As filed with the Securities and Exchange Commission on May 1, 1998
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. 9
|X|
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF
1940
|-|
Amendment No. 11
|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, LLP
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.
<PAGE>
Title of Securities being registered:
Variable Annuity Contracts
It is proposed that this filing will become effective: |_|
immediately upon filing pursuant to paragraph (b)
|X| on May 1, 1998 pursuant to paragraph (b)
|_| 60 days after filing pursuant to paragraph (a)(i)
|_| on ________________ pursuant
to paragraph (a)(i)
If appropropriate, check the following box:
|_| this Post-Effective Amendment designates a new effective date
for a previously filed Post-Effective Amendment.
- 2 -
<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
<TABLE>
<CAPTION>
Item of Form N-4 Prospectus Caption
<S> <C> <C>
1. Cover Page............................................... Cover Page
2. Definitions.............................................. Definitions
3. Synopsis................................................. Summary
4. Condensed Financial Information.......................... Not Applicable
5. General
(a) Depositor Transamerica Occidental Life
Insurance 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
- 3 -
<PAGE>
(c) Changes Addition, Deletion, or
Substitution
(d) Inquiries Summary; Available Information
8. Annuity Period........................................... Annuity Payments
9. Death Benefit............................................ Death Benefit
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
PART B
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
- 4 -
<PAGE>
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
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
- 5 -
<PAGE>
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
- 6 -
</TABLE>
<PAGE>
1
PROFILE OF THE
DREYFUS/TRANSAMERICA
TRIPLE ADVANTAGE(R)
VARIABLE AND FIXED ANNUITY
Issued by
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
May 1, 1998
This Profile is a summary of some of the more important
points that you should know and consider before purchasing
a Contract. The Contract is more fully described
in the full Prospectus which accompanies this Profile.
Please read the Prospectus carefully.
1. The Annuity Contract. The Dreyfus/Transamerica Triple Advantage is a contract
between you and Transamerica Occidental Life Insurance Company with both
"variable" and "guaranteed" investment options. In the Contract, you can invest,
in your choice of eighteen Sub-Accounts corresponding to eighteen funds
("Portfolios") in the Variable Account or in the Guaranteed Periods of the Fixed
Account from Transamerica. You could gain or lose money you invest in the
Portfolios, but you could also earn more than investing in the Fixed Account
options. Transamerica guarantees the safety of money invested in the Fixed
Account options. The Fixed Account and some of the Portfolios may not be
available in all states.
The Contract is a deferred annuity, which means it has two phases: the
accumulation phase and the annuity phase. During the accumulation phase you can
make additional purchase payments to the Contract, transfer your money among the
investment options, and withdraw some or all of your investment. During this
phase earnings accumulate on a tax-deferred basis for individuals, but if you
withdraw money some or all of it may be taxable. Tax deferral is not available
for corporations and some trusts.
During the annuity phase Transamerica will make periodic payments to
you. The dollar amount of the payments may depend on the amount of money
invested and earned during the accumulation phase (and other factors, such as
age and sex).
2. The Annuity Payments. You can generally decide when to end the accumulation
phase and begin receiving annuity payments from Transamerica. You can choose
fixed annuity payments, where the dollar amount of each payment generally stays
the same, or variable payments that go up or down in dollar amount based on the
investment performance of the Portfolios you select. You can choose among
payments for the lifetime of an individual, or payments for the longer of one
lifetime or a guaranteed period of 10, 15, or 20 years, or payments for one
lifetime and the lifetime of another individual.
3. Purchasing a Contract. Generally, you must invest at least $5,000 to purchase
a Contract, and then you can make more investments of at least $500 each ($100
each if made under the automatic payment plan and deducted from your bank
account). You may cancel your Contract during the Free Look Period. This right
is explained in item 10 on page 4 of this Profile.
The Triple Advantage variable annuity is designed for long-term
tax-deferred accumulation of assets, generally for retirement or other long-term
goals. Individuals in high tax brackets get the most benefit from the tax
deferral feature. You should not make an investment in the Contract for
short-term purposes or if you cannot take the risk of losing some of your
investment.
4. Investment Options. VARIABLE ACCOUNT: You can invest in any of the
Sub-Accounts corresponding to the following
eighteen Portfolios:
Money Market Capital Appreciation International Value
Special Value Stock Index Disciplined Stock
Zero Coupon 2000 Socially Responsible Growth Small Company Stock
Quality Bond Growth and Income Balanced
Small Cap International Equity Limited Term High Income
Transamerica Growth
Core Value
MidCap Stock
These Portfolios are described in their own prospectuses. You
can earn or lose money in any of these Portfolios. All Portfolios may not be
available in all states.
FIXED ACCOUNT: In most states, you can also invest in a Fixed Account
option, where Transamerica guarantees the principal invested plus at least 3%
annual interest.
5. Expenses. The Contract provides many benefits and features that you do not
get with a regular mutual fund. It costs Transamerica money to provide these
benefits, so there are charges in connection with this Contract. If you withdraw
your money within seven years of investing it, there may be a withdrawal charge
of up to 6% of the amount invested. Once each Contract Year we deduct an Account
Fee of no more than $30 (there is no fee if your Account Value is over $50,000).
Insurance and administrative charges of 1.40% per year are charged against your
average daily value in the Variable Account and a $10 fee for transfers over 18
in one year. Advisory fees are also deducted by the Portfolios' manager, and the
Portfolios pay other expenses which, in total, vary from 0. 28% to 1.42% per
year of the amounts in the Portfolios. Finally, there might be premium taxes
ranging from 0 to 3.5% of your investment and/or on amounts you use to purchase
annuity benefits (depending on your state's law).
The following chart shows these charges (except transfer fees premium
taxes). The $30 annual Account Fee is not included in the first column because
the fee is waived for Account Values over $50,000 and the approximate average
Account Value is over $50,000. The third column is the sum of the first two. The
examples in the last two columns show the total amounts you would be charged, in
dollars, if you invested $1000, the investment grew 5% each year, and you
withdrew your entire investment after one year or ten years. Year one includes
the withdrawal charge and year ten does not.
<TABLE>
<CAPTION>
EXAMPLES:
Total
Portfolio/ Annual Annual Expenses at end Total Expenses at
Sub-Account Insurance Portfolio Total Annual of end of
- -----------
Charges Charges Charges One Year Ten Years
<S> <C> <C> <C> <C> <C>
Money Market 1.40% 0.61% 2.01% $71.40 $233.76
Special Value 1.40% 0.99% 2.39% $75.21 $272.63
Zero Coupon 2000 1.40% 0.61% 2.01% $71.40 $233.76
Quality Bond 1.40% 0.75% 2.15% $72.81 $248.27
Small Cap 1.40% 0.78% 2.18% $73.11 $251.35
Capital Appreciation 1.40% 0.80% 2.20% $73.31 $253.39
Stock Index 1.40% 0.28% 1.68% $68.08 $198.70
Socially Responsible 1.40% 0.82% 2.22% $73.51 $255.44
Growth and Income 1.40% 0.80% 2.20% $73.31 $253.39
International Equity 1.40% 1.06% 2.46% $75.91 $279.62
International Value 1.40% 1.42% 2.82% $79.51 $314.73
Disciplined Stock 1.40% 1.02% 2.42% $75.51 $275.63
Small Company 1.40% 1.12% 2.52% $76.51 $285.56
Balanced 1.40% 1.00% 2.40% $75.31 $273.63
Limited Term High Income 1.40% 0.89% 2.29% $74.21 $262.55
Transamerica Growth 1.40% 0.85% 2.25% $73.84 $261.67
Core Value 1.40% 1.00% 2.40% $75.36 $279.12
MidCap Stock 1.40% 1.00% 2.40% $75.36 $279.12
</TABLE>
The Annual Portfolio Charges above are for 1997 and do not reflect expense
reimbursements or fee waivers, except for the Limited Term High Income and
Transamerica Growth Portfolios. The Core Value and MidCap Stock Portfolios did
not commence operations in1997; the numbers for these funds are annualized
estimates including reimbursements or waivers for1998. Expenses may be higher or
lower in the future. See the Variable Account Fee Table on page 11 of the Triple
Advantage prospectus for more detailed information.
6. Federal Income Taxes. Individuals generally are not taxed on increases in the
contract value until a distribution occurs (e.g., a withdrawal or annuity
payment) or is deemed to occur (e.g., a pledge, loan, or assignment of the
contract). If you withdraw money, earnings come out first and are taxed.
Generally, some portion (sometimes all) of any distribution or deemed
distribution is taxable as ordinary income. In some cases, income taxes will be
withheld from distributions. If you are under age 59 1/2 when you withdraw
money, an additional 10% federal tax penalty may apply on the withdrawn
earnings. Certain owners that are not individuals may be currently taxed on
increases in the contract, whether distributed or not.
7. Access to Your Money. You can generally take money out at any time during the
accumulation phase. A withdrawal charge of up to 6% of a purchase payment may be
assessed by Transamerica, but no withdrawal charge will be assessed on money
that has been in the Contract for seven years. In certain cases, the withdrawal
charge may be waived if you are in a hospital or nursing home for a long period
or, in some states, if you are diagnosed with a terminal illness. After the
first Contract Year, for only the first withdrawal in a Contract Year, you may
withdraw the greater of accumulated earnings or 15% of Purchase Payments
received at least one but less than seven years ago. Additionally, at any time
you can withdraw accumulated earnings on your purchase payments not previously
withdrawn without a withdrawal charge. (See Page 30 of the prospectus for a more
detailed discussion.)
You may have to pay income taxes on amounts you withdraw and there may also be a
10% tax penalty if you make withdrawals before you are 59 1/2 years old.
If you withdraw money from the Fixed Account option prematurely, you will
generally forfeit some of the interest that you earned, but you will always
receive the principal you invested plus 3% interest.
8. Past Investment Performance. The value of the money you allocate to the
Sub-Account(s) will go up or down, depending on the investment performance of
the Portfolios you pick. The following chart shows the past investment
performance on a year by year basis for each Sub-Account. These figures have
already been reduced by the insurance charges, the account fee, the fund
manager's fee and all the expenses of the mutual fund portfolio, but these
figures do not include the withdrawal charge, which would reduce performance if
it applied. Remember, past performance is no guarantee of future performance or
earnings.
<TABLE>
<CAPTION>
CALENDAR YEAR
SUB-ACCOUNT
1997 1996 1995 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Money Market(1) 3.66% 3.53% 4.21% 3.00% 1.86% 2.71% 4.54% N/A
Special Value(1) 21.36% (5.67%) (0.48%) (3.48%) 26.74% (0.41%) 8.99% N/A
Zero Coupon 2000(1) 5.45% 1.10% 16.35% (5.41%) 13.52% 7.29% 17.14% N/A
Quality Bond(1) 7.83% 1.63% 18.91% (6.17%) 13.66% 10.45% 12.47% N/A
Small Cap(1) 15.06% 15.06% 28.84% 4.95% 65.77% 68.98% 156.07% N/A
Capital Appreciation(2) 26.21% 22.71% 32.82% 1.45% N/A N/A N/A N/A
Stock Index(3) 31.05% 19.80% 35.92% (0.60%) 7.75% 5.55% 27.98% (6.52%)
Socially Responsible(4) 26.59% 19.00% 33.67% (0.08%) N/A N/A N/A N/A
Growth and Income(5) 14.53% 18.63% 59.58% N/A N/A N/A N/A N/A
International Equity(5) 8.02% 9.82% 6.62% N/A N/A N/A N/A N/A
International Value(6) 7.13% N/A N/A N/A N/A N/A N/A N/A
Disciplined Stock(6) 29.62% N/A N/A N/A N/A N/A N/A N/A
Small Company Stock(6) 20.01% N/A N/A N/A N/A N/A N/A N/A
Transamerica Growth(7) 50.34% 26.63% 53.02% 7.71% 27.73% 13.58% 41.47% (12.58%)
</TABLE>
(1) Portfolio Inception 8-31-90 (3) Portfolio Inception 9-29-89
(2) Portfolio Inception 4-5-93 (4) Portfolio Inception 10-7-93
(5) Portfolio Inception 12-15-94
(6) Portfolio Inception 5-1-96
(7) Portfolio Inception 2-26-69
Data is for full years only. Therefore, no performance is reported for the
Balanced and Limited Term High Income Sub-Accounts because these Sub-Accounts
had not been in operation for a full year in 1997. Additionally, the Core Value
and MidCap Stock Sub-Accounts did not commence operations in 1997 and,
therefore, no performance is reported for these Sub-Accounts. The figures for
the Money Market, Special Value, Zero Coupon 2000, Quality Bond, Small Cap,
Stock Index and Transamerica Growth Sub-Accounts include data for periods before
the Sub-Accounts commenced operations, based on the actual performance of the
corresponding Portfolios since they commenced operations.
9. Death Benefit. If you or the Annuitant die during the accumulation phase, the
beneficiary is guaranteed by Transamerica to receive a death benefit of at least
the amount you invested (less any amounts you have already withdrawn), even if
your investment has lost money because of the investment performance of the
Portfolios you picked.
The death benefit will be the greatest of: (1), the Account Value; (2)
a seven-year step-up death benefit, which is the highest Account Value on the
most recent seven year anniversary of your purchase of the Contract (adjusted
for additional investments and any withdrawals since that anniversary less
premium taxes applicable to those withdrawals); or (3) your investments, less
withdrawals and any premium taxes applicable to that withdrawal, compounded at
5% annual effective interest (the 5% interest stops when you, your joint Owner,
or the Annuitant reaches age 75, or when it has doubled the amount of your
investment, whichever is earlier).
10. Other Information. The Contract offers other features you might be
interested in. These features may not be available in all states and may not be
suitable for your particular situation. Some of these features include:
FREE LOOK. After you get your Contract, you have ten days to look it
over and decide if it is really right for you (this period may be longer in
certain states). If you decide not to keep the Contract, you can cancel it
during this period, and you will get back the amount of your investment that you
allocated to the Fixed Account and the current value of the amounts you
allocated to the Variable Account (without any withdrawal charges). Certain laws
may require that if you cancel during this period, you are entitled to get back
the greater of your full investment or the Account Value. If one of these laws
apply, then during this "free look" period your investment allocated to the
Variable Account, may be placed in the Money Market Portfolio (depending upon
the state in which the Contract is sold).
TELEPHONE TRANSFERS. You can generally arrange to transfer money
between the investments in your contract by
telephone.
DOLLAR COST AVERAGING. You can instruct Transamerica to automatically
transfer amounts from the Purchase Payments you allocated to the Money Market,
Limited Term High Income or Quality Bond Sub-Accounts, or possibly from another
Sub-Account or a Guarantee Period of the Fixed Account, to any of the other
Sub-Accounts each month. Dollar Cost Averaging is intended to give you a lower
average cost per share or unit than a single, one time investment, but it does
not assure a profit or protect against loss and is intended to continue for some
time.
AUTOMATIC ASSET REBALANCING. The performance of each Sub-Account may
cause the allocation of value among the Sub-Accounts to change. You may instruct
Transamerica to periodically automatically rebalance the amounts in the
Sub-Accounts by reallocating amounts among them.
SYSTEMATIC WITHDRAWAL OPTION. You can arrange to have Transamerica send
you money automatically each month out of your Contract during the accumulation
phase. There are limits on the amounts, but the withdrawal charge will not apply
(the payments may be taxable and subject to the penalty tax if you are under age
59 1/2).
AUTOMATIC PAYOUT OPTION. If you have certain Qualified Contract
(for example: a non-Roth IRA), you can arrange
to have the minimum distributions required by the IRS to be automatically paid
to you.
11. INQUIRIES. You can get more information and have your questions
answered by writing or calling:
Transamerica Annuity Service Center
P.O. Box 31848
Charlotte, North Carolina 28231-1848
800-258-4260
<PAGE>
["Front Green Cover"]
[LOGO]
PROSPECTUS FOR
DREYFUS/TRANSAMERICA TRIPLE ADVANTAGE(R)
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
DREYFUS INVESTMENT PORTFOLIOSGROWTH PORTFOLIO OF TRANSAMERICA
VARIABLE INSURANCE FUND, INC.
May 1, 1998
<PAGE>
DREYFUS/TRANSAMERICA TRIPLE ADVANTAGE(R)
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 in which the
selected Sub-Accounts are invested. The Owner bears the entire investment risk
for all amounts allocated to the Variable Account. Amounts allocated to the
Fixed Account are guaranteed by Transamerica to accrue at 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 31848, Charlotte, North Carolina 28231-1848, 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 keep it for future reference.
The date of this Prospectus is May 1, 1998
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. , Dreyfus Investment Potfolios and Growth Portfolio of
Transamerica Variable Insurance 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.
Aninvestment 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.
The Contract provides for monthly Annuity Payments to be made by
Transamerica on a fixed or a variable basis 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 may also be deducted.
The Variable Account is divided into Sub-Accounts. Each Sub-Account is
invested in shares of a specific Portfolio. Eighteen Portfolios are currently
available for investment under the Contract: the Money Market, Special Value,
Zero Coupon 2000, Quality Bond, Small Cap, Capital Appreciation, Growth and
Income, International Equity, International Value, Disciplined Stock, Small
Company Stock, Balanced and Limited Term High Income Portfolios of Dreyfus
Variable Investment Fund; Dreyfus Stock Index Fund; The Dreyfus Socially
Responsible Growth Fund, Inc.; Core Value and MidCap Stock Portfolios of Dreyfus
Investment Portfolios and the Growth Portfolio of Transamerica Variable
Insurance 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 32). For more information about the Funds, see
"The Funds" (page 20) 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 existing amounts transferred to the Guarantee Periods of the Fixed
Account will be credited with interest of at least 3% per year. Transamerica
may, at 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 generally be subject to an interest adjustment which
will reduce the interest credited to the minimum 3% annual rate. (See "The Fixed
Account" page 23.)
The Initial Purchase Payment for each Contract must generally be at
least $5,000 unless, with the prior permission of Transamerica, the Contract is
sold as a Qualified Contract to certain retirement plans. 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.
<PAGE>
TABLE OF CONTENTS Page
DEFINITIONS 5
SUMMARY 8
CONDENSED FINANCIAL INFORMATION 16
PERFORMANCE DATA 18
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND THE
VARIABLE ACCOUNT 19
Transamerica Occidental Life Insurance Company 19
Published Ratings 19
The Variable Account 19
THE FUNDS 20
THE FIXED ACCOUNT 23
Guarantee Periods 24
Interest Adjustment 24
Expiration of a Guarantee Period 24
THE CONTRACT 24
APPLICATION AND PURCHASE PAYMENTS 25
Purchase Payments 25
Allocation of Purchase Payments 25
Investment Option Limits
ACCOUNT VALUE 26
TRANSFERS 27
Before the Annuity Date 27
Telephone Transfers 27
Possible Restrictions 27
Dollar Cost Averaging 28
Automatic Asset Rebalancing 28
After the Annuity Date 28
CASH WITHDRAWALS 29
Withdrawals 29
Systematic Withdrawal Option 30
Automatic Payout Option 30
DEATH BENEFIT 30
Payment of Death Benefit 31
Designation of Beneficiaries 31
Death of Annuitant Prior to the Annuity Date 31
Death of Owner Prior to the Annuity Date 31
Death of Annuitant or Owner After the Annuity Date 31
CHARGES AND DEDUCTIONS 32
Contingent Deferred Sales Load 32
Administrative Charges 33
Mortality and Expense Risk Charge 33
Premium Taxes 34
Transfer Fees 34
Systematic Withdrawal Option 34
Taxes 34
Portfolio Expenses 34
Interest Adjustment.............................34
Sales in Special Situations.....................
ANNUITY PAYMENTS 35
Annuity Date ..................................35
Annuity Payment ..................................35
Election of Annuity Forms and Payment Options.......35
Annuity Payment Options.............................35
Fixed Annuity Payment Option........................36
TABLE OF CONTENTS CONTINUED
Variable Annuity Payment Option.....................36
Annuity Forms ..................................36
Alternate Fixed Annuity Rates.......................37
QUALIFIED CONTRACTS 37
Automatic Payout Option ("APO").....................38
Restrictions under 403(b) Programs..................38
FEDERAL TAX MATTERS 38
Introduction ..................................38
Purchase Payments
Taxation of Annuities...............................39
Qualified Contracts.................................41
Possible Changes in Taxation........................42
Other Tax Consequences..............................42
DISTRIBUTION OF THE CONTRACT.................................42
LEGAL PROCEEDINGS 43
LEGAL MATTERS 43
ACCOUNTANTS 43
VOTING RIGHTS 43
AVAILABLE INFORMATION 43
STATEMENT OF ADDITIONAL
INFORMATION - TABLE OF CONTENTS......................................44
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.
<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: (a) whose life is
used to determine the amount of monthly annuity payments on the Annuity Date;
and (b) who is the Payee designated to receive monthly annuity payments, unless
such Payee is changed by the Owner. The Annuitant cannot be changed after this
Certificate has been issued, except upon the Annuitant's death prior to the
Annuity Date if a Contingent Annuitant has previously been named. In the case of
a Qualified Contract used to fund an IRA or a 403(b) annuity, the Owner must be
the Annuitant. Annuitant's Beneficiary: The person or persons named by the Owner
who may receive the Death Benefit under the Contract, if: (a) the Annuitant is
not the Owner, there is no named Contingent Annuitant and the Annuitant dies
before the Annuity Date and before the death of the Owner(s); 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 specified by the Owner. 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 applicable 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 applicable 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. The contingent annuitant may be changed by the Owner at any time
while the Annuitant is living and before the Annuity Date. Contract: An
individual annuity contract issued by Transamerica, or a certificate issued by
Transamerica which evidences an individual's 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. Death Benefit:
The benefit that may be payable by Transamerica to the Owner's or Annuitant's
Beneficiary, as applicable, if an Owner or the Annuitant dies before the Annuity
Date. The Death Benefit is equal to the greatest of (1) the Account Value, (2)
the greatest 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 and less the
sum of all subsequent withdrawals and any premium taxes applicable to those
withdrawals), or (3) the sum of all Purchase Payments, less withdrawals and any
premium taxes applicable to those withdrawals, 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 any 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 applicable to those withdrawals), together
with credited interest, has grown to two times the amount of all Purchase
Payments (less all withdrawals and any premium taxes applicable to those
withdrawals) as a result of such interest accumulation, if earlier. The Death
Benefit will be determined as of the end of the Valuation Period during which
the last of the following items is received by us at our ServiceCenter: (i)
proof of death of the Owner or Annuitant; and (ii) the written notice of the
method of settlement elected by the beneficiary. 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. Free Look Period: The period of time, beginning on the date the Owner
receives the Contract, during which the Owner has the right to cancel the
Contract. The length of this period depends upon the state of issuance. Funds:
Dreyfus Variable Investment Fund, Dreyfus Stock Index Fund, The Dreyfus Socially
Responsible Growth Fund, Inc., Dreyfus Investment Portfolios and Transamerica
Variable Insurance Fund, Inc., in which the Variable Account currently invests.
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 Fee; 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. 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 (Joint Owners): The person(s) who, while
living, control(s) all rights and benefits under the Contract. Joint Owners own
the Contract equally with right of survivorship. The right of survivorship means
that if a Joint Owner dies, his or her interest in the Contract will pass to the
surviving Joint Owner in accordance with the Death Benefit provisions. Joint
Owners must be husband and wife as of the Contract Date (except in
Pennsylvania). Qualified Contracts cannot have Joint Owners. Owner's
Beneficiary: If the Owner is an individual, the Owner's Beneficiary is the
person(s) who may receive the Death Benefit if the Owner dies before the Annuity
Date and before the death of the Annuitant. 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: Dreyfus Stock Index
Fund, The Dreyfus Socially Responsible Growth Fund, Inc., or any one of the
Series of Dreyfus Variable Investment Fund or any one of the Portfolios of
Dreyfus Investment Portfolios or the Growth Portfolio of Transamerica Varible
Insurance Fund, Inc., 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
issued in connection with a retirement plan or program.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 31848 Charlotte, North Carolina 28231-1848, and at telephone (800)
258-4260. Source Account: A Sub-Account of the Variable Account or a Guarantee
Period of the Fixed Account, as permitted, from which Dollar Cost Averaging
transfers are being made. 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 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 Systematic Withdrawal fees; and less
(h) withdrawals from the Sub- Accounts less any premium taxes applicable to
those withdrawals. 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. Withdrawals: Refers to
partial withdrawals, including systematic withdrawals, and full surrenders that
are paid in cash to the Owner or person(s) the Owner specifies.
<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) non-qualified plans; (b) as an individual
retirement annuity that qualifies for special tax treatment under Code Section
408 and whose initial Purchase Payment is a rollover or transfer from a
qualified retirement plan receiving special tax treatment under Code Sections
401(a), 403(b) and 408 (a "rollover IRA"); or (c) as an individual retirement
annuity that qualifies for special tax treatment under Code Section 408A and
whose initial Purchase payment is a rollover, transfer or conversion from other
individual retirement plans issued under Sections 408 or 408A of the Code (a
"rollover Roth IRA"). Additionally, with Transamerica's prior permission, the
Contract may be used as an IRA or Roth IRA whose initial Purchase Payment is
limited to the contribution limitations of the Code (a "contributory IRA" or
"contributory Roth IRA"), as an annuity under Section 403(b) of the Code, and
with various types of qualified pension and profit-sharing plans under Section
401(a) of the Code. 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 an individual
annuity contract or to a certificate issued under a group annuity contract. The
term "Owner" refers to the Owner or any Joint Owner of the individual contract
or 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 generally be at
least $5,000 unless, with Transamerica's permission, the Contract is sold as a
Qualified Contract to certain retirement plans. 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. The
minimum Net Purchase Payment that may be allocated to an Inactive Sub-Account is
$500 and to a new Guarantee Period is $1,000. (See "Application and Purchase
Payments" page 25.) 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 19.)
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 a Portfolio of
Dreyfus Investment Portfolios or in the Growth Portfolio of Transamerica
Variable Insurance Fund, Inc., or in Dreyfus Stock Index Fund or The Dreyfus
Socially Responsible Growth Fund, Inc. (together "The Funds"). The following
eighteen Portfolios are currently available for investment in the Variable
Account.
Money Market Capital Appreciation
Special Value Stock Index
Zero Coupon 2000 Socially Responsible Growth
Quality Bond Growth and Income
Small Cap International Equity
International Value Transamerica Growth
Disciplined Stock Core Value
Small Company Stock MidCap Stock
Balanced
Limited Term High Income
Each Portfolio has distinct investment objectives and policies which are
described in the accompanying prospectuses for
the Funds. (See "The Funds" page 20.) Some Portfolios may not be available in
all states.
The Funds pay their investment adviser 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 charges described under "Charges and Deductions" (page 32).
For more information about the Funds, see "The Funds" (page 20) 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 generally be subject to an interest adjustment which will reduce the
interest credited to the amount withdrawn to the minimum 3% annual rate. (See
"The Fixed Account" page 23.) Investment Option Limit
Currently, the Owner may not elect more than a total of eighteen
investment options over the life of the
Contract. Investment options include Sub-Accounts of the Variable Account and
the Fixed Account. See "Investment Option
Limit" page___.
Transfers Before the Annuity Date
Prior to the Annuity Date, the Owner may make transfers between and
among the Guarantee Periods of the Fixed Account and the Sub-Accounts of the
Variable Account. A "transfer" is the reallocation of amounts between the
Guaranteed Period(s) of the Fixed Account and the Sub-Account(s) of the Variable
Account, among the Guarantee Periods of the Fixed Account, and among
Sub-Accounts of the Variable Account. There is a $10 fee for each transfer in
excess of eighteen per Contract Year. Transfers specifically excluded under
certain programs will not count towards the eighteen free transfers per Contract
Year. Amounts transferred from a Guarantee Period prior to its Expiration Date
will generally be subject to an interest adjustment which will reduce the
interest credited to the minimum 3% annual rate.(See "Transfer Fees" page 34,
"The Fixed Account" page 23, andfor transfers after the Annuity Date, see "After
the Annuity Date" page 31.) Withdrawals
All or part of the Cash Surrender Value for a Contract may be withdrawn
by the Owner on or before the Annuity Date. Amounts withdrawn may be subject to
a Contingent Deferred Sales Load depending upon how long the withdrawn Purchase
Payments have been held under the Contract. (See "Contingent Deferred Sales
Load" below and at page 32.) 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 Qualified Contracts may be subject to severe
restrictions. (Except for rollover IRAs, Qualified Contracts are sold only with
Transamerica's prior permission.) (See "Qualified Contracts" page 37 and
"Federal Tax Matters" page 38.) The annual Account Fee generally will be
deducted on a full surrender of a Contract. (See "Withdrawals" page 29.) Only
one, and in some states no partial withdrawal, will be permitted while the
Systematic Withdrawal Option is in effect.
Amounts withdrawn from a Guarantee Period prior to its Expiration Date
will generally be subject to an interest adjustment which will reduce the
interest credited to the amount withdrawn to the minimum 3% annual rate. (See
"The Fixed Account" page 23.) Transamerica may delay payment of any withdrawal
from the Fixed Account for up to six months.
(See "Cash Withdrawals" page 29.)
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. TRANSAMERICA GUARANTEES THAT THE AGGREGATE
CONTINGENT DEFERRED SALES LOAD WILL NEVER EXCEED 6% OF THE PURCHASE PAYMENTS.
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. (See
Contingent Deferred Sales Load" page 32.)
Certain amounts may be withdrawn free of any Contingent Deferred Sales
Load. The Owner may make withdrawals up to the "Allowed Amount" (described
below) without incurring a Contingent Deferred Sales Load each Contract Year
before the Annuity Date. During the first Contract Year, the Allowed Amount is
equal to accumulated earnings not previously withdrawn. For the first
withdrawal, and only the first withdrawal in a Contract Year after the first
Contract Year, the available Allowed Amount is equal to the sum of: (a) 100% of
Purchase Payments not previously withdrawn and received at least seven Contract
Years before the date of withdrawal; plus (b) the greater of (i) the accumulated
earnings not previously withdrawn or (ii) 15% of Purchase Payments received at
least one but less than seven complete Contract Years before the date of
withdrawal not reduced by any withdrawals deemed to have been made from such
Purchase Payments. After the first withdrawal in a Contract Year, after the
first Contract Year, the available Allowed Amount is equal to the sum of: (a)
100% of Purchase Payments, not previously withdrawn and received at least seven
complete Contract Years before the date of withdrawal; plus (b) accumulated
earnings not previously withdrawn. Withdrawals will always be made first from
accumulated earnings, and then from Purchase Payments on a first in first out
basis. Therefore, accumulated earnings could be withdrawn as part of the first
withdrawal in a Contract Year and, therefore, not be available for withdrawals
made later that Contract Year. If an Allowed Amount is not withdrawn during a
Contract Year, it does not carry over to the next Contract Year. However,
accumulated earnings, if any, in an Owner's Account Value are always available
as the Allowed Amount. No withdrawals are allowed with regard to Purchase
Payment made by a check which has not cleared. 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 (30 days in Pennsylvania) out of a continuous 60 day
period and other conditions are met. Additionally, in some states, the
Contingent Deferred Sales Load is waived if, after the first Contract Year the
Owner, is diagnosed with a terminal illness reasonably expected to result in
death within twelve months. (See "Contingent Deferred Sales Load" page 32.)
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 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
33.) 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 33.)
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. If the Account Value is over $50,000 on the last business day of the
Contract Year, or 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 33.)
Currently, no fee for the Systematic Withdrawal Option is imposed, but
Transamerica reserves the right to charge for this option in the future. A $10
charge is imposed for each transfer in excess of 18 during a Contract Year. (See
"Transfer Fees" page 34.) 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 34.)
In addition, amounts withdrawn or transferred out of a Guarantee Period
of the Fixed Account prior to its Expiration Date will generally be subject to
an interest adjustment which will reduce the interest earned on that amount to
the minimum 3% annual rate.
<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 32 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
<TABLE>
<CAPTION>
Contingent Deferred
Contract Years since Sales Load
Purchase Payments Receipt Percentage
<S> <C> <C>
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 Fees (first 18 per Contract Year)(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>
Portfolio Annual Expenses
(as a percentage of assets after fee waiver and/or expense reimbursement)(6)
<TABLE>
<CAPTION>
------------------------------------- ---------------- ------------------ --------------------------
Management Other Total Portfolio
Portfolios Fee Expenses Annual Expense
------------------------------------- ---------------- ------------------ --------------------------
------------------------------------- ---------------- ------------------ --------------------------
<S> <C> <C> <C>
Money Market 0.50% 0.11% 0.61%
------------------------------------- ---------------- ------------------ --------------------------
------------------------------------- ---------------- ------------------ --------------------------
Special Value 0.75% 0.24% 0.99%
------------------------------------- ---------------- ------------------ --------------------------
------------------------------------- ---------------- ------------------ --------------------------
Zero Coupon 2000 0.45% 0.16% 0.61%
------------------------------------- ---------------- ------------------ --------------------------
------------------------------------- ---------------- ------------------ --------------------------
Quality Bond 0.65% 0.10% 0.75%
------------------------------------- ---------------- ------------------ --------------------------
------------------------------------- ---------------- ------------------ --------------------------
Small Cap 0.75% 0.03% 0.78%
------------------------------------- ---------------- ------------------ --------------------------
------------------------------------- ---------------- ------------------ --------------------------
Capital Appreciation 0.75% 0.05% 0.80%
------------------------------------- ---------------- ------------------ --------------------------
------------------------------------- ---------------- ------------------ --------------------------
Stock Index Fund 0.25% 0.03% 0.28%
------------------------------------- ---------------- ------------------ --------------------------
------------------------------------- ---------------- ------------------ --------------------------
Socially Responsible Growth Fund 0.75% 0.07% 0.82%
------------------------------------- ---------------- ------------------ --------------------------
------------------------------------- ---------------- ------------------ --------------------------
Growth and Income 0.75% 0.05% 0.80%
------------------------------------- ---------------- ------------------ --------------------------
------------------------------------- ---------------- ------------------ --------------------------
International Equity 0.75% 0.31% 1.06%
------------------------------------- ---------------- ------------------ --------------------------
------------------------------------- ---------------- ------------------ --------------------------
International Value 1.00% 0.42% 1.42%
------------------------------------- ---------------- ------------------ --------------------------
------------------------------------- ---------------- ------------------ --------------------------
Disciplined Stock 0.75% 0.27% 1.02%
------------------------------------- ---------------- ------------------ --------------------------
------------------------------------- ---------------- ------------------ --------------------------
Small Company Stock 0.75% 0.37% 1.12%
------------------------------------- ---------------- ------------------ --------------------------
------------------------------------- ---------------- ------------------ --------------------------
Balanced 0.75% 0.25% 1.00%
------------------------------------- ---------------- ------------------ --------------------------
------------------------------------- ---------------- ------------------ --------------------------
Limited Term High Income 0.65% 0.24% 0.89%
------------------------------------- ---------------- ------------------ --------------------------
------------------------------------- ---------------- ------------------ --------------------------
Transamerica Growth 0.75% 0.10% 0.85%
------------------------------------- ---------------- ------------------ --------------------------
------------------------------------- ---------------- ------------------ --------------------------
Core Value 0.75% 0.25% 1.00%
------------------------------------- ---------------- ------------------ --------------------------
------------------------------------- ---------------- ------------------ --------------------------
MidCap Stock 0.75% 0.25% 1.00%
------------------------------------- ---------------- ------------------ --------------------------
</TABLE>
<PAGE>
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. These figures are for the year ended December 31, 1997, except for Core
Value and MidCap Stock, which are annualized estimates for the year 1998, their
first year of operation. Actual expenses in future years may be higher or lower
than the figures above.
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 Payments may be withdrawn each year after the
first Contract Year without imposition of any Contingent Deferred Sales
Load; 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 ("CDSL"); accumulated earnings may
always be withdrawn without imposition of a CDSL. (See Contingent
Deferred Sales Load" page 32.)
(3) A Transfer Fee of $10 will be imposed for each transfer in excess of 18
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 32.)
(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 32.)
(5) The current annual Administrative Expense Charge is 0.15%; it may
be increased to 0.25%. (See "Charges and
Deductions" page 32.)
(5) (6) From time to time, each Portfolio's investment adviser, in its sole
discretion, may waive all or part of its fees and/or voluntarily assume
certain Portfolio expenses. The expenses shown in the above Portfolio
Annual Expenses table reflect the Portfolio's Adviser's waiver of fees
or reimbursement of expenses, if applicable, for calendar year 1997,
except for Core Value and MidCap Stock Portfolios which are annualized
estimates of expenses to be paid in 1998. It is anticipated that such
waivers and reimbursements will continue for calendar year 1998.
Without such waivers or reimbursements, the management fee, other
expenses and total portfolio annual expenses for 1997 would have been,
as a percentage of assets, 0.75%, 0.23% and 0.98% for Transamerica
Growth Portfolio and 0.65%, 0.29%, and 0.94% for Limited Term High
Income Portfolio, respectively.
<PAGE>
Examples*
The following three examples reflect no Account Fee deduction because
the approximate average Account Value is more than $50,000 and the Account Fee
is waived for Account Values of $50,000. The tabular information assumes that
the entire Account Value is allocated to the Variable Account.
These examples all assume no Transfer Fee, systematic withdrawal fee
or premium tax have been assessed. Premium
taxes may be applicable. (See "Premium Taxes" page 34.)
These examples show expenses without reflecting fee waivers and
reimbursements for1997. Except for the Limited Term High Income and Transamerica
Growth Portfolios, it is not anticipated that there will be any fee waivers or
expense reimbursements 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>
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Money Market $71.40 $105.55 $141.94 $233.76
Special Value $75.21 $117.05 $161.55 $272.63
Zero Coupon 2000 $71.40 $105.55 $141.94 $233.76
Quality Bond $72.81 $109.80 $149.39 $248.27
Small Capital $73.11 $110.71 $150.95 $251.35
Capital Appreciation $73.31 $111.32 $151.96 $253.39
Stock Index $68.08 $95.46 $124.16 $198.70
Socially Responsible Growth $73.51 $111.92 $152.98 $255.44
Growth Income $73.31 $111.32 $151.96 $253.39
International Equity $75.91 $119.15 $165.05 $279.62
International Value $79.51 $129.90 $182.89 $314.73
Disciplined Stock $75.51 $117.95 $163.05 $275.63
Small Company Stock $71.51 $120.95 $168.05 $285.56
Balanced Fund $75.31 $117.35 $162.05 $273.63
Limited Term High Income $74.21 $114.03 $156.51 $262.55
Transamerica Growth Fund $73.84 $113.08 $154.87 $261.67
Core Value $75.36 $117.78 $162.95 $279.12
MidCap Stock $75.36 $117.78 $162.95 $279.12
</TABLE>
Example 2
If the Owner does not surrender and does not annuitize the Contract,
they would pay the following expenses on a $1,000 Initial Purchase Payment
assuming a 5% annual return on assets:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Money Market $20.40 $63.05 $108.29 $233.76
Special Value $24.21 $74.55 $127.55 $272.63
Zero Coupon 2000 $20.40 $63.05 $108.29 $233.76
Quality Bond $21.81 $67.30 $115.43 $248.27
Small Capital $22.11 $68.21 $116.95 $251.35
Capital Appreciation $22.31 $68.82 $117.96 $253.39
Stock Index $17.08 $52.96 $91.26 $198.70
Socially Responsible Growth $22.51 $69.42 $118.98 $255.44
Growth Income $22.31 $68.82 $117.96 $253.39
International Equity $24.91 $76.65 $131.05 $279.62
International Value $28.51 $87.40 $148.89 $314.73
Disciplined Stock $24.51 $75.45 $129.05 $275.63
Small Company Stock $25.51 $78.45 $134.05 $285.56
Balanced Fund $24.31 $74.85 $128.05 $273.63
Limited Term High Income $23.21 $71.53 $122.51 $262.55
Transamerica Growth Fund $22.84 $70.58 $121.22 $261.67
Core Value $24.36 $75.28 $129.30 $279.12
MidCap Stock $24.36 $75.28 $129.30 $279.12
</TABLE>
Example 3
If the Owner elects to annuitize at the end of the applicable period
under an Annuity Form with life contingencies,** they would pay the following
expenses on a $1,000 Initial Purchase Payment assuming a 5% annual return on
assets:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Money Market $71.40 $63.05 $108.29 $233.76
Special Value $75.21 $74.55 $127.55 $272.63
Zero Coupon 2000 $71.40 $63.05 $108.29 $233.76
Quality Bond $72.81 $67.30 $115.43 $248.27
Small Capital $73.11 $68.21 $116.95 $251.35
Capital Appreciation $73.31 $68.82 $117.96 $253.39
Stock Index $68.08 $52.96 $91.26 $198.70
Socially Responsible Growth $73.51 $69.42 $118.98 $255.44
Growth Income $73.31 $68.82 $117.96 $253.39
International Equity $75.91 $76.65 $131.05 $279.62
International Value $79.51 $87.40 $148.89 $314.73
Disciplined Stock $75.51 $75.45 $129.05 $275.63
Small Company Stock $76.51 $78.45 $134.05 $285.56
Balanced Fund $75.31 $74.85 $128.05 $273.63
Limited Term High Income $74.21 $71.53 $122.51 $262.55
Transamerica Growth Fund $73.84 $70.58 $121.22 $261.67
Core Value $75.36 $75.28 $129.30 $279.12
MidCap Stock $75.36 $75.28 $129.30 $279.12
</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. The
assumed 5% annual return is only hypothetical.
It is not a representation of past or future returns. Actual returns could be
greater or less than this assumed rate.
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 35.)
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 36.)
Payments on Death Before the Annuity Date
The Death Benefit for a Contract will be equal to the greatest of (1)
the Account Value; (2) a seven-year step-up benefit, which is the greatest
Account Value determined as of the seventh Contract Anniversary and at each
succeeding Contract Anniversary occurring at seven year intervals thereafter
(adjusted for additional Purchase Payments and withdrawals since that
anniversary less premium taxes applicable to those withdrawals); or (3) Purchase
Payments, less withdrawals and premium taxes applicable to those withdrawals,
compounded at 5% annual effective interest rate (the 5% interest stops when an
Owner or the Annuitant reaches age 75, or when it has doubled the amount of your
investment less withdrawals and any premium taxes applicable to those
withdrawals, whichever is earlier). (See "Death Benefit" page 30.) The Death
Benefit will generally be paid within seven days of receipt of the required
Proof of Death of an 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 30.) Federal Income Tax Consequences
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 except that mandatory withholding may apply for
certain Qualified Contracts. In addition, a federal penalty tax may apply to
certain distributions. (See "Federal Tax Matters" page 38.) 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 most cases, Transamerica will refund the Purchase Payments
allocated to the Fixed Account plus the Variable Accumulated Value as of the
date the written notice and the Contract are received by Transamerica. In other
cases, including for certain ages of Owners in some states, and in all states
for IRAs, Transamerica will refund the greater of the Purchase Payments or the
Account Value as of the date the written notice and the Contract are received by
Transamerica. In certain situations, the Purchase Payments received before or
during the Free Look period will be allocated among the Guarantee Period(s) of
the Fixed Account and Sub-Account(s) of the Variable Account in accordance with
the Owner's instructions. In certain situations, the Purchase Payment(s)
received before or during the Free Look Period which the Owner has allocated to
the Fixed Account will be allocated to the Guarantee Period(s) in accordance
with the Owner's instructions, but Purchase Payments 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). Owners should consult their registered
representative or investment adviser (or see their Contract) for the applicable
provision. (See "Application and Purchase Payments" page 25 and "Account Value"
page 26.) Questions
Any questions about procedures or the Contract will be answered by the
Transamerica Annuity Service Center ("Service Center"), at P.O. Box 31848,
Charlotte, North Carolina 28231-1848, 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 the Funds 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 38.)
<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 the period from commencement of business operations of the
Sub-Account through December 31,1997. The Core Value, MidCap Stock and
Transamerica Growth Sub-Accounts are not included because these Sub-Accounts did
not commence operations during 1997. 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 Special Zero Coupon Quality
Market Value 2000 Bond Small Cap
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
(Inception 1/4/93)(Inception 1/4/93)(Inception 1/4/93)(Inception 1/4/93) (Inception 1/4/93)
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 3,654,791.776 287,450.768 206,103.348 255,350.340 254,839.860
</TABLE>
<TABLE>
<CAPTION>
Capital Appreciation Stock Index Socially Responsible
Sub-Account Sub-Account Sub-Account
(Inception- (Inception- (Inception-
April 5, January 4 October 7,
1993) 1993) 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 $13.364
Number of Accumulation Units
Outstanding at End of Period 237,733.021 93,536.733 26,089.826
</TABLE>
<TABLE>
<CAPTION>
Year Ending December 31, 1994
---------------------------------------------------------------------------------
Money Special Zero Coupon Quality
Market Value 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>
<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 $13.364 $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 Special Zero Coupon Quality
Market Value 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
International
Capital Appreciation Stock Index Socially Responsible Growth and Income Equity
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
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
Year Ending December 31, 1996
---------------------------------------------------------------------------------
Money Special Zero Coupon Quality
Market Value 2000 Bond Small Cap
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
at Beginning of Period $1.093 $12.292 $14.740 $13.908 $51.121
Accumulation Unit Value
at End of Period $1.132 $11.682 $14.911 $14.142 $58.773
Number of Accumulation
Units Outstanding
at End of Period 38,983,053.941 1,232,530.711 1,320,168.687 3,072,774.847 2,736,720.675
<PAGE>
International
Capital Appreciation Stock Index Socially Responsible Growth and Income Equity
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
at Beginning of Period $17.610 $22.172 $17.752 $19.426 $12.964
Accumulation Unit Value
at End of Period $21.802 $26.791 $21.221 $23.131 $14.267
Number of Accumulation
Units Outstanding
at End of Period 3,665,146.389 2,030,280.057 708,680.320 6,332,649.215 1,480,395.223
</TABLE>
<TABLE>
<CAPTION>
International Value Disciplined Stock Small Company Stock
Sub-Account Sub-Account Sub-Account
(Inception 5/1/96) (Inception 5/1/96) (Inception 5/1/96)
Accumulation Unit Value
<S> <C> <C> <C>
at Beginning of Period $10.00 $10.00 $10.00
Accumulation Unit Value
at End of Period $10.244 $11.776 $10.772
Number of Accumulation
Units Outstanding
at End of Period 230,868.491 618,809.191 543,949.419
</TABLE>
<TABLE>
<CAPTION>
Year Ending December 31, 1997
---------------------------------------------------------------------------------
Money Special Zero Coupon Quality
Market Value 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 $1.132 $11.682 $14.911 $14.142 $58.773
Accumulation Unit Value
at End of Period $1.175 $14.185 $15.736 $15.260 $67.668
Number of Accumulation
Units Outstanding
at End of Period 42,660,950.364 2,649,561.005 1,350,865,.031 4,020,220.452 2,954,842.907
</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 $21.802 $26.791 $21.221 $23.131 $14.267
Accumulation Unit Value
at End of Period $27.532 $35.128 $26.879 $26.509 $15.421
Number of Accumulation
Units Outstanding
at End of Period 6,447,159.634 3,357,236.245 1,335,814.063 7,480,387.355 2,176,230.247
Limited Term
High Income Balanced
International Value Disciplined Stock Small Company Stock Sub-Account Sub-Account
Sub-Account Sub-Account Sub-Account (Inception 5/1/97)(Inception 5/1/97)
Accumulation Unit Value
at Beginning of Period $10.244 $11.776 $10.772 $10.000 $10.000
Accumulation Unit Value
at End of Period $10.982 $15.272 $12.935 $10.852 $11.738
Number of Accumulation
Units Outstanding
at End of Period 1,047,389.002 2,278,146.352 1,604,089.554 2,424,231.798 647,855.304
</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.
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 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 safety or 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 investment
performance of Transamerica's general account assets or any other separate
account maintained by Transamerica.
The Variable Account has eighteen Sub-Accounts, each of which
invests solely in a specific corresponding
Portfolio. (See "The Funds" below.) Changes to the Sub-Accounts may be
made at the discretion of Transamerica. (See
"Addition, Deletion, or Substitution" page 22.)
THE FUNDS
The Variable Account invests exclusively in Series of Dreyfus Variable
Investment Fund (the "Variable Fund"), Dreyfus Stock Index Fund (the "Stock
Index Fund"), The Dreyfus Socially Responsible Growth Fund, Inc. (the "Socially
Responsible Fund"), Portfolios of Dreyfus Investment Portfolios and the Growth
Portfolio of Transamerica Variable Insurance Fund, Inc. ("Transamerica VIF").
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, thirteen 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. Dreyfus Investment
Portfolios was organized as an investment business trust under Massachusetts law
pursuant to an Agreement and Declaration of Trust dated May 14, 1993, is
registered with the Commission as an open-end management company under the 1940
Act and commenced operations May 1, 1998. Currently, two portfolios of Dreyfus
Investment Portfolios are available for the Contracts. Transamerica VIF was
incorporated under Maryland law on June 23, 1995, commenced operations on
November 1, 1996, and is registered with the SEC as a management investment
company. Transamerica VIF currently consists of two investment portfolios, one
of which is the Growth Portfolio. 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, the Stock Index Fund
and Transamerica VIF 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. Fayez Sarofim & Co. provides sub-investment advisory
services for the Capital Appreciation Portfolio. NCM Capital Management Group,
Inc., provides sub-investment advisory services for the Socially Responsible
Fund. Transamerica provides investment advisory services to Transamerica VIF,
with Transamerica Investment Services, Inc., providing sub-investment advisory
services.
The Portfolios are described below. See the Variable Fund, the Stock
Index Fund, the Socially Responsible Fund,
Dreyfus Investment Portfolios and Transamerica Variable Insurance Fund, Inc.,
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. Special Value Portfolio
The Special Value 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 at the annual rate of 0.75 of 1% of the value of the
Portfolio's average daily net assets. 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.
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
$1.5 billion 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.
International Value Portfolio
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
adviser. 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. 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. 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 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 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. Balanced Portfolio
The Balanced Portfolio's investment objective is to provide investment
results that are greater than the total return performance of common stocks and
bonds in the aggregate, as represented by a hybrid index 60% of which is
composed of the common stocks in the Standard & Poor's 500 Composite Stock Price
Index and 40% of which is composed of the bonds in the Lehman Brothers
Intermediate Government/Corporate Bond Index. This Portfolio invests primarily
in common stocks and bonds in proportion consistent with their expected returns
and risks as determined by The Dreyfus Corporation. 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. Limited Term High
Income Portfolio
The Limited Term High Income Portfolio's investment objective is to
maximize total return, consisting of capital appreciation and current income.
This Portfolio seeks to achieve its objective by investing up to all of its
assets in a portfolio of lower rated fixed-income securities, commonly known as
"junk bonds" that, under normal market conditions, has an effective duration of
three and one-half years or less and an effective average portfolio maturity of
four years or less. Investments of this type are subject to a greater risk of
loss of principal and non-payment of interest. Investors should carefully assess
the risks associated with an investment in the Portfolio (those risks are
described in the Portfolio's Prospectus). An investment advisory fee is payable
monthly to The Dreyfus Corporation at the annual rate of 0.65 of 1% of the value
of the Portfolio's average daily net assets. 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
1% of the value of the Stock Index 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
and a sub-investment advisory fee is payable monthly to NCM Capital Management
Group, Inc. at the aggregate annual rate of 0.75 of 1% of the value of the
Socially Responsible Fund's average daily net assets. Core Value Portfolio
The Core Value Portfolio is a diversified portfolio, the primary
investment objective of which is to provide long-term growth of capital; current
income is a secondary investment objective. The Portfolio anticipates that at
least 65% of the value of its total assets (except when maintaining a temporary
defensive position) will be invested in equity securities, such as common
stocks, preferred stock and securities convertible into common stocks, including
Depository Receipts, which would be characterized as "value" companies according
to criteria established by The Dreyfus Corporation. In general, the Portfolio's
investments are broadly diversified over a number of industries and, as a matter
of operating policy, the Portfolio will not invest more than 25% of its total
assets in any one industry. A management fee is payable monthly to The Dreyfus
Corporation at the annual rate of 0.75 of 1% of the Portfolio's average daily
net assets. MidCap Stock Portfolio
The MidCap Stock Portfolio is a diversified portfolio, the investment
objective of which 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 Standard & Poor's MidCap 400 Index. Medium-size issuers will
include those U.S. companies with market capitalizations (market price per share
times the number of shares outstanding) generally ranging in value from $200
million to $5 billion. The Portfolio also may invest in large and small
capitalization companies, including emerging and cyclical growth companies.
Emerging and cyclical growth companies are firms which, while they may not have
a history of stable long-term growth, are nontheless expected to represent
attractive investments. The equity securities in which the Portfolio invests
consist of common stocks, preferred stocks and securtieis convertible into
common stocks, including those in the form of Depositary Receipts. The Portfolio
is not an index fund and its investments are not limited to securities of
issuers included in the S&P 400 Index. A management fee is payable monthly to
The Dreyfus Corporation at the annual rate of 0.75 of 1% of the Portfolio's
average daily net assets. Growth Portfolio of the Transamerica Variable
Insurance Fund, Inc., seeks long-term capital growth. Common stock (list and
unlisted) is the basic form of investment. The Growth Portfolio invests
primarily in common stocks of growth companies that are considered by the
manager to be premier companies. In the manager's view, characteristics of
premier companies include one or more of the following: dominant market share;
leading brand recognition; proprietary products or technology; low-cost
production capability; and excellent management with shareholder orientation.
The manager of the Portfolio believes in long-term investing and places great
emphasis on the sustainability of the above competitive advantages. Unless
market conditions indicate otherwise, the manager also tries to keep the
Portfolio fully invested in equity-type securities and does not try to time
stock market movements. When in the judgment of the manager market conditions
warrant, the Portfolio may, for temporary defensive purposes, hold part or all
of its assets in cash, debt or money market instruments. The Portfolio may
invest up to 10% of its assets in debt securities having a call on common stocks
that are rated below investment grade. A management fee is 0.75 of 1% of the
average daily net assets payable to Transamerica Occidental Life Insurance
Company, as adviser, and adviser pays Transamerica Investment Services, Inc. a
monthly fee at the annual rate of 0.30 of 1% of the first $50 million, 0.25 of
1% of next $150 million and 0.20 of 1% of assets in excess of $200 million.
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.
Transamerica receives fees from The Dreyfus Corporation or its
affiliates for providing certain administrative and or other services.
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. The Fixed Account is not available
in all states.
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. 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 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.
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.
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.
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.
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
Except in certain circumstances, an interest adjustment will be made to
any amount withdrawn or transferred 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 ON THE AMOUNT WITHDRAWN OR TRANSFERRED.
Exceptions to the interest adjustment include : 1) amounts withdrawn
within 30 days before the Expiration Date
of the Guarantee Period; 2) amounts withdrawn from a Guarantee Period serving
as the Source Account, if available, for
Dollar Cost Averaging transfers (see "Dollar Cost Averaging", page 28);
and 3) amounts paid as part of a Death Benefit
(see "Death Benefit" page 30). A Contingent Deferred Sales Load may apply to
withdrawals made at the end of a Guarantee
Period even if there is no interest adjustment made.
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 free 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, as rollover IRAs
and as rollover Roth IRAs that qualify for special federal income tax treatment.
With Transamerica's prior permission, the Contracts may also be available as
contributory IRAs, as contributory Roth IRAs, as Section 403(b) annuities and
for use in Section 401(a) qualified pension and profit sharing plans established
by corporate employers. Generally, Qualified Contracts contain certain
restrictive provisions limiting the timing and amount of payments to 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 certain Qualified Contracts.
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.
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 generally be at
least $5,000. Only upon its grant of prior permission will Transamerica accept
lower initial Purchase Payments for certain Qualified Contracts.
The Contract will be issued and the Net Purchase Payment derived from
the Initial Purchase Payment will generally be accepted and credited within two
business days after the later of receipt of sufficient information to issue a
Contract and 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
certain 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, including for some ages
of Owners in some states, and in all states for IRAs, Transamerica will refund
the greater of the Purchase Payments or Account Value of the date the written
notice and the Contract are received by Transamerica. In other states, the
Purchase Payments allocated to the Fixed Account plus the Variable Accumulated
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 this page).
Additional Net Purchase Payments are credited to the Contract as of the date the
payment is received. Currently, additional purchase payments after the initial
purchase payment may not be made to Section 401(a) and Section 403(b) annuity
contracts.
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 how Purchase Payments will be allocated under the
Contract. The Owner may allocate the Net Purchase Payments 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 allocation to any Inactive Sub-Account is subject to a minimum of $500;
the initial allocation to a new Guarantee Period is subject to a minimum of
$1,000. The Owner may choose to allocate nothing to a particular Sub-Account or
Guarantee Period.
With regard to the allocation of Purchase Payments during the Free Look
Period for any portion of the Net Purchase Payments allocated to the Fixed
Account, the amounts specified by the Contract Owner will be allocated to the
Guarantee Period(s) specified by the Contract Owner. With regard to Purchase
Payments allocated to the Variable Account, in most situations where the
Purchase Payment allocated to the Fixed Account plus Variable Accumulation Value
will be refunded upon exercise of the Free Look, 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. In
most situations where the greater of Purchase Payments or Account Value will be
refunded on exercise of the Free Look, 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. This initial allocation after the Free Look Period from the Money Market
Sub-Account to the Sub-Account(s) selected by the Owner does not count toward
the limit of 18 free transfers per Contract Year.
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 an allocation of an additional Net Purchase Payment is directed
to an Inactive Sub-Account of the Variable
Account, then the amount allocated must be at least $500. If an allocation
of an additional Net Purchase Payment is
directed to a new Guaranteed Period of the Fixed Account, then the amount
allocated must be at least $1000.
Investment Option Limit
Currently, the Owner may not allocate amounts to more than eighteen
investment options over the life of the Contract. Investment options include
Sub-Accounts of the Variable Account and Guarantee Periods of the Fixed Account.
Each Sub-Account and each duration of Guarantee Period that ever received a
transfer or purchase payment allocation count as one towards this total of
eighteen limit. Transamerica may waive this limit in the future. For example, if
the Owner makes an allocation to the Money Market Sub-Account and later
transfers all amounts of this Money Market Sub-Account, it would still count as
one for the purposes of the limitation even if it held no value. If the Owner
transfers from a Sub-Account to another Sub-Account and later back to the first,
the count towards the limitation would be two, not three. If the Owner selects a
Guarantee Period and renews for the same term, the count will be one; but if the
Owner renews to a Guarantee Period with a different term, the count will be two.
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 Systematic Withdrawal
Option fees; and less (h) any withdrawals from the Sub-Accounts less any premium
tax applicable to those withdrawals.
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.
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) the minimum amount which may be
transferred is $500; (2) the minimum transfer to an Inactive Sub-Account is
$500; and (3) 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 Portfolios.
Transamerica imposes a transfer fee of $10 for each transfer in excess
of 18 in a Contract Year. Transamerica reserves the right to waive the transfer
fee or vary the number of transfers without charge or not count transfers under
certain options or services for purposes of the allowed number without charge. A
transfer generally will be effective on the date the request for transfer is
received by the Service Center. When a transfer is made from a Guarantee Period
before its Expiration Date, the amount transferred will generally be subject to
an interest adjustment. (See "The Fixed Account" page 23.) 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 $500,
then Transamerica reserves the right to
transfer the remaining amount along with the amount requested to be
transferred in accordance with the transfer
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(s); facsimile transfer requests may
not be allowed. Dollar Cost Averaging
Prior to the Annuity Date, the Owner may request that amounts be
automatically transferred from one (and only one) of the Sub-Accounts which
invest in the Money Market, Quality Bond or Limited Term High Income Portfolios
(the "Source Account"), to any of the Sub-Accounts of the Variable Account on a
monthly basis by submitting a request to the Service Center in a form and manner
acceptable to Transamerica. Transfers may be allowed from Source Accounts in
addition to the Money Market and Quality Bond Sub-Accounts and may include the
shortest Guarantee Period of the Fixed Account; call the Service Center for the
availability of other Source Account options. The transfers will begin the month
following, but no sooner than one week 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) the estimated end of the Free
Look Period (allowing 5 days for delivery of the Contract by mail). Transfers
will continue for the duration selected by the Owner unless (1) terminated by
the Owner, (2) automatically terminated by Transamerica because there are
insufficient funds in the Source Account, or (3) for other reasons as set forth
in the Contract. The Owner may request that monthly transfers be continued 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 last transfer.
In order to be eligible for Dollar Cost Averaging, the Owner must meet
the following conditions: (1) the value of the Source Account must be at least
$5,000; (2) the minimum amount that can be transferred out of the Source 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 Source 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 18 transfers allowed without
charge per Contract Year. There will be no interest adjustments on Dollar Cost
Averaging transfers from the Fixed Account, if allowed as a Source Account by
Transamerica.
Dollar Cost Averaging transfers may not be made to the Fixed Account.
Automatic Asset Rebalancing
After Purchase Payments have been allocated among the variable
Sub-Accounts, the performance of each Sub-Account may cause this allocation to
change. The Owner may instruct Transamerica to automatically rebalance the
amounts in the Variable Accumulated Value by reallocating amounts among the
variable Sub-Accounts, at the time, and in the percentages, specified in the
Owner instructions to Transamerica and accepted by Transamerica. The Owner may
elect to have the rebalancing done on an annual, semi-annual or quarterly basis.
The Owner may elect to have amounts allocated among the Sub-Accounts using whole
percentages, with a minimum of 10% allocated to each Sub-Account.
The Owner may elect to establish, change or terminate the Automatic
Asset Rebalancing by submitting a request to the Service Center in a form and
manner acceptable to Transamerica. Automatic Asset Rebalancing will not count
towards the limit of 18 free transfers in a Contract Year. There is currently no
charge for the Automatic Asset Rebalancing, however, Transamerica reserves the
right to charge a nominal amount for this feature. Transamerica reserves the
right to discontinue offering Automatic Asset Rebalancing any time for any
reason. After the Annuity Date
If a Variable Annuity Payout Option is elected, the Owner may make
transfers among Sub-Accounts after the Annuity Date by giving a request to the
Service Center in a form acceptable to Transamerica, 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 then 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(s) 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. No
Withdrawals may be made after the Annuity Date. 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.
Partial withdrawals must be at least $500. In some states, only one
partial withdrawal will be permitted while the Systematic Withdrawal Option is
in effect. In other states, no partial withdrawals will be permitted while the
Systematic Withdrawal Option is in effect.
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 $500, 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 $500. 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.
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.
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 32).
Withdrawals may be taxable transactions. The Code requires Transamerica
to withhold federal income tax from withdrawals. Generally, an Owner will be
entitled to elect, in writing, not to have tax withholding apply, except for
distributions from certain Qualified Contracts that may be subject to mandatory
20% withholding. 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 currently 10% 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 38.)
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 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 generally be subject to an interest adjustment.
(See "Interest Adjustment" page 24.)
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 23.)
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.
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) of the Variable Account on a monthly basis. (Other
distribution modes may be permitted.) The withdrawals will commence the month
following, but no sooner than one week 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.
To be eligible for the Systematic Withdrawal Option, the Account Value
must be at least $12,000 at the time of election. The minimum monthly amount
that can be withdrawn is $100. 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 38.)
The systematic 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. In some states, no partial withdrawal may be made while the
Systematic Withdrawal Option is in effect and any partial withdrawal will
automatically terminate the Systematic Withdrawal Option and any portion of such
partial withdrawal, which exceeds the Allowed Amount for withdrawals after the
first withdrawal in a Contract Year will be subject to a Contingent Deferred
Sales Load (see page 32). In other states, only one partial withdrawal can be
made while the Systematic Withdrawal Option is in effect and more than one
partial withdrawal while this option is in effect will automatically terminate
the Systematic Withdrawal Option and the amounts taken as the first and second
partial withdrawals which exceed the Allowed Amount for withdrawals after the
first withdrawal in a Contract Year, will be subject to a Contingent Deferred
Sales Load (see page 32).
Transamerica reserves the right to impose an annual fee of an amount
not to exceed $25 per Contract year 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. Consult your tax adviser
and, if applicable, the particular retirement plan, before requesting
withdrawals from a Qualified Contract. There may
be severe restrictions with regard to withdrawals from Qualified Contracts.
Automatic Payout Option
Prior to the Annuity Date, the Owner may elect the Automatic Payout
Option ("APO") to satisfy minimum distribution requirements under the Code for
certain Qualified Contracts. See the Automatic Payout Option discussion under
Qualified Contracts on page 38.
DEATH BENEFIT
If an Owner or Annuitant dies before the Annuity Date, a death benefit
is payable.
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 premium taxes
applicable to those withdrawals), or (3) the sum of all Purchase Payments, less
withdrawals and any premium taxes applicable to those withdrawals, 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 any 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. For
Contracts purchased by any Owner or with an Annuitant age 75 or older, the death
benefit available under option three above will be the sum of all Purchase
Payments, less withdrawals and any premium taxes applicable to these
withdrawals.
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 will remain in the Sub-Accounts as previously specified by the Owner or
in the Sub-Accounts as reallocated pursuant to instructions received by
Transamerica from all Beneficiaries. Therefore, the value of the Variable
Account will fluctuate with investment performance of the applicable
Sub-Account(s), and 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. Where the Owner is not an individual, the death
benefit is generally payable upon receipt of Proof of Death of the Annuitant.
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 38.) 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 and the Owner is an individual other than the annuitant.
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 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
Beneficiaries has terminated, any benefits payable will be paid to the Owner's
or Owners' 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 upon the death of the Annuitant the
Contingent Annuitant will become the Annuitant and no death benefit will be paid
at that time. Death of Owner Prior to the Annuity Date
If an Owner die before the Annuity Date, a death benefit will be paid
to that Owner's Beneficiary. If the Contract has Joint Owner's, the surviving
Joint Owner will be the Owner's Beneficiary. If the surviving Owner's
Beneficiary is the deceased Owner's spouse, then that spouse may elect to treat
the Contract as his or her own or receive payment of the Death Benefit. The
payment of the death benefit may be subject to certain distribution requirements
under the federal income tax laws. (See "Federal Tax Matters," page 38.)
Death of Annuitant or Owner After the Annuity Date
If the Annuitant or an 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. If the
Owner is not the Annuitant, upon an Owner's death, any remaining ownership
rights will pass to the Owner's Beneficiary.
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 or Asset Rebalancing 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 Portfolios 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
from the Account Value 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.
Number of Contingent Deferred
Contract Years Sales Load As a
Since Receipt of Each Percentage of
Purchase Payment 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%
The Owner may make withdrawals from the Account Value up to the
"Allowed Amount" (described below) without incurring a Contingent Deferred Sales
Load each Contract Year before the Annuity Date. During the first Contract Year,
the Allowed Amount is equal to accumulation earnings not previously withdrawn.
For the first withdrawal, and only the first withdrawal, in a Contract Year
after the first Contract Year, the available Allowed Amount is equal to the sum
of: (a) all Purchase Payments not previously withdrawn and received at least
seven Contract Years before the date of withdrawal; plus (b) the greater of (i)
the accumulated earnings not previously withdrawn or (ii) 15% of Purchase
Payments received at least one but less than seven complete Contract Years
before the date of withdrawal not reduced to take into account any withdrawals
deemed to be made from such purchase payments. For withdrawals after the first
withdrawal in a Contract Year after the first Contract Year, the available
Allowed Amount is equal to the sum of: (a) all Purchase Payments, not previously
withdrawn and received at least seven complete Contract Years before the date of
withdrawal; plus (b) accumulated earnings not previously withdrawn. Withdrawals
will always be made first from accumulated earnings, and then from Purchase
Payments on a first in first out basis. Therefore, accumulation earnings could
be withdrawn as part of the first withdrawal in a Contract Year and, therefore,
not be available for withdrawals made later that Contract Year. If an Allowed
Amount is not withdrawn during a Contract Year, it does not carry over to the
next Contract Year. However, accumulated earnings, if any, in an Owner's Account
Value are always available as the Allowed Amount. No withdrawals are allowed
with regard to Purchase Payments made by a check which has not cleared. A
withdrawal not subject to a Contingent Deferred Sales Load will generally
receive an interest adjustment if made from a Guarantee Period before its
expiration (see "Interest Adjustment" page 24 ).
Some Contract Owners may hold Contracts which, when originally issued,
provided for an Allowed Amount which was equal to the sum of (1) all Purchase
Payments, not previously withdrawn and held more then seven Contract Years plus
(2) 10% of Purchase Payments held between one and seven Contract Years not
reduced by any withdrawals made from such Purchase Payments. Under these
Contracts, withdrawals were made first from Purchase Payments (on a first in
first out basis) then from earnings. The Allowed Amount applicable to these
Contract Owners will be determined by whichever formula provides them with the
larger amount available, for full surrenders only, without a Contingent Deferred
Sales Load.
No Contingent Deferred Sales Load will be charged on the Allowed Amount
if a Contract is surrendered 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: (a) upon annuitization after the first three Contract Years to
an option involving life contingencies; (b) upon payment of the Death Benefit;
(c) upon transfers of Account Value among and between the Sub-Accounts of the
Variable Account and the Guarantee Periods of the Fixed Account; (d) under the
Systematic Withdrawal Option; (e) 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.
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 (30
days for Contracts issued in Pennsylvania) 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
apply if the Owner is receiving extended medical care in a licensed hospital or
nursing care facility at the time the Owner applied for the Contract or at the
Contract Date.
Additionally, in some states, the Contingent Deferred Sales Load
arising from a withdrawal or surrender of the Contract will be waived if the
Owner is diagnosed, after the first Contract Year, with a terminal illness
reasonably expected to result in death within twelve months. Proof of the
terminal illness must be received by the Service Center at the time the
withdrawal or surrender request is received. 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 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 for those administrative expenses attributable to the
Contract and the Variable Account which exceed the revenues received from the
Account Fee, any Transfer Fees, 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. The administrative charges do not bear any
relationship to the actual administrative costs of a particular Contract. 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. 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.
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 Fees
A $10 transfer fee is charged for each transfer in excess of eighteen
in a Contract Year. Transamerica reserves the right to waive the transfer fee or
vary the number of transfer without charge or not count transfers under certain
opitons or services for purposes of the allowed number without charge.
Currently, no fee is charged for Automatic Asset Rebalancing.
However, Transamerica reserves the right to impose
a nominal fee.
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 20.)
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 23.
Sales in Special Situations
Transamerica may sell the Contracts in special situations that are
expected to involve reduced expenses for Transamerica. These instances may
include: 1) sales in certain group arrangements, such as employee savings plans;
2) sales to current or former officers, directors and employees (and their
families) of Transamerica and its affiliates; 3) sales to officers, directors,
and employees (and their families) of the Portfolios' investment advisers and
their affiliates; and 4) sales to officers, directors, employees and sales
agents (registered representatives) (and their families) of broker-dealers and
other financial institutions that have sales agreements with Transamerica to
sell the Contracts. In these situations, 1) the contingent deferred sales load
may be reduced or waived, 2) the mortality and expense risk charge or
administration charges may be reduced or waived; and/or 3) certain amounts may
be credited to the Contract Account Value (for example, amounts related to
commissions or sales compensation otherwise payable to a broker-dealer may be
credited to the Contract Account Value. These reductions in fees or charges or
credits to account value will not unfairly discriminate against any contract
owner. These reductions in fees or charges or credits to account value is
generally taxable and treated as Purchase Payments for purposes of income tax
and any possible premium tax charge.
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 made 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 38.)
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.
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 to the Variable Sub-Accounts will be in the proportion of the Account
Value to the 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
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, 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 as long as the survivor 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. 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 a Qualified Contract, the Owner may not change the Payee on or after
the Annuity Date.
Alternate Fixed Annuity Rates
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.
QUALIFIED CONTRACTS
The Contracts may be used to fund rollover IRAs or rollover
Roth IRAs and, with Transamerica's prior permission, to fund contributory IRAs
and contributory Roth IRAs, for use in connection with Sections 408 and 408A of
the Code. A rollover IRA is one whose initial Purchase Payment is from the
rollover or transfer of certain kinds of distributions from a non-Roth IRA,
qualified plans, or Section 403(b) tax sheltered annuities, following the rules
set out in the Code to maintain favorable tax treatment of the rollover IRA. A
rollover Roth IRA is one whose initial Purchase Payment is from the rollover,
transfer or conversion from a non-Roth IRA or Roth IRA. A contributory IRA or
contributory Roth IRA are those whose initial and subsequent Purchase Payments
are subject to limitations imposed by the Code. With Transamerica's prior
permission, the Contracts may also be used 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 as Section 403(b) annuities. Currently, additional Purchase
Payments after the initial Purchase Payment may not be made to Contracts used as
Section 401(a) or Section 403(b) annuities.
The tax rules applicable to distribution from qualified retirement
plans, including restrictions on contributions and benefits, taxation of
distributions, and any tax penalties, vary according to the type of plan and the
terms and conditions of the plan itself. Various tax penalties may apply to
contributions in excess of specified limits, distributions prior to age 59 1/2
(subject to certain exceptions), distributions that do not satisfy specified
requirements and certain other transactions with respect to qualified plans.
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. If a
Contract is purchased to fund an IRA or Roth IRA, the Annuitant must also be the
Owner. In addition, under current tax law, minimum distributions are required
from certain Qualified Contracts. See "Federal Tax Matters", page 45. The Owner
should consult his/her tax adviser concerning these matters. Automatic Payout
Option ("APO")
Prior to the Annuity Date, for Qualified Contracts other than Roth
IRAs, 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 with regard to this Contract. See "Federal Tax Matters", page 45. For IRAs
and SEP/IRAs this may be elected no earlier than six months prior to the
calendar year in which the Owner attains age 70 1/2, but payments may not begin
earlier than January of such calendar year. For other Qualified Contracts, APO
can be elected no earlier than six months prior to the later of when the Owner
(a) attains age 70 1/2; and (b) retires from employment. 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. APO
withdrawals will not be made from the Fixed Account.
APO 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. Withdrawals cannot be made
from a Sub-Account from which Dollar Cost Averaging transfers are being made.
Payments will be made annually, and will continue unless terminated by
the Owner or automatically terminated by Transamerica as set forth in the
Contract. Once terminated, APO may not be elected again.
If only APO withdrawals are made, no Contingent Deferred Sales Load
will apply, regardless of the "Allowed Amount" (described on page 32). However,
if a partial withdrawal is taken, that partial withdrawal and any subsequent
withdrawals that Contract Year will be subject to a CDSL to the extent they
exceed the "Allowed Amount." (See "Contingent Deferred Sales Load" page 32.)
To be eligible for this option, the following conditions must be met:
(1) the Account Value must be at least $12,000 at the time of election; and (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.
APO allows the required minimum distribution to be paid from the
Sub-Account(s) of 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. In which case, if there are amounts in a
Contract's Account Value remaining in the Fixed Account, the minimum
distribution requirements with regard to the Account Value may not be met. If
amounts are transferred to Sub-Accounts from a Guaranteed Period before its
Expiration Date, an interest adjustment will be made to such amounts.
If you have more than one qualified plan subject to the Code's minimum
distribution requirements, you must consider all such plans in the calculation
of your minimum distribution requirement, but Transamerica will make
calculations and distribution with regard to this Contract only. 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 January 1, 1989. Distributions of such amounts will be
allowed only upon death of the employee, on or after attainment of age 59 1/2,
separation from service, disability, or financial hardship, except that income
attributable to elective contributions may not be distributed in the case of
hardship.
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 special 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), 408 and 408A 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 special 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.
Purchase Payments
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.
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 Non-Qualified 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 Contracts owned by
natural persons.
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 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. The
"investment in the contract" is generally equal to the amount of non-deductible
Purchase Payments made. 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.
Withholding
The Code requires Transamerica to withhold federal income tax from
distributions under the Contracts. However, except for distributions from
certain Qualified Contracts, an Owner will be entitled to elect, in writing, not
to have tax withheld. Withholding applies to the portion of a distribution which
is includible in income and subject to federal income tax, where the taxable
amount is at least $200. Some states also require withholding for state income
taxes.
The withholding varies according to the type of distribution and the
Owner's tax status. "Eligible rollover distributions" from Section 401(a) plans
and Section 403(b) tax sheltered annuities are subject to mandatory federal
income tax withholding at the rate of 20%. An eligible rollover distribution is
the taxable portion of any distribution from such a plan, except for certain
distributions, such as minimum required distributions or settlement option
payments made in a specified form. The 20% mandatory withholding does not apply,
however, if the Owner chooses a "direct rollover" from the plan to another
tax-qualified plan or to an IRA (other than a Roth IRA).
The federal income tax withholding rate for a distribution that is not
an "eligible rollover distribution" is 10% of the taxable amount of the
distribution.
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 59
1/2; (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 Joint
Owner. Other tax penalties may apply to certain distributions pursuant to a
Qualified Contract.
Taxation of Death Benefit Proceeds
Amounts may be distributed from the Contract because of the death of an
Owner or 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. Other rules relating to distributions at death apply to
Qualified Contracts. You should consult your legal counsel and tax adviser
regarding these rules and their impact on Qualified Contracts.
Required Distributions upon Owner's Death
Notwithstanding any provision of the Contract or this prospectus to the
contrary, no payment of benefits provided under the Contract will be allowed
that does not satisfy the requirements of Section 72(s) of the Code. If the
Owner dies before the Annuity Date, the Death Benefit payable to the Owner's
Beneficiary will be distributed as follows:
(a) the Death Benefit must be completely distributed within five years
of the Owner's date of death; or (b) the Owner's Beneficiary may elect,
within the one year period after the Owner's date of death, to
receive the Death Benefit in the form of an annuity from us,
provided that: (1) such annuity is distributed in
substantially equal installments over the life of such Owner's
Beneficiary or over a period not extending beyond the life
expectancy of such Owner's Beneficiary; and (2) such
distributions begin not later than one year after the Owner's
date of death.
Notwithstanding (a) and (b) above, if the sole Owner's Beneficiary is
the deceased Owner's surviving spouse, then such spouse may elect, within the
one year period after the Owner's date of death, to continue the contract under
the same terms as before the Owner's death. Upon receipt of such election from
the spouse, in a form and manner acceptable to us, at our Service Center: (1)
all rights of the spouse as Owner's Beneficiary under the contract in effect
prior to such election will cease; (2) the spouse will become the Owner of the
contract and will also be treated as the Contingent Annuitant, if none has been
named and only if the deceased Owner was the Annuitant; and (3) all rights and
privileges granted by the Contract or allowed by Transamerica will belong to the
spouse as Owner of the Contract. This election will be deemed to have been made
by the spouse if such spouse makes a Purchase Payment to the Contract or fails
to make a timely election as described in this paragraph.
If the Owner's Beneficiary is a nonspouse, the distribution provisions
described in subparagraphs (a) and (b) above, will apply even if the Annuitant
and/or Contingent Annuitant are alive at the time of the Owner's death. If the
nonspouse Owner's Beneficiary is not an individual, then only a cash payment
will be paid.
If no election is received by us from a nonspouse Owner's Beneficiary
within the one year period after the Owner's date of death, then we will pay the
Death Benefit to the Owner's Beneficiary in a cash payment. The Death Benefit
will be determined as of the date we make the cash payment. Such cash payment
will be in full settlement of all our liability under the contract.
If Annuitant Dies After Annuity Starts - If the Annuitant dies after
the annuity starts, any benefit payable will be distributed at least as rapidly
as under the Annuity Form then in effect.
If Owner Dies After Annuity Starts - If the Owner dies after the
annuity starts, any benefit payable will continue to be distributed at least as
rapidly as under the Annuity Form then in effect. All of the Owner's rights
granted under the contract or allowed by us will pass to the Owner's
Beneficiary.
Joint Ownership - For purposes of this section, if the contract has
Joint Owners we will consider the date of death of the first Joint Owner as the
death of the Owner and the surviving Joint Owner will become the Owner of the
Contract.
Transfers, Assignments, or Exchanges of the Contract
A transfer of ownership of a Non-Qualified 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. Qualified Contracts cannot be
transferred or assigned, except as permitted by the Code or the Employee
Retirement Income Security Act of 1974 (ERISA).
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 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 as rollover IRAs and
rollover Roth IRAs. With Transamerica's prior permission, the Contract may also
be used as a contributory IRA, as a contributory Roth IRA, as a Section 403(b)
annuity, and for use in pension and profit sharing plansqualified under Section
401(a). 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 59 1/2
(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.
For qualified plans under Section 401(a), 403(a) and 403(b), the Code
requires that distributions generally must commence no later than the later of
April 1 of the calendar year following the calendar year in which the Owner (or
plan participant) (i) reaches age 70 1/2 or (ii) retires, and must be made in a
specified form and manner. If the plan participant is a "5 percent owner" (as
defined in the Code), distributions generally must begin no later than April 1
of the calendar year following the calendar year in which the Owner (or plan
participant) reaches age 70 1/2. For IRAs described in Section 408,
distributions generally must commence no later than the later of April 1 of the
calendar year following the calendar year in which the Owner (or plan
participant) reaches age 70 1/2. Roth IRAs under Section 408A do not require
distributions at any time prior to the Owner's death.
Qualified Pension and Profit Sharing Plans
Section 401(a) of the Code permits 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, Simplified Employee Plans and Roth IRAs
The Contracts are designed for use with rollover IRAs and contributory
IRAs. A contributory IRA is a Contract in which initial and subsequent Purchase
Payments are subject to limitations imposed by the Code. 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
qualified plans may be "rolled over" or transferred on a tax-deferred basis into
an IRA.
Earnings in an IRA are not taxed until distributed. IRA contributions
are limited each year to the lesser of $2,000 or 100% of the Owner's
compensation (including earned income as defined in Code Section 401(c)(2)) and
may be deductible in whole or in part depending on the individual's adjusted
gross income and whether or not the individual is considered an active
participant in a qualified plan. The limit on the amount contributed to an IRA
does not apply to distributions from certain other types of qualified plans that
are "rolled over" or transferred on a tax-deferred basis into an IRA. Amounts in
the IRA (other than nondeductible contributions) are taxed when distributed from
the IRA. Distributions prior to age 59 1/2 are subject to a 10% penalty tax,
unless certain exceptions apply. Purchasers should seek competent advice as to
the suitability of the Contract for use with IRAs.
Eligible employers that meet specified criteria under Code Section
408(k) could establish simplified employee pension plans (SEP-IRAs) for their
employees using IRAs. Employer contributions that may be made to such plans are
larger than the amounts that may be contributed to regular IRAs, and may be
deductible to the employer. SEP-IRAs are subject to certain Code requirements
regarding participation and amounts of contributions.
The Contracts may also be used with rollover Roth IRAs and contributory
Roth IRAs. A contributory Roth IRA is a contract to which initial and subsequent
Purchase Payments are subject to limitations imposed by the Code. Section 408A
of the Code permits eligible individuals to contribute to an individual
retirement program known as a Roth IRA on a non-deductible basis. In addition,
distributions from a Section 408 IRA may be converted to a Roth IRA. A Section
408 IRA is an IRA described in Sections 408(a) or 408(b), other than a Roth IRA.
You should consult a tax adviser before combining any converted amounts with any
other Roth IRA contributions, including any other conversion amounts from other
tax years. Distributions from a Roth IRA generally are not taxed, except that,
once aggregate distributions exceed contributions to the Roth IRA, income tax
and a 10% penalty tax may apply to distributions made (1) before age 59 1/2
(subject to certain exceptions) or (2) during the five taxable years starting
with the year in which the first contribution is made to the Roth IRA.
Purchasers should seek competent advice as to the suitability of the contract
for use with Roth IRAs.
The sale of a Contract for use with an IRA, SEP-IRA or Roth IRA may be
subject to special disclosure requirements of the Internal Revenue Service.
Purchasers of these Contracts will be provided with supplemental information
required by the Internal Revenue Service or other appropriate agency. Such
purchasers will have the right to revoke thTax Sheltered Annuitiesays Under Code
Section 403(b), payments made by public school systems and certain tax ase.
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 Social Security and
Medicare (FICA) 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, disability, or financial
hardship. In addition, income attributable to elective contributions may not be
distributed in the case of hardship.
Pre-1989 contributions and earnings through December 31, 1989 are not
subject to the restrictions described above. However, funds transferred to a
Qualified Contract from a Section 403(b)(7) custodial account will be subject to
the restrictions.
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. A Qualified
Contract will be amended as necessary to conform to the requirements of the
Code.
Possible Changes in Taxation
Legislation has been proposed in 1998 that, if enacted, would adversely
modify the federal taxation of certain insurance and annuity contracts. For
example, one proposal would tax transfers among investment options and tax
exchanges involving variable contracts. A second proposal would reduce the
"investment in the contract" under cash value life insurance and certain annuity
contracts by certain amounts, thereby increasing the amount of income for
purposes of computing gain. Although the likelihood of there being any changes
is uncertain, there is always the possibility that the tax treatment of the
Contracts could be changed by legislation or other means. Moreover, it is also
possible that any change could be retroactive (that is, effective prior to the
date of the change). You should consult a tax adviser with respect to
legislative developments and their effect on the Contract. 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.
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 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 generally receive compensation of up to 6.25% of any Initial and additional
Purchase Payments made (although higher amounts may be paid in certain
circumstances). 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). Additional amounts, including asset based
trail 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.
PREPARING FOR YEAR 2000
As a result of computer systems that may recognize a date of 12/31/00
as the year 1900 rather than the year 2000, disruptions of business activities
may occur with the year 2000. In response, Transamerica established in 1997 a
"Y2K" committee to address this issue. With regard to the systems and software
which administer and affect the contracts, Transamerica has determined that is
own internal systems will be Year 2000 compliant. Additionally, Transamerica
requests any third party vendor which supplies software or administrative
services to Transamerica in connection with the administration of the contracts,
to certify that the software or services will be Year 2000 compliant. In
determining the variable accumulation unit values for each variable sub-account,
Transamerica is reliant upon information received from the portfolios and is
confirming that Year 2000 issues will not interfere with this flow of
information. As of the date of this prospectus, it is not anticipated that
contract owners will experience negative afffects on their investment, or on the
services received in connection with their contracts, as a result of Year 2000
issues. However, especially when taking into account interaction with other
systems, it is difficult to predict with precision that there will be no
disruption of services in connection with the year 2000. 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, LLP. 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, 1997 and 1996, and for each of the
three years in the period ended December 31, 1997, and the financial statements
for the Variable Account at December 31, 1997, and for each of the two years in
the period then ended, appearing in the Statement of Additional Information have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
reports thereon appearing elsewhere herein, 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.
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.
<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 3
Variable Annuity Units and Payments4
Variable Annuity Unit Value 4
Transfers After the Annuity Date 4
GENERAL PROVISIONS 4 IRS Required Distributions 4 Non-Participating 4
Misstatement of Age or Sex 4 Proof of Existence and Age 5 Assignment 5
Annuity Data 5 Annual Report 5 Incontestability 5 Ownership 5 Entire
Contract 5 Changes in the Contract 5 Protection of Benefits 6 Delay of
Payments 6 Notices and Directions 6
CALCULATION OF YIELDS AND TOTAL RETURNS 6
Money Market Sub-Account Yield Calculation 6
Other Sub-Account Yield Calculations 7
Standard Total Return Calculations 7
Hypothetical Performance Data 8
Other Performance Data 8
HISTORIC PERFORMANCE DATA 8
General Limitations 8
Sub-Account Performance Figures 9
Hypothetical Sub-Account Performance Figures 9
FEDERAL TAX MATTERS 11
Taxation of Transamerica 11
Tax Status of the Contract 11
DISTRIBUTION OF THE CONTRACT 12
SAFEKEEPING OF VARIABLE ACCOUNT ASSETS 13
TRANSAMERICA 13
General Information and History 13
STATE REGULATION 13
RECORDS AND REPORTS 13
FINANCIAL STATEMENTS 13
APPENDIX A-1
Annuity Transfer Formula A-1
<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).
<PAGE>
"BACK COVER"
Issued by:
Transamerica Occidental
Life Insurance Company
(Certificate Form GNC-33, Individual Contract Form 1-502)
1150 South Olive
Los Angeles, CA 90015
<PAGE>
1
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, 1998, as supplemented
from time to time, by writing to Transamerica Occidental Life Insurance Company,
Annuity Service Center, at P.O. Box 31848 Charlotte, North Carolina 28231 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, 1998
<PAGE>
15
TABLE OF CONTENTS
Page
THE CONTRACT................................................3
DOLLAR COST AVERAGING.......................................3
NET INVESTMENT FACTOR.......................................3
ANNUITY PERIOD..............................................3
Variable Annuity Units and Payments................4
Variable Annuity Unit Value........................4
Transfers After the Annuity Date...................4
GENERAL PROVISIONS..........................................4
IRS Required Distributions.........................4
Non-Participating..................................4
Misstatement of Age or Sex.........................5
Proof of Existence and Age.........................4
Assignment.........................................5
Annuity Data.......................................5
Annual Report......................................5
Incontestability...................................5
Ownership..........................................5
Entire Contract....................................5
Changes in the Contract............................5
Protection of Benefits.............................6
Delay of Payments..................................6
Notices and Directions.............................6
CALCULATION OF YIELDS AND TOTAL RETURNS.....................6
Money Market Sub-Account Yield Calculation.........6
Other Sub-Account Yield Calculations...............7
Standard Total Return Calculations.................7
Hypothetical Performance Data......................8
Other Performance Data.............................8
HISTORIC PERFORMANCE DATA...................................8
General Limitations................................8
Sub-Account Performance Data.......................9
Hypothetical Sub-Account Performance Figures.......9
FEDERAL TAX MATTERS........................................11
Taxation of Transamerica..........................11
Tax Status of the Contract........................11
DISTRIBUTION OF THE CONTRACT...............................12
SAFEKEEPING OF VARIABLE ACCOUNT ASSETS.....................13
TRANSAMERICA...............................................13
General Information and History...................13
STATE REGULATION...........................................13
RECORDS AND REPORTS........................................13
FINANCIAL STATEMENTS.......................................13
APPENDIX..................................................A-1
Annuity Transfer Formula......................A-1
<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 of the receiving Sub-Account(s)
to which monthly transfers were made to be less than $500. 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 $500; 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 $500; or (c) submit an additional
Purchase Payment to make the value of the Sub-Account equal to or
greater than $500; or (d) transfer the entire value of the receiving
Sub-Account(s) back into the Source 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 Source 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 free 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 "ex-dividend" 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 the New
York Stock Exchange is open.
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).
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 as may the date
of determination.
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 27 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.
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
The Contract is intended to qualify as an annuity contract for federal
income tax purposes. All provisions in the Contract will be interpreted to
maintain such tax qualification. We may make changes in order to maintain this
qualification or to conform the Contract to any applicable changes in the tax
qualification requirements. We will provide you with a copy of any changes made
to the Contract. 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 11.)
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, or other form relied upon to determine annuity
payment , 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
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 ServiceCenter. 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. This report will also
include any other information required by law or regulation. 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(s) will be entitled to the rights granted by the
Contract, or allowed by Transamerica under the Contract. If an Owner dies, the
rights of the Owner belong to the estate of the Owner unless the Owner has
previously named an Owner's Beneficiary. A surviving Joint Owner automatically
becomes the 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.
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 or
transfers 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 31 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 ServiceCenter.
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 and income other than investment income 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, 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
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 Load that may be applicable to a particular period.
Hypothetical Performance Data
Transamerica may also disclose "hypothetical" performance data for a
Sub-Account, 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 Sub-Account
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.
Except for Transamerica Growth, the Funds have provided the performance
data for the Sub-Accounts. Except for Transamerica Growth none of the Funds or
their investment advisers 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
Core Value and MidCap Stock Sub-Accounts since, prior to May 1, 1998, the
related Portfolios had not yet commenced operations.
Money Market Sub-Account Yields
The annualized yield for the Money Market Sub-Account for the seven-day
period ending December 31, 1997 was 3.59%. The effective yield for the Money
Market Sub-Account for the seven-day period ending December 31, 1997 was 3.65%.
Sub-Account Performance Figures Including Hypothetical Performance
The charts below show historical performance data for the Sub-Accounts,
including, for seven Sub-Accounts, "hypothetical" data for the periods prior to
the inception of the Sub-Accounts, based on the performance of the corresponding
Portfolios since their 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.
The dates to the left of the Sub-Account names below indicate the date
of commencement of operation of the Portfolios, which coincide with the date of
commencement of operation of the corresponding Sub-Account, with these seven
exceptions: the Money Market; Managed Assets, Zero Coupon 2000, Qualify Bond,
Small Cap and Stock Index Sub-Accounts which commenced operations January 4,
1993, and the Transamerica Growth Sub-Account which commenced operations May 1,
1998.. Hence, the performance data given for these seven Sub-Accounts which
precedes these dates is "hypothetical."
Standard Average annual total returns for periods since inception of
the Portfolio, including hypothetical performance, 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>
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
For the period
from
commencement of
SUB-ACCOUNT (date of commencement of For the 1-year For the 3-year For the 5-year Portfolio
operation of Corresponding Portfolio) period ending period ending period ending operations to
12/31/97 12/31/97 12/31/97 12/31/97
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
Money Market (8/31/90) -1.96% 2.20% 2.49% 3.42%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Special Value (8/31/90) 15.36% 2.89% 6.26% 6.01%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Zero Coupon 2000 (8/31/90) -0.27% 5.99% 5.27% 8.18%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Quality Bond (8/31/90) 1.96% 7.82% 6.19% 8.01%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Small Cap (8/31/90) 9.06% 18.31% 24.00% 41.95%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Capital Appreciation (4/5/93) 20.21% 26.16% N/A 17.65%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Stock Index (9/29/89) 25.05% 27.74% 17.57% 14.18%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Socially Responsible (10/7/93) 20.59% 25.24% N/A 19.21%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Growth & Income (12/15/94) 8.53% 28.45% N/A 28.16%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
International Equity (12/15/94) 2.14% 6.71% N/A 6.71%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
International Value (5/1/96) 1.30% N/A N/A 2.19%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Disciplined Stock (5/1/96) 23.62% N/A N/A 25.72%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Small Company Stock (5/1/96) 14.01% N/A N/A 13.30%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Balanced (5/1/97) N/A N/A N/A N/A
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Limited Term High Income(5/1/97) N/A N/A N/A N/A
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Transamerica Growth (2/26/69)* 44.94% 41.91% 29.73% 24.12%*
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Non-Standard Average annual total returns for period since inception of
the Portfolio including hypothetical performance, 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. Non-Standard performance data will only be disclosed if the standard
performance data for the required periods is also disclosed.
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
For the period
from
commencement of
SUB-ACCOUNT (date of commencement of For the 1-year For the 3-year For the 5-year Portfolio
operation of Corresponding Portfolio) period ending period ending period ending operations to
12/31/97 12/31/97 12/31/97 12/31/97
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Money Market (8/31/90) 3.66% 3.78% 3.21% 3.43%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Special Value (8/31/90) 21.36% 4.44% 6.88% 6.01%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Zero Coupon 2000 (8/31/90) 5.45% 7.45% 5.91% 8.18%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Quality Bond (8/31/90) 7.83% 9.23% 6.81% 8.02%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Small Cap (8/31/90) 15.06% 19.49% 24.33% 41.96%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Capital Appreciation (4/5/93) 26.21% 27.19% N/A 18.11%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Stock Index (9/29/89) 31.05% 28.76% 17.99% 14.19%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Socially Responsible (10/7/93) 26.59% 26.30% N/A 19.75%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Growth & Income (12/15/94) 14.53% 29.45% N/A 29.14%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
International Equity (12/15/94) 8.02% 8.15% N/A 8.13%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
International Value (5/1/96) 7.13% N/A N/A 5.73%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Disciplined Stock (5/1/96) 29.52% N/A N/A 28.81%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Small Company Stock (5/1/96) 20.01% N/A N/A 16.61%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Balanced (5/1/97) N/A N/A N/A N/A
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Limited Term High Income(5/1/97) N/A N/A N/A N/A
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Transamerica Growth (2/26/69)* 50.34% 42.65% 29.98% 24.12%*
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
</TABLE>
Non-Standard Cumulative total returns for periods since inception of the
Portfolio, including hypothetical performance, 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.
- ---------------------------------------- ------------------- ------------------
For the 1-year
SUB-ACCOUNT (date of commencement of period ending Since Inception
operation of Corresponding Portfolio) 12/31/97
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Money Market (8/31/90) 3.66% 28.08%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Special Value (8/31/90) 21.36% 53.51%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Zero Coupon 2000 (8/31/90) 5.45% 78.14%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Quality Bond (8/31/90) 7.83% 76.16%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Small Cap (8/31/90) 15.06% 1208.55%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Capital Appreciation (4/5/93) 26.21% 120.51%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Stock Index (9/29/89) 31.05% 199.18%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Socially Responsible (10/7/93) 26.59% 114.76%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Growth & Income (12/15/94) 14.53% 118.14%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
International Equity (12/15/94) 8.02% 26.91%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
International Value (5/1/96) 7.13% 9.75%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Disciplined Stock (5/1/96) 29.62% 52.63%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Small Company Stock (5/1/96) 20.01% 29.26%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Balanced (5/1/97) N/A% 17.38%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Limited Term High Income(5/1/97) N/A% 8.52%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Transamerica Growth (2/26/69)* 50.34% 767.83%*
- ---------------------------------------- ------------------- ------------------
*The Growth Portfolio of the Transamerica Variable Insurance Fund,
Inc., is the successor to Separate Account Fund C of Transamerica Occidental
Life Insurance Company, a management investment company funding variable
annuities, through a reorganization on November 1, 1996. Accordingly, the
performance data for the Transamerica VIF Growth Portfolio include performance
of its predecessor. The performance shown in the "since inception" box for the
Transamerica Growth Sub-Account is 10-year performance, not performance since
1969.
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 special tax treatment
("Qualified Contract"). Qualified Contracts are designed for use by retirement
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 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
deceased 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 Contracts.
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 1997, $21,886,072.80 in commissions were paid to
TSSC as underwriter of the Contracts; no amounts were retained by TSSC. During
fiscal year 1996, $15,506,834.71 in commissions were paid to TSSC as underwriter
of the Contracts; no amounts were retained by TSSC. 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 1997, $2,394,358.42 in
commissions were paid to TFR as underwriter of the Contracts; no amounts were
retained by TFR. During fiscal year 1996, $2,283,845.07 in commissions were paid
to TFR as underwriter of the Contracts; no amounts were retained by TFR. During
fiscal year 1995, $1,485,889.71 in commissions were paid to TFR as underwriter
of the Contracts; $496,781.00 was retained by TFR. 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, 1997.
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.
<PAGE>
APPENDIX
Accumulation Transfer Formula
Transfers after the annuity date are implemented according to the
following formulas:
(1) Determine the number of units to be transferred from the variable
sub-account as follows:
= AT/AUV1
(2) Determine the number of variable accumulation units remaining in
such variable sub-account (after the transfer):
= UNIT1 AT/AUV1
(3) Determine the number of variable accumulation units in the
transferee variable sub-account (after the transfer):
= UNIT2 + AT/AUV2
(4) Subsequent variable accumulation payments will reflect the changes
in variable accumulation units in each variable sub-account as of the
next Variable Accumulation Payment's due date.
Where:
(AUV1) is the variable accumulation Unit value of the Variable
sub-account that the transfer is being made from as of the end of the
valuation Period in which the transfer request was received.
(AUV2) is the variable accumulation unit value of the variable
sub-account that the transfer is being made to as of the end of the
valuation period in which the transfer request was received.
(UNIT1) is the number of variable accumulation units in the Variable
sub-account that the transfer is being made from, before the transfer.
(UNIT2) is the number of variable accumulation units in the variable
sub-account that the transfer is being made to, before the transfer.
(AT) is the dollar amount being transferred from the variable
sub-account.
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
Audited Financial Statements
Separate Account VA-2L of
Transamerica Occidental
Life Insurance Company
Year ended December 31, 1997
with Report of Independent Auditors
<PAGE>
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Audited Financial Statements
Year ended December 31, 1997
Contents
Report of Independent Auditors.......................1
Statement of Assets and Liabilities..................2
Statement of Operations..............................5
Statement of Changes in Net Assets...................8
Notes to Financial Statements........................14
<PAGE>
1
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,
Socially Responsible Fund, International Value Portfolio, Disciplined Stock,
Small Company Stock, Limited Term High Income and Balanced Sub-accounts) as of
December 31, 1997, the related statement of operations for the year then ended,
and the statements of changes in net assets for each of 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, 1997, by correspondence with
the fund managers. 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, 1997, the results of their operations for the
year then ended, and the changes in their net assets for each of the two years
in the period then ended in conformity with generally accepted accounting
principles.
Charlotte, NC
April 13, 1998
<PAGE>
2
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Statement of Assets and Liabilities
December 31, 1997
<TABLE>
<CAPTION>
Zero
Money Managed Coupon
Market Assets 2000
Sub-account Sub-account Sub-account
------------------ ------------------- -------------------
Assets:
<S> <C> <C> <C>
Investments, at fair value $ 50,363,424 $ 37,377,174 $ 21,244,116
Receivable for units sold - 208,058 13,304
Due from Transamerica Life - - -
------------------ ------------------- -------------------
Total assets 50,363,424 37,585,232 21,257,420
Liabilities:
Payable for units redeemed 247,434 - -
Due to Transamerica Life 4,731 9 207
------------------ ------------------- -------------------
Total liabilities 252,165 9 207
------------------ ------------------- -------------------
Net assets $ 50,111,259 $ 37,585,223 $ 21,257,213
================== =================== ===================
Accumulation units outstanding 42,660,950.364 2,649,561.005 1,350,865.031
================== =================== ===================
Net asset value and redemption price per unit $ 1.174640 $ 14.185453 $ 15.736001
================== =================== ===================
Other sub-account information:
Number of mutual fund shares 50,363,424.490 2,877,380.580 1,727,163.870
Net asset value per share $ 1.00 $ 12.99 $ 12.30
Investment cost $ 50,363,424 $ 36,146,793 $ 21,352,714
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
3
Socially
Quality Small Capital Growth and International Stock Responsible
Bond Cap Appreciation Income Equity Index Fund Fund
Sub-accoSub-account Sub-account Sub-account Sub-account Sub-account Sub-account
- ------- ------------------- ------------------ ------------------- ------------------- ------------------ -------------------
<S><C> <C> <C> <C> <C> <C>
$ 61,2$9,200,156,803 $ 177,318,642 $ 198,353,844 $ 33,501,666 $ 117,476,214 $ 35,952,603
55,448 - 193,749 - 59,149 457,131 -
2,595 - - 11,096 - 385 21
- ------- ------------------- ------------------ ------------------- ------------------- ------------------ -------------------
61,347,200,156,803 177,512,391 198,364,940 33,560,815 117,933,730 35,952,624
- 208,756 - 67,150 - - 47,570
- 402 7,187 - 54 - -
- ------- ------------------- ------------------ ------------------- ------------------- ------------------ -------------------
- 209,158 7,187 67,150 54 - 47,570
- ------- ------------------- ------------------ ------------------- ------------------- ------------------ -------------------
$ 61,3$7,199,947,645 $ 177,505,204 $ 198,297,790 $ 33,560,761 $ 117,933,730 $ 35,905,054
======= =================== ================== =================== =================== ================== ===================
4,020,222,954,842.907 6,447,159.634 7,480,387.355 2,176,230.247 3,357,236.245 1,335,814.063
======= =================== ================== =================== =================== ================== ===================
$ 15.$597267.667775 $ 27.532311 $ 26.509027 $ 15.421512 $ 35.128219 $ 26.878781
======= =================== ================== =================== =================== ================== ===================
5,225,0143,502,919.210 6,355,506.880 9,545,420.780 2,389,562.480 4,562,183.044 1,439,831.920
$11.73 $ 57.14 $ 27.90 $ 20.78 $ 14.02 $ 25.75 $ 24.97
$ 60,3$0,170,086,887 $ 142,975,277 $ 193,164,590 $ 34,298,435 $ 96,934,937 $ 31,097,786
</TABLE>
See accompanying notes.
<PAGE>
4
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Statement of Assets and Liabilities (continued)
December 31, 1997
<TABLE>
<CAPTION>
Small
International Disciplined Company Limited Term
Value Stock Stock High Income Balanced
Sub-account Sub-account Sub-account Sub-account Sub-account
------------------ ----------------- ------------------ ------------------- -------------------
Assets:
<S> <C> <C> <C> <C> <C>
Investments, at fair value $ 11,472,547 $ 34,427,518 $ 20,723,960 $ 25,877,756 $ 7,546,939
Receivable for units sold 29,020 365,479 25,295 429,439 57,429
Due from Transamerica Life 1,509 71 - 261 -
------------------ ----------------- ------------------ ------------------- -------------------
Total assets 11,503,076 34,793,068 20,749,255 26,307,456 7,604,368
Liabilities:
Payable for units redeemed - - - - -
Due to Transamerica Life - - 58 - 1
------------------ ----------------- ------------------ ------------------- -------------------
Total liabilities - - 58 - 1
------------------ ----------------- ------------------ ------------------- -------------------
Net assets $ 11,503,076 $ 34,793,068 $ 20,749,197 $ 26,307,456 $ 7,604,367
================== ================= ================== =================== ===================
Accumulation units outstanding 1,047,389.002 2,278,146.352 1,604,089.554 2,424,231.798 647,855.304
================== ================= ================== =================== ===================
Net asset value and redemption
price
per unit $ 10.982621 $ 15.272534 $ 12.935186 $ 10.851873 $ 11.737755
================== ================= ================== =================== ===================
Other sub-account information:
Number of mutual fund shares 852,977.530 1,881,285.110 1,284,808.450 2,009,142.550 537,531.282
Net asset value per share $ 13.45 $ 18.30 $ 16.13 $ 12.88 $ 14.04
Investment cost $ 11,614,941 $ 31,705,867 $ 19,200,233 $ 26,355,169 $ 7,646,427
</TABLE>
See accompanying notes.
<PAGE>
5
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Statement of Operations
Year ended December 31, 1997
<TABLE>
<CAPTION>
Zero
Money Managed Coupon
Market Assets 2000
Sub-account Sub-account Sub-account
----------------- ------------------- -------------------
<S> <C> <C> <C>
Investment income $ 2,403,664 $ 176,668 $1,366,819
Expenses
Mortality and expense risk charge 661,951 332,477 284,216
------------------ ------------------ -------------------
Net investment income (loss) 1,741,713 (155,809) 1,082,603
Net realized and unrealized gain (loss) on investments:
Realized gain (loss) on investment transactions - (202,908) 35,106
Unrealized appreciation (depreciation) of investments - 3,388,026 (6,228)
------------------ ------------------ -------------------
Net gain (loss) on investments - 3,185,118 28,878
------------------ ------------------ -------------------
Increase in net assets resulting from operations $ 1,741,713 $ 3,029,309 $1,111,481
================== ================== ===================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
6
Socially
Quality Small Capital Growth and International Stock Responsible
Bond Cap Appreciation Income Equity Index Fund Fund
Sub-accoSub-account Sub-account Sub-account Sub-account Sub-account Sub-account
- ------- ------------------- ------------------ ------------------- ------------------- ------------------ -------------------
<S> <C> <C> <C> <C> <C> <C>
$ 3,626,$911,477,864 $ 1,484,297 $ 16,027,785 $ 2,316,565 $ 4,607,685 $1,141,266
705,7622,474,072 1,844,624 2,407,433 395,770 1,176,504 353,490
- ------- ------------------- ------------------ ------------------- ------------------- ------------------ -------------------
2,920,5359,003,792 (360,327) 13,620,352 1,920,795 3,431,181 787,776
126,4567,851,059 7,299,736 5,008,940 851,741 4,486,732 746,963
957,8697,514,049 20,112,491 4,751,784 (1,206,438) 13,124,422 3,880,151
- ------- ------------------- ------------------ ------------------- ------------------- ------------------ -------------------
1,084,3215,365,108 27,412,227 9,760,724 (354,697) 17,611,154 4,627,114
- ------- ------------------- ------------------ ------------------- ------------------- ------------------ -------------------
$ 4,004,$624,368,900 $ 27,051,900 $ 23,381,076 $ 1,566,098 $21,042,335 $5,414,890
======= =================== ================== =================== =================== ================== ===================
</TABLE>
See accompanying notes.
<PAGE>
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Statement of Operations (continued)
Year ended December 31, 1997
<TABLE>
<CAPTION>
Limited Term
Small
International Disciplined Company High
Value Stock Stock Income Balanced
Sub-account Sub-account Sub-account Sub-account Sub-account
--------------- ------------- ------------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Investment income $ 352,380 $1,846,592 $395,884 $906,085 $343,920
Expenses
Mortality and expense risk charge 97,166 265,743 154,173 84,435 26,133
--------------- ------------- ------------- --------------- ------------
Net investment income (loss) 255,214 1,580,849 241,711 821,650 317,787
Net realized and unrealized gain on investments:
Realized gain on investment transactions 155,929 641,361 316,013 33,817 16,765
Unrealized appreciation (depreciation) of (210,301) 2,140,092 1,191,352 (477,413) (99,488)
investments
--------------- ------------- ------------- --------------- ------------
Net gain (loss) on investments (54,372) 2,781,453 1,507,365 (443,596) (82,723)
--------------- ------------- ------------- --------------- ------------
Increase in net assets resulting from $ 200,842 $4,362,302 $1,749,076 $378,054 $235,064
operations
=============== ============= ============= =============== ============
</TABLE>
See accompanying notes.
<PAGE>
8
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Statement of Changes in Net Assets
Year ended December 31, 1997
<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) $ 1,741,713 $ (155,809) $ 1,082,603
Realized gain (loss) on investment transactions - (202,908) 35,106
Unrealized (depreciation) appreciation of investments - 3,388,026 (6,228)
------------------- ------------------- --------------------
Increase in net assets resulting from operations 1,741,713 3,029,309 1,111,481
Changes from accumulation unit transactions 4,225,058 20,158,011 460,083
------------------- ------------------- --------------------
Total increase in net assets 5,966,771 23,187,320 1,571,564
Net assets at beginning of year 44,144,488 14,397,903 19,685,649
------------------- ------------------- --------------------
Net assets at end of year $ 50,111,259 $37,585,223 $ 21,257,213
=================== =================== ====================
</TABLE>
<PAGE>
10
<TABLE>
<CAPTION>
Socially
Quality Small Capital Growth and International Stock Responsible
Bond Cap Appreciation Income Equity Index Fund Fund
Sub-accounSub-account Sub-account Sub-account Sub-account Sub-account Sub-account
- ------ ------------------ ------------------- ------------------- ------------------ ------------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
$ 9,003,792 $ (360,327) $ 13,620,352 $ 1,920,795 $ 3,431,181 $ 787,776
$
2,920,535
126,47,851,059 7,299,736 5,008,940 851,741 4,486,732 746,963
957,87,514,049 20,112,491 4,751,784 (1,206,438) 13,124,422 3,880,151
- ------ ------------------ ------------------- ------------------- ------------------ ------------------- -------------------
4,004,24,368,900 27,051,900 23,381,076 1,566,098 21,042,335 5,414,890
18,909,078 11,979,599 14,154,916 1,103,766 7,360,632 1,695,754
13,886,14,733,974 70,544,573 28,437,984 10,873,817 42,498,940 15,451,216
- ------ ------------------ ------------------- ------------------- ------------------ ------------------- -------------------
31,724,417 31,353,043 82,494,872 13,141,461 24,920,042 8,104,965
17,891,39,102,874 97,596,473 51,819,060 12,439,915 63,541,275 20,866,106
50,633,495 43,332,642 96,649,788 14,245,227 32,280,674 9,800,719
43,455160,844,771 79,908,731 146,478,730 21,120,846 54,392,455 15,038,948
- ------ ------------------ ------------------- ------------------- ------------------ ------------------- -------------------
$ 61,3$7199,947,645 $177,505,204 $ 198,297,790 $33,560,761 $117,933,730 $35,905,054
====== ================== =================== =================== ================== =================== ===================
</TABLE>
See accompanying notes.
<PAGE>
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Statement of Changes in Net Assets (continued)
Year ended December 31, 1997
<TABLE>
<CAPTION>
Small Limited Term
InternationalInterDisciplined Company High
Value Stock Stock Income Balanced
Sub-account Sub-account Sub-account Sub-account Sub-account
---------------- -------------- --------------- --------------- --------------
Increase in net assets:
Operations:
<S> <C> <C> <C> <C>
Net investment income $ 255,214 $1,5$0,84241,711 $ 821,650 $ 317,787
Realized gain on investment 155,929 641,361 316,013 33,817 16,765
transactions
Unrealized appreciation (depreciation)
of investments (210,301) 2,140,092 1,191,352 (477,413) (99,488)
---------------- -------------- --------------- ---------------- -------------
Increase in net assets resulting from 200,842 4,362,302 1,749,076 378,054 235,064
operations
Increase (decrease) in net assets resulting
from operations
Changes from accumulation unit transactions 8,937,137 23,143,704 13,140,876 25,929,402 7,369,303
---------------- -------------- --------------- ---------------- -------------
Total increase in net assets 9,137,979 27,506,006 14,889,952 26,307,456 7,604,367
Net assets at beginning of year 2,365,097 7,287,062 5,859,245 - -
---------------- -------------- --------------- ---------------- -------------
Net assets at end of year $ 11,503,076 $34,$920,749,197 $ 26,307,456 $ 7,604,367
================ ============== =============== ================ =============
</TABLE>
See accompanying notes.
<PAGE>
11
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Statement of Changes in Net Assets (continued)
Year ended December 31, 1996
<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 $ 1,455,189 $ 648,786 $ 806,085
Realized gain (loss) on investment transactions - (272,069) 176,858
Unrealized appreciation (depreciation) of investments - (1,125,681) (718,652)
------------------- ------------------- --------------------
Increase (decrease) in net assets resulting from operations 1,455,189 (748,964) 264,291
Increase (decrease) in net assets resulting from operations
Changes from accumulation unit transactions 7,936,768 (689,994) 6,098,917
------------------- ------------------- --------------------
Total increase (decrease) in net assets 9,391,957 (1,438,958) 6,363,208
Net assets at beginning of year 34,752,531 15,836,861 13,322,441
------------------- ------------------- --------------------
Net assets at end of year $ 44,144,488 $ 14,397,903 $ 19,685,649
=================== =================== ====================
</TABLE>
<PAGE>
20
<TABLE>
<CAPTION>
Socially
Quality Small Capital Growth and International Stock Responsible
Bond Cap Appreciation Income Equity Index Fund Fund
Sub-accounSub-account Sub-account Sub-account Sub-account Sub-account Sub-account
- ------ ------------------ ------------------- ------------------- ------------------ ------------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
$ 3,058,168 $ 128,702 $ 14,942,201 $ 592,936 $ 1,178,504 $ 496,994
$ 1,671,839
508,08,998,399 2,812,515 2,397,777 337,081 1,205,186 790,992
(1,302,76,852,511 9,038,382 (3,185,062) 173,749 4,976,942 407,768
- ------ ------------------ ------------------- ------------------- ------------------ ------------------- -------------------
877,18,909,078 11,979,599 14,154,916 1,103,766 7,360,632 1,695,754
14,035,31,724,417 31,353,043 82,494,872 13,141,461 24,920,042 8,104,965
- ------ ------------------ ------------------- ------------------- ------------------ ------------------- -------------------
14,912,50,633,495 43,332,642 96,649,788 14,245,227 32,280,674 9,800,719
28,542,110,211,276 36,576,089 49,828,942 6,875,619 22,111,781 5,238,229
- ------ ------------------ ------------------- ------------------- ------------------ ------------------- -------------------
$160,844,771 $ 79,908,731 $ 146,478,730 $21,120,846 $54,392,455 $15,038,948
$ 43,455,679
====== ================== =================== =================== ================== =================== ===================
</TABLE>
See accompanying notes.
<PAGE>
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Statement of Changes in Net Assets (continued)
Year ended December 31, 1996
<TABLE>
<CAPTION>
Small
International Disciplined Company
Value Stock Stock
Sub-account Sub-account Sub-account
------------------- ------------------- --------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C>
Net investment income (loss) $ 10,529 $ 128 $ (7,973)
Realized gain on investment transactions 2,854 27,444 16,684
Unrealized appreciation of investments 67,907 581,559 332,376
------------------- ------------------- --------------------
Increase in net assets resulting from operations 81,290 609,131 341,087
Changes from accumulation unit transactions 2,283,807 6,677,931 5,518,158
------------------- ------------------- --------------------
Total increase in net assets 2,365,097 7,287,062 5,859,245
Net assets at beginning of year - - -
------------------- ------------------- --------------------
Net assets at end of year $ 2,365,097 $ 7,287,062 $ 5,859,245
=================== =================== ====================
</TABLE>
See accompanying notes.
<PAGE>
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Notes to Financial Statements
December 31, 1997
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 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 fifteen sub-accounts, each of which invests
exclusively in a specific corresponding mutual fund portfolio. The mutual fund
portfolios consist of: thirteen Series in the Dreyfus Variable Investment Fund
(Variable Fund), The Dreyfus Stock Index Fund (Stock Index Fund) and The Dreyfus
Socially Responsible Growth Fund (Socially Responsible Fund) (together "the
Funds"). The Variable Fund's thirteen series are: Money Market, Managed Assets,
Zero Coupon 2000, Quality Bond, Small Cap, Capital Appreciation, Growth and
Income, International Equity, International Value, Disciplined Stock, Small
Company Stock, Limited Term High Income, and Balanced. The Funds are open-end
management investment companies registered under the Investment Company Act of
1940.
2. Significant Accounting Policies
The accompanying financial statements of the Separate Account have been prepared
in accordance with 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:
<PAGE>
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Notes to Financial Statements (continued)
2. Significant Accounting Policies (continued)
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).
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. Under current federal income tax law,
income from assets maintained in the Separate Account for the exclusive benefit
of participants is generally not subject to federal income tax.
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 1997, CDSL amounted to $573,665.
<PAGE>
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Notes to Financial Statements (continued)
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.
5. Accumulation Units
The changes in accumulation units and amounts are as follows:
<TABLE>
<CAPTION>
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, 1997
Accumulation Units:
<S> <C> <C> <C> <C> <C>
Units sold 83,712,800.356 896,854.738 134,531.514 1,149,685.619 407,361.656
Units redeemed (5,029,007.362) (72,572.707)) (86,744.492) (249,610.219) (154,203.877)
Units transferred (75,005,896.573) 592,748.263 (17,090.696) 47,370.205 (35,035.547)
-----------------------------------------------------------------------------------------
Net increase 3,677,896.421 1,417,030.294 30,696.326 947,445.605 218,122.232
=========================================================================================
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 1,874,404.220 1,583,834.677 601,318.310 922,018.336 411,050.080
Units redeemed (226,001.847) (407,307.100) (98,874.112) (137,084.298) (38,596.704)
Units transferred 1,133,610.872 (28,789.437) 193,390.826 542,022.150 254,680.367
----------------- ----------------- ---------------- ---------------- -----------------
Net increase 2,782,013.245 1,147,738.140 695,835.024 1,326,956.188 627,133.743
================= ================= ================ ================ =================
Small Limited
International Disciplined Company Term High
Value Stock Stock Income Balanced
Sub-account Sub-account Sub-account Sub-Account Sub-Account
----------------- ------------------ --------------- --------------- ------------------
Accumulation Units:
Units sold 554,443.908 981,075.667 659,601.527 1,631,738.279 413,663.428
Units redeemed (25,039.540) (22,227.511) (25,277.506) (15,858.442) (2,376.140)
Units transferred 287,116.143 700,489.005 425,816.114 808,351.961 236,568.016
----------------- ----------------- --------------- ----------------- -----------------
Net increase 816,520.511 1,659,337.161 1,060,140.135 2,424,231.798 647,855.304
================= ================= =============== ================= =================
</TABLE>
<PAGE>
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Notes to Financial Statements (continued)
5. Accumulation Units (continued)
<TABLE>
<CAPTION>
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, 1997 Amounts:
<S> <C> <C> <C> <C> <C>
Sales $ 96,675,164 $ 12,637,211 $ 2,035,469 $ 16,782,687 $25,822,848
Redemptions (5,788,809) (1,007,675) (1,320,324) (3,635,760) (9,754,503)
Transfers (86,661,297) 8,528,475 (255,062) 740,001 (1,334,371)
--------------- --------------- -------------- --------------- ---------------
Net increase $ 4,225,058 $ 20,158,011 $ 460,083 $ 13,886,928 $14,733,974
=============== =============== ============== =============== ===============
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 $ 48,079,038 $ 39,388,244 $ 9,381,825 $29,585,638 $10,234,085
Redemptions (5,778,453) (10,151,169) (1,519,126) (4,390,571) (950,360)
Transfers 28,243,988 (799,091) 3,011,118 17,303,873 6,167,491
--------------- --------------- -------------- --------------- ---------------
Net increase $ 70,544,573 $ 28,437,984 $ 10,873,817 $42,498,940 $15,451,216
=============== =============== ============== =============== ===============
Small Limited Term
International Disciplined Company High
Value Stock Stock Income Balanced
Sub-Account Sub-Account Sub-Account Sub-account Sub-account
--------------- --------------- -------------- --------------- ---------------
Amounts:
Sales $6,090,814 $ 13,710,492 $ 8,054,531 $17,489,564 $4,717,587
Redemptions (278,170) (316,317) (300,972) (167,003) (27,523)
Transfers 3,124,492 9,749,529 5,387,317 8,606,841 2,679,239
--------------- --------------- -------------- --------------- ---------------
Net increase $8,937,136 $ 23,143,704 $ 13,140,876 $25,929,402 $7,369,303
=============== =============== ============== =============== ===============
</TABLE>
<PAGE>
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Notes to Financial Statements (continued)
5. Accumulation Units (continued)
<TABLE>
<CAPTION>
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, 1996
Accumulation Units:
<S> <C> <C> <C> <C> <C>
Units sold 84,829,635.088 204,692.159 413,093.309 902,702.777 665,111.780
Units redeemed (3,070,388.610) (87,122.923) (49,888.113) (131,978.915) (152,546.291)
Units transferred (74,583,756,484) (173,468.080) 53,164.339 249,737.097 68,275.988
-----------------------------------------------------------------------------------------
Net increase (decrease) 7,175,489.994 (55,898.844) 416,369.535 1,020,460.959 580,841.477
=========================================================================================
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 1,072,137.049 2,324,436.399 573,262.921 648,607.009 229,132.936
Units redeemed (107,047.937) (152,952.625) (56,657.308) (55,075.413) (16,830.748)
Units transferred 623,027.773 1,596,126.852 433,414.968 439,476.645 201,300.196
----------------- ----------------- ---------------- ---------------- -----------------
Net increase 1,588,116.885 3,767,610.626 950,020.581 1,033,008.241 413,602.384
================= ================= ================ ================ =================
Small
International Disciplined Company
Value Stock Stock
Sub-account Sub-account Sub-account
----------------- ----------------- ---------------
Accumulation Units:
Units sold 152,912.538 357,313.796 230,428.287
Units redeemed (12,607.703) (3,876.966) (7,020.803)
Units transferred 90,563.656 265,372.361 320,541.935
----------------- ----------------- ---------------
Net increase 230,868.491 618,809.191 543,949.419
================= ================= ===============
</TABLE>
<PAGE>
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Notes to Financial Statements (continued)
5. Accumulation Units (continued)
<TABLE>
<CAPTION>
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, 1996 Amounts:
<S> <C> <C> <C> <C> <C>
Sales $92,097,586 $ 2,575,676 $6,038,826 $ 12,399,661 $ 36,416,666
Redemptions (3,421,366) (1,089,349) (722,670) (1,802,619) (8,376,723)
Transfers (80,739,452) (2,176,321) 782,761 3,438,624 3,684,474
--------------- --------------- --------------- --------------- ----------------
Net increase (decrease) $ 7,936,768 $ (689,994) $6,098,917 $ 14,035,666 $ 31,724,417
=============== =============== =============== =============== ================
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 $ 20,927,043 $ 50,943,631 $ 7,932,847 $15,690,112 $4,431,782
Redemptions (2,117,332) (3,363,450) (786,175) (1,344,527) (322,218)
Transfers 12,543,332 34,914,691 5,994,789 10,574,457 3,995,401
--------------- --------------- --------------- --------------- ----------------
Net increase $ 31,353,043 $ 82,494,872 $ 13,141,461 $24,920,042 $8,104,965
=============== =============== =============== =============== ================
Small
International Disciplined Company
Value Stock Stock
Sub-Account Sub-Account Sub-Account
--------------- --------------- ---------------
Amounts:
Sales $ 1,511,354 $ 3,900,826 $ 2,324,984
Redemptions (128,057) (44,523) (71,932)
Transfers 900,510 2,821,628 3,265,106
--------------- --------------- ---------------
Net increase $ 2,283,807 $ 6,677,931 $ 5,518,158
=============== =============== ===============
</TABLE>
<PAGE>
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Notes to Financial Statements (continued)
6. Investment Transactions
The aggregate cost of purchases and the aggregate proceeds from the sales of
investments for the year ended December 31, 1997 were:
<TABLE>
<CAPTION>
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 $119,472,308 $ 24,301,764 $5,339,635 $27,607,286 $52,273,991
================ ================= ================ ================= ================
Aggregate proceeds from sales $113,124,467 $ 4,517,544 $3,814,152 $10,913,942 $27,667,580
================ ================= ================ ================= ================
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 $87,916,207 $70,134,765 $17,919,950 $58,316,779 $18,985,784
================ ================= ================ ================= ================
Aggregate proceeds from sales $17,658,446 $28,093,051 $ 5,211,882 $12,968,863 $ 2,781,871
================ ================= ================ ================= ================
International Disciplined Small Company Limited Term High
Value Stock Stock Income Sub-account Balanced
Sub-account Sub-account Sub-account Sub-account
---------------- ----------------- ---------------- ----------------- ----------------
Aggregate purchases $10,368,235 $27,090,258 $16,358,909 $27,788,186 $7,801,622
================ ================= ================ ================= ================
Aggregate proceeds from sales $ 1,204,774 $ 2,705,756 $ 2,546,651 $ 1,466,834 $ 171,960
================ ================= ================ ================= ================
</TABLE>
<PAGE>
<PAGE>
Audited Consolidated Financial Statements
Transamerica Occidental Life Insurance Company and Subsidiaries
December 31, 1997
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
Audited Consolidated Financial Statements
December 31, 1997
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>
-26-
4367:Folder T
04/22/98 3:30 PM
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, 1997 and
1996, 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,
1997. 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, 1997 and
1996, and the consolidated results of their operations and their cash flows for
each of the three years in the period ended December 31, 1997, in conformity
with generally accepted accounting principles.
January 23, 1998
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
December 31
1997 1996
--------------------- -------------
(In thousands, except
for share data)
ASSETS
Investments:
<S> <C> <C>
Fixed maturities available for sale $ 29,231,998 $ 26,980,676
Equity securities available for sale 791,221 471,734
Mortgage loans on real estate 706,939 716,669
Real estate 19,633 24,876
Policy loans 451,023 442,607
Other long-term investments 69,793 66,686
Short-term investments 324,672 135,726
--------------------- ---------------------
31,595,279 28,838,974
Cash 36,656 35,817
Accrued investment income 481,913 404,866
Accounts receivable 294,542 297,967
Reinsurance recoverable on paid and unpaid losses 920,847 829,653
Deferred policy acquisitions costs 2,102,588 2,138,203
Other assets 299,500 256,382
Separate account assets 5,494,703 3,527,950
--------------------- ---------------------
$ 41,226,028 $ 36,329,812
===================== =====================
LIABILITIES AND SHAREHOLDER'S EQUITY
Policy liabilities:
Policyholder contract deposits $ 24,061,811 $ 22,718,955
Reserves for future policy benefits 5,468,611 5,275,149
Policy claims and other 557,822 502,331
--------------------- ---------------------
30,088,244 28,496,435
Income tax liabilities 814,088 388,852
Accounts payable and other liabilities 482,716 560,663
Separate account liabilities 5,494,703 3,527,950
--------------------- ---------------------
36,879,751 32,973,900
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 422,342 335,619
Retained earnings 2,738,151 2,467,406
Foreign currency translation adjustments (33,440) (24,472)
Net unrealized investment gains 1,191,637 549,772
--------------------- ---------------------
4,346,277 3,355,912
--------------------- ---------------------
$ 41,226,028 $ 36,329,812
===================== =====================
</TABLE>
See notes to consolidated financial statements.
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
Year Ended December 31
1997 1996 1995
--------------- --------------- ----------
(In thousands)
Revenues:
<S> <C> <C> <C>
Premiums and other considerations $ 1,777,371 $ 1,641,985 $ 1,663,576
Net investment income 2,165,565 2,077,232 1,972,759
Net realized investment gains 40,263 17,471 28,112
--------------- --------------- ---------------
TOTAL REVENUES 3,983,199 3,736,688 3,664,447
Benefits:
Benefits paid or provided 2,727,064 2,558,792 2,439,156
Increase in policy reserves and liabilities 59,246 57,968 236,205
--------------- --------------- ---------------
2,786,310 2,616,760 2,675,361
Expenses:
Amortization of deferred policy acquisition costs 265,264 235,180 182,123
Salaries and salary related expenses 165,768 158,699 145,681
Other expenses 284,220 224,084 200,339
--------------- --------------- ---------------
715,252 617,963 528,143
--------------- --------------- ---------------
TOTAL BENEFITS AND EXPENSES 3,501,562 3,234,723 3,203,504
--------------- --------------- ---------------
INCOME BEFORE INCOME TAXES 481,637 501,965 460,943
Provision for income taxes 149,581 164,685 149,647
--------------- --------------- ---------------
NET INCOME $ 332,056 $ 337,280 $ 311,296
=============== =============== ===============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
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, 1995 2,206,933 $ 27,587 $ 319,279 $ 1,921,232 $ (28,347) $ (321,460)
Net income 311,296
Capital contributions from 14,299
parent
Dividends declared (61,116)
Change in foreign currency
translation adjustments 4,729
Change in net unrealized
investment gains 1,260,392
Balance at December 31, 1995 2,206,933 27,587 333,578 2,171,412 (23,618) 938,932
Net income 337,280
Capital contributions from
parent 2,041
Dividends declared (41,286)
Change in foreign currency
translation adjustments (854)
Change in net unrealized
investment gains (389,160)
Balance at December 31, 1996 2,206,933 27,587 335,619 2,467,406 (24,472) 549,772
Net income 332,056
Capital transactions with
parent 86,723
Dividends declared (61,311)
Change in foreign currency
translation adjustments (8,968)
Change in net unrealized
investment gains 641,865
Balance at December 31, 1997 2,206,933 $ 27,587 $ 422,342 $ 2,738,151 $ (33,440) $ 1,191,637
============ ========== =========== ============= ============ ============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31
1997 1996 1995
--------------- ---------------- ----------
(In thousands)
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income $ 332,056 $ 337,280 $ 311,296
Adjustments to reconcile net income to net cash
provided by operating activities:
Changes in:
Reinsurance recoverable (91,194) (73,328) (466,669)
Accounts receivable (15,983) (159,309) (58,866)
Policy liabilities 1,102,246 949,108 1,273,723
Other assets, accounts payable and other
liabilities, and income taxes (89,954) (32,662) (252,362)
Policy acquisition costs deferred (467,730) (388,003) (381,806)
Amortization of deferred policy acquisition costs 256,303 268,770 191,313
Net realized gains on investment transactions (31,302) (51,061) (37,302)
Other (64,651) (15,758) (22,862)
--------------- --------------- ---------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 929,791 835,037 556,465
INVESTMENT ACTIVITIES
Purchases of securities (9,825,763) (7,362,635) (5,667,539)
Purchases of other investments (127,437) (334,895) (330,503)
Sales of securities 8,193,409 5,064,780 3,587,367
Sales of other investments 129,671 175,001 155,084
Maturities of securities 559,361 506,941 341,485
Net change in short-term investments (188,946) 75,774 (67,337)
Other (53,478) (21,358) (35,384)
--------------- --------------- ---------------
NET CASH USED IN
INVESTING ACTIVITIES (1,313,183) (1,896,392) (2,016,827)
FINANCING ACTIVITIES
Additions to policyholder contract deposits 6,851,644 6,260,653 5,151,428
Withdrawals from policyholder contract deposits (6,411,213) (5,173,419) (3,624,044)
Capital contributions from parent 3,800 - -
Dividends paid to parent (60,000) (40,000) (60,000)
--------------- --------------- ---------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 384,231 1,047,234 1,467,384
--------------- --------------- ---------------
INCREASE (DECREASE) IN CASH 839 (14,121) 7,022
Cash at beginning of year 35,817 49,938 42,916
--------------- --------------- ---------------
CASH AT END OF YEAR $ 36,656 $ 35,817 $ 49,938
=============== =============== ===============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1997
NOTE A--SIGNIFICANT ACCOUNTING POLICIES
Business: Transamerica Occidental Life Insurance Company ("TOLIC") and its
subsidiaries (collectively, the "Company"),
engage 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.
Reclassifications: Certain reclassifications of 1996 and 1995 amounts have
been made to conform to the 1997
- -----------------
presentation.
Use of Estimates: Certain amounts reported in the accompanying consolidated
financial statements are based on management's best estimates and judgment.
Actual results could differ from those estimates.
New Accounting Standards: In June of 1997, the Financial Accounting Standards
Board issued a new standard on reporting comprehensive income, which establishes
standards for reporting and displaying comprehensive income and its components
in the financial statements. This standard is effective for interim and annual
periods beginning after December 15, 1997. Reclassification of financial
statements for all periods presented will be required upon adoption. Application
of this statement will not change recognition or measurement of net income and,
therefore, will not impact the Company's consolidated results of operations or
financial position.
In 1997, the Company adopted the Financial Accounting Standards Board's new
standard on accounting for transfers of financial assets, servicing of financial
assets and extinguishment of liabilities. The standard requires that a transfer
of financial assets be accounted for as a sale only if certain specified
conditions for surrender of control over the transferred assets exist. There was
no material effect on the consolidated financial position or results of
operations of the Company.
In 1996, the Company adopted the Financial Accounting Standards Board's new
standard on accounting for the impairment of long-lived assets and for
long-lived assets to be disposed of. The standard requires 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. There
was no 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 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.
<PAGE>
NOTE A--SIGNIFICANT ACCOUNTING POLICIES (Continued)
Principles of Consolidation: The consolidated financial statements of the
Company 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.
Investments: Investments are reported on the following bases:
Fixed maturities--All debt securities, including redeemable preferred
stocks, are classified as available for sale and carried at fair value.
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 K - 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.
Real estate--Investment real estate that the Company intends to hold for
the production of income is carried at depreciated cost less allowance
for possible impairment. Properties held for sale, primarily foreclosed
assets, are carried at the lower of depreciated cost or fair value less
estimated selling costs.
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 investments 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 reserves for future policy benefits, net of deferred
income taxes, as a separate component of shareholder's equity and, accordingly,
have no effect on net income.
<PAGE>
NOTE A--SIGNIFICANT ACCOUNTING POLICIES (Continued)
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 related to
non-traditional and investment type products are adjusted as if unrealized gains
or losses on securities available for sale were realized. 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.
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 non-traditional life insurance and
investment-type 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 3.0% to 9.7% in 1997 and 2.6% to 9.8% in 1996 and 2.8% to 10% in
1995.
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 certain 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 2.25% in earlier years to 11.82%. 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.
<PAGE>
NOTE A--SIGNIFICANT ACCOUNTING POLICIES (Continued)
Foreign Currency Translation: The effect of changes in exchange rates in
translating the 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
1997, 1996 or 1995.
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.
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.
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. The receivables and payables under certain modified
coinsurance arrangements are presented on a net basis to the extent that such
receivables and payables are with the same ceding company. 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 if TOLIC filed
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.
<PAGE>
NOTE A--SIGNIFICANT ACCOUNTING POLICIES (Continued)
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
from independent pricing services. Fair values for derivative instruments,
including off-balance-sheet instruments, are estimated using values obtained
from 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.
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 maturates 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.
<PAGE>
NOTE B--INVESTMENTS
The cost and fair value of fixed maturities available for sale and equity
securities are as follows (in thousands):
<TABLE>
<CAPTION>
Gross Gross
Unrealized Unrealized Fair
Cost Gain Loss Value
December 31, 1997
U.S. Treasury securities and
obligations of U.S. government
<S> <C> <C> <C> <C>
corporations and agencies $ 273,949 $ 78,390 $ - $ 352,339
Obligations of states and political
subdivisions 219,391 16,765 31 236,125
Foreign governments 81,425 6,996 2 88,419
Corporate securities 18,596,027 1,438,385 57,729 19,976,683
Public utilities 4,017,154 340,580 811 4,356,923
Mortgage-backed securities 3,795,464 342,805 1,977 4,136,292
Redeemable preferred stocks 69,773 24,326 8,882 85,217
---------------- ---------------- ---------------- ----------------
Total fixed maturities $ 27,053,183 $ 2,248,247 $ 69,432 $ 29,231,998
================ ================ ================ ================
Equity securities $ 309,637 $ 488,322 $ 6,738 $ 791,221
================ ================ ================ ================
December 31, 1996
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies $ 288,605 $ 25,118 $ 1,628 $ 312,095
Obligations of states and political
subdivisions 258,596 8,508 538 266,566
Foreign governments 110,283 4,479 520 114,242
Corporate securities 15,171,041 779,904 108,999 15,841,946
Public utilities 4,462,063 203,604 35,769 4,629,898
Mortgage-backed securities 5,548,067 252,094 56,293 5,743,868
Redeemable preferred stocks 66,856 10,281 5,076 72,061
---------------- ---------------- ---------------- ----------------
Total fixed maturities $ 25,905,511 $ 1,283,988 $ 208,823 $ 26,980,676
================ ================ ================ ================
Equity securities $ 199,494 $ 281,418 $ 9,178 $ 471,734
================ ================ ================ ================
</TABLE>
<PAGE>
NOTE B--INVESTMENTS (Continued)
The cost and fair value of fixed maturities available for sale at December 31,
1997, by contractual maturity, are shown below. Expected maturities will differ
from contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties (in thousands):
<TABLE>
<CAPTION>
Fair
Cost Value
Maturity
<S> <C> <C> <C>
Due in 1998 $ 494,969 $ 510,261
Due in 1999-2002 3,877,467 4,019,436
Due in 2003-2007 5,908,618 6,249,016
Due after 2007 12,906,892 14,231,776
---------------- ----------------
23,187,946 25,010,489
Mortgage-backed securities 3,795,464 4,136,292
Redeemable preferred stock 69,773 85,217
---------------- ----------------
$ 27,053,183 $ 29,231,998
================ ================
The components of the carrying value of real estate are as follows (in
thousands):
1997 1996
--------------- ----------
Investment real estate $ 18,806 $ 22,814
Properties held for sale 827 2,062
---------------- ----------------
$ 19,633 $ 24,876
================ ================
</TABLE>
As of December 31, 1997, the Company held a total investment in one issuer,
other than the United States Government or a Unites States Government agency or
authority, which exceeded 10% of total shareholder's equity as follows (in
thousands):
Name of Issuer Carrying Value
Hill Street Funding $ 516,822
The carrying value of those assets that were on deposit with public officials in
compliance with regulatory requirements was $21.7 million at December 31, 1997.
<PAGE>
NOTE B--INVESTMENTS (Continued)
Net investment income by major investment category is summarized as follows (in
thousands):
<TABLE>
<CAPTION>
1997 1996 1995
---------------- ---------------- ----------
<S> <C> <C> <C>
Fixed maturities $ 2,096,543 $ 2,005,764 $ 1,904,519
Equity securities 5,339 5,458 3,418
Mortgage loans on real estate 62,877 58,165 40,702
Real estate (11,110) (7,435) 3,209
Policy loans 28,080 27,012 25,641
Other long-term investments 511 978 2,353
Short-term investments 12,770 10,616 13,286
---------------- ---------------- ----------------
2,195,010 2,100,558 1,993,128
Investment expenses (29,445) (23,326) (20,369)
----------------- ---------------- ----------------
$ 2,165,565 $ 2,077,232 $ 1,972,759
================ ================ ================
</TABLE>
Significant components of net realized investment gains are as follows (in
thousands):
<TABLE>
<CAPTION>
1997 1996 1995
---------------- ---------------- ----------
Net gains (losses) on disposition of investments in:
<S> <C> <C> <C>
Fixed maturities $ (21,484) $ 40,967 $ 52,889
Equity securities 59,834 15,750 5,637
Other (1,410) 3,424 2,327
---------------- ---------------- ----------------
36,940 60,141 60,853
Provision for impairment (5,638) (9,080) (23,551)
Accelerated amortization of DPAC 8,961 (33,590) (9,190)
---------------- ---------------- ----------------
$ 40,263 $ 17,471 $ 28,112
================ ================ ================
The components of net gains (losses) on disposition of investment in fixed maturities are as follows (in thousands):
1997 1996 1995
Gross gains $ 82,452 $ 74,817 $ 61,504
Gross losses (103,936) (33,850) (8,615)
---------------- ---------------- ----------------
$ (21,484) $ 40,967 $ 52,889
================= ================ ================
</TABLE>
Proceeds from disposition of investment in fixed maturities available for sale
were $7,896.5 million in 1997, $4,969.2 million in 1996 and $3,461.1 million in
1995.
<PAGE>
NOTE B--INVESTMENTS (Continued)
The costs of certain investments have been reduced by the following allowances
for impairment in value (in thousands):
<TABLE>
<CAPTION>
December 31
1997 1996
---------------- -----------
<S> <C> <C>
Fixed maturities $ 64,168 $ 54,160
Mortgage loans on real estate 24,508 22,654
Real estate 5,854 9,146
Other long-term investments 5,900 11,025
---------------- ----------------
$ 100,430 $ 96,985
================ ================
</TABLE>
The components of net unrealized investment gains in the accompanying
consolidated balance sheet are as follows (in thousands):
<TABLE>
<CAPTION>
December 31
1997 1996
---------------- ----------
Unrealized gains on investment in:
<S> <C> <C>
Fixed maturities $ 2,178,815 $ 1,075,165
Equity securities 481,584 272,240
---------------- ----------------
2,660,399 1,347,405
Fair value adjustments to:
DPAC (546,111) (306,602)
Reserves for future policy benefits (281,000) (195,000)
---------------- ----------------
(827,111) (501,602)
Related deferred taxes (641,651) (296,031)
---------------- ----------------
$ 1,191,637 $ 549,772
================ ================
</TABLE>
<PAGE>
NOTE C--DEFERRED POLICY ACQUISITION COSTS (DPAC)
Significant components of changes in DPAC are as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------
<S> <C> <C> <C>
Balance at beginning of year $ 2,138,203 $ 1,974,211 $ 2,480,474
Amounts deferred:
Commissions 352,300 290,512 298,698
Other 115,431 97,491 83,108
Amortization attributed to:
Net gain on disposition of investments 8,961 (33,590) (9,190)
Operating income (265,264) (235,180) (182,123)
Fair value adjustment (239,509) 48,969 (706,915)
Foreign currency translation adjustment (7,534) (4,210) 10,159
----------------- --------------- ----------------
Balance at end of year $ 2,102,588 $ 2,138,203 $ 1,974,211
================ =============== ================
</TABLE>
NOTE D--POLICY LIABILITIES
Components of policyholder contract deposits are as follows (in thousands):
<TABLE>
<CAPTION>
December 31
1997 1996
---------------- -----------
<S> <C> <C>
Liabilities for investment-type products $ 19,297,966 $ 18,126,119
Liabilities for non-traditional life insurance
products 4,763,845 4,592,836
--------------- ---------------
$ 24,061,811 $ 22,718,955
=============== ===============
</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 $281 million as of December 31, 1997, $195 million as of
December 31, 1996 and $339 million as of December 31, 1995.
<PAGE>
NOTE E--INCOME TAXES
Components of income tax liabilities are as follows (in thousands):
<TABLE>
<CAPTION>
December 31
1997 1996
---------------- -----------
<S> <C> <C>
Current tax liabilities (receivables) $ 44,510 $ (13,752)
Deferred tax liabilities 769,578 402,604
---------------- ----------------
$ 814,088 $ 388,852
================ ================
</TABLE>
Significant components of deferred tax liabilities (assets) are as follows (in
thousands):
<TABLE>
<CAPTION>
December 31
1997 1996
---------------- -----------
<S> <C> <C>
Deferred policy acquisition costs $ 783,624 $ 726,011
Unrealized investment gains 641,651 296,031
---------------- ----------------
Total deferred tax liabilities 1,425,275 1,022,042
Life insurance policy liabilities (613,874) (578,823)
Provision for impairment of investments (35,151) (33,945)
Other-net (6,672) (6,670)
----------------- -----------------
Total deferred tax assets (655,697) (619,438)
---------------- ----------------
$ 769,578 $ 402,604
================ ================
</TABLE>
The Company offsets all deferred tax assets and liabilities and presents them in
a single amount in the consolidated balance sheet.
Components of provision for income taxes are as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------
<S> <C> <C> <C>
Current tax expense $ 122,201 $ 99,692 $ 115,614
Deferred tax expense (benefit):
Domestic 14,731 55,261 21,784
Foreign 12,649 9,732 12,249
---------------- ---------------- ---------------
$ 149,581 $ 164,685 $ 149,647
================ ================ ===============
</TABLE>
<PAGE>
NOTE E--INCOME TAXES (Continued)
The differences between federal income taxes computed at the statutory rate and
the provision for income taxes as reported are as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
---------------- ---------------- -----------
Income before income taxes:
<S> <C> <C> <C>
Income from U.S. operations $ 430,449 $ 474,160 $ 425,946
Income from foreign operations 51,189 27,805 34,997
--------------- --------------- ---------------
481,638 501,965 460,943
Tax rate 35% 35% 35%
--------------- --------------- ---------------
Federal income taxes at statutory rate 168,573 175,688 161,330
Income not subject to tax (3,284) (2,262) (685)
Low income housing credits (10,156) (8,175) (3,137)
Other, net (5,552) (566) (7,861)
--------------- --------------- ---------------
$ 149,581 $ 164,685 $ 149,647
=============== =============== ===============
</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, 1997 was $138 million. At
December 31, 1997, $2,179 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 $58.5 million, $149.1 million and $153.3 million were paid
principally to the Company's parent in 1997, 1996 and 1995, respectively.
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.
<PAGE>
NOTE F--REINSURANCE (Continued)
The components of the Company's life insurance in force and premiums and other
considerations are summarized as follows (in thousands):
<TABLE>
<CAPTION>
Ceded to Assumed
Direct Other from Other Net
Amount Companies Companies Amount
1997
Life insurance in force,
<S> <C> <C> <C> <C>
at end of year $ 241,379,957 $ 207,533,094 $ 225,685,653 $ 259,532,516
==================== =================== =================== ===================
Premiums and other
considerations $ 1,854,918 $ 1,163,259 $ 1,085,712 $ 1,777,371
==================== =================== =================== ===================
Benefits paid or
provided $ 2,950,335 $ 696,009 $ 472,738 $ 2,727,064
==================== =================== =================== ===================
1996
Life insurance in force,
at end of year $ 220,162,932 $ 195,158,214 $ 201,560,322 $ 226,565,040
==================== =================== =================== ===================
Premiums and other
considerations $ 1,702,975 $ 1,033,201 $ 972,211 $ 1,641,985
==================== =================== =================== ===================
Benefits paid or
provided $ 2,922,967 $ 1,112,561 $ 748,386 $ 2,558,792
==================== =================== =================== ===================
1995
Life insurance in force,
at end of year $ 206,722,573 $ 116,762,869 $ 174,193,592 $ 264,153,296
==================== =================== =================== ===================
Premiums and other
considerations $ 1,857,439 $ 1,079,303 $ 885,440 $ 1,663,576
==================== =================== =================== ===================
Benefits paid or
provided $ 2,803,213 $ 1,065,545 $ 701,488 $ 2,439,156
==================== =================== =================== ===================
</TABLE>
<PAGE>
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 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 (benefits) recognized for all plans were
$(5.4) million in 1997, $(3.1) million in 1996 and $2.5 million in 1995, of
which $(6.1) million in 1997, $(3.7) million in 1996 and $2.0 million in 1995,
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 1997, 1996 and 1995.
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 loans and advances, investments in a money market fund managed by an
affiliated company, rental of space, and other specialized services. At December
31, 1997, pension funds administered for these related companies aggregated
$1,467.4 million and the investment in an affiliated money market fund, included
in short-term investments, was $91.1 million.
During 1996, the Company transferred certain below investment grade bonds with
an aggregate book value of $424.9 million, including an aggregate interest
receivable of $9.6 million, to a special purpose subsidiary of Transamerica
Corporation in exchange for assets with a fair value of $438.9 million,
comprised of collateralized higher-rated bond obligations of $413.9 million
issued by the special purpose subsidiary and cash of $25 million. The excess of
fair value of the consideration received over the book value of the bonds
transferred is included in net realized investment gains.
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 assets 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.
<PAGE>
NOTE H--RELATED PARTY TRANSACTIONS (Continued)
During 1997, equity securities with a fair value of $177.2 million (cost of
$55.5 million) were received from Transamerica Corporation. $50 million was used
as a partial paydown on a $200 million note due from Transamerica Corporation.
The excess of fair value over cost less the amount applied to the note was
recorded as additional paid-in capital. The remaining balance on the note, which
is due in 2013 and bears interest at 7%, is $150 million.
In addition, the Company received a capital contribution of $15 million from
Transamerica Corporation.
NOTE I--REGULATORY MATTERS
TOLIC and its insurance subsidiaries are subject to state insurance laws and
regulations, principally those of TOLIC and each subsidiary'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 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):
<TABLE>
<CAPTION>
1997 1996 1995
------------------- ------------------- ------------
<S> <C> <C> <C>
Statutory net income $ 96,472 $ 112,296 $ 131,607
Statutory capital and surplus, at
end of year 1,556,228 1,249,045 1,115,691
</TABLE>
NOTE J-COMMITMENTS AND CONTINGENCIES
The Company issues synthetic guaranteed investment contracts which guarantee, in
exchange for a fee, the liquidity of pension plans to pay certain qualified
benefits if other sources of plan liquidity are exhausted. Unlike traditional
guaranteed investment contracts, the plan sponsor retains the credit risk in a
synthetic contract while the Company assumes some limited degree of interest
rate risk. To minimize the risk of loss, the Company underwrites these contracts
based on plan sponsor agreement, at the inception of the contract, on investment
guidelines to be followed, including overall portfolio credit and maturity
requirements. Adherence to these investment requirements is monitored regularly
by the Company. At December 31, 1997, commitments to maintain liquidity for
benefit payments on notional amounts of $3.3 billion were outstanding compared
to $1.9 billion at December 31, 1996.
<PAGE>
NOTE J-COMMITMENTS AND CONTINGENCIES (Continued)
The Company is subject to mandatory assessments by state guaranty funds to cover
losses to policyholders of those insurance companies that are under regulatory
supervision. Certain states allow such assessments to be used to reduce future
premium taxes. The Company estimates and recognizes its obligation for guaranty
fund assessments, net of premium tax deductions, based on the survey data
provided by National Organization of Life and Health Insurance Guaranty
Associations. At December 31, 1997 and 1996, the estimated exposures and the
resultant accruals recorded were not material to the consolidated financial
position or results of operations of the Company.
Substantially all leases of the Company are operating leases principally for the
rental of real estate. Rental expenses for equipment and properties were $16.5
million in 1997, $20.6 million in 1996 and $25.3 million in 1995. 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, 1997 (in thousands):
Year ending December 31:
1998 $ 15,115
1999 14,468
2000 12,208
2001 11,768
2002 6,874
Later years 55,597
--------------------
$ 116,030
====================
The Company is a defendant in various legal actions arising from its operations.
These include legal actions similar to those faced by many other major life
insurers which allege damages related to sales practices for universal life
policies sold between January 1981 and June 1996. In one such action, the
Company and plaintiffs' counsel entered into a settlement which was approved on
June 26, 1997. The settlement required prompt notification to affected
policyholders. Administrative and policy benefit costs associated with the
settlement of $31 million pre-tax have been accrued. Additional costs related to
the settlement are not expected to be material and will be incurred over a
period of years. Additional costs related to the settlement are not currently
determinable. In the opinion of the Company, any ultimate liability which might
result from other litigation would not have a materially adverse effect on the
combined financial position of the Company or the results of its operations.
<PAGE>
NOTE K--FINANCIAL INSTRUMENTS
The carrying values and estimated fair values of financial instruments are as
follows (in thousands):
<TABLE>
<CAPTION>
December 31
-----------------------------------------
1997 1996
----------------------------------- -----------------
Carrying Fair Carrying Fair
Value Value Value Value
Financial Assets:
<S> <C> <C> <C> <C>
Fixed maturities available for sale $ 29,231,998 $ 29,231,998 $ 26,980,676 $ 26,980,676
Equity securities available for sale 791,221 791,221 471,734 471,734
Mortgage loans on real estate 706,939 774,556 716,669 770,122
Policy loans 451,023 427,924 442,607 416,396
Short-term investments 324,672 324,672 135,726 135,726
Cash 36,656 36,656 35,817 35,817
Accrued investment income 481,913 481,913 404,866 404,866
Financial Liabilities:
Liabilities for investment-type contracts:
Single and flexible premium
deferred annuities 6,779,951 6,261,707 6,962,501 6,400,632
Single premium immediate annuities 4,361,311 5,122,562 4,115,047 4,476,968
Guaranteed investment contracts 3,211,834 3,265,384 3,153,769 3,207,342
Other deposit contracts 4,944,870 4,992,906 3,894,802 3,913,046
Off-balance-sheet assets (liabilities):
Interest rate swap agreements designated
as hedges of liabilities in a:
Receivable position - 8,189 - 43,916
Payable position - (5,247) - (5,485)
</TABLE>
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 K--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.
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. Any 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.
Gains or losses on terminated interest rate agreements are deferred and
amortized over the remaining life of the underlying assets or liabilities being
hedged.
<PAGE>
NOTE K--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, 1997
Interest rate swap agreements designated as hedges of securities available
for sale, where TLC pays:
<S> <C> <C> <C>
Fixed rate interest $ 419,715 6.81% $ 1,820
Floating rate interest 280,905 6.48% 3,000
Floating rate interest based on one index and
receives floating rate interest based on
another index 337,371 - (320)
Interest rate swap agreements designated as
hedges of financial liabilities, where TLC pays:
Fixed rate interest - - -
Floating rate interest 2,252,089 6.17% 4,507
Floating rate interest based on one index and
receives floating rate interest based on
another index 304,820 - (1,565)
Interest rate floor agreements 560,500 6.46% 25,254
Swaptions 8,326,030 4.50% 103,018
Others 29,117 - 15,314
December 31, 1996
Interest rate swap agreements designated as hedges of securities available
for sale, where TLC pays:
Fixed rate interest $ 270,035 6.73% $ 1,511
Floating rate interest 250,905 6.77% 5,877
Floating rate interest based on one index and
receives floating rate interest based on
another index 326,644 - (9,359)
Interest rate swap agreements designated as
----
hedges of financial liabilities, where TLC pays:
Fixed rate interest 60,000 4.39% 333
Floating rate interest 1,710,716 6.11% 37,655
Floating rate interest based on one index and
receives floating rate interest based on
another index 58,585 - 443
Interest rate floor agreements 560,500 6.46% 19,287
Swaptions 8,327,570 4.50% 54,198
Others 108,745 - 19,607
</TABLE>
<PAGE>
NOTE K--FINANCIAL INSTRUMENTS (Continued)
Generally, notional amounts indicate the volume of transactions and estimated
fair values indicate the amounts subject to credit risk.
Activities with respect to the notional amounts are summarized as follows (in
thousands):
<TABLE>
<CAPTION>
Beginning End
of Year Additions Maturities Terminations of Year
1997:
Interest rate swap agreements
designated as hedges of
<S> <C> <C> <C> <C> <C>
securities available for sale $ 847,584 $ 322,165 $ 91,858 $ 39,900 $ 1,037,991
Interest rate swap agreements
designated as hedges of
financial liabilities 1,829,301 2,297,133 1,554,525 15,000 2,556,909
Interest rate floor agreements 560,500 - - - 560,500
Swaptions 8,327,570 - - 1,540 8,326,030
Others 108,745 20,572 100,200 - 29,117
-------------- -------------- -------------- ------------ ----------------
$ 11,673,700 $ 2,639,870 $ 1,746,583 $ 56,440 $ 12,510,547
============== ============== ============== ============ ================
1996:
Interest rate swap agreements
designated as hedges of
securities available for sale $ 440,173 $ 566,023 $ 143,554 $ 15,058 $ 847,584
Interest rate swap agreements
designated as hedges of
financial liabilities 1,146,678 1,887,348 1,103,525 101,200 1,829,301
Interest rate floor agreements 560,500 - - - 560,500
Interest rate cap agreements 250,000 - 250,000 - -
Swaptions 1,267,140 7,170,000 109,570 - 8,327,570
Others 100,000 8,745 - - 108,745
-------------- -------------- -------------- ------------ ----------------
$ 3,764,491 $ 9,632,116 $ 1,606,649 $ 116,258 $11,673,700
============== ============== ============== ============ ===========
1995:
Interest rate swap agreements
designated as hedges of
securities available for sale $ 274,777 $ 246,790 $ 59,947 $ 21,447 $ 440,173
Interest rate swap agreements
designated as hedges of
financial liabilities 601,545 1,035,910 460,777 30,000 1,146,678
Interest rate floor agreements 560,500 - - - 560,500
Interest rate cap agreements 100,000 250,000 100,000 - 250,000
Swaptions 100,000 1,167,140 - - 1,267,140
Others 100,000 - - - 100,000
-------------- -------------- -------------- ------------ ----------------
$ 1,736,822 $ 2,699,840 $ 620,724 $ 51,447 $ 3,764,491
============== ============== ============== ============ ================
</TABLE>
<PAGE>
NOTE K--FINANCIAL INSTRUMENTS (Continued)
Financial instruments which potentially subject the Company to concentrations of
credit risk consist principally of temporary cash investments, derivatives,
fixed maturities, mortgage loans on real estate and reinsurance receivables. The
Company places its temporary cash investments and enters into derivative
transactions 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. The Company
places reinsurance with only highly rated insurance companies. At December 31,
1997, the Company had no significant concentration of credit risk.
<PAGE>
27
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)
(k) Sales Agreement among Transamerica Insurance Securities
Sales Corporation, Transamerica
Occidental Life Insurance Company, First Transamerica
Life Insurance Company and
Broker/Dealers, dated August 24, 1994.(10)
(l) Form of Sales Agreement between Transamerica Occidental
Life Insurance Company,
Transamerica Life Insurance and Annuity Company, First
Transamerica Life Insurance
Company and Transamerica Securities Sales Corporation.
(10)
(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.
(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)
(h) Amendment Dated as of August 24, 1994 to Participation
Agreement Dated as of August 31, 1993 between
Transamerica Occidental Life Insurance 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. (10) (11)
(b) Consent of Independent Auditors. (10) (11)
(11) No financial statements are omitted from item 23.
(12) Not applicable.
(13) Performance Data Calculations. (6)
(14) Not applicable.
(15) Powers of Attorney.
Robert Abeles (10) (11) Richard N. Latzer (2)(11)
Thomas J. Cusack (6)(11) Karen MacDonald (9)(11)
James W. Dederer (2)(11) Gary U. Rolle' (2)(11)
Paul E. Rutledge III(11) Richard H. Finn (1)(11)
T.Desmond Sugrue(10)(11)
George A. Foegele (11) Bruce A. Turkstra (11)
David E. Gooding (2)(11) Nooruddin S. Veerjee (4)(11)
Edgar H. Grubb (2)(11) Robert A. Watson(9)(11)
Frank C. Herringer (2)(11)
(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).
(9) Filed with Post-Effective Amendment No. 7 to this Form N-4 Registration
Statement File No.
33-49998 (April 26, 1996).
(10) Filed with Post-Effective Amendment No. 8 to this Form N-4 Registration
Statement File No. 33-49998
(11)il 2 Filed herewith.
Item 25. List of Directors of Transamerica Occidental Life Insurance Company
Robert Abeles Frank C. Herringer
Thomas J. Cusack Richard N. Latzer
James W. Dederer Karen MacDonald
Richard H. Finn Gary U. Rolle'
George A. FoegelePaul E. Rutledge III
David E. Gooding
Edgar H. GrubbT. Desmond Sugrue
Bruce A. Turkstra
Nooruddin S. Veerjee
Robert A. Watson
List of Officers for Transamerica Occidental Life Insurance Company
<TABLE>
<CAPTION>
<S> <C>
Thomas J. Cusack President and Chief Executive Officer
Nooruddin S. Veerjee President - Insurance Products Division
Bruce A. Turkstra Executive Vice President and Chief Information Officer
George A. Foegele Senior Vice President
Paul E. Rutledge III President - Reinsurance Division
Robert Abeles Executive Vice President and Chief Financial Officer
James W. Dederer, CLU Executive Vice President, General Counsel and Corporate Secretary
David E. Gooding Executive Vice President and Chief Information Officer
Bruce Clark Senior Vice President and Chief Actuary
Meheriar Hasan Vice President
Daniel E. Jund, FLMI Senior Vice President
Karen MacDonald Senior Vice President and Corporate Actuary
William N. Scott, CLU, FLMI Senior Vice President
T. Desmond Sugrue Executive Vice President
Ron F. Wagley Senior Vice President and Chief Agency Officer
Darrel K.S. Yuen President-Asian Operations
Richard N. Latzer Chief Investment Officer
Gary U. Rolle', CFA Chief Investment Officer
Stephen J. Ahearn Investment Officer
Glen E. Bickerstaff Investment Officer
Jim Bowman Vice President
John M. Casparian Investment Officer
Catherine Collinson Vice President
Heather E. Creeden Investment Officer
Colin Funai Investment Officer
William L. Griffin Investment Officer
Sharon K. Kilmer Investment Officer
Matthew W. Kuhns Investment Officer
Michael F. Luongo Investment Officer
Matthew Palmer Investment Officer
Thomas C. Pokorski Investment Officer
Susan A. Silbert Investment Officer
Philip W. Treick 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
Nancy Blozis Vice President and Controller
Thomas Briggle Vice President
Thomas Brimacombe Vice President
Roy Chong-Kit Senior Vice President and 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
Randy Dobo Vice President and Actuary
Thomas P. Dolan, FLMI Vice President
John V. Dohmen Vice President
Harry Dunn, FSA Vice President and Chief Reinsurance Actuary
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
Paul Hankwitz, MD Vice President and Chief Medical Director
Kevin Hobbs Vice President
Randall C. Hoiby Vice President and Associate General Counsel
John W. Holowasko Vice President
Phoebe Huang 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
Ken Kilbane Vice President
Frank J. LaRusso Vice President and Chief Underwriting Officer
Richard K. M. Lau, ASA Vice President
Philip E. McHale, FLMI Vice President
Mark Madden Vice President
Maureen McCarthy Vice President
Vic Modugno Vice President and Associate Actuary
Jess Nadelman Vice President
Wayne Nakano, CPA Vice President
Paul Norris Vice President and Actuary
Michael Palace, ASA Vice President and Actuary
Jerry Paul Vice President
Stephen W. Pinkham Vice President
Kristy M. Pipes Senior Vice President
Bruce Powell Vice President
Larry H. Roy Vice President
Gary L. Seagraves Vice President
Joel D. Seigle Vice President
Sandra Smith Vice President
James O. Strand Vice President
Alice Su Vice President
Lee Tang Vice President
Bill Tate Vice President
Claude W. Thau, FSA Senior Vice President
Kim A. Tursky Vice President and Assistant Secretary
John Vieren Vice President
Timothy Weis Vice President
William R. Wellnitz, FSA Senior Vice President and Actuary
Virginia M. Wilson Vice President and Controller
Thomas Winters Vice President
Ronald R. Wolfe Regional Vice President
Sally Yamada Vice President and Treasurer
Olisa Abaelu Second Vice President
Flora Bahaudin Second Vice President
Frank Beardsley Vice President
Benjamin Bock Vice President
Daniel J. Bohmfalk Second Vice President and Associate Actuary
Ken Bromberg Second 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
Lance Cockings, CPA Second Vice President
Ron Corlew Second Vice President
Dave Costanza 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
Toni A. Forge Second Vice President
Jerry Gable, FSA Second Vice President
Roger Hagopian Second Vice President
Sharon Haley Second Vice President
Brian Hoyt Second Vice President
Zahid Hussain Vice President and Associate Actuary
Ahmad Kamil, FIA, MAAA Vice President and Associate Actuary
Andrew G. Kanelos Second Vice President
Ronald G. Keller Second Vice President
Joan Klubnik Second Vice President
Roger Korte Second Vice President
Lynette Lawson Second Vice President
Dean LeCesne Second Vice President
Liwen Lien Second Vice President
Marilyn McCullough Vice President
Richard MacKenzie Second Vice President
Danny Mahoney Second Vice President
Carl Marcero Second Vice President and Chief Reinsurance Underwriter
Claudia Maytum Second Vice President
Clay Moye Second Vice President
Daniel A. Norwick Second Vice President
John Oliver Second Vice President
Susan O'Brien Second Vice President
Stephanie Quincey Second Vice President
Paul Reisz Second Vice President
James R. Robinson Second Vice President
Ray Robinson Second Vice President
John J. Romer Vice President
Thomas M. Ronce Second Vice President and Assistant General Counsel
Laura Scully Second Vice President
Frederick Seto Second Vice President
Jack Shalley, MD Second Vice President and Medical Director
Steven R. Shepard Second Vice President and Assistant General Counsel
Frank Snyder Second Vice President
Mary Spence Second Vice President
Jean Stefaniak Second Vice President
Michael S. Stein Second Vice President
Christina Stiver Vice President
David Stone Second Vice President
Suzette Stover-Hoyt Second Vice President
John Tillotson Second Vice President
K. Y. To Second Vice President
Boning Tong Second Vice President and Associate Actuary
Janet Unruh Second Vice President and Assistant General Counsel
Colleen Vandermark Vice President
Marsha Wallace Second Vice President
Sheila Wickens, MD Second Vice President and Medical Director
Michael B. Wolfe Vice President
James Wolfenden Statement Officer
Kamran Haghighi Tax Officer
</TABLE>
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.
<PAGE>
TRANSAMERICA CORPORATION AND SUBSIDIARIES
WITH STATE OR COUNTRY OF INCORPORATION
Transamerica Corporation - DE
ARC Reinsurance Corporation - HI
Transamerica Management, Inc. - DE
Criterion Investment Management Company - TX
Inter-America Corporation - CA
Mortgage Corporation of America - CA
Pyramid Insurance Company, Ltd. - HI
Pacific Cable Ltd. - Bmda.
TC Cable, Inc. - DE
RTI Holdings, Inc. - DE
Transamerica Airlines, Inc. - DE
Transamerica Business Technologies Corporation - DE
Transamerica CBO I, Inc. - DE
Transamerica Corporation (Oregon) - OR
Transamerica Delaware, L.P. - DE
Transamerica Finance Corporation - DE
TA Leasing Holding Co., Inc. - DE
Trans Ocean Ltd. - DE
Trans Ocean Container Corp. - DE
SpaceWise Inc. - DE
TOD Liquidating Corp. - CA
TOL S.R.L. - Itl.
Trans Ocean Container Finance Corp. - DE
Trans Ocean Leasing Deutschland GmbH - Ger.
Trans Ocean Leasing PTY Limited - Aust.
Trans Ocean Management Corporation - CA
Trans Ocean Management S.A. - SWTZ
Trans Ocean Regional Corporate Holdings - CA
Trans Ocean Tank Services Corporation - DE
Transamerica Leasing Inc. - DE
Better Asset Management Company LLC - DE
Transamerica Leasing Holdings Inc. - DE
Greybox Logistics Services Inc. - DE
Greybox L.L.C. - DE
Transamerica Trailer Leasing S.N.C. - Fra.
Greybox Services Limited - U.K.
Intermodal Equipment, Inc. - DE
Transamerica Leasing N.V. - Belg.
Transamerica Leasing SRL - Itl.
Transamerica Distribution Services Inc. - DE
Transamerica Leasing Coordination Center - Belg.
Transamerica Leasing do Brasil Ltda. - Braz.
Transamerica Leasing GmbH - Ger.
Transamerica Leasing Limited - U.K.
ICS Terminals (UK) Limited - U.K.
Transamerica Leasing Pty. Ltd. - Aust.
Transamerica Leasing (Canada) Inc. - Can.
Transamerica Leasing (HK) Ltd. - H.K.
Transamerica Leasing (Proprietary) Limited - S.Afr.
Transamerica Tank Container Leasing Pty. Limited - Aust.
Transamerica Trailer Holdings I Inc. - DE
Transamerica Trailer Holdings II Inc. - DE
Transamerica Trailer Holdings III Inc. - DE
Transamerica Trailer Leasing AB - Swed.
Transamerica Trailer Leasing AG - SWTZ
Transamerica Trailer Leasing A/S - Denmk.
Transamerica Trailer Leasing GmbH - Ger.
Transamerica Trailer Leasing (Belgium) N.V. - Belg.
Transamerica Trailer Leasing (Netherlands) B.V. - Neth.
Transamerica Trailer Spain S.A. - Spn.
Transamerica Transport Inc. - NJ
Transamerica Commercial Finance Corporation, I - DE
BWAC Credit Corporation - DE
BWAC International Corporation - DE
BWAC Twelve, Inc. - DE
TIFCO Lending Corporation - IL
Transamerica Insurance Finance Corporation - MD
Transamerica Insurance Finance Company (Europe) - MD
Transamerica Insurance Finance Corporation, California - CA
Transamerica Insurance Finance Corporation, Canada - ON
Transamerica Business Credit Corporation - DE
Direct Capital Equity Investment, Inc. - DE
TA Air East, Corp. -
TA Air III, Corp. - DE
TA Air II, Corp. - DE
TA Air IV, Corp. - DE
TA Air I, Corp. - DE
TBC III, Inc. - DE
TBC II, Inc. - DE
TBC IV, Inc. -
TBC I, Inc. - DE
TBC Tax III, Inc. -
TBC Tax II, Inc. -
TBC Tax IV, Inc. -
TBC Tax IX, Inc. -
TBC Tax I, Inc. -
TBC Tax VIII, Inc. -
TBC Tax VII, Inc. -
TBC Tax VI, Inc. -
TBC Tax V, Inc. -
TBC Tax XII, Inc. -
TBC Tax XI, Inc. -
TBC V, Inc. -
The Plain Company - DE
Transamerica Distribution Finance Corporation - DE
Transamerica Accounts Holding Corporation - DE
Transamerica Commercial Finance Corporation - DE
Inventory Funding Trust - DE
Inventory Funding Company, LLC - DE
TCF Asset Management Corporation - CO
Transamerica Joint Ventures, Inc. - DE
Transamerica Inventory Finance Corporation - DE
BWAC Seventeen, Inc. - DE
Transamerica Commercial Finance Canada, Limited - ON
Transamerica Commercial Finance Corporation, Canada - Can.
BWAC Twenty-One, Inc. - DE
Transamerica Commercial Finance Limited - U.K.
WFC Polska Sp. Zo.o -
Transamerica Commercial Holdings Limited - U.K.
Transamerica Commercial Holdings, Inc. -
Transamerica Trailer Leasing Limited - NY
Transamerica Commercial Finance France S.A. - Fra.
Transamerica GmbH Inc. - DE
Transamerica Retail Financial Services Corporation - DE
Transamerica Consumer Finance Holding Company - DE
Metropolitan Mortgage Company - FL
Easy Yes Mortgage, Inc. - FL
Easy Yes Mortgage, Inc. - GA
First Florida Appraisal Services, Inc. - FL
First Georgia Appraisal Services, Inc. - GA
Freedom Tax Services, Inc. - FL
J.J. & W. Advertising, Inc. - FL
J.J. & W. Realty Corporation - FL
Liberty Mortgage Company of Ft. Myers, Inc. - FL
Metropolis Mortgage Company - FL
Perfect Mortgage Company - FL
Whirlpool Financial National Bank - DE
Transamerica Vendor Financial Services - DE
Transamerica Distribution Finance Corporation de Mexico -
Transamerica Corporate Services de Mexico -
Transamerica Federal Savings Bank -
Transamerica HomeFirst, Inc. - CA
Transamerica Home Loan - CA
Transamerica Lending Company - DE
Transamerica Financial Products, Inc. - CA
Transamerica Foundation - CA
Transamerica Insurance Corporation of California - CA
Arbor Life Insurance Company - AZ
Plaza Insurance Sales, Inc. - CA
Transamerica Advisors, Inc. - CA
Transamerica Annuity Service Corporation - NM
Transamerica Financial Resources, Inc. - DE
Financial Resources Insurance Agency of Texas - TX
TBK Insurance Agency of Ohio, Inc. - OH
Transamerica Financial Resources Insurance Agency of Alabama Inc.
- - AL
Transamerica Financial Resources Insurance Agency of Massachusetts
Inc. - MA
Transamerica International Insurance Services, Inc. - DE
Home Loans and Finance Ltd. - U.K.
Transamerica Occidental Life Insurance Company - CA
NEF Investment Company - CA
Transamerica China Investments Holdings Limited - H.K.
Transamerica Life Insurance and Annuity Company - NC
Transamerica Assurance Company - CO
Transamerica Life Insurance Company of Canada - Can.
Transamerica Life Insurance Company of New York - NY
Transamerica South Park Resources, Inc. - DE
Transamerica Variable Insurance Fund, Inc. - MD
USA Administration Services, Inc. - KS
Transamerica Products, Inc. - CA
Transamerica Leasing Ventures, Inc. - CA
Transamerica Products II, Inc. - CA
Transamerica Products IV, Inc. - CA
Transamerica Products I, Inc. - CA
Transamerica Securities Sales Corporation - MD
Transamerica Service Company - DE
Transamerica Intellitech, Inc. - DE
Transamerica International Holdings, Inc. - DE
Transamerica Investment Services, Inc. - DE
Transamerica Income Shares, Inc. (managed by TA Investment Services)
- - MD
Transamerica LP Holdings Corp. - DE
Transamerica Real Estate Tax Service (A Division of Transamerica
Corporation) - N/A
Transamerica Flood Hazard Certification (A Division of TA Real Estate
Tax Service) - N/A
Transamerica Realty Services, Inc. - DE
Bankers Mortgage Company of California - CA
Pyramid Investment Corporation - DE
The Gilwell Company - CA
Transamerica Affordable Housing, Inc. - CA
Transamerica Minerals Company - CA
Transamerica Oakmont Corporation - CA
Ventana Inn, Inc. - CA
Transamerica Senior Properties, Inc. - DE
Transamerica Senior Living, Inc. - DE
*Designates INACTIVE COMPANIES
A Division of Transamerica Corporation
ss.Limited Partner; Transamerica Corporation is General Partner
<PAGE>
Item 27. Number of Certificate Owners
As of April 1, 1998 there were 12,451 Owners of Non-Qualified
Individual Contracts and 6,534Owners 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 $95,000,000 for Coverage A and
$80,000,000 for Coverage B for the period 11/15/98 to 11/15/2000. Coverage B is
subject to a self insured retention of $15,000,000. The primary policy under the
program is with CNA Lloyds, Gulf, Chubb and Travelers.
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
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.
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION AND OFFICES WITH
BUSINESS ADDRESS* TRANSAMERICA FINANCIAL RESOURCES
<S> <C>
Barbara A. Kelley President and Director
Regina M. Fink Secretary and Counsel
Monica Suryapranata Treasurer
Gilbert F. Cronin Director
James W. Dederer Director
John Leon Second Vice President and Director of Due Diligence
Dan Trivers Vice President, Director of Administration and
Chief Compliance Officer
Ronald F. Wagley Director
Kerry Rider Second Vice President and Director of Compliance
</TABLE>
*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
UnderwriterDiscounts & Commission Redemption Commissions Compensation
<S> <C> <C> <C> <C>
TSSC -0- -0- 21,886,072.80 -0-
TFR -0- -0- 2,394,358.42 -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.
(e) Transamerica hereby represents that the fees and the charges deducted
under the Contracts, in the aggregate, are reasonable in relation to
the services rendered, the expenses expected to be incurred, and the
risks assumed by Transamerica.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Transamerica
Occidental Life Insurance Company certifies that this Post-Effective Amendment
No. 9 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. 9 to the Registration Statement to
be signed on its behalf by the undersigned in the City of Los Angeles, State of
California on this 28th day of April, 1998.
SEPARATE ACCOUNT VA-2L TRANSAMERICA OCCIDENTAL
OF TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
LIFE INSURANCE COMPANY (DEPOSITOR)
(REGISTRANT)
--------------------------
David M. Goldstein
Vice President
As Required by the Securities Act of 1933, this Post-Effective
Amendment No. 9 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>
_____________________* Director, Executive Vice President April 28, 1998
Robert Abeles and Chief Financial Officer
______________________* Director, President, Chairman April 28, 1998
Thomas J. Cusack and Chief Executive Officer
1998
______________________* Director April 28, 1998
Richard I. Finn
______________________* Director April 28, 1998
George A. Foegele
______________________* Director April 28, 1998
David E. Gooding
______________________* Director April 28, 1998
Edgar H. Grubb
______________________* Director April 28, 1998
Frank C. Herringer
______________________* Director April 28, 1998
Richard N. Latzer
______________________* Director April 28, 1998
Karen MacDonald
______________________* Director April 28, 1998
Gary U. Rolle'
______________________* Director April 28, 1998
Paul E. Rutledge III
______________________* Director April 28, 1998
T. Desmond Sugrue
______________________* Director April 28, 1998
Bruce A. Turkstra
______________________* Director April 28, 1998
Nooruddin S. Veerjee
______________________* Director April 28, 1998
Robert A. Watson
</TABLE>
______________________ On April 28, 1998 as Attorney-in-Fact pursuant to
*By:David M. Goldstein
powers of attorney previously filed and filed herewith, and
in his
own capacity as Vice President.
<PAGE>
EXHIBIT INDEX
Exhibit Description Page
No. of Exhibit No.
(10) (a) Consent of Counsel C-22
(b) Consent of Independent Auditors C-23
(15) Power of Attorney C-25
<PAGE>
Exhibit 10(a) Consent of Counsel
<PAGE>
Sutherland, Asbill & Brennan LLP
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
April 28, 1998
Transamerica Occidental Life Insurance Company
1150 South Olive Street
Los Angeles, CA 90015
Re: Separate Account VA-2L
Gentelemen:
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. 9 to the Form
N-4 registration statement for Separate Account VA-2L (File No. 33-49998).
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.
Sincerely,
SUTHERLAND, ASBILL & BRENNAN
/s/ Frederick R. Bellamy, Esq.
<PAGE>
Exhibit 10(b) Consent of Independent Auditors
We consent to the reference to our firm under the caption "Accountants" in
Post-Effective Amendment No. 9 under the Securities Act of 1933 and
Post-Effective Amendment No. 11 under the Investment Company Act of 1940 to the
Registration Statement (Form N-4 No. 33-49998) and related Prospectus and
Statement of Additional Information of Separate Account VA-2L of Transamerica
Occidental Life Insurance Company and to the use of our report dated January 23,
1998 with respect to the consolidated financial statements of Transamerica
Occidental Life Insurance Company and our report dated April 13, 1998 with
respect to the financial statements of Separate Account VA-2L, both included in
the Statement of Additional Information.
/s/Ernst & Young LLP
Los Angeles, California
April 28, 1998
<PAGE>
Exhibit 15 Powers 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, David M. Goldstein, David E. Gooding,
and William M. Hurst 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 him 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 life insurance and 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
20th day of March, 1998.
------------------------------
Robert Abeles
<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, David M. Goldstein, David E. Gooding,
and William M. Hurst 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 him 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 life insurance and 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
20th day of March, 1998.
------------------------------
Thomas J. Cusack
<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, David M. Goldstein, David E. Gooding,
and William M. Hurst 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 him 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 life insurance and 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
20th day of March, 1998.
------------------------------
James W. Dederer
<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, David M. Goldstein, David E. Gooding,
and William M. Hurst 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 him 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 life insurance and 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
20th day of March, 1998.
------------------------------
Richard H. Finn
<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, David M. Goldstein, David E. Gooding,
and William M. Hurst 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 him 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 life insurance and 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
20th day of March, 1998.
------------------------------
George A. Foegele
<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, David M. Goldstein, David E. Gooding,
and William M. Hurst 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 him 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 life insurance and 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
20th day of March, 1998.
------------------------------
David E. Gooding
<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, David M. Goldstein, David E. Gooding,
and William M. Hurst 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 him 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 life insurance and 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
20th day of March, 1998.
------------------------------
Edgar H. Grubb
<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, David M. Goldstein, David E. Gooding,
and William M. Hurst 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 him 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 life insurance and 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
20th day of March, 1998.
------------------------------
Frank C. Herringer
<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, David M. Goldstein, David E. Gooding,
and William M. Hurst 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 him 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 life insurance and 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
20th day of March, 1998.
------------------------------
Richard N. Latzer
<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, David M. Goldstein, David E. Gooding,
and William M. Hurst 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 life insurance and 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 his hand, this
20th day of March, 1998.
------------------------------
Karen MacDonald
<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, David M. Goldstein, David E. Gooding,
and William M. Hurst 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 him 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 life insurance and 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
20th day of March, 1998.
------------------------------
Mark McEachen
<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, David M. Goldstein, David E. Gooding,
and William M. Hurst 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 him 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 life insurance and 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
20th day of March, 1998.
------------------------------
Gary U. Rolle'
<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, David M. Goldstein, David E. Gooding,
and William M. Hurst 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 him 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 life insurance and 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
20th day of March, 1998.
------------------------------
Paul E. Rutledge III
<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, David M. Goldstein, David E. Gooding,
and William M. Hurst 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 him 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 life insurance and 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
20th day of March, 1998.
------------------------------
T. Desmond Sugrue
<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, David M. Goldstein, David E. Gooding,
and William M. Hurst 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 him 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 life insurance and 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
20th day of March, 1998.
------------------------------
Bruce A. Turkstra
<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, David M. Goldstein, David E. Gooding,
and William M. Hurst 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 him 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 life insurance and 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
20th day of March, 1998.
------------------------------
Nooruddin Veerjee
<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, David M. Goldstein, David E. Gooding,
and William M. Hurst 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 him 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 life insurance and 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
20th day of March, 1998.
------------------------------
Robert A. Watson
