File Nos. 33-54772
811-7248
================================================================================
Securities and Exchange Commission
Washington, DC 20549
FORM N-4
Registration Statement Under the Securities Act of 1933 [ X ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 11 [ X ]
Registration Statement Under the Investment Company Act of 1940
Amendment No. 12 [ X ]
(check appropriate box or boxes)
General American Separate Account Twenty-Eight
(Exact Name of Registrant)
General American Life Insurance Company
(Name of Depositor)
700 Market Street, St. Louis, Missouri 63101
(Address of Depositor's Principal Executive Office) (Zip Code)
Depositor's Telephone Number, including Area Code: (314) 231-1700
Name and address of Agent for Service
Christopher A. Martin, Esquire
General American Life Insurance Company
700 Market Street
St. Louis, Missouri 63101
Copy to:
Raymond A. O'Hara III
Blazzard, Grodd & Hasenauer, P.C.
P.O. Box 5108
Westport, CT 06881
(203) 226-7866
It is proposed that this filing will become effective:
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[ X ] on May 1, 2000 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[ ] on (date) pursuant to paragraph (a)(1) of rule 485
If appropriate, check the following:
____ This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities Being Registered:
Individual Variable Annuity Contracts
Cross Reference Sheet
Pursuant to Rule 481
Showing Location in Part A (Prospectus) and Part B
(Statement of Additional Information) of Registration Statement
Information Required by Form N-4
PART A
Item of Form N-4 Prospectus Caption
1. Cover Page. . . . . . . . . . . . . . . Cover Page
2. Definitions . . . . . . . . . . . . . . Index of Special Terms
3. Synopsis. . . . . . . . . . . . . . . . Highlights
4. Condensed Financial
Information . . . . . . . . . . . . . . Financial Statements
5. General Description of Registrant,
Depositor and Portfolio Companies. . . The Company; Investment
Options
6. Deductions and Expenses. . . . . . . . Charges and Deductions
7. General Description of Variable
Annuity Contracts. . . . . . . . . . . The Annuity Contracts
8. Annuity Period. . . . . . . . . . . . . Annuity Provisions
9. Death Benefit . . . . . . . . . . . . . Death Benefit
10 Purchases and Contract Value. . . . . . Purchase
11. Redemptions. . . . . . . . . . . . . . Access to Your Money
12. Taxes. . . . . . . . . . . . . . . . . Taxes
13. Legal Proceedings . . . . . . . . . . . None
14. Table of Contents of the
Statement of Additional
Information . . . . . . . . . . . . . . Table of Contents of the
Statement of Additional
Information
PART B
Item of Form N-4 Part B Caption
15. Cover Page. . . . . . . . . . . . . . . Cover Page
16. Table of Contents . . . . . . . . . . . Table of Contents
17. General Information . . . . . . . . . . Company
and History
18. Services. . . . . . . . . . . . . . . . Not Applicable
19. Purchase of Securities
Being Offered . . . . . . . . . . . . . Distribution
20. Underwriters . . . . . . . . . . . . . Distribution
21. Calculation of Performance Data . . . . Performance Information
22. Annuity Payments. . . . . . . . . . . . Annuity Provisions
23. Financial Statements. . . . . . . . . . Financial Statements
PART C - OTHER INFORMATION
Information required to be included in Part C is set forth under the
appropriate item so numbered in Part C to this Registration Statement.
PART A
PROSPECTUS
GENERAL AMERICAN LIFE INSURANCE COMPANY
GENERAL AMERICAN SEPARATE ACCOUNTS TWENTY-EIGHT & TWENTY-NINE
PROSPECTUS
FOR THE
INDIVIDUAL VARIABLE ANNUITY CONTRACTS
This prospectus describes individual variable annuity contracts offered by
General American Life Insurance Company (we, us, our). The Contracts are
deferred variable annuities. These Contracts provide for accumulation of
Contract values and annuity payments on a fixed and variable basis, or a
combination fixed and variable basis. The Contracts are no longer offered for
sale. Existing Contract owners may continue to make additional purchase
payments to their Contracts.
The Contracts have a number of current investment choices (1 Fixed Account
and 7 Investment Funds). The Fixed Account is part of our general assets and
provides an investment rate guaranteed by us. The seven Investment Funds
available are portfolios of AIM Variable Insurance Funds which are listed
below. You can put your money in any of these Investment Funds which are
offered through our separate accounts, General American Separate Account
Twenty-Eight and General American Separate Account Twenty-Nine.
<TABLE>
<CAPTION>
<S> <C>
AIM VARIABLE INSURANCE FUNDS
Managed by: A I M Advisors, Inc.
AIM V.I. Capital Appreciation Fund
AIM V.I. Diversified Income Fund
AIM V.I. Global Growth and Income Fund
AIM V.I. Government Securities Fund
AIM V.I. International Equity Fund
AIM V.I. Money Market Fund
AIM V.I. Telecommunications and Technology Fund
</TABLE>
Please read this Prospectus before investing. You should keep it for future
reference. It contains important information. To learn more about the Contract,
you can obtain a copy of the Statement of Additional Information (SAI) (dated
May 1, 2000). The SAI has been filed with the Securities and Exchange Commission
(SEC) and is legally a part of the Prospectus. If you wish to receive, at no
charge, the SAI, call us at (800) 237-6580 (toll free) or write us at: 700
Market Street, St. Louis, Missouri 63101. The SEC has a website
(http://www.sec.gov) that contains the SAI, material incorporated by reference,
and other information regarding companies that file electronically.
The Contracts:
* are not bank deposits
* are not federally insured
* are not endorsed by any bank or government agency
* are not guaranteed and may be subject to possible loss of
principal
The SEC has not approved these Contracts or determined that this prospectus is
accurate or complete. Any representation that it has is a criminal offense.
MAY 1, 2000
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Page
INDEX OF SPECIAL TERMS
SUMMARY OF CONTRACT FEES AND EXPENSES
HIGHLIGHTS
THE COMPANY
THE ANNUITY CONTRACTS
PURCHASE
Purchase Payments
Allocation of Purchase Payments
Account Continuation
INVESTMENT OPTIONS
AIM Variable Insurance Funds
Fixed Account
Transfer Privilege
Dollar Cost Averaging
Personal Portfolio Rebalancing
Interest Sweep Option
Additions, Deletions or Substitutions of Investments
CHARGES AND DEDUCTIONS
Administrative Charges
Annual Contract Fee
Special Handling Fees
Surrender Charge (Contingent Deferred Sales Charge)
Interest Change Adjustment
Charge-Free Amounts
Reduction of Surrender Charge for Contracts Issued Under Group or Sponsored Arrangements
Mortality and Expense Risk Charge
Transfer Fees
Fees and Expenses of the Funds
Premium Tax
Other Taxes
VARIABLE ACCOUNT
Accumulation Units
Value of Accumulation Units
Net Investment Factor
ACCESS TO YOUR MONEY
Surrenders and Partial Withdrawals
Systematic Withdrawal Plan
DEATH BENEFIT
Death of a Contract Owner who is the Annuitant
Death of a Contract Owner who is not the Annuitant
Death of the Annuitant who is not a Contract Owner
Other Provisions
Amount of Death Benefit
ANNUITY PROVISIONS
Annuity Date
Annuity Options
Value of Variable Annuity Payments
FEDERAL TAX MATTERS
Annuity Contracts in General
Qualified and Non-Qualified Contracts
Withdrawals - Non-Qualified Contracts
Withdrawals - Qualified Contracts
Withdrawals - Tax-Sheltered Annuities
Diversification
Section 403(b) Plans
Corporate Pension and Profit-Sharing Plans and H.R. 10 Plans
Deferred Compensation Plans
YIELDS AND TOTAL RETURNS
OTHER INFORMATION
The Separate Accounts
Principal Underwriter
Voting Rights
Written Notice or Written Request
Assignments and Changes of Ownership
Ownership
The Beneficiary
Deferment of Payment
Financial Statements
Statement of Additional Information
APPENDIX A
Example of Surrender Charge Calculations
Explanation of Columns in Table
Full Surrender
Partial Withdrawal
Full Surrender following Partial Withdrawal
HISTORICAL CHARTS OF UNITS AND UNIT VALUES
Chart 1 - Separate Account Twenty-Eight
Chart 2 - Separate Account Twenty-Nine
</TABLE>
INDEX OF SPECIAL TERMS
Because of the complex nature of the contract, we have used certain words
or terms in this prospectus which may need an explanation. We have
identified the following as some of these words or terms. The page that is
indicated here is where we believe you will find the best explanation for
the word or term. These words and terms are in italics on the indicated
page.
Page
Accumulation Phase
Accumulation Unit
Annuitant
Annuity Commencement Date
Annuity Income Options
Annuity Payments
Annuity Unit
Beneficiary
Business Day
Fixed Account
Guarantee Period
Income Phase
Funds
Joint Owner
Non-Qualified
Owner
Purchase Payment
Qualified
Tax Deferral
SUMMARY OF CONTRACT FEES AND EXPENSES
Contract Owner Transaction Expenses
Surrender Charge (contingent deferred sales charge):
After a purchase payment has been held by us for six complete years it may be
withdrawn free of any surrender charge. For purchase payments held by us for
less than six complete years, surrender charges are as follows (expressed as a
percentage of net purchase payments withdrawn):
Years Since Receipt of Surrender Charge
Purchase Payment Percentage
---------------- ----------
0 6%
1 5%
2 4%
3 3%
4 2%
5 1%
6 0%
Each contract year you can withdraw up to ten percent of the accumulated value
of your Contract without having a surrender charge imposed. Up to twenty percent
of your accumulated value may be withdrawn without a surrender charge if no
withdrawals were made in the prior contract year.
Transfer fee:
There is no charge for the first 12 transfers during a contract year. For each
transfer after 12, we reserve the right to charge a fee of $25.00 or 2% of the
amount transferred, whichever is less. Transfers made pursuant to the dollar
cost averaging, personal portfolio rebalancing or interest sweep programs are
not included in determining the number of transfers that occur in a contract
year.
Annual Contract Fee:
If the accumulated value of your Contract is less than $20,000, we charge a fee
of $30.00 or 2% of accumulated value, whichever is less. If your accumulated
value is $20,000 or greater, or if all assets are invested in the Fixed Account,
the contract fee is waived.
Separate Account Annual Expenses:
Mortality and expense risk charge 1.25%
Administrative expense charge .15%
---
Total Separate Account annual expenses 1.40%
Investment Fund Expenses:
(expressed as a percentage of average daily net assets)
<TABLE>
<CAPTION>
Investment Management
and
Administration Fees Other Expenses Total Expenses
--------------------- -------------- ---------------
<S> <C> <C> <C>
AIM VARIABLE INSURANCE FUNDS
AIM V.I. Capital Appreciation Fund 0.62% 0.11% 0.73%
AIM V.I. Diversified Income Fund 0.60% 0.23% 0.83%
AIM V.I. Global Growth and Income Fund* 1.00% 0.34% 1.34%
AIM V.I. Government Securities Fund 0.50% 0.40% 0.90%
AIM V.I. International Equity Fund 0.75% 0.22% 0.97%
AIM V.I. Money Market Fund 0.40% 0.20% 0.60%
AIM V.I. Telecommunications and Technology Fund 1.00% 0.27% 1.27%
<FN>
*Without the fee waiver, other expenses were .37% and total expenses were 1.37%.
</FN>
</TABLE>
Examples
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return on assets:
(a) if you surrendered your contract after the end of the specified time
period;
(b) if you do not surrender your contract after the end of the specified
time period;
(c) if you annuitize after the end of the specified time period.
<TABLE>
<CAPTION>
Time Periods
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
AIM VARIABLE INSURANCE FUNDS
AIM V.I. Capital Appreciation Fund (a)$77.09 (a)$107.01 (a)$139.33 (a)$258.58
(b)$23.09 (b)$ 71.01 (b)$121.33 (b)$258.58
(c)$77.09 (c)$107.01 (c)$121.33 (c)$258.58
AIM V.I. Diversified Income Fund (a)$78.10 (a)$110.03 (a)$144.37 (a)$268.68
(b)$24.10 (b)$ 74.03 (b)$126.37 (b)$268.68
(c)$78.10 (c)$110.03 (c)$126.37 (c)$268.68
AIM V.I. Global Growth and Income Fund (a)$83.19 (a)$125.27 (a)$169.67 (a)$318.52
(b)$29.19 (b)$ 89.27 (b)$151.67 (b)$318.52
(c)$83.19 (c)$125.27 (c)$151.67 (c)$318.52
AIM V.I. Government Securities Fund (a)$78.80 (a)$112.13 (a)$147.88 (a)$275.69
(b)$24.80 (b)$ 76.13 (b)$129.88 (b)$275.69
(c)$78.80 (c)$112.13 (c)$129.88 (c)$275.69
AIM V.I. International Equity Fund (a)$79.50 (a)$114.23 (a)$151.38 (a)$282.64
(b)$25.50 (b)$ 78.23 (b)$133.38 (b)$282.64
(c)$79.50 (c)$114.23 (c)$133.38 (c)$282.64
AIM V.I. Money Market Fund (a)$75.79 (a)$103.07 (a)$132.74 (a)$245.28
(b)$21.79 (b)$ 67.07 (b)$114.74 (b)$245.28
(c)$75.79 (c)$103.07 (c)$114.74 (c)$245.28
AIM V.I. Telecommunications and
Technology Fund (a)$82.50 (a)$123.19 (a)$166.23 (a)$311.85
(b)$28.50 (b)$ 87.19 (b)$148.23 (b)$311.85
(c)$82.50 (c)$123.19 (c)$148.23 (c)$311.85
</TABLE>
Notes to Table of Fees and Expenses and Examples
1. For the purposes of calculating the values in the above examples, we have
translated the administration fees into an annual asset charge of 0.070%,
based on the total annual administrative charges collected in 1998 divided
by the average total assets held under the Contracts offered by this
Prospectus.
2. The purpose of the table above is to help you understand the costs and
expenses that a variable annuity contract owner will bear directly or
indirectly.
3. Note that the expense amounts in the examples are aggregate amounts for the
Investment Funds for the number of years indicated.
4. For a more complete description of the Investment Funds' fees and expenses,
see the Investment Funds' Prospectuses.
5. The examples above are not a representation of past or future expenses, and
the Investment Funds' actual expenses may be higher or lower than those
shown.
6. Neither the table nor the examples reflect any premium tax that may be
applicable to a contract; such taxes currently range from 0% to 3.5%. For a
complete description of Contract costs and expenses, see the section titled
"Charges and Deductions," in this Prospectus.
HIGHLIGHTS
The variable annuity contract that we are offering is a contract between you,
the owner, and us, the insurance company. The Contract provides a means for
investing on a tax-deferred basis in our Fixed Account and the Investment Funds.
The Contract is intended for retirement savings or other long-term investment
purposes and provides for a death benefit as well as other insurance related
benefits. If you choose to have your money invested in the Investment Funds you
will bear the entire investment risk.
The Contract, like all deferred annuity contracts, has two phases: the
accumulation phase and the income phase. During the accumulation phase, earnings
accumulate on a tax-deferred basis. You can make withdrawals during this phase.
However, the earnings you take out will be taxed as income, and we may assess a
surrender charge of up to 6% of the amount you withdraw. The income phase
occurs when you begin receiving regular payments from your Contract.
You can choose to receive annuity payments on a variable basis, fixed basis or
combination of both. If you choose variable payments, the amount of the variable
annuity payments will depend upon the investment performance of the Investment
Funds you select for the income phase. If you choose fixed payments, the amount
of the fixed annuity payments are level for the payout period.
Free Look. If you cancel your Contract within 10 days after receiving it (or
whatever period is required in your state), we will give you back your purchase
payments. In some states we are required to give you back the value of your
contract that is invested in the Investment Funds plus any purchase payments you
allocated to the Fixed Account.
Tax Penalty. The earnings in your Contract are not taxed until you take money
out of your Contract. If you take money out during the accumulation phase,
earnings come out first and are taxed as income. If you are younger than 59 1/2
when you take money out, you may be charged a 10% federal tax penalty on these
earnings. Payments during the income phase are considered partly a return of
your original investment.
Inquiries. If you need more information or require assistance after you purchase
a contract, please contact us at:
General American's Variable Annuity Administration Department
P.0. Box 14490
St. Louis, Missouri 63101
(800) 237-6580.
All inquiries should include the Contract number and the name of the contract
owner and/or the annuitant.
THE COMPANY
We are an insurance company that is wholly-owned by GenAmerica Corporation.
GenAmerica Corporation is wholly-owned by Metropolitan Life Insurance Company, a
New York insurance company ("MetLife"). We were chartered in 1933 and since then
have continuously engaged in the business of life insurance, annuities, and
accident and health insurance. Our National Headquarters is located at 700
Market Street, St. Louis, Missouri 63101. The telephone number is 314-231-1700.
We are licensed to do business in 49 states of the U.S., the District of
Columbia, Puerto Rico, and are registered in Canada and licensed in the
Provinces of Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland,
Nova Scotia, Ontario, Prince Edward Island, Quebec, and Saskatchewan.
We conduct a conventional life insurance business. Assets derived from our
business should be considered by purchasers of variable annuity contracts only
as bearing upon our ability to meet our obligations under the variable annuity
contracts and should not be considered as bearing on the investment performance
of the Separate Account.
MetLife is developing a plan under which it would convert from a mutual
company to a publicly-held stock company. MetLife's conversion to a stock
company, or "demutualization", is subject to policyholder and regulatory
approval, as well as the satisfaction of certain other conditions. MetLife's
contemplated demutualization will not affect our contractual obligations.
THE ANNUITY CONTRACTS
This Prospectus describes the variable annuity contracts that we are offering.
An annuity is a Contract between you, the owner, and us, the insurance company,
where we promise to pay you an income, in the form of annuity payments,
beginning on a designated date in the future. Until you decide to begin
receiving annuity payments, your Contract is in the accumulation phase. Once you
begin receiving annuity payments, your Contract enters the income phase.
The Contract benefits from tax deferral. Tax deferral means that you are not
taxed on earnings or appreciation on the assets in your Contract until you take
money out of your Contract.
The Contract is called a variable annuity because you can choose among the
Investment Funds, and depending upon market conditions, you can make or lose
money in any of these Investment Funds. If you select the variable annuity
portion of the Contract, the amount of money you are able to accumulate in your
Contract during the accumulation phase depends upon the investment performance
of the Investment Fund(s) you select. If you select the fixed annuity portion of
the Contract, the value will also depend upon the interest we credit to the
Fixed Account.
The Contract is available to individuals seeking annuity contracts entitled to
favorable tax treatment under the Code as traditional Individual Retirement
Annuity (IRA) plans and qualified plans under Sections 401, 403(b) and 457. The
Contract is also available to individuals not entitled to any special tax
benefits under the Code. The rights and benefits of the Contracts are described
below and in the Contract; however, General American reserves the right
to make any modification to conform the Contract to, or to give the Contract
Owner the benefit of, any Federal or state statute or any rule or regulation of
the United States Treasury Department.
PURCHASE
You can purchase this Contract by completing an application and providing us
with an initial purchase payment. We will not issue a Contract after the first
day of the first month following the annuitant's 90th birthday.
Purchase Payments
The minimum initial purchase payment permitted is $2,000. Each purchase payment
made thereafter must be for at least $100. The amount of purchase payments made
in the first contract year may be limited to the greater of double your initial
purchase payment or $25,000. Afterwards, the purchase payments allowed each
contract year cannot exceed the annual equivalent of twice the amount of
purchase payments made in the first contract year. Any purchase payments over
this amount, or any purchase payments that would cause the accumulated value of
your Contract to exceed $1,000,000, will be accepted after our prior approval.
You can make purchase payments at any time prior to:
* the annuity date;
* full surrender of the Contract; or
* your death or the death of the annuitant.
Instead of making the minimum initial purchase payment of $2,000, you may
elect to deposit your initial purchase payment in monthly installments by means
of a pre-authorized check ("PAC") procedure. Under a PAC procedure, amounts will
be deducted each month from your checking account and applied as a purchase
payment under your Contract. The PAC procedure can also be used to make
additional purchase payment deposits. The minimum monthly PAC deduction must be
at least $100 and you can cancel at any time by contacting us at least 5
business days prior to the next scheduled withdrawal.
Allocation of Purchase Payments
You specify how you want your purchase payments allocated. You may allocate each
purchase payment to one or more of the Investment Funds and/or the Fixed
Account. However, the requested allocations must be in whole number percentages
and total 100%. The minimum initial allocation to any Investment Fund and/or the
Fixed Account must be at least $500. You can change the allocation instructions
for future purchase payments. If any of the investment options are no longer
offered by us when you make an allocation, we will contact you to secure new
allocations.
If the application is in good order, your initial purchase payment will be
credited within two business days after we receive your application. However, if
your application is not in good order (missing information, etc.), we may retain
the initial purchase payment for up to five business days while attempting to
complete the application. If the application cannot be made in good order
within five business days, the initial purchase payment will be returned
immediately to you unless you consent in writing to us retaining the initial
purchase payment until the application is in good order. Subsequent purchase
payments are credited within one business day.
Our business days are each day when both the New York Stock Exchange and us are
open for business. Our business day ends when the New York Stock Exchange
closes, usually 4:00 PM Eastern Time.
Account Continuation
Your Contract will stay in force until the earlier of the annuity date,
surrender of the Contract, or your death or the death of the annuitant. However,
we may cancel your Contract at the end of any two consecutive contract years
when no purchase payments have been made if:
(i) the total purchase payments made over the life of the Contract, less
any withdrawals, are less than $2,000; and
(ii) the accumulated value at the end of such two year period is less than
$2,000.
Upon cancellation, we will pay you the accumulated value computed as of the
valuation period when the cancellation occurs less any administrative charges.
Cancellation of your Contract could have adverse tax consequences.
INVESTMENT OPTIONS
The Contract gives you the choice of allocating purchase payments to our Fixed
Account, or to one or more of the Investment Funds listed below. Additional
Investment Funds may be available in the future.
Each of these Investment Funds has a separate prospectus that is provided with
this Prospectus. You should read the Investment Fund Prospectus before you
decide to allocate your assets to the Investment Fund.
The investment objectives and policies of certain of the Investment Funds are
similar to the investment objectives and policies of other mutual funds that
certain of the investment advisers manage. Although the objectives and policies
may be similar, the investment results of the Investment Funds may be higher
or lower than the results of such other mutual funds. The investment advisers
cannot guarantee, and make no representation, that the investment results of
similar funds will be comparable even though the funds have the same investment
advisers.
A Fund's performance may be affected by risks specific to certain types of
investments, such as foreign securities, derivative investments, non-investment
grade debt securities, initial public offerings (IPOs) or companies with
relatively small market capitalizations. IPOs and other investment techniques
may have a magnified performance impact on a Fund with a small asset base. A
Fund may not experience similar performance as its assets grow.
AIM Variable Insurance Funds
AIM Variable Insurance Funds is a management investment company with
multiple portfolios. A I M Advisors, Inc. is the investment adviser to each
Portfolio. Each Portfolio pays Investment Management and Administration Fees
to A I M Advisors, Inc. The following Portfolios are available under your
contract:
AIM V.I. Capital Appreciation Fund
AIM V.I. Diversified Income Fund
AIM V.I. Global Growth and Income Fund
AIM V.I. Government Securities Fund
AIM V.I. International Equity Fund
AIM V.I. Money Market Fund
AIM V.I. Telecommunications and Technology Fund (formerly, AIM V.I.
Telecommunications Fund)
On October 15 and 22, 1999 pursuant to an Agreement and Plan of Reorganization
approved by shareholders, the assets of the shares of GT Global Variable
Investment Trust and GT Global Variable Investment Series were transferred to
a corresponding series of AIM Variable Insurance Funds.
THERE IS NO ASSURANCE THAT ANY OF THE INVESTMENT FUNDS WILL ATTAIN THEIR
RESPECTIVE STATED OBJECTIVES, OR THAT ATTAINMENT CAN BE SUSTAINED.
Shares of the Fund's may be offered in connection with certain variable annuity
contracts and variable life insurance policies of various life insurance
companies which may or may not be affiliated with us. Certain Funds may also
be sold directly to qualified plans. The Funds believe that offering their
shares in this manner will not be disadvantageous to you.
Fixed Account
Under the Fixed Account option, you choose among various time periods to which
you allocate purchase payments or transfers. These time periods are established
by us and are referred to as Guarantee Periods. Each Guarantee Period will have
a duration of at least one year. The Guarantee Period selected will determine
the interest rate we credit to your Contract. You may select one or more
Guarantee Period(s) from among those we make available.
OUR MANAGEMENT MAKES THE FINAL DETERMINATION OF THE GUARANTEED INTEREST RATES TO
BE DECLARED. WE CANNOT PREDICT OR GUARANTEE THE LEVEL OF FUTURE GUARANTEED
INTEREST RATES, EXCEPT THAT WE GUARANTEE THAT FUTURE INTEREST RATES WILL NOT BE
BELOW 3% PER YEAR COMPOUNDED ANNUALLY.
Transfer Privilege
At any time during the accumulation period you may transfer all or part of your
accumulated value to any of the Investment Funds and/or Fixed Account, subject
to the following conditions:
(1) transfers from the Fixed Account are not allowed during the first
twelve months of the Guarantee Period you choose;
(2) transfers must be made by written request or by telephone, provided we
have a telephone authorization in good order completed by you;
(3) transfers from an Investment Fund or a Guarantee Period of the Fixed
Account must be for at least $500, or the entire amount if less than
$500;
(4) any accumulated value remaining in an Investment Fund or Guarantee
Period of the Fixed Account may not be less than $500, or the request
may be treated as a request to transfer the entire amount in that
Investment Fund; and
(5) there is no limit to the number of transfers that you may request.
Transfers involving an Investment Fund may further be limited by additional
terms and conditions imposed by the Investment Funds. You must instruct us as to
what amounts you want transferred from each Investment Fund and Guarantee Period
of the Fixed Account. A transfer will be effective on the date we receive your
transfer request. We may revoke or modify the transfer privilege at any time,
including the minimum amount for a transfer and the transfer charge, if any.
Dollar Cost Averaging
The dollar cost averaging program allows you to systematically transfer a set
amount from a selected Investment Fund or the Fixed Account to any of the other
Investment Funds. By allocating amounts on a regular schedule as opposed to
allocating the total amount at one particular time, you may be less susceptible
to the impact of market fluctuations.
Dollar cost averaging does not assure a profit and does not protect you against
loss in declining markets. Since dollar cost averaging involves continuous
investment in securities regardless of fluctuating price levels of such
securities, you should consider your financial ability to continue the dollar
cost averaging program through periods of fluctuating price levels.
Under the dollar cost averaging program you must designate at least $2,000 for
investment. Transfers from the GT Global Money Market Fund, GT Global Variable
Growth & Income Fund, GT Global Variable Strategic Income Fund, GT Global
Variable Global Government Income Fund, the GT Global Variable U.S. Government
Income Fund, or the Dollar Cost Averaging Guarantee Periods will continue until
the dollar amount requested has been transferred or the accumulated value in the
Investment Fund or Guarantee Period is exhausted, whichever is sooner. Dollar
cost averaging transfer allocations for a Guarantee Period or Investment Fund
which is no longer offered will remain in that Investment Fund until you change
the allocation instructions.
Transfers made under the dollar cost averaging program are not taken into
account in determining any applicable transfer fee. We reserve the right to
modify, suspend, or terminate the dollar cost averaging program at any time.
Personal Portfolio Rebalancing
The accumulated value allocated to each Investment Fund increases or decreases
at different rates depending on the investment performance of the Investment
Fund. Personal portfolio rebalancing automatically reallocates the accumulated
value in the Investment Funds and Guarantee Periods to maintain your selected
allocation. The goal of the personal portfolio rebalancing is to assist you by
selling from the Investment Funds that have appreciated most, and purchasing
additional units in the Investment Funds or Guarantee Periods that have
appreciated least.
You may choose the specific investment options that you want included in your
personal portfolio. However, the personal portfolio must contain at least two
investment options and may include all available investment options.
You may select rebalancing on a monthly, quarterly, semiannual, or annual basis.
The minimum amount that will be transferred from any Investment Fund or
Guarantee Period under this program is the greater of $50 or 0.5% of the
accumulated value of that Investment Fund or Guarantee Period. Certain
Investment Funds and personal portfolio rebalancing Guarantee Periods are
available investment options under this program. The number of available
investment options may change. The designated allocation can be changed at any
time upon your written request.
Transfers made under the personal portfolio rebalancing program are not taken
into account in determining any applicable transfer fee. We reserve the right to
modify, suspend, or terminate the personal portfolio rebalancing program at any
time. Participation in the personal portfolio rebalancing program does not
assure that you will profit from purchases under the program nor will it prevent
or lessen losses in a declining market.
Interest Sweep Option
Under this program we will automatically transfer earnings from selected
Guarantee Periods in your Fixed Account, which are called Interest Sweep
Guarantee Periods, to one or more selected Investment Funds. By allocating these
earnings to the Investment Funds, you can pursue further growth in the value of
your Contract through more aggressive investments. If you have allocated net
purchase payments or transfers to more than one Interest Sweep Guarantee Period,
the Interest Sweep transfer will occur from the oldest Interest Sweep Guarantee
Period. We will transfer a minimum of $25 from the Interest Sweep Guarantee
Period to the designated Investment Funds. These transfers can be made on a
monthly, quarterly, semiannual, or annual basis.
Transfers made under the interest sweep program are not taken into account in
determining any applicable transfer fee. We reserve the right to modify,
suspend, or terminate the interest sweep program at any time. The interest sweep
option does not assure profit and does not protect against loss in declining
markets.
Additions, Deletions or Substitutions of Investments
We may be required to substitute one of the Investment Funds you have selected
with another Investment Fund. We would not do this without the prior approval of
the Securities and Exchange Commission. We may also limit further investment in
an Investment Fund. We will give you notice of either of these actions.
CHARGES AND DEDUCTIONS
The full amount of your initial purchase payment, less any applicable tax, is
invested in the investment option(s) you choose.
Administrative Charges
Annual Contract Fee . On the last day of each contract year, we deduct an annual
contract fee, which we refer to as an account fee, to compensate us for expenses
relating to the issue and maintenance of your Contract and your account. For
contract years ending prior to December 31, 1999, we will deduct the lesser of
$30 or 2% of the accumulated value of your Contract if your accumulated value is
less than $20,000. Afterwards, the account fee may be adjusted annually subject
to the following:
* in no event will the fee be adjusted by more than the amount that
reflects the change in the Consumer Price Index since December 31,
1992; and
* in no event will it exceed $50.
The account fee will be waived if your Contract has an accumulated value of
$20,000 or more. Also, we will not deduct an account fee if you allocated all of
the accumulated value of your Contract to our Fixed Account during the entire
previous contract year. We will deduct the account fee if you make a full
surrender of your Contract or upon your death or the annuitant's death.
During the income phase, the account fee will be deducted in equal amounts from
each variable annuity payment made during the year. This deduction will not be
made from fixed annuity payments.
Also, the net investment factor incorporates an administrative expense charge at
the end of each valuation period (during both the accumulation period and after
annuity payments begin) at an annual rate of 0.15% to reimburse us for those
administrative expenses attributable to your Contract, your account, and the
separate accounts which exceed the revenues received from the account fee. We
believe the administrative expense charge and the account fee have been set at a
level that will recover no more than the actual costs of administering your
Contract.
Special Handling Fees
We reserve the right to charge a special handling fee to recover costs
associated with certain activities and requests. These activities and requests
include: wire transfer charges ($11.50), checks returned to us for insufficient
funds ($15), Interest Change Adjustment estimations in excess of four annually
($10), minimum distribution calculations ($10), annuitization calculations in
excess of four annually ($10), duplicate contracts ($25), and additional copies
of confirmation notices or quarterly statements (currently no charge).
This fee will be deducted from the first available option in this list:
(a) Money Market Fund;
(b) Variable Fund with the largest accumulated value;
(c) Guaranteed Interest Option.
The fee for special handling will not exceed $50 per request. We do not expect
to profit from these charges.
Surrender Charge (Contingent Deferred Sales Charge)
We may deduct a surrender charge on certain surrenders and withdrawals to cover
our expenses relating to the sale of the Contracts, including commissions to
registered representatives and other promotional expenses.
When you make a full surrender of your Contract or partial withdrawal of
accumulated value, we will apply a surrender charge to the gross withdrawal
amount, excluding any applicable charges from the Fixed Account or
administrative charges. This surrender charge will apply to purchase payments
made within six complete years measured from the date the purchase payment is
received by us. The surrender charge schedule is as follows:
Complete Years Since Receipt Surrender
of Purchase Payment Charge Percentage
-------------------- -----------------
0 6%
1 5%
2 4%
3 3%
4 2%
5 1%
6+ 0%
When you make a surrender or partial withdrawal, the amounts that you withdraw
will be done on a "first in first out" (FIFO) basis. Purchase payments which we
received more than six years before the date of your withdrawal will not be
subject to a surrender charge. If you withdraw all of your purchase payments,
further withdrawals will be made from your earnings without incurring a
surrender charge. If your accumulated value is less than the purchase payments
subject to a surrender charge, the surrender charge will only be applied to your
accumulated value.
We will not assess a surrender charge in the event of annuitization with us
after three contract years, or on death of the annuitant if the date of issue is
prior to the annuitant's 80th birthday. Currently, however, we assess surrender
charges upon annuitization within three contract years only if Annuity Option 4
(Income for a Fixed Period) is chosen with annuity payments for a period of less
than ten years.
If revenues from surrender charges are not sufficient to cover certain
sales-related expenses, we will bear the shortfall. If the revenues from
surrender charges exceed such expenses, we will retain the excess. We do not
currently believe that the surrender charge revenues will cover the expected
sales-related expenses.
Interest Change Adjustment
If you make a full surrender or partial withdrawal from the Fixed Account before
thirty days prior to the expiration date of the Guarantee Period you selected,
you may be subject to an Interest Change Adjustment deduction.
Charge-Free Amounts
You can withdraw up to 10% of your accumulated value each year without incurring
a surrender charge. We refer to this as the charge-free amount. After your first
contract anniversary, you can withdraw up to 20% of your accumulated value
without charge if you did not make any charge-free withdrawals in the prior
contract year.
The charge-free amounts withdrawn will not reduce the purchase payments still
subject to a surrender charge. The charge-free amount does not apply upon full
surrender.
Reduction of Surrender Charge for Contracts Issued Under Group or Sponsored
Arrangements
Contracts may be sold to members of a class of associated individuals or to a
trustee, an employer, or some other entity representing such a class. We may
waive or reduce the surrender charge on some policies when the sales efforts and
administrative costs are lower due to various factors such as:
* the expected number of participants and the amount of premium payments
anticipated;
* the nature of the group, association or class;
* the expected persistency and the possibility of favorable mortality;
and
* the amount and timing of the premium payment; and any selling cost.
Any reductions will be made uniformly to all individuals falling in the class
benefitting from the reduction. We may also modify the criteria for
qualification for sales charge reductions as experience is gained, subject to
the limit that such reductions will not be unfavorably discriminatory against
the interest of any contract owner.
Mortality and Expense Risk Charge
During the accumulation period and after annuity payments begin, the net
investment factor incorporates charges to cover mortality and expense risk at
the end of each valuation period as a percentage of the accumulated value in the
Investment Funds. This charge is 1.25% annually (1.00% for mortality risk and
.25% for expense risk).
The mortality risk that we assume is that annuitants may live for a longer
period of time than estimated when the guarantees in your Contract were
established. Because of these guarantees, each payee is assured that longevity
will not have an adverse effect on the annuity payments received. The mortality
risk that we assume also includes a guarantee to pay a death benefit if the
annuitant dies before the annuity date. The expense risk that we assume is the
risk that the surrender charge and administrative charges will be insufficient
to cover actual future expenses.
Transfer Fees
For each transfer in excess of twelve during the contract year, we charge an
amount equal to the lesser of $25 or 2% of the amount transferred. Transfers
made under the dollar cost averaging program, the personal portfolio rebalancing
program, or the interest sweep program are not included in determining the
amount of transfers. Transfers from the Fixed Account may be subject to an
Interest Change Adjustment deduction.
Fees and Expenses of the Funds
There are deductions from and expenses paid out of the assets of the various
Investment Funds, which are described in the attached fund prospectuses.
Premium Tax
Some states and other governmental entities (e.g., municipalities) charge
premium taxes or similar taxes. We are responsible for the payment of these
taxes and will make a deduction from the value of your contract for them. Some
of these taxes are due when your Contract is issued, and others are due when
annuity payments begin. When a premium tax is due at the time you make a
purchase payment, we will deduct from the payment such tax. Premium taxes
generally range from 0% to 3.5%, depending on the state.
We reserve the right to defer or waive the charge assessed for premium tax in
certain jurisdictions until your Contract is surrendered or until your death. We
will notify you in writing before exercising our right to collect deferred
premium tax from the accumulated value.
Other Taxes
We charge in the future for any tax or economic burden we incur attributable to
the separate accounts or to the Contracts.
VARIABLE ACCOUNT
Accumulation Units
We will establish an account in your name for each Investment Fund to which
you allocate purchase payments or transfer amounts. Purchase payments and
transfer amounts are allocated to Investment Funds and credited in the
form of accumulation units.
The number of accumulation units credited to each account is determined by
dividing the purchase payment or transfer amount for the account by the value of
an accumulation unit for that Investment Fund for the valuation period during
which the purchase payment or transfer request is credited. The number of
accumulation units in any account will be increased at the end of a valuation
period by any purchase payments allocated to the corresponding Investment Fund
during that valuation period and by any accumulated value transferred to that
Investment Fund from another Investment Fund or from a guarantee period during
that valuation period. The number of accumulation units in any account will be
decreased at the end of a valuation period by any transfers of accumulated value
out of the corresponding Investment Fund, by any partial withdrawals or
surrenders from that Investment Fund, and by any administrative charges or
surrender charge deducted from that Investment Fund during that valuation
period.
Value of Accumulation Units
The value of accumulation units in each Investment Fund will vary from one
valuation period to the next depending upon the investment results of the
particular Investment Fund. The value of an accumulation unit for each
Investment Fund was arbitrarily set at $12 for the first valuation period. The
value of an accumulation unit for any subsequent valuation period is determined
by multiplying the value of an accumulation unit for the immediately preceding
valuation period by the net investment factor for such Investment Fund for the
valuation period for which the value is being determined.
Net Investment Factor
Each business day we will calculate each Investment Fund's net investment
factor. An Investment Fund's net investment factor measures its investment
performance during a valuation period. The net investment factor for each
investment fund for any valuation period is determined by dividing (a) by (b)
and subtracting (c) from the result:
Where (a) is: (1) the net asset value per share of an Investment Fund share
held in the Investment Fund determined at the end of the current valuation
period, plus (2) the per share amount of any dividend or capital gain
distribution made by an Investment Fund on shares held in the Investment
Fund if the "ex-dividend" date occurs during the current valuation period.
Where (b) is: the net asset value per share of an Investment Fund share
held in the Investment Fund determined as of the end of the immediately
preceding valuation period.
Where (c) is: a factor representing the charges deducted from the
Investment Fund on a daily basis for mortality and expense risks and
administrative expenses. Such factor is equal, on an annual basis, to 1.40%
(1.25% for mortality and expense risk and 0.15% for administrative
expenses).
The net investment factor may be greater or less than or equal to one;
therefore, the value of an accumulation unit may increase, decrease, or remain
the same. The value of an annuity unit, described in the Statement of Additional
Information, is also affected by the net investment factor.
ACCESS TO YOUR MONEY
You can have access to the money in your Contract:
* by making a withdrawal (either a partial or a complete withdrawal);
* when a death benefit is paid; or
* by electing to receive annuity payments.
Surrenders and Partial Withdrawals
You may surrender your Contract or make a partial withdrawal to receive all or
part of the accumulated value of your Contract at any time before you begin
receiving annuity payments and while the annuitant is living.
A full surrender will result in a cash withdrawal payment equal to the
accumulated value of your Contract, less any applicable administrative charges,
interest charge adjustment, and surrender charge. If you request a partial
withdrawal, it will result in a reduction in your accumulated value equal to the
amount you receive plus any applicable surrender charge, administrative charges
and interest change adjustment.
There is no limit on the frequency of partial withdrawals. However, the minimum
amount that you may withdraw is $500 or your entire balance in the Investment
Fund or Guarantee Period, if less. If you do not tell us otherwise, the amounts
that we will withdraw from the Investment Funds will be on a pro rata basis. If
you make a partial withdrawal from the Fixed Account, you may be subject to
further limitations.
If, after the withdrawal (and deduction of any applicable administrative
charges, interest change adjustment and surrender charge), the amount remaining
in the Investment Fund is less than $500, we may treat the partial withdrawal as
a withdrawal of the entire amount held in the Investment Fund. If a partial
withdrawal plus any applicable administrative charges, interest change
adjustment and surrender charge would reduce the accumulated value to less than
$500, we may treat the partial withdrawal as a full surrender of your Contract.
The amount you receive can be less than the amount requested if your accumulated
value is insufficient to cover applicable charges. Any withdrawal request cannot
exceed the accumulated value of your Contract. If a partial withdrawal would
result in the remaining accumulated value being lower than the surrender charges
due, the partial withdrawal request will be treated as a full surrender.
We will, upon request, provide you with an estimate of the amounts that would be
payable in the event of a full surrender or partial withdrawal. We reserve the
right to charge a reasonable fee to recover the administrative expenses
associated with these requests.
Income taxes, tax penalties and certain restrictions may apply to any withdrawal
you make. If at the time you make a written request for a full surrender or a
partial withdrawal, you do not provide us with a written election not to have
Federal income taxes withheld, we must by law withhold such taxes from the
taxable portion of any surrender or withdrawal.
Systematic Withdrawal Plan
We administer a systematic withdrawal plan ("SWP") which allows you to authorize
periodic withdrawals during the accumulation period. If you enter into a SWP
agreement, you will instruct us to withdraw selected amounts from your Contract
on a monthly, quarterly, semiannual or annual basis. In requesting a SWP, you
must specify the amounts to be withdrawn from each Investment Fund and Guarantee
Period, if any. If you do not specify, the total amount including any applicable
surrender charges will be deducted from all Investment Funds pro-rata.
Currently, the SWP is available if you request a minimum $200 periodic
withdrawal. Amounts withdrawn may be subject to a surrender charge. Amounts
withdrawn from the Fixed Account may be subject to the interest change
adjustment and other restrictions. Withdrawals taken under the SWP may also be
subject to the 10% Federal penalty tax on early withdrawals and to income taxes.
The SWP may be terminated at any time by you or us.
DEATH BENEFIT
In every case of death, we must receive proof of your death or the death of the
annuitant before we are obliged to act.
Death of a Contract Owner who is the Annuitant .
If you die during the accumulation phase, and if your surviving spouse is the
beneficiary, the spouse may continue the Contract as the new owner. The death
benefit, if more than the accumulated value, will be paid to the surviving
spouse by crediting the Contract with an amount equal to the difference between
the death benefit and the accumulated value. If your surviving spouse is not the
beneficiary, the death benefit will become payable to the beneficiary.
If you die during the income phase, we will not pay a death benefit except as
may be provided under the annuity option elected.
Death of a Contract Owner who is not the Annuitant .
If a you die during the accumulation phase, and if your surviving spouse is the
annuitant, the spouse may continue the Contract as the new owner. If your
surviving spouse is not the Annuitant, the accumulated value, less any
applicable administration fees, interest change adjustment, or surrender charge,
will be distributed to the beneficiary.
If you die during the income phase, we will not pay a death benefit.
Death of the Annuitant who is not a Contract Owner .
If the Annuitant dies during the accumulation phase and before you or any joint
owner, the death benefit is paid to the beneficiary. The beneficiary may elect
to receive these benefits through one of the annuity options available under the
Contract or in a single lump sum. If an election is not made by written request
within one year after the death of the annuitant, the death benefit will be paid
in a single lump sum.
If the Annuitant dies during the income phase, we will not pay a death benefit
except as may be provided under the annuity option elected.
Other provisions .
Except as otherwise provided above, payments made under the death benefit
provisions will be made in one lump sum and must be made within 5 years after
the date of your death or that of the Annuitant. If, however, you or your
beneficiary make a written choice of one of the two options described below, we
will treat the proceeds as you or your beneficiary has chosen. The two options
are:
(i) Leave the proceeds of the Contract with us. The entire accumulated
value must be paid in a lump sum to the beneficiary before the end of
the fifth year after your death or that of the annuitant's death.
(ii) Apply the proceeds to create an immediate annuity for the beneficiary,
who will be the owner and annuitant. Payments under the annuity, or
under any other method of payment we make available, must be for the
life of the beneficiary, or for a number of years that is not more
than the life expectancy of the beneficiary (as determined for Federal
tax purposes) at the time of your death, and must begin within one
year after your death or that of the annuitant's.
Amount of Death Benefit
If your Contract is issued on or after the annuitant's 80th birthday, the death
benefit amount is the accumulated value, less any applicable interest change
adjustment, surrender charge or administrative charges.
If your Contract is issued before the annuitant's 80th birthday, the death
benefit amount is the amount described below, less any applicable interest
change adjustment and administrative charges. The death benefit amount for the
first contract year is the greater of:
(a) the sum of all net purchase payments made, less any amounts
deducted through partial withdrawals; or
(b) the accumulated value of your Contract.
After the first year, the death benefit amount will be the greater of:
(a) the accumulated value of your Contract; or
(b) the death benefit reset amount.
The first death benefit reset amount will be determined on the last day of the
first Contract Year and will be the greater of a) the accumulated value or b)
the sum of all net purchase payments less any amounts withdrawn. Thereafter, the
death benefit reset amount will be the greater of a) the accumulated value on
the last day of the Contract Year or b) the prior death benefit reset amount
plus any net purchase payments less withdrawals since the prior death benefit
reset amount was determined.
If the Contract was issued prior to the annuitant's 75th birthday, the death
benefit reset will occur on the last day of each Contract Year until the
annuitant's 80th birthday. After age 80, the death benefit reset will occur
every six Contract Years measured from the date the Contract was issued.
However, if the Contract was issued on or after the annuitant's 75th birthday,
the death benefit reset amount will continue to be the amount which was
calculated on the last day of the Contract Year prior to the annuitant's 80th
birthday and will not be redetermined.
The death benefit amount is determined as of the date due proof of death,
Written Request for payment and all other requirements have been received
at our Annuity Service Office.
Contracts Issued Under Section 401/457 of the Code
If the annuitant dies during the accumulation phase the death benefit will equal
the accumulated value, less any applicable interest change adjustment, surrender
charge, or administrative charges for Contracts issued under Section 401 or 457
of the Code with multiple participants.
ANNUITY PROVISIONS
The accumulated value on the annuity date, less any applicable administration
charges, interest change adjustment, surrender charge and premium tax will be
applied to an annuity option. Currently, we assess surrender charges only if
Annuity Option 4 (Income for a Fixed Period) is chosen with annuity payments
lasting for a period of less than ten years.
Annuity Date
Annuity payments will begin on the annuity date, unless your Contract has been
surrendered or the proceeds have been paid to the designated beneficiary prior
to that date. The annuity date must be on the later of the first day of the
first month following the annuitant's 85th birthday or upon completion of five
contract years measured from the date of issue. Under certain qualified
arrangements, distributions may be required before the annuity date. You may
change the annuity date.
Annuity Options
The annuity option may be elected or changed if it was not irrevocable by
written request, provided the annuitant is still alive. Election of an annuity
option must be made before thirty days before the annuity date.
Currently, the minimum amount which you may apply under an annuity option is
$5,000 and the minimum annuity payment is $50. If the accumulated value of your
Contract is less than $5,000 when the annuity date arrives, we will make a lump
sum payment of the remaining amount to you. If at any time payments are, or
become, less than $50, we may change the frequency of payments to intervals that
will result in payments of at least $50. We reserve the right to change these
requirements.
The following options are currently available:
Option 1 - Life Annuity - An annuity payable in monthly, quarterly,
semi-annual or annual payments during the lifetime of the annuitant,
ceasing with the last installment due prior to the death of the annuitant.
Since there is no provision for a minimum number of payments under this
annuity option, the payee would receive only one payment if the annuitant
died prior to the due date of the second payment, two payments if the
annuitant died prior to the due date of the third payment, etc.
Option 2 - Life Annuity with 60, 120, 180, or 240 Monthly Payments
Guaranteed - An annuity payable in monthly, quarterly, semi-annual, or
annual payments during the lifetime of the annuitant, with the guarantee
that if, at the death of the annuitant, payments have been made for less
than 60 months, 120 months, 180 months, or 240 months, as elected, payments
will be continued to the beneficiary during the remainder of the elected
period.
Option 3 - Joint and Survivor Income for Life - An annuity payable in
monthly, quarterly, semi-annual, or annual payments while both the
annuitant and a second person remain alive, and thereafter during the
remaining lifetime of the survivor, ceasing with the last installment due
prior to the death of the survivor. If the primary payee dies after
payments begin, full payments or payments of 1/2 or 2/3, (whichever you
elected when applying for this option) will continue to the other payee
during his or her lifetime. Since there is no provision for a minimum
number of payments under Annuity Option 3, the payees would receive only
one payment if both the annuitant and the second person died prior to
the due date of the second payment, two payments if they died prior to
the due date of the third payment, etc.
Option 4 - Income for a Fixed Period - An annuity payable in annual,
semiannual, quarterly, or monthly payments over a specified number of
years, not less than five nor more than thirty. When a variable annuity
basis is selected, a mortality and expense risk charge continues to be
assessed, even though we incur no mortality risk under this option.
With respect to any Option not involving a life contingency (e.g., Option 4 -
Income for a Fixed Period), you may elect to have the present value of the
guaranteed monthly annuity payments remaining, as of the date we receive proof
of the claim, commuted and paid in a lump sum.
Value of Variable Annuity Payments
The dollar amount of your payment from the Investment Fund(s) will depend upon
four things:
* the value of your Contract in the Investment Fund(s) on the annuity
commencement date;
* the 4% assumed investment rate used in the annuity table for the
Contract; and
* the performance of the Investment Funds you selected; and
* if permitted in your state and under the type of Contract you have
purchased, the age and sex of the annuitant(s).
If the actual performance exceeds the 4% assumed rate plus the deductions for
expenses, your annuity payments will increase. Similarly, if the actual
performance is less than 4% plus the amount of the deductions, your annuity
payments will decrease.
The value of all payments (both guaranteed and variable) will be greater for
shorter guaranteed periods than for longer guaranteed periods, and greater for
life annuities than for joint and survivor annuities, because they are expected
to be made for a shorter period.
The method of computation of variable annuity payments is described in more
detail in the Statement of Additional Information.
FEDERAL TAX MATTERS
NOTE: We have prepared the following information on taxes as a general
discussion of the subject. It is not intended as tax advice to any individual.
You should consult your own tax adviser about your own circumstances. We have
included in the Statement of Additional Information an additional discussion
regarding taxes.
Annuity Contracts in General
Annuity contracts are a means of setting aside money for future needs - usually
retirement. Congress recognized how important saving for retirement was and
provided special rules in the Internal Revenue Code (Code) for annuities.
Simply stated, these rules provide that you will not be taxed on the earnings on
the money held in your annuity contract until you take the money out. This is
referred to as tax deferral. There are different rules as to how you are taxed
depending on how you take the money out and the type of contract - qualified or
non-qualified (see following sections).
Under non-qualified contracts, you, as the owner, are not taxed on increases in
the value of your contract until a distribution occurs - either as a withdrawal
or as annuity payments. When you make a withdrawal, you are taxed on the amount
of the withdrawal that is earnings. For annuity payments, different rules apply.
A portion of each annuity payment is treated as a partial return of your
purchase payments and is not taxed. The remaining portion of the annuity payment
is treated as ordinary income. How the annuity payment is divided between
taxable and non-taxable portions depends upon the period over which the annuity
payments are expected to be made. Annuity payments received after you have
received all of your purchase payments are fully includible in income.
When a non-qualified contract is owned by a non-natural person (e.g.,
corporation or certain other entities other than a trust holding the contract as
an agent for a natural person), the contract will generally not be treated as an
annuity for tax purposes.
Qualified and Non-Qualified Contracts
If you purchase the contract as an individual and not under any pension plan,
specially sponsored program or an individual retirement annuity, your contract
is referred to as a non-qualified contract.
If you purchase the contract under a pension plan, specially sponsored program,
or an individual retirement annuity, your contract is referred to as a qualified
contract. Examples of qualified plans are: Individual Retirement Annuities
(IRAs), Tax-Sheltered Annuities (sometimes referred to as 403(b) contracts), and
pension and profit-sharing plans, which include 401(k) plans and H.R. 10 Plans.
A qualified Contract will not provide any necessary or additional tax deferral
if it is used to fund a qualified plan that is tax deferred. However, the
Contract has features and benefits other than tax deferral that may make it an
appropriate investment for a qualified plan. You should consult your tax adviser
regarding these features and benefits prior to purchasing a qualified Contract.
Withdrawals - Non-Qualified Contracts
If you make a withdrawal from your contract, the Code treats such a withdrawal
as first coming from earnings and then from your purchase payments. Such
withdrawn earnings are includible in income.
The Code also provides that any amount received under an annuity contract which
is included in income may be subject to a penalty. The amount of the penalty is
equal to 10% of the amount that is includible in income. Some withdrawals will
be exempt from the penalty. They include any amounts:
(1) paid on or after the taxpayer reaches age 59 1/2;
(2) paid after you die;
(3) paid if the taxpayer becomes totally disabled (as that term is defined
in the Code);
(4) paid in a series of substantially equal payments made annually (or
more frequently) for life or a period not exceeding life expectancy;
(5) paid under an immediate annuity; or
(6) which come from purchase payments made prior to August 14, 1982.
Withdrawals - Qualified Contracts
If you make a withdrawal from your qualified contract, a portion of the
withdrawal is treated as taxable income. This portion depends on the ratio of
pre-tax purchase payments to the after-tax purchase payments in your contract.
If all of your purchase payments were made with pre-tax money then the full
amount of any withdrawal is includible in taxable income. Special rules may
apply to withdrawals from certain types of qualified contracts.
The Code also provides that any amount received under a qualified contract
which is included in income may be subject to a penalty. The amount of the
penalty is equal to 10% of the amount that is includible in income. Some
withdrawals will be exempt from the penalty. They include any amounts:
(1) paid on or after you reach age 59 1/2;
(2) paid after you die;
(3) paid if you become totally disabled (as that term is defined in the
Code);
(4) paid to you after leaving your employment in a series of substantially
equal periodic payments made annually (or more frequently) under a
lifetime annuity;
(5) paid to you after you have attained age 55 and you have left your
employment;
(6) paid for certain allowable medical expenses (as defined in the Code);
(7) paid pursuant to a qualified domestic relations order;
(8) paid on account of an IRS levy upon the qualified contract;
(9) paid from an IRA for medical insurance (as defined in the Code);
(10) paid from an IRA for qualified higher education expenses; or
(11) paid from an IRA for up to $10,000 for qualified first-time homebuyer
expenses (as defined in the Code).
The exceptions in (5) and (7) above do not apply to IRAs. The exception in
(4) above applies to IRAs but without the requirement of leaving employment.
We have provided a more complete discussion in the Statement of Additional
Information.
Withdrawals - Tax-Sheltered Annuities
The Code limits the withdrawal of amounts attributable to purchase payments made
under a salary reduction agreement by owners from Tax-Sheltered Annuities.
Withdrawals can only be made when an owner:
(1) reaches age 59 1/2;
(2) leaves his/her job;
(3) dies;
(4) becomes disabled (as that term is defined in the Code); or
(5) in the case of hardship.
However, in the case of hardship, the owner can only withdraw the purchase
payments and not any earnings.
Diversification
The Code provides that the underlying investments for a variable annuity must
satisfy certain diversification requirements in order to be treated as an
annuity contract. We believe that the Investment Funds are managed so as to
comply with the requirements.
Neither the Code nor the Internal Revenue Service Regulations issued to date
provide guidance as to the circumstances under which you, because of the degree
of control you exercise over the underlying investments, are considered the
owner of the shares of the Investment Funds. If you are considered owner of the
shares, it will result in the loss of the favorable tax treatment for the
contract. It is unknown to what extent owners are permitted to select Investment
Funds, to make transfers among the Investment Funds or the number and type of
Investment Funds owners may select from without being considered owner of the
shares. If any guidance is provided which is considered a new position, then the
guidance is generally applied prospectively. However, if such guidance is
considered not to be a new position, it may be applied retroactively. This would
mean that you, as the owner of the contract, could be treated as the owner of
the Investment Funds.
Types of Qualified Contracts
Individual Retirement Annuities
Section 408(b) of the Code permits eligible individuals to contribute to an
individual retirement program known as an "Individual Retirement Annuity"
("IRA"). Under applicable limitations, certain amounts may be contributed to an
IRA which will be deductible from the individual's taxable income. These IRAs
are subject to limitations on eligibility, contributions, transferability and
distributions. Sales of Contracts for use with IRAs are subject to special
requirements imposed by the Code, including the requirement that certain
informational disclosure be given to persons desiring to establish an IRA.
Section 403(b) Plans
Under Code Section 403(b), payments made by public school systems and certain
tax exempt organizations to purchase annuity contracts for their employees are
excludable from the gross income of the employee, subject to certain
limitations. However, these payments may be subject to FICA (Social Security)
taxes. Furthermore there are additional restrictions regarding transferability,
distributions, nondiscrimination and withdrawals.
Corporate Pension and Profit Sharing Plans and H.R. 10 Plans
Code Section 401(a) permits employers to establish various types of retirement
plans for employees, and permits self-employed individuals to establish
retirement plans for themselves and their employees. These retirement plans may
permit the purchase of the Contracts to provide benefits under the plans.
Adverse tax consequences to the plan, to the participant or to both may result
if this Contract is assigned or transferred to any individual as a means to
provide benefit payments.
Deferred Compensation Plans
Under Code provisions, employees and independent contractors performing services
for state and local governments and other tax-exempt organizations may
participate in Deferred Compensation Plans under Section 457 of the Code. The
amounts deferred under a Plan which meets the requirements of Section 457 of the
Code are not taxable as income to the participant until paid or otherwise made
available to the participant or beneficiary. In general, distributions from a
Plan are prohibited under section 457 of the Code unless made after the
participating employee:
attains age 70 1/2,
separates from service,
dies, or
suffers an unforeseeable financial emergency as defined in the Code.
Furthermore, the Code provides additional requirements and restrictions
regarding eligibility, contributions and distributions.
YIELDS AND TOTAL RETURNS
We periodically advertise performance of the various Investment Funds. We will
calculate performance by determining the percentage change in the accumulated
value for selected periods. This performance number reflects the deduction of
the insurance charges. It does not reflect the deduction of any surrender
charge. The deduction of any surrender charges would reduce the percentage
increase or make greater any percentage decrease. Any advertisement will also
include total return figures which reflect the deduction of the mortality and
expense charges, and surrender charges.
We may, from time to time, include in our advertising and sales materials, tax
deferred compounding charts and other hypothetical illustrations, which may
include comparisons of currently taxable and tax deferred investment programs,
based on selected tax brackets.
OTHER INFORMATION
The Separate Accounts
The Separate Accounts were established on May 28, 1992, pursuant to
authorization by our Board of Directors. The Separate Accounts are registered as
unit investment trusts with the Securities and Exchange Commission (the "SEC")
under the Investment Company Act of 1940, as amended (the "1940 Act"). Such
registration does not involve supervision of the management, investment
practices, policies of the Separate Accounts, or of us by the SEC.
Purchase payments may be received by the Separate Accounts from individual
variable annuity contracts that are Qualified Contracts entitled to favorable
tax treatments under the Code and also from individual variable annuity
contracts not entitled to any special tax benefits. Any such purchase payments
are pooled together and invested separately from our General Account (the
general assets of the insurance company other than separate account assets). The
persons participating in the variable portion of these Contracts look to the
investment experience of the assets in the Separate Accounts.
Under Missouri law, the net assets of the Separate Accounts are held for the
exclusive benefit of the owners of the Contracts and for the persons entitled to
annuity payments which reflect the investment results of the Separate Accounts.
That portion of the assets of each Separate Account equal to the reserves and
other liabilities under the Contracts participating in it is not chargeable with
liabilities arising out of any other business that we may conduct. The income,
gains, and losses, whether or not realized, from the assets of each Investment
Fund of a Separate Account are credited to or charged against that Investment
Fund without regard to any other income, gains, or losses.
Separate Account Twenty-Eight currently has three Investment Funds. They are:
AIM V.I. Diversified Income Fund
AIM V.I. Government Securities Fund
AIM V.I. Money Market Fund
Separate Account Twenty-Nine currently has four Investment Funds. They are:
AIM V.I. International Equity Fund
AIM V.I. Capital Appreciation Fund
AIM V.I. Telecommunications and Technology Fund
AIM V.I. Global Growth and Income Fund
These are the only Investment Funds currently available under the Contracts.
Principal Underwriter
As of May 1, 1999, Cova Life Sales Company (Life Sales), One Tower Lane, Suite
3000, Oakbrook Terrace, Illinois 60181-4644, acts as the distributor of the
contracts. Life Sales is one of our affiliates. Life Sales will pay
distribution compensation to selling broker/dealers in varying amounts which
under normal circumstances are not expected to exceed 5.25% of purchase
payments for such Contracts, plus 0.25% of the contract value in all
Investment Funds per year. As an alternative, Life Sales may pay distribution
compensation to selected broker/dealers in amounts which are not expected
to exceed 6.0% of purchase payments for such Contracts, with no residual
payments.
Voting Rights
We are the legal owner of the Investment Fund shares. However, we believe that
when an Investment Fund solicits proxies in conjunction with a vote of
shareholders, it is required to obtain from you and other owners instructions as
to how to vote those shares. When we receive those instructions, we will vote
all of the shares we own in proportion to those instructions. This will also
include any shares that we own on our own behalf. Should we determine that it is
no longer required to comply with the above, we will vote the shares in our own
right.
Written Notice or Written Request
A written notice or written request is any notice or request that you send to us
requesting any changes or making any request affecting your Contract. Such a
request or notice must be in a format and content acceptable to us.
Assignments and Changes of Ownership
With respect to nonqualified individual Contracts, an assignment or change in
ownership of the Contract or of any interest in it will not bind us unless:
(1) it is made in a written instrument;
(2) the original instrument or a certified copy is filed at our Annuity
Service Office; and
(3) we send you a receipt.
We are not responsible for the validity of any assignment. If a claim is based
on an assignment or change of ownership, proof of interest of the claimant may
be required. A valid assignment will take precedence over any claim of a
beneficiary. Any amounts due under a valid assignment will be paid in one lump
sum.
With respect to all other Contracts, the Contract Owner may not transfer, sell,
assign, discount, or pledge a Contract for a loan or a security for the
performance of an obligation or any other purpose, to any person other than to
us at our Annuity Service Office.
Any request received by us which is not specifically addressed in an assignment
document must be in writing and signed by both the assignor and the assignee.
Ownership
You, as the owner of the contract, have all the rights under the contract. Prior
to the Annuity Commencement Date, the owner is as designated at the time the
contract is issued, unless changed. If there are joint owners, any rights of
ownership must be done by joint action.
The Beneficiary
The beneficiary is the person or legal entity that may receive benefits under
the Contract in the event of the annuitant's or your death. The original
beneficiary is named in the Contract Application. Subject to any assignment of a
Contract, you may change the beneficiary designation during the lifetime of the
annuitant by the filing of a written request acceptable to us at our Annuity
Service Office. If Annuity Option 3 (Joint and Survivor Income for Life) is
selected, the designation of the second annuitant may not be changed after
annuity payments begin. If the beneficiary designation is changed, we reserve
the right to require that the Contract be returned for endorsement. A
beneficiary who becomes entitled to receive benefits under the Contract may also
designate, in the same manner, a second beneficiary to receive any benefits
which may become payable under the Contract to him or her by reason of the
primary beneficiary's death. If a beneficiary has not been designated by you or
if a beneficiary so designated is not living on the date a lump sum death
benefit is payable or on the date any annuity payments are to be made, the
beneficiary shall be your estate.
Deferment of Payment
We may be required to suspend or postpone payments for surrenders or transfers
for any period when:
1. the New York Stock Exchange is closed (other than customary weekend
and holiday closings);
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of shares of the
Investment Funds is not reasonably practicable or we cannot reasonably
value the shares of the Investment Funds;
4. during any other period when the Securities and Exchange Commission,
by order, so permits for the protection of owners.
We may also delay the payment of a surrender or partial withdrawal from the
Fixed Account for up to six months from receipt of written request. If payment
is delayed, the amount due will continue to be credited with the rate of
interest then credited to the General Account until the payment is made.
Financial Statements
The financial statements for General American and both Separate Accounts
Twenty-Eight and Twenty-Nine (as well as the auditors' reports thereon) are
included in the Statement of Additional Information.
Statement of Additional Information - Table of Contents
A Statement of Additional Information is available which contains more details
concerning the subjects discussed in this Prospectus. The following is the Table
of Contents for that Statement:
COMPANY
EXPERTS
DISTRIBUTION
Reduction of the Surrender Charge
PERFORMANCE INFORMATION
Total Return
Money Market Yield
Yields of Other Investment Funds
Historical Unit Values
Effect of the Annual Contract Fee
FEDERAL TAX STATUS
General
Diversification
Multiple Contracts
Partial 1035 Exchanges
Contracts Owned by Other than Natural Persons
Tax Treatment of Assignments
Death Benefits
Income Tax Withholding
Tax Treatment of Withdrawals - Non-Qualified Contracts
Qualified Plans
Tax Treatment of Withdrawals - Qualified Contracts
Tax-Sheltered Annuities - Withdrawal Limitations
ANNUITY PROVISIONS
Computation of the Value of an Annuity Unit
Determination of the Amount of the First Annuity Installment
Determination of the Fluctuating Values of the Annuity Installments
GENERAL MATTERS
Participating
Incorrect Age or Sex
Annuity data
Quarterly Reports
Incontestability
Ownership
Reinstatement
SAFEKEEPING OF ACCOUNT ASSETS
STATE REGULATION
RECORDS AND REPORTS
LEGAL PROCEEDINGS
FINANCIAL STATEMENTS
OTHER INFORMATION
FINANCIAL STATEMENTS
APPENDIX A
<TABLE>
<CAPTION>
Example of Surrender Charge Calculations
This example assumes that the date of the full surrender or partial withdrawal
is during the 10th Contact Year.
1 2 3 4
- - - -
<S> <C> <C> <C> <C>
1 $2,000 0% $0
2 $2,000 0% $0
3 $2,000 0% $0
4 $2,000 0% $0
5 $2,000 1% $20.00
6 $2,000 2% $40.00
7 $2,000 3% $60.00
8 $2,000 4% $80.00
9 $2,000 5% $100.00
10 $2,000 6% $120.00
------ -------
$20,000 $420.00
</TABLE>
Explanation of Columns in Table
Column 1:
Represents Contract Years
Column 2:
Represents amounts of Net Purchase Payments. Each Net Purchase Payment is made
on the first day of each Contract Year.
Column 3:
Represents the surrender charge percentages imposed on the amounts in Column 2.
Column 4:
Represents the surrender charge imposed on each Net Purchase Payment. It is
determined by multiplying the amount in Column 2 by the percentage in Column 3.
For example, the surrender charge imposed on Net Purchase Payment 7
= Net Purchase Payment 7 Column 2 x Net Purchase Payment 7 Column 3
= $2,000 x 3%
= $60
Full Surrender
The total of Column 4, $420, represents the total amount of surrender charge
imposed on Net Purchase Payments in this example. No free amount is allowed upon
full surrender. If the Accumulated Value is $30,000, the amount received upon
surrender would be $29,580, less any applicable interest change adjustment or
administrative fees.
Partial Withdrawal
The sum of amounts in Column 4 for as many Net Purchase Payments as are
liquidated reflects the surrender charge imposed in the case of a partial
withdrawal.
If the Accumulated Value is $30,000, $6,000 can be withdrawn without incurring a
surrender charge ("free amount"). This assumes that there have been at least two
Contract Years since January 1, 1996, and no free amounts have been withdrawn in
the prior contract year. The free amount does not reduce premiums still subject
to charge.
For example, if $20,000 were withdrawn, the first $6,000 represents the free
amount. The next $14,000 would be a withdrawal of the first seven Net Purchase
Payments. The amount of surrender charges imposed would be the sum of amounts in
Column 4 for Net Purchase Payments 1, 2, 3, 4, 5, 6, and 7 which is $120.
The amount received would be $19,880, less any applicable interest change
adjustment.
Full Surrender following Partial Withdrawal
The Accumulated Value remaining after the partial withdrawal is $10,000. The
first seven Net Purchase Payments were withdrawn as part of the partial
withdrawal. If the Contract is fully surrendered in the 10th Contract Year after
the partial withdrawal, the remaining three Net Purchase Payments will incur a
surrender charge equal to the sum of the amounts in Column 4 for Net Purchase
Payments 8, 9, and 10, which is $300.
The amount received would be $9,700, less any applicable interest change
adjustment or administrative fees.
HISTORICAL CHARTS OF UNITS AND UNIT VALUES
The initial value of an accumulation unit in Separate Account Twenty-Eight and
Separate Account Twenty-Nine was set as $12.00. The charts below show
accumulation unit values and the numbers of units outstanding from inception of
certain Investment Funds through December 31, 1999. On October 15 and 22, 1999,
pursuant to an Agreement and Plan of Reorganization approved by shareholders,
the assets of the shares of GT Global Variable Investment Trust and GT Global
Variable Investment Series were transferred to a corresponding series of AIM
Variable Insurance Funds.
<TABLE>
<CAPTION>
Chart 1 - Separate Account Twenty-Eight
Total Units
Accumulation Accumulation Outstanding,
Unit Value: Unit Value: End of Period
Year Beginning of Period End of Period (in thousands)
---- ------------------- ------------- --------------
<S> <C> <C> <C> <C>
AIM V.I. Money Market Fund 1999 14.53 14.64 1,237
Money Market Fund 1999 14.22 14.53 0
1998 13.75 14.22 2,024
1997 13.30 13.75 1,943
1996 12.87 13.30 1,490
1995 12.40 12.87 1,158
1994 12.15 12.40 1,572
1993 12.00* 12.15 303
AIM V.I. Diversified Income Fund 1999 17.29 17.44 826
Variable Strategic Income Fund 1999 18.09 17.29 0
1998 18.45 18.09 1,179
1997 17.46 18.45 1,505
1996 14.56 17.46 1,807
1995 12.36 14.56 1,737
1994 15.11 12.36 1,886
1993 12.00* 15.11 1,187
Variable Global Government Income 1999 15.96 14.68 0
Fund 1998 14.36 15.96 552
1997 13.95 14.36 571
1996 13.33 13.95 743
1995 11.66 13.33 893
1994 12.95 11.66 825
1993 12.00* 12.95 464
AIM V.I. Government Securities Fund 1999 14.59 14.61 262
Variable U.S. Government Income 1999 15.27 14.59 0
Fund 1998 14.19 15.27 483
1997 13.29 14.19 515
1996 13.18 13.29 410
1995 11.65 13.18 452
1994 12.61 11.65 205
1993 12.00* 12.61 69
<FN>
* At inception on February 10, 1993.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Chart 2 Separate Account Twenty-Nine
Total Units
Accumulation Accumulation Outstanding,
Unit Value: Unit Value: End of Period
Year Beginning of Period End of Period (in thousands)
---- ------------------- ------------- --------------
<S> <C> <C> <C> <C>
Variable New Pacific Fund 1999 8.52 9.08 0
1998 10.11 8.52 1,146
1997 17.41 10.11 1,518
1996 13.48 17.41 1,776
1995 13.70 13.48 1,687
1994 15.87 13.70 1,410
1993 12.00* 15.87 492
Variable Europe Fund 1999 26.78 25.30 0
1998 23.41 26.78 1,210
1997 20.62 23.41 1,166
1996 16.05 20.62 1,182
1995 14.84 16.05 970
1994 15.14 14.84 1,007
1993 12.00* 15.14 349
AIM V.I. Capital Appreciation Fund 1999 30.87 42.44 911
Variable America Fund 1999 27.80 30.87 0
1998 26.08 27.80 1,458
1997 23.02 26.08 1,679
1996 19.69 23.02 1,802
1995 15.93 19.69 1,906
1994 13.59 15.93 953
1993 12.00* 13.59 117
AIM Global Growth and Income Fund 1999 21.27 23.27 1,319
Variable Growth & Income Fund 1999 23.61 21.27 0
1998 20.02 23.61 2,342
1997 17.47 20.02 2,506
1996 15.23 17.47 2,080
1995 13.37 15.23 2,002
1994 13.96 13.37 1,908
1993 12.00* 13.96 827
Variable Latin America Fund 1999 11.03 12.87 0
1998 19.18 11.03 806
1997 16.98 19.18 1,429
1996 14.06 16.98 1,292
1995 18.79 14.06 1,380
1994 17.46 18.79 1,412
1993 12.00* 17.46 463
AIM V.I. Telecommunications and
Technology Fund 1999 34.09 54.79 1,953
Variable Telecommunications Fund 1999 26.89 34.09 0
1998 22.33 26.89 2,558
1997 19.76 22.33 3,030
1996 16.79 19.76 3,177
1995 13.77 16.79 3,019
1994 13.03 13.77 2,612
1993 12.00* 13.03 605
AIM V.I. International Equity Fund 1999 13.02 17.83 3,154
Variable International Fund 1999 12.11 13.02 0
1998 12.34 12.11 581
1997 11.70 12.34 454
1996 10.94 11.70 384
1995 11.22 10.94 314
1994 12.00 11.22 172
Variable Emerging Markets Fund 1999 7.44 9.00 0
1998 11.96 7.44 739
1997 14.06 11.96 1,361
1996 10.88 14.06 1,234
1995 11.93 10.88 809
1994 12.00 11.93 574
Variable Natural Resources Fund 1999 14.23 15.64 0
1998 21.54 14.23 436
1997 21.57 21.54 763
1996 14.47 21.57 746
1995 12.00 14.47 86
Variable Infrastructure Fund 1999 17.52 18.21 0
1998 16.71 17.52 351
1997 16.13 16.71 518
1996 13.10 16.13 366
1995 12.00 13.10 113
<FN>
* At inception on February 10, 1993, except for the Variable
Telecommunications Fund, which commenced operations on October 18, 1993;
the Variable International Fund which commenced operations on July 12,
1994; the Variable Emerging Markets Fund, which commenced operations on
July 6, 1994; and the Variable Natural Resources Fund and the Variable
Infrastructure Fund, which both commenced operations on January 31, 1995.
The Investment Funds which invest in The AIM V.I. Funds (except the AIM V.I.
International Equity Fund) commenced operations on October 15, 1999. The
Investment Fund which invests in the AIM V.I. International Equity Fund
commenced operations on October 22, 1999.
</FN>
</TABLE>
PART B
STATEMENT OF ADDITIONAL INFORMATION
INDIVIDUAL VARIABLE ANNUITY CONTRACT
ISSUED BY
GENERAL AMERICAN SEPARATE ACCOUNT
TWENTY-EIGHT
AND
GENERAL AMERICAN SEPARATE ACCOUNT
TWENTY-NINE
AND
GENERAL AMERICAN LIFE INSURANCE COMPANY
THIS IS NOT A PROSPECTUS. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE
READ IN CONJUNCTION WITH THE PROSPECTUS DATED MAY 1, 2000, FOR THE INDIVIDUAL
VARIABLE ANNUITY CONTRACT WHICH IS DESCRIBED HEREIN.
THE PROSPECTUS CONCISELY SETS FORTH INFORMATION THAT A PROSPECTIVE INVESTOR
OUGHT TO KNOW BEFORE INVESTING. FOR A COPY OF THE PROSPECTUS CALL OR WRITE THE
COMPANY AT: GENERAL AMERICAN LIFE INSURANCE COMPANY, GTG/VA DEPARTMENT, P.O. BOX
66821, ST. LOUIS, MISSOURI, 63166-6821, (800) 237-6580.
THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED MAY 1, 2000.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
COMPANY .........................................................................................................
EXPERTS .........................................................................................................
DISTRIBUTION......................................................................................................
Reduction of the Surrender Charge........................................................................
PERFORMANCE INFORMATION...........................................................................................
Total Return.............................................................................................
Money Market Yield Calculation...........................................................................
Yields of Other Investment Funds.........................................................................
Historical Unit Values...................................................................................
Effect of the Annual Contract Fee.......................................................................
FEDERAL TAX STATUS...............................................................................................
General ...............................................................................................
Diversification.........................................................................................
Multiple Contracts......................................................................................
Partial 1035 Exchanges..................................................................................
Contracts Owned by Other than Natural Persons...........................................................
Tax Treatment of Assignments............................................................................
Death Benefits..........................................................................................
Income Tax Withholding..................................................................................
Tax Treatment of Withdrawals - Non-Qualified Contracts..................................................
Qualified Plans.........................................................................................
Tax Treatment of Withdrawals - Qualified Contracts......................................................
Tax-Sheltered Annuities - Withdrawal Limitations........................................................
ANNUITY PROVISIONS...............................................................................................
Computation of the Value of an Annuity Unit.............................................................
Determination of the Amount of the First Annuity Installment............................................
Determination of the Fluctuating Values of the Annuity Installments.....................................
GENERAL MATTERS..................................................................................................
Participating...........................................................................................
Incorrect Age or Sex....................................................................................
Annuity Data............................................................................................
Quarterly Reports.......................................................................................
Incontestability........................................................................................
Ownership...............................................................................................
Reinstatement...........................................................................................
SAFEKEEPING OF ACCOUNT ASSETS....................................................................................
STATE REGULATION.................................................................................................
RECORDS AND REPORTS..............................................................................................
LEGAL PROCEEDINGS................................................................................................
OTHER INFORMATION................................................................................................
FINANCIAL STATEMENTS.............................................................................................
</TABLE>
COMPANY
We (the "Company") are an insurance company that is wholly-owned by GenAmerica
Corporation. GenAmerica Corporation is wholly-owned by Metropolitan Life
Insurance Company, a New York insurance company ("MetLife"). We were chartered
in 1933 and since then have continuously engaged in the business of life
insurance, annuities, and accident and health insurance. Our National
Headquarters is located at 700 Market Street, St. Louis, Missouri 63101. The
telephone number is 314-231-1700. We are licensed to do business in 49 states of
the U.S., the District of Columbia, Puerto Rico, and are registered in Canada
and licensed in the Provinces of Alberta, British Columbia, Manitoba, New
Brunswick, Newfoundland, Nova Scotia, Ontario, Prince Edward Island, Quebec, and
Saskatchewan.
We conduct a conventional life insurance business. Assets derived from our
business should be considered by purchasers of variable annuity contracts only
as bearing upon our ability to meet our obligations under the variable annuity
contracts and should not be considered as bearing on the investment performance
of the Separate Account.
MetLife is developing a plan under which it would convert from a mutual
company to a publicly-held stock company. MetLife's conversion to a stock
company, or "demutualization", is subject to policyholder and regulatory
approval, as well as the satisfaction of certain other conditions. MetLife's
contemplated demutualization will not affect our contractual obligations.
EXPERTS
Audited financial statements of General American Life Insurance Company and the
Separate Account have been included in reliance upon the reports of KPMG LLP,
independent certified public accountants, appearing elsewhere herein, and upon
the authority of said firm as experts in accounting and auditing.
DISTRIBUTION
Cova Life Sales Company ("Life Sales"), the principal underwriter of the
Contracts, is registered with the Securities and Exchange Commission under the
Securities Exchange Act of 1934 as a broker-dealer and is a member of the
National Association of Securities Dealers, Inc.
REDUCTION OF THE SURRENDER CHARGE
The amount of the surrender charge on the Contracts may be reduced or eliminated
when sales of the Contracts are made to individuals or to a group of individuals
in a manner that results in savings of sales expenses. The entitlement to
reduction of the surrender charge will be determined by the Company after
examination of all the relevant factors such as:
1. The size and type of group to which sales are to be made. Generally, the
sales expenses for a larger group are less than for a smaller group because
of the ability to implement large numbers of Contracts with fewer sales
contacts.
2. The total amount of purchase payments to be received. Per Contract sales
expenses are likely to be less on larger purchase payments than on smaller
ones.
3. Any prior or existing relationship with the Company. Per Contract sales
expenses are likely to be less when there is a prior existing relationship
because of the likelihood of implementing the Contract with fewer sales
contacts.
4. Other circumstances, of which the Company is not presently aware, which
could result in reduced sales expenses.
If, after consideration of the foregoing factors, the Company determines that
there will be a reduction in sales expenses, the Company may provide for a
reduction of the surrender charge.
The surrender charge may be eliminated when the Contracts are issued to an
officer, director or employee of the Company or any of its affiliates. In no
event will any reduction of the surrender charge be permitted where the
reduction or elimination will be unfairly discriminatory to any person.
PERFORMANCE INFORMATION
TOTAL RETURN
From time to time, the Company may advertise performance data. Such data will
show the percentage change in the value of an accumulation unit based on the
performance of a Investment Fund over a period of time, usually a calendar year,
determined by dividing the increase (decrease) in value for that unit by the
accumulation unit value at the beginning of the period.
Any such advertisement will include total return figures for the time periods
indicated in the advertisement. Such total return figures will reflect the
deduction of the expenses for the underlying Investment Fund being advertised
and any applicable surrender charges.
The hypothetical value of a Contract purchased for the time periods described in
the advertisement will be determined by using the actual accumulation unit
values for an initial $1,000 purchase payment, and deducting any applicable
surrender charge to arrive at the ending hypothetical value. The average annual
total return is then determined by computing the fixed interest rate that a
$1,000 purchase payment would have to earn annually, compounded annually, to
grow to the hypothetical value at the end of the time periods described. The
formula used in these calculations is:
n
P (1 + T) = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the time periods used (or
fractional portion thereof) of a hypothetical $1,000 payment made at the
beginning of the time periods used.
The Company may also advertise performance data which will be calculated in the
same manner as described above but which will not reflect the deduction of any
surrender charge. The deduction of any surrender charge would reduce any
percentage increase or make greater any percentage decrease.
Owners should note that the investment results of each Investment Fund will
fluctuate over time, and any presentation of the Investment Fund's total return
for any period should not be considered as a representation of what an
investment may earn or what an owner's total return may be in any future period.
MONEY MARKET YIELD CALCULATION
Advertisements and sales literature concerning the Contracts may report the
"current annualized yield" for the Investment Funds of the Separate Accounts
that invests in the GT Global: Money Market Fund, without taking into account
any realized or unrealized gains or losses on shares in the Fund. The annualized
yield is computed by:
(a) determining the net change after 7 days (exclusive of realized gains and
losses on shares of the underlying Investment Fund or on its respective
portfolio securities and unrealized appreciation and depreciation) in the
value of a hypothetical account having a balance of 1 unit at the beginning
of the period;
(b) dividing such net change in account value by the value of the account at
the beginning of the 7-day period to determine the base period return; and
(c) annualizing the result of this division on a 365-day basis.
The net change in account value reflects (1) net income from the Investment Fund
attributable to the hypothetical account; and (2) charges and deductions imposed
under the contract upon the hypothetical account. The charges and deductions
include the per unit charges for mortality and expense risk, the administrative
charge for the Investment Fund, and the annual contract fee. For the purpose of
calculating current yields for a Contract, an average per unit contract fee is
used, as described below. Current yield will be calculated according to the
following formula:
Current Yields = (NCF - ES/UV) X (365/7)
Where:
NCF = the net change in the value of one unit in the Division
(exclusive of realized gains and losses on the sale of securities and
unrealized appreciation and depreciation) for the 7-day period
specified.
ES = per unit expenses for a hypothetical account having one unit over
the 7-day period.
UV = the unit value for the first day of the 7-day period.
General American advertisement and sales literature may also quote the
"effective yield" of the Investment Fund investing in the GT Global: Money
Market Fund for the same 7-day period, determined on a compounded basis. The
effective yield is calculated by compounding the unannualized base period return
according to the following formula:
365/7
Effective Yield = (1+((NCF-ES)/UV)) - 1,
Where:
NCF = the net change in the value of one unit in the Investment Fund
(exclusive of realized gains and losses on the sale of securities and
unrealized appreciation and depreciation) for the 7-day period
specified.
ES = per unit expenses for a hypothetical account having one unit over
the 7-day period.
UV = the unit value for the first day of the 7-day period.
Because of the charges and deductions imposed on units according to the terms of
the Contract, the yield for the Money Market Fund will be lower than the yield
for the Investment Fund or the corresponding Trust which underlie the Investment
Fund.
Yields on amounts in the Money Market Fund will normally fluctuate on a daily
basis. For that reason the yield for any past period is not an indication nor a
representation of future yields. The actual yield for the Investment Fund is
affected by changes in interest rates on money market securities, the average
portfolio maturity of the underlying Fund, the types and qualities of portfolio
securities held by the Investment Fund, and the operating expenses of the Fund.
Yields on amounts held in the Money Market Fund may also be presented for
periods other than seven days.
YIELDS OF OTHER INVESTMENT FUNDS
Advertisements and sales literature for the Contract may report the current
annualized yield of one or more of the Investment Funds (other than the Money
Market Fund) for a 30-day or one-month period. The annualized yield of an
Investment Fund refers to income generated by the Investment Fund during a
specified 30-day or one-month period. Because the yield is annualized, the yield
generated by the Investment Fund during the specified period is assumed to be
generated every 30-day or one-month period over a year. The yield is computed
by:
(1) dividing the net investment income of the fund corresponding to the
Investment Fund less expenses for the Investment Fund for the period; by
(2) the maximum offering price per unit of the Investment Fund on the last day
of the period times the daily average number of units outstanding for the
period; then
(3) compounding that yield for a 6-month period; and then
(4) multiplying that result by 2.
Expenses attributable to the Investment Fund include the mortality and expense
risk charge, the administrative charge for the Investment Fund, and the annual
contract fee. A contract fee of $2.50 is used to calculate the 30-day or
one-month yield as in the following equation:
6
Yield = 2x((((N1-ES)/(UxUV))+1) - 1)
Where:
NI = net investment income of the Fund for the 30-day or one-month
period in question
ES = expenses of the Investment Fund for the 30-day or one-month
period
U = the average number of units outstanding
UV = the unit value at the close of the last day in the 30-day or one-
month period
Because of the charges and deductions imposed under the Contracts (ES in the
equation) the yield for an Investment Fund will be lower than the yield for the
corresponding Fund.
The yield on amounts in any Investment Fund will normally fluctuate. For that
reason yields for any past periods are not indications nor representations of
future yields. The actual yield for an Investment Fund is affected by the type
and the quality of the portfolio securities held in the underlying Fund, and the
operating expenses of the Fund.
Yield calculations do not take surrender charges into account, but such charges
are deducted from amounts greater than ten percent of the Accumulated Value
under a Contract if such amounts are withdrawn within the first six contract
years after they were deposited.
HISTORICAL UNIT VALUES
The Company may also show historical accumulation unit values in certain
advertisements containing illustrations. These illustrations will be based on
actual accumulation unit values.
In addition, the Company may distribute sales literature which compares the
percentage change in accumulation unit values for any of the Investment Funds
against established market indices such as the Standard & Poor's 500 Composite
Stock Price Index, the Dow Jones Industrial Average or other management
investment companies which have investment objectives similar to the Investment
Fund being compared. The Standard & Poor's 500 Composite Stock Price Index is an
unmanaged, unweighted average of 500 stocks, the majority of which are listed on
the New York Stock Exchange. The Dow Jones Industrial Average is an unmanaged,
weighted average of thirty blue chip industrial corporations listed on the New
York Stock Exchange. Both the Standard & Poor's 500 Composite Stock Price Index
and the Dow Jones Industrial Average assume quarterly reinvestment of dividends.
EFFECT OF THE ANNUAL CONTRACT FEE
The Contract provides for the deduction each year of the lesser of $30 or 2% of
an account's value provided the account value is less than $20,000. If the
account value exceeds $20,000, or if the entire account value is in the Fixed
Account, then no contract fee is charged. So that this charge can be reflected
in yield and total return calculations it is assumed that the annual charge will
be $30 and this charge is converted into a per-dollar, per-day charge based on
the average Accumulated Value in the Separate Accounts of all the Contracts as
of the last day of the period for which quotations are provided. The average
value of Contracts in the Separate Accounts is assumed to be $20,000. The
per-dollar, per-day average charge will be adjusted to reflect the assumptions
underlying a particular performance quotation.
FEDERAL TAX STATUS
GENERAL
NOTE: THE FOLLOWING DESCRIPTION IS BASED UPON THE COMPANY'S UNDERSTANDING OF
CURRENT FEDERAL INCOME TAX LAW APPLICABLE TO ANNUITIES IN GENERAL. THE COMPANY
CANNOT PREDICT THE PROBABILITY THAT ANY CHANGES IN SUCH LAWS WILL BE MADE.
PURCHASERS ARE CAUTIONED TO SEEK COMPETENT TAX ADVICE REGARDING THE POSSIBILITY
OF SUCH CHANGES. THE COMPANY DOES NOT GUARANTEE THE TAX STATUS OF THE CONTRACTS.
PURCHASERS BEAR THE COMPLETE RISK THAT THE CONTRACTS MAY NOT BE TREATED AS
"ANNUITY CONTRACTS" UNDER FEDERAL INCOME TAX LAWS. IT SHOULD BE FURTHER
UNDERSTOOD THAT THE FOLLOWING DISCUSSION IS NOT EXHAUSTIVE AND THAT SPECIAL
RULES NOT DESCRIBED HEREIN MAY BE APPLICABLE IN CERTAIN SITUATIONS. MOREOVER, NO
ATTEMPT HAS BEEN MADE TO CONSIDER ANY APPLICABLE STATE OR OTHER TAX LAWS.
Section 72 of the Code governs taxation of annuities in general. An Owner is not
taxed on increases in the value of a Contract until distribution occurs, either
in the form of a lump sum payment or as annuity payments under the Annuity
Option selected. For a lump sum payment received as a total withdrawal (total
surrender), the recipient is taxed on the portion of the payment that exceeds
the cost basis of the Contract. For Non-Qualified Contracts, this cost basis is
generally the purchase payments, while for Qualified Contracts there may be no
cost basis. The taxable portion of the lump sum payment is taxed at ordinary
income tax rates.
For annuity payments, a portion of each payment in excess of an exclusion amount
is includible in taxable income. The exclusion amount for payments based on a
fixed annuity option is determined by multiplying the payment by the ratio that
the cost basis of the Contract (adjusted for any period or refund feature) bears
to the expected return under the Contract. The exclusion amount for payments
based on a variable annuity option is determined by dividing the cost basis of
the Contract (adjusted for any period certain or refund guarantee) by the number
of years over which the annuity is expected to be paid. Payments received after
the investment in the Contract has been recovered (i.e. when the total of the
excludable amount equals the investment in the Contract) are fully taxable. The
taxable portion is taxed at ordinary income tax rates. For certain types of
Qualified Plans there may be no cost basis in the Contract within the meaning of
Section 72 of the Code. Owners, Annuitants and Beneficiaries under the Contracts
should seek competent financial advice about the tax consequences of any
distributions.
The Company is taxed as a life insurance company under the Code. For federal
income tax purposes, the Separate Accounts are not a separate entity from the
Company, and its operations form a part of the Company.
DIVERSIFICATION
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity Contracts. The Code provides that a
variable annuity Contract will not be treated as an annuity Contract for any
period (and any subsequent period) for which the investments are not, in
accordance with regulations prescribed by the United States Treasury Department
("Treasury Department"), adequately diversified. Disqualification of the
Contract as an annuity Contract would result in the imposition of federal income
tax to the Owner with respect to earnings allocable to the Contract prior to the
receipt of payments under the Contract. The Code contains a safe harbor
provision which provides that annuity Contracts such as the Contract meet the
diversification requirements if, as of the end of each quarter, the underlying
assets meet the diversification standards for a regulated investment company and
no more than fifty-five percent (55%) of the total assets consist of cash, cash
items, U.S. Government securities and securities of other regulated investment
companies.
On March 2, 1989, the Treasury Department issued Regulations (Treas.
Reg.1.817-5), which established diversification requirements for the Investment
Funds underlying variable Contracts such as the Contract. The Regulations
amplify the diversification requirements for variable contracts set forth in the
Code and provide an alternative to the safe harbor provision described above.
Under the Regulations, an Investment Fund will be deemed adequately diversified
if: (1) no more than 55% of the value of the total assets of the option is
represented by any one investment; (2) no more than 70% of the value of the
total assets of the option is represented by any two investments; (3) no more
than 80% of the value of the total assets of the option is represented by any
three investments; and (4) no more than 90% of the value of the total assets of
the option is represented by any four investments.
The Code provides that, for purposes of determining whether or not the
diversification standards imposed on the underlying assets of variable Contracts
by Section 817(h) of the Code have been met, "each United States government
agency or instrumentality shall be treated as a separate issuer."
The Company intends that all Investment Funds underlying the Contracts will be
managed in such a manner as to comply with these diversification requirements.
The Treasury Department has indicated that the diversification Regulations do
not provide guidance regarding the circumstances in which Owner control of the
investments of the Separate Accounts will cause the Owner to be treated as the
owner of the assets of the Separate Accounts, thereby resulting in the loss of
favorable tax treatment for the Contract. At this time it cannot be determined
whether additional guidance will be provided and what standards may be contained
in such guidance.
The amount of Owner control which may be exercised under the Contract is
different in some respects from the situations addressed in published rulings
issued by the Internal Revenue Service in which it was held that the policy
owner was not the owner of the assets of the Separate Accounts. It is unknown
whether these differences, such as the Owner's ability to transfer among
investment choices or the number and type of investment choices available, would
cause the Owner to be considered as the owner of the assets of the Separate
Accounts resulting in the imposition of federal income tax to the Owner with
respect to earnings allocable to the Contract prior to receipt of payments under
the Contract.
In the event any forthcoming guidance or ruling is considered to set forth a new
position, such guidance or ruling will generally be applied only prospectively.
However, if such ruling or guidance was not considered to set forth a new
position, it may be applied retroactively resulting in the Owners being
retroactively determined to be the owners of the assets of the Separate
Accounts.
Due to the uncertainty in this area, the Company reserves the right to modify
the Contract in an attempt to maintain favorable tax treatment.
MULTIPLE CONTRACTS
The Code provides that multiple non-qualified annuity Contracts which are issued
within a calendar year to the same contract owner by one company or its
affiliates are treated as one annuity Contract for purposes of determining the
tax consequences of any distribution. Such treatment may result in adverse tax
consequences including more rapid taxation of the distributed amounts from such
combination of Contracts. For purposes of this rule, Contracts received in a
Section 1035 exchange will be considered issued in the year of the exchange.
Owners should consult a tax adviser prior to purchasing more than one
non-qualified annuity Contract in any calendar year.
PARTIAL 1035 EXCHANGES
Section 1035 of the Code provides that an annuity contract may be exchanged in
a tax-free transaction for another annuity contract. Historically, it was
presumed that only the exchange of an entire contract, as opposed to a
partial exchange, would be accorded tax-free status. In 1998 in CONWAY VS.
COMMISSIONER, the Tax Court held that the direct transfer of a portion of
an annuity contract into another annuity contract qualified as a non-taxable
exchange. On November 22, 1999, the Internal Revenue Service filed an Action
on Decision which indicated that it acquiesced in the Tax Court decision in
CONWAY. However, in its acquiescence with the decision of the Tax Court, the
Internal Revenue Service stated that it will challenge transactions where
taxpayers enter into a series of partial exchanges and annuitizations as part
of a design to avoid application of the 10% premature distribution penalty or
other limitations imposed on annuity contracts under the Code. In the absence
of further guidance from the Internal Revenue Service it is unclear what
specific types of partial exchange designs and transactions will be challenged
by the Internal Revenue Service. Due to the uncertainty in this area owners
should consult their own tax advisers prior to entering into a partial exchange
of an annuity contract.
CONTRACTS OWNED BY OTHER THAN NATURAL PERSONS
Under Section 72(u) of the Code, the investment earnings on premiums for the
Contracts will be taxed currently to the Owner if the Owner is a non-natural
person, e.g., a corporation or certain other entities. Such Contracts generally
will not be treated as annuities for federal income tax purposes. However, this
treatment is not applied to a Contract held by a trust or other entity as an
agent for a natural person nor to Contracts held by Qualified Plans. Purchasers
should consult their own tax counsel or other tax adviser before purchasing a
Contract to be owned by a non-natural person.
TAX TREATMENT OF ASSIGNMENTS
An assignment or pledge of a Contract may be a taxable event. Owners should
therefore consult competent tax advisers should they wish to assign or pledge
their Contracts.
DEATH BENEFITS
Any death benefits paid under the Contract are taxable to the beneficiary.
The rules governing the taxation of payments from an annuity contract, as
discussed above, generally apply to the payment of death benefits and depend
on whether the death benefits are paid as a lump sum or as annuity payments.
Estate taxes may also apply.
INCOME TAX WITHHOLDING
All distributions or the portion thereof which is includible in the gross income
of the Owner are subject to federal income tax withholding. Generally, amounts
are withheld from periodic payments at the same rate as wages and at the rate of
10% from non-periodic payments. However, the Owner, in most cases, may elect not
to have taxes withheld or to have withholding done at a different rate.
Certain distributions from retirement plans qualified under Section 401 or
Section 403(b) of the Code, which are not directly rolled over to another
eligible retirement plan or individual retirement account or individual
retirement annuity, are subject to a mandatory 20% withholding for federal
income tax. The 20% withholding requirement generally does not apply to:
a) a series of substantially equal payments made at least annually for the life
or life expectancy of the participant or joint and last survivor expectancy of
the participant and a designated beneficiary or for a specified period of 10
years or more; or b) distributions which are required minimum distributions; or
c) the portion of the distributions not includible in gross income (i.e. returns
of after-tax contributions); or d) hardship withdrawals. Participants should
consult their own tax counsel or other tax adviser regarding withholding
requirements.
TAX TREATMENT OF WITHDRAWALS - NON-QUALIFIED CONTRACTS
Section 72 of the Code governs treatment of distributions from annuity
Contracts. It provides that if the Contract Value exceeds the aggregate purchase
payments made, any amount withdrawn will be treated as coming first from the
earnings and then, only after the income portion is exhausted, as coming from
the principal. Withdrawn earnings are includible in gross income. It further
provides that a ten percent (10%) penalty will apply to the income portion of
any premature distribution. However, the penalty is not imposed on amounts
received: (a) after the taxpayer reaches age 59 1/2; (b) after the death of the
Owner; (c) if the taxpayer is totally disabled (for this purpose disability is
as defined in Section 72(m)(7) of the Code); (d) in a series of substantially
equal periodic payments made not less frequently than annually for the life (or
life expectancy) of the taxpayer or for the joint lives (or joint life
expectancies) of the taxpayer and his or her Beneficiary; (e) under an immediate
annuity; or (f) which are allocable to purchase payments made prior to August
14, 1982.
With respect to (d) above, if the series of substantially equal periodic
payments is modified before the later of your attaining age 59 1/2 or 5 years
from the date of the first periodic payment, then the tax for the year of the
modification is increased by an amount equal to the tax which would have been
imposed (the 10% penalty tax) but for the exception, plus interest for the tax
years in which the exception was used.
The above information does not apply to Qualified Contracts. However, separate
tax withdrawal penalties and restrictions may apply to such Qualified Contracts.
(See "Tax Treatment of Withdrawals - Qualified Contracts" below.)
QUALIFIED PLANS
The Contracts offered herein are designed to be suitable for use under various
types of Qualified Plans. Taxation of participants in each Qualified Plan varies
with the type of plan and terms and conditions of each specific plan. Owners,
Annuitants and Beneficiaries are cautioned that benefits under a Qualified Plan
may be subject to the terms and conditions of the plan regardless of the terms
and conditions of the Contracts issued pursuant to the plan. Some retirement
plans are subject to distribution and other requirements that are not
incorporated into the Company's administrative procedures. The Company is not
bound by the terms and conditions of such plans to the extent such terms
conflict with the terms of a Contract, unless the Company specifically consents
to be bound. Owners, Annuitants and Beneficiaries are responsible for
determining that contributions, distributions and other transactions with
respect to the Contracts comply with applicable law.
A qualified Contract will not provide any necessary or additional tax deferral
if it is used to fund a qualified plan that is tax deferred. However, the
Contract has features and benefits other than tax deferral that may make it an
appropriate investment for a qualified plan. Following are general descriptions
of the types of Qualified Plans with which the Contracts may be used. Such
descriptions are not exhaustive and are for general informational purposes only.
The tax rules regarding Qualified Plans are very complex and will have differing
applications depending on individual facts and circumstances. Each purchaser
should obtain competent tax advice prior to purchasing a Contract issued under a
Qualified Plan.
Contracts issued pursuant to Qualified Plans include special provisions
restricting Contract provisions that may otherwise be available as described
herein. Generally, Contracts issued pursuant to Qualified Plans are not
transferable except upon surrender or annuitization. Various penalty and excise
taxes may apply to contributions or distributions made in violation of
applicable limitations. Furthermore, certain withdrawal penalties and
restrictions may apply to surrenders from Qualified Contracts. (See "Tax
Treatment of Withdrawals - Qualified Contracts" below.)
On July 6, 1983, the Supreme Court decided in Arizona Governing Committee v.
Norris that optional annuity benefits provided under an employer's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women. The Contracts sold by the Company in connection with
Qualified Plans will utilize annuity tables which do not differentiate on the
basis of sex. Such annuity tables will also be available for use in connection
with certain non-qualified deferred compensation plans.
a. Section 403(b) Plans
Section 403(b) of the Code permits the purchase of "tax-sheltered annuities" by
public schools and certain charitable, educational and scientific organizations
described in Section 501(c)(3) of the Code. These qualifying employers may make
contributions to the Contracts for the benefit of their employees. Such
contributions are not includible in the gross income of the employees until the
employees receive distributions from the Contracts. The amount of contributions
to the tax-sheltered annuity is limited to certain maximums imposed by the Code.
Furthermore, the Code sets forth additional restrictions governing such items as
transferability, distributions, nondiscrimination and withdrawals. (See "Tax
Treatment of Withdrawals - Qualified Contracts" and "Tax-Sheltered Annuities -
Withdrawal Limitations" below.) Employee loans are not allowable under the
Contracts. Any employee should obtain competent tax advice as to the tax
treatment and suitability of such an investment.
b. Individual Retirement Annuities
Section 408(b) of the Code permits eligible individuals to contribute to an
individual retirement program known as an "Individual Retirement Annuity"
("IRA"). Under applicable limitations, certain amounts may be contributed to an
IRA which will be deductible from the individual's taxable income. These IRAs
are subject to limitations on eligibility, contributions, transferability and
distributions. (See "Tax Treatment of Withdrawals - Qualified Contracts" below.)
Under certain conditions, distributions from other IRAs and other Qualified
Plans may be rolled over or transferred on a tax-deferred basis into an IRA.
Sales of Contracts for use with IRAs are subject to special requirements imposed
by the Code, including the requirement that certain informational disclosure be
given to persons desiring to establish an IRA. Purchasers of Contracts to be
qualified as Individual Retirement Annuities should obtain competent tax advice
as to the tax treatment and suitability of such an investment.
c. Pension and Profit-Sharing Plans
Sections 401(a) and 401(k) of the Code permit employers, including self-employed
individuals, to establish various types of retirement plans for employees. These
retirement plans may permit the purchase of the Contracts to provide benefits
under the Plan. Contributions to the Plan for the benefit of employees will not
be includible in the gross income of the employees until distributed from the
Plan. The tax consequences to participants may vary depending upon the
particular plan design. However, the Code places limitations and restrictions on
all Plans including on such items as: amount of allowable contributions; form,
manner and timing of distributions; transferability of benefits; vesting and
nonforfeitability of interests; nondiscrimination in eligibility and
participation; and the tax treatment of distributions, withdrawals and
surrenders. (See "Tax Treatment of Withdrawals - Qualified Contracts" below.)
Purchasers of Contracts for use with Pension or Profit Sharing Plans should
obtain competent tax advice as to the tax treatment and suitability of such an
investment.
d. Deferred Compensation Plans
Under Code provisions, employees and independent contractors performing services
for state and local governments and other tax-exempt organizations may
participate in Deferred Compensation Plans under Section 457 of the Code. The
amounts deferred under a Plan which meets the requirements of Section 457 of the
Code are not taxable as income to the participant until paid or otherwise made
available to the participant or beneficiary. As a general rule, the maximum
amount which can be deferred in any one year is the lesser of $8,000 or 33 1/3
percent of the participant's includible compensation. However, in limited
circumstances, the plan may provide for additional catch-up contributions in
each of the last three years before normal retirement age. Furthermore, the Code
provides additional requirements and restrictions regarding eligibility and
distributions.
All of the assets and income of a Plan established by a governmental employer
after August 20, 1996, must be held in trust for the exclusive benefit of
participants and their beneficiaries. For this purpose, custodial accounts and
certain annuity contracts are treated as trusts. Plans that were in existence on
August 20, 1996 may be amended to satisfy the trust and exclusive benefit
requirements any time prior to January 1, 1999, and must be amended not later
than that date to continue to receive favorable tax treatment. The requirement
of a trust does not apply to amounts under a Plan of a tax exempt
(non-governmental) employer. In addition, the requirement of a trust does not
apply to amounts under a Plan of a governmental employer if the Plan is not an
eligible plan within the meaning of section 457(b) of the Code. In the absence
of such a trust, amounts under the plan will be subject to the claims of the
employer's general creditors.
In general, distributions from a Plan are prohibited under section 457 of the
Code unless made after the participating employee:
attains age 70 1/2,
separates from service,
dies, or
suffers an unforeseeable financial emergency as defined in the Code.
Under present federal tax law, amounts accumulated in a Plan under section 457
of the Code cannot be transferred or rolled over on a tax-deferred basis except
for certain transfers to other Plans under section 457.
Due to the uncertainty in this area, we reserve the right to modify the contract
in an attempt to maintain favorable tax treatment.
TAX TREATMENT OF WITHDRAWALS - QUALIFIED CONTRACTS
In the case of a withdrawal under a Qualified Contract, a ratable portion of the
amount received is taxable, generally based on the ratio of the individual's
cost basis to the individual's total accrued benefit under the retirement plan.
Special tax rules may be available for certain distributions from a Qualified
Contract. Section 72(t) of the Code imposes a 10% penalty tax on the taxable
portion of any distribution from qualified retirement plans, including Contracts
issued and qualified under Code Sections 401 (Pension and Profit-Sharing Plans),
403(b)(Tax-Sheltered Annuities) and 408 and 408A (Individual Retirement
Annuities). To the extent amounts are not includible in gross income because
they have been rolled over to an IRA or to another eligible Qualified Plan, no
tax penalty will be imposed. The tax penalty will not apply to the following
distributions: (a) if distribution is made on or after the date on which the
Owner or Annuitant (as applicable) reaches age 59 1/2; (b) distributions
following the death or disability of the Owner or Annuitant (as applicable) (for
this purpose disability is as defined in Section 72(m) (7) of the Code); (c)
after separation from service, distributions that are part of substantially
equal periodic payments made not less frequently than annually for the life (or
life expectancy) of the Owner or Annuitant (as applicable) or the joint lives
(or joint life expectancies) of such Owner or Annuitant (as applicable) and his
or her designated Beneficiary; (d) distributions to an Owner or Annuitant (as
applicable) who has separated from service after he has attained age 55; (e)
distributions made to the Owner or Annuitant (as applicable) to the extent such
distributions do not exceed the amount allowable as a deduction under Code
Section 213 to the Owner or Annuitant (as applicable) for amounts paid during
the taxable year for medical care; (f) distributions made to an alternate payee
pursuant to a qualified domestic relations order; (g) distributions made on
account of an IRS levy upon the Qualified Contract; (h) distributions from an
Individual Retirement Annuity for the purchase of medical insurance (as
described in Section 213(d)(1)(D) of the Code) for the Owner or Annuitant (as
applicable) and his or her spouse and dependents if the Owner or Annuitant (as
applicable) has received unemployment compensation for at least 12 weeks (this
exception will no longer apply after the Owner or Annuitant (as applicable) has
been re-employed for at least 60 days); (i) distributions from an Individual
Retirement Annuity made to the Owner or Annuitant (as applicable) to the extent
such distributions do not exceed the qualified higher education expenses (as
defined in Section 72(t)(7) of the Code) of the Owner or Annuitant (as
applicable) for the taxable year; and (j) distributions from an Individual
Retirement Annuity made to the Owner or Annuitant (as applicable) which are
qualified first-time home buyer distributions (as defined in Section 72(t)(8)of
the Code.) The exceptions stated in (d) and (f) above do not apply in the case
of an Individual Retirement Annuity. The exception stated in (c) above applies
to an Individual Retirement Annuity without the requirement that there be a
separation from service.
With respect to (c) above, if the series of substantially equal periodic
payments is modified before the later of your attaining age 59 1/2 or 5 years
from the date of the first periodic payment, then the tax for the year of the
modification is increased by an amount equal to the tax which would have been
imposed (the 10% penalty tax) but for the exception, plus interest for the tax
years on which the exception was used.
Generally, distributions from a qualified plan must begin no later than April
1st of the calendar year following the later of (a) the year in which the
employee attains age 70 1/2 or (b) the calendar year in which the employee
retires. The date set forth in (b) does not apply to an Individual Retirement
Annuity. Required distributions must be over a period not exceeding the life
expectancy of the individual or the joint lives or life expectancies of the
individual and his or her designated beneficiary. If the required minimum
distributions are not made, a 50% penalty tax is imposed as to the amount not
distributed.
TAX-SHELTERED ANNUITIES - WITHDRAWAL LIMITATIONS
The Code limits the withdrawal of amounts attributable to contributions made
pursuant to a salary reduction agreement (as defined in Section 403(b)(11) of
the Code) to circumstances only when the Owner: (1) attains age 59 1/2; (2)
separates from service; (3) dies; (4) becomes disabled (within the meaning of
Section 72(m)(7) of the Code); or (5) in the case of hardship. However,
withdrawals for hardship are restricted to the portion of the Owner's Contract
Value which represents contributions made by the Owner and does not include any
investment results. The limitations on withdrawals became effective on January
1, 1989 and apply only to salary reduction contributions made after December 31,
1988, to income attributable to such contributions and to income attributable to
amounts held as of December 31, 1988. The limitations on withdrawals do not
affect transfers between Tax-Sheltered Annuity Plans. Owners should consult
their own tax counsel or other tax adviser regarding any distributions.
ANNUITY PROVISIONS
COMPUTATION OF THE VALUE OF AN ANNUITY UNIT
The table of contractual guaranteed annuity rates is based on an assumed
interest rate. The assumed interest rate is 4% for all contracts.
As a starting point, the value of a Separate Account Twenty-Eight and
Twenty-Nine annuity unit was established at $12.00. The value of the annuity
unit at the end of any subsequent business day is determined by multiplying such
value for the preceding business day by the product of (a) the daily reduction
factor (.99989256) once for each calendar day expiring between the end of the
sixth preceding business day and the end of the fifth preceding business day and
(b) the net investment factor for the fifth business day preceding such business
day.
These daily reduction factors are necessary to neutralize the assumed net
investment rate built into the annuity tables. Calculations are performed as of
the fifth preceding business day to permit calculation of amounts and the
mailing of checks in advance of their due date.
This may be illustrated by the following hypothetical example. Assuming that the
net investment factor for the fifth preceding business day was 1.00176027, and
assuming that the annuity unit value for the preceding business day was $12.20,
then the annuity unit for the current business day is $12.22, determined as
follows:
1.00176027 $12.200000
X .99989256 X 1.00165264
-------------- ---------------
1.00165264 $12.220162208
DETERMINATION OF THE AMOUNT OF THE FIRST ANNUITY INSTALLMENT
When annuity installments begin, the accumulated value of the Contract is
established. This is the sum of the products of the values of an accumulation
unit in each Investment Fund on the fifth business day preceding the annuity
commencement date and the number of accumulation units credited to the Contract
as of the annuity commencement date.
The Contract contains tables indicating the dollar amount of the first annuity
installment under each form of variable annuity for each $1,000 of value of the
Contract. The amount of the first annuity installment depends on the option
chosen and the sex (if applicable) and age of the annuitant.
The first annuity installment is determined by multiplying the benefit per
$1,000 of value shown in the tables in the Contract by the number of thousands
of dollars of accumulated value of the Contract allocated to the Investment
Fund.
If a greater first installment would result, General American will compute the
first installment on the same mortality basis as is used in determining such
installments under individual variable annuity Contracts then being issued for a
similar class of annuitants.
DETERMINATION OF THE FLUCTUATING VALUES OF THE ANNUITY INSTALLMENTS
The dollar amount of the first annuity installment, determined as described
above, is translated into annuity units by dividing that dollar amount by the
value of an annuity unit on the due date of the first annuity installment. The
number of annuity units remains fixed and the amount of each subsequent annuity
installment is determined by multiplying this fixed number of annuity units by
the value of an annuity unit on the date the installment is due.
If in any month after the first the application of the above net investment
factors produces a net investment increment exactly equivalent to the assumed
annualized rate of 4%, then the payment in that month will not change. Since it
is unlikely that it will be exactly equivalent, installments will vary up or
down depending upon whether such investment increment is greater or less than
the assumed annualized rate of 4%. A higher assumption would mean a higher
initial annuity payment but a more slowly rising series of subsequent annuity
payments (or a more rapidly falling series of subsequent annuity payments if the
value of an annuity unit is decreasing). A lower assumption would have the
opposite effect.
GENERAL MATTERS
PARTICIPATING
The Contracts share in General American's divisible surplus while they are in
force prior to the annuity commencement date. Each year General American will
determine the share of divisible surplus, if any, accruing to the Contracts.
Investment results are credited directly through the changes in the value of the
accumulation units and annuity units. Also, most mortality and expense savings
are credited directly through decreases in the appropriate charges. Therefore,
the Company expects little or no divisible surplus to be credited to a Contract.
If any divisible surplus is credited to a Contract, the Contract Owner may
choose to take the distribution in cash, reduce the stipulated payment, or leave
the distribution with General American to accumulate with interest.
INCORRECT AGE OR SEX
If the age at issue or sex of the annuitant as shown in the Contract is
incorrect, any benefit payable under a supplemental agreement will be such as
the premiums paid would have purchased at the correct age at issue and sex.
After General American begins paying monthly income installments, appropriate
adjustment will be made in any remaining installments.
ANNUITY DATA
General American will not be liable for obligations which depend on receiving
information from a payee until such information is received in a form
satisfactory to General American.
QUARTERLY REPORTS
Quarterly, General American will give the contract owner a report of the current
accumulated value allocated to each Investment Fund; the current accumulated
value allocated to the General Account; and any purchase payments, charges,
transfers, or surrenders during that period. This report will also give the
contract owner any other information required by law or regulation. The contract
owner may ask for a report like this at any time. The quarterly reports will be
distributed without charge. General American reserves the right to charge a fee
for additional reports.
INCONTESTABILITY
General American cannot contest this Contract.
OWNERSHIP
The owner of the Contract on the contract date is the annuitant, unless
otherwise specified in the application. The owner may specify a new owner by
written notice at any time thereafter. During the annuitant's lifetime all
rights and privileges under this Contract may be exercised solely by the owner.
REINSTATEMENT
A Contract may be reinstated if a stipulated payment is in default and if the
accumulated value has not been applied under the surrender provision.
Reinstatement may be made during the lifetime of the annuitant but before the
annuity date by the payment of one stipulated payment. Benefits provided by any
supplemental agreement attached to this Contract may be reinstated by providing
evidence of insurability satisfactory to General American. The reinstatement
provisions incorporated in such supplemental agreement must be complied with.
SAFEKEEPING OF ACCOUNT ASSETS
Title to assets of the Separate Accounts is held by General American. The assets
are kept physically segregated and held separate and apart from General
American's general account assets. Records are maintained of all purchases and
redemptions of eligible shares held by each of the Investment Funds of the
separate account.
STATE REGULATION
General American is a life insurance company organized under the laws of
Missouri, and is subject to regulation by the Missouri Division of Insurance. An
annual statement is filed with the Missouri Commissioner of Insurance on or
before March 1 of each year covering the operations and reporting on the
financial condition of General American as of December 31 of the preceding
calendar year. Periodically, the Missouri Commissioner of Insurance examines the
financial condition of General American, including the liabilities and reserves
of the Separate Accounts.
In addition, General American is subject to the insurance laws and regulations
of all the states where it is licensed to operate. The availability of certain
contract rights and provisions depends on state approval and filing and review
processes. Where required by state law or regulation, the Contracts will be
modified accordingly.
RECORDS AND REPORTS
All records and accounts relating to the Separate Accounts will be maintained by
General American. As presently required by the Investment Company Act of 1940
and regulations promulgated thereunder, General American will mail to all
contract owners at their last known address of record, at least semi-annually,
reports containing such information as may be required under that Act or by any
other applicable law or regulation.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Separate Accounts are a party or to
which the assets of the Separate Accounts are subject. General American is not
involved in any litigation that is of material importance in relation to its
total assets or that relates to the Separate Accounts.
OTHER INFORMATION
A Registration Statement has been filed with the Securities and Exchange
Commission, under the Securities Act of 1933 as amended, with respect to the
Contracts discussed in this Statement of Additional Information. Not all of the
information set forth in the Registration Statement, amendments, and exhibits
thereto has been included in this Statement of Additional Information.
Statements contained in this Statement of Additional Information concerning the
content of the Contracts and other legal instruments are intended to be
summaries. For a complete statement of the terms of these documents, reference
should be made to the instruments filed with the Securities and Exchange
Commission.
FINANCIAL STATEMENTS
The consolidated financial statements of the Company included herein should be
considered only as bearing upon the ability of the Company to meet its
obligations under the Contracts.
INDEPENDENT AUDITORS' REPORT
The Board of Directors
General American Life Insurance Company and Contractholders of
General American Separate Account Twenty-eight and Separate Account
Twenty-nine:
We have audited the statements of assets and liabilities, including the
schedule of investments, of the GT Global Variable Investment Fund Money
Market, Variable Strategic Income, Variable Global Government and
Variable U.S. Government Income and AIM Variable Insurance Fund Money
Market, Diversified Income, and Government Securities Divisions of
General American Separate Account Twenty-eight and of the GT Global
Variable Investment Fund Variable New Pacific, Variable Europe, Variable
America, Variable Growth & Income, Variable Latin America, Variable
Telecommunications, Variable International, Variable Emerging Markets,
Variable Natural Resources and Variable Infrastructure, and AIM Variable
Insurance Fund Global Growth & Income, Capital Appreciation,
Telecommunications and International Equity Divisions of General
American Separate Account Twenty-nine as of December 31, 1999, and the
related statements of operations for the period then ended, changes in
net assets for each of the periods in the two-year period then ended,
and the condensed financial information for the periods presented.
These financial statements and condensed financial information are the
responsibility of the management of General American Separate Accounts
Twenty-eight and Twenty-nine. Our responsibility is to express an
opinion on these financial statements, and condensed financial
information 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
and condensed financial information 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 investments owned as of December 31, 1999 by
correspondence with GT Global Variable Investment Funds and AIM Variable
Insurance Funds. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and condensed financial
information referred to above present fairly, in all material respects,
the financial position of the GT Global Variable Investment Fund Money
Market, Variable Strategic Income, Variable Global Government and
Variable U.S. Government Income and AIM Variable Insurance Fund Money
Market, Diversified Income, and Government Securities Divisions of
General American Separate Account Twenty-eight and of the GT Global
Variable Investment Fund Variable New Pacific, Variable Europe, Variable
America, Variable Growth & Income, Variable Latin America, Variable
Telecommunications, Variable International, Variable Emerging Markets,
Variable Natural Resources, and Variable Infrastructure, and AIM
Variable Insurance Fund Global Growth & Income, Capital Appreciation,
Telecommunications and International Equity Divisions of General
American Separate Account Twenty-nine as of December 31, 1999, the
results of their operations for the period then ended, the changes in
their net assets for each of the periods in the two-year period then
ended, and the condensed financial information for the periods
presented, in conformity with generally accepted accounting principles.
/s/ KPMG LLP
St. Louis, Missouri
February 25, 2000
<PAGE>
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-EIGHT
S T A T E M E N T S O F A S S E T S A N D L I A B I L I T I E S
December 31, 1999
<CAPTION>
GT Global GT Global GT Global
GT Global Variable Variable Global Variable US
Money Strategic Government Government
Market Income Income Income
Division Division Division Division
--------- --------- --------------- -----------
<S> <C> <C> <C> <C>
Assets:
Investments in GT Global Variable Investment Funds,
at market value (see Schedule of Investments): $ 0 $ 0 $ 0 $ 0
Investments in AIM Variable Investment Funds,
at market value (see Schedule of Investments): 0 0 0 0
Receivable from General American Life
Insurance Company 0 0 0 0
Receivable from AIM 0 0 0 0
----- ----- ----- -----
Total assets 0 0 0 0
----- ----- ----- -----
Liability:
Payable to General American Life
Insurance Company 0 0 0 0
----- ----- ----- -----
Total net assets $ 0 $ 0 $ 0 $ 0
===== ===== ===== =====
Total net assets represented by:
Individual variable annuity contracts cash value
invested in Separate Account $ 0 $ 0 $ 0 $ 0
Individual variable annuity contracts cash value
in payment period 0 0 0 0
----- ----- ----- -----
Total net assets $ 0 $ 0 $ 0 $ 0
===== ===== ===== =====
Total individual units held 0 0 0 0
Individual unit value $0.00 $0.00 $0.00 $0.00
Cost of investments $ 0 $ 0 $ 0 $ 0
<CAPTION>
AIM V.I. AIM V.I. AIM V.I.
Money Diversified Government
Market Income Securities
Division FundFund Fund
----------- ----------- ----------
<S> <C> <C> <C>
Assets:
Investments in GT Global Variable Investment Funds,
at market value (see Schedule of Investments): $ 0 $ 0 $ 0
Investments in AIM Variable Investment Funds,
at market value (see Schedule of Investments): 18,130,998 14,405,085 3,820,150
Receivable from General American Life
Insurance Company 0 0 5,799
Receivable from AIM 2,137 0 0
----------- ----------- ----------
Total assets 18,133,135 14,405,085 3,825,949
----------- ----------- ----------
Liability:
Payable to General American Life
Insurance Company 23,792 6,467 0
----------- ----------- ----------
Total net assets $18,109,343 $14,398,618 $3,825,949
=========== =========== ==========
Total net assets represented by:
Individual variable annuity contracts cash value
invested in Separate Account $18,109,343 $14,272,010 $3,799,334
Individual variable annuity contracts cash value
in payment period 0 126,608 26,615
----------- ----------- ----------
Total net assets $18,109,343 $14,398,618 $3,825,949
=========== =========== ==========
Total individual units held 1,236,788 825,804 261,915
Individual unit value $ 14.64 $ 17.44 $ 14.61
Cost of investments $18,130,998 $15,145,944 $3,945,045
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-EIGHT
S T A T E M E N T S O F O P E R A T I O N S
For the period ended December 31, 1999
<CAPTION>
GT Global GT Global GT Global
GT Global Variable Variable Global Variable US
Money Strategic Government Government
Market Income Income Income
Division Division Division Division
---------- ----------- --------------- -----------
<S> <C> <C> <C> <C>
Investment income:
Dividend income $1,138,423 $ 1,047,181 $ 238,175 $ 313,584
Expenses:
Mortality, expense and administrative charges (382,649) (181,710) (75,631) (67,118)
---------- ----------- --------- ---------
Net investment income 755,774 865,471 162,544 246,466
---------- ----------- --------- ---------
Net realized gain (loss) on investments:
Realized gain from distributions 0 0 0 200,536
Realized gain (loss) on sales 0 (3,028,557) (814,880) (738,594)
---------- ----------- --------- ---------
Net realized gain (loss) on investments 0 (3,028,557) (814,880) (538,058)
---------- ----------- --------- ---------
Net unrealized gain (loss) on investments:
Unrealized gain (loss) on investments,
beginning of period 0 (1,393,942) (18,364) 6,024
Unrealized gain (loss) on investments,
end of period 0 0 0 0
---------- ----------- --------- ---------
Net unrealized gain (loss) on investments 0 1,393,942 18,364 (6,024)
---------- ----------- --------- ---------
Net loss on investments 0 (1,634,615) (796,516) (544,082)
---------- ----------- --------- ---------
Net increase (decrease) in net assets resulting
from operations $ 755,774 $ (769,144) $(633,972) $(297,616)
========== =========== ========= =========
<CAPTION>
AIM V.I. AIM V.I. AIM V.I.
Money Diversified Government
Market Income Securities
Fund Fund Fund
-------- ----------- ----------
<S> <C> <C> <C>
Investment income:
Dividend income $196,483 $ 939,391 $ 147,200
Expenses:
Mortality, expense and administrative charges (54,894) (47,120) (12,483)
-------- --------- ---------
Net investment income 141,589 892,271 134,717
-------- --------- ---------
Net realized gain (loss) on investments:
Realized gain from distributions 0 0 0
Realized gain (loss) on sales 0 (10,713) (3,338)
-------- --------- ---------
Net realized gain (loss) on investments 0 (10,713) (3,338)
-------- --------- ---------
Net unrealized gain (loss) on investments:
Unrealized gain (loss) on investments,
beginning of period 0 0 0
Unrealized gain (loss) on investments,
end of period 0 (740,859) (124,895)
-------- --------- ---------
Net unrealized gain (loss) on investments 0 (740,859) (124,895)
-------- --------- ---------
Net loss on investments 0 (751,572) (128,233)
-------- --------- ---------
Net increase (decrease) in net assets resulting
from operations $141,589 $ 140,699 $ 6,484
======== ========= =========
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-EIGHT
S T A T E M E N T S O F C H A N G E S I N N E T A S S E T S
For the periods ended December 31, 1999 and 1998
<CAPTION>
GT Global GT Global Variable
Money Market Division Strategic Income Division
------------------------------ ----------------------------
1999 1998 1999 1998
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
Operations:
Net investment income $ 755,774 $ 1,046,231 $ 865,471 $ 1,386,491
Net realized gain (loss) on investments 0 0 (3,028,557) (688,015)
Net unrealized gain (loss) on investments 0 0 1,393,942 (1,196,023)
------------ ------------ ------------ -----------
Net increase (decrease) in net assets resulting
from operations 755,774 1,046,231 (769,144) (497,547)
------------ ------------ ------------ -----------
Deposits into Separate Account 6,872,590 4,126,570 877,254 589,616
Transfers to (from) Separate Account (1,029,887) 10,874,210 (15,298,193) (1,661,337)
Withdrawals from Separate Account (37,927,808) (11,447,788) (6,134,047) (4,875,464)
------------ ------------ ------------ -----------
Net deposits into (withdrawals from) Separate Account (32,085,105) 3,552,992 (20,554,986) (5,947,185)
------------ ------------ ------------ -----------
Increase (decrease) in net assets (31,329,331) 4,599,223 (21,324,130) (6,444,732)
------------ ------------ ------------ -----------
Net assets, beginning of period 31,329,331 26,730,108 21,324,130 27,768,862
------------ ------------ ------------ -----------
Net assets, end of period $ 0 $ 31,329,331 $ 0 $21,324,130
============ ============ ============ ===========
<CAPTION>
GT Global Variable Global GT Global Variable U.S.
Government Income Division Government Income Division
----------- ----------- ----------- -----------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Operations:
Net investment income $ 162,544 $ 352,169 $ 246,466 $ 266,179
Net realized gain (loss) on investments (814,880) 591,887 (538,058) 418,601
Net unrealized gain (loss) on investments 18,364 (45,327) (6,024) (140,491)
----------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting
from operations (633,972) 898,729 (297,616) 544,289
----------- ----------- ----------- -----------
Deposits into Separate Account 109,070 232,266 79,120 274,206
Transfers to (from) Separate Account (6,830,811) 867,608 (5,333,671) 448,034
Withdrawals from Separate Account (1,448,630) (1,401,213) (1,814,254) (1,203,725)
----------- ----------- ----------- -----------
Net deposits into (withdrawals from) Separate Account (8,170,371) (301,339) (7,068,805) (481,485)
----------- ----------- ----------- -----------
Increase (decrease) in net assets (8,804,343) 597,390 (7,366,421) 62,804
----------- ----------- ----------- -----------
Net assets, beginning of period 8,804,343 8,206,953 7,366,421 7,303,617
----------- ----------- ----------- -----------
Net assets, end of period $ 0 $ 8,804,343 $ 0 $ 7,366,421
=========== =========== =========== ===========
<CAPTION>
AIM V.I. AIM V.I. AIM V.I.
Money Diversified Government
Market Income Securities
Fund Fund Fund
------------ ----------- ----------
1999 1999 1999
------------ ----------- ----------
<S> <C> <C> <C>
Operations:
Net investment income $ 141,589 $ 892,271 $ 134,717
Net realized gain (loss) on investments 0 (10,713) (3,338)
Net unrealized gain (loss) on investments 0 (740,859) (124,895)
------------ ----------- ----------
Net increase in net assets resulting
from operations 141,589 140,699 6,484
------------ ----------- ----------
Deposits into Separate Account 333,272 114,760 19,283
Transfers to (from) Separate Account 29,827,856 16,506,464 4,365,561
Withdrawals from Separate Account (12,193,374) (2,363,305) (565,379)
------------ ----------- ----------
Net deposits into (withdrawals from) Separate Account 17,967,754 14,257,919 3,819,465
------------ ----------- ----------
Increase (decrease) in net assets 18,109,343 14,398,618 3,825,949
Net assets, beginning of period 0 0 0
------------ ----------- ----------
Net assets, end of period $ 18,109,343 $14,398,618 $3,825,949
============ =========== ==========
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-NINE
S T A T E M E N T S O F A S S E T S A N D L I A B I L I T I E S
December 31, 1999
<CAPTION>
GT Global
GT Global GT Global GT Global Variable
Variable Variable Variable Growth &
New Pacific Europe America Income
Division Division Division Division
----------- --------- --------- ---------
<S> <C> <C> <C> <C>
Assets:
Investments in GT Global Variable Investment Funds,
at market value (see Schedule of Investments): $ 0 $ 0 $ 0 $ 0
Investments in AIM Variable Investment Funds,
at market value (see Schedule of Investments): 0 0 0 0
Receivable from AIM 0 0 0 0
----- ----- ----- -----
Total assets 0 0 0 0
----- ----- ----- -----
Liability:
Payable to General American Life
Insurance Company 0 0 0 0
----- ----- ----- -----
Total net assets $ 0 $ 0 $ 0 $ 0
===== ===== ===== =====
Total net assets represented by:
Individual variable annuity contracts cash value
invested in Separate Account $ 0 $ 0 $ 0 $ 0
Individual variable annuity contracts cash value
in payment period 0 0 0 0
----- ----- ----- -----
Total net assets $ 0 $ 0 $ 0 $ 0
===== ===== ===== =====
Total individual units held 0 0 0 0
Individual unit value $0.00 $0.00 $0.00 $0.00
Cost of investments $ 0 $ 0 $ 0 $ 0
<CAPTION>
GT Global
GT Global Variable GT Global
Variable Telecom- Variable
Latin America munications International
Division Division Division
------------- ----------- -------------
<S> <C> <C> <C>
Assets:
Investments in GT Global Variable Investment Funds,
at market value (see Schedule of Investments): $ 0 $ 0 $ 0
Investments in AIM Variable Investment Funds,
at market value (see Schedule of Investments): 0 0 0
Receivable from AIM 0 0 0
----- ----- -----
Total assets 0 0 0
----- ----- -----
Liability:
Payable to General American Life
Insurance Company 0 0 0
----- ----- -----
Total net assets $ 0 $ 0 $ 0
===== ===== =====
Total net assets represented by:
Individual variable annuity contracts cash value
invested in Separate Account $ 0 $ 0 $ 0
Individual variable annuity contracts cash value
in payment period 0 0 0
----- ----- -----
Total net assets $ 0 $ 0 $ 0
===== ===== =====
Total individual units held 0 0 0
Individual unit value $0.00 $0.00 $0.00
Cost of investments $ 0 $ 0 $ 0
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-NINE
S T A T E M E N T S O F A S S E T S A N D L I A B I L I T I E S
December 31, 1999
<CAPTION>
GT Global GT Global
Variable Variable GT Global
Emerging Natural Variable
Markets Resources Infrastructure
Division Division Division
--------- --------- --------------
<S> <C> <C> <C>
Assets:
Investments in GT Global Variable Investment Funds,
at market value (see Schedule of Investments): $ 0 $ 0 $ 0
Investments in AIM Variable Investment Funds,
at market value (see Schedule of Investments): 0 0 0
Receivable from AIM 0 0 0
----- ----- -----
Total assets 0 0 0
----- ----- -----
Liability:
Payable to General American Life
Insurance Company 0 0 0
----- ----- -----
Total net assets $ 0 $ 0 $ 0
===== ===== =====
Total net assets represented by:
Individual variable annuity contracts cash value
invested in Separate Account $ 0 $ 0 $ 0
Individual variable annuity contracts cash value
in payment period 0 0 0
----- ----- -----
Total net assets $ 0 $ 0 $ 0
===== ===== =====
Total individual units held 0 0 0
Individual unit value $0.00 $0.00 $0.00
Cost of investments $ 0 $ 0 $ 0
<CAPTION>
AIM V.I. AIM V.I. AIM V.I.
Global Growth Capital AIM V.I. International
and Income Appreciation Telecomunications Equity
Fund Fund Fund Fund
------------- ------------ ----------------- -------------
<S> <C> <C> <C> <C>
Assets:
Investments in GT Global Variable Investment Funds,
at market value (see Schedule of Investments): $ 0 $ 0 $ 0 $ 0
Investments in AIM Variable Investment Funds,
at market value (see Schedule of Investments): 30,726,785 38,683,155 107,126,082 56,329,615
Receivable from AIM 0 0 0 0
----------- ----------- ------------ -----------
Total assets 30,726,785 38,683,155 107,126,082 56,329,615
----------- ----------- ------------ -----------
Liability:
Payable to General American Life
Insurance Company 21,469 28,123 138,314 103,579
----------- ----------- ------------ -----------
Total net assets $30,705,316 $38,655,032 $106,987,768 $56,226,036
=========== =========== ============ ===========
Total net assets represented by:
Individual variable annuity contracts cash value
invested in Separate Account $30,529,560 $38,521,393 $106,820,634 $56,111,297
Individual variable annuity contracts cash value
in payment period 175,756 133,639 167,134 114,739
----------- ----------- ------------ -----------
Total net assets $30,705,316 $38,655,032 $106,987,768 $56,226,036
=========== =========== ============ ===========
Total individual units held 1,319,468 910,735 1,952,743 3,154,292
Individual unit value $ 23.27 $ 42.44 $ 54.79 $ 17.83
Cost of investments $28,005,890 $29,164,890 $ 68,094,812 $43,121,428
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-NINE
S T A T E M E N T S O F O P E R A T I O N S
For the period ended December 31, 1999
<CAPTION>
GT Global
GT Global GT Global GT Global Variable
Variable Variable Variable Growth &
New Pacific Europe America Income
Division Division Division Division
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Investment income:
Dividend income $ 266,686 $ 140,893 $ 0 $ 1,194,172
Expenses:
Mortality, expense and administrative charges (132,156) (249,681) (390,771) (486,585)
---------- ----------- ----------- ------------
Net investment income (loss) 134,530 (108,788) (390,771) 707,587
---------- ----------- ----------- ------------
Net realized gain (loss) on investments:
Realized gain from distributions 0 10,547,826 9,011,388 11,566,187
Realized gain (loss) on sales 3,294,077 (9,408,336) (5,102,073) (14,388,054)
---------- ----------- ----------- ------------
Net realized gain (loss) on investments 3,294,077 1,139,490 3,909,315 (2,821,867)
---------- ----------- ----------- ------------
Net unrealized gain (loss) on investments:
Unrealized gain (loss) on investments,
beginning of period 230,946 1,469,077 (410,224) 2,254,232
Unrealized gain (loss) on investments,
end of period 0 0 0 0
---------- ----------- ----------- ------------
Net unrealized gain (loss) on investments (230,946) (1,469,077) 410,224 (2,254,232)
---------- ----------- ----------- ------------
Net gain (loss) on investments 3,063,131 (329,587) 4,319,539 (5,076,099)
---------- ----------- ----------- ------------
Net increase (decrease) in net assets resulting
from operations $3,197,661 $ (438,375) $ 3,928,768 $ (4,368,512)
========== =========== =========== ============
<CAPTION>
GT Global
GT Global Variable GT Global
Variable Telecom- Variable
Latin America munications International
Division Division Division
------------- ----------- -------------
<S> <C> <C> <C>
Investment income:
Dividend income $ 313,507 $ 0 $ 161,791
Expenses:
Mortality, expense and administrative charges (97,658) (787,658) (57,353)
---------- ----------- ---------
Net investment income (loss) 215,849 (787,658) 104,438
---------- ----------- ---------
Net realized gain (loss) on investments:
Realized gain from distributions 0 15,434,332 629,188
Realized gain (loss) on sales 207,225 5,658,738 (52,885)
---------- ----------- ---------
Net realized gain (loss) on investments 207,225 21,093,070 576,303
---------- ----------- ---------
Net unrealized gain (loss) on investments:
Unrealized gain (loss) on investments,
beginning of period (874,501) 4,911,569 238,842
Unrealized gain (loss) on investments,
end of period 0 0 0
---------- ----------- ---------
Net unrealized gain (loss) on investments 874,501 (4,911,569) (238,842)
---------- ----------- ---------
Net gain (loss) on investments 1,081,726 16,181,501 337,461
---------- ----------- ---------
Net increase (decrease) in net assets resulting
from operations $1,297,575 $15,393,843 $ 441,899
========== =========== =========
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-NINE
S T A T E M E N T S O F O P E R A T I O N S
For the period ended December 31, 1999
<CAPTION>
GT Global GT Global
Variable Variable GT Global
Emerging Natural Variable
Markets Resources Infrastructure
Division Division Division
---------- ----------- --------------
<S> <C> <C> <C>
Investment income:
Dividend income $ 134,940 $ 160,183 $ 132,982
Expenses:
Mortality, expense and administrative charges (72,618) (72,885) (57,473)
---------- ----------- ---------
Net investment income (loss) 62,322 87,298 75,509
---------- ----------- ---------
Net realized gain (loss) on investments:
Realized gain from distributions 0 0 489,289
Realized gain (loss) on sales 1,265,366 (2,579,803) (248,148)
---------- ----------- ---------
Net realized gain (loss) on investments 1,265,366 (2,579,803) 241,141
---------- ----------- ---------
Net unrealized gain (loss) on investments:
Unrealized gain (loss) on investments,
beginning of period (93,550) (3,076,723) 86,533
Unrealized gain (loss) on investments,
end of period 0 0 0
---------- ----------- ---------
Net unrealized gain (loss) on investments 93,550 3,076,723 (86,533)
---------- ----------- ---------
Net gain (loss) on investments 1,358,916 496,920 154,608
---------- ----------- ---------
Net increase (decrease) in net assets resulting
from operations $1,421,238 $ 584,218 $ 230,117
========== =========== =========
<CAPTION>
AIM V.I. AIM V.I. AIM V.I.
Global Growth Capital AIM V.I. International
and Income Appreciation Telecomunications Equity
Fund Fund Fund Fund
------------- ------------ ----------------- -------------
<S> <C> <C> <C> <C>
Investment income:
Dividend income $ 0 $ 27,025 $ 0 $ 375,256
Expenses:
Mortality, expense and administrative charges (95,489) (113,344) (285,990) (182,369)
---------- ----------- ----------- -----------
Net investment income (loss) (95,489) (86,319) (285,990) 192,887
---------- ----------- ----------- -----------
Net realized gain (loss) on investments:
Realized gain from distributions 0 843,165 0 1,574,755
Realized gain (loss) on sales 239,889 942,381 1,571,183 2,016,902
---------- ----------- ----------- -----------
Net realized gain (loss) on investments 239,889 1,785,546 1,571,183 3,591,657
---------- ----------- ----------- -----------
Net unrealized gain (loss) on investments:
Unrealized gain (loss) on investments,
beginning of period 0 0 0 0
Unrealized gain (loss) on investments,
end of period 2,720,895 9,518,265 39,031,270 13,208,187
---------- ----------- ----------- -----------
Net unrealized gain (loss) on investments 2,720,895 9,518,265 39,031,270 13,208,187
---------- ----------- ----------- -----------
Net gain (loss) on investments 2,960,784 11,303,811 40,602,453 16,799,844
---------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting
from operations $2,865,295 $11,217,492 $40,316,463 $16,992,731
========== =========== =========== ===========
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-NINE
S T A T E M E N T S O F C H A N G E S I N N E T A S S E T S
For the periods ended December 31, 1999 and 1998
<CAPTION>
GT Global GT Global
Variable New Pacific Division Variable Europe Division
----------------------------- ----------------------------
1999 1998 1999 1998
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Operations:
Net investment income (loss) $ 134,530 $ 159,913 $ (108,788) $ (440,197)
Net realized gain (loss) on investments 3,294,077 (1,303,057) 1,139,490 7,187,477
Net unrealized gain (loss) on investments (230,946) 586,649 (1,469,077) 708,761
------------ ----------- ------------ -----------
Net increase (decrease) in net assets
resulting from operations 3,197,661 (556,495) (438,375) 7,456,041
------------ ----------- ------------ -----------
Deposits into Separate Account 697,098 437,207 1,153,309 1,221,006
Transfers to (from) Separate Account (9,770,792) (3,613,152) (24,825,583) 3,539,888
Withdrawals from Separate Account (3,890,454) (1,845,816) (8,279,593) (7,120,193)
------------ ----------- ------------ -----------
Net deposits into (withdrawals from) Separate Account (12,964,148) (5,021,761) (31,951,867) (2,359,299)
------------ ----------- ------------ -----------
Increase (decrease) in net assets (9,766,487) (5,578,256) (32,390,242) 5,096,742
Net assets, beginning of period 9,766,487 15,344,743 32,390,242 27,293,500
------------ ----------- ------------ -----------
Net assets, end of period $ 0 $ 9,766,487 $ 0 $32,390,242
============ =========== ============ ===========
<CAPTION>
GT Global GT Global Variable
Variable America Division Growth & Income Division
------------------------------ ----------------------------
1999 1998 1999 1998
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Operations:
Net investment income (loss) $ (390,771) $ (559,355) $ 707,587 $ 396,098
Net realized gain (loss) on investments 3,909,315 6,673,751 (2,821,867) 7,821,973
Net unrealized gain (loss) on investments 410,224 (3,909,681) (2,254,232) 646,487
------------ ----------- ------------ -----------
Net increase (decrease) in net assets
resulting from operations 3,928,768 2,204,715 (4,368,512) 8,864,558
------------ ----------- ------------ -----------
Deposits into Separate Account 1,819,019 1,322,117 1,498,558 1,394,718
Transfers to (from) Separate Account (34,583,667) 2,386,380 (37,847,075) 4,831,962
Withdrawals from Separate Account (11,708,156) (9,151,241) (14,575,008) (9,978,026)
------------ ----------- ------------ -----------
Net deposits into (withdrawals from) Separate Account (44,472,804) (5,442,744) (50,923,525) (3,751,346)
------------ ----------- ------------ -----------
Increase (decrease) in net assets (40,544,036) (3,238,029) (55,292,037) 5,113,212
Net assets, beginning of period 40,544,036 43,782,065 55,292,037 50,178,825
------------ ----------- ------------ -----------
Net assets, end of period $ 0 $40,544,036 $ 0 $55,292,037
============ =========== ============ ===========
<CAPTION>
GT Global Variable GT Global Variable
Emerging Markets Division Natural Resources Division
----------------------------- ---------------------------
1999 1998 1999 1998
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Operations:
Net investment (loss) $ 62,322 $ (122,100) $ 87,298 $ (141,096)
Net realized gain (loss) on investments 1,265,366 (6,686,132) (2,579,803) (3,092,431)
Net unrealized gain (loss) on investments 93,550 2,742,183 3,076,723 (1,389,503)
----------- ------------ ----------- ------------
Net increase (decrease) in net assets
resulting from operations 1,421,238 (4,066,049) 584,218 (4,623,030)
----------- ------------ ----------- ------------
Deposits into Separate Account 594,770 384,193 384,047 785,669
Transfers to (from) Separate Account (5,099,246) (5,088,834) (5,256,712) (4,279,195)
Withdrawals from Separate Account (2,413,765) (2,005,301) (1,920,467) (2,120,793)
----------- ------------ ----------- ------------
Net deposits into (withdrawals from) Separate Account (6,918,241) (6,709,942) (6,793,132) (5,614,319)
----------- ------------ ----------- ------------
Increase (decrease) in net assets (5,497,003) (10,775,991) (6,208,914) (10,237,349)
Net assets, beginning of period 5,497,003 16,272,994 6,208,914 16,446,263
----------- ------------ ----------- ------------
Net assets, end of period $ 0 $ 5,497,003 $ 0 $ 6,208,914
=========== ============ =========== ============
<CAPTION>
GT Global Variable GT Global Variable
Infrastructure Division Latin America Division
----------------------------- ----------------------------
1999 1998 1999 1998
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Operations:
Net investment (loss) $ 75,509 $ (28,342) $ 215,849 $ 76,981
Net realized gain (loss) on investments 241,141 280,277 207,225 (7,928,473)
Net unrealized gain (loss) on investments (86,533) 108,981 874,501 (431,008)
----------- ----------- ------------ ------------
Net increase (decrease) in net assets
resulting from operations 230,117 360,916 1,297,575 (8,282,500)
----------- ----------- ------------ ------------
Deposits into Separate Account 176,052 314,984 628,208 566,968
Transfers to (from) Separate Account (4,761,980) (1,757,657) (7,439,812) (7,364,854)
Withdrawals from Separate Account (1,795,096) (1,413,107) (3,371,323) (3,434,437)
----------- ----------- ------------ ------------
Net deposits into (withdrawals from) Separate Account (6,381,024) (2,855,780) (10,182,927) (10,232,323)
----------- ----------- ------------ ------------
Increase (decrease) in net assets (6,150,907) (2,494,864) (8,885,352) (18,514,823)
Net assets, beginning of period 6,150,907 8,645,771 8,885,352 27,400,175
----------- ----------- ------------ ------------
Net assets, end of period $ 0 $ 6,150,907 $ 0 $ 8,885,352
=========== =========== ============ ============
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-NINE
S T A T E M E N T S O F C H A N G E S I N N E T A S S E T S
For the periods ended December 31, 1999 and 1998
<CAPTION>
GT Global Variable GT Global Variable
Telecommunications Division International Division
------------------------------ ---------------------------
1999 1998 1999 1998
------------ ------------ ----------- ----------
<S> <C> <C> <C> <C>
Operations:
Net investment income (loss) $ (787,658) $ (952,157) $ 104,438 $ (34,663)
Net realized gain (loss) on investments 21,093,070 8,134,976 576,303 388,192
Net unrealized gain (loss) on investments (4,911,569) 5,159,740 (238,842) 120,291
------------ ------------ ----------- ----------
Net increase (decrease) in net assets
resulting from operations 15,393,843 12,342,559 441,899 473,820
------------ ------------ ----------- ----------
Deposits into Separate Account 1,655,957 1,541,601 516,987 192,290
Transfers to (from) Separate Account (66,718,406) (349,612) (5,486,987) 1,676,410
Withdrawals from Separate Account (19,111,639) (12,413,145) (2,506,652) (915,108)
------------ ------------ ----------- ----------
Net deposits into (withdrawals from) Separate Account (84,174,088) (11,221,156) (7,476,652) 953,592
------------ ------------ ----------- ----------
Increase (decrease) in net assets (68,780,245) 1,121,403 (7,034,753) 1,427,412
Net assets, beginning of period 68,780,245 67,658,842 7,034,753 5,607,341
------------ ------------ ----------- ----------
Net assets, end of period $ 0 $ 68,780,245 $ 0 $7,034,753
============ ============ =========== ==========
<CAPTION>
AIM V.I. AIM V.I. AIM V.I.
Global Growth Capital AIM V.I. International
and Income Appreciation Telecomunications Equity
Fund Fund Fund Fund
------------- ------------ ----------------- -------------
1999 1999 1999 1999
------------- ------------ ----------------- -------------
<S> <C> <C> <C> <C>
Operations:
Net investment (loss) $ (95,489) $ (86,319) $ (285,990) $ 192,887
Net realized gain (loss) on investments 239,889 1,785,546 1,571,183 3,591,657
Net unrealized gain (loss) on investments 2,720,895 9,518,265 39,031,270 13,208,187
----------- ----------- ------------ -----------
Net increase (decrease) in net assets
resulting from operations 2,865,295 11,217,492 40,316,463 16,992,731
----------- ----------- ------------ -----------
Deposits into Separate Account 385,936 385,796 465,117 228,658
Transfers to (from) Separate Account 31,708,343 30,135,897 73,445,712 44,445,680
Withdrawals from Separate Account (4,254,258) (3,084,153) (7,239,524) (5,441,033)
----------- ----------- ------------ -----------
Net deposits into (withdrawals from) Separate Account 27,840,021 27,437,540 66,671,305 39,233,305
----------- ----------- ------------ -----------
Increase (decrease) in net assets 30,705,316 38,655,032 106,987,768 56,226,036
Net assets, beginning of period 0 0 0 0
----------- ----------- ------------ -----------
Net assets, end of period $30,705,316 $38,655,032 $106,987,768 $56,226,036
=========== =========== ============ ===========
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
GENERAL AMERICAL SEPARATE ACCOUNT TWENTY-EIGHT AND
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-NINE
N O T E S T O F I N A N C I A L S T A T E M E N T S
December 31, 1999
NOTE 1--ORGANIZATION
General American Separate Account Twenty-eight and General American
Separate Account Twenty-nine (the Separate Accounts) commenced
operations on February 10, 1993, and are registered under the Investment
Company Act of 1940 (1940 Act) as unit investment trusts. The Separate
Accounts receive purchase payments from individual variable annuity
contracts issued by General American Life Insurance Company (General
American) which may be qualified or non- qualified.
During 1999 the funds invested in the GT Global Variable Investment
Funds were transferred into the AIM Variable Insurance (V.I.) Funds.
See Note 4--Fund Substitution.
As of December 31, 1999, Separate Account Twenty-eight is divided into
three divisions and Separate Account Twenty-nine is divided into four
divisions. Each division invests exclusively in shares of a single fund
of AIM Variable Insurance Funds (the Funds), an open-end diversified
management investment company. Separate Account Twenty-eight invests in
the Money Market, Diversified Income, and Government Securities Funds.
Separate Account Twenty-nine invests in the Capital Appreciation, Global
Growth and Income, Telecomunications, and International Equity Funds.
Contractholders have the option of directing their deposits into one or
all of the Divisions as well as a fixed account of General American,
which is not generally subject to regulation under the Securities Act of
1933 or the 1940 Act. The unit values for the Separate Accounts for all
divisions began at $12.00 on February 10, 1993, except the following
Divisions of Separate Account Twenty-nine which began at $12.00: the
Variable Telecommunications Division on October 18, 1993, the Variable
International Division on July 12, 1994, the Variable Emerging Markets
Division on July 6, 1994, and the Variable Natural Resources and
Variable Infrastructure Divisions on January 31, 1995. The unit values
for the Separate Accounts investing in the AIM V.I. Money Market,
Diversified Income, Government Securities, Global Growth and Income,
Capital Appreciation, and Telecomunications Funds began on October 15,
1999 at the following unit values respectively $14.53, $17.29, $14.59,
$21.27, $30.87, $34.09. The AIM V.I. International Equity Fund began on
October 22, 1999 at a unit value of $13.02.
On January 6, 2000, Metropolitan Life Insurance Company (MetLife),
headquartered in New York City, purchased 100% of GenAmerica Corporation
(the Company) for $1.2 billion in cash. The acquisition was a result of
liquidity problems encountered by the Company's wholly owned subsidiary
General American
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed
by the Separate Accounts in the preparation of financial statements.
The policies followed are in conformity with generally accepted
accounting principles.
(A) INVESTMENTS
The Separate Accounts' investments in the AIM Variable Insurance Funds
are valued daily on the respective shares held and based on the net
asset values as reported to General American by the Funds at the close
of each business day. The specific identification method is used in
determining the cost of shares sold on withdrawals by the Separate
Accounts. Share transactions are recorded on the trade date, which is
the same as the settlement date.
(B) FEDERAL INCOME TAXES
Under current Federal income tax law, the investment income and capital
gains from sales of investments of the Separate Accounts are not
taxable. Therefore, no Federal income tax expense has been provided.
<PAGE>
GENERAL AMERICAL SEPARATE ACCOUNT TWENTY-EIGHT AND
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-NINE
N O T E S T O F I N A N C I A L S T A T E M E N T S
December 31, 1999
(C) DIVIDEND REIMBURSEMENT
Dividends received from the underlying mutual funds are recorded on the
ex-dividend date and immediately reinvested on the pay date.
(D) USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of increase and decrease
in net assets from operations during the period. Actual results could
differ from those estimates.
NOTE 3--CONTRACT CHARGES
Mortality and Expense Risk Charge: General American assumes the
mortality and expense risks and provides certain administrative services
related to operating the Separate Accounts, for which the Separate
Accounts are charged an annual fee of 1.25% based on the values at the
end of each valuation period. Mortality and expense charges for
Separate Account Twenty-eight totaled $731,228 for the period ended
December 31, 1999. Mortality and expense charges for Separate Account
Twenty-nine totaled $2,743,007 for the period ended December 31, 1999.
Surrender Charge (Contingent Deferred Sales Charge): Under Separate
Account contractual arrangements, General American is entitled
to collect payment for sales charges. Contracts are subject to a
deferred sales charge contingent upon full surrender of the contract or
partial withdrawal of accumulated value. The sales charge is 6% the
first contract year, decreasing by 1% each subsequent year. The
contingent deferred sales charge will be waived in the event of
annuitization after the third year or on death if the date of issue is
prior to the annuitant's 80th birthday. Sales charges as a result of
surrenders are disclosed in Note 7.
Account Fee and Administrative Charges: General American has the
responsibility for the administration of the contract. As reimbursement
for account administrative expenses, on the last day of the contract
year, General American deducts an account fee. For contracts with
accumulated values less than $20,000, the fee is the lesser of $30 or 2%
of the accumulated value for contract years ending prior to December 31,
1999. Thereafter, the account fee may be adjusted annually. The
account fee is waived for contracts with accumulated values of $20,000
or more. General American charges an amount equal to the lesser of $25
or 2% of the amount transferred, for each transfer in excess of twelve
(12) during the contract year, excluding transfers made under the dollar
cost averaging program, personal portfolio rebalancing, or interest
sweep program and reserves the right to charge a fee to cover the
expenses for special handling. Account fees are disclosed in Note 7.
General American also provides certain administrative services for which
it charges an administrative charge to the Separate Accounts at an
annual rate of 0.15%. Administrative charges for Separate Account
Twenty-eight totaled $90,377 for the period ended December 31, 1999.
Administrative charges for Separate Account Twenty-nine totaled $339,023
for the period ended December 31, 1999.
Premium Taxes: In states which charge premium taxes, the taxes are
withdrawn from the purchase payment or the accumulated value of the
contract. Premium taxes are disclosed in Note 7.
NOTE 4 - FUND SUBSTITUTION
Prior to October 15, 1999 Separate Account Twenty-eight was divided into
four divisions and SeparateAccount Twenty-nine was divided into ten
divisions. Each division invested exlusively in shares of a single fund
of GT Global Variable Investment Funds. Separate Account Twenty-eight
invested in the Money Market, Variable Strategic Income, Variable
Global Government Income, and Variable U.S. Government Income Funds.
Separate Account Twenty-nine invested in the Variable New Pacific,
Variable Europe,
<PAGE>
GENERAL AMERICAL SEPARATE ACCOUNT TWENTY-EIGHT AND
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-NINE
N O T E S T O F I N A N C I A L S T A T E M E N T S
December 31, 1999
Variable America, Variable Growth & Income, Variable Latin America,
Variable Telecomunications, Variable International, Variable Emerging
Markets, Variable Natural Resources, and Variable Infrastructure Funds.
On October 15, 1999 and October 22, 1999, the funds invested in the GT
Global Variable Investment Funds were transferred into AIM V.I. Funds.
On October 15, 1999, the GT Global Money Market Fund was transferred
into the AIM V.I. Money Market Fund; the GT Global Variable Strategic
Income and Variable Global Government Income Funds were transferred into
the AIM V.I. Diversified Income Fund; the GT Global U.S. Government
Income Fund was transferred into the AIM V.I. Government Securities
Fund; the GT Global Variable Growth & Income Fund was transferred into
the AIM V.I. Global Growth and Income Fund; the GT Global Variable
America Fund was transferred into the AIM V.I. Capital Appreciation
Fund; and the GT Global Variable Telecomunications Fund was transferred
into the AIM V.I. Telecomunications Fund.
On October 22, 1999 the GT Global Variable New Pacific, Variable Europe,
Variable Latin America, Variable International, Variable Emerging
Markets, Variable Natural Resources, and Variable Infrastructure Funds
were transferred into the AIM V.I. International Equity Fund.
<PAGE>
GENERAL AMERICAL SEPARATE ACCOUNT TWENTY-EIGHT AND
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-NINE
N O T E S T O F I N A N C I A L S T A T E M E N T S
December 31, 1999
NOTE 5--PURCHASES AND SALES OF SHARES
During the period ended December 31, 1999, cost of purchases and proceeds
from sales of AIM Variable Insurance Fund and GT Global Variable Investment
Fund shares were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
--------- -----
SEPARATE ACCOUNT TWENTY-EIGHT
- -----------------------------
<S> <C> <C>
AIM V.I. Money Market Fund $ 41,497,669 $ 23,366,671
AIM V.I. Diversified Income Fund 19,310,063 4,153,405
AIM V.I. Government Securities Fund 4,933,587 985,204
GT Global Money Market Fund 493,750,685 528,005,293
GT Global Variable Strategic Income Fund 6,836,111 26,554,249
GT Global Variable Global Government
Income Fund 8,737,910 16,837,867
GT Global Variable U.S. Government
Income Fund 1,773,268 8,463,302
<CAPTION>
SEPARATE ACCOUNT TWENTY-NINE
- ----------------------------
<S> <C> <C>
AIM V.I. Global Growth and Income Fund $ 33,593,779 $ 5,827,778
AIM V.I. Capital Appreciation Fund 33,533,287 5,310,778
AIM V.I. Telecommunications Fund 72,970,965 6,447,336
AIM V.I. International Equity Fund 56,389,741 15,285,215
GT Global Variable New Pacific Fund 204,437,305 217,295,685
GT Global Variable Europe Fund 189,072,627 209,750,724
GT Global Variable America Fund 34,373,082 68,047,111
GT Global Variable Growth & Income Fund 39,913,850 78,504,213
GT Global Variable Latin America Fund 5,811,494 15,812,268
GT Global Variable Telecommunications
Fund 55,001,969 124,919,106
GT Global Variable International Fund 36,442,493 43,228,791
GT Global Variable Emerging Markets Fund 30,158,249 37,034,416
GT Global Variable Natural Resources Fund 7,892,143 14,613,181
GT Global Variable Infrastructure Fund 1,049,154 6,887,703
</TABLE>
<PAGE>
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-EIGHT AND
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-NINE
N O T E S T O F I N A N C I A L S T A T E M E N T S
(Continued)
December 31, 1999
NOTE 6--ACCUMULATION UNIT ACTIVITY
The following is a summary of the accumulation unit activity for the
periods ended December 31, 1999 and 1998 for Separate Account Twenty-
eight (in thousands):
<TABLE>
<CAPTION>
GT Global GT Global
Money Market Variable Strategic
Division Income Division
------------------------ -----------------------
1999 1998 1999 1998
------ ----- ----- -----
<S> <C> <C> <C> <C>
Individual units held:
Deposits 476 297 50 32
Transfers (53) 781 (883) (93)
Withdrawals (2,627) (817) (346) (265)
------ ----- ----- -----
Outstanding units, beginning of period 2,204 1,943 1,179 1,505
------ ----- ----- -----
Outstanding units, end of period 0 2,204 0 1,179
====== ===== ===== =====
<CAPTION>
GT Global GT Global
Variable Global Variable
Government U.S. Government
Income Division Income Division
---------------------- ----------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Individual units held:
Deposits 7 16 5 19
Transfers (461) 58 (366) 30
Withdrawals (98) (93) (122) (81)
---- --- ---- ---
Outstanding units, beginning of period 552 571 483 515
---- --- ---- ---
Outstanding units, end of period 0 552 0 483
==== === ==== ===
<CAPTION>
AIM V.I. AIM V.I. AIM V.I.
Money Diversified Government
Market Income Securities
Fund Fund Fund
-------- ----------- ----------
1999 1999 1999
-------- ----------- ----------
<S> <C> <C> <C>
Individual units held:
Deposits 23 5 1
Transfers 2,051 956 300
Withdrawals (837) (135) (39)
----- ---- ---
Outstanding units, beginning of period 0 0 0
----- ---- ---
Outstanding units, end of period 1,237 826 262
===== ==== ===
</TABLE>
<PAGE>
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-EIGHT AND
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-NINE
N O T E S T O F I N A N C I A L S T A T E M E N T S
(Continued)
December 31, 1999
NOTE 6--ACCUMULATION UNIT ACTIVITY (CONTINUED)
The following is a summary of the accumulation unit activity for the
periods ended December 31, 1999 and 1998 for Separate Account Twenty-
nine (in thousands).
<TABLE>
<CAPTION>
GT Global GT Global GT Global
Variable New Variable Variable
Pacific Division Europe Division America Division
-------------------- -------------------- ---------------------
1999 1998 1999 1998 1999 1998
----- ----- ----- ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Individual units held:
Deposits 65 43 47 43 58 50
Transfers (797) (203) (933) 265 (1,135) 82
Withdrawals (414) (212) (324) (264) (381) (353)
----- ----- ----- ----- ------ -----
Outstanding units, beginning of period 1,146 1,518 1,210 1,166 1,458 1,679
----- ----- ----- ----- ------ -----
Outstanding units, end of period 0 1,146 0 1,210 0 1,458
===== ===== ===== ===== ====== =====
<CAPTION>
GT Global GT Global
Variable Growth & Variable Latin
Income Division America Division
--------------------- -------------------
1999 1998 1999 1998
------ ----- ---- -----
<S> <C> <C> <C> <C>
Individual units held:
Deposits 68 65 40 35
Transfers (1,767) 226 (589) (434)
Withdrawals (643) (455) (257) (224)
------ ----- ---- -----
Outstanding units, beginning of period 2,342 2,506 806 1,429
------ ----- ---- -----
Outstanding units, end of period 0 2,342 0 806
====== ===== ==== =====
<CAPTION>
GT Global GT Global
Variable Variable GT Global
Telecommunications International Variable Emerging
Division Division Markets Division
--------------------- ------------------- -------------------
1999 1998 1999 1998 1999 1998
------ ----- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C>
Individual units held:
Deposits 53 63 41 16 54 36
Transfers (2,010) (37) (424) 184 (535) (456)
Withdrawals (601) (498) (198) (73) (258) (202)
------ ----- ---- --- ---- -----
Outstanding units, beginning of period 2,558 3,030 581 454 739 1,361
------ ----- ---- --- ---- -----
Outstanding units, end of period 0 2,558 0 581 0 739
====== ===== ==== === ==== =====
<CAPTION>
GT Global GT Global
Variable Natural Variable Infra-
Resources Division structure Division
------------------- -------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Individual units held:
Deposits 22 41 10 17
Transfers (337) (244) (262) (103)
Withdrawals (121) (124) (99) (81)
---- ---- ---- ----
Outstanding units, beginning of period 436 763 351 518
---- ---- ---- ----
Outstanding units, end of period 0 436 0 351
==== ==== ==== ====
<CAPTION>
AIM V.I.
Global AIM V.I. AIM V.I.
Growth & Capital AIM V.I. International
Income Appreciation Telecomunications Equity
Fund Fund Fund Fund
-------- ------------ ----------------- -------------
1999 1999 1999 1999
-------- ------------ ----------------- -------------
<S> <C> <C> <C> <C>
Individual units held:
Deposits 17 11 13 16
Transfers 1,495 986 2,107 3,504
Withdrawals (193) (86) (167) (366)
----- --- ----- -----
Outstanding units, beginning of period 0 0 0 0
----- --- ----- -----
Outstanding units, end of period 1,319 911 1,953 3,154
===== === ===== =====
</TABLE>
<PAGE>
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-EIGHT AND
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-NINE
N O T E S T O F I N A N C I A L S T A T E M E N T S
December 31, 1999
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT
Deposits into the Separate Account are used to purchase shares in
GT Global Variable Investment Funds or AIM V.I. Funds. Net deposits
represent the amounts available for investment in such shares after
deduction of premium taxes, administrative costs, and surrender charges.
Activity for Separate Account Twenty-eight follows.
<TABLE>
<CAPTION>
GT Global GT Global Variable
Money Market Division Strategic Income Division
------------------------------ ---------------------------
1999 1998 1999 1998
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
Total gross deposits $ 6,941,036 $ 4,216,030 $ 879,901 $ 596,851
Transfers between fund divisions and General American (1,029,887) 10,874,210 (15,298,193) (1,661,337)
Surrenders and withdrawals (37,463,507) (11,222,268) (6,064,884) (4,797,048)
------------ ------------ ------------ -----------
Total of gross deposits, transfers, and surrenders
between fund divisions (31,552,358) 3,867,972 (20,483,176) (5,861,534)
Deductions:
Premium taxes 0 (3,705) 0 (1,688)
Account Fees (68,446) (85,755) (2,647) (5,548)
Surrender charges (464,301) (225,520) (69,163) (78,415)
------------ ------------ ------------ -----------
Total deductions (532,747) (314,980) (71,810) (85,651)
------------ ------------ ------------ -----------
Net deposits into (deductions from) Separate Account $(32,085,105) $ 3,552,992 $(20,554,986) $(5,947,185)
============ ============ ============ ===========
<CAPTION>
GT Global Variable Global GT Global Variable U.S.
Government Income Division Government Income Division
----------------------------- --------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Total gross deposits $ 110,640 $ 236,964 $ 79,959 $ 278,136
Transfers between fund divisions and General American (6,830,811) 867,608 (5,333,671) 448,034
Surrenders and withdrawals (1,434,327) (1,384,864) (1,777,383) (1,183,992)
----------- ----------- ----------- -----------
Total of gross deposits, transfers, and surrenders
between fund divisions (8,154,498) (280,292) (7,031,095) (457,822)
Deductions:
Premium taxes 0 (1,093) 0 (1,530)
Account Fees (1,570) (3,605) (840) (2,400)
Surrender charges (14,303) (16,349) (36,870) (19,733)
----------- ----------- ----------- -----------
Total deductions (15,873) (21,047) (37,710) (23,663)
----------- ----------- ----------- -----------
Net deposits into (deductions from) Separate Account $(8,170,371) $ (301,339) $(7,068,805) $ (481,485)
=========== =========== =========== ===========
<CAPTION>
AIM V.I. AIM V.I. AIM V.I.
Money Diversified Government
Market Income Securities
Fund Fund Fund
------------ ----------- ----------
1999 1999 1999
------------ ----------- ----------
<S> <C> <C> <C>
Total gross deposits $ 336,251 $ 115,442 $ 19,433
Transfers between fund divisions and General American 29,827,855 16,506,465 4,365,561
Surrenders and withdrawals (11,985,962) (2,342,663) (556,900)
------------ ----------- ----------
Total of gross deposits, transfers, and surrenders
between fund divisions 18,178,144 14,279,244 3,828,094
Deductions:
Premium taxes 0 0 0
Account Fees (2,979) (682) (150)
Surrender charges (207,411) (20,643) (8,479)
------------ ----------- ----------
Total deductions (210,390) (21,325) (8,629)
------------ ----------- ----------
Net deposits into (deductions from) Separate Account $ 17,967,754 $14,257,919 $3,819,465
============ =========== ==========
</TABLE>
<PAGE>
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-EIGHT AND
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-NINE
N O T E S T O F I N A N C I A L S T A T E M E N T S
December 31, 1999
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT
(CONTINUED)
Deposits into the Separate Account are used to purchase shares in
GT Global Variable Investment Funds or AIM V.I. Funds. Net deposits
represent the amounts available for investment in such shares after
deduction of premium taxes, administrative costs, and surrender charges.
Activity for Separate Account Twenty-nine follows.
<TABLE>
<CAPTION>
GT Global GT Global
Variable New Pacific Division Variable Europe Division
------------------------------ ---------------------------
1999 1998 1998 1998
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Total gross deposits $ 733,692 $ 467,192 $ 1,168,836 $ 1,263,348
Transfers between fund divisions and General American (9,770,792) (3,613,152) (24,825,583) 3,539,888
Surrenders and withdrawals (3,836,786) (1,811,064) (8,160,514) (6,981,674)
------------ ----------- ------------ -----------
Total of gross deposits, transfers, and surrenders
between fund divisions (12,873,886) (4,957,024) (31,817,261) (2,178,438)
------------ ----------- ------------ -----------
Deductions:
Premium taxes 0 (669) 0 (264)
Account Fees (36,594) (29,317) (15,527) (42,079)
Surrender charges (53,668) (34,751) (119,079) (138,518)
------------ ----------- ------------ -----------
Total deductions (90,262) (64,737) (134,606) (180,861)
------------ ----------- ------------ -----------
Net deposits into (deductions from) Separate Account $(12,964,148) $(5,021,761) $(31,951,867) $(2,359,299)
============ =========== ============ ===========
<CAPTION>
GT Global
Variable America Division
------------------------------
1998 1998
------------ -----------
<S> <C> <C>
Total gross deposits $ 1,830,403 $ 1,342,670
Transfers between fund divisions and General American (34,583,667) 2,386,380
Surrenders and withdrawals (11,562,874) (8,968,710)
------------ -----------
Total of gross deposits, transfers, and surrenders
between fund divisions (44,316,138) (5,239,660)
------------ -----------
Deductions:
Premium taxes 0 (2,032)
Account Fees (11,384) (18,522)
Surrender charges (145,282) (182,530)
------------ -----------
Total deductions (156,666) (203,084)
------------ -----------
Net deposits into (deductions from) Separate Account $(44,472,804) $(5,442,744)
============ ===========
<CAPTION>
GT Global Variable GT Global Variable
Emerging Markets Division Natural Resources Division
----------------------------- --------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Total gross deposits $ 598,784 $ 388,910 $ 386,226 $ 791,216
Transfers between fund divisions and General American (5,099,246) (5,088,834) (5,256,712) (4,279,195)
Surrenders and withdrawals (2,373,058) (1,955,068) (1,879,258) (2,064,704)
----------- ----------- ----------- -----------
Total of gross deposits, transfers, and surrenders
between fund divisions (6,873,520) (6,654,992) (6,749,744) (5,552,683)
----------- ----------- ----------- -----------
Deductions:
Premium taxes 0 (1,079) 0 0
Account Fees (4,014) (3,638) (2,179) (5,547)
Surrender charges (40,707) (50,233) (41,209) (56,089)
----------- ----------- ----------- -----------
Total deductions (44,721) (54,950) (43,388) (61,636)
----------- ----------- ----------- -----------
Net deposits into (deductions from) Separate Account $(6,918,241) $(6,709,942) $(6,793,132) $(5,614,319)
=========== =========== =========== ===========
<CAPTION>
GT Global Variable
Infrastructure Division
-----------------------------
1999 1998
----------- -----------
<S> <C> <C>
Total gross deposits $ 176,499 $ 316,330
Transfers between fund divisions and General American (4,761,980) (1,757,657)
Surrenders and withdrawals (1,749,945) (1,371,569)
----------- -----------
Total of gross deposits, transfers, and surrenders
between fund divisions (6,335,426) (2,812,896)
----------- -----------
Deductions:
Premium taxes 0 0
Account Fees (447) (1,346)
Surrender charges (45,151) (41,538)
----------- -----------
Total deductions (45,598) (42,884)
----------- -----------
Net deposits into (deductions from) Separate Account $(6,381,024) $(2,855,780)
=========== ===========
<CAPTION>
GT Global GT Global Variable
Growth & Income Division Latin America Division
------------------------------ ---------------------------
1999 1998 1999 1998
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
Total gross deposits $ 1,510,463 $ 1,415,739 $ 630,989 $ 574,021
Transfers between fund divisions and General American (37,847,075) 4,831,962 (7,439,812) (7,364,854)
Surrenders and withdrawals (14,398,572) (9,801,457) (3,326,633) (3,366,528)
------------ ----------- ------------ ------------
Total of gross deposits, transfers, and surrenders
between fund divisions (50,735,184) (3,553,756) (10,135,456) (10,157,361)
------------ ----------- ------------ ------------
Deductions:
Premium taxes 0 (2,685) 0 (1,300)
Account Fees (11,905) (18,337) (2,781) (5,753)
Surrender charges (176,436) (176,568) (44,690) (67,909)
------------ ----------- ------------ ------------
Total deductions (188,341) (197,590) (47,471) (74,962)
------------ ----------- ------------ ------------
Net deposits into (deductions from) Separate Account $(50,923,525) $(3,751,346) $(10,182,927) $(10,232,323)
============ =========== ============ ============
<CAPTION>
GT Global Variable
Telecommunications Division
------------------------------
1999 1998
------------ -----------
<S> <C> <C>
Total gross deposits $ 1,690,013 $ 1,581,728
Transfers between fund divisions and General American (66,718,406) (349,612)
Surrenders and withdrawals (18,858,772) (12,173,840)
------------ -----------
Total of gross deposits, transfers, and surrenders
between fund divisions (83,887,165) (10,941,724)
------------ -----------
Deductions:
Premium taxes 0 (3,520)
Account Fees (34,056) (36,607)
Surrender charges (252,867) (239,305)
------------ -----------
Total deductions (286,923) (279,432)
------------ -----------
Net deposits into (deductions from) Separate Account $(84,174,088) $(11,221,156)
============ ============
</TABLE>
<PAGE>
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-EIGHT AND
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-NINE
N O T E S T O F I N A N C I A L S T A T E M E N T S
December 31, 1999
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
<TABLE>
<CAPTION>
AIM V.I.
Global Growth
GT Global Variable and Income
International Division Fund
----------------------------- -------------
1999 1998 1999
----------- ---------- -------------
<S> <C> <C> <C>
Total gross deposits $ 520,732 $ 202,306 $ 388,325
Transfers between fund divisions and General American (5,486,987) 1,676,410 31,708,343
Surrenders and withdrawals (2,467,466) (899,949) (4,223,051)
----------- ---------- -----------
Total of gross deposits, transfers, and surrenders
between fund divisions (7,433,721) 978,767 27,873,617
----------- ---------- -----------
Deductions:
Premium taxes 0 0 (344)
Account Fees (3,745) (10,016) (2,045)
Surrender charges (39,186) (15,159) (31,207)
----------- ---------- -----------
Total deductions (42,931) (25,175) (33,596)
----------- ---------- -----------
Net deposits into (deductions from) Separate Account $(7,476,652) $ 953,592 $27,840,021
=========== ========== ===========
<CAPTION>
AIM V.I. AIM V.I.
Capital AIM V.I. International
Appreciation Telecomunications Equity
Fund Fund Fund
------------ ----------------- -------------
1999 1999 1999
------------ ----------------- -------------
<S> <C> <C> <C>
Total gross deposits $ 387,427 $ 472,203 $ 233,618
Transfers between fund divisions and General American 30,135,897 73,445,712 44,445,680
Surrenders and withdrawals (3,053,564) (7,182,331) (5,354,357)
----------- ----------- -----------
Total of gross deposits, transfers, and surrenders
between fund divisions 27,469,760 66,735,584 39,324,941
----------- ----------- -----------
Deductions:
Premium taxes 0 (712) (1,181)
Account Fees (1,630) (6,374) (3,779)
Surrender charges (30,590) (57,193) (86,676)
----------- ----------- -----------
Total deductions (32,220) (64,279) (91,636)
----------- ----------- -----------
Net deposits into (deductions from) Separate Account $27,437,540 $66,671,305 $39,233,305
=========== =========== ===========
</TABLE>
<PAGE>
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-EIGHT AND
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-NINE
S C H E D U L E O F I N V E S T M E N T S
December 31, 1999
<CAPTION>
Market
No. of Shares Value
------------- -----------
<S> <C> <C>
Separate Account Twenty-Eight:
AIM V.I. Money Market Fund 18,130,998 $18,130,998
AIM V.I. Diversified Income Fund 1,431,917 14,405,085
AIM V.I. Government Securities Fund 359,374 3,820,150
Separate Account Twenty-Nine:
AIM V.I. Global Growth and Income Fund 2,271,011 30,726,785
AIM V.I. Capital Appreciation Fund 1,087,216 38,683,155
AIM V.I. Telecomunications Fund 3,250,185 107,126,082
AIM V.I. International Equity Fund 1,923,169 56,329,615
See accompanying independent auditors' report.
</TABLE>
<PAGE>
<TABLE>
Table 1
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-EIGHT
C O N D E N S E D F I N A N C I A L I N F O R M A T I O N
December 31, 1999
<CAPTION>
Total Units
Accumulation Accumulation Outstanding,
Unit Value: Unit Value: End of Period
Beginning of Period<F*> End of Period (in thousands)
----------------------- ------------- --------------
<S> <C> <C> <C> <C>
AIM V.I. Money Market Fund 1999 14.53<F1> 14.64 1,237
AIM V.I. Diversified Income Fund 1999 17.29<F2> 17.44 826
AIM V.I. Government Securities Fund 1999 14.59<F3> 14.61 262
GT Global Money Market Division 1999 14.22 14.53<F**> 0<F**>
1998 13.75 14.22 2,204
1997 13.30 13.75 1,943
1996 12.87 13.30 1,490
1995 12.40 12.87 1,158
1994 12.15 12.40 1,572
1993 12.00 12.15 303
GT Global Variable Strategic Income Division 1999 18.09 17.29<F**> 0<F**>
1998 18.45 18.09 1,179
1997 17.46 18.45 1,505
1996 14.56 17.46 1,807
1995 12.36 14.56 1,737
1994 15.11 12.36 1,886
1993 12.00 15.11 1,187
GT Global Variable Global Government Income Division 1999 15.96 14.68<F**> 0<F**>
1998 14.36 15.96 552
1997 13.95 14.36 571
1996 13.33 13.95 743
1995 11.66 13.33 893
1994 12.95 11.66 825
1993 12.00 12.95 464
GT Global Variable U.S. Government Income Division 1999 15.27 14.59<F**> 0<F**>
1998 14.19 15.27 483
1997 13.29 14.19 515
1996 13.18 13.29 410
1995 11.65 13.18 452
1994 12.61 11.65 205
1993 12.00 12.61 69
<FN>
<F*> At inception of Separate Account on February 10, 1993; except for the AIM V.I. Funds which commenced on October 15, 1999.
<F**>Represents closing values on the date of substitution, October 15, 1999.
<F1> Beginning unit value represents closing unit value for the GT Global Variable Money Market Division.
<F2> Beginning unit value represents closing unit value for the GT Global Variable Strategic Income Division.
<F3> Beginning unit value represents closing unit value for the GT Global Variable U.S. Government Income Division.
</FN>
See accompanying independent auditors' report.
</TABLE>
<PAGE>
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-NINE
C O N D E N S E D F I N A N C I A L I N F O R M A T I O N
December 31, 1999
<CAPTION>
Total Units
Accumulation Accumulation Outstanding,
Unit Value: Unit Value: End of Period
Beginning of Period<F*> End of Period (in thousands)
----------------------- ------------- --------------
<S> <C> <C> <C> <C>
AIM V.I. Global Growth and Income Fund 1999 21.27<F1> 23.27 1,319
AIM V.I. Capital Appreciation Fund 1999 30.87<F2> 42.44 911
AIM V.I. Telecomunications Fund 1999 34.09<F3> 54.79 1,953
AIM V.I. International Equity Fund 1999 13.02<F4> 17.83 3,154
Variable New Pacific Division 1999 8.52 9.08<F***> 0<F***>
1998 10.11 8.52 1,146
1997 17.41 10.11 1,518
1996 13.48 17.41 1,776
1995 13.70 13.48 1,687
1994 15.87 13.70 1,410
1993 12.00 15.87 492
Variable Europe Division 1999 26.78 25.30<F***> 0<F***>
1998 23.41 26.78 1,210
1997 20.62 23.41 1,166
1996 16.05 20.62 1,182
1995 14.84 16.05 970
1994 15.14 14.84 1,007
1993 12.00 15.14 349
Variable America Division 1999 27.80 30.87<F**> 0<F**>
1998 26.08 27.80 1,458
1997 23.02 26.08 1,679
1996 19.69 23.02 1,802
1995 15.93 19.69 1,906
1994 13.59 15.93 953
1993 12.00 13.59 117
Variable Growth & Income Division 1999 23.61 21.27<F**> 0<F**>
1998 20.02 23.61 2,342
1997 17.47 20.02 2,506
1996 15.23 17.47 2,080
1995 13.37 15.23 2,002
1994 13.96 13.37 1,908
1993 12.00 13.96 827
<FN>
<F*> At inception of Separate Account on February 10, 1993, except for the Variable Telecommunications Division, which commenced
operations on October 18, 1993; the Variable International Growth Division, which commenced operations on July 12, 1994; the
Variable Emerging Markets Division, which commenced operations on July 6, 1994; the Variable Natural Resources Division and
Variable Infrastructure Division which commenced operations on January 31, 1995; the AIM V.I. Global Growth and Income,
Capital Appreciation, and Telecomunications Funds which commenced on October 15, 1999; and the AIM V.I. International
Equity Fund which commenced operations on October 22, 1999.
<F**> Represents closing values on the date of substitution, October 15, 1999.
<F***>Represents closing values on the date of substitution, October 22, 1999.
<F1> Beginning unit value represents closing unit value for the GT Global Variable Growth and Income Division.
<F2> Beginning unit value represents closing unit value for the GT Global Variable America Division.
<F3> Beginning unit value represents closing unit value for the GT Global Variable Telecomunications Division.
<F4> Beginning unit value represents closing unit value for the GT Global Variable International Division.
</FN>
See accompanying independent auditors' report.
</TABLE>
<PAGE>
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-NINE
C O N D E N S E D F I N A N C I A L I N F O R M A T I O N
December 31, 1999
<CAPTION>
Total Units
Accumulation Accumulation Outstanding,
Unit Value: Unit Value: End of Period
Beginning of Period<F*> End of Period (in thousands)
----------------------- ------------- --------------
<S> <C> <C> <C> <C>
Variable Latin America Division 1999 11.03 12.87<F***> 0<F***>
1998 19.18 11.03 806
1997 16.98 19.18 1,429
1996 14.06 16.98 1,292
1995 18.79 14.06 1,380
1994 17.46 18.79 1,412
1993 12.00 17.46 463
Variable Telecommunications Division 1999 26.89 34.09<F**> 0<F**>
1998 22.33 26.89 2,558
1997 19.76 22.33 3,030
1996 16.79 19.76 3,177
1995 13.77 16.79 3,019
1994 13.03 13.77 2,612
1993 12.00 13.03 605
Variable International Division 1999 12.11 13.02<F***> 0<F***>
1998 12.34 12.11 581
1997 11.70 12.34 454
1996 10.94 11.70 384
1995 11.22 10.94 314
1994 12.00 11.22 172
Variable Emerging Markets Division 1999 7.44 9.00<F***> 0<F***>
1998 11.96 7.44 739
1997 14.06 11.96 1,361
1996 10.88 14.06 1,234
1995 11.93 10.88 809
1994 12.00 11.93 574
Variable Natural Resources Division 1999 14.23 15.64<F***> 0<F***>
1998 21.54 14.23 436
1997 21.57 21.54 763
1996 14.47 21.57 746
1995 12.00 14.47 86
Variable Infrastructure Division 1999 17.52 18.21<F***> 0<F***>
1998 16.71 17.52 351
1997 16.13 16.71 518
1996 13.10 16.13 366
1995 12.00 13.10 113
<FN>
<F*> At inception of Separate Account on February 10, 1993, except for the Variable Telecommunications Division, which commenced
operations on October 18, 1993; the Variable International Growth Division, which commenced operations on July 12, 1994; the
Variable Emerging Markets Division, which commenced operations on July 6, 1994; the Variable Natural Resources Division and
Variable Infrastructure Division which commenced operations on January 31, 1995; the AIM V.I. Global Growth and Income,
Capital Appreciation, and Telecomunications Funds which commenced on October 15, 1999; and the AIM V.I. International
Equity Fund which commenced operations on October 22, 1999.
<F**> Represents closing values on the date of substitution, October 15, 1999.
<F***>Represents closing values on the date of substitution, October 22, 1999.
</FN>
See accompanying independent auditors' report.
</TABLE>
GENERAL AMERICAN LIFE INSURANCE
COMPANY AND SUBSIDIARIES
Consolidated Financial Statements
December 31, 1999 and 1998
(With Independent Auditors' Report Thereon)
INDEPENDENT AUDITORS' REPORT
Board of Directors and Members of General American Life Insurance
Company:
We have audited the accompanying consolidated balance sheets of General
American Life Insurance Company and subsidiaries as of December 31, 1999
and 1998, and the related consolidated statements of operations,
comprehensive income, stockholder equity, and cash flows for each of the
years in the three-year period ended December 31, 1999. These
consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these consolidated 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 audits
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
General American Life Insurance Company and subsidiaries as of December
31, 1999 and 1998, and the results of their operations and their cash
flows for each of the years in the three-year period ended December 31,
1999, in conformity with generally accepted accounting principles.
St. Louis, Missouri
February 4, 2000
<PAGE>>
<TABLE>
General American Life Insurance Company and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(dollars in millions, except share data)
<CAPTION>
As of December 31
-----------------
1999 1998
--------- --------
<S> <C> <C>
ASSETS
- - ----------------------------------------------------------------
Fixed maturities:
Available-for-sale, at fair value $ 6,826.1 11,068.3
Mortgage loans, net 1,678.9 2,337.5
Real estate, net 127.2 129.9
Equity securities, at fair value 49.3 48.6
Policy loans 2,243.9 2,151.0
Short-term investments 292.4 195.3
Other invested assets 898.8 457.6
--------- --------
Total investments 12,116.6 16,388.2
Cash and cash equivalents 790.0 591.1
Accrued investment income 153.9 205.6
Reinsurance recoverables 863.3 905.0
Other contract deposits 325.5 4,094.8
Deferred tax asset, net 197.6 -
Deferred policy acquisition costs 1,286.1 773.8
Other assets 781.1 675.7
Separate account assets 6,915.6 5,214.8
--------- --------
Total assets $23,429.7 28,849.0
========= ========
LIABILITIES AND STOCKHOLDER EQUITY
- - ----------------------------------------------------------------
Policy and contract liabilities:
Future policy benefits $ 5,995.6 5,589.5
Policyholder account balances:
Universal life 3,032.1 2,960.9
Annuities 3,709.8 3,714.5
Pension funds and interest sensitive contract liabilities 556.8 7,581.3
Policy and contract claims 702.1 591.1
Dividends payable to policyholders 120.6 121.7
--------- --------
Total policy and contract liabilities 14,117.0 20,559.0
Amounts payable to reinsurers 79.2 201.4
Long-term debt and notes payable 216.6 221.9
Other liabilities and accrued expenses 825.0 912.4
Deferred tax liability, net - 75.4
Separate account liabilities 6,892.0 5,194.9
--------- --------
Total liabilities 22,129.8 27,165.0
Minority interests 420.0 383.1
Stockholder equity:
Common stock, $1 par value, 5,000,000 shares authorized,
3,000,000 shares issued and outstanding 3.0 3.0
Additional paid in capital 71.1 3.0
Retained earnings 1,074.1 1,242.0
Accumulated other comprehensive (loss) income (268.3) 52.9
--------- --------
Total stockholder equity 879.9 1,300.9
--------- --------
Total liabilities and stockholder equity $23,429.7 28,849.0
========= ========
See accompanying notes to consolidated financial statements.
</TABLE>
2
<PAGE>
<TABLE>
General American Life Insurance Company and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in millions)
<CAPTION>
Years ended December 31
-----------------------
1999 1998 1997
-------- ------- -------
<S> <C> <C> <C>
REVENUES
- - -------------------------------------------------------
Insurance premiums $2,207.6 2,028.0 1,671.3
Other considerations 183.2 173.6 135.8
Net investment income 1,157.2 1,135.8 945.5
Ceded commissions 21.7 39.9 44.9
Other income 386.0 323.0 362.3
Net realized investment (losses) gains (200.6) 13.7 28.5
-------- ------- -------
Total revenues 3,755.1 3,714.0 3,188.3
-------- ------- -------
BENEFITS AND EXPENSES
- - -------------------------------------------------------
Policy benefits 1,978.4 1,832.9 1,517.7
Interest credited to policyholder account balances 533.9 516.8 399.4
-------- ------- -------
Total policyholder benefits 2,512.3 2,349.7 1,917.1
Dividends to policyholders 191.6 192.1 182.1
Policy acquisition costs 154.0 240.7 171.1
Other insurance and operating expenses 917.5 713.7 712.8
Interest expense 17.7 17.9 20.2
Demutualization expense 13.3 - -
Fees to exit funding agreement business 141.4 - -
-------- ------- -------
Total benefits and expenses 3,947.8 3,514.1 3,003.3
-------- ------- -------
(Loss) income before provision for income taxes (192.7) 199.9 185.0
-------- ------- -------
Income tax (benefit) provision:
Current (23.6) 35.2 65.8
Deferred (40.7) 18.4 (0.1)
-------- ------- -------
Total income tax (benefit) provision (64.3) 53.6 65.7
-------- ------- -------
(Loss) income before minority interest (128.4) 146.3 119.3
Minority interest in earnings of consolidated subsidiaries (24.8) (29.2) (22.1)
-------- ------- -------
Net (loss) income $ (153.2) 117.1 97.2
======== ======= =======
See accompanying notes to consolidated financial statements.
</TABLE>
3
<PAGE>
<TABLE>
General American Life Insurance Company and Subsidiaries
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(dollars in millions)
<CAPTION>
Years ended December 31
-----------------------
1999 1998 1997
------- ----- -----
<S> <C> <C> <C>
Net (loss) income $(153.2) 117.1 97.2
Other comprehensive (loss) income (321.2) (54.0) 75.6
------- ----- -----
Comprehensive (loss) income $(474.4) 63.1 172.8
======= ===== =====
See accompanying notes to consolidated financial statements.
</TABLE>
4
<PAGE>
<TABLE>
General American Life Insurance Company and Subsidiaries
CONSOLIDATED STATEMENTS OF STOCKHOLDER EQUITY
(dollars in millions)
<CAPTION>
ACCUMULATED
OTHER
ADDITIONAL COMPREHENSIVE TOTAL
COMMON PAID-IN RETAINED (LOSS) STOCKHOLDER
STOCK CAPITAL EARNINGS INCOME EQUITY
------ ---------- -------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996 $ - - 966.5 31.3 997.8
Net income 97.2 97.2
Other comprehensive income 75.6 75.6
Issuance of common stock 3.0 3.0 (6.0) -
Dividend to parent (4.5) (4.5)
Other, net 4.4 4.4
---- ---- ------- ------ -------
Balance at December 31, 1997 3.0 3.0 1,057.6 106.9 1,170.5
Net income 117.1 117.1
Other comprehensive loss (54.0) (54.0)
Parent's share of subsidiary's
issuance of non-voting stock 68.6 68.6
Other, net (1.3) (1.3)
---- ---- ------- ------ -------
Balance at December 31, 1998 3.0 3.0 1,242.0 52.9 1,300.9
Net loss (153.2) (153.2)
Other comprehensive loss (321.2) (321.2)
Parent's share of subsidiaries'
capital stock transactions 25.3 25.3
Capital contribution from parent 68.1 68.1
Dividends (40.0) (40.0)
---- ---- ------- ------ -------
Balance at December 31, 1999 $3.0 71.1 1,074.1 (268.3) 879.9
==== ==== ======= ====== =======
See accompanying notes to consolidated financial statements.
</TABLE>
5
<PAGE>
<TABLE>
General American Life Insurance Company and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)
<CAPTION>
Years ended December 31
-----------------------
1999 1998 1997
--------- ------- -------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
- - ----------------------------------------------------------------
Net (loss) income $ (153.2) 117.1 97.2
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Change in:
Accrued investment income 50.9 (37.4) (20.6)
Reinsurance recoverables and
other contract deposits 463.9 496.1 203.7
Deferred policy acquisition costs (165.9) (102.1) (113.0)
Other assets (39.5) (172.1) (61.8)
Future policy benefits 406.2 655.5 693.1
Policy and contract claims 111.0 132.5 105.5
Other liabilities and accrued expenses (78.1) 48.2 319.8
Deferred income tax provision (40.7) 18.4 (0.1)
Policyholder considerations (183.2) (173.6) (135.8)
Interest credited to policyholder account balances 533.9 516.8 399.4
Amortization and depreciation (32.5) 34.6 32.7
Net realized investment losses (gains) 200.6 (13.7) (28.5)
Other, net 12.0 7.4 0.4
--------- ------- -------
Net cash provided by operating activities 1,085.4 1,527.7 1,492.0
--------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
- - ----------------------------------------------------------------
Proceeds from investments sold or redeemed:
Fixed maturities available-for-sale 10,891.4 2,027.4 2,070.7
Mortgage loans 1,442.8 370.4 594.2
Equity securities 10.3 2.1 31.6
Cost of investments purchased:
Fixed maturities available-for-sale (8,110.5) (4,251.1) (4,463.1)
Mortgage loan originations (800.2) (594.5) (439.0)
Equity securities (19.2) (17.4) (47.3)
Maturity of fixed maturities available-for-sale 310.6 145.3 281.7
Increase in policy loans, net (92.9) (77.9) (153.4)
Increase in short-term and other invested assets, net (521.8) (215.2) (130.4)
Investments in subsidiaries 81.3 (24.5) (6.0)
--------- ------- -------
Net cash provided by (used in) investing activities 3,191.8 (2,635.4) (2,261.0)
--------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
- - ----------------------------------------------------------------
Net policyholder account and contract (withdrawals) deposits (4,186.7) 1,108.8 1,024.5
Proceeds from subsidiary stock offering 124.9 221.8 -
Issuance of debt - 2.3 1.9
Repayment of debt (0.7) (0.4) (80.6)
Dividends (45.8) (3.8) (2.1)
Other, net 28.9 27.5 46.8
--------- ------- -------
Net cash (used in) provided by financing activities (4,079.4) 1,356.2 990.5
--------- ------- -------
Effect of exchange rate changes 1.1 (16.3) (5.3)
--------- ------- -------
Net increase in cash and cash equivalents 198.9 232.2 216.2
Cash and cash equivalents at beginning of year 591.1 358.9 142.7
--------- ------- -------
Cash and cash equivalents at end of year $ 790.0 591.1 358.9
========= ======= =======
See accompanying notes to consolidated financial statements.
</TABLE>
6
<PAGE>
General American Life Insurance Company and Subsidiaries
(1) BASIS OF PRESENTATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
ACQUISITION BY METLIFE
On January 6, 2000, Metropolitan Life Insurance Company (MetLife),
headquartered in New York City, purchased 100% of GenAmerica Corporation
(GenAmerica), General American Life Insurance Company's (General American
or the Company) parent, for $1.2 billion in cash. The acquisition was a
result of liquidity problems encountered by General American.
On August 10, 1999, at management's request, the Missouri Department of
Insurance placed the Company under an order of administrative supervision
(the order). The immediate cause of the order was the Company's inability
to immediately satisfy approximately $4 billion in institutional funding
agreement contract surrenders. The funding agreements guaranteed the
holder a return on principal at a stated interest rate for a specified
period of time. The contracts also allowed the holder to "put" the
contract to the Company for a payout of principal and interest within
designated time periods of 7, 30 or 90 days. The Company had reinsured 50%
of the funding agreement contracts with ARM Financial Group, Inc. (ARM).
In July 1999, Moody's Investors Services, Inc. downgraded the claims paying
ability rating of ARM due to the relative illiquidity of certain of its
invested assets, which resulted in the Company recapturing the obligations
and assets related to the funding agreements reinsured by ARM. As a result
of the recapture, Moody's downgraded the Company's claims paying ability
rating. Upon announcement of the downgrade, a large number of funding
agreement holders surrendered their contracts. The Company was unable to
liquidate sufficient assets in an orderly fashion without incurring
significant losses and therefore management requested the order.
In connection with the acquisition, MetLife offered each holder of a
General American funding agreement the option to exchange its funding
agreement for a MetLife funding agreement with substantially identical
terms and conditions or receive cash equal to the principal amount plus
accrued interest. In consideration of this exchange offer, the Company
transferred to MetLife assets having a market value equal to the market
value of the funding agreement liabilities, approximately $5.7 billion.
As a result of its efforts to raise liquidity to meet the funding agreement
requests and the transfer of assets to MetLife, the Company incurred
approximately $214.7 million in pretax capital losses. In addition to the
capital losses, the Company incurred $141.4 million in fees associated with
the recapture and transfer of the funding agreement business. With the
transfer, the Company fully exited the funding agreement business.
GenAmerica will operate as a wholly-owned stock subsidiary of MetLife.
The $1.2 billion purchase price was paid to GenAmerica's parent General
American Mutual Holding Company (GAMHC) and deposited in an account for the
benefit of the Company's policyholders. Ultimately, these funds, minus
adjustments, will be distributed to participating General American
policyholders, with accumulated interest and GAMHC will be dissolved.
7
<PAGE>
General American Life Insurance Company and Subsidiaries
REORGANIZATION
In September 1996, the Board of Directors of General American adopted the
Plan which authorized the reorganization (Reorganization) of the Company
into a mutual insurance holding company structure. The Missouri Department
of Insurance held a public hearing on the Reorganization on December 19,
1996 and approved the Plan on January 24, 1997. The policyholders of the
Company approved the Plan on January 28, 1997 and the Reorganization became
effective on April 24, 1997 (effective date). The Company was the first
company to obtain approval and to form a mutual insurance holding company
under the Missouri Mutual Holding Company Statute.
Pursuant to the Reorganization, the Company (i) formed GAMHC as a mutual
insurance holding company under the insurance laws of the State of
Missouri, (ii) formed GenAmerica as an intermediate stock holding company
under the general laws of the State of Missouri, and (iii) amended and
restated its Charter and Articles of Incorporation to authorize the
issuance of capital stock and the continuance of its existence as a stock
life insurance company under the same name. GAMHC may, among other things,
elect all of the directors of GenAmerica and approve matters submitted for
shareholder approval. As of the effective date of the Reorganization, the
membership interests and the contractual rights of the policyholders of the
Company were separated - the membership interests automatically became, by
operation of law, membership interests in GAMHC and the contractual rights
remained with the Company. Each person who became the owner of a
designated policy or contract of insurance or annuity issued by the Company
after the effective date of the Reorganization (subject to certain
exceptions and conditions set forth in the Articles of Incorporation of
GAMHC) became a member of GAMHC and had a membership interest in GAMHC by
operation of law so long as such policy or contract remains in force. The
membership interests in GAMHC follow, and are not severable, from the
insurance or annuity policy or contract from which the membership interest
in GAMHC is derived.
On the effective date, the Company issued three million shares of its
authorized shares of capital stock to GAMHC. GAMHC then contributed all of
these to GenAmerica in exchange for one thousand shares of its common
stock. As a result, GenAmerica directly owned the Company, and GAMHC
indirectly owned the Company, through GenAmerica. The Reorganization was
accounted for at historical cost in a manner similar to a pooling of
interests.
The consolidated financial statements include the assets, liabilities, and
results of operations of the Company and the following wholly owned
insurance subsidiaries: Cova Corporation (COVA), an insurance holding
company, Paragon Life Insurance Company, Security Equity Life Insurance
Company, General Life Insurance Company of America, General Life Insurance
Company (GLIC), GenAm Benefits Insurance Company, and its 48.3 percent
owned subsidiary, Reinsurance Group of America, Incorporated (RGA), an
insurance holding company. In addition, the financial statements include
the assets, liabilities, and results of operations of the following wholly
owned non-insurance subsidiaries: Red Oak Realty Company, White Oak
Royalty Company, GenMark, Inc., and its 60.4 percent owned subsidiary,
Conning Corporation (Conning).
The Company's principal lines of business, conducted through General
American or one of its subsidiaries, are: Individual Life Insurance,
Annuities, Group Life and Health Insurance, Asset Management, and
Reinsurance. The Company distributes its products and services primarily
through a nationwide network of general agencies, independent brokers, and
group sales and claims offices. The Company and its subsidiaries are
licensed to do business in all fifty states, ten Canadian provinces, Puerto
Rico, and the District of Columbia. Through its subsidiaries, the Company
has operations in Europe, Pacific Rim countries, Latin America, and Africa.
INITIAL PUBLIC OFFERING
In December 1997, Conning successfully completed an Initial Public Offering
of 2.875 million shares of its common stock. Conning received net proceeds
of approximately $34.5 million from the offering. The
8
<PAGE>
General American Life Insurance Company and Subsidiaries
Company owned 60.4 and 62.7 percent of the total shares outstanding of
Conning's common stock at December 31, 1999 and 1998 respectively. The
publicly held stock of Conning is listed on the NASDAQ National Market
System.
OTHER OFFERINGS
At RGA's annual stockholders' meeting on May 27, 1998, a new class of non-
voting common stock was authorized. In June 1998, RGA completed a
secondary public offering in which it sold 7,417,500 million shares of non-
voting common stock traded on the New York Stock Exchange under the symbol
RGA.A. The offering provided net proceeds of approximately $221.8 million,
which have been utilized to finance the continued growth of RGA's
operations domestically and internationally. After the subsequent
offering, the Company's ownership percentage decreased from 63.8% to 53.3%.
On September 14, 1999 RGA held a special shareholder's meeting at which an
amendment to its restated articles of incorporation, as amended, was
approved which converted 7,417,496 shares of non-voting common stock into
7,194,971 shares of voting common stock, with cash paid in lieu of any
fractional shares. After the non-voting stock conversion, the Company's
ownership percentage was 53.5%.
On November 23, 1999, RGA completed a private placement of securities in
which it sold 4,784,689 shares of its common stock, $0.01 par value per
share to MetLife. The price per share was $26.125, and the aggregate value
of the transaction was approximately $125 million. Proceeds from the
private placement will be used for general corporate purposes, including
the immediate capital needs associated with the Company's primary
businesses. After the private offering, the Company's ownership percentage
was 48.3%.
SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements are prepared on the
basis of generally accepted accounting principles (GAAP) and include the
accounts of the Company and its majority owned subsidiaries. Less than
majority-owned entities in which the Company has at least a 20 percent
interest are reported on the equity basis. The Company continues to
consolidate the financial statements of RGA even though its ownership
percentage has declined to below 50 percent since the Company has retained
control of RGA through a majority representation on RGA's Board of
Directors at December 31, 1999 and through January 6, 2000. All
significant intercompany accounts and transactions have been eliminated in
consolidation. The preparation of financial statements requires the use of
estimates by management, which affect the amounts reflected in the
financial statements. Actual results could differ from those estimates.
Accounts that the Company deems to be sensitive to changes in estimates
include future policy benefits and policy and contract claims, deferred
acquisition costs, and investment and deferred tax valuation allowances.
The significant accounting policies of the Company are as follows:
RECOGNITION OF REVENUE
For traditional life insurance policies, including participating
businesses, premiums are recognized when due, less allowances for estimated
uncollectible balances. For limited payment contracts, net premiums are
recorded as revenue, and the difference between the gross premium and the
net premium is deferred and recognized in income in a constant relationship
to insurance in force over the estimated policy life.
For universal life and annuity products, contract charges for mortality,
surrender, and expense, other than front-end expense charges, are reported
as income when charged to policyholders' accounts.
Other income represents the fees generated from the Company's non-insurance
operations, primarily service and contract fees relating to concessions,
asset management, system development, and third-party administration.
Amounts are recognized when earned.
9
<PAGE>
General American Life Insurance Company and Subsidiaries
INVESTED ASSETS
FIXED MATURITIES AND EQUITY SECURITIES: All of the Company's securities are
classified as available-for-sale. Fixed maturities available-for-sale are
reported at fair value and are so classified based on the possibility that
such securities could be sold prior to maturity if that action enables the
Company to execute its investment philosophy and appropriately match
investment results to operating and liquidity needs. Equity securities are
carried at fair value.
Realized gains or losses on the sale of securities are determined on the
basis of specific identification. Unrealized gains and losses are
recorded, net of related income tax effects as well as related adjustments
to deferred acquisition costs, in accumulated other comprehensive income, a
separate component of stockholder equity.
The Company recognizes its proportionate share of the resultant gains or
losses on the issuance or repurchase of its subsidiaries' stock as a direct
credit or charge to retained earnings.
MORTGAGE LOANS: Mortgage loans on real estate are stated at an unpaid
principal balance, net of unamortized discounts, and valuation allowances
for possible impairment in value. The Company discontinues the accrual of
interest on mortgage loans which are more than 90 days delinquent.
Interest received on nonaccrual mortgage loans is generally reported as
interest income.
POLICY LOANS, REAL ESTATE AND OTHER INVESTED ASSETS: Policy loans are
carried at an unpaid principal balance and are generally secured by the
cash surrender value of the underlying contracts. Investment real estate
which the Company intends to hold for the production of income is carried
at depreciated cost, net of writedowns for other than temporary declines in
fair value and encumbrances. Properties held for sale (primarily acquired
through foreclosure) are carried at the lower of depreciated cost (fair
value at foreclosure plus capital additions less accumulated depreciation
and encumbrances) or fair value. Adjustments to carrying value of
properties held for sale are recorded in a valuation reserve when the fair
value is below depreciated cost. The accumulated depreciation and
encumbrances on real estate amounted to $44.0 million and $52.4 million at
December 31, 1999 and 1998, respectively. Direct valuation allowances
amounted to $4.7 million and $7.3 million at December 31, 1999 and 1998,
respectively. Other invested assets are principally recorded at fair
value.
SHORT-TERM INVESTMENTS: Short-term investments, consisting primarily of
money market instruments and other debt issues purchased with an original
maturity of less than a year, are carried at amortized cost, which
approximates fair value.
INVESTED ASSET IMPAIRMENT AND VALUATION ALLOWANCES: Invested assets are
considered impaired when the Company determines that collection of all
amounts due under the contractual terms is doubtful. The Company adjusts
invested assets to their estimated net realizable value at the point at
which it determines an impairment is other than temporary. In addition,
the Company has established valuation allowances for mortgage loans and
other invested assets. Valuation allowances for other than temporary
impairments in value are netted against the asset categories to which they
apply. Additions to valuation allowances are included in realized gains
and losses.
10
<PAGE>
General American Life Insurance Company and Subsidiaries
CASH AND CASH EQUIVALENTS: For purposes of reporting cash flows, cash and
cash equivalents represent cash, demand deposits, and highly liquid short-
term investments, which include U.S. Treasury bills, commercial paper, and
repurchase agreements with original or remaining maturities of 90 days or
less when purchased.
INVESTMENT INCOME
Fixed maturity premium and discounts are amortized into income using the
scientific yield method over the term of the security. Amortization of the
premium or discount on mortgage-backed securities is recognized using a
scientific yield method which considers the estimated timing and amount of
prepayments of underlying mortgage loans. Actual prepayment experience is
periodically reviewed and effective yields are adjusted when differences
arise between the prepayments originally anticipated and the actual
prepayments received and those prepayments currently anticipated. When
such differences occur, the net investment in the mortgage-backed security
is adjusted to the amount that would have existed had the new effective
yield been applied since the acquisition of the security with a
corresponding charge or credit to interest income (the "retrospective
method").
POLICY AND CONTRACT LIABILITIES
For traditional life insurance policies, future policy benefits are
computed using a net level premium method taking into account actuarial
assumptions as to mortality, persistency, and interest established at
policy issue. Assumptions established at policy issue as to mortality and
persistency are based on industry standards and the Company's historical
experience which, together with interest and expense assumptions, provide a
margin for adverse deviation. Interest rate assumptions generally range
from 2.5 percent to 11.0 percent. When the liabilities for future policy
benefits plus the present value of expected future gross premiums are
insufficient to provide for expected policy benefits and expenses,
unrecoverable deferred policy acquisition costs are written off and
thereafter a premium deficiency reserve is established through a charge to
earnings.
For participating policies, future policy benefits are computed using a net
level premium method based on the guaranteed cash value basis for mortality
and interest. Mortality rates are similar to those used for statutory
valuation purposes. Interest rates generally range from 2.5 percent to 6.0
percent. Dividend liabilities are established when earned.
Policyholder account balances for universal life and annuity policies are
equal to the policyholder account value before deduction of any surrender
charges. The policyholder account value represents an accumulation of
gross premium payments plus credited interest less expense, mortality
charges, and withdrawals. These expense charges are recognized in income
as earned.
The range of weighted average interest crediting rates used by the
Company's life insurance subsidiaries were as follows:
1999 1998 1997
Universal life 4.00-8.00% 5.25-7.10% 6.00-7.10%
Annuities 3.00-9.10% 4.00-9.20% 5.70-9.30%
Accident and health benefits for active lives are calculated using the net
level premium method and assumptions as to future morbidity, withdrawals,
and interest, which provide a margin for adverse deviation. Benefit
liabilities for disabled lives are calculated using the present value of
future benefits and experience assumptions for claim termination, expense,
and interest which also provide a margin for adverse deviation.
11
<PAGE>
General American Life Insurance Company and Subsidiaries
POLICY AND CONTRACT CLAIMS
The Company establishes a liability for unpaid claims based on estimates of
the ultimate cost of claims incurred, which is comprised of aggregate case
basis estimates, average claim costs for reported claims, and estimates of
incurred but not reported losses based on past experience. Policy and
contract claims include a provision for both life and accident and health
claims. Management believes the liabilities for unpaid claims are adequate
to cover the ultimate liability; however, due to the underlying risks and
the high degree of uncertainty associated with the determination of the
liability for unpaid claims, the amounts which will ultimately be paid to
settle these liabilities cannot be precisely determined and may vary from
the estimated amount included in the consolidated balance sheets.
DEFERRED POLICY ACQUISITION COSTS
The costs, which vary with and are primarily related to the production of
new and renewal business, have been deferred to the extent that such costs
are deemed recoverable from future profitability of the underlying
business. Such costs include commissions, premium taxes, as well as
certain other costs of policy issuance and underwriting.
For limited payment and other nonparticipating traditional life insurance
policies, the deferred policy acquisition costs are amortized, with
interest, in proportion to the ratio of the expected annual premium revenue
to the expected total premium revenue. Expected future premium revenue is
estimated utilizing the same assumptions used for computing liabilities for
future policy benefits for these policies.
For participating life insurance, universal life, and annuity type
contracts, the deferred policy acquisition costs are amortized over a
period of not more than thirty years in relation to the present value of
estimated gross profits arising from interest margin, cost of insurance,
policy administration, and surrender charges.
The range of average rates of assumed interest used by the Company's
insurance subsidiaries in estimated gross margins were as follows:
1999 1998 1997
Participating life 7.76% 8.25% 8.17%
Universal life 6.00-9.20% 6.25-7.50% 6.25-7.79%
Annuities 3.00-7.00% 7.00-7.83% 7.00-7.84%
The estimates of expected gross margins are evaluated regularly and are
revised if actual experience or other evidence indicates that revision is
appropriate. Upon revision, total amortization recorded to date is
adjusted by a charge or credit to current earnings. Deferred policy
acquisition costs are adjusted for the impact on estimated gross margins as
if the net unrealized gains and losses on securities had actually been
realized.
REINSURANCE AND OTHER CONTRACT DEPOSITS
In the normal course of business, the Company seeks to limit its exposure
to loss on any single insured by ceding risks to other insurance
enterprises or reinsurers under various types of contracts including
coinsurance and excess coverage. The Company's retention level per
individual life ranges between $50 thousand and $2.5 million depending on
the entity writing the policy.
The Company assumes and retrocedes financial reinsurance contracts, which
represent low mortality risk reinsurance treaties. These contracts are
reported as deposits and are included in other contract deposits in the
consolidated balance sheets. The amount of revenue reported on these
contracts represents fees and the cost of insurance under the terms of the
reinsurance agreement.
12
<PAGE>
General American Life Insurance Company and Subsidiaries
Reinsurance activities are accounted for consistent with terms of the
underlying contracts. Premiums ceded to other companies have been reported
as a reduction of premiums. Amounts applicable to reinsurance ceded for
future policy benefits and claim liabilities have been reported as assets
for these items, and commissions and expense allowances received in
connection with reinsurance ceded have been accounted for in income as
earned. Reinsurance does not relieve the Company from its primary
responsibility to meet claim obligations. The Company evaluates the
financial conditions of its reinsurers annually.
FEDERAL INCOME TAXES
The Company and certain of its U.S. subsidiaries file consolidated federal
income tax returns. Any acquired life insurance company is not included in
the consolidated return until the acquired company has been a member of the
consolidated group for five years. Prior to satisfying the five-year
requirement, the subsidiary files a separate federal return. RGA Barbados,
a subsidiary of RGA, also files a U.S. tax return. The Company's foreign
subsidiaries are taxed under applicable local statutes. No deferred tax
liabilities have been recognized for the foreign subsidiaries per
Accounting Principles Board (APB) Opinion 23, Accounting for Income Taxes -
Special Areas.
The Company uses the asset and liability method to record deferred income
taxes. Accordingly, deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases, using enacted tax rates, expected to apply to
taxable income in the years in which those temporary differences are
expected to be recovered or settled. The Company has not recognized a
deferred tax liability for the excess of financial statement carrying
amount over the tax basis of its less-than-80 percent owned domestic
subsidiaries as the tax law provides a means by which the reported amount
of that investment can be recovered tax-free and the Company expects that
it will ultimately use that means.
SEPARATE ACCOUNT BUSINESS
The assets and liabilities of the separate account represent segregated
funds administered and invested by the Company for purposes of funding
variable life insurance and annuity contracts for the exclusive benefit of
the contractholders.
The Company charges the separate account for cost of insurance and
administrative expense associated with a contract and charges related to
early withdrawals by contractholders. The assets and liabilities of the
separate account are carried at fair value. The Company's participation in
the separate account (seed money) is carried at fair value in the separate
account, and amounted to $27.2 million and $19.9 million at December 31,
1999 and 1998, respectively.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value estimates are made at a specific point in time, based on
relevant market information and information about the financial instrument.
These estimates do not reflect any premium or discount that could result
from offering for sale at one time the Company's entire holdings of a
particular financial instrument. Although fair value estimates are
calculated using assumptions that management believes are appropriate,
changes in assumptions could significantly affect the estimates and such
estimates should be used with care. The following assumptions were used to
estimate the fair value of each class of financial instrument for which it
was practicable to estimate fair value:
INVESTMENT SECURITIES: Fixed maturities are valued using quoted market
prices, if available. For securities not actively traded, fair values are
estimated using values obtained from independent pricing services or in the
case of private placements are estimated by discounting expected future
cash flows using a current market rate applicable to the yield, credit
quality, and maturity of investments. The fair values of equity securities
are based on quoted market prices.
13
<PAGE>
General American Life Insurance Company and Subsidiaries
DERIVATIVES: Derivatives are valued using quoted market prices, if
available. For derivatives not actively traded, fair values are estimated
using values obtained from independent pricing services.
MORTGAGE LOANS: The fair values of mortgage loans are estimated using
discounted cash flow analyses and interest rates currently being offered
for similar loans to borrowers with similar credit ratings. Loans with
similar characteristics are aggregated for purposes of the calculations.
POLICY LOANS: The fair value of policy loans approximates the carrying
value. The majority of these loans are indexed, with a yield tied to a
stated return.
POLICYHOLDER ACCOUNT BALANCES ON INVESTMENT TYPE CONTRACTS: Fair values for
the Company's liabilities under investment-type contracts are estimated
using cash surrender values. For contracts with no defined maturity date,
the carrying value approximates fair value.
PENSION FUNDS AND INTEREST SENSITIVE CONTRACT LIABILITIES: Fair values for
the Company's interest sensitive contract liabilities are estimated using
cash surrender values. For contracts with no defined maturity date, the
carrying value approximates fair value.
SEPARATE ACCOUNT ASSETS AND LIABILITIES: The separate account assets and
liabilities are carried at fair value as determined by the market value of
the underlying segregated investments.
SHORT-TERM INVESTMENTS AND CASH AND CASH EQUIVALENTS: The carrying amount
approximates fair value.
LONG-TERM DEBT AND NOTES PAYABLE: The fair value of long-term debt and
notes payable is estimated using discounted cash flow calculations based on
interest rates currently being offered for similar instruments.
Refer to Note 3 & Note 4 for additional information on fair value of
financial instruments.
NEW ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative
Instruments and Hedging Activities, effective for fiscal years beginning
after June 15, 2000, and is effective for interim periods in the initial
year of adoption. SFAS No. 133 requires companies to record derivatives on
the balance sheet as assets or liabilities, measured at fair value. It
also requires that gains or losses resulting from changes in the values of
those derivatives be reported depending on the use of the derivative and
whether it qualifies for hedge accounting. The Company has not yet
determined the effect of the implementation of SFAS No. 133 on the results
of operation, financial position, or liquidity. The Company plans to adopt
the provisions of SFAS No. 133 in 2001.
RECLASSIFICATION
The Company has reclassified the presentation of certain prior period
information to conform to the 1999 presentation.
(2) ACQUISITIONS AND DIVESTITURES
On September 30, 1999, the Company sold its 100 percent ownership in
Consultec, LLC to ACS Enterprise Solutions, Inc. Proceeds received net of
expenses were $65.7 million and the realized gain, net of tax, on the sale
was $28.4 million.
14
<PAGE>
General American Life Insurance Company and Subsidiaries
(3) INVESTMENTS
Fixed Maturities and Equity Securities
The amortized cost and estimated fair value of fixed maturities and equity
securities at December 31, 1999 and 1998 are as follows (in millions):
<TABLE>
<CAPTION>
1999
- - ---------------------------------------------------------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Available-for-sale:
U. S. Treasury securities $ 88.6 0.2 (4.8) 84.0
Government agency
obligations 686.8 55.3 (54.8) 687.3
Corporate securities 4,298.6 104.6 (318.2) 4,085.0
Mortgage-backed securities 970.3 1.2 (106.7) 864.8
Asset-backed securities 1,441.5 1.0 (337.5) 1,105.0
-------- ----- ------ -------
Total fixed maturities
available-for-sale $7,485.8 162.3 (822.0) 6,826.1
======== ===== ====== =======
Equity securities $ 42.7 9.5 (2.9) 49.3
======== ===== ====== =======
<CAPTION>
1998
- - ---------------------------------------------------------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Available-for-sale:
U. S. Treasury securities $ 20.7 0.4 -- 21.1
Government agency
obligations 1,151.5 122.5 (11.2) 1,262.8
Corporate securities 6,889.9 380.1 (164.1) 7,105.9
Mortgage-backed securities 1,812.4 34.0 (38.5) 1,807.9
Asset-backed securities 861.7 13.1 (4.2) 870.6
--------- ----- ------ --------
Total fixed maturities
available-for-sale $10,736.2 550.1 (218.0) 11,068.3
========= ===== ====== ========
Equity securities $ 39.1 9.5 -- 48.6
========= ===== ====== ========
</TABLE>
The Company manages its credit risk associated with fixed maturities by
diversifying its portfolio. At December 31, 1999, the Company held no
corporate debt securities or foreign government debt securities of a
single issuer, which had a carrying value in excess of ten percent of
stockholder equity.
15
<PAGE>
General American Life Insurance Company and Subsidiaries
The amortized cost and estimated fair value of fixed maturity
investments at December 31, 1999 are shown by contractual maturity for
all securities except, U.S. Government agencies mortgage-backed
securities which are distributed by maturity year based on the Company's
estimate of the rate of future prepayments of principal over the
remaining lives of the securities (in millions). These estimates are
developed using prepayment speeds provided in broker consensus data.
Such estimates are derived from prepayment speed experience at the
interest rate levels projected for the applicable underlying collateral
and can be expected to vary from actual experience. 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.
ESTIMATED
AMORTIZED FAIR
COST VALUE
--------- ---------
Due in one year or less $ 147.8 149.0
Due after one year through five years 1,122.9 1,086.1
Due after five years through ten years 1,641.7 1,482.9
Due after ten years through twenty years 3,603.1 3,243.3
Mortgage-backed securities 970.3 864.8
-------- -------
Total $7,485.8 6,826.1
======== =======
The sources of net investment income follow (in millions):
1999 1998 1997
-------- ------- -----
Fixed maturities $ 749.6 744.3 561.7
Mortgage loans 175.4 188.8 194.5
Real estate 25.0 25.7 34.1
Equity securities 2.0 1.2 1.3
Policy loans 144.9 152.2 148.3
Short-term investments 46.5 22.4 16.6
Other 33.0 18.9 14.0
-------- ------- -----
Investment revenue 1,176.4 1,153.5 970.5
Investment expenses (19.2) (17.7) (25.0)
-------- ------- -----
Net investment income $1,157.2 1,135.8 945.5
======== ======= =====
16
<PAGE>
General American Life Insurance Company and Subsidiaries
Net realized gains (losses) from sales of investments consist of the
following (in millions):
1999 1998 1997
------- ----- -----
Fixed maturities:
Realized gains $ 70.4 19.0 24.0
Realized losses (330.8) (14.0) (16.8)
Equity securities:
Realized gains 48.2 2.0 1.8
Realized losses (0.4) (0.2) (1.5)
Other investments, net 12.0 6.9 21.0
------- ----- -----
Net realized investment gains $(200.6) 13.7 28.5
======= ===== =====
Included in net realized losses are permanent write-downs of
approximately $67.6 million and $5.5 million during 1999 and 1998,
respectively.
A summary of the components of the net unrealized appreciation
(depreciation) on invested assets carried at fair value is as follows
(in millions):
1999 1998
------- ------
Unrealized (depreciation) appreciation:
Fixed maturities available-for-sale $(659.7) 332.1
Equity securities 6.6 9.5
Derivatives (33.8) (5.3)
Effect of unrealized appreciation (depreciation) on:
Deferred policy acquisition costs 186.0 (155.7)
Present value of future profits 14.6 (0.5)
Deferred income taxes 169.7 (69.1)
Other 1.5 (2.9)
Minority interest, net of taxes 69.4 (19.6)
------- ------
Net unrealized (depreciation) appreciation $(245.7) 88.5
======= ======
The Company has securities on deposit with various state insurance
departments and regulatory authorities with an amortized cost of
approximately $881.8 million and $545.7 million at December 31, 1999 and
1998, respectively.
The Company's credit review procedures are designed to promote timely
identification of investments that require a higher-than-normal degree
of scrutiny. Each quarter a review is performed of impaired assets.
Factors considered in the evaluation include the collateral values,
credit quality of the issuer, amount of the exposure, our ability to
reduce exposure in situations of deteriorating credit worthiness, and
loss probabilities. Once a charge-off is taken, income is no longer
accrued, all cash is applied to principal. The Company's total impaired
assets amount to $31.8 million and $35.6 million at December 31, 1999
and 1998, respectively.
17
<PAGE>
General American Life Insurance Company and Subsidiaries
MORTGAGE LOANS
The Company originates mortgage loans on income-producing properties,
such as apartments, retail and office buildings, light warehouses, and
light industrial facilities. Loan to value ratios at the time of loan
approval are 75 percent or less. The Company minimizes risk through a
thorough credit approval process and through geographic and property
type diversification.
During 1999, the Company entered into an agreement whereby approximately
$625.6 million of mortgage loans were sold by the Company for
securitization and resale by a financial institution as mortgage pass-
through certificates. The sale of these mortgage loans resulted in a
net gain of approximately $0.6 million. These amounts are reflected
within net investment income in the consolidated statement of
operations.
The Company's mortgage loans were distributed as follows (in millions):
<TABLE>
<CAPTION>
1999 1998
-------------------- --------------------
PERCENT PERCENT
CARRYING OF CARRYING OF
VALUE TOTAL VALUE TOTAL
-------------------- --------------------
<S> <C> <C> <C> <C>
Arizona $ 125.6 7.4% $ 167.6 7.1%
California 298.0 17.4 395.3 16.6
Colorado 150.5 8.8 228.1 9.6
Florida 134.0 7.9 171.6 7.2
Georgia 137.6 8.1 176.1 7.4
Illinois 91.9 5.4 162.2 6.8
Maryland 78.2 4.6 102.9 4.3
Missouri 98.1 5.7 93.5 3.9
Texas 157.8 9.2 197.4 8.3
Washington 69.1 4.0 99.6 4.2
Other 367.2 21.5 581.7 24.6
-------------------- --------------------
Subtotal 1,708.0 100.0% 2,376.0 100.0%
===== =====
Valuation reserve (29.1) (38.5)
-------- --------
Total $1,678.9 $2,337.5
======== ========
<CAPTION>
1999 1998
-------------------- --------------------
PERCENT PERCENT
CARRYING OF CARRYING OF
VALUE TOTAL VALUE TOTAL
-------------------- --------------------
<S> <C> <C> <C> <C>
Property type:
Apartment $ 143.0 8.4% $ 77.1 3.2%
Retail 490.8 28.7 872.2 36.7
Office building 604.6 35.4 747.8 31.5
Industrial 391.6 22.9 422.6 17.8
Other commercial 78.0 4.6 256.3 10.8
-------------------- --------------------
Subtotal 1,708.0 100.0% 2,376.0 100.0%
===== =====
Valuation reserve (29.1) (38.5)
-------- --------
Total $1,678.9 $2,337.5
======== ========
</TABLE>
18
<PAGE>
General American Life Insurance Company and Subsidiaries
An impaired loan is measured at the present value of expected future
cash flows or, alternatively, the observable market price or the fair
value of the collateral.
Mortgage loans which have been non-income producing for the preceding
twelve months were $6.5 million and $20.1 million at December 31, 1999
and 1998, respectively. At December 31, 1999 and 1998, the recorded
investment in mortgage loans that were considered impaired was $48.8
million and $100.7 million, respectively, with related allowances for
credit losses of $4.0 million and $12.6 million, respectively. The
average recorded investment in impaired loans during 1999 and 1998 was
$74.8 million and $110.2 million, respectively.
For the years ended December 31, 1999, 1998, and 1997, the Company
recognized $3.6 million, $6.8 million, and $9.7 million, respectively,
of interest income on those impaired loans, which included $3.6 million,
$7.0 million, and $9.9 million, respectively, of interest income
recognized using the cash basis method of income recognition.
As of December 31, 1999, the Company has outstanding fixed rate
Commercial mortgage loan commitments totaling $68.9 million with a
market value of $67.0 million at rates ranging from 7.125% to 8.50%, and
total variable rate commitments totaling $143.3 million with a market
value of $140.9 million.
SECURITIES LENDING
The Company participates in a securities lending program. In the
Company's agreements, collateral is held on certain fixed maturity
securities loaned to other institutions through a lending agreement.
The minimum collateral on securities loaned is 102% of the market value
of the loaned securities, marked to market daily. The Company retains
full ownership of the loaned securities and is indemnified by the
lending agent in the event a borrower becomes insolvent or fails to
return the securities. The amount on loan at December 31, 1999 and 1998
was $60.3 million and $122.5 million, respectively, and was
appropriately collateralized.
DERIVATIVES
The Company has a variety of reasons to use derivative instruments, such
as to attempt to protect the Company against possible changes in the
market value of its portfolio as a result of interest rate changes and
to manage the portfolio's effective yield, maturity, and duration. The
Company does not invest in derivatives for speculative purposes. Upon
disposition, a realized gain or loss is recognized accordingly, except
when exercising an option contract or taking delivery of a security
underlying a futures contract. In these instances, the recognition of
gain or loss is postponed until the disposal of the security underlying
the option of futures contract.
Summarized below are the specific types of derivative instruments used
by the Company:
INTEREST RATE SWAPS: The Company manages interest rate risk on certain
contracts, primarily through the utilization of interest rate swaps.
Under interest rate swaps, the Company agrees with counterparties to
exchange, at specified intervals, the payments between floating and
fixed-rate interest amounts calculated by reference to notional amounts.
Net interest payments are recognized within net investment income in the
consolidated statements of operations.
At December 31, 1999, the Company had 19 outstanding interest rate swap
agreements which expire at various dates through 2024. Under 18 of the
agreements, the Company receives a fixed rate ranging from 6.065 percent
to 6.842 percent on a notional amount of $1.5 billion and pays a
floating rate based on London Interbank Offered Rate (LIBOR). Under the
remaining outstanding interest rate swap agreement, the Company receives
a floating rate based on LIBOR on a notional amount of $2 million and
pays a fixed rate of 6.495 percent. The estimated fair value of the
agreements at December 31, 1999 was a net loss of approximately $33.8
million, which is recognized in accumulated other comprehensive income.
19
<PAGE>
General American Life Insurance Company and Subsidiaries
At December 31, 1998, the Company had 35 outstanding interest rate swap
agreements which expire at various dates through 2025. Under 19
outstanding interest rate swap agreements, the Company receives a
floating rate based on LIBOR on a notional amount of $116.0 million and
pays a fixed rate ranging from 3.13 percent to 8.56 percent. Under 15
of the agreements, the Company receives a fixed rate ranging from 5.79
percent to 7.57 percent on a notional amount of $80.5 million and pays a
floating rate based on LIBOR. On the remaining swap agreement, the
Company receives a floating rate based on LIBOR on a notional amount of
$5 million and pays a floating rate based on LIBOR. The estimated fair
value of the agreements at December 31, 1998 was a net loss of
approximately $4.7 million, which is recognized in accumulated other
comprehensive income.
CURRENCY, SWAPS AND CROSS CURRENCY SWAPS: Under foreign currency swaps,
the Company agrees with other parties to exchange at specified
intervals, the difference between two currencies on an exchange rate
basis the interest amounts calculated by reference to an agreed notional
principal amount. Under cross currency swaps, the Company swaps the
difference between two currencies and between floating and fixed-rate
interest amounts calculated by reference to notional amounts. The
Company uses this technique for foreign denominated assets to match
dollar denominated liabilities of various fixed income products. Net
interest payments are recognized within net investment income in the
consolidated statements of operations.
At December 31, 1999, the Company held no currency or cross currency
swaps. At December 31, 1998 the Company had one outstanding currency
swap agreement and five outstanding cross currency swaps which expire at
various dates through 2016. The notional amount was $34.2 million. The
1998 estimated fair value of the agreements was a net loss of $5.5
million and is recognized in accumulated other comprehensive income.
TOTAL RETURN SWAP: The Company uses the total return swap to construct a
structured product that resembles an equity linked note. The total
return swap is used to obtain equity participation. The Company agrees
with other parties to pay at specified intervals, floating-rate interest
amounts calculated by reference to an agreed notional principal amount.
In return the Company receives equity participation, which is calculated
by reference to an agreed equity market index and a notional principal
amount. If the amount is positive at the termination date, the Company
receives such amount. If the amount is negative at the termination date,
the Company pays out such amount to the counterparty.
At December 31, 1999, the Company held no total return swap agreements.
At December 31, 1998, the Company had one outstanding total return swap,
which expires in 2028. The notional amount was $14.0 million and the
estimated fair value of the agreement was a net profit of $1.9 million,
which is recognized in accumulated other comprehensive income.
FUTURES: A futures contract is an agreement involving the delivery of a
particular asset on a specified future date at an agreed upon price.
The Company generally invests in futures on U.S. Treasury Bonds, U.S.
Treasury Notes, and the S&P 500 Index and typically closes the contract
prior to the delivery date. These contracts are generally used to manage
the portfolio's effective maturity and duration.
At December 31, 1999, the Company held no futures contracts. At
December 31, 1998, futures contracts outstanding were as follows (in
millions):
Net Sold Notional Fair Unrealized
Position Amount Value Gain
-------- -------- ----- -----------
(0.3) $33.1 $32.9 $0.2
The 1998 unrealized gain was recognized in accumulated other
comprehensive income.
20
<PAGE>
General American Life Insurance Company and Subsidiaries
The Company is exposed to credit related risk in the event of
nonperformance by counterparties to financial instruments but does not
expect any counterparties to fail to meet their obligations. Where
appropriate, master netting agreements are arranged and collateral is
obtained in the form of rights to securities to lower the Company's
exposure to credit risk. It is the Company's policy to deal only with
highly rated companies. At December 31, 1999 and 1998, there were not
any significant concentrations with counterparties.
(4) FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of a financial instrument is the amount at which the
instrument could be exchanged in a current transaction between willing
parties. The following table presents the carrying amounts and estimated
fair values of the Company's financial instruments at December 31, 1999
and 1998 (in millions). Refer to Note 3 for the estimated fair values
of the Company's derivative instruments.
<TABLE>
<CAPTION>
1999 1998
-------------------- --------------------
ESTIMATED ESTIMATED
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
-------------------- --------------------
<S> <C> <C> <C> <C>
Assets:
Fixed maturities $6,826.1 6,826.1 11,068.3 11,068.3
Mortgage loans 1,678.9 1,691.7 2,337.5 2,472.5
Policy loans 2,243.9 2,243.9 2,151.0 2,151.0
Short-term investments 292.4 292.4 195.3 195.3
Other invested assets 898.8 898.8 457.6 457.6
Separate account assets 6,915.6 6,915.6 5,214.8 5,214.8
Liabilities:
Policyholder account balances
relating to investment
Contracts $5,179.4 5,279.8 5,044.8 4,929.7
Pension funds and other
interest sensitive liabilities 556.8 551.2 7,581.3 7,592.0
Long-term debt and
notes payable 216.6 209.8 221.9 216.6
Separate account liabilities 6,892.0 6,892.0 5,194.9 5,194.9
======== ======= ======== ========
</TABLE>
(5) REINSURANCE
The Company is a reinsurer to the life and health industry. The effect
of reinsurance on premiums and other considerations is as follows
(in millions):
<TABLE>
<CAPTION>
1999 1998 1997
-------- ------- -------
<S> <C> <C> <C>
Direct $1,139.5 1,210.8 1,159.1
Assumed 1,667.7 1,422.3 996.9
Ceded (416.4) (431.5) (348.9)
-------- ------- -------
Net insurance premiums and other
considerations $2,390.8 2,201.6 1,807.1
======== ======= =======
</TABLE>
21
<PAGE>
General American Life Insurance Company and Subsidiaries
(6) FEDERAL INCOME TAXES
Income tax (benefit) expense attributable to income from operations
consists of the following (in millions):
<TABLE>
<CAPTION>
1999 1998 1997
------ ---- ----
<S> <C> <C> <C>
Current income tax (benefit) expense $(23.6) 35.2 65.8
Deferred income tax (benefit) expense (40.7) 18.4 (0.1)
------ ---- ----
Provision for income taxes $(64.3) 53.6 65.7
====== ==== ====
</TABLE>
Income tax (benefit) expense attributable to income from operations
differed from the amounts computed by applying the U.S. federal
income tax rate of 35 percent to pre-tax income as a result of
the following (in millions):
<TABLE>
<CAPTION>
1999 1998 1997
------ ----- ----
<S> <C> <C> <C>
Computed "expected" tax (benefit) expense $(67.4) 70.0 64.8
Increase (decrease) in income tax resulting
from:
Surplus (benefit) tax on mutual life
insurance companies - (7.5) 5.3
Foreign tax rate in excess of U.S. tax
rate 1.0 0.8 0.6
Tax preferred investment income (11.4) (10.9) (6.6)
State tax net of federal benefit 1.7 1.6 0.8
Corporate owned life insurance (3.3) (3.6) -
Foreign tax credit - (1.3) (0.6)
Goodwill amortization 1.9 1.5 1.0
Difference in book vs. tax basis in
domestic subsidiaries 1.6 2.8 2.2
Valuation allowance for loss
carryforwards 5.7 - -
Capitalized acquisition costs 2.4 - -
Other, net 3.5 0.2 (1.8)
------ ---- ----
Provision for income taxes $(64.3) 53.6 65.7
====== ==== ====
</TABLE>
Total income taxes were allocated as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------- ----- -----
<S> <C> <C> <C>
Provision for income taxes $ (64.3) 53.6 65.7
Income tax from stockholder equity:
Unrealized investment (loss) gain
recognized for financial reporting
purposes (237.0) (22.6) 55.9
Foreign currency translation 7.8 (9.4) (12.1)
Other (2.4) (1.4) (0.5)
------- ----- -----
Provision for income taxes $(295.9) 20.2 109.0
======= ===== =====
</TABLE>
22
<PAGE>
General American Life Insurance Company and Subsidiaries
The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and liabilities at December 31, 1999
and 1998 are presented below (in millions):
<TABLE>
<CAPTION>
1999 1998
------ -----
<S> <C> <C>
Deferred tax assets:
Reserve for future policy benefits $158.9 90.9
Deferred acquisition costs capitalized for tax 147.4 128.8
Employee benefits 41.5 28.2
Investments 46.2 -
Net operating and capital loss 57.2 46.8
Unrealized loss on investments 163.9 -
Other, net 95.5 98.5
------ -----
Gross deferred tax assets 710.6 393.2
Less valuation allowance 7.2 1.5
------ -----
Total deferred tax assets after valuation allowance $703.4 391.7
====== =====
<CAPTION>
1999 1998
------- -----
<S> <C> <C>
Deferred tax liabilities:
Unrealized gain on investments $ - 79.1
Deferred acquisition costs capitalized for financial
reporting 385.0 274.5
Investments - 3.7
Other, net 120.8 109.8
------- -----
Total deferred tax liabilities 505.8 467.1
------- -----
Total deferred tax (asset) liability $(197.6) 75.4
======= =====
</TABLE>
The Company has not recognized a deferred tax liability for the
undistributed earnings of its wholly owned domestic and foreign
subsidiaries because the Company currently does not expect those
unremitted earnings to become taxable to the Company in the foreseeable
future. In addition, the Company has not recognized a deferred tax
liability of approximately $106 million for the excess of financial
statement carrying amount over the tax basis of its less-than-80-percent
owned domestic subsidiaries. This is because the unremitted earnings of
foreign subsidiaries will not be repatriated in the foreseeable future,
or because the excess of the financial statement carrying amount over
the tax basis of its less-that-80 percent owned domestic subsidiaries
will not become taxable as the tax law provides a means by which the
reported amount of that investment can be recovered tax-free and the
Company expects that it will ultimately use that means.
The Company believes that it is more likely than not that the deferred
tax assets established will be realized except for the amount of the
valuation allowance. As of December 31, 1999 and 1998, the Company has
provided for a 100 percent valuation allowance against the deferred tax
asset related to the net operating losses of the Company's foreign
subsidiaries including RGA's Australian, Argentine, South African and UK
subsidiaries and NaviSys' Mexican subsidiary. At December 31, 1999, the
Company's subsidiaries had capital loss carryforwards of $89.4 million,
and net operating loss carryforwards of $146.7 million. The capital and
net operating losses are expected to be utilized during the period
allowed for carryforwards.
23
<PAGE>
General American Life Insurance Company and Subsidiaries
The Company has been audited by the Internal Revenue Service for the
years through and including 1994. The Company is currently being
audited for the years 1995 and 1996. The Company believes that any
adjustments that might be required for open years will not have a
material effect on the Company's consolidated financial statements.
During 1999, 1998, and 1997 the Company paid income taxes totaling
approximately $77.0 million, $59.6 million, and $70.8 million,
respectively.
(7) DEFERRED POLICY ACQUISITION COSTS
A summary of the policy acquisition costs deferred and amortized is as
follows (in millions):
<TABLE>
<CAPTION>
1999 1998 1997
-------- ------ ------
<S> <C> <C> <C>
Balance at beginning of year $ 773.8 695.3 652.3
Transfer of present value of future profits -- -- 19.3
Prior year adjustment due to change in
reserving methods -- (0.2) --
Policy acquisition costs deferred 324.6 332.9 267.0
Policy acquisition cost amortized (214.4) (280.0) (211.9)
Interest credited 60.4 39.3 40.8
Deferred policy acquisition costs relating to
change in unrealized (gain) loss on
investments available-for-sale 341.7 (13.5) (72.2)
-------- ------ ------
Balance at end of year $1,286.1 773.8 695.3
======== ====== ======
</TABLE>
(8) ASSOCIATE BENEFIT PLANS AND POSTRETIREMENT BENEFITS
The Company has a defined benefit plan covering substantially all
associates. The benefits are based on years of service and each
associate's compensation level. The Company's funding policy is to
contribute annually the maximum amount deductible for federal income tax
purposes. Contributions provide for benefits attributed to service to
date and for those expected to be earned in the future.
Associates of the Company also are offered several non-qualified,
defined benefit, and defined contribution plans for directors and
management associates. The plans are unfunded and are deductible for
federal income tax purposes when the benefits are paid. Effective April
30, 1999, the liabilities that relate to these plans are managed at
GenAmerica Management Corporation, a subsidiary of GenAmerica. The
Company recognized expense of $12.9 million, $8.2 million, and $7.7
million for the years ended December 31, 1999, 1998, and 1997,
respectively, related to these plans.
In addition to pension benefits, the Company provides certain health
care and life insurance benefits for retired employees. Substantially
all employees may become eligible for these benefits if they reach
retirement age while working for the Company. Alternatively, retirees
may elect certain prepaid health care benefit plans.
The Company uses the accrual method to account for the costs of its
retiree plans and amortizes its transition obligation for retirees and
fully eligible or vested employees over 20 years. The unamortized
transition obligation was $13.4 million and $14.4 million at December
31, 1999 and 1998, respectively.
24
<PAGE>
General American Life Insurance Company and Subsidiaries
The Board of Directors has adopted an associate incentive plan
applicable to full-time salaried associates with at least one year of
service. Contributions to the plan are determined annually by the Board
of Directors and are based upon salaries of eligible associates. Full
vesting occurs after five years of continuous service. The Company's
contribution to the plan was $4.3 million, $10.4 million, and $10.4
million for 1999, 1998, and 1997 respectively.
At December 31, 1999, plan assets were invested 79.2% in the S&P Stock
Fund, 6.9% in the Small-Cap Stock Fund, 9.1% in the Separately Managed
Account Fund, and 4.8% in the Long-Term Bond Fund. At December 31, 1998
plan assets were invested 70.1% in the S&P 500 Stock Fund, 7.4% in the
Small-Cap Stock Fund, 17.3% in the Separately Managed Account Fund, and
5.2% in the Long-Term Bond Fund. These assets are invested in General
American separate accounts and held in a trust by an unrelated third
party administrator.
The following tables summarize the Company's associate benefit plans and
postretirement benefits (in millions):
<TABLE>
<CAPTION>
Pension Benefits Other Benefits
------------------ -----------------
1999 1998 1999 1998
------ ----- ----- ----
<S> <C> <C> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of year $149.1 129.8 $45.7 37.7
Service cost 6.5 5.8 1.7 1.7
Interest cost 10.3 9.2 2.8 2.9
Participant contributions -- -- 0.2 0.2
Plan amendments 0.3 (0.4) -- (1.3)
Curtailments 2.4 -- -- --
Special termination benefits 1.2 -- -- --
Benefits paid (8.0) (6.6) (1.9) (1.4)
Actuarial (gain) loss (1.9) 11.3 (7.8) 5.9
------ ----- ----- ----
Benefit obligation at end of year 159.9 149.1 40.7 45.7
------ ----- ----- ----
Change in plan assets:
Fair value of plan assets at
beginning of year 174.8 150.5 -- --
Actual return on plan assets 10.5 29.2 -- --
Employer contributions 2.1 1.7 1.7 1.2
Associates contributions -- -- 0.2 0.2
Benefits paid (8.0) (6.6) (1.9) (1.4)
------ ----- ----- ----
Fair value of plan assets at end of year $179.4 174.8 $-- --
====== ===== ===== ====
</TABLE>
25
<PAGE>
General American Life Insurance Company and Subsidiaries
<TABLE>
<CAPTION>
Pension Benefits Other Benefits
1999 1998 1997 1999 1998 1997
------ ----- ----- ------ ----- -----
<S> <C> <C> <C> <C> <C> <C>
Reconciliation of funded status:
Funded status $ 19.4 25.7 20.7 $(40.7) (45.7) (37.7)
Unrecognized actuarial gain (12.3) (14.5) (8.2) (9.6) (1.9) (7.8)
Unrecognized transition
obligation 0.2 0.3 1.1 13.4 14.4 16.8
Unrecognized prior service
cost (0.3) (0.8) (2.2) -- -- --
------ ----- ----- ------ ----- -----
Net amount recognized at end
of year 7.0 10.7 11.4 (36.9) (33.2) (28.7)
------ ----- ----- ------ ----- -----
Amounts recognized in the
statement of financial
position consist of:
Prepaid benefit cost 40.6 37.9 35.9 -- -- --
Accrued benefit liability (38.2) (32.2) (28.2) (36.9) (33.2) (28.7)
Intangible asset 0.1 0.9 0.9 -- -- --
Accumulated other
comprehensive loss 4.5 4.1 2.8 -- -- --
------ ----- ----- ------ ----- -----
Net amount recognized at end
of year $ 7.0 10.7 11.4 $(36.9) (33.2) (28.7)
====== ===== ===== ====== ===== =====
Other comprehensive loss
(income) attributable to
change in additional
minimum liability
recognition $ 0.3 1.3 (0.5) $ -- -- --
====== ===== ===== ====== ===== =====
</TABLE>
26
<PAGE>
General American Life Insurance Company and Subsidiaries
<TABLE>
<CAPTION>
Pension Benefits Other Benefits
1999 1998 1997 1999 1998 1997
------ ----- ----- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Additional year-end
information for plans with
benefit obligations in
excess of plan assets:
Benefit obligation 47.6 36.6 32.2 40.7 45.7 37.7
Additional year-end
information for pension
plans with accumulated
benefit obligations in
excess of plan assets:
Projected benefit
obligation 40.5 36.6 32.2 -- -- --
Accumulated benefit
obligation 37.8 32.1 28.0 -- -- --
Fair value of plan assets 0.1 0.1 -- -- -- --
====== ===== ===== ==== ==== ====
Components of net periodic
benefit cost:
Service cost 6.5 5.8 5.9 1.7 1.7 1.7
Interest cost 10.3 9.2 8.6 2.8 2.9 2.5
Expected return on plan
assets (15.3) (13.2) (11.1) -- -- --
Amortization of prior
service cost (0.1) (0.1) 0.1 -- -- --
Amortization of
transitional
obligation 0.1 0.1 0.3 1.0 1.0 1.1
Recognized actuarial
loss (gain) 0.6 0.4 0.4 (0.1) -- (0.2)
------ ----- ----- ---- ---- ----
Net periodic benefit cost $ 2.1 2.2 4.2 5.4 5.6 5.1
====== ===== ===== ==== ==== ====
Additional loss recognized due to:
Curtailment $ 2.3 0.1 -- -- -- --
Special Termination Benefit 1.4 -- -- -- -- --
====== ===== ===== ==== ==== ====
Weighted-average assumptions as
of December 31:
Discount rate 7.50% 6.75% 7.25% 7.50% 6.75% 7.25%
Expected long-term rate of
return on plan assets 9.00% 9.00% 9.00% -- -- --
Rate of compensation
increase (qualified plan) 4.95% 4.20% 4.20% -- -- --
====== ===== ===== ==== ==== ====
</TABLE>
27
<PAGE>
General American Life Insurance Company and Subsidiaries
ASSUMED HEALTH CARE COST TREND: For measurement purposes, a 7.0% annual
rate of increase in the per capita cost of covered health care benefits
was assumed for 1999. The rate assumed to decrease gradually to 5% for
2003 and remain at that level thereafter.
Assumed health care cost trend rates have a significant effect on the
amounts reported for the health care plan. A one-percentage point change
in assumed health care cost trend rates would have the following effects
(in thousands):
One Percentage One Percentage
Point Increase Point Decrease
-------------- --------------
Effect on total service and interest cost
components for 1999 $0.9 (0.7)
Effect on end of year 1999
postretirement benefit obligation $5.8 (4.7)
(9) DEBT
The Company's long-term debt and notes payable consists of the
following (in millions):
<TABLE>
<CAPTION>
Face Value at December 31,
Description Rate Maturity 1999 1998
- - ----------- ---- -------- ---- ----
<S> <C> <C> <C> <C>
Long-term debt:
General American surplus note 7.625% January 2024 $107.0 107.0
RGA senior note 7.250% April 2006 100.0 100.0
Notes payable:
RGA Australia Hldgs. 5.180% April 2000 9.5 8.9
------ -----
Total long-term debt and notes payable $216.5 215.9
====== =====
</TABLE>
The difference between the face value of debt and the carrying value per
the consolidated balance sheets is unamortized discount.
General American's surplus note pays interest on January 15 and July 15
of each year. The note is not subject to redemption prior to maturity.
Payment of principal and interest on the note may be made only with the
approval of the Missouri Director of Insurance.
The RGA senior note pays interest semiannually on April 1 and October 1.
The ability of RGA to make debt principal and interest payments as well
as make dividend payments to shareholders is ultimately dependent on the
earnings and surplus of its subsidiaries and the investment earnings on
the undeployed debt proceeds. The transfer of funds from the insurance
subsidiaries to RGA is subject to applicable insurance laws and
regulations. Principal repayments are due in April 2000 and are
expected to be renewed under the terms of the line of credit. This
agreement contained various restrictive covenants which primarily
pertain to limitations on the quality and types of investments, minimum
requirements of net worth, and minimum rating requirements.
Interest paid on debt during 1999, 1998, and 1997 amounted to $17.8
million, $17.0 million, and $20.0 million, respectively.
As of December 31, 1999, the Company was in compliance with all
covenants under its debt agreements.
28
<PAGE>
General American Life Insurance Company and Subsidiaries
(10) COMPREHENSIVE INCOME
In June 1997, the Financial Accounting Standards Board issued SFAS No.
130, Reporting Comprehensive Income, effective for years beginning after
December 15, 1997. SFAS No. 130 establishes standards for reporting and
display of comprehensive income but does not affect results of
operations. Effective January 1, 1998, the Company adopted SFAS No. 130.
The components of comprehensive income, other than net income, are as
follows (in millions):
<TABLE>
<CAPTION>
1999
---------------------------------------------
TAX NET-
BEFORE-TAX (EXPENSE) OF-TAX
AMOUNT BENEFIT AMOUNT
---------------------------------------------
<S> <C> <C> <C>
Foreign currency translation adjustments $ 19.5 (6.8) 12.7
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during
period (753.1) 266.9 (486.2)
Less: Reclassification adjustment for gains
(losses) realized in net income (233.5) 81.5 (152.0)
---------------------------------------------
Net unrealized gains (losses) on securities (519.6) 185.4 (334.2)
Minimum benefit liability (1.0) 1.3 0.3
---------------------------------------------
Total other comprehensive (loss) income $(501.1) 179.9 (321.2)
=============================================
<CAPTION>
1998
---------------------------------------------
TAX NET-
BEFORE-TAX (EXPENSE) OF-TAX
AMOUNT BENEFIT AMOUNT
---------------------------------------------
<S> <C> <C> <C>
Foreign currency translation adjustments $(20.6) 7.2 (13.4)
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during
period (56.6) 19.3 (37.3)
Less: Reclassification adjustment for gains
(losses) realized in net income 4.7 (1.7) 3.0
--------------------------------------------
Net unrealized gains (losses) on securities (61.3) 21.0 (40.3)
Minimum benefit liability (0.3) -- (0.3)
--------------------------------------------
Total other comprehensive (loss) income $(82.2) 28.2 (54.0)
============================================
</TABLE>
29
<PAGE>
General American Life Insurance Company and Subsidiaries
<TABLE>
<CAPTION>
1997
---------------------------------------------
TAX NET-
BEFORE-TAX (EXPENSE) OF-TAX
AMOUNT BENEFIT AMOUNT
---------------------------------------------
<S> <C> <C> <C>
Foreign currency translation adjustments $(14.3) 10.6 (3.7)
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during
period 132.3 (49.1) 83.2
Less: Reclassification adjustment for gains
(losses) realized in net income 7.4 (2.6) 4.8
---------------------------------------------
Net unrealized gains (losses) on securities 124.9 (46.5) 78.4
Minimum benefit liability 0.9 -- 0.9
---------------------------------------------
Total other comprehensive (loss) income $111.5 (35.9) 75.6
=============================================
</TABLE>
The following schedule reflects the change in net accumulated other
comprehensive (loss) income for the periods ending December 31, 1999
and 1998 (in millions):
<TABLE>
<CAPTION>
CURRENT
BALANCE AS PERIOD BALANCE AS
OF 12/31/98 CHANGE OF 12/31/99
----------- ------- -----------
<S> <C> <C> <C>
Foreign currency adjustments $(32.9) 12.7 (20.2)
Unrealized gains (losses) on securities 88.5 (334.2) (245.7)
Minimum benefit liability (2.7) 0.3 (2.4)
----------- ------- -----------
Total accumulated other comprehensive
(loss) income $ 52.9 (321.2) (268.3)
----------- ------- -----------
<CAPTION>
CURRENT
BALANCE AS PERIOD BALANCE AS
OF 12/31/97 CHANGE OF 12/31/98
----------- ------- -----------
<S> <C> <C> <C>
Foreign currency adjustments $(19.5) (13.4) (32.9)
Unrealized gains (losses) on securities 128.8 (40.3) 88.5
Minimum benefit liability (2.4) (0.3) (2.7)
----------- ------- -----------
Total accumulated other comprehensive
(loss) income $106.9 (54.0) 52.9
=========== ======= ===========
</TABLE>
30
<PAGE>
General American Life Insurance Company and Subsidiaries
(11) REGULATORY MATTERS
The Company and its insurance subsidiaries are subject to financial
statement filing requirements in their respective state of domicile, as
well as the states in which they transact business. Such financial
statements, generally referred to as statutory financial statements, are
prepared on a basis of accounting which varies in some respects from
GAAP. Statutory accounting practices include: (1) charging of policy
acquisition costs to income as incurred; (2) establishment of a
liability for future policy benefits computed using required valuation
standards; (3) nonprovision of deferred federal income taxes resulting
from temporary differences between financial reporting and tax bases of
assets and liabilities; (4) recognition of statutory liabilities for
asset impairments and yield stabilization on fixed maturity dispositions
prior to maturity with asset valuation reserves based on statutorily
determined formulas; and (5) valuation of investments in bonds at
amortized cost.
Combined net income and policyholders' surplus of the Company and its
consolidated insurance subsidiaries, for the years ended and at December
31, 1999, 1998, and 1997, as determined in accordance with statutory
accounting practices, are as follows (in millions):
1999 1998 1997
------- ------- -----
Net (loss) income $(190.8) 60.8 39.7
Policyholders' surplus 741.3 1,147.4 844.1
======= ======= =====
For the year ended December 31, 1999, General American has changed its
method for recording equity in earnings of subsidiaries on a statutory
basis to reflect such earnings as a direct charge or credit to surplus,
and not a component of investment income.
Under Risk-Based Capital (RBC) requirements, General American and its
insurance subsidiaries are required to measure their solvency against
certain parameters. As of December 31, 1999, the Company's insurance
subsidiaries exceeded the established RBC minimums. In addition, the
Company's insurance subsidiaries exceeded the minimum statutory capital
and surplus requirements of their respective states of domicile.
The Company's insurance subsidiaries are subject to limitations on the
payment of dividends to the Company. Generally, dividends during any
year may not be paid without prior regulatory approval, in excess of the
lessor of (and with respect to life and health subsidiaries in Missouri,
in excess of the greater of): (a) ten percent of the insurance
subsidiaries' statutory surplus as of the preceding December 31 or (b)
the insurance subsidiaries' statutory gain from operations for the
preceding year.
31
<PAGE>
General American Life Insurance Company and Subsidiaries
(12) PARTICIPATING POLICIES AND DIVIDENDS TO POLICYHOLDERS
Over 18.9 percent and 22.8 percent of the Company's business in force
relates to participating policies as of December 31, 1999 and 1998,
respectively. These participating policies allow the policyholders to
receive dividends based on actual interest, mortality, and expense
experience for the related policies. These dividends are distributed to
the policyholders through an annual dividend, using current dividend
scales which are approved by the Board of Directors.
(13) CONTINGENT LIABILITIES
The Company was named as a defendant in a lawsuit that was filed in 1996
in Arizona State Court. The lawsuit claimed benefits under a disability
policy and damages for bad faith termination of such benefits. In
November 1998, the jury entered a verdict against the Company, awarding
the plaintiff approximately $59 million in damages, including $58
million in punitive damages. In January 1999, the Company filed a motion
for judgment notwithstanding the verdict, a motion for a new trial, and
a request for reduction of the punitive damages awarded. The Trial
Court reduced the punitive damage award to $18 million. The Company has
appealed the verdict and the award of the Court.
The Company was named as a defendant in a lawsuit filed in a federal
district court in Phoenix, Arizona along with Paul Revere Life Insurance
Company. The lawsuit claimed that Paul Revere denied benefits which was
a breach of the implied duty of good faith and that both companies were
liable due to being in a joint venture relationship. The jury found for
the plaintiff and assessed punitive damages against the company in the
sum of $10.2 million and against Paul Revere in the sum of $6.8 million.
Both companies have filed post-trial motions aimed at setting aside the
jury verdict and/or reducing the jury awards. The Company intends to
vigorously appeal the verdict if it is allowed to stand.
The Company was named as defendant in the following purported class
action lawsuits: Chain v. General American Life Insurance Company (filed
in the U.S. District Court for the Northern District of Mississippi in
1996); Newburg Trust v. General American Life Insurance Company (filed
in the U.S. District Court for the District of Massachusetts in 1996);
and Ludwig, Sippil, DAllesandro and Cunningham v. General American Life
Insurance Company (filed in the U.S. District Court for the Southern
District of Illinois in 1997). These lawsuits allege that the Company
engaged in deceptive sales practices in connection with the sale of
certain life insurance policies. None of these lawsuits has been
certified as a class action. Although the claims asserted in each
lawsuit are not identical, the plaintiffs seek unspecified actual and
punitive damages under similar claims, including breach of contract,
fraud, intentional or negligent misrepresentation, breach of fiduciary
duty and unjust enrichment. The Company filed a motion to dismiss all
of the claims in each of the lawsuits. The Court in each of these
lawsuits has dismissed certain of the plaintiffs' claims while allowing
others to proceed. These three cases have been consolidated with one
individual case in the U.S. District Court for the Eastern District of
Missouri. The Company has negotiated a settlement agreement with counsel
for plaintiffs which resolves all matters concerning the relief for the
class. There is, however, no agreement on the attorneys' fees or
expenses of class counsel. This settlement is in the process of being
finalized. It will then be submitted to the Court for review and
approval along with the issue of attorneys' fees and expenses. If the
settlement is not approved the Company intends to continue to oppose the
lawsuits vigorously.
In addition to the matters discussed above, the Company is involved in
pending and threatened litigation in the normal course of its business.
While the outcome of these matters cannot be predicted with certainty,
at the present time and based on information currently available,
management does not believe that the Company's liability arising from
pending or threatened litigation will have a material adverse affect on
the Company's financial condition or results of operations.
32
<PAGE>
General American Life Insurance Company and Subsidiaries
(14) RELATED PARTY TRANSACTIONS
In 1999, GenAmerica made capital contributions to the Company of $38.0
million, $10.1 million of NaviSys Incorporated's (NaviSys) equity, and
$20.0 million of NaviSys' bonds. The $38.0 million contribution
consisted of a promissory note from ARM, and was expensed by the Company
after it became uncollectible.
The following related party transactions occurred in the connection with
MetLife's acquisition of GenAmerica.
The Company paid and expensed approximately $20 million to MetLife
as consideration for MetLife's willingness to accept the funding
agreement business of General American as described in Note 1.
The Company paid $40 million to MetLife during 1999 which
ultimately was returned to GAMHC at the closing on January 6,
2000. This transaction has been recorded as a dividend by the
Company to GAMHC in the accompanying financial statements.
Subsequent to December 31, 1999 an additional $40 million was paid
to MetLife on behalf of GAMHC.
During 1999, GenAmerica paid and expensed $12 million of
investment advisory fees for which GAMHC and GenAmerica were
jointly and severably liable.
RGA also has reinsurance transactions between MetLife and certain of its
subsidiaries. Under these agreements, RGA reflected earned premiums of
approximately $108 million and $113 million in 1999 and 1998,
respectively. The earned premiums reflect the net of business assumed
from and ceded to MetLife and its subsidiaries. Underwriting gain
(loss) on this business was approximately $12 million and $13 million in
1999 and 1998, respectively.
(15) SUBSEQUENT EVENTS
On January 1, 2000, the Company exited the Group Health business through
the Asset Purchase Agreement and related reinsurance arrangements with
Great-West Life & Annuity Insurance Company (Great-West). This
agreement also includes any life business that is directly associated to
the health business.
The Company is required to reimburse Great-West for up to $10 million in
net operating losses incurred during 2000. These amounts have been
fully accrued in the 1999 consolidated financial statements of the
Company. The Company must also compensate Great-West for certain
receivables related to this business should they be deemed uncollectible.
On January 18, 2000, MetLife proposed to acquire all of Conning's
outstanding shares of common stock not already controlled by MetLife for
$10.50 per share in cash. MetLife acquired a beneficial interest of
approximately 61% in Conning as a result of its January 6, 2000
acquisition of GenAmerica. Conning has received MetLife's proposal and
the Conning Board of Directors is evaluating the proposed transaction.
33
<PAGE>
General American Life Insurance Company and Subsidiaries
On January 24, 2000, Conning announced that it had learned of a
complaint purporting to be a shareholder class action suit that has been
filed in the Supreme Court of the State of New York, naming Conning and
MetLife as co-defendants. The complaint follows the January 18, 2000
announcement of MetLife's proposal to acquire all of the outstanding
shares of common stock not already controlled by MetLife for $10.50 per
share in cash. The complaint alleges that MetLife's proposal to acquire
the remaining equity interest in Conning fails to offer a fair price to
Conning's shareholders and lacks adequate procedural protections.
Additionally, the complaint alleges that as a result of MetLife's
proposal, the defendants have engaged in acts of self-dealing and
breeches of fiduciary duty in connection with the proposed transaction.
Conning was subsequently served with the complaint and believes the
plaintiff's claims are without merit.
34
PART C
OTHER INFORMATION
Item 24. Financial statements and Exhibits
(a) Financial Statements
All required financial statements are included in Part B of this Registration
Statement.
(b) Exhibits
(1) Resolutions of the Board of Directors of General American Life
Insurance Company ("General American") authorizing establishment of
the Separate Account. 2
(2) Not applicable
(3) (a) Distribution Agreement 4
(b) Agency (Selling) Agreement 4
(4) (a) Form of variable annuity contract #100790 8
(b) Form of individual retirement account endorsement 7
(c) Form of endorsement (No. 1099500) relating to attained age and
processing without an application. 7
(d) Form of endorsement (No. 1099542) relating to attained age and
processing without an application for the State of Texas. 7
(e) Form of endorsement (No. 1099400) relating to Section 401 and
457, Internal Revenue Code. 7
(f) Form of endorsement (No. 1099436) relating to Section 401 and
457, Internal Revenue Code for the State of Oregon.7
(g) Form of endorsement (No. 1099460) relating to Section 401 and
457, Internal Revenue Code for the State of New Jersey. 7
(h) Endorsement relating to enhanced free withdrawal and death
benefit, #1E18 8
(5) Form of Contract Application 1
(6) (a) Amended and Restated Charter and Articles of Incorporation of
General American Life Insurance Company 9
(b) By-laws of General American 9
(7) Not applicable
(8) Participation Agreement 4
(9) Opinion and Consent of Counsel 1
(10) Independent Auditors' Consent
(11) Not applicable
(12) Not applicable
(13) Not applicable
(14) Powers of attorney for General American Life Insurance Company
Directors August A. Busch, III, William E. Cornelius, John C.
Danforth 6, Bernard A. Edison, Richard A. Liddy, William E. Maritz,
Craig D. Schnuck 5, William P. Stiritz, Andrew C. Taylor 4, Edwin
Trusheim, Robert L. Virgil, Jr., Virginia V. Weldon, and Ted C.
Wetterau 3
1 Incorporated by reference to Registration Statement on Form N-4
(File No. 33-54774) filed on 15 November 1993.
C-1
<PAGE>
2 Incorporated by reference to Registration Statement on Form S-6
(File No. 33-53098) filed on 8 October 1992.
3 Incorporated by reference to Post-Effective Amendment No. 1 filed
on 8 February 1993 (File No. 33-54774).
4 Incorporated by reference to Post-Effective Amendment No. 3 filed
on 30 April 1993 (File No. 33-54774).
5 Incorporated by reference to Post-Effective Amendment No. 5 filed
on 29 April 1994 (File No. 33-54774)
6 Incorporated by reference to Post-Effective Amendment No. 6 filed
on 28 April 1995.
7 Incorporated by reference to Post-Effective Amendment No. 7 filed
on 29 April 1996.
8 Incorporated by reference to Post-Effective Amendment No. 8 filed
on 28 April 1997.
9 Incorporated by reference to Post-Effective Amendment No. 9 filed
on 27 March 1998.
Item 25. Directors and Officers of the Depositor
<TABLE>
<CAPTION>
Officer's Name and Principal Positions and Offices
Business Address* with Depositor
<S> <C>
Robert J. Banstetter, Sr. Vice President, General
700 Market Street Counsel & Secretary, Feb.
St. Louis, MO 63101 1991 to present. Vice President
and General Counsel, Jan. 1983 -
Feb. 1991.
Barry C. Cooper Vice President and Controller
Kevin C. Eichner President
E. Thomas Hughes Corporate Actuary and
700 Market Street Treasurer, Oct. 1994 to
St. Louis, MO 63101 present. Formerly Executive Vice
President - Group Pensions, March
1990 - Oct. 1994.
Richard A. Liddy Chairman and Chief
700 Market Street Executive Officer,
St. Louis, MO 63101 Jan. 1995 to present. Formerly,
President and Chief Executive
Officer, May 1992 - Jan.
1995. President and Chief
Operating Officer, May 1988 -
May 1992.
Warren J. Winer Executive Vice President-Group Life
& Health, Aug. 1995 to
present. Formerly Managing
Director for William M.
Mercer, Inc. July 1993 to
Aug. 1995 and President
and Chief Operating Officer,
W.F. Corroon, 1986 - July
1993.
Bernard H Wolzenski Executive Vice President-
Individual, Oct. 1991 to present.
Formerly Vice President, Individual
Life Products, May 1986 - Oct. 1991.
A. Greig Woodring President and Chief
660 Mason Ridge Center Drive Executive Officer,
St. Louis, MO 63141 Reinsurance Group of America, Dec.
1992 to present. Also, Executive
Vice President Reinsurance.
</TABLE>
Richard A. Liddy, listed as a Principal Officer, is also a Director of the
Company.
******
* The principal business address of each person listed is General American
Life Insurance Company, 13045 Tesson Ferry Road, St. Louis, MO 63128,
unless otherwise indicated.
<TABLE>
<CAPTION>
Positions and Offices
Directors with Depositor
<S> <C>
August A. Busch III Director
Anheuser-Busch Companies, Inc.
One Busch Place
St. Louis, Missouri 63118
William E. Cornelius Director
Union Electric Company
1901 Chouteau Street
St. Louis, MO 63103
John C. Danforth Director
Bryan Cave
One Metropolitan Square, Suite 3600
St. Louis, Missouri 63102
Bernard A. Edison Director
Edison Brothers Stores, Inc.
P.O. Box 14020
St. Louis, Missouri 63178
William E. Maritz Director
Maritz, Inc.
1375 North Highway Drive
Fenton, Missouri 63099
Craig D. Schnuck Director
Schnuck Markets, Inc.
11420 Lackland Road
P.O. Box 46928
St. Louis, Missouri 63146
William P. Stiritz Director
Ralston Purina Company
Checkerboard Square
St. Louis, Missouri 63164
Andrew C. Taylor Director
Enterprise Rent-A-Car
600 Corporate Park Drive
St. Louis, Missouri 63105
Robert L. Virgil Director
Edward Jones and Company
12555 Manchester Road
St. Louis, Missouri 63131-3729
Virginia V. Weldon, M.D. Director
Monsanto Company
800 North Lindbergh Boulevard
St. Louis, Missouri 63167
Ted C. Wetterau Director
Wetterau Associates
7000 Bonhomme, Suite 750
St. Louis, Missouri 63105
</TABLE>
Item 26. Persons Controlled by or Under Common Control With the Depositor
or Registrant
<TABLE>
<CAPTION>
LIST OF SUBSIDIARIES AND AFFILIATES OF
GENAMERICA CORPORATION
As of January 27, 2000
<S> <C>
Metropolitan Life Insurance Company: Holds all of the stock in GenAmerica Corporation.
GenAmerica Corporation: formed to hold all of the stock of General American Life Insurance Company.
GenAmerica Management Corporation: central management corporation.
Walnut Street Securities, Inc.: wholly-owned subsidiary engaged in the process of selling variable life
insurance and variable annuities and other securities.
Walnut Street Advisers, Inc.: wholly-owned subsidiary of Walnut Street Securities engaged in
the business of giving investment advice.
WSS Insurance Agency of Alabama, Inc.: Formed to act as a resident insurance agency for Walnut
Street Securities, Inc. in Alabama.
WSS Insurance Agency of Massachusetts, Inc.: Formed to act as a resident insurance agency for
Walnut Street Securities, Inc. in Massachusetts.
WSS Insurance Agency of Ohio, Inc.: Formed to act as a resident insurance agency for Walnut
Street Securities, Inc. in Ohio.
WSS Insurance Agency of Texas, Inc.: Formed to act as a resident insurance agency for Walnut
Street Securities, Inc. in Texas.
Collaborative Strategies, Inc.: wholly-owned business management consulting company.
GenAmerica Capital I: Wholly-owned Delaware trust formed for the purpose of issuing securities as an
investment vehicle for GenAmerica Corporation.
Missouri Reinsurance (Barbados), Inc.: wholly-owned Barbados exempt life, accident and health
reinsurance company.
VirtualFinances.Com, Inc.: Wholly-owned company formed for the E-Commerce initiative of GeneraLife.
Benefit Resource Life Insurance Company (Bermuda) Ltd. (fka RGA Insurance Company (Bermuda) Limited):
subsidiary formed to engage in insurance business.
General American Life Insurance Company: an insurance company selling life and health insurance and
pensions.
GenAm Benefits Insurance Company (fka EBPLife Insurance Company): wholly-owned subsidiary
formed to hold all group business.
Cova Corporation: wholly-owned subsidiary formed to own the former Xerox Life companies.
Cova Financial Services Life Insurance Company: wholly-owned by Cova Corporation,
engaged in the business of selling annuities and life insurance.
First Cova Life Insurance Company: wholly-owned by Cova Financial Services
Life Insurance Company, engaged in the sale of life insurance in New York.
Cova Financial Life Insurance Company: wholly-owned by Cova Corporation,
engaged in the sale of life insurance and annuities in California.
Cova Life Management Company: wholly-owned by Cova Corporation. Employer of the
individuals operating the Cova companies.
Cova Investment Advisory Corporation: wholly-owned by Cova Life Management
Company. Intended to provide investment advice to Cova Life insureds and
annuity owners.
Cova Investment Allocation Corporation: wholly-owned by Cova Life Management
Company. Intended to provide advice on allocation of premiums to Cova Life
insureds and annuity owners.
Cova Life Sales Company: wholly-owned by Cova Life Management Company.
Broker-dealer established to supervise sales of Cova Life contracts.
Cova Life Administration Services Company: wholly-owned by Cova Life
Management Company. Provides administrative services for Cova annuities.
General Life Insurance Company: wholly-owned subsidiary, domiciled in Texas, engaged in the
business of selling life insurance and annuities.
General Life Insurance Company of America: wholly-owned subsidiary, domiciled in
Illinois, engaged in the business of selling life insurance and annuities.
Paragon Life Insurance Company: wholly-owned subsidiary engaged in employer sponsored sales of
life insurance.
Equity Intermediary Company: wholly-owned subsidiary holding company formed to own stock in
subsidiaries.
Reinsurance Group of America, Incorporated: subsidiary, of which approximately 53.5%
is owned by Equity Intermediary and the balance by the public.
RGA Sudamerica S.A.: Chilean subsidiary, of which all but one share is owned
by RGA and one share is owned by RGA Reinsurance Company, existing to hold
Chilean reinsurance operations.
BHIF America Sequros de Vida S.A.: Chilean subsidiary, of which 50%
is owned by RGA Sudamerica S.A. and 50% is owned by Chilean
interests, engaged in business as a life/annuity insurer.
RGA Reinsurance Company Chile S.A.: 100% owned by RGA, engaged in
business of reinsuring life and annuity business of BHIF America.
General American Argentina Sequros de Vida S.A.: Argentinean subsidiary 100%
owned by RGA, engaged in business as a life, annuity, disability and
survivorship insurer.
RGA Argentina S.A.: Argentinian subsidiary 100% owned by RGA.
Reinsurance Company of Missouri, Incorporated: wholly owned subsidiary formed
for the purpose of owning RGA Reinsurance Company.
RGA Reinsurance Company: subsidiary engaged in the reinsurance
business.
Fairfield Management Group, Inc.: 100% owned subsidiary.
Reinsurance Partners, Inc.: wholly-owned
subsidiary of Fairfield Management Group, Inc.,
engaged in business as a reinsurance brokerage
company.
Great Rivers Reinsurance Management, Inc.:
wholly-owned subsidiary of Fairfield Management
Group, Inc., acting as a reinsurance manager.
RGA (U.K.) Underwriting Agency Limited:
wholly-owned by Fairfield Management Group, Inc.
RGA Reinsurance Company (Barbados) Ltd.: subsidiary of Reinsurance Group of
America, Incorporated formed to engage in the exempt insurance business.
RGA/Swiss Financial Group, L.L.C.: 40% owned subsidiary formed to
market and manage financial reinsurance business to be assumed by RGA
Reinsurance Company.
Triad Re, Ltd.: Reinsurance Group of America, Incorporated owns 100% of all
outstanding and issued shares of the Company's preferred stock. Reinsurance
Group of America, Inc. owns 66.67% of all outstanding and issued shares of the
Company's common stock. Schmitt-Sussman Enterprises, Inc. owns 33.33% of all
outstanding and issued shares of the Company's common stock.
RGA Americas Reinsurance Company, Ltd.: Reinsurance Group of America,
Incorporated owns 100% of this company.
RGA International Ltd.: a New Brunswick corporation wholly-owned by
Reinsurance Group of America, existing to hold Canadian reinsurance operations.
RGA Financial Products Limited: 100% owned by RGA International Ltd.
(100 Class A shares).
RGA Canada Management Company, Ltd.: a New Brunswick corporation
wholly-owned by G.A. Canadian Holdings, existing to accommodate
Canadian investors.
RGA Life Reinsurance Company of Canada: wholly-owned by RGA
Canada Management Company, Ltd.
RGA Holdings Limited: holding company formed in the United Kingdom to own two
operating companies: RGA Managing Agency Limited and RGA Capital Limited.
RGA Capital Limited: company is a corporate member of a Lloyd's life
syndicate.
RGA Managing Agency Limited: inactive company.
RGA Australian Holdings Pty Limited: holding company formed to own RGA Reinsurance
Company of Australia Limited.
RGA Reinsurance Company of Australia Limited: formed to reinsure the life,
health and accident business of non-affiliated Australian insurance companies.
RGA South African Holdings (Pty) Ltd.: 100% owned by Reinsurance Group of America,
Incorporated formed for the purpose of holding RGA Reinsurance Company of South Africa
Limited.
RGA Reinsurance Company of South Africa Limited: 100% owned by RGA South
African Holdings (Pty) Ltd.
Security Equity Life Insurance Company: wholly-owned subsidiary, domiciled in New York,
engaged in the business of selling life insurance and annuities.
GenAm Holding Company: Formed to hold stock in various non-insurance subsidiaries.
NaviSys Incorporated: wholly-owned subsidiary engaged in the sale of computer
software and in providing third party administrative services.
NaviSys Enterprise Solutions, Inc.: 80% owned by NaviSys Incorporated. New
Jersey corporation providing enterprise life administration software.
NaviSys Illustration Solutions, Inc.: 100% owned by NaviSys Incorporated.
Pennsylvania corporation providing sales illustration software.
NaviSys Asia Pacific Limited: 100% owned by NaviSys Incorporated. Engaged in
licensing of software products in Hong Kong.
NaviSys de Mexico, S.A. de C.V.: 100% owned by NaviSys Incorporated, engaged
in licensing of NaviSys software products in Latin America.
Genelco Software, S.A.: 100% owned by NaviSys Incorporated, engaged in
licensing of NaviSys software products in Spain.
Conning Corporation: 61% owned subsidiary formed to own the Conning companies (with
the remainder owned by the public).
Conning, Inc.: a holding company organized under Delaware law.
Conning & Company: a Connecticut corporation engaged in providing asset
management and investment advisory services as well as insurance research
services.
Conning Asset Management Company: a Missouri corporation engaged in providing
investment advice.
Red Oak Realty Company: wholly-owned subsidiary formed for the purpose of investing
in and operating real estate.
GenMark Incorporated: wholly-owned subsidiary company acting as distribution company.
Stan Mintz Associates, Inc.: wholly-owned subsidiary purchased to maintain a
significant marketing presence in the Madison, Wisconsin area upon the
retirement of General Agent Stan Mintz.
GenMark Insurance Agency of Alabama, Inc.: formed to act as resident
insurance agency in Alabama.
GenMark Insurance Agency of Massachusetts, Inc.: formed to act as resident
insurance agency in Massachusetts.
GenMark Insurance Agency of Ohio, Inc.: formed to act as resident insurance
agency in Ohio.
GenMark Insurance Agency of Texas, Inc.: formed to act as resident insurance
agency in Texas.
White Oak Royalty Company: wholly-owned, second-tier subsidiary formed to own mineral
interests.
</TABLE>
Mutual funds associated with General American Life Insurance Company:
General American Capital Company
Item 27. Number of Contract Owners
As of March 31, 2000 there were: 1,671
Title of Class Number of Owners of Record
Qualified 328
Non-Qualified 1,343
Item 28. Indemnification
Section 351.355 of the Missouri General and Business Corporation Law, in brief,
allows a corporation to indemnify any person who is a party or is threatened to
be made a party to any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, or investigative by reason
of the fact that he is or was a director, officer, employee, or agent of the
corporation, against expenses, including attorneys' fees, judgments, fines, and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action if he acted in good faith and in a manner reasonably believed
to be in or not opposed to the best interests of the corporation. Where any
person was or is a party or is threatened to be made a party in an action or
suit by or in the right of the corporation to procure a judgment in its favor,
indemnification may not be paid where such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
corporation, unless a court determines that the person is fairly and reasonably
entitled to indemnity. A corporation has the power to give any further
indemnity, to any person who is or was a director, officer, employee or agent,
provided for in the articles of incorporation or as authorized by any by-law
which has been adopted by vote of the shareholders, provided that no such
indemnity shall indemnify any person's conduct which was finally adjudged to
have been knowingly fraudulent, deliberately dishonest, or willful misconduct.
In accordance with Missouri law, General American's Board of Directors, at its
meeting on 19 November 1987 and the policyholders of General American at the
annual meeting held on 26 January 1988 adopted the following resolutions:
"BE IT RESOLVED THAT
1. The company shall indemnify any person who is or was a director,
officer, or employee of the company, or is or was serving at the request of the
company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against any and all
expenses (including attorneys' fees), judgments, fines and amounts paid in
C-13
<PAGE>
settlement, actually and reasonably incurred by him or her in connection with
any civil, criminal, administrative or investigative action, proceeding or claim
(including an action by or in the right of the company) by reason of the fact
that he or she was serving in such capacity if he or she acted in good faith and
in a manner he or she reasonably believed to be in or not opposed to the best
interests of the company; provided that such person's conduct is not finally
adjudged to have been knowingly fraudulent, deliberately dishonest or willful
misconduct.
2. The indemnification provided herein shall not be deemed exclusive of
any other rights to which a director, officer, or employee may be entitled under
any agreement, vote of policyholders or disinterested directors, or otherwise,
both as to action in his or her official capacity and as to action in another
capacity while holding such office, and shall continue as to a person who has
ceased to be a director, officer, or employee and shall inure to the benefit of
the heirs, executors and administrators of such a person.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Item 29. PRINCIPAL UNDERWRITER
(a) Cova Life Sales Company is the principal underwriter for the following
investment companies (other than Registrant):
Cova Variable Annuity Account One
Cova Variable Annuity Account Five
Cova Variable Life Account One
Cova Variable Life Account Five
First Cova Variable Annuity Account One
Cova Variable Annuity Account Four
General American Separate Account Twenty-Nine
Security Equity Separate Account 26
Security Equity Separate Account 27
(b) Cova Life Sales Company is the principal underwriter for the Contracts.
The following persons are the officers and directors of Cova Life Sales Company.
The principal business address for each officer and director of Cova Life Sales
Company is One Tower Lane, Suite 3000, Oakbrook Terrace, Illinois 60181-4644.
Name and Principal Positions and Offices
Business Address with Underwriter
Lorry J. Stensrud Director
Patricia E. Gubbe President, Chief Compliance Officer and Director
William C. Mair Director
Shari Ruecker Vice President
Philip A. Haley Vice President
Mark E. Reynolds Treasurer
James W. Koeger Assistant Treasurer
Bernard J. Spaulding Secretary
(c) Not Applicable
Item 30. Location of Accounts and Records
All accounts and records required to be maintained by Section 31(a) of the 1940
Act and the rules under it are maintained by General American or its wholly-
owned, second tier subsidiary, Genelco Incorporated, located at 9735 Landmark
Parkway Drive, St. Louis, MO 631278-1690.
C-18
<PAGE>
Item 31. Management Services
All management contracts are discussed in Part A or Part B.
Item 32. Undertakings and Representations
(a) The Registrant undertakes that it will file post-effective amendments to
this registration statement as frequently as necessary to ensure that the
audited financial statements in the registration statement are never more than
16 months old for so long as Purchase Payments under the Contracts may be
accepted.
(b) The Registrant undertakes to include, as part of the application to
purchase a Contract offered by the prospectus, a space that an applicant can
check to request Statement of Additional Information.
(c) The Registrant undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available under
this Form promptly upon written or oral request to General American at the
address or phone number listed in the prospectus.
(d) The Registrant represents that it is relying upon a "no-action" letter (No.
IP-6-88) issued to the American Council of Life Insurance concerning the
conflict between the redeemability requirements of sections 22(e), 27(c)(1), and
27(d) of the Investment Company Act of 1940 and the limits on the redeemability
of variable annuities imposed by section 403(b)(11) of the Internal Revenue
Code. Registrant has included disclosure concerning the 403(b)(11) restrictions
in its prospectus and sales literature, and established a procedure whereby each
plan participant will sign a statement acknowledging these restrictions before
the contract is issued. Sales representatives have been instructed to bring the
restrictions to the attention of potential plan participants.
(e) General American, sponsor of Registrant (also known as "Depositor"), hereby
represents that the fees and charges deducted under the terms of the Contracts
are, in the aggregate, reasonable in relationship to the services rendered, the
expenses expected, and the risks assumed by General American.
C-19
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant, General American Separate Account Twenty-Eight,
certifies that it meets the requirements of Securities Act Rule 485(b) for
effectiveness of this Registration Statement and has duly caused this
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 St. Louis, State of Missouri, on the 1st day of May, 2000.
GENERAL AMERICAN
SEPARATE ACCOUNT
TWENTY-EIGHT (REGISTRANT)
BY: GENERAL AMERICAN LIFE
INSURANCE COMPANY
By:/s/ RICHARD A. LIDDY
-------------------------
Chairman and
Chief Executive Officer
By: GENERAL AMERICAN LIFE INSURANCE
COMPANY (DEPOSITOR)
By:/s/ RICHARD A. LIDDY
-------------------------
Chairman and
Chief Executive Officer
As required by the Securities Act of 1933, this Registration Statement has been
signed below by the following persons in their capacities with General American
Life Insurance Company and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/S/RICHARD A. LIDDY 5/1/00
- --------------------------
Richard A. Liddy Chairman and ---------
Chief Executive Officer and
Director (Principal Executive
Officer)
- --------------------------
Kevin C. Eichner President
/s/ BARRY C. COOPER 5/1/00
- --------------------------
Barry C. Cooper Vice President and ---------
Controller (Principal
Financial Officer and
Principal Accounting Officer)
* 5/1/00
- ------------------------
August A. Busch, III Director
* 5/1/00
- ------------------------
William E. Cornelius Director
* 5/1/00
- ------------------------
John C. Danforth Director
* 5/1/00
- ------------------------
Bernard A. Edison Director
* 5/1/00
- --------------------------
William E. Maritz Director
* 5/1/00
- ------------------------
Craig D. Schnuck Director
* 5/1/00
- ------------------------
William P. Stiritz Director
* 5/1/00
- ------------------------
Andrew C. Taylor Director
* 5/1/00
- ------------------------
Robert L. Virgil, Jr. Director
* 5/1/00
- ------------------------
Virginia V. Weldon Director
* 5/1/00
- ------------------------
Ted C. Wetterau Director
*By:/s/ MATTHEW P. MCCAULEY
-------------------------
Matthew P. McCauley
</TABLE>
* Original powers of attorney authorizing Matthew P. McCauley to sign the
Registration Statement and Amendments thereto on behalf of the Directors of
General American Life Insurance Company have been filed as Exhibits to this
Registration Statement.
C-22
EXHIBITS TO
POST-EFFECTIVE AMENDMENT NO. 11 TO
FORM N-4
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-EIGHT
INDEX TO EXHIBITS
EX-99-B10 Independent Auditors' Consent
Independent Auditors' Consent
The Board of Directors
General American Life Insurance Company
We consent to the use of our reports included herein and to the reference to
our firm under the heading "Experts" in the Registration Statement and
Prospectuses for General American Separate Account Twenty-eight.
/s/KPMG LLP
------------
KPMG LLP
St. Louis, Missouri
April 28, 2000
