April 26, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Transamerica Occidental Life Insurance Company Separate Account VA-2L,
Post- Effective Amendment No.7 To Form N-4, (File Nos. 33-49998,
811-7042)
Commissioners:
Transmitted herewith for filing via EDGAR, please find Post-Effective Amendmen
No. 7 to the Registration Statement on Form N-4 for Separate Account VA-2L of
Transamerica Occidental Life Insurance Company.
This Amendment is being filed pursuant to Paragraph (b) of Rule 485 under the
Securities Act of 1933.
Please call Regina M. Fink, Esq. of Transamerica's Law Department at (213)
742-3131 with any questions.
Very truly yours,
Susan Vivino
Paralegal
cc: F. Bellamy, Esq.
R. Fink, Esq.
Enclosures
<PAGE>
As filed with the Securities and Exchange Commission on __________, 1996
Registration No. 33-49998
811-7042
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |_|
Pre-Effective Amendment No. |_|
Post-Effective Amendment No. 7 |X|
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |_|
Amendment No. 9 |X|
-----
SEPARATE ACCOUNT VA-2L
(Exact Name of Registrant)
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
(Name of Depositor)
1150 South Olive, Los Angeles, CA 90015
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number, including Area Code: (213) 742-2111
Name and Address of Agent for Service: Copy to:
James W. Dederer, Esquire Frederick R. Bellamy, Esquire
Executive Vice President, General Counsel and Sutherland, Asbill & Brennan
Corporate Secretary 1275 Pennsylvania Avenue, N.W.
Transamerica Occidental Life Insurance Co. Washington, D.C. 20004-2404
1150 South Olive
Los Angeles, CA 90015
Approximate date of proposed sale to the
public: As soon as practicable after effectiveness of the
Registration Statement.
The Registrant has previously filed a declaration of indefinite registration of
its shares pursuant to Rule 24f- 2 under the Investment Company Act of 1940. The
Rule 24f-2 Notice for the year ended December 31, 1995 was filed on February 28,
1996.
It is proposed that this filing will become effective: |_|
immediately upon filing pursuant to paragraph (b) |X| on May
1, 1996 pursuant to paragraph (b) |_| 60 days after filing
pursuant to paragraph (a)(i) |_| on ________________ pursuant
to paragraph (a)(i) |_| 75 days after filing pursuant to
paragraph (a)(ii) |_| on ________________ pursuant to
paragraph (a)(ii) of Rule 485
If appropropriate, check the following box:
|_| this Post-Effective Amendment designates
a new effective date for a previously
filed Post-Effective Amendment.
<PAGE>
CROSS REFERENCE SHEET
Pursuant to Rule 495
Showing Location in Part A (Prospectus),
Part B (Statement of Additional Information) and Part C
of Registration Statement Information Required by Form N-4
PART A
Item of Form N-4 Prospectus Caption
1. Cover Page......................Cover Page
2. Definitions.....................Definitions
3. Synopsis........................Summary
4. Condensed Financial Information.Not Applicable
5. General
(a) Depositor.................Transamerica Occidental Life I
nsurance Company;
Additional Information about Transamerica
Occidental Life Insurance Company;
(b) Registrant................The Variable Account
(c) Portfolio Company.........The Funds
(d) Fund Prospectus...........The Funds
(e) Voting Rights.............Voting Rights
6. Deductions and Expenses.........
(a) General...................Charges and Deductions
(b) Sales Load %..............Contingent Deferred Sales Load
(c) Special Purchase Plan.....Not Applicable
(d) Commissions...............Distribution of the Contracts
(e) Fund Expenses.............The Funds
(f) Operating Expenses........Variable Account Fee Table
7. Contracts
(a) Persons with Rights......The Contract; Cash Withdrawals; Death
Benefit;
Voting Rights
(b) (i) Allocation of Premium
Payments....... Allocation of Purchase Payments
(ii) Transfers...... Transfers
(iii) Exchanges...... Federal Tax Matters
(c) Changes.............. Addition, Deletion, or Substitution
(d) Inquiries............ Summary; Available Information
8. Annuity Period............. Annuity Payments
9. Death Benefit.............. Death Benefit
<PAGE>
10. Purchase and Contract Balances...........................
(a) Purchases................Contract Application and Purchase Payments
(b) Valuation................Participant Account Value
(c) Daily Calculation........Variable Accumulated Value
(d) Underwriter..............Distribution of the Contracts
11. Redemptions
(a) By Contract Owners.......Withdrawals; Systematic Withdrawal Option;
Automatic Payout Option
By Annuitant.............Not Applicable
(b) Texas ORP................Not Applicable
(c) Check Delay..............Cash Withdrawals
(d) Lapse....................Not Applicable
(e) Free Look.............Definitions; Summary; Contract Application and
.........................Purchase Payments
12. Taxes..........................Federal Tax Matters
13. Legal Proceedings..............Legal Proceedings
14. Table of Contents for the
Statement of
Additional Information.........Statement of Additional Information Table of
Contents
Item of Form N-4 Statement of Additional
Information Caption
15. Cover Page................ Cover Page
16. Table of Contents......... Table of Contents
17. General Information
and History............... (Prospectus) Transamerica Occidental Life
Insurance Company; (Prospectus) Additional
Information About Transamerica Occidental Life
Insurance Company
18. Services.................................................
(a) Fees and Expenses
of Registrant............. (Prospectus) Variable Account Fee Table;
(Prospectus) The Funds
(b) Management Contracts...... (Prospectus) Third Party Administration
(c) Custodian............... Records and Reports; Safekeeping of Account
Assets
Independent Auditors .... (Prospectus) Accountants
(d) Assets of Registrant...... Not Applicable
(e) Affiliated Person......... Not Applicable
(f) Principal Underwriter..... Not Applicable
<PAGE>
19. Purchase of Securities
Being Offered...............(Prospectus) The Contract
Offering Sales Load.........(Prospectus) Contingent Deferred Sales Load
20. Underwriters................(Prospectus) Distribution of the Contracts
21. Calculation of Performance
Data........................(Prospectus) Performance Data; Calculation of
Yields and Total Returns
22. Annuity Payments............(Prospectus) Annuity Payments; Annuity Period
23. Financial Statements........Financial Statements
PART C -- OTHER INFORMATION
Item of Form N-4 Part C Caption
24. Financial Statements
and Exhibits................. Financial Statements and Exhibits
(a) Financial Statements... Financial Statements
(b) Exhibits............... Exhibits
25. Directors and Officers of
the Depositor................. Directors and Officers of the Depositor
26. Persons Controlled By or Under Common Control
with the Depositor or Registrant . Persons Controlled By or Under Common
Control
with the Depositor or Registrant
27. Number of Contract Owners......... Number of Contract Owners
28. Indemnification................... Indemnification
29. Principal Underwriters............ Principal Underwriters
30. Location of Accounts
and Records....................... Location of Accounts and Records
31. Management Services............... Management Services
32. Undertakings...................... Undertakings
Signature Page.................... Signature Page
- 4 -
<PAGE>
changes made April 20, 1996
version va2lpro.3
LOGO
PROSPECTUS FOR
DREYFUS/TRANSAMERICA TRIPLE ADVANTAGE
A Variable Annuity Issued by
Transamerica Occidental
Life Insurance Company
Including Fund Prospectuses for
DREYFUS VARIABLE INVESTMENT FUND
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC.
DREYFUS STOCK INDEX FUND
May 1, 1996
- 0 -
<PAGE>
DREYFUS/TRANSAMERICA TRIPLE ADVANTAGE
VARIABLE ANNUITY
Issued by
TRANSAMERICA OCCIDENTAL LIFE INSURANCE
COMPANY 1150 South Olive Street, Los Angeles,
California 90015, (213) 742-2111.
This Prospectus describes the Dreyfus/Transamerica Triple Advantage
Variable Annuity, a variable annuity contract (the "Contract") issued by
Transamerica Occidental Life Insurance Company ("Transamerica"). The Contract is
designed to aid individuals in long-term financial planning and for retirement
or other long-term purposes.
The Owner may allocate Purchase Payments to one or more Sub-Accounts of
Separate Account VA- 2L (the "Variable Account"), to the available Guarantee
Periods of the Fixed Account (which credit interest at guaranteed annual rates),
or to both.
The Account Value, except for amounts in the Fixed Account, will vary
in accordance with the investment performance of the Portfolios of the Funds in
which the selected Sub-Accounts are invested. The Owner bears the entire
investment risk under the Contract for all amounts allocated to the Variable
Account. Amounts allocated to the Fixed Account are guaranteed by Transamerica
to accrue a Guaranteed Interest Rate if held for the entire Guarantee Period
chosen by the Owner. There is no guaranteed or minimum withdrawal value for
amounts in the Variable Account; the Cash Surrender Value or Annuity Purchase
Amount could be less than the Purchase Payments invested in the Contract.
This Prospectus sets forth the basic information that a prospective
investor should know before investing. A "Statement of Additional Information"
containing more detailed information about the Contract is available free by
writing Transamerica Occidental Life Insurance Company, Annuity Service Center,
at P.O. Box 60708, Los Angeles, California 90060-0708 until June 10, 1996, and
at P.O. Box 31848, Charlotte, North Carolina 28231-1848 after June 10, 1996, or
by calling (800) 258-4260. The Statement of Additional Information, which has
the same date as this Prospectus, as it may be supplemented from time to time,
has been filed with the Securities and Exchange Commission and is incorporated
herein by reference. The table of contents of the Statement of Additional
Information is included at the end of this Prospectus.
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 May 1, 1996.
This Prospectus must be accompanied by current prospectuses for Dreyfus Variable
Investment Fund, Dreyfus Stock Index Fund, and The Dreyfus Socially Responsible
Growth Fund, Inc.
- --------------------------------------------------------------------
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE 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.
- ---------------------------------------------------------------------
An investment in the Contract is not a deposit or obligation of, or
guaranteed or endorsed by, any bank, nor is the Contract federally insured by
the Federal Deposit Insurance Corporation, the Federal Reserve Board or any
other government agency. Investing in the Contract involves certain investment
risks, including possible loss of principal.
- 1 -
<PAGE>
The Contract provides for monthly Annuity Payments to be made by
Transamerica on a fixed or a variable or combination of a fixed and variable
basis for the life of the Annuitant or for some other period, beginning on the
first day of the month following the Annuity Date selected by the Owner. Prior
to the Annuity Date, the Owner can transfer amounts between and among the
Guarantee Periods of the Fixed Account and the Sub-Accounts of the Variable
Account. Some prohibitions and restrictions apply. After the Annuity Date, some
transfers are permitted among the Sub-Accounts if the Owner selects a Variable
Annuity Payment Option. Before the Annuity Date, the Owner can also elect to
withdraw all or a portion of the Cash Surrender Value in exchange for a cash
payment from Transamerica; however, withdrawals may be subject to a Contingent
Deferred Sales Load, premium taxes, federal tax and/or a tax penalty, an
interest adjustment (for Fixed Account withdrawals) and, upon surrender, the
annual Account Fee will also be deducted.
The Variable Account is divided into Sub-Accounts. Each Sub-Account is
invested in shares of a specific Portfolio. Thirteen Portfolios are currently
available for investment under the Contract: the Money Market, Managed Assets,
Zero Coupon 2000, Quality Bond, Small Cap, Capital Appreciation, Growth and
Income, International Equity, International Value, Disciplined Stock, and Small
Company Stock Portfolios of Dreyfus Variable Investment Fund; the Dreyfus Stock
Index Fund; and The Dreyfus Socially Responsible Growth Fund, Inc. Certain fees
and expenses are charged against the assets of each Portfolio. The Account Value
and the amount of any variable Annuity Payments will vary to reflect the
investment performance of the Sub-Account(s) selected by the Owner and the
deduction of the Contract charges described under "Charges and Deductions" page
41. For more information about the Funds, see "The Funds" page 23 and the
accompanying Funds' prospectuses.
The Fixed Account is divided into Guarantee Periods, each of which has
its own Guaranteed Interest Rate and its own Expiration Date. Purchase Payments
allocated or Account Value transferred to the Guarantee Periods of the Fixed
Account will be credited with interest of at least 3% per year. Transamerica
may, in its discretion, declare interest rates for Guarantee Periods in excess
of the 3% minimum annual rate; it is never obligated to declare more than a 3%
annual rate. Amounts withdrawn or transferred from a Guarantee Period prior to
its Expiration Date will be subject to an interest adjustment which will reduce
the interest credited to the 3% minimum rate. (See "The Fixed Account" page 27.)
The Initial Purchase Payment for each Contract must be at least $5,000,
and generally each additional Purchase Payment must be at least $500, unless an
automatic payment plan is selected. The prior approval of Transamerica is
required before it will accept total Purchase Payments for any Contract in
excess of $1,000,000.
The Dreyfus/Transamerica Triple Advantage Variable Annuity will be
issued as a certificate under a group annuity contract in some states and as an
individual annuity contract in other states. The term "Contract" as used herein
refers to both the individual contract and the certificates issued under the
group contract.
- 2 -
2
<PAGE>
TABLE OF CONTENTS
Page
DEFINITIONS.....................................................5
SUMMARY.........................................................9
CONDENSED FINANCIAL INFORMATION................................19
PERFORMANCE DATA...............................................21
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND THE
VARIABLE ACCOUNT..............................................22
Transamerica Occidental Life Insurance Company........22
Published Ratings.....................................22
The Variable Account..................................23
THE FUNDS......................................................23
THE FIXED ACCOUNT..............................................27
Guarantee Periods.....................................28
Interest Adjustment...................................29
Expiration of a Guarantee Period......................29
THE CONTRACT...................................................30
Qualified Contracts...................................30
APPLICATION AND PURCHASE PAYMENTS..............................31
Purchase Payments.....................................31
Allocation of Purchase Payments.......................32
ACCOUNT VALUE..................................................32
TRANSFERS......................................................34
Before the Annuity Date...............................34
Telephone Transfers...................................34
Possible Restrictions.................................35
Dollar Cost Averaging.................................35
After the Annuity Date................................36
CASH WITHDRAWALS...............................................36
Withdrawals...........................................36
Systematic Withdrawal Option..........................38
Automatic Payout Option (APO).........................38
Restrictions under Section 403(b) Programs............39
DEATH BENEFIT..................................................39
Payment of Death Benefit..............................40
Designation of Beneficiaries..........................40
Death of Annuitant Prior to the Annuity Date..........41
Death of Certificate Owner Prior to the Annuity Date..41
Death of Annuitant or Owner After the Annuity Date....41
CHARGES AND DEDUCTIONS.........................................41
Contingent Deferred Sales Load........................41
Administrative Charges................................43
Mortality and Expense Risk Charge.....................44
Premium Taxes.........................................45
Transfer Fee..........................................45
Systematic Withdrawal Option..........................45
Taxes.................................................45
Portfolio Expenses....................................45
.....................................................
Interest Adjustment...................................46
- 3 -
3
<PAGE>
TABLE OF CONTENTS CONTINUED
ANNUITY PAYMENTS....................................................46
Annuity Date...............................................46
Annuity Payment............................................46
Election of Annuity Forms and Payment Options..............47
Annuity Payment Options....................................47
Fixed Annuity Payment Option...............................47
Variable Annuity Payment Option............................48
Annuity Forms..............................................48
Alternate Fixed Annuity Rates..............................50
FEDERAL TAX MATTERS.................................................50
DISTRIBUTION OF THE CONTRACT........................................54
LEGAL PROCEEDINGS...................................................55
LEGAL MATTERS.......................................................55
ACCOUNTANTS.........................................................55
VOTING RIGHTS.......................................................56
AVAILABLE INFORMATION...............................................56
STATEMENT OF ADDITIONAL
INFORMATION - TABLE OF CONTENTS.....................................57
APPENDIX A.........................................................A-1
Example of Variable Accumulation Unit Value Calculations..A-1
Example of Variable Annuity Unit Value Calculations.......A-1
Example of Variable Annuity Payment Calculations..........A-1
The Contract is not available in all
states.
- 4 -
4
<PAGE>
DEFINITIONS
Account: The account established and maintained under the Contract to which the
Owner's Net Purchase Payments are credited. Account Value: The Account Value is
equal to the sum of: (a) the Fixed Accumulated Value, plus (b) the Variable
Accumulated Value. Active Sub-Account: A Sub-Account of the Variable Account in
which the Contract has current value. Annuitant: The person whose life is used
to determine the amount of monthly Annuity Payments on the Annuity Date.
Annuitant's Beneficiary: The person or persons named by the Owner who may
receive the death benefits under the Contract if: (a) there is no named
Contingent Annuitant and the Annuitant dies before the Annuity Date; or (b) the
Annuitant dies after the Annuity Date under an Annuity Form containing a period
certain option. Annuity Date: The date on which the Annuity Purchase Amount will
be applied to provide an Annuity under the Annuity Form and Payment Option
selected by the Owner. Unless a different Annuity Date is elected under the
annuity provisions, the Annuity Date will be as shown in the Contract. Annuity
Payment: An amount paid by Transamerica at regular intervals to the Annuitant
and/or any other Payee. It may be on a variable or fixed basis. Annuity Purchase
Amount: The Annuity Purchase Amount is the amount applied as a single premium to
provide an annuity under the Annuity Form and Payment Option elected by the
Owner. The Annuity Purchase Amount is equal to: (a) the Account Value; less (b)
any interest adjustment; less (c) any applicable Contingent Deferred Sales Load;
and less (d) any applicable premium taxes. In determining the Annuity Purchase
Amount, Transamerica will waive the Contingent Deferred Sales Load if the
Annuity Form elected involves life contingencies and the Annuity Date occurs on
or after the third Contract Anniversary. Annuity Year: A one-year period
starting on the Annuity Date and, after that, each succeeding one-year period.
Cash Surrender Value: The amount payable to the Owner if the Contract is
surrendered on or before the Annuity Date. The Cash Surrender Value is equal to:
(a) the Account Value; less (b) reductions for the annual Account Fee, if any;
less (c) any interest adjustment; less (d) any applicable Contingent Deferred
Sales Load; and less (e) any applicable premium taxes. Code: The U.S. Internal
Revenue Code of 1986, as amended, and the rules and regulations issued
thereunder. Contingent Annuitant: The person who: (a) becomes the Annuitant if
the Annuitant dies before the Annuity Date; or (b) may receive benefits under
the Contract if the Annuitant dies after the Annuity Date under an Annuity Form
containing a contingent annuity option. Contract: An individual annuity contract
issued to an individual by Transamerica, or a certificate issued to an
individual which evidences his or her coverage under a group annuity contract.
Contract Anniversary: The same month and day as the Contract Date in each
calendar year after the calendar year in which the Contract Date occurs.
Contract Date: The effective date of the Contract as shown on the Contract.
Contract Year: The 12-month period from the Contract Date and ending with the
day before the Contract Anniversary and each twelve month period thereafter. The
first Contract Year for any particular net Purchase Payment is the Contract Year
in which the Purchase Payment is received by the Service Center. Expiration
Date: The last day of a Guarantee Period. Fixed Account: The Fixed Account
contains one or more Guarantee Periods to which all or portions of Net Purchase
Payments and transfers may be allocated. The Fixed Account assets are general
assets of Transamerica and are distinguishable from those allocated to a
separate account of Transamerica. Fixed Accumulated Value: The total dollar
amount of all Guarantee Amounts held under the Fixed Account for the Contract
prior to the Annuity Date. The Fixed Accumulated Value is determined without
regard to any interest adjustment. Fixed Annuity: An annuity with predetermined
payment amounts. Funds: Dreyfus Variable Investment Fund, Dreyfus Stock Index
Fund, and The Dreyfus Socially Responsible Growth Fund, Inc., in which the
Variable Account currently invests.
- 5 -
5
<PAGE>
Guarantee Amount: The Guarantee Amount is equal to: (a) the amount of the Net
Purchase Payment or transfer allocated to a particular Guarantee Period with a
particular Expiration Date; less (b) any withdrawals or transfers made from that
Guarantee Period; less (c) any applicable Transfer Fees; less (d) any reductions
for the annual Account Fee; and plus (e) interest credited. Guarantee Period:
The period for which a Guaranteed Interest Rate is credited, which shall not be
less than one year. Guaranteed Interest Rate: The effective annual rate of
interest credited by Transamerica to a Guarantee Amount during any Guarantee
Period. Inactive Sub-Account: A Sub-Account of the Variable Account in which the
Contract has a zero balance. Joint Owners: Must be husband and wife as of the
Contract Date (except in Pennsylvania). Net Investment Factor: An index that
measures the investment performance of a Sub-Account from one Valuation Period
to the next. Net Purchase Payment: A Purchase Payment reduced by any applicable
premium tax (including retaliatory premium taxes). Non-Qualified Contract: A
Contract other than a Qualified Contract. Owner: The person or persons who,
while living, control(s) all rights and benefits under an individual annuity
contract, or under a certificate issued under a group annuity contract. Owner's
Beneficiary: The person who becomes the Owner if the Owner dies. If the Contract
has Joint Owners, the surviving Joint Owner will be the Owner's Beneficiary.
Payee: The person who receives the annuity payments after the Annuity Date. The
Payee will be the Annuitant, unless otherwise changed by the Owner. Portfolio:
The Dreyfus Stock Index Fund, The Dreyfus Socially Responsible Growth Fund,
Inc., or any one of the Series of Dreyfus Variable Investment Fund underlying a
Sub-Account of the Variable Account. Proof of Death: May be: (a) a copy of a
certified death certificate; (b) a copy of a certified decree of a court of
competent jurisdiction as to the finding of death; (c) a written statement by a
medical doctor who attended the deceased; or (d) any other proof satisfactory to
Transamerica. Qualified Contract: A Contract used in connection with an
individual retirement annuity which receives favorable federal income tax
treatment under Sections 403(b) or 408 of the Code or with various types of
pension and profit sharing plans which receive favorable tax treatment under
Section 401 of the Code. Contracts qualified under Sections 401 and 403(b) may
not be available in all states. Receipt: Receipt and acceptance by Transamerica
at its Service Center. Series: Any of the Portfolios of Dreyfus Variable
Investment Fund available for investment by a Sub-Account under the Contract.
Service Center: Transamerica's Annuity Service Center, at P.O. Box 60708, Los
Angeles, CA 90060-0708, until June 10, 1996, and at P.O. Box 31848 Charlotte,
North Carolina 28231-1848 after June 10, 1996, and at telephone (800) 258-4260.
Socially Responsible Fund: The Dreyfus Socially Responsible Growth Fund, Inc., a
diversified open-end management investment company. Stock Index Fund: Dreyfus
Stock Index Fund, a non-diversified open-end management investment company.
Sub-Account: A subdivision of the Variable Account investing solely in shares of
one of the Portfolios. Valuation Day: Any day the New York Stock Exchange is
open for trading. Valuation occurs currently as of 4:00 p.m. ET each Valuation
Day. Valuation Period: The time interval between the closing of the New York
Stock Exchange on consecutive Valuation Days. Variable Account: Separate Account
VA-2L, a separate account established and maintained by Transamerica for the
investment of a portion of its assets pursuant to Section 10506 of the
California Insurance Code. The Variable Account contains several Sub-Accounts to
which all or portions of Net Purchase Payments and transfers may be allocated.
Variable Accumulated Value: The total dollar amount of all Variable Accumulation
Units under each Sub-Account of the Variable Account held for the Contract prior
to the Annuity Date. The Variable Accumulated Value prior
- 6 -
6
<PAGE>
to the Annuity Date is equal to: (a) Net Purchase Payments allocated to the
Sub-Accounts; plus or minus (b) any increase or decrease in the value of the
assets of the Sub-Accounts due to investment results; less (c) the daily
Mortality and Expense Risk Charge; less (d) the daily Administrative Expense
Charge; less (e) any reductions for the annual Account Fee; plus or minus (f)
amounts transferred from or to the Fixed Account; less (g) any applicable
Transfer Fees; and less (h) withdrawals from the Sub-Accounts. Variable
Accumulation Unit: A unit of measure used to determine the Account Value prior
to the Annuity Date. The value of a Variable Accumulation Unit varies with each
Sub-Account. Variable Annuity: An annuity with payments which vary as to dollar
amount in relation to the investment performance of specified Sub-Accounts of
the Variable Account. Variable Annuity Unit: A unit of measure used to determine
the amount of the second and each subsequent payment under a Variable Annuity
Payment Option. The value of a Variable Annuity Unit varies with each
Sub-Account. Variable Fund: Dreyfus Variable Investment Fund, an open-end
management investment company. Withdrawals: Refers to partial withdrawals, full
surrenders, and systematic withdrawals that are paid in cash to the Owner.
- 7 -
7
<PAGE>
SUMMARY
The Contract
The Flexible Purchase Payment Multi-Funded Deferred Annuity Contract described
in this Prospectus is designed to aid individuals in long-term financial
planning and for retirement or other long-term purposes. The Contract may be
used in connection with a retirement plan which qualifies as a retirement
program under Sections 403(b) or 408 of the Code, with various types of
qualified pension and profit sharing plans under Section 401 of the Code, or
with non-qualified plans. Contracts qualified under Sections 401 and 403(b) may
not be available in all states. The Contract is issued by Transamerica
Occidental Life Insurance Company ("Transamerica"), a wholly-owned subsidiary of
Transamerica Insurance Corporation of California, which in turn is a direct
subsidiary of Transamerica Corporation. Its principal office is at 1150 South
Olive Street, Los Angeles, California 90015, telephone (213) 742-2111.
The term "Contract" as used herein refers to either the individual
annuity contract or to a certificate issued under a group annuity contract. The
term "Owner" refers to the owner of the individual contract or the owner of the
certificate, as appropriate.
Transamerica will establish and maintain an Account for each individual
annuity contract and for each certificate issued under a group contract. Each
Owner will receive either an individual annuity contract, or a certificate
evidencing the Owner's coverage under a group annuity contract. The Contract
provides that the Account Value, after certain adjustments, will be applied to
an Annuity Form and Payment Option on a selected future date ("Annuity Date").
The Owner may allocate all or portions of Net Purchase Payments to one
or more Sub-Accounts of the Variable Account, to the available Guarantee Periods
of the Fixed Account which guarantees a minimum fixed return, or to both.
The Account Value prior to the Annuity Date, except for amounts in the
Fixed Account, will vary, depending on the investment experience of each
Sub-Account of the Variable Account selected by the Owner. All payments and
values provided under the Contract when based on the investment experience of
the Variable Account are variable and are not guaranteed as to dollar amount.
Therefore, prior to the Annuity Date the Owner bears the entire investment risk
under the Contract for amounts allocated to the Variable Account.
There is no guaranteed or minimum Cash Surrender Value, so the proceeds
of a surrender could be less than the total Purchase Payments.
The initial Purchase Payment for each Contract must be at least $5,000,
and generally each additional Purchase Payment must be at least $500, unless an
automatic payment plan is selected. In no event, however, may the total of all
Purchase Payments under a Contract exceed $1,000,000 without the prior approval
of Transamerica.
An additional Net Purchase Payment allocated to an Inactive Sub-Account
or to a new Guarantee Period
may not be less than $1,000. (See "Application and Purchase Payments" page 31.)
The Variable Account
The Variable Account is a separate account (Separate Account VA-2L)
that is subdivided into Sub-Accounts. (See "The Variable Account" page 22.)
Assets of each Sub-Account are invested in a specified mutual fund Portfolio.
Each Sub-Account uses its assets to purchase, at their net asset value, shares
of a specific Series of Dreyfus Variable Investment Fund or shares in the
Dreyfus Stock Index Fund or The Dreyfus Socially Responsible Growth Fund, Inc.
(together "The Funds"). Thirteen Portfolios are currently available for
investment in the Variable Account under the Contract: (1) Money Market, (2)
Managed Assets, (3) Zero Coupon 2000, (4) Quality Bond, (5) Small Cap, (6)
Capital Appreciation, (7) Growth and Income, (8) International Equity, (9)
International Value, (10) Disciplined Stock, and (11) Small Company Stock, each
of which is a Series of Dreyfus Variable Investment Fund; (12) the Dreyfus Stock
Index Fund; and (13) The Dreyfus Socially Responsible Growth Fund, Inc. Each
Portfolio has distinct investment objectives and policies which are described in
the accompanying prospectuses for the Funds. (See "The Funds" page 23.)
The Funds pay their investment advisers and administrators certain fees
charged against the assets of each Portfolio. The Account Value, if any, of a
Contract and the amount of any Variable Annuity Payments will vary to reflect
the investment performance of all of the Sub-Accounts selected by the Owner and
the deduction of the
- 8 -
8
<PAGE>
charges described under "Charges and Deductions" page 41. For more information
about the Funds, see "The
Funds" page 23 and the accompanying Funds' prospectuses.
The Fixed Account
Each Net Purchase Payment, or portion thereof, allocated to the Fixed
Account, as well as each amount transferred to the Fixed Account, will establish
a new Guarantee Period. Each Guarantee Period will have its own Guaranteed
Interest Rate (which will be at least 3% per year) and its own Expiration Date.
Amounts allocated to a new Guarantee Period must be at least $1,000. Amounts
withdrawn or transferred from a Guarantee Period prior to its Expiration Date
will be subject to an interest adjustment which will reduce the interest
credited to the 3% minimum rate. (See "The Fixed Account" page 27.) Transfers
Before the Annuity Date
Prior to the Annuity Date, the Owner may transfer values between and
among the Guarantee Periods of the Fixed Account and the Sub-Accounts of the
Variable Account. Total transfers are limited to eighteen during a Contract
Year. See "Transfers" on page 34 for additional limitations regarding transfers.
Transamerica currently does not impose a Transfer Fee, but it reserves
the right to charge a Transfer Fee
for each transfer in excess of six made during the same Contract Year. (See
"Transfer Fee" page 45.) Amounts
transferred from a Guarantee Period prior to its Expiration Date will be
subject to an interest adjustment which
will reduce the interest credited to the 3% minimum rate. (See "The Fixed
Account" page 27.) (For Transfers
after the Annuity Date, see "After the Annuity Date" page 36.)
Withdrawals
All or part of the Cash Surrender Value for a Contract may be withdrawn
by the Owner on or before the Annuity Date. No partial withdrawals will be
permitted while the Systematic Withdrawal Option is in effect. However, amounts
withdrawn may be subject to a Contingent Deferred Sales Load depending upon how
long the withdrawn Purchase Payments have been held under the Certificate.
TRANSAMERICA GUARANTEES THAT THE AGGREGATE CONTINGENT DEFERRED SALES LOAD WILL
NEVER EXCEED 6% OF THE PURCHASE PAYMENTS. (See "Contingent Deferred Sales Load"
page 41.) Amounts withdrawn may be subject to a premium tax or similar tax,
depending upon the state in which the Owner lives. Withdrawals may further be
subject to any federal, state or local income tax, and subject to a penalty tax.
Withdrawals from Section 403(b) annuities may be subject to severe restrictions.
(See "Federal Tax Matters" page 50.) The annual Account Fee generally will be
deducted on a full surrender of a Contract. (See "Withdrawals" page 36 for
additional limitations regarding withdrawals.)
Amounts withdrawn from a Guarantee Period prior to its Expiration
Date will be subject to an interest
adjustment which will reduce the interest credited to the 3% minimum rate.
(See "The Fixed Account" page 27.)
Transamerica may delay payment of any withdrawal from the Fixed Account for
up to six months. (See "Cash
Withdrawals" page 36.)
Contingent Deferred Sales Load
Transamerica does not deduct a sales charge from Purchase Payments
(although premium taxes may be deducted). However, if any part of the Account
Value is withdrawn, a Contingent Deferred Sales Load of up to 6% of Purchase
Payments may be assessed by Transamerica to cover certain expenses relating to
the sale of the Contracts, including commissions to registered representatives
and other promotional expenses. After a Purchase Payment has been held by
Transamerica for seven Contract Years, it may be withdrawn without charge. In
addition, no Contingent Deferred Sales Load is assessed on death, on transfers,
or on certain annuitizations.
After the first Contract Year, certain amounts may be withdrawn free of
a Contingent Deferred Sales Load. This "Free Withdrawal Amount" will be at least
(a) 10% of Purchase Payments more than one year old, or (b) the greater of
earnings or 15% of Purchase Payments more than one year old, depending on the
state of issuance. In addition, in certain states the Contingent Deferred Sales
Load is waived on a withdrawal if the Owner is confined to a hospital or nursing
care facility for 45 days out of a continuous 60 day period. (See "Contingent
Deferred Sales Load" page 41, and "Withdrawals" page 36.) Other Charges and
Deductions
Transamerica deducts a daily charge (the "Mortality and Expense Risk
Charge") equal to a percentage of the value of the net assets in the Variable
Account for the mortality and expense risks assumed. The effective
- 9 -
9
<PAGE>
annual rate of this charge is 1.25% of the value of the net assets in the
Variable Account attributable to the
Contracts. (See "Mortality and Expense Risk Charge" page 44.) TRANSAMERICA
GUARANTEES THAT THIS
MORTALITY AND EXPENSE RISK CHARGE WILL NOT BE INCREASED.
Transamerica also deducts a daily charge (the "Administrative Expense
Charge") equal to a percentage of the value of the net assets in the Variable
Account corresponding to an effective annual rate of 0.15% to help cover some of
the costs of administering the Contracts and the Variable Account. This charge
may change, but it is guaranteed not to exceed a maximum effective annual rate
of 0.25% (See "Administrative Charges" page 43.) There is also an administrative
charge (the "Account Fee") each year for Contract maintenance. This fee
currently is $30 (or 2% of the Account Value, if less) deducted at the end of
the Contract Year. This fee may change but it is guaranteed not to exceed $60
(or 2% of the Account Value, if less) per Contract Year. In certain states, if
the Account Value is over $50,000 on the last business day of a Contract Year,
or if earlier, as of the date the Contract is surrendered, the Account Fee will
be waived for that year. After the Annuity Date this fee is referred to as the
Annuity Fee. The Annuity Fee is $30 and will not change. (See "Administrative
Charges" page 43.)
Currently, no Transfer Fees are imposed. However, for each transfer in
excess of six during a Contract Year, a Transfer Fee may be imposed equal to no
more than $10. (See "Transfer Fee" page 45.)
Charges for state premium taxes (including retaliatory premium taxes)
will be imposed in some states. Depending on the applicability of such state
taxes, the charges could be deducted from premiums, from amounts withdrawn,
and/or from the Annuity Purchase Amount upon annuitization. (See "Premium Taxes"
page 45.)
In addition, amounts withdrawn or transferred out of a Guarantee Period
of the Fixed Account prior to its Expiration Date will be subject to an interest
adjustment which will reduce the interest earned to the 3% minimum annual rate.
- 10 -
10
<PAGE>
Variable Account Fee Table
The purpose of this table is to assist in understanding the various
costs and expenses that the Owner will bear directly and indirectly. The table
reflects expenses of the Variable Account as well as of the Portfolios. The
table assumes that the entire Account Value is in the Variable Account. The
information set forth should be considered together with the narrative provided
under the heading "Charges and Deductions" on page 41 of this Prospectus, and
with the Funds' prospectuses. In addition to the expenses listed below, premium
taxes may be applicable. Contract Transaction Expenses(1)
Sales Load Imposed on Purchase Payments 0
Maximum Contingent Deferred Sales Load(2) 6%
- -----------------------------------------------------------------------------
Range of Contingent Deferred Sales Load Over Time
Contingent Deferred
Contract Years since Sales Load
Purchase Payments Receipt Percentage
Less than 2 years 6%
2 years but less than 4 years 5%
4 years but less than 6 years 4%
6 years but less than 7 years 2%
7 or more 0%
- -------------------------------------------------------------------
Transfer Fee(3) 0
Systematic Withdrawal Fee(3) 0
Account Fee(4) $30
Variable Account Annual Expenses(1)
Mortality and Expense Risk Charges 1.25%
Administrative Expense Charge(5) .15%
Other Fees and Expenses of the Variable Account 0.00%
Total Variable Account Annual Expenses 1.40%
<TABLE>
<CAPTION>
Zero Stock
Money Managed Coupon Quality Small Capital Index
Portfolio Market Assets 2000 Bond Cap Appreciation Fund(7)
- --------- ------ ------ ---- ---- --- ------------ -------
Annual Expenses(6)
- -------------------
(as a percentage of Portfolio
average net assets after fee waiver
and/or expense reimbursement )
<S> <C> <C> <C> <C> <C> <C> <C>
Management Fees 0.47% 0.75% 0.42% 0.61% 0.75% 0.73% 0.25%
Other Expenses 0.15% 0.19% 0.26% 0.20% 0.08% 0.12% 0.14%
Total Portfolio Annual0.62% 0.94% 0.68% 0.81% 0.83% 0.85% 0.39%
Expenses
</TABLE>
<TABLE>
<CAPTION>
Socially Growth Small
Responsible and International International Disciplined Company
Portfolio Fund Income Equity Value(8) Stock(8) Stock(8)
- --------- ---- ------ ------ -------- -------- --------
Annual Expenses(6)
- -------------------
(as a percentage of Portfolio
average net assets after fee waiver
and/or expense reimbursement )
<S> <C> <C> <C> <C> <C> <C>
Management Fees 0.69% 0.72% 0.30% 1.00% 0.75% 0.75%
Other Expenses 0.58% 0.20% 1.29% 0.50% 0.25% 0.25%
Total Portfolio Annual 1.27% 0.92% 1.59% 1.50% 1.00% 1.00%
Expenses
</TABLE>
Expense information regarding the Portfolios has been provided by the Funds.
Transamerica has no reason to doubt the accuracy of that information, but
Transamerica has not verified those figures. In preparing the table above and
the examples that follow, Transamerica has relied on the figures provided by the
Funds. Actual expenses in future years may be higher or lower than the figures
above.
- 11 -
11
<PAGE>
Notes to Fee Table:
(1) The Contract Transaction Expenses apply to each Contract, regardless of
how Account Value is allocated between the Variable Account and the
Fixed Account. The Variable Account Annual Expenses do not apply to the
Fixed Account.
(2) A portion of the Purchase Payment may be withdrawn each year after the
first Contract Year without imposition of any Contingent Deferred Sales
Load, and after a Purchase Payment has been held by Transamerica for
seven Contract Years, the remaining Purchase Payment may be withdrawn
free of any Contingent Deferred Sales Load. (See "Charges and
Deductions" page 41.)
(3) Transamerica currently does not impose a Transfer Fee. However, a
Transfer Fee of $10 may be imposed for each transfer in excess of six
in a Contract Year. Transamerica may also impose a fee (of up to $25
per year) if the systematic withdrawal option is elected.
(See "Charges and Deductions" page 41.)
(4) The current annual Account Fee is $30 (or 2% of the Account Value, if
less) per Contract Year. The fee may be changed annually,
but it may not exceed $60 (or 2% of the Account Value, if less). (See
"Charges and Deductions" page 41.)
(5) The current annual Administrative Expense Charge is 0.15%; it may be
increased to 0.25%. The total of the charges described in
notes (2), (3) and (4) will never exceed the anticipated or estimated
costs to administer the Contract and the Variable Account. (See
"Charges and Deductions" page 41.)
(6) From time to time, the Portfolios' investment advisers (or the manager
and/or index manager in the case of the Stock Index Fund) in their sole
discretion may waive all or part of their fees and/or voluntarily
assume certain Portfolio expenses. For a more complete description of
the Portfolios' fees and expenses, see the Funds' prospectuses. As of
the date of this Prospectus, certain fees are being waived or expenses
are being assumed, in each case on a voluntary basis. Without such
waivers or reimbursements, the Management Fees, Other Expenses and
Total Portfolio Annual Expenses that would have been incurred for the
last completed fiscal year, December 31, 1995, would be - Money Market:
.0.50%, 0.15%, 0.65%; Managed Assets: 0.75%, 0.19%, 0.94%; Zero Coupon
2000: 0.45%, 0.26%, 0.71%; Quality Bond: 0.65%, 0.20%, 0.85%; Small
Cap: 0.75%, 0.08%, 0.83%; Capital Appreciation: 0.75%, 0.12%, 0.87%;
Stock Index Fund: 0.25%, 0.17%, 0.42%; Socially Responsible Fund:
0.75%, 0.58%; 1.33%; Growth and Income: 0.75%, 0.20%, 0.95%; and
International Equity: 0.75%, 1.29%, 2.04%. There is no guarantee that
any fee waivers or expense reimbursements will continue in the future.
See the Funds' prospectuses for a discussion of fee waiver and expense
reimbursements.
(7) The Stock Index Fund expense information has been restated to reflect
current fees.
(8) The International Value, Disciplined Stock and Small Company Stock
Portfolios did not commence operations during 1995. These numbers are
annualized estimates of the expenses that each Portfolio expects to
incur during fiscal year 1996.
- 12 -
12
<PAGE>
Examples*
The following six examples reflect the $30 Account Fee as an annual
charge of 0.068% of assets based on an approximate average Account Value of
$44,000. The tabular information assumes that the entire Account Value is
allocated to the Variable Account.
These examples all assume no Transfer Fees, systematic withdrawal fee
or premium tax have been
assessed. Premium taxes may be applicable. (See "Premium Taxes" page 45.)
Examples 1 through 3 show expenses based on fee waivers and
reimbursements for 1995. There is no guarantee that any fee waivers or expense
reimbursements will continue in the future.
Example 1
If the Owner surrenders the Contract at the end of the applicable time period,
he/she would pay the following expenses on a $1,000 Initial Purchase Payment
assuming a 5% annual return on assets:
<TABLE>
<CAPTION>
One Year Three Years Five Years Ten Years
<S> <C> <C> <C> <C>
Money Market $73.93 $112.42 $152.28 $241.89
Managed Assets $76.95 $121.58 $167.92 $274.45
Zero Coupon 2000 $74.50 $114.15 $155.33 $248.08
Quality Bond $75.72 $117.87 $161.67 $261.36
Small Cap $75.91 $118.45 $162.63 $263.38
Capital Appreciation $76.10 $119.02 $163.59 $265.40
Stock Index Fund $71.57 $105.78 $140.49 $217.78
Socially Responsible Fund $80.05 $130.94 $184.86 $306.87
Growth and Income $76.76 $121.01 $167.45 $272.45
International Equity $83.04 $139.92 $198.54 $337.22
International Value $82.20 $137.40 $203.92 $328.79
Disciplined Stock $77.51 $123.29 $180.62 $280.43
Small Company Stock $77.51 $123.29 $180.62 $280.43
</TABLE>
Example 2
If the Owner does not surrender and does not annuitize the Contract,
he/she would pay the following expenses on a $1,000 Initial Purchase Payment
assuming a 5% annual return on assets:
<TABLE>
<CAPTION>
One Year Three Years Five Years Ten Years
<S> <C> <C> <C> <C>
Money Market $21.19 $65.43 $112.28 $241.89
Managed Assets $24.39 $75.09 $128.46 $274.45
Zero Coupon 2000 $21.79 $67.25 $115.33 $248.08
Quality Bond $23.09 $71.18 $121.92 $261.36
Small Cap $23.29 $71.78 $122.93 $263.38
Capital Appreciation $23.49 $72.38 $123.93 $265.40
Stock Index Fund $18.87 $58.42 $100.49 $217.78
Socially Responsible Fund $27.69 $84.97 $144.86 $306.87
Growth and Income $24.19 $74.49 $127.45 $272.45
International Equity $30.88 $94.45 $160.51 $337.22
International Value $29.98 $91.79 $156.13 $328.79
Disciplined Stock $24.99 $76.90 $131.46 $280.43
Small Company Stock $24.99 $76.90 $131.46 $280.43
</TABLE>
Example 3
If the Owner elects to annuitize at the end of the applicable period under an
Annuity Form with life contingencies,** he/she would pay the following expenses
on a $1,000 Initial Purchase Payment assuming a 5% annual return on assets:
<TABLE>
<CAPTION>
One Year Three Years Five Years Ten Years
<S> <C> <C> <C> <C>
Money Market $73.93 $65.43 $112.28 $241.89
Managed Assets $76.95 $75.09 $128.46 $274.45
Zero Coupon 2000 $74.50 $67.25 $115.33 $248.08
Quality Bond $75.72 $71.18 $121.92 $261.36
Small Cap $75.91 $71.78 $122.93 $263.38
Capital Appreciation $76.10 $72.38 $123.93 $265.40
Stock Index Fund $71.76 $58.42 $100.49 $217.78
Socially Responsible Fund $80.05 $84.97 $144.86 $306.87
Growth and Income $76.76 $74.49 $127.45 $272.45
International Equity $83.04 $94.45 $160.51 $337.22
International Value $82.20 $91.79 $156.13 $328.79
Disciplined Stock $77.51 $76.90 $131.46 $280.43
Small Company Stock $77.51 $76.90 $131.46 $280.43
</TABLE>
Examples 4 through 6 show examples based on the fund fees and expenses which
would have been incurred for the last completed fiscal year, December 31, 1995,
for all Portfolios (if no waivers and reimbursements had been in effect).
Example 4
If the Owner surrenders the Contract at the end of the applicable time period,
he/she would pay the following expenses on a $1,000 Initial Purchase Payment
assuming a 5% annual return on assets:
<TABLE>
<CAPTION>
One Year Three Years Five Years Ten Years
<S> <C> <C> <C> <C>
Money Market $74.22 $113.29 $153.81 $244.99
Managed Assets $76.95 $121.58 $167.92 $274.45
Zero Coupon 2000 $74.78 $115.01 $156.83 $251.16
Quality Bond $76.10 $119.02 $163.59 $265.40
Small Cap $75.91 $118.45 $162.63 $263.38
Capital Appreciation $76.29 $119.59 $164.56 $267.42
Stock Index Fund $72.04 $106.54 $142.03 $220.96
Socially Responsible Fund $80.61 $132.63 $187.82 $312.64
Growth and Income $77.04 $121.87 $168.40 $275.45
International Equity $87.24 $152.39 $219.14 $378.13
International Value $82.20 $137.40 $203.92 $328.79
Disciplined Stock $77.51 $123.29 $180.62 $280.43
Small Company Stock $77.51 $123.29 $180.62 $280.43
</TABLE>
Example 5
If the Owner does not surrender and does not annuitize the Contract, he/she
would pay the following expenses on a $1,000 Initial Purchase Payment assuming a
5% annual return on assets:
<TABLE>
<CAPTION>
One Year Three Years Five Years Ten Years
<S> <C> <C> <C> <C>
Money Market $21.49 $66.34 $113.81 $244.99
Managed Assets $24.39 $75.09 $128.46 $274.45
Zero Coupon 2000 $22.09 $65.15 $116.86 $251.16
Quality Bond $23.49 $72.38 $123.93 $265.40
Small Cap $23.29 $71.78 $122.93 $263.38
Capital Appreciation $23.69 $72.99 $124.94 $267.42
Stock Index Fund $19.18 $59.34 $102.03 $220.96
Socially Responsible Fund $28.29 $86.75 $147.82 $312.64
Growth and Income $24.49 $75.40 $128.96 $275.45
International Equity $35.34 $107.62 $182.07 $378.13
International Value $29.98 $91.79 $156.13 $328.79
Disciplined Stock $24.99 $76.90 $131.46 $280.43
Small Company Stock $24.99 $76.90 $131.46 $280.43
</TABLE>
- 14 -
14
<PAGE>
Example 6
If the Owner elects to annuitize at the end of the applicable period under an
Annuity Form with life contingencies,** he/she would pay the following expenses
on a $1,000 Initial Purchase Payment assuming a 5% annual return on assets:
<TABLE>
<CAPTION>
One Year Three Years Five Years Ten Years
<S> <C> <C> <C> <C>
Money Market $74.22 $66.34 $113.81 $244.99
Managed Assets $76.95 $75.09 $128.46 $274.45
Zero Coupon 2000 $74.78 $65.15 $116.86 $251.16
Quality Bond $76.10 $72.38 $123.93 $265.40
Small Cap $75.91 $71.78 $122.93 $263.38
Capital Appreciation $76.29 $72.99 $124.94 $267.42
Stock Index Fund $72.04 $59.34 $102.03 $220.96
Socially Responsible Fund $80.61 $86.75 $147.82 $312.64
Growth and Income $77.04 $75.40 $128.96 $275.45
International Equity $87.24 $107.62 $182.07 $378.13
International Value $82.20 $91.79 $156.13 $328.79
Disciplined Stock $77.51 $76.90 $131.46 $280.43
Small Company Stock $77.51 $76.90 $131.46 $280.43
</TABLE>
*In preparing the examples above, Transamerica has relied on the data provided
by the Funds. Transamerica has no reason to doubt the accuracy of that
information, but Transamerica has not verified those figures. **For
annuitizations before the third Contract Anniversary, or for annuitization under
a form that does not include life contingencies, a Contingent Deferred Sales
Load may apply.
THESE EXAMPLES SHOULD NOT BE CONSIDERED REPRESENTATIONS OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES PAID MAY BE GREATER OR LESS THAN THOSE SHOWN, SUBJECT
TO THE GUARANTEES IN THE CONTRACT.
Annuity Payments
Annuity Payments will be made either on a fixed basis or a variable
basis or a combination of a fixed and variable basis as the Owner selects. The
Owner has flexibility in choosing the Annuity Date for his or her Contract. In
no event may the Annuity Date be a date later than the first day of the month
immediately preceding the month of the Annuitant's 85th birthday or the first
day of the month coinciding with or next following the tenth Contract
Anniversary, whichever occurs last. This extension of the Annuity Date to the
tenth Contract Anniversary may not be available in all states. The Annuity Date
may not be earlier than the first day of the month coinciding with or
immediately following the third Contract Anniversary except for Qualified
Contracts. Annuity Payments will begin on the first day of the calendar month
following the Annuity Date. (See "Annuity Payments" page 46.)
Four Annuity Forms are available under the Contract: (1) Life Annuity;
(2) Life and Contingent Annuity;
(3) Life Annuity with Period Certain; and (4) Joint and Survivor Annuity. (See
"Annuity Forms" page 48.)
Payments on Death Before the Annuity Date
The death benefit for a Contract will be no less than the greater of
(a) the Account Value or (b) the sum of all Purchase Payments made to the
Contract, less the sum of all withdrawals and any applicable premium taxes; in
some cases the death benefit will be a higher amount. (See "Death Benefit" page
39.) The death benefit will generally be paid within seven days of receipt of
the required Proof of Death of the Owner or the Annuitant and election of the
method of settlement or as soon thereafter as Transamerica has sufficient
information about the Beneficiary to make the payment, but if no settlement
method is elected the death benefit will be paid no later than one year from the
date of death. No Contingent Deferred Sales Load or interest adjustment is
imposed. The death benefit may be paid as either a lump sum or as an annuity.
(See "Death Benefit" page 39.) Federal Income Tax Consequences
- 15 -
15
<PAGE>
An Owner who is a natural person generally should not be taxed on
increases in the Account Value until a distribution under the Contract occurs
(e.g., a withdrawal or Annuity Payment) or is deemed to occur (e.g., a pledge,
loan, or assignment of a Contract). Generally, a portion (up to 100%) of any
distribution or deemed distribution is taxable as ordinary income. The taxable
portion of distributions is generally subject to income tax withholding unless
the recipient elects otherwise (although withholding is mandatory for certain
qualified Contracts). In addition, a federal penalty tax may apply to certain
distributions. (See "Federal Tax Matters" page 50.) Right to Cancel
The Owner has the right to examine the Contract for a limited period,
known as a "Free Look Period." The Owner can cancel the Contract by delivering
or mailing a written notice of cancellation, or sending a telegram to the
Service Center and by returning the Contract before midnight of the tenth day
(or longer if required by state law) after receipt of the Contract. Notice given
by mail and the return of the Contract by mail will be effective on the date
received by Transamerica. The amount of the refund may depend on the state of
issuance. In some states (and in all states for IRAs), Transamerica will refund
the greater of the Purchase Payment(s) or the Account Value as of the date the
written notice and the Contract are received by Transamerica; in these
situations, the Purchase Payment(s) received before or during the Free Look
Period which are to be allocated to the Sub- Accounts of the Variable Accounts
will be held in the Money Market Sub-Account until the estimated end of the Free
Look Period (allowing 5 days for delivery of the Contract by mail). In other
cases, Transamerica will refund the Account Value as of the date the written
notice and the Contract are received by Transamerica; in these cases, on the
Contract Date the Initial Purchase Payment will be allocated among the
Sub-Accounts of the Variable Account and the Guarantee Periods of the Fixed
Account in accordance with the Owner's instructions. Owners should consult their
registered representative or investment adviser (or see their Contract) for the
applicable provision. (See "Application and Purchase Payments" page 31, and
"Account Value" page 32.) Questions
Any questions about procedures or the Contract will be answered by the
Transamerica Annuity Service Center ("Service Center"), at P.O. Box 30757, Los
Angeles, California 90030-0757 until June 10, 1996, and at P.O. Box 31848,
Charlotte, North Carolina 28231-1848 after June 10, 1996, or call (800)258-4260.
All inquiries should include the Contract Number and the Owner's and Annuitant's
names.
NOTE: The foregoing summary is qualified in its entirety by the
detailed information in the remainder of this Prospectus and in the prospectuses
for Dreyfus Variable Investment Fund, Dreyfus Stock Index Fund and The Dreyfus
Socially Responsible Growth Fund, Inc. which should be referred to for more
detailed information. With respect to Qualified Contracts, it should be noted
that the requirements of a particular retirement plan, an endorsement to the
Contract, or limitations or penalties imposed by the Code or the Employee
Retirement Income Security Act of 1974, as amended, may impose additional limits
or restrictions on Purchase Payments, Withdrawals, distributions, or benefits,
or on other provisions of the Contract. This Prospectus does not describe such
limitations or restrictions. (See "Federal Tax Matters" page 50.)
- 16 -
16
<PAGE>
CONDENSED FINANCIAL INFORMATION
The following condensed financial information is derived from the
financial statements of the Variable Account. The data should be read in
conjunction with the financial statements, related notes, and other financial
information included in the Statement of Additional Information.
The following table sets forth certain information regarding the
Sub-Accounts for a Contract for the period from commencement of business
operations on January 4, 1993 through December 31, 1995, except for the Socially
Responsible Sub-Account which commenced operations on October 7, 1993, the
Capital Appreciation Sub-Account which commenced operations on April 5, 1993 and
the Growth and Income and the International Equity Sub-Accounts which commenced
operations on December 15, 1994. Information for the International Value,
Disciplined Stock and Small Company Stock Sub-Accounts is not included because
these Sub-Accounts did not commence operations during 1995.
The Variable Accumulation Unit values and the number of Variable
Accumulation Units outstanding for each Sub-Account for the periods shown are as
follows:
<TABLE>
<CAPTION>
Year Ending December 31, 1993
-----------------------------------------------------------------
Money Managed Zero Coupon Quality
Market Assets 2000 Bond Small Cap
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
<S> <C> <C> <C> <C> <C>
at Beginning of Period $1.00 $10.09 $11.85 $11.00 $22.54
Accumulation Unit Value
at End of Period.. $1.018 $12.861 $13.373 $12.445 $37.702
Number of Accumulation
Units Outstanding
at End of Period.. 3,654,791.776287,4509.768 206,103.348 255,350.340 254,839.860
</TABLE>
<TABLE>
<CAPTION>
Capital Appreciation Socially Responsible
Sub-Account Sub-Account
(Inception- (Inception-
April 5, Stock Index October 7,
1993) Sub-Account 1993)
----- ----------- -----
Accumulation Unit Value at
<S> <C> <C> <C>
Beginning of Period..... $12.50 $15.31 $12.49
Accumulation Unit Value at
End of Period........... $13.160 $16.521 $13.326
Number of Accumulation Units
Outstanding at End of Period 237,733.021 93,536.733 26,089.821
</TABLE>
<TABLE>
<CAPTION>
Year Ending December 31, 1994
---------------------------------------------------------------------------------
Money Managed Zero Coupon Quality
Market Assets 2000 Bond Small Cap
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
<S> <C> <C> <C> <C> <C>
at Beginning of Period $1.018 $12.861 $13.373 $12.445 $37.702
Accumulation Unit Value
at End of Period.. $1.048 $12.496 $12.672 $11.711 $40.064
Number of Accumulation
Units Outstanding
at End of Period.. 23,559,789.7951,486,438.137 476,355.738 931,527.691 1,250,237.625
</TABLE>
- 17 -
17
<PAGE>
<TABLE>
<CAPTION>
International
Growth and Income Equity
Sub-Account Sub-Account
Capital Appreciation Stock Index Socially Responsible (Inception (Inception
Sub-Account Sub-Account Sub-Account December 15, 1994) December 15, 1994)
Accumulation Unit Value
<S> <C> <C> <C> <C> <C>
at Beginning of Period $13.160 $16.521 $13.326 $12.177 $12.247
Accumulation Unit Value
at End of Period..... $13.373 $16.437 $13.377 $12.167 $12.240
Number of Accumulation
Units Outstanding
at End of Period..... 919,622.615 348,937.285 135,018.350 4,300.380 8,552.073
</TABLE>
<TABLE>
<CAPTION>
Year Ending December 31, 1995
- ---------------------------------------------------------------------------------
Money Managed Zero Coupon Quality
Market Assets 2000 Bond Small Cap
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
<S> <C> <C> <C> <C> <C>
at Beginning of Period$1.048 $12.496 $12.672 $11.711 $40.064
Accumulation Unit Value
at End of Period $1.093 $12.292 $14.740 $13.908 $51.121
Number of Accumulation
Units Outstanding
at End of Period 31,807,563.947 1,288,429.555 903,799.152 2,052,313.888 2,155,879.198
</TABLE>
<TABLE>
<CAPTION>
International
Capital Appreciation Stock Index Socially Responsible Growth and Income Equity
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
<S> <C> <C> <C> <C> <C>
at Beginning of Period $13.373 $16.437 $13.377 $12.167 $12.240
Accumulation Unit Value
at End of Period $17.610 $22.172 $17.752 $19.426 $12.964
Number of Accumulation
Units Outstanding
at End of Period 2,077,029.504 997,271.816 295,077.936 2,565,038.589 530,374.642
</TABLE>
Financial Statements for the Variable Account and Transamerica
The financial statements and reports of independent auditors for the
Variable Account and Transamerica are contained in the Statement of Additional
Information.
- 18 -
18
<PAGE>
PERFORMANCE DATA
From time to time, Transamerica may advertise yields and average annual
total returns for the Sub-Accounts of the Variable Account. In addition,
Transamerica may advertise the effective yield of the Money Market Sub-Account.
These figures will be based on historical information and are not intended to
indicate future performance.
The yield of the Money Market Sub-Account refers to the annualized
income generated by an investment in that Sub-Account over a specified seven-day
period. The yield is calculated by assuming that the income generated for that
seven-day period is generated each seven-day period over a 52-week period and is
shown as a percentage of the investment. The effective yield is calculated
similarly but, when annualized, the income earned by an investment in that
Sub-Account is assumed to be reinvested. The effective yield will be slightly
higher than the yield because of the compounding effect of this assumed
reinvestment.
The yield of a Sub-Account (other than the Money Market Sub-Account)
refers to the annualized income generated by an investment in the Sub-Account
over a specified thirty-day period. The yield is calculated by assuming that the
income generated by the investment during that thirty-day period is generated
each thirty-day period over a twelve-month period and is shown as a percentage
of the investment.
The yield calculations do not reflect the effect of any Contingent
Deferred Sales Load or premium taxes that may be applicable to a particular
Contract. To the extent that the Contingent Deferred Sales Load is applicable to
a particular Contract, the yield of that Contract will be reduced. For
additional information regarding yields and total returns calculated using the
standard formats briefly described herein, please refer to the Statement of
Additional Information.
The average annual total return of a Sub-Account refers to return
quotations assuming an investment has been held in the Sub-Account for various
periods of time including, but not limited to, a period measured from the date
the Sub-Account commenced operations. When a Sub-Account has been in operation
for 1, 5, and 10 years, respectively, the average annual total return for these
periods will be provided. The average annual total return quotations will
represent the average annual compounded rates of return that would equate an
initial investment of $1,000 to the redemption value of that investment
(including the deduction of any applicable Contingent Deferred Sales Load but
excluding deduction of any premium taxes) as of the last day of each of the
periods for which total return quotations are provided.
Performance information for any Sub-Account reflects only the
performance of a hypothetical Contract under which Account Value is allocated to
a Sub-Account during a particular time period on which the calculations are
based. Performance information should be considered in light of the investment
objectives and policies and characteristics of the Portfolios in which the
Sub-Account invests, and the market conditions during the given time period, and
should not be considered as a representation of what may be achieved in the
future. For a description of the methods used to determine yield and total
returns, see the Statement of Additional Information.
Reports and promotional literature may also contain other information
including (1) the ranking of any Sub-Account derived from rankings of variable
annuity separate accounts or their investment products tracked by Lipper
Analytical Services, Inc., VARDS, IBC/Donoghue's Money Fund Report, Financial
Planning Magazine, Money Magazine, Bank Rate Monitor, Standard and Poor's
Indices, Dow Jones Industrial Average, and other rating services, companies,
publications, or other persons who rank separate accounts or other investment
products on overall performance or other criteria, and (2) the effect of tax
deferred compounding on Sub-Account investment returns, or returns in general,
which may be illustrated by graphs, charts, or otherwise, and which may include
a comparison, at various points in time, of the return from an investment in a
Contract (or returns in general) on a tax-deferred basis (assuming one or more
tax rates) with the return on a currently taxable basis.
Other ranking services and indices may be used.
In its advertisements and sales literature, Transamerica may discuss,
and may illustrate by graphs, charts, or otherwise, the implications of longer
life expectancy for retirement planning, the tax and other consequences of
long-term investment in the Contract, the effects of the Contract's lifetime
payout option, and the operation of certain special investment features of the
Contract -- such as the Dollar Cost Averaging option. Transamerica may explain
and depict in charts, or other graphics, the effects of certain investment
strategies, such as allocating
- 19 -
19
<PAGE>
purchase payments between the Fixed Account and an equity Sub-Account.
Transamerica may also discuss the Social Security system and its projected
payout levels and retirement plans generally, using graphs, charts and other
illustrations.
Transamerica may from time to time also disclose average annual total
return in non-standard formats and cumulative (non-annualized) total return for
the Sub-Accounts. The non-standard average annual total return and cumulative
total return will assume that no Contingent Deferred Sales Load is applicable.
Transamerica may from time to time also disclose yield, standard total returns,
and non-standard total returns for any or all Sub-Accounts.
All non-standard performance data will only be disclosed if the
standard performance data is also disclosed. For additional information
regarding the calculation of other performance data, please refer to the
Statement of Additional Information.
Transamerica may also advertise performance figures for the
Sub-Accounts based on the performance of a Portfolio prior to the time the
Variable Account commenced operations.
TRANSAMERICA OCCIDENTAL LIFE INSURANCE
COMPANY AND THE VARIABLE ACCOUNT
Transamerica Occidental Life Insurance Company
Transamerica Occidental Life Insurance Company ("Transamerica") is a
stock life insurance company incorporated under the laws of the State of
California in 1906. It is principally engaged in the sale of life insurance and
annuity policies. Transamerica is a wholly-owned subsidiary of Transamerica
Insurance Corporation of California, which in turn is a direct subsidiary of
Transamerica Corporation. The address of Transamerica is 1150 South Olive
Street, Los Angeles, California, 90015. Published Ratings
Transamerica may from time to time publish in advertisements, sales
literature and reports to Owners, the ratings and other information assigned to
it by one or more independent rating organizations such as A.M. Best Company,
Standard & Poor's, Moody's, and Duff & Phelps. The purpose of the ratings is to
reflect the financial strength and/or claims-paying ability of Transamerica and
should not be considered as bearing on the investment performance of assets held
in the Variable Account. Each year the A.M. Best Company reviews the financial
status of thousands of insurers, culminating in the assignment of Best's
Ratings. These ratings reflect their current opinion of the relative financial
strength and operating performance of an insurance company in comparison to the
norms of the life/health insurance industry. In addition, the claims-paying
ability of Transamerica as measured by Standard & Poor's Insurance Ratings
Services, Moody's, or Duff & Phelps may be referred to in advertisements or
sales literature or in reports to Owners. These ratings are opinions of an
operating insurance company's financial capacity to meet the obligations of its
insurance and annuity policies in accordance with their terms, including its
obligations under the Fixed Account provisions of this Contract. Such ratings do
not reflect the investment performance of the Variable Account or the degree of
risk associated with an investment in the Variable Account. The Variable Account
Separate Account VA-2L of Transamerica (the "Variable Account") was
established by Transamerica as a separate account under the laws of the State of
California on May 22, 1992 pursuant to resolutions of Transamerica's Board of
Directors. The Variable Account is registered with the Securities and Exchange
Commission ("Commission") under the Investment Company Act of 1940 (the "1940
Act") as a unit investment trust. It meets the definition of a separate account
under the federal securities laws. However, the Commission does not supervise
the management or the investment practices or policies of the Variable Account.
The assets of the Variable Account are owned by Transamerica but they
are held separately from the other assets of Transamerica. Section 10506 of the
California Insurance Law provides that the assets of a separate account are not
chargeable with liabilities incurred in any other business operation of the
insurance company (except to the extent that assets in the separate account
exceed the reserves and other liabilities of the separate account). Income,
gains and losses incurred on the assets in the Variable Account, whether or not
realized, are credited to or charged against the Variable Account without regard
to other income, gains or losses of Transamerica. Therefore, the investment
performance of the Variable Account is entirely independent of the
- 20 -
20
<PAGE>
investment performance of Transamerica's general account assets or any other
separate account maintained by Transamerica.
The Variable Account has ten Sub-Accounts, each of which invests solely
in a specific corresponding
Portfolio. (See "The Funds" page 23.) Changes to the Sub-Accounts may be made at
the discretion of
Transamerica. (See "Addition, Deletion, or Substitution" page 27.)
THE FUNDS
The Variable Account invests exclusively in Series of the Dreyfus
Variable Investment Fund (the "Variable Fund"), the Dreyfus Stock Index Fund
(the "Stock Index Fund") and The Dreyfus Socially Responsible Growth Fund, Inc.
(the "Socially Responsible Fund"). The Variable Fund was organized as an
unincorporated business trust under Massachusetts law pursuant to an Agreement
and Declaration of Trust dated October 29, 1986, commenced operations on August
31, 1990, and is registered with the Commission as an open-end management
investment company under the 1940 Act. Currently, eleven Series (i.e.,
Portfolios) of the Variable Fund are available for the Contracts . Each of these
Portfolios has separate investment objectives and policies. As a result, each
Portfolio operates as a separate investment Portfolio, and the investment
performance of one Portfolio has no effect on the investment performance of any
other Portfolio. The Stock Index Fund was incorporated under Maryland law on
January 24, 1989, commenced operations on September 29, 1989, and is registered
with the Commission as an open-end, non-diversified, management investment
company. The Socially Responsible Fund was incorporated under Maryland law on
July 20, 1992, commenced operations on October 7, 1993, and is registered with
the Commission as an open-end, diversified, management investment company.
However, the Commission does not supervise the management or the investment
practices and policies of any of the Funds. The assets of the Variable Fund, the
Socially Responsible Fund and the Stock Index Fund are each separate from the
assets of the other Funds.
The Dreyfus Corporation provides investment advisory and administrative
services to the Variable Fund and the Socially Responsible Fund.Mellon Equity
Associates provides index fund management services to the Stock Index Fund, with
The Dreyfus Corporation serving as the manager, in accordance with applicable
agreements with the Fund. Comstock Partners, Inc. provides sub-investment
advisory services to the Managed Assets Portfolio. Fayez Sarofim & Co. provides
sub-investment advisory services for the Capital Appreciation Portfolio. The
Boston Company Asset Management, Inc. provides sub-investment advisory services
to the International Value Portfolio. Laurel Capital Advisors provides
sub-investment advisory services to the Small Company Stock and Disciplined
Stock Portfolios. M&G Investment Management Limited provides sub-investment
advisory services for the International Equity Portfolio. NCM Capital Management
Group, Inc. provides sub-investment advisory services for the Socially
Responsible Fund.
The Portfolios are described below. See the Variable Fund, the Stock
Index Fund and the Socially
Responsible Fund prospectuses for more information.
Money Market Portfolio
The Money Market Portfolio's investment objective is to achieve as high
a level of current income as is consistent with the preservation of capital and
the maintenance of liquidity. It seeks to achieve its objective by investing in
short-term money market instruments. The investment advisory fee is payable
monthly at the annual rate of 0.50 of 1% of the value of the Portfolio's average
daily net assets. This Portfolio is neither insured nor guaranteed by the United
States Government, and there can be no assurance that it will be able to
maintain a stable net asset value of $1.00 per share. Managed Assets Portfolio
The Managed Assets Portfolio's investment objective is to maximize
total return, consisting of capital appreciation and current income. It seeks to
achieve its objective by investing in a wide range of equity and debt securities
and money market instruments. An investment advisory fee is payable monthly to
The Dreyfus Corporation, and a sub-investment advisory fee is payable to
Comstock Partners, Inc., each at the annual rate of 0.375 of 1% (for a total of
0.75%) of the value of the Portfolio's average daily net assets.
- 21 -
21
<PAGE>
Zero Coupon 2000 Portfolio
The Zero Coupon 2000 Portfolio's investment objective is to provide as
high an investment return as is consistent with the preservation of capital. It
seeks to achieve its objective by investing primarily in debt obligations of the
U.S. Treasury that have been stripped of their unmatured interest coupons,
interest coupons that have been stripped from debt obligations issued by the
U.S. Treasury and receipts and certificates for stripped debt obligations and
stripped coupons including U.S. Government trust certificates (collectively,
"Stripped Treasury Securities"). The Portfolio also may purchase certain other
types of stripped government or corporate securities. The Portfolio's assets
will consist primarily of Portfolio securities which will mature on or about
December 31, 2000. The investment advisory fee is payable monthly at the annual
rate of 0.45 of 1% of the value of the Portfolio's average daily net assets. No
more than 55% of the Portfolio's assets will be invested in Stripped Treasury
Securities. Quality Bond Portfolio
The Quality Bond Portfolio's investment objective is to provide the
maximum amount of current income to the extent consistent with the preservation
of capital and the maintenance of liquidity. It seeks to achieve its objective
by investing principally in debt obligations of corporations, the U.S.
Government and its agencies and instrumentalities, and major banking
institutions. The investment advisory fee is payable monthly at the annual rate
of 0.65 of 1% of the value of the Portfolio's average daily net assets. Small
Cap Portfolio
The Small Cap Portfolio's investment objective is to maximize capital
appreciation. It seeks to achieve its objective by investing principally in
common stocks; under normal market conditions, the Series will invest at least
65% of its total assets in companies with market capitalizations of less than
$750 million at the time of purchase which The Dreyfus Corporation believes to
be characterized by new or innovative products, services or processes which
should enhance prospects for growth in future earnings. The investment advisory
fee is payable monthly at the annual rate of 0.75 of 1% of the value of the
Portfolio's average daily net assets. Capital Appreciation Portfolio
The Capital Appreciation Portfolio's primary investment objective is to
provide long-term capital growth consistent with the preservation of capital;
current income is a secondary goal. It seeks to achieve its goals by investing
in common stocks of domestic and foreign issuers. An investment advisory fee is
payable monthly to The Dreyfus Corporation and a sub-investment advisory fee is
payable monthly to Fayez Sarofim & Co. at the aggregate annual rate of 0.75 of
1% of the value of the Portfolio's average daily net assets. Growth and Income
Portfolio
The Growth and Income Portfolio's investment objective is to provide
long-term capital growth, current income and growth of income, consistent with
reasonable investment risk. This Portfolio invests primarily in equity and debt
securities and money market instruments of domestic and foreign issuers. The
proportion of the Portfolio's assets invested in each type of security will vary
from time to time in accordance with The Dreyfus Corporation's assessment of
economic conditions and investment opportunities. An investment advisory fee is
payable monthly to The Dreyfus Corporation at the annual rate of 0.75 of 1% of
the value of the Portfolio's average daily net assets. International Equity
Portfolio
The International Equity Portfolio's investment objective is to
maximize capital appreciation. This Portfolio invests primarily in the equity
securities of foreign issuers located throughout the world. An investment
advisory fee at an annual rate of 0.75 of 1% of the value of the Portfolio's
average daily net assets is payable monthly to The Dreyfus Corporation. An
investment advisory fee is payable monthly to The Dreyfus Corporation at the
annual rate of 1.00% of the value of the Portfolio's average daily net assets.
The Dreyfus Corporation has agreed to pay the Boston Company Asset Management,
Inc. a monthly fee at the annual rate of 0.50% of 1% of the value of the
Portfolio's average daily net assets. International Value Portfolio
- 22 -
22
<PAGE>
The International Value Portfolio's investment objective is long-term
capital growth. This Series invests primarily in a portfolio of publicly traded
equity securities of foreign issuers which would be characterized as "value"
companies according to criteria established by the Portfolio's investment
advisers. An investment advisory fee is payable monthly to The Dreyfus
Corporation at the annual rate of 1.00% of the value of the Portfolio's average
daily net assets. The Dreyfus Corporation has agreed to pay The Boston Company
Asset Management, Inc. a monthly fee at the annual rate of 0.50% of 1% of the
value of the Portfolio's average daily net assets. Disciplined Stock Portfolio
The Disciplined Stock Portfolio's investment objective is to provide
investment results that are greater than the total return performance of
publicly traded common stocks in the aggregate, as presented by the Standard &
Poor's 500 Composite Stock Price Index. This Portfolio will use quantitative
statistical modeling techniques to construct a portfolio in an attempt to
achieve its investment objective, without assuming undue risk relative to the
broad stock market. An investment advisory fee is payable monthly to The Dreyfus
Corporation at the annual rate of 0.75% of 1% of the value of the Portfolio's
average daily net assets. The Dreyfus Corporation has agreed to pay Laurel
Capital Advisors a monthly fee at the annual rate of 0.25 of 1% of the average
daily net assets of the Portfolios up to $100 million; 0.20 of 1% of the
Portfolio's average daily net assets from $100 million to $1 billion; 0.15 of 1%
of the Portfolio's average daily net assets from $1 billion to $1.5 billion; and
0.10 of 1% of the Portfolio's average daily net assets of $1.5 billion or more.
Small Company Stock Portfolio
The Small Company Stock Portfolio's investment objective is to provide
investment results that are greater than the total return performance of
publicly traded common stocks in the aggregate, as represented by the Russell
2500(TM) Index. This Portfolio invests primarily in a portfolio of equity
securities of small- to medium-sized domestic issuers, while attempting to
maintain volatility and diversification similar to that of the Russell 2500(TM)
Index. An investment advisory fee is payable monthly to The Dreyfus Corporation
at the annual rate of 0.75% of 1% of the value of the Portfolio's average daily
net assets. The Dreyfus Corporation has agreed to pay Laurel Capital Advisors a
monthly fee at the annual rate of 0.25 of 1% of the average daily net assets of
the Portfolio up to $100 million; 0.20 of 1% of the Portfolio's average daily
net assets from $100 million to $1 billion; 0.15 of 1% of the Portfolio's
average daily net assets from $1 billion to $1.5 billion; and 0.10 of 1% of the
Portfolio's average daily net assets of $1.5 billion or more. Stock Index Fund
The Stock Index Fund's investment objective is to provide investment
results that correspond to the price and yield performance of publicly traded
common stocks in the aggregate, as represented by the Standard & Poor's 500
Composite Stock Price Index. The Stock Index Fund is neither sponsored by nor
affiliated with Standard & Poor's Corporation. The Stock Index Fund pays a
monthly management fee to The Dreyfus Corporation at the annual rate of 0.245%
of the value of the Stock Index Fund's average daily net assets. The Dreyfus
Corporation has agreed to pay Mellon Equity Assoicates a monthly fee at the
annual rate of 0.095% of the value of the Fund's average daily net assets. The
Socially Responsible Fund
The Socially Responsible Fund's primary goal is to provide capital
growth. It seeks to achieve this goal by investing principally in common stocks,
or securities convertible into common stock, of companies which, in the opinion
of the Fund's management, not only meet traditional investment standards, but
also show evidence that they conduct their business in a manner that contributes
to the enhancement of the quality of life in America. Current income is a
secondary goal. A management fee is payable monthly to The Dreyfus Corporation
at the annual rate of 0.75 of 1% of the value of the Socially Responsible Fund's
average daily net assets. The Dreyfus Corporation pays NCM Capital Management
Group, Inc. a sub-investment advisory fee at the annual rate of 0.10 of 1% of
the Portfolio's average daily net assets up to $32 million; 0.15 of 1% of the
Portfolio's average daily net assets in excess of $32 million up to $150
million; 0.20 of 1% of the Portfolio's average daily net assets in excess of
$150 million up to $300 million; and 0.25 of 1% of the Portfolio's average daily
net assets in excess of $300 million.
- 23 -
23
<PAGE>
Meeting objectives depends on various factors, including, but not
limited to, how well the Portfolio
managers anticipate changing economic and market conditions. THERE IS NO
ASSURANCE THAT ANY OF
THESE PORTFOLIOS WILL ACHIEVE THEIR STATED OBJECTIVES.
An investment in the Contract is not a deposit or obligation of, or
guaranteed or endorsed, by any bank, nor is the Contract federally insured by
the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any
other government agency. Investing in the Contract involves certain investment
risks, including possible loss of principal.
Since all of the Portfolios are available to registered separate
accounts offering variable annuity and variable life products of Transamerica as
well as other insurance companies, there is a possibility that a material
conflict may arise between the interests of the Variable Account and one or more
other separate accounts investing in the Funds. In the event of a material
conflict, the affected insurance companies will take any necessary steps to
resolve the matter, including stopping their separate accounts from investing in
the Funds. See the Funds' prospectuses for greater details.
Additional information concerning the investment objectives and
policies of all of the Portfolios, the investment advisory services and
administrative services and charges can be found in the current prospectuses for
the Funds which accompany this Prospectus. The Funds' prospectuses should be
read carefully before any decision is made concerning the allocation of Purchase
Payments to, or transfers among, the Sub-Accounts. Addition, Deletion, or
Substitution
Transamerica does not control the Funds and cannot guarantee that any
of the Sub-Accounts of the Variable Account or any of the Portfolios will always
be available for allocation of Purchase Payments or transfers. Transamerica
retains the right to make changes in the Variable Account and in its
investments.
Transamerica reserves the right to eliminate the shares of any
Portfolio held by a Sub-Account and to substitute shares of another Portfolio or
of another investment company for the shares of any Portfolio, if the shares of
the Portfolio are no longer available for investment or if, in Transamerica's
judgment, investment in any Portfolio would be inappropriate in view of the
purposes of the Variable Account. To the extent required by the 1940 Act, a
substitution of shares attributable to the Owner's interest in a Sub-Account
will not be made without prior notice to the Owner and the prior approval of the
Commission. Nothing contained herein shall prevent the Variable Account from
purchasing other securities for other series or classes of variable annuity
policies, or from effecting an exchange between series or classes of variable
policies on the basis of requests made by Owners.
New Sub-Accounts may be established when, in the sole discretion of
Transamerica, marketing, tax, investment or other conditions so warrant. Any new
Sub-Accounts will be made available to existing Owners on a basis to be
determined by Transamerica. Each additional Sub-Account will purchase shares in
a Portfolio or in another mutual fund or investment vehicle. Transamerica may
also eliminate one or more Sub-Accounts if, in its sole discretion, marketing,
tax, investment or other conditions so warrant. In the event any Sub-Account is
eliminated, Transamerica will notify Owners and request a re-allocation of the
amounts invested in the eliminated Sub-Account.
In the event of any substitution or change, Transamerica may make such
changes in the Contract as may be necessary or appropriate to reflect such
substitution or change. Furthermore, if deemed to be in the best interests of
persons having voting rights under the Contracts, the Variable Account may be
operated as a management company under the 1940 Act or any other form permitted
by law, may be de-registered under such Act in the event such registration is no
longer required, or may be combined with one or more other separate accounts.
THE FIXED ACCOUNT
This Prospectus is generally intended to serve as a disclosure document
only for the Contract and the Variable Account. For complete details regarding
the Fixed Account, see the Contract itself.
Purchase Payments allocated to and amounts transferred to the Fixed
Account become part of the general account of Transamerica, which supports
insurance and annuity obligations. Because of exemptive and exclusionary
provisions, interests in the general account have not been registered under the
Securities Act of 1933 (the "1933 Act"), nor is the general account registered
as an investment company under the 1940 Act.
- 24 -
24
<PAGE>
Accordingly, neither the general account nor any interests therein are generally
subject to the provisions of the 1933 Act or the 1940 Act, and Transamerica has
been advised that the staff of the Securities and Exchange Commission has not
reviewed the disclosures in this Prospectus which relate to the Fixed Account.
The Guarantee Periods of the Fixed Account are part of the general
account of Transamerica. The general account of Transamerica consists of all the
general assets of Transamerica, other than those in the Variable Account, or in
any other segregated asset account. Instead of the Owner bearing the investment
risk as is the case for values in the Variable Account, Transamerica bears the
full investment risk for all values in the Fixed Account. Transamerica has sole
discretion to invest the assets of its general account subject to applicable
law.
The allocation or transfer of funds to the Fixed Account does not
entitle the Owner to share in the investment experience of Transamerica's
general account. Instead, Transamerica guarantees that the funds allocated or
transferred to the Fixed Account will accrue a specified annual rate of interest
for a specific duration. The rate of interest credited will always be at least
3% per year. Consequently, if the Owner allocates all Net Purchase Payments only
to the Fixed Account and makes no transfers or withdrawals, the minimum amount
of the Account Value will be determinable and guaranteed.
The Policy Owner bears the risk that, after the initial Guarantee Period,
Transamerica will not credit interest in excess of 3% per year to amounts
allocated to the Fixed Account.
Net Purchase Payments allocated to the Fixed Account will establish a new
Guarantee Period of a duration selected by the Owner from among those then being
offered by Transamerica. Every Guarantee Period offered by Transamerica will
have a duration of at least one year. The minimum amount that may be allocated
or transferred to a Guarantee Period is $1,000. Net Purchase Payments allocated
to the Fixed Account will be credited on the date the payment is received at the
Service Center. Any amount transferred from another Guarantee Period or from a
Sub-Account of the Variable Account to the Fixed Account will establish a new
Guarantee Period as of the effective date of the transfer. Guarantee Periods
Each Guarantee Period will have its own Guaranteed Interest Rate and
Expiration Date. The Guaranteed Interest Rate applicable to a Guarantee Period
will depend on the date the Guarantee Period is established and the duration
chosen by the Owner. A Guarantee Period chosen may not extend beyond the Annuity
Date.
Transamerica reserves the right to change the maximum number of
Guarantee Periods that may be in effect at any one time.
Transamerica will establish effective annual rates of interest for each
Guarantee Period. The effective annual rate of interest established by
Transamerica for a Guarantee Period will remain in effect for the duration of
the Guarantee Period.
Interest will be credited to a Guarantee Period based on its daily
balance at a daily rate which is equivalent to the Guaranteed Interest Rate
applicable to that Guarantee Period for amounts held during the entire Guarantee
Period. Amounts withdrawn or transferred from a Guarantee Period prior to its
Expiration Date will be subject to an interest adjustment as described below. In
no event will the effective annual rate of interest applicable to a Guarantee
Period be less than 3% per year. Interest Adjustment
An interest adjustment occurs when a withdrawal or a transfer is made
from a Guarantee Period before its Expiration Date. ANY SUCH AMOUNT WITHDRAWN OR
TRANSFERRED FROM A GUARANTEE PERIOD WILL BE CREDITED WITH INTEREST AT A RATE OF
ONLY 3% PER YEAR FROM THE DATE THE GUARANTEE PERIOD WAS ESTABLISHED TO THE DATE
OF PAYMENT OR TRANSFER, REGARDLESS OF THE GUARANTEED INTEREST RATE. THIS MEANS
THAT ANY INTEREST IN EXCESS OF 3% WILL BE FORFEITED.
- 25 -
25
<PAGE>
An interest adjustment will not apply to amounts withdrawn or
transferred within the 30-day period ending
on the Expiration Date of the Guarantee Period from which the withdrawal
or transfer is being made. No interest
adjustment applies to death benefits.
Expiration of Guarantee Period
At least 45 days, but not more than 60 days, prior to the Expiration
Date of a Guarantee Period, Transamerica will notify the Owner as to the options
available when a Guarantee Period expires. The Owner may elect one of the
following options:
(a) transfer the Guarantee Amount of that Guarantee Period to a
new Guarantee Period from among those being offered by
Transamerica at such time. The new Guarantee Period will be
established on the later of (i) the date selected by the
Owner, or (ii) the date the notice, in a form and manner
acceptable to Transamerica, is received by Transamerica at the
Service Center, but in no event later than the day immediately
following the Expiration Date of the previous Guarantee
Period; or
(b) transfer the Guarantee Amount of that Guarantee Period to one
or more Sub-Accounts of the
Variable Account.
Transamerica must receive the Owner's notice electing one of these
options at the Service Center by the expiration date of the Guarantee Period. If
such election has not been received by Transamerica at the Service Center, the
Guarantee Amount of that Guarantee Period will remain in the Fixed Account and a
new Guarantee Period of the same duration as the expiring Guarantee Period, if
offered, will automatically be established by Transamerica with a new Guaranteed
Interest Rate declared by Transamerica for that Guarantee Period. The new
Guarantee Period will start on the day following the expiration date of the
previous Guarantee Period.
If Transamerica is not currently offering Guarantee Periods having the
same duration as the expiring Guarantee Period, the new Guarantee Period will be
the next longer duration, or if Transamerica is not offering Guarantee Periods
longer than the duration of the expiring Guarantee Period, the next shorter
duration.
If the Guarantee Amount of an expiring Guarantee Period is less than
$1,000, Transamerica reserves the right to transfer such amount to the Money
Market Sub-Account of the Variable Account.
A transfer from a Guarantee Period made within the 30-day period ending
on its Expiration Date will not be counted for the purpose of determining the
eighteen allowable transfers per Contract Year, nor will such transfer be
subject to any interest adjustment.
THE CONTRACT
The Contract is a Flexible Purchase Payment Multi-Funded Deferred
Annuity Contract. The rights and benefits are described below and in the
individual contract or in the certificate and group contract; however,
Transamerica reserves the right to make any modification to conform the
individual contract and the group contract and certificates thereunder to, or
give the Owner the benefit of, any federal or state statute or rule or
regulation. The obligations under the Contract are obligations of Transamerica.
The Contracts are available on a non-qualified basis and as individual
retirement annuities (IRAs) that qualify for special federal income tax
treatment, as Section 403(b) annuities, and for use in qualified pension and
profit sharing plans established by corporate employers. Contracts for use with
such qualified plans may not be available in all states. Generally, Qualified
Contracts contain certain restrictive provisions limiting the timing and amount
of payments and distributions from the Qualified Contract.
The Owner designates the Annuitant. The Annuitant can be the same
person as the Owner and must be the same person in the case of a Qualified
Contract.
Annuity Payments will be made to the Annuitant after the Annuity Date
unless, in the case of a Non-Qualified Contract, the Owner changes the Payee
after the Annuity Date.
For each Contract, a different Account will be established and values,
benefits and charges will be calculated separately. The various administrative
rules described below will apply separately to each Contract, unless otherwise
noted.
- 26 -
26
<PAGE>
Qualified Contracts
The Contracts may be used to fund IRA rollovers for use in connection
with Section 408(b) of the Code. An IRA rollover is a rollover of certain kinds
of distributions from qualified plans, Section 403(b) tax sheltered annuities
and individual retirement plans, following the rules set out in the Code to
maintain favorable tax treatment to an Individual Retirement Annuity.
The Contracts may also be used (a) for various types of qualified
pension and profit sharing plans under Section 401 of the Code, which permits
corporate employers to establish various types of retirement plans for
employees, and (b) as Section 403(b) annuities. Purchasers of the contracts for
use in qualified plans should seek competent advice regarding the suitability of
the proposed plan documents and the Contract to their specific needs.
Transamerica reserves the right to decline to sell the Contract to certain
qualified plans or terminate the contract if in Transamerica's judgment the
Contract is not appropriate for the plan. The Contracts issued for use in
connection with Sections 401 and 403(b) qualified plans may not be available in
all states.
If a Contract is purchased to fund an IRA, the Annuitant must also be
the Owner. In addition, under current tax law, if a Contract is purchased to
fund an IRA, minimum distributions must commence not later than April 1st of the
calendar year following the calendar year in which the Owner attains age 70 1/2.
The Owner should consult his/her tax adviser concerning these matters.
APPLICATION AND PURCHASE PAYMENTS
Purchase Payments
All Purchase Payments must be paid to the Service Center. A
confirmation will be issued to the Owner upon the acceptance of each Purchase
Payment.
The Initial Purchase Payment for each Contract must be at least $5,000.
The Contract will be issued and the Net Purchase Payment derived from
the Initial Purchase Payment generally will be accepted and credited within two
business days after the later of receipt of sufficient information to issue a
Contract or receipt of the Initial Purchase Payment at the Service Center. (A
Net Purchase Payment is the Purchase Payment less any applicable premium taxes,
including retaliatory premium taxes.) Acceptance is subject to sufficient
information being provided in a form acceptable to Transamerica, and
Transamerica reserves the right to reject any application or Purchase Payment.
Contracts normally will not be issued with respect to annuitants more than 80
years old, although Transamerica in its discretion may waive this restriction in
appropriate cases.
If the Initial Purchase Payment cannot be credited within two days of
receipt of the Purchase Payment and information requesting issuance of a
Contract because the information is incomplete or for any other reason, then
Transamerica will contact the Owner, explain the reason for the delay and will
refund the Initial Purchase Payment within five business days, unless the Owner
consents to Transamerica retaining the Initial Purchase Payment and crediting it
as soon as the requirements are fulfilled.
Each Contract provides for a Free Look Period of 10 days (or longer if
required by state law) after receipt of the Contract during which the Owner may
cancel the Contract. To cancel, the Contract must be returned to Transamerica
with a written notice of cancellation. In some states (and in all states for
IRAs), Transamerica will refund the sum of: (i) the Purchase Payment(s)
allocated to the Fixed Account, and (ii) the greater of the Purchase Payment(s)
allocated to the Variable Account or the Variable Accumulated Value as of the
date the written notice and the Contract are received by Transamerica. In all
other states, the Account Value will be returned with any adjustments required
by applicable law or regulation (and without imposition of any Contingent
Deferred Sales Load) as of the date the notice and Contract are received. Owners
should consult their registered representative or investment adviser (or see
their Contract) for the applicable provision.
Additional Purchase Payments may be made at any time prior to the
Annuity Date, as long as the Annuitant or Contingent Annuitant is living.
Additional Purchase Payments must be at least $500, or at least $100 if made
pursuant to an automatic payment plan under which the Additional Purchase
Payment is automatically deducted from a bank account. In addition, minimum
allocation amounts apply (see "Allocation of Purchase Payments" on page 32).
Additional Net Purchase Payments are credited to the Contract as of the date the
payment is received.
- 27 -
27
<PAGE>
Total Purchase Payments for any Contract may not exceed $1,000,000
without prior approval of Transamerica.
In no event may the sum of all Purchase Payments for a Contract during
any taxable year exceed the
limits imposed by any applicable federal or state law, rules, or regulations.
Allocation of Purchase Payments
The Owner specifies in the application how Purchase Payments will be
allocated under the Contract. The Owner may allocate the Net Purchase Payment
between and among one or more of the Sub-Accounts of the Variable Account and
the Guarantee Periods of the Fixed Account as long as the portions are whole
number percentages and any allocation percentage for a Sub-Account is at least
10%. In addition, the Initial Purchase Payment is subject to a minimum
allocation of $1,000 to any selected Sub-Account or Guarantee Period. The Owner
may choose to allocate nothing to a particular Sub-Account or Guarantee Period.
On the Contract Date, in states where the greater of Purchase Payments
or Account Value will be refunded on exercise of the Free Look right (and in all
states for IRAs), the Net Purchase Payment derived from the portion of Initial
Purchase Payment allocated to the Variable Account will first be allocated to
the Money Market Sub-Account of the Variable Account and will remain in that
Sub-Account until the estimated end of the Free Look Period (allowing 5 days for
delivery of the Contract by mail). The dollar value of the Variable Accumulation
Units held in the Money Market Sub-Account attributable to such Net Purchase
Payment will then be allocated among the Sub-Accounts of the Variable Account in
accordance with the allocation percentages selected by the Owner. In all other
states, on the Contract Date the Net Purchase Payment(s) derived from the
Initial Purchase Payment(s) will be allocated between and among the Sub-Accounts
of the Variable Account and the Guarantee Periods of the Fixed Account in
accordance with the allocation percentages selected by the Owner.
Each Net Purchase Payment will be subject to the allocation percentages
in effect at the time of receipt of such Purchase Payment. The allocation
percentages for new Purchase Payments between and among the Sub-Accounts of the
Variable Account and the Guarantee Period of the Fixed Account may be changed by
the Owner at any time by submitting a request for such change, in a form and
manner acceptable to Transamerica, to the Service Center. Any changes to the
allocation percentages are subject to the limitation above. Any change will take
effect with the first Purchase Payment received with or after receipt by the
Service Center of the request for such change, in a form and manner acceptable
to Transamerica and will continue in effect until subsequently changed.
If the allocation of additional Net Purchase Payments is directed to an
Inactive Sub-Account of the Variable Account or a Guarantee Period of the Fixed
Account, then the amount allocated must be at least $1,000.
ACCOUNT VALUE
Before the Annuity Date, the Account Value is equal to: (a) the Fixed
Accumulated Value plus (b) the Variable Accumulated Value. The Fixed Accumulated
Value is the total dollar amount of all Guarantee Amounts held under the Fixed
Account for the Contract prior to the Annuity Date. The Fixed Accumulated Value
is determined without regard to any interest adjustment. The Variable
Accumulated Value is the total dollar amount of all Variable Accumulation Units
under each Sub-Account of the Variable Account held for the Contract prior to
the Annuity Date. The Variable Accumulated Value prior to the Annuity Date is
equal to: (a) Net Purchase Payments allocated to the Sub-Accounts; plus or minus
(b) any increase or decrease in the value of the assets of the Sub-Accounts due
to investment results; less (c) the daily Mortality and Expense Risk Charge;
less (d) the daily Administrative Expense Charge; less (e) any reductions for
the annual Account Fee; plus or minus (f) amounts transferred from or to the
Fixed Account; less (g) any applicable Transfer Fees; and less (h) any
withdrawals from the Sub-Accounts.
A Valuation Period is the period between successive Valuation Days. It
begins at the close of the New York Stock Exchange (generally 4:00 p.m. ET) on
each Valuation Day and ends at the close of the New York Stock Exchange on the
next succeeding Valuation Day. A Valuation Day is each day that the New York
Stock Exchange is open for regular business. The value of the Variable Account
assets is determined at the end of each Valuation Day. To determine the value of
an asset on a day that is not a Valuation Day, the value of that asset as of the
end of the next Valuation Day will be used.
- 28 -
28
<PAGE>
The Variable Accumulated Value is expected to change from Valuation
Period to Valuation Period, reflecting the investment experience of all of the
selected Portfolios as well as the deductions for charges.
Net Purchase Payments which the Owner allocates to a Sub-Account of the
Variable Account are used to purchase Variable Accumulation Units in that
Sub-Account. The number of Variable Accumulation Units to be credited for each
Sub-Account will be determined by dividing the portion of each Net Purchase
Payment allocated to the Sub-Account by the Variable Accumulation Unit Value
determined at the end of the Valuation Period during which the Net Purchase
Payment was received. In the case of the Initial Net Purchase Payment, Variable
Accumulation Units for that payment will be credited to the Account Value within
two Valuation Days of the later of: (a) the date an acceptable and properly
completed application is received at our Service Center; or (b) the date our
Service Center receives the Initial Purchase Payment. In the case of any
subsequent Purchase Payment, Variable Accumulation Units for that payment will
be credited at the end of the Valuation Period during which Transamerica
receives the payment. The value of a Variable Accumulation Unit for each
Sub-Account for a Valuation Period is established at the end of each Valuation
Period and is calculated by multiplying the value of that unit at the end of the
prior Valuation Period by the Sub-Account's Net Investment Factor for the
Valuation Period. The value of a Variable Accumulation Unit may go up or down.
The Net Investment Factor is used to determine the value of
Accumulation and Annuity Unit Values for the end of a Valuation Period. The
applicable formula can be found in the Statement of Additional Information.
Transfers involving Sub-Accounts will result in the purchase and/or
cancellation of Variable Accumulation Units having a total value equal to the
dollar amount being transferred to or from a particular Sub-Account. The
purchase and cancellation of such units generally are made using the Variable
Accumulation Unit value of the applicable Sub-Account as of the end of the
Valuation Day in which the transfer is effective.
TRANSFERS
Before the Annuity Date
Before the Annuity Date, the Owner may transfer all or any portion of
the Account Value among and between the Sub-Accounts of the Variable Account and
the Guarantee Periods of the Fixed Account currently being offered by
Transamerica.
Transfers among and between the Sub-Accounts and the Guarantee Periods
of the Fixed Account may be made by submitting a request, in a form and manner
acceptable to Transamerica, to the Service Center. The transfer request must
specify: (a) the Sub-Account(s) and/or Guarantee Period(s) from which the
transfer is to be made; (b) the amount of the transfer, subject to the minimum
transfer amount described in the Contract; and (c) the Sub-Account(s) and/or
Guarantee Period(s) to receive the transferred amount. The transfer request is
subject to the following conditions: (1) not more than 18 transfers between and
among the Guarantee Periods of the Fixed Account and the Sub-Accounts may be
made in any Contract Year; (2) the minimum amount which may be transferred is
$500; (3) the minimum transfer to an Inactive Sub-Account is $1,000; and (4) the
minimum transfer required to establish a new Guarantee Period under the Fixed
Account is $1,000. Transfers among the Sub-Accounts are also subject to such
terms and conditions as may be imposed by the Funds.
Currently, there is no charge for transfers. However, Transamerica
reserves the right to impose a charge of the lesser of 2% of the amount
transferred or $10 for each transfer after six in any Contract Year. All
requests received during a single Valuation Period will be treated as a single
transfer. A transfer generally will be effective on the date the request for
transfer is received by the Service Center. Transfers involving the Fixed
Account are counted as transfers for purposes of assessing the Transfer Fee
charge for more than six (6) transfers in a Contract Year.
When a transfer is made from a Guarantee Period before its Expiration
Date, the amount transferred will be subject to an interest adjustment. (See
"The Fixed Account" page 27.) A transfer from a Guarantee Period made within the
30-day period ending on its Expiration Date will not be counted for the purpose
of the eighteen allowable transfers per Contract Year, nor will such transfer be
subject to any interest adjustment.
If a transfer reduces the value in a Sub-Account to less than $1,000,
then Transamerica reserves the right to transfer the remaining amount along with
the amount requested to be transferred in accordance with the transfer
- 29 -
29
<PAGE>
instructions provided by the Owner. Under current law, there will not be any tax
liability to the Owner if the
Owner makes a transfer.
Telephone Transfers
Transamerica will allow telephone transfers if the Owner has provided
proper authorization for such transfers in a form and manner acceptable to
Transamerica. Limitations and rules for these transfers will be provided to the
Owner by Transamerica. Transamerica reserves the right to suspend telephone
transfer privileges at any time, for some or all Contracts, for any reason.
Withdrawals are not permitted by telephone.
Transamerica will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine and if it follows such
procedures it will not be liable for any losses due to unauthorized or
fraudulent instructions. Transamerica, however, may be liable for such losses if
it does not follow those reasonable procedures. The procedures Transamerica will
follow for telephone transfers may include requiring some form of personal
identification prior to acting on instructions received by telephone, providing
written confirmation of the transaction, and/or tape recording the instructions
given by telephone. Possible Restrictions
Transamerica reserves the right without prior notice to modify,
restrict, suspend or eliminate the transfer privileges (including telephone
transfers) at any time and for any reason. For example, restrictions may be
necessary to protect Owners from adverse impacts on Portfolio management of
large and/or numerous transfers by market timers or others. Transamerica has
determined that the movement of significant Sub-Account values from one
Sub-Account to another may prevent the underlying Portfolio from taking
advantage of investment opportunities because the Portfolio must maintain a
significant cash position in order to handle redemptions. Such movement may also
cause a substantial increase in Portfolio transaction costs which must be
indirectly borne by Contract Owners. Therefore, Transamerica reserves the right
to require that all transfer requests be made by the Contract Owner and not by a
third party holding a power of attorney and to require that each transfer
request be made by a separate communication to Transamerica. Transamerica also
reserves the right to request that each transfer request be submitted in writing
and be manually signed by the Contract Owner or Owners; facsimile transfer
requests may not be allowed. Dollar Cost Averaging
Prior to the Annuity Date, the Owner may automatically transfer amounts
from either (but not both) of the Sub-Accounts which invest in the Money Market
or Quality Bond Portfolios to any of the other Sub-Accounts on a monthly basis
by submitting a request to the Service Center in a form and manner acceptable to
Transamerica. The transfers will begin on the tenth day of the next month
following receipt of such request, provided that Dollar Cost Averaging transfers
will not commence until the later of (a) 30 days after the Contract Date, or (b)
after the estimated end of the Free Look Period (allowing 5 days for delivery of
the Contract by mail). Transfers will continue for twelve consecutive months
unless terminated by the Owner, or automatically terminated by Transamerica
because there are insufficient funds in the applicable Sub-Account, or for other
reasons as set forth in the Contract. The Owner may request that monthly
transfers be continued for an additional twelve months by giving notice to the
Service Center in a form and manner acceptable to Transamerica within 30 days
prior to the last monthly transfer. If no request to continue the monthly
transfers is made by the Owner, this option will terminate automatically with
the twelfth transfer.
In order to be eligible for Dollar Cost Averaging, the Owner must meet
the following conditions: (1) the value of the selected Sub-Account (from which
the transfers are made) must be at least $5,000; (2) the minimum amount that can
be transferred out of the selected Sub-Account is $250 per month; and (3) the
minimum amount transferred into any other Sub-Account is the greater of $250 or
10% of the amount being transferred. Dollar Cost Averaging transfers can not be
made from a Sub-Account from which Systematic Withdrawals or Automatic Payouts
are being made.
There is no charge for the Dollar Cost Averaging service and transfers
due to Dollar Cost Averaging will not count toward the number of transfers
without charge nor the limit of 18 transfers per Contract Year.
Dollar Cost Averaging is not available with respect to the Fixed
Account.
After the Annuity Date
- 30 -
30
<PAGE>
If a Variable Annuity Payout Option is elected, the Owner may make
transfers among Sub-Accounts after the Annuity Date by giving a written request
to the Service Center, subject to the following provisions: (1) transfers after
the Annuity Date may be made no more than four times during any Annuity Year;
and (2) the minimum amount transferred from one Sub-Account to another is the
amount supporting a current $75 monthly payment.
Transfers among Sub-Accounts during the Annuity Period will be
processed based on the formula outlined in the Statement of Additional
Information.
CASH WITHDRAWALS
Withdrawals
The Owner may withdraw all or part of the Cash Surrender Value for a
Contract at any time during the life of the Annuitant and prior to the Annuity
Date by giving a written request to the Service Center and subject to the rules
below. Federal or state laws, rules or regulations may also apply. The amount
payable to the Owner if the Contract is surrendered on or before the Annuity
Date is the Cash Surrender Value which is equal to the Account Value, less the
Account Fee, less any interest adjustment, less any applicable Contingent
Deferred Sales Load, and less applicable premium taxes. If the Account Value
exceeds $50,000 on the date the Contract is surrendered, and where permitted by
state law, the Account Fee will be waived.
No withdrawals may be made after the Annuity Date. Partial withdrawals
must be at least $500. No partial withdrawals will be permitted while the
Systematic Withdrawal Option is in effect.
A full surrender will result in a cash withdrawal payment equal to the
Cash Surrender Value at the end of the Valuation Period during which the
election is received along with all completed forms. Any applicable Contingent
Deferred Sales Load will be deducted from the amount paid.
In the case of a partial withdrawal, the Owner may direct the Service
Center to withdraw amounts from specific Sub-Account(s) and/or from the Fixed
Account. If the Owner does not specify the Sub-Account(s) from which the
withdrawal is to be made, the withdrawal will be taken pro rata from all
Sub-Accounts of the Variable Account with current values. If the requested
withdrawal reduces the value of a Sub-Account from which the withdrawal was made
to less than $1,000, Transamerica reserves the right to transfer the remaining
value of that Sub-Account pro rata among the other Active Sub-Accounts with
values equal to or greater than $1,000. If no such Sub-Accounts exist, such
transfer will be made to the Money Market Sub-Account. The Owner will be
notified in writing of any such transfer.
A partial withdrawal request will not be processed if it would reduce
the Account Value to less than $2,000. In that case, the Owner will be notified
that he or she will have 10 days from the date notice is mailed to: (a) withdraw
a lesser amount (subject to the $500 minimum), leaving an Account Value of at
least $2,000; or (b) surrender the Contract for its Cash Surrender Value.
(Amounts payable will be determined as of the end of the Valuation Period during
which the subsequent instructions are received.) If, after the expiration of the
10-day period, no written election is received from the Owner, the withdrawal
request will be considered null and void, and no withdrawal will be processed.
The Account Fee, unless waived, will be deducted from a full surrender
before the application of any Contingent Deferred Sales Load (see "Charges and
Deductions" page 41).
Withdrawals may be taxable transactions. The Code requires Transamerica
to withhold federal income tax from withdrawals. However, except for certain
Qualified Plans, generally an Owner will be entitled to elect, in writing, not
to have tax withholding apply. Withholding applies to the portion of the
withdrawal which is includible in income and subject to federal income tax. The
federal income tax withholding rate is 10%, or 20% in the case of certain
qualified plans, of the taxable amount of the withdrawal. Withholding applies
only if the taxable amount of the withdrawal is at least $200. Some states also
require withholding for state income taxes. Moreover, the Code provides that a
10% penalty tax may be imposed on the taxable portions of distributions for
certain early withdrawals. (See "Federal Tax Matters" page 50.)
Withdrawal (including surrender) requests generally will be processed
as of the end of the Valuation Period during which the request, including all
completed forms, is received. Payment of any cash withdrawal or lump sum death
benefit due from the Variable Account will occur within seven days from the date
the election
- 31 -
31
<PAGE>
is received, except that Transamerica may postpone such payment if: (1) the New
York Stock Exchange is closed for other than usual weekends or holidays, or
trading on the Exchange is otherwise restricted; or (2) an emergency exists as
defined by the Commission, or the Commission requires that trading be
restricted; or (3) the Commission permits a delay for the protection of Owners.
The withdrawal request will be effective when all appropriate withdrawal request
forms are received. Payments of any amounts derived from a Purchase Payment paid
by check may be delayed until the check has cleared the Owner's bank.
When a withdrawal is made from a Guarantee Period before its Expiration
Date, the amount withdrawn will be subject to an interest adjustment. (See "The
Fixed Account" page 27.)
Transamerica may delay payment of any withdrawal from the Fixed Account
for up to six months after Transamerica receives the request for such
withdrawal. If Transamerica delays payment for more than 30 days, Transamerica
will pay interest on the withdrawal amount up to the date of payment. (See "The
Fixed Account" page 27.)
SINCE THE OWNER ASSUMES THE INVESTMENT RISK AND BECAUSE CERTAIN
WITHDRAWALS ARE SUBJECT TO A CONTINGENT DEFERRED SALES LOAD, THE TOTAL AMOUNT
PAID UPON SURRENDER OF THE CONTRACT (TAKING INTO ACCOUNT ANY PRIOR WITHDRAWALS)
MAY BE MORE OR LESS THAN THE TOTAL PURCHASE PAYMENTS PAID.
After a withdrawal of the total Cash Surrender Value, or at any time
that the Account Value is zero, all rights of the Owner will terminate.
Since the Qualified Contracts offered by the Prospectus will be issued
in connection with retirement plans which meet the requirements of Sections 401,
403(b), or 408(b) of the Code, reference should be made to the terms of the
particular retirement or profit-sharing plans for any additional limitations or
restrictions on cash withdrawals.
An Owner may elect, under the Systematic Withdrawal Option or Automatic
Payout Option (but not both),
to withdraw certain amounts on a periodic basis from the Sub-Accounts prior to
the Annuity Date.
Systematic Withdrawal Option
Prior to the Annuity Date, the Owner, by giving Written Notice to the
Service Center, may elect to have withdrawals automatically made from one or
more Sub-Account(s) on a monthly basis. (Other distribution modes may be
permitted.) The withdrawals will commence on the fourth day of the month
following receipt of Written Notice, except that they will not commence sooner
than the later of (a) 30 days after the Contract Date or (b) the end of the Free
Look Period. Upon written notice to the Owners, Transamerica may change the day
of the month on which withdrawals are made under this option. Withdrawals will
be from the Sub-Account(s) and in the percentage allocations specified by the
Owner. If no specifications are made, withdrawals will be pro-rata from all
Sub-Account(s) with value. Systematic Withdrawals can not be made from a
Sub-Account from which Dollar Cost Averaging transfers are being made.
- 32 -
32
<PAGE>
To be eligible for the Systematic Withdrawal Option, the Contract Value
must be at least $15,000 at the time of election. The minimum monthly amount
that can be withdrawn is $125. The maximum monthly amount that can be withdrawn
on an annual basis is equal to the sum, as of the date of the first withdrawal,
of (a) 10% of Purchase Payments that are less than seven Contract Years old and
(b) 10% of remaining Purchase Payments that are at least seven Contract Years
old.
Systematic withdrawals are not subject to the Contingent Deferred Sales
Load but can be reduced by any applicable premium tax. Systematic withdrawals
may be taxable, subject to withholding, and subject to the 10% penalty tax. (See
"Federal Tax Matters" page 36.)
The withdrawals will continue unless terminated by the Owner or
automatically terminated by Transamerica as set forth in the Contract. If this
option is terminated it may not be elected again until the next Contract
Anniversary. Partial withdrawals can not be made while the Systematic Withdrawal
Option is in effect. A partial withdrawal while this option is in effect will
automatically terminate the Systematic Withdrawal Option and the full amount may
be subject to a Contingent Deferred Sales Load.
Transamerica reserves the right to impose an annual fee of an amount
not to exceed $25 for administrative expenses associated with processing the
systematic withdrawals. This fee, which is currently waived, will be deducted
from each systematic withdrawal in equal installments during a Contract Year.
The Systematic Withdrawal Option is not available with respect to the
Fixed Account.
Automatic Payout Option ("APO")
Prior to the Annuity Date, for Qualified Contracts, the Owner may elect
the Automatic Payout Option (APO) to satisfy minimum distribution requirements
under Sections 401(a)(9), 403(b), and 408(b)(3) of the Code. This may be elected
no earlier than six months prior to the calendar year in which the Owner attains
age 701/2, but payments may not begin earlier than January of such calendar
year. Additionally, APO withdrawals may not begin before the later of (a) 30
days after the Contract Date or (b) the end of the Free Look Period. APO may be
elected in any calendar month, but no later than the month in which the Owner
attains age 84. The APO is not available with respect to the Fixed Account.
Withdrawals will be from the Sub-Account(s) and in the percentage
allocations specified by the Onwer. If no specifications are made, withdrawals
will be pro-rata from all Sub-Account(s) with value. Withdrawals can not be made
from a Sub-Account from which Dollar Cost Averaging transfers are being made.
Payments will be made on the seventh day of the month, and will
continue unless terminated by the Owner or automatically terminated by
Transamerica as set forth in the Contract. Once terminate, APO may not be
elected again.
If only APO withdrawals are made, no Contingent Deferred Sales Load
will apply, regardless of the free withdrawal amount. However, if a partial
withdrawal is taken, a Contingent Deferred Sales Load will be applied to both
the APO and partial withdrawals above the free withdrawal amount. (See
"Contingent Deferred Sales Load" page 41.)
To be eligible for this option, the following conditions must be met:
(1) the Account Value must be at least $15,000 at the time of election; (2) the
annual withdrawal amount is the larger of the required minimum distribution
under Code Sections 401(a)(9) or 408(b)(3) or $500; and (3) the minimum amount
per payment (if not annual) must be at least $150.
APO allows the required minimum distribution to be paid in equal
installments, either monthly, quarterly, or annually, from the Variable Account.
If there are insufficient funds in the Variable Account to make a withdrawal, or
for other reasons as set forth in the Contract, this option will terminate.
Restrictions Under Section 403(b) Programs
Certain restrictions apply to annuity contracts used in connection with
Internal Revenue Code Section 403(b) retirement plans. Section 403(b) of the
Internal Revenue Code provides for tax-deferred retirement savings plans for
employees of certain non-profit and educational organizations. In accordance
with the requirements of the Code, Section 403(b) annuities generally may not
permit distribution of (i) elective contributions made in years beginning after
December 31, 1988, and (ii) earnings on those contributions and (iii) earnings
on amounts attributable to elective contributions held as of the end of the last
year beginning before
- 33 -
33
<PAGE>
January 1, 1989. Distributions of such amounts will be allowed only upon death
of the employee, on or after attainment of age 591/2, separation from service,
disability, or financial hardship, except that income attributable to elective
contributions may not be distributed in the case of hardship.
DEATH BENEFIT
If the Owner or Annuitant dies before the Annuity Date, a death benefit
is payable. The amount of the death benefit depends on the state of issuance.
In certain states the death benefit will be equal to the greatest of
(1) the Account Value, (2) the Account Value determined as of the seventh
Contract Anniversary and at each succeeding Contract Anniversary occurring at
subsequent seven year intervals thereafter, adjusted for any subsequent Purchase
Payments paid by the Owner (less the sum of all subsequent withdrawals and any
applicable premium taxes), or (3) the sum of all Purchase Payments, less
withdrawals and any applicable premium taxes, plus interest thereon equal to a
5% annual effective rate, credited on a daily basis up to (i) the Contract
Anniversary following the earlier of the Owner's or Annuitant's 75th birthday,
or (ii) the date the sum of all Purchase Payments, (less the sum of all
withdrawals and any premium taxes), together with credited interest, has grown
to two times the amount of all Purchase Payments (less all withdrawals and any
premium taxes) as a result of such interest accumulation, if earlier.
In other states, the death benefit for each Contract will be equal to
the largest of (1) the sum of the Purchase Payments, less withdrawals and less
premium or similar taxes as of the Annuitant's or Owner's date of death, (2) the
Account Value, or (3) the Account Value determined as of the seventh Contract
Anniversary and at each succeeding Contract Anniversary occurring at subsequent
seven year intervals thereafter (that is, as of the most recent Seven Year
Anniversary), adjusted for any subsequent Purchase Payments (less the sum of all
subsequent withdrawals and any applicable premium taxes) made since that Seven
Year Anniversary.
Owners should consult their registered representative or investment
adviser (or see their Contract) for the applicable death benefit provision.
The death benefit will be determined as of the end of the Valuation
Period during which the later of (a) Proof of Death of the Owner or Annuitant is
received by the Service Center and (b) a written notice of the method of
settlement elected by the Beneficiary is received at the Service Center. If no
settlement method is elected, the death benefit will be paid no later than one
year after the date of death. No Contingent Deferred Sales Load will apply.
Until the death benefit is paid, the Account Value allocated to the Variable
Account remains in the Variable Account, and fluctuates with investment
performance of the applicable Portfolio(s). Accordingly, the amount of the death
benefit depends on the Account Value at the time the death benefit is paid.
There is no extra charge for the death benefit, and it applies
automatically (i.e. no election by the Owner
is necessary).
Payment of Death Benefit
The death benefit is generally payable upon receipt of Proof of Death
of the Annuitant or Owner. Upon receipt of this proof and an election of a
method of settlement, the death benefit generally will be paid within seven
days, or as soon thereafter as Transamerica has sufficient information about the
Beneficiary to make the payment. The Beneficiary may receive the amount payable
in a lump sum cash benefit or, subject to any limitations under any state or
federal law, rule, or regulation, under one of the Annuity Forms unless a
settlement agreement is effective under the Contract preventing such election.
If no settlement method is elected within one year of the date of death, the
death benefit will be paid in a lump sum. The payment of the death benefit may
be subject to certain distribution requirements under the federal income tax
laws. (See "Federal Tax Matters" page 50.) Designation of Beneficiaries
The Owner may select one or more Beneficiaries and name them in a form
and manner acceptable to Transamerica. If the Owner selects more than one
Beneficiary, unless otherwise indicated by the Owner they will share equally in
any death benefits payable in the event of the Annuitant's death before the
Annuity Date if there is no Contingent Annuitant, or the Owner's death if there
is no Joint Owner. Different Beneficiaries may be named with respect to the
Annuitant's death (Annuitant's Beneficiary) and the Owner's death (Owner's
Beneficiary). Before the Annuitant's death, the Owner may change the Beneficiary
by notice to the Service Center. The Owner
- 34 -
34
<PAGE>
may also make the designation of Beneficiary irrevocable by sending notice to
and obtaining approval from the Service Center. Irrevocable Beneficiaries may be
changed only with the written consent of the designated Irrevocable
Beneficiaries, except to the extent required by law.
The interest of any Beneficiary who dies before the Owner or Annuitant
will terminate at the death of the Beneficiary. The interest of any Beneficiary
who dies at the time of, or within 30 days after, the death of the Owner or
Annuitant will also terminate if no benefits have been paid unless the Contract
has been endorsed to provide otherwise. The benefits will then be paid as though
the Beneficiary had died before the Owner or Annuitant. If the interest of all
designated Beneficiaries has terminated, any benefits payable will be paid to
the Owner's estate.
Transamerica may rely on an affidavit by any responsible person in
determining the identity or non-existence of any Beneficiary not identified by
name.
Death of Annuitant Prior to the Annuity Date
If the Annuitant dies prior to the Annuity Date and the Annuitant is
not an Owner and there is no Contingent Annuitant, a death benefit under the
Contract relating to that Annuitant will be paid to the Annuitant's Beneficiary.
If there is a Contingent Annuitant, then the Contingent Annuitant will become
the Annuitant. Death of Certificate Owner Prior to the Annuity Date
If an Owner dies before the Annuity Date, a death benefit will be paid
to that Owner's Beneficiary. If the Owner's Beneficiary is the deceased Owner's
spouse, then the spouse may elect to treat the Contract as his or her own. The
payment of the death benefit may be subject to certain distribution requirements
under the federal income tax laws. (See "Federal Tax Matters," page 50.)
Death of Annuitant or Owner After the Annuity Date
If an Annuitant or Owner dies after the annuity starts, the remaining
undistributed portion, if any, of the Contract will be distributed at least as
rapidly as under the method of distribution being used as of the date of such
death. Under some Annuity Forms, there will be no death benefit.
CHARGES AND DEDUCTIONS
No deductions are made from Purchase Payments except for any applicable
premium taxes. Therefore, the full amount, less any premium taxes, of the
Purchase Payments are invested in one or more of the Sub-Accounts of the
Variable Account and/or in the Guarantee Periods of the Fixed Account.
As more fully described below, charges under the Contract are assessed
in three ways: (1) as deductions for the Account (or Annuity) Fees, any Transfer
Fees, any Systematic Withdrawal Option fees, any interest adjustment (for
withdrawals from the Fixed Account) and, if applicable, for premium taxes; (2)
as charges against the assets of the Variable Account for the assumption of
mortality and expense risks and administrative expenses; and (3) as Contingent
Deferred Sales Loads. In addition, certain deductions are made from the assets
of the Funds for investment management fees and expenses. These fees and
expenses are described in the Funds' prospectuses and in their statements of
additional information. Contingent Deferred Sales Load
No deduction for sales charges is made from Purchase Payments (although
premium tax may be deducted). However, a Contingent Deferred Sales Load of up to
6% of Purchase Payments made may be imposed on certain withdrawals or surrenders
to partially cover certain expenses incurred by Transamerica relating to the
sale of the Contract, including commissions paid to salespersons, the costs of
preparation of sales literature and other promotional costs and acquisition
expenses.
The Contingent Deferred Sales Load percentage varies according to the
number of Contract Years between the Contract Year in which a Net Purchase
Payment was credited to the Contract and the Contract Year in which the
withdrawal is made. The amount of the Contingent Deferred Sales Load is
determined by multiplying the amount withdrawn subject to the Contingent
Deferred Sales Load by the Contingent Deferred Sales Load percentage in
accordance with the following table. In no event shall the aggregate Contingent
Deferred Sales Load assessed against the Contract exceed 6% of the aggregate
Purchase Payments.
- 35 -
35
<PAGE>
Number of
Contract Years
Since Receipt of Contingent Deferred Sales Load
Purchase Payment As a Percentage of Purchase Payment
Less than one year 6%
1 year but less than 2 years 6%
2 years but less than 3 years 5%
3 years but less than 4 years 5%
4 years but less than 5 years 4%
5 years but less than 6 years 4%
6 years but less than 7 years 2%
7 or more years 0%
An amount equal to (a) Purchase Payments that have been held by
Transamerica for at least seven Contract Years and have not been previously
withdrawn, plus (b) the "Free Withdrawal Amount" (described below) may be
withdrawn free of any Contingent Deferred Sales Load. Any excess amount
withdrawn will be subject to the Contingent Deferred Sales Load.
The "Free Withdrawal Amount" depends on the state of issuance. Owners
should consult their registered representative or investment adviser (or see
their Contract) for the applicable provision.
In some states, during any Contract Year after the first Contract Year,
the Free Withdrawal Amount is the accumulated earnings not previously withdrawn,
or, if greater, 15% of the Purchase Payments which have been held less than
seven Contract Years, but more than one complete Contract Year (not adjusted for
any withdrawals to be made from such Purchase Payments). In such cases, the
amount actually withdrawn will be applied first to accumulated earnings, and
then applied to the oldest remaining Purchase Payments, then to the next oldest
and so forth. If a Free Withdrawal Amount is not withdrawn during a Contract
Year, it does not carry over to the next Contract Year. However, accumulated
earnings, if any, on the Owner's account are always available as the Free
Withdrawal Amount (if greater than 15% of Purchase Payments).
In all other states, after the first complete Contract Year, the Free
Withdrawal Amount is 10% of Purchase Payments held less than seven Contract
Years, but more than one complete Contract Year (not adjusted for any prior
withdrawals deemed to be made from such Purchase Payments). In these states,
withdrawals will be applied first to Purchase Payments on a first-in, first-out
basis (and then to earnings which are not subject to the Contingent Deferred
Sales Load); withdrawals will be assumed to be made from the oldest Purchase
Payment first. If this 10% free withdrawal amount is not withdrawn or paid out
during a Contract Year, it does not carry over to the next Contract Year.
No Contingent Deferred Sales Load will be charged on the Free
Withdrawal Amount if surrender of the Contract occurs in the second or
subsequent Contract Year for a Purchase Payment and the Owner was eligible to
withdraw the amount without charge but had not made such a withdrawal during the
Contract Year in which the date of surrender occurs. In addition, no Contingent
Deferred Sales Load is assessed upon annuitization after the first three
Contract Years to an option involving life contingencies; upon payment of the
death benefit; upon transfers of Account Value among and between the
Sub-Accounts of the Variable Account and the Guarantee Periods of the Fixed
Account; under the Systematic Withdrawal Option; or, in some circumstances,
under the Automatic Payout Option. Any applicable Contingent Deferred Sales Load
will be deducted from the amount requested for both partial withdrawals and full
surrenders. The Contingent Deferred Sales Load and any premium tax applicable to
a withdrawal from the Fixed Account will be deducted from the amount withdrawn
after the interest adjustment, if any, is applied and before payment is made to
the Owner.
In certain states, the Contingent Deferred Sales Load arising from a
withdrawal or surrender of the Contract will be waived if the Owner receives
extended medical care in a licensed hospital or nursing care facility for a
least 45 days during any continuous 60 day period beginning on or after the
first Contract Anniversary and the request for the withdrawal or surrender,
together with proof of such extended care, is received at the Service Center
during the term of such care or within 90 days after the last day upon which the
Owner received such extended care. This waiver of the Contingent Deferred Sales
Load may not be available in all states and does not
- 36 -
36
<PAGE>
apply if the Owner is receiving extended medical care in a licensed hospital or
nursing care facility at the time
the Contract is purchased.
Administrative Charges
At the end of each Contract Year before the Annuity Date, Transamerica
deducts an annual Account Fee as partial compensation for expenses relating to
the issue and maintenance of the Contract, and the Variable Account. The annual
Account Fee is equal to the lesser of $30 or 2% of the Account Value. The
Account Fee may be changed upon 30 days advance written notice, but in no event
may it exceed the lesser of $60 or 2% of the Account Value. Such increases in
the Account Fee will apply only to future deductions after the effective date of
the change. If the Contract is surrendered on other than the end of a Contract
Year, the Account Fee will be deducted in full at the time of such surrender.
The Account Fee will be deducted on a pro rata basis from each Sub-Account in
which the Account is invested at the time of such deduction. If the entire
Account is in the Fixed Amount, then the annual Account Fee will be deducted on
a pro rata basis from all Guarantee Periods under the Fixed Account. The Account
Fee for a Contract Year may be waived if the Account Value exceeds $50,000 on
the last business day of that Contract Year or, if earlier, as of the date the
Contract is surrendered. This waiver of the Account Fee may not be available in
all states.
After the Annuity Date, an annual Annuity Fee of $30 will be deducted
in equal amounts from each Variable Annuity Payment made during the year ($2.50
each month if monthly payments). This fee will not be changed. No Annuity Fee
will be deducted from Fixed Annuity Payments.
Transamerica also makes a deduction (the Administrative Expense Charge)
from the Variable Account at the end of each Valuation Period (both before and
after the Annuity Date) at an effective current annual rate of 0.15% of assets
held in each Sub-Account to reimburse Transamerica for those administrative
expenses attributable to the Contract and the Variable Account which exceed the
revenues received from the Account Fee, any Transfer Fee, and any fee imposed
for Systematic Withdrawals. Transamerica has the ability to increase or decrease
this charge, but the charge is guaranteed not to exceed 0.25%. Transamerica will
provide 30 days written notice of any change in fees. Transamerica believes that
the Administrative Expense Charge and Account Fee have been initially set (and
will continue to be set) at a level that will recover no more than the
anticipated and estimated costs associated with administering the Contract and
Variable Account. The administrative charges do not bear any relationship to the
actual administrative costs of a particular Contract. Transamerica does not
expect to make a profit from the Account Fee or the Administrative Expense
Charge. The Administrative Expense Charge is reflected in the Variable
Accumulation or Variable Annuity Unit Values for each Sub-Account. Mortality and
Expense Risk Charge
Transamerica imposes a charge called the Mortality and Expense Risk
Charge to compensate it for bearing certain mortality and expense risks under
the Contract. For assuming these risks, Transamerica makes a daily charge equal
to .003403% corresponding to an effective annual rate of 1.25% of the value of
the net assets in the Variable Account. This charge is imposed before the
Annuity Date and if an Annuity Purchase Amount is applied to a Variable Payment
Option, also after the Annuity Date. The approximate portion of this charge
estimated to be attributable to mortality risks is 0.65%; the approximate
portion of this charge attributable to expense risks is 0.60%. Transamerica
guarantees that this charge of 1.25% will never increase.
The Mortality and Expense Risk Charge is reflected in the Variable
Accumulation and Variable Annuity Unit Values for each Sub-Account.
Variable Accumulated Values and Variable Annuity Payments are not
affected by changes in actual mortality experience incurred by Transamerica. The
mortality risks assumed by Transamerica arise from its contractual obligations
to make Annuity Payments (determined in accordance with the annuity tables and
other provisions contained in the Contract) and to pay death benefits prior to
the Annuity Date. Thus Owners are assured that neither the Annuitant's own
longevity nor an unanticipated improvement in general life expectancy will
adversely affect the Annuity Payments under the Contract.
Transamerica also bears substantial risk in connection with the death
benefit before the Annuity Date, since it will pay a death benefit that may
exceed the Cash Surrender Value. In this way, Transamerica bears the risk of
unfavorable experience in the Sub-Accounts.
- 37 -
37
<PAGE>
The expense risk assumed by Transamerica is the risk that
Transamerica's actual expenses in administering the Contracts and the Variable
Account will exceed the amount recovered through the Administrative Expense
Charge, Account Fees, Transfer Fees and any fees imposed for Systematic
Withdrawals.
If the Mortality and Expense Risk Charge is insufficient to cover
actual costs and risks assumed, the loss will fall on Transamerica. Conversely,
if this charge is more than sufficient, any excess will be profit to
Transamerica. Currently, Transamerica expects a profit from this charge.
Transamerica anticipates that the Contingent Deferred Sales Load will
not generate sufficient funds to pay the cost of distributing the Contracts. To
the extent that the Contingent Deferred Sales Load is insufficient to cover the
actual cost of Contract distribution, the deficiency will be met from
Transamerica's general corporate assets which may include amounts, if any,
derived from the Mortality and Expense Risk Charge. Premium Taxes
Transamerica may be required to pay premium or retaliatory taxes
currently ranging from 0% to 3.5% in connection with Purchase Payments or values
under the Contracts. Depending upon applicable state law, Transamerica may
deduct the premium taxes which are payable with respect to a particular Contract
from the Purchase Payments, from amounts withdrawn, or from amounts applied on
the Annuity Date. In some states, charges for both direct premium taxes and
retaliatory premium taxes may be imposed at the same or different times with
respect to the same Purchase Payment, depending upon applicable state law.
In certain limited circumstances, a broker-dealer or other entity
distributing the Contracts may elect to pay
to Transamerica an amount equal to the premium taxes that would otherwise be
attributable to that entity's
customers. In such cases, Transamerica will not impose a premium tax charge on
those contracts.
Transfer Fee
Transamerica currently does not charge for transfers. However,
Transamerica may impose a fee for each
transfer in excess of the first six in a single Contract Year. Transamerica
will deduct the charge from the amount
transferred. This fee would be no more than $10 and would be used to help
cover Transamerica's costs of
processing transfers.
Systematic Withdrawal Option
Transamerica reserves the right to impose an annual fee of an amount
not to exceed $25 for administrative
expenses associated with processing systematic withdrawals. This fee, which is
currently waived, will be deducted
from each systematic withdrawal in equal installments during a Contract Year.
Taxes
Under present laws, Transamerica will incur state or local taxes (in
addition to the premium taxes described above) in several states. No charges are
currently made for taxes other than state premium taxes. However, Transamerica
reserves the right to deduct charges in the future for federal, state, and local
taxes or the economic burden resulting from the application of any tax laws that
Transamerica determines to be attributable to the Contracts. Portfolio Expenses
The value of the assets in the Variable Account reflects the value of
Portfolio shares and therefore the fees
and expenses paid by each Portfolio. A complete description of the fees,
expenses, and deductions from the
Portfolios are found in the Funds' prospectuses. (See "The Funds" page 23.)
Interest Adjustment
For a description of the interest adjustment applicable to early
withdrawals and transfers from the Guarantee Periods of the Fixed Account, see
"The Fixed Account" page 27.
- 38 -
38
<PAGE>
ANNUITY PAYMENTS
Annuity Date
Initially, the Annuity Date is selected by the Owner at the time the
Initial Purchase Payment is made. Thereafter, the Annuity Date may be changed
from time to time by the Owner by giving notice, in a form and manner acceptable
to Transamerica, to the Service Center, provided that notice of each change is
received by the Service Center at least thirty (30) days prior to the
then-current Annuity Date. The Annuity Date must not be earlier than the third
Contract Anniversary, except for certain Qualified Contracts. The latest Annuity
Date which may be elected is the later of (a) the first day of the calendar
month immediately preceding the month of the Annuitant's 85th birthday, or (b)
the first day of the month coinciding with or next following the tenth Contract
Anniversary. This Annuity Date extension to the tenth Contract Anniversary may
not be available in all states.
The Annuity Date must be the first day of a calendar month. The first
Annuity Payment will be on the
first day of the month immediately following the Annuity Date.
Annuity Payment
The Annuity Date is the date that the Annuity Purchase Amount is
applied to provide the Annuity Payments under the Contract under the selected
Annuity Form and Payment Option, unless the entire Account Value has been
withdrawn or the death benefit has been paid to the Beneficiary prior to that
date. The Annuity Purchase Amount is the Account Value, less any interest
adjustment, less any applicable Contingent Deferred Sales Load and less any
applicable premium taxes. Any Contingent Deferred Sales Load will be waived if
values are applied to an Annuity Form involving life contingencies on or after
the third Contract Anniversary.
If the amount of the monthly Annuity Payment from any of the Payment
Options selected by the Owner would result in a monthly annuity payment of less
than $150, or if the Annuity Purchase Amount is less than $5,000, Transamerica
reserves the right to offer a less frequent mode of payment or pay the Cash
Surrender Value in a cash payment. Monthly Annuity Payments from the Variable
Annuity Payment Option will further be subject to a minimum monthly annuity of
$75 from each Sub-Account of the Variable Account from which such payments are
made.
The Owner may choose from the Annuity Forms below. Transamerica may
consent to other plans of payment before the Annuity Date. For Annuity Forms
involving life income, the actual age and/or sex of the Annuitant, or a Joint or
Contingent Annuitant will affect the amount of each payment. Sex-distinct rates
generally are not allowed under certain Qualified Contracts. Transamerica
reserves the right to ask for satisfactory proof of the Annuitant's (or Joint or
Contingent Annuitant's) age. Transamerica may delay Annuity Payments until
satisfactory proof is received. Since payments to older Annuitants are expected
to be fewer in number, the amount of each Annuity Payment shall be greater for
older Annuitants than for younger Annuitants.
The Owner may choose from the two Annuity Payment Options described
below. The Annuity Date and Annuity Forms available for Qualified Contracts may
also be controlled by endorsements, the plan or applicable law.
A portion or the entire amount of the Annuity Payments may be taxable
as ordinary income. If, at the time the Annuity Payments begin, Transamerica has
not received a proper written election not to have federal income taxes
withheld, Transamerica must by law withhold such taxes from the taxable portion
of such annuity payments and remit that amount to the federal government.
Federal income tax withholding is mandatory for certain distributions from
Section 401 retirement plans and 403(b) annuities. State income tax withholding
may also apply.
(See "Federal Tax Matters" page 50.)
Election of Annuity Forms and Payment Options
The Annuity Form and Payment Option for each Contract is set as a 120
month period certain and life Annuity Form, under the Variable Payment Option.
Before the Annuity Date, and while the Annuitant is living, the Owner
may, by Written Request, change the Annuity Form or Annuity Payment Option or
may request payment of the Cash Surrender Value for the Contract. The request
for change of the Annuity Date or Annuity Payment Option must be received by the
Service Center at least 30 days prior to the Annuity Date.
- 39 -
39
<PAGE>
In the event that an Annuity Form and Payment Option is not selected at
least 30 days before the Annuity
Date, Transamerica will make Variable Annuity Payments in accordance with the
120 month period certain and
life Annuity Form and the applicable provisions of the Contract.
Annuity Payment Options
The Annuity Forms may be paid under Fixed or Variable Annuity Payment
Options. Under the Fixed Annuity Payment Option, the amount of each payment will
be determined on the Annuity Date and will not subsequently be affected by the
investment performance of the Sub-Accounts. Under the Variable Annuity Payment
Option, the Annuity Payments, after the first Annuity Payment, will reflect the
investment experience of the Sub-Account or Sub-Accounts chosen by the Owner.
Owners may elect a Fixed Annuity, a Variable Annuity, or a combination
of both (in 25% increments of the Annuity Purchase Amount). If the Owner elects
a combination, he or she must specify what part of the Annuity Purchase Amount
is to be applied to the Fixed and Variable Payment Options. Unless specified
otherwise, the applied Annuity Purchase Amount will be used to provide a
Variable Annuity. In this event, the initial allocation of Variable Annuity
Units for the Variable Sub-Accounts will be in proportion to the Contract's
value in the Sub-Accounts on the Annuity Date. Fixed Annuity Payment Option
A Fixed Annuity provides for Annuity Payments which will remain
constant pursuant to the terms of the Annuity Form elected. If a Fixed Annuity
is selected, the portion of the Annuity Purchase Amount used to provide the
Fixed Annuity will be transferred to the general account assets of Transamerica,
and the amount of Annuity Payments will be established by the fixed annuity
provisions selected and the age and sex (if sex-distinct rates are allowed by
law) of the Annuitant and will not reflect investment experience after the
Annuity Date. The Fixed Annuity Payment amounts are determined by applying the
Annuity Purchase Rate specified in the Contract to the portion of the Annuity
Purchase Amount applied to the Fixed Annuity Option by the Owner. Payments may
vary after the death of the Annuitant under some Annuity Options; the amounts of
these variances are fixed on the Annuity Date. Variable Annuity Payment Option
A Variable Annuity provides for payments that vary in dollar amount,
based on the investment performance of the selected Sub-Account(s) of the
Variable Account. The Variable Annuity Purchase Rate Tables in the Contract
reflect an assumed annual interest rate of 4%, so if the actual net investment
performance of the Sub-Account(s) is less than this rate, then the dollar amount
of the actual Annuity Payments will decrease. If the actual net investment
performance of the Sub-Account(s) is higher than this rate, then the dollar
amount of the actual Annuity Payments will increase. If the net investment
performance exactly equals the 4% rate, then the dollar amount of the actual
Annuity Payments will remain constant.
Variable Annuity Payments will be based on the Sub-Accounts selected by
the Owner, and on the allocations among the Sub-Accounts.
For further details as to the determination of Variable Annuity
Payments, see the Statement of Additional
Information.
Annuity Forms
The Owner may choose any of the Annuity Forms described below. Subject
to approval by Transamerica, the Owner may select any other Annuity Forms then
being offered by Transamerica.
(1) Life Annuity. Payments start on the first day of the month
immediately following the Annuity Date, if the Annuitant is living. Payments end
with the payment due just before the Annuitant's death. There is no death
benefit under this form. It is possible that only one payment will be made under
this form if the Annuitant dies before the second payment is due; only two
payments will be made if the Annuitant dies before the third payment is due, and
so forth.
(2) Life and Contingent Annuity. Payments start on the first day of the
month immediately following the Annuity Date, if the Annuitant is living.
Payments will continue for as long as the Annuitant lives. After the Annuitant
dies, payments will be made to the Contingent Annuitant, if living, for as long
as the Contingent Annuitant lives. The continued payments can be in the same
amount as the original payments, or in an amount equal to one-half or two-thirds
thereof. Payments will end with the payment due just before the death of the
- 40 -
40
<PAGE>
Contingent Annuitant. There is no death benefit after both die. If the
Contingent Annuitant does not survive the Annuitant, payments will end with the
payment due just before the death of the Annuitant. It is possible that only one
payment or very few payments will be made under this form, if the Annuitant and
Contingent Annuitant die shortly after payments begin.
The written request for this form must: (a) name the Contingent
Annuitant; and (b) state the percentage of payments for the Contingent
Annuitant. Once Annuity Payments start under this Annuity Form, the person named
as Contingent Annuitant for purposes of being the measuring life, may not be
changed. Transamerica will require proof of age for the Annuitant and for the
Contingent Annuitant before payments start.
(3) Life Annuity With Period Certain. Payments start on the first day
of the month immediately following
the Annuity Date, if the Annuitant is living. Payments will be made for the
longer of: (a) the Annuitant's life; or
(b) the period certain. The period certain may be 120 or 180 or 240 months,
but in no event may it exceed the
life expectancy of the Annuitant.
If the Annuitant dies after all payments have been made for the period
certain, payments will cease with the payment due just before the Annuitant's
death. No benefit will then be payable to the Annuitant's Beneficiary.
If the Annuitant dies during the period certain, the rest of the period
certain payments will be made to the Annuitant's Beneficiary, unless the Owner
provides otherwise. The Owner may elect to have the commuted value of these
payments paid in a single sum. Transamerica will determine the commuted value by
discounting the rest of the payments at the then current rate of interest used
for commuted values.
If the Owner does not elect to have the commuted value paid in a single
sum after the Annuitant's death, the Owner may designate a Payee to receive any
remaining payments payable if the Annuitant's Beneficiary dies before all of the
payments under the period certain have been made. If the Annuitant's Beneficiary
dies before receiving all of the remaining period certain payments and a
designated Payee does not survive the Annuitant's Beneficiary for at least 30
days, then the remaining payments will be paid to the Owner, if living,
otherwise in a single sum to the Owner's estate.
The written request for this form must: (a) state the length of the
period certain; and (b) name the
Annuitant's Beneficiary.
(4) Joint and Survivor Annuity. Payments will be made to the Annuitant,
starting on the first day of the month immediately following the Annuity Date,
if and for as long as the Annuitant and Joint Annuitant are living. After the
Annuitant or Joint Annuitant dies, payments will continue for so long as the
survivor lives. Payments will be made to the survivor for his or her life.
Payments end with the payment due just before the death of the survivor. The
continued payments can be in the same amount as the original payments, or in an
amount equal to one-half or two-thirds thereof. It is possible that only one
payment or very few payments will be made under this form if the Annuitant and
Joint Annuitant both die shortly after payments begin.
The written request for this form must: (a) name the Joint Annuitant;
and (b) state the percentage of continued payments for the survivor. Once
payments start under this Annuity Form, the person named as Joint Annuitant, for
the purpose of being the measuring life, may not be changed. Transamerica will
need proof of age for the Joint Annuitant before payments start.
(5) Other Forms of Payment. Benefits can be provided under any other
Annuity Form not described in this section subject to Transamerica's agreement
and any applicable state or federal law or regulation. Requests for any other
Annuity Form must be made in writing to the Service Center at least 30 days
before the Annuity Date.
Once payments start under the Annuity Form and Payment Option selected
by the Owner: (a) no changes can be made in the Annuity Form and Payment Option;
(b) no additional Purchase Payment will be accepted under the Contract; and (c)
no further withdrawals will be allowed.
The Owner may, at any time after the Annuity Date by written notice to
us at our Service Center, change
the Payee of annuity benefits being provided under the Contract. The effective
date of change in Payee will be
the later of: (a) the date we receive the Written Request for such change; or
(b) the date specified by the Owner.
If the Contract is issued as an IRA, the Owner may not change the Payee on or
after the Annuity Date.
Alternate Fixed Annuity Rates
- 41 -
41
<PAGE>
The amount of any Fixed Annuity Payments will be determined on the
Annuity Date by using either the guaranteed fixed annuity rates or
Transamerica's current single premium fixed annuity rates at the time, whichever
would result in a higher amount of monthly Fixed Annuity Payments.
FEDERAL TAX MATTERS
Introduction
The following discussion is a general description of federal tax
considerations relating to the Contract and is not intended as tax advice. This
discussion is not intended to address the tax consequences resulting from all of
the situations in which a person may be entitled to or may receive a
distribution under the Contract. Any person concerned about these tax
implications should consult a competent tax adviser before initiating any
transaction. This discussion is based upon Transamerica'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 the
continuation of the present federal income tax laws or of the current
interpretation by the Internal Revenue Service. Moreover, no attempt has been
made to consider any applicable state or other tax laws.
The Contract may be purchased on a non-tax qualified basis
("Non-Qualified Contract") or purchased and used in connection with plans
qualifying for favorable tax treatment ("Qualified Contract"). Qualified
Contracts are designed for use in connection with plans entitled to special
income tax treatment under Sections 401, 403(b), and 408 of the Code. The
ultimate effect of federal income taxes on the amounts held under a Contract, on
Annuity Payments, and on the economic benefit to the Owner, the Annuitant, or
the Beneficiary may depend on the type of retirement plan, and on the tax status
of the individual concerned. In addition, certain requirements must be satisfied
in purchasing a Qualified Contract with proceeds from a tax qualified retirement
plan and receiving distributions from a Qualified Contract in order to continue
receiving favorable tax treatment. Therefore, purchasers of Qualified Contracts
should seek competent legal and tax advice regarding the suitability of the
Contract for their situation, the applicable requirements, and the tax treatment
of the rights and benefits of the Contract. The following discussion assumes
that a Qualified Contract is purchased with proceeds from and/or contributions
under retirement plans that qualify for the intended special federal income tax
treatment.
The following discussion is based on the assumption that the Contract
qualifies as an annuity contract for
federal income tax purposes. The Statement of Additional Information discusses
the requirements for qualifying
as an annuity.
Taxation of Annuities
In General
Section 72 of the Code governs taxation of annuities in general.
Transamerica believes that the Owner who is a natural person generally is not
taxed on increases in the value of an Account until distribution occurs by
withdrawing all or part of the Account Value (e.g., withdrawals or Annuity
Payments under the Annuity Option elected). For this purpose, the assignment,
pledge, or agreement to assign or pledge any portion of the Account Value (and
in the case of a Qualified Contract, any portion of an interest in the plan)
generally will be treated as a distribution. The taxable portion of a
distribution (in the form of a single sum payment or an annuity) is taxable as
ordinary income.
The Owner of any annuity contract who is not a natural person generally
must include in income any increase in the excess of the Account Value over the
"investment in the contract" (discussed below) during the taxable year. There
are some exceptions to this rule and a prospective Owner that is not a natural
person may wish to discuss these with a competent tax adviser.
The following discussion generally applies to a Contract owned by a
natural person. Withdrawals In the case of a withdrawal under a
Qualified Contract, including withdrawals under the Systematic
Withdrawal Option or the Automatic Payout Option, a ratable portion of the
amount received is taxable, generally based on the ratio of the "investment in
the contract" to the individual's total accrued benefit under the retirement
plan. The "investment in the contract" generally equals the amount of any
non-deductible Purchase Payments paid
- 42 -
42
<PAGE>
by or on behalf of any individual. For a Qualified Contract , the "investment
in the contract" can be zero. Special
tax rules may be available for certain distributions from a Qualified Contract.
With respect to Non-Qualified Contracts, partial withdrawals, including
withdrawals under the Systematic Withdrawal Option, are generally treated as
taxable income to the extent that the Account Value immediately before the
withdrawal exceeds the "investment in the contract" at that time. If a partial
withdrawal from the Fixed Account is subject to an interest adjustment, the
Account Value immediately before the withdrawal will not be altered to take into
account the interest adjustment. As a result, for purposes of determining the
taxable portion of the partial withdrawal, the Account Value will be treated as
including the amount deducted from the Fixed Account due to the interest
adjustment. Full surrenders are treated as taxable income to the extent that the
amount received exceeds the "investment in the contract."
Annuity Payments
Although the tax consequences may vary depending on the Annuity Payment
elected under the Contract, in general, only the portion of the Annuity Payment
that represents the amount by which the Account Value exceeds the "investment in
the contract" will be taxed; after the "investment in the contract" is
recovered, the full amount of any additional Annuity Payments is taxable. For
Variable Annuity Payments, the taxable portion is generally determined by an
equation that establishes a specific dollar amount of each payment that is not
taxed. The dollar amount is determined by dividing the "investment in the
contract" by the total number of expected periodic payments. However, the entire
distribution will be taxable once the recipient has recovered the dollar amount
of his or her "investment in the contract." For Fixed Annuity Payments, in
general there is no tax on the portion of each payment which represents the same
ratio that the "investment in the contract" bears to the total expected value of
the Annuity Payments for the term of the payments; however, the remainder of
each Annuity Payment is taxable. Once the "investment in the contract" has been
fully recovered, the full amount of any additional Annuity Payments is taxable.
If Annuity Payments cease as a result of an Annuitant's death before full
recovery of the "investment in the contract," consult a competent tax advisor
regarding deductibility of the unrecovered amount.
Penalty Tax
In the case of a distribution pursuant to a Non-Qualified Contract,
there may be imposed a federal income tax penalty equal to 10% of the amount
treated as taxable income. In general, however, there is no penalty tax on
distributions: (1) made on or after the date on which the Owner attains age
591/2; (2) made as a result of death or disability of the Owner; or (3) received
in substantially equal periodic payments as a life annuity or a joint and
survivor annuity for the lives or life expectancies of the Owner and a
"designated beneficiary." Other tax penalties may apply to certain distributions
pursuant to a Qualified Contract.
Taxation of Death Benefit Proceeds
Amounts may be distributed from the Account because of the death of an
Owner or the Annuitant. Generally such amounts are includible in the income of
the recipient as follows: (1) if distributed in a lump sum, they are taxed in
the same manner as a full surrender as described above, or (2) if distributed
under an Annuity Option, they are taxed in the same manner as Annuity Payments,
as described above. For these purposes, the investment in the Contract is not
affected by the Owner's or Annuitant's death. That is, the investment in the
Contract remains the amount of any Purchase Payments paid which are not excluded
from gross income.
Transfers, Assignments, or Exchanges of the Contract
A transfer of ownership of a Contract, the designation of an Annuitant,
Payee, or other Beneficiary who is not also the Owner, or the exchange of a
Contract may result in certain tax consequences to the Owner that are not
discussed herein. An Owner contemplating any such designation, transfer,
assignment, or exchange should contact a competent tax adviser with respect to
the potential tax effects of such a transaction.
Multiple Contracts
All deferred non-qualified annuity contracts that are issued by
Transamerica (or its affiliates) to the same Owner during any calendar year are
treated as one annuity contract for purposes of determining the amount
includible in gross income under Section 72(e) of the Code. In addition, the
Treasury Department has specific authority to issue regulations that prevent the
avoidance of Section 72(e) through the serial purchase of annuity contracts or
otherwise. Congress has also indicated that the Treasury Department may have
authority to treat the
- 43 -
43
<PAGE>
combination purchase of an immediate annuity contract and separate deferred
annuity contracts as a single annuity
contract under its general authority to prescribe rules as may be necessary to
enforce the income tax laws.
Qualified Contracts
In General
The Qualified Contract is designed for use with several types of
retirement plans. The tax rules applicable to participants and beneficiaries in
retirement plans vary according to the type of plan and the terms and conditions
of the plan. Special favorable tax treatment may be available for certain types
of contributions and distributions. Adverse tax consequences may result from
contributions in excess of specified limits; distributions prior to age 591/2
(subject to certain exceptions); distributions that do not conform to specified
commencement and minimum distribution rules; aggregate distributions in excess
of a specified annual amount; and in other specified circumstances. We make no
attempt to provide more than general information about use of the Contracts with
the various types of retirement plans. Owners and participants under retirement
plans as well as annuitants and beneficiaries are cautioned that the rights of
any person to any benefits under Qualified Contracts may be subject to the terms
and conditions of the plans themselves, regardless of the terms and conditions
of the Contract issued in connection with such a plan. Some retirement plans are
subject to distribution and other requirements that are not incorporated in the
administration of the Contracts. Owners are responsible for determining that
contributions, distributions and other transactions with respect to the
Contracts satisfy applicable law. Purchasers of Contracts for use with any
retirement plan should consult their legal counsel and tax adviser regarding the
suitability of the Contract.
Qualified Pension and Profit Sharing Plans
Section 401(a) of the Code permits corporate employers to establish
various types of retirement plans for employees. Such retirement plans may
permit the purchase of the Contract in order to provide retirement savings under
the plans. The Self-Employed Individuals' Tax Retirement Act of 1962, as
amended, commonly referred to as "H.R. 10," also permits self-employed
individuals to establish qualified plans for themselves and their employees.
Adverse tax consequences to the plan, to the participant or to both may result
if this Contract is assigned or transferred to any individual as a means to
provide benefits payments. Purchasers of a Contract for use with such plans
should seek competent advice regarding the suitability of the proposed plan
documents and the Contract to their specific needs. The Contract is designed to
invest retirement savings and not to distribute retirement benefits.
Individual Retirement Annuities
The Contract is designed for use with IRA rollovers. Section 408 of the
Code permits eligible individuals to contribute to an individual retirement
program known as an Individual Retirement Annuity or Individual Retirement
Account (each hereinafter referred to as an "IRA"). Also, distributions from
certain other types of qualified plans may be "rolled over" on a tax-deferred
basis into an IRA. The sale of a Contract for use with an IRA may be subject to
special disclosure requirements of the Internal Revenue Service. Purchasers of a
Contract for use with IRAs will be provided with supplemental information
required by the Internal Revenue Service or other appropriate agency. Such
purchasers will have the right to revoke their purchase within 7 days of the
earlier of the establishment of the IRA or their purchase. Various tax penalties
may apply to contributions in excess of specified limits, aggregate
distributions in excess of $150,000 annually, distributions that do not satisfy
specified requirements, and certain other transactions. A Qualified Contract
will be amended as necessary to conform to the requirements of the Code.
Purchasers should seek competent advice as to the suitability of the Contract
for use with IRAs.
Section 403(b) Plans
Under Code Section 403(b), payments made by public school systems and
certain tax exempt organizations to purchase annuity contracts for their
employees are excludable from the gross income of the employee, subject to
certain limitations. However, these payments may be subject to FICA (Social
Security) taxes.
Code Section 403(b)(11) restricts the distribution under Code Section
403(b) annuity contracts of: (1) elective contributions made in years beginning
after December 31, 1988; (2) earnings on those contributions; and (3) earnings
in such years on amounts held as of the last year beginning before January 1,
1989. Distribution of those amounts may only occur upon death of the employee,
attainment of age 59 1/2, separation from service,
- 44 -
44
<PAGE>
disability, or financial hardship. In addition, income attributable to elective
contributions may not be distributed
in the case of hardship.
Withholding
Pension and annuity distributions generally are subject to withholding
for the recipient's federal income tax liability at rates that vary according to
the type of distribution and the recipient's tax status. Recipients, however,
generally are provided the opportunity to elect not to have tax withheld from
distributions. Federal income tax withholding is mandatory for certain
distributions from Section 401 or Section 403(b) retirement plans.
Restrictions under Qualified Contracts
Other restrictions with respect to the election, commencement, or
distribution of benefits may apply under
Qualified Contracts or under the terms of the plans in respect of which
Qualified Contracts are issued.
Possible Changes in Taxation
In past years, legislation has been proposed that would have adversely
modified the federal taxation of certain annuities. For example, one such
proposal would have changed the tax treatment of non-qualified annuities that
did not have "substantial life contingencies" by taxing income as it is credited
to the annuity. Although as of the date of this prospectus Congress is not
actively considering any legislation regarding the taxation of annuities, there
is always the possibility that the tax treatment of annuities could change by
legislation or other means (such as IRS regulations, revenue rulings, judicial
decisions, etc.). Moreover, it is also possible that any change could be
retroactive (that is, effective prior to the date of the change). Other Tax
Consequences
As noted above, the foregoing discussion of the federal income tax
consequences is not exhaustive and special rules are provided with respect to
other tax situations not discussed in this Prospectus. Further, the federal
income tax consequences discussed herein reflect Transamerica's understanding of
current law and the law may change. Federal estate and gift tax consequences and
state and local estate, inheritance, and other tax consequences of ownership or
receipt of distributions under the Contract depend on the individual
circumstances of each Owner or recipient of the distribution. A competent tax
adviser should be consulted for further information. General
At the time the Initial Purchase Payment is paid, a prospective
purchaser must specify whether he or she is purchasing a Non-Qualified Contract
or a Qualified Contract. If the Initial Premium is derived from an exchange or
surrender of another annuity contract, Transamerica may require that the
prospective purchaser provide information with regard to the federal income tax
status of the previous annuity contract. Transamerica will require that persons
purchase separate Contracts if they desire to invest monies qualifying for
different annuity tax treatment under the Code. Each such separate Contract
would require the minimum Initial Purchase Payment stated above. Additional
Purchase Payments under a Contract must qualify for the same federal income tax
treatment as the Initial Purchase Payment under the Contract; Transamerica will
not accept an additional Purchase Payment under a Contract if the federal income
tax treatment of such Purchase Payment would be different from that of the
Initial Purchase Payment.
DISTRIBUTION OF THE CONTRACT
Transamerica Securities Sales Corporation ("TSSC") is the principal
underwriter of the Contracts. TSSC may also serve as an underwriter and
distributor of other contracts issued through the Variable Account and certain
other separate accounts of Transamerica and affiliates of Transamerica. TSSC is
a wholly-owned subsidiary of Transamerica Insurance Corporation of California,
which is a subsidiary of the Transamerica Corporation. TSSC is registered with
the Commission as a broker/dealer and is a member of the National Association of
Securities Dealers, Inc. ("NASD"). Its principal offices are located at 1150
South Olive Street, Los Angeles, California 90015. Transamerica pays TSSC for
acting as the principal underwriter under a distribution agreement.
TSSC has entered into sales agreements with other broker/dealers to
solicit applications for the Contracts
through registered representatives who are licensed to sell securities and
variable insurance products. These
agreements provide that applications for the Contracts may be solicited by
registered representatives of the
broker/dealers appointed by Transamerica to sell its variable life insurance
and variable annuities. These
- 45 -
45
<PAGE>
broker/dealers are registered with the Commission and are members of the NASD.
The registered representatives are authorized under applicable state regulations
to sell variable life insurance and variable annuities.
Under the agreements, Contracts will be sold by broker/dealers which
will receive compensation of up to 6.25% of any Initial and additional Purchase
Payments made. Additional amounts may be paid in certain circumstances (such as
upon certain annuitizations, when an additional commission of 2.5% of the
Account Value annuitized may be paid). Asset based trailer commissions may be
paid in some situations.
Transamerica Financial Resources, Inc. ("TFR") also is an underwriter
and distributor of the Contracts.
TFR is a wholly-owned subsidiary of Transamerica Insurance Corporation of
California and is registered with the
Commission and the NASD as a broker/dealer.
LEGAL PROCEEDINGS
There is no pending material legal proceeding affecting the Variable
Account. Transamerica is involved in various kinds of routine litigation which,
in management's judgment, are not of material importance to Transamerica's
assets or to the Variable Account.
LEGAL MATTERS
Advice regarding certain legal matters concerning the federal
securities laws applicable to the issue and sale of the Contract has been
provided by Sutherland, Asbill & Brennan. The organization of Transamerica, its
authority to issue the Contract and the validity of the form of the Contract
have been passed upon by James W. Dederer, Executive Vice President, Secretary
and General Counsel of Transamerica.
ACCOUNTANTS
The consolidated financial statements of Transamerica at December 31,
1995, and December 31, 1994, and for each of the three years in the period ended
December 31, 1995, and the financial statements for the Variable Account at
December 31, 1995, have been audited by Ernst & Young LLP, Independent Auditors,
as set forth in their reports appearing in the Statement of Additional
Information, and are included in reliance upon such reports given upon the
authority of such firm as experts in accounting and auditing.
VOTING RIGHTS
To the extent required by applicable law, all Portfolio shares held in
the Variable Account will be voted by Transamerica at regular and special
shareholder meetings of the respective Funds in accordance with instructions
received from persons having voting interests in the corresponding Sub-Account.
If, however, the 1940 Act or any regulation thereunder should be amended, or if
the present interpretation thereof should change, or if Transamerica determines
that it is allowed to vote all Portfolio shares in its own right, Transamerica
may elect to do so.
The person with the voting interest is the Owner. The number of votes
which are available to an Owner will be calculated separately for each
Sub-Account of the Variable Account. Before the Annuity Date, that number will
be determined by applying his or her percentage interest, if any, in a
particular Sub-Account to the total number of votes attributable to that
Sub-Account. The Owner holds a voting interest in each Sub-Account to which the
Account Value is allocated. After the Annuity Date, the number of votes
decreases as Annuity Payments are made and as the reserves for the Contract
decrease.
The number of votes of a Portfolio will be determined as of the date
coincident with the date established by that Portfolio for determining
shareholders eligible to vote at the meeting of the Funds. Voting instructions
will be solicited by written communication prior to such meeting in accordance
with procedures established by the respective Funds.
Shares as to which no timely instructions are received and shares held
by Transamerica as to which Owners have no beneficial interest will be voted in
proportion to the voting instructions which are received with respect to all
Contracts participating in the Sub-Account. Voting instructions to abstain on
any item to be voted upon will be applied on a pro rata basis to reduce the
votes eligible to be cast.
- 46 -
46
<PAGE>
Each person or entity having a voting interest in a Sub-Account will
receive proxy material, reports and other material relating to the appropriate
Portfolio.
It should be noted that the Funds are not required, and do not intend,
to hold annual or other regular meetings of shareholders.
AVAILABLE INFORMATION
Transamerica has filed a registration statement (the "Registration
Statement") with the Securities and Exchange Commission under the 1933 Act
relating to the Contract offered by this Prospectus. This Prospectus has been
filed as a part of the Registration Statement and does not contain all of the
information set forth in the Registration Statement and exhibits thereto, and
reference is hereby made to such Registration Statement and exhibits for further
information relating to Transamerica and the Contract. Statements contained in
this Prospectus, as to the content of the Contract and other legal instruments,
are summaries. For a complete statement of the terms thereof, reference is made
to the instruments filed as exhibits to the Registration Statement. The
Registration Statement and the exhibits thereto may be inspected and copied at
the office of the Commission, located at 450 Fifth Street, N.W., Washington,
D.C.
- 47 -
47
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
A Statement of Additional Information is available which contains more
details concerning the subjects discussed in this Prospectus. The following is
the Table of Contents for that Statement:
TABLE OF CONTENTS Page
THE CONTRACT...................................................3
DOLLAR COST AVERAGING..........................................3
NET INVESTMENT FACTOR..........................................3
ANNUITY PERIOD.................................................4
Variable Annuity Units and Payments...................4
Variable Annuity Unit Value...........................4
Transfers After the Annuity Date......................4
GENERAL PROVISIONS.............................................5
IRS Required Distributions............................5
Non-Participating.....................................5
Misstatement of Age or Sex............................5
Proof of Existence and Age............................5
Assignment............................................5
Annuity Data..........................................5
Annual Report.........................................5
Incontestability......................................6
Ownership.............................................6
Entire Contract.......................................6
Changes in the Contract...............................6
Protection of Benefits................................6
Delay of Payments.....................................6
Notices and Directions................................7
CALCULATION OF YIELDS AND TOTAL RETURNS........................7
Money Market Sub-Account Yield Calculation.....................7
Other Sub-Account Yield Calculations..................8
Standard Total Return Calculations....................9
Hypothetical Performance Data.........................9
Other Performance Data...............................10
HISTORIC PERFORMANCE DATA.....................................10
General Limitations..................................10
Sub-Account Performance Figures......................11
Hypothetical Sub-Account Performance Figures.........12
....................................................
FEDERAL TAX MATTERS...........................................16
Taxation of Transamerica.............................16
Tax Status of the Contract...........................16
DISTRIBUTION OF THE CONTRACT..................................18
SAFEKEEPING OF VARIABLE ACCOUNT ASSETS........................18
TRANSAMERICA..................................................18
General Information and History......................18
STATE REGULATION..............................................19
RECORDS AND REPORTS...........................................19
FINANCIAL STATEMENTS..........................................19
- 48 -
48
<PAGE>
Appendix A
Example of Variable Accumulation Unit Value Calculations
Suppose the net asset value per share of a Portfolio at the end of the
current Valuation Period is $20.15; at the end of the immediately preceding
Valuation Period it was $20.10; the Valuation Period is one day; and no
dividends or distributions caused the Portfolio to go "ex-dividend" during the
current Valuation Period. $20.15 divided by $20.10 is 1.002488. Subtracting the
one day risk factor for Mortality and Expense Risk Charge and the Administrative
Expense Charge of .003814% (the daily equivalent of the current charge of 1.40%
on an annual basis) gives a Net Investment Factor of 1.002449. If the value of
the Variable Accumulation Unit for the immediately preceding Valuation Period
had been 15.500000, the value for the current Valuation Period would be
15.537966 (15.5 x 1.002449). Example of Variable Annuity Unit Value Calculations
Suppose the circumstances of the first example exist, and the value of
a Variable Annuity Unit for the immediately preceding Valuation Period had been
13.500000. If the first Variable Annuity Payment is determined by using an
annuity payment based on an assumed interest rate of 4% per year, the value of
the Variable Annuity Unit for the current Valuation Period would be 13.531613
(13.5 x 1.002449 (the Net Investment Factor) x 0.999893). 0.999893 is the
factor, for a one day Valuation Period, that neutralizes the assumed rate of
four percent (4%) per year used to establish the Variable Annuity Rates found in
the Contract. Example of Variable Annuity Payment Calculations
Suppose that the Account is currently credited with 3,200.000000
Variable Accumulation Units of a particular Sub-Account.
Also suppose that the Variable Accumulation Unit Value and the Variable
Annuity Unit Value for the particular Sub-Account for the Valuation Period which
ends immediately preceding the first day of the month is 15.500000 and 13.500000
respectively, and that the Variable Annuity Rate for the age and option elected
is $5.73 per $1,000. Then the first Variable Annuity Payment would be:
3.200 x 15.5 x 5.73 divided by 1,000 = $284.21,
and the number of Variable Annuity Units credited for future payments would be:
284.21 divided by 13.5 = 21.052444.
For the second monthly payment, suppose that the Variable Annuity Unit
Value on the 10th day of the second month is 13.565712. Then the second Variable
Annuity Payment would be $285.59 (21.052444 x 13.565712).
- 1 -
A-1
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION FOR
DREYFUS/TRANSAMERICA TRIPLE ADVANTAGE
VARIABLE ANNUITY
Issued By
Transamerica Occidental Life Insurance Company
The Statement of Additional Information expands upon subjects discussed
in the current Prospectus for the Dreyfus/Transamerica Triple Advantage Variable
Annuity (Contract) issued by Transamerica Occidental Life Insurance Company. The
Owner may obtain a copy of the Prospectus dated May 1, 1996, as supplemented
from time to time, by writing to Transamerica Occidental Life Insurance Company,
Annuity Service Center, at P.O. Box 60708, Los Angeles, CA 90060-0708 before
June 10, 1996, and at P.O. Box 31728 Charlotte, North Carolina 28231-1728 after
June 10, 1996, or calling (800) 258-4260. Terms used in the current Prospectus
for the Contract are incorporated in this Statement.
The Contract will be issued as a certificate under a group annuity
contract in some states and as an individual annuity contract in other states.
The term "Contract" as used herein refers to both the individual contract and
the certificates issued under the group contract. THIS STATEMENT OF ADDITIONAL
INFORMATION IS NOT A PROSPECTUS AND SHOULD BE READ ONLY IN CONJUNCTION WITH THE
PROSPECTUS FOR THE CONTRACT.
Dated May 1, 1996
- 2 -
<PAGE>
TABLE OF CONTENTS
THE CONTRACT (page 30).........................................................3
DOLLAR COST AVERAGING (page 35)................................................3
NET INVESTMENT FACTOR (page 33)................................................3
ANNUITY PERIOD (page 46).......................................................4
Variable Annuity Units and Payments...................................4
Variable Annuity Unit Value...........................................4
Transfers After the Annuity Date......................................4
GENERAL PROVISIONS.............................................................5
IRS Required Distributions............................................5
Non-Participating.....................................................5
Misstatement of Age or Sex............................................5
Proof of Existence and Age............................................5
Assignment............................................................5
Annuity Data..........................................................5
Annual Report.........................................................5
Incontestability......................................................6
Ownership.............................................................6
Entire Contract.......................................................6
Changes in the Contract...............................................6
Protection of Benefits................................................6
Delay of Payments.....................................................6
Notices and Directions................................................7
CALCULATION OF YIELDS AND TOTAL RETURNS (page 21)..............................7
Money Market Sub-Account Yield Calculation............................7
Other Sub-Account Yield Calculations..................................8
Standard Total Return Calculations....................................9
Hypothetical Performance Data.........................................9
Other Performance Data...............................................10
HISTORIC PERFORMANCE DATA.....................................................10
General Limitations..................................................10
Sub-Account Performance Data.........................................11
Hypothetical Sub-Account Performance Figures.........................12
..............................................................
FEDERAL TAX MATTERS (page 50).................................................16
Taxation of Transamerica.............................................16
Tax Status of the Contract...........................................16
DISTRIBUTION OF THE CONTRACT (page 55)........................................18
SAFEKEEPING OF VARIABLE ACCOUNT ASSETS (page 23)..............................18
TRANSAMERICA (page 22)........................................................18
General Information and History......................................18
STATE REGULATION (page 23)....................................................19
RECORDS AND REPORTS...........................................................19
FINANCIAL STATEMENTS..........................................................19
(Additional page references refer to the current
Prospectus.)
- 3 -
<PAGE>
THE CONTRACT
As a supplement to the description in the Prospectus, the following
provides additional information about the Contract which may be of interest to
some Owners.
DOLLAR COST AVERAGING
We reserve the right to send written notification to the Owner as to
the options available if termination of Dollar Cost Averaging, either by the
Owner or by Transamerica, results in the value in the receiving Sub-Account(s)
to which monthly transfers were made to be less than $1,000. The Owner will have
10 days from the date our notice is mailed to:
(a) transfer the value of the Sub-Account(s) to another Sub-Account
with a value equal to or greater than $1,000; or (b) transfer funds
from another Sub-Account into the receiving Sub-Account(s) to bring the
value of that Sub-Account to at least $1,000; or (c) submit an
additional Purchase Payment (subject to the $500 minimum) to make the
value of the
Sub-Account equal to or greater than $1,000; or
(d) transfer the entire value of the receiving Sub-Account(s) back into
the Sub-Account from which the automatic transfers were made. If no
election, in a form and manner acceptable to Transamerica, is made by
the Owner prior to the end
of the 10 day period, we reserve the right to transfer the value of the
receiving Sub-Account(s) back into the Sub-Account from which the automatic
transfers were made. Transfers made as a result of (a), (b), or (d) above will
not be counted for purposes of the eighteen allowable transfers per Contract
Year limitation.
NET INVESTMENT FACTOR
For any Sub-Account of the Variable Account, the Net Investment Factor
for a Valuation Period, before the Annuity Date, is (a) divided by (b), minus
(c) minus (d).
Where (a) is
The net asset value per share held in the Sub-Account, as of the
end of the Valuation Period,
plus or minus
The per-share amount of any dividend or capital gain distributions
if the "exdividend" date occurs in the Valuation Period, plus or minus
A per-share charge or credit as Transamerica may determine, as of
the end of the Valuation Period,
for taxes.
Where (b) is
The net asset value per share held in the Sub-Account as of the end
of the last prior Valuation Period.
Where (c) is
The daily charge of 0.003403% (1.25% annually) for the Mortality
and Expense Risk Charge under the Contract times the number of calendar
days in the current Valuation Period. Where (d) is
The daily Administrative Expense Charge, currently 0.000411% (0.15%
annually) times the number of calendar days in the current Valuation
Period. This charge may be increased, but will not exceed 0.000684%
(0.25% annually).
A Valuation Day is defined as any day that both the New York Stock
Exchange and our Service Office are open. We currently expect that
there are no days in which the Exchange is open and our Service Office
is closed.
ANNUITY PERIOD
The Variable Annuity Options provide for payments that fluctuate or
vary in dollar amount, based on the investment performance of the elected
Variable Account Sub-Account(s).
- 4 -
A-4
<PAGE>
Variable Annuity Units and Payments
For the first monthly payment, the number of Variable Annuity Units
credited in each Sub-Account will be determined by dividing (a) the product of
the portion of the value to be applied to the Sub-Account and the Variable
Annuity Purchase Rate specified in the Contract by (b) the value of one Variable
Annuity Unit in that Sub-Account on the Annuity Date.
The amount of each subsequent Variable Annuity Payment equals the
product of the number of Variable Annuity Units in each Sub-Account and the
Sub-Account's Variable Annuity Unit Value as of the tenth day of the month
before the payment due date. The amount of each payment may vary.
Variable Annuity Unit Value
The value of a Variable Annuity Unit in a Sub-Account on any Valuation
Day is determined as described below.
The Net Investment Factor for the Valuation Period (for the appropriate
Annuity Payment frequency) just ended is multiplied by the value of the Variable
Annuity Unit for the Sub-Account on the preceding Valuation Day. The Net
Investment Factor after the Annuity Date is calculated in the same manner as
before the Annuity Date and then multiplied by an interest factor. The interest
factor equals (.999893)n where n is the number of days since the preceding
Valuation Day. This compensates for the 4% interest assumption built into the
Variable Annuity Purchase Rates.
Transfers After the Annuity Date
After the Annuity Date, the Owner may transfer Variable Annuity Units
from one Sub-Account to another, subject to certain limitations. (See
"Transfers" page 34 of the Prospectus.) The dollar amount of each subsequent
monthly Variable Annuity Payment after the transfer must be determined using the
new number of Variable Annuity Units multiplied by the Sub-Account's Variable
Annuity Unit Value on the tenth day of the month preceding payment.
The formula used to determine a transfer after the Annuity Date can be
found in the Appendix to this Statement of Additional Information.
GENERAL PROVISIONS
IRS Required Distributions
If any Owner under a Non-Qualified Contract dies before the entire
interest in the Contract is distributed, the value generally must be distributed
to the designated Beneficiary so that the Contract qualifies as an annuity under
the Code. (See "Federal Tax Matters" page 16.)
Non-Participating
The Contract is non-participating. No dividends are payable and the
Contract will not share in the profits or surplus earnings of Transamerica.
Misstatement of Age or Sex
If the age or sex of the Annuitant or any other measuring life has been
misstated in the application, the Annuity Payments under the Contract will be
whatever the Annuity Purchase Amount applied on the Annuity Date would purchase
on the basis of the correct age or sex of the Annuitant and/or other measuring
life. Any overpayments or underpayments by Transamerica as a result of any such
misstatement may be respectively charged against or credited to the Annuity
Payment or Annuity Payments to be made after the correction so as to adjust for
such overpayment or underpayment.
Proof of Existence and Age
- 5 -
A-5
<PAGE>
Before making any payment under the Contract, Transamerica may require
proof of the existence and/or proof of the age of the Annuitant or any other
measuring life, or any other information deemed necessary in order to provide
benefits under the Contract.
Assignment
No assignment of a Contract will be binding on Transamerica unless made
in writing and given to Transamerica at its Service Office. Transamerica is not
responsible for the adequacy of any assignment. The Owner's rights and the
interest of any Annuitant or non-irrevocable Beneficiary will be subject to the
rights of any assignee of record.
Annuity Data
Transamerica will not be liable for obligations which depend on
receiving information from a Payee or measuring life until such information is
received in a satisfactory form.
Annual Report
At least once each Contract Year prior to the Annuity Date, the Owner
will be given a report of the current Account Value allocated to each
Sub-Account of the Variable Account and each Guarantee Period of the Fixed
Account. This report will also include any other information required by law or
regulation, including all transactions which have occurred during the accounting
period shown in the report. After the Annuity Date, a confirmation will be
provided with every Variable Annuity Payment.
Incontestability
Each Contract is incontestable from the Contract Date.
Ownership
Only the Owner will be entitled to the rights granted by the Contract,
or allowed by Transamerica under the Contract. If the Owner dies, the rights of
the Owner belong to the estate of the Owner unless the Owner has previously
named an Owner's Beneficiary.
Entire Contract
Transamerica has issued the Contract in consideration and acceptance of
the payment of the Initial Purchase Payment and, where state law requires, the
application. In those states that require a written application, a copy of the
application is attached to and is part of the Contract and along with the
Contract constitutes the entire contract. All statements made by the Owner are
considered representations and not warranties. Transamerica will not use any
statement in defense of a claim unless it is made in the application and a copy
of the application is attached to the Contract when issued.
The group annuity contract has been issued to a trust organized under
Missouri law. However, the sole purpose of the trust is to hold the group
annuity contract. The Owner has all rights and benefits under the individual
certificate issued under the group contract.
Changes in the Contract
Only two authorized officers of Transamerica, acting together, have the
authority to bind Transamerica or to make any change in the individual contract
or the group contract or individual certificates thereunder and then only in
writing. Transamerica will not be bound by any promise or representation made by
any other persons.
Transamerica may not change or amend the individual contract or the
group contract or individual certificates thereunder, except as expressly
provided therein, without the Owner's consent. However, Transamerica may change
or amend the individual contract or the group contract or individual
certificates thereunder if such change or amendment is necessary for the
individual contract or the group contract or individual certificates thereunder
to comply with any state or federal law, rule or regulation.
- 6 -
A-6
<PAGE>
Protection of Benefits
To the extent permitted by law, no benefit (including death benefits)
under the Contract will be subject to any claim or process of law by any
creditor.
Delay of Payments
Payment of any cash withdrawal or lump sum death benefit due from the
Variable Account will occur within seven days from the date the election becomes
effective, except that Transamerica may be permitted to postpone such payment
if: (1) the New York Stock Exchange is closed for other than usual weekends or
holidays, or trading on the Exchange is otherwise restricted; or (2) an
emergency exists as defined by the Securities and Exchange Commission
(Commission), or the Commission requires that trading be restricted; or (3) the
Commission permits a delay for the protection of Owners.
In addition, while it is our intention to process all transfers from
the Sub-Accounts immediately upon receipt of a transfer request, the Contract
gives us the right to delay effecting a transfer from a Sub-Account for up to
seven days, but only in certain limited circumstances. However, the staff of the
Commission currently interprets the Investment Company Act of 1940 to require
the immediate processing of all transfers, and in compliance with that
interpretation we will process all transfers immediately unless and until the
Commission or its staff changes its interpretation or otherwise permits us to
exercise this right. Subject to such approval, we may delay effecting such a
transfer only if there is a delay of payment from an affected Portfolio. If this
happens, and if the prior approval of the Commission or its staff is obtained,
then we will calculate the dollar value or number of units involved in the
transfer from a Sub-Account on or as of the date we receive a written transfer
request, but will not process the transfer to the transferee Sub-Account until a
later date during the seven-day delay period when the Portfolio underlying the
transferring Sub-Account obtains liquidity to fund the transfer request through
sales of portfolio securities, new Purchase Payments, transfers by investors or
otherwise. During this period, the amount transferred would not be invested in a
Sub-Account.
Transamerica may delay payment of any withdrawal from the Fixed Account
for a period of not more than six months after Transamerica receives the request
for such withdrawal. If Transamerica delays payment for more than 30 days,
Transamerica will pay interest on the withdrawal amount up to the date of
payment. (See "Cash Withdrawals" page 35 of the Prospectus.)
Notices and Directions
Transamerica will not be bound by any authorization, direction,
election or notice which is not in writing, in a form and manner acceptable to
Transamerica, and received at our Service Office.
Any written notice requirement by Transamerica to the Owner will be
satisfied by our mailing of any such required written notice, by first-class
mail, to the Owner's last known address as shown on our records.
CALCULATION OF YIELDS AND TOTAL RETURNS
Money Market Sub-Account Yield Calculation
In accordance with regulations adopted by the Commission, Transamerica
is required to compute the Money Market Sub-Account's current annualized yield
for a seven-day period in a manner which does not take into consideration any
realized or unrealized gains or losses on shares of the Money Market Series or
on its portfolio securities. This current annualized yield is computed by
determining the net change (exclusive of realized gains and losses on the sale
of securities and unrealized appreciation and depreciation) in the value of a
hypothetical account having a balance of one unit of the Money Market
Sub-Account at the beginning of such seven-day period, dividing such net change
in Account Value by the value of the account at the beginning of the period to
determine the base period return and annualizing this quotient on a 365-day
basis. The net change in Account Value reflects the deductions for the annual
Account Fee, the Mortality and Expense Risk Charge and Administrative Expense
Charges and income and expenses accrued during the period. Because of these
deductions,
- 7 -
A-7
<PAGE>
the yield for the Money Market Sub-Account of the Variable Account will be lower
than the yield for the Money Market Portfolio or any comparable substitute
funding vehicle.
The Commission also permits Transamerica to disclose the effective
yield of the Money Market Sub-Account for the same seven-day period, determined
on a compounded basis. The effective yield is calculated by compounding the
unannualized base period return by adding one to the base period return, raising
the sum to a power equal to 365 divided by 7, and subtracting one from the
result.
The yield on amounts held in the Money Market Sub-Account normally will
fluctuate on a daily basis. Therefore, the disclosed yield for any given past
period is not an indication or representation of future yields or rates of
return. The Money Market Sub-Account's actual yield is affected by changes in
interest rates on money market securities, average portfolio maturity of the
Money Market Portfolio or substitute funding vehicle, the types and quality of
portfolio securities held by the Money Market Series or substitute funding
vehicle, and operating expenses. In addition, the yield figures do not reflect
the effect of any Contingent Deferred Sales Load (of up to 6% of Purchase
Payments) that may be applicable to a Contract.
Other Sub-Account Yield Calculations
Transamerica may from time to time disclose the current annualized
yield of one or more of the Sub-Accounts (except the Money Market Sub-Account)
for 30-day periods. The annualized yield of a Sub-Account refers to the income
generated by the Sub-Account over a specified 30-day period. Because this yield
is annualized, the yield generated by a Sub-Account during the 30-day period is
assumed to be generated each 30-day period. The yield is computed by dividing
the net investment income per Variable Accumulation Unit earned during the
period by the price per unit on the last day of the period, according to the
following formula:
YIELD = 2{a-b 1}6 - 1
cd
Where:
a = net investment income earned during the period by the
Portfolio attributable to the shares owned
by the Sub-Account.
b = expenses for the Sub-Account accrued for the period
(net of reimbursements).
c = the average daily number of Variable Accumulation Units
outstanding during the period.
d = the maximum offering price per Variable Accumulation Unit on
the last day of the period.
Net investment income will be determined in accordance with rules
established by the Commission. Accrued expenses will include all recurring fees
that are charged to all Contracts. The yield calculations do not reflect the
effect of any Contingent Deferred Sales Load that may be applicable to a
particular Contract. Contingent Deferred Sales Load range from 6% to 0% of the
amount of Account Value withdrawn depending on the elapsed time since the
receipt of each Purchase Payment attributable to the portion of the Account
Value withdrawn.
Because of the charges and deductions imposed by the Variable Account,
the yield for the Sub-Account will be lower than the yield for the corresponding
Portfolio. The yield on amounts held in the Sub-Accounts normally will fluctuate
over time. Therefore, the disclosed yield for any given period is not an
indication or representation of future yields or rates of return. The
Sub-Account's actual yield will be affected by the types and quality of
portfolio securities held by the Portfolio, and its operating expenses.
Standard Total Return Calculations
Transamerica may from time to time also disclose average annual total
returns for one or more of the Sub-Accounts for various periods of time. Average
annual total return quotations are computed by finding the average annual
compounded rates of return over one, five and ten year periods that would equate
the initial amount invested to the ending redeemable value, according to the
following formula:
P{1 T}n = ERV
- 8 -
A-8
<PAGE>
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the one, five or ten-year period at
the end of the one, five, or ten-year period (or fractional
portion thereof).
All recurring fees are recognized in the ending redeemable value. The
standard average annual total return calculations will reflect the effect of any
Contingent Deferred Sales Loads that may be applicable to a particular period.
Hypothetical Performance Data
Transamerica may also disclose "hypothetical" performance data for a
Subaccount, for periods before the Subaccount commenced operations. Such
performance information for the Subaccount will be calculated based on the
performance of the corresponding Portfolio and the assumption that the
Subaccount was in existence for the same periods as those indicated for the
Portfolio, with a level of Contract charges currently in effect. The Portfolio
used for these calculations will be the actual Portfolio that the Subaccount
will invest in.
This type of hypothetical performance data may be disclosed on both an
average annual total return and a cumulative total return basis. Moreover, it
may be disclosed assuming that the Contract is not surrendered (i.e., with no
deduction for the Contingent Deferred Sales Load) and assuming that the Contract
is surrendered at the end of the applicable period (i.e., reflecting a deduction
for any applicable Contingent Deferred Sales Load).
Other Performance Data
Transamerica may from time to time also disclose average annual total
returns in a non-standard format in conjunction with the standard described
above. The non-standard format will be identical to the standard format except
that the Contingent Deferred Sales Load percentage will be assumed to be 0%.
Transamerica may from time to time also disclose cumulative total
returns in conjunction with the standard format described above. The cumulative
returns will be calculated using the following formula assuming that the
Contingent Deferred Sales Load percentage will be 0%.
CTR = {ERV/P} - 1
Where:
CTR = the cumulative total return net of Sub-Account recurring charges
for the period. ERV = ending redeemable value of a hypothetical $1,000
payment at the beginning of the one, five, or
ten-year period at the end of the one, five, or ten-year
period (or fractional portion thereof). P = a hypothetical initial
payment of $1,000. All non-standard performance data will be advertised
only if the standard performance data is also disclosed.
HISTORIC PERFORMANCE DATA
General Limitations
The figures below represent the past performance of the Sub-Accounts
and are not indicative of future performance. The figures may reflect the waiver
of advisory fees and reimbursement of other expenses.
The Variable Fund has provided the performance data for the Money
Market, Managed Assets, Zero
Coupon 2000, Quality Bond, Small Cap, Capital Appreciation, Growth and Income,
and International Equity
- 9 -
A-9
<PAGE>
Portfolios. The Stock Index Fund and the Socially Responsible Fund have provided
their performance data. The Sub-Account performance data is derived from the
data provided by the Funds. None of the Funds are affiliated with Transamerica.
In preparing the tables below, Transamerica has relied on the data provided by
the Funds. While Transamerica has no reason to doubt the accuracy of the figures
provided by the Funds, Transamerica has not verified those figures. No data is
provided for the International Value, Disciplined Stock and Small Company Stock
Sub-Accounts since, prior to May 1, 1996, these Sub-Accounts, and their related
Portfolios, had not yet commenced operations.
- 10 -
A-10
<PAGE>
Sub-Account Performance Figures
The charts below show the historical performance data for the
Sub-Accounts since each Sub-Account's commencement of operations. These figures
are not an indication of future performance of the Sub-Accounts. Some of the
figures reflect the waiver of advisory fees and reimbursement of other expenses
for part or all of the periods indicated.
Standard average annual total returns for periods since inception of
the Sub-Account for each Sub-Account are as follows. These figures include
mortality and expenses charges deducted at 1.25%, the administrative expenses
charge of 0.15% per annum, the administration charge of $30 per annum adjusted
for average account size and the maximum contingent deferred sales load of 6%.
<TABLE>
<CAPTION>
SUB-ACCOUNT For the 1-year For the period from
(date of commencement of period ending commencement of Sub-Account
operation of Sub-Account) 12/31/95 operations to 12/31/95
<S> <C> <C> <C> <C>
Money Market (1/4/93) -1.27% 2.76%
Managed Assets (1/4/93) -5.88% 5.46%
Zero Coupon 2000 (1/4/93) 10.95% 6.40%
Quality Bond (1/4/93) 13.51% 6.95%
Small Cap (1/4/93) 23.44% 30.01%
Capital Appreciation (4/5/93) 27.42% 12.40%
Stock Index (1/4/93) 30.52% 12.16%
Socially Responsible (10/7/93) 28.27% 15.47%
International Equity (12/15/94) 1.22% 1.50%
Growth & Income (12/15/94) 54.18% 52.05%
</TABLE>
Nonstandard average annual total returns for periods since inception of the
Sub-Account for each Sub-Account are as follows. These figures include mortality
and expenses charges deducted at 1.25%, the administrative expenses charge of
0.15% per annum, the administration charge of $30 per annum adjusted for average
account size but do not reflect the maximum contingent deferred sales load of
6%, which if reflected would reduce the figures. Nonstandard performance data
will only be disclosed if standard performance data for the required periods is
also disclosed.
<TABLE>
<CAPTION>
SUB-ACCOUNT For the 1-year For the period from
(date of commencement of period ending commencement of Sub-Account
operation of Sub-Account) 12/31/95 operations to 12/31/95
<S> <C> <C> <C> <C>
Managed Assets (1/4/93) -.48% 6.79%
Zero Coupon 2000 (1/4//93) 16.35% 7.71%
Quality Bond (1/4/93) 18.91% 8.25%
Small Cap (1/4/93) 28.84% 30.90%
Capital Appreciation (4/5/93) 32.82% 13.74%
Stock Index (1/4/93) 35.92% 13.34%
Socially Responsible (10/7/93) 33.67% 17.17%
International Equity (12/15/94) 6.62% 6.65%
Growth & Income (12/15/94) 59.50% 57.10%
</TABLE>
Standard cumulative total returns for periods since inception of the
Sub-Account for each Sub-Account are as follows. These figures include mortality
and expenses charges deducted at 1.25%, the administrative
- 11 -
A-11
<PAGE>
expenses charge of 0.15% per annum, the administration charge of $30 per annum
adjusted for average account size and the maximum contingent deferred sales load
of 6%.
<TABLE>
<CAPTION>
For the Period
SUB-ACCOUNT For the 1-Year Since Commencement
(date of commencement of period ending of the Sub-Account
operation of Sub-Account) 12/31/95 until 12/31/95
<S> <C> <C> <C> <C>
Money Market (1/4/93) -1.27%
Managed Assets (1/4/93) -5.88% 17.29%
Zero Coupon 2000 (1/4/93) 10.95% 20.46%
Quality Bond (1/4/93) 13.51% 22.34%
Small Cap (1/4/93) 23.44% 119.77%
Capital Appreciation (4/5/93) 27.42% 37.77%
Stock Index (1/4/93) 30.52% 41.08%
Socially Responsible (10/7/93) 28.27% 37.93%
International Equity (12/15/94) 1.22% 1.57%
Growth & Income (12/15/94) 54.18% 55.07%
</TABLE>
Non-standard cumulative total returns for each Sub-Account for periods since
inception of the Sub-Account are as follows. These figures include mortality and
expenses charges deducted at 1.25%, the administrative expenses charge of 0.15%
per annum, the administration charge of $30 per annum adjusted for average
account size but do not reflect the maximum contingent deferred sales load of
6%, which if reflected would reduce the figures. Nonstandard performance data
will only be disclosed if standard performance data for the required periods is
also disclosed.
<TABLE>
<CAPTION>
For the Period
SUB-ACCOUNT For the 1-Year Since Commencement
(date of commencement of period ending of the Sub-Account
operation of Sub-Account) 12/31/95 until 12/31/95
<S> <C> <C> <C> <C>
Managed Assets (1/4/93) 0.48% 21.79%
Zero Coupon 2000 (1/4/93) 16.35% 24.96%
Quality Bond (1/4/93) 18.71% 26.84%
Small Cap (1/4/93) 28.84% 124.27%
Capital Appreciation (4/5/93) 30.82% 42.34%
Stock Index (1/4/93) 35.92% 45.58%
Socially Responsible (10/7/93) 33.67% 42.51%
International Equity (12/15/94) 6.62% 6.97%
Growth & Income (12/15/94) 57.58% 60.47%
</TABLE>
Money Market Sub-Account Yields
The annualized yield for the Money Market Sub-Account for the seven-day
period ending December 29, 1995 was 3.79%. The effective yield for the Money
Market Sub-Account for the seven-day period ending December 29, 1995 was 3.86%.
Hypothetical Sub-Account Performance Figures
The charts below show "hypothetical" historical performance data for
the Sub-Accounts, including the periods prior to the inception of the
Sub-Accounts, based on the performance of the corresponding Portfolio since
- 12 -
A-12
<PAGE>
its inception date, with a level of charges equal to those currently assessed
under the Contracts. These figures are not an indication of the future
performance of the Sub-Accounts. Some of the figures reflect the waiver of
advisory fees and reimbursement of other expenses for part or all of the periods
indicated.
Hypothetical standard average annual total returns for periods since
inception of the Portfolio for each Sub-Account are as follows. These figures
include mortality and expenses charges deducted at 1.25%, the administrative
expenses charge of 0.15% per annum, the administration charge of $30 per annum
adjusted for average account size and the maximum contingent deferred sales load
of 6%.
<TABLE>
<CAPTION>
SUB-ACCOUNT For the 1-year For the 5-year For the period from
(date of commencement of period ending period ending commencement of Portfolio
operation of Corresponding Portfolio) 12/31/95 12/31/95 operations to 12/31/95
<S> <C> <C> <C> <C> <C>
Money Market (1/4/93) -1.27% 2.55% 2.76%
Managed Assets (8/31/90) -5.88% 5.16% 5.10%
Zero Coupon 2000 (8/31/90) 10.95% 8.95% 9.63%
Quality Bond (8/31/90) 13.51% 9.03% 8.82%
Small Cap (8/31/90) 23.44% 57.46% 53.51%
Capital Appreciation (4/5/93) 27.42% N/A 12.40%
Stock Index (9/29/89) 30.52% 14.08% 1.67%
Socially Responsible (10/7/93) 28.27% N/A 15.47%
International Equity (12/15/94) 1.22% N/A 1.50%
Growth & Income (12/15/94) 54.18% N/A 52.05%
</TABLE>
Hypothetical nonstandard average annual total returns for periods since
inception of the Portfolio for each Sub-Account are as follows. These figures
include mortality and expenses charges deducted at 1.25%, the administrative
expenses charge of 0.15% per annum, the administration charge of $30 per annum
adjusted for average account size but do not reflect the maximum contingent
deferred sales load of 6%, which if reflected would reduce the figures.
Nonstandard performance data will only be disclosed if standard performance data
for the required periods is also disclosed.
<TABLE>
<CAPTION>
SUB-ACCOUNT For the 1-year For the 5-year For the period from
(date of commencement of period ending period ending commencement of Portfolio
operation of Corresponding Portfolio) 12/31/95 12/31/95 operations to 12/31/95
<S> <C> <C> <C> <C> <C>
Managed Assets (8/31/90) 0.48% 5.74% 5.65%
Zero Coupon 2000 (8/31/90) 16.35% 9.46% 10.09%
Quality Bond (8/31/90) 18.91% 9.53% 9.30%
Small Cap (8/31/90) 28.84% 57.58% 53.60%
Capital Appreciation (4/5/93) 32.82% N/A 10.84%
Stock Index (9/29/89) 35.92% 14.50% 10.84%
Socially Responsible (10/7/93) 33.67% N/A 17.17%
International Equity (12/15/94) 6.62% N/A 6.65%
Growth & Income (12/15/94) 59.58% N/A 57.10%
</TABLE>
Hypothetical standard cumulative total returns for periods since inception
of the Portfolio for each Sub- Account are as follows. These figures include
mortality and expenses charges deducted at 1.25%, the administrative expenses
charge of 0.15% per annum, the administration charge of $30 per annum adjusted
for average account size and the maximum contingent deferred sales load of 6%.
- 13 -
A-13
<PAGE>
<TABLE>
<CAPTION>
For the period from
SUB-ACCOUNT For the 1-year For the 5 year commencement of
(date of commencement of period ending period ending Portfolio operations
operation of Corresponding Portfolio) 12/31/95 12/31/95 to 12/31/95
<S> <C> <C> <C> <C> <C>
Managed Assets (8/31/90) -5.88% 28.62% 30.37%
Zero Coupon 2000 (8/31/90) 10.95% 53.51% 63.32%
Quality Bond (8/31/90) 13.51% 54.05% 57.00%
Small Cap (8/31/90) 23.44% 868.03% 883.59%
Capital Appreciation (4/5/93) 27.42% N/A 37.77%
Stock Index (9/29/89) 30.52% 93.18% 88.59%
Socially Responsible (10/7/93) 28.27% N/A 37.93%
International Equity (12/15/94) 1.22% N/A 1.57%
Growth & Income (12/15/94) 54.18% N/A 55.07%
</TABLE>
Hypothetical non-standard cumulative total returns for periods since
inception of the Portfolio for each Sub- Account are as follows. These figures
include mortality and expenses charges deducted at 1.25%, the administrative
expenses charge of 0.15% per annum, the administration charge of $30 per annum
adjusted for average account size but do not reflect the maximum contingent
deferred sales load of 6%, which if reflected would reduce the figures.
Nonstandard performance data will only be disclosed if standard performance data
for the required periods is also disclosed.
<TABLE>
<CAPTION>
(Non-Annualized) For the period from
SUB-ACCOUNT For the 1-month For the 1-year For the 5 year commencement of
(date of commencement of period ending period ending period ending Portfolio operations
operation of Corresponding Portfolio) 12/31/95 12/31/95 12/31/95 to 12/31/95
<S> <C> <C> <C> <C> <C> <C>
Money Market (8/31/90) 0.35% 4.14% 16.99% 19.33%
Managed Assets (8/31/90) 1.95% -0.48% 32.22% 34.04%
Zero Coupon 2000 (8/31/90) 0.93% 16.35% 57.11% 66.99%
Quality Bond (8/31/90) 1.28% 18.91% 57.65% 60.68%
Small Cap (8/31/90) 1.99% 28.84% 871.63% 887.27%
Capital Appreciation (4/5/93) 2.34% 32.82% N/A 42.34%
Stock Index (9/29/89) 2.51% 35.92% 96.78% 90.46%
Socially Responsible (10/7/93) 0.29% 33.67% N/A 42.51%
International Equity (12/15/94) 3.30% 6.62% N/A 6.97%
Growth & Income (12/15/94) 4.45% 59.58% N/A 60.47%
</TABLE>
- 14 -
A-14
<PAGE>
- 15 -
A-15
<PAGE>
- 16 -
A-16
<PAGE>
- 17 -
A-17
<PAGE>
- 18 -
A-18
<PAGE>
- 19 -
A-19
<PAGE>
FEDERAL TAX MATTERS
The Dreyfus/Transamerica Triple Advantage Variable Annuity may be
purchased on a non-tax qualified basis ("Non-Qualified Contract") or purchased
and used in connection with plans qualifying for favorable tax treatment
("Qualified Contract"). Qualified Contracts are designed for use by individuals
in retirement plans which may or may not be plans qualified for special tax
treatment under Sections 401, 403(b) or 408 of the Internal Revenue Code of
1986, as amended (the "Code"). The ultimate effect of federal income taxes on
the Account Value, on Annuity Payments, and on the economic benefit to the
Owner, the Annuitant or the Beneficiary may depend on the type of retirement
plan for which the Contract is purchased, on the tax and employment status of
the individual concerned and on Transamerica's tax status. THE FOLLOWING
DISCUSSION IS GENERAL AND IS NOT INTENDED AS TAX ADVICE. Any person concerned
about these tax implications should consult a competent tax adviser. This
discussion is based upon Transamerica's understanding of the present federal
income tax laws as they are currently interpreted by the Internal Revenue
Service ("IRS"). No representation is made as to the likelihood of continuation
of these present federal income tax laws or of the current interpretations by
the Internal Revenue Service. Moreover, no attempt has been made to consider any
applicable state or other tax laws.
Taxation of Transamerica
Transamerica is taxed as a life insurance company under Part I of
Subchapter L of the Code. Since the Variable Account is not an entity separate
from Transamerica, and its operations form a part of Transamerica, it will not
be taxed separately as a "regulated investment company" under Subchapter M of
the Code. Investment income and realized capital gains are automatically applied
to increase reserves under the Contracts. Under existing federal income tax law,
Transamerica believes that the Variable Account investment income and realized
net capital gains will not be taxed to the extent that such income and gains are
applied to increase the reserves under the Contracts.
Accordingly, Transamerica does not anticipate that it will incur any
federal income tax liability attributable to the Variable Account and,
therefore, Transamerica does not intend to make provisions for any such taxes.
However, if changes in the federal tax laws or interpretations thereof result in
Transamerica being taxed on income or gains attributable to the Variable
Account, then Transamerica may impose a charge against the Variable Account
(with respect to some or all Contracts) in order to set aside provisions to pay
such taxes.
Tax Status of the Contract
Section 817(h) of the Code requires that with respect to
Non-Qualified Contracts, the investments of the Funds be "adequately
diversified" in accordance with Treasury regulations in order for the Contracts
to qualify as annuity contracts under federal tax law. The Variable Account,
through the Funds, intends to comply with the diversification requirements
prescribed by the Treasury in Reg. Sec. 1.817-5, which affect how the Funds'
assets may be invested.
In certain circumstances, owners of variable annuity contracts may be
considered the owners, for federal income tax purposes, of the assets of the
separate accounts used to support their contracts. In those circumstances,
income and gains from the separate account assets would be includible in the
variable contract owner's gross income. The IRS has stated in published rulings
that a variable contract owner will be considered the owner of separate account
assets if the contract owner possesses incidents of ownership in those assets,
such as the ability to exercise investment control over the assets. The Treasury
Department has also announced, in connection with the issuance of regulations
concerning diversification, that those regulations "do not provide guidance
concerning the circumstances in which investor control for the investments of a
segregated asset account may cause the investor (i.e., the Owner), rather than
the insurance company, to be treated as the owner of the assets in the account."
This announcement also stated that guidance would be issued by way of
regulations or rulings on the "extent to which policyholders may direct their
investments to particular Sub-Accounts without being treated as owners of the
underlying assets."
The ownership rights under the Contract are similar to, but different
in certain respects from, those described by the IRS in rulings in which it was
determined that Contract owners were not owners of separate account assets. For
example, the Owner has additional flexibility in allocating premium payments and
Account
- 20 -
A-20
<PAGE>
values. These differences could result in an Owner being treated as the owner of
a pro rata portion of the assets of the Variable Account. In addition,
Transamerica does not know what standards will be set forth, if any, in the
regulations or rulings which the Treasury Department has stated it expects to
issue. Transamerica therefore reserves the right to modify the Contract as
necessary to attempt to prevent an Owner from being considered the owner of a
pro rata share of the assets of the Variable Account.
In order to be treated as an annuity contract for federal income tax
purposes, section 72(s) of the Code requires any Non-Qualified Contract to
provide that (a) if any Owner dies on or after the Annuity Date but prior to the
time the entire interest in the Contract has been distributed, the remaining
portion of such interest will be distributed at least as rapidly as under the
method of distribution being used as of the date of that Owner's death; and (b)
if any Owner dies prior to the Annuity Date, the entire interest in the Contract
will be distributed within five years after the date of the Owner's death. These
requirements will be considered satisfied as to any portion of the Owner's
interest which is payable to or for the benefit of a "designated beneficiary"
and which is distributed over the life of such "designated beneficiary" or over
a period not extending beyond the life expectancy of that Beneficiary, provided
that such distributions begin within one year of the Owner's death. The Owner's
"designated beneficiary" refers to a natural person designated by such Owner as
a Beneficiary and to whom ownership of the Contract passes by reason of death.
However, if the Owner's "designated beneficiary" is the surviving spouse of the
Owner, the Contract may be continued with the surviving spouse as the new owner.
The Non-Qualified Contracts contain provisions which are intended to
comply with the requirements of section 72(s) of the Code, although no
regulations interpreting these requirements have yet been issued. Transamerica
intends to review such provisions and modify them if necessary to assure that
they comply with the requirements of Code section 72(s) when clarified by
regulation or otherwise. Other rules may apply to Qualified Contract.
DISTRIBUTION OF THE CONTRACT
Transamerica Securities Sales Corporation ("TSSC") is principal
underwriter of the Contracts. TSSC may also serve as principal underwriter and
distributor of other contracts issued through the Variable Account and certain
other separate accounts of Transamerica and any affiliates of Transamerica. TSSC
is a wholly owned subsidiary of Transamerica Insurance Corporation of
California, which is a subsidiary of Transamerica Corporation. TSSC is
registered with the Commission as a broker/dealer and is a member of the
National Association of Securities Dealers, Inc. ("NASD"). Transamerica pays
TSSC for acting as the principal underwriter under a distribution agreement.
TSSC has entered into sales agreements with other broker/dealers to
solicit applications for the Contracts through registered representatives who
are licensed to sell securities and variable insurance products. These
agreements provide that applications for the Contracts may be solicited by
registered representatives of the broker/dealers appointed by Transamerica to
sell its variable life insurance and variable annuities. These broker/dealers
are registered with the Commission and are members of the NASD. The registered
representatives are authorized under applicable state regulations to sell
variable life insurance and variable annuities.
Transamerica Financial Resources, Inc. ("TFR") is an underwriter and
distributor of the Contracts. TFR
is a wholly-owned subsidiary of Transamerica Insurance Corporation of
California and is registered with the
Commission and the NASD as a broker/dealer.
Under the agreements, applications for the Contracts will be sold by
broker/dealers which will receive compensation as described in the Prospectus.
The offering of the Contracts is expected to be continuous and neither
TSSC nor TFR anticipate discontinuing the offering of the Contracts. However,
TSSC and TFR reserve the right to discontinue the offering of the Contracts.
During fiscal year 1995, $9,421,052.81 in commissions were paid to TSSC
as underwriter of the Contracts; no amounts were retained by TSSC. During fiscal
year 1995, $1,485,889.71 in commissions were paid to TFR as underwriter of the
Contracts; $496,781 was retained by TFR. During fiscal year 1994, Dreyfus
Service Corporation served as principal underwriter until August 24, 1994;
thereafter, TSSC served as principal underwriter. Throughout fiscal year 1994,
TFR served as principal underwriter. Total commissions paid these
- 21 -
A-21
<PAGE>
three entities during 1994 were $5,926,028.01. During fiscal year 1993, TSSC did
not serve as underwriter. Dreyfus Service Corporation served as underwriter
throughout the year and was paid $1,473,219.07 in commissions. TFR served as
underwriter throughout 1993 and was paid $9,882.67 in commissions.
SAFEKEEPING OF VARIABLE ACCOUNT ASSETS
Title to assets of the Variable Account is held by Transamerica. The
assets of the Variable Account are kept separate and apart from Transamerica
general account assets. Records are maintained of all purchases and redemptions
of Portfolio shares held by each of the Sub-Accounts.
TRANSAMERICA
General Information and History
Transamerica Occidental Life Insurance Company was formerly known as
Occidental Life Insurance Company of California. The name change occurred on or
about September 1, 1981.
Transamerica is wholly-owned by Transamerica Insurance Corporation of
California, which is in turn, wholly-owned by Transamerica Corporation.
Transamerica Corporation is a financial services organization which engages
through its subsidiaries in two primary businesses: finance and insurance.
Finance consists of consumer lending, commercial lending, leasing and real
estate services. Insurance comprises life insurance, asset management, and
insurance brokerage.
STATE REGULATION
Transamerica is subject to the insurance laws and regulations of all
the states where it is licensed to operate. The availability of certain Contract
rights and provisions depends on state approval and/or filing and review
processes. Where required by state law or regulation, the Contract will be
modified accordingly.
RECORDS AND REPORTS
All records and accounts relating to the Variable Account will be
maintained by Transamerica or by its Service Office. As presently required by
the provisions of the 1940 Act and regulations promulgated thereunder which
pertain to the Variable Account, reports containing such information as may be
required under the 1940 Act or by other applicable law or regulation will be
sent to Owners semi-annually at their last known address of record.
FINANCIAL STATEMENTS
This Statement of Additional Information contains the financial
statements of the Variable Account as of December 31, 1995.
The consolidated financial statements of Transamerica included in this
Statement of Additional Information should be considered only as bearing on the
ability of Transamerica to meet its obligations under the Contract. They should
not be considered as bearing on the investment performance of the assets held in
the Variable Account.
- 22 -
A-22
<PAGE>
(This page has been left blank
intentionally.)
- 23 -
<PAGE>
Audited Financial Statements
Separate Account VA-2L of
Transamerica Occidental
Life Insurance Company
December 31, 1995
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Unitholders of Separate Account VA-2L of Transamerica Occidental Life Insurance
Company Board of Directors, Transamerica Occidental Life Insurance Company
We have audited the accompanying statement of assets and liabilities of Separate
Account VA-2L of Transamerica Occidental Life Insurance Company (comprised of
the Money Market, Managed Assets, Zero Coupon 2000, Quality Bond, Small Cap,
Capital Appreciation, Growth and Income, International Equity, Stock Index Fund,
and the Socially Responsible Fund Sub-accounts) as of December 31, 1995, the
related statement of operations for the year then ended, and the statements of
changes in net assets for the two years in the period then ended. These
financial statements are the responsibility of Separate Account VA-2L'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. Our procedures included
confirmation of securities owned as of December 31, 1995, by correspondence with
the fund manager. 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 each of the respective
sub-accounts comprising Separate Account VA-2L of Transamerica Occidental Life
Insurance Company at December 31, 1995, the results of their operations for the
year then ended, and the changes in their net assets for the two years in the
period then ended in conformity with generally accepted accounting principles.
April 15, 1996
<PAGE>
SEPARATE ACCOUNT VA-2L OF TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
<TABLE>
<CAPTION>
Zero
Money Managed Coupon
Market Assets 2000
Sub-account Sub-account Sub-account
ASSETS:
<S> <C> <C> <C>
Investments, at fair value--Notes 1 and 2:
Variable Fund Series:
Money Market Series-
35,340,678.780 shares at
$1.00 per share (cost $35,340,679) $ 35,340,679
Managed Assets Series-
1,356,894.980 shares at
$11.70 per share (cost $16,907,636) $ 15,875,671
Zero Coupon 2000 Series
1,044,842.642 shares at
$12.70 per share (cost $12,653,220) $ 13,269,502
Quality Bond Series
2,408,531.315 shares at
$11.81 per share (cost $27,140,580)
Small Cap Series
2,383,558.846 shares at
$46.13 per share (cost $94,250,213)
Capital Appreciation Series
2,063,877.502 shares at
$17.71 per share (cost $31,358,778)
Growth and Income Series-
2,698,524.015 shares at
$18.33 per share (cost $45,841,414)
International Equity Series-
534,768.750 shares at
$12.82 per share (cost $6,619,815)
Stock Index Fund-
1,280,959.519 shares at
$17.20 per share (cost $19,592,591)
Socially Responsible Fund-
302,396.118 shares at
$17.31 per share (cost $4,667,579)
Receivable for unsettled investments - - 51,515
Due from Transamerica Life 7,417 - 1,424
------------------ ------------------ -----------------
TOTAL ASSETS $ 35,348,096 $ 15,875,671 $ 13,322,441
LIABILITIES:
Payable for unsettled investments 595,565 38,480 -
Due to Transamerica Life - 330 -
------------------ ------------------ -----------------
TOTAL LIABILITIES 595,565 38,810 -
------------------ ------------------ -----------------
NET ASSETS $ 34,752,531 $ 15,836,861 $ 13,322,441
================== ================== =================
Accumulation units outstanding 31,807,563.947 1,288,429.555 903,799.152
================== ================== =================
Net asset value and redemption price per unit $ 1.092587 $ 12.291600 $ 14.740488
================== ================== =================
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Socially
Quality Small Capital Growth International Stock Responsible
Bond Cap Appreciation and Income Equity Index Fund Fund
Sub-account Sub-account Sub-account Sub-account Sub-account Sub-account Sub-account
<S> <C> <C> <C> <C> <C> <C>
$ 28,444,755
$ 109,953,570
$ 36,551,271
$ 49,463,945
$ 6,855,735
$ 22,032,504
$ 5,234,477
96,689 256,678 23,580 357,033 23,066 75,694 3,497
1,397 1,028 1,238 7,964 - 3,583 255
- ------------- ---------------- --------------- ---------------- --------------- ---------------- ----------------
$ 28,542,841 $ 110,211,276 $ 36,576,089 $ 49,828,942 $ 6,878,801 $ 22,111,781 $ 5,238,229
- - - - - - -
- - - - 3,182 - -
- ------------- ---------------- --------------- ---------------- --------------- ---------------- ----------------
- - - - 3,182 - -
- ------------- ---------------- --------------- ---------------- --------------- ---------------- ----------------
$ 28,542,841 $ 110,211,276 $ 36,576,089 $ 49,828,942 $ 6,875,619 $ 22,111,781 $ 5,238,229
============= ================ =============== ================ =============== ================ ================
2,052,313.888 2,155,879.198 2,077,029.504 2,565,038.589 530,374.642 997,271.816 295,077.936
============= ================ ================ ================ =============== ================ ================
$ 13.907639 $ 51.121267 $ 17.609807 $ 19.426196 $ 12.963702 $ 22.172271 $ 17.752019
============= ================ ================ ================ =============== ================ ================
</TABLE>
<PAGE>
SEPARATE ACCOUNT VA-2L OF TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
Year ended December 31, 1995
<TABLE>
<CAPTION>
Zero
Money Managed Coupon
Market Assets 2000
Sub-account Sub-account Sub-account
<S> <C> <C> <C> <C>
Investment income--Note 2 $ 1,491,326 $ 826,267 $ 523,393
Expenses--Note 3:
Mortality and expense risk charge 338,272 219,483 112,124
Administrative expense charge 40,753 26,508 13,494
------------------ ------------------ -----------------
NET INVESTMENT INCOME (LOSS) 1,112,301 580,276 397,775
Net realized and unrealized gain (loss) on investments:
Realized gain (loss) on investment transactions - (335,396) (140,089)
Unrealized appreciation (depreciation) of investments - (535,291) 1,030,346
------------------ ------------------ -----------------
NET GAIN (LOSS) ON INVESTMENTS - (870,687) 890,257
------------------ ------------------ -----------------
INCREASE (DECREASE) IN
NET ASSETS RESULTING
FROM OPERATIONS $ 1,112,301 $ (290,411) $ 1,288,032
================== ================== =================
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Socially
Quality Small Capital Growth International Stock Responsible
Bond Cap Appreciation and Income Equity Index Fund Fund
Sub-account Sub-account Sub-account Sub-account Sub-account Sub-account Sub-account
<C> <C> <C> <C> <C> <C> <C>
$ 1,092,357 $ 399,166 $ 460,967 $ 399,528 $ 43,474 $ 285,228 $ 23,297
219,298 935,207 272,389 231,473 35,386 145,736 36,598
26,486 113,172 32,797 27,956 4,273 17,598 4,420
- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
846,573 (649,213) 155,781 140,099 3,815 121,894 (17,721)
156,021 4,383,742 716,222 3,095,754 49,984 512,512 211,461
1,914,507 14,385,734 5,071,323 3,622,568 236,175 2,677,146 601,448
- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
2,070,528 18,769,476 5,787,545 6,718,322 286,159 3,189,658 812,909
- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
$ 2,917,101 $ 18,120,263 $ 5,943,326 $ 6,858,421 $ 289,974 $ 3,311,552 $ 795,188
=============== =============== =============== =============== =============== =============== ===============
</TABLE>
<PAGE>
SEPARATE ACCOUNT VA-2L OF TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
Year ended December 31, 1995
<TABLE>
<CAPTION>
Zero
Money Managed Coupon
Market Assets 2000
Sub-account Sub-account Sub-account
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C>
Net investment income (loss) $ 1,112,301 $ 580,276 $ 397,775
Realized gain (loss) on investment transactions - (335,396) (140,089)
Unrealized appreciation (depreciation) of investments - (535,291) 1,030,346
------------------ ------------------ -----------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 1,112,301 (290,411) 1,288,032
Change from accumulation unit transactions--Note 5 8,941,419 (2,447,403) 5,997,907
------------------ ------------------ -----------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 10,053,720 (2,737,814) 7,285,939
Net assets at beginning of year 24,698,811 18,574,675 6,036,502
------------------ ------------------ -----------------
NET ASSETS AT END OF YEAR $ 34,752,531 $ 15,836,861 $ 13,322,441
================== ================== =================
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Socially
Quality Small Capital Growth International Stock Responsible
Bond Cap Appreciation and Income Equity Index Fund Fund
Sub-account Sub-account Sub-account Sub-account Sub-account Sub-account Sub-account
<C> <C> <C> <C> <C> <C> <C>
$ 846,573 $ (649,213) $ 155,781 $ 140,099 $ 3,815 $ 121,894 $ (17,721)
156,021 4,383,742 716,222 3,095,754 49,984 512,512 211,461
1,914,507 14,385,734 5,071,323 3,622,568 236,175 2,677,146 601,448
- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
2,917,101 18,120,263 5,943,326 6,858,421 289,974 3,311,552 795,188
14,717,034 42,001,313 18,334,764 42,918,199 6,480,966 13,064,831 2,636,914
- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
17,634,135 60,121,576 24,278,090 49,776,620 6,770,940 16,376,383 3,432,102
10,908,706 50,089,700 12,297,999 52,322 104,679 5,735,398 1,806,127
- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
$ 28,542,841 $ 110,211,276 $ 36,576,089 $ 49,828,942 $ 6,875,619 $ 22,111,781 $ 5,238,229
=============== =============== =============== =============== =============== =============== ===============
</TABLE>
<PAGE>
SEPARATE ACCOUNT VA-2L OF TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
Year Ended December 31, 1994
<TABLE>
<CAPTION>
Zero
Money Managed Coupon
Market Assets 2000
Sub-account Sub-account Sub-account
Increase in net assets:
Operations:
<S> <C> <C> <C>
Net investment income (loss) $ 451,940 $ 324,066 $ 210,823
Realized gain (loss) on investment transactions - 34,656 (59,073)
Unrealized appreciation (depreciation) of
investments - (614,347) (351,797)
------------------ ------------------ -----------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 451,940 (255,625) (200,047)
Change from accumulation unit transactions--Note 5 20,524,893 15,133,325 3,480,417
------------------ ------------------ -----------------
TOTAL INCREASE IN NET ASSETS 20,976,833 14,877,700 3,280,370
Net assets at beginning of year 3,721,978 3,696,975 2,756,132
------------------ ------------------ -----------------
NET ASSETS AT END OF YEAR $ 24,698,811 $ 18,574,675 $ 6,036,502
================== ================== =================
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Socially
Quality Small Capital Growth International Stock Responsible
Bond Cap Appreciation and Income Equity Index Fund Fund
Sub-account Sub-account Sub-account Sub-account Sub-account Sub-account Sub-account
<C> <C> <C> <C> <C> <C> <C>
$ 410,995 $ (190,724) $ 104,875 $ (8) $ 37 $ 49,676 $ 31,262
(80,627) 740,538 23,184 25 222 (41,110) 169
(582,887) 903,477 58,409 (37) (255) (11,324) (36,349)
- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
(252,519) 1,453,291 186,468 (20) 4 (2,758) (4,918)
7,983,405 39,028,417 8,983,021 52,342 104,675 4,192,848 1,462,370
- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
7,730,886 40,481,708 9,169,489 52,322 104,679 4,190,090 1,457,452
3,177,820 9,607,992 3,128,510 - - 1,545,308 348,675
- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
$ 10,908,706 $ 50,089,700 $ 12,297,999 $ 52,322 $ 104,679 $ 5,735,398 $ 1,806,127
=============== =============== =============== =============== =============== =============== ===============
</TABLE>
<PAGE>
SEPARATE ACCOUNT VA-2L OF TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
NOTE 1--ORGANIZATION
Separate Account VA-2L of Transamerica Occidental Life Insurance Company
("Separate Account") was established by Transamerica Occidental Life Insurance
Company ("Transamerica Life") as a separate account under the laws of the State
of California on May 22, 1992. The Separate Account is registered with the
Securities and Exchange Commission (the Commission) under the Investment Company
Act of 1940 as a unit investment trust and is designed to provide annuity
benefits pursuant to flexible purchase payment multi-funded deferred annuity
contracts ("Contract") issued by Transamerica Life. The Separate Account
commenced operations when initial deposits were received on March 31, 1993.
In accordance with the terms of the Contract, all payments allocated to the
Separate Account by contract owners must be allocated to purchase units of any
or all of the Separate Account's ten sub-accounts, each of which invests
exclusively in a specific corresponding mutual fund portfolio. The mutual fund
portfolios are: eight Series of Dreyfus Variable Investment Fund (Variable
Fund), Dreyfus Stock Index Fund (Stock Index Fund) and The Dreyfus Socially
Responsible Growth Fund (Socially Responsible Fund) (together "the Funds"). The
Variable Fund's eight series are: Money Market Series, Managed Assets Series,
Zero Coupon 2000 Series, Quality Bond Series, Small Cap Series, Capital
Appreciation Series, Growth and Income, and International Equity. The Funds are
open-end management investment companies registered under the Investment Company
Act of 1940.
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements of the Separate Account have been prepared
on the basis of generally accepted accounting principles. The preparation of
financial statements requires management to make estimates and assumptions that
affect amounts reported in the financial statements and accompanying notes. Such
estimates and assumptions could change in the future as more information becomes
known which could impact the amounts reported and disclosed herein. The
accounting principles followed and the methods of applying those principles are
presented below:
Investment Valuation--Investments in the Funds' shares are carried at fair (net
asset) value. Realized investment gains or losses on investments are determined
on a specific identification basis which approximates average cost. Investment
transactions are accounted for on the date the order to buy or sell is executed
(trade date). Investments have a cost basis for federal income tax purposes of
$294,372,505.
Investment Income--Investment income consists of dividend income (both ordinary
and capital gains) and is recognized on the ex-dividend date. All distributions
received are reinvested in the respective sub-accounts.
Federal Income Taxes--Operations of the Separate Account are part of, and will
be taxed with, those of Transamerica Life, which is taxed as a "life insurance
company" under the Internal Revenue Code. No income taxes are payable by the
Separate Account.
<PAGE>
SEPARATE ACCOUNT VA-2L OF TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--Continued
December 31, 1995
NOTE 3--EXPENSES AND CHARGES
Mortality and expense risk charges are deducted from each sub-account of the
Separate Account on a daily basis which is equal, on an annual basis, to 1.25%
of the daily net asset value of the sub-account. This amount can never increase
and is paid to Transamerica Life. An administrative expense charge is also
deducted by Transamerica Life from each sub-account on a daily basis which is
equal, on an annual basis, to .15% of the daily net asset value of the
sub-account. This amount may change, but it is guaranteed not to exceed a
maximum effective annual rate of .25%.
The following charges are deducted from a contract holder's account by
Transamerica Life and not directly from the Separate Account. An annual contract
fee is deducted at the end of each contract year prior to the annuity date.
Currently, this charge is $30 (or 2% of the account value, if less). This charge
may change but is guaranteed not to exceed $60 (or 2% of the account value, if
less). After the annuity date this charge is referred to as the Annuity Fee. The
Annuity Fee is $30. In the event that a contract holder withdraws all or a
portion of the contract holder's account, a contingent deferred sales load
(CDSL) not exceeding 6% of premiums may be applied to the amount of the contract
value withdrawn to cover certain expenses relating to the sale of contracts. The
amount of the CDSL is based upon elapsed time since the premium was received and
disappears after the seventh year. During 1995, CDSL amounted to $252,920.
NOTE 4--REMUNERATION
The Separate Account pays no remuneration to directors, advisory boards or
officers or such other persons who may from time to time perform services for
the Separate Account.
<PAGE>
SEPARATE ACCOUNT VA-2L OF TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--Continued
December 31, 1995
NOTE 5--ACCUMULATION UNITS
<TABLE>
<CAPTION>
The change in accumulation units and amounts is as follows:
Zero
Money Managed Coupon Quality Small
Market Assets 2000 Bond Cap
Sub-account Sub-account Sub-account Sub-account Sub-account
Year Ended December 31, 1995
Accumulation Units:
<S> <C> <C> <C> <C> <C>
Units sold 73,714,235.343 239,703.304 268,630.635 556,212.925 585,262.635
Units redeemed (1,976,002.187) (86,284.661) (30,307.096) (86,297.967) (61,708.928)
Units transferred (63,490,459.004) (351,427.225) 189,119.875 650,871.239 382,087.866
------------------ ---------------- --------------- --------------- ---------------
NET INCREASE (DECREASE) 8,247,774.152 (198,008.582) 427,443.414 1,120,786.197 905,641.573
================== ================ =============== =============== ===============
Socially
Capital Growth International Stock Responsible
Appreciation and Income Equity Index Fund Fund
Sub-account Sub-account Sub-account Sub-account Sub-account
Accumulation Units:
Units sold 643,256.161 1,094,196.031 238,769.393 364,352.576 95,436.424
Units redeemed (59,860.176) (17,701.116) (9,610.054) (29,595.056) (7,137.910)
Units transferred 574,010.904 1,484,243.294 292,663.230 313,577.011 71,761.072
----------------- -------------- -------------- -------------- --------------
NET INCREASE 1,157,406.889 2,560,738.209 521,822.569 648,334.531 160,059.586
================= ============== ============== ============== ==============
Zero
Money Managed Coupon Quality Small
Market Assets 2000 Bond Cap
Sub-account Sub-account Sub-account Sub-account Sub-account
Amounts:
Sales $ 78,839,766 $ 2,960,448 $ 3,825,351 $ 7,466,958 $ 28,113,406
Redemptions (2,586,527) (1,059,302) (428,896) (1,119,941) (2,801,301)
Transfers (67,311,820) (4,348,549) 2,601,452 8,370,017 16,689,208
----------------- --------------- --------------- --------------- ---------------
NET INCREASE (DECREASE) $ 8,941,419 $ (2,447,403) $ 5,997,907 $ 14,717,034 $ 42,001,313
================= =============== =============== =============== ===============
Socially
Capital Growth International Stock Responsible
Appreciation and Income Equity Index Fund Fund
Sub-account Sub-account Sub-account Sub-account Sub-account
Amounts:
Sales $ 10,425,125 $ 19,073,524 $ 2,995,423 $ 7,463,199 $ 1,592,814
Redemptions (968,557) (317,376) (121,099) (598,898) (108,173)
Transfers 8,878,196 24,162,051 3,606,642 6,200,530 1,152,273
----------------- --------------- --------------- --------------- ---------------
NET INCREASE $ 18,334,764 $ 42,918,199 $ 6,480,966 $ 13,064,831 $ 2,636,914
================= =============== =============== =============== ===============
</TABLE>
<PAGE>
SEPARATE ACCOUNT VA-2L OF TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--Continued
December 31, 1995
<TABLE>
<CAPTION>
NOTE 5--ACCUMULATION UNITS (continued)
Zero
Money Managed Coupon Quality Small
Market Assets 2000 Bond Cap
Sub-account Sub-account Sub-account Sub-account Sub-account
Year Ended December 31, 1994
Amounts:
<S> <C> <C> <C> <C> <C>
Units sold 91,099,214.468 127,523.395 58,178.167 34,858.863 111,419.979
Units redeemed (591,215.810) (27,032.811) (3,861.532) (12,971.921) (18,310.088)
Units transferred (70,603,000.639) 1,098,496.785 215,935.755 654,290.409 902,287.874
------------------ --------------- --------------- --------------- ---------------
NET INCREASE 19,904,998.019 1,198,987.369 270,252.390 676,177.351 995,397.765
================== =============== =============== =============== ===============
Socially
Capital Growth International Stock Responsible
Appreciation and Income Equity Index Fund Fund
Sub-account Sub-account Sub-account Sub-account Sub-account
Amounts:
Units sold 76,260.367 - 7,603.920 41,548.320 17,286.110
Units redeemed (12,785.072) - - (3,324.449) (805.627)
Units transferred 618,414.299 4,300.380 948.153 217,176.681 92,448.041
----------------- -------------- -------------- -------------- --------------
NET INCREASE 681,889.594 4,300.380 8,552.073 255,400.552 108,928.524
================= ============== ============== ============== ==============
Zero
Money Managed Coupon Quality Small
Market Assets 2000 Bond Cap
Sub-account Sub-account Sub-account Sub-account Sub-account
Amounts:
Sales $ 93,556,049 $ 1,697,435 $ 766,691 $ 513,502 $ 4,452,309
Redemptions (610,950) (340,141) (49,463) (152,308) (711,478)
Transfers (72,420,206) 13,776,031 2,763,189 7,622,211 35,287,586
----------------- --------------- --------------- --------------- ---------------
NET INCREASE $ 20,524,893 $ 15,133,325 $ 3,480,417 $ 7,983,405 $ 39,028,417
================= =============== =============== =============== ===============
Socially
Capital Growth International Stock Responsible
Appreciation and Income Equity Index Fund Fund
Sub-account Sub-account Sub-account Sub-account Sub-account
Amounts:
Sales $ 1,011,308 $ 128 $ 93,070 $ 712,527 $ 238,856
Redemptions (166,707) - - (54,391) (10,725)
Transfers 8,138,420 52,214 11,605 3,534,712 1,234,239
----------------- --------------- --------------- --------------- ---------------
NET INCREASE $ 8,983,021 $ 52,342 $ 104,675 $ 4,192,848 $ 1,462,370
================= =============== =============== =============== ===============
</TABLE>
<PAGE>
SEPARATE ACCOUNT VA-2L OF TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--Continued
December 31, 1995
NOTE 6--INVESTMENT TRANSACTIONS
<TABLE>
<CAPTION>
The aggregate cost of purchases and the aggregate proceeds from the sales of
investments for the year ended December 31, 1995 were:
Zero
Money Managed Coupon Quality Small
Market Assets 2000 Bond Cap
Sub-account Sub-account Sub-account Sub-account Sub-account
<S> <C> <C> <C> <C> <C>
Aggregate purchases $ 96,812,060 $ 7,100,764 $ 9,023,402 $ 19,770,167 $ 54,545,712
=============== =============== =============== =============== ===============
Aggregate proceeds from sales $ 85,963,547 $ 8,928,503 $ 2,680,393 $ 4,010,190 $ 11,551,550
=============== =============== =============== =============== ===============
Socially
Capital Growth International Stock Responsible
Appreciation and Income Equity Index Fund Fund
Sub-account Sub-account Sub-account Sub-account Sub-account
Aggregate purchases $ 22,527,555 $ 51,409,776 $ 7,329,626 $ 16,321,843 $ 3,530,633
=============== =============== =============== =============== ===============
Aggregate proceeds from sales $ 4,062,774 $ 6,875,442 $ 868,239 $ 3,046,600 $ 795,652
=============== =============== =============== =============== ===============
</TABLE>
<PAGE>
Audited Consolidated Financial Statements
Transamerica Occidental Life Insurance Company and Subsidiaries
December 31, 1995
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
Audited Consolidated Financial Statements
December 31, 1995
Audited Consolidated Financial Statements
Report of Independent Auditors........................... 1
Consolidated Balance Sheet............................... 2
Consolidated Statement of Income......................... 3
Consolidated Statement of Shareholder's Equity........... 4
Consolidated Statement of Cash Flows..................... 5
Notes to Consolidated Financial Statements............... 6
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Transamerica Occidental Life Insurance Company
We have audited the accompanying consolidated balance sheet of Transamerica
Occidental Life Insurance Company and Subsidiaries as of December 31, 1995 and
1994, and the related consolidated statements of income, shareholder's equity,
and cash flows for each of the three years in the 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 consolidated financial position of Transamerica
Occidental Life Insurance Company and Subsidiaries at December 31, 1995 and
1994, and the consolidated results of their operations and their cash flows for
each of the three years in the period ended December 31, 1995, in conformity
with generally accepted accounting principles.
As discussed in Note A, the Company changed its method of accounting for certain
debt securities effective January 1, 1994.
ERNST & YOUNG LLP
February 14, 1996
<PAGE>
<TABLE>
<CAPTION>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
December 31
1995 1994
--------------------- -------------
(In thousands, except
for share data)
ASSETS
Investments:
<S> <C> <C>
Fixed maturities available for sale $ 25,997,403 $ 21,006,469
Equity securities available for sale 307,881 201,011
Mortgage loans on real estate 565,086 366,727
Investment real estate 38,376 69,246
Policy loans 426,377 412,938
Other long-term investments 62,536 50,079
Short-term investments 211,500 144,163
--------------------- ---------------------
27,609,159 22,250,633
Cash 49,938 42,916
Accrued investment income 394,008 363,121
Accounts receivable 174,266 202,456
Reinsurance recoverable on paid and unpaid losses 1,957,160 1,490,491
Deferred policy acquisitions costs 1,974,211 2,480,474
Deferred tax assets - 164,513
Other assets 257,333 241,733
Separate account assets 2,533,424 1,666,451
--------------------- ---------------------
$ 34,949,499 $ 28,902,788
===================== =====================
LIABILITIES AND SHAREHOLDER'S EQUITY
Policy liabilities:
Policyholder contract deposits $ 22,057,773 $ 19,281,515
Reserves for future policy benefits 5,245,233 4,846,072
Policy claims and other 542,511 555,289
--------------------- ---------------------
27,845,517 24,682,876
Income tax liabilities 587,801 67,870
Accounts payable and other liabilities 534,866 567,300
Separate account liabilities 2,533,424 1,666,451
--------------------- ---------------------
31,501,608 26,984,497
Shareholder's equity:
Common Stock ($12.50 par value):
Authorized--4,000,000 shares
Issued and outstanding--2,206,933 shares 27,587 27,587
Additional paid-in capital 333,578 319,279
Retained earnings 2,171,412 1,921,232
Foreign currency translation adjustments (23,618) (28,347)
Net unrealized investment gains (losses) 938,932 (321,460)
--------------------- ---------------------
3,447,891 1,918,291
--------------------- ---------------------
$ 34,949,499 $ 28,902,788
===================== =====================
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
Year Ended December 31
1995 1994 1993
--------------- --------------- ----------
(In thousands)
Revenues:
<S> <C> <C> <C>
Premiums and other considerations $ 1,811,888 $ 1,430,019 $ 1,212,680
Net investment income 1,972,759 1,771,575 1,724,301
Other operating revenue - 13,273 -
Net realized investment gains 28,112 20,730 44,887
--------------- --------------- ---------------
TOTAL REVENUES 3,812,759 3,235,597 2,981,868
Benefits:
Benefits paid or provided 2,587,468 2,116,125 1,993,013
Increase in policy reserves and liabilities 236,205 204,159 121,325
--------------- --------------- ---------------
2,823,673 2,320,284 2,114,338
Expenses:
Amortization of deferred policy acquisition costs 182,123 176,033 169,457
Salaries and salary related expenses 145,681 133,591 127,130
Other expenses 200,339 190,500 182,193
--------------- --------------- ---------------
528,143 500,124 478,780
--------------- --------------- ---------------
TOTAL BENEFITS AND EXPENSES 3,351,816 2,820,408 2,593,118
--------------- --------------- ---------------
INCOME BEFORE INCOME TAXES 460,943 415,189 388,750
Provision for income taxes 149,647 143,491 138,997
--------------- --------------- ---------------
NET INCOME $ 311,296 $ 271,698 $ 249,753
=============== =============== ===============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDER'S EQUITY
Net
Foreign Unrealized
Additional Currency Investment
Common Stock Paid-in Retained Translation Gains
Shares Amount Capital Earnings Adjustments (Losses)
(In thousands, except for share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1993 2,206,933 $ 27,587 $ 229,900 $ 1,495,781 $ (17,314) $ 74,643
Net income 249,753
Capital contributions from parent 89,379
Dividends declared (56,000)
Change in foreign currency
translation adjustments (3,740)
Change in net unrealized
investment gains (losses) (11,061)
Balance at December 31, 1993 2,206,933 27,587 319,279 1,689,534 (21,054) 63,582
Cumulative effect of change in
accounting for investments 795,187
Net income 271,698
Dividends declared (40,000)
Change in foreign currency
translation adjustments (7,293)
Change in net unrealized
investment gains (losses) (1,180,229)
Balance at December 31, 1994 2,206,933 27,587 319,279 1,921,232 (28,347) (321,460)
Net income 311,296
Capital contributions from parent 14,298
Dividends declared (61,114)
Change in foreign currency
translation adjustments 4,728
Change in net unrealized
investment gains (losses) 1,260,392
Balance at December 31, 1995 2,206,933 $ 27,587 $ 333,577 $ 2,171,414 $ (23,619) $ 938,932
============ ========== ============= ============ ============ =============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Year Ended December 31
1995 1994 1993
----------------- ------------------ ----------
(In thousands)
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income $ 311,296 $ 271,698 $ 249,753
Adjustments to reconcile net income to net cash
provided by operating activities:
Changes in:
Reinsurance recoverable (466,669) (290,926) (175,952)
Accounts receivable (58,866) (31,934) (183,598)
Policy liabilities 1,273,723 804,296 921,067
Other assets, accounts payable and other
liabilities, and income taxes (252,362) 133,499 135,658
Policy acquisition costs deferred (381,806) (394,858) (359,146)
Amortization of deferred policy acquisition costs 191,313 182,312 232,309
Net realized gains on investment transactions (37,247) (27,008) (107,769)
Other (22,917) (124,644) (107,831)
----------------- ----------------- -----------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 556,465 522,435 604,491
INVESTMENT ACTIVITIES
Purchases of securities (5,667,539) (9,354,375) (11,878,171)
Purchases of other investments (330,503) (143,771) (157,368)
Sales of securities 3,587,367 4,607,572 5,054,460
Sales of other investments 155,084 143,815 177,064
Maturities of securities 341,485 2,251,763 4,433,933
Net change in short-term investments (67,337) 38,597 (57,625)
Other (35,384) (25,354) (25,655)
----------------- ----------------- -----------------
NET CASH USED BY
INVESTING ACTIVITIES (2,016,827) (2,481,753) (2,453,362)
FINANCING ACTIVITIES
Additions to policyholder contract deposits 5,151,428 4,434,726 4,166,316
Withdrawals from policyholder contract deposits (3,624,044) (2,419,915) (2,313,176)
Capital contributions from parent or its affiliate - - 31,300
Dividends paid to parent (60,000) (40,000) (56,000)
----------------- ----------------- -----------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 1,467,384 1,974,811 1,828,440
----------------- ----------------- -----------------
INCREASE (DECREASE) IN CASH 7,022 15,493 (20,431)
Cash at beginning of year 42,916 27,423 47,854
----------------- ----------------- -----------------
CASH AT END OF YEAR $ 49,938 $ 42,916 $ 27,423
================= ================= =================
</TABLE>
See notes to consolidated financial statements.
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995
NOTE A--SIGNIFICANT ACCOUNTING POLICIES
Business: Transamerica Occidental Life Insurance Company ("TOLIC") and its
subsidiaries (collectively, the "Company"), engages in providing life insurance,
pension and annuity products, reinsurance, structured settlements and
investments which are distributed through a network of independent and
company-affiliated agents and independent brokers. The Company's customers are
primarily in the United States and Canada.
Basis of Presentation: The accompanying consolidated financial statements have
been prepared in accordance with generally accepted accounting principles which
differ from statutory accounting practices prescribed or permitted by regulatory
authorities.
Use of Estimates: Certain amounts reported in the accompanying combined
financial statements are based on the management's best estimates and judgment.
Actual results could differ from those estimates.
New Accounting Standards: In March 1995, the Financial Accounting Standards
Board issued a new standard on accounting for the impairment of long-lived
assets and for long-lived assets to be disposed of. The Company will adopt the
standard in 1996. The standard required that an impaired long-lived asset be
measured based on the fair value of the asset to be held and used or the fair
value less cost to sell of the asset to be disposed of. When adopted, this
standard is not expected to have a material effect on the consolidated financial
position or results of operations of the Company.
In 1995, the Company adopted the Financial Accounting Standards Board's new
standard on accounting for impairment of loans, which requires that an impaired
loan be measured based on the present value of expected cash flows discounted at
the loan's effective interest rate or the fair value of the collateral if the
loan is collateral dependent. There was no material effect on the consolidated
financial position or results of operations of the Company.
In 1994, the Company adopted the Financial Accounting Standards Board's new
standard on accounting for certain investments in debt and equity securities
which requires the Company to report at fair value, with unrealized gains and
losses excluded from earnings and reported on an after tax basis as a separate
component of shareholder's equity, its investments in debt securities for which
the Company does not have the positive intent and ability to hold to maturity.
Additionally, such unrealized gains and losses are considered in evaluating
deferred policy acquisition costs, with any resultant adjustment also excluded
from earnings and reported on an after tax basis in shareholder's equity. As of
January 1, 1994, the impact of adopting the standard was to increase
shareholder's equity by $795.2 million (net of deferred policy acquisition cost
adjustment of $367.2 million and deferred taxes of $428.2 million) with no
effect on net income.
Principles of Consolidation: The financial statements include the accounts of
TOLIC and its subsidiaries, all of which operate primarily in the life insurance
industry. TOLIC is a wholly owned subsidiary of Transamerica Insurance
Corporation of California, which is a wholly owned subsidiary of Transamerica
Corporation. All significant intercompany balances and transactions have been
eliminated in consolidation.
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1995
-8-
NOTE A--SIGNIFICANT ACCOUNTING POLICIES (Continued)
Investments: Investments are shown on the following bases:
Fixed maturities--All debt securities, including redeemable preferred
stocks, are classified as available for sale and carried at fair value
effective as of January 1, 1994. The Company does not carry any debt
securities principally for the purpose of trading. Prepayments are
considered in establishing amortization periods for premiums and
discounts and amortized cost is further adjusted for other-than-temporary
fair value declines. Derivative instruments are also reported as a
component of fixed maturities and are carried at fair value if designated
as hedges of securities available for sale or at amortized cost if
designated as hedges of liabilities. See Note M - Financial Instruments.
Equity securities available for sale (common and nonredeemable preferred
stocks)--at fair value. The Company does not carry any equity securities
principally for the purpose of trading.
Mortgage loans on real estate--at unpaid balances, adjusted for
amortization of premium or discount, less allowance for possible
impairment.
Investment real estate--at cost, less allowances for depreciation and
possible impairment.
Policy loans--at unpaid balances.
Other long-term investments--at cost, less allowance for possible
impairment.
Short-term investments--at cost, which approximates fair value.
Realized gains and losses on disposal of investment are determined generally on
a specific identification basis. The Company reports realized gains and losses
on investment transactions in the accompanying consolidated statement of income,
net of the amortization of deferred policy acquisition costs when such
amortization results from the realization of gains or losses other than as
originally anticipated on the sale of investments associated with
interest-sensitive products. Changes in fair values of fixed maturities
available for sale and equity securities available for sale are included in net
unrealized investment gains or losses after adjustment of deferred policy
acquisition costs and deferred income taxes as a separate component of
shareholder's equity and, accordingly, have no effect on net income.
Deferred Policy Acquisition Costs (DPAC): Certain costs of acquiring new and
renewal insurance contracts, principally commissions, medical examination and
inspection report fees, and certain variable underwriting, issue and field
office expenses, all of which vary with and are primarily related to the
production of such business, have been deferred. DPAC for non-traditional life
and investment-type products are amortized over the life of the related policies
in relation to estimated future gross profits. DPAC for traditional life
insurance products are amortized over the premium-paying period of the related
policies in proportion to premium revenue recognized, using principally the same
assumptions used for computing future policy benefit reserves. DPAC is adjusted
as if unrealized gains or losses on securities available for sale were realized.
Changes in such adjustments are included in net unrealized investment
<PAGE>
NOTE A--SIGNIFICANT ACCOUNTING POLICIES (Continued)
gains or losses on an after tax basis as a separate component of shareholder's
equity and, accordingly, have no effect on net income.
Separate Accounts: The Company administers segregated asset accounts for certain
holders of universal life policies, variable annuity contracts, and other
pension deposit contracts. The assets held in these Separate Accounts are
invested primarily in fixed maturities, equity securities, other marketable
securities, and short-term investments. The Separate Account assets are stated
at fair value and are not subject to liabilities arising out of any other
business the Company may conduct. Investment risks associated with fair value
changes are borne by the contract holders. Accordingly, investment income and
realized gains and losses attributable to Separate Accounts are not reported in
the Company's results of operations.
Policyholder Contract Deposits: Non-traditional life insurance products include
universal life and other interest-sensitive life insurance policies.
Investment-type products include single and flexible premium deferred annuities,
single premium immediate annuities, guaranteed investment contracts, and other
group pension deposit contracts that do not have mortality or morbidity risk.
Policyholder contract deposits on universal life and investment products
represent premiums received plus accumulated interest, less mortality charges on
universal life products and other administration charges as applicable under the
contract. Interest credited to these policies ranged from 2.8% to 10% in 1995
and 1994, and from 3.0% to 10.5% in 1993.
Reserves for Future Policy Benefits: Traditional life insurance products
primarily include those contracts with fixed and guaranteed premiums and
benefits and consist principally of whole life and term insurance policies,
limited-payment life insurance policies and annuities with life contingencies.
The reserve for future policy benefits for traditional life insurance products
has been provided on a net-level premium method based upon estimated investment
yields, withdrawals, mortality, and other assumptions which were appropriate at
the time the policies were issued. Such estimates are based upon past experience
with a margin for adverse deviation. Interest assumptions range from 4.3% in
earlier years to 9.5% on later issues. Reserves for future policy benefits are
evaluated as if unrealized gains or losses on securities available for sale were
realized and adjusted for any resultant premium deficiencies. Changes in such
adjustments are included in net unrealized investment gains or losses on an
after tax basis as a separate component of shareholder's equity and,
accordingly, have no effect on net income.
Foreign Currency Translation: The effect of changes in exchange rates in
translating foreign subsidiary's financial statements is accumulated as a
separate component of shareholder's equity, net of applicable income taxes.
Aggregate transaction adjustments included in income were not significant for
1995, 1994, or 1993.
Recognition of Revenue and Costs: Traditional life insurance contract premiums
are recognized as revenue over the premium-paying period, with reserves for
future policy benefits established from such premiums.
<PAGE>
NOTE A--SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenues for universal life and investment products consist of policy charges
for the cost of insurance, policy administration charges, amortization of policy
initiation fees, and surrender charges assessed against policyholder account
balances during the period. Expenses related to these products consist of
interest credited to policyholder account balances and benefit claims incurred
in excess of policyholder account balances. In 1993, the Company adopted this
method of accounting for its single premium immediate annuity contracts issued
under structured settlement arrangements based on a determination that such
contracts do not involve significant mortality risk. Accordingly, amounts
received by the Company as payments under these contracts are no longer included
in revenues but are reported as policyholder contract deposits.
Claim reserves include provisions for reported claims and claims incurred but
not reported.
Reinsurance: Coinsurance premiums, commissions, expense reimbursements, and
reserves related to reinsured business are accounted for on bases consistent
with those used in accounting for the original policies and the terms of the
reinsurance contracts. Yearly renewable term reinsurance is accounted for the
same as direct business. Premiums ceded and recoverable losses have been
reported as a reduction of premium income and benefits, respectively. The ceded
amounts related to policy liabilities have been reported as an asset.
Income Taxes: TOLIC and its domestic subsidiaries are included in the
consolidated federal income tax returns filed by Transamerica Corporation, which
by the terms of a tax sharing agreement generally requires TOLIC to accrue and
settle income tax obligations in amounts that would result from filing separate
tax returns with federal taxing authorities.
Deferred income taxes arise from temporary differences between the bases of
assets and liabilities for financial reporting purposes and income tax purposes,
based on enacted tax rates in effect for the years in which the temporary
differences are expected to reverse.
Fair Values of Financial Instruments: Fair values for debt securities are based
on quoted market prices, where available. For debt securities not actively
traded and private placements, fair values are estimated using values obtained
for independent pricing services. Fair values for derivative instruments,
including off-balance-sheet instruments, are estimated using values obtained for
independent pricing services.
Fair values for equity securities are based on quoted market prices.
Fair values for mortgage loans on real estate and policy loans are estimated
using discounted cash flow calculations, based on interest rates currently being
offered for similar loans to borrowers with similar credit ratings. Loans with
similar characteristics are aggregated for calculation purposes.
The carrying amounts of short-term investments, cash, and accrued investment
income approximate their fair value.
<PAGE>
NOTE A--SIGNIFICANT ACCOUNTING POLICIES (Continued)
Fair values for liabilities under investment-type contracts are estimated using
discounted cash flow calculations, based on interest rates currently being
offered by similar contracts with maturities consistent with those remaining for
the contracts being valued. The liabilities under investment-type contracts are
included in policyholder contract deposits in the accompanying consolidated
balance sheet.
Reclassifications: Certain reclassifications of 1994 and 1993 amounts have
been made to conform with the 1995
- -----------------
presentation.
NOTE B--INVESTMENTS
<TABLE>
<CAPTION>
The cost and fair value of fixed maturities available for sale are as follows
(in thousands):
Gross Gross
Carrying Unrealized Unrealized Fair
Value Gain Loss Value
---------------- --------------- --------------- -----------
December 31, 1995
- -----------------
U.S. Treasury securities and
obligations of U.S. government
<S> <C> <C> <C> <C>
corporations and agencies $ 92,958 $ 6,840 $ 99,798
Obligations of states and political
subdivisions 229,028 7,832 $ 572 236,288
Foreign governments 109,632 9,068 118,700
Corporate securities 11,945,631 1,126,903 30,58 13,041,953
Public utilities 4,338,637 390,237 2,909 4,725,965
Mortgage-backed securities 7,277,976 487,190 15,092 7,750,074
Redeemable preferred stocks 21,372 3,757 504 24,625
------ ----- --- ------
$ 24,015,234 $ 2,031,827 $ 49,658 $ 25,997,403
================ ================ ================ ================
December 31, 1994
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies $ 218,404 $ 535 $ 19,885 $ 199,054
Obligations of states and political
subdivisions 220,127 3,586 8,123 215,590
Foreign governments 210,789 1,551 6,367 205,973
Corporate securities 9,517,763 133,191 396,488 9,254,466
Public utilities 3,948,366 48,455 234,885 3,761,936
Mortgage-backed securities 7,791,957 105,175 530,362 7,366,770
Redeemable preferred stocks 3,140 - 460 2,680
----- - --- -----
$ 21,910,546 $ 292,493 $ 1,196,570 $ 21,006,469
================ ================ ================ ================
</TABLE>
<PAGE>
NOTE B--INVESTMENTS (Continued)
<TABLE>
<CAPTION>
The cost and fair value of fixed maturities available for sale at December 31,
1995, by contractual maturity, are shown below. Expected maturities will differ
from contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties (in thousands):
Fair
Cost Value
Maturity
<S> <C> <C> <C>
Due in 1996 $ 590,327 $ 603,732
Due in 1997-2000 3,016,991 3,150,785
Due in 2001-2005 3,714,128 3,962,712
Due after 2005 9,394,440 10,505,474
------------ ---------------
16,715,886 18,222,703
Mortgage-backed securities 7,277,976 7,750,075
Redeemable preferred stock 21,372 24,625
---------------- ----------------
$ 24,015,234 $ 25,997,403
================ ===============
The cost and fair value of equity securities available for sale are as follows
(in thousands):
1995 1994
--------------- -----------
Cost $ 150,968 $ 142,831
26,316 26,m
Gross unrealized gain 163,264 69,693
Gross unrealized loss (6,351) (11,513)
--------------- ---------------
Fair values $ 307,881 $ 201,011
=============== ===============
The components of the carrying value of investment real estate are as follows (in thousands):
1995 1994
Cost $ 48,913 $ 89,992
26,316 26,m
Allowance for depreciation (10,537) (20,746)
--------------- ---------------
$ 38,376 $ 69,246
=============== ===============
</TABLE>
<PAGE>
NOTE B--INVESTMENTS (Continued)
As of December 31, 1995, the Company did not hold a total investment in any one
issuer, other than the United States Government or a Unites States Government
agency or authority, which exceeded 10% of total shareholder's equity.
The carrying value of those assets that were on deposit with public officials in
compliance with regulatory requirements were $22.0 million at December 31, 1995.
<TABLE>
<CAPTION>
Net investment income by major investment category is summarized as follows (in thousands):
1995 1994 1993
<S> <C> <C> <C>
Fixed maturities $ 1,904,519 $ 1,705,618 $ 1,657,178
Equity securities 3,418 5,587 7,624
Mortgage loans on real estate 40,702 40,030 44,230
Investment real estate 3,209 5,024 4,232
Policy loans 25,641 24,614 23,219
Other long-term investments 2,353 7,173 7,973
Short-term investment 13,286 9,689 5,584
---------------- ---------------- ----------------
1,993,128 1,797,735 1,750,040
Investment expenses (20,369) (26,160) (25,739)
---------------- ---------------- ----------------
$ 1,972,759 $ 1,771,575 $ 1,724,301
================ ================ ================
Significant components of net realized investment gains are as follows (in
thousands):
1995 1994 1993
---------------- ---------------- ----------
Net gains on disposition of investments in:
Fixed maturities $ 52,889 $ 7,181 $ 149,145
Equity securities 5,637 32,374 12,491
Other 2,327 2,546 1,607
---------------- ---------------- ----------------
60,853 42,101 163,243
Provision for impairment (23,551) (15,092) (55,504)
Accelerated amortization of DPAC (9,190) (6,279) (62,852)
---------------- ---------------- ----------------
$ 28,112 $ 20,730 $ 44,887
================ ================ ================
The components of net gains on disposition of investment in fixed maturities are as follows (in thousands):
1995 1994 1993
Gross gains $ 61,504 $ 46,702 $ 151,232106,649
Gross losses (8,615) (39,521) (2,087)
---------------- ---------------- ----------------
$ 52,889 $ 7,181 $ 149,145
================ ================ ================
</TABLE>
<PAGE>
NOTE B--INVESTMENTS (Continued)
<TABLE>
<CAPTION>
The costs of certain investments have been reduced by the following allowances
for impairment in value (in thousands):
December 31
1995 1994
---------------- -----------
<S> <C> <C>
Fixed maturities $ 71,429 $ 92,145
Equity securities - 395
Mortgage loans on real estate 21,516 23,479
Investment real estate 16,207 14,656
Other long-term investments 11,025 11,125
---------------- ---------------
$ 120,177 $ 141,800
================ ===============
</TABLE>
<TABLE>
<CAPTION>
The components of changes in net unrealized investment gains (losses) in the
accompanying consolidated statement of shareholder's equity are as follows (in
thousands):
1995 1994 1993
---------------- ---------------- ----------
Changes in unrealized gains (losses):
<S> <C> <C> <C>
Fixed maturities $ 2,886,246 $ (2,494,478) $ 10
Equity securities 98,733 (39,756) (15,287)
---------------- ---------------- ----------------
2,984,979 (2,534,234) (15,277)
Change in related DPAC adjustments (706,915) 718,498 -
Change in policy liability adjustments (339,000) - -
Related deferred taxes (678,672) 635,507 4,216
---------------- ---------------- ----------------
$ 1,260,392 $ (1,180,229) $ (11,061)
================ ================ ================
</TABLE>
<TABLE>
<CAPTION>
Proceeds from disposition of investment in fixed maturities available for sale
were $3,802.6 million in 1995, $6,737.7 million in 1994 and $9,187.1 million in
1993.
<PAGE>
NOTE C--DEFERRED POLICY ACQUISITION COSTS (DPAC)
Significant components of changes in DPAC are as follows (in thousands):
1995 1994 1993
----------------- ---------------- -----------
<S> <C> <C> <C>
Balance at beginning of year $ 2,480,474 $ 1,929,332 $ 1,811,992
Cumulative effect of change in
accounting for investments - (367,154) -
Amounts deferred:
Commissions 298,698 305,858 288,195
Other 83,108 89,000 70,951
Amortization attributed to:
Net gain on disposition of investments (9,190) (6,279) (62,852)
Operating income (182,123) (176,033) (169,457)
Fair value adjustment (706,915) 718,498 -
Foreign currency translation adjustment 10,159 (12,748) (9,497)
---------------- ---------------- ----------------
Balance at end of year $ 1,974,211 $ 2,480,474 $ 1,929,332
================ ================ ================
</TABLE>
NOTE D--POLICY LIABILITIES
<TABLE>
<CAPTION>
Components of policyholder contract deposits are as follows (in thousands):
December 31
1995 1994
---------------- -----------
<S> <C> <C>
Liabilities for investment-type products $ 17,948,652 $ 15,862,970
Liabilities for non-traditional life insurance
products 4,109,121 3,418,545
------------ -------------
$ 22,057,773 $ 19,281,515
=============== ================
</TABLE>
Reserves for future policy benefits were evaluated as if the unrealized gains on
securities available for sale had been realized and adjusted for resultant
premium deficiencies by $339 million as of December 31, 1995.
<PAGE>
NOTE E--INCOME TAXES
<TABLE>
<CAPTION>
Components of income tax liabilities are as follows (in thousands):
December 31
1995 1994
---------------- -----------
<S> <C> <C>
Current tax liabilities $ 35,689 $ 67,870
Deferred tax liabilities 552,112 -
---------------- ---------------
$ 587,801 $ 67,870
================ ===============
</TABLE>
<TABLE>
<CAPTION>
Significant components of deferred tax liabilities (assets) are as follows (in
thousands):
December 31
1995 1994
---------------- -----------
<S> <C> <C>
Deferred policy acquisition costs $ 696,728 $ 650,207
Unrealized investment gains (losses) 505,579 (173,094)
Life insurance policy liabilities (601,875) (586,025)
Provision for impairment of investments (42,062) (49,630)
Other-net (6,258) (5,971)
---------------- ---------------
$ 552,112 $ (164,513)
================ ===============
</TABLE>
TOLIC offsets all deferred tax assets and liabilities and presents them in a
single amount in the consolidated balance sheet.
<TABLE>
<CAPTION>
Components of provisions for income taxes are as follows (in thousands):
1995 1994 1993
---------------- ---------------- -----------
<S> <C> <C> <C>
Current tax expense: $ 115,614 $ 204,087 $ 162,408
Deferred tax expense (benefit) 34,033 (60,596) (26,947)997
Adjustment for enacted change in tax laws - - 3,536
---------------- ---------------- ----------------
$ 149,647 $ 143,491 $ 138,997
================ ================ ================
</TABLE>
<PAGE>
NOTE E--INCOME TAXES (Continued)
<TABLE>
<CAPTION>
The differences between federal income taxes computed at the statutory rate and
the provision for income taxes as reported are as follows (in thousands):
1995 1994 1993
---------------- ---------------- ----------
Income before income taxes:
<S> <C> <C> <C>
Income from U.S. operations $ 425,946 $ 389,778 $ 367,560
Income from foreign operations 34,997 25,411 21,190
--------------- --------------- ---------------
460,943 415,189 388,750
Tax rate 35% 35% 35%
--------------- --------------- ---------------
Federal income taxes at statutory rate 161,330 145,316 136,063
Income not subject to tax (685) (910) (535)
Low income housing credits (3,137) (902) -
Adjustment for enacted change in tax laws - - 3,536
Other, net (7,861) (13) (67)
--------------- --------------- ---------------
$ 149,647 $ 143,491 $ 138,997
=============== =============== ===============
</TABLE>
Low income housing credits are recognized over the productive life of acquired
assets. In 1995, the Company recognized a $4.4 million tax benefit related to
the favorable settlement of a prior year tax matter.
Under the Life Insurance Company Income Tax Act of 1959, a portion of "gain from
operations" was not subject to current income taxation but was accumulated, for
tax purposes, in a memorandum account designated as "policyholders' surplus
account." The balance in this account was frozen at December 31, 1983 pursuant
to the Deficit Reduction Act of 1984. This amount becomes subject to tax when it
exceeds a certain maximum or when cash dividends are paid therefrom. The
policyholders' surplus account balance at December 31, 1995 was $138 million. At
December 31, 1995, $1,788.9 million was available for payment of dividends
without such tax consequences. No income taxes have been provided on the
policyholders' surplus account since the conditions that would cause such taxes
are remote.
Income taxes of $153.3 million, $195.4 million and $162.2 were paid principally
to the parent in 1995, 1994 and 1993, respectively.
<PAGE>
NOTE F--REINSURANCE
The Company is involved in both the cession and assumption of reinsurance with
other companies. Risks are reinsured with other companies to permit the recovery
of a portion of the direct losses, however, the Company remains liable to the
extent the reinsuring companies do not meet their obligations under these
reinsurance agreements.
<TABLE>
<CAPTION>
The components of the Company's life insurance in force and premiums and other
considerations are summarized as follows (in thousands):
Ceded to Assumed
Direct Other from Other Net
Amount Companies Companies Amount
1995
Life insurance in force,
<S> <C> <C> <C> <C>
at end of year $ 206,722,573 $ 116,762,869 $ 174,193,592 $ 264,153,296
==================== =================== =================== ===================
Premiums and other
considerations $ 1,857,449 $ 1,079,303 $ 1,033,752 $ 1,811,898
==================== =================== =================== ===================
Benefits paid or
provided $ 2,803,213 $ 1,065,545 $ 849,800 $ 2,587,468
==================== =================== =================== ===================
1994
Life insurance in force,
at end of year $ 191,884,093 $ 115,037,553 $ 158,882,366 $ 235,728,906
==================== =================== =================== ===================
Premiums and other
considerations $ 1,085,555 $ 689,615 $ 1,034,079 $ 1,430,019
==================== =================== =================== ===================
Benefits paid or
provided $ 2,338,370 $ 867,341 $ 645,096 $ 2,116,125
==================== =================== =================== ===================
1993
Life insurance in force,
at end of year $ 180,902,966 $ 95,719,350 $ 149,728,434 $ 234,912,050
==================== =================== =================== ===================
Premiums and other
considerations $ 1,273,293 $ 953,489 $ 892,876 $ 1,212,680
==================== =================== =================== ===================
Benefits paid or
provided $ 2,142,424 $ 633,782 $ 484,371 $ 1,993,013
==================== =================== =================== ===================
</TABLE>
NOTE G--PENSION PLAN AND OTHER POSTRETIREMENT BENEFITS
Substantially all employees of the Company are covered by noncontributory
defined pension benefit plans sponsored by the Company and the Retirement Plan
for Salaried Employees of Transamerica Corporation and Affiliates. Pension
benefits are based on the employee's compensation during the highest paid 60
consecutive months during the 120 months before
<PAGE>
NOTE G--PENSION PLAN AND OTHER POSTRETIREMENT BENEFITS (Continued)
retirement. Annual contributions to the plans generally include a provision for
current service costs plus amortization of prior service costs over periods
ranging from 10 to 30 years. Assets of the plans are invested principally in
publicly traded stocks and bonds.
The Company's total pension costs recognized for all plans were $2.5 million in
1995, $4.9 million in 1994 and $4.1 million in 1993, of which $2.0 million in
1995, $4.7 million in 1994 and $3.3 million in 1993, respectively, related to
the plan sponsored by Transamerica Corporation.
The plans sponsored by the Company are not material to the consolidated
financial position of the Company.
The Company also participates in various contributory defined benefit programs
sponsored by Transamerica Corporation that provide medical and certain other
benefits to eligible retirees. Postretirement benefit costs charged to income
were not significant in 1995, 1994 and 1993.
NOTE H--RELATED PARTY TRANSACTIONS
The Company has various transactions with Transamerica Corporation and certain
of its other subsidiaries in the normal course of operations. These transactions
include premiums for employee benefits (none in 1995, $5.5 million in 1994, and
$7.3 million in 1993), loans and advances, investments in a money market fund
managed by an affiliated company, rental of space, and other specialized
services. At December 31, 1995, pension funds administered for these related
companies aggregated $933.3 million and the investment in an affiliated money
market fund, included in short-term investments, was $55.2 million.
During 1995, the Company transferred real estate with an aggregate book value of
$27.7 million to an affiliate within the Transamerica Corporation group of
consolidated companies in exchange for consideration with a fair value of $49.7
million, comprising mortgage loans of $35.1 million and cash of $14.6 million.
The excess of fair value of the consideration received over the book value of
the real estates transferred, net of related tax payable to the parent, is
included as a capital contribution.
During 1993, the Company transferred equity securities with a cost of $110.7
million and agreed to pay $31.3 million to Transamerica Corporation in exchange
for a note receivable of $200 million. The excess of fair value of the
consideration received over the cost of the assets transferred is included as a
capital contribution.
The note matures in 2013 and bears interest at 7%.
NOTE I--OTHER OPERATING REVENUE
In 1994, the Company disposed of an investment in an affiliate which had been
accounted for under the equity method. Total consideration of $23.3 million was
received from the sale, resulting in income of $13.3 million.
<PAGE>
NOTE J-LEASES
Substantially all leases of the Company are operating leases principally for the
rental of real estate. Rental expense for equipment and properties was $25.3
million in 1995, $17.9 million in 1994, and $15 million in 1993.
The following is a schedule by years of future minimum
rental payments required under operating leases that have initial or remaining
noncancelable lease terms in excess of one year as of December 31, 1995 (in
thousands):
Year ending December 31:
1996 $ 20,011
1997 15,298
1998 11,429
1999 8,423
2000 5,897
Thereafter 24,445
$ 85,503
NOTE K--LITIGATION
The Company is a defendant in various legal actions arising from the normal
course of operations. Contingent liabilities arising from litigation are not
considered material in relation to the consolidated financial position and
results of operations of the Company.
NOTE L--REGULATORY MATTERS
<TABLE>
<CAPTION>
TOLIC and its insurance subsidiaries are subject to state insurance laws and
regulations, principally those of the Company's state of incorporation. Such
regulations include the risk based capital requirement and the restriction on
the payment of dividends. Generally, dividends during any year may not be paid,
without prior regulatory approval, in excess of the greater of 10% of the
Company's statutory capital and surplus as of the preceding year end or the
insurance Company's statutory net income from operations for the preceding year.
The insurance department of the domiciliary state recognizes these amounts as
determined in conformity with statutory accounting practices prescribed or
permitted by the insurance department, which vary in some respects from
generally accepted accounting principles. The Company's statutory net income and
statutory capital and surplus which are represented by TOLIC's net income and
capital and surplus are summarized as follows (in thousands):
1995 1994 1993
------------------- ------------------- ------------
<S> <C> <C> <C>
Statutory net income $ 131,607 $ 175,850 $ 192,978
Statutory capital and surplus, at
end of year 1,115,691 947,164 801,722
</TABLE>
<PAGE>
NOTE M--FINANCIAL INSTRUMENTS
<TABLE>
<CAPTION>
The carrying values and estimated fair values of financial instruments are as
follows (in thousands):
December 31
-----------------------------------------
1995 1994
----------------------------------- -----------------
Carrying Fair Carrying Fair
Value Value Value Value
Financial Assets:
<S> <C> <C> <C> <C>
Fixed maturities $ 25,997,403 $ 25,997,403 $ 21,006,469 $ 21,006,469
Equity securities 307,881 307,881 201,011 201,011
Mortgage loans on real estate 565,086 671,835 366,727 382,164
Policy loans 426,377 408,088 412,938 383,531
Short-term investments 211,500 211,500 144,163 144,163
Cash 49,938 49,938 42,916 42,916
Accrued investment income 394,008 394,008 363,121 363,121
Financial Liabilities:
Liabilities for investment-type contracts:
Single and flexible premium
deferred annuities 8,080,139 7,518,211 7,425,778 6,898,534
Single premium immediate annuities 4,123,954 4,677,652 3,735,691 3,510,764
Guaranteed investment contracts 2,958,850 2,998,047 2,382,195 2,336,682
Other deposit contracts 2,785,709 2,848,301 2,319,306 2,243,992
Off-balance-sheet assets (liabilities):
Exchange derivatives designated as
hedges of liabilities in a:
Receivable position - 23,881 - 4,974
Payable position - (3,086) - (24,625)
</TABLE>
Exchange derivatives, which require no premium payments at initiation, consist
principally of interest rate swap agreements and conditional derivatives, which
require premium payments at initiation, consist principally of swaptions and
interest rate floor and cap agreements.
The Company enters into various interest rate agreements in the normal course of
business primarily as a means of managing its interest rate exposure in
connection with asset and liability management.
Interest rate swap agreements generally involve the periodic exchange of fixed
rate interest and floating rate interest payments by applying a specified market
index to the underlying contract or notional amount, without exchanging the
underlying notional amounts. The differential to be paid or received on those
interest rate swap agreements that are designated as hedges of financial assets
is recorded on an accrual basis as a component of net investment
<PAGE>
NOTE M--FINANCIAL INSTRUMENTS (Continued)
income. The differential to be paid or received on those interest rate swap
agreements that are designated as hedges of financial liabilities is recorded on
an accrual basis as a component of benefits paid or provided. While the Company
is not exposed to credit risk with respect to the notional amounts of the
interest rate swap agreements, the Company is subject to credit risk from
potential nonperformance of counterparties throughout the contract periods. The
amounts potentially subject to such credit risk are much smaller than the
notional amounts. The Company controls this credit risk by entering into
transactions with only a selected number of high quality institutions,
establishing credit limits and maintaining collateral when appropriate.
Generally, the Company is subject to basis risk when an interest rate swap
agreement is not funded. As of December 31, 1995, there were no unfunded
interest rate swap agreements.
Interest rate floor and cap agreements generally provide for the receipt of
payments in the event the average interest rates during a settlement period fall
below specified levels under interest rate floor agreements or rise above
specified levels under interest rate cap agreements. A swaption generally
provides for an option to enter into an interest rate swap agreement in the
event of unfavorable interest rate movements. These agreements generally require
upfront premium payments. The costs of swaptions and interest rate floor and cap
agreements are amortized over the contractual periods and resulting amortization
expenses are included in net investment income. The conditional receipts under
these agreements are recorded on an accrual basis as a component of net
investment income if designated as hedges of financial assets or as a component
of benefits paid or provided if designated as hedges of financial liabilities.
<PAGE>
NOTE M--FINANCIAL INSTRUMENTS (Continued)
The information on derivative instruments is summarized as follows (in
thousands):
<TABLE>
<CAPTION>
Aggregate Weighted
Notional Average
Amount Fixed Rate Fair Value
December 31, 1995
Interest rate swap agreements designated as
hedges of securities available for sale,
where TLC pays:
<S> <C> <C> <C>
Fixed rate interest $ 235,173 7.99% $ (9,307)
Floating rate interest 140,000 5.65% 137
Floating rate interest based on one
index and receives floating rate
interest based on another index 65,000 242
Interest rate swap agreements designated as
hedges of financial liabilities, where TLC
pays:
Fixed rate interest 60,000 4.39% 741
Floating rate interest 934,678 6.17% 17,169
Floating rate interest based on one
index and receives floating rate
interest based on another index 152,000 (108)
560,500 6.46% 35,820
250,000 5.93% 792
1,367,140 5.52% 55,540
December 31, 1994
Interest rate swap agreements designated as
hedges of securities available for sale,
where TLC pays:
Fixed rate interest 178,777 7.20% (1,305)
Floating rate interest 96,000 4.96% (2,975)
Interest rate swap agreements designated as
hedges of financial liabilities, where TLC
Pays floating rate interest: 601,545 5.88% (19,651)
Interest rate floor agreements 560,500 6.46% 10,948
Interest rate cap agreements 100,000 5.00% 1,333
Swaptions and other 200,000 7.00% 5,313
</TABLE>
Generally, notional amounts indicate the volume of transactions and estimated
fair values indicate the amounts subject to credit risk.
<PAGE>
NOTE M--FINANCIAL INSTRUMENTS (Continued)
Financial instruments which potentially subject the Company to concentrations of
credit risk consist principally of temporary cash investments, fixed maturities
and mortgage loans on real estate. The Company places its temporary cash
investments with high credit quality financial institutions. Concentrations of
credit risk with respect to investments in fixed maturities and mortgage loans
on real estate are limited due to the large number of such investments and their
dispersion across many different industries and geographic areas. At December
31, 1995, the Company had no significant concentration of credit risk.
<PAGE>
PART C
Other Information
Item 24. Financial Statements and Exhibits
(a) Financial Statements
All required financial statements are included in Parts A or B of this
Registration Statement.
(b) Exhibits
(1) Resolution of the Board of Directors of Transamerica
Occidental Life Insurance Company
("Transamerica") authorizing establishment of the Variable
Account.(1)
(2) Not Applicable.
(3) (a) Master Agreement among Transamerica Occidental Life
Insurance Company, First
Transamerica Life Insurance, Transamerica Financial
Resources, Inc., Dreyfus Service
Corporation, and Dreyfus Service Organization, Inc. (4)
(b) Principal Agency Agreement between Transamerica
Occidental Life
Insurance Company and Dreyfus Service Organization,
Inc. (4)
(c) Distribution Agreement between Transamerica Occidental
Life Insurance
Company and Dreyfus Service Corporation.(4)
(d) Form of Sales Agreement among Dreyfus Service
Corporation, Dreyfus Service
Organization, Inc., and Broker-Dealers. (4)
(e) Amendment Dated as of August 31, 1993, to Master
Agreement among Transamerica
Occidental Life Insurance Company, First Transamerica
Life Insurance Company,
Transamerica Financial Resources, Inc., Dreyfus Service
Corporation and Dreyfus Service
Organization, Inc. (6)
(f) Amendment Dated as of August 31, 1993 to Principal
Agency Agreement between Transamerica Occidental Life
Insurance Company and Dreyfus Service Organization, Inc.
(6)
(g) Amendment Dated as of August 31, 1993 to Distribution
Agreement between
Transamerica Occidental Life Insurance Company and
Dreyfus Service Corporation. (6)
(h) Distribution Agreement between Transamerica Occidental
Life Insurance Company and
Transamerica Insurance Securities Sales Corporation,
dated as of August 24, 1994. (8)
(i) Sales Agreement among Transamerica Insurance Securities
Sales Corporation,
Transamerica Occidental Life Insurance Company, First
Transamerica Life Insurance
Company, Dreyfus Service Corporation, and Dreyfus
Service Organization, Inc., dated as
of August 24, 1994. (8)
(j) Services Agreement among Transamerica Occidental Life
Insurance Company, First
Transamerica Life Insurance Company, Transamerica
Insurance Securities Sales
Corporation, Dreyfus Service Corporation, and Dreyfus
Service Organization, Inc., dated
as of August 24, 1994. (8)
(4) Group Contract Form, Certificate Form, Individual Contract
Form and Endorsements.
(a) Contract Form and Endorsements. (5)
(i) Form of Flexible Purchase Payment Multi-Funded
Deferred Master Group Annuity
Contract.
(ii) Form of Automatic Payout Option Endorsement to
Group Contract.
<PAGE>
(iii) Form of Dollar Cost Averaging Option Endorsement to Group Contract.
(iv) Form of Systematic Withdrawal Option Endorsement to Group Contract.
(v) Form of Guaranteed Minimum Death Benefit Endorsement to Group Contract.
(vi) Form of Fixed Account Rider to Group Contract. (7)
(b) Certificate of Participation Form and Endorsements. (5)
(i) Form of Certificate of Participation.
(ii) Form of IRA Endorsement to Certificate.
(iii) Form of Dollar Cost Averaging Option Endorsement to Certificate.
(iv) Form of Systematic Withdrawal Option Endorsement to Certificate.
(v) Form of Automatic Payout Option Endorsement to Certificate.
(vi) Form of Benefit Distribution Endorsement to Certificate.
(c) Individual Contract Form and Endorsements (6)
(i) Form of Flexible Purchase Payment Multi-Funded Deferred Individual
Annuity
Contract.
(ii) Form of IRA Endorsement to Individual Contract.
(iii) Form of Benefit Distribution Endorsement.
(iv) Form of Dollar Cost Averaging Option Endorsement to Individual Contract.
(v) Form of Systematic Withdrawal Option Endorsement to Individual Contract.
(vi) Form of Automatic Payout Option Endorsement to Individual Contract.
(vii) Form of Guaranteed Minimum Death Benefit Endorsement
to Individual Contract.
(viii) Form of Fixed Account Rider to Individual Contract. (7)
(5) (a) Form of Application for and Acceptance of Group Annuity
Contract.(5)
(b) Form of Application for Enrollment under Group Annuity
Contract.(5)
(c) Form of Application for Individual Annuity Contract. (6)
(6) (a) Restated Articles of Incorporation of Transamerica. (1)
(b) Restated By-Laws of Transamerica. (1)
(7) Not applicable.
(8) (a) Participation Agreement between Transamerica Occidental Life
Insurance Company and
Dreyfus Variable Investment Fund. (4)
(b) Participation Agreement between Transamerica Occidental Life
Insurance Company and
Dreyfus Life and Annuity Index Fund, Inc. (4)
(c) Participation Agreement between Transamerica Occidental Life
Insurance Company and
The Dreyfus Socially Responsible Growth Fund, Inc. (6)
(d) Administrative Services Agreement between Transamerica
Occidental Life Insurance
Company and Vantage Computer Systems, Inc. (4)
(e) Amendment Dated as of August 31, 1993 to Participation
Agreement between Transamerica Occidental Life Insurance
Company and Dreyfus Variable Investment Fund.
(6)
(f) Amendment Dated as of August 31, 1993 to Participation
Agreement between
Transamerica Occidental Life Insurance Company and
Dreyfus Life and Annuity Index
Fund, Inc. (6)
(g) Amendment Dated as of August 24, 1994 to Participation
Agreement Dated as of March
3, 1993, As Amended, between Transamerica Occidental
Life Insurance Company and
Dreyfus Variable Investment Fund. (8)
<PAGE>
(h) Amendment Dated as of August 24, 1994 to Participation
Agreement Dated as of August
31, 1993 between Transamerica Occidental Life Insuranc
Company and Dreyfus Socially
Responsible Growth Fund, Inc. (8)
(i) Amendment Dated as of August 24, 1994 to Participation
Agreement Dated as of March
3, 1993, As Amended, between Transamerica Occidental
Life Insurance Company and
Dreyfus Stock Index Fund. (8)
(9) (a) Opinion and Consent of Counsel. ( 9)
(10) (a) Consent of Counsel. (9)
(b) Consent of Independent Auditors. (9)
(11) No financial statements are omitted from item 23.
(12) Not applicable.
(13) Performance Data Calculations. (6)
(14) Not applicable.
(15) Powers of Attorney.
Richard N. Latzer (2)
Kent L. Colwell (2) Charles E. LeDoyen (2)
Thomas J. Cusack (6) Karen MacDonald (9)
John A. Fibiger (6) James B. Roszak (2)
Richard H. Finn (1) William E. Simms (3)
David E. Gooding (2) Nooruddin S. Veerjee (4)
Edgar H. Grubb (2) Robert A. Watson(9)
Frank C. Herringer (2)
(1) Filed with initial filing of this Form N-4 Registration Statement,
File No. 33-49998 (July 24, 1992).
(2) Incorporated by reference to Exhibit 7(c) of Post-Effective Amendment
No.1 to the Registration
Statement of Transamerica Occidental Life Insurance Company's Separate
Account VL on Form S-6,
File No. 33-28107 (April 30, 1990).
(3) Incorporated by reference to Exhibit 7(d) of Post-Effective Amendment
No. 2 to the Registration
Statement of Transamerica Occidental Life Insurance Company's Separate
Account VL on Form S-6,
File No. 33-28107 (April 30, 1991).
(4) Filed with Post-Effective Amendment No. 1 to this Form N-4 Registration
Statement, File No. 33-
49998 (April 30, 1993).
(5) Filed with Post-Effective Amendment No. 3 to this Form N-4 Registration
Statement, File No. 33-
49998 (March 8, 1994).
(6) Filed with Post-Effective Amendment No. 4 to this Form N-4 Registration
Statement, File No. 33-
49998 (April 29, 1994).
(7) Filed with Post-Effective Amendment No. 5 to this Form N-4 Registration
Statement, File No. 33-
49998 (March 1, 1995).
(8) Filed with Post-Effective Amendment No. 6 to this Form N-4 Registration
Statement File No.
33-499988 (April 28, 1995).
<PAGE>
(9) Filed herewith.
Item 25. List of Directors of Transamerica Occidental Life Insurance Company
Frank C. Herringer
Kent L. Colwell Richard N. Latzer
Thomas J. Cusack Charles E. LeDoyen
James W. Dederer Karen MacDonald
John A. Fibiger Gary U. Rolle'
Richard H. Finn James B. Roszak
David E. Gooding William E. Simms
Edgar H. Grubb Nooruddin S. Veerjee
Robert A. Watson
List of Officers for Transamerica Occidental Life Insurance Company
Thomas J. Cusack President and Chief Executive Officer
John A. Fibiger, FSA Chairman
James B. Roszak President, Life Insurance Division and Chief
Marketing Officer
William E. Simms President - Reinsurance Division
James W. Dederer, CLU Executive Vice President, General
Counsel and Corporate Secretary
David E. Gooding Executive Vice President and Chief Information Officer
Charles E. LeDoyen President-Structured Settlements Division
Bruce Clark Senior Vice President and Chief Actuary
Daniel E. Jund, FLMI Senior Vice President
Karen MacDonald Senior Vice President and Corporate Actuary
Louise K. Neal Senior Vice President
William N. Scott, CLU, FLMI Senior Vice President
T. Desmond Sugrue Senior Vice President
Ron F. Wagley Senior Vice President
and Chief Agency Officer
Nooruddin S. Veerjee, FSA President - Group Pension Division
Darrel K.S. Yuen President-Asian Operations
Richard N. Latzer Chief Investment Officer
Gary U. Rolle', CFA Chief Investment Officer
Glen E. Bickerstaff Investment Officer
John M. Casparian Investment Officer
Kent L. Colwell Investment Officer
Heather E. Creeden Investment Officer
Colin Funai Investment Officer
Sharon K. Kilmer Investment Officer
Lyman Lokken Investment Officer
Michael F. Luongo Investment Officer
Matthew Palmer Investment Officer
Thomas C. Pokorski Investment Officer
Susan A. Silbert Investment Officer
John J. Strain Investment Officer
Jeffrey S. Van Harte Investment Officer
Lennart H. Walin Investment Officer
Paul Wintermute Investment Officer
William D. Adams Vice President
Sandra Bailey-Whichard Vice President
Nicki Bair Senior Vice President
Dennis Barry Vice President
Laurie Bayless Vice President
Marsha Blackman Vice President
Thomas Briggle Vice President
Thomas Brimacombe Vice President
Roy Chong-Kit Vice President and Chief Actuary
Alan T. Cunningham Vice President and Deputy General Counsel
Aldo Davanzo Vice President and Assistant Secretary
Daniel Demattos Vice President
Peter DeWolf Vice President
Mary J. Dinkel, CLU Vice President
Randy Dobo Vice President and Actuary
Thomas P. Dolan, FLMI Vice President
John V. Dohmen Vice President
Gail DuBois Vice President and Associate Actuary
Ken Ellis Vice President
George Garcia Vice President and Chief Medicare Officer
David M. Goldstein Vice President and Associate General Counsel
John D. Haack Vice President
Paul Hankwitz, MD Vice President and Chief Medical Director
Randall C. Hoiby Vice President and Associate General Counsel
John W. Holowasko Vice President
William M. Hurst Vice President and Associate General Counsel
James M. Jackson Vice President and Deputy General Counsel
Allan H. Johnson, FSA Vice President and Actuary
James D. Lamb, FSA Vice President and Chief Actuary
Ronald G. Larson, FLMI Regional Vice President
Frank J. LaRusso Vice President and Chief Underwriting Officer
Richard K. M. Lau, ASA Vice President
Thomas Liu Vice President
Katherine Lomeli Vice President and Assistant Secretary
Philip E. McHale, FLMI Vice President
Vic Modugno Vice President and Associate Actuary
Mischelle Mullin Vice President
Wayne Nakano, CPA Vice President and Controller
Paul Norris Vice President and Actuary
John W. Paige, FSA Vice President and Associate Actuary
Stephen W. Pinkham Vice President
Bruce Powell Vice President
Larry H. Roy Vice President
Joel D. Seigle Vice President
Sandra Smith Vice President
James O. Strand Vice President
Deborah Tatro Vice President
Lawrence Taylor Vice President
Claude W. Thau, FSA Senior Vice President
Kim A. Tursky Vice President and Assistant Secretary
William R. Wellnitz, FSA Senior Vice President and Actuary
Anthony Wilkey Vice President
Thomas Winters Vice President
Ronald R. Wolfe Regional Vice President
Sally Yamada Vice President and Treasurer
Flora Bahaudin Second Vice President
David Barcellos Vice President
Michael C. Barnhart Second Vice President
Dan Bass, ASA Second Vice President
Frank Beardsley Vice President
Esther Blount Second Vice President
Benjamin Bock Vice President
Art Bueno Second Vice President
Barry Buner Second Vice President
Beverly Cherry Second Vice President
Wonjoon Cho Second Vice President
Art Cohen Second Vice President
Gloria Durosko Second Vice President
Reid A. Evers Vice President and Associate General
Counsel
David Fairhall Second Vice President and Associate Actuary
Selma Fox Second Vice President
Jerry Gable, FSA Second Vice President
Roger Hagopian Second Vice President
Sharon Haley Second Vice President
Zahid Hussain Second Vice President and Associate Actuary
Ahmad Kamil, FIA, MAAA Vice President and Associate Actuary
Ronald G. Keller Second Vice President
Ken Kiefer Second Vice President
Dean LeCesne Second Vice President
Marilyn McCullough Vice President
Carl Marcero Second Vice President
Lisa Moriyama Second Vice President
Joseph K. Nelson Second Vice President
John Oliver Second Vice President
Daragh O'Sullivan Second Vice President
Stephanie Quincey Second Vice President
James R. Robinson Second Vice President
John J. Romer Vice President
Thomas M. Ronce Second Vice President and Assistant General Counsel
Hugh Shellenberger Second Vice President
Mary Spence Second Vice President
Jean Stefaniak Second Vice President
Michael S. Stein Second Vice President
Christina Stiver Second Vice President
David Stone Second Vice President
John Tillotson Second Vice President
Janet Unruh Second Vice President and Assistant General Counsel
Colleen Vandermark Vice President
Susan Viator Second Vice President
Richard T. Wang Second Vice President
James B. Watson Second Vice President and Assistant General Counsel
Joanne E. Whitaker Second Vice President
Sheila Wickens, MD Second Vice President and Medical Director
William Wojciechowski Second Vice President
Michael B. Wolfe Vice President
Wilbur L. Fulmer Tax Officer
James Wolfenden Statement Officer
Item 26. Person Controlled by or Under Common Control With the Depositor
or Registrant.
The Depositor, Transamerica Occidental Life Insurance Company
(Transamerica), is wholly owned by Transamerica Insurance Corporation of
California. The Registrant is a segregated asset account of Transamerica.
The following chart indicates the persons controlled by or under common
control with Transamerica.
TRANSAMERICA CORPORATION AND SUBSIDIARIES
WITH STATE OR COUNTRY OF INCORPORATION
Transamerica Corporation
ARC Reinsurance Corporation - Hawaii
*Coast Service Company - California
*Inter-America Corporation - California
*LMS Co. - California
*Mortgage Corporation of America - California
Pyramid Insurance Company, Ltd. - Hawaii
Pacific Cable Ltd. - Bermuda
TC Cable, Inc. (25% ownership) - Delaware
River Thames Insurance Company Ltd. (51% ownership) - United Kingdom
*RTI Holdings, Inc. - Delaware
*TCS Inc. - Delaware
*Trans International Entities Inc. - Delaware
Transamerica Airlines, Inc. - Delaware
Transamerica Asset Management Group, Inc. - Delaware
Criterion Investment Management Company - Texas
*Transamerica Corporation (Oregon) - Oregon
ss.Transamerica Delaware, L.P. - Delaware
Transamerica Finance Group, Inc. - Delaware
Transamerica Financial Services Finance Company - Delaware (TFG owns
100% of common stock; TFC owns 100% of preferred stock)
Transamerica HomeFirst, Inc. - California
Transamerica Finance Corporation - Delaware
BWAC Twelve, Inc. - Delaware
Transamerica Insurance Finance Corporation - Maryland
Transamerica Insurance Finance Corporation, California -
California
Transamerica Insurance Finance Corporation, Canada -
Canada
Transamerica Insurance Finance Company (U.K.) - Maryland
Arcadia General Insurance Company - Arizona
Arcadia National Life Insurance Company - Arizona
Transamerica Insurance Administrators, Inc. - Delaware
First Credit Corporation - Delaware
*Pacific Agency, Inc. - Indiana
Pacific Finance Loans - California
Pacific Service Escrow Inc. - Delaware
Transamerica Acceptance Corporation - Delaware
Transamerica Credit Corporation - Nevada
Transamerica Credit Corporation - Washington
Transamerica Financial Consumer Discount Company - Pennsylvania
Transamerica Financial Corporation - Nevada
Transamerica Financial Professional Services, Inc. - California
Transamerica Financial Services, Inc. - British Columbia
Transamerica Financial Services - California
NAB Services, Inc. - California
Transamerica Financial Services - Wyoming
Transamerica Financial Services Company - Ohio
Transamerica Financial Services, Inc. - Alabama
Transamerica Financial Services, Inc. - Arizona
Transamerica Financial Services, Inc. - Hawaii
Transamerica Financial Services, Inc. - Kansas
Transamerica Financial Services Inc. - Minnesota
Transamerica Financial Services, Inc. - New Jersey
Transamerica Financial Services, Inc. - Texas
Transamerica Financial Services (Inc.) - Oklahoma
Transamerica Financial Services of Dover, Inc. - Delaware
TELCO Holding Co., Inc. - Delaware
Transamerica Commercial Finance Corporation, I - Delaware
BWAC Credit Corporation - Delaware
BWAC International Corporation - Delaware
Transamerica Business Credit Corporation - Delaware
Transamerica Inventory Finance Corporation - Delaware
Transamerica Commercial Finance Corporation - Delaware
TCF Asset Management Corporation - Colorado
Transamerica Joint Ventures, Inc. - Delaware
BWAC Seventeen, Inc. - Delaware
*Transamerica Commercial Finance Canada, Limited - Ontario
Transamerica Commercial Finance Corporation, Canada -
Canada
*TCF Commercial Leasing Corporation, Canada - Ontario
Transamerica Commercial Finance France S.A. - France
BWAC Twenty-One, Inc. - Delaware
Transamerica Commercial Holdings Limited - United Kingdom
Transamerica Commercial Finance Limited - United Kingdom
Transamerica Trailer Leasing Limited -
United Kingdom (51%)
Transamerica GmbH Inc. - Delaware
Transamerica Financieringsmattschappij B.V. - Netherlands
*Transamerica Finanzierungs GmbH - Germany
(BWAC Twenty-One, Inc./Transamerica GmbH Inc.)
Transamerica Finanzierungs GmbH - Germany
TA Leasing Holding Co., Inc. - Delaware
Transamerica Leasing Inc. - Delaware
Transamerica Leasing Holdings, Inc. - Delaware
Greybox Services Ltd. - United Kingdom
Greybox L.L.C. - Delaware
Intermodal Equipment, Inc. - Delaware
Transamerica Leasing N.V. - Belgium
Transamerica Leasing Srl. - Italy
Transamerica Container Acquisition Corporation - Delaware
Transamerica Distribution Services Inc. - Delaware
Transamerica Leasing Coordination Center - Belgium
Transamerica Leasing do Brasil S/C Ltda. - Brazil
Transamerica Leasing GmbH - Germany
Transamerica Leasing (HK) Ltd. - Hong Kong
Transamerica Leasing Limited - United Kingdom
ICS Terminals (U.K.) Limited - United Kingdom
Transamerica Leasing Proprietary Limited - South Africa
Transamerica Leasing Pty. Ltd. - Australia
Transamerica Leasing (Canada) Inc. - Canada
Transamerica Tank Container Leasing Pty. Limited - Australia
Transamerica Trailer Holdings I Inc. - Delaware
Transamerica Trailer Holdings II Inc. - Delaware
Transamerica Trailer Holdings III - Delaware
Transamerica Trailer Leasing AB - Sweden
Transamerica Trailer Leasing (Belgium) N.V. -
Belgium
Transamerica Trailer Leasing (Netherlands) B.V. - Netherlands
Transamerica Trailer Leasing A/S - Denmark
Transamerica Trailer Leasing GmbH - Germany
Transamerica Trailer Leasing S.A. - France
Transamerica Trailer Leasing S.p.A. - Italy
Transamerica Trailer Spain, S.A. - Spain
Transamerica Transport Inc. - New Jersey
*Transamerica Homes, Inc. - Delaware
Transamerica Information Management Services, Inc. - Delaware
Transamerica Insurance Corporation of California - California
Arbor Life Insurance Company - Arizona
Plaza Insurance Sales, Inc. - California
*Transamerica Advisors, Inc. - California
Transamerica Annuity Service Corporation - New Mexico
Transamerica Financial Resources, Inc. - Delaware
Financial Resources Insurance Agency of Texas, Inc. - Texas
TBK Insurance Agency of Ohio - Ohio
Transamerica Financial Resources Insurance Agency of Alabama, Inc. -
Alabama
Transamerica Financial Resources Insurance Agency of Massachusetts,
Inc. - Massachusetts
Transamerica Securities Sales Corporation - Maryland
Transamerica International Insurance Services, Inc. - Delaware
Bulkrich Trading Limited (50%) - Hong Kong
Home Loans & Finance Limited - United Kingdom
Transamerica Occidental Life Insurance Company - California
Bulkrich Trading Limited (50%) - Hong Kong
First Transamerica Life Insurance Company - New York
*NEF Investment Company - Delaware
Transamerica Life Insurance and Annuity Company - North Carolina
Transamerica Assurance Company - Missouri
Transamerica Life Insurance Company of Canada - Canada
Transamerica Variable Insurance Fund, Inc. - Maryland
USA Administration Services, Inc. - Kansas
Transamerica Products, Inc. - California
Transamerica Leasing Ventures, Inc. - California
Transamerica Products I, Inc. - California
Transamerica Products II, Inc. - California
Transamerica Products IV, Inc. - California
Transamerica Service Company - Delaware
Transamerica International Holdings, Inc. - Delaware
TC Cable, Inc. (75% ownership)
*Transamerica International Limited - Canada
Transamerica Investment Services, Inc. - Delaware
*Transamerica Land Capital, Inc. - California
*Bankers Mortgage Company of California - California
ss.Transamerica LP Holdings Corp. - Delaware
oTransamerica Real Estate Tax Service
oTransamerica Flood Hazard Certification - New Jersey
Transamerica Realty Services, Inc. - Delaware
*The Gilwell Company - California
Pyramid Investment Corporation - Delaware
Transamerica Minerals Company - California
Transamerica Oakmont Corporation - California
Transamerica Properties, Inc. - Delaware
Transamerica Real Estate Management Co. - California
Transamerica Retirement Management Corporation - Delaware
Ventana Inn, Inc. - California
*Transamerica Systems Corporation - Delaware
Transamerica Telecommunications Corporation - Delaware
*Designates INACTIVE COMPANIES
oA Division of Transamerica Corporation
ss.Limited Partner; Transamerica Corporation is General Partner
Item 27. Number of Certificate Owners
As of April 1, 1996 there were 5304 Owners of Non- Qualified Individual
Contracts and 2948 Owners of Qualified Individual Contracts.
Item 28. Indemnification
Transamerica's Bylaws provide in Article V as follows:
Section 1. Right to Indemnification.
Each person who was or is a party or is threatened to be made a party to or is
involved, even as a witness, in any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, or investigative
(hereafter a "Proceeding"), by reason of the fact that he, or a person of whom
he is the legal
representative, is or was a director, officer, employee, or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another foreign or domestic
corporation, partnership, joint venture, trust, or other enterprise, or was a
director, officer, employee, or agent of a foreign or domestic corporation that
was predecessor corporation of the corporation or of another enterprise at the
request of such predecessor corporation, including service with respect to
employee benefit plans, whether the basis of the Proceeding is alleged action in
an official capacity as a director, officer, employee, or agent or in any other
capacity while serving as a director, officer, employee, or agent (hereafter an
"Agent"), shall be indemnified and held harmless by the corporation to the
fullest extent authorized by statutory and decisional law, as the same exists or
may hereafter be interpreted or amended (but, in the case of any such amendment
or interpretation, only to the extent that such amendment or interpretation
permits the corporation to provide broader indemnification rights than were
permitted prior thereto) against all expense, liability, and loss (including
attorneys' fees, judgements, fines, ERISA excise taxes and penalties, amounts
paid or to be paid in settlement, any interest, assessments, or other charges
imposed thereon, and any federal, state, local or foreign taxes imposed on any
Agent as a result of the actual or deemed receipt of any payments under this
Article) incurred or suffered by such person in connection with investigating,
defending, being a witness in, or participating in (including on appeal), or
preparing for any of the foregoing, in any Proceeding (hereafter "Expenses");
provided however, that except as to actions to enforce indemnification rights
pursuant to Section 3 of this Article, the corporation shall indemnify any Agent
seeking indemnification in connection with a Proceeding (or part thereof)
initiated by such person only if the Proceeding (or part thereof) was authorized
by the Board of Directors of the corporation. The right to indemnification
conferred in this Article shall be a contract right. [It is the Corporation's
intent that the bylaws provide indemnification in excess of that expressly
permitted by Section 317 of the California General Corporation Law, as
authorized by the Corporation's Articles of Incorporation.]
Section 2. Authority to Advance Expenses.
Expenses incurred by an officer or director (acting in his capacity as such) in
defending a Proceeding shall be paid by the corporation in advance of the final
disposition of such Proceeding, provided, however, that if required by the
California General Corporation Law, as amended, such Expenses shall be advanced
only upon delivery to the corporation of an undertaking by or on behalf of such
director or officer to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the corporation as authorized in
this Article or otherwise. Expenses incurred by other Agents of the corporation
(or by the directors or officers not acting in their capacity as such, including
service with respect to employee benefit plans) may be advanced upon the receipt
of a similar undertaking, if required by law, and upon such other terms and
conditions as the Board of Directors deems appropriate. Any obligation to
reimburse the corporation for Expense advances shall be unsecured and no
interest shall be charged thereon.
Section 3. Right of Claimant to Bring Suit.
If a claim under Section 1 or 2 of this Article is not paid in full by the
corporation within 30 days after a written claim has been received by the
corporation, the claimant may at any time thereafter bring suit against the
corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense
(including attorneys' fees) of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending a Proceeding in advance of its final disposition where the
required undertaking has been tendered to the corporation) that the claimant has
not met the standards of conduct that make it permissible under the California
General Corporation Law for the corporation to indemnify the claimant for the
amount claimed. The burden of proving such a defense shall be on the
corporation. Neither the failure of the corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper under the circumstances because he has met the applicable
standard of conduct set forth in the California General Corporation Law, nor an
actual determination by the corporation (including its Board of Directors,
independent legal counsel, or its stockholders) that the claimant had not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that claimant has not met the applicable standard of conduct.
Section 4. Provisions Nonexclusive.
The rights conferred on any person by this Article shall not be exclusive of any
other rights that such person may have or hereafter acquire under any statute,
provision of the Articles of Incorporation, bylaw, agreement, vote of
stockholders or disinterested directors, or otherwise, both as to action in an
official capacity and as to action in another capacity while holding such
office. To the extent that any provision of the Articles, agreement, or vote of
the stockholders or disinterested directors is inconsistent with these bylaws,
the provision, agreement, or vote shall take precedence.
Section 5. Authority to Insure.
The corporation may purchase and maintain insurance to protect itself and any
Agent against any Expense asserted against or incurred by such person, whether
or not the corporation would have the power to indemnify the Agent against such
Expense under applicable law or the provisions of this Article [provided that,
in cases where the corporation owns all or a portion of the shares of the
company issuing the insurance policy, the company and/or the policy must meet
one of the two sets of conditions set forth in Section 317 of the California
General Corporation Law, as amended].
Section 6. Survival of Rights.
The rights provided by this Article shall continue as to a person who has ceased
to be an Agent and shall inure to the benefit of the heirs, executors, and
administrators of such person.
Section 7. Settlement of Claims.
The corporation shall not be liable to indemnify any Agent under this Article
(a) for any amounts paid in settlement of any action or claim effected without
the corporation's written consent, which consent shall not be unreasonably
withheld; or (b) for any judicial award, if the corporation was not given a
reasonable and timely opportunity, at its expense, to participate in the defense
of such action.
Section 8. Effect of Amendment
Any amendment, repeal, or modification of this Article shall not adversely
affect any right or protection of any Agent existing at the time of such
amendment, repeal, or modification.
Section 9. Subrogation.
In the event of payment under this Article, the corporation shall be subrogated
to the extent of such payment to all of the rights of recovery of the Agent, who
shall execute all papers required and shall do everything that may be necessary
to secure such rights, including the execution of such documents necessary to
enable the corporation effectively to bring suit to enforce such rights.
Section 10. No Duplication of Payments.
The corporation shall not be liable under this Article to make any payment in
connection with any claim made against the Agent to the extent the Agent has
otherwise actually received payment (under any insurance policy, agreement,
vote, or otherwise) of the amounts otherwise indemnifiable hereunder.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling person of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the 1933 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by the 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 1933 Act and will be governed by the final
adjudication of such issue.
The directors and officers of Transamerica Occidental Life Insurance
Company are covered under a Directors and Officers liability program which
includes direct coverage to directors and officers (Coverage A) and corporate
reimbursement (Coverage B) to reimburse the Company for indemnification of its
directors and officers. Such directors and officers are indemnified for loss
arising from any covered claim by reason of any Wrongful Act in their capacities
as directors or officers. In general, the term "loss" means any amount which the
insureds are legally obligated to pay for a claim for Wrongful Acts. In general,
the term "Wrongful Acts" means any breach of duty, neglect, error, misstatement,
misleading statement or omission caused, committed or attempted by a director or
officer while acting individually or collectively in their capacity as such,
claimed against them solely by reason of their being directors and officers. The
limit of liability under the program is $65,000,000 for Coverage A and
$55,000,000 for Coverage B for the period 11/25/93 to 11/25/94. Coverage B is
subject to a self insured retention of $5,000,000. The primary policy under the
program is with Corporate Officers and Directors Assurance Holding Limited
(CODA).
Item 29. Principal Underwriter
Transamerica Securities Sales Corporation (TSSC) and Transamerica
Financial Resources (TFR) are the co-underwriters of the Certificates and the
Individual Contracts as defined in the Investment Company Act of 1940. TSSC
became Principal Underwriter effective 8-24-94.
NAME AND PRINCIPAL POSITION AND OFFICES WITH
BUSINESS ADDRESS* TRANSAMERICA SECURITIES SALES CORPORATION
Barbara A. Kelley President and Director
Regina M. Fink Secretary and Director
Benjamin Tang Treasurer
James B. Roszak Director
Nooruddin Veerjee Director
Dan S. Trivers Senior Vice President
Nicki A. Bair Vice President
Chris Shaw Second Vice President
*The Principal business address for each officer and director is 1150 South
Olive, Los Angeles, CA 90015.
NAME AND PRINCIPAL POSITION AND OFFICES WITH
BUSINESS ADDRESS* TRANSAMERICA FINANCIAL RESOURCES
Barbara A. Kelley President and Director
Regina M. Fink Secretary and Counsel
Mary Anthony M. Canete Assistant Treasurer
Gilbert F. Cronin Director
James W. Dederer Director
John Leon Second Vice President and Director of Due Diligence
James B. Roszak Director
Jeffrey C. Goodrich Vice President
Dan Trivers Second Vice President, Director of Administration and
Chief Compliance Officer
Ronald F. Wagley Director
Kerry Rider Second Vice President and Director of Compliance
*The Principal business address for each officer and director is 1150 South
Olive, Los Angeles, CA 90015.
The following table lists the amounts of commissions paid to the
co-underwriters during the last fiscal year.
<TABLE>
<CAPTION>
Name of
Principal Net Underwriting Compensation on Brokerage
Underwriter Discounts & Commission Redemption Commissions Compensation
<S> <C> <C> <C> <C>
TSSC -0- -0- 9,421,052.81 -0-
TFR -0- -0- 1,485,889.71 -0-
</TABLE>
Item 30. Location and Accounts and Records
All accounts and records required to be maintained by Section 31(a) of
the 1940 Act and the rules under it are maintained by Transamerica or the
Service Office at their administrative offices.
Item 31. Management Services
All management contracts are discussed in Parts A or B.
Items 32. Undertakings
(a) Registrant undertakes that it will file a post-effective amendment to
this registration statement as frequently as necessary to ensure that
the audited financial statements in the registration statement are
never more than 16 months old for so long as payments under the
variable annuity contracts may be accepted.
(b) Registrant undertakes that it will include either (1) as part of any
application to purchase a Certificate or an Individual Contract offered
by the Prospectus, a space that an applicant can check to request a
Statement of Additional Information, or (2) a post card or similar
written communication affixed to or included in the Prospectus that the
applicant can remove to send for a Statement of Additional Information.
(c) Registrant undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available
under this Form promptly upon written or oral request to Transamerica
at the address or phone number listed in the Prospectus.
(d) Registrant represents that it is relying on a no-action letter dated
November 28, 1988, to the American Council of Life Insurance (Ref. No.
IP-6-88) regarding Sections 22(e), 27(c)(i) and 27(d) of the Investment
Company Act of 1940, in connection with redeemability restrictions on
Section 403(b) policies, and that paragraphs numbered (1) through (4)
of that letter will be complied with.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
Transamerica Occidental Life Insurance Company certifies that this
Post-Effective Amendment No. 7 to the Registration Statement meets all of the
requirements for effectiveness pursuant to Rule 485(b) under the Securities Act
of 1933 and has duly caused this Post-Effective Amendment No. 7 to the
Registration Statement to be signed on its behalf by the undersigned in the City
of Los Angeles, State of California on this 26th day of April, 1996.
SEPARATE ACCOUNT VA-2L TRANSAMERICA OCCIDENTAL
OF TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
LIFE INSURANCE COMPANY (DEPOSITOR)
(REGISTRANT)
--------------------------
James W. Dederer, Executive
Vice President, General Counsel
and Corporate Secretary
As Required by the Securities Act of 1933, this Post-Effective
Amendment No. 7 to the Registration
Statement has been signed by the following persons in the capacities and
on the date indicated.
<TABLE>
<CAPTION>
Signatures Titles Date
<S> <C> <C>
______________________* President, Chief Executive Officer April 26, 1996
Thomas J. Cusack and Director
David R. Carpenter and Chief Executive Officer
______________________* Chairman and Director April 26, 199 6
John A. Fibiger
______________________* Director April 26, 1996
Kent L. Colwell
______________________* Director April 26, 1996
Richard I. Finn
______________________* Director April 26, 1996
David E. Gooding
______________________* Director April 26, 1996
Edgar H. Grubb
______________________* Director April 26, 1996
Frank C. Herringer
______________________* Director April 26, 1996
Richard N. Latzer
______________________* Director April 26, 1996
Charles E. LeDoyen
______________________* Director April 26, 1996
Karen MacDonald
______________________* Director April 26, 1996
Gary U. Rolle'
______________________* Director April 26, 1996
James B. Roszak
______________________* Director April 26, 1996
William E. Simms
______________________* Director April 26, 1996
Nooruddin S. Veerjee
______________________* Director April 26, 199 6
Robert A. Watson
</TABLE>
______________________ On April 26, 199 6 as Attorney-in-Fact pursuant to
*By: James W. Dederer powers of attorney previously filed and filed
herewith, and in his own
capacity as Executive Vice President, General Counsel, Corporate Secretary
and Director
<PAGE>
Registration No. 33-49998
811-7042
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SEPARATE ACCOUNT VA-2L
OF
TRANSAMERICA OCCIDENTAL
LIFE INSURANCE COMPANY
EXHIBITS
TO
POST-EFFECTIVE AMENDMENT NO. 7
TO
THE REGISTRATION STATEMENT ON FORM N-4
UNDER
THE SECURITIES ACT OF 1933
AND
THE INVESTMENT COMPANY ACT OF 1940
APRIL 1996
EXHIBIT INDEX
Exhibit Description Page
No. of Exhibit No.
(9) (a) Opinion and Consent of Counsel C-21
(10) (a) Consent of Counsel C-22
(b) Consent of Independent Auditors C-23
(15) Power of Attorney C-25
<PAGE>
Exhibit (9)(a)
Opinion and Consent of Counsel
<PAGE>
April 17, 1996
Transamerica Occidental Life
Insurance Company
1150 South Olive Street
Los Angeles, CA 90015
Gentlemen:
With reference to the Post-Effective Amendment No. 7 to the Registration
Statement on Form N-4 filed by Transamerica Occidental Life Insurance
Company and its Separate Account VA-2L with the Securities and
Exchange Commission covering certain variable annuity contracts (File No.
33-49998), I have examined such documents and such law as I considered
necessary and appropriate, and on the basis of such examinations, it is my
opinion that:
1.) Transamerica Occidental Life Insurance Company is duly
organized and validly existing under the laws of the State of
California.
2.) The variable annuity contracts, when issued as contemplated
by the said Form N-4 Registration Statement, as amended,
will constitute legal, validly issued and binding obligations of
Transamerica Occidental Life Insurance Company.
I hereby consent to the filing of this opinion as an exhibit to the said Post-
Effective Amendment No. 7 to the Form N-4 Registration Statement and to
the reference to my name under the caption "Legal Matters" in the
Prospectus contained in the said Post-Effective Amendment No. 7. In
giving this consent, I am not admitting that I am in the category of persons
whose consent is required under Section 7 of the Securities Act of 1933.
Very truly yours,
James W. Dederer
Executive Vice President,
General Counsel and
Corporate Secretary
<PAGE>
Exhibit (10)(a)
Consent of Counsel
<PAGE>
Sutherland, Asbill & Brennan
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2404
April 22, 1996
Transamerica Occidental Life Insurance Company
1150 South Olive Street
Los Angeles, CA 90015
Re: Separate Account VA-2L
File No. 33-49998
Gentlemen:
We hereby consent to the reference to our name under the caption "Legal
Matters" in the Prospectus filed as part of Post-Effective Amendment No. 7 to
the Form N-4 Registration Statement for Separate Account Va-2L. In giving
this consent, we do not admit that we are in the category of persons whose
consent is required under Section 7 of the Securities Act of 1933.
Very truly yours,
SUTHERLAND, ASBILL & BRENNAN
By Frederick R. Bellamy
<PAGE>
Exhibit (10)(b)
Consent of Independent Auditors
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Condensed Financial
Information" and "Accountants" in the Prospectus and to the use of our reports
dated April 15, 1996 and February 14, 1996 on Separate Account VA-2L of
Transamerica Occidental Life Insurance Company and Transamerica Occidental Life
Insurance Company, respectively, contained in the Statement of Additional
Information.
Ernst & Young LLP
Los Angeles, California
April 26, 1996
<PAGE>
Exhibit 15
Power of Attorney
<PAGE>
POWER OF ATTORNEY
The undersigned director of Transamerica Occidental Life
Insurance Company, a California corporation (the "Company"),
hereby constitutes and appoints Aldo Davanzo, James W. Dederer,
Charles E. LeDoyen and David E. Gooding and each of them (with
full power to each of them to act alone), her true and lawful
attorney-in-fact and agent, with full power of substitution to
each, for her and on her behalf and in her name, place and stead,
to execute and file any of the documents referred to below
relating to registrations under the Securities Act of 1933 and
under the Investment Company Act of 1940 with respect to any
variable life insurance or annuity policies: registration
statements on any form or forms under the Securities Act of 1933
and under the Investment Company Act of 1940, and any and all
amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith,
each of said attorneys-in-fact and agents and her or their
substitutes being empowered to act with or without the others or
other, and to have full power and authority to do or cause to be
done in the name and on behalf of the undersigned each and every
act and thing requisite and necessary or appropriate with respect
thereto to be done in and about the premises in order to
effectuate the same, as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set
her hand, this _________ day of January, 1996.
_____________________________
Karen MacDonald
POWER OF ATTORNEY
The undersigned director of Transamerica Occidental Life
Insurance Company, a California corporation (the "Company"),
hereby constitutes and appoints Aldo Davanzo, James W. Dederer,
Charles E. LeDoyen and David E. Gooding and each of them (with
full power to each of them to act alone), his true and lawful
attorney-in-fact and agent, with full power of substitution to
each, for his and on his behalf and in his name, place and stead,
to execute and file any of the documents referred to below
relating to registrations under the Securities Act of 1933 and
under the Investment Company Act of 1940 with respect to any
variable life insurance or annuity policies: registration
statements on any form or forms under the Securities Act of 1933
and under the Investment Company Act of 1940, and any and all
amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith,
each of said attorneys-in-fact and agents and his or their
substitutes being empowered to act with or without the others or
other, and to have full power and authority to do or cause to be
done in the name and on behalf of the undersigned each and every
act and thing requisite and necessary or appropriate with respect
thereto to be done in and about the premises in order to
effectuate the same, as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set
his hand, this _________ day of January, 1996.
_____________________________
Robert A. Watson
