<PAGE>
Registration No. 33-45122
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933
Post-Effective Amendment No. 9
and
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
Amendment No. 9
PANORAMA PLUS SEPARATE ACCOUNT
(Exact Name of Registrant)
C.M. LIFE INSURANCE COMPANY
(Name of Depositor)
140 Garden Street, Hartford, CT 06154
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number, including Area Code: 1-800-234-5606
Ann F. Lomeli, Secretary
C.M. Life Insurance Company
140 Garden Street
Hartford, Connecticut 06154
Approximate date of proposed public offering: Continuous.
It is proposed that this filing will become effective (check appropriate box)
/ / immediately upon filing pursuant to paragraph (b) of Rule 485
/X/ on May 1, 1999 pursuant to paragraph (b) of Rule 485
/ / 60 days after filing pursuant to paragraph (a) of Rule 485
/ / on (date) pursuant to paragraph (a) of the Rule 485
If appropriate, check the following box:
This post-effective amendment designates a new effective date for a previously
filed post-effective amendment.
STATEMENT PURSUANT TO RULE 24f-2
The Registrant has registered an indefinite number or amount of its variable
annuity contracts under the Securities Act of 1933 pursuant to Rule 24f-2 under
the Investment Company Act of 1940. The Rule 24f-2 Notice for Registrant's
fiscal year ended December 31, 1998 was filed on or about March 22, 1999.
1
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CROSS REFERENCE TO ITEMS
REQUIRED BY FORM N-4
<TABLE>
<CAPTION>
N-4 Item Caption in Prospectus
- -------- ---------------------
<S> <C>
1 ............................ Cover Page
2 ............................ Index of Special Terms
3 ............................ Table of Fees and Expenses
4 ............................ Condensed Financial
Information; Performance
5 ............................ The Company; Investment
Choices
6 ............................ Expenses; Distributors
7 ............................ Ownership; Purchasing a
Contract; Voting Rights;
Reservation of Rights; Contract Value; Cover Page
8 ............................ The Income Phase
9 ............................ Death Benefit
10 ........................... The Accumulation Phase;
Distributors
11 ........................... Highlights; Withdrawals
12 ........................... Taxes
13 ........................... Legal Proceedings
14 ........................... Additional Information
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Caption in Statement of
Additional Information
----------------------
<S> <C>
15 ........................... Cover Page
16 ........................... Table of Contents
17 ........................... General Information
18 ........................... Distribution; Experts
19 ........................... Purchase of Securities
Being Offered
20 ........................... Distribution
21 ........................... Performance Measures
22 ........................... Annuity Units and Unit
Values
23 ........................... Financial Statements
</TABLE>
3
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
<PAGE>
C.M. Life Insurance Company
Panorama Plus Separate Account
Panorama Plus Variable Annuity
This prospectus describes the Panorama Plus variable annuity contract offered by
C.M. Life Insurance Company. We will issue this contract as an individual or a
group flexible premium deferred variable annuity depending on the state where we
issue the contract. It provides for accumulation of contract value and annuity
payments on a fixed and variable basis.
You, the contract owner, have a number of investment choices in this contract.
These investment choices include the general account that is subject to an
interest rate factor adjustment, as well as the following nine funds which are
offered through our separate account, Panorama Plus Separate Account.
Panorama Series Fund, Inc.
o Panorama Total Return Portfolio
o Panorama Growth Portfolio
o Panorama Government Securities Portfolio
o Panorama International Equity Portfolio
Oppenheimer Variable Account Funds
o Oppenheimer Money Fund/VA
o Oppenheimer Bond Fund/VA
Fidelity Variable Insurance Products Fund II
o VIP II Contrafund Portfolio*
American Century Variable Portfolios, Inc.
o American Century VP Income & Growth Portfolio*
T. Rowe Price Equity Series, Inc.
o T. Rowe Price Mid-Cap Growth Portfolio*
* Subject to state availability
Please read this prospectus before investing. You should keep it for future
reference. It contains important information about the Panorama Plus contract.
To learn more about the Panorama Plus contract, you can obtain a copy of the
Statement of Additional Information (SAI), dated May 1, 1999. We filed the SAI
with the Securities and Exchange Commission (SEC) and it is legally a part of
this prospectus. The SEC maintains a Web site (http://www.sec.gov) that contains
the SAI, material incorporated by reference and other information regarding
companies that file electronically with the SEC. The Table of Contents of the
SAI is on page 31 of this prospectus. For a free copy of the SAI, or for general
inquiries, call our Annuity Service Center at (800) 366-8226 or write to:
Panorama Plus, Annuity Products, H562, P.O. Box 9067, Springfield, Massachusetts
01102-9067.
The contracts:
o are not bank deposits.
o are not federally insured.
o are not endorsed by any bank or governmental agency.
o are not guaranteed and may be subject to loss of principal.
- --------------------------------------------------------------------------------
The SEC has not approved these contracts or determined that this prospectus is
accurate or complete. Any representation that it has is a criminal offense.
- --------------------------------------------------------------------------------
May 1, 1999
1
<PAGE>
Table Of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
Highlights 4
Panorama Plus Separate Account -
Table of Fees and Expenses 5
The Company 9
The Panorama Plus Deferred Variable
Annuity Contract - General Overview 9
Ownership of the Contact 10
Owner 10
Annuitant 10
Contingent Annuitant 10
Beneficiary 10
Purchasing a Contract 11
Purchase Payments 11
Allocation of Purchase Payments 11
Investment Choices 12
The Separate Account 12
The Funds 12
The General Account 13
Contract Value 14
Accumulation Units 14
Minimum Contract Value 14
Transfers 14
Transfers During the
Accumulation Phase 14
Transfers During the Income Phase 15
Dollar Cost Averaging Program 15
Withdrawals 16
Systematic Withdrawal Program 16
Expenses 18
Insurance Charges 18
Mortality and Expense Risk Charge 18
Administrative Expense Charge 18
Contract Maintenance Fee 18
Surrender Charge 18
Free Withdrawals 19
Window Period 19
Interest Rate Factor Adjustment 19
Premium Taxes 20
Income Taxes 20
Fund Expenses 20
The Income Phase 21
Fixed Annuity Payments 21
Variable Annuity Payments 21
Annuity Unit Value 22
Annuity Options 22
Death Benefit 23
Death Benefit During the Accumulation
Phase 23
Death of Contract Owner 23
Death of Annuitant 24
Death Benefit Options 24
Death of Annuitant on or after the
Annuity Income Date 24
Taxes 25
Annuity Contracts in General 25
Qualified and Non-Qualified Contracts 25
Withdrawals - Non-Qualified Contracts 25
Withdrawals - Qualified Contracts 26
Withdrawals - Tax Sheltered Annuities 26
Withdrawals - Texas Optional Retirement
Program 27
Other Information 28
Terminal Illness Benefit 28
Performance 28
Standardized Total Returns 28
Nonstandard Total Returns 28
Yield and Effective Yield 28
Related Performance 29
Year 2000 29
Distributors 29
Electronic Transmission of Application
Information 29
Assignment 29
Misstatement of Age or Sex 30
Voting Rights 30
Reservation of Rights 30
Suspension of Payments or Transfers 30
Legal Proceedings 30
Financial Statements 30
Additional Information 31
Appendix A -
Condensed Financial Information A-1
</TABLE>
2
<PAGE>
Index Of Special Terms
We have tried to make this prospectus as readable and understandable for you as
possible. By the very nature of the contract, however, certain technical words
or terms are unavoidable. We have identified the following as some of these
words or terms. The page that is indicated here is where we believe you will
find the best explanation for the word or term.
<TABLE>
<CAPTION>
Page
<S> <C>
Accumulation Phase 9
Accumulation Unit 14
Annuitant 10
Annuity Income Date 21
Annuity Options 22
Annuity Payments 21
Annuity Service Center Cover Page
Annuity Unit Value 22
Contract Issue Date 11
Free Withdrawal 19
Income Phase 9
Interest Rate Factor Adjustment 19
Non-Qualified 25
Purchase Payment 11
Qualified 25
Separate Account 12
Tax Deferral 9
Window Period 19
</TABLE>
3
<PAGE>
Highlights
This prospectus describes the general provisions of the Panorama Plus contract.
You may review a copy of the contract upon request.
Free Look
You have a right to examine your contract. If you change your mind about owning
your contract, you can cancel it within 15 calendar days after we issue it.
However, this time period may vary by state. When you cancel the contract within
this time period, we will not assess a surrender charge, interest rate factor
adjustment, contract maintenance fee or premium tax. You will receive back your
contract value as of the business day we receive your contract and written
request at our Annuity Service Center. If your state requires it or if you
purchase this contract as an IRA, we will return the greater of your purchase
payments less any withdrawals you took, or the contract value.
Surrender Charge
We do not deduct a sales charge when we receive a purchase payment from you.
However, we may assess a surrender charge if you withdraw all of or any part of
the contract value. We will deduct this charge on the business day we receive
your written request for a withdrawal. The surrender charge is 5% of the amount
withdrawn for the first five contract years and 0% thereafter.
Federal Income Tax Penalty
If you withdraw any of the contract value from your non-qualified contract, a
10% federal income tax penalty may be applied to the amount of the withdrawal
that is includible in your gross income for tax purposes. Some withdrawals may
be exempt from the penalty tax. They include any amounts:
o paid on or after you reach age 59 1/2;
o paid to your beneficiary after you die;
o paid if you become totally disabled as that term is defined in the Internal
Revenue Code;
o paid in a series of substantially equal payments made annually or more
frequently, for life or a period not exceeding life expectancy;
o paid under an immediate annuity; or
o that come from purchase payments made before August 14, 1982.
The Internal Revenue Code (the Code) treats any withdrawal as first coming from
earnings and then from your purchase payments. Separate tax penalties and
restrictions apply to withdrawals under qualified contracts. Please refer to the
Taxes section of this prospectus for more information.
4
<PAGE>
Panorama Plus Separate Account
Table Of Fees And Expenses
Contract Owner Transaction Expenses
<TABLE>
<S> <C>
Transfer Fee: Currently, no fee
Sales Load on Purchases: 0%
Surrender Charge
(as a percentage of contract value withdrawn): 5% for contract years 1-5 and 0% thereafter
Contract Maintenance Fee: $30 per Contract Year.
Separate Account Annual Expenses
(as a percentage of the average account value)
Mortality and Expense Risk Charge: 1.07%
Administrative Charge: 0.07%
----
Total Separate Account Annual Expenses: 1.14%
</TABLE>
5
<PAGE>
Annual Fund Expenses
(as a percentage of average net assets as of December 31, 1998)
<TABLE>
<CAPTION>
Management Other Total Operating
Fees Expenses Expenses
After Expense After Expense
Reimbursements Reimbursements
<S> <C> <C> <C>
Oppenheimer Money Fund/VA 0.45% 0.05% 0.50%
Oppenheimer Bond Fund/VA 0.72% 0.02% 0.74%
Panorama Total Return Portfolio 0.53% 0.02% 0.55%
Panorama Growth Portfolio 0.52% 0.01% 0.53%
Panorama International Equity Portfolio 1.00% 0.09% 1.09%
Panorama Government Securities Portfolio 0.52% 0.16% 0.68%
Fidelity's VIP II Contrafund Portfolio* 0.59% 0.07%** 0.66%**
American Century VP Income & Growth Portfolio* 0.70% 0.00% 0.70%
T. Rowe Price Mid-Cap Growth Portfolio* 0.85% 0.00% 0.85%
</TABLE>
* Subject to state availability
** A portion of the brokerage commissions that the VIP II Contrafund Portfolio
pays was used to reduce the other expenses for the Portfolio. In addition,
this Portfolio has entered into arrangements with its custodian whereby
credits realized as a result of uninvested cash balances were used to reduce
custodian expenses. Without such reductions, the other expenses for this
Portfolio would have been 0.11%, increasing the total fund operating
expenses to 0.70%
(See the funds' prospectuses for more information.)
In addition to the expenses indicated in the Table of Fees and Expenses, we
apply an interest rate factor adjustment to the amount of your contract value in
the general account that is subject to surrender charge if you make a full or
partial withdrawal during the accumulation phase. We also apply an interest rate
factor adjustment on the annuity income date if you apply the general account
balance to a variable annuity option. We do not apply an interest rate factor
adjustment if the amount withdrawn is a free withdrawal amount, or the
withdrawal is made during a window period. The adjustment does not apply to
contracts issued to Pennsylvania residents. The interest rate factor adjustment
may increase or decrease the general account balance withdrawal proceeds.
6
<PAGE>
Examples
The following examples are designed to help you understand the expenses in the
contract. The examples show the cumulative expenses you would pay assuming you
invested $1,000 in a contract and allocated all of it to a fund which earned 5%
each year. All the expenses shown in the table of fees and expenses, including
the annual fund expenses, are assumed to apply.
In the first example, we assume that you withdrew all of your money at the end
of years 1, 3, 5 or 10.
<TABLE>
<CAPTION>
Year 1 3 5 10
<S> <C> <C> <C> <C>
Money Market Sub-Account(1) $ 69 $105 $ 94 $205
Income Sub-Account(2) 72 112 107 231
Total Return Sub-Account 70 106 97 210
Growth Sub-Account 70 105 96 208
International Equity Sub-Account 75 122 125 267
Government Securities Sub-Account 71 110 104 224
Contrafund Sub-Account* 71 110 105 227
Income & Growth Sub-Account* 71 110 105 227
Mid-Cap Growth Sub-Account* 73 115 113 243
</TABLE>
7
<PAGE>
In this second example, we assume 1) that you did not make a withdrawal or 2)
that you decided to begin the income phase at the end of each year shown. (The
income phase is not available until the end of the 5 th contract year.)
<TABLE>
<CAPTION>
Year 1 3 5 10
<S> <C> <C> <C> <C>
Money Market Sub-Account(1) $ 18 $ 55 $ 94 $205
Income Sub-Account(2) 20 62 107 231
Total Return Sub-Account 18 56 97 210
Growth Sub-Account 18 56 96 208
International Equity Sub-Account 24 73 125 267
Government Securities Sub-Account 20 60 104 224
Contrafund Sub-Account* 20 61 105 227
Income & Growth Sub-Account* 20 61 105 227
Mid-Cap Growth Sub-Account* 21 66 113 243
</TABLE>
(1) The Money Market Sub-Account invests in the Oppenheimer Money Fund/VA.
(2) The Income Sub-Account invests in the Oppenheimer Bond Fund/VA. .
* Subject to state availability
The purpose of the Table of Fees and Expenses is to assist you in understanding
the various costs and expenses that you will incur. The table reflects expenses
of the separate account and the funds.
The examples reflect the $30 annual contract maintenance fee as an annual charge
of 0.086% of the assets. This charge is based on an anticipated average contract
value of $35,000.
The examples do not reflect any premium taxes. However, premium taxes may apply.
The examples should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown.
There is an accumulation unit value history contained in Appendix A - Condensed
Financial Information.
8
<PAGE>
The Company
C.M. Life Insurance Company, 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, and is licensed in all states except New
York. The Company is a wholly-owned subsidiary of Massachusetts Mutual Life
Insurance Company (MassMutual). MassMutual is a mutual life insurance company
specially chartered by the Commonwealth of Massachusetts on May 14, 1851. It is
currently licensed to transact life, accident, and health insurance business in
all states, the District of Columbia, Puerto Rico and certain provinces of
Canada. MassMutual had estimated consolidated statutory assets in excess of $67
billion and estimated total assets under management of $176.8 billion as of
December 31, 1998.
The Panorama Plus Deferred Variable
Annuity Contract
General Overview
This annuity is a contract between you, the owner and us, C.M. Life. The
contract is intended for retirement savings or other long-term investment
purposes. In exchange for your purchase payments, we agree to pay you an income
when you choose to receive it. You elect the income period beginning on a date
you designate that is at least 5 years in the future from the date we issued
your contract. The contract, like all deferred annuity contracts, has two phases
- - the accumulation phase and the income phase. Your contract is in the
accumulation phase until you decide to begin receiving annuity payments. During
the accumulation phase we provide a death benefit. Once you begin receiving
annuity payments, your contract enters the income phase.
You are not taxed on contract earnings until you take money from your contract.
This is known as tax deferral.
The contract is called a variable annuity because you can choose to allocate
your purchase payments among various investment choices. Your choices include
nine funds and the general account. The amount of money you are able to
accumulate in your contract during the accumulation phase depends upon the
investment performance of the funds you elect as well as the interest we credit
on the general account.
At the beginning of the income phase, you can choose to receive annuity payments
on a variable basis, fixed basis or a combination of both. If you choose
variable payments, the amount of the annuity payments will fluctuate depending
on the investment performance of the funds you elect for the income phase. If
you elect to receive payments on a fixed basis, the payments you receive will
remain level.
We may issue the contract as an individual or group flexible premium deferred
variable annuity. In those states where we issue a group contract, we issue a
certificate to individuals. The certificate is subject to the terms of the group
contract under which we issue the certificate. You may become a participant
under the group contract by completing an application and forwarding an initial
purchase payment to us. The certificate we issue to a participant indicates the
participant's rights and benefits under the group contract. Terms of the group
contract are controlling.
The participant as owner may exercise all rights and benefits of the certificate
without the consent of the group contract owner. Unless we state otherwise, the
owner of a certificate under a group Panorama Plus deferred variable annuity and
the owner of an individual Panorama Plus deferred variable annuity have the same
rights and benefits. As a result, the term "contract" means either an individual
Panorama Plus deferred variable annuity or a certificate issued under the group
Panorama Plus deferred variable annuity.
9
<PAGE>
Ownership of the Contract
Owner
The owner is named at time of application. The owner can be an individual or a
non-natural person. We will not issue a contract to you if you have reached your
85 th birthday as of the date we proposed to issue the contract.
As the owner of the contract, you exercise all rights under the contract. The
owner names the beneficiary. You may change the owner of the contract at any
time prior to the annuity date by written request. If you change the owner, the
change is subject to our underwriting rules. Changing the owner may result in
tax consequences. On and after the annuity income date, you continue as the
owner.
Annuitant
The annuitant is the person on whose life we base annuity payments. You
designate the annuitant at the time of application. We will not issue a contract
to you if the proposed annuitant has reached his/her 85th birthday as of the
date we proposed to issue the contract. You may change the annuitant before the
annuity income date, subject to our underwriting rules. However, the annuitant
may not be changed on a contract owned by a non-natural person.
Contingent Annuitant
You may name a contingent annuitant. If the annuitant dies before the annuity
income date, the contingent annuitant will receive all benefits otherwise due
the annuitant, providing he/she is less than 85 years of age on the date the
annuitant died.
Beneficiary
The beneficiary is the person(s) or entity you name to receive any death
benefit. You name the beneficiary at the time of application. Unless an
irrevocable beneficiary has been named, you can change the beneficiary at any
time before you die.
After we receive proof of death, the beneficiary has the exclusive right to:
o appoint a contingent beneficiary who would succeed to the beneficiary's
interest if the beneficiary dies; and
o make transfers under the contract.
10
<PAGE>
Purchasing a Contract
Purchase Payments
The minimum amount we accept for your initial purchase payment is $500, or $40
per month when purchased under an automatic investment plan. You can make
additional purchase payments of as little as $50.
The maximum amount of cumulative purchase payments we accept without our prior
approval is based on the annuitant's age when we issued the contract. The
maximum amount is:
o $1 million up to the annuitant's 76 th birthday; or
o $500,000 if the annuitant is age 76 or older.
You may make your initial purchase payment, along with your completed
application, by giving them to your agent/broker. You may make additional
purchase payment by mailing them to our Annuity Service Center. You may also
instruct your bank to wire transfer funds to:
Fleet Bank, Hartford, CT
ABA #01190045
CM Life Insurance/Panorama Plus Account
#5033-9395
Ref: (VA Contract Number)
Name: (Your Name)
We have the rights to reject any application or purchase payment.
Allocation of Purchase
Payments
When you purchase your contract, you choose how we will apply your purchase
payments among the investment choices. If you make additional purchase payments,
we will apply them in the same way as your first purchase payment, unless you
tell us otherwise.
Once we receive your purchase payment and the necessary information at our
Annuity Service Center, we will issue your contract and apply your first
purchase payment within 2 business days. If you do not give us all of the
information we need, we will contact you to get it. If for some reason we are
unable to complete this process within 5 business days, we will either send back
your money or get your permission to keep it until we get all of the necessary
information.
We consider the date we credit your initial purchase payment to your contract as
the contract issue date. We use this contract issue date to determine contract
years and contract anniversaries.
If you add more money to your contract by making additional purchase payments,
we will credit these amounts to your contract on the business day we receive
them at our Annuity Service Center. Our business day closes when the New York
Stock Exchange closes, usually 4:00 p.m. Eastern time. If we receive your
purchase payment at our Annuity Service Center on a non-business day or after
the business day closes, we will credit the amount to your contract effective
the next business day.
After the first contract year, we limit the amount of money that you may
allocate to the general account in any one contract year to the greater of:
o $25,000; or
o 125% of the average annual purchase payments you have allocated to the
general account during the last 5 contract years, or all years, if your
contract is less than 5 years old.
This restriction does not apply during the window period.
11
<PAGE>
Investment Choices
The Separate Account
We established a separate account, Panorama Plus Separate Account, to hold the
assets that underlie the contracts. Our Board of Directors adopted a resolution
to establish the separate account under Connecticut insurance law on September
25, 1991. We have registered the separate account with the Securities and
Exchange Commission as a unit investment trust under the Investment Company Act
of 1940.
C.M. Life owns the assets of the separate account. However, those separate
account assets equal to the reserves and other contract liabilities are not
chargeable with liabilities arising out of any other business we may conduct.
All the income, gains and losses (realized or unrealized) resulting from these
assets are credited to, or charged against, the contracts and not against any
other contracts we may issue.
The separate account is currently divided into 9 sub-accounts. Each of these
sub-accounts invests in a fund. You bear the complete investment risk for
purchase payments that you allocate to a fund.
The Funds
Subject to state availability, the contract offers 9 funds which are listed
below. We may add additional funds in the future.
Panorama Series Fund, Inc.
Panorama Series Fund, Inc. ("Panorama Fund") is an open-end investment company.
Oppen-heimerFunds, Inc. ("OFI"), is the investment adviser to the Panorama Fund.
OFI has operated as an investment adviser since 1959 and, together with a
subsidiary, manages investment companies with over $95 billion in assets and
over 4 million shareholder accounts as of December 31, 1998. OFI is owned by
Oppen-heimer Acquisition Corporation, a holding company that is owned in part by
senior officers for OFI and controlled by MassMutual. The address of OFI is Two
World Trade Center, New York, NY 10048-0203.
Babson-Stewart Ivory International ("Babson-Stewart"), One Memorial Drive,
Cambridge, MA 02142, is the subadviser to the International Equity Portfolio.
Babson-Stewart is a partnership formed in 1987 between David L. Babson & Co.,
Inc., a subsidiary of MassMutual and Stewart Ivory & Co., Ltd., located in
Edinburgh, Scotland.
Panorama Total Return Portfolio. The Panorama Total Return Portfolio seeks to
maximize the total investment return (including both capital appreciation and
income) by allocating its assets among stocks, corporate bonds, U.S. Government
securities and its instrumentalities, and money market instruments according to
changing market conditions.
Panorama Growth Portfolio. The Panorama Growth Portfolio seeks long-term growth
of capital by investing primarily in common stocks with low price-earnings
ratios and better than anticipated earnings. Realization of current income is a
secondary consideration.
Panorama International Equity Portfolio. The Panorama International Equity
Portfolio seeks long-term growth of capital by investing primarily in equity
securities of companies wherever located, the primary stock market of which is
outside the United States.
Panorama Government Securities Portfolio. The Panorama Government Securities
Portfolio seeks a high level of current income with a high degree of safety of
principal, by investing primarily in U.S. Government securities and U.S.
Government related securities.
Oppenheimer Variable Account Funds
Oppenheimer Variable Account Funds ("Oppen-heimer Funds") is an investment
company consisting of ten separate series of shares known as funds. The
Oppenheimer Funds are also advised by OFI.
Oppenheimer Bond Fund/VA. The Oppenheimer Bond Fund/VA seeks a high level of
current income. The Fund seeks capital growth when consistent with its primary
objective. This Fund will, under normal market conditions, invest at least 65%
of its total assets in investment grade debt securities
Oppenheimer Money Fund/VA. The Oppen-heimer Money Fund/VA seeks maximum current
income from investments in money market
12
<PAGE>
securities that is consistent with low capital risk and maintenance of
liquidity. The fund invests in short-term, high quality money market securities.
T. Rowe Price Equity Series, Inc.
T. Rowe Price Equity Series, Inc. is a diversified, open-end investment company
incorporated in Maryland in 1994. The T. Rowe Price Mid-Cap Growth Portfolio is
a separate series of shares of T. Rowe Price Equity Series, Inc. T. Rowe Price
Associates, Inc. was founded in 1937 and is the investment adviser to the
Portfolio. Its business address is 100 East Pratt Street, Baltimore, MD 21202.
T. Rowe Price Mid-Cap Growth Portfolio.* The T. Rowe Price Mid-Cap Growth
Portfolio seeks long-term capital appreciation by investing in mid-cap stocks
with potential for above-average earnings growth. T. Rowe Price defines mid-cap
companies as those with market capitalizations within the range of companies in
the S&P 400 Mid-Cap Index
* Subject to state availability.
American Century Variable
Portfolios, Inc.
American Century Variable Portfolios, Inc. ("American Century VP") was organized
as a Maryland Corporation in 1987 and is a diversified, open-end management
investment company. American Century Management, Inc. ("American Century") is
the investment manager of American Century VP. American Century has been
providing investment advisory services to investment companies and institutional
investors since founded in 1958. American Century's address is American Century
Tower, 4500 Main Street, Kansas City, Missouri 64111.
American Century VP Income & Growth Portfolio.* The American Century VP Income &
Growth Portfolio seeks dividend growth, current income and capital appreciation
by investing in common stocks.
* Subject to state availability.
Fidelity Variable Insurance Products
Fund II
Fidelity Variable Insurance Products Fund II ("VIP II") is an open-end
management investment company, organized as a Massachusetts business trust in
1988. Fidelity's VIP II Contrafund Portfolio is a diversified fund
of VIP II.
Fidelity Management & Research Company ("FMR") is the investment adviser to
Fidelity's VIP II Contrafund Portfolio. FMR is the management arm of Fidelity
Investments. Fidelity Investments has its principal business address at 82
Devonshire Street, Boston, MA 02109.
Fidelity Management & Research(U.K.) Inc. in London, England, and Fidelity
Management & Research (Far East) Inc. in Tokyo, Japan, assist FMR with foreign
investments. They each serve as subadvisors for Fidelity's VIP II Contrafund
Portfolio.
Fidelity's VIP II Contrafund Portfolio.* Fidelity's VIP II Contrafund Portfolio
seeks long-term capital appreciation by investing in the securities of companies
whose value is not fully recognized by the public.
* Subject to state availability.
- --------------------------------------------------------------------------------
There is no assurance that the funds will achieve their stated objective. The
fund prospectuses contain more detailed information about the funds. Current
copies of the fund prospectuses are attached to this prospectus. You should read
the information contained in the funds' prospectuses carefully before investing.
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The General Account
Amounts that you allocate to the general account become part of our general
account assets and are subject to the claims of all our creditors. All of our
general account assets will be available to fund benefits under a contract. You
can also make transfers of your contract value into the general account. You do
not participate in the investment performance of the assets in the general
account. Instead, we credit your contract with interest at a specified rate that
we declare in advance. We guarantee this rate will be at least 3% per year. We
may credit a higher rate of interest at our discretion.
Any part of your contract value that is held in the general account is subject
to an interest rate factor adjustment. We explain the interest rate factor
adjustment later in this prospectus and in the attached prospectus for the fixed
account with interest rate factor adjustment.
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Contract Value
Your contract value is the sum of your value in the separate account and the
general account.
Your value in the separate account will vary depending on the investment
performance of the funds you choose. In order to keep track of your contract
value, we use a unit of measure called an accumulation unit. During the income
phase of your contract we call the unit an annuity unit.
Accumulation Units
Every business day we determine the value of an accumulation unit for each of
the funds. Changes in the accumulation unit value reflect the investment
performance of the fund as well as deductions for insurance and other charges.
The value of an accumulation unit may go up or down from business day to
business day.
The Statement of Additional Information contains more information on the
calculation of the accumulation unit value.
When you make a purchase payment to the funds, we credit your contract with
accumulation units. We determine the number of accumulation units to credit by
dividing the amount of the purchase payment allocated to a fund by the value of
one accumulation unit for that fund. When you make a withdrawal, we deduct from
your contract accumulation units representing the withdrawal amount.
We calculate the value of an accumulation unit for each fund after the New York
Stock Exchange closes each business day. Any change in the accumulation unit
value will be reflected in your contract value.
Example:
On Monday we receive an additional purchase payment of $5,000 from you. You have
told us you want this to go to the Oppenheimer Bond Fund/VA. When the New York
Stock Exchange closes on that Monday, we determine that the value of an
accumulation unit for the Oppenheimer Bond Fund/VA is $13.90. We then divide
$5,000 by $13.90 and credit your contract on Monday night with 359.71
accumulation units for the Oppenheimer Bond Fund/VA.
Minimum Contract Value
You must maintain a minimum contract value of $250 during the accumulation phase
of your contract. If you fail to do so, we may, upon 60 days notice, return your
contract value less any applicable fees or charges. Your contract will continue
in force if you make purchase payments that restore your contract value to the
minimum contract value within 60 days of the notice date.
Transfers
You can transfer all or part of your contract value. You can make transfers by
telephone. If you want to use our automatic voice response system, you must
submit a written request to obtain a personal identification number (PIN). We
will use reasonable procedures to confirm that instructions given to us by
telephone are genuine. We may be liable for any losses due to unauthorized or
fraudulent instructions, if we fail to use such procedures. We may tape record
all telephone instructions.
Transfers During the Accumulation Phase
You, or the beneficiary if a death benefit has become payable, may transfer all
or part of the assets in a fund or the general account. You can make a transfer
to or from the general account and to or from any fund. We currently do not
limit the number of times a year you may make transfers. We currently do not
impose a fee on transfers. However, we reserve the right to charge a fee in the
future.
The following rules apply to any transfer during the accumulation phase:
1. The minimum amount that you may transfer is $100.
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2. The total amount that you may transfer to or from the general account is
limited to the greater of:
o $25,000, or
o 30% of the general account balance at the end of the previous contract
year.
3. We only allow transfers between competing accounts during the window
period. For this purpose, we consider the general account and the
Oppenheimer Money Fund/VA "competing accounts".
The window period is the last 30 days of each 5-year period.
4. We restrict other transfers involving any competing account for certain
periods:
o for a period of 90 days following a transfer out of a competing
account, you may not transfer into the other competing account.
o for a period of 90 days following a transfer into a competing account,
you may not transfer out of the other competing account.
Your transfer is effective on the business day we receive your request at our
Annuity Service Center. Our business day closes when the New York Stock Exchange
closes, usually 4:00 p.m. Eastern time. If we receive your request at our
Annuity Service Center on a non-business day or after our business day closes,
your transfer request will be effective on the next business day.
Transfers During the Income Phase
During the income phase you may make only 1 transfer of your value in the
separate account each contract year. We do not permit transfers to or from the
general account.
We have the right to terminate or modify these transfer provisions.
Dollar Cost Averaging Program
The Dollar Cost Averaging Program allows you to systematically transfer a set
amount from the general account or a elected fund to any of the other funds. By
allocating amounts on a regular schedule as opposed to allocating the total
amount at one particular time, you may be less susceptible to the impact of
market fluctuations. The Dollar Cost Averaging Program is available only during
the accumulation phase.
Dollar Cost Averaging does not assure a profit and does not protect you against
loss in declining markets. Since Dollar Cost Averaging involves continuous
investment in securities regardless of fluctuating price levels of such
securities, you should consider your financial ability to continue the Dollar
Cost Averaging Program through periods of fluctuating price levels.
We offer 3 Dollar Cost Averaging options.
1. Fixed dollar amount transfers from one fund to one or more other fund(s).
The minimum transfer amount is $100.
2. Fixed dollar amount transfers from the general account to one or more
fund(s) except the Oppenheimer Money Fund/VA. The minimum transfer is $100.
You may elect this option only during the accumulation phase at the time of your
initial purchase payment into the general account or on your contract
anniversary date. We must receive your written request to elect this option at
least 5 business days before your contract anniversary. We limit the amount you
may transfer from the general account as follows:
o In the initial contract year, you may transfer the greater of:
a) 30% of your initial purchase payment, or
b) $25,000.
o In subsequent contract years, you may transfer the greater of:
a) 30% of your contract value in the general account at the end of
the previous contract year, or
b) $25,000.
3. Transfers of interest from the general account to any fund(s) except the
Oppenheimer Money Fund. You must have at least $5,000 in the general
account on each transfer date to participate in this option. We waive the
$100 minimum transfer amount for this option.
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You may elect this option only:
o at the time you make the initial purchase payment to the general
account, or
o in subsequent years, on your contract's anniversary date.
We do not allow you to make additional transfers from the general account while
Dollar Cost Averaging options 2 or 3 are in effect, unless your contract is in
the window period.
You can choose the frequency at which we make the Dollar Cost Averaging
transfers, i.e., monthly, quarterly, semi-annually or annually. You will also
choose the specific date on which you would like the first Dollar Cost Averaging
transfer to occur. However, if you elect a date that is less than 5 business
days from the date the election form is received at our Annuity Service Center,
we may defer the first transfer for one month. If you do not elect a start date,
we will automatically start the Dollar Cost Averaging Program within 5 business
days from the date we receive your election form. You may make changes to your
election, including termination of the program, by written request. If you
participate in the Dollar Cost Averaging Program, you cannot also participate in
the Systematic Withdrawal Plan.
The Dollar Cost Averaging option will terminate:
o if you withdraw your total contract value;
o if we have made the last transfer you elected;
o if there is insufficient contract value to make the transfer;
o upon your death or the annuitant's death;
o if we receive from you a written request to terminate the program at
our Annuity Service Center at least 5 business days prior to the next
transfer date;
o if for option 3, your contract value in the general account falls
below $5,000; or
o if you begin receiving annuity payments.
We currently do not charge you for participation in the Dollar Cost Averaging
Program. However, we reserve the right to charge for this feature in the future.
We have the right to modify, terminate or suspend the Dollar Cost Averaging
Program.
Withdrawals
During the accumulation phase you may make either partial or total withdrawals
of your contract value. Your withdrawal request is effective on the business day
we receive your written request at our Annuity Service Center. If we receive
your request at our Annuity Service Center on a non-business day or after our
business day closes, your withdrawal request will be effective on the next
business day. We will pay any withdrawal amount within 7 days of our receipt of
your fully completed written request at our Annuity Service Center unless we are
required to suspend or postpone withdrawal payments.
Unless you instruct us otherwise, we will take any partial withdrawal
proportionally from your contract value in the funds and the general account.
The minimum amount that you may withdraw from the separate account or general
account is $100. We require that after you make a partial withdrawal you keep at
least $250 in the contract. Partial withdrawals are subject to a surrender
charge.
When you make a total withdrawal you will receive your contract value:
o less any applicable surrender charge;
o less any applicable premium tax;
o less any contract maintenance fee, and
o less any purchase payments we credited to your contract that have not
cleared the bank, until they clear the bank.
We also apply the interest rate factor adjustment to amounts withdrawn from the
general account, unless you withdraw amounts during the window period.
Systematic Withdrawal Program
This program provides for an automatic monthly, quarterly, semi-annual or annual
payment to you from your contract of at least $100. Currently, we do not charge
for this program, but we reserve the right to charge in the future.
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You may elect to begin the Systematic Withdrawal Program on or after your first
contract anniversary. We will begin systematic withdrawals on the date you elect
as long as we receive a fully completed written request at least 5 business days
prior to the date you elected. If the start date you elect is less than 5 days
after we receive your written request, we may postpone the start of your
systematic withdrawals for one month. If you do not elect a start date, we will
automatically begin systematic withdrawals within 5 business days after we
receive your request.
If you are participating in the Automatic Investment Plan Option, or the Dollar
Cost Averaging Program you cannot also participate in the Systematic Withdrawal
Plan.
Your systematic withdrawal program ends:
o if you withdraw your total contract value;
o upon your death or the annuitant's death;
o if we process the last withdrawal you elected;
o if your value in a elected fund or the general account is insufficient to
complete the withdrawal;
o if you begin receiving annuity payments;
o if you give us a written request to terminate your program. We must receive
your request at least 5 business days before the next scheduled withdrawal
date.
The Systematic Withdrawal Program is available only during the accumulation
phase. Withdrawals in excess of your free withdrawal amount may be subject to a
surrender charge and interest rate factor adjustment.
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Income taxes, tax penalties and certain restrictions may apply to any withdrawal
you make.
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Expenses
There are charges and other expenses associated with the contracts that reduce
the return on your investment in the contract. These charges and expenses are:
Insurance Charges
Each business day we deduct our insurance charges from the assets of the
separate account. We do this as part of our calculation of the value of the
accumulation units and the annuity units. The insurance charge has two parts:
(1) the mortality and expense risk charge and (2) the administrative expense
charge.
Mortality and Expense Risk Charge
This charge is equal, on an annual basis, to 1.07% of the daily value of the
assets invested in each fund, after fund expenses are deducted. This charge is
for:
o the mortality risk associated with the insurance benefits provided,
including our obligation to make annuity payments after the annuity date
regardless of how long all annuitants live, the death benefits, and the
guarantee of rates used to determine your annuity payments during the
income phase;
o the expense risk that the current charges will be insufficient to cover the
actual cost of administering the contract.
We reserve the right to increase the mortality and expense risk charge. We will
not increase it above 1.25%. If the mortality and expense risk charge is not
sufficient, then we will bear the loss. However, we do expect to profit from
this charge.
Administrative Expense Charge
This charge is equal, on an annual basis, to 0.07% of the daily value of the
contracts invested in each fund, after fund expenses are deducted. We assess
this charge, together with the annual contract maintenance fee, to reimburse us
for all the expenses associated with the administration of the contract and the
separate account. Some of these expenses are: preparation of the contract,
confirmations, annual reports and statements, maintenance of contract records,
personnel costs, legal and accounting fees, filing fees, and computer and
systems costs. We can increase this charge, but the combined total of the
administrative expense charge and the mortality and expense risk charge will
never exceed 1.50%.
Contract Maintenance Fee
We deduct $30 from your contract as a contract maintenance fee on the last day
of each contract year during the accumulation phase and, if you fully withdraw
your contract value, on that withdrawal date. We may increase this charge, but
it will not exceed $60 per year. Subject to state regulations, we will deduct
the annual contract maintenance fee proportionately from the investment choices
you have elected. For contracts issued to Pennsylvania residents, we will
calculate this fee as a pro rata portion of the balance in each fund.
We will not deduct the contract maintenance fee after your contract begins the
income phase. We do not expect to profit from this fee.
Surrender Charge
We do not deduct a sales charge when we receive a purchase payment. However, if
you withdraw all of or any part of the contract value during the first 5
contract years, we may assess a surrender charge on the amount you withdraw that
exceeds the free withdrawal amount. The surrender charge is 5% of the amount
withdrawn. We use this charge to cover certain expenses relating to the sale of
the contract. We will deduct any surrender charge as of the business day we
receive your written request.
If you withdraw:
o from more than one investment choice, we will deduct the surrender charge
proportionately from the amounts remaining in the investment choice(s) you
elected.
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o the total value from an investment choice, we will deduct the surrender
charge proportionately from amounts remaining in the investment choices
that still have value.
o your entire contract value, we will deduct the surrender from the contract
value. You will receive a check for the net amount.
In addition to the free withdrawals described later in this section, we will not
impose a surrender charge under the following circumstances:
o If you cancel the contract during the 15 day free look period.
o If you withdraw the entire contract value on the annuity income date.
o If you take a partial or full withdrawal during the window period or after
the first 5 contract years.
o If we pay a death benefit.
o If you redeem "excess contributions" to a plan qualifying for special
income tax treatment. These types of plans are referred to as Qualified
Plans, including Individual Retirement Annuities (IRAs) and Tax Sheltered
Annuities (TSAs). We look to the Internal Revenue Code for the definition
and description of excess contributions.
o If you surrender your contract before April 30, 2000, and the proceeds of
the surrender are used to purchase a new group annuity issued by
MassMutual. The group annuity may be subject to charges upon surrender.
o If you fully surrender a Panorama variable annuity contract that is past
its surrender charge period and exchange it for a Panorama Plus contract.
Exchange programs may not be available in all states. Check with your agent. We
have the right to terminate these exchange programs at any time. If you want
more information about the exchange programs, contact your agent or us at our
Annuity Service Center.
C.M. Life guarantees that the aggregate surrender charge will never exceed 8.5%
of the total purchase payments made. Further information about how the surrender
charge is calculated can be found in the Statement of Additional Information.
Free Withdrawals
Beginning in the second contract year, you may withdraw an amount without
incurring a surrender charge or an interest rate factor adjustment. The maximum
you may withdraw without penalty is 10% of your contract value as of the end of
the previous contract year. You may take this 10% in multiple withdrawals each
contract year.
Window Period
The window period is the last 30 days of each 5-year period. During this window
period, you may surrender or transfer to any fund, part or all of your contract
value in the general account without incurring a surrender charge or an interest
rate factor adjustment. During the window period you may also surrender all or
part of your contract value in the separate account without incurring a
surrender charge.
Interest Rate Factor Adjustment
Except during the window period, we will apply an interest rate factor
adjustment:
o to any amount that you partially or fully withdraw from the general account
during the accumulation phase, or
o to any amount from the general account that you apply to a variable annuity
option at the beginning of the income phase.
We base the interest rate factor adjustment on the interest rates payable on
U.S. Treasury securities. This means that generally, if rates on U.S. Treasury
securities are higher when you withdraw than when you made the payment, a
negative adjustment will be applied to the amount you withdraw. This could
result in your receiving an amount lower than the amount of your purchase
payment(s). If rates on U.S. Treasury securities are lower when you withdraw
than when you made the payment, a positive adjustment will be applied to the
amount you withdraw. This could result in your receiving an amount higher than
the amount of your purchase payment(s).
We do not apply the interest rate factor adjustment during the window period or
to free
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withdrawal amounts. Also, we do not apply the interest rate factor adjustment to
contracts we issue to Pennsylvania residents.
Further information about the interest rate factor adjustment can be found in
the Statement of Additional Information and the attached prospectus for the
fixed account with interest rate factor adjustment.
Premium Taxes
Some states and other governmental entities charge premium taxes or similar
taxes. We are responsible for the payment of these taxes and will make a
deduction from your contract value for them. Some of these taxes are due when
your contract is issued, others are due when annuity payments begin. Currently
we do not charge you for these taxes until you begin receiving annuity payments
or when you fully withdraw your contract value. Premium taxes generally range
from 0% to 3.5%, depending on the state.
Transfer Fee
We currently do not impose a fee on transfers during the accumulation phase or
the income phase.
Income Taxes
We will deduct from the contract any income taxes that we incur because of the
operation of the separate account. At the present time, we are not making any
such deductions. We will deduct any withholding taxes required by law.
Fund Expenses
There are deductions from and expenses paid out of the assets of the various
funds, which are described in the attached fund prospectuses. We may enter into
certain arrangements under which we are reimbursed by the funds' advisors,
distributors and/or affiliates for the administrative service that we provide.
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The Income Phase
If you want to receive regular income from your annuity, you can choose to
receive fixed and/or variable annuity payments under one of several options. You
can choose the month and year in which those payments begin. We call that date
the annuity income date. Your annuity income date cannot be earlier than 5 years
after you buy the contract.
You choose your annuity income date and annuity option when you purchase your
contract. You can change either at any time before the annuity income date
provided you give us 30 days written notice. If you do not choose an annuity
option, we will assume that you elected Annuity Option B with 10 years of
payments guaranteed.
The latest annuity income date that you may elect is the annuitant's 90th
birthday. Unless you indicate otherwise, we will make annuity payments to the
annuitant. After the annuitant dies, we will make any remaining guaranteed
annuity payments to the beneficiary.
We make annuity payments based on the age and sex of the annuitant under all
options except Option E. We may require proof of age and sex before annuity
payments begin.
At the annuity income date, you have the same fund choices that you had in the
accumulation phase. You can choose whether payments will be fixed, variable, or
a combination of both. If you elect a combination of both, you must indicate
which part of your contract value we should apply to the fixed and variable
payment options. If you do not tell us otherwise, we will base your annuity
payments on the investment allocations that are in place on the annuity date.
Therefore, any amounts in the funds will be applied to a variable payout and any
amounts in the general account will be applied to a fixed payout.
If your contract value is less than $2,000 on the annuity date, we reserve the
right to pay you a lump sum rather than a series of annuity payments. If any
annuity payment is less than $100, we reserve the right to change the payment
basis to equivalent less frequent payments.
In order to avoid adverse tax consequences, you should begin to take
distributions at least equal to the minimum amount required by the IRS, no later
than the required beginning date. If your contract is an IRA, that date should
be the date you reach 70 1/2. For qualified plans and TSAs, that date is the
later of your retirement or when you reach age 70 1/2.
Fixed Annuity Payments
If you choose fixed payments, the payment amount will not vary. The payment
amount will depend upon the following 4 things:
o The value of your contract on the annuity date;
o The deduction of premium taxes, if applicable;
o The annuity option you select; and
o The age and sex of the annuitant (and joint annuitant if a joint payment
option is elected).
Variable Annuity Payments
If you choose variable payments, the payment amount will vary with the
investment performance of the funds. The first payment amount will depend on the
following 6 things:
o The value of your contract on the annuity date;
o The deduction of premium taxes, if applicable;
o The application of an interest rate factor adjustment, if applicable;
o The annuity option you select;
o The age and sex of the annuitant (and joint annuitant if a joint payment
option is elected); and
o An assumed investment rate (AIR) of 4% per year.
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If you elect to have your contract value in the general account applied to a
variable annuity, your first variable annuity payment amount will also reflect
the interest rate factor adjustment.
Future variable payments will depend on the performance of the funds you
elected. If the actual performance exceeds the 4% assumed investment rate plus
the deductions for expenses, your annuity payments will increase. Similarly, if
the actual rate is less than 4% plus the amount of the deductions, your annuity
payments will decrease.
Annuity Unit Value
In order to keep track of the value of your variable annuity payment, we use a
unit of measure called an annuity unit. We calculate the number of your annuity
units at the beginning of the income phase. During the income phase, the number
of annuity units will not change. However, the value of your annuity units will
change to reflect the investment performance of the funds you elected. The
Statement of Additional Information contains more information on how annuity
payments and annuity unit values are calculated.
Annuity Options
The following annuity options are available. After annuity payments begin, you
cannot change the annuity option or the frequency of annuity payments. In
addition, during the income phase we do not allow withdrawals.
Annuity Option A - Life Income. Under this option we make fixed and/or variable
periodic payments as long as the annuitant is alive. After the annuitant dies we
stop making payments.
Annuity Option B - Life Income with Period Certain. We will make fixed and/or
variable periodic payments for a guaranteed period, or as long as the annuitant
lives, whichever is longer. The guaranteed period may be 5, 10 or 20 years. At
the time the annuitant elects the annuity payment option, he/she may give the
beneficiary the right to elect a lump sum payment equal to the present value of
the remaining guaranteed annuity payments.
Annuity Option C - Joint and Last Survivor Payments. We will make fixed and/or
variable periodic payments during the joint lifetime of 2 annuitants. When one
dies, we will continue making these payments as if both annuitants were alive.
We will not make payments after both annuitants have died.
Annuity Option D - Joint and 2/3 Survivor Annuity. We will make fixed and/or
variable periodic payments during the joint lifetime of 2 annuitants. We will
continue making payments during the lifetime of the surviving annuitant. We will
compute these payments for the surviving annuitant on the basis of two-thirds of
the annuity payment (or units) in effect during the joint lifetime. We will not
make payments after both annuitants have died.
Annuity Option E - Period Certain. (not available as a variable income option)
We will make periodic payments of a fixed amount for a specified period. The
specified period must be at least 5 years and cannot be more than 30 years. In
most states, if you do not want payments to continue for the remainder of the
specified period, you may elect to have an amount equal to the present value of
the remaining guaranteed annuity payments paid as a lump sum or applied to
another annuity option.
Annuity Option F - Special Income Settlement Agreement. We will pay you in
accordance with terms agreed upon in writing by both you and us.
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Death Benefit
Death Benefit During
The Accumulation Phase
If you or the annuitant die before the annuity income date, we will pay a death
benefit to your beneficiary once we receive due proof of death and the contract
at our Annuity Service Center. However, if the annuitant dies before you and
there is a contingent annuitant who is less than 85 years old on the annuitant's
date of death, we will not pay any death benefit. The contract will continue in
force with the contingent annuitant as the annuitant.
We determine the amount of death benefit payable at the time of payment. If the
deceased was less than age 75 at the time of death, we will pay the greater of:
o the contract value, or
o the total purchase payments, less any withdrawals and charges.
Otherwise, we will base payments on the contract value at the time of payment.
We will not apply a surrender charge, interest rate factor adjustment or
contract maintenance fee to any death benefit payment.
The death benefit options that are available depend on whether you and the
annuitant are the same person.
Death Of Contract Owner
If you and the annuitant are not the same person and you die before the
annuitant and before the annuity income date, one of the following scenarios
applies:
1. If your spouse is the beneficiary and survives you, he/she may elect only
death benefit option A, B or C within 1 year after your death. If your
spouse does not make a election within 1 year of your death, your spouse
will become the contract owner.
2. If the beneficiary is a natural person and not your spouse, the beneficiary
may elect only death benefit option B or C within 1 year after your death.
If the beneficiary does not make a election within 1 year of your death, we
will pay the beneficiary in a single sum at that time.
3. If the beneficiary is not a natural person, it may elect only death benefit
option B or D within 1 year after your death.
4. If no beneficiary survives you, we will declare the annuitant the
beneficiary and scenario 1 or 2 above will apply. If no election is made
within 1 year after your death, we will pay the death benefit in a single
sum at that time.
If you, the contract owner, and the annuitant are the same person, and you die
before the annuity income date, one of the following scenarios applies:
1. If your spouse is the beneficiary, he/she may elect only death benefit
option B, C or G within 1 year after your death. If your spouse does not
make a election within 1 year after your death, he/she will become the
contract owner and annuitant under the contract.
2. If the beneficiary is a natural person but not your spouse, the beneficiary
may elect only death benefit option B or C within 1 year after your death.
If the beneficiary does not make a election within 1 year after your death,
we will pay the death benefit to the beneficiary in a single sum at that
time.
3. If the beneficiary is not a natural person, it may elect only death benefit
option B or D within 1 year after your death. If the beneficiary does not
make a election within 1 year after your death, we will pay the death
benefit in a single lump sum at that time.
4. If no beneficiary survives you, we will pay the death benefit in a single
sum to your estate within 5 years after the date of your death. If your
estate does not make an election within 1 year after your death, we will
pay the death benefit in a single sum at that time.
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Death Of Annuitant
If you and the annuitant are not the same person and:
o the annuitant dies before you, and
o the annuitant dies prior to the annuity income date, and
o there is no contingent annuitant younger than age 85, or
o if the contract owner is not a natural person,
one of the following scenarios applies:
1. The beneficiary, if a natural person, may only elect death benefit option E
or F within 1 year after the annuitant's death. If the beneficiary does not
make a election within 1 year after the annuitant's death we will pay the
death benefit to the beneficiary in a single sum at that time.
2. If the beneficiary is not a natural person, it may only elect death benefit
option D or E within 1 year after the annuitant's death. If the beneficiary
does not make a election within 1 year after the annuitant's death, we will
pay the death benefit in a single sum at that time.
3. If no beneficiary survives the annuitant, we will consider you the
beneficiary and preceding scenario 1 or 2 will apply.
Death Benefit Options
For purposes of these death benefit options, we determine life expectancy based
on the tables in the Regulations, under Section 72 of the Code. The following
death benefit options are available:
Option A - Become the contract owner;
Option B - Receive the death benefit as a single sum within 1 year after the
contract owner's death;
Option C - Receive the death benefit under any annuity option offered in the
contract, provided the entire death benefit is distributed:
1. within 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 we are asked to pay the death benefit under Option C, scenario 2 or 3, we
will pay the first installment within 1 year after the contract owner's death.
Option D - Receive the death benefit under any annuity option offered in the
contract, provided the entire death benefit is distributed within 5 years of the
date of death;
Option E - Receive the death benefit as a single sum within 1 year after the
annuitant's death;
Option F - 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.
We will pay the first installment within 1 year after the annuitant's death.
Option G - Become the contract owner and annuitant of the contract, just as if
the beneficiary had always been the contract owner and annuitant.
Death Of Annuitant On Or After
The Annuity Income Date
If the annuitant dies on or after the annuity income date, any death benefit
depends on the annuity option in effect on the annuitant's date of death. We
will distribute any remaining payments at least as rapidly as under the method
of distribution being used as of the date of death.
If a beneficiary dies while receiving the benefits, we will pay any balance to
the beneficiary's estate in a lump sum. If no beneficiary survives the
annuitant, we will pay any benefits to the estate of the last annuitant to die
in a single sum.
24
<PAGE>
Taxes
NOTE: We have prepared the following information on taxes as a general
discussion of the subject. It is not intended as tax advice to any individual.
You should consult your own tax adviser about your own circumstances. We have
included in the Statement of Additional Information an additional discussion
regarding taxes.
Annuity Contracts In General
Annuity contracts are a means of setting aside money for future needs - usually
retirement. Congress recognized how important saving for retirement was and
provided special rules in the Internal Revenue Code (Code) for annuities.
Simply stated, these rules provide that you will not be taxed on the earnings on
the money held in your annuity contract until you take the money out. This is
referred to as tax deferral. There are different rules as to how you are taxed
depending on how you take the money out and the type of contract - qualified or
non-qualified (see following sections).
You, as the owner of a non-qualified annuity, will generally not be taxed on
increases in the value of your contract until a distribution occurs -either as a
withdrawal or as annuity payments. When you make a withdrawal, you are taxed on
the amount of the withdrawal that is earnings. For annuity payments, different
rules apply. A portion of each annuity payment is treated as a partial return of
your purchase payments and is not taxed. The remaining portion of the annuity
payment is treated as ordinary income. How the annuity payment is divided
between taxable and non-taxable portions depends upon the period over which the
annuity payments are expected to be made. Annuity payments received after you
have recovered all of your purchase payments are fully includible in income.
When a non-qualified contract is owned by a non-natural person (e.g.,
corporation or certain other entities other than a trust holding the contract as
an agent for a natural person), the contract will generally not be treated as an
annuity for tax purposes.
Qualified And Non-Qualified
Contracts
If you purchase the contract as an individual and not under any pension plan,
specially sponsored program or an individual retirement annuity, your contract
is referred to as a non-qualified contract.
If you purchase the contract under a pension plan, specially sponsored program,
or an individual retirement annuity, your contract is referred to as a qualified
contract. Examples of qualified plans are: deductible and non-deductible
Individual Retirement Annuities (IRAs), and pension and profit-sharing plans,
which include 401(k) plans and H.R. 10 plans, TSAs, etc.
This contract is not designed to be used in ERISA-covered plans. C.M. Life will
not sell this contract to qualified pension and profit sharing plans, SEPS,
Section 457 deferred compensation plans or ERISA-covered TSA programs. The term
"Qualified Plans" as used in this prospectus refers only to plans that have
certain tax advantages under the Internal Revenue Code and does not denote
ERISA-covered plans.
Withdrawals - Non-Qualified
Contracts
If you take a withdrawal from your contract, the Code treats that withdrawal as
first coming from earnings and then from your purchase payments. The withdrawn
earnings are includible in income.
The Code also provides that any amount received under an annuity contract which
is included in income may be subject to a penalty. The amount of the penalty is
equal to 10% of the amount that is includible in income. Some withdrawals will
be exempt from the penalty. They include any amounts:
(1) paid on or after you reach age 59 1/2;
(2) paid to your beneficiary after you die;
25
<PAGE>
(3) paid if you become totally disabled (as that term is defined in the Code);
(4) paid in a series of substantially equal payments made annually (or more
frequently) for life or a period not exceeding life expectancy;
(5) paid under an immediate annuity; or
(6) which come from purchase payments made before August 14, 1982.
Withdrawals - Qualified
Contracts
If you have no cost basis for your interest in a qualified contract, the full
amount of any distribution is taxable to you as ordinary income. If you do have
a cost basis for your interest, a portion of the distribution is taxable,
generally based on the ratio of your cost basis to your total contract value.
Special tax rules may be available for certain distributions from a qualified
contract.
Section 72(t) of the Code imposes a 10% penalty tax on the taxable portion of
any distribution from qualified retirement plans, including contracts issued and
qualified under Code Sections 401 (Pension and Profit-Sharing Plans), 408
(Individual Retirement Annuities - IRAs), and 408A (Roth IRAs). Exceptions from
the penalty tax are as follows:
o distributions made on or after you reach age 59 1/2 ;
o distributions made after your death or disability (as defined in Code
Section 72(m)(7);
o after separation from service, distributions that are part of substantially
equal periodic payments made not less frequently than annually for your
life (or life expectancy) or the joint lives (or joint life expectancies)
of you and your designated beneficiary (in applying this exception to
distributions from IRAs, a separation from service is not required);
o distributions made after separation of service if you have reached age 55
(not applicable to distributions from IRAs);
o distributions made to you up to the amount allowable as a deduction to you
under Code Section 213 for amounts you paid during the taxable year for
medical care;
o distributions made to an alternate payee pursuant to a qualified domestic
relations order (not applicable to distributions from IRAs);
o distributions from an IRA for the purchase of medical insurance (as
described in Code Section 213(d)(1)(D)) for you and your spouse and
dependents if you received unemployment compensation for at least 12 weeks
and have not been re-employed for at least 60 days);
o distributions from an IRA to the extent they do not exceed your qualified
higher education expenses (as defined in Code Section 72(t)(7) for the
taxable year; and
o distributions from an IRA which are qualified first-time home buyer
distributions (as defined in Code Section 72(t)(8)).
Generally, distributions from a qualified plan must begin no later than April
1st of the calendar year following the later of (a) the year in which you attain
age 70 1/2 or (b) the calendar year in which you retire. The date set forth in
(b) does not apply to an IRA. Required distributions do not apply to a Roth IRA
during your lifetime. Required distributions must be over a period not exceeding
your life expectancy or the joint lives or joint life expectancies of you and
your designated beneficiary. If required minimum distributions are not made, a
50% penalty tax is imposed on the amount that should have been distributed.
Withdrawals - Tax-Sheltered
Annuities
The Code limits the withdrawal of purchase payments made by owners through
salary reductions from certain Tax-Sheltered Annuities. Withdrawals of salary
reduction amounts and their earnings can only be made when an owner:
(1) reaches age 59 1/2 ;
(2) leaves his/her job;
(3) dies;
26
<PAGE>
(4) becomes disabled, as that term is defined in the Code; or
(5) in the case of hardship.
In the case of hardship, the owner can only withdraw the purchase payments and
not any earnings.
Any contract value as of December 31, 1988 is not subject to these restrictions.
Additionally, return of "excess contributions" or amounts paid to a spouse as a
result of a qualified domestic relations order are not subject to these
restrictions.
Withdrawals - Texas Optional
Retirement Program
No withdrawals may be made in connection with a contract issued pursuant to the
Texas Optional Retirement Program for faculty members of Texas public
institutions of high learning before you:
o terminated employment in all such institutions and repay employer
contributions if termination occurs during the first twelve months of
employment;
o retire;
o die; or
o attain age 70 1/2
27
<PAGE>
Other Information
Terminal Illness Benefit
Before your 75th birthday, you may elect a Terminal Illness Benefit. This
benefit is not available in all states. We will require proof that you are
terminally ill and not expected to live more than 12 months. This proof will
include certification by a licensed medical practitioner performing within the
scope of his/her license. You, the annuitant or contingent annuitant may not be
the licensed medical practitioner, nor can the medical practitioner be the
parent, spouse or child of the contract owner, annuitant or contingent
annuitant. We may also impose additional requirements.
We will determine the amount of payment when we receive your written request.
The Terminal Illness Benefit is the greater of:
(1) your purchase payments, less any withdrawals and any applicable charges; or
(2) your contract value.
We will not apply a surrender charge, interest rate factor adjustment or
contract maintenance fee with respect to any Terminal Illness Benefit. Payment
of the Terminal Illness Benefit will terminate the contract.
Performance
We may advertise certain performance-related information. This information
reflects historical performance and is not intended to indicate or predict the
future performance.
Standardized Total Returns
We will show standardized average annual total returns for sub-accounts that
have been in existence for more than one year. These returns assume you made a
single $1,000 payment at the beginning of the period and withdrew the entire
amount at the end of the period. The return reflects a deduction for the
surrender charge, the contact maintenance fee and all other separate account and
contract level charges, except premium taxes, if any.
If a sub-account has been in existence for less than one year, we will show the
aggregate total return. This assumes you made a single $1,000 payment at the
beginning of the period and withdrew the entire amount at the end of the period.
The return reflects the change in unit value and a deduction of the surrender
charge.
Nonstandard Total Returns
We will also show total returns based on historical performance of the
sub-accounts and underlying funds. We may assume the contracts were in existence
prior to their inception date, May 13, 1992, which they were not. Total return
percentages include all fund level and separate account level charges. They do
not include a surrender charge, contract maintenance fee, or premium taxes, if
any. If these charges were included, returns would be less than those shown.
Total Returns compare the value of an accumulation unit at the beginning of a
period with the value of an accumulation unit at the end of the period.
Average Annual Total Returns measure this performance over a period of time
greater than one year. Average annual total returns compare values over a given
period of time and express the percentage as an average annual rate.
Yield and Effective Yield
We may also show yield and effective yield for the Oppenheimer Money Fund/VA
over a seven-day period, which we then "annualize". This means that when we
calculate yield, we assume that the amount of money the investment earns for the
week is earned each week over a 52- week period. We show this as a percentage of
the investment. We calculate the "effective yield" similarly, but when we
annualize the amount, we assume the income earned is re-invested. Therefore, the
effective yield is slightly higher than the yield because of the compounding
effect.
28
<PAGE>
Related Performance
Some of the funds available to you may be similar to mutual funds offered in the
retail marketplace. These funds generally have the same investment objectives,
policies and portfolio managers as the retail mutual funds and usually were
formed after the retail mutual funds. While these funds generally have identical
investment objectives, policies and portfolio managers, they are separate and
distinct from retail mutual funds. In fact, performance of these funds may be
dramatically different from the performance of the retail mutual funds. This is
due to differences in the funds' sizes, dates shares of stocks are purchased and
sold, cash flows and expenses. You should remember that retail mutual fund
performance is not the performance of the funds available in this contract and
is not an indication of future performance of these funds.
Year 2000
Like other businesses and governments around the world, we could be adversely
affected if the computer systems used by us and those with which we do business
do not properly recognize the year 2000. This is commonly known as the "Year
2000 issue".
In 1996, our 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 certain subsidiaries, including us. MassMutual is addressing the Year
2000 issue internally with modifications to existing programs and conversions to
new programs. MassMutual is also seeking assurances from vendors, customers,
service providers, governments and others with which we and MassMutual conduct
business, to determine their year 2000 readiness.
MassMutual has allocated a portion of the costs related to the year 2000 issue
to us. The costs are currently being expensed, and when measured against net
gain from operations before dividends, are not material to us.
Distributors
MML Distributors, LLC (MML Distributors) serves as principal underwriter for the
contracts. MML Investors Services, Inc. (MMLISI) serves as co-underwriter for
the contracts. Their purpose as underwriters is to distribute the contracts. MML
Distributors and MMLISI are wholly-owned subsidiaries of MassMutual. Both are
located at 1414 Main Street, Springfield, Massachusetts 01144-1013.
We will pay commissions to broker-dealers who sell the contracts. Commissions
are a combination percentage of purchase payments and contract value. Currently,
we pay an amount up to 4.5% of purchase payments. In addition, we pay a maximum
commission of .50% of contract values each contract year.
From time-to-time, MML Distributors may enter into special arrangements with
certain broker-dealers. These special arrangements may provide for the payment
of higher compensation to such broker-dealers for selling the contracts.
Electronic Transmission Of
Application Information
Upon agreement with a limited number of broker-dealers, we will accept
electronic data transmissions of application information. Our Annuity Service
Center will accept this information at the time that the initial purchase
payment is transmitted by wire. Please contact your representative for more
information.
Assignment
You can assign the contract at any time during your lifetime. We will not be
bound by the assignment until we receive written notice of the assignment. We
will not be liable for any payment or other action we take in accordance with
the contract before we receive notice of the assignment. You may be subject to
tax consequences if you assign your contract.
If you assign your contract, your rights may only be exercised with the consent
of the assignee of record. We require consent of any irrevocable beneficiary
before we assign proceeds.
29
<PAGE>
Misstatement Of Age Or Sex
If the annuitant's age or sex has been stated incorrectly, the annuity payment
we will make is what is appropriate for the correct age and sex. After we
correct the mistake, the annuitant will receive the sum of any underpayments
within 30 calendar days. If we have made any overpayments, we will subtract the
amount of the overpayments from the annuity payments(s) we make following the
correction.
Voting Rights
We are the legal owner of the fund shares. However, when a fund solicits proxies
in conjunction with a vote of shareholders, it is required to obtain from you
and other owners, instructions as to how to vote those shares. When we receive
those instructions, we will vote all of the shares, for which we have not
received voting instructions, in proportion to those instructions. This will
also include any shares that we own on our own behalf. If we determine that we
are no longer required to comply with the above, we will vote the shares in our
own right.
During the accumulation phase of your contract and while the annuitant is
living, we determine the number of shares you may vote by dividing your contract
value in each fund, if any, by $100. Fractional shares are counted. During the
income phase or after the annuitant dies, we determine the number of shares you
may vote based on our liability for future variable monthly annuity payments.
Reservation Of Rights
We reserve the right to:
o substitute another fund for one of the funds you have elected, and
o add or eliminate sub-accounts.
If we do so, we will receive prior approval from the Securities and Exchange
Commission, if necessary. We will give you notice of our intent to exercise one
of these rights.
Suspension Of Payments Or
Transfers
We may be required to suspend or postpone payments for withdrawals or transfers
from the funds for any period when:
o the New York Stock Exchange is closed (other than customary weekend and
holiday closings); or trading on the New York Stock Exchange is restricted;
o an emergency exists as a result of which disposal of shares of the funds is
not reasonably practicable or we cannot reasonably value the shares of the
funds;
o during any other period when the Securities and Exchange Commission, by
order, so permits for your protection.
We reserve the right to defer payment for a withdrawal from the general account
for the period permitted by law but not for more than six months.
Legal Proceedings
We are currently not involved in any legal proceedings that might adversely
impact the contracts.
Financial Statements
We have included our financial statements and those of the separate account in
the Statement of Additional Information.
30
<PAGE>
Additional Information
For further information about the contract, you may obtain a Statement of
Additional Information. You can call the telephone number indicated on the cover
page or you can write to us. For your convenience we have included a form for
that purpose.
The Table of Contents of this statement is as follows:
1. C. M. Life Insurance Company
2. The Separate Account
3. Accumulation Unit Values
4. Annuity Units and Unit Values
5. Income Phase Transfer Formulas
6. Surrender Charge Calculation
7. Interest Rate Factor Adjustment Calculation
8. Records, Reports and Services
9. Performance Measures
10. Distribution
11. Purchase of Securities Being Offered
12. Federal Tax Matters
13. Experts
14. Financial Statements
31
<PAGE>
To: C.M. Life Insurance Company
Annuity Products, H565
P.O. Box 9067
Springfield, Massachusetts 01102-9067
Please send me a Statement of Additional Information for C.M. Life's Panorama
Plus.
Name __________________________________________
Address __________________________________________
__________________________________________
City ________________ State ______ Zip ________
Telephone __________________________________________
32
<PAGE>
Appendix A
Panorama Plus Separate Account
Condensed Financial Information
The following schedules include accumulation unit values for the periods
indicated. We have extracted this data from the separate account's audited
financial statements. You should read this information in conjunction with the
separate account's audited financial statements and related notes that are
included in the Statement of Additional Information.
Accumulation Unit Values
<TABLE>
<CAPTION>
Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
Sub-Account 1992(a) 1992 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Money Market $1.000000 $1.012022 $1.027456 $1.054570 $1.100599 $1.147312 $1.194713 $1.243348
Government Securities 1.000000 1.061901 1.158653 1.095471 1.281804 1.293638 1.391852 1.488104
Income 1.000000 1.060916 1.174260 1.114759 1.306525 1.318102 1.423761 1.503383
Total Return 1.000000 1.058946 1.217379 1.186187 1.460595 1.586635 1.863659 2.043296
Growth 1.000000 1.064372 1.276534 1.258146 1.711382 2.014864 2.517282 2.698453
International Equity 1.000000 0.950887 1.146031 1.145014 1.251930 1.400836 1.497222 1.767452
</TABLE>
Accumulation Units Outstanding
<TABLE>
<CAPTION>
Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1992 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C>
Money Market 681,553 3,136,932 13,603,045 16,949,501 13,507,122 12,091,336 14,186,953
Government Securities 8,444,505 11,994,574 13,726,057 12,647,811 12,647,811 11,672,397 11,323,817
Income 2,564,029 12,281,025 16,488,930 20,617,764 22,192,539 21,424,948 22,174,564
Total Return 12,316,597 71,182,538 147,324,713 194,679,349 224,734,224 224,379,585 209,536,235
Growth 2,798,378 19,370,204 49,636,052 83,371,008 111,846,534 128,553,850 128,161,817
International Equity 742,623 5,578,969 22,419,639 31,322,974 40,507,658 44,128,995 41,761,023
</TABLE>
(a) Commencement of operations for the Sub-Accounts was May 13, 1992.
Prior to December 1, 1996, the Combined Financial Information reflected the
Money Market and Income Sub-Accounts investment in the Money Market and Income
Portfolios of Panorama Fund, respectively. On December 1, 1996, we substituted
shares of the Oppenheimer Money Fund/VA and the Oppenheimer Bond Fund/VA for
shares of Panorama Fund's Money Market and Income Portfolios, respectively.
Therefore, effective December 1, 1996, the Condensed Financial Information
reflects the Money Market and Income Sub-Accounts' investment in the Oppenheimer
Money Fund/VA and the Oppenheimer Bond Fund/VA, respectively.
A-1
<PAGE>
PART B
INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
<PAGE>
PANORAMA PLUS VARIABLE ANNUITY
C.M. LIFE INSURANCE COMPANY
(Depositor)
PANORAMA PLUS SEPARATE ACCOUNT
(Registrant)
STATEMENT OF ADDITIONAL INFORMATION
May 1, 1999
This Statement of Additional Information is not a prospectus and should be read
only in conjunction with the prospectuses for the Panorama Plus variable annuity
contract and for the underlying funds. You may obtain a copy of the prospectus
dated May 1, 1999 by calling 1-800-366-8226, or by writing to the Annuity
Service Center, H562, P.O. Box 9067, Springfield, MA 01102-9067.
TABLE OF CONTENTS
PAGE
C.M. Life Insurance Company ............................................... 2
The Separate Account ...................................................... 2
Accumulation Unit Values .................................................. 2
Annuity Units and Unit Values ............................................. 4
Income Phase Transfer Formulas ............................................ 4
Surrender Charge Calculation .............................................. 5
Interest Rate Factor Adjustment Calculation ............................... 6
Records, Reports and Services ............................................. 11
Performance
Measures .................................................................. 12
Distribution .............................................................. 16
Purchase of Securities Being Offered ...................................... 16
Federal Tax Matters ....................................................... 16
Experts ................................................................... 23
Financial Statements.................................................final pages
1
<PAGE>
C.M. LIFE INSURANCE COMPANY
C.M. Life Insurance Company ("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 sales of life insurance and annuities, and is
licensed in all states except New York. C.M. Life is a wholly-owned subsidiary
of Massachusetts Mutual Life Insurance Company ("MassMutual").
MassMutual is a mutual life insurance company specially chartered by the
Commonwealth of Massachusetts on May 14, 1851. It is currently licensed to
transact life (including variable life), accident, and health insurance business
in all states, the District of Columbia, Puerto Rico and certain provinces of
Canada. MassMutual had consolidated statutory assets in excess of $67 billion
and estimated total assets under management of $176.8 billion as of December 31,
1998.
THE SEPARATE ACCOUNT
The Panorama Plus Separate Account of C.M. Life Insurance Company (the "Separate
Account") was established as a separate account under the laws of the State of
Connecticut, on September 25, 1991.
Under Connecticut law, the assets of the Separate Account are owned by C.M.
Life, but they are held separately from the other assets of C.M. Life, and are
not chargeable with liabilities incurred in any other business operation of C.M.
Life (except to the extent that assets in the Separate Account exceed the
reserves and other liabilities of the Separate Account). Income, gains, and
losses incurred on the assets in the sub-accounts of the Separate Account,
whether or not realized, are credited to or charged against that sub-account,
without regard to other income, gains or losses of any other investment account
or sub-account of C.M. Life. Therefore, the investment performance of any
sub-account is entirely independent of the investment performance of C.M. Life's
General Account assets or any other separate account maintained by C.M. Life.
The Separate Account is registered with the Securities and Exchange Commission
(the "SEC") under the Investment Company Act of 1940, as amended, (the "1940
Act") as a unit investment trust. It meets the definition of a "separate
account" under the federal securities laws. However, the SEC does not supervise
the management or the investment practices or policies of the Separate Account
or of C.M. Life.
ACCUMULATION UNIT VALUES
ACCUMULATION UNITS. Accumulation units are used to account for all
amounts allocated to or withdrawn from the
Separate Account. C.M. Life will determine the
number of accumulation units of a sub-account
purchased or canceled by dividing the net purchase
payment allocated to (or the amount withdrawn
from) the sub-account by the dollar value of one
accumulation unit on the date of the transaction.
The Separate Account balance will consist of the
sum of the value of all accumulation units in all
sub-accounts credited to the contract on the
applicable valuation date.
ACCUMULATION UNIT VALUE. The value of an accumulation unit in a sub-account
on any valuation date is the product of (a) the
value on the preceding valuation date and (b) the
net investment factor for the sub-account for the
valuation period just ended.
2
<PAGE>
A VALUATION DATE is every day on which C.M. Life 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.
A VALUATION PERIOD is 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.
NET INVESTMENT FACTOR C.M. Life 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 fund for the valuation period just
ended).
(DIV) dividends, (i.e., any dividend per share declared on behalf of the fund
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 fund 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 fund 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 (which will not exceed 1.50% on an annual basis)).
EXAMPLE:
The following example illustrates the calculation of accumulation unit value:
<TABLE>
<S> <C>
Net Asset Value Per Share at End of Valuation Period (ENAV) = $ 34.00
Dividends Per Share Declared (Ex-dividend Date within Valuation Period) (DIV) = $ 2.00
Reserve for Taxes Per Share on Capital Gains/Losses (within valuation Period)(TAX) = $ [5.00]
Net Asset Value Per Share at Beginning of Valuation Period (BNAV) = $ 30.00
Applicable Mortality and Expense and Administrative Charges for Valuation Period
(CHGS) = (.0107 + .0007)/365 = .0000312
Net Investment Factor = (34 + 2 - 5)/30 - .0000312 = 1.0333021
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
Accumulation Unit Value at Beginning of Period = $ 10.00
Accumulation Unit Value at End of Period = 10.00 x 1.0333021 = $ 10.33
</TABLE>
ANNUITY UNITS AND UNIT VALUES
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 value to be applied
to the sub-account and the annuity purchase rate specified in the contract
by the value of one annuity unit in that sub-account on the annuity income
date.
2. The amount of each annuity income payment equals the product of the
annuitant's number of annuity units and the annuity unit values on the
payment date. The amount of each payment may vary from prior annuity income
payments.
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%. This compensates for the interest assumption built into the annuity
purchase rates.
INCOME PHASE TRANSFER FORMULAS
During the income phase, the contract owner may transfer Separate Account
balance from one sub-account to another, subject to certain limitations. No
transfers are permitted to or from the General Account during the income phase.
(See "Transfers," in the Prospectus.)
1. Transfers during the income phase are implemented according to the
following formula:
2. Determine the number of units to be transferred from the sub-account
as follows: = AT/AUV1
3. Determine the number of annuity units remaining in such sub-account
(after the transfer) = UNIT1- AT/AUV
4. Determine the number of annuity units in the transferee sub-account
(after the transfer): = UNIT2 + AT/AUV2
5. Subsequent annuity payments will reflect the changes in annuity units
in each sub-account as of the next annuity income payment's due date.
4
<PAGE>
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.
EXAMPLE: The following example illustrates the application of the
income phase transfer formulas:
ASSUME
------
Annuity unit value of sub-account #1 = $10.00
Annuity unit value of sub-account #2 = $ 8.50
Number of units in sub-account #1 = 50
Number of units in sub-account #2 = 20
To transfer $30.00 from sub-account #1 to sub-account #2:
Number of units to transfer from sub-account #1 = 30/10 = 3
Number of units left after transfer = 50 - 3 = 47
Number of units to transfer to sub-account #2 = 30/8.50 = 3.53
New number of units in sub-account #2 = 20 + 3.53 = 23.53
New monthly annuity income payment from
sub-account #1= 10 x 47 = $470.00
New monthly annuity income payment from
sub-account #2= 23.53 x 8.50 = $200.01
SURRENDER CHARGE CALCULATION
A surrender charge is deducted from the contract balance upon a partial or full
withdrawal of the contract value, unless certain conditions apply.
The partial surrender charge formula is calculated as follows:
(PW - FREE) x 5%(95%) = PSC, but not less than zero.
The full surrender charge formula is calculated as follows:
(FW - FREE) x 5%= FSC.
5
<PAGE>
Where:
(PW) is the partial withdrawal amount.
(FW) is the full withdrawal amount.
(FREE) is the free withdrawal amount.
(PSC) is the partial surrender charge amount.
(FSC) is the full surrender charge amount.
Example:
Assume a Separate Account balance of $50,000 at the beginning of the second
contract year.
1) If there is a full withdrawal at the beginning of the second contract year:
Surrender Charge = ($50,000 - $5,000) x .05 = $2,250.00.
Thus, the withdrawal proceeds would
be = $50,000 - $30 - $2,250.00 = $47,720.00
Note: The contract maintenance fee ($30) applies to full withdrawals.
2) If there is a partial withdrawal of $10,000 at the beginning of the second
contract year:
Surrender Charge = ($10,000 - $5000) x .05/.95 = $263.16.
Thus, the Separate Account balance would be reduced
by $10,000 + $263.16 = $10,263.16.
INTEREST RATE FACTOR ADJUSTMENT CALCULATION
The amount of General Account balance partially or fully withdrawn during the
accumulation phase, 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 withdraw than when you made the applicable purchase payments, a
negative interest rate factor adjustment will generally be applied to the amount
withdrawn, 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 withdraw
than when you made the applicable purchase payments, a positive interest rate
factor adjustment will generally be applied to the amount withdrawn, 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 withdrawal 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 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 withdrawal.
6
<PAGE>
The partial withdrawal interest rate factor adjustment formula is:
(1 - 1/IRF) x (GAPW - GAF + GAPSC) = IRFA.
In the event of a partial withdrawal, there is no interest rate factor
adjustment if the General Account free withdrawal amount exceeds the General
Account portion of such partial withdrawal.
The full withdrawal interest rate factor adjustment formula is:
(IRF - 1) x (GAFW - GAF) = IRFA.
Where:
(GAPW) is the General Account partial withdrawal amount.
(GAFW) is the General Account full withdrawal amount.
(GAF) is the General Account free withdrawal amount.
(GAPSC) is the General Account portion of the partial surrender charge
amount determined as follows:
GAPSC = (GAPW - 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) to the power of (N/12)
----------------------------------- = IRF
(1.003 + Tb) to the power of (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 withdrawals 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.
7
<PAGE>
Each allocation made prior to a partial withdrawal and/or transfer from the
General Account (other than the current withdrawal) shall be adjusted by
multiplying such allocation by the following fraction:
1 - PW/GAB
Where:
(PW) is the amount of the partial withdrawal 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
withdrawal and/or transfer from the General Account,
A separate adjustment shall be calculated for each prior partial
withdrawal 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 withdrawal,
(N) is the number of whole months remaining in the current five-year
period as of the date of the partial or full withdrawal (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 withdrawal 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 withdrawal proceeds (for full General Account balance
withdrawals) or the remaining General Account balance (for partial General
Account balance withdrawals). 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 withdrawal at that time.
Also, assume the U.S. Treasury Index Rate at that time is 7%.
8
<PAGE>
THEN: IRF = (1.07) to the power of (5)
--------------------------- = .9861
(1.073) to the power of (5)
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 withdrawal at that time.
Also, assume the U.S. Treasury Index Rate remains at 7% for all
maturities:
THEN: IRF = 1.07
----- = .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 withdrawal 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 withdrawal proceeds paid =
$50,000 + $2,250 - $30 = $52,220.
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 - .95) x ($50,000 - $5,000)
= $2,250.
Thus, the actual amount of withdrawal proceeds paid = $50,000 -
$2,250 - $30 = $47,720.
Note: The contract maintenance fee ($30) applies to full
withdrawals.
4) Assume a partial withdrawal of $10,000 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.
9
<PAGE>
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 reduced by $10,000 -
$236.16 = $10,263.16.
Examples:
The following examples illustrate the impact of the interest rate factor
adjustment together with the surrender charge on withdrawal 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 withdrawal 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 withdrawal 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.
10
<PAGE>
Thus, the actual amount of withdrawal proceeds paid = $50,000 -
$2,250 - $4,500 - $30 = $43,220.00.
Note: The contract maintenance fee ($30) applies to full
withdrawal.
(2) Assume a partial withdrawal of $10,000 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 = ($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.
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 = ($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.
RECORDS, REPORTS AND SERVICES
All records and accounts relating to the Separate Account will be maintained by
C.M. Life. As presently required by the Investment Company Act of 1940 and
regulations promulgated thereunder, C.M. Life will mail to all contract owners
at their last known address of record, at least annually, reports containing
such information as may be required under that Act or by any other applicable
law or regulation. Contract owners will also receive confirmation of each
financial transaction and any other reports required by law or regulation.
The assets of each of the sub-accounts of the Separate Account are held in the
custody of C.M. Life. The assets of each of the sub-accounts of the Separate
Account are segregated and held separate and apart from the assets of the other
sub-accounts and from C.M. Life's General Account assets. C.M. Life maintains
records of all purchases and redemptions of shares of the of the Funds held by
each of the sub-accounts.
11
<PAGE>
PERFORMANCE MEASURES
C.M. Life may advertise certain performance-related information. This
information reflects historical performance and is not intended to indicate or
predict future performance.
Standardized Average Annual Total Return
C.M. Life will show standardized average annual total returns for each
sub-account that has been in existence for more than one year. These returns
assume you made a single $1,000 payment at the beginning of the period and
withdrew the entire amount at the end of the period. The return reflects a
deduction for the surrender charge, the annual contract maintenance fee and all
other fund, separate account and contract level charges, except premium taxes,
if any.
If a sub-account has been in existence for less than one year, C.M. Life will
show the aggregate total return. This assumes you made a single $1,000 payment
at the beginning of the period and withdrew the entire amount at the end of the
period. The return reflects the change in unit value and a deduction of the
surrender charge.
The following tables show the standardized average annual total return for the
sub-accounts for the period ended December 31, 1998.
<TABLE>
<CAPTION>
1 Year 5 Years Since Inception
------ ------- ---------------
<S> <C> <C> <C>
Money Market Sub-Account(1) -0.66% 3.88% 3.47%
Government Securities Sub-Account 2.05% 5.08% 6.12%
Income Sub-Account(2) 0.74% 5.70% 6.72%
Total Return Sub-Account 3.33% 9.64% 10.17%
Growth Sub-Account 1.31% 15.26% 15.31%
International Equity Sub-Account 12.52% 8.84% 8.76%
</TABLE>
The inception date of the contract was May 13, 1992.
(1) The Money Market Sub-Account invests in the Oppenheimer Money Fund/VA.
(2) The Income Sub-Account invests in the Oppenheimer Bond Fund/VA.
Non-Standard Total Returns
C.M. Life will also show total returns based on historical performance of the
sub-accounts and underlying funds. C.M. Life may assume the contracts were in
existence prior to their inception date (May 13, 1992), which they were not.
Total return percentages include all fund level and separate account level
charges. They do not include a surrender charge, contract maintenance fee, or
premium taxes, if any. If these charges were included, returns would be less
than those shown.
Total Returns compare the value of an accumulation unit at the beginning of a
period with the value of an accumulation unit at the end of the period.
Average Annual Total Returns measure this performance over a period of time
greater than one year. Average annual total returns compare values over a given
period of time and express the percentage as an average annual rate.
The performance figures discussed below, are calculated on the basis of the
historical performance of the funds, and may assume the contracts were in
existence prior to their inception date (May 13, 1992) which
12
<PAGE>
they were not. Beginning on the contract inception date (May 13, 1992), actual
accumulation unit values are used for the calculations.
Average Annual Total Returns
For Periods Ending 12/31/98
<TABLE>
<CAPTION>
Since
Portfolio (Inception) 1 Year 3 Years 5 Years 10 Years Inception
- --------------------- ------ ------- ------- -------- ---------
<S> <C> <C> <C> <C> <C>
Oppenheimer Money (1/21/82)* 4.07% 4.05% 3.93% 4.42% 4.61%
Panorama Government Securities
(5/13/92) 6.92% 5.10% 5.13% NA 6.17%
Oppenheimer Bond (4/3/85) 5.59% 5.72% 5.79% 8.04% 7.85%
Panorama Total Return (9/30/82) 9.64% 11.84% 10.91% 12.44% 12.45%
Panorama Growth (1/21/82) 7.20% 16.39% 16.15% 16.68% 16.39%
International Equity (5/13/92) 18.05% 12.18% 9.05% NA 8.96%
</TABLE>
*Although the Oppenheimer Money Fund/VA commenced operations on 4/3/85, the
information necessary to calculate returns is available only for 1987 and later
years.
Performance information for the sub-accounts may be: (a) compared to other
variable annuity separate accounts or other investment products surveyed by
Lipper Analytical Services, a nationally recognized independent reporting
service or similar service that rank mutual funds and other investment companies
by overall performance, investment objectives and assets; (b) compared to
indices; (c) tracked by other ratings services, companies, publications or
persons who rank separate accounts or other investment products on overall
performance or other criteria; and (d) included in data bases that can be used
to produce reports and illustrations by organizations such as CDA Wiesenberger.
Performance figures will be calculated in accordance with standardized methods
established by each reporting service.
C.M. Life may also show yield and effective yield for the Money Market
sub-account over a seven-day period, which C.M. Life then "annualizes". This
means that when C.M. Life calculates yield, it assumes that the amount of money
the investment earns for the week is earned each week over a 52-week period.
C.M. Life shows this as a percentage of the investment. C.M. Life calculates the
"effective yield" similarly but when it annualizes the amount, C.M. Life assumes
the income earned is re-invested. Therefore, the effective yield is slightly
higher than the yield because of the compounding effect.
These figures reflect a deduction for all fund, separate account and contract
level charges assuming the contract remains inforce. The figures do not reflect
the surrender charge or premium tax deductions (if any), which if included would
reduce the percentages reported.
The 7-day yield and effective yield for the Money Market sub-account for the
period ended December 31, 1998 are as follows
<TABLE>
<CAPTION>
After Deduction of Contract Maintenance
Before Deduction of Contract Maintenance Fee Fee (Contract Maintenance Fee is 0.086%)
- -------------------------------------------- ----------------------------------------
<S> <C> <C> <C>
7-Day Yield: 1.61% 7-Day Yield: 1.53%
7-Day Effective Yield: 1.62% 7-Day Effective Yield: 1.54%
</TABLE>
The performance figures discussed above reflect historical results of the Funds
and are not intended to indicate or to predict future performance.
13
<PAGE>
Panorama Plus Hypothetical Projections
PANORAMA GROWTH
$10,000 Purchase payment made December 31, 1988
<TABLE>
<CAPTION>
Non-Standard
-------------
Accumulated Calendar Year
Date Payment Value Total Return
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
12/31/88 $10,000 $10,000
12/31/89 $13,398 33.98%
12/31/90 $12,169 -9.17%
12/31/91 $16,516 35.73%
12/31/92 $18,300 10.80%
12/31/93 $21,917 19.77%
12/31/94 $21,572 -1.58%
12/31/95 $29,312 35.89%
12/31/96 $34,480 17.63%
12/31/97 $43,048 24.85%
12/31/98 $46,117 7.13%
</TABLE>
PANORAMA TOTAL RETURN
$10,000 Purchase payment made December 31, 1988
<TABLE>
<CAPTION>
Non-Standard
-------------
Accumulated Calendar Year
Date Payment Value Total Return
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
12/31/88 $10,000 $10,000
12/31/89 $12,130 21.30%
12/31/90 $12,022 -0.89%
12/31/91 $15,277 27.08%
12/31/92 $16,587 8.58%
12/31/93 $19,039 14.78%
12/31/94 $18,521 -2.72%
12/31/95 $22,776 22.97%
12/31/96 $24,711 8.50%
12/31/97 $28,996 17.34%
12/31/98 $31,761 9.54%
</TABLE>
OPPENHEIMER BOND
$10,000 Purchase payment made December 31, 1988
<TABLE>
<CAPTION>
Non-Standard
-------------
Accumulated Calendar Year
Date Payment Value Total Return
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
12/31/88 $10,000 $10,000
12/31/89 $11,174 11.74%
12/31/90 $11,892 6.43%
12/31/91 $13,800 16.04%
12/31/92 $14,500 5.08%
12/31/93 $16,175 11.55%
12/31/94 $15,652 -3.23%
12/31/95 $18,075 15.48%
</TABLE>
14
<PAGE>
<TABLE>
<S> <C> <C> <C>
12/31/96 $18,697 3.44%
12/31/97 $20,166 7.86%
12/31/98 $21,263 5.44%
</TABLE>
PANORAMA GOVERNMENT SECURITIES
$10,000 Purchase payment made May 12, 1992
<TABLE>
<CAPTION>
Non-Standard
-------------
Accumulated Calendar Year
Date Payment Value Total Return
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
5/12/92 $10,000 $10,000
12/31/92 $10,619 6.19%
12/31/93 $11,555 8.82%
12/31/94 $10,895 -5.71%
12/31/95 $12,716 16.72%
12/31/96 $12,802 0.68%
12/31/97 $13,742 7.34%
12/31/98 $14,662 6.69%
</TABLE>
OPPENHEIMER MONEY MARKET
$10,000 Purchase payment made December 31, 1988
<TABLE>
<CAPTION>
Non-Standard
-------------
Accumulated Calendar Year
Date Payment Value Total Return
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
12/31/88 $10,000 $10,000
12/31/89 $10,780 7.80%
12/31/90 $11,487 6.55%
12/31/91 $12,028 4.71%
12/31/92 $12,329 2.50%
12/31/93 $12,544 1.74%
12/31/94 $12,894 2.79%
12/31/95 $13,441 4.24%
12/31/96 $13,942 3.73%
12/31/97 $14,489 3.92%
12/31/98 $15,048 3.86%
</TABLE>
PANORAMA INTERNATIONAL EQUITY
$10,000 Purchase payment made May 13, 1992
<TABLE>
<CAPTION>
Non-Standard
-------------
Accumulated Calendar Year
Date Payment Value Total Return
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
5/13/92 $10,000 $10,000
12/31/92 $9,508 -4.92%
12/31/93 $11,428 20.19%
12/31/94 $11,388 -0.35%
12/31/95 $12,420 9.05%
12/31/96 $13,866 11.65%
12/31/97 $14,790 6.66%
12/31/98 $17,429 17.84%
</TABLE>
15
<PAGE>
DISTRIBUTION
MML Distributors, LLC ("MML Distributors"), is the principal underwriter of the
Contracts. MML Distributors is a limited liability corporation. MML Investors
Services, Inc. ("MMLISI") serves as co-underwriter of the Contracts. Both MML
Distributors and MMLISI are broker-dealers registered with the Securities and
Exchange Commission and members of the National Association of Securities
Dealers, Inc. MML Distributors and MMLISI are indirect wholly-owned subsidiaries
of Massachusetts Mutual Life Insurance Company and affiliates of C.M. Life
Insurance Company.
Pursuant to the Underwriting and Servicing Agreement, both MML Distributors and
MMLISI will receive compensation for their activities as underwriters for the
Separate Account. Compensation paid to MMLISI was $39,500 in 1998 and $39,500 in
1997. No compensation was paid to MML Distributors in 1998 or 1997. Commissions
will be paid through MMLISI and MML Distributors to agents and selling brokers
for selling the Contracts. During 1998, 1997 and 1996, commission payments
amounted to $5,066,528, $4,710,230 and $4,655,336 respectively.
MML Distributors may enter into selling agreements with other broker-dealers
which are registered with the Securities and Exchange Commission and are members
of the National Association of Securities Dealers, Inc. ("selling brokers").
Contracts are sold through agents who are licensed by state insurance officials
to sell the contracts. These agents are also registered representatives of
selling brokers or of MMLISI.
MML Distributors does business under different variations of its name; including
the name MML Distributors, L.L.C. in the states of Illinois, Michigan, Oklahoma,
South Dakota, and Washington, and the MML Distributors, Limited Liability
Company in the states of Maine, Ohio, and West Virginia.
The offering is on a continuous bases.
PURCHASE OF SECURITIES BEING OFFERED
Interests in the Separate Account are sold to contract owners as accumulation
units. Charges associated with such securities are discussed in the Expenses
section of the prospectus.
FEDERAL TAX MATTERS
General
Note: The following description is based upon C.M. Life's understanding of
current federal income tax law applicable to annuities in general. C.M. Life
cannot predict the probability that any changes in such laws will be made.
Purchasers are cautioned to seek competent tax advice regarding the possibility
of such changes. C.M. Life does not guarantee the tax status of the contracts.
Purchasers bear the complete risk that the contracts may not be treated as
"annuity contracts" under federal income tax laws. It should be further
understood that the following discussion is not exhaustive and that special
rules not described herein may be applicable in certain situations. Moreover, no
attempt has been made to consider any applicable state or other tax laws.
Section 72 of the Code governs taxation of annuities in general. An owner is
generally not taxed on increases in the value of a contract until distribution
occurs, either in the form of a lump sum payment or as annuity payments under
the annuity option selected. For a lump sum payment received as a total
16
<PAGE>
withdrawal (total surrender), the recipient is taxed on the portion of the
payment that exceeds the cost basis of the contract. For non-qualified
contracts, this cost basis is generally the purchase payments, while for
qualified contracts there may be no cost basis. The taxable portion of the lump
sum payment is taxed at ordinary income tax rates.
For annuity payments, a portion of each payment in excess of an exclusion amount
is includible in taxable income. The exclusion amount for payments based on a
fixed annuity option is determined by multiplying the payment by the ratio that
the cost basis of the contract (adjusted for any period or refund feature) bears
to the expected return under the contract. The exclusion amount for payments
based on a variable annuity option is determined by dividing the cost basis of
the contract (adjusted for any period certain or refund guarantee) by the number
of years over which the annuity is expected to be paid. Payments received after
the investment in the contract has been recovered (i.e. when the total of the
excludable amount equals the investment in the contract) are fully taxable. The
taxable portion is taxed at ordinary income tax rates. For certain types of
qualified plans there may be no cost basis in the contract within the meaning of
Section 72 of the Code. Owners, annuitants and beneficiaries under the contracts
should seek competent financial advice about the tax consequences of any
distributions.
C.M. Life is taxed as a life insurance company under the Code. For federal
income tax purposes, the separate account is not a separate entity from C.M.
Life, and its operations form a part of C.M. Life.
Diversification
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not, in
accordance with regulations prescribed by the United States Treasury Department
("Treasury Department"), adequately diversified. Disqualification of the
contract as an annuity contract would result in the imposition of federal income
tax to the Owner with respect to earnings allocable to the contract prior to the
receipt of payments under the contract. The Code contains a safe harbor
provision which provides that annuity contracts such as the contract meet the
diversification requirements if, as of the end of each quarter, the underlying
assets meet the diversification standards for a regulated investment company and
no more than fifty-five percent (55%) of the total assets consist of cash, cash
items, U.S. Government securities and securities of other regulated investment
companies.
On March 2, 1989, the Treasury Department issued Regulations (Treas.
Reg.1.817-5), which established diversification requirements for the investment
portfolios underlying variable contracts such as the contract. The regulations
amplify the diversification requirements for variable contracts set forth in the
Code and provide an alternative to the safe harbor provision described above.
Under the regulations, an investment portfolio will be deemed adequately
diversified if: (1) no more than 55% of the value of the total assets of the
portfolio is represented by any one investment; (2) no more than 70% of the
value of the total assets of the portfolio is represented by any two
investments; (3) no more than 80% of the value of the total assets of the
portfolio is represented by any three investments; and (4) no more than 90% of
the value of the total assets of the portfolio is represented by any four
investments.
The Code provides that, for purposes of determining whether or not the
diversification standards imposed on the underlying assets of variable contracts
by Section 817(h) of the Code have been met, "each United States government
agency or instrumentality shall be treated as a separate issuer."
C.M. Life intends that all investment portfolios underlying the contracts will
be managed in such a manner as to comply with these diversification
requirements.
17
<PAGE>
The Treasury Department has indicated that the diversification regulations do
not provide guidance regarding the circumstances in which owner control of the
investments of the separate account will cause the owner to be treated as the
owner of the assets of the separate account, thereby resulting in the loss of
favorable tax treatment for the contract. At this time it cannot be determined
whether additional guidance will be provided and what standards may be contained
in such guidance.
The amount of owner control which may be exercised under the contract is
different in some respects from the situations addressed in published rulings
issued by the Internal Revenue Service in which it was held that the policy
owner was not the owner of the assets of the separate account. It is unknown
whether these differences, such as the owner's ability to transfer among
investment choices or the number and type of investment choices available, would
cause the owner to be considered as the owner of the assets of the separate
account resulting in the imposition of federal income tax to the owner with
respect to earnings allocable to the contract prior to receipt of payments under
the contract.
In the event any forthcoming guidance or ruling is considered to set forth a new
position, such guidance or ruling will generally be applied only prospectively.
However, if such ruling or guidance was not considered to set forth a new
position, it may be applied retroactively resulting in the owner being
retroactively determined to be the owner of the assets of the separate account.
Due to the uncertainty in this area, C.M. Life reserves the right to modify the
contract in an attempt to maintain favorable tax treatment.
Multiple Contracts
The Code provides that multiple non-qualified annuity contracts which are issued
within a calendar year to the same contract owner by one company or its
affiliates are treated as one annuity contract for purposes of determining the
tax consequences of any distribution. Such treatment may result in adverse tax
consequences including more rapid taxation of the distributed amounts from such
combination of contracts. Owners should consult a tax adviser prior to
purchasing more than one non-qualified annuity contract in any calendar year.
Contracts Owned by Other than Natural Persons
Under Section 72(u) of the Code, the investment earnings on premiums for the
contracts will be taxed currently to the owner if the owner is a non-natural
person, e.g., a corporation or certain other entities. Such contracts generally
will not be treated as annuities for federal income tax purposes. However, this
treatment is not applied to a contract held by a trust or other entity as an
agent for a natural person nor to contracts held by qualified plans. Purchasers
should consult their own tax counsel or other tax adviser before purchasing a
contract to be owned by a non-natural person.
Tax Treatment of Assignments
An assignment or pledge of a contract may be a taxable event. Owners should
therefore consult competent tax advisers should they wish to assign or pledge
their contracts.
Income Tax Withholding
All distributions or the portion thereof which is includible in the gross income
of the owner are subject to federal income tax withholding. Generally, amounts
are withheld from periodic payments at the same rate as wages and at the rate of
10% from non-periodic payments. However, the owner, in most cases, may elect not
to have taxes withheld or to have withholding done at a different rate.
18
<PAGE>
Effective January 1, 1993, certain distributions from retirement plans qualified
under Section 401 of the Code, which are not directly rolled over to another
eligible retirement plan or individual retirement account or individual
retirement annuity, are subject to a mandatory 20% withholding for federal
income tax. The 20% withholding requirement generally does not apply to: a) a
series of substantially equal payments made at least annually for the life or
life expectancy of the participant or joint and last survivor expectancy of the
participant and a designated beneficiary or for a specified period of 10 years
or more; or b) distributions which are required minimum distributions; or c) the
portion of the distributions not includible in gross income (i.e. returns of
after-tax contributions). The 20% withholding requirement also does not apply to
hardship distributions from a 401(k) plan made after December 31, 1998.
Participants should consult their own tax counsel or other tax adviser regarding
withholding requirements.
Tax Treatment of Withdrawals - Non-Qualified Contracts
Section 72 of the Code governs treatment of distributions from annuity
contracts. It provides that if the contract value exceeds the aggregate purchase
payments made, any amount withdrawn will be treated as coming first from the
earnings and then, only after the income portion is exhausted, as coming from
the principal. Withdrawn earnings are includible in gross income. It further
provides that a ten percent (10%) penalty will apply to the income portion of
any premature distribution. However, the penalty is not imposed on amounts
received: (a) after the taxpayer reaches age 59 1/2; (b) after the death of the
owner; (c) if the taxpayer is totally disabled (for this purpose disability is
as defined in Section 72(m)(7) of the Code); (d) in a series of substantially
equal periodic payments made not less frequently than annually for the life (or
life expectancy) of the taxpayer or for the joint lives (or joint life
expectancies) of the taxpayer and his or her beneficiary; (e) under an immediate
annuity; or (f) which are allocable to purchase payments made prior to August
14, 1982.
With respect to (d) above, if the series of substantially equal periodic
payments is modified before the later of your attaining age 59 1/2 or 5 years
from the date of the first periodic payment, then the tax for the year of the
modification is increased by an amount equal to the tax which would have been
imposed (the 10% tax penalty), but for the exception, plus interest for the tax
years in which the exception was used.
The above information does not apply to qualified contracts. However, separate
tax withdrawal penalties and restrictions may apply to such qualified contracts.
(See "Tax Treatment of Withdrawals - Qualified Contracts" below.)
Qualified Plans
The contracts offered herein are designed to be suitable for use under various
types of qualified plans. Taxation of participants in each qualified plan varies
with the type of plan and terms and conditions of each specific plan. Owners,
annuitants and beneficiaries are cautioned that benefits under a qualified plan
may be subject to the terms and conditions of the plan regardless of the terms
and conditions of the contracts issued pursuant to the plan. Some retirement
plans are subject to distribution and other requirements that are not
incorporated into C.M. Life's administrative procedures. Owners, participants
and beneficiaries are responsible for determining that contributions,
distributions and other transactions with respect to the contracts comply with
applicable law. Following are general descriptions of the types of qualified
plans with which the contracts may be used. Such descriptions are not exhaustive
and are for general informational purposes only. The tax rules regarding
qualified plans are very complex and will have differing applications depending
on individual facts and circumstances. Each purchaser should obtain competent
tax advice prior to purchasing a contract issued under a qualified plan.
19
<PAGE>
Contracts issued pursuant to qualified plans include special provisions
restricting contract provisions that may otherwise be available as described
herein. Generally, contracts issued pursuant to qualified plans are not
transferable except upon surrender or annuitization. Various penalty and excise
taxes may apply to contributions or distributions made in violation of
applicable limitations. Furthermore, certain withdrawal penalties and
restrictions may apply to surrenders from qualified contracts. (See "Tax
Treatment of Withdrawals - Qualified Contracts" below.)
On July 6, 1983, the Supreme Court decided in Arizona Governing Committee v.
Norris that optional annuity benefits provided under an employer's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women. The contracts sold by C.M. Life in connection with
qualified plans will utilize annuity tables which do not differentiate on the
basis of sex. Such annuity tables will also be available for use in connection
with certain non-qualified deferred compensation plans.
a. Tax Sheltered Annuities
Section 403(b) of the Code permits the purchase of "tax sheltered annuities" by
public schools and certain charitable, educational and scientific organizations
described in Section 501(c)(3) of the Code. These qualifying employers may make
contributions to the contracts for the benefit of their employees. Such
contributions are not includible in the gross income of the employees until the
employees receive distributions from the contracts. The amount of contributions
to the tax sheltered annuity is limited to certain maximums imposed by the Code.
Furthermore, the Code sets forth additional restrictions governing such items as
transferability, distributions, nondiscrimination and withdrawals. (See "Tax
Treatment of Withdrawals - Qualified Contracts" and "Tax Sheltered Annuities -
Withdrawal Limitations" below.) Employee loans are not allowable under the
contracts. Any employee should obtain competent tax advice as to the tax
treatment and suitability of such an investment.
b. H.R. 10 Plans
Section 401 of the Code permits self-employed individuals to establish qualified
plans for themselves and their employees, commonly referred to as "H.R. 10" or
"Keogh" plans. Contributions made to the plan for the benefit of the employees
will not be included in the gross income of the employees until distributed from
the Plan. The tax consequences to participants may vary depending upon the
particular plan design. However, the Code places limitations and restrictions on
all plans including on such items as: amount of allowable contributions; form,
manner and timing of distributions; transferability of benefits; vesting and
nonforfeitability of interests; nondiscrimination in eligibility and
participation; and the tax treatment of distributions, withdrawals and
surrenders. (See "Tax Treatment of Withdrawals - Qualified Contracts" below.)
Purchasers of contracts for use with an H.R. 10 Plan should obtain competent tax
advice as to the tax treatment and suitability of such an investment.
c. Individual Retirement Annuities
Section 408(b) of the Code permits eligible individuals to contribute to an
individual retirement program known as an "Individual Retirement Annuity"
("IRA"). Under applicable limitations, certain amounts may be contributed to an
IRA which will be deductible from the individual's gross income. These IRAs are
subject to limitations on eligibility, contributions, transferability and
distributions. (See "Tax Treatment of Withdrawals - Qualified Contracts" below.)
Under certain conditions, distributions from other IRAs and other Qualified
Plans may be rolled over or transferred on a tax-deferred basis into an IRA.
Sales of contracts for use with IRAs are subject to special requirements imposed
by the Code, including the requirement that certain informational disclosure be
given to persons desiring to establish an
20
<PAGE>
IRA. Purchasers of contracts to be qualified as Individual Retirement Annuities
should obtain competent tax advice as to the tax treatment and suitability of
such an investment.
Roth IRAs
Section 408A of the Code provides that beginning in 1998, individuals may
purchase a new type of non-deductible IRA, known as a Roth IRA. Purchase
payments for a Roth IRA are limited to a maximum of $2,000 per year. Lower
maximum limitations apply to individuals with adjusted gross incomes between
$95,000 and $110,000 in the case of single taxpayers, between $150,000 and
$160,000 in the case of married taxpayers filing joint returns, and between $0
and $10,000 in the case of married taxpayers filing separately. An overall
$2,000 annual limitation continues to apply to all of a taxpayer's IRA
contributions, including Roth IRA and non-Roth IRAs.
Qualified distributions from Roth IRAs are free from federal income tax. A
qualified distribution requires that an individual has held the Roth IRA for at
least five years and, in addition, that the distribution is made either after
the individual reaches age 59 1/2, on the individual's death or disability, or
as a qualified first-time home purchase, subject to a $10,000 lifetime maximum,
for the individual, a spouse, child, grandchild, or ancestor. Any distribution
which is not a qualified distribution is taxable to the extent of earnings in
the distribution. Distributions are treated as made from contributions first and
therefore no distributions are taxable until distributions exceed the amount of
contributions to the Roth IRA. The 10% penalty tax and the regular IRA
exceptions to the 10% penalty tax apply to taxable distributions from a Roth
IRA.
Amounts may be rolled over from one Roth IRA to another Roth IRA. Furthermore,
an individual may make a rollover contribution from a non-Roth IRA to a Roth
IRA, unless the individual has adjusted gross income over $100,000 or the
individual is a married taxpayer filing a separate return. The individual must
pay tax on any portion of the IRA being rolled over that represents income or a
previously deductible IRA contribution. However, for rollovers in 1998, the
individual may pay that tax ratably over the four taxable year period beginning
with tax year 1998.
Purchasers of contracts to be qualified as a Roth IRA should obtain competent
tax advice as to the tax treatment and suitability of such an investment.
d. Corporate Pension and Profit-Sharing Plans
Sections 401(a) and 401(k) of the Code permit corporate employers to establish
various types of retirement plans for employees. These retirement plans may
permit the purchase of the contracts to provide benefits under the plan.
Contributions to the plan for the benefit of employees will not be includible in
the gross income of the employees until distributed from the plan. The tax
consequences to participants may vary depending upon the particular plan design.
However, the Code places limitations and restrictions on all Plans including on
such items as: amount of allowable contributions; form, manner and timing of
distributions; transferability of benefits; vesting and nonforfeitability of
interests; nondiscrimination in eligibility and participation; and the tax
treatment of distributions, withdrawals and surrenders. (See "Tax Treatment of
Withdrawals - Qualified Contracts" below.) Purchasers of contracts for use with
Corporate Pension or Profit Sharing Plans should obtain competent tax advice as
to the tax treatment and suitability of such an investment.
21
<PAGE>
Tax Treatment of Withdrawals - Qualified Contracts
In the case of a withdrawal under a qualified contract, a ratable portion of the
amount received is taxable, generally based on the ratio of the individual's
cost basis to the individual's total accrued benefit under the retirement plan.
Special tax rules may be available for certain distributions from a qualified
contract. Section 72(t) of the Code imposes a 10% penalty tax on the taxable
portion of any distribution from qualified retirement plans, including contracts
issued and qualified under Code Sections 401 (H.R. 10 and Corporate Pension and
Profit-Sharing Plans), and 408 (Individual Retirement Annuities) and 408A (Roth
IRAs). To the extent amounts are not includible in gross income because they
have been rolled over to an IRA or to another eligible qualified plan, no tax
penalty will be imposed. The tax penalty will not apply to the following
distributions: (a) if distribution is made on or after the date on which the
owner or annuitant (as applicable) reaches age 59 1/2; (b) distributions
following the death or disability of the owner or annuitant (as applicable) (for
this purpose disability is as defined in Section 72(m) (7) of the Code); (c)
after separation from service, distributions that are part of substantially
equal periodic payments made not less frequently than annually for the life (or
life expectancy) of the owner or annuitant (as applicable) or the joint lives
(or joint life expectancies) of such owner or annuitant (as applicable) and his
or her designated beneficiary; (d) distributions to an owner or annuitant (as
applicable) who has separated from service after he has attained age 55; (e)
distributions made to the owner or annuitant (as applicable) to the extent such
distributions do not exceed the amount allowable as a deduction under Code
Section 213 to the Owner or Annuitant (as applicable) for amounts paid during
the taxable year for medical care; (f) distributions made to an alternate payee
pursuant to a qualified domestic relations order; (g) distributions from an
Individual Retirement Annuity for the purchase of medical insurance (as
described in Section 213(d)(1)(D) of the Code) for the owner or annuitant (as
applicable) and his or her spouse and dependents if the owner or annuitant (as
applicable) has received unemployment compensation for at least 12 weeks (this
exception will no longer apply after the owner or annuitant (as applicable) has
been re-employed for at least 60 days); (h) distributions from an Individual
Retirement Annuity made to the owner or annuitant (as applicable) to the extent
such distributions do not exceed the qualified higher education expenses (as
defined in Section 72(t)(7) of the Code) of the owner or annuitant (as
applicable) for the taxable year; and (i) distributions from an Individual
Retirement Annuity made to the owner or annuitant (as applicable) which are
qualified first-time home buyer distributions (as defined in Section 72(t)(8)of
the Code.) The exceptions stated in (d) and (f) above do not apply in the case
of an Individual Retirement Annuity. The exception stated in (c) above applies
to an Individual Retirement Annuity without the requirement that there be a
separation from service.
With respect to (c) above, if the series of substantially equal periodic
payments is modified before the later of your attaining age 59 1/2 or 5 years
from the date of the first periodic payment, then the tax for the year of the
modification is increased by an amount equal to the tax which would have been
imposed (the 10% penalty tax) but for the exception, plus interest for the tax
years in which the exception was used.
Generally, distributions from a qualified plan must begin no later than April
1st of the calendar year following the later of (a) the year in which the
employee attains age 70 1/2 or (b) the calendar year in which the employee
retires. The date set forth in (b) does not apply to an Individual Retirement
Annuity. Required distributions do not apply to a Roth IRA during the lifetime
of the Owner. Required distributions must be over a period not exceeding the
life expectancy of the individual or the joint lives or life expectancies of the
individual and his or her designated beneficiary. If the required minimum
distributions are not made, a 50% penalty tax is imposed as to the amount not
distributed.
22
<PAGE>
Tax Sheltered Annuities - Withdrawal Limitations
The Code limits the withdrawal of amounts attributable to contributions made
pursuant to a salary reduction agreement (as defined in Section 403(b)(11) of
the Code) to circumstances only when the owner: (1) attains age 59 1/2; (2)
separates from service; (3) dies; (4) becomes disabled (within the meaning of
Section 72(m)(7) of the Code); or (5) in the case of hardship. However,
withdrawals for hardship are restricted to the portion of the contract owner's
value which represents contributions made by the owner and does not include any
investment results. The limitations on withdrawals became effective on January
1, 1989 and apply only to salary reduction contributions made after December 31,
1988, to income attributable to such contributions and to income attributable to
amounts held as of December 31, 1988. The limitations on withdrawals do not
affect transfers between tax sheltered annuity plans. Contract owners should
consult their own tax counsel or other tax adviser regarding any distributions.
Section 457 Deferred Compensation ("Section 457") Plans
Employees of (and independent contractors who perform services for) certain
state and local governmental units, or certain tax-exempt employers, may
participate in a Section 457 plan of the employer, allowing them to defer part
of their salary or other compensation. The amount deferred, and accrued income
thereon, will not be taxable until it is paid or otherwise made available to the
employee.
The maximum amount that can be deferred under a Section 457 plan in any tax year
is generally one-third of the employee's includible compensation, up to $8,000
(in 1998). Includible compensation means earnings for services rendered to the
employer which are includible in the employee's gross income, excluding the
contributions under the Section 457 plan or a Tax-Sheltered Annuity. Certain
catch-up deferrals are permitted during the last three (3) years before an
employee attains normal retirement age. The contract purchased is issued to the
employer, and the employee has no rights or vested interest in the contract. All
contract value must be held for the exclusive benefit of the employee, and
payments can only be made in accordance with Section 457 plan provisions.
Presently, tax-free transfers of assets in a section 457 plan can only be made
to another section 457 plan in certain limited cases.
Purchasers of contracts for use with Section 457 plans should obtain competent
tax advice as to the tax treatment and suitability of such an investment.
EXPERTS
We have included the financial statements of C. M. Life and Panorama Plus
Separate Account in this Statement of Additional Information in reliance on the
reports of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of that firm as experts in accounting and auditing.
PricewaterhouseCoopers LLP's report on the statutory financial statements of
C.M. Life includes explanatory paragraphs relating to the use of statutory
accounting practices rather than generally accepted accounting principles.
PricewaterhouseCoopers LLP is located in Springfield, Massachusetts 01101.
23
<PAGE>
Report Of Independent Accountants
To the Contract Owners of Panorama Plus Separate Account and
The Board of Directors of C.M. Life Insurance Company
In our opinion, the accompanying statement of assets and liabilities and the
related statements of operations and of changes in net assets present fairly, in
all material respects, the financial position of each of the sub-accounts of the
Panorama Plus Separate Account (hereafter referred to as "the Account") at
December 31, 1998, the results of each of their operations for the year then
ended and the changes in each of their net assets for each of the two years in
the period then ended, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Account's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of investments owned at December 31, 1998 by correspondence with
the investment companies, provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
Springfield, Massachusetts
February 25, 1999
F-1
<PAGE>
Panorama Plus Separate Account
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
<TABLE>
<S> <C>
ASSETS:
Investments, at Market (Notes 3A and 3B):
Total Return Sub-Account
224,160,055 shares(Cost $396,332,538) $428,145,705
Growth Sub-Account
105,760,489 shares(Cost $304,770,300) 345,836,799
Government Securities Sub-Account
14,912,044 shares(Cost $16,111,578) 16,850,610
International Equity Sub-Account
47,012,334 shares(Cost $58,852,881 73,809,364
Money Market Sub-Account
17,604,156 shares(Cost $17,604,156) 17,604,156
*Income Sub-Account
2,706,027 shares (Cost $34,712,215) 33,338,252
------------
Total investments 915,584,886
------------
Dividends receivable 31,808
Receivable from C.M. Life Insurance Company 4,302
------------
NET ASSETS $915,620,996
============
</TABLE>
<TABLE>
<CAPTION>
Net assets: Units Unit Value Net Assets
----- ---------- ----------
<S> <C> <C> <C>
Total Return Sub-Account 209,536,235 $ 2.043296 $428,144,551
Growth Sub-Account 128,161,817 2.698453 345,838,640
Government Securities Sub-Account 11,323,817 1.488104 16,851,018
International Equity Sub-Account 41,761,023 1.767452 73,810,604
Money Market Sub-Account 14,186,953 1.243348 17,639,320
Income Sub-Account 22,174,564 1.503383 33,336,863
------------
$915,620,996
============
</TABLE>
*The Income Sub-Account invests in the Oppenheimer Bond Fund.
See Notes to Financial Statements.
F-2
<PAGE>
Panorama Plus Separate Account
STATEMENT OF OPERATIONS
For The Year Ended December 31, 1998
<TABLE>
<CAPTION>
Government International
Total Return Growth Securities Equity Money Market *Income
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
------------ ------------ ---------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Investment income
Dividends (Note 3B) $ 60,990,669 $ 45,589,490 $ 926,324 $ 2,432,957 $814,607 $ 959,297
Expenses
Mortality and expense risk fees (Note 4) 4,810,144 3,851,957 185,811 821,539 181,808 362,792
------------ ------------ ---------- ----------- -------- ----------
Net investment income(Note 3C) 56,180,525 41,737,533 740,513 1,611,418 632,799 596,505
------------ ------------ ---------- ----------- -------- ----------
Net realized and unrealized gain (loss)
on investments
Net realized gain on investments
(Notes 3B, 3C and 6) 8,712,734 17,519,511 470,345 3,011,506 -- 64,002
Change in net unrealized appreciation/depreciation
of investments (26,539,079) (36,930,341) (151,458) 6,840,065 -- 1,038,213
------------ ------------ ---------- ----------- -------- ----------
Net gain (loss) on investments (17,826,345) (19,410,830) 318,887 9,851,571 -- 1,102,215
------------ ------------ ---------- ----------- -------- ----------
Net increase in net assets resulting
from operations $ 38,354,180 $ 22,326,703 $1,059,400 $11,462,989 $632,799 $1,698,720
============ ============ ========== =========== ======== ==========
</TABLE>
*The Income Sub-Account invests in the Oppenheimer Bond Fund.
See Notes to Financial Statements.
F-3
<PAGE>
Panorama Plus Separate Account
STATEMENT OF CHANGES IN NET ASSETS For The Year Ended December 31, 1998
<TABLE>
<CAPTION>
Government International
Total Return Growth Securities Equity Money Market
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income $ 56,180,525 $ 41,737,533 $ 740,513 $ 1,611,418 $ 632,799
Net realized gain on investments 8,712,734 17,519,511 470,345 3,011,506 --
Change in net unrealized appreciation/
depreciation of investments (26,539,079) (36,930,341) (151,458) 6,840,065 --
------------- ------------- ------------- ------------- -------------
Net increase in net assets resulting
from operations 38,354,180 22,326,703 1,059,400 11,462,989 632,799
------------- ------------- ------------- ------------- -------------
Capital transactions:
Net contract payments 24,140,599 24,286,725 1,106,669 4,298,145 4,131,906
Withdrawal of funds (48,104,474) (28,611,868) (2,650,180) (5,692,454) (3,867,333)
Reimbursement (payment) of
accumulation unit value fluctuation 86,559 30,713 2,364 5,496 (19,924)
Transfers between sub-accounts and
the General Account (4,499,346) 4,200,075 1,086,515 (2,334,475) 2,316,196
------------- ------------- ------------- ------------- -------------
Net increase (decrease) in net assets
resulting from capital transactions (28,376,662) (94,355) (454,632) (3,723,288) 2,560,845
------------- ------------- ------------- ------------- -------------
Total increase 9,977,518 22,232,348 604,768 7,739,701 3,193,644
NET ASSETS, at beginning of the year 418,167,033 323,606,292 16,246,250 66,070,903 14,445,676
------------- ------------- ------------- ------------- -------------
NET ASSETS, at end of the year $ 428,144,551 $ 345,838,640 $ 16,851,018 $ 73,810,604 $ 17,639,320
============= ============= ============= ============= =============
<CAPTION>
*Income
Sub-Account
-------------
<S> <C>
Increase (decrease) in net assets
Operations:
Net investment income $ 596,505
Net realized gain on investments 64,002
Change in net unrealized appreciation/
depreciation of investments 1,038,213
-------------
Net increase in net assets resulting
from operations 1,698,720
-------------
Capital transactions:
Net contract payments 3,090,400
Withdrawal of funds) (3,990,534)
Reimbursement (payment) of
accumulation unit value fluctuation) (2,864)
Transfers between sub-accounts and
the General Account 2,037,135
-------------
Net increase (decrease) in net assets
resulting from capital transactions 1,134,137
-------------
Total increase 2,832,857
NET ASSETS, at beginning of the year 30,504,006
-------------
NET ASSETS, at end of the year $ 33,336,863
=============
</TABLE>
*The Income Sub-Account invests in the Oppenheimer Bond Fund.
See Notes to Financial Statements.
F-4
<PAGE>
Panorama Plus Separate Account
STATEMENT OF CHANGES IN NET ASSETS For The Year Ended December 31, 1997
<TABLE>
<CAPTION>
Government International
Total Return Growth Securities Equity Money Market
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income $ 38,734,903 $ 17,185,896 $ 843,314 $ 688,682 $ 604,643
Net realized gain (loss) on investments 5,179,750 8,764,220 264,249 1,281,403 --
Change in net unrealized appreciation/
depreciation of investments 18,447,840 34,459,860 59,626 2,122,434 --
----------- ----------- ---------- ---------- ----------
Net increase in net assets
resulting from operations 62,362,493 60,409,976 1,167,189 4,092,519 604,643
----------- ----------- ---------- ---------- ----------
Capital transactions:
Net contract payments 27,867,462 31,596,957 927,700 6,477,310 4,334,561
Withdrawal of funds (19,860,273) (11,972,272) (1,395,063) (3,045,511) (2,226,289)
Reimbursement (payment) of
accumulation unit value fluctuation 13,955 103,136 (1,516) (4,665) (3,986)
Transfers between sub-accounts and
the General Account (8,787,789) 18,112,938 (813,749) 1,806,665 (3,760,136)
----------- ----------- ---------- ---------- ----------
Net increase (decrease) in net assets
resulting from capital transactions (766,645) 37,840,759 (1,282,628) 5,233,799 (1,655,850)
----------- ----------- ---------- ---------- ----------
Total increase (decrease) 61,595,848 98,250,735 (115,439) 9,326,318 (1,051,207)
NET ASSETS, at beginning of the year 356,571,185 225,355,557 16,361,689 56,744,585 15,496,883
----------- ----------- ---------- ---------- ----------
NET ASSETS, at end of the year 418,167,033 323,606,292 16,246,250 66,070,903 14,445,676
=========== =========== ========== ========== ==========
<CAPTION>
*Income
Sub-Account
-------------
<S> <C>
Increase (decrease) in net assets
Operations:
Net investment income $ 1,548,528
Net realized gain (loss) on investments (139,043)
Change in net unrealized appreciation/
depreciation of investments 859,084
----------
Net increase in net assets
resulting from operations 2,268,569
----------
Capital transactions:
Net contract payments 2,446,088
Withdrawal of funds (1,769,344)
Reimbursement (payment) of
accumulation unit value fluctuation 195
Transfers between sub-accounts and
the General Account (1,693,532)
----------
Net increase (decrease) in net assets
resulting from capital transactions (1,016,593)
----------
Total increase (decrease) 1,251,976
NET ASSETS, at beginning of the year 29,252,030
----------
NET ASSETS, at end of the year 30,504,006
==========
</TABLE>
See Notes to Financial Statements.
F-5
<PAGE>
Panorama Plus Separate Account
Notes To Financial Statements
1. HISTORY
Panorama Plus Separate Account (the "Separate Account") was established as
a separate investment account of C.M. Life Insurance Company ("C.M. Life").
C.M. Life is a wholly-owned subsidiary of Massachusetts Mutual Life
Insurance Company ("MassMutual").
The Separate Account is used exclusively for C.M. Life's Group and
Individual Flexible Premium Deferred Annuity.
The Separate Account operates as a registered unit investment trust
pursuant to the Investment Company Act of 1940 ("the 1940 Act").
2. INVESTMENT OF THE SEPARATE ACCOUNT'S ASSETS
The Separate Account maintains six Sub-Accounts. Each Sub-Account invests
in shares of certain investment portfolios of two investment companies: the
Panorama Series Fund, Inc. ("Panorama Fund") and the Oppenheimer Variable
Account Funds ("Oppenheimer Trust"). Panorama Fund is an open-end,
diversified management investment company registered under the Investment
Company Act of 1940 with four of its portfolios currently available to
Panorama Plus contractowners: the Total Return Sub-Account invests in the
Panorama Total Return Portfolio, the Growth Sub-Account invests in the
Panorama Growth Portfolio, the Government Securities Sub-Account invests in
the Panorama Government Securities Portfolio and the International Equity
Sub-Account invests in the Panorama International Equity Portfolio.
Oppenheimer Trust is an open-end, diversified management investment company
registered under the Investment Company Act of 1940 with two of its funds
currently available to Panorama Plus contractowners: the Money Market
Sub-Account invests in the Oppenheimer Money Fund and the Income
Sub-Account invests in the Oppenheimer Bond Fund. OppenheimerFunds, Inc., a
controlled subsidiary of MassMutual, serves as investment manager to the
Panorama Fund and Oppenheimer Trust.
In addition to the six Sub-Accounts of the Separate Account, a
contractowner may also allocate funds to C.M. Life's General Account.
Interests in the General Account are registered under the Securities Act of
1933, as amended, but the General Account in not registered under the 1940
Act.
3. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed
consistently by the Separate Account in preparation of the financial
statements in conformity with generally accepted accounting principles.
A. Investment Valuation
Investments in Panorama Fund and Oppenheimer Trust are each stated at
market value which is the net asset value per share of each of the
respective underlying portfolios.
B. Accounting for Investments
Investment transactions are accounted for on the trade date and identified
cost is the basis followed in determining the cost of investments sold for
financial statement purposes. Dividend income is recorded on the
ex-dividend date.
C. Federal Income Taxes
Operations of the Separate Account form a part of the total operations of
C.M. Life, and the Separate Account is not taxed separately. C.M. Life is
taxed as a life insurance company under the provisions of the 1986 Internal
Revenue Code, as amended. The Separate Account will not be taxed as a
"regulated investment company" under Subchapter M of the Internal Revenue
Code. Under existing federal law, no taxes are payable on investment income
and realized capital gains attributable to contracts which depend on the
Separate Account's investment performance. Accordingly, no provision for
federal income tax has been made. C.M. Life may, however, make such a
charge in the future if an unanticipated change of current law results in a
company tax liability attributable to the Separate Account.
F-6
<PAGE>
Notes To Financial Statements (Continued)
D. Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires that management make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
4. CHARGES
There are no deductions for sales charges made from contract payments at the
time of purchase. C.M. Life may pay premium taxes in connection with purchase
payments under the Contracts. Depending upon applicable state law, C.M. Life
will deduct any premium taxes from purchase payments, upon surrender or on the
Annuity Income Date. Premium taxes currently range from 0% to 4.28% of purchase
payments.
There is also an annual contract maintenance fee (currently $30 per Contract),
imposed each year for contract maintenance and related administrative expenses.
For assuming mortality and expense risks, C.M. Life deducts a charge equal, on
an annual basis, to 1.07% of the daily net asset value of the Separate Account's
assets. C.M. Life also deducts an administrative charge equal, on an annual
basis, to .07% of the daily net assets of each of the Sub-Accounts of the
Separate Account. These charges cover expenses in connection with the
administration of the Separate Account and the contracts.
5. DISTRIBUTION AGREEMENTS
MML Distributors, LLC ("MML Distributors"), a wholly-owned subsidiary of
MassMutual, serves as principal underwriter of the contracts pursuant to an
underwriting and servicing agreement among MML Distributors, C.M. Life and
Panorama Plus Separate Account. MML Distributors is registered with the
Securities and Exchange Commission (the "SEC") as a broker-dealer under the
Securities Exchange Act of 1934 and is a member of the National Association of
Securities Dealers, Inc. (the "NASD"). MML Distributors may enter into selling
agreements with other broker-dealers who are registered with the SEC and are
members of the NASD in order to sell the contracts.
MML Investors Services, Inc. ("MMLISI") serves as co-underwriter of the
contracts pursuant to underwriting and servicing agreements among MMLISI, C.M.
Life and Panorama Plus Separate Account. MMLISI is registered with the SEC as a
broker dealer under the Securities Exchange Act of 1934 and is a member of the
NASD. Registered representatives of MMLISI sell the contracts as authorized
variable life insurance agents under applicable state insurance laws.
Pursuant to underwriting and servicing agreements, commissions or other fees due
to registered representatives for selling and servicing the contracts are paid
by C.M. Life on behalf of MML Distributors or MMLISI. MML Distributors and
MMLISI also receive compensation for their actions as underwriters of the
contracts.
6. PURCHASES AND SALES OF INVESTMENTS
<TABLE>
<CAPTION>
Government International
For The Year Ended Total Return Growth Securities Equity Money Market Income
December 31, 1998 Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
- ----------------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Cost of purchases $102,610,719 $ 91,258,284 $ 6,318,142 $ 12,913,401 $ 20,208,788 $ 9,249,860
Proceeds from sales $ 74,810,083 $ 49,623,454 $ 6,032,364 $ 15,026,361 $ 17,021,524 $ 7,518,304
</TABLE>
F-7
<PAGE>
Notes To Financial Statements (Continued)
7. NET INCREASE (DECREASE) IN ACCUMULATION UNITS
<TABLE>
<CAPTION>
Government International
For The Year Ended Total Return Growth Securities Equity Money Market Income
December 31, 1998 Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
- ------------------ ------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Units purchased $ 12,547,757 $ 9,271,389 $ 764,428 $ 2,557,243 $ 3,387,881 $ 2,104,616
Units withdrawn (25,010,464.00) (11,026,434) (1,830,858) (3,424,566) (3,150,252) (2,717,327)
Units transferred between
sub-accounts and the
General Account (2,380,643) 1,363,012 717,850 (1,500,649) 1,857,988 1,362,327
------------- ------------- ------------- ------------- ------------- -------------
Net increase (decrease) $ (14,843,350) $ (392,033) $ (348,580) $ (2,367,972) $ 2,095,617 $ 749,616
Units, at beginning of the year 224,379,585 128,553,850 11,672,397 44,128,995 12,091,336 21,424,948
------------- ------------- ------------- ------------- ------------- -------------
Units, at end of the year $ 209,536,235 $ 128,161,817 $ 11,323,817 $ 41,761,023 $ 14,186,953 $ 22,174,564
============= ============= ============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
Government International
For The Year Ended Total Return Growth Securities Equity Money Market Income
December 31, 1997 Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
- ------------------ ------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Units purchased $ 16,378,019 $ 14,130,615 $ 733,847 $ 4,497,931 $ 3,926,075 $ 1,858,460
Units withdrawn (11,576,893) (5,433,187) (1,081,277) (2,125,968) (2,112,329) (1,344,284)
Units transferred between
sub-accounts and the
General Account (5,155,765) 8,009,888 (627,984) 1,249,374 (3,229,532) (1,281,767)
------------- ------------- ------------- ------------- ------------- -------------
Net increase (decrease) $ (354,639) $ 16,707,316 $ (975,414) $ 3,621,337 $ (1,415,786) $ (767,591)
Units, at beginning of the year 224,734,224 111,846,534 12,647,811 40,507,658 13,507,122 22,192,539
------------- ------------- ------------- ------------- ------------- -------------
Units, at end of the year $ 224,379,585 $ 128,553,850 $ 11,672,397 $ 44,128,995 $ 12,091,336 $ 21,424,948
============= ============= ============= ============= ============= =============
</TABLE>
F-8
<PAGE>
Report Of Independent Accountants
To the Board of Directors and Policyholders of
Massachusetts Mutual Life Insurance Company
We have audited the accompanying statutory statements of financial position of
Massachusetts Mutual Life Insurance Company as of December 31, 1998 and 1997,
and the related statutory statements of income and changes in policyholders'
contingency reserves, and of cash flows for each of the three years in the
period ended December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with 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 in Note 1, these financial statements were prepared in conformity
with accounting practices prescribed or permitted by the Division of Insurance
of the Commonwealth of Massachusetts, 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, are presumed to be
material.
In our opinion, because of the effects of the matter discussed in the preceding
paragraph, the financial statements audited by us do not present fairly, in
conformity with generally accepted accounting principles, the financial position
of Massachusetts Mutual Life Insurance Company as of December 31, 1998 and 1997,
or the results of its operations or its cash flows for each of the three years
in the period ended December 31, 1998.
In our opinion, the financial statements audited by us present fairly, in all
material respects, the financial position of Massachusetts Mutual Life Insurance
Company as of December 31, 1998 and 1997, and the results of its operations and
its cash flows for each of the three years in the period ended December 31,
1998, on the basis of accounting described in Note 1.
PricewaterhouseCoopers LLP
Springfield, Massachusetts
February 25, 1999
FF-1
<PAGE>
Massachusetts Mutual Life Insurance Company
STATUTORY STATEMENTS OF FINANCIAL POSITION
December 31,
1998 1997
-------- --------
(In Millions)
Assets:
Bonds $ 25,215.8 $ 23,508.2
Common stocks 296.3 354.7
Mortgage loans 5,916.5 5,245.8
Real estate 1,739.8 1,697.7
Other investments 2,263.7 1,963.8
Policy loans 5,224.2 4,950.4
Cash and short-term investments 1,123.3 1,941.2
----------- -----------
41,779.6 39,661.8
Other assets 1,306.2 1,169.7
----------- -----------
43,085.8 40,831.5
Separate account assets 19,589.7 16,803.1
----------- -----------
$ 62,675.5 $ 57,634.6
=========== ===========
See notes to statutory financial statements.
FF-2
<PAGE>
Massachusetts Mutual Life Insurance Company
STATUTORY STATEMENTS OF FINANCIAL POSITION, Continued
December 31,
1998 1997
-------- --------
(In Millions)
Liabilities:
Policyholders' reserves and funds $ 35,277.0 $ 33,783.2
Policyholders' dividends 1,021.6 954.1
Policyholders' claims and other benefits 332.4 353.4
Federal income taxes 634.9 436.5
Asset valuation and other investment reserves 1,053.4 973.4
Other liabilities 1,578.9 1,457.9
----------- -----------
39,898.2 37,958.5
Separate account liabilities 19,588.5 16,802.8
----------- -----------
59,486.7 54,761.3
Policyholders' contingency reserves 3,188.8 2,873.3
----------- -----------
$ 62,675.5 $ 57,634.6
=========== ===========
See notes to statutory financial statements.
FF-3
<PAGE>
Massachusetts Mutual Life Insurance Company
STATUTORY STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Years Ended December 31,
1998 1997 1996
-------- -------- --------
(In Millions)
<S> <C> <C> <C>
Revenue:
Premium income $ 7,482.2 $ 6,764.8 $ 6,328.6
Net investment income 2,956.8 2,870.2 2,834.4
Fees and other income 154.0 126.7 117.2
--------- --------- ---------
10,593.0 9,761.7 9,280.2
--------- --------- ---------
Benefits and expenses:
Policyholders' benefits and payments 5,873.9 6,583.8 6,048.2
Addition to policyholders' reserves and funds 2,299.6 826.8 945.2
Operating expenses 509.5 450.8 428.0
Commissions 299.3 315.3 335.5
State taxes, licenses and fees 88.1 81.5 96.4
Merger restructuring costs - - 66.1
--------- --------- ---------
9,070.4 8,258.2 7,919.4
--------- --------- ---------
Net gain before federal income taxes and dividends 1,522.6 1,503.5 1,360.8
Federal income taxes 199.3 284.4 276.7
--------- --------- ---------
Net gain from operations before dividends 1,323.3 1,219.1 1,084.1
Dividends to policyholders 982.9 919.5 859.9
--------- --------- ---------
Net gain from operations 340.4 299.6 224.2
Net realized capital gain (loss) 25.4 (42.5) 40.3
--------- --------- ---------
Net income $ 365.8 $ 257.1 $ 264.5
========= ========= =========
</TABLE>
See notes to statutory financial statements.
FF-4
<PAGE>
Massachusetts Mutual Life Insurance Company
STATUTORY STATEMENTS OF CHANGES
IN POLICYHOLDERS' CONTINGENCY RESERVES
<TABLE>
<CAPTION>
Years Ended December 31,
1998 1997 1996
-------- -------- --------
(In Millions)
<S> <C> <C> <C>
Policyholders' contingency reserves,
beginning of year $2,873.3 $2,638.6 $2,600.9
-------- -------- --------
Increases (decreases) due to:
Net income 365.8 257.1 264.5
Net unrealized capital gain (loss) 17.4 119.1 (1.7)
Change in asset valuation and other investment reserves (81.0) (76.0) (142.4)
Change in prior year policyholders' reserves 8.6 (55.4) (72.2)
Other 4.7 (10.1) (10.5)
-------- -------- --------
315.5 234.7 37.7
-------- -------- --------
Policyholders' contingency reserves,
end of year $3,188.8 $2,873.3 $2,638.6
======== ======== ========
</TABLE>
See notes to statutory financial statements.
FF-5
<PAGE>
Massachusetts Mutual Life Insurance Company
STATUTORY STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended December 31,
1998 1997 1996
-------- -------- --------
(In Millions)
<S> <C> <C> <C>
Operating activities:
Net income $ 365.8 $ 257.1 $ 264.5
Addition to policyholders' reserves and funds,
net of transfers to separate accounts 1,472.8 421.3 426.7
Net realized capital (gain) loss (25.4) 42.5 (40.3)
Other changes 15.4 (108.1) (286.1)
--------- --------- ---------
Net cash provided by operating activities 1,828.6 612.8 364.8
--------- --------- ---------
Investing activities:
Loans and purchases of investments (15,981.2) (12,292.7) (10,171.5)
Sales or maturities of investments and receipts
from repayment of loans 13,334.7 12,545.7 8,539.3
--------- --------- ---------
Net cash provided by (used in) investing activities (2,646.5) 253.0 (1,632.2)
--------- --------- ---------
Increase (decrease) in cash and short-term investments (817.9) 865.8 (1,267.4)
Cash and short-term investments, beginning of year 1,941.2 1,075.4 2,342.8
--------- --------- ---------
Cash and short-term investments, end of year $ 1,123.3 $ 1,941.2 $ 1,075.4
========= ========= =========
</TABLE>
See notes to statutory financial statements.
FF-6
<PAGE>
Notes To Statutory Financial Statements
Massachusetts Mutual Life Insurance Company ("the Company") is a mutual life
insurance company and as such has no shareholders. The Company's primary
business is individual life insurance, annuity and disability income
products distributed primarily through career agents. The Company also
provides either directly or through its subsidiaries, a wide range of
pension products and services, as well as investment services to
individuals, corporations and institutions in all 50 states and the District
of Columbia.
On March 1, 1996, the operations of the former Connecticut Mutual Life
Insurance Company ("Connecticut Mutual") were merged into the Company. This
merger was accounted for under the pooling of interests method of
accounting. For the purposes of this presentation, these financial
statements reflect historical amounts giving retroactive effect as if the
merger had occurred on January 1, 1996 in conformity with the practices of
the National Association of Insurance Commissioners ("NAIC") and the
accounting practices prescribed or permitted by the Division of Insurance of
the Commonwealth of Massachusetts. In 1996, merger-related expenses totaling
$66.1 million were recorded in the Statutory Statement of Income. On the
merger date, policyholders' reserves attributable to disability income
contracts were strengthened by $75.0 million, investment reserves for real
estate were increased by $49.8 million and net prepaid pension assets were
increased by $10.4 million with all adjustments reflected as a charge to
policyholders' contingency reserves.
On March 31, 1996, the Company sold MassMutual Holding Company Two, Inc., a
wholly-owned subsidiary, and its subsidiaries, including Mirus Life
Insurance Company (formerly the MML Pension Insurance Company; currently
doing business as "UniCARE"), which comprised the Company's group life and
health business, to WellPoint Health Networks, Inc. The Company received
total consideration of $402.2 million ($340.0 million in cash and $62.2
million in notes receivable) and recognized a before tax gain of $187.9
million. The Company, pursuant to a 1994 reinsurance agreement, cedes its
group life, accident and health business to UniCARE.
1. SUMMARY OF ACCOUNTING PRACTICES
The accompanying statutory financial statements, have been prepared in
conformity with the statutory accounting practices of the NAIC and the
accounting practices prescribed or permitted by the Division of Insurance of
the Commonwealth of Massachusetts and are different in some respects from
financial statements prepared in accordance with generally accepted
accounting principles ("GAAP"). 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, morbidity 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 reported 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 and variable life products,
variable annuities and investment related products are reported as premium
income and changes in reserves, whereas under GAAP, these payments would be
recorded as deposits to policyholders' account balances.
In March 1998, the NAIC adopted the Codification of Statutory Accounting
Principles ("Codification"). Codification provides a comprehensive guide of
statutory accounting principles for use by insurers in all states and is
expected to become effective no later than January 1, 2001. The effect of
adopting Codification shall be reported as an adjustment to policyholders'
contingency reserves on the effective date. The Company is currently
reviewing the impact of Codification; however, since the Division of
Insurance of the Commonwealth of Massachusetts has not approved
Codification, the ultimate impact cannot be determined at this time.
FF-7
<PAGE>
Notes To Statutory Financial Statements (Continued)
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 these financial
statements.
Certain 1997 and 1996 amounts have been reclassified to conform with the
current year presentation.
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
NAIC. Generally, bonds are valued at amortized cost, preferred stocks in
good standing at cost, and common stocks, except for unconsolidated
subsidiaries, at fair value.
Mortgage loans are valued at unpaid principal net of unamortized premium or
discount. The Company discontinues the accrual of interest on mortgage loans
which are delinquent more than 90 days or when collection is uncertain. Real
estate is valued at cost less accumulated depreciation, impairment
allowances and mortgage encumbrances. Encumbrances totaled $63.5 million in
1998 and $14.2 million in 1997. Depreciation on investment real estate is
calculated using the straight-line and constant yield methods.
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.
Investments in unconsolidated subsidiaries and affiliates, joint ventures
and other forms of partnerships are included in other investments on the
Statutory Statement of Financial Position and are accounted for using the
equity method.
In compliance with regulatory requirements, the Company maintains an Asset
Valuation Reserve ("AVR") and an Interest Maintenance Reserve ("IMR"). The
AVR and other investment reserves stabilize the policyholders' contingency
reserves against fluctuations in the value of stocks, as well as declines in
the value of bonds, mortgage loans and real estate investments. The IMR
captures after-tax realized capital gains and losses which result from
changes in the overall level of interest rates for all types of fixed income
investments and interest related hedging activities. These interest rate
related gains and losses are 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 $189.1 million
in 1998, $95.4 million in 1997 and $73.1 million in 1996 were charged to the
IMR. Amortization of the IMR into net investment income amounted to $40.3
million in 1998, $31.0 million in 1997, and $26.9 million in 1996.
Realized capital gains and losses, less taxes, not includible in the IMR,
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 policyholders' contingency reserves.
B. Separate Accounts
Separate account assets and liabilities represent segregated funds
administered and invested by the Company for the benefit of pension,
variable annuity and variable life insurance contractholders. Assets consist
principally of marketable securities reported at fair value. Premiums,
benefits and expenses of the separate
FF-8
<PAGE>
Notes To Statutory Financial Statements (Continued)
accounts are reported in the Statutory Statement of Income. The Company
receives administrative and investment advisory fees from these accounts.
Net transfers to separate accounts of $821.3 million, $355.7 million and
$636.5 million in 1998, 1997 and 1996, respectively, are included in the
addition of policyholders' reserves and funds.
C. Non-admitted Assets
Assets designated as "non-admitted" (principally certain furniture,
equipment and other receivables) are excluded from the Statutory Statement
of Financial Position by an adjustment to policyholders' contingency
reserves.
D. Policyholders' Reserves and Funds
Policyholders' reserves for life insurance 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 the 1941, 1958 and 1980 Commissioners' Standard Ordinary
mortality tables with assumed interest rates ranging from 2.5 to 6.75
percent.
Reserves for individual annuities, guaranteed investment contracts and
deposit administration and immediate participation guarantee contracts are
based on accepted actuarial methods principally at interest rates ranging
from 2.25 to 11.25 percent. Reserves for policies and contracts considered
investment contracts have a carrying value of $7,734.6 million and $8,077.9
million at December 31, 1998 and 1997, respectively with a fair value of
$7,940.6 million and $8,250.0 million at December 31, 1998 and 1997,
respectively, as determined by discounted cash flow projections.
Disability income policy reserves are generally calculated using the two-
year preliminary term, net level premium and fixed net premium methods and
various morbidity tables.
The Company made certain changes in the valuation of policyholders' reserves
which increased policyholders' contingency reserves by $8.6 million in 1998
and decreased policyholders' contingency reserves by $55.4 million and $72.2
million in 1997 and 1996, respectively.
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. Disability
income premiums are recognized as revenue when due. Commissions and other
costs related to issuance of new policies, maintenance and settlement costs
are charged to current operations when incurred.
F. Policyholders' Dividends
The Board of Directors annually approves dividends to be paid in the
following year. These dividends are allocated to reflect the relative
contribution of each group of policies to policyholders' contingency
reserves and consider investment and mortality experience, expenses and
federal income tax charges. The liability for policyholders' dividends is
equal to the estimated amount of dividends to be paid in the following
calendar year.
FF-9
<PAGE>
Notes To Statutory Financial Statements (Continued)
G. Cash and Short-term Investments
For purposes of the Statutory Statement of Cash Flows, the Company considers
all highly liquid investments purchased with a maturity of twelve months or
less to be short-term investments.
H. Policyholders' Contingency Reserves
Policyholders' contingency reserves represent surplus of the Company as
reported to regulatory authorities and are intended to protect policyholders
against possible adverse experience.
2. SURPLUS NOTES
The Company issued surplus notes of $100.0 million at 7.50 percent and $250.0
million at 7.625 percent in 1994 and 1993, respectively. These notes are
unsecured and subordinate to all present and future indebtedness of the
Company, policy claims and prior claims against the Company as provided by
the Massachusetts General Laws. Issuance was approved by the Commissioner of
Insurance of the Commonwealth of Massachusetts ("the Commissioner").
All payments of interest and principal are subject to the prior approval of
the Commissioner. Sinking fund payments are due as follows: $62.5 million in
2021, $87.5 million in 2022, $150.0 million in 2023 and $50.0 million in
2024.
Interest on the notes issued in 1994 is scheduled to be paid on March 1 and
September 1 of each year, to holders of record on the preceding February 15
or August 15, respectively. Interest on the notes issued in 1993 is scheduled
to be paid on May 15 and November 15 of each year, to holders of record on
the preceding May 1 or November 1, respectively. Interest expense is not
recorded until approval for payment is received from the Commissioner.
Interest of $26.6 million was approved and paid in 1998, 1997 and 1996.
The proceeds of the notes, less a $24.4 million reserve in 1998, and a $28.3
million reserve in 1997 for contingencies associated with the issuance of the
notes, are recorded as a component of the Company's policyholders'
contingency reserves as permitted by the Division of Insurance. These surplus
note reserves are included in asset valuation and other investment reserves
on the Statutory Statement of Financial Position.
3. BENEFIT PLANS
The Company provides multiple benefit plans to employees, agents and retirees
including retirement plans and life and health benefits.
Retirement Plans
The Company has two non-contributory defined benefit plans covering
substantially all of its employees. One plan includes active employees and
retirees previously employed by Connecticut Mutual Life Insurance Company
which merged with MassMutual in 1996; the other plan includes all other
eligible employees and retirees. Benefits are based on the employees' years
of service, compensation during the last five years of employment and
estimated social security retirement benefits. The Company accounts for these
plans following Financial Accounting Standards Board Statement No. 87,
"Employers' Accounting for Pensions". Accordingly, as permitted by the
Massachusetts Division of Insurance, the Company has recognized a pension
asset of $216.0 million and $157.4 million at December 31, 1998 and 1997,
respectively. Company policy is to fund pension costs in accordance with the
requirements of the Employee Retirement Income Security Act of 1974 and,
based on such requirements, no funding was required for the years ended
December 31, 1998, and 1997. The assets of the plans are invested in the
Company's general account and separate accounts.
FF-10
<PAGE>
Notes To Statutory Financial Statements (Continued)
The Company also has defined contribution plans for employees and agents. The
Company funds the plans by matching employee contributions, subject to
statutory limits. Company contributions and any earnings on them are vested
based on years of vesting service using a graduated vesting schedule in 20
percent increments over a five-year period.
Life and Health
Life and health insurance benefits are provided to employees and agents
through group insurance contracts. Substantially all of the Company's
employees and agents may become eligible for continuation of certain of these
benefits if they retire as active employees or agents of the Company. The
Company adopted the National Association of Insurance Commissioners'
accounting standard for post retirement life and health benefit costs,
requiring these benefits to be accounted for using the accrual method for
employees and agents eligible to retire and current retirees. The initial
transition obligation of $137.9 million is being amortized over twenty years
through 2012. During 1998, the Company transferred the administration of the
retiree life and health plan benefit obligations and supporting assets to an
unconsolidated subsidiary.
The status of the defined benefit plans as of December 31 is as follows:
Retirement Life and Health
1998 1997 1998 1997
---- ---- ---- ----
(In Millions)
Accumulated benefit obligation
at December 31 $ 822.8 $ 663.1 $ 185.6 $ 145.9
Fair value of plan assets
at December 31 1,160.2 1,154.2 21.0 21.7
--------- --------- -------- --------
Funded status $ 337.4 $ 491.1 $ (164.6) $ (124.2)
========= ========= ======== ========
The following rates were used in determining the actuarial present value of the
accumulated benefit obligations.
<TABLE>
<CAPTION>
Retirement Life and Health
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Discount rate 6.75% 7.25% 6.75% 7.25%
Increase in future compensation
levels 4.00-5.00% 4.00-5.00% 5.00% 5.00-5.50%
Long-term rate of return on assets 9.00-10.00% 9.00-10.00% 6.75% 6.75%
Assumed increases in medical cost
Rates in the first year - - 7.00% 6.25-9.50%
declining to - - 4.25% 4.75-5.00%
within - - 5 years 5 years
</TABLE>
A one percent increase in the annual assumed inflation rate in medical cost
rates would increase the 1998 accumulated postretirement benefit liability and
benefit expense by $9.2 million and $1.1 million, respectively. A one percent
decrease in the annual assumed inflation rate in medical costs rates would
decrease the 1998 accumulated postretirement benefit liability and benefit
expense by $8.5 million and $1.0 million, respectively.
FF-11
<PAGE>
Notes To Statutory Financial Statements (Continued)
The expense charged to operations for all employee benefit plans is $32.1
million in 1998, $23.9 million in 1997 and $38.1 million in 1996. In 1997,
there was a significant reduction in plan participants in the Connecticut
Mutual Plan which resulted in recognition of a pension plan curtailment gain
of $10.7 million.
4. RELATED PARTY TRANSACTIONS
The company has management and service contracts or cost sharing arrangements
with various subsidiaries and affiliates whereby the Company, for a fee, will
furnish a subsidiary or affiliate, as required, operating facilities, human
resources, computer software development and managerial services. Fees earned
under the terms of the contracts or arrangements were $205.0 million and
$137.3 million for 1998 and 1997, respectively.
The Company has reinsurance agreements with its subsidiaries, C.M. Life
Insurance Company and MML Bay State Life Insurance Company, including stop-
loss and modified coinsurance agreements on life insurance products. Total
premiums assumed on these agreements were $38.4 million in 1998, $40.9
million in 1997 and $44.1 million in 1996.
5. FEDERAL INCOME TAXES
Provision for federal income taxes is based upon the Company's estimate of
its current 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, acquisition costs and restructuring costs and of permanent
differences such as the equity tax, resulted in effective tax rates which
differ from the statutory tax rate.
The Company plans to file its 1998 federal income tax return on a
consolidated basis with its eligible life affiliates and non-life affiliates.
C.M. Life Insurance Company, which is not an eligible life affiliate, files a
separate return. The Company and its eligible life insurance and non-life
affiliates are subject to a written tax allocation agreement, which allocates
the group's consolidated tax liability for payment purposes. Generally, the
agreement provides that affiliates with losses shall be compensated for the
use of their losses and credits by other affiliates.
The Internal Revenue Service has completed examining the Company's income tax
returns through the year 1992 for Massachusetts Mutual and 1995 for
Connecticut Mutual, and is currently examining Massachusetts Mutual for the
years 1993 and 1994. The Company believes adjustments which may result from
such examinations will not materially affect its financial position.
Components of the formula authorized by the Internal Revenue Service for
determining deductible policyholder dividends have not been finalized for
1998 or 1997. The Company records the estimated effects of anticipated
revisions in the Statutory Statement of Income.
Federal tax payments were $152.4 million in 1998, $353.4 million in 1997 and
$330.7 million in 1996.
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. In the
normal course of business, the Company enters into commitments to purchase
privately placed bonds and to issue mortgage loans.
FF-12
<PAGE>
Notes To Statutory Financial Statements (Continued)
A. Bonds
The carrying value and estimated fair value of bonds are as follows:
<TABLE>
<CAPTION>
December 31, 1998
-----------------
Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
---------- ---------- ---------- ----------
(In Millions)
<S> <C> <C> <C> <C>
U. S. Treasury securities $ 4,945.3 $ 473.0 $ 20.4 $ 5,397.9
and obligations of U. S.
government corporations
and agencies
Debt securities issued by 41.2 1.5 1.3 41.4
foreign governments
Mortgage-backed securities 3,734.4 188.0 13.9 3,908.5
State and local governments 360.5 33.2 7.9 385.8
Corporate debt securities 14,133.3 845.3 118.4 14,860.2
Utilities 885.8 102.6 0.3 988.1
Affiliates 1,115.3 0.6 0.9 1,115.0
----------- ---------- -------- -----------
TOTAL $ 25,215.8 $ 1,644.2 $ 163.1 $ 26,696.9
=========== ========== ======== ===========
<CAPTION>
December 31, 1997
-----------------
Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
---------- ---------- ---------- ----------
(In Millions)
<S> <C> <C> <C> <C>
U. S. Treasury securities $ 6,241.0 $ 470.5 $ 10.3 $ 6,701.2
and obligations of U. S.
government corporations
and agencies
Debt securities issued by 83.5 4.4 3.0 84.9
foreign governments
Mortgage-backed securities 3,008.7 187.9 9.0 3,187.6
State and local governments 361.9 23.9 .6 385.2
Corporate debt securities 12,148.9 765.2 46.9 12,867.2
Utilities 871.8 100.1 2.2 969.7
Affiliates 792.4 2.8 1.0 794.2
----------- ---------- -------- -----------
TOTAL $ 23,508.2 $ 1,554.8 $ 73.0 $ 24,990.0
=========== ========== ======== ===========
</TABLE>
FF-13
<PAGE>
Notes To Statutory Financial Statements (Continued)
The carrying value and estimated fair value of bonds at December 31, 1998 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 $ 556.5 $ 560.7
Due after one year through five years 4,150.6 4,270.5
Due after five years through ten years 8,622.8 9,045.0
Due after ten years 5,319.5 5,999.6
--------- ---------
18,649.4 19,875.8
Mortgage-backed securities, including
securities guaranteed by the U.S.
Government 6,566.4 6,821.1
--------- ---------
TOTAL $25,215.8 $26,696.9
========= =========
Proceeds from sales of investments in bonds were $11,663.4 million during
1998, $11,427.8 million during 1997 and $6,390.7 million during 1996. Gross
capital gains of $331.8 million in 1998, $200.7 million in 1997 and $188.8
million in 1996 and gross capital losses of $47.3 million in 1998, $68.8
million in 1997 and $255.5 million in 1996 were realized on those sales,
portions of which were included in the IMR. The estimated fair value of non-
publicly traded bonds is determined by the Company using a pricing matrix and
quoted market prices for publicly traded bonds.
B. Stocks
Common stocks, except for unconsolidated subsidiaries, had a cost of $238.4
million in 1998 and $250.3 million in 1997.
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, was $6,178.8 million and $5,039.1 million at December 31,
1998 and 1997, respectively.
The Company had restructured loans with book values of $126.6 million, and
$202.3 million at December 31, 1998 and 1997, respectively. These loans
typically have been modified to defer a portion of the contractual interest
payments to future periods. Interest deferred to future periods totaled $0.1
million in 1998, $5.1 million in 1997 and $2.2 million in 1996. At December
31, 1998, scheduled commercial mortgage loan maturities were as follows:
1999 - $341.0 million; 2000 - $333.0 million; 2001 - $305.2 million; 2002 -
$210.6 million; 2003 - $299.0 million; and $3,106.4 million thereafter.
D. Policy Loans
Policy loans are recorded at cost as it is not practicable to determine the
fair value since they do not have a stated maturity.
E. Other
Preferred stocks in good standing had fair values of $116.0 million in 1998
and $145.5 million in 1997, using a pricing matrix for non-publicly traded
stocks and quoted market prices for publicly traded stocks.
FF-14
<PAGE>
Notes To Statutory Financial Statements (Continued)
The carrying value of investments which were non-income producing for the
preceding twelve months was $13.2 million and $5.7 million at December 31,
1998 and 1997, respectively.
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 financial instruments, described below, which are not
recorded in the financial statements, unless otherwise noted, 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, options, and purchased
caps and floors 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 an
exchange, at specified intervals, between streams of variable rate and fixed
rate interest payments calculated by reference to an agreed-upon notional
principal amount. Gains and losses realized on the termination of contracts
are deferred and amortized through the IMR over the remaining life of the
associated contract. IMR amortization is included in net investment income on
the Statutory Statement of Income. Net amounts receivable and payable are
accrued as adjustments to investment income and included in other assets on
the Statutory Statement of Financial Position. At December 31, 1998 and 1997,
the Company had swaps with notional amounts of $4,382.0 million and $3,220.2
million, respectively. The fair values of these instruments were $84.1
million at December 31, 1998 and $20.9 million at December 31, 1997.
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 fifteen years. The amounts
paid for options purchased are amortized into investment income over the life
of the contract on a straight-line basis. Unamortized costs 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 deferred and amortized through the IMR over the remaining life of the
option contract. At December 31, 1998 and 1997, the Company had option
contracts with notional amounts of $12,704.4 million and $5,388.2 million,
respectively. The Company's credit risk exposure was limited to the
unamortized costs of $92.5 million and $59.0 million, which had fair values
of $161.9 million and $99.6 million at December 31, 1998 and 1997,
respectively.
Interest rate cap agreements grant the purchaser the right to receive the
excess of a referenced interest rate over a stated rate calculated by
reference to an agreed upon notional amount. Interest rate floor agreements
grant the purchaser the right to receive the excess of a stated rate over a
referenced interest rate calculated by reference to an agreed upon notional
amount. Amounts paid for interest rate caps and floors are amortized into
investment income over the life of the asset on a straight-line basis.
Unamortized costs are included in other investments on the Statutory
Statement of Financial Position. Amounts receivable and payable are accrued
as adjustments to investment income and included in the Statutory Statement
of Financial Position as other assets. Gains and losses on these contracts,
including any unamortized cost, are recognized upon termination and are
deferred and amortized through the IMR over the remaining life of the
associated cap or floor agreement. At December 31, 1998 and 1997, the company
had agreements with notional amounts of $4,337.9 million and $3,348.6
million, respectively. The Company's credit risk exposure on these agreements
is limited to the unamortized costs of $22.7 million and $18.2 million at
December 31, 1998 and 1997, respectively. The fair values of these
instruments were $43.9 million and $23.4 million at December 31, 1998 and
1997, respectively.
FF-15
<PAGE>
Notes To Statutory Financial Statements (Continued)
The Company enters into forward U.S. Treasury, and Government National
Mortgage Association ("GNMA") and Federal National Home Mortgage Association
("FNMA") 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 IMR over the remaining life of the asset. At December
31, 1998 and 1997, the Company had U. S. Treasury, GNMA and FNMA purchase
commitments which will settle during the following year with contractual
amounts of $603.4 million and $1,100.7 million, respectively. The fair values
of these commitments were $604.1 million and $1,117.6 million, including net
unrealized gains of $0.7 million and $16.9 million at December 31, 1998 and
1997, respectively.
The Company utilizes other agreements to reduce exposures to various risks.
Notional amounts relating to these agreements totaled $384.2 million and
$385.6 million at December 31, 1998 and 1997, respectively. The fair values
of these instruments resulted in an unrealized gain of $7.2 million at
December 31, 1998 and an unrealized loss of $6.8 million at December 31,
1997.
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 $272.5 million and $146.7 million at
December 31, 1998 and 1997, respectively. The Company monitors exposure to
ensure counterparties are credit worthy and concentration of exposure is
minimized. Additionally, collateral positions have been obtained with
counterparties when considered prudent.
8. INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES
MassMutual has two primary insurance subsidiaries, C.M. Life, which primarily
writes variable annuities and universal life insurance, and MML Bay State,
which primarily writes variable life and annuity business. MassMutual's
wholly-owned non-insurance subsidiary MassMutual Holding Company, Inc.
("MMHC") owns subsidiaries which include retail and institutional asset
management, registered broker dealer and international life and annuity
operations.
MassMutual accounts for the value of its investments in subsidiaries at their
underlying net equity. Operating results for such subsidiaries are reflected
as net unrealized capital gains in the Statement of Changes in Policyholders'
Contingency Reserves. Net investment income is recorded by MassMutual to the
extent that dividends are declared by the subsidiaries. The Company holds
debt issued by MMHC and its subsidiaries of $1,111.3 million and $792.4
million at December 31, 1998 and 1997, respectively.
Below is summarized financial information for the unconsolidated subsidiaries
as of December 31 and for the year then ended:
1998 1997
-------- --------
(In Millions)
Domestic Life Insurance Subsidiaries:
Total revenue $ 1,151.4 $ 1,086.9
Net income (loss) $ (3.2) $ 1.1
Assets $ 4,741.4 $ 3,766.8
Other Subsidiaries:
Total revenue $ 1,137.4 $ 967.2
Net income $ 73.6 $ 75.4
Assets $ 2,839.5 $ 2,018.8
FF-16
<PAGE>
Notes To Statutory Financial Statements (Continued)
9. REINSURANCE
The Company has reinsurance agreements with other insurance companies in the
normal course of business. In addition, the Company cedes the remainder of
its group life and health business to UniCARE. Premiums, benefits to
policyholders and provisions for future benefits are stated net of
reinsurance. The Company remains liable to the insured for the payment of
benefits if the reinsurer cannot meet its obligations under the reinsurance
agreements. Total premiums ceded were $183.9 million in 1998, $294.6 million
in 1997 and $793.5 million in 1996.
10. 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 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 foreseen 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.
11. SUBSIDIARIES AND AFFILIATED COMPANIES
A summary of ownership and relationship of the Company and its subsidiaries
and affiliated companies as of December 31, 1998 is illustrated below. The
Company provides management or advisory services to these companies.
Subsidiaries are wholly-owned, except as noted.
Parent
------
Massachusetts Mutual Life Insurance Company
Subsidiaries of Massachusetts Mutual Life Insurance Company
-----------------------------------------------------------
CM Assurance Company
CM Benefit Insurance Company
C.M. Life Insurance Company
MassMutual Holding Company
MassMutual of Ireland, Limited
MML Bay State Life Insurance Company
MML Distributors, LLC
MassMutual Mortgage Finance, LLC
Subsidiaries of MassMutual Holding Company
------------------------------------------
GR Phelps & Co., Inc.
MassMutual Holding Trust I
MassMutual Holding Trust II
MassMutual Holding MSC, Inc.
MassMutual International, Inc.
MML Investor Services, Inc.
FF-17
<PAGE>
Notes To Statutory Financial Statements (Continued)
Subsidiaries of MassMutual Holding Trust I
------------------------------------------
Antares Capital Corporation - 99.4%
Charter Oak Capital Management, Inc. - 80.0%
Cornerstone Real Estate Advisors, Inc.
DLB Acquisition Corporation - 85.8%
Oppenheimer Acquisition Corporation - 89.36%
Subsidiaries of MassMutual Holding Trust II
-------------------------------------------
CM Advantage, Inc.
CM International, Inc.
CM Property Management, Inc.
HYP Management, Inc.
MMHC Investments, Inc.
MML Realty Management
Urban Properties, Inc.
MassMutual Benefits Management, Inc.
Subsidiaries of MassMutual International, Inc.
----------------------------------------------
Compensa de Seguros de Vida S.A. - 33.5%
MassLife Seguros de Vida (Argentina) S.A.
MassMutual International (Bermuda) Ltd.
Mass Seguros de Vida (Chile) S.A. - 33.5%
MassMutual International (Luxembourg) S.A.
MassMutual Holding MSC, Inc.
----------------------------
MassMutual Corporate Value Limited - 40.93%
9048 - 5434 Quebec, Inc.
1279342 Ontario Limited
Affiliates of Massachusetts Mutual Life Insurance Company
---------------------------------------------------------
MML Series Investment Fund
MassMutual Institutional Funds
Oppenheimer Value Stock Fund
FF-18
<PAGE>
PART C
OTHER INFORMATION
Item 24 Financial Statements and Exhibits
(a) Financial Statements:
Financial Statements Included in Part A
Condensed Financial Information
Financial Statements Included in Part B
Registrant
Reports of Independent Accountants
Statement of Assets and Liabilities as of December 31, 1998
Statement of Operations for the year ended December 31, 1998
Statement of Changes in Net Assets for the years ended December 31,
1998, and 1997
Notes to Financial Statements
The Depositor
Reports of Independent Accountants
Statutory Statements of Financial Position as of December 31, 1998 and
1997
Statutory Statements of Income for the Years ended December 31, 1998,
1997 and 1996
Statutory Statements of Changes in Shareholder's Equity for the years
ended December 31, 1998, 1997 and 1996
Statutory Statements of Cash Flows for the years ended December 31,
1998, 1997 and 1996
Notes to Statutory Financial Statements
(b) Exhibits:
(1) Copy of Resolution of the Board of Directors of C.M. Life Insurance Company
establishing the Separate Account. (7)
(2) Not Applicable.
(3) (a) Form of Distribution Agreement between the Registrant and MML
Distributors LLC.(3)
(b) Copy of Underwriting and Servicing Agreement between MML Investors
Services, Inc. and C.M. Life Insurance Company.(2)
(4) (a) Form of Individual Contract and Certificates for the Panorama Plus
Annuity.(7)
(5) Form of Application for the Panorama Plus Annuity Individual Contract.(7)
(6) (a) Copy of the Articles of Incorporation of C.M. Life Insurance
Company.(4)
(b) Copy of the by-laws of C.M. Life Insurance Company.(4)
(7) Not Applicable.
(8) (a) Form of Participation Agreement with Oppenheimer Variable Account
Funds.(5)
(b) Form of Participation Agreement with Panorama Series Funds, Inc.(5)
(c) Form of Participation Agreement with T. Rowe Price Equity Series,
Inc.(9)
(d) Form of Participation Agreement with Fidelity Variable Insurance
Products Fund II.(9)
9
<PAGE>
(e) Form of Participation Agreement with American Century Variable
Portfolio.(10)
(9) Opinion of and Consent of Counsel.(1)
(10) (i) Consent of Independent Accountants, PricewaterhouseCoopers LLP.(1)
(ii) Copy of the Powers of Attorney (8)
(ii) Copy of the Power of Attorney for Robert J. O'Connell (11)
(11) Not Applicable.
(12) Not Applicable.
(13) Form of Schedule of Computation of Performance(7)
(14) Not Applicable.
(1) Filed herewith.
(2) Incorporated by reference to Exhibit 1(b) to the registration statement on
Form S-1 for C.M. Life Insurance Company (File No. 333-2347) as filed with
the Securities and Exchange Commission on April 8, 1996.
(3) Incorporated by reference to Post-Effective Amendment No. 7 to the
registration statement on Form N-4 for the Panorama Plus Separate Account
(File No. 33-45122) as filed with the Securities and Exchange Commission on
April 23, 1997.
(4) Incorporated by reference to Post Effective Amendment No. 3 to Registration
Statement File No. 33-91072.
(5) Incorporated by reference to Registration Statement File No. 333-22557,
filed on February 28, 1997.
(6) Incorporated by reference to Post Effective Amendment No. 4 to Registration
No. 333-2347
(7) Incorporated by reference to Post-Effective Amendment No. 8 to Registration
Statement No. 33-45122 filed and effective May 1, 1998.
(8) Incorporated by reference to Post-Effective Amendment No. 33-61679 filed on
Form N-4 on December 21, 1998.
(9) Incorporated by reference to Initial Registration Statement No. 333-65887,
filed on October 20, 1998.
(10) Incorporated by reference to Pre-Effective Amendment No. 2 to Registration
Statement No. 333-41667, filed on May 26, 1998.
(11) Incorporated by reference to Post-Effective Amendment No. 6 to Registration
Statement No. 333-41667 filed on Form S-6 in April, 1999.
10
<PAGE>
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
C.M. LIFE INSURANCE COMPANY
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Name, Position, Business Address Principal Occupation(s ) During Past Five Years
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Lawrence V. Burkett, Jr., Director, C.M. Life
President and Chief Executive Officer Director, President and Chief Executive Officer (since 1996)
1295 State Street MassMutual
Springfield, MA 01111 Executive Vice President and General Counsel (since 1993)
Senior Vice President and Deputy General Counsel (1992-1993)
- ---------------------------------------------------------------------------------------------------------------------------------
John B. Davies, Director C.M. Life
1295 State Street Director (since 1996)
Springfield, MA 01111 MassMutual
Executive Vice President (since 1994)
Associate Executive Vice President (1994-1994)
General Agent (1982-1993)
- ---------------------------------------------------------------------------------------------------------------------------------
Isadore Jermyn, Director and Senior C.M. Life
Vice President and Actuary Director (since 1998); Senior Vice President and Actuary (since 1996)
1295 State Street MassMutual
Springfield, MA 01111 Senior Vice President and Actuary (since 1999 and 1995-1998)
Senior Vice President and Chief Actuary (1998-1999)
Vice President and Actuary (1980-1995)
- ---------------------------------------------------------------------------------------------------------------------------------
James E. Miller, Director and Senior C.M. Life
Vice President-Life Operations Director and Senior Vice President-Life Operations (since 1998)
140 Garden Street MassMutual
Hartford, CT 06154 Executive Vice President (since 1997 and 1987-1996)
UniCare Life & Health
Senior Vice President (1996-1997)
- ---------------------------------------------------------------------------------------------------------------------------------
Robert J. O'Connell, Director C.M. Life
1295 State Street Director (since 1999)
Springfield, MA 01111 MassMutual
President and Chief Executive Officer (since 1999)
American International Group, Inc.
Senior Vice President (1991-1998)
AIG Life Companies
President and Chief Executive Officer (1991-1998)
- ---------------------------------------------------------------------------------------------------------------------------------
Stuart H. Reese, Director and Senior C.M. Life
Vice President-Investments Director and Senior Vice President-Investments (since 1996)
1295 State Street MassMutual
Springfield, MA 01111 Chief Executive Director-Investment Management (since 1997)
Senior Vice President (1993-1997)
Aetna Life and Casualty and Affiliates
Investment Manager (1979-1993)
- ---------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OFFICERS (other than those who are also Directors):
- ---------------------------------------------------------------------------------------------------------------------------------
Anne Melissa Dowling, Senior Vice C.M. Life
President-Large Corporate Marketing Senior Vice President-Large Corporate Marketing (since 1996)
140 Garden Street MassMutual
Hartford, CT 06154 Senior Vice President (since 1996)
Connecticut Mutual Life Insurance Company
Chief Investment Officer (1994-1996)
Travelers Insurance Co.
Senior Vice President-International (1987-1993)
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Edward M. Kline, Treasurer C.M. Life
1295 State Street Treasurer (since 1997)
Springfield, MA 01111 MassMutual
Vice President (since 1989) and Treasurer (since 1997)
- ---------------------------------------------------------------------------------------------------------------------------------
Ann F. Lomeli, Secretary C.M. Life
1295 State Street Secretary (since 1988)
Springfield, MA 01111 MassMutual
Vice President, Secretary and Deputy General Counsel (since 1999)
Vice President, Secretary and Associate General Counsel (1998-1999)
Vice President, Associate Secretary and Associate General Counsel
(1996-1998)
Connecticut Mutual Life Insurance Company
Corporate Secretary and Counsel (1988-1996)
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
The assets of the Registrant, under state law, are assets of C.M. Life.
C.M. Life Insurance Company is 100% owned by Massachusetts Mutual Life Insurance
Company.
The Registrant may also be deemed to be under common control with other separate
accounts established by MassMutual and its life insurance subsidiaries, C.M.
Life Insurance Company and MML Bay State Life Insurance Company, which are
registered as unit investment trusts under the Investment Company Act of 1940.
The discussion that follows indicates those entities owned directly or
indirectly by Massachusetts Mutual Life Insurance Company:
12
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
CORPORATE ORGANIZATION
A. DIRECT SUBSIDIARIES OF MASSMUTUAL
MassMutual is the sole owner of each subsidiary unless otherwise indicated.
1. CM Assurance Company, a Connecticut corporation which operates as a life
and health insurance company. This subsidiary is inactive.
2. CM Benefit Insurance Company, a Connecticut corporation which operates as a
life and health insurance company. This subsidiary is inactive.
3. C.M. Life Insurance Company, a Connecticut corporation which operates as a
life and health insurance company.
4. MML Bay State Life Insurance Company, a Connecticut corporation which
operates as a life and health insurance company.
5. MML Distributors, LLC, a Connecticut limited liability company which
operates as a securities broker-dealer. (MassMutual - 99%; G.R. Phelps &
Co., Inc. - 1%)
6. MassMutual of Ireland, Limited, a corporation organized in the Republic of
Ireland which formerly operated to provide claims service to holders of
MassMutual group life and accident and health insurance contracts. This
subsidiary is inactive and will be dissolved in the near future.
7. MassMutual Holding Company, a Delaware corporation which operates as a
holding company for certain MassMutual entities.
8. MassMutual Mortgage Finance, LLC, a Delaware limited liability company
which makes, acquires, holds and sells mortgage loans.
B. MASSMUTUAL HOLDING COMPANY GROUP
MassMutual Holding Company is the sole owner of each subsidiary or
affiliate unless otherwise indicated.
1. G.R. Phelps & Co, Inc., a Connecticut corporation which formerly operated
as a securities broker-dealer. This subsidiary is inactive and expected to
be dissolved.
2. MML Investors Services, Inc., a Massachusetts corporation which operates as
a securities broker-dealer. (MassMutual Holding Company - 86%; G.R. Phelps
& Co., Inc. - 14%)
3. MassMutual Holding MSC, Inc., a Massachusetts corporation which operates as
a holding company for MassMutual positions in investment entities organized
outside of the United States. This subsidiary qualifies as a "Massachusetts
Security Corporation" under Chapter 63 of the Massachusetts General Laws.
4. MassMutual Holding Trust I, a Massachusetts business trust which operates
as a holding company for separately-staffed MassMutual investment
subsidiaries.
5. MassMutual Holding Trust II, a Massachusetts business trust which operates
as a holding company for non-staffed MassMutual investment subsidiaries.
6. MassMutual International, Inc., a Delaware corporation which operates as a
holding company for those entities constituting MassMutual's international
insurance operations.
13
<PAGE>
C. MML INVESTORS SERVICES, INC. GROUP
Set forth below are the direct and indirect subsidiaries of MML Investors
Services, Inc. The parent is the sole owner of each subsidiary unless
otherwise indicated.
Direct Subsidiaries of MML Investors Services, Inc.
1. MML Insurance Agency, Inc., a Massachusetts corporation which operates as
an insurance broker.
2. MML Securities Corporation, a Massachusetts corporation which operates as a
"Massachusetts Security Corporation" under Section 63 of the Massachusetts
General Laws.
Direct Subsidiaries of MML Insurance Agency, Inc.
1. DISA Insurance Services of America, Inc., an Alabama corporation which
operates as an insurance broker.
2. Diversified Insurance Services of America, Inc., a Hawaii corporation which
operates as an insurance broker.
3. MML Insurance Agency of Mississippi, P.C., a Mississippi corporation which
operates as an insurance broker.
4. MML Insurance Agency of Nevada, Inc., a Nevada corporation which operates
as an insurance broker.
5. MML Insurance Agency of Ohio, Inc. an Ohio corporation which operates as an
insurance broker. (Controlled by MML Insurance Agency, Inc. through a
voting trust agreement.)
6. MML Insurance Agency of Texas, Inc., a Texas corporation which operates as
an insurance broker. (Controlled by MML Insurance Agency, Inc. through an
irrevocable proxy arrangement.)
D. MASSMUTUAL HOLDING MSC, INC. GROUP
MassMutual Holding MSC, Inc. is the sole owner of each subsidiary or
affiliate unless otherwise indicated.
1. MassMutual Corporate Value Limited, a Cayman Islands corporation which
holds a 90% ownership interest in MassMutual Corporate Value Partners
Limited, another Cayman Islands corporation operating as a high-yield bond
fund. (MassMutual Holding MSC, Inc. - 46%)
2. 9048-5434 Quebec, Inc., a Canadian corporation which operates as the owner
of Hotel du Parc in Montreal, Quebec, Canada.
3. 1279342 Ontario Limited, a Canadian corporation which operates as the owner
of Deerhurst Resort in Huntsville, Ontario, Canada.
E. MASSMUTUAL HOLDING TRUST I GROUP
Set forth below are the direct and indirect subsidiaries and affiliates of
MassMutual Holding Trust I. The parent is the sole owner of each subsidiary
unless otherwise indicated.
Direct Subsidiaries of MassMutual Holding Trust I
1. Antares Capital Corporation, a Delaware corporation which operates as a
finance company. (MassMutual Holding Trust I - 99%)
14
<PAGE>
2. Charter Oak Capital Management, Inc., a Delaware corporation which operates
as a manager of institutional investment portfolios. (MassMutual Holding
Trust I - 80%)
3. Cornerstone Real Estate Advisers, Inc., a Massachusetts corporation which
operates as an investment adviser.
4. DLB Acquisition Corporation, a Delaware corporation which operates as a
holding company for the David L. Babson companies (MassMutual Holding Trust
I - 85%).
5. Oppenheimer Acquisition Corp., a Delaware corporation which operates as a
holding company for the Oppenheimer companies (MassMutual Holding Trust I -
89%).
Direct Subsidiary of DLB Acquisition Corporation
David L. Babson and Company Incorporated, a Massachusetts corporation which
operates as an investment adviser.
Direct Affiliates of David L. Babson and Company Incorporated
1. Babson Securities Corporation, a Massachusetts corporation which operates
as a securities broker-dealer.
2. Babson-Stewart Ivory International, a Massachusetts general partnership
which operates as an investment adviser. (David L. Babson and Company
Incorporated - 50%).
3. Potomac Babson Incorporated, a Massachusetts corporation which operates as
an investment adviser (David L. Babson and Company Incorporated - 60%).
Direct Subsidiary of Oppenheimer Acquisition Corp.
OppenheimerFunds, Inc., a Colorado corporation which operates as the investment
adviser to the Oppenheimer Funds.
Direct Subsidiaries of OppenheimerFunds, Inc.
1. Centennial Asset Management Corporation, a Delaware corporation which
operates as investment adviser and general distributor of the Centennial
Funds.
2. HarbourView Asset Management Corporation, a New York corporation which
operates as an investment adviser.
3. OppenheimerFunds Distributor, Inc., a New York corporation which operates
as a securities broker-dealer.
4. Oppenheimer Partnership Holdings, Inc., a Delaware corporation which
operates as a holding company.
5. Oppenheimer Real Asset Management, Inc., a Delaware corporation which is
the sub-adviser to a mutual fund investing in the commodities markets.
6. Shareholder Financial Services, Inc., a Colorado corporation which operates
as a transfer agent for mutual funds.
7. Shareholder Services, Inc., a Colorado corporation which operates as a
transfer agent for various Oppenheimer and MassMutual funds.
15
<PAGE>
Direct Subsidiary of Centennial Asset Management Corporation
Centennial Capital Corporation, a Delaware corporation which formerly sponsored
a unit investment trust.
Direct Affiliate of Cornerstone Real Estate Advisers, Inc.
Cornerstone Office Management, LLC, a Delaware limited liability company which
serves as the general partner of Cornerstone Suburban Office, L.P. (Cornerstone
Real Estate Advisers, Inc. - 50%; MML Realty Management Corporation - 50%).
F. MASSMUTUAL HOLDING TRUST II GROUP
MassMutual Holding Trust II is the sole owner of each subsidiary.
1. CM Advantage, Inc., a Connecticut corporation which serves as a general
partner of real estate limited partnerships. The subsidiary is largely
inactive and will be dissolved in the near future.
2. CM International, a Delaware corporation which is the issuer of
collateralized mortgage obligation securities.
3. CM Property Management, Inc., a Connecticut corporation which serves as the
general partner of Westheimer 335 Suites Limited Partnership. The
partnership holds a ground lease with respect to hotel property in Houston,
Texas.
4. HYP Management, Inc., a Delaware corporation which operates as the "LLC
Manager" of MassMutual High Yield Partners II LLC, a high yield bond fund.
5. MassMutual Benefits Management, Inc., a Delaware corporation which supports
MassMutual with benefit plan administration and planning services.
6. MMHC Investment, Inc., a Delaware corporation which is a passive investor
in MassMutual/Darby CBO IM, Inc., MassMutual/Darby CBO LLC, MassMutual High
Yield Partners II LLC, and other MassMutual investments.
7. MML Realty Management Corporation, a Massachusetts corporation which
formerly operated as a manager of properties owned by MassMutual.
8. Urban Properties, Inc., a Delaware corporation which serves as a general
partner of real estate limited partnerships and as a real estate holding
company.
Direct Affiliate of MMHC Investment, Inc.
MassMutual/Darby CBO IM Inc., a Delaware corporation which operates as the "LLC
Manager" of MassMutual/Darby CBO LLC, a collateralized bond obligation fund.
(MMHC Investment, Inc. - 50%)
Direct Affiliate of MML Realty Management Corporation
Cornerstone Office Management, LLC, a Delaware limited liability company which
serves as the general partner of Cornerstone Suburban Office, L.P. (MML Realty
Management Corporation - 50%; Cornerstone Real Estate Advisers, Inc. - 50%).
G. MASSMUTUAL INTERNATIONAL, INC. GROUP
16
<PAGE>
Set forth below are the direct or indirect subsidiaries and affiliates of
MassMutual International, Inc. The parent is the sole owner of each
subsidiary or affiliate unless otherwise indicated.
Direct Affiliates of MassMutual International, Inc.
1. MassMutual Internacional (Argentina) S.A., a corporation organized in the
Argentine Republic which operates as a holding company. (MassMutual
International, Inc. - 99%; MassMutual Holding Company - 1%)
2. MassMutual Internacional (Chile) S.A., a corporation organized in the
Republic of Chile which operates as a holding company. (MassMutual
International, Inc. - 99%; MassMutual Holding Company - 1%)
3. MassMutual International (Bermuda) Ltd., a corporation organized in Bermuda
which operates as a life insurance company.
4. MassMutual International (Luxembourg) S.A., a corporation organized in the
Grand Duchy of Luxembourg which operates as a life insurance company.
(MassMutual International, Inc. - 99%; MassMutual Holding Company - 1%)
5. MassLife Seguros de Vida, S.A., a corporation organized in the Argentine
Republic which operates as a life insurance company. (MassMutual
International, Inc. - 99.9%)
Direct Subsidiaries of MassMutual Internacional (Argentina) S.A.
MassMutual Services S.A., a corporation organized in the Argentine Republic
which operates as a service company. (MassMutual Internacional (Argentina) S.A.
- - 99%; MassMutual International, Inc. - 1%)
Direct Affiliate of MassMutual Internacional (Chile) S.A.
1. Mass Seguros de Vida S.A., a corporation organized in the Republic of Chile
which operates as a life insurance company. (MassMutual Internacional
(Chile) S.A. - 33.5%)
2. Origen Inversiones S.A., a corporation organized in the Republic of Chile
which operates as a holding company. (MassMutual Internacional (Chile) S.A.
- 33.5%)
Direct Subsidiary of Origen Inversiones S.A.
Compania de Seguros Vida Corp S.A., corporation organized in the Republic of
Chile which operates as an insurance company. (Origen Inversiones S.A. - 99%)
H. REGISTERED INVESTMENT COMPANY AFFILIATES
Each of the following entities is a registered investment company sponsored by
MassMutual or one of its affiliates.
1. DLB Fund Group, a Massachusetts business trust which operates as an
open-end investment company advised by David L. Babson and Company
Incorporated. MassMutual owns at least 25% of each series of shares issued
by the fund.
2. MML Series Investment Fund, a Massachusetts business trust which operates
as an open-end investment company. All shares issued by the trust are owned
by MassMutual and certain of its affiliates.
3. MassMutual Corporate Investors, a Massachusetts business trust which
operates as a closed-end investment company. MassMutual serves as
investment adviser to the trust.
17
<PAGE>
4. MassMutual Institutional Funds, a Massachusetts business trust which
operates as an open-end investment company. All shares issued by the trust
are owned by MassMutual.
5. MassMutual Participation Investors, a Massachusetts business trust which
operates as a closed-end investment company. MassMutual serves as
investment adviser to the trust.
6. Oppenheimer Series Fund, Inc., a Maryland corporation which operates as an
open-end investment company. MassMutual and affiliates own a majority of
certain series of shares issued by the fund.
7. Panorama Series Fund, Inc., a Maryland corporation which operates as an
open-end investment company. All shares issued by the fund are owned by
MassMutual and certain affiliates.
ITEM 27. NUMBER OF CONTRACT OWNERS
As of February 28, 1999, there were 22,205 Contract Owners in the Separate
Account.
ITEM 28. INDEMNIFICATION
The following provisions regarding the Indemnification of Directors and Officers
of the Registrant are applicable: Connecticut Law. Because all directors and
officers of the Registrant shall serve at the request of its parent corporation,
Connecticut Mutual Life Insurance Company, a Connecticut nonstock corporation,
indemnification of the directors and officers may be provided by Connecticut
Mutual Life Insurance Company. Except where an applicable insurance policy is
procured, Connecticut General Statutes ("C.G.S.") Section 33-454a governs
indemnification by a nonstock corporation of persons who are serving at its
request as directors or officers of a stock corporation. Under C.G.S. Section
33-454a, a nonstock corporation shall indemnify any director or officer who was
or is a party, or was threatened to be made a party, to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (hereinafter referred to as "proceeding") by virtue of the fact
that he or the person whose legal representative he is or was serving at the
request of the nonstock corporation as a director or officer of a stock
corporation, against "covered expenditures" if (and only if) his conduct met the
applicable statutory eligibility standard. The types of expenditures which are
covered and the statutory eligibility standard vary according to the type of
proceeding to which the director or officer is or was a party or was threatened
to be made a party.
According to C.G.S. Section 33-454a, in non-derivative proceedings other than
ones brought in connection with an alleged claim based upon the purchase or sale
by a director or officer of securities of stock corporation, which the director
or officer serves or served at the request of the nonstock corporation, the
nonstock corporation shall indemnify a director or officer against judgements,
fines, penalties, amounts paid in settlement and reasonable expenses, including
attorneys' fees, actually incurred by him in connection with the proceeding, or
any appeal therein, if and only if he acted (i) in good faith and (ii) in a
manner he reasonably believed to be in the best interests of the nonstock
corporation. However, where the proceeding brought is criminal in nature, C.G.S.
Section 33-454a requires that the director of officer must satisfy the
additional condition that he had no reasonable cause to believe that his conduct
was unlawful in order to be indemnified. A director or officer also will be
entitled to indemnification as described above if (i) he is successful on the
merits in the defense of any non-derivative proceeding brought against him or
(ii) a court shall have determined that in view of all the circumstances he is
fairly and reasonably entitled to be indemnified. The decision about whether the
director or officer qualifies for indemnification under C.G.S, Section 33- 454a
may be made (i) in writing by a majority of those members of the board of
directors of the nonstock corporation who were not parties to the proceeding in
question, (ii) in writing by independent legal counsel selected by a consent in
writing signed by a majority of those directors who were not parties to the
proceeding, (iii) in the case of an employee or an agent of the nonstock
corporation who is serving as a director or an officer of a stock corporation at
the request of the nonstock corporation, by the nonstock corporation's general
counsel, or (iv) by the members of the nonstock corporation entitled to vote
thereon. A director or officer also may apply to a court of competent
jurisdiction for indemnification even though he previously applied to the board,
independent legal counsel, the general counsel or the members and his
application for indemnification was rejected.
18
<PAGE>
For the purposes of C.G.S. Section 33-454a, the termination of any proceeding by
judgement, order, settlement, conviction or upon a plea of nolo contendere or
its equivalent shall not create, of itself, a presumption that the director or
officer did not act in good faith or in a manner which that director or officer
did not believe reasonably to be in the best interests of the nonstock
corporation. Likewise, the termination of a criminal act or proceeding shall not
create, of itself, a presumption that the director or officer had reasonable
cause to believe that his conduct was unlawful.
In non derivative proceedings based on the purchase or sale of securities of the
stock corporation, which the director or officer serves or served at the request
of the nonstock corporation, C.G.S. Section 333-454a provides that the nonstock
corporation shall indemnify the director or officer only after a court shall
have determined upon application that, in view of all the circumstance, the
director or officer is fairly and reasonably entitled to be indemnified.
Furthermore, the expenditures for which the director or officer shall be
indemnified shall be only such amount as the court determines to be appropriate.
Pursuant to C.G.S. Section 33-454a, where a director or officer was or is a
party or was threatened to be made a party to a derivative proceeding, the
nonstock corporation shall indemnify him against expenses, including attorneys'
fees, actually and reasonably incurred by him in connection with the proceeding
or any appeal therein, in relation to matters as to which he is finally adjudged
not to have breached his duty to the nonstock corporation. The nonstock
corporation also shall indemnify a director or officer where the court
determined that, in view of all the circumstances, such person is fairly and
reasonably entitled to be indemnified; however, in such a situation, the
individual shall be indemnified only for such amount as the court determines to
be appropriate. Furthermore, the statute provides that the nonstock corporation
shall not indemnify a director or officer for amounts paid to the nonstock
corporation, to a plaintiff or to counsel for a plaintiff in settling or
otherwise disposing of a threatened or pending action, with or without court
approval, or for expenses incurred in defending a threatened action or a pending
action which is settled or otherwise disposed of without court approval.
C.G.S. Section 33-454a also provides that expenses incurred in defending a
proceeding may be paid by the nonstock corporation in advance of the final
disposition of such proceeding upon authorization of the board or directors of
the nonstock corporation, provided said expenses are indemnifiable under the
statute and the director of officer agrees to repay such amount if he is later
found not entitled to indemnification by the nonstock corporation.
Any provision in the certificate of incorporation, the by-laws, a member or
director resolution, of agreement or otherwise that is inconsistent with C.G.S.
Section 33-454a is invalid; provided, however, that the statute specifically
authorizes a nonstock corporation to procure insurance providing greater
indemnification rights than those set out in C.G.S. Section 33-454a, the premium
cost of which may be shared with the director or officer on such basis as my be
agreed upon.
Indemnification provided by Connecticut Mutual Life Insurance Company to the
directors and officers of the Registrant may also be governed by C.G.S. Section
38-27b, which governs indemnification of persons serving as directors and
officers of a stock corporation at the request of a mutual insurance company.
Under C.G.S. Section 38- 27b, the extent of indemnification that may be provided
by a mutual insurance company is more limited than that which may be provided by
a nonstock corporation under C.G.S. Section 33-454a. Unlike a nonstock
corporation, a mutual insurance company may not provide indemnification based
solely on a determination that: (i) the director or officer was successful on
the merits in the proceeding, or (ii) in view of all circumstances, the director
or officer is fairly and reasonably entitled to be indemnified. Furthermore,
unlike a nonstock corporation, a mutual insurance company may not indemnify an
employee or an agent of the mutual company serving at its request as a director
or an officer of a stock corporation based solely on a determination by the
general counsel of the nonstock corporation that the director or officer has met
the applicable standard of behavior entitling him to indemnification.
The Directors and Officers of the Registrant are covered under a Directors and
Officers liability policy written by Sargasso Mutual Insurance Company, Ltd.
naming the Directors and Officers of Connecticut Mutual Life Insurance Company
and its subsidiaries (including the Registrant) as insureds. Such Directors and
Officers are indemnified for loss arising from any claim by reason of any
Wrongful Act in their capacities as Directors or Officers. The term "loss" means
any amount which the Insureds are legally obligated to pay for a claim for
Wrongful Acts. The term "Wrongful
19
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Act" means any of alleged breach of duty, neglect, error, misstatement,
misleading statement or omission actually or allegedly caused, committed or
attempted by a Director of Officer while acting individually or collectively in
their capacity as such, claimed against them solely by reason of their Directors
and Officers. The limit of liability under the policy is $15,000,000 each policy
year.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provision, or otherwise, the registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Item 29. Principal Underwriters
(a) MML Distributors, LLC, a controlled subsidiary of MassMutual,
acts as principal underwriter for registered separate accounts
of MassMutual, C.M. Life and MML Bay State.
(b)(1) MML Distributors, LLC, is the principal underwriter for the
contracts. The following people are officers and member
representatives of the principal underwritier.
OFFICERS AND MEMBER REPRESENTATIVES
MML DISTRIBUTORS, LLC
<TABLE>
<S> <C> <C>
Kenneth M. Rickson Member Representative One Monarch Place
G.R. Phelps & Co., Inc. 1414 Main Street
Springfield, MA 01144-1013
Margaret Sperry Member Representative 1295 State Street
Massachusetts Mutual Springfield, MA 01111-0001
Life Insurance Co.
Kenneth M. Rickson Chief Executive Officer, One Monarch Place
President, and Main OSJ 1414 Main Street
Supervisor Springfield, MA 01144-1013
John E. Forrest Vice President One Monarch Place
1414 Main Street
Springfield, MA 01144-1013
Michael L. Kerley Vice President One Monarch Place
Assistant Secretary 1414 Main Street
Springfield, MA 01144-1013
Ronald E. Thomson Vice President One Monarch Place
1414 Main Street
Springfield, MA 01144-1013
James T. Bagley Treasurer 1295 State Street
Springfield, MA 01111
Bruce C. Frisbie Assistant Treasurer 1295 State Street
Springfield, MA 01111-0001
</TABLE>
20
<PAGE>
<TABLE>
<S> <C> <C>
Raymond W. Anderson Assistant Treasurer 140 Garden Street
Hartford, CT 06154
Ann F. Lomeli Secretary 1295 State Street
Springfield, MA 01111-0001
Marilyn A. Sponzo Chief Legal Officer One Monarch Place
Assistant Secretary 1414 Main Street
Springfield, MA 01144-1013
Robert Rosenthal Compliance Officer One Monarch Place
1414 Main Street
Springfield, MA 01144-1013
Melissa Thompson Registration Manager One Monarch Place
1414 Main Street
Springfield, MA 01144-1013
Ruth B. Howe Director of Continuing One Monarch Place
Education 1414 Main Street
Springfield, MA 01144-1013
Peter D. Cuozzo Variable Life Supervisor 140 Garden Street
and Hartford OSJ Supervisor Hartford, CT 06154
Anne Melissa Dowling Large Corporate 140 Garden Street
Markets Supervisor Hartford, CT 06154
</TABLE>
(b)(2) MML Investors Services, Inc. is the co-underwriter of the
contracts. The following people are the officers and directors
of the co-underwriter.
MML INVESTORS SERVICES, INC.
OFFICERS AND DIRECTORS
<TABLE>
<CAPTION>
OFFICER BUSINESS ADDRESS
- ------- ----------------
<S> <C>
Kenneth M. Rickson One Monarch Place
President 1414 Main Street
Springfield, MA 01144-1013
Michael L. Kerley One Monarch Place
Vice President, Chief Legal Officer, 1414 Main Street
Chief Compliance Officer, Assistant Secretary Springfield, MA 01144-1013
Ronald E. Thomson One Monarch Place
Vice President, Treasurer 1414 Main Street
Springfield, MA 01144-1013
Ann F. Lomeli 1295 State Street
Secretary/Clerk Springfield, MA 01111
John E. Forrest One Monarch Place
Vice President 1414 Main Street
National Sales Director Springfield, MA 01144-1013
Marilyn A. Sponzo One Monarch Place
Assistant Secretary 1414 Main Street
Springfield, MA 01144-1013
James Furlong One Monarch Place
Chief Operations Officer 1414 Main Street
Springfield, MA 01144-1013
</TABLE>
21
<PAGE>
<TABLE>
<S> <C>
James T. Bagley One Monarch Place
Controller 1414 Main Street
Springfield, MA 01144-1013
David Deonarine One Monarch Place
Sr. Registered Options Principal 1414 Main Street
Compliance Registered Options Principal Springfield, MA 01144-1013
Nicholas J. Orphan 245 Peach Tree Center Ave., Suite 2330
Regional Supervisor (South) Atlanta, GA 30303
Robert W. Kumming 1295 State Street
Retirement Services Regional Supervisor Springfield, MA 01111
(East/Central)
Peter J. Zummo 1295 State Street
Retirement Services Regional Supervisor(South/West) Springfield, MA 01111
Bruce Lukowiak 6263 North Scottsdale Rd., Suite 222
Regional Supervisor (West) Scottsdale, AZ 85250
Gary L. Greenfield 1 Lincoln Center, Suite 1490
Regional Supervisor (Central) Oakbrook Terrace, IL 60181
Burvin E. Pugh, Jr. 1295 State Street
Chief Agency Field Force Supervisor Springfield, MA 01111
John P. McCloskey 1295 State Street
Regional Supervisor (East) Springfield, MA 01144
Robert J. O'Connell 1295 State Street
Chairman of the Board of Directors Springfield, MA 01144
Susan Alfano 1295 State Street
Director Springfield, MA 01111
Lawrence V. Burkett, Jr. 1295 State Street
Director Springfield, MA 01111
John B. Davies 1295 State Street
Director Springfield, MA 01111
Anne Melissa Dowling 140 Garden Street
Director Hartford, CT 01654
Gary T. Huffman 1295 State Street
Director Springfield, MA 01111
Douglas J. Jangraw 140 Garden Street
Director Hartford, CT 01654
Burvin E. Pugh, Jr. 1295 State Street
Director Springfield, MA 01111
</TABLE>
(c) See the section captioned "Distribution" in the Statement of
Additional Information.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The records to be maintained by Section 31(a) of the Investment Company Act of
1940 and Rules 31a-1 to 31a-3 promulgated thereunder, are maintained by C.M.
Life at 140 Garden Street, Hartford, Connecticut 06154 and by MMLISI at 1414
Main Street, Springfield, MA 01144-1013.
ITEM 31. MANAGEMENT SERVICES.
None.
22
<PAGE>
ITEM 32. UNDERTAKINGS
(a) Registrant undertakes that it will file a post-effective amendment to this
registration statement as frequently as necessary to ensure that the audited
financial statements in the registration statement are never more than 16 months
old for so long as Purchase Payments under the Contract may be accepted (except
in accordance with SEC staff no-action correspondence).
(b) Registrant undertakes that it will include either (i) a postcard or similar
written communication affixed to or included in the Prospectus that the
applicant can remove to send for a Statement of Additional Information or (ii) a
space in the Contract application that an applicant can check to request a
Statement of Additional Information.
(c) Registrant undertakes to deliver any Statement of Additional Information and
any financial statements required to be made available under this Form promptly
upon written or oral request of C.M. Life at the address or phone number listed
in the Prospectus.
(D) Section 403(B) Representations
C.M. Life represents that it is relying on a no-action letter dated November 28,
1988, to the American Council of Life Insurance (Ref. No. IP-6-88), regarding
Sections 22(e), 27(c)(1), and 27(d) of the Investment Company Act of 1940, in
connection with redeemability restrictions on Section 403(b) Contracts, and that
paragraph numbered (1) through (4) of the letter will be complied with.
(e) Statement Pursuant To Rule 6c-7: Texas Optional Retirement Program
C.M. Life and the Separate Account rely of 17 C.F.R. ss. 270.6c-7, and represent
that the provisions of that Rule have been or will be complied with.
(f) C.M. Life Insurance Company hereby represents that the fees and charges
deducted under the group and individual flexible premium deferred annuity
contracts described in this Registration Statement in the aggregate, are
reasonable in relation to the services rendered, the expenses expected to be
incurred, and the risks assumed by C.M. Life Insurance Company.
23
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Panorama Plus Separate Account, certifies that it meets all of the requirement
for effectiveness of this Post-Effective Amendment No. 9 pursuant to Rule 485(b)
under the Securities Act of 1933 and has caused this Post-Effective Amendment
No. 9 to Registration Statement No. 33-45122 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 22nd day of April, 1999.
PANORAMA PLUS SEPARATE ACCOUNT
C.M. LIFE INSURANCE COMPANY
(Depositor)
By: /s/ Lawrence V. Burkett, Jr.*
---------------------------------
Lawrence V. Burkett, Jr., Director, President and Chief
Executive Officer
C.M. Life Insurance Company
/s/ Richard M. Howe On April 22, 1999, as Attorney-in-Fact pursuant to
- --------------------- powers of attorney.
*Richard M. Howe
As required by the Securities Act of 1933, this Post-Effective Amendment
No. 9 to Registration Statement No. 33-45122 has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Lawrence V. Burkett, Jr.* Director, President and Chief April 22, 1999
- ------------------------------- Executive Officer
Lawrence V. Burkett, Jr.
/s/ Edward M. Kline* Vice President and Treasurer April 22, 1999
- ------------------------------- (Principal Financial Officer)
Edward M. Kline
/s/ John M. Miller, Jr.* Vice President and Comptroller April 22, 1999
- ------------------------------- (Principal Accounting Officer)
John M. Miller Jr.
/s/ John B. Davies* Director April 22, 1999
- -------------------------------
John B. Davies
/s/ Stuart H. Reese* Director April 22, 1999
- -------------------------------
Stuart H. Reese.
/s/ Isadore Jermyn* Director April 22, 1999
- -------------------------------
Isadore Jermyn
/s/ James Miller* Director April 22, 1999
- -------------------------------
James Miller
/s/ Robert J. O'Connell* Director April 22, 1999
- -------------------------------
Robert J. O'Connell
/s/ Richard M. Howe On April 22, 1999, as Attorney-in-Fact pursuant to
- ------------------------------- powers of attorney.
*Richard M. Howe
</TABLE>
24
<PAGE>
REPRESENTATION BY REGISTRANT'S COUNSEL
As attorney to the Registrant, I, James M. Rodolakis, have reviewed this
Post-Effective Amendment No. 9 to Registration Statement No. 33-45122, and
represent, pursuant to the requirement of paragraph (e) of Rule 485 under the
Securities Act of 1933, that this Amendment does not contain disclosures which
would render it ineligible to become effective pursuant to paragraph (b) of said
Rule 485.
/s/ James M. Rodolakis
- ------------------------------
James M. Rodolakis
Counsel
C.M. Life Insurance Company
25
<PAGE>
EXHIBIT INDEX
(9) Opinion of and Consent of Counsel
(10)(i) Consent of Independent Accountants, PricewaterhouseCoopers LLP
26
<PAGE>
Exhibit 9
Opinion of and Consent of Counsel
April, 1999
C.M. Life Insurance Company
140 Garden Street
Hartford, CT 06154
Re: Post-Effective Amendment No. 9 to Registration Statement
No. 33-45122 filed on Form N-4
Ladies and Gentlemen:
This opinion is furnished in connection with the filing of Post-Effective
Amendment No. 9 to Registration Statement No. 33-45122 on Form N-4 under the
Securities Act of 1933 for C.M. Life Insurance Company's ("CM Life") flexible
premium variable annuity contract (the "Contract"). Panorama Plus Separate
Account issues the Contract.
As an attorney for CM Life, I provide legal advice to CM Life in connection with
the operation of its variable products. In such role I am familiar with the
Post-Effective Amendment for the Contract. 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
the laws of the state of Connecticut and is subject to regulation by the
Connecticut Commissioner of Insurance.
2. Panorama Plus Separate Account is a separate account validly established and
maintained by CM Life in accordance with Connecticut law.
3. All of the prescribed corporate procedures for the issuance of the Contract
have been followed, and all applicable state laws have been complied with.
I hereby consent to the use of this opinion as an exhibit to this Post-Effective
Amendment.
Very truly yours,
/s/ James M. Rodolakis
- ------------------------------
James M. Rodolakis
Counsel
27
<PAGE>
Exhibit 10(i)
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. 9 to the
Registration Statement of Panorama Plus Separate Account on Form N-4
(Registration No. 33-45122), of our report, dated February 25, 1999 on our
audits of the Panorama Plus Separate Account, and of our report dated February
25, 1999 on our audits of the statutory financial statements of C.M. Life
Insurance Company, which includes explanatory paragraphs relating to the use of
statutory accounting practices, which differ from generally accepted accounting
principles. We also consent to the reference to our Firm under the caption
"Experts" in the Statement of Additional Information.
PricewaterhouseCoopers LLP
Springfield, Massachusetts
April 27, 1999
28
