<PAGE> 1
As filed with the Securities and Exchange Commission on 29 April 1996.
Registration No. 33-54774
811-7166
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. 9 / X /
Registration Statement Under the Investment Company Act of 1940
Amendment No. 10 / X /
General American Separate Account Twenty-Nine
(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)
Depositor's Telephone Number: (314) 231-1700
M.P. McCauley, Esquire
General American Life Insurance Company
700 Market Street
St. Louis, Missouri 63101
(Name and address of Agent for Service)
Copy to:
Stephen E. Roth, Esquire
Sutherland, Asbill & Brennan
1275 Pennsylvania Ave., NW
Washington, DC 20004-2404
i
<PAGE> 2
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b), of Rule 485
X on 29 April 1996 pursuant to paragraph (b) of Rule 485
60 days after filing pursuant to paragraph (a)(1) of Rule 485
on , pursuant to paragraph (a)(1) of rule 485
75 days after filing pursuant to paragraph (a)(2) of rule 485
on _________________ pursuant to paragraph (a)(2) of Rule 485
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, an indefinite
number or amount of securities has been registered under the Securities Act of
1933. The Registrant filed the 24f-2 Notice for the fiscal year ended 31
December 1995 on 20 February 1996.
ii
<PAGE> 3
Cross Reference Sheet
Pursuant to Rule 481
Showing Location in Part A (Prospectus) and Part B
(Statement of Additional Information) of Registration Statement
of Information Required by Form N-4
PART A
Item of Form N-4 Prospectus Caption
1. Cover Page..................................Cover Page
2. Definitions.................................Definitions
3. Synopsis....................................Questions and Answers
About the Contract
4. Condensed Financial
Information.................................Financial Statements
5. General Description of
(a) Depositor..........................General American
(b) Registrant.........................The Separate Accounts
(c) Portfolio Company..................GT Global Variable
Investment Trust and
GT Global Variable
Investment Series
(d) Fund Prospectus....................GT Global Variable
Investment Trust and
GT Global Variable
Investment Series
(e) Voting Rights......................Voting Rights
(f) Administrators.....................N/A
6. Deductions and Expenses
(a) General............................Charges and Deductions
(b) Sales Load %.......................Surrender Charge
(c) Special Purchase
Plan...............................N/A
(d) Commissions........................Principal Underwriter
(e) Expenses -
Registrant.........................Administrative Charges;
Mortality and Expense
Assurance Charge
(f) Fund Expenses......................Advisory Fees and Other
Expenses of the Funds
and Trusts
(g) Organizational
Expenses...........................N/A
7. Contracts
(a) Persons with
Rights.............................Summary; The Contracts;
Distributions Under the
Contracts; Voting Rights
iii
<PAGE> 4
(b) (i) Allocation of
Purchase
Payments..................Allocation of Net
Purchase Payments
(ii) Transfers.................Transfer Privilege
(iii) Exchanges.................N/A
(c) Changes ..........................Additions, Deletions or
Substitutions of
Investments
8. Annuity Period..............................Annuity Provisions;
Annuity Date; Annuity
Options
9. Death Benefit...............................Death Benefits
10 Purchases and Contract Value
(a) Purchases..........................Contract Application and
Purchase Payments
(b) Valuation..........................Value of Accumulation
Units
(c) Daily Calculation..................Value of Accumulation
Units
(d) Underwriter........................Principal Underwriter
11. Redemptions
(a) - By Owners........................Surrender Charge; Cash
Withdrawals; Systematic
Withdrawal Plan
- By Annuitant.....................Annuity Options
(b) Texas Optional Retirement
Program............................N/A
(c) Check Delay........................Deferment of Payment
(d) Lapse..............................Account Continuation
(e) Free Look..........................Can the Contract be
Canceled After It Is
Delivered?; Right to
Examine
12. Taxes ......................................Federal Tax Matters
13. Legal Proceedings...........................Part B: Legal
Proceedings
14. Table of Contents for the
Statement of Additional
Information.................................Statement of Additional
Information
iv
<PAGE> 5
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.................Part A: General American
and History.........................Life Insurance Company
and The Separate Account
18. Services
(a) Fees and Expenses of
Registrant................. N/A
(b) Management Contracts....... N/A
(c) Custodian.................. N/A
Independent Public
Accountant...............Financial Statements
(d) Assets of
Registrant.................Safekeeping of Account
Assets
(e) Affiliated Persons......... N/A
(f) Principal
Underwriter................Distribution of the Contracts
19. Purchase of Securities
Being Offered.......................Distribution of the
Contracts
20. Underwriters .......................Distribution of the
Contracts
21. Money Market Yield..................Money Market Yield
22. Annuity Payments....................Computation of Variable
Annuity Income Payments
23. Financial Statements................Financial Statements
PART C - OTHER INFORMATION
Item of Form N-4
24. Financial Statements and
Exhibits ...........................Financial Statements and
Exhibits
(a) Financial Statements............(a) Financial Statements
(b) Exhibits........................(b) Exhibits
25. Directors and Officers
of the Depositor....................Directors and officers
of the Depositor
26. Persons Controlled by
or Under Common Control
with the Depositor or
Registrant..........................Persons Controlled by or In Common
Control with the Depositor
Registrant
v
<PAGE> 6
27. Number of Contract
Owners..............................Number of Contract Owners
28. Indemnification.....................Indemnification
29. Principal Underwriters..............Principal Underwriters
30. Location of Accounts
and Records.........................Location of Accounts and
Records
31. Management Services.................Management Services
32. Undertakings........................Undertakings
Signature Pages.....................Signatures
vi
<PAGE> 7
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GENERAL AMERICAN SEPARATE ACCOUNTS
TWENTY-EIGHT & TWENTY-NINE
PROSPECTUS
FOR THE
INDIVIDUAL VARIABLE ANNUITY CONTRACT
OFFERED BY
GENERAL AMERICAN LIFE INSURANCE COMPANY
(A MISSOURI MUTUAL COMPANY)
700 MARKET STREET
ST. LOUIS, MISSOURI 63101
1-800-237-6580
- --------------------------------------------------------------------------------
THIS PROSPECTUS DESCRIBES INDIVIDUAL VARIABLE ANNUITY CONTRACTS OFFERED BY
GENERAL AMERICAN LIFE INSURANCE COMPANY ("GENERAL AMERICAN"). THESE CONTRACTS,
COLLECTIVELY REFERRED TO AS THE "CONTRACT" OR THE "CONTRACTS" IN THIS
PROSPECTUS, ARE DESIGNED TO AID INDIVIDUALS IN LONG-TERM FINANCIAL PLANNING AND
PROVIDE FOR THE ACCUMULATION OF CAPITAL ON A TAX-DEFERRED BASIS FOR RETIREMENT
OR OTHER LONG-TERM PURPOSES. THE CONTRACTS MAY BE PURCHASED WITH A SINGLE
MINIMUM INITIAL PURCHASE PAYMENT OF $2,000.
PRIOR TO THE ANNUITY DATE, THE CONTRACT OWNER MAY DIRECT THAT PURCHASE PAYMENTS
ACCUMULATE ON A COMPLETELY VARIABLE BASIS, A COMPLETELY FIXED BASIS, OR A
COMBINATION VARIABLE AND FIXED BASIS. THE CONTRACT OWNER HAS SIGNIFICANT
FLEXIBILITY IN DETERMINING THE FREQUENCY AND AMOUNT OF EACH PURCHASE PAYMENT.
THE CONTRACT OWNER MAY ELECT TO RECEIVE ANNUITY PAYMENTS ON A VARIABLE BASIS,
FIXED BASIS, OR A COMBINATION OF BOTH. THE CONTRACT OWNER ALSO HAS SIGNIFICANT
FLEXIBILITY IN DETERMINING THE ANNUITY DATE ON WHICH ANNUITY PAYMENTS ARE
SCHEDULED TO COMMENCE. FULL SURRENDERS OR PARTIAL WITHDRAWALS MAY BE MADE AT ANY
TIME PRIOR TO THE ANNUITY DATE, ALTHOUGH IN MANY CIRCUMSTANCES THEY MAY BE
SUBJECT TO A SURRENDER CHARGE AND A FEDERAL PENALTY TAX. ANY AMOUNT SURRENDERED
OR WITHDRAWN WILL BE PAID IN A LUMP SUM, OR UPON ANNUITIZATION, THE CONTRACT
WILL BE PAID OUT UNDER ONE OF THE AVAILABLE ANNUITY OPTIONS. THE CONTRACTS
PROVIDE THE FLEXIBILITY NECESSARY TO PERMIT A CONTRACT OWNER TO DEVISE AN
ANNUITY THAT BEST FITS HIS OR HER NEEDS.
PURCHASE PAYMENTS MAY BE ALLOCATED ALL OR IN PART TO GENERAL AMERICAN SEPARATE
ACCOUNTS TWENTY-EIGHT AND TWENTY-NINE. ASSETS OF THE SEPARATE ACCOUNTS ARE
INVESTED IN DIVISIONS WHICH INVEST IN FUNDS OF GT GLOBAL VARIABLE INVESTMENT
FUNDS. A LIST OF THE FUNDS CAN BE FOUND IN THE ACCOMPANYING PROSPECTUS FOR THE
GT GLOBAL VARIABLE INVESTMENT FUNDS. IN MOST STATES, THE CONTRACT OWNER MAY ALSO
ALLOCATE ALL OR PART OF THE PURCHASE PAYMENTS TO THE FIXED ACCOUNT OF GENERAL
AMERICAN WHICH PROVIDES A GUARANTEED RATE OF RETURN FOR A SPECIFIED PERIOD.
THIS PROSPECTUS SETS FORTH THE INFORMATION THAT A PROSPECTIVE INVESTOR SHOULD
KNOW BEFORE INVESTING. A STATEMENT OF ADDITIONAL INFORMATION ABOUT THE CONTRACTS
AND THE DIVISIONS IS AVAILABLE FREE IF YOU WRITE GENERAL AMERICAN AT THE ADDRESS
ABOVE OR BY CALLING (800) 237-6580. THE STATEMENT OF ADDITIONAL INFORMATION,
WHICH HAS THE SAME DATE AS THIS PROSPECTUS, HAS BEEN FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION AND AS AMENDED OR SUPPLEMENTED FROM TIME TO TIME, IS
INCORPORATED HEREIN BY REFERENCE. THE TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION CAN BE FOUND ON PAGE 38 OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
THIS PROSPECTUS MUST BE ACCOMPANIED BY A CURRENT PROSPECTUS FOR THE
GT GLOBAL VARIABLE INVESTMENT FUNDS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
PLEASE READ THIS PROSPECTUS CAREFULLY AND RETAIN IT FOR FUTURE REFERENCE.
THE DATE OF THIS PROSPECTUS IS APRIL 29, 1996.
THE CONTRACT IS AVAILABLE IN ALL STATES EXCEPT NEW YORK. CERTAIN INVESTMENT
OPTIONS
MAY NOT BE AVAILABLE IN ALL STATES.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO DEALER, SALESMAN, OR OTHER
PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN
THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE,
SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON.
---------------------
Prospectus Page 1
<PAGE> 8
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TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
<S> <C>
DEFINITIONS.............................................................................. 4
SUMMARY OF CONTRACT FEES AND EXPENSES.................................................... 5
HISTORICAL CHARTS OF UNITS AND UNIT VALUES............................................... 8
QUESTIONS AND ANSWERS ABOUT THE CONTRACT................................................. 9
GENERAL AMERICAN LIFE INSURANCE COMPANY
AND THE SEPARATE ACCOUNTS.............................................................. 11
General American.................................................................... 11
The Separate Accounts............................................................... 12
GT GLOBAL VARIABLE INVESTMENT FUNDS...................................................... 12
ADDITIONS, DELETIONS OR SUBSTITUTIONS OF INVESTMENTS..................................... 13
THE CONTRACTS............................................................................ 14
Right to Examine.................................................................... 14
Contract Application and Purchase Payments.......................................... 14
Place, Amount and Frequency......................................................... 14
Account Continuation................................................................ 15
Allocation of Net Purchase Payments................................................. 15
VARIABLE ACCOUNT......................................................................... 16
Accumulation Units.................................................................. 16
Value of Accumulation Units......................................................... 16
Net Investment Factor............................................................... 16
GUARANTEED INTEREST OPTIONS.............................................................. 16
Guarantee Periods................................................................... 17
Guaranteed Interest Rates........................................................... 17
TRANSFER PRIVILEGE....................................................................... 18
DOLLAR COST AVERAGING.................................................................... 18
PERSONAL PORTFOLIO REBALANCING........................................................... 19
INTEREST SWEEP........................................................................... 19
CONTRACT OWNER INQUIRIES................................................................. 19
CHARGES AND DEDUCTIONS................................................................... 20
Administrative Charges.............................................................. 20
Annual Contract Fee............................................................ 20
Transfer Fee................................................................... 20
Special Handling Fees.......................................................... 20
Surrender Charge.................................................................... 21
Mortality and Expense Risk Charge................................................... 22
Premium Tax......................................................................... 22
Other Taxes......................................................................... 23
Fees and Expenses of the Funds...................................................... 23
YIELDS AND TOTAL RETURNS................................................................. 23
</TABLE>
---------------------
Prospectus Page 2
<PAGE> 9
-----------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
<S> <C>
DISTRIBUTIONS UNDER THE CONTRACT......................................................... 24
Cash Withdrawals.................................................................... 24
Systematic Withdrawal Plan.......................................................... 25
Interest Change Adjustment.......................................................... 26
Annuity Provisions.................................................................. 26
Annuity Date........................................................................ 26
Annuity Options..................................................................... 26
Election of Annuity Options.................................................... 26
The Options Available.......................................................... 27
Calculation of Payments........................................................ 27
Value of Variable Annuity Payments............................................. 27
Deferment of Payment................................................................ 28
The Beneficiary..................................................................... 28
Death Benefits...................................................................... 28
Death of a Contract Owner who is the Annuitant................................. 28
Death of a Contract Owner who is not the Annuitant............................. 29
Death of the Annuitant who is not a Contract Owner............................. 29
Other Provisions............................................................... 29
Amount of Death Benefit............................................................. 29
Assignments and Changes of Ownership................................................ 30
FEDERAL TAX MATTERS...................................................................... 30
Introduction........................................................................ 30
Taxation of General American........................................................ 31
Tax Status of the Contracts......................................................... 31
Diversification................................................................ 31
Investor Control............................................................... 31
Required Distributions......................................................... 32
Taxation of Annuities............................................................... 32
In General..................................................................... 32
Withdrawals and Surrenders..................................................... 32
Annuity Payments............................................................... 33
Penalty Tax.................................................................... 33
Taxation of Death Benefit Proceeds............................................. 33
Transfers, Assignments or Exchanges of the Contract............................ 33
Multiple Contracts............................................................. 33
Withholding.................................................................... 34
Possible Changes in Taxation................................................... 34
Other Tax Consequences......................................................... 34
Qualified Contracts............................................................ 34
Individual Retirement Annuities and Accounts........................................ 34
Code Section 403(b) Plans........................................................... 35
Corporate Pension and Profit-Sharing Plans and H.R. 10 Plans........................ 35
Deferred Compensation Plans......................................................... 35
Restrictions Under Qualified Contracts.............................................. 35
VOTING RIGHTS............................................................................ 36
PRINCIPAL UNDERWRITER.................................................................... 36
FINANCIAL STATEMENTS..................................................................... 38
STATEMENT OF ADDITIONAL INFORMATION...................................................... 38
APPENDIX A -- Surrender Charge Calculations.............................................. 39
APPENDIX B -- Interest Change Adjustment Calculations.................................... 40
</TABLE>
---------------------
Prospectus Page 3
<PAGE> 10
-----------------------------------------------
DEFINITIONS
- --------------------------------------------------------------------------------
Accumulated Value -- The value under the Contract prior to the Annuity Date of
all Net Purchase Payments, plus all interest credits or all gains and losses,
less any past charges deducted or amounts previously withdrawn.
Accumulation Unit -- An accounting unit of measure used to determine the value
of a Division prior to the Annuity Date.
Annuitant -- The individual upon whose life Annuity Payments are based and who
may receive payments from the Contract under an Annuity Option.
Annuity Date -- The date on which Annuity Payments begin.
Annuity Option -- One of several ways in which Annuity Payments may be made.
Annuity Payment -- One of a series of payments made under an Annuity Option.
Annuity Service Office -- The service office of the Company is General American,
GT Global Department, P.O. Box 66821, St. Louis, Missouri 63166-6821.
Annuity Unit -- An accounting unit of measure used to calculate variable Annuity
Payments.
Beneficiary -- The person or legal entity that may receive any benefits due
under the Contract in the event of the Annuitant's or Contract Owner's death.
Business Day -- A day on which both General American and the New York Stock
Exchange ("NYSE") are open for business. The following days are not business
days for General American: New Year's Day, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day, Friday after Thanksgiving, and Christmas Day.
Code -- The Internal Revenue Code of 1986, as amended.
Contract -- The document for each Contract Owner which evidences the coverage of
the Contract Owner. The Contract, its riders, endorsements, and amendments, if
any, and the Contract Application, a copy of which is attached to and made a
part hereof, are the entire Contract.
Contract Application -- The document signed by the Contract Owner that evidences
the Contract Owner's application for the Contract.
Contract Owner ("you", "your") -- The person, persons or entity entitled to
exercise all rights and privileges or ownership as stated in the Contract and in
whose name the Contract is issued.
Contract Owner's Account -- An account established for each Contract Owner.
Contract Year -- A continuous twelve month period commencing on the Date of
Issue and each anniversary, thereof.
Date of Issue -- The date the Initial Purchase Payment is invested in the
Contract.
Division -- A Division of Separate Account Twenty-Eight or Twenty-Nine. Each
Division invests solely in its corresponding GT Global Variable Investment Fund
and takes the name of the Fund in which it invests.
Expiration Date -- The expiration date of the Guarantee Period of the Fixed
Account. This date will be the day before the date that a Net Purchase Payment
or transfer occurred, plus the number of calendar years in the Guarantee Period.
Fixed Account -- An account that consists of all of our assets other than those
in the Separate Accounts or any other of our segregated investment accounts. The
Fixed Account may not be available in all jurisdictions.
Fund (or Funds) -- The separate investment portfolios of GT Global Variable
Investment Funds.
General American ("Company", "we", "us", "our") -- General American Life
Insurance Company, a Missouri mutual insurance company.
GT Global Variable Investment Funds -- Refers to a portfolio of either G.T.
Global Variable Investment Series or G.T. Global Variable Investment Trust or
the two together.
Guaranteed Interest Options -- One of several investment options in which
General American guarantees the repayment of the principal amount and payment of
a fixed rate of interest,
---------------------
Prospectus Page 4
<PAGE> 11
-----------------------------------------------
less charges, for a specified Guarantee Period. Amounts allocated by Contract
Owners to a Guaranteed Interest Option will be invested in General American's
Fixed Account.
Guarantee Period -- A period of time during which a specified rate of return is
promised by the Company under a Guaranteed Interest Option.
Initial Purchase Payment -- The first payment which the Contract Owner makes.
Net Purchase Payment -- A Purchase Payment, less any applicable deduction for
premium or other tax.
Nonqualified Contracts -- Contracts that do not receive favorable tax treatment
under Sections 401, 403, 408, or 457 of the Code. Earnings on these Contracts
currently receive special Federal income tax treatment.
Payee -- The Contract Owner, Annuitant, Beneficiary, or any other person, estate
or legal entity to whom benefits are to be paid.
Purchase Payment -- Any payment or sum received by the Company from the Contract
Owner.
Qualified Contracts -- Contracts purchased in connection with a retirement plan
that receives favorable tax treatment under Sections 401, 403, 408, or 457 of
the Code.
Right to Examine Period -- The period during which the Contract can be cancelled
and treated as void from the Date of Issue.
Separate Account -- A segregated investment account created by General American.
The Separate Accounts for this Contract are numbers Twenty-Eight and
Twenty-Nine. Each is registered with the Securities and Exchange Commission as a
unit investment trust and meets the definition of a "separate account" under the
Federal securities laws.
Valuation Period -- A period commencing at the close of business each Business
Day and ending at the close of business of the following Business Day.
Written Notice (or Written Request) -- A notice or request in writing signed by
the Contract Owner and received by our Annuity Service Office. Such a request
must be in a format and have content acceptable to General American.
- --------------------------------------------------------------------------------
SUMMARY OF CONTRACT FEES AND EXPENSES
- --------------------------------------------------------------------------------
CONTRACT OWNER TRANSACTION EXPENSES:
Sales load imposed on Purchase: ........................................... None
Surrender Charge (contingent deferred sales charge):
Ten percent (10%) of the Accumulated Value may be withdrawn without penalty each
year, subject to a cumulative ceiling of 20% of the Accumulated Value. After a
Net Purchase Payment has been held by the Company for six complete years it may
be withdrawn free of any surrender charge. For Net Purchase Payments held by the
Company for less than six complete years, surrender charges are as follows
(expressed as a percentage of Net Purchase Payments withdrawn):
<TABLE>
<CAPTION>
YEARS SINCE RECEIPT
OF SURRENDER CHARGE
NET PURCHASE PAYMENT PERCENTAGE
- -------------------- ----------------
<S> <C>
0 6%
1 5%
2 4%
3 3%
4 2%
5 1%
6 0%
Transfer fee: $25 for transfers in
excess of twelve per
Contract Year.
</TABLE>
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Prospectus Page 5
<PAGE> 12
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<TABLE>
<S> <C>
Annual Contract Fee: The lesser of $30.00 or
2% of Accumulated Value
if the Accumulated Value
is less than $20,000. If
the Accumulated Value is
$20,000 or greater, or if
all assets are invested
in the Fixed Account, the
contract fee is waived.
</TABLE>
SEPARATE ACCOUNT ANNUAL EXPENSES:
<TABLE>
<S> <C>
Mortality and expense risk charge 1.25%
Administrative expense charge .15%
Other fees and expenses .00%
------
Total Separate Account annual expenses 1.40%
------
------
</TABLE>
COMBINED ANNUAL EXPENSES OF FUNDS UNDERLYING EACH DIVISION:
(expressed as a percentage of net assets)
<TABLE>
<CAPTION>
INVESTMENT
MANAGEMENT
AND OTHER TOTAL
ADMINI- EXPENSES EXPENSES
STRATION AFTER REIM- AFTER REIM-
GT GLOBAL FEES BURSEMENT* BURSEMENT*
--------- ---------- ---------- ----------
<S> <C> <C> <C>
Variable New
Pacific Fund 1.00% 0.25% 1.25%
Variable
Europe Fund 1.00% 0.25% 1.25%
Variable Latin
America Fund 1.00% 0.25% 1.25%
Variable
America Fund 0.75% 0.25% 1.00%
Variable
International
Fund 1.00% 0.25% 1.25%
Variable
Infrastructure
Fund 1.00% 0.25% 1.25%
Variable
Natural
Resources
Fund 1.00% 0.25% 1.25%
Variable
Emerging
Markets Fund 1.00% 0.25% 1.25%
Variable
Telecom-
munications
Fund 1.00% 0.25% 1.25%
Variable
Growth &
Income Fund 1.00% 0.25% 1.25%
Variable
Strategic
Income Fund 0.75% 0.25% 1.00%
Variable
Global
Government
Income Fund 0.75% 0.25% 1.00%
Variable U.S.
Government
Income Fund 0.75% 0.25% 1.00%
Money Market
Fund 0.50% 0.25% 0.75%
</TABLE>
* Figures in the "Other Expenses After Reimbursement" and "Total Expenses After
Reimbursement" columns are restated from the amounts you would have incurred in
1995 to reflect the fees and reimbursement or waiver arrangements for 1996. If
there had been no reimbursement of expenses and no expense reductions during
1995, the actual expenses of each Fund, expressed as a percentage of net assets,
with Investment Management and Administration Fees stated first, then Other
Expenses, followed by Total Expenses, would have been as follows: Variable New
Pacific Fund, 1.00%, 0.61%, 1.61%; Variable Europe Fund, 1.00%, 0.72%, 1.72%;
Variable Latin America Fund, 1.00%, 0.69%, 1.69%; Variable America Fund, 0.75%,
0.31%, 1.06%; Variable International Fund, 1.00%, 2.53%, 3.53%; Variable
Infrastructure Fund, 1.00%, 8.35%, 9.35%; Variable Natural Resources Fund,
1.00%, 8.07%, 9.07%; Variable Telecommunications Fund, 1.00%, 0.26%, 1.26%;
Variable Emerging Markets Fund, 1.00%, 1.22%, 2.22%; Variable Growth & Income
Fund, 1.00%, 0.44%, 1.44%; Variable Global Government Income Fund, 0.75%, 0.91%,
1.66%; Variable Strategic Income Fund, 0.75%, 0.49%, 1.24%; Variable U.S.
Government Income Fund, 0.75%, 1.81%, 2.56%; Money Market Fund, 0.50%, 0.55%,
1.05%.
---------------------
Prospectus Page 6
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EXAMPLES
If you surrender your contract at the end of the applicable time period, you
would pay the following aggregate expenses per Division on a $1,000 investment,
assuming 5% annual return and reimbursement of expenses, as described below:
<TABLE>
<CAPTION>
1 3 5 10
GT GLOBAL YEAR YEARS YEARS YEARS
--------- ---- ----- ----- -----
<S> <C> <C> <C> <C>
Variable New Pacific
Division $87 $ 123 $ 162 $ 302
Variable Europe Division 87 123 162 302
Variable Latin America
Division 87 123 162 302
Variable America Division 85 116 150 277
Variable International
Division 87 123 162 302
Variable Infrastructure
Division 87 123 162 302
Variable Natural
Resources Division 87 123 162 302
Variable Emerging Markets
Division 87 123 162 302
Variable
Telecommunications
Division 87 123 162 302
Variable Growth & Income
Division 87 123 162 302
Variable Strategic Income
Division 85 116 150 277
Variable Global
Government Income
Division 85 116 150 277
Variable U.S. Government
Income Division 85 116 150 277
Money Market Division 82 108 137 252
</TABLE>
If you do not surrender your contract at the end of the applicable time period,
you would pay the following aggregate expenses per Division on the same
investment:
<TABLE>
<CAPTION>
1 3 5 10
GT GLOBAL YEAR YEARS YEARS YEARS
--------- ---- ----- ----- -----
<S> <C> <C> <C> <C>
Variable New Pacific
Division $27 $ 83 $ 142 $ 302
Variable Europe Division 27 83 142 302
Variable Latin America
Division 27 83 142 302
Variable America Division 25 76 130 279
Variable International
Division 27 83 142 302
Variable Infrastructure
Division 27 83 142 302
Variable Natural
Resources Division 27 83 142 302
Variable Emerging Markets
Division 27 83 142 302
Variable
Telecommunications
Division 27 83 142 302
Variable Growth & Income
Division 27 83 142 302
Variable Strategic Income
Division 25 76 130 277
Variable Global
Government Income
Division 25 76 130 277
Variable U.S. Government
Income Division 25 76 130 277
Money Market Division 22 68 117 252
</TABLE>
If you annuitize at the end of the applicable time period, you would pay the
following aggregate expenses per Division.
<TABLE>
<CAPTION>
1 3 5 10
GT GLOBAL YEAR YEARS YEARS YEARS
--------- ---- ----- ----- -----
<S> <C> <C> <C> <C>
Variable New Pacific
Division $87 $ 123 $ 142 $ 302
Variable Europe Division 87 123 142 302
Variable Latin America
Division 87 123 142 302
Variable America Division 84 116 130 277
Variable International
Division 87 123 142 302
Variable Infrastructure
Division 87 123 142 302
Variable Natural
Resources Division 87 123 142 302
Variable Emerging Markets
Division 87 123 142 302
Variable
Telecommunications
Division 87 123 142 302
Variable Growth & Income
Division 87 123 142 302
Variable Strategic Income
Division 84 116 130 277
Variable Global
Government Income
Division 84 116 130 277
Variable U.S. Government
Income Division 84 116 130 277
Money Market Division 82 108 117 252
</TABLE>
For the purposes of calculating the values in the above examples, the Company
has translated the $30 annual administration fee into an annual asset charge of
0.034%, based on the total annual administrative charges collected in 1995
divided by the average total assets held under the Contracts offered by this
Prospectus.
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Prospectus Page 7
<PAGE> 14
-----------------------------------------------
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. Note
that the expense amounts in the examples are aggregate amounts for the Divisions
and the Funds for the number of years indicated. For a more complete description
of the GT Global Variable Investment Funds' fees and expenses, see the Funds'
Prospectus. For all GT Global Variable Investment Funds, the expenses shown
under "Other Expenses After Reimbursement" and "Total Expenses After
Reimbursement" reflect reimbursement by LGT Asset Management, Inc. ("LGT Asset
Management") of certain expenses incurred by each Fund. From time to time, LGT
Asset Management in its sole discretion may waive receipt of its fees and
voluntarily assume certain Fund expenses. LGT Asset Management currently has
undertaken to assume the expenses (other than taxes, brokerage fees, interest,
and extraordinary expenses) incurred by each Fund, to the extent such expenses
exceed the Investment Management and Administration fees, as set forth above, by
more than 0.25%. THE EXAMPLES ABOVE ARE NOT A REPRESENTATION OF PAST OR FUTURE
EXPENSES, AND THE FUNDS' ACTUAL EXPENSES MAY BE HIGHER OR LOWER THAN THOSE
SHOWN. 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.
- --------------------------------------------------------------------------------
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
each Division through December 31, 1995. There can be no assurance that the
future investment performance of these Separate Account Divisions will be
comparable to past performance.
CHART 1 -- SEPARATE ACCOUNT TWENTY-EIGHT
<TABLE>
<CAPTION>
TOTAL
ACCUMU- UNITS
LATION ACCUMU- OUT-
UNIT LATION STANDING,
VALUE: UNIT END OF
BEGINNING VALUE: PERIOD
OF END OF (IN
YEAR PERIOD* PERIOD THOUSANDS)
----- ------- ------- ---------
<S> <C> <C> <C> <C>
Money Market
Division 1995 12.40 12.87 1,158
1994 12.15 12.40 1,572
1993 12.00 12.15 303
Variable
Strategic
Income Division 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 Division 1995 11.66 13.33 893
1994 12.95 11.66 825
1993 12.00 12.95 464
Variable U.S.
Government
Income Division 1995 11.65 13.18 452
1994 12.61 11.65 205
1993 12.00 12.61 69
</TABLE>
CHART 2 -- SEPARATE ACCOUNT TWENTY-NINE
<TABLE>
<CAPTION>
TOTAL
ACCUMU- UNITS
LATION ACCUMU- OUT-
UNIT LATION STANDING,
VALUE: UNIT END OF
BEGINNING VALUE: PERIOD
OF END OF (IN
YEAR PERIOD* PERIOD THOUSANDS)
----- ------- ------- ---------
<S> <C> <C> <C> <C>
Variable New
Pacific
Division 1995 13.70 13.48 1,687
1994 15.87 13.70 1,410
1993 12.00 15.87 492
Variable Europe
Division 1995 14.84 16.05 970
1994 15.14 14.84 1,007
1993 12.00 15.14 349
Variable America
Division 1995 15.93 19.69 1,906
1994 13.59 15.93 953
1993 12.00 13.59 117
</TABLE>
---------------------
Prospectus Page 8
<PAGE> 15
-----------------------------------------------
<TABLE>
<CAPTION>
TOTAL
ACCUMU- UNITS
LATION ACCUMU- OUT-
UNIT LATION STANDING,
VALUE: UNIT END OF
BEGINNING VALUE: PERIOD
OF END OF (IN
YEAR PERIOD* PERIOD THOUSANDS)
---- ----- ----- -----
<S> <C> <C> <C> <C>
Variable Growth &
Income Division 1995 13.37 15.23 2,002
1994 13.96 13.37 1,908
1993 12.00 13.96 827
Variable Latin
America
Division 1995 18.79 14.06 1,380
1994 17.46 18.79 1,412
1993 12.00 17.46 463
Variable Tele-
communications
Division 1995 13.77 16.79 3,019
1994 13.03 13.77 2,612
1993 12.00 13.03 605
Variable
International
Division 1995 11.22 10.94 314
1994 12.00 11.22 172
<CAPTION>
<S> <C> <C> <C> <C>
Variable Emerging
Markets
Division 1995 11.93 10.88 809
1994 12.00 11.93 574
Variable Natural
Resources
Division 1995 12.00 14.47 86
Variable
Infrastructure
Division 1995 12.00 13.10 113
</TABLE>
- ------------
* At inception on February 10, 1993, except for the Variable Telecommunications
Division, which commenced operations on October 18, 1993; the Variable
International Division, which commenced operations on July 12, 1994; the
Variable Emerging Markets Division, which commenced operations on July 6,
1994; and the Variable Natural Resources Division and the Variable
Infrastructure Division, which both commenced operations on January 31, 1995.
- --------------------------------------------------------------------------------
QUESTIONS AND ANSWERS ABOUT
THE CONTRACT
- --------------------------------------------------------------------------------
The following section contains brief questions and answers about the Contract.
Reference should be made to the body of this Prospectus for more detailed
information. With respect to the Contract, it should be noted that the
requirements of a Qualified Contract, an endorsement to the Contract, or
limitations or penalties imposed by the Code may impose limits or restrictions
on payments, surrenders, distributions, or benefits, or on other provisions of
the Contracts, and these short questions do not describe any such limitations or
restrictions. (See "Federal Tax Matters")
1. WHAT IS THE PURPOSE OF THE CONTRACT?
The Contract allows you to accumulate funds on a tax-deferred basis and to
receive Annuity Payments when desired, based on the investment experience of the
assets underlying the Contracts. The Contracts are designed for use in
connection with nonqualified and qualified retirement plans.
A Contract may be purchased with proceeds from sources that do not qualify for
special tax treatment. The source of the proceeds affects the way Annuity
Payments are taxed, but not the operation of the Contracts. (See "Federal Tax
Matters")
You can allocate Purchase Payments to the Separate Accounts and the Fixed
Account. The Division of the Separate Accounts will invest in the Funds of GT
Global Variable Investment Funds in accordance with your instructions. Because
Annuity Payments and Accumulated Values depend on the investment experience of
the selected Divisions, you bear the entire investment risk under these
Contracts for amounts allocated to the Divisions of the Separate Accounts.
Purchase Payments may also be allocated, in whole or in part, to the Guaranteed
Interest Options of the Fixed Account.
2. WHAT IS AN ANNUITY AND WHY MAY BENEFITS VARY?
An annuity provides for a series of Annuity Payments beginning on the Annuity
Date. You may select from a number of Annuity Options, including Annuity
Payments for the life of the Annuitant (or the Annuitant and another person, the
"Joint Annuitant") with or without a
---------------------
Prospectus Page 9
<PAGE> 16
-----------------------------------------------
guaranteed number of Annuity Payments, or for a designated period. Annuity
Payments which are guaranteed throughout the payment period are referred to in
this Prospectus as "Guaranteed Annuity Payments." Annuity Payments which vary in
accordance with the investment experience of the Divisions selected by you are
referred to in this Prospectus as "variable Annuity Payments."
3. WHAT TYPES OF INVESTMENTS UNDERLIE THE SEPARATE ACCOUNTS?
Currently, the Separate Accounts invest in shares of G.T. Global Variable
Investment Series and G.T. Global Variable Investment Trust (together, "GT
Global Variable Investment Funds"). Both are management investment companies
offering access to investments managed by LGT Asset Management. A list of the
Funds currently offered is given in the prospectus for the GT Global Variable
Investment Funds, which must accompany this Prospectus.
4. HOW DO I PURCHASE A CONTRACT?
You may purchase a Contract with a single minimum Initial Purchase Payment of
$2,000. Subsequent Purchase Payments generally may be made at any time prior to
the Annuity Date as long as the Annuitant is living. (See "Contract Application
and Purchase Payments")
5. HOW DO I ALLOCATE NET PURCHASE PAYMENTS?
Net Purchase Payments may be allocated among one or more of the Divisions,
and/or Guaranteed Interest Options in accordance with the allocation percentages
selected by you in your Contract Application. The initial allocations must be in
whole percents totaling 100% and involve amounts of at least $500 per Division
or Guaranteed Interest Option. Allocations for additional Net Purchase Payments
may be changed by sending Written Notice to us. (See "Allocation of Net Purchase
Payments")
Net Purchase Payments or portions of Net Purchase Payments allocated to the
Guaranteed Interest Options will accrue interest at a rate of at least 3%
compounded annually and may also be subject to an interest change adjustment.
(See "Guaranteed Interest Options")
6. CAN I TRANSFER AMOUNTS AMONG THE DIVISIONS?
Transfers among the Divisions or to and from the Guaranteed Interest Options can
be made subject to certain limitations. (See "Transfer Privilege")
7. CAN I GET TO MY MONEY IF I NEED IT?
All or part of the Accumulated Value of the Contract may be withdrawn before the
earlier of the Annuitant's death or the Annuity Date. However, amounts withdrawn
may be subject to a surrender charge depending on how long the withdrawn Net
Purchase Payments have been invested in the Contract. In addition, withdrawals
of Accumulated Value from the Fixed Account will, except within 30 days of the
expiration of the Guarantee Period, be subject to an interest change adjustment
and certain surrenders may be subject to a Federal penalty tax. (See
"Distributions under the Contract", "Interest Change Adjustment", and "Federal
Tax Matters")
8. WHAT ARE THE CHARGES AND DEDUCTIONS UNDER THE CONTRACTS?
We deduct a daily charge equal to a percentage of the value of the net assets in
the Divisions for the mortality and expense risks assumed by us and for the cost
of administering these Contracts. The annual rate of this charge is 1.40% (1.25%
for mortality and expense risk and .15% for administrative expenses). In
addition, Contracts with Accumulated Values of less than $20,000 on the Contract
Anniversary may be assessed an annual contract fee equal to the lesser of $30 or
2% of Accumulated Value in Contract Years ending prior to December 31, 1999.
Thereafter, the contract fee may be adjusted annually, subject to limitations.
(See "Administrative Charges")
In order to permit investment of the entire Net Purchase Payment, we currently
do not deduct a sales load at the time of investment. However, a surrender
charge is imposed on certain full or partial withdrawals from the Contracts to
cover expenses relating to the sale of the Contracts, including commissions to
registered representatives and other promotional expenses. The surrender charge,
calculated as a percentage of each Net Purchase Payment, will apply to Net
Purchase Payments for six years from the date each such Net Purchase Payment is
received. The surrender charge ranges from 6% during the first Contract Year
after a Net Purchase Payment is received, to 1% during the sixth year after such
a
---------------------
Prospectus Page 10
<PAGE> 17
-----------------------------------------------
Net Purchase Payment is received. (See "Surrender Charge") Also, premium tax may
be deducted, if applicable. Certain states impose a premium tax, currently
ranging up to 3.5% (See "Premium Tax")
9. WHAT ANNUITY OPTIONS ARE AVAILABLE UNDER THE CONTRACTS?
You may receive Annuity Payments on a variable basis or a fixed basis or both.
You also have flexibility in choosing the Annuity Date, subject to current laws.
Four Annuity Options are included in the Contract: (1) Life Annuity; (2) Life
Annuity, with 60, 120, 180, or 240 Monthly Payments Guaranteed; (3) Joint and
Survivor Income for Life; and (4) Income for a Fixed Period which may range from
five to thirty years. (See "Annuity Options")
10. CAN THE CONTRACT BE CANCELLED AFTER IT IS DELIVERED?
The Contract contains a provision for a Right to Examine Period which permits
you to cancel the Contract by returning it to us at our Annuity Service Office,
or to the registered representative through whom it was purchased, within ten
days of receipt of the Contract. (This period is normally ten days, but some
states require a different time for the Right to Examine.) You will then receive
from us the refund made on the Contract. The amount of the refund will depend
upon the state in which the Contract is issued. Usually it will be an amount
equal to the Accumulated Value in any Separate Account Division and any Purchase
Payments allocated to the Fixed Account, without any deduction for premium tax,
surrender charge, or administrative charges. Some states require that we return
the Purchase Payments made on the Contract.
11. WHOM DO I CALL IF I HAVE QUESTIONS ABOUT MY CONTRACT?
Any questions about privileges or your Contract will be answered by our Annuity
Service Office, General American, GT Global Department, P.O. Box 66821, St.
Louis, Missouri, 63166-6821, (800) 237-6580. All inquiries should include the
Contract number and the Contract Owner's name.
12. WHAT CAN I EXPECT TO RECEIVE FROM GENERAL AMERICAN?
Confirmations will be mailed to you for any financial transactions that take
place, and quarterly statements will be sent showing the Accumulated Value in
each Division, the Accumulated Value in the Guaranteed Interest Options, and any
Purchase Payments, charges, transfers, partial withdrawals, or surrenders during
the time period covered. In addition, we will send you financial reports of the
Separate Accounts and for the GT Global Variable Investment Funds.
- --------------------------------------------------------------------------------
GENERAL AMERICAN LIFE INSURANCE COMPANY
AND THE SEPARATE ACCOUNTS
- --------------------------------------------------------------------------------
GENERAL AMERICAN
General American Life Insurance Company is a mutual life insurance company. It
was chartered in 1933 and since then has continuously engaged in the business of
life insurance, annuities, and accident and health insurance. General American's
National Headquarters (Home Office) is located at 700 Market Street, St. Louis,
Missouri 63101. The telephone number is (314) 231-1700. It is licensed to do
business in 49 states of the United States, the District of Columbia, Puerto
Rico, and is 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.
General American conducts a conventional life insurance business. Assets derived
from such business should be considered by purchasers of variable annuity
contracts only as bearing upon the ability of General American to meet its
obligations under the variable annuity contracts and should not be considered as
bearing on the
---------------------
Prospectus Page 11
<PAGE> 18
-----------------------------------------------
investment performance of the Separate Accounts.
THE SEPARATE ACCOUNTS
The Separate Accounts were established on May 28, 1992, pursuant to
authorization by the Board of Directors of General American. Although they are
an integral part of General American and not separate corporations, 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
General American 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 the General Account of General
American (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 General American may conduct.
The income, gains, and losses, whether or not realized, from the assets of each
Division of a Separate Account are credited to or charged against that Division
without regard to any other income, gains, or losses.
Separate Account Twenty-Eight currently has four Divisions, each of which
invests solely in a corresponding GT Global Variable Investment Fund. These are:
GT Global Variable Strategic Income Division
GT Global Variable Global Government Income Division
GT Global Variable U.S. Government Income Division
GT Global Money Market Division
Separate Account Twenty-Nine currently has ten Divisions, each of which invests
solely in a corresponding GT Global Variable Investment Fund. These are:
GT Global Variable New Pacific Division
GT Global Variable Europe Division
GT Global Variable Latin America Division
GT Global Variable America Division
GT Global Variable International Division
GT Global Variable Infrastructure Division
GT Global Variable Natural Resources Division
GT Global Variable Emerging Markets Division
GT Global Variable Telecommunications Division
GT Global Variable Growth & Income Division
- --------------------------------------------------------------------------------
GT GLOBAL VARIABLE INVESTMENT
FUNDS
- --------------------------------------------------------------------------------
Each of the GT Global Variable Investment Funds (each, a "Fund", collectively,
the "Funds") described above is a separate investment portfolio of either G.T.
Global Variable Investment Series ("Series") or G.T. Global Variable Investment
Trust ("Trust"). Each Fund has its own investment objectives, policies, and
limitations and invests directly in a portfolio of securities or other
investments. The Series and Trust are each organized as a Massachusetts business
trust and each is registered under the 1940 Act as an open-end management
investment company of the series type. Variable New Pacific Fund, Variable
---------------------
Prospectus Page 12
<PAGE> 19
-----------------------------------------------
Europe Fund, Variable America Fund, Variable International Fund and Money Market
Fund are part of the Series. Variable Latin America Fund, Variable
Infrastructure Fund, Variable Natural Resources Fund, Variable
Telecommunications Fund, Variable Emerging Markets Fund, Variable Growth &
Income Fund, Variable Global Government Income Fund, Variable Strategic Income
Fund, and Variable U.S. Government Income Fund are part of the Trust.
LGT Asset Management is the investment manager and administrator of each Fund.
On January 1, 1996, G.T. Capital Management, Inc. changed its name to LGT Asset
Management, Inc. Each Fund pays Investment Management and Administration Fees to
LGT Asset Management. (See "Fees and Expenses of the Funds")
Detailed information concerning the Funds, their investment objectives and
policies, and the charges levied upon them can be found in the current
Prospectus for the GT Global Variable Investment Funds, which accompanies this
Prospectus. General American assumes no responsibility for the Prospectus of the
GT Global Variable Investment Funds. Each Prospectus should be read carefully
before any decision is made concerning the allocation of Purchase Payments to a
Division that corresponds to a particular Fund.
THERE IS NO ASSURANCE THAT ANY OF THE FUNDS WILL ATTAIN THEIR RESPECTIVE STATED
OBJECTIVES, OR IF THEY ATTAIN THEM THAT THEY WILL BE ABLE TO DO SO OVER A
SUSTAINED PERIOD OF TIME.
- --------------------------------------------------------------------------------
ADDITIONS, DELETIONS, OR
SUBSTITUTIONS OF INVESTMENTS
- --------------------------------------------------------------------------------
General American reserves the right, subject to applicable law and to the plans
of Operations for the Separate Accounts, to make additions to, deletions from,
or substitutions for the shares of a Fund that are held or purchased by the
Separate Accounts for the Divisions. General American reserves the right to
eliminate the shares of any of the Funds and to substitute shares of another
Fund of GT Global Variable Investment Funds or of another registered open-end
investment company, if the shares of a Fund are no longer available for
investment, or if in its judgment further investment in any Fund becomes
inappropriate in view of the purposes of the Separate Accounts. General American
will not replace any shares attributable to a Contract Owner's interest in a
Division of the Separate Accounts without at least thirty days Written Notice to
the Contract Owner and prior approval of the SEC, to the extent required by the
1940 Act or other applicable law. Nothing contained in this Prospectus shall
prevent the Separate Accounts from purchasing other securities for other series
or classes of policies, or from permitting a conversion between series or
classes of policies on the basis of requests made by Contract Owners.
General American also reserves the right to establish additional Divisions of
the Separate Accounts, each of which would invest in a new Fund of G.T. Global
Variable Investment Series or G.T. Global Variable Investment Trust, or in
shares of another investment company, with a specified investment objective. New
Divisions may be established when, in the sole discretion of General American,
marketing needs or investment conditions warrant, and any new Division will be
made available to existing Contract Owners on a basis to be determined by
General American. To the extent approved by the SEC, General American may also
eliminate or combine one or more Divisions, substitute one Division for another
Division, or transfer assets between Divisions if, in its sole discretion,
marketing, tax, or investment conditions warrant.
In the event of a substitution or change, General American may make such changes
it considers necessary in the Contracts by appropriate endorsement. General
American will notify all Contract Owners of any such changes.
If it is deemed by General American to be in the best interests of persons
having voting rights under the Contracts, and to the extent any necessary SEC
approvals or Contract Owner votes are obtained, the Separate Accounts may be:
(a) operated as management companies under the 1940 Act; (b) deregistered under
the
---------------------
Prospectus Page 13
<PAGE> 20
-----------------------------------------------
1940 Act in the event such registration is no longer required; or (c) combined
with other separate accounts of General American. To the extent permitted by
applicable law, General American may also transfer the assets of the Separate
Account associated with the Contracts to another separate account.
- --------------------------------------------------------------------------------
THE CONTRACTS
- --------------------------------------------------------------------------------
The Contract is available to individuals seeking annuity contracts entitled to
favorable tax treatment under the Code as Qualified Contracts, and also to
individuals seeking annuity contracts not entitled to any special tax benefits.
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.
RIGHT TO EXAMINE
The Contract Owner may cancel the Contract during the Right to Examine Period
starting after the Contract Owner receives the Contract. This period is normally
ten days, but some states require a different time for the Right to Examine.
Upon receipt of a Written Request for cancellation by General American's Annuity
Service Office or by the registered representative through whom it was
purchased, the Contract will be cancelled and a refund will be made. The amount
of the refund will depend on the state in which the Contract is issued; however,
it will usually be an amount equal to the Accumulated Value in any Separate
Account Division and any Purchase Payments allocated to the Fixed Account,
without any deduction for premium tax, surrender charge, interest change
adjustment, or administrative charges. As to Accumulated Value in a Division,
the daily charge for mortality and expense risks and certain operating expenses
of the corresponding Funds will not be returned. In some states applicable law
requires that the amount of the Purchase Payment be returned.
CONTRACT APPLICATION AND PURCHASE PAYMENTS
(a) Place, Amount and Frequency
Purchase Payments are to be paid to the Company at its Annuity Service Office or
to a broker/dealer where such broker/dealer has made special arrangements with
the Company for collection of Purchase Payments. All Purchase Payments received
at the Annuity Service Office before the close of the NYSE (3:00 p.m. St. Louis
Time) on any Business Day will be considered received on that Business Day.
Payment by electronic funds transfer from broker/dealers with whom an
arrangement has been entered into will be considered received on the Business
Day Written Notice of such payment is received by the Annuity Service Office,
provided that such Written Notice is received before the close of the NYSE on
that Business Day, and the funds transferred are actually received at the
Annuity Service Office by 9:00 a.m. St. Louis time on the next Business Day.
The amount of Purchase Payments may vary; however, the Company will not accept
an Initial Purchase Payment which is less than $2,000, and each additional
Purchase Payment must be at least $100.
In lieu of the initial purchase payment of $2,000, a Contract Owner may elect to
deposit his or her Initial Purchase Payment in monthly installments by means of
a pre-authorized check ("PAC") process. The PAC process may also be used to
deposit additional Purchase Payments to an established Contract. Under the PAC
process, amounts will be deducted each month from the Contract Owner's bank
account and applied as Purchase Payments under a Contract. Deductions may be
made on the 5th or 20th of each month as selected by the Contract Owner. The
minimum monthly PAC deduction must be at least $100. PAC deposits may be made to
any Division or Guaranteed Period. A Written Request must be received by the
Annuity Service Office from the Contract Owner authorizing General American to
debit his or her bank account.
The Contract Owner may cancel PAC at any time by sending a Written Request to
the Annuity Service Office at least five business days prior to the next
scheduled withdrawal. General American is not responsible for any debits made to
a bank account prior to the time the Written
---------------------
Prospectus Page 14
<PAGE> 21
-----------------------------------------------
Request for termination is received at the Annuity Service Office.
In any Contract Year after the first, General American reserves the right not to
accept Purchase Payments in excess of double the amount paid in the initial
Contract Year. In the first Contract Year, Purchase Payments may be limited to
the greater of double the total initial premium or $25,000. The Company will
notify the Contract Owner in writing, at his or her address last known to us, at
least sixty days prior to exercising these rights. In addition, the prior
approval of the Company is required before it will accept a Purchase Payment
which would cause the value of a Contract Owner's Account to exceed $1,000,000.
If the value of a Contract Owner's Account exceeds $1,000,000, no additional
Purchase Payments will be accepted without the prior approval of the Company. In
addition, the Date of Issue for the Contract can be no later than the first day
of the first month following the Annuitant's 90th birthday.
A completed Contract Application and the Initial Purchase Payment are forwarded
to the Company for acceptance. Upon acceptance, the Contract is issued to the
Contract Owner and the Initial Purchase Payment is credited to the Contract
Owner's Account. The Date of Issue will be the date the Initial Purchase Payment
is invested. The Initial Purchase Payment must be invested within two Business
Days of receipt by the Company of a Contract Application in good order. The
Company may retain the Initial Purchase Payment for up to five Business Days
while attempting to complete an incomplete Contract Application. If the Contract
Application cannot be made complete within five Business Days, the prospective
Contract Owner will be informed of the reasons for the delay. The Initial
Purchase Payment will be returned immediately unless the prospective Contract
Owner consents in writing to the Company's retaining the Initial Purchase
Payment until the Contract Application is made in good order. Thereafter, the
Initial Purchase Payment must be invested within two Business Days. Subsequent
Net Purchase Payments are invested at the end of the Business Day during which
they are received by the Company at the Annuity Service Office.
Purchase Payments may be made at any time prior to the Annuity Date, full
surrender of the Contract, or death of the Annuitant or Contract Owner.
(b) Account Continuation
The Contract does not require continuing Purchase Payments and will continue in
force until the earlier of the Annuity Date, surrender of the Contract, or death
of the Annuitant or Contract Owner. Notwithstanding the foregoing, the Company
may, after sixty days grace period following Written Notice to the Contract
Owner, at its option, cancel a Contract at the end of any two consecutive
Contract Years in which no Purchase Payments have been made, if both (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, the Company will
pay the Contract Owner the Accumulated Value computed as of the Valuation Period
during which the cancellation occurs less administrative charges, if applicable.
Such cancellation could have adverse tax consequences. (See "Federal Tax
Matters")
(c) Allocation of Net Purchase Payments
The Net Purchase Payment is that portion of a Purchase Payment which remains
after deduction of any applicable premium or other tax. The initial Net Purchase
Payment will be allocated among the Divisions of the Separate Accounts and
Guarantee Periods of the Fixed Account in accordance with the allocation
percentage specified in the particular Contract Application. The initial
percentages specified in the Contract Application must be in whole percents
totaling 100% and allocate amounts of at least $500 per Division or Guarantee
Period.
The allocations for additional Net Purchase Payments among the Guarantee Periods
and Divisions may be changed by the Contract Owner at any time by Written
Request. Any allocation change will take effect with the first Purchase Payment
received with or after receipt of a Written Request for change by the Company
and will continue in effect until subsequently changed. If any portions of the
Net Purchase Payments are received for allocation to a Guarantee Period or
Division no longer offered by the Company, the Company will contact the Contract
Owner to secure new allocations. Subsequent Net Purchase Payments should be at
least $100. If the subsequent payment specifies allocation percentages different
from the initial percentages specified in the Contract application, they must be
in whole percents, and total 100%.
---------------------
Prospectus Page 15
<PAGE> 22
-----------------------------------------------
VARIABLE ACCOUNT
ACCUMULATION UNITS
The Company will establish an account in the Contract Owner's name for each
Division to which the Contract Owner allocates Net Purchase Payments or transfer
amounts. Net Purchase Payments and transfer amounts are allocated to Divisions
and credited to such accounts in the form of Accumulation Units. The following
discussion of Accumulation Units, the value of Accumulation Units and the net
investment factor formula pertains only to the Divisions. The parallel
discussion regarding accumulations in the Fixed Account appears elsewhere in
this Prospectus. (See "Guaranteed Interest Options")
The number of Accumulation Units to be credited to each account is determined by
dividing the Net Purchase Payment or transfer amount for the account by the
value of an Accumulation Unit for that Division for the Valuation Period during
which the Net 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 Net Purchase Payments allocated to the corresponding Division
during that Valuation Period and by any Accumulated Value transferred to that
Division from another Division 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 Division, by any partial withdrawals or surrenders from that
Division, and by any administrative charges or surrender charge deducted from
that Division during that Valuation Period.
VALUE OF ACCUMULATION UNITS
The value of Accumulation Units in each Division will vary from one Valuation
Period to the next depending upon the investment results of that particular
Division. The value of an Accumulation Unit for each Division 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 Division for the Valuation Period for which the value
is being determined.
NET INVESTMENT FACTOR
Each Business Day we will calculate each Division's net investment factor. A
Division's net investment factor measures its investment performance during a
Valuation Period. The net investment factor for each Division 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 a Fund share held in the Division
determined at the end of the current Valuation Period, plus (2) the per share
amount of any dividend or capital gain distribution made by a Fund on shares
held in the Division if the "ex-dividend" date occurs during the current
Valuation Period.
Where (b) is:
the net asset value per share of a Fund share held in the Division determined
as of the end of the immediately preceding Valuation Period.
Where (c) is:
a factor representing the charges deducted from the Division 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.
GUARANTEED INTEREST OPTIONS
Net Purchase Payments applied to one of the Guaranteed Interest Options will be
invested in the Fixed Account. Interests in the Fixed Account have not, and are
not required to be, registered with the SEC under the 1933 Act, and neither the
Fixed Account nor General American has been registered as an investment company
under the 1940 Act. Therefore, the Fixed Account and interests therein are not
generally subject to regulation under the 1933 Act or the 1940 Act. The
following disclosure relating to the Fixed Account and related Guarantee Periods
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is for your information and has not been reviewed by the SEC. Nevertheless, such
disclosure may be subject to certain generally applicable provisions of Federal
securities laws relating to the accuracy and completeness of statements made in
this Prospectus. The Fixed Account may not be available in all jurisdictions.
You should ask your registered representative whether it is an option for you.
GUARANTEE PERIODS
The Company will establish an account for the Contract Owner for each Guarantee
Period to which such Contract Owner allocates Net Purchase Payments or
transfers. The Company has established Dollar Cost Averaging, Interest Sweep,
and Personal Portfolio Rebalancing Guarantee Periods for the purpose of
facilitating the Dollar Cost Averaging, Interest Sweep, and Personal Portfolio
Rebalancing programs. The Contract Owners may select one or more Guarantee
Period(s) from among those we make available. Each Guarantee Period will have a
duration of at least one year. The period(s) selected will determine the
guaranteed interest rate(s). A Net Purchase Payment, or the portion thereof, or
the amount transferred in accordance with the transfer privilege, allocated to a
particular Guarantee Period, less any amounts or charges subsequently withdrawn,
will earn interest at the Guaranteed Interest Rate during the Guarantee Period.
Initial Guarantee Periods begin on the date of allocation or transfer, and end
on the Expiration Date. Subsequent Guarantee Periods begin on the first day
following the Expiration Date.
Any portion of a Contract Owner's Accumulated Value allocated or transferred to
a particular Guarantee Period with a particular Expiration Date (including
interest earned thereon) will be referred to herein as a "Guarantee Period
Amount." Interest will be credited daily at a rate equivalent to the compound
annual rate. We cannot predict or guarantee the level of future Guaranteed
Interest Rates, except that we guarantee that future Guaranteed Interest Rates
will not be below 3%, per year compounded annually. As a result of additional
Net Purchase Payments, renewals, and transfers of portions of the Contract
Owner's Accumulated Value described under "See Transfer Privilege" which begin
new Guarantee Periods, Guarantee Period Amounts allocated to Guarantee Periods
of the same duration may have different Expiration Dates. Thus, each Guarantee
Period Amount will be treated separately for purposes of determining any
interest change adjustment. (See "Interest Change Adjustment")
The Company will notify the Contract Owner in writing, at his or her last known
address to us, at least 30 and no more than 75 days prior to the Expiration Date
of each Guarantee Period Amount. The Guarantee Period Amount will renew for a
new Guarantee Period of the same duration as the previous Guarantee Period,
unless the Company receives, prior to the end of the expiring Guarantee Period,
written election by the Contract Owner of a different Guarantee Period from
among those being offered by the Company at such time, instructions to transfer
all or a portion of the Guarantee Period Amount to one or more Divisions in
accordance with the transfer privilege, (see "Transfer Privilege") or
instructions to withdraw all or a portion of the Guarantee Period Amount. If the
previous Guarantee Period is no longer being offered by the Company, such amount
will be placed in the GT Global Money Market Division, unless the Contract Owner
gives us other instructions. Each new Guarantee Period Amount must be at least
$500.
GUARANTEED INTEREST RATES
The Company periodically will establish an applicable guaranteed interest rate
for each Guarantee Period offered by the Company. Guaranteed interest rates for
the Dollar Cost Averaging, Interest Sweep, and Personal Portfolio Rebalancing
Guaranteed Interest Options may be different than for other Guaranteed Interest
Options with the same duration. Current Guaranteed Interest Rates may be changed
by the Company at any time depending on investment interest rates available to
the Company and other factors as described below. Once established, however, the
rate applicable to a particular Guarantee Period Amount is guaranteed for the
duration of the applicable Guarantee Period. If, however, all or part of the
Accumulated Value is withdrawn from the Guaranteed Interest Options, it will be
subject to any applicable surrender charge and may be subject to an interest
change adjustment. (See "Interest Change Adjustment")
General American has no specific formula for establishing the Guaranteed
Interest Rates for the Guarantee Periods. The determination may
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be influenced by, but not necessarily correspond to, interest rates generally
available on the type of investments to be acquired with the Guarantee Period
Amounts. General American, in determining Guaranteed Interest Rates, may also
consider, among other factors, the duration of a Guarantee Period, regulatory
and tax requirements, sales commissions and administrative expenses borne by
General American, and general economic trends.
GENERAL AMERICAN'S MANAGEMENT MAKES THE FINAL DETERMINATION OF THE GUARANTEED
INTEREST RATES TO BE DECLARED. GENERAL AMERICAN CANNOT PREDICT OR GUARANTEE THE
LEVEL OF FUTURE GUARANTEED INTEREST RATES, EXCEPT THAT GENERAL AMERICAN
GUARANTEES THAT FUTURE GUARANTEED INTEREST RATES WILL NOT BE BELOW 3% PER YEAR
COMPOUNDED ANNUALLY.
TRANSFER PRIVILEGE
At any time during the accumulation period the Contract Owner may transfer all
or part of the Contract Owner's Accumulated Value to one or more Divisions of
the Separate Accounts and the Guarantee Periods of the Fixed Account, subject to
the following conditions: (1) transfers from the Fixed Account are not allowed
during the first twelve months of that Guarantee Period; (2) transfers must be
made by Written Request or by telephone, provided we have a telephone
authorization in good order completed by the Contract Owner; (3) transfers from
a Division or a Guarantee Period must be at least $500, or the entire amount
remaining in the Division or Guarantee Period, if less than $500; (4) any
Contract Owner's Accumulated Value remaining in a Division or Guarantee Period
may not be less than $500, or the request may be treated as a request to
transfer the entire amount in that Division; and (5) there is no limit to the
number of transfers that the Contract Owner may request. The Company charges $25
for each transfer in excess of twelve during the Contract Year, excluding
transfers made under the Dollar Cost Averaging ("DCA") program, the Personal
Portfolio Rebalancing ("PPR") program, or the Interest Sweep ("IS") program.
In addition, transfers from the Fixed Account will be subject to the Interest
Change Adjustment unless the transfer is effective within thirty days prior to
the Expiration Date applicable to the Guarantee Period Amount. Transfers
involving a Division will be subject to the additional terms and conditions as
may be imposed by each Division's corresponding Fund. The Contract Owner must
instruct the Company as to what amounts should be transferred from each Division
and Guarantee Period. Transfers made from a Guarantee Period will be made on a
first-in-first-out basis (FIFO) when more than one Guarantee Period amount
exists within a Guarantee Period. A transfer will be effective on the date the
request for transfer is received by the Company. Under current law, there will
not be any tax liability to the Contract Owner if a Contract Owner makes a
transfer. 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 Company offers a Dollar Cost Averaging ("DCA") program which enables a
Contract Owner to pre-authorize a periodic exercise of the contractual transfer
privilege described above. Contract Owners entering into a DCA agreement
instruct the Company to transfer on the Business Day coincident with or
subsequent to the 15th of each month a predetermined dollar amount of at least
$100 per month. Transfers from the GT Global Money Market Division, GT Global
Variable Growth & Income Division, GT Global Variable Strategic Income Division,
GT Global Variable Global Government Income Division, the GT Global Variable
U.S. Government Income Division, or the DCA Guarantee Periods will continue
until the dollar amount requested has been transferred or the Accumulated Value
in the Division or Guarantee Period is exhausted, whichever is sooner. The
Interest Change Adjustment and waiting period are waived for Dollar Cost
Averaging transfers from the Guarantee Periods. Dollar Cost Averaging transfer
allocations for a Guarantee Period or Division which is no longer offered will
remain in that Division until the allocation instructions are changed by the
Contract Owner.
Contract Owners entering the DCA program must designate at least $2,000 for
investment through DCA. Contract Owners interested in the DCA program may elect
to participate in the program through a Written Request to the Company.
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The DCA program is intended to permit Contract Owners to utilize "dollar cost
averaging," a long-term investment method which provides for investments to be
made in regular equal installments over time to control the risk of investing at
the top of a market cycle. The Company makes no guarantees that Dollar Cost
Averaging will result in a profit or protect against loss. Because the DCA
program involves continuous investments in the Divisions regardless of
fluctuating unit values of such Divisions, Contract Owners should consider their
financial ability to continue to purchase through periods of fluctuating unit
values. The Company reserves the right to discontinue offering the DCA program
at any time.
PERSONAL PORTFOLIO REBALANCING
Contract Owners may participate in the Personal Portfolio Rebalancing ("PPR")
program. This program enables a Contract Owner to authorize the Company to
transfer all or a portion of assets of the Accumulated Value on a periodic basis
in order to maintain a designated allocation among the Divisions or the PPR
Guarantee Periods as selected by the Contract Owner. The Contract Owner may
choose what specific investment options are included in his or her personal
portfolio. The personal portfolio must contain at least two investment options
and may include all available investment options. The Accumulated Value
allocated to each Division increases or decreases at different rates depending
on the investment performance of the Division. Personal Portfolio Rebalancing
automatically reallocates the Accumulated Value in the Divisions and Guarantee
Periods to maintain the allocation selected by the Contract Owner. The personal
portfolio will automatically reallocate on the day of the month determined by
the Date of Issue. If the Date of Issue is on the 29th, 30th, or 31st of any
month, reallocation will take place on the 28th of each subsequent rebalancing
period.
The goal of the PPR program is to assist the Contract Owners by selling the
accumulation units that have appreciated most, and purchasing additional units
in the Divisions or Guarantee Periods that have appreciated least. Participation
in PPR does not assure the Contract Owner profit from purchases under the
program nor will it prevent or lessen losses in a declining market.
A Contract Owner may select rebalancing on a monthly, quarterly, semiannual, or
annual basis. The minimum amount that will be transferred from any Division or
Guarantee Period under this program is the greater of $50 or 0.5% of the
Accumulated Value of that Division or Guarantee Period. Currently, all Divisions
and the PPR Guarantee Periods are available investment options under this
program. The number of available investment options may change. The Interest
Change Adjustment and waiting period are waived for Personal Portfolio
Rebalancing transfers from Guarantee Periods. The designated allocation can be
changed at any time upon Written Request from the Contract Owner. Amounts
transferred under this program are not included in the twelve free transfers per
contract year. The Company reserves the right to modify, suspend, or terminate
this program at any time.
INTEREST SWEEP
Contract Owners may participate in the Interest Sweep ("IS") program. This
program enables a Contract Owner to authorize transfers of accrued interest from
the Interest Sweep Guarantee Periods to one or more Divisions. If the Contract
Owner has allocated Net Purchase Payments or transfers to more than one Interest
Sweep Guarantee Period, the IS transfer will occur from the oldest Interest
Sweep Guarantee Period. A minimum of at least $25 from the Interest Sweep
Guarantee Periods will transfer to designated Divisions on the day of the month
determined by the date the Written Request is received in the Annuity Service
Office. If the Written Request is received on the 29th, 30th, or 31st of any
month, the Interest Sweep transfer will take place on the 1st of each subsequent
Interest Sweep period. Contract Owners may select the IS transfer on a monthly,
quarterly, semiannual, or annual basis. The Interest Change Adjustment and
waiting period are waived for Interest Sweep transfers from Guarantee Periods.
Amounts transferred under IS are not included in the twelve free transfers per
contract year. The Company reserves the right to modify, suspend, or terminate
the IS program at any time.
CONTRACT OWNER INQUIRIES
General American performs all administrative functions in connection with the
Contracts, such as underwriting, record keeping, Contract Owner servicing, and
reporting. Contract Owner inquiries should be addressed to General American Life
Insurance Company, Annuity Service Office, P.O. Box 66821, St. Louis,
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Missouri 63166-6821, or made by calling (800) 237-6580. All inquiries should
include the Contract number, Contract Owner's name, and Social Security Number.
- --------------------------------------------------------------------------------
CHARGES AND DEDUCTIONS
- --------------------------------------------------------------------------------
No deductions are made from the Initial Purchase Payment unless a state premium
tax or other tax is due. (See "Premium Tax") Therefore, the full amount of the
Initial Purchase Payment, less any applicable tax, is invested in one or more
Divisions of the Separate Accounts and/or the Fixed Account.
ADMINISTRATIVE CHARGES
a) Annual Contract Fee
On the last day of each Contract Year, the Company may deduct a contract fee
(referred to in the Contract as "Account Fee") as partial compensation for
expenses relating to the issue and maintenance of the Contract and the Contract
Owner's account. For Contracts with Accumulated Values of less than $20,000, the
contract fee is equal to the lesser of $30 or 2% of the Accumulated Value for
Contract Years ending prior to December 31, 1999. Thereafter, the contract fee
may be adjusted annually, but in no event may it 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 annual contract fee will be waived
for Contracts with Accumulated Values of $20,000 or more.
The annual contract fee will be deducted from the GT Global Money Market
Division or from the Division with the largest portion of Accumulated Value if
no GT Global Money Market Division investment exists on the Contract
Anniversary, or from the Fixed Account if no Separate Account investments exist
on the Contract Anniversary. If a Contract Owner's Accumulated Value has been
allocated solely to the Fixed Account during the entire previous Contract Year,
no account fee will be assessed. To the extent that the contract fee is deducted
from a Division, Accumulation Units will be cancelled to effect the deduction.
Upon full surrender of the Contract or upon the death of the contract Owner or
Annuitant, the entire annual contract fee, if applicable, will be assessed.
On occasion, the last day of a Contract Year will not fall on a Business Day. In
this case, the last day of a Contract Year and the next Business Day fall in the
same calendar month, administrative charges will be taken on the next Business
Day. If the last day of a Contract Year and the next Business Day do not fall in
the same calendar month, administrative charges will be taken on the Business
Day immediately preceding the last day of the Contract Year.
After the Annuity Date, the annual contract fee will be deducted in equal
amounts from each variable Annuity Payment made during the year. No such
deduction will be made from fixed Annuity Payments.
The net investment factor incorporates a 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 the Company for those administrative
expenses attributable to the Contracts, the Contract Owner's Accounts, and the
Separate Accounts which exceed the revenues received from the contract fee. The
Company believes the administrative expense charge and the contract fee have
been set at a level that will recover no more than the actual costs associated
with administering the Contract. (See "Net Investment Factor")
b) Transfer Fee
The Company charges $25 for each transfer in excess of twelve during the
Contract Year, excluding transfers made under the Dollar Cost Averaging,
Personal Portfolio Rebalancing, or Interest Sweep program. This fee will be
deducted from a division to which the transfer is being made.
c) Special Handling Fees
The Contract provides that the Company reserves the right to charge a fee to
cover the Company's expenses for special handling. Items currently considered as
special handling (and the current charges assessed) include: wire transfer
charges ($11.50), checks returned to us for
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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 Division, (b) Variable Division with the largest Accumulated
Value, (c) Guaranteed Interest Option. The fee for special handling will not
exceed $50 per request. The Company does not expect to make a profit from these
charges.
SURRENDER CHARGE (CONTINGENT DEFERRED SALES CHARGE)
No deduction for a sales load is made from Purchase Payments. A surrender charge
is imposed on certain surrenders and withdrawals to cover certain expenses
relating to the sale of the Contracts, including commissions to registered
representatives and other promotional expenses.
Upon full surrender of the Contract or partial withdrawal of Accumulated Value,
General American will apply a surrender charge to the gross withdrawal amount,
excluding any applicable interest change adjustment or administrative charges.
This surrender charge, expressed as a percentage of each Net Purchase Payment,
will apply to Net Purchase Payments for six complete years measured from the
date the Net Purchase Payment is received. The surrender charge schedule is as
follows:
<TABLE>
<CAPTION>
COMPLETE YEARS SINCE RECEIPT SURRENDER
OF NET PURCHASE PAYMENT CHARGE PERCENTAGE
- ---------------------------- -----------------
<S> <C>
0 6%
1 5%
2 4%
3 3%
4 2%
5 1%
6+ 0%
</TABLE>
General American offers to its officers and full-time employees (including
employees of its subsidiary companies) individual variable annuity contracts
with a surrender charge of 2% in the first year after receipt of the Net
Purchase Payment, 1% in the second year after receipt of the Net Purchase
Payment, and 0% thereafter.
A Contract Owner may make partial withdrawals up to the level of the "Free
Amount" each Contract Year without incurring a surrender charge. The Free Amount
equals 10% of the Accumulated Value on the date that the first partial
withdrawal is made in the Contract Year. Beginning with the contract anniversary
in 1997, the Free Amount will equal 20% of the Accumulated Value if no Free
Amounts were withdrawn in the prior Contract Year. If Free Amounts were
withdrawn in the prior Contract Year, the Free Amount will equal 10% of the
Accumulated Value. The annual Free Amount will be equal to the appropriate
percentage of the Accumulated Value on the date that the first partial
withdrawal is made each Contract Year.
The Free Amounts withdrawn will not reduce the Net Purchase Payments still
subject to a surrender charge. The Free Amount does not apply upon full
surrender.
After the Free Amount has been withdrawn, additional amounts will be withdrawn
from Net Purchase Payments on a "first in first out" (FIFO) basis and will be
subject to the surrender charge noted in the above table. Net Purchase Payments
which were received more than six years prior to the date of withdrawal may be
withdrawn free from surrender charges. After all Net Purchase Payments have been
withdrawn, further withdrawals will be made from earnings without incurring a
surrender charge. If the Accumulated Value is less than the Net Purchase
Payments being withdrawn and subject to a surrender charge, the surrender charge
will only be applied to the Accumulated Value.
The surrender charge is not applied in the event of annuitization with General
American after three Contract Years, or on death of the Annuitant if the Date of
Issue is on or after January 1, 1996, and prior to the Annuitant's 80th
birthday. Currently, however, General American assesses 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.
In the event that revenues from surrender charges are not sufficient to cover
certain sales-related expenses, the Company will bear the shortfall; conversely,
if the revenues from surrender charges exceed such expenses, the Company will
retain the excess. General American does not currently believe that the
surrender charge revenues will cover the expected sales-related expenses. Any
shortfall will be made up from the Company's General Account which may include
amounts derived
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from the mortality and expense risk charge described below.
See Appendix A for examples of the surrender charge calculation.
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. The
Company may waive or reduce the surrender charge on such policies in recognition
of the fact that sales efforts and administrative costs are generally lower for
such classes, and sales compensation may be adjusted. The amount of any
reduction will depend upon 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.
General American will determine the amount of reduction which is appropriate and
may change the surrender charge attributable to future premiums if it does so on
a basis which is uniform with respect to all similar Contract Owners. The
Company 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
Divisions. The charge for mortality and expense risk is 1.25% annually (1.00%
for mortality risk and .25% for expense risk).
The mortality risk that General American assumes is that Annuitants may live for
a longer period of time than estimated when the guarantees in the 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 General American assumes also includes a guarantee to pay a death
benefit if the Annuitant dies before the Annuity Date. The expense risk that
General American assumes is the risk that the surrender charge and
administrative charges will be insufficient to cover actual future expenses.
PREMIUM TAX
Under the laws of certain jurisdictions, taxes are payable in respect of
so-called "annuity considerations," which term in the case of applicable
Contracts could include the Purchase Payment or the Accumulated Value of such
Contracts. The tax rates range from 0% to 3.50%. The list of jurisdictions
imposing annuity taxes follows:
STATE ANNUITY PREMIUM TAX RATES
<TABLE>
<CAPTION>
QUALIFIED NONQUALIFIED
STATE CONTRACTS CONTRACTS
------------------------ --------- ------------
<S> <C> <C>
California .50% 2.35%
District of Columbia 2.25% 2.25%
Kansas 0% 2.00%
Kentucky 2.00% 2.00%
Maine 0% 2.00%
Nevada 0% 3.50%
South Dakota 0% 1.25%
West Virginia 1.00% 1.00%
Wyoming 0% 1.00%
</TABLE>
Note: The above annuity premium tax rates are in effect as of January 1, 1996.
States not listed above currently have no premium tax on the purchase of
individual variable annuity contracts for use with nonqualified or qualified
plans. However, premium tax statutes are subject to amendment by legislative act
and to judicial and administrative interpretations, both of which may affect the
above list of states levying such taxes and the applicable tax rates.
Particularly because a portion of the premium tax charge may be made at the time
Annuity Payments commence, the above list of tax rates may not be those in
effect at the time the premium tax charge is made.
General American reserves the right to defer or waive the charge assessed for
premium tax in certain jurisdictions until the Contract is surrendered or until
the Contract Owner's death. The Company will notify the Contract Owner in
writing before exercising its right to collect deferred premium tax from the
Accumulated Value.
Laws relating to premium tax and the interpretations of such laws are subject to
change
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which may affect the deductions, if any, made under Contracts for premium tax.
Some jurisdictions permit payment of premium tax on the Accumulated Value which
is applied to provide an annuity. In those places, General American does not
make any separate deductions for premium tax from Purchase Payments, as it is
permitted to do under the Contracts, but defers any separate deductions for
premium tax until the Accumulated Value is applied to provide Annuity Payments.
(Although General American may be required in some of these jurisdictions to pay
premium tax currently on surrender charges, it presently intends to pay the
taxes out of the deductions and charges made against all Contracts.) General
American plans, where permissible, to defer any separate deductions for premium
tax until the Accumulated Value is applied to provide Annuity Payments, at which
time the amount of any applicable premium tax will be measured by the
Accumulated Value. However, in many jurisdictions the premium tax are applied to
Purchase Payments, and in those cases the deductions for such taxes will be made
when the Purchase Payments are received. Thus, General American reserves the
right to make a separate deduction from each Purchase Payment, or from the
Accumulated Value, depending on which method or combination of methods results
in the appropriate deduction for applicable premium tax.
OTHER TAXES
Currently, no charge is made against the Separate Accounts for any Federal,
state, or local taxes (other than premium tax) that the Company incurs that may
be attributable to the Separate Accounts or the Contracts. The Company may,
however, make a charge in the future for any such tax or economic burden on the
Company resulting from the application of the tax laws that it determines to be
properly attributable to the Separate Accounts or to the Contracts.
FEES AND EXPENSES OF THE FUNDS
Because the Separate Accounts purchase shares of the GT Global Variable
Investment Funds, the net asset value of each Division will normally reflect the
operating expenses incurred by its corresponding GT Global Variable Investment
Fund. The operating expenses of the Funds, include the Investment Management and
Administration Fees and Expenses paid to LGT Asset Management. The annualized
rates at which the various Funds pay such fees and expenses to LGT Asset
Management range from 0.75% to 1.25% of a Fund's average daily net assets. LGT
Asset Management has undertaken to assume those expenses (other than taxes,
brokerage fees, interest, and extraordinary expenses) incurred by each Fund, to
the extent such expenses exceed the Investment Management and Administration
Fees by more than .25%. (See the accompanying prospectus of the GT Global
Variable Investment Funds.)
YIELDS AND TOTAL RETURNS
General American may advertise the yields, effective yields, and total return
for the Divisions of the Separate Accounts. Of course, such figures will be
based upon past performance and do not indicate what investment returns or unit
values will be in the future. Detailed information on the calculation of
performance information appears in the Statement of Additional Information, but
a summary is given here.
The effective yield and total return of a Division are based upon the investment
performance of the GT Global Variable Investment Fund corresponding to the
Division. (See "GT Global Variable Investment Funds") The investment performance
of a Division will reflect the expenses of the Fund and the Division.
The yield of the GT Global Money Market Division refers to the annual rate of
interest generated by an investment in the Division over a specified seven-day
period. The yield is calculated by assuming that the income earned for that
seven-day period is the same for every other seven-day period in a year and can
be expressed as a percentage of the investment. The effective yield is
calculated in the same way but income earned is assumed to be reinvested
continuously. This compounding causes the effective yield to be slightly higher
than the yield.
The yield of the other Divisions refers to the annualized rate of return for an
investment in the Division over a specified thirty-day or one-month period. The
thirty-day income is shown as a percentage of the investment and annualized by
assuming that income is earned at the same rate for each month during the year.
The average annual total return of a Division is a quotation assuming that an
investment in the Division has been held in the Division for various time
periods, including a period measured from
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the date operations of the Division began up to a maximum period of ten years.
In the future, average annual total returns will be reported for each Division
for one, five, and ten years when the Division has been in operation for those
periods of time.
Average annual total return quotations represent the average compounded rates of
return on an initial investment of $1,000 as of the last day of the period for
which the quotations are provided. The report on average annual total return
will show the average percentage change in the value of an investment in the
Division, including any surrender charge that would apply if the Contract is
surrendered at the end of the period, but excluding any deductions for premium
tax.
Advertising and sales literature for the Contract may compute yield or total
return on different bases. Total return may be reported without a deduction for
the surrender charge on the assumption that an investment will persist beyond
the six year period during which a surrender charge is applicable. Such
persistency would be consistent with the idea that the Contract is a long-term
investment suitable for retirement income. Total return for the Funds may be
advertised, but such information will always be accompanied by the total return
for the corresponding Divisions. General American may present illustrations
showing total return performance for a hypothetical Contract based on an
assumption such as allocation of an amount to one or more Divisions, or monthly
transfers to a selected Division under the Dollar Cost Averaging program. Such
illustrations will reflect the performance of the selected Divisions, including
all charges except the surrender charge, over various time periods in the past.
Advertising and sales literature for the Contracts may also compare the
performance of one or more Divisions to various relevant indices or to the
performance of other variable annuity investment choices, either generally or
with reference to choices with investment objectives similar to those of the
Fund and the Division. Performance information based on rankings by independent
services may also be included in sales literature and advertising.
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DISTRIBUTIONS UNDER THE CONTRACT
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CASH WITHDRAWALS
At any time before the Annuity Date and during the lifetime of the Annuitant,
the Contract Owner may elect to receive a cash withdrawal payment from the
Company. Any such election must be in the form of a Written Request and specify
the amount of the withdrawal. It will be effective on the date that it is
received by the Company. Any Written Request received at the Annuity Service
Office before the close of the NYSE (3:00 p.m. St. Louis time) on any Business
Day will be considered received on that Business Day.
The Contract Owner may request a full surrender or a partial withdrawal. A full
surrender will result in a cash withdrawal payment equal to the value of the
Contract Owner's Account at the end of the Valuation Period during which the
election becomes effective, less any applicable administrative charges, interest
change adjustment, and surrender charge. A request for a partial withdrawal will
result in a reduction in the Contract Owner's Accumulated Value equal to the
amount you receive plus any applicable administrative charges, interest change
adjustment and surrender charge. The amount you receive can be less than the
amount requested if the Accumulated Value is insufficient to cover applicable
charges and produce the requested amount. Any withdrawal request cannot exceed
the Accumulated Value of the Contract. Any applicable interest change adjustment
and surrender charge will be calculated based upon the gross amount of
withdrawal. If a partial withdrawal would result in a remaining Accumulated
Value lower than the surrender charges due under the Contract, the partial
withdrawal request will be treated as a full surrender.
There is no limit on the frequency of partial withdrawals. However, the amount
withdrawn must be at least $500 or, if less, the entire balance in the Division
or Guarantee Period. If after the withdrawal (and deduction of any applicable
administrative charges, interest change adjustment and surrender charge) the
amount
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remaining in the Division or Guarantee Period would be less than $500, the
Company may treat the partial withdrawal as a withdrawal of the entire amount
held in the Division or Guarantee Period. If a partial withdrawal plus any
applicable administrative charges, interest change adjustment and surrender
charge would reduce the Accumulated Value to less than $500, the Company may
treat the partial withdrawal as a full surrender of the Contract.
In the case of a partial withdrawal, the Contract Owner must instruct the
Company as to the amounts to be withdrawn from each Division and/or Guarantee
Period. If a partial withdrawal is to be made from the Fixed Account, the
Contract Owner must instruct the Company from which Guarantee Period the
withdrawals are to be made. Withdrawal will be made on a first-in-first-out
basis when more than one Guarantee Period Amount exists within a Guarantee
Period.
ALL CASH WITHDRAWALS FROM ANY GUARANTEE PERIOD AMOUNT, EXCEPT THOSE EFFECTIVE
WITHIN THIRTY DAYS PRIOR TO THE EXPIRATION DATE OF SUCH GUARANTEE PERIOD AMOUNT,
WILL BE SUBJECT TO THE INTEREST CHANGE ADJUSTMENT.
Cash withdrawals from a Division will result in the cancellation of Accumulation
Units attributable to the Contract Owner's Account with an aggregate value on
the effective date of the withdrawal equal to the total amount by which the
Accumulated Value in the Division is reduced. The cancellation of such units
will be based on the Accumulation Unit values of the Division at the end of the
Valuation Period during which the cash withdrawal is effective.
If at the time the Contract Owner makes a Written Request for a full surrender
or a partial withdrawal, he or she does not provide us with a written election
not to have Federal income taxes withheld, the Company must by law withhold such
taxes from the taxable portion of any surrender or withdrawal.
The Company, upon request, will provide the Contract Owner with an estimate of
the amounts that would be payable in the event of a full surrender or partial
withdrawal. The Company reserves the right to charge a reasonable fee to recover
the administrative expenses associated with these requests. (See "Special
Handling Fees")
Written requests for cash withdrawal payments to a party, other than the
Contract Owner and/or to an address other than the Contract Owner's address of
record require a signature guarantee. In addition, if the Contract Owner's
address of record has been changed within the preceding thirty days, a signature
guarantee is required. Any cash withdrawal payment will be paid within seven
days from our receipt of the Written Request, subject to postponement under
Deferment of Payment provisions described herein. (See "Deferment of Payments")
Since the Qualified Contracts offered by this Prospectus will be issued in
connection with retirement plans which meet the requirements of the Code,
reference should be made to the terms of the particular retirement plan for any
limitations or restrictions on cash withdrawals. A cash withdrawal under either
a Qualified Contract or a Nonqualified Contract offered by this Prospectus also
may result in a Federal penalty tax. The tax consequences of a cash withdrawal
payment under both Qualified Contracts and Nonqualified Contracts should be
carefully considered. (See "Tax Status the Contracts")
SYSTEMATIC WITHDRAWAL PLAN
General American administers a systematic withdrawal plan ("SWP") which allows
certain Contract Owners to authorize periodic withdrawals during the
accumulation period. Contract Owners entering into an SWP agreement instruct
General American to withdraw selected amounts from the Contract on a Business
Day coincident with or subsequent to the 25th of a month on a monthly,
quarterly, semiannual or annual basis. Currently, the SWP is available to
Contract Owners who request a minimum $200 periodic withdrawal. Amounts
withdrawn may be subject to a surrender charge. (See "Guaranteed Interest
Options" and "Federal Tax Matters") Amounts withdrawn from the Fixed Account
will be subject to the interest change adjustment. Withdrawals taken under the
SWP may be subject to the 10% Federal penalty tax on early withdrawals and to
income taxes. (See "Federal Tax Matters") Contract Owners interested in SWP may
obtain an Annuity Service Request Form from their registered representative or
the Annuity Service Office. General American reserves the right to amend the SWP
on thirty days' Written Notice.
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The SWP may be terminated at any time by the Contract Owner or General American.
INTEREST CHANGE ADJUSTMENT
Any full surrender or partial withdrawal of a Guarantee Period Amount which is
not effective within thirty days prior to the Expiration Date of the Guarantee
Period Amount will be subject to an interest change adjustment ("ICA"). For this
purpose, transfers, distributions on the death of a Contract Owner,
annuitization, and amounts applied to purchase an annuity are all treated as
cash withdrawals. The ICA will be subtracted from the gross amount being
withdrawn after deductions of any applicable administrative charges and before
deduction of any applicable surrender charge.
The ICA will reflect the relationship between the Current Rate (defined as J
below) for Guarantee Periods of the same duration as the period from which the
surrender or withdrawal is being made and the Guaranteed Interest Rate
applicable to the amount being withdrawn. It also reflects the time remaining in
the applicable Guarantee Period. The application of the ICA may result in a
lower payment than the Guarantee Period Amount upon surrender or withdrawal.
The interest change adjustment is determined by the application of the following
formula: ICA x W x .9 x (J-I) x (N/12) where,
W is the gross withdrawal as of the effective date of the application of the
interest change adjustment, prior to the application of the interest change
adjustment, surrender charge, and administrative charges;
J is the Guaranteed Interest Rate declared by the Company, as of the effective
date of the application of the interest change adjustment, for current
allocations to Guarantee Periods equal to the original Guarantee Period from
which the surrender or withdrawal is being made;
I is the Guaranteed Interest Rate currently being credited to the Guarantee
Period Amount subject to the interest change adjustment; and
N is the number of complete months remaining in the Guarantee Period of the
Guarantee Period Amount subject to the interest change adjustment.
In the determination of J, if the Company currently does not offer the
applicable Guarantee Period, then the rate will be determined by using the next
shorter Guarantee Period that is currently being offered.
Notwithstanding application of the foregoing formula, (a) in no event will the
ICA be less than zero, and (b) the gross surrender or withdrawal minus the
interest change adjustment will not be less than the part of the Net Purchase
Payment or transfer amount being withdrawn accumulated at three percent interest
compounded annually since the beginning of the Guarantee Period.
See Appendix B for examples of the interest change adjustment calculation.
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. If the Annuity Date of the Contract occurs within
the first three Contract Years, surrender charges may be deducted upon
annuitization. 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 under the Contract on the Annuity Date, unless the
Contract has been surrendered or the proceeds have been paid to the designated
Beneficiary prior to that date. The Annuity Date will be the later of the first
day of the first month following the Annuitant's 85th birthday or upon
completion of five Contract Years. Under certain qualified arrangements,
distributions may be required before the Annuity Date.
The Contract Owner may change the Annuity Date. An Annuity Date may be changed
only by Written Request during the Annuitant's lifetime, and such a request must
reach the Annuity Service Office at least thirty days before (1) the then
current Annuity Date, and (2) the new Annuity Date. The new Annuity Date must be
no later than the Annuity Date as defined in the paragraph above.
ANNUITY OPTIONS
(a) Election of Annuity Options
The Annuity Option may be elected or changed if the Annuity Option was not
irrevocable by
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Written Request, provided the Annuitant is still alive. This election must be
made no later than thirty days prior to the Annuity Date.
The Annuity Options selected may be either variable, fixed, or a combination of
the two. In the absence of an election to the contrary, Annuity Payments will be
made as a Life Annuity with 120 Monthly Payments Guaranteed (Option 2 below);
that portion of Accumulated Value in the Divisions of the Separate Accounts will
be applied to provide variable Annuity Payments and that portion of Accumulated
Value in the Fixed Account will be applied to provide fixed Annuity Payments.
The minimum amount which may be applied under an option will be based upon our
rules at the time the option becomes effective (or as required by law). Our
current rules state that the minimum amount which may be applied under an option
is $5,000 and the minimum Annuity Payment is $50. If the Accumulated Value is
less than $5,000 when the Annuity Date arrives, General American will make a
lump sum payment of such amount to the Contract Owner. If at any time payments
are, or become less than $50, General American has the right to change the
frequency of payments to intervals that will result in payments of at least $50.
(b) The Options 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 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 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
General American incurs no mortality risk under this option.
(c) Calculation of Payments
Payments under an Annuity Option will be calculated using the effective annual
rate of 4% compounded annually. The mortality table used in determining payments
paid under life income options is the 1983 Individual Annuitant Mortality Table
A. In using this mortality table, ages of Annuitants will be reduced by one year
for Annuity Dates occurring during the 1990s, reduced two years for Annuity
Dates occurring during the decade 2000-2009, and so on.
Life income options are based on the Annuitant's sex and age nearest birthday on
the Annuity Date. We have the right to require satisfactory proof of age and
sex. If age or sex has been incorrectly stated, the proper adjustments in
payments will be made. We may also require proof that the Annuitant is living on
any payment due date.
(d) Value of Variable Annuity Payments
For the variable portion of an Annuity Option, the amounts applied to the
annuity are used to purchase Annuity Units in the selected Divisions. The number
of Annuity Units purchased in each Division is calculated as the dollar amount
of the first Annuity Payment provided by proceeds from that Division divided by
the Annuity Unit value for the Division as of the Annuity Date. On any
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payment date, the amount of payment from each Division is calculated as the
number of Annuity Units for the Division times the Annuity Unit value for the
Division as of the payment date, less any applicable administration charges.
Although the value of variable Annuity Payments will reflect the performance of
the Divisions, we guarantee that the dollar amount of variable Annuity Payments
will not be adversely affected by our actual expense and mortality results. The
annuity tables that are contained in the Contract, and are used to calculate the
value of variable Annuity Payments, are based on an assumed annual interest rate
of 4% per year. If the actual net investment experience exactly equals the
assumed interest rate, then the variable Annuity Payments will remain the same
(equal to the first Annuity Payment). However, if actual investment experience
exceeds the assumed interest rate, the variable Annuity Payments will increase;
conversely, they will decrease if the actual experience is lower.
The value of all payments (both fixed and variable) will be greater for shorter
monthly payment guarantee periods than for longer monthly payment guarantee
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.
DEFERMENT OF PAYMENT
Payment of any cash withdrawal or lump sum death benefit due from a Division
will be made within seven days from the date the election becomes effective,
except that General American may be permitted to defer such payment: (1) for any
period (a) during which the NYSE is closed other than customary weekend and
holiday closing or (b) during which trading on the NYSE is restricted (as
determined or required by the SEC); (2) for any period during which an emergency
exists (as determined by the SEC) as a result of which (a) disposal of
securities held by the Fund is not reasonably practicable, or (b) it is not
reasonably practicable to determine the value of the net assets of the Fund; or
(3) for such other periods as the SEC may by order permit for the protection of
investors.
General American may defer payment of any cash withdrawal or lump sum death
benefit due from the Fixed Account for a period not to exceed six months.
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 contract Owner's death. (See
"Death Benefits"). The original Beneficiary is named in the Contract
Application. Subject to any assignment of a Contract, the Beneficiary
designation may be changed by the Contract Owner during the lifetime of the
Annuitant by the filing of a Written Request acceptable to General American at
its 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, General
American reserves 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
the Contract Owner 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 the Contract Owner's estate.
DEATH BENEFITS
In every case of death, General American must receive proof of the death of the
Contract Owner or Annuitant before it is obliged to act.
(a) Death of a Contract Owner who is the Annuitant
If a Contract Owner dies prior to the Annuity Date, and if the Contract Owner's
surviving spouse is the Beneficiary, the spouse may elect to continue the
Contract as the new owner and 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 the Contract Owner's surviving spouse is not the Beneficiary, the
death benefit will become payable to the Beneficiary.
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If a Contract Owner dies on or after the Annuity Date, no death benefit will be
payable under the Contract except as may be provided under the Annuity Option
elected.
(b) Death of a Contract Owner who is not the Annuitant
If a Contract Owner dies prior to the Annuity Date, and if the Contract Owner's
surviving spouse is the Annuitant, the spouse may elect to continue the Contract
as the new owner. If the Contract Owner's 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 a Contract Owner dies on or after the Annuity Date, no death benefit will be
payable under the Contract.
(c) Death of the Annuitant who is not a Contract Owner
If the Annuitant dies prior to the Annuity Date and before a Contract Owner, the
death benefit will become payable 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 on or after the Annuity Date, no death benefit will be
payable under the Contract except as may be provided under the Annuity Option
elected.
(d) 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 five (5) years
after the date of death of the Contract Owner or Annuitant. The death benefit
will be paid or credited within seven days of receipt at the Annuity Service
Office of due proof of death and a Written Request for payment, except as we may
be permitted to defer such payment in accordance with the Investment Company Act
of 1940 and applicable state insurance law.
If, however, the Contract Owner or the Beneficiary makes a written choice of one
of the two options described below, and if such choice is clear to General
American, the Company will treat the proceeds as the Contract Owner or the
Beneficiary has chosen. The two options are:
(i) Leave the proceeds of the Contract with General American. The entire
Accumulated Value must be paid in a lump sum to the Beneficiary before the end
of the fifth year after the Contract Owner's or 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 General American makes 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 the
Contract Owner's death, and must begin within one year after the Contract
Owner's or Annuitant's death.
AMOUNT OF DEATH BENEFIT
The death benefit will be the appropriate option as described in either (I) or
(II) below. It is determined as of the date both due proof of death and Written
Request for payment are received at the Company's Annuity Service Office.
(I) If the Date of Issue is prior to the Annuitant's 80th birthday, the death
benefit is the amount described below, less any applicable interest change
adjustment or administrative charges:
(A) For Contracts with a Date of Issue before January 1, 1996, the death
benefit available beginning on January 1, 1996, through the Contract Year
ending in 1997 will be the greater of (a) the sum of all Net Purchase
Payments made, less any amounts deducted through partial withdrawals; or
(b) the Accumulated Value. This also applies during the first Contract
Year for all Contracts with a Date of Issue after January 1, 1996.
(B) For Contracts with a Date of Issue before January 1, 1996, the death
benefit available beginning with the Contract Year beginning in 1997 and
for all Contract Years thereafter will be the greater of (a) the death
benefit reset amount described below; or (b) the Accumulated Value. This
also applies in the second Contract Year and each Contract Year
thereafter for Contracts
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with a Date of Issue after January 1, 1996.
The death benefit reset will occur as follows: For Contracts with a Date of
Issue before January 1, 1996, the first death benefit reset will occur on the
last day of the Contract Year which began in 1996. For Contracts with a Date of
Issue after January 1, 1996, the first death benefit reset will occur on the
last day of the first Contract Year. The death benefit reset amounts will
continue to be calculated on the last day of each Contract Year until the last
day of the Contract Year prior to the Annuitant's 80th birthday. Thereafter, if
the Date of Issue is prior to the Annuitant's 75th birthday, the death benefit
reset continues to occur every six Contract Years, measured from the Date of
Issue.
The first death benefit reset amount will be equal to the greater of (a) the
Accumulated Value on the last day of the Contract Year; or (b) the sum of all
Net Purchase Payments made, less any amounts deducted through partial
withdrawals.
All subsequent death benefit reset amounts will be equal to 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 and less any amounts
deducted through partial withdrawals since then.
(II) If the Date of Issue is on or after the Annuitant's 80th birthday, the
death benefit will be the Accumulated Value, less any applicable interest change
adjustment, surrender charge, or administrative charges.
Contracts Issued Under Section 401/457 of the Code
If the Annuitant dies prior to the Annuity Date 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.
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 General
American 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 the Contract Owner a receipt. General American is 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 the Company which is not specifically addressed in an
assignment document must be in writing and signed by both the assignor and the
assignee.
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FEDERAL TAX MATTERS
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THE FOLLOWING DISCUSSION IS
GENERAL AND IS NOT INTENDED AS
TAX ADVICE
INTRODUCTION
The following discussion is a general description of the Federal income tax
considerations relating to the Contract and is not intended as tax advice. This
discussion is not intended to address the tax consequences resulting from all of
the situations in which a person may be entitled to or may receive a
distribution under the Contract. Any person concerned about these tax
implications should consult a competent tax advisor before initiating any
transaction. The discussion is based upon General American's understanding of
the present Federal income tax laws as they are currently interpreted by the
Internal Revenue Service. No representation is made as to the likelihood of the
continuation of the present Federal income tax laws or of the current
interpretation by the Internal Revenue Service. Moreover, no attempt has been
made to consider any applicable state or other tax laws.
The Contract may be purchased on a nonqualified basis ("Nonqualified Contract")
or purchased and used in connection with plans qualifying for favorable tax
treatment
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("Qualified Contract"). Qualified Contracts are intended to be purchased in
connection with plans entitled to special income tax treatment under Sections
401, 408, and 457 of the Code or as tax sheltered annuities under Section 403(b)
of the Code. The ultimate effect of Federal income taxes on the amounts held
under a Contract or Annuity payments, and on the economic benefit to the
Contract Owner, the Annuitant, or the Beneficiary depends on the type of
retirement plan, and on the tax and employment status of the individual
concerned. In addition, certain requirements must be satisfied in purchasing a
Qualified Contract and receiving distributions from a Qualified Contract in
order to continue receiving favorable tax treatment. Therefore, purchasers of
Qualified Contracts should seek competent legal and tax advice regarding the
suitability of the Contract for their situation, the applicable requirements,
and the tax treatment of the rights and benefits of the Contract. The following
discussion assumes that a Qualified Contract is purchased with proceeds from
and/or contributions under retirement plans that qualify for the intended
special Federal income tax treatment.
TAXATION OF GENERAL AMERICAN
General American is taxed as a life insurance company under Part I of Subchapter
L of the Code. Since the operations of the Separate Accounts form a part of
General American, they will not be taxed separately as a "regulated investment
company" under Subchapter M of the Code. Investment income and realized capital
gains are automatically applied to increase reserves under the Contract. Under
existing Federal income tax law, General American believes that the investment
income and realized net capital gains of the Separate Accounts will not be taxed
to the extent that such income and gains are applied to increase the reserves
under the Contract.
Accordingly, General American does not anticipate that it will incur any Federal
income tax liability attributable to the Separate Accounts and, therefore,
General American does not intend to make provisions for any such taxes. However,
if changes in the Federal tax laws or interpretations thereof result in General
American being taxed on income or gains attributable to the Separate Accounts,
then General American may impose a charge against the Separate Accounts (with
respect to some or all Contracts) in order to set aside amounts to pay such
taxes.
TAX STATUS OF THE CONTRACTS
(a) Diversification
Section 817(h) of the Code requires that with respect to Nonqualified Contracts,
the investments of the Divisions be "adequately diversified" in accordance with
Treasury Department regulations in order for the Contracts to qualify as annuity
contracts under Federal tax law. The Separate Accounts, through the Funds,
intend to comply with the diversification requirements prescribed by the
Treasury Department in Treas. Reg. Sec. 1.817-5.
(b) Investor Control
The Treasury Department has from time to time suggested that under some
circumstances the owner of a variable contract will be deemed to be in control
over the investments of a separate account supporting the contract, which may
cause the owner, rather than the insurance company, to be treated as the owner
of the assets in the separate account. If a Contract Owner is considered the
owner of the assets of a separate account, income and gains from that account
would be included in the owner's gross income. The Treasury Department also has
stated on past occasions that it will issue regulations or rulings addressing
this issue.
The ownership rights under the Contract are different in certain respects from
those described by the IRS in rulings in which it was determined that contract
owners were not owners of separate account assets. For example, a Contract Owner
has the choice of more Divisions and narrower investment strategies in which to
allocate net Purchase Payments and Accumulation Value, and may be able to
transfer among Divisions more frequently than in such rulings. These differences
could result in a Contract Owner being treated as the owner of the assets of the
Separate Accounts. In addition, General American does not know what standards
will be set forth, if any, in the additional regulations or rulings which the
Treasury Department has stated it expects to issue. General American therefore
reserves the right to modify the Contract as necessary to attempt to prevent a
Contract Owner from being considered the owner of a pro rata share of the assets
of the Separate Accounts.
---------------------
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(c) Required Distributions
In order to be treated as an annuity contract for Federal income tax purposes,
Section 72(s) of the Code requires any Nonqualified Contract to provide that (a)
if any Contract Owner dies on or after the Annuity Date but prior to the time
the entire interest in the Contract has been distributed, the remaining portion
of such interest will be distributed at least as rapidly as under the method of
distribution being used as of the date of that Contract Owner's death; and (b)
if any Contract Owner dies prior to the Annuity Date, the entire interest in the
Contract will be distributed within five years after the date of that Contract
Owner's death. These requirements will be considered satisfied as to any portion
of the Contract Owner's interest which is payable to or for the benefit of a
"designated beneficiary" and which is distributed over the life of such
"designated beneficiary" or over a period not extending beyond the life
expectancy of that beneficiary, provided that such distributions begin within
one year of that Contract Owner's death. The Contract Owner's "designated
beneficiary" is the person or entity designated by such Owner as a Beneficiary
and to whom ownership of the Contract passes by reason of death. If the Contract
Owner's "designated beneficiary" is the surviving spouse of the Contract Owner,
the Contract may be continued with the surviving spouse as the new Owner.
The Nonqualified Contracts contain provisions which are intended to comply with
the requirements of Section 72(s) of the Code, although no regulations
interpreting these requirements have yet been issued. General American intends
to review such provisions and modify them if necessary to assure that they
comply with the requirements of Code Section 72(s) when clarified by regulation
or otherwise. There are other rules that apply to Qualified Contracts.
The following discussion is based on the assumption that the Contract qualifies
as an annuity contract for Federal income tax purposes.
TAXATION OF ANNUITIES
(a) In General
Section 72 of the Code governs taxation of annuities in general. General
American believes that a Contract Owner who is a natural person generally is not
taxed on increases in the value of a Contract until distribution occurs by
withdrawing all or part of the account value (e.g., partial withdrawals,
surrenders, or Annuity Payments under the Annuity Option elected). For this
purpose, the assignment, pledge, or agreement to assign or pledge any portion of
the account value (and in the case of a Qualified Contract, any portion of an
interest in the qualified plan) generally will be treated as a distribution. The
taxable portion of a distribution (in the form of a single sum payment or an
annuity) is taxable as ordinary income. Any Contract Owner who is not a natural
person generally must include in income any increase in the excess of the
Contract's account value over the "investment in the Contract" (discussed below)
during the taxable year. There are some exceptions to this rule and a
prospective Contract Owner that is not a natural person may wish to discuss
these with a competent tax adviser.
The following discussion generally applies to a Contract owned by a natural
person.
(b) Withdrawals and Surrenders
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 "investment in
the Contract" to the individual's total accrued benefit or the balance under the
retirement plan. The "investment in the Contract" generally equals the amount of
any premium payments paid by or on behalf of any individual with after-tax
dollars. For a Contract issued in connection with qualified plans, the
"investment in the Contract" can be zero. Special tax rules may be available for
certain distributions from a Qualified Contract.
With respect to Nonqualified Contracts, partial withdrawals, including any
withdrawals under the systematic withdrawal plan, are generally treated as
taxable income to the extent that the account value immediately before the
withdrawal exceeds the "investment in the Contract" at that time. Full
surrenders are treated as taxable income to the extent that the amount received
exceeds the "investment in the Contract".
The account value is subject to an interest change adjustment upon a withdrawal
or surrender. There is no definitive guidance on the proper tax treatment of
such an adjustment, and the Contract Owner should contact a competent tax
---------------------
Prospectus Page 32
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advisor with respect to the potential tax consequences of an interest change
adjustment.
(c) Annuity Payments
Although the tax consequences may vary depending on the Annuity Payment elected
under the Contract, in general, only the portion of the Annuity Payment that
represents the amount by which the Accumulated Value exceeds the "investment in
the Contract" will be taxed; after the investment in the Contract is recovered,
the full amount of any additional Annuity Payments is taxable.
For variable Annuity Payments, the taxable portion is generally determined by an
equation that establishes a specific dollar amount of each payment that is not
taxed. The dollar amount is determined by dividing the "investment in the
Contract" by the total number of expected periodic payments. However, the entire
distribution will be taxable once the recipient has recovered the dollar amount
of his or her "investment in the Contract."
For fixed Annuity Payments, in general, there is no tax on the portion of each
payment which represents the same ratio that the "investment in the Contract"
bears to the total expected value of the Annuity Payments for the term of the
payments; however, the remainder of each Annuity Payment is taxable. In all
cases, after the "investment in the Contract" is recovered, the full amount of
any additional Annuity Payment is taxable.
(d) Penalty Tax
In the case of a distribution pursuant to a Nonqualified Contract, there may be
imposed a Federal penalty tax equal to 10% of the amount treated as taxable
income. In general, however, there is no penalty tax on distributions: (1) made
on or after the date on which the Contract Owner attains age 59 1/2; (2) made as
a result of death or disability of the Contract Owner; (3) received in
substantially equal periodic payments as a life annuity or a joint and survivor
annuity for the lives or life expectancies of the Contract Owner and a
"designated beneficiary;" (4) from a qualified plan* (5) allocable to investment
in the Contract before August 14, 1982; (6) under a qualified funding asset (as
defined in Code Section 130(d)); or (7) under an immediate annuity (as defined
in Code Section (u)(4)).
*Other tax penalties may apply to certain distributions under a Qualified
Contract, including a penalty similar to the penalty for distributions from
Nonqualified Contracts described above.
(e) Taxation of Death Benefit Proceeds
Amounts may be distributed from a Contract because of the death of a Contract
Owner or an Annuitant. Generally, such amounts are includable in the income of
the recipient as follows: (1) if distributed in a lump sum, they are taxed in
the same manner as a full surrender of the Contract, as described above, or (2)
if distributed under an annuity option, they are taxed in the same manner as
annuity payments, as described above. For these purposes, the investment in the
contract is not affected by the owner's or annuitant's death. That is, the
investment in the contract remains the amount of any purchase payments paid
which were not excluded from gross income.
(f) Transfers, Assignments, or Exchanges of the Contract
In general, a transfer of ownership of a Contract, the collateral assignment of
a Contract, the designation of an Annuitant or Beneficiary who is not also the
Contract Owner, or the exchange of a Contract may result in certain tax
consequences to the Contract Owner. For example, when a Contract is assigned as
collateral for a loan, the entire excess of the Contract's account value over
the "investment in the contract" becomes taxable as ordinary income, and, if the
Contract Owner is under the age of 59 1/2, a penalty tax equal to 10% of the
taxable amount may also be imposed. Increases in the value of a Contract that
has been assigned will continue to be taxable annually to the Contract Owner
until the assignment is released.
Any Contract owner contemplating such a transfer, assignment, designation, or
exchange should contact a competent tax adviser for advice with respect to the
potential tax effects of such a transaction.
(g) Multiple Contracts
All Nonqualified Annuity Contracts that are issued by General American (or its
affiliates) to the same Contract Owner during any calendar year are treated as
one annuity Contract for purposes of determining the amount includable in gross
income under Section 72(e) of the Code.
---------------------
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In addition, the Treasury Department has specific authority to issue regulations
that prevent the avoidance of Section 72(e) through the serial purchase of
annuity contracts or otherwise.
(h) Withholding
Pension and annuity distributions generally are subject to withholding from the
recipient's Federal income tax liability at rates that vary according to the
type of distribution and the recipient's tax status. Recipients, however,
generally are provided the opportunity to elect not to have tax withheld from
distributions. Different rules may apply to United States citizens or
expatriates living abroad and, effective January 1, 1993, to certain
distributions under Qualified Contracts. In addition, some states have enacted
legislation requiring withholding.
(i) Possible Changes in Taxation
In past years, legislation has been proposed that would have adversely modified
the Federal taxation of certain annuities. For example, one such proposal would
have changed the tax treatment of non-qualified annuities that did not have
"substantial life contingencies" by taxing income as it is credited to the
annuity. Although as of the date of this Prospectus Congress is not considering
any legislation regarding the taxation of annuities, there is always the
possibility that the tax treatment of annuities could change by legislation or
other means (such as the IRS regulations, revenue rulings, judicial decisions,
etc.). Moreover, it is also possible that any change could be effective prior to
the date of any such change.
(j) Other Tax Consequences
As noted above, the foregoing discussion of the Federal income tax consequences
under the Contract is not exhaustive, and special rules are provided with
respect to other tax situations not discussed in the Prospectus. Further, the
Federal income tax consequences discussed herein reflect General American's
understanding of current law, and the law may change. Federal estate and state
and local estate, inheritance, and other tax consequences of ownership or
receipt of distributions under the Contract depend on the individual
circumstances of each Contract Owner or recipient of the distribution. A
competent tax adviser should be consulted for further information.
(k) Qualified Contracts
The Qualified Contract is designed for use with several types of retirement
plans. The tax rules applicable to participants and beneficiaries in retirement
plans vary according to the type of plan and the terms and conditions of the
plan. Special favorable tax treatment may be available for certain types of
contributions and distributions. Adverse tax consequences may result from
contributions in excess of specified limits; distributions prior to age 59 1/2
(subject to certain exceptions); distributions that do not conform to specified
commencement and minimum distribution rules; aggregate distributions in excess
of a specified annual amount; and in other specified circumstances.
We make no attempt to provide more than general information about use of the
Contracts with the various types of retirement plans. Owners and participants
under retirement plans, as well as Annuitants and Beneficiaries, are cautioned
that the rights of any person to any benefits under Qualified Contracts may be
subject to the terms and conditions of the plans themselves, regardless of the
terms and conditions of the Contract issued in connection with such a plan. Some
retirement plans are subject to distribution and other requirements that are not
incorporated in the administration of the Contracts. Contract Owners are
responsible for determining that contributions, distributions and other
transactions with respect to the Contracts satisfy applicable law. Purchasers of
Contracts for use with any retirement plan should consult their legal counsel
and tax adviser regarding the suitability of the Contract.
INDIVIDUAL RETIREMENT ANNUITIES AND ACCOUNTS
The Contract is designed for use with individual retirement annuities and
individual retirement accounts. Section 408 of the Code permits eligible
individuals to contribute to an individual retirement program known as an
individual retirement annuity or individual retirement account (each hereinafter
referred to as "IRA"). Also, distributions from certain other types of qualified
plans may be "rolled over" on a tax-deferred basis into an IRA. The sale of a
Contract for use with an IRA may be subject to special disclosure requirements
of the Internal Revenue Service. Purchasers of the Contract for use with IRAs
will be provided with supplemental information required by the Internal Revenue
---------------------
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Service or other appropriate agency. Such purchasers will have the right to
revoke their purchase within seven days of the earlier of the establishment of
the IRA or their purchase. If a Qualified Contract is issued in connection with
an employer's Simplified Employee Pension ("SEP") plan, Contract Owners,
Annuitants and Beneficiaries are cautioned that the rights of any person to any
benefits under qualified plans may be subject to the terms and conditions of the
plans themselves, regardless of the terms and conditions of the Contract. A
Qualified Contract will be amended as necessary to conform to the requirements
of the Code.
CODE SECTION 403(B) PLANS
Under Code Section 403(b), payments made by public school systems and certain
tax exempt organizations to purchase annuity contracts for their employees are
excludable from the gross income of the employee, subject to certain
limitations. However, these payments may be subject to FICA (Social Security)
taxes.
Code Section 403(b)(11) restricts the distribution under Code Section 403(b)
annuity contracts of: (1) elective contributions made in years beginning after
December 31, 1988; (2) earnings on those contributions; and (3) earnings in such
years on amounts held as of the last year beginning before January 1, 1989.
Distribution of those amounts may only occur upon death of the employee,
attainment of age 59 1/2, separation from service, disability, or financial
hardship. Income attributable to elective contributions may not be distributed
in the case of hardship. Distributions prior to age 59 1/2 due to separation
from service or financial hardship are subject to the nondeductible 10% penalty
tax for premature distributions, in addition to income tax.
The 1940 Act has distribution requirements which differ from the requirements of
Code Section 403(b) set forth above. However, these Contracts are being offered
in reliance upon, and in compliance with, the provisions of no-action letter
number IP-6-88 issued by the Securities and Exchange Commission to the American
Council of Life Insurance. The no action letter allows the Separate Account to
apply the restrictions created by Code Section 403(b)(11) as long as specified
steps, such as this disclosure, are taken to ensure that Contract Owners are
aware of the Code restrictions. General American believes it is in compliance
with the provisions of the no-action letter.
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 selfemployed 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
Code Section 457 provides for certain deferred compensation plans. These plans
may be offered with respect to service for state governments, local governments,
political subdivisions, agencies, instrumentalities and certain affiliates of
such entities, and tax exempt organizations. All investments are owned by the
sponsoring employer and are subject to the claims of the general creditors of
the employer. Distributions are taxable in full. Depending on the terms of the
particular plan, the employer may be entitled to draw on deferred amounts for
purposes unrelated to its Section 457 plan obligations. These plans are subject
to various restrictions on contributions and distributions.
RESTRICTIONS UNDER QUALIFIED CONTRACTS
Other restrictions with respect to the election, commencement, or distribution
of benefits may apply under Qualified Contracts or under the terms of the plans
in respect of which Qualified Contracts are issued.
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- --------------------------------------------------------------------------------
VOTING RIGHTS
- --------------------------------------------------------------------------------
To the extent required by law, the GT Global Variable Investment Fund shares
held in the Divisions of the Separate Accounts will be voted by General American
at shareholder meetings of such Funds in accordance with instructions received
from persons having voting interests in the corresponding Divisions of the
Separate Accounts. The Contract Owner holds a voting interest in each Division
to which the Accumulated Value is allocated or from which Annuity Payments are
generated. If, however, the 1940 Act or any regulation thereunder should be
amended, or if the present interpretation thereof should change, and, as a
result, General American determines that it is allowed to vote the Fund shares
in its own right, General American may elect to do so.
The number of votes which are available to a Contract Owner will be calculated
separately for each Division of the Separate Accounts. That number will be
determined by applying the Contract Owner's percentage interest, if any, in a
particular Division to the total number of votes attributable to the Division.
The number of votes is equal to the number of dollars: (a) during the
accumulation period, in the Accumulated Value attributable to a Division divided
by the net asset value of a share of the corresponding Fund; and (b) during the
annuity period, in the reserve credited to the Annuity Units held in the
Division(s) under the variable Annuity Option in effect divided by the net asset
value of a share of the corresponding Fund. Generally, during the annuity period
the number of votes applicable to the Annuitant will decrease.
At most Fund shareholder meetings, votes may be cast in person or by proxy and
fractional votes will be counted.
The number of votes of a Division which are available will be determined as of
the date established by the corresponding Fund for determining shareholders
eligible to vote at the meeting. This determination will include any other
separate accounts investing in the Fund. Voting instructions will be solicited
by written communication from us prior to such meeting in accordance with
procedures established.
Fund shares as to which no timely instructions are received or shares held by
General American as to which Contract Owners have no beneficial interest will be
voted in proportion to the voting instructions which are received with respect
to all Contracts participating in that Fund. Voting instructions to abstain on
any item to be voted upon will be applied on a pro rata basis to reduce the
votes eligible to be cast.
Each person having a voting interest in a Division will receive proxy material,
reports, and other materials relating to the appropriate Fund.
To the extent that General American, as shareholder of the Funds, is entitled to
vote any Fund's interest in the Funds held by the Separate Accounts, it will do
so on the same basis as described above.
- --------------------------------------------------------------------------------
PRINCIPAL UNDERWRITER
- --------------------------------------------------------------------------------
GT Global, Inc. ("GT Global") is the principal underwriter of the Contracts. GT
Global's address is 50 California Street, 27th Floor, San Francisco, California
94111. GT Global 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 Divisions per year. As an alternative, GT Global may pay distribution
compensation to selected broker/dealers in amounts which are not expected to
exceed 6.00% of Purchase Payments for such Contracts, with no residual payments.
Any Guarantee Period beginning after December 31, 1995, will not be included in
the contract value upon which the percent of asset commissions are determined.
Any Guaranteed Period that began on or before December 31, 1995, will be
included in the contract value upon
---------------------
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which the percent of asset commissions are determined.
Commissions are reduced for contracts issued when the Annuitant's age at Date of
Issue is greater than or equal to attained age 80. From time to time, additional
sales incentives may be provided to selected broker/dealers. In 1995, General
American paid $3,381,819 to GT Global.
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- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
A Statement of Additional Information is available which contains more details
concerning the subjects discussed in this Prospectus. The following is the Table
of Contents for that Statement:
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
<S> <C>
THE CONTRACTS.............................................................................. S-3
Computation of Variable Annuity Income Payments........................................ S-3
(a) Value of an Annuity Unit...................................................... S-3
(b) Amount of First Installment................................................... S-3
(c) Values of Annuity Installments................................................ S-4
Yield and Performance Calculations..................................................... S-4
(a) Money Market Yield............................................................ S-4
(b) Yields of Other Divisions..................................................... S-6
(c) Total Return.................................................................. S-7
(d) Effect of the Annual Contract Fee............................................. S-8
GENERAL MATTERS............................................................................ S-9
Participating.......................................................................... S-9
Incorrect Age or Sex................................................................... S-10
Annuity Data........................................................................... S-10
Annual Reports......................................................................... S-10
Incontestability....................................................................... S-10
Ownership.............................................................................. S-10
DISTRIBUTION OF THE CONTRACTS.............................................................. S-10
SAFEKEEPING OF ACCOUNT ASSETS.............................................................. S-11
STATE REGULATION........................................................................... S-11
RECORDS AND REPORTS........................................................................ S-11
LEGAL PROCEEDINGS.......................................................................... S-12
OTHER INFORMATION.......................................................................... S-12
FINANCIAL STATEMENTS....................................................................... S-12
</TABLE>
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APPENDIX A
- --------------------------------------------------------------------------------
EXAMPLE OF SURRENDER CHARGE CALCULATIONS
This example assumes that the date of the full surrender or partial withdrawal
is during the 10th Contact Year.
<TABLE>
<CAPTION>
1 3
-- 2 -- 4
------- ----
<S> <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
6 $ 2,000 2% $ 40
7 $ 2,000 3% $ 60
8 $ 2,000 4% $ 80
9 $ 2,000 5% $100
10 $ 2,000 6% $120
------- ----
$20,000 $420
------- ----
------- ----
</TABLE>
EXPLANATION OF COLUMNS IN TABLE
Column 1:
Represents Contract Years
Column 2:
Represents amounts of Net Purchase Payments. Each Net Purchase Payment was 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.
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APPENDIX B
- --------------------------------------------------------------------------------
EXAMPLE OF INTEREST CHANGE ADJUSTMENT (ICA) CALCULATIONS
The ICA factor is:
ICA = W x .9 x (J-I) x (N/12)
These examples assume the following:
1) the Guarantee Period Amount is allocated to a six year Guarantee Period with
a Guaranteed Interest Rate of 6% or .06
2) the date of surrender is two years from the Expiration Date (N = 24)
3) the original amount applied is $10,000
4) the value of the Guarantee Period Amount on the date of surrender is
$12,624.77
5) no transfers or partial withdrawals affecting this Guarantee Period Amount
have been made
6) A surrender charge, if any, is calculated in the same manner as shown in the
examples in Appendix A
The maximum ICA = 12,624.77 - 10,000 x (1.03)4 = 1,369.68 which reflects the
minimum accumulation at 3% interest.
EXAMPLE OF A POSITIVE ICA THAT IS NOT CAPPED
Assume that on the date of surrender, the current rate (J) is 7% or .07
The ICA factor
= W x .9 x (J-I) x (N/12)
= 12,624.77 x .9 x (.07-.06) x (24/12)
= 227.25
Since the ICA factor of $227.25 is less than the maximum ICA factor, $227.25 is
deducted from the value of the Guarantee Period Amount before the deduction of
any surrender charge.
EXAMPLE OF A POSITIVE ICA THAT IS CAPPED
Assume that on the date of surrender, the current rate (J) is 15% or .15
The ICA factor
= W x .9 x (J-I) x (N/12)
= 12,624.77 x .9 x (.15-.06) x (24/12)
= 2,045.21
Here, since the ICA factor is greater than the maximum ICA, the maximum ICA of
1,369.68 is deducted from the value of the Guarantee Period Amount before the
deduction of any surrender charge.
EXAMPLE OF WHEN THE ICA IS ZERO:
Assume that on the date of surrender the current rate (J) is 5% or .05
The ICA factor
= W x .9 x (J-I) x (N/12)
= 12,624.77 x .9 x (.05-.06) x (24/12)
= -227.25
Since the ICA cannot be less than zero, no ICA is applicable.
---------------------
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<PAGE> 47
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
The Board of Directors and Contractholders
General American Life Insurance Company:
We have audited the statements of assets and liabilities, including the schedule
of investments and condensed financial information, of the Money Market,
Variable Strategic Income, Variable Global Government Income, and Variable U.S.
Government Income Divisions of General American Separate Account Twenty-eight
and of the Variable New Pacific, Variable Europe, Variable America, Variable
Growth & Income, Variable Latin America, Variable Telecommunications, Variable
International Growth, Variable Emerging Markets, Variable Natural Resources, and
Variable Infrastructure Divisions of General American Separate Account
Twenty-nine as of December 31, 1995, the related statements of operations,
changes in net assets and condensed financial information for the periods
presented. These financial statements and condensed financial information are
the responsibility of management of 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 at December 31, 1995 by correspondence with GT Global Variable Investment
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 Money Market, Variable Strategic Income, Variable Global
Government Income, and Variable U.S. Government Income Divisions of General
American Separate Account Twenty-eight and of the Variable New Pacific, Variable
Europe, Variable America, Variable Growth & Income, Variable Latin America,
Variable Telecommunications, Variable International Growth, Variable Emerging
Markets, Variable Natural Resources and Variable Infrastructure Divisions of
General American Separate Account Twenty-nine as of December 31, 1995, the
results of their operations, changes in their net assets and the condensed
financial information for all periods presented, in conformity with generally
accepted accounting principles.
KPMG PEAT MARWICK LLP
St. Louis, Missouri
January 28, 1996
<PAGE> 48
---------------------------------------------------------------------
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-EIGHT
STATEMENTS OF ASSETS
AND LIABILITIES
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE VARIABLE GLOBAL VARIABLE U.S.
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):............. $13,765,803 $25,211,257 $ 11,918,883 $ 5,975,880
Receivable from General American Life Insurance Company...... 1,078,126 86,156 0 0
Dividend receivable from GT Global Financial Services,
Inc. ...................................................... 63,553 0 0 0
----------- ----------- ----------- ----------
Total assets................................................. 14,907,482 25,297,413 11,918,883 5,975,880
----------- ----------- ----------- ----------
Liability:
Payable to General American Life Insurance Company........... >0 0 12,093 15,353
----------- ----------- ----------- ----------
Total net assets............................................. $14,907,482 $25,297,413 $ 11,906,790 $ 5,960,527
=========== =========== =========== ==========
Total net assets represented by:
Individual variable annuity contracts cash value invested in
Separate Account........................................... $14,907,482 $25,297,413 $ 11,906,790 $ 5,740,807
General American Life Insurance Company seed money cash
value...................................................... 0 0 0 219,720
----------- ----------- ----------- ----------
Total net assets............................................. $14,907,482 $25,297,413 $ 11,906,790 $ 5,960,527
=========== =========== =========== ==========
Total individual units held.................................... 1,158,210 1,737,045 893,418 435,451
Total seed money units held.................................... 0 0 0 16,666
Individual unit value.......................................... $ 12.87 $ 14.56 $ 13.33 $ 13.18
Cost of investments............................................ $13,765,803 $23,805,951 $ 11,593,316 $ 5,867,795
</TABLE>
See accompanying notes to the financial statements.
---------
D-1
1
<PAGE> 49
---------------------------------------------------------------------
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-EIGHT
STATEMENTS OF OPERATIONS
For the year ended December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE VARIABLE GLOBAL VARIABLE U.S.
MONEY STRATEGIC GOVERNMENT GOVERNMENT
MARKET INCOME INCOME INCOME
DIVISION DIVISION DIVISION DIVISION
------------ ----------- --------------- -------------
<S> <C> <C> <C> <C>
Investment income:
Dividend income and capital gains distributions............ $ 812,845 $ 1,988,808 $ 720,954 $ 233,771
Expenses:
Mortality, expense and administrative charges.............. (222,901) (325,900) (151,543) (63,474)
------------ ----------- ----------- -----------
Net investment income...................................... 589,944 1,662,908 569,411 170,297
------------ ----------- ----------- -----------
Net realized gain (loss) on investments:
Proceeds from sales........................................ 128,368,085 16,612,256 8,008,732 15,437,209
Cost of investments sold................................... 128,368,085 20,227,107 8,616,419 15,195,862
------------ ----------- ----------- -----------
Net realized gain (loss) on investments.................... 0 (3,614,851) (607,687) 241,347
------------ ----------- ----------- -----------
Net unrealized gain (loss) on investments:
Unrealized (loss) on investments, beginning of period...... 0 (4,293,669) (1,125,758) (17,130)
Unrealized gain on investments, end of period.............. 0 1,405,306 325,567 108,085
------------ ----------- ----------- -----------
Net unrealized gain on investments......................... 0 5,698,975 1,451,325 125,215
------------ ----------- ----------- -----------
Net gain on investments.................................... 0 2,084,124 843,638 366,562
------------ ----------- ----------- -----------
Net increase in net assets resulting from operations....... $ 589,944 $ 3,747,032 $ 1,413,049 $ 536,859
============ =========== =========== ===========
</TABLE>
See accompanying notes to the financial statements.
---------
D-2
2
<PAGE> 50
---------------------------------------------------------------------
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-EIGHT
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE
MONEY MARKET DIVISION STRATEGIC INCOME DIVISION
--------------------------- --------------------------
1995 1994 1995 1994
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Operations:
Net investment income...................................... $ 589,944 $ 239,881 $ 1,662,908 $ 2,178,260
Net realized (loss) on investments......................... 0 0 (3,614,851) (976,465)
Net unrealized gain (loss) on investments.................. 0 0 5,698,975 (5,660,691)
------------ ----------- ----------- -----------
Net increase (decrease) in net assets resulting from
operations............................................... 589,944 239,881 3,747,032 (4,458,896)
------------ ----------- ----------- -----------
Deposits into Separate Account............................. 10,769,393 26,105,644 2,989,136 18,785,977
Transfers (from) Separate Account.......................... (12,838,342) (5,168,252) (2,608,659) (6,184,807)
Withdrawals from Separate Account.......................... (3,110,109) (5,357,023) (2,137,433) (2,774,821)
------------ ----------- ----------- -----------
Net deposits into (withdrawals from) Separate Account...... (5,179,058) 15,580,369 (1,756,956) 9,826,349
------------ ----------- ----------- -----------
Increase (decrease) in net assets.......................... (4,589,114) 15,820,250 1,990,076 5,367,453
Net assets, beginning of period............................ 19,496,596 3,676,346 23,307,337 17,939,884
------------ ----------- ----------- -----------
Net assets, end of period.................................. $ 14,907,482 $19,496,596 $25,297,413 $23,307,337
============ =========== =========== ===========
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE GLOBAL VARIABLE U.S.
GOVERNMENT INCOME DIVISION GOVERNMENT INCOME DIVISION
--------------------------- --------------------------
1995 1994 1995 1994
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Operations:
Net investment income...................................... $ 569,411 $ 542,186 $ 170,297 $ 77,888
Net realized gain (loss) on investments.................... (607,687) (227,866) 241,347 (157,816)
Net unrealized gain (loss) on investments.................. 1,451,325 (1,202,426) 125,215 (15,613)
------------ ----------- ----------- -----------
Net increase (decrease) in net assets resulting from
operations............................................... 1,413,049 (888,106) 536,859 (95,541)
------------ ----------- ----------- -----------
Deposits into Separate Account............................. 1,998,263 9,205,605 2,187,551 1,981,181
Transfers to (from) Separate Account....................... (126,814) (2,684,992) 1,369,582 110,378
Withdrawals from Separate Account.......................... (995,738) (2,025,502) (525,767) (470,050)
------------ ----------- ----------- -----------
Net deposits into Separate Account......................... 875,711 4,495,111 3,031,366 1,621,509
------------ ----------- ----------- -----------
Increase in net assets..................................... 2,288,760 3,607,005 3,568,225 1,525,968
Net assets, beginning of period............................ 9,618,030 6,011,025 2,392,302 866,334
------------ ----------- ----------- -----------
Net assets, end of period.................................. $ 11,906,790 $ 9,618,030 $ 5,960,527 $ 2,392,302
============ =========== =========== ===========
</TABLE>
See accompanying notes to the financial statements.
---------
D-3
3
<PAGE> 51
-------------------------------------------------------------------
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-NINE
STATEMENTS OF ASSETS
AND LIABILITIES
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE VARIABLE VARIABLE
NEW PACIFIC EUROPE AMERICA
DIVISION DIVISION DIVISION
----------- ----------- -----------
<S> <C> <C> <C>
Assets:
Investments in GT Global Variable Investment Funds,
at market value (see Schedule of Investments):................ $22,782,344 $15,617,326 $38,073,225
Receivable from General American Life Insurance Company......... 0 0 0
----------- ----------- -----------
Total assets.................................................... 22,782,344 15,617,326 38,073,225
----------- ----------- -----------
Liability:
Payable to General American Life Insurance Company.............. 42,686 51,617 546,932
----------- ----------- -----------
Total net assets................................................ $22,739,658 $15,565,709 $37,526,293
=========== =========== ===========
Total net assets represented by:
Individual variable annuity contracts cash value invested in
Separate Account.............................................. $22,739,658 $15,565,709 $37,500,504
Individual variable annuity contracts in payment period......... 0 0 25,789
----------- ----------- -----------
Total net assets................................................ $22,739,658 $15,565,709 $37,526,293
=========== =========== ===========
Total individual units held....................................... 1,686,639 969,727 1,905,750
Individual unit value............................................. $ 13.48 $ 16.05 $ 19.69
Cost of investments............................................... $22,053,958 $15,329,191 $38,818,586
</TABLE>
See accompanying notes to the financial statements.
---------
D-4
4
<PAGE> 52
-------------------------------------------------------------------
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-NINE
STATEMENTS OF ASSETS
AND LIABILITIES
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE VARIABLE VARIABLE VARIABLE VARIABLE
GROWTH & VARIABLE TELECOM- INTERNATIONAL EMERGING NATURAL VARIABLE
INCOME LATIN AMERICA MUNICATIONS GROWTH MARKETS RESOURCES INFRASTRUCTURE
DIVISION DIVISION DIVISION DIVISION DIVISION DIVISION DIVISION
----------- -------------- ------------ -------------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
$30,722,899 $ 19,490,161 $ 50,808,355 $ 3,976,109 $8,803,830 $1,242,578 $ 1,473,538
0 0 0 0 1,147 0 8,322
----------- ----------- ----------- ---------- ---------- ---------- ----------
30,722,899 19,490,161 50,808,355 3,976,109 8,804,977 1,242,578 1,481,860
----------- ----------- ----------- ---------- ---------- ---------- ----------
235,317 88,654 115,738 546,871 0 1,300 0
----------- ----------- ----------- ---------- ---------- ---------- ----------
$30,487,582 $ 19,401,507 $ 50,692,617 $ 3,429,238 $8,804,977 $1,241,278 $ 1,481,860
=========== =========== =========== ========== ========== ========== ==========
$30,487,582 $ 19,401,507 $ 50,657,363 $ 3,429,238 $8,804,977 $1,241,278 $ 1,481,860
0 0 35,254 0 0 0 0
----------- ----------- ----------- ---------- ---------- ---------- ----------
$30,487,582 $ 19,401,507 $ 50,692,617 $ 3,429,238 $8,804,977 $1,241,278 $ 1,481,860
=========== =========== =========== ========== ========== ========== ==========
2,002,051 1,379,710 3,018,624 313,509 809,276 85,786 113,105
$ 15.23 $ 14.06 $ 16.79 $ 10.94 $ 10.88 $ 14.47 $ 13.10
$28,451,951 $ 20,706,067 $ 42,042,413 $ 3,993,400 $8,793,434 $1,253,701 $ 1,485,319
</TABLE>
See accompanying notes to the financial statements.
---------
D-5
5
<PAGE> 53
-------------------------------------------------------------------
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-NINE
STATEMENTS OF OPERATIONS
For the period ended December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE VARIABLE VARIABLE
NEW PACIFIC EUROPE AMERICA
DIVISION DIVISION DIVISION
----------- ----------- -----------
<S> <C> <C> <C>
Investment income:
Dividend income and capital gains distributions................. $ 89,700 $ 153,925 $ 605,026
Expenses:
Mortality, expense and administrative charges................... (283,673) (214,740) (447,929)
----------- ----------- -----------
Net investment income (loss).................................... (193,973) (60,815) 157,097
----------- ----------- -----------
Net realized gain (loss) on investments:
Proceeds from sales............................................. 72,793,859 31,061,979 29,953,338
Cost of investments sold........................................ 74,402,481 30,420,170 23,817,583
----------- ----------- -----------
Net realized gain (loss) on investments......................... (1,608,622) 641,809 6,135,755
----------- ----------- -----------
Net unrealized gain (loss) on investments:
Unrealized gain (loss) on investments, beginning of period...... (1,348,912) (348,343) 619,171
Unrealized gain (loss) on investments, end of period............ 728,386 288,135 (745,361)
----------- ----------- -----------
Net unrealized gain (loss) on investments....................... 2,077,298 636,478 (1,364,532)
----------- ----------- -----------
Net gain (loss) on investments.................................. 468,676 1,278,287 4,771,223
----------- ----------- -----------
Net increase (decrease) in net assets resulting from
operations.................................................... $ 274,703 $ 1,217,472 $ 4,928,320
=========== =========== ===========
</TABLE>
- ------------------
* The Variable Natural Resources Division and the Variable Infrastructure
Division commenced operations January 31, 1995.
See accompanying notes to the financial statements.
---------
D-6
6
<PAGE> 54
-------------------------------------------------------------------
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-NINE
STATEMENTS OF OPERATIONS
For the period ended December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE VARIABLE VARIABLE VARIABLE VARIABLE
GROWTH & VARIABLE TELECOM- INTERNATIONAL EMERGING NATURAL VARIABLE
INCOME LATIN AMERICA MUNICATIONS GROWTH MARKETS RESOURCES INFRASTRUCTURE
DIVISION DIVISION DIVISION DIVISION DIVISION DIVISION* DIVISION*
---------- ------------- ----------- ------------- ----------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 817,419 $ 2,979,778 $ 1,045,934 $ 33,461 $ 88,365 $ 61,072 $ 0
(392,330) (273,950) (617,741) (41,969) (103,685) (6,754) (8,272)
----------- ---------- ----------- ----------- ---------- -------
425,089 2,705,828 428,193 (8,508) (15,320) 54,318 (8,272)
----------- ---------- ----------- ----------- ---------- -------
5,142,435 22,593,431 6,584,232 11,154,648 6,235,244 1,159,227 532,977
4,939,521 31,325,100 5,066,652 11,219,407 7,479,001 1,117,107 497,139
----------- ---------- ----------- ----------- ---------- -------
202,914 (8,731,669) 1,517,580 (64,759) (1,243,757) 42,120 35,838
----------- ---------- ----------- ----------- ---------- -------
(792,989) (773,943) 2,580,877 (86,474) (687,996) 0 0
2,270,948 (1,215,906) 8,765,942 (17,291) 10,396 (11,123) (11,781)
----------- ---------- ----------- ----------- ---------- -------
3,063,937 (441,963) 6,185,065 69,183 698,392 (11,123) (11,781)
----------- ---------- ----------- ----------- ---------- -------
3,266,851 (9,173,632) 7,702,645 4,424 (545,365) 30,997 24,057
----------- ---------- ----------- ----------- ---------- -------
$3,691,940 $ (6,467,804) $ 8,130,838 $ (4,084) $ (560,685) $ 85,315 $ 15,785
=========== ========== =========== =========== ========== =======
</TABLE>
See accompanying notes to the financial statements.
---------
D-7
7
<PAGE> 55
-------------------------------------------------------------------
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-NINE
STATEMENTS OF CHANGES IN NET ASSETS
For the period ended December 31, 1995 and the period ended December 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE NEW PACIFIC
DIVISION VARIABLE EUROPE DIVISION VARIABLE AMERICA DIVISION
-------------------------- -------------------------- --------------------------
1995 1994 1995 1994 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment
income (loss)..... $ (193,973) $ (164,703) $ (60,815) $ (161,063) $ 157,097 $ 35,617
Net realized gain
(loss) on
investments....... (1,608,622) 135,981 641,809 345,378 6,135,755 383,586
Net unrealized gain
(loss) on
investments....... 2,077,298 (2,218,530) 636,478 (683,796) (1,364,532) 443,084
----------- ----------- ----------- ----------- ----------- -----------
Net increase
(decrease) in net
assets
resulting from
operations........ 274,703 (2,247,252) 1,217,472 (499,481) 4,928,320 862,287
----------- ----------- ----------- ----------- ----------- -----------
Deposits into
Separate Account.. 3,610,697 16,465,784 1,602,275 12,652,934 9,612,392 9,793,371
Transfers to (from)
Separate Account.. 1,060,224 682,064 (1,000,779) 124,656 10,537,113 5,449,159
Withdrawals from
Separate Account.. (1,530,691) (3,377,871) (1,193,369) (2,616,101) (2,731,105) (2,509,306)
----------- ----------- ----------- ----------- ----------- -----------
Net deposits into
(withdrawals from)
Separate
Account........... 3,140,230 13,769,977 (591,873) 10,161,489 17,418,400 12,733,224
----------- ----------- ----------- ----------- ----------- -----------
Increase (decrease)
in net assets..... 3,414,933 11,522,725 625,599 9,662,008 22,346,720 13,595,511
Net assets,
beginning of
period............ 19,324,725 7,802,000 14,940,110 5,278,102 15,179,573 1,584,062
----------- ----------- ----------- ----------- ----------- -----------
Net assets, end of
period............ $22,739,658 $19,324,725 $15,565,709 $14,940,110 $37,526,293 $15,179,573
=========== =========== =========== =========== =========== ===========
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
See accompanying notes to the financial statements.
---------
D-8
8
<PAGE> 56
-------------------------------------------------------------------
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-NINE
<TABLE>
<CAPTION>
VARIABLE
VARIABLE NATURAL VARIABLE
EMERGING MARKETS RESOURCES INFRASTRUCTURE
DIVISION** DIVISION*** DIVISION***
-------------------------- ----------- --------------
1995 1994 1995 1995
----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment
income (loss)..... $ (15,320) $ 45,748 $ 54,318 $ (8,272)
Net realized gain
(loss) on
investments....... (1,243,757) 92,507 42,120 35,838
Net unrealized gain
(loss) on
investments....... 698,392 (687,996) (11,123) (11,781)
----------- ----------- ----------- -----------
Net increase
(decrease) in net
assets
resulting from
operations........ (560,685) (549,741) 85,315 15,785
----------- ----------- ----------- -----------
Deposits into
Separate Account.. 3,361,077 6,973,126 432,320 934,944
Transfers to (from)
Separate Account.. (104,693) 2,540,709 828,362 634,407
Withdrawals from
Separate Account.. (736,190) (2,118,626) (104,719) (103,276)
----------- ----------- ----------- -----------
Net deposits into
Separate Account.. 2,520,194 7,395,209 1,155,963 1,466,075
----------- ----------- ----------- -----------
Increase in net
assets............ 1,959,509 6,845,468 1,241,278 1,481,860
Net assets,
beginning of
period............ 6,845,468 0 0 0
----------- ----------- ----------- -----------
Net assets, end of
period............ $ 8,804,977 $ 6,845,468 $ 1,241,278 $ 1,481,860
=========== =========== =========== ===========
</TABLE>
- ------------------
* The Variable International Growth Division commenced operations July 12,
1994.
** The Variable Emerging Markets Division commenced operations July 6, 1994.
*** The Variable Natural Resources Division and the Variable Infrastructure
Division commenced operations January 31, 1995.
See accompanying notes to the financial statements.
---------
D-9
9
<PAGE> 57
-------------------------------------------------------------------
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-NINE
STATEMENTS OF CHANGES IN NET ASSETS
For the period ended December 31, 1995 and the period ended December 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE
INTERNATIONAL
VARIABLE VARIABLE VARIABLE GROWTH
GROWTH & INCOME DIVISION LATIN AMERICA DIVISION TELECOMMUNICATIONS DIVISION DIVISION*
----------------------------- ----------------------------- ----------------------------- ----------
1995 1994 1995 1994 1995 1994 1995
----------- ----------- ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 425,089 $ 348,417 $ 2,705,828 $ (193,665) $ 428,193 $ (308,735) $ (8,508)
202,914 128,962 (8,731,669) 2,505,931 1,517,580 170,763 (64,759)
3,063,937 (1,330,107) (441,963) (2,279,969) 6,185,065 2,027,155 69,183
----------- ----------- ----------- ----------- ----------- ----------- ----------
3,691,940 (852,728) (6,467,804) 32,297 8,130,838 1,889,183 (4,084)
----------- ----------- ----------- ----------- ----------- ----------- ----------
2,987,675 18,229,782 3,938,984 21,910,069 7,406,448 29,801,164 1,134,850
850,154 272,795 (2,665,686) 558,243 2,141,926 2,002,590 726,150
(2,559,842) (3,671,967) (1,934,144) (4,055,755) (2,951,598) (5,616,777) (358,943)
----------- ----------- ----------- ----------- ----------- ----------- ----------
1,277,987 14,830,610 (660,846) 18,412,557 6,596,776 26,186,977 1,502,057
----------- ----------- ----------- ----------- ----------- ----------- ----------
4,969,927 13,977,882 (7,128,650) 18,444,854 14,727,614 28,076,160 1,497,973
25,517,655 11,539,773 26,530,157 8,085,303 35,965,003 7,888,843 1,931,265
----------- ----------- ----------- ----------- ----------- ----------- ----------
$30,487,582 $25,517,655 $19,401,507 $26,530,157 $50,692,617 $35,965,003 $3,429,238
=========== =========== =========== =========== =========== =========== ==========
<CAPTION>
1994
----------
<S> <C> <C>
$ 874
(30,763)
(86,474)
----------
(116,363)
----------
2,245,552
548,312
(746,236)
----------
2,047,628
----------
1,931,265
0
----------
$1,931,265
==========
</TABLE>
See accompanying notes to the financial statements.
---------
D-10
10
<PAGE> 58
---------------------------------------------------------------------------
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-EIGHT AND
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-NINE
NOTES TO
FINANCIAL STATEMENTS
December 31, 1995
- --------------------------------------------------------------------------------
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-tax qualified.
Separate Account Twenty-eight is divided into four divisions and Separate
Account Twenty-nine is divided into ten divisions. Each division invests
exclusively in shares of a single fund of GT Global Variable Investment Funds
(the Funds), an open-end diversified management investment company. Separate
Account Twenty-eight invests in the Money Market, Variable Strategic Income,
Variable Global Government Income, and Variable U.S. Government Income Funds.
Separate Account Twenty-nine invests in the Variable New Pacific, Variable
Europe, Variable America, Variable Growth & Income, Variable Latin America,
Variable Telecommunications, Variable International Growth, Variable Emerging
Markets, Variable Natural Resources and Variable Infrastructure 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 Growth 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.
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 GT Global Variable 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.
(C) DIVIDEND REINVESTMENT
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 Assurance 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 Accounts Twenty-eight and Twenty-nine
totaled $2,816,840 for the period ended December 31, 1995.
Surrender 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 surrender of the contract or a
greater than 10% partial withdrawal of funds on deposit. The sales charge is 6%
the first contract year, decreasing by 1% each
---------
D-11
11
<PAGE> 59
---------------------------------------------------------------------------
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-EIGHT AND
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-NINE
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 75th birthday. Sales charges as a result of surrenders
are disclosed in Note 6.
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 $25 for each transfer in excess of
twelve (12) during the Contract Year, excluding transfers made under the Dollar
Cost Averaging program and reserves the right to charge a fee to cover the
expenses for special handling. Account fees are disclosed in Note 6. 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% at the
end of each valuation period. Administrative charges for Separate Account
Twenty-eight and Twenty-nine totaled $338,021 for the period ended December 31,
1995.
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 6.
NOTE 4 -- PURCHASES AND SALES OF GT GLOBAL VARIABLE INVESTMENT FUND SHARES
During the period ended December 31, 1995, cost of purchases and proceeds from
sales of GT Global Variable Investment Fund shares were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
SEPARATE ACCOUNT TWENTY-EIGHT
------------------------------------
Money Market Fund $122,694,302 $128,368,085
Variable Strategic Income Fund 16,600,599 16,612,256
Variable Global Government Income Fund 9,453,283 8,008,732
Variable U.S. Government Income Fund 18,489,833 15,437,209
SEPARATE ACCOUNT TWENTY-NINE
-----------------------------------
Variable New Pacific Fund $ 75,742,824 $ 72,793,859
Variable Europe Fund 30,303,819 31,061,979
Variable America Fund 48,061,845 29,953,338
Variable Growth & Income Fund 7,026,932 5,142,435
Variable Latin America Fund 25,042,050 22,593,431
Variable Telecommunications Fund 13,779,478 6,584,232
Variable International Growth Fund 13,201,209 11,154,648
Variable Emerging Markets Fund 8,684,921 6,235,244
Variable Natural Resources Fund 2,370,808 1,159,227
Variable Infrastructure Fund 1,982,458 532,977
</TABLE>
---------
D-12
12
<PAGE> 60
---------------------------------------------------------------------------
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-EIGHT AND
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-NINE
NOTE 5 -- ACCUMULATION UNIT ACTIVITY
The following is a summary of the accumulation unit activity for the years ended
December 31, 1995 and 1994 for Separate Account Twenty-eight (in thousands):
<TABLE>
<CAPTION>
VARIABLE VARIABLE
GLOBAL U.S.
VARIABLE GOVERNMENT GOVERNMENT
MONEY MARKET STRATEGIC INCOME INCOME
DIVISION INCOME DIVISION DIVISION DIVISION
----------------- ----------------- ------------- -------------
1995 1994 1995 1994 1995 1994 1995 1994
------ ------ ------ ------ ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Individual units held:
Deposits......................................... 856 2,130 229 1,392 158 751 176 166
Transfers........................................ (1,022) (426) (214) (480) (11) (224) 113 9
Withdrawals...................................... (248) (435) (164) (213) (79) (166) (42) (39)
Outstanding units, beginning of period........... 1,572 303 1,886 1,187 825 464 188 52
------- ------- ------- ------- ----- ----- ----- -----
Outstanding units, end of period................. 1,158 1,572 1,737 1,886 893 825 435 188
======= ======= ======= ======= ===== ===== ===== =====
General American Life Insurance Company seed money:
Deposits......................................... 0 0 0 0 0 0 0 0
Transfers........................................ 0 0 0 0 0 0 0 0
Withdrawals...................................... 0 0 0 0 0 0 0 0
Outstanding units, beginning of period........... 0 0 0 0 0 0 17 17
------- ------- ------- ------- ----- ----- ----- -----
Outstanding units, end of period................. 0 0 0 0 0 0 17 17
======= ======= ======= ======= ===== ===== ===== =====
</TABLE>
The following is a summary of the accumulation unit activity for the years ended
December 31, 1995 and 1994 for all Divisions except the Variable International
Growth Division which shows the unit activity for the year ended December 31,
1995 and the period from July 12, 1994 through December 31, 1994; the Variable
Emerging Markets Division which shows the unit activity for the year ended
December 31, 1995 and the period from July 6, 1994 through December 31, 1994;
the Variable Natural Resources Division and the Variable Infrastructure Division
which shows the unit activity for the period January 31, 1995 through December
31, 1995 for Separate Account Twenty-nine (in thousands). There was no activity
in Separate Account Twenty-nine relating to General American Life Insurance
Company seed money.
<TABLE>
<CAPTION>
VARIABLE NEW VARIABLE VARIABLE VARIABLE GROWTH & VARIABLE LATIN
PACIFIC DIVISION EUROPE DIVISION AMERICA DIVISION INCOME DIVISION AMERICA DIVISION
--------------------- --------------------- --------------------- --------------------- ---------------------
1995 1994 1995 1994 1995 1994 1995 1994 1995 1994
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Individual
units
held:
Deposits... 276 1,103 107 828 510 641 216 1,335 267 1,121
Transfers... 118 40 (65) 2 583 357 63 17 (168) 27
Withdrawals... (117) (225) (79) (172) (140) (162) (185) (271) (131) (199)
Outstanding
units,
beginning
of
period... 1,410 492 1,007 349 953 117 1,908 827 1,412 463
------- ------- ------- ------- ------- ----- ------- ------- ------- -------
Outstanding
units,
end of
period... 1,687 1,410 970 1,007 1,906 953 2,002 1,908 1,380 1,412
======= ======= ======= ======= ======= ===== ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
VARIABLE VARIABLE
VARIABLE VARIABLE NATURAL INFRA-
TELECOMMUNICATIONS INTERNATIONAL VARIABLE EMERGING RESOURCES STRUCTURE
DIVISION GROWTH DIVISION MARKETS DIVISION DIVISION DIVISION
--------------------- --------------------- --------------------- --------- ---------
1995 1994 1995 1994 1995 1994 1995 1995
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Individual
units
held:
Deposits... 487 2,281 106 190 312 537 32 72
Transfers... 115 150 70 45 (9) 198 61 49
Withdrawals... (195) (424) (34) (63) (68) (161) (7) (8)
Outstanding
units,
beginning
of
period... 2,612 605 172 0 574 0 0 0
------- ------- ----- ----- ----- ----- ----
Outstanding
units,
end of
period... 3,019 2,612 314 172 809 574 86 113
======= ======= ===== ===== ===== ===== ====
</TABLE>
---------
D-13
13
<PAGE> 61
---------------------------------------------------------------------------
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-EIGHT
NOTE 6 -- 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. Net deposits represent the amounts available for
investment in such shares after deduction of premium taxes, administrative
costs, and surrender charges.
For the year ended December 31, 1995 and the period ended December 31, 1994.
<TABLE>
<CAPTION>
MONEY MARKET VARIABLE STRATEGIC
DIVISION INCOME DIVISION
--------------------------- ---------------------------
1995 1994 1995 1994
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Total gross deposits............................................. $10,798,707 $ 26,110,989 $ 2,995,532 $ 18,797,879
Transfers between fund divisions and General American............ (12,838,342) (5,168,252) (2,608,659) (6,184,807)
Surrenders and withdrawals....................................... (3,059,601) (5,321,689) (2,090,617) (2,760,455)
----------- ------------ ----------- ------------
Total gross deposits, transfers, and surrenders between fund
divisions.................................................. (5,099,236) 15,621,048 (1,703,744) 9,852,617
----------- ------------ ----------- ------------
Deductions:
Premium taxes.................................................. 0 0 (16) (8,811)
Account Fees................................................... (29,314) (5,345) (6,380) (3,091)
Surrender charges.............................................. (50,508) (35,334) (46,816) (14,366)
----------- ------------ ----------- ------------
Total deductions............................................. (79,822) (40,679) (53,212) (26,268)
----------- ------------ ----------- ------------
Net deposits into (deductions from) Separate Account............. $(5,179,058) $ 15,580,369 $(1,756,956) $ 9,826,349
=========== ============= =========== =============
</TABLE>
<TABLE>
<CAPTION>
VARIABLE GLOBAL VARIABLE U.S.
GOVERNMENT INCOME GOVERNMENT INCOME
DIVISION DIVISION
-------------------------- ---------------------------
1995 1994 1995 1994
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Total gross deposits.............................................. $ 2,001,213 $ 9,206,570 $ 2,189,649 $ 1,981,343
Transfers between fund divisions and General American............. (126,814) (2,684,992) 1,369,582 110,378
Surrenders and withdrawals........................................ (981,723) (2,019,176) (517,308) (470,034)
----------- ----------- ----------- ------------
Total gross deposits, transfers, and surrenders between fund
divisions................................................... 892,676 4,502,402 3,041,923 1,621,687
----------- ----------- ----------- ------------
Deductions:
Premium taxes................................................... 0 (125) (2) (107)
Account Fees.................................................... (2,950) (840) (2,096) (55)
Surrender charges............................................... (14,015) (6,326) (8,459) (16)
----------- ----------- ----------- ------------
Total deductions.............................................. (16,965) (7,291) (10,557) (178)
----------- ----------- ----------- ------------
Net deposits into Separate Account................................ $ 875,711 $ 4,495,111 $ 3,031,366 $ 1,621,509
=========== =========== =========== =============
</TABLE>
---------
D-14
14
<PAGE> 62
---------------------------------------------------------------------------
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-NINE
NOTE 6 -- 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. Net deposits represent the amounts available for
investment in such shares after deduction of premium taxes, administrative
costs, and surrender charges.
For the period ended December 31, 1995 and the period ended December 31, 1994.
<TABLE>
<CAPTION>
VARIABLE
NEW PACIFIC DIVISION VARIABLE EUROPE DIVISION VARIABLE AMERICA DIVISION
--------------------------- --------------------------- ----------------------------
1995 1994 1995 1994 1995 1994
----------- ------------ ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits.......... $ 3,625,120 $ 16,469,934 $ 1,607,354 $ 12,656,048 $ 9,630,823 $ 9,795,891
Transfers between fund
divisions and
General American............ 1,060,224 682,064 (1,000,779) 124,656 10,537,113 5,449,159
Surrenders and withdrawals.... (1,494,877) (3,371,059) (1,162,758) (2,613,681) (2,670,026) (2,506,292)
----------- ------------ ----------- ------------ ------------ ------------
Total gross deposits,
transfers, and
surrenders between fund
divisions............... 3,190,467 13,780,939 (556,183) 10,167,023 17,497,910 12,738,758
----------- ------------ ----------- ------------ ------------ ------------
Deductions:
Premium taxes............... (488) (1,198) (22) (1,715) (6) (1,161)
Account Fees................ (13,935) (2,952) (5,057) (1,399) (18,425) (1,359)
Surrender charges........... (35,814) (6,812) (30,611) (2,420) (61,079) (3,014)
----------- ------------ ----------- ------------ ------------ ------------
Total deductions.......... (50,237) (10,962) (35,690) (5,534) (79,510) (5,534)
----------- ------------ ----------- ------------ ------------ ------------
Net deposits into (deductions
from)
Separate Account............ $ 3,140,230 $ 13,769,977 $ (591,873) $ 10,161,489 $ 17,418,400 $ 12,733,224
=========== ============= =========== ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
VARIABLE
VARIABLE NATURAL VARIABLE
EMERGING MARKETS RESOURCES INFRASTRUCTURE
DIVISION** DIVISION*** DIVISION***
-------------------------- ----------- --------------
1995 1994 1995 1995
----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits......... $ 3,363,325 $ 6,973,499 $ 432,775 $ 935,004
Transfers between fund
divisions and
General American........... (104,693) 2,540,709 828,362 634,407
Surrenders and withdrawals... (726,356) (2,118,115) (104,551) (102,860)
----------- ----------- ----------- --------------
Total gross deposits,
transfers, and
surrenders between fund
divisions.............. 2,532,276 7,396,093 1,156,586 1,466,551
----------- ----------- ----------- --------------
Deductions:
Premium taxes.............. (5) (18) 0 0
Account Fees............... (2,243) (355) (455) (60)
Surrender charges.......... (9,834) (511) (168) (416)
----------- ----------- ----------- --------------
Total deductions......... (12,082) (884) (623) (476)
----------- ----------- ----------- --------------
Net deposits into Separate
Account.................... $ 2,520,194 $ 7,395,209 $ 1,155,963 $ 1,466,075
=========== =========== =========== ==============
</TABLE>
- ------------------
* The Variable International Growth Division commenced operations July 12,
1994.
** The Variable Emerging Markets Division commenced operations July 6, 1994.
*** The Variable Natural Resources Division and the Variable Infrastructure
Division commenced operations January 31, 1995.
---------
D-15
15
<PAGE> 63
---------------------------------------------------------------------------
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-NINE
NOTE 6 -- SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
For the period ended December 31, 1995 and the period ended December 31, 1994.
<TABLE>
<CAPTION>
VARIABLE
VARIABLE GROWTH & VARIABLE LATIN TELECOMMUNICATIONS DIVISION VARIABLE INTERNATIONAL
INCOME DIVISION AMERICA DIVISION GROWTH DIVISION*
---------------------------- ---------------------------- ---------------------------- ---------------------------
1995 1994 1995 1994 1995 1994 1995 1994
----------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 2,997,409 $ 18,242,080 $ 3,946,085 $ 21,924,154 $ 7,440,798 $ 29,809,737 $ 1,136,543 $ 2,245,577
850,154 272,795 (2,665,686) 558,243 2,141,926 2,002,590 726,150 548,312
(2,495,073) (3,657,960) (1,896,475) (4,045,368) (2,885,630) (5,602,519) (350,536) (746,236)
----------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
1,352,490 14,856,915 (616,076) 18,437,029 6,697,094 26,209,808 1,512,157 2,047,653
----------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
0 (9,332) (22) (8,440) (26) (2,784) 0 0
(9,734) (2,966) (7,079) (5,645) (34,324) (5,789) (1,693) (25)
(64,769) (14,007) (37,669) (10,387) (65,968) (14,258) (8,407) 0
----------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
(74,503) (26,305) (44,770) (24,472) (100,318) (22,831) (10,100) (25)
----------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
$ 1,277,987 $ 14,830,610 $ (660,846) $ 18,412,557 $ 6,596,776 $ 26,186,977 $ 1,502,057 $ 2,047,628
=========== ============ =========== ============ =========== ============ =========== ===========
</TABLE>
---------
D-16
16
<PAGE> 64
---------------------------------------------------------------------------
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-EIGHT AND
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-NINE
SCHEDULE OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
---------- -----------
<S> <C> <C>
SEPARATE ACCOUNT TWENTY-EIGHT:
GT Global Money Market Fund 13,765,803 $13,765,803
GT Global Variable Strategic Income Fund 2,125,738 25,211,257
GT Global Variable Global Government Income Fund 1,035,524 11,918,883
GT Global Variable U.S. Government Income Fund 509,019 5,975,880
SEPARATE ACCOUNT TWENTY-NINE:
GT Global Variable New Pacific Fund 1,636,663 22,782,344
GT Global Variable Europe Fund 945,359 15,617,326
GT Global Variable America Fund 1,956,486 38,073,225
GT Global Variable Growth & Income Fund 2,108,641 30,722,899
GT Global Variable Latin America Fund 1,569,256 19,490,161
GT Global Variable Telecommunications Fund 3,013,544 50,808,355
GT Global Variable International Growth Fund 361,136 3,976,109
GT Global Variable Emerging Markets Fund 809,176 8,803,830
GT Global Variable Natural Resources Fund 89,523 1,242,578
GT Global Variable Infrastructure Fund 111,043 1,473,538
</TABLE>
See accompanying independent auditors' report.
---------
D-17
17
<PAGE> 65
---------------------------------------------------------------------------
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-EIGHT AND
GENERAL AMERICAN SEPARATE ACCOUNT TWENTY-NINE
TABLE 1
CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOTAL UNITS
ACCUMULATION ACCUMULATION OUTSTANDING,
UNIT VALUE: UNIT VALUE: END OF PERIOD
BEGINNING OF PERIOD* END OF PERIOD (IN THOUSANDS)
-------------------- ------------- --------------
<S> <C> <C> <C> <C>
SEPARATE ACCOUNT TWENTY-EIGHT:
Money Market Division 1995 12.40 12.87 1,158
1994 12.15 12.40 1,572
1993 12.00 12.15 303
Variable Strategic Income Division 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
Division 1995 11.66 13.33 893
1994 12.95 11.66 825
1993 12.00 12.95 464
Variable U.S. Government Income
Division 1995 11.65 13.18 452
1994 12.61 11.65 205
1993 12.00 12.61 69
SEPARATE ACCOUNT TWENTY-NINE:
Variable New Pacific Division 1995 13.70 13.48 1,687
1994 15.87 13.70 1,410
1993 12.00 15.87 492
Variable Europe Division 1995 14.84 16.05 970
1994 15.14 14.84 1,007
1993 12.00 15.14 349
Variable America Division 1995 15.93 19.69 1,906
1994 13.59 15.93 953
1993 12.00 13.59 117
Variable Growth & Income Division 1995 13.37 15.23 2,002
1994 13.96 13.37 1,908
1993 12.00 13.96 827
Variable Latin America Division 1995 18.79 14.06 1,380
1994 17.46 18.79 1,412
1993 12.00 17.46 463
Variable Telecommunications Division 1995 13.77 16.79 3,019
1994 13.03 13.77 2,612
1993 12.00 13.03 605
Variable International Growth
Division 1995 11.22 10.94 314
1994 12.00 11.22 172
Variable Emerging Markets Division 1995 11.93 10.88 809
1994 12.00 11.93 574
Variable Natural Resources Division 1995 12.00 14.47 86
Variable Infrastructure Division 1995 12.00 13.10 113
</TABLE>
- ------------------
* 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; and the Variable Natural Resources Division and Variable
Infrastructure Division which commenced operations on January 31, 1995.
See accompanying independent auditors' report.
---------
D-18
18
<PAGE> 66
GENERAL AMERICAN LIFE INSURANCE COMPANY
Financial Statements and Schedule
December 31, 1995 and 1994
(With Independent Auditors' Report Thereon)
<PAGE> 67
INDEPENDENT AUDITORS' REPORT
The Board of Directors
General American Life Insurance Company:
We have audited the accompanying statements of assets, liabilities, contingency
reserves, and policyholders' surplus of General American Life Insurance Company
as of December 31, 1995 and 1994, and the related statements of operations,
policyholders' surplus, and contingency reserves and cash flow for each of the
years in the three-year period ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of General American Life Insurance
Company as of December 31, 1995 and 1994, and the results of its operations and
its cash flows for each of the years in the three-year period ended December 31,
1995, in conformity with generally accepted accounting principles (see note 2 to
the financial statements).
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information included
in the accompanying schedule is presented for purposes of additional analysis
and is not a required part of the basic financial statements. Such information
has been subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
KPMG PEAT MARWICK LLP
March 12, 1996
1
<PAGE> 68
GENERAL AMERICAN LIFE INSURANCE COMPANY
Statements of Assets, Liabilities, Contingency
Reserves, and Policyholders' Surplus
December 31, 1995 and 1994
(In thousands of dollars)
<TABLE>
<CAPTION>
===================================================================================================
ASSETS 1995 1994
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Invested assets:
Bonds $3,822,820 3,223,167
Mortgage loans 1,674,037 1,565,710
Real estate 226,663 231,554
Stocks 335,203 266,776
Market value appreciation of subsidiaries 190,790 285,340
Loans to policyholders 1,328,376 1,152,518
Short-term investments 294 4,912
Other invested assets 47,802 35,121
Cash and cash equivalents (13,511) 57,991
- ---------------------------------------------------------------------------------------------------
Total invested assets 7,612,474 6,823,089
Accrued investment income 102,848 91,169
Premiums deferred and uncollected 81,624 75,454
Other assets 126,997 106,455
Separate accounts 1,642,220 1,239,311
- ---------------------------------------------------------------------------------------------------
Total assets $9,566,163 8,335,478
===================================================================================================
<CAPTION>
===================================================================================================
LIABILITIES, CONTINGENCY RESERVES, AND POLICYHOLDERS' SURPLUS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Liabilities:
Policyholders' liabilities:
Policy reserves $5,182,888 4,662,012
Pension funds 1,105,202 1,018,588
Policy and contract claims 90,955 87,904
Dividends - accumulated, due and provided 219,539 201,334
Premiums received in advance and premium deposits 35,844 24,592
- ---------------------------------------------------------------------------------------------------
Total policyholders' liabilities 6,634,428 5,994,430
Commissions, expenses, and taxes 93,655 90,590
Amounts due - reinsurance 18,280 42,690
Notes payable 100,000 -
Funds held under coinsurance 89,573 -
Other 191,943 236,400
Separate accounts 1,619,807 1,219,124
- ---------------------------------------------------------------------------------------------------
Total liabilities 8,747,686 7,583,234
- ---------------------------------------------------------------------------------------------------
Contingency reserves:
Asset valuation reserve 202,727 235,351
Interest maintenance reserve 25,967 20,560
- ---------------------------------------------------------------------------------------------------
Total contingency reserves 228,694 255,911
- ---------------------------------------------------------------------------------------------------
Policyholders' surplus:
Reserve for group insurance 44,783 43,529
Surplus notes 107,000 107,000
Unassigned funds 438,000 345,804
- ---------------------------------------------------------------------------------------------------
Total policyholders' surplus 589,783 496,333
- ---------------------------------------------------------------------------------------------------
Total liabilities, contingency reserves,
and policyholders' surplus $9,566,163 8,335,478
===================================================================================================
</TABLE>
See accompanying notes to financial statements.
2
<PAGE> 69
GENERAL AMERICAN LIFE INSURANCE COMPANY
Statements of Operations, Policyholders' Surplus,
and Contingency Reserves
Years ended December 31, 1995, 1994, and 1993
(In thousands of dollars)
<TABLE>
<CAPTION>
==================================================================================================================
1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue:
Premiums $1,661,172 1,485,704 1,040,403
Net investment income 546,243 501,863 485,705
Reinsurance ceded and other income 170,871 250,072 141,564
- ------------------------------------------------------------------------------------------------------------------
Total revenue 2,378,286 2,237,639 1,667,672
- ------------------------------------------------------------------------------------------------------------------
Benefits and expenses:
Benefits 929,206 896,036 899,896
Increase in reserves 504,069 425,976 6,490
Net transfers to separate accounts 254,128 307,470 159,688
Commissions 118,525 174,030 157,159
General and administrative expenses 268,759 246,890 255,024
- ------------------------------------------------------------------------------------------------------------------
Total benefits and expenses 2,074,687 2,050,402 1,478,257
- ------------------------------------------------------------------------------------------------------------------
Gain from operations 303,599 187,237 189,415
Dividends to policyholders 242,688 127,576 89,111
- ------------------------------------------------------------------------------------------------------------------
Net gain from operations after dividends to policyholders
and before federal income taxes 60,911 59,661 100,304
Provision for federal income tax 8,577 35,390 23,753
- ------------------------------------------------------------------------------------------------------------------
Net gain from operations 52,334 24,271 76,551
Capital gains (losses), net of federal income tax 194,793 (49,158) (21,552)
Net capital losses (gains) transferred to the interest maintenance
reserve (10,165) 11,012 (13,330)
- ------------------------------------------------------------------------------------------------------------------
Net gain (loss) 236,962 (13,875) 41,669
- ------------------------------------------------------------------------------------------------------------------
Other policyholders' surplus changes:
Unrealized capital gains and losses, net (96,021) (499) 215,479
Additions from (to) contingency reserves 27,217 23,664 (95,430)
Repayment of nonrecourse transfer agreement - (35,949) (13,000)
Surplus notes - 107,000 -
Change in surplus as a result of reinsurance (38,922) - -
Amortization of intangible assets (35,865) - -
Other items, net 79 (28,190) 65
- ------------------------------------------------------------------------------------------------------------------
(143,512) 66,026 107,114
- ------------------------------------------------------------------------------------------------------------------
Increase in policyholders' surplus 93,450 52,151 148,783
Policyholders' surplus, beginning of year 496,333 444,182 295,399
- ------------------------------------------------------------------------------------------------------------------
Policyholders' surplus, end of year $ 589,783 496,333 444,182
==================================================================================================================
Contingency reserves:
Addition (to) from policyholders' surplus (27,217) (23,664) 95,430
Contingency reserves, beginning of year 255,911 279,575 184,145
- ------------------------------------------------------------------------------------------------------------------
Contingency reserves, end of year $ 228,694 255,911 279,575
==================================================================================================================
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 70
GENERAL AMERICAN LIFE INSURANCE COMPANY
Statements of Cash Flow
Years ended December 31, 1995, 1994, and 1993
(In thousands of dollars)
[CAPTION]
<TABLE>
===================================================================================================
1995 1994 1993
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operations:
Cash received:
Premiums $1,642,922 1,492,175 1,136,015
Net investment income 536,488 501,683 460,617
Reinsurance ceded and other income 128,585 137,201 123,004
- ---------------------------------------------------------------------------------------------------
Total cash received from operations 2,307,995 2,131,059 1,719,636
- ---------------------------------------------------------------------------------------------------
Benefits paid:
Life, accident, and health claims (409,325) (437,729) (468,595)
Benefits to policyholders (286,423) (242,016) (505,911)
Dividends to policyholders (223,111) (100,038) (100,642)
- ---------------------------------------------------------------------------------------------------
Total benefits paid (918,859) (779,783) (1,075,148)
- ---------------------------------------------------------------------------------------------------
Operating charges paid:
Commissions, expenses, and taxes (324,113) (410,154) (424,545)
Net transfers to separate accounts (255,890) (321,268) (145,855)
Federal income taxes (96,814) (5,393) (23,415)
- ---------------------------------------------------------------------------------------------------
Total operating charges paid (676,817) (736,815) (593,815)
- ---------------------------------------------------------------------------------------------------
Other, net 28,955 153,082 45,343
- ---------------------------------------------------------------------------------------------------
Net cash provided by operations 741,274 767,543 96,016
- ---------------------------------------------------------------------------------------------------
Cash flows from investments:
Proceeds from investments sold, matured, or repaid:
Bonds 1,135,681 751,219 1,258,702
Stocks 77,208 34,761 56,437
Mortgage loans 206,188 135,503 102,050
Net decrease in loans to policyholders - - 62,600
Sale of GenCare 353,750 - -
Other invested assets 25,757 65,848 60,256
- ---------------------------------------------------------------------------------------------------
Total investment proceeds 1,798,584 987,331 1,540,045
- ---------------------------------------------------------------------------------------------------
Cost of investments acquired:
Bonds (1,787,628) (1,031,372) (1,440,513)
Stocks (230,287) (27,182) (100,599)
Mortgage loans (353,242) (309,433) (109,719)
Net increase in loans to policyholders (175,858) (132,739) -
Other invested assets (164,345) (363,016) (89,491)
- ---------------------------------------------------------------------------------------------------
Total investments acquired (2,711,360) (1,863,742) (1,740,322)
- ---------------------------------------------------------------------------------------------------
Net cash used in investments (912,776) (876,411) (200,277)
- ---------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from issuance of surplus notes - 107,000 -
Proceeds from issuance of notes payable 100,000 - -
- ---------------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (71,502) (1,868) (104,261)
Cash and cash equivalents, beginning of year 57,991 59,859 164,120
- ---------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year $ (13,511) 57,991 59,859
===================================================================================================
</TABLE>
See accompanying notes to financial statements.
4
<PAGE> 71
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
December 31, 1995, 1994, and 1993
===============================================================================
(1) ORGANIZATION
General American Life Insurance Company (General American or the Company) is a
mutual life insurance company originally incorporated as a stock company under
the laws of Missouri in 1933, and which began operations as a mutual company in
1936. The Company's principal lines of business are: Individual Life Insurance
and Annuities, Group Life and Health Insurance, Group Pension, and Investments.
General American distributes its products and services primarily through a
nationwide network of general agencies, independent brokers and group sales, and
claims offices. General American is licensed to do business in all 50 states,
12 Canadian provinces, Puerto Rico, and the District of Columbia. Through its
subsidiaries, the Company is also expanding its operations in Europe, Pacific
Rim countries, and Latin America.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Company include General American Life Insurance
Company and, on the equity method of accounting, the following majority-owned
unconsolidated subsidiaries: Reinsurance Group of America, Incorporated (RGA);
Paragon Life Insurance Company; Conning Asset Management (CAM); COVA Corporation
(COVA); General American Holding Company; Security Equity Life Insurance
Company; General Life Insurance Company of America, and National American Life
Insurance Company of Texas (NALICOT). The financial statements have been
prepared on the basis of accounting practices prescribed or permitted by the
Department of Insurance of the State of Missouri and in conformity with the
practices of the National Association of Insurance Commissioners (NAIC) which
are currently considered generally accepted accounting principles (GAAP) for
mutual life insurance companies.
In accordance with Missouri State Insurance Law and Regulations, General
American's subsidiaries are not consolidated for regulatory filing purposes. The
preparation of financial statements requires management to make estimates and
assumptions which affect the reported amounts of assets and liabilities as of
the date of the balance sheets and the statements of operations, policyholders'
surplus and contingency reserves. Actual results could differ from these
estimates. Accounts that the Company deems to be sensitive to changes in
estimates include policy reserves and policy and contract claims, as well as
certain investments.
NEW ACCOUNTING STANDARDS
In April 1993, the Financial Accounting Standards Board (FASB), issued
Interpretation No. 40, Applicability of Principles to Mutual Life Insurance and
Other Enterprises. This interpretation requires mutual life insurance companies
that have traditionally issued statutory basis financial statements that have
been reported to be in conformity with GAAP, to apply all authoritative
accounting pronouncements in preparing those statements, effective for periods
beginning after December 15, 1994.
In January 1995, the FASB issued Statement of Financial Accounting Standards No.
120 (SFAS 120), Accounting and Reporting by Mutual Life Insurance Enterprises
for Certain Long-Duration Participating
5 (Continued)
<PAGE> 72
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
Contracts and the American Institute of Certified Public Accountants (AICPA)
issued Statement of Position 95-1 (SOP 95-1), Accounting for Certain Insurance
Activities of Mutual Life Insurance Enterprises, which together defines the GAAP
model for mutual life insurance enterprises. These pronouncements define the
enterprises and method of accounting for certain participating life insurance
contracts of mutual and stock life insurance companies that meet the criteria
defined in SOP 95-1. SFAS 120 also defers implementation of Interpretation No.
40 to be concurrent with implementation of SFAS 120. SFAS 120 and SOP 95-1 are
effective for financial statements issued for fiscal years beginning after
December 15, 1995.
In connection with the adoption of SFAS 120, the Company plans to adopt the
following accounting standards:
- SFAS 109, Accounting for Income Taxes
- SFAS 114, Accounting by Creditors Impairment of a Loan
- SFAS 115, Accounting for Certain Debt and Equity Securities
- SFAS 118, Accounting by Creditors for Impairment of a Loan - Income
Recognition and Disclosures
The Company has not determined the impact on the Company's financial condition
or results of operations.
VALUATION OF INVESTMENTS
Bonds and stocks are valued as prescribed by the NAIC. Bonds are primarily
carried at amortized cost, as it is generally the Company's intent to hold such
to maturity. However, the Company does liquidate certain bonds prior to
maturity based on asset/liability and duration matching requirements associated
with policies and contracts. Additionally, preferred stocks are carried at
cost and common stocks are carried at market value. Mortgage loans and policy
loans are stated at the outstanding principal balances. Real estate acquired
through foreclosure or held for investment is carried at the lower of cost or
market value. Investments in real estate are carried net of accumulated
depreciation and encumbrances of $56.5 million and $46.7 million in 1995 and
1994, respectively, as well as direct valuation allowances of $25.4 million and
$24.2 million in 1995 and 1994, respectively.
Loan-backed bonds, included in bonds, are valued at amortized cost. Amortization
of the discount or premium from the purchase of these securities is recognized
using a level yield method which considers the estimated timing and amount of
prepayments of the underlying mortgage loans. Actual prepayment experience is
periodically reviewed and effective yields are recalculated when differences
arise between the prepayments originally anticipated and the actual prepayments
received and currently anticipated. When such differences occur, the net
investment in the mortgage-backed bond is adjusted to the amount that would have
existed had the new effective yield been applied since the acquisition of the
bond with a corresponding charge or credit to interest income (the
"retrospective method").
In accordance with practices prescribed by the NAIC, General American values
its ownership interest in publicly traded subsidiaries based upon current quoted
market values. These ownership interests are 63% of RGA and 72% of GenCare
Health Systems, Inc. (GenCare). The investment in RGA is carried at 89% of
quoted market value. On January 3, 1995, the Company sold its 72% ownership in
GenCare to United HealthCare Corporation. Proceeds received net of expenses
were $354 million and the net
6 (Continued)
<PAGE> 73
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
realized gain on sale was $179 million. The extent to which the carrying values
of those investments differ from statutory net assets creates asset appreciation
or depreciation, with an offsetting unrealized gain or loss reflected in
policyholders' surplus. Market value appreciation of $190.8 million and $285.3
million is included in market value appreciation of subsidiaries in the balance
sheets at December 31, 1995 and 1994, respectively.
Certain capital gains and losses realized on investment sales that resulted from
changes in the level of interest rates are recorded in an Interest Maintenance
Reserve (IMR), net of related income taxes. The IMR is amortized into operating
income over the approximate remaining maturities of the investments sold.
Certain other realized gains and losses from the sale or decrease in valuation
basis due to change in credit quality of invested assets are presented
separately from operating income, net of applicable income taxes. Unrealized
capital gains and losses are reflected as direct credits and charges to
policyholders' surplus.
The NAIC has established an asset valuation reserve (AVR) for the potential
losses on investments. This reserve is maintained for the purpose of
stabilizing surplus against the effect of fluctuations in the value of certain
bond, stock, mortgage loan, and real estate investments by direct charge to
policyholders' surplus.
The following methods and assumptions were used by the Company in estimating its
fair value disclosures for financial instruments:
Investment securities
Fair values for fixed maturity securities (including redeemable preferred
stocks) are based on quoted market prices, where available. For fixed maturity
securities not actively traded, fair values are estimated using values obtained
from independent pricing services or, in the case of private placements, are
estimated by discounting expected future cash flows using a current market rate
applicable to the yield, credit quality, and maturity of the investments. The
fair values for equity securities are based on quoted market prices.
Mortgage loans
The fair values for mortgage loans are estimated using discounted cash flow
analyses, using interest rates currently being offered for similar loans to
borrowers with similar credit ratings. Loans with similar characteristics are
aggregated for purposes of the calculations.
Policy loans
The carrying amount for policy loans reported in the balance sheets approximates
the fair value. The majority of these loans are indexed, with yield tied to a
stated return.
Short-term investments and cash and cash equivalents
The carrying amounts reported in the balance sheets for these instruments
approximate the fair values.
7 (Continued)
<PAGE> 74
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
Investment contracts
Fair values for the Company's liabilities under investment-type insurance
contracts are estimated using discounted cash flow calculations based on
interest rates currently being offered for similar contracts with maturities
consistent with those remaining for the contracts being valued.
Other Policyholder Funds
Other policyholder funds are supplementary contract reserves and dividend
accumulations that represent deposits that have defined maturities. The
carrying value of these funds is a reasonable estimate of fair value.
CASH AND CASH EQUIVALENTS
Cash equivalents include liquid investments with original maturities of 90 days
or less.
SEPARATE ACCOUNT BUSINESS
Separate account assets and liabilities represent segregated funds administered
and invested by the Company for the exclusive benefit of pension and variable
annuity contractholders. The Company receives administrative and investment
advisory fees for services rendered on behalf of these funds. The amount of
assets in excess of liabilities of $22.4 million and $20.2 million at December
31, 1995 and 1994, respectively, represents policy surrender charges that are
permitted to be recorded to surplus under statutory accounting practices.
POLICY RESERVES
Policy reserves for life insurance and annuities are based on statutory
mortality and interest assumptions without consideration for lapses and
withdrawals. Mortality assumptions are based on various mortality tables
including primarily: American Experience, 1941 Commissioners Standard Ordinary
(CSO), 1958 CSO, and 1980 CSO for life insurance; and 1937 Standard Annuity
Table, 1971 Individual Annuity Mortality Table (IAM), 1983 IAM, and the
Progressive Annuity Table for annuities. Interest assumptions range from 2.0%
to 6.0% for ordinary policy reserves and from 2.0% to 11.25% for group and
annuity reserves. Approximately 27% of the ordinary life reserves are
calculated on a net level reserve basis and 73% on a modified reserve basis. The
use of a modified reserve basis partially offsets the effect of immediately
expensing acquisition costs by providing a policy reserve increase in the first
policy year that is less than the reserve increase in renewal years.
REINSURANCE
Premiums, commissions, expense reimbursements, benefits, and reserves related to
reinsurance business are accounted for on bases consistent with those used in
accounting for the original policies issued and the terms of the reinsurance
contracts. Premiums ceded to other companies have been reported as a reduction
of premium income. Amounts applicable to reinsurance ceded for future policy
benefits and claim liabilities have been reported as reductions of these items.
8 (Continued)
<PAGE> 75
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
In the normal course of business the Company seeks to limit its exposure to loss
on any single insured by ceding risks to other insurance enterprises or
reinsurers under various types of contracts including coinsurance and excess
coverage. The Company's retention level per individual life ranges between $1.0
to $2.0 million. To the extent that an assuming reinsurance company is unable
to meet its obligations under a reinsurance agreement, the Company remains
primarily liable.
REVENUES AND EXPENSES
Premiums are credited to revenue over the premium paying period of the policies.
Annuity and deposit contract considerations are recognized as revenue when
received. Expenses, including acquisition costs related to acquiring new
business, are charged to operations as incurred. Investment income is
recognized as earned.
FEDERAL INCOME TAXES
Federal income taxes are charged to operations based on income that is currently
taxable. Deferred taxes are not established for the tax effects of temporary
differences between financial reporting and taxable income.
FOREIGN CURRENCY TRANSLATION
The functional currency for the Company's Canadian business operations is the
Canadian dollar. The translation of that foreign currency into U.S. dollars is
performed for the asset and liability portfolios using exchange rates in effect
at year-end. The income statement accounts are translated using current
exchange rates in effect for the years presented. The Canadian dollars have
been converted to U.S. dollars based on a conversion rate of $.7329, $.7133, and
$.7527 for each Canadian dollar as of December 31, 1995, 1994, and 1993,
respectively. In accordance with statutory accounting principles, the losses
resulting from such translation are included as a liability and an unrealized
capital loss.
NONADMITTED ASSETS
Certain assets, designated under statutory reporting as "nonadmitted assets,"
have been charged directly to policyholders' surplus.
RECLASSIFICATIONS
Certain 1994 and 1993 financial statement balances have been reclassified to
conform with 1995 presentation.
(3) ACQUISITION
On June 1, 1995, the Company acquired Xerox Life Insurance Companies, now known
as COVA Corporation. At acquisition, COVA had total assets of approximately
$635.6 million. The purchase price of approximately $107.7 million was funded
from the Company's operations.
Effective July 31, 1995, the Company entered into a merger arrangement with
Conning Corporation & Subsidiaries (Conning), an investment management firm,
whereby the Company acquired Conning and
9 (Continued)
<PAGE> 76
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
subsequently contributed Conning and General American Investment Management
Company, a wholly owned subsidiary, to form CAM. At acquisition, Conning had
total assets of approximately $16.0 million. The purchase price consisted of
approximately $13.0 million in cash (from the Company's operations) and 3.2
million shares of CAM convertible redeemable preferred stock, with a fair value
of $17.0 million.
These transactions were accounted for using the purchase method of accounting.
The results of operations of the acquired entities are included in the financial
statements subsequent to the respective acquisition dates. The excess of cost
over fair value of net assets acquired amounted to approximately $56.6 million
and $23.1 million for COVA and Conning, respectively. The excesses of cost over
fair value of net assets of approximately $16.8 million and $16.0 million for
COVA and Conning, respectively, were written off at the acquisition dates for
statutory accounting purposes. The write-off of the intangible asset was caused
by the Company exceeding its statutory intangible asset limit. The remaining
excess of cost over fair value of net assets is being amortized over 10 years.
(4) INVESTMENTS
Major categories of net investment income consist of the following (in thousands
of dollars):
<TABLE>
<CAPTION>
==================================================================================================================
Years ended December 31 1995 1994 1993
==================================================================================================================
<S> <C> <C> <C>
Bonds $ 291,382 249,906 239,161
Stocks (635) 27,938 34,953
Mortgage loans 141,603 139,392 139,012
Real estate 37,108 41,498 34,473
Loans to policyholders 92,731 75,957 65,957
Short-term investments 19,078 7,113 4,656
Other (544) 936 2,141
- ------------------------------------------------------------------------------------------------------------------
Gross investment income 580,723 542,740 520,353
Amortization of interest maintenance reserve 4,757 4,559 4,336
Investment expense (39,237) (45,436) (38,984)
- ------------------------------------------------------------------------------------------------------------------
Net investment income $ 546,243 501,863 485,705
==================================================================================================================
</TABLE>
BONDS
The carrying and estimated fair values of the Company's bond investments at
December 31, 1995 and 1994, by category, are as follows (in thousands of
dollars):
<TABLE>
<CAPTION>
==================================================================================================================
GROSS GROSS ESTI-
UNREA- UNREA- MATED
CARRYING LIZED LIZED FAIR
1995 VALUE GAINS LOSSES VALUE
==================================================================================================================
<S> <C> <C> <C> <C>
Government obligations (including obligations
guaranteed by the U.S. government) $ 241,141 15,689 830 256,000
Corporate securities 2,754,029 219,058 130,267 2,842,820
Mortgage-backed securities 731,125 26,136 1,625 755,636
Asset-backed securities 96,525 2,540 27 99,038
- ------------------------------------------------------------------------------------------------------------------
Total $3,822,820 263,423 132,749 3,953,494
==================================================================================================================
</TABLE>
10 (Continued)
<PAGE> 77
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
<TABLE>
<CAPTION>
==================================================================================================================
GROSS GROSS ESTI-
UNREA- UNREA- MATED
CARRYING LIZED LIZED FAIR
1994 VALUE GAINS LOSSES VALUE
==================================================================================================================
<S> <C> <C> <C> <C>
Government obligations (including obligations
guaranteed by the U.S. government) $ 47,602 274 3,880 43,996
Corporate securities 2,378,039 24,670 109,942 2,292,767
Mortgage-backed securities 739,601 7,630 37,091 710,140
Asset-backed securities 57,925 1,067 1,399 57,593
- ------------------------------------------------------------------------------------------------------------------
Total $3,223,167 33,641 152,312 3,104,496
==================================================================================================================
</TABLE>
The carrying and estimated fair values of the Company's bond investments at
December 31, 1995, by contractual maturity, are shown below (in thousands of
dollars). Expected maturities may differ from contractual maturities because
borrowers may have the right to call or prepay obligations without call or
prepayment penalties.
<TABLE>
<CAPTION>
====================================================================================
ESTIMATED
CARRYING FAIR
VALUE VALUE
====================================================================================
<S> <C> <C>
Due in one year or less $ 61,050 62,896
Due one year through five years 707,731 730,515
Due five years through ten years 1,423,347 1,366,241
Due after ten years 1,630,692 1,793,842
- ------------------------------------------------------------------------------------
Total $3,822,820 3,953,494
====================================================================================
</TABLE>
Before consideration of IMR, gross gains of $25.8 million, $12.5 million, and
$26.5 million and gross losses of $6.0 million, $28.0 million, and $5.0 million
were realized on bond sales, maturities, and redemptions in 1995, 1994, and
1993, respectively. The cost of investments sold is generally determined on a
first-in, first-out method and includes the effects of any related capital
amortization of premium or accretion of discount.
The Company is sensitive to interest rate changes, as its liabilities may
reprice or mature before interest-earning assets. The Company manages its
interest rate risk primarily through the utilization of interest rate swaps.
Under interest rate swaps, the Company agrees with other counterparties to
exchange, at specified intervals, the payments between floating and fixed-rate
interest amounts calculated by reference to notional amounts. Net interest
payments are recognized within net investment income in the statutory statements
of operations, policyholders' surplus, and contingency reserves.
At December 31, 1995, the Company had six outstanding interest rate swap
agreements which expire at various dates through 2025. Under four of the
agreements, the Company receives a fixed rate ranging from 5.825% to 6.92% on
$15.4 million and pays a floating rate based on the London Interbank Offered
11 (Continued)
<PAGE> 78
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
Rate (LIBOR). Under the remaining two agreements, the Company receives a
floating rate based on LIBOR on $20.0 million and pays a fixed rate of 6.52% and
6.9%, respectively. The estimated fair value of the agreements was
approximately $1.2 million unrealized loss, which reflects gross unrealized
gains and losses of $.1 million and $1.3 million, respectively, at December 31,
1995, which is not recognized in the accompanying balance sheets. At December
31, 1994, the Company's exposure to derivative financial investments was not
material.
The Company is exposed to credit risk in the event of nonperformance by
counterparties to financial instruments, but does not expect any counterparties
to fail to meet their obligations. Where appropriate, master netting agreements
are arranged or collateral is obtained in the form of rights to securities to
lower the Company's exposure to credit risk. It is the Company's policy to deal
with only highly rated counterparties.
MORTGAGE LOANS
As of December 31, 1995 and 1994, the Company's mortgage loans were distributed
as follows (in thousands of dollars):
<TABLE>
<CAPTION>
===================================================================================================================================
1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
BOOK PERCENT BOOK PERCENT
STATES VALUE OF TOTAL VALUE OF TOTAL
===================================================================================================================================
<S> <C> <C> <C> <C>
Arizona $ 106,426 6.4% $88,601 5.7%
California 276,531 16.5 290,957 18.6
Colorado 206,438 12.2 188,929 12.0
Florida 180,350 10.8 186,405 11.9
Illinois 151,514 9.1 158,267 10.1
Maryland 76,640 4.6 71,274 4.6
Missouri 84,623 5.1 89,647 5.7
Nevada 63,190 3.8 55,661 3.6
Texas 137,416 8.2 156,910 10.0
Virginia 82,705 4.9 85,294 5.4
Other 308,204 18.4 193,765 12.4
- -----------------------------------------------------------------------------------------------------------------------------------
Total $1,674,037 100.0% $1,565,710 100.0%
===================================================================================================================================
<CAPTION>
1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
BOOK PERCENT BOOK PERCENT
PROPERTY TYPE VALUE OF TOTAL VALUE OF TOTAL
===================================================================================================================================
<S> <C> <C> <C> <C>
Apartment $ 93,530 5.6% $ 83,656 5.3%
Retail 658,918 39.3 591,098 37.8
Office building 458,503 27.4 405,048 25.9
Industrial 397,623 23.8 415,456 26.5
Other commercial 65,463 3.9 70,452 4.5
- ----------------------------------------------------------------------------------------------------------------------------------
Total $1,674,037 100.0% $1,565,710 100.0%
==================================================================================================================================
</TABLE>
12 (Continued)
<PAGE> 79
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
The Company makes mortgage loans on income-producing properties, such as
apartments, retail and office buildings, light warehouses, and light industrial
facilities. Loan-to-value ratios at the time of loan approval are 75% or less.
The estimated fair value of the Company's mortgage loan portfolio at December
31, 1995 and 1994 was approximately $1,747.5 million and $1,558.5 million,
respectively. The Company had outstanding commercial mortgage loan commitments
as of December 31, 1995 of $211.1 million.
During 1995, the Company entered into an agreement whereby approximately $109.8
million of mortgage loans were sold by the Company for securitization and resale
by a financial institution as mortgage pass-through certificates. In conjunction
with the transaction, the Company entered into futures positions to hedge
against interest rate risk. The sale of these mortgage loans resulted in a net
loss of approximately $.4 million. In addition, the close-out of the futures
positions related to this transaction resulted in a net loss of approximately
$6.4 million. These amounts are reflected within net investment income in the
statutory statement of operations, policyholders' surplus, and contingency
reserves.
STOCKS
The carrying value of preferred stock was $8.1 million at December 31, 1995 and
1994, respectively. The fair value of the preferred stock was $8.3 million and
$8.2 million at December 31, 1995 and 1994, respectively. The cost of
nonaffiliated common stocks held at December 31, 1995 and 1994 was $3.1 million
and $5.0 million, respectively. The fair value of nonaffiliated common stocks
held at December 31, 1995 and 1994 was $2.6 million and $5.0 million,
respectively.
At December 31, 1995 and 1994, investments with carrying values of $247.0
million and $211.9 million, respectively, were on deposit with various
governmental agencies as required by law.
(5) INVESTMENT CONTRACTS
The carrying amounts and estimated fair values of the Company's liabilities for
investment-type insurance contracts at December 31, 1995 and 1994 are as follows
(in thousands of dollars):
<TABLE>
<CAPTION>
==================================================================================================================
1995 1994
- ------------------------------------------------------------------------------------------------------------------
ESTIMATED ESTIMATED
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
==================================================================================================================
<S> <C> <C> <C> <C>
Guaranteed investment contracts $492,340 494,059 342,766 336,922
==================================================================================================================
Supplementary contract without
life contingencies $ 6,443 6,443 6,887 6,887
==================================================================================================================
Individual and group annuities $373,259 372,730 390,193 362,531
==================================================================================================================
</TABLE>
13 (Continued)
<PAGE> 80
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
(6) REINSURANCE
The Company is a major reinsurer in the life and health industry. The effect of
reinsurance on premiums is as follows (in thousands of dollars):
<TABLE>
<CAPTION>
================================================================================
1995 1994 1993
================================================================================
<S> <C> <C> <C>
Direct $1,830,570 1,687,391 1,604,310
Assumed 206,127 272,356 474,092
- --------------------------------------------------------------------------------
2,036,697 1,959,747 2,078,402
Ceded (375,525) (474,043) (1,037,999)
- --------------------------------------------------------------------------------
Net $1,661,172 1,485,704 1,040,403
================================================================================
</TABLE>
Reinsurance assumed represents approximately $51 billion, $38 billion, and $69
billion of insurance in force for 1995, 1994, and 1993, respectively. The amount
of ceded insurance in force, including retrocessions, was $57 billion, $54
billion, and $81 billion for 1995, 1994, and 1993, respectively. Net reserve
credits taken on reinsurance ceded and retroceded for 1995, 1994, and 1993 were
$360 million, $258 million, and $281 million, respectively.
(7) FEDERAL INCOME TAXES
The provision for federal income tax expense is based upon a consolidated income
tax provision for the Company and its subsidiaries. The provision differs from
that computed based on the federal statutory rate of 35% in 1995, 1994, and
1993. The reasons for these differences are as follows (in thousands of
dollars):
<TABLE>
<CAPTION>
==============================================================================================================
1995 1994 1993
- --------------------------------------------------------------------------------------------------------------
PER- PER- PER-
CENT OF CENT OF CENT OF
PRETAX PRETAX PRETAX
AMOUNT INCOME AMOUNT INCOME AMOUNT INCOME
==============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Federal income tax computed
on pretax income $ 21,319 35.0% $ 20,881 35.0% $ 35,106 35.0%
Deferred acquisition cost tax
on premiums 10,024 16.5 10,027 16.8 12,394 12.4
Surplus tax on mutual life
insurance companies - - 15,675 26.3 - -
Tax preferred investment income (11,477) (18.8) (8,787) (14.7) (1,659) (1.7)
Mortgage loan and real estate
differences 814 1.3 600 1.0 (5,291) (5.3)
Policy reserve, dividends, and
other product differences (8,460) (13.9) 2,911 4.9 (5,541) (5.5)
Equity in undistributed earnings
of subsidiaries 440 .7 (5,161) (8.7) (10,769) (10.7)
Other, net (4,083) (6.7) (756) (1.3) (487) (.5)
- --------------------------------------------------------------------------------------------------------------
Provision for federal income tax $ 8,577 14.1% $ 35,390 59.3% $ 23,753 23.7%
==============================================================================================================
</TABLE>
14 (Continued)
<PAGE> 81
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
(8) ASSOCIATE BENEFIT PLANS AND POSTRETIREMENT BENEFITS
The Company has a defined benefit plan covering substantially all associates.
The benefits are based on years of service and each associate's compensation
level. The Company's funding policy is to contribute annually the maximum
amount deductible for federal income tax purposes. Contributions provide for
benefits attributed to service to date and for those expected to be earned in
the future.
The Company also has several nonqualified, defined benefit and defined
contribution plans for directors and management associates. The plans are
unfunded and are deductible for federal income tax purposes when the benefits
are paid.
Net periodic defined benefit plan costs consist of the following (in thousands
of dollars):
<TABLE>
<CAPTION>
========================================================================================================
1995 1994 1993
========================================================================================================
<S> <C> <C> <C>
Service cost $ 2,805 3,285 2,824
Interest 5,056 4,523 4,128
Return on plan assets (27,134) 3,068 (11,695)
Amortization and deferral 18,514 (13,840) 1,784
- --------------------------------------------------------------------------------------------------------
Pension credit $ (759) (2,964) (2,959)
========================================================================================================
</TABLE>
The following table presents the plans' funded status and amounts recognized in
the Company's balance sheet at December 31, 1995 and 1994 (in thousands of
dollars):
<TABLE>
<CAPTION>
========================================================================================================================
1995 1994
- ------------------------------------------------------------------------------------------------------------------------
QUALIFIED OTHER QUALIFIED OTHER
PLANS PLANS PLANS PLANS
========================================================================================================================
<S> <C> <C> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including
vested benefits of $63,983 and $15,112
in 1995 and $48,378 and $10,554 in 1994,
respectively $ 65,900 24,595 48,872 18,115
========================================================================================================================
Projected benefit obligation for service
rendered to date 79,557 27,046 59,684 20,093
Plan assets at fair value, primarily listed
stocks and bonds 114,167 - 95,325 -
- ------------------------------------------------------------------------------------------------------------------------
Plan assets in excess of (less than) projected
benefit obligations 34,610 (27,046) 35,641 (20,093)
Unrecognized net transition (asset) obligation - 2,451 (657) 1,978
- ------------------------------------------------------------------------------------------------------------------------
Pension cost funded in advance $ 34,610 34,984
========================================================================================================================
Accrued pension liability $(24,595) (18,115)
========================================================================================================================
</TABLE>
15 (Continued)
<PAGE> 82
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
Assumptions used for the projected benefit obligation included a 7.25% current
discount rate, a 4.50% increase rate for future compensation levels, and a 9.25%
projected return on plan assets for 1995.
The Board of Directors has adopted an associate incentive plan applicable to
full-time salaried associates with at least one year of service. Contributions
to the plan are determined yearly by the Board of Directors and are based upon
salaries of eligible associates. Full vesting will occur after five years of
continuous service. The Company's contributions to the plan were $9.2 million,
$1.6 million, and $7.1 million for 1995, 1994, and 1993, respectively.
In addition to pension benefits, the Company provides certain health care and
life insurance benefits for retired employees. Substantially all employees may
become eligible for these benefits if they reach retirement age while working
for the Company. Alternatively, retirees may elect certain prepaid health care
benefit plans.
In 1993, in accordance with the implementation of SFAS No. 106, Employers
Accounting for Postretirement Benefits Other Than Pensions, the Company changed
its method of accounting for the costs of its retiree benefit plans to the
accrual method, and elected to amortize its transition obligation for retirees
and fully eligible or vested employees over 20 years. The unamortized transition
obligations were $18.6 million and $19.6 million at December 31, 1995 and 1994,
respectively. Net postretirement benefit costs for the years ended December 31,
1995, 1994, and 1993 were $4.8 million, $4.0 million, and $4.6 million,
respectively, and includes the expected cost of such benefits for newly eligible
or vested employees, interest cost, gains and losses arising from differences
between actuarial assumptions and actual experience, and amortization of the
transition obligation.
The discount rate used in determining the accumulated postretirement benefit
obligation was 8.25%, and the health care cost trend rates were 10%, 9%, and 10%
for the Indemnity Plan, HMO Plan, and Dental Plan, respectively, graded to 6.00%
over 13 years. The health care cost trend rate assumption has a significant
effect on the amounts reported. To illustrate, increasing the assumed health
care cost trend rates by one percentage point in each year would increase the
accumulated postretirement benefit obligation as of January 1, 1995 by $3.1
million and the estimated eligibility cost and interest cost components of net
periodic postretirement benefit cost for 1995 by $.5 million.
(9) NOTES PAYABLE
In September 1995 the Company obtained a note payable for $100.0 million with a
financial institution. The note is secured by bonds with a carrying value of
$100.7 million. The note bears a fixed interest rate at 5.55% payable quarterly
and matures on March 29, 1996. The carrying value of this note approximates the
fair value at December 31, 1995.
(10) CONTINGENCY RESERVES
ASSET VALUATION RESERVE
The AVR is maintained for the purpose of stabilizing surplus against the effect
of fluctuations in the value of certain bond, stock, mortgage loan, and real
estate investments. Changes in the market value of common stocks carried at
market value are applied to the common stock component of this reserve. This
treatment has the effect of insulating statutory surplus from short-term market
value fluctuations of common stock. This reserve is recorded as a direct charge
to policyholders' surplus in accordance with statutory accounting practices.
16 (Continued)
<PAGE> 83
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
The balance of the AVR component as of December 31, 1995 and 1994 is as follows
(in thousands of dollars):
<TABLE>
<CAPTION>
=========================================================================================
1995 1994
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Bonds, preferred stocks, and short-term
investments $ 40,829 39,859
Mortgage loans 49,339 48,543
Common stock 92,196 126,959
Real estate and other invested assets 20,363 19,990
- -----------------------------------------------------------------------------------------
$202,727 235,351
=========================================================================================
</TABLE>
Included in the mortgage loan component of the AVR at December 31, 1995 and 1994
was $42.9 million, which represents an additional reserve for potential credit
losses inherent in the mortgage loan portfolio. At December 31, 1995 and 1994,
the AVR is held at a level equal to 87.2% and 90.1%, respectively, of the
maximum reserve level allowed by the NAIC.
INTEREST MAINTENANCE RESERVE
IMR excludes certain net realized gains and losses from the net gain in the
current year and amortizes those gains and losses through net investment income
over a period of years. The net effect of this change on the 1995, 1994, and
1993 net gain is as follows (in thousands of dollars):
<TABLE>
<CAPTION>
======================================================================================================
1995 1994 1993
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Amount of realized capital gains (losses)
included in IMR $10,165 (11,012) 13,330
Amount amortized and reflected in net
investment income (4,757) (4,559) (4,335)
- ------------------------------------------------------------------------------------------------------
Excluded from net gain (loss) $ 5,408 (15,571) 8,995
======================================================================================================
</TABLE>
(11) TRANSACTIONS WITH SUBSIDIARIES
General American has purchased insurance from, and also reinsured business with,
RGA Reinsurance Company (RGA Re), formerly St. Louis Reinsurance Company. RGA Re
is a subsidiary of RGA. In addition to the agreement wherein the former
reinsurance division of General American was transferred to RGA Re. The effect
of this business was to increase premiums and other considerations by $136.5
million in 1995 and $17.5 million in 1994 and to increase policy benefits and
other expenses by $92.9 million in 1995 and $17.1 million in 1994. The Company
also received $2.8 million, $6.3 million, and $4.3 million in dividends from
subsidiaries in 1995, 1994, and 1993, respectively.
17 (Continued)
<PAGE> 84
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
In May 1993, the Company sold a portion of its reinsurance subsidiary, RGA, to
the public through an initial public offering of common stock. RGA received net
proceeds of approximately $160.0 million from the offering. The transaction
increased surplus and contingency reserves of the Company by approximately
$167.0 million. After the sale, the Company owned 62% of the total shares
outstanding of RGA common stock. The publicly held stock of RGA trades on the
New York Stock Exchange.
(12) POLICYHOLDERS' SURPLUS
During 1988, the Company entered into a nonrecourse transfer agreement with an
unaffiliated financial institution. Under this nonrecourse transfer agreement,
the Company transferred the right to the portion of premiums in excess of the
net valuation premium on certain policies for a limited period. The purchaser's
right to future premiums is limited to the portion above the amount necessary to
build policyholder reserves and, therefore, cannot interfere with, or have
priority over, the interests of the Company's policyholders. Risk associated
with policy lapses transfers to the purchaser while its interest terminates if
and when repayment of the amount advanced is received. As of December 31, 1994,
the Company has made full repayment of this nonrecourse transfer agreement with
a direct charge to surplus of $34.8 million.
(13) SURPLUS NOTES
On January 14, 1994, the Company issued surplus notes with a face amount of
$107.0 million bearing a 7.625% interest rate due in 2024. The notes pay
interest on January 15 and July 15 each year. The notes are not subject to
redemption prior to maturity. Payment of principal and interest on the notes
may be made only with the approval of the Missouri Director of Insurance.
(14) RISKED-BASED CAPITAL
The insurance departments of various states, including the Company's domiciliary
state of Missouri impose risk-based capital (RBC) requirements on insurance
enterprises. The RBC calculation serves as a benchmark for the regulation of
life insurance companies by state insurance regulators. Their requirements apply
various weighted factors to financial balances or activity levels based on their
perceived degree of risk.
The RBC guidelines define specific capital levels where regulatory intervention
is required based on the ratio of a Company's actual total adjusted capital (sum
of capital and surplus and asset valuation reserve) to control levels determined
by the RBC formula. At December 31, 1995, the Company's actual total adjusted
capital was $879.9 million compared to its authorized control level computed
under the RBC formula of $179.1 million. Additionally, each of the Company's
insurance subsidiaries actual total adjusted capital exceeded all minimum
requirements.
(15) CONTINGENT LIABILITIES
From time to time, the Company is subject to insurance-related litigation in the
normal course of its business. Management does not believe the Company is a
party to any such pending litigation which would have a material adverse effect
on its financial statements or future operations.
18 (Continued)
<PAGE> 85
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
(16) SUBSEQUENT EVENTS
On January 25, 1996, General American and Security Mutual Life Insurance Company
(a New York company) announced an agreement to form a strategic alliance
(subject to regulatory approval) to market life insurance products more
efficiently and to achieve long-term growth objectives. This agreement may
include such things as consulting services, technology sharing, and investment
advisory services.
19 (Continued)
<PAGE> 86
Schedule
--------
GENERAL AMERICAN LIFE INSURANCE COMPANY
Schedule of Selected Financial Data From Annual Statement
Year ended December 31, 1995
<TABLE>
===================================================================================================
- ---------------------------------------------------------------------------------------------------
<S> <C>
Investment income earned:
Government bonds $ (1,515,086)
Other bonds (unaffiliated) 290,933,051
Bonds of affiliates 1,963,693
Preferred stocks (unaffiliated) 618,924
Common stocks (unaffiliated) -
Common stocks of affiliates (1,253,512)
Mortgages loans 141,603,417
Real estate 37,107,928
Premium notes, policy loans, and liens 92,730,645
Cash on hand and on deposit 110,588
Short-term investments 18,967,377
Other invested assets (1,275,570)
Aggregate write-in for investment income 731,575
- ---------------------------------------------------------------------------------------------------
Gross investment income $ 580,723,030
===================================================================================================
Real estate owned - book value less encumbrances $ 263,827,709
===================================================================================================
Mortgage loans - book value:
Residential mortgages $ 5,820,009
Commercial mortgages 1,668,216,758
- ---------------------------------------------------------------------------------------------------
Total mortgage loans $1,674,036,767
===================================================================================================
Mortgage loans by standing - book value:
Good standing $1,503,595,363
Good standing with restructured terms 144,257,321
Interest overdue more than three months, not in foreclosure 5,459,437
Foreclosure in process 20,724,646
Other long-term assets - statement value 35,193,813
Collateral loans -
Bonds and stocks of parents, subsidiaries, and affiliates -
book value:
Bonds 27,515,357
Preferred stocks 633,594
Common stocks 515,215,742
===================================================================================================
</TABLE>
20 (Continued)
<PAGE> 87
Schedule, Cont.
---------------
GENERAL AMERICAN LIFE INSURANCE COMPANY
Schedule of Selected Financial Data From Annual Statement, Continued
<TABLE>
===================================================================================================
- ---------------------------------------------------------------------------------------------------
<S> <C>
Bonds and short-term investments by class and maturity:
Bonds by maturity - statement value:
Due within one year or less $ 147,354,910
Over 1 year through 5 years 836,465,796
Over 5 years through 10 years 1,404,057,005
Over 10 years through 20 years 844,035,702
Over 20 years 623,600,086
- ---------------------------------------------------------------------------------------------------
Total by maturity $3,855,513,499
===================================================================================================
Bonds by class - statement value:
Class 1 $2,550,083,706
Class 2 1,133,865,256
Class 3 129,439,150
Class 4 34,823,913
Class 5 1,453,511
Class 6 5,847,963
- ---------------------------------------------------------------------------------------------------
Total by class 3,855,513,499
Total bonds publicly traded 2,595,931,013
- ---------------------------------------------------------------------------------------------------
Total bonds privately placed $1,259,582,486
===================================================================================================
Preferred stocks - statement value $ 8,194,965
Common stocks - market value 517,797,909
Short-term investments - book value 32,693,051
Financial options owned - statement value 855,000
Financial options written and in force - statement value 1,372,050
Financial futures contracts open - current price 1,556,051
Cash on deposit (47,728,369)
Life insurance in force:
Ordinary 99,750,100
Group life 46,529,984
Amount of accidental death insurance in force under ordinary policies 787,974
Life insurance policies with disability provisions in force:
Ordinary 11,191,931
Group life 33,999,724
Supplementary contracts in force:
Ordinary - not involving life contingencies 529
Amount on deposit 4,677,010
Income payable 473,615
Ordinary - involving life contingencies 425
Income payable 306,246
Group - not involving life contingencies 358
Amount of deposit 2,540,119
Income payable 1,857,912
Group - involving life contingencies 86
Income payable 301,553
===================================================================================================
</TABLE>
21 (Continued)
<PAGE> 88
Schedule, Cont.
---------------
GENERAL AMERICAN LIFE INSURANCE COMPANY
Schedule of Selected Financial Data From Annual Statement, Continued
<TABLE>
===================================================================================================
<S> <C>
Annuities:
Ordinary:
Immediate - amount of income payable $ 4,601,464
Deferred - fully paid account balance 493,925
Deferred - not fully paid account balance 984,452,874
Group:
Immediate - amount of income payable 29,532,911
Deferred - fully paid account balance 940,963
Deferred - not fully paid account balance 1,519,952,339
Accident and health insurance - premiums in force:
Ordinary 30,469,801
Group 278,501,063
Credit -
Deposit funds and dividend accumulations:
Deposit funds - account balance 348,545,716
Dividend accumulations - account balance 79,245,861
Claim payments 1994:
Group accident and health - year ended December 31:
1995 130,390,021
1994 36,142,689
1993 -
Other accident and health:
1995 1,378,908
1994 1,452,851
1993 5,607,713
Other coverages that use developmental methods to calculate
claims reserves:
1995 -
1994 -
1993 -
=================================================================================
</TABLE>
See accompanying independent auditors' report.
22
<PAGE> 89
Part B Registration No. 33-54774
GENERAL AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT TWENTY-NINE
STATEMENT OF ADDITIONAL INFORMATION
FOR THE
GENERAL AMERICAN/GT GLOBAL
INDIVIDUAL VARIABLE ANNUITY CONTRACT
Offered by
General American Life Insurance Company
(A Mutual Insurance Company domiciled in Missouri)
700 Market Street
St. Louis, Missouri 63101
This Statement of Additional Information expands upon subjects discussed in the
current Prospectus dated 29 April 1996 for the individual variable annuity
contracts ("Contracts" or "Contract" as syntax requires) offered in conjunction
with GT Global Variable Investment Funds by General American Life Insurance
Company. You may obtain a copy of the Prospectus by calling 1-800-237-6580 or
writing to General American Life Insurance Company, GTG/VA Department, P.O. Box
66821, St. Louis, Missouri 63166-6821. Terms defined in the current Prospectus
for the Contract have the same meanings in this Statement.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD BE READ
ONLY IN CONJUNCTION WITH THE PROSPECTUS FOR THE CONTRACT.
Dated 29 April 1996
S-1
<PAGE> 90
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
THE CONTRACTS....................................................................................S-3
Computation of Variable Annuity Income Payments..................................................S-3
(a) Value of an Annuity Unit.......................................................S-3
(b) Amount of First Installment....................................................S-3
(c) Values of Annuity Installments.................................................S-4
Yield and Performance Calculations...............................................................S-4
(a) Money Market Yield.............................................................S-4
(b) Yields of other Divisions......................................................S-6
(c) Total Return...................................................................S-7
(d) Effect of the Annual Contract Fee..............................................S-8
GENERAL MATTERS..................................................................................S-9
Participating....................................................................................S-9
Incorrect Age or Sex.............................................................................S-10
Annuity Data.....................................................................................S-10
Annual Reports...................................................................................S-10
Incontestability.................................................................................S-10
Ownership ...................................................................................S-10
DISTRIBUTION OF THE CONTRACTS....................................................................S-10
SAFEKEEPING OF ACCOUNT ASSETS....................................................................S-11
STATE REGULATION.................................................................................S-11
RECORDS AND REPORTS..............................................................................S-11
LEGAL PROCEEDINGS................................................................................S-12
OTHER INFORMATION................................................................................S-12
FINANCIAL STATEMENTS.............................................................................S-12
</TABLE>
S-2
<PAGE> 91
THE CONTRACTS
The following provides additional information about the Contracts which
supplements the description in the Prospectus and may be of interest to the
Contract Owners.
COMPUTATION OF VARIABLE ANNUITY INCOME PAYMENTS
(a) 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 an annuity unit in each Division of Separate
Account Twenty-Eight and Separate Account Twenty-Nine 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 a Division
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 $10.216857, determined as
follows:
1.00176027 $12.200000
x.99989256 x 1.00165264
1.00165264 $12.220162208
(b) 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 Division of 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.
S-3
<PAGE> 92
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 from a Division 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
division.
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.
(c) DETERMINATION OF THE FLUCTUATING VALUES OF THE ANNUITY INSTALLMENTS
The dollar amount of the first annuity installment from any Division, 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 the increment 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.
YIELD AND PERFORMANCE CALCULATIONS
(a) MONEY MARKET YIELD
Advertisements and sales literature concerning the contracts may report the
"current annualized yield" for the Division 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:
S-4
<PAGE> 93
(a) determining the net change after 7 days (exclusive of realized gains
and losses on shares of the underlying 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 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 Division, 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 Division 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 Division
(exclusive of realized gains and losses on the sale of securities and
unrealized appreciation and depreciation) for the 7-day period
specified.
S-5
<PAGE> 94
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 Division will be lower than the
yield for the Fund or the corresponding Trust which underlie the Division.
Yields on amounts in the Money Market Division 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 Division 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 Fund, and the operating expenses of the Fund. Yields on
amounts held in the Money Market Division may also be presented for periods
other than seven days.
(b) YIELDS OF OTHER DIVISIONS
Advertisements and sales literature for the Contract may report the current
annualized yield of one or more of the Divisions (other than the Money Market
Division) for a 30-day or one-month period. The annualized yield of a Division
refers to income generated by the Division during a specified 30-day or
one-month period. Because the yield is annualized, the yield generated by the
Division 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 Division less expenses for
the Division for the period by (2) the maximum offering price per unit of the
Division 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
Division include the mortality and expense risk charge, the administrative
charge for the Division, 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 Division for the 30-day or one-month period
S-6
<PAGE> 95
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 a Division will be lower than the yield for the
corresponding Fund.
The yield on amounts in any Division will normally fluctuate. For that reason
yields for any past periods are not indications nor representations of future
yields. The actual yield for a Division 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.
(c) TOTAL RETURN
Advertisement and sales literature for the Contracts may, in addition to or as
an alternative to quoting yield, report "total return," including the average
annual total return for one or more of the Divisions for various periods of
time. General American will include in references to total return a quote for
the Division's total return since inception until the Division has been in
operation for more than 10 years, after which time a ten year return will be
used instead. Reports on total return will also include the average annual total
return for a Division for 1 and 5 years when the Division has been in operation
for those periods. Average annual total return for other lengths of time may
also be disclosed.
Average annual total return represents the average annual compounded rate of
return on an initial investment of $1,000 in a Division as of the last day of
the period used for measurement. Total return quotations will be for periods
ending on the last day of the most recent month possible, given the length of
time it takes to produce advertisements and sales literature. The period for
which total return has been calculated will always be identified.
Average annual total return will be calculated using Division unit values
calculated on each Business Day based on the performance of the corresponding
underlying Fund, with deductions for the mortality and expense risk charge, the
administrative
S-7
<PAGE> 96
charge, and the annual contract fee at the rate of $2.50 per month. The
calculation will assume the Contract is surrendered at the end of the period in
question, producing a surrender charge for periods of six years or less. All of
this means total return can be calculated according to the following formula:
1/N
TR = ((ERV/P) - 1
Where:
TR = the average annual total return net of recurring Contract charges
at the Division level (such as the mortality and expense risk charge,
the administrative charge, and the annual contract fee).
ERV = the ending redeemable value (net of any applicable surrender
charge) at the end of the period in question for an account with an
initial value of $1,000.
P = a hypothetical initial payment into the Division of $1,000.
N = the number of years in the period.
General American may also quote total returns in its sales literature or
advertisements that do not reflect the surrender charge. These are calculated in
exactly the same way as the average annual total returns described above, except
that the ending redeemable value of the hypothetical account is not net of a
surrender charge.
(d) 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.
S-8
<PAGE> 97
Sales literature or advertisements for the contracts may include total return or
other performance information for a hypothetical Contract based on the
assumption that the Initial Purchase Payment is allocated to more than one
Division, or that there are monthly transfers under the Dollar Cost Averaging
program. Such return information will reflect the performance of the Divisions
involved for the amount and the duration of the hypothetical allocation. They
will also reflect the deduction of the charges described above, except the
surrender charge. For example, total return information for a Contract taking
part in Dollar Cost Averaging for a 12-month period will assume that the DCA
program began at the start of the most recently 12-month period for which
average annual total return information is available. Such return information
assumes an initial investment in the Money Market Division at the beginning of
that period and monthly transfers of a portion of the sum in that Division to
the other Divisions designated each month over the 12-month period. The total
return for such a Contract over 12 months will therefore reflect the return on
the part of the Contract invested in the Money Market Division, and the return
on the parts invested in the Divisions receiving funds, only for the period
during which the transferred amounts are assumed to be invested in these
Divisions. The return for a sum invested in a Division will be based on the
performance of that Division for the length of the investment, and will reflect
the charges described above other than the surrender charge. Performance
information for a Dollar Cost Averaging program may also show the return for a
designated Division over various periods assuming monthly transfers into the
Division, and may compare those returns to returns assuming an initial lump-sum
investment in the Division. Performance information may also be compared to
various indices, such as the U.S. Treasury Bills index, and may be illustrated
by graphs, charts, or other means.
GENERAL MATTERS
PARTICIPATING
The Contracts share in General American's divisible surplus while they are in
force prior to the Annuity 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, or leave the distribution with General
American to increase the Accumulated Value.
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INCORRECT AGE OR SEX
If the age at issue or sex of the Annuitant as shown in the Contract is
incorrect, any benefit payable will be such as if the Accumulated Value would
have been purchased using the correct age and sex. If the error is discovered
after General American begins paying Annuity Payments, 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.
ANNUAL REPORTS
Quarterly, General American will give the Contract Owner a report of the current
Accumulated Value allocated to each Division; the current Accumulated Value
allocated to the Fixed 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 annual report 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.
DISTRIBUTION OF THE CONTRACTS
GT Global, Inc. ("GT Global"), 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.
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The Contracts are offered to the public through individuals licensed under the
federal securities laws and state insurance laws. These individuals are sales
agents of General American and registered representatives of broker/dealers
which have entered into selling agreements with GT Global. Included in this
group of broker/dealers is Walnut Street Securities, Inc., a wholly-owned
subsidiary of General American. The offering of the Contracts is continuous and
General American does not anticipate discontinuing the offering of the
Contracts. However, General American does reserve the right to discontinue the
offering of the Contracts.
SAFEKEEPING OF SEPARATE ACCOUNT ASSETS
Title to assets of the Separate Accounts is held by General American. The assets
are kept in book entry form or physically segregated and held separate and apart
from General American's general account assets. Records are maintained of all
purchases and redemptions of eligible Fund shares held by each of the Divisions
of the Separate Accounts. (See "Reports and Records" below.)
STATE REGULATION
General American is a mutual 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 maintain 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.
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LEGAL PROCEEDINGS
There are no legal proceedings to which the Separate Account is a party or to
which the assets of the Separate Account are subject. General American is not
involved in any litigation that is of material importance in relation to its
total assets or that relates to the Separate Accounts.
OTHER INFORMATION
Registration Statements have 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 financial statements of General American, which are included in this
Statement of Additional Information, should be considered only as bearing on the
ability of General American to meet its obligations under the Contracts. They
should not be considered as bearing on the investment performance of the assets
held in the Separate Accounts.
The financial statements of General American and the Separate Account as of 31
December 1995 have been audited by KPMG Peat Marwick LLP, independent certified
public accountants, who serve as independent accountants for General American
and for the Separate Account.
The audited financial statements of General American have been prepared in
accordance with accounting practices prescribed or permitted by the Department
of Insurance of the State of Missouri which are currently considered generally
accepted accounting principles for mutual life companies.
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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. 1
(b) Form of individual retirement account endorsement. 1
(c) Form of endorsement (No. 1099500) relating to attained age
and processing without an application
(d) Form of endorsement (No. 1099542) relating to attained age
and processing without an application for the State of Texas
(e) Form of endorsement (No. 1099400) relating to Section 401 and
457, Internal Revenue Code
(f) Form of endorsement (No. 1099436) relating to Section 401 and
457, Internal Revenue Code for the State of Oregon
(g) Form of endorsement (No. 1099460) relating to Section 401
and 457,Internal Revenue Code for the State of New Jersey
(5) Form of Contract Application. 1
(6) (a) Certificate of Incorporation of General American. 2
(b) By-laws of General American. 2
(7) Not applicable
(8) Participation Agreement. 4
(9) Opinion and Consent of Counsel. 1
(10) Consent of Independent Accountants (with Financial Statements)
(11) No financial statements are omitted from item 23.
(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, H. 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.
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.
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Item 25. Directors and Officers of the Depositor
Officer's Name and Principal Positions and Offices
Business Address* with Depositor
Robert J. Banstetter, Sr. Vice President, General
700 Market Street Counsel & Secretary, Feb.
St. Louis, MO 63101 1991 to present and General
Counsel, Jan. 1983 - Feb. 1991.
John W. Barber Vice President and Controller,
Dec. 1984 to present.
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, President and
700 Market Street Chief 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.
<PAGE> 103
Leonard M. Rubenstein Executive Vice President-
700 Market Street Investments, Oct. 1994 to present.
St. Louis, MO 63101 Formerly Executive Vice President -
Investments & Treasurer, Securities,
Feb. 1991 - Dec. 1994. Formerly Vice
President and Treasurer, Nov. 1984 -
Feb. 1991.
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
Insurance, Oct. 1991 - present.
Formerly Vice President, Individual
Life Products, June 1989 - Nov. 1991
A. Greig Woodring President and Chief Executive
660 Mason Ridge Center Drive Officer, Reinsurance Group of
St. Louis, MO 63141 America, Incorporated,
Dec. 1992 to present.
Executive Vice President
Reinsurance, Mar. 1990 to Dec. 1992.
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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.
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Positions and Offices
Directors with Depositor
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
H. Edwin Trusheim Director
General American Life Insurance Company
700 Market Street
St. Louis, Missouri 63101
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Positions and Offices
Directors with Depositor
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
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Item 26. Persons Controlled by or Under Common Control With the Depositor or
Registrant
The Depositor, General American Life Insurance Company ("General American"),
controls the companies named on the following pages:
General American Life Insurance Company: a Missouri mutual insurance company
selling life and health insurance and pensions. Principal place of business: St.
Louis, Missouri.
Cova Corporation: wholly-owned Missouri subsidiary formed to own the Cova
Life companies. Principal place of business: St. Louis, Missouri.
Cova Financial Services Life Insurance Company: wholly-owned Missouri
subsidiary of Cova Corporation, engaged in the business of selling
annuities and life insurance. Principal place of business: Oakbrook,
Illinois.
First Cova Life Insurance Company: wholly-owned New York subsidiary of
Cova Financial Services Life Insurance Company. Engaged in the sale of
life insurance in New York. Principal place of business: New York, New
York.
Cova Financial Life Insurance Company: wholly-owned California subsidiary
of Cova Corporation, engaged in the sale of life insurance and annuities.
Principal place of business: Oakbrook, Illinois.
Cova Life Management Company: wholly-owned Delaware subsidiary of Cova
Corporation. Employer of the individuals operating the Cova companies.
Principal place of business: Oakbrook, Illinois
Cova Investment Advisory Corporation: wholly-owned Illinois subsidiary
of Cova Life Management Company. Intended to provide investment advice
to Cova Life insureds and annuity owners. Principal place of business:
Oakbrook, Illinois.
Cova Investment Allocation Corporation: wholly-owned Illinois
subsidiary of Cova Life Management Company. Intended to provide advice
on allocation of premiums to Cova Life insureds and annuity owners.
Principal place of business: Oakbrook, Illinois.
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Cova Life Sales Company: wholly-owned Delaware subsidiary of Cova
Life Management Company. Broker-dealer established to supervise
sales of Cova Life contracts. Principal place of business:
Oakbrook, Illinois. General Life Insurance Company of America:
wholly-owned subsidiary, domiciled in Illinois, engaged in the
business of selling life insurance and annuities. Principal place
of business: Edwardsville, Illinois.
General Life Insurance Company: wholly-owned subsidiary, domiciled in
Texas, engaged in the business of selling life insurance and
annuities. Principal place of business: Edwardsville, Illinois.
Paragon Life Insurance Company: wholly-owned Missouri subsidiary
engaged in employer sponsored sales of life insurance. Principal place
of business: St. Louis, Missouri.
Equity Intermediary Company: wholly-owned subsidiary holding company
formed to own stock in subsidiaries. Principal place of business: St.
Louis, Missouri.
Reinsurance Group of America, Incorporated: Missouri corporation,
of which approximately 64% is owned by Equity Intermediary
Company and the balance by the public, owning RGA Reinsurance
Company and G.A. Canadian Holdings, Ltd., (i.e. all reinsurance
business). Principal place of business: St. Louis, Missouri.
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 (fka Saint Louis Reinsurance Company),
existing to hold Chilean reinsurance operations. Principal
place of business: Santiago, Chile.
BHIF America Seguros 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. Principal place of business:
Santiago, Chile.
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Manantial Seguros de Vida S.A.: Argentinean subsidiary, of which
50% is owned by RGA and 50% by Argentinean interests called the
Sojo Group, engaged in business as a life, annuity, disability,
and survivorship insurer. Principal place of business: Buenos
Aires, Argentina.
RGA Reinsurance Company (formerly Saint Louis Reinsurance
Company): Missouri subsidiary of Reinsurance Group of America
engaged in the reinsurance business. Principal place of business:
St. Louis, Missouri.
Fairfield Management Group, Inc.: 51% owned Missouri
subsidiary of RGA Reinsurance Company (fka Saint Louis
Reinsurance Company) and 49% is owned by management.
Principal place of business: St. Louis, Missouri.
Reinsurance Partners, Inc.: wholly-owned Missouri subsidiary
of Fairfield Management Group, Inc., engaged in business as
a reinsurance brokerage company. Principal place of
business: St. Louis, Missouri.
Great Rivers Reinsurance Management, Inc.: wholly-owned
Missouri subsidiary of Fairfield Management Group, Inc.,
acting as a reinsurance manager. Principal place of
business: St. Louis, Missouri.
RGA (U.K.) Underwriting Agency Limited: 80% owned by
Fairfield Management Group, Inc.. Principal place of
business: London, England.
RGA Reinsurance Company (Barbados) Ltd.: subsidiary of
Reinsurance Group of America, Incorporated formed to engage in
the exempt insurance business. Principal place of business:
Barbados, West Indies.
RGA/Swiss Financial Group, L.L.C.: subsidiary formed to
market and manage financial reinsurance business to be
assumed by RGA Reinsurance Company. Principal place of
business: St. Louis, Missouri.
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TAIMS L.L.C.: 51% owned by RGA; 49% owned by TAIMS
Holding Corp., a Canadian corporation. Acts as a holding company
in a joint venture with IBM to sell computers and software for
the application process to brokers and agents. Principal place of
business: St. Louis, Missouri.
G.A. Canadian Holdings, Ltd.: a New Brunswick corporation
wholly-owned by Reinsurance Group of America, existing to hold
Canadian reinsurance operations. Principal place of business:
Montreal, Canada.
RGA Canada Management Company, Ltd.: a New Brunswick
corporation wholly-owned by G.A. Canadian Holdings, existing
to accommodate Canadian investors. Principal place of
business: Montreal, Canada.
RGA Life Reinsurance Company of Canada: Federally
chartered corporation wholly-owned by RGA Canada
Management Company, Ltd. Principal place of business:
Montreal, Canada.
RGA Holdings Limited: holding company formed in the United Kingdom to
own two operating companies: RGA Managing Agency Limited and RGA
Capital Limited.
RGA Managing Agency Limited: company has applied to Lloyd's of
London for registration as a managing agent or underwriter.
RGA Capital Limited: company has applied to Lloyd's of London
syndicate which will underwrite accident and health business.
RGA Reinsurance Company (Bermuda) Ltd.: subsidiary formed to reinsure
the foreign (international) and domestic (U.S.) business of affiliated
and non-affiliated companies.
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.
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Security Equity Life Insurance Company: wholly-owned subsidiary, domiciled
in New York, engaged in the business of selling life insurance and
annuities. Principal place of business: Armonk, New York.
General American Holding Company: wholly-owned Missouri subsidiary owning
non-insurance subsidiaries. Principal place of business: St. Louis,
Missouri.
Conning Asset Management Company: wholly-owned, second-tier Missouri
subsidiary formed to own General American Investment Management
Company and Conning Corporation. Principal place of business: St.
Louis, Missouri.
General American Investment Management Company: wholly-owned,
third-tier Missouri subsidiary engaged in providing investment
advice. Principal place of business: St. Louis, Missouri.
Conning Corporation: a holding company organized under Delaware
law. Principal place of business: St. Louis, Missouri.
Conning & Company: a Connecticut corporation engaged in
providing asset management and investment advisory services
as well as insurance research services. Principal place of
business: Hartford, Connecticut.
Conning International, Inc.: an inactive company formed to
engage in international activities. Principal place of
business: Hartford, Connecticut.
Consultec, Inc.: wholly-owned, second-tier Georgia subsidiary engaged
in providing data processing services for government entities.
Principal place of business: Atlanta, Georgia.
Genelco Incorporated: wholly-owned, second-tier Missouri subsidiary
engaged in the sale of computer software and in providing third-party
administrative services. Principal place of business: St. Louis,
Missouri.
International Underwriting Services, Incorporated: Illinois
corporation 88.3% owned by Genelco. Provides third-party
underwriting services to insurance companies. Principal place of
business: Barrington, Illinois.
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Genelco de Mexico: Mexican corporation 99% owned by Genelco
Incorporated; engaged in licensing of Genelco software products
in Latin America. Principal place of business: Mexico City,
Mexico.
Genelco Software, S.A.: a Spanish corporation 99% owned by Genelco
Incorporated, engaged in licensing of Genelco Software products in
Spain.
Red Oak Realty Company: wholly-owned, second-tier Missouri subsidiary
formed for the purpose of investing in and operating real estate.
Principal place of business: St. Louis, Missouri.
GenMark Incorporated: wholly-owned, second-tier Missouri subsidiary
company acting as distribution company. Principal place of business:
St. Louis, Missouri.
Walnut Street Securities, Inc.: wholly-owned, third-tier Missouri
subsidiary engaged in the process of selling variable life
insurance and variable annuities and other securities. Principal
place of business: St. Louis, Missouri.
Walnut Street Advisers, Inc.: wholly-owned Missouri
subsidiary of Walnut Street Securities engaged in the
business of giving investment advice. Principal place of
business: St. Louis, Missouri.
Stan Mintz Associates, Inc.: wholly-owned Wisconsin subsidiary
purchased to maintain a significant marketing presence in the
Madison, Wisconsin area upon the retirement of General Agent Stan
Mintz. Principal place of business: Madison, Wisconsin.
White Oak Royalty Company: wholly-owned, second-tier Oklahoma
subsidiary formed to own mineral interests. Principal place of
business: St. Louis, Missouri.
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Item 27. Number of Contract Owners 6,432
As of 29 March 1996 there were:
Title of Class Number of Owners of Record
Qualified 1,573
Non-Qualified 4,859
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
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.
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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 Underwriters
(a) GT Global, Inc. serves as the principal underwriter and distributor
for the variable annuity contracts using Separate Account Twenty-Eight and
Separate Account Twenty-Nine of General American and funded by the GT Global
Variable Investment Funds.
(b) Directors and Officers
Name and Principal Business Positions and Offices
Address * with Underwriter
David A. Minella Chairman of the Board of Directors
William J. Guilfoyle President and Director
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Name and Principal Business Positions and Offices
Address * with Underwriter
James R. Tufts Senior Vice President -
Finance and Director
Raymond R. Cunningham Senior Vice President -
National Sales Manager and Director
Helge K. Lee Senior Vice President and Secretary
Donald F. MacLeod Senior Vice President
375 Park Avenue, Suite 3404
New York, NY 10152
Stephen A. Maginn Senior Vice President -
519 S. Juanita Regional Sales Manager
Redondo Beach, California 90277
Robert J. Wolf Senior Vice President -
71 South 20th St., Suite 120 Regional Sales manager
Battlecreek, MI 49015
Peter R. Guarino Assistant Secretary
David J. Thelander Assistant Secretary
David P. Anderson, Jr. Vice President
1012 William
Plymouth, MI 48170
Bruce Caldwell Vice President
1003 Medinah Ct.
Kennesaw, GA 30144
Philip B. Christoper Vice President
Rt. 2, Box 232A
Charlottesville, VA 22902
Jon Burke Vice President
31 Darlene Drive
Southboro, MA 01772
Anthony Di Bacco Vice President
30585 Via Lindon
Laguna Niguel, CA 92677
Stephen Donovick Vice President
2806 Carriage Lane
Carrolton, TX 75019
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Name and Principal Business Positions and Offices
Address * with Underwriter
Philip D. Edelstein Vice President
9 Huntly Circle
Palm Beach Gardens, FL 33418
Jon Fessel Vice President
1781 Pine Harrier Circle
Sarasota, FL 34231
Ned E. Hammond Vice President
8080 N. Central Expressway, Suite 400
Dallas, TX 75206
Campbell Judge Vice President
4312 Linden Hills Blvd., #202
Minneapolis, MN 55410
Richard Kashnowski Vice President
1454 High School Drive
Brentwood, MO 63144
Allen M. Kuhn Vice President
7220 Garfield Street
New Orleans, LA 70118
Jeffrey Kulik Vice President
10013 Cape Ann Drive
Columbia, MD 21046
Steven C. Manns Vice President
3025 Caswell Drive
Troy, MI 48084
C. David Matthews Vice President
2445 Pebblebrook
Westlake, OH 44145
Anthony R. Rogers Vice President
100 South Bank Drive
Cary, NC 27511
James B. Sandidge Vice President
758 Chimney Creek Drive
Golden, CO 80401
Philip Schertz Vice President
25 Ivy Place
Wayne, NJ 07470
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Name and Principal Business Positions and Offices
Address * with Underwriter
Peter Sykes Vice President
3490 East Brockbank Drive
Salt Lake City, UT 84124
Tommy D. Wells Vice President
25 Crane Drive
Sam Anselmo, CA 94960
Todd H. Westby Vice President
3405 Goshen Road
Newtown Square, PA 19073
Brian A. Williams Vice President
655 Cherry Avenue
Winnetka, IL 60093
Eric T. Zeigler Vice President
437 30th Street
Manhattan Beach, CA 90266
* Unless otherwise indicated, the business address of each person listed is 50
California Street, San Francisco, CA 94111.
(c) Principal Underwriter 1995 Brokerage 1995 Compensation
Commission
GT Global, Inc. $3,381,819.40 $3,381,819.40
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 at its
administrative offices, 13045 Tesson Ferry Road, St. Louis, MO 63128.
Item 31. Management Services
All management contracts are discussed in Part A or Part B.
Item 32. Undertakings
(a) The Registrant undertakes that it will file a post-effective amendment to
this registration statement as frequently as necessary to ensure that the
audited financial statements in the registration statement are never more than
16 months old for so long as Purchase Payments under the Contracts may be
accepted.
C-16
<PAGE> 118
(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.
C-17
<PAGE> 119
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant, General American Separate Account Twenty-Nine, 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 19th day of April 1996.
GENERAL AMERICAN
SEPARATE ACCOUNT
TWENTY-NINE (REGISTRANT)
(SEAL) BY: GENERAL AMERICAN LIFE
INSURANCE COMPANY (for
Registrant and as
Depositor)
Robert J. Banstetter, Sr. Richard A. Liddy
Attest: _________________________ By: ________________________
Robert J. Banstetter, Sr. Richard A. Liddy
Secretary Chairman, President, and
Chief Executive Officer
General American Life
Insurance Company
C-18
<PAGE> 120
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>
Richard A. Liddy
- -------------------------
Richard A. Liddy Chairman, President, and 4/19/96
Chief Executive Officer
(Principal Executive Officer)
Leonard M. Rubenstein
- ------------------------
Leonard M. Rubenstein Executive Vice President 4/19/96
(Principal Financial Officer)
John W. Barber
- ------------------------
John W. Barber Vice President and 4/19/96
Controller
(Principal Accounting Officer)
*
-----------------------
August A. Busch, III Director
*
-----------------------
William E. Cornelius Director
*
-----------------------
John C. Danforth Director
*
-----------------------
Bernard A. Edison Director
Richard A. Liddy
- ------------------------ 4/19/96
Richard A. Liddy Director
*
-----------------------
William E. Maritz Director
*_____________________
Craig D. Schnuck Director
</TABLE>
C-19
<PAGE> 121
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
*
-----------------------
William P. Stiritz Director
*
-----------------------
Andrew C. Taylor Director
*
-----------------------
H. Edwin Trusheim Director
*
-----------------------
Robert L. Virgil, Jr. Director
*
-----------------------
Virginia V. Weldon Director
*
-----------------------
Ted C. Wetterau Director
*By: Matthew P. McCauley 4/19/96
-------------------
Matthew P. McCauley
</TABLE>
* Original powers of attorney authorizing Matthew P. McCauley, Juanita M.
Thomas, Leonard M. Rubenstein, and each of them singly, 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-20
<PAGE> 122
The Board of Directors
General American Life Insurance Company
We consent to the use of our reports included herein on General American Life
Insurance Company and on General American Separate Accounts Twenty-Eight and
Twenty-Nine and to the reference of our firm under the heading of "Financial
Statements" in the Registration Statement and Prospectus for General American
Separate Accounts Twenty-Eight and Twenty-Nine.
The audited financial statements of General American Life Insurance Company have
been prepared in accordance with accounting practices prescribed or permitted by
the Department of Insurance of the State of Missouri which are currently
considered generally accepted accounting principles for mutual life insurance
companies.
KPMG PEAT MARWICK LLP
St. Louis, Missouri
April 29, 1996
C-21
<PAGE> 123
ENDORSEMENT
ISSUED BY GENERAL AMERICAN LIFE INSURANCE COMPANY
This contract has been issued under Section 401 or Section 457 of the Internal
Revenue Code of 1986. If there are multiple participants and the Annuitant dies
prior to the Annuity Date, the Amount of Death Benefit provision is amended at
issue to read:
The death benefit will be the accumulated value, less any applicable
interest change adjustment, surrender charge, or administrative
charges.
This form is for use in all states except OREGON and NEW JERSEY.
1099400
(9/94)
<PAGE> 124
ENDORSEMENT
ISSUED BY GENERAL AMERICAN LIFE INSURANCE COMPANY
This contract has been issued under Section 401 or Section 457 of the Internal
Revenue Code of 1986. If there are multiple participants and the Annuitant dies
prior to the Annuity Date, the Amount of Death Benefit provision is amended at
issue to read:
The death benefit will be the accumulated value, less any applicable
administrative charges.
This form is for use in OREGON.
1099436
(9/94)
<PAGE> 125
ENDORSEMENT
ISSUED BY GENERAL AMERICAN LIFE INSURANCE COMPANY
This contract has been issued under Section 401 or Section 457 of the Internal
Revenue Code of 1986. If there are multiple participants and the Annuitant dies
prior to the Annuity Date, the Amount of Death Benefit provision is amended at
issue to read:
The death benefit will be the accumulated value, less any applicable
surrender charge or administrative charges.
This form is for use in NEW JERSEY.
1099460
(9/94)
<PAGE> 126
ENDORSEMENT
ISSUED BY GENERAL AMERICAN LIFE INSURANCE COMPANY
The definition of Age on page 3.01 is hereby amended at issue to read: the
Annuitant's Age at his or her last birthday.
All references to the "application" are hereby amended to read: "application,
if any". The original Owner and Beneficiary are as shown on the contract
specifications page.
The Incontestability provision is hereby amended at issue to read: We will not
contest the validity of this Contract.
The first sentence of the Misstatement of Age or Sex and corrections provision
is hereby amended at issue to read: If the age or sex of the Annuitant has been
misstated in this Contract, the benefits available under this Contract will be
those which the purchase payments would have purchased for the correct age or
sex.
This form is for use in all states except TEXAS.
1099500
(9/94)
<PAGE> 127
ENDORSEMENT
ISSUED BY GENERAL AMERICAN LIFE INSURANCE COMPANY
The definition of Age on page 3.01 is hereby amended at issue to read: the
Annuitant's Age at his or her last birthday.
All references to the "application" are hereby amended to read: "application,
if any". The original Owner and Beneficiary are as shown on the contract
specifications page.
The Incontestability provision is hereby amended at issue to read: We will not
contest the validity of this Contract.
The first sentence of the Misstatement of Age or Sex and corrections provision
is hereby amended at issue to read: If the age or sex of the Annuitant has been
misstated in this Contract, the benefits available under this Contract will be
those which the purchase payments would have purchased for the correct age or
sex.
This form is for use in TEXAS
1099542
(9/94)
