<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 29, 1997
REGISTRATION NO. 33-61672
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
POST-EFFECTIVE AMENDMENT NO. 6
TO
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF THE SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
------------------------
ML OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT II
(EXACT NAME OF TRUST)
ML LIFE INSURANCE COMPANY OF NEW YORK
(NAME OF DEPOSITOR)
100 CHURCH STREET, 11TH FLOOR
NEW YORK, NEW YORK 10080-6511
(COMPLETE ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
BARRY G. SKOLNICK, ESQ.
Senior Vice President & General Counsel
ML LIFE INSURANCE COMPANY OF NEW YORK
800 SCUDDERS MILL ROAD
PLAINSBORO, NEW JERSEY 08536
(NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE)
------------------------
COPY TO:
STEPHEN E. ROTH, ESQ.
SUTHERLAND, ASBILL & BRENNAN, L.L.P.
1275 PENNSYLVANIA AVENUE, NW
WASHINGTON, D.C. 20004-2404
------------------------
It is proposed that this filing will become effective (check appropriate
box)
[ ] immediately upon filing pursuant to paragraph (b)
[X] on May 1, 1997 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1) of Rule 485
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment
Check box if it is proposed that the filing will become effective on (date)
at (time) pursuant to Rule 487 [ ]
Pursuant to Rule 24f-2 of the Investment Company Act of 1940, the
Registrant has registered an indefinite amount of securities under the
Securities Act of 1933. The Registrant filed the 24f-2 Notice for the year ended
December 31, 1996 on February 26, 1997.
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<PAGE> 2
ML OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT II
ML LIFE INSURANCE COMPANY OF NEW YORK
CROSS REFERENCE TO ITEMS REQUIRED BY FORM N-8B-2
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N-8B-2 ITEM CAPTION IN PROSPECTUS
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1 Cover Page
2 Cover Page
3 Facts About the Separate Account, the Funds, the Zero Trusts and ML of New
York; More About the Separate Account and its Divisions
4 Facts About the Separate Account, the Funds, the Zero Trusts and ML of New
York (ML of New York and MLPF&S); More About the Contract (Selling the
Contracts)
5 Facts About the Separate Account, the Funds, the Zero Trusts and ML of New
York (ML of New York and MLPF&S); More About ML Life Insurance Company of
New York (State Regulation)
6 Facts About the Separate Account, the Funds, the Zero Trusts and ML of New
York (The Separate Account); More About the Separate Account and its
Divisions (Charges to Series Fund Assets)
7 Not Applicable
8 Experts
9 More About ML Life Insurance Company of New York (Legal Proceedings)
10 Summary of the Contract; Facts About the Contract; More About the Contract;
More About the Separate Account and its Divisions
11 Summary of the Contract (The Investment Divisions); Facts About the Separate
Account, the Funds, the Zero Trusts and ML of New York; More About the
Separate Account and its Divisions (About the Separate Account; The Zero
Trusts)
12 Summary of the Contract (The Investment Divisions); Facts About the Separate
Account, the Funds, the Zero Trusts and ML of New York; More About the
Separate Account and its Divisions
13 Summary of the Contract (Loans; Fees and Charges); Facts About the Contract
(Charges Deducted from the Investment Base; Contract Loading; Charges to the
Separate Account; Guarantee Period; Cash Value; Loans; Partial Withdrawals;
Death Benefit Proceeds; Payment of Death Benefit Proceeds; Rights to Cancel
(or Exchange); More About the Contract (Group or Sponsored Arrangements; ML
of New York's Income Taxes); More About the Separate Account and its
Divisions (Charges to Fund Assets)
14 Facts About the Contract (Who May Be Covered; Purchasing a Contract;
Additional Payments); More About the Contract (Other Contract Provisions)
15 Summary of the Contract (Availability and Payments); Facts About the Contract
(Purchasing A Contract; Additional Payments); More About the Contract
(Income Plans)
16 Facts About the Separate Account, the Funds, the Zero Trusts and ML of New
York; More About the Separate Account and its Divisions
17 Summary of the Contract (Net Cash Surrender Value; Rights to Cancel ("Free
Look" Period) or Exchange; Partial Withdrawals); Facts About the Contract
(Cash Value; Partial Withdrawals; Right to Cancel or Exchange); More About
the Contract (Using the Contract; Some Administrative Procedures)
18 Facts About the Separate Account, the Funds, the Zero Trusts and ML of New
York; More About the Separate Account and its Divisions
19 More About ML Life Insurance Company of New York
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N-8B-2 ITEM CAPTION IN PROSPECTUS
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20 Not Applicable
21 Summary of the Contract (Loans); Facts About the Contract (Loans)
22 Not Applicable
23 Not Applicable
24 Not Applicable
25 Facts About the Separate Account, the Funds, the Zero Trusts and ML of New
York (ML of New York and MLPF&S); More About ML Life Insurance Company of
New York
26 Not Applicable
27 Facts About the Separate Account, the Funds, the Zero Trusts and ML of New
York (ML of New York and MLPF&S); More About ML Life Insurance Company of
New York
28 More About ML Life Insurance Company of New York
29 Facts About the Separate Account, the Funds, the Zero Trusts and ML of New
York (ML of New York and MLPF&S)
30 Not Applicable
31 Not Applicable
32 Not Applicable
33 Not Applicable
34 Not Applicable
35 Facts About the Separate Account, the Funds, the Zero Trusts and ML of New
York (ML of New York and MLPF&S)
36 Not Applicable
37 Not Applicable
38 Facts About the Separate Account, the Funds, the Zero Trusts and ML Life of
New York (ML of New York and MLPF&S); More About the Contract (Selling the
Contracts)
39 Facts About the Separate Account, the Funds, the Zero Trusts and ML of New
York (ML of New York and MLPF&S); More About the Contract (Selling the
Contracts)
40 More About the Contract (Selling the Contract)
41 Facts About the Separate Account, the Funds, the Zero Trusts and ML of New
York (ML of New York and MLPF&S); More About the Contract (Selling the
Contracts)
42 Not Applicable
43 Not Applicable
44 Facts About the Contract; More About the Contract
45 Not Applicable
46 Summary of the Contract; Facts About the Contract (Net Cash Surrender Value;
Partial Withdrawals)
47 Summary of the Contract (The Investment Divisions); Facts About the Separate
Account, the Funds, the Zero Trusts and ML of New York; More About the
Separate Account and its Divisions
48 Facts About the Separate Account, the Funds, the Zero Trusts and ML of New
York (ML of New York and MLPF&S); More About ML Life Insurance Company of
New York (State Regulation)
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N-8B-2 ITEM CAPTION IN PROSPECTUS
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49 Facts About the Separate Account, the Funds, the Zero Trusts and ML of New
York; Facts About the Contract (Charges Deducted from the Investment Base;
Contract Loading; Charges to the Separate Account); More About the Contract
(Selling the Contracts)
50 Not Applicable
51 Facts About the Contract; More About the Contract
52 Facts About the Separate Account, the Funds, the Zero Trusts and ML of New
York; More About the Separate Account and its Divisions
53 More About the Contract (Tax Considerations; ML of New York's Income Taxes)
54 Not Applicable
55 Not Applicable
56 Not Applicable
57 Not Applicable
58 Not Applicable
59 More About ML Life Insurance Company of New York (Financial Statements)
</TABLE>
<PAGE> 5
PROSPECTUS
MAY 1, 1997
ML OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT II
FLEXIBLE PREMIUM VARIABLE
UNIVERSAL LIFE INSURANCE CONTRACT
ISSUED BY
ML LIFE INSURANCE COMPANY OF NEW YORK
HOME OFFICE: 100 CHURCH STREET, 11TH FLOOR
NEW YORK, NEW YORK 10080-6511
SERVICE CENTER: P.O. BOX 9025
SPRINGFIELD, MASSACHUSETTS 01102-9025
1414 MAIN STREET, THIRD FLOOR
SPRINGFIELD, MASSACHUSETTS 01104-1007
PHONE: (800) 831-8172
OFFERED THROUGH
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
This Prospectus is for a flexible premium variable universal life insurance
contract (the "Contract") offered by ML Life Insurance Company of New York ("ML
of New York"), a subsidiary of Merrill Lynch & Co., Inc.
During the "free look" period, the initial payment less contract loading will be
invested only in the division investing in the Money Reserve Portfolio. After
the "free look" period, the contract owner may invest in up to any five of the
38 investment divisions of ML of New York Variable Life Separate Account II (the
"Separate Account"), the ML of New York separate investment account available
under the Contract. The investments available through the investment divisions
include ten mutual fund portfolios of the Merrill Lynch Series Fund, Inc.; seven
mutual fund portfolios of the Merrill Lynch Variable Series Funds, Inc.; two
mutual fund portfolios of the AIM Variable Insurance Funds, Inc.; one mutual
fund portfolio of the Alliance Variable Products Series Fund, Inc.; two mutual
fund portfolios of the MFS Variable Insurance Trust; and sixteen unit investment
trusts in The Merrill Lynch Fund of Stripped ("Zero") U.S. Treasury Securities.
Currently, the contract owner may change his or her investment allocation as
many times as desired.
The Contract provides an estate benefit through life insurance coverage on the
life of the insured. The Contract offers two death benefit options. At the
election of the contract owner, the death benefit may include the Contract's
cash value. Subject to certain conditions, contract owners may purchase
additional insurance through an additional insurance rider. ML of New York
guarantees that the coverage will remain in force for the guarantee period. Each
payment will extend the guarantee period until such time as the guarantee period
is established for the whole of life of the insured. During this guarantee
period, ML of New York will terminate the Contract only if the debt exceeds
certain contract values. After the guarantee period, the Contract will remain in
force as long as there is not excessive debt and as long as the cash value is
sufficient to cover the charges due. While the Contract is in force, the death
benefit may vary to reflect the investment results of the investment divisions
chosen, but will generally never be less than the current face amount.
The Contract allows for additional payments. Contract owners may also borrow up
to the loan value of the Contract, make partial withdrawals or turn in the
Contract for its net cash surrender value. The net cash surrender value will
vary with the investment results of the investment divisions chosen. ML of New
York does not guarantee any minimum net cash surrender value.
It may not be advantageous to replace existing insurance with the Contract. The
Contract may be exchanged for a contract with benefits that do not vary with the
investment results of a separate account.
THE PURCHASE OF THIS CONTRACT INVOLVES CERTAIN RISKS. BECAUSE IT IS A VARIABLE
LIFE INSURANCE CONTRACT, THE VALUE OF THE CONTRACT REFLECTS THE INVESTMENT
PERFORMANCE OF THE SELECTED INVESTMENT OPTIONS. INVESTMENT RESULTS CAN VARY BOTH
UP AND DOWN AND CAN EVEN DECREASE THE VALUE OF PREMIUM PAYMENTS. THEREFORE,
CONTRACT OWNERS COULD LOSE ALL OR PART OF THE MONEY THEY HAVE INVESTED. ML OF
NEW YORK DOES NOT GUARANTEE THE VALUE OF THE CONTRACT. RATHER, CONTRACT OWNERS
BEAR ALL INVESTMENT RISKS.
LIFE INSURANCE IS INTENDED TO BE A LONG-TERM INVESTMENT. CONTRACT OWNERS SHOULD
EVALUATE THEIR INSURANCE NEEDS AND THE CONTRACT'S LONG-TERM INVESTMENT POTENTIAL
AND RISKS BEFORE PURCHASING THE CONTRACT.
PARTIAL WITHDRAWALS AND SURRENDER OF THE CONTRACT ARE SUBJECT TO TAX, AND IF
TAKEN BEFORE THE CONTRACT OWNER ATTAINS AGE 59 1/2 MAY ALSO BE SUBJECT TO A 10%
FEDERAL PENALTY TAX. LOANS MAY BE TAXABLE IF THE CONTRACT BECOMES A "MODIFIED
ENDOWMENT CONTRACT."
PLEASE READ THIS PROSPECTUS AND KEEP IT FOR FUTURE REFERENCE. IT MUST BE
ACCOMPANIED BY CURRENT PROSPECTUSES FOR THE MERRILL LYNCH SERIES FUND, INC.; THE
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.; THE AIM VARIABLE INSURANCE FUNDS,
INC.; THE ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.; THE MFS VARIABLE
INSURANCE TRUST; AND THE MERRILL LYNCH FUND OF STRIPPED ("ZERO") U.S. TREASURY
SECURITIES.
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.
<PAGE> 6
TABLE OF CONTENTS
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PAGE
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IMPORTANT TERMS....................................................................... 4
SUMMARY OF THE CONTRACT
Purpose of the Contract............................................................. 5
Availability and Payments........................................................... 6
CMA(R) Insurance Service............................................................ 6
The Investment Divisions............................................................ 6
How the Death Benefit Varies........................................................ 6
How the Investment Base Varies...................................................... 7
Net Cash Surrender Value............................................................ 7
Illustrations....................................................................... 7
Replacement of Existing Coverage.................................................... 7
Rights to Cancel ("Free Look" Period) or Exchange................................... 7
How Death Benefit and Cash Value Increases are Taxed................................ 7
Loans............................................................................... 8
Partial Withdrawals................................................................. 8
Fees and Charges.................................................................... 8
FACTS ABOUT THE SEPARATE ACCOUNT, THE FUNDS, THE ZERO TRUSTS
AND ML OF NEW YORK
The Separate Account................................................................ 9
The Series Fund..................................................................... 9
The Variable Series Funds........................................................... 10
The AIM V.I. Funds.................................................................. 11
The Alliance Fund................................................................... 12
The MFS Trust....................................................................... 12
Certain Risks of the Funds.......................................................... 13
The Zero Trusts..................................................................... 13
ML of New York and MLPF&S........................................................... 14
FACTS ABOUT THE CONTRACT
Who May be Covered.................................................................. 14
Purchasing a Contract............................................................... 14
Additional Insurance Rider.......................................................... 15
Additional Payments................................................................. 16
Effect of Additional Payments....................................................... 16
Investment Base..................................................................... 17
Charges Deducted from the Investment Base........................................... 18
Contract Loading.................................................................... 18
Charges to the Separate Account..................................................... 19
Charges to Fund Assets.............................................................. 19
Guarantee Period.................................................................... 20
Cash Value.......................................................................... 21
Loans............................................................................... 22
Partial Withdrawals................................................................. 23
Death Benefit Proceeds.............................................................. 23
Payment of Death Benefit Proceeds................................................... 25
Rights to Cancel or Exchange........................................................ 25
Reports to Contract Owners.......................................................... 26
MORE ABOUT THE CONTRACT
Using the Contract.................................................................. 26
Some Administrative Procedures...................................................... 27
Other Contract Provisions........................................................... 28
Income Plans........................................................................ 29
</TABLE>
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Group or Sponsored Arrangements..................................................... 29
Unisex Legal Considerations for Employers........................................... 30
Selling the Contracts............................................................... 30
Tax Considerations.................................................................. 31
ML of New York's Income Taxes....................................................... 34
Reinsurance......................................................................... 34
MORE ABOUT THE SEPARATE ACCOUNT AND ITS DIVISIONS
About the Separate Account.......................................................... 34
Changes Within the Account.......................................................... 35
Net Rate of Return for an Investment Division....................................... 35
The Funds........................................................................... 35
The Zero Trusts..................................................................... 37
ILLUSTRATIONS
Illustrations of Death Benefits, Investment Base, Net Cash Surrender Values and
Accumulated Payments............................................................. 38
EXAMPLES
Additional Payments................................................................. 44
Partial Withdrawals................................................................. 44
Changing the Death Benefit Option................................................... 45
MORE ABOUT ML LIFE INSURANCE COMPANY OF NEW YORK
Directors and Executive Officers.................................................... 46
Service Arrangement................................................................. 47
State Regulation.................................................................... 48
Legal Proceedings................................................................... 48
Experts............................................................................. 48
Legal Matters....................................................................... 48
Registration Statements............................................................. 48
Financial Statements................................................................ 48
Financial Statements of ML of New York Variable Life Separate Account II............ S-1
Financial Statements of ML Life Insurance Company of New York....................... G-1
</TABLE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS.
3
<PAGE> 8
IMPORTANT TERMS
additional payment: is a payment which may be made after the "free look"
period. Additional payments do not require evidence of insurability.
attained age: is the issue age of the insured plus the number of full years
since the contract date.
base premium: is the amount equal to the level annual premium necessary for the
face amount of the contract to endow at the insured's age 100. ML of New York
assumes death benefit option 1 is elected and further assumes a 5% annual rate
of return on the base premium less contract loading and a maximum cost of
insurance charge. Once determined, the base premium will not change.
cash value: is equal to the investment base plus any unearned charges for cost
of insurance and rider costs plus any debt less any accrued net loan cost since
the last contract anniversary (or since the contract date during the first
contract year).
cash value corridor factor: is used to determine the amount of death benefit
purchased by $1.00 of cash value. ML of New York uses this factor in the
calculation of the variable insurance amount to make sure that the Contract
always meets the requirements of what constitutes a life insurance contract
under the Internal Revenue Code.
contract anniversary: is the same date of each year as the contract date.
contract date: is used to determine processing dates, contract years and
anniversaries. It is usually the business day next following the receipt of the
initial payment at the Service Center. It is also referred to as the policy
date.
contract loading: is chargeable to all payments for sales load, federal tax and
premium tax charges.
death benefit: if option 1 is elected, it is the larger of the face amount and
the variable insurance amount; if option 2 is elected it is the larger of the
face amount plus the cash value and the variable insurance amount.
death benefit proceeds: are equal to the death benefit plus the amount of any
insurance provided by a rider less any debt.
debt: is the sum of all outstanding loans on a contract plus accrued interest.
excess sales load: a portion of the sales load calculated during the first two
policy years that may be refunded in the event of surrender during the first two
policy years. After policy year two, the excess sales load is zero.
face amount: is the minimum death benefit as long as the Contract remains in
force. The face amount will change if a change in death benefit option is made
or if a partial withdrawal is taken.
fixed base: is calculated in the same manner as the cash value except that 5%
is substituted for the net rate of return, the guaranteed maximum cost of
insurance rates and guaranteed maximum rider costs are substituted for current
rates and loans and repayments are not taken into account. After the end of the
guarantee period, the fixed base is zero.
guarantee period: is the time guaranteed that the Contract will remain in force
regardless of investment experience, unless the debt exceeds certain values. It
is the period that a comparable fixed life insurance contract (same face amount,
payments made, guaranteed mortality table, contract loading and guaranteed
maximum rider costs) would remain in force if credited with 5% interest per
year.
in force date: is the date when the underwriting process is complete, the
initial payment is received and outstanding contract amendments (if any) are
received.
initial payment: is the payment required to put the Contract into effect.
4
<PAGE> 9
investment base: is the amount available under a Contract for investment in the
Separate Account at any time. A contract owner's investment base is the sum of
the amounts invested in each of the selected investment divisions.
investment division: is any division in the Separate Account.
issue age: is the insured's age as of his or her birthday nearest the contract
date.
issue date: is the date that the Contract is issued. The contestable and
suicide periods are measured from this date.
net amount at risk: is the excess, as of a processing date, of the death
benefit (adjusted for interest at an annual rate of 5%) over the cash value, but
before the deduction for cost of insurance.
net cash surrender value: is equal to the cash value less debt.
processing dates: are the contract date and the first day of each contract
quarter thereafter. Processing dates are the days when ML of New York deducts
certain charges from the investment base.
processing period: is the period between consecutive processing dates.
target premium: is equal to 75% of the base premium.
variable insurance amount: is computed daily by multiplying the cash value
(plus certain excess sales load during the first 24 months after the Contract is
issued) by the cash value corridor factor for the insured at his or her attained
age.
SUMMARY OF THE CONTRACT
PURPOSE OF THE CONTRACT
This flexible premium variable universal life insurance contract offers a choice
of investments and an opportunity for the Contract's investment base, cash value
and death benefit to grow based on investment results.
ML of New York does not guarantee that contract values will increase. Depending
on the investment results of selected investment divisions, the investment base,
cash value and death benefit may increase or decrease on any day. The contract
owner bears the investment risk. ML of New York guarantees to keep the Contract
in force during the guarantee period subject to the effect of any debt.
Life insurance is not a short term investment. The contract owner should
evaluate the need for insurance and the Contract's long term investment
potential and risks before purchasing a contract.
The Contract should be purchased as a long-term investment designed to provide a
death benefit. The Contract's net cash surrender value, as well as its death
benefit, may be used to provide proceeds for various individual and business
planning purposes. However, loans and partial withdrawals will affect the net
cash surrender value and death benefit proceeds, and may cause the Contract to
lapse; in addition, partial withdrawals may be currently taxable. If the
performance of the investment divisions to which investment base is allocated is
not sufficient to provide funds for the specific planning purpose contemplated,
or if insufficient payments are made or Contract values maintained, then the
purchaser may not be able to utilize the Contract to achieve the purposes for
which it was purchased. Because the Contract is designed to provide benefits on
a long-term basis, before purchasing a Contract in connection with a specialized
purpose, a purchaser should consider whether the long-term nature of the
Contract, and the potential impact of any contemplated loans and partial
withdrawals, are consistent with the purposes for which the Contract is being
considered. Using a Contract for a specialized purpose may have tax
consequences. (See "Tax Considerations" on page 31.)
5
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AVAILABILITY AND PAYMENTS
The Contract is available in New York. A Contract may be issued for an insured
from age 20 through age 85. The minimum initial payment is 75% of the base
premium.
ML of New York will not accept an initial payment that provides a guarantee
period of less than two years. The guarantee period is the period of time ML of
New York guarantees that the Contract will remain in force regardless of
investment experience unless the debt exceeds certain values.
ML of New York will issue a Contract only with a face amount (including any
additional insurance rider face amount) greater than $750,000.
Contract owners may make additional payments. Contract owners may specify an
additional payment amount on the application to be paid on either a quarterly or
annual basis. For additional payments not being withdrawn from a CMA account, ML
of New York will send reminder notices for such amounts beginning in the second
contract year.
CMA(R) INSURANCE SERVICE
Contract owners who subscribe to the Merrill Lynch Cash Management Account(R)
financial service ("CMA account") may elect to have their Contract linked to
their CMA account electronically. Certain transactions will be reflected in
monthly CMA account statements. Payments may be transferred to and from the
Contract through a CMA account.
THE INVESTMENT DIVISIONS
During the "free look" period, the initial payment less contract loading will be
invested in the investment division of the Separate Account investing in the
Money Reserve Portfolio. After the "free look" period, the contract owner may
select up to five of the 38 investment divisions in the Separate Account. See
"Changing the Allocation" on page 17.
Payments are invested in investment divisions of the Separate Account. Ten
investment divisions of the Separate Account invest exclusively in shares of
designated mutual fund portfolios of the Merrill Lynch Series Fund, Inc. (the
"Series Fund"). Seven investment divisions of the Separate Account invest
exclusively in Class A shares of designated mutual fund portfolios of the
Merrill Lynch Variable Series Funds, Inc. (the "Variable Series Funds"). Two
investment divisions of the Separate Account invest exclusively in shares of
designated mutual fund portfolios of the AIM Variable Insurance Funds, Inc. (the
"AIM V.I. Funds"). One investment division of the Separate Account invests
exclusively in shares of a designated mutual fund portfolio of the Alliance
Variable Products Series Fund, Inc. (the "Alliance Fund"). Two investment
divisions of the Separate Account invest exclusively in shares of designated
mutual fund portfolios of the MFS Variable Insurance Trust (the "MFS Trust").
Each mutual fund portfolio has a different investment objective. The other
sixteen investment divisions invest in units of designated unit investment
trusts in The Merrill Lynch Fund of Stripped ("Zero") U.S. Treasury Securities
(the "Zero Trusts"). The contract owner's payments are not invested directly in
the Series Fund, the Variable Series Funds, the AIM V.I. Funds, the Alliance
Fund, or the MFS Trust (each, a "Fund"; collectively, the "Funds"); or in the
Zero Trusts.
HOW THE DEATH BENEFIT VARIES
Contract owners elect a death benefit option on the application. Under option 1,
the death benefit equals the larger of the face amount or the variable insurance
amount. Under option 2, the death benefit equals the larger of the sum of the
face amount plus the cash value or the variable insurance amount. Subject to
certain conditions, contract owners may change the death benefit option. The
death benefit may increase or decrease on any day depending on the investment
results of the investment divisions chosen by the contract owner. Death benefit
proceeds equal the death benefit
- ---------------
Cash Management Account and CMA are registered trademarks of Merrill Lynch,
Pierce, Fenner & Smith Incorporated.
6
<PAGE> 11
reduced by any debt and increased by any rider benefits payable. (See "Death
Benefit Proceeds" on page 23.)
HOW THE INVESTMENT BASE VARIES
A Contract's investment base is the amount available for investment at any time.
On the contract date (usually the business day next following receipt of the
initial payment at the Service Center), the investment base is equal to the
initial payment less contract loading and charges for cost of insurance and
rider costs. Afterwards, it varies daily based on investment performance of the
investment divisions chosen. The contract owner bears the risk of poor
investment performance and receives the benefit of favorable investment
performance. Contract owners may wish to consider diversifying their investment
in the Contract by allocating the investment base to two or more investment
divisions.
NET CASH SURRENDER VALUE
Contract owners may surrender their Contracts at any time and receive the net
cash surrender value. The net cash surrender value varies daily based on
investment performance of the investment divisions chosen. ML of New York
doesn't guarantee any minimum net cash surrender value. If the Contract is
surrendered within 24 months after issue, the contract owner will receive
certain excess sales load. (See "Contract Loading -- Excess Sales Load" on page
19.)
ILLUSTRATIONS
Illustrations in this Prospectus or used in connection with the purchase of the
Contract are based on hypothetical investment rates of return. These rates are
not guaranteed. They are illustrative only and should not be deemed a
representation of past or future performance. Actual rates of return may be more
or less than those reflected in the illustrations and, therefore, actual values
will be different than those illustrated.
REPLACEMENT OF EXISTING COVERAGE
Before purchasing a Contract, the contract owner should ask his or her Merrill
Lynch registered representative if changing, or adding to, current insurance
coverage would be advantageous. Generally, it is not advisable to purchase
another contract as a replacement for existing coverage. In particular,
replacement should be carefully considered if the decision to replace existing
coverage is based solely on a comparison of contract illustrations.
RIGHTS TO CANCEL ("FREE LOOK" PERIOD) OR EXCHANGE
Once the contract owner receives the contract, he or she should review it
carefully to make sure it is what he or she intended to purchase. A Contract may
be returned for a refund within the later of ten days after the contract owner
receives it, 45 days after the contract owner completes the application, or ten
days after ML of New York mails or personally delivers the Notice of Withdrawal
Right to the contract owner. If the Contract is returned during the "free look"
period, ML of New York will refund the initial payment without interest.
Once the Contract is issued, a contract owner may also exchange the Contract for
a contract with benefits that do not vary with the investment results of a
separate account. (See "Exchanging the Contract" on page 25.)
HOW DEATH BENEFIT AND CASH VALUE INCREASES ARE TAXED
Under current federal tax law, life insurance contracts receive tax-favored
treatment. The death benefit is generally excludable from the beneficiary's
gross income for federal income tax purposes, according to Section 101(a)(1) of
the Internal Revenue Code. An owner of a life insurance contract is not taxed on
any increase in the cash value while the contract remains in force.
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If the Contract is a modified endowment contract under federal tax law, certain
distributions made during the insured's lifetime, such as loans, partial
withdrawals, collateral assignments, capitalized interest, and complete
surrenders, are includable in gross income on an income-first basis. A 10%
penalty tax may also be imposed on distributions made before the contract owner
attains age 59 1/2. Contracts that are not modified endowment contracts under
federal tax law receive preferential tax treatment with respect to certain
distributions.
For a discussion of the tax issues associated with this Contract, see "Tax
Considerations" on page 31.
LOANS
Contract owners may borrow up to the loan value of their Contracts, which is 90%
of the cash value. The maximum loan amount that may be borrowed at any time is
the difference between the loan value and debt. (See "Loans" on page 22.)
Debt is deducted from the amount payable on surrender of the Contract and is
also subtracted from any death benefit payable. Loan interest accrues daily and,
IF IT IS NOT PAID EACH YEAR, IT IS CAPITALIZED AND ADDED TO THE OUTSTANDING LOAN
AMOUNT. If the Contract is a modified endowment contract, the amount of
capitalized interest will be treated as a taxable distribution. Depending upon
investment performance of the divisions and the amounts borrowed, loans may
cause a Contract to lapse. If the Contract lapses with a loan outstanding,
adverse tax consequences may result. Policy debt is considered part of total
cash value which is used to calculate gain. (See "Tax Considerations" on page
31.)
PARTIAL WITHDRAWALS
Contract owners may make partial withdrawals beginning in contract year sixteen,
subject to certain conditions. (See "Partial Withdrawals" on page 23.)
FEES AND CHARGES
Contract Loading. ML of New York deducts certain charges from all payments
before they are invested in the investment divisions. These charges are:
- Sales load equal to 46.25% of each payment through the second base
premium and 1.25% of each payment thereafter.
- State and local premium tax charge of 2% of each payment.
- A charge for federal taxes of 1.25% of each payment.
(See "Contract Loading" on page 18.)
Investment Base Charges. ML of New York deducts certain charges from the
investment base. The charges deducted are:
- On the contract date and on all processing dates after the contract date,
ML of New York makes deductions for cost of insurance (see "Cost of
Insurance" on page 18) and any rider costs (see "Additional Insurance
Rider" on page 15).
- On each contract anniversary, ML of New York makes deductions for the net
loan cost if there has been any debt during the prior year. It equals a
maximum of 2% of the debt per year.
Separate Account Charges. There are certain charges deducted daily from the
investment results of the investment divisions in the Separate Account. These
charges are:
- an asset charge designed to cover mortality and expense risks deducted
from all investment divisions which is equivalent to .90% annually at the
beginning of the year; and
- a trust charge deducted from only those investment divisions investing in
the Zero Trusts, which is currently equivalent to .34% annually at the
beginning of the year and will never exceed .50% annually.
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Advisory Fees. The portfolios in the Funds pay monthly advisory fees and other
expenses. (See "Charges to Fund Assets" on page 19.)
This summary is intended to provide only a very brief overview of the more
significant aspects of the Contract. Further detail is provided in this
Prospectus and in the Contract. The Contract together with its attached
applications, medical exam(s), amendments, riders and endorsements constitutes
the entire agreement between the contract owner and ML of New York and should be
retained.
For the definition of certain terms used in this Prospectus, see "Important
Terms" on page 4.
FACTS ABOUT THE SEPARATE ACCOUNT, THE FUNDS,
THE ZERO TRUSTS AND ML OF NEW YORK
THE SEPARATE ACCOUNT
The Separate Account is a separate investment account established by ML of New
York on December 4, 1991. It is registered with the Securities and Exchange
Commission as a unit investment trust pursuant to the Investment Company Act of
1940. This registration does not involve any supervision by the Securities and
Exchange Commission over the investment policies or practices of the Separate
Account. It meets the definition of a separate account under the federal
securities laws. The Separate Account is used to support the Contract as well as
to support other variable life insurance contracts issued by ML of New York.
ML of New York owns all of the assets in the Separate Account. The assets of the
Separate Account are kept separate from ML of New York's general account and any
other separate accounts it may have. New York insurance law provides that the
Separate Account's assets, to the extent of its reserves and liabilities, may
not be charged with liabilities arising out of any other business ML of New York
conducts.
Obligations to contract owners and beneficiaries that arise under the Contract
are obligations of ML of New York. Income, gains, and losses, whether or not
realized, from assets allocated are, in accordance with the Contracts, credited
to or charged against the Separate Account without regard to other income, gains
or losses of ML of New York. As required, the assets in the Separate Account
will always be at least equal to the reserves and other liabilities of the
Separate Account. If the assets exceed the required reserves and other Contract
liabilities (which will always be at least equal to the aggregate contract value
allocated to the Separate Account under the Contracts), ML of New York may
transfer the excess to its general account.
There are currently 38 investment divisions in the Separate Account. Ten invest
in shares of a specific portfolio of the Series Fund. Seven invest in shares of
a specific portfolio of the Variable Series Funds. Two invest in shares of a
specific portfolio of the AIM V.I. Funds. One invests in shares of a specific
portfolio of the Alliance Fund. Two invest in shares of a specific portfolio of
the MFS Trust. Sixteen invest in units of a specific Zero Trust. Complete
information about the Funds and the Zero Trusts, including the risks associated
with each portfolio (including specific risks associated with investment in the
High Yield Portfolio of the Series Fund) can be found in the accompanying
prospectuses. They should be read in conjunction with this Prospectus.
THE SERIES FUND
The Series Fund is registered with the Securities and Exchange Commission as an
open-end management investment company and its investment adviser is Merrill
Lynch Asset Management, L.P. ("MLAM"). All of its ten mutual fund portfolios are
currently available through the Separate Account. The investment objectives of
the Series Fund portfolios are described below. There is no guarantee that any
portfolio will be able to meet its investment objective.
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Money Reserve Portfolio seeks to preserve capital, maintain liquidity and
achieve the highest possible current income consistent with those objectives by
investing in short-term money market securities.
Intermediate Government Bond Portfolio seeks to obtain the highest level of
current income consistent with the protection of capital afforded by investing
in debt securities issued or guaranteed by the U.S. Government or its agencies
with a maximum maturity of 15 years.
Long-Term Corporate Bond Portfolio primarily seeks to provide as high a level of
current income as is believed to be consistent with prudent investment risk, and
secondarily, seeks the preservation of capital. In seeking to achieve these
objectives, the Portfolio invests at least 80% of the value of its assets in
debt securities that have a rating within the three highest grades of Moody's or
Standard & Poor's.
High Yield Portfolio primarily seeks as high a level of current income as is
believed to be consistent with prudent management, and secondarily capital
appreciation when consistent with its primary objective. The Portfolio seeks to
achieve its investment objective by investing principally in fixed income
securities rated in the lower categories of the established rating services or
in unrated securities of comparable quality (including securities commonly known
as "junk bonds").
Capital Stock Portfolio seeks long-term growth of capital and income, plus
moderate current income. It generally invests in equity securities considered to
be of good or improving quality or considered to be undervalued based on
criteria such as historical price/book value and price/earnings ratios.
Growth Stock Portfolio seeks long-term growth of capital by investing in a
diversified portfolio of securities, primarily common stocks, of aggressive
growth companies considered to have special investment value.
Multiple Strategy Portfolio seeks a high total investment return consistent with
prudent risk through a fully managed investment policy utilizing equity
securities, intermediate and long-term debt securities and money market
securities.
Natural Resources Portfolio seeks long-term growth of capital and protection of
the purchasing power of shareholders' capital by investing primarily in equity
securities of domestic and foreign companies with substantial natural resource
assets.
Global Strategy Portfolio seeks high total investment return by investing
primarily in a portfolio of equity and fixed-income securities, including
convertible securities, of U.S. and foreign issuers.
Balanced Portfolio seeks a level of current income and a degree of stability of
principal not normally available from an investment solely in equity securities
and the opportunity for capital appreciation greater than that normally
available from an investment solely in debt securities by investing in a
balanced portfolio of fixed-income and equity securities.
MLAM is indirectly owned and controlled by Merrill Lynch & Co., Inc. and is a
registered adviser under the Investment Advisers Act of 1940. The Series Fund,
as part of its operating expenses, pays an investment advisory fee to MLAM. (See
"Charges to Fund Assets" on page 19.)
THE VARIABLE SERIES FUNDS
The Variable Series Funds is registered with the Securities and Exchange
Commission as an open-end management investment company and its investment
adviser is MLAM. Seven of its 16 mutual fund portfolios are currently available
through the Separate Account. The investment objectives of the seven available
Variable Series Funds portfolios are described below. There is no guarantee that
any portfolio will be able to meet its investment objective.
Basic Value Focus Fund seeks capital appreciation, and secondarily, income by
investing in securities, primarily equities, that management of the Fund
believes are undervalued and therefore
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represent basic investment value. Particular emphasis is placed on securities
that provide an above-average dividend return and sell at a below-average
price/earnings ratio.
Global Bond Focus Fund (formerly the World Income Focus Fund) seeks to provide
high total investment return by investing in a global portfolio of fixed income
securities denominated in various currencies, including multinational currency
units. The Fund will invest in fixed income securities that have a credit rating
of A or better by Standard & Poor's or commercial paper rated A-1 by Standard &
Poor's or Prime-1 by Moody's or obligations that MLAM has determined to be of
similar creditworthiness.
Global Utility Focus Fund seeks to obtain capital appreciation and current
income through investment of at least 65% of its total assets in equity and debt
securities issued by domestic and foreign companies which are, in the opinion of
management of the Fund, primarily engaged in the ownership or operation of
facilities used to generate, transmit or distribute electricity,
telecommunications, gas or water.
International Equity Focus Fund seeks to obtain capital appreciation and
secondarily, income by investing in a diversified portfolio of equity securities
of issuers located in countries other than the United States. Under normal
conditions, at least 65% of the Fund's net assets will be invested in such
equity securities.
Developing Capital Markets Focus Fund seeks long-term capital appreciation by
investing in securities, principally equities, of issuers in countries having
smaller capital markets. For purposes of its investment objective, the Fund
considers countries having smaller capital markets to be all countries other
than the four countries having the largest equity market capitalizations.
Equity Growth Fund seeks to attain long-term growth of capital by investing in a
diversified portfolio of securities primarily common stocks, of relatively small
companies that management of the Fund believes have special investment value,
and of emerging growth companies regardless of size. Such companies are selected
by management on the basis of their long-term potential for expanding their size
and profitability or for gaining increased market recognition for their
securities. Current income is not a factor in such selection.
Index 500 Fund seeks to provide investment results that, before expenses,
correspond to the aggregate price and yield performance of the Standard & Poor's
500 Composite Stock Price Index (the "S&P 500 Index").
The Variable Series Funds, as part of its operating expenses, pays an investment
advisory fee to MLAM. (See "Charges to Fund Assets" on page 19.)
THE AIM V.I. FUNDS
The AIM V.I. Funds is registered with the Securities and Exchange Commission as
an open-end, series, management investment company and its investment adviser is
A I M Advisors, Inc. ("AIM"). Two of its mutual fund portfolios are currently
available through the Separate Account. The investment objectives of the two
available AIM V.I. Funds portfolios are described below. There is no guarantee
that any portfolio will be able to meet its investment objective.
AIM V.I. Capital Appreciation Fund seeks capital appreciation through
investments in common stocks, with emphasis on medium-sized and smaller emerging
growth companies. The portfolio is primarily comprised of securities of two
basic categories of companies: (1) "core" companies, which AIM considers to have
experienced above-average and consistent long-term growth in earnings and to
have excellent prospects for outstanding future growth, and (2) "earnings
acceleration" companies which AIM believes are currently enjoying a dramatic
increase in profits.
AIM V.I. Value Fund seeks to achieve long-term growth of capital by investing
primarily in equity securities judged by AIM to be undervalued relative to the
current or projected earnings of the companies issuing the securities, or
relative to current market values of assets owned by the companies issuing the
securities or relative to the equity markets generally. Income is a secondary
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objective. The investment division investing in this Fund should not be selected
by contract owners who seek income as their primary investment objective.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173, is a wholly owned
subsidiary of A I M Management Group Inc., an indirect subsidiary of AMVESCO plc
(formerly INVESCO plc). AIM is a registered adviser under the Investment
Advisers Act of 1940. AIM was organized in 1976, and, together with its domestic
subsidiaries, manages or advises 48 investment company portfolios (including the
AIM V.I. Funds). The AIM V.I. Funds, as part of its operating expenses, pays an
investment advisory fee to AIM. (See "Charges to Fund Assets" on page 19.)
THE ALLIANCE FUND
The Alliance Fund is registered with the Securities and Exchange Commission as
an open-end management investment company and its investment adviser is Alliance
Capital Management L.P. ("Alliance"). One of its mutual fund portfolios is
currently available through the Separate Account. The investment objective of
the available Alliance Fund portfolio is described below. There is no guarantee
that this portfolio will be able to meet its investment objective.
Premier Growth Portfolio seeks growth of capital by pursuing aggressive
investment policies. Since investments will be made based upon their potential
for capital appreciation, current income will be incidental to the objective of
capital growth. Because of the market risks inherent in any investment, the
selection of securities on the basis of their appreciation possibilities cannot
ensure against possible loss in value.
Alliance, a Delaware limited partnership with principal offices at 1345 Avenue
of the Americas, New York, New York 10105, is a registered adviser under the
Investment Advisers Act of 1940. Alliance Capital Management Corporation
("ACMC"), the sole general partner of Alliance, is an indirect wholly-owned
subsidiary of The Equitable Life Assurance Society of the United States, which
is in turn a wholly-owned subsidiary of the Equitable Companies Incorporated, a
holding company which is controlled by AXA, a French insurance holding company.
The Alliance Fund, as part of its operating expenses, pays an investment
advisory fee to Alliance. (See "Charges to Fund Assets" on page 19.)
THE MFS TRUST
The MFS Trust is registered with the Securities and Exchange Commission as an
open-end management investment company and its investment adviser is
Massachusetts Financial Services Company ("MFS"). Two of its mutual fund
portfolios are currently available through the Separate Account. The investment
objectives of the available MFS Trust portfolios are described below. There is
no guarantee that any portfolio will be able to meet its investment objective.
MFS Emerging Growth Series seeks to provide long-term growth of capital by
investing primarily (i.e., at least 80% of its assets under normal
circumstances) in common stocks of emerging growth companies. Emerging growth
companies include companies that MFS believes are early in their life cycle but
which have the potential to become major enterprises. Dividend and interest
income from portfolio securities, if any, is incidental to the Fund's objective
of long-term growth of capital.
MFS Research Series seeks to provide long-term growth of capital and future
income. The portfolio securities of the MFS Research Series are selected by a
committee of investment research analysts. This committee includes investment
analysts employed not only by the Adviser but also by MFS International (U.K.)
Limited, a wholly-owned subsidiary of MFS. The Series' assets are allocated
among industries by the analysts acting together as a group. Individual analysts
are then responsible for selecting what they view as the securities best suited
to meet the Series' investment objective within their assigned industry
responsibility.
MFS, a Delaware corporation, 500 Boylston Street, Boston, Massachusetts 02116,
is a subsidiary of Sun Life of Canada (U.S.), which, in turn, is a wholly-owned
subsidiary of Sun Life Assurance Company of Canada, and is a registered adviser
under the Investment Advisers Act of 1940. MFS is
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America's oldest mutual fund organization. MFS and its predecessor organizations
have a history of money management dating from 1924 and the founding of the
first mutual fund in the United States, Massachusetts Investors Trust. The MFS
Trust, as part of its operating expenses, pays an investment advisory fee to
MFS. (See "Charges to Fund Assets" on page 19.)
CERTAIN RISKS OF THE FUNDS
Investment in lower-rated debt securities, such as those in which the High Yield
Portfolio of the Series Fund, and the Developing Capital Markets Focus and
International Equity Focus Funds of the Variable Series Funds, expect to invest,
entails relatively greater risk of loss of income or principal. The Developing
Capital Markets Focus Fund of the Variable Series Funds has no established
rating criteria for the debt securities in which it may invest, and will rely on
the investment adviser's judgment in evaluating the creditworthiness of an
issuer of such securities. In an effort to minimize risk, these portfolios will
diversify holdings among many issuers. However, there can be no assurance that
diversification will protect these portfolios from widespread defaults during
periods of sustained economic downturn.
In seeking to protect the purchasing power of capital, the Natural Resources
Portfolio of the Series Fund reserves the right, when management anticipates
significant economic, political, or financial instability, such as high
inflationary pressures or upheaval in foreign currency exchange markets, to
invest a majority of its assets in companies that explore for, extract, process
or deal in gold or in asset-based securities indexed to the value of gold
bullion. The Natural Resources Portfolio will not concentrate its investments in
such securities until it has been advised that the Contracts' federal tax status
will not be adversely affected as a result.
In selecting investments for the AIM V.I. Capital Appreciation Fund, AIM is
particularly interested in companies that are likely to benefit from new or
innovative products, services or processes that should enhance such companies'
prospects for future growth in earnings. As a result of this policy, the market
prices of many of the securities purchased and held by this Fund may fluctuate
widely. Any income received from securities held by the Fund will be incidental,
and a contract owner should not consider a purchase of shares of the Fund as
equivalent to a complete investment program.
For the MFS Emerging Growth Series, the nature of investing in emerging growth
companies involves greater risk than is customarily associated with investments
in more established companies. Emerging growth companies often have limited
product lines, markets or financial resources, and they may be dependent on
one-person management. In addition, there may be less research available on many
promising small and medium sized emerging growth companies, making it more
difficult to find and analyze these companies. The securities of emerging growth
companies may have limited marketability and may be subject to abrupt or erratic
market movements than securities of larger, more established growth companies or
the market averages in general. Shares of the MFS Emerging Growth Series,
therefore, are subject to greater fluctuation in value than shares of a
conservative equity fund or of a growth fund which invests entirely in proven
growth stocks.
Because investment in these Portfolios and Funds entails relatively greater risk
of loss of income or principal, it may not be appropriate to allocate all
payments and investment base to an investment division that invests in one of
these Portfolios or Funds.
THE ZERO TRUSTS
The Zero Trusts was formed to provide safety of capital and a high yield to
maturity. It seeks this through U.S. Government-backed investments which make no
periodic interest payments and, therefore, are purchased at a deep discount.
When held to maturity the investments should receive approximately a fixed
yield. The value of Zero Trust units before maturity varies more than it would
if the Zero Trusts contained interest-bearing U.S. Treasury securities of
comparable maturities.
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The Zero Trust portfolios consist mainly of:
- bearer debt obligations issued by the U.S. Government stripped of their
unmatured interest coupons;
- coupons stripped from U.S. debt obligations; and
- receipts and certificates for such stripped debt obligations and coupons.
The Zero Trusts currently available have maturity dates in years 1998 through
2011, 2013 and 2014.
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S"), a subsidiary of
Merrill Lynch & Co., Inc., is the sponsor for the Zero Trusts. The sponsor will
sell units of the Zero Trusts to the Separate Account and has agreed to
repurchase units when ML of New York needs to sell them to pay benefits and make
reallocations. ML of New York pays the sponsor a fee for these transactions and
is reimbursed through the trust charge assessed to the divisions investing in
the Zero Trusts. (See "Charges to Divisions Investing in the Zero Trusts" on
page 19.)
ML OF NEW YORK AND MLPF&S
ML of New York is a stock life insurance company organized under the laws of the
State of New York in 1973. It is an indirect wholly owned subsidiary of Merrill
Lynch & Co., Inc. ML of New York is authorized to sell life insurance and
annuities in 9 states. It is also authorized to sell variable life insurance and
variable annuities in certain of those jurisdictions.
MLPF&S is a wholly owned subsidiary of Merrill Lynch & Co., Inc. and provides a
broad range of securities brokerage and investment banking services in the
United States. It provides marketing services for ML of New York and is the
principal underwriter of the Contracts issued through the Separate Account. ML
of New York retains MLPF&S to provide services relating to the Contracts under a
distribution agreement. (See "Selling the Contracts" on page 30.)
FACTS ABOUT THE CONTRACT
WHO MAY BE COVERED
The Contract is available in New York. ML of New York will issue a Contract on
the life of the insured provided the relationship between the applicant and the
insured meets ML of New York's insurable interest requirements and provided the
insured is not over age 85 or under age 20. The insured's issue age will be
determined using age as of his or her birthday nearest the contract date. The
insured must also meet ML of New York's medical and other underwriting
requirements, which will include undergoing a medical examination.
ML of New York assigns insureds to underwriting classes which determine the
current cost of insurance rates used in calculating cost of insurance
deductions. Contracts may be issued on insureds in standard, non-smoker or
preferred non-smoker underwriting classes. Contracts may also be issued on
insureds in a substandard underwriting class. For a discussion of the effect of
underwriting classification on deductions for cost of insurance, see "Cost of
Insurance" on page 18.
PURCHASING A CONTRACT
To purchase a Contract, the contract owner must complete an application and make
a payment. The payment is required to put the Contract into effect. In the
application, the contract owner selects the face amount of the Contract. The
amount of the minimum initial payment for a given Contract depends on the face
amount selected and the issue age, sex and underwriting class of the insured.
The minimum initial payment for any Contract is 75% of the base premium. ML of
New York will not accept an initial payment for a specified face amount that
will provide a guarantee period of less than two years. (See "Selecting the
Initial Face Amount" and "Initial Guarantee Period" on page 15.)
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ML of New York also will not accept an initial payment that would cause the
Contract to fail to qualify as life insurance under federal tax law as
interpreted by ML of New York.
Insurance coverage generally begins as of the contract date, which is usually
the next business day following receipt of the initial payment at ML of New
York's Service Center. Temporary life insurance coverage may be provided prior
to the contract date under the terms of a temporary insurance agreement. In
accordance with ML of New York's underwriting rules, temporary life insurance
coverage may not exceed $300,000 and may not be in effect for more than 90 days.
As provided for under state insurance law, the contract owner, to preserve
insurance age, may be permitted to backdate the Contract. In no case may the
contract date be more than six months prior to the date the application was
completed. Charges for cost of insurance and rider costs for the backdated
period are deducted on the contract date.
If ML of New York determines that, based on the contract owner's initial payment
and face amount, the Contract will be a modified endowment contract, ML of New
York will issue the Contract provided the contract owner signs a statement
acknowledging that the Contract is a modified endowment contract or agrees
either to reduce the initial payment or to increase the face amount to a level
at which the Contract will not be a modified endowment contract. For a
discussion of the tax consequences of purchasing a modified endowment contract,
see "Tax Considerations" on page 31.
Selecting the Initial Face Amount. The minimum initial face amount (excluding
any additional insurance rider face amount) is $250,000 or that face amount
which generates a $4,000 base premium, if larger. ML of New York will issue a
Contract only with a face amount (including any additional insurance rider face
amount) greater than $750,000. The maximum face amount that may be specified for
a given initial payment is the amount which will provide an initial guarantee
period of at least two years. For the same initial payment amount, the larger
the face amount requested, the shorter the guarantee period. The initial face
amount will change if the contract owner changes the death benefit option or
takes a partial withdrawal. Subject to certain conditions, the contract owner
may purchase additional insurance coverage through an additional insurance
rider. (See "Additional Insurance Rider" below.)
Initial Guarantee Period. The initial guarantee period for a Contract will be
determined by the initial payment, face amount and any additional insurance
rider face amount. The guarantee period will be adjusted each time an additional
payment is made, when a partial withdrawal is taken, when a death benefit option
change results in a change in face amount and when the additional insurance
rider face amount is increased or decreased.
The guarantee period is the period of time ML of New York guarantees that the
Contract will remain in force regardless of investment experience unless the
debt exceeds certain values. The guarantee period is based on the guaranteed
maximum cost of insurance rates in the Contract, guaranteed maximum rider costs
(if an additional insurance rider is elected), the contract loading and a 5%
interest assumption. This means that for a given initial payment and face
amount, different insureds will have different guarantee periods depending on
the age, sex and underwriting class of the insureds. For example, an older
insured will have a shorter guarantee period than a younger insured in the same
underwriting class.
The maximum guarantee period is for the whole of life of the insured.
ADDITIONAL INSURANCE RIDER
The contract owner may purchase additional insurance coverage payable to the
beneficiary on the death of the insured. Additional insurance coverage may be
purchased through an additional insurance rider when the Contract is purchased.
Under ML of New York's current procedures, the maximum additional insurance
rider face amount at the time the Contract is purchased is three times the face
amount of the Contract. The rider can also be added on any contract anniversary
thereafter, as long as an application is completed, satisfactory evidence of
insurability of the insured is provided, and the insured has not attained the
age of 69. The minimum additional insurance rider
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face amount at any time is $100,000. A cost of insurance charge for the rider
("rider charge") will be deducted from the Contract's investment base on each
processing date. The rider charge will be based on the same cost of insurance
rates as the Contract. (See "Cost of Insurance" on page 18.) Because insurance
coverage through an additional insurance rider is purchased through deductions
from the Contract's investment base that are not taken into account in
determining the base premium, there is no additional contract loading associated
with this coverage.
The additional insurance rider and all charges associated with the rider will
terminate upon the insured attaining age 70. At that time, all additional
insurance coverage will terminate.
Once each year, the additional insurance rider face amount may be increased
(subject to evidence of insurability for the insured) or decreased (after the
seventh contract anniversary); however, any change in the additional insurance
rider face amount must be at least $100,000. The effective date of the change
will be the contract anniversary next following underwriting approval of the
change. As of the effective date of the increase or decrease in the additional
insurance rider face amount, ML of New York uses the existing fixed base and the
face amount of the Contract plus the new additional insurance rider face amount
to calculate a new guarantee period. A decrease in the additional insurance
rider face amount will increase the guarantee period. An increase in the
additional insurance rider face amount will decrease the guarantee period. An
increase will not be allowed on the first contract anniversary if the face
amount of the Contract plus the new rider face amount provide a guarantee period
of less than one year from the effective date of the increase.
A decrease in the additional insurance rider face amount can cause a Contract
which is not a modified endowment contract to become a modified endowment
contract. In such a case, ML of New York will not process the decrease until the
contract owner confirms in writing his or her intent to convert the Contract to
a modified endowment contract. For a discussion of the tax consequences of
increasing or decreasing the additional insurance rider face amount, see "Tax
Considerations" on page 31.
ADDITIONAL PAYMENTS
After the "free look" period, contract owners may make additional payments while
the insured is living. Additional payments must be submitted with an additional
payment form. The minimum ML of New York will accept for these payments is $100.
For Contracts that are not modified endowment contracts, making an additional
payment may cause them to become modified endowment contracts. (See "Tax
Considerations" on page 31.) ML of New York will return that portion of any
additional payment beyond that necessary to extend the guarantee period to the
whole of life of the insured. ML of New York will also return that portion of
any additional payment that would cause the Contract to fail to qualify as life
insurance under federal tax law as interpreted by ML of New York.
Contract owners may specify an additional payment amount on the application to
be paid on either an annual or quarterly basis. For additional payments not
being withdrawn from a CMA account, ML of New York will send reminder notices
beginning in the second contract year. If a contract owner has the CMA Insurance
Service, such additional payments may be withdrawn automatically from his or her
CMA account and transferred to his or her Contract. The withdrawals will
continue under the selected plan until ML of New York is notified otherwise.
EFFECT OF ADDITIONAL PAYMENTS
Generally, any additional payments will be accepted the day they are received at
the Service Center. However, if acceptance of any portion of the payment would
cause a Contract which is not a modified endowment contract to become a modified
endowment contract, to the extent feasible, ML of New York will not accept that
portion of the payment unless the contract owner confirms in writing his or her
intent to convert the Contract to a modified endowment contract. ML of New York
may return that portion of the payment pending receipt of instructions from the
contract owner.
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<PAGE> 21
On the date ML of New York receives and accepts an additional payment, ML of New
York will:
- increase the Contract's investment base by the amount of the payment less
contract loading applicable to the payment;
- reflect the additional payment in the calculation of the variable
insurance amount (see "Variable Insurance Amount" on page 24); and
- increase the fixed base by the amount of the payment less contract
loading applicable to the payment (see "The Contract's Fixed Base" on
page 21).
As of the processing date on or next following receipt and acceptance of an
additional payment, ML of New York will increase the guarantee period if the
guarantee period prior to receipt and acceptance of an additional payment is
less than for the whole of life of the insured.
ML of New York will determine the increase in the guarantee period by taking the
immediate increase in the cash value resulting from the additional payment and
adding to that interest at the annual rate of 5% for the period from the date ML
of New York receives and accepts the payment to the contract processing date on
or next following such date. This is the guarantee adjustment amount. The
guarantee adjustment amount is added to the fixed base and the resulting new
fixed base is used to calculate a new guarantee period. For a discussion of the
effect of additional payments on a Contract's guarantee period, see "Additional
Payments" in the Examples on page 44.
If any excess sales load has been applied to keep the Contract in force, any
additional payment, less contract loading, will first be applied to recover such
excess sales load (see "Excess Sales Load" on page 19). Next, unless specified
otherwise, if there is any debt, any payment made will be applied first as a
loan repayment, with any excess applied as an additional payment. (See "Loans"
on page 22.)
INVESTMENT BASE
A Contract's investment base is the amount available for investment at any time.
It is the sum of the amounts invested in each of the investment divisions. On
the contract date, the investment base equals the initial payment less contract
loading and charges for cost of insurance and rider costs. ML of New York
adjusts the investment base daily to reflect the investment performance of the
investment divisions the contract owner has selected. (See "Net Rate of Return
for an Investment Division" on page 35.) The investment performance reflects the
deduction of Separate Account charges. (See "Charges to the Separate Account" on
page 19.)
Partial withdrawals, loans and deductions for cost of insurance, rider costs and
net loan cost decrease the investment base. (See "Charges Deducted from the
Investment Base" on page 18, "Partial Withdrawals" on page 23 and "Loans" on
page 22.) Loan repayments and additional payments increase it. Contract owners
may elect from which investment divisions loans and partial withdrawals are
taken and to which investment divisions repayments and additional payments are
added. If an election is not made, ML of New York will allocate increases and
decreases proportionately to the contract owner's investment base as then
allocated in the investment divisions.
Investment Allocation During the "Free Look" Period and Preallocation. The
initial payment less contract loading will be invested only in the division
investing in the Money Reserve Portfolio. Through the first 14 days following
the in force date, the initial payment less contract loading will remain in that
division. Thereafter, the investment base will be reallocated to the investment
divisions selected by the contract owner on the application, if different. The
contract owner may invest in up to five of the 38 investment divisions in the
Separate Account.
Changing the Allocation. After the "free look" period, a contract owner's
investment base may be invested in up to five investment divisions at any one
time. Currently, investment allocations may be changed as often as desired. ML
of New York reserves the right to charge up to $25 for each change in excess of
six each year. In order to change their investment base allocation, contract
owners must call or write to the Service Center. (See "Some Administrative
Procedures" on page 27.)
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<PAGE> 22
Zero Trust Allocations. ML of New York will notify contract owners 30 days
before a Zero Trust in which they have invested matures. Contract owners must
notify ML of New York by calling or writing at least seven days before the
maturity date how to reinvest their funds in the division investing in that Zero
Trust. If ML of New York is not notified, it will move the contract owner's
investment base in that division to the investment division investing in the
Money Reserve Portfolio.
Units of a specific Zero Trust may no longer be available when a request for
allocation is received. Should this occur, ML of New York will attempt to notify
the contract owner immediately so that the request can be changed.
Allocation to the Division Investing in the Natural Resources Portfolio. ML of
New York and the Separate Account reserve the right to suspend the sale of units
of the investment division investing in the Natural Resources Portfolio in
response to conditions in the securities markets or otherwise.
CHARGES DEDUCTED FROM THE INVESTMENT BASE
The charges described below are deducted pro-rata from the investment base on
processing dates.
Cost of Insurance. ML of New York deducts the cost of insurance from the
investment base on the contract date and on each processing date thereafter.
This charge compensates ML of New York for the cost of providing life insurance
coverage for the insured. It is based on the underwriting class, sex and
attained age of the insured and the Contract's net amount at risk.
To determine the cost of insurance, ML of New York multiplies the current cost
of insurance rate by the Contract's net amount at risk. The net amount at risk
is the difference, as of a processing date, between the death benefit (adjusted
for interest at an annual rate of 5%) and the cash value, but before the
deduction for cost of insurance.
Current cost of insurance rates may be equal to or less than the guaranteed cost
of insurance rates depending on the underwriting class, sex and attained age of
the insured. Current cost of insurance rates are lower for insureds in a
preferred non-smoker underwriting class than for insureds of the same age in a
non-smoker underwriting class and are lower for insureds in a non-smoker
underwriting class than for insureds of the same age and sex in a standard
underwriting class.
ML of New York guarantees that the current cost of insurance rates will never
exceed the maximum guaranteed rates shown in the Contract. The maximum
guaranteed rates for Contracts (other than those issued on a substandard basis)
do not exceed the rates based on the 1980 Commissioners Standard Ordinary
Mortality Table (CSO Table). ML of New York may use rates that are equal to or
less than these rates, but never greater. The maximum rates for Contracts issued
on a substandard basis are based on a multiple of the 1980 CSO Table. Any change
in the cost of insurance rates will apply to all insureds of the same age, sex
and underwriting class whose Contracts have been in force for the same length of
time.
Net Loan Cost. The net loan cost is explained under "Loans" on page 22.
Rider Charges. Rider charges are deducted on the contract date and on each
processing date thereafter. These charges are explained under "Additional
Insurance Rider" on page 15.
CONTRACT LOADING
Chargeable to each payment is an amount called the contract loading. The
contract loading equals 49.5% of each payment made until cumulative payments
have been made in an amount equal to two base premiums, and 4.5% of each payment
thereafter. This charge consists of a sales load, a charge for federal taxes and
a state and local premium tax charge.
The sales load, equal to 46.25% of each payment through the second base premium
and 1.25% of each payment thereafter, compensates ML of New York for sales
expenses and the costs for underwriting and issuing the Contract. The sales load
may be reduced in certain group or sponsored arrangements as described on page
29.
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<PAGE> 23
The charge for federal taxes is equal to 1.25% of each payment.
The state and local premium tax charge is equal to 2% of each payment.
Excess Sales Load. Excess sales load is equal to any sales load deducted from
the first two base premiums in excess of 30% of premiums paid up to an amount
equal to the first base premium, and then 10% of the premiums paid up to an
amount equal to the second base premium. It is calculated and applied in the
following situations only during the first 24 months after the Contract is
issued:
- It is refunded if the Contract is surrendered during the first 24 months
after issue.
- It is added to the cash value so as to keep the Contract in force if debt
exceeds the larger of (i) cash value plus any excess sales load not
previously applied to keep the Contract in force and (ii) the fixed base
during the first 24 months after issue.
- It is added to the cash value in determining the variable insurance
amount during the first 24 months after issue.
CHARGES TO THE SEPARATE ACCOUNT
Each day ML of New York deducts an asset charge from each division of the
Separate Account. The total amount of this charge is computed at .90% annually
at the beginning of the year. Of this amount, .75% is for
- the risk assumed by ML of New York that insureds as a group will live for
a shorter time than actuarial tables predict. As a result, ML of New York
would be paying more in death benefits than planned; and
- the risk assumed by ML of New York that it will cost more to issue and
administer the Contracts than expected.
The remaining amount, .15%, is for
- the risk assumed by ML of New York with respect to potentially
unfavorable investment results. This risk is that the Contract's cash
value cannot cover the charges due during the guarantee period.
The total asset charge may not be increased.
Charges to Divisions Investing in the Zero Trusts. ML of New York assesses a
daily trust charge against the assets of each division investing in the Zero
Trusts. This charge reimburses ML of New York for the transaction charge paid to
MLPF&S when units are sold to the Separate Account.
The trust charge is currently equivalent to .34% annually at the beginning of
the year. It may be increased, but will not exceed .50% annually at the
beginning of the year. The charge is based on cost (taking into account loss of
interest) with no expected profit.
Tax Charges. ML of New York has the right under the Contract to impose a charge
against Separate Account assets for any taxes imposed on the Separate Account's
investment earnings. (See "ML of New York's Income Taxes" on page 34.)
CHARGES TO FUND ASSETS
Charges to Series Fund Assets. The Series Fund incurs operating expenses and
pays a monthly advisory fee to MLAM. This fee equals an annual rate of:
- .50% of the first $250 million of the aggregate average daily net assets
of the Series Fund;
- .45% of the next $50 million of such assets;
- .40% of the next $100 million of such assets;
- .35% of the next $400 million of such assets; and
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<PAGE> 24
- .30% of such assets over $800 million.
One or more of the insurance companies investing in the Series Fund has agreed
to reimburse the Series Fund so that the ordinary expenses of each portfolio
(which include the monthly advisory fee) do not exceed .50% of the portfolio's
average daily net assets. These companies have also agreed to reimburse MLAM for
any amounts it pays under the investment advisory agreement, as described below.
These reimbursement obligations will remain in effect so long as the advisory
agreement remains in effect and cannot be amended or terminated without Series
Fund approval.
Charges to Variable Series Funds Assets. The Variable Series Funds incurs
operating expenses and pays a monthly advisory fee to MLAM. This fee equals an
annual rate of .60% of the average daily net assets of the Basic Value Focus
Fund, Global Bond Focus Fund and Global Utility Focus Fund. This fee equals an
annual rate of .30%, .75%, 1.00%, and .75% of the average daily net assets of
the Index 500 Fund, the International Equity Focus Fund, the Developing Capital
Markets Focus Fund, and the Equity Growth Fund, respectively.
MLAM and Merrill Lynch Life Agency, Inc. have entered into two agreements which
limit the operating expenses paid by each Fund in a given year to 1.25% of its
average daily net assets, which is less than the expense limitations imposed by
state securities laws or published regulations thereunder. These reimbursement
agreements provide that any expenses in excess of 1.25% of average daily net
assets will be reimbursed to the Fund by MLAM which, in turn, will be reimbursed
by Merrill Lynch Life Agency, Inc.
Charges to AIM V.I. Funds Assets. The AIM V.I. Funds incurs operating expenses
and pays a monthly advisory fee to AIM, which serves as the investment adviser
to each fund of the AIM V.I. Funds. As the investment adviser, AIM receives from
the AIM V.I. Capital Appreciation Fund and the AIM V.I. Value Fund an advisory
fee at an annual rate of .65% of each fund's average daily net assets.
Charges to Alliance Fund Assets. The Alliance Fund incurs operating expenses
and pays a monthly advisory fee to Alliance, which serves as the investment
adviser to each fund of the Alliance Fund. As the investment adviser, Alliance
receives from the Alliance Premier Growth Portfolio an advisory fee at an annual
rate of 1.00% of the fund's average daily net assets.
Alliance voluntarily waives fees and expenses that exceed .95% of the average
net assets of the Alliance Fund. Alliance may discontinue or reduce any waivers
or assumptions of expenses at any time without notice. Alliance, however,
intends to continue such reimbursements for the foreseeable future.
Charges to MFS Trusts Assets. The MFS Trust incurs operating expenses and pays
a monthly advisory fee to MFS, which serves as the investment adviser to each of
the funds of MFS Trust. As the investment adviser, MFS receives from the MFS
Emerging Growth Series and MFS Research Series an advisory fee, computed and
paid monthly, at an annual rate of .75% of the average daily net assets of the
respective fund.
Subject to termination or revision at the sole discretion of MFS, MFS has agreed
to bear expenses of the MFS Emerging Growth Series and the MFS Research Series
(the "Series") such that each Series' expenses, except for management fees
("Other Expenses"), do not exceed .25% of the average daily net assets of the
Series. The obligation of MFS to bear Other Expenses for a Series terminates on
the last day of the Series' fiscal year in which Other Expenses are less than or
equal to .25%.
GUARANTEE PERIOD
ML of New York guarantees that the Contract will stay in force for the guarantee
period unless the debt exceeds certain contract values. (See "Loans" on page
22.) Additional payments will extend the guarantee period until such time as it
is guaranteed for the whole of life of the insured. The guarantee period will be
affected by partial withdrawals, by changes in death benefit options and by
20
<PAGE> 25
increases and decreases in the face amount of the additional insurance rider. A
reserve is held in ML of New York's general account to support this guarantee.
When the Guarantee Period is Less Than for Life. After the end of the guarantee
period, ML of New York may cancel the Contract if the cash value plus certain
excess sales load on a processing date is insufficient to cover charges due on
that date. (See "Charges Deducted from the Investment Base" on page 18 and
"Contract Loading -- Excess Sales Load" on page 19.)
ML of New York will notify the contract owner at the contract owner's last known
address before cancelling the Contract. The contract owner will then have 61
days to pay an amount which, after deducting contract loading, equals at least
three times the charges that were due (and not deducted) on the processing date
when the cash value was determined to be insufficient, plus any excess sales
load previously applied to keep the Contract in force. If this amount is paid,
ML of New York will deduct the charges due on the processing date and apply the
balance to investment base. ML of New York will cancel the Contract at the end
of this grace period if payment has not yet been received. At that time, ML of
New York will deduct any charges for cost of insurance and rider costs that were
applicable to the grace period and refund any unearned charges for cost of
insurance, rider costs and any excess sales load not previously applied to keep
the Contract in force.
If ML of New York cancels a Contract, it may be reinstated while the insured is
still living if:
- the reinstatement is requested within three years after the end of the
grace period;
- ML of New York receives satisfactory evidence of the insured's
insurability; and
- the reinstatement payment is made. The reinstatement payment is the
minimum payment for which ML of New York would then issue a Contract for
the minimum guarantee period with the same face amount as the original
Contract, based on the insured's attained age and underwriting class as
of the effective date of the reinstated Contract.
A reinstated Contract will be effective on the processing date on or next
following the date the reinstatement application is approved.
The Contract's Fixed Base. On the contract date, the fixed base equals the cash
value. From then on, the fixed base is calculated in the same manner as the cash
value except that the calculation substitutes 5% for the net rate of return, the
guaranteed maximum cost of insurance rates and the guaranteed maximum rider
costs are substituted for the current rates and it is calculated as though there
had been no loans or repayments. The fixed base is equivalent to the cash value
for a comparable fixed benefit contract with the same face amount and guarantee
period. After the end of the guarantee period the fixed base is zero. The fixed
base is used to limit ML of New York's right to cancel the Contract during the
guarantee period.
Automatic Adjustment. On any contract anniversary, if the cash value is greater
than the fixed base necessary to cause the guarantee period to equal the whole
of life of the insured, the guarantee period will be extended to the whole of
life of the insured.
CASH VALUE
A Contract's cash value fluctuates daily with the investment results of the
investment divisions selected. ML of New York does not guarantee any minimum
cash value. The cash value on any date equals the total investment base plus
debt plus unearned charges for cost of insurance and rider costs less any
accrued net loan cost since the last contract anniversary (or since the contract
date during the first contract year).
Cancelling the Contract. A contract owner may cancel the Contract at any time
the insured is living. The request must be in writing in a form satisfactory to
ML of New York. All rights to death benefits will end on the date the written
request is sent to ML of New York.
The contract owner will then receive the net cash surrender value. The contract
owner may elect to receive this amount either in a single payment or under one
or more income plans described on
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<PAGE> 26
page 29. The net cash surrender value will be determined as of the date of
receipt of the written request at the Service Center.
If the Contract is cancelled during the first 24 months after the issue date of
the Contract, excess sales load will be refunded except to the extent previously
applied to keep the contract in force. (See "Contract Loading -- Excess Sales
Load" on page 19.)
LOANS
Contract owners may use the Contract as collateral to borrow funds from ML of
New York. The minimum loan is $200. Contract owners may repay all or part of the
loan at any time during the insured's lifetime. Each repayment must be for at
least $200 or the amount of the debt, if less. If any excess sales load was
previously applied to keep the Contract in force, any loan repayment will first
be applied to repay such excess sales load.
When a loan is taken, ML of New York transfers a portion of the contract owner's
investment base equal to the amount borrowed out of the investment divisions and
holds it as collateral in its general account. When a loan repayment is made, ML
of New York transfers an amount equal to the repayment from the general account
to the investment divisions. The contract owner may select from which divisions
borrowed amounts should be taken and which divisions should receive repayments
(including interest payments). Otherwise, ML of New York will take the borrowed
amounts proportionately from and make repayments proportionately to the contract
owner's investment base as then allocated in the investment divisions.
If a contract owner has the CMA Insurance Service, loans may be transferred to
and loan repayments transferred from his or her CMA account.
Effect on Death Benefit and Cash Value. Whether or not a loan is repaid, taking
a loan will have a permanent effect on a Contract's cash value and may have a
permanent effect on its death benefit. This is because the collateral for a loan
does not participate in the performance of the investment divisions while the
loan is outstanding. If the amount credited to the collateral is more than what
is earned in the investment divisions, the cash value may be higher as a result
of the loan, as may be the death benefit. Conversely, if the amount credited is
less, the cash value will be lower, as may be the death benefit. In that case,
the lower cash value may cause the Contract to lapse sooner than if no loan had
been taken.
Loan Value. The loan value of a Contract equals 90% of its cash value. The sum
of all outstanding loan amounts plus accrued interest is called debt. The
maximum amount that can be borrowed at any time is the difference between the
loan value and the debt.
Interest. While a loan is outstanding, ML of New York may charge interest at a
maximum rate of 6% annually. Currently ML of New York charges interest of 5.25%
annually. Interest accrues each day and payments are due at the end of each
contract year. IF THE INTEREST ISN'T PAID WHEN DUE, IT IS ADDED TO THE
OUTSTANDING LOAN AMOUNT. Interest paid on a loan generally is not tax
deductible.
The amount held in ML of New York's general account as collateral for a loan
earns interest at a minimum of 4% annually. Currently a loan amount earns
interest at 4.5%.
ML of New York may change the interest rates currently charged on loans and the
rates of interest earned on the loan collateral amounts. Any such changes will
be effective on the contract anniversary following the date such rates are
declared.
Net Loan Cost. On each contract anniversary, ML of New York reduces the
investment base by the net loan cost (the difference between the interest
charged and the earnings on the amount held as collateral in the general
account) and adds that amount to the amount held in the general account as
collateral for the loan. Since the interest charged is 5.75% and the collateral
earnings on such amounts are 5.0%, the current net loan cost on loaned amounts
is .75%. The net loan cost is taken into account in determining the net cash
surrender value of the Contract if the date of surrender is not a contract
anniversary.
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Cancellation Due to Excess Debt. If on a processing date the debt exceeds the
larger of (i) cash value plus certain excess sales load, and less charges due on
that date, and (ii) the fixed base (if any), ML of New York will cancel the
Contract 61 days after a notice of intent to terminate the Contract is mailed to
the contract owner unless ML of New York has received at least the minimum
repayment amount specified in the notice. During the first 24 months after the
Contract is issued, ML of New York will add excess sales load to the cash value
as necessary to keep the Contract in force if debt exceeds the larger of the
cash value less charges due and the fixed base. (See "Contract Loading -- Excess
Sales Load" on page 19.) Upon termination, ML of New York will deduct any
charges for cost of insurance and rider costs that may be applicable to the
61-day period and refund any unearned charges for cost of insurance, rider costs
and any excess sales load not previously applied to keep the Contract in force.
If the Contract lapses with a loan outstanding, adverse tax consequences may
result. (See "Tax Considerations" on page 31.)
PARTIAL WITHDRAWALS
Beginning in contract year sixteen, a contract owner may make partial
withdrawals by submitting a request in a form satisfactory to ML of New York.
The effective date of the withdrawal is the date a withdrawal request is
received at the Service Center. Contract owners may elect to receive the
withdrawal amount either in a single payment or, subject to ML of New York's
rules, under one or more income plans.
Contract owners may make one partial withdrawal each contract year. The minimum
amount for each partial withdrawal is $1,000. The remaining cash value less any
debt following a partial withdrawal must equal or exceed $5,000. The amount of
any partial withdrawal may not exceed the loan value as of the effective date of
the partial withdrawal less any debt. A partial withdrawal may not be repaid.
Effect on Investment Base, Fixed Base, Cash Value and Death Benefit. As of the
effective date of the withdrawal, the investment base, fixed base, cash value
and, if the contract owner has elected death benefit option 1, the face amount
of the Contract will each be reduced by the amount of the partial withdrawal. ML
of New York allocates this reduction proportionately to the investment base in
each of the contract owner's investment divisions unless notified otherwise. The
variable insurance amount will also reflect the partial withdrawal as of the
effective date.
Effect on Guarantee Period. As of the processing date on or next following the
effective date of a partial withdrawal, ML of New York calculates a new
guarantee period. This is done by taking the immediate decrease in cash value
resulting from the partial withdrawal and adding to that amount interest at an
annual rate of 5% for the period from the date of the withdrawal to the contract
processing date on or next following such date. This is the guarantee adjustment
amount. The guarantee adjustment amount is subtracted from the fixed base and
the resulting new fixed base is used to calculate a new guarantee period. For a
discussion of the effect of partial withdrawals on a Contract's guarantee
period, see "Partial Withdrawals" in the Examples on page 44.
A partial withdrawal may cause a Contract which is not a modified endowment
contract to become a modified endowment contract. In such a case, ML of New York
will not process the partial withdrawal until the contract owner confirms in
writing his or her intent to convert the Contract to a modified endowment
contract. For a discussion of the tax issues associated with a partial
withdrawal, see "Tax Considerations" on page 31.
DEATH BENEFIT PROCEEDS
ML of New York will pay the death benefit proceeds to the beneficiary upon
receipt of all information needed to process the payment, including due proof of
the death of the insured. When ML of New York is first provided reliable
notification of the insured's death by a representative of the owner or the
insured, investment base may be transferred to the division investing in the
Money Reserve Portfolio, pending payment of death benefit proceeds.
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<PAGE> 28
If the insured should die within two years from the Contract's issue date,
within two years from the effective date of any requested change in the death
benefit option requiring evidence of insurability, or within two years of an
increase in the additional insurance rider face amount requiring evidence of
insurability, due proof of the insured's death should be sent promptly to the
Service Center since ML of New York may pay only a limited benefit or contest
the Contract. (See "Incontestability" and "Payment in Case of Suicide" on page
28.)
Death Benefit Proceeds. The death benefit payable depends on the death benefit
option in effect on the date of death.
- Under option 1, the death benefit is equal to the larger of the face
amount or the variable insurance amount.
- Under option 2, the death benefit is equal to the larger of the face
amount plus the cash value or the variable insurance amount.
Contract owners who wish to have investment experience reflected in insurance
coverage should choose option 2. Contract owners who wish to have insurance
coverage that generally does not vary in amount should choose option 1.
The death benefit will never be less than the amount required to keep the
Contract qualified as life insurance under federal income tax laws.
To determine the death benefit proceeds, ML of New York will subtract from the
death benefit any debt and add to the death benefit any rider benefits payable.
The values used in calculating the death benefit proceeds are as of the date of
death. If the insured dies during the grace period, the death benefit proceeds
equal the death benefit proceeds in effect immediately prior to the grace period
reduced by any overdue charges. (See "When the Guarantee Period is Less Than for
Life" on page 21.)
Variable Insurance Amount. ML of New York determines the variable insurance
amount daily by:
- calculating the cash value (plus any excess sales load during the first
24 months after the Contract is issued); and
- multiplying it by the cash value corridor factor (explained below) for
the insured at his or her attained age.
The variable insurance amount will never be less than required by federal tax
law.
Cash Value Corridor Factor. The cash value corridor factor is used to determine
the amount of death benefit purchased by $1.00 of cash value. It is based on the
attained age of the insured on the date of calculation. It decreases daily as
the insured's age increases. As a result, the variable insurance amount as a
multiple of the cash value will decrease over time. A table of cash value
corridor factors as of each anniversary is included in the Contract.
Table of Illustrative Cash Value Corridor Factors
on Anniversaries
<TABLE>
<CAPTION>
ATTAINED AGE FACTOR
- ------------- ------------
<S> <C>
40 and under %250
45 %215
55 %150
65 %120
75-90 %105
95 and over %100
</TABLE>
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<PAGE> 29
Changing the Death Benefit Option. On each contract anniversary beginning with
the fifteenth, the contract owner may change the death benefit option. ML of New
York will change the face amount in order to keep the death benefit constant on
the effective date of the change. Therefore, if the change is from option 1 to
option 2, the face amount of the Contract will be decreased by the cash value on
the date of the change. A change in the death benefit option will not be
permitted if it would result in a face amount of less than $100,000. If the
change is from option 2 to option 1, the face amount of the Contract will be
increased by the cash value on the date of the change. For a discussion of the
effect of a change in the death benefit option on a Contract, see "Changing the
Death Benefit Option" in the Examples on page 45.
If the contract owner requests a change in the death benefit option from option
1 to option 2, evidence of insurability in a form satisfactory to ML of New York
that the insured is insurable may be required. In no event will a change be
permitted if, after the change, the Contract would not qualify as life insurance
under federal tax laws as interpreted by ML of New York.
A change in the death benefit option may cause a Contract which is not a
modified endowment contract to become a modified endowment contract. In such a
case, ML of New York will not process the change until the contract owner
confirms in writing his or her intent to convert the Contract to a modified
endowment contract. For a discussion of the tax issues associated with a change
in the death benefit option, see "Tax Considerations" on page 31.
PAYMENT OF DEATH BENEFIT PROCEEDS
ML of New York will generally pay the death benefit proceeds to the beneficiary
within seven days after all the information needed to process the payment is
received at its Service Center. ML of New York will add interest from the date
of the insured's death to the date of payment at an annual rate of at least 4%.
The beneficiary may elect to receive the proceeds either in a single payment or
under one or more income plans described on page 29.
Payment may be delayed if the Contract is being contested or under the
circumstances described in "Using the Contract" on page 26 and "Other Contract
Provisions" on page 28. If a delay is necessary and death of the insured occurs
prior to the end of the guarantee period, ML of New York may delay payment of
any excess of the death benefit over the face amount. After the guarantee period
has expired, ML of New York may delay payment of the entire death benefit.
RIGHTS TO CANCEL OR EXCHANGE
"Free Look" Period. A contract owner may cancel his or her Contract during the
"free look" period by returning it for a refund. Generally, the "free look"
period ends the later of ten days after the Contract is received, 45 days after
the contract owner completes the application or ten days after ML of New York
mails or personally delivers to the contract owner the Notice of Withdrawal
Right. To cancel the Contract during the "free look" period the contract owner
must mail or deliver the Contract to ML of New York's Service Center or to the
registered representative who sold it. ML of New York will refund the payment
made without interest. If cancelled, ML of New York may require the contract
owner to wait six months before applying again.
Exchanging the Contract. Contract owners may exchange their Contract at any
time for a contract with benefits that do not vary with the investment results
of a separate account. A request to exchange must be made in writing. To
exchange, the original Contract must be returned to ML of New York's Service
Center. The exchange will not require evidence of insurability.
The new contract will have the same owner, insured and beneficiary as those of
the original Contract on the date of the exchange. The new contract will also
have the same death benefit and the same net amount at risk as this Contract at
the time of exchange, and will have payments which are based on the same issue
age, sex, and underwriting class of the insured. Any debt will be carried over
to the new contract. For a discussion of the tax consequences of exchanging the
Contract, see "Tax Considerations" on page 31.
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REPORTS TO CONTRACT OWNERS
After the end of each processing period, contract owners will be sent a
statement of the allocation of their investment base, death benefit, cash value,
any debt and, if there has been a change, the face amount, the guarantee period
and the additional insurance rider face amount. All figures will be as of the
end of the immediately preceding processing period. The statement will show the
amounts deducted from or added to the investment base during the processing
period. The statement will also include any other information that may be
currently required by New York.
Contract owners will receive confirmation of all financial transactions. Such
confirmations will show the price per unit of each of the contract owner's
investment divisions, the number of units a contract owner has in the investment
division and the value of the investment division computed by multiplying the
quantity of units by the price per unit. (See "Net Rate of Return for an
Investment Division" on page 35.) The sum of the values in each investment
division is a contract owner's investment base.
Contract owners will also be sent an annual and a semi-annual report containing
financial statements and a list of portfolio securities of the Funds, as
required by the Investment Company Act of 1940.
CMA Account Reporting. Contract owners who have the CMA Insurance Service will
have certain Contract information included as part of their regular monthly CMA
account statement. It will list the investment base allocation, death benefit,
cash value, debt and any CMA account activity affecting the Contract during the
month.
MORE ABOUT THE CONTRACT
USING THE CONTRACT
Ownership. The contract owner is usually the insured, unless another owner has
been named in the application. The contract owner has all rights and options
described in the Contract.
The contract owner may want to name a contingent owner. If the contract owner
dies before the insured, the contingent owner will own the contract owner's
interest in the Contract and have all of the contract owner's rights. If the
contract owner doesn't name a contingent owner, the contract owner's estate will
own the contract owner's interest in the Contract upon the owner's death.
If there is more than one contract owner, ML of New York will treat the owners
as joint tenants with rights of survivorship unless the ownership designation
provides otherwise. The owners must exercise their rights and options jointly,
except that any one of the owners may reallocate the Contract's investment base
by phone if the owner provides the personal identification number as well as the
Contract number. One contract owner must be designated, in writing, to receive
all notices, correspondence and tax reporting to which contract owners are
entitled under the Contract.
Changing the Owner. During the insured's lifetime, with the consent of any
irrevocable beneficiary, the contract owner has the right to transfer ownership
of the Contract. The new owner will have all rights and options described in the
Contract. The change will be effective as of the day the notice is signed, but
will not affect any payment made or action taken by ML of New York before
receipt of the notice of the change at the Service Center. Changing the owner
may have tax consequences. (See "Tax Considerations" on page 31.)
Assigning the Contract as Collateral. Contract owners may assign the Contract
as collateral security for a loan or other obligation. This does not change the
ownership. However, the contract owner's rights and any beneficiary's rights are
subject to the terms of the assignment. Contract owners must give satisfactory
written notice at the Service Center in order to make or release an assignment.
ML of New York is not responsible for the validity of any assignment.
For a discussion of the tax issues associated with a collateral assignment, see
"Tax Considerations" on page 31.
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Naming Beneficiaries. ML of New York will pay the primary beneficiary the death
benefit proceeds of the Contract on the insured's death. If the primary
beneficiary has died, ML of New York will pay the contingent beneficiary. If no
contingent beneficiary is living, ML of New York will pay the estate of the
insured.
A contract owner may name more than one person as primary or contingent
beneficiaries. ML of New York will pay proceeds in equal shares to the surviving
beneficiaries unless the beneficiary designation provides otherwise.
A contract owner has the right to change beneficiaries during the insured's
lifetime, unless the primary beneficiary designation has been made irrevocable.
If the designation is irrevocable, the primary beneficiary must consent when
certain rights and options are exercised under this Contract. If the beneficiary
is changed, the change will take effect as of the day the notice is signed, but
will not affect any payment made or action taken by ML of New York before
receipt of the notice of the change at the Service Center.
Maturity Proceeds. The maturity date is the contract anniversary nearest the
insured's 100th birthday. On the maturity date, ML of New York will pay the net
cash surrender value to the contract owner, provided the insured is still living
at that time and the Contract is in effect at that time.
How ML of New York Makes Payments. ML of New York generally pays death benefit
proceeds, partial withdrawals, loans and net cash surrender value on
cancellation from the Separate Account within seven days after the Service
Center receives all the information needed to process the payment.
However, it may delay payment from the Separate Account if it isn't practical
for ML of New York to value or dispose of Trust units or Fund shares because:
- the New York Stock Exchange is closed, other than for a customary weekend
or holiday; or
- trading on the New York Stock Exchange is restricted by the Securities
and Exchange Commission; or
- the Securities and Exchange Commission declares that an emergency exists
such that it is not reasonably practical to dispose of securities held in
the Separate Account or to determine the value of their assets.
SOME ADMINISTRATIVE PROCEDURES
Described below are certain administrative procedures. ML of New York reserves
the right to modify them or to eliminate them. For administrative and tax
purposes, ML of New York may from time to time require that specific forms be
completed in order to accomplish certain transactions, including surrenders.
Personal Identification Number. ML of New York will send each contract owner a
four-digit personal identification number ("PIN") shortly after the Contract is
placed in force and before the end of the "free look" period. This number must
be given when the contract owner calls the Service Center to get information
about the Contract, to make a loan (if an authorization is on file), or to make
other requests. Unless the contract owner has preallocated the Contract's
investment base, the personal identification number will be accompanied by a
notice reminding the contract owner that all of the investment base is in the
division investing in the Money Reserve Portfolio, and that this allocation may
be changed by calling or writing to the Service Center. (See "Changing the
Allocation" on page 17.)
Reallocating the Investment Base. Contract owners can reallocate their
investment base either in writing in a form satisfactory to ML of New York or by
phone. If the reallocation is requested by phone, contract owners must give
their personal identification number as well as their Contract number. ML of New
York will give a confirmation number over the phone and then follow up in
writing.
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Requesting a Loan. A loan may be requested in writing in a form satisfactory to
ML of New York or, if all required authorization forms are on file, by phone.
Once the authorization has been received at the Service Center, contract owners
can call the Service Center, give their Contract number, name and personal
identification number, and tell ML of New York the loan amount and from which
divisions the loan should be transferred.
Upon request, ML of New York will wire the funds to the contract owner's account
at the financial institution named on the contract owner's authorization. ML of
New York will generally wire the funds within two working days of receipt of the
request. If the contract owner has the CMA Insurance Service, funds may be
transferred directly to that CMA account.
Requesting Partial Withdrawals. Beginning in contract year 16, partial
withdrawals may be requested in writing in a form satisfactory to ML of New
York. A contract owner may request a partial withdrawal by phone if all required
phone authorization forms are on file. Once the authorization has been received
at the Service Center, contract owners can call the Service Center, give their
Contract number, name and personal identification number, and tell ML of New
York how much to withdraw and from which investment divisions.
Upon request, ML of New York will wire the funds to the contract owner's account
at the financial institution named on the contract owner's authorization. ML of
New York will generally wire the funds within two working days of receipt of the
request. If the contract owner has the CMA Insurance Service, funds may be
transferred directly to that CMA account.
Telephone Requests. A telephone request for a loan, partial withdrawal or a
reallocation received before 4 p.m. (ET) generally will be processed the same
day. A request received at or after 4 p.m. (ET) will be processed the following
business day. ML of New York reserves the right to change or discontinue
telephone transfer procedures.
ML of New York will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. These procedures may include, but are not
limited to, possible recording of telephone calls and obtaining appropriate
identification before effecting any telephone transactions. ML of New York will
not be liable for following telephone instructions that it reasonably believes
to be genuine.
OTHER CONTRACT PROVISIONS
In Case of Errors in the Application. If an age or sex given in the application
is wrong, it could mean that the face amount or any other Contract benefit is
wrong. ML of New York will pay what the payments made would have bought for the
guarantee period at the true age or sex.
Incontestability. ML of New York will rely on statements made in the
applications. Legally, they are considered representations, not warranties. ML
of New York can contest the validity of a Contract if any material misstatements
are made in the initial application or any application for reinstatement. ML of
New York can also contest the validity of any change in face amount due to a
change in death benefit option if any material misstatements are made in any
application required for the change. ML of New York can also contest any amount
of any death benefit which wouldn't be payable except for the fact that an
increase in the additional insurance rider face amount which requires evidence
of insurability was requested if any material misstatements are made in any
application required for the increase.
ML of New York will not contest the validity of a Contract after it has been in
effect during the lifetime of the insured for two years from the date of issue
or the date of any reinstatement. A change in face amount due to a change in the
death benefit option won't be contested after the change has been in effect
during the lifetime of the insured for two years from the date of the change.
Nor will ML of New York contest any amount of death benefit attributable to an
increase in the additional insurance rider face amount which requires evidence
of insurability after the increase has been in effect during the lifetime of the
insured for two years from the date of the change.
Payment in Case of Suicide. If the insured commits suicide within two years
from the Contract's issue date or the date of any reinstatement, ML of New York
will pay only a limited death benefit and then terminate the Contract. The
benefit will be equal to the amount of the payments made, reduced by any debt.
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If the insured commits suicide within two years of the effective date of a
change in death benefit option requiring evidence of insurability or of the
effective date of an increase in additional insurance rider face amount
requiring evidence of insurability, any amount of death benefit which would not
be payable except for the fact that the face amount was increased will be
limited to the amount of cost of insurance deductions made for the increase.
Contract Changes -- Applicable Federal Tax Law. To receive the tax treatment
accorded to life insurance under federal income tax law, the Contract must
qualify initially and continue to qualify as life insurance under the Internal
Revenue Code or successor law. Therefore, to maintain this qualification to the
maximum extent of the law, ML of New York reserves the right to return any
additional payments that would cause the Contract to fail to qualify as life
insurance under applicable tax law as interpreted by ML of New York. Further, ML
of New York reserves the right to make changes in the Contract or its riders or
to make distributions from the Contract to the extent it is necessary to
continue to qualify the Contract as life insurance. Any changes will apply
uniformly to all Contracts that are affected and contract owners will be given
advance written notice of such changes.
INCOME PLANS
ML of New York offers several income plans to provide for payment of the death
benefit proceeds to the beneficiary. The contract owner may choose one or more
income plans at any time during the lifetime of the insured. If no plan has been
chosen when the insured dies, the beneficiary has one year to apply the death
benefit proceeds either paid or payable to that beneficiary to one or more of
the plans. The contract owner may also choose one or more income plans if the
Contract is cancelled or a partial withdrawal is taken. ML of New York's
approval is needed for any plan where any income payment would be less than
$100. Payments under these plans do not depend on the investment results of a
separate account.
Income plans include:
Annuity Plan. An amount can be used to purchase a single premium
immediate annuity.
Interest Payment. Amounts can be left with ML of New York to earn
interest at an annual rate of at least 3%. Interest payments can be made
annually, semi-annually, quarterly or monthly.
Income for a Fixed Period. Payments are made in equal installments
for a fixed number of years.
Income for Life. Payments are made in equal monthly installments
until death of a named person or end of a designated period, whichever is
later. The designated period may be for 10 or 20 years.
Income of a Fixed Amount. Payments are made in equal installments
until proceeds applied under the option and interest on unpaid balance at
not less than 3% per year are exhausted.
Joint Life Income. Payments are made in monthly installments as long
as at least one of two named persons is living. While both are living, full
payments are made. If one dies, payments at two-thirds of the full amount
are made. Payments end completely when both named persons die.
Once in effect, some of the plans may not provide any surrender rights.
GROUP OR SPONSORED ARRANGEMENTS
For certain group or sponsored arrangements, ML of New York may reduce the sales
load, cost of insurance rates and the minimum payment and may modify
underwriting classifications and requirements.
Group arrangements include those in which a trustee or an employer, for example,
purchases Contracts covering a group of individuals on a group basis. Sponsored
arrangements include those in which an employer allows ML of New York to sell
Contracts to its employees on an individual basis. Costs for sales,
administration and mortality generally vary with the size and stability of the
group and the reasons the Contracts are purchased, among other factors. ML of
New York takes all
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these factors into account when reducing charges. To qualify for reduced
charges, a group or sponsored arrangement must meet certain requirements,
including requirements for size and number of years in existence. Group or
sponsored arrangements that have been set up solely to buy Contracts or that
have been in existence less than six months will not qualify for reduced
charges.
ML of New York makes any reductions according to rules in effect when an
application for a Contract or additional payment is approved. It may change
these rules from time to time. However, reductions in charges will not
discriminate unfairly against any person.
UNISEX LEGAL CONSIDERATIONS FOR EMPLOYERS
In 1983 the Supreme Court held in Arizona Governing Committee v. Norris that
optional annuity benefits provided under an employee's deferred compensation
plan could not, under Title Vll of the Civil Rights Act of 1964, vary between
men and women. In addition, legislative, regulatory or decisional authority of
some states may prohibit use of sex-distinct mortality tables under certain
circumstances.
Generally, the Contracts offered by this Prospectus are based on mortality
tables that distinguish between men and women. As a result, the Contract pays
different benefits to men and women of the same age. Employers and employee
organizations should check with their legal advisers before purchasing these
Contracts.
SELLING THE CONTRACTS
MLPF&S is the principal underwriter of the Contract. It was organized in 1958
under the laws of the state of Delaware and is registered as a broker dealer
under the Securities Exchange Act of 1934. It is a member of the National
Association of Securities Dealers, Inc. ("NASD"). The principal business address
of MLPF&S is World Financial Center, 250 Vesey Street, New York, New York 10281.
MLPF&S also acts as principal underwriter of other variable life insurance and
variable annuity contracts issued by ML of New York, as well as variable life
insurance and variable annuity contracts issued by Merrill Lynch Life Insurance
Company, an affiliate of ML of New York. MLPF&S also acts as principal
underwriter of certain mutual funds managed by MLAM, the investment adviser for
the Series Fund and the Variable Series Funds.
Contracts are sold by registered representatives of MLPF&S who are also licensed
through Merrill Lynch Life Agency, Inc. as insurance agents for ML of New York.
ML of New York has entered into a distribution agreement with MLPF&S and a
companion sales agreement with Merrill Lynch Life Agency, Inc. through which
agreements the Contracts and other variable life insurance contracts issued
through the Separate Account are sold and the registered representatives are
compensated by Merrill Lynch Life Agency, Inc. and/or MLPF&S.
The maximum commissions ML of New York will pay to the applicable insurance
agency to be used to pay commissions to registered representatives are as
follows: 55% of the target premium under the Contract; plus 3% of payments in
excess of the target premium, up to an amount of payments equal to ten base
premiums; plus 1.5% of payments thereafter. Commissions may be paid in the form
of non-cash compensation.
The amounts paid under the distribution and sales agreements for the Separate
Account for the years ended December 31, 1996, December 31, 1995 and December
31, 1994 were $263,503, $162,482, and $140,551, respectively.
MLPF&S may arrange for sales of the Contract by other broker-dealers who are
registered under the Securities Exchange Act of 1934 and are members of the
NASD. Registered representatives of these other broker-dealers may be
compensated on a different basis than MLPF&S registered representatives.
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TAX CONSIDERATIONS
Definition of Life Insurance. In order to qualify as a life insurance contract
for federal tax purposes, the Contract must meet the definition of a life
insurance contract which is set forth in Section 7702 of the Internal Revenue
Code of 1986, as amended (the "Code"). The manner in which Section 7702 should
be applied to certain features of the Contract offered in this Prospectus is not
directly addressed by Section 7702. Nevertheless, ML of New York believes that
the Contract will meet the Section 7702 definition of a life insurance contract.
This means that:
- the death benefit should be fully excludable from the gross income of the
beneficiary under Section 101(a)(1) of the Code; and
- the contract owner should not be considered in constructive receipt of
the cash value, including any increases, until actual cancellation of the
Contract (see "Tax Treatment of Loans and Other Distributions" below).
In the absence of final regulations or other pertinent interpretations of
Section 7702, however, there is necessarily some uncertainty as to whether a
substandard risk Contract will meet the statutory life insurance contract
definition. There may also be some uncertainty with respect to a Contract with
an additional insurance rider attached. If a Contract were determined not to be
a life insurance contract for purposes of Section 7702, such Contract would not
provide most of the tax advantages normally provided by a life insurance
contract.
ML of New York thus reserves the right to make changes in the Contract if such
changes are deemed necessary to attempt to assure its qualification as a life
insurance contract for tax purposes. (See "Contract Changes -- Applicable
Federal Tax Law" on page 29.)
Diversification. Section 817(h) of the Code provides that separate account
investments (or the investments of a mutual fund, the shares of which are owned
by separate accounts of insurance companies) underlying the Contract must be
"adequately diversified" in accordance with Treasury regulations in order for
the Contract to qualify as life insurance. The Treasury Department has issued
regulations prescribing the diversification requirements in connection with
variable contracts. The Separate Account, through the Funds, intends to comply
with these requirements. Each Fund is obligated to comply with the
diversification requirements prescribed by the Treasury Department.
In connection with the issuance of the temporary diversification regulations,
the Treasury Department stated that it anticipates the issuance of regulations
or rulings prescribing the circumstances in which an owner's control of the
investments of a separate account may cause the owner, rather than the insurance
company, to be treated as the owner of the assets in the account. If the
contract owner is considered the owner of the assets of the Separate Account,
income and gains from the account would be included in the owner's gross income.
The ownership rights under the Contract offered in this Prospectus are similar
to, but different in certain respects from, those described by the Internal
Revenue Service in rulings in which it determined that the owners were not
owners of separate account assets. For example, the owner of the Contract has
additional flexibility in allocating payments and cash values. These differences
could result in the owner being treated as the owner of the assets of the
Separate Account. In addition, ML of New York does not know what standards will
be set forth in the regulations or rulings which the Treasury has stated it
expects to be issued. ML of New York therefore reserves the right to modify the
Contract as necessary to attempt to prevent the contract owner from being
considered an owner of the assets of the Separate Account.
Tax Treatment of Loans and Other Distributions. Federal tax law establishes a
class of life insurance contracts referred to as modified endowment contracts. A
modified endowment contract is any contract which satisfies the definition of
life insurance set forth in Section 7702 of the Code but fails to meet the 7-pay
test. This test applies a cumulative limit on the amount of payments that can be
made into a contract each year in the first seven contract years in order to
avoid modified endowment treatment. In effect, compliance with the 7-pay test
requires that contracts be purchased
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with a higher face amount for a given initial payment than would otherwise be
required, at a minimum, to meet the definition of life insurance. Contracts that
do not satisfy the 7-pay test, including contracts which initially satisfied the
7-pay test but later failed the test, will be considered modified endowment
contracts subject to the following distribution rules. Loans and partial
withdrawals from, as well as collateral assignments of, modified endowment
contracts will be treated as distributions to the contract owner. Furthermore,
if the loan interest is capitalized by adding the amount due to the balance of
the loan, the amount of the capitalized interest will be treated as a
distribution which may be subject to income tax, to the extent of the income in
the contract. All pre-death distributions (including loans, capitalized
interest, partial withdrawals, collateral assignments and complete surrenders)
from these contracts will be included in gross income on an income-first basis
to the extent of any income in the contract (the cash value less the contract
owner's investment in the contract) immediately before the distribution.
The law also imposes a 10% penalty tax on pre-death distributions (including
loans, capitalized interest, collateral assignments, partial withdrawals and
complete surrenders) from modified endowment contracts to the extent they are
included in income, unless such amounts are distributed on or after the taxpayer
attains age 59 1/2, because the taxpayer is disabled, or as substantially equal
periodic payments over the taxpayer's life (or life expectancy) or over the
joint lives (or joint life expectancies) of the taxpayer and his or her
beneficiary.
Contracts that comply with the 7-pay test will not be classified as modified
endowment contracts. Loans from contracts that are not modified endowment
contracts will be considered indebtedness of an owner and no part of a loan will
constitute income to the owner. In addition, pre-death distributions from these
contracts will generally not be included in gross income to the extent that the
amount received does not exceed the owner's investment in the contract. A lapse
of such a contract with an outstanding loan will result in the treatment of the
loan cancellation (including the accrued interest) as a distribution under the
contract and may be taxable.
Compliance with the 7-pay test does not imply or guarantee that only seven
payments will be required for the initial death benefit to be guaranteed for
life. Making additional payments or reducing the benefits (for example, through
a partial withdrawal, a change in death benefit option or terminating additional
benefits under a rider) may violate the 7-pay test or, at a minimum, reduce the
amount that may be paid in the future under the 7-pay test. Further, reducing
the death benefit during the first seven contract years will require retroactive
retesting and may well result in a failure of the 7-pay test regardless of any
efforts by ML of New York to provide a payment schedule that will not violate
the 7-pay test.
Any contract received in an exchange for a modified endowment contract will be
considered a modified endowment contract and will be subject to the tax
treatment accorded to modified endowment contracts that is described in the
Prospectus. A contract that is not originally classified as a modified endowment
contract can become so classified if there is a reduction in benefits during the
first seven contract years (including, for example, by a decrease in the
additional insurance rider face amount or a change in death benefit option) or
if a material change is made in the contract at any time. (A material change
includes, but is not limited to, a change in the benefits that was not reflected
in a prior 7-pay test computation, such as a change in death benefit option.)
This could result from additional payments made after 7-pay test calculations
done at the time of the contract exchange. Contract owners may choose not to
exercise their right to make additional payments, in order to preserve their
contract's current tax treatment.
If a contract becomes a modified endowment contract, distributions that occur
during the contract year it becomes a modified endowment contract and any
subsequent contract year will be taxed as distributions from a modified
endowment contract. In addition, distributions from a contract within two years
before it becomes a modified endowment contract will be taxed in this manner.
This means that a distribution made from a contract that is not a modified
endowment contract could later become taxable as a distribution from a modified
endowment contract.
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Special Treatment of Loans on the Contract. If there is any borrowing against
the Contract, whether a modified endowment contract or not, the interest paid on
loans generally is not tax deductible.
Aggregation of Modified Endowment Contracts. In the case of a pre-death
distribution (including a loan, partial withdrawal, capitalized interest,
collateral assignment or complete surrender) from a contract that is treated as
a modified endowment contract under the rules described above, a special
aggregation requirement may apply for purposes of determining the amount of the
income on the contract. Specifically, if ML of New York or any of its affiliates
issues to the same contract owner more than one modified endowment contract
within a calendar year, then for purposes of measuring the income on the
contract with respect to a distribution from any of those contracts, the income
on the contract for all those contracts will be aggregated and attributed to
that distribution.
Tax Treatment of Policy Split. The Contract may be issued upon exercise of
rights provided by a policy split rider under certain joint and last survivor
contracts issued by ML of New York. (For more information about this rider and
the conditions and rules relating to the exercise of any rights under the rider,
the contract owner should call the Service Center.) A policy split could have
adverse tax consequences; for example, it is not clear whether a policy split
will be treated as a nontaxable exchange under Sections 1031 through 1043 of the
Code. If a policy split is not treated as a nontaxable exchange, a split could
result in the recognition of taxable income in an amount up to any gain in the
joint and last survivor contract at the time of the split. In addition, it is
not clear whether the individual Contracts that result from a policy split would
in all circumstances be treated as life insurance contracts for federal income
tax purposes and, if so treated, whether the Contracts would be classified as
modified endowment contracts. (See "Tax Treatment of Loans and Other
Distributions" page 31.) Before the contract owner exercises rights provided by
a policy split rider in order to obtain this Contract, it is important that he
or she consult with a competent tax advisor regarding the possible consequences
of a policy split.
Other Tax Considerations. The transfer of the Contract or the designation of a
beneficiary may have federal, state, and/or local transfer and inheritance tax
consequences, including the imposition of gift, estate and generation skipping
transfer taxes. For example, the transfer of the Contract to, or the designation
as beneficiary of, or the payment of proceeds to, a person who is assigned to a
generation which is two or more generations below the generation assignment of
the contract owner, may have generation skipping transfer tax considerations
under Section 2601 of the Code.
The individual situation of each contract owner or beneficiary will determine
the extent, if any, to which federal, state and local transfer taxes may be
imposed. The contract owner should consult with a tax advisor for specific
information in connection with these taxes.
The particular situation of each contract owner or beneficiary will determine
how ownership or receipt of contract proceeds will be treated for purposes of
federal estate tax as well as state and local estate, inheritance, generation
skipping and other taxes.
Other Transactions. Changing the contract owner or an additional insurance
rider's face amount may have tax consequences. Exchanging this Contract for
another involving the same insured should have no federal income tax
consequences if there is no debt and no cash or other property is received,
according to Section 1035(a)(1) of the Code. In addition, exchanging this
Contract for more than one contract, or exchanging this Contract and one or more
other contracts for a single contract, in certain circumstances, may be treated
as an exchange under Section 1035, as long as all such contracts involve the
same insured(s). Any new contract would have to satisfy the 7-pay test from the
date of the exchange to avoid characterization as a modified endowment contract.
An exchange for a new contract or contracts may, however, result in a loss of
grandfathering status for statutory changes made after the old contract or
contracts were issued. Changing the insured under this Contract may not be
treated as an exchange under Section 1035, but rather as a taxable exchange. A
tax advisor should be consulted before effecting an exchange, since even if an
exchange is within Section 1035(a), the exchange may have tax consequences other
than immediate recognition of income.
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In addition, the Contract may be used in various arrangements, including
nonqualified deferred compensation or salary continuance plans, split dollar
insurance plans, executive bonus plans, retiree medical benefit plans and
others. The tax consequences of such plans may vary depending on the particular
facts and circumstances of each individual arrangement. Therefore, if you are
contemplating the use of a contract in any arrangement the value of which
depends in part on its tax consequences, you should be sure to consult a
qualified tax advisor regarding the tax attributes of the particular
arrangement.
Ownership of This Contract by Non-Natural Persons. The above discussion of the
tax consequences arising from the purchase, ownership and transfer of the
Contract has assumed that the owner of the Contract consists of one or more
individuals. Organizations exempt from taxation under Section 501(a) of the Code
may be subject to additional or different tax consequences with respect to
transactions such as contract loans. Further, organizations purchasing Contracts
covering the life of an individual who is an officer or employee of, or is
financially interested in, the taxpayer's trade or business, should consult a
tax advisor regarding possible tax consequences associated with a Contract prior
to the acquisition of this Contract and also before entering into any subsequent
changes to or transactions under this Contract.
ML of New York does not make any guarantee regarding the tax status of any
Contract or any transaction regarding the Contract.
The above discussion is not intended as tax advice. For tax advice contract
owners should consult a competent tax advisor. Although this tax discussion is
based on ML of New York's understanding of federal income tax laws as they are
currently interpreted, it can't guarantee that those laws or interpretations
will remain unchanged.
ML OF NEW YORK'S INCOME TAXES
Insurance companies are generally required to capitalize and amortize certain
policy acquisition expenses over a ten-year period rather than currently
deducting such expenses. This treatment applies to the deferred acquisition
expenses of a Contract and results in a significantly higher corporate income
tax liability for ML of New York in early contract years. ML of New York makes a
charge to compensate ML of New York for the anticipated higher corporate income
taxes that result from the receipt of payments under a Contract. (See "Contract
Loading" on page 18.)
Currently, ML of New York makes no charges to the Separate Account for any
federal, state or local taxes that it incurs that may be attributable to the
Separate Account or to the Contracts. ML of New York, however, reserves the
right to make a charge for assessments of federal premium taxes or federal,
state or local excise, profits or income taxes measured by or attributable to
the receipt of premiums.
REINSURANCE
ML of New York intends to reinsure some of the risks assumed under the
Contracts.
MORE ABOUT THE SEPARATE ACCOUNT AND ITS DIVISIONS
ABOUT THE SEPARATE ACCOUNT
The Separate Account is registered with the Securities and Exchange Commission
under the Investment Company Act of 1940 as a unit investment trust. This
registration does not involve any supervision by the Securities and Exchange
Commission of ML of New York's management or the management of the Separate
Account. The Separate Account is also governed by the laws of the State of New
York, ML of New York's state of domicile. ML of New York owns all of the assets
of the Separate Account. These assets are held separate and apart from all of ML
of New York's other assets. ML of New York maintains records of all purchases
and redemptions of shares of the Funds and units of the Zero Trusts by each of
the investment divisions.
34
<PAGE> 39
CHANGES WITHIN THE ACCOUNT
ML of New York may from time to time make additional investment divisions
available to contract owners. These divisions will invest in investment
portfolios ML of New York finds suitable for the Contracts. ML of New York also
has the right to eliminate investment divisions from the Separate Account, to
combine two or more investment divisions, or to substitute a new portfolio for
the portfolio in which an investment division invests. A substitution may become
necessary if, in ML of New York's judgment, a portfolio no longer suits the
purposes of the Contracts. This may happen due to a change in laws or
regulations or in a portfolio's investment objectives or restrictions, or
because the portfolio is no longer available for investment, or for some other
reason. ML of New York would get any required prior approval from the New York
State Insurance Department and the Securities and Exchange Commission before
making such a substitution. It would also get any other required approvals
before making such a substitution.
Subject to any required regulatory approvals, ML of New York reserves the right
to transfer assets of the Separate Account or of any of the investment divisions
to another separate account or investment division.
When permitted by law, ML of New York reserves the right to:
- deregister the Separate Account under the Investment Company Act of 1940;
- operate the Separate Account as a management company under the Investment
Company Act of 1940;
- restrict or eliminate any voting rights of contract owners, or other
persons who have voting rights as to the Separate Account; and
- combine the Separate Account with other separate accounts.
NET RATE OF RETURN FOR AN INVESTMENT DIVISION
Each investment division has a distinct unit value (also referred to as "price"
or "separate account index" in reports furnished to the contract owner by ML of
New York). When payments or other amounts are allocated to an investment
division, a number of units are purchased based on the value of a unit of the
investment division as of the end of the valuation period during which the
allocation is made. When amounts are transferred out of, or deducted from, an
investment division, units are redeemed in a similar manner. A valuation period
is each business day together with any non-business days before it. A business
day for an investment division is any day the New York Stock Exchange is open or
the SEC requires that the net asset value of an investment division be
determined.
For each investment division, the separate account index was initially set at
$10.00. The separate account index for each subsequent valuation period
fluctuates based upon the net rate of return for that period. ML of New York
determines the net rate of return of an investment division at the end of each
valuation period. The net rate of return reflects the investment performance of
the division for the valuation period and is net of the charges to the Separate
Account described above.
For divisions investing in the Funds, shares are valued at net asset value and
reflect reinvestment of any dividends or capital gains distributions declared by
the Funds.
For divisions investing in the Zero Trusts, units of each Zero Trust are valued
at the sponsor's repurchase price, as explained in the prospectus for the Zero
Trusts.
THE FUNDS
Buying and Redeeming Shares. The Funds sell and redeem their shares at net
asset value. Any dividend or capital gain distribution will be reinvested at net
asset value in shares of the same portfolio.
35
<PAGE> 40
Voting Rights. ML of New York is the legal owner of all Fund shares held in the
Separate Account. As the owner, ML of New York has the right to vote on any
matter put to vote at the Funds' shareholder meetings. However, ML of New York
will vote all Fund shares attributable to Contracts according to instructions
received from contract owners. Shares attributable to Contracts for which no
voting instructions are received will be voted in the same proportion as shares
in the respective investment divisions for which instructions are received.
Shares not attributable to Contracts will also be voted in the same proportion
as shares in the respective divisions for which instructions are received. If
any federal securities laws or regulations, or their present interpretation,
change to permit ML of New York to vote Fund shares in its own right, it may
elect to do so.
ML of New York determines the number of shares that contract owners have in an
investment division by dividing their Contract's investment base in that
division by the net asset value of one share of the portfolio. Fractional votes
will be counted. ML of New York will determine the number of shares for which a
contract owner may give voting instructions 90 days or less before each Fund
meeting. ML of New York will request voting instructions by mail at least 14
days before the meeting.
Under certain circumstances, ML of New York may be required by state regulatory
authorities to disregard voting instructions. This may happen if following the
instructions would mean voting to change the sub-classification or investment
objectives of the portfolios, or to approve or disapprove an investment advisory
contract.
ML of New York may also disregard instructions to vote for changes initiated by
a contract owner in the investment policy or the investment adviser if it
disapproves of the proposed changes. ML of New York would disapprove a proposed
change only if it was:
- contrary to state law;
- prohibited by state regulatory authorities; or
- decided by management that the change would result in overly speculative
or unsound investments.
If ML of New York disregards voting instructions, it will include a summary of
its actions in the next semi-annual report.
Resolving Material Conflicts. Shares of the Series Fund are available for
investment by ML of New York, Merrill Lynch Life Insurance Company (an indirect
wholly owned subsidiary of Merrill Lynch & Co., Inc.) and Monarch Life Insurance
Company (an insurance company not affiliated with ML of New York or Merrill
Lynch & Co., Inc.). Shares of the Variable Series Funds, the AIM V.I. Funds, the
Alliance Fund, and the MFS Trust are sold to separate accounts of ML of New
York, Merrill Lynch Life Insurance Company and insurance companies not
affiliated with ML of New York or Merrill Lynch & Co., Inc. to fund benefits
under variable life insurance and variable annuity contracts, and may be sold to
certain qualified plans.
It is possible that differences might arise between ML of New York's Separate
Account and one or more of the other separate accounts which invest in the
Funds. In some cases, it is possible that the differences could be considered
"material conflicts". Such a "material conflict" could also arise due to changes
in the law (such as state insurance law or federal tax law) which affect these
different variable life insurance and variable annuity separate accounts. It
could also arise by reason of difference in voting instructions from ML of New
York's contract owners and those of the other insurance companies, or for other
reasons. ML of New York will monitor events to determine how to respond to such
conflicts. If a conflict occurs, ML of New York may be required to eliminate one
or more investment divisions of the Separate Account which invest in the Funds
or substitute a new portfolio for a portfolio in which a division invests. In
responding to any conflict, ML of New York will take the action which it
believes necessary to protect its contract owners, consistent with applicable
legal requirements.
36
<PAGE> 41
Administration Services Agreements. AIM V.I. Funds has entered into an
Administrative Services Agreement with AIM, pursuant to which AIM has agreed to
provide certain accounting and other administrative services to the AIM V.I.
Funds, including the services of a principal financial officer and related
staff. As compensation to AIM for its services under the Administrative Services
Agreement, the AIM V.I. Funds reimburse AIM for expenses incurred by AIM or its
affiliates in connection with such services. AIM has entered into an agreement
with ML of New York with respect to administrative services for the AIM V.I.
Funds in connection with the Contracts. Under this agreement, AIM pays
compensation to ML of New York in an amount equal to a percentage of the average
net assets of the AIM V.I. Funds attributable to the Contracts.
Alliance Fund Distributors, Inc. ("AFD"), an affiliate of Alliance, has entered
into an agreement with ML of New York with respect to administrative services
for the Alliance Fund in connection with the Contracts. Under this agreement,
AFD pays compensation to ML of New York in an amount equal to a percentage of
the average net assets of the Alliance Fund attributable to the Contracts.
MFS has entered into an agreement with MLIG with respect to administrative
services for the MFS Trust in connection with the Contracts and certain
contracts issued by Merrill Lynch Life Insurance Company. Under this agreement,
MFS pays compensation to MLIG in an amount equal to a percentage of the average
net assets of the MFS Trust attributable to such contracts.
THE ZERO TRUSTS
The 16 Zero Trusts:
<TABLE>
<CAPTION>
Targeted Rate of Return to
Maturity as of
Zero Trust Maturity Date April 16, 1997
--------------------- --------------------- --------------------------
<C> <S> <C>
1998 February 15, 1998 4.35%
1999 February 15, 1999 5.11%
2000 February 15, 2000 5.28%
2001 February 15, 2001 5.33%
2002 February 15, 2002 5.46%
2003 August 15, 2003 5.57%
2004 February 15, 2004 5.64%
2005 February 15, 2005 5.59%
2006 February 15, 2006 5.45%
2007 February 15, 2007 5.56%
2008 February 15. 2008 5.83%
2009 February 15, 2009 5.86%
2010 February 15, 2010 5.94%
2011 February 15, 2011 5.92%
2013 February 15, 2013 6.00%
2014 February 15, 2014 6.09%
</TABLE>
Targeted Rate of Return to Maturity
Because the underlying securities in the Zero Trusts will grow to their face
value on the maturity date, it is possible to estimate a compound rate of growth
to maturity for the Zero Trust units.
But because the units are held in the Separate Account, the asset charge and the
trust charge (described in "Charges to the Separate Account" on page 19) must be
taken into account in estimating a targeted rate of return for the Separate
Account. The targeted rate of return to maturity for the Separate Account
depends on the compound rate of growth adjusted for these charges. It does not,
however, represent the actual return on a payment ML of New York might receive
under the Contract on that date, since it does not reflect the charges for
contract loading deducted from
37
<PAGE> 42
payments to a Contract, charges for cost of insurance and rider charges and any
net loan cost deducted from a Contract's investment base.
Since the value of the Zero Trust units will vary daily to reflect the market
value of the underlying securities, the compound rate of growth to maturity for
the Zero Trust units and the targeted rate of return to maturity for the
Separate Account will vary correspondingly.
ILLUSTRATIONS
ILLUSTRATIONS OF DEATH BENEFITS, INVESTMENT BASE, NET CASH SURRENDER VALUES AND
ACCUMULATED PAYMENTS
The tables on pages 40 through 43 demonstrate the way in which the Contract
works. The tables are based on the following ages, face amounts, payments and
guarantee periods and show values based upon both current and maximum mortality
charges.
1. The illustration on page 40 is for a Contract issued to a male age
45 in the standard non-smoker underwriting class with annual payments of
$18,009 through contract year 52, an initial face amount of $1 million, an
initial guarantee period of 2.5 years and coverage under death benefit
option 1. It assumes current mortality charges.
2. The illustration on page 41 is for a Contract issued to a male age
45 in the standard non-smoker underwriting class with annual payments of
$18,009 through contract year 52, an initial face amount of $1 million, an
initial guarantee period of 2.5 years and coverage under death benefit
option 1. It assumes maximum mortality charges.
3. The illustration on page 42 is for a Contract issued to a male age
45 in the standard non-smoker underwriting class with annual payments of
$55,163 through contract year 43, an initial face amount of $1 million, an
initial guarantee period of 9.5 years and coverage under death benefit
option 2. It assumes current mortality charges.
4. The illustration on page 43 is for a Contract issued to a male age
45 in the standard non-smoker underwriting class with annual payments of
$55,163 through contract year 43, an initial face amount of $1 million, an
initial guarantee period of 9.5 years and coverage under death benefit
option 2. It assumes maximum mortality charges.
The tables show how the death benefit, investment base and net cash surrender
value may vary over an extended period of time assuming hypothetical rates of
return (i.e., investment income and capital gains and losses, realized or
unrealized) equivalent to constant gross annual rates of 0%, 6% and 12%.
The death benefit, investment base and net cash surrender value for a Contract
would be different from those shown if the actual rates of return averaged 0%,
6% and 12% over a period of years, but also fluctuated above or below those
averages for individual contract years.
The amounts shown for the death benefit, investment base and net cash surrender
value as of the end of each contract year take into account the daily asset
charge in the Separate Account equivalent to .90% (annually at the beginning of
the year) of assets attributable to the Contracts at the beginning of the year.
The amounts shown in the tables also assume an additional charge of .52%. This
charge assumes that investment base is allocated equally among all investment
divisions and is based on the 1996 expenses (including monthly advisory fees)
for the Funds and the current trust charge. This charge also reflects expense
reimbursements made in 1996 to certain portfolios by the investment adviser to
the respective portfolio. These reimbursements amounted to .06%, .07%, .16%,
.48%, and .28% of the average daily net assets of the Developing Capital Markets
Focus Fund, the Natural Resources Portfolio, the MFS Emerging Growth Series, the
MFS Research Series, and the Premier Growth Portfolio, respectively. (See
"Charges to Fund Assets" on page 19.) The actual charge under a
38
<PAGE> 43
Contract for Fund expenses and the trust charge will depend on the actual
allocation of the investment base and may be higher or lower depending on how
the investment base is allocated.
Taking into account the .90% asset charge in the Separate Account and the .52%
charge described above, the gross annual rates of investment return of 0%, 6%
and 12% correspond to net annual rates of -1.42%, 4.53%, and 10.48%,
respectively. The gross returns are before any deductions and should not be
compared to rates which are after deduction of charges.
The hypothetical returns shown on the tables are without any income tax charges
that may be attributable to the Separate Account in the future, although they do
reflect the charge for federal taxes included in the contract loading. (See
"Contract Loading" on page 18.) In order to produce after tax returns of 0%, 6%
and 12%, the Funds would have to earn a sufficient amount in excess of 0% or 6%
or 12% to cover any tax charges attributable to the Separate Account.
The second column of the tables shows the amount which would accumulate if an
amount equal to the payments were invested to earn interest (after taxes) at 5%
compounded annually.
ML of New York will furnish upon request a personalized illustration reflecting
the proposed insured's age, face amount and the payment amounts requested. The
illustration will also use current cost of insurance rates and will assume that
the proposed insured is in a standard non-smoker underwriting class.
39
<PAGE> 44
MALE ISSUE AGE 45
STANDARD NON-SMOKER UNDERWRITING CLASS
ANNUAL PAYMENTS OF $18,009 THROUGH CONTRACT YEAR 52
FACE AMOUNT(1): $1 MILLION INITIAL GUARANTEE PERIOD: 2.5 YEARS
DEATH BENEFIT OPTION 1
BASED ON CURRENT MORTALITY CHARGES
<TABLE>
<CAPTION>
TOTAL
PAYMENTS END OF YEAR
MADE PLUS DEATH BENEFIT(3)(7)
INTEREST AT ASSUMING HYPOTHETICAL GROSS
5% AS ANNUAL INVESTMENT RETURN OF
OF END OF ------------------------------------------------
CONTRACT YEAR PAYMENTS(2)(6) YEAR 0% 6% 12%
- --------------------- -------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
1................... $ 18,009 $ 18,909 $ 1,000,000 $ 1,000,000 $ 1,000,000
2................... 18,009 38,764 1,000,000 1,000,000 1,000,000
3................... 18,009 59,612 1,000,000 1,000,000 1,000,000
4................... 18,009 81,502 1,000,000 1,000,000 1,000,000
5................... 18,009 104,487 1,000,000 1,000,000 1,000,000
6................... 18,009 128,621 1,000,000 1,000,000 1,000,000
7................... 18,009 153,962 1,000,000 1,000,000 1,000,000
8................... 18,009 180,570 1,000,000 1,000,000 1,000,000
9................... 18,009 208,508 1,000,000 1,000,000 1,000,000
10................... 18,009 237,843 1,000,000 1,000,000 1,000,000
15................... 18,009 408,043 1,000,000 1,000,000 1,000,000
20................... 18,009 625,265 1,000,000 1,000,000 1,000,000
30................... 18,009 1,256,330 1,000,000 1,000,000 2,180,409
55................... 0 5,097,257 0 0 0
</TABLE>
<TABLE>
<CAPTION>
END OF YEAR
INVESTMENT BASE AND END OF YEAR
NET CASH SURRENDER VALUE(3)(4) CASH VALUE(3)(5)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL RATE OF RETURN OF ANNUAL RATE OF RETURN OF
-------------------------------------------- --------------------------------------------
CONTRACT YEAR 0% 6% 12% 0% 6% 12%
- --------------------- --------- ----------- ------------ --------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
1................... $ 7,639 $ 8,131 $ 8,623 $ 7,639 $ 8,131 $ 8,623
2................... 14,713 16,158 17,663 14,713 16,158 17,663
3................... 29,283 32,616 36,189 29,283 32,616 36,189
4................... 43,380 49,550 56,385 43,380 49,550 56,385
5................... 57,085 67,063 78,515 57,085 67,063 78,515
6................... 70,430 85,212 102,820 70,430 85,212 102,820
7................... 83,434 104,047 129,559 83,434 104,047 129,559
8................... 96,187 123,689 159,086 96,187 123,689 159,086
9................... 108,637 144,127 191,656 108,637 144,127 191,656
10................... 120,679 165,294 227,504 120,679 165,294 227,504
15................... 171,062 279,842 467,247 171,062 279,842 467,247
20................... 203,717 412,339 772,816 203,717 412,339 772,816
30................... 183,308 702,172 2,037,765 183,308 702,172 2,037,765
55................... 0 1,854,596 23,142,909 0 1,854,596 23,142,909
</TABLE>
- ------------------------------
(1) Assumes no additional insurance rider face amount.
(2) All payments are illustrated as if made at the beginning of the contract
year.
(3) Assumes annual payments are made and no loans or withdrawals have been
taken.
(4) Investment base will equal net cash surrender value on each contract
anniversary. If the Contract is surrendered within 24 months after issue,
the contract owner will also receive any excess sales load previously
deducted.
(5) Cash value will equal investment base and net cash surrender value on each
contract anniversary if no loans have been taken.
(6) The payments shown may extend beyond the year in which the automatic
adjustment is made. At annual rates of return of 6% and 12% and currently
mortality charges, the guarantee period reaches life of the insured in
contract years 27 and 16, respectively. Once a guarantee of life is reached,
no more payments would be accepted. Values shown at annual rates of return
of 0%, 6% and 12% do not reflect any payments shown after a guarantee period
of life is reached.
(7) At contract year 55, on the contract anniversary nearest the insured's 100th
birthday, the Contract reaches its maturity date and a death benefit is no
longer provided. On the maturity date, the net cash surrender value is paid
to the contract owner, provided the insured is still living.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE
AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE PERFORMANCE. ACTUAL RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE ILLUSTRATED AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS SELECTED, PREVAILING INTEREST
RATES AND RATES OF INFLATION. THE DEATH BENEFIT, INVESTMENT BASE AND CASH VALUE
WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF RETURN AVERAGED
0%, 6% AND 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE
AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY ML OF
NEW YORK OR THE FUNDS OR THE ZERO TRUSTS THAT THESE HYPOTHETICAL RATES OF RETURN
CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
40
<PAGE> 45
MALE ISSUE AGE 45
STANDARD NON SMOKER UNDERWRITING CLASS
ANNUAL PAYMENTS OF $18,009 THROUGH CONTRACT YEAR 52
FACE AMOUNT(1): $1 MILLION INITIAL GUARANTEE PERIOD: 2.5 YEARS
DEATH BENEFIT OPTION 1
BASED ON MAXIMUM MORTALITY CHARGES
<TABLE>
<CAPTION>
TOTAL
PAYMENTS END OF YEAR
MADE PLUS DEATH BENEFIT(3)(7)
INTEREST AT ASSUMING HYPOTHETICAL GROSS
5% AS ANNUAL RATE OF RETURN OF
END OF OF END OF ------------------------------------------------
CONTRACT YEAR PAYMENTS(2)(6) YEAR 0% 6% 12%
- --------------------- -------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
1................... $ 18,009 $ 18,909 $ 1,000,000 $ 1,000,000 $ 1,000,000
2................... 18,009 38,764 1,000,000 1,000,000 1,000,000
3................... 18,009 59,612 1,000,000 1,000,000 1,000,000
4................... 18,009 81,502 1,000,000 1,000,000 1,000,000
5................... 18,009 104,487 1,000,000 1,000,000 1,000,000
6................... 18,009 128,621 1,000,000 1,000,000 1,000,000
7................... 18,009 153,962 1,000,000 1,000,000 1,000,000
8................... 18,009 180,570 1,000,000 1,000,000 1,000,000
9................... 18,009 208,508 1,000,000 1,000,000 1,000,000
10................... 18,009 237,843 1,000,000 1,000,000 1,000,000
15................... 18,009 408,043 1,000,000 1,000,000 1,000,000
20................... 18,009 625,265 1,000,000 1,000,000 1,000,000
30................... 18,009 1,256,330 1,000,000 1,000,000 1,798,719
55................... 0 5,097,257 0 0 0
</TABLE>
<TABLE>
<CAPTION>
END OF YEAR
INVESTMENT BASE AND END OF YEAR
NET CASH SURRENDER VALUE(3)(4) CASH VALUE(3)(5)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL RATE OF RETURN OF ANNUAL RATE OF RETURN OF
------------------------------------------ ------------------------------------------
CONTRACT YEAR 0% 6% 12% 0% 6% 12%
- --------------------- --------- --------- ------------ --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
1................... $ 5,714 $ 6,134 $ 6,556 $ 5,714 $ 6,134 $ 6,556
2................... 11,105 12,297 13,544 11,105 12,297 13,554
3................... 24,173 26,972 29,975 24,173 26,972 29,975
4................... 36,811 42,065 47,883 36,811 42,065 47,883
5................... 48,993 57,571 67,404 48,993 57,571 67,404
6................... 60,713 73,499 88,709 60,713 73,499 88,709
7................... 71,920 89,820 111,943 71,920 89,820 111,943
8................... 82,564 106,502 137,279 82,564 106,502 137,279
9................... 92,607 123,527 164,923 92,607 123,527 164,923
10................... 101,985 140,854 195,088 101,985 140,854 195,088
15................... 137,311 231,333 394,766 137,311 231,333 394,766
20................... 146,302 325,042 655,946 146,302 325,042 655,946
30................... 0 482,056 1,681,045 0 482,056 1,681,045
55................... 0 0 18,000,226 0 0 18,000,226
</TABLE>
- ------------------------------
(1) Assumes no additional insurance rider face amount.
(2) All payments are illustrated as if made at the beginning of the contract
year.
(3) Assumes annual payments are made and no loans or withdrawals have been
taken.
(4) Investment base will equal net cash surrender value on each contract
anniversary. If the Contract is surrendered within 24 months after issue,
the contract owner will also receive any excess sales load previously
deducted.
(5) Cash value will equal investment base and net cash surrender value on each
contract anniversary if no loans have been taken.
(6) The payments shown may extend beyond the year in which the automatic
adjustment is made. At an annual rate of return of 12% and maximum mortality
charges, the guarantee period reaches life of the insured in contract year
17. Once a guarantee of life is reached, no more payments would be accepted.
Values shown at annual rates of return of 0%, 6% and 12% do not reflect any
payments shown after a guarantee period of life is reached.
(7) At contract year 55, on the contract anniversary nearest the insured's 100th
birthday, the Contract reaches its maturity date and a death benefit is no
longer provided. On the maturity date, the net cash surrender value is paid
to the contract owner, provided the insured is still living.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE
AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE PERFORMANCE. ACTUAL RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE ILLUSTRATED AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS SELECTED, PREVAILING INTEREST
RATES AND RATES OF INFLATION. THE DEATH BENEFIT, INVESTMENT BASE AND CASH VALUE
WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF RETURN AVERAGED
0%, 6% AND 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE
AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY ML OF
NEW YORK OR THE FUNDS OR THE ZERO TRUSTS THAT THESE HYPOTHETICAL RATES OF RETURN
CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
41
<PAGE> 46
MALE ISSUE AGE 45
STANDARD NON-SMOKER UNDERWRITING CLASS
ANNUAL PAYMENTS OF $55,163 THROUGH CONTRACT YEAR 43
FACE AMOUNT(1): $1 MILLION INITIAL GUARANTEE PERIOD: 9.5 YEARS
DEATH BENEFIT OPTION 2
BASED ON CURRENT MORTALITY CHARGES
<TABLE>
<CAPTION>
TOTAL
PAYMENTS END OF YEAR
MADE PLUS DEATH BENEFIT(3)(7)
INTEREST AT ASSUMING HYPOTHETICAL GROSS
5% AS ANNUAL RATE OF RETURN OF
OF END OF -----------------------------------------------
CONTRACT YEAR PAYMENTS(2)(6) YEAR 0% 6% 12%
- --------------------- -------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
1................... $ 55,163 $ 57,921 $ 1,034,620 $ 1,036,741 $ 1,038,862
2................... 55,163 118,738 1,084,247 1,091,590 1,099,187
3................... 55,163 182,596 1,132,740 1,148,479 1,165,374
4................... 55,163 249,647 1,180,232 1,207,621 1,238,162
5................... 55,163 320,051 1,226,809 1,269,194 1,318,321
6................... 55,163 393,975 1,272,506 1,333,328 1,406,645
7................... 55,163 471,595 1,317,346 1,400,153 1,504,004
8................... 55,163 553,096 1,361,429 1,469,881 1,611,439
9................... 55,163 638,672 1,404,703 1,542,578 1,729,938
10................... 55,163 728,527 1,447,050 1,618,245 1,860,522
15................... 55,163 1,249,857 1,640,468 2,040,688 2,738,103
20................... 55,163 1,915,220 1,801,366 2,545,737 3,963,616
30................... 55,163 3,848,219 1,988,559 3,835,516 8,706,262
55................... 0 14,873,906 0 0 0
</TABLE>
<TABLE>
<CAPTION>
END OF YEAR
INVESTMENT BASE AND END OF YEAR
NET CASH SURRENDER VALUE(3)(4) CASH VALUE(3)(5)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL RATE OF RETURN OF ANNUAL RATE OF RETURN OF
-------------------------------------------- --------------------------------------------
CONTRACT YEAR 0% 6% 12% 0% 6% 12%
- --------------------- --------- ----------- ------------ --------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
1................... $ 34,620 $ 36,741 $ 38,862 $ 34,620 $ 36,741 $ 38,862
2................... 84,247 91,590 99,187 84,247 91,590 99,187
3................... 132,740 148,479 165,374 132,740 148,479 165,374
4................... 180,232 207,621 238,162 180,232 207,621 238,162
5................... 226,809 269,194 318,321 226,809 269,194 318,321
6................... 272,506 333,328 406,645 272,506 333,328 406,645
7................... 317,346 400,153 504,004 317,346 400,153 504,004
8................... 361,429 469,881 611,439 361,429 460,881 611,439
9................... 404,703 542,578 729,938 404,703 542,578 729,938
10................... 447,050 618,245 860,522 447,050 618,245 860,522
15................... 640,468 1,040,688 1,738,103 640,468 1,040,688 1,738,103
20................... 801,366 1,545,737 2,963,616 801,366 1,545,737 2,963,616
30................... 988,559 2,835,516 7,706,262 988,559 2,835,516 7,706,262
55................... 0 5,326,132 85,203,756 0 5,326,132 85,203,756
</TABLE>
- ------------------------------
(1) Assumes no additional insurance rider face amount.
(2) All payments are illustrated as if made at the beginning of the contract
year.
(3) Assumes annual payments are made and no loans or withdrawals have been
taken.
(4) Investment base will equal net cash surrender value on each contract
anniversary. If the Contract is surrendered within 24 months after issue,
the contract owner will also receive any excess sales load previously
deducted.
(5) Cash value will equal investment base and net cash surrender value on each
contract anniversary if no loans have been taken.
(6) The payments shown may extend beyond the year in which the automatic
adjustment is made. At annual rates of return of 6% and 12% and current
mortality charges, the guarantee period reaches life of the insured in
contract years 37 and 17, respectively. Once a guarantee of life is reached,
no more payments would be accepted. Values shown at annual rates of return
of 0%, 6% and 12% do not reflect any payments shown after a guarantee period
of life is reached.
(7) At contract year 55, on the contract anniversary nearest the insured's 100th
birthday, the Contract reaches its maturity date and a death benefit is no
longer provided. On the maturity date, the net cash surrender value is paid
to the contract owner, provided the insured is still living.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE
AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE PERFORMANCE. ACTUAL RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE ILLUSTRATED AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS SELECTED, PREVAILING INTEREST
RATES AND RATES OF INFLATION. THE DEATH BENEFIT, INVESTMENT BASE AND CASH VALUE
WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF RETURN AVERAGED
0%, 6% AND 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE
AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY ML OF
NEW YORK OR THE FUNDS OR THE ZERO TRUSTS THAT THESE HYPOTHETICAL RATES OF RETURN
CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
42
<PAGE> 47
MALE ISSUE AGE 45
STANDARD NON-SMOKER UNDERWRITING CLASS
ANNUAL PAYMENTS OF $55,163 THROUGH CONTRACT YEAR 43
FACE AMOUNT: $1 MILLION INITIAL GUARANTEE PERIOD: 9.5 YEARS
DEATH BENEFIT OPTION 2
BASED ON MAXIMUM MORTALITY CHARGES
<TABLE>
<CAPTION>
TOTAL
PAYMENTS END OF YEAR
MADE PLUS DEATH BENEFIT(3)(7)
INTEREST AT ASSUMING HYPOTHETICAL GROSS
5% AS ANNUAL RATE OF RETURN OF
OF END OF ------------------------------------------------
CONTRACT YEAR PAYMENTS(2)(6) YEAR 0% 6% 12%
- --------------------- -------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
1................... $ 55,163 $ 57,921 $ 1,032,681 $ 1,034,729 $ 1,036,779
2................... 55,163 118,738 1,080,607 1,087,695 1,095,029
3................... 55,163 182,596 1,127,567 1,142,763 1,159,078
4................... 55,163 249,647 1,173,554 1,200,009 1,229,511
5................... 55,163 320,051 1,218,543 1,259,491 1,306,956
6................... 55,163 393,975 1,262,529 1,321,290 1,392,127
7................... 55,163 471,595 1,305,456 1,385,439 1,485,759
8................... 55,163 553,096 1,347,269 1,451,972 1,588,665
9................... 55,163 638,672 1,387,926 1,520,937 1,701,754
10................... 55,163 728,527 1,427,354 1,592,350 1,826,000
15................... 55,163 1,249,857 1,604,207 1,987,556 2,657,167
20................... 55,163 1,915,220 1,739,444 2,447,055 3,793,322
30................... 55,163 3,848,219 1,797,695 3,506,600 8,020,126
55................... 0 14,873,906 0 0 0
</TABLE>
<TABLE>
<CAPTION>
END OF YEAR
INVESTMENT BASE AND END OF YEAR
NET CASH SURRENDER VALUE(3)(4) CASH VALUE(3)(5)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL RATE OF RETURN OF ANNUAL RATE OF RETURN OF
-------------------------------------------- --------------------------------------------
CONTRACT YEAR 0% 6% 12% 0% 6% 12%
- --------------------- --------- ----------- ------------ --------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
1................... $ 32,681 $ 34,729 $ 36,779 $ 32,681 $ 34,729 $ 36,779
2................... 80,607 87,695 95,029 80,607 87,695 95,029
3................... 127,567 142,763 159,078 127,567 142,763 159,078
4................... 173,554 200,009 229,511 173,554 200,009 229,511
5................... 218,543 259,491 306,956 218,543 259,491 306,956
6................... 262,529 321,290 392,127 262,529 321,290 392,127
7................... 305,456 385,439 485,759 305,456 385,439 485,759
8................... 347,269 451,972 588,665 347,269 451,972 588,665
9................... 387,926 520,937 701,754 387,926 520,937 701,754
10................... 427,354 592,350 826,000 427,354 592,350 826,000
15................... 604,207 987,556 1,657,167 604,207 987,556 1,657,167
20................... 739,444 1,447,055 2,793,322 739,444 1,447,055 2,793,322
30................... 797,695 2,506,600 7,020,126 797,695 2,506,600 7,020,126
55................... 0 0 68,449,423 0 0 68,449,423
</TABLE>
- ------------------------------
(1) Assumes no additional insurance rider face amount.
(2) All payments are illustrated as if made at the beginning of the contract
year.
(3) Assumes annual payments are made and no loans or withdrawals have been
taken.
(4) Investment base will equal net cash surrender value on each contract
anniversary. If the Contract is surrendered within 24 months after issue,
the contract owner will also receive any excess sales load previously
deducted.
(5) Cash value will equal investment base and net cash surrender value on each
contract anniversary if no loans have been taken.
(6) The payments shown may extend beyond the year in which the automatic
adjustment is made. At an annual rate of return of 12% and maximum mortality
charges, the guarantee period reaches life of the insured in contract year
17. Once a guarantee of life is reached, no more payments would be accepted.
Values shown at annual rates of return of 0%, 6% and 12% do not reflect any
payments shown after a guarantee period of life is reached.
(7) At contract year 55, on the contract anniversary nearest the insured's 100th
birthday, the Contract reaches its maturity date and a death benefit is no
longer provided. On the maturity date, the net cash surrender value is paid
to the contract owner, provided that insured is still living.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE
AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE PERFORMANCE. ACTUAL RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE ILLUSTRATED AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS SELECTED, PREVAILING INTEREST
RATES AND RATES OF INFLATION. THE DEATH BENEFIT, INVESTMENT BASE AND CASH VALUE
WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF RETURN AVERAGED
0%, 6% AND 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE
AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY ML OF
NEW YORK OR THE FUNDS OR THE ZERO TRUSTS THAT THESE HYPOTHETICAL RATES OF RETURN
CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
43
<PAGE> 48
EXAMPLES
ADDITIONAL PAYMENTS
As of the processing date on or next following receipt and acceptance of an
additional payment, ML of New York will increase the guarantee period if the
guarantee period prior to receipt and acceptance of an additional payment is
less than for the whole of life of the insured.
ML of New York will determine the increase in the guarantee period by taking the
immediate increase in the cash value resulting from the additional payment and
adding to that interest at the annual rate of 5% for the period from the date ML
of New York receives and accepts the payment to the contract processing date on
or next following such date. This is the guarantee adjustment amount. The
guarantee adjustment amount is added to the fixed base and the resulting new
fixed base is used to calculate a new guarantee period.
The amount of the increase in the guarantee period will depend on the amount of
the additional payment and the contract year in which it is received and
accepted. If additional payments of different amounts were made at the same time
to equivalent contracts, the contract to which the larger payment is applied
would have a larger increase in the guarantee period.
Example 1 shows the effect on the guarantee period of a $10,000 additional
payment received and accepted at the beginning of contract year five. Example 2
shows the effect of a $20,000 additional payment received and accepted at the
beginning of contract year five. Example 3 shows the effect of a $10,000
additional payment received and accepted at the beginning of contract year six.
All three examples assume that death benefit option 1 has been elected, that
annual payments of $18,009 have been made up to the contract year reflected in
the example and that no other contract transactions have been made.
Male Issue Age 45
Initial payment plus annual payments of $18,009
Face Amount: $1 million
Initial Guarantee Period: 2.5 years
Death Benefit Option: 1
Based on Maximum Mortality Charges
<TABLE>
<CAPTION>
EXAMPLE 1
--------------------------------
INCREASE
IN
CONTRACT ADDITIONAL GUARANTEE
YEAR PAYMENT PERIOD
---- ------- ----------
<S> <C> <C>
5 $ 10,000 1.5 years
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE 2
--------------------------------
INCREASE
IN
CONTRACT ADDITIONAL GUARANTEE
YEAR PAYMENT PERIOD
---- ------- ---------
<S> <C> <C>
5 $ 20,000 3 years
<CAPTION>
EXAMPLE 3
--------------------------------
INCREASE
IN
CONTRACT ADDITIONAL GUARANTEE
YEAR PAYMENT PERIOD
---- -------- ---------
<S> <C> <C>
6 $ 10,000 1.25 years
</TABLE>
PARTIAL WITHDRAWALS
As of the processing date on or next following the effective date of a partial
withdrawal, ML of New York calculates a new guarantee period. This is done by
taking the immediate decrease in cash value resulting from the partial
withdrawal and adding to that amount interest at an annual rate of 5% for the
period from the date of the withdrawal to the contract processing date on or
next following such date. This is the guarantee adjustment amount. The guarantee
adjustment amount is subtracted from the fixed base and the resulting new fixed
base is used to calculate a new guarantee period.
44
<PAGE> 49
The amount of the reduction in the guarantee period will depend on the amount of
the withdrawal, the face amount at the time of the withdrawal and the contract
year in which the withdrawal is made. If made at the same time to equivalent
contracts, a larger withdrawal would result in a greater reduction in the
guarantee period than a smaller withdrawal. The same partial withdrawal made at
the same time from contracts with the same guarantee periods but with different
face amounts would result in a greater reduction in the guarantee period for the
contract with the smaller face amount.
Examples 1 and 2 show the effect on the guarantee period of partial withdrawals
for $10,000 and $20,000 taken at the beginning of contract year sixteen. Example
3 shows the effect on the guarantee period of a $20,000 partial withdrawal taken
at the beginning of contract year eighteen. All three examples assume that death
benefit option 1 has been elected, that annual payments of $18,009 have been
made up to the contract year reflected in the example and that no other contract
transactions have been made.
Male Issue Age 45
Initial payment plus annual payments of $18,009
Face Amount: $1 million
Initial Guarantee Period: 2.5 years
Death Benefit Option: 1
Based on Maximum Mortality Charges
<TABLE>
<CAPTION>
EXAMPLE 1
- ---------------------------------
DECREASE
IN
CONTRACT PARTIAL GUARANTEE
YEAR WITHDRAWAL PERIOD
- --- -------- ---------
<S> <C> <C>
16 $ 10,000 .25 years
<CAPTION>
EXAMPLE 2
- ---------------------------------
DECREASE
IN
CONTRACT PARTIAL GUARANTEE
YEAR WITHDRAWAL PERIOD
- --- -------- ---------
<S> <C> <C>
16 $ 20,000 .75 year
<CAPTION>
EXAMPLE 3
- ---------------------------------
DECREASE
IN
CONTRACT PARTIAL GUARANTEE
YEAR WITHDRAWAL PERIOD
- --- -------- ---------
<S> <C> <C>
18 $ 20,000 .75 years
</TABLE>
CHANGING THE DEATH BENEFIT OPTION
On each contract anniversary beginning with the fifteenth, the contract owner
may change the death benefit option by switching from option 1 to option 2 or
from option 2 to option 1. ML of New York will change the face amount of the
Contract in order to keep the death benefit constant on the effective date of
the change. Therefore, if the change is from option 1 to option 2, the face
amount of the Contract will be decreased by the cash value on the date of the
change. If the change is from option 2 to option 1, the face amount of the
Contract will be increased by the cash value on the date of the change.
Example 1 shows the effect on the face amount of a change from option 1 to
option 2 and Example 2 shows the effect on the face amount of a change from
option 2 to option 1. The face amount before each change is $1 million.
45
<PAGE> 50
EXAMPLE 1
------------------------------------------------
Before Option Change
Death Benefit under Option 1: $1,000,000
Face Amount: $1,000,000
Cash Value: $80,000
After Option Change
Death Benefit under Option 2: $1,000,000
Face Amount: $920,000
Cash Value: $80,000
EXAMPLE 2
------------------------------------------------
Before Option Change
Death Benefit under Option 2: $1,080,000
Face Amount: $1,000,000
Cash Value: $80,000
After Option Change
Death Benefit under Option 1: $1,080,000
Face Amount: $1,080,000
Cash Value: $80,000
MORE ABOUT ML LIFE INSURANCE COMPANY OF NEW YORK
DIRECTORS AND EXECUTIVE OFFICERS
ML of New York's directors and executive officers and their positions with ML of
New York are as follows:
<TABLE>
<CAPTION>
NAME POSITION(S) WITH THE COMPANY
- ----------------------- -----------------------------------------
<S> <C>
Anthony J. Vespa Chairman of the Board, President, and
Chief Executive Officer
Joseph E. Crowne, Jr. Director, Senior Vice President, Chief
Financial Officer, Chief Actuary, and
Treasurer
Barry G. Skolnick Director, Senior Vice President, General
Counsel, and Secretary
David M. Dunford Director, Senior Vice President, and
Chief Investment Officer
Gail R. Farkas Director and Senior Vice President
Michael P. Cogswell Director, Vice President, and Senior
Counsel
Frederick J.C. Butler Director
Robert L. Israeloff Director
Allen N. Jones Director
Cynthia L. Kahn Director
Robert A. King Director
Irving M. Pollack Director
William A. Wilde, III Director
Robert J. Boucher Senior Vice President, Variable Life
Administration
Pearse McCormack Vice President, Administrative Manager,
and Assistant Secretary
</TABLE>
46
<PAGE> 51
Each director is elected to serve until the next annual meeting of shareholders
or until his or her successor is elected and shall have qualified. Some
directors have held various executive positions with insurance company
subsidiaries of ML of New York's indirect parent, Merrill Lynch & Co., Inc. The
principal positions of ML of New York's directors and executive officers for the
past five years are listed below:
Mr. Vespa joined ML of New York in February 1994. Since February 1994, he has
held the position of Senior Vice President of MLPF&S. From February 1991 to
February 1994, he held the position of District Director and First Vice
President of MLPF&S.
Mr. Crowne joined ML of New York in June 1991.
Mr. Skolnick joined ML of New York in November 1989. Since May 1992, he has held
the position of Assistant General Counsel of Merrill Lynch & Co., Inc. and First
Vice President of MLPF&S.
Mr. Dunford joined ML of New York in July 1990.
Ms. Farkas joined ML of New York in August 1995. Prior to August 1995, she held
the position of Director of Market Planning of MLPF&S.
Mr. Cogswell has been with ML of New York since November 1990.
Mr. Butler joined ML of New York in April 1991.
Mr. Israeloff joined ML of New York in April 1991. Since 1964, he has been
Chairman and Executive Partner of Israeloff, Trattner & Co., CPAs, P.C., a
public accounting firm.
Mr. Jones joined ML of New York in June 1996. Since May 1992, he has been Senior
Vice President of MLPF&S. From June 1992 to May 1995, he served as a director of
ML of New York. From June 1992 to February 1994, he held the position of
Chairman of the Board, President, and Chief Executive Officer of ML of New York.
Prior to June 1992, he held various positions with MLPF&S.
Ms. Kahn joined ML of New York in November 1993. She is a partner at the law
firm of Rogers & Wells. She has been associated with Rogers & Wells since 1984.
Mr. King joined ML of New York in April 1991. In May 1996, he retired from the
position of Vice President for Finance at Marymount College, Tarrytown, New
York, which he had held since February 1991.
Mr. Pollack joined ML of New York in April 1991. In 1980, he retired from the
Securities and Exchange Commission after thirty years of service, and having
served as an SEC Commissioner from 1974 to 1980. Since 1980, he has practiced
law and been a private consultant in the securities and capital markets fields.
Mr. Wilde joined ML of New York in March 1991. Since 1985, he has been a
Director and Vice President of Merrill Lynch Life Agency, Inc.
Mr. Boucher joined ML of New York in May 1992.
Mr. McCormack has been with ML of New York since August 1992. Since January
1997, he has been Vice President and Assistant Secretary. From January 1994 to
January 1997, he held the position of Assistant Administrative Officer. From
August 1992 to January 1994, he held the position of Product Specialist.
No shares of ML of New York are owned by any of its officers or directors, as it
is a wholly owned subsidiary of MLIG The officers and directors of ML of New
York, both individually and as a group, own less than one percent of the
outstanding shares of common stock of Merrill Lynch & Co., Inc.
SERVICE ARRANGEMENT
ML of New York and MLIG, are parties to a service agreement pursuant to which
MLIG has agreed to provide certain data processing, legal, actuarial,
management, advertising and other services of ML
47
<PAGE> 52
of New York, including services related to the Separate Account and the
Contracts. Expenses incurred by MLIG in relation to this service agreement are
reimbursed by ML of New York on an allocated cost basis. Charges billed to ML of
New York by MLIG pursuant to the agreement were $4.7 million during 1996.
STATE REGULATION
ML of New York is subject to the laws of the State of New York and to the
regulations of the New York Insurance Department (the "Department"). A detailed
financial statement in the prescribed form (the "Annual Statement") is filed
with the Department each year covering ML of New York's operations for the
preceding year and its financial condition as of the end of that year.
Regulation by the Department includes periodic examination to determine contract
liabilities and reserves so that the Department may certify that these items are
correct. ML of New York's books and accounts are subject to review by the
Department at all times. A full examination of ML of New York's operations is
conducted periodically by the Department and under the auspices of the National
Association of Insurance Commissioners. ML of New York is also subject to the
insurance laws and regulations of all jurisdictions in which it is licensed to
do business.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Separate Account is a party or to
which the assets of the Separate Account are subject. ML of New York and MLPF&S
are engaged in various kinds of routine litigation that, in the Company's
judgment, is not material to ML of New York's total assets or to MLPF&S.
EXPERTS
The financial statements of ML of New York as of December 31, 1996 and 1995 and
for each of the three years in the period ended December 31, 1996 and of the
Separate Account as of December 31, 1996 and for the periods presented, included
in this Prospectus have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their reports appearing herein, and have been so included
in reliance upon the reports of such firm given upon their authority as experts
in accounting and auditing. Deloitte & Touche LLP's principal business address
is Two World Financial Center, New York, New York 10281-1433.
Actuarial matters included in this Prospectus have been examined by Joseph E.
Crowne, Jr., F.S.A., Chief Actuary and Chief Financial Officer of ML of New
York, as stated in his opinion filed as an exhibit to the registration
statement.
LEGAL MATTERS
The organization of the Company, its authority to issue the Contract, and the
validity of the form of the Contract have been passed upon by Barry G. Skolnick,
ML of New York's Senior Vice President and General Counsel. Sutherland, Asbill &
Brennan, L.L.P. of Washington, D.C. has provided advice on certain matters
relating to federal securities and tax laws.
REGISTRATION STATEMENTS
Registration statements have been filed with the Securities and Exchange
Commission under the Securities Act of 1933 and the Investment Company Act of
1940 that relate to the Contract and its investment options. This Prospectus
does not contain all of the information in the registration statements as
permitted by Securities and Exchange Commission regulations. The omitted
information can be obtained from the Securities and Exchange Commission's
principal office in Washington, D.C., upon payment of a prescribed fee.
FINANCIAL STATEMENTS
The financial statements of ML of New York, included herein, should be
distinguished from the financial statements of the Separate Account and should
be considered only as bearing upon the ability of ML of New York to meet its
obligations under the Contracts.
48
<PAGE> 53
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
ML Life Insurance Company of New York
We have audited the accompanying statement of net assets of
ML of New York Variable Life Separate Account II (the
"Account") as of December 31, 1996 and the related
statements of operations and changes in net assets for each
of the three years in the period then ended. These financial
statements are the responsibility of the management of ML
Life Insurance Company of New York. 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 mutual fund and unit investment trust securities owned at
December 31, 1996. 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, such financial statements present fairly, in
all material respects, the financial position of the Account
at December 31, 1996 and the results of its operations and
the changes in its net assets for the above periods in
conformity with generally accepted accounting principles.
Our audits were conducted for the purpose of forming an
opinion on the basic financial statements taken as a whole.
The supplemental schedules included herein are presented for
the purpose of additional analysis and are not a required
part of the basic financial statements. These schedules are
the responsibility of the Company's management. Such
schedules have been subjected to the auditing procedures
applied in our audits of the basic financial statements and,
in our opinion, are fairly stated in all material respects
when considered in relation to the basic financial
statements taken as a whole.
January 31, 1997
<PAGE>
ML OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT II
ML LIFE INSURANCE COMPANY OF NEW YORK
STATEMENT OF NET ASSETS AT DECEMBER 31, 1996
<TABLE>
<CAPTION>
ASSETS: Cost Shares Market Value
----------------- ----------------- -----------------
<S> <C> <C> <C>
Investments in Merrill Lynch Series Fund, Inc. (Note 1):
Money Reserve Portfolio $ 3,335,567 3,335,567 $ 3,335,567
Intermediate Government Bond Portfolio 243,615 21,938 239,786
Long-Term Corporate Bond Portfolio 135,417 11,924 137,489
Capital Stock Portfolio 1,549,174 71,076 1,652,521
Growth Stock Portfolio 1,568,684 68,690 1,908,902
Multiple Strategy Portfolio 2,186,793 134,898 2,310,801
High Yield Portfolio 406,512 45,177 413,368
Natural Resources Portfolio 155,325 19,290 177,271
Global Strategy Portfolio 3,484,342 231,600 3,890,886
Balanced Portfolio 585,200 40,772 626,260
----------------- -----------------
13,650,629 14,692,851
----------------- -----------------
Investments in Merrill Lynch Variable Series Funds, Inc. (Note 1):
Global Utility Focus Fund 77,045 6,863 83,655
International Equity Focus Fund 594,110 54,018 628,227
Global Bond Focus Fund 60,396 6,262 61,121
Basic Value Focus Fund 1,786,791 136,431 2,010,990
Developing Capital Markets Focus Fund 465,787 49,706 499,549
Equity Growth Fund 56,894 2,209 57,931
----------------- -----------------
3,041,023 3,341,473
----------------- -----------------
Units
-----------------
Investments in the Merrill Lynch Fund of Stripped ("Zero")
U.S. Treasury Securities, Series A through K (Note 1):
1997 Trust 5,475 6,059 6,040
1998 Trust 30,140 35,021 32,960
1999 Trust 5,400 6,840 6,057
2000 Trust 71,034 94,346 78,625
2003 Trust 33,563 59,980 39,820
2004 Trust 19,398 33,453 21,410
2005 Trust 30,205 56,310 33,982
2007 Trust 7,715 16,023 8,557
2009 Trust 6,346 15,830 7,220
2010 Trust 18,118 55,434 23,377
2013 Trust 3,604 12,390 4,250
2014 Trust 53,898 184,944 58,466
----------------- -----------------
284,896 320,764
----------------- -----------------
TOTAL ASSETS $ 16,976,548 18,355,088
================= -----------------
LIABILITIES:
Payable to ML Life Insurance Company of New York 264,882
-----------------
TOTAL LIABILITIES 264,882
-----------------
NET ASSETS $ 18,090,206
=================
</TABLE>
See Notes to Financial Statements
2
<PAGE>
ML OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT II
ML LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ----------------- -----------------
<S> <C> <C> <C>
Investment Income:
Reinvested Dividends $ 772,097 $ 423,802 $ 268,953
Mortality and Expense Charges (Note 3) (121,660) (69,677) (39,147)
Transaction Charges (Note 4) (992) (512) (139)
----------------- ----------------- -----------------
Net Investment Income 649,445 353,613 229,667
----------------- ----------------- -----------------
Realized and Unrealized Gains (Losses):
Net Realized Gains (Losses) 1,598 (31,049) (14,386)
Net Unrealized Gains (Losses) 932,056 678,554 (356,936)
----------------- ----------------- -----------------
Net Realized and Unrealized Gains (Losses) 933,654 647,505 (371,322)
----------------- ----------------- -----------------
Increase (Decrease) in Net Assets
Resulting from Operations 1,583,099 1,001,118 (141,655)
----------------- ----------------- -----------------
Changes from Principal Transactions:
Transfers of Net Premiums 6,351,113 3,597,850 2,992,673
Transfers of Policy Loading, Net (Note 3) 495,055 259,576 242,105
Transfers Due to Deaths (25,307) (4,554) (4,709)
Transfers Due to Other Terminations (212,277) (238,972) (42,335)
Transfers Due to Policy Loans (118,069) (38,631) (26,381)
Transfers of Cost of Insurance (219,552) (163,287) (142,930)
Transfers of Loan Processing Charges (1,805) (916) (180)
----------------- ----------------- -----------------
Increase in Net Assets
Resulting from Principal Transactions 6,269,158 3,411,066 3,018,243
----------------- ----------------- -----------------
Increase in Net Assets 7,852,257 4,412,184 2,876,588
Net Assets Beginning Balance 10,237,949 5,825,765 2,949,177
----------------- ----------------- -----------------
Net Assets Ending Balance $ 18,090,206 $ 10,237,949 $ 5,825,765
================= ================= =================
</TABLE>
See Notes to Financial Statements
3
<PAGE>
ML OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT II
ML LIFE INSURANCE COMPANY OF NEW YORK
Notes to Financial Statements
1. ML of New York Variable Life Separate Account II
("Account"), a separate account of ML Life Insurance
Company of New York ("ML of New York") was established to
support the operations with respect to certain variable
life insurance contracts ("Contracts"). The Account is
governed by New York State Insurance Law. ML of New York
is an indirect wholly-owned subsidiary of Merrill Lynch &
Co., Inc. ("Merrill"). The Account is registered as a
unit investment trust under the Investment Company Act of
1940 and consists of thirty-three investment divisions
(thirty-five during the year). Ten of the investment
divisions each invest in the securities of a single
mutual fund portfolio of the Merrill Lynch Series Fund,
Inc. Six of the investment divisions each invest in the
securities of a single mutual fund portfolio of the
Merrill Lynch Variable Series Funds, Inc. (See Note 5).
Seventeen of the investment divisions (eighteen during
the year) each invest in the securities of a single trust
of the Merrill Lynch Fund of Stripped ("Zero") U.S.
Treasury Securities, Series A through K ("Zero Trusts").
Each trust of the Zero Trusts consists of Stripped
Treasury Securities with a fixed maturity date and a
Treasury Note deposited to provide income to pay expenses
of the trust.
The assets of the Account are registered in the name of
ML of New York. The portion of the Account's assets
applicable to the Contracts are not chargeable with
liabilities arising out of any other business ML of New
York may conduct.
The change in net assets accumulated in the Account
provides the basis for the periodic determination of the
amount of increased or decreased benefits under the
Contracts.
The net assets may not be less than the amount required
under New York State insurance law to provide for death
benefits (without regard to the minimum death benefit
guarantee) and other Contract benefits.
The financial statements included herein have been
prepared in accordance with generally accepted accounting
principles for variable life separate accounts registered
as unit investment trusts. The preparation of financial
statements in conformity with generally accepted
accounting principles requires management to make
estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results
could differ from those estimates.
2. The following is a summary of significant accounting
policies of the Account:
Investments in the divisions are included in the
statement of net assets at the net asset value of the
shares and units held.
Dividend income is recognized on the ex-dividend date.
All dividends are automatically reinvested.
Realized gains and losses on the sales of investments are
computed on the first in first out method.
The operations of the Account are included in the Federal
income tax return of ML of New York. Under the provisions
of the Contracts, ML of New York has the right to charge
the Account for any Federal income tax attributable to
the Account. No charge is currently being made against
the Account for such tax since, under current tax law, ML
of New York pays no tax on investment income and capital
gains reflected in variable life insurance contract
reserves. However, ML of New York retains the right to
charge for any Federal income tax incurred which is
attributable to the Account if the law is changed.
Contract loading, however, includes a charge for a
significantly higher Federal income tax liability of ML
of New York (see Note 3). Charges for state and local
taxes, if any, attributable to the Account may also be
made.
3. ML of New York assumes mortality and expense risks
related to Contracts investing in the Account and deducts
a daily charges at a rate of .90% (on an annual basis) of
the net assets of the Account to cover these risks.
ML of New York makes certain deductions from each
premium. For certain Contracts, the deductions are made
before the premium is allocated to the Account. For other
Contracts, the deductions are taken in equal installments
on the first through tenth Contract anniversaries. The
deductions are for (1) sales load, (2) Federal income
taxes, and (3) state and local premium taxes.
In addition, the cost of providing life insurance
coverage for the insureds will be deducted on the dates
specified by the Contract. This cost will vary dependent
upon the insured's underwriting class, sex, attained age
of each insured and the Contract's net amount at risk.
4. ML of New York pays all transaction charges to Merrill
Lynch, Pierce, Fenner & Smith Inc., a subsidiary of
Merrill and sponsor of the Zero Trusts, on the sale of
Zero Trust units to the Account. ML of New York deducts a
daily asset charge against the assets of each trust for
the reimbursement of these transaction charges. The asset
charge is equivalent to an effective annual rate of .34%
(annually at the beginning of the year) of net assets for
Contract owners.
5. Effective following the close of business on December 6,
1996, the International Bond Fund was merged with and
into the former World Income Focus Fund; the World Income
Focus Fund was renamed the Global Bond Focus Fund; and
the Fund's investment objective was modified.
<PAGE>
ML OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT II
ML LIFE INSURANCE COMPANY OF NEW YORK
SUPPLEMENTAL CONSOLIDATING SCHEDULE OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Divisions Investing In
-----------------------------------------------------
Intermediate Long-Term
Total Money Government Corporate
Separate Reserve Bond Bond
Account Portfolio Portfolio Portfolio
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Investment Income (Loss):
Reinvested Dividends $ 772,097 $ 103,078 $ 14,639 $ 8,048
Mortality and Expense Charges (121,660) (15,163) (1,968) (1,080)
Transaction Charges (992) 0 0 0
----------------- ----------------- ----------------- -----------------
Net Investment Income (Loss) 649,445 87,915 12,671 6,968
----------------- ----------------- ----------------- -----------------
Realized and Unrealized Gains (Losses):
Net Realized Gains (Losses) 1,598 0 1,580 3
Net Unrealized Gains (Losses) 932,056 0 (10,136) (3,943)
----------------- ----------------- ----------------- -----------------
Net Realized and Unrealized Gains (Losses) 933,654 0 (8,556) (3,940)
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets
Resulting from Operations 1,583,099 87,915 4,115 3,028
----------------- ----------------- ----------------- -----------------
Changes from Principal Transactions:
Transfers of Net Premiums 6,351,113 5,165,749 15,298 11,677
Transfers of Policy Loading, Net 495,055 490,996 (349) (248)
Transfers Due to Deaths (25,307) (19,967) 0 0
Transfers Due to Other Terminations (212,277) (25,965) 5 15
Transfers Due to Policy Loans (118,069) (699) 0 (8,026)
Transfers of Cost of Insurance (219,552) (31,592) (2,802) (1,898)
Transfers of Loan Processing Charges (1,805) (187) (8) (175)
Transfers Among Investment Divisions 0 (3,961,160) 52,514 39,904
Transfer of Merged Funds 0 0 0 0
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets
Resulting from Principal Transactions 6,269,158 1,617,175 64,658 41,249
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets 7,852,257 1,705,090 68,773 44,277
Net Assets Beginning Balance 10,237,949 1,369,817 173,997 93,162
----------------- ----------------- ----------------- -----------------
Net Assets Ending Balance $ 18,090,206 $ 3,074,907 $ 242,770 $ 137,439
================= ================= ================= =================
</TABLE>
<PAGE>
ML OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT II
ML LIFE INSURANCE COMPANY OF NEW YORK
SUPPLEMENTAL CONSOLIDATING SCHEDULE OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Divisions Investing In
-----------------------------------------------------------------------
Capital Growth Multiple High
Stock Stock Strategy Yield
Portfolio Portfolio Portfolio Portfolio
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Investment Income (Loss):
Reinvested Dividends $ 143,386 $ 38,471 $ 245,513 $ 25,506
Mortality and Expense Charges (10,355) (12,913) (18,686) (2,495)
Transaction Charges 0 0 0 0
----------------- ----------------- ----------------- -----------------
Net Investment Income (Loss) 133,031 25,558 226,827 23,011
----------------- ----------------- ----------------- -----------------
Realized and Unrealized Gains (Losses):
Net Realized Gains (Losses) (5,485) 3,715 (35,912) (671)
Net Unrealized Gains (Losses) 49,697 207,982 73,553 7,603
----------------- ----------------- ----------------- -----------------
Net Realized and Unrealized Gains (Losses) 44,212 211,697 37,641 6,932
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets
Resulting from Operations 177,243 237,255 264,468 29,943
----------------- ----------------- ----------------- -----------------
Changes from Principal Transactions:
Transfers of Net Premiums 124,131 150,718 152,418 25,998
Transfers of Policy Loading, Net 225 1,026 (3,197) 176
Transfers Due to Deaths 0 0 0 0
Transfers Due to Other Terminations (10,371) (11,821) (48,576) (1,649)
Transfers Due to Policy Loans (13,963) (15,882) (25,612) (5,809)
Transfers of Cost of Insurance (17,647) (19,858) (36,610) (4,025)
Transfers of Loan Processing Charges (153) (417) (311) (18)
Transfers Among Investment Divisions 674,243 501,049 218,373 191,296
Transfer of Merged Funds 0 0 0 0
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets
Resulting from Principal Transactions 756,465 604,815 256,485 205,969
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets 933,708 842,070 520,953 235,912
Net Assets Beginning Balance 718,365 1,061,712 1,789,215 177,339
----------------- ----------------- ----------------- -----------------
Net Assets Ending Balance $ 1,652,073 $ 1,903,782 $ 2,310,168 $ 413,251
================= ================= ================= =================
</TABLE>
<PAGE>
ML OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT II
ML LIFE INSURANCE COMPANY OF NEW YORK
SUPPLEMENTAL CONSOLIDATING SCHEDULE OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Divisions Investing In
-----------------------------------------------------------------------
Global
Natural Global Utility
Resources Strategy Balanced Focus
Portfolio Portfolio Portfolio Fund
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Investment Income (Loss):
Reinvested Dividends $ 2,772 $ 89,681 $ 20,809 $ 1,982
Mortality and Expense Charges (1,387) (29,889) (3,785) (440)
Transaction Charges 0 0 0 0
----------------- ----------------- ----------------- -----------------
Net Investment Income (Loss) 1,385 59,792 17,024 1,542
----------------- ----------------- ----------------- -----------------
Realized and Unrealized Gains (Losses):
Net Realized Gains (Losses) 1,875 15,132 366 87
Net Unrealized Gains (Losses) 15,704 337,443 17,957 5,630
----------------- ----------------- ----------------- -----------------
Net Realized and Unrealized Gains (Losses) 17,579 352,575 18,323 5,717
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets
Resulting from Operations 18,964 412,367 35,347 7,259
----------------- ----------------- ----------------- -----------------
Changes from Principal Transactions:
Transfers of Net Premiums 18,865 400,696 50,509 2,090
Transfers of Policy Loading, Net 70 5,875 749 (2)
Transfers Due to Deaths 0 0 (5,340) 0
Transfers Due to Other Terminations (967) (81,661) (1,255) (29)
Transfers Due to Policy Loans 0 (27,472) (4,040) 0
Transfers of Cost of Insurance (1,908) (57,689) (7,096) (690)
Transfers of Loan Processing Charges (57) (252) (31) (4)
Transfers Among Investment Divisions 13,918 529,455 220,242 59,158
Transfer of Merged Funds 0 0 0 0
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets
Resulting from Principal Transactions 29,921 768,952 253,738 60,523
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets 48,885 1,181,319 289,085 67,782
Net Assets Beginning Balance 128,324 2,713,284 337,005 15,835
----------------- ----------------- ----------------- -----------------
Net Assets Ending Balance $ 177,209 $ 3,894,603 $ 626,090 $ 83,617
================= ================= ================= =================
</TABLE>
<PAGE>
ML OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT II
ML LIFE INSURANCE COMPANY OF NEW YORK
SUPPLEMENTAL CONSOLIDATING SCHEDULE OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Divisions Investing In
-----------------------------------------------------------------------
International Global Basic
Equity Bond Value International
Focus Focus Focus Bond
Fund Fund Fund Fund
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Investment Income (Loss):
Reinvested Dividends $ 4,697 $ 1,034 $ 62,330 $ 1,938
Mortality and Expense Charges (4,415) (152) (11,926) (240)
Transaction Charges 0 0 0 0
----------------- ----------------- ----------------- -----------------
Net Investment Income (Loss) 282 882 50,404 1,698
----------------- ----------------- ----------------- -----------------
Realized and Unrealized Gains (Losses):
Net Realized Gains (Losses) 85 5 14,743 417
Net Unrealized Gains (Losses) 21,751 624 171,327 (412)
----------------- ----------------- ----------------- -----------------
Net Realized and Unrealized Gains (Losses) 21,836 629 186,070 5
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets
Resulting from Operations 22,118 1,511 236,474 1,703
----------------- ----------------- ----------------- -----------------
Changes from Principal Transactions:
Transfers of Net Premiums 58,953 2,504 92,817 0
Transfers of Policy Loading, Net 981 63 (1,345) (203)
Transfers Due to Deaths 0 0 0 0
Transfers Due to Other Terminations (11,361) (27) (6,645) 8
Transfers Due to Policy Loans (2,972) 0 (7,488) 0
Transfers of Cost of Insurance (7,163) (328) (19,752) (358)
Transfers of Loan Processing Charges (36) (4) (83) 0
Transfers Among Investment Divisions 229,734 10,123 968,722 32,873
Transfer of Merged Funds 0 41,724 0 (41,724)
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets
Resulting from Principal Transactions 268,136 54,055 1,026,226 (9,404)
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets 290,254 55,566 1,262,700 (7,701)
Net Assets Beginning Balance 337,801 5,521 747,772 7,701
----------------- ----------------- ----------------- -----------------
Net Assets Ending Balance $ 628,055 $ 61,087 $ 2,010,472 $ 0
================= ================= ================= =================
</TABLE>
<PAGE>
ML OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT II
ML LIFE INSURANCE COMPANY OF NEW YORK
SUPPLEMENTAL CONSOLIDATING SCHEDULE OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Divisions Investing In
-----------------------------------------------------------------------
Developing
Capital Equity
Markets Focus Growth 1996 1997
Fund Fund Trust Trust
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Investment Income (Loss):
Reinvested Dividends $ 8,213 $ 0 $ 0 $ 0
Mortality and Expense Charges (4,047) (81) (5) (47)
Transaction Charges 0 0 (1) (18)
----------------- ----------------- ----------------- -----------------
Net Investment Income (Loss) 4,166 (81) (6) (65)
----------------- ----------------- ----------------- -----------------
Realized and Unrealized Gains (Losses):
Net Realized Gains (Losses) (222) 1 308 16
Net Unrealized Gains (Losses) 30,006 1,037 (284) 246
----------------- ----------------- ----------------- -----------------
Net Realized and Unrealized Gains (Losses) 29,784 1,038 24 262
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets
Resulting from Operations 33,950 957 18 197
----------------- ----------------- ----------------- -----------------
Changes from Principal Transactions:
Transfers of Net Premiums 42,742 0 0 1,438
Transfers of Policy Loading, Net (1,156) 1 0 47
Transfers Due to Deaths 0 0 0 0
Transfers Due to Other Terminations (11,879) (28) (45) 0
Transfers Due to Policy Loans (6,106) 0 0 0
Transfers of Cost of Insurance (5,962) (146) (20) (133)
Transfers of Loan Processing Charges (57) (4) 0 0
Transfers Among Investment Divisions 116,247 57,113 (4,401) 2
Transfer of Merged Funds 0 0 0 0
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets
Resulting from Principal Transactions 133,829 56,936 (4,466) 1,354
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets 167,779 57,893 (4,448) 1,551
Net Assets Beginning Balance 328,523 0 4,448 4,476
----------------- ----------------- ----------------- -----------------
Net Assets Ending Balance $ 496,302 $ 57,893 $ 0 $ 6,027
================= ================= ================= =================
</TABLE>
<PAGE>
ML OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT II
ML LIFE INSURANCE COMPANY OF NEW YORK
SUPPLEMENTAL CONSOLIDATING SCHEDULE OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Divisions Investing In
-----------------------------------------------------------------------
1998 1999 2000 2003
Trust Trust Trust Trust
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Investment Income (Loss):
Reinvested Dividends $ 0 $ 0 $ 0 $ 0
Mortality and Expense Charges (288) (47) (649) (337)
Transaction Charges (108) (18) (244) (127)
----------------- ----------------- ----------------- -----------------
Net Investment Income (Loss) (396) (65) (893) (464)
----------------- ----------------- ----------------- -----------------
Realized and Unrealized Gains (Losses):
Net Realized Gains (Losses) 106 17 453 364
Net Unrealized Gains (Losses) 1,376 216 2,025 (231)
----------------- ----------------- ----------------- -----------------
Net Realized and Unrealized Gains (Losses) 1,482 233 2,478 133
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets
Resulting from Operations 1,086 168 1,585 (331)
----------------- ----------------- ----------------- -----------------
Changes from Principal Transactions:
Transfers of Net Premiums 1,434 1,429 13,023 2,137
Transfers of Policy Loading, Net (153) 47 205 (42)
Transfers Due to Deaths 0 0 0 0
Transfers Due to Other Terminations 2 0 0 3
Transfers Due to Policy Loans 0 0 0 0
Transfers of Cost of Insurance (380) (133) (1,073) (479)
Transfers of Loan Processing Charges 0 0 (1) (1)
Transfers Among Investment Divisions (17) 1 (3,014) (16)
Transfer of Merged Funds 0 0 0 0
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets
Resulting from Principal Transactions 886 1,344 9,140 1,602
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets 1,972 1,512 10,725 1,271
Net Assets Beginning Balance 30,968 4,532 67,853 38,519
----------------- ----------------- ----------------- -----------------
Net Assets Ending Balance $ 32,940 $ 6,044 $ 78,578 $ 39,790
================= ================= ================= =================
</TABLE>
<PAGE>
ML OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT II
ML LIFE INSURANCE COMPANY OF NEW YORK
SUPPLEMENTAL CONSOLIDATING SCHEDULE OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Divisions Investing In
-----------------------------------------------------------------------
2004 2005 2007 2009
Trust Trust Trust Trust
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Investment Income (Loss):
Reinvested Dividends $ 0 $ 0 $ 0 $ 0
Mortality and Expense Charges (191) (290) (42) (64)
Transaction Charges (72) (109) (16) (24)
----------------- ----------------- ----------------- -----------------
Net Investment Income (Loss) (263) (399) (58) (88)
----------------- ----------------- ----------------- -----------------
Realized and Unrealized Gains (Losses):
Net Realized Gains (Losses) 35 694 18 315
Net Unrealized Gains (Losses) (55) (793) 843 (529)
----------------- ----------------- ----------------- -----------------
Net Realized and Unrealized Gains (Losses) (20) (99) 861 (214)
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets
Resulting from Operations (283) (498) 803 (302)
----------------- ----------------- ----------------- -----------------
Changes from Principal Transactions:
Transfers of Net Premiums 0 12,896 0 2,511
Transfers of Policy Loading, Net (156) 1,046 (73) 232
Transfers Due to Deaths 0 0 0 0
Transfers Due to Other Terminations 2 (4) (4) 0
Transfers Due to Policy Loans 0 0 0 0
Transfers of Cost of Insurance (208) (708) (90) (64)
Transfers of Loan Processing Charges 0 (1) (1) 0
Transfers Among Investment Divisions (15) (2,625) 7,912 (2,763)
Transfer of Merged Funds 0 0 0 0
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets
Resulting from Principal Transactions (377) 10,604 7,744 (84)
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets (660) 10,106 8,547 (386)
Net Assets Beginning Balance 22,060 23,862 0 7,599
----------------- ----------------- ----------------- -----------------
Net Assets Ending Balance $ 21,400 $ 33,968 $ 8,547 $ 7,213
================= ================= ================= =================
</TABLE>
<PAGE>
ML OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT II
ML LIFE INSURANCE COMPANY OF NEW YORK
SUPPLEMENTAL CONSOLIDATING SCHEDULE OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Divisions Investing In
------------------------------------------------------
2010 2013 2014
Trust Trust Trust
----------------- ----------------- -----------------
<S> <C> <C> <C>
Investment Income (Loss):
Reinvested Dividends $ 0 $ 0 $ 0
Mortality and Expense Charges (205) (32) (441)
Transaction Charges (77) (12) (166)
----------------- ----------------- -----------------
Net Investment Income (Loss) (282) (44) (607)
----------------- ----------------- -----------------
Realized and Unrealized Gains (Losses):
Net Realized Gains (Losses) 135 0 3,418
Net Unrealized Gains (Losses) (1,059) (91) 4,569
----------------- ----------------- -----------------
Net Realized and Unrealized Gains (Losses) (924) (91) 7,987
----------------- ----------------- -----------------
Increase (Decrease) in Net Assets
Resulting from Operations (1,206) (135) 7,380
----------------- ----------------- -----------------
Changes from Principal Transactions:
Transfers of Net Premiums 0 1,080 0
Transfers of Policy Loading, Net (180) 37 383
Transfers Due to Deaths 0 0 0
Transfers Due to Other Terminations 1 0 (26)
Transfers Due to Policy Loans 0 0 0
Transfers of Cost of Insurance (201) (46) (493)
Transfers of Loan Processing Charges 0 0 (4)
Transfers Among Investment Divisions (12) 1 51,143
Transfer of Merged Funds 0 0 0
----------------- ----------------- -----------------
Increase (Decrease) in Net Assets
Resulting from Principal Transactions (392) 1,072 51,003
----------------- ----------------- -----------------
Increase (Decrease) in Net Assets (1,598) 937 58,383
Net Assets Beginning Balance 24,949 3,310 0
----------------- ----------------- -----------------
Net Assets Ending Balance $ 23,351 $ 4,247 $ 58,383
================= ================= =================
</TABLE>
<PAGE>
ML OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT II
ML LIFE INSURANCE COMPANY OF NEW YORK
SUPPLEMENTAL CONSOLIDATING SCHEDULE OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Divisions Investing In
-----------------------------------------------------
Intermediate Long-Term
Total Money Government Corporate
Separate Reserve Bond Bond
Account Portfolio Portfolio Portfolio
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Investment Income (Loss):
Reinvested Dividends $ 423,802 $ 75,573 $ 6,717 $ 5,678
Mortality and Expense Charges (69,677) (10,765) (882) (711)
Transaction Charges (512) 0 0 0
----------------- ----------------- ----------------- -----------------
Net Investment Income (Loss) 353,613 64,808 5,835 4,967
----------------- ----------------- ----------------- -----------------
Realized and Unrealized Gains (Losses):
Net Realized Gains (Losses) (31,049) 0 (3,021) (1,867)
Net Unrealized Gains 678,554 0 12,060 11,165
----------------- ----------------- ----------------- -----------------
Net Realized and Unrealized Gains 647,505 0 9,039 9,298
----------------- ----------------- ----------------- -----------------
Increase in Net Assets
Resulting from Operations 1,001,118 64,808 14,874 14,265
----------------- ----------------- ----------------- -----------------
Changes from Principal Transactions:
Transfers of Net Premiums 3,597,850 2,459,374 23,606 17,779
Transfers of Policy Loading, Net 259,576 232,646 727 264
Transfers Due to Deaths (4,554) 0 0 0
Transfers Due to Other Terminations (238,972) (34,843) (2,594) (2,669)
Transfers Due to Policy Loans (38,631) (3,399) 0 0
Transfers of Cost of Insurance (163,287) (21,503) (1,898) (2,082)
Transfers of Loan Processing Charges (916) (67) (6) (132)
Transfers Among Investment Divisions 0 (2,365,548) 50,888 5,396
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets
Resulting from Principal Transactions 3,411,066 266,660 70,723 18,556
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets 4,412,184 331,468 85,597 32,821
Net Assets Beginning Balance 5,825,765 1,038,349 88,400 60,341
----------------- ----------------- ----------------- -----------------
Net Assets Ending Balance $ 10,237,949 $ 1,369,817 $ 173,997 $ 93,162
================= ================= ================= =================
</TABLE>
<PAGE>
ML OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT II
ML LIFE INSURANCE COMPANY OF NEW YORK
SUPPLEMENTAL CONSOLIDATING SCHEDULE OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Divisions Investing In
-----------------------------------------------------------------------
Capital Growth Multiple High
Stock Stock Strategy Yield
Portfolio Portfolio Portfolio Portfolio
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Investment Income (Loss):
Reinvested Dividends $ 32,978 $ 31,715 $ 121,523 $ 15,804
Mortality and Expense Charges (4,909) (6,139) (13,244) (1,394)
Transaction Charges 0 0 0 0
----------------- ----------------- ----------------- -----------------
Net Investment Income (Loss) 28,069 25,576 108,279 14,410
----------------- ----------------- ----------------- -----------------
Realized and Unrealized Gains (Losses):
Net Realized Gains (Losses) (5,071) (5,479) (15,281) (1,905)
Net Unrealized Gains 74,124 175,202 126,014 8,743
----------------- ----------------- ----------------- -----------------
Net Realized and Unrealized Gains 69,053 169,723 110,733 6,838
----------------- ----------------- ----------------- -----------------
Increase in Net Assets
Resulting from Operations 97,122 195,299 219,012 21,248
----------------- ----------------- ----------------- -----------------
Changes from Principal Transactions:
Transfers of Net Premiums 114,670 118,193 159,175 25,566
Transfers of Policy Loading, Net 3,765 3,650 (2,509) 501
Transfers Due to Deaths 0 0 (2,252) 0
Transfers Due to Other Terminations (10,645) (3,826) (68,092) (7,461)
Transfers Due to Policy Loans (3,841) (5,879) (15,000) 0
Transfers of Cost of Insurance (12,143) (12,609) (29,367) (2,333)
Transfers of Loan Processing Charges (52) (161) (119) (6)
Transfers Among Investment Divisions 162,101 344,527 299,844 24,577
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets
Resulting from Principal Transactions 253,855 443,895 341,680 40,844
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets 350,977 639,194 560,692 62,092
Net Assets Beginning Balance 367,388 422,518 1,228,523 115,247
----------------- ----------------- ----------------- -----------------
Net Assets Ending Balance $ 718,365 $ 1,061,712 $ 1,789,215 $ 177,339
================= ================= ================= =================
</TABLE>
<PAGE>
ML OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT II
ML LIFE INSURANCE COMPANY OF NEW YORK
SUPPLEMENTAL CONSOLIDATING SCHEDULE OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Divisions Investing In
-----------------------------------------------------------------------
Global
Natural Global Utility
Resources Strategy Balanced Focus
Portfolio Portfolio Portfolio Fund
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Investment Income (Loss):
Reinvested Dividends $ 1,883 $ 105,576 $ 12,771 $ 819
Mortality and Expense Charges (967) (20,960) (2,089) (139)
Transaction Charges 0 0 0 0
----------------- ----------------- ----------------- -----------------
Net Investment Income (Loss) 916 84,616 10,682 680
----------------- ----------------- ----------------- -----------------
Realized and Unrealized Gains (Losses):
Net Realized Gains (Losses) 287 10,745 (1,046) 1,225
Net Unrealized Gains 9,187 116,873 29,915 1,119
----------------- ----------------- ----------------- -----------------
Net Realized and Unrealized Gains 9,474 127,618 28,869 2,344
----------------- ----------------- ----------------- -----------------
Increase in Net Assets
Resulting from Operations 10,390 212,234 39,551 3,024
----------------- ----------------- ----------------- -----------------
Changes from Principal Transactions:
Transfers of Net Premiums 22,453 420,392 64,595 1,973
Transfers of Policy Loading, Net 545 9,765 2,652 23
Transfers Due to Deaths 0 (2,302) 0 0
Transfers Due to Other Terminations (23) (95,638) (6,177) 25
Transfers Due to Policy Loans (2,534) (7,978) 0 0
Transfers of Cost of Insurance (1,508) (52,742) (6,217) (255)
Transfers of Loan Processing Charges (19) (251) (13) (1)
Transfers Among Investment Divisions 12,859 315,736 109,076 7,691
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets
Resulting from Principal Transactions 31,773 586,982 163,916 9,456
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets 42,163 799,216 203,467 12,480
Net Assets Beginning Balance 86,161 1,914,068 133,538 3,355
----------------- ----------------- ----------------- -----------------
Net Assets Ending Balance $ 128,324 $ 2,713,284 $ 337,005 $ 15,835
================= ================= ================= =================
</TABLE>
<PAGE>
ML OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT II
ML LIFE INSURANCE COMPANY OF NEW YORK
SUPPLEMENTAL CONSOLIDATING SCHEDULE OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Divisions Investing In
-----------------------------------------------------------------------
International Global Basic
Equity Bond Value International
Focus Focus Focus Bond
Fund Fund Fund Fund
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Investment Income (Loss):
Reinvested Dividends $ 4,480 $ 250 $ 6,840 $ 290
Mortality and Expense Charges (1,684) (23) (2,668) (33)
Transaction Charges 0 0 0 0
----------------- ----------------- ----------------- -----------------
Net Investment Income (Loss) 2,796 227 4,172 257
----------------- ----------------- ----------------- -----------------
Realized and Unrealized Gains (Losses):
Net Realized Gains (Losses) (3,036) 0 997 16
Net Unrealized Gains 16,069 135 53,427 412
----------------- ----------------- ----------------- -----------------
Net Realized and Unrealized Gains 13,033 135 54,424 428
----------------- ----------------- ----------------- -----------------
Increase in Net Assets
Resulting from Operations 15,829 362 58,596 685
----------------- ----------------- ----------------- -----------------
Changes from Principal Transactions:
Transfers of Net Premiums 49,049 4,080 44,182 0
Transfers of Policy Loading, Net 2,391 176 2,304 (18)
Transfers Due to Deaths 0 0 0 0
Transfers Due to Other Terminations (4,854) (2) (379) (4)
Transfers Due to Policy Loans 0 0 0 0
Transfers of Cost of Insurance (5,887) (90) (5,950) (214)
Transfers of Loan Processing Charges (14) 0 (34) 0
Transfers Among Investment Divisions 165,264 14 554,331 7,252
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets
Resulting from Principal Transactions 205,949 4,178 594,454 7,016
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets 221,778 4,540 653,050 7,701
Net Assets Beginning Balance 116,023 981 94,722 0
----------------- ----------------- ----------------- -----------------
Net Assets Ending Balance $ 337,801 $ 5,521 $ 747,772 $ 7,701
================= ================= ================= =================
</TABLE>
<PAGE>
ML OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT II
ML LIFE INSURANCE COMPANY OF NEW YORK
SUPPLEMENTAL CONSOLIDATING SCHEDULE OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Divisions Investing In
-----------------------------------------------------------------------
Developing
Capital
Markets Focus 1995 1996 1997
Fund Trust Trust Trust
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Investment Income (Loss):
Reinvested Dividends $ 905 $ 0 $ 0 $ 0
Mortality and Expense Charges (1,720) 0 (32) (32)
Transaction Charges 0 0 (12) (12)
----------------- ----------------- ----------------- -----------------
Net Investment Income (Loss) (815) 0 (44) (44)
----------------- ----------------- ----------------- -----------------
Realized and Unrealized Gains (Losses):
Net Realized Gains (Losses) (9,973) 0 9 5
Net Unrealized Gains 13,085 0 242 339
----------------- ----------------- ----------------- -----------------
Net Realized and Unrealized Gains 3,112 0 251 344
----------------- ----------------- ----------------- -----------------
Increase in Net Assets
Resulting from Operations 2,297 0 207 300
----------------- ----------------- ----------------- -----------------
Changes from Principal Transactions:
Transfers of Net Premiums 38,689 0 1,432 1,432
Transfers of Policy Loading, Net 898 0 54 54
Transfers Due to Deaths 0 0 0 0
Transfers Due to Other Terminations (1,784) (2) (1) (1)
Transfers Due to Policy Loans 0 0 0 0
Transfers of Cost of Insurance (4,791) 0 (137) (137)
Transfers of Loan Processing Charges (32) 0 0 0
Transfers Among Investment Divisions 193,264 (21) 23 4
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets
Resulting from Principal Transactions 226,244 (23) 1,371 1,352
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets 228,541 (23) 1,578 1,652
Net Assets Beginning Balance 99,982 23 2,870 2,824
----------------- ----------------- ----------------- -----------------
Net Assets Ending Balance $ 328,523 $ 0 $ 4,448 $ 4,476
================= ================= ================= =================
</TABLE>
<PAGE>
ML OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT II
ML LIFE INSURANCE COMPANY OF NEW YORK
SUPPLEMENTAL CONSOLIDATING SCHEDULE OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Divisions Investing In
-----------------------------------------------------------------------
1998 1999 2000 2003
Trust Trust Trust Trust
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Investment Income (Loss):
Reinvested Dividends $ 0 $ 0 $ 0 $ 0
Mortality and Expense Charges (122) (32) (365) (255)
Transaction Charges (47) (12) (138) (97)
----------------- ----------------- ----------------- -----------------
Net Investment Income (Loss) (169) (44) (503) (352)
----------------- ----------------- ----------------- -----------------
Realized and Unrealized Gains (Losses):
Net Realized Gains (Losses) 21 4 27 140
Net Unrealized Gains 1,559 507 6,514 6,488
----------------- ----------------- ----------------- -----------------
Net Realized and Unrealized Gains 1,580 511 6,541 6,628
----------------- ----------------- ----------------- -----------------
Increase in Net Assets
Resulting from Operations 1,411 467 6,038 6,276
----------------- ----------------- ----------------- -----------------
Changes from Principal Transactions:
Transfers of Net Premiums 2,366 1,430 11,494 3,472
Transfers of Policy Loading, Net 76 54 402 40
Transfers Due to Deaths 0 0 0 0
Transfers Due to Other Terminations (13) (1) (21) (18)
Transfers Due to Policy Loans 0 0 0 0
Transfers of Cost of Insurance (338) (136) (1,032) (514)
Transfers of Loan Processing Charges (1) 0 (3) (2)
Transfers Among Investment Divisions 20,133 5 25,134 29,265
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets
Resulting from Principal Transactions 22,223 1,352 35,974 32,243
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets 23,634 1,819 42,012 38,519
Net Assets Beginning Balance 7,334 2,713 25,841 0
----------------- ----------------- ----------------- -----------------
Net Assets Ending Balance $ 30,968 $ 4,532 $ 67,853 $ 38,519
================= ================= ================= =================
</TABLE>
<PAGE>
ML OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT II
ML LIFE INSURANCE COMPANY OF NEW YORK
SUPPLEMENTAL CONSOLIDATING SCHEDULE OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Divisions Investing In
-----------------------------------------------------------------------
2004 2005 2009 2010
Trust Trust Trust Trust
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Investment Income (Loss):
Reinvested Dividends $ 0 $ 0 $ 0 $ 0
Mortality and Expense Charges (84) (180) (61) (167)
Transaction Charges (32) (68) (23) (63)
----------------- ----------------- ----------------- -----------------
Net Investment Income (Loss) (116) (248) (84) (230)
----------------- ----------------- ----------------- -----------------
Realized and Unrealized Gains (Losses):
Net Realized Gains (Losses) 8 959 1,105 82
Net Unrealized Gains 2,067 4,690 1,392 6,317
----------------- ----------------- ----------------- -----------------
Net Realized and Unrealized Gains 2,075 5,649 2,497 6,399
----------------- ----------------- ----------------- -----------------
Increase in Net Assets
Resulting from Operations 1,959 5,401 2,413 6,169
----------------- ----------------- ----------------- -----------------
Changes from Principal Transactions:
Transfers of Net Premiums 0 6,368 5,039 0
Transfers of Policy Loading, Net 54 495 502 25
Transfers Due to Deaths 0 0 0 0
Transfers Due to Other Terminations (11) (7) (1) 71
Transfers Due to Policy Loans 0 0 0 0
Transfers of Cost of Insurance (161) (823) (159) (213)
Transfers of Loan Processing Charges (1) (1) 0 (1)
Transfers Among Investment Divisions 20,220 4,564 (5,499) 18,898
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets
Resulting from Principal Transactions 20,101 10,596 (118) 18,780
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets 22,060 15,997 2,295 24,949
Net Assets Beginning Balance 0 7,865 5,304 0
----------------- ----------------- ----------------- -----------------
Net Assets Ending Balance $ 22,060 $ 23,862 $ 7,599 $ 24,949
================= ================= ================= =================
</TABLE>
<PAGE>
ML OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT II
ML LIFE INSURANCE COMPANY OF NEW YORK
SUPPLEMENTAL CONSOLIDATING SCHEDULE OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Division Investing In
-----------------
2013
Trust
-----------------
<S> <C>
Investment Income (Loss):
Reinvested Dividends $ 0
Mortality and Expense Charges (20)
Transaction Charges (8)
-----------------
Net Investment Income (Loss) (28)
-----------------
Realized and Unrealized Gains (Losses):
Net Realized Gains (Losses) 0
Net Unrealized Gains 909
-----------------
Net Realized and Unrealized Gains 909
-----------------
Increase in Net Assets
Resulting from Operations 881
-----------------
Changes from Principal Transactions:
Transfers of Net Premiums 1,041
Transfers of Policy Loading, Net 40
Transfers Due to Deaths 0
Transfers Due to Other Terminations (1)
Transfers Due to Policy Loans 0
Transfers of Cost of Insurance (48)
Transfers of Loan Processing Charges 0
Transfers Among Investment Divisions 2
-----------------
Increase (Decrease) in Net Assets
Resulting from Principal Transactions 1,034
-----------------
Increase (Decrease) in Net Assets 1,915
Net Assets Beginning Balance 1,395
-----------------
Net Assets Ending Balance $ 3,310
=================
</TABLE>
<PAGE>
ML OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT II
ML LIFE INSURANCE COMPANY OF NEW YORK
SUPPLEMENTAL CONSOLIDATING SCHEDULE OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
Divisions Investing In
-----------------------------------------------------
Intermediate Long-Term
Total Money Government Corporate
Separate Reserve Bond Bond
Account Portfolio Portfolio Portfolio
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Investment Income (Loss):
Reinvested Dividends $ 268,953 $ 41,342 $ 4,966 $ 5,571
Mortality and Expense Charges (39,147) (7,682) (579) (500)
Transaction Charges (139) 0 0 0
----------------- ----------------- ----------------- -----------------
Net Investment Income (Loss) 229,667 33,660 4,387 5,071
----------------- ----------------- ----------------- -----------------
Realized and Unrealized Gains (Losses):
Net Realized Gains (Losses) (14,386) 0 (1,374) (2,463)
Net Unrealized Gains (Losses) (356,936) 0 (5,684) (5,516)
----------------- ----------------- ----------------- -----------------
Net Realized and Unrealized Gains (Losses) (371,322) 0 (7,058) (7,979)
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets
Resulting from Operations (141,655) 33,660 (2,671) (2,908)
----------------- ----------------- ----------------- -----------------
Changes from Principal Transactions:
Transfers of Net Premiums 2,992,673 2,182,917 16,259 14,303
Transfers of Policy Loading, Net 242,105 204,854 838 297
Transfers Due to Deaths (4,709) (4,709) 0 0
Transfers Due to Other Terminations (42,335) (19,061) (47) (34)
Transfers Due to Policy Loans (26,381) (3,291) 0 (8,090)
Transfers of Cost of Insurance (142,930) (11,687) (1,890) (1,766)
Transfers of Loan Processing Charges (180) (61) (2) (1)
Transfers Among Investment Divisions 0 (2,135,609) 57,882 15,300
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets
Resulting from Principal Transactions 3,018,243 213,353 73,040 20,009
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets 2,876,588 247,013 70,369 17,101
Net Assets Beginning Balance 2,949,177 791,336 18,031 43,240
----------------- ----------------- ----------------- -----------------
Net Assets Ending Balance $ 5,825,765 $ 1,038,349 $ 88,400 $ 60,341
================= ================= ================= =================
</TABLE>
<PAGE>
ML OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT II
ML LIFE INSURANCE COMPANY OF NEW YORK
SUPPLEMENTAL CONSOLIDATING SCHEDULE OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
Divisions Investing In
-----------------------------------------------------------------------
Capital Growth Multiple High
Stock Stock Strategy Yield
Portfolio Portfolio Portfolio Portfolio
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Investment Income (Loss):
Reinvested Dividends $ 22,713 $ 44,060 $ 91,638 $ 10,086
Mortality and Expense Charges (2,624) (3,093) (8,738) (858)
Transaction Charges 0 0 0 0
----------------- ----------------- ----------------- -----------------
Net Investment Income (Loss) 20,089 40,967 82,900 9,228
----------------- ----------------- ----------------- -----------------
Realized and Unrealized Gains (Losses):
Net Realized Gains (Losses) (193) (4,489) (8,962) (113)
Net Unrealized Gains (Losses) (36,308) (53,393) (122,822) (11,295)
----------------- ----------------- ----------------- -----------------
Net Realized and Unrealized Gains (Losses) (36,501) (57,882) (131,784) (11,408)
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets
Resulting from Operations (16,412) (16,915) (48,884) (2,180)
----------------- ----------------- ----------------- -----------------
Changes from Principal Transactions:
Transfers of Net Premiums 87,258 72,918 141,921 19,063
Transfers of Policy Loading, Net 3,860 2,341 6,369 899
Transfers Due to Deaths 0 0 0 0
Transfers Due to Other Terminations (3,606) (5,552) (694) (62)
Transfers Due to Policy Loans 0 0 (7,343) 0
Transfers of Cost of Insurance (12,541) (11,943) (30,302) (2,517)
Transfers of Loan Processing Charges (9) (11) (30) (3)
Transfers Among Investment Divisions 114,987 115,653 557,800 31,203
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets
Resulting from Principal Transactions 189,949 173,406 667,721 48,583
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets 173,537 156,491 618,837 46,403
Net Assets Beginning Balance 193,851 266,027 609,686 68,844
----------------- ----------------- ----------------- -----------------
Net Assets Ending Balance $ 367,388 $ 422,518 $ 1,228,523 $ 115,247
================= ================= ================= =================
</TABLE>
<PAGE>
ML OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT II
ML LIFE INSURANCE COMPANY OF NEW YORK
SUPPLEMENTAL CONSOLIDATING SCHEDULE OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
Divisions Investing In
-----------------------------------------------------------------------
Global
Natural Global Utility
Resources Strategy Balanced Focus
Portfolio Portfolio Portfolio Fund
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Investment Income (Loss):
Reinvested Dividends $ 881 $ 40,661 $ 6,867 $ 48
Mortality and Expense Charges (515) (12,743) (945) (9)
Transaction Charges 0 0 0 0
----------------- ----------------- ----------------- -----------------
Net Investment Income (Loss) 366 27,918 5,922 39
----------------- ----------------- ----------------- -----------------
Realized and Unrealized Gains (Losses):
Net Realized Gains (Losses) (1,133) 6,797 (2,182) 1
Net Unrealized Gains (Losses) (1,787) (96,994) (8,078) (139)
----------------- ----------------- ----------------- -----------------
Net Realized and Unrealized Gains (Losses) (2,920) (90,197) (10,260) (138)
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets
Resulting from Operations (2,554) (62,279) (4,338) (99)
----------------- ----------------- ----------------- -----------------
Changes from Principal Transactions:
Transfers of Net Premiums 15,585 322,623 52,080 1,574
Transfers of Policy Loading, Net 459 16,489 2,418 63
Transfers Due to Deaths 0 0 0 0
Transfers Due to Other Terminations (76) (6,534) (5,452) (1)
Transfers Due to Policy Loans 0 (7,657) 0 0
Transfers of Cost of Insurance (1,820) (55,334) (6,317) (141)
Transfers of Loan Processing Charges (2) (47) (4) 0
Transfers Among Investment Divisions 35,939 978,339 (64,303) 1,959
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets
Resulting from Principal Transactions 50,085 1,247,879 (21,578) 3,454
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets 47,531 1,185,600 (25,916) 3,355
Net Assets Beginning Balance 38,630 728,468 159,454 0
----------------- ----------------- ----------------- -----------------
Net Assets Ending Balance $ 86,161 $ 1,914,068 $ 133,538 $ 3,355
================= ================= ================= =================
</TABLE>
<PAGE>
ML OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT II
ML LIFE INSURANCE COMPANY OF NEW YORK
SUPPLEMENTAL CONSOLIDATING SCHEDULE OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
Divisions Investing In
-----------------------------------------------------------------------
International Global Basic Developing
Equity Bond Value Capital Markets
Focus Focus Focus Focus
Fund Fund Fund Fund
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Investment Income (Loss):
Reinvested Dividends $ 36 $ 37 $ 47 $ 0
Mortality and Expense Charges (178) (2) (144) (170)
Transaction Charges 0 0 0 0
----------------- ----------------- ----------------- -----------------
Net Investment Income (Loss) (142) 35 (97) (170)
----------------- ----------------- ----------------- -----------------
Realized and Unrealized Gains (Losses):
Net Realized Gains (Losses) 25 0 (15) 15
Net Unrealized Gains (Losses) (3,703) (34) (555) (9,329)
----------------- ----------------- ----------------- -----------------
Net Realized and Unrealized Gains (Losses) (3,678) (34) (570) (9,314)
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets
Resulting from Operations (3,820) 1 (667) (9,484)
----------------- ----------------- ----------------- -----------------
Changes from Principal Transactions:
Transfers of Net Premiums 17,941 955 9,863 18,358
Transfers of Policy Loading, Net 954 43 584 891
Transfers Due to Deaths 0 0 0 0
Transfers Due to Other Terminations (452) 0 (47) (685)
Transfers Due to Policy Loans 0 0 0 0
Transfers of Cost of Insurance (1,772) (20) (679) (1,570)
Transfers of Loan Processing Charges (3) 0 (3) (3)
Transfers Among Investment Divisions 103,175 2 85,671 92,475
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets
Resulting from Principal Transactions 119,843 980 95,389 109,466
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets 116,023 981 94,722 99,982
Net Assets Beginning Balance 0 0 0 0
----------------- ----------------- ----------------- -----------------
Net Assets Ending Balance $ 116,023 $ 981 $ 94,722 $ 99,982
================= ================= ================= =================
</TABLE>
<PAGE>
ML OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT II
ML LIFE INSURANCE COMPANY OF NEW YORK
SUPPLEMENTAL CONSOLIDATING SCHEDULE OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
Divisions Investing In
-----------------------------------------------------------------------
1995 1996 1997 1998
Trust Trust Trust Trust
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Investment Income (Loss):
Reinvested Dividends $ 0 $ 0 $ 0 $ 0
Mortality and Expense Charges (12) (19) (18) (45)
Transaction Charges (5) (7) (7) (17)
----------------- ----------------- ----------------- -----------------
Net Investment Income (Loss) (17) (26) (25) (62)
----------------- ----------------- ----------------- -----------------
Realized and Unrealized Gains (Losses):
Net Realized Gains (Losses) 30 12 (6) (5)
Net Unrealized Gains (Losses) (11) 13 (24) (124)
----------------- ----------------- ----------------- -----------------
Net Realized and Unrealized Gains (Losses) 19 25 (30) (129)
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets
Resulting from Operations 2 (1) (55) (191)
----------------- ----------------- ----------------- -----------------
Changes from Principal Transactions:
Transfers of Net Premiums 0 1,466 1,448 3,740
Transfers of Policy Loading, Net (8) 62 61 158
Transfers Due to Deaths 0 0 0 0
Transfers Due to Other Terminations 0 (1) (1) (4)
Transfers Due to Policy Loans 0 0 0 0
Transfers of Cost of Insurance (61) (182) (181) (328)
Transfers of Loan Processing Charges 0 0 0 0
Transfers Among Investment Divisions (1,638) (491) (469) 1,037
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets
Resulting from Principal Transactions (1,707) 854 858 4,603
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets (1,705) 853 803 4,412
Net Assets Beginning Balance 1,728 2,017 2,021 2,922
----------------- ----------------- ----------------- -----------------
Net Assets Ending Balance $ 23 $ 2,870 $ 2,824 $ 7,334
================= ================= ================= =================
</TABLE>
<PAGE>
ML OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT II
ML LIFE INSURANCE COMPANY OF NEW YORK
SUPPLEMENTAL CONSOLIDATING SCHEDULE OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
Divisions Investing In
-----------------------------------------------------------------------
1999 2000 2005 2009
Trust Trust Trust Trust
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Investment Income (Loss):
Reinvested Dividends $ 0 $ 0 $ 0 $ 0
Mortality and Expense Charges (18) (190) (36) (19)
Transaction Charges (7) (72) (13) (7)
----------------- ----------------- ----------------- -----------------
Net Investment Income (Loss) (25) (262) (49) (26)
----------------- ----------------- ----------------- -----------------
Realized and Unrealized Gains (Losses):
Net Realized Gains (Losses) (2) (317) (18) (9)
Net Unrealized Gains (Losses) (71) (812) (150) 12
----------------- ----------------- ----------------- -----------------
Net Realized and Unrealized Gains (Losses) (73) (1,129) (168) 3
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets
Resulting from Operations (98) (1,391) (217) (23)
----------------- ----------------- ----------------- -----------------
Changes from Principal Transactions:
Transfers of Net Premiums 1,414 9,351 1,275 0
Transfers of Policy Loading, Net 60 347 54 0
Transfers Due to Deaths 0 0 0 0
Transfers Due to Other Terminations (1) (16) (4) (3)
Transfers Due to Policy Loans 0 0 0 0
Transfers of Cost of Insurance (178) (1,369) (193) (75)
Transfers of Loan Processing Charges 0 (1) 0 0
Transfers Among Investment Divisions 487 (202) 5,464 5,405
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets
Resulting from Principal Transactions 1,782 8,110 6,596 5,327
----------------- ----------------- ----------------- -----------------
Increase (Decrease) in Net Assets 1,684 6,719 6,379 5,304
Net Assets Beginning Balance 1,029 19,122 1,486 0
----------------- ----------------- ----------------- -----------------
Net Assets Ending Balance $ 2,713 $ 25,841 $ 7,865 $ 5,304
================= ================= ================= =================
</TABLE>
<PAGE>
ML OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT II
ML LIFE INSURANCE COMPANY OF NEW YORK
SUPPLEMENTAL CONSOLIDATING SCHEDULE OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
Division Investing In
-----------------
2013
Trust
-----------------
<S> <C>
Investment Income (Loss):
Reinvested Dividends $ 0
Mortality and Expense Charges (10)
Transaction Charges (4)
-----------------
Net Investment Income (Loss) (14)
-----------------
Realized and Unrealized Gains (Losses):
Net Realized Gains (Losses) 15
Net Unrealized Gains (Losses) (132)
-----------------
Net Realized and Unrealized Gains (Losses) (117)
-----------------
Increase (Decrease) in Net Assets
Resulting from Operations (131)
-----------------
Changes from Principal Transactions:
Transfers of Net Premiums 361
Transfers of Policy Loading, Net 12
Transfers Due to Deaths 0
Transfers Due to Other Terminations (2)
Transfers Due to Policy Loans 0
Transfers of Cost of Insurance (64)
Transfers of Loan Processing Charges 0
Transfers Among Investment Divisions (66)
-----------------
Increase (Decrease) in Net Assets
Resulting from Principal Transactions 241
-----------------
Increase (Decrease) in Net Assets 110
Net Assets Beginning Balance 1,285
-----------------
Net Assets Ending Balance $ 1,395
=================
</TABLE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors of
ML Life Insurance Company of New York:
We have audited the accompanying balance sheets of ML Life
Insurance Company of New York (the "Company"), a wholly-owned
subsidiary of Merrill Lynch Insurance Group, Inc., as of December
31, 1996 and 1995, and the related statements of earnings,
stockholder's equity, and cash flows for each of the three years
in the period ended December 31, 1996. 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, such financial statements present fairly, in all
material respects, the financial position of the Company at
December 31, 1996 and 1995, and the results of its operations and
its cash flows for each of the three years in the period ended
December 31, 1996 in conformity with generally accepted
accounting principles.
February 24, 1997
<PAGE>
ML LIFE INSURANCE COMPANY OF NEW YORK
(A wholly-owned subsidiary of Merrill Lynch Insurance Group, Inc.)
BALANCE SHEETS
AS OF DECEMBER 31, 1996 AND 1995
(Dollars in Thousands)
<TABLE>
<CAPTION>
1996 1995
--------------- -------------
<S> <C> <C>
ASSETS
- ------
INVESTMENTS:
Fixed maturity securities, at estimated fair value
(amortized cost: 1996 - $264,341; 1995 - $295,403) $ 269,103 $ 307,596
Equity securities, at estimated fair value
(cost: 1996 - $8,975; 1995 - $3,017) 10,859 3,534
Mortgage loans 2,057 4,032
Policy loans on insurance contracts 85,548 82,073
--------------- -------------
Total Investments 367,567 397,235
=============== =============
CASH AND CASH EQUIVALENTS 7,828 17,387
ACCRUED INVESTMENT INCOME 5,952 6,603
DEFERRED POLICY ACQUISITION COSTS 29,272 30,922
FEDERAL INCOME TAXES - DEFERRED - 3,622
REINSURANCE RECEIVABLES 1,065 493
OTHER ASSETS 4,569 2,653
SEPARATE ACCOUNTS ASSETS 591,814 544,432
--------------- -------------
TOTAL ASSETS $ 1,008,067 $ 1,003,347
=============== =============
</TABLE>
See notes to financial statements.
<PAGE>
ML Life Insurance Company of New York
(A wholly-owned subsidiary of Merrill Lynch Insurance Group, Inc.)
Balance Sheets
As of December 31, 1996 and 1995
(Continued) (Dollars in Thousands)
<TABLE>
<CAPTION>
1996 1995
--------------- --------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDER'S EQUITY
- ------------------------------------
LIABILITIES:
POLICY LIABILITIES AND ACCRUALS:
Policyholders' account balances $ 318,567 $ 337,137
Claims and claims settlement expenses 2,572 2,901
--------------- --------------
Total policy liabilities and accruals 321,139 340,038
OTHER POLICYHOLDER FUNDS 1,160 739
FEDERAL INCOME TAXES - DEFERRED 626 -
FEDERAL INCOME TAXES - CURRENT 2,099 185
AFFILIATED PAYABLES - NET 5,026 4,062
OTHER LIABILITIES 1,649 3,112
SEPARATE ACCOUNTS LIABILITIES 591,814 544,432
--------------- --------------
Total Liabilities 923,513 892,568
--------------- --------------
STOCKHOLDER'S EQUITY:
Common stock, $10 par value - 220,000 shares
authorized, issued and outstanding 2,200 2,200
Additional paid-in capital 72,040 83,006
Retained earnings 9,219 24,034
Net unrealized gain on investment securities 1,095 1,539
-------------- --------------
Total Stockholder's Equity 84,554 110,779
-------------- --------------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 1,008,067 $ 1,003,347
============== ==============
</TABLE>
<PAGE>
ML LIFE INSURANCE COMPANY OF NEW YORK
(A wholly-owned subsidiary of Merrill Lynch Insurance Group, Inc.)
STATEMENTS OF EARNINGS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(Dollars in Thousands)
<TABLE>
<CAPTION>
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
REVENUES:
Investment revenue:
Net investment income $ 27,520 $ 29,819 $ 32,679
Net realized investment gains (losses) 2,169 (265) (2,218)
Policy charge revenue 11,959 10,864 10,339
------------ ------------ ------------
Total Revenues 41,648 40,418 40,800
------------ ------------ ------------
BENEFITS AND EXPENSES:
Interest credited to policyholders' account balances 16,586 17,375 22,691
Market value adjustment expense 301 238 132
Policy benefits (net of reinsurance recoveries: 1996 - $1,584
1995 - $917; 1994 - $715) 1,311 528 1,620
Reinsurance premium ceded 1,262 1,227 1,240
Amortization of deferred policy acquisition costs 3,784 1,300 4,141
Insurance expenses and taxes 4,595 4,508 3,685
------------ ------------ ------------
Total Benefits and Expenses 27,839 25,176 33,509
------------ ------------ ------------
Earnings Before Federal Income Tax Provision 13,809 15,242 7,291
------------ ------------ ------------
FEDERAL INCOME TAX PROVISION (BENEFIT):
Current 102 1,692 (213)
Deferred 4,488 3,486 2,031
------------ ------------ ------------
Total Federal Income Tax Provision 4,590 5,178 1,818
------------ ------------ ------------
NET EARNINGS $ 9,219 $ 10,064 $ 5,473
============ ============ ============
</TABLE>
See notes to financial statements.
<PAGE>
ML LIFE INSURANCE COMPANY OF NEW YORK
(A wholly-owned subsidiary of Merrill Lynch Insurance Group, Inc.)
STATEMENTS OF STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(Dollars in Thousands)
<TABLE>
<CAPTION>
Net
Additional unrealized Total
Common paid-in Retained investment stockholder's
stock capital earnings gain (loss) equity
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1994 $ 2,200 $ 83,006 $ 8,497 $ (927) $ 92,776
Net earnings 5,473 5,473
Net unrealized investment loss (2,436) (2,436)
----------- ----------- ----------- ----------- -------------
BALANCE, DECEMBER 31, 1994 2,200 83,006 13,970 ( 3,363) 95,813
Net earnings 10,064 10,064
Net unrealized investment gain 4,902 4,902
----------- ----------- ----------- ----------- -------------
BALANCE, DECEMBER 31, 1995 2,200 83,006 24,034 1,539 110,779
Dividend to Parent (10,966) (24,034) (35,000)
Net earnings 9,219 9,219
Net unrealized investment loss (444) (444)
----------- ----------- ----------- ----------- -------------
BALANCE, DECEMBER 31, 1996 $ 2,200 $ 72,040 $ 9,219 $ 1,095 $ 84,554
=========== =========== =========== =========== =============
</TABLE>
See notes to financial statements.
<PAGE>
ML LIFE INSURANCE COMPANY OF NEW YORK
(A wholly-owned subsidiary of Merrill Lynch Insurance Group, Inc.)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(Dollars in Thousands)
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net earnings $ 9,219 $ 10,064 $ 5,473
Adjustments to reconcile net earnings to net cash and
cash equivalents provided (used) by operating activities:
Amortization of deferred policy acquisition costs 3,784 1,300 4,142
Capitalization of policy acquisition costs (2,134) (4,368) (7,142)
Amortization, (accretion) and depreciation of investments 1 (434) (312)
Net realized investment (gains) losses (2,169) 265 2,218
Interest credited to policyholders' account balances 16,586 17,375 22,691
Provision for deferred Federal income tax 4,488 3,486 2,031
Changes in operating assets and liabilities:
Accrued investment income 651 751 2,810
Claims and claims settlement expenses (329) (1,413) (1,300)
Federal income taxes - current 1,914 15 (694)
Other policyholder funds 421 (793) 332
Affiliated payable - net 964 (180) (981)
Policy loans on insurance contracts (3,475) (4,246) (4,447)
Other, net (3,951) 1,723 (1,947)
----------- ----------- -----------
Net cash and cash equivalents provided
by operating activities 25,970 23,545 22,874
----------- ----------- -----------
INVESTING ACTIVITIES:
Sales of available-for-sale securities 155,645 68,736 128,183
Maturities of available-for-sale securities 34,455 38,420 92,499
Purchases of available-for-sale securities (162,828) (103,568) (73,045)
Mortgage loans principal payments received 1,975 - 8,998
Sales of mortgage loans - 3,608 -
----------- ----------- -----------
Net cash and cash equivalents provided by
investing activities 29,247 7,196 156,635
----------- ----------- -----------
</TABLE>
<PAGE>
ML LIFE INSURANCE COMPANY OF NEW YORK
(a wholly-owned subsidiary of Merrill Lynch Insurance Group, Inc.)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(Continued) (Dollars In Thousands)
<TABLE>
<CAPTION>
1996 1995 1994
------------- ------------- --------------
<S> <C> <C> <C>
FINANCING ACTIVITIES:
Dividends paid to parent $ (35,000) $ - $ -
Policyholders' account balances:
Deposits 32,158 43,191 56,297
Withdrawals (net of transfers to/from Separate Accounts) (61,934) (77,460) (242,355)
------------- ------------- --------------
Net cash and cash equivalents used
by financing activities (64,776) (34,269) (186,058)
------------- ------------- --------------
NET DECREASE IN CASH AND
CASH EQUIVALENTS (9,559) (3,528) (6,549)
CASH AND CASH EQUIVALENTS:
Beginning of year 17,387 20,915 27,464
------------- ------------- --------------
End of year $ 7,828 $ 17,387 $ 20,915
============= ============= ==============
Supplementary Disclosure of Cash Flow Information:
Cash paid (received) to (from) affiliates for:
Federal income taxes $ (1,812) $ 1,677 $ 482
Interest 440 447 352
</TABLE>
See notes to financial statements.
<PAGE>
ML LIFE INSURANCE COMPANY OF NEW YORK
(A wholly-owned subsidiary of Merrill Lynch Insurance Group,Inc.)
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Reporting: ML Life Insurance Company of New York (the
"Company") is a wholly-owned subsidiary of Merrill Lynch
Insurance Group, Inc. ("MLIG"). The Company is an indirect
wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("Merrill
Lynch & Co.").
The Company sells non-participating life insurance and annuity
products which comprise one business segment. The primary
products that the Company currently markets are immediate
annuities, market value adjusted annuities, variable life
insurance and variable annuities. The Company is licensed to
sell insurance in nine states; however, it currently limits its
marketing activities to the State of New York. The Company
markets its products solely through the retail network of
Merrill Lynch, Pierce, Fenner & Smith, Incorporated ("MLPF&S"),
a wholly-owned subsidiary of Merrill Lynch & Co.
The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles and
prevailing industry practices, both of which require management
to make estimates that affect the reported amounts and
disclosure of contingencies in the financial statements. Actual
results could differ from those estimates.
Revenue Recognition: Revenues for the Company's interest-
sensitive life, interest-sensitive annuity, variable life and
variable annuity products consist of policy charges for the
cost of insurance, deferred sales charges, policy
administration charges and/or withdrawal charges assessed
against policyholders' account balances during the period.
Policyholders' Account Balances: Liabilities for the Company's
universal life type contracts, including its life insurance and
annuity products, are equal to the full accumulation value of
such contracts as of the valuation date plus deficiency
reserves for certain products. Interest-crediting rates for the
Company's fixed-rate products are as follows:
Interest-sensitive life products 4.00% - 5.40%
Interest-sensitive deferred annuities 4.00% - 8.23%
Immediate annuities 3.00% - 10.00%
These rates may be changed at the option of the Company,
subject to minimum guarantees, after initial guaranteed rates
expire.
Liabilities for unpaid claims equal the death benefit for those
claims which have been reported to the Company and an estimate
based upon prior experience for claims unreported.
Reinsurance: In the normal course of business, the Company
seeks to limit its exposure to loss on any single insured life
and to recover a portion of benefits paid by ceding reinsurance
to other insurance enterprises or reinsurers under indemnity
reinsurance agreements, primarily excess coverage and
coinsurance agreements. The maximum amount of mortality risk
retained by the Company is approximately $500 on a single life.
Indemnity reinsurance agreements do not relieve the Company
from its obligations to policyholders. Failure of reinsurers to
honor their obligations could result in losses to the Company.
The Company regularly evaluates the financial condition of its
reinsurers so as to minimize its exposure to significant losses
from reinsurer insolvencies. The Company holds collateral under
reinsurance agreements in the form of letters of credit and
funds withheld totaling $183 that can be drawn upon for
delinquent reinsurance recoverables.
As of December 31, 1996, the Company had life insurance in-
force that was ceded to other life insurance companies of
$149,994.
Deferred Policy Acquisition Costs: Policy acquisition costs for
life and annuity contracts are deferred and amortized based on
the estimated future gross profits for each group of contracts.
These future gross profit estimates are subject to periodic
evaluation by the Company, with necessary revisions applied
against amortization to date. It is reasonably possible that
estimates of future gross profits could be reduced in the
future, resulting in a material reduction in the carrying
amount of deferred policy acquisition costs.
Policy acquisition costs are principally commissions and a
portion of certain other expenses relating to policy
acquisition, underwriting and issuance, that are primarily
related to and vary with the production of new business.
Certain costs and expenses reported in the statements of
earnings are net of amounts deferred. Policy acquisition costs
can also arise from the acquisition or reinsurance of existing
in-force policies from other insurers. These costs include
ceding commissions and professional fees related to the
reinsurance assumed. The deferred costs are amortized in
proportion to the estimated future gross profits over the
anticipated life of the acquired insurance contracts utilizing
an interest methodology.
The Company has entered into an assumption reinsurance
agreement with an unaffiliated insurer. The acquisition costs
relating to this agreement are being amortized over a twenty-
year period using an effective interest rate of 9.01%. This
reinsurance agreement provides for payment of contingent ceding
commissions based upon the persistency and mortality experience
of the insurance contracts assumed. Any payments made for the
contingent ceding commissions will be capitalized and amortized
using an identical methodology as that used for the initial
acquisition costs. The following is a reconciliation of the
acquisition costs related to the reinsurance agreement for the
years ended December 31:
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Beginning balance $ 17,654 $ 14,923 $ 15,614
Capitalized amounts 577 1,553 1,447
Interest accrued 1,566 2,138 1,407
Amortization (2,646) (960) (3,545)
----------- ----------- -----------
Ending balance $ 17,151 $ 17,654 $ 14,923
=========== =========== ===========
</TABLE>
The following table presents the expected amortization, net of
interest accrued, of these deferred acquisition costs over the
next five years. The amortization may be adjusted based on
periodic evaluation of the expected gross profits on the
reinsured policies.
1997 $1,394
1998 995
1999 942
2000 905
2001 868
Investments: The Company's investments in fixed maturity and
equity securities are classified as available-for-sale
securities, which are carried at estimated fair value with
unrealized gains and losses included in stockholder's equity.
If a decline in value of a security is determined by management
to be other-than-temporary, the carrying value is adjusted to
the estimated fair value at the date of this determination and
recorded as net realized investment gains (losses).
For fixed maturity securities, premiums are amortized to the
earlier of the call or maturity date, discounts are accreted to
the maturity date, and interest income is accrued daily. For
equity securities, dividends are recognized on the ex-dividend
date. Realized gains and losses on the sale or maturity of the
investments are determined on the basis of identified cost.
Fixed maturity securities may contain securities which are
considered non-investment grade. The Company defines non-
investment grade fixed maturity securities as unsecured
corporate debt obligations that do not have a rating equivalent
to Standard and Poor's (or similar rating agency) BBB or higher
and are not guaranteed by an agency of the Federal government.
Mortgage loans are stated at unpaid principal balances, net of
valuation allowances. Such valuation allowances are based on
the decline in value expected to be realized on mortgage loans
that may not be collectible in full. In establishing valuation
allowances, management considers, among other things, the
estimated fair value of the underlying collateral.
The Company recognizes income from mortgage loans based on the
cash payment interest rate of the loan, which may be different
from the accrual interest rate of the loan for certain
outstanding mortgage loans. The Company will recognize a
realized gain at the date of the satisfaction of the loan at
contractual terms for loans where there is a difference between
the cash payment interest rate and the accrual interest rate.
For all loans, the Company stops accruing income when an
interest payment default either occurs or is probable.
Impairments of mortgage loans are established as valuation
allowances and recorded to net realized investment gains or
losses.
The Company has previously made commercial mortgage loans
collateralized by real estate. The return on and the ultimate
recovery of these loans are generally dependent on the
successful operation, sale or refinancing of the real estate.
The Company monitors the effects of current and expected real
estate market conditions and other factors when assessing the
collectibility of mortgage loans. When, in management's
judgment, these assets are impaired, appropriate losses are
recorded. Such estimates necessarily include assumptions, which
may include anticipated improvements in selected market
conditions for real estate, which may or may not occur. The
more significant assumptions management considers involve
estimates of the following: lease absorption and sales rates;
real estate values and rates of return; operating expenses;
required capital improvements; inflation; and sufficiency of
any collateral independent of the real estate. Management
believes that the carrying value approximates the fair value of
these investments.
Policy loans on insurance contracts are stated at unpaid
principal balances.
Income Taxes: The results of operations of the Company are
included in the consolidated Federal income tax return of
Merrill Lynch & Co. The Company has entered into a tax-sharing
agreement with Merrill Lynch & Co. whereby the Company will
calculate its current tax provision based on its operations.
Under the agreement, the Company periodically remits to Merrill
Lynch & Co. its current federal tax liability.
The Company uses the asset and liability method in providing
income taxes on all transactions that have been recognized in
the financial statements. The asset and liability method
requires that deferred taxes be adjusted to reflect the tax
rates at which future taxable amounts will be settled or
realized. The effects of tax rate changes on future deferred
tax liabilities and deferred tax assets, as well as other
changes in income tax laws, are recognized in net earnings in
the period such changes are enacted. Valuation allowances are
established when necessary to reduce deferred tax assets to the
amounts expected to be realized.
Insurance companies are generally subject to taxes on premiums
and in substantially all states are exempt from state income
taxes.
Separate Accounts: Separate Accounts are established in
conformity with New York State Insurance Law, the Company's
domiciliary state, and are generally not chargeable with
liabilities that arise from any other business of the Company.
Separate Accounts assets may be subject to general claims of
the Company only to the extent the value of such assets exceeds
Separate Accounts liabilities.
Assets and liabilities of Separate Accounts, representing net
deposits and accumulated net investment earnings less fees,
held primarily for the benefit of policyholders, are shown as
separate captions in the balance sheets.
Statements of Cash Flows: For the purpose of reporting cash
flows, cash and cash equivalents include cash on hand and on
deposit and short-term investments with original maturities of
three months or less.
Reclassifications: To facilitate comparisons with the current
year, certain amounts in the prior years have been
reclassified.
<PAGE>
NOTE 2. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial instruments are carried at fair value or amounts that
approximate fair value. The carrying value of financial
instruments as of December 31 were:
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Assets:
Fixed maturity securities (1) $ 269,103 $ 307,596
Equity securities (1) 10,859 3,534
Mortgage loans (2) 2,057 4,032
Policy loans on insurance contracts (3) 85,548 82,073
Cash and cash equivalents (4) 7,828 17,387
Separate Accounts assets (5) 591,814 544,432
------------ ------------
Total financial instruments recorded as assets $ 967,209 $ 959,054
============ ============
</TABLE>
(1) For publicly traded securities, the estimated fair value
is determined using quoted market prices. For securities
without a readily ascertainable market value, the Company
has determined an estimated fair value using a discounted
cash flow model, including provision for credit risk,
based upon the assumption that such securities will be
held to maturity. Such estimated fair values do not
necessarily represent the values for which these
securities could have been sold at the dates of the
balance sheets. At December 31, 1996 and 1995 securities
without a readily ascertainable market value, having an
amortized cost of $55,323 and $63,071, had an estimated
fair value of $57,018 and $66,367, respectively.
(2) The estimated fair value of mortgage loans approximates
the carrying value. See Note 1 for a discussion of the
Company's valuation process.
(3) The Company estimates the fair value of policy loans as
equal to the book value of the loans. Policy loans are
fully collateralized by the account value of the
associated insurance contracts, and the spread between the
policy loan interest rate and the interest rate credited
to the account value held as collateral is fixed.
(4) The estimated fair value of cash and cash equivalents
approximates the carrying value.
(5) Assets held in Separate Accounts are carried at quoted
market values.
<PAGE>
NOTE 3: INVESTMENTS
The amortized cost and estimated fair value of investments in
fixed maturity and equity securities as of December 31 were:
<TABLE>
<CAPTION>
1996
---------------------------------------------------------------------
Cost / Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Fixed maturity securities:
Corporate debt securities $ 212,290 $ 4,743 $ 556 $ 216,477
Mortgage-backed securities 46,204 827 383 46,648
U.S. government and agencies 830 230 - 1,060
Foreign governments 5,017 10 109 4,918
------------ ----------- ----------- -----------
Total fixed maturity securities $ 264,341 $ 5,810 $ 1,048 $ 269,103
============ =========== =========== ===========
Equity securities:
Non-redeemable preferred stocks $ 7,237 $ 2,429 $ 38 $ 9,628
Common stocks 1,738 260 767 1,231
------------ ----------- ----------- -----------
Total equity securities $ 8,975 $ 2,689 $ 805 $ 10,859
============ =========== =========== ===========
1995
---------------------------------------------------------------------
Cost / Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
------------ ----------- ----------- -----------
Fixed maturity securities:
Corporate debt securities $ 225,859 $ 10,251 $ 493 $ 235,617
Mortgage-backed securities 64,347 2,126 75 66,398
U.S. government and agencies 5,197 384 - 5,581
------------ ----------- ----------- -----------
Total fixed maturity securities $ 295,403 $ 12,761 $ 568 $ 307,596
============ =========== =========== ===========
Equity securities:
Non-redeemable preferred stocks $ 1,251 $ 1,149 $ - $ 2,400
Common stocks 1,766 135 767 1,134
------------ ----------- ----------- -----------
Total equity securities $ 3,017 $ 1,284 $ 767 $ 3,534
============ =========== =========== ===========
</TABLE>
<PAGE>
The amortized cost and estimated fair value of fixed maturity
securities at December 31, 1996 by contractual maturity were:
<TABLE>
<CAPTION>
Estimated
Amortized Fair
Cost Value
----------- -----------
<S> <C> <C>
Fixed maturity securities:
Due in one year or less $ 36,508 $ 36,550
Due after one year through five years 125,060 128,214
Due after five years through ten years 45,087 46,196
Due after ten years 11,482 11,495
----------- -----------
218,137 222,455
Mortgage-backed securities 46,204 46,648
----------- -----------
Total fixed maturity securities $ 264,341 $ 269,103
=========== ===========
</TABLE>
Fixed maturity securities not due at a single maturity date
have been included in the preceding table in the year of final
maturity. Expected maturities may differ from contractual
maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment
penalties.
The amortized cost and estimated fair value of fixed maturity
securities at December 31, 1996 by rating agency equivalent
were:
<TABLE>
<CAPTION>
Estimated
Amortized Fair
Cost Value
----------- -----------
<S> <C> <C>
AAA $ 61,677 $ 62,377
AA 19,178 19,791
A 64,297 65,091
BBB 107,256 109,782
Non-investment grade 11,933 12,062
----------- -----------
Total fixed maturity securities $ 264,341 $ 269,103
=========== ===========
</TABLE>
<PAGE>
The Company has recorded certain adjustments to deferred policy
acquisition costs and policyholders' account balances in
conjunction with investments classified as available-for-sale.
The Company adjusts those assets and liabilities as if the
unrealized investment gains or losses from securities
classified as available-for-sale had actually been realized,
with corresponding credits or charges reported directly to
shareholder's equity. The following reconciles the net
unrealized investment gain on investment securities classified
as available-for-sale as of December 31:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Assets:
Fixed maturity securities $ 4,762 $ 12,193
Equity securities 1,884 517
----------- -----------
6,646 12,710
----------- -----------
Liabilities:
Policyholders' account balances 4,962 10,342
Federal income taxes - deferred 589 829
----------- -----------
5,551 11,171
----------- -----------
Stockholder's equity:
Net unrealized investment gain on investment securities $ 1,095 $ 1,539
=========== ===========
</TABLE>
Proceeds and gross realized investment gains and losses from
the sale of available-for-sale securities for the years ended
December 31 were:
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Proceeds $ 155,645 $ 68,736 $ 128,183
Gross realized investment gains 2,677 1,709 11,725
Gross realized investment losses 508 1,640 13,255
</TABLE>
The Company owned investment securities of $1,060 and $1,130
that were deposited with insurance regulatory authorities at
December 31, 1996 and 1995, respectively.
The Company's investment in mortgage loans are principally
collateralized by commercial real estate and are located in
California.
The Company had no impaired mortgage loans on real estate as of
December 31, 1996 and 1995.
<PAGE>
Additional information on impaired loans for the years ended
December 31 follows:
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Average investment in impaired loans $ - $ 3,650 $ 5,475
Investment income recognized (cash basis) - 233 275
</TABLE>
Net investment income arose from the following sources for the
years ended December 31:
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Fixed maturity securities $ 22,153 $ 25,046 $ 28,255
Equity securities 183 - -
Mortgage loans 388 686 975
Policy loans on insurance contracts 4,133 3,903 3,680
Cash and cash equivalents 1,559 1,103 659
----------- ----------- -----------
Gross investment income 28,416 30,738 33,569
Less investment expenses (896) (919) (890)
----------- ----------- -----------
Net investment income $ 27,520 $ 29,819 $ 32,679
=========== =========== ===========
</TABLE>
Net realized investment gains (losses), including changes in
valuation allowances, for the years ended December 31:
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Fixed maturity securities $ 657 $ 985 $ (1,767)
Equity securities 1,512 (916) 237
Mortgage loans - (334) (688)
----------- ----------- -----------
Net realized investment gains (losses) $ 2,169 $ (265) $ (2,218)
=========== =========== ===========
</TABLE>
The following is a reconciliation of the change in valuation
allowances which have been recorded to reflect other-than-
temporary declines in estimated fair value of mortgage loans
for the years ended December 31, 1995 and 1994. During 1996,
there were no valuation allowances recorded:
<TABLE>
<CAPTION>
Balance at Additions Balance at
Beginning Charged to Write - End
of Year Operations Downs of Year
------------ ------------ ---------- -----------
<S> <C> <C> <C> <C>
1995 $ 1,536 $ - $ 1,536 $ -
1994 848 688 - 1,536
</TABLE>
<PAGE>
The Company held no investments at December 31, 1996 which have
been non-income producing for the preceding twelve months.
NOTE 4: FEDERAL INCOME TAXES
The following is a reconciliation of the provision for income
taxes based on earnings before federal income taxes, computed
using the Federal statutory tax rate, with the provision for
income taxes for the years ended December 31:
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Provision for income taxes computed at Federal statutory rate $ 4,833 $ 5,334 $ 2,552
State corporate income taxes (10) (91) -
Decrease in income taxes resulting from:
Dividend received deduction (235) (31) (670)
Other 2 (34) (64)
----------- ----------- -----------
Federal income tax provision $ 4,590 $ 5,178 $ 1,818
=========== =========== ===========
</TABLE>
The Federal statutory rate for each of the three years in the
period ended December 31, 1996 was 35%.
The Company provides for deferred income taxes resulting from
temporary differences that arise from recording certain
transactions in different years for income tax reporting
purposes than for financial reporting purposes. The sources of
these differences and the tax effect of each are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Deferred policy acquisition costs $ (259) $ 1,239 $ 887
Policyholders' account balances 4,053 738 833
Liability for guaranty fund assessments 50 - -
Investment adjustments 642 1,445 1,117
Other 2 64 (806)
----------- ----------- -----------
Deferred Federal income tax provision $ 4,488 $ 3,486 $ 2,031
=========== =========== ===========
</TABLE>
<PAGE>
Deferred tax assets and liabilities as of December 31 are
determined as follows:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Deferred tax assets:
Policyholders' account balances $ 4,224 $ 8,277
Investment adjustments 1,939 2,581
Other - 2
----------- -----------
Total deferred tax assets 6,163 10,860
----------- -----------
Deferred tax liabilities:
Deferred policy acquisition costs 6,150 6,409
Liability for guaranty fund assessments 50 -
Net unrealized investment gain 589 829
----------- -----------
Total deferred tax liabilities 6,789 7,238
----------- -----------
Net deferred tax asset (liability) $ (626) $ 3,622
=========== ===========
</TABLE>
The Company anticipates that all deferred tax assets will be
realized, therefore no valuation allowance has been provided.
<PAGE>
NOTE 5: RELATED PARTY TRANSACTIONS
The Company and MLIG are parties to a service agreement whereby
MLIG has agreed to provide certain accounting, data processing,
legal, actuarial, management, advertising and other services to
the Company. Expenses incurred by MLIG in relation to this
service agreement are reimbursed by the Company on an allocated
cost basis. Charges billed to the Company by MLIG pursuant to
the agreement were $4,258, $3,968 and $3,673 for 1996, 1995 and
1994 respectively. The Company is allocated interest expense on
its accounts payable to MLIG which approximates the daily
Federal funds rate. Total intercompany interest paid was $74,
$88 and $50 for 1996, 1995 and 1994, respectively.
The Company and Merrill Lynch Asset Management, L.P. ("MLAM")
are parties to a service agreement whereby MLAM has agreed to
provide certain invested asset management services to the
Company. The Company pays a fee to MLAM for these services
through the MLIG service agreement. Charges attributable to
this agreement and allocated to the Company by MLIG were $186,
$206 and $203 for 1996, 1995 and 1994, respectively.
The Company has a general agency agreement with Merrill Lynch
Life Agency Inc. ("MLLA") whereby registered representatives of
MLPF&S, who are the Company's licensed insurance agents,
solicit applications for contracts to be issued by the Company.
MLLA is paid commissions for the contracts sold by such agents.
Commissions paid to MLLA were $1,334, $2,424 and $5,329 for
1996, 1995 and 1994, respectively. Substantially all of these
commissions were capitalized as deferred policy acquisition
costs and are being amortized in accordance with the policy
discussed in Note 1.
In connection with the acquisition of a block of variable life
insurance business from Monarch Life Insurance Company
("Monarch Life"), the Company borrowed funds from Merrill Lynch
& Co. to partially finance the transaction. As of December 31,
1996 and 1995, the outstanding balance of these loans was
$3,075. Repayments made on these loans during 1996, 1995, and
1994 were $0, $1,261 and $1,214, respectively. Interest was
calculated on these loans at LIBOR plus 150 basis points.
Intercompany interest paid on these loans during 1996, 1995 and
1994 was $366, $359 and $302, respectively.
NOTE 6: STOCKHOLDER'S EQUITY AND STATUTORY REGULATIONS
At December 31, 1996 and 1995, $41,214 and $58,790,
respectively, of stockholder's equity was available for
distribution to MLIG. Notice of intention to declare a dividend
must be filed with the New York Superintendent of Insurance who
may disallow the payment. During 1996, the Company paid a
$35,000 dividend to MLIG. No dividends were declared or paid
during 1995 and 1994. Statutory capital and surplus at December
31, 1996 and 1995, was $52,895 and $72,113, respectively.
Applicable insurance department regulations require that the
Company report its accounts in accordance with statutory
accounting practices. Statutory accounting practices primarily
differ from the principals utilized in theses financial
statements by charging policy acquisition costs to expense as
incurred, establishing future policy benefit reserves using
different actuarial assumptions, not providing for deferred
income taxes and valuing securities on a different basis. The
Company's statutory net income for 1996, 1995 and 1994 was
$12,884, $3,080 and $3,816, respectively.
The National Association of Insurance Commissioners ("NAIC")
utilized the Risk Based Capital ("RBC") adequacy monitoring
system. The RBC calculates the amount of adjusted capital which
a life insurance company should have based upon that company's
risk profile. As of December 31, 1996, and 1995, based on the
RBC formula, the Company's total adjusted capital level was
626% and 709%, respectively, of the minimum amount of capital
required to avoid regulatory action.
NOTE 7: COMMITMENTS AND CONTINGENCIES
State insurance laws generally require that all life insurers
who are licensed to transact business within a state become
members of the state's life insurance guaranty association.
These associations have been established for the protection of
policyholders from loss (within specified limits) as a result
of the insolvency of an insurer. At the time an insolvency
occurs, the guaranty association assesses the remaining members
of the association an amount sufficient to satisfy the
insolvent insurer's policyholder obligations (within specified
limits). Based upon the public information available at this
time, management believes the Company has no material financial
obligations to state guaranty associations.
In the normal course of business, the Company is subject to
various claims and assessments. Management believes the
settlement of these matters would not have a material effect on
the financial position or results of operations of the Company.
* * * * * *
<PAGE> 54
PART II. OTHER INFORMATION
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned Registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
RULE 484 UNDERTAKING
ML Life Insurance Company of New York's By-Laws provide, in Article VII,
Section 7.1 as follows:
Indemnification of Directors, Officers, Employees and Incorporators. To
the extent permitted by the law of the State of New York and subject to all
applicable requirements thereof:
a) any person made or threatened to be made a party to any action or
proceeding, whether civil or criminal, by reason of the fact that he, his
testator, or intestate, is or was a director, officer, employee or
incorporator of the Company shall be indemnified by the Company;
b) any person made or threatened to be made a party to any action or
proceeding, whether civil or criminal, by reason of the fact that he, his
testator or intestate serves or served any other organization in any
capacity at the request of the Company may be indemnified by the Company;
and
c) the related expenses of any such person in any other of said
categories may be advanced by the Company.
Any persons serving as an officer, director or trustee of a corporation,
trust, or other enterprise, including the Registrant, at the request of Merrill
Lynch are entitled to indemnification from Merrill Lynch, to the fullest extent
authorized or permitted by law, for liabilities with respect to actions taken or
omitted by such persons in any capacity in which such persons serve Merrill
Lynch or such other corporation, trust, or other enterprise. Any action
initiated by any such person for which indemnification is provided shall be
approved by the Board of Directors of Merrill Lynch prior to such initiation.
DIRECTORS' AND OFFICERS' INSURANCE
Merrill Lynch has purchased from Corporate Officers' and Directors'
Assurance Company directors' and officers' liability insurance policies which
cover, in addition to the Indemnification described above, liabilities for which
indemnification is not provided under the By-Laws. The Company will pay an
allocable portion of the insurance premium paid by Merrill Lynch with respect to
such insurance policies.
NEW YORK BUSINESS CORPORATION LAW
In addition, Sections 722, 723, and 724 of the New York Business
Corporation Law generally provide that a corporation has the power (and in some
instances the obligation) to indemnify a director or officer of the corporation,
or a person serving at the request of the corporation as a director or officer
of another corporation or other enterprise against any judgments, amounts paid
in settlement, and reasonably incurred expenses in a civil or criminal action or
proceeding if the director or officer acted in good faith in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation (or, in the case of a criminal action or proceeding, if he or she in
addition had no reasonable cause to believe that his or her conduct was
unlawful).
Insofar as indemnification for liability arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with
II-1
<PAGE> 55
the securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
REPRESENTATION PURSUANT TO SECTION 26(E)
ML Life Insurance Company of New York hereby represents that the fees and
charges deducted under the Contract, in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to be incurred, and the
risks assumed by ML Life Insurance Company of New York.
II-2
<PAGE> 56
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet.
The Prospectus consisting of 83 pages.
Undertaking to file reports.
Rule 484 Undertaking.
Representation Pursuant to Section 26(e).
The signatures.
Written Consents of the Following Persons:
(a) Barry G. Skolnick, Esq.
(b) Joseph E. Crowne, Jr., F.S.A.
(c) Sutherland, Asbill & Brennan, L.L.P.
(d) Deloitte & Touche LLP, Independent Auditors
The following exhibits:
<TABLE>
<S> <C> <C>
1.A. (1) Resolution of the Board of Directors of ML Life Insurance Company of New
York establishing the Separate Account
(2) Not applicable
(3) (a) Distribution Agreement between ML Life Insurance Company of New York and
Merrill Lynch, Pierce, Fenner & Smith Incorporated
(b) Amended Sales Agreement between ML Life Insurance Company of New York and
Merrill Lynch Life Agency Inc.
(c) Schedules of Sales Commissions
(4) Not applicable
(5) (a) (1) Flexible Premium Variable Universal Life Insurance Policy
(b) (1) Backdating Endorsement
(2) (a) Additional Insurance Rider for Flexible Premium Variable Universal Life
Insurance Policy
(6) (a) Charter of ML Life Insurance Company of New York
(b) By-Laws of ML Life Insurance Company of New York
(7) Not applicable
(8) (a) Agreement between ML Life Insurance Company of New York and Merrill Lynch
Funds Distributor, Inc.
(b) Agreement between ML Life Insurance Company of New York and Merrill
Lynch, Pierce, Fenner & Smith Incorporated
(c) Participation Agreement among Merrill Lynch Life Insurance Company, ML
Life Insurance Company of New York and Monarch Life Insurance Company
(Incorporated by Reference to Registrant's Post-Effective Amendment No. 3
to Form S-6 Registration No. 33-61670 Filed April 27, 1994)
(d) Management Agreement between Royal Tandem Life Insurance Company and
Merrill Lynch Asset Management, Inc.
(e) Form of Participation Agreement Among ML Life Insurance Company of New
York, Alliance Capital Management L.P., and Alliance Fund Distributors,
Inc. (Incorporated by Reference to ML Life of New York Variable Annuity
Separate Account A's Post-Effective Amendment No. 10 to Form N-4
Registration No. 33-43654 Filed December 9, 1996)
(f) Form of Participation Agreement Among MFS Variable Insurance Trust, ML
Life Insurance Company of New York, and Massachusetts Financial Services
Company (Incorporated by Reference to ML Life of New York Variable
Annuity Separate Account A's Post-Effective Amendment No. 10 to Form N-4
Registration No. 33-43654 Filed December 9, 1996)
</TABLE>
II-3
<PAGE> 57
<TABLE>
<S> <C> <C>
(g) Participation Agreement By and Among AIM Variable Insurance Funds, Inc.,
AIM Distributors, Inc., and ML Life Insurance Company of New York
(Incorporated by Reference to ML Life of New York Variable Annuity
Separate Account A's Post- Effective Amendment No. 11 to Form N-4
Registration No. 33-43654 Filed April 24, 1997)
(9) (a) Service Agreement between Tandem Financial Group, Inc. and Royal Tandem
Life Insurance Company
(b) Service Agreement between ML Life Insurance Company of New York and
Merrill Lynch Life Insurance Company
(10) (a) Variable Life Insurance Application
(b) Application for Reinstatement
(11) (a) Memorandum describing ML Life Insurance Company of New York's Issuance,
Transfer and Redemption Procedures (Incorporated by Reference to
Registrant's Post-Effective Amendment No. 2 to Form S-6 Registration No.
33-61672 Filed March 1, 1994)
(11) (b) Supplement to Memorandum describing ML Life Insurance Company of New
York's Issuance, Transfer and Redemption Procedures
2. See Exhibit 1.A.(5)
3. Opinion and Consent of Barry G. Skolnick, Esq. as to the legality of the securities
being registered (Incorporated by Reference to Registrant's Post-Effective Amendment No.
5 to Form S-6 Registration No. 33-61672 Filed April 26, 1996)
4. Not applicable
5. Not applicable
6. Opinion and Consent of Joseph E. Crowne, Jr., F.S.A. as to actuarial matters pertaining
to the securities being registered
7. (a) Power of Attorney of Frederick J.C. Butler (Incorporated by Reference to
Registrant's Post-Effective Amendment No. 2 to Form S-6 Registration No.
33-61670 Filed March 1, 1994)
(b) Power of Attorney of Michael P. Cogswell (Incorporated by Reference to
Registrant's Post-Effective Amendment No. 2 to Form S-6 Registration No.
33-61670 Filed March 1, 1994)
(c) Power of Attorney of Sandra K. Cox (Incorporated by Reference to
Registrant's Post-Effective Amendment No. 2 to Form S-6 Registration No.
33-61670 Filed March 1, 1994)
(d) Power of Attorney of Joseph E. Crowne, Jr. (Incorporated by Reference to
Registrant's Post-Effective Amendment No. 2 to Form S-6 Registration No.
33-61670 Filed March 1, 1994)
(e) Power of Attorney of David E. Dunford (Incorporated by Reference to
Registrant's Post-Effective Amendment No. 2 to Form S-6 Registration No.
33-61670 Filed March 1, 1994)
(f) Power of Attorney of Francis X. Ervin, Jr. (Incorporated by Reference to
Registrant's Post-Effective Amendment No. 2 to Form S-6 Registration No.
33-61670 Filed March 1, 1994)
(g) Power of Attorney of Gail R. Farkas (Incorporated by Reference to
Registrant's Post-Effective Amendment No. 2 to Form S-6 Registration No.
33-61670 Filed March 1, 1994)
(h) Power of Attorney of John C.R. Hele (Incorporated by Reference to
Registrant's Post-Effective Amendment No. 2 to Form S-6 Registration No.
33-61670 Filed March 1, 1994)
(i) Power of Attorney of Robert L. Israeloff (Incorporated by Reference to
Registrant's Post-Effective Amendment No. 2 to Form S-6 Registration No.
33-61670 Filed March 1, 1994)
</TABLE>
II-4
<PAGE> 58
<TABLE>
<S> <C> <C>
(j) Power of Attorney of Allen N. Jones (Incorporated by Reference to ML Life
of New York Variable Annuity Separate Account A's Post-Effective
Amendment No. 11 to Form N-4 Registration No. 33-43654 Filed April 24,
1997)
(k) Power of Attorney of Cynthia L. Kahn (Incorporated by Reference to
Registrant's Post-Effective Amendment No. 2 to Form S-6 Registration No.
33-61670 Filed March 1, 1994)
(l) Power of Attorney of Robert A. King (Incorporated by Reference to
Registrant's Post-Effective Amendment No. 2 to Form S-6 Registration No.
33-61670 Filed March 1, 1994)
(m) Power of Attorney of Irving M. Pollack (Incorporated by Reference to
Registrant's Post-Effective Amendment No. 2 to Form S-6 Registration No.
33-61670 Filed March 1, 1994)
(n) Power of Attorney of Barry G. Skolnick (Incorporated by Reference to
Registrant's Post-Effective Amendment No. 2 to Form S-6 Registration No.
33-61670 Filed March 1, 1994)
(o) Power of Attorney of Anthony J. Vespa (Incorporated by Reference to
Registrant's Post-Effective Amendment No. 2 to Form S-6 Registration No.
33-61670 Filed March 1, 1994)
(p) Power of Attorney of William A. Wilde, III (Incorporated by Reference to
Registrant's Post-Effective Amendment No. 2 to Form S-6 Registration No.
33-61670 Filed March 1, 1994)
8. (a) Written Consent of Barry G. Skolnick, Esq.
(b) Written Consent of Joseph E. Crowne, Jr., F.S.A. (See Exhibit 6)
(c) Written Consent of Sutherland, Asbill & Brennan, L.L.P.
(d) Written Consent of Deloitte & Touche LLP, Independent Auditors
27. Financial Data Schedule
</TABLE>
II-5
<PAGE> 59
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
ML of New York Variable Life Separate Account II, hereby certifies that this
Post-Effective Amendment No. 6 meets all of the requirements for effectiveness
pursuant to paragraph (b) of Rule 485 under the Securities Act of 1933, and has
duly caused this Post-Effective Amendment No. 6 to the Registration Statement to
be signed on its behalf by the undersigned thereunto duly authorized, and its
seal to be hereunto affixed and attested, all in the City of Plainsboro and the
State of New Jersey, on the 21st day of April 1997.
ML OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT II
(Registrant)
By: ML LIFE INSURANCE COMPANY OF NEW YORK
(Depositor)
<TABLE>
<S> <C> <C> <C>
Attest: /s/ EDWARD W. DIFFIN, JR. By: /s/ BARRY G. SKOLNICK
------------------------------------ ------------------------------------
Edward W. Diffin, Jr. Barry G. Skolnick
Vice President Senior Vice President
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 6 to the Registration Statement has been signed
below by the following persons in the capacities indicated on April 21, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ---------------------------------------- ----------------------------------------
<S> <C>
* Chairman of the Board, President, and
- ---------------------------------------- Chief Executive Officer
Anthony J. Vespa
* Director, Senior Vice President, Chief
- ---------------------------------------- Financial Officer, Chief Actuary, and
Joseph E. Crowne, Jr. Treasurer
* Director, Senior Vice President, and
- ---------------------------------------- Chief Investment Officer
David M. Dunford
* Director and Senior Vice President
- ----------------------------------------
Gail R. Farkas
* Director, Vice President, and Senior
- ---------------------------------------- Counsel
Michael P. Cogswell
* Director
- ----------------------------------------
Frederick J.C. Butler
* Director
- ----------------------------------------
Robert L. Israeloff
</TABLE>
II-6
<PAGE> 60
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ---------------------------------------- ----------------------------------------
<S> <C>
* Director
- ----------------------------------------
Allen N. Jones
* Director
- ----------------------------------------
Cynthia L. Kahn
* Director
- ----------------------------------------
Robert A. King
* Director
- ----------------------------------------
Irving M. Pollack
* Director
- ----------------------------------------
William A. Wilde, III
*By: /s/ BARRY G. SKOLNICK In his own capacity as Director, Senior
- ---------------------------------------- Vice President, General Counsel,
Barry G. Skolnick Secretary and as Attorney-In-Fact
</TABLE>
II-7
<PAGE> 61
EXHIBIT INDEX
<TABLE>
<S> <C>
1.A.1. Resolution of the Board of Directors of ML Life Insurance Company of New
York establishing the Separate Account
1.A.3.(a) Distribution Agreement Between ML Life Insurance Company of New York and
Merrill Lynch, Pierce, Fenner & Smith Incorporated
1.A.3.(b) Amended Sales Agreement between ML Life Insurance Company of New York and
Merrill Lynch Life Agency, Inc.
1.A.3.(c) Schedules of Sales Commissions
1.A.5(a)(1) Flexible Premium Variable Universal Life Insurance Policy
1.A.5(b)(1) Backdating Endorsement
1.A.5(b)(2)(a) Additional Insurance Rider for Flexible Premium Variable Universal Life
Insurance Policy
1.A.6(a) Charter of ML Life Insurance Company of New York
1.A.6(b) By-Laws of ML Life Insurance Company of New York
1.A.8(a) Agreement between ML Life Insurance Company of New York and Merrill Lynch
Funds Distributor, Inc.
1.A.8(b) Agreement between ML Life Insurance Company of New York and Merrill Lynch,
Pierce, Fenner & Smith Incorporated
1.A.8(d) Management Agreement between Royal Tandem Life Insurance Company and Merrill
Lynch Asset Management, Inc.
1.A.9(a) Service Agreement between Tandem Financial Group, Inc. and Royal Tandem Life
Insurance Company
1.A.9(b) Service Agreement among ML Life Insurance Company of New York and Merrill
Lynch Life Insurance Company
1.A.10(a) Variable Life Insurance Application
1.A.10(b) Application for Reinstatement
1.A.11(b) Supplement to Memorandum describing ML Life Insurance Company of New York's
Issuance, Transfer and Redemption Procedures
6. Opinion and Consent of Joseph E. Crowne, Jr., F.S.A. as to actuarial matters
pertaining to the securities being registered
8.(a) Written Consent of Barry G. Skolnick, Esq.
8.(c) Written Consent of Sutherland, Asbill & Brennan, L.L.P.
8.(d) Written Consent of Deloitte & Touche LLP, Independent Auditors
27. Financial Data Schedule
</TABLE>
II-8
<PAGE> 1
Exhibit 1.A.(1)
MINUTES OF THE BOARD OF DIRECTORS
OF
ML LIFE INSURANCE COMPANY OF NEW YORK
DECEMBER 4, 1991
The quarterly meeting of the Board of Directors of ML
Life Insurance Company of New York ("ML of New York" or the "Company") was held
on December 4, 1991, in New York, New York. Present were: Frederick J.C.
Butler, John C. Cirincion, Sandra K. Cox, Joseph E. Crowne, David M. Dunford,
John C.R. Hele, Robert L. Israeloff, Robert A. King, Kirk B. Maslin, Thomas H.
Patrick, Irving M. Pollack, Barry G. Skolnick, and William A. Wilde. Also
present by invitation were Robert Bordeman and Greta L. Ulmer.
Mr. Skolnick welcomed the two new directors, Ms. Cox
and Mr. Crowne, to the Board and gave a brief description of their backgrounds.
Mr. Skolnick then asked for any questions relating to the Minutes of the Board
of Directors of the Company for August 14, 1991. After discussion, and upon
motion duly made and seconded, it was unanimously
RESOLVED, that the Board hereby adopts
the minutes of the Board of Directors Meeting held on
August 14, 1991.
Mr. Dunford next gave an overview of the investment
activities for the past three months. He explained the lower interest rate risk
of the portfolio, the program to match the duration of the portfolio's assets
to liabilities, and the decrease in private placements from approximately 44%
to 27% of the portfolio. All the below investment grade securities which are
currently in the portfolio are private placements. At the end of September, the
market value of the portfolio was above book value. Most below investment
grade securities were sold to outside corporations. However, some of the
securities were transferred to the other Merrill Lynch insurance companies and
the price of these securities was determined by an independent third party
appraiser and then approved by the New York Insurance Department. After
discussion, and upon motion duly made and seconded, it was unanimously
RESOLVED, that the Board hereby adopts
the minutes of the Investment Committee meetings held
on October 31, 1991, September 17, 1991, and August
22, 1991, and ratifies the investments made by the
Investment Committee at the aforesaid meetings.
Mr. Bordeman next gave a review of the financial
condition of ML of New York and distributed a handout (Exhibit A) which
detailed ML of New York's statutory financial condition.
Mr. Skolnick next discussed the need to establish a
new variable life separate account which would be used in connection with new
variable life sales which are tentatively scheduled to commence in the first
quarter of 1992. After discussion, and upon motion duly made and seconded, it
was unanimously
RESOLVED, that pursuant to the
provisions of the New York Insurance Law Section
4240, ML of New York establishes a separate account,
ML of New York Variable Life Separate Account II (the
"Separate Account");
FURTHER RESOLVED, that the Separate
Account be established for the purpose of providing
for the issuance of variable life insurance contracts
("Contracts"), which Contracts shall provide that
part or all of the payments and benefits will
<PAGE> 2
reflect the investment experience of one or more
underlying security;
FURTHER RESOLVED, that the officers of
ML of New York be authorized and empowered to perform
all such acts and do all such things as may in their
judgment and discretion be necessary or desirable to
give full effect to these resolutions to enable ML of
New York to establish the Separate Account and issue
the Contracts, including, without limitation: (a) the
preparation and execution of service agreements,
custodian agreements, underwriting agreements and
other agreements and documents respecting such
Separate Account as they may deem necessary or
desirable; (b) the determination of the terms and
conditions of the Contracts being authorized; (c) the
determination of the jurisdictions in which
appropriate action shall be taken to obtain the
requisite qualification, registration and
authorization for the sale of the Contracts as such
Officers may deem advisable;
FURTHER RESOLVED, that the President,
any Vice President or the General Counsel, and each
of them, with full power to act without the other,
be, and each of them is, hereby authorized to cause
ML of New York to allocate and contribute to the
Separate Account, for a limited period and without
the purpose of funding Contracts, funds which ML of
New York might otherwise invest, if necessary to
comply with the Insurance Law for the purpose of
commencing the Separate Account's operation;
FURTHER RESOLVED, that the Board of
Directors of ML of New York reserves the right to
change the designation of the Separate Account
hereafter to such other designation as it may deem
necessary or appropriate;
FURTHER RESOLVED, that the President,
any Vice President or the General Counsel, and each
of them, with full power to act without the others,
with such assistance from ML of New York's
independent certified public accountants and
independent consultants or others as they may
require, be, and each of them is, hereby authorized
and directed to take all action necessary to: (a)
register the Contracts in such amounts, which may be
an indefinite amount, as the said officer of ML of
New York shall deem appropriate pursuant to one or
more registration statements in an offering made
under the Securities Act of 1933, as amended (the
"Registration Statements"); (b) register the Separate
Account as an investment company pursuant to the
Investment principal underwriter and distributor of
the Contracts on such terms and conditions as said
officer, in his sole discretion, may deem
appropriate;
FURTHER RESOLVED, that the President,
any Vice President or the General Counsel, and each
of them, with full power to act without the others,
be, and each of them is, hereby authorized to execute
and deliver such agreements and other documents and
to do all such acts and things as may be deemed
necessary or appropriate to carry out the foregoing
resolutions and the intent and purposes thereof;
FURTHER RESOLVED, that in establishing
the Separate Account, ML of New York shall meet the
requirements of Section 4240 of the Insurance Law;
FURTHER RESOLVED, that ML of New York
adopts and establishes the following Standards of
Conduct for its officers,
2
<PAGE> 3
directors, employees and affiliates (collectively
"Employee") regarding the conduct of business of ML
of New York's Separate Account:
No Employee shall, in the handling of an account,
investment or claim for or on behalf of any other person of ML of New York:
1. Employ any device, scheme or
artifice to defraud such person or
ML of New York;
2. Make any untrue statement of a
material fact to such person or ML
of New York or omit to state to such
person or ML of New York a material
fact necessary in order to make the
statements made, in light of the
circumstances in which they were
made, not misleading;
3. Engage in any act, practice or
course of business which operates or
would operate as a fraud or deceit
upon such person or ML of New York;
4. Engage in any manipulative practice
with respect to such person or ML
of New York;
5. Sell to, or purchase from, the
Separate Account established by ML
of New York any securities or other
property other than life and annuity
insurance policies;
6. Purchase or allowed to be purchased
for the Separate Account any
securities of which ML of New York
or an affiliated company is the
issuer;
7. Accept any compensation other than a
regular salary or wages from ML of
New York or an affiliated company
for the sale, or purchase, of
securities to or from the Separate
Account except to the extent
permitted under applicable laws,
rules or regulations of any
government, agency or
self-regulatory organization;
8. Engage in any joint transaction,
participation or common undertaking
whereby ML of New York or an
affiliated company participates with
the Separate Account in any
transaction in which ML of New York
or an affiliated company obtains an
advantage in the price or quality of
the item purchased, the service
received or in the cost of such
service, and ML of New York or any
other affiliated company is
disadvantaged in any of these
respects by the same transaction; or
9. Borrow money or securities from the
Separate Account other than under a
policy loan provision; and
FURTHER RESOLVED, that ML of New York
adopts and establishes the following Standards of
Suitability for its Employee regarding the conduct of
business of the Separate Account:
1. No recommendation shall be made to
an applicant to purchase a variable
life or variable annuity insurance
policy (collectively "Policy.), and
no Policy shall be issued, in the
absence of reasonable grounds to
believe that the purchase of the
Policy is suitable
3
<PAGE> 4
for the applicant on the basis of
information furnished after
reasonable inquiry of the applicant
concerning the applicant's insurance
and investment objectives, financial
situation and needs, and any other
information known to ML of New York
or to the agent making the
recommendation;
2. ML of New York, through its agents,
will use diligence to learn the
essential facts relative to each
applicant of a Policy;
3. ML of New York's primary policy is
that the customer's interest comes
first. In any areas where there are
conflicts between the customer's
interests and the interest of ML of
New York or its agents, the
customer's interests must always
take precedence; and
4. ML of New York through its agents
will give each customer the time and
attention needed to find the
products and services most suitable
for the customer's needs and will
provide timely and accurate
information that is not in any way
misleading.
Additionally, ML of New York's
agents, as registered representatives, are subject to
supervision respecting suitability and other sales
practices under rules of the New York Stock Exchange
and the National Association of Securities Dealers,
Inc.
Mr. Skolnick next gave a status report regarding
various corporate transactions for the period since the last meeting. The sale
of one of the Merrill Lynch insurance companies, Family Life Insurance Company,
closed in June of this year. Substantially all of its business originally sold
through the Merrill Lynch branch office network, mainly annuities, was
assumption reinsured by the Merrill Lynch insurance companies. On November 1,
1991, the majority of this business covering individuals now residing in the
state of New York upon approval by the New York Insurance Department was
transferred to ML of New York. Effective September 11, 1991, Royal Tandem Life
Insurance Company changed its name to ML Life Insurance Company of New York.
Mr. Skolnick next provided a progress report on the
Company's new variable annuity. On November 8, 1991, the registration statement
was filed with the Securities and Exchange Commission ("SEC"). We are currently
waiting for comments from the SEC. We are targeting February 1 as our effective
date. The new variable annuity policy forms have already been filed in various
states. By mid-February, we anticipate policy form approvals from approximately
30 states.
Mr. Skolnick next distributed the Proposed Quarterly
Board Meeting dates for 1992 (Exhibit B). Mr. Israeloff suggested that the
February 5 meeting be changed to February 12. All agreed that February 12,
1992, was acceptable.
There being no further business, the meeting
adjourned.
/s/ BARRY G. SKOLNICK
------------------------------
Barry G. Skolnick
Senior Vice President,
General Counsel & Secretary
4
<PAGE> 5
MERRILL LYNCH INSURANCE GROUP
ML Life Insurance Company of New York
Statutory Earnings
($ in Millions)
<TABLE>
<CAPTION>
Nine
Months
1990 * 1991 **
---- ----
<S> <C> <C>
Revenues 171.6 73.1
Policy Expenses 156.3 56.9
Operating Expenses 13.7 6.7
---------- ----------
Gain from Operations 1.6 9.4
Federal Income Taxes (1.5) 3.2
---------- ----------
Net Gain before Capital Gains/(Losses) 3.2 6.2
Realized Gains/(Losses) 0.3 (1.0)
---------- ----------
Net Income 3.5 5.2
========== ==========
Statutory Capital 25.2 54.6
MSVR 0.0 5.7
Return on Statutory Capital & MSVR 16.8% 16.2%
</TABLE>
* Includes Monarch Transaction
** Includes Variable Life line of business
<PAGE> 6
MERRILL LYNCH INSURANCE GROUP
ML Life Insurance Company of New York
Balance Sheet
($ in Millions)
<TABLE>
<CAPTION>
Nine
Months
1990 1991
---- ----
<S> <C> <C>
Invested Assets 716.0 703.9
Other Assets 26.7 78.5
Separate Accounts 2.6 289.6
Total Assets 745.3 1,072.0
Policyholder Liabilities 687.6 728.9
Other Liabilities 29.9 1.0
Separate Accounts 2.6 281.8
MSVR 0.0 5.7
Surplus 25.2 54.6
Total Liabilities & Surplus 745.3 54.6
Capitalization Ratio 3.8% 8.8%
RACR (a) 62.7% 143.3%
</TABLE>
(a) Risk Adjusted Capitalization Ratios:
- 1990 and 1991 calculated using new NAIC classifications and
revised Moody's formulas.
<PAGE> 7
MERRILL LYNCH INSURANCE GROUP
ML Life Insurance Company of New York
Capital Analysis
($ in Millions)
Risk Adjusted Capitalization Ratio:
* Analyzes Risk Characteristics of Balance Sheet
* Asset Risk
* Mortality Risk
* Interest Rate Risk
* Assigns "Target Surplus" Type Formulas to Each of the Risk
Components to Arrive at Required Surplus
* Compares Required Surplus to Actual Surplus & MSVR
<TABLE>
<CAPTION>
9 Months
1990 1991
---- ------
<S> <C> <C>
* (a) Actual Surplus & MSVR 25.2 60.3
(b) Total Required Surplus 40.2 42.1
as calculated
RACR = (a) 62.7% 143.3%
------
(b)
</TABLE>
Note: 1989 calculated based on old NAIC classifications and prior
Moody's formula.
1990 and 1991 calculated using new NAIC classifications and
revised Moody's formulas.
<PAGE> 8
MERRILL LYNCH INSURANCE GROUP
ML Life Insurance Company of New York
Reconciliation of Statutory Surplus
($ in Millions)
<TABLE>
<CAPTION>
Nine
Months
1990 1991
---- ----
<S> <C> <C>
Beginning Balance 8.3 25.2
New Income 9.1 5.2
Capital Contributions 17.8 25.7
Monarch Transaction (5.6) 0.0
Change in MSVR 7.8 (5.7)
Net Unrealized Losses (12.2) 3.9
Other Changes 0.0 0.3
------------ ------------
Ending Balance 25.2 54.6
============ ============
</TABLE>
<PAGE> 9
MERRILL LYNCH INSURANCE GROUP
ML Life Insurance Company of New York
Analysis of Capital Adequacy
($ in Millions)
<TABLE>
<CAPTION>
Fixed Annuitized/ Variable Variable Total
Life Annuities Immediate Asset I Life Annuities MLLIC-NY
---- --------- --------- ------- ---- --------- --------
<S> <C> <C> <C> <C> <C>
Statutory Reserves, 9/30/91 0.0 639.1 21.4 16.6 326.4 0.0 1,003.4
Policy Loan Reserves 0.0 0.0 0.0 0.0 50.4 0.0 50.4
-------------------------------------------------------------------------------------------
Net Statutory Reserves, 9/30/91 0.0 639.1 21.4 16.6 276.0 0.0 953.0
===========================================================================================
Target Surplus Ratio 10.0% 5.0% 5.0% 3.3% 1.0% 0.5%
Target Required Surplus 0.0 32.0 1.1 0.5 2.8 0.0 36.3
===========================================================================================
Total Actual Surplus/MSVR 60.3
=======
Excess 24.0
=======
</TABLE>
<PAGE> 10
ML LIFE INSURANCE COMPANY OF NEW YORK
Proposed Quarterly Board Meeting Dates for 1992
Wednesday, February 5, 1992
Wednesday, April 29, 1992
Wednesday, August 5, 1992
Wednesday, December 2, 1992
<PAGE> 1
EXHIBIT 1.A.(3)(a)
DISTRIBUTION AGREEMENT
AGREEMENT dated as of January 11, 1993, by and between ML
Life Insurance Company of New York ("ML of New York"), a New York corporation,
on its own behalf and on behalf of the ML of New York Variable Life Separate
Account II (the "Separate Account") and Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("MLPF&S"), a Delaware corporation.
WITNESSETH:
WHEREAS, the Separate Account is an account established and
maintained by ML of New York pursuant to the laws of the State of New York (the
"Contracts"), under which income, gains and losses, whether or not realized,
from assets allocated to such account, are, in accordance with the Contracts,
credited to or charged against such account without regard to other income,
gains, or losses of ML of New York;
WHEREAS, ML of New York has registered the Separate Account
as a unit investment trust under the Investment Company Act of 1940 (the
"Investment Company Act");
WHEREAS, MLPF&S is registered as a broker-dealer under the
Securities Exchange Act of 1934 (the "Exchange Act") and is a member of the
National Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, ML of New York has registered the Contracts under
the Securities Act of 1933 (the "1933 Act") and issues and sells the Contracts
through the Separate Account to the public through MLPF&S acting as its general
agent;
NOW, THEREFORE, ML of New York and MLPF&S hereby agree as
follows:
1. PRINCIPAL UNDERWRITER. ML of New York grants to MLPF&S the
exclusive right, during the term of this Agreement, subject to the
<PAGE> 2
registration requirements of the 1933 Act and the Investment Company Act and
the provisions of the Exchange Act, to be the distributor and principal
underwriter of Contracts issued through the Separate Account. In that
connection, MLPF&S shall arrange for the offer, sale and distribution of the
Contracts by persons or entities acting as general agents ("GAs") of ML of New
York at premium rates to be set by ML of New York.
2. SALES AGREEMENTS. MLPF&S is hereby authorized to arrange
for persons or entities qualified to act as GAs of ML of New York in various
jurisdictions to enter into separate written agreements, on such terms and
conditions as ML of New York may determine not inconsistent with this
Agreement, with organizations (including Merrill Lynch Life Agencies pursuant
to sales agreements) which agree to act as GAs of ML of New York and to
participate in the distribution of the Contracts and to use their best efforts
to solicit applications for the Contracts. Such organizations and their agents
or representatives soliciting applications for contracts shall be duly and
appropriately licensed, registered or otherwise qualified for the sale of such
Contracts (and the riders and other contracts offered in connection therewith)
under the insurance laws and any applicable blue-sky laws of each state or
other jurisdiction in which such Contracts may be lawfully sold and in which ML
of New York is licensed to sell the Contracts.
MLPF&S shall have the responsibility for supervision of all
such organizations to the extent required by law and shall assume any legal
responsibilities of ML of New York for the acts, commissions or defalcations of
any such organizations.
3. LIFE INSURANCE AGENTS. MLPF&S is authorized to help
arrange for the appointment of the organizations described in paragraph 2 above
as
- 2 -
<PAGE> 3
independent general agents of ML of New York for the sale of the Contracts and
any riders or contracts in connection therewith. ML of New York will undertake
to apply for life insurance agent licenses in the appropriate states or
jurisdictions for the designated agents or representatives of those GAs so
appointed by MLPF&S; provided that ML of New York reserves the right to refuse
to appoint any proposed agent, or once appointed to terminate the same.
4. SUITABILITY. ML of New York wishes to ensure that
Contracts distributed by MLPF&S will be issued to purchasers for whom the
Contract will be suitable. MLPF&S shall take reasonable steps to ensure that
the various agents which it arranges to be appointed do not make
recommendations to an applicant to purchase a Contract in the absence of
reasonable grounds to believe that the purchase of the Contract is suitable for
such applicant. While not limited to the following, a determination of
suitability shall be based on information furnished to an agent after
reasonable inquiry of such applicant concerning the applicant's insurance and
investment objectives, financial situation and needs, and the likelihood of
whether the applicant will persist with the Contract for such a period of time
that ML of New York's acquisition costs are amortized over a reasonable period
of time.
5. PROMOTION MATERIALS. MIPF&S shall have the responsibility
for consulting with respect to the design, drafting, legal review and filing of
sales promotion materials, and for the preparation of individual sales
proposals related to the sale of the Contracts.
6. RECORDS. MLPF&S shall maintain and preserve for the
periods prescribed such accounts, books, and other documents as are required of
it by applicable laws and regulations.
- 3 -
<PAGE> 4
7. INDEPENDENT CONTRACTOR. MIPF&S shall act as an independent
contractor and nothing herein contained shall constitute MIPF&S or its agents
or employees as employees of ML of New York in connection with the sale of the
Contracts.
8. INVESTIGATION AND PROCEEDINGS.
(a) MLPF&S and ML of New York agree to cooperate fully in any
insurance regulatory investigation or proceeding or judicial proceeding arising
in connection with the Contracts distributed under this Agreement. MIPF&S and
ML of New York further agree to cooperate fully in any securities regulatory
investigation or proceeding or judicial proceeding with respect to ML of New
York, MIPF&S, their affiliates and their agents or representatives to the
extent that such investigation or proceeding is in connection with Contracts
distributed under this Agreement. Without limiting the foregoing:
(i) MIPF&S will be notified promptly of any customer
complaint or notice of any regulatory investigation or proceeding or
judicial proceeding received by ML of New York with respect to ML of
New York and/or NIPF&S or any agent or representative or which may
affect ML of New York's issuance of any Contract marketed under this
Agreement.
(ii) MLPF&S will promptly notify ML of New York of any
customer complaint or notice of any regulatory investigation or
proceeding received by MIPF&S or its affiliates with respect to NLPF&S
and/or NL of New York or any agent or representative in connection
with any Contract distributed under this Agreement or any activity in
connection with any such Contract.
(b) In the case of a substantive customer complaint, MIPF&S
and NL of New York will cooperate in investigating such complaint and any
response
- 4 -
<PAGE> 5
to such complaint will be sent to the other party to this Agreement for
approval not less than five business days prior to its being sent to the
customer or regulatory authority, except that if a more prompt response is
required, the proposed response shall be communicated by telephone or
telegraph.
9. INDEMNIFICATION.
(a) ML of New York agrees to indemnify and hold harmless
MIPF&S and each officer and director thereof against any losses, claims,
damages or liabilities, joint or several, to which MIPF&S or such officer or
director may become subject, under the 1933 Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact, required to be stated therein or necessary to make the
statements therein not misleading, contained (i) in any Registration Statement
relating to the Contracts or any post-effective amendment thereof or in the
Prospectuses or any amendment or supplement to the Prospectuses relating to the
Contracts, or (ii) in any blue-sky application or other document executed by ML
of New York specifically for the purpose of qualifying any or all of the
Contracts for sale under the securities. laws of any jurisdiction, and NL of
New York will reimburse MLPF&S and each such officer or director, for any legal
or other expenses reasonably incurred by NIPF&S or such officer or director in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided that NL of New York will not be liable in any
such case to the extent that such loss, claim, damage or liability arises out
of, or is based upon, an untrue statement or alleged untrue statement or
omission or alleged omission made in reliance upon and in
- 5 -
<PAGE> 6
conformity with information (including, without limitation, negative responses
to inquiries) furnished to ML of New York by or on behalf of MIPF&S
specifically for use in the preparation of any Registration Statement or any
post-effective amendment thereof or any such blue-sky application or any
amendment thereof or supplement thereto.
(b) MLPF&S agrees to indemnify and hold harmless ML of New
York and its directors (including any person named in the Registration
Statement, with his or her consent, as about to become a director), each of its
officers who has signed any of the Registration Statements and each person, if
any, who controls ML of New York within the meaning of the 1933 Act or the
Exchange Act, against any losses, claims, damages or liabilities to which NL of
New York and any such director or officer or controlling person may become
subject, under the 1933 Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon:
(i) Any untrue statement or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading, contained (i) in any of the Registration
Statements or any post-effective amendments thereof, or (ii) in any
blue-sky application, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in
conformity with information (including, without limitation, negative
responses to inquiries) furnished to ML of New York by MLPF&S
specifically for use in
- 6 -
<PAGE> 7
the preparation of any of the Registration Statements or any such
post-effective amendments thereof or any such blue-sky application or
any such amendment thereof or supplement thereto; or
(ii) Any unauthorized use of sales materials or any verbal or
written misrepresentations or any unlawful sales practices concerning
the Contracts by NLPF&S; or
(iii) Claims by agents or representatives or employees of
MIPF&S for commissions, service fees, development allowances or other
compensation or remuneration of any type;
and MIPF&S will reimburse ML of New York and any director or officer or
controlling person for any legal or other expenses reasonably incurred by ML of
New York, such director or officer or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action.
This indemnity agreement will be in addition to any liability which MLPF&S may
otherwise have.
(c) Promptly after receipt by a party entitled to
indemnification ("indemnified party") under this paragraph 9 of notice of the
commencement of any action, if a claim in respect thereof is to be made against
any person obligated to provide indemnification under this paragraph 9
("indemnifying party"), such indemnified party will notify the indemnifying
party in writing of the commencement thereof, and the omission so to notify the
indemnifying party will not relieve it from any liability under this paragraph
9, except to the extent that the omission results in a failure of actual notice
to the indemnifying party and such indemnifying party is damaged solely as a
result of the failure to give such notice. In case any such
- 7 -
<PAGE> 8
action is brought against any indemnified party and it notifies an indemnifying
party of the commencement thereof, the indemnifying party will be entitled to
the extent it may wish, jointly with any other indemnifying party similarly
notified, to participate in the defense thereof, with separate counsel. Such
participation shall not relieve such indemnifying party of the obligation to
reimburse the indemnified party for reasonable legal and other expenses
incurred by such indemnified party in defending himself or herself, except for
such expenses incurred after the indemnifying party has deposited funds
sufficient to effect the settlement, with prejudice, of the claim in respect of
which indemnity is sought. Any such indemnifying party shall not be liable to
any such indemnified party on account of any settlement of any claim or action
effected without the consent of such indemnifying party.
The indemnity agreements contained in this paragraph 9 shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of MLPF&S or any officer or director thereof
or by or on behalf of ML of New York, (ii) delivery of any Contracts and
payments therefor, and (iii) any termination of this Agreement. A successor by
law of MLPF&S or of any of the parties to this Agreement, as the case may be,
shall be entitled to the benefits of the indemnity agreements contained in this
paragraph 9.
10. GUARANTEE. ML of New York undertakes to guarantee the
performance of all of MIPF&S's obligations, imposed by Section 27(f) of the
Investment Company Act, as amended, and paragraph (b) of Rule 27d-2 adopted by
the Securities and Exchange Commission, to make refunds of charges required of
the principal underwriter of Contracts issued in connection with the Separate
Account.
- 8 -
<PAGE> 9
11. TERMINATION. This Agreement shall terminate automatically
if it shall be assigned. This Agreement may be terminated at any time by either
party hereto on 60 days' written notice to the other party hereto, without the
payment of any penalty. Upon termination of this Agreement all authorizations,
rights and obligations shall cease except (i) the obligation to settle accounts
hereunder, including commissions on premiums subsequently received for
Contracts in effect at the time of termination; (ii) the agreements contained
in paragraph 8 hereof; and (iii) the indemnity set forth in paragraph 9 hereof.
12. REGULATION. This Agreement shall be subject to the
provisions of the Investment Company Act and the Exchange Act and the rules,
regulations, and rulings thereunder and of the NASD, from time to time in
effect, including such exemptions from the Investment Company Act as the
Securities and Exchange Commission may grant, and the terms hereof shall be
interpreted and construed in accordance therewith. Without limiting the
generality of the foregoing, the term "assigned" shall not include any
transaction exempted from section 15(b)(2) of the Investment Company Act.
MLPF&S shall submit to all regulatory and administrative
bodies having jurisdiction over the operations of ML of New York or the
Separate Account, present or future, any information, reports or other material
which any such body by reason of this Agreement may request or require pursuant
to applicable laws or regulations.
13. SEVERABILITY. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
- 9 -
<PAGE> 10
14. APPLICABLE LAW. This Agreement shall be construed and
enforced in accordance with and governed by the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
Attest: ML LIFE INSURANCE COMPANY
OF NEW YORK
/S/ GRETA L. ULMER By /S/ JOHN C. CIRINCOIN
- ------------------------ ------------------------------------------
Greta L. Ulmer John C. Cirincion
Vice President and Senior Counsel
Attest: MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED
/S/ CAROLINE J. HENRY By /S/ CHARLES P. BORKOWSKI, JR.
- ------------------------ ------------------------------------------
Caroline J. Henry Charles P. Borkowski, Jr.
First Vice President
- 10 -
<PAGE> 1
EXHIBIT 1.A.(3)(b)
GENERAL AGENCY AGREEMENT
This Agreement, effective as of the 3rd day of AUGUST, 1987, is made
between Royal Tandem Life Insurance Company (the "Company"), a New York
insurance company, and Merrill Lynch Life Agency Inc., a Washington
corporation, and the corporations listed together with their respective states
of incorporation on the signature pages hereof, (hereinafter referred to
collectively as the "General Agent").
I. APPOINTMENT
Subject to all the terms of this Agreement, the General Agent
is hereby appointed by the Company to represent it in the sale of the products
set forth in Appendix A (which is attached to and made part of this Agreement),
or supplements thereto executed by the Company and the General Agent, in any
jurisdiction in which the Company and the General Agent are both licensed and
in which the products may be legally sold.
The General Agent hereby accepts such appointment. The
Company and the General Agent agree that this Agreement is not an
1
<PAGE> 2
exclusive Agreement and no rights of exclusivity arise herefrom in favor of
either party.
2
<PAGE> 3
II. AUTHORIZATION
The General Agent is authorized to:
a. promote, market, solicit, sell and deliver policies
and contracts, collect and receive initial premiums
and considerations thereon, and perform any other act
specifically authorized by this Agreement or in
writing by the Company, and
b. appoint such sub-agents and solicitors, subject to
the approval of the Company, as the General Agent
deems necessary to conduct the General-Agency
business under this Agreement.
Neither the General Agent nor any sub-agent is authorized to
make, alter or discharge any policy or contract for the Company, waive charges,
lapses or forfeitures, name special rates, guarantee interest rates, policy
values or dividends, incur any debt or liability in the Company's name, or
otherwise bind the Company in any way, or under any circumstances to execute
any receipt for deferred or renewal premiums or considerations, or make any
endorsement on any policy or contract of the Company, or to receive any
payments due or to become due to the Company, except for initial premiums or
considerations on the policies and contracts covered by this Agreement. The
3
<PAGE> 4
Company shall maintain one or more administrative office(s) to which all policy
applications, premiums and policy service requests shall be referred by the
General Agent.
III. RELATIONSHIP
The General Agent is an independent contractor, and shall be
free to exercise independent judgment as to the time and manner of performing
the services authorized by this Agreement, subject to the limitations described
in this Agreement and to such rules and regulations as are now in effect or as
may hereafter be adopted from time to time respecting the conduct of the
Company's business and not interfering with the indicated freedom of action of
the General Agent. Nothing contained herein shall be construed as creating any
relationship other than that of independent contractor between the Company and
the General Agent, nor as creating any relationships of employer and employee
between the Company and any sub-agent or any employee of the General Agent or
any sub-agent, nor make any employee of the General Agent or any sub-agent
eligible to participate as a member in the Company's Group Insurance,
Investment or Retirement Plans nor shall any period under this Agreement be
counted as a period of membership under any of such Plans. Nothing contained
4
<PAGE> 5
in this Agreement shall restrict the General Agent from representing any other
insurer.
IV. EXPENSES
The General Agent shall pay all expenses whatsoever connected
with operating its business. The Company shall not be liable for any expenses
incurred by the General Agent or any sub-agent unless the Company has
specifically agreed in writing to pay such expenses.
V. NOTICE
A. The Company will give the General Agent the earliest
practicable notice in advance of any changes made with regard to products
marketed under this Agreement. If the decision to make changes with regard to
such products is not in response to legal or regulatory mandate, 30 days prior
written notice to the General Agent is required.
B. The Company will notify the General Agent within 10
days of its making public any actual or impending material adverse change in
the Company's financial condition, the financial condition of any subsidiary,
parent company or
5
<PAGE> 6
reinsurer, or if the "Best's" rating of the Company, any subsidiary, parent or
reinsurer has been or is to be lowered.
C. (1) Within 20 days after the Company has sent or
delivered the following reports to the pertinent regulatory agency, the Company
agrees to send or furnish the General Agent a copy of each such report actually
filed. The reports are:
(a) The Annual Statement of the Company filed
with the Company's State of domicile.
(b) The Quarterly Convention Statement of the
Company filed with the Company's state of
domicile.
(2) If the Company is part of an insurance holding
company system under the laws of its state of
domicile and subject to said laws, the Company agrees
to send, within 20 days of delivery to the pertinent
regulatory agency, copies of the following:
(a) Any amendments to the Company's Registration
Statement.
(b) The Company's Annual Report describing
transactions during the prior year with
entities within the holding company system.
6
<PAGE> 7
(c) Any requests for approval filed by the
Company with said regulatory agency with
respect to any proposed transaction(s)
between the Company and any entity within
the holding company system.
(d) If applicable, the 10-K report of the
Company's parent filed with the United
States Securities and Exchange Commission
("SEC").
(e) If applicable, the 10-Q report of the
Company's parent filed with the SEC.
D. Each party will notify the other of any regulatory or
administrative investigation or inquiry, claim or judicial proceeding or
customer complaint which may affect products marketed or services rendered
under this Agreement within 10 days of its receipt of notice of such action,
excluding, however, claims for benefits under a policy of application or
contests regarding the validity, enforceability, or construction of any policy
or application issued by the Company.
(1) Within 10 days after receipt by either party
of notice of any such investigation, claim, proceeding or customer complaint,
the party in receipt thereof will notify the other party by forwarding a copy
of all documents received in
7
<PAGE> 8
connection with the matter and will communicate to the other party additional
information it deems reasonably necessary to furnish the other party a complete
understanding of same.
(2) In the case of a customer complaint with
respect to the General Agent, any sub-agent or any company or person affiliated
with the General Agent or any sub-agent, the Company shall not take any final
action with respect to such complaint without prior consultation with the
General Agent.
(3) For the purposes of this Agreement, the term
"customer complaint" shall mean a written communication either directly from a
purchaser or his legal representative or indirectly from a regulatory agency to
which he or his legal representative has written, expressing a grievance.
(4) Each party agrees to cooperate fully with the
other in any administrative or regulatory investigation or inquiry, claim or
judicial proceeding or customer complaint regarding products marketed or
services rendered under this Agreement.
E. Any change in interest rates for new contracts or
renewals will be confirmed in writing to the General Agent.
F. Any written notice under this Agreement shall be
deemed to have been given when delivered personally or when
8
<PAGE> 9
mailed by first class mail, postage prepaid, or sent by prepaid telegram to the
address of record of the recipient with the sender.
The initial addresses of record of the parties are as follows:
Merrill Lynch Life Agency Inc.
800 Scudders Mill Road
Plainsboro, New Jersey 08536
Attention: Robert C. McClanahan, Jr.
Royal Tandem Life Insurance Company
1700 Broadway
New York, New York 10019
Attention: James J. McDonnell
IV. COMPENSATION
A. The Company will from time to time publish
Compensation Schedules, which shall, when published, become a part of this
Agreement. Each Compensation Schedule shall have a stated effective date,
which shell be no earlier than the date of its delivery to the General Agent.
Each Compensation Schedule shall contain compensation information pertaining to
one or more
9
<PAGE> 10
products, and may contain rules and conditions relating to the sales of such
products and the compensation therefor. Each Compensation Schedule shall apply
to the payment by the Company to the General Agent for all products covered by
such Compensation Schedule on and after its effective date.
B. The Company will send a Statement of Account,
including overrides and any agreed expense reimbursement allowances, for the
preceding month to the General Agent within 15 days after the end of each month
and pay to the General Agent any net monies found to be due under the terms of
this Agreement within 30 days thereafter.
VII. TERRITORY, WITHDRAWAL OF BUSINESS AND POLICY FORMS, LICENSING
The Company, upon 10 days prior written notice to the General
Agent, may stop doing business in any state or territory and withdraw any
policy or contract forms from the General Agent. The Company may suspend the
sale of any policy or contract upon notice to the General Agent.
The General Agent will be responsible for securing the
licensing and making the formal appointment of its sub-agents.
10
<PAGE> 11
At the General Agent's request, the Company will furnish reasonable cooperation
in connection therewith.
VIII. BOOKS, RECORDS
A. The Company and its designees shall have the right,
during normal business hours and upon 10 days prior written notice, to inspect
the books and records of the General Agent or any sub-agent relating solely to
the business contemplated by this Agreement. The General Agent shall have the
same right to inspect the books and records of the Company.
B. The Company shall furnish the General Agent with
specimen forms required by regulations, such 25 replacement analysis forms, and
disclosure material required for use in connection with the sale of the
Company's products.
C. The Company shall furnish the General Agent with
current customer data such as names, addresses and policy terms as reasonably
requested.
D. Any unused policies, forms, applications and other
supplies furnished by the Company to the General Agent shall always remain the
property of the Company and shall be accounted for and returned by the General
Agent to the Company on demand.
11
<PAGE> 12
E. From time to time, the Company may develop and make
available to the General Agent computer software or related materials
("Software"), in magnetic, written or other form, to be used in connection with
the sale of the Company's products. The Company hereby grants the General
Agent a non-exclusive, royalty-free license to use any such Software in
connection with the performance of its obligations hereunder. The Company
warrants that it has the right to grant such license. The General Agent agrees
not to copy such Software, except as required to perform its obligations
hereunder, nor to generate or obtain written copies of such Software supplied
in magnetic form and to return all such Software and all copies thereof upon
demand or upon the termination of this Agreement.
IX. PRODUCT NAMES
A. The Company hereby represents and warrants that the
Company has the right to use any product name being used by the Company in
connection with this Agreement.
B. The Company shall indemnify and defend the General
Agent from and against any and all claims (including the costs of reasonable
attorneys' fees, investigation and defense of such claims) for infringement of
the rights of third parties with
12
<PAGE> 13
respect to the use of any of the Company's product names in connection with
this Agreement.
C. Each party shall notify the other promptly in writing
of any and all allegations or claims by others cf which it may become aware
that the use of any of the Company's product names infringes any trademark or
service mark, violates any property right of a third party, or violates or is
contrary -- to any law, regulation, order, consent, or the like. The
indemnification provided for in the preceding paragraph shall not apply if the
General Agent has failed to furnish such prompt notification with respect to
the claim giving rise to the indemnification, and the Company has been
prejudiced by such failure. The Company shall notify the General Agent of the
settlement or other outcome of any such claim or suit.
X. INDEMNIFICATION
A. The Company shall indemnify and hold the General
Agent and any sub-agent, director, officer, employee or agent thereof harmless
against and from all civil liability, including attorneys' fees and costs of
investigation and defense incident thereto arising as a result of errors,
omissions, negligence, misrepresentation or wrongful action of the Company,
including
13
<PAGE> 14
failure to comply with any provision of this Agreement or with any applicable
federal law or regulation, state law or regulation, administrative rule or
regulation, or rule of any applicable self-regulatory organization. The General
Agent shall indemnify and hold the Company and any director, officer, employee
or agent thereof, harmless against and from all civil liability, including
attorneys' fees and costs of investigation and defense incident thereto arising
as a result of errors, omissions, negligence, misrepresentation or wrongful
action of the General Agent or sub-agents including failure to comply with any
provision of this Agreement or with any applicable federal law or regulation,
state law or regulation, administrative rule or regulation, or rule of any
applicable self-regulatory organization. This Section X will survive the
termination of this Agreement.
XI. CUSTOMER CONFIDENTIALITY
The Company shall not disclose the names and addresses of the
General Agent's customers and applicants to any other insurance company,
investment adviser, or securities broker dealer (including affiliates of the
Company) nor to any agent, agency manager, broker or other sales representative
of such
14
<PAGE> 15
companies. The Company may not, without the General Agent's consent, solicit
any of such customers and applicants for any of the Company's products. Routine
communication including renewal notices, premium statements, lapse notices,
reinstatement notices, conservation letters and other contacts with existing or
recently lapsed policy or contract holders regarding these policies or
contracts shall, however, be permitted. This section is not intended to limit
the right of the Company to enter into administration and servicing agreements
with other companies (including affiliates) under which technical and
administrative personnel may have access to certain names and addresses in the
ordinary course of business. Such agreements will provide for the preservation
or the confidentiality of this information.
XII. GENERAL PROVISIONS
A. No assignment of this Agreement shall be valid; no
commissions or any other payments to accrue hereunder shall be assigned or
transferred in whole or in part without the written consent of the Company.
Such consent will not be unreasonably withheld.
C. The first premium or consideration on any policy or
contract covered by this Agreement is due and payable to the
15
<PAGE> 16
Company immediately upon collection. The General Agent shall immediately remit
to the Company all payments received or collected on behalf of the Company; all
such payments received or collected on behalf of the Company by the General
Agent shall be considered trust funds held for the benefit of the Company.
Nothing herein shall limit the Company's discretion to accept or reject any
application for the purchase of any of its products.
C. Neither the General Agent nor any sub-agent shall pay
or allow any inducement not Specified in the policy or contract, nor rebate any
premium or consideration or portion thereof, in any manner whatsoever
D. The General Agent will perform any investigation
required by the law of the jurisdiction in which any sub-agent's license is
sought. The General Agent vouches for the character, competence and
qualifications of each sub-agent appointed as contemplated by this Agreement.
The General Agent will be responsible for all acts and omissions of each
sub-agent relating to any activities of such sub-agent with respect to the sale
of the Company's products during any period of license. Neither the General
Agent nor any sub-agent will solicit applications for business for the Company
in any jurisdiction in which the Company, the General Agent and the sub-agent
are not each duly
16
<PAGE> 17
licensed, nor use any stationery, letterhead, business card or other similar
item which refers to the Company in conjunction with any product which is not
product of the Company.
E. The Company, subject to the duty of prior
consultation in Clause Y. A. 2. hereof, shall have the right to decide, and to
settle, any claim or claims of applicants, policyholders, agents, brokers or
others against the General Agent or the Company in connection with any
transaction arising from this Agreement. If such settlement results in the
recession of a policy and the total or partial refund of premiums and
considerations previously paid, the General Agent shall return to the Company
all commissions resulting from such premiums and considerations (and the
General Agent shall not be paid any commissions resulting from such premiums
and considerations which commissions have been accrued but not paid). If such
settlement results in a payment other than a refund of premiums and
considerations, the Company reserves the right to seek recovery of the amount
of such payment if the underlying claim resulted from alleged acts or omissions
of the General Agent or any sub-agent. If any proceeding brought to enforce
such right of recovery, the reasonableness of the Company's settlement with the
17
<PAGE> 18
original claimant shall be presumed in the absence of clear and convincing
evidence proving the contrary.
F. The Company may offset any amount claimed by it
under this Agreement against any account payable by the Company to the General
Agent; if there be nothing payable to the General Agent by the Company, any
such amount shall be the indebtedness of the General Agent and will survive
termination of this Agreement.
G. Nothing in this Agreement shall be deemed to impose
any limitation on the right of the Company immediately to terminate any
sub-agent and the Company's licensing or sponsoring thereof under the law of
any state, with or without cause and with or without notice, and to require the
General Agent immediately to terminate any agreement or relationship between
the General Agent and any such sub-agent to the extent necessary to preclude
any such sub-agent from representing the Company; any written agreements
between the General Agent and its sub-agents must so provide.
H. This Agreement, together with its attachments,
contains the entire Agreement between the parties concerning any transactions
entered into on or after the date hereof and supersedes any and all prior oral
or written agreements or
18
<PAGE> 19
understandings relating to the subject matter hereof. This Agreement may be
amended, modified or waived, in whole or in part, only by a writing signed by
the party against whom enforcement thereof is sought. This Agreement shall be
binding on the parties' respective successors and assigns.
I. Forbearance, neglect or failure of either party to
enforce strict compliance with any or all provisions of this Agreement shall
not waive any such provision or release the other party hereto in any way. A
waiver of a past act or circumstance subsequent action or circumstance.
J. This Agreement shall be construed and enforced
according to the laws of the State of New York.
K. For convenience, this instrument may be executed in
one or more counterparts, each of which shall be deemed in all respects an
original.
ROYAL TANDEM LIFE INSURANCE COMPANY
By: /s/ MARIANNE KEARNS
---------------------------------
(Name) Marianne Kearns
Vice President
---------------------------------
(Title)
19
<PAGE> 20
MERRILL LYNCH LIFE AGENCY, INC.
A Washington Corporation
By: /s/ ROBERT C. MCCLANAHAN, JR.
---------------------------------
(Name) Robert C. McClanahan, Jr.
Senior Vice President
---------------------------------
(Title)
20
<PAGE> 21
COMPENSATION SCHEDULE
This schedule is an addendum to the General Agency Agreement between the Royal
Tandem Life Insurance Company (the "Company") and Merrill Lynch Life Agency,
Inc. ("General Agent") and applies to the contracts listed below on and after
the effective dates listed for such contracts, when issued by the Company and
placed by agents licensed by the Company who are also sub-agents of the General
Agent.
The General Agent agrees to refund to the Company any commissions attributable
to policies or contracts NTO'd or wholly or partially surrendered during the
first policy year. The charge to the General Agent will be equal to 100% of
monies paid on any portion of the premium surrendered during the first six
months and 50% of any portion of the premium surrendered during the second six
months. For partial surrenders, the recovery will be based on the amount
surrendered less the 10% free corridor amount. There will be no charge back as
a result of the death of the annuitant.
<TABLE>
<CAPTION>
Policy/Contract Form Number Commission Effective Date
<S> <C> <C> <C>
Single Premium Alt 1 SPDA-RT-85B 3.5% 8-3-87
Deferred Annuity Alt 2 SPDA-RT-85
Alt 3 SPDA-RT-85A
</TABLE>
MERRILL LYNCH LIFE AGENCY, INC. ROYAL TANDEM LIFE INSURANCE COMPANY
By: /s/ ROBERT C. MCCLANAHAN, JR. By: /s/ JAMES MCDONNELL
------------------------------- ----------------------------
Robert C. McClanahan, Jr. James McDonnell
Title: Senior Vice President Title: Senior Vice President
Dated: October 22, 1987 Date: November 9, 1987
2
<PAGE> 22
<TABLE>
<CAPTION>
POLICY/CONTRACT FORM NUMBER COMMISSION EFFECTIVE DATE
<S> <C> <C> <C>
Modified Guaranteed RT-MVA-90 3.5% 11/01/90
Annuity
</TABLE>
MERRILL LYNCH LIFE AGENCY, INC. ROYAL TANDEM LIFE INSURANCE COMPANY
By: /s/ ROBERT C. MCCLANAHAN, JR. By: /s/ JOHN C. CIRINCION
------------------------------- ----------------------------
Robert C. McClanahan, Jr. John C. Cirincion
Title: Senior Vice President Title: Vice President
Dated: December 27, 1990 Date: December 27, 1990
3
<PAGE> 23
AMENDMENT ONE
To
COMPENSATION SCHEDULE
This schedule is an addendum to the General Agency Agreement between the Royal
Tandem Life Insurance Company (the "Company") and Merrill Lynch Life Agency,
Inc. ("General Agent") and applies to the contracts listed below on and after
the effective dates listed for such contracts, when issued by the Company and
placed by agents licensed by the Company who are also sub-agents of the General
Agent.
The General Agent agrees to refund to the Company any commissions attributable
to policies or contracts NTO-d or wholly or partially surrendered during the
first policy year. The charge to the General Agent will be equal to 100% of
monies paid on any portion of the premium surrendered during the first six
months and 50% of any portion of the premium surrendered during the second six
months. For partial surrenders, the recovery will be based on the amount
surrendered less the 10% free corridor amount. There will be no charge back as
a result of the death of the annuitant.
1
<PAGE> 24
Effective
Policy/Contract Form Number Commission Date
Single Premium Alt 1 SPDA-RT-85B 3.5% 8-3-87
Deferred Annuity Alt 2 SPDA-RT-85
Atl 3 SPDA-RT-85A
2
<PAGE> 25
AMENDMENT TWO
TO
COMPENSATION SCHEDULE
For Sale of Variable Life Insurance Policies
This schedule is an addendum to the General Agency Agreement between the Royal
Tandem Life Insurance Company ("Company") and Merrill Lynch Life Agency Inc.
("General Agent") and applies to the policies listed below on and after the
effective date set forth below, when issued by the Company and placed by agents
licensed by the Company who are also sub-agents of the General Agent.
Effective 1/1/91
FLEXIBLE PREMIUM POLICY
Policy
Year COMMISSION
Prime Plan VII "Investor"
(Forms MEP87(Y) & MF.PS87(NY))
(% of Aggregate Premiums paid into the base Flexible Premium Life Policy)
First $1,000,000 1 3.50%
Next $2,500,000 3.50
Excess 3.00
First $1,000,000 2-15 3.50
Next $2,500,000 3.50
Excess 3.00
Prime Plan VII "7"
Prime Plan VII "Combo"
(Forms MFP87(NY))(MLPFS 87(NY))
(% of Aggregate Premiums paid into the base Flexible Premium Life Policy)
First $1,000,000 1 9.50%
Next $2,500,000 7.50
Excess 5.50
00182-CI1
1
<PAGE> 26
First $1,000,000 2-15 6.35
Next $2,500,000 4.35
Excess 2.35
*Combo is the Prime Plan VII "7" sold along with the SPIAR
RIDERS FOR FLEXIBLE PREMIUM POLICIES
SPIAR
(Annuity Rider)
(% of premium paid for Single Premium Immediate Annuity Certain)
1 3.50%
Directed Life/2
(Form MSCP87) (45))
5 Pay - LPU @ 85
Scheduled Payments
Contract Payment Total
Year Period Commission
1 9 35.20
10 38.40
11-15 47.60
16-20 54.40
21-LPU@85 55.00
2 5-8 4.50
9-10 6.50
11-20 8.00
21-LPU@85 10.25
3-7 5-8 4.00
9-LPU@85 6.00
8-15 5-LPU@85 3.00
16+ 5-LPU@85 0.00
Unscheduled Payments
00182-CI1
2
<PAGE> 27
Contract
Year Total Commission
1-15 4.50%
16+ 1.50*
* Service Fee
00182-CI1
3
<PAGE> 28
LPU @ 95 - (Plans A and B - Ages less than 55) (Form MSCP87(45))
Scheduled Payments
Contract
Year Total Commission
1 55.00%
2 10.25
3-7 7.50
8-15 3.00
16+ 0.00
Unscheduled Payments
Contract
Year Total Commission
1-15 4.50%
16+ 1.50*
* Service Fee
LPU @ 95 - (Plans A and B - Ages 55 and over) (Form MSCP87(45))
Scheduled Payments
Contract
Year Total Commission
1 55.00%
2 10.25
3-7 10.25
8-15 3.00
16+ 0.00
Unscheduled Payments
00182-CI1
4
<PAGE> 29
Contract
Year Total Commission
1-15 4.50%
16+ 1.50*
* Service Fee
00182-CI1
5
<PAGE> 30
LPU @ 95 - (Plan C) (Form MCP87(45))
Scheduled Payments
Contract
Year Total Commission
1 55.00%
2 10.25
3-7 10.25
8-15 3.00
16+ 0.00
Unscheduled Payments
Contract
Year Total Commission
1-15 4.50%
16+ 1.50*
* Service Fee
00182-CI1
6
<PAGE> 31
1. RELATIONSHIP
With respect to the offer and sale or variable life policies, it is
understood that General Agent is associated with Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S"). It is further understood that
MLPF&S is a registered broker-dealer under the Securities Exchange Act
of 1934 and a member of the National Association of Securities
Dealers, Inc., that the agents or representatives of General Agent
that will be soliciting applications for the Policies also will be
registered representatives of MLPF&S, and that MLPF&S also will be
responsible for training, supervision, and control of the agents or
representatives selling the Policies and for otherwise complying with
applicable federal and state securities law requirements applicable to
it in connection with the sale of the Policies by its associated
persons.
2. LICENSING AND APPOINTMENT
a. No agent or representative of General Agent shall solicit
applications for the Policies until duly licensed and
appointed by the Company as a life insurance agent of the
Company in the appropriate states or other jurisdictions.
b. General Agent shall ensure that such agents or
representatives fulfill any training requirements necessary
to be so licensed.
c. General Agent also understands that agents or representatives
of General Agent selling the Policies must have variable
contract licenses where required and that certain states
require that a special variable life insurance examination be
passed by an agent before he can solicit applications for the
Policies.
d. It is understood that the Company reserves the right to
refuse to appoint any proposed agent, or once appointed, to
thereafter terminate the same.
3. SOLICITATION
General Agent also understands and acknowledges that neither it nor
its agents or representatives is authorized by MLPF&S
00182-CI1
7
<PAGE> 32
or the Company to give any information or make any representation in
connection with this Agreement or the offering of the Policies other
than those contained in the Prospectuses or other solicitation
material authorized in writing by MLPF&S.
00182-CI1
8
<PAGE> 33
SIGNATURES
ML Life Insurance Company of New York
By /s/ BARRY G. SKOLNICK
-----------------------------------
Barry G. Skolnick
Title Senior Vice President, General
-----------------------------------
Counsel, and Secretary
-----------------------------------
ML Life Agency Inc.,
A Texas Corporation
By /s/ WILLIAM E. PICKENS
-----------------------------------
William E. Pickens
Title Chairman of the Board and
-----------------------------------
President
-----------------------------------
Merrill Lynch Life Agency, Ltd., A Mississippi Corporation
Merrill Lynch Life Agency, Inc., An Alabama Corporation
Merrill Lynch Life Agency, Inc., An Arizona Corporation
Merrill Lynch Life Agency, Inc., An Arkansas Corporation
Merrill Lynch Life Agency, Inc., An Idaho Corporation
Merrill Lynch Life Agency, Inc., An Illinois Corporation
Merrill Lynch Life Agency of Maine, Inc., A Maine Corporation
00182-CI1
9
<PAGE> 34
Merrill Lynch Life Agency, Inc., A Massachusetts Corporation
Merrill Lynch Life Agency, Inc., A Montana Corporation
Merrill Lynch Life Agency, Inc., A New Mexico Corporation
Merrill Lynch Life Agency, Inc., An Ohio Corporation
Merrill Lynch Life Agency, Inc., An Oklahoma Corporation
Merrill Lynch Life Agency, Inc., A Puerto Rico Corporation
Merrill Lynch Life Agency, Inc., A South Dakota Corporation
Merrill Lynch Life Agency, Inc., A Wyoming Corporation
Merrill Lynch Life Agency, Inc., A Virgin Islands Corporation
By /s/ WILLIAM A. WILDE
-----------------------------------
William A. Wilde
Title Vice President
-----------------------------------
Merrill Lynch Life Agency, Inc., A Washington
Corporation
By /s/ WILLIAM A. WILDE
-----------------------------------
William A. Wilde
Title Senior Vice President
-----------------------------------
00182-CI1
10
<PAGE> 35
ML LIFE INSURANCE COMPANY OF NEW YORK
AMENDMENT 3 TO GENERAL AGENCY
AGREEMENT
The General Agency Compensation Schedule to the General Agency Agreement
dated August 3,1987 between ML Life Insurance Company of New York ("MLLICNY")
and Merrill Lynch Life Agency, Inc., et al. ("MLLA") is hereby amended due to,
and as of the introduction of new products, such date being _______________.
This schedule applies to the policies and contracts listed below on and
after the effective dates listed for such policies and contracts, when issued
by MLLICNY, and placed by agents who were licensed by MLLICNY and who were also
agents of MLLA. MLLA agrees to refund to MLLICNY any commissions attributable
to policies or contracts NTO'd or wholly or partially surrendered during the
first six months and 50% on any portion of the premium surrendered during the
second six months. There will be no charge back as a result of the death of the
insured/annuitant.
POLICY/CONTRACT COMMISSION EFFECTIVE DATE
INVESTOR LIFE
(Single or Joint and Last Survivor)
Flexible Premium Variable
Life Insurance
First Year
First $1,500,000 3.50%
Next $2,500,000 3.50%
Excess Over $4,000,000 3.00%
INVESTOR LIFE PLUS
(Single or Joint and Last Survivor)
Flexible Premium Variable Life Insurance
First Year
First $1,500,000 9.50%
Next $2,500,000 7.50%
Excess Over $4,000,000 5.50%
1
<PAGE> 36
Renewal Years (2-15)(1)
First $1,500,000 6.35%
Next $2,500,000 4.35%
Excess Over $4,000,000 2.35%
SPIAR Annuity Rider
All $$$ 3.50%
Flexible Premium Variable Annuity
Initial Premium
(Separate Account A*) 3.50%
Internal 1035 Exchanges(2) 3.50%
Additional Premiums 3.50%
* Note: There are no commissions paid on Separate Account B
- ----------------------------------
1/ A Service Fee of 2.00% will be paid after year 15
2/ When one produce is exchanged for another within MLLICNY
2
<PAGE> 37
SIGNATURES
ML Life Insurance Company of New York
By
-----------------------------------
Barry G. Skolnick
Title Senior Vice President, General
-----------------------------------
Counsel, and Secretary
-----------------------------------
ML Life Agency Inc.,
A Texas Corporation
By
-----------------------------------
William E. Pickens
Title Chairman of the Board and
-----------------------------------
President
-----------------------------------
Merrill Lynch Life Agency, Ltd., A Mississippi Corporation
Merrill Lynch Life Agency, Inc., An Alabama Corporation
Merrill Lynch Life Agency, Inc., An Arizona Corporation
Merrill Lynch Life Agency, Inc., An Arkansas Corporation
Merrill Lynch Life Agency, Inc., An Idaho Corporation
Merrill Lynch Life Agency, Inc., An Illinois Corporation
Merrill Lynch Life Agency of Maine, Inc., A Maine Corporation
3
<PAGE> 38
Merrill Lynch Life Agency, Inc., A Massachusetts Corporation
Merrill Lynch Life Agency, Inc., A Montana Corporation
Merrill Lynch Life Agency, Inc., A New Mexico Corporation
Merrill Lynch Life Agency, Inc., An Ohio Corporation
Merrill Lynch Life Agency, Inc., An Oklahoma Corporation
Merrill Lynch Life Agency, Inc., A Puerto Rico Corporation
Merrill Lynch Life Agency, Inc., A South Dakota Corporation
Merrill Lynch Life Agency, Inc., A Wyoming Corporation
Merrill Lynch Life Agency, Inc., A Virgin Islands Corporation
By
-----------------------------------
William A. Wilde
Title Vice President
-----------------------------------
Merrill Lynch Life Agency, Inc., A Washington
Corporation
By
-----------------------------------
William A. Wilde
Title Senior Vice President
-----------------------------------
4
<PAGE> 1
EXHIBIT 1.A.(3)(c)
ESTATE INVESTOR COMMISSIONS
March 10, 1993
COMMISSION SCHEDULE
<TABLE>
<CAPTION>
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A. Percent of Premium MLLIC MLLICNY
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<S> <C> <C>
On minimum premium 95.00% 55.00%
Above minimum until 10 base premiums paid 3.00% 3.00%
Excess over 10 base premiums 3.00% 1.50%
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
B. Percent of Investment Base (Trail) MLLIC MLLICNY
- ---------------------------------------------------------------------------------------
Beginning of Policy Year 1 0.00% 0.00%
Beginning of Policy Years 2 and After 0.11% 0.00%
- ---------------------------------------------------------------------------------------
</TABLE>
C. Chargebacks
1. Free Look/Surrender/Lapse
- -----------------------------
Chargebacks are only assessed on the commission paid on the minimum premium.
The chargeback is 100% of the 95% commission (55% MLLICNY) on surrenders in
the first policy year, and 50% on surrenders in the second policy year.
2. Trail commissions
- ---------------------
Trail commissions are not subject to chargeback.
<PAGE> 1
EXHIBIT 1.A.(5)(a)(1)
<TABLE>
<S> <C>
ML LIFE INSURANCE COMPANY OF NEW YORK
Home Office: New York, New York
Variable Life Service Center: P.O. Box 9025, Springfield,
Massachusetts 01102-9025
Telephone: 1-800-354-5333
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INSURED NO. 1 RICHARD ROE
POLICY NUMBER SPECIMEN
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE
INSURANCE POLICY
This policy is a legal contract between its owner and us. Please read it
carefully. In this policy, the work you refers to the owner shown on the policy
schedule. We, us, and our refers to ML Life Insurance Company of New York.
- --------------------------------------------------------------------------------------------------------------------
DEATH BENEFIT PROVIDED We will pay the death benefit proceeds to the beneficiary when we receive due
BY THIS POLICY proof of the death of the insured.
At issue, the death benefit equals this policy's initial face amount plus any
additional insurance rider face amount. Afterwards, the death benefit may
increase or decrease on any day, depending on this policy's investment results,
but will never be less than this policy's face amount. The duration for which
the death benefit is in effect may vary with the investment results, but will
never be less than this policy's guarantee period. For details on death benefit
proceeds and the guarantee period, see Insurance Benefits.
- --------------------------------------------------------------------------------------------------------------------
CASH VALUE BENEFITS During the lifetime of the insured while this policy is in effect we provide cash
PROVIDED BY value benefits and other important rights as described in this policy.
THIS POLICY
The cash value may increase or decrease on any day, depending on the investment
results for this policy. No minimum amount is guaranteed. For information on
cash surrender values, see Policy Benefits For The Owner.
- --------------------------------------------------------------------------------------------------------------------
INVESTMENT RESULTS You may allocate this policy's total investment base among the investment
FOR THIS POLICY divisions. Each division invests in a designated investment portfolio. Cash
values and death benefits may increase or decrease depending on the investment
experience of these investment divisions, the allocation of the policy's
investment base among the divisions and the timing and amount of all premiums.
For details, see How Variable Life Insurance Works.
- --------------------------------------------------------------------------------------------------------------------
RIGHT TO EXAMINE This policy may be returned on or before the end of the free look period. That
THIS POLICY period ends at the later of ten days after you receive this policy, 45 days after
you execute the application, or ten days after we mail or deliver to you the
Notice of Withdrawal Rights. Mail or deliver this policy to us or to the agent
who sold it. The returned policy will be treated as if we never issued it. We
will promptly return the premium paid.
/s/ BARRY G. SKOLNICK /s/ ALLEN JONES
--------------------- ---------------------
BARRY G. SKOLNICK ALLEN JONES
Secretary President
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</TABLE>
- 1 -
VUS92NY SPECIMEN
<PAGE> 2
<TABLE>
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<S> <C>
FLEXIBLE PREMIUM VARIABLE Variable universal life insurance payable upon death of the insured. Death
UNIVERSAL LIFE INSURANCE benefit subject to guaranteed minimum during guarantee period. Guaranteed
POLICY minimum is policy's face amount. Flexible premiums. Non-participating.
Investment results reflected in policy benefits.
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</TABLE>
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VUS92NY SPECIMEN
<PAGE> 3
- --------------------------------------------------------------------------------
POLICY CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POLICY SCHEDULE Page 3
<S> <C>
DEFINITIONS 4
INTRODUCTION TO THIS POLICY 5
PREMIUM PAYMENTS 7
HOW VARIABLE LIFE INSURANCE WORKS 9
POLICY BENEFITS FOR THE OWNER 13
INSURANCE BENEFITS 16
CHOOSING AN INCOME PLAN 18
OTHER IMPORTANT INFORMATION 21
APPENDIX 1 23
APPENDIX 2 24
</TABLE>
A copy of the application(s) and any additional benefit and endorsements are at
the back of this policy.
<TABLE>
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<S> <C>
Policy Schedule The Policy Schedule comes right after this page. It gives specific facts about this policy and its
coverage. Please refer to it while reading this policy.
</TABLE>
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VUS92 SPECIMEN
<PAGE> 4
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POLICY SCHEDULE
- -------------------------------------------------------------------------------
INSURED Richard Roe
ISSUE AGE/SEX 35 Male
UNDERWRITING CLASS Standard Non-Smoker
INITIAL PREMIUM $45,000.00
INITIAL FACE AMOUNT $1,000,000.00
BASE PREMIUM $10,416.00
INITIAL ADDITIONAL INSURANCE
RIDER FACE AMOUNT $500,000.00
ISSUE DATE September 30, 1992
POLICY DATE September 30, 1992
POLICY NUMBER SPECIMEN
OWNER Richard Roe
INITIAL GUARANTEE PERIOD The Initial Guarantee Period is 12.25
years.
((SALES LOAD (only included if applicable
regulations under the Investment
Company Act of 1940 require a reduced
sales load))
RIDERS (( Additional Insurance Rider (only if
elected))
((THIS IS A MODIFIED ENDOWMENT
CONTRACT.))
- 4 -
VUS92 SPECIMEN
<PAGE> 5
<TABLE>
<CAPTION>
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DEFINITIONS
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<S> <C>
OWNER The owner has the rights and options as described in this policy. The owner is shown on the Policy
Schedule.
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BENEFICIARY The beneficiary is the person to whom we pay the proceeds upon the death of the insured.
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BASE PREMIUM The base premium is the amount equal to the level annual premium necessary for the face amount of the
policy to endow on the policy anniversary nearest the insured's 100th birthday. We assume a 5% annual
rate of return on the base premium less premium loading and guaranteed maximum cost of insurance rates
shown in Appendix 1. Once determined, the base premium will not change. The base premium is shown on
the Policy Schedule.
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SEPARATE ACCOUNT The ML of New York Variable Life Separate Account II is governed by the laws of New York, our state of
domicile.
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TOTAL INVESTMENT The total investment base is the amount that this policy provides for investment at any time. It is
BASE the sum of the investment base in each of the investment divisions.
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FIXED BASE The fixed base on the policy date of this policy equals this policy's cash value. Thereafter, the
fixed base is calculated in the same manner as the cash value except that all calculations are based on
the guaranteed maximum cost of insurance rats and a 5% annual rate of interest. The fixed base
calculation does not reflect policy loans and repayments.
- -----------------------------------------------------------------------------------------------------------------------------------
CASH VALUE The cash value on any date equals the total investment base, plus policy debt, less any accrued net
loan cost since the last policy anniversary (or since the policy date during the first policy year),
plus any unearned charges for cost of insurance and rider costs.
- -----------------------------------------------------------------------------------------------------------------------------------
VARIABLE INSURANCE The variable insurance amount equals the cash value corridor factor for the insured at his or her
AMOUNT attained age multiplied by the sum of cash value plus any excess sales load as calculated under
applicable regulations in effect under the Investment Company Act of 1940. The variable insurance
amount will vary daily based on the investment results, any premium payments made, any partial
withdrawals taken and any loans taken.
In no event will the variable insurance amount be less than that required to keep this policy
qualified as life insurance under the federal income tax laws. The table of cash value corridor
factors is shown in Appendix 2.
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GUARANTEE PERIOD The guarantee period is the period for which the policy face amount and any additional insurance rider
face amount are guaranteed to remain in effect unless debt exceeds certain values. It is calculated
assuming the cash value accrues interest at an annual rate of 5% and guaranteed maximum cost of
insurance rates and rider costs are deducted.
</TABLE>
- 5 -
VUS92NY SPECIMEN
<PAGE> 6
<TABLE>
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
INTRODUCTION TO THIS POLICY
This policy insures the life of the insured listed on the Policy Schedule.
The insured is the owner of this policy unless another owner has been named in
the application. If there is more than one owner, the owners must exercise
their rights and options jointly. We reserve the right to limit the number of
owners.
- ----------------------------------------------------------------------------------------------------------------
THIS POLICY IS A This policy is a contract between you and us. We provide insurance coverage
CONTRACT and other benefits as stated in this policy. We do this in return for a
completed application and payment of the initial premium.
Whenever we use the word policy, we mean the entire contract. The entire
contract consists of:
- the basic policy;
- the attached copy of the initial application and
medical exam(s).
- all attached subsequent applications and amendments to
change the basic policy; and
- any riders or endorsements.
Riders and endorsements add provisions or change the terms of the basic
policy.
- ----------------------------------------------------------------------------------------------------------------
DATES AND AGES The following dates and ages are referred to in this policy.
REFERRED TO IN THIS DATE OF ISSUE
POLICY This is the date this policy is issued at our Service Center. The contestable
and suicide periods are measured from this date.
POLICY DATE
This date is used to determine policy processing dates, policy years and
anniversaries. It is generally one business day after the premium is received
by us. See the Policy Schedule. The policy date may or may not be the same
as the date of issue. The policy processing dates are the days when we deduct
charges. They are the policy date and the same day of the month as the policy
date at the end of each successive three month period. A policy processing
period is the period between successive policy processing dates.
ISSUE AGE
This is the insured's age on the insured's birthday nearest to the policy
date.
ATTAINED AGE
This is the insured's age plus the number of full years elapsed since the
policy date.
MATURITY DATE
The maturity date of this policy is the policy anniversary nearest the
insured's 100th birthday.
- ----------------------------------------------------------------------------------------------------------------
RIGHT TO NAME A You may name a contingent owner. If you die before a death benefit is payable
CONTINGENT OWNER under this policy, your interest in this policy will then pass to the
contingent owner. If there's no contingent owner, your interest will pass to
your estate.
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
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VUS92 SPECIMEN
<PAGE> 7
<TABLE>
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
THE BENEFICIARY We pay the death benefit proceeds to the primary beneficiary. If the primary
beneficiary (whether or not irrevocable) has died, the proceeds are paid to
any contingent beneficiary. If there is no surviving beneficiary, we pay the
proceeds to the estate of the insured. One or more persons may be named as
primary beneficiaries or contingent beneficiaries. In that case we will
assume the proceeds are to be paid in equal shares to the surviving
beneficiaries. The owner can specify other than equal shares. If an
irrevocable beneficiary has been designated, you and the irrevocable
beneficiary must act together to exercise certain rights and options under
this policy.
- ----------------------------------------------------------------------------------------------------------------
CHANGE OF OWNER OR During the insured's lifetime, with the consent of any irrevocable
BENEFICIARY beneficiary, you can transfer ownership of this policy and change the
beneficiary. To do this, you must send us written notice of the change in a
form satisfactory to us. The change will take effect as of the day the notice
is signed. However, the change will not affect any payment made or action
taken by us before receipt of the notice of the change at our Service Center.
- ----------------------------------------------------------------------------------------------------------------
SENDING NOTICE TO Any written notices or requests should be sent to our Service Center in a form
US satisfactory to us. The address is shown on the front of this policy. Please
include your name, the name of the insured and the policy number.
- ----------------------------------------------------------------------------------------------------------------
ALLOCATION OF As of the date we receive and accept an additional premium payment, the
ADDITIONAL PREMIUMS increase in the total investment base will be allocated among the investment
divisions in accordance with instructions from the owner. If no such
instructions are received by us, allocation will be among the investment
divisions in the same proportion as the investment base in each division bears
to the total investment base as of the date we receive and accept the premium.
- ----------------------------------------------------------------------------------------------------------------
PREMIUM LOADING As of the date we receive and accept any premium:
- The investment base will increase by the amount of the payment less:
(1) a sales load of 46.25% of each payment through the second base
premium and 1.25% of each base premium paid after the second; (2) a
premium tax charge of 2.00% of each premium paid; (3) a charge for
federal taxes of 1.25% of each premium paid. These charges are
deducted before allocation to applicable investment divisions.
We may also deduct a charge for other assessments of federal premium taxes or
federal, state or local excise, profits or income taxes measured by or
attributable to the receipt of premiums. We also reserve the right to deduct
from the separate account any taxes imposed on the separate account earnings.
If your sales load will be less than the sales load described above, it will
be shown on the Policy Schedule. In no event will the sales load exceed the
amount permitted by applicable regulations in effect under the Investment
Company Act of 1940.
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PREMIUM PAYMENTS
- ----------------------------------------------------------------------------------------------------------------
WHEN TO PAY Payment of the initial premium is required to put this policy in effect. The
PREMIUMS amount of the initial premium is shown on the Policy Schedule.
- ----------------------------------------------------------------------------------------------------------------
WHERE TO PAY Pay the premiums to our Service Center.
PREMIUMS
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</TABLE>
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VUS92 SPECIMEN
<PAGE> 8
<TABLE>
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<S> <C>
ADDITIONS PREMIUMS After the end of the free look period, if the insured is alive, the owner may
pay additional premiums under this policy. To make an additional premium
payment, the owner must provide us with notice at our Service Center. We
reserve the right to return any portion of the additional premiums that would
case this policy to become a modified endowment contract, under applicable tax
law as interpreted by us, unless you consent. We may also return any portion
of the additional premium that would cause this policy to fail to qualify as
life insurance under applicable tax laws as interpreted by us. Any amount of
additional premium beyond that necessary to extend the guarantee period to the
whole of life of the insured will be returned to you.
The minimum additional premium is $100. Unless otherwise specified by the
owner, if there is any policy debt, any additional premiums paid will be
applied as a loan repayment, with any excess used as an additional premium.
See Policy Loans.
As of the policy processing date on or next following the date of receipt and
acceptance of an additional premium the guarantee period may increase. See
The Guarantee Period.
The variable insurance amount will also reflect this premium.
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
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VUS92 SPECIMEN
<PAGE> 9
<TABLE>
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<S> <C>
GRACE PERIOD After the end of the guarantee period, we will terminate this policy at the
end of the grace period if the quarterly charges are greater than the cash
value on a policy processing date.
The grace period will end 61 days after we mail a notice to the owner that we
may terminate this policy because of insufficient cash value. To avoid
termination, you must pay us an amount which after deducting premium loading
equals at least three (3) times the charges that were due on the policy
processing date on which we determined that the cash value was insufficient.
However, see Policy Loans. This amount will be specified on the notice we
send. If we do not receive such amount at our Service Center before the end
of the grace period, this policy will terminate. At that time, we deduct any
charges for cost of insurance and rider costs applicable to the grace period
and refund to you any unearned charges for cost of insurance and rider costs.
If the insured dies during the grace period, we will pay the beneficiary the
insurance benefits as described in Proceeds Payable To The Beneficiary.
- ----------------------------------------------------------------------------------------------------------------
HOW TO REINSTATE If we have terminated this policy at the end of the grace period, you may
THIS POLICY reinstate it provided the insured had not died between the date we terminated
this policy and the effective date of reinstatement if:
- You ask for reinstatement within three (3) years after the end of the
grace period;
- We receive satisfactory evidence of the insured's insurability; and
- You pay us at least the minimum premium for which we would then issue
this policy based on the policy year and underwriting class of the
insured as of the effective date of the reinstated policy.
The effective date of the reinstated policy will be the policy processing date
on or next following the date we approve the reinstatement application.
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</TABLE>
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VUS92 SPECIMEN
<PAGE> 10
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
HOW VARIABLE LIFE INSURANCE WORKS
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
THE SEPARATE The variable life insurance benefits under this policy are provided through
ACCOUNT investments made in the separate account. This account is kept separate from
our general account and any other separate accounts we may have. It is used
to support variable life insurance policies and may be used for other purposes
permitted by applicable laws and regulations. We own the assets in the
separate account. Assets equal to the reserves and other liabilities of the
account will not be charged with liabilities that arise from any other
business we conduct. However, we may transfer to our general account assets
which exceed the reserves and other liabilities of the separate account.
The separate account will invest in mutual funds, unit investment trusts and
other investment portfolios which we determine to be suitable for this
policy's purposes. The separate account is a unit investment trust under
federal securities laws. It is registered with the Securities and Exchange
Commission (SEC) under the Investment Company Act of 1940.
Income, realized and unrealized gains or losses from assets in the separate
account are credited to or charged against the account without regard to other
income, gains or losses in our other separate accounts or general account.
- ----------------------------------------------------------------------------------------------------------------
INVESTMENT DIVISIONS The separate account is divided into investment divisions. Each investment
division invests in a designated investment portfolio. the divisions and the
investment portfolios in which they invest are described in the prospectus.
Each investment division will be valued at the end of each valuation period.
A valuation period is each business day together with any non-business days
before it. A business day for a division is any day the New York Stock
Exchange (NYSE) is open for trading or any day in which the SEC requires that
the mutual funds, unit investment trusts or other investment portfolios be
valued.
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
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VUS92 SPECIMEN
<PAGE> 11
<TABLE>
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
CHANGES TO THE We may from time to time make additional investment divisions available.
SEPARATE ACCOUNT These divisions will invest in investment portfolios we find suitable for this
policy. We also have the right to eliminate investment divisions from the
separate account, to combine two or more investment divisions or to substitute
a new portfolio for the portfolio in which an investment division invests. A
substitution may become necessary if, in our judgment, a portfolio no longer
suits the purposes of this policy. This may happen due to a change in laws or
regulations, or a change in a portfolio's investment objectives or
restrictions, or because the portfolio is no longer available for investment
or for some other reason. We would get any required prior approval from the
insurance department of our state of domicile before making such a
substitution. We would also get any required prior approval from the SEC and
any other required approvals before making such a substitution.
Subject to any required regulatory approvals, we reserve the right to transfer
assets of the separate account or of an investment division, which we
determine to be associated with the class of policies to which this policy
belongs, to another separate account or investment division.
When permitted by law, we reserve the right to:
- Deregister the separate account under the Investment Company Act of
1940.
- Operate the separate account as a management investment company under
the Investment Company Act of 1940.
- Restrict or eliminate any voting rights of policyowners or other
persons who have voting rights as to the separate account; and
- Combine the separate account with other separate accounts.
- ----------------------------------------------------------------------------------------------------------------
ALLOCATION OF The owner selects the divisions to which to allocate the total investment
TOTAL INVESTMENT base. The maximum number of divisions to which the total investment base may
BASE be allocated at any one time is five (5).
The owner can change the allocation of the total investment base among the
investment divisions. The number of allocation changes per year is unlimited.
We reserve the right to charge up to $25 for each transfer in excess of six
(6) per year. No allocation changes are allowed during the free look period.
To make a change, the owner must provide us with satisfactory notice at our
Service Center. The change will take effect when we receive the notice. Our
calculations will reflect the change.
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</TABLE>
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VUS92 SPECIMEN
<PAGE> 12
<TABLE>
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT BASE IN ON THE POLICY DATE
EACH INVESTMENT On the policy date, your initial premium is reduced by the premium loading.
DIVISION See Premium Loading. The balance is your total investment base which
allocated to the Money Reserve investment division. The we deduct quarterly
charges. The resulting amount remains in the Money Reserve investment
division. Then we deduct quarterly charges. The resulting amount remains in
the Money Reserve investment division at least until the end of the free look
period. After that, upon notice in a form satisfactory to us, you may
allocate any portion of your total investment base to other investment
divisions. See Allocation Of Total Investment Base. After the free look
period, the owner may pay additional premiums under this policy. See
Additional Premiums.
On Each Subsequent Business Day
On each subsequent business day, the investment base in each division is an
amount calculated as follows:
(1) We take the investment base in the division at the end of the
preceding valuation period.
(2) We multiply (1) by the division's net rate of return for the current
valuation period.
(3) We add (1) and (2).
(4) We add to (3) any premiums allocated to the division during the
current valuation period less any premium loading deducted before
allocation.
(5) We add to (4) any loan repayments received and subtract from (4) any
borrowed amounts which are allocated to the division during the
current valuation period.
(6) We add any amounts transferred to the investment division and subtract
any amounts transferred from the investment division since the end of
the preceding valuation period.
(7) If the business day is a policy processing date, we subtract from (6)
the following amounts allocated to that division for the next policy
processing period (sometimes referred to as quarterly charges):
(a) cost of insurance.
(b) any other fees we describe in this policy; and
(c) any rider charges deducted from the investment base.
If a policy processing date is on a policy anniversary, we also
subtract:
(d) any net loan cost.
All amounts in (7) will be allocated to each division in the same
proportion as (3) bears to the total investment base.
(8) If the charges in (7) exceed the amount in (6), we will notify you of
the amount due.
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</TABLE>
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VUS92 SPECIMEN
<PAGE> 13
<TABLE>
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
CHARGES DEDUCTED COST OF INSURANCE
FROM INVESTMENT BASE We will determine the cost of insurance on each policy processing date as
follows:
(1) We determine the policy's net amount at risk as of the policy
processing date, which is equal to:
(a) the death benefit as of the policy processing date adjusted
for interest at the rate of 5% per year, less
(b) the cash value as of the policy processing date but before
deduction for the cost of insurance.
(2) We divide (1) by $1,000.
(3) We determine the current cost of insurance rate per $1,000 based on
the policy year, sex and underwriting class of the insured.
(4) We multiply (2) by (3).
We may change the current cost of insurance rates per $1,000 from time to
time. Any change in the current rates will be as described in Changes in
Policy Cost Factors. They will never be more than the guaranteed maximum cost
of insurance rates per $1000 shown in Appendix 1.
OTHER DEDUCTIONS
The net loan cost is described in the Policy Loans provision. The cost and
frequency of deduction of any benefits from riders are shown on the Policy
Schedule unless otherwise provided for in the rider. An asset charge at a
daily rate of .002477% (equivalent to .90% annually in advance) and a trust
charge at a daily rate currently of .000933% (equivalent to .34% annually in
advance) are deducted from appropriate investment divisions in the separate
account.
We reserve the right to increase the trust charge but in no event above a
daily rate of .001373% (equivalent to .50% annually in advance).
- ----------------------------------------------------------------------------------------------------------------
WHAT HAPPENS ON THE If part of the total investment base is allocated to an investment division
MATURITY DATE OF AN that has a maturity date, then, unless otherwise specified by the owner, the
INVESTMENT DIVISION amounts in that division as of the maturity date will be allocated to the
Money Reserve investment division. We will notify the owner 30 days in
advance of the maturity date. To elect an allocation to other than the Money
Reserve investment division, the owner must provide satisfactory notice to us
at least seven (7) days prior to the maturity date. The allocation on a
maturity date will not be considered a change in the allocation of the
investment base for purposes of the number of changes permitted before a
charge may be applied.
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</TABLE>
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VUS92 SPECIMEN
<PAGE> 14
<TABLE>
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<S> <C>
MEASUREMENT OF The investment experience of an investment division is determined at the end
INVESTMENT of each division's valuation period.
EXPERIENCE
INDEX OF INVESTMENT EXPERIENCE
We use an index to measure changes in each investment division's experience
during a valuation period. We set the index at $10 when the first investments
in that division were made. The index for a current valuation period equals
the index for the preceding valuation period multiplied by the experience
factor for the current period.
HOW WE DETERMINE THE EXPERIENCE FACTOR
The experience factor for an investment division's valuation period reflects
the investment experience of the portfolio in which the division invests as
well as the charges assessed against the division. The factor is calculated
as follows:
(1) We take the net asset value as of the end of the current valuation
period of the portfolio in which the division invests.
(2) We add to (1) the amount of any dividend or capital gains distribution
declared during the current valuation period for the investment
portfolio. We subtract from that amount a charge for our taxes, if
any.
(3) We divide (2) by the net asset value of the portfolio at the end of
the preceding valuation period.
(4) We subtract the daily asset charge for each day in the valuation
period. This charge is to cover expense, mortality and minimum death
benefit guarantee risks that we are assuming.
(5) For any divisions investing in unit investment trusts only, we
subtract an additional charge equal to the daily trust charge for each
day in the valuation period. this charge is to cover the actual costs
incurred in the purchase or sale of units of the trusts.
The net asset value of an investment company's shares held in each investment
division shall be the value reported to us by the investment company. Such
net asset value will be net of any investment advisory fees and other expenses
of such investment company.
Calculations for divisions investing in the mutual fund portfolios are made on
a per share basis. Calculations for divisions investing in unit investment
trusts are on a per unit basis.
- ----------------------------------------------------------------------------------------------------------------
NET RATE OF RETURN Here's how to determine an investment division's net rate of return for a
FOR AN INVESTMENT valuation period:
DIVISION (1) We determine the change in the division's index from the preceding
valuation period to the current valuation period.
(2) We divide this by the index for the preceding valuation period.
We follow a consistent method for longer periods of time.
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</TABLE>
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VUS92 SPECIMEN
<PAGE> 15
<TABLE>
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<S> <C>
POLICY BENEFITS FOR THE OWNER
There are important rights and benefits that are available to the owner of
this policy during the lifetime of the insured. Many of these rights and
benefits are enumerated in this section.
- ----------------------------------------------------------------------------------------------------------------
PARTIAL WITHDRAWAL REQUIREMENTS FOR EACH PARTIAL WITHDRAWAL
Each partial withdrawal is subject to the following requirements:
- The minimum partial withdrawal is $1,000. The remaining cash value
less any policy debt following a partial withdrawal must equal or
exceed $5,000. Withdrawals are permitted once each policy year,
beginning in policy year 16.
- The amount of a partial withdrawal may not exceed the loan value as of
the effective date of a partial withdrawal, less any existing policy
debt as of such date.
- A partial withdrawal may not be repaid.
REQUESTING A PARTIAL WITHDRAWAL
The request for a partial withdrawal must be in a form satisfactory to us.
The effective date of the withdrawal will be the date the request is received
at our Service Center.
EFFECT OF A PARTIAL WITHDRAWAL ON TOTAL INVESTMENT BASE, CASH VALUE AND DEATH
BENEFIT
As of the effective date of a partial withdrawal:
- The total investment base, cash value, fixed base and, if you have
elected death benefit Option 1, the face amount of this policy, each
will be reduced by the amount of the partial withdrawal.
- The reduction in the total investment base will be allocated among the
investment divisions in accordance with your instructions. If no such
instructions are received by us, allocation will be among the
investment divisions in the same proportion as the investment base in
each division bears to the total investment base as of the effective
date of the partial withdrawal.
- The variable insurance amount will reflect the partial withdrawal.
As of the policy processing date on or next following the effective date of a
partial withdrawal, the guarantee period will decrease.
EFFECT OF A PARTIAL WITHDRAWAL ON GUARANTEED PERIOD
As of the policy processing date on or next following the effective date of a
partial withdrawal, the guarantee period will decrease as follows:
(1) We determine he immediate decrease in cash value resulting from the
partial withdrawal.
(2) We add to (1) interest at the annual rate of 5% for the period from
the date of the withdrawal to the policy processing date on or next
following such date. This is the guarantee adjustment amount.
(3) We subtract the guarantee adjustment amount from the fixed base and
use the new fixed base to calculate a new guarantee period.
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
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VUS92 SPECIMEN
<PAGE> 16
<TABLE>
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
PARTIAL WITHDRAWAL WHEN WE WILL PAY THE PARTIAL WITHDRAWAL
(CONTINUED) We'll usually pay the amount of the partial withdrawal within seven (7) days
after we receive a request satisfactory to us. But we may delay paying the
amount of the partial withdrawal when:
- The NYSE is closed for trading except for a normal holiday closing; or
- The SEC determines that a state of emergency exists.
- ----------------------------------------------------------------------------------------------------------------
CASH VALUE BENEFITS SURRENDERING YOUR POLICY
You can surrender this policy at any time and receive its cash value less any
policy debt. This amount may be paid in cash or under one or more income
plans. See Choosing An Income Plan. To surrender this policy, the owner must
return it to our Service Center with a signed request for surrender in a form
satisfactory to us. The right to a death benefit will end on the date the
request is sent to us. The cash value will vary daily. We will determine the
cash value as of the date we receive this policy and the signed request at our
Service Center. We will usually pay the cash value less any policy debt
within seven (7) days. But we may delay payment when we are not able to
determine the amount because:
- The NYSE is closed for trading except for a normal holiday closing; or
- The SEC determines that a state of emergency exists.
If the policy is surrendered during the first two policy years, we will refund
a part of the sales load to the extent required by regulations in effect under
the Investment Company Act of 1940.
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
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VUS92 SPECIMEN
<PAGE> 17
<TABLE>
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
POLICY LOANS You may borrow money from us. The maximum amount you may borrow is the loan
value. This policy will be the only security we require for the loan. A loan
may be taken any time this policy is in effect. You may repay all or part of
the loan at any time while the insured is living.
LOAN VALUE
The loan value is 90% of the cash value. The maximum loan amount that may be
borrowed at any time is the difference between the loan value and the policy
debt. The minimum permissible amount of any loan and minimum repayment amount
are each $200.
INTEREST AND NET LOAN COST
Interest accrues (builds up) each day on your outstanding loan. The sum of
all outstanding loans plus accrued interest is called policy debt. The amount
held in the general account for loans (see Effect Of A Loan) earns interest.
On each policy anniversary, the investment base is increased by the interest
earned on the amount held in the general account and decreased by the interest
accrued on the policy debt. The difference between the interest accrued on
the policy debt and the interest earned on the amount held in the general
account is called the net loan cost.
The net loan cost will be calculated as follows:
(1) We determine the policy debt as of the previous policy anniversary and
take into account loans and repayments made during the policy year.
(2) We multiply (1) by the loan interest rate less the annual rate of
interest earned on the amount held in the general account for loans.
The maximum loan interest rate is 6% pr year. The amount held in the general
account for loans earns interest at a minimum rate of 4% annually.
Interest payments are due at the end of each policy year. If interest isn't
paid when due, an amount equal to the interest due will be added to your
outstanding loan amount and interest will accrue on this new loan amount.
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
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VUS92 SPECIMEN
<PAGE> 18
<TABLE>
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
POLICY LOANS INTEREST AND NET LOAN COST (CONTINUED)
(CONTINUED)
The loan interest rate and the annual rate of interest earned on the loan
amount transferred to the general account are set on each policy anniversary.
EFFECT OF A LOAN
An amount equal to the loan will be transferred out of the separate account
and into our general account. At the time of a repayment, an amount equal to
a repayment will be transferred out of the general account and into the
separate account. A policy loan and the net loan cost reduce the total
investment base while repayment of a loan will cause an increase in the total
investment base. Loans, repayments and the net loan cost will be allocated
among the investment divisions in accordance with your instructions. You may
change that allocation by sending satisfaction notice to us. If no such
instructions are on record, the loan, repayment or net loan cost will be
allocated in the same proportion as the investment base in each division bears
to the total investment base as of the date of the loan, repayment or
deduction of net loan cost.
A loan, whether or not repaid, will have a permanent effect on the cash values
and may have a permanent effect on the death benefits. If not repaid, the
policy debt will reduce the amount of death benefit proceeds and cash value
benefits.
Loans and repayments during a policy year will affect our calculations.
If on the policy processing date, the policy debt exceeds the larger of:
(a) The cash value plus any excess sales load calculated in
accordance with applicable regulations in effect under the
Investment Company Act of 1940 less quarterly charges and
(b) the fixed base,
we will terminate this policy. We will not do this, however, until 61 days
after we mail notice of our intent to terminate. We will notify you at your
last known address. Upon termination, we deduct any charges for cost of
insurance and rider costs applicable to the 61 day period and refund to you
any unearned charges for cost of insurance and rider costs.
WHEN WE WILL MAKE THE LOAN
We will usually loan the money within seven (7) days after we receive a
request in a form satisfactory to us. But we may delay making the loan when
we are not able to determine the loan value because:
- The NYSE is closed for trading except for a normal holiday closing; or
- The SEC determines that a state of emergency exists.
- ----------------------------------------------------------------------------------------------------------------
ASSIGNMENT - USING THIS You may assign this policy as collateral security for a loan or other
POLICY AS obligation. This does not change the ownership. but your rights and any
COLLATERAL SECURITY beneficiary's rights are subject to the terms of the assignment. To make or
release an assignment, we must receive written notice, satisfactory to us, at
our Service Center. We are not responsible for the validity of any
assignment.
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
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VUS92 SPECIMEN
<PAGE> 19
<TABLE>
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
RIGHT TO FIXED LIFE The owner may exchange this policy for a policy with benefits that do not vary
BENEFITS with the investment results of a separate account. No evidence of
insurability will be required.
We'll issue the new policy on your life after we receive:
- A proper written request; and
- This policy.
OTHER FACTS ABOUT THE NEW POLICY
The new policy's owner, insured and beneficiary will be the same as those of
this policy as of the date of exchange. The new policy will have the same
death benefit and the same net amount at risk as this policy at the time of
exchange. The new policy will also have the same issue age, issue date, face
amount, cash value, underwriting class and benefit riders as this policy. Any
policy debt under this policy will be carried over to the new policy.
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
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VUS92 SPECIMEN
<PAGE> 20
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
INSURANCE BENEFITS
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
THE GUARANTEE PERIOD ON THE POLICY DATE
The initial guarantee period and initial face amount on the policy date are
shown on the Policy Schedule. The guarantee period and face amount are not
affected by investment results nor the allocation of the total investment base
among the investment divisions. The guarantee period will change as described
below as a result of any additional premiums.
WHEN AN ADDITIONAL PREMIUM IS PAID
The guarantee period will increase as follows:
(1) We determine the immediate increase in cash value resulting from the
additional premium less premium loading. See Premium Loading.
(2) We add to (1) interest at the annual rate of 5% for the period from
the date we receive and accept the additional premium to the policy
processing date on or next following such date. This is the guarantee
adjustment amount.
(3) If the guarantee period prior to payment is less than for the lifetime
of the insured, the guarantee adjustment amount is added to the fixed
base and the new fixed base will be used to calculate a new guarantee
period. Any excess amount of additional premium beyond that necessary
to extend the guarantee period to the whole of life of the insured
will be turned to you.
AUTOMATIC ADJUSTMENT
On any policy anniversary if the cash value is greater than the fixed base
necessary to cause the guarantee period to equal the whole of life of the
insured, the guarantee period will be extended to the whole of life of the
insured.
- ----------------------------------------------------------------------------------------------------------------
PROCEEDS PAYABLE TO THE We will pay the death benefit proceeds to the beneficiary upon the insured's
BENEFICIARY death. The proceeds may be paid in cash or under one or more income plans.
See Choosing An Income Plan.
In the event of the death of the insured within two years from the date of
issue, proof of such death should be promptly submitted to our Service Center
since we will pay only a limited benefit under certain circumstances. See
Limits On Our Contesting This Policy and Suicide.
DEATH BENEFIT PROCEEDS
Death benefit proceeds depend upon the death benefit option in effect on the
date of death.
OPTION 1. Under this option, death benefit proceeds are determined as
follows:
(1) We determine the policy's death benefit, which is the larger of the
face amount or the variable insurance amount.
(2) We subtract from (1) any policy debt.
(3) We add to (2) any rider benefits payable
OPTION 2. Under this option, death benefit proceeds are determined as
follows:
(1) We determine the policy's death benefit, which is the larger of the
face amount plus cash value or the variable insurance amount.
(2) We subtract from (1) any policy debt.
(3) We add to (2) any rider benefits payable.
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
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VUS92 SPECIMEN
<PAGE> 21
<TABLE>
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
The value of the death benefit proceeds will be that as of the insured's date
of death. If that death occurs during the grace period, we will pay the
beneficiary the death benefit proceeds in effect immediately prior to the
grace period reduced by any overdue charges. The death benefit will never be
less than that required to keep this policy qualified as life insurance under
the federal income tax laws.
CHANGING THE DEATH BENEFIT OPTION
On each policy anniversary beginning with the fifteenth, the owner may change
the death benefit option. We will change the policy face amount in order to
keep your death benefit constant as of the effective date of the change.
If the death benefit option is changed from Option 1 to Option 2, satisfactory
evidence of insurability will be required. A change in the death benefit
option will not be permitted if it would result in a face amount of less than
$100,000. In no event will a change be permitted if after the change, the
policy would not qualify as life insurance under federal income tax laws.
- ----------------------------------------------------------------------------------------------------------------
PROCEEDS PAYABLE TO THE HOW TO CLAIM DEATH BENEFIT PROCEEDS
BENEFICIARY The beneficiary should contact our Service Center for instructions. We will
(CONTINUED) usually pay the proceeds within seven (7) days after we receive satisfactory
proof of the insured's death and any other requirements. We may delay payment
of all or part of the death benefit if we have not been able to determine this
policy's cash value as of the date of death because:
- The NYSE is closed for trading except for normal holiday closing; or
- The SEC determines that a state of emergency exists.
If a delay is necessary and death of the insured occurs prior to the end of
the guarantee period, we may delay payment of any excess of the death benefit
over the face amount. After the guarantee period has expired, we may delay
payment of the entire death benefit.
We will add interest to the death benefit proceeds at an annual rate of at
least the minimum required by state law from the date of death to the date of
payment.
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
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VUS92 SPECIMEN
<PAGE> 22
<TABLE>
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
CHOOSING AN INCOME PLAN
You may choose one or more income plans under the policy for the payment of
death benefit proceeds. If, at the time of the death of the insured no plan
has been chosen for paying death benefit proceeds, the beneficiary may choose
a plan within one year. The owner may also effect an income plan under the
policy on surrender of the policy.
Our approval s needed for any plan where:
- The person named to receive payment is other than the owner or
beneficiary;
- The person named is not a natural person, such as a corporation; or
- Any income payment would be less than $100.
- ----------------------------------------------------------------------------------------------------------------
THE INCOME PLANS There are six (6) income plans to choose from. They are:
PLAN 1. INCOME FOR A FIXED PERIOD
Payment is made in equal installments for a fixed number of years. We
guarantee each monthly payment will be at least the amount shown in the
following table. Values for annual, semi-annual or quarterly payments are
available on request.
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Table for Income for a Fixed Period
(Payments for Each $1,000 Applied)
---------------------------------------------------------------------------
Fixed
Period of Monthly Fixed Period Monthly
Years Income of Years Income
--------- ------- ------------ --------
<S> <C> <C> <C>
1 $84.47 16 $6.53
2 42.86 17 6.23
3 28.99 18 5.96
4 22.06 19 5.73
5 17.91 20 5.51
6 15.41 21 5.32
7 13.16 22 5.15
8 11.68 23 4.99
9 10.53 24 4.84
10 9.61 25 4.71
11 8.86 26 4.59
12 8.24 27 4.47
13 7.71 28 4.37
14 7.26 29 4.27
15 6.87 30 4.18
---------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
PLAN 2. INCOME FOR LIFE
Payment is made to the person named in equal monthly installments and
guaranteed for at least a period certain. The period certain can be 10 or 20
years. Other periods certain are available on request. A refund certain may
be chosen instead. Under this arrangement, income is guaranteed until
payments equal the amount applied. If the person named lives beyond the
guaranteed payments, payments continue until his or her death.
We guarantee each payment will be at least the amount shown in the following
table. By age we mean the named person's age on his or her birthday nearest
the plan's effective date. Amounts for ages not shown are available on
request.
- ----------------------------------------------------------------------------------------------------------------
THE INCOME PLANS Tables for Income for Life
(CONTINUED) (Monthly Payments for Each $1,000 Applied)
-------------------------------------------------------------------------------
</TABLE>
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VUS92 SPECIMEN
<PAGE> 23
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
Payments to a Male
Age 10 Years 20 Years Certain Refund Certain
----------- -------- ---------------- --------------
Certain
---------
<S> <C> <C> <C>
0-10 $3.24 $3.23 $3.22
15 3.32 3.31 3.30
20 3.41 3.40 3.39
25 3.52 3.51 3.50
30 3.66 3.64 3.63
35 3.84 3.81 3.79
40 4.07 4.00 3.99
45 4.36 4.23 4.24
50 4.71 4.50 4.54
55 5.14 4.79 4.92
60 5.68 5.10 5.39
65 6.35 5.38 6.01
70 7.17 5.60 6.83
75 8.07 5.72 7.94
80 8.93 5.75 9.48
85 & over 9.54 5.75 ----
-------------------------------------------------------------------------------
</TABLE>
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VUS92 SPECIMEN
<PAGE> 24
<TABLE>
<CAPTION> ---------------------------------------------------------------------------
Payments to a Female
Age 10 Years 20 Years Certain Refund Certain
-------- -------- ---------------- --------------
Certain
----------
<S> <C> <C> <C>
0-10 $3.17 $3.16 $3.15
15 3.23 3.22 3.21
20 3.30 3.29 3.28
25 3.39 3.38 3.37
30 3.50 3.49 3.48
35 3.64 3.62 3.61
40 3.81 3.78 3.77
45 4.04 3.99 3.98
50 4.33 4.23 4.24
55 4.70 4.53 4.57
60 5.17 4.87 4.99
65 5.80 5.22 5.55
70 6.63 5.51 6.32
75 7.64 5.68 7.39
80 8.64 5.74 8.85
85 & over 9.33 5.75 ----
---------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
PLAN 3. INTEREST PAYMENT
Amounts can be left with us to earn interest at an annual rate of at least
3%. Interest payments can be made annually, semi-annually, quarterly or monthly.
PLAN 4. INCOME OF A FIXED AMOUNT
Payments of an agreed fixed amount are made annually, semi-annually, quarterly
or monthly. The fixed amount per year must be at least $60 for each $1,000 of
the amount applied. The amount applied will earn interest at an annually rate
of at least 3%. Payments will continue until the amount applied and interest
are fully paid.
- ------------------------------------------------------------------------------------------------------------------
THE INCOME PLANS PLAN 5. JOINT LIFE INCOME
(CONTINUED) This plan is available if there are two persons named to receive payments. At
least one of the persons named must be either the owner or beneficiary of this
policy. Monthly payments are made as long as at least one of the named persons
is living. We guarantee the payments will be at the amount shown in the
following table while both named persons are alive. When one dies, we
guarantee to continue paying the other at least two-thirds of the amount
shown. by age we mean the named person's age on his or her birth day nearest
the plan's effective date. Amounts for two males, two females or for ages not
shown in the table below are available on request.
</TABLE>
<TABLE>
<CAPTION>
Table of Joint Life Income
(Monthly Payments for Each $1,000 Applied)
Female Age
55 60 65 70 75
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
50 $4.55 $4.76 $4.99 $5.26 $5.56
55 4.75 4.99 5.27 5.59 5.95
60 4.95 5.25 5.59 5.98 6.42
Male Age 65 5.18 5.53 5.94 6.43 6.99
70 5.43 5.84 6.33 6.94 7.66
75 5.69 6.16 6.73 7.49 8.41
</TABLE>
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VUS92 SPECIMEN
<PAGE> 25
<TABLE>
<S> <C>
PLAN 6. ANNUITY PLAN
An amount can be used to buy any single premium annuity we offer on the plan's
effective date. Annuities combine features of guaranteed income and payment
similar to plans 2 and 5.
- ---------------------------------------------------------------------------------------------------------------
PAYMENTS WHEN NAMED PERSON When the person named to receive payments dies, we will pay an amounts still
DIES due. The amounts still due are determined as follows:
- For plans 1, 2 or 4, any remaining guaranteed payments will be
continued. Under plan 4, any unpaid proceeds with any accrued
interest may be paid in a single sum. Under plans 1 and 2, the
discounted values of the remaining guaranteed payments may be paid in
a single sum. This means we deduct the amount of the interest each
remaining guaranteed payment would have earned had it not been paid
out early. The discount interest rate is 3% for plan 1 and 3.50% for
plan 2. But we will use the interest rate we used to calculate the
payment for plans 1 and 2, if they were not based on the table in this
policy.
- For plan 3, we'll pay the amount left with us and any accrued
interest.
- For plan 5, no amounts are payable after both named persons have died.
- For plan 6, the annuity agreement will state the amount due, if any.
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
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VUS92 SPECIMEN
<PAGE> 26
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
OTHER IMPORTANT INFORMATION
- ---------------------------------------------------------------------------------------------------------------
<S> <C>
LIMITS ON OUR CONTESTING We rely on the statements made in the applications. Legally, they are
THIS POLICY considered representations, not warranties. We can contest the validity of
this policy if any material misstatements are made in any applications. A copy
of any application will be attached to this policy.
We will not contest the validity of this policy after this policy has been in
effect during the insured's lifetime for two years from the date of issue. We
will not contest any policy change that requires evidence of insurability, or
any reinstatement of this policy, after the change or reinstatement has been
in effect for two years during the lifetime of the insureds.
- ---------------------------------------------------------------------------------------------------------------
QUARTERLY REPORT We will send you a report four (4) times a policy year within 31 days after
the end of each policy quarter. The report will show the death benefit, cash
value, any change in the additional insurance rider face amount and policy
debt as of the end of the policy quarter. The report will also show the
allocation of the total investment base as of such date and the amounts
deducted from or added to the total investment base since the last quarterly
report. The report will also include any other information that may be
currently required by the insurance supervisory official of the jurisdiction
in which this policy is delivered.
- ---------------------------------------------------------------------------------------------------------------
CHANGING THIS POLICY This policy with any benefit riders may be changed to another plan of
insurance according to our rules at the time of the change.
- ---------------------------------------------------------------------------------------------------------------
POLICY CHANGES - For you to receive the tax treatment accorded to life insurance under federal
APPLICABLE TAX LAW law, this policy must qualify initially and continue to qualify as life
insurance under the Internal Revenue Code of 1986, as amended, or successor
law. Therefore, to maintain this qualification to the maximum extent
permitted by law, we reserve in this policy the right to return any premium
payments that would cause this policy to fail to qualify as life insurance
under applicable tax law as interpreted by us. Further, we reserve the right
to make changes in this policy or its riders or to make distributions from
this policy to the extent we deem it necessary to continue to qualify this
policy as life insurance. Any such changes will apply uniformly to all
policies that are affected. You will be given advance written notice of such
changes.
- ---------------------------------------------------------------------------------------------------------------
ERROR IN AGE OR SEX If the age or sex for the insured as stated in the application is wrong, it
could mean the face amount or any other policy benefit is wrong. Therefore,
amounts payable under this policy or its riders will be what the premiums paid
would have bought for the guarantee period at the true age or sex.
- ---------------------------------------------------------------------------------------------------------------
SUICIDE If the insured commits suicide within two years from the date of issue or
reinstatement, we will pay only a limited benefit and then terminate this
policy. The limited benefit will be the amount of the premiums paid less any
policy debt.
- ---------------------------------------------------------------------------------------------------------------
CLAIMS OF CREDITORS The proceeds of this policy will be free from creditors' claims to the extent
allowed by law.
- ---------------------------------------------------------------------------------------------------------------
NON-PARTICIPATING This policy does not participate in the divisible surplus of ML Life Insurance
Company of New York ("ML of New York").
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
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VUS92 SPECIMEN
<PAGE> 27
<TABLE>
- ---------------------------------------------------------------------------------------------------------------
<S> <C>
AUTHORITY TO MAKE All agreements made by us must be signed by our president or a vice president
AGREEMENTS and by our secretary or an assistant secretary. No other person, including an
insurance agent or broker, can:
- Change any of this policy's terms;
- Extend the time for paying premiums; or
- Make any agreement binding on us.
- ---------------------------------------------------------------------------------------------------------------
CHANGES IN POLICY COST Changes in policy cost factors (expense charges, current cost of insurance
FACTORS rates, loan charges) will be by class and based upon changes in future
expectations for such elements as: mortality, persistency, expenses and taxes.
The policy cost factors are determined prospectively. We will not recoup
prior losses by means of policy cost factor changes. Any change in policy
cost factors will be determined in accordance with procedures and standards on
file, if required, with the insurance supervisory official of the jurisdiction
in which this policy is delivered.
- ---------------------------------------------------------------------------------------------------------------
MATURITY DATE OF On the maturity date of this policy we will pay the owner the cash value less
THIS POLICY any policy debt if the insured is then living and this policy is in effect.
The cash value may be paid in cash or under one or more income plans. See
CHOOSING AN INCOME PLAN.
- ---------------------------------------------------------------------------------------------------------------
REQUIRED NOTE ON OUR Our computations of reserves and fixed base are based on the Commissioners
COMPUTATIONS 1980 Standard Ordinary Mortality Tables and interest at the rate of 5% per
year. When making our computations, we assume that death claims are paid
immediately. Mortality and expense risks of ML of New York shall not
adversely affect the dollar amount of insurance benefits or cash values.
We have filed a detailed statement of our computations with the insurance
supervisor of the state or jurisdiction where this policy is delivered. All
policy values equal or exceed those required by the law of that state or
jurisdiction. Any benefit provided by an attached rider will not increase
these values unless stated in that rider.
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
- 27 -
VUS92 SPECIMEN
<PAGE> 28
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
APPENDIX 1
- ---------------------------------------------------------------------------------------------------------------
TABLE OF GUARANTEED MAXIMUM COST OF INSURANCE RATES
(Quarterly Rates per $1,000 of New Amount at Risk)
- ---------------------------------------------------------------------------------------------------------------
Policy Policy Policy
Year Factor Year Factor Year Factor
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 $0.42295 26 $3.18520 51 $41.22151
2 0.44299 27 3.51568 52 45.42455
3 0.47955 28 3.89259 53 49.83813
4 0.50063 29 4.32384 54 54.38230
5 0.53572 30 4.81234 55 59.12649
6 0.57332 31 5.35339 56 64.14988
7 0.61846 32 5.93709 57 69.55698
8 0.66360 33 6.57156 58 75.55722
9 0.71628 34 7.25469 59 82.46033
10 0.76898 35 8.00258 60 91.57321
11 0.83173 36 8.84989 61 105.28638
12 0.89952 37 9.97119 62 129.02044
13 0.97236 38 10.93238 63 177.71697
14 1.05025 39 12.22466 64 307.63677
15 1.13823 40 13.68573 65 333.33333
16 1.23128 41 15.26525
17 1.34199 42 16.94414
18 1.47039 43 18.75768
19 1.61399 44 20.64011
20 1.78040 45 22.65747
21 1.96461 46 24.89273
22 2.16921 47 27.41004
23 2.39667 48 30.29207
24 2.62210 49 33.58917
25 2.88823 50 37.25464
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
APPENDIX 2
- ---------------------------------------------------------------------------------------------------------------
CASH VALUE CORRIDOR FACTORS
- ---------------------------------------------------------------------------------------------------------------
Age of Percentage of Cash Age of Percentage of Cash
Insured Value Insured Value
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
40 and under 250% 61 128%
41 243% 62 126%
42 236% 63 124%
43 229% 64 122%
44 222% 65 120%
45 215% 66 119%
46 209% 67 118%
47 203% 68 117%
48 197% 69 116%
49 191% 70 115%
50 185% 71 113%
51 178% 72 111%
52 171% 73 109%
53 164% 74 107%
54 157% 75 - 90 105%
55 150% 91 104%
56 146% 92 103%
57 142% 93 102%
58 138% 94 101%
59 134% 95 and over 100%
60 130%
- ---------------------------------------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE Variable universal life insurance payable upon death of the insured. Death
UNIVERSAL LIFE INSURANCE benefit subject to guaranteed minimum during guarantee period. Guaranteed
POLICY minimum is policy's face amount. Flexible premiums. Non-participating.
Investment results reflected in policy benefits.
---------------------------------------------------------------------------------
</TABLE>
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VUS92 SPECIMEN
<PAGE> 29
<TABLE>
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<S> <C>
[LOGO] Merrill Lynch Life Insurance Company LITTLE ROCK,
MERRILL LYNCH ARKANSAS
-----------------------------------------------------------------------------------
ADDITIONAL INSURANCE RIDER
- ---------------------------------------------------------------------------------------------------------------
RIDER SCHEDULE Insured No. 1: Richard Roe
Owner: Richard Roe
Issue Date: September 30, 1992
Policy Number: SPECIMEN
Rider Face Amount: $500,000.00
- ---------------------------------------------------------------------------------------------------------------
INSURANCE BENEFITS This rider provides additional insurance coverage to the insured. It is
payable to the beneficiary at the death of the insured. The rider face amount
provided by this rider is shown on the above rider schedule.
- ---------------------------------------------------------------------------------------------------------------
CHANGING THE RIDER FACE The owner may elect to change the rider face amount prior to the insured's
AMOUNT attained age 85. The minimum change in the rider face amount is $100,000.
Once (1) such change is permitted each year. The minimum additional insurance
rider face amount is $100,000. To request a change in rider face amount, you
must provide satisfactory notice to us. The effective date of change will be
the policy anniversary date next following underwriting approval of the
change. As of the effective date of change, the guarantee period will change.
See HOW WE DETERMINE THE GUARANTEE PERIOD.
- ---------------------------------------------------------------------------------------------------------------
INCREASING THE RIDER FACE The owner may elect to change the rider face amount prior to the insured's
AMOUNT attained age 85. The minimum change in the rider face amount is $100,000.
One (1) such change is permitted each year. The minimum additional insurance
rider face amount is $100,000. To request a change in rider face amount, you
must provide satisfactory notice to us. The effective date of change will be
the policy anniversary date next following underwriting approve of the change.
As of the effective date of change, the guarantee period will change. See How
We Determine The Guarantee Period.
- ---------------------------------------------------------------------------------------------------------------
INCREASING THE RIDER FACE If the insured is alive, you may increase the rider face amount. Satisfactory
AMOUNT evidence of insurability will be required before we will increase the rider
face amount. We will not allow an increase on the first policy anniversary if
the face amount of the policy plus the new rider face amount provide a
guarantee period of less than one year from the effective date of the
increase. An increase in face amount will decrease the guarantee period.
- ---------------------------------------------------------------------------------------------------------------
DECREASING THE RIDER FACE Beginning in policy year 8, you may decrease the rider face amount but not
AMOUNT below the amount required to keep the policy qualified as life insurance under
federal income tax laws. A decrease in the face amount will increase the
guarantee period.
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VUS92 SPECIMEN
<PAGE> 30
<TABLE>
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HOW WE DETERMINE THE When A Change In Rider Face Amount Is Requested
GUARANTEE PERIOD As of the effective date of change, we will redetermined he guarantee period
as follows:
(1) We take the fixed base described in the policy as of such date.
(2) Based on the policy year, the face amount of the policy, plus the
rider face amount, and the amount in (1), we will redetermine the
guarantee period.
Our computations are based on an annual interest rate of 5% and the guaranteed
maximum cost of insurance rates shown in Appendix 1.
- ---------------------------------------------------------------------------------------------------------------
COST OF RIDER The cost of the rider is determined by dividing the rider face amount by $1000
and multiplying the result by the current cost of insurance rate per $1000
based on the policy year and sex and underwriting class of the insured. The
cost of the rider is deducted from the investment base as described in the
policy. See INVESTMENT BASE IN EACH INVESTMENT DIVISION IN THE POLICY.
- ---------------------------------------------------------------------------------------------------------------
INCONTESTABILITY AND The incontestability and suicide provisions of the policy also apply to this
SUICIDE rider. We can contest the validity of any change in the rider face amount
requested by the owner if any material misstatements are made in any
application required for that change. We will not contest any change in the
rider face amount requested by the owner after the change has been in effect
during the insured's lifetime for two years from the effective date of such
change. If the insured commits suicide within two years of the effective date
of any increase in the rider face amount requested by the owner, we will
terminate the coverage attributable to such increase in rider face amount and
pay only a limited benefit. The limited benefit will be the amount of cost of
insurance deductions made for such increase.
- ---------------------------------------------------------------------------------------------------------------
WHEN THIS RIDER WILL This rider will terminate on the date the policy terminates or lapses.
TERMINATE
- ---------------------------------------------------------------------------------------------------------------
GENERAL This rider is a part of the policy. It has no cash or loan value. Its
benefit is subject to all the terms of this rider and the policy.
ML LIFE INSURANCE COMPANY OF NEW YORK
/s/ BARRY G. SKOLNICK /s/ ALLEN JONES
------------------------------- ---------------------
Barry G. Skolnick Allen Jones
Secretary President
===============================================================================================================
</TABLE>
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VUS92 SPECIMEN
<PAGE> 1
EXHIBIT 1.A.(5)(b)(1)
------------------------------------------------
ML LIFE INSURANCE COMPANY OF NEW YORK,
NEW YORK NEW YORK
------------------------------------------------
BACKDATING ENDORSEMENT
- -------------------------------------------------------------------------------
ENDORSEMENT DATE Insured: RICHARD ROE
Policy Number: SPECIMEN
Policy Date: September 30, 1992
Endorsement Effective Date: September 30, 1992
- -------------------------------------------------------------------------------
Endorsement on This Policy on its Date of Issue:
For the policy processing period beginning on
the policy date we will calculate the net rate
of return for an investment division as follows:
(1) For the period from the policy date to
the Endorsement Effective Date we will
credit interest at the rate used in our
computations shown in the Policy
Schedule.
(2) For the period from the Endorsement
Date to the next policy processing date,
we will credit the division's net rate of
return for such period.
/S/ BARRY G. SKOLNICK /S/ ALLEN JONES
------------------------- ------------------
Barry G. Skolnick Allen Jones
Secretary President
MBDR87 BDR92
<PAGE> 1
EXHIBIT 1.A.(5)(b)(2)(a)
<TABLE>
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<S> <C>
ML LIFE INSURANCE COMPANY OF NEW YORK NEW YORK,
NEW YORK
-------------------------------------------------------------------------------
ADDITIONAL INSURANCE RIDER
- ------------------------------------------------------------------------------------------------------------
RIDER SCHEDULE Insured No. 1: Richard Roe
Insured No. 2: Jane Roe
Owner: Jane Roe
Issue Date: September 30, 1992
Policy Number: SPECIMEN
Rider Face Amount: $500,000.00
- ------------------------------------------------------------------------------------------------------------
INSURANCE BENEFITS The rider provides additional insurance converge to the insureds. It is
payable to the beneficiary at the death of the last surviving insured. The
rider face amount provided by this rider is shown on the above rider
schedule.
- ------------------------------------------------------------------------------------------------------------
CHANGING THE RIDER The owner may elect to change the rider face amount prior to either
FACE AMOUNT insured's attained age 85. The minimum change in the rider face amount is
$100,000. One (1) such change is permitted each year. The minimum
additional insurance rider face amount is $100,000. To request a change in
rider face amount, you must provide satisfactory notice to us. The
effective date of change will be the policy anniversary date next following
underwriting approval of the change. As of the effective date of change,
the guarantee period will change. See HOW WE DETERMINE THE GUARANTEE
PERIOD.
- ------------------------------------------------------------------------------------------------------------
INCREASING THE RIDER If both insureds are alive, you may increase the rider face amount.
FACE AMOUNT Satisfactory evidence of insurability will be required before we will
increase the rider face amount. We will not allow an increase on the first
policy anniversary if the face amount of the policy plus the new rider face
amount provide a guarantee period of less than one year from the effective
date of the increase. An increase in face amount will decrease the
guarantee period.
- ------------------------------------------------------------------------------------------------------------
</TABLE>
- 1 -
AIVUL92NY SPECIMEN
<PAGE> 2
<TABLE>
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<S> <C>
DECREASING THE RIDER Beginning in policy year 8, you may decrease the rider face amount but not
FACE AMOUNT below the amount required to keep the policy qualified as life insurance
under federal income tax laws. A decrease in face amount will increase the
guarantee period.
- ------------------------------------------------------------------------------------------------------------
HOW WE DETERMINE THE WHEN A CHANGE IN RIDER FACE AMOUNT IS REQUESTED
GUARANTEE PERIOD As of the effective date of change, we will redetermine the guarantee
period as follows:
(1) We take the fixed base described in the policy as of such date.
(2) Based on the policy year, the face amount of the policy, plus
the rider face amount, and the amount in (1), we will
redetermine the guarantee period.
Our computations are based on an annual interest rate of 5% and the
guaranteed maximum cost of insurance rates shown in Appendix 1.
- ------------------------------------------------------------------------------------------------------------
COST OF RIDER The cost of the rider is determined by dividing the rider face amount by
$1000 and multiplying the result by the current cost of insurance rate per
$1000 based on the policy year and sex and underwriting class of both
insureds. The cost of the rider is deducted from the investment base as
described in the policy. See INVESTMENT BASE IN EACH INVESTMENT DIVISION in
the policy.
- ------------------------------------------------------------------------------------------------------------
INCONTESTABILITY AND The incontestability and suicide provisions of the policy also apply to
SUICIDE this rider. We can contest the validity of any change in the rider face
amount requested by owner if any material misstatements are made in any
application required for that change. We will not contest any change in
the rider face amount requested by the owner after the change has been in
effect during either insured's lifetime for two years from the effective
date of such change. If either insured commits suicide within two years of
the effective date of any increase in the rider face amount requested by
the owner, we will terminate the coverage attributable to such increase in
rider face amount and pay only a limited benefit. The limited benefit will
be the amount of cost of insurance deductions made for such increase.
- ------------------------------------------------------------------------------------------------------------
WHEN THIS RIDER WILL This rider will terminate on the date the policy terminates or lapses.
TERMINATE
- ------------------------------------------------------------------------------------------------------------
</TABLE>
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AIVUL92NY SPECIMEN
<PAGE> 3
<TABLE>
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GENERAL The rider is a part of the policy. It has no cash or loan value. Its
benefit is subject to all the terms of this rider and the policy.
ML LIFE INSURANCE COMPANY OF NEW YORK
/S/ BARRY G. SKOLNICK /S/ ALLEN JONES
------------------------- -------------------
Barry G. Skolnick Allen Jones
Secretary President
</TABLE>
- 3 -
AIVUL92NY SPECIMEN
<PAGE> 1
EXHIBIT 1.A.(6)(a)
CERTIFICATE OF AMENDMENT
OF THE CHARTER OF
ROYAL TANDEM LIFE INSURANCE COMPANY
Under Section 1206 of the
Insurance Law and
Section 305 of the
Business Corporation
Law of the State of New York
We, the undersigned, Thomas H. Patrick, President of
Royal Tandem Life Insurance Company, and Barry G. Skolnick,
Secretary of Royal Tandem Life Insurance Company, hereby certify:
1. The name of the corporation is Royal Tandem Life
Insurance Company (the "Corporation"). The name under which the Corporation was
formed is Agway Life Insurance Company.
2. The Corporation's Declaration of Intention and
Charter was filed in the office of the Superintendent of Insurance of the State
of New York (the "Superintendent's Office") on November 28, 1973. The
Corporation's Certificate of
SPECIMEN - 1 -
<PAGE> 2
Amendment and Restatement of Charter was filed in the Superintendent's Office
on September 3, 1986.
3. The Charter of the Corporation ia hereby amended
to change the name of the Corporation to "ML Life Insurance
Company of New York."
4. The text or Article I of the Corporation is
Charter, which states the name or the Corporation, is hereby amended to read as
herein set forth in full:
ARTICLE I
NAME
The name of the corporation shall be
ML Life Insurance-Company of New York.
5. The aforesaid Amendment to the Charter of the
Corporation and the filing of this Certificate of Amendment was duly authorized
and approved by a Vote of the majority of all the outstanding shares of the
Corporation entitled to vote thereon.
SPECIMEN - 2 -
<PAGE> 3
IN WITNESS WHEREOF, the undersigned have duly executed
and signed thin Certificate of Amendment on this 14th day of AUGUST, 1991.
/S/ THOMAS H. PATRICK
----------------------------
Thomas M. Patrick, President
/S/ BARRY G. SKOLNICK
----------------------------
Barry G. Skolnick, Secretary
SPECIMEN - 3 -
<PAGE> 4
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On this 14th day of AUGUST, 1991, before me came Thomas B.
Patrick and Barry G. Skolnick, to me known to be the individuals described in
and who executed the foregoing instrument in my presence, and they acknowledged
that they executed the same.
/S/ JOHN C. CIRINCION
---------------------------------
John C. Cirincion
Notary Public
[Stamp]
JOHN C. CIRINCION
NOTARY PUBLIC, STATE OF NEW YORK
NO. 31-4736108
QUALIFIED IN NEW YORK COUNTY
COMMISSION EXPIRES OCTOBER 31, 1991
SPECIMEN - 4 -
<PAGE> 5
CERTIFICATE OF AMENDMENT AND
RESTATEMENT OF CHARTER OF
AGWAY LIFE INSURANCE COMPANY
Under Section 1206 of the
Insurance Law and
Section 807 of the
Business Corporation
Law of the State of New York.
We, the undersigned, Richard Campanaro, President of
Agway Life Insurance Company, and Kevin Keefe, Assistant Secretary of Agway
Life Insurance Company, hereby certify:
1. The name of the corporation is Agway Life
Insurance Company (the "Corporation"). Agway Life Insurance Company is the name
under which the corporation was formed.
2. The Corporation's Declaration of Intention and
Charter was filed in the office of the Superintendent of Insurance of the State
of New York on November 28, 1973.
3. The Charter of the Corporation is hereby amended:
(i) to change the name of the Corporation to Royal Tandem Life
SPECIMEN - 5 -
<PAGE> 6
Insurance Company; (ii) to change its location and principal office and place
of business to the City, County and State of New York; (iii) to restate its
corporate powers in accordance with current law and to include other rights,
powers and privileges authorized or granted by law; (iv) to increase the
maximum number of directors from 30 to 36 and to revise the qualifications of
Board of Directors members; (v) to delete the provision for annual meetings of
stockholders, which will be governed by the by-laws; and (vi) to otherwise
revise provisions of the original charter in minor respects, in accordance with
the foregoing. The test of the Corporation's Charter is hereby amended and
restated to read as herein set forth in full:
ARTICLE I
NAME
The name of the corporation shall be
Royal Tandem Life Insurance Company.
ARTICLE II
PLACE OF PRINCIPAL OFFICE
The principal office of the corporation shall be
located in the City, County and State of New York.
ARTICLE III
SPECIMEN - 6 -
<PAGE> 7
PURPOSES
The business to be transacted by the corporation
shall be: the following kinds of insurance business
specified in Paragraphs 1, 2 and 3 of Subsection (a) of
Section 1113 of the Insurance Law of the State of New
York, and any amendments to such paragraphs or
provisions in substitution therefor which may be
hereafter adopted:
1. "Life insurance," meaning every insurance upon
the lives of human beings and every insurance
appertaining thereto, including the granting of
endowment benefits, additional benefits in the event of
death by accident, additional benefits safeguarding the
contract from lapse, or providing a special surrender
value, upon total and permanent disability of the
insured, and optional modes of settlement of proceeds.
Amounts paid the corporation for life insurance and
proceeds-applied under optional modes of settlement or
under dividend options may be allocated by the
corporation to one OF more separate accounts pursuant
to Section 4240 of the Insurance Law of the State of
New York.
2. "Annuities," meaning all agreements to make
periodical payments for a period certain or where the
making or continuance of all or some of a series of
such payments, or the amount of any such payment,
depends upon the continuance of human life, except
payments made under the authority of paragraph one.
Amounts paid to the corporation to provide annuities
and proceeds applied under optional modes of settlement
or under dividend options may be allocated by the
corporation to one or more separate accounts pursuant
to Section 4240 of the Insurance Law of the State of
New York.
SPECIMEN - 7 -
<PAGE> 8
3. "Accident and health insurance," meaning (a)
insurance against death or personal injury by accident
or by any specified kind or kinds of accident and
insurance against sickness, ailment or bodily injury,
including insurance providing disability benefits
pursuant to Article Nine of the Workers' Compensation
Law of the State of New York, except as specified in
subparagraph (b) following; and (b) non-cancellable
disability insurance, meaning insurance against
disability resulting from sickness, ailment or bodily
injury, (but excluding insurance solely against
accidental injury) under any contract which does not
give the corporation the option to cancel or otherwise
terminate the contract at or after one year from its
effective date or renewal date; together with such
other kind or kinds of business to the extent
necessarily or properly incidental to the kind or kinds
of insurance business which the corporation is
authorized to do.
The corporation shall also have all other rights,
powers and privileges now or hereafter authorized or
granted by the Insurance Law of the State of New York
or any other law or laws of the State of New York to
stock life insurance companies having power to do the
kind or kinds of business hereinabove referred to and
any and all other rights, powers and privileges of a
corporation now or hereafter granted by the laws of the
State of New York and not prohibited to such stock life
insurance companies.
ARTICLE IV
EXERCISE OF CORPORATE POWERS
SPECIMEN - 8 -
<PAGE> 9
The corporate powers of the corporation shall be
exercised by a Board of Directors, by committees
thereof, and by such officers, employees and agents as
may be empowered to do so by, or pursuant to the
authorization of, the Board of Directors or any such
committee.
ARTICLE V
BOARD OF DIRECTORS
The Board of Directors shall consist of not less
than 13 (except for vacancies temporarily unfilled) nor
more than 36 Directors, as may be determined from time
to time by a vote of the Stockholders or of a majority
of the entire Board.
The Board of Directors shall have power to adopt
by-laws, not inconsistent with this Charter and the
laws of the State of New York, and to amend or repeal
such by-laws, by vote of a majority of the entire
Board.
Any Director may be removed by action of the Board
of Directors for cause or by vote of the Stockholders
with or without cause.
ARTICLE VI
ELECTION OF DIRECTORS AND OFFICERS
The Directors shall be elected annually by the
Stockholders in the manner provided for in the by-laws.
Every Stockholder of record shall be entitled to one
vote in person or by proxy for each share of capital
stock standing in his name on the record of
Stockholders.
Newly created directorships resulting from an
increase in the number of Directors
SPECIMEN - 9 -
<PAGE> 10
and vacancies occurring in the Board of Directors for
any reason except the removal of Directors without
cause may be filled by vote of the Stockholders or of a
majority of the Directors then in office, although less
than a quorum exists. Vacancies occurring in the Board
by reason of the removal of Directors without cause may
be filled by vote of the Stockholders or action of the
Board.
Each Director shall be at least twenty-one years
of age, and at all times a majority of the Directors
shall be citizens and residents of the United States,
and not less than three of the Directors shall be
residents of the State of New York.
The officers shall be elected annually by the Board
of Directors or appointed in the manner provided for in
the by-laws. Officers may also be elected or appointed
and a vacancy in any office may be filled by the Board
of Directors at any meeting.
ARTICLE VII
DURATION OF EXISTENCE
The duration of existence of the corporation shall
be perpetual.
ARTICLE VIII
CAPITAL STOCK
The authorized capital of the corporation shall
be Two Million Two Hundred Thousand Dollars
($2,200,000), consisting of Two Hundred Twenty Thousand
(220,000) shares of capital stock having par value of
Ten Dollars ($10) per share.
SPECIMEN - 10 -
<PAGE> 11
The holders of the capital stock shall be entitled
to receive dividends in such amounts and at such times
as is declared by the Board of Directors out of surplus
applicable thereto under and pursuant to the laws of
the State of New York.
4. The aforesaid Restated and Amended Charter of the corporation was
duly authorized and approved by a consent in writing by the holder of all of
the outstanding shares of the corporation.
IN WITNESS WHEREOF, the undersigned have executed and signed this
Certificate this 22nd day of August, 1986.
/S/ RICHARD W. CAMPANARO
----------------------------------
Richard W. Campanaro
President
/S/ KEVIN KAYE [SEAL]
----------------------------------
Kevin Kaye
Assistant Secretary
SPECIMEN - 11 -
<PAGE> 12
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
On this 22nd day of August nineteen hundred eighty six, before me
came Richard Campanaro and Kevin Keefe, to me known to be the individuals
described in and who executed the foregoing instrument, and acknowledged that
they executed the same.
/S/ JOAN B. MIASTKOWSKI
--------------------------------
Joan B. Miastkowski
Notary Public
[Stamp]
JOAN B. MIASTKOWSKI
NOTARY PUBLIC, STATE OF NEW YORK
NO. 41-2687190
CERTIFICATE FILED IN NEW YORK COUNTY
QUALIFIED IN QUEENS COUNTY
COMMISSION EXPIRES MARCH 30, 1987
SPECIMEN - 12 -
<PAGE> 1
EXHIBIT 1.A.(6)(b)
BY-LAWS
OF
ML LIFE INSURANCE COMPANY OF NEW YORK
ARTICLE I
MEETINGS OF STOCKHOLDERS
Section 1.1 ANNUAL MEETING. The annual meeting of the Stockholders for the
election of Directors and the transaction of other business shall be held at
10:00 a.m. New York City time on the second Thursday of April in each year or
on such other date or at such other hour as may be fixed by the Board of
Directors.
Section 1.2 SPECIAL MEETING. A special meeting of the Stockholders may be
called at any time by the Board of Directors, the Chairman of the Board or the
President, and shall be called by the Secretary upon the written request of the
holders of record of a majority of the outstanding shares entitled to vote at
the meeting specifying the date, hour and purpose or purposes of the meeting.
At such special meeting only such business may be transacted which is related
to the purpose or purposes set forth on the notice or waiver of notice of the
meeting.
<PAGE> 2
Section 1.3 PLACE OF MEETING. Meetings of the Stockholders shall be held at
the principal office of the Company in the City and State of New York, or at
such other place within or without the State of New York as may be fixed by the
Board of Directors.
Section 1.4 NOTICE. Written notice shall be given of each meeting of the
Stockholders stating the place, date and hour of the meeting and, unless it is
the annual meeting, indicating that it is being issued by or at the direction
of the person or persons calling the meeting. Notice of a special meeting shall
also state the purpose or purposes for which the meeting is called. A copy of
the notice of any meeting shall be given, personally or by mail not less than
ten (10) nor more than fifty (50) days before the date of the meeting, to each
Stockholder entitled to vote at the meeting. Notice of meeting need not be
given to any Stockholder who submits a signed waiver of notice, in person or by
proxy, whether before or after the meeting. The attendance of any Stockholder
at any meeting, in person or by proxy, without protesting prior to the
conclusion of the meeting the lack of notice of the meeting, shall constitute a
waiver of notice by him.
SPECIMEN - 2 -
<PAGE> 3
Section 1.5 PROXIES; VOTING. Each Stockholder of record shall be entitled
at every meeting of the Stockholders to one vote for each share of capital
stock standing in his name on the record of Stockholders. Every Stockholder
entitled to vote at a meeting or to express consent or dissent without a
meeting may authorize another person or persons to act for him by proxy. Every
proxy must be signed by the Stockholder or his attorney-in-fact. Directors
shall be elected by a plurality of the votes cast at a meeting of the
Stockholders by the holders of shares entitled to vote in the election.
Whenever any corporate action, other than tile election of Directors, is to be
taken by vote of the Stockholders, it shall, except as otherwise required by
law, be authorized by a majority of the votes cast at a meeting of the
Stockholders by the holders of shares entitled to vote thereon.
Section 1.6 QUORUM. The presence, in person or by proxy, of the holders of
a majority of the outstanding shares entitled to vote thereat shall constitute
a quorum at a meeting of the Stockholders for the transaction of any business.
Despite the absence of a quorum, the Stockholders present in person or by proxy
may adjourn the meeting to another tine or place. At any adjourned meeting at
SPECIMEN - 3 -
<PAGE> 4
which a quorum is present, any business may be transacted that might have been
transacted on the original date or the meeting.
Section 1.7 SELECTION OF INSPECTORS. In advance of any meeting of the
Stockholders, the Board of Directors may appoint one or more inspectors to act
at the meeting for any adjournment. If inspectors are not so appointed, the
person presiding at a meeting of the Stockholders may, and on the request of
any Stockholder entitled to vote thereat shall, appoint one or more inspectors.
In case any person appointed fails to appear or act, the vacancy may be filled
by appointment made by the Board in advance of the meeting or at the meeting by
the person presiding thereat. Each inspector, before entering upon the
discharge of his duties, shall take and sign an oath faithfully to execute the
duties of inspector at the meeting with strict impartiality and according to
the best of his ability.
Section 1.8 CONSENT OF STOCKHOLDERS WITHOUT A MEETING. Whenever Stockholders
are required or permitted to take any action by vote, such action may be taken
without a meeting on written consent, setting forth the action so taken, signed
by the holders of ali outstanding snares entitled to vote thereon.
SPECIMEN - 4 -
<PAGE> 5
ARTICLE II
BOARD OF DIRECTORS
Section 2.1 NUMBER OF DIRECTORS. The Board of Directors shall consist of not
less than thirteen (13) nor more than thirty six (36) directors as determined
from time to time by vote of the Stockholders or of a majority of the entire
Board. As used in these By-laws, "entire Board of Directors" or "entire Board"
means the total number of Directors which the Company would have if there were
no vacancies. Each Director shall meet the qualifications expressed in the
Charter.
Section 2.2 ELECTION AND TERMS OF DIRECTORS. At each meeting of the
Stockholders, Directors shall be elected to hold office until the next annual
meeting. Each Director shall hold office until the expiration of the term for
which he is elected and until his successor has been elected and qualified, or
until his death, resignation or removal.
Section 2.3 REGULAR MEETINGS. The Board of Directors shall meet
for the purpose of electing officers and the transaction of other business
immediately following the adjournment of the annual
SPECIMEN - 5 -
<PAGE> 6
meeting of the Stockholders at the place of such annual meeting. The time and
place of other regular meetings of the Board shall be fixed by the Board.
Section 2.4 SPECIAL MEETINGS. A special meeting of the Board of Directors
may be called at any time by the Chairman of the Board, the President or three
Directors to be held on such date and at such hour as is stated in the notice
or waiver of notice of the meeting.
Section 2.5 QUORUM. A majority of the entire Board of Directors shall
constitute a quorum for the transaction of business at any regular or special
meeting of the Board, except as otherwise described by these By-Laws. A
majority of the Directors present, whether or not a quorum is present, may
adjourn any meeting to another time or place.
Section 2.6 ACTION BY THE BOARD. Except as otherwise prescribed by law,
the Charter of the Company or these By-Laws, the vote of a majority of the
Directors present at the time of the vote, if a quorum is present at such time,
shall be the act of the Board of Directors.
SPECIMEN - 6 -
<PAGE> 7
Section 2.7 NOTICE OF MEETINGS. Notice of a regular meeting of the Board of
Directors need not be given. Notice in writing of each special meeting of the
Board of Directors shall be given to each Director at least two days in advance
thereof and shall state in general terms the purpose or purposes of the
meeting. Any such notice shall be deemed given to a Director when delivered to
him or sent by mail, telegram, cablegram, or radiogram addressed to him at his
address furnished to the Secretary. Notice of any adjournment of a meeting to
another time or place need not be given if such time and place are announced at
the meeting.
Section 2.8 RESIGNATIONS. Any Director may resign at any time by giving
written notice to the Chairman of the Board, the President or the Secretary.
Such resignation shall take effect on receipt of such notice or at any later
time specified therein.
Section 2.9 REMOVAL OF DIRECTORS. Any Director may be removed by action
of the Board of Directors for cause or by vote of the Stockholders with or
without cause.
Section 2.10 VACANCIES. Newly created directorships resulting from an
increase in the number of Directors and vacancies occurring
SPECIMEN - 7 -
<PAGE> 8
in the Board of Directors for any reason (except the removal of Directors
without cause) may be filled by vote of the Stockholders or of a majority of
the Directors then in office, although less than a quorum exists. Vacancies
occurring in the Board by reason of the removal of Directors without cause may
be filled by vote of the Stockholders or action of the Board.
Section 2.11 DIRECTORS' FEES. The Directors shall be paid such fees for
services as Directors as may have been authorized by the Board of Directors.
Section 2.12 Participation in Meetings; Action by Consent Without Meeting. Any
Director may participate in a meeting of the Board or any Committee thereof by
means of a conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other at the same
time, and such participation shall constitute presence in person at such
meeting. Any action required or permitted to be taken by of the Board or any
Committee thereof may be taken without a meeting if all members of the Board or
any committee, thereof as the case may be, consent in writing to the adoption
of a resolution authorizing
SPECIMEN - 8 -
<PAGE> 9
the action and such written consents and resolution are filed with the minutes
of the Board or such committee, as the case may be.
ARTICLE III
COMMITTEES
Section 3.1 GENERAL. The Board of Directors, by resolution adopted by a
majority of the entire Board, may designate from among its members, an
executive committee and other standing committees each consisting or at least
three Directors. The Board may designate by resolution adopted by a majority of
the entire Board one or more Directors as alternate members of any committee,
who may replace any absent member or members at any meeting of such committee.
Each committee shall serve at the pleasure of the Board.
Section 3.2 POWERS. Each committee shall have the authority of the Board of
Directors to the extent provided in the resolution designating such committee,
except that no committee shall have authority to submit to the Stockholders any
action for which Stockholder's approval is required by law, to fill vacancies
in the Board or in any committee, to fix the compensation of the Directors
SPECIMEN - 9 -
<PAGE> 10
for serving on the Board or any committee, to amend or repeal any of these
By-Laws or to adopt new By-Laws, or to amend or repeal any resolution of the
Board which by its terms shall not be so amendable or repealable.
Section 3.3 QUORUM AND MANNER OF ACTING. Except as otherwise prescribed by
the Board of Directors, a majority of the total membership which a committee
would have if there were no vacancies shall constitute a quorum for the
transaction of business and the vote of a majority of the members present at
the time of the vote, if a quorum is present at such time, shall be the act of
such committee. Except as provided in these By-Laws or otherwise prescribed by
the Board, each committee may elect a Chairman from among its members, fix the
time and date of its meeting and adopt other rules of procedure. Any action
taken by a committee shall be reported to the Board at its next meeting.
Section 3.4 RESIGNATION. Any member of a committee may resign at any time
by giving written notice to the Chairman of the Board, the President, or the
Secretary. Such resignation shall take effect on receipt of such notice or at
any later time specified therein.
SPECIMEN - 10-
<PAGE> 11
Section 3.5 REMOVAL OF MEMBERS. Any member of a committee may be removed by
action of the Board of Directors with or without cause.
Section 3.6 VACANCIES. Any vacancy occurring in any committee for any reason
may be filled by resolution adopted by a majority of the entire Board.
Section 3.7 SUBCOMMITTEES. Any committee may appoint one or more subcommittees
from its members. Any such subcommittee may be charged with the duty of
considering and reporting to the appointing committee on any matter within the
responsibility of the committee appointing such subcommittee.
ARTICLE IV
OFFICERS
Section 4.1 GENERAL. The officers of the Company shall be a Chairman of the
Board, a President, one or more Vice Presidents, a Controller, a Secretary, a
Treasurer, an Actuary and such other officers as the Board of Directors may
determine. Each officer shall hold office for the term for which he is elected
and until his successor has been elected and until his successor has been
SPECIMEN - 11 -
<PAGE> 12
elected and qualified or until his death, resignation or removal. Any two or
more offices may be held by the same person, except the offices of President
and Secretary. The Board may require any officer to give security for the
faithful performance of his duties.
Section 4.2 RESIGNATION. Any officer may resign at any time by giving
written notice to the Chairman of the Board, the President or Secretary. Such
resignation shall take effect on receipt of such notice or at any later time
specified therein.
Section 4.3 REMOVAL OF OFFICERS AND VACANCIES. Any officer elected by the
Board of Directors may be removed by the Board with or without cause. A vacancy
occurring in any office for any reason may be filled by action of the Board of
Directors.
Section 4.4 CHIEF EXECUTIVE OFFICER. The Chairman of the Board or the
President shall be chief executive officer of the company as the Board
of Directors from time to time shall determine, and the Board of Directors from
time to time may determine who shall act as chief executive officer in the
absence or inability to act of the then incumbent.
SPECIMEN - 12-
<PAGE> 13
Subject to the control of the Board and to the extent not
otherwise prescribed by these By-Laws, the chief executive officer shall be
responsible for the general management and direction of all the business and
affairs of the Company.
Section 4.5 CHAIRMAN OF THE BOARD. The Chairman of the Board shall be
elected from among the members of the Board of Directors. He shall preside at
all meetings of the Stockholders and of the Board at which he is present. He
shall also exercise such powers and perform such duties as may be delegated or
assigned to or required of him by these By-Laws or by or pursuant to
authorization of the Board.
Section 4.6 PRESIDENT. The President shall be elected from the members of
the Board of Directors. The President shall exercise such powers and perform
such duties as may be delegated or assigned to or required of him by these
By-Laws or by or pursuant to authorization of the Board or (if the President is
not the chief executive officer) by the chief executive officer.
In the absence of the Chairman of the Board, the President shall
preside at all meetings of the Stockholders and of the Board at which he is
present.
SPECIMEN - 13-
<PAGE> 14
Section 4.7 VICE PRESIDENT. Each Vice President, including any Executive or
Senior Vice President, shall exercise such powers and perform such duties as
may be delegated or assigned to or required of him by these By-Laws or by or
pursuant to authorization of the Board or the President.
Section 4.8 CONTROLLER. The Controller shall be responsible for keeping and
maintaining the books of account of the Company, subject to the control of the
Board of Directors and the President. The Controller shall exercise such powers
and perform such other duties as relate to the office of the Controller, and
also such powers and duties as may be delegated or assigned to or required of
him by these By-Laws or by or pursuant to authorization of the Board or the
President.
Section 4.9 SECRETARY. The Secretary shall issue notices and keep the
minutes of the meetings of the Stockholders and of the Board of Directors and
its committees and shall have custody of the Company's corporate seal and
records. The Secretary shall exercise such powers and perform such other duties
as relate to the office of the Secretary, and also such powers and duties as
may be delegated or assigned to or required of him by or pursuant to
SPECIMEN - 14 -
<PAGE> 15
authorization of the Board, the Chairman of the Board, or the President. The
Board may also elect or appoint one or more Assistant Secretaries to act in
place of the Secretary.
Section 4.10 TREASURER. The Treasurer shall be responsible for purchasing
and selling securities pursuant to authorization of the Board of Directors or
any committee thereof and the safekeeping of the Company's funds and
securities. The Treasurer shall exercise such powers and perform such other
duties as relate to the office of the Treasurer and also such power and duties
as may be delegated or assigned to or required of him by these By-Laws or by or
pursuant to the authorization of the Board or the President.
Section 4.11 ACTUARY. The Actuary shall be responsible for all actuarial
calculations and the preparation of all policy forms to be issued by the
Company, subject to the control of the Board of Directors and the President.
The Actuary shall exercise such powers and perform such other duties as relate
to the office of Actuary, and also such powers and duties as may be delegated
or assigned to or required of him by these By-Laws or by or pursuant to the
authorization of the Board or the President.
SPECIMEN - 15-
<PAGE> 16
Section 4.12 OTHER OFFICERS. Each other officer shall exercise such powers
and perform such duties as may be delegated or assigned to or required of him
or her by or pursuant to authorization of the Board or the President.
ARTICLE V
EXECUTION OF INSTRUMENTS
Section 5.1 EXECUTION OR INSTRUMENTS. Any one of the following, namely, the
Chairman of the Board, the President, any Vice President, or any officer,
employee or agent designated by or pursuant to authorization of the Board of
Directors or any committee thereof, shall have power to execute instruments on
behalf of the Company (other than checks, drafts and orders drawn on funds of
the Company deposited in its name in banks) and to affix the corporate seal. If
any such instrument is to be executed on behalf of the Company by more than one
person, any two or more of the foregoing or any one or more of the foregoing
with an Assistant Secretary or an Assistant Treasurer shall have power to
execute such instrument and affix the corporate seal.
The signature of any officer may be in facsimile on any such
instrument if it shall also bear the actual signature, or
SPECIMEN - 16 -
<PAGE> 17
personally inscribed initials, of an officer, employee or agent empowered by or
pursuant to the first sentence of this Section to execute such instrument,
provided that the Board of Directors or a committee thereof nay authorize the
issuance of insurance contracts and annuity contracts on behalf of the Company
bearing the facsimile signature of an officer without the actual signature or
personally inscribed initials of any person.
All checks, drafts and other orders drawn on funds of the
Company deposited in its name in banks shall be signed by one or more officers
or employees, but only pursuant to authorization of and in accordance with
rules prescribed by the Board, which rules may permit the use of facsimile
signatures.
Section 5.2 FACSIMILE SIGNATURES OF FORMER OFFICERS. If any officer whose
facsimile signature has been placed upon any instrument shall have ceased to be
such officer before such instrument is issued, it may be issued with the same
effect as if he had been such officer at the time of its issue.
Section 5.3 MEANING OF TERM INSTRUMENTS. As used in this Article V, the term
"instruments" includes, but is not limited to, contracts and agreements,
checks, drafts and other orders for the
SPECIMEN - 17 -
<PAGE> 18
payment of money, transfers of bonds, stocks, notes and other securities, and
powers of attorney, deeds, leases, releases of mortgages, satisfactions and all
other instruments entitled to be recorded in any jurisdiction.
ARTICLE VI
FINANCIAL STATEMENTS AND AUDIT
Section 6.1 ANNUAL STATEMENT AND REPORTS. At the meeting of the Board of
Directors following the annual meeting of the Stockholders, the Annual
Statement of the Company for the preceding year, together with a certificate of
verification thereof, by such independent Public Accountants as may have been
selected by the Board of Directors, shall be submitted to the Board. Interim
quarterly reports on the financial condition of the Company shall also be
submitted to the Board. The Annual Statement and interim reports shall be filed
with the records of the Board and a note of such submission shall be spread
upon the minutes. The Controller shall also report from time to time to the
Board or any committee any other matters coming to his attention in the course
of his duties which in his judgment should be brought to their attention.
SPECIMEN - 18-
<PAGE> 19
Section 6.2 INDEPENDENT PUBLIC ACCOUNTANTS. The books and accounts of the
Company shall be audited throughout each year by such independent Public
Accountants as shall be selected by the Board of Directors.
ARTICLE VII
INDEMNIFICATION
Section 7.1 INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND
INCORPORATORS. To the extent permitted by the law of the State of New York and
subject to all applicable requirements thereof:
a) any person made or threatened to be made a party to any
action or proceeding, whether civil or criminal, by reason of the
fact that he, his testator, or intestate, is or was a director,
officer, employee or incorporator of the Company shall be
indemnified by the Company;
b) any person made or threatened to be made a party to any
action or proceeding, whether civil or criminal, by reason of the
fact that he, his testator or intestate serves or served any other
organization in any capacity at the request of the Company may be
indemnified by the Company; and
SPECIMEN - 19 -
<PAGE> 20
c) the related expenses of any such person in any other of
said categories may be advanced by the Company.
ARTICLE VII
CAPITAL STOCK
Section 8.1 FORM OF CERTIFICATES. Certificates representing shares of capital
stock of the Company shall be in such form as shall be approved by the Board of
Directors. Each certificate shall be signed by the Chairman of the Board, the
President or a Vice President and the Secretary or the Treasurer, and may be
sealed with the corporate seal of the Company or a facsimile thereof. The
signatures of the officers upon a certificate may be facsimiles if the
certificate is countersigned by transfer agent or registered by a registrar
other than the Company itself or its employee.
Section 8.2 REGISTERED OWNER. Prior to due presentment for registration of
transfer of a certificate for shares of its capital stock, the Company may
treat the registered owner as the person exclusively entitled to vote, to
receive notifications and otherwise to exercise all the rights and powers of an
owner.
SPECIMEN - 20 -
<PAGE> 21
Section 8.3 CERTIFICATES LOST OR DESTROYED. The Company may issue a new
certificate for shares in place of any certificate therefore issued by it,
alleged to have been lost or destroyed, and the Board of Directors may require
the owner of the lost or destroyed certificate, or his legal representative to
give the Company a bond sufficient to indemnify the Company against any claim
that may be made against it on account of the alleged loss or destruction of
any such certificate or the issuance of any such new certificate.
Section 8.4 RECORD DATE. The Board of Directors may fix, in advance, a date
as the record date for the determination of Stockholders entitled to notice of
or to vote at any meeting of the Stockholders or any adjournment thereof, or to
express consent to or dissent from any proposal without a meeting, or to
receive payment of any dividend or the allotment of any rights. The Board may
also fix a date as the record date for the purpose of any other action. The
record date may not be more than fifty (50) nor less than ten (10) days before
the date of the meeting, nor more than fifty (50) days prior to any other
action. If no record date is fixed, the record date for the determination of
the Stockholders entitled to notice of or to vote at a meeting of the
Stockholders shall be at the close of business on the day next preceding the
day
SPECIMEN - 21 -
<PAGE> 22
on which notice is given, or, if no notice is given, the day on which the
meeting is held, and the record date for determining Stockholders for any other
purpose shall be at the close of business on the day on which the resolution of
the Board relating thereto is adopted.
ARTICLE IX
AMENDMENT OF BY-LAWS
Section 9.1 AMENDMENT OF BY-LAWS. These By-Laws may be amended or repealed and
new By-Laws may be adopted by vote of the Stockholders or of a majority of the
entire Board.
SPECIMEN - 22 -
<PAGE> 1
EXHIBIT 1.A.(8)(a)
AGREEMENT
AGREEMENT dated as of 1/11, 1993, by and between ML
Life Insurance Company of New York ("ML of New York"), a New York corporation,
on its own behalf and on behalf of the ML of New York Variable Life Separate
Account II (the "Separate Account"), and Merrill Lynch Funds Distributor, Inc.
("MLFD").
W I T N E S S E T H:
WHEREAS, the Separate Account is a separate account
established and maintained by ML of New York pursuant to the laws of the State
of New York for certain variable life insurance contracts issued by ML of New
York;
WHEREAS, the Separate Account is registered as a unit
investment trust under the Investment Company Act of 1940 ("Investment Company
Act");
WHEREAS, the Merrill Lynch Series Fund, Inc. ("Series
Fund") is registered as an open-end management investment company organized as
a series fund under the Investment Company Act and MLFD, pursuant to a written
agreement, is acting as the principal underwriter for the Series Fund;
WHEREAS, the Series Fund is offering shares of ten of
its portfolios to the Separate Account;
WHEREAS, to the extent permitted by applicable
insurance laws and regulations, ML of New York intends to purchase shares in
each of the offered portfolios on behalf of the Separate Account to fund the
variable life insurance contracts and MLFD is authorized to sell such shares to
unit investment trusts such as the Separate Account at no-load;
<PAGE> 2
NOW, THEREFORE, ML of New York and MLFD hereby agree
as follows:
1. MLFD agrees that it will sell to the Separate
Account those shares of the Series Fund which the Separate Account orders,
executing such orders on a daily basis at the net asset value next computed
after receipt of the order for the shares of the portfolios of the Series Fund.
2. All purchases of shares in the Series Fund by
ML of New York for its Separate Account from MLFD shall be at net asset value
and no commission shall be payable to MLFD.
3. A purchase of Fund shares shall be settled
within five business days after the transaction is effected.
4. This Agreement shall remain in effect until
terminated by the mutual written consent of the parties hereto.
5. This Agreement shall be subject to the
provisions of the Investment Company Act, the Securities Act of 1933 and the
Securities Exchange Act of 1934 and the rules and regulations, and rulings
thereunder, including such exemptions from those statutes, rules and
regulations as the Securities and Exchange Commission may grant, and the terms
hereof shall be interpreted and construed in accordance therewith.
6. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
- 2 -
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed as of the day and year first above written.
ML LIFE INSURANCE COMPANY OF NEW YORK
Attest: By: /S/ JOHN C. CIRINCION
-----------------------------------
Name: John C. Cirincion
Title: Vice President and Senior
Counsel
/S/ GRETA L. ULMER
- ------------------------------
Greta L. Ulmer
ML LYNCH FUNDS DISTRIBUTORS, INC.
Attest: By: /S/ TERRY K. GLENN
-----------------------------------
Name: Terry K. Glenn
Title: President
/S/ MICHAEL J. HENNEWINKEL
- ---------------------------
Michael J. Hennewinkel
- 3 -
<PAGE> 1
EXHIBIT 1.A.(8)(b)
AGREEMENT
AGREEMENT effective as of January 11, 1993 between ML
Life Insurance Company of New York ("ML of New York"), a New York corporation,
and Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S"), a Delaware
corporation.
WHEREAS, ML of New York Variable Life Separate
Account II ("Separate Account") is a separate investment account of ML of New
York registered under the Investment Company Act of 1940 ("Investment Company
Act") as a unit investment trust, which serves as the investment vehicle for
premiums received under certain variable life insurance contracts issued by ML
of New York and the Separate Account ("Contracts"), and
WHEREAS, The Merrill Lynch Fund of Stripped "Zero"
U.S. Treasury Securities, Series A and any subsequent series ("Trust") is a
unit investment trust sponsored by MLPF&S that will have several portfolios
("Portfolios") and the Trust is registered as a unit investment trust under the
Investment Company Act, and
WHEREAS, ML of New York seeks a unit investment trust
as the underlying investment medium for certain designated investment divisions
of the Separate Account that will be sold to the Separate Account and that will
be designed to enable the Separate Account to provide contract owners with a
stable rate of return, and
WHEREAS, MLPF&S desires to make the various
portfolios of the Trust available to ML of New York for the investment of
amounts allocated under the Contracts to the designated investment divisions of
the Separate Account.
NOW, THEREFORE, in consideration of the mutual
promises contained here, the parties agree as follows:
1. ML of New York shall invest in the Trust
assets of the Separate Account held in investment divisions designated for such
investment, provided that MLPF&S fulfills the obligations et forth in
paragraphs 2 through 6.
2. Until the securities of any particular
Portfolio of the Trust mature, MLPF&S will make units representing interest in
that Portfolio ("Units") available continuously for purchase by ML of New York
for investment of assets
<PAGE> 2
of designated investment divisions of the Separate Account, either by selling
Units currently held in inventory or by creating new Units, except that MLPF&S
shall not be obligated to create new Units if the underlying portfolio
securities are unavailable.
3. Units of the Trust will be sold to the
Separate Account at an offering price that is the sum of the net asset value of
the Units, uniformly computed on any given day based upon either a daily or
weekly computation, using the offering side evaluation of the portfolio
securities, and the transaction charge as set forth in the current Prospectus
of the Trust.
Such transaction charges as set forth in the current
Prospectus of the Trust are subject to change hereafter, by mutual agreement,
provided that any new rate established does not exceed the rate ordinarily paid
by a dealer to acquire similar securities, and provided that the transaction
charge shall not be increased if the staff of the Securities and Exchange
Commission expresses an objection to such change or, if ML of New York believes
necessary, unless an order of the Securities and Exchange Commission providing
appropriate exemptive relief is obtained.
4. MLPF&S will continuously maintain a secondary
market in Units of each Portfolio and will repurchase Units held by the
Separate Account at a price equal to the net asset value of the Units, based
upon the offering side evaluation of the underlying securities of the
applicable Portfolios.
5. MLPF&S may, at its discretion, redeem Units
of the Trust that it has purchased in the secondary market, provided that it
redeems Units only in an amount that substantially equal the value of one or
more securities held in the affected Portfolio, so that uninvested cash
generated by a redemption is de minimis.
6. The underlying securities of the Trust will
be evaluated by a qualified entity that is not affiliated with MLPF&S.
The terms used in this Agreement shall be construed
in accordance with the Investment Company Act, and this Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware.
- 2 -
<PAGE> 3
ML LIFE INSURANCE COMPANY OF NEW YORK
Attest: By: /s/ JOHN C. CIRINCION
-----------------------------------
Name: John C. Cirincion
Title: Vice President and Senior
Counsel
/s/ GRETA L. ULMER
- ---------------------------
Greta L. Ulmer
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
Attest: By:/s/ CHARLES P. BORKOWSKI, JR.
---------------------------------
Name: Charles P. Borkowski, Jr.
Title: First Vice President
/s/ CAROLINE J. HENRY
- ---------------------------
Caroline J. Henry
- 3 -
<PAGE> 1
EXHIBIT 1.A.(8)(d)
MANAGEMENT AGREEMENT
AGREEMENT made as of this first day of October, 1990,
by and between ROYAL TANDEM LIFE INSURANCE COMPANY, a New York corporation
(hereinafter referred to as the "Client"), and MERRILL LYNCH ASSET MANAGEMENT,
INC. a Delaware corporation (hereinafter referred to as the "Manager").
W I T N E S S E T H
WHEREAS, the Client is engaged in business as an
insurance company subject to regulation under the laws of each state in which
it does business; and
WHEREAS, the Manager is engaged principally in
rendering management and investment advisory services and is registered as an
investment adviser under the Investment Advisers Act of 1940; and
WHEREAS, the Client desires to retain the Manager to
provide investment advisory services to the Client in the manner and on the
terms hereinafter set forth; and
WHEREAS, the Manager is willing to provide investment
advisory services to the Client on the terms and conditions hereinafter set
forth;
NOW THEREFORE, in consideration of the premises and
the covenants hereinafter contained, the Client and the Manager hereby agree as
follows:
1. APPOINTMENT AND DUTIES OF MANAGER
The Client hereby appoints the Manager as investment manager
of such portion of the Client's investment portfolio as is designated from time
to time by the Client to the Manager in writing (the "Portfolio") and to
furnish, or arrange for affiliates to furnish, the investment advisory services
described below, on the terms and conditions set forth in this Agreement. The
Manager hereby accepts such appointment and agrees during such period, at its
own expense, to render, or arrange for the rendering of, such services and to
assume the obligations herein set forth for the compensation provided for
herein. Except as limited below and in the Statement of Investment Policy and
Guidelines attached hereto, the Manager shall have full discretion, as the
Client's agent and attorney-in-fact, to make purchases and sales of
<PAGE> 2
investments on the Client's behalf and otherwise to act at the Manager's
discretion in the management of the Portfolio.
The manager shall provide (or arrange for affiliates to
provide) the Client with such investment research, advice and supervision and
written reports as the latter may from time to time (but no less frequently
than monthly) consider necessary for the proper supervision of the assets of
the Client, shall furnish continuously an investment program for the Client and
shall have full discretion as the Client's agent and attorney-in-fact, to
determine from time to time which securities shall be purchased, sold, modified
or exchanged and what portion of the assets of the Client shall be held in (i)
the various securities in which the Client invests, (ii) options, (iii)
futures, (iv) options on futures or (v) cash, subject only to the restrictions
of applicable law and the Client's investment objectives, investment policies
and investment restrictions as the same are in each case advised in writing by
the Client to the Manager. Without limiting the foregoing, the Manager shall
have authority to approve the restructuring of investments held in the
Portfolio, either through changes in the terms of the security (including
changes in voting rights, dividend rights, interest rates, maturity, conversion
rights or other rights or preferences relating to the security) or through the
substitution of new securities, having such terms and provisions as may be
deemed appropriate by the Manager in light of the prevailing circumstances, for
securities held in the Portfolio. The Manager shall make decisions for the
Client as to foreign currency matters and make determinations as to foreign
exchange contracts, foreign currency options, foreign currency futures and
related options on foreign currency futures. The Manager shall make decisions
for the Client as to the manner in which voting rights, rights to consent to
corporate action and any other rights pertaining to the Client's Portfolio
securities shall be exercised and shall have the authority, as the Client's
agent and attorney-in-fact, to exercise such rights on behalf of the Client.
The Manager may temporarily invest the Client's cash
2
<PAGE> 3
in a money market fund which employs the Manager or an affiliate as its
investment adviser.
2. PORTFOLIO TRANSACTIONS
The Client authorizes the Manager to establish accounts in the
Client's name with Brokerage Firms that are members of the National Association
of Security Dealers and/or members of the Regional or National Securities
Exchanges including the Manager's affiliate MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED (MERRILL LYNCH) and to buy, sell or otherwise effect
transactions in stocks, bonds and any other securities for the Client's
accounts and in the Client's name and the Client empowers such firms to follow
the Manager's instructions.
The Client agrees that, if Merrill Lynch effects investment
transactions for the Client, it may act as principal, or as agent for both
sides of a transaction, in accordance with applicable law. When Merrill Lynch
acts as agent for both sides of a transaction, it may be paid commissions from,
and has duties to, the opposing sides. If Merrill Lynch effects transactions
on the Client's behalf on a stock exchange, it may retain the compensation it
is paid for such services, in accordance with applicable law. The Manager is
required by Section 11(a) of the Securities Exchange Act of 1934 to include the
preceding sentence in this agreement for clients who are companies, governments
and other institutions.
Investment firms, including Merrill Lynch, may be compensated
from the Client's Portfolio at their standard rates for effecting investment
transactions on the Client's behalf.
3. ADMINISTRATION
The Manager is a registered investment adviser under the
Investment Advisers Act of 1940.
The Client acknowledges that it has received the Manager's
disclosure statement. The Client represents that the person entering this
agreement on
3
<PAGE> 4
the Client's behalf has full power and authority to do so and that it is
binding.
The Client agrees to notify the Manager prior to giving any
instruction to an investment firm or custodian regarding the commitment,
withdrawal or investment of the Portfolio. The Manager is under no duty to
enter into any transaction with respect to assets which are not readily
available for delivery.
The Client will instruct any investment firm or custodian to
transmit simultaneously to the Client and to the Manager all confirmations and
periodic statements.
The Manager will send the Client current valuations of the
Client's account at least four times annually.
Employees of the Manager's affiliates may receive credits or
compensation for transactions effected on the Client's behalf.
The Client acknowledges that the Manager's affiliates may have
investment banking relationships with publicly traded companies and that
employees of the manager's affiliates may act as directors of publicly traded
companies, which at times may preclude the Manager from effecting transactions
on the Client's behalf in securities of such companies.
4. LIMITATION OF LIABILITY
The Manager will not be liable for the consequences of any
investment decision or related activities made or omitted in accordance with
Section 1 hereof, except for loss incurred as a result of the Manager's gross
negligence or willful or reckless misconduct. The Manager will not be liable
for loss incurred by any other person or as a result of any person other than
the Manager, whether or not its affiliate. These limitations of liability also
apply to the Manager's directors, officers, employees and agents.
4
<PAGE> 5
5. CHOICE OF LAW
THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, EXCEPT AS MAY BE PREEMPTED BY
FEDERAL LAW.
6. CUSTODY
The Chase Manhattan Bank, N.A. will act as custodian of the
Portfolio. The Manager will never receive or physically control the Portfolio.
The Client's money market fund shares may be recorded in the Client's name at a
transfer agent.
The Manager will not be responsible for making any tax credit
or similar claim or any legal filing on the Client's behalf.
7. FEES
In Compensation for the Manager's services hereunder, the
Client shall periodically pay to the Manager, upon demand of the Manager (but
no less frequently than annually), a fee equal to the sum of (i) the Manager's
costs, expenses and disbursements incurred during such period in connection
with its services hereunder and (ii) 10% of the amount calculated pursuant to
clause (i) hereof.
8. TERMINATION
This agreement shall remain in force until further notice.
The Client will be entitled to terminate this agreement at any time, effective
from the time the Manager receives written notification or such other time as
may be mutually agreed upon, subject to the settlement of transactions in
progress. There will be no penalty charge on termination. This agreement will
also be terminated on the fifth day after the Manager sends the Client notice
in writing of the Manager's intent to terminate this agreement or such other
time as may be mutually agreed upon, also subject to the settlement of
transactions in progress. The Manager may not assign this agreement without
the Client's prior consent.
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
ROYAL TANDEM LIFE INSURANCE COMPANY
By /s/ DAVID M. DUNFORD
--------------------------------
David M. Dunford
Senior Vice President
Date of Execution: Jan. 24, 1991
MERRILL LYNCH ASSET MANAGEMENT, INC.
By /s/ N. JOHN HEWITT
--------------------------------
N. John Hewitt
Senior Vice President
Date of Execution: Jan. 24, 1991
6
<PAGE> 7
STATEMENT OF
INVESTMENT POLICY AND GUIDELINES
FOR THE ROYAL TANDEM PORTFOLIOS
Merrill Lynch Insurance Group policy regarding investments supporting its
insurance in force is currently, and will remain, one of maximizing value for
its policyholders and equity owners, consistent with utmost concern for the
security over the long and short term. MLAM will pursue this objective by
investing in a diversified portfolio which conforms to the following
guidelines:
A. Securities issued by the United States Treasury or an agency
of the United States Government which are backed by the full
faith and credit of the United States Government in any amount
are authorized.
B. Mortgage-backed securities issued by the Federal Home Loan
Mortgage Corporation, the Federal National Mortgage
Association or the Government National Mortgage Association in
any amount are authorized.
C. Mortgage-backed securities collateralized by single family
residential mortgage loans (i.e., collateralized mortgage
obligations, private participations) shall conform to the
following size limits per issuer as rated by either Moody's or
Standard and Poor's.
Rating Maximum per Issuer
------- ------------------
AAA $ 40 Million
AA $ 30 Million
A $ 20 Million
BAA $ 10 Million
D. Interest rate sensitive derivative mortgage-backed securities
such as Interest-Only and Principal-Only securities (IO/PO) or
Z-tranche CMOs shall conform to a size limit per issue of $10
million original face, and shall in no case exceed 10% of the
book value of the portfolio.
E. Z-type "accrual" bonds will conform to the limitations for the
general mortgage backed securities, except that they will not
exceed 30% of the book value of the portfolio.
F. Commercial mortgages may be included, not exceeding a total of
$30 million. No single mortgage shall exceed $5 million.
G. Securities collateralized by other assets (credit cards, auto
loans, mobile homes, and other loans or receivables) may be
purchased only if investment grade. Per-issue maximums shall
conform to those in place for investment grade corporate
securities.
H. Investment grade corporate bond size limits per issuer are as
follows:
Rating Maximum per Issuer
------ ------------------
AAA $ 30 Million
AA $ 30 Million
A $ 15 Million
BAA $ 10 Million
Subject to overall holdings company limitations.
<PAGE> 8
I. Non-investment grade bond size limits are as follows:
Rating Maximum per Issuer
------ ------------------
BB $ 5 Million
B and lower $ 3 Million
Subject to overall holding company limitations.
The percentage of bonds below investment grade should be
targeted to be maintained at a level below 10% of the book
value of the portfolio.
J. Private placements may be held. Investments shall be limited
to $10 million per issuer, subject to overall holding company
limitations.
K. Investments in convertible bonds are allowed provided the
securities are rated investment grade by either Standard &
Poor's or Moody's at time of purchase. Such acquisitions
shall be advised in writing to the Investment Committee. All
other forms of equity participation are allowed subject to the
prior approval of the Investment Committee.
L. Investments in International bonds, Currencies or Swaps are
allowed subject to the approval of the Investment Committee,
prior to acquisition.
M. Investments in Financial Futures, Options, Options on Futures,
are allowed for hedging purposes only, subject to guidelines
approved by the Investment Committee.
N. Investments with durations longer than 10 years, or those
whose durations change by more than 50% for 200 basis point
change in interest rates in either direction require
notification to the Investment Committee.
O. Notwithstanding the above guidelines, all investments will
comply with the appropriate Federal, State and other legal
regulations.
Operating Guidelines
In order to comply with the Portfolio Guidelines and to achieve efficiencies in
controlling the investment function, the following operating guidelines will
apply to all portfolio managers.
A. Available funds must be promptly invested. This normally
means two weeks, with the exceptions of situations where
securities are purchased with advance settlement dates.
B. Trades must be reported to MLIG the same day the trade is
made.
C. Mortgage security purchases shall in all aspects qualify as
"good delivery" under Public Security Association standards.
D. The investment adviser will notify MLIG of any changes in
grade by Moody's or Standard & Poor's on a monthly basis.
E. Quarterly review shall be conducted by MLAM investigating all
Watch List issues for continued credit worthiness. All other
credit positions shall be reviewed annually or as
circumstances dictate.
F. The portfolio will be managed with the objective of
maintaining asset/liability duration within previously agreed
upon bounds.
2
<PAGE> 9
CREDIT GUIDELINES
MLAM shall provide:
FOR THE INVESTMENT COMMITTEE
A. Quarterly Portfolio Status Update
Four conferences per year will be held to review portfolio
structure (interest rate risk, sector diversification etc.),
investment strategy, transactions and portfolio performance.
B. Quarterly Credit Status Update
Four conferences per year will be held to review performance
and credit analysis.
C. Other Reporting as Required
Brief summaries stating opinion about continued credit
worthiness and outlook for an issuer, whenever holding a
position in this company becomes questionable.
D. For the Asset Risk Management
On a quarterly basis, provide appropriate financial and
operating data on each Watch List issue.
3
<PAGE> 10
AMENDMENT TO MANAGEMENT AGREEMENT
This Amendment dated as of the 28th day of January, 1992 is by
and between ML LIFE INSURANCE COMPANY OF NEW YORK, formerly known as Royal
Tandem Life Insurance Company, a New York corporation (hereinafter referred to
as the "Client") and MERRILL LYNCH ASSET MANAGEMENT, INC., a Delaware
corporation (hereinafter referred to as the "Manager").
W I T N E S S E T H
WHEREAS, by a Management Agreement dated as of October 1, 1990
(the "Agreement") between the Client and the Manager, the Client retained the
Manager to provide investment advisory services to the Client on the terms and
conditions set forth therein; and
WHEREAS, the Client and the Manager desire to amend the
Agreement as hereinafter provided;
NOW THEREFORE, in consideration of the premises hereinafter
contained, the Client and the Manager hereby agree as follows:
1. AMENDMENT
The following section shall be added immediately
following Section 8 of the Agreement:
"9. ARBITRATION
The Client and the Manager agree that any
controversy which may arise between them concerning
this Agreement or any other transaction or other
agreement (whether entered into before, with or after
this Agreement) shall be determined by arbitration
conducted before and pursuant to the constitution and
rules of the Board of Directors of the New York Stock
Exchange, Inc., or before and pursuant to the Code of
Arbitration Procedure of the National Association of
Securities Dealers, Inc., as the Client may elect.
The Client authorizes the Manager to make such
election on behalf of the Client if the Client does
not notify the Manager by Certified Mail addressed to
the Manager at its Main Office within five (5) days
after the Manager has sent the Client its
notification requesting the Client to make such
election. The
<PAGE> 11
award of the arbitrator(s) shall be final and
judgement upon the award may be entered in any court,
state or federal, having jurisdiction. The Client
agrees to submit itself and its personal
representatives to the jurisdiction of any such court
for the purpose of such arbitration and the entering
of any such judgement.
2. MISCELLANEOUS
(a) BINDING EFFECT.
The Agreement, as amended hereby, shall be
binding upon and shall inure to the benefit of the
Client and the Manager and the successors and assigns
of the Client and the Manager.
(b) CONSTRUCTION.
This Amendment shall be construed in
connection with and as part of the Agreement, and all
terms conditions and covenants contained in the
Agreement except as herein modified, shall remain in
full force and effect.
(c) REFERENCE.
Any and all notices, requests, certificates
and other instruments executed and delivered after
the execution and delivery of this Amendment may
refer to "Management Agreement" or the "Management
Agreement, dated as of October 1, 1990" without
making specific reference to this Amendment, but
nevertheless all such references shall be deemed to
include this Amendment unless the context shall
otherwise require.
(d) NO OTHER AMENDMENTS.
Except as expressly amended by this Amendment
and the documents delivered pursuant hereto, the
Management Agreement shall not be modified or
otherwise affected in any manner, and shall continue
in full force and effect.
2
<PAGE> 12
IN WITNESS WHEREOF, the parties have caused this instrument to
be executed and delivered on the day and year first above written.
ML LIFE INSURANCE COMPANY OF NEW YORK
By: /s/ DAVID M. DUNFORD
---------------------------------
David M. Dunford
Senior Vice President
Date of Execution: January 28, 1992
MERRILL LYNCH ASSET MANAGEMENT, INC.
By: /s/ N. JOHN HEWITT
---------------------------------
N. John Hewitt
Senior Vice President
Date of Execution: January 28, 1992
3
<PAGE> 1
EXHIBIT 1.A.(9)(a)
SERVICE AGREEMENT BETWEEN
TANDEM FINANCIAL GROUP, INC.
AND
ROYAL TANDEM LIFE INSURANCE COMPANY
Service Agreement made as of the 22nd day of June, 1987 between
TANDEM FINANCIAL GROUP, INC., a Delaware corporation ("TFG") and ROYAL TANDEM
LIFE INSURANCE COMPANY, a New York corporation ("Royal Tandem"),
W I T N E S S E T H:
WHEREAS, Royal Tandem is a wholly-owned subsidiary of TFG and
desires to utilize certain of TFG's services (including related property and
personnel) in carrying out some of its corporate functions and TFG is willing
to furnish the same on the terms and conditions hereinafter set forth;
NOW, THEREFORE, the parties do hereby mutually agree as follows,
effective so long as Royal-Tandem is such a subsidiary of TFG:
SPECIMEN - 1 -
<PAGE> 2
1. TFG will furnish, or contract with any of its affiliates or
subsidiaries for the furnishing of, as available, services as listed in Exhibit
I hereto, if and to the extent requested by Royal Tandem. Royal Tandem will
utilize such services in accordance with the Commitment Agreement (copy
attached) to the New York Insurance Department (the "Department").
2. Royal Tandem agrees to pay TFG for such services
(i) the amounts as may be specified in one or more
Schedules, pertaining to particular categories of services, as may be executed
by the parties and attached to and incorporated into this Agreement; or
(ii) if not so specified, to pay those charges (direct
and indirect) and expenses incurred by TFG or any of its affiliates or
subsidiaries which, as reasonably determined by TFG and demonstrated to the
reasonable satisfaction of Royal Tandem, reflect actual cost to TFG or its
affiliates or subsidiaries of furnishing such services, provided that
SPECIMEN - 2 -
<PAGE> 3
(a) charges and expenses for personnel shall be
based on a reasonable allocation of the time
spent on Royal Tandem matters relative to time
spent on other matters,
(b) charges and expenses for property or other
services shall be based on a reasonable allocation
of the proportion of and period of time such
property or services is utilized for Royal Tandem
matters relative to that utilized for other
matters, and
(c) no charges or expenses shall exceed those
charged by the service provider in the relevant
market for comparable personnel, property or
services as the case may be.
TFG will provide Royal Tandem with a bill for service charges and expenses
incurred within 45 days after the end of the quarter in which incurred or in
which TFG ascertains the amounts thereof, and Royal Tandem will pay for such
charges and expenses upon receipt of the bill.
SPECIMEN - 3 -
<PAGE> 4
3. The books, accounts and records of TFG and Royal Tandem as to all
transactions hereunder shall be maintained so as to clearly and accurately
disclose the nature and details of the transactions, including such accounting
information as is necessary to support the reasonableness of the charges,
expenses or fees hereunder. Royal Tandem shall have the right, at its own
expense, and at any reasonable time, to make an audit of the services rendered
and the amounts charged therefor.
4. The term of this Agreement shall commence as of the date
hereinabove indicated and continue until December 31, 1987, and thereafter
shall be deemed to be renewed automatically, upon the same terms and
conditions, for successive periods of one year each, until either party, at
least 60 days prior to the expiration of the original term or of any extended
term, shall give written notice to the other party of its intention not to
renew the Agreement, provided that, notwithstanding the foregoing, electronic
data processing services will be made available to Royal Tandem for up to six
months following any such termination, if Royal Tandem shall so request.
SPECIMEN - 4 -
<PAGE> 5
5. All differences between TFG and Royal Tandem on which agreement
cannot be reached will be decided by arbitration. The arbitrators will
interpret this Agreement in accordance with the usual business practices,
rather than strict technicalities or rules of law. Three arbitrators will
decide any differences. They must be officers of life insurance companies other
than the two parties to this agreement, their parents, subsidiaries and
affiliates. One of the arbitrators is to be appointed by Royal Tandem and one
by TFG, and these two will select a third. If the two are unable to agree on a
third, the choice will be left to the President of the American Council of Life
Insurance or its successor organization. The arbitrators' decision will be by
majority vote and no appeal will be taken from it. The costs of the arbitration
will be borne by the losing party unless the arbitrators decide otherwise.
6. No assignment of this Agreement shall be made by TFG without the
consent of Royal Tandem.
7. Subject to the foregoing Section 6, this Agreement shall inure to
the benefit of and be binding upon the successors and assigns of the parties
hereto.
SPECIMEN - 5 -
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
TANDEM FINANCIAL GROUP, INC.
By: /S/ MARIANNE KEARNS
----------------------
Marianne Kearns
ROYAL TANDEM LIFE
INSURANCE COMPANY
By: /S/ MARIANNE KEARNS
-----------------------
Marianne Kearns
SPECIMEN - 6 -
<PAGE> 7
EXHIBIT I
To Service Agreement
Between TFG and Royal Tandem
Personnel, Property and Services (except as provided under separate agreements
or Schedules):
1. Electronic data processing
2. Legal
3. Corporate Secretary
4. Actuarial
5. Product design and development
6. General corporate management.
7. Storage
8. Office and general supplies
9. Financial and cash advice or management
10. Advertising and public relations
11. Printing
12. Development of software programs
SPECIMEN - 7 -
<PAGE> 8
Superintendent, State of New York
Department of Insurance
Re: ACQUISITION OF CONTROL OF
ROYAL TANDEM LIFE INSURANCE COMPANY
Dear Superintendent:
COMMITMENT AGREEMENT TO THE
NEW YORK INSURANCE DEPARTMENT
Pursuant to your request, the undersigned, The Equitable Life Assurance Society
of the United States ("Equitable"), Tandem Financial Group, Inc. ("TFG") and
Merrill Lynch & Co., Inc. ("Merrill Lynch") (collectively known as the
"Parents" and individually as a "Parent") represent and commit, effective as to
each Parent so long as it shall be deemed by the Department, under applicable
law, to control Royal Tandem Life Insurance Company ("Royal Tandem"), that it
will not on behalf of Royal Tandem do, indirectly or through the medium of
another entity, that which is prohibited to Royal Tandem by statute, or
regulation or administrative ruling of the New York Insurance Department,
including but not limited to the following:
1. No Parent nor any of its affiliates or
subsidiaries will offer, sell, give or in any way transfer or assign any
securities issued by any of such companies, or offer any options or warrants on
such securities, to persons who are officers, directors, agents or employees of
Royal Tandem, except in connection with services rendered directly to such
Parent or the company selling, offering or giving such securities, options or
warrants, and after full and appropriate disclosure to, and prior approval by
the Superintendent of the plan pursuant to which such offer, sale or gift is
made and except as permitted by the provisions of Regulation No. 54. This
paragraph, however, shall not be deemed to apply to any offer or sale made to
any such person as a part of, and on the same terms as, a general offering to
stockholders or to the public.
SPECIMEN - 8 -
<PAGE> 9
2. No Parent nor any of its affiliates or
subsidiaries, nor controlling interests thereof, other than Royal Tandem, will
grant any compensation or special advantage to officers, directors, agents or
employees of Royal Tandem except in connection with services rendered directly
to such Parent or the company making such grant as provided by but not limited
to the provisions of Section 1509 of the New York Insurance Law.
3. Royal Tandem's operations will be directed by its
own management and no agreement or arrangement will be made pursuant to which
another company will provide such management directly or indirectly. Royal
Tandem shall maintain a home office in New York which shall have at least one
full-time administrative officer who is unaffiliated with any other company in
the holding company system and who shall have full responsibility and authority
for making management and administrative decisions and carrying out established
policy. The management of Royal Tandem will be fully responsible to the
Department for the actions of, or failure to act by, Royal Tandem, pursuant to
the provisions of Section 1507 of the New York Insurance Law.
4. Royal Tandem will maintain in this state, at its
home office, officers and qualified personnel knowledgeable of and responsible
for directing and performing the daily operations of Royal Tandem, included but
not limited to the following primary insurance company functions:
(a) Policyholder services - such services shall
comprise any and all activities involving
personal contact or communication with a
policyholder or beneficiary, including but
not limited to policy loan applications and
payments, surrender requests including
computation and payment of benefits,
determination and payment of policy
benefits, policy conversions, beneficiary
changes, policy changes, request for general
information, dividend computations, premium
payments, policy lapses and reinstatements,
and consumer complaints.
SPECIMEN - 9 -
<PAGE> 10
(b) Recordkeeping - Royal Tandem will maintain
at its home office in New York, all records,
files and other sources of information
relating to the operations of the company.
Such recordkeeping shall include but not be
limited to ledgers, journals, trial balances
and adjusting journal entries, vouchers,
annual statement workpapers, and all related
back-up records including EDP printouts. If
it is necessary to transfer records in
connection with the performance of specific
services, copies of such records shall be
transferred and the originals maintained at
the home office of Royal Tandem. Persons
providing services shall forward to the home
office of Royal Tandem the originals or
copies of all work papers, related records
and documents prepared and utilized in
connection with such services. While records
which are maintained solely on EDP tapes,
disks, etc., need not be forwarded to Royal
Tandem, the servicer, when requested, shall
provide printouts of such tapes, disks, etc.
which shall be available for inspection by
the Superintendent at the home office in New
York.
(c) Accounting - Royal Tandem will perform all
accounting functions at its home office in
New York. Such accounting functions shall
include but not be limited to the initiation
and preparation of all vouchers and
accounting records and/or transactions
relating to the financial condition of the
subsidiary, verification that original
financial data and accounting transactions
have been accurately prepared and reflected
in the subsidiary's books of account, bank
reconciliations and reconciliations of EDP
printouts. This shall not preclude Royal
Tandem from the use of an outside service
for the preparation of accounting records or
processing of accounting transactions,
SPECIMEN - 10 -
<PAGE> 11
provided that (i) the initiation of such
records and/or transactions are prepared
and the final product verified by Royal
Tandem at its home office in New York and
(ii) that there is within Royal Tandem's
home office in New York qualified personnel
knowledgeable of and familiar with all the
details of the services provided including
but not limited to, accounting and adjusting
entries.
(d) Underwriting - Royal Tandem will establish
and reduce to writing all underwriting
standards for the acceptance of new
business, make all final underwriting
decisions and maintain at its home office in
New York all original papers which are basic
to the insurance contract. Within a period
of five years from the date of this
Commitment Agreement, Royal Tandem will
perform at its home office in New York all
underwriting functions. Such underwriting
shall include but not be limited to the
review of policy applications, assignment of
policy numbers, MIB review, medical review,
and actual policy issue. It is understood
that no service agreements will be entered
into by Royal Tandem which will provide
for underwriting services beyond the above-
mentioned period.
(e) Claims - Royal Tandem will establish and
reduce to writing claims settlement
procedures, and will exercise final approval
authority for all claims settlements and
maintain at its home office in New York all
original claims investigation papers and
worksheets. Within a period of five years
from the date of this Commitment Agreement,
Royal Tandem will perform at its home office
in New York all claims processing and
settlement. Such claims processing and
settlement shall include but not be limited
to verification that the policy was in force
and review and investigation of claims. It
SPECIMEN - 11 -
<PAGE> 12
is understood that no service agreements
will be entered into which will provide for
claims processing services beyond the
above-mentioned period.
(f) Marketing - Within a period of five years
from the date of this Commitment Agreement,
Royal Tandem will perform at its home office
in New York the following marketing
functions: recruitment and direction of the
agency field force, validation of agents
training allowances and development
allowances, and the administration of all
agency matters. It is understood that no
service agreements will be entered into by
Royal Tandem which will provide for
marketing services beyond the above-
mentioned period.
5. All agreements providing for the rendering of
statistical, mechanical or ministerial services on a regular or systematic
basis between Royal Tandem and either Equitable or its subsidiaries or
affiliates, or any modification thereof, will be submitted to the Department
for prior review, pursuant to the provisions of Section 1505 and 1507 of the
New York Insurance Law.
6. All reinsurance treaties between Royal Tandem and
any Parent or affiliates thereof, or any modification thereto, will be
submitted to the New York Insurance Department for prior review in accordance
with the provisions of Section 1505 of the New York Insurance Law. Any
experience rating formula or dividend formula to be used in conjunction with
the agreements will be submitted to the New York Insurance Department for prior
review. Expenses and settlement data under this formula will be retained and
will be furnished to the New York Insurance Department upon request.
7. Royal Tandem will neither subsidize nor be
subsidized by any Parent or by any Parent's subsidiaries or affiliates. Subject
to the foregoing, all expenses incurred by or on its behalf, all joint expenses
and the cost of servicing functions provided Royal Tandem by such P.rent or
subsidiaries, affiliateS or other corporate entities thereof, will be allocated
SPECIMEN - 12 -
<PAGE> 13
equitably. Adequate and properly documented workpapers serving as a basis for
allocations and charges shall be maintained by Royal Tandem. The books,
accounts an! records of each party will be kept in a manner which clearly and
accurately discloses, inter alia, the nature and details of all transactions
and arrangements between Royal Tandem and such Parent or any subsidiary or
affiliate thereof. All of the above shall be in conformance with the provisions
of Section 1505 of the New York Insurance Law.
This section shall not be deemed to prohibit the
rendering of incidental services to and for the benefit of Royal Tandem by
Equitable without being compensated therefor.
8. Royal Tandem will operate at arm's length in
relation to each Parent, its subsidiaries and affiliates. Allocations and
classifications of expenses incurred jointly, or for services rendered or
received shall be in accordance with New York Insurance Department Regulation
33. In the event that, in the judgment of the Insurance Department, the books,
accounts and records of Royal Tandem do not adequately reveal all transactions
relevant to its operations, the books, accounts, and records of each Parent,
its subsidiaries and/or affiliates, will be made available to the Department to
the extent they relate to Royal Tandem, its officers, directors, employees or
agents pursuant to the provisions of Section 1504 of the New York Insurance
Law.
9. In line with the customary practice of
non-affiliated domestic life companies, Royal Tandem's income is to be received
directly at its home office and an itemized record is to be made thereof at the
time of receipt. Within the meaning of the preceding sentence, Royal Tandem mar
arrange for the collection of premiums or other income at a lock box located
within or without this state, provided that:
(a) A contract providing for the
establishment and operation of the
lock box is entered into by all of
the parties affected by such
arrangement and the contract is
submitted to the Superintendent for
prior approval.
(b) All bank accounts maintained in connection
with the operation of the lock box shall be
in the name of the subsidiary insurer, and
SPECIMEN - 13 -
<PAGE> 14
withdrawal therefrom shall be limited to
checks signed by authorized officials of the
subsidiary insurer only.
(c) Where a bank account is maintained outside
the state for collection purposes, the
account shall be in the name of the
subsidiary insurer and withdrawals from
such account shall be solely for the
purpose of transferring funds to a New York
bank account. Withdrawals shall be made at
periodic intervals not to exceed ten days,
so that the maximum balance in such out of
state account at the day of withdrawal will
not exceed $1,000.00 unless the
Superintendent has indicated his prior
approval for the maintenance of a larger
balance. Royal Tandem is to maintain in New
York (i) all bank accounts customarily
maintained in New York by non-affiliated
domestic life companies and (ii) all
evidence of ownership of its assets. Royal
Tandem's obligations (including benefits
and salaries) are to be paid directly to
its primary obligees by drafts or checks on
its bank accounts.
10. Agreements with agencies engaged in common by
Royal Tandem and any Parent or affiliates thereof shall not, directly or
indirectly, provide for compensation or other financial advantages which would
be prohibited by Section 4228 or 4229 of the New York Insurance Law, as
amended, or regulations, circular letters and rulings relative thereto and as
provided in Section 1509 of the New York Insurance Law and this agreement.
11. Royal Tandem shall require such agents engaged in
common, as described above, to make available, on request by the Superintendent
of Insurance of the State of New York, all books and records in respect to
their insurance activities with Royal Tandem and any Parent and/or affiliates
thereof.
12. No transfer, depletion, divestment or
reassignment of a significant number of its chief management officers or
personnel performing important and/or key functions in vital
SPECIMEN - 14 -
<PAGE> 15
departments of Royal Tandem shall be made by or to any Parent, its affiliates,
subsidiaries or controlling interests thereof if it would result in impairing
the operations of Royal Tandem. No transactions of this type shall be entered
into prior to being submitted to the Department for review.
13. No transactions will be entered into by Royal
Tandem, any Parent or any affiliate which involves or could involve the actual
or proposed transfer, directly or indirectly, of control of Royal Tandem without
prior notice to and no objection being raised by the Department to the terms of
the transaction.
Such transactions shall include but not be limited to:
(a) Pledging of shares as collateral for
loans.
(b) Hypothecation of securities.
(c) Sale of new shares of such Parent or
affiliate.
(d) Encumbering of shares of such Parent
or affiliate.
(e) Exchange of shares.
(f) Any other disposition of shares.
14. Any director or principal officer of any Parent,
who holds office in subsidiaries or affiliates of Royal Tandem which will have
dealings with Royal Tandem, and who is found to be untrustworthy, will be
removed from these offices at the direction of the Department.
15. In keeping with the Department's requirement that
the name of a Parent or any of its affiliates not be used in Royal Tandems name
unless a modifier is placed in front of the Parent or affiliate's name, no
Parent will change its name nor permit any of its affiliates to change their
names in such a way as to circumvent the intention
SPECIMEN - 15 -
<PAGE> 16
of this requirement. Each Parent and Royal Tandem further agree that they will
not use any advertising or printed material which circumvents the intention of
this requirement by stressing or emphasizing the name of the Parent or
affiliate.
16. In the future, if Royal Tandem should plan to
make any significant deviation from the Plan of Operations and actuarial
projections originally submitted to the New York State Insurance Department,
the Department will be informed of such planned deviation and Royal Tandem will
submit new actuarial projections to the Department and will obtain the
Department's approval prior to entering into any new product lines or lines of
business which would cause such deviation.
It is further understood that the signing of this
commitment agreement by present management of the Parents, and of Royal Tandem,
is binding not only on present management but on any successor management which
may be the result of internal or external changes, and must be made a part of,
but not limited to, any merger, takeover, tender officer, assumption or pooling
of interest agreement voluntarily entered into.
It is further agreed that if any changes are
incorporated in the New York Insurance Law, Department RegulatiOnS, or
Administrative Procedures which alter to any material extent these commitments,
these changes will be automatically incorporated in this document, which is
signed by executive officers of the Parents and Royal Tandem. This document has
or will receive the consent and approval of the Board of Directors of each
Parent.
Respectfully submitted,
Dated: June , 1987
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
By /S/ PETER WILDE
-------------------------------
Peter Wilde
Title: Executive Vice President
SPECIMEN - 16 -
<PAGE> 17
TANDEM FINANCIAL GROUP, INC.
By /S/ RICHARD W. CAMPANARO
-------------------------------
Richard C. Campanaro
Title: President
MERRILL LYNCH & CO., INC.
By /S/ JOHN L. STEFFENS
-------------------------------
John L. Steffens
Title: Executive Vice President
ROYAL TANDEM LIFE INSURANCE
COMPANY
By /S/ RICHARD W. CAMPANARO
-------------------------------
Richard W. Campanaro
Title: President
SPECIMEN - 17 -
<PAGE> 18
SPECIAL COMMITMENT AGREEMENT TO
THE NEW YORK INSURANCE DEPARTMENT
The undersigned each agree with the New York State
Insurance Department as follows, effective for the period described below:
1. With respect to transactions between Royal Tandem
Life Insurance Company ("Royal Tandem") and The Equitable Life Assurance
Society of the United States ("Equitable Life"), Royal Tandem and Equitable
Life commit that, notwithstanding Section 1502 of the New York Insurance Law,
they will comply with all the provisions of Section 1505 thereof.
2. Royal Tandem will utilize only those marketing
distribution systems which cannot be effectively served by Equitable Life, by
Equitable Variable Life Insurance Company ("EVEICO"), by National Integrity
Life Insurance Company ("National Integrity") or any other New York licensed
life insurance company subsidiary of Equitable Life. Equitable Life and EVLICO
will utilize only traditional affiliated agency sales forces consisting of
career agents to distribute their products and services, and National Integrity
will distribute its products and services in accordance with its Special
Commitment Agreement to the New York Insurance Department, dated November 4,
1985, as amended or supplemented, whereas Royal Tandem will distribute its
products and services only through licensed subsidiaries and affiliates of
Merrill Lynch & Co., Inc. ("Merrill Lynch"), and their registered
representatives or employees as licensed for Royal Tandem, or through such
other agents or groups of agents or other means as may be approved in writing
from time to time by the Insurance Department. Equitable Life, EVLICO, Rational
Integrity and Royal Tandem will not license, directly or indirectly, agents in
common. None of Equitable Life, EVLICO or National Integrity will license any
agent licensed with Royal Tandem. Royal Tandem will not license any agent
licensed with Equitable Life, EVLICO or National Integrity. To avoid dual
licensing, (a) every agent license application received by Royal Tandem will be
computer matched against Equitable Life's Agent Data Base, which lists all
Equitable Life/EVLICO Agents, and will be matched against National Integrity's
Agent Data Base and any such applications which match against any such Agent
Data Base
SPECIMEN - 18 -
<PAGE> 19
will be denied by Royal Tandem and (b) every agent license application received
by Equitable Life, EVLICO or National Integrity will be computer matched
against Royal Tandem's Agent Data Base, which lists all Royal Tandem Agents,
and any such applications which match against Such Agent Data Base will be
denied by Equitable Life, EVLICO or National Integrity, as the case may be.
3. This Special Commitment Agreement shall be
effective as to Equitable Life, EVLICO, Royal Tandem and National Integrity so
long as Equitable Life shall be deemed by the Department, under applicable law,
to control Royal Tandem, and shall be effective as to Merrill Lynch so long as
Merrill Lynch shall be deemed by the Department, under applicable law, to
control Royal Tandem.
Dated: June , 1987
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
By /S/ PETER WILDE
-------------------------------
Peter Wilde
Title: Executive Vice President
EQUITABLE VARIABLE LIFE INSURANCE
COMPANY
By /S/ THOMAS KERWIN
-------------------------------
Thomas Kerwin
Title: President
ROYAL TANDEM LIFE INSURANCE COMPANY
By /S/ RICHARD W. CAMPANARO
-------------------------------
Richard C. Campanaro
Title: President
SPECIMEN - 19 -
<PAGE> 20
NATIONAL INTEGRITY LIFE INSURANCE
COMPANY
By /S/ FRANKLIN MAISAND
-------------------------------
Franklin Maisand
Title: President
MERRILL LYNCH & CO., INC.
By /S/ JOHN L. STEFFENS
-------------------------------
John L. Steffens
Title: Executive Vice President
SPECIMEN - 20 -
<PAGE> 21
June , 1987
Honorable James P. Corcoran
Superintendent
State of New York
Department of Insurance
160 West Broadway
New York, New York 10013
Re: ACQUISITION OF CONTROL OF
ROYAL TANDEM LIFE INSURANCE COMPANY
Dear Mr. Corcoran:
The undersigned each agree with the New York State
Insurance Department, effective for the period described below, that Royal
Tandem Life Insurance Company ("Royal Tandem") shall at all times maintain a
minimum capital of two million dollars and a minimum surplus of four million
dollars. This commitment letter shall be effective as to each of The Equitable
Life Assurance Society of the United States and Merrill Lynch & Co., Inc. so
long as it shall be deemed by the Department, under applicable law, to control
Royal Tandem.
Respectfully submitted,
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
By /S/ PETER WILDE
-------------------------------
Peter Wilde
Title: Executive Vice President
MERRILL LYNCH & CO., INC.
By /S/ JOHN L. STEFFENS
-------------------------------
John L. Steffens
Title: Executive Vice President
SPECIMEN - 21 -
<PAGE> 22
ROYAL TANDEM LIFE INSURANCE
COMPANY
By /S/ RICHARD W. CAMPANARO
-------------------------------
Richard W. Campanaro
Title: President
SPECIMEN - 22 -
<PAGE> 1
EXHIBIT 1.A.(9)(b)
VARIABLE LIFE INSURANCE
SERVICE AGREEMENT
BETWEEN
MERRILL LYNCH LIFE INSURANCE COMPANY
AND
ML LIFE INSURANCE COMPANY OF NEW YORK
THIS SERVICE AGREEMENT (this "Agreement") dated as of
May 22, 1992, by and between MERRILL LYNCH LIFE INSURANCE COMPANY, an Arkansas
insurance corporation with offices at 800 Scudders Mill Road, Plainsboro, New
Jersey 08536 ("MLLIC") and ML LIFE INSURANCE COMPANY OF NEW YORK, a New York
insurance corporation with offices at 717 5th Avenue, New York, New York 10022
("ML NY").
W I T N E S S E T H:
WHEREAS, MLLIC and its affiliates have systems and
experience necessary for the servicing of variable life insurance business;
WHEREAS, ML NY desires MLLIC to perform certain
administrative and special services for ML NY for new and in-force variable
life insurance policies of ML NY (the "Policies"); and
<PAGE> 2
WHEREAS, MLLIC and ML NY wish to assure that the use
of facilities and all charges for services incurred hereunder are reasonable
and in accordance with the requirements of applicable state regulations,
including New York Insurance Department Regulation No. 33 (11 NYCRR Section 91)
("Regulation 33"); and
WHEREAS, MLLIC and ML NY wish to identify the
services to be rendered to ML NY by MLLIC and its affiliates, subject to the
terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the covenants and
of the mutual promises set forth herein, MLLIC and ML NY agree as follows:
1. PERFORMANCE OF SERVICES.
1.1 DESCRIPTION OF SERVICES AND PERFORMANCE STANDARDS.
Subject to the terms and conditions and limitations of this Agreement, MLLIC
agrees to perform the administrative and system services described in Exhibits
A and B, respectively, annexed hereto for the Policies (collectively, the
"Services"). The Services will be performed using the same standards of care
and diligence which MLLIC exercises in the performance of its own
administrative responsibilities.
2. ACCESS TO FACILITIES.
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<PAGE> 3
2.1 FACILITIES AND TRAINED PERSONNEL. MLLIC will at all times
maintain sufficient facilities and trained personnel of the kind necessary to
perform this Agreement in a manner satisfactory to ML NY.
2.2 STATUS OF EMPLOYEE AND FACILITIES. Whenever MLLIC utilizes
its employees to perform Services for ML NY pursuant to this Agreement, such
employees shall at all times remain subject to the direction and control of
MLLIC, and ML NY shall have no liability to such persons for their welfare,
salaries, fringe benefits, legally required employer contributions and tax
obligations by virtue of the relationships established under this Agreement.
No facility of MLLIC used in performing the Services for or subject to use by
ML NY shall be deemed to be transferred, assigned, conveyed or leased by such
performance or use.
2.3 EXERCISE OF JUDGMENT IN RENDERING SERVICES. In performing any
of the Services hereunder, MLLIC shall at all times act in the best interests
of ML NY and MLLIC will use its best efforts and act in good faith in a manner
designed to maintain the existing and ongoing relationship between ML NY and
its variable life policyholders.
3. FEES. ML NY Agrees to pay MLLIC for services
rendered and those charges (direct and indirect) and expenses
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<PAGE> 4
incurred by MLLIC or any of its affiliates or subsidiaries which, as reasonably
determined by MLLIC and demonstrated to the reasonable satisfaction of ML NY,
reflect actual cost to MLLIC or its affiliates or subsidiaries of furnishing
such Services, provided that:
(a) charges and expenses for personnel shall be based on
a reasonable allocation of the time spent on ML NY matters relative to time
spent on other matters; and
(b) charges and expenses for property or other Services
shall be based on a reasonable allocation of the proportion of and period of
time such property or Services is utilized for ML NY matters relative to that
utilized for other matters.
4. ACCOUNTING RECORDS AND DOCUMENTS.
4.1 MAINTENANCE OF RECORDS. MLLIC shall be responsible
for maintaining full and accurate accounts and records of all Services rendered
pursuant to this Agreement and such additional information as ML NY may
reasonably request for purposes of its internal bookkeeping, accounting
operations and management. MLLIC shall keep such accounts and records
available, during all reasonable business hours, at its principal
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<PAGE> 5
offices, or at such other location as required by applicable state laws and
regulations or by state regulatory authorities, for audit, inspection and
copying by ML NY and persons authorized by it or any governmental agency having
jurisdiction over ML NY. With respect to accounting and statistical records
prepared by or for MLLIC by reason of its performance under this Agreement,
summaries of such records in a form acceptable to ML NY shall be delivered to
ML NY within fifteen days from the end of the period to which the records
pertain.
4.2 INSPECTION AND AUDIT RIGHTS. In addition to rights
granted under Section 5 below, at any time during the term of this Agreement,
and for a period of seven years after termination or expiration of this
Agreement, ML NY, or its authorized independent auditors or counsel, shall have
the right to inspect and audit MLLIC's premises and facilities, accounts, books
and records relating to the Services and the Policies upon two business days'
prior written notice during MLLIC's regular business hours.
5. OTHER RECORDS AND DOCUMENTS. All books, records and
files established and maintained by MLLIC by reasons of its performance under
this Agreement in respect of Policies shall be
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<PAGE> 6
the property of ML NY and shall be delivered to ML NY promptly upon request by
ML NY.
6. OWNERSHIP OF DATA. MLLIC acknowledges that ML NY has
all right, title and interest in and to all non-public data relating to all
Policies, related client information and all other related information
generated electronically, in hard copy or otherwise, in the course of
performance of this Agreement. MLLIC may use all such information for the
exclusive purpose of servicing ML NY pursuant to the terms and conditions of
this Agreement and as may be required in order to comply with applicable laws
and the rules and regulations of any governmental entity.
7. FORCE MAJEURE; DISASTER RECOVERY.
7.1 FORCE MAJEURE. MLLIC shall not be liable to ML NY or
any other party for MLLIC's inability to perform its obligations under this
Agreement if such inability is due to strike or other labor dispute, fire, war,
terrorism, insurrection, act of God, governmental intervention, or which is
otherwise unavoidable with reasonable diligence and is caused by any event not
within the reasonable control of MLLIC and without its fault or negligence, and
the time of performance by MLLIC of its obligations hereunder shall be extended
for the period for
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<PAGE> 7
which such event continues. Notice of the occurrence of any such event shall be
given promptly by MLLIC to ML NY.
8. INDEMNIFICATION. Each party hereto (the
"Indemnifying Party") and its affiliates shall indemnify the other party hereto
(the "Indemnified Party") and any of its affiliates, shareholders, officers,
directors, employees or agents from and against any loss, liability, claim,
penalty or damages (including reasonable attorney's fees and expenses) arising
from or relating to any breach by the Indemnifying Party of this Agreement, or
any claims made against the Indemnified Party by any party relating to the
Indemnifying Party's willful misconduct or negligence in performing, or failure
to perform, the terms of this Agreement.
9. TERM AND TERMINATION RIGHTS.
9.1 TERM. This Agreement will commence on the effective
date of the closing of the acquisition of the Monarch Life Insurance Company
variable life service center by MLLIC and will continue in effect unless
terminated pursuant to this Section 9.
9.2 EVENTS OF DEFAULT. Any one or more of the following
shall constitute an Event of Default as to a party hereunder:
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<PAGE> 8
(a) It fails to perform or observe any covenant,
term or condition contained herein, including, but not limited to, breach of
performance or payment requirements and such failure or breach shall not have
been cured within 5 days after notice by the non-defaulting party of such
failure or breach; PROVIDED, HOWEVER, that if the defaulting party reasonably
believes that the failure or breach is not curable within such 5-day period,
the defaulting party may send written notice to the non-defaulting prior to the
expiration of such 5-day period setting forth the anticipated time it believes
would be necessary to cure, and the action proposed to effectively cure, such
failure or breach, and the non-defaulting party shall not unreasonably withhold
approval of such defaulting party's proposal;
(b) Any representation of it contained herein
shall be false and misleading as of the date made or deemed to be made;
(c) Any report or record prepared or submitted by
it pursuant to the terms of this Agreement, shall be intentionally false or
misleading as of the date made or deemed to have been made;
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<PAGE> 9
(d) An event to which the provisions of Section
7.1 applies shall have occurred and be continuing for a period of 30
consecutive days.
9.3. REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT.
(a) Upon the occurrence of an Event of Default as
described in Section 9.2 above, the non-defaulting party may, at its option,
terminate the Agreement by giving written notice of its intention to terminate
this Agreement.
9.4 VOLUNTARY TERMINATION. Upon 90 days notice by either
party to the other this Agreement may be terminated.
10. EFFECT OF TERMINATION OF AGREEMENT. If this
Agreement is terminated by either party pursuant to any Section of this
Agreement, MLLIC will reasonably cooperate with ML NY to facilitate the
transition of the Services to ML NY or to another service provider selected by
ML NY. Upon termination of this Agreement, or at the end of the transition
period set forth in this Section 10 (the "Transition period"), at ML NY's
option and request, MLLIC shall perform all steps necessary, at the expense of
ML NY, to transfer all ML NY property and information to ML NY or a party
designated by ML NY and ML NY shall have the right, title and interest in and
to all such property and information, including, but not limited to, insurance
policies, financial and
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<PAGE> 10
technical information and data, and MLLIC shall promptly deliver all such
property and information to ML NY or ML NY's designee.
11. CONFIDENTIALITY. The parties hereto agree that the
terms of this Agreement and all documents, know-how and technical, financial,
insurance, processing data, performance and client information owned by a party
and furnished or disclosed to the other party hereunder, including, without
limitation, all of the terms of this Agreement, shall be treated as proprietary
and confidential information and shall be held in strict confidence and shall
not, without the prior written consent of the party furnishing or disclosing
such information, be made available or disclosed to any third party (unless
such party agrees to be bound by the confidentiality restrictions set forth
herein) or be used by the other party hereto other than as contemplated
hereunder. Moreover, each party hereto agrees to restrict dissemination of
particular confidential information of the other party to only those persons in
their respective organizations who must have access to such information in
order for such party to perform its obligations under this Agreement.
Notwithstanding the above restriction, neither party shall have any obligation
for any disclosure of confidential information which is, or becomes, generally
known to the public without breach of the
- 11 -
<PAGE> 11
terms of this Agreement, or if any disclosure of confidential information is
required by court order or by order of any governmental or administrative
agency or tribunal having jurisdiction over the party.
12. MISCELLANEOUS.
12.1 ASSIGNMENT. MLLIC shall have the right to assign any
of its rights or obligations under this Agreement to an affiliate or to an
unaffiliated third party upon ML NY's prior consent, which consent shall not be
unreasonably withheld. ML NY shall have the right to assign any of its rights
or obligations hereunder to any affiliate upon notice to MLLIC. Except as and
to the extent specifically provided in this Agreement, nothing in this
Agreement, expressed or implied, is intended to confer on any person other than
the parties hereto, or their respective legal successors, any rights, remedies,
obligations or liabilities that would otherwise be applicable. The
representations and agreements contained in this Agreement shall be binding
upon, extend to and inure to the benefit of the parties hereto, and each of
their respective successors and authorized assigns.
12.2 MLLIC AFFILIATE AGREEMENTS. ML NY hereby
acknowledges that MLLIC may enter into agreements with an
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<PAGE> 12
affiliate to assist it in providing the Services to ML NY under this Agreement,
PROVIDED, HOWEVER, MLLIC may not enter into any such agreement without the
prior express approval of ML NY.
12.3 GOVERNING LAW. This Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York applicable to contracts made and to be performed in that State,
without regard to principles of conflicts of law.
12.4 ARBITRATION. All differences between MLLIC and ML NY
on which agreement cannot be reached will be decided by arbitration. The
arbitrators will interpret this Agreement in accordance with the usual business
practices, rather than strict technicalities or rules of law. Three
arbitrators will decide any differences. They must be officers of life
insurance companies other than the two parties to this agreement, their
parents, subsidiaries and affiliates. One of the arbitrators is to be
appointed by ML NY and one by MLLIC and these two will select a third. If the
two are unable to agree on a third, the choice will be left to the President of
the American Council of Life Insurance or its successor organization. The
arbitrators' decision will be by majority vote and no appeal will be taken
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<PAGE> 13
from it. The costs of the arbitration will be borne by the losing party unless
the arbitrators decide otherwise.
12.5 NOTICE. Any notice or other communication in
connection with this Agreement shall be deemed to be delivered if in writing
addressed as provided below if either (i) via facsimile (delivery will be
effective upon confirmation of receipt), (ii) actually delivered at such
address or (iii) in the case of a letter, five business days shall have elapsed
after the same shall have been deposited in the United States mails, properly
addressed, postage prepaid:
(a) If to ML NY to:
ML Life Insurance Company of New York
717 5th Avenue
New York, New York 10022
Attention: Chief Administrative Officer
(b) If to MLLIC:
Merrill Lynch Life Insurance Company
c/o Merrill Lynch Insurance Group, Inc.
800 Scudders Mill Road
Section 1D
Plainsboro, New Jersey 08536
Attention: General Counsel
or to such other persons or places as each party may from time to time
designate by written notice sent as provided in this Section 12.5
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<PAGE> 14
12.6 ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement and understanding between the parties and supersedes all prior
agreements, arrangements and understandings relating to the subject matter
hereof.
12.7 SURVIVAL. Upon the expiration or termination of this
Agreement for any reason whatsoever, the obligations set forth in Section 4.2
(Inspection Rights), Section 5 (Other Records and Documents), Section 6
(Ownership of Data), Section 8 (Indemnification), Section 10 (Effect of
Termination or Expiration of Agreement), Section 11 (Confidentiality), and
Section 12.4 (Arbitration) shall survive such termination.
12.8 SEVERABILITY. The invalidity or unenforceability of
any term or provision hereof shall not affect the validity or enforceability of
any other term or provision hereof.
12.9 SECTION HEADINGS. Section headings contained herein
are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
12.10 COUNTERPARTS. This Agreement may be executed in
separate counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
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<PAGE> 15
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed in duplicate by their respective officers duly authorized so to do,
and their respective corporate seals to be affixed hereto, as of the date and
year first above written.
ML LIFE INSURANCE COMPANY OF NEW YORK
By /s/ BARRY G. SKOLNICK
-----------------------------------
Name: BARRY G. SKOLNICK
Title: SENIOR VICE PRESIDENT
MERRILL LYNCH LIFE INSURANCE COMPANY
BY /S/ JOHN C. CIRINCION
-----------------------------------
Name: JOHN C. CIRINCION
Title: VICE PRESIDENT AND SENIOR
COUNSEL
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EXHIBIT A
DESCRIPTION OF THE SERVICES FOR
ML LIFE INSURANCE COMPANY OF NEW YORK
VARIABLE LIFE PRODUCTS
MLLIC shall provide the following Services using reasonable diligence. In the
course of performing such Services, with respect to information which is not
furnished to MLLIC by third parties, MLLIC shall provide materially correct
information to ML NY and its Policyholders:
I. SELECTION, UNDERWRITING, AND ISSUANCE SERVICES
A. Application handling - Receive application or copy of
application and evidence of premium payment, including amount
and date of payment; enter information into computer system.
B. Based on ML NY underwriting requirements as communicated to
MLLIC from time to time, request information from marketing
firm, agent, applicant,
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doctor, or inspection company and pay all applicable fees for
such information requests.
C. Furnish underwriting support and advisory services, which
include reviewing policy applications in an advisory capacity
(including M.I.B. medical review) using ML NY underwriting
standards, and recommend decisions to ML NY for ML NY's final
determination; promptly upon receipt of ML NY's final
determination, enter decision into computer system.
D. If application must be declined or closed out, forward
explanatory letter and arrange for refund drawn on a ML NY
bank account and notify ML NY of such results.
E. Assembly and mailing
1. Assemble computer-printed ML NY policies with
materials pertinent to ML NY and to the product
(wallets, issue letters, identification cards,
illustrations, etc.)
2. Forward mailing package to policyholder or to general
agent for delivery.
3. Send copy of policy face sheet to ML NY.
F. Correspondence and forms
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Use ML NY's forms and stationery in all correspondence related
to underwriting and policy issue.
G. Documents and reports
Provide ML NY, upon request, with copies of all selection,
underwriting, and issuance documents and reports processed and
produced by MLLIC in support of ML NY, in either original
paper document form or microfiche form, as deemed appropriate
by ML NY under the circumstances. All original documents and
reports are the property of ML NY.
H. To the extent there are newly issued policies or add-ons for
which reinsurance applies, take customary ministerial steps
necessary for reinsurance by third parties to cover risks
pursuant to the terms of applicable automatic or facultative
reinsurance treaties or agreements.
II. POLICY SERVICE
MLLIC will be responsible for arranging for the handling of such
requests and for maintaining all records related to them.
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<PAGE> 19
A. Be prepared to provide on request on a daily basis a record
for each policyholder (i) summarizing the name and address of
the policyholder, policy number, applicable policy form and
riders; investment base, allocation among the various
investment divisions of the investment base, cash surrender
value, and (ii) providing any other information requested by
ML NY. Such records shall be delivered to ML NY promptly upon
request.
B. Billing
1. Send to the contract owner premium notices and return
envelopes bearing ML NY's name and, at direction of
ML NY, ML NY's or its lock box mailing address.
2. Implement automatic bank withdrawals, wire transfers
or similar transfers for deposit in ML NY bank
accounts.
3. Update records based on notices and accompanying
payments.
4. Provide services as needed for clarification and
maintenance of billing funds.
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5. Transfer to an ML NY bank account the amount of any
premium sent in error to MLLIC.
C. Distribute to policyholders quarterly and annual reports,
prospectuses and prospectus supplements and modifications to
policy schedule pages.
D. Follow standards in Prospectus with regard to surrender and
policyholder loans.
E. Communication, correspondence and forms There will be an 800
number, or similar telephone number made available, for
communication between policyholders and MLLIC. ML NY's forms
and stationery will be used in all correspondence related to
policy services. Any 800 number will be answered in the name
of ML NY by personnel trained by MLLIC to respond to any
questions from policyholders relating to their variable life
policies with ML NY. All correspondence, other than that
addressed to ML NY's lock box, will use a return address of ML
NY in its home state.
F. Documents and reports
Provide ML NY, upon request, with copies of all policy service
documents and reports processed and produced by MLLIC in
support of ML NY, in either original paper
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<PAGE> 21
document form or microfiche form, as deemed appropriate by ML
NY under the circumstances. All documents and reports are the
property of ML NY.
G. With respect to in force policies for which third party
reinsurance applies, take customary ministerial steps
necessary to provide the policy services described above for
such policies.
III. CLAIMS
Claims service will originate with ML NY, who will authorize MLLIC to
assume responsibility for supporting all functions related to the
receipt, processing and payment of ML NY's policy claims.
A. Identify the insured.
B. Investigate and process claims based upon ML NY's claims
guidelines, and make a recommendation to ML NY as to the
disposition of the claim.
C. Give prompt notice by facsimile transmission to ML NY of each
claim with respect to a benefit payment under any of its
policies and a recommendation as to disposition of such claim.
If requested by ML NY within five business days of receipt of
a notice of
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claim, promptly provide the file, or a copy thereof, to ML NY.
ML NY shall instruct MLLIC whether to contest such claim
within five business days of receipt of such file or copy
thereof.
D. Subject to ML NY's prior approval, pay all claims, whether
settled or adjudicated.
E. Adjudicate claims based upon ML NY's claims guidelines,
PROVIDED, HOWEVER, that ML NY reserves the right to assume the
defense of any claims.
F. Audit claims processed.
G. If requested by ML NY send ML NY drafts and/or correspondence
to payee or to policyholders.
H. Upon request, send record of claim activity via facsimile
transmission to ML NY.
1. Maintain copies of all original claims on microfiche
for any future claim processing.
2. Maintain computer system records of claims
information.
I. Provide reports, perform maintenance, and assure all records
are accurate and balanced to the appropriate accounting
records.
J. Communication, Correspondence and Forms
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<PAGE> 23
1. Maintain telephone service area to respond to any
claims questions or provide current status of claims.
2. ML NY will authorize the use of an 800 number for
communication between policyholders and MLLIC.
3. Use ML NY's forms and stationery in all
correspondence related to policy claims.
K. Documents and reports
Provide ML NY, upon ML NY's request, with original copies of
all policy claims documents and reports processed and produced
by MLLIC in support of ML NY, in either original paper
document form or microfiche forms, as deemed appropriate by ML
NY under the circumstances. All documents and reports are the
property of ML NY.
L. With respect to in force policies under which automatic or
facultative reinsurance treaties or agreements apply, collect
amounts due on any claims on behalf of ML NY.
IV. CASH ACCOUNTING
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All ML NY cash received at MLLIC will be deposited into ML NY's bank
accounts which will be opened by ML NY but maintained by MLLIC. If
cash is received at ML NY, checks and original documents such as
applications, etc. will be forwarded to MLLIC for deposit and records
processing. If cash is received at another ML NY bank account, funds
will be transferred into the ML NY bank account maintained by MLLIC
and copies of original documents such as applications, etc., will be
forwarded to MLLIC for records processing. All bank statements and
deposit slips are to be received directly by MLLIC which will send
copies to ML NY upon request. All withdrawals from ML NY's bank
accounts must be deposited in an ML NY account in its home state or
deposited directly in ML NY's underlying separate accounts, as may be
directed by ML NY. Unless otherwise designated by ML NY, all
disbursement checks must have the signature of an officer of ML NY.
A. Monitor transfer of funds to: (i) verify that all monies due
ML NY are deposited in ML NY's bank accounts and (ii) verify
that all monies payable by MLLIC on behalf of ML NY through
these accounts have been disbursed.
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<PAGE> 25
B. Obtain information where available regarding all receipts and
disbursements flowing through ML NY's bank accounts so that ML
NY may make proper accounting entries on its books.
C. Obtain, where available, bank statements from ML NY's banks
for reconciliation and processing.
D. Handle all commission processing and payment for ML NY and
maintain all commission records.
E. With respect to in force policies for which third party
reinsurance applies, take customary ministerial steps to
perform the cash accounting services described above.
F. Perform daily calculations for policy valuations based on
information provided by the Investment Advisers and submit
daily trades for processing by the Investment Advisers.
G. MLLIC will assist ML NY with tax withholding information for
filing remittances and related tax forms to all applicable
governmental authorities.
H. MLLIC will prepare and distribute Form 1099 tax information
forms or their equivalent regarding the ML NY Policies.
- x -
<PAGE> 26
V. ACCOUNTING
Provide the following accounting services to ML NY:
A. Corporate Records
1. Maintain a complete set of ML NY's and records
relating to the variable life insurance policies
reflecting the Services provided hereunder.
2. Maintain general ledger, premium receipts journal,
cash receipts and disbursements journals, investment
records, expense records, commission records, chart
of accounts, financial reports, and any other records
and information necessary to support accounting
responsibilities for ML NY.
3. Maintain, and provide to ML NY upon request, all
accounting records necessary for the preparation and
timely filing of ML NY's financial statements as
required for compliance with applicable laws and
regulations promulgated thereunder and for generally
accepted accounting principles and/or SAP purposes as
identified by Issuer (i.e. for both internal and
external reporting purposes).
- xi -
<PAGE> 27
4. Assist ML NY in the preparation of all
accounting-related forms and special filings
(including premium taxes) required by ML NY's home
state and any other regulatory bodies.
B. Reporting
Provide to ML NY sufficient information to meet the
requirements of its home state's Insurance Department, and any
other state's laws and regulations, and enable any
examinations to be conducted and fully completed within the
home state.
C. At ML NY's request, provide management information services,
including, but not limited to, loss rations, mortality
experiences, regional sales, regional lapse rates, reports and
such other information as ML NY reasonably deems necessary for
the management of its business.
D. Provide actuarial valuation services.
E. Provide assistance to ML NY in connection with any filings or
other compliance activities required by any state insurance
department, the Securities and Exchange Commission or any
other governmental agency.
F. Correspondence and forms
- xii -
<PAGE> 28
Use ML NY's forms and stationery, where appropriate, in all
correspondence related to accounting.
G. Documents and reports
Provide ML NY, upon request, with copies of all accounting
documents and reports processed and produced by MLLIC in
support of ML NY, in either original paper document form or
microfiche form, as deemed appropriate by ML NY under the
circumstances. All documents and reports are the property of
ML NY.
VI. PURCHASING, PRINTING, AND MAIL SUPPORT
A. Prepare and produce all forms, stationery and other printed
material for ML NY consistent with forms currently provided.
B. Submit all forms and stationery prepared for ML NY to ML NY
for approval prior to use.
C. Maintain separate purchasing records.
D. Maintain a new Identification Number System (form numbers) to
facilitate management of a separate inventory.
- xiii -
<PAGE> 29
E. Prepare, handle and process all mailings associated with the
day to day administration of variable life products for ML NY.
F. Correspondence and forms
Use ML NY forms and stationery, where appropriate, in all
correspondence related to purchasing, printing, and mail
support.
G. Documents and reports
Provide ML NY, upon request, with original copies of all
purchasing, printing, and mail support documents and reports
processed and produced by MLLIC in support of ML NY, in either
original paper document form or microfiche form, as deemed
appropriate by ML NY under the circumstances. All documents
and reports are the property of ML NY.
VII. DATA PROCESSING AND SOFTWARE DEVELOPMENT
A. Maintain a distinct identification code for processing ML NY
policies.
B. MLLIC will control all systems services' applications.
C. Computer Software Development
- xiv -
<PAGE> 30
In the event that ML NY has particular needs for certain
software development, MLLIC, upon ML NY's request, shall
submit a proposal for developing new software or a derivative
of existing software. ML NY requests for software development
shall be handled in accordance with procedures set forth
below.
1. Step 1 - ML NY shall send a written request for
software development to MLLIC identifying specific
business needs.
2. Step 2 - MLLIC and M$ NY will jointly develop the
scope and expectations of the project. MLLIC will
develop a plan outline and high level cost estimate.
3. Step 3 - MLLIC and ML NY will jointly develop
detailed business requirements. MLLIC will produce a
projected plan with a total estimated cost.
4. Step 4 - If the project plan, projected start date
and total estimated costs are unacceptable, ML NY,
shall have the right to develop the software itself
or approach an independent third party to perform
such development work.
- xv -
<PAGE> 31
5. Step 5 - MLLIC has the right to retain consultants
that satisfy ML NY requirements.
E. Provide computer-produced reports necessary to support ML NY's
variable life business.
F. Correspondence and forms
Use ML NY's forms and stationery, where appropriate, in all
correspondence related to data processing.
G. Documents and reports
Provide ML NY with copies of all data processing documents and
reports processed and produced by MLLIC in support of ML NY,
in either original paper document form or microfiche form, as
deemed appropriate by ML NY under the circumstances. All
documents and reports are the property of ML NY.
VIII. ADMINISTRATIVE SERVICES
Perform the following administrative services:
A. Effect written confirmations of transactions and prepare
quarterly statements of transactions.
B. Effect reallocations for policyholders.
- xvi -
<PAGE> 32
C. Prepare policy histories, including a complete accounting for
policyholders.
D. Effect loans and partial withdrawals, surrenders and premium
refunds of policies, including delivery of conservation kits,
where appropriate.
E. Effect beneficiary and ownership changes in all policies.
F. Respond to customer complaints.
G. Effect death claims.
H. Prepare general correspondence.
I. Effect processing for all declined, withdrawn, incompleted
cases.
J. Inspect all policy forms for accuracy.
IX. RECORDKEEPING SYSTEMS
Prepare the transactions files, form and reports listed in Exhibit C,
in form and substance satisfactory to ML NY:
X. OTHER SERVICES
A. Product Development Services
MLLIC will make recommendations to ML NY from time to time
with respect to new services which will enhance ML
- xvii -
<PAGE> 33
NY's variable life business. Such recommendations will only be
adopted with the prior written consent of ML NY. ML NY shall
have the right to any new products developed by MLLIC or its
affiliates at a price to be mutually agreed upon by the
parties in good faith.
B. Marketing Services
1. Upon ML NY's request, assist ML NY in reviewing
promotional literature and advertising materials for
the marketing and promotion of ML NY's variable life
business.
- xviii -
<PAGE> 34
EXHIBIT B
SYSTEM SERVICES
It is the intent that MLLIC shall be responsible for managing,
operating and maintaining all physical and environmental facilities (space,
electrical power, steam, HVAC, cooling water, lighting, fire safety, etc.)
("Physical and Environmental Facilities"), all physical technology devices
(processors, input and output devices, storage devices, networks,
communications devices, media, etc.) ("Physical Technological Devices"), all
logical technology components (operating systems, control programs, schedulers,
measurement systems, report generators, interface software, etc.) ("Logical
Technology; components"), all application specific logic components and all
data assets pertinent to ML NY's products ("Application Specific Logic").
- xix -
<PAGE> 35
SERVICE AGREEMENT BETWEEN
TANDEM FINANCIAL GROUP, INC.
AND
ROYAL TANDEM LIFE INSURANCE COMPANY
Service Agreement made as of the 22nd day of June, 1987 between TANDEM
FINANCIAL GROUP, INC., a Delaware corporation ("TFG") and ROYAL TANDEM LIFE
INSURANCE COMPANY, a New York corporation ("Royal Tandem"),
W I T N E S S E T H:
WHEREAS, Royal Tandem is a wholly-owned subsidiary of TFG and desires
to utilize certain of TFG's services (including related property and personnel)
in carrying out some of its corporate functions and TFG is willing to furnish
the same on the terms and conditions hereinafter set forth;
NOW, THEREFORE, the parties do hereby mutually agree as follows,
effective so long as Royal Tandem is such a subsidiary of TFG:
1. TFG will furnish, or contact with any of its affiliates or
subsidiaries for the furnishing of, as available, services as listed in Exhibit
I hereto, if and to the extent requested by Royal Tandem. Royal Tandem will
utilize such services in accordance with the Commitment Agreement (copy
attached) to the New York Insurance Department (the "Department").
2. Royal Tandem agrees to pay TFG for such services
<PAGE> 36
(i) the amounts as may be specified in one or more
Schedules, pertaining to particular categories of services, may be executed by
the parties and attached to an incorporated into this Agreement; or
(ii) if not so specified, to pay those charges (direct and
indirect) and expenses incurred by TFG or any its affiliates or subsidiaries
which, as reasonably determined by TFG and demonstrated to the reasonable
satisfaction of Royal Tandem, reflect actual cost to TFG or its affiliates or
subsidiaries of furnishing such services, provided that
(a) charges and expenses for personnel shall be
based on a reasonable allocation of the time
spent on Royal Tandem matters relative to
time spent on other matters,
(b) charges and expenses for property or other
services shall be based on a reasonable
allocation of the proportion of and period of
time such property or services is utilized
for Royal Tandem matters relative to that
utilized for other matters, and
(c) no charges or expenses shall exceed those
charged by the service provider in the
- 2 -
<PAGE> 37
relevant market for comparable personnel,
property or services as the case may be.
TFG will provide Royal Tandem with a bill for service charges and expenses
incurred within 45 days after the end of the quarter in which incurred or in
which TFG ascertains the amounts thereof, and Royal Tandem will pay for such
charges and expenses upon receipt of the bill.
3. The books, accounts and records of TFG and Royal Tandem as to
all transactions hereunder shall be maintained so as to clearly and accurately
disclose the nature and details of the transactions, including such accounting
information as is necessary to support the reasonableness of the charges,
expenses or fees hereunder. Royal Tandem shall have the right, at its own
expense, and at any reasonable time, to make an audit of the services rendered
and the amount charged therefor.
4. The term of this Agreement shall commence as of the date
hereinabove indicated and continue until December 31, 1987, and thereafter
shall be deemed to be renewed automatically, upon the same terms and
conditions, for successive periods of one year each, until either party, at
least 60 days prior to the expiration of the original term or of any extended
term, shall give written notice to the other party of its intention not to
- 3 -
<PAGE> 38
renew the Agreement, provide that, notwithstanding the foregoing, electronic
date processing services will be made available to Royal Tandem for up to six
months following any such termination, if Royal Tandem shall so request.
5. All difference between TFG and Royal Tandem on which agreement
cannot be reached will be decided by arbitration. The arbitrators will
interpret this Agreement in accordance with the usual business practices,
rather than strict technicalities or rules of law. Three arbitrators will
decide any differences. They must be officers of life insurance companies other
than the two parties to this agreement, their parents, subsidiaries and
affiliates. One of the arbitrators is to be appointed by Royal Tandem and one
by TFG, and these two will select a third. If the two are unable to agree on a
third, the choice will be left to the President of the American Council of Life
Insurance or its successor organization. The arbitrators' decision will be by
majority vote and no appeal will be taken from it. The costs of the
arbitration will be borne by the losing party unless the arbitrators decided
otherwise.
6. No assignment of this Agreement shall be made by TFG without
the consent of Royal Tandem.
- 4 -
<PAGE> 39
7. Subject to the foregoing Section 6, this Agreement shall inure
to the benefit of and be binding upon the successors and assigns of the parties
hereto.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
TANDEM FINANCIAL GROUP, INC.
BY: /s/ MARIANNE KEARNS
-------------------------------
MARIANNE KEARNS
ROYAL TANDEM LIFE INSURANCE COMPANY
BY: /s/ MARIANNE KEARNS
-------------------------------
MARIANNE KEARNS
- 5 -
<PAGE> 40
EXHIBIT C
FINANCIAL, ACTUARIAL
AND OPERATIONAL INFORMATION
As used herein:
D = Daily
W = Weekly
P = Preliminary Monthly Reporting
M = Final Monthly Reporting
R = Monthly Reconciliation
Q = Quarterly
S = Semi Annually
A = Annually
* = Identifies Information not currently available and to be developed.
<TABLE>
<CAPTION>
Designated Frequency
Description of Information/Report D W P M R Q S A
--------------------------------- -------------------------------------
Financial Information
---------------------
<S> <C>
1. Cash Trial Balance X X
2. Accrual Trial Balance X X
3. Posted Statutory Ledger X X
4. Combined Trial Balance X X
5. Separate Account Financial Statements X X
</TABLE>
<PAGE> 41
<TABLE>
<CAPTION>
Designated Frequency
Description of Information/Report D W P M R Q S A
--------------------------------- -------------------------------------
<S> <C>
*6. Reconciliation of change in policy investment base,
including Separate Account roll-forward-dollars and counts X
7. Reconciliation of receivable for investments sold X
8. Reconciliation of payable for investments purchased X
9. Separate Account Investments by Fund X
10. Detail listing of unpaid and contested claims X
11. Analysis of balances due to/from Separate Account and/or
the General Account X
*12. Death Benefit Paid by Amt at Risk X
*13. Policies surrendered - Full - dollars and counts X
*14. Policies surrendered - Partial - dollars and counts X
15. Reconciliation of Investment Custodial Account to S/A X
16. Reconciliation of Reserve System to Ledger X
17. GAAP Trial Balance X
18. GAAP G/L Update X
*19. Analysis of Monthly Financial Information X
*20. Transfer reconciliation X
21. Suspense Reconciliation Summary Report X
*22. Reconciliation of Policy Ledger to Reporting Ledger X
</TABLE>
- 2 -
<PAGE> 42
<TABLE>
<CAPTION>
Designated Frequency
Description of Information/Report D W P M R Q S A
--------------------------------- -------------------------------------
<S> <C>
*23. Policy Loan summary Information and general ledger to
administration systems reconciliation X
*24. Reconciliation of DPL change X
25. Reconciliation of any other policy-related receivables by type X
26. Reconciliation of any other policy-related payables by type X
*27. Reconciliation and detail listings of balances due to/from
Separate Account and/or the General Account X
28. Premiums by New Issue and Add Ons X
*29. Reconciliation of S/A Assets to S/A Reserves X
*30. Bank account reconciliations to the policy ledgers X
31. Reconciliation of Investment shares and unit records to the
Investment custodial statements X
32. SPIAR detail summarized by interest rates, issue year and
type with policy counts X
33. GID assets by Interest rate and maturity date X
34. Year-to-date premium tax reports in current format X
35. Semi-Annual Policy Holder Reports X
36. VLI financial date for annual Separate Account (green
blank) in format suitable for consolidation X
</TABLE>
- 3 -
<PAGE> 43
<TABLE>
<CAPTION>
Designated Frequency
Description of Information/Report D W P M R Q S A
--------------------------------- -------------------------------------
<S> <C>
37. VLI financial data for annual SEC filing of N-SAR in format
suitable for consolidation X
38. Reconciliation of amount due from reinsurers on losses
incurred by reinsurer X
39. Reconciliation of amount due from reinsurers on IBNR by
reinsurer X
40. Reconciliation of amount due to reinsurers for premiums
ceded by reinsurer X
41. Detail listing by reinsurer of amount in force per Schedule
S 3A X
42. Detail listing by reinsurer of reserve credit taken per
Schedule S 3A X
43. Detail listing by reinsurer of premiums per Schedule S 3A X
44. Detail Listing of reinsurance assumed per Schedule S part 3B X
45. Preparation of Exhibit 1 part 1 & 2 by product X
46. Premiums by state and reconciliation of premiums by state
to Exhibit 1 X
47. Death by state X
48. Surrender/withdrawal benefits paid by state, by product, by
qualified, by non-qualified X
</TABLE>
- 4 -
<PAGE> 44
<TABLE>
<CAPTION>
Designated Frequency
Description of Information/Report D W P M R Q S A
--------------------------------- -------------------------------------
<S> <C>
49. Exhibit II Parts 1 and 2 by Product X
50. Reconciliation of Life Insurance In Force between Years -
Page 15 X
51. Reconciliation of annuities - Page 16 X
52. Exhibit B - Aggregate Reserve for Life Policies and
Contracts X
53. Schedule E - Cash Deposits X
54. Schedule F X
55. Income Tax Reserves X
</TABLE>
- 5 -
<PAGE> 45
<TABLE>
<CAPTION>
Designated Frequency
Description of Information/Report D W P M R Q S A
--------------------------------- -------------------------------------
<S> <C>
Actuarial Information
1. Separate Account Reserves summarized by account and
valuation assumptions. X
2. General Account Reserves, summarized by assumptions as
follows: X
- Split into loans and GID categories.
- Split into annual and single premium categories.
- Term Riders
- Reduced Paid Up Policies
- Extended Term Insurance Policies
- Payor Benefit
- Guaranteed Insurability Option
- ADB (Exhibit 8, Section D)
- Disability - Active Lives (Exhibit 8, Section E)
- Disability - Disabled Lives (Exhibit 8, Section F)
- VLI Minimum Death Benefit Guarantee (Exhibit 8, Section
G)
- Group Conversion Reserve (Exhibit 8, Section G)
- Annuities Certain and Lump Sums
- Reserves Ceded to Reinsurers
3. Separate Account Liabilities - Accrued Interest on Advanced
Transfers X
</TABLE>
- 6 -
<PAGE> 46
<TABLE>
<CAPTION>
Designated Frequency
Description of Information/Report D W P M R Q S A
--------------------------------- -------------------------------------
<S> <C>
4. Due, Deferred, Advanced Premiums as follows: X
- Gross premiums due, split between first year and renewal
- Gross Premiums Deferred, split between first year and
renewal
- Net Premiums Due, split between first year and renewal
- Net Premiums Deferred, split between first year and
renewal
- Premiums Paid in Advance, split between first year and
renewal
5. Reserves based on Generally Accepted Accounting Principles
(GAAP) as follows: X
- Adjustment for Deficiency Reserve
- Adjustment for GAAP Annuity Reserve
- Accrual for Current Year Formula Adjustments
- Deferred Load (Separate And General Account)
- Accrual of Deferred Loads (Separate and General Account)
- Adjustment for Minimum Death Benefit Guarantee
- Adjustment for Increased Death Benefit Reserve
- Adjustment for Excess Interest Reserves
6. Surrender Report X
*7. Experience ceding allowance file X
8. Reinsurance Premium Report X
9. Letter certifying reserve liabilities controlled by MLLIC X
Operational Information
</TABLE>
- 7 -
<PAGE> 47
<TABLE>
<CAPTION>
Designated Frequency
Description of Information/Report D W P M R Q S A
--------------------------------- -------------------------------------
<S> <C>
1. Settlement schedule for Separate Account tradets X
2. Daily reallocations in Separate Accounts X
3. Daily cash bank reports X
4. Daily Tax Withholding Information, as necessary for Monarch
Life to file Remittances X
5. Reconciliation of Withholding Information per the Tax
System to Daily Withholding Information X
</TABLE>
- 8 -
<PAGE> 48
EXHIBIT I
To Service Agreement
Between TFG and Royal Tandem
Personnel, Property and Services (except as provided under separate agreements
or Schedules):
1. Electronic data processing
2. Legal
3. Corporate Secretary
4. Actuarial
5. Product design and development
6. General corporate management.
7. Storage
8. Office and general supplies
9. Financial and cash advice or management
10. Advertising and public relations
11. Printing
12. Development of software programs
- 9 -
<PAGE> 49
Superintendent, State of New York
Department of Insurance
Re: Acquisition of Control of
Royal Tandem Life Insurance Company
Dear Superintendent:
COMMITMENT AGREEMENT TO THE
NEW YORK INSURANCE DEPARTMENT
Pursuant to your request, the undersigned, The Equitable Life Assurance Society
of the United States ("Equitable"), Tandem Financial Group, Inc. ("TFG") and
Merrill Lynch & Co., Inc. ("Merrill Lynch") (collectively known as the
"Parents" and individually as a "Parent") represent and commit, effective as to
each Parent so long as it shall be deemed by the Department, under applicable
law, to control Royal Tandem Life Insurance Company ("Royal Tandem"), that it
will not on behalf of Royal Tandem do, indirectly or through the medium of
another entity, that which is prohibited to Royal Tandem by statute, or
regulation or administrative ruling of the New York Insurance Department,
including but not limited to the following:
1. No Parent nor any of its affiliates or subsidiaries will offer,
sell, give or in any way transfer or assign any securities issued by any of
such companies, or offer any options or warrants on such securities, to persons
who are officers, directors, agents or employees of Royal Tandem, except in
connection with services rendered directly to such Parent or the company
selling, offering or giving such securities, options or warrants, and after
full and appropriate disclosure to, and prior approval by the Superintendent of
the plan pursuant to which such offer, sale or gift is made and except as
permitted by the provisions of Regulation No. 54. This paragraph, however,
shall not be deemed to apply to any offer or sale made to any such person as a
part of, and on the same terms as, a general offering to stockholders or to the
public.
<PAGE> 50
2. No Parent nor any of its affiliates or subsidiaries, nor
controlling interests thereof, other than Royal Tandem, will grant any
compensation or special advantage to officers, directors, agents or employees
of Royal Tandem except in connection with services rendered directly to such
Parent or the company making such grant as provided by but not limited to the
provisions of Section 1509 of the New York Insurance Law.
3. Royal Tandem's operations will be directed by its own management
and no agreement or arrangement will be made pursuant to which another company
will provide such management directly or indirectly. Royal Tandem shall
maintain a home office in New York which shall have at least one full-time
administrative officer who is unaffiliated with any other company in the
holding company system and who shall have full responsibility and authority for
making management and administrative decisions and carrying out established
policy. The management of Royal Tandem will be fully responsible to the
Department for the actions of, or failure to act by, Royal Tandem, pursuant to
the provisions of Section 1507 of the New York Insurance Law.
4. Royal Tandem will maintain in this state, at its home office,
officers and qualified personnel knowledgeable of and responsible for directing
and performing the daily operations of Royal Tandem, included but not limited
to the following primary insurance company functions:
(a) Policyholder services - such services shall comprise any and
all activities involving personal contact or communication
with a policyholder or beneficiary, including but not limited
to policy loan applications and payments, surrender requests
including computation and payment of benefits, determination
and payment of policy benefits, policy conversions,
beneficiary changes, policy changes, request for general
information, dividend computations, premium payments, policy
lapses and reinstatements, and consumer complaints.
(b) Recordkeeping - Royal Tandem will maintain at its home office
in New York, all records, files and other sources of
information relating to the operations of the company. Such
recordkeeping shall include but not be limited to ledgers,
journals, trial balances and adjusting journal entries,
vouchers, annual statement workpapers, and all related back-up
records including EDP printouts. If it is necessary be
transfer records in connection with the performance of
specific
- 2 -
<PAGE> 51
services, copies of such records shall be transferred and the
originals maintained at the home office of Royal Tandem.
Persons providing services shall forward to the home office of
Royal Tandem the originals or copies all work papers, related
records and documents prepared and utilized in connection with
such services. While records which are maintained services
solely on EDP tapes, disks, etc., need not be forwarded to
Royal Tandem, the servicer, when requested, shall provide
printouts of such tapes, disks, etc. which shall be available
for inspection by the Superintendent at the home office in New
York.
(c) Accounting - Royal Tandem will perform all accounting
functions at its home office in New York. Such accounting
functions shall include but not be limited to the initiation
and preparation of all vouchers and accounting records and/or
transactions relating to the financial condition of the
subsidiary, verification that original financial data and
accounting transactions have been accurately prepared and
reflected in the subsidiary's books of account, bank
reconciliations and reconciliations of EDP printouts. this
shall not preclude Royal Tandem from the use of an outside
service for the preparation of accounting records or
processing of accounting transactions provided that (i) the
initiation of such records and/or transactions are prepared
and the final product verified by Royal Tandem at its home
office in New York and (ii) that there is within Royal
Tandem's home office in New York qualified personnel
knowledgeable of and familiar with all the details of the
services provided including but not limited to, accounting and
adjusting entries.
(d) Underwriting - Royal Tandem will establish and reduce to
writing all underwriting standards for the acceptance of new
business, make all final underwriting decisions and maintain
at its home office in New York all original papers which are
basic to the insurance contract. Within a period of five
years from the date of this Commitment Agreement, Royal Tandem
will perform at its home office in New York all underwriting
functions. Such underwriting shall include but not be limited
to the review of policy applications, assignment of policy
numbers, MIB review, medical review, and actual policy issue.
It is understood that no service agreements will be entered
- 3 -
<PAGE> 52
into by Royal Tandem which will provide for underwriting
services beyond the above mentioned period.
(e) Claims - Royal Tandem will establish and reduce to writing
claims settlement procedures, and will exercise final approval
authority For all claim settlements and maintain at its home
office in New York all original claims investigation paper and
worksheets. Within a period of five years from the date of
this Commitment Agreement, Royal Tandem will perform at its
home office in New York all claims processing and settlement.
Such claims processing and settlement shall include but not be
limited to verification that the policy was in force and
review and investigation of claims. lt is understood that no
service agreements will be entered into which will provide for
claims processing services beyond the above-mentioned period.
(f) Marketing - Within a period of five years from the date of
this Commitment Agreement, Royal Tandem will perform at its
home office in New York the following marketing functions:
recruitment and direction of the agency field force,
validation of agents training allowances and development
allowances, and the administration of all agency matters. It
is understood that no service agreements will be entered into
by Royal Tandem which will provide for marketing services
beyond the above-mentioned period.
5. All agreements providing for the rendering of statistical,
mechanical or ministerial services on a regular or systematic basis between
Royal Tandem and either Equitable or its subsidiaries or affiliates, or any
modification thereof, will be submitted to the Department for prior review,
pursuant to the provisions of Section 1505 and 1507 of the New York Insurance
Law.
6. All reinsurance treaties between Royal Tandem and any Parent or
affiliates thereof, or any modification thereto. will be submitted to the New
York Insurance Department for prior review in accordance with the provisions of
Section 1505 of the New York Insurance Law. Any experience rating formula or
dividend formula to be used in conjunction with the agreements will be
submitted to the New York insurance Department for prior review. Expenses and
settlement data under this formula will be retained and will be furnished to
the New York Insurance Department upon request.
- 4 -
<PAGE> 53
7. Royal Tandem will neither subsidize nor be subsidized by any Parent
or by any Parent's subsidiaries or affiliates. Subject to the foregoing, all
expenses incurred by or on its behalf, all joint expenses and the cost of
servicing functions provided Royal Tandem by such Parent or subsidiaries
affiliates or other corporate entities thereof, will be allocated equitably.
Adequate and properly documented workpapers serving as a basis for allocations
and charges shall be maintained by Royal Tandem. The books, accounts and
records of each party will be kept in a manner which clearly and accurately
discloses, inter alia, the nature and details of all transactions and
arrangements between Royal Tandem and such Parent or any subsidiary or
affiliate thereof. All of the above shall be in conformance with the provisions
of Section 1505 of the New York Insurance Law.
This section shall not be deemed to prohibit the rendering of
incidental services to and for the benefit of Royal Tandem by Equitable without
being compensated therefor.
8. Royal Tandem will operate at arm's length in relation to each
Parent, its subsidiaries and affiliates. Allocations and classifications of
expenses incurred jointly, or for services rendered or received shall be in
accordance with New York Insurance Department Regulation 33. In the event that,
in the judgment of the Insurance Department, the books, accounts and records of
Royal Tandem do not adequately reveal all transactions relevant to its
operations, the books, accounts, and records of each Parent, its subsidiaries
and or affiliates, will be made available to the Department to the extent they
relate to Royal Tandem, its officers, directors, employees or agents pursuant
to the provisions of Section 1504 of the New York Insurance Law.
9. In line with the customary practice of non-affiliated domestic life
companies, Royal Tandem's income is to be received directly at its home office
and an itemized record is to be made thereof at the time of receipt. Within
the meaning of the preceding sentence, Royal Tandem may arrange for the
collection of premiums or other income at a lock box located within or without
this state, provided that:
(a) A contract providing for the establishment and operation of
the lock box is entered into by all of the parties affected by
such arrangement and the contract is submitted to the
Superintendent for prior approval.
- 5 -
<PAGE> 54
(b) All bank accounts maintained in connection with the operation
of the lock box shall be in the name of the subsidiary
insurer, and withdrawal therefrom shall be limited to checks
signed by authorized officials of the subsidiary insurer only.
(c) Where a bank account is maintained outside the state for
collection purposes, the account shall be in the name of the
subsidiary insurer and withdrawals from such account shall be
solely for the purpose of transferring funds to a New York
bank account. Withdrawals shall be made at periodic intervals
not to exceed ten days, so that the maximum balance in such
out of state account at the day of withdrawal will not exceed
$1,000.00 unless the Superintendent has indicated his prior
approval for the maintenance of a larger balance. Royal Tandem
is to maintain in New York (i) all bank accounts customarily
maintained in New York by non-affiliated domestic life
companies and (ii) all evidence of ownership of its assets.
Royal Tandem's obligations (including benefits and salaries)
are to be paid directly to its primary obligees by drafts or
checks on its bank accounts.
10. Agreements with agencies engaged in common by Royal Tandem and
any Parent or affiliates thereof shall not, directly or indirectly, provide for
compensation or other financial advantages which would be prohibited by Section
4228 or 4229 of the New York Insurance Law, as amended, or regulations,
circular letters and rulings relative thereto and as provided in Section 15O9
of the New York Insurance Law and this agreement.
11. Royal Tandem shall require such agents engaged in common, as
described above, to make available, on request by the Superintendent of
Insurance of the State of New York, all books and records in respect to their
insurance activities with Royal Tandem and any Parent and/or affiliates
thereof.
12. No transfer, depletion, divestment or reassignment of a
significant number of its chief management officers or personnel performing
important and/or key functions in vital departments of Royal Tandem shall be
made by or to any Parent, its affiliates, subsidiaries or controlling interests
thereof if it would result in impairing the operations of Royal Tandem. No
transactions of this type shall be entered into prior to being submitted to the
Department for review.
- 6 -
<PAGE> 55
13. No transactions will be entered into by Royal Tandem, any
Parent or any affiliate which involves or could involve the actual or proposed
transfer, directly or indirectly, of control of Royal Tandem without prior
notice to and no objection being raised by the Department to the terms of the
transaction.
Such transactions shall include but not be limited to
(a) Pledging of shares as collateral for loans.
(b) Hypothecation of securities.
(c) Sale of new shares of such Parent or affiliate.
(d) Encumbering of shares of such Parent or affiliate.
(e) Exchange of shares.
(f) Any other disposition of shares.
14. Any director or principal officer of any Parent, who holds
office in subsidiaries or affiliates of Royal Tandem which will have dealings
with Royal Tandem, and who is found to be untrustworthy, will be removed from
these offices at the direction of the Department.
15. In keeping with the Department's requirement that the name of
a Parent or any of its affiliates not be used in Royal Tandem's name unless a
modifier is placed in front of the Parent or affiliate's name, no Parent will
change its name nor permit any of its affiliate to change their names in such a
way as to circumvent the intention of this requirement. Each Parent and Royal
Tandem further agree that they will not use any advertising or printed material
which circumvents the intention of this requirement by stressing or emphasizing
the name of the Parent or affiliate.
16. In the future, if Royal Tandem should plan to make any
significant deviation from the Plan of Operations and actuarial projections
originally submitted to the New York State Insurance Department, the Department
will be informed of such planned deviation and Royal Tandem will submit new
actuarial projections to the Department and will obtain the Department's
approval prior to entering into any new product lines or lines of business
which would cause such deviation.
- 7 -
<PAGE> 56
It is further understood that the signing of this commitment agreement
by present management of the Parents, and of Royal Tandem, is binding not only
on present management but on any successor management which may be the result
of internal or external changes, and must be made a part of, but not limited
to, any merger, takeover, tender officer, assumption or pooling of interest
agreement voluntarily entered into.
It is further agreed that if any changes are incorporated in the New
York Insurance Law, Department Regulations, or Administrative Procedures which
alter to any material extent these commitments, these changes will be
automatically incorporated in this document, which is signed by executive
officers of the Parents and Royal Tandem. This document has or will receive
the consent and approval of the Board of Directors of each Parent.
Respectfully submitted,
Dated: June , 1987
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
BY /S/ PETER WILDE
------------------------------
PETER WILDE
Title: EXECUTIVE VICE PRESIDENT
TANDEM FINANCIAL GROUP, INC.
BY /S/ RICHARD W. CAMPANARO
------------------------------
RICHARD W. CAMPANARO
Title: PRESIDENT
MERRILL LYNCH & CO., INC.
BY /S/ JOHN L. STEFFENS
------------------------------
JOHN L. STEFFENS
- 8 -
<PAGE> 57
Title: EXECUTIVE VICE PRESIDENT
ROYAL TANDEM LIFE INSURANCE COMPANY
By /s/ RICHARD W. CAMPANARO
------------------------------
RICHARD W. CAMPANARO
Title: PRESIDENT
- 9 -
<PAGE> 58
SPECIAL COMMITMENT AGREEMENT TO
THE NEW YORK INSURANCE DEPARTMENT
The undersigned each agree with the New York State Insurance
Department as follows, effective for the period described below:
1. With respect to transactions between Royal Tandem Life
Insurance Company ("Royal Tandem") and The Equitable Life Assurance Society of
the United States ("Equitable Life"), Royal Tandem and Equitable Life commit
that, notwithstanding Section 1502 of the New York Insurance Law, they will
comply with all the provisions of Section 1505 thereof.
2. Royal Tandem will utilize only those marketing distribution
systems which cannot be effectively served by Equitable Life, by Equitable
Variable Life Insurance Company ("EVLICO"), by National Integrity Life
Insurance Company ("National Integrity") or any other New York licensed life
insurance company subsidiary of Equitable Life. Equitable Life and EVLICO will
utilize only traditional affiliated agency sales forces consisting of career
agents to distribute their products and services, and National Integrity will
distribute its products and services in accordance with its Special Commitment
Agreement to the New York Insurance Department, dated November 4, 1985, as
amended or supplemented, whereas Royal Tandem will distribute its products and
services only through licensed subsidiaries and affiliates of Merrill Lynch &
Co., Inc. ("Merrill Lynch"), and their registered representatives or employees
as licensed for Royal Tandem, or through such other agents or groups of agents
or other means as may be approved in writing from time to time by the Insurance
Department. Equitable Life, EVLlCO, National Integrity and Royal Tandem will
not license, directly or indirectly, agents in common. None of Equitable Life,
EVLICO or National Integrity will license any agent licensed with Royal Tandem.
Royal Tandem will not license any agent licensed with Equitable Life, EVLICO or
National Integrity. To avoid dual licensing, (a) every agent license
application received by Royal Tandem will be computer matched against Equitable
Life's Agent Data Base, which lists all Equitable Life/EVLICO Agents, and will
be matched against National Integrity's Agent Data Base and any such
applications which match against any such Agent Data Base will be denied by
Royal Tandem and (b) every agent license application received by Equitable
Life, EVLICO or National Integrity will be computer matched against Royal
Tandem's Agent Data Base, which lists all Royal Tandem Agents, and any such
applications which match against such Agent Data Base will
<PAGE> 59
be denied by Equitable Life, EVLICO or Nationa1 Integrity, as the case may
be.
3. This Special Commitment Agreement shall be effective as to
Equitable Life, EVLICO, Royal Tandem and National Integrity, so long as
Equitable Life shall be deemed by the Department, under applicable law,
- 2 -
<PAGE> 60
to control Royal Tandem, and shall be effective as to Merrill Lynch so long as
Merrill Lynch shall be deemed by the Department, under applicable law, to
control Royal Tandem.
Dated: June , 1987
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
By /s/ PETER WILDE
------------------------------
PETER WILDE
Title: EXECUTIVE VICE PRESIDENT
EQUITABLE VARIABLE LIFE
INSURANCE COMPANY
By /s/ THOMAS KERWIN
------------------------------
THOMAS KERWIN
Title: PRESIDENT
ROYAL TANDEM LIFE INSURANCE COMPANY
By /s/ RICHARD W. CAMPANARO
------------------------------
RICHARD W. CAMPANARO
Title: PRESIDENT
NATIONAL INTEGRITY LIFE INSURANCE
COMPANY
By /s/ FRANKLIN MAISANO
------------------------------
FRANKLIN MAISANO
Title: PRESIDENT
MERRILL LYNCH & CO., INC.
- 3 -
<PAGE> 61
By /s/ JOHN L. STEFFENS
------------------------------
JOHN L. STEFFENS
Title: EXECUTIVE VICE PRESIDENT
- 4 -
<PAGE> 62
June , 1987
Honorable James P. Corcoran
Superintendent
State of New York
Department of Insurance
160 West Broadway
New York, New York 10013
Re: Acquisition of Control of
Royal Tandem Life Insurance Company
Dear Mr. Corcoran:
She undersigned each agree with the New York State Insurance
Department, effective for the period described below, that Royal Tandem Life
Insurance Company ("Royal Tandem") shall at all times maintain a minimum
capital of two million dollars and a minimum surplus of four million dollars.
This commitment letter shall be effective as to each of The Equitable Life
Assurance Society of the United States and Merrill Lynch & Co., Inc. so long as
it shall be deemed by the Department, under applicable law, to control Royal
Tandem.
Respectfully submitted,
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
By /s/ PETER WILDE
------------------------------
PETER WILDE
Title: EXECUTIVE VICE PRESIDENT
MERRILL LYNCH & CO., INC.
By /s/ JOHN L. STEFFENS
------------------------------
JOHN L. STEFFENS
Title: EXECUTIVE VICE PRESIDENT
- 5 -
<PAGE> 63
ROYAL TANDEM LIFE INSURANCE COMPANY
By /s/ RICHARD W. CAMPANARO
------------------------------
RICHARD W. CAMPANARO
Title: PRESIDENT
- 6 -
<PAGE> 1
EXHIBIT 1.A.(10)(a)
<TABLE>
<CAPTION>
ML LIFE INSURANCE COMPANY OF NEW YORK
New York, New York
- ----------------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH ACCOUNT NUMBER POLICY NUMBER
LIFE INSURANCE APPLICATION
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C>
PROPOSED INSURED NO. 1
SECTION 1 -COMPLETE IN ALL CASES
- ----------------------------------------------------------------------------------------------------------------------------
Full Name of Proposed Insured No. 1 (First, Middle, Last) Social Security Number
[ ] Mr. [ ] Mrs. [ ] Miss [ ] Ms. [ ] Other
-------------------
- ----------------------------------------------------------------------------------------------------------------------------
Permanent Residence Address
- ----------------------------------------------------------------------------------------------------------------------------
City State Zip Code
- ----------------------------------------------------------------------------------------------------------------------------
Employer (If Employed)
- ----------------------------------------------------------------------------------------------------------------------------
Business Address
- ----------------------------------------------------------------------------------------------------------------------------
City State Zip Code
- ----------------------------------------------------------------------------------------------------------------------------
Occupation & Principal Duties
- ----------------------------------------------------------------------------------------------------------------------------
Sex Marital Status Date of Birth Place of U.S. Citizen
Birth [ ] Yes [ ] No
- ----------------------------------------------------------------------------------------------------------------------------
PROPOSED INSURED NO. 2
SECTION 2 - COMPLETE IF APPLICABLE
- ----------------------------------------------------------------------------------------------------------------------------
Full Name of Proposed Insured No. 1 (First, Middle, Last) Social Security Number
[ ] Mr. [ ] Mrs. [ ] Miss [ ] Ms. [ ] Other
-------------------
- ----------------------------------------------------------------------------------------------------------------------------
Permanent Residence Address Relationship to
Proposed Insured #1
- ----------------------------------------------------------------------------------------------------------------------------
City State Zip Code
- ----------------------------------------------------------------------------------------------------------------------------
Employer (If Employed)
- ----------------------------------------------------------------------------------------------------------------------------
Business Address
- ----------------------------------------------------------------------------------------------------------------------------
City State Zip Code
- ----------------------------------------------------------------------------------------------------------------------------
Occupation & Principal Duties
- ----------------------------------------------------------------------------------------------------------------------------
Sex Marital Status Date of Birth Place of U.S. Citizen
Birth [ ] Yes [ ] No
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
OWNER
SECTION 3 - COMPLETE IN ALL CASES (IF MORE THAN ONE OWNER, PROVIDE DETAILED
OWNER INFORMATION IN SECTION 16 - ADDITIONAL INFORMATION)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C>
[ ] Proposed Insured No. 1 [ ] Proposed Insured No. 2 [ ] Both Proposed Insured with right of survivorship
- ----------------------------------------------------------------------------------------------------------------------------
[ ] Other - If Other, complete
the following - Owner is: [ ] Individual [ ] Trust [ ] Corporation [ ] Sole Proprietorship
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Full Name Of Owner (First, Middle, Last) Social Security
[ ] Mr. [ ] Mrs. [ ] Miss [ ] Ms. [ ] Other or Tax ID Number
--------------------
- ----------------------------------------------------------------------------------------------------------------------------
Permanent Residence Address
- ----------------------------------------------------------------------------------------------------------------------------
City State Zip Code
- ----------------------------------------------------------------------------------------------------------------------------
Telephone No. Date of Birth Relationship to Relationship to Proposed
or Trust Date Proposed Insured #1 Insured #2
( )
- ----------------------------------------------------------------------------------------------------------------------------
CONTINGENT OWNER
SECTION 4 - OPTIONAL
- ----------------------------------------------------------------------------------------------------------------------------
Full Name Of Owner (First, Middle, Last) Social Security or
[ ] Mr. [ ] Mrs. [ ] Miss [ ] Ms. [ ] Other Tax ID Number
--------------------
- ----------------------------------------------------------------------------------------------------------------------------
Permanent Residence Address
- ----------------------------------------------------------------------------------------------------------------------------
Telephone No. Date of Birth Relationship to Relationship to
or Trust Date Proposed Insured #1 Proposed Insured #2
( )
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
M1000 NEW 11/92
<PAGE> 2
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
BENEFICIARY(IES) DESIGNATION(S)
SECTION 5 - COMPLETE IN ALL CASES - A PROPOSED INSURED CANNOT BE THE BENEFICIARY
- ----------------------------------------------------------------------------------------------------------------------------
Show name(s) and relationship(s) to the proposed insured(s) and provide Social Security or Tax ID numbers (if available).
The owner reserves the right to change the beneficiary(ies) unless indicated below. If the owner wishes to restrict
future changes in beneficiary designations, write the work "IRREVOCABLE" next to the beneficiary's name.
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Primary Beneficiary(ies): Social Security or Tax ID No. Relationship(s) to proposed insured(s):
- ----------------------------- --------------------------------- ------------------------------------
- ----------------------------- --------------------------------- ------------------------------------
- ----------------------------- --------------------------------- ------------------------------------
Contingent Beneficiary(ies): Social Security or Tax ID No. Relationship(s) to proposed insured(s):
- ----------------------------- --------------------------------- ------------------------------------
- ----------------------------- --------------------------------- ------------------------------------
- ----------------------------- --------------------------------- ------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PLAN APPLIED FOR
SECTION 6 - COMPLETE IN ALL CASES
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Plan Death Benefit Option (If Applicable on Plan Applied For)
[ ] Option #1 [ ] Option #2
- ----------------------------------------------------------------------------------------------------------------------------
Base Policy Face Amount Additional Total Face Amount
Insurance Rider
Face Amount $
$ (Optional)
$
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
INITIAL PREMIUM
SECTION 7 - TO BE PAID IN ONE LUMP SUM. MODAL PAYMENTS NOT AVAILABLE
- --------------------------------------------------------------------------------
(1) Initial Premium Amount: Show Amount of Initial Premium That Will Be Paid
For This Insurance
- --------------------------------------------------------------------------------
(2) Premium Enclosed With Application: Indicate Amount. If None, Write "None".
- --------------------------------------------------------------------------------
Payment Method
[ ] Check [ ] CMA Insurance Service
- --------------------------------------------------------------------------------
ADDITIONAL PREMIUM
SECTION 8 - OPTIONAL
- --------------------------------------------------------------------------------
Additional premiums are optional and may be made for any duration or frequency
desired after the end of the free-look period. Complete this section if the
owner elects to receive reminder notices for additional premiums to be paid by
check or for CMA to authorize an automatic debit to the CMA Account. Specify
the premium amount, and the duration and frequency for the remainder notice.
ML Life Insurance Company of New York ("ML of New York") reserves the right to
refuse any additional premium that would cause the contract to fail to qualify
as life insurance under federal tax law, cause the contract to become a
Modified Endowment Contract without your consent, or cause the guarantee period
to exceed the life of the insured or younger insured for joint life policies.
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Additional Premium Amount of Frequency Method of Payment
Duration (Years) Additional Premium [ ] Annual [ ] Quarterly [ ]Check [ ] CMA Insurance Service
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
`SECTION 9 - INITIAL ALLOCATION
Allocation of initial investment base is limited to the money market portfolio
as described in the prospectus.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
PREALLOCATION
SECTION 10 - OPTIONAL (IF AVAILABLE ON PLAN APPLIED FOR)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Show the amount in dollars or percentages
Note: Investment Division Name (in whole numbers)
Use this section of the
application to indicate the % or $
desired investment -------------------------------------- --------------- --------------
divisions to which ML of % or $
New York should allocate -------------------------------------- --------------- --------------
the owner's funds. If % or $
there are no instructions -------------------------------------- --------------- --------------
provided here, the owner's % or $
funds will remain in the -------------------------------------- --------------- --------------
money market investment 100% or $
division. It will be the -------------------------------------- --------------
owner's responsibility to
allocate the funds either
in writing or by phone.
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
M1000 NEW 11/92
<PAGE> 3
<TABLE>
<CAPTION>
SECTION 11 - COMPLETE IN ALL CASES
- ----------------------------------------------------------------------------------------------------------------------------
<C> <C>
[ ] New Application [ ] Change to existing policy: #______________ [ ] Change in Death Benefit Option
[ ] Exercise of Policy Split Rider Option [ ] Other ________________________
[ ] Change in Additional Insurance Rider, Specify Amount $
</TABLE>
<TABLE>
<CAPTION>
Proposed Proposed
Insured Insured
Number 1 Number 2
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. BUILD (Height/Weight) Proposed Insured Number 1: ________ ft._________ in./_________ lbs.
Proposed Insured Number 2:______ ft._________ in./_________ lbs.
2. OCCUPATIONAL DUTIES. Is the proposed insured not performing his or her usual
occupational duties (or usual daily duties if student, homemaker or retired) [ ] Yes [ ] No [ ] Yes [ ] No
without any disabling impairment? If "NO" provide details in Section 12 - Remarks)
- ------------------------------------------------------------------------------------------------------------------------------
Provide details for "YES" answers to questions 3 and 4 under Health Care Provider Information
3. HEALTH HISTORY. During the past 10 years, has the proposed insured consulted a
physician, been hospitalized, treated, advised or diagnosed by a health
professional for any heart, liver, lung or kidney trouble, high blood pressure,
stroke, diabetes, cancer, nervous or mental disorders or any other health [ ] Yes [ ] No [ ] Yes [ ] No
impairments?
4. During the past 10 years, has the proposed insured been hospitalized, treated, or
diagnosed by a health professional for any disorders of the immune system including [ ] Yes [ ] No [ ] Yes [ ] No
AIDS or ARC?
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
HEALTH CARE PROVIDER INFORMATION If additional space is needed, use Section 12 - Remarks
Proposed
Insured No. Facility/Doctor City/State/Telephone No. Reason/Diagnosis Date
<S> <C> <C> <C> <C>
- --------------- ------------------------- ----------------------------- ------------------------- ----------
- --------------- ------------------------- ----------------------------- ------------------------- ----------
- --------------- ------------------------- ----------------------------- ------------------------- ----------
- --------------- ------------------------- ----------------------------- ------------------------- ----------
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Provide details for all "YES" answers to questions 5 - 14 in Section 12 - Remarks
5. Family History. Have any of the proposed insured's parents or siblings died before
the age 60 or been diagnosed before the age 60 with coronary artery disease? [ ] Yes [ ] No [ ] Yes [ ] No
6. Tobacco Habits. Has the proposed insured smoked cigarettes or used tobacco in any
form during the past 12 months? [ ] Yes [ ] No [ ] Yes [ ] No
7. Has the proposed insured ever used tobacco in any form? (If "Yes", indicate type,
frequency and date last used.) [ ] Yes [ ] No [ ] Yes [ ] No
8. Insurance Activity. Has the proposed insured ever been refused life insurance,
been offered a modified or raised policy, or applied for or received disability
benefits from any source? [ ] Yes [ ] No [ ] Yes [ ] No
9. Does the proposed insured have any applications pending or any life insurance in
force with other companies? (If "Yes", list companies, amounts and dates.) [ ] Yes [ ] No [ ] Yes [ ] No
10. Will this policy replace or change an existing insurance policy or annuity? (If
"Yes", list all companies and policy numbers.) [ ] Yes [ ] No [ ] Yes [ ] No
11. Avocation/Sports. Has the proposed insured, in the past 2 years engaged in, or
expect to engage in, hang gliding, sky diving, scuba or skin diving, motor vehicle
racing or any other hazardous sports/activities? [ ] Yes [ ] No [ ] Yes [ ] No
12. Aviation. During the past 2 years has the proposed insured flown or does the
proposed insured expect to fly other than as a passenger on a regularly scheduled
airline? (If "Yes", complete the Aviation Questionnaire) [ ] Yes [ ] No [ ] Yes [ ] No
13. Foreign Travel/Residence. Does proposed insured currently travel or reside, or
expect to travel or reside outside the United States (other than Canada)? [ ] Yes [ ] No [ ] Yes [ ] No
14. Driving. During the past 3 years, has the proposed insured been convicted of any
moving violations or has the proposed insured ever had a driver's license suspended
or revoked or been convicted of driving while impaired or intoxicated? [ ] Yes [ ] No [ ] Yes [ ] No
Driver's License Number(s):
Proposed Insured Number 1: State
----------------------------- -----------------------
Proposed Insured Number 2: State
----------------------------- ------------------------
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
M1000 NEW 11/92
<PAGE> 4
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
REMARKS
SECTION 12 - DETAILS FOR "NO" ANSWER TO QUESTION 2; "YES" ANSWERS TO QUESTIONS 5-14.
Proposed If additional space is needed, use Section 16 -
Insured Number Question Number Details (include dates) Additional Information
<S> <C> <C>
- ------------------ --------------- ----------------------------------------------------------------------------
- ------------------ --------------- ----------------------------------------------------------------------------
- ------------------ --------------- ----------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SECTION 13 - SUITABILITY, AGREEMENT AND AUTHORIZATION
<TABLE>
<S> <C>
Suitability
By signing below, the applicant acknowledges receipt delivered to and accepted by the owner, the answers and
of the appropriate prospectus and understands statements in this application continue to be complete and
that the death benefit under the policy may increase or true at the time of such payment and delivery, and the
decrease depending upon the investment results of the proposed insureds' insurability and condition of health
policy, but will never be less than the face amount. remains as stated in the application. Upon request,
The duration for which a policy is in effect may illustration of death benefits and cash surrender values
depend on the investment results of the policy, but comparing the policy applied for and a fixed life insurance
will never be less than the Guarantee Period. policy of the same premium will be furnished. We will
The policy's cash surrender value may increase or decrease furnish any information that may be currently required by
on any day depending upon the investment results. No the insurance supervisory official of the jurisdiction in
minimum cash surrender value is guaranteed. The which this policy is delivered.
policy is a long-term commitment to meet insurance
needs and financial goals. Authorization
Agreement I, the proposed insured, authorize any physician, hospital
You agree that to the best of your knowledge and or other medical practitioner or facility, insurance
belief, all statements and answers in the application company, Medical Information Bureau, or any other
are complete and true and may be relied upon in organization, institution or person that has any
determining whether to issue the policy. The information about my health or any non-medical information
application will form a part of any policy to be relevant to my insurability or that of my minor children
issued, and no medical examiner or registered has who are to be insured to release such information to ML of
authority to modify this agreement or waive any of ML New York and its reinsurers. I authorize ML of New York to
of New York's rights or requirements. If ML of New obtain investigative consumer reports, if appropriate. I
York makes a correction as indicated in Section 15, it understand that I have a right to learn the content and
will be approved by acceptance of the policy. You receive a copy of any such report. This authorization is
also understand that unless otherwise provided by the valid for 2 1/2 years from the date signed and a
Temporary Insurance Agreement, no policy will take photographic copy is as valued as the original. I
effect unless, while the proposed insured(s) is (are) acknowledge receipt of the Fair Credit Reporting Act
living, the initial premium is paid, the policy is and Medical Bureau Notices.
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SIGNATURES
SECTION 14 - COMPLETE IN ALL CASES
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SIGNED AT: CITY STATE ON (DATE)
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Note: If owner(s) are other than either Proposed Insured(s), each owner must
sign below in his/her appropriate capacity. For multiple owners, the
certifications are assumed to apply to all owners of the policy, unless
otherwise specified.
Certification: Under penalties of perjury, I certify that:
1) The Social Security and/or Taxpayer Identification Number(s) displayed
o the first page of this application are correct (or I am waiting for
a number to be issued to me), and
CHECK ONE:
2) [ ] I am not subject to backup withholding either because I have not
been notified by the Internal Revenue Service (IRS) that I am subject
to backup withholding, or the IRS has notified me that I am no longer
subject to backup withholding.
3) [ ] I have been notified by the IRS that I am subject to backup
withholding.
<TABLE>
<S> <C>
==============================================================================================================================
Proposed Insured No. 1 Proposed Insured No. 2
(Parent/Guardian if Proposed Insured is Under Age 15) (Parent/Guardian if Proposed Insured is Under Age 15)
X X
- ------------------------------------------------------------------------------------------------------------------------------
Applicant/Owner (if Other Than Either Proposed Insured) Applicant/Owner (if Other Than Either Proposed Insured)
X X
- ------------------------------------------------------------------------------------------------------------------------------
Print Name of Financial Consultant/Witness Signature of Financial consultant/Witness and
Social Security Number
X X
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
M1000 NEW 11/92
<PAGE> 5
CORRECTIONS
SECTION 15 - HOME OFFICE USE ONLY
- --------------------------------------------------------------------------------
Minor application corrections (No change will be made in plan, benefits
applied for, amount of insurance, age at issue, or underwriting class unless
agreed to in writing).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECTION 16 - ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
M1000 NEW 11/92
<PAGE> 1
EXHIBIT 1.A.(10)(b)
Service Center
P.O. Box 9025
Springfield, MA 01102-9025
- --------------------------------------------------------------------------------
APPLICATION FOR REINSTATEMENT
- --------------------------------------------------------------------------------
This is an application to ML Life Insurance Company of New York ("ML of New
York), a life insurance company located in New York, New York for the
reinstatement of Life Insurance contract number __________________________ on
the life of __________________________________ , the Former Insured.
<TABLE>
- -----------------------------------------------------------------------------------------------
<S> <C>
TERMS FOR Except as stated below, the Former Insured:
REINSTATEMENT 1. Is presently employed as a(n): ________________________
2. Has not had any physical impairments or physical disorders.
3. Has not, within the past 24 months, consulted any physician or
practitioner, been a patient in any hospital, institution,
sanitorium or suffered any illness or bodily injury.
4. Has not applied for, or requested reinstatement of health or
life insurance since the above policy was issued which has been
declined or is now pending.
If there are any exceptions to the above, please provide details
on the lines below:
-------------------------------------------------------
-------------------------------------------------------
- -----------------------------------------------------------------------------------------------
AUTHORIZATION To help determine my insurability, I authorize:
- Any physician, hospital, other medical practitioner or facility,
insurance company or the Medical Information Bureau to release
to ML of New York and its reinsurers information about my health
or the health of any of my minor children who are to be insured.
- Any employer, business associate, financial institution, consumer
reporting agency or government unit to release to ML of New York
and its reinsurers any information about my occupation,
avocation, finances, driving record, character and reputation or
that of my minor children who are to be insured.
- ML of New York to obtain investigative consumer reports, if
appropriate.
- ML of New York to report information about my insurability or
that of any of my minor children to its reinsurers and to the
Medical Information Bureau.
- -----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
REINSTATEMENT SIGNATURES AUTHORIZATION:
<S> <C>
I hereby apply for reinstatement of the above contract and agree that the I understand that I have the right to learn the content
above statements are true to the best of my knowledge and belief. and receive a copy of any information obtained by ML of
New York pursuant to this authorization and that a copy
of this authorization is as valid as the original. I
- ------------------------------------------------------------------------- acknowledge receipt of the Fair Credit Reporting Act and
Signature of Former Insured Date Medical Information Bureau Notices (located on the
reverse side of this form) and that this authorization
- ------------------------------------------------------------------------ is valid for 2 1/2 years from the date this form is
Signature of Former Insured Date signed.
(If other than the Former Insured. If jointly owned, both owners must
sign.) -------------------------------------------------------
Former Insured Date
-------------------------------------------------------
Applicant/Owner Date
</TABLE>
50792NY REV 11/91 - 1 -
<PAGE> 2
ML LIFE INSURANCE COMPANY OF NEW YORK NEW YORK, NEW YORK
- --------------------------------------------------------------------------------
NOTICES TO THE PROPOSED INSURED
LEAVE THIS FORM WITH CLIENT.
- --------------------------------------------------------------------------------
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<S> <C>
MEDICAL INFORMATION Information on your insurability will be treated as confidential. However, we may make a brief
BUREAU NOTICE report on our conclusions to the Medical Information Bureau, a non-profit membership
organization of life insurance companies, which operates an information exchange on behalf of
its members. If you apply to another Bureau member company for life or health insurance
coverage, or submit a claim for benefits to such company, that company may request the Bureau to
provide information in your file. If you ask, the Bureau will provide your physician with any
information it has on you. If you believe the information is inaccurate, you may contact the
Bureau and seek a correction in accordance with procedures similar to those set forth in the
Federal Fair Credit Reporting Act. The address of the Bureau's information office is Post
Office Box 105, Essex Station, Boston, MA 02112. The telephone number is (617) 426-3660.
We may also release information in our files to our reinsurers and to other life insurance
companies to whom you may apply for life or health insurance or to whom you may submit a claim.
- ----------------------------------------------------------------------------------------------------------------------------------
FAIR CREDIT REPORTING In connection with our underwriting of this application, we may conduct an investigative
ACT consumer report on the proposed insured. This report, if requested, will contain information on
your character, general reputation, personal characteristics, and mode of living. This
information may be obtained through personal interviews with you, your neighbors, friends and
acquaintances, or through telephone interviews with you or a member of your household. You may
ask to be interviewed in connection with this report.
Any information obtained in this report would be for business purposes only. No information
will be revealed to any person contacted for the purpose of completing the report. You may
request and receive a copy of this investigative consumer report. If you would like additional
information on the nature and extent of the investigation, we will be pleased to provide it to
you. Send your written request to ML of New York's Variable Life Service Center, P.O. Box 9025,
Springfield, MA 01102-9025.
Please be sure to include your full name, date of birth and any applicable policy numbers.
- ----------------------------------------------------------------------------------------------------------------------------------
AUTHORIZATION BY IN SIGNING THE APPLICATION, YOU'VE AUTHORIZED THE FOLLOWING TO HELP DETERMINE INSURABILITY:
PROPOSED INSURED - any physician, hospital, other medical practitioner or facility,
insurance company and the Medical Information Bureau (see Notice
above) to release to ML of New York and its reinsurers
information about your health or the health of any of your minor
children who are to be insured;
- any employer, business associate, financial institution, consumer
reporting agency, government unit, and the Medical Information
Bureau (see Notice above) to release to ML of New York and its
reinsurers information about your occupation, avocation,
finances, driving record, character and reputation or that of
your minor children who are to be insured;
- ML of New York to obtain investigative consumer reports, if
appropriate; and
- ML of New York to report information about the insurability of
you or any of your minor children to its reinsurers and to the
Medical Information Bureau, as described in the statement of ML
of New York's underwriting procedures (see Notice above).
</TABLE>
- 2 -
<PAGE> 3
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AUTHORIZATION You understand that you have the right to learn the content and receive a copy of any such
BY PROPOSED report. You agree that a photographic copy of the authorization is as valid as the original.
INSURED You acknowledge receipt of the Fair Credit Reporting Act and Medical Information Bureau Notices.
(CONTINUED) You agree the authorization is valid for two and one-half years from the date the application
was signed.
</TABLE>
- 3 -
<PAGE> 1
EXHIBIT 1.A. (11)(b)
SUPPLEMENT TO ML LIFE INSURANCE COMPANY OF NEW YORK'S
ISSUANCE, TRANSFER AND REDEMPTION PROCEDURES
FOR POLICIES PURSUANT TO RULE 6e-2(b)(12)(ii) AND RULE 6e-3(T)(b)(12)
This document supplements the administrative procedures
that will be followed by ML Life Insurance Company of New York ("ML of New
York") in connection with the issuance of variable life insurance policies (the
"Policies") issued through the ML of New York Variable Life Separate Account II
(the "Account"), the transfer of assets held under the Policies, and the
redemption by owners of their interests in the Policies.
A. Premium Processing (File Nos. 33-51794 and 33-51702)
Planned payments received on the day prior to a due date
will be credited on the due date to facilitate compliance with the 7-pay test;
planned payments received more than twenty-four hours prior to a due date will
be returned to the contract owner with instructions for timing planned payments
to facilitate compliance with the 7-pay test. This delay in crediting planned
premiums is intended to ensure that the 7-pay test continues to be met by
contracts that are not classified as modified endowment contracts under Section
7702A of the Internal Revenue Code of 1986, as amended (the "Code"); premature
crediting of planned premiums may jeopardize the status of a contract under
Section 7702 of the Code.
B. Payment of Death Benefits (File Nos. 33-51794, 33-51702, 33-61672,
and 33-61670)
When ML of New York is first provided reliable notification
of the insured's death by a representative of the owner or the insured
(including a Merrill Lynch Financial Consultant), investment base may be
transferred to the division investing in the Money Reserve Portfolio, pending
payment of death benefit proceeds.
<PAGE> 1
Exhibit 6
[ML Life Insurance Company of New York]
April 23, 1997
Board of Directors
ML Life Insurance Company of New York
100 Church Street, 11th Floor
New York, NY 10080-6511
Re: ML of New York Variable Life Separate Account II
To the Board of Directors:
This opinion is furnished in connection with the filing of Post-Effective
Amendment No. 6 to the Registration Statement filed on Form S-6 (File No.
33-61672) which covers premiums received under certain flexible premium variable
life insurance contracts ("Contracts" or "Contract") issued by ML Life Insurance
Company of New York (the "Company").
The Prospectus included in the Registration Statement describes Contracts which
are issued by the Company. The Contract forms were reviewed under my direction,
and I am familiar with the Registration Statement and exhibits thereto. In my
opinion:
1. The illustrations of death benefits, investment base, net cash surrender
values, and cash values and accumulated premiums included in the
Registration Statement for the Contract and based on the assumptions stated
in the illustrations, are consistent with the provisions of the Contract.
The rate structure of the Contract has not been designed so as to make the
relationship between premiums and benefits, as shown in the illustrations,
appear more favorable to a prospective purchaser of a Contract for the ages
and sexes shown, than to prospective purchasers of a Contract for other
ages and sex.
2. The table of illustrative cash value corridor factors included in the
"Death Benefit Proceeds" section is consistent with the provisions of the
Contract.
3. The information with respect to the Contract contained in (i) the
illustrations of the increase in guarantee period included in the
"Additional Payments" section of the Examples, (ii) the illustrations of a
decrease in guarantee period included in the "Partial Withdrawals" section
of the Examples and (iii) the illustrations of the changes in face amount
included in the "Changing the Death Benefit Option" section of the
Examples, based on the assumptions specified, are consistent with the
provisions of the Contract.
I hereby consent to the use of this opinion as an exhibit to the Registration
Statement and to the use of my name relating to actuarial matters under the
heading "Experts" in the Prospectus.
Very truly yours,
/s/ JOSEPH E. CROWNE
Joseph E. Crowne, FSA
Senior Vice President and
Chief Financial Officer
<PAGE> 1
Exhibit 8(a)
[ML LIFE INSURANCE COMPANY OF NEW YORK]
CONSENT
I hereby consent to the reference to my name under the heading "Legal Matters"
in the prospectus included in Post-Effective Amendment No. 6 to the
Registration Statement on Form S-6 for certain variable life insurance
contracts issued through ML of New York Variable Life Separate Account II of ML
Life Insurance Company of New York ( File No. 33-61672).
/s/ Barry G. Skolnick
---------------------------------------
Barry G. Skolnick, Esq.
Senior Vice President and General Counsel
April 23, 1997
<PAGE> 1
Exhibit 8(c)
[Letterhead]
CONSENT OF SUTHERLAND, ASBILL & BRENNAN, L.L.P.
We consent to the reference to our firm under the heading "Legal Matters" in the
prospectus included in Post-Effective Amendment No. 6 to the Registration
Statement on Form S-6 for certain variable universal life insurance contracts
issued through ML of New York Variable Life Separate Account II of ML Life
Insurance Company of New York (File No. 33-61672). 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.
/s/ Sutherland, Asbill & Brennan,
L.L.P.
SUTHERLAND, ASBILL & BRENNAN, L.L.P.
Washington, D.C.
April 23, 1997
<PAGE> 1
Exhibit 8(d)
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-Effective Amendment No. 6 to Registration
Statement No. 33-61672 of ML of New York Variable Life Separate Account II on
Form S-6 of our reports on (i) ML Life Insurance Company of New York dated
February 24, 1997, and (ii) ML of New York Variable Life Separate Account II
dated January 31, 1997, appearing in the Prospectus, which is a part of such
Registration Statement, and to the reference to us under the heading "Experts"
in such Prospectus.
/s/ DELOITTE & TOUCHE LLP
New York, New York
April 28, 1997
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