As filed with the Securities and Exchange Commission on April 28, 1997
Registration No. 33-55152
811-7368
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
|_|
Pre-Effective Amendment No. |_|
Post-Effective Amendment No. 6 |X|
-----
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |_|
Amendment No. 7 |X|
-----
SEPARATE ACCOUNT VA-2LNY
(Exact Name of Registrant)
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
(formerly called, First Transamerica Life Insurance Company)
(Name of Depositor)
100 Manhattanville Road, Purchase, NY 10577
-------------------------------------
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number, including Area Code: (914) 701-6000
Name and Address of Agent for Service: Copy to:
James W. Dederer, Esquire Frederick R. Bellamy, Esquire
Chairman of the Board, General Counsel and Sutherland, Asbill & Brennan L.L.P.
Corporate Secretary 1275 Pennsylvania Avenue, N.W.
Transamerica Life Insurance Company of New York Washington, D.C. 20004-2404
100 Manhattanville Road
Purchase, NY 10577
Approximate date of proposed sale to the
public: As soon as practicable after effectiveness of the
Registration Statement.
The Registrant has previously filed a declaration of indefinite registration of
its shares pursuant to Rule 24f- 2 under the Investment Company Act of 1940. The
Rule 24f-2 Notice for the year ended December 31, 1996 was filed on February 25,
1997
It is proposed that this filing will become effective:
|_| immediately upon filing pursuant to paragraph (b)
|X| on May 1, 1997 pursuant to paragraph (b)
|_| 60 days after filing pursuant to paragraph (a)(i)
|_| on ________________ pursuant to paragraph (a)(i)
|_| 75 days after filing pursuant to paragraph (a)(ii)
|_| on ________________ pursuant to
paragraph (a)(ii) of Rule 485
If appropropriate, check the following box:
|_| this Post-Effective Amendment designates
a new effective date for a previously
filed Post-Effective Amendment.
<PAGE>
CROSS REFERENCE SHEET
Pursuant to Rule 495
Showing Location in Part A (Prospectus),
Part B (Statement of Additional Information) and Part C
of Registration Statement Information Required by Form N-4
PART A
<TABLE>
<CAPTION>
Item of Form N-4 Prospectus Caption
<S> <C>
1. Cover Page............................................... Cover Page
2. Definitions.............................................. Definitions
3. Synopsis................................................. Summary
4. Condensed Financial Information.......................... Not Applicable
5. General
(a) Depositor Transamerica Occidental Life
Insurance Company;
Additional Information about
Transamerica
Occidental Life Insurance Company;
(b) Registrant The Variable Account
(c) Portfolio Company The Funds
(d) Fund Prospectus The Funds
(e) Voting Rights Voting Rights
6. Deductions and Expenses..................................
(a) General Charges and Deductions
(b) Sales Load % Contingent Deferred Sales Load
(c) Special Purchase Plan Not Applicable
(d) Commissions Distribution of the Contracts
(e) Fund Expenses The Funds
(f) Operating Expenses Variable Account Fee Table
7. Contracts
(a) Persons with Rights The Contract; Cash
Withdrawals; Death Benefit;
Voting Rights
(b) (i) Allocation of Premium
Payments..................................... Allocation of Purchase Payments
(ii) Transfers.................................... Transfers
(iii) Exchanges.................................... Federal Tax Matters
(c) Changes Addition, Deletion, or
Substitution
(d) Inquiries Summary; Available Information
8. Annuity Period........................................... Annuity Payments
9. Death Benefit............................................ Death Benefit
10. Purchase and Contract Balances
(a) Purchases Contract Application and
Purchase Payments
(b) Valuation Participant Account Value
(c) Daily Calculation Variable Accumulated Value
(d) Underwriter Distribution of the Contracts
11. Redemptions
(a) By Contract Owners Withdrawals; Systematic
Withdrawal Option;
Automatic Payout Option
By Annuitant....................................... Not Applicable
(b) Texas ORP Not Applicable
(c) Check Delay Cash Withdrawals
(d) Lapse Not Applicable
(e) Free Look Definitions; Summary; Contract
Application and
................................................... Purchase Payments
12. Taxes.............................................. Federal Tax Matters
13. Legal Proceedings.................................. Legal Proceedings
14. Table of Contents for the
Statement of
Additional Information................................... Statement of Additional Information Table
of
Contents
PART B
Item of Form N-4 Statement of Additional
Information Caption
15. Cover Page......................................... Cover Page
16. Table of Contents.................................. Table of Contents
17. General Information
and History.............................................. (Prospectus) Transamerica Occidental Life
Insurance Company; (Prospectus)
Additional
Information About Transamerica
Occidental Life
Insurance Company
18. Services...........................................
(a) Fees and Expenses
of Registrant...................................... (Prospectus) Variable Account Fee Table;
(Prospectus) The Funds
(b) Management Contracts (Prospectus) Third Party
Administration
(c) Custodian Records and Reports;
Safekeeping of Account
Assets
Independent Auditors ............................. (Prospectus) Accountants
(d) Assets of Registrant Not Applicable
(e) Affiliated Person Not Applicable
(f) Principal Underwriter Not Applicable
19. Purchase of Securities
Being Offered............................................ (Prospectus) The Contract
Offering Sales Load...................................... (Prospectus) Contingent Deferred Sales
Load
20. Underwriters....................................... (Prospectus) Distribution of the Contracts
21. Calculation of Performance
Data..................................................... (Prospectus) Performance Data; Calculation of
Yields and Total Returns
22. Annuity Payments................................... (Prospectus) Annuity Payments; Annuity
Period
23. Financial Statements............................... Financial Statements
PART C -- OTHER INFORMATION
Item of Form N-4 Part C Caption
24. Financial Statements
and Exhibits............................................. Financial Statements and Exhibits
(a) Financial Statements Financial Statements
(b) Exhibits Exhibits
25. Directors and Officers of
the Depositor............................................ Directors and Officers of the Depositor
26. Persons Controlled By or Under Common Control
with the Depositor or Registrant Persons Controlled By or
Under Common Control
with the Depositor or Registrant
27. Number of Contract Owners.......................... Number of Contract Owners
28. Indemnification.................................... Indemnification
29. Principal Underwriters............................. Principal Underwriters
30. Location of Accounts
and Records.............................................. Location of Accounts and Records
31. Management Services................................ Management Services
32. Undertakings....................................... Undertakings
Signature Page........................................... Signature Page
</TABLE>
<PAGE>
PROFILE
Of The
DREYFUS/TRANSAMERICA
TRIPLE ADVANTAGE(R)
VARIABLE ANNUITY
Issued By
TRANSAMERICA LIFE
INSURANCE COMPANY OF NEW YORK
May 1, 1997
This Profile is a summary of some of the more
important points that you should know and consider
before purchasing a Policy.
The Policy is more fully described in the full
Prospectus which accompanies this Profile. Please read
the Prospectus carefully.
1. The Annuity Policy. The Dreyfus/Transamerica Triple Advantage is an
annuity policy or a contract
between you and Transamerica Life Insurance Company of New York. In the Policy
you can invest,
in your choice of fifteen mutual funds ("Portfolios") in the Variable Account.
You
could gain or lose money you invest in the Portfolios.
The policy is a deferred annuity, which means it has two phases: the
accumulation phase and the annuity phase. During the accumulation phase you can
invest additional premiums in the Policy, transfer your money among the
Portfolios, and withdraw some or all of your investment. During this phase
earnings accumulate on a tax-deferred basis for individuals, but if you withdraw
money some or all of it may be taxable.
Tax deferral is not available for corporation and some trusts.
During the annuity phase Transamerica will make periodic payments to
you. The dollar amount of the payments may depend on the amount of money
invested and earned during the accumulation phase (and other factors, such as
age and sex).
2. The Annuity Payments. You can generally decide when to end the accumulation
phase and begin receiving annuity payments from Transamerica. You can choose
fixed annuity payments, where the dollar amount of each payment generally stays
the same, or variable payments that go up or down in dollar amount based on the
investment performance of the Portfolio(s) you select. You can choose among
payments for the lifetime of an individual, or payments for the longer of one
lifetime or a guaranteed period of 10, 15, or 20 years, or payments for one
lifetime and the lifetime of another individual.
3. Purchasing a Policy. Generally you must invest at least $5,000 to purchase a
Policy, and then you can make more investments of at least $500 each ($100 each
if made under the automatic payment plan and deducted from your bank account).
You may cancel your Policy during the Free Look Period explained in item 10 on
page 5 of this Profile.
The Triple Advantage is designed for long-term tax-deferred
accumulation of assets, generally for retirement or other long-term goals.
People in high tax brackets get the most benefit from the tax deferral feature.
You should not make an investment in the Policy for short-term purposes or if
you cannot take the risk of losing some of your investment.
4. Investment Options. You can invest your premiums in any of the
following fifteen Portfolios:
Money Market Capital Appreciation International Value
<PAGE>
Managed Assets Stock Index Disciplined Stock
Zero Coupon 2000 Socially Responsible Growth Small Company Stock
Quality Bond Growth and Income Balanced
Small Cap International Equity Limited Term High Income
These Portfolios are described in their own prospectuses. You can earn
or lose money in any of these Portfolios.
5. Expenses. The Policy provides many benefits and features that
you do not get with a regular
mutual fund or CD investment. It costs Transamerica money to provide these
benefits, so there are charges
in connection with the Policy.
If you withdraw your money within seven years of investing it, there
may be a withdrawal charge of up to 6% of the amount invested.
Once each year we deduct a policy fee of no more than $30 (there is no
fee if your Policy Value is over $50,000).
Insurance and administrative charges of 1.40% per year are charged
against the average daily value of your Policy. Advisory fees are also deducted
by the Portfolios' manager and the Portfolios pay other expenses which in total,
vary from 0.30% to 1.35% per year of the amounts in the Portfolios.
Finally, although New York currently has no premium tax on annuities
depending on where you live during the time you hold this Contract, there might
be premium taxes ranging from 0 to 3.5% of your investment and/or on amounts you
use to purchase annuity benefits.
The following chart shows these charges (except premium taxes). The $30
annual policy fee is not included in the first column because the fee is waived
for contract values over $50,000 and the approximate average contract value for
these contracts is over $50,000. The third column is the sum of the first two.
The examples in the last two columns show the total amounts you would be
charged, in dollars, if you invested $1,000, the investment grew 5% each year,
and you withdrew your entire investment after one year or ten years. Year one
includes the withdrawal charge and year 10 does not.
EXAMPLES:
<TABLE>
<CAPTION>
Total
Variable Account Annual Annual Expenses at
Total Expenses
Portfolio/ Insurance Portfolio Total Annual end of One
at end of 10
Sub-Account Charges Charges Charges Year
Years
<S> <C> <C> <C> <C> <C>
Money Market 1.40% 0.62% 2.02% $73.29 $234.80
Managed Assets 1.40% 0.93% 2.33% $76.21 $266.60
Zero Coupon 2000 1.40% 0.66% 2.06% $73.67 $238.97
Quality Bond 1.40% 0.81% 2.19% $74.89 $252.37
Small Cap 1.40% 0.79% 2.19% $74.89 $252.37
Capital Appreciation 1.40% 0.84% 2.24% $75.37 $257.48
2
<PAGE>
Stock Index 1.40% 0.30% 1.70% $70.26 $200.86
Socially Responsible 1.40% 0.99% 2.39% $76.78 $272.63
Growth & Income 1.40% 0.83% 2.23% $75.27 $256.46
International Equity 1.40% 1.28% 2.68% $79.50 $301.24
International Value 1.40% 1.35% 2.75% $80.16 $308.01
Disciplined Stock 1.40% 0.96% 2.36% $76.50 $269.62
Small Company 1.40% 0.94% 2.34% $76.31 $267.60
Balanced 1.40% 1.25% 2.65% $84.50 $359.87
Limited Term High 1.40% 1.00% 2.40% $83.19 $341.61
Income
</TABLE>
The Annual Portfolio Charges above are for 1996 and do not reflect expense
reimbursement or fee waivers except for the Balanced and Limited Term High
Income Portfolios which did not commence operations in 1996; the numbers for
these funds are annualized estimates for 1997. Expenses may be higher or lower
in the future. See the Variable Account Fee Table on page 11 of the Triple
Advantage prospectus for more detailed information.
3
<PAGE>
6. Federal Income Taxes. Individuals generally are not taxed on increases in the
policy value until a distribution occurs (e.g., a withdrawal or annuity payment)
or is deemed to occur (e.g., a pledge, loan, or assignment of the contract). If
you withdraw money, earnings come out first and are taxed. Generally, some
portion (sometimes all) of any distribution or deemed distribution is taxable as
ordinary income. In some cases, income taxes will be withheld from
distributions. If you are under age 59 1/2 when you withdraw money, an
additional 10% federal tax penalty may apply to the withdrawn earnings. Certain
owners that are not individuals may be currently taxed on increases in the
contract, whether distributed or not.
7. Access to Your Money. You can generally take money out at any time during the
accumulation phase. A withdrawal charge of up to 6% of a purchase payment may be
assessed by Transamerica, but no withdrawal charge will be assessed on money
that has been in the Contract for seven years. Additionally, you can withdraw
accumulated earnings on your purchase payments not previously withdrawn at any
time without a withdrawal charge. In addition, after the first Contract Year,
for only the first withdrawal in a Contract Year, you may withdraw the greater
of accumulated earnings or 10% of Purchase Payments received at least one but
less than seven years ago. (See Page 41 of the prospectus for a more detailed
discussion.) You may have to pay taxes on amounts you withdraw and there may
also be a 10% tax penalty if you make withdrawals before you are 59 1/2 years
old.
8. Past Investment Performance. The value of the money you allocate to the
Portfolio(s) will go up or down, depending on the investment performance of the
Portfolios you pick. The following chart shows the past investment performance
on a year by year basis for each Sub-Account. These figures have already been
reduced by the insurance charges, the policy fee, the fund manager's fee and all
the expenses of the mutual fund portfolio. But these figures do not include the
withdrawal charge, which would reduce performance if it applied. Remember, past
performance is no guarantee of future performance or earnings.
CALENDAR YEAR
<TABLE>
<CAPTION>
SUB-ACCOUNT 1996 1995 1994 1993 1992 1991 1990 1989
- ----------- ---- ---- ---- ---- ---- ---- ----
----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Money Market(1) 3.53% 4.21% 3.00% 1.86% 2.71% 4.54% N/ N/A
A
Managed Assets(1) (5.67%) (0.48%) (3.48%) 26.74% (0.41%) 8.99% N/ N/A
A
Zero Coupon 2000(1) 1.10% 16.35% (5.41%) 13.52% 7.29% 17.14% 6.28% N/A
Quality Bond(1) 1.63% 18.91% (6.17%) 13.66% 10.45% 12.47% N/ N/A
A
Small Cap(1) 15.06% 28.84% 4.95% 65.77% 68.98% 156.07% N/ N/A
A
Capital 22.71% 32.82% 1.45% N/ N/A N/A N/A N/A
Appreciation(2) A
4
<PAGE>
StN/)
A
Socially 19.00% 33.67% (0.08%) N/ N/A N/A N/A N/A
Responsible(4) A
Growth and 18.63% 59.58% N/A N/A N/A N/A N/A N/A
Income(5)
International 9.82% 6.62% N/A N/A N/A N/A N/A N/A
Equity(5)
</TABLE>
(1) Portfolio Inception 8-31-90
(2) Portfolio Inception 4-5-93
(3) Portfolio Inception 9-29-89
(4) Portfolio Inception 10-7-93
(5) Portfolio Inception 12-15-94
No performance is reported for the International Value, Disciplined Stock and
Small Company Stock SubAccounts because these Sub-Accounts had not been in
operation for a full year in 1996. Additionally, the Balanced and Limited Term
High Income Sub-Accounts did not commence operations in 1996 and, therefore, no
performance is reported for these Sub-Accounts.
<PAGE>
9. Death Benefit. If you or the annuitant die during the accumulation
phase, then the appropriate beneficiary will receive a death benefit.
If death occurs before age 85, the death benefit will be the greatest
of: (1), the Policy Value; (2) the Premiums you've paid, less any amounts you
have withdrawn (less any premium taxes applicable to those withdrawal's); or (3)
the highest Policy Value on any anniversary of your purchase of the Policy the
Owner's or Annuitant's up to age 75 (adjusted for additional investments and
withdrawals since that anniversary, and less premium taxes). After age 85, the
death benefit is the Policy Value.
10. Other Information. The Triple Advantage variable annuity offers other
features you might be interested in. These features may not be suitable for
your particular situation. Some of these features include:
FREE LOOK. After you get your Policy, you have ten days to look it
over and decide if it is really right for you. If you decide not to keep the
Policy, you can cancel it during this period, and you will get back your full
Policy value (this may be more or less than your investment), and no withdrawal
charge will be deducted.
DOLLAR COST AVERAGING. You can instruct Transamerica to automatically
transfer amounts from the premiums you allocated to the Money Market or Quality
Bond Sub-Accounts to any of the other SubAccounts each month. Dollar Cost
Averaging is intended to give you a lower average cost per share or unit than a
single, one time investment.
AUTOMATIC ASSET REBALANCING. The performance of each Sub-Account
may
cause the allocation of value among the Sub-Accounts to change. You may instruct
Transamerica to periodically automatically rebalance the amounts in the
Sub-Accounts by reallocating amounts among them.
SYSTEMATIC WITHDRAWAL OPTION. You can arrange to have Transamerica
send you money automatically each month out of your Policy Value during the
accumulation phase. There are limits on the amounts, but the withdrawal charge
will not apply (the payments may be taxable and subject to the penalty tax if
you are under age 59 1/2 ).
AUTOMATIC PAYOUT OPTION. Certain pension and retirement plans require
that certain amounts be distributed from the plan at certain ages. You can
arrange to have such amounts distributed automatically during the accumulation
phase.
11. INQUIRIES. You can get more information and have your questions
answered by writing or calling:
Transamerica Annuity Service Center
P.O. Box 31728
Charlotte, North Carolina 28231-1728
(800) 258-4261
6
<PAGE>
["Front Maroon Cover"]
LOGO
PROSPECTUS FOR
DREYFUS/TRANSAMERICA TRIPLE ADVANTAGE(R)
May 1, 1997
A Variable Annuity Issued by
First Transamerica
Life Insurance Company
Including Fund Prospectuses for
DREYFUS VARIABLE INVESTMENT FUND
May 1, 1997
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC.
May 1, 1997
DREYFUS STOCK INDEX FUND
May 1, 1997
7
<PAGE>
DREYFUS/TRANSAMERICA TRIPLE ADVANTAGE(R)
VARIABLE ANNUITY
Issued by
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
100 Manhattanville Road, Purchase New York 10577,
(914) 701-6000
This Prospectus describes the Dreyfus/Transamerica Triple Advantage
Variable Annuity, a variable annuity policy ("Policy") issued by Transamerica
Life Insurance Company of New York (formerly called First Transamerica Life
Insurance Company) ("Transamerica"). The Policy is designed to aid individuals
in long-term financial planning and for retirement or other long-term purposes.
The Policy Value will accumulate on a variable basis in Transamerica
Separate Account VA-2LNY (the "Variable Account").
The Owner bears the entire investment risk under this Policy. There is
no guaranteed or minimum withdrawal value; the Cash Surrender Value or Annuity
Purchase Amount could be less than the Premiums invested in the Policy.
-------
This Prospectus sets forth the basic information that a prospective
investor should know before investing. A "Statement of Additional Information"
containing more detailed information about the Policy is available free by
writing Transamerica Life Insurance Company of New York, Annuity Service Center,
at P.O. Box 31728, Charlotte, North Carolina 28231-1728 or by calling (800)
258-4261. The Statement of Additional Information, which has the same date as
this Prospectus, as it may be supplemented from time to time, has been filed
with the Securities and Exchange Commission and is incorporated herein by
reference. The table of contents of the Statement of Additional Information is
included at the end of this Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Please read this prospectus carefully and retain it
for future reference. The date of this
Prospectus is May 1, 1997
This Prospectus must be accompanied by current Prospectuses for Dreyfus Variable
Investment Fund, Dreyfus Stock Index Fund, and The Dreyfus Socially Responsible
Growth Fund, Inc.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION
IN WHICH
SUCH OFFERING
MAY NOT LAWFULLY BE MADE. NO DEALER, SALESMAN, OR OTHER PERSON IS
AUTHORIZED
TO GIVE
ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION WITH
THIS OFFERING
OTHER THAN
THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE,
SUCH OTHER
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON.
An investment in the Policy is not a deposit or obligation of, or guaranteed or
endorsed by, any bank, nor is the Contract federally insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board or any other government
agency. Investing in the Policy involves certain investment risks, including
possible loss of principal.
<PAGE>
The Policy provides for monthly Annuity Payments to be made by
Transamerica on a fixed or a variable or combination of a fixed and variable
basis for the life of the Annuitant or for some other period, beginning on the
first day of the month following the Annuity Date selected by the Owner. Prior
to the Annuity Date, the Owner can transfer amounts among the Sub-Accounts of
the Variable Account. Some prohibitions and restrictions apply. After the
Annuity Date, some transfers are permitted among the Sub-Accounts if the Owner
selects a Variable Annuity Payment Option. Before the Annuity Date, the Owner
can also elect to withdraw all or a portion of the Cash Surrender Value in
exchange for a cash payment from Transamerica; however, withdrawals may be
subject to a Contingent Deferred Sales Load, premium taxes, federal tax and/or a
tax penalty and, upon surrender, the annual Policy Fee will also be deducted.
The Variable Account is divided into Sub-Accounts. Each Sub-Account is
invested in shares of a specific Portfolio. Fifteen Portfolios are available for
investment under the Policies: Money Market, Managed Assets, Zero Coupon 2000,
Quality Bond, Small Cap, Capital Appreciation, Growth and Income, International
Equity, International Value, Disciplined Stock, Small Company Stock, Balanced
and Limited Term High Income Portfolios of Dreyfus Variable Investment Fund;
Dreyfus Stock Index Fund; and The Dreyfus Socially Responsible Growth Fund, Inc.
Certain fees and expenses are charged against the assets of each Portfolio. The
Policy Value and the amount of any Variable Annuity payments will vary to
reflect the investment performance of the Sub-Account(s) selected by the Owner
and the deduction of the Policy charges described under "Charges and Deductions"
on page 29. For more information about the Funds, see "The Funds" on page 18 and
the accompanying Funds' prospectuses.
The Initial Premium for the Policy must generally be at least $5,000
unless, with the prior permission of Transamerica, the Contract is sold as a
Qualified Contract to certain retirement plans. Generally, each additional
Premium must be at least $500, unless an automatic payment plan is selected. The
prior approval of Transamerica is required before total Premiums for any Policy
in excess of $1,000,000 will be accepted.
2
<PAGE>
TABLE OF CONTENTS
Page
DEFINITIONS...............................................................5
SUMMARY...................................................................7
CONDENSED FINANCIAL INFORMATION..........................................15
PERFORMANCE DATA.........................................................16
FIRST TRANSAMERICA LIFE INSURANCE COMPANY AND THE VARIABLE
ACCOUNT.................................................................18
First Transamerica Life Insurance Company.......................18
Published Ratings...............................................18
The Variable Account............................................18
THE FUNDS................................................................18
THE POLICY...............................................................22
.............................................................
POLICY APPLICATION AND PREMIUMS..........................................22
Premiums........................................................22
Allocation of Premiums..........................................23
POLICY VALUE.............................................................23
TRANSFERS................................................................24
Before the Annuity Date.........................................24
Possible Restrictions...........................................24
Dollar Cost Averaging...........................................25
Automatic Asset Rebalancing
After the Annuity Date..........................................25
CASH WITHDRAWALS.........................................................25
Withdrawals.....................................................25
Systematic Withdrawal Option....................................26
Automatic Payout Option.........................................27
DEATH BENEFIT............................................................27
Payment of Death Benefit........................................28
Designation of Beneficiaries..................................28
Death of Annuitant Prior to the Annuity Date..................28
Death of Owner Prior to the Annuity Date......................28
Death of Annuitant or Owner After the Annuity Date............28
CHARGES AND DEDUCTIONS.................................................29
Contingent Deferred Sales Load................................29
Administrative Charges........................................30
Mortality and Expense Risk Charge.............................30
Premium Taxes.................................................31
Transfer Fee..................................................31
Systematic Withdrawal Option..................................31
Taxes.........................................................31
Portfolio Expenses............................................31
ANNUITY PAYMENTS.......................................................31
Annuity Date..................................................31
Annuity Payment...............................................31
Election of Annuity Forms and Payment Options.................32
Annuity Payment Options.......................................32
Fixed Annuity Payment Option..................................32
Variable Annuity Payment Option...............................33
Annuity Forms.................................................33
Alternate Fixed Annuity Rates.................................34
QUALIFIED POLICIES
Withholding
3
<PAGE>
Automatic Payout Option
Restrictions under 403(b) Programs
FEDERAL TAX MATTERS.......................................................34
Introduction.....................................................34
Taxation of Annuities............................................35
Qualified Policies...............................................36
Possible Change in Taxation......................................36
Other Tax Consequences...........................................36
Individual Retirement Annuities..................................37
Restrictions under Qualified Policies............................37
General.......................................................37
DISTRIBUTION OF THE POLICY................................................37
LEGAL PROCEEDINGS.........................................................38
LEGAL MATTERS.............................................................38
ACCOUNTANTS...............................................................38
VOTING RIGHTS.............................................................38
AVAILABLE INFORMATION.....................................................38
STATEMENT OF ADDITIONAL INFORMATION - TABLE OF CONTENTS...................39
APPENDIX A...............................................................A-1
Example of Variable Accumulation Unit Value Calculations........A-1
Example of Variable Annuity Unit Value Calculations.............A-1
Example of Variable Annuity Payment Calculations................A-1
This Policy is available only in New York.
4
<PAGE>
DEFINITIONS
Active Sub-Account: A Sub-Account of the Variable Account in which the Policy
has current value.
Annuitant: The person: (a) whose life is used to determine the amount of monthly
annuity payments on the Annuity Date; and (b) who is the Payee designated to
receive monthly annuity payments, unless such Payee is changed by the Owner. The
Annuitant cannot be changed after this Certificate has been issued, except upon
the Annuitant's death prior to the Annuity Date if a Contingent Annuitant has
previously been named. In the case of a Qualified Contract used to fund an IRA,
the Owner must be the Annuitant. Annuitant's Beneficiary: The person(s) named by
the Owner who may receive the Death Benefit under the Contract, if: (a) the
Annuitant is not the Owner, there is no named Contingent Annuitant and the
Annuitant dies before the Annuity Date and before the death of the Owner(s); or
(b) the Annuitant dies after the Annuity Date under an Annuity Form containing a
period certain option. Annuity Date: The date on which the Annuity Purchase
Amount will be applied to provide monthly annuity payments under the Annuity
Form and Payment Option selected by the Owner. Monthly annuity payments will
start the first day of the month immediately following the Annuity Date. Unless
the Annuity Date is changed as allowed by the Policy, the Annuity Date will be
as shown in the Policy. The Annuity Date may be changed by the Owner upon 30
days advance written notice to our Service Office. The revised Annuity Date may
not be earlier than the first day of the calendar month coinciding with or next
following the third Policy Anniversary. The Annuity Date may not be later than
the first day of the calendar month immediately preceding the month of the
Annuitant's 85th birthday. Annuity Payment: An amount paid by Transamerica at
regular intervals to the Annuitant and/or any other Payee. It may be on a
variable or fixed basis. Annuity Purchase Amount: The amount applied as a single
premium to provide an annuity under the Annuity Form and Payment Options
available under the Policy. The Annuity Purchase Amount is equal to the Policy
Value, less any applicable Contingent Deferred Sales Load, and less any
applicable premium taxes. In determining the Annuity Purchase Amount,
Transamerica will waive the Contingent Deferred Sales Load if the Annuity Form
involves life contingencies and the Annuity Date occurs on or after the third
Policy Anniversary. Annuity Year: A one-year period starting on the Annuity Date
and, after that, each succeeding one-year period. Cash Surrender Value: The
amount payable to the Owner if the Policy is surrendered on or before the
Annuity Date. The Cash Surrender Value is equal to the Policy Value, less the
Policy Fee, less any applicable Contingent Deferred Sales Load, and less
applicable premium taxes. Code: The U.S. Internal Revenue Code of 1986, as
amended, and the rules and regulations issued thereunder. Contingent Annuitant:
The person who: (a) becomes the Annuitant if the Annuitant dies before the
Annuity Date; or (b) may receive benefits under the Policy if the Annuitant dies
after the Annuity Date under an Annuity Form containing a contingent annuity
option. A Contingent Annuitant may be designated only if the Owner is not also
the Annuitant. The Contingent Annuitant may be changed at any time by the Owner
while the Annuitant is living and before the Annuity Date. Fixed Annuity: An
annuity with predetermined payment amounts. Free Look Period: The period of
time, currently 10 days, beginning when the Owner has received the Policy,
during which the Owner has the right to cancel the Policy. Funds: Dreyfus
Variable Investment Fund, Dreyfus Stock Index Fund and The Dreyfus Socially
Responsible Growth Fund, Inc. in which the Variable Account currently invests.
Inactive Sub-Account: A Sub-Account of the Variable Account in which the Policy
has a zero balance. Net Investment Factor: An index that measures the investment
performance of a Sub-Account from one Valuation Period to the next. Net Premium:
A Premium reduced by any applicable premium tax (including retaliatory premium
taxes). Non-Qualified Policy: A Policy other than a Qualified Policy. Owner
(Joint Owners): The person or persons who, while living, control(s) all rights
and benefits under the Policy. Joint Owners own the Policy equally with the
right of survivorship. The right of survivorship means that if a Joint Owner
dies, his or her interest in the policy will pass to the surviving Joint Owner
in accordance with the Death Benefit provision. Qualified Policies may not have
Joint Owners. Owner's Beneficiary: The person who becomes the Owner of the
Policy if the Owner dies. If the Policy has Joint Owners, the surviving Joint
Owner will be the Owner's Beneficiary.
5
<PAGE>
Payee: The person who receives the Annuity Payments after the Annuity Date. The
Payee will be the Annuitant, unless otherwise changed by the Owner. Policy
Anniversary: The same month and day as the Policy Date in each calendar year
after the calendar year in which the Policy Date occurs. Policy Date: The
effective date of the Policy as shown on the Policy. Policy Value: The total
dollar amount of all Variable Accumulation Units in each Sub-Account of the
Variable Account held for the Policy prior to the Annuity Date. The Policy Value
is equal to: (a) Net Premiums; plus or minus (b) any increase or decrease in the
value of the Sub-Accounts due to investment results; less (c) the daily
Mortality and Expense Risk Charge; less (d) the daily Administrative Expense
Charge; less (e) the annual Policy Fees (taken at the end of each Policy Year);
less (f) any applicable Transfer Fees; and less (g) any withdrawals from the
Sub-Accounts. Policy Year: The 12-month period from the Policy Date and ending
with the day before the first Policy Anniversary and each twelve month period
thereafter. The first Policy Year for any particular Net Premium is the Policy
Year in which the Premium is received by the Service Center. Portfolio: Dreyfus
Stock Index Fund, The Dreyfus Socially Responsible Growth Fund, Inc., or any one
of the Series of Dreyfus Variable Investment Fund underlying a Sub-Account of
the Variable Account. Proof of Death: May be: (a) a copy of a certified death
certificate; (b) a copy of a certified decree of a court of competent
jurisdiction as to the finding of death; (c) a written statement by a medical
doctor who attended the deceased; or (d) any other proof satisfactory to
Transamerica. Qualified Policy: A Policy used in connection with an individual
retirement annuity which receives favorable federal income tax treatment under
Section 408 of the Code. Receipt: Receipt and acceptance by Transamerica at its
Service Center. Series: Any of the portfolios of Dreyfus Variable Investment
Fund available for investment by a Sub-Account under the Policy. Service Center:
Transamerica's Annuity Service Center, at P.O. Box 31728, Charlotte, North
Carolina 28231-1728 and at telephone (800) 258-4261. Socially Responsible Fund:
The Dreyfus Socially Responsible Growth Fund, Inc., a diversified open-end
management investment company. Stock Index Fund: Dreyfus Stock Index Fund, a
non-diversified open-end management investment company. Sub-Account: A
subdivision of the Variable Account investing solely in shares of one of the
Portfolios. Valuation Day: Any day the New York Stock Exchange is open for
trading and that is a regular business day for our Service Center. Valuation
occurs currently as of 4:00 p.m. ET each Valuation Day. Valuation Period: The
time interval between the closing of the New York Stock Exchange on consecutive
Valuation Days. Variable Account: Separate Account VA-2LNY, a separate account
established and maintained by Transamerica for the investment of a portion of
its assets pursuant to Section 4240 of the New York Insurance Law and Regulation
47 (part 50). The Variable Account contains several Sub-Accounts to which all or
portions of Net Premiums and transfers may be allocated. Variable Accumulation
Unit: A unit of measure used to determine the Policy Value prior to the Annuity
Date. The value of a Variable Accumulation Unit varies with each Sub-Account.
Variable Annuity: An annuity with payments which vary as to dollar amount in
relation to the investment performance of specified Sub-Accounts of the Variable
Account. Variable Annuity Unit: A unit of measure used to determine the amount
of the second and each subsequent payment under a Variable Annuity Payment
Option. The value of a Variable Annuity Unit varies with each Sub-Account.
Variable Fund: Dreyfus Variable Investment Fund, an open-end management
investment company. Withdrawals: Refers to partial withdrawals, full surrenders,
and systematic withdrawals that are paid in cash to the Owner or person(s)
specified by the Owner. Written Notice (or Written Request): A notice or request
in writing by the Owner to Transamerica's Service Center. Such a request must
contain original signatures; no carbons or photocopies will be accepted.
Transamerica reserves the right to accept a facsimile copy.
6
<PAGE>
SUMMARY
The Policy
The Flexible Premium Multi-Funded Deferred Annuity Policy (the
"Policy") described in this Prospectus is designed to aid individuals in
long-term financial planning and for retirement or other long-term purposes. The
Contract may be used with non-qualified plans and as an individual retirement
annuity, that qualifies for special tax treatment under Section 408 of the Code,
and whose initial Purchase Payment is a rollover of amounts from a qualified
retirement plan(s) receiving special tax treatment under Sections 401(a), 403(b)
and 408 of the Code, (a "rollover IRA"). Additionally, with Transamerica's prior
permission, the Policy may be used as an IRA whose initial Purchase Payment
limited to the contribution limitations of the Code (a "contributory IRA"), as
an annuity under Section 403(b) of the Code and with various types of qualified
pension and profit-sharing plans under Section 401(a) of the Code. The Policy is
issued by Transamerica Life Insurance Company of New York (formerly called First
Transamerica Life Insurance Company) ("Transamerica"), a wholly-owned subsidiary
of Transamerica Occidental Life Insurance Company, having its principal office
at 100 Manhattanville Road, Purchase New York 10577, telephone (914) 701-6000.
The change in name to Transamerica Life Insurance Company of New York is
effective May 1, 1997.
The Policy provides that the Policy Value, after certain adjustments,
will be applied to an Annuity Form and Payment Option on a selected future date
(the "Annuity Date", page 32).
The Policy Value will depend on the investment experience of each
Sub-Account of the Variable Account selected by the Owner. All payments and
values provided under the Policy when based on the investment experience of the
Variable Account are variable and are not guaranteed as to dollar amount.
Therefore, prior to the Annuity Date the Owner bears the entire investment risk
under the Policy.
There is no guaranteed or minimum Cash Surrender Value, so the proceeds
of a surrender could be less than the total Premiums.
The Initial Premium for each Policy must generally be at least $5,000
unless, with Transamerica's permission, the Policy is sold as a Qualified Policy
to certain retirement plans. Generally, each additional Premium must be at least
$500 (unless an automatic payment plan is selected). In no event, however, may
the total of all Premiums under a Policy exceed $1,000,000 without the prior
approval of Transamerica. The minimum Net Purchase Payment that may be allocated
to an
Inactive Sub-Account is $500 and to a new Guarantee Period is $1,000.
(See "Policy Application and Premiums" page 22.)
The Variable Account
The Variable Account is a separate account (Separate Account VA-2LNY)
that is subdivided into Sub-Accounts. (See "The Variable Account" page 18.)
Assets of each Sub-Account are invested in a specified mutual fund Portfolio.
Each Sub-Account uses its assets to purchase, at their net asset value, shares
of a specific Series of Dreyfus Variable Investment Fund or shares in Dreyfus
Stock Index Fund or in The Dreyfus Socially Responsible Growth Fund, Inc.
(together "The Funds"). The following fifteen Portfolios are currently available
for investment in the Variable Account. All Portfolios may not be available for
investment.
Money Market Capital Appreciation International Value
Managed Assets Stock Index Disciplined Stock
Zero Coupon 2000 Socially Responsible Growth Small Company Stock
Quality Bond Growth and Income Balanced
Small Cap International Equity Limited Term High Income
The Funds pay their investment adviser and administrators certain fees charged
against the assets of each Portfolio. The Policy Value, if any, of a Policy and
the amount of any Variable Annuity Payments will vary to reflect the investment
performance of all of the Sub-Accounts selected by the Owner and the deduction
of the charges described under "Charges
7
<PAGE>
and Deductions" on page 29. For more information about the Funds, see
"The Funds" page 18 and the accompanying Funds'
prospectuses.
Transfers Before the Annuity Date
Prior to the Annuity Date, the Owner may transfer make up to 18
transfers between and among the Sub-Accounts of the Variable Account. A
"transfer" is the reallocation of amounts among the Sub-Accounts of the Variable
Account. All reallocations on any one day is considered one transfer. Total
transfers are limited to eighteen during a Policy Year. This limit includes all
transfers except those specifically excluded under certain programs. (See
"Transfers" on page 24.)
Transamerica currently does not impose a Transfer Fee, but it reserves
the right to charge a Transfer Fee for each
transfer in excess of twelve made during the same Policy Year. (See "Transfer
Fee" page 31.) (For Transfers after the
Annuity Date, see "After the Annuity Date" page 25.)
Withdrawals
All or part of the Cash Surrender Value for a Policy may be withdrawn
by the Owner on or before the Annuity Date. However, amounts withdrawn may be
subject to a Contingent Deferred Sales Load. (See "Contingent Deferred Sales
Load" page 29.) Amounts withdrawn may be subject to a premium tax or similar
tax, depending upon the state in which the Owner lives. Withdrawals may further
be subject to any federal, state or local income tax, and subject to a penalty
tax and Qualified Contracts may be subject to severe restrictions. (See
"Qualified Contracts" and "Federal Tax Matters" page 35.) (Except for rollover
IRA's, Qualified Contracts are sold only with Transamerica's prior permission.)
The annual Policy Fee generally will be deducted on a full surrender of a
Policy. (See "Withdrawals" page 26 for additional limitations regarding
withdrawals.) Contingent Deferred Sales Load
Transamerica does not deduct a sales charge from Premiums (although
premium taxes may be deducted). However, if any part of the Policy Value is
withdrawn, a Contingent Deferred Sales Load of up to 6% of Premiums withdrawn
may be assessed by Transamerica to cover certain expenses relating to the sale
of the Policies, including commissions to registered representatives and other
promotional expenses. TRANSAMERICA GUARANTEES THAT THE AGGREGATE
CONTINGENT
DEFERRED SALES LOAD WILL NEVER EXCEED 6% OF THE PREMIUMS. After a
Premium has
been held by Transamerica for seven Policy Years, the remaining Premium may be
withdrawn without charge.
Certain amounts may be withdrawn free of any Contingent Deferred Sales
Load. The Owner may make withdrawals up to the "Allowed Amount" (described
below) without incurring a Contingent Deferred Sales Load each Policy Year
before the Annuity Date. During the first Policy Year, the Allowed Amount is
equal to accumulated earnings not previously withdrawn. For the first
withdrawal, and only the first withdrawal, in a Policy Year after the first
Policy Year, the available Allowed Amount is equal to the sum of (a) 100% of
Premiums not previously withdrawn and received at least seven Policy years
before the date of withdrawal; plus (b) the greater of (i) the accumulated
earnings not previously withdrawn or (ii) 10% of Premiums received at least one
but less than seven complete Policy Years before the date of withdrawal not
reduced to take into account any withdrawals deemed to be made from such
Premiums. After the first withdrawal in a Policy Year, after the first Policy
Year, the available Allowed Amount is equal to the sum of: (a) 100% of Premiums
not previously withdrawn and received at least seven complete Policy Years
before the date of withdrawal; plus (b) accumulated earnings not previously
withdrawn. Withdrawals will always be made first from accumulated earnings, and
then from Premiums on a first in first out basis. Therefore, Accumulated
Earnings could be withdrawn as part of the first withdrawal in a Policy Year
and, therefore, not be available for withdrawals made later that Policy Year. If
an Allowed Amount is not withdrawn during a Contract Year, it does not carry
over to the next Contract Year. However, accumulated earnings, if any, in an
Owner's Account Value are always available as the Allowed Amount. No withdrawals
are allowed with regard to Premiums made by a check which has not cleared. (See
"Contingent Deferred Sales Load" page 29 and "Withdrawals" page 26.) Other
Charges and Deductions
Transamerica deducts a daily charge (the "Mortality and Expense Risk
Charge") equal to a percentage of the value
of the net assets in the Variable Account for the mortality and expense risks
assumed. The effective annual rate of this charge
is 1.25% of the value of the net assets in the Variable Account attributable to
the Policies. (See "Mortality and Expense Risk
Charge" page 30.) TRANSAMERICA GUARANTEES THAT THIS MORTALITY AND
EXPENSE RISK
CHARGE WILL
8
<PAGE>
NOT BE INCREASED.
Transamerica also deducts a daily charge (the "Administrative Expense
Charge") equal to a percentage of the value of the net assets in the Variable
Account corresponding to an effective annual rate of 0.15% to help cover some of
the costs of administering the Policy and the Variable Account. This charge may
change, but it is guaranteed not to exceed a maximum effective annual rate of
0.25%. (See "Administrative Charges" page 30).
There is also an administrative charge (the "Policy Fee") each year for
Policy maintenance. This fee is currently $30 (or 2% of the Policy Value, if
less) but will not be assessed for Policy Years in which the Policy Value
exceeds $50,000 on the last business day of the Policy Year or as of the date
the Policy is surrendered. The Policy Fee will be deducted at the end of the
Policy Year or when the Policy is surrendered, if earlier. The Policy Fee may
change but it is guaranteed not to exceed $60 (or 2% of the Policy Value, if
less) per Policy Year. After the Annuity Date this fee is referred to as the
Annuity Fee. The Annuity Fee is $30 and will not change. (See "Administrative
Charges" page 30.)
Currently, no Transfer Fees are imposed. However, for each transfer in
excess of twelve during a Policy Year, a Transfer Fee may be imposed equal to
the lesser of $10 or 2% of the amount transferred. (See "Transfer Fee" page 31.)
Also, New York currently has no premium tax nor retaliatory premium
tax. If New York imposes these taxes in the future, or if the Owner is or
becomes a resident of a state other than New York where such taxes apply, the
charges could be deducted from premiums and/or from the Annuity Purchase Amount
upon annuitization. (See "Premium Taxes" page 31.)
9
<PAGE>
Variable Account Fee Table
The purpose of this table is to assist in understanding the various
costs and expenses that the Owner will bear directly and indirectly. The table
reflects expenses of the Variable Account as well as of the Portfolios. The
table assumes that the entire Account Value is in the Variable Account. The
information set forth should be considered together with the narrative provided
under the heading "Charges and Deductions" on page 29 of this Prospectus, and
with the Funds' prospectuses. In addition to the expenses listed below, premium
taxes may be applicable. Contract Transaction Expenses(1)
Sales Load Imposed on Purchase Payments 0
Maximum Contingent Deferred Sales Load(2) 6%
Range of Contingent Deferred Sales Load Over Time
Contingent Deferred
Contract Years since Sales Load
Purchase Payments Receipt Percentage
Less than 2 years 6%
2 years but less than 4 years 5%
4 years but less than 6 years 4%
6 years but less than 7 years 2%
7 or more 0%
Transfer Fee(3) 0
Systematic Withdrawal Fee(3) 0
Account Fee(4) $30
Variable Account Annual Expenses(1)
Mortality and Expense Risk Charges 1.25%
Administrative Expense Charge(5) .15%
Other Fees and Expenses of the Variable Account 0.00%
Total Variable Account Annual Expenses 1.40%
<TABLE>
<CAPTION>
Zero
Stock
Money Managed Coupon Quality Small Capital
Index
Portfolio Market Assets 2000 Bond Cap Appreciation
Fund
- --------- ------ ------ ---- ---- --- ------------ -------
Annual Expenses(6)
- -------------------
(as a percentage of Portfolio
average net assets after fee waiver
and/or expense reimbursement)
<S> <C> <C> <C> <C> <C> <C> <C>
Management Fees 0.50% 0.75% 0.45% 0.65% 0.75% 0.75% 0.24%
Other Expenses 0.12% 0.18% 0.21% 0.14% 0.04% 0.09% 0.05%
Total Portfolio Annual 0.62% 0.93% 0.66% 0.79% 0.79% 0.84% 0.30%
Expenses
</TABLE>
<TABLE>
<CAPTION>
Socially Growth
Small
Responsible and International International Disciplined
Company
Portfolio Fund Income Equity Value( 7) Stock( 7)
Stock( 7)
- --------- ---- ------ ------ --------- --------- ---------
Annual Expenses(6)
- -------------------
(as a percentage of Portfolio
average net assets after fee waiver
and/or expense reimbursement )
<S> <C> <C> <C> <C> <C> <C>
Management Fees 0.72% 0.75% 0.75% 0.66% 0.59% 0.56%
Other Expenses 0.24% 0.08% 0.53% 0.35% 0.21% 0.19%
Total Portfolio Annual 0.96% 0.83% 1.28% 1.01% 0.80% 0.75%
Expenses
</TABLE>
10
<PAGE>
Short Term High
Portfolio Balanced(8) Income Securities(8)
Annual Expenses(6)
(as a percentage of Portfolio
average net assets after fee waiver
and/or expense reimbursement )
Management Fees 0.75% 0.65%
Other Expenses 0.50% 0.35%
Total Portfolio Annual 1.25% 1.00%
Expenses
Expense information regarding the Portfolios has been provided by the Funds.
Transamerica has no reason to doubt the accuracy of that information, but
Transamerica has not verified those figures. In preparing the table above and
the examples that follow, Transamerica has relied on the figures provided by the
Funds. Actual expenses in future years may be higher or lower than the figures
above.
11
<PAGE>
Notes to Fee Table:
(1) The Contract Transaction Expenses apply to each Contract, regardless of
how Account Value is allocated between the Variable Account and the
Fixed Account. The Variable Account Annual Expenses do not apply to the
Fixed Account.
(2) A portion of the Purchase Payments may be withdrawn each year after the
first Contract Year without imposition of any Contingent Deferred Sales
Load; after a Purchase Payment has been held by Transamerica for seven
Contract Years, the remaining Purchase Payment may be withdrawn free of
any Contingent Deferred Sales Load ("CDSL"); accumulated earnings may
always be withdrawn without imposition of a CDSL.
(See "Contingent Deferred Sales Load" page 35.)
(3) Transamerica currently does not impose a Transfer Fee. However, a
Transfer Fee of $10 may be imposed for each transfer in excess of six in
a Contract Year. Transamerica may also impose a fee (of up to $25 per
year) if the systematic withdrawal option is elected. (See "Charges and
Deductions" page 35.)
(4) The current annual Account Fee is $30 (or 2% of the Account Value, if
less) per Contract Year. The fee may be changed annually, but it may
not exceed $60 (or 2% of the Account Value, if less). (See "Charges and
Deductions" page 35.)
(5) The current annual Administrative Expense Charge is 0.15%; it may be
increased to 0.25%. The total of the charges described in notes (2),
(3) and (4) will never exceed the anticipated or estimated costs to
administer the Contract and the Variable Account. (See "Charges and
Deductions" page 35.)
(6) From time to time, the Portfolios' investment adviser, in its sole
discretion, may waive all or part of their fees and/or voluntarily
assume certain Portfolio expenses. For fiscal year 1996, certain fees
were waived or expenses assumed, in each case on a voluntary basis.
With such waivers or reimbursements, the Management Fees, Other
Expenses and Total Portfolio Annual Expenses that were paid for the
last completed fiscal year, December 31, 1996, for the Socially
Responsible Fund were 0.72%, 0.24% and 0.96%. The International Value,
Disciplined Stock, and Small Company Stock Portfolios did not commence
operations until April 30, 1996. The Management Fee, Other Expenses and
Total Portfolio Annual Expenses that were paid, on an annualized basis
because of such waivers or reimbursements, for the last completed
fiscal year, December 31, 1996, for these Portfolios were:
International Value: 0.66%, 0.35%, 1.01%; Disciplined Stock: 0.59%,
0.21%, 0.80%; and Small Company Stock: 0.56%; 0.19%; and 0.75%. During
calendar year 1997, the adviser has under taken to waive fees and
reimburse expenses as follows: Stock Index with a cap at 0.40%;
Balanced with a cap of 1.25% on an annualized basis; and Limited Term
High Income with a cap of 1% on an annualized basis. For a more
complete description of the Portfolios' fees and expenses, see the
Funds' prospectuses.
(7) The International Value, Disciplined Stock and Small Company Stock
Portfolios did not commence operations until April 30, 1996. These
numbers show the expenses annualized as though the Portfolio had been
in operation throughout 1996.
(8) The Balanced and Limited Term High Income Portfolios did not commence
operations during 1996. These numbers are annualized estimates of the
expenses that each of these Portfolios expects to incur with waivers
and reimbursements during fiscal year 1997.
12
<PAGE>
Examples*
The following three examples reflect no Policy Fee deduction because
the approximate average Policy Value is more than $50,000 and the Policy fee is
waived for Account Value over $50,000.
These examples all assume no Transfer Fees, systematic withdrawal fee
or premium tax have been assessed. Premium
taxes may be applicable. (See "Premium Taxes" page 31.)
These examples show expeneses without reflecting fee waivers and
reimbursements for 1996. Except for the Stock Index, Balanced and Limited Term
High Income Portfolios, it is not anticipated that there will be any fee waivers
or expense reimbursements in the future.
Example 1
If the Owner surrenders the Policy at the end of the applicable time
period, he/she would pay the following expenses on a $1,000 Initial Premium
assuming a 5% annual return on assets:
<TABLE>
<CAPTION>
Sub-Account One Year Three Years Five Years Ten Years
<S> <C> <C> <C> <C>
Money Market 76.29 112.96 148.80 234.80
Managed Assets 79.21 121.85 164.53 266.60
Zero Coupon 2000 76.67 114.11 150.84 238.97
Quality Bond 77.89 117.85 157.46 252.37
Small Cap 77.89 117.85 157.46 252.37
Capital Appreciation 78.37 119.28 159.99 257.48
Stock Index 73.26 103.57 132.30 200.86
Socially Responsible 79.78 123.57 167.55 272.63
Growth and Income 78.27 118.99 159.48 256.46
International Equity 82.5 131.8 181.99 301.24
International Value 83.16 133.77 185.45 308.01
Disciplined Stock 79.5 122.71 166.04 269.62
Small Company Stock 79.31 122.14 165.03 267.6
Balanced $82.22 $130.95 $180.51 $298.32
Limited Term High Income $79.87 $123.85 $168.05 $273.63
</TABLE>
Example 2
If the Owner does not surrender and does not annuitize the Policy,
he/she would pay the following expenses on a $1,000 Initial Premium assuming a
5% annual return on assets:
<TABLE>
<CAPTION>
Sub-Account One Year Three Years Five Years Ten Years
<S> <C> <C> <C> <C>
Money Market 20.50 63.35 108.80 234.80
Managed Assets 23.61 72.74 124.53 266.60
Zero Coupon 2000 20.90 64.57 110.84 238.97
13
<PAGE>
Quality Bond 22.21 68.51 117.46 252.37
Small Cap 22.21 68.51 117.46 252.37
Capital Appreciation 22.71 70.02 119.99 257.48
Stock Index 17.28 53.57 92.30 200.86
Socially Responsible 24.21 74.55 127.55 272.63
Growth and Income 22.61 69.72 119.48 256.46
International Equity 27.11 83.23 141.99 301.24
International Value 27.81 85.32 145.45 308.01
Disciplined Stock 23.91 73.65 126.04 269.62
Small Company Stock 23.71 73.04 125.03 267.60
Balanced $26.81 $82.34 $140.51 $298.32
Limited Term High Income $24.31 $74.85 $128.05 $273.63
</TABLE>
14
<PAGE>
Example 3
If the Owner elects to annuitize at the end of the applicable period
under an Annuity Form with life contingencies,** he/she would pay the following
expenses on a $1,000 Initial Premium assuming a 5% annual return on assets:
<TABLE>
<CAPTION>
Sub-Account One Year Three Years Five Years Ten Years
<S> <C> <C> <C> <C>
Money Market 76.29 63.35 108.80 234.80
Managed Assets 79.21 72.74 124.53 266.60
Zero Coupon 2000 76.67 64.57 110.84 238.97
Quality Bond 77.89 68.51 117.46 252.37
Small Cap 77.89 68.51 117.46 252.37
Capital Appreciation 78.37 70.02 119.99 257.48
Stock Index 73.26 53.57 92.30 200.86
Socially Responsible 79.78 74.55 127.55 272.63
Growth and Income 78.27 69.72 119.48 256.46
International Equity 82.50 83.23 141.99 301.24
International Value 83.16 85.32 145.45 308.01
Disciplined Stock 79.50 73.65 126.04 269.62
Small Company Stock 79.31 73.04 125.03 267.60
Balanced $82.22 $82.34 $140.51 $298.32
Limited Term High Income $79.87 $74.85 $128.05 $273.63
</TABLE>
15
<PAGE>
* In preparing the examples above, Transamerica has relied on the data
provided by the Funds. Transamerica has no reason to doubt the accuracy
of that information, but Transamerica has not verified those figures.
** For annuitization under a form that does not include life contingencies, a
Contingent Deferred Sales Load may apply.
THESE EXAMPLES SHOULD NOT BE CONSIDERED REPRESENTATIONS OF PAST
OR FUTURE
EXPENSES.
ACTUAL EXPENSES PAID MAY BE GREATER OR LESS THAN THOSE SHOWN,
SUBJECT TO THE
GUARANTEES
IN THE POLICY. The assumed 5% annual return is only hypothetical. It is not a
representation of past or future returns.
Actual returns could be greater or less than this assumed rate.
16
<PAGE>
Annuity Payments
Annuity Payments will be made either on a fixed basis or a variable
basis or a combination of a fixed and variable basis as the Owner selects. The
Owner has flexibility in choosing the Annuity Date for his or her Policy. In no
event may the Annuity Date be later than the first day of the month immediately
preceding the month of the Annuitant's 85th birthday nor earlier than the first
day of the month coinciding with or immediately following the third Policy
Anniversary. Annuity Payments will begin on the first day of the calendar month
following the Annuity Date. (See "Annuity Payments" page 32.)
Four Annuity Forms are available under the Policy: (1) Life Annuity;
(2) Life and Contingent Annuity; (3) Life
Annuity with Period Certain; and (4) Joint and Survivor Annuity. (See "Annuity
Forms" page 33.)
Payments on Death Before the Annuity Date
A death benefit is paid on the death of either the Owner or Annuitant
prior to the Annuity Date. If the deceased Owner or Annuitant, as applicable,
had not attained their 85th birthday, the death benefit for a Policy is the
greatest of (a) the Policy Value, (b) all Premiums paid to the Policy less
withdrawals and any premium taxes applicable to those withdrawals or (c) the
greatest Policy Anniversary Value prior to the earliest of the Annuitant's or
Owner's 75th birthday increased by Premiums paid since that Policy Anniversary
less withdrawals and any premium taxes applicable to those withdrawals. If the
deceased Owner or Annuitant, as applicable, had attained age 85, the death
benefit will be the Policy Value. The death benefit will generally be paid
within seven days of receipt of the required Proof of Death of the Owner or the
Annuitant and election of the method of settlement or as soon thereafter as
Transamerica has sufficient information about the Beneficiary to make the
payment, but if no settlement method is elected the death benefit will be paid
no later than one year from the date of death. No Contingent Deferred Sales Load
is imposed. The death benefit may be paid as either a lump sum or as an annuity.
(See "Death Benefit" page 28.) Federal Income Tax Consequences
An Owner who is a natural person generally should not be taxed on
increases in the Policy Value until a distribution under the Policy occurs
(e.g., a withdrawal or Annuity Payment) or is deemed to occur (e.g., a pledge,
loan, or assignment of a Policy). Generally, a portion (up to 100%) of any
distribution or deemed distribution is taxable as ordinary income. The taxable
portion of distributions is generally subject to income tax withholding unless
the recipient elects otherwise, except that mandatory withholding may apply for
certain Qualified Contracts. In addition, a federal penalty tax may apply to
certain distributions or deemed distributions. (See "Federal Tax Matters" page
35.) Right to Cancel
The Owner has the right to examine the Policy for a limited period,
known as a "Free Look Period." The Owner can cancel the Policy by delivering or
mailing a written notice or by sending a telegram to (a) the agent through whom
the Policy was purchased or (b) the Service Center before midnight of the tenth
day after receipt of the Policy. Notice given by mail and the return of the
Policy by mail, properly addressed and postage prepaid, will be deemed by
Transamerica to have been made on the date postmarked. Transamerica will refund
the Policy Value determined as of the date the notice is postmarked within seven
days after receipt of such notice to cancel and the returned Policy. Questions
Any questions about procedures or the Policy will be answered by the
Transamerica Annuity Service Center ("Service Center") at P.O. Box 31728,
Charlotte, North Carolina 28231-1728 or call (800) 258-4261. All inquiries
should include the Policy Number and the Owner's and Annuitant's names.
NOTE: The foregoing summary is qualified in its entirety by the
detailed information in the remainder of this Prospectus and in the prospectuses
for Dreyfus Variable Investment Fund, Dreyfus Stock Index Fund, and The Dreyfus
Socially Responsible Growth Fund, Inc. which should be referred to for more
detailed information. With respect to Qualified Policies, it should be noted
that the requirements of a particular retirement plan, an endorsement to the
Policy, or limitations or penalties imposed by the Code or the Employee
Retirement Income Security Act of 1974, as amended,may impose limits or
restrictions on Premiums, Withdrawals, distributions, or benefits, or on other
provisions of the Policy. This Prospectus does not describe such limitations or
restrictions. (See "Federal Tax Matters" page 35.)
CONDENSED FINANCIAL INFORMATION
The following condensed financial information is derived from the
financial statements of the Variable Account. The data should be read in
conjunction with the financial statements, related notes, and other financial
information included in the Statement of Additional Information.
The following table sets forth certain information regarding the
Sub-Accounts for the period from commencement
of business operations of the Sub-Account through December 31, 1996. The
Balanced Fund and Limited Term High Income
17
<PAGE>
Fund are not included because these Sub-Accounts did not commence operations
during 1996.
The Variable Accumulation Unit values and the number of Variable
Accumulation Units outstanding for each Sub-Account for the periods shown are as
follows:
<TABLE>
<CAPTION>
Year Ending December 31, 1993
-----------------------------------------------------------------
Money Managed Zero Coupon Quality Small Cap
Market Assets 2000 Bond Sub-Account
Sub-Account Sub-Account Sub-Account Sub-Account(Inception 1/4/93)
Accumulation Unit Value
<S> <C> <C> <C> <C> <C>
at Beginning of Period $1.021 $12.797 $13.225 $12.310 $39.620
Accumulation Unit Value
at End of Period $1.018 $12.861 $13.373 $12.445 $37.702
Number of Accumulation
Units Outstanding
at End of Period 2,678,280.492 167,686.797 137,252.898 86,752.856 138,557.449
</TABLE>
<TABLE>
<CAPTION>
Capital Appreciation Stock IndexSocially Responsible
Sub-Account Sub-Account Sub-Account
(Inception- (Inception (Inception-
April 5, January 4, October 7,
1993) 1993 1993)
Accumulation Unit Value at
<S> <C> <C> <C>
Beginning of Period $6.590 $16.590 $12.490
Accumulation Unit Value at
End of Period $13.160 $16.521 $13.364
Number of Accumulation Units
Outstanding at End of Period 44,612.892 32,543.274 3,555.254
</TABLE>
<TABLE>
<CAPTION>
Year Ending December 31, 1994
---------------------------------------------------------------------------------
Money Managed Zero Coupon Quality
Market Assets 2000 Bond Small Cap
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
<S> <C> <C> <C> <C> <C>
at Beginning of Period$1.018 $12.861 $13.373 $12.445 $37.702
Accumulation Unit Value
at End of Period $1.048 $12.496 $12.672 $11.710 $40.064
Number of Accumulation
Units Outstanding
at End of Period 8,547,165.659 820,985.237 203,164.533 164,657.770 612,327.237
</TABLE>
<TABLE>
<CAPTION>
Capital Appreciation Stock Index Socially Responsible
Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
<S> <C> <C> <C>
at Beginning of Period $13.160 $16.521 $13.364
Accumulation Unit Value
at End of Period $13.373 $16.437 $13.377
Number of Accumulation
Units Outstanding
18
<PAGE>
at End of Period 285,264.827 190,496,641 24,435.402
</TABLE>
<TABLE>
<CAPTION>
Year Ending December 31, 1995
- ---------------------------------------------------------------------------------------------------------------
Money Managed Zero Coupon Quality
Market Assets 2000 Bond Small
Cap
Sub-Account Sub-Account Sub-Account Sub-Account
Sub-Account
Accumulation Unit Value
<S> <C> <C> <C> <C> <C>
at Beginning of Period $1.048 $12.496 $12.672 $11.711
$40.064
Accumulation Unit Value
at End of Period $1.093 $12.292 $14.740 $13.908
$51.121
Number of Accumulation
Units Outstanding
at End of Period 9,084,943.487 666,488.480 351,788.006 454,139.991
817,445.023
</TABLE>
<TABLE>
<CAPTION>
Growth and Income
International Equity
Sub-Account
Sub-Account
Capital Appreciation Stock Index Socially Responsible (Inception
(Inception
Sub-Account Sub-Account Sub-Account January 5, 1995
January 5, 1995
----------- ----------- ----------- --------------- ---------------
Accumulation Unit Value
<S> <C> <C> <C> <C> <C>
at Beginning of Period $13.373 $16.437 $13.377 $12.235 $12.024
Accumulation Unit Value
at End of Period $17.610 $22.172 $17.752 $19.426 $12.964
Number of Accumulation
Units Outstanding
at End of Period 587,928.246 365,482.688 49,020.846 734,393.096 61,152.467
</TABLE>
<TABLE>
<CAPTION>
Year Ending December 31, 1996
---------------------------------------------------------------------------------------------------------
Money Managed Zero Coupon Quality
Market Assets 2000 Bond Small
Cap
Sub-Account Sub-Account Sub-Account Sub-Account
Sub-Account
Accumulation Unit Value
<S> <C> <C> <C> <C> <C>
at Beginning of Period$1.093 $12.292 $14.740 $13.908
$51.121
Accumulation Unit Value
at End of Period $1.132 $11.682 $14.911 $14.142
$58.773
Number of Accumulation
Units Outstanding
at End of Period 10,392,468.634 489,733.637 396,886.829 664,469.782
1,000,594.786
International
Capital Appreciation Stock Index Socially Responsible Growth and
Income Equity
Sub-Account Sub-Account Sub-Account Sub-Account
Sub-Account
Accumulation Unit Value
at Beginning of Period $17.610 $22.172 $17.752 $19.426
$12.964
Accumulation Unit Value
at End of Period $21.802 $26.791 $21.221 $23.131
$14.267
Number of Accumulation
Units Outstanding
at End of Period 1,074,614.761 585,454.420 103,732.717 1,906,011.179
226,976.242
</TABLE>
International Value Disciplined Stock Small Company Stock
Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
19
<PAGE>
at Beginning of Period $10.00 $10.00 $10.00
Accumulation Unit Value
at End of Period $10.244 $11.776 $10.772
Number of Accumulation
Units Outstanding
at End of Period 47,815.855 381,884.114 212,878.654
20
<PAGE>
Financial Statements for the Variable Account and Transamerica
The financial statements and reports of independent auditors for the
Variable Account and Transamerica are contained in the Statement of Additional
Information.
PERFORMANCE DATA
From time to time, Transamerica may advertise yields and average
annual total returns for the Sub-Accounts of the Variable Account. In addition,
Transamerica may advertise the effective yield of the Money Market Sub-Account.
These figures will be based on historical information and are not intended to
indicate future performance. The yield of the Money Market Sub-Account refers to
the annualized income generated by an investment in that Sub-Account over a
specified seven-day period. The yield is calculated by assuming that the income
generated for that seven-day period is generated each seven-day period over a
52-week period and is shown as a percentage of the investment. The effective
yield is calculated similarly but, when annualized, the income earned by an
investment in that Sub-Account is assumed to be reinvested. The effective yield
will be slightly higher than the yield because of the compounding effect of this
assumed reinvestment.
The yield of a Sub-Account (other than the Money Market Sub-Account)
refers to the annualized income generated by an investment in the Sub-Account
over a specified thirty-day period. The yield is calculated by assuming that the
income generated by the investment during that thirty-day period is generated
each thirty-day period over a twelve-month period and is shown as a percentage
of the investment.
The yield calculations do not reflect the effect of any Contingent
Deferred Sales Load or premium taxes that may be applicable to a particular
Policy. To the extent that the Contingent Deferred Sales Load is applicable to a
particular Policy, the yield of that Policy will be reduced. For additional
information regarding yields and total returns calculated using the standard
formats briefly described herein, please refer to the Statement of Additional
Information.
The average annual total return of a Sub-Account refers to return
quotations assuming an investment has been held in the Sub-Account for various
periods of time including, but not limited to, a period measured from the date
the Sub-Account commenced operations. When a Sub-Account has been in operation
for 1, 5, and 10 years, respectively, the average annual total return for these
periods will be provided. The average annual total return quotations will
represent the average annual compounded rates of return that would equate an
initial investment of $1,000 to the redemption value of that investment
(including the deduction of any applicable Contingent Deferred Sales Load but
excluding the deduction of any premium taxes) as of the last day of each of the
periods for which total return quotations are provided.
Performance information for any Sub-Account reflects only the
performance of a hypothetical Policy under which Policy Value is allocated to a
Sub-Account during a particular time period on which the calculations are based.
Performance information should be considered in light of the investment
objectives and policies and characteristics of the Portfolios in which the
Sub-Account invests, and the market conditions during the given time period, and
should not be considered as a representation of what may be achieved in the
future. For a description of the methods used to determine yield and total
returns, see the Statement of Additional Information.
Reports and promotional literature may also contain other information
including (1) the ranking of any Sub-Account derived from rankings of variable
annuity separate accounts or their investment products tracked by Lipper
Analytical Services, Inc., VARDS, IBC/Donoghue's Money Fund Report, Financial
Planning Magazine, Money Magazine, Bank Rate Monitor, Standard and Poor's
Indices, Dow Jones Industrial Average, and other rating services, companies,
publications, or other persons who rank separate accounts or other investment
products on overall performance or other criteria, and (2) the effect of tax
deferred compounding on Sub-Account investment returns, or returns in general,
which may be illustrated by graphs, charts, or otherwise, and which may include
a comparison, at various points in time, of the return from an investment in a
Policy (or returns in general) on a tax-deferred basis (assuming one or more tax
rates) with the return on a currently taxable basis. Other ranking services and
indices may be used.
In its advertisements and sales literature, Transamerica may discuss,
and may illustrate by graphs, charts, or otherwise, the implications of longer
life expectancy for retirement planning, the tax and other consequences of
long-term investment in the Policy, the effects of the Policy's lifetime payout
option, and the operation of certain special investment features of the Policy
- -- such as the Dollar Cost Averaging option. Transamerica may explain and depict
in charts, or other graphics, the effects of certain investment strategies.
Transamerica may also discuss the Social Security system and its projected
payout levels and retirement plans generally, using graphs, charts and other
illustrations.
Transamerica may from time to time also disclose average annual total
return in non-standard formats and cumulative (non-annualized) total return for
the Sub-Accounts. The non-standard average annual total return and cumulative
total return will assume that no Contingent Deferred Sales Load is applicable.
Transamerica may from time to time also disclose yield, standard total returns,
and non-standard total returns for any or all Sub-Accounts.
21
<PAGE>
All non-standard performance data will only be disclosed if the
standard performance data is also disclosed. For additional information
regarding the calculation of other performance data, please refer to the
Statement of Additional Information.
Transamerica may also advertise performance figures for the
Sub-Accounts based on the performance of a Portfolio prior to the time the
Variable Account commenced operations.
22
<PAGE>
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
AND THE VARIABLE ACCOUNT
Transamerica Life Insurance Company of New York
Transamerica Life Insurance Company of New York, formerly called
First Transamerica Life Insurance Company, ("Transamerica") is a stock life
insurance company incorporated under the laws of the State of New York on
February 5, 1986. It is principally engaged in the sale of life insurance and
annuity policies. Transamerica is a wholly-owned subsidiary of Transamerica
Occidental Life Insurance Company, which in turn is an indirect subsidiary of
Transamerica Corporation. The address for First Transamerica Life is 575 Fifth
Avenue, Thirty-Sixth Floor, New York, New York 10017-2422. The name change to
Transamerica Life Insurance Company of New York is effective May 1, 1997.
Published Ratings
Transamerica may from time to time publish in advertisements, sales
literature and reports to Owners, the ratings and other information assigned to
it by one or more independent rating organizations such as A.M. Best Company,
Standard & Poor's, and Duff & Phelps. The purpose of the ratings is to reflect
the financial strength and/or claims-paying ability of Transamerica and should
not be considered as bearing on the investment performance of assets held in the
Variable Account. Each year the A.M. Best Company reviews the financial status
of thousands of insurers, culminating in the assignment of Best's Ratings. These
ratings reflect their current opinion of the relative financial strength and
operating performance of an insurance company in comparison to the norms of the
life/health insurance industry. In addition, the claims-paying ability of
Transamerica as measured by Standard & Poor's Insurance Ratings Services or Duff
& Phelps may be referred to in advertisements or sales literature or in reports
to Owners. These ratings are opinions of an operating insurance company's
financial capacity to meet the obligations of its insurance and annuity policies
in accordance with their terms. Such ratings do not reflect the investment
performance of the Variable Account or the degree of risk associated with an
investment in the Variable Account. The Variable Account
Separate Account VA-2LNY of Transamerica (the Variable Account) was
established by Transamerica as a separate account under the laws of the State of
New York on June 23, 1992 pursuant to resolutions of Transamerica's Board of
Directors. The Variable Account is registered with the Securities and Exchange
Commission ("Commission") under the Investment Company Act of 1940 (the "1940
Act") as a unit investment trust. It meets the definition of a separate account
under the federal securities laws. However, the Commission does not supervise
the management or the investment practices or policies of the Variable Account.
The assets of the Variable Account are owned by Transamerica but they
are held separately from the other assets of Transamerica. Section 4240 of the
New York Insurance Law provides that the assets of a separate account are not
chargeable with liabilities incurred in any other business operation of the
insurance company (except to the extent that assets in the separate account
exceed the reserves and other liabilities of the separate account) if and to the
extent so provided in the applicable agreements, and the Policies contain such a
provision. Income, gains and losses incurred on the assets in the Variable
Account, whether or not realized, are credited to or charged against the
Variable Account without regard to other income, gains or losses of
Transamerica. Therefore, the investment performance of the Variable Account is
entirely independent of the investment performance of Transamerica's general
account assets or any other separate account maintained by Transamerica.
The Variable Account has fifteen Sub-Accounts, each of which invests
solely in a specific corresponding Portfolio. (See "The Funds" page 19.)
Changes to the Sub-Accounts may be made at the discretion of Transamerica. (See
"Addition, Deletion, or Substitution" page 21.) All Sub-Accounts may not be
available May 1, 1997.
THE FUNDS
The Variable Account invests exclusively in Series of Dreyfus
Variable Investment Fund (the "Variable Fund"), Dreyfus Stock Index Fund (the
"Stock Index Fund") and The Dreyfus Socially Responsible Growth Fund, Inc. (the
"Socially Responsible Fund"). The Variable Fund was organized as an
unincorporated business trust under Massachusetts law pursuant to an Agreement
and Declaration of Trust dated October 29, 1986, commenced operations on August
31, 1990, and is registered with the Commission as an open-end management
investment company under the 1940 Act. Currently, thirteen Series (i.e.,
Portfolios) of the Variable Fund are available for the Policies. Each Portfolio
has separate investment objectives and policies. As a result, each Portfolio
operates as a separate investment portfolio and the investment performance of
one Portfolio has no effect on the investment performance of any other
Portfolio. The Stock Index Fund was incorporated under Maryland law on January
24, 1989, commenced operations on September 29, 1989, and is registered with
23
<PAGE>
the Commission as an open-end, non-diversified, management investment company.
The Socially Responsible Fund was incorporated under Maryland law on July 20,
1992, commenced operations on August 31, 1993, and is registered with the
Commission as an open-end, diversified, management investment company. However,
the Commission does not supervise the management or the investment practices and
policies of any of the Funds. The assets of the Variable Fund, the Socially
Responsible Fund and the Stock Index Fund are each separate from the assets of
the other Funds.
The Dreyfus Corporation provides investment advisory and administrative
services to the Variable Fund and the Socially Responsible Fund. Mellon Equity
Associates provides index fund management services to the Stock Index Fund, with
The Dreyfus Corporation serving as the manager, in accordance with applicable
agreements with the Fund. Fayez Sarofim & Co. provides sub-investment advisory
services for the Capital Appreciation Portfolio. NCM Capital Management Group,
Inc., provides sub-investment advisory services for the Socially Responsible
Fund.
The Portfolios are described below. See the Variable Fund, the Stock Index Fund
and the Socially Responsible Fund
prospectuses for more information.
Money Market Portfolio
The Money Market Portfolio's investment objective is to achieve as
high a level of current income as is consistent with the preservation of capital
and the maintenance of liquidity. It seeks to achieve its objective by investing
in short-term money market instruments. The investment advisory fee is payable
monthly at the annual rate of 0.50 of 1% of the value of the Portfolio's average
daily net assets. This Portfolio is neither insured nor guaranteed by the United
States Government and there can be no assurance that it will be able to maintain
a stable net asset value of $1.00 per share. Managed Assets Portfolio
The Managed Asset Portfolio's investment objective is to maximize
total return, consisting of capital appreciation and current income. It seeks to
achieve its objective by investing in a wide range of equity and debt securities
and money market instruments. An investment advisory fee is payable monthly to
The Dreyfus Corporation at the annual rate of 0.75 of 1% (for a total of 0.75%)
of the value of the Portfolio's average daily net assets. Zero Coupon 2000
Portfolio
The Zero Coupon 2000 Portfolio's investment objective is to provide
as high an investment return as is consistent with the preservation of capital.
It seeks to achieve its objective by investing primarily in debt obligations of
the U.S. Treasury that have been stripped of their unmatured interest coupons,
interest coupons that have been stripped from debt obligations issued by the
U.S. Treasury and receipts and certificates for stripped debt obligations and
stripped coupons, including U.S. Government trust certificates (collectively,
"Stripped Treasury Securities"). The Portfolio's also may purchase certain other
types of stripped government or corporate securities. The Portfolio's assets
will consist primarily of portfolio securities which will mature on or about
December 31, 2000. The investment advisory fee is payable monthly at the annual
rate of 0.45 of 1% of the value of the Portfolio's average daily net assets.
Quality Bond Portfolio
The Quality Bond Portfolio's investment objective is to provide the
maximum amount of current income to the
extent consistent with the preservation of capital and the maintenance of
liquidity. It seeks to achieve its objective by investing
principally in debt obligations of corporations, the U.S. Government and its
agencies and instrumentalities, and major banking
institutions. The investment advisory fee is payable monthly at the annual rate
of 0.65 of 1% of the value of the Portfolio's
average daily net assets.
Small Cap Portfolio
The Small Cap Portfolio's investment objective is to maximize capital
appreciation. It seeks to achieve its objective by investing principally in
common stocks;under normal market conditions, the Portfolio's will invest at
least 65% of its total assets in companies with market capitalizations of less
than $1.5 billion at the time of purchase which The Dreyfus Corporation believes
to be characterized by new or innovative products, services or processes which
should enhance prospects for growth in the future earnings. The investment
advisory fee is payable monthly at the annual rate of 0.75 of 1% of the value of
the Portfolio's average daily net assets. Capital Appreciation Portfolio
The Capital Appreciation Portfolio's primary investment objective is
to provide long-term capital growth consistent with the preservation of capital;
current income is a secondary goal. It seeks to achieve its goals by investing
in common stocks of domestic and foreign issuers. An investment advisory fee is
payable to The Dreyfus Corporation and a sub-investment advisory fee is payable
monthly to Fayez Sarofim & Co. at the aggregate annual rate of 0.75 of 1% of the
value of the Portfolio's average daily net assets. Growth and Income Portfolio
24
<PAGE>
The Growth and Income Portfolio's investment objective is to provide
long-term capital growth, current income and growth of income, consistent with
reasonable investment risk. This Portfolio invests primarily in equity and debt
securities and money market instruments of domestic and foreign issuers. The
proportion of the Portfolio's assets invested in each type of security will vary
from time to time in accordance with The Dreyfus Corporation's assessment of
economic conditions and investment opportunities. An investment advisory fee is
payable monthly to The Dreyfus Corporation at the annual rate of 0.75 of 1% of
the value of the Portfolio's average daily net assets. International Equity
Portfolio
The International Equity Portfolio's investment objective is to
maximize capital appreciation. This Portfolio's invests
primarily in the equity securities of foreign issuers located throughout the
world. An investment advisory fee at an annual rate
of 0.75 of 1% of the value of the Portfolio's average daily net assets is
payable monthly to The Dreyfus Corporation.
International Value Portfolio
The International Value Portfolio's investment objective is long-term
capital growth. This Portfolio invests primarily in a portfolio of publicly
traded equity securities of foreign issuers which would be characterized as
"value" companies according to criteria established by the Portfolio's
investment adviser. An investment advisory fee is payable monthly to The Dreyfus
Corporation at the annual rate of 1.00% of the value of the Portfolio's average
daily net assets. Disciplined Stock Portfolio
The Disciplined Stock Portfolio's investment objective is to provide
investment results that are greater than the total return performance of
publicly traded common stocks in the aggregate, as presented by the Standard &
Poor's 500 Composite Stock Price Index. This Portfolio will use quantitative
statistical modeling techniques to construct a portfolio in an attempt to
achieve its investment objective without assuming undue risk relative to the
broad stock market. An investment advisory fee is payable monthly to The Dreyfus
Corporation at the annual rate of 0.75 of 1% of the value of the Portfolio's
average daily net assets. Small Company Stock Portfolio
The Small Company Stock Portfolio's investment objective is to provide
investment results that are greater than the total return performance of
publicly traded common stocks in the aggregate as represented by the Russell
2500(TM) Index. This Portfolio invests primarily in a portfolio of equity
securities of small- to medium-sized domestic issuers, while attempting to
maintain volatility and diversification similar to that of the Russell 2500(TM)
Index. An investment advisory fee is payable monthly to the Dreyfus Corporation
at the annual rate of 0.75 of 1% of the value of the Portfolio's average daily
net assets. Balanced Fund
The Balanced Portfolio's investment objective is to provide investment
results that are greater than the total return performance of common stocks and
bonds in the aggregate, as represented by a hybrid index, 60% of which is
composed of the common stocks in the Standard & Poor's 500 Composite Stock Price
Index and 40% of which is composed of the bonds in the Lehman Brothers
Intermediate Government/Corporate Bond Index. This Series invests primarily in
common stocks and bonds in proportion consistent with their expected returns and
risks as determined by The Dreyfus Corporation. An investment advisory fee is
payable monthly to the Dreyfus Corporation at the annual rate of 0.75% of 1% of
the value of the Portfolio's average daily net assets. Limited Term High Income
Fund
The Limited Term High Income Portfolio's investment objective is to
maximize total return, consisting of capital appreciation and current income.
This Portfolio seeks to achieve its objective by investing up to all of tis
assets in a portfolio of lower rated fixed-income securities, commonly known as
"junk bonds," that, under normal market conditions, has an effective duration of
three and on-half years or less and an effective average portfolio maturity of
four years or less. Investments of this type are subject to a greater risk of
loss of principal and non-payment of interest. Investors should carefully assess
the risks assoicated with an investment in the Portfolio (those risks are
described in the Portfolio's prospecuts). An investment advisory fee is payable
monthly to the Dreyfus Corporation at the annual rate of 0.65% of 1% of the
value of the Portfolio's average daily net assets. Stock Index Fund
The Stock Index Fund's investment objective is to provide investment
results that correspond to the price and yield performance of publicly traded
common stocks in the aggregate, as represented by the Standard & Poor's 500
Composite Stock Price Index. The Stock Index Fund is neither sponsored by nor
affiliated with Standard & Poor's Corporation. The Stock Index Fund pays a
monthly management fee to The Dreyfus Corporation at the annual rate of 0.245%
of the value of the Stock Index Fund's average daily net assets. The Dreyfus
Corporation has agreed to pay Mellon Equity Assoicates a monthly fee at the
annual rate of 0.095% of the value of the Fund's average daily net assets.
Socially Responsible Fund
The Socially Responsible Fund's primary goal is to provide capital
growth. It seeks to achieve this goal by
25
<PAGE>
investing principally in common stocks, or securities convertible into common
stock, of companies which, in the opinion of the Fund's management, not only
meet traditional investment standards, but also show evidence that they conduct
their business in a manner that contributes to the enhancement of the quality of
life in America. Current income is a secondary goal. A management fee is payable
monthly to The Dreyfus Corporation at the annual rate of 0.75 of 1% of the value
of the Socially Responsible Fund's average daily net assets. The Dreyfus
Corporation pays NCM Capital Management Group, Inc. a sub-investment advisory
fee at the annual rate of 0.10 of 1% of the Portfolio's average daily net assets
up to $32 million; 0.15 of 1% of the Portfolio's average daily net assets in
excess of $32 million up to $150 million; 0.20 of 1% of the Portfolio's average
daily net assets in excess of $150 million up to $300 million; and 0.25 of 1% of
the Portfolio's average daily net assets in excess of $300 million.
Meeting objectives depends on various factors, including, but not
limited to, how well the portfolio managers
anticipate changing economic and market conditions. THERE IS NO ASSURANCE THAT
ANY OF THESE PORTFOLIOS
WILL ACHIEVE THEIR STATED OBJECTIVES.
An investment in the Policy is not a deposit or obligation of, or
guaranteed or endorsed by, any bank, nor is the Policy federally insured by the
Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investing in the Policy involves certain investment risks,
including possible loss of principal.
Since all of the Portfolios are available to registered separate
accounts offering variable annuity and variable life products of Transamerica as
well as other insurance companies, there is a possibility that a material
conflict may arise between the interests of the Variable Account and one or more
other separate accounts investing in the Funds. In the event of a material
conflict, the affected insurance companies will take any necessary steps to
resolve the matter, including stopping their separate account from investing in
the Funds. See the Funds' prospectuses for more details.
Transamerica receives fees from the Dreyfus Corporation or its
affiliates for providing certain administrative and or other services.
Additional information concerning the investment objectives and
policies of all of the Portfolios, the investment advisory services and
administrative services and charges can be found in the current prospectuses for
the Funds which accompany this Prospectus. The Funds' prospectuses should be
read carefully before any decision is made concerning the allocation of Premiums
to, or transfers among, the Sub-Accounts. Addition, Deletion, or Substitution
Transamerica does not control the Funds and cannot guarantee that any
of the Sub-Accounts of the Variable Account or any of the Portfolios will always
be available for allocation of Premiums or transfers. Transamerica retains the
right to make changes in the Variable Account and in its investments.
Subject to the approval of the New York Insurance Department,
Transamerica reserves the right to eliminate the shares of any Portfolio held by
a Sub-Account, and to substitute shares of another Portfolio or of another
investment company for the shares of any Portfolio, if the shares of the
Portfolio are no longer available for investment or if, in Transamerica's
judgement, investment in any Portfolio would be inappropriate in view of the
purposes of the Variable Account. To the extent required by the 1940 Act, a
substitution of shares attributable to the Owner's interest in a Sub-Account
will not be made without prior notice to the Owner and the prior approval of the
Commission. Nothing contained herein shall prevent the Variable Account from
purchasing other securities for other series or classes of variable annuity
policies, or from effecting an exchange between series or classes of variable
policies on the basis of requests made by Owners.
New Sub-Accounts may be established when, in the sole discretion of
Transamerica, marketing, tax, investment or other conditions so warrant. Any new
Sub-Accounts will be made available to existing Owners on a basis to be
determined by Transamerica. Each additional Sub-Account will purchase shares in
a Portfolio or in another mutual fund or investment vehicle. Transamerica may
also eliminate one or more Sub-Accounts if, in its sole discretion, marketing,
tax, investment or other conditions so warrant. In the event any Sub-Account is
eliminated, Transamerica will notify Owners and request a re-allocation of the
amounts invested in the eliminated Sub-Account.
In the event of any substitution or change, Transamerica may make such
changes in the Policies as may be necessary or appropriate to reflect such
substitution or change. Furthermore, if deemed to be in the best interests of
persons having voting rights under the Policies, the Variable Account may be
operated as a management company under the 1940 Act or any other form permitted
by law, may be deregistered under such Act in the event such registration is no
longer required, or may be combined with one or more other separate accounts.
THE POLICY
The Policy is a Flexible Premium Multi-Funded Individual Deferred Annuity
Policy. The rights and benefits under
the Policy are described below and in the Policy; however, Transamerica reserves
the right to make any modification to
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conform the Policy to, or give the Policy Owner the benefit of, any federal or
state statute or rule or regulation. The obligations under the Policy are
obligations of Transamerica.
The Contracts are available on a non-qualified basis and as individual
retirement annuities (IRAs) that qualify for special federal income tax
treatment and whose initial Purchase Payment is a rollover from a qualified
retirement plan. With Transamerica's prior permission, the Contracts may also be
available as a contributory IRAs, as Section 403(b) annuities and for use in
qualified pension and profit sharing plans established by corporate employers.
Generally, Qualified Contracts contain restrictive provisions limiting the
timing and amount of payments and distributions from the Qualified Contract.
POLICY APPLICATION AND PREMIUMS
Premiums
All Premiums must be paid to the Service Center. A confirmation will
be issued to the Owner upon the acceptance of each Premium.
The Initial Premium for each Policy must generally be at least $5,000.
Transamerica, may, in its discretion, accept lower initial Premiums for certain
Qualified Contracts.
The Policy will be issued and the Net Premium derived from the Initial
Premium generally will be accepted and credited within two business days after
the receipt of a properly completed application and receipt of the Initial
Premium at the Service Center. (A Net Premium is the Premium less any applicable
premium taxes, including retaliatory premium taxes, should such taxes be levied
in the future in New York or should the Owner live in a state with such taxes in
the future.) Acceptance is subject to the application being received in good
order and Transamerica reserves the right to reject any application.
If the Initial Premium cannot be credited within two days of receipt of
the Premium and application because the application is incomplete or for any
other reason, then Transamerica will contact the Owner, explain the reason for
the delay and will refund the Initial Premium within five business days unless
the Owner consents to Transamerica retaining the Initial Premium and crediting
it as soon as the requirements are fulfilled.
The Owner has the right to examine the Policy for a limited period
known as a "Free Look Period." The Owner can cancel the Policy by delivering or
mailing a written notice or by sending a telegram to (a) the agent through whom
the Policy was purchased or (b) the Service Center, before midnight of the tenth
day after receipt of the Policy. Notice given by mail and the return of the
Policy by mail, properly addressed and postage prepaid, will be deemed by
Transamerica to have been made on the date postmarked. Transamerica will refund
the Policy Value determined as of the date the notice is postmarked within seven
days after receipt of such notice to cancel and the returned Policy.
Additional Premiums may be made at any time prior to the Annuity Date,
as long as the Annuitant or Contingent Annuitant is living. Additional Premiums
must be at least $500, or at least $100 if made pursuant to an automatic payment
plan, under which the Additional Premiums is automatically deducted from a bank
account. In addition, minimum allocation amounts apply (see "Allocation of
Premiums" on page 23). Additional Net Premiums are credited to the Policy as of
the date the payment is received.
Total Premiums for any Policy may not exceed $1,000,000 without prior
approval of Transamerica. In no event may the sum of all Premiums for a
Policy during any taxable year exceed the limits imposed by any
applicable federal or state laws, rules, or regulations.
Allocation of Premiums
The Owner specifies in the application how Premiums will be allocated
under the Policy. The Owner may allocate
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the Net Premium to one or more of the Sub-Accounts as long as the portions are
whole number percentages and any allocation percentage for a Sub-Account is at
least 10%. In addition, the Initial Premium is subject to a minimum allocation
of $1,000 to any selected Sub-Account. The Owner may choose to allocate nothing
to a particular Sub-Account.
For IRAs, on the Policy Date, the Net Premium derived from the Initial
Premium will first be allocated to the Money Market Sub-Account of the Variable
Account and will remain in that Sub-Account for fifteen calendar days after the
Policy Date. At that time, the dollar value of the Accumulation Units held in
the Money Market Sub-Account attributable to such net Premium will be allocated
among the Sub-Accounts of the Variable Account in accordance with the allocation
percentages selected by the Owner in the application. This initial allocation
after the Free Look Period from the Money Market SubAccount to the Sub-Accounts
selected by the Onwer does not count towards the limit of 18 transfers per
Contract Year. On non-IRA Policies, the Net Premium derived from the initial
Premium will be allocated directly to the Sub-Account(s) selected by the Owner.
Each Net Premium will be subject to the allocation percentages in
effect at the time of receipt of such Premium. The allocation percentages for
new Premiums among the Sub-Accounts may be changed by the Owner at any time by
submitting a request for such change to the Service Center in a form and manner
acceptable to Transamerica. Any changes to the allocation percentages are
subject to the limitation above. Any change will take effect with the first
Premium received with or after receipt of request for such change by the Service
Center, in a form and manner acceptable to Transamerica, and will continue in
effect until subsequently changed.
If the allocation of additional Net Premiums is directed to an Inactive
Sub-Account of the Variable Account, then the amount allocated must be at least
$500.
POLICY VALUE
Before the Annuity Date, the Policy Value is the total dollar amount of
all Variable Accumulation Units in each Sub-Account credited to a Policy. The
Policy Value is equal to: (a) Net Premiums; plus or minus (b) any increase or
decrease in the value of the Sub-Accounts due to investment results; less (c)
the daily Mortality and Expense Risk Charge; less (d) the daily Administrative
Expense Charge; less (e) the annual Policy Fees, if applicable, taken at the end
of each Policy Year; less (f) any Transfer Fees; and less (g) any withdrawals
from the Sub-Accounts less any premium tax applicalbe to those withdrawals.
A Valuation Period is the period between successive Valuation Days. It
begins at the close of the New York Stock Exchange (generally 4:00 p.m. ET) on
each Valuation Day and ends at the close of the New York Stock Exchange on the
next succeeding Valuation Day. A Valuation Day is each day that the New York
Stock Exchange is open for regular business. The value of the Variable Account
assets is determined at the end of each Valuation Day. To determine the value of
an asset on a day that is not a Valuation Day, the value of that asset as of the
end of the next Valuation Day will be used.
The Policy Value is expected to change from Valuation Period to
Valuation Period, reflecting the investment experience of all of the selected
Portfolios as well as the deductions for charges.
Net Premiums which the Owner allocates to a Sub-Account of the Variable
Account are used to purchase Variable Accumulation Units in that Sub-Account.
The number of Variable Accumulation Units to be credited for each Sub-Account
will be determined by dividing the portion of each Net Premium allocated to the
Sub-Account by the Variable Accumulation Unit Value determined at the end of the
Valuation Period during which the Net Premium was received. In the case of the
Initial Net Premium, Variable Accumulation Units for that payment will be
credited to the Policy Value (and held in the Money Market Sub-Account for
fifteen calendar days after the Policy Date) within two Valuation Days of the
later of: (a) the date an acceptable and properly completed application is
received at our Service Center; or (b) the date our Service Center receives the
Initial Premium. In the case of any subsequent Premium, Variable Accumulation
Units for that payment will be credited at the end of the Valuation Period
during which Transamerica receives the payment. The value of a Variable
Accumulation Unit for each Sub-Account for a Valuation Period is established at
the end of each Valuation Period and is calculated by multiplying the value of
that unit at the end of the prior Valuation Period by the Sub-Account's Net
Investment Factor for the Valuation Period. The value of a Variable Accumulation
Unit may go up or down.
The Net Investment Factor is used to determine the value of
Accumulation and Annuity Unit Values for the end of a Valuation Period. The
applicable formula can be found in the Statement of Additional Information.
Transfers among the Sub-Accounts will result in the purchase and/or
cancellation of Variable Accumulation Units having a total value equal to the
dollar amount being transferred to or from a particular Sub-Account. The
purchase and cancellation of such units generally are made using the Variable
Accumulation Unit value of the applicable Sub-Accounts as of the end of the
Valuation Day in which the transfer is effective.
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TRANSFERS
Before the Annuity Date
Before the Annuity Date, the Owner may transfer all or part of the
Policy Value among the Variable Sub-Account(s) by giving a Written Request to
the Service Center subject to the following conditions: (1) not more than 18
transfers may be made in any Policy Year; (2) the minimum amount which may be
transferred is $500; and (3) the minimum transfer to an Inactive Sub-Account is
$500. Transfers are also subject to such terms and conditions as may be imposed
by the Funds. No transfers will be processed until the later of (a) 30 days
after Policy Date or (b) the estimated end of the Free Look Period (allowing 5
days for delivery of the policy by mail).
Transfer requests must specify the amounts being transferred from each
Sub-Account and the amounts being transferred into each Sub-Account.
Currently, there is no charge for transfers. However, Transamerica
reserves the right to impose a charge of the lesser of 2% of the amount
transferred or $10 for each transfer after twelve in any Policy Year. All
requests received during a single Valuation Period will be treated as a single
transfer. A transfer generally will be effective on the date the request for
transfer is received by the Service Center.
If a transfer reduces the value in a Sub-Account to less than $500,
then Transamerica reserves the right to
transfer the remaining amount along with the amount requested to be transferred
in accordance with the transfer instructions
provided by the Owner. Under current law, there will not be any tax liability to
the Owner if the Owner makes a transfer.
Possible Restrictions
Transamerica reserves the right without prior notice to modify,
restrict, suspend or eliminate the transfer privileges (including telephone
transfers) at any time and for any reason. For example, restrictions may be
necessary to protect Owners from adverse impacts on portfolio management of
large and/or numerous transfers by market timers or others. Transamerica has
determined that the movement of significant Sub-Account values from one
Sub-Account to another may prevent the underlying Portfolio from taking
advantage of investment opportunities because the Portfolio must maintain a
significant cash position in order to handle redemptions. Such movement may also
cause a substantial increase in Portfolio transaction costs which must be
indirectly borne by Owners. Therefore, Transamerica reserves the right to
require that all transfer requests be made by the Owner and not by a third party
holding a power of attorney and to require that each transfer request be made by
a separate communication to Transamerica. Transamerica also reserves the right
to request that each transfer request be submitted in writing and be manually
signed by the Owner or Owners; facsimile transfer requests may not be allowed.
Dollar Cost Averaging
Prior to the Annuity Date, the Owner may request that amounts be
automatically transferred from one (and only one) of the Sub-Accounts which
invest in the Money Market or Quality Bond Portfolios to any of the Sub-Accounts
on a monthly basis by submitting a request to the Service Center in a form and
manner acceptable to Transamerica. The transfers will begin the month following,
but no sooner than one week following, receipt of such request, provided that
Dollar Cost Averaging transfers will not commence until the later of (a) 30 days
after the Contract Date, or (b) the estimated end of the Free Look Period
(allowing 5 days for delivery of the Contract by mail). Transfers will continue
for twelve consecutive months unless (1) terminated by the Owner, (2)
Transamerica has provided for a longer term, (3) automatically terminated by
Transamerica because there are insufficient funds in the applicable Sub-Account,
or (4) for other reasons as set forth in the Contract. The Owner may request
that monthly transfers be continued for an additional period of time by giving
notice to the Service Center in a form and manner acceptable to Transamerica
within 30 days prior to the last monthly transfer. If no request to continue the
monthly transfers is made by the Owner, this option will terminate automatically
with the last transfer.
In order to be eligible for Dollar Cost Averaging, the Owner must meet
the following conditions: (1) the value of the selected Sub-Account (from which
the transfers are made) must be at least $5,000; (2) the minimum amount that can
be transferred out of the selected Sub-Account is $250 per month; and (3) the
minimum amount transferred into any other Sub-Account is the greater of $250 or
10% of the amount being transferred. Dollar Cost Averaging transfers can not be
made from a Sub-Account from which Systematic Withdrawals or Automatic Payouts
are being made.
There is no charge for the Dollar Cost Averaging service and transfers
due to Dollar Cost Averaging will not count toward the number of transfers
without charge nor the limit of 18 transfers per Contract Year.
Automatic Asset Rebalancing
After Purchase Payments have been allocated among the variable
Sub-Accounts, the performance of each SubAccount may cause this allocation to
change. The Owner may instruct Transamerica to automatically rebalance the
amounts in the Variable Accumulated Value by reallocating amounts among the
variable Sub-Accounts, at the time, and in the
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percentages, specified in the Owner instructions to Transamerica and accepted by
Transamerica. The Owner may elect to have the rebalancing done on an annual,
semi-annual or quarterly basis. The Owner may elect to have amounts allocated
among the Sub-Accounts using whole percentages, with a minimum of 10% allocated
to each Sub-Account.
The Owner may elect to establish, change or terminate the Automatic
Asset Rebalancing by submitting a request to the Service Center in a form and
manner acceptable to Transamerica. The restrictions concerning transfers
described on page 29 will not be applicable to the Automatic Asset Rebalancing;
Automatic Asset Rebalancing will not count towards the limit of 18 transfers in
a Contract Year. There is currently no charge for the Automatic Asset
Rebalancing, however, Transamerica reserves the right to charge a nominal amount
for this feature. Transamerica reserves the right to discontinue offering
Automatic Asset Rebalancing any time for any reason. After the Annuity Date
If a Variable Annuity Payout Option is elected, the Owner may
transfer Variable Account amounts after the Annuity Date by submitting a request
in a form acceptable to Transamerica to the Service Center, in a form and manner
acceptable to Transamerica, subject to the following provisions: (1) transfers
after the Annuity Date may be made no more than four times during any Annuity
Year; and (2) the minimum amount transferred from one Sub-Account to another is
the amount supporting a current $50 monthly payment.
Transfers among Sub-Accounts during the Annuity Period will be
processed based on the formula outlined in the Statement of Additional
Information.
CASH WITHDRAWALS
Withdrawals
The Owner may withdraw all or part of the Cash Surrender Value for a
Policy at any time during the life of the Annuitant and prior to the Annuity
Date by giving a written request to the Service Center and subject to the rules
below. Federal or state laws, rules or regulations may also apply. The amount
payable to the Owner if the Policy is surrendered on or before the Annuity Date
is the Cash Surrender Value which is equal to the Policy Value, less any Policy
Fee, less any applicable Contingent Deferred Sales Load and less any applicable
premium taxes.
No withdrawals may be made after the Annuity Date. Only one partial
withdrawal will be permitted while the Systematic Withdrawal Option is in
effect. Partial withdrawals must be at least $500.
A full surrender will result in a cash withdrawal payment equal to the
Cash Surrender Value at the end of the Valuation Period during which the request
is received along with all completed forms. Any applicable Contingent Deferred
Sales Load will be deducted from the amount paid.
In the case of a partial withdrawal, the Owner may instruct the Service
Center as to the amounts to be withdrawn from each Sub-Account. If the Owner
does not specify the Sub-Account(s) from which the withdrawal is to be made, the
withdrawal will be taken pro rata from all Sub-Accounts with current values. If
the requested withdrawal reduces the value of the Sub-Account from which the
withdrawal was made to less than $500, Transamerica reserves the right to
transfer the remaining value of that Sub-Account pro rata among the other Active
Sub-Accounts with values equal to or greater than $1,000. If no such
Sub-Accounts exist, such transfer will be made to the Money Market Sub-Account.
The Owner will be notified in writing of any such transfer.
A partial withdrawal will not be processed if it would reduce the
Policy Value to less than $2,000. In that case, the Owner will be notified that
he or she will have 10 days from the date notice is mailed to: (a) withdraw a
lesser amount (subject to the $500 minimum), leaving a Policy Value of at least
$2,000; or (b) surrender the Policy for its Cash Surrender Value. (Amounts
payable will be determined as of the end of the Valuation Period during which
the subsequent instructions are received.) If, after the expiration of the
10-day period, no written election is received from the Owner, the withdrawal
request will be considered null and void, and no withdrawal will be processed.
The Policy Fee will be deducted from a full surrender before the
application of any Contingent Deferred Sales Load (see "Charges and Deductions"
page 29). Withdrawals will be allocated on a first-in, first-out basis from
Premiums, and then from earnings (for purposes of calculating the Contingent
Deferred Sales Load).
Withdrawals may be taxable transactions. The Code requires Transamerica
to withhold federal income tax from withdrawals. However, generally an Owner
will be entitled to elect, in writing, not to have tax withholding apply.
Withholding applies to the portion of the withdrawal which is includible in
income and subject to federal income tax. The federal income tax withholding
rate for partial withdrawals and full surrenders is 10%, or 20% in the case of
certain qualified plans, of the taxable amount of the withdrawal. Withholding
applies only if the taxable amount of the withdrawal is at least $200. Moreover,
the Code provides that a 10% penalty tax may be imposed on the taxable portions
of distributions for certain early withdrawals. (See "Federal Tax Matters" page
35.) In addition, under New York law the Owner may request Transamerica
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to withhold New York income tax from withdrawals.
Withdrawal (including surrender) requests generally will be processed
as of the end of the Valuation Period during which the request, including all
completed forms, is received. Payment of any cash withdrawal or lump sum death
benefit due from the Variable Account will occur within seven days from the date
the request is received, except that Transamerica may postpone such payment if:
(1) the New York Stock Exchange is closed for other than usual weekends or
holidays, or trading on the Exchange is otherwise restricted; or (2) an
emergency exists as defined by the Commission, or the Commission requires that
trading be restricted; or (3) the Commission permits a delay for the protection
of Owners. The withdrawal request will be effective when all appropriate
withdrawal request forms are received. Payments of any amounts derived from
Premiums paid by check may be delayed until the check has cleared the Owner's
bank.
SINCE THE OWNER ASSUMES THE INVESTMENT RISK AND BECAUSE
CERTAIN
WITHDRAWALS ARE SUBJECT TO A CONTINGENT DEFERRED SALES LOAD,
THE TOTAL AMOUNT
PAID UPON SURRENDER OF THE POLICY (TAKING INTO ACCOUNT ANY PRIOR
WITHDRAWALS)
MAY BE MORE OR LESS THAN THE TOTAL PREMIUMS PAID.
After a withdrawal of the total Cash Surrender Value, or at any time
that the Policy Value is zero, all rights of the Owner will terminate.
Since the Qualified Policies offered by the Prospectus, only iwth
Transamerica's prior permission (except for rollover IRA's), will be issued in
connection with retirement plans which meet the requirements of Section 408(b)
of the Code, reference should be made to the terms of the particular retirement
plans for any additional limitations or restrictions on cash withdrawals.
An Owner may elect, under the Systematic Withdrawal Option or Automatic
Payout Option (but not both), to
withdraw certain amounts on a periodic basis from the Sub-Accounts prior to the
Annuity Date.
Systematic Withdrawal Option
Prior to the Annuity Date, the Owner, by giving Written Notice
to the Service Center, may elect to have withdrawals automatically made from one
or more Sub-Account(s) on a monthly basis. (Other distribution modes may be
permitted.) The withdrawals will commence the month following, but no sooner
than one week following, receipt of Written Notice, except that they will not
commence sooner than the later of (a) 30 days after the Policy Date or (b) the
end of the Free Look Period. Upon written notice to the Owners, Transamerica may
change the day of the month on which withdrawals are made under this option.
Withdrawals will be from the Sub-Account(s) and in the percentage allocations
specified by the Owner. If no specifications are made, withdrawals will be
pro-rata from all Sub-Account(s) with value. Systematic Withdrawals can not be
made from a Sub-Account from which Dollar Cost Averaging transfers are being
made.
To be eligible for the Systematic Withdrawal Option, the Policy Value
must be at least $12,000 at the time of election. The minimum monthly amount
that can be withdrawn is $100. The maximum monthly amount that can be withdrawn
on an annual basis is equal to the sum, as of the date of the first withdrawal,
of (a) 10% of Premiums that are less than seven Policy Years old and (b) 10% of
remaining Premiums that are at least seven Policy Years old.
Systematic withdrawals are not subject to the Contingent Deferred Sales
Load but can be reduced by any applicable
premium tax. Systematic withdrawals may be taxable, subject to withholding, and
subject to the 10% penalty tax. (See
"Federal Tax Matters" page 41.)
The systematic withdrawals will continue unless terminated by the Owner
or automatically terminated by Transamerica as set forth in the Policy. If this
option is terminated it may not be elected again until the next Policy
Anniversary. Only one partial withdrawal can be made while the Systematic
Withdrawal Option is in effect and a second partial withdrawal taken while this
option is in effect will automatically terminate the Systematic Withdrawal
Option and any amount requested as a partial withdrawal (including the first in
a Policy Year will be subject to a Contingent Deferred Sales Load to the extent
it exceeds accumulated earnings.
Transamerica reserves the right to impose an annual fee of an amount
not to exceed $25 per Contract year for administrative expenses associated with
processing the systematic withdrawals. This fee, which is currently waived, will
be deducted from each systematic withdrawal in equal installments during a
Contract Year.
Consult your tax adviser and, if applicable, the particular retirement
plan, before requesting withdrawals from a Qualified Contract. There may be
severe restrictions with regard to withdrawals from Qualified Contracts.
Automatic Payout Option ("APO")
Prior to the Annuity Date, the Owner may elect the Automatic Payout
Option ("APO") to satisfy minimum distribution requirements under the Code for
Qualified Contracts, including under Section 408(b)(3) of the Code with regard
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to IRA's. See the Automatic Payout Option discussion under Qualified Plans on
page 41.
DEATH BENEFIT
If the Owner or Annuitant dies before the Annuity Date, a death benefit
is payable. If the deceased Owner or Annuitant, as applicable, had not attained
their 85th birthday, the death benefit will be the greatest of (a) the Policy
Value, (b) all Premiums paid less all withdrawals and any premium taxes
applicable to those withdrawals or (c) the greatest Policy Anniversary Value
prior to the earliest of the Annuitant's or Owner's 75th birthday increased by
all Premiums paid since that Policy Anniversary less all withdrawals and any
premium taxes applicable to those withdrawals since that Policy Anniversary. If
the deceased Owner or Annuitant, as applicable, had attained age 85, the death
benefit will be equal to Policy Value. The Death Benefit will be determined as
of the Valuation Period during which the later of (a) Proof of Death of the
Owner or Annuitant is received by the Service Center or (b) a Written Notice of
the method of settlement elected by the Beneficiary is received at the Service
Center. If no settlement method is elected, the death benefit will be calculated
and paid as of a date no later than one year after the date of death. No
Contingent Deferred Sales Load will apply. Until the death benefit is paid, the
Policy Value will remain in the Sub-Accounts as previously specified by the
Owner or as reallocated pursuant to instructions received by Transamerica from
all Beneficiaries. Therefore, the Policy Value will fluctuate with investment
performance of the applicable Sub-Account(s) and accordingly, the amount of the
death benefit will depend on the Policy Value at the time the death benefit is
paid. Payment of Death Benefit
The death benefit is generally payable upon receipt of Proof of Death
of the Annuitant or Owner. Upon receipt of this proof and an election of a
method of settlement, the death benefit generally will be paid within seven
days, or as soon thereafter as Transamerica has sufficient information to make
the payment. The death benefit may be paid in a lump sum cash benefit or,
subject to any limitations under any state or federal law, rule, or regulation,
under one of the Annuity Forms unless a settlement agreement is effective under
the Policy preventing such election. If no settlement method is elected within
one year of the date of death, the death benefit will be paid in a lump sum. The
payment of the death benefit may be subject to certain distribution requirements
under the federal income tax laws. (See "Federal Tax Matters" page 35.)
Designation of Beneficiaries
The Owner may select one or more Beneficiaries and name them in the
application. If the Owner selects more than one beneficiary, unless otherwise
indicated by the Owner they will share equally in any death benefits payable in
the event of the Annuitant's death before the Annuity Date if there is no
Contingent Annuitant, or the Owner's death if there is no Joint Owner. Different
Beneficiaries may be named with respect to the Annuitant's death (Annuitant's
Beneficiary) and the Owner's death (Owner's Beneficiary). Before the Annuitant's
death, the Owner may change the Beneficiary by notice to the Service Center in a
form and manner acceptable to Transamerica. The Owner may also make the
designation of Beneficiary irrevocable by sending notice to and obtaining
approval from the Service Center. Irrevocable Beneficiaries may only be
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changed with the written consent of the designated Irrevocable Beneficiaries,
except to the extent required by law. The interest of any Beneficiary
who dies before the Owner or Annuitant will terminate at the death of
the Beneficiary.
The interest of any Beneficiary who dies at the time of, or within 30 days
after, the death of the Owner or Annuitant will also terminate if no benefits
have been paid unless the Policy has been endorsed to provide otherwise. The
benefits will then be paid as though the Beneficiary had died before the Owner
or Annuitant. If the interests of all designated Beneficiaries have terminated,
any benefits payable will be paid to the Owner's estate.
Transamerica may rely on an affidavit by any responsible person in
determining the identity or non-existence of any Beneficiary not identified by
name.
Death of Annuitant Prior to the Annuity Date
If the Annuitant dies prior to the Annuity Date and the Annuitant is
not the Owner and there is no Contingent Annuitant, a death benefit under the
Policy relating to that Annuitant will be paid to the Annuitant's Beneficiary.
If there is a Contingent Annuitant, then upon the death of the Annuitant the
Contingent Annuitant will become the Annuitant and no Death Benefit will be paid
at that time. Death of Owner Prior to the Annuity Date
If an Owner dies before the Annuity Date, a death benefit will be
paid to that Owner's Beneficiary. If the Contract has Joint Onwer's, the
surviving Joint Owner will be the Owner's Beneficiary. If the Owner's
Beneficiary is the deceased Owner's spouse, then the spouse may elect to treat
the Policy as his or her own or receives payment of the death benefit. The
payment of the death benefit may be subject to certain distribution requirements
under the federal income tax laws. (See "Federal Tax Matters" page 35.)
Death of Annuitant or Owner After the Annuity Date
If the Annuitant or an Owner dies after the annuity starts, the
remaining undistributed portion, if any, of the Policy will be distributed at
least as rapidly as under the method of distribution being used as of the date
of such death. Under some Annuity Forms, there will be no death benefit. If the
Owner is not the Annuitant, upon an Owner's death, any remaining ownership
rights will pass to the Owner's Beneficiary.
CHARGES AND DEDUCTIONS
No deductions are made from Premiums except for any applicable
premium taxes. Therefore, the full amount, less any premium taxes, of the
Premiums are invested in one or more of the Sub-Accounts of the Variable
Account.
As more fully described below, charges under the Policy are assessed in
three ways: (1) as deductions for the Policy (or Annuity) Fees, any Transfer
Fees, any Systematic Withdrawal Option fees and, if applicable, for premium
taxes; (2) as charges against the assets of the Variable Account for the
assumption of mortality and expense risks and administrative expenses; and (3)
as Contingent Deferred Sales Loads. In addition, certain deductions are made
from the assets of the Funds for investment management fees and expenses. These
fees and expenses are described in the Funds' prospectuses and their statements
of additional information. Contingent Deferred Sales Load
No deduction for sales charges is made from Premiums (although
premium tax may be deducted). However, a Contingent Deferred Sales Load of up to
6% of Premiums paid may be imposed on certain withdrawals or surrenders (and
possibly on certain annuitizations) to partially cover certain expenses incurred
by Transamerica relating to the sale of the Policies, including commissions paid
to salespersons, the costs of preparation of sales literature and other
promotional costs and acquisition expenses.
The Contingent Deferred Sales Load percentage varies according to the
number of Policy Years between the Policy Year in which a Net Premium was
credited to the Policy and the Policy Year in which the withdrawal is made. The
amount of the Contingent Deferred Sales Load is determined by multiplying the
amount withdrawn subject to the Contingent Deferred Sales Load by the Contingent
Deferred Sales Load percentage in accordance with the following table.
Number of Policy Years Contingent Deferred Sales Load
Since Receipt of Each Premium As a Percentage of Premium
Less than one year 6%
1 year but less than 2 years 6%
2 years but less than 3 years 5%
3 years but less than 4 years 5%
4 years but less than 5 years 4%
5 years but less than 6 years 4%
6 years but less than 7 years 2%
7 or more years 0%
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In no event shall the aggregate Contingent Deferred Sales Load assessed
against the Policy exceed 6% of the aggregate Premiums paid to a Policy.
Certain amounts may be withdrawn free of any Contingent Deferred Sales
Load. The Owner may make withdrawals up to the "Allowed Amount" (described
below) without incurring a Contingent Deferred Sales Load each Policy Year
before the Annuity Date. During the first Policy Year, the Allowed Amount is
equal to accumulated earnings not previously withdrawn. For the First
withdrawal, and only the first withdrawal in a Policy Year after the first
Policy Year, the available Allowed Amount is equal to the sum of (a) 100% of
Premiums not previously withdrawn and received at least seven Policy years
before the date of withdrawal; please (b) the greater of (i) the accumulated
earnings not previously withdrawn or (ii) 10% of Premiums received at least one
but less than seven complete Policy Years before the date of withdrawal not
reduced to take into account any withdrawals deemed to be made from such
Premiums. After the first withdrawal in a Policy Year, after the first Policy
Year, the available Allowed Amount is equal to the sum of: (a) 100% of Premiums
not previously withdrawn and received at least seven complete Policy Years
before the date of withdrawal; plus (b) accumulated earnings not previously
withdrawn. Withdrawals will always be made first from accumulated earnings, and
then from Premiums on a first in first out basis, so that Accumulated Earnings
may be depleted with the first withdrawal and the 10% of Purchase Payments
discussed above is not use in the calculation of the Allowed Amount. If an
Allowed Amount is not withdrawn during a Contract Year, it does not carry over
to the next Contract Year. However, accumulated earnings, if any, in an Owner's
Account Value are always available as the Allowed Amount. No withdrawals are
allowed with regard to Premiums made by a check which has not cleared.
In addition, no Contingent Deferred Sales Load is assessed: (a) upon
annuitization to an option involving life contingencies on or after the third
Policy Anniversary; (b) on distributions resulting from the death of the Owner
or Annuitant before Annuity Date; (c) upon withdrawals of Policy Value among the
Sub-Accounts under the Systematic Withdrawal Option; (d) or, in some
circumstances, under the Automatic Payout Option. Any applicable Contingent
Deferred Sales Load will be deducted from the amount requested for both partial
withdrawals and full surrenders.
Additionally, upon approval by and conditioned by the restrictions or
modifications, if any, required by the New York Insurance Department, the
Contingent Deferred Sales Load will be waived if the Owner is diagnosed with a
terminal illness, reasonable expected to result in death within twelve months,
after the first Policy Year. Proof of terminal illness must be received by the
Service Center at the time to withdrawal or surrender is requested.
Administrative Charges
At the end of each Policy Year before the Annuity Date, Transamerica
deducts an annual Policy Fee as partial compensation for expenses relating to
the issue and maintenance of the Policy and the Variable Account. The annual
Policy Fee is equal to the lesser of $30 or 2% of the Policy Value. No Policy
Fee will be deducted for a Policy Year if the Policy Value exceeds $50,000 on
the last business day of the Policy Year or as of the date the Policy is
surrendered. The Policy Fee may be changed upon 30 days advance written notice,
subject to the prior approval of the New York State Insurance Department but in
no event may it exceed the lesser of $60 or 2% of the Policy Value. Such
increases in the Policy Fee will apply only to future deductions after the
effective date of the change. If the Policy is surrendered on other than the end
of a Policy Year, the Policy Fee will be deducted in full at the time of such
surrender. The Policy Fee will be deducted on a pro rata basis from each
Sub-Account in which the Policy is invested at the time of such deduction.
After the Annuity Date, an annual Annuity Fee of $30 will be deducted
in equal amounts from each Variable Annuity Payment made during the year ($2.50
each month if monthly payments). This fee will not be changed. No Annuity Fee
will be deducted from Fixed Annuity Payments.
Transamerica also makes a deduction (the Administrative Expense Charge)
from the Variable Account at the end of each Valuation Period (both before and
after the Annuity Date) at an effective current annual rate of 0.15% of assets
held
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in each Sub-Account for those administrative expenses attributable to the
Policies and the Variable Account which exceed the revenues received from the
Policy Fee, any Transfer Fee, and any fee imposed for Systematic Withdrawals.
Transamerica has the ability to increase or decrease this charge, but the charge
is guaranteed not to exceed 0.25%. Transamerica will provide 30 days written
notice of any change in fees. The administrative charges do not bear any
relationship to the actual administrative costs of a particular Policy. The
Administrative Expense Charge is reflected in the Variable Accumulation or
Variable Annuity Unit Values for each Sub-Account. Mortality and Expense Risk
Charge
Transamerica imposes a charge called the Mortality and Expense Risk
Charge to compensate it for bearing certain mortality and expense risks under
the Policies. For assuming these risks, Transamerica makes a daily charge equal
to 0.003403% corresponding to an effective annual rate of 1.25% of the value of
the net assets in the Variable Account. This charge is imposed before the
Annuity Date and if an Annuity Purchase Amount is applied to a Variable Payment
Option, also after the Annuity Date. Transamerica guarantees that this charge of
1.25% will never increase.
The Mortality and Expense Risk Charge is reflected in the Variable
Accumulation or Variable Annuity Unit Values for each Sub-Account.
Variable Accumulated Values and Variable Annuity Payments are not
affected by changes in actual mortality experience incurred by Transamerica. The
mortality risks assumed by Transamerica arise from its contractual obligations
to make Annuity Payments (determined in accordance with the annuity tables and
other provisions contained in the Policy) and to pay death benefits prior to the
Annuity Date. Thus Owners are assured that neither the Annuitant's own longevity
nor an unanticipated improvement in general life expectancy will adversely
affect the Annuity Payments under the Policy.
Transamerica also bears substantial risk in connection with the death
benefit before the Annuity Date, since it will pay a death benefit that may be
greater than the Policy Value. In this way, Transamerica bears the risk of
unfavorable experience in the Sub-Accounts.
The expense risk assumed by Transamerica is the risk that
Transamerica's actual expenses in administering the Policy and the Variable
Account will exceed the amount recovered through the Administrative Expense
Charge, Policy Fees, Transfer Fees and any fees imposed for Systematic
Withdrawals.
If the Mortality and Expense Risk Charge is insufficient to cover
actual costs and risks assumed, the loss will fall on Transamerica. Conversely,
if this charge is more than sufficient, any excess will be profit to
Transamerica. Currently, Transamerica expects a profit from this charge.
Transamerica anticipates that the Contingent Deferred Sales Load will
not generate sufficient funds to pay the cost of distributing the Policies. To
the extent that the Contingent Deferred Sales Load is insufficient to cover the
actual cost of Policy distribution, the deficiency will be met from
Transamerica's general corporate assets which may include amounts, if any,
derived from the Mortality and Expense Risk Charge. Premium Taxes
Currently, New York has no premium tax or retaliatory premium tax. If
New York imposes these taxes in the future, or if the Owner is or becomes a
resident of a state where such taxes apply, Transamerica will deduct applicable
premium taxes, including any retaliatory taxes, paid with respect to a
particular Policy from the Premiums, from amounts withdrawn, or from amounts
applied on the Annuity Date.
In certain limited circumstances, a broker-dealer or other entity
distributing the Policies may elect to pay to
Transamerica an amount equal to the premium taxes that would otherwise be
attributable to that entity's customers. In such
cases, Transamerica will not impose a premium tax charge on those Policies.
Transfer Fee
Transamerica currently does not charge for transfers between Sub-
Accounts. However, Transamerica may impose
a fee for each transfer in excess of the first twelve in a single Policy Year.
Transamerica will deduct the charge from the
amount transferred. This fee would be the lesser of $10 or 2% of the amount
transferred and would be used to help cover
Transamerica's costs of processing transfers. Currently, no fee is charged for
Automatic Asset Rebalancing. However,
Transamerica reserves the right to impose a nominal fee.
Systematic Withdrawal Option
Transamerica reserves the right to impose an annual fee of an amount
not to exceed $25 for administrative expenses associated with processing
systematic withdrawals. This fee, which is currently waived, will be deducted
from each systematic
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withdrawal in equal installments during a Policy Year.
Taxes
Under present laws, Transamerica will incur state or local taxes (in
addition to the premium taxes described above) in several states. No charges are
currently made for taxes other than state premium taxes. However, Transamerica
reserves the right to deduct charges in the future for federal, state and local
taxes or the economic burden resulting from the application of any tax laws that
Transamerica determines to be attributable to the Policies. Portfolio Expenses
The value of the assets in the Variable Account reflects the value of
Portfolio shares and therefore the fees and expenses paid by each Portfolio. A
complete description of the fees, expenses, and deductions from the Portfolios
are found in the Funds' prospectuses. (See "The Funds" page 18.)
ANNUITY PAYMENTS
Annuity Date
Initially, the Annuity Date is selected by the Owner at the time the
Initial Premium is paid. Thereafter, the Annuity Date may be changed from time
to time by the Owner by giving notice to the Service Center provided that notice
of each change is received by the Service Center at least thirty (30) days prior
to the then-current Annuity Date. The Annuity Date must not be earlier than the
third Policy Anniversary. The latest Annuity Date which may be elected is the
first day of the calendar month immediately preceding the month of the
Annuitant's 85th birthday.
The Annuity Date must be the first day of a calendar month. The first
Annuity Payment will be on the first day of
the month immediately following the Annuity Date.
Annuity Payment
The Annuity Date is the date that the Annuity Purchase Amount is
applied to provide the Annuity Payments under the Policy under the selected
Annuity Form and Payment Option, unless the entire Policy Value has been
withdrawn or the death benefit has been paid to the Beneficiary prior to that
date. The Annuity Purchase Amount is the Policy Value, less any applicable
Contingent Deferred Sales Load and less any applicable premium taxes. Any
Contingent Deferred Sales Load will be waived if values are applied to an
Annuity Form involving life contingencies on or after the third Policy
Anniversary.
If the amount of the monthly Annuity Payment from any of the Payment
Options selected by the Owner would result in a monthly Annuity Payment of less
than $20, or if the Annuity Purchase Amount is less than $2,000, Transamerica
reserves the right to offer a less frequent mode of payment or pay the Policy
Value in a cash payment. Monthly Annuity Payments from the Variable Annuity
Payment Option will further be subject to a minimum monthly annuity amount of
$50 from each Sub-Account of the Variable Account from which such payments are
made.
The Owner may choose from the Annuity Forms below. Transamerica may
consent to other plans of payment before the Annuity Date. For Annuity Forms
involving life income, the actual age and/or sex of the Annuitant, or a Joint or
Contingent Annuitant will affect the amount of each payment. Sex-distinct rates
generally are not allowed under certain Qualified Policies. Transamerica
reserves the right to ask for satisfactory proof of the Annuitant's (or Joint or
Contingent Annuitant's) age. Transamerica may delay Annuity Payments until
satisfactory proof is received. Since payments to older Annuitants are expected
to be fewer in number, the amount of each Annuity Payment under a selected
Annuity Form shall be greater for older Annuitants than for younger Annuitants.
The Owner may choose from the two Annuity Payment Options described
below. The Annuity Date and Annuity Forms available for Qualified Policies may
also be controlled by endorsements, the plan or applicable law.
A portion or the entire amount of the Annuity Payments may be taxable
as ordinary income. If, at the time the Annuity Payments begin, Transamerica has
not received a proper written election not to have federal income taxes
withheld, Transamerica must by law withhold such taxes from the taxable portion
of such annuity payments and remit that amount to the federal government. State
income tax withholding may also apply. (See "Federal Tax Matters" page 35.)
Election of Annuity Forms and Payment Options
The Annuity Form and Payment Option for each Policy is set as a 120
month period certain and life Annuity Form, under the Variable Payment Option.
Before the Annuity Date, and while the Annuitant is living, the Owner
may, by Written Request, change the Annuity Form or Annuity Payment Option or
may request payment of the Cash Surrender Value for the Policy. The request for
change of the Annuity Date or Annuity Payment Option must be received by the
Service Center at least 30 days prior to the Annuity Date.
In the event that an Annuity Form and Payment Option are not selected
at least 30 days before the Annuity Date, Transamerica will make Variable
Annuity Payments in accordance with the 120 month period certain and life
Annuity Form
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and the applicable provisions of the Policy.
Annuity Payment Options
The Annuity Forms may be paid under Fixed or Variable Annuity Payment
Options. Under the Fixed Annuity Payment Option, the amount of each payment will
be determined on the Annuity Date and will not subsequently be affected by the
investment performance of the Sub-Accounts. Under the Variable Annuity Payment
Option, the Annuity Payments, after the first Annuity Payment, will reflect the
investment experience of the Sub-Account or Sub- Accounts chosen by the Owner.
Owners may elect a Fixed Annuity, a Variable Annuity, or a combination
of both (in 25% increments of the Annuity Purchase Amount). If the Owner elects
a combination, he or she must specify what part of the Annuity Purchase Amount
is to be applied to the Fixed and Variable Payment Options. Unless specified
otherwise, the applied Annuity Purchase Amount will be used to provide a
Variable Annuity. In this event, the initial allocation of Variable Annuity
Units for the Variable Sub-Accounts will be in proportion to the Policy's value
in the Sub-Accounts on the Annuity Date. Fixed Annuity Payment Option
A Fixed Annuity provides for Annuity Payments which will remain
constant pursuant to the terms of the Annuity Form elected. If a Fixed Annuity
is selected, the portion of the Annuity Purchase Amount used to provide the
Fixed Annuity will be transferred to the general account assets of Transamerica,
and the amount of Annuity Payments will be established by the fixed annuity
provisions selected and the age and sex (if sex-distinct rates are allowed by
law) of the Annuitant and will not reflect investment experience after the
Annuity Date. The Fixed Annuity Payment amounts are determined by applying the
Annuity Purchase Rate specified in the Policy to the portion of the Annuity
Purchase Amount applied to the Fixed Annuity Option by the Owner. Payments may
vary after the death of the Annuitant under some Annuity Options; the amounts of
these variances are fixed on the Annuity Date. Variable Annuity Payment Option
A Variable Annuity provides for payments that vary in dollar amount,
based on the investment performance of the selected Sub-Account(s) of the
Variable Account. The Variable Annuity Purchase Rate Tables in the Policy
reflect an assumed annual interest rate of 4%, so if the actual net investment
performance of the Sub-Account(s) is less than this rate, then the dollar amount
of the actual Annuity Payments will decrease. If the actual net investment
performance of the Sub-Account(s) is higher than this rate, then the dollar
amount of the actual Annuity Payments will increase. If the net investment
performance exactly equals the 4% rate, then the dollar amount of the actual
Annuity Payments will remain constant.
Variable Annuity Payments will be based on the Sub-Accounts selected by
the Owner, and on the allocations among the Sub-Accounts.
For further details as to the determination of Variable Annuity
Payments, see the Statement of Additional Information.
Annuity Forms
The Owner may choose any of the Annuity Forms described below.
Subject to approval by Transamerica, the Owner may select any other Annuity
Forms then being offered by Transamerica.
(1) Life Annuity. Payments start on the first day of the month
immediately following the Annuity Date, if the Annuitant is living. Payments end
with the payment due just before the Annuitant's death. There is no death
benefit under this form. It is possible that only one payment will be made under
this form if the Annuitant dies before the second payment is due; only two
payments will be made if the Annuitant dies before the third payment is due, and
so forth.
(2) Life and Contingent Annuity. Payments start on the first day of the
month immediately following the Annuity Date, if the Annuitant is living.
Payments will continue for as long as the Annuitant lives. After the Annuitant
dies, payments will be made to the Contingent Annuitant, if living, for as long
as the Contingent Annuitant lives. The continued payments can be in the same
amount as the original payments, or in an amount equal to one-half or two-thirds
thereof. Payments will end with the payment due just before the death of the
Contingent Annuitant. There is no death benefit after both die. If the
Contingent Annuitant does not survive the Annuitant, payments will end with the
payment due just before the death of the Annuitant. It is possible that only one
payment or very few payments will be made under this form, if the Annuitant and
Contingent Annuitant die shortly after payments begin.
The Written Request for this form must: (a) name the Contingent
Annuitant; and (b) state the percentage of payments for the Contingent
Annuitant. Once Annuity Payments start under this Annuity Form, the person named
as Contingent Annuitant for purposes of being the measuring life, may not be
changed. Transamerica will require proof of age for the Annuitant and for the
Contingent Annuitant before payments start.
(3) Life Annuity With Period Certain. Payments start on the first day
of the month immediately following the Annuity
Date, if the Annuitant is living. Payments will be made for the longer of: (a)
the Annuitant's life: or (b) the period certain.
The period certain may be 120 or 180 or 240 months, but in no event may it
exceed the life expectancy of the Annuitant.
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If the Annuitant dies after all payments have been made for the period
certain, payments will cease with the payment due just before the Annuitant's
death. No benefit will then be payable to the Annuitant's Beneficiary.
If the Annuitant dies during the period certain, the rest of the period
certain payments will be made to the Annuitant's Beneficiary. The Owner may
elect to have the commuted value of these payments paid in a single sum.
Transamerica will determine the commuted value by discounting the rest of the
payments at the then current rate of interest used for commuted values.
If the Owner does not elect to have the commuted value paid in a single
sum after the Annuitant's death, the Owner may designate a Payee to receive any
remaining payments payable if the Annuitant's Beneficiary dies before all of the
payments under the period certain have been made. If the Annuitant's Beneficiary
dies before receiving all of the remaining period certain payments and a
designated Payee does not survive the Annuitant's Beneficiary for at least 30
days, then the remaining payments will be paid to the Owner, if living,
otherwise in a single sum to the Owner's estate.
The Written Request for this form must: (a) state the length of the
period certain; and (b) name the Annuitant's
Beneficiary.
(4) Joint and Survivor Annuity. Payments will be made, starting on the
first day of the month immediately following the Annuity Date, if and for as
long as the Annuitant and Joint Annuitant are living. After the Annuitant or
Joint Annuitant dies, payments will continue as long as the survivor lives. The
continued payments can be in the same amount as the original payments, or in an
amount equal to one-half or two-thirds thereof. It is possible that only one
payment or very few payments will be made under this form if the Annuitant and
Joint Annuitant both die shortly after payments begin.
The Written Request for this form must: (a) name the Joint Annuitant;
and (b) state the percentage of continued payments for the survivor. Once
payments start under this Annuity Form, the person named as Joint Annuitant, for
the purpose of being the measuring life, may not be changed. Transamerica will
need proof of age for the Joint Annuitant before payments start.
(5) Other Forms of Payment. Benefits can be provided under any other
Annuity Form not described in this section subject to Transamerica's agreement
and any applicable state or federal law or regulation. Requests for any other
Annuity Form must be made in writing to the Service Center at least 30 days
before the Annuity Date.
Once payments start under the Annuity Form and Payment Option selected
by the Owner: (a) no changes can be made in the Annuity Form and Payment Option;
(b) no additional Premium will be accepted under the Policy; and (c) no further
withdrawals will be allowed.
The Owner may, at any time after the Annuity Date by Written Notice to
us at our Service Center, change the Payee
of annuity benefits being provided under the Policy. The effective date of
change in Payee will be the later of: (a) the date
we receive the Written Request for such change; or (b) the date specified by the
Owner. If the Policy is issued as an IRA,
the Owner may not change the Payee on or after the Annuity Date.
Alternate Fixed Annuity Rates
The amount of any Fixed Annuity Payments will be determined on the
Annuity Date by using either the guaranteed fixed annuity rates or
Transamerica's current single premium fixed annuity rates at the time, whichever
would result in a higher amount of monthly Fixed Annuity Payments. QUALIFIED
POLICIES
With Transamerica's prior permission, the Policy may be used to fund
IRA rollovers and, to fund contributory IRA's, for use in connection with
Section 408(b) of the Code. A rollover IRA is one whose initial Purchase Payment
is from the rollover of certain kinds of distributions from qualified plans,
Section 403(b) tax sheltered annuities and individual retirement plans,
following the rules set out in the Code to maintain favorable tax treatment for
the individual retirement annuity. A contributory IRA is one to which initial
and subsequent Purchase Payments are subject to limitations imposed by the Code.
With Transamerica's prior permission, the Policy may also be used for
various types of qualified pension and profit sharing plans under Section 401 of
the Code, which permits corporate employers to establish various types of
retirement plans for employees, and as Section 403(b) annuities. The tax rules
applicable to distribution from qualified retirement plans, including
restrictions on contributions and benefits, taxation of distributions, any tax
penalties vary according to the type of plan and the terms and conditions of the
plan itself. Various tax penalties may apply to contributions in excess of
specified limits, aggregate distributions in excess of specified amount,
distributions prior to age 59 1/2 (subject to certain exceptions), distributions
that do not satisfy specified requirements and certain other transactions with
subject to qualified plans. Purchasers of the contracts for use in qualified
plans should seek competent advice regarding the suitability of the proposed
plan documents and the Policies to their specific needs. Transamerica reserves
the right to decline to sell
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the Policy to certain qualified plans or terminate the contract if in
Transamerica's judgment the Policy is not appropriate for the plan. Policy
issued for use in connection with Sections 401 and 403(b) qualified plans may
not be available in all states.
If a Policy is purchased to fund an IRA, the Annuitant must also be the
Owner. In addition, under current tax law, Policy is purchased to fund an IRA,
minimum distributions from IRA's must commence not later than April 1st of the
calendar year following the calendar year in which the Owner attains age 70 1/2.
The Owner should consult his/her tax adviser concerning these matters.
Withholding
A distributee receiving withdrawals from certain Qualified Policiess
may not be entitled to elect in writing, not to have income tax withholding
apply. The federal income withholding rate in the case of certain Qualified
Policy, but not IRA's is 20% of the taxable amount of the withdrawal.
Since the Qualified Policy offered by the Prospectus will be issued in
connection with retirement plans which meet the requirements of Sections 401,
403(b), or 408(b) of the Code, reference should be made to the terms of the
particular retirement plan and the Code for any additional limitations or
restrictions on cash withdrawals.
Automatic Payout Option ("APO")
Prior to the Annuity Date, for Qualified Policy only, the Owner may
elect the Automatic Payout Option ("APO") to satisfy minimum distribution
requirements under Sections 401(a)(9), 403(b), and 408(b)(3) of the Code with
regard to this Policy. This may be elected no earlier than six months prior to
the calendar year in which the Owner attains age 701/2, but payments may not
begin earlier than January of such calendar year. Additionally, APO withdrawals
may not begin before the later of (a) 30 days after the Policy Date or (b) the
end of the Free Look Period. APO may be elected in any calendar month, but no
later than the month in which the Owner attains age 84.
APO withdrawals will be from the Sub-Account(s) and in the percentage
allocations specified by the Owner. If no specifications are made, withdrawals
will be pro-rata from all Sub-Account(s) with value. Withdrawals can not be made
from a Sub-Account from which Dollar Cost Averaging transfers are being made.
Payments will be made annually, and will continue unless terminated by
the Owner or automatically terminated by Transamerica as set forth in the
Policy. Once terminated, APO may not be elected again.
If only APO withdrawals are made, no Contingent Deferred Sales Load
will apply, regardless of the "Allowed Amount" (described on page 40). However,
if a partial withdrawal is taken, that partial withdrawal and any subsequent
withdrawals that Policy Year will be subject to a CDSL to the extent they exceed
the "Allowed Amount." (See "Contingent Deferred Sales Load" page 35.)
To be eligible for this option, the following conditions must be met:
(1) the Account Value must be at least $12,000 at the time of election; (2) the
annual withdrawal amount is the larger of the required minimum distribution
under Code Sections 401(a)(9) or 408(b)(3) or $500; and (3) the minimum amount
per payment (if not annual) must be at least $100.
APO allows the required minimum distribution to be paid from the
Sub-Account(s) of the Variable Account. If there are insufficient funds in the
Variable Account to make a withdrawal, or for other reasons as set forth in the
Policies, this option will terminate. In which case, if there are amounts in a
Policies Account Value remaining in the Fixed Account, the minimum distribution
requirements with regard to the Account Value may not be met. If amounts are
transferred to Sub-Accounts from a Guaranteed Period before its Expiration Date,
an interest adjustment will be made to such amounts.
If you have more than one qualified plan subject to the Code's minimum
distribution requirements, you must consider all such plans in the calculation
of your minimum distribution requirement, but Transamerica will make
calculations and distribution with regard to this Policies only. Restrictions
under Section 403(b) Programs
Certain restrictions apply to annuity contracts used in connection with
Internal Revenue Code Section 403(b) retirement plans. Section 403(b) of the
Internal Revenue Code provides for tax-deferred retirement savings plans for
employees of certain non-profit and educational organizations. In accordance
with the requirements of the Code, Section 403(b) annuities generally may not
permit distribution of (i) elective contributions made in years beginning after
December 31, 1988, and (ii) earnings on those contributions and (iii) earnings
on amounts attributable to elective contributions held as of the end of the last
year beginning before January 1, 1989. Distributions of such amounts will be
allowed only upon death of the employee, on or after attainment of age 59 1/2,
separation from service, disability, or financial hardship, except that
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income attributable to elective contributions may not be distributed in the
case of hardship.
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FEDERAL TAX MATTERS
Introduction
The following discussion is a general description of federal tax
considerations relating to the Policy 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 Policy. Any person concerned about these tax implications
should consult a competent tax adviser before initiating any transaction. This
discussion is based upon Transamerica's understanding of the present federal
income tax laws as they are currently interpreted by the Internal Revenue
Service. No representation is made as to the likelihood of the continuation of
the present federal income tax laws or of the current interpretation by the
Internal Revenue Service. Moreover, no attempt has been made to consider any
applicable state or other tax laws.
The Policy may be purchased on a non-tax qualified basis
("Non-Qualified Policy") or purchased and used in connection with plans
qualifying for special tax treatment ("Qualified Policy"). Qualified Policies
are designed for use by individuals solely as plans entitled to special income
tax treatment under section 408 of the Code. The ultimate effect of federal
income taxes on the amounts held under a Policy, on Annuity Payments, and on the
economic benefit to the Owner, the Annuitant, or the Beneficiary may depend on
the type of retirement plan, and on the tax status of the individual concerned.
In addition, certain requirements must be satisfied in purchasing a Qualified
Policy with proceeds from a tax qualified retirement plan and receiving
distributions from a Qualified Policy in order to continue receiving special tax
treatment. Therefore, purchasers of Qualified Policies should seek competent
legal and tax advice regarding the suitability of the Policy for their
situation, the applicable requirements, and the tax treatment of the rights and
benefits of the Policy. The following discussion assumes that a Qualified Policy
is purchased with proceeds from and/or contributions under retirement plans that
qualify for the intended special federal income tax treatment.
The following discussion is based on the assumption that the Policy
qualifies as an annuity contract for federal
income tax purposes. The Statement of Additional Information discusses the
requirements for qualifying as an annuity.
Taxation of Annuities
In General
Section 72 of the Code governs taxation of annuities in general.
Transamerica believes that the Owner who is a natural person generally is not
taxed on increases in the value of a Policy until distribution occurs by
withdrawing all or part of the Policy Value (e.g., withdrawals or Annuity
Payments under the Annuity Option elected). For this purpose, the assignment,
pledge, or agreement to assign or pledge any portion of the Policy Value (and in
the case of a Qualified Policy, any portion of an interest in the plan)
generally will be treated as a distribution. The taxable portion of a
distribution (in the form of a single sum payment or an annuity) is taxable as
ordinary income.
The Owner of any Non-Qualified Policy who is not a natural person
generally must include in income any increase in the excess of the Policy Value
over the "investment in the contract" (discussed below) during the taxable year.
There are some exceptions to this rule and a prospective Owner that is not a
natural person may wish to discuss these with a competent tax adviser.
The following discussion generally applies to Policies owned by a
natural persons.
Withdrawals
In the case of a withdrawal under a Qualified Policy, including
withdrawals under the Systematic Withdrawal Option or the Automatic Payout
Option, a ratable portion of the amount received is taxable, generally based on
the ratio of the "investment in the contract" to the individual's total accrued
benefit under the retirement plan. The "investment in the contract" generally
equals the amount of any non-deductible Premiums paid by or on behalf of any
individual. For a Qualified Policy , the "investment in the contract" can be
zero. Special tax rules may be available for certain distributions from a
Qualified Policy.
With respect to Non-Qualified Policies, partial withdrawals, including
withdrawals under the Systematic Withdrawal Option, are generally treated as
taxable income to the extent that the Policy 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."
Annuity Payments
Although the tax consequences may vary depending on the Annuity Payment
elected under the Policy, in general, only the portion of the Annuity Payment
that represents the amount by which the Policy 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
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"investment in the contract" by the total number of expected periodic payments.
However, the entire distribution will be taxable once the recipient has
recovered the dollar amount of his or her "investment in the contract." For
Fixed Annuity Payments, in general there is no tax on the portion of each
payment which represents the same ratio that the "investment in the contract"
bears to the total expected value of the Annuity Payments for the term of the
payments; however, the remainder of each Annuity Payment is taxable. Once the
"investment in the contract" has been fully recovered, the full amount of any
additional Annuity Payments is taxable. If Annuity Payments cease as a result of
an Annuitant's death before full recovery of the "investment in the contract,"
consult a competent tax advisor regarding deductibility of the unrecovered
amount.
Penalty Tax
In the case of a distribution pursuant to a Non-Qualified Policy, there
may be imposed a federal income tax penalty equal to 10% of the amount treated
as taxable income. In general, however, there is no penalty tax on
distributions: (1) made on or after the date on which the Owner attains age
591/2; (2) made as a result of death or disability of the Owner; or (3) received
in substantially equal periodic payments as a life annuity or a joint and
survivor annuity for the lives or life expectancies of the Owner and a Joint
Owner. Other tax penalties may apply to certain distributions under a Qualified
Policy.
Taxation of Death Benefit Proceeds
Amounts may be distributed from the Policy because of the death of an
Owner or the Annuitant. Generally such amounts are includible in income as
follows: (1) if distributed in a lump sum, they are taxed in the same manner as
a full surrender, as described above, or (2) if distributed under an Annuity
Option, they are taxed in the same manner as Annuity Payments, as described
above. For these purposes, the investment in the Policy is not affected by the
Owner's or Annuitant's death. That is, the investment in the Policy remains the
amount of any Premiums paid which were not excluded from gross income. Other
rules relating to distributions at death apply to Qualified Contracts. You
should consult your legal counsel and tax adviser regarding these rules and
their impact on Qualified Contracts.
Required Distributions upon Owner's Death
Notwithstanding any provision of the Contract or this prospectus to the
contrary, no payment of benefits provided under the Contract will be allowed
that does not satisfy the requirements of Section 72(s) of the Code.
Notwithstanding any other provision of the Contract or this prospectus,
if the Owner dies before the Annuity Date, the Death Benefit payable to the
Owner's Beneficiary will be distributed as follows:
(a) the Death Benefit must be completely distributed within five years
of the Owner's date of death; or (b) the Owner's Beneficiary may elect,
within the one year period after the Owner's date of death, to receive
the Death Benefit in the form of an annuity from us, provided
that: (1) such annuity is distributed in substantially equal
installments over the life of such Owner's Beneficiary or over
a period not extending beyond the life expectancy of such
Owner's Beneficiary; and (2) such distributions begin not
later than one year after the Owner's date of death.
Notwithstanding (a) and (b) above, if the sole Owner's Beneficiary is
the deceased Owner's surviving spouse, then such spouse may elect, within the
one year period after the Owner's date of death, to continue the contract under
the same terms as before the Owner's death. Upon receipt of such election from
the spouse, in a form and manner acceptable to us, at our Service Office: (1)
all rights of the spouse as Owner's Beneficiary under the contract in effect
prior to such election will cease; (2) the spouse will become the Owner of the
contract and will also be treated as the Contingent Annuitant, if none has been
named and only if the deceased Owner was the Annuitant; and (3) all rights and
privileges granted by the contract or allowed by Transamerica will belong to the
spouse as Owner of the Contract. This election will be deemed to have been made
by the spouse if such spouse makes a Purchase Payment to the contract or fails
to make a timely election as described in this paragraph.
If the Owner's Beneficiary is a nonspouse, the distribution provisions
described in subparagraphs (a) and (b) above, will apply even if the Annuitant
and/or Contingent Annuitant are alive at the time of the Owner's death. If the
nonspouse Owner's Beneficiary is not an individual, then only a cash payment
will be paid.
If no election is received by us from a nonspouse Owner's Beneficiary
within the one year period after the Owner's date of death, then we will pay the
Death Benefit to the Owner's Beneficiary in a cash payment. The Death Benefit
will be determined as of the date we make the cash payment. Such cash payment
will be in full settlement of all our liability under the contract.
If Annuitant Dies After Annuity Starts - If the Annuitant dies after
the annuity starts, any benefit payable will be distributed at least as rapidly
as under the Annuity Form then in effect.
If Owner Dies After Annuity Starts - If the Owner dies after the
annuity starts, any benefit payable will continue to be distributed at least as
rapidly as under the Annuity Form then in effect. All of the Owner's rights
granted under the
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contract or allowed by us will pass to the Owner's Beneficiary.
Joint Ownership - For purposes of this section, if the contract has
Joint OPwners we will consider the date of death
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of the first Joint Owner as the death of the Owner and the surviving Joint
Owner will become the Owner of the Contract. Transfers, Assignments, or
Exchanges of the Policy A transfer of ownership of a Non-Qualified
Policy, the designation of an Annuitant, Payee, or Beneficiary who is
not also the Owner, or the exchange of a Policy may result in certain tax
consequences to the Owner that are not discussed herein. An Owner contemplating
any such designation, transfer, assignment, or exchange should contact a
competent tax adviser with respect to the potential tax effects of such a
transaction. Certain Qualified Policies cannot be transferred or assigned.
Multiple Policies
All deferred non-qualified annuity contracts that are issued by
Transamerica (or its affiliates) to the same Owner during any calendar year are
treated as one annuity contract for purposes of determining the amount
includible in gross income under section 72(e) of the Code. In addition, the
Treasury Department has specific authority to issue regulations that prevent the
avoidance of section 72(e) through the serial purchase of annuity contracts or
otherwise. Congress has also indicated that the Treasury Department may have
authority to treat the combination purchase of an immediate annuity contract and
separate deferred annuity contracts as a single annuity contract under its
general authority to prescribe rules as may be necessary to enforce the income
tax laws. Qualified Policies
In General
The Qualified Contract is designed for use as a rollover IRA. With
Transamerica's prior permission, the Contract may also be used as a contributory
IRA, as a Section 403(b) annuity, and for use in qualified pension and profit
sharing plans established by Corporate employers. The tax rules applicable to
participants and beneficiaries in retirement plans vary according to the type of
plan and the terms and conditions of the plan. Special favorable tax treatment
may be available for certain types of contributions and distributions. Adverse
tax consequences may result from contributions in excess of specified limits;
distributions prior to age 591/2 (subject to certain exceptions); distributions
that do not conform to specified commencement and minimum distribution rules;
aggregate distributions in excess of a specified annual amount; and in other
specified circumstances. We make no attempt to provide more than general
information about use of the Contracts with the various types of retirement
plans. Owners and participants under retirement plans as well as annuitants and
beneficiaries are cautioned that the rights of any person to any benefits under
Qualified Contracts may be subject to the terms and conditions of the plans
themselves, regardless of the terms and conditions of the Contract issued in
connection with such a plan. Some retirement plans are subject to distribution
and other requirements that are not incorporated in the administration of the
Contracts. Owners are responsible for determining that contributions,
distributions and other transactions with respect to the Contracts satisfy
applicable law. Purchasers of Contracts for use with any retirement plan should
consult their legal counsel and tax adviser regarding the suitability of the
Contract.
Qualified Pension and Profit Sharing Plans
Section 401(a) of the Code permits employers to establish various types
of retirement plans for employees. Such retirement plans may permit the purchase
of the Contract in order to provide retirement savings under the plans. The
Self-Employed Individuals' Tax Retirement Act of 1962, as amended, commonly
referred to as "H.R. 10," also permits self-employed individuals to establish
qualified plans for themselves and their employees. Adverse tax consequences to
the plan, to the participant or to both may result if this Contract is assigned
or transferred to any individual as a means to provide benefits payments.
Purchasers of a Contract for use with such plans should seek competent advice
regarding the suitability of the proposed plan documents and the Contract to
their specific needs. The Contract is designed to invest retirement savings and
not to distribute retirement benefits.
Individual Retirement Annuities
The Contract is designed for use with IRA rollovers and direct
transfers. Section 408 of the Code permits eligible individuals to contribute to
an individual retirement program known as an Individual Retirement Annuity or
Individual Retirement Account (each hereinafter referred to as an "IRA"). Also,
distributions from certain other types of qualified plans may be "rolled over"
on a tax-deferred basis into an IRA. The sale of a Contract for use with an IRA
may be subject to special disclosure requirements of the Internal Revenue
Service. Purchasers of a Contract for use with IRAs will be provided with
supplemental information required by the Internal Revenue Service or other
appropriate agency. Such purchasers will have the right to revoke their purchase
within 7 days of the earlier of the establishment of the IRA or their purchase.
Various tax penalties may apply to contributions in excess of specified limits,
aggregate distributions in excess of certain annual limits, distributions that
do not satisfy specified requirements, and certain other transactions. A
Qualified Contract will be amended as necessary to conform to the requirements
of the Code. Purchasers should seek competent advice as to the suitability of
the Contract for use with IRAs.
Section 403(b) Plans
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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. In addition, income attributable to elective contributions may not be
distributed in the case of hardship.
Withholding
Pension and annuity distributions generally are subject to withholding
for the recipient's federal income tax liability at rates that vary according to
the type of distribution and the recipient's tax status. Recipients, however,
generally are provided the opportunity to elect not to have tax withheld from
distributions. Federal income tax withholding is mandatory for certain
distributions from Section 401 or Section 403(b) retirement plans.
Restrictions under Qualified Contracts
Other restrictions with respect to the election, commencement, or
distribution of benefits may apply under Qualified
Contracts or under the terms of the plans in respect of which Qualified
Contracts are issued.
Possible Changes in Taxation
In past years, legislation has been proposed that would have adversely
modified the federal taxation of certain annuities. For example, one such
proposal would have changed the tax treatment of non-qualified annuities that
did not have "substantial life contingencies" by taxing income as it is credited
to the annuity. Although, as of the date of this prospectus, Congress is not
actively considering any legislation regarding the taxation of annuities, there
is always the possibility that the tax treatment of annuities could change by
legislation or other means (such as IRS regulations, revenue rulings, judicial
decisions, etc.). Moreover, it is also possible that any change could be
retroactive (that is, effective prior to the date of the change). Other Tax
Consequences
As noted above, the foregoing discussion of the federal income tax
consequences is not exhaustive and special rules are provided with respect to
other tax situations not discussed in this Prospectus. Further, the federal
income tax consequences discussed herein reflect Transamerica's understanding of
current law and the law may change. Federal gift and estate tax consequences and
state and local estate, inheritance, and other tax consequences of ownership or
receipt of distributions under the Policy depend on the individual circumstances
of each Owner or recipient of the distribution. A competent tax adviser should
be consulted for further information.
General
At the time the Initial Premium is paid, a prospective purchaser must
specify whether he or she is purchasing a Non-Qualified Policy or a Qualified
Policy. If the Initial Premium is derived from an exchange or surrender of
another annuity contract, Transamerica may require that the prospective
purchaser provide information with regard to the federal income tax status of
the previous annuity contract. Transamerica will require that persons purchase
separate Policies if they desire to invest monies qualifying for different
annuity tax treatment under the Code. Each such separate Policy would require
the minimum Initial Premium stated above. Additional Premiums under a Policy
must qualify for the same federal income tax
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treatment as the Initial Premium under the Policy; Transamerica will not accept
an additional Premium under a Policy if the federal income tax treatment of such
Premium would be different from that of the Initial Premium.
DISTRIBUTION OF THE POLICY
Transamerica Securities Sales Corporation ("TSSC") is the principal
underwriter of the Policies. TSSC may also serve as an underwriter and
distributor of other policies issued through the Variable Account and certain
other separate accounts of Transamerica and any affiliates of Transamerica. TSSC
is a wholly-owned subsidiary of Transamerica Insurance Corporation of
California, which is a subsidiary of Transamerica Corporation. TSSC is
registered with the Commission as a broker/dealer and is a member of the
National Association of Securities Dealers, Inc. ("NASD"). Its principal offices
are located at 1150 South Olive, Los Angeles, California 90015. Transamerica
pays TSSC for acting as the principal underwriter under a distribution
agreement.
TSSC has entered into sales agreements with other broker/dealers to
solicit applications for the Policies through registered representatives who are
licensed to sell securities and variable insurance products. These agreements
provide that applications for the Policies may be solicited by registered
representatives of the broker/dealers appointed by Transamerica to sell its
variable life insurance and variable annuities. These broker/dealers are
registered with the Commission and are members of the NASD. The registered
representatives are authorized under applicable state regulations to sell
variable life insurance and variable annuities.
Under the agreements, applications for Policies will be sold by
broker/dealers which will generally receive compensation of up to 6.25% of any
Initial and additional Premiums paid (although higher amounts may be paid in
certain circumstances). Additional amounts, including asset based trail
commissions, may be paid in certain circumstances.
Transamerica Financial Resources, Inc. ("TFR") also is an underwriter
and distributor of the Policies. TFR is a
wholly-owned subsidiary of Transamerica Insurance Corporation of California and
is registered with the Commission and the
NASD as a broker/dealer.
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LEGAL PROCEEDINGS
There is no pending material legal proceeding affecting the Variable
Account. Transamerica is involved in various
kinds of routine litigation which, in management's judgment, are not of material
importance to Transamerica's assets or to the
Variable Account.
LEGAL MATTERS
Advice regarding certain legal matters concerning the federal
securities laws applicable to the issue and sale of the
Policies has been provided by Sutherland, Asbill & Brennan. The organization of
Transamerica, its authority to issue the
Policies and the validity of the form of the Policies have been passed upon by
James W. Dederer General Counsel of
Transamerica.
ACCOUNTANTS
The financial statements of Transamerica for each of the three
years in the period ended December 31, 1996, and the financial statements of the
Variable Account at December 31,
1996, have been audited by Ernst & Young LLP, Independent Auditors, as set forth
in their reports appearing in the
Statement of Additional Information, and are included in reliance upon such
reports given upon the authority of such firm
as experts in accounting and auditing.
VOTING RIGHTS
To the extent required by applicable law, all Portfolio shares held
in the Variable Account will be voted by Transamerica at regular and special
shareholder meetings of the respective Funds in accordance with instructions
received from persons having voting interests in the corresponding Sub-Account.
If, however, the 1940 Act or any regulation thereunder should be amended, or if
the present interpretation thereof should change, or if Transamerica determines
that it is allowed to vote all Portfolio shares in its own right, Transamerica
may elect to do so.
The person with the voting interest is the Owner. The number of votes
which are available to an Owner will be calculated separately for each
Sub-Account of the Variable Account. Before the Annuity Date, that number will
be determined by applying his or her percentage interest, if any, in a
particular Sub-Account to the total number of votes attributable to that
Sub-Account. The Owner holds a voting interest in each Sub-Account to which the
Policy Value is allocated. After the Annuity Date, the number of votes decreases
as Annuity Payments are made and as the reserves for the Policy decrease.
The number of votes of a Portfolio will be determined as of the date
coincident with the date established by that Portfolio for determining
shareholders eligible to vote at the meeting of the Funds. Voting instructions
will be solicited by written communication prior to such meeting in accordance
with procedures established by the respective Funds.
Shares as to which no timely instructions are received and shares held
by Transamerica as to which Owners have no beneficial interest will be voted in
proportion to the voting instructions which are received with respect to all
Policies participating in the Sub-Account. Voting instructions to abstain on any
item to be voted upon will be applied on a pro rata basis to reduce the votes
eligible to be cast.
Each person or entity having a voting interest in a Sub-Account will
receive proxy material, reports and other material relating to the appropriate
Portfolio.
It should be noted that the Funds are not required to, and do not
intend to, hold annual or other regular meetings of shareholders.
AVAILABLE INFORMATION
Transamerica has filed a registration statement (the "Registration
Statement") with the Securities and Exchange Commission under the Securities Act
of 1933 relating to the Policy offered by this Prospectus. This Prospectus has
been filed as a part of the Registration Statement and does not contain all of
the information set forth in the Registration Statement and exhibits thereto,
and reference is hereby made to such Registration Statement and exhibits for
further information relating to Transamerica and the Policy. Statements
contained in this Prospectus, as to the content of the Policy and other legal
instruments, are summaries. For a complete statement of the terms thereof,
reference is made to the instruments filed as exhibits to the Registration
Statement. The Registration Statement and the exhibits thereto may be inspected
and copied at the office of the Commission, located at 450 Fifth Street, N.W.,
Washington, D.C.
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STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS
A Statement of Additional Information is available which contains
more details concerning the subjects discussed in this Prospectus. The following
is the Table of Contents for that Statement:
Page
THE POLICY..............................................................3
DOLLAR COST AVERAGING...................................................3
NET INVESTMENT FACTOR...................................................3
ANNUITY PERIOD..........................................................4
Variable Annuity Units and Payments............................4
Variable Annuity Unit Value....................................4
Transfers After the Annuity Date...............................4
GENERAL PROVISIONS......................................................4
IRS Required Distributions.....................................4
Non-Participating..............................................4
Misstatement of Age or Sex.....................................4
Proof of Existence and Age.....................................5
Assignment.....................................................5
Annuity Data...................................................5
Annual Report..................................................5
Incontestability...............................................5
Ownership......................................................5
Entire Contract................................................5
Changes in the Policy..........................................5
Protection of Benefits.........................................5
Delay of Payments..............................................6
Notices and Directions.........................................6
CALCULATION OF YIELDS AND TOTAL RETURNS.................................6
Money Market Sub-Account Yield Calculation.....................6
Other Sub-Account Yield Calculations...........................7
Standard Total Return Calculations.............................7
Hypothetical Performance Data..................................8
Other Performance Data.........................................8
HISTORIC PERFORMANCE DATA...............................................8
General Limitations............................................8
Sub-Account Performance Figures................................9
Hypothetical Sub-Account Performance Figures..................11
FEDERAL TAX MATTERS....................................................13
Taxation of Transamerica......................................13
Tax Status of the Policies....................................13
DISTRIBUTION OF THE POLICY.............................................14
SAFEKEEPING OF ACCOUNT ASSETS..........................................15
TRANSAMERICA...........................................................15
General Information and History...............................15
STATE REGULATION ......................................................15
RECORDS AND REPORTS....................................................15
FINANCIAL STATEMENTS...................................................15
APPENDIX..............................................................A-1
Annuity Transfer Formula.....................................A-1
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Appendix A
Example of Variable Accumulation Unit Value Calculations
Suppose the net asset value per share of a Portfolio at the end of the
current Valuation Period is $20.15; at the end of the immediately preceding
Valuation Period it was $20.10; the Valuation Period is one day; and no
dividends or distributions caused the Portfolio to go "ex-dividend" during the
current Valuation Period. $20.15 divided by $20.10 is 1.002488. Subtracting the
one day risk factor for Mortality and Expense Risk Charge and the Administrative
Expense Charge of .003814% (the daily equivalent of the current charge of 1.40%
on an annual basis) gives a Net Investment Factor of 1.002449. If the value of
the Variable Accumulation Unit for the immediately preceding Valuation Period
had been 15.500000, the value for the current Valuation Period would be
15.537966 (15.5 x 1.002449). Example of Variable Annuity Unit Value Calculations
Suppose the circumstances of the first example exist, and the value of
a Variable Annuity Unit for the immediately preceding Valuation Period had been
13.500000. If the first Variable Annuity Payment is determined by using an
annuity payment based on an assumed interest rate of 4% per year, the value of
the Variable Annuity Unit for the current Valuation Period would be 13.531613
(13.5 x 1.002449 (the Net Investment Factor) x 0.999893). 0.999893 is the
factor, for a one day Valuation Period, that neutralizes the assumed rate of
four percent (4%) per year used to establish the Variable Annuity Rates found in
the Contract. Example of Variable Annuity Payment Calculations
Suppose that the Account is currently credited with 3,200.000000
Variable Accumulation Units of a particular Sub-Account.
Also suppose that the Variable Accumulation Unit Value and the Variable
Annuity Unit Value for the particular Sub-Account for the Valuation Period which
ends immediately preceding the first day of the month is 15.500000 and 13.500000
respectively, and that the Variable Annuity Rate for the age and option elected
is $5.73 per $1,000. Then the first Variable Annuity Payment would be:
3.200 x 15.5 x 5.73 divided by 1,000 = $284.21,
and the number of Variable Annuity Units credited for future payments would be:
284.21 divided by 13.5 = 21.052444.
For the second monthly payment, suppose that the Variable Annuity Unit
Value on the 10th day of the second month is 13.565712. Then the second Variable
Annuity Payment would be $285.59 (21.052444 x 13.565712).
A-1
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STATEMENT OF ADDITIONAL INFORMATION FOR
DREYFUS/TRANSAMERICA TRIPLE ADVANTAGE
VARIABLE ANNUITY POLICY
Issued By
Transamerica Life Insurance Company of New York
The Statement of Additional Information expands upon subjects discussed
in the current Prospectus for the Dreyfus/Transamerica Triple Advantage Variable
Annuity Policy ("Policy") issued by Transamerica Life Insurance Company of New
York (formerly called First Transamerica Life Insurance Company). The Owner may
obtain a copy of the Prospectus dated May 1, 1997, as supplemented from time to
time, by writing to Transamerica Life Insurance Company of New York, Annuity
Service Center, P.O. Box 31728, Charlotte, North Carolina 28231-1728 or by
calling 800-258- 4261. Terms used in the current Prospectus for the Policy are
incorporated in this Statement. THIS STATEMENT OF ADDITIONAL INFORMATION IS
NOT
A PROSPECTUS AND SHOULD BE READ ONLY IN CONJUNCTION WITH THE
PROSPECTUS FOR THE
POLICY.
Dated May 1, 1997
<PAGE>
TABLE OF CONTENTS
Page
THE POLICY (page 22).........................................................3
DOLLAR COST AVERAGING (page 25)..............................................3
NET INVESTMENT FACTOR (page 24)..............................................3
ANNUITY PERIOD (page 33).....................................................4
Variable Annuity Units and Payments.................................4
Variable Annuity Unit Value.........................................4
Transfers After the Annuity Date....................................4
GENERAL PROVISIONS...........................................................4
IRS Required Distributions..........................................4
Non-Participating...................................................4
Misstatement of Age or Sex..........................................4
Proof of Existence and Age..........................................5
Assignment..........................................................5
Annuity Data........................................................5
Annual Report.......................................................5
Incontestability....................................................5
Ownership...........................................................5
Entire Contract.....................................................5
Changes in the Policy...............................................5
Protection of Benefits..............................................5
Delay of Payments...................................................6
Notices and Directions..............................................6
CALCULATION OF YIELDS AND TOTAL RETURNS (page 16)............................6
Money Market Sub-Account Yield Calculation..........................6
Other Sub-Account Yield Calculations................................7
Standard Total Return Calculations..................................7
Hypothetical Performance Data.......................................8
Other Performance Data..............................................8
HISTORIC PERFORMANCE DATA....................................................8
General Limitations.................................................8
Sub-Account Performance Figures.....................................9
Hypothetical Sub-Account Performance Figures.......................11
FEDERAL TAX MATTERS (page 35)...............................................13
Taxation of Transamerica...........................................13
Tax Status of the Policies.........................................13
DISTRIBUTION OF THE POLICY (page 37)........................................14
SAFEKEEPING OF ACCOUNT ASSETS (page 18).....................................15
TRANSAMERICA (page 18)......................................................15
General Information and History....................................15
STATE REGULATION (page 18)..................................................15
RECORDS AND REPORTS.........................................................15
FINANCIAL STATEMENTS........................................................15
APPENDIX...................................................................A-1
Annuity Transfer Formula..........................................A-1
(Additional page references refer to the current Prospectus.)
2
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THE POLICY
As a supplement to the description in the Prospectus, the following
provides additional information about the Policy which may be of
interest to some Owners.
DOLLAR COST AVERAGING
We reserve the right to send written notification to the Owner
as to the options available if termination of Dollar Cost Averaging,
either by the Owner or by Transamerica, results in the value in the
receiving Sub-Account(s) to which monthly transfers were made to be
less than $500. The Owner will have 10 days from the date our notice is
mailed to: (a) transfer the value of the Sub-Account(s) to another
Sub-Account with a value equal to or greater than $500; or (b) transfer
funds from another Sub-Account into the receiving Sub-Account(s) to
bring the value of that Sub-Account to at least $500; or (c) submit an
additional Premium to make the value of the Sub-Account equal to or
greater than $500; or (d) transfer the entire value of the receiving
Sub-Account(s) back into the Sub-Account from which the automatic
transfers were made.
If no election, in a form and manner acceptable to
Transamerica, is made by the Owner prior to the end of the 10 day
period, Transamerica reserves the right to transfer the value of the
receiving Sub-Account(s) back into the Sub-Account from which the
automatic transfers were made. Transfers made as a result of (a), (b),
or (d) above will not be counted for purposes of the eighteen allowable
transfers per Policy Year limitation.
NET INVESTMENT FACTOR
For any Sub-Account of the Variable Account, the Net
Investment Factor for a Valuation Period before
the Annuity Date is (a) divided by (b), minus (c) minus (d).
Where (a) is
The net asset value per share held in the Sub-Account, as of
the end of the Valuation Period,
plus or minus
The per-share amount of any dividend or capital gain
distributions if the "exdividend" date occurs in the Valuation Period,
plus or minus
A per-share charge or credit as Transamerica may determine, as
of the end of the Valuation Period, for
taxes.
Where (b) is
The net asset value per share held in the Sub-Account as of
the end of the last prior Valuation Period.
Where (c) is
The daily charge of 0.003403% (1.25% annually) for the
Mortality and Expense Risk Charge under this Policy times the number of
calendar days in the current Valuation Period. Where (d) is
The daily Administrative Charge, currently 0.000411% (0.15%
annually) times the number of calendar days in the current Valuation
Period. This charge may be increased, but will not exceed 0.000684%
(0.25% annually).
A Valuation Day is defined as any day on which the New York
Stock Exchange is open. We currently expect that there will not be any
days on which the Exchange will be open and our Service Office will be
closed.
ANNUITY PERIOD
The Variable Annuity Options provide for payments that
fluctuate or vary in dollar amount, based on the investment performance
of the selected Variable Account Sub-Account(s).
Variable Annuity Units and Payments
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For the first monthly payment, the number of Variable Annuity
Units credited in each Sub-Account will be determined by dividing (a)
the product of the portion of the value to be applied to the
Sub-Account and the Variable Annuity Purchase Rate specified in the
Policy by (b) the value of one Variable Annuity Unit in that
Sub-Account on the Annuity Date. The amount of each subsequent Variable
Annuity Payment equals the product of the number of Variable Annuity
Units in each Sub-Account and the Sub-Account's Variable Annuity Unit
Value as of the tenth day of the month before the payment due date. The
amount of each payment may vary.
Variable Annuity Unit Value
The value of a Variable Annuity Unit in a Sub-Account on any
Valuation Day is determined as described below.
The Net Investment Factor for the Valuation Period (for the
appropriate Annuity Payment frequency) just ended is multiplied by the
value of the Variable Annuity Unit for the Sub-Account on the preceding
Valuation Day. The Net Investment Factor after the Annuity Date is
calculated in the same manner as before the Annuity Date and then
multiplied by an interest factor. The interest factor equals (.999893)n
where n is the number of days since the preceding Valuation Day. This
compensates for the 4% interest assumption built into the Variable
Annuity Purchase Rates.
Transfers After the Annuity Date
After the Annuity Date, the Owner may transfer Variable
Annuity Units from one Sub-Account to another, subject to certain
limitations. (See "Transfers" page 24 of the Prospectus.) The dollar
amount of each subsequent monthly Variable Annuity Payment after the
transfer must be determined using the new number of Variable Annuity
Units multiplied by the Sub-Account's Variable Annuity Unit Value on
the tenth day of the month preceding payment.
The formula used to determine a transfer after the Annuity
Date can be found in the Appendix to this Statement of Additional
Information.
GENERAL PROVISIONS
IRS Required Distributions
The Contract is intended to qualify as an annuity contract for
federal income tax purposes. All provisions in the Contract will be
interpreted to maintain such tax qualification. We may make changes in
order to maintain this qualification or to conform to the Contract to
any applicable changes in the tax qualification requirements. If any
Owner under a Non-Qualified Policy dies before the entire interest in
the Policy is distributed, the value generally must be distributed to
the designated Beneficiary so that the Policy qualifies as an annuity
under the Code. (See "Federal Tax Matters" page 13.)
Non-Participating
The Policies are non-participating. No dividends are payable
and the Policies will not share in the profits or surplus earnings of
Transamerica.
Misstatement of Age or Sex
If the age or sex of the Annuitant or any other measuring life
has been misstated in the application, the Annuity Payments under the
Policy will be whatever the Annuity Purchase Amount applied on the
Annuity Date would purchase on the basis of the correct age or sex of
the Annuitant and/or other measuring life. Any overpayments or
underpayments by Transamerica as a result of any such misstatement may
be respectively charged against or credited to the Annuity Payment or
Annuity Payments to be made after the correction so as to adjust for
such overpayment or underpayment.
Proof of Existence and Age
Before making any payment under the Policy, Transamerica may
require proof of the existence and/or proof of the age of the Annuitant
or any other measuring life, or any other information deemed necessary
in order to provide benefits under the Policy.
Assignment
4
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No assignment of a Policy will be binding on Transamerica
unless made in writing and given to Transamerica at its Service Office.
Transamerica is not responsible for the adequacy of any assignment. The
Owner's rights and the interest of any Annuitant or non-irrevocable
Beneficiary will be subject to the rights of any assignee of record.
Annuity Data
Transamerica will not be liable for obligations which depend
on receiving information from a Payee or measuring life until such
information is received in a satisfactory form.
Annual Report
At least once each Policy Year prior to the Annuity Date, the
Owner will be given a report of the current Policy Value allocated to
each Sub-Account. This report will also include any other information
required by law or regulation. After the Annuity Date, a confirmation
will be provided with every Variable Annuity Payment.
Incontestability
The Policies are incontestable from the Policy Date.
Ownership
Only the Owner(s) will be entitled to the rights granted by
the Policy, or allowed by Transamerica under the Policy. If an Owner
dies, the rights of the Owner belong to the estate of the Owner unless
the Owner has previously named an Owner's Beneficiary. A surviving
Joint Onwer automatically becomes the Owner's Beneficiary.
Entire Contract
Transamerica has issued the Policy in consideration and
acceptance of the application and payment of the Initial Premium. A
copy of the application is attached to and is part of the Policy and
along with the Policy constitutes the entire contract. All statements
made by the Owner are considered representations and not warranties.
Transamerica will not use any statement in defense of a claim unless it
is made in the application and a copy of the application is attached to
the Policy when issued.
Changes in the Policy
Only two authorized officers of Transamerica, acting together,
have the authority to bind Transamerica or to make any change in the
Policy and then only in writing. Transamerica will not be bound by any
promise or representation made by any other persons.
Transamerica may not change or amend the Policy, except as
expressly provided in the Policy, without the Owner's consent. However,
Transamerica may change or amend the Policy if such change or amendment
is necessary for the Policy to comply with any state or federal law,
rule or regulation.
Protection of Benefits
To the extent permitted by law, no benefit (including death
benefits) under the Policy will be subject to any claim or process of
law by any creditor.
Delay of Payments
Payment of any cash withdrawal or lump sum death benefit due
from the Variable Account will occur within seven days from the date
the election becomes effective, except that Transamerica may be
permitted to postpone such payment if: (1) the New York Stock Exchange
is closed for other than usual weekends or holidays, or trading on the
Exchange is otherwise restricted; or (2) an emergency exists as defined
by the Securities and Exchange Commission (Commission), or the
Commission requires that trading be restricted; or (3) the Commission
permits a delay for the protection of Owners.
In addition, while it is our intention to process all
transfers from the Sub-Accounts immediately upon receipt of a transfer
request, the Policy gives us the right to delay effecting a transfer
from a Sub-Account for up to seven days, but only in certain limited
circumstances. However, the staff of the Commission currently
interprets the Investment Company Act of 1940 to require the immediate
processing of all transfers, and in compliance with that interpretation
we will process all transfers immediately unless and until the
Commission or
5
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its staff changes its interpretation or otherwise permits us to
exercise this right. Subject to such approval, we may delay effecting
such a transfer only if there is a delay of payment from an affected
Portfolio. If this happens, and if the prior approval of the Commission
or its staff is obtained, then we will calculate the dollar value or
number of units involved in the transfer from a Sub-Account on or as of
the date we receive a written transfer request, but will not process
the transfer to the transferee Sub-Account until a later date during
the seven-day delay period when the Portfolio underlying the
transferring Sub-Account obtains liquidity to fund the transfer request
through sales of portfolio securities, new Premiums, transfers by
investors or otherwise. During this period, the amount transferred
would not be invested in a Sub-Account.
Notices and Directions
We will not be bound by any authorization, direction, election
or notice which is not in writing, or in a form and manner acceptable
to Transamerica, and received at our Service Office.
Any written notice requirement by Transamerica to the Owner
will be satisfied by our mailing of any such required written notice,
by first-class mail, to the Owner's last known address as shown on our
records.
CALCULATION OF YIELDS AND TOTAL RETURNS
Money Market Sub-Account Yield Calculation
In accordance with regulations adopted by the Commission,
Transamerica is required to compute the Money Market Sub-Account's
current annualized yield for a seven-day period in a manner which does
not take into consideration any realized or unrealized gains or losses
on shares of the Money Market Series or on its portfolio securities.
This current annualized yield is computed by determining the net change
(exclusive of realized gains and losses on the sale of securities and
unrealized appreciation and depreciation) in the value of a
hypothetical account having a balance of one unit of the Money Market
Sub-Account at the beginning of such seven-day period, dividing such
net change in Policy Value by the value of the account at the beginning
of the period to determine the base period return and annualizing this
quotient on a 365-day basis. The net change in Policy Value reflects
the deductions for the annual Policy Fee, the Mortality and Expense
Risk Charges and Administrative Expense Charges and income and expenses
accrued during the period. Because of these deductions, the yield for
the Money Market Sub-Account of the Variable Account will be lower than
the yield for the Money Market Portfolio or any comparable substitute
funding vehicle.
The Commission also permits Transamerica to disclose the
effective yield of the Money Market Sub-Account for the same seven-day
period, determined on a compounded basis. The effective yield is
calculated by compounding the unannualized base period return by adding
one to the base period return, raising the sum to a power equal to 365
divided by 7, and subtracting one from the result.
The yield on amounts held in the Money Market Sub-Account
normally will fluctuate on a daily basis. Therefore, the disclosed
yield for any given past period is not an indication or representation
of future yields or rates of return. The Money Market Sub-Account's
actual yield is affected by changes in interest rates on money market
securities, average portfolio maturity of the Money Market Portfolio or
substitute funding vehicle, the types and quality of portfolio
securities held by the Money Market Portfolio or substitute funding
vehicle, and operating expenses. In addition, the yield figures do not
reflect the effect of any Contingent Deferred Sales Load (of up to 6%
of Premiums) that may be applicable to a Policy.
Other Sub-Account Yield Calculations
Transamerica may from time to time disclose the current
annualized yield of one or more of the Sub-Accounts (except the Money
Market Sub-Account) for 30-day periods. The annualized yield of a
Sub-Account refers to the income generated by the Sub-Account over a
specified 30-day period. Because this yield is annualized, the yield
generated by a Sub-Account during the 30-day period is assumed to be
generated each 30-day period. The yield is computed by dividing the net
investment income per Variable Accumulation Unit earned during the
period by the price per unit on the last day of the period, according
to the following formula:
YIELD 2{a - b+1}6-1
cd
Where: 6
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a = net investment income earned during the period by the Portfolio
attributable to the shares owned by the Sub-Account.
b = expenses for the Sub-Account accrued for the period (net of
reimbursements).
c = the average daily number of Variable Accumulation Units
outstanding during the period.
d = the maximum offering price per Variable Accumulation Unit on the
last day of the period.
Net investment income will be determined in accordance with
rules established by the Commission. Accrued expenses will include all
recurring fees that are charged to all Policies. The yield calculations
do not reflect the effect of any Contingent Deferred Sales Load that
may be applicable to a particular Policy. Contingent Deferred Sales
Load range from 6% to 0% of the amount of Policy Value withdrawn
depending on the elapsed time since the receipt of each Premium
attributable to the portion of the Policy Value withdrawn.
Because of the charges and deductions imposed by the Variable
Account, the yield for the Sub-Account will be lower than the yield for
the corresponding Portfolio. The yield on amounts held in the
Sub-Accounts normally will fluctuate over time. Therefore, the
disclosed yield for any given period is not an indication or
representation of future yields or rates of return. The Sub-Account's
actual yield will be affected by the types and quality of portfolio
securities held by the Portfolio, and its operating expenses.
Standard Total Return Calculations
Transamerica may from time to time also disclose average
annual total returns for one or more of the Sub-Accounts for various
periods of time. Average annual total return quotations are computed by
finding the average annual compounded rates of return over one, five
and ten year periods that would equate the initial amount invested to
the ending redeemable value, according to the following formula:
P{1+T}n = ERV
Where:
P a hypothetical initial payment of $1,000 T average
annual total return n number of years
ERV ending redeemable value of a hypothetical
$1,000 payment made at the beginning of the one,
five, or ten-year period at the end of the one, five
or ten-year period (or fractional portion thereof).
All recurring fees are recognized in the ending redeemable
value. The standard average annual total return calculations will
reflect the effect of any Contingent Deferred Sales Loads that may be
applicable to a particular period.
Hypothetical Performance Data
Transamerica may also disclose "hypothetical" performance data
for a Sub-Account, for periods before the Sub-Account commenced
operations. Such performance information for the Sub-Account will be
calculated based on the performance of the corresponding Portfolio and
the assumption that the Sub-Account was in existence for the same
periods as those indicated for the Portfolio, with a level of Contract
charges currently in effect. The Portfolio used for these calculations
will be the actual Portfolio that the Sub-Account will invest in.
This type of hypothetical performance data may be disclosed on
both an average annual total return and a cumulative total return
basis. Moreover, it may be disclosed assuming that the Contract is not
surrendered (i.e., with no deduction for the Contingent Deferred Sales
Load) and assuming that the Contract is surrendered at the end of the
applicable period (i.e., reflecting a deduction for any applicable
Contingent Deferred Sales Load).
Other Performance Data
Transamerica may from time to time also disclose average
annual total returns in a non-standard format in conjunction with the
standard described above. The non-standard format will be identical to
the standard format except that the Contingent Deferred Sales Load
percentage will be assumed to be 0%.
Transamerica may from time to time also disclose cumulative
total returns in conjunction with the standard format described above.
The cumulative returns will be calculated using the following formula
assuming that the Contingent Deferred Sales Load percentage will be 0%.
CTR {ERV/P} - 1
7
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Where:
CTR= the cumulative total return net of Sub-Account recurring charges
for the period.
ERV= ending redeemable value of a hypothetical $1,000 payment at
the beginning of the one, five, or ten-year period at the end
of the one, five, or ten-year period (or fractional portion
thereof).
P = a hypothetical initial payment of $1,000.
All non-standard performance data will be advertised only if
the standard performance data is also disclosed.
HISTORIC PERFORMANCE DATA
General Limitations
The figures below represent the past performance of the Sub-Accounts
and are not indicative of future performance. The figures may reflect the waiver
of advisory fees and reimbursement of other expenses.
The Variable Fund has provided the performance data for the Money
Market, Managed Assets, Zero Coupon 2000, Quality Bond, Small Cap, Capital
Appreciation, Growth and Income, International Equity, International Value,
Disciplines Stock and Small Company Stock Sub-Accounts.. The Stock Index Fund
and Socially Responsible Fund have provided their performance data. The
Sub-Account performance data is derived from the data provided by the Funds.
None of the Funds are affiliated with Transamerica. In preparing the tables
below, Transamerica has relied on the data provided by the Funds. While
Transamerica has no reason to doubt the accuracy of the figures provided by the
Funds, Transamerica has not verified those figures. No data is provided for the
Balanced and Limited Term High Income Sub-Accounts since, prior to May 1, 1997,
these Sub-Accounts, and their related Portfolios, had not yet commenced
operations.
8
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9
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31, 1996 was 3.59%. The effective yield for the Money Market
Sub-Account for the seven-day period ending December 31, 1996 was 3.65%.
Sub-Account Performance Figures Including Hypothetical Performance
The charts below show historical performance data for the Sub-Accounts,
including, for six SubAccounts, "hypothetical" data for the periods prior to the
inception of the Sub-Accounts, based on the performance of the corresponding
Portfolios since their inception date, with a level of charges equal to those
currently assessed under the Contracts. These figures are not an indication of
the future performance of the Sub-Accounts. Some of the figures reflect the
waiver of advisory fees and reimbursement of other expenses for part or all of
the periods indicated.
The dates to the left of the Sub-Account names below indicate the date
of commencement of operation of the Portfolios, which coincide with the date of
commencement of operation of the corresponding Sub-Account, with these six
exceptions: the Money Market; Managed Assets, Zero Coupon 2000, Qualify Bond,
Small Cap and Stock Index SubAccounts commenced operations January 4, 1993.
Hence, the performance data given for these six Sub-Accounts which precedes the
date of January 4, 1993, is "hypothetical".
Standard average annual total returns for periods since inception of
the Portfolio, including hypothetical performance, for each Sub-Account are as
follows. These figures include mortality and expenses charges deducted at 1.25%,
the administrative expenses charge of 0.15% per annum, the administration charge
of $30 per annum adjusted for average account size and the maximum contingent
deferred sales load of 6%.
<TABLE>
<CAPTION>
SUB-ACCOUNT For the 1-year For the 5-year For the
period from
(date of commencement of period ending period ending
commencement of Portfolio
operation of Corresponding Portfolio) 12/31/96 12/31/96 operations to
12/31/96
<S> <C> <C> <C> <C> <C>
Money Market (8/31/90) (2.09%) 2.28% 3.12%
Managed Assets (8/31/90) (11.07%) 2.00% 3.51%
Zero Coupon 2000 (8/31/90) (4.37%) 5.64% 8.41%
Quality Bond (8/31/90) (3.87%) 6.72% 7.84%
Small Cap (8/31/90) 9.06% 34.03% 46.73%
Capital Appreciation (4/5/93) 16.71% n/a 15.16%
Stock Index (9/29/89) 13.80% 12.49% 12.05%
Socially Responsible (10/7/93) 13.00% n/a 16.64%
Growth & Income (12/15/94) 12.63% n/a 35.20%
International Equity (12/15/94) 3.83% n/a 5.91%
</TABLE>
Data for the International Value, Disciplined Stock, and Small Company Stock
Sub-Accounts is not included since the related Portfolios were not in
operartions for all of 1996.
Nnon-standard cumulative total returns for periods since inception of the
Portfolio, including hypothetical performance, for each Sub-Account are as
follows. These figures include mortality and expenses charges
10
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deducted at 1.25%, the administrative expenses charge of 0.15% per annum, the
administration charge of $30 per annum adjusted for average account size but do
not reflect the maximum contingent deferred sales load of 6%, which if reflected
would reduce the figures. Nonstandard performance data will only be disclosed if
standard performance data for the required periods is also disclosed.
<TABLE>
<CAPTION>
For the period
from
SUB-ACCOUNT For the 1-year For the 3-year For the 5-year
commencement of
(date of commencement of period ending period ending period ending
Portfolio operations
operation of Corresponding Portfolio) 12/31/96 12/31/96 12/31/96 to 12/31/96
<S> <C> <C> <C> <C> <C> <C>
Money Market (8/31/90) 3.53% 10.96% 15.93% 23.55%
Managed Assets (8/31/90) (5.67%) (9.39%) 14.43% 26.48%
Zero Coupon 2000 (8/31/90) 1.10% 11.27% 35.58% 68.88%
Quality Bond (8/31/90) 1.63% 13.40% 42.44% 63.33%
Small Cap (8/31/90) 15.06% 55.61% 336.48% 1036.31%
Capital Appreciation (4/5/93) 22.71% 65.39% n/a 74.69%
Stock Index (9/29/89) 19.80% 61.87% 84.14% 128.83%
Socially Responsible (10/7/93) 19.00% 58.97% n/a 69.61%
Growth & Income (12/15/94) 18.63% n/a n/a 90.41%
International Equity (12/15/94) 9.82% n/a n/a 17.48%
International Value (5/1/96) n/a n/a n/a 2.44%
Disciplined Stock (5/1/96) n/a n/a n/a 17.76%
Small Company Stock (5/1/96) n/a n/a n/a 7.72%
</TABLE>
Hypothetical standard cumulative total returns for periods since inception
of the Portfolio for each Sub-Account are as follows. These figures include
mortality and expenses charges deducted at 1.25%, the administrative expenses
charge of 0.15% per annum, the administration charge of $30 per annum adjusted
for average account size and the maximum contingent deferred sales load of 6%.
<TABLE>
<CAPTION>
For the period from
SUB-ACCOUNT For the 1-year For the 5 year
commencement of
(date of commencement of period ending period ending Portfolio
operations
operation of Corresponding Portfolio) 12/31/95 12/31/95 to 12/31/95
<S> <C> <C> <C>
Managed Assets (8/31/90) -5.88 28.62 30.37%
Zero Coupon 2000 (8/31/90) 10.95 53.51 63.32%
Quality Bond (8/31/90) 13.51 54.05 57.00%
Small Cap (8/31/90) 23.44 868.03 883.59%
Capital Appreciation (4/5/93) 27.42 N/A 37.77%
Stock Index (9/29/89) 30.52 93.18 88.59%
Socially Responsible (10/7/93) 28.27 N/A 37.93%
International Equity (12/15/94) 1.22 N/A 1.57%
Growth & Income (12/15/94) 54.18 N/A
55.07%
</TABLE>
Hypothetical non-standard cumulative total returns for periods since
inception of the Portfolio for each Sub-Account are as follows. These figures
include mortality and expenses charges deducted at 1.25%, the administrative
expenses charge of 0.15% per annum, the administration charge of $30 per annum
adjusted for average account size but do not reflect the maximum contingent
deferred sales load of 6%, which if reflected would reduce the figures.
Nonstandard performance data will only be disclosed if standard performance data
for the required periods is also disclosed.
<TABLE>
<CAPTION>
(Non-Annualized)
period from
SUB-ACCOUNT For the 1-month For the 1-year For the 5 year
commencement of
(date of commencement of period ending period ending period ending
Portfolio operations
operation of Corresponding Portfolio) 12/31/95 12/31/95 12/31/95
to 12/31/95
<S> <C> <C> <C> <C> <C> <C>
Money Market (8/31/90) 0.35% 4.14% 16.99% 19.33%
Managed Assets (8/31/90) 1.95% -0.48% 32.22% 34.04%
Zero Coupon 2000 (8/31/90) 0.93% 16.35% 57.11% 66.99%
Quality Bond (8/31/90) 1.28% 18.91% 57.65% 60.68%
Small Cap (8/31/90) 1.99% 28.84% 871.63% 887.27%
Capital Appreciation (4/5/93) 2.34% 32.82% N/A 42.34%
Stock Index (9/29/89) 2.51% 35.92% 96.78% 90.46%
Socially Responsible (10/7/93) 0.29% 33.67% N/A 42.51%
International Equity (12/15/94) 3.30% 6.62% N/A 6.97%
Growth & Income (12/15/94) 4.45% 59.58% N/A 60.47%
</TABLE>
12
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FEDERAL TAX MATTERS
The Dreyfus/Transamerica Triple Advantage Variable Annuity may be purchased
on a non-tax-qualified basis ("NonQualified Contract") or purchased and used in
connection with plans qualifying for special tax treatment ("Qualified
Contracts"). Qualified Contracts are designed for use by individual retirement
plans qualified for special tax treatment under Section 401, 403(b) or 408 of
the Internal Revenue Code of 1986, as amendment (the "Code"). The ultimate
effect of federal income taxes on the Policy Value, on Annuity Payments, and on
the economic benefit to the Owner, the Annuitant or the Beneficiary may depend
on the type of retirement plan for which the Policy is purchased, on the tax and
employment status of the individual concerned and on Transamerica's tax status.
THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED AS TAX
ADVICE. Any
person concerned about these tax implications should consult a competent tax
adviser. This discussion is based upon Transamerica's understanding of the
present federal income tax laws as they are currently interpreted by the
Internal Revenue Service ("IRS"). No representation is made as to the likelihood
of continuation of these present federal income tax laws or of the current
interpretations by the Internal Revenue Service. Moreover, no attempt has been
made to consider any applicable state or other tax laws.
Taxation of Transamerica
Transamerica is taxed as a life insurance company under Part I of
Subchapter L of the Code. Since the Variable Account is not an entity separate
from Transamerica, and its operations form a part of Transamerica, it will not
be taxed separately as a "regulated investment company" under Subchapter M of
the Code. Investment income and realized capital gains are automatically applied
to increase reserves under the Policy. Under existing federal income tax law,
Transamerica believes that the Variable Account investment income and realized
net capital gains will not be taxed to the extent that such income and gains are
applied to increase the reserves under the Policy.
Accordingly, Transamerica does not anticipate that it will incur any
federal income tax liability attributable to the Variable Account and,
therefore, Transamerica does not intend to make provisions for any such taxes.
However, if changes in the federal tax laws or interpretations thereof result in
Transamerica being taxed on income or gains attributable to the Variable
Account, then Transamerica may impose a charge against the Variable Account
(with respect to some or all Policies) in order to set aside provisions to pay
such taxes.
Tax Status of the Policies
Section 817(h) of the Code requires that with respect to Non-Qualified
Policies, the investments of the Funds be "adequately diversified" in accordance
with Treasury regulations in order for the Policies to qualify as annuity
contracts under federal tax law. The Variable Account, through the Funds,
intends to comply with the diversification requirements prescribed by the
Treasury in Reg. Sec. 1.817-5, which affect how the Funds' assets may be
invested.
In certain circumstances, owners of variable annuity policies may be
considered the owners, for federal income tax purposes, of the assets of the
separate accounts used to support their policies. In those circumstances, income
and gains from the separate account assets would be includible in the variable
policy owner's gross income. The IRS has stated in published rulings that a
variable policy owner will be considered the owner of separate account assets if
the policy owner possesses incidents of ownership in those assets, such as the
ability to exercise investment control over the assets. The Treasury Department
has also announced, in connection with the issuance of regulations concerning
diversification, that those regulations "do not provide guidance concerning the
circumstances in which investor control for the investments of a segregated
asset account may cause the investor (i.e., the Owner), rather than the
insurance company, to be treated as the owner of the assets in the account."
This announcement also stated that guidance would be issued by way of
regulations or rulings on the "extent to which policyholders may direct their
investments to particular Sub-Accounts without being treated as owners of the
underlying assets."
The ownership rights under the Policy are similar to, but different in
certain respects from, those described by the IRS in rulings in which it was
determined that owners were not owners of separate account assets. For example,
the Owner has additional flexibility in allocating premium payments and Policy
Account values. These differences could result in an Owner being treated as the
owner of a pro rata portion of the assets of the Variable Account. In addition,
Transamerica does not know what standards will be set forth, if any, in the
regulations or rulings which the Treasury Department has stated it expects to
issue. Transamerica therefore reserves the right to modify the Policy as
necessary to attempt to prevent an Owner from being considered the owner of a
pro rata share of the assets of the Variable Account.
In order to be treated as an annuity contract for federal income tax
purposes, section 72(s) of the Code requires any
13
<PAGE>
Non-Qualified Policy to provide that (a) if any Owner dies on or after the
Annuity Date but prior to the time the entire interest in the Policy has been
distributed, the remaining portion of such interest will be distributed at least
as rapidly as under the method of distribution being used as of the date of that
Owner's death; and (b) if any Owner dies prior to the Annuity Date, the entire
interest in the Policy will be distributed within five years after the date of
the Owner's death. These requirements will be considered satisfied as to any
portion of the Owner's interest which is payable to or for the benefit of a
"designated beneficiary" and which is distributed over the life of such
"designated beneficiary" or over a period not extending beyond the life
expectancy of that Beneficiary, provided that such distributions begin within
one year of that Owner's death. The Owner's "designated beneficiary" refers to a
natural person designated by such Owner as a Beneficiary and to whom ownership
of the Policy passes by reason of death. However, if the Owner's "designated
beneficiary" is the surviving spouse of the deceased Owner, the Policy may be
continued with the surviving spouse as the new owner.
The Non-Qualified Policies contain provisions which are intended to comply
with the requirements of section 72(s) of the Code, although no regulations
interpreting these requirements have yet been issued. Transamerica intends to
review such provisions and modify them if necessary to assure that they comply
with the requirements of Code section 72(s) when clarified by regulation or
otherwise. Other rules may apply to Qualified Policies.
DISTRIBUTION OF THE POLICY
Transamerica Securities Sales Corporation ("TSSC") is principal underwriter
of the Policies. TSSC may also serve as principal underwriter and distributor of
other contracts issued through the Variable Account and certain other separate
accounts of Transamerica and any affiliates of Transamerica. TSSC is a
wholly-owned subsidiary of Transamerica Insurance Corporation of California,
which is a subsidiary of Transamerica Corporation. TSSC is registered with the
Commission as a broker/dealer and is a member of the National Association of
Securities Dealers, Inc. ("NASD"). Transamerica pays TSSC for acting as the
principal underwriter under a distribution agreement.
TSSC has entered into sales agreements with other broker/dealers to solicit
applications for the Contracts through registered representatives who are
licensed to sell securities and variable insurance products. These agreements
provide that applications for the Contracts may be solicited by registered
representatives of the broker/dealers appointed by Transamerica to sell its
variable life insurance and variable annuities. These broker/dealers are
registered with the Commission and are members of the NASD. The registered
representatives are authorized under applicable state regulations to sell
variable life insurance and variable annuities.
Transamerica Financial Resources, Inc. ("TFR") is an underwriter and
distributor of the Contracts. TFR is a
wholly-owned subsidiary of Transamerica Insurance Corporation of California and
is registered with the Commission and
the NASD as a broker/dealer.
Under the agreements, applications for the Contracts will be sold by
broker/dealers which will receive compensation as described in the Prospectus.
The offering of the Policies is expected to be continuous and neither TSSC
nor TFR anticipate discontinuing the offering of the Policies. However, TSSC and
TFR reserve the right to discontinue the offering of the Policies.
During fiscal year 1996, $4,277,511.85 in commissions were paid to TSSC as
underwriter of the Policies; no amounts were retained by TSSC. During fiscal
year 1996, $66.00 in commissions were paid to TFR; no amounts were retained by
TFR. During fiscal
year 1995, $2,355,155.93 in commissions were paid to TSSC as underwriter of the
Policies; no amounts were retained by TSSC. During fiscal year 1995, $286.000 in
commissions were paid to TFR as underwriter of the Policy. During fiscal year
1994, Dreyfus Service Corporation served as co-underwriter until August 24,
1995; thereafter, TSSC served as underwriter. Total commission paid these two
entities during 1994 was $2,553,814.11. No amounts were retained by TSSC.
Throughout fiscal year 1994, TFR served as principal underwriter, but received
no commissions.
SAFEKEEPING OF ACCOUNT ASSETS
Title to assets of the Variable Account is held by Transamerica. The assets
are kept separate and apart from Transamerica's general account assets. Records
are maintained of all purchases and redemptions of Portfolio shares held by each
of the Sub-Accounts.
14
<PAGE>
TRANSAMERICA
General Information and History
Transamerica is wholly-owned by Transamerica Occidental Life Insurance
Company, which is, in turn, an indirect subsidiary of Transamerica Corporation.
Transamerica Corporation is a financial services organization which engages
through its subsidiaries in two primary businesses: finance and insurance.
Finance consists of consumer lending, commercial lending, leasing and real
estate services. Insurance comprises life insurance, asset management and
insurance brokerage.
STATE REGULATION
Transamerica is subject to the insurance laws and regulations of all the
states where it is licensed to operate. The availability of certain Policy
rights and provisions depends on state approval and/or filing and review
processes. Where required by state law or regulation, the Policies will be
modified accordingly.
RECORDS AND REPORTS
All records and accounts relating to the Variable Account will be
maintained by Transamerica or by its Service Office. As presently required by
the 1940 Act and regulations promulgated thereunder which pertain to the
Variable Account, reports containing such information as may be required under
the 1940 Act or by other applicable law or regulation will be sent to Owners
semi-annually at their last known address of record.
FINANCIAL STATEMENTS
This Statement of Additional Information contains the financial statements
of the Variable Account as of December 31, 1996.
The financial statements of Transamerica included in this Statement of
Additional Information should be considered only as bearing on the ability of
Transamerica to meet its obligations under the Policies. They should not be
considered as bearing on the investment performance of the assets held in the
Variable Account.
15
<PAGE>
Audited Financial Statements
First Transamerica Life
Insurance Company
December 31, 1996
<PAGE>
FIRST TRANSAMERICA LIFE INSURANCE COMPANY
Audited Financial Statements
December 31, 1996
Report of Independent Auditors.................. 1
Balance Sheet................................... 2
Statement of Income............................. 3
Statement of Shareholder's Equity............... 4
Statement of Cash Flows......................... 5
Notes to Financial Statements................... 6
<PAGE>
1
REPORT OF INDEPENDENT AUDITORS
Transamerica Corporation
and
Board of Directors
First Transamerica Life Insurance Company
We have audited the accompanying balance sheet of First Transamerica Life
Insurance Company as of December 31, 1996 and 1995, and the related statements
of income, shareholder's equity, and cash flows for each of the three years in
the period ended December 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of First Transamerica Life
Insurance Company at December 31, 1996 and 1995, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.
As discussed in Note A, First Transamerica Life Insurance Company changed its
method of accounting for certain debt securities effective January 1, 1994.
February 12, 1997
<PAGE>
FIRST TRANSAMERICA LIFE INSURANCE COMPANY
16
2
FIRST TRANSAMERICA LIFE INSURANCE COMPANY
BALANCE SHEET
<TABLE>
<CAPTION>
December 31
1996 1995
--------------------- --------------
(In thousands, except
for share data)
ASSETS
Investments:
<S> <C> <C>
Fixed maturities available for sale $ 464,153 $ 433,428
Investment real estate 353 363
Policy loans 11,973 10,764
--------------------- ---------------------
476,479 444,555
Cash 9,079 16,257
Accrued investment income 8,840 7,511
Accounts receivable 3,214 4,542
Reinsurance recoverable on paid and unpaid losses 12,241 11,136
Deferred policy acquisitions costs 56,632 35,588
Other assets 7,047 5,993
Separate account assets 195,363 109,222
--------------------- ---------------------
$ 768,895 $ 634,804
===================== =====================
LIABILITIES AND SHAREHOLDER'S EQUITY
Policy liabilities:
Policyholder contract deposits $ 461,059 $ 420,826
Reserves for future policy benefits 10,264 10,075
Policy claims and other 3,890 6,707
--------------------- ---------------------
475,213 437,608
Income tax liabilities 3,849 4,533
Accounts payable and other liabilities 28,496 17,172
Separate account liabilities 195,363 109,222
--------------------- ---------------------
702,921 568,535
Shareholder's equity:
Common stock ($1,000 par value):
Authorized--2,000 shares
Issued and outstanding--2,000 shares 2,000 2,000
Additional paid-in capital 52,320 52,320
Retained earnings 9,397 5,068
Net unrealized investment gains 2,257 6,881
--------------------- ---------------------
65,974 66,269
--------------------- ---------------------
$ 768,895 $ 634,804
===================== =====================
</TABLE>
See notes to financial statements.
<PAGE>
STATEMENT OF INCOME
<TABLE>
<CAPTION>
Year Ended December 31
1996 1995 1994
--------------- --------------- ----------
(In thousands)
Revenues:
<S> <C> <C> <C>
Premiums and other considerations $ 15,624 $ 13,495 $ 10,836
Net investment income 34,834 30,897 26,468
Net realized investment gains (losses) 99 19 (36)
--------------- --------------- ---------------
TOTAL REVENUES 50,557 44,411 37,268
Benefits:
Benefits paid or provided 34,455 31,984 26,628
Increase (decrease) in policy reserves and liabilities (711) 316 381
--------------- --------------- ---------------
33,744 32,300 27,009
Expenses:
Amortization of deferred policy acquisition costs 3,002 2,197 1,536
Salaries and salary related expenses 3,518 3,206 2,726
Other expenses 3,789 3,219 3,499
--------------- --------------- ---------------
10,309 8,622 7,761
--------------- --------------- ---------------
TOTAL BENEFITS AND EXPENSES 44,053 40,922 34,770
--------------- --------------- ---------------
INCOME BEFORE INCOME TAXES 6,504 3,489 2,498
Provision for income taxes 2,175 1,331 986
--------------- --------------- ---------------
NET INCOME $ 4,329 $ 2,158 $ 1,512
=============== =============== ===============
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF SHAREHOLDER'S EQUITY
Net
Unrealized
Additional Investment
Common Stock Paid-in Retained Gains
Shares Amount Capital Earnings (Losses)
(In thousands, except for share data)
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1994 2,000 $ 2,000 $ 39,920 $ 1,398
Cumulative effect of change in
accounting for investments $ 12,075
Net income 1,512
Capital contributions from parent 7,400
Change in net unrealized
investment gains (losses) (15,987)
Balance at December 31, 1994 2,000 2,000 47,320 2,910 (3,912)
Net income 2,158
Capital contributions from parent 5,000
Change in net unrealized
investment gains (losses) 10,793
Balance at December 31, 1995 2,000 2,000 52,320 5,068 6,881
Net income 4,329
Change in net unrealized
investment gains (4,624)
Balance at December 31, 1996 2,000 $ 2,000 $ 52,320 $ 9,397 $ 2,257
============ ============ ============ =========== ==============
</TABLE>
See notes to financial statements.
<PAGE>
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31
1996 1995 1994
--------------- --------------- ----------
(In thousands)
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income $ 4,329 $ 2,158 $ 1,512
Adjustments to reconcile net income to net cash
used by operating activities:
Changes in:
Reinsurance recoverable and accounts
receivable 223 2,498 (8,129)
Accrued investment income (1,329) (1,351) (1,099)
Policy liabilities 7,850 11,693 9,489
Other assets, accounts payable and other
liabilities, and income taxes 10,549 786 10,791
Policy acquisition costs deferred (12,288) (12,126) (14,387)
Amortization of deferred policy acquisition costs 3,002 2,197 1,536
Net realized losses (gains) on investment transactions (99) (19) 36
Other 1,179 (698) 92
--------------- --------------- ---------------
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES 13,416 5,138 (159)
INVESTMENT ACTIVITIES
Purchases of securities and other investments (92,243) (79,260) (66,255)
Sales of investments 39,469 28,738 20,742
Maturities of securities 2,500 2,000 -
Other (75) (77) 3,852
--------------- --------------- ---------------
NET CASH USED
BY INVESTING ACTIVITIES (50,349) (48,599) (41,661)
FINANCING ACTIVITIES
Additions to policyholder contract deposits 60,604 65,019 67,951
Withdrawals from policyholder contract deposits (30,849) (26,078) (22,729)
Capital contributions from parent - 5,000 7,400
--------------- --------------- ---------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 29,755 43,941 52,622
--------------- --------------- ---------------
INCREASE (DECREASE) IN CASH (7,178) 480 10,802
Cash at beginning of year 16,257 15,777 4,975
--------------- --------------- ---------------
CASH AT END OF YEAR $ 9,079 $ 16,257 $ 15,777
=============== =============== ===============
</TABLE>
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
NOTE A--SIGNIFICANT ACCOUNTING POLICIES
Business: First Transamerica Life Insurance Company (the "Company") is
domiciled in New York. The Company is a
wholly owned subsidiary of Transamerica Occidental Life Insurance Company
("TOLIC"), which is an indirect
subsidiary of Transamerica Corporation.
The Company engages in providing life insurance, annuity products, reinsurance,
and structured settlements. The Company's customers are primarily in the state
of New York.
Basis of Presentation: The accompanying financial statements have been prepared
in accordance with generally accepted accounting principles which differ from
statutory accounting practices prescribed or permitted by regulatory
authorities.
Use of Estimates: Certain amounts reported in the accompanying financial
statements are based on the management's best estimates and judgment. Actual
results could differ from those estimates.
New Accounting Standards: In June of 1996, the Financial Accounting Standards
Board issued a new standard on accounting for transfers of financial assets,
servicing of financial assets and extinguishment of liabilities. The Company
must adopt the standard in 1997. The standard requires that a transfer of
financial assets be accounted for as a sale only if certain specified conditions
for surrender of control over the transferred assets exist. When adopted, the
standard is not expected to new standard on accounting for transfers of
financial assets, servicing of financial assets and have a material effect on
the financial position or results of operations of the Company.
In 1996, the Company adopted the Financial Accounting Standards Board's new
standard on accounting for the impairment of long-lived assets and for
long-lived assets to be disposed of. The standard requires that an impaired
long-lived asset be measured based on the fair value of the asset to be held and
used or the fair value less cost to sell of the asset to be disposed of. There
was no material effect on the financial position or results of operations of the
Company.
In 1994, the Company adopted the Financial Accounting Standards Board's standard
on accounting for certain investments in debt and equity securities which
requires the Company to report at fair value, with unrealized gains and losses
excluded from earnings and reported on an after tax basis as a separate
component of shareholder's equity, its investments in debt securities for which
the Company does not have the positive intent and ability to hold to maturity.
Additionally, such unrealized gains and losses are considered in evaluating
deferred policy acquisition costs with any resultant adjustment also excluded
from earnings and reported on an after tax basis in shareholder's equity. As of
January 1, 1994, the impact of adopting the standard was to increase
shareholder's equity by $12.1 million (net of deferred taxes of $6.5 million)
with no effect on net income.
Investments: Investments are reported on the following bases.
Fixed maturities --All debt securities are classified as available for
sale and carried at fair value. The Company does not carry any debt
securities principally for the purpose of trading. Prepayments are
considered in establishing amortization periods for premiums and discounts
and amortized cost is further adjusted for other-than-temporary fair value
declines.
Investment real estate--Investment real estate is carried at depreciated
cost less allowance for possible impairment.
Policy loans--at unpaid balances.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1996
NOTE A--SIGNIFICANT ACCOUNTING POLICIES (Continued)
Realized gains and losses on disposal of investments are determined on a
specific identification basis. Changes in fair values of fixed maturities
available for sale are included in net unrealized investment gains or losses
after adjustment of deferred policy acquisition costs and deferred income taxes
as a separate component of shareholder's equity and, accordingly, have no effect
on net income.
Deferred Policy Acquisition Costs (DPAC): Certain costs of acquiring new and
renewal insurance contracts, principally commissions, medical examination and
inspection report fees, and certain variable underwriting and issue expenses,
all of which vary with and are primarily related to the production of such
business, have been deferred. DPAC for non-traditional life and investment-type
products are amortized over the life of the related policies generally in
relation to estimated future gross profits. DPAC for traditional life insurance
products are amortized over the premium-paying period of the related policies in
proportion to premium revenue recognized, using principally the same assumptions
used for computing future policy benefit reserves. DPAC is adjusted as if
unrealized gains or losses on securities available for sale were realized.
Changes in such adjustments are included in net unrealized investment gains or
losses on an after tax basis as a separate component of shareholder's equity
and, accordingly, have no effect on net income.
Separate Accounts: The Company administers segregated asset accounts for
variable annuity contracts. The assets held in these Separate Accounts are
invested in various mutual fund portfolios managed by third party companies. The
Separate Account assets are stated at fair value and are not subject to
liabilities arising out of any other business the Company may conduct.
Investment risks associated with fair value changes are borne by the contract
holders. Accordingly, investment income and realized gains and losses
attributable to Separate Accounts are not reported in the Company's results of
operations.
Policyholder Contract Deposits: Non-traditional life insurance products include
universal life and other interest-sensitive life insurance policies.
Investment-type products include single and flexible premium deferred annuities
and single premium immediate annuities. Policyholder contract deposits on
universal life and investment products represent premiums received plus
accumulated interest, less mortality charges on universal life products and
other administration charges as applicable under the contract. Interest credited
to these policies ranged from 5.2% to 7.2% in 1996 and from 5.5% to 7.8% in 1995
and 1994.
Reserves for Future Policy Benefits: Traditional life insurance products
primarily include those contracts with fixed and guaranteed premiums and
benefits and consist principally of whole life and term insurance policies,
limited-payment life insurance policies and certain annuities with life
contingencies. The reserve for future policy benefits for traditional life
insurance products has been provided on a net-level premium method based upon
estimated investment yields, withdrawals, mortality, and other assumptions which
were appropriate at the time the policies were issued. Such estimates are based
on past experience with a margin for adverse deviation. The interest assumptions
range from 4.0% to 5.5%.
Recognition of Revenue and Costs: Traditional life insurance contract premiums
are recognized as revenue over the premium-paying period, with reserves for
future policy benefits established from such premiums.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1996
NOTE A--SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenues for universal life and investment products consist of policy charges
for the cost of insurance, policy administration charges, amortization of policy
initiation fees, and surrender charges assessed against policyholder account
balances during the period. Expenses related to these products consist of
interest credited to policyholder account balances and benefit claims incurred
in excess of policyholder account balances.
Policy liabilities include provisions for reported claims and claims incurred
but not reported.
Reinsurance: Coinsurance premiums, commissions, expense reimbursements, and
reserves related to reinsured business are accounted for on bases consistent
with those used in accounting for the original policies and the terms of the
reinsurance contracts. Yearly renewable term reinsurance is accounted for the
same as direct business. Premiums ceded and recoverable losses have been
reported as a reduction of premium income and benefits, respectively. The ceded
amounts related to policy liabilities have been reported as an asset.
Income Taxes: The Company is included in the consolidated federal income tax
return of TOLIC which, with its domestic subsidiaries and affiliates, is
included in the consolidated federal income tax returns filed by Transamerica
Corporation, which by the terms of a tax sharing agreement generally requires
the Company to accrue and settle income tax obligations in amounts that would
result from filing separate tax returns with federal taxing authorities.
Deferred income taxes arise from temporary differences between the bases of
assets and liabilities for financial reporting purposes and income tax purposes,
based on enacted tax rates in effect for the years in which the temporary
differences are expected to reverse.
Fair Values of Financial Instruments: Fair values for debt securities are based
on quoted market prices, where
available.
Fair values for policy loans are estimated using discounted cash flow
calculations, based on interest rates currently being offered for similar loans
to borrowers.
The carrying amounts of cash and accrued investment income approximate their
fair value.
Fair values for liabilities under investment-type contracts are estimated using
discounted cash flow calculations, based on interest rates currently being
offered by similar contracts with maturities consistent with those remaining for
the contracts being valued. The liabilities under investment-type contracts are
included in policyholder contract deposits in the accompanying balance sheet.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1996
NOTE B--INVESTMENTS
<TABLE>
<CAPTION>
The cost and fair value of fixed maturities available for sale are as follows
(in thousands):
Gross Gross
Unrealized Unrealized Fair
Cost Gain Loss Value
December 31, 1996
U.S. Treasury securities and
obligations of U.S. government
<S> <C> <C> <C> <C>
corporations and agencies $ 843 $ 58 $ 901
Obligations of states and political
subdivisions 23,193 801 $ 6 23,988
Corporate securities 280,021 10,485 2,473 288,033
Public utilities 114,746 4,267 1,136 117,877
Mortgage-backed securities 32,722 632 - 33,354
---------------- ---------------- ---------------- ----------------
$ 451,525 $ 16,243 $ 3,615 $ 464,153
================ ================ ================ ================
December 31, 1995
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies $ 1,356 $ 117 $ 1,473
Obligations of states and political
subdivisions 14,381 522 14,903
Corporate securities 210,276 20,010 $ 63 230,223
Public utilities 104,238 9,190 52 113,376
Mortgage-backed securities 71,513 1,942 2 73,453
---------------- ---------------- ---------------- ----------------
$ 401,764 $ 31,781 $ 117 $ 433,428
================ ================ ================ ================
</TABLE>
The cost and fair value of fixed maturities available for sale at December 31,
1996, by contractual maturity, are shown below. Expected maturities will differ
from contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties (in thousands):
<TABLE>
<CAPTION>
Fair
Cost Value
<S> <C> <C> <C>
Due in 1997 $ 3,661 $ 3,723
Due in 1998-2001 38,387 40,230
Due in 2002-2006 105,319 107,752
Due after 2006 271,436 279,094
---------------- ----------------
418,803 430,799
Mortgage-backed securities 32,722 33,354
---------------- ----------------
$ 451,525 $ 464,153
================ ================
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1996
NOTE B--INVESTMENTS (Continued)
As of December 31, 1996, the Company held a total investment in one issuer,
other than the United States Government or a United States Government agency or
authority, which exceeded 10% of total shareholder's equity as follows (in
thousands):
Name of Issuer Carrying Value
Panenergy Corporation $ 7,011
The carrying value of those assets that were on deposit with public officials in
compliance with regulatory requirements was $0.9 million at December 31, 1996.
Net investment income (expense) by major investment category is summarized as
follows (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
-------------- -------------- ---------
<S> <C> <C> <C>
Fixed maturities $ 34,262 $ 30,329 $ 26,085
Short-term, policy loans and other
investments 631 582 576
-------------- -------------- --------------
34,893 30,911 26,661
Investment expenses (59) (14) (193)
-------------- -------------- --------------
Net investment income $ 34,834 $ 30,897 $ 26,468
============== ============== ==============
The following summarizes realized investment gains and losses and other
information related to investments (in thousands):
1996 1995 1994
-------------- -------------- ---------
Gross gains on disposition of investment in
fixed maturities $ 99 $ 283
Gross losses on disposition of investment in
fixed maturities - (264) $ (36)
-------------- -------------- --------------
Net gains (losses) on disposition of
investment in fixed maturities $ 99 $ 19 $ (36)
============== ============== ==============
Proceeds from disposition of investment in
fixed maturities $ 41,969 $ 30,738 $ 20,742
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1996
NOTE B--INVESTMENTS (Continued)
The components of net unrealized investment gains in the accompanying balance
sheet are as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
------------ ---------
Unrealized gains on investment in fixed
<S> <C> <C>
maturities $ 12,628 $ 31,664
Fair value adjustments to DPAC (9,320) (21,078)
Related deferred taxes (1,051) (3,705)
------------ -------------
$ 2,257 $ 6,881
============ =============
</TABLE>
NOTE C--DEFERRED POLICY ACQUISITION COSTS (DPAC)
Significant components of changes in DPAC are as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
-------------- -------------- ---------
<S> <C> <C> <C>
Balance at beginning of year $ 35,588 $ 61,435 $ 33,884
Amounts deferred:
Commissions 9,045 8,645 10,617
Other 3,243 3,481 3,770
Amortization (3,002) (2,197) (1,536)
Fair value adjustment 11,758 (35,776) 14,700
-------------- -------------- --------------
Balance at end of year $ 56,632 $ 35,588 $ 61,435
============== ============== ==============
</TABLE>
NOTE D--POLICY LIABILITIES
Components of policyholder contract deposits are as follows (in thousands):
<TABLE>
<CAPTION>
December 31
1996 1995
<S> <C> <C>
Liabilities for investment-type products $ 268,260 $ 272,839
Liabilities for non-traditional life insurance
products 192,799 147,987
------------- -------------
$ 461,059 $ 420,826
============= =============
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1996
NOTE E--INCOME TAXES
Components of income tax liabilities are as follows (in thousands):
December 31
1996 1995
Current tax liabilities $ 951 $ 512
Deferred tax liabilities 2,898 4,021
------------- -------------
$ 3,849 $ 4,533
============= =============
Significant components of deferred tax liabilities (assets) are as follows (in
thousands):
December 31
1996 1995
Deferred policy acquisition costs $ 18,046 $ 16,899
Life insurance policy liabilities (16,335) (16,563)
Unrealized investment gains 1,051 3,705
Other - net 136 (20)
------------- -------------
$ 2,898 $ 4,021
============= =============
The Company offsets all deferred tax assets and liabilities and presents them in
a single amount in the balance sheet.
Components of provision for income taxes (benefits) are as follows (in
thousands):
<TABLE>
<CAPTION>
1996 1995 1994
-------------- -------------- ---------
<S> <C> <C> <C>
Current tax expense (benefit) $ 751 $ (665) $ 1,016
Deferred tax expense (benefit) 1,424 1,996 (30)
-------------- -------------- --------------
$ 2,175 $ 1,331 $ 986
============== ============== ==============
</TABLE>
The differences between federal income taxes computed at the statutory rate and
provision for income taxes are primarily due to the amortization of goodwill.
An income tax payment of $0.3 million, an income tax refund of $0.1 million, and
an income tax payment of $1.1 million in 1996, 1995 and 1994, respectively, were
paid to and received from TOLIC.
NOTE F--REINSURANCE
The Company is involved in the cession of reinsurance to affiliated companies.
Risks are reinsured with other companies to permit the recovery of a portion of
the direct losses, however, the Company remains liable to the extent the
reinsuring companies do not meet their obligations under these reinsurance
agreements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1996
NOTE F--REINSURANCE (Continued)
The components of the Company's life insurance in force and premiums and other
considerations, and benefits paid or provided are summarized as follows (in
thousands):
<TABLE>
<CAPTION>
Ceded to
Gross Ceded to Non-Affiliated Net
Amount TOLIC Companies Amount
1996
Life insurance in force,
<S> <C> <C> <C> <C>
at end of year $ 4,769,031 $ 177,437 $ 2,323,447 $ 2,268,147
================== ================= ================== ==================
Premiums and other
considerations $ 24,652 $ 753 $ 8,275 $ 15,624
================== ================= ================== ==================
Benefits paid or
provided $ 43,440 $ 539 $ 8,446 $ 34,455
================== ================= ================== ==================
1995
Life insurance in force,
at end of year $ 5,216,397 $ 198,199 $ 2,643,198 $ 2,375,000
================== ================= ================== ==================
Premiums and other
considerations $ 23,367 $ 0 $ 9,872 $ 13,495
================== ================= ================== ==================
Benefits paid or
provided $ 39,432 $ 1,822 $ 5,626 $ 31,984
================== ================= ================== ==================
1994
Life insurance in force,
at end of year $ 5,399,638 $ 687,608 $ 2,473,081 $ 2,238,949
================== ================= ================== ==================
Premiums and other
considerations $ 21,631 $ 3,024 $ 7,771 $ 10,836
================== ================= ================== ==================
Benefits paid or
provided $ 37,700 $ 1,302 $ 9,770 $ 26,628
================== ================= ================== ==================
</TABLE>
NOTE G--PENSION PLAN AND OTHER POSTRETIREMENT BENEFITS
Substantially all employees of the Company are covered by the Retirement Plan
for Salaried Employees of Transamerica Corporation and Affiliates (the "Plan").
Pension benefits are based on the employee's compensation during the highest
paid 60 consecutive months during the 120 months before retirement. Annual
contributions to the Plan generally include a provision for current service
costs plus amortization of prior service costs over periods ranging from 10 to
30 years. Assets of the plans are primarily invested in publicly traded stocks
and bonds.
The Company's pension costs charged to income were not significant in 1996,
1995, and 1994.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1996
NOTE G--PENSION PLAN AND OTHER POSTRETIREMENT BENEFITS (Continued)
The Company also participates in various contributory defined benefit programs
sponsored by Transamerica Corporation that provide medical and certain other
benefits to eligible retirees. Postretirement benefit costs charged to income
were not significant.
NOTE H--RELATED PARTY TRANSACTIONS
The Company has various transactions with TOLIC and certain of its other
affiliates in the normal course of operations, including reinsurance
transactions, computer services, investment services and advertising services.
The reinsurance recoverable from TOLIC, including the amount receivable for
policy claims paid, amounted to $0.3 million and $0.1 million at December 31,
1996 and 1995, respectively.
NOTE I--REGULATORY MATTERS
The Company is subject to state insurance laws and regulations, principally
those of the State of New York. Such regulations include the risk-based capital
requirement and the restriction on the payment of dividends. Generally,
dividends during any year may not be paid, without prior regulatory approval, in
excess of the greater of 10% of the Company's statutory capital and surplus as
of the preceding year end or the Company's statutory net income from operations
for the preceding year. Those statutory amounts are determined in conformity
with statutory accounting practices prescribed or permitted by the Department of
Insurance of New York ("New York Department"). Currently, no dividends can be
paid by the Company without prior approval of the New York Department.
The Company's statutory net income income (loss) and capital and surplus are
summarized as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
-------------- -------------- ---------
<S> <C> <C> <C>
Statutory net income (loss) $ (551) $ 1,779 $ (5,238)
Statutory capital and surplus, at end of year 22,822 22,713 16,612
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1996
NOTE J--COMMITMENTS AND CONTINGENCIES
Substantially all leases of the Company are operating leases principally for the
rental of real estate. Rental expenses for equipment and properties were $0.9
million for both 1996 and 1995 and $1.1 million for 1994. The following is a
schedule by years of future minimum rental payments required under operating
leases that have initial or remaining noncancelable lease terms in excess of one
year as of December 31, 1996 (in thousands):
Year ending December 31:
1997 $ 1,187
1998 1,187
1999 1,016
2000 743
2001 394
Later years 4,541
$ 9,068
================
The Company is a defendant in various legal actions arising from its operations.
These include legal actions similar to those faced by many other major life
insurers which allege damages related to sales practices for universal life
policies sold between January 1981 and June 1996. In one such action, the
Company and plaintiffs' counsel are working toward a settlement. Any such
proposed settlement is subject to significant contingencies, including approval
by the court. The lawsuit may proceed if such contingencies are not satisfied.
In the opinion of the Company, any ultimate liability which might result from
such litigation would not have a materially adverse effect on the financial
position of the Company or the results of its operations.
NOTE K--FINANCIAL INSTRUMENTS
The carrying values and estimated fair values of financial instruments are as
follows (in thousands):
<TABLE>
<CAPTION>
December 31
1996 1995
------------------------------- ------------------
Carrying Fair Carrying Fair
Value Value Value Value
Financial Assets:
<S> <C> <C> <C> <C>
Fixed maturities $ 464,153 $ 464,153 $ 433,428 $ 433,428
Policy loans 11,973 11,973 10,764 10,910
Cash 9,079 9,079 16,257 16,257
Accrued investment income 8,840 8,840 7,511 7,511
Financial Liabilities:
Liabilities for investment-type
contracts:
Single and flexible premium
deferred annuities 125,022 122,705 154,292 151,433
Single premium immediate
annuities 143,238 130,297 118,547 114,553
</TABLE>
<PAGE>
Audited Financial Statements
Separate Account VA-2LNY of
First Transamerica
Life Insurance Company
Year ended December 31, 1996
with Report of Independent Auditors
<PAGE>
Report of Independent Auditors
Unitholders of Separate Account VA-2LNY
of First Transamerica Life Insurance Company
Board of Directors, First Transamerica Life Insurance Company
We have audited the accompanying statement of assets and liabilities of Separate
Account VA-2LNY of First Transamerica Life Insurance Company (comprised of the
Money Market, Managed Assets, Zero Coupon 2000, Quality Bond, Small Cap, Capital
Appreciation, Stock Index Fund, Socially Responsible Fund, Growth and Income,
International Equity, International Value Portfolio, Disciplined Stock
Portfolio, and Small Company Stock Portfolio Sub-accounts) as of December 31,
1996, the related statement of operations for the year then ended, and the
statements of changes in net assets for the two years in the period then ended.
These financial statements are the responsibility of Separate Account VA-2LNY's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1996, by correspondence with
the fund managers. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of each of the respective
sub-accounts comprising Separate Account VA-2LNY of First Transamerica Life
Insurance Company at December 31, 1996, the results of their operations for the
year then ended, and the changes in their net assets for the two years in the
period then ended in conformity with generally accepted accounting principles.
March 3, 1997
<PAGE>
1
Separate Account VA-2LNY of
First Transamerica Life Insurance Company
Statement of Assets and Liabilities
December 31, 1996
<TABLE>
<CAPTION>
Zero
Money Managed Coupon
Market Assets 2000
Sub-account Sub-account Sub-account
------------------ ------------------- -------------------
Assets:
<S> <C> <C> <C> <C> <C>
Investments, at fair value (Notes 1 and 2) $ 11,663,746 $ 5,720,885 $ 5,918,194
Receivable for net units sold 106,345 - -
Due from Transamerica Life - - -
----------------- ------------------ ------------------
Total assets $ 11,770,091 $ 5,720,885 $ 5,918,194
Liabilities:
Payable for net units redeemed - 22 30
Due to Transamerica Life 1,638 1 -
----------------- ------------------ ------------------
Total liabilities 1,638 23 30
----------------- ------------------ ------------------
Net assets $ 11,768,453 $ 5,720,862 $ 5,918,164
================= ================== ==================
Accumulation units outstanding 10,392,468.634 489,733.637 396,886.829
================= ================== ==================
Net asset value and redemption price per unit $ 1.132402 $ 11.681577 $ 14.911465
================= ================== ==================
Other sub-account information:
Number of shares 11,663,745.790 539,706.137 481,545.505
Net asset value per share $ 1.00 $ 10.60 $ 12.29
Investment cost $ 11,663,746 $ 6,621,424 $ 5,881,973
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
Socially
Quality Small Capital Stock Responsible Growth and International
Bond Cap Appreciation Index Fund Fund Income Equity
Sub-account Sub-account Sub-account Sub-account Sub-account Sub-account Sub-account
- ---------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
$9,397,038 $ 58,796,653 $ 23,431,114 $ 15,685,692 $ 2,200,073 $ 44,081,314 $ 3,238,272
- 10,432 - - 1,250 6,130 -
2 727 - - - - 5
- --------- --------------- --------------- --------------- --------------- --------------- ---------------
$9,397,040 $ 58,807,812 $ 23,431,114 $ 15,685,692 $ 2,201,323 $ 44,087,444 $ 3,238,277
- 42 1,987 988 - - -
- - 21 18 4 36 -
- --------- --------------- --------------- --------------- --------------- --------------- ---------------
- 42 2,008 1,006 4 36 -
- --------- --------------- --------------- --------------- --------------- --------------- ---------------
$9,397,040 $ 58,807,770 $ 23,429,106 $ 15,684,686 $ 2,201,319 $ 44,087,408 $ 3,238,277
========== =============== =============== =============== =============== =============== ===============
664,469.782 1,000,594.78661,074,614.7616585,454.420 103,732.717 1,906,011.1226,976.242
======================================================== =========== ============================
$ 14.1421$2 58.772812 $ 21.802330 $ 26.790617 $ 21.221060 $ 23.130719 $ 14.267032
======================== ============= ============= ============= ============= =============
817,133.71,128,967.988 1,066,019.767 773,456.191 109,510.834 2,254,798.683 235,339.548
$ 11.5$ 52.08 $ 21.98 $ 20.28 $ 20.09 $ 19.55 $ 13.76
$ 9,394,$7148,228,603 $ 19,237,112 $ 13,002,851 $ 2,049,037 $ 44,825,963 $ 3,222,985
</TABLE>
See accompanying notes.
<PAGE>
- ------------------------------------------------------------------------------
Separate Account VA-2LNY of
- -----------------------------------------------------------------------------
First Transamerica Life Insurance Company
Statement of Assets and Liabilities (continued)
December 31, 1996
<TABLE>
<CAPTION>
Small
International Disciplined Company
Value Stock Stock
Sub-account Sub-account Sub-account
------------------ ------------------- -------------------
Assets:
<S> <C> <C> <C> <C> <C>
Investments, at fair value (Notes 1 and 2) $ 489,842 $ 4,430,771 $ 2,293,060
Receivable for net units sold - 66,278 -
Due from Transamerica Life 1 - -
----------------- ------------------ ------------------
Total assets $ 489,843 $ 4,497,049 $ 2,293,060
Liabilities:
Payable for net units redeemed - - -
Due to Transamerica Life - 3 1
----------------- ------------------ ------------------
Total liabilities - 3 1
----------------- ------------------ ------------------
Net assets $ 489,843 $ 4,497,046 $ 2,293,059
================= ================== ==================
Accumulation units outstanding 47,815.855 381,884.114 212,878.654
================= ================== ==================
Net asset value and redemption price per unit $ 10.244350 $ 11.775943 $ 10.771672
================= ================== ==================
Other sub-account information:
Number of shares 38,268.876 299,578.821 169,479.652
Net asset value per share $ 12.80 $ 14.79 $ 13.53
Investment cost $ 473,727 $ 4,082,076 $ 2,135,971
See accompanying notes.
</TABLE>
<PAGE>
Separate Account VA-2LNY of
First Transamerica Life Insurance Company
Statement of Operations
Year ended December 31, 1996
<TABLE>
<CAPTION>
Zero
Money Managed Coupon
Market Assets 2000
Sub-account Sub-account Sub-account
------------------ ------------------ -------------------
<S> <C> <C> <C> <C>
Investment Income (Note 2) $ 531,833 $ 350,516 $ 328,984
Expenses (Note 3):
Mortality and expense risk charge 150,100 105,279 78,716
----------------- ---------------- ----------------
Net investment income 381,733 245,237 250,268
Net realized and unrealized (loss) gain on investments:
Realized (loss) gain on investment transactions - (189,898) 51,030
Unrealized (depreciation) appreciation of investments - (309,410) (227,245)
----------------- ---------------- ----------------
Net (loss) gain on investments - (499,308) (176,215)
----------------- ---------------- ----------------
Increase (decrease) in net assets resulting from operations $ 381,733 $ (254,071) $ 74,053
================= ================- ================
operations
Increase (decrease) in net assets resulting from operatios
operations from
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Socially
Quality Small Capital Stock Responsible Growth and International
Bond Cap Appreciation Index Fund Fund Income Equity
Sub-account Sub-account Sub-account Sub-account Sub-account Sub-account Sub-account
- ------------- ---------------- ----------------- --------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
$ 450,620 $ 1,836,871 $ 269,443 $ 506,263 $ 93,232 $ 4,935,954 $ 122,452
107,939 707,999 234,765 163,078 21,150 421,978 30,830
- ------------ --------------- -------------- ------------- ------------- ------------- -------------
342,681 1,128,872 34,678 343,185 72,082 4,513,976 91,622
123,076 2,247,550 1,043,836 491,176 60,088 902,602 55,696
(266,024) 3,618,274 2,549,860 1,423,105 136,069 (1,361,873) 46
- ------------ --------------- -------------- ------------- ------------- ------------- -------------
(142,948) 5,865,824 3,593,696 1,914,281 196,157 (459,271) 55,742
- ------------ --------------- -------------- ------------- ------------- ------------- -------------
$ 199,733 $ 6,994,696 $ 3,628,374 $ 2,257,466 $ 268,239 $ 4,054,705 $ 147,364
============ =============== ============== ============= ============= ============= =============
</TABLE>
See accompanying notes.
<PAGE>
- -----------------------------------------------------------------------------
Separate Account VA-2LNY of
- -------------------------------------------------------------------------------
First Transamerica Life Insurance Company
Statement of Operations (continued)
Year ended December 31, 1996
<TABLE>
<CAPTION>
Small
International Disciplined Company
Value Stock Stock
Sub-account Sub-account Sub-account
------------------ ------------------ -------------------
<S> <C> <C> <C> <C>
Investment income (Note 2) $ 4,577 $ 20,474 $ 10,070
Expenses (Note 3)
Mortality and expense risk charge 2,723 18,757 14,842
--------------- --------------- ---------------
Net investment income (loss) 1,854 1,717 (4,772)
Net realized and unrealized gain on investments:
Realized gain (loss) on investment transactions 708 15,555 (7,185)
Unrealized appreciation of investments 16,114 348,695 157,089
--------------- --------------- ---------------
Net gain on investments 16,822 364,250 149,904
--------------- --------------- ---------------
Increase in net assets resulting from operations $ 18,676 $ 365,967 $ 145,132
=============== =============== ===============
</TABLE>
See accompanying notes.
<PAGE>
- ------------------------------------------------------------------------------
Separate Account VA-2LNY of
- ------------------------------------------------------------------------------
First Transamerica Life Insurance Company
Statement of Changes in Net Assets
Year ended December 31, 1996
<TABLE>
<CAPTION>
Zero
Money Managed Coupon
Market Assets 2000
Sub-account Sub-account Sub-account
------------------- ------------------ -------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C>
Net investment income $ 381,733 $ 245,237 $ 250,268
Realized (loss) gain on investment transactions - (189,898) 51,030
Unrealized (depreciation) appreciation of investments - (309,410) (227,245)
----------------- ----------------- -----------------
Increase (decrease) in net assets resulting from operations 381,733 (254,071) 74,053
Increase (decrease) in net assets resulting from operations
Changes from accumulation unit transactions (Note 5) 1,460,629 (2,217,277) 658,584
----------------- ----------------- -----------------
Total increase (decrease) in net assets 1,842,362 (2,471,348) 732,637
Net assets at beginning of year 9,926,091 8,192,210 5,185,527
----------------- ----------------- -----------------
Net assets at end of year $ 11,768,453 $ 5,720,862 $ 5,918,164
================= ================= =================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Socially
Quality Small Capital Stock Responsible Growth and International
Bond Cap Appreciation Index Fund Fund Income Equity
Sub-account Sub-account Sub-account Sub-account Sub-account Sub-account Sub-account
- ----------------- ----------------- ---------------- ---------------- ---------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
$ 342,681 $ 1,128,872 $ 34,678 $ 343,185 $ 72,082 $ 4,513,976 $ 91,622
123,076 2,247,550 1,043,836 491,176 60,088 902,602 55,696
(266,024) 3,618,274 2,549,860 1,423,105 136,069 (1,361,873) 46
- --------------- -------------- -------------- --------------- --------------- -------------- --------------
199,733 6,994,696 3,628,374 2,257,466 268,239 4,054,705 147,364
2,881,292 10,024,249 9,447,429 5,323,639 1,062,861 25,766,239 2,298,151
- --------------- -------------- -------------- --------------- --------------- -------------- --------------
3,081,025 17,018,945 13,075,803 7,581,105 1,331,100 29,820,944 2,445,515
6,316,015 41,788,825 10,353,303 8,103,581 870,219 14,266,464 792,762
- --------------- -------------- -------------- --------------- --------------- -------------- --------------
$ 9,397,040 $ 58,807,770 $ 23,429,106 $ 15,684,686 $ 2,201,319 $ 44,087,408 $ 3,238,277
=============== ============== ============== =============== =============== ============== ==============
</TABLE>
See accompanying notes.
<PAGE>
- ----------------------------------------------------------------------------
Separate Account VA-2LNY of
- ------------------------------------------------------------------------------
First Transamerica Life Insurance Company
Statement of Changes in Net Assets (continued)
Year ended December 31, 1996
<TABLE>
<CAPTION>
Small
International Disciplined Company
Value Stock Stock
Sub-account Sub-account Sub-account
------------------- ------------------ -------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C>
Net investment income $ 1,854 $ 1,717 $ (4,772)
Realized gain (loss) on investment transactions 708 15,555 (7,185)
Unrealized appreciation of investments 16,114 348,695 157,089
----------------- ----------------- -----------------
Increase in net assets resulting from operations 18,676 365,967 145,132
Increase (decrease) in net assets resulting from operations
Changes from accumulation unit transactions (Note 5) 471,167 4,131,079 2,147,927
----------------- ----------------- -----------------
Total increase in net assets 489,843 4,497,046 2,293,059
Net assets at beginning of year - - -
----------------- ----------------- -----------------
Net assets at end of year $ 489,843 $ 4,497,046 $ 2,293,059
=================== ================== ===================
</TABLE>
See accompanying notes.
<PAGE>
Separate Account VA-2LNY of
First Transamerica Life Insurance Company
Statement of Changes in Net Assets
Year ended December 31, 1995
<TABLE>
<CAPTION>
Money Managed Coupon
Market Assets 2000
Sub-account Sub-account Sub-account
----------------- ---------------- -----------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C>
Net investment income (loss) $ 372,818 $ 291,209 $ 165,749
Realized (loss) gain on investment transactions - (150,832) (14,600)
Unrealized (depreciation) appreciation of investments - (293,718) 391,296
--------------- --------------- ---------------
Increase (decrease) in net assets resulting from operations 372,818 (153,341) 542,445
Increase (decrease) in net assets resulting from operations
Changes from accumulation unit transactions (Note 5) 592,766 (1,913,560) 2,068,529
--------------- --------------- ---------------
Total increase (decrease) in net assets 965,584 (2,066,901) 2,610,974
Net assets at beginning of year 8,960,507 10,259,111 2,574,553
--------------- --------------- ---------------
Net assets at end of year $ 9,926,091 $ 8,192,210 $ 5,185,527
=============== =============== ===============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Socially
Quality Small Capital Stock Responsible Growth and International
Bond Cap Appreciation Index Fund Fund Income Equity
Sub-account Sub-account Sub-account Sub-account Sub-account Sub-account Sub-account
- ----------------- ----------------- ---------------- ---------------- ---------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
$ 173,818 $ (300,986) $ 40,129 $ 48,537 $ (3,538) $ 37,593 $ 238
38,833 1,736,579 119,162 149,258 116,779 785,377 10,932
379,343 6,401,100 1,641,431 1,307,948 19,919 617,224 15,242
- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
591,994 7,836,693 1,800,722 1,505,743 133,160 1,440,194 26,412
3,795,787 9,419,766 4,737,770 3,466,691 413,718 12,826,270 766,350
- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
4,387,781 17,256,459 6,538,492 4,972,434 546,878 14,266,464 792,762
1,928,234 24,532,366 3,814,811 3,131,147 323,341 - -
- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
$ 6,316,015 $ 41,788,825 $ 10,353,303 $ 8,103,581 $ 870,219 $ 14,266,464 $ 792,762
=============== =============== =============== =============== =============== =============== ===============
</TABLE>
See accompanying notes.
<PAGE>
- ----------------------------------------------------------------------------
Separate Account VA-2LNY of
- ---------------------------------------------------------------------------
First Transamerica Life Insurance Company
Notes to Financial Statements
December 31, 1996
1. Organization
Separate Account VA-2LNY of First Transamerica Life Insurance Company ("Separate
Account") was established by First Transamerica Life Insurance Company
("Transamerica Life"), a wholly-owned subsidiary of Transamerica Occidental Life
Insurance Company, as a separate account under the laws of the State of New York
on June 23, 1992. The Separate Account is registered with the Securities and
Exchange Commission (the Commission) under the Investment Company Act of 1940 as
a unit investment trust and is designed to provide annuity benefits pursuant to
flexible premium multi-funded individual deferred annuity policies ("Policy")
issued by Transamerica Life. The Separate Account commenced operations when
initial deposits were received on July 7, 1993.
In accordance with the terms of the Policy, all payments allocated to the
Separate Account by policy owners must be allocated to purchase units of any or
all of the Separate Account's thirteen sub-accounts, each of which invests
exclusively in a specific corresponding mutual fund portfolio. The mutual fund
portfolios are: eleven Series of Dreyfus Variable Investment Fund (Variable
Fund), Dreyfus Stock Index Fund (Stock Index Fund) and The Dreyfus Socially
Responsible Growth Fund (Socially Responsible Fund) (together "the Funds"). The
Variable Fund's eleven series are: Money Market Series, Managed Assets Series,
Zero Coupon 2000 Series, Quality Bond Series, Small Cap Series, Capital
Appreciation Series, Growth and Income, International Equity, International
Value Portfolio, Disciplined Stock Portfolio, and Small Company Stock Portfolio.
The International Value, Disciplined Stock and Small Company Stock sub accounts
were added to the Separate Account effective May 1, 1996. The Funds are open-end
management investment companies registered under the Investment Company Act of
1940.
2. Significant Accounting Policies
The accompanying financial statements of the Separate Account have been prepared
in accordance with generally accepted accounting principles. The preparation of
financial statements requires management to make estimates and assumptions that
affect amounts reported in the financial statements and accompanying notes. Such
estimates and assumptions could change in the future as more information becomes
known which could impact the amounts reported and disclosed herein. The
accounting principles followed and the methods of applying those principles are
presented below:
<PAGE>
Separate Account VA-2LNY of
First Transamerica Life Insurance Company
Notes to Financial Statements
2. Significant Accounting Policies (continued)
Investment Valuation--Investments in the Funds' shares are carried at fair (net
asset) value. Realized investment gains or losses on investments are determined
on a specific identification basis which approximates average cost. Investment
transactions are accounted for on the date the order to buy or sell is executed
(trade date).
Investment Income--Investment income consists of dividend income (both ordinary
and capital gains) and is recognized on the ex-dividend date. All distributions
received are reinvested in the respective sub-accounts.
Federal Income Taxes--Operations of the Separate Account are part of, and will
be taxed with, those of Transamerica Life, which is taxed as a "life insurance
company" under the Internal Revenue Code. Under current federal income tax law,
income from assets maintained in the Fund for the exclusive benefit of
participants generally is not subject to federal income tax.
3. Expenses and Charges
Mortality and expense risk charges are deducted from each sub-account on a daily
basis which is equal, on an annual basis, to 1.25% of the daily net asset value
of the sub-account. This amount can never increase and is paid to Transamerica
Life. An administrative expense charge is also deducted by Transamerica Life
from each sub-account on a daily basis which is equal, on an annual basis, to
.15% of the daily net asset value of the sub-account. This amount may change,
but it is guaranteed not to exceed a maximum effective annual rate of .25%.
The following charges are deducted from a policyholder's account by Transamerica
Life and not directly from the Separate Account. An annual policy fee is
deducted at the end of each policy year prior to the annuity date. Currently,
this charge is $30 (or 2% of the policy value, if less). This charge may change
but is guaranteed not to exceed $60 (or 2% of the policy, if less). After the
annuity date this charge is referred to as the Annuity Fee. In the event that a
policyholder withdraws all or a portion of the policyholder's account, a
contingent deferred sales load (CDSL) not exceeding 6% of premiums may be
applied to the amount of the policy value withdrawn to cover certain expenses
relating to the sale of policies. The amount of the CDSL is based upon elapsed
time since the premium was received and disappears after the seventh year.
During 1996, CDSL amounted to $133,845.
<PAGE>
Separate Account VA-2LNY of
First Transamerica Life Insurance Company
Notes to Financial Statements
4. Remuneration
The Separate Account pays no remuneration to directors, advisory boards or
officers or such other persons who may from time to time perform services for
the Separate Account.
5. Accumulation Units
<TABLE>
<CAPTION>
The changes in accumulation units and amounts are as follows:
Zero
Money Managed Coupon Quality Small
Market Assets 2000 Bond Cap
Sub-account Sub-account Sub-account Sub-account Sub-account
------------------- ---------------- ---------------- ---------------- ----------------
Year ended December 31, 1996
Accumulation Units:
<S> <C> <C> <C> <C> <C>
Units sold 26,617,198.730 38,335.624 51,842.861 175,846.080 126,546.210
Units redeemed (861,772.292) (61,586.450) (14,816.735) (24,722.837) (33,470.516)
Units transferred (24,447,901.29111) (153,504.017) 8,072.697 59,206.548 90,074.069
------------------ ---------------- --------------- --------------- ---------------
Net increase (decrease) 1,307,525.147 (176,754.843) 45,098.823 210,329.791 183,149.763
============= ===============- =============== =============== ===============
Capital Stock Socially Growth and International
Appreciation Index Fund Responsible Income Equity
Sub-account Sub-account Sub-account Sub-account Sub-account
---------------- ---------------- ---------------- ---------------- -----------------
Accumulation Units:
Units sold 270,146.010 137,024.714 35,870.324 666,760.274 92,814.368
Units redeemed (20,846.507) (15,121.803) (1,442.547) (33,415.468) (2,759.436)
Units transferred 237,387.012 98,068.821 20,284.094 538,273.277 75,768.843
-------------- ------------- --------------- --------------- ---------------
Net increase 486,686.515 219,971.732 54,711.871 1,171,618.083 165,823.775
============== ============= =============== =============== ===============
</TABLE>
<PAGE>
Separate Account VA-2LNY of
First Transamerica Life Insurance Company
Notes to Financial Statements
<TABLE>
<CAPTION>
5. Accumulation Units (continued)
Small
International Disciplined Company
Value Stock Stock
Sub-account Sub-account Sub-account
------------------- ---------------- ----------------
Accumulation Units:
<S> <C> <C> <C>
Units sold 47,818.902 188,126.210 119,085.212
Units redeemed (12,484.261) (250.516) (177.873)
Units transferred 12,481.214 194,008.420 93,971.315
----------------- -------------- ---------------
Net increase 47,815.855 381,884.114 212,878.654
================= ============== ===============
</TABLE>
<TABLE>
<CAPTION>
Zero
Money Managed Coupon Quality Small
Market Assets 2000 Bond Cap
Sub-account Sub-account Sub-account Sub-account Sub-account
---------------- ---------------- ---------------- ---------------- -----------------
Year ended December 31, 1996
Amounts:
<S> <C> <C> <C> <C> <C>
Sales $ 29,535,731 $ 491,826 $ 753,021 $ 2,399,464 $ 6,971,390
Redemptions (940,962) (772,263) (216,107) (338,685) (1,852,863)
Transfers (27,134,140) (1,936,840) 121,670 820,513 4,905,722
---------------- ---------------- --------------- --------------- ---------------
Net increase (decrease) $ 1,460,629 $ (2,217,277) $ 658,584 $ 2,881,292 $ 10,024,249
=============== ================ =============== =============== ===============
Capital Stock Socially Growth and International
Appreciation Index Fund Responsible Income Equity
Sub-account Sub-account Sub-account Sub-account Sub-account
Amounts:
Sales $ 5,339,870 $ 3,329,379 $ 692,678 $ 14,772,345 $ 1,293,057
Redemptions (409,817) (366,457) (29,419) (751,599) (38,366)
Transfers 4,517,376 2,360,717 399,602 11,745,493 1,043,460
--------------- --------------- --------------- --------------- ---------------
Net increase $ 9,447,429 $ 5,323,639 $ 1,062,861 $ 25,766,239 $ 2,298,151
=============== =============== =============== =============== ===============
</TABLE>
<PAGE>
Separate Account VA-2LNY of
First Transamerica Life Insurance Company
Notes to Financial Statements
<TABLE>
<CAPTION>
5. Accumulation Units (continued)
Small
International Disciplined Company
Value Stock Stock
Sub-account Sub-account Sub-account
------------------ ----------------- ----------------
Amounts:
<S> <C> <C> <C>
Sales $ 348,424 $ 2,039,665 $ 1,210,502
Redemptions (30) (2,921) (1,894)
Transfers 122,773 2,094,335 939,319
----------------- --------------- ---------------
Net increase $ 471,167 $ 4,131,079 $ 2,147,927
================= =============== ===============
</TABLE>
<TABLE>
<CAPTION>
Zero
Money Managed Coupon Quality Small
Market Assets 2000 Bond Cap
Sub-account Sub-account Sub-account Sub-account Sub-account
------------------- ----------------- --------------- --------------- ---------------
Year ended December 31, 1995
Accumulation Units:
<S> <C> <C> <C> <C> <C>
Units sold 29,544,251.052 26,430.886 26,892.823 18,981.373 66,834.194
Units redeemed (961,510.362) (34,020.748) (9,576.976) (14,077.846) (19,447.456)
Units transferred (28,044,962.862) (146,906.895) 131,307.626 284,578.694 157,731.048
----------------- ------------ ----------- ----------- -----------
Net increase (decrease) 537,777.828 (154,496.757) 148,623.473 289,482.221 205,117.786
================= ============== ============= ============= ==============
Capital Stock Socially Growth and International
Appreciation Index Fund Responsible Income Equity
Sub-account Sub-account Sub-account Sub-account Sub-account
------------------- ----------------- --------------- --------------- -----------------
Accumulation Units:
Units sold 52,743.913 26,348.437 7,783.369 108,076.106 11,372.243
Units redeemed (17,918.025) (9,709.656) (848.278) (4,644.204) (1,447.345)
Units transferred 267,836.448 158,347.265 17,914.164 630,961.194 51,227.569
----------------- -------------- ------------- ----------- -------------
Net increase 302,662.336 174,986.046 24,849.255 734,393.096 61,152.467
================= ============== ============= ============= =============
</TABLE>
<PAGE>
Separate Account VA-2LNY of
First Transamerica Life Insurance Company
Notes to Financial Statements
<TABLE>
<CAPTION>
5. Accumulation Units (continued)
Zero
Money Managed Coupon Quality Small
Market Assets 2000 Bond Cap
Sub-account Sub-account Sub-account Sub-account Sub-account
------------------- ----------------- --------------- --------------- -----------------
Amounts:
<S> <C> <C> <C> <C> <C>
Sales $ 31,752,030 $ 331,503 $ 385,356 $ 248,748 $ 3,139,452
Redemptions (1,027,098) (418,989) (136,865) (174,885) (891,363)
Transfers (30,132,166) (1,826,074) 1,820,038 3,721,924 7,171,677
------------------ --------------- -------------- ------------- -------------
Net increase (decrease) $ 592,766 $ (1,913,560) $ 2,068,529 $ 3,795,787 $ 9,419,766
================== =============== ============== ============= =============
Capital Stock Socially Growth and International
Appreciation Index Fund Responsible Income Equity
Sub-account Sub-account Sub-account Sub-account Sub-account
------------------- ----------------- --------------- --------------- -----------------
Amounts:
Sales $ 827,607 $ 524,503 $ 128,894 $ 1,922,589 $ 142,470
Redemptions (277,839) (192,252) (14,360) (77,573) (17,841)
Transfers 4,188,002 3,134,440 299,184 10,981,254 641,721
------------------ --------------- -------------- ------------- -------------
Net increase $ 4,737,770 $ 3,466,691 $ 413,718 $ 12,826,270 $ 766,350
================== =============== ============== ============= =============
</TABLE>
6. Investment Transactions
<TABLE>
<CAPTION>
The aggregate cost of purchases and the aggregate proceeds from the sales of
investments for the year ended December 31, 1996 were:
Zero
Money Managed Coupon Quality Small
Market Assets 2000 Bond Cap
Sub-account Sub-account Sub-account Sub-account Sub-account
---------------- ----------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Aggregate purchases $ 38,977,531 $ 1,708,024 $ 2,111,465 $ 5,548,697 $ 19,238,021
=============== =============== ============= ============= =============
Aggregate proceeds from sales $ 37,350,845 $ 3,679,019 $ 1,166,104 $ 2,286,011 $ 8,029,394
=============== =============== ============= ============= =============
</TABLE>
<PAGE>
Separate Account VA-2LNY of
First Transamerica Life Insurance Company
Notes to Financial Statements
<TABLE>
<CAPTION>
6. Investment Transactions (continued)
Capital Stock Socially Growth and International
Appreciation Index Fund Responsible Income Equity
Sub-account Sub-account Sub-account Sub-account Sub-account
---------------- ----------------- --------------- --------------- -------------------
<S> <C> <C> <C> <C> <C>
Aggregate purchases $ 12,569,868 $ 7,223,701 $ 1,623,410 $ 35,514,418 $ 3,265,100
=============== =============== ============= ============= =============
Aggregate proceeds from sales $ 3,050,069 $ 1,488,106 $ 484,010 $ 5,163,989 $ 867,816
=============== =============== ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
Small
International Disciplined Company
Value Stock Stock
Sub-account Sub-account Sub-account
---------------- ----------------- ---------------
<S> <C> <C> <C>
Aggregate purchases $ 520,351 $ 4,345,720 $ 2,629,899
=============== =============== =============
Aggregate proceeds from sales $ 47,332 $ 279,199 $ 486,743
=============== =============== =============
</TABLE>
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
All required financial statements are included in Parts A or B of this
Registration Statement.
(b) Exhibits
(1) Resolution of the Board of Directors of First Transamerica Life
Insurance Company ("Transamerica") authorizing establishment of the
Variable Account.(1)
(2) Not Applicable.
(3) (a) Master Agreement among Transamerica Occidental Life Insurance
Company,
First Transamerica Life Insurance Company, Transamerica
Financial Resources,
Inc., Dreyfus Service Corporation, and Dreyfus Service
Organization, Inc.(4)
(b) Principal Agency Agreement between First Transameric a Life
Insurance
Company and Dreyfus Service Organization, Inc.(3)
(c) Distribution Agreement between First Transamerica life
Insurance Company
and Dreyfus Service Corporation.(3)
(d) Form of Sales Agreement among Dreyfus Service Corporation,
Dreyfus Service
Organization, Inc. and Broker-Dealers.(4)
(e) Amendment Dated as of August 31, 1993, to Master Agreement
among
Transamerica Occidental Life Insurance Company, First
Transamerica Life
Insurance Company, Transamerica Financial Resources, Inc.,
Dreyfus Service
Corporation and Dreyfus Service Organization, Inc. (5)
(f) Amendment Dated as of August 31, 1993 to Principal Agency
Agreement
between First Transamerica Life Insurance Company and Dreyfus
Service
Organization, Inc. (5)
(g) Amendment Dated as of August 31, 1993 to Distribution
Agreement between
First Transamerica Life Insurance Company and Dreyfus Service
Corporation.
(5)
(h) Form of Sales Agreement among Transamerica Insurance
Securities Sales
Corporation, Transamerica Occidental Life Insurance Company,
First
Transamerica Life Insurance Company and Broker/Dealers, dated
August 24,
1994.(8)
(i) Form of Sales Agreement between Transamerica Occidental Life
Insurance
<PAGE>
Company, Transamerica Life Insurance and Annuity Company, First
Transamerica Life Insurance Company and Transamerica Securities Sales
Corporation.(8)
(4) Policy Form and Endorsements. (5)
(a) Form of Flexible Premium Multi-Funded Individual Deferred
Annuity Policy.
(b) Form of IRA Endorsement.
(c) Form of Automatic Payout Option Endorsement.
(d) Form of Dollar Cost Averaging Option Endorsement.
(e) Form of Systematic Withdrawal Option Endorsement.
(f) Form of Unisex Annuity Rates Endorsement.
(5) Form of Application. (5)
(6) (a) Declaration of Intention and Charter of Transamerica.(1)
(b) By-Laws of Transamerica.(1)
(7) Not applicable.
(8) (a) Participation Agreement between First Transamerica Life
Insurance Company
and Dreyfus Variable Investment Fund.(3)
(b) Participation Agreement between First Transamerica Life
Insurance Company
and Dreyfus Life and Annuity Index Fund, Inc.(3)
(c) Participation Agreement between First Transamerica Life
Insurance Company
and The Dreyfus Socially Responsible Growth Fund, Inc. (5)
(d) Administrative Services Agreement (Draft) between First
Transamerica Life
Insurance Company and Vantage Computer Systems, Inc.(3)
(9) (a) Opinion and Consent of Counsel.(7)
(10) (a) Consent of Counsel.(8)
(b) Consent of Independent Auditors .(8)
(11) No financial statements are omitted from item 23.
(12) Not applicable.
(13) Performance Data Calculations.(5)
(14) Not applicable.
(15) Powers of Attorney.
Alan T. Cunningham (8) Robert Abeles (8)
<PAGE>
Marc C. Abrahms (5) James Inzerillo (5)
Daniel E. Jund (7)
James T. Byrne, Jr. (5) Cecelia Kempler (5)
Thomas J. Cusack (7)
James W. Dederer (2) John A. Paganelli (2)
John A. Fibiger (2) James B. Roszak (2)
David E. Gooding (2)
Allan D. Greenberg
(1) Filed with initial filing of the Form N-4 Registration Statement,
File No. 33-55152
(December 1, 1992).
(2) Filed with Pre-Effective Amendment No.1 to the Form N-4 Registration
Statement,
File No. 33-55152 (February 10, 1993).
(3) Incorporated by reference to the like-numbered exhibit to Post-
Effective Amendment
No.1 to the Form N-4 Registration Statement of Transamerica Occidental
Life
Insurance Company's Separate Account VA-2L, File No. 33-49998 (April
30, 1993).
(4) Filed with Post-Effective Amendment No. 1 to the Form N-4 Registration
Statement,
File No. 33-55152 (June 8, 1993).
(5) Filed with Post-Effective Amendment No. 2 to the Form N-4 Registration
Statement,
File No. 33-55152 (April 29, 1994).
(6) Filed with Post-Effective Amendment No. 3 to the Form N-4 Registration
(7) Filed with Post-Effective Amendment No. 4 to the Form N-4
<PAGE>
Registration Statement File No. 33-55152 (April 26, 1996).
(8) Filed herewith.
Item 25. Directors and Officers of the Depositor
<TABLE>
<CAPTION>
Name and Principal
Business Address Position and Offices with Depositor
<S> <C>
s James W. Dederer Director, Chairman, General Counsel and Corporate
Secretary
Alan T. Cunningham Director and President
Robert Rubinstein Senior Vice President, Chief Actuary and Assistant Secretary
Gary Rolle' Investment Officer
Susan Silbert Investment Officer
Paul Hankowitz MD Vice President and Chief Medical Director
James D. Lamb FSA Vice President and Actuary
Katharine Lomeli Vice President and Assistant Secretary
William J. Lyons Vice President and Chief Underwriter
Alison B. Pettingall Vice President - Marketing
Martin V. Mondato Second Vice President and Director of Operations
Kamran Haghighi Tax Officer
William M. Hurst Assistant Secretary
Sally S. Yamada Treasurer
Robert Abeles Director
Marc C. Abrahms Director
James T. Byrne, Jr. Director
Thomas J. Cusack Director
John A. Fibiger Director
David E. Gooding Director
Allan D. Greenberg Director
James Inzerillo Director
Daniel E. Jund Director
Ceceilia Kemper Director
John A. Paganelli Director
James B. Roszak Director
</TABLE>
<PAGE>
The Depositor, First Transamerica Life Insurance Company
(Transamerica), is wholly owned by Transamerica Occidental Life Insurance
Company. The Registrant is a segregated asset account of Transamerica.
The following chart indicates the persons controlled by or under common
control with Transamerica.
TRANSAMERICA CORPORATION AND SUBSIDIARIES
WITH STATE OR COUNTRY OF INCORPORATION
Transamerica Corporation
ARC Reinsurance Corporation - Hawaii
Inter-America Corporation - California
Mortgage Corporation of America - California
Pyramid Insurance Company, Ltd. - Hawaii
Pacific Cable Ltd. - Bermuda
TC Cable, Inc. - Delaware
River Thames Insurance Company Limited - England
RTI Holdings, Inc. - Delaware
Transamerica Airlines, Inc. - Delaware
Transamerica Asset Management Group, Inc. - Delaware
Criterion Investment Management Company - Texas
<PAGE>
Transamerica CBO I, Inc. - Delaware
Transamerica Corporation (Oregon) - Oregon
Transamerica Delaware, L.P. - Delaware
Transamerica Finance Group, Inc. - Delaware
BWAC Twelve, Inc. - Delaware
Transamerica Insurance Finance Corporation - Maryland
Transamerica Insurance Finance Company (Europe) - Maryland
Transamerica Insurance Finance Corporation, California -
California
Transamerica Insurance Finance Corporation, Canada - Ontario
Transamerica Finance Corporation - Delaware
TA Leasing Holding Co., Inc. - Delaware
Trans Ocean Ltd. - Delaware
Trans Ocean Container Corp. - Delaware
Cool Solutions, Inc. - Delaware
TOD Liquidating Corp. - California
TOL S.R.L. - Italy
Trans Ocean Leasing Deutschland GMBH - Germany
Trans Ocean Leasing PTY Limited - Australia
Trans Ocean Management Corporation -
Trans Ocean Regional Corporate Holdings - California
Trans Ocean SARL - France
Trans Ocean Tank Services Corporation - Delaware
Trans Ocean Container Finance Corp. - Delaware
Transamerica Leasing Inc. - Delaware
Better Asset Management Company LLC - Delaware
Greybox L.L.C. - Delaware
Transamerica Leasing Holdings Inc. - Delaware
Greybox Services Limited - United Kingdom
Intermodal Equipment, Inc. - Delaware
Transamerica Leasing N.V. - Belgium
Transamerica Leasing SRL - Italy
Transamerica Distribution Services Inc. - Delaware
Transamerica Leasing Coordination Center - Belgium
Transamerica Leasing do Brasil Ltda. - Brazil
Transamerica Leasing GmbH - West Germany
Transamerica Leasing Limited - United Kingdom
ICS Terminals (UK) Limited - United Kingdom
Transamerica Leasing Pty. Ltd. - Australia
Transamerica Leasing (Canada) Inc. - Canada
Transamerica Leasing (HK) Ltd. - Hong Kong
Transamerica Leasing (Proprietary) Limited - South Africa
Transamerica Tank Container Leasing Pty. Limited - Australia
Transamerica Trailer Holdings I Inc. - Delaware
Transamerica Trailer Holdings II Inc. - Delaware
Transamerica Trailer Holdings III Inc. - Delaware
Transamerica Trailer Leasing AB - Sweden
Transamerica Trailer Leasing A/S - Denmark.
Transamerica Trailer Leasing GmbH - Germany
Transamerica Trailer Leasing S.A. - Fra.
Transamerica Trailer Leasing S.p.A. - Italy
Transamerica Trailer Leasing (Belgium) N.V. - Belg.
Transamerica Trailer Leasing (Netherlands) B.V. - Neth.
Transamerica Trailer Spain S.A. - Spn.
Transamerica Transport Inc. - NJ
TELColorado Holding Co., Inc. - Delaware
<PAGE>
Transamerica Commercial Finance Corporation, I - Delaware
BWAC Credit Corporation - Delaware
BWAC International Corporation - Delaware
Transamerica Business Credit Corporation - Delaware
The Plain Company - Delaware
Transamerica Global Distribution Finance Corporation - Delaware
Transamerica Inventory Finance Corporation - Delaware
BWAC Seventeen, Inc. - Delaware
Transamerica Commercial Finance Canada, Limited - Ontario
Transamerica Commercial Finance Corporation, Canada - Canada
TCF Commercial Leasing Corporation, Canada - Ontario
BWAC Twenty-One, Inc. - Delaware
Transamerica Commercial Holdings Limited - United Kingdom
Transamerica Commercial Finance Limited - United Kingdom
Transamerica Trailer Leasing Limited - United Kingdom
Transamerica Commercial Finance Corporation - Delaware
TCF Asset Management Corporation - Colorado
Transamerica Joint Ventures, Inc. - Delaware
Transamerica Commercial Finance France S.A. - France
Transamerica GmbH Inc. - Delaware
Transamerica Financieringsmaatschappij B.V. - Netherlands
Transamerica GmbH - Germany - Germany
Transamerica Finance Loan Company - Delaware
Transamerica Financial Services Holding Company - Delaware
Arcadia General Insurance Company - Arizona
Arcadia National Life Insurance Company - Arizona
First Credit Corporation - Delaware
Pacific Agency, Inc. - Indiana
Pacific Agency, Inc. - Nevada
Pacific Finance Loans - California
Pacific Service Escrow Inc. - Delaware
Transamerica Acceptance Corporation - Delaware
Transamerica Financial Services Limited, United Kingdom -
United Kingdom
Transamerica Credit Corporation - Nevada
Transamerica Credit Corporation (Washington) - Washington
Transamerica Financial Consumer Discount Company (Pennsylvania)
- Pennsylvania
Transamerica Financial Corporation - Nevada
Transamerica Financial Services Mortgage Company - Delaware
Transamerica Financial Professional Services, Inc. - California
Transamerica Financial Services - California
NAB Services, Inc. - California
Transamerica Financial Services Company - Ohio
Transamerica Financial Services Inc. - Hawaii
Transamerica Financial Services Inc. - Minnesota
Transamerica Financial Services of Dover, Inc. - Delaware
Transamerica Financial Services, Inc. - Alabama
Transamerica Financial Services, Inc. - British Columbia
Transamerica Financial Services, Inc. - New Jersey
Transamerica Financial Services, Inc. - Texas
Transamerica Financial Services, Inc. - West Virginia
Transamerica Insurance Administrators, Inc. - Delaware
Transamerica Mortgage Company - Delaware
Transamerica Financial Services Finance Co. - Delaware
Transamerica HomeFirst, Inc. - California
Transamerica Foundation - California
<PAGE>
Transamerica Information Management Services, Inc. - Delaware
Transamerica Insurance Corporation of California - California
Arbor Life Insurance Company - Arizona
Plaza Insurance Sales, Inc. - California
Transamerica Advisors, Inc. - California
Transamerica Annuity Service Corporation - New Mexico
Transamerica Financial Resources, Inc. - Delaware
Financial Resources Insurance Agency of Texas - Texas
TBK Insurance Agency of Ohio, Inc. - Ohio
Transamerica Financial Resources Insurance Agency of Alabama Inc.
- Alabama
Transamerica Financial Resources Insurance Agency of Massachusetts
Inc. - Massachusetts
Transamerica International Insurance Services, Inc. - Delaware
Home Loans and Finance Ltd. - United Kingdom
Transamerica Occidental Life Insurance Company - California
Bulkrich Trading Limited - Hong Kong
First Transamerica Life Insurance Company - New York
NEF Investment Company - California
Transamerica Life Insurance and Annuity Company - North Carolina
Transamerica Assurance Company - Colorado
Transamerica Life Insurance Company of Canada - Canada
Transamerica Variable Insurance Fund, Inc. - Maryland
USA Administration Services, Inc. - Kansas
Transamerica Products, Inc. - California
Transamerica Leasing Ventures, Inc. - California
Transamerica Products II, Inc. - California
Transamerica Products IV, Inc. - California
Transamerica Products I, Inc. - California
Transamerica Securities Sales Corporation - Maryland
Transamerica Service Company - Delaware
Transamerica International Holdings, Inc. - Delaware
Transamerica Investment Services, Inc. - Delaware
Transamerica Income Shares, Inc. (managed by TA Investment Services)
- - Maryland
Transamerica LP Holdings Corp. - Delaware
Transamerica Properties, Inc. - Delaware
Transamerica Retirement Management Corporation - Delaware
Transamerica Real Estate Tax Service (A Division of Transamerica
Corporation) - N/A
Transamerica Flood Hazard Certification (A Division of TA Real Estate
Tax Service) - N/A
Transamerica Realty Services, Inc. - Delaware
Bankers Mortgage Company of California - California
Pyramid Investment Corporation - Delaware
The Gilwell Company - California
Transamerica Affordable Housing, Inc. - California
Transamerica Minerals Company - California
Transamerica Oakmont Corporation - California
Ventana Inn, Inc. - California
Transamerica Telecommunications Corporation - Delaware
<PAGE>
<PAGE>
<PAGE>
<PAGE>
*Designates INACTIVE COMPANIES
oA Division of Transamerica Corporation
ss.Limited Partner; Transamerica Corporation is General Partner
Item 27. Number of Policy Owners
As of April 1 , 1997, there were 2,158 Owners of Non-Qualified
Individual Policies and 1,560 Owners of Qualified Individual Policies.
Item 28. Indemnification
Transamerica's Bylaws provide in Article VIII as follows:
Section 1. Indemnification: (a) The Corporation shall indemnify to
the fullest extent now or hereafter
provided for or permitted by law each person involved in, or made or threatened
to be made a party to, any
action, suit, claim or proceeding, whether civil or criminal, including any
investigative, administrative, legislative,
<PAGE>
or other proceeding, and including any action by or in the right of the
Corporation or any other corporation, or any partnership, joint venture, trust,
employee benefit plan, or other enterprise (any such entity, other than the
Corporation, being hereinafter referred to as an "Enterprise"), and including
appeals therein (any such action or process being hereinafter referred to as a
"Proceeding"), by reason of the fact that such person, such person's testator or
intestate (i) is or was a director or officer of the Corporation, or (ii) is or
was serving, at the request of the Corporation, as a director, officer, or in
any other capacity, of any other Enterprise, against any and all judgments,
amounts paid in settlement, and expenses, including attorneys' fees, actually
and reasonably incurred as a result of or in connection with any Proceeding,
except as provided in Subsection (b) below.
(b) No indemnification shall be made to or on behalf of any such person
if a judgment or other final adjudication adverse to such person establishes
that such person's acts were committed in bad faith or were the result of active
and deliberate dishonesty and were material to the cause of action so
adjudicated, or that such person personally gained in fact a financial profit or
other advantage to which such person was not legally entitled. In addition, no
indemnification shall be made with respect to any Proceeding initiated by any
such person against the Corporation, or a director or officer of the
Corporation, other than to enforce the terms of this Article VIII, unless such
Proceeding was authorized by the Board of Directors. Further, no indemnification
shall be made with respect to any settlement or compromise of any Proceeding
unless and until the Corporation has consented to such settlement or compromise.
(c) Written notice of any Proceeding for which indemnification may be
sought by any person shall be given to the Corporation as soon as practicable.
The Corporation shall then be permitted to participate in the defense of any
such proceeding or, unless conflicts of interest or position exist between such
person and the Corporation in the conduct of such defense, to assume such
defense. In the event that the Corporation assumes the defense of any such
Proceeding, legal counsel selected by the Corporation shall be reasonably
acceptable to such person. After such an assumption, the Corporation shall not
be liable to such person for any legal or other expenses subsequently incurred
unless such expenses have been expressly authorized by the Corporation. In the
event that the Corporation participates in the defense of any such Proceeding,
such person may select counsel to represent him in regard to such a Proceeding;
however, such person shall cooperate in good faith with any request that common
counsel be utilized by the parties to any Proceeding who are similarly situated,
unless to do so would be inappropriate due to actual or potential differing
interests between or among such parties.
(d) In making any determination regarding any person's entitlement to
indemnification hereunder, it shall be presumed that such person is entitled to
indemnification, and the Corporation shall have the burden of proving the
contrary.
Section 2. Advancement of Expenses. Except in the case of a Proceeding
against a director, officer, or other person specifically approved by the Board
of Directors, the Corporation shall, subject to Section 1 of this Article VIII
above, pay expenses actually and reasonably incurred by or on behalf of such a
person in defending any Proceeding in advance of the final disposition of such
Proceeding. Such payments shall be made promptly upon receipt by the
Corporation, from time to time, of a written demand by such person for such
advancement, together with an undertaking by or on behalf of such person to
repay any expenses so advanced to the extent that the person receiving the
advancement is ultimately found not to be entitled to indemnification for part
or all of such expenses.
Section 3. Rights Not Exclusive. The rights to indemnification and
advancement of expenses granted by or pursuant to this Article VIII (i) shall
not limit or exclude, but shall be in addition to, any other rights which may be
granted by or pursuant to any statute, corporate charter, by-law, resolution of
stockholders or directors or agreement, (ii) shall be deemed to constitute
contractual obligations of the Corporation to any person who serves in a
capacity referred to in Section 1 of this Article VIII at any time while this
Article VIII is in effect, (iii) shall continue to exist after the repeal or
modification of this Article VIII with respect to events occurring prior thereto
and (iv) shall continue as to a person who has ceased to be a director or
officer and shall inure to the benefit of the estate, spouse, heirs, executors,
administrators or assigns of such person. It is the
<PAGE>
intent of this Article VIII to require the Corporation to indemnify the persons
referred to herein for the aforementioned judgments, amounts paid in settlement,
and expenses, including attorneys' fees, in each and every circumstance in which
such indemnification could lawfully be permitted by express provisions of
by-laws, and the indemnification required by this Article VIII shall not be
limited by the absence of an express recital of such circumstances.
Section 4. Indemnification of Employees and Others. The Corporation
may, from time to time, with the approval of the Board of Directors, and to the
extent authorized, grant rights to indemnification, and to the advancement of
expenses, to any employee or agent of the Corporation or to any person serving
at the request of the Corporation as a director or officer, or in any other
capacity, of any other Enterprise, to the fullest extent of the provisions of
this Article VIII with respect to the indemnification and advancement of
expenses of directors and officers of the Corporation.
Section 5. Authorization of Contracts. The Corporation may, with the
approval of the Board of Directors, enter into an agreement with any person who
is, or is about to become, a director, officer, employee or agent of the
Corporation, or who is serving, or is about to serve, at the request of the
Corporation, as a director, officer, or in any other capacity, of any other
Enterprise, which agreement may provide for indemnification of such person and
advancement of expenses to such person upon terms, and to the extent, not
prohibited by law. The failure to enter into any such agreement shall not affect
or limit the rights of any such person under this Article VIII.
Section 6. Insurance. The Corporation may purchase and maintain
insurance to indemnify the
Corporation and any person eligible to be indemnified under this Article VIII
within the limits permitted by law.
Section 7. Severability. If any provision of this Article VIII is
determined at any time to be
unenforceable in any respect, the other provisions shall not in any way be
affected or impaired thereby.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling person of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the 1933 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by the director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
The directors and officers of First Transamerica Life Insurance Company
are covered under a Directors and Officers liability program which includes
direct coverage to directors and officers (Coverage A) and for corporate
reimbursement (Coverage B) to reimburse the Company for indemnification of its
directors and officers. Such directors and officers are indemnified for loss
arising from any covered claim by reason of any Wrongful Act in their capacities
as directors or officers. The term "loss" means any amount which the insureds
are legally obligated to pay for a claim for Wrongful Acts. The term "Wrongful
Acts" means any breach of duty, neglect, error, misstatement, misleading
statement or omission actually or allegedly caused, committed or attempted by a
director or officer while acting individually or collectively in their capacity
as such, claimed against them solely by reason of their being directors and
officers. The limit of liability under the program is $65,000,000 for Coverage A
and $55,000,000 for Coverage B for the policy year 11/25/93 to 11/25/94.
Coverage B is subject to a self insured retention of $5,000,000. The primary
policy is with Corporate Officers and Directors Assurance Holding Limited
(CODA).
Item 29. Principal Underwriter
<PAGE>
Transamerica Securities Sales Corporation (TSSC) and Transamerica
Financial Resources (TFR) are the co-underwriters of the Certificates and the
Individual Contracts as defined in the Investment Company Act of 1940. TSSC
became Principal Underwriter effective 8-24-94.
NAME AND PRINCIPAL POSITION AND OFFICES WITH
BUSINESS ADDRESS* TRANSAMERICA SECURITIES SALES
CORPORATION
Barbara A. Kelley President and Director
Regina M. Fink Secretary and Director
Benjamin Tang Treasurer
James B. Roszak Director
Nooruddin Veerjee Director
Dan S. Trivers Senior Vice President
Nicki A. Bair Vice President
Chris Shaw Second Vice President
*The Principal business address for each officer and director is 1150 South
Olive, Los Angeles, CA 90015.
NAME AND PRINCIPAL POSITION AND OFFICES WITH
BUSINESS ADDRESS* TRANSAMERICA FINANCIAL
RESOURCES
Barbara A. Kelley President and Director
Regina M. Fink Secretary and Counsel
Monica Suryapranata Treasurer
Gilbert F. Cronin Director
James W. Dederer Director
John Leon Second Vice President and D
irector of Due Diligence
James B. Roszak Director
Jeffrey C. Goodrich Vice President
Dan Trivers Vice President, Director of
Administration and
Chief Compliance Officer
Ronald F. Wagley Director
Kerry Rider Second Vice President and
Director of Compliance
*The Principal business address for each officer and director is 1150 South
Olive, Los Angeles, CA 90015.
<TABLE>
<CAPTION>
The following table lists the amounts of commissions paid to the
principal underwriter during the last fiscal year.
Name of
Principal Net Underwriting Compensation on Brokerage
Underwriter* Discounts & Commission Redemption Commissions
Compensation
- ------------ ---------------------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
TSSC -0- -0- $4,277,511.85 -0-
TFR -0- -0- 66.00 -0-
</TABLE>
Item 30. Location and Accounts and Records
All accounts and records required to be maintained by Section 31(a) of
the 1940 Act and the rules under it are maintained by Transamerica or the
Service Office at their administrative offices.
Item 31. Management Services
All management contracts are discussed in Parts A or B.
Items 32. Undertakings
(a) Registrant undertakes that it will file a post-effective amendment to
this registration statement as frequently as necessary to ensure that
the audited financial statements in the registration statement are
never more than 16 months old for so long as payments under the
variable annuity contracts may be accepted.
(b) Registrant undertakes that it will include either (1) as part of any
Application to purchase a Policy offered by the Prospectus, a space
that an applicant can check to request a Statement of Additional
Information, or (2) a post card or similar written communication
affixed to or included in the Prospectus that the applicant can remove
to send for a Statement of Additional Information.
(c) Registrant undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available
under this Form promptly upon written or oral request to Transamerica
at the address or phone number listed in the Prospectus.
(d) Transamerica hereby represents that the fees and charges deducted under
the policies are reasonable in the aggregate, in relation to the services
rendered, expenses expected to be incurred and risks assumed by
Transamerica.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, First
Transamerica Life Insurance Company certifies that this Post-Effective Amendment
No.6 to the Registration Statement meets all of the requirements for
effectiveness pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Post-Effective Amendment No.6 to the Registration Statement to
be signed on its behalf by the undersigned in the City of Los Angeles, State of
California on the 28th day of April, 1997.
SEPARATE ACCOUNT VA-2LNY FIRST TRANSAMERICA
OF FIRST TRANSAMERICA LIFE INSURANCE COMPANY
LIFE INSURANCE COMPANY (DEPOSITOR)
(REGISTRANT)
BY:________________________
James W. Dederer,
Chairman of the Board,
General Counsel and
Corporate Secretary
As Required by the Securities Act of 1933, this Post-Effective
Amendment No. 6to
the Registration Statement has been signed by the following persons in the
capacities and on
the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
- -
<S> <C> <C>
_________________________ * President and Director
April 28, 1997
Alan T. Cunningham
__________________________* Vice Presidentand Controller,
April 28, 1997
Alexander Smith
__________________________* Director
April 28, 1997
Marc C. Abrahms
_________________________* Director April
28, 1997
Robert Abeles
_________________________* Director April
28, 1997
James T. Byrne, Jr.
<PAGE>
__________________________* Director
April 28, 1997
Thomas J. Cusack
__________________________* Director
April 28, 1997
John Fibiger
__________________________* Director
April 28, 1997
David E. Gooding
___________________________* Director
April 28, 1997
Allan D. Greenberg
___________________________* Director
April 28, 1997
James B. Roszak
___________________________* Director
April 28, 1997
James Inzerillo
___________________________* Director
April 28, 1997
Daniel E. Jund
___________________________* Director
April 28, 1997
Cecelia Kempler
_________________________* Director April
28, 1997
John A. Paganelli
_________________________* Director April
28, 1997
James B. Roszak
</TABLE>
*By: James W. Dederer
On April 28, 1997 as Attorney -in-Fact pursuant to
powers of
attorney previously filed and filed herewith, and in his own capacity
as Chairman of the Board, General Counsel, Corporate Secretary and
Director.
C-19
<PAGE>
EXHIBIT INDEX
Exhibit Description
Page
No. of Exhibit
No.
(3) (h) Form of Sales Agreement among Transamerica
Insurance Securities Sales Corporation,
Transamerica Occidental Life Insurance
Company, First Transamerica Life Insurance
Company and Broker/Dealers, dated August 24,
1994.(8)
(i) Form of Sales Agreement between Transamerica
Occidental Life Insurance Company,
Transamerica Life Insurance and Annuity
Company, First Transamerica Life Insurance
Company and Transamerica Securities Sales
Corporation.(8)
(10) (a)Consent of Counsel
C-23
(b)Consent of Independent Auditors
C-24
(15) (d)Power of Attorney
C-26
(i)Power of Attorney
C-27
<PAGE>
Exhibit (3)(h)
Sales Agreement among Transamerica Insurance Securities Sales
Corporation, Transamerica Occidental Life
Insurance Company, First Transamerica Life Insurance Company
and Broker/Dealers, dated August 24,
1994.(8)
<PAGE>
Agreement dated as of ______________________________, 1994, by
and among TRANSAMERICA INSURANCE SECURITIES SALES CORPORATION, a
California
corporation ("TISSC"), TRANSAMERICA OCCIDENTAL LIFE INSURANCE
COMPANY, a
California insurance company ("TOLIC"), FIRST TRANSAMERICA LIFE
INSURANCE
COMPANY ("FTLIC," together with TOLIC, the "Transamerica Companies" and each
individually, a "Transamerica Company," and the Transamerica Companies together
with TISSC, "Transamerica"), and ___________________________________________, a
__________________ corporation ("Broker-Dealer"); and
_____________________________, a____________________ corporation ("Insurance
Agent").
RECITALS:
A. Each Transamerica Company pursuant to a Distribution
Agreement with TISSC (the "Distribution Agreements") has appointed TISSC as the
principal underwriter of the class or classes of variable annuity contracts
identified in Schedule 1 to this Agreement at the time that this Agreement is
executed, and such other class or classes of variable insurance products that
may be added to Schedule 1 from time to time in accordance with Section 2(g) of
this Agreement (each, a "class of Contracts"; all such classes, the
"Contracts"). Each class of Contracts will be issued by a Transamerica Company
through one or more separate accounts of such Transamerica Company ("Separate
Accounts") and each class of Contracts will be funded by shares of certain
registered investment companies (each, a "Fund"; together, the "Funds") and/or
by a fixed account option(s). The Transamerica Companies have authorized TISSC
to enter into separate written agreements with broker-dealers pursuant to which
such broker-dealers would be authorized to participate in the sale of the
Contracts and would agree to use their best efforts to solicit applications for
the Contracts.
B. Broker-Dealer is a broker-dealer and Insurance Agent is a
life insurance agent. Insurance Agent is:
() the same person as Broker-Dealer.
() an Affiliate of Broker-Dealer
C. The parties to this Agreement desire that Broker-Dealer and
Insurance Agent be authorized to solicit applications for the sale of the
Contracts subject to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and of the
mutual promises and covenants hereinafter set forth, the parties agree as
follows:
1. Additional Definitions
(a) Registration Statement - With respect to each class of
Contracts, the most recent effective registration statement(s) filed with the
SEC or the most recent effective post-effective amendment(s) thereto, including
financial statements included therein and all exhibits thereto. There may be
more than one Registration Statement in effect at a time for a
<PAGE>
class of Contracts; in such case, any reference to "the Registration Statement"
for a class of Contracts shall refer to any or all, depending on the context, of
the Registration Statements for such class of Contracts.
(b) Prospectus - With respect to each class of Contracts, the
prospectus for such class of Contracts included within the Registration
Statement for such class of Contracts; provided, however, that, if the most
recently filed prospectus filed pursuant to Rule 497 under the 1933 Act
subsequent to the date on which Registration Statement became effective differs
from the prospectus on file at the time such Registration Statement became
effective, the term "Prospectus" shall refer to the most recently filed
prospectus filed under Rule 497 from and after the date on which it shall have
been filed.
(c) 1933 Act - The Securities Act of 1933, as amended.
--------
(d) 1934 Act - The Securities Exchange Act of 1934, as amended.
--------
(e) 1940 Act - The Investment Company Act of 1940, as amended.
--------
(f) Agent - An individual associated with Insurance Agent and
Broker-Dealer who is appointed by one or both of the Transamerica Companies as
an agent for the purpose of soliciting applications.
(g) Premium - A payment made under a Contract to purchase
benefits under such Contract.
(h) Service Center - Transamerica Annuity Service Center, P.O.
Box 419706, Kansas City, Missouri, 64141-6706, (800) 258-4260, or such other
address as may be designated from time to time by the Transamerica Companies and
provided to Insurance Agent and Broker-Dealer.
(i) Agents Manual - The manual prepared by the Transamerica
Companies and attached hereto as Exhibit A.
(j) SEC - The Securities and Exchange Commission.
(k) NASD - The National Association of Securities Dealers, Inc.
(l) Affiliate - With respect to a person, any other person
controlling, controlled by, or under common control with, such person.
(m) Broker-of-Record - Generally, the person designated in the
Transamerica Companies' records as the person, with respect to a Contract, who
is entitled to receive compensation payable with respect to such Contract and
who is able to contact directly the owner of such Contract. In the case of
compensation payable with respect to a Premium, the
2
<PAGE>
Broker-of-Record shall be the party designated as such in the Transamerica
Companies records, at the time such Premium is accepted by a Transamerica
Company. In the case of any payment of compensation payable with respect to
Contract value, the Broker-of-Record shall be the party designated as such in
the Transamerica Companies records, in accordance with the Agents Manual at the
time any such payment is payable. In the case of compensation payable on
annuitization of a Contract, the Broker-of-Record is the party designated as
such in the Transamerica Companies records on the Annuity Date for such
Contract.
2. Authorization of Broker-Dealer and Insurance Agent
(a) Pursuant to the authority granted to it in the
Distribution Agreements, TISSC hereby authorizes Broker-Dealer under the
securities laws, and the Transamerica Companies hereby authorize Insurance Agent
under the insurance laws, each in a non-exclusive capacity, to sell the
Contracts. Broker-Dealer and Insurance Agent accept such authorization and shall
use their best efforts to find purchasers for the Contracts in each case
acceptable to the Transamerica Company issuing such Contracts. Broker-Dealer and
Insurance Agent understand that the public offering of and solicitation for a
class of Contracts will commence as soon as practicable after the effective date
of the Registration Statement for such class of Contracts.
(b) TISSC and the Transamerica Companies shall notify
Broker-Dealer and Insurance Agent in writing of all states and jurisdictions in
which each Transamerica Company is licensed to sell the Contracts.
(c) Broker-Dealer and Insurance Agent acknowledge that no
territory is exclusively assigned hereunder, and each Transamerica Company and
TISSC reserves the right in its sole discretion to establish or appoint one or
more agencies in any jurisdiction in which Insurance Agent transacts business
hereunder.
(d) Insurance Agent is vested under this Agreement with power
and authority to select and recommend individuals associated with Insurance
Agent for appointment as Agents of one or both of the Transamerica Companies,
and only individuals so recommended by Insurance Agent shall become Agents,
provided that each Transamerica Company reserves the right in its sole
discretion to refuse to appoint any proposed agent or, once appointed, to
terminate the same at any time with or without cause.
(e) Neither Broker-Dealer nor Insurance Agent shall expend or
contract for the expenditure of the funds of TISSC or the Transamerica
Companies. Broker-Dealer and Insurance Agent each shall pay all expenses
incurred by each of them in the performance of this Agreement, unless otherwise
specifically provided for in this Agreement or unless TISSC and the Transamerica
Companies shall have agreed in advance in writing to share the cost of any such
expenses. Initial state appointment fees for Insurance Agent and appointees of
Insurance Agent as Agents of a Transamerica Company will be paid by such
Transamerica
3
<PAGE>
Company unless otherwise paid for by the Insurance Agent or Broker-Dealer.
Renewal state appointment fees for any Insurance Agent or any appointee of any
Insurance Agent shall be paid by such Transamerica Company if, in the
Transamerica Company's sole discretion, its minimum production and activity
requirements for the payment of renewal appointment fees have been met by such
Insurance Agent or appointee. Each Transamerica Company shall establish
reasonable minimum production and activity requirements for the payment of
renewal state appointment fees, which may be changed by such Transamerica
Company in its sole discretion at any time without notice. Except as otherwise
provided herein, Insurance Agent will be obligated to pay all state appointment
fees, including, but not limited to, renewal appointment fees not paid for by a
Transamerica Company, transfer fees and termination fees, and any other fees
required to be paid to obtain state insurance licenses for Insurance Agent or
appointees of Insurance Agent. Neither Broker-Dealer nor Insurance Agent shall
possess or exercise any authority on behalf of either Transamerica Company other
than that expressly conferred on Broker-Dealer or Insurance Agent by this
Agreement. In particular, and without limiting the foregoing, neither
Broker-Dealer nor Insurance Agent shall have any authority, nor shall either
grant such authority to any Agent, on behalf of one or both of the Transamerica
Companies: to make, alter or discharge any Contract or other contract entered
into pursuant to a Contract; to waive any Contract forfeiture provision; to
extend the time of paying any Premiums; or to receive any monies or Premiums
from applicants for or purchasers of the Contracts (except for the sole purpose
of forwarding monies or Premiums to a Transamerica Company).
(f) Broker-Dealer and Insurance Agent acknowledge that each
Transamerica Company has the right in its sole discretion to reject any
applications or Premiums received by it and to return or refund to an applicant
such applicant's Premium. In the event that a Transamerica Company rejects an
application solicited by an Agent or Insurance Agent, such Transamerica Company
will return any Premium paid by the applicant to such applicant and will
promptly notify Insurance Agent of such action. In the event that a purchaser
exercises his free look right under his Contract, any amount to be refunded as
provided in such Contract shall be so refunded to the purchaser by or on behalf
of the Transamerica Company that issued such Contract and such Transamerica
Company shall promptly notify Insurance Agent of such action.
(g) Schedule 1 to this Agreement may be amended by
Transamerica at its sole discretion from time to time to include other classes
of variable annuity contracts or variable life insurance contracts, which
classes of contracts are distributed by TISSC pursuant to the Distribution
Agreements or other distribution agreements with the Transamerica Companies. The
provisions of this Agreement shall be equally applicable to each such class of
Contracts unless the context otherwise requires. Schedule 1 to this Agreement
may be amended by Transamerica at its sole discretion from time to time with 30
days notice to Insurance Agent to delete classes of variable annuity contracts
or variable life insurance contracts.
(h) TISSC and the Transamerica Companies acknowledge that Broker-Dealer and
Insurance Agent are each an independent contractor. Accordingly, Broker-Dealer
and
4
<PAGE>
Insurance Agent are not obliged or expected to give full time and energies to
the performance of their obligations hereunder, nor are Broker-Dealer and
Insurance Agent obliged or expected to represent TISSC or one or both of the
Transamerica Companies exclusively. Nothing herein contained shall constitute
Broker-Dealer, Insurance Agent, the Agents or any agents or representatives of
Broker-Dealer or Insurance Agent as employees of TISSC or a Transamerica Company
in connection with the solicitation of applications for the Contracts.
3. Licensing and Registration of Broker-Dealer, Insurance Agent and Agents
(a) Broker-Dealer represents that it is a broker-dealer
registered with the SEC under the 1934 Act, and is a member of the NASD.
Broker-Dealer must, at all times when performing its functions and fulfilling
its obligations under this Agreement, be duly registered as a broker-dealer
under the 1934 Act and in each state or other jurisdiction in which Broker-
Dealer intends to perform its functions and fulfill its obligations hereunder,
and be a member in good standing of the NASD.
(b) Insurance Agent represents that it is a licensed life
insurance agent where required to solicit applications, except that if Insurance
Agent cannot be qualified to be a licensed life insurance agent until appointed
by an insurer, Insurance Agent represents that it is qualified to be a licensed
insurance agent but for the appointment by an insurer. Insurance Agent must, at
all times when performing its functions and fulfilling its obligations under
this Agreement, be duly licensed to sell the Contracts in each state or other
jurisdiction in which Insurance Agent intends to perform its functions and
fulfill its obligations hereunder.
(c) Broker-Dealer shall ensure that no individual shall offer
or sell the Contracts on behalf of Broker-Dealer in any state or other
jurisdiction in which the Contracts may lawfully be sold unless such individual
is an associated person of Broker-Dealer (as that term is defined in Section
3(a)(18) of the 1934 Act) and duly registered with the NASD and any applicable
state securities regulatory authority as a registered person of Broker-Dealer
qualified to sell the Contracts in such state or jurisdiction.
(d) Insurance Agent shall ensure that no individual shall
offer or sell the Contracts on behalf of Insurance Agent in any state or other
jurisdiction unless such individual is duly licensed and appointed as an Agent
of one or both of the Transamerica Companies (as appropriate), and appropriately
licensed, registered or otherwise qualified to offer and sell the Contracts to
be offered and sold by such individual under the insurance laws of such state or
jurisdiction. Insurance Agent understands that certain states may require that a
special variable contracts examination be passed by an Agent before he or she
can solicit applications for the Contracts. Nothing in this Agreement is to be
construed as requiring a Transamerica Company to obtain a license or issue a
consent or appointment to enable any particular agent of Insurance Agent to sell
Contracts; however, each Transamerica Company shall provide its full cooperation
to Insurance Agent in its efforts to assist individuals recommended by Insurance
Agent who are reasonably qualified, in meeting the requirements for appointment.
All matters concerning the licensing of any individuals recom-
5
<PAGE>
mended for appointment by Insurance Agent under any applicable state insurance
law shall be a matter directly between Insurance Agent and such individual, and
the Insurance Agent shall furnish a Transamerica Company with proof of proper
licensing of such individual or other proof, reasonably acceptable to
Transamerica, of satisfaction by such individual of licensing requirements prior
to such Transamerica Company appointing any such individual as an Agent of such
Transamerica Company.
(e) If Insurance Agent is an Affiliate of Broker-Dealer as reflected in
Recital D, to this Agreement, then by engaging in the distribution activities
contemplated by the Agreement, Broker-Dealer and Insurance Agent represent and
warrant either that:
(i) Broker-Dealer and Insurance Agent:
(A) have obtained a letter from the Staff of the Securities and Exchange
Commission advising Broker-Dealer and Insurance Agent that the Staff will not
recommend enforcement action if Insurance Agent is not registered as a
broker-dealer with the Commission;
(B) are complying and will continue to comply with
the conditions set forth in such letter at all times while the Agreement is in
effect; or
(ii) at the time that the Agreement becomes effective and during the term of
the Agreement:
(A) Insurance Agent is either wholly-owned by Broker-Dealer or an
affiliated person of Broker-Dealer or is wholly-owned by one or more associated
persons of Broker-Dealer;
(B) Insurance Agent and its personnel will be "associated persons" of
Broker-Dealer within the meaning of Section 3(a)(18) of the 1934 Act;
(C) Insurance Agent will engage in the offer or sale of the contracts
only through persons who are registered person of Broker-Dealer;
(D) Insurance Agent will not receive or handle customer funds or
securities;
(E) Broker-Dealer will be responsible for the training, supervision and
control of registered persons engaging in the offer or sale of the Contracts on
behalf of Insurance Agent, as required under the 1934 Act, NASD rules and other
applicable statutes or regulations, and will also be responsible for the
supervision and control of any of its associated persons who are owners,
directors or executive officers of Insurance Agent;
6
<PAGE>
(F) Broker-Dealer will comply with all applicable requirements of the
1934 Act and the NASD, including the requirement to maintain and preserve books
and records under Section 17(a) of the 1934 Act and the rules thereunder; and
(G) Commissions and fees relating to the Contracts will be reflected in
the quarterly FOCUS reports and the fee assessment reports filed by Broker-
Dealer with the NASD.
Broker-Dealer and Insurance Agent shall notify Transamerica immediately
in writing if Broker-Dealer and/or Insurance Agent fail to comply with any of
the applicable provisions set forth above.
4. Broker-Dealer and Insurance Agent Compliance
(a) Insurance Agent shall train, supervise, and be solely
responsible for the conduct of the Agents in their solicitation activities in
connection with the Contracts, and shall supervise Agents' compliance with
applicable rules and regulations of any insurance regulatory agencies that have
jurisdiction over variable contracts activities, as well as the rules and
procedures of the Transamerica Companies pertaining to the solicitation, sale
and submission of applications for the Contracts, which are set forth in the
Agents Manual as provided to it in writing, as it may be amended from time to
time in the Transamerica Companies' sole discretion. Broker-Dealer shall be
solely responsible for background investigations of the Agents to determine
their qualifications, good character, and moral fitness to sell the Contracts.
(b) Broker-Dealer shall be responsible for securities
training, supervision and control of the Agents in connection with their
solicitation activities with respect to the Contracts and shall supervise
Agents' strict compliance with applicable federal and state securities law and
NASD requirements in connection with such solicitation activities.
(c) Broker-Dealer and Insurance Agent shall comply with the
rules and procedures set forth in the Agents Manual as provided to them in
writing, as it may be amended from time to time, and shall be solely responsible
for such compliance.
(d) Broker-Dealer and Insurance Agent hereby represent and
warrant that they are duly in compliance with all applicable federal and state
securities laws and regulations, including without limitation state insurance
laws and regulations imposing insurance licensing requirements.
(e) Broker-Dealer and Insurance Agent each shall carry out
their respective sales and administrative obligations under this Agreement in
continued compliance with federal and state laws and regulations, including
those governing securities and/or insurance related activities or transactions,
as applicable.
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(f) Broker-Dealer, Insurance Agent and Agents shall not offer
or attempt to offer the Contracts, nor solicit applications for the Contracts,
nor deliver Contracts, in any state or jurisdiction in which the Contracts may
not be lawfully sold or offered for sale. For purposes of determining where the
Contracts may be offered and applications solicited, Broker-Dealer and Insurance
Agent may rely on written notification, as revised from time to time, that they
receive from the Transamerica Companies.
(g) Broker-Dealer and Insurance Agent shall ensure that each
Agent shall comply with a standard of conduct applicable to licensed insurance
agents including, but not limited to, the following:
(i) An Agent shall be duly qualified, licensed and
registered to solicit and participate in the sale of Contracts as set
forth in Section 3 of this Agreement.
(ii) An Agent shall not solicit applications for the
Contracts without delivering the Prospectus for the Contracts and any
then-applicable supplements thereto, and, where required by state
insurance law (as set forth in a notice to be supplied by the
Transamerica Companies), the then-currently effective statement of
additional information for the Contracts, and the then-currently
effective prospectus(es) for the Fund(s) and any then-applicable
supplements thereto. In soliciting applications for the Contracts, an
Agent shall only make statements, oral or written, which are in
accordance with the Prospectuses, statements of information and
Registration Statements for the Contract(s), or a Fund, or in reports
or proxy statements therefor, or in promotional, sales or advertising
material or other information supplied and approved in writing by
Transamerica. An Agent shall utilize only those applications for the
Contracts provided to Insurance Agent by Transamerica Company.
(iii) An Agent shall recommend the purchase of a
Contract to an applicant only if he has reasonable grounds to believe
that such purchase is suitable for the applicant in accordance with,
among other things, applicable regulations of any state insurance
regulatory authority, the SEC and the NASD. While not limited to the
following, a determination of suitability shall be based on information
supplied to an Agent after a reasonable inquiry concerning the
applicant's insurance and investment objectives and financial situation
and needs.
(iv) An Agent shall accept initial Premiums in the
form of a check or money order only if made payable to "Transamerica
Occidental Life Insurance Company" or "First Transamerica Life
Insurance Company," as applicable, and signed by the applicant for the
Contract. An Agent shall not accept third-party checks or cash for
Premiums.
(v) All checks and money orders and applications for
the Contracts received by an Agent shall be remitted promptly, and in
any event not later than 2 business days after receipt, to the Service
Center.
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<PAGE>
(vi) An Agent shall have no authority to endorse
checks or money orders payable to a Transamerica Company.
(vii) An Agent shall have no authority to alter,
modify, waive or change any of the terms, rates, charges or conditions
of the Contracts.
(viii) An Agent shall have no authority to advertise
for or on behalf of TISSC or a Transamerica Company without prior
written approval and authorization from TISSC or such Transamerica
Company.
(ix) An Agent shall have no authority to offer, sell,
or solicit applications for Contracts or Premiums thereunder which will
be subject to or in connection with any so-called "market timing"
program, plan, arrangement or service.
(x) An Agent shall not encourage a prospective
purchaser to surrender or exchange an insurance policy or contract in
order to purchase a Contract or, conversely, to surrender or exchange a
Contract in order to purchase another insurance policy or contract,
subject to applicable NASD Rules of Fair Practice and any other
applicable laws, regulations and regulatory guidelines.
(xi) An Agent shall act in accordance with the Agents
Manual in connection with any solicitation activities in connection
with the Contracts.
(h) Insurance Agent shall return promptly to the appropriate
Transamerica Company all receipts for delivered Contracts, all undelivered
Contracts and all receipts for cancellation, in accordance with the instructions
set forth in the Agents Manual. Upon issuance of a Contract by a Transamerica
Company and delivery of such Contract to Insurance Agent, Insurance Agent shall
promptly deliver such Contract to its purchaser. For purposes of this provision,
"promptly" shall be deemed to mean not later than five calendar days. Each
Transamerica Company will assume that a Contract issued by such Transamerica
Company will be delivered by Insurance Agent to the purchaser of such Contract
within five calendar days for purposes of determining when to transfer Premiums
initially allocated to the Money Market Account available under such Contract to
the particular investment options specified by such purchaser. As a result, if a
purchaser exercises the free look provisions under a Contract, Broker-Dealer
shall indemnify the Transamerica Company issuing a Contract for any loss
incurred by such Transamerica Company that results from Insurance Agent's
failure to deliver such Contract to its purchaser within the contemplated five
calendar day period.
(i) In the event that Premiums are sent to Insurance Agent or
Broker-Dealer, rather than to the Service Center, Insurance Agent and
Broker-Dealer shall promptly (and in any event, not later than 2 business days)
remit such Premiums to the appropriate Transamerica Company at the Service
Center. Insurance Agent and Broker-Dealer acknowledge that if any Premium is
held at any time by either of them, such Premium shall
9
<PAGE>
be held on behalf of the customer, and Insurance Agent or Broker-Dealer shall
segregate such Premium from their own funds and promptly (and in any event,
within 2 business days) remit such Premium to the appropriate Transamerica
Company. All such Premiums, whether by check, money order or wire, shall at all
times be the property of the Transamerica Company issuing the Contract pursuant
to which such Premiums are paid.
(j) Neither Broker-Dealer nor Insurance Agent, nor any of
their directors, partners, officers, employees, registered persons, associated
persons, agents or affiliated persons, in connection with the offer or sale of
the Contracts, shall give any information or make any representations or
statements, written or oral, concerning the Contracts, a Fund or Fund Shares,
other than information or representations which are in accordance withthe
Prospectuses, statements of additional information and Registration Statements
for the Contracts, or a Fund, or in reports or proxy statements therefore, or in
promotional, sales or advertising material or other information supplied and
approved in writing by TISSC and Transamerica Company.
(k) Broker-Dealer and Insurance Agent shall not use or
implement any promotional, sales or advertising material relating to the
Contracts without the prior written approval of TISSC and Transamerica
Companies.
(l) Broker-Dealer and Insurance Agent understand, acknowledge,
and represent that Contracts and Premiums thereunder shall not be solicited,
offered, or sold in connection with any so-called "market timing" program, plan,
arrangement or service. Should TISSC or a Transamerica Company determine at its
reasonable discretion that Broker-Dealer or Insurance Agent is soliciting,
offering, or selling, or has solicited, offered, or sold, Contracts or Premiums
subject to any so-called "market timing" program, plan, arrangement or service,
TISSC or such Transamerica Company may take such action which is necessary, at
its sole discretion, to halt such solicitations, offers or sales. Furthermore,
in addition to any indemnification provided in Section 13 to this Agreement and
any other liability that Broker- Dealer and Insurance Agent might have,
Broker-Dealer and Insurance Agent shall each be liable to TISSC and each
Transamerica Company whose Contracts are solicited, offered or sold in
connection with any so-called "market timing" program, plan, arrangement or
service and each Fund affected by any such program, plan, arrangement or
service, for any damages or losses, actual or consequential, sustained by TISSC
or either Transamerica Company or any Fund, as a result of any so-called "market
timing" program, plan, arrangement or service which causes such losses or
damages following solicitation, offer, or sale of a Contract or Premium subject
to "market timing" or similar service by Broker-Dealer or Insurance Agent.
(m) Broker-Dealer and Insurance Agent shall be solely
responsible under applicable tax laws for the reporting of compensation paid to
Agents.
(n) Insurance Agent represents that it maintains and shall
maintain such books and records concerning the activities of the Agents as may
be required by the appropriate insurance regulatory agencies that have
jurisdiction and that may be reasonably required by
10
<PAGE>
the Transamerica Companies to adequately reflect the Contracts business
processed through Insurance Agent. Insurance Agent shall make such books and
records available to a Transamerica Company at any reasonable time upon written
request by a Transamerica Company.
(o) Broker-Dealer represents that it maintains and shall
maintain appropriate books and records concerning the activities of the Agents
as are required by the SEC, the NASD and other agencies having jurisdiction and
that may be reasonably required by TISSC to reflect adequately the Contracts
business processed through Insurance Agent. Broker-Dealer shall make such books
and records available to a Transamerica Company at any reasonable time upon
written request by a Transamerica Company.
(p) Broker-Dealer and Insurance Agent shall promptly furnish
to Transamerica or its authorized agent, and Transamerica shall promptly furnish
to Broker-Dealer or Insurance Agent, any reports and information that
Transamerica may reasonably request for the purpose of meeting such Transamerica
Company's reporting and recordkeeping requirements under the insurance laws of
any state, under any applicable federal and state securities laws, rules and
regulations, and the rules of the NASD.
5. Sales Materials
(a) During the term of this Agreement, TISSC and each
Transamerica Company will provide Broker-Dealer and Insurance Agent, without
charge, with as many copies of Prospectuses (and any supplements thereto),
current Fund prospectus(es) (and any supplements thereto), and applications for
the Contracts, as Broker-Dealer or Insurance Agent may reasonably request. Upon
termination of this Agreement, Broker-Dealer and Insurance Agent will promptly
return to TISSC any Prospectuses, applications, Fund prospectuses, and other
materials and supplies furnished by TISSC or Transamerica Company to
Broker-Dealer or Insurance Agent or to the Agents.
(b) During the term of this Agreement, TISSC will be
responsible for providing and approving all promotional, sales and advertising
material to be used by Broker- Dealer and Insurance Agent. TISSC will file such
materials or will cause such materials to be filed with the SEC, the NASD,
and/or with any state securities regulatory authorities, as appropriate.
6. Commissions and Expenses
(a) During the term of this Agreement, TISSC shall pay to
Insurance Agent as compensation for Contracts for which it is the
Broker-of-Record, the commissions and fees set forth in Schedule 2 to this
Agreement, as such Schedule 2 may be amended or modified at any time, in any
manner, and without prior notice, by Transamerica, and subject to other
provisions of this Agreement. Any amendment to Schedule 2 will be applicable to
any Contract for which an application or premium is received by the Service
Center on or after the
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<PAGE>
effective date of such amendment or which is in effect after the effective date
of such amendment. Compensation with respect to any Contract shall be paid to
Insurance Agent only for so long as Insurance Agent is the Broker-of-Record for
such Contract.
(b) Broker-Dealer and Insurance Agent recognize that all
compensation payable to Insurance Agent hereunder will be disbursed by or on
behalf of the Transamerica Companies after Premiums are received and accepted by
the appropriate Transamerica Company and that no compensation of any kind other
than that described in this Agreement is payable to Insurance Agent.
Compensation generally will be paid twice per month.
(c) Chargebacks
(i) In the event that:
(A) a Premium is returned because a
Transamerica Company rejects the application for such Premium
or because the Premium, or the application for such Premium,
is not timely received by a Transamerica Company as required
herein, or a refund is made because a purchaser exercises his
free look right under his Contract; or
(B) within the first six months after the
date that a Contract was issued, the purchaser surrenders the
Contract, or otherwise rescinds the Contract, or the Contract
annuitizes;
then, in any such event, upon written request from TISSC, Insurance
Agent shall promptly repay any and all compensation received by
Insurance Agent, based on all Premiums paid into the Contract, and
shall pay any loss incurred as a result of a Premium being returned
which was not timely received or for which an application was not
timely received by a Transamerica Company.
(ii) If during the period from six months after the
date of issuance of a Contract to the end of the first policy year of
the Contract, the purchaser exercises a right to surrender the
Contract, or otherwise rescinds the Contract, or the Contract
annuitizes, then, in any such event, upon written request from TISSC,
Insurance Agent shall promptly repay one-half (1/2) of any and all
compensation received by Insurance Agent, based on all Premiums paid
into the Contract.
(iii) If at any time after the first policy year of a
Contract, the purchaser exercises a right to surrender the Contract, or
otherwise rescinds the Contract, then, in any such event, upon written
request from TISSC, Insurance Agent shall promptly repay one-half (1/2)
of any and all compensation received by Insurance Agent, based on all
Premiums paid into the Contract in the policy year in which the
Contract is surrendered or rescinded.
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<PAGE>
(iv) If at any time during the second or third policy
year of a Contract the Contract annuities, then, in any such event,
upon written request from TISSC, Insurance Agent shall promptly repay
one-half (1/2) of any and all compensation received by Insurance Agent,
based on all Premiums paid into the Contract in the policy year in
which the Contract annuitizes.
(v) If at any time after the third policy year of a
Contract, the Contract annuities and the issuing Transamerica Company
does not waive the contingent deferred sales charge, then, in any such
event, upon written request from TISSC, Insurance Agent, shall promptly
repay one-half (1/2) of any and all compensation received by Insurance
Agent, based on all Premiums paid into the Contract in the policy year
in which the Contract annuitizes.
(vi) If at any time after the third policy year of a
Contract, the Contract annuitizes and the issuing Transamerica Company
waives the contingent deferred sales charge, then, in any such event,
upon written request from TISSC, Insurance Agent shall promptly repay
any and all compensation received by Insurance Agent, based on all
Premiums paid into the Contract during the immediately preceding six
calendar months.
If repayment and/or payment under any of the provisions of this Section 6(c) is
not promptly made following receipt of a notice of request for repayment,
Insurance Agent authorizes TISSC, at its sole option, to deduct any such
unrepaid compensation or unpaid payment from any future compensation as it
becomes due to Insurance Agent, to the extent permitted by applicable law;
provided, however, that this option on the part of TISSC shall not prevent it
from pursuing any other means or remedies available to it to recover such
compensation and/or payment. For purposes of this Section 6(c), the payment of a
death benefit pursuant to the terms of a Contract shall not be deemed a
surrender or rescission by a purchaser. The provisions of this Section 6(c) are
not intended to impose any repayment and/or payment obligation with respect to
asset-based sales compensation, including "trail" commissions, paid to Insurance
Agent.
(d) With respect to commissions, compensation or any other
amounts owed by Transamerica to Broker-Dealer or Insurance Agent under any other
agreement, Insurance Agent shall have a right to set off against such amounts
any monies payable by Insurance Agent under this Agreement, including Section
6(c) hereof, to Insurance Agent, to the extent permitted by applicable laws.
This right on the part of Insurance Agent shall not prevent both of them or
either of them from pursuing any other means or remedies available to them to
recover such monies payable by Insurance Agent.
(e) Broker-Dealer or Insurance Agent shall immediately remit
to the appropriate Transamerica Company any premium retained (in error) by
Broker-Dealer or Insurance Agent.
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<PAGE>
7. Interests in Agreement. Agents shall have no interest in this
Agreement or right to any commissions to be paid by TISSC to Insurance Agent.
Insurance Agent shall be solely responsible for the payment of any commission or
consideration of any kind to Agents. Insurance Agent shall have no right to
withhold or deduct any commission from any Premiums in respect of the Contracts
which it may collect. Insurance Agent shall have no interest in any compensation
paid by a Transamerica Company to TISSC, now or hereafter, in connection with
the sale of any Contracts hereunder.
8. Term of Agreement
(a) This Agreement relates solely to the classes of Contracts
identified in Schedule 1 to this Agreement.
(b) This Agreement shall remain in effect for a period of one
year, and, unless terminated earlier pursuant to subsections (c) or (d) of this
Section, shall automatically continue in effect for one-year periods thereafter;
provided, however, that it shall automatically terminate upon termination of one
or both of the Distribution Agreements referenced in Recital A of this
Agreement.
(c) This Agreement may be terminated by any party hereto by
giving notice to the other parties at least sixty (60) days prior to an annual
anniversary of this Agreement as identified on the face page.
(d) If Broker-Dealer or Insurance Agent, on the one side, or
TISSC or either or both of the Transamerica Companies, on the other side, should
default in a material respect, in their respective obligations under this
Agreement, or breach in a material respect, any of their respective
representations or warranties made in this Agreement, may, at their option,
cancel and terminate this Agreement without notice.
(e) Upon termination of this Agreement, all authorizations,
rights, and obligations hereunder shall cease except:
(i) the obligation to settle accounts hereunder,
including the payment of compensation with respect to Contracts in
effect at the time of termination or issued pursuant to applications
received by a Transamerica Company prior to termination or Premiums
received on such Contracts subsequent to termination of this Agreement;
(ii) the provisions with respect to indemnification set forth in Section
13 hereof;
(iii) the provisions of Sections 4(g) and 4(h) hereof
that require Insurance Agent and Broker-Dealer to maintain certain
books and records; and
(iv) the confidentiality provisions contained in Section 11 hereof.
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9. Complaints and Investigations
(a) TISSC, the Transamerica Companies, Broker-Dealer and
Insurance Agent each shall cooperate fully in any insurance regulatory
investigation or proceeding or judicial proceeding arising in connection with
the Contracts marketed under this Agreement. In addition, TISSC, the
Transamerica Companies, Broker-Dealer and Insurance Agent shall cooperate fully
in any securities regulatory investigation or proceeding or judicial proceeding
with respect to TISSC, Broker-Dealer, their Affiliates and their agents, to the
extent that such investigation or proceeding is in connection with the Contracts
marketed under this Agreement. Without limiting the foregoing:
(i) Broker-Dealer and Insurance Agent will be
notified promptly of any customer complaint or notice of any regulatory
investigation or proceeding or judicial proceeding received by TISSC or
a Transamerica Company with respect to Insurance Agent or any Agent or
which may affect the issuance of any Contract marketed under this
Agreement; and
(ii) Broker-Dealer and Insurance Agent will promptly
notify TISSC and the appropriate Transamerica Company of any written
customer complaint or notice of any regulatory investigation or
proceeding or judicial proceeding received by Broker- Dealer, Insurance
Agent or their Affiliates with respect to themselves, their Affiliates,
or any Agent in connection with any Contract marketed under this
Agreement or any activity in connection with any such Contract.
(b) In the case of a customer complaint, TISSC, the
Transamerica Companies, Broker-Dealer and Insurance Agent will cooperate in
investigating such complaint and any response by Broker-Dealer or Insurance
Agent to such complaint will be sent to TISSC for approval not less than five
business days prior to its being sent to the customer or regulatory authority,
except that if a more prompt response is required, the proposed response shall
be communicated by telephone or facsimile.
10. Assignment. This Agreement shall be nonassignable by the parties hereto,
except that a party may assign its rights and obligations to any subsidiary of,
or any company under common control with, such party, provided that:
(a) the assignee is duly licensed to perform all functions
required of that party under this Agreement;
(b) the assignee undertakes to perform such party's functions hereunder; and
(c) in the event Broker-Dealer or Insurance Agent determines
to assign its rights and obligations under this Agreement:
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(i) such proposed assignment is approved in advance
by TISSC, in the event of an assignment by Broker-Dealer or by
the Transamerica Companies, as appropriate, in the event of an
assignment by Insurance Agent; and
(ii) Broker-Dealer or Insurance Agent or assignee
pays any state insurance agent appointment fees that become
due and payable as a result of the assignment.
11. Confidentiality. Transamerica and Broker-Dealer and Insurance Agent
shall maintain the confidentiality of any customer list or any other proprietary
information that either may acquire in the performance of this Agreement and
shall not use such customer list or information without the prior written
consent of the other party.
12. Modification of Agreement. This Agreement supersedes all prior
agreements, either oral or written, between the parties relating to the
Contracts and, except for any amendment of Schedule 1 pursuant to the terms of
Section 2 hereof or Schedule 2 pursuant to the terms of Section 6 hereof, may
not be modified in any way unless by written agreement signed by all of the
parties.
13. Indemnification
(a) Broker-Dealer and Insurance Agent, jointly and severally,
shall indemnify and hold harmless TISSC and each Transamerica Company and each
person who controls or is associated with a Transamerica Company within the
meaning of such terms under the federal securities laws, and any officer,
director, employee or agent of the foregoing, against any and all losses,
claims, damages or liabilities, joint or several (including any investigative,
legal and other expenses reasonably incurred in connection with, and any amounts
paid in settlement of, any action, suit or proceeding or any claim asserted), to
which they or any of them may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
arise out of or are based upon:
(i) violation(s) by Broker-Dealer, Insurance Agent,
or an Agent of federal or state securities law or regulation(s),
insurance law or regulation(s), or any rule or requirement of the NASD;
(ii) any unauthorized use of sales or advertising
material, any oral or written misrepresentations, or any unlawful sales
practices concerning the Contracts, by Broker-Dealer, Insurance Agent
or an Agent;
(iii) claims by the Agents or other agents or
representatives of Insurance Agent or Broker-Dealer for commissions or
other compensation or remuneration of any type;
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(iv) any action or inaction by a clearing broker
through whom Broker- Dealer or Insurance Agent processes any
transaction pursuant to this Agreement;
(v) any failure on the part of Broker-Dealer,
Insurance Agent, or an Agent to submit Premiums or applications to the
Transamerica Companies, or to submit the correct amount of a Premium,
on a timely basis and in accordance with Section 4 of this Agreement
and the Agents Manual;
(vi) any failure on the part of Broker-Dealer,
Insurance Agent, or an Agent to deliver Contracts to purchasers thereof
on a timely basis and in accordance with the Agents Manual; or
(vi) a breach by Broker-Dealer or Insurance Agent of
any provision of this Agreement, including without limitation Section
4(l).
This indemnification will be in addition to any liability which Broker-Dealer
and Insurance Agent may otherwise have.
(b) TISSC and the Transamerica Companies, jointly and
severally, shall indemnify and hold harmless Broker-Dealer and Insurance Agent
and each person who controls or is associated with Broker-Dealer or Insurance
Agent within the meaning of such terms under the federal securities laws, and
any officer, director, employee or agent of the foregoing, against any and all
losses, claims, damages or liabilities, joint or several (including any
investigative, legal and other expenses reasonably incurred in connection with,
and any amounts paid in settlement of, any action, suit or proceeding or any
claim asserted), to which they or any of them may become subject under any
statue or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities arise out of or are based upon any breach by
TISSC or a Transamerica Company of any provision of this Agreement. This
indemnification will be in addition to any liability which TISSC and the
Transamerica Companies, jointly and severally, may otherwise have.
(c) After receipt by a party entitled to indemnification
("indemnified party") under this Section 13 of notice of the commencement of any
action, if a claim in respect thereof is to be made against any person obligated
to provide indemnification under this Section 13 ("indemnifying party"), such
indemnified party will notify the indemnifying party in writing of the
commencement thereof as soon as practicable thereafter, provided that the
omission so to notify the indemnifying party will not relieve it from any
liability under this Section 13, except to the extent that the omission results
in a failure of actual notice to the indemnifying party and such indemnifying
party is damaged solely as a result of the failure to give such notice. The
indemnifying party, upon the request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in such
proceeding and shall pay the fees and disbursements of such counsel related to
such proceeding. In any such proceeding, any indemnified party shall have the
right to retain its own counsel, but the fees
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and expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying party
and the indemnified party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, but if such proceeding is
settled with such consent or if final judgment is entered in such proceeding for
the plaintiff, the indemnifying party shall indemnify the indemnified party from
and against any loss or liability by reason of such settlement or judgment.
14. Rights, Remedies, etc. are Cumulative. The rights, remedies and
obligations contained in this Agreement are cumulative and are in addition to
any and all rights, remedies and obligations, at law or in equity, which the
parties hereto are entitled to under state and federal laws. Failure of a party
to insist upon strict compliance with any of the conditions of this Agreement
shall not be construed as a waiver of any of the conditions, but the same shall
remain in full force and effect. No waiver of any of the provisions of this
Agreement shall be deemed, or shall constitute, a waiver of any other
provisions, whether or not similar, nor shall any waiver constitute a continuing
waiver.
15. Notices. All notices hereunder are to be made in writing and shall be given:
if to TISSC, to:
Transamerica Insurance Securities Sales Corporation
Attention: General Counsel
Transamerica Center
1150 South Olive Street
Los Angeles, California 90015
if to Transamerica Occidental Life Insurance Company, to:
Transamerica Occidental Life Insurance Company
Attention: General Counsel
Transamerica Center
1150 South Olive Street
Los Angeles, California 90015
if to First Transamerica Life Insurance Company, to:
First Transamerica Life Insurance Company
Attention: General Counsel
575 Fifth Avenue
New York, New York 10017
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if to Broker-Dealer, to:
======================
======================
if to Insurance Agent, to:
=======================
-----------------------
or such other address as such party may hereafter specify in writing. Each such
notice to a party shall be either hand delivered or transmitted by registered or
certified United States mail with return receipt requested, and shall be
effective upon delivery.
16. Interpretation, Jurisdiction, Etc. This Agreement constitutes the
whole agreement between the parties hereto with respect to the subject matter
hereof, and supersedes all prior oral or written understandings, agreements or
negotiations between the parties with respect to the subject matter hereof. No
prior writings by or between the parties hereto with respect to the subject
matter hereof shall be used by a party in connection with the interpretation of
any provision of this Agreement. This Agreement shall be construed and its
provisions interpreted under and in accordance with the internal laws of the
state of California without giving effect to principles of conflict of laws.
17. Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or the breach hereof, shall be settled by arbitration in a forum
selected by Transamerica in accordance with the Commercial Arbitration Rules of
the American Arbitration Association, and judgment upon the award rendered by
the arbitrator(s) may be entered in any court having jurisdiction thereof.
18. Headings. The headings in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
19. Counterparts. This Agreement may be executed in two or more counterparts,
each of which taken together shall constitute one and the same instrument.
20. Severability. This is a severable Agreement. In the event that any
provision of this Agreement would require a party to take action prohibited by
applicable federal or state law or prohibit a party from taking action required
by applicable federal or state law, then it is the intention of the parties
hereto that such provision shall be enforced to the extent permitted under the
law, and, in any event, that all other provisions of this Agreement shall remain
valid and duly enforceable as if the provision at issue had never been a part
hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
Transamerica Insurance Securities __________________________
Sales Corporation Broker/Dealer
By:________________________ By:________________________
Name:______________________ Name:______________________
Title:_______________________ Title:_______________________
Transamerica Occidental Life ___________________________
Insurance Company Insurance Agent
By:________________________ By:________________________
Name:______________________ Name:______________________
Title:_______________________ Title:_______________________
First Transamerica Life
Insurance Company
By:________________________
Name:______________________
Title:_______________________
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Schedule 1
Contracts Subject to this Agreement
Effective September 1, 1994
Dreyfus-Transamerica Triple Advantage Variable Annuity Contract
21
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Option 1
Schedule 2
Effective September 1, 1994
Premiums. A commission will be paid to Insurance Agent for each Premium
accepted on a Contract for which Insurance Agent is the Broker-of-Record as
follows:
=====================================================================
=====
Class of Contracts Commission Rate
- --------------------------------------------------------------------------
Dreyfus-Transamerica 5.25%
Triple Advantage
=====================================================================
=====
Commissions will be paid twice monthly, based on Premiums accepted during the
prior half- monthly period.
Annuitization. A commission will be paid to Insurance Agent upon annuitization
of a Contract for which Insurance Agent is the Broker-of-Record on the Annuity
Date, based on the amount of Contract Value annuitized, as follows:
=====================================================================
======
Class of Contracts Commission Rate
- ---------------------------------------------------------------------------
Dreyfus-Transamerica 2.5%
Triple Advantage
=====================================================================
======
This commission will apply to annuitization only if the Contract has been in
force for three full years prior to the Annuity Date and if the annuity elected
involves life contingencies.
NO COMMISSION ON ANNUITIZATION WILL BE PAID ON CONTRACTS ISSUED IN
NEW YORK.
22
<PAGE>
Schedule 2 Option 2
Effective September 1, 1994 (not available for
First Transamerica
Life Insurance
Company)
Premium. A commission will be paid to Insurance Agent for each Premium accepted
on each Contract for which Insurance Agent is Broker-of-Record as follows:
=====================================================================
======
Class of Contracts Commission Rate
- ---------------------------------------------------------------------------
Dreyfus/Transamerica 4.50%
Triple Advantage
=====================================================================
======
Commissions will be paid twice monthly, based on Premiums accepted during the
prior half- monthly period.
Asset-Based Trailer. In addition, after a Contract has been in effect for 15
months an asset-based fee will be paid to Insurance Agent, based on the Contract
Value of each Contract for which Insurance Agent is the Broker-of-Record at the
time the fee is paid, until the Contract is annuitized. The asset-based fee will
be determined on the basis of a 0.25% annualized rate applied monthly to the
Contract Value.
=====================================================================
=========
Class of Contracts Asset-Based Fee
- ------------------------------------------------------------------------------
Dreyfus/Transamerica Monthly Factor 0.020810%
Triple Advantage
=====================================================================
=========
The asset-based fee will be paid once monthly, based on average aggregate
Contract Value during the prior monthly period. The average aggregate Contract
Value shall be the sum of the Contract Values on the first day of the prior
monthly period and on the last day thereof, divided by 2. If a Contract is
terminated or annuities at any time during a monthly period, no asset-based gee
will be paid for that monthly period.
Annuitization. A commission will be paid to Insurance Agent upon annuitization
of a Contract for which Insurance Agent is the Broker-of-Record on the Annuity
Date, based on the amount of Contract Value annuitized, as follows:
=====================================================================
======
Class of Contracts Commission Rate
- ---------------------------------------------------------------------------
Dreyfus-Transamerica 2.50%
Triple Advantage
=====================================================================
======
This commission will apply to annuitization only if the Contract has been in
force for three full years prior to the Annuity Date and if the annuity elected
involves life contingencies.
<PAGE>
Exhibit (3)(l)
Form Sales Agreement between Transamerica Occidental Life
Insurance Company, Transamerica Life Insurance and Annuity
Company, First Transamerica Life Insurance Company and
Transamerica Securirites Sales Corporation.(10)
<PAGE>
Transamerica Life Companies
Institutional Marketing Services
Variable Insurance Products Sales Agreement
This Agreement is effective as of the date identified on the signature page of
this Agreement and is made by and between Transamerica Occidental Life Insurance
Company, Transamerica Life Insurance and Annuity Company and First Transamerica
Life Insurance Company, as applicable and as indicated on the signature page,
("Insurance Company(ies)") and Transamerica Securities Sales Corporation
("Underwriter") (collectively "Transamerica") and
_____________________________________________, a registered broker-dealer,
("Broker").
WHEREAS, the Insurance Companies are in the business of issuing variable
insurance products to the public;
WHEREAS, Underwriter, an affiliate of the Insurance Companies, is
registered as a broker-dealer under the Securities Exchange Act of 1934, is a
member of the NASD and acts as principal underwriter for certain variable
insurance products issued by the Insurance Company;
WHEREAS, Transamerica wishes to appoint Broker to solicit applications
for certain variable insurance products issued by the Insurance Companies;
WHEREAS, Broker wishes to accept such appointment;
NOW THEREFORE, in consideration of these premises and mutual agreements, wherein
it is agreed as follows:
Section 1. Appointment of Broker and Sale of Contracts.
1.1 Subject to the terms and conditions of this Agreement,
Transamerica appoints Broker to solicit applications for, and
to service, the variable insurance products identified in the
Attachment(s) (the "Contracts"), and Broker accepts such
appointment. Broker is appointed, on a nonexclusive basis, as
an independent contractor free to exercise its own judgement
as to the time, place and means of performing all acts
thereunder.
1.2Broker shall distribute the Contracts only in those jurisdictions in which
the Contracts are registered or qualified for sale, as specified by
Transamerica, and only through their duly licensed registered representatives
(in accordance with
the rules of the NASD) who are also of good character and fully insurance
licensed and qualified in the applicable jurisdictions and duly appointed to
solicit applications for the Contract (in accordance with the insurance law of
such jurisdictions) with the appropriate Insurance Company. An Insurance
<PAGE>
Company may, in its sole discretion reject for appointment any
agent and may withdraw its authority to any agent to solicit
applications.
1.3 Broker shall abide by all applicable laws, rules and
regulations, including, without limitation, the rules of the
NASD, insurance law and state and federal securities and
banking law, and including, without limitation, the
maintenance of licenses and books and records required by
applicable laws and regulations.
1.4 Broker shall supervise and train its registered
representatives and other associated persons to ensure
compliance with all applicable laws and shall be responsible
for the acts of its registered representatives and associated
persons in soliciting applications for and servicing
Contracts.
1.5 All payments collected by Broker for the Insurance Companies
shall be received in trust and shall be remitted immediately,
together with all the required documentation, to Transamerica
at the address indicated on the application or by
Transamerica. All checks and money order for payments under
contracts shall be drawn to the order of the appropriate
Insurance Company. The Broker shall not withhold or deduct any
part of any payment to Transamerica for any reason unless
specifically authorized to do so in writing by Transamerica.
If authorized by Transamerica to "net commissions" by
deducting part of a payment under a Contract, Broker shall
comply with all applicable Transamerica policies and
procedures and with all applicable laws and regulations,
including, if applicable, obtaining the customer's written
consent to deduct the appropriate commission from a payment.
Transamerica may terminate its authorization to "net
commissions" at any time; thereafter, the Broker must remit
the full payment amounts.
1.6 All applications are subject to acceptance or rejection by the
Insurance Company in it sole discretion. Insurance Companies
may at any time, at their sole discretion, discontinue issuing
the Contracts or change the form or content of the Contracts
to be issued.
1.7 In soliciting applications for Contracts, Broker may not
accept any risks of any kind for or on behalf of Transamerica
and may not bind Transamerica by promise or agreement or alter
any Contract in any way.
Section 2.Prospectus, Advertisements, Sales Literature and Other Communications.
2.1 Transamerica shall use reasonable efforts to provide
information and marketing assistance to Broker, including
providing, without charge, reasonable quantities of
advertising materials, sales literature, reports and current
prospectuses for the Contracts and underlying funding
vehicles.
2
<PAGE>
2.2 In making offers of the Contracts, Broker shall deliver the
applicable currently effective prospectuses, as required by
law.
2.3 Broker and its agents shall not misrepresent the Contracts and
shall make no oral or written representation which is
inconsistent with the terms of the Contracts, prospectuses or
sales literature or is misleading in any way.
2.4 Transamerica shall deliver to Broker, and Broker shall use,
only sales literature and advertising material which conforms
to all applicable legal requirements and which has been
authorized by Transamerica.
2.5 Broker shall not print, publish, distribute or use any
advertisement, sales literature or other written materials
related to the Contracts, other than materials provided by
Transamerica hereunder, unless such has first been approved in
writing by Transamerica.
Section 3. Compensation.
3.1 In consideration of the services performed as specified in
this Agreement, Broker shall receive compensation as specified
in the Attachment(s). In any states in which Broker may not
receive compensation pursuant to state insurance law, the
insurance agency(ies) with which it has associated itself, and
which is (are) identified on the signature page, shall be paid
the compensation.
Section 4. Representation and Warranties and Compliance by Broker.
4.1 Broker represents, warrants and covenants that:
a. It is, and shall remain during the term of this Agreement, a
properly licensed and registered broker-dealer under
applicable state and federal securities law, a member of SIPC
and a member in good standing of the NASD.
b. It shall solicit applications for Contracts only through a
properly licensed insurance agents ("Insurance Agent"), duly
appointed by the appropriate Insurance Company. For purposes
of this Agreement, all acts and omissions of the Insurance
Agent within the scope of this Agreement shall be deemed to be
acts or omissions of Broker.
c. It is in compliance, and shall remain in compliance, with all
applicable laws, rules and regulations, including, without
limitation, those of the NASD and state and federal
securities, banking and insurance laws.
d. It has taken and shall continue to take the actions
appropriate to supervise its representatives and other associated persons to
ensure compliance with all
3
<PAGE>
applicable laws and regulations.
e. It shall comply, and shall cause Insurance Agent to comply,
with any applicable Transamerica policies and procedures,
including, without limitation, those contained in the Agents'
Manual and those regarding replacements of Contracts, as
amended from time to time, as communicated to Broker.
f. (i) It shall not solicit or sell any Contracts in connection with any
"market timing" or "asset allocation" program or service, and (ii)If
Transamerica determines in its sole discretion that Broker is soliciting or has
solicited Contracts subject to any such program, Transamerica may take action
it deems necessary to halt such solicitations or sales and (iii) In addition to
any indemnification provided in Section 5 of this Agreement and any other
liability that Broker may have, Broker shall be liable to Transamerica and each
underlying funding vehicle affected by any such program, for any damages or
losses, actual or consequential, sustained by them as a result of such program.
Section 5. Indemnification.
5.1 Broker shall indemnify and hold harmless Transamerica, and
each employee, director, officer and shareholder of
Transamerica, against any losses, claims, damages or
liabilities, including but not limited to reasonable attorney
fees and court costs, to which Transamerica or any employee,
officer director or shareholder may be subject, which arise
out of or are based on any violation of the terms of this
Agreement, any Transamerica policies or procedures as
communicated to Broker or any applicable law by Broker, its
representatives, the Insurance Agent, its agents and any
employee, officer, director, shareholder, principal, partner
and affiliate of the Broker or Insurance Agent. In the event
Transamerica suffers a loss resulting from Broker-Dealer
activities, BrokerDealer hereby assigns any proceeds received
under its fidelity bond to Transamerica to the extent of such
losses. If there is any deficiency amount, whether due to a
deductible or otherwise, Broker-Dealer shall promptly pay
Transamerica such amount on demand and Broker-Dealer shall
indemnify and hold harmless Transamerica from any such
deficiency and from the costs of collection thereof (including
reasonable attorneys' fees).
5.2 Transamerica shall indemnify and hold harmless Broker, and
each employee, officer, director or shareholder of Broker,
against any losses, claims, damages or liabilities, including
but not limited to reasonable attorney fees and court costs,
to which Broker or any employee, officer, director or
shareholder becomes subject which arises out of or is based on
any violation of the terms of this Agreement or any applicable
law by Transamerica and any employee, officers, director,
shareholder and affiliates.
4
<PAGE>
Section 6. Miscellaneous.
6.1 Trademarks. The provision of Contracts and prospectuses and
sales literature for the Contracts and underlying funding
vehicles to the Broker shall not provide the Broker with any
license to use any tradenames, trademarks, service marks or
logos or proprietary information of Transamerica or any
underlying funding vehicle or any affiliates thereof, except
to the extent necessary for Broker to distribute the Contracts
in accordance with the terms hereof.
6.2 Confidentiality. Each party shall keep confidential any
confidential information
it may acquire as a result of this Agreement.
6.3 Complaints and Proceedings. Broker shall promptly report to
Transamerica any customer or regulatory complaints or
inquiries involving the Contracts and shall fully cooperate
with Transamerica in any regulatory investigation or
proceeding or judicial proceeding and in the settlement of any
claim relating to the solicitation or sale of the Contracts
under this Agreement.
6.4 Communications. All communications should be sent to the
parties at the
addresses indicated on the signature page of this Agreement.
6.5 Agreement. This Agreement includes any Attachment(s) hereto
("Agreement") and constitutes the entire agreement between the
parties with respect to the subject matter hereto, and
supersedes all prior oral or written understandings or
agreements, and no prior writings between the parties shall be
used to interpret this Agreement.
6.6 Amendment. Transamerica reserves the right to amend this
Agreement, including any Attachments, at any time without
prior notice. Broker submission of an application for a
Contract subsequent to notice of such an amendment shall be
construed as consent by Broker to such amendment.
6.7 The Contracts. Transamerica may modify, change or discontinue
the offering
of any form of the Contracts at any time.
6.8 Nonwaiver. Forbearance by Transamerica to enforce any rights
in this Agreement shall not be construed as a waiver of the
conditions of this Agreement and no wavier of any provision in
this Agreement shall be deemed to be a waiver of any other
provision.
6.9 Severability. This is a severable Agreement. In the event that
any provision would require action prohibited by law or would
prohibit action required by law, then such provision shall be
enforceable to the extent permitted by law and all other
provisions shall remain valid and enforceable.
5
<PAGE>
6.10 Termination. This Agreement may be terminated by any party with or without
cause upon giving written notice to the other parties. Sections 5.1, 5.2,
and 6 and any applicable provisions contained in the Attachment(s) shall survive
the termination of this Agreement.
6.11 Assignment. This Agreement may not be assigned without the written
consent of all parties.
6.12 Counterparts. This Agreement may be executed in two or more counterparts,
which when taken together shall constitute one and the same instrument.
6.13 Governing Law. This Agreement shall be construed in accordance with the
laws of the state of California without giving effect to principles of
conflict of laws.
This Agreement is effective as of ___________________, 199____, and is made
between the parties signing below:
Transamerica Occidental Life Insurance Company
1150 South Olive Street
Los Angeles, CA 90015
Signature:______________________________
Name:__________________________________
Title:__________________________________
Transamerica Life Insurance and Annuity Company
1150 South Olive Street
Los Angeles, CA 90015
Signature:______________________________
Name:__________________________________
Title:___________________________________
First Transamerica Life Insurance Company
575 Fifth Avenue, 36th Floor
New York, NY 10017
Signature:_________________________
Name:___________________________
Title:_____________________________
Transamerica Securities Sales Corporation
1150 South Olive Street
Los Angeles, CA 90015
Signature:________________________
Name:__________________________
Title:___________________________
Broker-Dealer:_________________________
Address:______________________________
==============================
Phone:_______________________________
Signature:_____________________________
Name:_______________________________
Title:________________________________
If Broker may not receive compensation due to state insurance laws, please
indicated the insurance agency(ies) to receive compensation.
For compensation payable in the state of ____________, please pay:
Insurance agency:__________________
Address: _______________________________
===============================
To the attention of:_________________
phone number:____________________
For compensation payable in the state of ____________, please pay:
Insurance agency:__________________
Address: _______________________________
===============================
To the attention of:_________________
phone number:____________________
7
<PAGE>
Attachment #1
Dreyfus/Transamerica Triple Advantage Variable Annuity
A.Contracts. Broker is authroized to sell Dreyfus/Transamerica Triple Advantage
Variable Annuity Contracts and Policies (the "Contracts").
B. Compensation. In consideration of the sales of each Contract, Transamerica
shall pay Broker, or such insurance agency specified by Broker, the compensation
described in one of the attached Options. Broker shall chose the Option to be
applicable to each Contract when or before the initial Purchase Payment or
Premium ("Purchase Payment") under the Contract is received by Transamerica, by
sending to Transamerica a notice such as the attached example or such other
notice acceptable to Transamerica. Without prior notice, Transamerica may change
the amount of compensation payable pursuant to this Attachment #1 and this new
compensation will be applicable prospectively on new Contracts and on new
premiums received under then currently issued Contracts.
C. Chargebacks.
(1) Rejection of Application and Exercise of Free Look.
In the event that, a Purchase Payment is returned because an Insurance
Company rejects the application for such Contract or because the
Premium or the application for the Contract, is not timely received by
Transamerica, or a refund is made because a purchaser exercises his
free-look right under the Contract, then upon written request from
Transamerica, Broker (or specified insurance agency) shall promptly
repay any and all compensation received based on all Purchase Payments
paid into the Contract and shall pay any loss incurred as a result of a
Purchase Payment being returned which was not timely received or for
which an application was not timely received by Transamerica.
(2) Annuitization.
In the instance of the annuitization of a Contract within the first six
months of receipt of Purchase Payment(s), Transamerica shall pay the
commission due on the annuitization of the Contract and Transamerica
shall chargeback to the Broker (or specified insurance agency), or ask
that Broker repay Transamerica, as Transamerica may determine in it
discretion, the difference between the commission paid on annuitization
and the commission paid upon receipt of the Purchase Payment(s) to the
Contract.
A-1
<PAGE>
D. Right of Set Off. With respect to commissions, compensation or any other
amounts owed Broker (or insurance agency specified by it) by Transamerica,
Transamerica shall have a right of set off again such amounts any monies owed
Transamerica by Broker (or specified insurance agency) to the extent permitted
by applicable law.
E. Netting Commissions
__________
If space is initialled at left by authorized Transamerica personnel, Broker is
authorized to "net commissions" pursuant to Section 1.5 of the Sales
Agreement.
This Attachment #1 is made part of Sales Agreement with ____________________
("Broker") on behalf of Transamerica, effective ______________, 199__.
By:____________________________________
Signature:_______________________________
Name:_________________________________
Title:__________________________________
A-2
<PAGE>
EXAMPLE OF FORM TO CHOOSE COMPENSATION OPTIONS FOR EACH
CONTRACT
<PAGE>
Exhibit (10)(a)
Consent of Counsel
<PAGE>
Sutherland, Asbill & Brennan
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2404
(202) 383-0100
Transamerica Life Insurance Company of New York
100 Manhattanville Road
Purchase, NY 10577
Re: Separate Account VA-2LNY
Gentlemen:
we hereby consent to the reference to our name under the caption "Legal Matters"
in the prospectus filed as part of Post-Effetive Amendment No. 6 to the Form
N-4 Registration Statement for Separate Account VA-2LNY. In giving this
consent, we do not admit that we are in the category of persons whose consent is
required under Section 7 of the Securities Act of 1933.
Very truly yours,
SUTHERLAND, ASBILL & BRENNAN
By: /s/ Frederick R. Bellamy
<PAGE>
Exhibit (10)(b)
Consent of Independent Auditors
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Condensed Financial
Information" and "Accountants" in the Prospectus dated May 1, 1997, and to the
use of our reports dated March 3, 1997 and February 12, 1997 with respect to the
financial statements of Separate Account VA-2LNY of First Transamerica Life
Insurance Company and First Transamerica Life Insurance Company, respectively,
contained in the Statement of Additional Information.
Ernst & Young LLP
Charlotee, North Carolina
April 28, 1997
<PAGE>
Exhibit 15
Power of Attorney
<PAGE>
POWER OF ATTORNEY
The undersigned director of First Transamerica Life Insurance
Company, a New York corporation (the "Company"), hereby constitutes and appoints
Aldo Davanzo, James W. Dederer, David E. Gooding and Charles E. LeDoyen and each
of them (with full power to each of them to act alone), his true and lawful
attorney-in-fact and agent, with full power of substitution to each, for his and
on his behalf and in his name, place and stead, to execute and file any of the
documents referred to below relating to registrations under the Securities Act
of 1933 and under the Investment Company Act of 1940 with respect to any life
insurance or annuity policies: registration statements on any form or forms
under the Securities Act of 1933 and under the Investment Company Act of 1940,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his or their substitutes being empowered to act
with or without the others or other, and to have full power and authority to do
or cause to be done in the name and on behalf of the undersigned each and every
act and thing requisite and necessary or appropriate with respect thereto to be
done in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this 21st day of
January, 1997.
- -----------------------------
Alan T. Cunningham
<PAGE>
Exhibit 15
Power of Attorney
<PAGE>
POWER OF ATTORNEY
The undersigned director of First Transamerica Life Insurance
Company, a New York corporation (the "Company"), hereby constitutes and appoints
Aldo Davanzo, James W. Dederer, David E. Gooding and Charles E. LeDoyen and each
of them (with full power to each of them to act alone), his true and lawful
attorney-in-fact and agent, with full power of substitution to each, for his and
on his behalf and in his name, place and stead, to execute and file any of the
documents referred to below relating to registrations under the Securities Act
of 1933 and under the Investment Company Act of 1940 with respect to any life
insurance or annuity policies: registration statements on any form or forms
under the Securities Act of 1933 and under the Investment Company Act of 1940,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his or their substitutes being empowered to act
with or without the others or other, and to have full power and authority to do
or cause to be done in the name and on behalf of the undersigned each and every
act and thing requisite and necessary or appropriate with respect thereto to be
done in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the
undersigned has hereunto set his hand, this _________ day of October, 1996.
- -----------------------------
Robert Abeles
