<PAGE> 1
As filed with the Securities and Exchange Commission on 29 April 1996
Registration No. 33-48550
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
POST-EFFECTIVE AMENDMENT NO. 6
TO
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
(Exact Name of Registrant)
GENERAL AMERICAN LIFE INSURANCE COMPANY
700 Market Street
St. Louis, MO 63101
(Name and Address of principal executive office of depositor)
Matthew P. McCauley, Esquire
General American Life Insurance Company
700 Market Street
St. Louis, MO 63101
(Name and Address of Agent for Service of Process)
Copy to:
Stephen E. Roth, Esquire
Sutherland, Asbill & Brennan
1275 Pennsylvania Ave., N.W.
Washington, DC 20004-2404
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
X on (29 April 1996) pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)(1)
on (Date) pursuant to paragraphs (a)(1) and (a)(3)
of rule 485
this document designates a new effective date for a
previously filed post-effective amendment.
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant
has registered an indefinite amount of securities under the Securities Act
of 1933. The Notice required by Rule 24f-2 for l995 was filed on 21
February 1996.
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RECONCILIATION AND TIE BETWEEN ITEMS
IN FORM N-8B-2 AND THE PROSPECTUS
Item No. of
Form N-8B-2 Caption in Prospectus
----------- ---------------------
1. Cover Page
2. Cover Page
3. Not Applicable
4. Distribution of the Policies
5. The Company and the Separate Account
6. The Separate Account
7. Not Required
8. Not Required
9. Legal Proceedings
10. Summary; General American Capital
Company/ Russell Insurance Funds;
Charges and Deductions; Policy
Benefits; Policy Rights; Voting
Rights; General Matters
11. Summary; General American Capital
Company/ Russell Insurance Funds
12. Summary; General American Capital
Company/ Russell Insurance Funds
13. Summary; Charges and Deductions; General
American Capital Company/ Russell
Insurance Funds
14. Summary; Payment and Allocation of
Premiums
15. Payment and Allocation of Premiums
16. Payment and Allocation of Premiums;
General American Capital Company/
Russell Insurance Funds
17. Summary; Charges and Deductions; Policy
Rights; General American Capital
Company/ Russell Insurance Funds
18. General American Capital Company/
Russell Insurance Funds; Payment and
Allocation of Premiums
19. General Matters; Voting Rights
20. Not Applicable
21. Policy Rights; General Matters
22. Not Applicable
23. Safekeeping of the Separate Account's Assets
24. General Matters
25. The Company and the Separate Account
26. Not Applicable
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Item No. of
Form N-8B-2 Caption in Prospectus
----------- ---------------------
27. The Company and the Separate Account
28. Management of the Company
29. The Company and the Separate Account
30. Not Applicable
31. Not Applicable
32. Not Applicable
33. Not Applicable
34. Not Applicable
35. The Company and the Separate Account
36. Not Required
37. Not Applicable
38. Summary; Distribution of the Policies
39. Summary; Distribution of the Policies
40. Distribution of the Policies
41. The Company and the Separate Account;
Distribution of the Policies
42. Not Applicable
43. Not Applicable
44. Payment and Allocation of Premiums
45. Not Applicable
46. Policy Rights
47. General American Capital Company/Russell
Insurance Funds
48. Not Applicable
49. Not Applicable
50. The Separate Account
51. Cover Page; Summary; Charges and
Deductions; Policy Rights; Policy
Benefits; Payment and Allocation of
Premiums
52. General American Capital Company/Russell
Insurance Funds
53. Federal Tax Matters
54. Not Applicable
55. Not Applicable
56. Not Required
57. Not Required
58. Not Required
59. Not Required
- ii -
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This Post-Effective Amendment No. 6 to the Registration Statement on Form
S-6 includes two prospectuses describing variable life insurance policies
which are substantially identical, except that the policy described in the
second prospectus makes available to policy owners different investment
divisions of the registrant than does the policy described in the original
prospectus.
- iii -
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FLEXIBLE PREMIUM VARIABLE LIFE
INSURANCE POLICY
ISSUED BY
GENERAL AMERICAN LIFE INSURANCE COMPANY
700 Market Street
St. Louis, MO 63101
(314) 231-1700
This Prospectus describes an individual flexible premium variable life
insurance Policy ("the Policy") offered by General American Life Insurance
Company ("General American" or "the Company"). The Policy is designed to
provide lifetime insurance protection to age 100 and at the same time provide
maximum flexibility to vary premium payments and change the level of death
benefits payable under the Policy. This flexibility allows an Owner to
provide for changing insurance needs under a single insurance policy. An
Owner also has the opportunity to allocate Net Premiums among several
investment portfolios with different investment objectives.
The Policy provides for: (I) a Cash Surrender Value that can be
obtained by surrendering the Policy; (2) Policy Loans; and (3) a death
benefit payable at the Insured's death. As long as a Policy remains in force,
the death benefit will not be less than the current Face Amount of the
Policy. A Policy will remain in force so long as its Cash Surrender Value is
sufficient to pay certain monthly charges imposed in connection with the
Policy.
After the end of the "Right to Examine Policy" period, Net Premiums may
be allocated to one or more of the Divisions of General American Separate
Account Eleven ("the Separate Account") or in certain contracts to General
American's General Account. If Net Premiums are allocated to the Separate
Account, the amount of the Cash Value will vary to reflect the investment
performance of the investment Divisions selected by the Owner, the Policy may
lapse, and, depending on the death benefit option elected, the amount of the
death benefit above the minimum may also vary with that investment
performance. The Owner bears the entire investment risk for all amounts
allocated to the Separate Account; there is no minimum guaranteed Cash Value.
Divisions of the Separate Account invest in corresponding Funds from
the following open-end, diversified management investment companies: (1)
General American Capital Company, (2) Variable Insurance Products Fund, (3)
Variable Insurance Products Fund II, and (4) Van Eck Investment Trust.
Funds offered from General American Capital Company include the S & P 500
Index Fund, the Money Market Fund, the Bond Index Fund, the Managed Equity
Fund, the Asset Allocation Fund, the International Equity Fund, and the
Special Equity Fund. Funds offered from Variable Insurance Products Fund
include the Equity-Income Portfolio, the Growth Portfolio, the High Income
Portfolio, and the Overseas Portfolio. The Fund offered from Variable
Insurance Products Fund II is the Asset Manager Portfolio. The Fund offered
from Van Eck Investment Trust is the Gold and Natural Resources Fund.
A full description of the Funds, including the investment policies,
restrictions, risks, and charges is contained in the Prospectus of each Fund.
It may not be advantageous to purchase a Policy as a replacement for
another type of life insurance or as a means to obtain additional insurance
protection if the purchaser already owns another flexible premium variable
life insurance policy.
This Prospectus must be accompanied by current Prospectuses for General
American Capital Company, Variable Insurance Products Fund, Variable
Insurance Products Fund II, and Van Eck Investment Trust.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Please read this Prospectus carefully and retain it for future
reference.
The date of this Prospectus is April 29, 1996.
The Policies are not available in all states.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN
WHICH SUCH OFFERING MAY NOT BE LAWFULLY MADE. NO DEALER, SALESMAN, OR OTHER
PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN
CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON.
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TABLE OF CONTENTS
Page
Definitions 1
Summary 2
The Company and the Separate Account 7
The Company
The Separate Account
General American Capital Company
Variable Insurance Products Fund
Variable Insurance Products Fund II
Van Eck Investment Trust
Addition, Deletion, or Substitution of Investments
Policy Benefits 10
Death Benefit
Cash Value
Policy Rights 14
Loans
Surrender, Partial Withdrawals and Pro Rate Surrender
Transfers
Dollar Cost Averaging
Right to Examine Policy
Payment of Benefits at Maturity
Payment and Allocation of Premiums 20
Issuance of a Policy
Premiums
Allocation of Net Premiums and Cash Value
Policy Lapse and Reinstatement
Charges and Deductions 22
Premium Expense Charges
Monthly Deduction
Contingent Deferred Sales Charge
Separate Account Charges
Dividends 26
The General Account 27
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General Matters 29
Distribution of the Policies 32
Federal Tax Matters 32
Unisex Requirements Under Montana Law 35
Safekeeping of the Separate Account's Assets 35
Voting Rights 35
State Regulation of the Company 36
Management of the Company 37
Legal Matters 41
Legal Proceedings 41
Experts 41
Additional Information 41
Financial Statements 41
Appendix A A-1
Appendix B B-1
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DEFINITIONS
Attained Age - The Issue Age of the Insured plus the number of
completed Policy Years.
Beneficiary - the person(s) named in the application or by later
designation to receive Policy proceeds in the event of the Insured's death. A
Beneficiary may be changed as set forth in the Policy and this Prospectus.
Cash Value - The total amount that a Policy provides for investment at
any time. It is equal to the total of the amounts credited to the Owner in
the Separate Account, the Loan Account, and in certain contracts, the General
Account.
Cash Surrender Value - The Cash Value of a Policy on the date of
surrender, less any Indebtedness, and less any surrender charges.
Division - A subaccount of the Separate Account. Each Division invests
exclusively in the shares of a corresponding Fund of either General American
Capital Company, Variable Insurance Products Fund, Variable Insurance
Products Fund II, or Van Eck Investment Trust.
Effective Date - The date as of which insurance coverage begins under a
policy.
Face Amount - The minimum death benefit under the Policy so long as the
Policy remains in force.
Fund - A separate investment Portfolio of either General American
Capital Company, Variable Insurance Products Fund, Variable Insurance
Products Fund II, or Van Eck Investment Trust. Although sometimes referred to
elsewhere as "Portfolios," they are referred to herein as "Funds," except
where "Portfolio" is part of their name.
General Account -The assets of the Company other than those allocated
to the Separate Account or any other separate account. The Loan Account is
part of the General Account.
Home Office - The service office of General American Life Insurance
Company, the mailing address of which is P.O. Box 14490, St. Louis, Missouri
63178.
Indebtedness - The sum of all unpaid Policy Loans and accrued interest
on loans.
Insured - The person whose life is insured under the Policy.
Investment Start Date -The date the initial premium is applied to the
General Account and/or the Divisions of the Separate Account. This date is
the later of the Issue Date or the date the initial premium is received at
General American's Home Office.
Issue Age - The Insured's age at his or her nearest birthday as of the
date the Policy is issued.
Issue Date - The date from which Policy Anniversaries, Policy Years,
and Policy Months are measured.
Loan Account - The account of the Company to which amounts securing
Policy Loans are allocated. The Loan Account is part of General American's
General Account.
Loan Subaccount - A Loan Subaccount exists for the General Account and
for each Division of the Separate Account. Any Cash Value transferred to the
Loan Account will be allocated to the appropriate Loan Subaccount to reflect
the origin of the Cash Value. At any point in time, the Loan Account will
equal the sum of all the Loan Subaccounts.
Maturity Date - The Policy Anniversary on which the Insured reaches
Attained Age 100.
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Monthly Anniversary - The same date in each succeeding month as the
Issue Date except that whenever the Monthly Anniversary falls on a date other
than a Valuation Date, the Monthly Anniversary will be deemed the next
Valuation Date. If any Monthly Anniversary would be the 29th, 30th, or 31st
day of a month that does not have that number of days, then the Monthly
Anniversary will be the last day of that month.
Net Premium - The premium less the premium expense charges (consisting
of the sales charge and the premium tax charge).
Owner - The Owner of a Policy, as designated in the application or as
subsequently changed.
Policy - The flexible premium variable life insurance Policy offered by
the Company and described in this Prospectus.
Policy Anniversary - The same date each year as the Issue Date.
Policy Month - A month beginning on the Monthly Anniversary.
Policy Year - A period beginning on a Policy Anniversary and ending on
the day immediately preceding the next Policy Anniversary.
Portfolio - see Fund.
SEC - The United States Securities and Exchange Commission.
Separate Account - General American Separate Account Eleven, a separate
investment account established by the Company to receive and invest the Net
Premiums paid under the Policy, and certain other variable life policies, and
allocated by the Owner to provide variable benefits.
Valuation Date - Each day that the New York Stock Exchange is open for
trading and the Company is open for business. The Company is not open for
business the day after Thanksgiving.
Valuation Period - The period between two successive Valuation Dates,
commencing at 4:00 p.m. (Eastern Standard Time) on a Valuation Date and
ending 4:00 p.m. on the next succeeding Valuation Date.
SUMMARY
The following summary of Prospectus information should be read in
conjunction with the detailed information appearing elsewhere in this
Prospectus. Unless otherwise indicated, the description of the Policies
contained in this Prospectus assumes that a Policy is in force and that there
is no outstanding Indebtedness.
The Policy. Under the flexible premium variable life insurance Policy
described in this Prospectus, the Owner may, subject to certain limitations,
make premium payments in any amount and at any frequency. The Policy is a
life insurance contract with death benefits, Cash Value, surrender rights,
Policy Loan privileges, and other features traditionally associated with life
insurance. It is a "flexible premium" Policy because, unlike traditional
insurance policies, there is no fixed schedule for premium payments.
Although the Owner may establish a schedule of premium payments ("planned
premium payments"), failure to make the planned premium payments will not
necessarily cause a Policy to lapse nor will making the planned premium
payments guarantee that a Policy will remain in force to maturity. Thus, an
Owner may, but is not required to, pay additional premiums. This flexibility
permits an Owner to provide for changing insurance needs within a single
insurance policy.
The Policy is a "variable" Policy because, unlike the fixed benefits
under an ordinary life insurance contract, to the extent that Net Premiums
are allocated to the Separate Account, the Cash Value and, under certain
circumstances, the death benefit under a Policy may increase or decrease
depending upon the investment performance of the Divisions of the Separate
Account to which the Owner has allocated Net Premium payments. However, so
long as a Policy's Cash Surrender Value continues to be sufficient to pay the
monthly deductions, an
2
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Owner is guaranteed a minimum death benefit equal to the Face Amount of his or
her Policy, less any outstanding Indebtedness.
A Policy will lapse (and terminate without value) when the Cash
Surrender Value is insufficient to pay the next monthly deduction and a grace
period of 62 days expires without an adequate payment being made by the
Owner. (See Payment and Allocation of Premiums - Policy Lapse and
Reinstatement.)
The Separate Account. After the end of the "Right to Examine Policy"
period, the Owner may allocate the Net Premiums to the Separate Account and,
if it is available, to the General Account. Amounts allocated to the
Separate Account are further allocated to one or more Divisions. Assets of
each Division are invested at net asset value in shares of a corresponding
Fund. (See The Company and the Separate Account.) An Owner may change future
allocations of Net Premiums at any time.
The option offered in connection with the Policies to allocate Net
Premiums or to transfer Cash Value to the General Account may not be made
available, at the Company's discretion, under all Policies. Further, the
option may be limited with respect to some Policies. The Company may, from
time to time, adjust the extent to which future premiums may be allocated to
the General Account in regard to any or all outstanding Policies. Such
adjustments may not be uniform as to all Policies.
Until the end of the "Right to Examine Policy" period (See Policy Rights
- - Right to Examine Policy), all Net Premiums automatically will be allocated
to the Division that invests in the Money Market Fund. (See Payment and
Allocation of Premiums - Allocation of Net Premiums and Cash Value.)
To the extent Net Premiums are allocated to the Divisions of the
Separate Account, the Cash Value will, and the death benefit may, vary with
the investment performance of the chosen Division. To the extent Net
Premiums are allocated to the General Account, the Cash Value will accrue
interest at a guaranteed minimum rate. (See The General Account.) Thus,
depending upon the allocation of Net Premiums, investment risk over the life
of a Policy may be borne by the Owner, by the Company, or by both.
Subject to certain restrictions, an Owner may transfer Cash Values
among the Divisions of the Separate Account or, it available, between the
Separate Account and the General Account. Currently, no charge is assessed
for transfers. The Company reserves the right to revoke or modify the
transfer privilege. (See Policy Rights - Transfers.)
Charges and Deductions. A premium expense charge will be deducted from
each premium payment prior to allocation. The premium expense charge
consists of a sales charge and a charge to cover premium taxes. The sales
charge will never exceed 5.0% and is currently 5.0% in Policy years one
through ten and 2.25% in Policy years past Policy year ten. The charge to
cover premium taxes is 2.5%. (See Charges and Deductions - Premium Expense
Charges.)
A Contingent Deferred Sales Charge to compensate for sales expenses
will also be assessed against the Cash Value under a Policy upon a surrender,
a lapse, a partial withdrawal, or pro rata surrender. The Contingent
Deferred Sales Charge will never exceed 4% of premiums paid. (See Policy
Rights - Surrender, Partial Withdrawals, and Pro Rata Surrender;, Policy
Benefits - Death Benefit;, and Charges and Deductions - Contingent Deferred
Sales Charge.) Reductions in the Contingent Deferred Sales Charge are
available in some situations. (See Reduction of Charges.)
On each Monthly Anniversary, the Cash Value will be reduced by a
monthly deduction. The monthly deduction includes an administrative charge of
$4 per month for each Policy Month. (See Charges and Deductions - Monthly
Deduction.) A monthly charge is also made for the cost of insurance, and the
cost of any additional benefits provided by rider. (See Charges and
Deductions - Monthly Deduction.)
A daily charge based on an effective annual charge of .70% of the net
assets of each Division of the Separate Account will be imposed for the
Company's assumption of certain mortality and expense risks incurred in
connection with the Policies. (See Charges and Deductions - Separate Account
Charges.)
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The Company may make a charge for any taxes or economic burden
resulting from the application of the tax laws that it determines to be
properly attributable to the Separate Account or to the Policy. (See Federal
Tax Matters.)
The operating expenses of the Separate Account are paid by General
American. Investment advisory fees and other operating expenses of the Funds
are paid by the Funds and are reflected in the value of the assets of the
corresponding Division of the Separate Account. For a description of these
charges, see Charges and Deductions--Separate Account Charges.
Currently, there are no transaction charges to cover the administrative
costs of processing partial withdrawals or transfers of Cash Value between
Divisions of the Separate Account. In contracts with the General Account
option, there are no transaction charges to cover the administrative costs of
processing transfers of Cash Value between the Separate and General Accounts.
However, the Company reserves the right to impose such charges in the future.
In addition, transfers and withdrawals are subject to restrictions relative
to amount and frequency. (See Payment and Allocation of Premiums - Allocation
of Net Premiums and Cash Value;, Policy Rights - Surrender, Partial
Withdrawals, and Pro Rata Surrender; and The General Account.)
Premiums. An Owner has considerable flexibility concerning the amount
and frequency of premium payments. A Policy will not become effective until
the Owner has paid an initial premium equal to one-twelfth (1/12) of the
"Minimum Premium" for the Policy. This amount will be different for each
Policy. Thereafter, an Owner may, subject to certain restrictions, make
premium payments in any amount and at any frequency. The Owner may also
determine a planned premium payment schedule. The schedule will provide for a
premium payment of a level amount at a fixed interval over a specified period
of time. An Owner need not, however, adhere to the planned premium payment
schedule. For policies issued as a result of a term conversion from certain
General American term policies, the Company requires the Owner to pay an
initial premium, which combined with conversion credits given, will equal one
full "Minimum Premium" for the Policy. (See Payment and Allocation of
Premiums.)
A Policy will lapse only when the Cash Surrender Value is insufficient
to pay the next monthly deduction (See Charges and Deductions - Monthly
Deduction.) and a grace period expires without a sufficient payment by the
Owner. (See Payment and Allocation of Premiums - Policy Lapse and
Reinstatement.)
Death Benefit. A death benefit is payable to the named Beneficiary when
the Insured under a Policy dies. Three death benefit options are available.
Under Death Benefit Option A, the death benefit is the Face Amount of the
Policy or, if greater, the applicable percentage of Cash Value. Under Death
Benefit Option B, the death benefit is the Face Amount of the Policy plus the
Cash Value or, if greater, the applicable percentage of Cash Value. Under
Death Benefit Option C, the death benefit is the Face Amount of the Policy
or, if greater, the Cash Value multiplied by the Attained Age factor. So long
as the Policy remains in force, the minimum death benefit under any death
benefit option will be at least the current Face Amount. The death benefit
will be increased by any unpaid dividends determined prior to the Insured's
death, and by the amount of the cost of insurance for the portion of the
month from the date of death to the end of the month, and reduced by any
outstanding Indebtedness. The death benefit will be paid according to the
settlement options available at the time of death. (See Policy Benefits -
Death Benefit.)
The minimum Face Amount at issue is $50,000 under the Company's current
rules. Subject to certain restrictions, the Owner may change the Face Amount
and the death benefit option. In certain cases evidence of insurability may
be required. (See Change in Death Benefit Option, and Change In Face Amount.)
Additional insurance benefits offered under the Policy include a waiver
of specified premium rider, a waiver of monthly deduction rider, and an
increasing benefit option. (See General Matters - Additional Insurance
Benefits.) The cost of these additional insurance benefits will be deducted
from the Cash Value as part of the monthly deduction. (See Charges and
Deductions - Monthly Deduction.)
Cash Value. The Policies provide for a Cash Value equal to the total of
the amounts credited to the Owner in the Separate Account, the Loan Account
(securing Policy Loans) and in certain contracts, the General Account. A
Policy's Cash Value will reflect the amount and frequency of Net Premium
payments, the investment performance of any selected Divisions of the
Separate Account, any Policy Loans, any partial withdrawals, and the
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<PAGE> 12
charges imposed in connection with the Policy. (See Policy Benefits - Cash
Value.) There is no minimum guaranteed Cash Value.
Policy Loans. After the first Policy Anniversary, an Owner may borrow
against the Cash Value of a Policy. The maximum amount that may be borrowed
under a Policy ("the Loan Value") is the Cash Value of the Policy on the date
the loan request is received, less loan interest to the next Policy
Anniversary, less any outstanding Indebtedness, less any surrender charges to
the next Policy Anniversary, and less monthly deductions to the next loan
interest due date. Loan interest is payable on each Policy Anniversary and
all outstanding Indebtedness will be deducted from proceeds payable at the
Insured's death, upon maturity, upon the exercise of a settlement option, or
upon surrender.
A Policy loan will be allocated among the General Account (if
available) and the various Divisions of the Separate Account. When a loan is
allocated to the Divisions of the Separate Account, a portion of the Policy's
Cash Value in the Divisions of the Separate Account sufficient to secure the
loan will be transferred to the Loan Account as security for the loan.
Therefore, a loan may have impact on the Policy's Cash Value even if it is
repaid. A Policy Loan may be repaid in whole or in part at any time while the
Policy is in force. (See Policy Rights - Loans.) Loans taken from, or secured
by, a Policy may have Federal income tax consequences. (See Federal Tax
Matters.)
Surrender, Partial Withdrawals, and Pro Rata Surrender. At any time
that a Policy is in force, an Owner may elect to surrender the Policy and
receive its Cash Surrender Value plus the value of any dividends determined
prior to the surrender. After the first year, an Owner may also request a
partial withdrawal of the Cash Surrender Value of the Policy. When the death
benefit is not based on an applicable percentage of the Cash Value, a partial
withdrawal reduces the death benefit payable under the Policy by an amount
equal to the reduction in the Policy's Cash Value. An Owner may also request
a pro rata surrender of the Policy. (See Policy Rights - Surrender, Partial
Withdrawals, and Pro Rata Surrender.) A surrender, partial withdrawal, or pro
rata surrender may have Federal income tax consequences. (See Federal Tax
Matters.)
Right to Examine Policy. The Owner has a limited right to return a
Policy for cancellation within 20 days after receiving it (30 days if the
Owner is a resident of California and is age 60 or older), or within 45 days
after the application is signed, whichever is later. If a Policy is canceled
within this time period, a refund will be paid which will equal all premiums
paid under the Policy except in Kansas. The Owner also has a similar right to
cancel a requested increase in Face Amount. Upon cancellation of an increase,
the additional charges deducted in connection with the increase will be added
to the Cash Value. (See Policy Rights - Right to Examine Policy.)
Illustrations of Death Benefits and Cash Surrender Values.
Illustrations on pages A-2 to A-10 in Appendix A show how death benefits and
Cash Surrender Values may vary based on certain rate of return assumptions
and how these benefits compare with amounts which would accumulate if
premiums were invested to earn interest at 5% compounded annually. If a
Policy is surrendered in the early Policy Years the Cash Surrender Value
payable will be low as compared to premiums accumulated at interest, and
consequently the insurance protection provided prior to surrender will be
costly. You may make a written request for a projection of illustrated
future Cash Values and death benefits for a nominal fee not to exceed $25.00.
Tax Consequences of the Policy. If a Policy is issued on the basis of a
standard premium class or on a guaranteed or simplified issue basis, while
limited guidance exists, the Company believes that the Policy should qualify
as a life insurance contract for Federal income tax purposes. However, if a
Policy is issued on a substandard basis, it is unclear whether or not such a
Policy would qualify as a life insurance contract for Federal income tax
purposes. Assuming that the Policy qualifies as a life insurance contract for
Federal income tax purposes, the Company believes the Cash Value of the
Policy should be subject to the same Federal income tax treatment as the Cash
Value of a conventional fixed-benefit contract. If so, the Owner is not
considered to be in constructive receipt of the Cash Value under the Policy
until there is a distribution. A change of Owners, a surrender, a partial
withdrawal, a pro rata surrender, a lapse with outstanding Indebtedness, or
an exchange may have tax consequences, depending on the particular
circumstances. (See Federal Tax Matters.)
A Policy may be treated as a "modified endowment contract" depending
upon the amount of premiums paid in relation to the death benefit. If the
Policy is a modified endowment contract, then all pre-death distributions,
including Policy Loans and due but unpaid loan interest, will be treated
first as a distribution of
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taxable income and then as a return of basis or investment in the contract. In
addition, prior to age 59 1/2 taxable income from such distributions generally
will be subject to a 10% additional tax.
If the Policy is not a modified endowment contract, distributions
generally will be treated first as a return of basis or investment in the
contract and then as disbursing taxable income. Moreover, loans will not be
treated as distributions. Finally, neither distributions nor loans from a
Policy that is not a modified endowment contract are subject to the 10.0%
additional tax. (See Federal Tax Matters.)
Dividends. While a Policy is in force, it may share in the divisible
surplus of the Company. Each year the Company will determine the share of
divisible surplus accruing to a Policy and will distribute the surplus as
dividend. The Company is not obligated to pay dividends on the Policies. (See
Dividends.)
* * *
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This Prospectus describes only those aspects of the Policy that relate
to the Separate Account, except where General Account matters are specifically
mentioned. For a brief summary of the aspects of the Policy relating to the
General Account, see The General Account.
THE COMPANY AND THE SEPARATE ACCOUNT
The Company
General American Life Insurance Company ("General American" or "the
Company") is a mutual life insurance company originally incorporated as a
stock company under the laws of Missouri in 1933, and which began operations
as a mutual company in 1936. General American is principally engaged in
issuing individual and group life and health insurance policies and annuity
contracts. As of December 31,1994, it had assets of more than $9.6 billion.
It is admitted to do business in 49 states, the District of Columbia, and in
ten Canadian provinces. The principal offices of General American are at 700
Market Street, St. Louis, Missouri 63101. The mailing address of General
American's service center ("the Home Office") is PO. Box 14490, St. Louis,
Missouri 63178.
The Separate Account
General American Life Insurance Company Separate Account Eleven ("the
Separate Account") was established by General American as a separate
investment account on January 24, 1985 under Missouri law. The Separate
Account will receive and invest the Net Premiums paid under this Policy and
allocated to it. In addition, the Separate Account currently receives and
invests Net Premiums for other classes of flexible premium variable life
insurance policies and might do so for additional classes in the future.
The Separate Account has been registered with the SEC as a unit
investment trust under the Investment Company Act of 1940 ("the 1940 Act")
and meets the definition of a "separate account" under Federal securities
laws. Registration with the SEC does not involve supervision of the
management or investment practices or policies of the Separate Account or
General American by the SEC.
The Separate Account currently is divided into seventeen Divisions.
Divisions invest in corresponding Funds from one of four open-end,
diversified management investment companies: (1) General American Capital
Company, and (2) Variable Insurance Products Fund, (3) Variable Insurance
Products Fund II, and (4) Van Eck Investment Trust. Income and both realized
and unrealized gains or losses from the assets of each Division of the
Separate Account are credited to or charged against that Division without
regard to income, gains, or losses from any other Division of the Separate
Account or arising out of any other business General American may conduct.
Although the assets of the Separate Account are the property of General
American, the assets in the Separate Account equal to the reserves and other
liabilities of the Separate Account are not chargeable with liabilities
arising out of any other business which General American may conduct. The
assets of the Separate Account are available to cover the general liabilities
of General American only to the extent that the Separate Account's assets
exceed its liabilities arising under the Policies. From time to time, the
Company may transfer to its General Account any assets of the Separate
Account that exceed the reserves and the Policy liabilities of the Separate
Account (which will always be at least equal to the aggregate Policy value
allocated to the Separate Account under the Policies). Before making any such
transfers, General American will consider any possible adverse impact the
transfer may have on the Separate Account.
General American Capital Company
General American Capital Company (" the Capital Company") is an
open-end, diversified management investment company which was incorporated in
Maryland on November 15, 1985, and commenced operations on October 1, 1987.
Only the Capital Company Funds described in this section of the Prospectus
are currently available as investment choices for this Policy even though
additional Funds may be described in the prospectus for the Capital Company
Shares of Capital Company are currently offered to separate accounts
established by General American Life Insurance Company and affiliates. The
Capital Company's investment Advisor is General American Investment
Management Company ("the Advisor"), a wholly-owned subsidiary of General
American Holding Company which, in turn is wholly owned by General American.
The Advisor selects investments for four of the Funds and oversees the
performance of the sub-advisors for the Managed Equity Fund, the
International Equity
7
<PAGE> 15
Fund and the Special Equity Fund. The sub-advisor for the Managed Equity Fund
is Morgan Stanley Asset Management Inc. of New York, New York. The sub-advisor
for the International Equity and Special Equity Funds is Provident Capital
Management (PCM) of Philadelphia, Pennsylvania.
The investment objectives and policies of each Fund are summarized
below:
S&P 500 Index Fund: The investment objective of this Fund is to
provide investment results that parallel the price and yield performance
of publicly-traded common stocks in the aggregate. The Fund uses
the Standard & Poor's Composite Index of 500 Stocks ( "the S&P
Index") as its standard for performance comparison. The Fund
attempts to duplicate the performance of the S&P Index and
includes dividend income as a component of the Fund's total
return. The Fund is not managed by Standard & Poor's.
The Money Market Fund: The investment objective of the Money Market
Fund is to obtain the highest level of current income which is
consistent with the preservation of capital and maintenance of
liquidity. The Fund invests primarily in high-quality, short-term
money market instruments. An investment in the Money Market
Fund is neither insured nor guaranteed by the U. S. Government.
Bond Index Fund: The investment objective of this Fund is to
provide a rate of return that reflects the performance of the
publicly-traded bond market as a whole. The Fund uses the Lehman
Brothers Government/Corporate Bond Index as its standard for performance
comparison.
Managed Equity Fund: The investment objective of this Fund is
long-term growth of capital, obtained by investing primarily in common
stocks. Securing moderate current income is a secondary objective.
Asset Allocation Fund: The investment objective of this Fund is a
high rate of long-term total return composed of capital growth and
income payments. Preservation of capital is the secondary
objective and chief limit on investment risk. The Fund will
invest only in those types of securities that the other Capital
Company Funds may invest in. The Asset Allocation Fund invests
in a combination of common stocks, bonds, or money market
instruments in accordance with guidelines established from time
to time by Capital Company's Board of Directors.
International Equity Fund: The investment objective of this Fund
is long-term capital appreciation. It pursues this objective by
investing primarily in equity securities of issuers in countries
included in the Morgan Stanley Capital International ("MSCI")
Europe, Australia and Far East Index ("EAFE").
Special Equity Fund: The investment objective of this Fund is
capital appreciation. It pursues this objective by investing primarily
in common stocks of smaller companies and securities convertible
into common stock. Any income received is incidental to the
objective of capital appreciation.
Variable Insurance Products Fund
Variable Insurance Products Fund ("VIP") is an open-end, diversified
management investment company organized as a Massachusetts business trust on
November 13, 1981. Only the Funds described in this section of the Prospectus
are currently available as investment choices for this Policy even though
additional Funds may be described in the prospectus for VIP. VIP shares are
purchased by insurance companies to fund benefits under variable insurance
and annuity policies. Fidelity Management & Research Company ("FMR") of
Boston, Massachusetts is the Funds' Manager.
The investment objectives and policies of each Fund are summarized
below:
Equity-Income Portfolio: The investment objective of this Fund is
income, obtained by investing primarily in income-producing
equity securities. In choosing these securities, FMR will also
consider the potential for capital appreciation. The Fund's goal
is to achieve a yield which exceeds the composite yield on the
securities comprising the Standard & Poor's Composite Index of
500 Stocks.
8
<PAGE> 16
Growth Portfolio: The investment objective of this Fund is capital
appreciation. The Fund normally purchases common stocks,
although its investments are not restricted to any one type of
security. Capital appreciation may also be obtained from other
types of securities, including bonds and preferred stocks.
Overseas Portfolio: The investment objective of this Fund is
long-term growth of capital. The Fund invests primarily in foreign
securities. The Overseas Portfolio provides a means for
investors to diversify their own portfolios by participation in
companies and economies outside of the United States.
High Income Portfolio: The investment objective of this Fund is
a high level of current income. The Fund seeks to fulfill the
objectives by investing primarily in high-yielding, lower-rated,
fixed-income securities, while also considering growth of
capital. Lower-rated securities, commonly referred to as "junk
bonds," involve greater risk of default or price change than
securities assigned a higher quality rating.
Variable Insurance Products Fund II
Variable Insurance Products Fund II ("VIP II") is an open-end,
diversified management investment company organized as a Massachusetts
business trust on March 21, 1988. Only the Fund(s) described in this section
of the Prospectus are currently available as investment choices for this
Policy even though additional Funds may be described in the prospectus for
VIP II. VIP II shares are purchased by insurance companies to fund benefits
under variable insurance and annuity policies. FMR is the Fund's manager.
The investment objective and policies of the Funds(s) are summarized below:
Asset Manager: The investment objective of this Fund is to seek
a high total return with reduced risk over the long-term by
allocating its assets among domestic and foreign stocks, bonds,
and short-term fixed income instruments.
Van Eck Investment Trust
Van Eck Investment Trust ("Van Eck") is an open-end management
investment company organized as a Massachusetts business trust on January 7,
1987. Only the Fund(s) described in this section of the Prospectus are
currently available as investment choices for this Policy even though
additional Funds may be described in the prospectus for Van Eck. Shares of
Van Eck are offered only to separate accounts of various insurance companies
to support benefits of variable insurance and annuity policies. The assets of
Van Eck are managed by Van Eck Associates Corporation of New York, New York.
The investment objectives and policies of the Fund(s) are summarized below:
Gold and Natural Resources Fund: The investment objective of
the Fund is to seek long-term capital appreciation by investing
in equity and debt securities of companies engaged in the
exploration, development, production, and distribution of gold
and other natural resources, such as strategic and other metals,
minerals, forest products, oil, natural gas, and coal. Current
income is not an objective.
There is no assurance that any of the Funds will achieve its stated
objective. It is conceivable that in the future it may be disadvantageous
for Funds to offer shares to separate accounts of various insurance companies
to serve as the investment medium for their variable products or for both
variable life and annuity separate accounts to invest simultaneously in
Capital Company. The Board of Trustees of FMR, the Board of Trustees of Van
Eck, the Board of Directors of Capital Company, the respective advisors of
each Fund, and the Company and any other insurance companies participating
in VIP, VIP II, Van Eck, and Capital Company are required to monitor events
to identify any material irreconcilable conflicts that may possibly arise,
and to determine what action, if any, should be taken in response to those
events or conflicts. A more detailed description of the Funds, their
investment policies, restrictions, risks, and charges is in the prospectuses
for VIP, VIP II, Van Eck, and Capital Company, which must accompany or
precede this Prospectus and which should be read carefully.
9
<PAGE> 17
Addition, Deletion, or Substitution of Investments
The Company reserves the right, subject to compliance with applicable
law, to make additions to, deletions from, or substitutions for the shares
that are held by the Separate Account or that the Separate Account may
purchase. The Company reserves the right to eliminate the shares of any of
the Funds and to substitute shares of another Fund of Capital Company, VIP,
VIP II, Van Eck, or of another registered open-end investment company if the
shares of a Fund are no longer available for investment or if in its judgment
further investment in any Fund becomes inappropriate in view of the purposes
of the Separate Account. The Company will not substitute any shares
attributable to an Owner's interest in a Division of the Separate Account
without notice to the Owner and prior approval of the SEC, to the extent
required by the 1940 Act or other applicable law. Nothing contained in this
Prospectus shall prevent the Separate Account from purchasing other
securities for other series or classes of policies, or from permitting a
conversion between series or classes of policies on the basis of requests
made by Owners.
The Company also reserves the right to establish additional Divisions
of the Separate Account, each of which would invest in a new Fund of Capital
Company, VIP, VIP II, or Van Eck, or in shares of another investment company,
with a specified investment objective. New Divisions may be established when,
in the sole discretion of the Company, marketing needs or investment
conditions warrant. Any new Division will be made available to existing
Owners on a basis to be determined by the Company. To the extent approved by
the SEC, the Company may also eliminate or combine one or more Divisions,
substitute one Division for another Division, or transfer assets between
Divisions if, in its sole discretion, marketing, tax, or investment
conditions warrant.
In the event of a substitution or change, the Company may, if it
considers it necessary, make such changes in the Policy by appropriate
endorsement and offer conversion options required by law, if any. The Company
will notify all Owners of any such changes.
If deemed by the Company to be in the best interests of persons having
voting rights under the Policy, and to the extent any necessary SEC approvals
or Owner votes are obtained, the Separate Account may be: (a) operated as a
management company under the 1940 Act; (b) de-registered under that Act in
the event such registration is no longer required; or (c) combined with other
separate accounts of the Company. To the extent permitted by applicable law,
the Company may also transfer the assets of the Separate Account associated
with the Policy to another separate account.
POLICY BENEFITS
Death Benefit
As long as the Policy remains in force (See Payment and Allocation of
Premiums - Policy Lapse and Reinstatement), the Company will, upon receipt of
proof of the Insured's death at its Home Office, pay the death benefit in a
lump sum. The amount of the death benefit payable will be determined at the
end of the Valuation Period during which the Insured's death occurred. The
death benefit will be paid to the surviving Beneficiary or Beneficiaries
specified in the application or as subsequently changed.
The Policy provides three death benefit options: "Death Benefit Option
A," "Death Benefit Option B," and "Death Benefit Option C." The death
benefit under all options will never be less than the current Face Amount of
the Policy (less Indebtedness) as long as the Policy remains in force. (See
Payment and Allocation of Premiums - Policy Lapse and Reinstatement.) The
minimum Face Amount currently is $50,000.
Death Benefit Option A. Under Death Benefit Option A, the death
benefit is the current Face Amount of the Policy or, if greater, the
applicable percentage of Cash Value on the date of death. The applicable
percentage is 250% for an Insured Attained Age 40 or below on the Policy
Anniversary prior to the date of death. For Insureds with an a Attained Age
over 40 on that Policy Anniversary, the percentage is lower and declines with
age as shown in the Applicable Percentage of Cash Value Table shown below.
Accordingly, under Death Benefit Option A the death benefit will remain level
at the Face Amount unless the applicable percentage of Cash Value exceeds the
current Face Amount, in which case the amount of the death benefit will vary
as the Cash Value varies. (See Illustrations of Death Benefits and Cash
Values, Appendix A.)
10
<PAGE> 18
Death Benefit Option B. Under Death Benefit Option B, the death benefit
is equal to the current Face Amount plus the Cash Value of the Policy on the
date of death or, if greater, the applicable percentage of the Cash Value on
the date of death. The applicable percentage is the same as under Death
Benefit Option A: 250% for an Insured Attained Age 40 or below on the Policy
Anniversary prior to the date of death, and for Insureds with an Attained Age
over 40 on that Policy Anniversary the percentage declines as shown in the
Applicable Percentage of Cash Value Table shown below. Accordingly, under
Death Benefit Option B the amount of the death benefit will always vary as
the Cash Value varies (but will never be less than the Face Amount). (See
Illustrations of Death Benefits and Cash Values, Appendix A.)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Applicable Percentage of Cash Value Table<F*>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Insured 40 or 45 50 55 60 65 70 78 to 95 or
Person's Age under 90 older
- --------------------------------------------------------------------------------------------------------
Policy Account 250% 215% 185% 150% 130% 120% 115% 105% 100%
Percentage Multiple
- --------------------------------------------------------------------------------------------------------
<FN>
<F*>For ages that are not shown on this table, the applicable percentage
multiples will decrease by a ratable portion for each full year.
</TABLE>
Death Benefit Option C. Under Death Benefit Option C, the death
benefit is equal to the current Face Amount of the Policy or, if greater, the
Cash Value on the date of death multiplied by the "Attained Age factor" (a
list of sample Attained Age factors is shown in the Sample Attained Age
Factor Table below). Accordingly, under Death Benefit Option C the death
benefit will remain level at the Face Amount unless the Cash Value multiplied
by the Attained Age factor exceeds the current Face Amount, in which case the
amount of the death benefit will vary as the Cash Value varies. (See
Illustrations of Death Benefits and Cash Values, Appendix A.)
<TABLE>
<CAPTION>
Death Benefit Option C Sample Attained Age Factor Table
- -----------------------------------------------------------------------------------------------------------
Insured Male Female Insured Male Female
Attained Lives Lives Attained Lives Lives
Age Factor Factor Age Factor Factor
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
20 6.39373 7.62992 60 1.87392 2.15766
- -----------------------------------------------------------------------------------------------------------
25 5.50505 6.48136 65 1.65835 1.87615
- -----------------------------------------------------------------------------------------------------------
30 4.68733 5.49185 70 1.48797 1.64736
- -----------------------------------------------------------------------------------------------------------
35 3.97255 4.64894 75 1.35451 1.46009
- -----------------------------------------------------------------------------------------------------------
40 3.37168 3.94230 80 1.25595 1.31875
- -----------------------------------------------------------------------------------------------------------
45 2.87784 3.36481 85 1.18113 1.21344
- -----------------------------------------------------------------------------------------------------------
50 2.47279 2.88712 90 1.12767 1.13972
55 2.14116 2.49005 95 1.07472 1.07637
</TABLE>
Changes In Death Benefit Option. After the first Policy Anniversary,
if the Policy was issued with either Death Benefit Option A or Death Benefit
Option B, the death benefit option may be changed. The option may be changed
once each Policy Year, and a request for change must be made to the Company
in writing. The effective date of such a change will be the Monthly
Anniversary on or following the date the Company receives the change request.
A change in death benefit option may have Federal income tax consequences.
(See Federal Tax Matters.)
A Death Benefit Option A Policy may change its death benefit option to
Death Benefit Option B. The Face Amount will be decreased to equal the death
benefit less the Cash Value on the effective date of change. A Death Benefit
Option B Policy may change its death benefit option to Death Benefit Option
A. The Face Amount will be increased to equal the death benefit on the
effective date of change. A Policy issued under Death Benefit Option C may
not change to either Death Benefit Option A or Death Benefit Option B for the
entire lifetime of the Contract. Similarly, a Policy issued under either
Death Benefit Option A or B may not change to Death Benefit Option C for the
lifetime of the Policy.
11
<PAGE> 19
Satisfactory evidence of insurability must be submitted to the Company
in connection with a request for a change from Death Benefit Option A to
Death Benefit Option B. A change may not be made if it would result in a
Face Amount of less than the minimum Face Amount.
A change in death benefit option will not in itself result in an
immediate change in the amount of a Policy's death benefit or Cash Value. In
addition, if, prior to or accompanying a change in the death benefit option,
there has been an increase in the Face Amount, the cost of insurance charge
may be different for the increased amount. (See Monthly Deduction - Cost of
Insurance.)
Change in Face Amount. Subject to certain limitations set forth below,
an Owner may increase or decrease the Face Amount of a Policy once each
Policy Year and not before the first Policy Anniversary. A written request
is required for a change in the Face Amount. A change in Face Amount may
affect the cost of insurance rate and the net amount at risk, both of which
affect an Owner's cost of insurance charge. (See Monthly Deduction - Cost of
Insurance.) A change in the Face Amount of a Policy may have Federal income
tax consequences. (See Federal Tax Matters.)
For an increase in the Face Amount, the Company requires that
satisfactory evidence of insurability be submitted. An application for an
increase must be received within 60 days prior to, or 30 days following, a
Policy Anniversary. If approved, the increase will become effective as of
the Policy Anniversary. In addition, the Insured must have an Attained Age
of not greater than 80 on the effective date of the increase. The increase
may not be less than $25,000. Although an increase need not necessarily be
accompanied by an additional premium, the Cash Surrender Value in effect
immediately after the increase must be sufficient to cover the next monthly
deduction. To the extent the Cash Surrender Value is not sufficient, an
additional premium must be paid. (See Charges and Deductions - Monthly
Deduction.) An increase in the Face Amount may result in certain additional
charges. (See Charges and Deductions - Monthly Deduction.)
For the Owner's rights upon an increase in Face Amount, see Policy
Rights - Right to Examine Policy. Owners should consult their sales
representative before deciding whether to increase coverage by increasing the
Face Amount of a Policy.
Any decrease in the Face Amount will become effective on the Monthly
Anniversary on or following receipt of the written request by the Company.
The amount of the requested decrease must be at least $5,000 and the Face
Amount remaining in force after any requested decrease may not be less than
minimum Face Amount. If following a decrease in Face Amount, the Policy
would not comply with the maximum premium limitations required by Federal tax
law (see Payment and Allocation of Premiums), the decrease may be limited or
Cash Value may be returned to the Owner (at the Owner's election), to the
extent necessary to meet these requirements. Decreases will be applied to
prior increases in the Face Amount, if any, in the reverse order in which
such increases occurred, and then to the original Face Amount. This order of
reduction will be used to determine the amount of subsequent cost of
insurance charges (See Monthly Deduction - Cost of Insurance; and Charges and
Deductions - Contingent Deferred Sales Charge.)
Payment of the Death Benefit. The death benefit under the Policy will
ordinarily be paid in a lump sum within seven days after the Company receives
all documentation required for such a payment. Payment may, however, be
postponed in certain circumstances. (See General Matters - Postponement of
Payment from the Separate Account.) The death benefit will be increased by
any unpaid dividends determined prior to the Insured's death, and by the
amount of the monthly cost of insurance for the portion of the month from the
date of death to the end of the month, and reduced by any outstanding
Indebtedness. (See General Matters - Additional Insurance Benefits,
Dividends, and Charges and Deductions.) The Company will pay interest on the
death benefit from the date of the Insured's death to the date of payment.
Interest will be at an annual rate determined by the Company, but will never
be less than the guaranteed rate of 4%. Provisions for settlement of
proceeds other than a lump sum payment may only be made upon written
agreement with the Company.
12
<PAGE> 20
Cash Value
The Cash Value of the Policy is equal to the total of the amounts
credited to the Owner in the Separate Account, the Loan Account (securing
Policy Loans), and, in certain contracts, the General Account. The Policy's
Cash Value in the Separate Account will reflect the investment performance of
the chosen Divisions of the Separate Account as measured by each Division's
Net Investment Factor (defined below), the frequency and amount of Net
Premiums paid, transfers, partial withdrawals, loans and the charges assessed
in connection with the Policy. An Owner may at any time surrender the Policy
and receive the Policy's Cash Surrender Value. (See Policy Rights -
Surrender, Partial Withdrawals, and Pro Rata Surrender.) The Policy's Cash
Value in the Separate Account equals the sum of the Policy's Cash Values in
each Division. There is no guaranteed minimum Cash Value.
Determination of Cash Value. Cash Value is determined on each
Valuation Date. On the Investment Start Date, the Cash Value in a Division
will equal the portion of any Net Premium allocated to the Division, reduced
by the portion allocated to that Division of the monthly deduction(s) due
from the Issue Date through the Investment Start Date. (See Payment and
Allocation of Premiums.) Thereafter, on each Valuation Date, the Cash Value
in a Division of the Separate Account will equal:
(1) The Cash Value in the Division on the preceding
Valuation Date, multiplied by the Division's Net Investment
Factor (defined below) for the current Valuation Period; plus
(2) Any Net Premium payments received during the
current Valuation Period which are allocated to the Division;
plus
(3) Any loan repayments allocated to the Division
during the current Valuation Period; plus
(4) Any amounts transferred to the Division from
the General Account or from another Division during the current
Valuation Period; plus
(5) That portion of the interest credited on
outstanding loans which is allocated to the Division during the
current Valuation Period; minus
(6) Any amounts transferred from the Division to
the General Account, Loan Account, or to another Division during
the current Valuation Period (including any transfer charges);
minus
(7) Any partial withdrawals from the Division
during the current Valuation Period; minus
(8) Any withdrawal due to a pro rata surrender
from the Division during the current Valuation Period; minus
(9) Any withdrawal or surrender charges incurred
during the current Valuation Period attributed to the Division
in connection with a partial withdrawal or pro rata surrender;
minus
(10) If a Monthly Anniversary occurs during the
current Valuation Period, the portion of the monthly deduction
allocated to the Division during the current Valuation Period to
cover the Policy Month which starts during that Valuation Period.
(See Charges and Deductions.)
Net Investment Factor: The Net Investment Factor measures the
investment performance of a Division during a Valuation Period. The Net
Investment Factor for each Division for a Valuation period is calculated as
follows:
(1) The value of the assets at the end of the
preceding Valuation Period; plus
(2) The investment income and capital gains,
realized or unrealized, credited to the assets in the Valuation
Period for which the Net Investment Factor is being determined;
minus
13
<PAGE> 21
(3) The capital losses, realized or unrealized,
charged against those assets during the Valuation Period; minus
(4) Any amount charged against each Division for
taxes, including any tax or other economic burden resulting from
the application of the tax laws determined by the Company to be
properly attributable to the Divisions of the Separate Account,
or any amount set aside during the Valuation Period as a reserve
for taxes attributable to the operation or maintenance of each
Division; minus
(5) A charge equal to .0019111% of the average net
assets for each day in the Valuation Period. This is equivalent
to an effective annual rate of 0.70% per year for mortality and
expense risks; divided by
(6) The value of the assets at the end of the
preceding Valuation Period.
POLICY RIGHTS
Loans
Loan Privileges. After the first Policy Anniversary, the Owner may, by
written request to General American, borrow an amount up to the Loan Value of
the Policy, with the Policy serving as sole security for such loan. A loan
taken from, or secured by, a Policy may have Federal income tax consequences.
(See Federal Tax Matters.)
The Loan Value is the Cash Value of the Policy on the date the loan
request is received, less interest to the next loan interest due date, less
anticipated monthly deductions to the next loan interest due date, less any
existing loan, and less any surrender charge. Policy Loan interest is payable
on each Policy Anniversary.
The minimum amount that may be borrowed is $500. The loan may be
completely or partially repaid at any time while the Insured is living. Any
amount due to an Owner under a Policy Loan ordinarily will be paid within
seven days after General American receives the loan request at its Home
Office, although payments may be postponed under certain circumstances. (See
General Matters-Postponement of Payments from the Separate Account.)
When a Policy Loan is made, Cash Value equal to the amount of the loan
plus interest due will be transferred to the Loan Account as security for the
loan. A Loan Subaccount exists within the Loan Account for the General
Account and each Division of the Separate Account. Amounts transferred to the
Loan Account to secure Indebtedness are allocated to the appropriate Loan
Subaccount to reflect its origin. Unless the Owner requests a different
allocation, amounts will be transferred from the Divisions of the Separate
Account and the General Account in the same proportion that the Policy's Cash
Value in each Division and the General Account, if any, bears to the Policy's
total Cash Value, less the Cash Value in the Loan Account, at the end of the
Valuation Period during which the request for a Policy Loan is received.
This will reduce the Policy's Cash Value in the General Account and Separate
Account. These transactions will not be considered transfers for purposes of
the limitations on transfers between Divisions or to or from the General
Account.
Cash Value in the Loan Account is expected to earn interest at a rate
("the earnings rate") which is lower than the rate charged on the Policy Loan
("the borrowing rate"). Cash Value in the Loan Account will accrue interest
daily at an earnings rate which is the greater of (a) an annual rate of 4%
("the guaranteed earnings rate") or (b) a current rate determined by us ("the
discretionary earnings rate"). The Company may change the discretionary
earnings rate on Policy Loans at any time in its sole discretion. Currently
in Policy Years one through ten, we accrue interest at a discretionary
earnings rate which is .85% less than the borrowing rate we charge for Policy
Loan interest. Beginning in Policy Year eleven we accrue interest at a
discretionary earnings rate which is .50% less than the borrowing rate we
charge for Policy Loan interest. The difference between the rate of interest
earned and the borrowing rate is the "Loan Spread". The Loan Spreads
mentioned above are currently in effect and are not guaranteed.
14
<PAGE> 22
Interest credited on the Cash Value held in the Loan Account will be
allocated on Policy Anniversaries to the General Account and the Divisions of
the Separate Account in the same proportion that the Cash Value in each Loan
Subaccount bears to the Cash Value in the Loan Account. The interest credited
will also be transferred: (1) when a new loan is made; (2) when a loan is
partially or fully repaid; and (3) when an amount is needed to meet a monthly
deduction.
Interest Charged. The borrowing rate we charge for Policy Loan interest
will be based on an index. The indexed borrowing rate will never be more than
the maximum loan rate permitted by law. More information on the borrowing
rate charged is provided below.
General American will inform the Owner of the current borrowing rate
when a Policy Loan is made. General American will also mail the Owner an
advance notice if there is to be a change in the borrowing rate applicable to
any outstanding Indebtedness.
Policy Loan interest is due and payable annually on each Policy
Anniversary. If the Owner does not pay the interest when it is due, the
unpaid loan interest will be added to the outstanding Indebtedness as of the
due date and will be charged interest at the same rate as the rest of the
Indebtedness. (See Effect of Policy Loans below.) The amount of Policy Loan
interest which is transferred to the Loan Account will be deducted from the
Divisions of the Separate Account and from the General Account in the same
proportion that the portion of the Cash Value in each Division and in the
General Account, respectively, bears to the total Cash Value of the Policy
minus the Cash Value in the Loan Account.
We determine the borrowing rate at the beginning of each Policy Year .
The same rate applies to any outstanding Indebtedness and to any new Policy
Loans made during the year. The borrowing rate determined by General
American for a Policy Year may not exceed a Maximum Limit which is the
greater of:
(a) The Published Monthly Average (defined below) for
the calendar month ending two months before the beginning of the
month in which the Policy Anniversary falls (example: for a
Policy with a June Policy Anniversary, the March Published
Average); or
(b) Five Percent (5%).
The Published Monthly Average means:
(1) Moody's Corporate Bond Yield Average - Monthly
Average Corporate, as published by Moody's Investors Service, Inc.
or any successor to that service; or
(2) If that average is no longer published, a
substantially similar average, established by regulation issued
by the insurance supervisory official of the state in which this
Policy is issued.
If the Maximum Limit for a Policy Year, as determined in this manner,
is at least 0.50% higher than the borrowing rate determined by General
American for the previous Policy Year, General American may increase the
borrowing rate to not more than the Maximum Limit. Therefore the borrowing
rate we charge for Policy Loan interest will only change if the Published
Monthly Average differs from the previous rate by at least 0.50%.
Effect of Policy Loans. Whether or not a Policy Loan is repaid, it
will permanently affect the Cash Value of a Policy, and may permanently
affect the amount of the death benefit. The collateral for the loan (the
amount held in the Loan Account) does not participate in the performance of
the Separate Account while the loan is outstanding. If the Loan Account
earnings rate is less than the investment performance of the selected
Division(s), the Cash Value of the Policy will be lower as a result of the
Policy Loan. Conversely, if the Loan Account earnings rate is higher than
the investment performance of the Division(s), the Cash Value may be higher.
In addition, if the Indebtedness (See Definitions) exceeds the Cash
Value minus the surrender charge on any Monthly Anniversary, the Policy will
lapse, subject to a grace period. (See Payment and Allocation of Premiums -
Policy Lapse and Reinstatement.) A sufficient payment must be made within
the later of the grace period of 62 days from the Monthly Anniversary
immediately before the date Indebtedness exceeds the Cash Value less any
surrender charges, or 31 days after notice that a Policy will terminate
unless a sufficient payment has been
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<PAGE> 23
mailed, or the Policy will lapse and terminate without value. A lapsed
Policy, however, may later be reinstated subject to certain limitations. (See
Payment and Allocation of Premiums - Policy Lapse and Reinstatement.)
Any outstanding Indebtedness will be deducted from the proceeds payable
upon the death of the Insured, surrender, or the maturity of the Policy.
Repayment of Indebtedness. A Policy Loan may be repaid in whole or in
part at any time prior to the death of the Insured and as long as a Policy is
in force. When a loan repayment is made, an amount securing the Indebtedness
in the Loan Account equal to the loan repayment will be transferred to the
Divisions of the Separate Account and the General Account in the same
proportion that the Cash Value in each Loan Subaccount bears to Cash Value in
the Loan Account. Amounts paid while a Policy Loan is outstanding will be
treated as premiums unless the Owner requests in writing that they be treated
as repayment of Indebtedness.
Surrender, Partial Withdrawals and Pro Rata Surrender
At any time during the lifetime of the Insured and while a Policy is in
force, the Owner may surrender the Policy by sending a written request to the
Company. After the first Policy Year, an Owner may make a partial withdrawal
by sending a written request to the Company. The amount available for
surrender is the Cash Surrender Value at the end of the Valuation Period
during which the surrender request is received at the Company's Home Office.
Amounts payable from the Separate Account upon surrender, partial withdrawal,
or a pro rata surrender will ordinarily be paid within seven days of receipt
of the written request. (See General Matters - Postponement of Payments from
the Separate Account.)
Surrenders. To effect a surrender, either the Policy itself must be
returned to the Company along with the request, or the request must be
accompanied by a completed affidavit of loss, which is available from the
Company. Upon surrender, the Company will pay the Cash Surrender Value plus
any unpaid dividends determined prior to surrender (See Dividends) to the
Owner in a single sum. The Cash Surrender Value equals the Cash Value on the
date of surrender, less any Indebtedness, and less any surrender charge.
(See Charges and Deductions - Contingent Deferred Sales Charge.) The Company
will determine the Cash Surrender Value as of the date that an Owner's
written request is received at the Company's Home Office. If the request is
received on a Monthly Anniversary, the monthly deduction otherwise deductible
will be included in the amount paid. Coverage under a Policy will terminate
as of the date of surrender. The Insured must be living at the time of a
surrender. A surrender may have Federal income tax consequences. (See Federal
Tax Matters.)
Partial Withdrawals. After the first Policy Year, an Owner may make up
to one partial withdrawal each Policy Month from the Separate Account, and up
to four partial withdrawals and transfers in any Policy Year from the General
Account. A partial withdrawal may have Federal income tax consequences. (See
Federal Tax Matters.)
The minimum amount of a partial withdrawal request, net of any
applicable surrender charges, is the lesser of a) $500 from a Division of
the Separate Account, or b) the Policy's Cash Value in a Division. (See
Charges and Deductions - Contingent Deferred Sales Charge.) Partial
withdrawals made during a Policy Year may not exceed the following limits.
The maximum amount that may be withdrawn from a Division of the Separate
Account is the Policy's Cash Value net of any applicable surrender charges
in that Division. The total partial withdrawals and transfers from the
General Account over the Policy Year may not exceed a maximum amount equal to
the greatest of the following: (1) 25% of the Cash Surrender Value in the
General Account at the beginning of the Policy Year, (2) $5,000, (3) the
previous Policy Year's maximum amount.
The Owner may allocate the amount withdrawn plus any applicable
surrender charge, subject to the above conditions, among the Divisions of the
Separate Account and the General Account. If no allocation is specified, then
the partial withdrawal will be allocated among the Divisions of the Separate
Account and the General Account in the same proportion that the Policy's Cash
Value in each Division and the General Account bears to the total Cash Value
of the Policy, less the Cash Value in the Loan Account, on the date the
request for the partial withdrawal is received. If the limitations on
withdrawals from the General Account will not permit this proportionate
allocation, the Owner will be requested to provide an alternate allocation.
(See The General Account.)
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<PAGE> 24
No amount may be withdrawn that would result in there being
insufficient Cash Value to meet any surrender charge that would be payable
immediately following the withdrawal upon the surrender of the remaining Cash
Value.
The death benefit will be affected by a partial withdrawal. If Death
Benefit Option A or Death Benefit Option C is in effect and the death benefit
equals the Face Amount, then a partial withdrawal will decrease the Face
Amount by an amount equal to the partial withdrawal plus the applicable
surrender charge resulting from that partial withdrawal. If the death benefit
is based on a percentage of the Cash Value, then a partial withdrawal will
decrease the Face Amount by an amount by which the partial withdrawal plus
the applicable surrender charge exceeds the difference between the death
benefit and the Face Amount. If Death Option B is in effect, the Face Amount
will not change.
The Face Amount remaining in force after a partial withdrawal may not
be less than the minimum Face Amount. Any request for a partial withdrawal
that would reduce the Face Amount below this amount will not be implemented.
Partial withdrawals may affect the way in which the cost of insurance
charge is calculated and the amount of pure insurance protection afforded
under a Policy. (See Monthly Deduction - Cost of Insurance.) Partial
withdrawals will be applied first to reduce the initial Face Amount and then
to each increase in Face Amount in order, starting with the first increase.
The Company may change the minimum amount required for a partial withdrawal
or the number of times partial withdrawals may be made.
Pro Rata Surrender. After the first Policy Year, an Owner can make a
pro rata surrender of the Policy. The pro rata surrender will reduce the Face
Amount and the Cash Value by a percentage chosen by the Owner. This
percentage must be any whole number. A pro rata surrender may have Federal
income tax consequences. (See Federal Tax Matters.) The percentage will be
applied to the Face Amount and the Cash Value on the Monthly Anniversary on
or following our receipt of the request.
The Owner may allocate the amount of decrease in Cash Value plus any
applicable surrender charge among the Divisions of the Separate Account and
the General Account. (See Charges and Deductions - Contingent Deferred Sales
Charge.) If no allocation is specified, then the decrease in Cash Value and
any applicable surrender charge will be allocated among the Divisions of the
Separate Account and the General Account in the same proportion that the
Policy's Cash Value in each Division and the General Account bears to the
total Cash Value of the Policy, less the Cash Value in the Loan Account, on
the date the request for pro rata surrender is received.
A pro rata surrender can not be processed if it will reduce the Face
Amount below the minimum Face Amount of the Policy. No pro rata surrender
will be processed for more Cash Surrender Value than is available on the date
of the pro rata surrender. A cash payment will be made to the Owner for the
amount of Cash Value reduction less any applicable surrender charges.
Pro rata surrenders may affect the way in which the cost of insurance
charge is calculated and the amount of the pure insurance protection afforded
under the Policy. (See Monthly Deduction - Cost of Insurance.) Pro rata
surrenders will be applied to prior increases in the Face Amount, if any, in
the reverse order in which such increases occurred, and then to the original
Face Amount.
Charges on Surrender, Partial Withdrawals and Pro Rata Surrender. If a
Policy is surrendered within the first ten Policy Years, the Deferred
Contingent Sales Charge will apply. (See Contingent Deferred Sales Charge.)
A partial withdrawal or pro rata surrender may also result in a charge.
The amount of the charge assessed is a portion of the Contingent Deferred
Sales Charge that would be deducted upon surrender or lapse. Charges are
described in more detail under Charges and Deductions - Contingent Deferred
Sales Charge.
While partial withdrawals and pro rata surrenders are each methods of
reducing a Policy's Cash Value, a pro rata surrender differs from a partial
withdrawal in that a partial withdrawal does not typically have a
proportionate effect on a Policy's death benefit by reducing the Policy's
Face Amount, while a pro rata surrender does. Assuming that a Policy's death
benefit is not a percentage of the Policy's Cash Value, a pro rata surrender
will reduce the Policy's death benefit in the same proportion that the
Policy's Cash Value is reduced, while a partial
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<PAGE> 25
withdrawal will reduce the death benefit by one dollar for each dollar of Cash
Value withdrawn. Partial Withdrawals and Pro Rata Surrenders will also result
in there being different cost of insurance charges subsequently deducted. (See
Monthly Deduction - Cost of Insurance; Surrender, Partial Withdrawals and Pro
Rata Surrender - Partial Withdrawals; and Surrenders, Partial Withdrawals, and
Pro Rata Surrenders-Pro Rata Surrender.)
Transfers
Under General American's current practices, a Policy's Cash Value,
except amounts credited to the Loan Account, may be transferred among the
Divisions of the Separate Account and for certain contracts, between the
General Account and the Divisions. Transfers to and from the General Account
are subject to restrictions (See The General Account). For transfers to the
General Account, see The General Account. For transfers from the General
Account, see The General Account. Requests for transfers from or among
Divisions of the Separate Account must be made in writing. Transfers from or
among the Divisions of the Separate Account may be made once each Policy
Month and must be in amounts of at least $500 or, if smaller, the Policy's
Cash Value in a Division. General American ordinarily will effectuate
transfers and determine all values in connection with transfers as of the end
of the Valuation Period during which the transfer request is received.
All requests received on the same Valuation Day will be considered a
single transfer request. Each transfer must meet the minimum requirement of
$500 or the entire Cash Value in a Division whichever is smaller. Where a
single transfer request calls for more than one transfer, and not all of the
transfers would meet the minimum requirements, General American will
effectuate those transfers that do meet the requirements. Transfers resulting
from Policy Loans will not be counted for purposes of the limitations on the
amount or frequency of transfers allowed in each Policy Month or Policy Year.
Although General American currently intends to continue to permit
transfers for the foreseeable future, the Policy provides that General
American may at any time revoke, modify, or limit the transfer privilege,
including the minimum amount transferable, the maximum General Account
allocation percent, and the frequency of such transfers. General American may
in the future impose a charge of no more than $25 per transfer request.
Dollar Cost Averaging
The Owner may direct the Company to transfer amounts on a monthly basis
from the Money Market Fund to any other Division of the Separate Account.
This service is intended to allow the Owner to utilize "dollar cost
averaging" ("DCA"), a long-term investment technique which provides for
regular, level investments over time. The Company makes no guarantee that DCA
will result in a profit or protect against loss.
The following rules and restrictions apply to DCA transfers:
(1) The minimum DCA transfer amount is $100.
(2) A written election of the DCA service, on a form provided by the
Company, must be completed by the Owner and on file with the Company in order
to begin DCA transfers.
(3) In the written election of the DCA service, the Owner indicates
how DCA transfers are to be allocated among the Divisions of the Separate
Account. For any Division chosen to receive DCA transfers, the minimum
percentage that may be allocated to a Division is 5% of the DCA transfer
amount, and fractional percentages may not be used.
(4) DCA transfers can only be made from the Money Market Fund, and
DCA transfers will not be allowed to the General Account.
(5) The DCA transfers will not count against the Policy's normal
transfer restrictions. (See Policy Rights-- Transfers.)
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<PAGE> 26
(6) The DCA transfer percentages may differ from the allocation
percentages the Owner specifies for the allocation of Net Premiums. (See
Payment and Allocation of Premiums -- Allocation of Net Premiums and Cash
Values.)
(7) Once elected, DCA transfers from the Money Market Fund will be
processed monthly until either the value in the Money Market Fund is
completely depleted or the Owner instructs the Company in writing to cancel
the DCA service.
(8) Transfers as a result of a Policy Loan or repayment, or in
exercise of the conversion privilege, are not subject to the DCA rules and
restrictions. The DCA service terminates at the time the conversion privilege
is exercised, when any outstanding amount in any Division of the Separate
Account is immediately transferred to the General Account. (See Policy Rights
- - Loans, and Policy Rights - Conversion Privilege.)
(9) DCA transfers will not be made until the Right to Examine Policy
period has expired (See Policy Rights - Right to Examine Policy).
The Company reserves the right to assess a processing fee for the DCA
service. The Company reserves the right to discontinue offering DCA upon 30
days' written notice to Owners. However, any such discontinuation will not
affect DCA services already commenced. The Company reserves the right to
impose a minimum total Cash Value, less outstanding Indebtedness, in order to
qualify for DCA service. Also, the Company reserves the right to change the
minimum necessary Cash Value and the minimum required DCA transfer amount.
Right to Examine Policy
The Owner may cancel a Policy within 20 days after receiving it (30
days if the Owner is a resident of California and is age 60 or older) or
within 45 days after the application was signed, whichever is later. If a
Policy is canceled within this time period, a refund will be paid. Where
required by state law, the refund will equal all premiums paid under the
Policy. Where required by state law, General American will refund an amount
equal to the greater of premiums paid or (1) plus (2) where (1) is the
difference between the premiums paid, including any policy fees or other
charges, and the amounts allocated to the Separate Account under the Policy
and (2) is the value of the amounts allocated to the Separate Account under
the Policy on the date the returned Policy is received by General American or
its agent.
To cancel the Policy, the Owner should mail or deliver the Policy to
either General American or the agent who sold it. A refund of premiums paid
by check may be delayed until the Owner's check has cleared the bank upon
which it was drawn. (See General Matters - Postponement of Payments from the
Separate Account.)
A request for an increase in Face Amount (see Policy Benefits - Death
Benefit) may also be canceled. The request for cancellation must be made
within the later of 20 days from the date the Owner received the new Policy
specifications page for the increase, or 45 days after the application for
the increase was signed.
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Payments of Benefits at Maturity
If the Insured is living and the Policy is in force, the Company will
pay in a lump sum the Cash Surrender Value of the Policy on the Maturity
Date, plus any unpaid dividends determined prior to maturity. Amounts payable
on the Maturity Date ordinarily will be paid in a lump sum within seven days
of that date, although payments may be postponed under certain circumstances.
(See General Matters - Postponements of Payments from the Separate Account.)
A Policy will mature if and when the Insured reaches Attained Age 100.
Settlement options other than a lump sum payment may only be made upon
written agreement with the Company.
PAYMENT AND ALLOCATION OF PREMIUMS
Issuance of a Policy
Individuals wishing to purchase a Policy must complete an application
and submit it to an authorized registered agent of General American or to
General American's Home Office. A Policy will generally be issued to
Insureds of Issue Ages 0 through 80 for regularly underwritten contracts and,
should they become available in the future, to Insureds of Issue Ages 0
through 64 for simplified issue and guaranteed issue contracts. General
American may, in its sole discretion, issue Policies to individuals falling
outside of those Issue Ages. Acceptance of an application is subject to
General American's underwriting rules and General American reserves the right
to reject an application for any reason.
The Issue Date is determined by General American in accordance with its
standard underwriting procedures for variable life insurance policies. The
Issue Date is used to determine Policy Anniversaries, Policy Years, and
Policy Months. Insurance coverages under a Policy will not take effect until
the Policy has been delivered and the initial premium has been paid prior to
the Insured's death and prior to any change in health as shown in the
application.
Premiums
The initial premium is due on the Issue Date, and may be paid to an
authorized registered agent of General American or to General American at its
Home Office. General American currently requires that the initial premium for
a Policy be at least equal to one-twelfth (1/12) of the Minimum Premium for
the Policy. The Minimum Premium is the amount specified for each Policy based
on the requested initial Face Amount and the charges under the Policy which
vary according to the Issue Age, sex, underwriting risk class, and smoker
status of the Insured. (See Charges and Deductions.) For policies issued as
a result of a term conversion from certain General American term policies,
the Company requires the Owner to pay an initial premium, which combined with
conversion credits given, will equal one full "Minimum Premium" for the
Policy. Following the initial premium, subject to the limitations
described below, premiums may be paid in any amount and at any interval.
Premiums after the first premium payment must be paid to General American at
its Home Office. An Owner may establish a schedule of planned premiums which
will be billed by the Company at regular intervals. Failure to pay planned
premiums, however, will not itself cause the Policy to lapse. (See Policy
Lapse and Reinstatement.) Premium receipts will be furnished upon request.
An Owner may make unscheduled premium payments at any time in any
amount, or skip planned premium payments, subject to the minimum and maximum
premium limitations described below.
If a Policy is in the intended Owner's possession but the initial
premium has not been paid, the Policy is not in force. The intended Owner is
deemed to have the Policy for inspection only.
Premium Limitations. Every premium payment must be at least $10. In no
event may the total of all premiums paid in any Policy Year exceed the
current maximum premium limitations for that Policy Year. Maximum premium
limits for the Policy Year will be shown in an Owner's annual report.
In general, for policies issued with Death Benefit Option A or Death
Benefit Option B, the maximum premium limit for a Policy Year is the largest
amount of premium that can be paid in that Policy Year such that the sum of
the premiums paid under the Policy will not at any time exceed the guideline
premium limitations needed to comply with the tax definition of life
insurance. For policies issued with Death Benefit Option C, the company
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<PAGE> 28
reserves the right to impose other restrictions upon the amount of premium
that may be paid into the Policy. If at any time a premium is paid which
would result in total premiums exceeding the current maximum premium
limitations, the Company will only accept that portion of the premium which
will make total premiums equal the maximum. Any part of the premium in
excess of that amount will be returned or applied as otherwise agreed, and no
further premiums will be accepted until allowed under the current maximum
premium limitations.
In addition to the foregoing tax definitional limits on premiums, for
purposes of determining whether distributions (including loans) are a return
of income first, the Company monitors the Policy to detect whether the "seven
pay limit" has been exceeded. If the seven pay limit is exceeded, the Policy
becomes a "Modified Endowment". The Company has adopted administrative steps
designed to notify an Owner when it is believed that a premium payment will
cause a Policy to become a modified endowment contract. The Owner will be
given a limited amount of time to request that the premium be reversed in
order to avoid the Policy's being classified as a modified endowment
contract. (See Federal Tax Matters.)
If the Company receives a premium payment which would cause the death
benefit to increase by an amount that exceeds the Net Premium portion of the
payment, then the Company reserves the right to (1) refuse that premium
payment, or (2) require additional evidence of insurability before it accepts
the premium.
Allocation of Net Premiums and Cash Value
Allocation of Net Premiums. In the application for a Policy, the Owner
indicates how Net Premiums are to be allocated among the Divisions of the
Separate Account, to the General Account (if available), or both. For each
Division chosen, the minimum percentage that may be allocated to a Division
is 5% of the Net Premium, and fractional percentages may not be used. Certain
other restrictions apply to allocations made to the General Account (see
General Account). For policies issued with an allowable percentage to the
General Account of more than 5%, the minimum percentage is 5%, and fractional
percentages may not be used.
The allocation for future Net Premiums may be changed without charge at
any time by providing notice to the Company. Any change in allocation will
take effect immediately upon receipt by the Company of written notice. No
charge is imposed for changing the allocations of future premiums. The
initial allocation will be shown on the application which is attached to the
Policy. The Company may at any time modify the maximum percentage of future
Net Premiums that may be allocated to the General Account.
During the period from the Issue Date to the end of the Right to
Examine Policy Period (See Policy Rights - Right to Examine Policy), Net
Premiums will automatically be allocated to the Division that invests in the
Money Market Fund of Capital Company. When this period expires, the Policy's
Cash Value in that Division will be transferred to the Divisions of the
Separate Account and to the General Account (if available) in accordance with
the allocation requested in the application for the Policy, or any allocation
instructions received subsequent to receipt of the application. Net Premiums
received after the Right to Examine Policy Period will be allocated according
to the allocation instructions most recently received by the Company unless
otherwise instructed for that particular premium receipt.
The Policy's Cash Value may also be transferred between Divisions of
the Separate Account, and, if the General Account is available under the
Policy, between those Divisions and the General Account. (See Policy Rights -
Transfers.)
The value of amounts allocated to Divisions of the Separate Account
will vary with the investment performance of the chosen Divisions and the
Owner bears the entire investment risk. This will affect the Policy's Cash
Value, and may affect the death benefit as well. Owners should periodically
review their allocations of Net Premiums and the Policy's Cash Value in light
of market conditions and their overall financial planning requirements.
Policy Lapse and Reinstatement
Lapse. Unlike conventional whole life insurance policies, the failure
to make a premium payment following the initial premium will not itself cause
a Policy to lapse. Lapse will occur when the Cash Surrender
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<PAGE> 29
Value is insufficient to cover the monthly deduction, and a grace period
expires without a sufficient payment being made.
The grace period, which is 62 days, begins on the Monthly Anniversary
on which the Cash Surrender Value becomes insufficient to meet the next
monthly deduction. The Company will notify the Owner at the beginning of the
grace period by mail addressed to the last known address on file with the
Company. The notice to the Owner will indicate the amount of additional
premium that must be paid. The amount of the premium required to keep the
Policy in force will be the amount to cover the outstanding monthly
deductions and premium expense charges. (See Charges and Deductions - Monthly
Deduction.) If the Company does not receive the required amount within the
grace period, the Policy will lapse and terminate without Cash Value.
If the Insured dies during the grace period, any overdue monthly
deductions will be deducted from the death benefit otherwise payable.
Reinstatement. The Owner may reinstate a lapsed Policy by written
application any time within five years after the date of lapse and before the
Maturity Date. Reinstatement is subject to the following conditions:
1. Evidence of the insurability of the Insured
satisfactory to the Company (including evidence of insurability
of any person covered by a rider to reinstate the rider).
2. Payment of a premium that, after the deduction
of premium expense charges, is large enough to cover: (a) the
monthly deductions due at the time of lapse, and (b) two times
the monthly deduction due at the time of reinstatement.
3. Payment or reinstatement of any Indebtedness.
Any Indebtedness reinstated will cause Cash Value of an equal
amount also to be reinstated. Any loan interest due and unpaid on
the Policy Anniversary prior to reinstatement must be repaid at
the time of reinstatement. Any loan paid at the time of
reinstatement will cause an increase in Cash Value equal to the
amount to be reinstated.
The Policy cannot be reinstated if it has been surrendered.
The amount of Cash Value on the date of reinstatement will be equal to
the amount of any Policy Loan reinstated, increased by the Net Premiums paid
at reinstatement, any Policy Loan paid at the time of reinstatement, and the
amount of any surrender charge paid at the time of lapse. The Insured must be
alive on the date the Company approves the application for reinstatement. If
the Insured is not then alive, such approval is void and of no effect.
The effective date of reinstatement will be the date the Company
approves the application for reinstatement. There will be a full monthly
deduction for the Policy Month which includes that date. (See Charges and
Deductions-Monthly Deduction.)
The surrender charge in effect at the time of reinstatement will equal
the surrender charge in effect at the time of lapse.
CHARGES AND DEDUCTIONS
Charges will be deducted in connection with the Policy to compensate
the Company for providing the insurance benefits set forth in the Policy and
any additional benefits added by rider, administering the Policies, incurring
expenses in distributing the Policies, and assuming certain risks in
connection with the Policy.
Premium Expense Charges
Prior to allocation of Net Premiums, premium payments will be reduced
by premium expense charges consisting of a sales charge and a charge for
premium taxes. The premium payment less the premium expense charge equals the
Net Premium.
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Sales Charge. A sales charge not to exceed 5% of each premium payment
will be deducted from each premium payment to partially compensate the
Company for expenses incurred in distributing the Policy and any additional
benefits provided by riders. The Company currently intends to deduct a sales
charge of 5% in Policy Years one through ten and 2.25% in Policy Years past
Policy Year ten. The expenses covered by the sales charge include agent sales
commissions, the cost of printing Prospectuses and sales literature, and any
advertising costs. Where Policies are issued to Insureds with higher
mortality risks or to Insureds who have selected additional insurance
benefits, a portion of the amount deducted for sales charge is used to pay
distribution expenses and other costs associated with these additional
coverages. No increase in this sales charge will occur that would result in
an increase in the sales charge percentage deducted in any previous Policy
year.
A Contingent Deferred Sales Charge is also imposed under certain
circumstances for expenses incurred in distributing the Policies. That charge
is discussed below.
To the extent that sales expenses are not recovered from the sales
charge and the surrender charge, those expenses may be recovered from other
sources, including the mortality and expense risk charge described below.
Premium Taxes. Various states and subdivisions impose a tax on premiums
received by insurance companies. Premium taxes vary from state to state. A
deduction of 2.5% of the premium is taken from each premium payment for these
taxes. The deduction represents an amount the Company considers necessary to
pay the premium taxes imposed by the states and any subdivisions thereof.
Monthly Deduction
Charges will be deducted monthly from the Cash Value of each Policy
("the monthly deduction") to compensate the Company for (a) certain
administrative costs; (b) the cost of insurance; and (c) the cost of optional
benefits added by rider. The monthly deduction will be taken on the
Investment Start Date and on each Monthly Anniversary. It will be allocated
among the General Account and each Division of the Separate Account in the
same proportion that a Policy's Cash Value in the General Account and the
Policy's Cash Value in each Division bear to the total Cash Value of the
Policy, less the Cash Value in the Loan Account, on the date the deduction is
taken. Because portions of the monthly deduction, such as the cost of
insurance, can vary from month to month, the monthly deduction itself can
vary in amount from month to month.
Monthly Administrative Charge. The Company has responsibility for the
administration of the Policies and the Separate Account. Administrative
expenses include premium billing and collection, record keeping, processing
death benefit claims, cash surrenders, partial withdrawals, Policy changes,
and reporting and overhead costs, processing applications, and establishing
Policy records. As reimbursement for administrative expenses related to the
maintenance of each Policy and the Separate Account, the Company assesses a
monthly administration charge from each Policy. This charge is $4 per month
for all Policy Months. These charges are guaranteed not to increase while the
Policy is in force. The Company does not anticipate that it will make any
profit on the monthly administrative charge.
The Company may administer the Policy itself, or the Company may
purchase administrative services from such sources (including affiliates) as
may be available. Such services will be acquired on a basis which, in the
Company's sole discretion, affords the best services at the lowest cost. The
Company reserves the right to select a company to provide services which the
Company deems, in its sole discretion, is the best able to perform such
services in a satisfactory manner even though the costs for such services may
be higher than would prevail elsewhere.
Cost of Insurance. The cost of insurance is deducted on each Monthly
Anniversary for the following Policy Month. Because the cost of insurance
depends upon a number of variables, the cost will vary for each Policy Month.
The cost of insurance is determined separately for the initial Face Amount
and for any subsequent increases in Face Amount. The Company will determine
the cost of insurance charge by multiplying the applicable cost of insurance
rate or rates by the net amount at risk (defined below) for each Policy
Month.
The cost of insurance rates are determined at the beginning of each
Policy Year for the initial Face Amount and each increase in Face Amount. The
rates will be based on the Attained Age, duration, rate class, and sex
(except for Policies sold in Montana, (See Unisex Requirements Under Montana
Law) of the Insured at issue
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or the date of an increase in Face Amount. The cost of insurance rates
generally increase as the Insured's Attained Age increases. The rate class of
an Insured also will affect the cost of insurance rate. For the initial Face
Amount, the Company will use the rate class on the Issue Date. For each
increase in Face Amount, other than one caused by a change in the death
benefit option, the Company will use the rate class applicable to that
increase. If the death benefit equals a percentage of Cash Value, an increase
in Cash Value will cause an automatic increase in the death benefit. The rate
class for such increase will be the same as that used for the most recent
increase that required proof of insurability.
The Company currently places Insureds into a preferred rate class, a
standard rate class, or into rate classes involving a higher mortality risk.
The degree of underwriting imposed may vary from full underwriting, to
simplified issue underwriting, and should it become available in the future,
to guaranteed issue underwriting.
Actual cost of insurance rates may change and the actual monthly cost
of insurance rates will be determined by the Company based on its
expectations as to future mortality experience. However, the actual cost of
insurance rates will not be greater than the guaranteed cost of insurance
rates set forth in the Policy. For fully underwritten and simplified issue
Policies which are not in a substandard risk class, the guaranteed cost of
insurance rates are equal to 100% of the rates set forth in the male/female
1980 CSO Mortality Tables (1980 CSO Table A and 1980 CSO Table G), age
nearest birthday. Higher rates apply if the Insured is determined to be in a
substandard risk class.
In two otherwise identical Policies, an Insured in the preferred rate
class will have a lower cost of insurance than an Insured in a rate class
involving higher mortality risk. For rate classes other than the guaranteed
issue rate class, each rate class is also divided into two categories:
smokers and nonsmokers. Nonsmoker Insureds will generally incur a lower cost
of insurance than similarly situated Insureds who smoke. (Insureds under
Attained Age 20 are automatically assigned to the smoker rate class.)
Policies issued with simplified underwriting or guaranteed issue, if it would
become available in the future, will in general incur a higher cost of
insurance than Policies issued under full underwriting. Guaranteed issue
Policies will in general incur the highest cost of insurance rates.
The net amount at risk for a Policy Month is (a) the death benefit at
the beginning of the Policy Month divided by 1.0032737 (which reduces the net
amount at risk, solely for purposes of computing the cost of insurance, by
taking into account assumed monthly earnings at an annual rate of 4%), less
(b) the Cash Value at the beginning of the Policy Month. If there is an
increase in the Face Amount, a net amount at risk will be calculated
separately for the initial Face Amount and for each increase in Face Amount.
If Death Benefit Option A or Death Option C is in effect, for purposes of
determining the net amounts at risk for the initial Face Amount and for each
increase in Face Amount, Cash Value will first be considered a part of the
initial Face Amount. If the Cash Value is greater than the initial Face
Amount, the excess Cash Value will then be considered a part of each increase
in order, starting with the first increase. If Death Benefit Option B is in
effect, the net amount at risk will be determined separately for the initial
Face Amount and for each increase in Face Amount. In calculating the cost of
insurance charges, the cost of insurance rate for a Face Amount is applied to
the net amount at risk for that Face Amount.
Additional Insurance Benefits. The monthly deduction will include
charges for any additional benefits provided by rider. (See General Matters -
Additional Insurance Benefits.)
Contingent Deferred Sales Charge
For a period of up to ten years after the Issue Date, the Company will
impose a CDSC upon surrender or lapse of the Policy, upon a partial
withdrawal, or upon a pro rata surrender. The amount of the charge assessed
will depend upon a number of factors, including the type of event (a full
surrender, lapse, or partial withdrawal), the amount of any premium payments
made under the Policy prior to the event, and the number of Policy Years
having elapsed since the Policy was issued.
The Contingent Deferred Sales Charge compensates the Company for
expenses relating to the distribution of the Policy, including agents'
commissions, advertising, and the printing of the Prospectus and sales
literature.
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<PAGE> 32
Calculation of Charge. If a Policy is surrendered, the charge will be
the Contingent Deferred Sales Charge Percentage multiplied by 4.0% of
premiums paid since issue.
The Contingent Deferred Sales Charge Percentage is shown in the table
below.
<TABLE>
Contingent Deferred Sales Charge Percentage Table
<CAPTION>
If surrender or lapse The following percentage
occurs in the last month of the surrender charge
of Policy Year:<F*> will be payable:<F**>
<S> <C>
1 through 5 100%
6 80%
7 60%
8 40%
9 20%
10 and later 0%
--------------
<FN>
<F*> In addition, the percentages reduce equally for each
Policy Month during the years shown. For example,
during the seventh year, the percentage reduces equally
each month from 80% at the end of the sixth Year to 60% at
the end of the seventh Year.
<F**> For male issue ages 75 through 80 and female issue
ages 77 through 80, the Contingent Deferred Sales Charge
Percentage grades to 0% in less than ten years.
</TABLE>
Charge Assessed Upon Partial Withdrawals or Pro Rata Surrender. The
amount of the Contingent Deferred Sales Charge deducted upon a partial
withdrawal or pro rata surrender will equal a fraction of the charge that
would be deducted if the Policy were surrendered at that time. The fraction
will be determined by dividing the amount of the withdrawal of cash by the
Cash Value before the withdrawal and multiplying the result by the charge.
Immediately after a withdrawal, the Policy's remaining surrender charge will
equal the amount of the surrender charge immediately before the withdrawal
less the amount deducted in connection with the withdrawal.
Reduction of Charges. The Policy is available for purchase by
individuals, corporations, and other institutions. For certain individuals
and certain corporate or other group or sponsored arrangements purchasing one
or more Policies, General American may waive or reduce the amount of the
Sales Charge, Contingent Deferred Sales Charge, monthly administrative
charge, or other charges where the expenses associated with the sale of the
Policy or Policies or the underwriting or other administrative costs
associated with the Policy or Policies are reduced.
Sales, underwriting, or other administrative expenses may be reduced
for reasons such as expected economies resulting from a corporate purchase or
a group or sponsored arrangement; from the amount of the initial premium
payment or payments; or from the amount of projected premium payments.
General American will determine in its discretion if, and in what amount, a
reduction is appropriate. The Company may modify its criteria for
qualification for reduction of charges as experience is gained, subject to
the limitation that such reductions will not be unfairly discriminatory
against the interests of any Owner.
Separate Account Charges
Mortality and Expense Risk Charge. General American will deduct a daily
charge from the Separate Account at the rate of .0019111% of the average net
assets of each Division of the Separate Account which equals an effective
annual rate of .70% of those net assets. This deduction is guaranteed not to
increase while the Policy is in force. General American may realize a profit
from this charge.
The mortality risk assumed by General American is that Insureds may die
sooner than anticipated and that therefore General American will pay an
aggregate amount of death benefits greater than anticipated. The expense risk
assumed is that expenses incurred in issuing and administering the Policy
will exceed the amounts realized from the administrative charges assessed
against the Policy.
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<PAGE> 33
Expenses of General American Capital Company, Variable Insurance
Products Fund, Variable Insurance Products Fund II, and Van Eck Investment
Trust. The value of the net assets of the Separate Account will reflect the
investment advisory fee and other expenses incurred by these investment
companies. See the prospectuses for the respective Funds for a description
of investment advisory fees and other expenses incurred by the Capital
Company, VIP, VIP II, and Van Eck.
No charges are currently made to the Separate Account for Federal,
state, or local taxes that the Company incurs which may be attributable to
such Separate Account or to the Policy. The Company may make such a charge
for any such taxes or economic burden resulting from the application of the
tax laws that it determines to be properly attributable to the Separate
Account or to the Policy. (See Federal Tax Matters.)
DIVIDENDS
The Policy is a participating Policy which is entitled to a share, if
any, of the divisible surplus of the Company as determined each year and
apportioned to it. This surplus will be distributed as a dividend payable
annually on the January Monthly Anniversary. If the Insured dies after the
dividend has been determined, the Company will pay any unpaid dividend to the
Beneficiary.
Dividends under participating policies may be described as refunds of
premiums which adjust the cost of a Policy to the actual level of costs
emerging over time after the issue of the Policies. Both Federal and state
law recognize that dividends are generally considered to be a refund of a
portion of the premium paid and therefore are not treated as income for
Federal or state income tax purposes. However, depending on the dividend
payment option chosen (see below), dividends may have tax consequences to
Owners. Counsel or other competent tax advisors should be consulted for more
complete information.
Dividend illustrations published at the time of issue of a Policy
reflect the actual recent experience of the issuing insurance company with
respect to factors such as interest, mortality, and expenses. State law
generally prohibits a company from projecting or estimating future results.
State law also requires that dividends must be based on surplus, after
setting aside certain necessary amounts, and that such surplus must be
apportioned equitably among participating policies. In other words, in
principle and by statute, dividends must be based on actual experience and
cannot be guaranteed at issue of a Policy.
Each year the Company's actuary analyzes the current and recent past
experience and compares it to the assumptions used in determining the premium
rates at the time of issue. Some of the more important data studied includes
mortality and lapse rates, investment yield in the General Account, and
actual expenses incurred in administering the Policy. Such data is then
allocated to each dividend class, e.g., by year of issue, age and plan. The
actuary then determines what dividends can be equitably apportioned to each
Policy class and makes a recommendation to the Company's Board of Directors
("the Board"). The Board, which has the ultimate authority to declare
dividends, will vote the amount of surplus to be apportioned to each Policy
class, thereby, authorizing the distribution of the annual dividend.
An Owner may choose one of the following dividend options. Dividends
will be credited under the chosen option until the Owner changes it. If the
Owner does not choose an option, the Company will credit the dividend under
Dividend Option B until such time as the Owner requests in writing a
different option.
Dividend Option A: Cash. The amount of the dividend will be paid in
cash.
Dividend Option B: Increase Cash Value. The amount of the dividend will
be added to the Policy's Cash Value on the date of the dividend payment. The
Cash Value will be increased by the amount of the dividend. The dividend will
be allocated to the General Account (if available) and the Divisions of the
Separate Account according to the current allocation of the Net Premium.
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<PAGE> 34
THE GENERAL ACCOUNT
Because of exemptive and exclusionary provisions, interests in the
General Account have not been registered under the Securities Act of 1933 and
the General Account has not been registered as an investment company under
the 1940 Act. Accordingly, neither the General Account nor any interests
therein are subject to the provisions of these Acts and, as a result, the
staff of the SEC has not reviewed the disclosure in this Prospectus relating
to the General Account. The disclosure regarding the General Account may,
however, be subject to certain generally applicable provisions of the Federal
securities laws relating to the accuracy and completeness of statements made
in prospectuses.
General Description
The General Account consists of all assets owned by General American
other than those in the Separate Account and other separate accounts. Subject
to applicable law, General American has sole discretion over the investment
of the assets of the General Account.
At issue, General American will determine the maximum percentage of the
non-borrowed Cash Value that may be allocated, either initially or by
transfer, to the General Account. The ability to allocate Net Premiums or to
transfer Cash Value to the General Account may not be made available, in the
Company's discretion, under certain Policies. Further, the option may be
limited with respect to some Policies. The Company may, from time to time,
adjust the extent to which premiums or Cash Value may be allocated to the
General Account (the "maximum allocation percentage"). Such adjustments may
not be uniform as to all Policies. General American may at any time modify
the General Account maximum allocation percent. Subject to this maximum, an
Owner may elect to allocate Net Premiums to the General Account, the Separate
Account, or both. Subject to this maximum, the Owner may also transfer Cash
Value from the Divisions of the Separate Account to the General Account, or
from the General Account to the Divisions of the Separate Account. The
allocation of Net Premiums or the transfer of Cash Value to the General
Account does not entitle an Owner to share in the investment experience of
the General Account. Instead, General American guarantees that Cash Value
allocated to the General Account will accrue interest at a rate of at least
4%, compounded annually, independent of the actual investment experience of
the General Account.
The Loan Account is part of the General Account.
The Policy
This Prospectus describes a flexible premium variable life insurance
policy. This Prospectus is generally intended to serve as a disclosure
document only for the aspects of the Policy relating to the Separate Account.
For complete details regarding the General Account, see the Policy itself.
General Account Benefits
If the Owner allocates all Net Premiums only to the General Account and
makes no transfers, partial withdrawals, pro rata surrenders, or Policy
Loans, the entire investment risk will be borne by General American, and
General American guarantees that it will pay at least a minimum specified
death benefit. The Owner may select Death Benefit Option A, B or C under the
Policy and may change the Policy's Face Amount subject to satisfactory
evidence of insurability.
General Account Cash Value
Net Premiums allocated to the General Account are credited to the Cash
Value. General American bears the full investment risk for these amounts and
guarantees that interest will be credited to each Owner's Cash Value in the
General Account at a rate of no less than 4% per year, compounded annually.
General American may, AT ITS SOLE DISCRETION, credit a higher rate of
interest, although it is not obligated to credit interest in excess of 4% per
year, and might not do so. ANY INTEREST CREDITED ON THE POLICY'S CASH VALUE
IN THE GENERAL ACCOUNT IN EXCESS OF THE GUARANTEED MINIMUM RATE OF 4% PER
YEAR WILL BE DETERMINED IN THE SOLE DISCRETION OF GENERAL AMERICAN. THE
POLICY OWNER ASSUMES
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<PAGE> 35
THE RISK THAT INTEREST CREDITED MAY NOT EXCEED THE GUARANTEED MINIMUM RATE OF
4% PER YEAR. If excess interest is credited, a different rate of interest may
be applied to the Cash Value in the Loan Account. The Cash Value in the
General Account will be calculated on each Monthly Anniversary of the Policy.
General American guarantees that, on each Valuation Date, the Cash
Value in the General Account will be the amount of the Net Premiums allocated
or Cash Value transferred to the General Account, plus interest at the rate
of 4% per year, plus any excess interest which General American credits and
any amounts transferred into the General Account, less the sum of all Policy
charges allocable to the General Account and any amounts deducted from the
General Account in connection with partial withdrawals, pro rata surrenders,
surrender charges or transfers to the Separate Account.
Transfers, Surrenders, Partial Withdrawals and Policy Loans
After the first Policy Year and prior to the Maturity Date, a portion
of Cash Value may be withdrawn from the General Account or transferred from
the General Account to the Separate Account. A maximum total of four partial
withdrawals and transfers from the General Account is permitted in a Policy
Year. A partial withdrawal, net of any applicable surrender charges, and any
transfer must be at least $500 or, the Policy's entire Cash Value in the
General Account if less than $500. No amount may be withdrawn from the
General Account that would result in there being insufficient Cash Value to
meet any surrender charges that would be payable immediately following the
withdrawal upon the surrender of the remaining Cash Value of the Policy. The
total amount of transfers and withdrawals in a Policy Year may not exceed a
Maximum Amount equal to the greater of (a) 25% of a Policy's Cash Surrender
Value in the General Account at the beginning of the Policy Year, (b) $5,000,
or (c) the previous Policy Year's Maximum Amount (not to exceed the total
Cash Surrender Value of the Policy).
Transfers to the General Account are limited by the maximum allocation
percentage (described below) in effect for a Policy at the time a transfer
request is made.
Policy Loans may also be made from the Policy's Cash Value in the
General Account.
Loans and withdrawals from the General Account may have Federal income
tax consequences. (See Federal Tax Matters.)
No transfer charge currently is imposed on transfers to or from the
General Account. However, such a charge may be imposed in the future.
General American may revoke or modify the privilege of transferring amounts
to or from the General Account at any time. Partial withdrawals and pro rata
surrenders will result in the imposition of the applicable surrender charge.
Transfers, surrenders, partial withdrawals and pro rata surrenders
payable from the General Account and the payment of Policy Loans allocated to
the General Account may, subject to certain limitations, be delayed for up to
six months. However, if payment is deferred for 30 days or more, General
American will pay interest at the rate of 2.5% per year for the period of the
deferment. Amounts from the General Account used to pay premiums on policies
with General American will not be delayed.
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<PAGE> 36
GENERAL MATTERS
Postponement of Payments from the Separate Account
The Company usually pays amounts payable on partial withdrawal, pro
rata surrender, surrender, or Policy Loan allocated to the Separate Account
Divisions within seven days after written notice is received. Payment of any
amount payable from the Divisions of the Separate Account upon surrender,
partial withdrawals, pro rata surrender, death of Insured, or the Maturity
Date, as well as payments of a Policy Loan and transfers, may be postponed
whenever: (1) the New York Stock Exchange is closed other than customary
weekend and holiday closings, or trading on the New York Stock Exchange is
restricted as determined by the SEC; (2) the SEC by order permits
postponement for the protection of Owners; or (3) an emergency exists, as
determined by the SEC, as a result of which disposal of securities is not
reasonably practicable or it is not reasonably practicable to determine the
value of the Separate Account's net assets. The Company may defer payment of
the portion of any Policy Loan from the General Account for not more than six
months.
Payments under the Policy of any amounts derived from premiums paid by
check may be delayed until the Owner's check has cleared the bank upon which
it was drawn.
The Contract
The Policy, the attached application, any riders, endorsements, any
application for an increase in Face Amount, and any application for
reinstatement constitute the entire contract. All statements made by the
Insured in the application and any supplemental applications can be used to
contest a claim or the validity of the Policy. Any change to the Policy must
be in writing and approved by the President, a Vice President, or the
Secretary of the Company. No agent has the authority to alter or modify any
of the terms, conditions, or agreements of the Policy or to waive any of its
provisions.
Control of Policy
The Insured is the Owner of the Policy unless another person is shown
as the Owner in the application. Ownership may be changed, however, as
described below. The Owner is entitled to all rights provided by the Policy,
prior to its Maturity Date. After the Maturity Date, the Owner cannot change
the payee nor the mode of payment, unless otherwise provided in the Policy.
Any person whose rights of ownership depend upon some future event does not
possess any present rights of ownership. If there is more than one Owner at a
given time, all Owners must exercise the rights of ownership by joint action.
If the Owner dies, and the Owner is not the Insured, the Owner's interest in
the Policy becomes the property of his or her estate unless otherwise
provided. Unless otherwise provided, the Policy is jointly owned by all
Owners named in the Policy or by the survivors of those joint Owners. Unless
otherwise stated in the Policy, the final Owner is the estate of the last
joint Owner to die. The Company may rely on the written request of any
trustee of a trust which is the Owner of the Policy, and the Company is not
responsible for the proper administration of any such trust.
Beneficiary
The Beneficiary(ies) is (are) the person(s) specified in the
application or by later designation. Unless otherwise stated in the Policy,
the Beneficiary has no rights in a Policy before the death of the Insured. If
there is more than one Beneficiary at the death of the Insured, each
Beneficiary will receive equal payments unless otherwise provided by the
Owner. If no Beneficiary is living at the death of the Insured, the proceeds
will be payable to the Owner or, if the Owner is not living, to the Owner's
estate.
The Company permits the designation of various types of trusts as
Beneficiary(ies), including trusts for minor beneficiaries, trusts under a
will, and trusts under a separate written agreement. An Owner is also
permitted to designate several types of beneficiaries, including business
beneficiaries.
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<PAGE> 37
Change of Owner or Beneficiary
The Owner may change the ownership and/or Beneficiary designation by
written request in a form acceptable to the Company at any time during the
Insured's lifetime subject to any restrictions stated in the Policy and this
Prospectus. The Company may require that the Policy be returned for
endorsement of any change. If acceptable to us, the change will take effect
as of the date the request is signed, whether or not the Insured is living
when the request is received at the Company's Home Office. The Company is not
liable for any payment made or action taken before the Company received the
written request for change. If the Owner is also a Beneficiary of the Policy
at the time of the Insured's death, the Owner may, within sixty days of the
Insured's death, designate another person to receive the Policy proceeds. Any
change will be subject to any assignment of the Policy or any other legal
restrictions.
Policy Changes
The Company reserves the right to limit the number of changes to a
Policy to one per Policy Year and to restrict changes in the first Policy
Year. Currently, only one change is permitted during any Policy Year and no
change may be made during the first Policy Year. For this purpose, changes
include increases or decreases in Face Amount and changes in the death
benefit option. No change will be permitted, if as a result, the Policy would
fail to satisfy the definition of life insurance in Section 7702 of the
Internal Revenue Code or any applicable successor provision.
Conformity with Statutes
If any provision in a Policy is in conflict with the laws of the state
governing the Policy, the provision will be deemed to be amended to conform
to such laws. In addition, the Company reserves the right to change the
Policy if it determines that a change is necessary to cause this Policy to
comply with, or give the Owner the benefit of any Federal or state statute,
rule, or regulation, including, but not limited to, requirements of the
Internal Revenue Code, or its regulations or published rulings.
Claims of Creditors
To the extent permitted by law, neither the Policy nor any payment
under it will be subject to the claims of creditors or to any legal process.
Incontestability
The Policy is incontestable after it has been in force for two years
from the Issue Date during the lifetime of the Insured. An increase in Face
Amount or addition of a rider after the Issue Date is incontestable after
such increase or addition has been in force for two years from its effective
date during the lifetime of the Insured. Any reinstatement of a Policy is
incontestable only after it has been in force during the lifetime of the
Insured for two years after the effective date of the reinstatement.
Assignment
The Company will be bound by an assignment of a Policy only if: (a) the
assignment is in writing; (b) the original assignment instrument or a
certified copy thereof is filed with the Company at its Home Office; and (c)
the Company returns an acknowledged copy of the assignment instrument to the
Owner. The Company is not responsible for determining the validity of any
assignment. Payment of Policy proceeds is subject to the rights of any
assignee of record. If a claim is based on an assignment, the Company may
require proof of the interest of the claimant. A valid assignment will take
precedence over the claim of any Beneficiary.
Suicide
Suicide within two years of the Issue Date is not covered by the
Policy. If the Insured dies by suicide, while sane or insane, within two
years from the Issue Date (or within the maximum period permitted by the laws
of the state in which the Policy was delivered, if less than two years), the
amount payable will be limited to premiums paid, less any partial withdrawals
and outstanding Indebtedness subject to certain limitations, if the Insured,
while
30
<PAGE> 38
sane or insane, dies by suicide within two years after the effective
date of an increase in Face Amount, the death benefit for that increase will
be limited to the amount of the monthly deductions for the increase.
If the Insured is a Missouri citizen when the Policy is issued, this
provision does not apply on the Issue Date of the Policy, or on the effective
date of any increase in Face Amount, unless the Insured intended suicide when
the Policy, or the increase in Face Amount, was applied for.
Misstatement of Age or Sex and Corrections
If the age or sex (except any Policies sold in Montana: (See Unisex
Requirements Under Montana Law) of the Insured has been misstated in the
application, the amount of the death benefit will be that which the most
recent cost of insurance charge would have purchased for the correct age and
sex.
Any payment or Policy changes made by the Company in good faith,
relying on its records or evidence supplied with respect to such payment,
will fully discharge the Company's duty. The Company reserves the right to
correct any errors in the Policy.
Change in Rate Class
Sixty days prior to the Policy Anniversary on which the Insured attains
age 20, a letter will be sent to the Owner notifying the Owner of the
opportunity to apply for a change in the Insured's Rate Class from Smoker to
Non-Smoker. Upon receipt of the forms requested for a Non-Smoker risk
classification and proof satisfactory to the Company, the Rate Class will be
Non-Smoker. If the Owner does not apply for a Rate Class change, the Rate
Class will remain Smoker.
Additional Insurance Benefits
Subject to certain requirements, one or more of the following
additional insurance benefits may be added to a Policy by rider. The
descriptions below are intended to be general; the terms of the Policy riders
providing the additional benefits may vary from state to state, and the
Policy should be consulted. The cost of any additional insurance benefits
which require additional charges will be deducted as part of the monthly
deduction from the Policy's Cash Value. (See Charges and Deductions - Monthly
Deduction.) Certain restrictions may apply and are described in the
applicable rider. An insurance agent authorized to sell the Policy can
describe these extra benefits further. Samples of the provisions are
available from General American upon written request.
Waiver of Monthly Deduction Rider. Provides for the waiver of the
monthly deductions while the Insured is totally disabled, subject to certain
limitations described in the rider. The Insured must have become disabled
after age 5 and before age 65.
Waiver of Specified Premium Rider. Provides for crediting the Policy's
Cash Value with a specified monthly premium while the Insured is totally
disabled. The monthly premium selected at issue is not guaranteed to keep the
Policy in force. The Insured must have become disabled after age 5 and
before age 65.
Increasing Benefit Option Rider. Allows the Owner to increase the Face
Amount of the Policy without evidence of insurability. The increase is made
on each Policy Anniversary.
Records and Reports
The Company will maintain all records relating to the Separate Account
and will mail to the Owner once each Policy Year, at the last known address
of record, a report which shows the current Policy values, premiums paid,
deductions made since the last report, and any outstanding Policy Loans. The
Owner will also be sent a periodic report for the Capital Company, VIP, VIP
II, and Van Eck and a list of the securities held in each Fund. Receipt of
premium payments, transfers, partial withdrawals, pro rata surrenders, Policy
Loans, loan repayments, changes in death benefit options, increases or
decreases in Face Amount, surrenders and reinstatements will be confirmed
promptly following each transaction.
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<PAGE> 39
An Owner may request in writing a projection of illustrated future Cash
Surrender Values and death benefits. This projection will be furnished by the
Company for a nominal fee which will not exceed $25.
DISTRIBUTION OF THE POLICIES
The Policy will be sold by individuals who, in addition to being
licensed as life insurance agents for the Company, are also registered
representatives of Walnut Street Securities, Inc. ("Walnut Street"), the
principal underwriter of the Policy, or of broker-dealers who have entered
into written sales agreements with Walnut Street. Walnut Street was
incorporated under the laws of Missouri in 1984 and is a wholly-owned
subsidiary of General American Holding Company, which is, in turn, a
wholly-owned subsidiary of the Company. Walnut Street is registered with the
SEC under the Securities Exchange Act of 1934 as a broker-dealer and is a
member of the National Association of Securities Dealers, Inc. No director or
officer of Walnut Street owns any units in the Separate Account.
Writing agents will receive commissions based on a commission schedule
and rules. Currently, agent first-year commissions equal 7.50% of target
premiums paid in Policy Year 1. In renewal years, the agent commissions equal
4.0% of premiums paid in years 2 through 10. A 2.50% of premium service fee
is paid after Policy year 10. For Policy years after Policy Year 1, a
commission of .20% of the average monthly Cash Value for each Policy Year is
paid. These are maximum commissions, and reductions may be possible under the
circumstances outlined in the section entitled Reduction of Charges. General
Agents receive compensation which may be in part based on the level of agent
commissions in their agencies.
As principal underwriter for the Policies, Walnut Street received
$435,743.69 in commission income on total premium payments of $4,054,168.79
in 1995. Walnut Street receives no administrative fees, management fees, or
other fee income from sales of the Policies.
The general agent commission schedules and rules differ for different
types of agency contracts.
FEDERAL TAX MATTERS
Introduction
The following summary provides a general description of the Federal
income tax considerations associated with the Policy and does not purport to
be complete or to cover all situations. This discussion is not intended as
tax advice. Counsel or other competent tax advisors should be consulted for
more complete information. This discussion is based upon General American's
understanding of the present Federal income tax laws as they are currently
interpreted by the Internal Revenue Service. No representation is made as to
the likelihood of continuation of the present Federal income tax laws or of
the current interpretations by the Internal Revenue Service.
Tax Status of the Policy
Section 7702 of the Internal Revenue Code of 1986, as amended (the
"Code") includes a definition of a life insurance contract for Federal tax
purposes. The Secretary of the Treasury (the "Treasury") issued proposed
regulations which specify what will be considered reasonable mortality
charges under Section 7702. Guidance as to how Section 7702 is to be applied
is, however, limited. If a Policy were determined not to be a life insurance
contract for purposes of Section 7702, such Policy would not provide most of
the tax advantages normally provided by a life insurance policy.
With respect to a Policy issued on a basis of a standard premium class
or on a guaranteed or simplified issue basis, while there is some uncertainty
due to the limited guidance under Section 7702, the Company believes that
such a Policy should meet the Section 7702 definition of a life insurance
contract. However, with respect to a Policy issued on a substandard basis
(i.e., a premium class involving higher than standard mortality risk), it is
not clear whether such a Policy would satisfy Section 7702, particularly if
the Owner pays the full amount of premiums permitted under the Policy.
32
<PAGE> 40
If it is subsequently determined that a Policy does not satisfy Section
7702, the Company will take whatever steps are appropriate and necessary to
attempt to cause such a Policy to comply with Section 7702, including
possibly refunding any premiums paid that exceed the limitations allowable
under Section 7702 (together with interest or other earnings on any such
premiums refunded as required by law). For these reasons, the Company
reserves the right to modify the Policy as necessary to attempt to qualify it
as a life insurance contract under Section 7702.
Section 817(h) of the Code authorizes the Treasury to set standards by
regulation or otherwise for the investments of the Separate Account to be
"adequately diversified" in order for the Policy to be treated as a life
insurance contract for Federal tax purposes. The Separate Account, intends to
comply with the diversification requirements prescribed by the Treasury in
Regulation Section 1.817-5, which affect how assets may be invested. Although
General American does not control Capital Company, VIP, VIP II, or Van Eck,
it has entered into agreements, which require these investment companies to
be operated in compliance with the requirements prescribed by the Treasury.
The Treasury announced that the regulations regarding diversification
of investments do not provide guidance concerning the tax consequences of the
extent to which Owners may direct their investments to the divisions of a
separate account. It is not clear whether additional guidance in this regard
will be provided or whether, if provided, it will be applied on a prospective
basis only. It is possible that if additional guidance on this issue is
promulgated, the Policy may need to be modified to comply with such guidance.
For these reasons, the Company reserves the right to modify the Policy as
necessary to attempt to prevent the Owner from being considered the owner of
the assets of the Separate Account or otherwise to qualify the Policy for
favorable tax treatment.
The following discussion assumes that the Policy will qualify as a life
insurance contract for Federal income tax purposes.
1. Tax Treatment of Policy Benefits. In general, the Company
believes that the proceeds and Cash Value increases of a Policy should be
treated in a manner consistent with a fixed-benefit life insurance policy for
Federal income tax purposes. Thus, the death benefit under the Policy should
be excludable from the gross income of the Beneficiary under Section
101(a)(1) of the Code, unless a transfer for value (generally a sale of the
policy) has occurred.
Many changes or transactions involving a Policy may have tax
consequences, depending on the circumstances. Such changes include, but are
not limited to, the exchange of the Policy, a change of the Policy's Face
Amount, a Policy Loan, an additional premium payment, a Policy lapse with an
outstanding Policy Loan, a partial withdrawal, or a surrender of the Policy.
In addition, Federal estate and state and local estate, inheritance, and
other tax consequences of ownership or receipt of Policy proceeds depend upon
the circumstances of each Owner or Beneficiary. A competent tax advisor
should be consulted for further information.
Generally, the Owner will not be deemed to be in constructive receipt
of the Policy's Cash Value, including increments thereof, under the Policy
until there is a distribution. The tax consequences of distributions from,
and Policy Loans taken from or secured by, a Policy depend upon whether the
Policy is classified as a "modified endowment contract". However, upon a
complete surrender or lapse of any Policy, or when benefits are paid at such
a Policy's maturity date, if the amount received plus the amount of
outstanding Indebtedness exceeds the total investment in the Policy, the
excess will generally be treated as ordinary income subject to tax.
2. Modified Endowment Contracts. A policy may be treated as a
modified endowment contract depending upon the amount of premiums paid in
relation to the death benefit provided under such Policy. The premium
limitation rules for determining whether a Policy is a modified endowment
contract are extremely complex. In general, however, a Policy will be a
modified endowment contract if the accumulated premiums paid at any time
during the first seven Policy Years exceed the sum of the net level premiums
which would have been paid on or before such time if the Policy provided for
paid-up future benefits after the payment of seven level annual premiums.
In addition, if a Policy is "materially changed" it may cause such
Policy to be treated as a modified endowment contract. The material change
rules for determining whether a Policy is a modified endowment
33
<PAGE> 41
contract are also extremely complex. In general, however, the determination of
whether a Policy will be a modified endowment contract after a material change
generally depends upon the relationship among the death benefit at the time
of such change, the Cash Value at the time of the change and the additional
premiums paid in the seven Policy Years starting with the date on which the
material change occurs.
Moreover, a life insurance contract received in exchange for a life
insurance contract classified as a modified endowment contract will also be
treated as a modified endowment contract.
Due to the Policy's flexibility, classification of a Policy as a
modified endowment contract will depend upon the circumstances of each
Policy. The Company has, however, adopted administrative steps designed to
protect an Owner against the possibility that the Policy might become a
modified endowment contract. The Company believes the safeguards are adequate
for most situations, but it cannot provide complete assurance that a Policy
will not be classified as a modified endowment contract. At the time a
premium is credited which would cause the Policy to become a modified
endowment contract, the Company will notify the Owner that unless a refund of
the excess premium is requested by the Owner, the Policy will become a
modified endowment contract. The Owner will have 30 days after receiving such
notification to request the refund. The excess premium paid with 4% required
annual interest will be returned to the Owner upon receipt by the Company of
the refund request. The amount to be refunded will be deducted from the
Policy Cash Value in the Divisions of the Separate Account and in the General
Account in the same proportion as the premium payment was allocated to such
Divisions.
Accordingly, a prospective Owner should contact a competent tax advisor
before purchasing a Policy to determine the circumstances under which the
Policy would be a modified endowment contract. In addition, an Owner should
contact a competent tax advisor before paying any additional premiums or
making any other change to, including an exchange of, a Policy to determine
whether such premium or change would cause the Policy (or the new Policy in
the case of an exchange) to be treated as a modified endowment contract.
3. Distributions from Policies Classified as Modified Endowment
Contract. Policies classified as modified endowment contracts will be subject
to the following tax rules: First, all distributions, including distributions
upon surrender and benefits paid at maturity, from such a Policy are treated
as ordinary income subject to tax up to the amount equal to the excess (if
any) of the Cash Value immediately before the distribution over the
investment in the Policy (described below) at such time. Second, Policy Loans
taken from, or secured by, such a Policy, as well as due but unpaid interest
thereon, are treated as distributions from such a Policy and taxed
accordingly. Third, a 10 percent additional income tax is imposed on the
portion of any distribution from, or Policy Loan taken from or secured by,
such a Policy that (a) is included in income, except where the distribution
or Policy Loan is made on or after the Owner attains age 59 1/2, (b) is
attributable to the Owner's becoming disabled, or (c) is part of a series of
substantially equal periodic payments for the life (or life expectancy) of
the Owner or the joint lives (or joint life expectancies) of the Owner and
the Owner's Beneficiary.
4. Distributions From Policies Not Classified as Modified Endowment
Contract. Distributions from Policies not classified as a modified endowment
contracts are generally treated as first recovering the investment in the
Policy (described below) and then, only after the return of all such
investment in the Policy, as distributing taxable income. An exception to
this general rule occurs in the case of a decrease in the Policy's death
benefit (possibly including a partial withdrawal) or any other change that
reduces benefits under the Policy in the first 15 years after the Policy is
issued and that results in cash distribution to the Owner in order for the
Policy to continue complying with the Section 7702 definitional limits. Such
a cash distribution will be taxed in whole or in part as ordinary income (to
the extent of any gain in the Policy) under rules prescribed in Section 7702.
Policy Loans from, or secured by, a Policy that is not a modified
endowment contract are not treated as distributions. Instead. such loans are
treated as indebtedness of the Owner.
Upon a complete surrender or lapse of a Policy that is not a modified
endowment contract, or when benefits are paid at such a Policy's maturity
date, if the amount received plus the amount of indebtedness exceeds the
total investment in the Policy, the excess will generally be treated as
ordinary income subject to tax.
Neither distributions (including distributions upon surrender or lapse)
nor Policy Loans from, or secured by, a Policy that is not a modified
endowment contract are subject to the 10 percent additional income tax.
34
<PAGE> 42
If a Policy which is not a modified endowment contract subsequently
becomes a modified endowment contract, then any distribution made from the
Policy within two years prior to the date of such change in status may become
taxable.
5. Policy Loan Interest. Generally, interest paid on any loan under
a Policy which is owned by an individual is not deductible. In addition,
interest on any loan under a Policy owned by a taxpayer and covering the life
of any individual who is an officer of or is financially interested in the
business carried on by that taxpayer, will not be tax deductible to the
extent the aggregate amount of such Policy Loans with respect to contracts
covering such individual exceeds $50,000. No amount of Policy Loan interest
is, however, deductible if the Policy is deemed for Federal tax purposes to
be a single premium life insurance contract. The Owner should consult a
competent tax advisor as to whether the Policy would be so deemed. There are
other limitations on the deductibility of Policy Loan interest, and an owner
should consult a competent tax advisor about these additional limitations
before deducting any Policy Loan interest.
6. Investment in the Policy. Investment in the Policy means (i) the
aggregate amount of any premiums or other consideration paid for a Policy,
minus (ii) the aggregate amount received under the Policy which is excluded
from gross income of the Owner (except that the amount of any Policy Loan
from, or secured by, a Policy that is a modified endowment contract, to the
extent such amount is excluded from gross income, will be disregarded), plus
(iii) the amount of any Policy Loan from, or secured by, a Policy that is a
modified endowment contract to the extent that such amount is included in the
gross income of the Owner.
7. Multiple Policies. All modified endowment contracts that are
issued by the Company (or its affiliates) to the same Owner during any
calendar year are treated as one modified endowment contract for purposes of
determining the amount includible in gross income under Section 72(e) of the
Code.
8. Possible Charge for Taxes. At the present time, the Company makes
no charge to the Separate Account for any Federal, state, or local taxes (as
opposed to Premium Tax Charges which are deducted from premium payments) that
it incurs which may be attributable to such Separate Account or to the
Policies. The Company, however, reserves the right in the future to make a
charge for any such tax or other economic burden resulting from the
application of the tax laws that it determines to be properly attributable to
the Separate Account or to the Policies.
UNISEX REQUIREMENTS UNDER MONTANA LAW
The State of Montana generally prohibits the use of actuarial tables
that distinguish between men and women in determining premiums and Policy
benefits for policies issued on the lives of their residents. Therefore, all
Policies offered by this Prospectus to insure residents of Montana will have
premiums and benefits which are based on actuarial tables that do not
differentiate on the basis of sex.
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS
General American holds the assets of the Separate Account in a
custodial account in its name at the Bank of New York. The Company maintains
records of all purchases and redemptions of applicable Fund shares by each of
the Divisions. Additional protection for the assets of the Separate Account
is afforded by a blanket fidelity bond issued by Lloyd's Underwriters in the
amount of five million dollars, covering all officers and employees of the
Company who have access to the assets of the Separate Account.
VOTING RIGHTS
Based on its understanding of current applicable legal requirements,
the Company will vote the shares of the Funds held in the Separate Account at
regular and special shareholder meetings of the mutual funds in accordance
with the instructions received from persons having voting interests in the
corresponding Divisions of the Separate Account. If, however, the 1940 Act or
any regulation thereunder should be amended or if the present interpretation
thereof should change, and as a result the Company determines that it is
permitted to vote shares of
35
<PAGE> 43
the Fund in its own right, it may elect to do so. No voting privileges apply
to the Policies with respect to Cash Value removed from the Separate Account
as a result of a Policy Loan.
The number of votes which an Owner has the right to instruct will be
calculated separately for each Division. Voting rights reflect the dollar
value of the total number of units of each Division of the Separate Account
credited to the Owner at the record date, rather than the number of units
alone. Fractional shares will be counted. The number of votes of the Fund
which the Owner has the right to instruct will be determined as of the date
coincident with the date established by that Fund for determining
shareholders eligible. Voting instructions will be solicited by written
communications prior to such meeting in accordance with procedures
established by the mutual funds.
The company will vote shares of a Fund for which no timely instructions
are received in proportion to the voting instructions which are received with
respect to that Fund. The Company will also vote any shares of the Funds
which are not attributable to Policies in the same proportion.
Each person having a voting interest in a Division will receive any
proxy material, reports, and other materials relating to the appropriate
Fund.
Disregard of Voting Instructions. The Company may, when required by
state insurance regulatory authorities, disregard voting instructions if the
instructions require that the shares be voted so as to cause a change in the
subclassification or investment objective of the Fund or to approve or
disapprove an investment advisory contract for a Fund. In addition, the
Company itself may disregard voting instructions in favor of changes
initiated by an Owner in the investment policy or the investment advisor or
sub-advisor of a Fund if the Company reasonably disapproves of such changes.
A proposed change would be disapproved only if the proposed change is
contrary to state law or prohibited by state regulatory authorities, or the
Company determined that the change would have an adverse effect on its
General Account in that the proposed investment policy for a Fund may result
in overly speculative or unsound investments. If the Company disregards
voting instructions, a summary of that action and the reasons for such action
will be included in the next annual report to Owners.
STATE REGULATION OF THE COMPANY
The Company, a mutual life insurance company organized under the laws
of Missouri, and the Separate Account are subject to regulation by the
Missouri Department of Insurance. An annual statement is filed with the
Director of Insurance on or before March 1st of each year covering the
operations and reporting on the financial condition of the Company as of
December 31 of the preceding year. Periodically, the Director of Insurance
examines the liabilities and reserves of the Company and the Separate Account
and certifies their adequacy, and a full examination of the Company's
operations is conducted by the National Association of Insurance
Commissioners at least once every three years.
In addition, the Company is subject to the insurance laws and
regulations of other states within which it is licensed or may become
licensed to operate. Generally, the insurance departments of other states
apply the laws of the state of domicile in determining permissible
investments.
36
<PAGE> 44
MANAGEMENT OF THE COMPANY
<TABLE>
<CAPTION>
Principal Occupation (s)
Name During Past Five Years<F*>
---- --------------------------
Principal Officers <F**>
- ------------------------
<S> <C>
Richard A. Liddy Chairman, President and CEO, 1/95-present; Chairman of the Executive Committee,
5/92-present. Formerly President and CEO, 5/92-1/95; President and Chief Operating
Officer, 5/88-5/92.
Robert J. Banstetter, Sr. Vice President, General Counsel and Secretary, 2/91-present. Formerly Vice
President and General Counsel, 1/83-2/91.
John W. Barber Vice President and Controller, 12/84-present.
O'Neil P. Boudreaux Vice President-Group Field Accounts, 4/87-present.
E. Thomas Hughes Corporate Actuary and Treasurer, 10/94-present. Formerly Executive Vice
President-Group Pensions, 3/90-10/94
Michael P. Ingrassia Vice President-Group Executive Accounts, 3/92-present. Formerly Vice
President-Group Operations, 5/84-2/92.
George T. Lacy Vice President-Group Field Sales, 6/83-present.
Thomas R. McPherron Vice President-Individual Information Systems, 4/84-present.
Leonard M. Rubenstein Executive Vice President-Investments, 10/94-present. Formerly Executive Vice
President-Investments and Treasurer, 2/91-10/94; Vice President and Treasurer,
11/84-2/91.
Barbara L. Snyder Vice President-Product Division, 4/95-present. Formerly Vice President and
Chief Actuary, American Bankers Insurance Company, Miami, FL.
Warren J. Winer Executive Vice President-Group Life and Health, 8/95-present. Formerly
Managing Director, William M. Mercer, Inc., 7/93-8/95; President and Chief Operating
Officer, W. F. Corroon, 1986-7/93.
Bernard H. Wolzenski Executive Vice President-Individual Insurance, 10/91-present. Formerly Vice
President-Life Product Management, 5/86-10/91.
A. Greig Woodring President and Chief Executive Officer, Reinsurance Group of America,
12/92-present. Formerly Executive Vice President-Reinsurance, 3/90-12/92.
<FN>
<F*> All positions listed are with General American unless otherwise
indicated.
<F**> The principal business address of Messrs. Banstetter, Hughes,
Liddy, and Rubenstein, is General American Life Insurance
Company, 700 Market Street, St. Louis, Missouri 63101. The
principal business address for Messrs. Barber, Boudreaux,
Ingrassia, Lacy, McPherron, Winer and Wolzenski and for Ms.
Snyder is 13045 Tesson Ferry Road, St. Louis, Missouri 63128.
The principal business address for Mr. Woodring is 660 Mason
Ridge Center Drive, Suite 300, St. Louis, Missouri 63141.
37
<PAGE> 45
<CAPTION>
Principal Occupation (s)
Name During Past Five Years<F*>
---- --------------------------
Directors
- ----------
<S> <C>
August A. Busch III Chairman of the Board and President, Anheuser-Busch Companies, Inc.,
Anheuser-Busch Companies, Inc. (beer business).
One Busch Place
St. Louis, Missouri 63118
William E. Cornelius Retired Chairman and Chief Executive Officer, Union Electric Company
Union Electric Company (electric utility business). Prior to 1993, Chairman and Chief
P.O. Box 149 Executive Officer.
St. Louis, Missouri 63166
John C. Danforth Partner. Formerly, U. S. Senator, State of Missouri.
Bryan Cave
One Metropolitan Square, Suite 3600
St. Louis, Missouri 63102
Bernard A. Edison Director Emeritus, Edison Brothers Stores, Inc. (retail specialty
Edison Brothers Stores, Inc. stores).
P.O. Box 14020
St. Louis, Missouri 63178
Richard A. Liddy Chairman, President and CEO, General American.
General American Life Insurance Co.
700 Market Street
St. Louis, MO 63101
William E. Maritz Chairman and Chief Executive Officer, Maritz, Inc.
Maritz, Inc. (motivation, travel, communications, training and marketing research
1375 North Highway Drive business).
Fenton, Missouri 63099
Craig D. Schnuck Chairman and Chief Executive Officer, Schnuck Markets, Inc. (retail
Schnuck Markets, Inc. supermarket chain). Prior to 1991, President and Chief Executive Officer.
11420 Lackland Road
P.O. Box 46928
St. Louis, Missouri 63146
William P. Stiritz Chairman, Chief Executive Officer and President, Ralston Purina Company
Ralston Purina Company (pet food, batteries, and bread business); Chairman, Ralcorp Holdings, Inc.
Checkerboard Square (ready-to-eat cereal, baby food, ski resorts).
St. Louis, Missouri 63164
Andrew C. Taylor Chief Executive Officer and President, Enterprise Rent-A-Car (car
Enterprise Rent-A-Car rental). Prior to May, 1991, President.
600 Corporate Park Drive
St. Louis, Missouri 63105
38
<PAGE> 46
<CAPTION>
Principal Occupation (s)
Name During Past Five Years<F*>
---- --------------------------
Directors (continued)
- ---------------------
<S> <C>
H. Edwin Trusheim Retired Chairman and Chief Executive Officer.
General American Life Insurance Co.
P.O. Box 396
St. Louis, MO 63166
Robert L. Virgil Principal, Edward Jones (investments). Prior to 1993, Dean, the John
Edward Jones M. Olin School of Business, Washington University (business education).
12555 Manchester
St. Louis, Missouri 63131-3729
Virginia V. Weldon, M.D. Senior Vice President, Public Policy, Monsanto Company (chemicals
Monsanto Company diversified industry, pharmaceuticals, life science products, and food
800 North Lindbergh ingredients business). Prior to 1993, Vice President, Public Policy.
St. Louis, Missouri 63167
Ted C. Wetterau President, Wetterau Associates, L.L.C. Retired Chairman and Chief
Wetterau Associates, L.L.C. Executive Officer, Wetterau Incorporated (retail and wholesale grocery,
7700 Bonhomme, Suite 750 manufacturing business).
St. Louis, Missouri 63105
<FN>
<F*> All positions listed are with General American unless otherwise
indicated.
</TABLE>
39
<PAGE> 47
LEGAL MATTERS
All matters of Missouri law pertaining to the Policy, including
the validity of the Policy and General American's right to issue the Policy
under Missouri insurance law, have been passed upon by Robert J. Banstetter,
Vice President, General Counsel, and Secretary of General American.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Separate Account is a party
or to which the assets of the Separate Account are subject. General American
is not involved in any litigation that is of material importance in relation
to its total assets or that relates to the Separate Account.
EXPERTS
The audited financial statements of General American and the Separate
Account have been included in this Prospectus in reliance on the reports of
KPMG Peat Marwick LLP independent certified public accountants, and on the
authority of said firm as experts in accounting and auditing.
The audited financial statements of General American have been prepared
in accordance with accounting practices prescribed or permitted by the
Department of Insurance of the State of Missouri.
Actuarial matters included in this Prospectus have been examined by
Alan J. Hobbs, FSA, MAAA, LLIF, Second Vice President & Financial Actuary of
General American, as stated in the opinion filed as an exhibit to the
registration statement.
ADDITIONAL INFORMATION
A registration statement has been filed with the Securities and
Exchange Commission, under the Securities Act of 1933, as amended, with
respect to the Policy offered hereby. This Prospectus does not contain all
the information set forth in the registration statement and the amendments
and exhibits to the registration statement, to all of which reference is made
for further information concerning the Separate Account, General American and
the Policy offered hereby. Statements contained in this Prospectus as to the
contents of the Policy and other legal instruments are summaries. For a
complete statement of the terms thereof reference is made to such instruments
as filed.
FINANCIAL STATEMENTS
The financial statements of General American which are included in this
Prospectus should be distinguished from the financial statements of the
Separate Account, and should be considered only as bearing on the ability of
General American to meet its obligations under the Policy. They should not be
considered as bearing on the investment performance of the assets held in the
Separate Account. Financial information is not provided for three of the
thirteen Divisions of the Separate Account because those Divisions have only
recently been established, and therefore, no operating history exists for
those Divisions.
41
<PAGE> 48
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Contractholders
General American Life Insurance Company:
We have audited the statements of assets and liabilities, including the
schedule of investments, of the S & P 500 Index, Money Market, Bond Index,
Managed Equity, Asset Allocation, International Equity, Special Equity,
Equity-Income, Growth, Overseas, Asset Manager, High Income, and Gold and
Natural Resources Fund Divisions of General American Separate Account Eleven
as of December 31, 1995, and the related statements of operations and
changes in net assets for each of the periods presented. These financial
statements are the responsibility of the Separate Account'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.
The investments owned at December 31, 1995 were verified by audit of the
statements of assets and liabilities of the underlying portfolios of General
American Capital Company and confirmation by correspondence with respect to
the Variable Insurance Products Fund and the Variable Insurance Products
Fund II sponsored by Fidelity Investments, and the Van Eck World Wide
Insurance Trust sponsored by Van Eck Associates Corporation. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the S & P 500 Index,
Money Market, Bond Index, Managed Equity, Asset Allocation, International
Equity, Special Equity, Equity-Income, Growth, Overseas, Asset Manager, High
Income, and Gold and Natural Resources Fund Divisions of General American
Separate Account Eleven as of December 31, 1995, and the results of their
operations and changes in their net assets for the periods presented, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
St. Louis, Missouri
February 14, 1996
<PAGE> 49
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<CAPTION>
S & P 500 MONEY BOND MANAGED ASSET
INDEX MARKET INDEX EQUITY ALLOCATION
FUND DIVISION<F*> FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION
----------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments in General American
Capital Company, at market value
(see Schedule of Investments): $ 4,660,592 $ 4,313,391 $ 1,401,432 $ 1,906,081 $ 5,976,187
Receivable from General American
Life Insurance Company 9,482 52,175 30,675 0 0
------------ ------------ ------------ ------------ ------------
Total assets 4,670,074 4,365,566 1,432,107 1,906,081 5,976,187
------------ ------------ ------------ ------------ ------------
Liabilities:
Payable to General American Life
Insurance Company 0 0 0 669 20,141
------------ ------------ ------------ ------------ ------------
Total net assets $ 4,670,074 $ 4,365,566 $ 1,432,107 $ 1,905,412 $ 5,956,046
============ ============ ============ ============ ============
Total net assets represented by:
Individual Variable Universal
Life cash value invested in
Separate Account $ 3,815,004 $ 1,301,794 $ 1,345,123 $ 1,795,686 $ 5,198,203
Individual Variable General
Select Plus cash value
invested in Separate Account 671,207 1,973,614 68,165 87,843 744,647
Individual Variable Universal
Life-100 cash value invested
in Separate Account 183,863 1,090,158 18,819 21,883 13,196
------------ ------------ ------------ ------------ ------------
Total net assets $ 4,670,074 $ 4,365,566 $ 1,432,107 $ 1,905,412 $ 5,956,046
============ ============ ============ ============ ============
Total units held - VUL-95 171,035 85,178 70,255 92,648 240,154
Total units held - VGSP 46,722 178,067 5,819 6,537 58,089
Total units held - VUL-100 13,553 103,808 1,595 1,655 1,033
VUL-95 Net unit value $ 22.31 $ 15.28 $ 19.15 $ 19.38 $ 21.65
VGSP Net unit value $ 14.37 $ 11.08 $ 11.71 $ 13.44 $ 12.82
VUL-100 Net unit value $ 13.57 $ 10.50 $ 11.80 $ 13.22 $ 12.78
Cost of investments $ 3,809,346 $ 4,472,131 $ 1,382,427 $ 1,932,993 $ 5,778,364
<FN>
<F*> This fund was formerly known as the Equity Index Fund.
See accompanying notes to financial statements.
(continued)
<PAGE> 50
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<CAPTION>
INTERNATIONAL SPECIAL
EQUITY EQUITY EQUITY-INCOME GROWTH OVERSEAS
FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments in General American
Capital Company, at market value
(see Schedule of Investments): $ 5,393,857 $ 4,208,131 $ 0 $ 0 $ 0
Investments in Variable Insurance
Products Fund, at market value
(see Schedule of Investments): 0 0 5,467,954 7,320,976 3,434,520
Receivable from General American
Life Insurance Company 0 0 12,130 13,925 0
------------ ------------ ------------ ------------ -----------
Total assets 5,393,857 4,208,131 5,480,084 7,334,901 3,434,520
------------ ------------ ------------ ------------ -----------
Liabilities:
Payable to General American Life
Insurance Company 6,534 11,741 0 0 1,243
------------ ------------ ------------ ------------ -----------
Total net assets $ 5,387,323 $ 4,196,390 $ 5,480,084 $ 7,334,901 $ 3,433,277
============ ============ ============ ============ ===========
Total net assets represented by:
Individual Variable Universal Life cash
value invested in Separate Account $ 1,990,578 $ 2,205,064 $ 3,847,596 $ 5,045,265 $ 2,423,740
Individual Variable General
Select Plus cash value invested
in Separate Account 407,033 605,574 1,381,202 1,974,154 915,145
Individual Variable Universal Life-100
cash value invested in Separate Account 39,637 45,285 251,286 315,482 94,392
General American Life Insurance
Company seed money 2,950,075 1,340,467 0 0 0
------------ ------------ ------------ ------------ -----------
Total net assets $ 5,387,323 $ 4,196,390 $ 5,480,084 $ 7,334,901 $ 3,433,277
============ ============ ============ ============ ===========
Total units held - VUL-95 136,570 168,023 248,776 326,247 173,970
Total units held - VGSP 32,384 46,252 89,358 135,556 73,610
Total units held - VUL-100 3,691 3,773 18,763 23,510 8,683
Total units held - Seed Money 200,000 100,000 0 0 0
VUL-95 Net unit value $ 14.58 $ 13.12 $ 15.47 $ 15.46 $ 13.93
VGSP Net unit value $ 12.57 $ 13.09 $ 15.46 $ 14.56 $ 12.43
VUL-100 Net unit value $ 10.74 $ 12.00 $ 13.39 $ 13.42 $ 10.87
Cost of investments $ 5,353,571 $ 3,743,850 $ 4,599,747 $ 5,819,334 $ 3,223,522
See accompanying notes to financial statements. (continued)
<PAGE> 51
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<CAPTION>
ASSET HIGH GOLD & NATURAL
MANAGER INCOME RESOURCES FUND
FUND DIVISION FUND DIVISION DIVISION
------------- ------------- --------------
<S> <C> <C> <C>
Assets:
Investments in Variable Insurance
Products Fund, at market value
(see Schedule of Investments): $ 0 $ 200,236 $ 0
Investments in Variable Insurance
Products Fund II, at market value
(see Schedule of Investments): 49,927 0 0
Investments in Van Eck Worldwide
Insurance Trust at market value
(see Schedule of Investments): 0 0 9,800
Receivable from General American
Life Insurance Company 1,191 2,713 0
----------------- ------------ -----------
Total assets 51,118 202,949 9,800
----------------- ------------ -----------
Liabilities:
Payable to General American Life
Insurance Company 0 0 3
----------------- ------------ -----------
Total net assets $ 51,118 $ 202,949 $ 9,797
================= ============ ===========
Total net assets represented by:
Individual Variable Universal Life
cash value invested in Separate Account $ 3,486 $ 64,527 $ 1,253
Individual Variable General Select Plus
cash value invested in Separate Account 16,287 68,271 0
Individual Variable Universal Life-100
cash value invested in Separate Account 31,345 70,151 8,544
----------------- ------------ -----------
Total net assets $ 51,118 $ 202,949 $ 9,797
================= ============ ===========
Total units held - VUL-95 327 5,980 126
Total units held - VGSP 1,528 6,321 0
Total units held - VUL-100 2,944 6,503 859
VUL-95 Net unit value $ 10.65 $ 10.79 $ 9.94
VGSP Net unit value $ 10.66 $ 10.80 $ 9.95
VUL-100 Net unit value $ 10.65 $ 10.79 $ 9.94
Cost of investments $ 48,148 $ 197,899 $ 9,430
See accompanying notes to financial statements.
</TABLE>
<PAGE> 52
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<CAPTION>
S & P 500 INDEX MONEY MARKET
FUND DIVISION<F*> FUND DIVISION
---------------------------------- ----------------------------------
1995 1994 1993 1995 1994 1993
---------- --------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment income<F**> $ -- $ -- $ -- $ -- $ -- $ --
Expenses:
Mortality and expense charges - VUL-95 (31,973) (25,046) (19,235) (13,058) (14,631) (14,659)
Mortality and expense charges - VGSP (3,459) (1,323) (51) (8,747) (2,628) (1,058)
Mortality and expense charges - VUL-100 (233) 0 0 (1,350) 0 0
--------- --------- --------- --------- ---------- ----------
Total expenses (35,665) (26,369) (19,286) (23,155) (17,259) (15,717)
--------- --------- --------- --------- ---------- ----------
Net investment expense (35,665) (26,369) (19,286) (23,155) (17,259) (15,717)
--------- --------- --------- --------- ---------- ----------
Net realized gain on investments:
Proceeds from sales 1,645,207 686,069 535,381 4,135,625 4,456,652 4,428,583
Cost of investments sold 1,177,496 509,241 361,270 3,838,296 4,377,730 4,360,377
---------- --------- --------- ---------- ---------- ----------
Net realized gain from sales
of investments 467,711 176,828 174,111 297,329 78,922 68,206
---------- --------- --------- ---------- ---------- ----------
Net unrealized gain (loss) on investments:
Unrealized gain (loss) on investments,
beginning of period (10,068) 133,360 103,836 (31,189) (40,988) (29,471)
Unrealized gain (loss) on investments,
end of period 851,246 (10,068) 133,360 (158,740) (31,189) (40,988)
---------- --------- --------- ---------- ---------- ----------
Net unrealized gain (loss) on investments 861,314 (143,428) 29,524 (127,551) 9,799 (11,517)
---------- --------- --------- ---------- ---------- ----------
Net gain on investments 1,329,025 33,400 203,635 169,778 88,721 56,689
---------- --------- --------- ---------- ---------- ----------
Net increase in net assets resulting
from operations $1,293,360 $ 7,031 $ 184,349 $ 146,623 $ 71,462 $ 40,972
========== ========= ========= ========== ========== ==========
<FN>
<F*>This fund was formerly known as the Equity Index Fund.
<F**>See Note 2C.
See accompanying notes to the financial statements.
(continued)
<PAGE> 53
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<CAPTION>
BOND INDEX MANAGED EQUITY
FUND DIVISION FUND DIVISION
----------------------------------- -------------------------------------
1995 1994 1993 1995 1994 1993
----------- ---------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income<F**> $ -- $ -- $ -- $ -- $ -- $ --
Expenses:
Mortality and expense charges - VUL-95 (18,478) (19,171) (13,970) (16,717) (16,186) (15,267)
Mortality and expense charges - VGSP (153) (19) (2) (208) (43) (2)
Mortality and expense charges - VUL-100 (24) 0 0 (40) 0 0
----------- ---------- ---------- ----------- ----------- -----------
Total expenses (18,655) (19,190) (13,972) (16,965) (16,229) (15,269)
----------- ---------- ---------- ----------- ----------- -----------
Net investment expense (18,655) (19,190) (13,972) (16,965) (16,229) (15,269)
----------- ---------- ---------- ----------- ----------- -----------
Net realized gain on investments:
Proceeds from sales 1,760,565 445,177 318,801 934,536 404,690 507,147
Cost of investments sold 1,722,345 191,016 212,106 742,079 84,849 225,119
----------- ---------- ---------- ----------- ----------- -----------
Net realized gain from sales
of investments 38,220 254,161 106,695 192,457 319,841 282,028
----------- ---------- ---------- ----------- ----------- -----------
Net unrealized gain (loss) on investments:
Unrealized gain (loss) on investments,
beginning of period (313,506) 32,498 (511) (408,116) (14,824) 114,850
Unrealized gain (loss) on investments,
end of period 19,005 (313,506) 32,498 (26,912) (408,116) (14,824)
----------- ---------- ---------- ----------- ----------- -----------
Net unrealized gain (loss) on investments 332,511 (346,004) 33,009 381,204 (393,292) (129,674)
----------- ---------- ---------- ----------- ----------- -----------
Net gain (loss) on investments 370,731 (91,843) 139,704 573,661 (73,451) 152,354
----------- ---------- ---------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting
from operations $ 352,076 $ (111,033) $ 125,732 $ 556,696 $ (89,680) $ 137,085
=========== ========== ========== =========== =========== ===========
<FN>
<F**>See Note 2C.
See accompanying notes to the financial statements.
(continued)
<PAGE> 54
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<CAPTION>
ASSET ALLOCATION INTERNATIONAL EQUITY
FUND DIVISION FUND DIVISION
----------------------------------- -------------------------------------
1995 1994 1993 1995 1994 1993<F*>
----------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income<F**> $ -- $ -- $ -- $ -- $ -- $ --
Expenses:
Mortality and expense charges - VUL-95 (46,892) (34,698) (30,407) (13,991) (8,440) (3,205)
Mortality and expense charges - VGSP (5,214) (6,461) (567) (2,260) (1,125) (40)
Mortality and expense charges - VUL-100 (10) 0 0 (66) 0 0
Mortality and expense charges - Seed Money 0 0 0 (23,784) (23,655) (17,769)
----------- ---------- ---------- ----------- ----------- -----------
Total expenses (52,116) (41,159) (30,974) (40,101) (33,220) (21,014)
----------- ---------- ---------- ----------- ----------- -----------
Net investment expense (52,116) (41,159) (30,974) (40,101) (33,220) (21,014)
----------- ---------- ---------- ----------- ----------- -----------
Net realized gain on investments:
Proceeds from sales 1,872,184 1,082,127 2,893,227 222,880 347,137 492,139
Cost of investments sold 1,266,674 666,236 2,167,156 (333,555) (54,371) 205,222
----------- ---------- ---------- ----------- ----------- -----------
Net realized gain from sales
of investments 605,510 415,891 726,071 556,435 401,508 286,917
----------- ---------- ---------- ----------- ----------- -----------
Net unrealized gain (loss) on investments:
Unrealized gain (loss) on investments,
beginning of period (765,423) (146,386) 234,887 198,307 400,379 0
Unrealized gain (loss) on investments,
end of period 197,823 (765,423) (146,386) 40,286 198,307 400,379
----------- ---------- ---------- ----------- ----------- -----------
Net unrealized gain (loss) on investments 963,246 (619,037) (381,273) (158,021) (202,072) 400,379
----------- ---------- ---------- ----------- ----------- -----------
Net gain (loss) on investments 1,568,756 (203,146) 344,798 398,414 199,436 687,296
----------- ---------- ---------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting
from operations $ 1,516,640 $ (244,305) $ 313,824 $ 358,313 $ 166,216 $ 666,282
=========== ========== ========== =========== =========== ===========
<FN>
<F*> The International Equity Fund began operations on February 16, 1993.
<F**>See Note 2C.
See accompanying notes to the financial statements.
(continued)
<PAGE> 55
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<CAPTION>
SPECIAL EQUITY EQUITY-INCOME
FUND DIVISION FUND DIVISION
------------------------------------ -----------------------------------
1995 1994 1993<F*> 1995 1994 1993<F*>
---------- --------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividend income<F**> $ -- $ -- $ -- $ 220,000 $ 67,978 $ 4,951
Expenses:
Mortality and expense charges - VUL-95 (16,741) (9,881) (2,763) (24,157) (9,487) (1,079)
Mortality and expense charges - VGSP (3,645) (1,556) (49) (6,731) (1,631) (191)
Mortality and expense charges - VUL-100 (72) 0 0 (378) 0 0
Mortality and expense charges - Seed Money (11,191) (9,556) (7,854) 0 0 0
---------- --------- --------- ---------- ---------- ---------
Total expenses (31,649) (20,993) (10,666) (31,266) (11,118) (1,270)
---------- --------- --------- ---------- ---------- ---------
Net investment income (loss) (31,649) (20,993) (10,666) 188,734 56,860 3,681
---------- --------- --------- ---------- ---------- ---------
Net realized gain on investments:
Proceeds from sales 855,583 236,621 71,043 486,651 307,356 5,054
Cost of investments sold 524,141 158,311 36,141 419,184 298,942 4,810
---------- --------- --------- ---------- ---------- ---------
Net realized gain from sales
of investments 331,442 78,310 34,902 67,467 8,414 244
---------- --------- --------- ---------- ---------- ---------
Net unrealized gain (loss) on investments:
Unrealized gain on investments,
beginning of period 75,550 165,807 0 17,485 12,226 0
Unrealized gain on investments,
end of period 464,281 75,550 165,807 868,207 17,485 12,226
---------- --------- --------- ---------- ---------- ---------
Net unrealized gain (loss) on investments 388,731 (90,257) 165,807 850,722 5,259 12,226
---------- --------- --------- ---------- ---------- ---------
Net gain (loss) on investments 720,173 (11,947) 200,709 918,189 13,673 12,470
---------- --------- --------- ---------- ---------- ---------
Net increase (decrease) in net assets resulting
from operations $ 688,524 $ (32,940) $ 190,043 $1,106,923 $ 70,533 $ 16,151
========== ========= ========= ========== ========== =========
<FN>
<F*>The Special Equity Fund and the Equity-Income Fund began operations on February 16 and March 18, 1993, respectively.
<F**>See Note 2C.
See accompanying notes to the financial statements.
(continued)
<PAGE> 56
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<CAPTION>
GROWTH OVERSEAS
FUND DIVISION FUND DIVISION
----------------------------------- ---------------------------------
1995 1994 1993<F*> 1995 1994 1993<F*>
----------- -------- ---------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividend income $ 21,771 $ 73,822 $ 0 $ 17,414 $ 3,448 $ 0
Expenses:
Mortality and expense charges - VUL-95 (34,577) (13,498) (1,918) (17,340) (8,858) (964)
Mortality and expense charges - VGSP (11,893) (4,366) (670) (5,232) (1,870) (38)
Mortality and expense charges - VUL-100 (439) 0 0 (152) 0 0
----------- -------- ---------- -------- -------- --------
Total expenses (46,909) (17,864) (2,588) (22,724) (10,728) (1,002)
----------- -------- ---------- -------- -------- --------
Net investment income (loss) (25,138) 55,958 (2,588) (5,310) (7,280) (1,002)
----------- -------- ---------- -------- -------- --------
Net realized gain (loss) on investments:
Proceeds from sales 987,205 347,508 13,415 408,880 320,673 19,380
Cost of investments sold 811,157 354,315 12,069 389,718 292,237 16,711
----------- -------- ---------- -------- -------- --------
Net realized gain (loss) from sales
of investments 176,048 (6,807) 1,346 19,162 28,436 2,669
----------- -------- ---------- -------- -------- --------
Net unrealized gain (loss) on investments:
Unrealized gain (loss) on investments,
beginning of period 51,539 40,113 0 (36,045) 23,986 0
Unrealized gain (loss) on investments,
end of period 1,501,642 51,539 40,113 210,998 (36,045) 23,986
----------- -------- ---------- -------- -------- --------
Net unrealized gain (loss) on investments 1,450,103 11,426 40,113 247,043 (60,031) 23,986
----------- -------- ---------- -------- -------- --------
Net gain (loss) on investments 1,626,151 4,619 41,459 266,205 (31,595) 26,655
----------- -------- ---------- -------- -------- --------
Net increase (decrease) in net assets resulting
from operations $ 1,601,013 $ 60,577 $ 38,871 $260,895 $(38,875) $ 25,653
=========== ======== ========== ======== ======== ========
<FN>
<F*> The Growth Fund and the Overseas Fund began operations on March 4 and March 11, 1993, respectively.
See accompanying notes to the financial statements.
(continued)
<PAGE> 57
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
PERIOD ENDED DECEMBER 31, 1995
<CAPTION>
ASSET MANAGER HIGH INCOME GOLD & NATURAL RESOURCES
FUND DIVISION FUND DIVISION FUND DIVISION
-------------------- ----------------- ------------------------
1995<F*> 1995<F*> 1995<F*>
-------------------- ----------------- -----------------------
<S> <C> <C> <C>
Investment income:
Dividend income $ 0 $ 0 $ 32
Expenses:
Mortality and expense charges - VUL-95 (3) (122) (3)
Mortality and expense charges - VGSP (20) (55) 0
Mortality and expense charges - VUL-100 (29) (76) (11)
--------------- -------------- ---------------
Total expenses (52) (253) (14)
--------------- -------------- ---------------
Net investment income (loss) (52) (253) 18
--------------- -------------- ---------------
Net realized gain (loss) on investments:
Proceeds from sales 448 28,646 144
Cost of investments sold 435 27,514 149
--------------- -------------- ---------------
Net realized gain (loss) from sales
of investments 13 1,132 (5)
--------------- -------------- ---------------
Net unrealized gain on investments:
Unrealized gain on investments,
beginning of period 0 0 0
Unrealized gain on investments,
end of period 1,779 2,337 370
--------------- -------------- ---------------
Net unrealized gain on investments 1,779 2,337 370
--------------- -------------- ---------------
Net gain on investments 1,792 3,469 365
--------------- -------------- ---------------
Net increase in net assets resulting
from operations $ 1,740 $ 3,216 $ 383
=============== ============== ===============
<FN>
<F*> The Asset Manager Fund, High Income Fund, and Gold & Natural Resources Fund began operations on July 19,
May 24, and August 9, 1995, respectively.
See accompanying notes to the financial statements.
</TABLE>
<PAGE> 58
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<CAPTION>
S & P 500 INDEX MONEY MARKET
FUND DIVISION<F*> FUND DIVISION
---------------------------------------- ----------------------------------------
1995 1994 1993 1995 1994 1993
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income (loss) $ (35,665) $ (26,369) $ (19,286) $ (23,155) $ (17,259) $ (15,717)
Net realized gain on investments 467,711 176,828 174,111 297,329 78,922 68,206
Net unrealized gain (loss) on investments 861,314 (143,428) 29,524 (127,551) 9,799 (11,517)
------------ ------------ ------------ ------------ ------------ ------------
Net increase in net assets
resulting from operations 1,293,360 7,031 184,349 146,623 71,462 40,972
Net deposits into (deductions from)
Separate Account (145,477) 571,671 1,313,941 2,340,021 177,261 104,218
------------ ------------ ------------ ------------ ------------ ------------
Increase in net assets 1,147,883 578,702 1,498,290 2,486,644 248,723 145,190
Net assets, beginning of period 3,522,191 2,943,489 1,445,199 1,878,922 1,630,199 1,485,009
------------ ------------ ------------ ------------ ------------ ------------
Net assets, end of period $ 4,670,074 $ 3,522,191 $ 2,943,489 $ 4,365,566 $ 1,878,922 $ 1,630,199
============ ============ ============ ============ ============ ============
<FN>
<F*>This fund was formerly known as the Equity Index Fund.
See accompanying notes to the financial statements.
(continued)
<PAGE> 59
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<CAPTION>
BOND INDEX MANAGED EQUITY
FUND DIVISION FUND DIVISION
---------------------------------------- ----------------------------------------
1995 1994 1993 1995 1994 1993
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income (loss) $ (18,655) $ (19,190) $ (13,972) $ (16,965) $ (16,229) $ (15,269)
Net realized gain on investments 38,220 254,161 106,695 192,457 319,841 282,028
Net unrealized gain (loss) on investments 332,511 (346,004) 33,009 381,204 (393,292) (129,674)
------------ ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations 352,076 (111,033) 125,732 556,696 (89,680) 137,085
Net deposits into (deductions from)
Separate Account (1,271,114) 143,229 1,387,954 (487,360) (55,715) 374,743
------------ ----------- ----------- ----------- ----------- -----------
Increase (decrease) in net assets (919,038) 32,196 1,513,686 69,336 (145,395) 511,828
Net assets, beginning of period 2,351,145 2,318,949 805,263 1,836,076 1,981,471 1,469,643
------------ ----------- ----------- ----------- ----------- -----------
Net assets, end of period $ 1,432,107 $ 2,351,145 $ 2,318,949 $ 1,905,412 $ 1,836,076 $ 1,981,471
============ =========== =========== =========== =========== ===========
See accompanying notes to the financial statements.
(continued)
<PAGE> 60
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<CAPTION>
ASSET ALLOCATION INTERNATIONAL EQUITY
FUND DIVISION FUND DIVISION
------------------------------------- --------------------------------------
1995 1994 1993 1995 1994 1993<F*>
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income (loss) $ (52,116) $ (41,159) $ (30,974) $ (40,101) $ (33,220) $ (21,014)
Net realized gain on investments 605,510 415,891 726,071 556,435 401,508 286,917
Net unrealized gain (loss) on investments 963,246 (619,037) (381,273) (158,021) (202,072) 400,379
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations 1,516,640 (244,305) 313,824 358,313 166,216 666,282
Net deposits into (deductions from)
Separate Account (709,124) 649,032 159,169 789,597 775,500 2,631,415
----------- ----------- ----------- ----------- ----------- -----------
Increase in net assets 807,516 404,727 472,993 1,147,910 941,716 3,297,697
Net assets, beginning of period 5,148,530 4,743,803 4,270,810 4,239,413 3,297,697 0
----------- ----------- ----------- ----------- ----------- -----------
Net assets, end of period $ 5,956,046 $ 5,148,530 $ 4,743,803 $ 5,387,323 $ 4,239,413 $ 3,297,697
=========== =========== =========== =========== =========== ===========
<FN>
<F*>The International Equity Fund began operations on February 16, 1993.
See accompanying notes to the financial statements.
(continued)
<PAGE> 61
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<CAPTION>
SPECIAL EQUITY EQUITY-INCOME
FUND DIVISION FUND DIVISION
------------------------------------- -----------------------------------
1995 1994 1993<F*> 1995 1994 1993<F*>
----------- ----------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income (loss) $ (31,649) $ (20,993) $ (10,666) $ 188,734 $ 56,860 $ 3,681
Net realized gain on investments 331,442 78,310 34,902 67,467 8,414 244
Net unrealized gain (loss) on investments 388,731 (90,257) 165,807 850,722 5,259 12,226
----------- ----------- ----------- ----------- ----------- ---------
Net increase (decrease) in net assets
resulting from operations 688,524 (32,940) 190,043 1,106,923 70,533 16,151
Net deposits into Separate Account 229,832 1,309,438 1,811,493 2,068,778 1,686,138 531,561
----------- ----------- ----------- ----------- ----------- ---------
Increase in net assets 918,356 1,276,498 2,001,536 3,175,701 1,756,671 547,712
Net assets, beginning of period 3,278,034 2,001,536 0 2,304,383 547,712 0
----------- ----------- ----------- ----------- ----------- ---------
Net assets, end of period $ 4,196,390 $ 3,278,034 $ 2,001,536 $ 5,480,084 $ 2,304,383 $ 547,712
=========== =========== =========== =========== =========== =========
<FN>
<F*>The Special Equity Fund and the Equity-Income Fund began operations on February 16 and March 18, 1993, respectively.
See accompanying notes to the financial statements.
(continued)
<PAGE> 62
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<CAPTION>
GROWTH OVERSEAS
FUND DIVISION FUND DIVISION
------------------------------------- -----------------------------------
1995 1994 1993<F*> 1995 1994 1993<F*>
----------- ----------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income (loss) $ (25,138) $ 55,958 $ (2,588) $ (5,310) $ (7,280) $ (1,002)
Net realized gain (loss) on investments 176,048 (6,807) 1,346 19,162 28,436 2,669
Net unrealized gain (loss) on investments 1,450,103 11,426 40,113 247,043 (60,031) 23,986
----------- ----------- ----------- ----------- ----------- ---------
Net increase (decrease) in net assets
resulting from operations 1,601,013 60,577 38,871 260,895 (38,875) 25,653
Net deposits into Separate Account 1,991,002 2,588,073 1,055,365 1,053,659 1,672,381 459,564
----------- ----------- ----------- ----------- ----------- ---------
Increase in net assets 3,592,015 2,648,650 1,094,236 1,314,554 1,633,506 485,217
Net assets, beginning of period 3,742,886 1,094,236 0 2,118,723 485,217 0
----------- ----------- ----------- ----------- ----------- ---------
Net assets, end of period $ 7,334,901 $ 3,742,886 $ 1,094,236 $ 3,433,277 $ 2,118,723 $ 485,217
=========== =========== =========== =========== =========== =========
<FN>
<F*>The Growth Fund and the Overseas Fund began operations on March 4 and March 11, 1993, respectively.
See accompanying notes to the financial statements.
(continued)
<PAGE> 63
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
PERIOD ENDED DECEMBER 31, 1995
<CAPTION>
ASSET MANAGER HIGH INCOME GOLD & NATURAL RESOURCES
FUND DIVISION FUND DIVISION FUND DIVISION
----------------- -------------------- ------------------------
1995<F*> 1995<F*> 1995<F*>
----------------- -------------------- ------------------------
<S> <C> <C> <C>
Operations:
Net investment income (loss) $ (52) $ (253) $ 18
Net realized gain (loss) on investments 13 1,132 (5)
Net unrealized gain on investments 1,779 2,337 370
--------- --------- ----------
Net increase in net assets
resulting from operations 1,740 3,216 383
Net deposits into Separate Account 49,378 199,733 9,414
--------- --------- ----------
Increase in net assets 51,118 202,949 9,797
Net assets, beginning of period 0 0 0
--------- --------- ----------
Net assets, end of period $ 51,118 $ 202,949 $ 9,797
========= ========= ==========
<FN>
<F*> The Asset Manager Fund, High Income Fund, and Gold & Natural Resources Fund began operations on July 19,
May 24, and August 9, 1995, respectively.
See accompanying notes to the financial statements.
</TABLE>
<PAGE> 64
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
Note 1 - Organization
General American Separate Account Eleven (the Separate Account) commenced
operations on September 15, 1987 and is registered under the Investment
Company Act of 1940 (1940 Act) as a unit investment trust. The Separate
Account offers three products: Variable Universal Life (VUL-95), Variable
General Select Plus (VGSP), and Variable Universal Life (VUL-100) that
receive and invest net premiums for flexible premium variable life insurance
policies that are issued by General American Life Insurance Company (General
American). The Separate Account is divided into thirteen Divisions. Each
Division invests exclusively in shares of a single Fund of either General
American Capital Company, Variable Insurance Products Fund, Variable
Insurance Products Fund II, or Van Eck Worldwide Insurance Trust which are
open-end, diversified management companies. The Funds of the General
American Capital Company, sponsored by General American, are the S & P 500
Index (formerly Equity Index), Money Market, Bond Index, Managed Equity,
Asset Allocation, International Equity, and the Special Equity Fund
Divisions. The funds of the Variable Insurance Products Fund, managed by
Fidelity Management & Research Company, are the Equity-Income, Growth,
Overseas, and the High Income Fund Divisions. The fund of the Variable
Insurance Products Fund II, managed by Fidelity Management and Research
Company is the Asset Manager Fund. The fund of the Van Eck Worldwide
Insurance Trust, managed by Van Eck Associates Corporation, is the Gold and
Natural Resources Fund. Policyholders have the option of directing their
premium payments into one or all of the Funds as well as into the general
account of General American, which is not generally subject to regulation
under the Securities Act of 1933 or the 1940 Act.
Note 2 - Significant Accounting Policies
The following is a summary of significant accounting policies followed by
the Separate Account in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
A. Investments
The Separate Accounts' investments in the thirteen Funds are valued
daily based on the net asset values of the respective Fund shares held as
reported to General American by General American Capital Company, Variable
Insurance Products Fund, Variable Insurance Products Fund II, and Van Eck
Worldwide Insurance Trust. The specific identification method is used in
determining the cost of shares sold on withdrawals by the Separate Account.
Share transactions are recorded on the trade date, which is the same as the
settlement date.
B. Federal Income Taxes
Under current federal income tax law, capital gains from sales of
investments of the Separate Account are not taxable. Therefore, no federal
income tax expense has been provided.
C. Distribution of Income and Realized Capital Gains
General American Capital Company follows the federal income tax
practice known as consent dividending, whereby substantially all of its net
investment income and realized gains are deemed to be passed through to the
Separate Account. As a result, General American Capital Company does not
pay any dividends or capital gain distributions. During December of each
year, accumulated investment income and capital gains of the underlying
Capital Company Fund are allocated to the Separate Account by increasing the
cost basis and recognizing a capital gain in the Separate Account. The
Variable Insurance Products Fund, Variable Insurance Products Fund II, and
Van Eck Worldwide Insurance Trust intend to pay out all of its net
investment income and net realized capital gains each year. Dividends from
the funds are distributed at least annually on a per share basis and are
recorded on the ex dividend date. Normally, net realized capital gains, if
any, are distributed each year for each fund. Such income and capital gain
distributions are automatically reinvested in additional shares of the
funds.
<PAGE> 65
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
D. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to 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 increase and decrease in net assets
from operations during the period. Actual results could differ from those
estimates.
Note 3 - Policy Charges
Charges are deducted from premiums and paid to General American for
providing the insurance benefits set forth in the contracts and any
additional benefits added by rider, administering the policies,
reimbursement of expenses incurred in distributing the policies, and
assuming certain risks in connection with the policies.
Prior to the allocation of net premiums among General American's general
account and the Fund Divisions of the Separate Account, premium payments
are reduced by premium expense charges, which consist of a sales charge and
a charge for premium taxes. The premium payment, less the premium expense
charge, equals the net premium.
Sales Charge: A sales charge equal to 6% is deducted from each VUL-95
-------------
premium paid. A sales charge of 5% in years one through ten and 2.25%
thereafter is deducted from each VGSP premium paid. This charge is deducted
to partially reimburse General American for expenses incurred in
distributing the policy and any additional benefits provided by rider. No
sales charge is deducted from VUL-100 premiums.
Premium Taxes: Various state and political subdivisions impose a tax
--------------
on premiums received by insurance companies. Premium taxes vary from state
to state. A deduction of 2% of each VUL-95 premium, 2.5% of each VGSP
premium, and 2.10% of each VUL-100 premium is made from each premium payment
for these taxes. In addition, a 1.25% deduction is taken from VUL-100
premiums to cover the company's Federal income tax costs attributable to the
amount of premium received.
Charges are deducted monthly from the cash value of each policy to
compensate General American for (a) certain administrative costs; (b)
insurance underwriting and acquisition expenses in connection with issuing a
policy; (c) the cost of insurance, and (d) the cost of optional benefits
added by rider.
Administrative Charge: General American has responsibility for the
----------------------
administration of the policies and the Separate Account. As reimbursement
for administrative expenses related to the maintenance of each policy and
the Separate Account, General American assesses a monthly administrative
charge against each policy. This charge is $10 per month for a standard
policy and $12 per month for a pension policy during the first 12 policy
months and $4 (standard) and $6 (pension) per month for all policy months
beyond the 12th for VUL-95 contracts. The charge is $4 per month for VGSP
contracts. The charge is $13 per month during the first 12 policy months
and $6 per month thereafter for VUL-100 contracts.
Insurance Underwriting and Acquisition Expense Charge: An additional
------------------------------------------------------
administrative charge is deducted from policy cash value for VUL-95 as part
of the monthly deduction during the first 12 policy months and for the first
12 policy months following an increase in the face amount. The charge is
$0.08 per month multiplied by the face amount divided by 1,000. For
VUL-100, the charge during the first 12 policy months is $0.16 per month
multiplied by the face amount divided by 1,000, and in all policy years
thereafter, the charge is $0.01 per month multiplied by the face amount
divided by 1,000.
<PAGE> 66
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
Cost of Insurance: The cost of insurance is deducted on each monthly
------------------
anniversary date for the following policy month. Because the cost of
insurance depends upon a number of variables, the cost varies for each
policy month. The cost of insurance is determined separately for the
initial face amount and for any subsequent increases in face amount.
General American determines the monthly cost of insurance charge by
multiplying the applicable cost of insurance rate or rates by the net amount
at risk for each policy month.
Optional Rider Benefits Charge: This monthly deduction includes
-------------------------------
charges for any additional benefits provided by rider.
Contingent Deferred Sales Charge: During the first ten policy years
--------------------------------
for VUL-95 and VGSP, and the first fifteen years for VUL-100, General
American also assesses a charge upon surrender or lapse of a Policy, a
requested decrease in face amount, or a partial withdrawal that causes the
face amount to decrease. The amount of the charge assessed depends on a
number of factors, including whether the event is a full surrender or lapse
or only a decrease in face amount, the amount of premiums received to date
by General American, and the policy year in which the surrender or other
event takes place.
Mortality and Expense Charge: In addition to the above charges, a
-----------------------------
daily charge is made for the mortality and expense risks assumed by General
American. General American deducts a daily charge from the Separate Account
at the rate of .002319% for VUL-95, .0019111% for VGSP, and .002455% for
VUL-100 of the net assets of each division of the Separate Account, which
equals an annual rate of .85%, .70%, and .90% for VUL-95, VGSP, and VUL-100
respectively. VUL-95, VGSP, and VUL-100 mortality and expense charges for
1995 were $269,027, $47,617, and $2,880, respectively. The mortality risk
assumed by General American is the risk that those insured may die sooner
than anticipated and therefore, that General American will pay an aggregate
amount of death benefits greater than anticipated. The expense risk assumed
is that expenses incurred in issuing and administering the policy will
exceed the amounts realized from the administrative charges assessed against
the policy.
<PAGE> 67
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
Note 4 - Purchases and Sales of Shares
During the year ended December 31, 1995, purchases including net realized
gain and income from distribution and proceeds from sales of General
American Capital Company shares were as follows:
<TABLE>
<CAPTION>
S & P 500 Money Bond Managed Asset International Special
Index Market Index Equity Allocation Equity Equity
Fund Fund Fund Fund Fund Fund Fund
---------- ---------- ----------- ----------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Purchases $1,581,971 $6,661,543 $ 508,923 $ 623,290 $1,601,344 $1,491,399 $1,274,625
========== ========== =========== =========== ========== ========== ==========
Sales $1,645,207 $4,135,625 $ 1,760,565 $ 934,536 $1,872,184 $ 222,880 $ 855,583
========== ========== =========== =========== ========== ========== ==========
</TABLE>
During the year ended December 31, 1995, purchases (including dividend
reinvestment) and proceeds from sales of Variable Insurance Products Fund
Shares were as follows:
<TABLE>
<CAPTION>
Equity-Income Growth Overseas High Income
Fund Fund Fund Fund
------------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Purchases $2,804,909 $3,015,080 $1,512,757 $ 225,413
========== ========== ========== ===========
Sales $ 486,651 $ 987,205 $ 408,880 $ 28,646
========== ========== ========== ===========
</TABLE>
During the year ended December 31, 1995, purchases (including dividend
reinvestment) and proceeds from sales of Variable Insurance Products Fund II
shares were as follows:
<TABLE>
<CAPTION>
Asset Manager
Fund
------------
<S> <C>
Purchases $ 48,583
============
Sales $ 448
============
</TABLE>
During the year ended December 31, 1995, purchases (including dividend
reinvestment) and proceeds from sales of Van Eck Worldwide Insurance Trust
shares were as follows:
<TABLE>
<CAPTION>
Gold and Natural
Resources Fund
----------------
<S> <C>
Purchases $ 9,579
============
Sales $ 144
============
</TABLE>
<PAGE> 68
Note 5 - Accumulation Unit Activity
The following is a summary of the accumulation unit activity for the years
ended, December 31, 1995, 1994, and 1993:
<TABLE>
<CAPTION>
S & P 500 INDEX MONEY MARKET
FUND DIVISION<F*> FUND DIVISION
----------------------------------- -------------------------------------
1995 1994 1993 1995 1994 1993
--------- -------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Variable Universal Life-95:
Deposits 78,391 78,329 124,523 206,798 326,065 328,809
Withdrawals (101,054) (61,101) (44,114) (215,226) (343,656) (325,426)
Outstanding units, beginning of period 193,698 176,470 96,061 93,606 111,197 107,814
--------- -------- -------- --------- --------- ---------
Outstanding units, end of period 171,035 193,698 176,470 85,178 93,606 111,197
========= ======== ======== ========= ========= =========
Variable General Select Plus:<F**>
Deposits 30,100 27,980 4,977 344,162 226,931 160,999
Withdrawals (15,451) (843) (41) (215,211) (184,184) (154,630)
Outstanding units, beginning of period 32,073 4,936 0 49,116 6,369 0
--------- -------- -------- --------- --------- ---------
Outstanding units, end of period 46,722 32,073 4,936 178,067 49,116 6,369
========= ======== ======== ========= ========= =========
Variable Univeral Life-100:<F***>
Deposits 14,240 214,797
Withdrawals (687) (110,989)
Outstanding units, beginning of period 0 0
--------- ---------
Outstanding units, end of period 13,553 103,808
========= =========
<FN>
<F*>This fund was formerly known as the Equity Index Fund
<F**>The Variable General Select Plus product was introduced in 1993, and the first deposit was received on March 31, 1993.
<F***>The Variable Universal Life 100 product was introduced in 1995, and the first deposit was received on June 7, 1995.
(continued)
<PAGE> 69
Note 5 - Accumulation Unit Activity (continued)
The following is a summary of the accumulation unit activity for the years
ended, December 31, 1995, 1994, and 1993:
<CAPTION>
BOND INDEX MANAGED EQUITY
FUND DIVISION FUND DIVISION
----------------------------------- -------------------------------------
1995 1994 1993 1995 1994 1993
--------- -------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Variable Universal Life-95:
Deposits 28,341 34,979 102,301 37,042 38,637 82,095
Withdrawals (102,229) (26,804) (18,035) (68,803) (43,454) (56,377)
Outstanding units, beginning of period 144,143 135,968 51,702 124,409 129,226 103,508
--------- -------- -------- --------- --------- ---------
Outstanding units, end of period 70,255 144,143 135,968 92,648 124,409 129,226
========= ======== ======== ========= ========= =========
Variable General Select Plus: <F**>
Deposits 5,765 1,257 86 5,835 1,260 84
Withdrawals (1,249) (35) (5) (595) (43) (4)
Outstanding units, beginning of period 1,303 81 0 1,297 80 0
--------- -------- -------- --------- --------- ---------
Outstanding units, end of period 5,819 1,303 81 6,537 1,297 80
========= ======== ======== ========= ========= =========
Variable Univeral Life-100:<F***>
Deposits 1,670 1,823
Withdrawals (75) (168)
Outstanding units, beginning of period 0 0
--------- ---------
Outstanding units, end of period 1,595 1,655
========= =========
<FN>
<F**>The Variable General Select Plus product was introduced in 1993, and the first deposit was received on March 31, 1993.
<F***>The Variable Universal Life 100 product was introduced in 1995, and the first deposit was received on June 7, 1995.
(continued)
<PAGE> 70
Note 5 - Accumulation Unit Activity, (continued)
The following is a summary of the accumulation unit activity for the years
ended, December 31, 1995, 1994, and 1993:
<CAPTION>
ASSET ALLOCATION INTERNATIONAL EQUITY
FUND DIVISION FUND DIVISION
----------------------------------- -------------------------------------
1995 1994 1993 1995 1994 1993<F*>
--------- -------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Variable Universal Life-95:
Deposits 80,183 101,360 130,078 74,018 71,731 91,938
Withdrawals (98,461) (49,338) (184,573) (28,390) (31,331) (41,396)
Outstanding units, beginning of period 258,432 206,410 260,905 90,942 50,542 0
--------- -------- -------- --------- --------- ---------
Outstanding units, end of period 240,154 258,432 206,410 136,570 90,942 50,542
========= ======== ======== ========= ========= =========
Variable General Select Plus: <F**>
Deposits 12,925 18,605 106,273 16,837 18,803 4,246
Withdrawals (31,947) (43,756) (4,011) (6,722) (730) (50)
Outstanding units, beginning of period 77,111 102,262 0 22,269 4,196 0
--------- -------- -------- --------- --------- ---------
Outstanding units, end of period 58,089 77,111 102,262 32,384 22,269 4,196
========= ======== ======== ========= ========= =========
Variable Univeral Life-100:<F***>
Deposits 1,072 4,468
Withdrawals (39) (777)
Outstanding units, beginning of period 0 0
--------- ---------
Outstanding units, end of period 1,033 3,691
========= =========
General American Life Insurance Company
seed money:
Deposits 0 0 0 0 0 200,000
Withdrawals 0 0 0 0 0 0
Outstanding units, beginning of period 0 0 0 200,000 200,000 0
--------- -------- -------- --------- --------- ---------
Outstanding units, end of period 0 0 0 200,000 200,000 200,000
========= ======== ======== ========= ========= =========
<FN>
<F*>The International Equity Fund began operations on February 16, 1993.
<F**>The Variable General Select Plus product was introduced in 1993, and the first deposit was received on March 31, 1993.
<F***>The Variable Universal Life 100 product was introduced in 1995, and the first deposit was received on June 7, 1995.
(continued)
<PAGE> 71
Note 5 - Accumulation Unit Activity, (continued)
The following is a summary of the accumulation unit activity for the years
ended, December 31, 1995, 1994, and 1993:
<CAPTION>
GROWTH OVERSEAS
FUND DIVISION FUND DIVISION
----------------------------------- -------------------------------------
1995 1994 1993<F*> 1995 1994 1993<F*>
--------- -------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Variable Universal Life-95:
Deposits 181,296 202,047 73,613 97,609 116,391 37,139
Withdrawals (80,832) (42,320) (7,557) (42,775) (31,173) (3,221)
Outstanding units, beginning of period 225,783 66,056 0 119,136 33,918 0
--------- -------- -------- --------- --------- ---------
Outstanding units, end of period 326,247 225,783 66,056 173,970 119,136 33,918
========= ======== ======== ========= ========= =========
Variable General Select Plus: <F**>
Deposits 90,761 95,218 30,412 46,058 56,343 4,847
Withdrawals (60,661) (19,705) (469) (24,367) (9,246) (25)
Outstanding units, beginning of period 105,456 29,943 0 51,919 4,822 0
--------- -------- -------- --------- --------- ---------
Outstanding units, end of period 135,556 105,456 29,943 73,610 51,919 4,822
========= ======== ======== ========= ========= =========
Variable Univeral Life-100:<F***>
Deposits 25,375 9,829
Withdrawals (1,865) (1,146)
Outstanding units, beginning of period 0 0
--------- ---------
Outstanding units, end of period 23,510 8,683
========= =========
<FN>
<F*>The Growth Fund and the Overseas Fund began operations on March 4, and March 11, 1993, respectively.
<F**>The Variable General Select Plus product was introduced in 1993, and the first deposit was received on March 31, 1993.
<F***>The Variable Universal Life 100 product was introduced in 1995, and the first deposit was received on June 7, 1995.
(continued)
<PAGE> 72
Note 5 - Accumulation Unit Activity, (continued)
The following is a summary of the accumulation unit activity for the years ended, December 31, 1995, 1994, and 1993:
<CAPTION>
SPECIAL EQUITY EQUITY-INCOME
FUND DIVISION FUND DIVISION
----------------------------------- ----------------------------------
1995 1994 1993<F*> 1995 1994 1993<F*>
------- ------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Variable Universal Life-95:
Deposits 94,909 119,434 79,353 143,543 139,841 46,425
Withdrawals (88,190) (31,453) (6,030) (48,670) (28,685) (3,678)
Outstanding units, beginning of period 161,304 73,323 0 153,903 42,747 0
------- ------- ------- ------- ------- ------
Outstanding units, end of period 168,023 161,304 73,323 248,776 153,903 42,747
======= ======= ======= ======= ======= ======
Variable General Select Plus:<F**>
Deposits 22,352 33,038 4,632 78,040 51,432 7,763
Withdrawals (12,685) (1,030) (55) (34,513) (13,273) (91)
Outstanding units, beginning of period 36,585 4,577 0 45,831 7,672 0
------- ------- ------- ------- ------- ------
Outstanding units, end of period 46,252 36,585 4,577 89,358 45,831 7,672
======= ======= ======= ======= ======= ======
Variable Univeral Life-100:<F***>
Deposits 4,498 20,481
Withdrawals (725) (1,718)
Outstanding units, beginning of period 0 0
------- -------
Outstanding units, end of period 3,773 18,763
------- -------
General American Life Insurance Company
seed money:
Deposits 0 0 100,000 0 0 0
Withdrawals 0 0 0 0 0 0
Outstanding units, beginning of period 100,000 100,000 0 0 0 0
------- ------- ------- ------- ------- ------
Outstanding units, end of period 100,000 100,000 100,000 0 0 0
======= ======= ======= ======= ======= ======
<FN>
<F*>The Special Equity Fund and the Equity-Income Fund began operations on February 16 and March 18, 1993 respectively.
<F**>The Variable General Select Plus product was introduced in 1993, and the first deposit was received on March 31, 1993.
<F***>The Variable Universal Life 100 product was introduced in 1995, and the first deposit was received on June 7, 1995.
(continued)
<PAGE> 73
Note 5 - Accumulation Unit Activity, (continued)
The following is a summary of the accumulation unit activity for the period ended, December 31, 1995:
<CAPTION>
ASSET MANAGER HIGH INCOME GOLD AND NATURAL RESOURCES
FUND DIVISION FUND DIVISION FUND DIVISION
--------------------- ------------------- ----------------------------------
1995<F*> 1995<F*> 1995<F*>
--------------------- ------------------- ----------------------------------
<S> <C> <C> <C>
Variable Universal Life-95:
Deposits 331 6,217 135
Withdrawals (4) (237) (9)
Outstanding units, beginning of period 0 0 0
----- ----- ---
Outstanding units, end of period 327 5,980 126
===== ===== ===
Variable General Select Plus: <F**>
Deposits 1,534 6,436 0
Withdrawals (6) (115) 0
Outstanding units, beginning of period 0 0 0
----- ----- ---
Outstanding units, end of period 1,528 6,321 0
===== ===== ===
Variable Univeral Life-100:<F**>
Deposits 3,044 6,662 890
Withdrawals (100) (159) (31)
Outstanding units, beginning of period 0 0 0
----- ----- ---
Outstanding units, end of period 2,944 6,503 859
===== ===== ===
<FN>
<F*>The Asset Manager Fund, High Income Fund, and Gold & Natural Resources Fund began operations on July 19, May 24, and August 9,
1995, respectively.
<F**>The Variable Universal Life 100 product was introduced in 1995, and the first deposit was received on June 7, 1995.
</TABLE>
<PAGE> 74
Note 6 - Summary of Gross and Net Deposits into Separate Account
Deposits into the Separate Account are used to purchase shares in the Capital
Company, Variable Insurance Products Funds, Variable Insurance Products Fund
II, or Van Eck Worldwide Insurance Trust. Net deposits represent the amounts
available for investment in such shares after deduction of sales charges,
premium taxes, administrative costs, insurance, underwriting and acquisition
expense, cost of insurance, and cost of optional benefits by rider. Realized
and unrealized capital gains (losses) have been excluded from net deposits
into the Separate Account because they have been included in increase
(decrease) in net assets resulting from operations in the Statements or
Changes in Net Assets.
<TABLE>
<CAPTION>
Variable Universal Life-95:
- ---------------------------
S & P 500 INDEX MONEY MARKET
FUND DIVISION<F*> FUND DIVISION
-------------------------------------- -----------------------------------------
1995 1994 1993 1995 1994 1993
----------- --------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 919,322 $ 712,049 $ 611,759 $ 2,001,421 $ 4,699,999 $ 4,656,095
Transfers between fund divisions and
General American 472,868 (7,433) 990,439 (1,597,558) (3,475,334) (3,470,334)
Surrenders and withdrawals (1,380,995) (162,056) (13,771) (346,828) (274,623) (7,137)
----------- --------- ---------- ----------- ----------- -----------
Total gross deposits, transfers, and
surrenders between fund divisions 11,195 542,570 1,588,427 57,035 950,042 1,178,473
----------- --------- ---------- ----------- ----------- -----------
Deductions:
Sales charges & premium taxes 82,459 83,216 50,516 194,508 398,298 374,871
Administrative costs and other expense
charges 64,223 123,584 82,963 95,102 492,935 426,628
Cost of insurance and additional benefits 370,924 295,287 192,315 234,609 326,377 331,256
----------- --------- ---------- ----------- ----------- -----------
Total deductions 517,606 502,087 325,794 524,219 1,217,610 1,132,755
----------- --------- ---------- ----------- ----------- -----------
Net deposits into (deductions from)
Separate Account $ (506,411) $ 40,483 $1,262,633 $ (467,184) $ (267,568) $ 45,718
=========== ========= ========== =========== =========== ===========
<FN>
<F*>This fund was formerly known as the Equity Index Fund.
(continued)
<PAGE> 75
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<CAPTION>
Variable Universal Life-95:
- ---------------------------
BOND INDEX MANAGED EQUITY
FUND DIVISION FUND DIVISION
-------------------------------------- ---------------------------------------
1995 1994 1993 1995 1994 1993
----------- --------- ---------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 421,967 $496,821 $ 212,957 $ 465,063 $ 552,307 $689,307
Transfers between fund divisions and
General American 62,346 (54,209) 1,316,365 (121,086) (157,877) 135,951
Surrenders and withdrawals (1,586,477) (64,076) (1,604) (647,675) (144,799) (69,915)
----------- -------- ---------- --------- --------- --------
Total gross deposits, transfers, and
surrenders between fund divisions (1,102,164) 378,536 1,527,718 (303,698) 249,631 755,343
----------- -------- ---------- --------- --------- --------
Deductions:
Sales charges & premium taxes 32,747 40,004 16,011 38,137 47,457 62,788
Administrative costs and other expense
charges 38,228 51,703 25,347 32,697 69,603 95,414
Cost of insurance and additional benefits 168,249 156,048 99,237 201,403 201,082 223,201
----------- -------- ---------- --------- --------- --------
Total deductions 239,224 247,755 140,595 272,237 318,142 381,403
----------- -------- ---------- --------- --------- --------
Net deposits into (deductions from)
Separate Account $(1,341,388) $130,781 $1,387,123 $(575,935) $ (68,511) $373,940
=========== ======== ========== ========= ========= ========
(continued)
<PAGE> 76
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<CAPTION>
Variable Universal Life-95:
- ---------------------------
ASSET ALLOCATION INTERNATIONAL EQUITY
FUND DIVISION FUND DIVISION
---------------------------------------- ---------------------------------------
1995 1994 1993 1995 1994 1993<F*>
----------- ---------- ----------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 1,361,239 $1,682,596 $ 1,052,209 $635,309 $608,033 $2,259,051
Transfers between fund divisions and
General American (10,959) 83,984 (1,340,630) 302,360 246,711 413,861
Surrenders and withdrawals (1,175,619) (186,438) (49,957) (45,598) (44,700) (695)
----------- ---------- ----------- -------- -------- ----------
Total gross deposits, transfers, and
surrenders between fund divisions 174,661 1,580,142 (338,378) 892,071 810,044 2,672,217
----------- ---------- ----------- -------- -------- ----------
Deductions:
Sales charges & premium taxes 115,321 130,253 85,090 54,639 48,119 20,276
Administrative costs and other expense
charges 55,437 155,847 119,804 26,569 73,520 25,104
Cost of insurance and additional benefits 503,988 448,764 365,674 184,782 124,406 40,778
----------- ---------- ----------- -------- -------- ----------
Total deductions 674,746 734,864 570,568 265,990 246,045 86,158
----------- ---------- ----------- -------- -------- ----------
Net deposits into (deductions from)
Separate Account $ (500,085) $ 845,278 $ (908,946) $626,081 $563,999 $2,586,059
=========== ========== =========== ======== ======== ==========
<FN>
<F*>The International Equity Fund Division began operations on February 16, 1993.
(continued)
<PAGE> 77
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<CAPTION>
Variable Universal Life-95:
- ---------------------------
SPECIAL EQUITY EQUITY-INCOME
FUND DIVISION FUND DIVISION
--------------------------------------- -------------------------------------
1995 1994 1993<F*> 1995 1994 1993<F*>
--------- ---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 713,819 $ 746,886 $ 1,324,154 $ 1,217,315 $ 783,048 $135,825
Transfers between fund divisions and
General American (319,339) 562,587 551,090 565,593 832,542 372,878
Surrenders and withdrawals (35,191) (53,731) (702) (37,075) (20,500) 0
--------- ---------- ----------- ----------- ---------- --------
Total gross deposits, transfers, and
surrenders between fund divisions 359,289 1,255,742 1,874,542 1,745,833 1,595,190 508,703
--------- ---------- ----------- ----------- ---------- --------
Deductions:
Sales charges & premium taxes 57,765 62,347 25,935 101,562 59,726 10,947
Administrative costs and other expense
charges 21,671 87,848 36,101 62,440 110,908 20,146
Cost of insurance and additional benefits 206,889 143,671 49,754 344,156 176,144 26,075
--------- ---------- ----------- ----------- ---------- --------
Total deductions 286,325 293,866 111,790 508,158 346,778 57,168
--------- ---------- ----------- ----------- ---------- --------
Net deposits into Separate Account $ 72,964 $ 961,876 $ 1,762,752 $ 1,237,675 $1,248,412 $451,535
========= ========== =========== =========== ========== ========
<FN>
<F*>The Special Equity Fund and the Equity-Income Fund Divisions began operations on February 16, and March 18, 1993, respectively.
(continued)
<PAGE> 78
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<CAPTION>
Variable Universal Life-95:
- ---------------------------
GROWTH OVERSEAS
FUND DIVISION<F*> FUND DIVISION
------------------------------------- -------------------------------------
1995 1994 1993 1995 1994 1993
---------- ---------- -------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $1,771,614 $1,291,793 $299,560 $ 978,388 $ 795,752 $135,955
Transfers between fund divisions and
General American 348,401 1,055,928 560,834 156,839 677,421 329,027
Surrenders and withdrawals (61,341) (16,988) (711) (33,911) (5,052) (706)
---------- ---------- -------- ---------- ---------- --------
Total gross deposits, transfers, and
surrenders between fund divisions 2,058,674 2,330,733 859,683 1,101,316 1,468,121 464,276
---------- ---------- -------- ---------- ---------- --------
Deductions:
Sales charges & premium taxes 145,300 104,397 24,087 79,076 65,305 10,896
Administrative costs and other expense
charges 94,464 178,047 43,172 47,698 104,587 18,054
Cost of insurance and additional benefits 494,220 261,855 50,807 269,853 174,032 28,894
---------- ---------- -------- ---------- ---------- --------
Total deductions 733,984 544,299 118,066 396,627 343,924 57,844
---------- ---------- -------- ---------- ---------- --------
Net deposits into Separate Account $1,324,690 $1,786,434 $741,617 $ 704,689 $1,124,197 $406,432
========== ========== ======== ========== ========== ========
<FN>
<F*>The Growth Fund and the Overseas Fund Divisions began operations on March 4, and March 11, 1993, respectively.
(continued)
<PAGE> 79
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<CAPTION>
Variable Universal Life-95:
- ---------------------------
ASSET MANAGER HIGH INCOME GOLD & NATURAL RESOURCES
FUND DIVISION FUND DIVISION FUND DIVISION
------------------ ----------------- ----------------------------
1995<F*> 1995<F*> 1995<F*>
------------------ ----------------- ----------------------------
<S> <C> <C> <C>
Total gross deposits $ 24 $ 6,373 $ 1,007
Transfers between fund divisions and
General American 3,317 59,489 387
Surrenders and withdrawals 0 0 0
------- ------- -------
Total gross deposits, transfers, and
surrenders between fund divisions 3,341 65,862 1,394
------- ------- -------
Deductions:
Sales charges & premium taxes 3 499 81
Administrative costs and other expense
charges 1 152 15
Cost of insurance and additional benefits 38 2,360 72
------- ------- -------
Total deductions 42 3,011 168
------- ------- -------
Net deposits into Separate Account $ 3,299 $62,851 $ 1,226
======= ======= =======
<FN>
<F*>The Asset Manager Fund, the High Income Fund, and the Gold & Natural Resources Fund Divisions began operations on July 19,
May 2 4,and August 9, 1995, respectively.
</TABLE>
(continued)
<PAGE> 80
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<TABLE>
<CAPTION>
Variable General Select Plus:<F**>
- ----------------------------------
S & P 500 INDEX MONEY MARKET
FUND DIVISION<F*> FUND DIVISION
------------------------------------- -----------------------------------------
1995 1994 1993 1995 1994 1993
---------- ---------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 47,504 $ 453,179 $ 32,784 $ 3,333,097 $ 2,408,387 $ 1,900,807
Transfers between fund divisions
and General American 182,278 116,566 23,666 (1,350,435) (1,573,558) (1,546,175)
Surrenders and withdrawals (15,259) (1,470) 0 (10,440) 0 0
---------- ---------- --------- ----------- ----------- -----------
Total gross deposits, transfers, and
surrenders between fund divisions 214,523 568,275 56,450 1,972,222 834,829 354,632
---------- ---------- --------- ----------- ----------- -----------
Deductions:
Sales charges & premium taxes 11,884 15,406 2,452 232,745 181,024 142,444
Administrative costs and other
expense charges 2,255 14,773 2,310 3,550 170,179 132,319
Cost of insurance and additional
benefits 18,795 6,908 380 85,423 38,797 21,369
---------- ---------- --------- ----------- ----------- -----------
Total deductions 32,934 37,087 5,142 321,718 390,000 296,132
---------- ---------- --------- ----------- ----------- -----------
Net deposits into
Separate Account $ 181,589 $ 531,188 $ 51,308 $ 1,650,504 $ 444,829 $ 58,500
========== ========== ========= =========== =========== ===========
<FN>
<F*>This fund was formerly known as the Equity Index Fund.
<F**>The Variable General Select Plus product was introduced in 1993, and the first deposit was received on March 31, 1993.
(continued)
<PAGE> 81
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<CAPTION>
Variable General Select Plus:<F**>
- ----------------------------------
BOND INDEX MANAGED EQUITY
FUND DIVISION FUND DIVISION
------------------------------------- -----------------------------------------
1995 1994 1993 1995 1994 1993
---------- ---------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 9,129 $ 2,394 $ 713 $ 9,302 $ 3,900 $ 716
Transfers between fund divisions
and General American 57,441 10,690 272 60,563 9,776 234
Surrenders and withdrawals (12,416) 0 0 0 0 0
---------- ---------- --------- ----------- ----------- -----------
Total gross deposits, transfers, and
surrenders between fund divisions 54,154 13,084 985 69,865 13,676 950
---------- ---------- --------- ----------- ----------- -----------
Deductions:
Sales charges & premium taxes 614 152 54 645 226 54
Administrative costs and other
expense charges 713 213 57 148 259 55
Cost of insurance and additional
benefits 1,149 271 43 1,454 395 38
---------- ---------- --------- ----------- ----------- -----------
Total deductions 2,476 636 154 2,247 880 147
---------- ---------- --------- ----------- ----------- -----------
Net deposits into
Separate Account $ 51,678 $ 12,448 $ 831 $ 67,618 $ 12,796 $ 803
========== ========== ========= =========== =========== ===========
<FN>
<F**>The Variable General Select Plus product was introduced in 1993, and the first deposit was received on March 31, 1993.
(continued)
<PAGE> 82
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<CAPTION>
Variable General Select Plus:<F**>
- ----------------------------------
ASSET ALLOCATION INTERNATIONAL EQUITY
FUND DIVISION FUND DIVISION
------------------------------------- -----------------------------------------
1995 1994 1993 1995 1994 1993<F*>
---------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ (34,323) $ 48,281 $ 435 $ 76,251 $ 92,237 $ 11,318
Transfers between fund divisions
and General American (131,408) (183,023) 1,068,765 76,707 141,207 36,203
Surrenders and withdrawals (10,179) (22,704) 0 (4,465) (489) 0
---------- ---------- ----------- ----------- ----------- -----------
Total gross deposits, transfers, and
surrenders between fund divisions (175,910) (157,446) 1,069,200 148,493 232,955 47,521
---------- ---------- ----------- ----------- ----------- -----------
Deductions:
Sales charges & premium taxes 6,512 1,704 49 7,697 6,884 848
Administrative costs and other
expense charges 1,175 3,794 69 1,158 6,913 842
Cost of insurance and additional
benefits 38,419 33,302 967 15,526 7,657 475
---------- ---------- ----------- ----------- ----------- -----------
Total deductions 46,106 38,800 1,085 24,381 21,454 2,165
---------- ---------- ----------- ----------- ----------- -----------
Net deposits into (deductions from)
Separate Account $ (222,016) $ (196,246) $ 1,068,115 $ 124,112 $ 211,501 $ 45,356
========== ========== =========== =========== =========== ===========
<FN>
<F*>The International Equity Fund Division began operations on February 16, 1993.
<F**>The Variable General Select Plus product was introduced in 1993, and the first deposit was received on March 31, 1993.
(continued)
<PAGE> 83
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<CAPTION>
Variable General Select Plus:<F**>
- ----------------------------------
SPECIAL EQUITY EQUITY-INCOME
FUND DIVISION FUND DIVISION
------------------------------------- -----------------------------------------
1995 1994 1993<F*> 1995 1994 1993<F*>
---------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 81,787 $ 206,659 $ 26,654 $ 285,714 $ 170,100 $ 4,644
Transfers between fund divisions
and General American 76,580 181,915 26,500 446,973 312,672 76,984
Surrenders and withdrawals (11,584) (1,182) 0 (62,763) 0 0
---------- ---------- ----------- ----------- ----------- -----------
Total gross deposits, transfers, and
surrenders between fund divisions 146,783 387,392 53,154 669,924 482,772 81,628
---------- ---------- ----------- ----------- ----------- -----------
Deductions:
Sales charges & premium taxes 12,214 15,456 1,991 20,534 12,452 330
Administrative costs and other
expense charges 1,880 14,899 1,887 4,696 12,315 381
Cost of insurance and additional
benefits 19,771 9,475 535 54,185 20,279 891
---------- ---------- ----------- ----------- ----------- -----------
Total deductions 33,865 39,830 4,413 79,415 45,046 1,602
---------- ---------- ----------- ----------- ----------- -----------
Net deposits into
Separate Account $ 112,918 $ 347,562 $ 48,741 $ 590,509 $ 437,726 $ 80,026
========== ========== =========== =========== =========== ===========
<FN>
<F*>The Special Equity Fund and the Equity-Income Fund Divisions began operations on February 16, and March 18, 1993, respectively.
<F**>The Variable General Select Plus product was introduced in 1993, and the first deposit was received on March 31, 1993.
(continued)
<PAGE> 84
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<CAPTION>
Variable General Select Plus:<F**>
- ----------------------------------
GROWTH OVERSEAS
FUND DIVISION FUND DIVISION
------------------------------------- -----------------------------------------
1995 1994 1993<F*> 1995 1994 1993<F*>
---------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 392,035 $ 372,501 $ 53,837 $ 154,142 $ 191,494 $ 24,337
Transfers between fund divisions
and General American 225,243 514,277 273,042 200,230 399,196 32,594
Surrenders and withdrawals (161,933) (1,272) 0 (55,346) (583) 0
---------- ---------- ----------- ----------- ----------- -----------
Total gross deposits, transfers, and
surrenders between fund divisions 455,345 885,506 326,879 299,026 590,107 56,931
---------- ---------- ----------- ----------- ----------- -----------
Deductions:
Sales charges & premium taxes 34,454 27,464 4,192 13,147 14,571 1,834
Administrative costs and other
expense charges 10,979 27,083 4,049 3,913 14,045 1,729
Cost of insurance and additional
benefits 71,870 29,320 4,890 27,603 13,307 236
---------- ---------- ----------- ----------- ----------- -----------
Total deductions 117,303 83,867 13,131 44,663 41,923 3,799
---------- ---------- ----------- ----------- ----------- -----------
Net deposits into
Separate Account $ 338,042 $ 801,639 $ 313,748 $ 254,363 $ 548,184 $ 53,132
========== ========== =========== =========== =========== ===========
<FN>
<F*>The Growth Fund and the Overseas Fund Divisions began operations on March 4, and March 11, 1993 respectively.
<F**>The Variable General Select Plus product was introduced in 1993, and the first deposit was received on March 31, 1993.
(continued)
<PAGE> 85
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<CAPTION>
Variable General Select Plus:
- -----------------------------
ASSET MANAGER HIGH INCOME GOLD & NATURAL RESOURCES
FUND DIVISION FUND DIVISION FUND DIVISION
--------------------- ---------------------- ----------------------------
1995<F*> 1995<F*> 1995<F*>
--------------------- ---------------------- ----------------------------
<S> <C> <C> <C>
Total gross deposits $ 255 $ 603 $ 0
Transfers between fund divisions
and General American 15,583 68,178 0
Surrenders and withdrawals 0 0 0
-------- -------- --------
Total gross deposits, transfers, and
surrenders between fund divisions 15,838 68,781 0
-------- -------- --------
Deductions:
Sales charges & premium taxes 10 37 0
Administrative costs and other
expense charges 3 22 0
Cost of insurance and additional
benefits 53 1,176 0
-------- -------- --------
Total deductions 66 1,235 0
-------- -------- --------
Net deposits into
Separate Account $ 15,772 $ 67,546 $ 0
======== ======== ========
<F*>The Asset Manager Fund, the High Income Fund, and the Gold & Natural Resources Fund Divisions began operations on July 19,
May 24, and August 9, 1995, respectively.
(continued)
<PAGE> 86
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<CAPTION>
Variable Universal Life-100:<F****>
- -----------------------------------
S & P 500 INDEX MONEY MARKET BOND INDEX MANAGED EQUITY ASSET ALLOCATION
FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION
----------------- --------------- --------------- ---------------- ------------------
1995 1995 1995 1995 1995
----------------- --------------- --------------- ---------------- ------------------
<S> <C> <C> <C> <C> <C>
Total gross deposits $ 16,519 $ 2,385,983 $ 2,634 $ 1,658 $ 926
Transfers between fund divisions
and General American 172,340 (1,031,031) 16,903 21,497 12,569
Surrenders and withdrawals 0 0 0 0 0
---------- ----------- --------- --------- ---------
Total gross deposits, transfers, and
surrenders between fund divisions 188,859 1,354,952 19,537 23,155 13,495
---------- ----------- --------- --------- ---------
Deductions:
Premium taxes 458 73,630 79 48 30
Administrative costs and other
expense charges 4,054 51,168 350 791 254
Cost of insurance and additional
benefits 5,002 73,453 512 1,359 234
---------- ----------- --------- --------- ---------
Total deductions 9,514 198,251 941 2,198 518
---------- ----------- --------- --------- ---------
Net deposits into
Separate Account $ 179,345 $ 1,156,701 $ 18,596 $ 20,957 $ 12,977
========== =========== ========= ========= =========
<FN>
<F****>The Variable Universal Life 100 product was introduced in 1995, and the first deposit was received on June 7, 1995.
(continued)
<PAGE> 87
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<CAPTION>
Variable Universal Life-100:<F****>
- -----------------------------------
INTERNATIONAL
EQUITY SPECIAL EQUITY EQUITY-INCOME GROWTH OVERSEAS
FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION
----------------- --------------- --------------- ---------------- ------------------
1995 1995 1995 1995 1995
----------------- --------------- --------------- ---------------- ------------------
<S> <C> <C> <C> <C> <C>
Total gross deposits $ 20,494 $ 18,525 $ 44,385 $ 50,500 $ 25,338
Transfers between fund divisions
and General American 27,674 34,407 219,488 304,735 82,196
Surrenders and withdrawals 0 0 0 0 0
--------- -------- --------- --------- ---------
Total gross deposits, transfers, and
surrenders between fund divisions 48,168 52,932 263,873 355,235 107,534
--------- -------- --------- --------- ---------
Deductions:
Premium taxes 656 598 1,400 1,424 762
Administrative costs and other
expense charges 2,585 2,711 8,425 10,377 4,563
Cost of insurance and additional
benefits 5,523 5,673 13,454 15,164 7,602
--------- -------- --------- --------- ---------
Total deductions 8,764 8,982 23,279 26,965 12,927
--------- -------- --------- --------- ---------
Net deposits into
Separate Account $ 39,404 $ 43,950 $ 240,594 $ 328,270 $ 94,607
========= ======== ========= ========= =========
<FN>
<F****>The Variable Universal Life 100 product was introduced in 1995, and the first deposit was received on June 7, 1995.
(continued)
<PAGE> 88
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
Variable Universal Life-100:<F****>
- -----------------------------------
ASSET MANAGER HIGH INCOME GOLD & NATURAL RESOURCES
FUND DIVISION FUND DIVISION FUND DIVISION
--------------------- ---------------------- ----------------------------
1995<F*> 1995<F*> 1995<F*>
--------------------- ---------------------- ----------------------------
<S> <C> <C> <C>
Total gross deposits $ 964 $ 5,221 $ 193
Transfers between fund divisions
and General American 30,404 65,982 8,300
Surrenders and withdrawals 0 0 0
--------- --------- ---------
Total gross deposits, transfers, and
surrenders between fund divisions 31,368 71,203 8,493
--------- --------- ---------
Deductions:
Premium taxes 28 174 8
Administrative costs and other
expense charges 602 801 144
Cost of insurance and additional
benefits 431 892 153
--------- --------- ---------
Total deductions 1,061 1,867 305
--------- --------- ---------
Net deposits into
Separate Account $ 30,307 $ 69,336 $ 8,188
========= ========= =========
<FN>
<F*>The Asset Manager Fund, the High Income Fund, and the Gold & Natural Resources Fund Divisions began operations on July 19,
May 24, and August 9, 1995, respectively.
<F****>The Variable Universal Life 100 product was introduced in 1995, and the first deposit was received on June 7, 1995.
</TABLE>
<PAGE> 89
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
No. of Shares Market Value
----------------- ----------------
<S> <C> <C>
S & P 500 Index Fund<F**>
General American Capital Company<F*> 193,071 $4,660,592
Money Market Fund
General American Capital Company<F*> 263,930 4,313,391
Bond Index Fund
General American Capital Company<F*> 68,062 1,401,432
Managed Equity Fund
General American Capital Company<F*> 91,079 1,906,081
Asset Allocation Fund
General American Capital Company<F*> 257,595 5,976,187
International Equity Fund
General American Capital Company<F*> 356,997 5,393,857
Special Equity Fund
General American Capital Company<F*> 306,201 4,208,131
Equity-Income Fund
Variable Insurance Products Fund 283,755 5,467,954
Growth Fund
Variable Insurance Products Fund 250,718 7,320,976
Overseas Fund
Variable Insurance Products Fund 201,438 3,434,520
Asset Manager Fund
Variable Insurance Products Fund II 3,162 49,927
High Income Fund
Variable Insurance Products Fund 16,617 200,236
Gold & Natural Resources Fund
Van Eck Worldwide Insurance Trust 680 9,800
<FN>
<F*>These funds use consent dividending. See Note 2C.
<F**>This fund was formerly known as the Equity Index Fund.
See accompanying notes to financial statements.
</TABLE>
<PAGE> 90
LEGAL COUNSEL
Stephen E. Roth
Sutherland, Asbill & Brennan, Washington, D.C.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
If distributed to prospective investors, this report must be preceded or
accompanied by a current prospectus.
The prospectus is incomplete without reference to the financial data
contained in the annual report.
<PAGE> 91
INDEPENDENT AUDITORS' REPORT
The Board of Directors
General American Life Insurance Company:
We have audited the accompanying statements of assets, liabilities,
contingency reserves, and policyholders' surplus of General American Life
Insurance Company as of December 31, 1995 and 1994, and the related
statements of operations, policyholders' surplus, and contingency reserves
and cash flow for each of the years in the three-year period ended
December 31, 1995. 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.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of General American Life
Insurance Company as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for each of the years in the three-year period
ended December 31, 1995, in conformity with generally accepted accounting
principles (see note 2 to the financial statements).
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information
included in the accompanying schedule is presented for purposes of additional
analysis and is not a required part of the basic financial statements. Such
information has been subjected to the auditing procedures applied in the
audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
KPMG PEAT MARWICK LLP
March 12, 1996
1
<PAGE> 92
GENERAL AMERICAN LIFE INSURANCE COMPANY
<TABLE>
Statements of Assets, Liabilities, Contingency
Reserves, and Policyholders' Surplus
December 31, 1995 and 1994
(In thousands of dollars)
<CAPTION>
===================================================================================================
ASSETS 1995 1994
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Invested assets:
Bonds $3,822,820 3,223,167
Mortgage loans 1,674,037 1,565,710
Real estate 226,663 231,554
Stocks 335,203 266,776
Market value appreciation of subsidiaries 190,790 285,340
Loans to policyholders 1,328,376 1,152,518
Short-term investments 294 4,912
Other invested assets 47,802 35,121
Cash and cash equivalents (13,511) 57,991
- ---------------------------------------------------------------------------------------------------
Total invested assets 7,612,474 6,823,089
Accrued investment income 102,848 91,169
Premiums deferred and uncollected 81,624 75,454
Other assets 126,997 106,455
Separate accounts 1,642,220 1,239,311
- ---------------------------------------------------------------------------------------------------
Total assets $9,566,163 8,335,478
===================================================================================================
<CAPTION>
===================================================================================================
LIABILITIES, CONTINGENCY RESERVES, AND POLICYHOLDERS' SURPLUS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Liabilities:
Policyholders' liabilities:
Policy reserves $5,182,888 4,662,012
Pension funds 1,105,202 1,018,588
Policy and contract claims 90,955 87,904
Dividends - accumulated, due and provided 219,539 201,334
Premiums received in advance and premium deposits 35,844 24,592
- ---------------------------------------------------------------------------------------------------
Total policyholders' liabilities 6,634,428 5,994,430
Commissions, expenses, and taxes 93,655 90,590
Amounts due - reinsurance 18,280 42,690
Notes payable 100,000 -
Funds held under coinsurance 89,573 -
Other 191,943 236,400
Separate accounts 1,619,807 1,219,124
- ---------------------------------------------------------------------------------------------------
Total liabilities 8,747,686 7,583,234
- ---------------------------------------------------------------------------------------------------
Contingency reserves:
Asset valuation reserve 202,727 235,351
Interest maintenance reserve 25,967 20,560
- ---------------------------------------------------------------------------------------------------
Total contingency reserves 228,694 255,911
- ---------------------------------------------------------------------------------------------------
Policyholders' surplus:
Reserve for group insurance 44,783 43,529
Surplus notes 107,000 107,000
Unassigned funds 438,000 345,804
- ---------------------------------------------------------------------------------------------------
Total policyholders' surplus 589,783 496,333
- ---------------------------------------------------------------------------------------------------
Total liabilities, contingency reserves, and policyholders' surplus $9,566,163 8,335,478
===================================================================================================
See accompanying notes to financial statements.
</TABLE>
2
<PAGE> 93
GENERAL AMERICAN LIFE INSURANCE COMPANY
<TABLE>
Statements of Operations, Policyholders' Surplus,
and Contingency Reserves
Years ended December 31, 1995, 1994, and 1993
(In thousands of dollars)
<CAPTION>
==================================================================================================================
1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue:
Premiums $1,661,172 1,485,704 1,040,403
Net investment income 546,243 501,863 485,705
Reinsurance ceded and other income 170,871 250,072 141,564
- ------------------------------------------------------------------------------------------------------------------
Total revenue 2,378,286 2,237,639 1,667,672
- ------------------------------------------------------------------------------------------------------------------
Benefits and expenses:
Benefits 929,206 896,036 899,896
Increase in reserves 504,069 425,976 6,490
Net transfers to separate accounts 254,128 307,470 159,688
Commissions 118,525 174,030 157,159
General and administrative expenses 268,759 246,890 255,024
- ------------------------------------------------------------------------------------------------------------------
Total benefits and expenses 2,074,687 2,050,402 1,478,257
- ------------------------------------------------------------------------------------------------------------------
Gain from operations 303,599 187,237 189,415
Dividends to policyholders 242,688 127,576 89,111
- ------------------------------------------------------------------------------------------------------------------
Net gain from operations after dividends to policyholders
and before federal income taxes 60,911 59,661 100,304
Provision for federal income tax 8,577 35,390 23,753
- ------------------------------------------------------------------------------------------------------------------
Net gain from operations 52,334 24,271 76,551
Capital gains (losses), net of federal income tax 194,793 (49,158) (21,552)
Net capital losses (gains) transferred to the interest maintenance
reserve (10,165) 11,012 (13,330)
- ------------------------------------------------------------------------------------------------------------------
Net gain (loss) 236,962 (13,875) 41,669
- ------------------------------------------------------------------------------------------------------------------
Other policyholders' surplus changes:
Unrealized capital gains and losses, net (96,021) (499) 215,479
Additions from (to) contingency reserves 27,217 23,664 (95,430)
Repayment of nonrecourse transfer agreement - (35,949) (13,000)
Surplus notes - 107,000 -
Change in surplus as a result of reinsurance (38,922) - -
Amortization of intangible assets (35,865) - -
Other items, net 79 (28,190) 65
- ------------------------------------------------------------------------------------------------------------------
(143,512) 66,026 107,114
- ------------------------------------------------------------------------------------------------------------------
Increase in policyholders' surplus 93,450 52,151 148,783
Policyholders' surplus, beginning of year 496,333 444,182 295,399
- ------------------------------------------------------------------------------------------------------------------
Policyholders' surplus, end of year $ 589,783 496,333 444,182
==================================================================================================================
Contingency reserves:
Addition (to) from policyholders' surplus (27,217) (23,664) 95,430
Contingency reserves, beginning of year 255,911 279,575 184,145
- ------------------------------------------------------------------------------------------------------------------
Contingency reserves, end of year $ 228,694 255,911 279,575
==================================================================================================================
See accompanying notes to financial statements.
</TABLE>
3
<PAGE> 94
GENERAL AMERICAN LIFE INSURANCE COMPANY
<TABLE>
Statements of Cash Flow
Years ended December 31, 1995, 1994, and 1993
(In thousands of dollars)
<CAPTION>
===================================================================================================
1995 1994 1993
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operations:
Cash received:
Premiums $1,642,922 1,492,175 1,136,015
Net investment income 536,488 501,683 460,617
Reinsurance ceded and other income 128,585 137,201 123,004
- ---------------------------------------------------------------------------------------------------
Total cash received from operations 2,307,995 2,131,059 1,719,636
- ---------------------------------------------------------------------------------------------------
Benefits paid:
Life, accident, and health claims (409,325) (437,729) (468,595)
Benefits to policyholders (286,423) (242,016) (505,911)
Dividends to policyholders (223,111) (100,038) (100,642)
- ---------------------------------------------------------------------------------------------------
Total benefits paid (918,859) (779,783) (1,075,148)
- ---------------------------------------------------------------------------------------------------
Operating charges paid:
Commissions, expenses, and taxes (324,113) (410,154) (424,545)
Net transfers to separate accounts (255,890) (321,268) (145,855)
Federal income taxes (96,814) (5,393) (23,415)
- ---------------------------------------------------------------------------------------------------
Total operating charges paid (676,817) (736,815) (593,815)
- ---------------------------------------------------------------------------------------------------
Other, net 28,955 153,082 45,343
- ---------------------------------------------------------------------------------------------------
Net cash provided by operations 741,274 767,543 96,016
- ---------------------------------------------------------------------------------------------------
Cash flows from investments:
Proceeds from investments sold, matured, or repaid:
Bonds 1,135,681 751,219 1,258,702
Stocks 77,208 34,761 56,437
Mortgage loans 206,188 135,503 102,050
Net decrease in loans to policyholders - - 62,600
Sale of GenCare 353,750 - -
Other invested assets 25,757 65,848 60,256
- ---------------------------------------------------------------------------------------------------
Total investment proceeds 1,798,584 987,331 1,540,045
- ---------------------------------------------------------------------------------------------------
Cost of investments acquired:
Bonds (1,787,628) (1,031,372) (1,440,513)
Stocks (230,287) (27,182) (100,599)
Mortgage loans (353,242) (309,433) (109,719)
Net increase in loans to policyholders (175,858) (132,739) -
Other invested assets (164,345) (363,016) (89,491)
- ---------------------------------------------------------------------------------------------------
Total investments acquired (2,711,360) (1,863,742) (1,740,322)
- ---------------------------------------------------------------------------------------------------
Net cash used in investments (912,776) (876,411) (200,277)
- ---------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from issuance of surplus notes - 107,000 -
Proceeds from issuance of notes payable 100,000 - -
- ---------------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (71,502) (1,868) (104,261)
Cash and cash equivalents, beginning of year 57,991 59,859 164,120
- ---------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year $ (13,511) 57,991 59,859
===================================================================================================
See accompanying notes to financial statements.
</TABLE>
4
<PAGE> 95
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
December 31, 1995, 1994, and 1993
===============================================================================
(1) ORGANIZATION
General American Life Insurance Company (General American or the Company) is
a mutual life insurance company originally incorporated as a stock company
under the laws of Missouri in 1933, and which began operations as a mutual
company in 1936. The Company's principal lines of business are: Individual
Life Insurance and Annuities, Group Life and Health Insurance, Group Pension,
and Investments.
General American distributes its products and services primarily through a
nationwide network of general agencies, independent brokers and group sales,
and claims offices. General American is licensed to do business in all 50
states, 12 Canadian provinces, Puerto Rico, and the District of Columbia.
Through its subsidiaries, the Company is also expanding its operations in
Europe, Pacific Rim countries, and Latin America.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Company include General American Life
Insurance Company and, on the equity method of accounting, the following
majority-owned unconsolidated subsidiaries: Reinsurance Group of America,
Incorporated (RGA); Paragon Life Insurance Company; Conning Asset Management
(CAM); COVA Corporation (COVA); General American Holding Company; Security
Equity Life Insurance Company; General Life Insurance Company of America, and
National American Life Insurance Company of Texas (NALICOT). The financial
statements have been prepared on the basis of accounting practices prescribed
or permitted by the Department of Insurance of the State of Missouri and in
conformity with the practices of the National Association of Insurance
Commissioners (NAIC) which are currently considered generally accepted
accounting principles (GAAP) for mutual life insurance companies.
In accordance with Missouri State Insurance Law and Regulations, General
American's subsidiaries are not consolidated for regulatory filing purposes.
The preparation of financial statements requires management to make estimates
and assumptions which affect the reported amounts of assets and liabilities
as of the date of the balance sheets and the statements of operations,
policyholders' surplus and contingency reserves. Actual results could differ
from these estimates. Accounts that the Company deems to be sensitive to
changes in estimates include policy reserves and policy and contract claims,
as well as certain investments.
NEW ACCOUNTING STANDARDS
In April 1993, the Financial Accounting Standards Board (FASB), issued
Interpretation No. 40, Applicability of Principles to Mutual Life Insurance
and Other Enterprises. This interpretation requires mutual life insurance
companies that have traditionally issued statutory basis financial statements
that have been reported to be in conformity with GAAP, to apply all
authoritative accounting pronouncements in preparing those statements,
effective for periods beginning after December 15, 1994.
In January 1995, the FASB issued Statement of Financial Accounting Standards
No. 120 (SFAS 120), Accounting and Reporting by Mutual Life Insurance
Enterprises for Certain Long-Duration Participating
5 (Continued)
<PAGE> 96
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
Contracts and the American Institute of Certified Public Accountants (AICPA)
issued Statement of Position 95-1 (SOP 95-1), Accounting for Certain
Insurance Activities of Mutual Life Insurance Enterprises, which together
defines the GAAP model for mutual life insurance enterprises. These
pronouncements define the enterprises and method of accounting for certain
participating life insurance contracts of mutual and stock life insurance
companies that meet the criteria defined in SOP 95-1. SFAS 120 also defers
implementation of Interpretation No. 40 to be concurrent with implementation
of SFAS 120. SFAS 120 and SOP 95-1 are effective for financial statements
issued for fiscal years beginning after December 15, 1995.
In connection with the adoption of SFAS 120, the Company plans to adopt the
following accounting standards:
- SFAS 109, Accounting for Income Taxes
- SFAS 114, Accounting by Creditors Impairment of a Loan
- SFAS 115, Accounting for Certain Debt and Equity Securities
- SFAS 118, Accounting by Creditors for Impairment of a Loan - Income
Recognition and Disclosures
The Company has not determined the impact on the Company's financial
condition or results of operations.
VALUATION OF INVESTMENTS
Bonds and stocks are valued as prescribed by the NAIC. Bonds are primarily
carried at amortized cost, as it is generally the Company's intent to hold
such to maturity. However, the Company does liquidate certain bonds prior to
maturity based on asset/liability and duration matching requirements
associated with policies and contracts. Additionally, preferred stocks are
carried at cost and common stocks are carried at market value. Mortgage
loans and policy loans are stated at the outstanding principal balances. Real
estate acquired through foreclosure or held for investment is carried at the
lower of cost or market value. Investments in real estate are carried net
of accumulated depreciation and encumbrances of $56.5 million and $46.7
million in 1995 and 1994, respectively, as well as direct valuation
allowances of $25.4 million and $24.2 million in 1995 and 1994, respectively.
Loan-backed bonds, included in bonds, are valued at amortized cost.
Amortization of the discount or premium from the purchase of these securities
is recognized using a level yield method which considers the estimated timing
and amount of prepayments of the underlying mortgage loans. Actual
prepayment experience is periodically reviewed and effective yields are
recalculated when differences arise between the prepayments originally
anticipated and the actual prepayments received and currently anticipated.
When such differences occur, the net investment in the mortgage-backed bond
is adjusted to the amount that would have existed had the new effective yield
been applied since the acquisition of the bond with a corresponding charge or
credit to interest income (the "retrospective method").
In accordance with practices prescribed by the NAIC, General American values
its ownership interest in publicly traded subsidiaries based upon current
quoted market values. These ownership interests are 63% of RGA and 72% of
GenCare Health Systems, Inc. (GenCare). The investment in RGA is carried at
89% of quoted market value. On January 3, 1995, the Company sold its 72%
ownership in GenCare to United HealthCare Corporation. Proceeds received net
of expenses were $354 million and the net
6 (Continued)
<PAGE> 97
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
realized gain on sale was $179 million. The extent to which the carrying
values of those investments differ from statutory net assets creates asset
appreciation or depreciation, with an offsetting unrealized gain or loss
reflected in policyholders' surplus. Market value appreciation of $190.8
million and $285.3 million is included in market value appreciation of
subsidiaries in the balance sheets at December 31, 1995 and 1994,
respectively.
Certain capital gains and losses realized on investment sales that resulted
from changes in the level of interest rates are recorded in an Interest
Maintenance Reserve (IMR), net of related income taxes. The IMR is amortized
into operating income over the approximate remaining maturities of the
investments sold. Certain other realized gains and losses from the sale or
decrease in valuation basis due to change in credit quality of invested
assets are presented separately from operating income, net of applicable
income taxes. Unrealized capital gains and losses are reflected as direct
credits and charges to policyholders' surplus.
The NAIC has established an asset valuation reserve (AVR) for the potential
losses on investments. This reserve is maintained for the purpose of
stabilizing surplus against the effect of fluctuations in the value of
certain bond, stock, mortgage loan, and real estate investments by direct
charge to policyholders' surplus.
The following methods and assumptions were used by the Company in estimating
its fair value disclosures for financial instruments:
Investment securities
Fair values for fixed maturity securities (including redeemable preferred
stocks) are based on quoted market prices, where available. For fixed
maturity securities not actively traded, fair values are estimated using
values obtained from independent pricing services or, in the case of private
placements, are estimated by discounting expected future cash flows using a
current market rate applicable to the yield, credit quality, and maturity of
the investments. The fair values for equity securities are based on quoted
market prices.
Mortgage loans
The fair values for mortgage loans are estimated using discounted cash flow
analyses, using interest rates currently being offered for similar loans to
borrowers with similar credit ratings. Loans with similar characteristics
are aggregated for purposes of the calculations.
Policy loans
The carrying amount for policy loans reported in the balance sheets
approximates the fair value. The majority of these loans are indexed, with
yield tied to a stated return.
Short-term investments and cash and cash equivalents
The carrying amounts reported in the balance sheets for these instruments
approximate the fair values.
7 (Continued)
<PAGE> 98
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
Investment contracts
Fair values for the Company's liabilities under investment-type insurance
contracts are estimated using discounted cash flow calculations based on
interest rates currently being offered for similar contracts with maturities
consistent with those remaining for the contracts being valued.
Other Policyholder Funds
Other policyholder funds are supplementary contract reserves and dividend
accumulations that represent deposits that have defined maturities. The
carrying value of these funds is a reasonable estimate of fair value.
CASH AND CASH EQUIVALENTS
Cash equivalents include liquid investments with original maturities of 90
days or less.
SEPARATE ACCOUNT BUSINESS
Separate account assets and liabilities represent segregated funds
administered and invested by the Company for the exclusive benefit of pension
and variable annuity contractholders. The Company receives administrative
and investment advisory fees for services rendered on behalf of these funds.
The amount of assets in excess of liabilities of $22.4 million and $20.2
million at December 31, 1995 and 1994, respectively, represents policy
surrender charges that are permitted to be recorded to surplus under
statutory accounting practices.
POLICY RESERVES
Policy reserves for life insurance and annuities are based on statutory
mortality and interest assumptions without consideration for lapses and
withdrawals. Mortality assumptions are based on various mortality tables
including primarily: American Experience, 1941 Commissioners Standard
Ordinary (CSO), 1958 CSO, and 1980 CSO for life insurance; and 1937 Standard
Annuity Table, 1971 Individual Annuity Mortality Table (IAM), 1983 IAM, and
the Progressive Annuity Table for annuities. Interest assumptions range from
2.0% to 6.0% for ordinary policy reserves and from 2.0% to 11.25% for group
and annuity reserves. Approximately 27% of the ordinary life reserves are
calculated on a net level reserve basis and 73% on a modified reserve basis.
The use of a modified reserve basis partially offsets the effect of
immediately expensing acquisition costs by providing a policy reserve
increase in the first policy year that is less than the reserve increase in
renewal years.
REINSURANCE
Premiums, commissions, expense reimbursements, benefits, and reserves related
to reinsurance business are accounted for on bases consistent with those used
in accounting for the original policies issued and the terms of the
reinsurance contracts. Premiums ceded to other companies have been reported
as a reduction of premium income. Amounts applicable to reinsurance ceded
for future policy benefits and claim liabilities have been reported as
reductions of these items.
8 (Continued)
<PAGE> 99
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
In the normal course of business the Company seeks to limit its exposure to
loss on any single insured by ceding risks to other insurance enterprises or
reinsurers under various types of contracts including coinsurance and excess
coverage. The Company's retention level per individual life ranges between
$1.0 to $2.0 million. To the extent that an assuming reinsurance company is
unable to meet its obligations under a reinsurance agreement, the Company
remains primarily liable.
REVENUES AND EXPENSES
Premiums are credited to revenue over the premium paying period of the
policies. Annuity and deposit contract considerations are recognized as
revenue when received. Expenses, including acquisition costs related to
acquiring new business, are charged to operations as incurred. Investment
income is recognized as earned.
FEDERAL INCOME TAXES
Federal income taxes are charged to operations based on income that is
currently taxable. Deferred taxes are not established for the tax effects of
temporary differences between financial reporting and taxable income.
FOREIGN CURRENCY TRANSLATION
The functional currency for the Company's Canadian business operations is the
Canadian dollar. The translation of that foreign currency into U.S. dollars
is performed for the asset and liability portfolios using exchange rates in
effect at year-end. The income statement accounts are translated using
current exchange rates in effect for the years presented. The Canadian
dollars have been converted to U.S. dollars based on a conversion rate of
$.7329, $.7133, and $.7527 for each Canadian dollar as of December 31, 1995,
1994, and 1993, respectively. In accordance with statutory accounting
principles, the losses resulting from such translation are included as a
liability and an unrealized capital loss.
NONADMITTED ASSETS
Certain assets, designated under statutory reporting as "nonadmitted assets,"
have been charged directly to policyholders' surplus.
RECLASSIFICATIONS
Certain 1994 and 1993 financial statement balances have been reclassified to
conform with 1995 presentation.
(3) ACQUISITION
On June 1, 1995, the Company acquired Xerox Life Insurance Companies, now
known as COVA Corporation. At acquisition, COVA had total assets of
approximately $635.6 million. The purchase price of approximately $107.7
million was funded from the Company's operations.
Effective July 31, 1995, the Company entered into a merger arrangement with
Conning Corporation & Subsidiaries (Conning), an investment management firm,
whereby the Company acquired Conning and
9 (Continued)
<PAGE> 100
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
subsequently contributed Conning and General American Investment Management
Company, a wholly owned subsidiary, to form CAM. At acquisition, Conning had
total assets of approximately $16.0 million. The purchase price consisted of
approximately $13.0 million in cash (from the Company's operations) and 3.2
million shares of CAM convertible redeemable preferred stock, with a fair value
of $17.0 million.
These transactions were accounted for using the purchase method of
accounting. The results of operations of the acquired entities are included
in the financial statements subsequent to the respective acquisition dates.
The excess of cost over fair value of net assets acquired amounted to
approximately $56.6 million and $23.1 million for COVA and Conning,
respectively. The excesses of cost over fair value of net assets of
approximately $16.8 million and $16.0 million for COVA and Conning,
respectively, were written off at the acquisition dates for statutory
accounting purposes. The write-off of the intangible asset was caused by the
Company exceeding its statutory intangible asset limit. The remaining excess
of cost over fair value of net assets is being amortized over 10 years.
(4) INVESTMENTS
Major categories of net investment income consist of the following (in
thousands of dollars):
<TABLE>
<CAPTION>
==================================================================================================================
Years ended December 31 1995 1994 1993
==================================================================================================================
<S> <C> <C> <C>
Bonds $ 291,382 249,906 239,161
Stocks (635) 27,938 34,953
Mortgage loans 141,603 139,392 139,012
Real estate 37,108 41,498 34,473
Loans to policyholders 92,731 75,957 65,957
Short-term investments 19,078 7,113 4,656
Other (544) 936 2,141
- ------------------------------------------------------------------------------------------------------------------
Gross investment income 580,723 542,740 520,353
Amortization of interest maintenance reserve 4,757 4,559 4,336
Investment expense (39,237) (45,436) (38,984)
- ------------------------------------------------------------------------------------------------------------------
Net investment income $ 546,243 501,863 485,705
==================================================================================================================
</TABLE>
BONDS
The carrying and estimated fair values of the Company's bond investments at
December 31, 1995 and 1994, by category, are as follows (in thousands of
dollars):
<TABLE>
<CAPTION>
==================================================================================================================
GROSS GROSS ESTI-
UNREA- UNREA- MATED
CARRYING LIZED LIZED FAIR
1995 VALUE GAINS LOSSES VALUE
==================================================================================================================
<S> <C> <C> <C> <C>
Government obligations (including obligations
guaranteed by the U.S. government) $ 241,141 15,689 830 256,000
Corporate securities 2,754,029 219,058 130,267 2,842,820
Mortgage-backed securities 731,125 26,136 1,625 755,636
Asset-backed securities 96,525 2,540 27 99,038
- ------------------------------------------------------------------------------------------------------------------
Total $3,822,820 263,423 132,749 3,953,494
==================================================================================================================
10 (Continued)
<PAGE> 101
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
<CAPTION>
GROSS GROSS ESTI-
UNREA- UNREA- MATED
CARRYING LIZED LIZED FAIR
1994 VALUE GAINS LOSSES VALUE
==================================================================================================================
<S> <C> <C> <C> <C>
Government obligations (including obligations
guaranteed by the U.S. government) $ 47,602 274 3,880 43,996
Corporate securities 2,378,039 24,670 109,942 2,292,767
Mortgage-backed securities 739,601 7,630 37,091 710,140
Asset-backed securities 57,925 1,067 1,399 57,593
- ------------------------------------------------------------------------------------------------------------------
Total $3,223,167 33,641 152,312 3,104,496
==================================================================================================================
</TABLE>
The carrying and estimated fair values of the Company's bond investments at
December 31, 1995, by contractual maturity, are shown below (in thousands of
dollars). Expected maturities may differ from contractual maturities because
borrowers may have the right to call or prepay obligations without call or
prepayment penalties.
<TABLE>
<CAPTION>
====================================================================================
ESTIMATED
CARRYING FAIR
VALUE VALUE
====================================================================================
<S> <C> <C>
Due in one year or less $ 61,050 62,896
Due one year through five years 707,731 730,515
Due five years through ten years 1,423,347 1,366,241
Due after ten years 1,630,692 1,793,842
- ------------------------------------------------------------------------------------
Total $3,822,820 3,953,494
====================================================================================
</TABLE>
Before consideration of IMR, gross gains of $25.8 million, $12.5 million, and
$26.5 million and gross losses of $6.0 million, $28.0 million, and
$5.0 million were realized on bond sales, maturities, and redemptions in
1995, 1994, and 1993, respectively. The cost of investments sold is
generally determined on a first-in, first-out method and includes the effects
of any related capital amortization of premium or accretion of discount.
The Company is sensitive to interest rate changes, as its liabilities may
reprice or mature before interest-earning assets. The Company manages its
interest rate risk primarily through the utilization of interest rate swaps.
Under interest rate swaps, the Company agrees with other counterparties to
exchange, at specified intervals, the payments between floating and
fixed-rate interest amounts calculated by reference to notional amounts. Net
interest payments are recognized within net investment income in the
statutory statements of operations, policyholders' surplus, and contingency
reserves.
At December 31, 1995, the Company had six outstanding interest rate swap
agreements which expire at various dates through 2025. Under four of the
agreements, the Company receives a fixed rate ranging from 5.825% to 6.92% on
$15.4 million and pays a floating rate based on the London Interbank Offered
11 (Continued)
<PAGE> 102
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
Rate (LIBOR). Under the remaining two agreements, the Company receives a
floating rate based on LIBOR on $20.0 million and pays a fixed rate of 6.52%
and 6.9%, respectively. The estimated fair value of the agreements was
approximately $1.2 million unrealized loss, which reflects gross unrealized
gains and losses of $.1 million and $1.3 million, respectively, at December
31, 1995, which is not recognized in the accompanying balance sheets. At
December 31, 1994, the Company's exposure to derivative financial investments
was not material.
The Company is exposed to credit risk in the event of nonperformance by
counterparties to financial instruments, but does not expect any
counterparties to fail to meet their obligations. Where appropriate, master
netting agreements are arranged or collateral is obtained in the form of
rights to securities to lower the Company's exposure to credit risk. It is
the Company's policy to deal with only highly rated counterparties.
MORTGAGE LOANS
As of December 31, 1995 and 1994, the Company's mortgage loans were
distributed as follows (in thousands of dollars):
<TABLE>
<CAPTION>
===================================================================================================================================
1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
BOOK PERCENT BOOK PERCENT
STATES VALUE OF TOTAL VALUE OF TOTAL
===================================================================================================================================
<S> <C> <C> <C> <C>
Arizona $ 106,426 6.4% $ 88,601 5.7%
California 276,531 16.5 290,957 18.6
Colorado 206,438 12.2 188,929 12.0
Florida 180,350 10.8 186,405 11.9
Illinois 151,514 9.1 158,267 10.1
Maryland 76,640 4.6 71,274 4.6
Missouri 84,623 5.1 89,647 5.7
Nevada 63,190 3.8 55,661 3.6
Texas 137,416 8.2 156,910 10.0
Virginia 82,705 4.9 85,294 5.4
Other 308,204 18.4 193,765 12.4
- -----------------------------------------------------------------------------------------------------------------------------------
Total $1,674,037 100.0% $1,565,710 100.0%
===================================================================================================================================
<CAPTION>
1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
BOOK PERCENT BOOK PERCENT
PROPERTY TYPE VALUE OF TOTAL VALUE OF TOTAL
===================================================================================================================================
<S> <C> <C> <C> <C>
Apartment $ 93,530 5.6% $ 83,656 5.3%
Retail 658,918 39.3 591,098 37.8
Office building 458,503 27.4 405,048 25.9
Industrial 397,623 23.8 415,456 26.5
Other commercial 65,463 3.9 70,452 4.5
- ----------------------------------------------------------------------------------------------------------------------------------
Total $1,674,037 100.0% $1,565,710 100.0%
==================================================================================================================================
</TABLE>
12 (Continued)
<PAGE> 103
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
The Company makes mortgage loans on income-producing properties, such as
apartments, retail and office buildings, light warehouses, and light
industrial facilities. Loan-to-value ratios at the time of loan approval are
75% or less.
The estimated fair value of the Company's mortgage loan portfolio at
December 31, 1995 and 1994 was approximately $1,747.5 million and $1,558.5
million, respectively. The Company had outstanding commercial mortgage loan
commitments as of December 31, 1995 of $211.1 million.
During 1995, the Company entered into an agreement whereby approximately
$109.8 million of mortgage loans were sold by the Company for securitization
and resale by a financial institution as mortgage pass-through certificates.
In conjunction with the transaction, the Company entered into futures
positions to hedge against interest rate risk. The sale of these mortgage
loans resulted in a net loss of approximately $.4 million. In addition, the
close-out of the futures positions related to this transaction resulted in a
net loss of approximately $6.4 million. These amounts are reflected within
net investment income in the statutory statement of operations,
policyholders' surplus, and contingency reserves.
STOCKS
The carrying value of preferred stock was $8.1 million at December 31, 1995
and 1994, respectively. The fair value of the preferred stock was
$8.3 million and $8.2 million at December 31, 1995 and 1994, respectively.
The cost of nonaffiliated common stocks held at December 31, 1995 and 1994
was $3.1 million and $5.0 million, respectively. The fair value of
nonaffiliated common stocks held at December 31, 1995 and 1994 was $2.6
million and $5.0 million, respectively.
At December 31, 1995 and 1994, investments with carrying values of $247.0
million and $211.9 million, respectively, were on deposit with various
governmental agencies as required by law.
(5) INVESTMENT CONTRACTS
The carrying amounts and estimated fair values of the Company's liabilities
for investment-type insurance contracts at December 31, 1995 and 1994 are as
follows (in thousands of dollars):
<TABLE>
<CAPTION>
==================================================================================================================
1995 1994
- ------------------------------------------------------------------------------------------------------------------
ESTIMATED ESTIMATED
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
==================================================================================================================
<S> <C> <C> <C> <C>
Guaranteed investment contracts $492,340 494,059 342,766 336,922
==================================================================================================================
Supplementary contract without
life contingencies $ 6,443 6,443 6,887 6,887
==================================================================================================================
Individual and group annuities $373,259 372,730 390,193 362,531
==================================================================================================================
</TABLE>
13 (Continued)
<PAGE> 104
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
(6) REINSURANCE
The Company is a major reinsurer in the life and health industry. The
effect of reinsurance on premiums is as follows (in thousands of dollars):
<TABLE>
<CAPTION>
==============================================================================================================
1995 1994 1993
==============================================================================================================
<S> <C> <C> <C>
Direct $1,830,570 1,687,391 1,604,310
Assumed 206,127 272,356 474,092
- --------------------------------------------------------------------------------------------------------------
2,036,697 1,959,747 2,078,402
Ceded (375,525) (474,043) (1,037,999)
- --------------------------------------------------------------------------------------------------------------
Net $1,661,172 1,485,704 1,040,403
==============================================================================================================
</TABLE>
Reinsurance assumed represents approximately $51 billion, $38 billion,
and $69 billion of insurance in force for 1995, 1994, and 1993, respectively.
The amount of ceded insurance in force, including retrocessions, was
$57 billion, $54 billion, and $81 billion for 1995, 1994, and 1993,
respectively. Net reserve credits taken on reinsurance ceded and retroceded
for 1995, 1994, and 1993 were $360 million, $258 million, and $281 million,
respectively.
(7) FEDERAL INCOME TAXES
The provision for federal income tax expense is based upon a
consolidated income tax provision for the Company and its subsidiaries. The
provision differs from that computed based on the federal statutory rate of
35% in 1995, 1994, and 1993. The reasons for these differences are as
follows (in thousands of dollars):
<TABLE>
<CAPTION>
=============================================================================================================================
1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------
PER- PER- PER-
CENT OF CENT OF CENT OF
PRETAX PRETAX PRETAX
AMOUNT INCOME AMOUNT INCOME AMOUNT INCOME
=============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Federal income tax computed
on pretax income $ 21,319 35.0% $ 20,881 35.0% $ 35,106 35.0%
Deferred acquisition cost tax
on premiums 10,024 16.5 10,027 16.8 12,394 12.4
Surplus tax on mutual life
insurance companies - - 15,675 26.3 - -
Tax preferred investment income (11,477) (18.8) (8,787) (14.7) (1,659) (1.7)
Mortgage loan and real estate
differences 814 1.3 600 1.0 (5,291) (5.3)
Policy reserve, dividends, and
other product differences (8,460) (13.9) 2,911 4.9 (5,541) (5.5)
Equity in undistributed earnings
of subsidiaries 440 .7 (5,161) (8.7) (10,769) (10.7)
Other, net (4,083) (6.7) (756) (1.3) (487) (.5)
- -----------------------------------------------------------------------------------------------------------------------------
Provision for federal income tax $ 8,577 14.1% $ 35,390 59.3% $ 23,753 23.7%
=============================================================================================================================
</TABLE>
14 (Continued)
<PAGE> 105
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
(8) ASSOCIATE BENEFIT PLANS AND POSTRETIREMENT BENEFITS
The Company has a defined benefit plan covering substantially all associates.
The benefits are based on years of service and each associate's compensation
level. The Company's funding policy is to contribute annually the maximum
amount deductible for federal income tax purposes. Contributions provide for
benefits attributed to service to date and for those expected to be earned in
the future.
The Company also has several nonqualified, defined benefit and defined
contribution plans for directors and management associates. The plans are
unfunded and are deductible for federal income tax purposes when the benefits
are paid.
Net periodic defined benefit plan costs consist of the following (in
thousands of dollars):
<TABLE>
<CAPTION>
========================================================================================================
1995 1994 1993
========================================================================================================
<S> <C> <C> <C>
Service cost $ 2,805 3,285 2,824
Interest 5,056 4,523 4,128
Return on plan assets (27,134) 3,068 (11,695)
Amortization and deferral 18,514 (13,840) 1,784
- --------------------------------------------------------------------------------------------------------
Pension credit $ (759) (2,964) (2,959)
========================================================================================================
</TABLE>
The following table presents the plans' funded status and amounts recognized in
the Company's balance sheet at December 31, 1995 and 1994 (in thousands of
dollars):
<TABLE>
<CAPTION>
========================================================================================================================
1995 1994
- ------------------------------------------------------------------------------------------------------------------------
QUALIFIED OTHER QUALIFIED OTHER
PLANS PLANS PLANS PLANS
========================================================================================================================
<S> <C> <C> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including
vested benefits of $63,983 and $15,112
in 1995 and $48,378 and $10,554 in 1994,
respectively $ 65,900 24,595 48,872 18,115
========================================================================================================================
Projected benefit obligation for service
rendered to date 79,557 27,046 59,684 20,093
Plan assets at fair value, primarily listed
stocks and bonds 114,167 - 95,325 -
- ------------------------------------------------------------------------------------------------------------------------
Plan assets in excess of (less than) projected
benefit obligations 34,610 (27,046) 35,641 (20,093)
Unrecognized net transition (asset) obligation - 2,451 (657) 1,978
- ------------------------------------------------------------------------------------------------------------------------
Pension cost funded in advance $ 34,610 34,984
========================================================================================================================
Accrued pension liability $(24,595) (18,115)
========================================================================================================================
</TABLE>
15 (Continued)
<PAGE> 106
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
Assumptions used for the projected benefit obligation included a 7.25% current
discount rate, a 4.50% increase rate for future compensation levels, and a
9.25% projected return on plan assets for 1995.
The Board of Directors has adopted an associate incentive plan applicable to
full-time salaried associates with at least one year of service. Contributions
to the plan are determined yearly by the Board of Directors and are based upon
salaries of eligible associates. Full vesting will occur after five years of
continuous service. The Company's contributions to the plan were $9.2 million,
$1.6 million, and $7.1 million for 1995, 1994, and 1993, respectively.
In addition to pension benefits, the Company provides certain health care and
life insurance benefits for retired employees. Substantially all employees may
become eligible for these benefits if they reach retirement age while working
for the Company. Alternatively, retirees may elect certain prepaid health care
benefit plans.
In 1993, in accordance with the implementation of SFAS No. 106, Employers
Accounting for Postretirement Benefits Other Than Pensions, the Company changed
its method of accounting for the costs of its retiree benefit plans to the
accrual method, and elected to amortize its transition obligation for retirees
and fully eligible or vested employees over 20 years. The unamortized
transition obligations were $18.6 million and $19.6 million at December 31,
1995 and 1994, respectively. Net postretirement benefit costs for the years
ended December 31, 1995, 1994, and 1993 were $4.8 million, $4.0 million, and
$4.6 million, respectively, and includes the expected cost of such benefits for
newly eligible or vested employees, interest cost, gains and losses arising
from differences between actuarial assumptions and actual experience, and
amortization of the transition obligation.
The discount rate used in determining the accumulated postretirement benefit
obligation was 8.25%, and the health care cost trend rates were 10%, 9%, and
10% for the Indemnity Plan, HMO Plan, and Dental Plan, respectively, graded to
6.00% over 13 years. The health care cost trend rate assumption has a
significant effect on the amounts reported. To illustrate, increasing the
assumed health care cost trend rates by one percentage point in each year would
increase the accumulated postretirement benefit obligation as of January 1,
1995 by $3.1 million and the estimated eligibility cost and interest cost
components of net periodic postretirement benefit cost for 1995 by $.5 million.
(9) NOTES PAYABLE
In September 1995 the Company obtained a note payable for $100.0 million with a
financial institution. The note is secured by bonds with a carrying value of
$100.7 million. The note bears a fixed interest rate at 5.55% payable
quarterly and matures on March 29, 1996. The carrying value of this note
approximates the fair value at December 31, 1995.
(10) CONTINGENCY RESERVES
ASSET VALUATION RESERVE
The AVR is maintained for the purpose of stabilizing surplus against the
effect of fluctuations in the value of certain bond, stock, mortgage loan,
and real estate investments. Changes in the market value of common stocks
carried at market value are applied to the common stock component of this
reserve. This treatment has the effect of insulating statutory surplus from
short-term market value fluctuations of common stock. This reserve is
recorded as a direct charge to policyholders' surplus in accordance with
statutory accounting practices.
16 (Continued)
<PAGE> 107
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
The balance of the AVR component as of December 31, 1995 and 1994 is as
follows (in thousands of dollars):
<TABLE>
<CAPTION>
=========================================================================================
1995 1994
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Bonds, preferred stocks, and short-term
investments $ 40,829 39,859
Mortgage loans 49,339 48,543
Common stock 92,196 126,959
Real estate and other invested assets 20,363 19,990
- -----------------------------------------------------------------------------------------
$202,727 235,351
=========================================================================================
</TABLE>
Included in the mortgage loan component of the AVR at December 31, 1995 and
1994 was $42.9 million, which represents an additional reserve for potential
credit losses inherent in the mortgage loan portfolio. At December 31, 1995
and 1994, the AVR is held at a level equal to 87.2% and 90.1%, respectively,
of the maximum reserve level allowed by the NAIC.
INTEREST MAINTENANCE RESERVE
IMR excludes certain net realized gains and losses from the net gain in the
current year and amortizes those gains and losses through net investment
income over a period of years. The net effect of this change on the 1995,
1994, and 1993 net gain is as follows (in thousands of dollars):
<TABLE>
<CAPTION>
======================================================================================================
1995 1994 1993
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Amount of realized capital gains (losses)
included in IMR $10,165 (11,012) 13,330
Amount amortized and reflected in net
investment income (4,757) (4,559) (4,335)
- ------------------------------------------------------------------------------------------------------
Excluded from net gain (loss) $ 5,408 (15,571) 8,995
======================================================================================================
</TABLE>
(11) TRANSACTIONS WITH SUBSIDIARIES
General American has purchased insurance from, and also reinsured business
with, RGA Reinsurance Company (RGA Re), formerly St. Louis Reinsurance Company.
RGA Re is a subsidiary of RGA. In addition to the agreement wherein the
former reinsurance division of General American was transferred to RGA Re. The
effect of this business was to increase premiums and other considerations by
$136.5 million in 1995 and $17.5 million in 1994 and to increase policy
benefits and other expenses by $92.9 million in 1995 and $17.1 million in 1994.
The Company also received $2.8 million, $6.3 million, and $4.3 million in
dividends from subsidiaries in 1995, 1994, and 1993, respectively.
17 (Continued)
<PAGE> 108
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
In May 1993, the Company sold a portion of its reinsurance subsidiary, RGA, to
the public through an initial public offering of common stock. RGA received
net proceeds of approximately $160.0 million from the offering. The
transaction increased surplus and contingency reserves of the Company by
approximately $167.0 million. After the sale, the Company owned 62% of the
total shares outstanding of RGA common stock. The publicly held stock of RGA
trades on the New York Stock Exchange.
(12) POLICYHOLDERS' SURPLUS
During 1988, the Company entered into a nonrecourse transfer agreement with an
unaffiliated financial institution. Under this nonrecourse transfer agreement,
the Company transferred the right to the portion of premiums in excess of the
net valuation premium on certain policies for a limited period. The purchaser's
right to future premiums is limited to the portion above the amount necessary
to build policyholder reserves and, therefore, cannot interfere with, or have
priority over, the interests of the Company's policyholders. Risk associated
with policy lapses transfers to the purchaser while its interest terminates if
and when repayment of the amount advanced is received. As of December 31,
1994, the Company has made full repayment of this nonrecourse transfer
agreement with a direct charge to surplus of $34.8 million.
(13) SURPLUS NOTES
On January 14, 1994, the Company issued surplus notes with a face amount of
$107.0 million bearing a 7.625% interest rate due in 2024. The notes pay
interest on January 15 and July 15 each year. The notes are not subject to
redemption prior to maturity. Payment of principal and interest on the notes
may be made only with the approval of the Missouri Director of Insurance.
(14) RISKED-BASED CAPITAL
The insurance departments of various states, including the Company's
domiciliary state of Missouri impose risk-based capital (RBC) requirements on
insurance enterprises. The RBC calculation serves as a benchmark for the
regulation of life insurance companies by state insurance regulators. Their
requirements apply various weighted factors to financial balances or activity
levels based on their perceived degree of risk.
The RBC guidelines define specific capital levels where regulatory intervention
is required based on the ratio of a Company's actual total adjusted capital
(sum of capital and surplus and asset valuation reserve) to control levels
determined by the RBC formula. At December 31, 1995, the Company's actual
total adjusted capital was $879.9 million compared to its authorized control
level computed under the RBC formula of $179.1 million. Additionally, each of
the Company's insurance subsidiaries actual total adjusted capital exceeded all
minimum requirements.
(15) CONTINGENT LIABILITIES
From time to time, the Company is subject to insurance-related litigation in
the normal course of its business. Management does not believe the Company is
a party to any such pending litigation which would have a material adverse
effect on its financial statements or future operations.
18 (Continued)
<PAGE> 109
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
(16) SUBSEQUENT EVENTS
On January 25, 1996, General American and Security Mutual Life Insurance
Company (a New York company) announced an agreement to form a strategic
alliance (subject to regulatory approval) to market life insurance products
more efficiently and to achieve long-term growth objectives. This agreement
may include such things as consulting services, technology sharing, and
investment advisory services.
19 (Continued)
<PAGE> 110
Schedule
--------
GENERAL AMERICAN LIFE INSURANCE COMPANY
<TABLE>
Schedule of Selected Financial Data From Annual Statement
Year ended December 31, 1995
===================================================================================================
- ---------------------------------------------------------------------------------------------------
<S> <C>
Investment income earned:
Government bonds $ (1,515,086)
Other bonds (unaffiliated) 290,933,051
Bonds of affiliates 1,963,693
Preferred stocks (unaffiliated) 618,924
Common stocks (unaffiliated) -
Common stocks of affiliates (1,253,512)
Mortgages loans 141,603,417
Real estate 37,107,928
Premium notes, policy loans, and liens 92,730,645
Cash on hand and on deposit 110,588
Short-term investments 18,967,377
Other invested assets (1,275,570)
Aggregate write-in for investment income 731,575
- ---------------------------------------------------------------------------------------------------
Gross investment income $ 580,723,030
===================================================================================================
Real estate owned - book value less encumbrances $ 263,827,709
===================================================================================================
Mortgage loans - book value:
Residential mortgages $ 5,820,009
Commercial mortgages 1,668,216,758
- ---------------------------------------------------------------------------------------------------
Total mortgage loans $1,674,036,767
===================================================================================================
Mortgage loans by standing - book value:
Good standing $1,503,595,363
Good standing with restructured terms 144,257,321
Interest overdue more than three months, not in foreclosure 5,459,437
Foreclosure in process 20,724,646
Other long-term assets - statement value 35,193,813
Collateral loans -
Bonds and stocks of parents, subsidiaries, and affiliates - book value:
Bonds 27,515,357
Preferred stocks 633,594
Common stocks 515,215,742
===================================================================================================
20 (Continued)
<PAGE> 111
Schedule, Cont.
---------------
GENERAL AMERICAN LIFE INSURANCE COMPANY
<CAPTION>
Schedule of Selected Financial Data From Annual Statement, Continued
===================================================================================================
- ---------------------------------------------------------------------------------------------------
<S> <C>
Bonds and short-term investments by class and maturity:
Bonds by maturity - statement value:
Due within one year or less $ 147,354,910
Over 1 year through 5 years 836,465,796
Over 5 years through 10 years 1,404,057,005
Over 10 years through 20 years 844,035,702
Over 20 years 623,600,086
- ---------------------------------------------------------------------------------------------------
Total by maturity $3,855,513,499
===================================================================================================
Bonds by class - statement value:
Class 1 $2,550,083,706
Class 2 1,133,865,256
Class 3 129,439,150
Class 4 34,823,913
Class 5 1,453,511
Class 6 5,847,963
- ---------------------------------------------------------------------------------------------------
Total by class 3,855,513,499
Total bonds publicly traded 2,595,931,013
- ---------------------------------------------------------------------------------------------------
Total bonds privately placed $1,259,582,486
===================================================================================================
Preferred stocks - statement value $ 8,194,965
Common stocks - market value 517,797,909
Short-term investments - book value 32,693,051
Financial options owned - statement value 855,000
Financial options written and in force - statement value 1,372,050
Financial futures contracts open - current price 1,556,051
Cash on deposit (47,728,369)
Life insurance in force:
Ordinary 99,750,100
Group life 46,529,984
Amount of accidental death insurance in force under ordinary policies 787,974
Life insurance policies with disability provisions in force:
Ordinary 11,191,931
Group life 33,999,724
Supplementary contracts in force:
Ordinary - not involving life contingencies 529
Amount on deposit 4,677,010
Income payable 473,615
Ordinary - involving life contingencies 425
Income payable 306,246
Group - not involving life contingencies 358
Amount of deposit 2,540,119
Income payable 1,857,912
Group - involving life contingencies 86
Income payable 301,553
===================================================================================================
21 (Continued)
<PAGE> 112
Schedule, Cont.
---------------
GENERAL AMERICAN LIFE INSURANCE COMPANY
<CAPTION>
Schedule of Selected Financial Data From Annual Statement, Continued
===================================================================================================
<S> <C>
Annuities:
Ordinary:
Immediate - amount of income payable $ 4,601,464
Deferred - fully paid account balance 493,925
Deferred - not fully paid account balance 984,452,874
Group:
Immediate - amount of income payable 29,532,911
Deferred - fully paid account balance 940,963
Deferred - not fully paid account balance 1,519,952,339
Accident and health insurance - premiums in force:
Ordinary 30,469,801
Group 278,501,063
Credit -
Deposit funds and dividend accumulations:
Deposit funds - account balance 348,545,716
Dividend accumulations - account balance 79,245,861
Claim payments 1994:
Group accident and health - year ended December 31:
1995 130,390,021
1994 36,142,689
1993 -
Other accident and health:
1995 1,378,908
1994 1,452,851
1993 5,607,713
Other coverages that use developmental methods to calculate claims reserves:
1995 -
1994 -
1993 -
===================================================================================================
See accompanying independent auditors' report.
</TABLE>
22
<PAGE> 113
APPENDIX A- Illustrations of Death Benefits and Cash Values
The following tables illustrate how the Cash Value, Cash Surrender
Value, and death benefit of a Policy change with the investment experience of
a Division of the Separate Account. The tables show how the Cash Value, Cash
Surrender Value, and death benefit of a Policy issued to an insured of a
given age and at a given premium would vary over time if the investment
return on the assets held in each Division of the Separate Account were a
uniform, gross, after-tax annual rate of 0%, 6%, or 12%. The tables on pages
A-2 through A-10 illustrate a Policy issued to a Male, age 45 in a preferred
nonsmoker rate class. If the insured falls into a smoker rate class, the
Cash Values, Cash Surrender Values, and death benefits would be lower than
those shown in the tables. In addition, the Cash Values, Cash Surrender
Values, and death benefits would be different from those shown if the gross
annual investment rates of return averaged 0%, 6%, and 12% over a period of
years, but fluctuated above and below those averages for individual Policy
Years.
The Cash Value column under the "Guaranteed" heading shows the
accumulated value of the Net Premiums paid at the stated interest rate,
reflecting deduction of the monthly administrative charges and monthly
charges for the cost of insurance based on the maximum values allowed under
the 1980 Commissioners Standard Ordinary Mortality Table. The Cash Surrender
Value column under the "Guaranteed" heading shows the projected Cash
Surrender Value of the Policy, which is calculated by taking the Cash Value
under the "Guaranteed" heading and deducting any appropriate Contingent
Deferred Sales Charge. The Cash value column under the "Current" heading
shows the accumulated value of the Net Premiums paid at the stated interest
rate, reflecting deduction of the monthly administrative charges and monthly
charges for the cost of insurance at their current level, which is less than
or equal to that allowed by the 1980 Commissioners Standard Ordinary
Mortality Table. The Cash Value column under the "Current" heading also
reflects payment of the projected dividends into the Cash Value. The Cash
Surrender Value column under the "Current" heading shows the projected Cash
Surrender Value of the Policy, which is calculated by taking the Cash Value
under the "Current" heading and deducting any appropriate Contingent Deferred
Sales Charge. The illustrations of death benefits reflect the above
assumptions. The death benefits also vary between tables depending upon
whether Death Benefit Options A or C (Level Type) or Death Benefit Option
B(Increasing Type) are illustrated.
The amounts shown for Cash Value, Cash Surrender Value, and death
benefit reflect the fact that the investment rate of return is lower than the
gross after-tax return on the assets held in a Division of the Separate
Account. The charges include a .70% charge for mortality and expense risk,
the investment advisory fee (.52% of aggregate average daily net assets is
assumed but the actual investment advisory fee applicable to each Division is
shown in the respective Prospectuses of General American Capital Company,
Variable Insurance Products Fund, Variable Insurance Products Fund II, and
Van Eck Investment Trust), and administrative expenses incurred (which are
assumed to be .18%). After deduction for these amounts, the illustrated
gross annual investment rates of return of 0%, 6%, and 12% correspond to
approximate net annual rates of -1.40%, 4.60%, and 10.60%, respectively. The
Prospectuses for General American Capital Company, Variable Insurance
Products Fund, Variable Insurance Products Fund II, and Van Eck Investment
Trust should be consulted for details about the nature and extent of their
expenses. There is no arrangement for reimbursing the expenses of General
American Capital Company, Variable Insurance Products Fund, Variable
Insurance Products Fund II, and Van Eck Investment Trust.
The hypothetical values shown in the tables do not reflect any charges
for Federal income taxes against the Separate Account (as opposed to Premium
Tax Charges which are deducted from premium payments), since General American
is not currently making any such charges. However, such charges may be made
in the future and, in that event, the gross annual investment rate of return
of the Divisions of the Separate Account would have to exceed 0%, 6%, and 12%
by an amount sufficient to cover the tax charges in order to produce the
death benefit and Cash Value illustration. (See Federal Tax Matters.)
The tables illustrate the Policy values that would result based upon
the investment rates of return if premiums are paid as indicated, if all Net
Premiums are allocated to the Separate Account, if no Policy Loans have been
made, and dividends are paid into the Cash Value as projected. The tables
are also based on the assumptions that the Owner has not requested an
increase or decrease in the Face Amount, that no partial withdrawals have
been made, that no transfer charges were incurred, and that no optional
riders have been requested.
Upon request, General American will provide a comparable illustration
based upon the proposed Insured's age, sex, and rate class, the Face Amount
or premium requested, the proposed frequency of premium payments, and any
available riders requested.
<PAGE> 114
GENERAL AMERICAN LIFE INSURANCE CO. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT $100000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT LEVEL (OPTION A) ANNUAL PREMIUM $ 2180.82
<TABLE>
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL GROSS
ANNUAL RATE OF RETURN @ 0% (NET RATE @ -1.40%)
******************************************************************************************************************
<CAPTION>
CURRENT <F**> GUARANTEED <F*>
PREMS ------------ ------------ ------------ ------------ ------------ ------------
ACCUM CASH SURR CASH DEATH CASH SURR CASH DEATH
YEAR @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
---- ----- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2290 1726 1813 100000 1412 1499 100000
2 4694 3383 3558 100000 2774 2949 100000
3 7219 4963 5225 100000 4085 4347 100000
4 9870 6490 6839 100000 5345 5694 100000
5 12653 7977 8413 100000 6550 6987 100000
6 15575 9541 9959 100000 7805 8224 100000
7 18644 11101 11467 100000 9032 9399 100000
8 21866 12670 12949 100000 10228 10508 100000
9 25249 14238 14395 100000 11387 11544 100000
10 28802 15806 15806 100000 12502 12502 100000
11 32532 17297 17297 100000 13377 13377 100000
12 36448 18744 18744 100000 14166 14166 100000
13 40560 20145 20145 100000 14866 14866 100000
14 44878 21510 21510 100000 15473 15473 100000
15 49412 22841 22841 100000 15982 15982 100000
16 54172 24111 24111 100000 16384 16384 100000
17 59171 25323 25323 100000 16667 16667 100000
18 64419 26470 26470 100000 16815 16815 100000
19 69930 27545 27545 100000 16811 16811 100000
20 75716 28551 28551 100000 16637 16637 100000
25 109288 32336 32336 100000 12555 12555 100000
30 152136 33244 33244 100000
<FN>
<F*>THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE RATES
<F**> THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE RATES AND DIVIDENDS BASED ON
THE CURRENT DIVIDEND SCALE FOR THE EXACT COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ALSO
ARE BASED ON A POLICY ISSUE DATE OF JANUARY 1, FOR PURPOSES OF DETERMINING DIVIDEND AMOUNTS.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY, AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY
POLICYOWNER, AND THE INVESTMENT RESULTS FOR FUNDS OF GENERAL AMERICAN CAPITAL COMPANY, VARIABLE
INSURANCE PRODUCTS FUND, VARIABLE INSURANCE PRODUCTS FUND II, AND VAN ECK WORLDWIDE INSURANCE TRUST.
THE CASH VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN
IF THE ACTUAL RATES OF RETURN AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE COMPANY,
WALNUT STREET SECURITIES, GENERAL AMERICAN CAPITAL COMPANY, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE
INSURANCE PRODUCTS FUND II, VAN ECK WORLDWIDE INSURANCE TRUST, OR ANY REPRESENTATIVE THEREOF, THAT THIS
HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS INDICATED AND ASSUME ANY ADDITIONAL
PREMIUMS SHOWN ARE RECEIVED ON THE POLICY ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE
PAID BY THE COMPANY.
</TABLE>
<PAGE> 115
GENERAL AMERICAN LIFE INSURANCE CO. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT $100000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT LEVEL (OPTION B) ANNUAL PREMIUM $ 5777.00
<TABLE>
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL GROSS
ANNUAL RATE OF RETURN @ 0% (NET RATE @ -1.40%)
******************************************************************************************************************
<CAPTION>
CURRENT <F**> GUARANTEED <F*>
PREMS ------------ ------------ ------------ ------------ ------------ ------------
ACCUM CASH SURR CASH DEATH CASH SURR CASH DEATH
YEAR @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
---- ----- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 6066 4859 5091 105091 4540 4771 104771
2 12435 9600 10062 110062 8977 9439 109439
3 19123 14211 14905 114905 13308 14001 114001
4 26145 18719 19644 119644 17534 18458 118458
5 33518 23137 24292 124292 21651 22806 122806
6 41259 27755 28864 128864 25935 27044 127044
7 49388 32377 33348 133348 30194 31164 131164
8 57923 37017 37757 137757 34422 35161 135161
9 66885 41664 42080 142080 38612 39028 139028
10 76296 46320 46320 146320 42757 42757 142757
11 86176 50792 50792 150792 46344 46344 146344
12 96551 55182 55182 155182 49783 49783 149783
13 107444 59478 59478 159478 53072 53072 153072
14 118882 63693 63693 163693 56206 56206 156206
15 130892 67828 67828 167828 59180 59180 159180
16 143503 71847 71847 171847 61983 61983 161983
17 156744 75753 75753 175753 64602 64602 164602
18 170647 79534 79534 179534 67022 67022 167022
19 185245 83179 83179 183179 69224 69224 169224
20 200573 86692 86692 186692 71190 71190 171190
25 289505 101912 101912 201912 76993 76993 176993
30 403008 112043 112043 212043 73911 73911 173911
<FN>
<F*>THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE RATES
<F**> THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE RATES
AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT COMBINATION OF PREMIUMS AND BENEFITS
SHOWN. THESE VALUES ALSO ARE BASED ON A POLICY ISSUE DATE OF JANUARY 1, FOR PURPOSES OF DETERMINING
DIVIDEND AMOUNTS.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED A
REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN
AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY POLICYOWNER, AND THE
INVESTMENT RESULTS FOR FUNDS OF GENERAL AMERICAN CAPITAL COMPANY, VARIABLE INSURANCE PRODUCTS FUND,
VARIABLE INSURANCE PRODUCTS FUND II, AND VAN ECK WORLDWIDE INSURANCE TRUST. THE CASH VALUE, CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF
RETURN AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT
AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE COMPANY, WALNUT STREET
SECURITIES, GENERAL AMERICAN CAPITAL COMPANY, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE
PRODUCTS FUND II, VAN ECK WORLDWIDE INSURANCE TRUST, OR ANY REPRESENTATIVE THEREOF, THAT THIS
HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS INDICATED AND ASSUME ANY ADDITIONAL
PREMIUMS SHOWN ARE RECEIVED ON THE POLICY ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE
PAID BY THE COMPANY.
</TABLE>
<PAGE> 116
GENERAL AMERICAN LIFE INSURANCE CO. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT $100000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT LEVEL (OPTION C) ANNUAL PREMIUM $ 5777.00
<TABLE>
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL GROSS
ANNUAL RATE OF RETURN @ 0% (NET RATE @ -1.40%)
******************************************************************************************************************
<CAPTION>
CURRENT <F**> GUARANTEED <F*>
PREMS ------------ ------------ ------------ ------------ ------------ ------------
ACCUM CASH SURR CASH DEATH CASH SURR CASH DEATH
YEAR @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
---- ----- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 6066 4866 5097 100000 4563 4794 100000
2 12435 9625 10087 100000 9047 9509 100000
3 19123 14272 14965 100000 13454 14147 100000
4 26145 18834 19758 100000 17786 18711 100000
5 33518 23324 24479 100000 22045 23201 100000
6 41259 28030 29139 100000 26510 27620 100000
7 49388 32762 33733 100000 30996 31966 100000
8 51858 32335 32982 100000 30284 30931 100000
9 54450 31901 32224 100000 29527 29851 100000
10 57173 31458 31458 100000 28717 28717 100000
11 60032 30779 30779 100000 27523 27523 100000
12 63033 30081 30081 100000 26261 26261 100000
13 66185 29354 29354 100000 24928 24928 100000
14 69494 28605 28605 100000 23513 23513 100000
15 72969 27835 27835 100000 22009 22009 100000
16 76617 27017 27017 100000 20401 20401 100000
17 80448 26149 26149 100000 18673 18673 100000
18 84471 25223 25223 100000 16804 16804 100000
19 88694 24227 24227 100000 14769 14769 100000
20 93129 23160 23160 100000 12541 12541 100000
25 118859 16357 16357 100000
30 151697 5483 5483 100000
<FN>
<F*>THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE RATES
<F**> THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE RATES AND DIVIDENDS BASED
ON THE CURRENT DIVIDEND SCALE FOR THE EXACT COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES
ALSO ARE BASED ON A POLICY ISSUE DATE OF JANUARY 1, FOR PURPOSES OF DETERMINING DIVIDEND AMOUNTS.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED A
REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN
AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY POLICYOWNER, AND THE
INVESTMENT RESULTS FOR FUNDS OF GENERAL AMERICAN CAPITAL COMPANY, VARIABLE INSURANCE PRODUCTS FUND,
VARIABLE INSURANCE PRODUCTS FUND II, AND VAN ECK WORLDWIDE INSURANCE TRUST. THE CASH VALUE, CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF
RETURN AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT
AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE COMPANY, WALNUT STREET
SECURITIES, GENERAL AMERICAN CAPITAL COMPANY, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE
PRODUCTS FUND II, VAN ECK WORLDWIDE INSURANCE TRUST, OR ANY REPRESENTATIVE THEREOF, THAT THIS
HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS INDICATED AND ASSUME ANY ADDITIONAL
PREMIUMS SHOWN ARE RECEIVED ON THE POLICY ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE
PAID BY THE COMPANY.
</TABLE>
<PAGE> 117
GENERAL AMERICAN LIFE INSURANCE CO. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT $100000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT LEVEL (OPTION A) ANNUAL PREMIUM $ 2180.82
<TABLE>
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL GROSS
ANNUAL RATE OF RETURN @ 6% (NET RATE @ 4.60%)
******************************************************************************************************************
<CAPTION>
CURRENT <F**> GUARANTEED <F*>
PREMS ------------ ------------ ------------ ------------ ------------ ------------
ACCUM CASH SURR CASH DEATH CASH SURR CASH DEATH
YEAR @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
---- ----- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2290 1841 1929 100000 1517 1605 100000
2 4694 3727 3901 100000 3080 3254 100000
3 7219 5649 5911 100000 4687 4949 100000
4 9870 7635 7984 100000 6342 6691 100000
5 12653 9700 10136 100000 8044 8480 100000
6 15575 11965 12383 100000 9898 10317 100000
7 18644 14354 14720 100000 11831 12198 100000
8 21866 16883 17162 100000 13843 14122 100000
9 25249 19549 19706 100000 15929 16086 100000
10 28802 22357 22357 100000 18087 18087 100000
11 32532 25263 25263 100000 20125 20125 100000
12 36448 28297 28297 100000 22201 22201 100000
13 40560 31461 31461 100000 24316 24316 100000
14 44878 34774 34774 100000 26474 26474 100000
15 49412 38247 38247 100000 28676 28676 100000
16 54172 41870 41870 100000 30919 30919 100000
17 59171 45657 45657 100000 33204 33204 100000
18 64419 49615 49615 100000 35526 35526 100000
19 69930 53757 53757 100000 37882 37882 100000
20 75716 58100 58100 100000 40270 40270 100000
25 109288 83542 83542 100000 52835 52835 100000
30 152136 116779 116779 124954 67058 67058 100000
<FN>
<F*>THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE RATES
<F**> THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE RATES AND DIVIDENDS BASED
ON THE CURRENT DIVIDEND SCALE FOR THE EXACT COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES
ALSO ARE BASED ON A POLICY ISSUE DATE OF JANUARY 1, FOR PURPOSES OF DETERMINING DIVIDEND AMOUNTS.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED A
REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN
AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY POLICYOWNER, AND THE
INVESTMENT RESULTS FOR FUNDS OF GENERAL AMERICAN CAPITAL COMPANY, VARIABLE INSURANCE PRODUCTS FUND,
VARIABLE INSURANCE PRODUCTS FUND II, AND VAN ECK WORLDWIDE INSURANCE TRUST. THE CASH VALUE, CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF
RETURN AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT
AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE COMPANY, WALNUT STREET
SECURITIES, GENERAL AMERICAN CAPITAL COMPANY, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE
PRODUCTS FUND II, VAN ECK WORLDWIDE INSURANCE TRUST, OR ANY REPRESENTATIVE THEREOF, THAT THIS
HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS INDICATED AND ASSUME ANY ADDITIONAL
PREMIUMS SHOWN ARE RECEIVED ON THE POLICY ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE
PAID BY THE COMPANY.
</TABLE>
<PAGE> 118
GENERAL AMERICAN LIFE INSURANCE CO. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT $100000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT LEVEL (OPTION B) ANNUAL PREMIUM $ 5777.00
<TABLE>
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL GROSS
ANNUAL RATE OF RETURN @ 6% (NET RATE @ 4.60%)
******************************************************************************************************************
<CAPTION>
CURRENT <F**> GUARANTEED <F*>
PREMS ------------ ------------ ------------ ------------ ------------ ------------
ACCUM CASH SURR CASH DEATH CASH SURR CASH DEATH
YEAR @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
---- ----- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 6066 5174 5405 105405 4844 5075 105075
2 12435 10548 11010 111010 9884 10347 110347
3 19123 16118 16811 116811 15126 15819 115819
4 26145 21918 22842 122842 20576 21500 121500
5 33518 27971 29126 129126 26240 27395 127395
6 41259 34577 35687 135687 32400 33510 133510
7 49388 41554 42524 142524 38875 39845 139845
8 57923 48924 49664 149664 45665 46405 146405
9 66885 56691 57107 157107 52774 53190 153190
10 76296 64868 64868 164868 60200 60200 160200
11 86176 73351 73351 173351 67440 67440 167440
12 96551 82223 82223 182223 74912 74912 174912
13 107444 91485 91485 191485 82622 82622 182622
14 118882 101169 101169 201169 90576 90576 190576
15 130892 111294 111294 211294 98775 98775 198775
16 143503 121847 121847 221847 107218 107218 207218
17 156744 132848 132848 232848 115901 115901 215901
18 170647 144308 144308 244308 124816 124816 224816
19 185245 156237 156237 256237 133951 133951 233951
20 200573 168659 168659 268659 143295 143295 243295
25 289505 238630 238630 338630 192850 192850 292850
30 403008 322786 322786 422786 245212 245212 345212
<FN>
<F*>THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES
<F**> THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE RATES
AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT COMBINATION OF
PREMIUMS AND BENEFITS SHOWN. THESE VALUES ALSO ARE BASED ON A POLICY ISSUE
DATE OF JANUARY 1, FOR PURPOSES OF DETERMINING DIVIDEND AMOUNTS.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY,
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A
NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY POLICYOWNER,
AND THE INVESTMENT RESULTS FOR FUNDS OF GENERAL AMERICAN CAPITAL COMPANY,
VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE PRODUCTS FUND II, AND VAN
ECK WORLDWIDE INSURANCE TRUST. THE CASH VALUE, CASH SURRENDER VALUE AND DEATH
BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF
RETURN AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE
MADE BY THE COMPANY, WALNUT STREET SECURITIES, GENERAL AMERICAN CAPITAL
COMPANY, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE PRODUCTS FUND II,
VAN ECK WORLDWIDE INSURANCE TRUST, OR ANY REPRESENTATIVE THEREOF, THAT THIS
HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED OVER
ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS INDICATED
AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY ANNIVERSARIES.
ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE COMPANY.
</TABLE>
<PAGE> 119
GENERAL AMERICAN LIFE INSURANCE CO. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT $100000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT LEVEL (OPTION C) ANNUAL PREMIUM $ 5777.00
<TABLE>
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL GROSS
ANNUAL RATE OF RETURN @ 6% (NET RATE @ 4.60%)
******************************************************************************************************************
<CAPTION>
CURRENT <F**> GUARANTEED <F*>
PREMS ------------ ------------ ------------ ------------ ------------ ------------
ACCUM CASH SURR CASH DEATH CASH SURR CASH DEATH
YEAR @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
---- ----- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 6066 5182 5413 100000 4869 5100 100000
2 12435 10576 11038 100000 9962 10424 100000
3 19123 16188 16881 100000 15293 15987 100000
4 26145 22054 22979 100000 20878 21802 100000
5 33518 28202 29357 100000 26729 27885 100000
6 41259 34931 36041 100000 33143 34253 100000
7 49388 42064 43035 103318 39952 40922 100000
8 51858 44110 44757 104358 41632 42279 100000
9 54450 46223 46546 105444 43343 43667 100000
10 57173 48406 48406 106585 45082 45082 100000
11 60032 50495 50495 108118 46526 46526 100000
12 63033 52676 52676 109726 47999 47999 100000
13 66185 54941 54941 111389 49503 49503 100363
14 69494 57301 57301 113120 51039 51039 100757
15 72969 59762 59762 114922 52607 52607 101164
16 76617 62309 62309 116763 54207 54207 101579
17 80448 64949 64949 118652 55834 55834 102001
18 84471 67681 67681 120592 57487 57487 102428
19 88694 70505 70505 122585 59158 59158 102856
20 93129 73428 73428 124646 60845 60845 103286
25 118859 89579 89579 136074 69484 69484 105550
30 151697 108449 108449 149453 78313 78313 107923
<FN>
<F*>THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES
<F**> THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE RATES
AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT COMBINATION OF
PREMIUMS AND BENEFITS SHOWN. THESE VALUES ALSO ARE BASED ON A POLICY ISSUE
DATE OF JANUARY 1, FOR PURPOSES OF DETERMINING DIVIDEND AMOUNTS.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY,
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A
NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY POLICYOWNER,
AND THE INVESTMENT RESULTS FOR FUNDS OF GENERAL AMERICAN CAPITAL COMPANY,
VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE PRODUCTS FUND II, AND VAN
ECK WORLDWIDE INSURANCE TRUST. THE CASH VALUE, CASH SURRENDER VALUE AND DEATH
BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF
RETURN AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE
MADE BY THE COMPANY, WALNUT STREET SECURITIES, GENERAL AMERICAN CAPITAL
COMPANY, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE PRODUCTS FUND II,
VAN ECK WORLDWIDE INSURANCE TRUST, OR ANY REPRESENTATIVE THEREOF, THAT THIS
HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED OVER
ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS INDICATED
AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY ANNIVERSARIES.
ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE COMPANY.
</TABLE>
<PAGE> 120
GENERAL AMERICAN LIFE INSURANCE CO. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT $100000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT LEVEL (OPTION A) ANNUAL PREMIUM $ 2180.82
<TABLE>
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL GROSS
ANNUAL RATE OF RETURN @ 12% (NET RATE @ 10.60%)
******************************************************************************************************************
<CAPTION>
CURRENT <F**> GUARANTEED <F*>
PREMS ------------ ------------ ------------ ------------ ------------ ------------
ACCUM CASH SURR CASH DEATH CASH SURR CASH DEATH
YEAR @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
---- ----- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2290 1957 2044 100000 1623 1710 100000
2 4694 4085 4259 100000 3398 3573 100000
3 7219 6393 6655 100000 5341 5603 100000
4 9870 8926 9275 100000 7470 7819 100000
5 12653 11723 12160 100000 9803 10239 100000
6 15575 14929 15348 100000 12468 12887 100000
7 18644 18499 18865 100000 15415 15782 100000
8 21866 22478 22757 100000 18671 18950 100000
9 25249 26902 27059 100000 22263 22420 100000
10 28802 31816 31816 100000 26223 26223 100000
11 32532 37258 37258 100000 30403 30403 100000
12 36448 43302 43302 100000 35004 35004 100000
13 40560 50012 50012 100000 40084 40084 100000
14 44878 57478 57478 100000 45708 45708 100000
15 49412 65794 65794 100000 51950 51950 100000
16 54172 75052 75052 100000 58895 58895 100000
17 59171 85352 85352 109251 66644 66644 100000
18 64419 96751 96751 121907 75317 75317 100000
19 69930 109366 109366 135614 85029 85029 105435
20 75716 123329 123329 150461 95738 95738 116801
25 109288 218816 218816 253826 167473 167473 194269
30 152136 377608 377608 404041 283601 283601 303453
<FN>
<F*>THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES
<F**> THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE RATES
AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT COMBINATION OF
PREMIUMS AND BENEFITS SHOWN. THESE VALUES ALSO ARE BASED ON A POLICY ISSUE
DATE OF JANUARY 1, FOR PURPOSES OF DETERMINING DIVIDEND AMOUNTS.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY,
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A
NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY POLICYOWNER,
AND THE INVESTMENT RESULTS FOR FUNDS OF GENERAL AMERICAN CAPITAL COMPANY,
VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE PRODUCTS FUND II, AND VAN
ECK WORLDWIDE INSURANCE TRUST. THE CASH VALUE, CASH SURRENDER VALUE AND DEATH
BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF
RETURN AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE
MADE BY THE COMPANY, WALNUT STREET SECURITIES, GENERAL AMERICAN CAPITAL
COMPANY, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE PRODUCTS FUND II,
VAN ECK WORLDWIDE INSURANCE TRUST, OR ANY REPRESENTATIVE THEREOF, THAT THIS
HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED OVER
ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS INDICATED
AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY ANNIVERSARIES.
ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE COMPANY.
</TABLE>
<PAGE> 121
GENERAL AMERICAN LIFE INSURANCE CO. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT $100000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT LEVEL (OPTION B) ANNUAL PREMIUM $ 5777.00
<TABLE>
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL GROSS
ANNUAL RATE OF RETURN @ 12% (NET RATE @ 10.60%)
******************************************************************************************************************
<CAPTION>
CURRENT <F**> GUARANTEED <F*>
PREMS ------------ ------------ ------------ ------------ ------------ ------------
ACCUM CASH SURR CASH DEATH CASH SURR CASH DEATH
YEAR @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
---- ----- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 6066 5489 5720 105720 5149 5380 105380
2 12435 11534 11996 111996 10829 11292 111292
3 19123 18181 18874 118874 17094 17787 117787
4 26145 25518 26443 126443 24003 24927 124927
5 33518 33633 34788 134788 31619 32775 132775
6 41259 42896 44005 144005 40292 41401 141401
7 49388 53204 54174 154174 49909 50879 150879
8 57923 64668 65408 165408 60554 61293 161293
9 66885 77391 77807 177807 72316 72732 172732
10 76296 91495 91495 191495 85294 85294 185294
11 86176 107100 107100 207100 99091 99091 199091
12 96551 124391 124391 224391 114248 114248 214248
13 107444 143526 143526 243526 130903 130903 230903
14 118882 164719 164719 264719 149208 149208 249208
15 130892 188196 188196 288196 169330 169330 269330
16 143503 214169 214169 314169 191448 191448 291448
17 156744 242912 242912 342912 215759 215759 315759
18 170647 274715 274715 374715 242474 242474 342474
19 185245 309903 309903 409903 271827 271827 371827
20 200573 348846 348846 448846 304075 304075 404075
25 289505 615524 615524 715524 520015 520015 620015
30 403008 1058447 1058447 1158447 866517 866517 966517
<FN>
<F*>THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES
<F**> THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE RATES
AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT COMBINATION OF
PREMIUMS AND BENEFITS SHOWN. THESE VALUES ALSO ARE BASED ON A POLICY ISSUE
DATE OF JANUARY 1, FOR PURPOSES OF DETERMINING DIVIDEND AMOUNTS.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY,
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A
NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY POLICYOWNER,
AND THE INVESTMENT RESULTS FOR FUNDS OF GENERAL AMERICAN CAPITAL COMPANY,
VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE PRODUCTS FUND II, AND VAN
ECK WORLDWIDE INSURANCE TRUST. THE CASH VALUE, CASH SURRENDER VALUE AND DEATH
BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF
RETURN AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE
MADE BY THE COMPANY, WALNUT STREET SECURITIES, GENERAL AMERICAN CAPITAL
COMPANY, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE PRODUCTS
FUND II, VAN ECK WORLDWIDE INSURANCE TRUST, OR ANY REPRESENTATIVE THEREOF,
THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR, OR
SUSTAINED OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS INDICATED
AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY ANNIVERSARIES.
ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE COMPANY.
</TABLE>
<PAGE> 122
GENERAL AMERICAN LIFE INSURANCE CO. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT $100000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT LEVEL (OPTION C) ANNUAL PREMIUM $ 5777.00
<TABLE>
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL GROSS
ANNUAL RATE OF RETURN @ 12% (NET RATE @ 10.60%)
******************************************************************************************************************
<CAPTION>
CURRENT <F**> GUARANTEED <F*>
PREMS ------------ ------------ ------------ ------------ ------------ ------------
ACCUM CASH SURR CASH DEATH CASH SURR CASH DEATH
YEAR @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
---- ----- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 6066 5497 5728 100000 5175 5406 100000
2 12435 11564 12026 100000 10915 11377 100000
3 19123 18260 18953 100000 17285 17979 100000
4 26145 25679 26604 100000 24361 25285 100000
5 33518 33916 35071 100000 32223 33379 100000
6 41259 43334 44443 109898 41238 42347 104715
7 49388 53784 54754 131454 51189 52160 125224
8 51858 59580 60227 140431 56384 57031 132978
9 54450 65924 66247 150075 62012 62336 141214
10 57173 72870 72870 160452 68107 68107 149964
11 60032 80396 80396 172140 74384 74384 159268
12 63033 88703 88703 184771 81206 81206 169156
13 66185 97851 97851 198385 88622 88622 179675
14 69494 107939 107939 213086 96681 96681 190861
15 72969 119068 119068 228967 105436 105436 202754
16 76617 131304 131304 246054 114941 114941 215390
17 80448 144763 144763 264460 125251 125251 228815
18 84471 159555 159555 284290 136424 136424 243076
19 88694 175801 175801 305659 148516 148516 258220
20 93129 193651 193651 328729 161592 161592 274307
25 118859 312700 312700 475008 244500 244500 371408
30 151697 501013 501013 690446 365097 365097 503141
<FN>
<F*>THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES
<F**> THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE RATES
AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT COMBINATION OF
PREMIUMS AND BENEFITS SHOWN. THESE VALUES ALSO ARE BASED ON A POLICY ISSUE
DATE OF JANUARY 1, FOR PURPOSES OF DETERMINING DIVIDEND AMOUNTS.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY,
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A
NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY POLICYOWNER,
AND THE INVESTMENT RESULTS FOR FUNDS OF GENERAL AMERICAN CAPITAL COMPANY,
VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE PRODUCTS FUND II, AND VAN
ECK WORLDWIDE INSURANCE TRUST. THE CASH VALUE, CASH SURRENDER VALUE AND DEATH
BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF
RETURN AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE
MADE BY THE COMPANY, WALNUT STREET SECURITIES, GENERAL AMERICAN CAPITAL
COMPANY, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE PRODUCTS FUND II,
VAN ECK WORLDWIDE INSURANCE TRUST, OR ANY REPRESENTATIVE THEREOF, THAT THIS
HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED OVER
ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS INDICATED
AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY ANNIVERSARIES.
ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE COMPANY.
</TABLE>
<PAGE> 123
APPENDIX B
Target Premium Factors per Thousand of Face Amount
Male Policy
Age Factor Age Factor
- --- ------ --- ------
0 14.29 45 57.77
1 14.18 46 59.67
2 14.58 47 61.62
3 15.01 48 63.62
4 15.46 49 65.70
5 15.94 50 67.83
6 16.44 51 70.04
7 16.96 52 72.31
8 17.52 53 74.64
9 18.11 54 77.04
10 18.73 55 79.50
11 19.38 56 82.02
12 20.05 57 84.61
13 20.74 58 87.28
14 21.44 59 90.03
15 22.14 60 92.89
16 22.84 61 95.86
17 23.55 62 98.94
18 24.25 63 102.14
19 24.97 64 105.44
20 25.71 65 108.86
21 26.46 66 112.39
22 27.25 67 116.07
23 28.08 68 119.93
24 28.94 69 124.02
25 29.84 70 128.38
26 30.79 71 133.05
27 31.79 72 138.03
28 32.83 73 143.31
29 33.93 74 148.87
30 35.06 75 154.68
31 36.25 76 160.76
32 37.48 77 167.16
33 38.75 78 173.98
34 40.08 79 181.36
35 41.45 80 189.45
36 42.87 81 198.36
37 44.34 82 208.15
38 45.85 83 218.81
39 47.41 84 230.23
40 49.02 85 242.34
41 50.68 86 255.11
42 52.38 87 268.60
43 54.13 88 282.97
44 55.92 89 298.61
90 316.23
B-1
<PAGE> 124
APPENDIX B
Target Premium Factors per Thousand of Face Amount
Female Policy
Age Factor Age Factor
- --- ------ --- ------
0 11.75 45 49.20
1 11.75 46 50.80
2 12.09 47 52.44
3 12.44 48 54.13
4 12.82 49 55.87
5 13.21 50 57.66
6 13.63 51 59.50
7 14.06 52 61.39
8 14.51 53 63.34
9 14.99 54 65.33
10 15.48 55 67.36
11 16.00 56 69.45
12 16.54 57 71.59
13 17.10 58 73.81
14 17.67 59 76.13
15 18.26 60 78.54
16 18.87 61 81.08
17 19.49 62 83.72
18 20.13 63 86.47
19 20.80 64 89.29
20 21.48 65 92.19
21 22.19 66 95.17
22 22.93 67 98.24
23 23.69 68 101.44
24 24.48 69 104.83
25 25.30 70 108.46
26 26.15 71 112.36
27 27.04 72 116.56
28 27.95 73 121.04
29 28.90 74 125.81
30 29.89 75 130.83
31 30.90 76 136.14
32 31.96 77 141.78
33 33.05 78 147.85
34 34.18 79 154.47
35 35.36 80 161.78
36 36.57 81 169.89
37 37.83 82 178.88
38 39.12 83 188.78
39 40.46 84 199.60
40 41.83 85 211.36
41 43.23 86 224.13
42 44.67 87 238.06
43 46.14 88 253.36
44 47.65 89 270.44
90 290.05
B-2
<PAGE> 125
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
ISSUED BY
GENERAL AMERICAN LIFE INSURANCE COMPANY
700 Market Street
St. Louis, MO 63101
(314) 231-1700
This Prospectus describes an individual flexible premium variable life
insurance Policy ("the Policy") offered by General American Life Insurance
Company ("General American" or "the Company"). The Policy is designed to
provide lifetime insurance protection to age 100 and at the same time provide
maximum flexibility to vary premium payments and change the level of death
benefits payable under the Policy. This flexibility allows an Owner to
provide for changing insurance needs under a single insurance policy. An
Owner also has the opportunity to allocate Net Premiums among several
investment portfolios with different investment objectives.
The Policy provides for: (1) a Cash Surrender Value that can be
obtained by surrendering the Policy; (2) Policy Loans; and (3) a death
benefit payable at the Insured's death. As long as a Policy remains in force,
the death benefit will not be less than the current Face Amount of the
Policy. A Policy will remain in force so long as its Cash Surrender Value is
sufficient to pay certain monthly charges imposed in connection with the
Policy.
After the end of the "Right to Examine Policy" period, Net Premiums may
be allocated to one or more of the Divisions of General American Separate
Account Eleven ("the Separate Account") or in certain contracts to General
American's General Account. If Net Premiums are allocated to the Separate
Account, the amount of the Cash Value will vary to reflect the investment
performance of the investment Divisions selected by the Owner, the Policy may
lapse, and, depending on the death benefit option elected, the amount of the
death benefit above the minimum may also vary with that investment
performance. The Owner bears the entire investment risk for all amounts
allocated to the Separate Account; there is no minimum guaranteed Cash Value.
Divisions of the Separate Account invest in corresponding Funds from
the following open-end, diversified management investment companies:
Russell Insurance Funds, Inc.
Multi-Style Equity Fund
Aggressive Equity Fund
Non-U.S. Fund
Core Bond Fund
General American Capital Company
Money Market Fund
A full description of the Funds, including the investment policies,
restrictions, risks, and charges is contained in the prospectus of each Fund.
It may not be advantageous to purchase a Policy as a replacement for
another type of life insurance or as a means to obtain additional insurance
protection if the purchaser already owns another flexible premium variable
life insurance policy.
This Prospectus must be accompanied by current prospectuses for Russell
Insurance Funds, Inc. and General American Capital Company.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Please read this Prospectus carefully and retain it for future reference.
The date of this Prospectus is April 29, 1996.
The Policy is not available in all states.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN
WHICH SUCH OFFERING MAY NOT BE LAWFULLY MADE. NO DEALER, SALESMAN, OR OTHER
PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN
CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON.
<PAGE> 126
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
<S> <C>
DEFINITIONS 1
SUMMARY 2
THE COMPANY AND THE SEPARATE ACCOUNT 6
The Company 6
The Separate Account 6
Russell Insurance Funds, Inc. 6
General American Capital Company 7
POLICY BENEFITS 8
Death Benefit 8
Cash Value 10
POLICY RIGHTS 11
Loans 11
Surrender, Partial Withdrawals and Pro Rata Surrender 13
Transfers 15
Dollar Cost Averaging 15
Right to Examine Policy 16
Payment of Benefits at Maturity 16
PAYMENT AND ALLOCATION OF PREMIUMS 17
Issuance of a Policy 17
Premiums 17
Allocation of Net Premiums and Cash Value 18
Policy Lapse and Reinstatement 18
CHARGES AND DEDUCTIONS 19
Premium Expense Charges 19
Monthly Deduction 20
Contingent Deferred Sales Charge 21
Separate Account Charges 22
DIVIDENDS 22
THE GENERAL ACCOUNT 23
GENERAL MATTERS 25
DISTRIBUTION OF THE POLICIES 28
FEDERAL TAX MATTERS 28
UNISEX REQUIREMENTS UNDER MONTANA LAW 31
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS 31
VOTING RIGHTS 31
STATE REGULATION OF THE COMPANY 32
MANAGEMENT OF THE COMPANY 33
LEGAL MATTERS 36
LEGAL PROCEEDINGS 36
EXPERTS 36
ADDITIONAL INFORMATION 36
FINANCIAL STATEMENTS 36
APPENDIX A A-1
APPENDIX B B-1
</TABLE>
<PAGE> 127
DEFINITIONS
Attained Age - The Issue Age of the Insured plus the number of
completed Policy Years.
Beneficiary - the person(s) named in the application or by later
designation to receive Policy proceeds in the event of the Insured's death. A
Beneficiary may be changed as set forth in the Policy and this Prospectus.
Cash Value - The total amount that a Policy provides for investment at
any time. It is equal to the total of the amounts credited to the Owner in
the Separate Account, the Loan Account, and in certain contracts, the General
Account.
Cash Surrender Value - The Cash Value of a Policy on the date of
surrender, less any Indebtedness, and less any surrender charges.
Division - A subaccount of the Separate Account which invests
exclusively in the shares of a corresponding Fund of Russell Insurance Funds,
Inc. ("Russell Insurance Funds") or General American Capital Company.
Effective Date - The date as of which insurance coverage begins under a
policy.
Face Amount - The minimum death benefit under the Policy so long as the
Policy remains in force.
Fund - A separate investment portfolio of Russell Insurance Funds or
General American Capital Company.
General Account -The assets of the Company other than those allocated
to the Separate Account or any other separate account. The Loan Account is
part of the General Account.
Home Office - The service office of General American Life Insurance
Company, the mailing address of which is P.O. Box 14490, St. Louis, Missouri
63178.
Indebtedness - The sum of all unpaid Policy Loans and accrued interest
on loans.
Insured - The person whose life is insured under the Policy.
Investment Start Date -The date the initial premium is applied to the
General Account and/or the Divisions of the Separate Account. This date is
the later of the Issue Date or the date the initial premium is received at
General American's Home Office.
Issue Age - The Insured's age at his or her nearest birthday as of the
date the Policy is issued.
Issue Date - The date from which Policy Anniversaries, Policy Years,
and Policy Months are measured.
Loan Account - The account of the Company to which amounts securing
Policy Loans are allocated. The Loan Account is part of General American's
General Account.
Loan Subaccount - A Loan Subaccount exists for the General Account and
for each Division of the Separate Account. Any Cash Value transferred to the
Loan Account will be allocated to the appropriate Loan Subaccount to reflect
the origin of the Cash Value. At any point in time, the Loan Account will
equal the sum of all the Loan Subaccounts.
Maturity Date - The Policy Anniversary on which the Insured reaches
Attained Age 100.
Monthly Anniversary - The same date in each succeeding month as the
Issue Date except that whenever the Monthly Anniversary falls on a date other
than a Valuation Date, the Monthly Anniversary will be deemed the next
Valuation Date. If any Monthly Anniversary would be the 29th, 30th, or 31st
day of a month that does not have that number of days, then the Monthly
Anniversary will be the last day of that month.
Net Premium - The premium less the premium expense charges (consisting
of the sales charge and the premium tax charge).
1
<PAGE> 128
Owner - The Owner of a Policy, as designated in the application or as
subsequently changed.
Policy - The flexible premium variable life insurance Policy offered by
the Company and described in this Prospectus.
Policy Anniversary - The same date each year as the Issue Date.
Policy Month - A month beginning on the Monthly Anniversary.
Policy Year - A period beginning on a Policy Anniversary and ending on
the day immediately preceding the next Policy Anniversary.
SEC - The United States Securities and Exchange Commission.
Separate Account - General American Separate Account Eleven, a separate
investment account established by the Company to receive and invest the Net
Premiums paid under the Policy, and certain other variable life policies, and
allocated by the Owner to provide variable benefits.
Valuation Date - Each day that the New York Stock Exchange is open for
trading and the Company is open for business. The Company is not open for
business the day after Thanksgiving.
Valuation Period - The period between two successive Valuation Dates,
commencing at 4:00 p.m. (Eastern Standard Time) on a Valuation Date and
ending 4:00 p.m. on the next succeeding Valuation Date.
SUMMARY
The following summary of Prospectus information should be read in
conjunction with the detailed information appearing elsewhere in this
Prospectus. Unless otherwise indicated, the description of the Policies
contained in this Prospectus assumes that a Policy is in force and that there
is no outstanding Indebtedness.
The Policy. Under the flexible premium variable life insurance Policy
described in this Prospectus, the Owner may, subject to certain limitations,
make premium payments in any amount and at any frequency. The Policy is a
life insurance contract with death benefits, Cash Value, surrender rights,
Policy Loan privileges, and other features traditionally associated with life
insurance. It is a "flexible premium" Policy because, unlike traditional
insurance policies, there is no fixed schedule for premium payments.
Although the Owner may establish a schedule of premium payments ("planned
premium payments"), failure to make the planned premium payments will not
necessarily cause a Policy to lapse nor will making the planned premium
payments guarantee that a Policy will remain in force to maturity. Thus, an
Owner may, but is not required to, pay additional premiums. This flexibility
permits an Owner to provide for changing insurance needs within a single
insurance policy.
The Policy is a "variable" Policy because, unlike the fixed benefits
under an ordinary life insurance contract, to the extent that Net Premiums
are allocated to the Separate Account, the Cash Value and, under certain
circumstances, the death benefit under a Policy may increase or decrease
depending upon the investment performance of the Divisions of the Separate
Account to which the Owner has allocated Net Premium payments. However, so
long as a Policy's Cash Surrender Value continues to be sufficient to pay the
monthly deductions, an Owner is guaranteed a minimum death benefit equal to
the Face Amount of his or her Policy, less any outstanding Indebtedness.
A Policy will lapse (and terminate without value) when the Cash
Surrender Value is insufficient to pay the next monthly deduction and a grace
period of 62 days expires without an adequate payment being made by the
Owner. (See Payment and Allocation of Premiums - Policy Lapse and
Reinstatement.)
The Separate Account. After the end of the "Right to Examine Policy"
period, the Owner may allocate the Net Premiums to the Separate Account and,
if it is available, to the General Account. Amounts allocated to the
Separate Account are further allocated to one or more Divisions. Assets of
each Division are invested at net asset value in shares of a corresponding
Fund. (See The Company and the Separate Account.) An Owner may change future
allocations of Net Premiums at any time.
2
<PAGE> 129
The option offered in connection with the Policies to allocate Net
Premiums or to transfer Cash Value to the General Account may not be made
available, at the Company's discretion, under all Policies. Further, the
option may be limited with respect to some Policies. The Company may, from
time to time, adjust the extent to which future premiums may be allocated to
the General Account in regard to any or all outstanding Policies. Such
adjustments may not be uniform as to all Policies.
Until the end of the "Right to Examine Policy" period (See Policy
Rights - Right to Examine Policy), all Net Premiums automatically will be
allocated to the Division that invests in the Money Market Fund. (See
Payment and Allocation of Premiums - Allocation of Net Premiums and Cash
Value.)
To the extent Net Premiums are allocated to the Divisions of the
Separate Account, the Cash Value will, and the death benefit may, vary with
the investment performance of the chosen Division. To the extent Net
Premiums are allocated to the General Account, the Cash Value will accrue
interest at a guaranteed minimum rate. (See The General Account.) Thus,
depending upon the allocation of Net Premiums, investment risk over the life
of a Policy may be borne by the Owner, by the Company, or by both.
Subject to certain restrictions, an Owner may transfer Cash Values
among the Divisions of the Separate Account or, if available, between the
Separate Account and the General Account. Currently, no charge is assessed
for transfers. The Company reserves the right to revoke or modify the
transfer privilege. (See Policy Rights - Transfers.)
Charges and Deductions. A premium expense charge will be deducted from
each premium payment prior to allocation. The premium expense charge
consists of a sales charge and a charge to cover premium taxes. The sales
charge will never exceed 5.0% and is currently 5.0% in Policy years one
through ten and 2.25% in Policy years past Policy year ten. The charge to
cover premium taxes is 2.5%. (See Charges and Deductions - Premium Expense
Charges.)
A Contingent Deferred Sales Charge to compensate for sales expenses
will also be assessed against the Cash Value under a Policy upon a surrender,
a lapse, a partial withdrawal, or pro rata surrender. The Contingent
Deferred Sales Charge will never exceed 4% of premiums paid. (See Policy
Rights - Surrender, Partial Withdrawals, and Pro Rata Surrender; Policy
Benefits - Death Benefit; and Charges and Deductions - Contingent Deferred
Sales Charge.) Reductions in the Contingent Deferred Sales Charge are
available in some situations. (See Reduction of Charges.)
On each Monthly Anniversary, the Cash Value will be reduced by a
monthly deduction. The monthly deduction includes an administrative charge of
$4 per month for each Policy Month. (See Charges and Deductions - Monthly
Deduction.) A monthly charge is also made for the cost of insurance, and the
cost of any additional benefits provided by rider. (See Charges and
Deductions - Monthly Deduction.)
A daily charge based on an effective annual charge of .70% of the net
assets of each Division of the Separate Account will be imposed for the
Company's assumption of certain mortality and expense risks incurred in
connection with the Policies. (See Charges and Deductions - Separate Account
Charges.)
The Company may make a charge for any taxes or economic burden
resulting from the application of the tax laws that it determines to be
properly attributable to the Separate Account or to the Policy. (See Federal
Tax Matters.)
The operating expenses of the Separate Account are paid by General
American. Investment management and advisory fees and other operating
expenses of the Funds are paid by the Funds and are reflected in the value of
the assets of the corresponding Division of the Separate Account. For a
description of these charges, see Charges and Deductions-Separate Account
Charges.
Currently, there are no transaction charges to cover the administrative
costs of processing partial withdrawals or transfers of Cash Value between
Divisions of the Separate Account. In contracts with the General Account
option, there are no transaction charges to cover the administrative costs of
processing transfers of Cash Value between the Separate and General Accounts.
However, the Company reserves the right to impose such charges in the future.
In addition, transfers and withdrawals are subject to restrictions relative
to amount and frequency. (See Payment and Allocation of Premiums - Allocation
of Net Premiums and Cash Value; Policy Rights - Surrender, Partial
Withdrawals, and Pro Rata Surrender; and The General Account.)
3
<PAGE> 130
Premiums. An Owner has considerable flexibility concerning the amount
and frequency of premium payments. A Policy will not become effective until
the Owner has paid an initial premium equal to one-twelfth (1/12) of the
"Minimum Premium" for the Policy. This amount will be different for each
Policy. Thereafter, an Owner may, subject to certain restrictions, make
premium payments in any amount and at any frequency. The Owner may also
determine a planned premium payment schedule. The schedule will provide for a
premium payment of a level amount at a fixed interval over a specified period
of time. An Owner need not, however, adhere to the planned premium payment
schedule. For policies issued as a result of a term conversion from certain
General American term policies, the Company requires the Owner to pay an
initial premium, which combined with conversion credits given, will equal one
full "Minimum Premium" for the Policy. (See Payment and Allocation of
Premiums.)
A Policy will lapse only when the Cash Surrender Value is insufficient
to pay the next monthly deduction (See Charges and Deductions - Monthly
Deduction.) and a grace period expires without a sufficient payment by the
Owner. (See Payment and Allocation of Premiums - Policy Lapse and
Reinstatement.)
Death Benefit. A death benefit is payable to the named Beneficiary when
the Insured under a Policy dies. Three death benefit options are available.
Under Death Benefit Option A, the death benefit is the Face Amount of the
Policy or, if greater, the applicable percentage of Cash Value. Under Death
Benefit Option B, the death benefit is the Face Amount of the Policy plus the
Cash Value or, if greater, the applicable percentage of Cash Value. Under
Death Benefit Option C, the death benefit is the Face Amount of the Policy
or, if greater, the Cash Value multiplied by the Attained Age factor. So long
as the Policy remains in force, the minimum death benefit under any death
benefit option will be at least the current Face Amount. The death benefit
will be increased by any unpaid dividends determined prior to the Insured's
death and by the amount of the cost of insurance for the portion of the month
from the date of death to the end of the month, and reduced by any
outstanding Indebtedness. The death benefit will be paid according to the
settlement options available at the time of death. (See Policy Benefits -
Death Benefit.)
The minimum Face Amount at issue is $50,000 under the Company's current
rules. Subject to certain restrictions, the Owner may change the Face Amount
and the death benefit option. In certain cases evidence of insurability may
be required. (See Change in Death Benefit Option, and Change In Face Amount.)
Additional insurance benefits offered under the Policy include a waiver
of specified premium rider, a waiver of monthly deduction rider, and an
increasing benefit option. (See General Matters - Additional Insurance
Benefits.) The cost of these additional insurance benefits will be deducted
from the Cash Value as part of the monthly deduction. (See Charges and
Deductions - Monthly Deduction.)
Cash Value. The Policy provides for a Cash Value equal to the total of
the amounts credited to the Owner in the Separate Account, the Loan Account
(securing Policy Loans) and in certain contracts, the General Account. A
Policy's Cash Value will reflect the amount and frequency of Net Premium
payments, the investment performance of any selected Divisions of the
Separate Account, any Policy Loans, any partial withdrawals, and the charges
imposed in connection with the Policy. (See Policy Benefits - Cash Value.)
There is no minimum guaranteed Cash Value.
Policy Loans. After the first Policy Anniversary, an Owner may borrow
against the Cash Value of a Policy. The maximum amount that may be borrowed
under a Policy ("the Loan Value") is the Cash Value of the Policy on the date
the loan request is received, less loan interest to the next Policy
Anniversary, less any outstanding Indebtedness, less any surrender charges to
the next Policy Anniversary, and less monthly deductions to the next loan
interest due date. Loan interest is payable on each Policy Anniversary and
all outstanding Indebtedness will be deducted from proceeds payable at the
Insured's death, upon maturity, upon the exercise of a settlement option, or
upon surrender.
A Policy loan will be allocated among the General Account (if
available) and the various Divisions of the Separate Account. When a loan is
allocated to the Divisions of the Separate Account, a portion of the Policy's
Cash Value in the Divisions of the Separate Account sufficient to secure the
loan will be transferred to the Loan Account as security for the loan.
Therefore, a loan may have impact on the Policy's Cash Value even if it is
repaid. A Policy Loan may be repaid in whole or in part at any time while the
Policy is in force. (See Policy Rights - Loans.) Loans taken from, or secured
by, a Policy may have Federal income tax consequences. (See Federal Tax
Matters.)
Surrender, Partial Withdrawals, and Pro Rata Surrender. At any time
that a Policy is in force, an Owner may elect to surrender the Policy and
receive its Cash Surrender Value plus the value of any dividends determined
prior to the surrender. After the first year, an Owner may also request a
partial withdrawal of the Cash Surrender Value of the Policy. When the death
benefit is not based on an applicable percentage of the Cash Value, a partial
withdrawal reduces the death
4
<PAGE> 131
benefit payable under the Policy by an amount equal to the reduction in the
Policy's Cash Value. An Owner may also request a pro rata surrender of the
Policy. (See Policy Rights - Surrender, Partial Withdrawals, and Pro Rata
Surrender.) A surrender, partial withdrawal, or pro rata surrender may have
Federal income tax consequences. (See Federal Tax Matters.)
Right to Examine Policy. The Owner has a limited right to return a
Policy for cancellation within 20 days after receiving it (30 days if the
Owner is a resident of California and is age 60 or older), or within 45 days
after the application is signed, whichever is later. If a Policy is canceled
within this time period, a refund will be paid which will equal all premiums
paid under the Policy except in Kansas. The Owner also has a similar right to
cancel a requested increase in Face Amount. Upon cancellation of an increase,
the additional charges deducted in connection with the increase will be added
to the Cash Value. (See Policy Rights - Right to Examine Policy.)
Illustrations of Death Benefits and Cash Surrender Values.
Illustrations on pages A-2 to A-10 in Appendix A show how death benefits and
Cash Surrender Values may vary based on certain rate of return assumptions
and how these benefits compare with amounts which would accumulate if
premiums were invested to earn interest at 5% compounded annually. If a
Policy is surrendered in the early Policy Years the Cash Surrender Value
payable will be low as compared to premiums accumulated at interest, and
consequently the insurance protection provided prior to surrender will be
costly. You may make a written request for a projection of illustrated
future Cash Values and death benefits for a nominal fee not to exceed $25.00.
Tax Consequences of the Policy. If a Policy is issued on the basis of a
standard premium class or on a guaranteed or simplified issue basis, while
limited guidance exists, the Company believes that the Policy should qualify
as a life insurance contract for Federal income tax purposes. However, if a
Policy is issued on a substandard basis, it is unclear whether or not such a
Policy would qualify as a life insurance contract for Federal income tax
purposes. Assuming that the Policy qualifies as a life insurance contract for
Federal income tax purposes, the Company believes the Cash Value of the
Policy should be subject to the same Federal income tax treatment as the Cash
Value of a conventional fixed-benefit contract. If so, the Owner is not
considered to be in constructive receipt of the Cash Value under the Policy
until there is a distribution. A change of Owners, a surrender, a partial
withdrawal, a pro rata surrender, a lapse with outstanding Indebtedness, or
an exchange may have tax consequences, such as making the Policy a modified
endowment contract, depending on the particular circumstances. (See Federal
Tax Matters.)
A Policy may be treated as a "modified endowment contract" depending
upon the amount of premiums paid in relation to the death benefit. If the
Policy is a modified endowment contract, then all pre-death distributions,
including Policy Loans and due but unpaid loan interest, will be treated
first as a distribution of taxable income and then as a return of basis or
investment in the contract. In addition, prior to age 59 1/2 taxable income
from such distributions generally will be subject to a 10% additional tax. A
prospective Owner should contact a competent tax advisor before purchasing a
Policy to determine the circumstances under which the Policy would be a
modified endowment contract, and before paying any additional premiums or
making any other change to, including an exchange of, a Policy to determine
whether such premium or change would cause the Policy (or the new Policy in
the case of an exchange) to be treated as a modified endowment contract.
If the Policy is not a modified endowment contract, distributions
generally will be treated first as a return of basis or investment in the
contract and then as disbursing taxable income. Moreover, loans will not be
treated as distributions. Finally, neither distributions nor loans from a
Policy that is not a modified endowment contract are subject to the 10.0%
additional tax. (See Federal Tax Matters.)
Dividends. While a Policy is in force, it may share in the divisible
surplus of the Company. Each year the Company will determine the share of
divisible surplus accruing to a Policy and will distribute the surplus as
dividend. The Company is not obligated to pay dividends on the Policies. (See
Dividends.)
This Prospectus describes only those aspects of the Policy that relate
to the Separate Account, except where General Account matters are
specifically mentioned. For a brief summary of the aspects of the Policy
relating to the General Account, see The General Account.
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<PAGE> 132
THE COMPANY AND THE SEPARATE ACCOUNT
The Company
General American Life Insurance Company ("General American" or "the
Company") is a mutual life insurance company originally incorporated as a
stock company under the laws of Missouri in 1933, and which began operations
as a mutual company in 1936. General American is principally engaged in
issuing individual and group life and health insurance policies and annuity
contracts. As of December 31,1994, it had assets of more than $9.6 billion.
It is admitted to do business in 49 states, the District of Columbia, and in
ten Canadian provinces. The principal offices of General American are at 700
Market Street, St. Louis, Missouri 63101. The mailing address of General
American's service center ("the Home Office") is P.O. Box 14490, St. Louis,
Missouri 63178.
The Separate Account
General American Life Insurance Company Separate Account Eleven ("the
Separate Account") was established by General American as a separate
investment account on January 24, 1985 under Missouri law. The Separate
Account will receive and invest the Net Premiums paid under this Policy and
allocated to it. In addition, the Separate Account currently receives and
invests Net Premiums for other classes of flexible premium variable life
insurance policies and might do so for additional classes in the future.
The Separate Account has been registered with the SEC as a unit
investment trust under the Investment Company Act of 1940 ("the 1940 Act")
and meets the definition of a "separate account" under Federal securities
laws. Registration with the SEC does not involve supervision of the
management or investment practices or policies of the Separate Account or
General American by the SEC.
The Separate Account currently is divided into seventeen divisions. The
Divisions which are available under the Policy are four Divisions which
invest in corresponding Funds from Russell Insurance Funds and one Division
which invests in a corresponding Fund from General American Capital Company.
Income and both realized and unrealized gains or losses from the assets of
each Division of the Separate Account are credited to or charged against that
Division without regard to income, gains, or losses from any other Division
of the Separate Account or arising out of any other business General American
may conduct.
Although the assets of the Separate Account are the property of General
American, the assets in the Separate Account equal to the reserves and other
liabilities of the Separate Account are not chargeable with liabilities
arising out of any other business which General American may conduct. The
assets of the Separate Account are available to cover the general liabilities
of General American only to the extent that the Separate Account's assets
exceed its liabilities arising under the Policies. From time to time, the
Company may transfer to its General Account any assets of the Separate
Account that exceed the reserves and the Policy liabilities of the Separate
Account (which will always be at least equal to the aggregate Policy value
allocated to the Separate Account under the Policies). Before making any such
transfers, General American will consider any possible adverse impact the
transfer may have on the Separate Account.
Russell Insurance Funds
Russell Insurance Funds ("the Investment Company") is an open-end,
diversified management investment company which was incorporated in Maryland
on October 8, 1987. The assets of each Fund of the Investment Company are
managed by one or more investment advisory organizations (each, a "Money
Manager') researched and recommended by Frank Russell Company ("FRC"),
consultant to the Investment Company. FRC's wholly owned subsidiary, Frank
Russell Investment Management Company ("the Management Company"), provides
general management of the Investment Company. The Management Company
continuously monitors and evaluates the Money Managers and recommends their
engagement, replacement, or termination to the board of the Investment
Company based upon the consultation and advice of FRC.
The investment objectives and policies of each Fund are summarized below:
Multi-Style Equity Fund: The investment objective of the Fund
is to provide income and capital growth by investing principally in
equity securities.
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<PAGE> 133
Aggressive Equity Fund: The investment objective of the Fund
is to maximize total return primarily through capital appreciation
and by assuming a higher level of volatility than is ordinarily
expected from the Multi-Style Equity Fund, by investing in equity
securities.
Non-U.S. Fund: The investment objectives of the Fund are to
provide favorable total return and additional diversification for
United States investors by investing primarily in equity and
fixed-income securities of non-United States companies and
securities issued by non-United States governments.
Core Bond Fund: The investment objectives of the Fund are to
provide effective diversification against equities and a stable
level of cash flow by investing in fixed-income securities.
General American Capital Company
General American Capital Company ( the "Capital Company") is an
open-end, diversified management investment company which was incorporated in
Maryland on November 15, 1985, and commenced operations on October 1, 1987.
Only the Capital Company Fund described in this section of the Prospectus is
currently available as an investment choice for this Policy even though
additional Funds may be described in the prospectus for Capital Company.
Shares of Capital Company are currently offered to separate accounts
established by General American Life Insurance Company and affiliates. The
Capital Company's Investment Advisor is General American Investment
Management Company ("the Advisor"), a wholly-owned subsidiary of General
American Holding Company which, in turn is wholly owned by General American.
The Advisor selects investments for the Fund
The investment objectives and policies of the Fund are summarized
below:
The Money Market Fund: The investment objective of the Money
Market Fund is to obtain the highest level of current income which
is consistent with the preservation of capital and maintenance of
liquidity. The Fund invests primarily in high-quality, short-term
money market instruments. An investment in the Money Market Fund
is neither insured nor guaranteed by the U. S. Government.
There is no assurance that any of the Funds will achieve its stated
objective. A more detailed description of the Funds, their investment
policies, restrictions, risks, and charges is in the prospectuses for Russell
Insurance Funds and Capital Company, which must accompany or precede this
Prospectus and which should be read carefully.
Addition, Deletion, or Substitution of Investments
The Company reserves the right, subject to compliance with applicable
law, to make additions to, deletions from, or substitutions for the shares
that are held by the Separate Account or that the Separate Account may
purchase. The Company reserves the right to eliminate the shares of any of
the Funds and to substitute shares of another Fund of Russell Insurance
Funds, Capital Company, or of another registered open-end investment company
if the shares of a Fund are no longer available for investment or if in its
judgment further investment in any Fund becomes inappropriate in view of the
purposes of the Separate Account. The Company will not substitute any shares
attributable to an Owner's interest in a Division of the Separate Account
without notice to the Owner and prior approval of the SEC, to the extent
required by the 1940 Act or other applicable law. Nothing contained in this
Prospectus shall prevent the Separate Account from purchasing other
securities for other series or classes of policies, or from permitting a
conversion between series or classes of policies on the basis of requests
made by Owners.
The Company also reserves the right to establish additional Divisions
of the Separate Account, each of which would invest in a new Fund of Russell
Insurance Funds, Capital Company, or in shares of another investment company,
with a specified investment objective. New Divisions may be established when,
in the sole discretion of the Company, marketing needs or investment
conditions warrant. Any new Division will be made available to existing
Owners on a basis to be determined by the Company. To the extent approved by
the SEC, the Company may also eliminate or combine one or more Divisions,
substitute one Division for another Division, or transfer assets between
Divisions if, in its sole discretion, marketing, tax, or investment
conditions warrant.
In the event of a substitution or change, the Company may, if it
considers it necessary, make such changes in the Policy by appropriate
endorsement and offer conversion options required by law, if any. The Company
will notify all Owners of any such changes.
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<PAGE> 134
If deemed by the Company to be in the best interests of persons having
voting rights under the Policy, and to the extent any necessary SEC approvals
or Owner votes are obtained, the Separate Account may be: (a) operated as a
management company under the 1940 Act; (b) de-registered under that Act in
the event such registration is no longer required; or (c) combined with other
separate accounts of the Company. To the extent permitted by applicable law,
the Company may also transfer the assets of the Separate Account associated
with the Policy to another separate account.
POLICY BENEFITS
Death Benefit
As long as the Policy remains in force (See Payment and Allocation of
Premiums--Policy Lapse and Reinstatement), the Company will, upon receipt of
proof of the Insured's death at its Home Office, pay the death benefit in a
lump sum. The amount of the death benefit payable will be determined at the
end of the Valuation Period during which the Insured's death occurred. The
death benefit will be paid to the surviving Beneficiary or Beneficiaries
specified in the application or as subsequently changed.
The Policy provides three death benefit options: "Death Benefit Option
A," "Death Benefit Option B," and "Death Benefit Option C." The death
benefit under all options will never be less than the current Face Amount of
the Policy (less Indebtedness) as long as the Policy remains in force. (See
Payment and Allocation of Premiums - Policy Lapse and Reinstatement.) The
minimum Face Amount currently is $50,000.
Death Benefit Option A. Under Death Benefit Option A, the death
benefit is the current Face Amount of the Policy or, if greater, the
applicable percentage of Cash Value on the date of death. The applicable
percentage is 250% for an Insured Attained Age 40 or below on the Policy
Anniversary prior to the date of death. For Insureds with an Attained Age
over 40 on that Policy Anniversary, the percentage is lower and declines with
age as shown in the Applicable Percentage of Cash Value Table shown below.
Accordingly, under Death Benefit Option A the death benefit will remain level
at the Face Amount unless the applicable percentage of Cash Value exceeds the
current Face Amount, in which case the amount of the death benefit will vary
as the Cash Value varies. (See Illustrations of Death Benefits and Cash
Values, Appendix A.)
Death Benefit Option B. Under Death Benefit Option B, the death benefit
is equal to the current Face Amount plus the Cash Value of the Policy on the
date of death or, if greater, the applicable percentage of the Cash Value on
the date of death. The applicable percentage is the same as under Death
Benefit Option A: 250% for an Insured Attained Age 40 or below on the Policy
Anniversary prior to the date of death, and for Insureds with an Attained Age
over 40 on that Policy Anniversary the percentage declines as shown in the
Applicable Percentage of Cash Value Table on the next page. Accordingly,
under Death Benefit Option B the amount of the death benefit will always vary
as the Cash Value varies (but will never be less than the Face Amount). (See
Illustrations of Death Benefits and Cash Values, Appendix A.)
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
Applicable Percentage of Cash Value Table<F*>
<CAPTION>
Insured 40 or 45 50 55 60 65 70 78 to 95 or
Person's Age under 90 older
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Policy Account
Percentage Multiple 250% 215% 185% 150% 130% 120% 115% 105% 100%
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
<F*>For ages that are not shown on this table, the applicable percentage
multiples will decrease by a ratable portion for each full year.
</TABLE>
Death Benefit Option C. Under Death Benefit Option C, the death
benefit is equal to the current Face Amount of the Policy or, if greater, the
Cash Value on the date of death multiplied by the "Attained Age factor" (a
list of sample Attained Age factors is shown in the Sample Attained Age
Factor Table below). Accordingly, under Death Benefit Option C the death
benefit will remain level at the Face Amount unless the Cash Value multiplied
by the Attained Age factor exceeds the current Face Amount, in which case the
amount of the death benefit will vary as the Cash Value varies. (See
Illustrations of Death Benefits and Cash Values, Appendix A.)
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<PAGE> 135
<TABLE>
Death Benefit Option C Sample Attained Age Factor Table
<CAPTION>
- -------------------------------------------------------------------------
Insured Male Female Insured Male Female
Attained Lives Lives Attained Lives Lives
Age Factor Factor Age Factor Factor
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
20 6.39373 7.62992 60 1.87392 2.15766
- -------------------------------------------------------------------------
25 5.50505 6.48136 65 1.65835 1.87615
- -------------------------------------------------------------------------
30 4.68733 5.49185 70 1.48797 1.64736
- -------------------------------------------------------------------------
35 3.97255 4.64894 75 1.35451 1.46009
- -------------------------------------------------------------------------
40 3.37168 3.94230 80 1.25595 1.31875
- -------------------------------------------------------------------------
45 2.87784 3.36481 85 1.18113 1.21344
- -------------------------------------------------------------------------
50 2.47279 2.88712 90 1.12767 1.13972
- -------------------------------------------------------------------------
55 2.14116 2.49005 95 1.07472 1.07637
</TABLE>
Changes In Death Benefit Option. After the first Policy Anniversary,
if the Policy was issued with either Death Benefit Option A or Death Benefit
Option B, the death benefit option may be changed. The option may be changed
once each Policy Year, and a request for change must be made to the Company
in writing. The effective date of such a change will be the Monthly
Anniversary on or following the date the Company receives the change request.
A change in death benefit option may have Federal income tax consequences.
(See Federal Tax Matters.)
A Death Benefit Option A Policy may change its death benefit option to
Death Benefit Option B. The Face Amount will be decreased to equal the death
benefit less the Cash Value on the effective date of change. A Death Benefit
Option B Policy may change its death benefit option to Death Benefit Option
A. The Face Amount will be increased to equal the death benefit on the
effective date of change. A Policy issued under Death Benefit Option C may
not change to either Death Benefit Option A or Death Benefit Option B for the
entire lifetime of the Contract. Similarly, a Policy issued under either
Death Benefit Option A or B may not change to Death Benefit Option C for the
lifetime of the Policy.
Satisfactory evidence of insurability must be submitted to the Company
in connection with a request for a change from Death Benefit Option A to
Death Benefit Option B. A change may not be made if it would result in a
Face Amount of less than the minimum Face Amount.
A change in death benefit option will not in itself result in an
immediate change in the amount of a Policy's death benefit or Cash Value. In
addition, if, prior to or accompanying a change in the death benefit option,
there has been an increase in the Face Amount, the cost of insurance charge
may be different for the increased amount. (See Monthly Deduction - Cost of
Insurance.)
Change in Face Amount. Subject to certain limitations set forth below,
an Owner may increase or decrease the Face Amount of a Policy once each
Policy Year and not before the first Policy Anniversary. A written request
is required for a change in the Face Amount. A change in Face Amount may
affect the cost of insurance rate and the net amount at risk, both of which
affect an Owner's cost of insurance charge. (See Monthly Deduction - Cost of
Insurance.) A change in the Face Amount of a Policy may have Federal income
tax consequences, including conversion of the Policy into a modified
endowment contract. (See Federal Tax Matters.)
For an increase in the Face Amount, the Company requires that
satisfactory evidence of insurability be submitted. An application for an
increase must be received within 60 days prior to, or 30 days following, a
Policy Anniversary. If approved, the increase will become effective as of
the Policy Anniversary. In addition, the Insured must have an Attained Age
of not greater than 80 on the effective date of the increase. The increase
may not be less than $25,000. Although an increase need not necessarily be
accompanied by an additional premium, the Cash Surrender Value in effect
immediately after the increase must be sufficient to cover the next monthly
deduction. To the extent the Cash Surrender Value is not sufficient, an
additional premium must be paid. (See Charges and Deductions - Monthly
Deduction.) An increase in the Face Amount may result in certain additional
charges. (See Charges and Deductions - Monthly Deduction.)
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<PAGE> 136
For the Owner's rights upon an increase in Face Amount, see Policy
Rights - Right to Examine Policy. Owners should consult their sales
representative before deciding whether to increase coverage by increasing the
Face Amount of a Policy.
Any decrease in the Face Amount will become effective on the Monthly
Anniversary on or following receipt of the written request by the Company.
The amount of the requested decrease must be at least $5,000 and the Face
Amount remaining in force after any requested decrease may not be less than
minimum Face Amount. If following a decrease in Face Amount, the Policy
would not comply with the maximum premium limitations required by Federal tax
law (see Payment and Allocation of Premiums), the decrease may be limited or
Cash Value may be returned to the Owner (at the Owner's election), to the
extent necessary to meet these requirements. Decreases will be applied to
prior increases in the Face Amount, if any, in the reverse order in which
such increases occurred, and then to the original Face Amount. This order of
reduction will be used to determine the amount of subsequent cost of
insurance charges (See Monthly Deduction - Cost of Insurance; and Charges and
Deductions - Contingent Deferred Sales Charge.)
Where one or more Policies are sold to a corporation or other entity or
group of individuals, special arrangements may be agreed upon to increase or
decrease the Face Amount, in accordance with criteria which the Company may
establish and modify from time to time in its discretion. Criteria that may
determine changes in Face Amount include, but shall not be limited to,
periodic adjustments to the Insured's level of compensation, the number of
Policies issued to a corporation or other entity, or the number of Policies
issued to any group of owners. Criteria established by the Company will not
unfairly discriminate against the interest of any Owner or Insured.
Payment of the Death Benefit. The death benefit under the Policy will
ordinarily be paid in a lump sum within seven days after the Company receives
all documentation required for such a payment. Payment may, however, be
postponed in certain circumstances. (See General Matters - Postponement of
Payment from the Separate Account.) The death benefit will be increased by
any unpaid dividends determined prior to the Insured's death, and by the
amount of the monthly cost of insurance for the portion of the month from the
date of death to the end of the month, and reduced by any outstanding
Indebtedness. (See General Matters - Additional Insurance Benefits,
Dividends, and Charges and Deductions.) The Company will pay interest on the
death benefit from the date of the Insured's death to the date of payment.
Interest will be at an annual rate determined by the Company, but will never
be less than the guaranteed rate of 4%. Provisions for settlement of
proceeds other than a lump sum payment may only be made upon written
agreement with the Company.
Cash Value
The Cash Value of the Policy is equal to the total of the amounts
credited to the Owner in the Separate Account, the Loan Account (securing
Policy Loans), and, in certain contracts, the General Account. The Policy's
Cash Value in the Separate Account will reflect the investment performance of
the chosen Divisions of the Separate Account as measured by each Division's
Net Investment Factor (defined on the next page), the frequency and amount of
Net Premiums paid, transfers, partial withdrawals, loans and the charges
assessed in connection with the Policy. An Owner may at any time surrender
the Policy and receive the Policy's Cash Surrender Value. (See Policy Rights
- - Surrender, Partial Withdrawals, and Pro Rata Surrender.) The Policy's Cash
Value in the Separate Account equals the sum of the Policy's Cash Values in
each Division. There is no guaranteed minimum Cash Value.
Determination of Cash Value. Cash Value is determined on each
Valuation Date. On the Investment Start Date, the Cash Value in a Division
will equal the portion of any Net Premium allocated to the Division, reduced
by the portion allocated to that Division of the monthly deduction(s) due
from the Issue Date through the Investment Start Date. (See Payment and
Allocation of Premiums.) Thereafter, on each Valuation Date, the Cash Value
in a Division of the Separate Account will equal:
(1) The Cash Value in the Division on the preceding Valuation
Date, multiplied by the Division's Net Investment Factor (defined
below) for the current Valuation Period; plus
(2) Any Net Premium payments received during the current Valuation
Period which are allocated to the Division; plus
(3) Any loan repayments allocated to the Division during the
current Valuation Period; plus
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<PAGE> 137
(4) Any amounts transferred to the Division from the General
Account or from another Division during the current Valuation
Period; plus
(5) That portion of the interest credited on outstanding loans
which is allocated to the Division during the current Valuation
Period; minus
(6) Any amounts transferred from the Division to the General
Account, Loan Account, or to another Division during the current
Valuation Period (including any transfer charges); minus
(7) Any partial withdrawals from the Division during the current
Valuation Period; minus
(8) Any withdrawal due to a pro rata surrender from the Division
during the current Valuation Period; minus
(9) Any withdrawal or surrender charges incurred during the
current Valuation Period attributed to the Division in connection
with a partial withdrawal or pro rata surrender; minus
(10) If a Monthly Anniversary occurs during the current
Valuation Period, the portion of the monthly deduction allocated
to the Division during the current Valuation Period to cover the
Policy Month which starts during that Valuation Period. (See
Charges and Deductions.)
Net Investment Factor: The Net Investment Factor measures the
investment performance of a Division during a Valuation Period. The Net
Investment Factor for each Division for a Valuation period is calculated as
follows:
(1) The value of the assets at the end of the preceding Valuation
Period; plus
(2) The investment income and capital gains, realized or
unrealized, credited to the assets in the Valuation Period for which the
Net Investment Factor is being determined; minus
(3) The capital losses, realized or unrealized, charged against
those assets during the Valuation Period; minus
(4) Any amount charged against each Division for taxes,
including any tax or other economic burden resulting from the
application of the tax laws determined by the Company to be
properly attributable to the Divisions of the Separate Account,
or any amount set aside during the Valuation Period as a reserve
for taxes attributable to the operation or maintenance of each
Division; minus
(5) A charge equal to .0019111% of the average net assets for
each day in the Valuation Period. This is equivalent to an effective
annual rate of 0.70% per year for mortality and expense risks;
divided by
(6) The value of the assets at the end of the preceding Valuation
Period.
POLICY RIGHTS
Loans
Loan Privileges. After the first Policy Anniversary, the Owner may, by
written request to General American, borrow an amount up to the Loan Value of
the Policy, with the Policy serving as sole security for such loan. A loan
taken from, or secured by, a Policy may have Federal income tax consequences.
(See Federal Tax Matters.)
The Loan Value is the Cash Value of the Policy on the date the loan
request is received, less interest to the next loan interest due date, less
anticipated monthly deductions to the next loan interest due date, less any
existing loan, and less any surrender charge. Policy Loan interest is payable
on each Policy Anniversary.
The minimum amount that may be borrowed is $500. The loan may be
completely or partially repaid at any time while the Insured is living. Any
amount due to an Owner under a Policy Loan ordinarily will be paid within
seven days after General American receives the loan request at its Home
Office, although payments may be postponed under certain circumstances. (See
General Matters-Postponement of Payments from the Separate Account.)
11
<PAGE> 138
When a Policy Loan is made, Cash Value equal to the amount of the loan
plus interest due will be transferred to the Loan Account as security for the
loan. A Loan Subaccount exists within the Loan Account for the General
Account and each Division of the Separate Account. Amounts transferred to the
Loan Account to secure Indebtedness are allocated to the appropriate Loan
Subaccount to reflect its origin. Unless the Owner requests a different
allocation, amounts will be transferred from the Divisions of the Separate
Account and the General Account in the same proportion that the Policy's Cash
Value in each Division and the General Account, if any, bears to the Policy's
total Cash Value, less the Cash Value in the Loan Account, at the end of the
Valuation Period during which the request for a Policy Loan is received.
This will reduce the Policy's Cash Value in the General Account and Separate
Account. These transactions will not be considered transfers for purposes of
the limitations on transfers between Divisions or to or from the General
Account.
Cash Value in the Loan Account is expected to earn interest at a rate
("the earnings rate") which is lower than the rate charged on the Policy Loan
("the borrowing rate"). Cash Value in the Loan Account will accrue interest
daily at an earnings rate which is the greater of (a) an annual rate of 4%
("the guaranteed earnings rate" or (b) a current rate determined by us ("the
discretionary earnings rate"). The Company may change the discretionary
earnings rate on Policy Loans at any time in its sole discretion. Currently
in Policy Years one through ten, we accrue interest at a discretionary
earnings rate which is .50% less than the borrowing rate we charge for Policy
Loan interest. Beginning in Policy Year eleven we accrue interest at a
discretionary earnings rate which is .25% less than the borrowing rate we
charge for Policy Loan interest. The difference between the rate of interest
earned and the borrowing rate is the "Loan Spread." The Loan Spreads
mentioned above are currently in effect and are not guaranteed.
Interest credited on the Cash Value held in the Loan Account will be
allocated on Policy Anniversaries to the General Account and the Divisions of
the Separate Account in the same proportion that the Cash Value in each Loan
Subaccount bears to the Cash Value in the Loan Account. The interest credited
will also be transferred: (1) when a new loan is made; (2) when a loan is
partially or fully repaid; and (3) when an amount is needed to meet a monthly
deduction.
Interest Charged. The borrowing rate we charge for Policy Loan interest
will be based on an index. The indexed borrowing rate will never be more than
the maximum loan rate permitted by law. More information on the borrowing
rate charged is provided below.
General American will inform the Owner of the current borrowing rate
when a Policy Loan is made. General American will also mail the Owner an
advance notice if there is to be a change in the borrowing rate applicable to
any outstanding Indebtedness.
Policy Loan interest is due and payable annually on each Policy
Anniversary. If the Owner does not pay the interest when it is due, the
unpaid loan interest will be added to the outstanding Indebtedness as of the
due date and will be charged interest at the same rate as the rest of the
Indebtedness. (See Effect of Policy Loans on the next page.) The amount of
Policy Loan interest which is transferred to the Loan Account will be
deducted from the Divisions of the Separate Account and from the General
Account in the same proportion that the portion of the Cash Value in each
Division and in the General Account, respectively, bears to the total Cash
Value of the Policy minus the Cash Value in the Loan Account.
We determine the borrowing rate at the beginning of each Policy Year.
The same rate applies to any outstanding Indebtedness and to any new Policy
Loans made during the year. The borrowing rate determined by General
American for a Policy Year may not exceed a Maximum Limit which is the
greater of:
(a) The Published Monthly Average (defined below) for the
calendar month ending two months before the beginning of the month
in which the Policy Anniversary falls (example: for a Policy with
a June Policy Anniversary, the March Published Average); or
(b) Five Percent (5%).
The Published Monthly Average means:
(1) Moody's Corporate Bond Yield Average - Monthly Average
Corporate, as published by Moody's Investors Service, Inc. or any
successor to that service; or
(2) If that average is no longer published, a substantially
similar average, established by regulation issued by the insurance
supervisory official of the state in which this Policy is
issued.
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<PAGE> 139
If the Maximum Limit for a Policy Year, as determined in this manner,
is at least 0.50% higher than the borrowing rate determined by General
American for the previous Policy Year, General American may increase the
borrowing rate to not more than the Maximum Limit. Therefore the borrowing
rate we charge for Policy Loan interest will only change if the Published
Monthly Average differs from the previous rate by at least 0.50%.
Effect of Policy Loans. Whether or not a Policy Loan is repaid, it
will permanently affect the Cash Value of a Policy, and may permanently
affect the amount of the death benefit. The collateral for the loan (the
amount held in the Loan Account) does not participate in the performance of
the Separate Account while the loan is outstanding. If the Loan Account
earnings rate is less than the investment performance of the selected
Division(s), the Cash Value of the Policy will be lower as a result of the
Policy Loan. Conversely, if the Loan Account earnings rate is higher than
the investment performance of the Division(s), the Cash Value may be higher.
In addition, if the Indebtedness (See Definitions) exceeds the Cash
Value minus the surrender charge on any Monthly Anniversary, the Policy will
lapse, subject to a grace period. (See Payment and Allocation of Premiums -
Policy Lapse and Reinstatement.) A sufficient payment must be made within
the later of the grace period of 62 days from the Monthly Anniversary
immediately before the date Indebtedness exceeds the Cash Value less any
surrender charges, or 31 days after notice that a Policy will terminate
unless a sufficient payment has been mailed, or the Policy will lapse and
terminate without value. A lapsed Policy, however, may later be reinstated
subject to certain limitations. (See Payment and Allocation of Premiums -
Policy Lapse and Reinstatement.)
Any outstanding Indebtedness will be deducted from the proceeds payable
upon the death of the Insured, surrender, or the maturity of the Policy.
Repayment of Indebtedness. A Policy Loan may be repaid in whole or in
part at any time prior to the death of the Insured and as long as a Policy is
in force. When a loan repayment is made, an amount securing the Indebtedness
in the Loan Account equal to the loan repayment will be transferred to the
Divisions of the Separate Account and the General Account in the same
proportion that the Cash Value in each Loan Subaccount bears to Cash Value in
the Loan Account. Amounts paid while a Policy Loan is outstanding will be
treated as premiums unless the Owner requests in writing that they be treated
as repayment of Indebtedness.
Surrender, Partial Withdrawals and Pro Rata Surrender
At any time during the lifetime of the Insured and while a Policy is in
force, the Owner may surrender the Policy by sending a written request to the
Company. After the first Policy Year, an Owner may make a partial withdrawal
by sending a written request to the Company. The amount available for
surrender is the Cash Surrender Value at the end of the Valuation Period
during which the surrender request is received at the Company's Home Office.
Amounts payable from the Separate Account upon surrender, partial withdrawal,
or a pro rata surrender will ordinarily be paid within seven days of receipt
of the written request. (See General Matters - Postponement of Payments from
the Separate Account.)
Surrenders. To effect a surrender, either the Policy itself must be
returned to the Company along with the request, or the request must be
accompanied by a completed affidavit of loss, which is available from the
Company. Upon surrender, the Company will pay the Cash Surrender Value plus
any unpaid dividends determined prior to surrender (See Dividends) to the
Owner in a single sum. The Cash Surrender Value equals the Cash Value on the
date of surrender, less any Indebtedness, and less any surrender charge.
(See Charges and Deductions - Contingent Deferred Sales Charge.) The Company
will determine the Cash Surrender Value as of the date that an Owner's
written request is received at the Company's Home Office. If the request is
received on a Monthly Anniversary, the monthly deduction otherwise deductible
will be included in the amount paid. Coverage under a Policy will terminate
as of the date of surrender. The Insured must be living at the time of a
surrender. A surrender may have Federal income tax consequences. (See Federal
Tax Matters.)
Partial Withdrawals. After the first Policy Year, an Owner may make up
to one partial withdrawal each Policy Month from the Separate Account, and up
to four partial withdrawals and transfers in any Policy Year from the General
Account. A partial withdrawal may have Federal income tax consequences. (See
Federal Tax Matters.)
The minimum amount of a partial withdrawal request, net of any
applicable surrender charges, is the lesser of a) $500 from a Division of
the Separate Account, or b) the Policy's Cash Value in a Division. (See
Charges and Deductions - Contingent Deferred Sales Charge.) Partial
withdrawals made during a Policy Year may not exceed the following limits.
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The maximum amount that may be withdrawn from a Division of the Separate
Account is the Policy's Cash Value net of any applicable surrender charges
in that Division. The total partial withdrawals and transfers from the
General Account over the Policy Year may not exceed a maximum amount equal to
the greatest of the following: (1) 25% of the Cash Surrender Value in the
General Account at the beginning of the Policy Year, (2) $5,000, (3) the
previous Policy Year's maximum amount.
The Owner may allocate the amount withdrawn plus any applicable
surrender charge, subject to the above conditions, among the Divisions of the
Separate Account and the General Account. If no allocation is specified, then
the partial withdrawal will be allocated among the Divisions of the Separate
Account and the General Account in the same proportion that the Policy's Cash
Value in each Division and the General Account bears to the total Cash Value
of the Policy, less the Cash Value in the Loan Account, on the date the
request for the partial withdrawal is received. If the limitations on
withdrawals from the General Account will not permit this proportionate
allocation, the Owner will be requested to provide an alternate allocation.
(See The General Account.)
No amount may be withdrawn that would result in there being
insufficient Cash Value to meet any surrender charge that would be payable
immediately following the withdrawal upon the surrender of the remaining Cash
Value.
The death benefit will be affected by a partial withdrawal. If Death
Benefit Option A or Death Benefit Option C is in effect and the death benefit
equals the Face Amount, then a partial withdrawal will decrease the Face
Amount by an amount equal to the partial withdrawal plus the applicable
surrender charge resulting from that partial withdrawal. If the death benefit
is based on a percentage of the Cash Value, then a partial withdrawal will
decrease the Face Amount by an amount by which the partial withdrawal plus
the applicable surrender charge exceeds the difference between the death
benefit and the Face Amount. If Death Benefit Option B is in effect, the Face
Amount will not change.
The Face Amount remaining in force after a partial withdrawal may not
be less than the minimum Face Amount. Any request for a partial withdrawal
that would reduce the Face Amount below this amount will not be implemented.
Partial withdrawals may affect the way in which the cost of insurance
charge is calculated and the amount of pure insurance protection afforded
under a Policy. (See Monthly Deduction - Cost of Insurance.) Partial
withdrawals will be applied first to reduce the initial Face Amount and then
to each increase in Face Amount in order, starting with the first increase.
The Company may change the minimum amount required for a partial withdrawal
or the number of times partial withdrawals may be made.
Pro Rata Surrender. After the first Policy Year, an Owner can make a
pro rata surrender of the Policy. The pro rata surrender will reduce the Face
Amount and the Cash Value by a percentage chosen by the Owner. This
percentage must be any whole number. A pro rata surrender may have Federal
income tax consequences. (See Federal Tax Matters.) The percentage will be
applied to the Face Amount and the Cash Value on the Monthly Anniversary on
or following our receipt of the request.
The Owner may allocate the amount of decrease in Cash Value plus any
applicable surrender charge among the Divisions of the Separate Account and
the General Account. (See Charges and Deductions - Contingent Deferred Sales
Charge.) If no allocation is specified, then the decrease in Cash Value and
any applicable surrender charge will be allocated among the Divisions of the
Separate Account and the General Account in the same proportion that the
Policy's Cash Value in each Division and the General Account bears to the
total Cash Value of the Policy, less the Cash Value in the Loan Account, on
the date the request for pro rata surrender is received.
A pro rata surrender can not be processed if it will reduce the Face
Amount below the minimum Face Amount of the Policy. No pro rata surrender
will be processed for more Cash Surrender Value than is available on the date
of the pro rata surrender. A cash payment will be made to the Owner for the
amount of Cash Value reduction less any applicable surrender charges.
Pro rata surrenders may affect the way in which the cost of insurance
charge is calculated and the amount of the pure insurance protection afforded
under the Policy. (See Monthly Deduction - Cost of Insurance.) Pro rata
surrenders will be applied to prior increases in the Face Amount, if any, in
the reverse order in which such increases occurred, and then to the original
Face Amount.
Charges on Surrender, Partial Withdrawals and Pro Rata Surrender. If a
Policy is surrendered within the first ten Policy Years, the Deferred
Contingent Sales Charge will apply. (See Contingent Deferred Sales Charge.)
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A partial withdrawal or pro rata surrender may also result in a charge.
The amount of the charge assessed is a portion of the Contingent Deferred
Sales Charge that would be deducted upon surrender or lapse. Charges are
described in more detail under Charges and Deductions - Contingent Deferred
Sales Charge.
While partial withdrawals and pro rata surrenders are each methods of
reducing a Policy's Cash Value, a pro rata surrender differs from a partial
withdrawal in that a partial withdrawal does not typically have a
proportionate effect on a Policy's death benefit by reducing the Policy's
Face Amount, while a pro rata surrender does. Assuming that a Policy's death
benefit is not a percentage of the Policy's Cash Value, a pro rata surrender
will reduce the Policy's death benefit in the same proportion that the
Policy's Cash Value is reduced, while a partial withdrawal will reduce the
death benefit by one dollar for each dollar of Cash Value withdrawn. Partial
Withdrawals and Pro Rata Surrenders will also result in there being different
cost of insurance charges subsequently deducted. (See Monthly Deduction -
Cost of Insurance; Surrender, Partial Withdrawals and Pro Rata Surrender -
Partial Withdrawals; and Surrenders, Partial Withdrawals, and Pro Rata
Surrenders-Pro Rata Surrender.)
Transfers
Under General American's current practices, a Policy's Cash Value,
except amounts credited to the Loan Account, may be transferred among the
Divisions of the Separate Account and for certain contracts, between the
General Account and the Divisions. Transfers to and from the General Account
are subject to restrictions (See The General Account). Requests for transfers
from or among Divisions of the Separate Account may be made in writing or by
telephone. Transfers from or among the Divisions of the Separate Account may
be made once each Policy Month and must be in amounts of at least $500 or, if
smaller, the Policy's Cash Value in a Division. General American ordinarily
will effectuate transfers and determine all values in connection with
transfers as of the end of the Valuation Period during which the transfer
request is received.
Requests may be made by telephone if the Owner has chosen to use
General American's telephone transfer program. To elect this program the
Owner must complete a form provided by General American. General American
reserves the right to cancel the telephone transfer program upon 30 days
written notice.
All requests received on the same Valuation Day will be considered a
single transfer request. Each transfer must meet the minimum requirement of
$500 or the entire Cash Value in a Division whichever is smaller. Where a
single transfer request calls for more than one transfer, and not all of the
transfers would meet the minimum requirements, General American will
effectuate those transfers that do meet the requirements. Transfers resulting
from Policy Loans will not be counted for purposes of the limitations on the
amount or frequency of transfers allowed in each Policy Month or Policy Year.
Although General American currently intends to continue to permit
transfers for the foreseeable future, the Policy provides that General
American may at any time revoke, modify, or limit the transfer privilege,
including the minimum amount transferable, the maximum General Account
allocation percent, and the frequency of such transfers. General American may
in the future impose a charge of no more than $25 per transfer request.
Dollar Cost Averaging
The Owner may direct the Company to transfer amounts on a monthly basis
from the Money Market Fund to any other Division of the Separate Account.
This service is intended to allow the Owner to utilize "dollar cost
averaging" ("DCA"), a long-term investment technique which provides for
regular, level investments over time. The Company makes no guarantee that DCA
will result in a profit or protect against loss.
The following rules and restrictions apply to DCA transfers:
(1) The minimum DCA transfer amount is $100.
(2) A written election of the DCA service, on a form provided by the
Company, must be completed by the Owner and on file with the Company in order
to begin DCA transfers.
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(3) In the written election of the DCA service, the Owner indicates
how DCA transfers are to be allocated among the Divisions of the Separate
Account. For any Division chosen to receive DCA transfers, the minimum
percentage that may be allocated to a Division is 5% of the DCA transfer
amount, and fractional percentages may not be used.
(4) DCA transfers can only be made from the Money Market Fund, and DCA
transfers will not be allowed to the General Account.
(5) The DCA transfers will not count against the Policy's normal
transfer restrictions. (See Policy Rights-- Transfers.)
(6) The DCA transfer percentages may differ from the allocation
percentages the Owner specifies for the allocation of Net Premiums. (See
Payment and Allocation of Premiums -- Allocation of Net Premiums and Cash
Values.)
(7) Once elected, DCA transfers from the Money Market Fund will be
processed monthly until either the value in the Money Market Fund is
completely depleted or the Owner instructs the Company in writing to cancel
the DCA service.
(8) Transfers as a result of a Policy Loan or repayment, or in
exercise of the conversion privilege, are not subject to the DCA rules and
restrictions. The DCA service terminates at the time the conversion privilege
is exercised, when any outstanding amount in any Division of the Separate
Account is immediately transferred to the General Account. (See Policy Rights
- - Loans, and Policy Rights - Conversion Privilege.)
(9) DCA transfers will not be made until the Right to Examine Policy
period has expired (See Policy Rights - Right to Examine Policy).
No fee is currently charged for DCA, but the Company reserves the right
to assess a processing fee for the DCA service. The Company reserves the
right to discontinue offering DCA upon 30 days' written notice to Owners.
However, any such discontinuation will not affect DCA services already
commenced. The Company reserves the right to impose a minimum total Cash
Value, less outstanding Indebtedness, in order to qualify for DCA service.
Also, the Company reserves the right to change the minimum necessary Cash
Value and the minimum required DCA transfer amount.
Right to Examine Policy
The Owner may cancel a Policy within 20 days after receiving it (30
days if the Owner is a resident of California and is age 60 or older) or
within 45 days after the application was signed, whichever is later. If a
Policy is canceled within this time period, a refund will be paid. Where
required by state law, the refund will equal all premiums paid under the
Policy. Where required by state law, General American will refund an amount
equal to the greater of premiums paid or (1) plus (2) where (1) is the
difference between the premiums paid, including any policy fees or other
charges, and the amounts allocated to the Separate Account under the Policy
and (2) is the value of the amounts allocated to the Separate Account under
the Policy on the date the returned Policy is received by General American or
its agent.
To cancel the Policy, the Owner should mail or deliver the Policy to
either General American or the agent who sold it. A refund of premiums paid
by check may be delayed until the Owner's check has cleared the bank upon
which it was drawn. (See General Matters - Postponement of Payments from the
Separate Account.)
A request for an increase in Face Amount (see Policy Benefits - Death
Benefit) may also be canceled. The request for cancellation must be made
within the later of 20 days from the date the Owner received the new Policy
specifications page for the increase, or 45 days after the application for
the increase was signed.
Payment of Benefits at Maturity
If the Insured is living and the Policy is in force, the Company will
pay in a lump sum the Cash Surrender Value of the Policy on the Maturity
Date, plus any unpaid dividends determined prior to maturity. Amounts payable
on the Maturity Date ordinarily will be paid in a lump sum within seven days
of that date, although payments may be postponed under certain circumstances.
(See General Matters - Postponements of Payments from the Separate Account.)
A Policy will mature if and when the Insured reaches Attained Age 100.
Settlement options other than a lump sum payment may only be made upon
written agreement with the Company.
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PAYMENT AND ALLOCATION OF PREMIUMS
Issuance of a Policy
Individuals wishing to purchase a Policy must complete an application
and submit it to an authorized registered agent of General American or to
General American's Home Office. A Policy will generally be issued to
Insureds of Issue Ages 0 through 80 for regularly underwritten contracts and
to Insureds of Issue Ages 0 through 70 for simplified issue and to Insureds
of Issue Ages 20 through 70 for guaranteed issue contracts. General American
may, in its sole discretion, issue Policies to individuals falling outside of
those Issue Ages. Acceptance of an application is subject to General
American's underwriting rules and General American reserves the right to
reject an application for any reason.
The Issue Date is determined by General American in accordance with its
standard underwriting procedures for variable life insurance policies. The
Issue Date is used to determine Policy Anniversaries, Policy Years, and
Policy Months. Insurance coverages under a Policy will not take effect until
the Policy has been delivered and the initial premium has been paid prior to
the Insured's death and prior to any change in health as shown in the
application.
Premiums
The initial premium is due on the Issue Date, and may be paid to an
authorized registered agent of General American or to General American at its
Home Office. General American currently requires that the initial premium for
a Policy be at least equal to one-twelfth (1/12) of the Minimum Premium for
the Policy. The Minimum Premium is the amount specified for each Policy based
on the requested initial Face Amount and the charges under the Policy which
vary according to the Issue Age, sex, underwriting risk class, and smoker
status of the Insured. (See Charges and Deductions.) For policies issued as
a result of a term conversion from certain General American term policies,
the Company requires the Owner to pay an initial premium, which combined with
conversion credits given, will equal one full "Minimum Premium" for the
Policy. Following the initial premium, subject to the limitations
described below, premiums may be paid in any amount and at any interval.
Premiums after the first premium payment must be paid to General American at
its Home Office. An Owner may establish a schedule of planned premiums which
will be billed by the Company at regular intervals. Failure to pay planned
premiums, however, will not itself cause the Policy to lapse. (See Policy
Lapse and Reinstatement.) Premium receipts will be furnished upon request.
An Owner may make unscheduled premium payments at any time in any
amount, or skip planned premium payments, subject to the minimum and maximum
premium limitations described below.
If a Policy is in the intended Owner's possession but the initial
premium has not been paid, the Policy is not in force. The intended Owner is
deemed to have the Policy for inspection only.
Premium Limitations. Every premium payment must be at least $10. In no
event may the total of all premiums paid in any Policy Year exceed the
current maximum premium limitations for that Policy Year. Maximum premium
limits for the Policy Year will be shown in an Owner's annual report.
In general, for policies issued with Death Benefit Option A or Death
Benefit Option B, the maximum premium limit for a Policy Year is the largest
amount of premium that can be paid in that Policy Year such that the sum of
the premiums paid under the Policy will not at any time exceed the guideline
premium limitations needed to comply with the tax definition of life
insurance. For policies issued with Death Benefit Option C, the company
reserves the right to impose other restrictions upon the amount of premium
that may be paid into the Policy. If at any time a premium is paid which
would result in total premiums exceeding the current maximum premium
limitations, the Company will only accept that portion of the premium which
will make total premiums equal the maximum. Any part of the premium in
excess of that amount will be returned or applied as otherwise agreed, and no
further premiums will be accepted until allowed under the current maximum
premium limitations.
In addition to the foregoing tax definitional limits on premiums, for
purposes of determining whether distributions (including loans) are a return
of income first, the Company monitors the Policy to detect whether the "seven
pay limit" has been exceeded. If the seven pay limit is exceeded, the Policy
becomes a "Modified Endowment". The Company has adopted administrative steps
designed to notify an Owner when it is believed that a premium payment will
cause a Policy to become a modified endowment contract. The Owner will be
given a limited amount of time to request that the premium be reversed in
order to avoid the Policy's being classified as a modified endowment
contract. (See Federal Tax Matters.)
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If the Company receives a premium payment which would cause the death
benefit to increase by an amount that exceeds the Net Premium portion of the
payment, then the Company reserves the right to (1) refuse that premium
payment, or (2) require additional evidence of insurability before it accepts
the premium.
Allocation of Net Premiums and Cash Value
Allocation of Net Premiums. In the application for a Policy, the Owner
indicates how Net Premiums are to be allocated among the Divisions of the
Separate Account, to the General Account (if available), or both. For each
Division chosen, the minimum percentage that may be allocated to a Division
is 5% of the Net Premium, and fractional percentages may not be used. Certain
other restrictions apply to allocations made to the General Account (see
General Account). For policies issued with an allowable percentage to the
General Account of more than 5%, the minimum percentage is 5%, and fractional
percentages may not be used.
The allocation for future Net Premiums may be changed without charge at
any time by providing notice to the Company. Any change in allocation will
take effect immediately upon receipt by the Company of written notice. No
charge is imposed for changing the allocations of future premiums. The
initial allocation will be shown on the application which is attached to the
Policy. The Company may at any time modify the maximum percentage of future
Net Premiums that may be allocated to the General Account.
During the period from the Issue Date to the end of the Right to
Examine Policy Period (See Policy Rights - Right to Examine Policy), Net
Premiums will automatically be allocated to the Division that invests in the
Money Market Fund of Capital Company. When this period expires, the Policy's
Cash Value in that Division will be transferred to the Divisions of the
Separate Account and to the General Account (if available) in accordance with
the allocation requested in the application for the Policy, or any allocation
instructions received subsequent to receipt of the application. Net Premiums
received after the Right to Examine Policy Period will be allocated according
to the allocation instructions most recently received by the Company unless
otherwise instructed for that particular premium receipt.
The Policy's Cash Value may also be transferred between Divisions of
the Separate Account, and, if the General Account is available under the
Policy, between those Divisions and the General Account. (See Policy Rights -
Transfers.)
The value of amounts allocated to Divisions of the Separate Account
will vary with the investment performance of the chosen Divisions and the
Owner bears the entire investment risk. This will affect the Policy's Cash
Value, and may affect the death benefit as well. Owners should periodically
review their allocations of Net Premiums and the Policy's Cash Value in light
of market conditions and their overall financial planning requirements.
Policy Lapse and Reinstatement
Lapse. Unlike conventional whole life insurance policies, the failure
to make a premium payment following the initial premium will not itself cause
a Policy to lapse. Lapse will occur when the Cash Surrender Value is
insufficient to cover the monthly deduction, and a grace period expires
without a sufficient payment being made.
The grace period, which is 62 days, begins on the Monthly Anniversary
on which the Cash Surrender Value becomes insufficient to meet the next
monthly deduction. The Company will notify the Owner at the beginning of the
grace period by mail addressed to the last known address on file with the
Company. The notice to the Owner will indicate the amount of additional
premium that must be paid. The amount of the premium required to keep the
Policy in force will be the amount to cover the outstanding monthly
deductions and premium expense charges. (See Charges and Deductions - Monthly
Deduction.) If the Company does not receive the required amount within the
grace period, the Policy will lapse and terminate without Cash Value.
If the Insured dies during the grace period, any overdue monthly
deductions will be deducted from the death benefit otherwise payable.
Reinstatement. The Owner may reinstate a lapsed Policy by written
application any time within five years after the date of lapse and before the
Maturity Date. Reinstatement is subject to the following conditions:
1. Evidence of the insurability of the Insured satisfactory to the
Company (including evidence of insurability of any person
covered by a rider to reinstate the rider).
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2. Payment of a premium that, after the deduction of premium expense
charges, is large enough to cover: (a) the monthly deductions
due at the time of lapse, and (b) two times the monthly deduction
due at the time of reinstatement.
3. Payment or reinstatement of any Indebtedness. Any Indebtedness
reinstated will cause Cash Value of an equal amount also to be
reinstated. Any loan interest due and unpaid on the Policy
Anniversary prior to reinstatement must be repaid at the time of
reinstatement. Any loan paid at the time of reinstatement will
cause an increase in Cash Value equal to the amount to be
reinstated.
The Policy cannot be reinstated if it has been surrendered.
The amount of Cash Value on the date of reinstatement will be equal to
the amount of any Policy Loan reinstated, increased by the Net Premiums paid
at reinstatement, any Policy Loan paid at the time of reinstatement, and the
amount of any surrender charge paid at the time of lapse. The Insured must be
alive on the date the Company approves the application for reinstatement. If
the Insured is not then alive, such approval is void and of no effect.
The effective date of reinstatement will be the date the Company
approves the application for reinstatement. There will be a full monthly
deduction for the Policy Month which includes that date. (See Charges and
Deductions-Monthly Deduction.)
The surrender charge in effect at the time of reinstatement will equal
the surrender charge in effect at the time of lapse.
CHARGES AND DEDUCTIONS
Charges will be deducted in connection with the Policy to compensate
the Company for providing the insurance benefits set forth in the Policy and
any additional benefits added by rider, administering the Policies, incurring
expenses in distributing the Policies, and assuming certain risks in
connection with the Policy.
Premium Expense Charges
Prior to allocation of Net Premiums, premium payments will be reduced
by premium expense charges consisting of a sales charge and a charge for
premium taxes. The premium payment less the premium expense charge equals the
Net Premium.
Sales Charge. A sales charge not to exceed 5% of each premium payment
will be deducted from each premium payment to partially compensate the
Company for expenses incurred in distributing the Policy and any additional
benefits provided by riders. The Company currently intends to deduct a sales
charge of 5% in Policy Years one through ten and 2.25% in Policy Years past
Policy Year ten. The expenses covered by the sales charge include agent sales
commissions, the cost of printing Prospectuses and sales literature, and any
advertising costs. Where Policies are issued to Insureds with higher
mortality risks or to Insureds who have selected additional insurance
benefits, a portion of the amount deducted for sales charge is used to pay
distribution expenses and other costs associated with these additional
coverages. No increase in this sales charge will occur that would result in
an increase in the sales charge percentage deducted in any previous Policy
year.
A Contingent Deferred Sales Charge is also imposed under certain
circumstances for expenses incurred in distributing the Policies. That charge
is discussed below.
To the extent that sales expenses are not recovered from the sales
charge and the surrender charge, those expenses may be recovered from other
sources, including the mortality and expense risk charge described below.
Premium Taxes. Various states and subdivisions impose a tax on premiums
received by insurance companies. Premium taxes vary from state to state and
range from 0.75% to 3.50%. A deduction of 2.5% of the premium is taken from
each premium payment for these taxes. The deduction represents an amount the
Company considers necessary to pay the premium taxes imposed by the states
and any subdivisions thereof.
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Monthly Deduction
Charges will be deducted monthly from the Cash Value of each Policy
("the monthly deduction") to compensate the Company for (a) certain
administrative costs; (b) the cost of insurance; and (c) the cost of optional
benefits added by rider. The monthly deduction will be taken on the
Investment Start Date and on each Monthly Anniversary. It will be allocated
among the General Account and each Division of the Separate Account in the
same proportion that a Policy's Cash Value in the General Account and the
Policy's Cash Value in each Division bear to the total Cash Value of the
Policy, less the Cash Value in the Loan Account, on the date the deduction is
taken. Because portions of the monthly deduction, such as the cost of
insurance, can vary from month to month, the monthly deduction itself can
vary in amount from month to month.
Monthly Administrative Charge. The Company has responsibility for the
administration of the Policies and the Separate Account. Administrative
expenses include premium billing and collection, record keeping, processing
death benefit claims, cash surrenders, partial withdrawals, Policy changes,
and reporting and overhead costs, processing applications, and establishing
Policy records. As reimbursement for administrative expenses related to the
maintenance of each Policy and the Separate Account, the Company assesses a
monthly administration charge from each Policy. This charge is $4 per month
for all Policy Months. These charges are guaranteed not to increase while the
Policy is in force. The Company does not anticipate that it will make any
profit on the monthly administrative charge.
The Company may administer the Policy itself, or the Company may
purchase administrative services from such sources (including affiliates) as
may be available. Such services will be acquired on a basis which, in the
Company's sole discretion, affords the best services at the lowest cost. The
Company reserves the right to select a company to provide services which the
Company deems, in its sole discretion, is the best able to perform such
services in a satisfactory manner even though the costs for such services may
be higher than would prevail elsewhere.
Cost of Insurance. The cost of insurance is deducted on each Monthly
Anniversary for the following Policy Month. Because the cost of insurance
depends upon a number of variables, the cost will vary for each Policy Month.
The cost of insurance is determined separately for the initial Face Amount
and for any subsequent increases in Face Amount. The Company will determine
the cost of insurance charge by multiplying the applicable cost of insurance
rate or rates by the net amount at risk (defined below) for each Policy
Month.
The cost of insurance rates are determined at the beginning of each
Policy Year for the initial Face Amount and each increase in Face Amount. The
rates will be based on the Attained Age, duration, rate class, and sex
(except for Policies sold in Montana, (See Unisex Requirements Under Montana
Law) of the Insured at issue or the date of an increase in Face Amount. The
cost of insurance rates generally increase as the Insured's Attained Age
increases. The rate class of an Insured also will affect the cost of
insurance rate. For the initial Face Amount, the Company will use the rate
class on the Issue Date. For each increase in Face Amount, other than one
caused by a change in the death benefit option, the Company will use the rate
class applicable to that increase. If the death benefit equals a percentage
of Cash Value, an increase in Cash Value will cause an automatic increase in
the death benefit. The rate class for such increase will be the same as that
used for the most recent increase that required proof of insurability.
The Company currently places Insureds into a preferred rate class, a
standard rate class, or into rate classes involving a higher mortality risk.
The degree of underwriting imposed may vary from full underwriting, to
simplified issue underwriting, and to guaranteed issue underwriting.
Actual cost of insurance rates may change, and the actual monthly cost
of insurance rates will be determined by the Company based on its
expectations as to future mortality experience. However, the actual cost of
insurance rates will not be greater than the guaranteed cost of insurance
rates set forth in the Policy.
The Company issues Policies on three underwriting bases: a full
underwriting basis, a simplified underwriting basis, and a guaranteed
underwriting basis. Policies receiving a full underwriting basis are issued
in six rate classes: preferred non-smoker, preferred smoker, standard
non-smoker, standard smoker, substandard non-smoker and substandard smoker.
Policies underwritten on a simplified issue basis are issued in standard
smoker/non-smoker rate classes and substandard smoker/non-smoker rate
classes. Policies underwritten on a guaranteed issue basis are only issued
in guaranteed issue smoker and guaranteed issue non-smoker rate classes.
All other things being equal, Policies issued on a guaranteed issue basis
will have higher cost of insurance rates than Policies issued on a simplified
issue or fully underwritten basis. Generally, Policies underwritten on a
simplified issue basis will have the same cost of insurance rates as those
subject to full underwriting (except to the extent that a Policy underwritten
on a simplified issue basis may
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have received a preferred rate class had it been fully underwritten).
Similarly, for Policies issued on the same underwriting basis, all other things
being equal, standard rate classes pay a higher cost of insurance rate than
preferred rate classes and substandard rate classes pay a higher cost of
insurance rate than standard rate classes.
For Policies fully underwritten or underwritten on a simplified issue
basis that receive a standard rate class, the guaranteed cost of insurance
rates are equal to 100% of the rates set forth in the male/female 1980 CSO
Mortality Tables (1980 CSO Table A and 1980 CSO Table G), age nearest
birthday. For Policies issued on a guaranteed issue basis, the guaranteed
cost of insurance rates are equal to 125% of the rates set forth in the
smoker/ non-smoker 1980 CSO Mortality Tables (1980 CSO Table SB and 1980 CSO
Table NB), age nearest birthday.
The net amount at risk for a Policy Month is (a) the death benefit at
the beginning of the Policy Month divided by 1.0032737 (which reduces the net
amount at risk, solely for purposes of computing the cost of insurance, by
taking into account assumed monthly earnings at an annual rate of 4%), less
(b) the Cash Value at the beginning of the Policy Month. If there is an
increase in the Face Amount, a net amount at risk will be calculated
separately for the initial Face Amount and for each increase in Face Amount.
If Death Benefit Option A or Death Option C is in effect, for purposes of
determining the net amounts at risk for the initial Face Amount and for each
increase in Face Amount, Cash Value will first be considered a part of the
initial Face Amount. If the Cash Value is greater than the initial Face
Amount, the excess Cash Value will then be considered a part of each increase
in order, starting with the first increase. If Death Benefit Option B is in
effect, the net amount at risk will be determined separately for the initial
Face Amount and for each increase in Face Amount. In calculating the cost of
insurance charges, the cost of insurance rate for a Face Amount is applied to
the net amount at risk for that Face Amount.
Additional Insurance Benefits. The monthly deduction will include
charges for any additional benefits provided by rider. (See General Matters -
Additional Insurance Benefits.)
Contingent Deferred Sales Charge
For a period of up to ten years after the Issue Date, the Company will
impose a CDSC upon surrender or lapse of the Policy, upon a partial
withdrawal, or upon a pro rata surrender. The amount of the charge assessed
will depend upon a number of factors, including the type of event ( a full
surrender, lapse, or partial withdrawal), the amount of any premium payments
made under the Policy prior to the event, and the number of Policy Years
having elapsed since the Policy was issued.
The Contingent Deferred Sales Charge compensates the Company for
expenses relating to the distribution of the Policy, including agents'
commissions, advertising, and the printing of the Prospectus and sales
literature.
Calculation of Charge. If a Policy is surrendered, the charge will be
the Contingent Deferred Sales Charge Percentage multiplied by 4.0% of
premiums paid since issue.
The Contingent Deferred Sales Charge Percentage is shown in the table
on the next page.
<TABLE>
Contingent Deferred Sales Charge Percentage Table
<CAPTION>
If surrender or lapse The following percentage
occurs in the last month of the 4% surrender charge
of Policy Year:<F*> will be payable:<F**>
<S> <C>
1 through 5 100%
6 80%
7 60%
8 40%
9 20%
10 and later 0%
<FN>
------------------
<F*> In addition, the percentages reduce equally for each Policy Month
during the years shown. For example, during the seventh year,
the percentage reduces equally each month from 80% at the end
of the sixth Year to 60% at the end of the seventh Year.
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<PAGE> 148
<F**>For male issue ages 75 through 80 and female issue ages 77 through
80, the Contingent Deferred Sales Charge Percentage grades to
0% in less than ten years.
</TABLE>
Charge Assessed Upon Partial Withdrawals or Pro Rata Surrender. The
amount of the Contingent Deferred Sales Charge deducted upon a partial
withdrawal or pro rata surrender will equal a fraction of the charge that
would be deducted if the Policy were surrendered at that time. The fraction
will be determined by dividing the amount of the withdrawal of cash by the
Cash Value before the withdrawal and multiplying the result by the charge.
Immediately after a withdrawal, the Policy's remaining surrender charge will
equal the amount of the surrender charge immediately before the withdrawal
less the amount deducted in connection with the withdrawal.
Reduction of Charges. The Policy is available for purchase by
individuals, corporations, and other institutions. For certain individuals
and certain corporate or other group or sponsored arrangements purchasing one
or more Policies, General American may waive or reduce the amount of the
Sales Charge, Contingent Deferred Sales Charge, monthly administrative
charge, or other charges where the expenses associated with the sale of the
Policy or Policies or the underwriting or other administrative costs
associated with the Policy or Policies are reduced.
Sales, underwriting, or other administrative expenses may be reduced
for reasons such as expected economies resulting from a corporate purchase or
a group or sponsored arrangement; from the amount of the initial premium
payment or payments; or from the amount of projected premium payments.
General American will determine in its discretion if, and in what amount, a
reduction is appropriate. The Company may modify its criteria for
qualification for reduction of charges as experience is gained, subject to
the limitation that such reductions will not be unfairly discriminatory
against the interests of any Owner.
Separate Account Charges
Mortality and Expense Risk Charge. General American will deduct a daily
charge from the Separate Account at the rate of .0019111% of the average net
assets of each Division of the Separate Account which equals an effective
annual rate of .70% of those net assets. This deduction is guaranteed not to
increase while the Policy is in force. General American may realize a profit
from this charge.
The mortality risk assumed by General American is that Insureds may die
sooner than anticipated and that therefore General American will pay an
aggregate amount of death benefits greater than anticipated. The expense risk
assumed is that expenses incurred in issuing and administering the Policy
will exceed the amounts realized from the administrative charges assessed
against the Policy.
Expenses of Russell Insurance Funds and General American Capital
Company. The value of the net assets of the Separate Account will reflect the
investment management and advisory fees and other expenses incurred by these
investment companies. See the prospectuses for the respective Funds for a
description of investment management and advisory fees and other expenses
incurred by Russell Insurance Funds and the Capital Company.
No charges are currently made to the Separate Account for Federal,
state, or local taxes that the Company incurs which may be attributable to
such Separate Account or to the Policy. The Company may make such a charge
for any such taxes or economic burden resulting from the application of the
tax laws that it determines to be properly attributable to the Separate
Account or to the Policy. (See Federal Tax Matters.)
DIVIDENDS
The Policy is a participating Policy which is entitled to a share, if
any, of the divisible surplus of the Company as determined each year and
apportioned to it. This surplus will be distributed as a dividend payable
annually on the January Monthly Anniversary. If the Insured dies after the
dividend has been determined, the Company will pay any unpaid dividend to the
Beneficiary. Because investment results are credited directly through
changes in the Policy's cash value, the Company expects little or no
divisible surplus to be credited to a Policy.
Dividends under participating policies may be described as refunds of
premiums which adjust the cost of a Policy to the actual level of costs
emerging over time after the issue of the Policies. Both Federal and state
law recognize that dividends are generally considered to be a refund of a
portion of the premium paid and therefore are not treated as income for
Federal or state income tax purposes. However, depending on the dividend
payment option chosen (see below),
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<PAGE> 149
dividends may have tax consequences to Owners. Counsel or other competent tax
advisors should be consulted for more complete information.
Dividend illustrations published at the time of issue of a Policy
reflect the actual recent experience of the issuing insurance company with
respect to factors such as interest, mortality, and expenses. State law
generally prohibits a company from projecting or estimating future results.
State law also requires that dividends must be based on surplus, after
setting aside certain necessary amounts, and that such surplus must be
apportioned equitably among participating policies. In other words, in
principle and by statute, dividends must be based on actual experience and
cannot be guaranteed at issue of a Policy.
Each year the Company's actuary analyzes the current and recent past
experience and compares it to the assumptions used in determining the premium
rates at the time of issue. Some of the more important data studied includes
mortality and lapse rates, investment yield in the General Account, and
actual expenses incurred in administering the Policy. Such data is then
allocated to each dividend class, e.g., by year of issue, age and plan. The
actuary then determines what dividends can be equitably apportioned to each
Policy class and makes a recommendation to the Company's Board of Directors
("the Board"). The Board, which has the ultimate authority to declare
dividends, will vote the amount of surplus to be apportioned to each Policy
class, thereby, authorizing the distribution of the annual dividend.
An Owner may choose one of the following dividend options. Dividends
will be credited under the chosen option until the Owner changes it. If the
Owner does not choose an option, the Company will credit the dividend under
Dividend Option B until such time as the Owner requests in writing a
different option.
Dividend Option A: Cash. The amount of the dividend will be paid in
cash.
Dividend Option B: Increase Cash Value. The amount of the dividend will
be added to the Policy's Cash Value on the date of the dividend payment. The
Cash Value will be increased by the amount of the dividend. The dividend will
be allocated to the General Account (if available) and the Divisions of the
Separate Account according to the current allocation of the Net Premium.
THE GENERAL ACCOUNT
Because of exemptive and exclusionary provisions, interests in the
General Account have not been registered under the Securities Act of 1933 and
the General Account has not been registered as an investment company under
the 1940 Act. Accordingly, neither the General Account nor any interests
therein are subject to the provisions of these Acts and, as a result, the
staff of the SEC has not reviewed the disclosure in this Prospectus relating
to the General Account. The disclosure regarding the General Account may,
however, be subject to certain generally applicable provisions of the Federal
securities laws relating to the accuracy and completeness of statements made
in prospectuses.
General Description
The General Account consists of all assets owned by General American
other than those in the Separate Account and other separate accounts. Subject
to applicable law, General American has sole discretion over the investment
of the assets of the General Account.
At issue, General American will determine the maximum percentage of the
non-borrowed Cash Value that may be allocated, either initially or by
transfer, to the General Account. The ability to allocate Net Premiums or to
transfer Cash Value to the General Account may not be made available, in the
Company's discretion, under certain Policies. Further, the option may be
limited with respect to some Policies. The Company may, from time to time,
adjust the extent to which premiums or Cash Value may be allocated to the
General Account (the "maximum allocation percentage"). Such adjustments may
not be uniform as to all Policies. General American may at any time modify
the General Account maximum allocation percent. Subject to this maximum, an
Owner may elect to allocate Net Premiums to the General Account, the Separate
Account, or both. Subject to this maximum, the Owner may also transfer Cash
Value from the Divisions of the Separate Account to the General Account, or
from the General Account to the Divisions of the Separate Account. The
allocation of Net Premiums or the transfer of Cash Value to the General
Account does not entitle an Owner to share in the investment experience of
the General Account. Instead, General American guarantees that Cash Value
allocated to the General Account will accrue interest at a rate of at least
4%, compounded annually, independent of the actual investment experience of
the General Account.
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<PAGE> 150
The Loan Account is part of the General Account.
The Policy
This Prospectus describes a flexible premium variable life insurance
policy. This Prospectus is generally intended to serve as a disclosure
document only for the aspects of the Policy relating to the Separate Account.
For complete details regarding the General Account, see the Policy itself.
General Account Benefits
If the Owner allocates all Net Premiums only to the General Account and
makes no transfers, partial withdrawals, pro rata surrenders, or Policy
Loans, the entire investment risk will be borne by General American, and
General American guarantees that it will pay at least a minimum specified
death benefit. The Owner may select Death Benefit Option A, B or C under the
Policy and may change the Policy's Face Amount subject to satisfactory
evidence of insurability.
General Account Cash Value
Net Premiums allocated to the General Account are credited to the Cash
Value. General American bears the full investment risk for these amounts and
guarantees that interest will be credited to each Owner's Cash Value in the
General Account at a rate of no less than 4% per year, compounded annually.
General American may, AT ITS SOLE DISCRETION, credit a higher rate of
interest, although it is not obligated to credit interest in excess of 4% per
year, and might not do so. ANY INTEREST CREDITED ON THE POLICY'S CASH VALUE
IN THE GENERAL ACCOUNT IN EXCESS OF THE GUARANTEED MINIMUM RATE OF 4% PER
YEAR WILL BE DETERMINED IN THE SOLE DISCRETION OF GENERAL AMERICAN. THE
POLICY OWNER ASSUMES THE RISK THAT INTEREST CREDITED MAY NOT EXCEED THE
GUARANTEED MINIMUM RATE OF 4% PER YEAR. If excess interest is credited, a
different rate of interest may be applied to the Cash Value in the Loan
Account. The Cash Value in the General Account will be calculated on each
Monthly Anniversary of the Policy.
General American guarantees that, on each Valuation Date, the Cash
Value in the General Account will be the amount of the Net Premiums allocated
or Cash Value transferred to the General Account, plus interest at the rate
of 4% per year, plus any excess interest which General American credits and
any amounts transferred into the General Account, less the sum of all Policy
charges allocable to the General Account and any amounts deducted from the
General Account in connection with partial withdrawals, pro rata surrenders,
surrender charges or transfers to the Separate Account.
Transfers, Surrenders, Partial Withdrawals and Policy Loans
After the first Policy Year and prior to the Maturity Date, a portion
of Cash Value may be withdrawn from the General Account or transferred from
the General Account to the Separate Account. A maximum total of four partial
withdrawals and transfers from the General Account is permitted in a Policy
Year. A partial withdrawal, net of any applicable surrender charges, and any
transfer must be at least $500 or, the Policy's entire Cash Value in the
General Account if less than $500. No amount may be withdrawn from the
General Account that would result in there being insufficient Cash Value to
meet any surrender charges that would be payable immediately following the
withdrawal upon the surrender of the remaining Cash Value of the Policy. The
total amount of transfers and withdrawals in a Policy Year may not exceed a
Maximum Amount equal to the greater of (a) 25% of a Policy's Cash Surrender
Value in the General Account at the beginning of the Policy Year, (b) $5,000,
or (c) the previous Policy Year's Maximum Amount (not to exceed the total
Cash Surrender Value of the Policy).
Transfers to the General Account are limited by the maximum allocation
percentage (described below) in effect for a Policy at the time a transfer
request is made.
Policy Loans may also be made from the Policy's Cash Value in the
General Account.
Loans and withdrawals from the General Account may have Federal income
tax consequences. (See Federal Tax Matters.)
No transfer charge currently is imposed on transfers to or from the
General Account. However, such a charge may be imposed in the future. General
American may revoke or modify the privilege of transferring amounts to or from
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<PAGE> 151
the General Account at any time. Partial withdrawals and pro rata
surrenders will result in the imposition of the applicable surrender charge.
Transfers, surrenders, partial withdrawals and pro rata surrenders
payable from the General Account and the payment of Policy Loans allocated to
the General Account may, subject to certain limitations, be delayed for up to
six months. However, if payment is deferred for 30 days or more, General
American will pay interest at the rate of 2.5% per year for the period of the
deferment. Amounts from the General Account used to pay premiums on policies
with General American will not be delayed.
GENERAL MATTERS
Postponement of Payments from the Separate Account
The Company usually pays amounts payable on partial withdrawal, pro
rata surrender, surrender, or Policy Loan allocated to the Separate Account
Divisions within seven days after written notice is received. Payment of any
amount payable from the Divisions of the Separate Account upon surrender,
partial withdrawals, pro rata surrender, death of Insured, or the Maturity
Date, as well as payments of a Policy Loan and transfers, may be postponed
whenever: (1) the New York Stock Exchange is closed other than customary
weekend and holiday closings, or trading on the New York Stock Exchange is
restricted as determined by the SEC; (2) the SEC by order permits
postponement for the protection of Owners; or (3) an emergency exists, as
determined by the SEC, as a result of which disposal of securities is not
reasonably practicable or it is not reasonably practicable to determine the
value of the Separate Account's net assets. The Company may defer payment of
the portion of any Policy Loan from the General Account for not more than six
months.
Payments under the Policy of any amounts derived from premiums paid by
check may be delayed until the Owner's check has cleared the bank upon which
it was drawn.
The Contract
The Policy, the attached application, any riders, endorsements, any
application for an increase in Face Amount, and any application for
reinstatement constitute the entire contract. All statements made by the
Insured in the application and any supplemental applications can be used to
contest a claim or the validity of the Policy. Any change to the Policy must
be in writing and approved by the President, a Vice President, or the
Secretary of the Company. No agent has the authority to alter or modify any
of the terms, conditions, or agreements of the Policy or to waive any of its
provisions.
Control of Policy
The Insured is the Owner of the Policy unless another person is shown
as the Owner in the application. Ownership may be changed, however, as
described below. The Owner is entitled to all rights provided by the Policy,
prior to its Maturity Date. After the Maturity Date, the Owner cannot change
the payee nor the mode of payment, unless otherwise provided in the Policy.
Any person whose rights of ownership depend upon some future event does not
possess any present rights of ownership. If there is more than one Owner at a
given time, all Owners must exercise the rights of ownership by joint action.
If the Owner dies, and the Owner is not the Insured, the Owner's interest in
the Policy becomes the property of his or her estate unless otherwise
provided. Unless otherwise provided, the Policy is jointly owned by all
Owners named in the Policy or by the survivors of those joint Owners. Unless
otherwise stated in the Policy, the final Owner is the estate of the last
joint Owner to die. The Company may rely on the written request of any
trustee of a trust which is the Owner of the Policy, and the Company is not
responsible for the proper administration of any such trust.
Beneficiary
The Beneficiary(ies) is (are) the person(s) specified in the
application or by later designation. Unless otherwise stated in the Policy,
the Beneficiary has no rights in a Policy before the death of the Insured. If
there is more than one Beneficiary at the death of the Insured, each
Beneficiary will receive equal payments unless otherwise provided by the
Owner. If no Beneficiary is living at the death of the Insured, the proceeds
will be payable to the Owner or, if the Owner is not living, to the Owner's
estate.
The Company permits the designation of various types of trusts as
Beneficiary(ies), including trusts for minor beneficiaries, trusts under a
will, and trusts under a separate written agreement. An Owner is also
permitted to designate several types of beneficiaries, including business
beneficiaries.
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<PAGE> 152
Change of Owner or Beneficiary
The Owner may change the ownership and/or Beneficiary designation by
written request in a form acceptable to the Company at any time during the
Insured's lifetime subject to any restrictions stated in the Policy and this
Prospectus. The Company may require that the Policy be returned for
endorsement of any change. If acceptable to us, the change will take effect
as of the date the request is signed, whether or not the Insured is living
when the request is received at the Company's Home Office. The Company is not
liable for any payment made or action taken before the Company received the
written request for change. If the Owner is also a Beneficiary of the Policy
at the time of the Insured's death, the Owner may, within sixty days of the
Insured's death, designate another person to receive the Policy proceeds. Any
change will be subject to any assignment of the Policy or any other legal
restrictions.
Policy Changes
The Company reserves the right to limit the number of changes to a
Policy to one per Policy Year and to restrict changes in the first Policy
Year. Currently, only one change is permitted during any Policy Year and no
change may be made during the first Policy Year. For this purpose, changes
include increases or decreases in Face Amount and changes in the death
benefit option. No change will be permitted that would result in a Policy not
satisfying the definition of life insurance under the Internal Revenue Code
of 1986 or any applicable successor provision thereto.
Conformity with Statutes
If any provision in a Policy is in conflict with the laws of the state
governing the Policy, the provision will be deemed to be amended to conform
to such laws. In addition, the Company reserves the right to change the
Policy if it determines that a change is necessary to cause this Policy to
comply with, or give the Owner the benefit of any Federal or state statute,
rule, or regulation, including, but not limited to, requirements of the
Internal Revenue Code, or its regulations or published rulings.
Claims of Creditors
To the extent permitted by law, neither the Policy nor any payment
under it will be subject to the claims of creditors or to any legal process.
Incontestability
The Policy is incontestable after it has been in force for two years
from the Issue Date during the lifetime of the Insured. An increase in Face
Amount or addition of a rider after the Issue Date is incontestable after
such increase or addition has been in force for two years from its effective
date during the lifetime of the Insured. Any reinstatement of a Policy is
incontestable only after it has been in force during the lifetime of the
Insured for two years after the effective date of the reinstatement.
Assignment
The Company will be bound by an assignment of a Policy only if: (a) the
assignment is in writing; (b) the original assignment instrument or a
certified copy thereof is filed with the Company at its Home Office; and (c)
the Company returns an acknowledged copy of the assignment instrument to the
Owner. The Company is not responsible for determining the validity of any
assignment. Payment of Policy proceeds is subject to the rights of any
assignee of record. If a claim is based on an assignment, the Company may
require proof of the interest of the claimant. A valid assignment will take
precedence over the claim of any Beneficiary.
Suicide
Suicide within two years of the Issue Date is not covered by the
Policy. If the Insured dies by suicide, while sane or insane, within two
years from the Issue Date (or within the maximum period permitted by the laws
of the state in which the Policy was delivered, if less than two years), the
amount payable will be limited to premiums paid, less any partial withdrawals
and outstanding Indebtedness subject to certain limitations, if the Insured,
while sane or insane, dies by suicide within two years after the effective
date of an increase in Face Amount, the death benefit for that increase will
be limited to the amount of the monthly deductions for the increase.
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<PAGE> 153
If the Insured is a Missouri citizen when the Policy is issued, this
provision does not apply on the Issue Date of the Policy, or on the effective
date of any increase in Face Amount, unless the Insured intended suicide when
the Policy, or the increase in Face Amount, was applied for.
Misstatement of Age or Sex and Corrections
If the age or sex (except any Policies sold in Montana; see Unisex
Requirements Under Montana Law) of the Insured has been misstated in the
application, the amount of the death benefit will be that which the most
recent cost of insurance charge would have purchased for the correct age and
sex.
Any payment or Policy changes made by the Company in good faith,
relying on its records or evidence supplied with respect to such payment,
will fully discharge the Company's duty. The Company reserves the right to
correct any errors in the Policy.
Change in Rate Class
Sixty days prior to the Policy Anniversary on which the Insured attains
age 20, a letter will be sent to the Owner notifying the Owner of the
opportunity to apply for a change in the Insured's Rate Class from Smoker to
Non-Smoker. Upon receipt of the forms requested for a Non-Smoker risk
classification and proof satisfactory to the Company, the Rate Class will be
Non-Smoker. If the Owner does not apply for a Rate Class change, the Rate
Class will remain Smoker.
Additional Insurance Benefits
Subject to certain requirements, one or more of the following
additional insurance benefits may be added to a Policy by rider. The
descriptions below are intended to be general; the terms of the Policy riders
providing the additional benefits may vary from state to state, and the
Policy should be consulted. The cost of any additional insurance benefits
which require additional charges will be deducted as part of the monthly
deduction from the Policy's Cash Value. (See Charges and Deductions - Monthly
Deduction.) Certain restrictions may apply and are described in the
applicable rider. An insurance agent authorized to sell the Policy can
describe these extra benefits further. Samples of the provisions are
available from General American upon written request.
Waiver of Monthly Deduction Rider. Provides for the waiver of the
monthly deductions while the Insured is totally disabled, subject to certain
limitations described in the rider. The Insured must have become disabled
after age 5 and before age 65.
Waiver of Specified Premium Rider. Provides for crediting the Policy's
Cash Value with a specified monthly premium while the Insured is totally
disabled. The monthly premium selected at issue is not guaranteed to keep the
Policy in force. The Insured must have become disabled after age 5 and
before age 65.
Increasing Benefit Rider. Allows the Owner to increase the Face Amount
of the Policy without evidence of insurability. The increase is made on each
Policy Anniversary.
Records and Reports
The Company will maintain all records relating to the Separate Account
and will mail to the Owner once each Policy Year, at the last known address
of record, a report which shows the current Policy values, premiums paid,
deductions made since the last report, and any outstanding Policy Loans. The
Owner will also be sent a periodic report for Russell Insurance Funds and the
Capital Company and a list of the securities held in each Fund. Receipt of
premium payments, transfers, partial withdrawals, pro rata surrenders, Policy
Loans, loan repayments, changes in death benefit options, increases or
decreases in Face Amount, surrenders and reinstatements will be confirmed
promptly following each transaction.
An Owner may request in writing a projection of illustrated future Cash
Surrender Values and death benefits. This projection will be furnished by the
Company for a nominal fee which will not exceed $25.
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<PAGE> 154
DISTRIBUTION OF THE POLICY
The Policy will be sold by individuals who, in addition to being
licensed as life insurance agents for the Company, are also registered
representatives of Walnut Street Securities, Inc. ("Walnut Street"), the
principal underwriter of the Policy, or of broker-dealers who have entered
into written sales agreements with Walnut Street. Walnut Street was
incorporated under the laws of Missouri in 1984 and is a wholly-owned
subsidiary of General American Holding Company, which is, in turn, a
wholly-owned subsidiary of the Company. Walnut Street is registered with the
SEC under the Securities Exchange Act of 1934 as a broker-dealer and is a member
of the National Association of Securities Dealers, Inc. No director or
officer of Walnut Street owns any units in the Separate Account.
Writing agents will receive commissions based on a commission schedule
and rules. Currently, agent first-year commissions equal 7.50% of target
premiums paid in Policy Year 1. In renewal years, the agent commissions equal
4.0% of premiums paid in years 2 through 10. A 2.50% of premium service fee
is paid after Policy year 10. For Policy years after Policy Year 1, a
commission of .20% of the average monthly Cash Value for each Policy Year is
paid. These are maximum commissions, and reductions may be possible under the
circumstances outlined in the section entitled Reduction of Charges. General
Agents receive compensation which may be in part based on the level of agent
commissions in their agencies. The general agent commission schedules and
rules differ for different types of agency contracts. Walnut Street receives
no administrative fees, management fees, or other fees from sales of the
Policy.
FEDERAL TAX MATTERS
Introduction
The following summary provides a general description of the Federal
income tax considerations associated with the Policy and does not purport to
be complete or to cover all situations. This discussion is not intended as
tax advice. Counsel or other competent tax advisors should be consulted for
more complete information. This discussion is based upon General American's
understanding of the present Federal income tax laws as they are currently
interpreted by the Internal Revenue Service. No representation is made as to
the likelihood of continuation of the present Federal income tax laws or of
the current interpretations by the Internal Revenue Service.
Tax Status of the Policy
Section 7702 of the Internal Revenue Code of 1986, as amended (the
"Code") includes a definition of a life insurance contract for Federal tax
purposes. The Secretary of the Treasury (the "Treasury") issued proposed
regulations which specify what will be considered reasonable mortality
charges under Section 7702. Guidance as to how Section 7702 is to be applied
is, however, limited. If a Policy were determined not to be a life insurance
contract for purposes of Section 7702, such Policy would not provide most of
the tax advantages normally provided by a life insurance policy.
With respect to a Policy issued on a basis of a standard premium class
or on a guaranteed or simplified issue basis, while there is some uncertainty
due to the limited guidance under Section 7702, the Company believes that
such a Policy should meet the Section 7702 definition of a life insurance
contract. However, with respect to a Policy issued on a substandard basis
(i.e., a premium class involving higher than standard mortality risk), it is
not clear whether such a Policy would satisfy Section 7702, particularly if
the Owner pays the full amount of premiums permitted under the Policy.
If it is subsequently determined that a Policy does not satisfy Section
7702, the Company will take whatever steps are appropriate and necessary to
attempt to cause such a Policy to comply with Section 7702, including
possibly refunding any premiums paid that exceed the limitations allowable
under Section 7702 (together with interest or other earnings on any such
premiums refunded as required by law). For these reasons, the Company
reserves the right to modify the Policy as necessary to attempt to qualify it
as a life insurance contract under Section 7702.
Section 817(h) of the Code authorizes the Treasury to set standards by
regulation or otherwise for the investments of the Separate Account to be
"adequately diversified" in order for the Policy to be treated as a life
insurance contract for Federal tax purposes. The Separate Account intends to
comply with the diversification requirements prescribed by the Treasury in
Regulation Section 1.817-5, which affect how assets may be invested. Although
General American does not control Russell Insurance Funds or the Capital
Company it has entered into agreements, which require these investment
companies to be operated in compliance with the requirements prescribed by
the Treasury.
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<PAGE> 155
The Treasury announced that the regulations regarding diversification
of investments do not provide guidance concerning the tax consequences of the
extent to which Owners may direct their investments to the divisions of a
separate account. It is not clear whether additional guidance in this regard
will be provided or whether, if provided, it will be applied on a prospective
basis only. It is possible that if additional guidance on this issue is
promulgated, the Policy may need to be modified to comply with such guidance.
For these reasons, the Company reserves the right to modify the Policy as
necessary to attempt to prevent the Owner from being considered the owner of
the assets of the Separate Account or otherwise to qualify the Policy for
favorable tax treatment.
The following discussion assumes that the Policy will qualify as a life
insurance contract for Federal income tax purposes.
l. Tax Treatment of Policy Benefits. In general, the Company believes
that the proceeds and Cash Value increases of a Policy should be treated in a
manner consistent with a fixed-benefit life insurance policy for Federal
income tax purposes. Thus, the death benefit under the Policy should be
excludable from the gross income of the Beneficiary under Section 101(a)(1)
of the Code, unless a transfer for value (generally a sale of the policy) has
occurred.
Many changes or transactions involving a Policy may have tax
consequences, depending on the circumstances. Such changes include, but are
not limited to, the exchange of the Policy, a change of the Policy's Face
Amount, a Policy Loan, an additional premium payment, a Policy lapse with an
outstanding Policy Loan, a partial withdrawal, or a surrender of the Policy.
In addition, Federal estate and state and local estate, inheritance, and
other tax consequences of ownership or receipt of Policy proceeds depend upon
the circumstances of each Owner or Beneficiary. A competent tax advisor
should be consulted for further information.
Generally, the Owner will not be deemed to be in constructive receipt
of the Policy's Cash Value, including increments thereof, under the Policy
until there is a distribution. The tax consequences of distributions from,
and Policy Loans taken from or secured by, a Policy depend upon whether the
Policy is classified as a "modified endowment contract." However, upon a
complete surrender or lapse of any Policy, or when benefits are paid at such
a Policy's maturity date, if the amount received plus the amount of
outstanding Indebtedness exceeds the total investment in the Policy, the
excess will generally be treated as ordinary income subject to tax.
2. Modified Endowment Contracts. A policy may be treated as a modified
endowment contract depending upon the amount of premiums paid in relation to
the death benefit provided under such Policy. The premium limitation rules
for determining whether a Policy is a modified endowment contract are
extremely complex. In general, however, a Policy will be a modified endowment
contract if the accumulated premiums paid at any time during the first seven
Policy Years exceed the sum of the net level premiums which would have been
paid on or before such time if the Policy provided for paid-up future
benefits after the payment of seven level annual premiums.
In addition, if a Policy is "materially changed" it may cause such
Policy to be treated as a modified endowment contract. The material change
rules for determining whether a Policy is a modified endowment contract are
also extremely complex. In general, however, the determination of whether a
Policy will be a modified endowment contract after a material change
generally depends upon the relationship among the death benefit at the time
of such change, the Cash Value at the time of the change and the additional
premiums paid in the seven Policy Years starting with the date on which the
material change occurs.
Moreover, a life insurance contract received in exchange for a life
insurance contract classified as a modified endowment contract will also be
treated as a modified endowment contract.
Due to the Policy's flexibility, classification of a Policy as a
modified endowment contract will depend upon the circumstances of each
Policy. The Company has, however, adopted administrative steps designed to
protect an Owner against the possibility that the Policy might become a
modified endowment contract. The Company believes the safeguards are adequate
for most situations, but it cannot provide complete assurance that a Policy
will not be classified as a modified endowment contract. At the time a
premium is credited which would cause the Policy to become a modified
endowment contract, the Company will notify the Owner that unless a refund of
the excess premium is requested by the Owner, the Policy will become a
modified endowment contract. The Owner will have 30 days after receiving such
notification to request the refund. The excess premium paid with 4% required
annual interest will be returned to the Owner upon receipt by the Company of
the refund request. The amount to be refunded will be deducted from the
Policy Cash Value in the Divisions of the Separate Account and in the General
Account in the same proportion as the premium payment was allocated to such
Divisions.
29
<PAGE> 156
Accordingly, a prospective Owner should contact a competent tax advisor
before purchasing a Policy to determine the circumstances under which the
Policy would be a modified endowment contract. In addition, an Owner should
contact a competent tax advisor before paying any additional premiums or
making any other change to, including an exchange of, a Policy to determine
whether such premium or change would cause the Policy (or the new Policy in
the case of an exchange) to be treated as a modified endowment contract.
3. Distributions from Policies Classified as Modified Endowment
Contract. Policies classified as modified endowment contracts will be subject
to the following tax rules: First, all distributions, including distributions
upon surrender and benefits paid at maturity, from such a Policy are treated
as ordinary income subject to tax up to the amount equal to the excess (if
any) of the Cash Value immediately before the distribution over the
investment in the Policy (described below) at such time. Second, Policy Loans
taken from, or secured by, such a Policy, as well as due but unpaid interest
thereon, are treated as distributions from such a Policy and taxed
accordingly. Third, a 10 percent additional income tax is imposed on the
portion of any distribution from, or Policy Loan taken from or secured by,
such a Policy that (a) is included in income, except where the distribution
or Policy Loan is made on or after the Owner attains age 591/2, (b) is
attributable to the Owner's becoming disabled, or (c) is part of a series of
substantially equal periodic payments for the life (or life expectancy) of
the Owner or the joint lives (or joint life expectancies) of the Owner and
the Owner's Beneficiary.
4. Distributions From Policies Not Classified as Modified Endowment
Contract. Distributions from Policies not classified as modified endowment
contracts are generally treated as first recovering the investment in the
Policy (described below) and then, only after the return of all such
investment in the Policy, as distributing taxable income. An exception to
this general rule occurs in the case of a decrease in the Policy's death
benefit (possibly including a partial withdrawal) or any other change that
reduces benefits under the Policy in the first 15 years after the Policy is
issued and that results in cash distribution to the Owner in order for the
Policy to continue complying with the Section 7702 definitional limits. Such
a cash distribution will be taxed in whole or in part as ordinary income (to
the extent of any gain in the Policy) under rules prescribed in Section 7702.
Policy Loans from, or secured by, a Policy that is not a modified
endowment contract are not treated as distributions. Instead. such loans are
treated as indebtedness of the Owner.
Upon a complete surrender or lapse of a Policy that is not a modified
endowment contract, or when benefits are paid at such a Policy's maturity
date, if the amount received plus the amount of indebtedness exceeds the
total investment in the Policy, the excess will generally be treated as
ordinary income subject to tax.
Neither distributions (including distributions upon surrender or lapse)
nor Policy Loans from, or secured by, a Policy that is not a modified
endowment contract are subject to the 10 percent additional income tax.
If a Policy which is not a modified endowment contract subsequently
becomes a modified endowment contract, then any distribution made from the
Policy within two years prior to the date of such change in status may become
taxable.
5. Policy Loan Interest. Generally, interest paid on any loan under a
Policy which is owned by an individual is not deductible. In addition,
interest on any loan under a Policy owned by a taxpayer and covering the life
of any individual who is an officer of or is financially interested in the
business carried on by that taxpayer, will not be tax deductible to the
extent the aggregate amount of such Policy Loans with respect to contracts
covering such individual exceeds $50,000. No amount of Policy Loan interest
is, however, deductible if the Policy is deemed for Federal tax purposes to
be a single premium life insurance contract. The Owner should consult a
competent tax advisor as to whether the Policy would be so deemed. There are
other limitations on the deductibility of Policy Loan interest, and an owner
should consult a competent tax advisor about these additional limitations
before deducting any Policy Loan interest.
6. Investment in the Policy. Investment in the Policy means (i) the
aggregate amount of any premiums or other consideration paid for a Policy,
minus (ii) the aggregate amount received under the Policy which is excluded
from gross income of the Owner (except that the amount of any Policy Loan
from, or secured by, a Policy that is a modified endowment contract, to the
extent such amount is excluded from gross income, will be disregarded), plus
(iii) the amount of any Policy Loan from, or secured by, a Policy that is a
modified endowment contract to the extent that such amount is included in the
gross income of the Owner.
30
<PAGE> 157
7. Multiple Policies. All modified endowment contracts that are issued
by the Company (or its affiliates) to the same Owner during any calendar year
are treated as one modified endowment contract for purposes of determining
the amount includible in gross income under Section 72(e) of the Code.
8. Possible Charge for Taxes. At the present time, the Company makes
no charge to the Separate Account for any Federal, state, or local taxes (as
opposed to Premium Tax Charges which are deducted from premium payments) that
it incurs which may be attributable to such Separate Account or to the
Policies. The Company, however, reserves the right in the future to make a
charge for any such tax or other economic burden resulting from the
application of the tax laws that it determines to be properly attributable to
the Separate Account or to the Policies.
UNISEX REQUIREMENTS UNDER MONTANA LAW
The State of Montana generally prohibits the use of actuarial tables
that distinguish between men and women in determining premiums and Policy
benefits for policies issued on the lives of their residents. Therefore, all
Policies offered by this Prospectus to insure residents of Montana will have
premiums and benefits which are based on actuarial tables that do not
differentiate on the basis of sex.
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS
General American holds the assets of the Separate Account in a
custodial account in its name at the Bank of New York. The Company maintains
records of all purchases and redemptions of applicable Fund shares by each of
the Divisions. Additional protection for the assets of the Separate Account
is afforded by a blanket fidelity bond issued by Lloyd's Underwriters in the
amount of five million dollars, covering all officers and employees of the
Company who have access to the assets of the Separate Account.
VOTING RIGHTS
Based on its understanding of current applicable legal requirements,
the Company will vote the shares of the Funds held in the Separate Account at
regular and special shareholder meetings of the mutual funds in accordance
with the instructions received from persons having voting interests in the
corresponding Divisions of the Separate Account. If, however, the 1940 Act or
any regulation thereunder should be amended or if the present interpretation
thereof should change, and as a result the Company determines that it is
permitted to vote shares of the Fund in its own right, it may elect to do so.
No voting privileges apply to the Policies with respect to Cash Value removed
from the Separate Account as a result of a Policy Loan.
The number of votes which an Owner has the right to instruct will be
calculated separately for each Division. Voting rights reflect the dollar
value of the total number of units of each Division of the Separate Account
credited to the Owner at the record date, rather than the number of units
alone. Fractional shares will be counted. The number of votes of the Fund
which the Owner has the right to instruct will be determined as of the date
coincident with the date established by that Fund for determining
shareholders eligible. Voting instructions will be solicited by written
communications prior to such meeting in accordance with procedures
established by the mutual funds.
The company will vote shares of a Fund for which no timely instructions
are received in proportion to the voting instructions which are received with
respect to that Fund. The Company will also vote any shares of the Funds
which are not attributable to Policies in the same proportion.
Each person having a voting interest in a Division will receive any
proxy material, reports, and other materials relating to the appropriate
Fund.
Disregard of Voting Instructions. The Company may, when required by
state insurance regulatory authorities, disregard voting instructions if the
instructions require that the shares be voted so as to cause a change in the
subclassification or investment objective of the Fund or to approve or
disapprove an investment advisory contract for a Fund. In addition, the
Company itself may disregard voting instructions in favor of changes
initiated by an Owner in the investment policy or the investment advisor or
sub-advisor of a Fund if the Company reasonably disapproves of such changes.
A proposed change would be disapproved only if the proposed change is
contrary to state law or prohibited by state regulatory authorities, or the
Company determined that the change would have an adverse effect on its
General Account in that the proposed investment policy for a Fund may
result in overly speculative or unsound investments. If the
31
<PAGE> 158
Company disregards voting instructions, a summary of that action and the reasons
for such action will be included in the next annual report to Owners.
STATE REGULATION OF THE COMPANY
The Company, a mutual life insurance company organized under the laws
of Missouri, and the Separate Account are subject to regulation by the
Missouri Department of Insurance. An annual statement is filed with the
Director of Insurance on or before March 1st of each year covering the
operations and reporting on the financial condition of the Company as of
December 31 of the preceding year. Periodically, the Director of Insurance
examines the liabilities and reserves of the Company and the Separate Account
and certifies their adequacy, and a full examination of the Company's
operations is conducted by the National Association of Insurance
Commissioners at least once every three years.
In addition, the Company is subject to the insurance laws and
regulations of other states within which it is licensed or may become
licensed to operate. Generally, the insurance departments of other states
apply the laws of the state of domicile in determining permissible
investments.
32
<PAGE> 159
<TABLE>
MANAGEMENT OF THE COMPANY
<CAPTION>
Principal Occupation (s)
Name During Past Five Years<F*>
---- --------------------------
<S> <C>
Principal Officers<F**>
- -----------------------
Richard A. Liddy Chairman, President and CEO, 1/95-present; Chairman of the Executive Committee,
5/92-present. Formerly President and CEO, 5/92-1/95; President and Chief
Operating Officer, 5/88-5/92.
Robert J. Banstetter, Sr. Vice President, General Counsel and Secretary, 2/91-present. Formerly Vice
President and General Counsel, 1/83-2/91.
John W. Barber Vice President and Controller, 12/84-present.
O'Neil P. Boudreaux Vice President-Group Field Accounts, 4/87-present.
E. Thomas Hughes Corporate Actuary and Treasurer, 10/94-present. Formerly Executive Vice President-
Group Pensions, 3/90-10/94
Michael P. Ingrassia Vice President-Group Executive Accounts, 3/92-present. Formerly Vice President-
Group Operations, 5/84-2/92.
George T. Lacy Vice President-Group Field Sales, 6/83-present.
Thomas R. McPherron Vice President-Individual Information Systems, 4/84-present.
Leonard M. Rubenstein Executive Vice President-Investments, 10/94-present. Formerly Executive Vice
President-Investments and Treasurer, 2/91-10/94; Vice President and Treasurer,
11/84-2/91.
Barbara L. Snyder Vice President-Product Division, 4/95-present. Formerly Vice President and Chief
Actuary, American Bankers Insurance Company, Miami, FL.
Warren J. Winer Executive Vice President-Group Life and Health, 8/95-present. Formerly Managing
Director, William M. Mercer, Inc., 7/93-8/95; President and Chief Operating
Officer, W. F. Corroon, 1986-7/93.
Bernard H. Wolzenski Executive Vice President-Individual Insurance, 10/91-present. Formerly Vice
President-Life Product Management, 5/86-10/91.
A. Greig Woodring President and Chief Executive Officer, Reinsurance Group of America, 12/92-present.
Formerly Executive Vice President-Reinsurance, 3/90-12/92.
<FN>
<F*> All positions listed are with General American unless otherwise indicated.
<F**> The principal business address of Messrs. Banstetter, Hughes, Liddy, and Rubenstein, is General American Life
Insurance Company, 700 Market Street, St. Louis, Missouri 63101. The principal business address for Messrs.
Barber, Boudreaux, Ingrassia, Lacy, McPherron, Winer and Wolzenski and for Ms. Snyder is 13045 Tesson Ferry
Road, St. Louis, Missouri 63128. The principal business address for Mr. Woodring is 660 Mason Ridge Center
Drive, Suite 300, St. Louis, Missouri 63141.
</TABLE>
33
<PAGE> 160
<TABLE>
<CAPTION>
Principal Occupation (s)
Name During Past Five Years<F*>
---- --------------------------
<S> <C>
Directors
- ---------
August A. Busch III Chairman of the Board and President, Anheuser-Busch Companies, Inc., (beer
Anheuser-Busch Companies, Inc. business.)
One Busch Place
St. Louis, Missouri 63118
William E. Cornelius Retired Chairman and Chief Executive Officer, Union Electric Company (electric
Union Electric Company utility business). Prior to 1993, Chairman and Chief Executive Officer.
P.O. Box 149
St. Louis, Missouri 63166
John C. Danforth Partner. Formerly, U.S. Senator, State of Missouri.
Bryan Cave
One Metropolitan Square, Suite 3600
St. Louis, Missouri 63102
Bernard A. Edison Director Emeritus, Edison Brothers Stores, Inc. (retail specialty stores).
Edison Brothers Stores, Inc.
P.O. Box 14020
St. Louis, Missouri 63178
Richard A. Liddy Chairman, President and CEO, General American
General American Life Insurance Co.
700 Market Street
St. Louis, MO 63101
William E. Maritz Chairman and Chief Executive Officer, Maritz, Inc.
Maritz, Inc. (motivation, travel, communications, training and marketing research business).
1375 North Highway Drive
Fenton, Missouri 63099
Craig D. Schnuck Chairman and Chief Executive Officer, Schnuck Markets, Inc. (retail supermarket
Schnuck Markets, Inc. chain). Prior to 1991, President and Chief Executive Officer
11420 Lackland Road
P.O. Box 46928
St. Louis, Missouri 63146
William P. Stiritz Chairman, Chief Executive Officer and President, Ralston Purina Company (pet food,
Ralston Purina Company batteries, and bread business); Chairman, Ralcorp Holdings, Inc. (ready-to-eat cereal, baby
Checkerboard Square food, ski resorts).
St. Louis, Missouri 63164
Andrew C. Taylor Chief Executive Officer and President, Enterprise Rent-A-Car (car rental). Prior
Enterprise Rent-A-Car to May, 1991, President.
600 Corporate Park Drive
St. Louis, Missouri 63105
34
<PAGE> 161
<CAPTION>
Principal Occupation (s)
Name During Past Five Years<F*>
---- --------------------------
<S> <C>
Directors (continued)
- ---------------------
H. Edwin Trusheim Retired Chairman and Chief Executive Officer
General American Life Insurance Co.
P.O. Box 396
St. Louis, MO 63166
Robert L. Virgil Principal, Edward Jones (investments). Prior to 1993, Dean, the John M. Olin
Edward Jones School of Business, Washington University (business education)
12555 Manchester
St. Louis, Missouri 63131-3729
Virginia V. Weldon, M.D. Senior Vice President, Public Policy, Monsanto Company (chemicals diversified
Monsanto Company industry, pharmaceuticals, life science products, and food ingredients business). Prior to
800 North Lindbergh 1993, Vice President, Public Policy.
St. Louis, Missouri 63167
Ted C. Wetterau President, Wetterau Associates, L.L.C. Retired Chairman and Chief Executive
Wetterau Associates, L.L.C. Officer, Wetterau Incorporated (retail and wholesale grocery, manufacturing business).
7700 Bonhomme, Suite 750
St. Louis, Missouri 63105
<FN>
<F*> All positions listed are with General American unless otherwise indicated.
</TABLE>
35
<PAGE> 162
LEGAL MATTERS
All matters of Missouri law pertaining to the Policy, including the
validity of the Policy and General American's right to issue the Policy under
Missouri insurance law, have been passed upon by Robert J. Banstetter, Vice
President, General Counsel, and Secretary of General American.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Separate Account is a party
or to which the assets of the Separate Account are subject. General American
is not involved in any litigation that is of material importance in relation
to its total assets or that relates to the Separate Account.
EXPERTS
The audited financial statements of General American and the Separate
Account have been included in this Prospectus in reliance on the reports of
KPMG Peat Marwick LLP, independent certified public accountants, and on the
authority of said firm as experts in accounting and auditing.
The audited financial statements of General American have been prepared
in accordance with accounting practices prescribed or permitted by the
Department of Insurance of the State of Missouri, which are currently
considered generally accepted accounting principles for mutual life
companies.
Actuarial matters included in this Prospectus have been examined by
Shashikant Bhav, FSA, MAAA,Executive Director and Associate Actuary, as
stated in the opinion filed as an exhibit to the registration statement.
ADDITIONAL INFORMATION
A registration statement has been filed with the Securities and
Exchange Commission, under the Securities Act of 1933, as amended, with
respect to the Policy offered hereby. This Prospectus does not contain all
the information set forth in the registration statement and the amendments
and exhibits to the registration statement, to all of which reference is made
for further information concerning the Separate Account, General American and
the Policy offered hereby. Statements contained in this Prospectus as to the
contents of the Policy and other legal instruments are summaries. For a
complete statement of the terms thereof reference is made to such instruments
as filed.
FINANCIAL STATEMENTS
The financial statements of General American which are included in this
Prospectus should be distinguished from the financial statements of the
Separate Account, and should be considered only as bearing on the ability of
General American to meet its obligations under the Policy. They should not be
considered as bearing on the investment performance of the assets held in the
Separate Account. Financial information is not provided for four of the five
Divisions of the Separate Account because those Divisions have only recently
been established, and therefore, no operating history exists for those
Divisions.
36
<PAGE> 163
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Contractholders
General American Life Insurance Company:
We have audited the statements of assets and liabilities, including the
schedule of investments, of the S & P 500 Index, Money Market, Bond Index,
Managed Equity, Asset Allocation, International Equity, Special Equity,
Equity-Income, Growth, Overseas, Asset Manager, High Income, and Gold and
Natural Resources Fund Divisions of General American Separate Account Eleven
as of December 31, 1995, and the related statements of operations and
changes in net assets for each of the periods presented. These financial
statements are the responsibility of the Separate Account'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.
The investments owned at December 31, 1995 were verified by audit of the
statements of assets and liabilities of the underlying portfolios of General
American Capital Company and confirmation by correspondence with respect to
the Variable Insurance Products Fund and the Variable Insurance Products
Fund II sponsored by Fidelity Investments, and the Van Eck World Wide
Insurance Trust sponsored by Van Eck Associates Corporation. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the S & P 500 Index,
Money Market, Bond Index, Managed Equity, Asset Allocation, International
Equity, Special Equity, Equity-Income, Growth, Overseas, Asset Manager, High
Income, and Gold and Natural Resources Fund Divisions of General American
Separate Account Eleven as of December 31, 1995, and the results of their
operations and changes in their net assets for the periods presented, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
St. Louis, Missouri
February 14, 1996
<PAGE> 164
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<CAPTION>
S & P 500 MONEY BOND MANAGED ASSET
INDEX MARKET INDEX EQUITY ALLOCATION
FUND DIVISION<F*> FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION
----------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments in General American
Capital Company, at market value
(see Schedule of Investments): $ 4,660,592 $ 4,313,391 $ 1,401,432 $ 1,906,081 $ 5,976,187
Receivable from General American
Life Insurance Company 9,482 52,175 30,675 0 0
------------ ------------ ------------ ------------ ------------
Total assets 4,670,074 4,365,566 1,432,107 1,906,081 5,976,187
------------ ------------ ------------ ------------ ------------
Liabilities:
Payable to General American Life
Insurance Company 0 0 0 669 20,141
------------ ------------ ------------ ------------ ------------
Total net assets $ 4,670,074 $ 4,365,566 $ 1,432,107 $ 1,905,412 $ 5,956,046
============ ============ ============ ============ ============
Total net assets represented by:
Individual Variable Universal
Life cash value invested in
Separate Account $ 3,815,004 $ 1,301,794 $ 1,345,123 $ 1,795,686 $ 5,198,203
Individual Variable General
Select Plus cash value
invested in Separate Account 671,207 1,973,614 68,165 87,843 744,647
Individual Variable Universal
Life-100 cash value invested
in Separate Account 183,863 1,090,158 18,819 21,883 13,196
------------ ------------ ------------ ------------ ------------
Total net assets $ 4,670,074 $ 4,365,566 $ 1,432,107 $ 1,905,412 $ 5,956,046
============ ============ ============ ============ ============
Total units held - VUL-95 171,035 85,178 70,255 92,648 240,154
Total units held - VGSP 46,722 178,067 5,819 6,537 58,089
Total units held - VUL-100 13,553 103,808 1,595 1,655 1,033
VUL-95 Net unit value $ 22.31 $ 15.28 $ 19.15 $ 19.38 $ 21.65
VGSP Net unit value $ 14.37 $ 11.08 $ 11.71 $ 13.44 $ 12.82
VUL-100 Net unit value $ 13.57 $ 10.50 $ 11.80 $ 13.22 $ 12.78
Cost of investments $ 3,809,346 $ 4,472,131 $ 1,382,427 $ 1,932,993 $ 5,778,364
<FN>
<F*> This fund was formerly known as the Equity Index Fund.
See accompanying notes to financial statements.
(continued)
<PAGE> 165
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<CAPTION>
INTERNATIONAL SPECIAL
EQUITY EQUITY EQUITY-INCOME GROWTH OVERSEAS
FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments in General American
Capital Company, at market value
(see Schedule of Investments): $ 5,393,857 $ 4,208,131 $ 0 $ 0 $ 0
Investments in Variable Insurance
Products Fund, at market value
(see Schedule of Investments): 0 0 5,467,954 7,320,976 3,434,520
Receivable from General American
Life Insurance Company 0 0 12,130 13,925 0
------------ ------------ ------------ ------------ -----------
Total assets 5,393,857 4,208,131 5,480,084 7,334,901 3,434,520
------------ ------------ ------------ ------------ -----------
Liabilities:
Payable to General American Life
Insurance Company 6,534 11,741 0 0 1,243
------------ ------------ ------------ ------------ -----------
Total net assets $ 5,387,323 $ 4,196,390 $ 5,480,084 $ 7,334,901 $ 3,433,277
============ ============ ============ ============ ===========
Total net assets represented by:
Individual Variable Universal Life cash
value invested in Separate Account $ 1,990,578 $ 2,205,064 $ 3,847,596 $ 5,045,265 $ 2,423,740
Individual Variable General
Select Plus cash value invested
in Separate Account 407,033 605,574 1,381,202 1,974,154 915,145
Individual Variable Universal Life-100
cash value invested in Separate Account 39,637 45,285 251,286 315,482 94,392
General American Life Insurance
Company seed money 2,950,075 1,340,467 0 0 0
------------ ------------ ------------ ------------ -----------
Total net assets $ 5,387,323 $ 4,196,390 $ 5,480,084 $ 7,334,901 $ 3,433,277
============ ============ ============ ============ ===========
Total units held - VUL-95 136,570 168,023 248,776 326,247 173,970
Total units held - VGSP 32,384 46,252 89,358 135,556 73,610
Total units held - VUL-100 3,691 3,773 18,763 23,510 8,683
Total units held - Seed Money 200,000 100,000 0 0 0
VUL-95 Net unit value $ 14.58 $ 13.12 $ 15.47 $ 15.46 $ 13.93
VGSP Net unit value $ 12.57 $ 13.09 $ 15.46 $ 14.56 $ 12.43
VUL-100 Net unit value $ 10.74 $ 12.00 $ 13.39 $ 13.42 $ 10.87
Cost of investments $ 5,353,571 $ 3,743,850 $ 4,599,747 $ 5,819,334 $ 3,223,522
See accompanying notes to financial statements. (continued)
<PAGE> 166
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<CAPTION>
ASSET HIGH GOLD & NATURAL
MANAGER INCOME RESOURCES FUND
FUND DIVISION FUND DIVISION DIVISION
------------- ------------- --------------
<S> <C> <C> <C>
Assets:
Investments in Variable Insurance
Products Fund, at market value
(see Schedule of Investments): $ 0 $ 200,236 $ 0
Investments in Variable Insurance
Products Fund II, at market value
(see Schedule of Investments): 49,927 0 0
Investments in Van Eck Worldwide
Insurance Trust at market value
(see Schedule of Investments): 0 0 9,800
Receivable from General American
Life Insurance Company 1,191 2,713 0
----------------- ------------ -----------
Total assets 51,118 202,949 9,800
----------------- ------------ -----------
Liabilities:
Payable to General American Life
Insurance Company 0 0 3
----------------- ------------ -----------
Total net assets $ 51,118 $ 202,949 $ 9,797
================= ============ ===========
Total net assets represented by:
Individual Variable Universal Life
cash value invested in Separate Account $ 3,486 $ 64,527 $ 1,253
Individual Variable General Select Plus
cash value invested in Separate Account 16,287 68,271 0
Individual Variable Universal Life-100
cash value invested in Separate Account 31,345 70,151 8,544
----------------- ------------ -----------
Total net assets $ 51,118 $ 202,949 $ 9,797
================= ============ ===========
Total units held - VUL-95 327 5,980 126
Total units held - VGSP 1,528 6,321 0
Total units held - VUL-100 2,944 6,503 859
VUL-95 Net unit value $ 10.65 $ 10.79 $ 9.94
VGSP Net unit value $ 10.66 $ 10.80 $ 9.95
VUL-100 Net unit value $ 10.65 $ 10.79 $ 9.94
Cost of investments $ 48,148 $ 197,899 $ 9,430
See accompanying notes to financial statements.
</TABLE>
<PAGE> 167
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<CAPTION>
S & P 500 INDEX MONEY MARKET
FUND DIVISION<F*> FUND DIVISION
---------------------------------- ----------------------------------
1995 1994 1993 1995 1994 1993
---------- --------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment income<F**> $ -- $ -- $ -- $ -- $ -- $ --
Expenses:
Mortality and expense charges - VUL-95 (31,973) (25,046) (19,235) (13,058) (14,631) (14,659)
Mortality and expense charges - VGSP (3,459) (1,323) (51) (8,747) (2,628) (1,058)
Mortality and expense charges - VUL-100 (233) 0 0 (1,350) 0 0
--------- --------- --------- --------- ---------- ----------
Total expenses (35,665) (26,369) (19,286) (23,155) (17,259) (15,717)
--------- --------- --------- --------- ---------- ----------
Net investment expense (35,665) (26,369) (19,286) (23,155) (17,259) (15,717)
--------- --------- --------- --------- ---------- ----------
Net realized gain on investments:
Proceeds from sales 1,645,207 686,069 535,381 4,135,625 4,456,652 4,428,583
Cost of investments sold 1,177,496 509,241 361,270 3,838,296 4,377,730 4,360,377
---------- --------- --------- ---------- ---------- ----------
Net realized gain from sales
of investments 467,711 176,828 174,111 297,329 78,922 68,206
---------- --------- --------- ---------- ---------- ----------
Net unrealized gain (loss) on investments:
Unrealized gain (loss) on investments,
beginning of period (10,068) 133,360 103,836 (31,189) (40,988) (29,471)
Unrealized gain (loss) on investments,
end of period 851,246 (10,068) 133,360 (158,740) (31,189) (40,988)
---------- --------- --------- ---------- ---------- ----------
Net unrealized gain (loss) on investments 861,314 (143,428) 29,524 (127,551) 9,799 (11,517)
---------- --------- --------- ---------- ---------- ----------
Net gain on investments 1,329,025 33,400 203,635 169,778 88,721 56,689
---------- --------- --------- ---------- ---------- ----------
Net increase in net assets resulting
from operations $1,293,360 $ 7,031 $ 184,349 $ 146,623 $ 71,462 $ 40,972
========== ========= ========= ========== ========== ==========
<FN>
<F*>This fund was formerly known as the Equity Index Fund.
<F**>See Note 2C.
See accompanying notes to the financial statements.
(continued)
<PAGE> 168
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<CAPTION>
BOND INDEX MANAGED EQUITY
FUND DIVISION FUND DIVISION
----------------------------------- -------------------------------------
1995 1994 1993 1995 1994 1993
----------- ---------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income<F**> $ -- $ -- $ -- $ -- $ -- $ --
Expenses:
Mortality and expense charges - VUL-95 (18,478) (19,171) (13,970) (16,717) (16,186) (15,267)
Mortality and expense charges - VGSP (153) (19) (2) (208) (43) (2)
Mortality and expense charges - VUL-100 (24) 0 0 (40) 0 0
----------- ---------- ---------- ----------- ----------- -----------
Total expenses (18,655) (19,190) (13,972) (16,965) (16,229) (15,269)
----------- ---------- ---------- ----------- ----------- -----------
Net investment expense (18,655) (19,190) (13,972) (16,965) (16,229) (15,269)
----------- ---------- ---------- ----------- ----------- -----------
Net realized gain on investments:
Proceeds from sales 1,760,565 445,177 318,801 934,536 404,690 507,147
Cost of investments sold 1,722,345 191,016 212,106 742,079 84,849 225,119
----------- ---------- ---------- ----------- ----------- -----------
Net realized gain from sales
of investments 38,220 254,161 106,695 192,457 319,841 282,028
----------- ---------- ---------- ----------- ----------- -----------
Net unrealized gain (loss) on investments:
Unrealized gain (loss) on investments,
beginning of period (313,506) 32,498 (511) (408,116) (14,824) 114,850
Unrealized gain (loss) on investments,
end of period 19,005 (313,506) 32,498 (26,912) (408,116) (14,824)
----------- ---------- ---------- ----------- ----------- -----------
Net unrealized gain (loss) on investments 332,511 (346,004) 33,009 381,204 (393,292) (129,674)
----------- ---------- ---------- ----------- ----------- -----------
Net gain (loss) on investments 370,731 (91,843) 139,704 573,661 (73,451) 152,354
----------- ---------- ---------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting
from operations $ 352,076 $ (111,033) $ 125,732 $ 556,696 $ (89,680) $ 137,085
=========== ========== ========== =========== =========== ===========
<FN>
<F**>See Note 2C.
See accompanying notes to the financial statements.
(continued)
<PAGE> 169
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<CAPTION>
ASSET ALLOCATION INTERNATIONAL EQUITY
FUND DIVISION FUND DIVISION
----------------------------------- -------------------------------------
1995 1994 1993 1995 1994 1993<F*>
----------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income<F**> $ -- $ -- $ -- $ -- $ -- $ --
Expenses:
Mortality and expense charges - VUL-95 (46,892) (34,698) (30,407) (13,991) (8,440) (3,205)
Mortality and expense charges - VGSP (5,214) (6,461) (567) (2,260) (1,125) (40)
Mortality and expense charges - VUL-100 (10) 0 0 (66) 0 0
Mortality and expense charges - Seed Money 0 0 0 (23,784) (23,655) (17,769)
----------- ---------- ---------- ----------- ----------- -----------
Total expenses (52,116) (41,159) (30,974) (40,101) (33,220) (21,014)
----------- ---------- ---------- ----------- ----------- -----------
Net investment expense (52,116) (41,159) (30,974) (40,101) (33,220) (21,014)
----------- ---------- ---------- ----------- ----------- -----------
Net realized gain on investments:
Proceeds from sales 1,872,184 1,082,127 2,893,227 222,880 347,137 492,139
Cost of investments sold 1,266,674 666,236 2,167,156 (333,555) (54,371) 205,222
----------- ---------- ---------- ----------- ----------- -----------
Net realized gain from sales
of investments 605,510 415,891 726,071 556,435 401,508 286,917
----------- ---------- ---------- ----------- ----------- -----------
Net unrealized gain (loss) on investments:
Unrealized gain (loss) on investments,
beginning of period (765,423) (146,386) 234,887 198,307 400,379 0
Unrealized gain (loss) on investments,
end of period 197,823 (765,423) (146,386) 40,286 198,307 400,379
----------- ---------- ---------- ----------- ----------- -----------
Net unrealized gain (loss) on investments 963,246 (619,037) (381,273) (158,021) (202,072) 400,379
----------- ---------- ---------- ----------- ----------- -----------
Net gain (loss) on investments 1,568,756 (203,146) 344,798 398,414 199,436 687,296
----------- ---------- ---------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting
from operations $ 1,516,640 $ (244,305) $ 313,824 $ 358,313 $ 166,216 $ 666,282
=========== ========== ========== =========== =========== ===========
<FN>
<F*> The International Equity Fund began operations on February 16, 1993.
<F**>See Note 2C.
See accompanying notes to the financial statements.
(continued)
<PAGE> 170
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<CAPTION>
SPECIAL EQUITY EQUITY-INCOME
FUND DIVISION FUND DIVISION
------------------------------------ -----------------------------------
1995 1994 1993<F*> 1995 1994 1993<F*>
---------- --------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividend income<F**> $ -- $ -- $ -- $ 220,000 $ 67,978 $ 4,951
Expenses:
Mortality and expense charges - VUL-95 (16,741) (9,881) (2,763) (24,157) (9,487) (1,079)
Mortality and expense charges - VGSP (3,645) (1,556) (49) (6,731) (1,631) (191)
Mortality and expense charges - VUL-100 (72) 0 0 (378) 0 0
Mortality and expense charges - Seed Money (11,191) (9,556) (7,854) 0 0 0
---------- --------- --------- ---------- ---------- ---------
Total expenses (31,649) (20,993) (10,666) (31,266) (11,118) (1,270)
---------- --------- --------- ---------- ---------- ---------
Net investment income (loss) (31,649) (20,993) (10,666) 188,734 56,860 3,681
---------- --------- --------- ---------- ---------- ---------
Net realized gain on investments:
Proceeds from sales 855,583 236,621 71,043 486,651 307,356 5,054
Cost of investments sold 524,141 158,311 36,141 419,184 298,942 4,810
---------- --------- --------- ---------- ---------- ---------
Net realized gain from sales
of investments 331,442 78,310 34,902 67,467 8,414 244
---------- --------- --------- ---------- ---------- ---------
Net unrealized gain (loss) on investments:
Unrealized gain on investments,
beginning of period 75,550 165,807 0 17,485 12,226 0
Unrealized gain on investments,
end of period 464,281 75,550 165,807 868,207 17,485 12,226
---------- --------- --------- ---------- ---------- ---------
Net unrealized gain (loss) on investments 388,731 (90,257) 165,807 850,722 5,259 12,226
---------- --------- --------- ---------- ---------- ---------
Net gain (loss) on investments 720,173 (11,947) 200,709 918,189 13,673 12,470
---------- --------- --------- ---------- ---------- ---------
Net increase (decrease) in net assets resulting
from operations $ 688,524 $ (32,940) $ 190,043 $1,106,923 $ 70,533 $ 16,151
========== ========= ========= ========== ========== =========
<FN>
<F*>The Special Equity Fund and the Equity-Income Fund began operations on February 16 and March 18, 1993, respectively.
<F**>See Note 2C.
See accompanying notes to the financial statements.
(continued)
<PAGE> 171
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<CAPTION>
GROWTH OVERSEAS
FUND DIVISION FUND DIVISION
----------------------------------- ---------------------------------
1995 1994 1993<F*> 1995 1994 1993<F*>
----------- -------- ---------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividend income $ 21,771 $ 73,822 $ 0 $ 17,414 $ 3,448 $ 0
Expenses:
Mortality and expense charges - VUL-95 (34,577) (13,498) (1,918) (17,340) (8,858) (964)
Mortality and expense charges - VGSP (11,893) (4,366) (670) (5,232) (1,870) (38)
Mortality and expense charges - VUL-100 (439) 0 0 (152) 0 0
----------- -------- ---------- -------- -------- --------
Total expenses (46,909) (17,864) (2,588) (22,724) (10,728) (1,002)
----------- -------- ---------- -------- -------- --------
Net investment income (loss) (25,138) 55,958 (2,588) (5,310) (7,280) (1,002)
----------- -------- ---------- -------- -------- --------
Net realized gain (loss) on investments:
Proceeds from sales 987,205 347,508 13,415 408,880 320,673 19,380
Cost of investments sold 811,157 354,315 12,069 389,718 292,237 16,711
----------- -------- ---------- -------- -------- --------
Net realized gain (loss) from sales
of investments 176,048 (6,807) 1,346 19,162 28,436 2,669
----------- -------- ---------- -------- -------- --------
Net unrealized gain (loss) on investments:
Unrealized gain (loss) on investments,
beginning of period 51,539 40,113 0 (36,045) 23,986 0
Unrealized gain (loss) on investments,
end of period 1,501,642 51,539 40,113 210,998 (36,045) 23,986
----------- -------- ---------- -------- -------- --------
Net unrealized gain (loss) on investments 1,450,103 11,426 40,113 247,043 (60,031) 23,986
----------- -------- ---------- -------- -------- --------
Net gain (loss) on investments 1,626,151 4,619 41,459 266,205 (31,595) 26,655
----------- -------- ---------- -------- -------- --------
Net increase (decrease) in net assets resulting
from operations $ 1,601,013 $ 60,577 $ 38,871 $260,895 $(38,875) $ 25,653
=========== ======== ========== ======== ======== ========
<FN>
<F*> The Growth Fund and the Overseas Fund began operations on March 4 and March 11, 1993, respectively.
See accompanying notes to the financial statements.
(continued)
<PAGE> 172
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
PERIOD ENDED DECEMBER 31, 1995
<CAPTION>
ASSET MANAGER HIGH INCOME GOLD & NATURAL RESOURCES
FUND DIVISION FUND DIVISION FUND DIVISION
-------------------- ----------------- ------------------------
1995<F*> 1995<F*> 1995<F*>
-------------------- ----------------- -----------------------
<S> <C> <C> <C>
Investment income:
Dividend income $ 0 $ 0 $ 32
Expenses:
Mortality and expense charges - VUL-95 (3) (122) (3)
Mortality and expense charges - VGSP (20) (55) 0
Mortality and expense charges - VUL-100 (29) (76) (11)
--------------- -------------- ---------------
Total expenses (52) (253) (14)
--------------- -------------- ---------------
Net investment income (loss) (52) (253) 18
--------------- -------------- ---------------
Net realized gain (loss) on investments:
Proceeds from sales 448 28,646 144
Cost of investments sold 435 27,514 149
--------------- -------------- ---------------
Net realized gain (loss) from sales
of investments 13 1,132 (5)
--------------- -------------- ---------------
Net unrealized gain on investments:
Unrealized gain on investments,
beginning of period 0 0 0
Unrealized gain on investments,
end of period 1,779 2,337 370
--------------- -------------- ---------------
Net unrealized gain on investments 1,779 2,337 370
--------------- -------------- ---------------
Net gain on investments 1,792 3,469 365
--------------- -------------- ---------------
Net increase in net assets resulting
from operations $ 1,740 $ 3,216 $ 383
=============== ============== ===============
<FN>
<F*> The Asset Manager Fund, High Income Fund, and Gold & Natural Resources Fund began operations on July 19,
May 24, and August 9, 1995, respectively.
See accompanying notes to the financial statements.
</TABLE>
<PAGE> 173
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<CAPTION>
S & P 500 INDEX MONEY MARKET
FUND DIVISION<F*> FUND DIVISION
---------------------------------------- ----------------------------------------
1995 1994 1993 1995 1994 1993
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income (loss) $ (35,665) $ (26,369) $ (19,286) $ (23,155) $ (17,259) $ (15,717)
Net realized gain on investments 467,711 176,828 174,111 297,329 78,922 68,206
Net unrealized gain (loss) on investments 861,314 (143,428) 29,524 (127,551) 9,799 (11,517)
------------ ------------ ------------ ------------ ------------ ------------
Net increase in net assets
resulting from operations 1,293,360 7,031 184,349 146,623 71,462 40,972
Net deposits into (deductions from)
Separate Account (145,477) 571,671 1,313,941 2,340,021 177,261 104,218
------------ ------------ ------------ ------------ ------------ ------------
Increase in net assets 1,147,883 578,702 1,498,290 2,486,644 248,723 145,190
Net assets, beginning of period 3,522,191 2,943,489 1,445,199 1,878,922 1,630,199 1,485,009
------------ ------------ ------------ ------------ ------------ ------------
Net assets, end of period $ 4,670,074 $ 3,522,191 $ 2,943,489 $ 4,365,566 $ 1,878,922 $ 1,630,199
============ ============ ============ ============ ============ ============
<FN>
<F*>This fund was formerly known as the Equity Index Fund.
See accompanying notes to the financial statements.
(continued)
<PAGE> 174
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<CAPTION>
BOND INDEX MANAGED EQUITY
FUND DIVISION FUND DIVISION
---------------------------------------- ----------------------------------------
1995 1994 1993 1995 1994 1993
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income (loss) $ (18,655) $ (19,190) $ (13,972) $ (16,965) $ (16,229) $ (15,269)
Net realized gain on investments 38,220 254,161 106,695 192,457 319,841 282,028
Net unrealized gain (loss) on investments 332,511 (346,004) 33,009 381,204 (393,292) (129,674)
------------ ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations 352,076 (111,033) 125,732 556,696 (89,680) 137,085
Net deposits into (deductions from)
Separate Account (1,271,114) 143,229 1,387,954 (487,360) (55,715) 374,743
------------ ----------- ----------- ----------- ----------- -----------
Increase (decrease) in net assets (919,038) 32,196 1,513,686 69,336 (145,395) 511,828
Net assets, beginning of period 2,351,145 2,318,949 805,263 1,836,076 1,981,471 1,469,643
------------ ----------- ----------- ----------- ----------- -----------
Net assets, end of period $ 1,432,107 $ 2,351,145 $ 2,318,949 $ 1,905,412 $ 1,836,076 $ 1,981,471
============ =========== =========== =========== =========== ===========
See accompanying notes to the financial statements.
(continued)
<PAGE> 175
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<CAPTION>
ASSET ALLOCATION INTERNATIONAL EQUITY
FUND DIVISION FUND DIVISION
------------------------------------- --------------------------------------
1995 1994 1993 1995 1994 1993<F*>
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income (loss) $ (52,116) $ (41,159) $ (30,974) $ (40,101) $ (33,220) $ (21,014)
Net realized gain on investments 605,510 415,891 726,071 556,435 401,508 286,917
Net unrealized gain (loss) on investments 963,246 (619,037) (381,273) (158,021) (202,072) 400,379
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations 1,516,640 (244,305) 313,824 358,313 166,216 666,282
Net deposits into (deductions from)
Separate Account (709,124) 649,032 159,169 789,597 775,500 2,631,415
----------- ----------- ----------- ----------- ----------- -----------
Increase in net assets 807,516 404,727 472,993 1,147,910 941,716 3,297,697
Net assets, beginning of period 5,148,530 4,743,803 4,270,810 4,239,413 3,297,697 0
----------- ----------- ----------- ----------- ----------- -----------
Net assets, end of period $ 5,956,046 $ 5,148,530 $ 4,743,803 $ 5,387,323 $ 4,239,413 $ 3,297,697
=========== =========== =========== =========== =========== ===========
<FN>
<F*>The International Equity Fund began operations on February 16, 1993.
See accompanying notes to the financial statements.
(continued)
<PAGE> 176
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<CAPTION>
SPECIAL EQUITY EQUITY-INCOME
FUND DIVISION FUND DIVISION
------------------------------------- -----------------------------------
1995 1994 1993<F*> 1995 1994 1993<F*>
----------- ----------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income (loss) $ (31,649) $ (20,993) $ (10,666) $ 188,734 $ 56,860 $ 3,681
Net realized gain on investments 331,442 78,310 34,902 67,467 8,414 244
Net unrealized gain (loss) on investments 388,731 (90,257) 165,807 850,722 5,259 12,226
----------- ----------- ----------- ----------- ----------- ---------
Net increase (decrease) in net assets
resulting from operations 688,524 (32,940) 190,043 1,106,923 70,533 16,151
Net deposits into Separate Account 229,832 1,309,438 1,811,493 2,068,778 1,686,138 531,561
----------- ----------- ----------- ----------- ----------- ---------
Increase in net assets 918,356 1,276,498 2,001,536 3,175,701 1,756,671 547,712
Net assets, beginning of period 3,278,034 2,001,536 0 2,304,383 547,712 0
----------- ----------- ----------- ----------- ----------- ---------
Net assets, end of period $ 4,196,390 $ 3,278,034 $ 2,001,536 $ 5,480,084 $ 2,304,383 $ 547,712
=========== =========== =========== =========== =========== =========
<FN>
<F*>The Special Equity Fund and the Equity-Income Fund began operations on February 16 and March 18, 1993, respectively.
See accompanying notes to the financial statements.
(continued)
<PAGE> 177
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<CAPTION>
GROWTH OVERSEAS
FUND DIVISION FUND DIVISION
------------------------------------- -----------------------------------
1995 1994 1993<F*> 1995 1994 1993<F*>
----------- ----------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income (loss) $ (25,138) $ 55,958 $ (2,588) $ (5,310) $ (7,280) $ (1,002)
Net realized gain (loss) on investments 176,048 (6,807) 1,346 19,162 28,436 2,669
Net unrealized gain (loss) on investments 1,450,103 11,426 40,113 247,043 (60,031) 23,986
----------- ----------- ----------- ----------- ----------- ---------
Net increase (decrease) in net assets
resulting from operations 1,601,013 60,577 38,871 260,895 (38,875) 25,653
Net deposits into Separate Account 1,991,002 2,588,073 1,055,365 1,053,659 1,672,381 459,564
----------- ----------- ----------- ----------- ----------- ---------
Increase in net assets 3,592,015 2,648,650 1,094,236 1,314,554 1,633,506 485,217
Net assets, beginning of period 3,742,886 1,094,236 0 2,118,723 485,217 0
----------- ----------- ----------- ----------- ----------- ---------
Net assets, end of period $ 7,334,901 $ 3,742,886 $ 1,094,236 $ 3,433,277 $ 2,118,723 $ 485,217
=========== =========== =========== =========== =========== =========
<FN>
<F*>The Growth Fund and the Overseas Fund began operations on March 4 and March 11, 1993, respectively.
See accompanying notes to the financial statements.
(continued)
<PAGE> 178
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
PERIOD ENDED DECEMBER 31, 1995
<CAPTION>
ASSET MANAGER HIGH INCOME GOLD & NATURAL RESOURCES
FUND DIVISION FUND DIVISION FUND DIVISION
----------------- -------------------- ------------------------
1995<F*> 1995<F*> 1995<F*>
----------------- -------------------- ------------------------
<S> <C> <C> <C>
Operations:
Net investment income (loss) $ (52) $ (253) $ 18
Net realized gain (loss) on investments 13 1,132 (5)
Net unrealized gain on investments 1,779 2,337 370
--------- --------- ----------
Net increase in net assets
resulting from operations 1,740 3,216 383
Net deposits into Separate Account 49,378 199,733 9,414
--------- --------- ----------
Increase in net assets 51,118 202,949 9,797
Net assets, beginning of period 0 0 0
--------- --------- ----------
Net assets, end of period $ 51,118 $ 202,949 $ 9,797
========= ========= ==========
<FN>
<F*> The Asset Manager Fund, High Income Fund, and Gold & Natural Resources Fund began operations on July 19,
May 24, and August 9, 1995, respectively.
See accompanying notes to the financial statements.
</TABLE>
<PAGE> 179
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
Note 1 - Organization
General American Separate Account Eleven (the Separate Account) commenced
operations on September 15, 1987 and is registered under the Investment
Company Act of 1940 (1940 Act) as a unit investment trust. The Separate
Account offers three products: Variable Universal Life (VUL-95), Variable
General Select Plus (VGSP), and Variable Universal Life (VUL-100) that
receive and invest net premiums for flexible premium variable life insurance
policies that are issued by General American Life Insurance Company (General
American). The Separate Account is divided into thirteen Divisions. Each
Division invests exclusively in shares of a single Fund of either General
American Capital Company, Variable Insurance Products Fund, Variable
Insurance Products Fund II, or Van Eck Worldwide Insurance Trust which are
open-end, diversified management companies. The Funds of the General
American Capital Company, sponsored by General American, are the S & P 500
Index (formerly Equity Index), Money Market, Bond Index, Managed Equity,
Asset Allocation, International Equity, and the Special Equity Fund
Divisions. The funds of the Variable Insurance Products Fund, managed by
Fidelity Management & Research Company, are the Equity-Income, Growth,
Overseas, and the High Income Fund Divisions. The fund of the Variable
Insurance Products Fund II, managed by Fidelity Management and Research
Company is the Asset Manager Fund. The fund of the Van Eck Worldwide
Insurance Trust, managed by Van Eck Associates Corporation, is the Gold and
Natural Resources Fund. Policyholders have the option of directing their
premium payments into one or all of the Funds as well as into the general
account of General American, which is not generally subject to regulation
under the Securities Act of 1933 or the 1940 Act.
Note 2 - Significant Accounting Policies
The following is a summary of significant accounting policies followed by
the Separate Account in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
A. Investments
The Separate Accounts' investments in the thirteen Funds are valued
daily based on the net asset values of the respective Fund shares held as
reported to General American by General American Capital Company, Variable
Insurance Products Fund, Variable Insurance Products Fund II, and Van Eck
Worldwide Insurance Trust. The specific identification method is used in
determining the cost of shares sold on withdrawals by the Separate Account.
Share transactions are recorded on the trade date, which is the same as the
settlement date.
B. Federal Income Taxes
Under current federal income tax law, capital gains from sales of
investments of the Separate Account are not taxable. Therefore, no federal
income tax expense has been provided.
C. Distribution of Income and Realized Capital Gains
General American Capital Company follows the federal income tax
practice known as consent dividending, whereby substantially all of its net
investment income and realized gains are deemed to be passed through to the
Separate Account. As a result, General American Capital Company does not
pay any dividends or capital gain distributions. During December of each
year, accumulated investment income and capital gains of the underlying
Capital Company Fund are allocated to the Separate Account by increasing the
cost basis and recognizing a capital gain in the Separate Account. The
Variable Insurance Products Fund, Variable Insurance Products Fund II, and
Van Eck Worldwide Insurance Trust intend to pay out all of its net
investment income and net realized capital gains each year. Dividends from
the funds are distributed at least annually on a per share basis and are
recorded on the ex dividend date. Normally, net realized capital gains, if
any, are distributed each year for each fund. Such income and capital gain
distributions are automatically reinvested in additional shares of the
funds.
<PAGE> 180
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
D. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to 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 increase and decrease in net assets
from operations during the period. Actual results could differ from those
estimates.
Note 3 - Policy Charges
Charges are deducted from premiums and paid to General American for
providing the insurance benefits set forth in the contracts and any
additional benefits added by rider, administering the policies,
reimbursement of expenses incurred in distributing the policies, and
assuming certain risks in connection with the policies.
Prior to the allocation of net premiums among General American's general
account and the Fund Divisions of the Separate Account, premium payments
are reduced by premium expense charges, which consist of a sales charge and
a charge for premium taxes. The premium payment, less the premium expense
charge, equals the net premium.
Sales Charge: A sales charge equal to 6% is deducted from each VUL-95
-------------
premium paid. A sales charge of 5% in years one through ten and 2.25%
thereafter is deducted from each VGSP premium paid. This charge is deducted
to partially reimburse General American for expenses incurred in
distributing the policy and any additional benefits provided by rider. No
sales charge is deducted from VUL-100 premiums.
Premium Taxes: Various state and political subdivisions impose a tax
--------------
on premiums received by insurance companies. Premium taxes vary from state
to state. A deduction of 2% of each VUL-95 premium, 2.5% of each VGSP
premium, and 2.10% of each VUL-100 premium is made from each premium payment
for these taxes. In addition, a 1.25% deduction is taken from VUL-100
premiums to cover the company's Federal income tax costs attributable to the
amount of premium received.
Charges are deducted monthly from the cash value of each policy to
compensate General American for (a) certain administrative costs; (b)
insurance underwriting and acquisition expenses in connection with issuing a
policy; (c) the cost of insurance, and (d) the cost of optional benefits
added by rider.
Administrative Charge: General American has responsibility for the
----------------------
administration of the policies and the Separate Account. As reimbursement
for administrative expenses related to the maintenance of each policy and
the Separate Account, General American assesses a monthly administrative
charge against each policy. This charge is $10 per month for a standard
policy and $12 per month for a pension policy during the first 12 policy
months and $4 (standard) and $6 (pension) per month for all policy months
beyond the 12th for VUL-95 contracts. The charge is $4 per month for VGSP
contracts. The charge is $13 per month during the first 12 policy months
and $6 per month thereafter for VUL-100 contracts.
Insurance Underwriting and Acquisition Expense Charge: An additional
------------------------------------------------------
administrative charge is deducted from policy cash value for VUL-95 as part
of the monthly deduction during the first 12 policy months and for the first
12 policy months following an increase in the face amount. The charge is
$0.08 per month multiplied by the face amount divided by 1,000. For
VUL-100, the charge during the first 12 policy months is $0.16 per month
multiplied by the face amount divided by 1,000, and in all policy years
thereafter, the charge is $0.01 per month multiplied by the face amount
divided by 1,000.
<PAGE> 181
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
Cost of Insurance: The cost of insurance is deducted on each monthly
------------------
anniversary date for the following policy month. Because the cost of
insurance depends upon a number of variables, the cost varies for each
policy month. The cost of insurance is determined separately for the
initial face amount and for any subsequent increases in face amount.
General American determines the monthly cost of insurance charge by
multiplying the applicable cost of insurance rate or rates by the net amount
at risk for each policy month.
Optional Rider Benefits Charge: This monthly deduction includes
-------------------------------
charges for any additional benefits provided by rider.
Contingent Deferred Sales Charge: During the first ten policy years
--------------------------------
for VUL-95 and VGSP, and the first fifteen years for VUL-100, General
American also assesses a charge upon surrender or lapse of a Policy, a
requested decrease in face amount, or a partial withdrawal that causes the
face amount to decrease. The amount of the charge assessed depends on a
number of factors, including whether the event is a full surrender or lapse
or only a decrease in face amount, the amount of premiums received to date
by General American, and the policy year in which the surrender or other
event takes place.
Mortality and Expense Charge: In addition to the above charges, a
-----------------------------
daily charge is made for the mortality and expense risks assumed by General
American. General American deducts a daily charge from the Separate Account
at the rate of .002319% for VUL-95, .0019111% for VGSP, and .002455% for
VUL-100 of the net assets of each division of the Separate Account, which
equals an annual rate of .85%, .70%, and .90% for VUL-95, VGSP, and VUL-100
respectively. VUL-95, VGSP, and VUL-100 mortality and expense charges for
1995 were $269,027, $47,617, and $2,880, respectively. The mortality risk
assumed by General American is the risk that those insured may die sooner
than anticipated and therefore, that General American will pay an aggregate
amount of death benefits greater than anticipated. The expense risk assumed
is that expenses incurred in issuing and administering the policy will
exceed the amounts realized from the administrative charges assessed against
the policy.
<PAGE> 182
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
Note 4 - Purchases and Sales of Shares
During the year ended December 31, 1995, purchases including net realized
gain and income from distribution and proceeds from sales of General
American Capital Company shares were as follows:
<TABLE>
<CAPTION>
S & P 500 Money Bond Managed Asset International Special
Index Market Index Equity Allocation Equity Equity
Fund Fund Fund Fund Fund Fund Fund
---------- ---------- ----------- ----------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Purchases $1,581,971 $6,661,543 $ 508,923 $ 623,290 $1,601,344 $1,491,399 $1,274,625
========== ========== =========== =========== ========== ========== ==========
Sales $1,645,207 $4,135,625 $ 1,760,565 $ 934,536 $1,872,184 $ 222,880 $ 855,583
========== ========== =========== =========== ========== ========== ==========
</TABLE>
During the year ended December 31, 1995, purchases (including dividend
reinvestment) and proceeds from sales of Variable Insurance Products Fund
Shares were as follows:
<TABLE>
<CAPTION>
Equity-Income Growth Overseas High Income
Fund Fund Fund Fund
------------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Purchases $2,804,909 $3,015,080 $1,512,757 $ 225,413
========== ========== ========== ===========
Sales $ 486,651 $ 987,205 $ 408,880 $ 28,646
========== ========== ========== ===========
</TABLE>
During the year ended December 31, 1995, purchases (including dividend
reinvestment) and proceeds from sales of Variable Insurance Products Fund II
shares were as follows:
<TABLE>
<CAPTION>
Asset Manager
Fund
------------
<S> <C>
Purchases $ 48,583
============
Sales $ 448
============
</TABLE>
During the year ended December 31, 1995, purchases (including dividend
reinvestment) and proceeds from sales of Van Eck Worldwide Insurance Trust
shares were as follows:
<TABLE>
<CAPTION>
Gold and Natural
Resources Fund
----------------
<S> <C>
Purchases $ 9,579
============
Sales $ 144
============
</TABLE>
<PAGE> 183
Note 5 - Accumulation Unit Activity
The following is a summary of the accumulation unit activity for the years
ended, December 31, 1995, 1994, and 1993:
<TABLE>
<CAPTION>
S & P 500 INDEX MONEY MARKET
FUND DIVISION<F*> FUND DIVISION
----------------------------------- -------------------------------------
1995 1994 1993 1995 1994 1993
--------- -------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Variable Universal Life-95:
Deposits 78,391 78,329 124,523 206,798 326,065 328,809
Withdrawals (101,054) (61,101) (44,114) (215,226) (343,656) (325,426)
Outstanding units, beginning of period 193,698 176,470 96,061 93,606 111,197 107,814
--------- -------- -------- --------- --------- ---------
Outstanding units, end of period 171,035 193,698 176,470 85,178 93,606 111,197
========= ======== ======== ========= ========= =========
Variable General Select Plus:<F**>
Deposits 30,100 27,980 4,977 344,162 226,931 160,999
Withdrawals (15,451) (843) (41) (215,211) (184,184) (154,630)
Outstanding units, beginning of period 32,073 4,936 0 49,116 6,369 0
--------- -------- -------- --------- --------- ---------
Outstanding units, end of period 46,722 32,073 4,936 178,067 49,116 6,369
========= ======== ======== ========= ========= =========
Variable Univeral Life-100:<F***>
Deposits 14,240 214,797
Withdrawals (687) (110,989)
Outstanding units, beginning of period 0 0
--------- ---------
Outstanding units, end of period 13,553 103,808
========= =========
<FN>
<F*>This fund was formerly known as the Equity Index Fund
<F**>The Variable General Select Plus product was introduced in 1993, and the first deposit was received on March 31, 1993.
<F***>The Variable Universal Life 100 product was introduced in 1995, and the first deposit was received on June 7, 1995.
(continued)
<PAGE> 184
Note 5 - Accumulation Unit Activity (continued)
The following is a summary of the accumulation unit activity for the years
ended, December 31, 1995, 1994, and 1993:
<CAPTION>
BOND INDEX MANAGED EQUITY
FUND DIVISION FUND DIVISION
----------------------------------- -------------------------------------
1995 1994 1993 1995 1994 1993
--------- -------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Variable Universal Life-95:
Deposits 28,341 34,979 102,301 37,042 38,637 82,095
Withdrawals (102,229) (26,804) (18,035) (68,803) (43,454) (56,377)
Outstanding units, beginning of period 144,143 135,968 51,702 124,409 129,226 103,508
--------- -------- -------- --------- --------- ---------
Outstanding units, end of period 70,255 144,143 135,968 92,648 124,409 129,226
========= ======== ======== ========= ========= =========
Variable General Select Plus: <F**>
Deposits 5,765 1,257 86 5,835 1,260 84
Withdrawals (1,249) (35) (5) (595) (43) (4)
Outstanding units, beginning of period 1,303 81 0 1,297 80 0
--------- -------- -------- --------- --------- ---------
Outstanding units, end of period 5,819 1,303 81 6,537 1,297 80
========= ======== ======== ========= ========= =========
Variable Univeral Life-100:<F***>
Deposits 1,670 1,823
Withdrawals (75) (168)
Outstanding units, beginning of period 0 0
--------- ---------
Outstanding units, end of period 1,595 1,655
========= =========
<FN>
<F**>The Variable General Select Plus product was introduced in 1993, and the first deposit was received on March 31, 1993.
<F***>The Variable Universal Life 100 product was introduced in 1995, and the first deposit was received on June 7, 1995.
(continued)
<PAGE> 185
Note 5 - Accumulation Unit Activity, (continued)
The following is a summary of the accumulation unit activity for the years
ended, December 31, 1995, 1994, and 1993:
<CAPTION>
ASSET ALLOCATION INTERNATIONAL EQUITY
FUND DIVISION FUND DIVISION
----------------------------------- -------------------------------------
1995 1994 1993 1995 1994 1993<F*>
--------- -------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Variable Universal Life-95:
Deposits 80,183 101,360 130,078 74,018 71,731 91,938
Withdrawals (98,461) (49,338) (184,573) (28,390) (31,331) (41,396)
Outstanding units, beginning of period 258,432 206,410 260,905 90,942 50,542 0
--------- -------- -------- --------- --------- ---------
Outstanding units, end of period 240,154 258,432 206,410 136,570 90,942 50,542
========= ======== ======== ========= ========= =========
Variable General Select Plus: <F**>
Deposits 12,925 18,605 106,273 16,837 18,803 4,246
Withdrawals (31,947) (43,756) (4,011) (6,722) (730) (50)
Outstanding units, beginning of period 77,111 102,262 0 22,269 4,196 0
--------- -------- -------- --------- --------- ---------
Outstanding units, end of period 58,089 77,111 102,262 32,384 22,269 4,196
========= ======== ======== ========= ========= =========
Variable Univeral Life-100:<F***>
Deposits 1,072 4,468
Withdrawals (39) (777)
Outstanding units, beginning of period 0 0
--------- ---------
Outstanding units, end of period 1,033 3,691
========= =========
General American Life Insurance Company
seed money:
Deposits 0 0 0 0 0 200,000
Withdrawals 0 0 0 0 0 0
Outstanding units, beginning of period 0 0 0 200,000 200,000 0
--------- -------- -------- --------- --------- ---------
Outstanding units, end of period 0 0 0 200,000 200,000 200,000
========= ======== ======== ========= ========= =========
<FN>
<F*>The International Equity Fund began operations on February 16, 1993.
<F**>The Variable General Select Plus product was introduced in 1993, and the first deposit was received on March 31, 1993.
<F***>The Variable Universal Life 100 product was introduced in 1995, and the first deposit was received on June 7, 1995.
(continued)
<PAGE> 186
Note 5 - Accumulation Unit Activity, (continued)
The following is a summary of the accumulation unit activity for the years
ended, December 31, 1995, 1994, and 1993:
<CAPTION>
GROWTH OVERSEAS
FUND DIVISION FUND DIVISION
----------------------------------- -------------------------------------
1995 1994 1993<F*> 1995 1994 1993<F*>
--------- -------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Variable Universal Life-95:
Deposits 181,296 202,047 73,613 97,609 116,391 37,139
Withdrawals (80,832) (42,320) (7,557) (42,775) (31,173) (3,221)
Outstanding units, beginning of period 225,783 66,056 0 119,136 33,918 0
--------- -------- -------- --------- --------- ---------
Outstanding units, end of period 326,247 225,783 66,056 173,970 119,136 33,918
========= ======== ======== ========= ========= =========
Variable General Select Plus: <F**>
Deposits 90,761 95,218 30,412 46,058 56,343 4,847
Withdrawals (60,661) (19,705) (469) (24,367) (9,246) (25)
Outstanding units, beginning of period 105,456 29,943 0 51,919 4,822 0
--------- -------- -------- --------- --------- ---------
Outstanding units, end of period 135,556 105,456 29,943 73,610 51,919 4,822
========= ======== ======== ========= ========= =========
Variable Univeral Life-100:<F***>
Deposits 25,375 9,829
Withdrawals (1,865) (1,146)
Outstanding units, beginning of period 0 0
--------- ---------
Outstanding units, end of period 23,510 8,683
========= =========
<FN>
<F*>The Growth Fund and the Overseas Fund began operations on March 4, and March 11, 1993, respectively.
<F**>The Variable General Select Plus product was introduced in 1993, and the first deposit was received on March 31, 1993.
<F***>The Variable Universal Life 100 product was introduced in 1995, and the first deposit was received on June 7, 1995.
(continued)
<PAGE> 187
Note 5 - Accumulation Unit Activity, (continued)
The following is a summary of the accumulation unit activity for the years ended, December 31, 1995, 1994, and 1993:
<CAPTION>
SPECIAL EQUITY EQUITY-INCOME
FUND DIVISION FUND DIVISION
----------------------------------- ----------------------------------
1995 1994 1993<F*> 1995 1994 1993<F*>
------- ------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Variable Universal Life-95:
Deposits 94,909 119,434 79,353 143,543 139,841 46,425
Withdrawals (88,190) (31,453) (6,030) (48,670) (28,685) (3,678)
Outstanding units, beginning of period 161,304 73,323 0 153,903 42,747 0
------- ------- ------- ------- ------- ------
Outstanding units, end of period 168,023 161,304 73,323 248,776 153,903 42,747
======= ======= ======= ======= ======= ======
Variable General Select Plus:<F**>
Deposits 22,352 33,038 4,632 78,040 51,432 7,763
Withdrawals (12,685) (1,030) (55) (34,513) (13,273) (91)
Outstanding units, beginning of period 36,585 4,577 0 45,831 7,672 0
------- ------- ------- ------- ------- ------
Outstanding units, end of period 46,252 36,585 4,577 89,358 45,831 7,672
======= ======= ======= ======= ======= ======
Variable Univeral Life-100:<F***>
Deposits 4,498 20,481
Withdrawals (725) (1,718)
Outstanding units, beginning of period 0 0
------- -------
Outstanding units, end of period 3,773 18,763
------- -------
General American Life Insurance Company
seed money:
Deposits 0 0 100,000 0 0 0
Withdrawals 0 0 0 0 0 0
Outstanding units, beginning of period 100,000 100,000 0 0 0 0
------- ------- ------- ------- ------- ------
Outstanding units, end of period 100,000 100,000 100,000 0 0 0
======= ======= ======= ======= ======= ======
<FN>
<F*>The Special Equity Fund and the Equity-Income Fund began operations on February 16 and March 18, 1993 respectively.
<F**>The Variable General Select Plus product was introduced in 1993, and the first deposit was received on March 31, 1993.
<F***>The Variable Universal Life 100 product was introduced in 1995, and the first deposit was received on June 7, 1995.
(continued)
<PAGE> 188
Note 5 - Accumulation Unit Activity, (continued)
The following is a summary of the accumulation unit activity for the period ended, December 31, 1995:
<CAPTION>
ASSET MANAGER HIGH INCOME GOLD AND NATURAL RESOURCES
FUND DIVISION FUND DIVISION FUND DIVISION
--------------------- ------------------- ----------------------------------
1995<F*> 1995<F*> 1995<F*>
--------------------- ------------------- ----------------------------------
<S> <C> <C> <C>
Variable Universal Life-95:
Deposits 331 6,217 135
Withdrawals (4) (237) (9)
Outstanding units, beginning of period 0 0 0
----- ----- ---
Outstanding units, end of period 327 5,980 126
===== ===== ===
Variable General Select Plus: <F**>
Deposits 1,534 6,436 0
Withdrawals (6) (115) 0
Outstanding units, beginning of period 0 0 0
----- ----- ---
Outstanding units, end of period 1,528 6,321 0
===== ===== ===
Variable Univeral Life-100:<F**>
Deposits 3,044 6,662 890
Withdrawals (100) (159) (31)
Outstanding units, beginning of period 0 0 0
----- ----- ---
Outstanding units, end of period 2,944 6,503 859
===== ===== ===
<FN>
<F*>The Asset Manager Fund, High Income Fund, and Gold & Natural Resources Fund began operations on July 19, May 24, and August 9,
1995, respectively.
<F**>The Variable Universal Life 100 product was introduced in 1995, and the first deposit was received on June 7, 1995.
</TABLE>
<PAGE> 189
Note 6 - Summary of Gross and Net Deposits into Separate Account
Deposits into the Separate Account are used to purchase shares in the Capital
Company, Variable Insurance Products Funds, Variable Insurance Products Fund
II, or Van Eck Worldwide Insurance Trust. Net deposits represent the amounts
available for investment in such shares after deduction of sales charges,
premium taxes, administrative costs, insurance, underwriting and acquisition
expense, cost of insurance, and cost of optional benefits by rider. Realized
and unrealized capital gains (losses) have been excluded from net deposits
into the Separate Account because they have been included in increase
(decrease) in net assets resulting from operations in the Statements or
Changes in Net Assets.
<TABLE>
<CAPTION>
Variable Universal Life-95:
- ---------------------------
S & P 500 INDEX MONEY MARKET
FUND DIVISION<F*> FUND DIVISION
-------------------------------------- -----------------------------------------
1995 1994 1993 1995 1994 1993
----------- --------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 919,322 $ 712,049 $ 611,759 $ 2,001,421 $ 4,699,999 $ 4,656,095
Transfers between fund divisions and
General American 472,868 (7,433) 990,439 (1,597,558) (3,475,334) (3,470,334)
Surrenders and withdrawals (1,380,995) (162,056) (13,771) (346,828) (274,623) (7,137)
----------- --------- ---------- ----------- ----------- -----------
Total gross deposits, transfers, and
surrenders between fund divisions 11,195 542,570 1,588,427 57,035 950,042 1,178,473
----------- --------- ---------- ----------- ----------- -----------
Deductions:
Sales charges & premium taxes 82,459 83,216 50,516 194,508 398,298 374,871
Administrative costs and other expense
charges 64,223 123,584 82,963 95,102 492,935 426,628
Cost of insurance and additional benefits 370,924 295,287 192,315 234,609 326,377 331,256
----------- --------- ---------- ----------- ----------- -----------
Total deductions 517,606 502,087 325,794 524,219 1,217,610 1,132,755
----------- --------- ---------- ----------- ----------- -----------
Net deposits into (deductions from)
Separate Account $ (506,411) $ 40,483 $1,262,633 $ (467,184) $ (267,568) $ 45,718
=========== ========= ========== =========== =========== ===========
<FN>
<F*>This fund was formerly known as the Equity Index Fund.
(continued)
<PAGE> 190
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<CAPTION>
Variable Universal Life-95:
- ---------------------------
BOND INDEX MANAGED EQUITY
FUND DIVISION FUND DIVISION
-------------------------------------- ---------------------------------------
1995 1994 1993 1995 1994 1993
----------- --------- ---------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 421,967 $496,821 $ 212,957 $ 465,063 $ 552,307 $689,307
Transfers between fund divisions and
General American 62,346 (54,209) 1,316,365 (121,086) (157,877) 135,951
Surrenders and withdrawals (1,586,477) (64,076) (1,604) (647,675) (144,799) (69,915)
----------- -------- ---------- --------- --------- --------
Total gross deposits, transfers, and
surrenders between fund divisions (1,102,164) 378,536 1,527,718 (303,698) 249,631 755,343
----------- -------- ---------- --------- --------- --------
Deductions:
Sales charges & premium taxes 32,747 40,004 16,011 38,137 47,457 62,788
Administrative costs and other expense
charges 38,228 51,703 25,347 32,697 69,603 95,414
Cost of insurance and additional benefits 168,249 156,048 99,237 201,403 201,082 223,201
----------- -------- ---------- --------- --------- --------
Total deductions 239,224 247,755 140,595 272,237 318,142 381,403
----------- -------- ---------- --------- --------- --------
Net deposits into (deductions from)
Separate Account $(1,341,388) $130,781 $1,387,123 $(575,935) $ (68,511) $373,940
=========== ======== ========== ========= ========= ========
(continued)
<PAGE> 191
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<CAPTION>
Variable Universal Life-95:
- ---------------------------
ASSET ALLOCATION INTERNATIONAL EQUITY
FUND DIVISION FUND DIVISION
---------------------------------------- ---------------------------------------
1995 1994 1993 1995 1994 1993<F*>
----------- ---------- ----------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 1,361,239 $1,682,596 $ 1,052,209 $635,309 $608,033 $2,259,051
Transfers between fund divisions and
General American (10,959) 83,984 (1,340,630) 302,360 246,711 413,861
Surrenders and withdrawals (1,175,619) (186,438) (49,957) (45,598) (44,700) (695)
----------- ---------- ----------- -------- -------- ----------
Total gross deposits, transfers, and
surrenders between fund divisions 174,661 1,580,142 (338,378) 892,071 810,044 2,672,217
----------- ---------- ----------- -------- -------- ----------
Deductions:
Sales charges & premium taxes 115,321 130,253 85,090 54,639 48,119 20,276
Administrative costs and other expense
charges 55,437 155,847 119,804 26,569 73,520 25,104
Cost of insurance and additional benefits 503,988 448,764 365,674 184,782 124,406 40,778
----------- ---------- ----------- -------- -------- ----------
Total deductions 674,746 734,864 570,568 265,990 246,045 86,158
----------- ---------- ----------- -------- -------- ----------
Net deposits into (deductions from)
Separate Account $ (500,085) $ 845,278 $ (908,946) $626,081 $563,999 $2,586,059
=========== ========== =========== ======== ======== ==========
<FN>
<F*>The International Equity Fund Division began operations on February 16, 1993.
(continued)
<PAGE> 192
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<CAPTION>
Variable Universal Life-95:
- ---------------------------
SPECIAL EQUITY EQUITY-INCOME
FUND DIVISION FUND DIVISION
--------------------------------------- -------------------------------------
1995 1994 1993<F*> 1995 1994 1993<F*>
--------- ---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 713,819 $ 746,886 $ 1,324,154 $ 1,217,315 $ 783,048 $135,825
Transfers between fund divisions and
General American (319,339) 562,587 551,090 565,593 832,542 372,878
Surrenders and withdrawals (35,191) (53,731) (702) (37,075) (20,500) 0
--------- ---------- ----------- ----------- ---------- --------
Total gross deposits, transfers, and
surrenders between fund divisions 359,289 1,255,742 1,874,542 1,745,833 1,595,190 508,703
--------- ---------- ----------- ----------- ---------- --------
Deductions:
Sales charges & premium taxes 57,765 62,347 25,935 101,562 59,726 10,947
Administrative costs and other expense
charges 21,671 87,848 36,101 62,440 110,908 20,146
Cost of insurance and additional benefits 206,889 143,671 49,754 344,156 176,144 26,075
--------- ---------- ----------- ----------- ---------- --------
Total deductions 286,325 293,866 111,790 508,158 346,778 57,168
--------- ---------- ----------- ----------- ---------- --------
Net deposits into Separate Account $ 72,964 $ 961,876 $ 1,762,752 $ 1,237,675 $1,248,412 $451,535
========= ========== =========== =========== ========== ========
<FN>
<F*>The Special Equity Fund and the Equity-Income Fund Divisions began operations on February 16, and March 18, 1993, respectively.
(continued)
<PAGE> 193
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<CAPTION>
Variable Universal Life-95:
- ---------------------------
GROWTH OVERSEAS
FUND DIVISION<F*> FUND DIVISION
------------------------------------- -------------------------------------
1995 1994 1993 1995 1994 1993
---------- ---------- -------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $1,771,614 $1,291,793 $299,560 $ 978,388 $ 795,752 $135,955
Transfers between fund divisions and
General American 348,401 1,055,928 560,834 156,839 677,421 329,027
Surrenders and withdrawals (61,341) (16,988) (711) (33,911) (5,052) (706)
---------- ---------- -------- ---------- ---------- --------
Total gross deposits, transfers, and
surrenders between fund divisions 2,058,674 2,330,733 859,683 1,101,316 1,468,121 464,276
---------- ---------- -------- ---------- ---------- --------
Deductions:
Sales charges & premium taxes 145,300 104,397 24,087 79,076 65,305 10,896
Administrative costs and other expense
charges 94,464 178,047 43,172 47,698 104,587 18,054
Cost of insurance and additional benefits 494,220 261,855 50,807 269,853 174,032 28,894
---------- ---------- -------- ---------- ---------- --------
Total deductions 733,984 544,299 118,066 396,627 343,924 57,844
---------- ---------- -------- ---------- ---------- --------
Net deposits into Separate Account $1,324,690 $1,786,434 $741,617 $ 704,689 $1,124,197 $406,432
========== ========== ======== ========== ========== ========
<FN>
<F*>The Growth Fund and the Overseas Fund Divisions began operations on March 4, and March 11, 1993, respectively.
(continued)
<PAGE> 194
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<CAPTION>
Variable Universal Life-95:
- ---------------------------
ASSET MANAGER HIGH INCOME GOLD & NATURAL RESOURCES
FUND DIVISION FUND DIVISION FUND DIVISION
------------------ ----------------- ----------------------------
1995<F*> 1995<F*> 1995<F*>
------------------ ----------------- ----------------------------
<S> <C> <C> <C>
Total gross deposits $ 24 $ 6,373 $ 1,007
Transfers between fund divisions and
General American 3,317 59,489 387
Surrenders and withdrawals 0 0 0
------- ------- -------
Total gross deposits, transfers, and
surrenders between fund divisions 3,341 65,862 1,394
------- ------- -------
Deductions:
Sales charges & premium taxes 3 499 81
Administrative costs and other expense
charges 1 152 15
Cost of insurance and additional benefits 38 2,360 72
------- ------- -------
Total deductions 42 3,011 168
------- ------- -------
Net deposits into Separate Account $ 3,299 $62,851 $ 1,226
======= ======= =======
<FN>
<F*>The Asset Manager Fund, the High Income Fund, and the Gold & Natural Resources Fund Divisions began operations on July 19,
May 2 4,and August 9, 1995, respectively.
</TABLE>
(continued)
<PAGE> 195
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<TABLE>
<CAPTION>
Variable General Select Plus:<F**>
- ----------------------------------
S & P 500 INDEX MONEY MARKET
FUND DIVISION<F*> FUND DIVISION
------------------------------------- -----------------------------------------
1995 1994 1993 1995 1994 1993
---------- ---------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 47,504 $ 453,179 $ 32,784 $ 3,333,097 $ 2,408,387 $ 1,900,807
Transfers between fund divisions
and General American 182,278 116,566 23,666 (1,350,435) (1,573,558) (1,546,175)
Surrenders and withdrawals (15,259) (1,470) 0 (10,440) 0 0
---------- ---------- --------- ----------- ----------- -----------
Total gross deposits, transfers, and
surrenders between fund divisions 214,523 568,275 56,450 1,972,222 834,829 354,632
---------- ---------- --------- ----------- ----------- -----------
Deductions:
Sales charges & premium taxes 11,884 15,406 2,452 232,745 181,024 142,444
Administrative costs and other
expense charges 2,255 14,773 2,310 3,550 170,179 132,319
Cost of insurance and additional
benefits 18,795 6,908 380 85,423 38,797 21,369
---------- ---------- --------- ----------- ----------- -----------
Total deductions 32,934 37,087 5,142 321,718 390,000 296,132
---------- ---------- --------- ----------- ----------- -----------
Net deposits into
Separate Account $ 181,589 $ 531,188 $ 51,308 $ 1,650,504 $ 444,829 $ 58,500
========== ========== ========= =========== =========== ===========
<FN>
<F*>This fund was formerly known as the Equity Index Fund.
<F**>The Variable General Select Plus product was introduced in 1993, and the first deposit was received on March 31, 1993.
(continued)
<PAGE> 196
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<CAPTION>
Variable General Select Plus:<F**>
- ----------------------------------
BOND INDEX MANAGED EQUITY
FUND DIVISION FUND DIVISION
------------------------------------- -----------------------------------------
1995 1994 1993 1995 1994 1993
---------- ---------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 9,129 $ 2,394 $ 713 $ 9,302 $ 3,900 $ 716
Transfers between fund divisions
and General American 57,441 10,690 272 60,563 9,776 234
Surrenders and withdrawals (12,416) 0 0 0 0 0
---------- ---------- --------- ----------- ----------- -----------
Total gross deposits, transfers, and
surrenders between fund divisions 54,154 13,084 985 69,865 13,676 950
---------- ---------- --------- ----------- ----------- -----------
Deductions:
Sales charges & premium taxes 614 152 54 645 226 54
Administrative costs and other
expense charges 713 213 57 148 259 55
Cost of insurance and additional
benefits 1,149 271 43 1,454 395 38
---------- ---------- --------- ----------- ----------- -----------
Total deductions 2,476 636 154 2,247 880 147
---------- ---------- --------- ----------- ----------- -----------
Net deposits into
Separate Account $ 51,678 $ 12,448 $ 831 $ 67,618 $ 12,796 $ 803
========== ========== ========= =========== =========== ===========
<FN>
<F**>The Variable General Select Plus product was introduced in 1993, and the first deposit was received on March 31, 1993.
(continued)
<PAGE> 197
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<CAPTION>
Variable General Select Plus:<F**>
- ----------------------------------
ASSET ALLOCATION INTERNATIONAL EQUITY
FUND DIVISION FUND DIVISION
------------------------------------- -----------------------------------------
1995 1994 1993 1995 1994 1993<F*>
---------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ (34,323) $ 48,281 $ 435 $ 76,251 $ 92,237 $ 11,318
Transfers between fund divisions
and General American (131,408) (183,023) 1,068,765 76,707 141,207 36,203
Surrenders and withdrawals (10,179) (22,704) 0 (4,465) (489) 0
---------- ---------- ----------- ----------- ----------- -----------
Total gross deposits, transfers, and
surrenders between fund divisions (175,910) (157,446) 1,069,200 148,493 232,955 47,521
---------- ---------- ----------- ----------- ----------- -----------
Deductions:
Sales charges & premium taxes 6,512 1,704 49 7,697 6,884 848
Administrative costs and other
expense charges 1,175 3,794 69 1,158 6,913 842
Cost of insurance and additional
benefits 38,419 33,302 967 15,526 7,657 475
---------- ---------- ----------- ----------- ----------- -----------
Total deductions 46,106 38,800 1,085 24,381 21,454 2,165
---------- ---------- ----------- ----------- ----------- -----------
Net deposits into (deductions from)
Separate Account $ (222,016) $ (196,246) $ 1,068,115 $ 124,112 $ 211,501 $ 45,356
========== ========== =========== =========== =========== ===========
<FN>
<F*>The International Equity Fund Division began operations on February 16, 1993.
<F**>The Variable General Select Plus product was introduced in 1993, and the first deposit was received on March 31, 1993.
(continued)
<PAGE> 198
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<CAPTION>
Variable General Select Plus:<F**>
- ----------------------------------
SPECIAL EQUITY EQUITY-INCOME
FUND DIVISION FUND DIVISION
------------------------------------- -----------------------------------------
1995 1994 1993<F*> 1995 1994 1993<F*>
---------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 81,787 $ 206,659 $ 26,654 $ 285,714 $ 170,100 $ 4,644
Transfers between fund divisions
and General American 76,580 181,915 26,500 446,973 312,672 76,984
Surrenders and withdrawals (11,584) (1,182) 0 (62,763) 0 0
---------- ---------- ----------- ----------- ----------- -----------
Total gross deposits, transfers, and
surrenders between fund divisions 146,783 387,392 53,154 669,924 482,772 81,628
---------- ---------- ----------- ----------- ----------- -----------
Deductions:
Sales charges & premium taxes 12,214 15,456 1,991 20,534 12,452 330
Administrative costs and other
expense charges 1,880 14,899 1,887 4,696 12,315 381
Cost of insurance and additional
benefits 19,771 9,475 535 54,185 20,279 891
---------- ---------- ----------- ----------- ----------- -----------
Total deductions 33,865 39,830 4,413 79,415 45,046 1,602
---------- ---------- ----------- ----------- ----------- -----------
Net deposits into
Separate Account $ 112,918 $ 347,562 $ 48,741 $ 590,509 $ 437,726 $ 80,026
========== ========== =========== =========== =========== ===========
<FN>
<F*>The Special Equity Fund and the Equity-Income Fund Divisions began operations on February 16, and March 18, 1993, respectively.
<F**>The Variable General Select Plus product was introduced in 1993, and the first deposit was received on March 31, 1993.
(continued)
<PAGE> 199
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<CAPTION>
Variable General Select Plus:<F**>
- ----------------------------------
GROWTH OVERSEAS
FUND DIVISION FUND DIVISION
------------------------------------- -----------------------------------------
1995 1994 1993<F*> 1995 1994 1993<F*>
---------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 392,035 $ 372,501 $ 53,837 $ 154,142 $ 191,494 $ 24,337
Transfers between fund divisions
and General American 225,243 514,277 273,042 200,230 399,196 32,594
Surrenders and withdrawals (161,933) (1,272) 0 (55,346) (583) 0
---------- ---------- ----------- ----------- ----------- -----------
Total gross deposits, transfers, and
surrenders between fund divisions 455,345 885,506 326,879 299,026 590,107 56,931
---------- ---------- ----------- ----------- ----------- -----------
Deductions:
Sales charges & premium taxes 34,454 27,464 4,192 13,147 14,571 1,834
Administrative costs and other
expense charges 10,979 27,083 4,049 3,913 14,045 1,729
Cost of insurance and additional
benefits 71,870 29,320 4,890 27,603 13,307 236
---------- ---------- ----------- ----------- ----------- -----------
Total deductions 117,303 83,867 13,131 44,663 41,923 3,799
---------- ---------- ----------- ----------- ----------- -----------
Net deposits into
Separate Account $ 338,042 $ 801,639 $ 313,748 $ 254,363 $ 548,184 $ 53,132
========== ========== =========== =========== =========== ===========
<FN>
<F*>The Growth Fund and the Overseas Fund Divisions began operations on March 4, and March 11, 1993 respectively.
<F**>The Variable General Select Plus product was introduced in 1993, and the first deposit was received on March 31, 1993.
(continued)
<PAGE> 200
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<CAPTION>
Variable General Select Plus:
- -----------------------------
ASSET MANAGER HIGH INCOME GOLD & NATURAL RESOURCES
FUND DIVISION FUND DIVISION FUND DIVISION
--------------------- ---------------------- ----------------------------
1995<F*> 1995<F*> 1995<F*>
--------------------- ---------------------- ----------------------------
<S> <C> <C> <C>
Total gross deposits $ 255 $ 603 $ 0
Transfers between fund divisions
and General American 15,583 68,178 0
Surrenders and withdrawals 0 0 0
-------- -------- --------
Total gross deposits, transfers, and
surrenders between fund divisions 15,838 68,781 0
-------- -------- --------
Deductions:
Sales charges & premium taxes 10 37 0
Administrative costs and other
expense charges 3 22 0
Cost of insurance and additional
benefits 53 1,176 0
-------- -------- --------
Total deductions 66 1,235 0
-------- -------- --------
Net deposits into
Separate Account $ 15,772 $ 67,546 $ 0
======== ======== ========
<F*>The Asset Manager Fund, the High Income Fund, and the Gold & Natural Resources Fund Divisions began operations on July 19,
May 24, and August 9, 1995, respectively.
(continued)
<PAGE> 201
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<CAPTION>
Variable Universal Life-100:<F****>
- -----------------------------------
S & P 500 INDEX MONEY MARKET BOND INDEX MANAGED EQUITY ASSET ALLOCATION
FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION
----------------- --------------- --------------- ---------------- ------------------
1995 1995 1995 1995 1995
----------------- --------------- --------------- ---------------- ------------------
<S> <C> <C> <C> <C> <C>
Total gross deposits $ 16,519 $ 2,385,983 $ 2,634 $ 1,658 $ 926
Transfers between fund divisions
and General American 172,340 (1,031,031) 16,903 21,497 12,569
Surrenders and withdrawals 0 0 0 0 0
---------- ----------- --------- --------- ---------
Total gross deposits, transfers, and
surrenders between fund divisions 188,859 1,354,952 19,537 23,155 13,495
---------- ----------- --------- --------- ---------
Deductions:
Premium taxes 458 73,630 79 48 30
Administrative costs and other
expense charges 4,054 51,168 350 791 254
Cost of insurance and additional
benefits 5,002 73,453 512 1,359 234
---------- ----------- --------- --------- ---------
Total deductions 9,514 198,251 941 2,198 518
---------- ----------- --------- --------- ---------
Net deposits into
Separate Account $ 179,345 $ 1,156,701 $ 18,596 $ 20,957 $ 12,977
========== =========== ========= ========= =========
<FN>
<F****>The Variable Universal Life 100 product was introduced in 1995, and the first deposit was received on June 7, 1995.
(continued)
<PAGE> 202
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<CAPTION>
Variable Universal Life-100:<F****>
- -----------------------------------
INTERNATIONAL
EQUITY SPECIAL EQUITY EQUITY-INCOME GROWTH OVERSEAS
FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION
----------------- --------------- --------------- ---------------- ------------------
1995 1995 1995 1995 1995
----------------- --------------- --------------- ---------------- ------------------
<S> <C> <C> <C> <C> <C>
Total gross deposits $ 20,494 $ 18,525 $ 44,385 $ 50,500 $ 25,338
Transfers between fund divisions
and General American 27,674 34,407 219,488 304,735 82,196
Surrenders and withdrawals 0 0 0 0 0
--------- -------- --------- --------- ---------
Total gross deposits, transfers, and
surrenders between fund divisions 48,168 52,932 263,873 355,235 107,534
--------- -------- --------- --------- ---------
Deductions:
Premium taxes 656 598 1,400 1,424 762
Administrative costs and other
expense charges 2,585 2,711 8,425 10,377 4,563
Cost of insurance and additional
benefits 5,523 5,673 13,454 15,164 7,602
--------- -------- --------- --------- ---------
Total deductions 8,764 8,982 23,279 26,965 12,927
--------- -------- --------- --------- ---------
Net deposits into
Separate Account $ 39,404 $ 43,950 $ 240,594 $ 328,270 $ 94,607
========= ======== ========= ========= =========
<FN>
<F****>The Variable Universal Life 100 product was introduced in 1995, and the first deposit was received on June 7, 1995.
(continued)
<PAGE> 203
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
Variable Universal Life-100:<F****>
- -----------------------------------
ASSET MANAGER HIGH INCOME GOLD & NATURAL RESOURCES
FUND DIVISION FUND DIVISION FUND DIVISION
--------------------- ---------------------- ----------------------------
1995<F*> 1995<F*> 1995<F*>
--------------------- ---------------------- ----------------------------
<S> <C> <C> <C>
Total gross deposits $ 964 $ 5,221 $ 193
Transfers between fund divisions
and General American 30,404 65,982 8,300
Surrenders and withdrawals 0 0 0
--------- --------- ---------
Total gross deposits, transfers, and
surrenders between fund divisions 31,368 71,203 8,493
--------- --------- ---------
Deductions:
Premium taxes 28 174 8
Administrative costs and other
expense charges 602 801 144
Cost of insurance and additional
benefits 431 892 153
--------- --------- ---------
Total deductions 1,061 1,867 305
--------- --------- ---------
Net deposits into
Separate Account $ 30,307 $ 69,336 $ 8,188
========= ========= =========
<FN>
<F*>The Asset Manager Fund, the High Income Fund, and the Gold & Natural Resources Fund Divisions began operations on July 19,
May 24, and August 9, 1995, respectively.
<F****>The Variable Universal Life 100 product was introduced in 1995, and the first deposit was received on June 7, 1995.
</TABLE>
<PAGE> 204
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
No. of Shares Market Value
----------------- ----------------
<S> <C> <C>
S & P 500 Index Fund<F**>
General American Capital Company<F*> 193,071 $4,660,592
Money Market Fund
General American Capital Company<F*> 263,930 4,313,391
Bond Index Fund
General American Capital Company<F*> 68,062 1,401,432
Managed Equity Fund
General American Capital Company<F*> 91,079 1,906,081
Asset Allocation Fund
General American Capital Company<F*> 257,595 5,976,187
International Equity Fund
General American Capital Company<F*> 356,997 5,393,857
Special Equity Fund
General American Capital Company<F*> 306,201 4,208,131
Equity-Income Fund
Variable Insurance Products Fund 283,755 5,467,954
Growth Fund
Variable Insurance Products Fund 250,718 7,320,976
Overseas Fund
Variable Insurance Products Fund 201,438 3,434,520
Asset Manager Fund
Variable Insurance Products Fund II 3,162 49,927
High Income Fund
Variable Insurance Products Fund 16,617 200,236
Gold & Natural Resources Fund
Van Eck Worldwide Insurance Trust 680 9,800
<FN>
<F*>These funds use consent dividending. See Note 2C.
<F**>This fund was formerly known as the Equity Index Fund.
See accompanying notes to financial statements.
</TABLE>
<PAGE> 205
LEGAL COUNSEL
Stephen E. Roth
Sutherland, Asbill & Brennan, Washington, D.C.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
If distributed to prospective investors, this report must be preceded or
accompanied by a current prospectus.
The prospectus is incomplete without reference to the financial data
contained in the annual report.
<PAGE> 206
INDEPENDENT AUDITORS' REPORT
The Board of Directors
General American Life Insurance Company:
We have audited the accompanying statements of assets, liabilities,
contingency reserves, and policyholders' surplus of General American Life
Insurance Company as of December 31, 1995 and 1994, and the related
statements of operations, policyholders' surplus, and contingency reserves
and cash flow for each of the years in the three-year period ended
December 31, 1995. 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.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of General American Life
Insurance Company as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for each of the years in the three-year period
ended December 31, 1995, in conformity with generally accepted accounting
principles (see note 2 to the financial statements).
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information
included in the accompanying schedule is presented for purposes of additional
analysis and is not a required part of the basic financial statements. Such
information has been subjected to the auditing procedures applied in the
audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
KPMG PEAT MARWICK LLP
March 12, 1996
1
<PAGE> 207
GENERAL AMERICAN LIFE INSURANCE COMPANY
<TABLE>
Statements of Assets, Liabilities, Contingency
Reserves, and Policyholders' Surplus
December 31, 1995 and 1994
(In thousands of dollars)
<CAPTION>
===================================================================================================
ASSETS 1995 1994
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Invested assets:
Bonds $3,822,820 3,223,167
Mortgage loans 1,674,037 1,565,710
Real estate 226,663 231,554
Stocks 335,203 266,776
Market value appreciation of subsidiaries 190,790 285,340
Loans to policyholders 1,328,376 1,152,518
Short-term investments 294 4,912
Other invested assets 47,802 35,121
Cash and cash equivalents (13,511) 57,991
- ---------------------------------------------------------------------------------------------------
Total invested assets 7,612,474 6,823,089
Accrued investment income 102,848 91,169
Premiums deferred and uncollected 81,624 75,454
Other assets 126,997 106,455
Separate accounts 1,642,220 1,239,311
- ---------------------------------------------------------------------------------------------------
Total assets $9,566,163 8,335,478
===================================================================================================
<CAPTION>
===================================================================================================
LIABILITIES, CONTINGENCY RESERVES, AND POLICYHOLDERS' SURPLUS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Liabilities:
Policyholders' liabilities:
Policy reserves $5,182,888 4,662,012
Pension funds 1,105,202 1,018,588
Policy and contract claims 90,955 87,904
Dividends - accumulated, due and provided 219,539 201,334
Premiums received in advance and premium deposits 35,844 24,592
- ---------------------------------------------------------------------------------------------------
Total policyholders' liabilities 6,634,428 5,994,430
Commissions, expenses, and taxes 93,655 90,590
Amounts due - reinsurance 18,280 42,690
Notes payable 100,000 -
Funds held under coinsurance 89,573 -
Other 191,943 236,400
Separate accounts 1,619,807 1,219,124
- ---------------------------------------------------------------------------------------------------
Total liabilities 8,747,686 7,583,234
- ---------------------------------------------------------------------------------------------------
Contingency reserves:
Asset valuation reserve 202,727 235,351
Interest maintenance reserve 25,967 20,560
- ---------------------------------------------------------------------------------------------------
Total contingency reserves 228,694 255,911
- ---------------------------------------------------------------------------------------------------
Policyholders' surplus:
Reserve for group insurance 44,783 43,529
Surplus notes 107,000 107,000
Unassigned funds 438,000 345,804
- ---------------------------------------------------------------------------------------------------
Total policyholders' surplus 589,783 496,333
- ---------------------------------------------------------------------------------------------------
Total liabilities, contingency reserves, and policyholders' surplus $9,566,163 8,335,478
===================================================================================================
See accompanying notes to financial statements.
</TABLE>
2
<PAGE> 208
GENERAL AMERICAN LIFE INSURANCE COMPANY
<TABLE>
Statements of Operations, Policyholders' Surplus,
and Contingency Reserves
Years ended December 31, 1995, 1994, and 1993
(In thousands of dollars)
<CAPTION>
==================================================================================================================
1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue:
Premiums $1,661,172 1,485,704 1,040,403
Net investment income 546,243 501,863 485,705
Reinsurance ceded and other income 170,871 250,072 141,564
- ------------------------------------------------------------------------------------------------------------------
Total revenue 2,378,286 2,237,639 1,667,672
- ------------------------------------------------------------------------------------------------------------------
Benefits and expenses:
Benefits 929,206 896,036 899,896
Increase in reserves 504,069 425,976 6,490
Net transfers to separate accounts 254,128 307,470 159,688
Commissions 118,525 174,030 157,159
General and administrative expenses 268,759 246,890 255,024
- ------------------------------------------------------------------------------------------------------------------
Total benefits and expenses 2,074,687 2,050,402 1,478,257
- ------------------------------------------------------------------------------------------------------------------
Gain from operations 303,599 187,237 189,415
Dividends to policyholders 242,688 127,576 89,111
- ------------------------------------------------------------------------------------------------------------------
Net gain from operations after dividends to policyholders
and before federal income taxes 60,911 59,661 100,304
Provision for federal income tax 8,577 35,390 23,753
- ------------------------------------------------------------------------------------------------------------------
Net gain from operations 52,334 24,271 76,551
Capital gains (losses), net of federal income tax 194,793 (49,158) (21,552)
Net capital losses (gains) transferred to the interest maintenance
reserve (10,165) 11,012 (13,330)
- ------------------------------------------------------------------------------------------------------------------
Net gain (loss) 236,962 (13,875) 41,669
- ------------------------------------------------------------------------------------------------------------------
Other policyholders' surplus changes:
Unrealized capital gains and losses, net (96,021) (499) 215,479
Additions from (to) contingency reserves 27,217 23,664 (95,430)
Repayment of nonrecourse transfer agreement - (35,949) (13,000)
Surplus notes - 107,000 -
Change in surplus as a result of reinsurance (38,922) - -
Amortization of intangible assets (35,865) - -
Other items, net 79 (28,190) 65
- ------------------------------------------------------------------------------------------------------------------
(143,512) 66,026 107,114
- ------------------------------------------------------------------------------------------------------------------
Increase in policyholders' surplus 93,450 52,151 148,783
Policyholders' surplus, beginning of year 496,333 444,182 295,399
- ------------------------------------------------------------------------------------------------------------------
Policyholders' surplus, end of year $ 589,783 496,333 444,182
==================================================================================================================
Contingency reserves:
Addition (to) from policyholders' surplus (27,217) (23,664) 95,430
Contingency reserves, beginning of year 255,911 279,575 184,145
- ------------------------------------------------------------------------------------------------------------------
Contingency reserves, end of year $ 228,694 255,911 279,575
==================================================================================================================
See accompanying notes to financial statements.
</TABLE>
3
<PAGE> 209
GENERAL AMERICAN LIFE INSURANCE COMPANY
<TABLE>
Statements of Cash Flow
Years ended December 31, 1995, 1994, and 1993
(In thousands of dollars)
<CAPTION>
===================================================================================================
1995 1994 1993
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operations:
Cash received:
Premiums $1,642,922 1,492,175 1,136,015
Net investment income 536,488 501,683 460,617
Reinsurance ceded and other income 128,585 137,201 123,004
- ---------------------------------------------------------------------------------------------------
Total cash received from operations 2,307,995 2,131,059 1,719,636
- ---------------------------------------------------------------------------------------------------
Benefits paid:
Life, accident, and health claims (409,325) (437,729) (468,595)
Benefits to policyholders (286,423) (242,016) (505,911)
Dividends to policyholders (223,111) (100,038) (100,642)
- ---------------------------------------------------------------------------------------------------
Total benefits paid (918,859) (779,783) (1,075,148)
- ---------------------------------------------------------------------------------------------------
Operating charges paid:
Commissions, expenses, and taxes (324,113) (410,154) (424,545)
Net transfers to separate accounts (255,890) (321,268) (145,855)
Federal income taxes (96,814) (5,393) (23,415)
- ---------------------------------------------------------------------------------------------------
Total operating charges paid (676,817) (736,815) (593,815)
- ---------------------------------------------------------------------------------------------------
Other, net 28,955 153,082 45,343
- ---------------------------------------------------------------------------------------------------
Net cash provided by operations 741,274 767,543 96,016
- ---------------------------------------------------------------------------------------------------
Cash flows from investments:
Proceeds from investments sold, matured, or repaid:
Bonds 1,135,681 751,219 1,258,702
Stocks 77,208 34,761 56,437
Mortgage loans 206,188 135,503 102,050
Net decrease in loans to policyholders - - 62,600
Sale of GenCare 353,750 - -
Other invested assets 25,757 65,848 60,256
- ---------------------------------------------------------------------------------------------------
Total investment proceeds 1,798,584 987,331 1,540,045
- ---------------------------------------------------------------------------------------------------
Cost of investments acquired:
Bonds (1,787,628) (1,031,372) (1,440,513)
Stocks (230,287) (27,182) (100,599)
Mortgage loans (353,242) (309,433) (109,719)
Net increase in loans to policyholders (175,858) (132,739) -
Other invested assets (164,345) (363,016) (89,491)
- ---------------------------------------------------------------------------------------------------
Total investments acquired (2,711,360) (1,863,742) (1,740,322)
- ---------------------------------------------------------------------------------------------------
Net cash used in investments (912,776) (876,411) (200,277)
- ---------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from issuance of surplus notes - 107,000 -
Proceeds from issuance of notes payable 100,000 - -
- ---------------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (71,502) (1,868) (104,261)
Cash and cash equivalents, beginning of year 57,991 59,859 164,120
- ---------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year $ (13,511) 57,991 59,859
===================================================================================================
See accompanying notes to financial statements.
</TABLE>
4
<PAGE> 210
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
December 31, 1995, 1994, and 1993
===============================================================================
(1) ORGANIZATION
General American Life Insurance Company (General American or the Company) is
a mutual life insurance company originally incorporated as a stock company
under the laws of Missouri in 1933, and which began operations as a mutual
company in 1936. The Company's principal lines of business are: Individual
Life Insurance and Annuities, Group Life and Health Insurance, Group Pension,
and Investments.
General American distributes its products and services primarily through a
nationwide network of general agencies, independent brokers and group sales,
and claims offices. General American is licensed to do business in all 50
states, 12 Canadian provinces, Puerto Rico, and the District of Columbia.
Through its subsidiaries, the Company is also expanding its operations in
Europe, Pacific Rim countries, and Latin America.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Company include General American Life
Insurance Company and, on the equity method of accounting, the following
majority-owned unconsolidated subsidiaries: Reinsurance Group of America,
Incorporated (RGA); Paragon Life Insurance Company; Conning Asset Management
(CAM); COVA Corporation (COVA); General American Holding Company; Security
Equity Life Insurance Company; General Life Insurance Company of America, and
National American Life Insurance Company of Texas (NALICOT). The financial
statements have been prepared on the basis of accounting practices prescribed
or permitted by the Department of Insurance of the State of Missouri and in
conformity with the practices of the National Association of Insurance
Commissioners (NAIC) which are currently considered generally accepted
accounting principles (GAAP) for mutual life insurance companies.
In accordance with Missouri State Insurance Law and Regulations, General
American's subsidiaries are not consolidated for regulatory filing purposes.
The preparation of financial statements requires management to make estimates
and assumptions which affect the reported amounts of assets and liabilities
as of the date of the balance sheets and the statements of operations,
policyholders' surplus and contingency reserves. Actual results could differ
from these estimates. Accounts that the Company deems to be sensitive to
changes in estimates include policy reserves and policy and contract claims,
as well as certain investments.
NEW ACCOUNTING STANDARDS
In April 1993, the Financial Accounting Standards Board (FASB), issued
Interpretation No. 40, Applicability of Principles to Mutual Life Insurance
and Other Enterprises. This interpretation requires mutual life insurance
companies that have traditionally issued statutory basis financial statements
that have been reported to be in conformity with GAAP, to apply all
authoritative accounting pronouncements in preparing those statements,
effective for periods beginning after December 15, 1994.
In January 1995, the FASB issued Statement of Financial Accounting Standards
No. 120 (SFAS 120), Accounting and Reporting by Mutual Life Insurance
Enterprises for Certain Long-Duration Participating
5 (Continued)
<PAGE> 211
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
Contracts and the American Institute of Certified Public Accountants (AICPA)
issued Statement of Position 95-1 (SOP 95-1), Accounting for Certain
Insurance Activities of Mutual Life Insurance Enterprises, which together
defines the GAAP model for mutual life insurance enterprises. These
pronouncements define the enterprises and method of accounting for certain
participating life insurance contracts of mutual and stock life insurance
companies that meet the criteria defined in SOP 95-1. SFAS 120 also defers
implementation of Interpretation No. 40 to be concurrent with implementation
of SFAS 120. SFAS 120 and SOP 95-1 are effective for financial statements
issued for fiscal years beginning after December 15, 1995.
In connection with the adoption of SFAS 120, the Company plans to adopt the
following accounting standards:
- SFAS 109, Accounting for Income Taxes
- SFAS 114, Accounting by Creditors Impairment of a Loan
- SFAS 115, Accounting for Certain Debt and Equity Securities
- SFAS 118, Accounting by Creditors for Impairment of a Loan - Income
Recognition and Disclosures
The Company has not determined the impact on the Company's financial
condition or results of operations.
VALUATION OF INVESTMENTS
Bonds and stocks are valued as prescribed by the NAIC. Bonds are primarily
carried at amortized cost, as it is generally the Company's intent to hold
such to maturity. However, the Company does liquidate certain bonds prior to
maturity based on asset/liability and duration matching requirements
associated with policies and contracts. Additionally, preferred stocks are
carried at cost and common stocks are carried at market value. Mortgage
loans and policy loans are stated at the outstanding principal balances. Real
estate acquired through foreclosure or held for investment is carried at the
lower of cost or market value. Investments in real estate are carried net
of accumulated depreciation and encumbrances of $56.5 million and $46.7
million in 1995 and 1994, respectively, as well as direct valuation
allowances of $25.4 million and $24.2 million in 1995 and 1994, respectively.
Loan-backed bonds, included in bonds, are valued at amortized cost.
Amortization of the discount or premium from the purchase of these securities
is recognized using a level yield method which considers the estimated timing
and amount of prepayments of the underlying mortgage loans. Actual
prepayment experience is periodically reviewed and effective yields are
recalculated when differences arise between the prepayments originally
anticipated and the actual prepayments received and currently anticipated.
When such differences occur, the net investment in the mortgage-backed bond
is adjusted to the amount that would have existed had the new effective yield
been applied since the acquisition of the bond with a corresponding charge or
credit to interest income (the "retrospective method").
In accordance with practices prescribed by the NAIC, General American values
its ownership interest in publicly traded subsidiaries based upon current
quoted market values. These ownership interests are 63% of RGA and 72% of
GenCare Health Systems, Inc. (GenCare). The investment in RGA is carried at
89% of quoted market value. On January 3, 1995, the Company sold its 72%
ownership in GenCare to United HealthCare Corporation. Proceeds received net
of expenses were $354 million and the net
6 (Continued)
<PAGE> 212
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
realized gain on sale was $179 million. The extent to which the carrying
values of those investments differ from statutory net assets creates asset
appreciation or depreciation, with an offsetting unrealized gain or loss
reflected in policyholders' surplus. Market value appreciation of $190.8
million and $285.3 million is included in market value appreciation of
subsidiaries in the balance sheets at December 31, 1995 and 1994,
respectively.
Certain capital gains and losses realized on investment sales that resulted
from changes in the level of interest rates are recorded in an Interest
Maintenance Reserve (IMR), net of related income taxes. The IMR is amortized
into operating income over the approximate remaining maturities of the
investments sold. Certain other realized gains and losses from the sale or
decrease in valuation basis due to change in credit quality of invested
assets are presented separately from operating income, net of applicable
income taxes. Unrealized capital gains and losses are reflected as direct
credits and charges to policyholders' surplus.
The NAIC has established an asset valuation reserve (AVR) for the potential
losses on investments. This reserve is maintained for the purpose of
stabilizing surplus against the effect of fluctuations in the value of
certain bond, stock, mortgage loan, and real estate investments by direct
charge to policyholders' surplus.
The following methods and assumptions were used by the Company in estimating
its fair value disclosures for financial instruments:
Investment securities
Fair values for fixed maturity securities (including redeemable preferred
stocks) are based on quoted market prices, where available. For fixed
maturity securities not actively traded, fair values are estimated using
values obtained from independent pricing services or, in the case of private
placements, are estimated by discounting expected future cash flows using a
current market rate applicable to the yield, credit quality, and maturity of
the investments. The fair values for equity securities are based on quoted
market prices.
Mortgage loans
The fair values for mortgage loans are estimated using discounted cash flow
analyses, using interest rates currently being offered for similar loans to
borrowers with similar credit ratings. Loans with similar characteristics
are aggregated for purposes of the calculations.
Policy loans
The carrying amount for policy loans reported in the balance sheets
approximates the fair value. The majority of these loans are indexed, with
yield tied to a stated return.
Short-term investments and cash and cash equivalents
The carrying amounts reported in the balance sheets for these instruments
approximate the fair values.
7 (Continued)
<PAGE> 213
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
Investment contracts
Fair values for the Company's liabilities under investment-type insurance
contracts are estimated using discounted cash flow calculations based on
interest rates currently being offered for similar contracts with maturities
consistent with those remaining for the contracts being valued.
Other Policyholder Funds
Other policyholder funds are supplementary contract reserves and dividend
accumulations that represent deposits that have defined maturities. The
carrying value of these funds is a reasonable estimate of fair value.
CASH AND CASH EQUIVALENTS
Cash equivalents include liquid investments with original maturities of 90
days or less.
SEPARATE ACCOUNT BUSINESS
Separate account assets and liabilities represent segregated funds
administered and invested by the Company for the exclusive benefit of pension
and variable annuity contractholders. The Company receives administrative
and investment advisory fees for services rendered on behalf of these funds.
The amount of assets in excess of liabilities of $22.4 million and $20.2
million at December 31, 1995 and 1994, respectively, represents policy
surrender charges that are permitted to be recorded to surplus under
statutory accounting practices.
POLICY RESERVES
Policy reserves for life insurance and annuities are based on statutory
mortality and interest assumptions without consideration for lapses and
withdrawals. Mortality assumptions are based on various mortality tables
including primarily: American Experience, 1941 Commissioners Standard
Ordinary (CSO), 1958 CSO, and 1980 CSO for life insurance; and 1937 Standard
Annuity Table, 1971 Individual Annuity Mortality Table (IAM), 1983 IAM, and
the Progressive Annuity Table for annuities. Interest assumptions range from
2.0% to 6.0% for ordinary policy reserves and from 2.0% to 11.25% for group
and annuity reserves. Approximately 27% of the ordinary life reserves are
calculated on a net level reserve basis and 73% on a modified reserve basis.
The use of a modified reserve basis partially offsets the effect of
immediately expensing acquisition costs by providing a policy reserve
increase in the first policy year that is less than the reserve increase in
renewal years.
REINSURANCE
Premiums, commissions, expense reimbursements, benefits, and reserves related
to reinsurance business are accounted for on bases consistent with those used
in accounting for the original policies issued and the terms of the
reinsurance contracts. Premiums ceded to other companies have been reported
as a reduction of premium income. Amounts applicable to reinsurance ceded
for future policy benefits and claim liabilities have been reported as
reductions of these items.
8 (Continued)
<PAGE> 214
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
In the normal course of business the Company seeks to limit its exposure to
loss on any single insured by ceding risks to other insurance enterprises or
reinsurers under various types of contracts including coinsurance and excess
coverage. The Company's retention level per individual life ranges between
$1.0 to $2.0 million. To the extent that an assuming reinsurance company is
unable to meet its obligations under a reinsurance agreement, the Company
remains primarily liable.
REVENUES AND EXPENSES
Premiums are credited to revenue over the premium paying period of the
policies. Annuity and deposit contract considerations are recognized as
revenue when received. Expenses, including acquisition costs related to
acquiring new business, are charged to operations as incurred. Investment
income is recognized as earned.
FEDERAL INCOME TAXES
Federal income taxes are charged to operations based on income that is
currently taxable. Deferred taxes are not established for the tax effects of
temporary differences between financial reporting and taxable income.
FOREIGN CURRENCY TRANSLATION
The functional currency for the Company's Canadian business operations is the
Canadian dollar. The translation of that foreign currency into U.S. dollars
is performed for the asset and liability portfolios using exchange rates in
effect at year-end. The income statement accounts are translated using
current exchange rates in effect for the years presented. The Canadian
dollars have been converted to U.S. dollars based on a conversion rate of
$.7329, $.7133, and $.7527 for each Canadian dollar as of December 31, 1995,
1994, and 1993, respectively. In accordance with statutory accounting
principles, the losses resulting from such translation are included as a
liability and an unrealized capital loss.
NONADMITTED ASSETS
Certain assets, designated under statutory reporting as "nonadmitted assets,"
have been charged directly to policyholders' surplus.
RECLASSIFICATIONS
Certain 1994 and 1993 financial statement balances have been reclassified to
conform with 1995 presentation.
(3) ACQUISITION
On June 1, 1995, the Company acquired Xerox Life Insurance Companies, now
known as COVA Corporation. At acquisition, COVA had total assets of
approximately $635.6 million. The purchase price of approximately $107.7
million was funded from the Company's operations.
Effective July 31, 1995, the Company entered into a merger arrangement with
Conning Corporation & Subsidiaries (Conning), an investment management firm,
whereby the Company acquired Conning and
9 (Continued)
<PAGE> 215
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
subsequently contributed Conning and General American Investment Management
Company, a wholly owned subsidiary, to form CAM. At acquisition, Conning had
total assets of approximately $16.0 million. The purchase price consisted of
approximately $13.0 million in cash (from the Company's operations) and 3.2
million shares of CAM convertible redeemable preferred stock, with a fair value
of $17.0 million.
These transactions were accounted for using the purchase method of
accounting. The results of operations of the acquired entities are included
in the financial statements subsequent to the respective acquisition dates.
The excess of cost over fair value of net assets acquired amounted to
approximately $56.6 million and $23.1 million for COVA and Conning,
respectively. The excesses of cost over fair value of net assets of
approximately $16.8 million and $16.0 million for COVA and Conning,
respectively, were written off at the acquisition dates for statutory
accounting purposes. The write-off of the intangible asset was caused by the
Company exceeding its statutory intangible asset limit. The remaining excess
of cost over fair value of net assets is being amortized over 10 years.
(4) INVESTMENTS
Major categories of net investment income consist of the following (in
thousands of dollars):
<TABLE>
<CAPTION>
==================================================================================================================
Years ended December 31 1995 1994 1993
==================================================================================================================
<S> <C> <C> <C>
Bonds $ 291,382 249,906 239,161
Stocks (635) 27,938 34,953
Mortgage loans 141,603 139,392 139,012
Real estate 37,108 41,498 34,473
Loans to policyholders 92,731 75,957 65,957
Short-term investments 19,078 7,113 4,656
Other (544) 936 2,141
- ------------------------------------------------------------------------------------------------------------------
Gross investment income 580,723 542,740 520,353
Amortization of interest maintenance reserve 4,757 4,559 4,336
Investment expense (39,237) (45,436) (38,984)
- ------------------------------------------------------------------------------------------------------------------
Net investment income $ 546,243 501,863 485,705
==================================================================================================================
</TABLE>
BONDS
The carrying and estimated fair values of the Company's bond investments at
December 31, 1995 and 1994, by category, are as follows (in thousands of
dollars):
<TABLE>
<CAPTION>
==================================================================================================================
GROSS GROSS ESTI-
UNREA- UNREA- MATED
CARRYING LIZED LIZED FAIR
1995 VALUE GAINS LOSSES VALUE
==================================================================================================================
<S> <C> <C> <C> <C>
Government obligations (including obligations
guaranteed by the U.S. government) $ 241,141 15,689 830 256,000
Corporate securities 2,754,029 219,058 130,267 2,842,820
Mortgage-backed securities 731,125 26,136 1,625 755,636
Asset-backed securities 96,525 2,540 27 99,038
- ------------------------------------------------------------------------------------------------------------------
Total $3,822,820 263,423 132,749 3,953,494
==================================================================================================================
10 (Continued)
<PAGE> 216
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
<CAPTION>
GROSS GROSS ESTI-
UNREA- UNREA- MATED
CARRYING LIZED LIZED FAIR
1994 VALUE GAINS LOSSES VALUE
==================================================================================================================
<S> <C> <C> <C> <C>
Government obligations (including obligations
guaranteed by the U.S. government) $ 47,602 274 3,880 43,996
Corporate securities 2,378,039 24,670 109,942 2,292,767
Mortgage-backed securities 739,601 7,630 37,091 710,140
Asset-backed securities 57,925 1,067 1,399 57,593
- ------------------------------------------------------------------------------------------------------------------
Total $3,223,167 33,641 152,312 3,104,496
==================================================================================================================
</TABLE>
The carrying and estimated fair values of the Company's bond investments at
December 31, 1995, by contractual maturity, are shown below (in thousands of
dollars). Expected maturities may differ from contractual maturities because
borrowers may have the right to call or prepay obligations without call or
prepayment penalties.
<TABLE>
<CAPTION>
====================================================================================
ESTIMATED
CARRYING FAIR
VALUE VALUE
====================================================================================
<S> <C> <C>
Due in one year or less $ 61,050 62,896
Due one year through five years 707,731 730,515
Due five years through ten years 1,423,347 1,366,241
Due after ten years 1,630,692 1,793,842
- ------------------------------------------------------------------------------------
Total $3,822,820 3,953,494
====================================================================================
</TABLE>
Before consideration of IMR, gross gains of $25.8 million, $12.5 million, and
$26.5 million and gross losses of $6.0 million, $28.0 million, and
$5.0 million were realized on bond sales, maturities, and redemptions in
1995, 1994, and 1993, respectively. The cost of investments sold is
generally determined on a first-in, first-out method and includes the effects
of any related capital amortization of premium or accretion of discount.
The Company is sensitive to interest rate changes, as its liabilities may
reprice or mature before interest-earning assets. The Company manages its
interest rate risk primarily through the utilization of interest rate swaps.
Under interest rate swaps, the Company agrees with other counterparties to
exchange, at specified intervals, the payments between floating and
fixed-rate interest amounts calculated by reference to notional amounts. Net
interest payments are recognized within net investment income in the
statutory statements of operations, policyholders' surplus, and contingency
reserves.
At December 31, 1995, the Company had six outstanding interest rate swap
agreements which expire at various dates through 2025. Under four of the
agreements, the Company receives a fixed rate ranging from 5.825% to 6.92% on
$15.4 million and pays a floating rate based on the London Interbank Offered
11 (Continued)
<PAGE> 217
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
Rate (LIBOR). Under the remaining two agreements, the Company receives a
floating rate based on LIBOR on $20.0 million and pays a fixed rate of 6.52%
and 6.9%, respectively. The estimated fair value of the agreements was
approximately $1.2 million unrealized loss, which reflects gross unrealized
gains and losses of $.1 million and $1.3 million, respectively, at December
31, 1995, which is not recognized in the accompanying balance sheets. At
December 31, 1994, the Company's exposure to derivative financial investments
was not material.
The Company is exposed to credit risk in the event of nonperformance by
counterparties to financial instruments, but does not expect any
counterparties to fail to meet their obligations. Where appropriate, master
netting agreements are arranged or collateral is obtained in the form of
rights to securities to lower the Company's exposure to credit risk. It is
the Company's policy to deal with only highly rated counterparties.
MORTGAGE LOANS
As of December 31, 1995 and 1994, the Company's mortgage loans were
distributed as follows (in thousands of dollars):
<TABLE>
<CAPTION>
===================================================================================================================================
1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
BOOK PERCENT BOOK PERCENT
STATES VALUE OF TOTAL VALUE OF TOTAL
===================================================================================================================================
<S> <C> <C> <C> <C>
Arizona $ 106,426 6.4% $ 88,601 5.7%
California 276,531 16.5 290,957 18.6
Colorado 206,438 12.2 188,929 12.0
Florida 180,350 10.8 186,405 11.9
Illinois 151,514 9.1 158,267 10.1
Maryland 76,640 4.6 71,274 4.6
Missouri 84,623 5.1 89,647 5.7
Nevada 63,190 3.8 55,661 3.6
Texas 137,416 8.2 156,910 10.0
Virginia 82,705 4.9 85,294 5.4
Other 308,204 18.4 193,765 12.4
- -----------------------------------------------------------------------------------------------------------------------------------
Total $1,674,037 100.0% $1,565,710 100.0%
===================================================================================================================================
<CAPTION>
1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
BOOK PERCENT BOOK PERCENT
PROPERTY TYPE VALUE OF TOTAL VALUE OF TOTAL
===================================================================================================================================
<S> <C> <C> <C> <C>
Apartment $ 93,530 5.6% $ 83,656 5.3%
Retail 658,918 39.3 591,098 37.8
Office building 458,503 27.4 405,048 25.9
Industrial 397,623 23.8 415,456 26.5
Other commercial 65,463 3.9 70,452 4.5
- ----------------------------------------------------------------------------------------------------------------------------------
Total $1,674,037 100.0% $1,565,710 100.0%
==================================================================================================================================
</TABLE>
12 (Continued)
<PAGE> 218
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
The Company makes mortgage loans on income-producing properties, such as
apartments, retail and office buildings, light warehouses, and light
industrial facilities. Loan-to-value ratios at the time of loan approval are
75% or less.
The estimated fair value of the Company's mortgage loan portfolio at
December 31, 1995 and 1994 was approximately $1,747.5 million and $1,558.5
million, respectively. The Company had outstanding commercial mortgage loan
commitments as of December 31, 1995 of $211.1 million.
During 1995, the Company entered into an agreement whereby approximately
$109.8 million of mortgage loans were sold by the Company for securitization
and resale by a financial institution as mortgage pass-through certificates.
In conjunction with the transaction, the Company entered into futures
positions to hedge against interest rate risk. The sale of these mortgage
loans resulted in a net loss of approximately $.4 million. In addition, the
close-out of the futures positions related to this transaction resulted in a
net loss of approximately $6.4 million. These amounts are reflected within
net investment income in the statutory statement of operations,
policyholders' surplus, and contingency reserves.
STOCKS
The carrying value of preferred stock was $8.1 million at December 31, 1995
and 1994, respectively. The fair value of the preferred stock was
$8.3 million and $8.2 million at December 31, 1995 and 1994, respectively.
The cost of nonaffiliated common stocks held at December 31, 1995 and 1994
was $3.1 million and $5.0 million, respectively. The fair value of
nonaffiliated common stocks held at December 31, 1995 and 1994 was $2.6
million and $5.0 million, respectively.
At December 31, 1995 and 1994, investments with carrying values of $247.0
million and $211.9 million, respectively, were on deposit with various
governmental agencies as required by law.
(5) INVESTMENT CONTRACTS
The carrying amounts and estimated fair values of the Company's liabilities
for investment-type insurance contracts at December 31, 1995 and 1994 are as
follows (in thousands of dollars):
<TABLE>
<CAPTION>
==================================================================================================================
1995 1994
- ------------------------------------------------------------------------------------------------------------------
ESTIMATED ESTIMATED
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
==================================================================================================================
<S> <C> <C> <C> <C>
Guaranteed investment contracts $492,340 494,059 342,766 336,922
==================================================================================================================
Supplementary contract without
life contingencies $ 6,443 6,443 6,887 6,887
==================================================================================================================
Individual and group annuities $373,259 372,730 390,193 362,531
==================================================================================================================
</TABLE>
13 (Continued)
<PAGE> 219
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
(6) REINSURANCE
The Company is a major reinsurer in the life and health industry. The
effect of reinsurance on premiums is as follows (in thousands of dollars):
<TABLE>
<CAPTION>
==============================================================================================================
1995 1994 1993
==============================================================================================================
<S> <C> <C> <C>
Direct $1,830,570 1,687,391 1,604,310
Assumed 206,127 272,356 474,092
- --------------------------------------------------------------------------------------------------------------
2,036,697 1,959,747 2,078,402
Ceded (375,525) (474,043) (1,037,999)
- --------------------------------------------------------------------------------------------------------------
Net $1,661,172 1,485,704 1,040,403
==============================================================================================================
</TABLE>
Reinsurance assumed represents approximately $51 billion, $38 billion,
and $69 billion of insurance in force for 1995, 1994, and 1993, respectively.
The amount of ceded insurance in force, including retrocessions, was
$57 billion, $54 billion, and $81 billion for 1995, 1994, and 1993,
respectively. Net reserve credits taken on reinsurance ceded and retroceded
for 1995, 1994, and 1993 were $360 million, $258 million, and $281 million,
respectively.
(7) FEDERAL INCOME TAXES
The provision for federal income tax expense is based upon a
consolidated income tax provision for the Company and its subsidiaries. The
provision differs from that computed based on the federal statutory rate of
35% in 1995, 1994, and 1993. The reasons for these differences are as
follows (in thousands of dollars):
<TABLE>
<CAPTION>
=============================================================================================================================
1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------
PER- PER- PER-
CENT OF CENT OF CENT OF
PRETAX PRETAX PRETAX
AMOUNT INCOME AMOUNT INCOME AMOUNT INCOME
=============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Federal income tax computed
on pretax income $ 21,319 35.0% $ 20,881 35.0% $ 35,106 35.0%
Deferred acquisition cost tax
on premiums 10,024 16.5 10,027 16.8 12,394 12.4
Surplus tax on mutual life
insurance companies - - 15,675 26.3 - -
Tax preferred investment income (11,477) (18.8) (8,787) (14.7) (1,659) (1.7)
Mortgage loan and real estate
differences 814 1.3 600 1.0 (5,291) (5.3)
Policy reserve, dividends, and
other product differences (8,460) (13.9) 2,911 4.9 (5,541) (5.5)
Equity in undistributed earnings
of subsidiaries 440 .7 (5,161) (8.7) (10,769) (10.7)
Other, net (4,083) (6.7) (756) (1.3) (487) (.5)
- -----------------------------------------------------------------------------------------------------------------------------
Provision for federal income tax $ 8,577 14.1% $ 35,390 59.3% $ 23,753 23.7%
=============================================================================================================================
</TABLE>
14 (Continued)
<PAGE> 220
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
(8) ASSOCIATE BENEFIT PLANS AND POSTRETIREMENT BENEFITS
The Company has a defined benefit plan covering substantially all associates.
The benefits are based on years of service and each associate's compensation
level. The Company's funding policy is to contribute annually the maximum
amount deductible for federal income tax purposes. Contributions provide for
benefits attributed to service to date and for those expected to be earned in
the future.
The Company also has several nonqualified, defined benefit and defined
contribution plans for directors and management associates. The plans are
unfunded and are deductible for federal income tax purposes when the benefits
are paid.
Net periodic defined benefit plan costs consist of the following (in
thousands of dollars):
<TABLE>
<CAPTION>
========================================================================================================
1995 1994 1993
========================================================================================================
<S> <C> <C> <C>
Service cost $ 2,805 3,285 2,824
Interest 5,056 4,523 4,128
Return on plan assets (27,134) 3,068 (11,695)
Amortization and deferral 18,514 (13,840) 1,784
- --------------------------------------------------------------------------------------------------------
Pension credit $ (759) (2,964) (2,959)
========================================================================================================
</TABLE>
The following table presents the plans' funded status and amounts recognized in
the Company's balance sheet at December 31, 1995 and 1994 (in thousands of
dollars):
<TABLE>
<CAPTION>
========================================================================================================================
1995 1994
- ------------------------------------------------------------------------------------------------------------------------
QUALIFIED OTHER QUALIFIED OTHER
PLANS PLANS PLANS PLANS
========================================================================================================================
<S> <C> <C> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including
vested benefits of $63,983 and $15,112
in 1995 and $48,378 and $10,554 in 1994,
respectively $ 65,900 24,595 48,872 18,115
========================================================================================================================
Projected benefit obligation for service
rendered to date 79,557 27,046 59,684 20,093
Plan assets at fair value, primarily listed
stocks and bonds 114,167 - 95,325 -
- ------------------------------------------------------------------------------------------------------------------------
Plan assets in excess of (less than) projected
benefit obligations 34,610 (27,046) 35,641 (20,093)
Unrecognized net transition (asset) obligation - 2,451 (657) 1,978
- ------------------------------------------------------------------------------------------------------------------------
Pension cost funded in advance $ 34,610 34,984
========================================================================================================================
Accrued pension liability $(24,595) (18,115)
========================================================================================================================
</TABLE>
15 (Continued)
<PAGE> 221
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
Assumptions used for the projected benefit obligation included a 7.25% current
discount rate, a 4.50% increase rate for future compensation levels, and a
9.25% projected return on plan assets for 1995.
The Board of Directors has adopted an associate incentive plan applicable to
full-time salaried associates with at least one year of service. Contributions
to the plan are determined yearly by the Board of Directors and are based upon
salaries of eligible associates. Full vesting will occur after five years of
continuous service. The Company's contributions to the plan were $9.2 million,
$1.6 million, and $7.1 million for 1995, 1994, and 1993, respectively.
In addition to pension benefits, the Company provides certain health care and
life insurance benefits for retired employees. Substantially all employees may
become eligible for these benefits if they reach retirement age while working
for the Company. Alternatively, retirees may elect certain prepaid health care
benefit plans.
In 1993, in accordance with the implementation of SFAS No. 106, Employers
Accounting for Postretirement Benefits Other Than Pensions, the Company changed
its method of accounting for the costs of its retiree benefit plans to the
accrual method, and elected to amortize its transition obligation for retirees
and fully eligible or vested employees over 20 years. The unamortized
transition obligations were $18.6 million and $19.6 million at December 31,
1995 and 1994, respectively. Net postretirement benefit costs for the years
ended December 31, 1995, 1994, and 1993 were $4.8 million, $4.0 million, and
$4.6 million, respectively, and includes the expected cost of such benefits for
newly eligible or vested employees, interest cost, gains and losses arising
from differences between actuarial assumptions and actual experience, and
amortization of the transition obligation.
The discount rate used in determining the accumulated postretirement benefit
obligation was 8.25%, and the health care cost trend rates were 10%, 9%, and
10% for the Indemnity Plan, HMO Plan, and Dental Plan, respectively, graded to
6.00% over 13 years. The health care cost trend rate assumption has a
significant effect on the amounts reported. To illustrate, increasing the
assumed health care cost trend rates by one percentage point in each year would
increase the accumulated postretirement benefit obligation as of January 1,
1995 by $3.1 million and the estimated eligibility cost and interest cost
components of net periodic postretirement benefit cost for 1995 by $.5 million.
(9) NOTES PAYABLE
In September 1995 the Company obtained a note payable for $100.0 million with a
financial institution. The note is secured by bonds with a carrying value of
$100.7 million. The note bears a fixed interest rate at 5.55% payable
quarterly and matures on March 29, 1996. The carrying value of this note
approximates the fair value at December 31, 1995.
(10) CONTINGENCY RESERVES
ASSET VALUATION RESERVE
The AVR is maintained for the purpose of stabilizing surplus against the
effect of fluctuations in the value of certain bond, stock, mortgage loan,
and real estate investments. Changes in the market value of common stocks
carried at market value are applied to the common stock component of this
reserve. This treatment has the effect of insulating statutory surplus from
short-term market value fluctuations of common stock. This reserve is
recorded as a direct charge to policyholders' surplus in accordance with
statutory accounting practices.
16 (Continued)
<PAGE> 222
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
The balance of the AVR component as of December 31, 1995 and 1994 is as
follows (in thousands of dollars):
<TABLE>
<CAPTION>
=========================================================================================
1995 1994
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Bonds, preferred stocks, and short-term
investments $ 40,829 39,859
Mortgage loans 49,339 48,543
Common stock 92,196 126,959
Real estate and other invested assets 20,363 19,990
- -----------------------------------------------------------------------------------------
$202,727 235,351
=========================================================================================
</TABLE>
Included in the mortgage loan component of the AVR at December 31, 1995 and
1994 was $42.9 million, which represents an additional reserve for potential
credit losses inherent in the mortgage loan portfolio. At December 31, 1995
and 1994, the AVR is held at a level equal to 87.2% and 90.1%, respectively,
of the maximum reserve level allowed by the NAIC.
INTEREST MAINTENANCE RESERVE
IMR excludes certain net realized gains and losses from the net gain in the
current year and amortizes those gains and losses through net investment
income over a period of years. The net effect of this change on the 1995,
1994, and 1993 net gain is as follows (in thousands of dollars):
<TABLE>
<CAPTION>
======================================================================================================
1995 1994 1993
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Amount of realized capital gains (losses)
included in IMR $10,165 (11,012) 13,330
Amount amortized and reflected in net
investment income (4,757) (4,559) (4,335)
- ------------------------------------------------------------------------------------------------------
Excluded from net gain (loss) $ 5,408 (15,571) 8,995
======================================================================================================
</TABLE>
(11) TRANSACTIONS WITH SUBSIDIARIES
General American has purchased insurance from, and also reinsured business
with, RGA Reinsurance Company (RGA Re), formerly St. Louis Reinsurance Company.
RGA Re is a subsidiary of RGA. In addition to the agreement wherein the
former reinsurance division of General American was transferred to RGA Re. The
effect of this business was to increase premiums and other considerations by
$136.5 million in 1995 and $17.5 million in 1994 and to increase policy
benefits and other expenses by $92.9 million in 1995 and $17.1 million in 1994.
The Company also received $2.8 million, $6.3 million, and $4.3 million in
dividends from subsidiaries in 1995, 1994, and 1993, respectively.
17 (Continued)
<PAGE> 223
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
In May 1993, the Company sold a portion of its reinsurance subsidiary, RGA, to
the public through an initial public offering of common stock. RGA received
net proceeds of approximately $160.0 million from the offering. The
transaction increased surplus and contingency reserves of the Company by
approximately $167.0 million. After the sale, the Company owned 62% of the
total shares outstanding of RGA common stock. The publicly held stock of RGA
trades on the New York Stock Exchange.
(12) POLICYHOLDERS' SURPLUS
During 1988, the Company entered into a nonrecourse transfer agreement with an
unaffiliated financial institution. Under this nonrecourse transfer agreement,
the Company transferred the right to the portion of premiums in excess of the
net valuation premium on certain policies for a limited period. The purchaser's
right to future premiums is limited to the portion above the amount necessary
to build policyholder reserves and, therefore, cannot interfere with, or have
priority over, the interests of the Company's policyholders. Risk associated
with policy lapses transfers to the purchaser while its interest terminates if
and when repayment of the amount advanced is received. As of December 31,
1994, the Company has made full repayment of this nonrecourse transfer
agreement with a direct charge to surplus of $34.8 million.
(13) SURPLUS NOTES
On January 14, 1994, the Company issued surplus notes with a face amount of
$107.0 million bearing a 7.625% interest rate due in 2024. The notes pay
interest on January 15 and July 15 each year. The notes are not subject to
redemption prior to maturity. Payment of principal and interest on the notes
may be made only with the approval of the Missouri Director of Insurance.
(14) RISKED-BASED CAPITAL
The insurance departments of various states, including the Company's
domiciliary state of Missouri impose risk-based capital (RBC) requirements on
insurance enterprises. The RBC calculation serves as a benchmark for the
regulation of life insurance companies by state insurance regulators. Their
requirements apply various weighted factors to financial balances or activity
levels based on their perceived degree of risk.
The RBC guidelines define specific capital levels where regulatory intervention
is required based on the ratio of a Company's actual total adjusted capital
(sum of capital and surplus and asset valuation reserve) to control levels
determined by the RBC formula. At December 31, 1995, the Company's actual
total adjusted capital was $879.9 million compared to its authorized control
level computed under the RBC formula of $179.1 million. Additionally, each of
the Company's insurance subsidiaries actual total adjusted capital exceeded all
minimum requirements.
(15) CONTINGENT LIABILITIES
From time to time, the Company is subject to insurance-related litigation in
the normal course of its business. Management does not believe the Company is
a party to any such pending litigation which would have a material adverse
effect on its financial statements or future operations.
18 (Continued)
<PAGE> 224
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
(16) SUBSEQUENT EVENTS
On January 25, 1996, General American and Security Mutual Life Insurance
Company (a New York company) announced an agreement to form a strategic
alliance (subject to regulatory approval) to market life insurance products
more efficiently and to achieve long-term growth objectives. This agreement
may include such things as consulting services, technology sharing, and
investment advisory services.
19 (Continued)
<PAGE> 225
Schedule
--------
GENERAL AMERICAN LIFE INSURANCE COMPANY
<TABLE>
Schedule of Selected Financial Data From Annual Statement
Year ended December 31, 1995
===================================================================================================
- ---------------------------------------------------------------------------------------------------
<S> <C>
Investment income earned:
Government bonds $ (1,515,086)
Other bonds (unaffiliated) 290,933,051
Bonds of affiliates 1,963,693
Preferred stocks (unaffiliated) 618,924
Common stocks (unaffiliated) -
Common stocks of affiliates (1,253,512)
Mortgages loans 141,603,417
Real estate 37,107,928
Premium notes, policy loans, and liens 92,730,645
Cash on hand and on deposit 110,588
Short-term investments 18,967,377
Other invested assets (1,275,570)
Aggregate write-in for investment income 731,575
- ---------------------------------------------------------------------------------------------------
Gross investment income $ 580,723,030
===================================================================================================
Real estate owned - book value less encumbrances $ 263,827,709
===================================================================================================
Mortgage loans - book value:
Residential mortgages $ 5,820,009
Commercial mortgages 1,668,216,758
- ---------------------------------------------------------------------------------------------------
Total mortgage loans $1,674,036,767
===================================================================================================
Mortgage loans by standing - book value:
Good standing $1,503,595,363
Good standing with restructured terms 144,257,321
Interest overdue more than three months, not in foreclosure 5,459,437
Foreclosure in process 20,724,646
Other long-term assets - statement value 35,193,813
Collateral loans -
Bonds and stocks of parents, subsidiaries, and affiliates - book value:
Bonds 27,515,357
Preferred stocks 633,594
Common stocks 515,215,742
===================================================================================================
20 (Continued)
<PAGE> 226
Schedule, Cont.
---------------
GENERAL AMERICAN LIFE INSURANCE COMPANY
<CAPTION>
Schedule of Selected Financial Data From Annual Statement, Continued
===================================================================================================
- ---------------------------------------------------------------------------------------------------
<S> <C>
Bonds and short-term investments by class and maturity:
Bonds by maturity - statement value:
Due within one year or less $ 147,354,910
Over 1 year through 5 years 836,465,796
Over 5 years through 10 years 1,404,057,005
Over 10 years through 20 years 844,035,702
Over 20 years 623,600,086
- ---------------------------------------------------------------------------------------------------
Total by maturity $3,855,513,499
===================================================================================================
Bonds by class - statement value:
Class 1 $2,550,083,706
Class 2 1,133,865,256
Class 3 129,439,150
Class 4 34,823,913
Class 5 1,453,511
Class 6 5,847,963
- ---------------------------------------------------------------------------------------------------
Total by class 3,855,513,499
Total bonds publicly traded 2,595,931,013
- ---------------------------------------------------------------------------------------------------
Total bonds privately placed $1,259,582,486
===================================================================================================
Preferred stocks - statement value $ 8,194,965
Common stocks - market value 517,797,909
Short-term investments - book value 32,693,051
Financial options owned - statement value 855,000
Financial options written and in force - statement value 1,372,050
Financial futures contracts open - current price 1,556,051
Cash on deposit (47,728,369)
Life insurance in force:
Ordinary 99,750,100
Group life 46,529,984
Amount of accidental death insurance in force under ordinary policies 787,974
Life insurance policies with disability provisions in force:
Ordinary 11,191,931
Group life 33,999,724
Supplementary contracts in force:
Ordinary - not involving life contingencies 529
Amount on deposit 4,677,010
Income payable 473,615
Ordinary - involving life contingencies 425
Income payable 306,246
Group - not involving life contingencies 358
Amount of deposit 2,540,119
Income payable 1,857,912
Group - involving life contingencies 86
Income payable 301,553
===================================================================================================
21 (Continued)
<PAGE> 227
Schedule, Cont.
---------------
GENERAL AMERICAN LIFE INSURANCE COMPANY
<CAPTION>
Schedule of Selected Financial Data From Annual Statement, Continued
===================================================================================================
<S> <C>
Annuities:
Ordinary:
Immediate - amount of income payable $ 4,601,464
Deferred - fully paid account balance 493,925
Deferred - not fully paid account balance 984,452,874
Group:
Immediate - amount of income payable 29,532,911
Deferred - fully paid account balance 940,963
Deferred - not fully paid account balance 1,519,952,339
Accident and health insurance - premiums in force:
Ordinary 30,469,801
Group 278,501,063
Credit -
Deposit funds and dividend accumulations:
Deposit funds - account balance 348,545,716
Dividend accumulations - account balance 79,245,861
Claim payments 1994:
Group accident and health - year ended December 31:
1995 130,390,021
1994 36,142,689
1993 -
Other accident and health:
1995 1,378,908
1994 1,452,851
1993 5,607,713
Other coverages that use developmental methods to calculate claims reserves:
1995 -
1994 -
1993 -
===================================================================================================
See accompanying independent auditors' report.
</TABLE>
22
<PAGE> 228
APPENDIX A- Illustrations of Death Benefits and Cash Values
The following tables illustrate how the Cash Value, Cash Surrender
Value, and death benefit of a Policy change with the investment experience of
a Division of the Separate Account. The tables show how the Cash Value, Cash
Surrender Value, and death benefit of a Policy issued to an insured of a
given age and at a given premium would vary over time if the investment
return on the assets held in each Division of the Separate Account were a
uniform, gross, after-tax annual rate of 0%, 6%, or 12%. The tables on pages
A-2 through A-10 illustrate a Policy issued to a Male, age 45 in a preferred
nonsmoker rate class. The tables on pages A-11 through A-19 illustrate a
Policy issued to an insured, age 45 in a guaranteed issue nonsmoker rate
class. If the insured falls into a smoker rate class, the Cash Values, Cash
Surrender Values, and death benefits would be lower than those shown in the
tables. In addition, the Cash Values, Cash Surrender Values, and death
benefits would be different from those shown if the gross annual investment
rates of return averaged 0%, 6%, and 12% over a period of years, but
fluctuated above and below those averages for individual Policy Years.
The Cash Value column under the "Guaranteed" heading shows the
accumulated value of the Net Premiums paid at the stated interest rate,
reflecting deduction of the monthly administrative charges and monthly
charges for the cost of insurance based on the maximum values allowed under
the 1980 Commissioners Standard Ordinary Mortality Table. The Cash Surrender
Value column under the "Guaranteed" heading shows the projected Cash
Surrender Value of the Policy, which is calculated by taking the Cash Value
under the "Guaranteed" heading and deducting any appropriate Contingent
Deferred Sales Charge. The Cash value column under the "Current" heading
shows the accumulated value of the Net Premiums paid at the stated interest
rate, reflecting deduction of the monthly administrative charges and monthly
charges for the cost of insurance at their current level, which is less than
or equal to that allowed by the 1980 Commissioners Standard Ordinary
Mortality Table. The Cash Surrender Value column under the "Current" heading
shows the projected Cash Surrender Value of the Policy, which is calculated
by taking the Cash Value under the "Current" heading and deducting any
appropriate Contingent Deferred Sales Charge. The illustrations of death
benefits reflect the above assumptions. The death benefits also vary between
tables depending upon whether Death Benefit Options A or C (Level Type) or
Death Benefit Option B (Increasing Type) are illustrated.
The amounts shown for Cash Value, Cash Surrender Value, and death
benefit reflect the fact that the investment rate of return is lower than the
gross after-tax return on the assets held in a Division of the Separate
Account. The charges include a .70% charge for mortality and expense risk,
the investment management and advisory fees (.73% of aggregate average daily
net assets is assumed but the actual investment management and advisory fees
applicable to each Division is shown in the respective prospectuses of
Russell Insurance Funds and General American Capital Company), and
administrative expenses incurred (which are assumed to be .43%). After
deduction for these amounts, the illustrated gross annual investment rates of
return of 0%, 6%, and 12% correspond to approximate net annual rates of
- -1.86%, 4.14%, and 10.14%, respectively. The prospectuses for Russell
Insurance Funds and General American Capital Company should be consulted for
details about the nature and extent of their expenses. There is no
arrangement for reimbursing the expenses of Russell Insurance Funds and
General American Capital Company
The hypothetical values shown in the tables do not reflect any charges
for Federal income taxes against the Separate Account (as opposed to Premium
Tax Charges which are deducted from premium payments), since General American
is not currently making any such charges. However, such charges may be made
in the future and, in that event, the gross annual investment rate of return
of the Divisions of the Separate Account would have to exceed 0%, 6%, and 12%
by an amount sufficient to cover the tax charges in order to produce the
death benefit and Cash Value illustration. (See Federal Tax Matters.)
The tables illustrate the Policy values that would result based upon
the investment rates of return if premiums are paid as indicated, if all Net
Premiums are allocated to the Separate Account and if no Policy Loans have
been made. The tables are also based on the assumptions that the Owner has
not requested an increase or decrease in the Face Amount, that no partial
withdrawals have been made, that no transfer charges were incurred, and that
no optional riders have been requested.
Upon request, General American will provide a comparable illustration
based upon the proposed Insured's age, sex, and rate class, the Face Amount
or premium requested, the proposed frequency of premium payments, and any
available riders requested.
A-1
<PAGE> 229
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Policy Face Amount $100,000 Male Preferred Nonsmoker Age 45
Death Benefit Option A Annual Premium $2,161.69
<CAPTION>
For Separate Account Eleven A Hypothetical Gross
Annual Rate of Return @ 0% (Net Rate @ -1.86%)
---------------------------------------------------------------------
Current<F*> Guaranteed<F**>
--------------------------------- ---------------------------------
Prems Net Net Cash Net Net Net Cash Net
Accum Annual Cash Surrender Death Cash Surrender Death
Year Age @ 5% Premium Value Value Benefit Value Value Benefit
- ---- --- -------- ------- ------- --------- --------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 $ 2,270 $ 2,162 $ 1,787 $ 1,701 $ 100,000 $ 1,787 $ 1,701 $ 100,000
2 47 4,653 2,162 3,498 3,325 100,000 3,200 3,027 100,000
3 48 7,155 2,162 5,123 4,864 100,000 4,557 4,297 100,000
4 49 9,783 2,162 6,689 6,344 100,000 5,856 5,510 100,000
5 50 12,542 2,162 8,209 7,777 100,000 7,095 6,663 100,000
6 51 15,439 2,162 9,694 9,279 100,000 8,274 7,859 100,000
7 52 18,481 2,162 11,135 10,772 100,000 9,386 9,023 100,000
8 53 21,674 2,162 12,544 12,267 100,000 10,427 10,150 100,000
9 54 25,028 2,162 13,911 13,755 100,000 11,391 11,236 100,000
10 55 28,549 2,162 15,237 15,237 100,000 12,273 12,273 100,000
11 56 32,246 2,162 16,583 16,583 100,000 13,068 13,068 100,000
12 57 36,128 2,162 17,871 17,871 100,000 13,774 13,774 100,000
13 58 40,204 2,162 19,102 19,102 100,000 14,387 14,387 100,000
14 59 44,484 2,162 20,289 20,289 100,000 14,905 14,905 100,000
15 60 48,978 2,162 21,432 21,432 100,000 15,321 15,321 100,000
16 61 53,697 2,162 22,506 22,506 100,000 15,628 15,628 100,000
17 62 58,652 2,162 23,513 23,513 100,000 15,813 15,813 100,000
18 63 63,854 2,162 24,446 24,446 100,000 15,862 15,862 100,000
19 64 69,317 2,162 25,299 25,299 100,000 15,756 15,756 100,000
20 65 75,052 2,162 26,074 26,074 100,000 15,477 15,477 100,000
25 70 108,330 2,162 28,573 28,573 100,000 10,848 10,848 100,000
30 75 150,801 2,162 27,934 27,934 100,000 0 0 0
<FN>
<F*>These values reflect investment results using current cost of insurance rates.
<F**>These values reflect investment results using guaranteed cost of insurance rates.
The hypothetical investment rate of return shown above is illustrative only,
and should not be deemed a representation of past or future results.
Actual investment results may be more or less than those shown and will
depend on a number of factors, including the investment allocation made by
the Policy Owner, and the investment results for the series of fund
portfolios. The Cash Value, Cash Surrender Value, and death benefit for a
Policy would be different from those shown if the actual rates of return
averaged the rate shown above over a period of years, but also fluctuated
above or below that average for individual Policy Years. No representation
can be made by the Company, Walnut Street Securities, Inc., General American
Capital Company, Russell Insurance Funds, Inc., or any representative
thereof, that this hypothetical rate of return can be achieved for any one
year, or sustained over any period of time.
Illustrated values shown above are as of the end of the Policy Years
indicated and assume any additional premiums shown are received on the
Policy Anniversaries. Illustrated values assume all premium taxes are paid
by the Company.
</TABLE>
A-2
<PAGE> 230
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Policy Face Amount $100,000 Male Preferred Nonsmoker Age 45
Death Benefit Option A Annual Premium $2,161.69
<CAPTION>
For Separate Account Eleven A Hypothetical Gross
Annual Rate of Return @ 6% (Net Rate @ 4.14%)
---------------------------------------------------------------------
Current<F*> Guaranteed<F**>
--------------------------------- ---------------------------------
Prems Net Net Cash Net Net Net Cash Net
Accum Annual Cash Surrender Death Cash Surrender Death
Year Age @ 5% Premium Value Value Benefit Value Value Benefit
- ---- --- -------- ------- ------- --------- --------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 $ 2,270 $ 2,162 $ 1,901 $ 1,815 $ 100,000 $ 1,901 $ 1,815 $ 100,000
2 47 4,653 2,162 3,837 3,664 100,000 3,531 3,358 100,000
3 48 7,155 2,162 5,799 5,540 100,000 5,197 4,938 100,000
4 49 9,783 2,162 7,813 7,467 100,000 6,902 6,557 100,000
5 50 12,542 2,162 9,894 9,462 100,000 8,644 8,212 100,000
6 51 15,439 2,162 12,057 11,642 100,000 10,424 10,009 100,000
7 52 18,481 2,162 14,296 13,933 100,000 12,237 11,874 100,000
8 53 21,674 2,162 16,625 16,349 100,000 14,081 13,805 100,000
9 54 25,028 2,162 19,039 18,884 100,000 15,953 15,797 100,000
10 55 28,549 2,162 21,543 21,543 100,000 17,847 17,847 100,000
11 56 32,246 2,162 24,205 24,205 100,000 19,765 19,765 100,000
12 57 36,128 2,162 26,952 26,952 100,000 21,703 21,703 100,000
13 58 40,204 2,162 29,793 29,793 100,000 23,664 23,664 100,000
14 59 44,484 2,162 32,741 32,741 100,000 25,649 25,649 100,000
15 60 48,978 2,162 35,804 35,804 100,000 27,657 27,657 100,000
16 61 53,697 2,162 38,968 38,968 100,000 29,684 29,684 100,000
17 62 58,652 2,162 42,241 42,241 100,000 31,727 31,727 100,000
18 63 63,854 2,162 45,628 45,628 100,000 33,781 33,781 100,000
19 64 69,317 2,162 49,134 49,134 100,000 35,838 35,838 100,000
20 65 75,052 2,162 52,771 52,771 100,000 37,892 37,892 100,000
25 70 108,330 2,162 73,325 73,325 100,000 48,092 48,092 100,000
30 75 150,801 2,162 99,519 99,519 106,486 57,882 57,882 100,000
<FN>
<F*>These values reflect investment results using current cost of insurance rates.
<F**>These values reflect investment results using guaranteed cost of insurance rates.
The hypothetical investment rate of return shown above is illustrative only,
and should not be deemed a representation of past or future results.
Actual investment results may be more or less than those shown and will
depend on a number of factors, including the investment allocation made by
the Policy Owner, and the investment results for the series of fund
portfolios. The Cash Value, Cash Surrender Value, and death benefit for a
Policy would be different from those shown if the actual rates of return
averaged the rate shown above over a period of years, but also fluctuated
above or below that average for individual Policy Years. No representation
can be made by the Company, Walnut Street Securities, Inc., General American
Capital Company, Russell Insurance Funds, Inc., or any representative
thereof, that this hypothetical rate of return can be achieved for any one
year, or sustained over any period of time.
Illustrated values shown above are as of the end of the Policy Years
indicated and assume any additional premiums shown are received on the
Policy Anniversaries. Illustrated values assume all premium taxes are paid
by the Company.
</TABLE>
A-3
<PAGE> 231
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Policy Face Amount $100,000 Male Preferred Nonsmoker Age 45
Death Benefit Option A Annual Premium $2,161.69
<CAPTION>
For Separate Account Eleven A Hypothetical Gross
Annual Rate of Return @ 12% (Net Rate @ 10.14%)
---------------------------------------------------------------------
Current<F*> Guaranteed<F**>
--------------------------------- ---------------------------------
Prems Net Net Cash Net Net Net Cash Net
Accum Annual Cash Surrender Death Cash Surrender Death
Year Age @ 5% Premium Value Value Benefit Value Value Benefit
- ---- --- -------- ------- ------- --------- --------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 $ 2,270 $ 2,162 $ 2,016 $ 1,929 $ 100,000 $ 2,016 $ 1,929 $ 100,000
2 47 4,653 2,162 4,191 4,018 100,000 3,876 3,703 100,000
3 48 7,155 2,162 6,531 6,272 100,000 5,894 5,635 100,000
4 49 9,783 2,162 9,081 8,735 100,000 8,089 7,743 100,000
5 50 12,542 2,162 11,874 11,442 100,000 10,475 10,043 100,000
6 51 15,439 2,162 14,949 14,534 100,000 13,075 12,659 100,000
7 52 18,481 2,162 18,326 17,963 100,000 15,904 15,541 100,000
8 53 21,674 2,162 22,048 21,771 100,000 18,986 18,709 100,000
9 54 25,028 2,162 26,142 25,986 100,000 22,346 22,190 100,000
10 55 28,549 2,162 30,651 30,651 100,000 26,012 26,012 100,000
11 56 32,246 2,162 35,685 35,685 100,000 30,020 30,020 100,000
12 57 36,128 2,162 41,223 41,223 100,000 34,411 34,411 100,000
13 58 40,204 2,162 47,323 47,323 100,000 39,236 39,236 100,000
14 59 44,484 2,162 54,058 54,058 100,000 44,550 44,550 100,000
15 60 48,978 2,162 61,502 61,502 100,000 50,418 50,418 100,000
16 61 53,697 2,162 69,723 69,723 100,000 56,915 56,915 100,000
17 62 58,652 2,162 78,818 78,818 100,888 64,127 64,127 100,000
18 63 63,854 2,162 88,842 88,842 111,941 72,156 72,156 100,000
19 64 69,317 2,162 99,853 99,853 123,817 81,126 81,126 100,596
20 65 75,052 2,162 111,951 111,951 136,580 91,047 91,047 111,078
25 70 108,330 2,162 192,756 192,756 223,597 156,626 156,626 181,686
30 75 150,801 2,162 322,290 322,290 344,851 260,631 260,631 278,875
<FN>
<F*>These values reflect investment results using current cost of insurance rates.
<F**>These values reflect investment results using guaranteed cost of insurance rates.
The hypothetical investment rate of return shown above is illustrative only,
and should not be deemed a representation of past or future results.
Actual investment results may be more or less than those shown and will
depend on a number of factors, including the investment allocation made by
the Policy Owner, and the investment results for the series of fund
portfolios. The Cash Value, Cash Surrender Value, and death benefit for a
Policy would be different from those shown if the actual rates of return
averaged the rate shown above over a period of years, but also fluctuated
above or below that average for individual Policy Years. No representation
can be made by the Company, Walnut Street Securities, Inc., General American
Capital Company, Russell Insurance Funds, Inc., or any representative
thereof, that this hypothetical rate of return can be achieved for any one
year, or sustained over any period of time.
Illustrated values shown above are as of the end of the Policy Years
indicated and assume any additional premiums shown are received on the
Policy Anniversaries. Illustrated values assume all premium taxes are paid
by the Company.
</TABLE>
A-4
<PAGE> 232
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Policy Face Amount $100,000 Male Preferred Nonsmoker Age 45
Death Benefit Option B Annual Premium $5,551.37
<CAPTION>
For Separate Account Eleven A Hypothetical Gross
Annual Rate of Return @ 0% (Net Rate @ -1.86%)
---------------------------------------------------------------------
Current<F*> Guaranteed<F**>
--------------------------------- ---------------------------------
Prems Net Net Cash Net Net Net Cash Net
Accum Annual Cash Surrender Death Cash Surrender Death
Year Age @ 5% Premium Value Value Benefit Value Value Benefit
- ---- --- -------- ------- ------- --------- --------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 $ 5,829 $ 5,551 $ 4,862 $ 4,640 $ 104,862 $ 4,862 $ 4,640 $ 104,862
2 47 11,949 5,551 9,586 9,142 109,586 9,278 8,834 109,278
3 48 18,376 5,551 14,163 13,497 114,163 13,573 12,907 113,573
4 49 25,123 5,551 18,619 17,731 118,619 17,746 16,858 117,746
5 50 32,209 5,551 22,969 21,859 122,969 21,796 20,686 121,796
6 51 39,648 5,551 27,226 26,160 127,226 25,721 24,655 125,721
7 52 47,459 5,551 31,381 30,448 131,381 29,515 28,583 129,515
8 53 55,661 5,551 35,446 34,735 135,446 33,174 32,463 133,174
9 54 64,273 5,551 39,412 39,012 139,412 36,690 36,291 136,690
10 55 73,316 5,551 43,281 43,281 143,281 40,058 40,058 140,058
11 56 82,810 5,551 47,204 47,204 147,204 43,273 43,273 143,273
12 57 92,780 5,551 51,007 51,007 151,007 46,331 46,331 146,331
13 58 103,248 5,551 54,692 54,692 154,692 49,231 49,231 149,231
14 59 114,239 5,551 58,273 58,273 158,272 51,969 51,969 151,969
15 60 125,780 5,551 61,751 61,751 161,751 54,540 54,540 154,540
16 61 137,898 5,551 65,095 65,095 165,095 56,934 56,934 156,934
17 62 150,622 5,551 68,305 68,305 168,305 59,140 59,140 159,140
18 63 163,982 5,551 71,373 71,373 171,373 61,142 61,142 161,142
19 64 178,010 5,551 74,290 74,290 174,290 62,923 62,923 162,923
20 65 192,739 5,551 77,058 77,058 177,058 64,467 64,467 164,467
25 70 278,198 5,551 88,381 88,381 188,381 68,173 68,173 168,173
30 75 387,268 5,551 94,469 94,469 194,469 63,143 63,143 163,143
<FN>
<F*>These values reflect investment results using current cost of insurance rates.
<F**>These values reflect investment results using guaranteed cost of insurance rates.
The hypothetical investment rate of return shown above is illustrative only,
and should not be deemed a representation of past or future results.
Actual investment results may be more or less than those shown and will
depend on a number of factors, including the investment allocation made by
the Policy Owner, and the investment results for the series of fund
portfolios. The Cash Value, Cash Surrender Value, and death benefit for a
Policy would be different from those shown if the actual rates of return
averaged the rate shown above over a period of years, but also fluctuated
above or below that average for individual Policy Years. No representation
can be made by the Company, Walnut Street Securities, Inc., General American
Capital Company, Russell Insurance Funds, Inc., or any representative
thereof, that this hypothetical rate of return can be achieved for any one
year, or sustained over any period of time.
Illustrated values shown above are as of the end of the Policy Years
indicated and assume any additional premiums shown are received on the
Policy Anniversaries. Illustrated values assume all premium taxes are paid
by the Company.
</TABLE>
A-5
<PAGE> 233
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Policy Face Amount $100,000 Male Preferred Nonsmoker Age 45
Death Benefit Option B Annual Premium $5,551.37
<CAPTION>
For Separate Account Eleven A Hypothetical Gross
Annual Rate of Return @ 6% (Net Rate @ 4.14%)
---------------------------------------------------------------------
Current<F*> Guaranteed<F**>
--------------------------------- ---------------------------------
Prems Net Net Cash Net Net Net Cash Net
Accum Annual Cash Surrender Death Cash Surrender Death
Year Age @ 5% Premium Value Value Benefit Value Value Benefit
- ---- --- -------- ------- ------- --------- --------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 $ 5,829 $ 5,551 $ 5,164 $ 4,942 $ 105,164 $ 5,164 $ 4,942 $ 105,164
2 47 11,949 5,551 10,493 10,049 110,493 10,175 9,731 110,175
3 48 18,376 5,551 15,982 15,315 115,982 15,353 14,687 115,353
4 49 25,123 5,551 21,661 20,772 121,661 20,703 19,815 120,703
5 50 32,209 5,551 27,551 26,440 127,551 26,226 25,116 126,226
6 51 39,648 5,551 33,672 32,606 133,672 31,928 30,862 131,928
7 52 47,459 5,551 40,023 39,090 140,023 37,805 36,872 137,805
8 53 55,661 5,551 46,624 45,914 146,624 43,859 43,148 143,859
9 54 64,273 5,551 53,474 53,075 153,474 50,087 49,687 150,087
10 55 73,316 5,551 60,584 60,584 160,584 56,487 56,487 156,487
11 56 82,810 5,551 68,123 68,123 168,123 63,059 63,059 163,059
12 57 92,780 5,551 75,925 75,925 175,925 69,803 69,803 169,803
13 58 103,248 5,551 84,001 84,001 184,001 76,722 76,722 176,722
14 59 114,239 5,551 92,376 92,376 192,376 83,816 83,816 183,816
15 60 125,780 5,551 101,060 101,060 201,060 91,084 91,084 191,084
16 61 137,898 5,551 110,032 110,032 210,032 98,520 98,520 198,520
17 62 150,622 5,551 119,301 119,301 219,301 106,116 106,116 206,116
18 63 163,982 5,551 128,870 128,870 228,870 113,860 113,860 213,860
19 64 178,010 5,551 138,738 138,738 238,738 121,735 121,735 221,735
20 65 192,739 5,551 148,917 148,917 248,917 129,725 129,725 229,725
25 70 278,198 5,551 204,541 204,541 304,541 170,936 170,936 270,936
30 75 387,268 5,551 267,846 267,846 367,846 211,823 211,823 311,823
<FN>
<F*>These values reflect investment results using current cost of insurance rates.
<F**>These values reflect investment results using guaranteed cost of insurance rates.
The hypothetical investment rate of return shown above is illustrative only,
and should not be deemed a representation of past or future results.
Actual investment results may be more or less than those shown and will
depend on a number of factors, including the investment allocation made by
the Policy Owner, and the investment results for the series of fund
portfolios. The Cash Value, Cash Surrender Value, and death benefit for a
Policy would be different from those shown if the actual rates of return
averaged the rate shown above over a period of years, but also fluctuated
above or below that average for individual Policy Years. No representation
can be made by the Company, Walnut Street Securities, Inc., General American
Capital Company, Russell Insurance Funds, Inc., or any representative
thereof, that this hypothetical rate of return can be achieved for any one
year, or sustained over any period of time.
Illustrated values shown above are as of the end of the Policy Years
indicated and assume any additional premiums shown are received on the
Policy Anniversaries. Illustrated values assume all premium taxes are paid
by the Company.
</TABLE>
A-6
<PAGE> 234
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Policy Face Amount $100,000 Male Preferred Nonsmoker Age 45
Death Benefit Option B Annual Premium $5,551.37
<CAPTION>
For Separate Account Eleven A Hypothetical Gross
Annual Rate of Return @ 12% (Net Rate @ 10.14%)
---------------------------------------------------------------------
Current<F*> Guaranteed<F**>
--------------------------------- ---------------------------------
Prems Net Net Cash Net Net Net Cash Net
Accum Annual Cash Surrender Death Cash Surrender Death
Year Age @ 5% Premium Value Value Benefit Value Value Benefit
- ---- --- -------- ------- ------- --------- --------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 $ 5,829 $ 5,551 $ 5,466 $ 5,244 $ 105,466 $ 5,466 $ 5,244 $ 105,466
2 47 11,949 5,551 11,437 10,993 111,437 11,109 10,665 111,109
3 48 18,376 5,551 17,950 17,283 117,950 17,282 16,616 117,282
4 49 25,123 5,551 25,085 24,197 125,085 24,037 23,149 124,037
5 50 32,209 5,551 32,919 31,809 132,919 31,428 30,317 131,428
6 51 39,648 5,551 41,535 40,469 141,535 39,515 38,450 139,515
7 52 47,459 5,551 50,999 50,066 150,999 48,362 47,429 148,362
8 53 55,661 5,551 61,410 60,700 161,410 58,036 57,325 158,036
9 54 64,273 5,551 72,853 72,453 172,853 68,613 68,213 168,613
10 55 73,316 5,551 85,430 85,430 185,430 80,173 80,173 180,173
11 56 82,810 5,551 99,426 99,426 199,426 92,811 92,811 192,811
12 57 92,780 5,551 114,791 114,791 214,791 106,627 106,627 206,627
13 58 103,248 5,551 131,664 131,664 231,664 121,737 121,737 221,737
14 59 114,239 5,551 150,211 150,211 250,211 138,265 138,265 238,265
15 60 125,780 5,551 170,601 170,601 270,601 156,345 156,345 256,345
16 61 137,898 5,551 192,984 192,984 292,984 176,124 176,124 276,124
17 62 150,622 5,551 217,562 217,562 317,562 197,756 197,756 297,756
18 63 163,982 5,551 244,546 244,546 344,546 221,412 221,412 321,412
19 64 178,010 5,551 274,166 274,166 374,166 247,272 247,272 347,272
20 65 192,739 5,551 306,690 306,690 406,690 275,541 275,541 375,541
25 70 278,198 5,551 523,866 523,866 623,866 461,777 461,777 561,777
30 75 387,268 5,551 870,448 870,448 970,448 752,886 752,886 852,886
<FN>
<F*>These values reflect investment results using current cost of insurance rates.
<F**>These values reflect investment results using guaranteed cost of insurance rates.
The hypothetical investment rate of return shown above is illustrative only,
and should not be deemed a representation of past or future results.
Actual investment results may be more or less than those shown and will
depend on a number of factors, including the investment allocation made by
the Policy Owner, and the investment results for the series of fund
portfolios. The Cash Value, Cash Surrender Value, and death benefit for a
Policy would be different from those shown if the actual rates of return
averaged the rate shown above over a period of years, but also fluctuated
above or below that average for individual Policy Years. No representation
can be made by the Company, Walnut Street Securities, Inc., General American
Capital Company, Russell Insurance Funds, Inc., or any representative
thereof, that this hypothetical rate of return can be achieved for any one
year, or sustained over any period of time.
Illustrated values shown above are as of the end of the Policy Years
indicated and assume any additional premiums shown are received on the
Policy Anniversaries. Illustrated values assume all premium taxes are paid
by the Company.
</TABLE>
A-7
<PAGE> 235
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Policy Face Amount $100,000 Male Preferred Nonsmoker Age 45
Death Benefit Option C Annual Premium $5,551.37
<CAPTION>
For Separate Account Eleven A Hypothetical Gross
Annual Rate of Return @ 0% (Net Rate @ -1.86%)
---------------------------------------------------------------------
Current<F*> Guaranteed<F**>
--------------------------------- ---------------------------------
Prems Net Net Cash Net Net Net Cash Net
Accum Annual Cash Surrender Death Cash Surrender Death
Year Age @ 5% Premium Value Value Benefit Value Value Benefit
- ---- --- -------- ------- ------- --------- --------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 $ 5,829 $ 5,551 $ 4,868 $ 4,646 $ 100,000 $ 4,868 $ 4,646 $ 100,000
2 47 11,949 5,551 9,610 9,165 100,000 9,331 8,887 100,000
3 48 18,376 5,551 14,220 13,554 100,000 13,699 13,033 100,000
4 49 25,123 5,551 18,728 17,840 100,000 17,975 17,087 100,000
5 50 32,209 5,551 23,145 22,035 100,000 22,159 21,049 100,000
6 51 39,648 5,551 27,485 26,419 100,000 26,255 25,189 100,000
7 52 47,459 5,551 31,741 30,809 100,000 30,261 29,329 100,000
8 53 49,832 0 30,868 30,246 100,000 29,100 28,478 100,000
9 54 52,324 0 29,992 29,681 100,000 27,898 27,587 100,000
10 55 54,940 0 29,111 29,111 100,000 26,647 26,647 100,000
11 56 57,687 0 28,227 28,227 100,000 25,340 25,340 100,000
12 57 60,571 0 27,322 27,322 100,000 23,971 23,971 100,000
13 58 63,600 0 26,394 26,394 100,000 22,533 22,533 100,000
14 59 66,780 0 25,453 25,453 100,000 21,020 21,020 100,000
15 60 70,119 0 24,498 24,498 100,000 19,420 19,420 100,000
16 61 73,625 0 23,500 23,500 100,000 17,722 17,722 100,000
17 62 77,306 0 22,460 22,460 100,000 15,907 15,907 100,000
18 63 81,171 0 21,367 21,367 100,000 13,955 13,955 100,000
19 64 85,230 0 20,210 20,210 100,000 11,841 11,841 100,000
20 65 89,492 0 18,988 18,988 100,000 9,537 9,537 100,000
25 70 114,216 0 11,494 11,494 100,000 0 0 0
30 75 145,772 0 65 65 100,000 0 0 0
<FN>
<F*>These values reflect investment results using current cost of insurance rates.
<F**>These values reflect investment results using guaranteed cost of insurance rates.
The hypothetical investment rate of return shown above is illustrative only,
and should not be deemed a representation of past or future results.
Actual investment results may be more or less than those shown and will
depend on a number of factors, including the investment allocation made by
the Policy Owner, and the investment results for the series of fund
portfolios. The Cash Value, Cash Surrender Value, and death benefit for a
Policy would be different from those shown if the actual rates of return
averaged the rate shown above over a period of years, but also fluctuated
above or below that average for individual Policy Years. No representation
can be made by the Company, Walnut Street Securities, Inc., General American
Capital Company, Russell Insurance Funds, Inc., or any representative
thereof, that this hypothetical rate of return can be achieved for any one
year, or sustained over any period of time.
Illustrated values shown above are as of the end of the Policy Years
indicated and assume any additional premiums shown are received on the
Policy Anniversaries. Illustrated values assume all premium taxes are paid
by the Company.
</TABLE>
A-8
<PAGE> 236
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Policy Face Amount $100,000 Male Preferred Nonsmoker Age 45
Death Benefit Option C Annual Premium $5,551.37
<CAPTION>
For Separate Account Eleven A Hypothetical Gross
Annual Rate of Return @ 6% (Net Rate @ 4.14%)
---------------------------------------------------------------------
Current<F*> Guaranteed<F**>
--------------------------------- ---------------------------------
Prems Net Net Cash Net Net Net Cash Net
Accum Annual Cash Surrender Death Cash Surrender Death
Year Age @ 5% Premium Value Value Benefit Value Value Benefit
- ---- --- -------- ------- ------- --------- --------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 $ 5,829 $ 5,551 $ 5,171 $ 4,949 $ 100,000 $ 5,171 $ 4,949 $ 100,000
2 47 11,949 5,551 10,519 10,075 100,000 10,234 9,790 100,000
3 48 18,376 5,551 16,048 15,382 100,000 15,498 14,832 100,000
4 49 25,123 5,551 21,790 20,902 100,000 20,975 20,087 100,000
5 50 32,209 5,551 27,769 26,658 100,000 26,677 25,566 100,000
6 51 39,648 5,551 34,005 32,939 100,000 32,617 31,551 100,000
7 52 47,459 5,551 40,506 39,573 100,000 38,807 37,874 100,000
8 53 49,832 0 41,925 41,304 100,000 39,873 39,251 100,000
9 54 52,324 0 43,395 43,084 100,000 40,946 40,636 100,000
10 55 54,940 0 44,917 44,917 100,000 42,023 42,023 100,000
11 56 57,687 0 46,496 46,496 100,524 43,102 43,102 100,000
12 57 60,571 0 48,120 48,120 101,223 44,180 44,180 100,000
13 58 63,600 0 49,793 49,793 101,958 45,258 45,258 100,000
14 59 66,780 0 51,523 51,523 102,739 46,333 46,333 100,000
15 60 70,119 0 53,312 53,312 103,568 47,404 47,404 100,000
16 61 73,625 0 55,146 55,146 104,411 48,466 48,466 100,000
17 62 77,306 0 57,028 57,028 105,277 49,514 49,514 100,000
18 63 81,171 0 58,956 58,956 106,166 50,539 50,539 100,000
19 64 85,230 0 60,928 60,928 107,080 51,534 51,534 100,000
20 65 89,492 0 62,949 62,949 108,032 52,490 52,490 100,000
25 70 114,216 0 73,761 73,761 113,381 56,422 56,422 100,000
30 75 145,772 0 85,702 85,702 119,643 57,597 57,597 100,000
<FN>
<F*>These values reflect investment results using current cost of insurance rates.
<F**>These values reflect investment results using guaranteed cost of insurance rates.
The hypothetical investment rate of return shown above is illustrative only,
and should not be deemed a representation of past or future results.
Actual investment results may be more or less than those shown and will
depend on a number of factors, including the investment allocation made by
the Policy Owner, and the investment results for the series of fund
portfolios. The Cash Value, Cash Surrender Value, and death benefit for a
Policy would be different from those shown if the actual rates of return
averaged the rate shown above over a period of years, but also fluctuated
above or below that average for individual Policy Years. No representation
can be made by the Company, Walnut Street Securities, Inc., General American
Capital Company, Russell Insurance Funds, Inc., or any representative
thereof, that this hypothetical rate of return can be achieved for any one
year, or sustained over any period of time.
Illustrated values shown above are as of the end of the Policy Years
indicated and assume any additional premiums shown are received on the
Policy Anniversaries. Illustrated values assume all premium taxes are paid
by the Company.
</TABLE>
A-9
<PAGE> 237
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Policy Face Amount $100,000 Male Preferred Nonsmoker Age 45
Death Benefit Option C Annual Premium $5,551.37
<CAPTION>
For Separate Account Eleven A Hypothetical Gross
Annual Rate of Return @ 12% (Net Rate @ 10.14%)
---------------------------------------------------------------------
Current<F*> Guaranteed<F**>
--------------------------------- ---------------------------------
Prems Net Net Cash Net Net Net Cash Net
Accum Annual Cash Surrender Death Cash Surrender Death
Year Age @ 5% Premium Value Value Benefit Value Value Benefit
- ---- --- -------- ------- ------- --------- --------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 $ 5,829 $ 5,551 $ 5,474 $ 5,252 $ 100,000 $ 5,474 $ 5,252 $ 100,000
2 47 11,949 5,551 11,466 11,022 100,000 11,173 10,729 100,000
3 48 18,376 5,551 18,025 17,359 100,000 17,447 16,781 100,000
4 49 25,123 5,551 25,238 24,349 100,000 24,359 23,471 100,000
5 50 32,209 5,551 33,187 32,076 100,000 31,982 30,872 100,000
6 51 39,648 5,551 41,957 40,891 104,709 40,398 39,332 100,818
7 52 47,459 5,551 51,571 50,638 124,965 49,584 48,651 120,151
8 53 49,832 0 56,484 55,862 132,943 53,979 53,358 127,048
9 54 52,324 0 61,866 61,555 141,484 58,743 58,432 134,343
10 55 54,940 0 67,761 67,761 150,638 63,902 63,902 142,058
11 56 57,687 0 74,221 74,221 160,465 69,485 69,485 150,226
12 57 60,571 0 81,278 81,278 170,972 75,524 75,524 158,869
13 58 63,600 0 88,989 88,989 182,218 82,057 82,057 168,023
14 59 66,780 0 97,429 97,429 194,280 89,121 89,121 177,714
15 60 70,119 0 106,669 106,669 207,222 96,759 96,759 187,971
16 61 73,625 0 116,748 116,748 221,045 105,010 105,010 198,820
17 62 77,306 0 127,748 127,748 235,830 113,915 113,915 210,294
18 63 81,171 0 139,741 139,741 251,641 123,516 123,516 222,423
19 64 85,230 0 152,809 152,809 268,557 133,852 133,852 235,241
20 65 89,492 0 167,051 167,051 286,691 144,968 144,968 248,792
25 70 114,216 0 259,629 259,629 399,087 214,231 214,231 329,304
30 75 145,772 0 400,075 400,075 558,521 311,966 311,966 435,517
<FN>
<F*>These values reflect investment results using current cost of insurance rates.
<F**>These values reflect investment results using guaranteed cost of insurance rates.
The hypothetical investment rate of return shown above is illustrative only,
and should not be deemed a representation of past or future results.
Actual investment results may be more or less than those shown and will
depend on a number of factors, including the investment allocation made by
the Policy Owner, and the investment results for the series of fund
portfolios. The Cash Value, Cash Surrender Value, and death benefit for a
Policy would be different from those shown if the actual rates of return
averaged the rate shown above over a period of years, but also fluctuated
above or below that average for individual Policy Years. No representation
can be made by the Company, Walnut Street Securities, Inc., General American
Capital Company, Russell Insurance Funds, Inc., or any representative
thereof, that this hypothetical rate of return can be achieved for any one
year, or sustained over any period of time.
Illustrated values shown above are as of the end of the Policy Years
indicated and assume any additional premiums shown are received on the
Policy Anniversaries. Illustrated values assume all premium taxes are paid
by the Company.
</TABLE>
A-10
<PAGE> 238
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Policy Face Amount $100,000 Guaranteed Issue Nonsmoker Age 45
Death Benefit Option A Annual Premium $1,921.52
<CAPTION>
For Separate Account Eleven A Hypothetical Gross
Annual Rate of Return @ 0% (Net Rate @ -1.86%)
---------------------------------------------------------------------------------
Current<F*> Guaranteed<F**>
------------------------------------- -------------------------------------
Prems Net Net Cash Net Net Net Cash Net
Accum Annual Cash Surrender Death Cash Surrender Death
Year Age @ 5% Premium Value Value Benefit Value Value Benefit
---- --- ------- ------- -------- -------- --------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 $ 2,018 $ 1,922 $ 1,324 $ 1,247 $ 100,000 $ 1,324 $ 1,247 $ 100,000
2 47 4,136 1,922 2,605 2,451 100,000 2,576 2,422 100,000
3 48 6,360 1,922 3,845 3,614 100,000 3,777 3,547 100,000
4 49 8,696 1,922 5,056 4,748 100,000 4,926 4,619 100,000
5 50 11,148 1,922 6,249 5,865 100,000 6,022 5,638 100,000
6 51 13,724 1,922 7,415 7,046 100,000 7,064 6,695 100,000
7 52 16,427 1,922 8,564 8,241 100,000 8,045 7,722 100,000
8 53 19,266 1,922 9,686 9,440 100,000 8,961 8,715 100,000
9 54 22,247 1,922 10,761 10,623 100,000 9,807 9,668 100,000
10 55 25,377 1,922 11,790 11,790 100,000 10,575 10,575 100,000
11 56 28,664 1,922 12,786 12,786 100,000 11,262 11,262 100,000
12 57 32,114 1,922 13,697 13,697 100,000 11,864 11,864 100,000
13 58 35,738 1,922 14,538 14,538 100,000 12,375 12,375 100,000
14 59 39,542 1,922 15,300 15,300 100,000 12,793 12,793 100,000
15 60 43,537 1,922 15,964 15,964 100,000 13,111 13,111 100,000
16 61 47,731 1,922 16,535 16,535 100,000 13,315 13,315 100,000
17 62 52,135 1,922 17,012 17,012 100,000 13,396 13,396 100,000
18 63 56,760 1,922 17,399 17,399 100,000 13,333 13,333 100,000
19 64 61,615 1,922 17,706 17,706 100,000 13,104 13,104 100,000
20 65 66,714 1,922 17,943 17,943 100,000 12,686 12,686 100,000
25 70 96,294 1,922 17,357 17,357 100,000 6,997 6,997 100,000
30 75 134,047 1,922 11,770 11,770 100,000 0 0 0
<FN>
<F*>These values reflect investment results using current cost of
insurance rates.
<F**>These values reflect investment results using guaranteed cost of
insurance rates.
The hypothetical investment rate of return shown above is illustrative only,
and should not be deemed a representation of past or future results. Actual
investment results may be more or less than those shown and will depend on a
number of factors, including the investment allocation made by the Policy
Owner, and the investment results for the series of fund portfolios. The
Cash Value, Cash Surrender Value, and death benefit for a Policy would be
different from those shown if the actual rates of return averaged the rate
shown above over a period of years, but also fluctuated above or below that
average for individual Policy Years. No representation can be made by the
Company, Walnut Street Securities, Inc., General American Capital Company,
Russell Insurance Funds, Inc., or any representative thereof, that this
hypothetical rate of return can be achieved for any one year, or sustained
over any period of time.
Illustrated values shown above are as of the end of the Policy Years
indicated and assume any additional premiums shown are received on the Policy
Anniversaries. Illustrated values assume all premium taxes are paid by the
Company.
</TABLE>
A-11
<PAGE> 239
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Policy Face Amount $100,000 Guaranteed Issue Nonsmoker Age 45
Death Benefit Option A Annual Premium $1,921.52
<CAPTION>
For Separate Account Eleven A Hypothetical Gross
Annual Rate of Return @ 6% (Net Rate @ 4.14%)
---------------------------------------------------------------------------------
Current<F*> Guaranteed<F**>
------------------------------------- -------------------------------------
Prems Net Net Cash Net Net Net Cash Net
Accum Annual Cash Surrender Death Cash Surrender Death
Year Age @ 5% Premium Value Value Benefit Value Value Benefit
---- --- ------- ------- -------- -------- --------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 $ 2,018 $ 1,922 $ 1,417 $ 1,340 $ 100,000 $ 1,417 $ 1,340 $ 100,000
2 47 4,136 1,922 2,875 2,721 100,000 2,844 2,690 100,000
3 48 6,360 1,922 4,375 4,145 100,000 4,304 4,073 100,000
4 49 8,696 1,922 5,933 5,626 100,000 5,794 5,487 100,000
5 50 11,148 1,922 7,563 7,179 100,000 7,316 6,932 100,000
6 51 13,724 1,922 9,257 8,888 100,000 8,869 8,501 100,000
7 52 16,427 1,922 11,029 10,706 100,000 10,449 10,126 100,000
8 53 19,266 1,922 12,872 12,626 100,000 12,051 11,805 100,000
9 54 22,247 1,922 14,769 14,631 100,000 13,672 13,534 100,000
10 55 25,377 1,922 16,724 16,724 100,000 15,307 15,307 100,000
11 56 28,664 1,922 18,756 18,756 100,000 16,952 16,952 100,000
12 57 32,114 1,922 20,818 20,818 100,000 18,606 18,606 100,000
13 58 35,738 1,922 22,924 22,924 100,000 20,266 20,266 100,000
14 59 39,542 1,922 25,069 25,069 100,000 21,930 21,930 100,000
15 60 43,537 1,922 27,242 27,242 100,000 23,596 23,596 100,000
16 61 47,731 1,922 29,449 29,449 100,000 25,253 25,253 100,000
17 62 52,135 1,922 31,697 31,697 100,000 26,897 26,897 100,000
18 63 56,760 1,922 33,993 33,993 100,000 28,513 28,513 100,000
19 64 61,615 1,922 36,351 36,351 100,000 30,088 30,088 100,000
20 65 66,714 1,922 38,790 38,790 100,000 31,606 31,606 100,000
25 70 96,294 1,922 51,986 51,986 100,000 37,971 37,971 100,000
30 75 134,047 1,922 67,048 67,048 100,000 40,213 40,213 100,000
<FN>
<F*>These values reflect investment results using current cost of
insurance rates.
<F**>These values reflect investment results using guaranteed cost of
insurance rates.
The hypothetical investment rate of return shown above is illustrative only,
and should not be deemed a representation of past or future results. Actual
investment results may be more or less than those shown and will depend on a
number of factors, including the investment allocation made by the Policy
Owner, and the investment results for the series of fund portfolios. The
Cash Value, Cash Surrender Value, and death benefit for a Policy would be
different from those shown if the actual rates of return averaged the rate
shown above over a period of years, but also fluctuated above or below that
average for individual Policy Years. No representation can be made by the
Company, Walnut Street Securities, Inc., General American Capital Company,
Russell Insurance Funds, Inc., or any representative thereof, that this
hypothetical rate of return can be achieved for any one year, or sustained
over any period of time.
Illustrated values shown above are as of the end of the Policy Years
indicated and assume any additional premiums shown are received on the Policy
Anniversaries. Illustrated values assume all premium taxes are paid by the
Company.
</TABLE>
A-12
<PAGE> 240
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Policy Face Amount $100,000 Guaranteed Issue Nonsmoker Age 45
Death Benefit Option A Annual Premium $1,921.52
<CAPTION>
For Separate Account Eleven A Hypothetical Gross
Annual Rate of Return @ 12% (Net Rate @ 10.14%)
---------------------------------------------------------------------------------
Current<F*> Guaranteed<F**>
------------------------------------- -------------------------------------
Prems Net Net Cash Net Net Net Cash Net
Accum Annual Cash Surrender Death Cash Surrender Death
Year Age @ 5% Premium Value Value Benefit Value Value Benefit
---- --- ------- ------- -------- -------- --------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 $ 2,018 $ 1,922 $ 1,510 $ 1,433 $ 100,000 $ 1,510 $ 1,433 $ 100,000
2 47 4,136 1,922 3,156 3,002 100,000 3,124 2,971 100,000
3 48 6,360 1,922 4,951 4,721 100,000 4,876 4,646 100,000
4 49 8,696 1,922 6,926 6,618 100,000 6,777 6,469 100,000
5 50 11,148 1,922 9,110 8,726 100,000 8,842 8,458 100,000
6 51 13,724 1,922 11,516 11,147 100,000 11,088 10,719 100,000
7 52 16,427 1,922 14,177 13,854 100,000 13,529 13,206 100,000
8 53 19,266 1,922 17,111 16,865 100,000 16,183 15,937 100,000
9 54 22,247 1,922 20,327 20,189 100,000 19,068 18,930 100,000
10 55 25,377 1,922 23,858 23,858 100,000 22,207 22,207 100,000
11 56 28,664 1,922 27,762 27,762 100,000 25,627 25,627 100,000
12 57 32,114 1,922 32,027 32,027 100,000 29,360 29,360 100,000
13 58 35,738 1,922 36,709 36,709 100,000 33,443 33,443 100,000
14 59 39,542 1,922 41,853 41,853 100,000 37,921 37,921 100,000
15 60 43,537 1,922 47,506 47,506 100,000 42,844 42,844 100,000
16 61 47,731 1,922 53,737 53,737 100,000 48,264 48,264 100,000
17 62 52,135 1,922 60,627 60,627 100,000 54,249 54,249 100,000
18 63 56,760 1,922 68,267 68,267 100,000 60,875 60,875 100,000
19 64 61,615 1,922 76,763 76,763 100,000 68,232 68,232 100,000
20 65 66,714 1,922 86,219 86,219 105,187 76,435 76,435 100,000
25 70 96,294 1,922 149,331 149,331 173,224 132,069 132,069 153,200
30 75 134,047 1,922 250,117 250,117 267,625 220,206 220,206 235,620
<FN>
<F*>These values reflect investment results using current cost of
insurance rates.
<F**>These values reflect investment results using guaranteed cost of
insurance rates.
The hypothetical investment rate of return shown above is illustrative only,
and should not be deemed a representation of past or future results. Actual
investment results may be more or less than those shown and will depend on a
number of factors, including the investment allocation made by the Policy
Owner, and the investment results for the series of fund portfolios. The
Cash Value, Cash Surrender Value, and death benefit for a Policy would be
different from those shown if the actual rates of return averaged the rate
shown above over a period of years, but also fluctuated above or below that
average for individual Policy Years. No representation can be made by the
Company, Walnut Street Securities, Inc., General American Capital Company,
Russell Insurance Funds, Inc., or any representative thereof, that this
hypothetical rate of return can be achieved for any one year, or sustained
over any period of time.
Illustrated values shown above are as of the end of the Policy Years
indicated and assume any additional premiums shown are received on the Policy
Anniversaries. Illustrated values assume all premium taxes are paid by the
Company.
</TABLE>
A-13
<PAGE> 241
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Policy Face Amount $100,000 Guaranteed Issue Nonsmoker Age 45
Death Benefit Option B Annual Premium $5,112.14
<CAPTION>
For Separate Account Eleven A Hypothetical Gross
Annual Rate of Return @ 0% (Net Rate @ -1.86%)
---------------------------------------------------------------------------------
Current<F*> Guaranteed<F**>
------------------------------------- -------------------------------------
Prems Net Net Cash Net Net Net Cash Net
Accum Annual Cash Surrender Death Cash Surrender Death
Year Age @ 5% Premium Value Value Benefit Value Value Benefit
---- --- ------- ------- -------- -------- --------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 $ 5,368 $ 5,112 $ 4,214 $ 4,010 $ 104,214 $ 4,214 $ 4,010 $ 104,214
2 47 11,004 5,112 8,327 7,918 108,327 8,297 7,888 108,297
3 48 16,922 5,112 12,339 11,726 112,339 12,270 11,656 112,270
4 49 23,136 5,112 16,265 15,447 116,265 16,130 15,312 116,130
5 50 29,660 5,112 20,118 19,096 120,118 19,880 18,858 119,880
6 51 36,511 5,112 23,887 22,906 123,887 23,517 22,535 123,517
7 52 43,704 5,112 27,587 26,728 127,587 27,035 26,176 127,035
8 53 51,257 5,112 31,206 30,551 131,206 30,429 29,775 130,429
9 54 59,188 5,112 34,722 34,354 134,722 33,694 33,325 133,694
10 55 67,515 5,112 38,137 38,137 138,137 36,821 36,821 136,821
11 56 76,258 5,112 41,544 41,544 141,544 39,808 39,808 139,808
12 57 85,439 5,112 44,805 44,805 144,805 42,650 42,650 142,650
13 58 95,079 5,112 47,935 47,935 147,935 45,342 45,342 145,342
14 59 105,200 5,112 50,923 50,923 150,923 47,880 47,880 147,880
15 60 115,828 5,112 53,750 53,750 153,750 50,259 50,259 150,259
16 61 126,987 5,112 56,418 56,418 156,418 52,465 52,465 152,465
17 62 138,705 5,112 58,930 58,930 158,930 54,487 54,487 154,487
18 63 151,008 5,112 61,289 61,289 161,289 56,306 56,306 156,306
19 64 163,926 5,112 63,510 63,510 163,510 57,900 57,900 157,900
20 65 177,490 5,112 65,606 65,606 165,606 59,247 59,247 159,247
25 70 256,187 5,112 73,404 73,404 173,404 61,771 61,771 161,770
30 75 356,627 5,112 74,845 74,845 174,845 54,802 54,802 154,802
<FN>
<F*>These values reflect investment results using current cost of
insurance rates.
<F**>These values reflect investment results using guaranteed cost of
insurance rates.
The hypothetical investment rate of return shown above is illustrative only,
and should not be deemed a representation of past or future results. Actual
investment results may be more or less than those shown and will depend on a
number of factors, including the investment allocation made by the Policy
Owner, and the investment results for the series of fund portfolios. The
Cash Value, Cash Surrender Value, and death benefit for a Policy would be
different from those shown if the actual rates of return averaged the rate
shown above over a period of years, but also fluctuated above or below that
average for individual Policy Years. No representation can be made by the
Company, Walnut Street Securities, Inc., General American Capital Company,
Russell Insurance Funds, Inc., or any representative thereof, that this
hypothetical rate of return can be achieved for any one year, or sustained
over any period of time.
Illustrated values shown above are as of the end of the Policy Years
indicated and assume any additional premiums shown are received on the Policy
Anniversaries. Illustrated values assume all premium taxes are paid by the
Company.
</TABLE>
A-14
<PAGE> 242
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Policy Face Amount $100,000 Guaranteed Issue Nonsmoker Age 45
Death Benefit Option B Annual Premium $5,112.14
<CAPTION>
For Separate Account Eleven A Hypothetical Gross
Annual Rate of Return @ 6% (Net Rate @ 4.14%)
---------------------------------------------------------------------------------
Current<F*> Guaranteed<F**>
------------------------------------- -------------------------------------
Prems Net Net Cash Net Net Net Cash Net
Accum Annual Cash Surrender Death Cash Surrender Death
Year Age @ 5% Premium Value Value Benefit Value Value Benefit
---- --- ------- ------- -------- -------- --------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 $ 5,368 $ 5,112 $ 4,484 $ 4,280 $ 104,484 $ 4,484 $ 4,280 $ 104,484
2 47 11,004 5,112 9,130 8,721 109,130 9,098 8,689 109,098
3 48 16,922 5,112 13,943 13,330 113,943 13,869 13,256 113,869
4 49 23,136 5,112 18,944 18,126 118,944 18,798 17,980 118,798
5 50 29,660 5,112 24,151 23,129 124,151 23,891 22,868 123,891
6 51 36,511 5,112 29,562 28,581 129,562 29,150 28,168 129,150
7 52 43,704 5,112 35,197 34,339 135,197 34,573 33,714 134,573
8 53 51,257 5,112 41,054 40,399 141,054 40,161 39,506 140,161
9 54 59,188 5,112 47,116 46,748 147,116 45,912 45,544 145,912
10 55 67,515 5,112 53,393 53,393 153,393 51,822 51,822 151,822
11 56 76,258 5,112 59,990 59,990 159,990 57,892 57,892 157,892
12 57 85,439 5,112 66,776 66,776 166,776 64,120 64,120 164,120
13 58 95,079 5,112 73,769 73,769 173,769 70,507 70,507 170,507
14 59 105,200 5,112 80,967 80,967 180,967 77,051 77,051 177,051
15 60 115,828 5,112 88,353 88,353 188,353 83,751 83,751 183,751
16 61 126,987 5,112 95,936 95,936 195,936 90,595 90,595 190,595
17 62 138,705 5,112 103,723 103,723 203,723 97,575 97,575 197,575
18 63 151,008 5,112 111,723 111,723 211,723 104,675 104,675 204,675
19 64 163,926 5,112 119,958 119,958 219,958 111,871 111,871 211,871
20 65 177,490 5,112 128,448 128,448 228,448 119,143 119,143 219,143
25 70 256,187 5,112 174,147 174,147 274,147 156,000 156,000 256,000
30 75 356,627 5,112 223,632 223,632 323,632 190,565 190,565 290,565
<FN>
<F*>These values reflect investment results using current cost of
insurance rates.
<F*>These values reflect investment results using guaranteed cost of
insurance rates.
The hypothetical investment rate of return shown above is illustrative only,
and should not be deemed a representation of past or future results. Actual
investment results may be more or less than those shown and will depend on a
number of factors, including the investment allocation made by the Policy
Owner, and the investment results for the series of fund portfolios. The
Cash Value, Cash Surrender Value, and death benefit for a Policy would be
different from those shown if the actual rates of return averaged the rate
shown above over a period of years, but also fluctuated above or below that
average for individual Policy Years. No representation can be made by the
Company, Walnut Street Securities, Inc., General American Capital Company,
Russell Insurance Funds, Inc., or any representative thereof, that this
hypothetical rate of return can be achieved for any one year, or sustained
over any period of time.
Illustrated values shown above are as of the end of the Policy Years
indicated and assume any additional premiums shown are received on the Policy
Anniversaries. Illustrated values assume all premium taxes are paid by the
Company.
</TABLE>
A-15
<PAGE> 243
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Policy Face Amount $100,000 Guaranteed Issue Nonsmoker Age 45
Death Benefit Option B Annual Premium $5,112.14
<CAPTION>
For Separate Account Eleven A Hypothetical Gross
Annual Rate of Return @ 12% (Net Rate @ 10.14%)
---------------------------------------------------------------------------------
Current<F*> Guaranteed<F**>
------------------------------------- -------------------------------------
Prems Net Net Cash Net Net Net Cash Net
Accum Annual Cash Surrender Death Cash Surrender Death
Year Age @ 5% Premium Value Value Benefit Value Value Benefit
---- --- ------- ------- -------- -------- --------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 $ 5,368 $ 5,112 $ 4,754 $ 4,550 $ 104,754 $ 4,754 $ 4,550 $ 104,754
2 47 11,004 5,112 9,965 9,556 109,965 9,933 9,524 109,933
3 48 16,922 5,112 15,680 15,066 115,680 15,602 14,988 115,602
4 49 23,136 5,112 21,961 21,143 121,961 21,805 20,987 121,805
5 50 29,660 5,112 28,880 27,857 128,880 28,594 27,572 128,594
6 51 36,511 5,112 36,487 35,506 136,487 36,027 35,046 136,027
7 52 43,704 5,112 44,866 44,007 144,866 44,158 43,300 144,158
8 53 51,257 5,112 54,082 53,428 154,082 53,053 52,399 153,053
9 54 59,188 5,112 64,196 63,827 164,196 62,779 62,411 162,779
10 55 67,515 5,112 75,297 75,297 175,297 73,410 73,410 173,410
11 56 76,258 5,112 87,590 87,590 187,590 85,032 85,032 185,032
12 57 85,439 5,112 101,043 101,043 201,043 97,736 97,736 197,736
13 58 95,079 5,112 115,785 115,785 215,785 111,627 111,627 211,627
14 59 105,200 5,112 131,934 131,934 231,934 126,816 126,816 226,816
15 60 115,828 5,112 149,608 149,608 249,608 143,427 143,427 243,427
16 61 126,987 5,112 168,962 168,962 268,962 161,587 161,587 261,587
17 62 138,705 5,112 190,166 190,166 290,166 181,437 181,437 281,437
18 63 151,008 5,112 213,409 213,409 313,409 203,126 203,126 303,126
19 64 163,926 5,112 238,909 238,909 338,909 226,812 226,812 326,812
20 65 177,490 5,112 266,909 266,909 366,909 252,673 252,673 352,673
25 70 256,187 5,112 453,185 453,185 553,185 422,351 422,351 522,351
30 75 356,627 5,112 747,785 747,785 847,785 685,484 685,484 785,484
<FN>
<F*>These values reflect investment results using current cost of
insurance rates.
<F**>These values reflect investment results using guaranteed cost of
insurance rates.
The hypothetical investment rate of return shown above is illustrative only,
and should not be deemed a representation of past or future results. Actual
investment results may be more or less than those shown and will depend on a
number of factors, including the investment allocation made by the Policy
Owner, and the investment results for the series of fund portfolios. The
Cash Value, Cash Surrender Value, and death benefit for a Policy would be
different from those shown if the actual rates of return averaged the rate
shown above over a period of years, but also fluctuated above or below that
average for individual Policy Years. No representation can be made by the
Company, Walnut Street Securities, Inc., General American Capital Company,
Russell Insurance Funds, Inc., or any representative thereof, that this
hypothetical rate of return can be achieved for any one year, or sustained
over any period of time.
Illustrated values shown above are as of the end of the Policy Years
indicated and assume any additional premiums shown are received on the Policy
Anniversaries. Illustrated values assume all premium taxes are paid by the
Company.
</TABLE>
A-16
<PAGE> 244
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Policy Face Amount $100,000 Guaranteed Issue Nonsmoker Age 45
Death Benefit Option C Annual Premium $5,112.14
<CAPTION>
For Separate Account Eleven A Hypothetical Gross
Annual Rate of Return @ 0% (Net Rate @ -1.86%)
---------------------------------------------------------------------------------
Current<F*> Guaranteed<F**>
------------------------------------- -------------------------------------
Prems Net Net Cash Net Net Net Cash Net
Accum Annual Cash Surrender Death Cash Surrender Death
Year Age @ 5% Premium Value Value Benefit Value Value Benefit
---- --- ------- ------- -------- -------- --------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 $ 5,368 $ 5,112 $ 4,231 $ 4,027 $ 100,000 $ 4,231 $ 4,027 $ 100,000
2 47 11,004 5,112 8,379 7,970 100,000 8,351 7,942 100,000
3 48 16,922 5,112 12,444 11,831 100,000 12,382 11,769 100,000
4 49 23,136 5,112 16,442 15,624 100,000 16,325 15,508 100,000
5 50 29,660 5,112 20,383 19,360 100,000 20,184 19,161 100,000
6 51 36,511 5,112 24,259 23,277 100,000 23,959 22,977 100,000
7 52 43,704 5,112 28,080 27,221 100,000 27,648 26,789 100,000
8 53 45,889 0 27,176 26,604 100,000 26,580 26,007 100,000
9 54 48,184 0 26,259 25,973 100,000 25,474 25,188 100,000
10 55 50,593 0 25,329 25,329 100,000 24,323 24,323 100,000
11 56 53,123 0 24,348 24,348 100,000 23,120 23,120 100,000
12 57 55,779 0 23,316 23,316 100,000 21,859 21,859 100,000
13 58 58,568 0 22,242 22,242 100,000 20,532 20,532 100,000
14 59 61,496 0 21,114 21,114 100,000 19,131 19,131 100,000
15 60 64,571 0 19,912 19,912 100,000 17,647 17,647 100,000
16 61 67,800 0 18,635 18,635 100,000 16,063 16,063 100,000
17 62 71,190 0 17,281 17,281 100,000 14,363 14,363 100,000
18 63 74,749 0 15,846 15,846 100,000 12,524 12,524 100,000
19 64 78,487 0 14,339 14,339 100,000 10,515 10,515 100,000
20 65 82,411 0 12,768 12,768 100,000 8,306 8,306 100,000
25 70 105,179 0 2,975 2,975 100,000 0 0 0
30 75 134,239 0 0 0 0 0 0 0
<FN>
<F*>These values reflect investment results using current cost of
insurance rates.
<F**>These values reflect investment results using guaranteed cost of
insurance rates.
The hypothetical investment rate of return shown above is illustrative only,
and should not be deemed a representation of past or future results. Actual
investment results may be more or less than those shown and will depend on a
number of factors, including the investment allocation made by the Policy
Owner, and the investment results for the series of fund portfolios. The
Cash Value, Cash Surrender Value, and death benefit for a Policy would be
different from those shown if the actual rates of return averaged the rate
shown above over a period of years, but also fluctuated above or below that
average for individual Policy Years. No representation can be made by the
Company, Walnut Street Securities, Inc., General American Capital Company,
Russell Insurance Funds, Inc., or any representative thereof, that this
hypothetical rate of return can be achieved for any one year, or sustained
over any period of time.
Illustrated values shown above are as of the end of the Policy Years
indicated and assume any additional premiums shown are received on the Policy
Anniversaries. Illustrated values assume all premium taxes are paid by the
Company.
</TABLE>
A-17
<PAGE> 245
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Policy Face Amount $100,000 Guaranteed Issue Nonsmoker Age 45
Death Benefit Option C Annual Premium $5,112.14
<CAPTION>
For Separate Account Eleven A Hypothetical Gross
Annual Rate of Return @ 6% (Net Rate @ 4.14%)
---------------------------------------------------------------------------------
Current<F*> Guaranteed<F**>
------------------------------------- -------------------------------------
Prems Net Net Cash Net Net Net Cash Net
Accum Annual Cash Surrender Death Cash Surrender Death
Year Age @ 5% Premium Value Value Benefit Value Value Benefit
---- --- ------- ------- -------- -------- --------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 $ 5,368 $ 5,112 $ 4,502 $ 4,298 $ 100,000 $ 4,502 $ 4,298 $ 100,000
2 47 11,004 5,112 9,187 8,778 100,000 9,158 8,749 100,000
3 48 16,922 5,112 14,064 13,451 100,000 13,999 13,385 100,000
4 49 23,136 5,112 19,155 18,337 100,000 19,031 18,213 100,000
5 50 29,660 5,112 24,481 23,459 100,000 24,268 23,246 100,000
6 51 36,511 5,112 30,043 29,062 100,000 29,720 28,739 100,000
7 52 43,704 5,112 35,862 35,003 100,000 35,397 34,538 100,000
8 53 45,889 0 36,995 36,422 100,000 36,353 35,780 100,000
9 54 48,184 0 38,157 37,871 100,000 37,311 37,025 100,000
10 55 50,593 0 39,351 39,351 100,000 38,268 38,268 100,000
11 56 53,123 0 40,550 40,550 100,000 39,220 39,220 100,000
12 57 55,779 0 41,756 41,756 100,000 40,165 40,165 100,000
13 58 58,568 0 42,978 42,978 100,000 41,099 41,099 100,000
14 59 61,496 0 44,212 44,212 100,000 42,020 42,020 100,000
15 60 64,571 0 45,448 45,448 100,000 42,924 42,924 100,000
16 61 67,800 0 46,688 46,688 100,000 43,802 43,802 100,000
17 62 71,190 0 47,935 47,935 100,000 44,648 44,648 100,000
18 63 74,749 0 49,192 49,192 100,000 45,448 45,448 100,000
19 64 78,487 0 50,469 50,469 100,000 46,188 46,188 100,000
20 65 82,411 0 51,776 51,776 100,000 46,854 46,854 100,000
25 70 105,179 0 58,464 58,464 100,000 48,571 48,571 100,000
30 75 134,239 0 64,850 64,850 100,000 44,983 44,983 100,000
<FN>
<F*>These values reflect investment results using current cost of
insurance rates.
<F**>These values reflect investment results using guaranteed cost of
insurance rates.
The hypothetical investment rate of return shown above is illustrative only,
and should not be deemed a representation of past or future results. Actual
investment results may be more or less than those shown and will depend on a
number of factors, including the investment allocation made by the Policy
Owner, and the investment results for the series of fund portfolios. The
Cash Value, Cash Surrender Value, and death benefit for a Policy would be
different from those shown if the actual rates of return averaged the rate
shown above over a period of years, but also fluctuated above or below that
average for individual Policy Years. No representation can be made by the
Company, Walnut Street Securities, Inc., General American Capital Company,
Russell Insurance Funds, Inc., or any representative thereof, that this
hypothetical rate of return can be achieved for any one year, or sustained
over any period of time.
Illustrated values shown above are as of the end of the Policy Years
indicated and assume any additional premiums shown are received on the Policy
Anniversaries. Illustrated values assume all premium taxes are paid by the
Company.
</TABLE>
A-18
<PAGE> 246
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Policy Face Amount $100,000 Guaranteed Issue Nonsmoker Age 45
Death Benefit Option C Annual Premium $5,112.14
<CAPTION>
For Separate Account Eleven A Hypothetical Gross
Annual Rate of Return @ 12% (Net Rate @ 10.14%)
---------------------------------------------------------------------------------
Current<F*> Guaranteed<F**>
------------------------------------- -------------------------------------
Prems Net Net Cash Net Net Net Cash Net
Accum Annual Cash Surrender Death Cash Surrender Death
Year Age @ 5% Premium Value Value Benefit Value Value Benefit
---- --- ------- ------- -------- -------- --------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 $ 5,368 $ 5,112 $ 4,773 $ 4,569 $ 100,000 $ 4,773 $ 4,569 $ 100,000
2 47 11,004 5,112 10,028 9,619 100,000 9,999 9,590 100,000
3 48 16,922 5,112 15,818 15,205 100,000 15,750 15,136 100,000
4 49 23,136 5,112 22,213 21,395 100,000 22,081 21,263 100,000
5 50 29,660 5,112 29,287 28,265 100,000 29,060 28,038 100,000
6 51 36,511 5,112 37,105 36,124 100,335 36,760 35,778 100,000
7 52 43,704 5,112 45,688 44,829 119,733 45,170 44,311 118,375
8 53 45,889 0 49,911 49,338 126,799 49,164 48,592 124,903
9 54 48,184 0 54,520 54,233 134,312 53,493 53,206 131,782
10 55 50,593 0 59,551 59,551 142,312 58,177 58,177 139,029
11 56 53,123 0 65,004 65,004 150,749 63,245 63,245 146,669
12 57 55,779 0 70,917 70,917 159,659 68,724 68,724 154,720
13 58 58,568 0 77,343 77,343 169,105 74,644 74,644 163,205
14 59 61,496 0 84,316 84,316 179,109 81,040 81,040 172,149
15 60 64,571 0 91,865 91,865 189,663 87,946 87,946 181,573
16 61 67,800 0 100,042 100,042 200,817 95,394 95,394 191,487
17 62 71,190 0 108,904 108,904 212,633 103,418 103,418 201,921
18 63 74,749 0 118,514 118,514 225,174 112,047 112,047 212,887
19 64 78,487 0 128,956 128,956 238,544 121,310 121,310 224,400
20 65 82,411 0 140,322 140,322 252,862 131,237 131,237 236,490
25 70 105,179 0 213,185 213,185 340,149 192,303 192,303 306,830
30 75 134,239 0 320,159 320,159 459,168 276,196 276,196 396,116
<FN>
<F*>These values reflect investment results using current cost of
insurance rates.
<F**>These values reflect investment results using guaranteed cost of
insurance rates.
The hypothetical investment rate of return shown above is illustrative only,
and should not be deemed a representation of past or future results. Actual
investment results may be more or less than those shown and will depend on a
number of factors, including the investment allocation made by the Policy
Owner, and the investment results for the series of fund portfolios. The
Cash Value, Cash Surrender Value, and death benefit for a Policy would be
different from those shown if the actual rates of return averaged the rate
shown above over a period of years, but also fluctuated above or below that
average for individual Policy Years. No representation can be made by the
Company, Walnut Street Securities, Inc., General American Capital Company,
Russell Insurance Funds, Inc., or any representative thereof, that this
hypothetical rate of return can be achieved for any one year, or sustained
over any period of time.
Illustrated values shown above are as of the end of the Policy Years
indicated and assume any additional premiums shown are received on the Policy
Anniversaries. Illustrated values assume all premium taxes are paid by the
Company.
</TABLE>
A-19
<PAGE> 247
<TABLE>
APPENDIX B
TARGET ANNUAL PREMIUM PER $1,000
BASE COVERAGE -- UNDERWRITTEN
NON-SMOKER RATES
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
- - - - - - - - - - - - Male Non-Smoker - - - - - - - - - - - - - - - - - - - - - Female Non-Smoker - - - - - - - - - -
Pre- Stan- Pre- Stan- Pre- Stan- Pre- Stan-
ferred dard ferred dard ferred dard ferred dard
Issue Non- Non- Issue Non- Non- Issue Non- Non- Issue Non- Non-
Age Smoker Smoker Age Smoker Smoker Age Smoker Smoker Age Smoker Smoker
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 -- -- 0 -- --
1 -- -- 41 48.84 48.86 1 -- -- 41 41.73 41.75
2 -- -- 42 50.44 50.45 2 -- -- 42 43.09 43.10
3 -- -- 43 52.09 52.11 3 -- -- 43 44.47 44.49
4 -- -- 44 53.77 53.79 4 -- -- 44 45.90 45.92
5 -- -- 45 55.51 55.53 5 -- -- 45 47.38 47.40
6 -- -- 46 57.27 57.31 6 -- -- 46 48.88 48.90
7 -- -- 47 59.10 59.14 7 -- -- 47 50.44 50.46
8 -- -- 48 60.98 61.00 8 -- -- 48 52.02 52.04
9 -- -- 49 62.90 62.92 9 -- -- 49 53.67 53.69
10 -- -- 50 64.87 64.90 10 -- -- 50 55.34 55.36
66.91
11 -- -- 51 66.89 11 -- -- 51 57.06 57.09
12 -- -- 52 68.95 68.99 12 -- -- 52 58.83 58.85
13 -- -- 53 71.07 71.11 13 -- -- 53 60.63 60.67
14 -- -- 54 73.23 73.27 14 -- -- 54 62.48 62.52
15 -- -- 55 75.44 75.49 15 -- -- 55 64.38 64.41
77.73
16 -- -- 56 77.68 16 -- -- 56 66.32 66.36
17 -- -- 57 79.98 80.04 17 -- -- 57 68.32 68.35
18 -- -- 58 82.31 82.38 18 -- -- 58 70.36 70.40
19 -- -- 59 84.71 84.78 19 -- -- 59 72.51 72.54
20 24.89 24.91 60 87.18 87.23 20 20.89 20.89 60 74.42 74.77
21 25.63 25.64 61 89.71 89.76 21 21.58 21.58 61 77.03 77.07
22 26.39 26.41 62 92.30 92.36 22 22.31 22.31 62 79.40 79.45
23 27.20 27.22 63 94.96 95.04 23 23.05 23.05 63 81.85 81.91
24 28.06 28.06 64 97.69 97.78 24 23.81 23.81 64 84.35 84.41
25 28.94 28.94 65 100.47 100.56 25 24.60 24.60 65 86.89 86.96
26 29.87 29.87 66 103.30 103.41 26 25.43 25.43 66 89.48 89.57
27 30.83 30.84 67 106.23 106.34 27 26.28 26.30 67 92.15 92.24
28 31.84 31.86 68 109.23 109.38 28 27.16 27.18 68 94.93 95.02
29 32.88 32.92 69 112.39 112.54 29 28.08 28.10 69 97.84 97.93
30 33.98 34.01 70 115.66 115.83 30 29.01 29.02 70 100.90 101.01
31 35.12 35.14 71 119.09 119.27 31 29.99 30.00 71 104.11 104.24
32 36.30 36.32 72 122.65 122.86 32 30.98 31.00 72 107.49 107.64
33 37.53 37.55 73 126.30 126.53 33 32.03 32.05 73 111.01 111.16
34 38.80 38.81 74 130.03 130.27 34 33.12 33.14 74 114.61 114.79
35 40.11 40.12 75 133.81 134.07 35 34.25 34.27 75 118.31 118.52
36 41.46 41.48 76 137.66 137.97 36 35.41 35.43 76 122.14 122.36
37 42.85 42.87 77 141.64 141.98 37 36.60 36.62 77 126.13 126.37
38 44.29 44.31 78 145.79 146.18 38 37.84 37.85 78 130.31 130.57
39 45.77 45.78 79 150.22 150.65 39 39.10 39.12 79 134.76 135.06
40 47.28 47.30 80 154.90 155.38 40 40.39 40.41 80 139.52 139.84
</TABLE>
B-1
<PAGE> 248
<TABLE>
APPENDIX B
TARGET ANNUAL PREMIUM PER $1,000
BASE COVERAGE -- UNDERWRITTEN
SMOKER RATES
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
- - - - - - - - - - - - - Male Smoker - - - - - - - - - - - - - - - - - - - - - - - Female Smoker - - - - - - - - - - -
Pre- Stan- Pre- Stan- Pre- Stan- Pre- Stan-
Issue ferred dard Issue ferred dard Issue ferred dard Issue ferred dard
Age Smoker Smoker Age Smoker Smoker Age Smoker Smoker Age Smoker Smoker
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 13.49 13.49 0 11.20 11.20
1 13.77 13.77 41 48.95 49.16 1 11.44 11.44 41 41.79 41.99
2 14.16 14.16 42 50.56 50.80 2 11.76 11.76 42 43.16 43.36
3 14.58 14.58 43 52.22 52.49 3 12.11 12.11 43 44.56 44.78
4 15.00 15.00 44 53.91 54.20 4 12.48 12.48 44 46.01 46.24
5 15.47 15.47 45 55.67 55.96 5 12.84 12.84 45 47.79 47.74
6 15.96 15.96 46 57.47 57.72 6 13.25 13.25 46 49.02 49.26
7 16.48 16.48 47 59.32 59.53 7 13.67 13.67 47 50.58 50.82
8 17.03 17.03 48 61.21 61.39 8 14.11 14.11 48 52.20 52.42
9 17.61 17.61 49 63.15 63.30 9 14.58 14.58 49 53.85 54.05
10 18.21 18.21 50 65.15 65.26 10 15.06 15.06 50 55.56 55.74
11 18.84 18.84 51 67.18 67.29 11 15.56 15.56 51 57.29 57.45
12 19.48 19.48 52 69.26 69.36 12 16.08 16.08 52 59.07 59.23
13 20.14 20.14 53 71.40 71.52 13 16.64 16.64 53 60.88 61.04
14 20.83 20.83 54 73.59 73.70 14 17.19 17.19 54 62.73 32.91
15 21.50 21.50 55 75.81 75.92 15 17.77 17.77 55 64.65 64.81
16 22.17 22.17 56 78.07 78.19 16 18.36 18.36 56 66.61 66.77
17 22.85 22.85 57 80.39 80.54 17 18.95 18.95 57 68.60 68.76
18 23.52 23.52 58 82.74 82.88 18 19.59 19.59 58 70.67 70.81
19 24.20 24.20 59 85.14 85.30 19 20.23 20.23 59 72.81 72.94
20 24.91 24.98 60 87.61 87.75 20 20.89 20.89 60 75.02 75.15
21 25.64 25.72 61 90.14 90.30 21 21.58 21.58 61 77.33 77.44
22 26.41 26.49 62 92.77 92.93 22 22.31 22.31 62 79.72 79.82
23 27.22 27.29 63 95.45 95.61 23 23.05 23.05 63 82.19 82.30
24 28.06 28.13 64 98.20 98.40 24 23.81 23.81 64 84.71 84.83
25 28.96 29.00 65 101.01 101.23 25 24.60 24.60 65 87.28 87.43
26 29.89 29.93 66 103.90 104.12 26 25.43 25.43 66 89.89 90.05
27 30.86 30.90 67 106.86 107.12 27 26.30 26.30 67 92.60 92.76
28 31.88 31.91 68 109.92 110.20 28 27.18 27.18 68 95.40 95.59
29 32.93 32.97 69 113.10 113.42 29 28.10 28.10 69 98.34 98.54
30 34.03 34.07 70 116.44 116.77 30 29.02 29.06 70 101.42 101.63
31 35.17 35.21 71 119.90 120.27 31 30.00 30.04 71 104.69 104.92
32 36.36 36.41 72 123.51 123.90 32 31.02 31.07 72 108.09 108.34
33 37.58 37.64 73 127.20 127.61 33 32.07 32.13 73 111.61 111.88
34 38.85 38.92 74 130.95 131.41 34 33.16 33.23 74 115.25 115.54
35 40.16 40.25 75 134.80 135.29 35 34.28 34.36 75 118.99 119.32
36 41.51 41.62 76 138.72 139.26 36 35.45 35.54 76 122.86 123.19
37 42.91 43.03 77 142.78 143.36 37 36.66 36.75 77 126.87 127.26
38 44.36 44.51 78 146.99 147.63 38 37.89 38.02 78 131.11 131.53
39 45.84 46.02 79 151.48 152.17 39 39.15 39.30 79 135.59 136.06
40 47.37 47.57 80 156.21 156.98 40 40.46 40.63 80 140.38 140.90
</TABLE>
B-2
<PAGE> 249
<TABLE>
APPENDIX B
TARGET ANNUAL PREMIUM PER $1,000
BASE COVERAGE -- GUARANTEED ISSUE
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
- - - - - - - - - - -Male Guaranteed Issue- - - - - - - - - - - - - - - - - - -Female Guaranteed Issue- - - - - - - - -
Issue Non- Issue Non- Issue Non- Issue Non-
Age Smoker Smoker Age Smoker Smoker Age Smoker Smoker Age Smoker Smoker
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 -- -- 0 -- --
1 -- -- 41 44.70 53.45 1 -- -- 41 44.70 53.45
2 -- -- 42 46.24 55.22 2 -- -- 42 46.24 55.22
3 -- -- 43 47.82 57.01 3 -- -- 43 47.82 57.01
4 -- -- 44 49.45 58.83 4 -- -- 44 49.45 58.83
5 -- -- 45 51.12 60.69 5 -- -- 45 51.12 60.69
6 -- -- 46 52.83 62.61 6 -- -- 46 52.83 62.61
7 -- -- 47 54.60 64.57 7 -- -- 47 54.60 64.57
8 -- -- 48 56.40 66.56 8 -- -- 48 56.40 66.56
9 -- -- 49 58.24 68.63 9 -- -- 49 58.24 68.63
10 -- -- 50 60.15 70.78 10 -- -- 50 60.15 70.78
11 -- -- 51 62.09 72.97 11 -- -- 51 62.09 72.97
12 -- -- 52 64.10 75.19 12 -- -- 52 64.10 75.19
13 -- -- 53 66.20 77.47 13 -- -- 53 66.20 77.47
14 -- -- 54 68.35 79.77 14 -- -- 54 68.35 79.77
15 -- -- 55 70.62 82.10 15 -- -- 55 70.62 82.10
16 -- -- 56 72.94 84.51 16 -- -- 56 72.94 84.51
17 -- -- 57 75.29 86.96 17 -- -- 57 75.29 86.96
18 -- -- 58 77.72 89.47 18 -- -- 58 77.72 89.47
19 -- -- 59 80.25 92.06 19 -- -- 59 80.25 92.06
20 22.39 27.34 60 82.85 94.72 20 22.39 27.34 60 82.85 94.72
21 23.07 28.15 61 85.52 97.47 21 23.07 28.15 61 85.52 97.47
22 23.78 28.99 62 88.26 100.35 22 23.78 28.99 62 88.26 100.35
23 24.52 29.87 63 91.03 103.30 23 24.52 29.87 63 91.03 103.30
24 25.31 30.79 64 93.83 106.30 24 25.31 30.79 64 93.83 106.30
25 26.15 31.76 65 96.69 109.36 25 26.15 31.76 65 96.69 109.36
26 27.00 32.77 66 99.70 112.47 26 27.00 32.77 66 99.70 112.47
27 27.89 33.83 67 102.83 115.66 27 27.89 33.83 67 102.83 115.66
28 28.81 34.94 68 106.12 119.02 28 28.81 34.94 68 106.12 119.02
29 29.78 36.09 69 109.54 122.54 29 29.78 36.09 69 109.54 122.54
30 30.79 37.28 70 113.12 126.28 30 30.79 37.28 70 113.12 126.28
31 31.83 38.54 71 -- -- 31 31.83 38.54 71 -- --
32 32.91 39.83 72 -- -- 32 32.91 39.83 72 -- --
33 34.04 41.18 73 -- -- 33 34.04 41.18 73 -- --
34 35.24 42.57 74 -- -- 34 35.24 42.57 74 -- --
35 36.45 43.99 75 -- -- 35 36.45 43.99 75 -- --
36 37.72 45.46 76 -- -- 36 37.72 45.46 76 -- --
37 39.02 46.96 77 -- -- 37 39.02 46.96 77 -- --
38 40.39 48.53 78 -- -- 38 40.39 48.53 78 -- --
39 41.78 50.14 79 -- -- 39 41.78 50.14 79 -- --
40 43.21 51.79 80 -- -- 40 43.21 51.79 80 -- --
</TABLE>
B-3
<PAGE> 250
PART II
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities and
Exchange Act of 1934, the undersigned registrant hereby undertakes to file
with the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore, or hereafter duly adopted pursuant
to authority conferred in that section.
RULE 484 UNDERTAKING
Section 351.355 of the Missouri General and Business Corporation Law, in
brief, allows a corporation to indemnify any person who is a party or is
threatened to be made a party to any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative by reason of the fact that he is or was a director, officer,
employee, or agent of the corporation, against expenses, including
attorneys' fees, judgments, fines, and amounts paid in settlement actually
and reasonably incurred by him in connection with such action if he acted
in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation. When any person was or
is a party or is threatened to be made a party in an action or suit by or
in the right of the corporation to procure a judgment in its favor by
reason of the Fact that he is or was a director, officer, employee, or
agent of the corporation, indemnification may be paid unless such person
shall have been adjudged to be liable for negligence or misconduct in the
performance of his duty to the corporation. In the event of such a
determination indemnification is allowed if a court determines that the
person is fairly and reasonably entitled to indemnity. A corporation has
the power to give any further indemnity to any person who is or was a
director, officer, employee, or agent, provided for in the articles of
incorporation or as authorized by any by-law which has been adopted by vote
of the shareholders, provided that no such indemnity shall indemnify any
person's conduct which was finally adjudged to have been knowingly
fraudulent, deliberately dishonest, or willful misconduct.
In accordance with Missouri law, General American's Board of Directors, at
its meeting on 19 November 1987, and the policyholders of General American
at the annual meeting held on 26 January 1988, adopted the following
resolutions:
"BE IT RESOLVED THAT
II-1
<PAGE> 251
1. The company shall indemnify any person who is, or was a
director, officer, or employee of the company, or is or was
serving at the request of the company as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against any and all
expenses
(including attorneys' fees), judgments, fines, and amounts paid
in settlement, actually and reasonably incurred by him or her
in connection with any civil, criminal, administrative, or
investigative action, proceeding, or claim (including an action
by or in the right of the company), by reason of the fact that
he or she was serving in such capacity if he or she acted in
good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the company;
provided that such person's conduct is not finally adjudged to
have been knowingly fraudulent, deliberately dishonest, or
willful misconduct.
2. The indemnification provided herein shall not be deemed
exclusive of any other rights to which a director, officer, or
employee may be entitled under any agreement, vote of
policyholders or disinterested directors, or otherwise, both as
to action in his or her official capacity and as to action in
another capacity which holding such office, and shall continue
as to a person who has ceased to be a director, officer, or
employee and shall inure to the benefit of the heirs, executors
and administrators of such a person."
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question 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.
II-2
<PAGE> 252
REPRESENTATIONS PURSUANT TO RULE 6e-3(T)
This filing is made pursuant to Rules 6c-3 and 6e-3(T) under the Investment
Company Act of 1940.
Registrant elects to be governed by Rule 6e-3(T)(b)(13)(i)(A) under the
Investment Company Act of 1940 with respect to the Policies described in
the Prospectuses.
Registrant makes the following representations:
(1) Section 6e-3(T)(b)(13)(iii)(F) has been relied upon.
(2) The level of the mortality and expense risk charge is within
the range of industry practice for comparable flexible premium
variable life insurance policies, and is reasonable in relation
to the risks assumed by the Company under the Policies.
(3) Registrant has concluded that there is a reasonable likelihood
that the distribution financing arrangement of the Separate
Account will benefit the Separate Account and Owners and will
keep and make available to the Commission on request a
memorandum setting forth the basis for this representation.
(4) The Separate Account will invest only in management investment
companies which have undertaken to have a board of directors, a
majority of whom are not interested persons of the company,
formulate and approve any plan under Rule 12b-1 to finance
distribution expenses.
The methodology used to support the representation made in paragraph (2)
above is based on an analysis of the mortality and expense risk charges
contained in other flexible premium variable life insurance policies.
Registrant undertakes to keep and make available to the Commission on
request the documents used to support the representation in paragraph (2)
above.
II-3
<PAGE> 253
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following Papers and Documents:
The facing sheet.
VGSP Prospectus, consisting of pages; FRC-VUL Prospectus,
consisting of ---- pages.
The undertaking to file reports required by Section 15 (d), 1934 Act.
The undertaking pursuant to Rule 484.
Representations pursuant to Rule 6e-3(T).
The signatures.
1. The following exhibits (which correspond in number to the numbers
under paragraph A of the instructions for exhibits to Form N-8B-2):
(1) Resolution of the Board of Directors of General
American authorizing establishment of the
Separate Account <F1>
(2) Not applicable
(3) (a) Principal Underwriting Agreement <F1>
(b) Proposed form of Selling Agreement <F1>
(c) Commission Schedule <F1>
(4) Not applicable
(5) (a) Revised form of VGSP Policy <F2>
(b) Form of VGSP Pension Policy and Policy Riders <F1>
(c) Waiver of monthly Deduction Rider <F1>
(d) Form of FRC-VUL Policy <F4>
(e) Form of FRC-VUL Waiver of Monthly Deduction Rider <F4>
(f) Form of FRC-VUL Waiver of Specified Premium Rider <F4>
(g) Form of FRC-VUL Increasing Benefit Rider <F4>
II-4
<PAGE> 254
(6) (a) Amended Charter and Articles of Incorporation of General
American <F2>
(b) Amended By-Laws of General American <F1>
(7) Not applicable
(8) (a) Form of Agreement to Purchase Shares of
General American Capital Company <F2>
(b) Form of Participation Agreement with Variable
Insurance Products Fund <F2>
(c) Form of Participation Agreement with Russell
Insurance Funds, Inc. <F4>
(9) Not applicable
(10) (a) Form of Application for Standard VGSP Policy <F2>
(b) Form of Application for Standard FRC-VUL Policy <F4>
(c) Form of Application for FRC-VUL Policy--Guaranteed
Issue <F4>
(d) Form of Master Application for FRC-VUL Policy <F4>
2. Revised Memorandum describing General American's issuance,
transfer, and redemption procedures for the Policies and
General American's procedure for conversion to a fixed
benefit policy <F2>
3. The following exhibits are numbered to correspond to the
numbers in the instructions as to exhibits for Form S-6.
(1) See above
(2) See Exhibit 1(5)
(3) (a) Opinion of Robert J. Banstetter, General
Counsel of General American as to VGSP Policy <F1>
(b) Opinion of Matthew P. McCauley, Associate
General Counsel of General American as to FRC-VUL
Policy <F4>
II-5
<PAGE> 255
(4) No financial statements are omitted from the
Prospectuses pursuant to prospectus
instructions 1(b) or (c).
(5) Not applicable
4. (a) Opinion and Consent of Alan J. Hobbs, F.S.A., as
to VGSP Policy and Prospectus <F3>
(b) Opinion and Consent of Shashikant Bhave, F.S.A.,
M.A.A.A., as to FRC-VUL Policy and Prospectus <F4>
5. The consent of KPMG Peat Marwick LLP, Independent
Certified Public Accountants.
[FN]
- ---------------------
<F1> Incorporated by reference to the initial Registration Statement
and File No. 33-48550.
<F2> Incorporated by reference to Pre-Effective Amendment
No. 1 to the Registration Statement, File No. 33-48550.
<F3> Incorporated by reference to Post-Effective Amendment No. 3 to
the Registration Statement, File No. 33-48550.
<F4> Incorporated by reference to Post-Effective Amendment No. 5 to
the Registration Statement, File NO. 33-48550.
II-6
<PAGE> 256
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, General
American Life Insurance Company and General American Separate Account
Eleven certify that they meet all of the requirements for effectiveness of
this amended Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and have duly caused this amended Registration
Statement to be signed on their behalf by the undersigned thereunto duly
authorized, and the seal of General American Life Insurance Company to be
hereunto affixed and attested, all in the City of St. Louis, State of
Missouri, on the 26th day of April, 1996.
GENERAL AMERICAN SEPARATE ACCOUNT
ELEVEN (Registrant)
(Seal) BY: GENERAL AMERICAN LIFE
INSURANCE COMPANY (for Registrant
and as Depositor)
Attest: /s/ Robert J. Banstetter, Sr. By: /s/ Richard A. Liddy
------------------------------ ----------------------------
Robert J. Banstetter, Sr. Richard A. Liddy
Secretary President
General American Life
Insurance Company
II-7
<PAGE> 257
Pursuant to the requirements of the Securities Act of 1933, this amended
Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Richard A. Liddy
- ---------------------------- Chairman, President 4/26/96
Richard A. Liddy (Principal Executive
Officer)
/s/ Leonard M. Rubenstein
- ---------------------------- Executive Vice 4/26/96
Leonard M. Rubenstein President-Investments
(Principal Financial
Officer)
/s/ John W. Barber
- ---------------------------- Vice President ----- 4/26/96
John W. Barber Controller
(Principal Accounting
Officer)
- ----------------------------
August A. Busch, III<F*> Director
- ----------------------------
William E. Cornelius<F*> Director
- ----------------------------
John C. Danforth<F*> Director
- ----------------------------
Bernard A. Edison<F*> Director
/s/ Richard A. Liddy
- ----------------------------
Richard A. Liddy Director 4/26/96
II-8
<PAGE> 258
Signature Title Date
- --------- ----- ----
- ----------------------------
William E. Maritz<F*> Director
- ----------------------------
Craig D. Schnuck<F*> Director
- ----------------------------
William P. Stiritz<F*> Director
- ----------------------------
Andrew C. Taylor<F*> Director
- ----------------------------
H. Edwin Trusheim<F*> Director
- ----------------------------
Robert L. Virgil, Jr.<F*> Director
- ----------------------------
Virginia V. Weldon<F*> Director
- ----------------------------
Ted C. Wetterau<F*> Director
By /s/ Matthew P. McCauley
-----------------------------
Matthew P. McCauley
[FN]
<F*> Original powers of attorney authorizing Matthew P. McCauley, Juanita M.
Thomas, or Leonard M. Rubenstein, and each of them singly, to sign this
Registration Statement and Amendments thereto on behalf of the Board of
Directors of General American Life Insurance Company are on file with the
Securities and Exchange Commission.
II-9
<PAGE> 259
INDEX TO EXHIBITS
Source
Exhibit or Page
Number Description Number
- ------ ----------- ------
1. Consent of KPMG Peat Marwick LLP, Independent
Certified Public Accountants
<PAGE> 1
Exhibit 1.
Consent of KPMG Peat Marwick LLP, Independent Certified Public Accountants
<PAGE> 2
The Board of Directors
General American Life Insurance Company:
Re: "Select Plus"
"Russell Insurance Funds"
We consent to the use of our reports included herein and to the reference
of our firm under the heading "Experts" in the Registration Statement and
Prospectus for General American Separate Account Eleven.
The audited financial statements of General American Life Insurance Company
have been prepared in accordance with accounting practices prescribed or
permitted by the Department of Insurance of the State of Missouri, which are
currently considered generally accepted accounting principles for mutual
life insurance companies.
KPMG PEAT MARWICK LLP
St. Louis, Missouri
April 29, 1996
