As filed with the Securities and Exchange Commission on May 1, 1998
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. 7
|X|
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
|-|
Amendment No. 8
|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 LLP
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.
Title of securities being registered:
Variable Annuity Contracts
It is proposed that this filing will become effective: |_|
immediately upon filing pursuant to paragraph (b)
|X| on May 1, 1998 pursuant to paragraph (b)
|_| 60 days after filing
pursuant to paragraph (a)(i) |_| on ________________ pursuant
to paragraph (a)(i)
If appropropriate, check the following box:
|_| this Post-Effective Amendment designates a new effective date
<PAGE>
for a previously filed Post-Effective Amendment.
- 2 -
<PAGE>
CROSS REFERENCE SHEET
Pursuant to Rule 495
Showing Location in Part A (Prospectus),
Part B (Statement of Additional Information) and Part C
of Registration Statement Information Required by Form N-4
PART A
<TABLE>
<CAPTION>
Item of Form N-4 Prospectus Caption
<S> <C>
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
- 3 -
<PAGE>
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;
- 4 -
<PAGE>
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
- 5 -
</TABLE>
<PAGE>
<PAGE>
PROFILE Of The
DREYFUS/TRANSAMERICA
TRIPLE ADVANTAGE(R)
VARIABLE ANNUITY
Issued By
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORKMay 1, 1998
ThisProfile 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.
<PAGE>
1. The Annuity Policy. The Dreyfus/Transamerica Triple Advantage ("Policy") 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 eighteen
Sub-Accounts corresponding to eighteen funds ("Portfolios") in the Variable
Account and the Fixed 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
corporations and some trusts.
During the annuity phase Transamerica will make periodic payments to
you. The dollar amount of the payments may depend on the amount of money
invested and earned during the accumulation phase (and other factors, such as
age and sex).
2. The Annuity Payments. You can generally decide when to end the accumulation
phase and begin receiving annuity payments from Transamerica. You can choose
fixed annuity payments, where the dollar amount of each payment generally stays
the same, or variable payments that go up or down in dollar amount based on the
investment performance of the Portfolios you select. You can choose among
payments for the lifetime of an individual, or payments for the longer of one
lifetime or a guaranteed period of 10, 15, or 20 years, or payments for one
lifetime and the lifetime of another individual.
3. Purchasing a 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 4 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 Sub-Accounts
corresponding to the following eighteen Portfolios:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Money Market Capital Appreciation International Value Transamerica Growth
Special Value Stock Index Disciplined Stock Core Value
Zero Coupon 2000 Socially Responsible Growth Small Company Stock MidCap Stock
Quality Bond Growth and Income Balanced
Small Cap International Equity Limited Term High Income
</TABLE>
These Portfolios are described in their own prospectuses. You can earn
or lose money in any of these Portfolios.
Fixed Account: You can also invest in a Fixed Account option, where Transamerica
guarantees the principal invested plus at least 3% annual interest.
<PAGE>
5. Expenses. The Policy provides many benefits and features that you do not get
with a regular mutual fund. It costs Transamerica money to provide these
benefits, so there are charges in connection with 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 and a $10 fee for transfers over 18 in one year.
Advisory fees are also deducted by the Portfolios' manager and the Portfolios
pay other expenses which in total, vary from 0.28% to 1.42% per year of the
amounts in the Portfolios.
Although New York currently has no premium tax on annuities, depending
on where you live during the time you hold this Policy, 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 transfer fees and
premium taxes). The $30 annual Policy Fee is not included in the first column
because the fee is waived for Policy Values over $50,000 and the approximate
average Policy Value is over $50,000. The third column is the sum of the first
two. The examples in the last two columns show the total amounts you would be
charged, in dollars, if you invested $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 Ten does not.
<TABLE>
<CAPTION>
EXAMPLES:
Total
Portfolio/ Annual Annual Expenses Total Expenses
Sub-Account Insurance Portfolio Total Annual at end of at end of
Charges Charges Charges One Year Ten Years
<S> <C> <C> <C> <C> <C>
Money Market 1.40% 0.61% 2.01% $74.40 $233.76
Special Value 1.40% 0.99% 2.39% $78.21 $272.63
Zero Coupon 2000 1.40% 0.61% 2.01% $74.40 $233.76
Quality Bond 1.40% 0.75% 2.15% $75.81 $248.27
Small Cap 1.40% 0.78% 2.18% $76.11 $251.35
Capital Appreciation 1.40% 0.80% 2.20% $76.31 $253.39
Stock Index 1.40% 0.28% 1.68% $71.08 $198.70
Socially Responsible 1.40% 0.82% 2.22% $76.51 $255.44
Growth and Income 1.40% 0.80% 2.20% $76.31 $253.39
International Equity 1.40% 1.06% 2.46% $78.91 $279.62
International Value 1.40% 1.42% 2.82% $82.51 $314.73
Disciplined Stock 1.40% 1.02% 2.42% $78.51 $275.63
Small Company 1.40% 1.12% 2.52% $79.51 $285.56
Balanced 1.40% 1.00% 2.40% $78.31 $273.63
Limited Term High Income 1.40% 0.89% 2.29% $77.21 $262.55
Transamerica Growth 1.40% 0.85% 2.25% $76.84 $261.67
CoreValue 1.40% 1.00% 2.40% $78.36 $279.12
MidCap Stock 1.40% 1.00% 2.40% $78.36 $279.12
</TABLE>
The Annual Portfolio Charges above are for 1997 and do not reflect expense
reimbursement or fee waivers except for the Limited
Term High Income and Transamerica Growth Portfolios. The Core Value and MidCap
Stock Portfolios did not commence
operations in 1997; the numbers for these Portfolios are annualized estimates
including reimbursements or waivers for
1998. Expenses may be higher or lower in the future. See the Variable Account
Fee Table on page 9 of the Triple Advantage
prospectus for more detailed information.
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 Policy). 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
Policy, 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 premium may be assessed
by Transamerica, but no withdrawal charge will be assessed on money that has
been in the Policy for seven years. In addition, after the first Policy Year,
for only the first withdrawal in a Policy Year, you may withdraw the greater of
accumulated earnings or 10% of Premiums received at least one but less than
seven years ago. Additionally, at any time you can withdraw accumulated earnings
on your premiums not previously withdrawn without a withdrawal charge. (See page
24 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
Sub-Accounts 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.
<PAGE>
<TABLE>
<CAPTION>
CALENDAR YEAR
PORTFOLIO/
SUB-ACCOUNT 1997 1996 1995 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Money Market(1) 3.66% 3.53% 4.21% 3.00% 1.86% 2.71% 4.54% N/A
Special Value(1) 21.36% (5.67%) (0.48%) (3.48%) 26.74% (0.41%) 8.99% N/A
Zero Coupon 2000(1) 5.45% 1.10% 16.35% (5.41%) 13.52% 7.29% 17.14% 6.28%
Quality Bond(1) 7.83% 1.63% 18.91% (6.17%) 13.66% 10.45% 12.47% N/A
Small Cap(1) 15.06% 15.06% 28.84% 4.95% 65.77% 68.98% 156.07% N/A
Capital Appreciation(2) 26.21% 22.71% 32.82% 1.45% N/A N/A N/A N/A
Stock Index(3) 31.05% 19.80% 35.92% (0.60%) 7.75% 5.55% 27.98% (6.52%)
Socially Responsible(4) 26.59% 19.00% 33.67% (0.08%) N/A N/A N/A N/A
Growth and Income(5) 14.53% 18.63% 59.58% N/A N/A N/A N/A N/A
International Equity(5) 8.02% 9.82% 6.62% N/A N/A N/A N/A N/A
International Value(6) 7.13% N/A N/A N/A N/A N/A N/A N/A
Disciplined Stock(6) 29.62% N/A N/A N/A N/A N/A N/A N/A
Small Company Stock(6) 20.01% N/A N/A N/A N/A N/A N/A N/A
Transamerica Growth(7) 50.34% 26.63% 53.02% 7.71% 27.73% 13.58% 41.47% (12.58%)
</TABLE>
<PAGE>
(1) Portfolio Inception 8-31-90 (3) Portfolio Inception 9-29-89
(7) Portfolio Inception 2-26-69
(2) Portfolio Inception 4-5-93 (4) Portfolio Inception 10-7-93
(5) Portfolio Inception 12-15-94
(6) Portfolio Inception 5-1-96
Data is for full years only. Therefore, no performance is reported for the
Balanced and Limited Term High Income Sub-Accounts because these Sub-Accounts
had not been in operation for a full year in1997. Additionally, the Core Value
and MidCap Stock Sub-Accounts did not commence operations in 1997 and,
therefore, no performance is reported for these Sub-Accounts. The figures for
the Money Market, Special Value, Zero Coupon 200, Quality Bond, Small Cap, Stock
Index and Transamerica Growth Sub-Accounts include data for periods before the
Sub-Accounts commenced operations, based on the actual performance of the
corresponding Portfolios since they commenced operation.
9. Death Benefit. If you or the Annuitant die during the accumulation phase, the
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 up to
the Owner's or Annuitant's 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 Policy 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 all the amounts you
allocated to the Fixed Account plus the current value of the amounts allocated
to the Variable Accounts (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, Quality
Bond or Limited Term High Income Sub-Accounts or the Fixed Account to any of the
other Sub-Accounts each month. Dollar Cost Averaging is intended to give you a
lower average cost per share or unit than a single, one time investment, but
does not assure a profit or protect against loss and is intended to continue for
some time period.
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
<PAGE>
["Front Maroon Cover"]
[LOGO]
<PAGE>
PROSPECTUS FOR
DREYFUS/TRANSAMERICA TRIPLE ADVANTAGE(R)
A Variable Annuity Issued by
Transamerica Life Insurance Company
of New York
Including Fund Prospectuses for
DREYFUS VARIABLE INVESTMENT FUND
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC.
DREYFUS STOCK INDEX FUND
DREYFUS INVESTMENT PORTFOLIOS
GROWTH PORTFOLIO OF TRANSAMERICA VARIABLE INSURANCE FUND, INC.
May 1, 1998
<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 Owner may allocate Premiums to one or more Sub-Accounts of Separate Account
VA-2LNY (the "Variable Account"), to the Fixed Account (which credits interest
at guaranteed annual rates) or to both.
The Policy Value, except for amounts in the Fixed Account, will vary in
accordance with the investment
performance of the Portfolios in which the selected Sub-Accounts are
invested. The Owner bears the entire investment
risk for amounts allocated to the Variable Account. There is no guaranteed or
minimum withdrawal value for amounts in the
Variable Account; the Cash Surrender Value or Annuity Purchase Amount could be
less than the 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, 1998
This Prospectus must be accompanied by current Prospectuses for Dreyfus Variable
Investment Fund, Dreyfus Stock Index Fund, The Dreyfus Socially Responsible
Growth Fund, Inc., Dreyfus Investment Portfolios and Growth Portfolio of
Transamerica Variable Insurance Fund, Inc.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO DEALER, SALESMAN, OR OTHER PERSON IS
AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION
WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON.
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.
<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. The Fixed
Account has restrictions on transfers. 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. Eighteen Portfolios are available
for investment under the Policies: Money Market, Special Value, Zero Coupon
2000, Quality Bond, Small Cap, Capital Appreciation, Growth and Income,
International Equity, International Value, Disciplined Stock, Small Company
Stock, Balanced and Limited Term High Income Portfolios of Dreyfus Variable
Investment Fund; Dreyfus Stock Index Fund; The Dreyfus Socially Responsible
Growth Fund, Inc.; Core Value and MidCap Stock Portfolios of Dreyfus Investment
Portfolios and the Growth Portfolio of Transamerica Variable Insurance Fund,
Inc. Certain fees and expenses are charged against the assets of each Portfolio.
The 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 26. For more information about the Funds, see "The Funds" on page 17 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 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. The prior
approval of Transamerica is required before total Premiums for any Policy in
excess of $1,000,000 will be accepted.
<PAGE>
TABLE OF CONTENTS
Page
DEFINITIONS
SUMMARY
CONDENSED FINANCIAL INFORMATION
PERFORMANCE DATA
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
AND THE VARIABLE ACCOUNT
Transamerica Life Insurance Company of New York
Published Ratings
The Variable Account
THE FUNDS
Addition, Deletion or Substitution
THE FIXED ACCOUNT
THE POLICY
POLICY APPLICATION AND PREMIUMS
Premiums
Allocation of Premiums
Investment Option Limits
POLICY VALUE
TRANSFERS
Before the Annuity Date
Possible Restrictions
Dollar Cost Averaging
Automatic Asset Rebalancing
After the Annuity Date
CASH WITHDRAWALS
Withdrawals
Systematic Withdrawal Option
Automatic Payout Option
DEATH BENEFIT
Payment of Death Benefit
Designation of Beneficiaries
Death of Annuitant Prior to the Annuity Date
Death of Owner Prior to the Annuity Date
Death of Annuitant or Owner After the Annuity Date
CHARGES AND DEDUCTIONS
Contingent Deferred Sales Load
Administrative Charges
Mortality and Expense Risk Charge
Premium Taxes
Transfer Fee
Systematic Withdrawal Option
Taxes
Portfolio Expenses
Sales in Special Situations
ANNUITY PAYMENTS
Annuity Date
Annuity Payment
Election of Annuity Forms and Payment Options
Annuity Payment Options
Fixed Annuity Payment Option
Variable Annuity Payment Option
Annuity Forms
Alternate Fixed Annuity Rates
QUALIFIED POLICIES
Automatic Payout Option
Restrictions under 403(b) Programs
FEDERAL TAX MATTERS
Premiums
Taxation of Annuities
Qualified Policies
Possible Change in Taxation
Other Tax Consequences
DISTRIBUTION OF THE POLICY
36
LEGAL PROCEEDINGS
LEGAL MATTERS
ACCOUNTANTS
VOTING RIGHTS
AVAILABLE INFORMATION
STATEMENT OF ADDITIONAL INFORMATION - TABLE OF CONTENTS
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.
<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 the Policy 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 Policy used to fund an IRA or
a 403(b) annuity, the Owner must be the Annuitant. Annuitant's Beneficiary: The
person(s) named by the Owner who may receive the Death Benefit under the Policy,
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 Account: All or
portions of Net Premiums and transfers may be allocated to the Fixed Account.
The Fixed Account assets are general assets of the Company and are
distinguishable from those allocated to a separate account of the Company. Fixed
Accumulated Value: The total dollar amount of all amounts held under the Fixed
Account for the policy prior to the Annuity Date. The Fixed Accumulated Value
prior to the Annuity Date is equal to: (a) Net Premiums allocated to the Fixed
Account plus interest credited; less (b) reductions for the annual Policy Fee
deducted on the last business day of each Policy Year; plus or minus (c) amounts
transferred to or from the Variable Sub-Accounts; less (d) any applicable
Transfer Fees; and less (e) withdrawals from Fixed Account. 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, The Dreyfus Socially
Responsible Growth Fund, Inc., Dreyfus Investment Portfolios and Transamerica
Variable Insurance 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. 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 sum of the Fixed Accumulated Value plus the
Variable Accumulated Value.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 or any
one of the Portfolios of Dreyfus Investment Portfolios or the Growth Portfolio
of Transamerica Variable Insurance Fund, Inc., underlying a Sub-Account of the
Variable Account. Proof of Death: May be: (a) a copy of a certified death
certificate; (b) a copy of a certified decree of a court of competent
jurisdiction as to the finding of death; (c) a written statement by a medical
doctor who attended the deceased; or (d) any other proof satisfactory to
Transamerica. Qualified Policy: A Policy issued in connection with a retirement
plan or program.Receipt: Receipt and acceptance by Transamerica at its Service
Center. Series: Any of the portfolios of Dreyfus Variable Investment Fund
available for investment by a Sub-Account under the Policy. Service Center:
Transamerica's Annuity Service Center, at P.O. Box 31728, Charlotte, North
Carolina 28231-1728 and at telephone (800) 258-4261. Source Account: A
Sub-Account of the Variable Account or the Fixed Account, as permitted, from
which Dollar Cost Averaging transfers are being made. Sub-Account: A subdivision
of the Variable Account investing solely in shares of one of the Portfolios.
Valuation Day: Any day the New York Stock Exchange is open for trading.
Valuation 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 Accumulated Value: The total dollar amount of all Variable
Accumulation Units under each Sub-Account of the Variable Account held for the
Policy prior to the Annuity Date. The Variable Accumulated Value prior to the
Annuity Date is equal to: (a) Net Premiums allocated to the Sub-Accounts; plus
or minus (b) any increase or decrease in the value of assets of the Sub-Accounts
due to investment results; less (c) the daily Mortality and Expense Risk Charge;
less (d) the daily Administrative Expense Charge; less (e) reductions for the
annual Policy Fee deducted on the last business day of each Policy Year; plus or
minus (f) amounts transferred to or from the Fixed Account; less (g) any
applicable Transfer Fees; and less (h) withdrawals from the Sub-Accounts.
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. 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.
<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
Policy may be used in connection with (a) non-qualified plans; (b) as an
individual retirement annuity that qualifies for special tax treatment under
Code Section 408 and whose initial Premium is a rollover or transfer from a
qualified retirement plan receiving special tax treatment under Code Sections
401(a), 403(b) and 408 (a "rollover IRA"); or (c) with Transamerica's prior
approval, as an individual retirement annuity that qualifies for special tax
treatment under Code Section 408A and whose initial Premium is a rollover,
transfer or conversion from other individual retirement plans issued under
Sections 408 or 408A of the Code (a "rollover Roth IRA"). Additionally, with
Transamerica's prior permission, the Policy may be used as an IRA or Roth IRA
whose initial Premium is limited to the contribution limitations of the Code (a
"contributory IRA" or "contributory Roth IRA") under Sections 408 or 408A of the
Code, 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
(see "Annuity Date", page 29).
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 Premium that may be allocated to an
Inactive Sub-Account is $500. (See "Policy Application and Premiums" page 21.)
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 17.)
Assets of each Sub-Account are invested in a specified mutual fund Portfolio.
Each Sub-Account uses its assets to purchase, at their net asset value, shares
of a specific Series of Dreyfus Variable Investment Fund or a Portfolio of
Dreyfus Investment Portfolios or in the Growth Portfolio of Transamerica
Variable Insurance Fund, Inc., or in Dreyfus Stock Index Fund or in The Dreyfus
Socially Responsible Growth Fund, Inc. (together "The Funds"). The following
eighteen Portfolios are currently available for investment in the Variable
Account. All Sub-Accounts may not be available May 1, 1998.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Money Market Capital Appreciation International Value Transamerica Growth
Special Value Stock Index Disciplined Stock Core Value
Zero Coupon 2000 Socially Responsible Growth Small Company Stock MidCap Stock Quality Bond
Growth and Income Balanced
Small Cap International Equity Limited Term High Income
</TABLE>
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 and Deductions" on page 26.
For more information about the Funds, see "The Funds" page 17 and the
accompanying Funds' prospectuses. The Fixed Account
The amounts in the Fixed Account will be credited interest at a rate
of not less than 3% annually. Transamerica
may credit interest at a rate in excess of 3% at its discretion for any
class. Each interest rate will be guaranteed to
be credtied for at least 12 months. (See "The Fixed Account" page ___.)
Investment Option Limit
Currently, the owner may not elect more than a total of eighteen
investment options over the life of the Policy.
Investment options include Sub-Accounts of the Variable Account and the
Fixed Account. See "Investment Option Limit"
page ____.
Transfers Before the Annuity Date
Prior to the Annuity Date, the Owner may make transfers between and
among the Sub-Accounts of the Variable Account. A "transfer" is the reallocation
of amounts among the Sub-Accounts of the Variable Account.
There is a $10 fee for each transfer in excess of 18 per Policy Year.
Transfers specifically excluded under (See "Transfer Fee" page 29.) (For
Transfers after the Annuity Date, see "After the Annuity Date" page 24.)
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 27.) 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 Policies may be subject to severe restrictions. (See
"Qualified Policies" page 32 and "Federal Tax Matters" page 33.) (Except for
rollover IRA's, Qualified Policies are sold only with Transamerica's prior
permission.) The annual Policy Fee generally will be deducted on a full
surrender of a Policy. (See "Cash Withdrawals" page 24 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 Policy Year. However, accumulated
earnings, if any, in an Owner's Policy 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 27 and "Cash
Withdrawals" page 24.) 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 28.)
TRANSAMERICA GUARANTEES THAT THIS MORTALITY AND EXPENSE RISK CHARGE WILL NOT BE
INCREASED.
Transamerica also deducts a daily charge (the "Administrative Expense
Charge") equal to a percentage of the value of the net assets in the Variable
Account corresponding to an effective annual rate of 0.15% to help cover some of
the costs of administering the 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 28).
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 28.)
A $10 charge is imposed for each transfer in excess of eighteen
during a Policy Year. (See "Transfer Fee" page
29.)
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 28.)
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 Policy 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 26 of this Prospectus, and
with the Funds' prospectuses. In addition to the expenses listed below, premium
taxes may be applicable.
<TABLE>
<CAPTION>
Policy Transaction Expenses(1)
<S> <C>
Sales Load Imposed on Premiums 0
Maximum Contingent Deferred Sales Load(2) 6%
Range of Contingent Deferred Sales Load Over Time
</TABLE>
<TABLE>
<CAPTION>
Contingent Deferred
Policy Years since Sales Load
Premiums Receipt Percentage
<S> <C> <C>
Less than 2 years 6%
2 years but less than 4 years 5%
4 years but less than 6 years 4%
6 years but less than 7 years 2%
7 or more 0%
Transfer Fee (first 18 per Policy Year)(3) 0
Systematic Withdrawal Fee(3) 0
Policy Fee(4) $30
Variable Account Annual Expenses(1)
Mortality and Expense Risk Charges 1.25%
Administrative Expense Charge(5) 0.15%
Other Fees and Expenses of the Variable Account 0.00%
Total Variable Account Annual Expenses 1.40%
</TABLE>
<TABLE>
<CAPTION>
Portfolio Annual Expenses
(as a percentage of assets after fee waiver and/or expense reimbursement)(6)
-------------------------------------- ------------------ ------------------ --------------------------
Management Other Total Portfolio
Portfolios Fee Expenses Annual Expense
-------------------------------------- ------------------ ------------------ --------------------------
-------------------------------------- ------------------ ------------------ --------------------------
<S> <C> <C> <C>
Money Market 0.50% 0.11% 0.61%
-------------------------------------- ------------------ ------------------ --------------------------
-------------------------------------- ------------------ ------------------ --------------------------
Special Value 0.75% 0.24% 0.99%
-------------------------------------- ------------------ ------------------ --------------------------
-------------------------------------- ------------------ ------------------ --------------------------
Zero Coupon 2000 0.45% 0.16% 0.61%
-------------------------------------- ------------------ ------------------ --------------------------
-------------------------------------- ------------------ ------------------ --------------------------
Quality Bond 0.65% 0.10% 0.75%
-------------------------------------- ------------------ ------------------ --------------------------
-------------------------------------- ------------------ ------------------ --------------------------
Small Cap 0.75% 0.03% 0.78%
-------------------------------------- ------------------ ------------------ --------------------------
-------------------------------------- ------------------ ------------------ --------------------------
Capital Appreciation 0.75% 0.05% 0.80%
-------------------------------------- ------------------ ------------------ --------------------------
-------------------------------------- ------------------ ------------------ --------------------------
Stock Index Fund 0.25% 0.03% 0.28%
-------------------------------------- ------------------ ------------------ --------------------------
-------------------------------------- ------------------ ------------------ --------------------------
Socially Responsible Growth Fund 0.75% 0.07% 0.82%
-------------------------------------- ------------------ ------------------ --------------------------
-------------------------------------- ------------------ ------------------ --------------------------
Growth and Income 0.75% 0.05% 0.80%
-------------------------------------- ------------------ ------------------ --------------------------
-------------------------------------- ------------------ ------------------ --------------------------
International Equity 0.75% 0.31% 1.06%
-------------------------------------- ------------------ ------------------ --------------------------
-------------------------------------- ------------------ ------------------ --------------------------
International Value 1.00% 0.42% 1.42%
-------------------------------------- ------------------ ------------------ --------------------------
-------------------------------------- ------------------ ------------------ --------------------------
Disciplined Stock 0.75% 0.27% 1.02%
-------------------------------------- ------------------ ------------------ --------------------------
-------------------------------------- ------------------ ------------------ --------------------------
Small Company Stock 0.75% 0.37% 1.12%
-------------------------------------- ------------------ ------------------ --------------------------
-------------------------------------- ------------------ ------------------ --------------------------
Balanced 0.75% 0.25% 1.00%
-------------------------------------- ------------------ ------------------ --------------------------
-------------------------------------- ------------------ ------------------ --------------------------
Limited Term High Income 0.65% 0.24% 0.89%
-------------------------------------- ------------------ ------------------ --------------------------
-------------------------------------- ------------------ ------------------ --------------------------
Transamerica Growth 0.75% 0.10% 0.85%
-------------------------------------- ------------------ ------------------ --------------------------
-------------------------------------- ------------------ ------------------ --------------------------
Core Value 0.75% 0.25% 1.00%
-------------------------------------- ------------------ ------------------ --------------------------
-------------------------------------- ------------------ ------------------ --------------------------
MidCap Stock 0.75% 0.25% 1.00%
-------------------------------------- ------------------ ------------------ --------------------------
</TABLE>
Expense information regarding the Portfolios has been provided by the Funds.
Transamerica has no reason to doubt the accuracy of that information, but
Transamerica has not verified those figures. In preparing the table above and
the examples that follow, Transamerica has relied on the figures provided by the
Funds. These figures are for the year ended December 31, 1997, except for Core
Value and MidCap Stock, which are annualized estimates for the year 1998, their
first year of operation. Actual expenses in future years may be higher or lower
than the figures above.
Notes to Fee Table:
(1) The Policy Transaction Expenses apply to each Policy, regardless of how
Policy 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 Premiums may be withdrawn each year after the first
Policy Year without imposition of any Contingent Deferred Sales Load;
after a Premium has been held by Transamerica for seven Policy Years,
the remaining 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 27.)
(3) A Transfer Fee of $10 will be imposed for each transfer in excess of 18
in a Policy 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 26.)
(4) The current annual Policy Fee is $30 (or 2% of the Policy Value, if
less) per Policy Year. The fee may be changed annually, but it may not
exceed $60 (or 2% of the Policy Value, if less). (See "Charges and
Deductions" page 26.)
(5) The current annual Administrative Expense Charge is 0.15%;
it may be increased to 0.25%. . (See "Charges and
Deductions" page 26.)
From time to time, each Portfolio's investment adviser, in its sole
discretion, may waive all or part of its fees and/or voluntarily assume
certain Portfolio expenses. The expenses shown in the above Portfolio
Annual Expenses table reflect the Portfolio's Adviser's waiver of fees
or reimbursement of expenses, if applicable, for calendar year 1997,
except for Core Value and MidCap Stock Portfolios which are annualized
estimates of expenses to be paid in 1998. It is anticipated that such
waivers and reimbursements will continue for calendar year 1998.
Without such waivers or reimbursements, the management fee, other
expenses and total portfolio annual expenses for 1997 would have been,
as a percentage of assets, 0.75%, 0.23% and 0.98% for Transamerica
Growth Portfolio and 0.65%, 0.29%, and 0.94% for Limited Term High
Income Portfolio, respectively.
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 Policy 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 28.)
These examples show expenses without reflecting fee waivers and
reimbursements for 1997. Except for the Limited Term High Income and
Transamerica Growth Portfolios, it is not anticipated that there will be any fee
waivers or expense reimbursements in the future.
Example 1
If the Owner surrenders the 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>
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Money Market $74.40 $108.05 $141.94 $233.76
Special Value $78.21 $119.55 $162.05 $272.63
Zero Coupon 2000 $74.40 $108.05 $141.94 $233.76
Quality Bond $75.81 $112.30 $149.39 $248.27
Small Capital $76.11 $113.21 $150.98 $251.35
Capital Appreciation $76.31 $113.82 $152.04 $253.39
Stock Index $71.08 $97.81 $124.16 $198.70
Socially Responsible Growth $76.51 $114.42 $153.10 $255.44
Growth Income $76.31 $113.82 $152.04 $253.39
International Equity $78.91 $121.65 $165.71 $279.62
International Value $82.51 $132.40 $184.33 $314.73
Disciplined Stock $78.51 $120.45 $163.62 $275.63
Small Company Stock $79.51 $123.45 $168.84 $285.56
Balanced Fund $78.31 $119.85 $162.57 $273.63
Limited Term High Income $77.21 $116.53 $156.79 $262.55
Transamerica Growth Fund $76.84 $115.58 $154.87 $261.67
Core Value $78.36 $120.28 $162.95 $279.12
MidCap Stock $78.36 $120.28 $162.95 $279.12
</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>
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Money Market $20.40 $63.05 $108.29 $233.76
Special Value $24.21 $74.55 $127.55 $272.63
Zero Coupon 2000 $20.40 $63.05 $108.29 $233.76
Quality Bond $21.81 $67.30 $115.43 $248.27
Small Capital $22.11 $68.21 $116.95 $251.35
Capital Appreciation $22.31 $68.82 $117.96 $253.39
Stock Index $17.08 $52.96 $91.26 $198.70
Socially Responsible Growth $22.51 $69.42 $118.98 $255.44
Growth Income $22.31 $68.82 $117.96 $253.39
International Equity $24.91 $76.65 $131.05 $279.62
International Value $28.51 $87.40 $148.89 $314.73
Disciplined Stock $24.51 $75.45 $129.05 $275.63
Small Company Stock $25.51 $78.45 $134.05 $285.56
Balanced Fund $24.31 $74.85 $128.05 $273.63
Limited Term High Income $23.21 $71.53 $122.51 $262.55
Transamerica Growth Fund $22.84 $70.58 $121.22 $261.67
Core Value $24.36 $75.28 $129.30 $279.12
MidCap Stock $24.36 $75.28 $129.30 $279.12
</TABLE>
Example 3
If the Owner elects to annuitize at the end of the applicable period
under an Annuity Form with life contingencies,** he/she would pay the following
expenses on a $1,000 Initial Premium assuming a 5% annual return on assets:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Money Market $74.40 $63.05 $108.29 $233.76
Special Value $78.21 $74.55 $127.55 $272.63
Zero Coupon 2000 $74.40 $63.05 $108.29 $233.76
Quality Bond $75.81 $67.30 $115.43 $248.27
Small Capital $76.11 $68.21 $116.95 $251.35
Capital Appreciation $76.31 $68.82 $117.96 $253.39
Stock Index $71.08 $52.96 $91.26 $198.70
Socially Responsible. Growth $76.51 $69.42 $118.98 $255.44
Growth Income $76.31 $68.82 $117.96 $253.39
International Equity $78.91 $76.65 $131.05 $279.62
International Value $82.51 $87.40 $148.89 $314.73
Disciplined Stock $78.51 $75.45 $129.05 $275.63
Small Company Stock $79.51 $78.45 $134.05 $285.56
Balanced Fund $78.31 $74.85 $128.05 $273.63
Limited Term High Income $77.21 $71.53 $122.51 $262.55
Transamerica Growth Fund $76.84 $70.58 $121.22 $261.67
Core Value $78.36 $75.28 $129.30 $279.12
MidCap Stock $78.36 $75.28 $129.30 $279.12
</TABLE>
* In preparing the examples above, Transamerica has relied on the data
provided by the Funds. Transamerica has no reason to doubt the accuracy
of that information, but Transamerica has not verified those figures.
** For 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.
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 29.)
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 30.)
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 26.) 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 Policies. In addition, a federal penalty tax may apply to
certain distributions or deemed distributions. (See "Federal Tax Matters" page
33.) 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 (or longer if required by New York Department of Insurance) 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 amounts allocated to the
Fixed Account and the Variable Accumulated 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 the Funds 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 33.)
CONDENSED FINANCIAL INFORMATION
The following condensed financial information is derived from the
financial statements of the Variable Account. The data should be read in
conjunction with the financial statements, related notes, and other financial
information included in the Statement of Additional Information.
The following table sets forth certain information regarding the
Sub-Accounts for the period from commencement of business operations of the
Sub-Account through December 31, 1997. The Core Value, MidCap Stock and
Transamerica Growth Sub-Accounts are not included because these Sub-Accounts did
not commence operations during1997. The Variable Accumulation Unit values and
the number of Variable Accumulation Units outstanding for each Sub-Account for
the periods shown are as follows:
<TABLE>
<CAPTION>
Year Ending December 31, 1993
- -----------------------------------------------------------------
Money Special Zero Coupon Quality
Market Value 2000 Bond Small Cap
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
(Inception 1/4/93)(Inception 1/4/93)(Inception 1/4/93)(Inception 1/4/93) (Inception 1/4/93)
Accumulation Unit Value
<S> <C> <C> <C> <C> <C>
at Beginning of Period $1.021 $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
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
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
Year Ending December 31, 1994
---------------------------------------------------------------------------------
Money Special Zero Coupon Quality
Market Value 2000 Bond Small Cap
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
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
Capital Appreciation Stock Index Socially Responsible
Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
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
at End of Period 285,265.910 190,496.642 24,171.591
Year Ending December 31, 1995
---------------------------------------------------------------------------------------------------------------
Money Special Zero Coupon Quality
Market Value 2000 Bond Small Cap
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
at Beginning of Period $1.048 $12.496 $12.672 $11.710 $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
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
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
<PAGE>
Year Ending December 31, 1996
---------------------------------------------------------------------------------------------------------
Money Special Zero Coupon Quality
Market Value 2000 Bond Small Cap
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
at Beginning of Period $1.093 $12.292 $14.740 $13.908 $51.121
Accumulation Unit Value
at End of Period $1.132 $11.682 $14.911 $14.142 $58.773
Number of Accumulation
Units Outstanding
at End of Period 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
International Value Disciplined Stock Small Company Stock
Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
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
Year Ending December 31, 1997
---------------------------------------------------------------------------------------------------------
Money Special Zero Coupon Quality
Market Value 2000 Bond Small Cap
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
at Beginning of Period $1.132 $11.682 $14.911 $14.142 $58.773
Accumulation Unit Value
at End of Period $1.175 $14.185 $15.736 $15.260 $67.668
Number of Accumulation
Units Outstanding
at End of Period 12,049,327.817 1,017,390.458 424,325.816 987,773.886 1,031,483.594
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 $21.802 $26.791 $21.221 $23.131 $14.267
Accumulation Unit Value
at End of Period $27.532 $35.128 $26.879 $26.509 $15.422
Number of Accumulation
Units Outstanding
at End of Period 1,798,913.636 808,857.987 230,281.724 2,179,109.968 378,355.293
Limited Term
High Income Balanced
International Value Disciplined Stock Small Company Stock Sub-Account Sub-Account
Sub-Account Sub-Account Sub-Account (Inception 5/1/97)(Inception 5/1/97)
Accumulation Unit Value
at Beginning of Period $10.244 $11.776 $10.772 $10.000 $10.000
Accumulation Unit Value
at End of Period $10.982 $15.272 $12.935 $10.852 $11.738
Number of Accumulation
Units Outstanding
at End of Period 172,941.244 1,196,912.676 513,524.112 473,373.863 333,714.857
</TABLE>
Financial Statements for the Variable Account and Transamerica
The financial statements and reports of independent auditors for the
Variable Account and Transamerica are contained in the Statement of Additional
Information.
PERFORMANCE DATA
From time to time, Transamerica may advertise yields and average annual
total returns for the Sub-Accounts of the Variable Account. In addition,
Transamerica may advertise the effective yield of the Money Market Sub-Account.
These figures will be based on historical information and are not intended to
indicate future performance. The yield of the Money Market Sub-Account refers to
the annualized income generated by an investment in that Sub-Account over a
specified seven-day period. The yield is calculated by assuming that the income
generated for that seven-day period is generated each seven-day period over a
52-week period and is shown as a percentage of the investment. The effective
yield is calculated similarly but, when annualized, the income earned by an
investment in that Sub-Account is assumed to be reinvested. The effective yield
will be slightly higher than the yield because of the compounding effect of this
assumed reinvestment.
The yield of a Sub-Account (other than the Money Market Sub-Account)
refers to the annualized income generated by an investment in the Sub-Account
over a specified thirty-day period. The yield is calculated by assuming that the
income generated by the investment during that thirty-day period is generated
each thirty-day period over a twelve-month period and is shown as a percentage
of the investment.
The yield calculations do not reflect the effect of any Contingent
Deferred Sales Load or premium taxes that may be applicable to a particular
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.
All non-standard performance data will only be disclosed if the
standard performance data is also disclosed. For additional information
regarding the calculation of other performance data, please refer to the
Statement of Additional Information.
Transamerica may also advertise performance figures for the
Sub-Accounts based on the performance of a Portfolio prior to the time the
Variable Account commenced operations.
TRANSAMERICA 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 Transamerica Life Insurance Company of New York
is100 Manhattanville Road, Purchase, New York 10577. The name change to
Transamerica Life Insurance Company of New York was 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 eighteen Sub-Accounts, each of which
invests solely in a specific corresponding
Portfolio. (See "The Funds" page 17.) Changes to the Sub-Accounts may be
made at the discretion of Transamerica. (See
"Addition, Deletion, or Substitution" page 20.)
THE FUNDS
The Variable Account invests exclusively in Series of Dreyfus Variable
Investment Fund (the "Variable Fund"), Dreyfus Stock Index Fund (the "Stock
Index Fund"), The Dreyfus Socially Responsible Growth Fund, Inc. (the "Socially
Responsible Fund"), Portfolios of Dreyfus Investment Portfolios and the Growth
Portfolio of Transamerica Variable Insurance Fund, Inc. ("Transamerica VIF").
The Variable Fund was organized as an unincorporated business trust under
Massachusetts law pursuant to an Agreement and Declaration of Trust dated
October 29, 1986, commenced operations on August 31, 1990, and is registered
with the Commission as an open-end management investment company under the 1940
Act. Currently, thirteen Series (i.e., Portfolios) of the Variable Fund are
available for the 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 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. Dreyfus Investment Portfolios was
organized as an unincorproated business trust under Massachusetts law pursuant
to an Agreement and Declaration of Trust dated May 14, 1993, is registered with
the Commission as an open-end management company under the 1940 Act and
commenced operations May 1, 1998. Currently, two Portfolios of Dreyfus
Investment Portfolios are available for the Policy. Transamerica VIF was
incorporated under Maryland law on June 23, 1995, commenced operations on
November 1, 1996, and is registered with the SEC as a management investment
company. However, the Commission does not supervise the management or the
investment practices and policies of any of the Funds. The assets of the
Variable Fund, the Socially Responsible Fund, the Stock Index Fund are each
separate from the assets of the other Funds.
The Dreyfus Corporation provides investment advisory and administrative
services to the Variable Fund and the Socially Responsible Fund. Mellon Equity
Associates provides index fund management services to the Stock Index Fund, with
The Dreyfus Corporation serving as the manager, in accordance with applicable
agreements with the Fund. Fayez Sarofim & Co. provides sub-investment advisory
services for the Capital Appreciation Portfolio. NCM Capital Management Group,
Inc., provides sub-investment advisory services for the Socially Responsible
Fund. Transamerica provides investment advisory services to Transamerica VIF,
with Transamerica Investment Services, Inc., providing sub-investment advisory
services.
The Portfolios are described below. See the Variable Fund, the Stock
Index Fund, the Socially Responsible Fund,
Dreyfus Investment Portfolio and Transamerica VIF prospectuses for more
information.
Money Market Portfolio
The Money Market Portfolio's investment objective is to achieve as high
a level of current income as is consistent with the preservation of capital and
the maintenance of liquidity. It seeks to achieve its objective by investing in
short-term money market instruments. The investment advisory fee is payable
monthly at the annual rate of 0.50 of 1% of the value of the Portfolio's average
daily net assets. This Portfolio is neither insured nor guaranteed by the United
States Government and there can be no assurance that it will be able to maintain
a stable net asset value of $1.00 per share. Special Value Portfolio
The Special Value Portfolio's investment objective is to maximize total
return, consisting of capital appreciation and current income. It seeks to
achieve its objective by investing in a wide range of equity and debt securities
and money market instruments. An investment advisory fee is payable monthly to
The Dreyfus Corporation at the annual rate of 0.75 of 1% of the value of the
Portfolio's average daily net assets. Zero Coupon 2000 Portfolio
The Zero Coupon 2000 Portfolio's investment objective is to provide as
high an investment return as is consistent with the preservation of capital. It
seeks to achieve its objective by investing primarily in debt obligations of the
U.S. Treasury that have been stripped of their unmatured interest coupons,
interest coupons that have been stripped from debt obligations issued by the
U.S. Treasury and receipts and certificates for stripped debt obligations and
stripped coupons, including U.S. Government trust certificates (collectively,
"Stripped Treasury Securities"). The Portfolio'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
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 Index. This Portfolio invests primarily in a portfolio of equity securities
of small- to medium-sized domestic issuers, while attempting to maintain
volatility and diversification similar to that of the Russell 2500 Index. An
investment advisory fee is payable monthly to the Dreyfus Corporation at the
annual rate of 0.75 of 1% of the value of the Portfolio's average daily net
assets. Balanced Portfolio The Balanced Portfolio's investment objective is to
provide investment results that are greater than the total return performance of
common stocks and bonds in the aggregate, as represented by a hybrid index, 60%
of which is composed of the common stocks in the Standard & Poor's 500 Composite
Stock Price Index and 40% of which is composed of the bonds in the Lehman
Brothers Intermediate Government/Corporate Bond Index. This 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 Portfolio
The Limited Term High Income Portfolio's investment objective is to
maximize total return, consisting of capital appreciation and current income.
This Portfolio seeks to achieve its objective by investing up to all of its
assets in a portfolio of lower rated fixed-income securities, commonly known as
"junk bonds," that, under normal market conditions, has an effective duration of
three and 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 associated with an investment in the Portfolio (those risks are
described in the Portfolio's prospectus). An investment advisory fee is payable
monthly to the Dreyfus Corporation at the annual rate of 0.65of 1% of the value
of the Portfolio's average daily net assets. Stock Index Fund
The Stock Index Fund's investment objective is to provide investment
results that correspond to the price and yield performance of publicly traded
common stocks in the aggregate, as represented by the Standard & Poor's 500
Composite Stock Price Index. The Stock Index Fund is neither sponsored by nor
affiliated with Standard & Poor's Corporation. The Stock Index Fund pays a
monthly management fee to The Dreyfus Corporation at the annual rate of 0.245 of
1% of the value of the Stock Index Fund's average daily net assets. Socially
Responsible Fund
The Socially Responsible Fund's primary goal is to provide capital
growth. It seeks to achieve this goal by investing principally in common stocks,
or securities convertible into common stock, of companies which, in the opinion
of the Fund's management, not only meet traditional investment standards, but
also show evidence that they conduct their business in a manner that contributes
to the enhancement of the quality of life in America. Current income is a
secondary goal. A management fee is payable monthly to The Dreyfus Corporation
and a sub-investment adviosry fee is payable monthly to NCM Capital Management
Group, Inc. at the aggregate annual rate of 0.75 of 1% of the value of the
Socially Responsible Fund's average daily net assets. Core Value Portfolio
The Core Value Portfolio is a diversified portfolios, the primary
investment objective of which is to provide long-term growth of capital; current
income is a secondary investment objective. The Portfolio anticipates that at
least 65% of the value of its total assets (except when maintaining a temporary
defensive position) will be invested in equity securities, such as common
stocks, preferred stock and securities convertible into common stocks, including
Depository Receipts, which would be characterized as "value" companies according
to criteria established by The Dreyfus Corporation. In general, the Portfolio's
investments are broadly diversified over a number of industries and, as a matter
of operating policy, the Portfolio will not invest more than 25% of its total
assets in any one industry. A management fee is payable monthly to The Dreyfus
Corporation at the annual rate of 0.75 of 1% of the Portfolio's average daily
net assets. MidCap Stock Portfolio
The MidCap Stock Portfolio is a diversified portfolio, the investment
objective of which is to provide investment results that are greater than the
total return performance of publicly-traded common stocks in the aggregate, as
represented by the Standard & Poor's MidCap 400 Index. Medium-size issuers will
include those U.S. companies with market capitalizations (market price per share
times the number of shares outstanding) generally ranging in value from $200
million to $5 billion. The Portfolio also may invest in large and small
capitalization companies, including emerging and cyclical growth companies.
Emerging and cyclical growth companies are firms which, while they may not have
a history of stable long-term growth, are nontheless expected to represent
attractive investments. The equity securities in which the Portfolio invests
consist of common stocks, preferred stocks and securtieis convertible into
common stocks, including those in the form of Depositary Receipts. The Portfolio
is not an index fund and its investments are not limited to securities of
issuers included in the S&P 400 Index. A management fee is payable monthly to
The Dreyfus Corporation at the annual rate of 0.75 of 1 of the Portfolio's
average daily net assets. Growth Portfolio of the Transamerica Variable
Insurance Fund, Inc., seeks long-term capital growth. Common stock (list and
unlisted) is the basic form of investment. The Growth Portfolio invests
primarily in common stocks of growth companies that are considered by the
manager to be premier companies. In the manager's view, characteristics of
premier companies include one or more of the following: dominant market share;
leading brand recognition; proprietary products or technology; low-cost
production capability; and excellent management with shareholder orientation.
The manager of the Portfolio believes in long-term investing and places great
emphasis on the sustainability of the above competitive advantages. Unless
market conditions indicate otherwise, the manager also tries to keep the
Portfolio fully invested in equity-type securities and does not try to time
stock market movements. When in the judgment of the manager market conditions
warrant, the portfolio may, for temporary defensive purposes, hold part or all
of its assets in cash, debt or money market instruments. The Portfolio may
invest up to 10% of its assets in debt securities having a call on common stocks
that are rated below investment grade. A management fee of 0.75 of 1% of the
average daily net assets is payable monthly to Transamerica Occidental Life
Insurance Company, as adviser, and adviser pays Transamerica Investment
Services, Inc. a monthly fee of at the annual reate of 0.30 of 1% of the first
$50 million, 0.25 of 1% of the next $150 million and 0.20 of 1% of assets in
excess of $200 million.
Meeting objectives depends on various factors, including, but not
limited to, how well the portfolio managers anticipate changing economic and
market conditions. THERE IS NO ASSURANCE THAT ANY OF THESE PORTFOLIOS WILL
ACHIEVE THEIR STATED OBJECTIVES.
An investment in the 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 FIXED ACCOUNT
This Prospectus is generally intended to serve as a disclosure document
only for the Policy and the Variable Account. For complete details regarding the
Fixed Account, see the Policy itself.
Premiums allocated to and amounts transferred to the Fixed Account
become part of the general account of Transamerica, which supports insurance and
annuity obligations. Because of exemptive and exvlusionary provisions, interests
in the general account have not been registered under the Securities Act of 1933
(the "1933 Act"), nor is the general account registered as an investment company
under the 1940 Act. Accordingly, neither the general account nor any interests
therein are generally subject to the provisions of the 1933 Act or the 1940 Act,
and the Securities and Exchange Commission has not reviewed the disclosures in
this Prospectus which related to the Fixed Account.
The Fixed Account is part of the general account of Transamerica. The
general Account of Transamerica consists of all the general assets of
Transamerica, other than those in the Variable Account, or in any other
segregated asset account. Transamerica has sole discretion to invest the assets
of its general account subject to applicable law. The allocation or transfer of
funds to the Fixed Account does not entitle the Owner to share in the investment
experience of Transamerica's general account.
Transamerica guarantees that it will credit interest at a rate of not
less than 3% per year, compounded annually, to amounts allocated to the Fixed
Account under the policies. However, Transamerica reserves the right to change
the minimum rate. Transamerica may credit interest at a rate in excess of 3% per
year. There is no specific formula for the determination of excess interest
credits. Some of the factors that the company may consider in determining
whether to credit excess interest to amounts allocated to the fixed account and
the amount in that account are general economic trends, rates of return
currently available and anticipated on the company's investments, regulatory and
tax requirements, and competitive factors.
Any interest credited to amounts allocated to the fixed account in
excess of 3% per year will be determined in the sole discretion of Transamerica.
The owner assumes the risk that interest credited to the fixed account
allocations may not exceed the minimum guarantee of 3% for any given year.
Rates of interest credited to the fixed account will be guaranteed for
at least twelve months and will vary by the timing and class of the allocation,
transfer or renewal. At any time after the end of the twelve month period for a
particular allocation, Transamerica may change the annual rate of interest for
that class; this new annual rate of interest will remain in effect for at least
twelve months. New purchase payments made to the policy which are allocated to
the fixed account may receive different rates of interest. These rates of
interest may differ from those interest rates credited to amounts transferred
from the variable sub-accounts or guarantee period account and from those
credited to amounts remaining in the fixed account and receiving renewal rates.
These rates of interest may also differ from rates for allocations applied under
certain options and services Transamerica may be offering. Transfers from the
Fixed Account
Transfers from the Fixed Account into a Sub-Account of the Variable
Account are limited to four per Policy Year. The maximum transfer amount allowed
from the Fixed Account will be the maximum transfer amount in effect on the date
of such transfer during a Policy Year. The maximum transfer amount is a
percentage of the value of the Fixed Account as of the date of the last Policy
Anniversary. The percentage rate, which will be declared by Transamerica from
time to time, will be a minimum of 25% and, currently, is 25%. Transfers into
the Fixed Account
Transfers from a Sub-Account of the Variable Account into the Fixed
Account are not allowed during the 90 day period directly following any transfer
made from the Fixed Account in a Sub-Account of the Variable Account.
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 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 Policies are available on a non-qualified basis as rollover IRAs
and as rollover Roth IRAs that qualify for special federal income tax treatment.
With Transamerica's prior permission, the Policies may also be available as a
contributory IRAs, as contributory Roth IRAs, as Section 403(b) annuities and
for use in Section 401(a) qualified pension and profit sharing plans established
by corporate employers. Generally, Qualified Policies contain restrictive
provisions limiting the timing and amount of payments and distributions from the
Qualified Policy.
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 Policies.
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. Policies
normally will not be issued with respect to Annuitants more than 80 years old,
although Transamerica in its discretion may waive this restriction in certain
cases.
If the Initial 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
Premium allocated to the Fixed Account plus the Variable Accumulated 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 21). Additional Net Premiums are credited to the Policy as of
the date the payment is received. Currently, additional Premiums after the
initial Premium may not be made to Section 401(a) and Section 403(b) annuity
Policies.
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 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 $500 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 Sub-Account to the Sub-Accounts
selected by the Owner does not count towards the limit of 18 free transfers per
Policy 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.
Investment Option Limit
Currently, the Owner may not allocate amounts to more than eighteen
investment options over the life of the Policy. Investment options include
Sub-Accounts of the Variable Account and the Fixed Account. Each Sub-Account and
the Fixed Account that ever received a transfer or purchase payment allocation
count as one towards this total of eighteen limit. Transamerica may waive this
limit in the future. For example, if the Owner makes an allocation to the Money
Market Sub-Account and later transfers all amounts out of this Money Market
Sub-Account, it would still count as one for the purposes of the limitation even
if it held no value. If the Owner transfers from a Sub-Account to another
Sub-Account and later back to the first, the count towards the limitation would
be two, not three.
POLICY VALUE
Before the Annuity Date, the Policy Value is the sum of the Fixed
Accumulated Value plus the Variable Accumulated Value. A Valuation Period is the
period between successive Valuation Days. It begins at the close of the New York
Stock Exchange (generally 4:00 p.m. ET) on each Valuation Day and ends at the
close of the New York Stock Exchange on the next succeeding Valuation Day. A
Valuation Day is each day that the New York Stock Exchange is open for regular
business. The value of the Variable Account assets is determined at the end of
each Valuation Day. To determine the value of an asset on a day that is not a
Valuation Day, the value of that asset as of the end of the next Valuation Day
will be used.
The Variable Accumulated Value is expected to change from Valuation
Period to Valuation Period, reflecting the investment experience of all of the
selected Portfolios as well as the deductions for charges.
Net 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.
TRANSFERS
Before the Annuity Date
Before the Annuity Date, the Owner may transfer all or part of the
Policy Value among the Sub-Accounts by giving a Written Request to the Service
Center subject to the following conditions: (1) the minimum amount which may be
transferred is $500; and (2) the minimum transfer to an Inactive Sub-Account is
$500. Transfers are restricted into or out of the Fixed Account. See the Fixed
Account, page ____. Transfers are also subject to such terms and conditions as
may be imposed by the Portfolios.
Transfer requests must specify the amounts being transferred from each
Sub-Account or the Fixed Account and the amounts being transferred into each
Sub-Account or the Fixed Account.
Transamerica imposes a transfer fee of $10 for each transfer over 18 in
a Policy Year. Transamerica reserves the right to waive the transfer fee or vary
the number of transfers without charge or not count transfers under certain
opitons or services for purposes of the allowed number without charge. If a
transfer reduces the value in a Sub-Account or the Fixed 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 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, Quality Bond or Limited Term High Income Portfolios
or the Fixed Account (the "Source Account") 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 Policy Date, or (b) the estimated end of the Free Look Period (allowing 5
days for delivery of the Policy by mail). Transfers will continue for the
duration selected by the Owner unless (1) terminated by the Owner, (2)
automatically terminated by Transamerica because there are insufficient funds in
the applicable Sub-Account or Fixed Account, or (3) for other reasons as set
forth in the Policy. 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 or Fixed 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 18 transfers without charge
per Policy Year.
Dollar Cost Averaging transfers may not be made to the Fixed Account.
Automatic Asset Rebalancing
After Premiums have been allocated among the variable Sub-Accounts, the
performance of each Sub-Account may cause this allocation to change. The Owner
may instruct Transamerica to automatically rebalance the amounts in the Variable
Accumulated Value by reallocating amounts among the variable Sub-Accounts, at
the time, and in the percentages, specified in the Owner instructions to
Transamerica and accepted by Transamerica. The Owner may elect to have the
rebalancing done on an annual, semi-annual or quarterly basis. The Owner may
elect to have amounts allocated among the Sub-Accounts using whole percentages,
with a minimum of 10% allocated to each Sub-Account.
The Owner may elect to establish, change or terminate the Automatic
Asset Rebalancing by submitting a request to the Service Center in a form and
manner acceptable to Transamerica. 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 free
transfers in a Policy 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 or Fixed Account.
If the Owner does not specify from where 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. 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 26). 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, except for distributions from certain Qualified Policies that may be
subject to mandatory 20% withholding. Withholding applies to the portion of the
withdrawal which is includible in income and subject to federal income tax. The
federal income tax withholding rate 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 33.) In addition, under New York law the Owner
may request Transamerica 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. The payment of a withdrawal from the Fixed Account may be delayed for up
to six months. If delayed for more than 10 days, interest will be paid on the
withdrawal amount up to the date of payment.
SINCE THE OWNER ASSUMES THE INVESTMENT RISK FOR AMOUNT ALLOCATED TO THE
VARIABLE ACCOUNT 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 with
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) and Fixed Account 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 33.)
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 Policy 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
Policy Year. Consult your tax adviser and, if applicable, the particular
retirement plan, before requesting withdrawals from a Qualified Policy. There
may be severe restrictions with regard to withdrawals from Qualified Policies.
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
certain Qualified Policies. See the Automatic Payout Option discussion under
Qualified Policies on page 32.
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 the 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 33.)
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 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 Policy has Joint Owners, 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 33.)
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
or the Fixed 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%
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 Premiums discussed
above is not used in the calculation of the Allowed Amount. If an Allowed Amount
is not withdrawn during a Policy Year, it does not carry over to the next Policy
Year. However, accumulated earnings, if any, in an Owner's Policy Value are
always available as the Allowed Amount. No withdrawals are allowed with regard
to Premiums made by a check which has not cleared.
Some Policy Owners may hold Policies which, when originally issued,
provided for an Allowed Amount which was equal to the sum of (1) all Premiums,
not previously withdrawn and held more then seven Policy Years plus (2) 10% of
Premiums held between one and seven Policy Years not reduced by any withdrawals
made from such Premiums. Under these Policies, withdrawals were made first from
Premiums (on a first in first out basis) then from earnings. The Allowed Amount
applicable to these Policy Owners will be determined by whichever formula
provides them with the larger amount available, for full surrenders only,
without a Contingent Deferred Sales Load.
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 the 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. 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 or
from the Fixed Account if there are insufficient funds in the Sub-Accounts.
After the Annuity Date, an annual Annuity Fee of $30 will be deducted
in equal amounts from each Variable Annuity Payment made during the year ($2.50
each month if monthly payments). This fee will not be changed. No Annuity Fee
will be deducted from Fixed Annuity Payments.
Transamerica also makes a deduction (the Administrative Expense Charge)
from the Variable Account at the end of each Valuation Period (both before and
after the Annuity Date) at an effective current annual rate of 0.15% of assets
held in each Sub-Account for those administrative expenses attributable to the
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
A $10 fee is charged for each transfer in excess of 18 in a Policy
Year. Currently, no fee is charged for
Automatic Asset Rebalancing. However, Transamerica reserves the right to
impose a nominal fee.
Systematic Withdrawal Option
Transamerica reserves the right to impose an annual fee of an
amount not to exceed $25 for administrative
expenses associated with processing systematic withdrawals. This fee, which
is currently waived, will be deducted from
each systematic withdrawal in equal installments during a 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 17.)
Sales in Special Situations
Transamerica may sell the Policies in special situations that are
expected to involve reduced expenses for Transamerica. These instances may
include: 1) sales in certain group arrangements, such as employee savings plans;
2) sales to current or former officers, directors and employees (and their
families) of Transamerica and its affiliates; 3) sales to officers, directors,
and employees (and their families) of the Portfolios' investment advisers and
their affiliates; and 4) sales to officers, directors, employees and sales
agents (registered representatives) (and their families) of broker-dealers and
other financial institutions that have sales agreements with Transamerica to
sell the policies. In such situations, 1) the contingent deferred sales load may
be reduced or waived, 2) the mortality and expense risk charge or administration
charges may be reduced or waived; and/or 3) certain amounts may be credited to
the policy account value (for examples, amounts related to commissions or sales
compensation otherwise payable to a broker-dealer may be credited to the Policy
Account Value. These reductions in fees or charges or credits to account value
will not unfairly discriminate against any Policy Owner. These reductions in
fees or charges or credits to Account Value are generally taxable and treated as
Premiums for purposes of income tax and any possible premium tax charge.
ANNUITY PAYMENTS
Annuity Date
Initially, the Annuity Date is selected by the Owner at the time the
Initial 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 33.)
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
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.
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 a
Qualified Policy, 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
The Policies may be used to fund rollover IRAs and, with Transamerica's
prior permission, to fund rollover Roth IRAS, contributory IRAs and contributory
Roth IRAs, for use in connection with Section 408 and 408A of the Code. A
rollover IRA is one whose initial Purchase Payment is from the rollover or
transfer of certain kinds of distributions from a non-Roth IRA, qualified plans,
or Section 403(b) tax sheltered annuities, following the rules set out in the
Code to maintain favorable tax treatment of the rollover IRA. A rollover Roth
IRA is one whose initial Purchase Payment is from the rollover, transfer or
conversion from non-Roth IRA or Roth IRA. A contributory IRA or contributory
Roth IRA are those whose initial and subsequent Purchase Payments are subject to
limitations imposed by the Code.
With Transamerica's prior permission, the 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. Currently,
additional Premiums after the initial Premium may not be made to Policies used
as Section 401(a) or Section 403(b) annuities. The tax rules applicable to
distribution from qualified retirement plans, including restrictions on
contributions and benefits, taxation of distributions, and any tax penalties,
vary according to the type of plan and the terms and conditions of the plan
itself. Various tax penalties may apply to contributions in excess of specified
limits, distributions prior to age 59 1/2 (subject to certain exceptions),
distributions that do not satisfy specified requirements and certain other
transactions with subject to qualified plans. Purchasers of the Policies 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 the Policy to certain qualified plans or
terminate the policy if in Transamerica's judgment the Policy is not appropriate
for the plan.
If a Policy is purchased to fund an IRA or Roth IRA, the Annuitant must
also be the Owner. In addition, under current tax law, minimum distributions are
required from certain Qualified Policies. See "Federal Tax Matters" page ___.
The Owner should consult his/her tax adviser concerning these matters.
Automatic Payout Option ("APO")
Prior to the Annuity Date, for Qualified Policy other than Roth IRAs,
the Owner may elect the Automatic Payout Option ("APO") to satisfy minimum
distribution requirements under Sections 401(a)(9), 403(b), and 408(b)(3) of the
Code with regard to this Policy. See "Federal Tax Matters" page ___. For IRAs
and Sep/IRAs this may be elected no earlier than six months prior to the
calendar year in which the Owner attains age 70 1/2, but payments may not begin
earlier than January of such calendar year. For other Qualified Policies, APO
can be elected no earlier than six months prior to the later of when the Owner
(a) attains age 70 1/2; and (b) retires from employment. Additionally, APO
withdrawals may not begin before the later of (a) 30 days after the 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 27). However,
if a partial withdrawal is taken, that partial withdrawal and any subsequent
withdrawals that Policy Year will be subject to a Contingent Deferred Sales
Charge to the extent they exceed the "Allowed Amount." (See "Contingent Deferred
Sales Load" page 27.)
To be eligible for this option, the following conditions must be met:
(1) the Policy Value must be at least $12,000 at the time of election; and (2)
the annual withdrawal amount is the larger of the required minimum distribution
under Code Sections 401(a)(9) or 408(b)(3) or $500.
APO allows the required minimum distribution to be paid from the
Sub-Account(s) of the Variable Account. If there are insufficient funds in the
Variable Account to make a withdrawal, or for other reasons as set forth in the
Policy, this option will terminate.
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 Policy only. Restrictions
under Section 403(b) Programs
Certain restrictions apply to annuity contracts used in connection with
Internal Revenue Code Section 403(b) retirement plans. Section 403(b) of the
Internal Revenue Code provides for tax-deferred retirement savings plans for
employees of certain non-profit and educational organizations. In accordance
with the requirements of the Code, Section 403(b) annuities generally may not
permit distribution of (i) elective contributions made in years beginning after
December 31, 1988, and (ii) earnings on those contributions and (iii) earnings
on amounts attributable to elective contributions held as of the end of the last
year beginning before January 1, 1989. Distributions of such amounts will be
allowed only upon death of the employee, on or after attainment of age 59 1/2,
separation from service, disability, or financial hardship, except that income
attributable to elective contributions may not be distributed in the case of
hardship.
FEDERAL TAX MATTERS
Introduction
The following discussion is a general description of federal tax
considerations relating to the 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 Sections 401, 403(b), 408 and 408A 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.
Premiums
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 policy, Transamerica may require that the prospective purchaser
provide information with regard to the federal income tax status of the previous
annuity policy. 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 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.
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 apply to 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 "investment in the
contract" by the total number of expected periodic payments. However, the entire
distribution will be taxable once the recipient has recovered the dollar amount
of his or her "investment in the contract." For Fixed Annuity Payments, in
general there is no tax on the portion of each payment which represents the same
ratio that the "investment in the contract" bears to the total expected value of
the Annuity Payments for the term of the payments; however, the remainder of
each Annuity Payment is taxable. Once the "investment in the contract" has been
fully recovered, the full amount of any additional Annuity Payments is taxable.
If Annuity Payments cease as a result of an Annuitant's death before full
recovery of the "investment in the contract," consult a competent tax advisor
regarding deductibility of the unrecovered amount. Withholding
The Code requires Transamerica to withhold federal income tax from
distributions under the Policies. However, except for distributions from certain
Qualified Policies, an Owner will be entitled to elect, in writing, not to have
tax withheld. Withholding applies to the portion of a distribution which is
includible in income and subject to federal income tax, where the taxable amount
is at least $200. Some states also require withholding for state income taxes.
The withholding varies according to the type of distribution and the
Owner's tax status. "Eligible rollover distributions" from Section 401(a) plans
and Section 403(b) tax sheltered annuities are subject to mandatory federal
income tax withholding at the rate of 20%. An eligible rollover distribution is
the taxable portion of any distribution from such a plan, except for certain
distributions, such as minimum required distributions or settlement option
payments made in a specified form. The 20% mandatory withholding does not apply,
however, if the Owner chooses a "direct rollover" from the plan to another
tax-qualified plan or to an IRA (other than a Roth IRA).
The federal income tax withholding rate for a distribution that is not
an "eligible rollover distribution" is 10% of the taxable amount of the
distribution.
Penalty Tax
In the case of a distribution pursuant to a Non-Qualified 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 59
1/2; (2) made as a result of death or disability of the Owner; or (3) received
in substantially equal periodic payments as a life annuity or a joint and
survivor annuity for the lives or life expectancies of the Owner and a Joint
Owner. Other tax penalties may apply to certain distributions 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 Policies. You should
consult your legal counsel and tax adviser regarding these rules and their
impact on Qualified Policies.
Required Distributions upon Owner's Death
Notwithstanding any provision of the Policy or this prospectus to the
contrary, no payment of benefits provided under the Policy will be allowed that
does not satisfy the requirements of Section 72(s) of the Code. If the Owner
dies before the Annuity Date, the Death Benefit payable to the Owner's
Beneficiary will be distributed as follows:
(a) the Death Benefit must be completely distributed within five years
of the Owner's date of death; or (b) the Owner's Beneficiary may elect,
within the one year period after the Owner's date of death, to
receive the Death Benefit in the form of an annuity from us,
provided that: (1) such annuity is distributed in
substantially equal installments over the life of such Owner's
Beneficiary or over a period not extending beyond the life
expectancy of such Owner's Beneficiary; and (2) such
distributions begin not later than one year after the Owner's
date of death.
Notwithstanding (a) and (b) above, if the sole Owner's Beneficiary is
the deceased Owner's surviving spouse, then such spouse may elect, within the
one year period after the Owner's date of death, to continue the Policy 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 Policy in effect prior
to such election will cease; (2) the spouse will become the Owner of the Policy
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 Policy or allowed by Transamerica will belong to the spouse as
Owner of the Policy. This election will be deemed to have been made by the
spouse if such spouse makes a Premium payment to the Policy 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 Policy.
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 Policy or allowed by us will pass to the Owner's Beneficiary.
Joint Ownership - For purposes of this section, if the Policy has Joint
Owners we will consider the date of death of the first Joint Owner as the death
of the Owner and the surviving Joint Owner will become the Owner of the Policy.
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, except as permitted by the Code or the
Employee Retirement Income Security Act of 1974 (ERISA).
Multiple Policies
All deferred non-qualified annuity policies that are issued by
Transamerica (or its affiliates) to the same Owner during any calendar year are
treated as one annuity policy 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 policies or
otherwise. Congress has also indicated that the Treasury Department may have
authority to treat the combination purchase of an immediate annuity policy and
separate deferred annuity policies as a single annuity policy under its general
authority to prescribe rules as may be necessary to enforce the income tax laws.
Qualified Policies
In General
The Qualified Policy is designed for use as a rollover IRA. With
Transamerica's prior permission, the Policy may also be used as a rollover Roth
IRA, a contributory IRA, or as a contributory Roth 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 59 1/2 (subject to certain exceptions); distributions
that do not conform to specified commencement and minimum distribution rules;
and in other specified circumstances. We make no attempt to provide more than
general information about use of the Policies 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 Policies may be subject to the terms and conditions of
the plans themselves, regardless of the terms and conditions of the Policy
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 Policies. Owners are responsible for determining that
contributions, distributions and other transactions with respect to the Policies
satisfy applicable law. Purchasers of Policies for use with any retirement plan
should consult their legal counsel and tax adviser regarding the suitability of
the Policy.
For qualified plans under Section 401(a), 403(a) and 403(b), the Code
requires that distributions generally must commence no later than the later of
April 1 of the calendar year following the calendar year in which the Owner (or
plan participant) (i) reaches age 70 1/2 or (ii) retires, and must be made in a
specified form and manner. If the plan participant is a "5 percent owner" (as
defined in the Code), distributions generally must begin no later than April 1
of the calendar year following the calendar year in which the Owner (or plan
participant) reaches age 70 1/2. For IRAs described in Section 408,
distributions generally must commence no later than the later of April 1 of the
calendar year following the calendar year in which the Owner (or plan
participant) reaches age 70 1/2. Roth IRAs under Section 408A do not require
distributions at any time prior to the Owner's death.
Qualified Pension and Profit Sharing Plans
Section 401(a) of the Code permits employers to establish various types
of retirement plans for employees. Such retirement plans may permit the purchase
of the Policy 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 Policy is assigned or
transferred to any individual as a means to provide benefits payments.
Purchasers of a Policy for use with such plans should seek competent advice
regarding the suitability of the proposed plan documents and the Policy to their
specific needs. The Policy is designed to invest retirement savings and not to
distribute retirement benefits.
Individual Retirement Annuities, Simplified Employee Plans and Roth IRAs
The Policies are designed for use with rollover IRAs and contributory
IRAs. A contributory IRA is a Policy in which initial and subsequent Purchase
Payments are subject to limitations imposed by the Code. Section 408 of the Code
permits eligible individuals to contribute to an individual retirement program
known as an Individual Retirement Annuity or Individual Retirement Account (each
hereinafter referred to as an "IRA"). Also, distributions from certain other
qualified plans may be "rolled over" or transferred on a tax-deferred basis into
an IRA.
Earnings in an IRA are not taxed until distributed. IRA contributions
are limited each year to the lesser of $2,000 or 100% of the Owner's
compensation (including earned income as defined in Code Section 401(c)(2)) and
may be deductible in whole or in part depending on the individual's adjusted
gross income and whether or not the individual is considered an active
participant in a qualified plan. The limit on the amount contributed to an IRA
does not apply to distributions from certain other types of qualified plans that
are "rolled over" or transferred on a tax-deferred basis into an IRA. Amounts in
the IRA (other than nondeductible contributions) are taxed when distributed from
the IRA. Distributions prior to age 59 1/2 are subject to a 10% penalty tax,
unless certain exceptions apply. Purchasers should seek competent advice as to
the suitability of the Policy for use with IRAs.
Eligible employers that meet specified criteria under Code Section
408(k) could establish simplified employee pension plans (SEP-IRAs) for their
employees using IRAs. Employer contributions that may be made to such plans are
larger than the amounts that may be contributed to regular IRAs, and may be
deductible to the employer. SEP-IRAs are subject to certain Code requirements
regarding participation and amounts of contributions.
The Policies may also be used with rollover Roth IRAs and contributory
Roth IRAs. A contributory Roth IRA is a policy to which initial and subsequent
Purchase Payments are subject to limitations imposed by the Code. Section 408A
of the Code permits eligible individuals to contribute to an individual
retirement program known as a Roth IRA on a non-deductible basis. In addition,
distributions from a Section 408 IRA may be converted to a Roth IRA. A Section
408 IRA is an IRA described in Sections 408(a) or 408(b), other than a Roth IRA.
You should consult a tax adviser before combining any converted amounts with any
other Roth IRA contributions, including any other conversion amounts from other
tax years. Distributions from a Roth IRA generally are not taxed, except that,
once aggregate distributions exceed contributions to the Roth IRA, income tax
and a 10% penalty tax may apply to distributions made (1) before age 59 1/2
(subject to certain exceptions) or (2) during the five taxable years starting
with the year in which the first contribution is made to the Roth IRA.
Purchasers should seek competent advice as to the suitability of the policy for
use with Roth IRAs.
The sale of a Policy for use with an IRA, SEP-IRA or Roth IRA may be
subject to special disclosure requirements of the Internal Revenue Service.
Purchasers of these Policies 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, SEP-IRA or Roth IRA or their purchase.
Tax Sheltered Annuities 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 Social Security and Medicare (FICA) taxes.
Code Section 403(b)(11) restricts the distribution under Code Section
403(b) annuity contracts of: (1) elective contributions made in years beginning
after December 31, 1988; (2) earnings on those contributions; and (3) earnings
in such years on amounts held as of the last year beginning before January 1,
1989. Distribution of those amounts may only occur upon death of the employee,
attainment of age 59 1/2, separation from service, disability, or financial
hardship. In addition, income attributable to elective contributions may not be
distributed in the case of hardship.
Pre-1989 contributions and earnings through December 31, 1989 are not
subject to the restrictions described above. However, funds transferred to a
Qualified Policy from a Section 403(b)(7) custodial account will be subject to
the restrictions.
Restrictions under Qualified Policies
Other restrictions with respect to the election, commencement,
or distribution of benefits may apply under
Qualified Policies or under the terms of the plans in respect of which
Qualified Policies are issued. A Qualified Policy
will be amended as necessary to conform to the requirements of the Code.
Possible Changes in Taxation
Legislation has been proposed in 1998 that, if enacted, would adversely
modify the federal taxation of certain insurance and annuity policies. For
example, one proposal would tax transfers among investment options and tax
exchanges involving variable policies. A second proposal would reduce the
"investment in the policy" under cash value life insurance and certain annuity
policies by certain amounts, thereby increasing the amount of income for
purposes of computing gain. Although the likelihood of there being any changes
is uncertain, there is always the possibility that the tax treatment of the
Policies could be changed by legislation or other means. Moreover, it is also
possible that any change could be retroactive (that is, effective prior to the
date of the change). You should consult a tax adviser with respect to
legislative developments and their effect on the Policy. 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.
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.
PREPARING FOR YEAR 2000
As a result of computer systems that may recognize a date of 12/31/00
as the year 1900 rather than the year 2000, disruptions of business activities
may occur with the year 2000. In response, Transamerica established in 1997 a
"Y2K" committee to address this issue. With regard to the systems and software
which administer and affect the policies, Transamerica has determined that is
own internal systems will be Year 2000 compliant. Additionally, Transamerica
requires any third party vendor which supplies software or administrative
services to Transamerica in connection with the administration of the policies,
to certify that the software or services will be Year 2000 compliant. In
determining the variable accumulation unit values for each variable sub-account,
Transamerica is reliant upon information received from the portfolios and is
confirming that Year 2000 issues will not interfere with this flow of
information. As of the date of this prospectus, it is not anticipated that
policy owners will experience negative afffects on their investment, or on the
services received in connection with their policies, as a result of Year 2000
issues. However, especially when taking into account interaction with other
systems, it is difficult to predict with precision that there will be no
disruption of services in connection with the year 2000. LEGAL PROCEEDINGS
There is no pending material legal proceeding affecting the Variable
Account. Transamerica is involved in various kinds of routine litigation which,
in management's judgment, are not of material importance to Transamerica's
assets or to the Variable Account.
LEGAL MATTERS
Advice regarding certain legal matters concerning the federal
securities laws applicable to the issue and sale of the 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 at December 31, 1997 and 1996, and for
each of the three years in the period then ended December 31, 1997, and the
financial statements for the Variable Account at December 31, 1997, and for each
of the two years in the period then ended, appearing in the Statement of
Additional Information have been audited by Ernst & Young LLP, Independent
Auditors, as set forth in their reports thereon appearing elsewhere herein, and
are included in reliance upon such reports given upon the authority of such firm
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.
<PAGE>
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 3
Variable Annuity Units and Payments4
Variable Annuity Unit Value 4
Transfers After the Annuity Date 4
GENERAL PROVISIONS 4 IRS Required Distributions 4 Non-Participating 4
Misstatement of Age or Sex 5 Proof of Existence and Age 5 Assignment 5
Annuity Data 5 Annual Report 5 Incontestability 5 Ownership 5 Entire
Policy 5 Changes in the Policy 5 Protection of Benefits 5 Delay of
Payments 5 Notices and Directions 6
CALCULATION OF YIELDS AND TOTAL RETURNS 6
Money Market Sub-Account Yield Calculation 6
Other Sub-Account Yield Calculations 6
Standard Total Return Calculations 7
Hypothetical Performance Data 7
Other Performance Data 7
HISTORIC PERFORMANCE DATA 8
General Limitations 8
Money Market Sub-Account Yields 8
Hypothetical Sub-Account Performance Figures 8
FEDERAL TAX MATTERS 11
Taxation of Transamerica 11
Tax Status of the Policies 11
DISTRIBUTION OF THE POLICY 12
SAFEKEEPING OF ACCOUNT ASSETS 12
TRANSAMERICA 13
General Information and History 13
STATE REGULATION 13
RECORDS AND REPORTS 13
FINANCIAL STATEMENTS 13
APPENDIX A-1
Annuity Transfer Formula A-1
<PAGE>
Appendix A
Example of Variable Accumulation Unit Value Calculations
Suppose the net asset value per share of a Portfolio at the end of the
current Valuation Period is $20.15; at the end of the immediately preceding
Valuation Period it was $20.10; the Valuation Period is one day; and no
dividends or distributions caused the Portfolio to go "ex-dividend" during the
current Valuation Period. $20.15 divided by $20.10 is 1.002488. Subtracting the
one day risk factor for Mortality and Expense Risk Charge and the Administrative
Expense Charge of .003814% (the daily equivalent of the current charge of 1.40%
on an annual basis) gives a Net Investment Factor of 1.002449. If the value of
the Variable Accumulation Unit for the immediately preceding Valuation Period
had been 15.500000, the value for the current Valuation Period would be
15.537966 (15.5 x 1.002449).
Example of Variable Annuity Unit Value Calculations
Suppose the circumstances of the first example exist, and the value of
a Variable Annuity Unit for the immediately preceding Valuation Period had been
13.500000. If the first Variable Annuity Payment is determined by using an
annuity payment based on an assumed interest rate of 4% per year, the value of
the Variable Annuity Unit for the current Valuation Period would be 13.531613
(13.5 x 1.002449 (the Net Investment Factor) x 0.999893). 0.999893 is the
factor, for a one day Valuation Period, that neutralizes the assumed rate of
four percent (4%) per year used to establish the Variable Annuity Rates found in
the Policy. Example of Variable Annuity Payment Calculations
Suppose that the Account is currently credited with 3,200.000000
Variable Accumulation Units of a particular Sub-Account.
Also suppose that the Variable Accumulation Unit Value and the Variable
Annuity Unit Value for the particular Sub-Account for the Valuation Period which
ends immediately preceding the first day of the month is 15.500000 and 13.500000
respectively, and that the Variable Annuity Rate for the age and option elected
is $5.73 per $1,000. Then the first Variable Annuity Payment would be:
3.200 x 15.5 x 5.73 divided by 1,000 = $284.21,
and the number of Variable Annuity Units credited for future payments
would be:
284.21 divided by 13.5 = 21.052444.
For the second monthly payment, suppose that the Variable Annuity Unit
Value on the 10th day of the second month is 13.565712. Then the second Variable
Annuity Payment would be $285.59 (21.052444 x 13.565712).
<PAGE>
- --------
<PAGE>
14
O:\1998\2lny\nysai4-23 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, 1998, 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, 1998
<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 Policy...................................................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.)
<PAGE>
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 Source Account from
which the automatic transfers were made.
If no election, in a form and manner acceptable to
Transamerica, is made by the Owner prior to the end of the 10 day
period, Transamerica reserves the right to transfer the value of the
receiving Sub-Account(s) back into the Source Accountfrom which the
automatic transfers were made. Transfers made as a result of (a), (b),
or (d) above will not be counted for purposes of the eighteen free
transfers per 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
"ex-dividend" date occurs in the Valuation Period, plus or minus
A per-share charge or credit as Transamerica may determine, as
of the end of the Valuation Period, for taxes. Where (b) is
The net asset value per share held in the Sub-Account as of
the end of the last prior Valuation Period.
Where (c) is
The daily charge of 0.003403% (1.25% annually) for the
Mortality and Expense Risk Charge under 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.
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
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)
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 Policy is intended to qualify as an annuity contract for
federal income tax purposes. All provisions in the Policy will be
interpreted to maintain such tax qualification. We may make changes in
order to maintain this qualification or to conform to the Policy to any
applicable changes in the tax qualification requirements. We will
provide you with a copy of any changes made to the Policy. 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
No assignment of a Policy will be binding on Transamerica
unless made in writing and given to Transamerica at its ServiceCenter.
Transamerica is not responsible for the adequacy of any assignment. The
Owner's rights and the interest of any Annuitant or non-irrevocable
Beneficiary will be subject to the rights of any assignee of record.
Annuity Data
Transamerica will not be liable for obligations which depend
on receiving information from a Payee or measuring life until such
information is received in a satisfactory form.
Annual Report
At least once each Policy Year prior to the Annuity Date, the
Owner will be given a report of the current Policy Value. This report
will also include any other information required by law or regulation.
After the Annuity Date, a confirmation will be provided with every
Variable Annuity Payment.
Incontestability
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 Owner automatically becomes the Owner's Beneficiary.
Entire Policy
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 Policy. 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 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.
Transamerica may delay payment of any withdrawal from the
Fixed Account for a period of not more than six months after
Transamerica receives the request for such withdrawal. If Transamerica
delays payment for more than 30 days, Transamerica will pay interest on
the withdrawal amount up to the date of payment. (See "Cash
Withdrawals" page ____ of the Prospectus.) 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 ServiceCenter.
Any written notice requirement by Transamerica to the Owner
will be satisfied by our mailing of any such required written notice,
by first-class mail, to the Owner's last known address as shown on our
records.
CALCULATION OF YIELDS AND TOTAL RETURNS
Money Market Sub-Account Yield Calculation
In accordance with regulations adopted by the Commission,
Transamerica is required to compute the Money Market Sub-Account's
current annualized yield for a seven-day period in a manner which does
not take into consideration any realized or unrealized gains or losses
on shares of the Money Market Series or on its portfolio securities.
This current annualized yield is computed by determining the net change
(exclusive of realized gains and losses on the sale of securities and
unrealized appreciation and depreciation) in the value of a
hypothetical account having a balance of one unit of the Money Market
Sub-Account and income other than investment income at the beginning of
such seven-day period, dividing such net change in 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:
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 Policy
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 Policy is not
surrendered (i.e., with no deduction for the Contingent Deferred Sales
Load) and assuming that the Policy is surrendered at the end of the
applicable period (i.e., reflecting a deduction for any applicable
Contingent Deferred Sales Load).
Other Performance Data
Transamerica may from time to time also disclose average
annual total returns in a non-standard format in conjunction with the
standard described above. The non-standard format will be identical to
the standard format except that the Contingent Deferred Sales Load
percentage will be assumed to be 0%.
Transamerica may from time to time also disclose cumulative
total returns in conjunction with the standard format described above.
The cumulative returns will be calculated using the following formula
assuming that the Contingent Deferred Sales Load percentage will be 0%.
CTR = {ERV/P} - 1
Where:
CTR= the cumulative total return net of Sub-Account recurring charges
for the period.
ERV= ending redeemable value of a hypothetical $1,000 payment at
the beginning of the one, five, or ten-year period at the end
of the one, five, or ten-year period (or fractional portion
thereof).
P = a hypothetical initial payment of $1,000.
All non-standard performance data will be advertised only if the standard
performance data is also disclosed.
HISTORIC PERFORMANCE DATA
General Limitations
The figures below represent the past performance of the Sub-Accounts
and are not indicative of future performance. The figures may reflect the waiver
of advisory fees and reimbursement of other expenses.
Except for Transamerica Growth, the Funds have provided the
performance data for the Sub-Accounts. Except for Transamerica Growth none of
the Funds or their investment advisers are affiliated with Transamerica. In
preparing the tables below, Transamerica has relied on the data provided by the
Funds. While Transamerica has no reason to doubt the accuracy of the figures
provided by the Funds, Transamerica has not verified those figures. No data is
provided for the Core Value and MidCap Stock Sub-Accounts since, prior to May 1,
1998, the related Portfolios had not yet commenced operations.
Sub-Account Performance Figures Including Hypothetical Performance
The charts below show historical performance data for the Sub-Accounts,
including, for six Sub-Accounts, "hypothetical" data for the periods prior to
the inception of the Sub-Accounts, based on the performance of the corresponding
Portfolios since their inception date, with a level of charges equal to those
currently assessed under the Polices. These figures are not an indication of the
future performance of the Sub-Accounts. Some of the figures reflect the waiver
of advisory fees and reimbursement of other expenses for part or all of the
periods indicated.
The dates to the left of the Sub-Account names below indicate the date
of commencement of operation of the Portfolios, which coincide with the date of
commencement of operation of the corresponding Sub-Account, with these seven
exceptions: the Money Market; Managed Assets, Zero Coupon 2000, Qualify Bond,
Small Cap and Stock Index Sub-Accounts which commenced operations January 4,
1993 and the Transamerica Growth Sub-Account which commenced operations May 1,
1998. Hence, the performance data given for these seven Sub-Accounts which
precedes these dates are "hypothetical".
Standard Average annual total returns for periods since inception of
the Portfolio, including hypothetical performance, for each Sub-Account are as
follows. These figures include mortality and expenses charges deducted at 1.25%,
the administrative expenses charge of 0.15% per annum, the administration charge
of $30 per annum adjusted for average account size and the maximum contingent
deferred sales load of 6%.
<TABLE>
<CAPTION>
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
For the period
from
commencement of
SUB-ACCOUNT (date of commencement of For the 1-year For the 3-year For the 5-year Portfolio
operation of Corresponding Portfolio) period ending period ending period ending operations to
12/31/97 12/31/97 12/31/97 12/31/97
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
Money Market (8/31/90) -1.96% 2.20% 2.49% 3.42%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Special Value (8/31/90) 15.36% 2.89% 6.26% 6.01%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Zero Coupon 2000 (8/31/90) -0.27% 5.99% 5.27% 8.18%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Quality Bond (8/31/90) 1.96% 7.82% 6.19% 8.01%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Small Cap (8/31/90) 9.06% 18.31% 24.00% 41.95%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Capital Appreciation (4/5/93) 20.21% 26.16% N/A 17.65%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Stock Index (9/29/89) 25.05% 27.74% 17.57% 14.18%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Socially Responsible (10/7/93) 20.59% 25.24% N/A 19.21%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Growth & Income (12/15/94) 8.53% 28.45% N/A 28.16%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
International Equity (12/15/94) 2.14% 6.71% N/A 6.71%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
International Value (5/1/96) 1.30% N/A N/A 2.19%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Disciplined Stock (5/1/96) 23.62% N/A N/A 25.72%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Small Company Stock (5/1/96) 14.01% N/A N/A 13.30%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Balanced (5/1/97) N/A N/A N/A N/A
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Limited Term High Income(5/1/97) N/A N/A N/A N/A
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Transamerica Growth(2/26/69)* 44.94% 41.91% 29.73% 24.12%*
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Non-Standard Average annual total returns for period since inception of
the Portfolio including hypothetical performance, for each Sub-Account are as
follows. These figures include mortality and expenses charges deducted at 1.25%,
the administrative expenses charge of 0.15% per annum, the administration charge
of $30 per annum adjusted for average account size but do not reflect the
maximum contingent deferred sales load of 6% which if reflected would reduce the
figures. Non-Standard performance data will only be disclosed if the standard
performance data for the required periods is also disclosed.
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
For the period
from
commencement of
SUB-ACCOUNT (date of commencement of For the 1-year For the 3-year For the 5-year Portfolio
operation of Corresponding Portfolio) period ending period ending period ending operations to
12/31/97 12/31/97 12/31/97 12/31/97
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Money Market (8/31/90) 3.66% 3.78% 3.21% 3.43%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Special Value (8/31/90) 21.36% 4.44% 6.88% 6.01%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Zero Coupon 2000 (8/31/90) 5.45% 7.45% 5.91% 8.18%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Quality Bond (8/31/90) 7.83% 9.23% 6.81% 8.02%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Small Cap (8/31/90) 15.06% 19.49% 24.33% 41.96%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Capital Appreciation (4/5/93) 26.21% 27.19% N/A 18.11%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Stock Index (9/29/89) 31.05% 28.76% 17.99% 14.19%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Socially Responsible (10/7/93) 26.59% 26.30% N/A 19.75%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Growth & Income (12/15/94) 14.53% 29.45% N/A 29.14%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
International Equity (12/15/94) 8.02% 8.15% N/A 8.13%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
International Value (5/1/96) 7.13% N/A N/A 5.73%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Disciplined Stock (5/1/96) 29.52% N/A N/A 28.81%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Small Company Stock (5/1/96) 20.01% N/A N/A 16.61%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Balanced (5/1/97) N/A N/A N/A N/A
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Limited Term High Income(5/1/97) N/A N/A N/A N/A
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Transamerica Growth(2/26/69)* 50.34% 42.65% 29.98% 24.12%*
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
</TABLE>
Non-Standard Cumulative total returns for periods since inception of the
Portfolio, including hypothetical performance, for each Sub-Account are as
follows. These figures include mortality and expenses charges deducted at 1.25%,
the administrative expenses charge of 0.15% per annum, the administration charge
of $30 per annum adjusted for average account size but do not reflect the
maximum contingent deferred sales load of 6%, which if reflected would reduce
the figures. Nonstandard performance data will only be disclosed if standard
performance data for the required periods is also disclosed.
- ---------------------------------------- ------------------- ------------------
For the 1-year
SUB-ACCOUNT (date of commencement of period ending Since Inception
operation of Corresponding Portfolio) 12/31/97
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Money Market (8/31/90) 3.66% 28.08%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Special Value (8/31/90) 21.36% 53.51%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Zero Coupon 2000 (8/31/90) 5.45% 78.14%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Quality Bond (8/31/90) 7.83% 76.16%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Small Cap (8/31/90) 15.06% 1208.55%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Capital Appreciation (4/5/93) 26.21% 120.51%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Stock Index (9/29/89) 31.05% 199.18%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Socially Responsible (10/7/93) 26.59% 114.76%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Growth & Income (12/15/94) 14.53% 118.14%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
International Equity (12/15/94) 8.02% 26.91%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
International Value (5/1/96) 7.13% 9.75%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Disciplined Stock (5/1/96) 29.62% 52.63%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Small Company Stock (5/1/96) 20.01% 29.26%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Balanced (5/1/97) N/A% 17.38%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Limited Term High Income(5/1/97) N/A% 8.52%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Transamerica Growth(2/26/69)* 50.34% 767.83%*
- ---------------------------------------- ------------------- ------------------
*The Growth Portfolio of the Transamerica Variable Insurance Fund,
Inc., is the successor to Separate Account Fund C of Transamerica Occidental
Life Insurance Company, a management investment company funding variable
annuities, through a reorganization on November 1, 1996. Accordingly, the
performance data for the Transamerica VIF Growth Portfolio include performance
of its predecessor. The performance shown in the "since inception" box for the
Transamerica Growth Sub-Account is 10-year performance, not performance since
1969.
FEDERAL TAX MATTERS
The Dreyfus/Transamerica Triple Advantage Variable Annuity may be
purchased on a non-tax-qualified basis ("Non-Qualified Policy") or purchased and
used in connection with plans qualifying for special tax treatment ("Qualified
Polices"). Qualified Polices 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
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 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 Polices through registered representatives who are
licensed to sell securities and variable insurance products. These agreements
provide that applications for the Polices 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 Polices. 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 Polices 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 1997, $5,543,415.68 in commission were paid to TSSC
as underwriter of the Policies; no amounts were retained by TSSC. 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 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 1997, $81.50 in commissions
were paid to TFR as underwriter of the Policies; no amounts were retained by
TFR. During fiscal year 1996, $66.00 in commissions were paid to TFR as
underwriter of the Policies; no amounts were retained by TFR. During fiscal year
1995, $286.000 in commissions were paid to TFR as underwriter of the Policy.
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.
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 31,1997.
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.
<PAGE>
Audited Financial Statements
Separate Account VA-2LNY of
Transamerica Life Insurance Company
of New York
Year ended December 31, 1997
with Report of Independent Auditors
<PAGE>
Separate Account VA-2LNY of
Transamerica Life Insurance Company
of New York
Audited Financial Statements
Year ended December 31, 1997
Contents
Report of Independent Auditors................1
Statement of Assets and Liabilities...........2
Statement of Operations.......................5
Statements of Changes in Net Assets...........8
Notes to Financial Statements.................14
<PAGE>
1
Report of Independent Auditors
Unitholders of Separate Account VA-2LNY
of Transamerica Life Insurance Company of New York
Board of Directors, Transamerica Life Insurance Company of New York
We have audited the accompanying statement of assets and liabilities of Separate
Account VA-2LNY of Transamerica Life Insurance Company of New York (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, Disciplined Stock, and Small
Company Stock, Limited Term High Income and Balanced Sub-accounts) as of
December 31, 1997, the related statement of operations for the year then ended,
and the statements of changes in net assets for 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, 1997, by correspondence with
the fund managers. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of each of the respective
sub-accounts comprising Separate Account VA-2LNY of Transamerica Life Insurance
Company of New York at December 31, 1997, 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.
Charlotte, NC
April 13, 1998
<PAGE>
2
Separate Account VA-2LNY of
Transamerica Life Insurance Company of New York
Statement of Assets and Liabilities
December 31, 1997
<TABLE>
<CAPTION>
Zero
Money Managed Coupon
Market Assets 2000
Sub-account Sub-account Sub-account
------------------ ------------------- -------------------
Assets:
<S> <C> <C> <C>
Investments, at fair value $ 14,377,670 $ 14,406,046 $ 6,676,625
Receivable for units sold - 26,088 -
Due from Transamerica Life - 10 597
------------------ ------------------- -------------------
Total assets 14,377,670 14,432,144 6,677,222
Liabilities:
Payable for units redeemed 220,462 - 30
Due to Transamerica Life 3,586 - -
------------------ ------------------- -------------------
Total liabilities 224,048 30
------------------ ------------------- -------------------
Net assets $ 14,153,622 $ 14,432,144 $ 6,677,192
================== =================== ===================
Accumulation units outstanding 12,049,327.817 1,017,390.458 424,325.816
================== =================== ===================
Net asset value and redemption price per unit $ 1.174640 $ 14.185453 $ 15.736001
================== =================== ===================
Other sub-account information:
Number of mutual fund shares 14,377,669.990 1,109,010.510 542,815.000
Net asset value per share $ $ 12.99 $
1.00 12.30
Investment cost $ 14,377,670 $ 13,953,087 $ 6,670,281
</TABLE>
<PAGE>
4
<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> <C>
$15,072$705 69,783,267 $ 49,400,523 $ 28,376,564 $ 6,093,149 $ 57,764,447 $ 5,827,520
- 15,000 126,818 37,133 96,529 8,541 7,291
1,788 - 970 44 13 1,872 -
- ---------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
15,074,493 69,798,267 49,528,311 28,413,741 6,189,691 57,774,860 5,834,811
- - - - - 8,635 -
1,333 68 62 - - 139 1
- ---------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
1,333 68 62 - - 8,774 1
- ---------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
$ 15,073,$60 69,798,199 $ 49,528,249 $ 28,413,741 $ 6,189,691 $ 57,766,086 $ 5,834,810
========== ================ ================ ================= ================ ================ ================
987,773.81,031,483.594 1,798,913.636 808,857.987 230,281.724 2,179,109.968 378,355.293
========== ================ ================ ================= ================ ================ ================
$ $ 67.667775 $ 27.532311 $ 35.128219 $ 26.878780 $ 26.509027 $ 15.421512
15.259727
========== ================ ================ ================= ================ ================ ================
1,284,970.51,221,268.240 1,770,628.060 1,102,002.467 244,018.800 2,779,809.753 415,657.610
$ 11.73 $ 57.14 $ 27.90 $ 25.75 $ 24.97 $ 20.78 $ 14.02
$ 14,812,$42 57,713,330 $ 39,296,009 $ 21,934,617 $ 5,519,362 $ 56,833,278 $ 6,085,312
</TABLE>
See accompanying notes.
<PAGE>
Separate Account VA-2LNY of
Transamerica Life Insurance Company of New York
Statement of Assets and Liabilities (continued)
December 31, 1997
<TABLE>
<CAPTION>
Small Limited Term
International Disciplined Company High
Value Stock Stock Income Balanced
Sub-account Sub-account Sub-account Sub-account Sub-account
---------------- --------------- ---------------- -------------- -----------------
Assets:
<S> <C> <C> <C> <C> <C>
Investments, at fair value $ 1,899,360 $ 18,249,524 $ 6,598,786 $ 5,090,504 $ 3,883,342
Receivable for units sold - 30,355 43,744 46,488 33,700
Due from Transamerica Life - 10 - 1 21
--------------- --------------- ---------------- -------------- -----------------
Total assets 1,899,360 18,279,889 6,642,530 5,136,993 3,917,063
Liabilities:
Payable for units redeemed - - - - -
Due to Transamerica Life 12 - - - -
--------------- --------------- ---------------- -------------- -----------------
Total liabilities 12 - - - -
--------------- --------------- ---------------- -------------- -----------------
Net assets $ 1,899,348 $ 18,279,889 $ 6,642,530 $ 5,136,993 $ 3,917,063
=============== =============== ================ ============== =================
Accumulation units outstanding 172,941.244 1,196,912.6767 513,524.112 473,373.863 333,714.857
=============== =============== ================ ============== =================
Net asset value and redemption price per unit $10.982621 $ 15.272534 $ 12.935186 $ 10.851873 $ 11.737755
=============== =============== ================ ============== =================
Other sub-account information:
Number of mutual fund shares 141,216.360 997,241.760 409,100.200 395,225.440 276,591.285
Net asset value per share $ 13.45 $ 18.30 $ 16.13 $ 12.88 $
14.04
Investment cost $1,922,151 $ 16,307,562 $ 5,987,663 $ 5,187,313 $
3,932,242
</TABLE>
See accompanying notes.
<PAGE>
5
Separate Account VA-2LNY of
Transamerica Life Insurance Company of New York
Statement of Operations
Year ended December 31, 1997
<TABLE>
<CAPTION>
Zero
Money Managed Coupon
Market Assets 2000
Sub-account Sub-account Sub-account
------------------ ------------------ -------------------
<S> <C> <C> <C>
Investment Income $ 675,965 $ 68,131 $ 404,595
Expenses:
Mortality and expense risk charge 185,713 132,192 84,259
------------------ ------------------ -------------------
Net investment income (loss) 490,252 (64,061) 320,336
Net realized and unrealized gain (loss) on investments:
Realized gain (loss) on investment transactions - (28,639) 42,556
Unrealized appreciation (depreciation) of investments - 1,353,498 (29,877)
------------------ ------------------ -------------------
Net gain (loss) on investments - 1,324,859 12,679
------------------ ------------------ -------------------
Increase in net assets resulting from operations $ 490,252 $ 1,260,798 $ 333,015
================== ================== ===================
</TABLE>
<PAGE>
7
<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>
$ 821,968 $ 4,005,626 $ 409,128 $ 1,146,097 $ 192,918 $ 4,709,294 $ 402,745
157,461 873,452 508,926 302,650 55,617 719,113 63,275
- ------------- ---------------- ----------------- --------------- ---------------- --------------- ---------------
664,507 3,132,174 (99,798) 843,447 137,301 3,990,181 339,470
(13,856) 3,799,039 1,722,743 964,885 277,744 1,239,648 145,985
258,196 1,501,887 5,910,512 3,759,106 422,751 1,675,818 (273,079)
- ------------- ---------------- ----------------- --------------- ---------------- --------------- ---------------
244,340 5,300,926 7,633,255 4,723,991 700,495 2,915,466 (127,094)
- ------------- ---------------- ----------------- --------------- ---------------- --------------- ---------------
$ 908,847 $ 8,433,100 $7,533,457 $ 5,567,438 $ 837,796 $ 6,905,647 $ 212,376
============= ================ ================= =============== ================ =============== ===============
</TABLE>
See accompanying notes.
<PAGE>
Separate Account VA-2LNY of
Transamerica Life Insurance Company of New York
Statement of Operations (continued)
Year ended December 31, 1997
<TABLE>
<CAPTION>
Small Limited Term
International Disciplined Company High
Value Stock Stock Income Balanced
Sub-account Sub-account Sub-account Sub-account Sub-account
------------- ---------------- ------------ ------------- ---------------
<S> <C> <C> <C> <C> <C>
Investment income $ 59,460 $ 993,912 $ 128,022 $ 182,910 $
181,161
Expenses:
Mortality and expense risk charge 16,135 158,332 54,793 17,827 16,118
------------ --------------- ------------ -------------- ---------------
Net investment income 43,325 835,580 73,229 165,083 165,043
Net realized and unrealized gain on investments:
Realized gain on investment transactions 31,926 293,850 90,485 8,797 26,088
Unrealized appreciation (depreciation) of investments (38,906) 1,593,267 454,034 (96,809) (48,900)
------------ --------------- ------------ -------------- ---------------
Net gain (loss) on investments (6,980) 1,887,117 544,519 (88,012) (22,812)
------------ --------------- ------------ -------------- ---------------
Increase in net assets resulting from operations $ 36,345 $ 2,722,697 $ 617,748 $ 77,071 $ 142,231
============ =============== ============ ============== ===============
</TABLE>
See accompanying notes.
<PAGE>
8
Separate Account VA-2LNY of
Transamerica Life Insurance Company of New York
Statement of Changes in Net Assets
Year ended December 31, 1997
<TABLE>
<CAPTION>
Zero
Money Managed Coupon
Market Assets 2000
Sub-account Sub-account Sub-account
------------------- ------------------ -------------------
Increase in net assets:
Operations:
<S> <C> <C> <C>
Net investment income $ 490,252 $ (64,061) $ 320,336
Realized gain (loss) on investment transactions - (28,639) 42,556
Unrealized appreciation (depreciation) of investments - 1,353,498 (29,877)
------------------- ------------------ -------------------
Increase in net assets resulting from operations 490,252 1,260,798 333,015
Changes from accumulation unit transactions 1,894,917 7,450,484 426,013
------------------- ------------------ -------------------
Total increase in net assets 2,385,169 8,711,282 759,028
Net assets at beginning of year 11,768,453 5,720,862 5,918,164
------------------- ------------------ -------------------
Net assets at end of year $ 14,153,622 $ 14,432,144 $ 6,677,192
=================== ================== ===================
</TABLE>
<PAGE>
10
<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>
$ 664,507 $ 3,132,174 $ (99,798) $ 843,447 $ 137,301 $ 3,990,181 $ 339,470
(13,856) 3,799,039 1,722,743 964,885 277,744 1,239,648 145,985
258,196 1,501,887 5,910,512 3,759,106 422,751 1,675,818 (273,079)
- ----------------- ----------------- ---------------- ---------------- ---------------- ---------------- -----------------
908,847 8,433,100 7,533,457 5,567,438 837,796 6,905,647 212,376
4,767,273 2,557,329 18,565,686 7,161,619 3,150,576 6,773,031 2,384,157
- ----------------- ----------------- ---------------- ---------------- ---------------- ---------------- -----------------
5,676,120 10,990,429 26,099,143 12,729,055 3,988,372 13,678,678 2,596,533
9,397,040 58,807,770 23,429,106 15,684,686 2,201,319 44,087,408 3,238,277
- ----------------- ----------------- ---------------- ---------------- ---------------- ---------------- -----------------
$ 15,073,160 $ 69,798,199 $ 49,528,249 $ 28,413,741 $ 6,189,691 $ 57,766,086 $ 5,834,810
================= ================= ================ ================ ================ ================ =================
</TABLE>
See accompanying notes.
<PAGE>
Separate Account VA-2LNY of
Transamerica Life Insurance Company of New York
Statement of Changes in Net Assets (continued)
Year ended December 31, 1997
<TABLE>
<CAPTION>
Small Limited Term
International Disciplined Company High
Value Stock Stock Income Balanced
Sub-account Sub-account Sub-account Sub-account Sub-account
-------------- --------------- -------------- ------------- --------------
Increase in net assets:
Operations:
<S> <C> <C> <C>
Net investment income $ 43,325 $ $ $ 165,083 $ 165,043
835,580 73,229
Realized gain (loss) on investment transactions 31,926 293,850 90,485 8,797 26,088
Unrealized appreciation (depreciation) of (38,906) 1,593,267 454,034 (96,809) (48,900)
investments
---------------- ------------- -------------- -------------- --------------
Increase in net assets resulting from operations 36,345 2,722,697 617,748 77,071 142,231
Increase (decrease) in net assets resulting from
operations
Changes from accumulation unit transactions 1,373,160 11,060,146 3,731,723 5,059,922 3,774,832
---------------- ------------- -------------- -------------- --------------
Total increase in net assets 1,409,505 13,782,843 4,349,471 5,136,993 3,917,063
Net assets at beginning of year 489,843 4,497,046 2,293,059 - -
---------------- ------------- -------------- -------------- --------------
Net assets at end of year $ 1,899,348 $ $ $ 5,136,993 $ 3,917,063
18,279,889 6,642,530
================ ============= ============== ============== ==============
</TABLE>
See accompanying notes.
<PAGE>
11
Separate Account VA-2LNY of
Transamerica Life Insurance Company of New York
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 gain (loss) on investment transactions - (189,898) 51,030
Unrealized appreciation (depreciation) 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 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>
19
<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
Transamerica Life Insurance Company of New York
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 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
Transamerica Life Insurance Company of New York
Notes to Financial Statements
December 31, 1997
1. Organization
Separate Account VA-2LNY of Transamerica Life Insurance Company of New York
("Separate Account") was established by Transamerica Life Insurance Company of
New York ("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 deferred annuity contracts ("Contract") 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 fifteen sub-accounts, each of which invests
exclusively in a specific corresponding mutual fund portfolio. The mutual fund
portfolios are: thirteen Series of Dreyfus Variable Investment Fund (Variable
Fund), The Dreyfus Stock Index Fund (Stock Index Fund) and The Dreyfus Socially
Responsible Growth Fund (Socially Responsible Fund) (together "the Funds"). The
Variable Fund's thirteen series are: Money Market 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, Small Company Stock Portfolio,
Limited Term High Income Portfolio, and Balanced Portfolio. 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
Transamerica Life Insurance Company of New York
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 Separate Account 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 1997, CDSL amounted to $290,734.
<PAGE>
Separate Account VA-2LNY of
Transamerica Life Insurance Company of New York
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
The changes in accumulation units and amounts are as follows:
<TABLE>
<CAPTION>
Zero
Money Managed Coupon Quality Small
Market Assets 2000 Bond Cap
Sub-account Sub-account Sub-account Sub-account Sub-account
------------------- ---------------- ---------------- ---------------- ----------------
Year ended December 31, 1997
Accumulation Units:
<S> <C> <C> <C> <C> <C>
Units sold 25,538,721.609 301,981.709 58,574.536 256,351.326 113,590.157
Units redeemed (757,137.837) (37,164.296) (26,578.774) (42,239.757) (46,205.039)
Units transferred (23,124,724.928) 262,839.408 (4,556.774) 109,192.535 (36,497.063)
------------------- ---------------- ---------------- ---------------- ----------------
Net increase 1,656,858.844 527,656.821 27,438.988 323,304.104 30,088.055
=================== ================ ================ ================ ================
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 506,102.406 168,152.559 79,314.719 387,764.498 118,843.102
Units redeemed (55,225.683) (41,910.565) (5,410.548) (154,073.858) (8,920.408)
Units transferred 273,422.152 97,161.572 52,644.835 39,408.148 41,456.355
---------------- ---------------- ---------------- ---------------- -----------------
Net increase 724,298.875 223,403.566 126,549.006 273,098.788 151,379.049
================ ================ ================ ================ =================
</TABLE>
<PAGE>
Separate Account VA-2LNY of
Transamerica Life Insurance Company of New York
Notes to Financial Statements
<TABLE>
<CAPTION>
5. Accumulation Units (continued)
Small Limited Term
International Disciplined Company High
Value Stock Stock Income Balanced
Sub-account Sub-account Sub-account Sub-account Sub-account
----------------- ---------------- ---------------- ---------------- ---------------
Accumulation Units:
<S> <C> <C> <C> <C> <C>
Units sold 77,065.959 480,302.749 160,543.609 296,850.601 197,477.584
Units redeemed (2,398.188) (16,329.802) (11,612.415) (3,331.342) (3,962.106)
Units transferred 50,457.618 351,055.618 151,714.265 179,854.605 140,199.379
----------------- ---------------- ---------------- ---------------- ---------------
Net increase 125,125.389 815,028.565 300,645.459 473,373.864 333,714.855
================= ================ ================ ================ ===============
Zero
Money Managed Coupon Quality Small
Market Assets 2000 Bond Cap
Sub-account Sub-account Sub-account Sub-account Sub-account
------------------- ---------------- ---------------- ---------------- ----------------
Year ended December 31, 1997
Amounts:
Sales $ 29,434,880 $ 4,312,486 $ 923,411 $ 3,794,539 $ 7,221,362
Redemptions (875,404) (509,107) (436,387) (645,401) (2,817,887)
Transfers (26,664,559) 3,647,105 (61,011) 1,618,135 (1,846,146)
------------------- ---------------- ---------------- ---------------- ----------------
Net increase $ 1,894,917 $ 7,450,484 $ 426,013 $ 4,767,273 $ 2,557,329
=================== ================ ================ ================ ================
Capital Stock Socially Growth and International
Appreciation Index Fund Responsible Income Equity
Sub-account Sub-account Sub-account Sub-account Sub-account
---------------- ---------------- ---------------- ---------------- -----------------
Amounts:
Sales $13,084,144 $5,397,734 $ 2,006,546 $ 9,646,123 $1,901,967
Redemptions (1,382,061) (1,290,044) (129,273) (3,803,987) (143,776)
Transfers 6,863,603 3,053,927 1,273,303 930,895 625,966
---------------- ---------------- ---------------- ---------------- -----------------
Net increase $ $7,161,617 $3,150,576 $ 6,773,031 $ 2,384,157
18,565,686
================ ================ ================ ================ =================
</TABLE>
<PAGE>
Separate Account VA-2LNY of
Transamerica Life Insurance Company of New York
Notes to Financial Statements
<TABLE>
<CAPTION>
5. Accumulation Units (continued)
Small Limited Term
International Disciplined Company High
Value Stock Stock Income Balanced
Sub-account Sub-account Sub-account Sub-account Sub-account
----------------- ---------------- ---------------- ---------------- ---------------
Amounts:
<S> <C> <C> <C> <C> <C>
Sales $ 866,433 $ 6,603,131 $ 1,982,201 $ 3,181,891 $ 2,241,613
Redemptions (27,209) (227,316) (145,845) (35,789) (46,204)
Transfers 533,936 4,684,331 1,895,367 1,913,820 1,579,423
----------------- ---------------- ---------------- ---------------- ---------------
Net increase $ 1,373,160 $ 11,060,146 $ 3,731,723 $ 5,059,922 $ 3,774,832
================= ================ ================ ================ ===============
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:
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
Transamerica Life Insurance Company of New York
Notes to Financial Statements
5. Accumulation Units (continued)
<TABLE>
<CAPTION>
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>
Sales $ $ 491,826 $ 753,021 $ 2,399,464 $ 6,971,390
29,535,731
Redemptions (940,962) (772,263) (216,107) (338,685) (1,852,863)
Transfers (27,134,140) (1,956,840) 121,670 820,513 4,905,722
------------------- ---------------- ---------------- ---------------- ----------------
Net increase (decrease) $ $ (2,217,277) $ 658,584 $ 2,881,292 $ 10,024,249
1,460,629
=================== ================ ================ ================ ================
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>
<TABLE>
<CAPTION>
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>
<PAGE>
Separate Account VA-2LNY of
Transamerica Life Insurance Company of New York
Notes to Financial Statements
6. Investment Transactions
The aggregate cost of purchases and the aggregate proceeds from the sales of
investments for the year ended December 31, 1997 were:
<TABLE>
<CAPTION>
Zero
Money Managed Coupon Quality Small
Market Assets 2000 Bond Cap
Sub-account Sub-account Sub-account Sub-account Sub-account
---------------- ----------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Aggregate purchases $35,913,691 $9,141,783 $2,206,498 $8,057,472 $17,472,122
================ ================= =============== =============== ===============
Aggregate proceeds from sales $33,149,410 $1,781,481 $1,460,745 $2,626,179 $11,786,434
================ ================= =============== =============== ===============
Capital Stock Socially Growth and International
Appreciation Index Fund Responsible Income Equity
Sub-account Sub-account Sub-account Sub-account Sub-account
---------------- ----------------- --------------- --------------- ---------------
Aggregate purchases $22,358,540 $10,571,550 $4,292,175 $19,491,019 $3,854,878
================ ================= =============== =============== ===============
Aggregate proceeds from sales $4,022,386 $ 2,396,695 $1,099,594 $ 8,723,351 $1,138,535
================ ================= =============== =============== ===============
Small Limited Term
International Disciplined Company High
Value Stock Stock Income Balanced
Sub-account Sub-account Sub-account Sub-account Sub-account
---------------- ----------------- --------------- --------------- ---------------
Aggregate purchases $1,657,155 $13,025,677 $4,272,129 $5,975,110 $4,311,464
================ ================= =============== =============== ===============
Aggregate proceeds from sales $ 240,658 $ 1,094,040 $ 510,922 $ 796,594 $ 405,310
================ ================= =============== =============== ===============
</TABLE>
<PAGE>
Audited Financial Statements
Transamerica Life
Insurance Company of New York
December 31, 1997
<PAGE>
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
Audited Financial Statements
December 31, 1997
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
3324/Folder T
REPORT OF INDEPENDENT AUDITORS
Transamerica Corporation
and
Board of Directors
Transamerica Life Insurance Company of New York
We have audited the accompanying balance sheet of Transamerica Life Insurance
Company of New York as of December 31, 1997 and 1996, and the related statements
of income, shareholder's equity, and cash flows for each of the three years in
the period ended December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Transamerica Life Insurance
Company of New York at December 31, 1997 and 1996, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1997, in conformity with generally accepted accounting principles.
January 23, 1998
<PAGE>
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
9
2
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
BALANCE SHEET
<TABLE>
<CAPTION>
December 31
1997 1996
--------------------- --------------
(In thousands, except
for share data)
ASSETS
Investments:
<S> <C> <C>
Fixed maturities available for sale $ 489,053 $ 464,153
Investment real estate 343 353
Policy loans 13,595 11,973
--------------------- ---------------------
502,991 476,479
Cash 3,029 9,079
Accrued investment income 9,245 8,840
Accounts receivable 3,419 3,214
Reinsurance recoverable on paid and unpaid losses 10,204 12,241
Deferred policy acquisitions costs 52,181 56,632
Other assets 5,364 7,047
Separate account assets 308,590 195,363
--------------------- ---------------------
$ 895,023 $ 768,895
===================== =====================
LIABILITIES AND SHAREHOLDER'S EQUITY
Policy liabilities:
Policyholder contract deposits $ 483,477 $ 482,561
Reserves for future policy benefits 10,449 10,264
Policy claims and other 1,810 3,890
--------------------- ---------------------
495,736 496,715
Income tax liabilities 8,008 3,849
Accounts payable and other liabilities 7,418 6,994
Separate account liabilities 308,590 195,363
--------------------- ---------------------
819,752 702,921
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 13,224 9,397
Net unrealized investment gains 7,727 2,257
--------------------- ---------------------
75,271 65,974
--------------------- ---------------------
$ 895,023 $ 768,895
===================== =====================
See notes to financial statements.
<PAGE>
STATEMENT OF INCOME
Year Ended December 31
1997 1996 1995
--------------- --------------- ----------
(In thousands)
Revenues:
Premiums and other considerations $ 17,833 $ 15,624 $ 13,495
Net investment income 37,068 34,834 30,897
Net realized investment gains 6 99 19
--------------- --------------- ---------------
TOTAL REVENUES 54,907 50,557 44,411
Benefits:
Benefits paid or provided 37,680 34,455 31,984
Increase (decrease) in policy reserves and liabilities (424) (711) 316
---------------- --------------- ---------------
37,256 33,744 32,300
Expenses:
Amortization of deferred policy acquisition costs 3,974 3,002 2,197
Salaries and salary related expenses 3,486 3,518 3,206
Other expenses 4,789 3,789 3,219
--------------- --------------- ---------------
12,249 10,309 8,622
--------------- --------------- ---------------
TOTAL BENEFITS AND EXPENSES 49,505 44,053 40,922
--------------- --------------- ---------------
INCOME BEFORE INCOME TAXES 5,402 6,504 3,489
Provision for income taxes 1,575 2,175 1,331
--------------- --------------- ---------------
NET INCOME $ 3,827 $ 4,329 $ 2,158
=============== =============== ===============
</TABLE>
See notes to financial statements.
<PAGE>
STATEMENT OF SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
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, 1995 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 (losses) (4,624)
------------ ------------ ------------ ----------- --------------
2,000 2,000 52,320 9,397 2,257
Balance at December 31, 1996
Net income 3,827
Change in net unrealized
investment gains (losses) 5,470
------------ ------------ ------------ ----------- --------------
Balance at December 31, 1997 2,000 $ 2,000 $ 52,320 $ 13,224 $ 7,727
============ ============ ============ =========== ==============
</TABLE>
See notes to financial statements.
<PAGE>
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31
1997 1996 1995
--------------- --------------- ----------
(In thousands)
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income $ 3,827 $ 4,329 $ 2,158
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Changes in:
Reinsurance recoverable and accounts
receivable 1,832 223 2,498
Accrued investment income (405) (1,329) (1,351)
Policy liabilities (1,893) 7,850 11,693
Other assets, accounts payable and other
liabilities, and income taxes 3,525 (4,130) 786
Policy acquisition costs deferred (13,256) (12,288) (12,126)
Amortization of deferred policy acquisition costs 3,974 3,002 2,197
Net realized gains on investment transactions (6) (99) (19)
Other (43) 1,179 (698)
---------------- --------------- ---------------
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES (2,445) (1,263) 5,138
INVESTMENT ACTIVITIES
Purchases of securities and other investments (92,398) (92,243) (79,260)
Sales of investments 84,805 39,469 28,738
Maturities of securities 3,668 2,500 2,000
Other (596) (75) (77)
---------------- --------------- ---------------
NET CASH USED
BY INVESTING ACTIVITIES (4,521) (50,349) (48,599)
FINANCING ACTIVITIES
Additions to policyholder contract deposits 40,978 75,283 65,019
Withdrawals from policyholder contract deposits (40,062) (30,849) (26,078)
Capital contributions from parent - - 5,000
--------------- --------------- ---------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 916 44,434 43,941
--------------- --------------- ---------------
(DECREASE) INCREASE IN CASH (6,050) (7,178) 480
Cash at beginning of year 9,079 16,257 15,777
--------------- --------------- ---------------
CASH AT END OF YEAR $ 3,029 $ 9,079 $ 16,257
=============== =============== ===============
</TABLE>
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
NOTE A--SIGNIFICANT ACCOUNTING POLICIES
Business: Transamerica Life Insurance Company of New York (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. Prior to 1997, the Company was named
First Transamerica Life Insurance
Company.
The Company engages primarily in providing life insurance, annuity products, 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.
Reclassifications: Certain reclassifications of prior year amounts have been
made to conform to the 1997
presentation.
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 1997, the Financial Accounting Standards
Board issued a new standard on reporting comprehensive income, which establishes
standards for reporting and displaying comprehensive income and its components
in the financial statements. This standard is effective for interim and annual
periods beginning after December 15, 1997. Reclassification of financial
statements for all periods presented will be required upon adoption. Application
of this statement will not change recognition or measurement of net income and,
therefore, will not impact the Company's results of operations or financial
position.
In 1997, the Company adopted the Financial Accounting Standards Board's new
standard on accounting for transfers of financial assets, servicing of financial
assets and extinguishment of liabilities. The standard requires that a transfer
of financial assets be accounted for as a sale only if certain specified
conditions for surrender of control over the transferred assets exist. There was
no material effect on the 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.
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--at cost, less allowance for depreciation and
possible impairment.
Policy loans--at unpaid balances.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1997
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 sales, 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
related to non-traditional and investment-type products 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 5.0% to 7.15% in 1997 and from 5.2% to 7.2% in
1996 and from 5.5% to 7.8% in 1995.
Reserves for Future Policy Benefits: Traditional life insurance products
primarily include those contracts with fixed and guaranteed premiums and
benefits and consist principally of whole life and term insurance policies,
limited-payment life insurance policies and certain annuities with life
contingencies. The reserve for future policy benefits for traditional life
insurance products has been provided on a net-level premium method based upon
estimated investment yields, withdrawals, mortality, and other assumptions which
were appropriate at the time the policies were issued. Such estimates are based
upon past experience with a margin for adverse deviation. The initial interest
assumptions range from 4.0% to 5.5%.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1997
NOTE A--SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recognition of Revenue and Costs: Traditional life insurance contract premiums
are recognized as revenue over the premium-paying period, with reserves for
future policy benefits established from such premiums.
Revenues for universal life and investment products consist of policy charges
for the cost of insurance, policy administration charges, amortization of policy
initiation fees, and surrender charges assessed against policyholder account
balances during the period. Expenses related to these products consist of
interest credited to policyholder account balances and benefit claims incurred
in excess of policyholder account balances.
Claim reserves include provisions for reported claims and claims incurred but
not reported.
Reinsurance: Coinsurance premiums, commissions, expense reimbursements, and
reserves related to reinsured business are accounted for on bases consistent
with those used in accounting for the original policies and the terms of the
reinsurance contracts. Yearly renewable term reinsurance is accounted for the
same as direct business. 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 if the Company filed separate tax returns with federal taxing
authorities.
Deferred income taxes arise from temporary differences between the bases of
assets and liabilities for financial reporting purposes and income tax purposes,
based on enacted tax rates in effect for the years in which the temporary
differences are expected to reverse.
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, 1997
NOTE B--INVESTMENTS
The cost and fair value of fixed maturities available for sale are as follows
(in thousands):
<TABLE>
<CAPTION>
Gross Gross
Unrealized Unrealized Fair
Cost Gain Loss Value
December 31, 1997
U.S. Treasury securities and
obligations of U.S. government
<S> <C> <C> <C> <C>
corporations and agencies $ 828 $ 75 $ - $ 903
Obligations of states and political
subdivisions 21,195 1,672 - 22,867
Corporate securities 345,198 25,661 139 370,720
Public utilities 84,557 7,542 79 92,020
Mortgage-backed securities 2,334 209 - 2,543
---------------- ---------------- ---------------- ----------------
$ 454,112 $ 35,159 $ 218 $ 489,053
================ ================ ================ ================
December 31, 1996
U.S. Treasury securities and
obligations of U.S. government
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
================ ================ ================ ================
</TABLE>
The cost and fair value of fixed maturities available for sale at December 31,
1997, by contractual maturity, are shown below. Expected maturities will differ
from contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties (in thousands):
<TABLE>
<CAPTION>
Fair
Cost Value
<S> <C> <C> <C>
Due in 1998 $ 7,897 $ 8,032
Due in 1999-2002 53,875 56,505
Due in 2003-2007 108,204 113,808
Due after 2007 281,802 308,165
---------------- ----------------
451,778 486,510
Mortgage-backed securities 2,334 2,543
---------------- ----------------
$ 454,112 $ 489,053
================ ================
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1997
NOTE B--INVESTMENTS (Continued)
As of December 31, 1997, the Company held investments 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
Hill Street Funding $ 9,178
=============
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, 1997.
Net investment income by major investment category is summarized as follows (in
thousands):
<TABLE>
<CAPTION>
1997 1996 1995
-------------- -------------- ---------
<S> <C> <C> <C>
Fixed maturities $ 35,740 $ 34,431 $ 30,865
Short-term, policy loans and other
investments 1,686 631 582
-------------- -------------- --------------
37,426 35,062 31,447
Investment expenses (358) (228) (550)
-------------- -------------- --------------
Net investment income $ 37,068 $ 34,834 $ 30,897
============== ============== ==============
The following summarizes realized investment gains and losses and other
information related to investments (in thousands):
1997 1996 1995
-------------- -------------- ---------
Gross gains on disposition of investment in
fixed maturities $ 664 $ 99 $ 283
Gross losses on disposition of investment in
fixed maturities (658) - (264)
-------------- ------------- -------------
Net gains on disposition of investment in
fixed maturities $ 6 $ 99 $ 19
============= ============= ============
Proceeds from disposition of investment in
fixed maturities $ 84,805 $ 39,469 $ 28,738
============= ============= ============
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1997
NOTE B--INVESTMENTS (Continued)
The components of change in net unrealized investment gains (losses) in the
accompanying statement of shareholder's equity are as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996
-------------- ---------
Unrealized gains on investment in fixed
<S> <C> <C>
maturities $ 34,941 $ 12,628
Fair value adjustments to DPAC (23,053) (9,320)
Related deferred taxes (4,161) (1,051)
-------------- -------------
$ 7,727 $ 2,257
============== =============
</TABLE>
NOTE C--DEFERRED POLICY ACQUISITION COSTS (DPAC)
Significant components of changes in DPAC are as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
-------------- -------------- ---------
<S> <C> <C> <C>
Balance at beginning of year $ 56,632 $ 35,588 $ 61,435
Amounts deferred:
Commissions 10,204 9,045 8,645
Other 3,052 3,243 3,481
Amortization (3,974) (3,002) (2,197)
Fair value adjustment (13,733) 11,758 (35,776)
-------------- -------------- --------------
Balance at end of year $ 52,181 $ 56,632 $ 35,588
============== ============== ==============
</TABLE>
NOTE D--POLICY LIABILITIES
Components of policyholder contract deposits are as follows (in thousands):
<TABLE>
<CAPTION>
December 31
1997 1996
<S> <C> <C>
Liabilities for investment-type products $ 316,628 $ 289,762
Liabilities for non-traditional life insurance
products 166,849 192,799
------------- --------------
$ 483,477 $ 482,561
============= ==============
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1997
NOTE E--INCOME TAXES
Components of income tax liabilities are as follows (in thousands):
<TABLE>
<CAPTION>
December 31
1997 1996
<S> <C> <C>
Current tax liabilities $ 294 $ 951
Deferred tax liabilities 7,714 2,898
------------- --------------
$ 8,008 $ 3,849
============= ==============
Significant components of deferred tax liabilities (assets) are as follows (in
thousands):
December 31
1997 1996
Deferred policy acquisition costs $ 21,897 $ 18,046
Unrealized investment gains 4,161 1,051
Other - net - 136
------------- -------------
Total deferred tax liabilities 26,058 19,233
Life insurance policy liabilities (18,344) (16,335)
------------- -------------
Total deferred tax assets (18,344) (16,335)
------------- -------------
$ 7,714 $ 2,898
============= =============
</TABLE>
The Company offsets all deferred tax assets and liabilities and presents them in
a single amount in the balance sheet.
Components of provisions for income taxes (benefits) are as follows (in
thousands):
<TABLE>
<CAPTION>
1997 1996 1995
-------------- -------------- ---------
<S> <C> <C> <C>
Current tax expense (benefit) $ (238) $ 751 $ (665)
Deferred tax expense 1,813 1,424 1,996
-------------- -------------- --------------
$ 1,575 $ 2,175 $ 1,331
============== ============== ==============
</TABLE>
The differences between federal income taxes computed at the statutory rate and
provision for income taxes are primarily due to tax exempt income.
An income tax payment of $0.4 million and $0.3 million and an income tax refund
of $0.1 million in 1997, 1996 and 1995, respectively, was received from or paid
to TOLIC.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1997
NOTE F--REINSURANCE (Continued)
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.
The components of the Company's life insurance in force and premiums and other
considerations are summarized as follows (in thousands):
<TABLE>
<CAPTION>
Ceded to
Gross Ceded to Non-affiliated Net
Amount TOLIC Companies Amount
1997
Life insurance in force,
<S> <C> <C> <C> <C>
at end of year $ 4,588,120 $ 297,518 $ 2,765,285 $ 1,525,317
=============== ================= ================== ==================
Premiums and other
considerations $ 23,686 $ 768 $ 5,085 $ 17,833
================== ================= ================== ==================
Benefits paid or
provided $ 45,434 $ 1,400 $ 6,354 $ 37,680
================== ================= ================== ==================
1996
Life insurance in force,
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 $ - $ 9,872 $ 13,495
================== ================= ================== ==================
Benefits paid or
provided $ 39,432 $ 1,822 $ 5,626 $ 31,984
================== ================= ================== ==================
</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.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1997
NOTE G--PENSION PLAN AND OTHER POSTRETIREMENT BENEFITS (Continued)
The Company's pension costs charged to income were not significant in 1997, 1996
or 1995.
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 $123,000 and $300,000 at December 31, 1997 and
1996, respectively.
NOTE I--LEASES
Substantially all leases of the Company are operating leases principally for the
rental of real estate. Rental expense for properties occupied by the Company was
$1.0 million in 1997 and $0.9 million in 1996 and 1995. The following is a
schedule by year of future minimum rental payments required under operating
leases that have initial or remaining noncancelable lease terms in excess of one
year as of December 31, 1997 (in thousands):
Year ending December 31
DecemDecember331:DEcDecember 31:
1998 $ 1,141
1999 1,141
2000 707
2001 328
2002 328
Later years 4,097
-------------
$ 7,742
NOTE J--LITIGATION
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 (along with TOLIC and Transamerica Assurance Company, an affiliate) and
plaintiff's counsel entered into a settlement which was approved on June 26,
1997. The settlement required prompt notification to affected policyholders.
Administrative and policy benefit costs associated with the settlement have been
accrued. The portion which relates to the Company is not material. Additional
costs related to the settlement are not expected to be material and will be
incurred over a period of years. Additional costs related to the settlement are
not currently determinable.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1997
NOTE J--LITIGATION (Continued)
In the opinion of the Company, any ultimate liability which might result from
other litigation would not have a materially adverse effect on the financial
position of the Company or the results of its operations.
NOTE K--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 New York Department.
The Company's statutory net income income (loss) and capital and surplus are
summarized as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
-------------- -------------- ---------
<S> <C> <C> <C>
Statutory net income (loss) $ 395 $ (551) $ 1,779
Statutory capital and surplus, at end of year 23,591 22,822 22,713
NOTE L--FINANCIAL INSTRUMENTS
The carrying values and estimated fair values of financial instruments are as
follows (in thousands):
December 31
1997 1996
------------------------------- ------------------
Carrying Fair Carrying Fair
Value Value Value Value
Financial Assets:
Fixed maturities $ 489,053 $ 489,053 $ 464,153 $ 464,153
Policy loans 13,595 13,595 11,973 11,973
Cash 3,029 3,029 9,079 9,079
Accrued investment income 9,245 9,245 8,840 8,840
Financial Liabilities:
Liabilities for investment-type
contracts:
Single and flexible premium
deferred annuities 151,173 150,577 146,524 144,207
Single premium immediate
annuities 165,455 165,881 143,238 130,297
</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 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.
(g) Form of Fixed Account Rider(9)
(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)
(e) Form of Participation Agreement between Transamerica Life
Insurance Company of New YOrk and Dreyfus
Investment Services(9)
(f) Form of Participation Agreement between
Transamerica Variable Insurance Fund, Transamerica Securities Sales Corporation
and Transamerica Life Insurance COmpany of NEw YOrk.(8)
(9) (a) Opinion and Consent of Counsel.(7)
(10) (a) Consent of Counsel.(8)(9)
(b) Consent of Independent Auditors .(8)(9)
(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)(9) Robert Abeles (8)(9)
Marc C. Abrahms (5)(9) James Inzerillo (5)(9)
Daniel E. Jund (7)(9)
James T. Byrne, Jr. (5)(9) Thomas J. Cusack (7) (9)
James W. Dederer (2) (9) John A. Paganelli (2) (9)
John A. Fibiger (2)(9) James B. Roszak (2) (9)
David E. Gooding (2)(9)
Allan D. Greenberg (9)
(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 Statement File No. 33-55152
(April 29, 1995).
(7) Filed with Post-Effective Amendment No. 5 to the Form N-4
Registration Statement File No. 33-55152
(April 26, 1996).
(8) Filed with Post-Effective Amendment No. 6 to the Form N-4
Registration Statement File No. 33-55152
(April 28, 1997)(9) Filed herewith.
<PAGE>
Item 25. Directors and Officers of the Depositor
Name and Principal
Business Address Position and Offices with Depositor
<TABLE>
<CAPTION>
<S> <C> <C>
James W. Dederer Director, Chairman, General Counsel and Corporate Secretary
Alan T. Cunningham Director and President
Robert Rubinstein Senior Vice President, Chief Actuary and Chief Operating OfficerGary
Rolle' Investment Officer
Susan Silbert Investment Officer
Nicki Bair FSA, MAAA Vice President
Roy Chong-Kit FSA, MAAA Vice President
Paul Hankowitz MD Vice President and Chief Medical Director
Ken Kilbane Vice President
William J. Lyons Vice President and Chief Underwriter
Alison B. Pettingall Vice President - Marketing
Alexander Smith, Jr. Vice President, Administration and Controller
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
John A. Paganelli Director
James B. Roszak Director
</TABLE>
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.
<PAGE>
TRANSAMERICA CORPORATION AND SUBSIDIARIES
WITH STATE OR COUNTRY OF INCORPORATION
Transamerica Corporation - DE
ARC Reinsurance Corporation - HI
Transamerica Management, Inc. - DE
Criterion Investment Management Company - TX
Inter-America Corporation - CA
Mortgage Corporation of America - CA
Pyramid Insurance Company, Ltd. - HI
Pacific Cable Ltd. - Bmda.
TC Cable, Inc. - DE
RTI Holdings, Inc. - DE
Transamerica Airlines, Inc. - DE
Transamerica Business Technologies Corporation - DE
Transamerica CBO I, Inc. - DE
Transamerica Corporation (Oregon) - OR
Transamerica Delaware, L.P. - DE
Transamerica Finance Corporation - DE
TA Leasing Holding Co., Inc. - DE
Trans Ocean Ltd. - DE
Trans Ocean Container Corp. - DE
SpaceWise Inc. - DE
TOD Liquidating Corp. - CA
TOL S.R.L. - Itl.
Trans Ocean Container Finance Corp. - DE
Trans Ocean Leasing Deutschland GmbH - Ger.
Trans Ocean Leasing PTY Limited - Aust.
Trans Ocean Management Corporation - CA
Trans Ocean Management S.A. - SWTZ
Trans Ocean Regional Corporate Holdings - CA
Trans Ocean Tank Services Corporation - DE
Transamerica Leasing Inc. - DE
Better Asset Management Company LLC - DE
Transamerica Leasing Holdings Inc. - DE
Greybox Logistics Services Inc. - DE
Greybox L.L.C. - DE
Transamerica Trailer Leasing S.N.C. - Fra.
Greybox Services Limited - U.K.
Intermodal Equipment, Inc. - DE
Transamerica Leasing N.V. - Belg.
Transamerica Leasing SRL - Itl.
Transamerica Distribution Services Inc. - DE
Transamerica Leasing Coordination Center - Belg.
Transamerica Leasing do Brasil Ltda. - Braz.
Transamerica Leasing GmbH - Ger.
Transamerica Leasing Limited - U.K.
ICS Terminals (UK) Limited - U.K.
Transamerica Leasing Pty. Ltd. - Aust.
Transamerica Leasing (Canada) Inc. - Can.
Transamerica Leasing (HK) Ltd. - H.K.
Transamerica Leasing (Proprietary) Limited - S.Afr.
Transamerica Tank Container Leasing Pty. Limited - Aust.
Transamerica Trailer Holdings I Inc. - DE
Transamerica Trailer Holdings II Inc. - DE
Transamerica Trailer Holdings III Inc. - DE
Transamerica Trailer Leasing AB - Swed.
Transamerica Trailer Leasing AG - SWTZ
Transamerica Trailer Leasing A/S - Denmk.
Transamerica Trailer Leasing GmbH - Ger.
Transamerica Trailer Leasing (Belgium) N.V. - Belg.
Transamerica Trailer Leasing (Netherlands) B.V. - Neth.
Transamerica Trailer Spain S.A. - Spn.
Transamerica Transport Inc. - NJ
Transamerica Commercial Finance Corporation, I - DE
BWAC Credit Corporation - DE
BWAC International Corporation - DE
BWAC Twelve, Inc. - DE
TIFCO Lending Corporation - IL
Transamerica Insurance Finance Corporation - MD
Transamerica Insurance Finance Company (Europe) - MD
Transamerica Insurance Finance Corporation, California - CA
Transamerica Insurance Finance Corporation, Canada - ON
Transamerica Business Credit Corporation - DE
Direct Capital Equity Investment, Inc. - DE
TA Air East, Corp. -
TA Air III, Corp. - DE
TA Air II, Corp. - DE
TA Air IV, Corp. - DE
TA Air I, Corp. - DE
TBC III, Inc. - DE
TBC II, Inc. - DE
TBC IV, Inc. -
TBC I, Inc. - DE
TBC Tax III, Inc. -
TBC Tax II, Inc. -
TBC Tax IV, Inc. -
TBC Tax IX, Inc. -
TBC Tax I, Inc. -
TBC Tax VIII, Inc. -
TBC Tax VII, Inc. -
TBC Tax VI, Inc. -
TBC Tax V, Inc. -
TBC Tax XII, Inc. -
TBC Tax XI, Inc. -
TBC V, Inc. -
The Plain Company - DE
Transamerica Distribution Finance Corporation - DE
Transamerica Accounts Holding Corporation - DE
Transamerica Commercial Finance Corporation - DE
Inventory Funding Trust - DE
Inventory Funding Company, LLC - DE
TCF Asset Management Corporation - CO
Transamerica Joint Ventures, Inc. - DE
Transamerica Inventory Finance Corporation - DE
BWAC Seventeen, Inc. - DE
Transamerica Commercial Finance Canada, Limited - ON
Transamerica Commercial Finance Corporation, Canada - Can.
BWAC Twenty-One, Inc. - DE
Transamerica Commercial Finance Limited - U.K.
WFC Polska Sp. Zo.o -
Transamerica Commercial Holdings Limited - U.K.
Transamerica Commercial Holdings, Inc. -
Transamerica Trailer Leasing Limited - NY
Transamerica Commercial Finance France S.A. - Fra.
Transamerica GmbH Inc. - DE
Transamerica Retail Financial Services Corporation - DE
Transamerica Consumer Finance Holding Company - DE
Metropolitan Mortgage Company - FL
Easy Yes Mortgage, Inc. - FL
Easy Yes Mortgage, Inc. - GA
First Florida Appraisal Services, Inc. - FL
First Georgia Appraisal Services, Inc. - GA
Freedom Tax Services, Inc. - FL
J.J. & W. Advertising, Inc. - FL
J.J. & W. Realty Corporation - FL
Liberty Mortgage Company of Ft. Myers, Inc. - FL
Metropolis Mortgage Company - FL
Perfect Mortgage Company - FL
Whirlpool Financial National Bank - DE
Transamerica Vendor Financial Services - DE
Transamerica Distribution Finance Corporation de Mexico -
Transamerica Corporate Services de Mexico -
Transamerica Federal Savings Bank -
Transamerica HomeFirst, Inc. - CA
Transamerica Home Loan - CA
Transamerica Lending Company - DE
Transamerica Financial Products, Inc. - CA
Transamerica Foundation - CA
Transamerica Insurance Corporation of California - CA
Arbor Life Insurance Company - AZ
Plaza Insurance Sales, Inc. - CA
Transamerica Advisors, Inc. - CA
Transamerica Annuity Service Corporation - NM
Transamerica Financial Resources, Inc. - DE
Financial Resources Insurance Agency of Texas - TX
TBK Insurance Agency of Ohio, Inc. - OH
Transamerica Financial Resources Insurance Agency of Alabama Inc.
- AL
Transamerica Financial Resources Insurance Agency of Massachusetts
Inc. - MA
Transamerica International Insurance Services, Inc. - DE
Home Loans and Finance Ltd. - U.K.
Transamerica Occidental Life Insurance Company - CA
NEF Investment Company - CA
Transamerica China Investments Holdings Limited - H.K.
Transamerica Life Insurance and Annuity Company - NC
Transamerica Assurance Company - CO
Transamerica Life Insurance Company of Canada - Can.
Transamerica Life Insurance Company of New York - NY
Transamerica South Park Resources, Inc. - DE
Transamerica Variable Insurance Fund, Inc. - MD
USA Administration Services, Inc. - KS
Transamerica Products, Inc. - CA
Transamerica Leasing Ventures, Inc. - CA
Transamerica Products II, Inc. - CA
Transamerica Products IV, Inc. - CA
Transamerica Products I, Inc. - CA
Transamerica Securities Sales Corporation - MD
Transamerica Service Company - DE
Transamerica Intellitech, Inc. - DE
Transamerica International Holdings, Inc. - DE
Transamerica Investment Services, Inc. - DE
Transamerica Income Shares, Inc. (managed by TA Investment Services)
- MD
Transamerica LP Holdings Corp. - DE
Transamerica Real Estate Tax Service (A Division of Transamerica
Corporation) - N/A
Transamerica Flood Hazard Certification (A Division of TA Real
Estate Tax Service) - N/A
Transamerica Realty Services, Inc. - DE
Bankers Mortgage Company of California - CA
Pyramid Investment Corporation - DE
The Gilwell Company - CA
Transamerica Affordable Housing, Inc. - CA
Transamerica Minerals Company - CA
Transamerica Oakmont Corporation - CA
Ventana Inn, Inc. - CA
Transamerica Senior Properties, Inc. - DE
Transamerica Senior Living, Inc. - DE
*Designates INACTIVE COMPANIES
A Division of Transamerica Corporation
ss.Limited Partner; Transamerica Corporation is General Partner
<PAGE>
Item 27. Number of Policy Owners
As of April 1 , 1998, there were 3,151 Owners of Non-Qualified
Individual Policies and 2,105Owners 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, 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 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 $95,000,000 for Coverage A
and $80,000,000 for Coverage B for the policy year 11/15/98 to 11/15/2000.
Coverage B is subject to a self insured retention of $15,000,000. The primary
policy is with CNA Lloyds, Gulf, Chubb and Travelers. Item 29. Principal
Underwriter
Transamerica Securities Sales Corporation (TSSC) is the underwriter of
the Certificates and the Individual Contracts as defined in the Investment
Company Act of 1940. TSSC became Principal Underwriter effective 8-24-94.
NAME AND PRINCIPAL POSITION AND OFFICES WITH
BUSINESS ADDRESS* TRANSAMERICA SECURITIES SALES CORPORATION
Barbara A. Kelley President and Director
Regina M. Fink Secretary and Director
Benjamin Tang Treasurer
Nooruddin Veerjee Director
Dan S. Trivers Senior Vice President
Nicki A. Bair Vice President
Chris Shaw Second Vice President
*The Principal business address for each officer and director is 1150 South
Olive, Los Angeles, CA 90015.
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 Director
of Due Diligence
Dan Trivers Vice President, Director of
Administration and
Chief Compliance Officer
Ronald F. Wagley Director
Kerry Rider Second Vice President and Director
of Compliance
*The Principal business address for each officer and director is 1150 South
Olive, Los Angeles, CA 90015.
The following table lists the amounts of commissions paid to the
principal underwriter during the last fiscal year.
<PAGE>
Name of
Principal Net Underwriting Compensation on Brokerage
Underwriter*Discounts & Commission Redemption Commissions Compensation
TSSC -0- -0- $5,543,415.68 -0-
TFR -0- -0- 81.50 -0-
<PAGE>
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 the charges deducted
under the Contracts, in the aggregate, are reasonable in relation to
the services rendered, the expenses expected to be incurred, and the
risks assumed by Transamerica.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Transamerica
Life Insurance Company of New York certifies that this Post-Effective Amendment
No.7 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.7 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,1998.
SEPARATE ACCOUNT VA-2LNY TRANSAMERICA
OF TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
LIFE INSURANCE COMPANY (DEPOSITOR)
OF NEW YORK
(REGISTRANT)
BY:________________________
David M. GoldsteinVice President
As Required by the Securities Act of 1933, this Post-Effective Amendment
No. 7 to the Registration Statement has
been signed by the following persons in the capacities and on the date
indicated.
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
- -
<S> <C> <C>
_________________________ * President and Director April 28, 1998
Alan T. Cunningham
__________________________* Vice President and Controller, April 28, 1998
Alexander Smith
__________________________* Director April 28, 1998
Marc C. Abrahms
_________________________* Director April 28, 1998
Robert Abeles
_________________________* Director April 28, 1998
James T. Byrne, Jr.
__________________________* Director April 28, 1998
Thomas J. Cusack
__________________________* Director April 28, 1998
James W. Dederer
__________________________* Director April 28, 1998
John Fibiger
__________________________* Director April 28, 1998
David E. Gooding
___________________________* Director April 28, 1998
Allan D. Greenberg
___________________________* Director April 28, 1998
James B. Roszak
___________________________* Director April 28, 1998
James Inzerillo
___________________________* Director April 28, 1998
Daniel E. Jund
_________________________* Director April 28, 1998
John A. Paganelli
_________________________* Director April 28, 1998
Nooruddin S. Veerjee
</TABLE>
On April 28, 1998 as Attorney -in-Fact pursuant to powers of
*By:David M. Goldstein attorney previously filed and filed
herewith, and in his own capacity as Vice President.
<PAGE>
EXHIBIT INDEX
Exhibit Description
No. of Exhibit
(4)(g) Fixed Account Rider
(8)(e) Form of Fund Participation Agreement
(f) Form of Participation Agreememt
(10) (a)Consent of Counsel
(b)Consent of Independent Auditors
(15) Power of Attorney
<PAGE>
Exhibit 4(g)
FIXED ACCOUNT RIDER
Except as otherwise provided in this Rider, all other provisions of the policy
remain in full force and effect and will apply to the Fixed Account, as
applicable.
Transamerica Life Insurance Company of New York has issued this Rider as a part
of the policy to which it is attached.
Definition of Terms - Unless redefined below, the terms defined in the policy
will have the same meaning when used in this Rider. For purposes of this Rider,
the following definitions apply:
Annuity Purchase Amount - The Annuity Purchase Amount is the amount applied as a
single premium to provide an annuity under the Annuity Form and Payment Option
elected by the Owner. The Annuity Purchase Amount is equal to the Policy Value,
less any applicable Contingent Deferred Sales Load and less any applicable
premium taxes. In determining the Annuity Purchase Amount, we will waive the
Contingent Deferred Sales Load if the Annuity Form elected involves life
contingencies and the Annuity Date occurs on or after the third Policy
Anniversary.
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 and if any, less any applicable Contingent
Deferred Sales Load and applicable premium taxes.
Fixed Account - All or portions of Net Premiums and transfers may be allocated
to the Fixed Account. The Fixed Account assets are general assets of the Company
and are distinguishable from those allocated to a separate account of the
Company.
Fixed Accumulated Value - The total dollar amount of all amounts held under the
Fixed Account for the policy prior to the Annuity Date. The Fixed Accumulated
Value prior to the Annuity Date is equal to: (a) Net Premiums allocated to the
Fixed Account; less (b) reductions for the annual Policy Fee deducted on the
last business day of each Policy Year; plus or minus (c) amounts transferred to
or from the Variable Sub-accounts; less (d) any applicable Transfer Fees; and
less (e) withdrawals from Fixed Account.
Initial Interest Rate - The Interest Rate in effect when a Premium is received
by us.
Policy Value - The sum of the Fixed Accumulated Value plus the Variable
Accumulated Value.
Premium - An amount paid to us as consideration for the benefits provided by the
policy.
Variable Accumulated Value - The total dollar amount of all Variable
Accumulation Units under each Sub-account of the Variable Account held for the
policy prior to the Annuity Date. The Variable Accumulated Value prior to the
Annuity Date is equal to: (a) Net Premiums allocated to the Sub-accounts; plus
or minus (b) any increase or decrease in the value of the assets of the
Sub-accounts due to investment results; less (c) the daily Mortality and Expense
Risk Charge; less (d) the daily Administrative Expense Charge; less (e)
reductions for the annual Policy Fee deducted on the last business day of each
Policy Year; plus or minus (f) amounts transferred to or from the Fixed Account;
less (g) any applicable Transfer Fees; and less (h) withdrawals from the
Sub-accounts.
3-080 02-198
THE FIXED ACCOUNT
Premium Payments to Fixed Account - All or portions of Net Premiums may be
allocated to the Fixed Account, as directed by
the Owner.
Initial Premium - The allocation of the Initial Premium into the fixed account
must be a minimum of 10% of the Initial Premium. The initial allocation to the
fixed account will be further subject to a minimum dollar amount of $1,000. All
or any portion of such Net Premium allocated to the fixed account will be
credited on the date the payment is received by us at our Service Office.
ESTABLISHMENT AND CREDITING OF INTEREST
Establishment of Interest Rates for Fixed Account - We will establish effective
annual rates of interest for new allocations received by us, from time to time,
for this Fixed Account. For purposes of this section, new allocations include
both new premium allocations and any transfers made from the Variable
Sub-accounts. The rate in effect when an allocation is received by us is the
"Initial Interest Rate" for that allocation.
The Initial Interest Rate applicable to the Initial allocation will be
guaranteed to remain in effect for at least twelve months from the date of
receipt of the Initial allocation.
Additional allocations you make to this policy will have and earn their own
Initial Interest Rates which we will, from time to time, declare for this type
of Fixed Account. The Initial Interest Rate applicable to any new allocation
will be the rate in effect on the date we receive the allocation. We guarantee
the Initial Interest Rate we declare for new allocations will remain in effect
for that allocation for at least twelve months from the date of receipt of that
allocation.
At any time after the end of the Interest Rate Period for a particular
allocation, we may change the annual rate of interest without prior written
notice. However, we guarantee that any subsequent change in the annual rate of
interest will remain in effect for a minimum of twelve months from the effective
date of change.
Crediting of Interest - Interest is credited to each allocation allocated to the
Fixed Account on a daily basis which is equivalent to the annual rate of
interest then in effect for that allocation. In no event will we credit interest
to any allocation allocated to the Fixed Account received under this policy at a
rate less than the Guaranteed Minimum Interest Rate of 3%.
3-080 02-198
TRANSFER PROVISIONS
Transfers Between Accounts - At the end of the free look period and before the
Annuity Date, the Owner may transfer all or any portion of the Fixed Account to
one or more Sub-accounts of the Variable Account. Transfers to or from the Fixed
Account will be subject to any transfer conditions and limitations imposed under
the policy, and further subject to the provisions described below.
Transfers between and among the Fixed Account and Variable Accounts will be
effective as of the date the request for the transfer, in a form and manner
acceptable to us, is received at our Service Office. The transfer request must
specify (a) the Sub-account(s) or Fixed Account from which the transfer is to be
made; (b) the amount of the transfer, subject to the minimum transfer amount
described in the policy; and (c) the Sub-account(s) or Fixed Account to receive
the transferred amount. If a transfer reduces the value of the Fixed Account or
a Sub-account of the Variable Account from which the transfer was made to less
than $1000, we reserve the right to transfer the remaining value in the Fixed
Account or the affected Sub-account in accordance with the transfer instructions
provided by the Owner.
Transfers from the Fixed Account - Transfers from the fixed account into a
Sub-account of the Variable Account are limited to four per Policy Year. The
maximum transfer amount allowed from the Fixed Account will be the maximum
amount in effect on the date of such transfer during a Policy Year. The maximum
transfer amount is a percentage of the value of the Fixed Account as of the date
of the last contract anniversary. The percentage rate, which will be declared by
the company from time to time, will be a minimum of 25 percent.
Transfers into the Fixed Account - Transfers from a Sub-Account of the Variable
Account into the Fixed Account are not allowed during the ninety day period
directly following any transfer made from the Fixed Account into a Sub-Account
of the Variable Account.
Transfer Fee - Prior to the Annuity Date, we reserve the right to impose a
Transfer Fee for each transfer in excess of twelve made during a single Policy
Year. If imposed, the amount of the Transfer Fee will be equal to the lesser of:
(a) 2% of the amount of the transfer; or (b) $10. The Transfer Fee will be
deducted from the amount of the transfer prior to its reallocation. If two or
more transfers are made on the same day, the Transfer Fee will be withdrawn pro
rata from the amount of the transfers.
3-080 02-198
WITHDRAWAL PROVISIONS
Partial Withdrawals from Fixed Account - At the end of the free look and before
the Annuity Date, the Owner may withdraw a portion of the Fixed Account for
cash, subject to any withdrawal conditions and limitations imposed under the
policy, any applicable federal or state law, rules or regulations, and further
subject to the provisions described below.
Withdrawal Limitations - The Contingent Deferred Sales Load and any premium tax
applicable to a withdrawal from the Fixed Account will be deducted from the
amount withdrawn before payment is made to the Owner. The minimum amount that
may be withdrawn is the lesser of $500, or the entire value of the Fixed
Account.
Policy Fee - Prior to the Annuity Date, an annual Policy Fee will be deducted on
a pro rata basis from the Variable Accumulated Value on the last business day of
each Policy Year, or if earlier, as of the date the policy is surrendered.
The amount of the annual Policy Fee is shown on the Policy Data page.
If the Variable Accumulated Value equals zero, then the Policy Fee will be
deducted from the Fixed Account.
There will be no Policy Fee deducted for a Policy Year if the aggregate of the
Variable Accumulated Value and/or the Fixed Accumulated Value exceeds $50,000 on
the last business day of that year, or if earlier, as of the date the policy is
surrendered.
The annual Policy Fee shown on the Policy Data page may be changed by us upon 30
days advance written notice to the Owner, subject to the prior approval of the
New York State Insurance Department. Any increase in the Policy Fee will apply
prospectively to Policy Fees deducted after the effective date of change. Any
increase will not result in the Policy Fee exceeding a maximum annual Policy Fee
equal to the lesser of 2% of the Policy Value or $60.
Delay of Payment - We may delay payment of any withdrawal from the Fixed Account
for a period of not more than six months after we receive the request for such
withdrawal. If we delay payment for more than 10 days, we will pay interest, as
provided in the Crediting of Interest provision of this Rider, on the withdrawal
amount up to the date of payment.
Signed for the Company at Purchase, New York, to be effective as of the later of
the Policy Date, or the date shown here .
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
President Chairman
3-080 02-198
<PAGE>
Exhibit (8)(e)
FUND PARTICIPATION AGREEMENT
This Agreement is entered into as of the day of _________, 1998, between
Transamerica Life Insurance Company of New York a life insurance company
organized under the laws of the State of ______________ ("Insurance Company"),
and DREYFUS INVESTMENT PORTFOLIOS("Fund").
----
ARTICLE I
DEFINITIONS
1.1 "Act" shall mean the Investment Company Act of 1940, as amended.
1.2 "Board" shall mean the Board of Directors or Trustees, as the case
may be, of a Fund, which has the responsibility for management and control of
the Fund.
1.3 "Business Day" shall mean any day for which a Fund calculates net
asset value per share as described in the Fund's Prospectus.
1.4 "Commission" shall mean the Securities and Exchange Commission.
1.5 "Contract" shall mean a variable annuity or life insurance contract
that uses any Participating Fund (as defined below) as an underlying investment
medium. Individuals who participate under a group Contract are "Participants."
1.6 "Contractholder" shall mean any entity that is a party to a Contract
with a Participating Company (as defined below).
1.7 "Disinterested Board Members" shall mean those members of the Board of
a Fund that are not deemed to be "interested persons" of the Fund, as defined
by the Act.
1.8 "Dreyfus" shall mean The Dreyfus Corporation and its affiliates, including
Dreyfus Service Corporation.
1.9 "Participating Companies" shall mean any insurance company (including
Insurance Company) that offers variable annuity and/or variable life insurance
contracts to the public and that has entered into an agreement with one or more
of the Funds.
1.10 "Participating Fund" shall mean each Fund, including, as applicable,
any series thereof, specified in Exhibit A, as such Exhibit may be amended
from time to time by agreement of the parties hereto, the shares of which are
available to serve as the underlying investment medium for the aforesaid
Contracts.
1.11 "Prospectus" shall mean the current prospectus and statement of
additional information of a Fund, as most recently filed with the Commission.
1.12 "Separate Account" shall mean Separate Account VA-2LNY, a separate
account established by Insurance Company in accordance with the laws of the
State of New York.
1.13 "Software Program" shall mean the software program used by a Fund
for providing Fund and account balance information including net asset value
per share. Such Program may include the Lion System. In situations where the
Lion System or any other Software Program used by a Fund is not available,
such information may be provided by telephone. The Lion System shall be
provided to Insurance Company at no charge.
1.14 "Insurance Company's General Account(s)" shall mean the general
account(s) of Insurance Company and its affiliates that invest in a Fund.
ARTICLE II
REPRESENTATIONS
2.1 Insurance Company represents and warrants that (a) it is an insurance
company duly organized and in good standing under applicable law; (b) it has
legally and validly established the Separate Account pursuant to the New York
Insurance Code for the purpose of offering to the public certain individual and
group variable annuity and life insurance contracts; (c) it has registered the
Separate Account as a unit investment trust under the Act to serve as the
segregated investment account for the
Contracts; and (d) the Separate Account is eligible to invest in
shares of each Participating Fund without such investment disqualifying any
Participating Fund as an investment medium for insurance company separate
accounts supporting variable annuity contracts or variable life insurance
contracts.
2.2 Insurance Company represents and warrants that (a) the Contracts will
be described in a registration statement filed under the Securities Act of
1933, as amended ("1933 Act"); (b) the Contracts will be issued and sold in
compliance in all material respects with all applicable federal and state laws;
and (c) the sale of the Contracts shall comply in all material respects with
state insurance law requirements. Insurance Company agrees to notify each
Participating Fund promptly of any investment
restrictions imposed by state insurance law and applicable to the
Participating Fund.
2.3 Insurance Company represents and warrants that the income, gains and
losses, whether or not realized, from assets allocated to the Separate Account
are, in accordance with the applicable Contracts, to be credited to or charged
against such Separate Account without regard to other income, gains or losses
from assets allocated to any other accounts of Insurance Company. Insurance
Company represents and warrants that the assets of the Separate Account are
and will be kept separate from Insurance
Company's General Account and any other separate accounts Insurance
Company may have, and will not be charged with liabilities from any business
that Insurance Company may conduct or the liabilities of any companies
affiliated with Insurance Company.
2.4 Each Participating Fund represents that it is registered with the
Commission under the Act as an open-end, management investment company and
possesses, and shall maintain, all legal and regulatory licenses, approvals,
consents and/or exemptions required for the Participating Fund to operate and
offer its shares as an underlying investment medium for Participating Companies.
2.5 Each Participating Fund represents that it is currently qualified as
a regulated investment company under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code"), and that it will make every effort to
maintain such qualification (under Subchapter M or any successor or similar
provision) and that it will notify Insurance Company immediately upon having a
reasonable basis for believing that it has ceased to so qualify or that it
might not so qualify in the future.
2.6 Insurance Company represents and agrees that the Contracts are
currently, and at the time of issuance will be, treated as life insurance
policies or annuity contracts, whichever is appropriate, under applicable
provisions of the Code, and that it will make every effort to maintain such
treatment and that it will notify each Participating Fund and Dreyfus
immediately upon having a reasonable basis for believing that the Contracts
have ceased to be so treated or that they might not be so treated in
the future. Insurance Company agrees that any prospectus offering a
Contract that is a "modified endowment contract," as that term is defined in
Section 7702A of the Code, will identify such Contract as a modified endowment
contract (or policy).
2.7 Each Participating Fund agrees that its assets shall be managed and
invested in a manner that complies with the requirements of Section 817(h) of
the Code.
2.8 Insurance Company agrees that each Participating Fund shall be
permitted (subject to the other terms of this Agreement) to make its shares
available to other Participating Companies and Contractholders.
2.9 Each Participating Fund represents and warrants that any of its
directors, trustees, officers, employees, investment advisers, and other
individuals/entities who deal with the money and/or securities of the
Participating Fund are and shall continue to be at all times covered by a
blanket fidelity bond or similar coverage for the benefit of the Participating
Fund in an amount not less than that required by Rule 17g-1 under the Act.
The aforesaid Bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.
2.10 Insurance Company represents and warrants that all of its employees
and agents who deal with the money and/or securities of each Participating Fund
are and shall continue to be at all times covered by a blanket fidelity bond
or similar coverage in an amount not less than the coverage required to be
maintained by the Participating Fund. The aforesaid Bond shall include coverage
for larceny and embezzlement and shall be issued by a reputable bonding
company.
2.11 Insurance Company agrees that Dreyfus shall be deemed a third party
beneficiary under this Agreement and may enforce any and all rights conferred
by virtue of this Agreement.
ARTICLE III
FUND SHARES
3.1 The Contracts funded through the Separate Account will provide for the
investment of certain amounts in shares of each Participating Fund.
3.2 Each Participating Fund agrees to make its shares available for
purchase at the then applicable net asset value per share by Insurance Company
and the Separate Account on each Business Day pursuant to rules of the
Commission. Notwithstanding the foregoing, each Participating Fund may refuse
to sell its shares to any person, or suspend or terminate the offering of its
shares, if such action is required by law or by regulatory authorities having
jurisdiction or is, in the sole discretion of its
Board, acting in good faith and in light of its fiduciary duties under
federal and any applicable state laws, necessary and in the best interests of
the Participating Fund's shareholders.
3.3 Each Participating Fund agrees that shares of the Participating Fund
will be sold only to (a) Participating Companies and their separate accounts or
(b) "qualified pension or retirement plans" as determined under Section 817(h)
(4) of the Code. Except as otherwise set forth in this Section 3.3, no shares
of any Participating Fund will be sold to the general public.
3.4 Each Participating Fund shall use its best efforts to provide closing
net asset value, dividend and capital gain information on a per-share basis to
Insurance Company by 6:00 p.m. Eastern time on each Business Day. Any material
errors in the calculation of net asset value, dividend and capital gain
information shall be reported immediately upon discovery to Insurance Company.
Non-material errors will be corrected in the next Business Day's net asset
value per share.
3.5 At the end of each Business Day, Insurance Company will use the
information described in Sections 3.2 and 3.4 to calculate the unit values
of the Separate Account for the day. Using this unit value, Insurance Company
will process the day's Separate Account transactions received by it by the
close of trading on the floor of the New York Stock Exchange (currently 4:00
p.m. Eastern time) to determine the net dollar amount of each Participating
Fund's shares that will be purchased or redeemed at
that day's closing net asset value per share. The net purchase or
redemption orders will be transmitted to each Participating Fund by Insurance
Company by 11:00 a.m. Eastern time on the Business Day next following
Insurance Company's receipt of that information. Subject to Sections 3.6 and
3.8, all purchase and redemption orders for Insurance Company's General
Accounts shall be effected at the net asset value per share of each
Participating Fund next calculated after receipt of the order by the
Participating Fund or its Transfer Agent.
3.6 Each Participating Fund appoints Insurance Company as its agent for the
limited purpose of accepting orders for the purchase and redemption of
Participating Fund shares for the Separate Account. Each Participating
Fund will execute orders at the applicable net asset value per share
determined as of the close of trading on the day of receipt of such
orders by Insurance Company acting as agent ("effective trade date"),
provided that the Participating Fund receives notice of such orders by
11:00 a.m. Eastern time on the next following Business Day and, if such
orders request the purchase of Participating Fund shares, the
conditions specified in Section 3.8, as applicable, are satisfied. A
redemption or purchase request that does not satisfy the conditions
specified above and in Section 3.8, as applicable, will be effected at
the net asset value per share computed on the Business Day immediately
preceding the next following Business Day upon which such conditions
have been satisfied in accordance with the requirements of this Section
and Section 3.8. Insurance Company represents and warrants that all
orders submitted by the Insurance Company for execution on the
effective trade date shall represent purchase or redemption orders
received from Contractholders prior to the close of trading on the New
York Stock Exchange on the effective trade date.
3.7 Insurance Company will make its best efforts to notify each applicable
Participating Fund in advance of any unusually large purchase or redemption
orders.
3.8 If Insurance Company's order requests the purchase of a Participating
Fund's shares, Insurance Company will pay for such purchases by wiring
Federal Funds to the Participating Fund or its designated custodial
account on the day the order is transmitted. Insurance Company shall
make all reasonable efforts to transmit to the applicable Participating
Fund payment in Federal Funds by 12:00 noon Eastern time on the
Business Day the Participating Fund receives the notice of the order
pursuant to Section 3.5. Each applicable Participating Fund will
execute such orders at the applicable net asset value per share
determined as of the close of trading on the effective trade date if
the Participating Fund receives payment in Federal Funds by 12:00
midnight Eastern time on the Business Day the Participating Fund
receives the notice of the order pursuant to Section 3.5. If payment in
Federal Funds for any purchase is not received or is received by a
Participating Fund after 12:00 noon Eastern time on such Business Day,
Insurance Company shall promptly, upon each applicable Participating
Fund's request, reimburse the respective Participating Fund for any
charges, costs, fees, interest or other expenses incurred by the
Participating Fund in connection with any advances to, or borrowings or
overdrafts by, the Participating Fund, or any similar expenses incurred
by the Participating Fund, as a result of portfolio transactions
effected by the Participating Fund based upon such purchase request. If
Insurance Company's order requests the redemption of any Participating
Fund's shares valued at or greater than $1 million dollars, the
Participating Fund will wire such amount to Insurance Company within
seven days of the order.
3.9 Each Participating Fund has the obligation to ensure that its shares
are registered with applicable federal agencies at all times.
3.10 Each Participating Fund will confirm each purchase or redemption
order made by Insurance Company. Transfer of Participating Fund shares will
be by book entry only. No share certificates will be issued to Insurance
Company. Insurance Company will record shares ordered from a Participating
Fund in an appropriate title for the corresponding account.
3.11 Each Participating Fund shall credit Insurance Company with the appropriate
number of shares.
3.12 On each ex-dividend date of a Participating Fund or, if not a Business
Day, on the first Business Day thereafter, each Participating Fund shall
communicate to Insurance Company the amount of dividend and capital gain, if
any, per share. All dividends and capital gains shall be automatically
reinvested in additional shares of the applicable Participating Fund at the
net asset value per share on the ex-dividend date. Each Participating Fund
shall, on the day after the ex-dividend date or, if not
a Business Day, on the first Business Day thereafter, notify Insurance
Company of the number of shares so issued.
ARTICLE IV
STATEMENTS AND REPORTS
4.1 Each Participating Fund shall provide monthly statements of account
as of the end of each month for all of Insurance Company's accounts by the
fifteenth (15th) Business Day of the following month.
4.2 Each Participating Fund shall distribute to Insurance Company copies
of the Participating Fund's Prospectuses, proxy materials, notices, periodic
reports and other printed materials (which the Participating Fund customarily
provides to its shareholders) in quantities as Insurance Company may reasonably
request for distribution to each Contractholder and Participant.
4.3 Each Participating Fund will provide to Insurance Company at least one
complete copy of all registration statements, Prospectuses, reports, proxy
statements, sales literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments to any of the
above, that relate to the Participating Fund or its shares, contemporaneously
with the filing of such document with the Commission or other regulatory
authorities.
4.4 Insurance Company will provide to each Participating Fund at least
one copy of all registration statements, Prospectuses, reports, proxy
statements, sales literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments to any of the
above, that relate to the Contracts or the Separate Account, contemporaneously
with the filing of such document with the Commission.
<PAGE>
ARTICLE V
EXPENSES
5.1 The charge to each Participating Fund for all expenses and costs of
the Participating Fund, including but not limited to management fees,
administrative expenses and legal and regulatory costs, will be made in the
determination of the Participating Fund's daily net asset value per share so as
to accumulate to an annual charge at the rate set forth in the Participating
Fund's Prospectus. Excluded from the expense limitation described herein shall
be brokerage commissions and transaction fees and
extraordinary expenses.
5.2 Except as provided in this Article V and, in particular in the next
sentence, Insurance Company shall not be required to pay directly any expenses
of any Participating Fund or expenses relating to the distribution of its
shares. Insurance Company shall pay the following expenses or costs:
a. Such amount of the production expenses of any Participating
Fund materials, including the cost of printing a Participating Fund's
Prospectus, or marketing materials for prospective Insurance Company
Contractholders and Participants as Dreyfus and Insurance Company shall agree
from time to time.
b. Distribution expenses of any Participating Fund materials or
marketing materials for prospective Insurance Company Contractholders and
Participants.
c. Distribution expenses of any Participating Fund materials or
marketing materials for Insurance Company Contractholders and Participants.
Except as provided herein, all other expenses of each Participating
Fund shall not be borne by Insurance Company.
ARTICLE VI
6. EXEMPTIVE RELIEF
6.1 Insurance Company has reviewed a copy of (i) the amended order dated
December 31, 1997 of the Securities and Exchange Commission under
Section 6(c) of the Act with respect to Dreyfus Variable Investment
Fund and Dreyfus Life and Annuity Index Fund, Inc.; and (ii) the order
dated February 5, 1998 of the Securities and Exchange Commission under
Section 6(c) of the Act with respect to The Dreyfus Socially
Responsible Growth Fund, Inc. and Dreyfus Investment Portfolios, and,
in particular, has reviewed the conditions to the relief set forth in
each related Notice. As set forth therein, if Dreyfus Variable
Investment Fund, Dreyfus Life and Annuity Index Fund, Inc., The Dreyfus
Socially Responsible Growth Fund, Inc. or Dreyfus Investment Portfolios
is a Participating Fund, Insurance Company agrees, as applicable, to
report any potential or existing conflicts promptly to the respective
Board of Dreyfus Variable Investment Fund, Dreyfus Life and Annuity
Index Fund, Inc., The Dreyfus Socially Responsible Growth Fund, Inc.
and/or Dreyfus Investment Portfolios, and, in particular, whenever
contract voting instructions are disregarded, and recognizes that it
will be responsible for assisting each applicable Board in carrying out
its responsibilities under such application. Insurance Company agrees
to carry out such responsibilities with a view to the interests of
existing Contractholders.
6.2 If a majority of the Board, or a majority of Disinterested Board
Members, determines that a material irreconcilable conflict exists with
regard to Contractholder investments in a Participating Fund, the Board shall
give prompt notice to all Participating Companies and any other Participating
Fund. If the Board determines that Insurance Company is responsible for causing
or creating said conflict, Insurance Company shall at its sole cost and
expense, and to the extent reasonably practicable (as
determined by a majority of the Disinterested Board Members), take
such action as is necessary to remedy or eliminate the irreconcilable material
conflict. Such necessary action may include, but shall not be limited to:
a. Withdrawing the assets allocable to the Separate Account
from the Participating Fund and reinvesting such assets in another
Participating Fund (if applicable) or a different investment medium, or
submitting the question of whether such segregation should be implemented to
a vote of all affected Contractholders; and/or
b. Establishing a new registered management investment company.
6.3 If a material irreconcilable conflict arises as a result of a decision
by Insurance Company to disregard Contractholder voting instructions and said
decision represents a minority position or would preclude a majority vote by
all Contractholders having an interest in a Participating Fund, Insurance
Company may be required, at the Board's election, to withdraw the investments
of the Separate Account in that Participating Fund.
6.4 For the purpose of this Article, a majority of the Disinterested
Board Members shall determine whether or not any proposed action adequately
remedies any irreconcilable material conflict, but in no event will any
Participating Fund be required to bear the expense of establishing a new
funding medium for any Contract. Insurance Company shall not be required by
this Article to establish a new funding medium for any Contract if an offer to
do so has been declined by vote of a majority of the
Contractholders materially adversely affected by the irreconcilable
material conflict.
6.5 No action by Insurance Company taken or omitted, and no action by the
Separate Account or any Participating Fund taken or omitted as a result of any
act or failure to act by Insurance Company pursuant to this Article VI, shall
relieve Insurance Company of its obligations under, or otherwise affect the
operation of, Article V.
ARTICLE VII
VOTING OF PARTICIPATING FUND SHARES
7.1 Each Participating Fund shall provide Insurance Company with copies,
at no cost to Insurance Company, of the Participating Fund's proxy material,
reports to shareholders and other communications to shareholders in such
quantity as Insurance Company shall reasonably require for distributing to
Contractholders or Participants.
Insurance Company shall:
(a) solicit voting instructions from Contractholders or
Participants on a timely basis and in accordance with applicable law;
(b) vote the Participating Fund shares in accordance with instructions
received from Contractholders or Participants; and
(c) vote the Participating Fund shares for which no instructions
have been received in the same proportion as Participating Fund shares for
which instructions have been received.
Insurance Company agrees at all times to vote its General Account
shares in the same proportion as the Participating Fund shares for which
instructions have been received from Contractholders or Participants.
Insurance Company further agrees to be responsible for assuring that voting
the Participating Fund shares for the Separate Account is conducted in a manner
consistent with other Participating Companies.
7.2 Insurance Company agrees that it shall not, without the prior written
consent of each applicable Participating Fund and Dreyfus, solicit, induce or
encourage Contractholders to (a) change or supplement the Participating Fund's
current investment adviser or (b) change, modify, substitute, add to or delete
from the current investment media for the Contracts.
ARTICLE VIII
MARKETING AND REPRESENTATIONS
8.1 Each Participating Fund or its underwriter shall periodically furnish
Insurance Company with the following documents, in quantities as Insurance
Company may reasonably request:
a. Current Prospectus and any supplements thereto; and
b. Other marketing materials.
Expenses for the production of such documents shall be borne by
Insurance Company in accordance with Section 5.2 of this Agreement.
8.2 Insurance Company shall designate certain persons or entities that
shall have the requisite licenses to solicit applications for the sale of
Contracts. No representation is made as to the number or amount of Contracts
that are to be sold by Insurance Company. Insurance Company shall make
reasonable efforts to market the Contracts and shall comply with all applicable
federal and state laws in connection therewith.
8.3 Insurance Company shall furnish, or shall cause to be furnished, to
each applicable Participating Fund or its designee, each piece of sales
literature or other promotional material in which the Participating Fund, its
investment adviser or the administrator is named, at least fifteen Business Days
prior to its use. No such material shall be used unless the Participating Fund
or its designee approves such material. Such approval (if given) must be in
writing and shall be presumed not given if
not received within ten Business Days after receipt of such material.
Each applicable Participating Fund or its designee, as the case may be, shall
use all reasonable efforts to respond within ten days of receipt.
8.4 Insurance Company shall not give any information or make any
representations or statements on behalf of a Participating Fund or concerning a
Participating Fund in connection with the sale of the Contracts other than the
information or representations contained in the registration statement or
Prospectus of, as may be amended or supplemented from time to time, or in
reports or proxy statements for, the applicable Participating Fund, or in sales
literature or other promotional material approved by
the applicable Participating Fund.
8.5 Each Participating Fund shall furnish, or shall cause to be furnished,
to Insurance Company, each piece of the Participating Fund's sales literature
or other promotional material in which Insurance Company or the Separate Account
is named, at least fifteen Business Days prior to its use. No such material
shall be used unless Insurance Company approves such material. Such approval
(if given) must be in writing and shall be presumed not given if not received
within ten Business Days after receipt
of such material. Insurance Company shall use all reasonable efforts
to respond within ten days of receipt.
8.6 Each Participating Fund shall not, in connection with the sale of
Participating Fund shares, give any information or make any representations on
behalf of Insurance Company or concerning Insurance Company, the Separate
Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as may
be amended or supplemented from time to time, or in published reports for the
Separate Account that are in the public domain or
approved by Insurance Company for distribution to Contractholders or
Participants, or in sales literature or other promotional material approved by
Insurance Company.
8.7 For purposes of this Agreement, the phrase "sales literature or other
promotional material" or words of similar import include, without
limitation, advertisements (such as material published, or designed for
use, in a newspaper, magazine or other periodical, radio, television,
telephone or tape recording, videotape display, signs or billboards,
motion pictures or other public media), sales literature (such as any
written communication distributed or made generally available to
customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, or reprints or
excerpts of any other advertisement, sales literature, or published
article), educational or training materials or other communications
distributed or made generally available to some or all agents or
employees, registration statements, prospectuses, statements of
additional information, shareholder reports and proxy materials, and
any other material constituting sales literature or advertising under
National Association of Securities Dealers, Inc. rules, the Act or the
1933 Act.
ARTICLE IX
INDEMNIFICATION
9.1 Insurance Company agrees to indemnify and hold harmless each
Participating Fund, Dreyfus, each respective Participating Fund's investment
adviser and sub-investment adviser (if applicable), each respective
Participating Fund's distributor, and their respective affiliates, and each of
their directors, trustees, officers, employees, agents and each person, if any,
who controls or is associated with any of the foregoing entities or persons
within the meaning of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of Section 9.1), 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) for which the Indemnified Parties may become subject, under the
1933 Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect to thereof) (i) aris
out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in information furnished by Insurance
Company for use in the registration statement or Prospectus or sales literature
or advertisements of the respective Participating Fund or with respect to the
Separate Account or Contracts, or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements
therein not misleading; (ii) arise out of or as a result of conduct,
statements or representations (other than statements or representations
contained in the Prospectus and sales literature or advertisements of the
respective Participating Fund) of Insurance Company or its agents, with respect
to the sale and distribution of Contracts for which the respective
Participating Fund's shares are an underlying investment; (iii) arise out of
the wrongful conduct of Insurance Company or persons under its
control with respect to the sale or distribution of the Contracts or
the respective Participating Fund's shares; (iv) arise out of Insurance
Company's incorrect calculation and/or untimely reporting of net purchase or
redemption orders; or (v) arise out of any breach by Insurance Company of a
material term of this Agreement or as a result of any failure by Insurance
Company to provide the services and furnish the materials or to make any
payments provided for in this Agreement. Insurance Company
will reimburse any Indemnified Party in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
however, that with respect to clauses (i) and (ii) above Insurance Company
will not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon any untrue statement or
omission or alleged omission made in such registration statement, prospectus,
sales literature, or advertisement in conformity
with written information furnished to Insurance Company by the
respective Participating Fund specifically for use therein. This indemnity
agreement will be in addition to any liability which Insurance Company may
otherwise have.
9.2 Each Participating Fund severally agrees to indemnify and hold harmless
Insurance Company and each of its directors, officers, employees,
agents and each person, if any, who controls Insurance Company within
the meaning of the 1933 Act against any losses, claims, damages or
liabilities to which Insurance Company or any such director, officer,
employee, agent or controlling person may become subject, under the
1933 Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) (1) arise out of or are
based upon any untrue statement or alleged untrue statement of any
material fact contained in the registration statement or Prospectus or
sales literature or advertisements of the respective Participating
Fund; (2) arise out of or are based upon the omission to state in the
registration statement or Prospectus or sales literature or
advertisements of the respective Participating Fund any material fact
required to be stated therein or necessary to make the statements
therein not misleading; or (3) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact
contained in the registration statement or Prospectus or sales
literature or advertisements with respect to the Separate Account or
the Contracts and such statements were based on information provided to
Insurance Company by the respective Participating Fund; and the
respective Participating Fund will reimburse any legal or other
expenses reasonably incurred by Insurance Company or any such director,
officer, employee, agent or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the respective Participating Fund will
not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement
or omission or alleged omission made in such registration statement,
Prospectus, sales literature or advertisements in conformity with
written information furnished to the respective Participating Fund by
Insurance Company specifically for use therein. This indemnity
agreement will be in addition to any liability which the respective
Participating Fund may otherwise have.
9.3 Each Participating Fund severally shall indemnify and hold Insurance
Company harmless against any and all liability, loss, damages, costs or
expenses which Insurance Company may incur, suffer or be required to
pay due to the respective Participating Fund's (1) incorrect
calculation of the daily net asset value, dividend rate or capital gain
distribution rate; (2) incorrect reporting of the daily net asset
value, dividend rate or capital gain distribution rate; and (3)
untimely reporting of the net asset value, dividend rate or capital
gain distribution rate; provided that the respective Participating Fund
shall have no obligation to indemnify and hold harmless Insurance
Company if the incorrect calculation or incorrect or untimely reporting
was the result of incorrect information furnished by Insurance Company
or information furnished untimely by Insurance Company or otherwise as
a result of or relating to a breach of this Agreement by Insurance
Company.
9.4 Promptly after receipt by an indemnified party under this Article of
notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying
party under this Article, notify the indemnifying party of the
commencement thereof. The omission to so notify the indemnifying party
will not relieve the indemnifying party from any liability under this
Article IX, except to the extent that the omission results in a failure
of actual notice to the indemnifying party and such indemnifying party
is damaged solely as a result of the failure to give such notice. In
case any such action is brought against any indemnified party, and it
notified the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the
extent that it may wish, assume the defense thereof, with counsel
satisfactory to such indemnified party, and to the extent that the
indemnifying party has given notice to such effect to the indemnified
party and is performing its obligations under this Article, the
indemnifying party shall not be liable for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof, other than reasonable costs of investigation.
Notwithstanding the foregoing, in any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees 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.
A successor by law of the parties to this Agreement shall be entitled
to the benefits of the indemnification contained in this Article IX. The
provisions of this Article IX shall survive termination of this Agreement.
9.5 Insurance Company shall indemnify and hold each respective
Participating Fund, Dreyfus and sub-investment adviser of the Participating
Fund harmless against any tax liability incurred by the Participating Fund
under Section 851 of the Code arising from purchases or redemptions by
Insurance Company's General Accounts or the account of its affiliates.
ARTICLE X
COMMENCEMENT AND TERMINATION
10.1 This Agreement shall be effective as of the date hereof and shall
continue in force until terminated in accordance with the provisions herein.
10.2 This Agreement shall terminate without penalty:
a. As to any Participating Fund, at the option of Insurance
Company or the Participating Fund at any time from the date hereof upon 180
days' notice, unless a shorter time is agreed to by the respective Participating
Fund and Insurance Company;
b. As to any Participating Fund, at the option of Insurance
Company, if shares of that Participating Fund are not reasonably available to
meet the requirements of the Contracts as determined by Insurance Company.
Prompt notice of election to terminate shall be furnished by Insurance Company,
said termination to be effective ten days after receipt of notice unless the
Participating Fund makes available a sufficient number of shares to meet the
requirements of the Contracts within said ten-
day period;
c. As to a Participating Fund, at the option of Insurance
Company, upon the institution of formal proceedings against that Participating
Fund by the Commission, National Association of Securities Dealers or any other
regulatory body, the expected or anticipated ruling, judgment or outcome of
which would, in Insurance Company's reasonable judgment, materially impair that
Participating Fund's ability to meet and perform the Participating Fund's
obligations and duties hereunder. Prompt notice
of election to terminate shall be furnished by Insurance
Company with said termination to be effective upon receipt of notice;
d. As to a Participating Fund, at the option of each
Participating Fund, upon the institution of formal proceedings against
Insurance Company by the Commission, National Association of Securities
Dealers or any other regulatory body, the expected or anticipated ruling,
judgment or outcome of which would, in the Participating Fund's reasonable
judgment, materially impair Insurance Company's ability to meet and perform
Insurance Company's obligations and duties hereunder. Prompt notice of
election to terminate shall be furnished by such
Participating Fund with said termination to be effective upon receipt of notice;
e. As to a Participating Fund, at the option of that
Participating Fund, if the Participating Fund shall determine,
in its sole judgment reasonably exercised in good faith, that
Insurance Company has suffered a material adverse change in
its business or financial condition or is the subject of
material adverse publicity and such material adverse change or
material adverse publicity is likely to have a material
adverse impact upon the business and operation of that
Participating Fund or Dreyfus, such Participating Fund shall
notify Insurance Company in writing of such determination and
its intent to terminate this Agreement, and after considering
the actions taken by Insurance Company and any other changes
in circumstances since the giving of such notice, such
determination of the Participating Fund shall continue to
apply on the sixtieth (60th) day following the giving of such
notice, which sixtieth day shall be the effective date of
termination;
f. As to a Participating Fund, upon termination of the
Investment Advisory Agreement between that Participating Fund and Dreyfus or
its successors unless Insurance Company specifically approves the selection of
a new Participating Fund investment adviser. Such Participating Fund shall
promptly furnish notice of such termination to Insurance Company;
g. As to a Participating Fund, in the event that Participating
Fund's shares are not registered, issued or sold in accordance with applicabl
federal law, or such law precludes the use of such shares as the underlying
investment medium of Contracts issued or to be issued by Insurance Company.
Termination shall be effective immediately as to that Participating Fund only
upon such occurrence without notice;
h. At the option of a Participating Fund upon a determination
by its Board in good faith that it is no longer advisable and in the best
interests of shareholders of that Participating Fund to continue to operate
pursuant to this Agreement. Termination pursuant to this Subsection (h) shall
be effective upon notice by such Participating Fund to Insurance Company of such
termination;
i. At the option of a Participating Fund if the Contracts cease
to qualify as annuity contracts or life insurance policies, as applicable, under
the Code, or if such Participating Fund reasonably believes that the Contracts
may fail to so qualify;
j. At the option of any party to this Agreement, upon another party's
breach of any material provision of this Agreement;
k. At the option of a Participating Fund, if the Contracts are
not registered, issued or sold in accordance with applicable federal and/or
state law; or
l. Upon assignment of this Agreement, unless made with the written
consent of every other non-assigning party.
Any such termination pursuant to Section 10.2a, 10.2d, 10.2e, 10.2f or
10.2k herein shall not affect the operation of Article V of this Agreement.
Any termination of this Agreement shall not affect the operation of Article IX
of this Agreement.
10.3 Notwithstanding any termination of this Agreement pursuant to Section
10.2 hereof, each Participating Fund and Dreyfus may, at the option of
the Participating Fund, continue to make available additional shares of
that Participating Fund for as long as the Participating Fund desires
pursuant to the terms and conditions of this Agreement as provided
below, for all Contracts in effect on the effective date of termination
of this Agreement (hereinafter referred to as "Existing Contracts").
Specifically, without limitation, if that Participating Fund and
Dreyfus so elect to make additional Participating Fund shares
available, the owners of the Existing Contracts or Insurance Company,
whichever shall have legal authority to do so, shall be permitted to
reallocate investments in that Participating Fund, redeem investments
in that Participating Fund and/or invest in that Participating Fund
upon the making of additional purchase payments under the Existing
Contracts. In the event of a termination of this Agreement pursuant to
Section 10.2 hereof, such Participating Fund and Dreyfus, as promptly
as is practicable under the circumstances, shall notify Insurance
Company whether Dreyfus and that Participating Fund will continue to
make that Participating Fund's shares available after such termination.
If such Participating Fund shares continue to be made available after
such termination, the provisions of this Agreement shall remain in
effect and thereafter either of that Participating Fund or Insurance
Company may terminate the Agreement as to that Participating Fund, as
so continued pursuant to this Section 10.3, upon prior written notice
to the other party, such notice to be for a period that is reasonable
under the circumstances but, if given by the Participating Fund, need
not be for more than six months.
10.4 Termination of this Agreement as to any one Participating Fund shall
not be deemed a termination as to any other Participating Fund unless Insurance
Company or such other Participating Fund, as the case may be, terminates this
Agreement as to such other Participating Fund in accordance with this Article X.
ARTICLE XI
AMENDMENTS
11.1 Any other changes in the terms of this Agreement, except for the
addition or deletion of any Participating Fund as specified in Exhibit A,
shall be made by agreement in writing between Insurance Company and each
respective Participating Fund.
ARTICLE XII
NOTICE
12.1 Each notice required by this Agreement shall be given by certified
mail, return receipt requested, to the appropriate parties at the following
addresses:
Insurance Company: Transamerica Life Insurance
Company of New York
100 Manhattanville Road
Purchase, New York 10577
Participating Funds: Dreyfus Investment Portfolios
c/o Premier Mutual Fund Services, Inc.
200 Park Avenue
New York, New York 10166
Attn: Vice President and Assistant Secretary
with copies to: [Name of Fund]
c/o The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Attn: Mark N. Jacobs, Esq.
Lawrence B. Stoller, Esq.
Stroock & Stroock & Lavan
180 Maiden Lane
New York, New York 10038-4982
Attn: Lewis G. Cole, Esq.
Stuart H. Coleman, Esq.
Notice shall be deemed to be given on the date of receipt by the
addresses as evidenced by the return receipt.
ARTICLE XIII
12.
MISCELLANEOUS
13.1 This Agreement has been executed on behalf of each Fund by the
undersigned officer of the Fund in his capacity as an officer of the Fund.
The obligations of this Agreement shall only be binding upon the assets and
property of the Fund and shall not be binding upon any director, trustee,
officer or shareholder of the Fund individually. It is agreed that the
obligations of the Funds are several and not joint, that no Fund shall be
liable for any amount owing by another Fund and that the Funds
have executed one instrument for convenience only.
ARTICLE XIV
LAW
14.1 This Agreement shall be construed in accordance with the internal
laws of the State of New York, without giving effect to principles of conflict
of laws.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be duly
executed and attested as of the date first above written.
Transamerica Life Insurance
Company of New York
By:
Its:
Attest:_____________________
DREYFUS LIFE AND ANNUITY INDEX FUND, INC. (d
Attest:_____________________
DREYFUS INVESTMENT PORTFOLIOS
By:
Its:
Attest:_____________________
<PAGE>
EXHIBIT A
LIST OF PARTICIPATING FUNDS
<PAGE>
Exhibit 8(f) Form of Participation AGreement
<PAGE>
PARTICIPATION AGREEMENT
Among
TRANSAMERICA VARIABLE INSURANCE FUND, INC.
TRANSAMERICA SECURITIES SALES CORPORATION
and
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
THIS AGREEMENT, made and entered into as of this ____ day
of _________,
1996 by and among TRANSAMERICA LIFE INSURANCE COMPANY OF
NEW YORK (hereinafter
"Transamerica"), a New York life insurance company, on its own
behalf and on
behalf of its SEPARATE ACCOUNT C (the "Account");
TRANSAMERICA VARIABLE
INSURANCE FUND, INC., a corporation organized under the
laws of Maryland
(hereinafter the "Fund"); and TRANSAMERICA SECURITIES
SALES CORPORATION,
(hereinafter the "Underwriter"), a _________ corporation.
WHEREAS, the Fund engages in business as an open-end
management investment
company and is available to act as the investment vehicle for
separate accounts
established for variable life insurance policies and/or
variable annuity
contracts (collectively, the "Variable Insurance Products")
to be offered by
insurance companies which have entered into participation
agreements similar to
this Agreement (hereinafter "Participating Insurance
Companies"), as well as
qualified pension and retirement plans; and
WHEREAS, the beneficial interests in the Fund are
divided into several
series of shares, each designated a "Portfolio" and representing
interests in a
particular managed portfolio of securities and other assets; and
WHEREAS, the Fund is registered as an open-end
management investment
company under the 1940 Act and shares of the Portfolios are
registered under the
Securities Act of 1933, as amended (hereinafter the "1933 Act");
and
WHEREAS, the Underwriter is duly registered as a
broker-dealer under the
Securities Exchange Act of 1934, as amended (the "1934 Act") and
is a member in
good standing of the National Association of Securities
Dealers, Inc. (the
"NASD"); and
WHEREAS, Transamerica has registered certain variable
annuity contracts
supported wholly or partially by the Account (the "Contracts")
under the 1933
Act and said Contracts are listed in Schedule A hereto, as it
may be amended
from time to time by mutual written agreement; and
WHEREAS, the Account is a duly organized, validly existing
segregated asset
account, established by resolution of the Board of Directors of
Transamerica,to set aside and invest assets attributable
to the Contracts;
and
WHEREAS, Transamerica has registered the Account as a unit
investment trust
under the 1940 Act; and
WHEREAS, to the extent permitted by applicable
insurance laws and
regulations, Transamerica intends to purchase shares in the
Portfolios listed in
Schedule B hereto, as it may be amended from time to time by
mutual written
agreement (the "Designated Portfolios"), on behalf of the
Account to fund the
aforesaid Contracts, and the Underwriter is authorized to sell
such shares to
unit investment trusts such as the Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises,
Transamerica,
the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Underwriter agrees to sell to Transamerica
those shares of the
Designated Portfolios which Transamerica orders, executing
such orders on a
daily basis at the net asset value next computed after receipt
by the Fund or
its designee of the order for the shares of the Portfolios. For
purposes of this
Section 1.1, Transamerica shall be the designee of the Fund for
receipt of such
orders and receipt by such designee shall constitute
receipt by the Fund;
provided that the Fund receives notice of such order by ____ a.m.
_________ time
on the next following Business Day. "Business Day" shall mean
any day on which
the New York Stock Exchange is open for trading and on which the
Fund calculates
its net asset value.
1.2. The Fund agrees to make shares of the Designated
Portfolios available
for purchase at the applicable net asset value per share by
Transamerica on
those days on which the Fund calculates its net asset values, and
the Fund shall
calculate such net asset value on each day which the New York
Stock Exchange is
open for trading. Notwithstanding the foregoing, the Board of
Directors of the
Fund (hereinafter the "Board") may refuse to sell shares of any
Portfolio to any
person, or suspend or terminate the offering of shares of any
Portfolio if such
action is required by law or by regulatory authorities having
jurisdiction or
is, in the sole discretion of the Board acting in good faith
and in light of
their fiduciary duties under federal and any applicable state
laws, necessary in
the best interests of the shareholders of such Portfolio.
1.3 The Fund and the Underwriter agree that shares of
the Designated
Portfolios will be sold only to Participating Insurance
Companies and their
separate accounts and qualified pension and retirement plans.
No shares of any
Designated Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter will not sell shares of
the Designated
Portfolios to any other insurance company, separate account or
qualified pension
and retirement plan unless an agreement containing provisions
substantially the
same as Sections 2.1, 3.6, 3.7, 3.8, and Article VII of this
Agreement is in
effect to govern such sales.
1.5. The Fund agrees to redeem for cash, on Transamerica's
request, any
full or fractional shares of the Fund held by Transamerica,
executing such
requests on a daily basis at the net asset value next computed
after receipt by
the Fund or its designee of the request for redemption,
except that the Fund
reserves the right to suspend the right of redemption or
postpone the date of
payment or satisfaction upon redemption consistent with
Section 22(e) of the
1940 Act. For purposes of this Section 1.5, Transamerica shall
be the designee
of the Fund for receipt of requests for redemption and receipt
by such designee
shall constitute receipt by the Fund; provided that the Fund
receives notice of
such request for redemption by the next
following Business Day.
1.6. The Parties hereto acknowledge that the arrangement
contemplated by
this Agreement is not exclusive; the Fund's shares may be
sold to other
insurance companies and qualified pension and retirement
plans (subject to
Section 1.4 and Article VI hereof) and the cash value of the
Contracts may be
invested in other investment companies.
1.7. Transamerica shall pay for Fund shares by the next
Business Day after an order to purchase Fund shares is made in
accordance with the provisions of Section 1.1 hereof.
Payment shall be in
federal funds transmitted by wire and/or by a credit for any
shares redeemed the
same day as the purchase. Upon receipt by the Fund of the
federal funds so
wired, such funds shall cease to be the responsibility of
Transamerica and shall
become the responsibility of the Fund.
1.8. The Fund shall pay and transmit the proceeds of
redemptions of Fund
shares by the next Business Day after a
redemption order is received, subject to Section 1.5 hereof.
Payment shall be in
federal funds transmitted by wire and/or a credit for any shares
purchased the
same day as the redemption.
1.9. Issuance and transfer of the Fund's shares will be by
book entry only.
Stock certificates will not be issued to Transamerica or the
Account. Shares
ordered from the Fund will be recorded in an appropriate title
for the Account
or the appropriate subaccount of the Account.
1.10. The Fund shall furnish same day notice (by wire
or telephone,
followed by written confirmation) to Transamerica of any
income, dividends or
capital gain distributions payable on the Designated
Portfolios' shares.
Transamerica hereby elects to receive all such income dividends
and capital gain
distributions in additional shares of that Portfolio.
Transamerica reserves the
right to revoke this election and to receive all such income
dividends and
capital gain distributions in cash. The Fund shall notify
Transamerica by the
end of the next following Business Day of the number of
shares so issued as
payment of such dividends and distributions.
1.11. The Fund shall make the net asset value per share for
each Designated
Portfolio available to Transamerica on a daily basis as soon
as reasonably
practical after the net asset value per share is calculated
and shall use its
best efforts to make such net asset value per share available
by _____ p.m.
________ time. If the Fund provides incorrect per share
net asset value
information, Transamerica shall be entitled to an adjustment
to the number of
shares purchased or redeemed to reflect the correct net asset
value per share.
Any material error in the calculation or reporting of net asset
value per share,
dividend or capital gains information shall be reported
immediately upon
discovery to Transamerica. Any error of a lesser amount shall
be corrected in
the next Business Day's net asset value per share.
In the event adjustments are required to correct any
error in the
computation of a Designated Portfolio's net asset value per
share, or dividend
or capital gain distribution, the Underwriter (or the
Underwriter or the Fund)
shall notify Transamerica as soon as possible after
discovering the need for
such adjustments. Notification can be made orally, but must
be confirmed in
writing. If an adjustment is necessary to correct an error which
caused Contract
owners to receive less than the amount to which they are
entitled, the Fund
shall make all necessary adjustments to the number of
shares owned by the
Account and distribute to the Account the amount of the
underpayment. In no
event shall Transamerica be liable to the Fund or the
Underwriter for any such
adjustments or overpayment amounts.
ARTICLE II. Representations and Warranties
2.1. Transamerica represents and warrants that the Contracts
are or will be
registered under the 1933 Act; that the Contracts will be
issued and sold in
compliance in all material respects with all applicable federal
and state laws
and that the sale of the Contracts shall comply in all material
respects with
state insurance suitability requirements. Transamerica further
represents and
warrants that it is an insurance company duly organized and
in good standing
under applicable law and that it has legally and validly
established the Account
as a segregated asset account under Section 10506 of the
California Insurance
Law and has registered the Account as a unit investment trust in
accordance with
the provisions of the 1940 Act to serve as a segregated
investment account for
the Contracts.
2.2. The Fund represents and warrants that Designated
Portfolio shares sold
pursuant to this Agreement shall be registered under the
1933 Act, duly
authorized for issuance and sold in compliance with the laws
of the State of
California and all applicable federal and state securities
laws including
without limitation the 1933 Act, the 1934 Act, and the 1940
Act and that the
Fund is and shall remain registered under the 1940 Act. The Fund
shall amend the
Registration Statement for its shares under the 1933 Act and
the 1940 Act from
time to time as required in order to effect the continuous
offering of its
shares. The Fund shall register and qualify the shares for sale
in accordance
with the laws of the various states if and to the extent
required by applicable
law.
2.3. The Fund reserves the right to adopt a plan
pursuant to Rule 12b-1
under the 1940 Act or impose an asset-based or other
charge to finance
distribution expenses as permitted by applicable law and
regulation. In any
event, the Fund represents and warrant that the
investment advisory or
management fees paid to the adviser by the Fund are
legitimate and not
excessive. To the extent that the Fund decides to finance
distribution expenses
pursuant to Rule 12b-1, the Fund undertakes to have a Board, a
majority of whom
are not interested persons of the Fund, formulate and approve
any plan pursuant
to Rule 12b- 1 under the 1940 Act to finance distribution
expenses.
2.4. The Fund represents and warrants that the investment
policies and fees
and expenses of the Designated Portfolios are and shall at all
times remain in
compliance with the insurance and other applicable laws of
the State of
California and any other applicable state to the extent required
to perform this
Agreement. The Fund further represents and warrants that
Designated Portfolio
shares will be sold in compliance with the insurance laws
of the State of
California and all applicable state securities laws or
exemptions therefrom.
Without limiting the generality of the foregoing, the Fund
represents and
warrants that it is and shall at all times remain in
compliance with the
policies and restrictions enumerated in Schedule C hereto,
as amended by
Transamerica from time to time, provided that such amendments
shall either be
(a) agreed to by the Fund and Transamerica, or (b) necessary
to comply with
applicable laws of the State of California.
2.5. The Fund represents and warrants that it is lawfully
organized and
validly existing under the laws of the State of Maryland and
that it does and
will comply in all material respects with the 1940 Act.
2.6. The Fund represents and warrant that all of their
directors, officers,
employees, investment advisers, and other individuals or
entities dealing with
the money and/or securities of the Fund are, and shall
continue to be at all
times, covered by a blanket fidelity bond or similar coverage for
the benefit of
the Fund in an amount not less than the minimal coverage
required by Section
17g-(1) of the 1940 Act or related provisions as may be
promulgated from time to
time. The aforesaid bond shall include coverage for larceny and
embezzlement and
shall be issued by a reputable bonding company.
2.7. The Fund will provide Transamerica with as much
advance notice as is
reasonably practicable of any material change affecting
the Designated
Portfolios (including, but not limited to, any material
change in its
registration statement or prospectus affecting the Designated
Portfolios and any
proxy solicitation affecting the Designated Portfolios) and
consult with
Transamerica in order to implement any such change in an
orderly manner,
recognizing the expenses of changes and attempting to minimize
such expenses by
implementing them in conjunction with regular annual updates of
the prospectuses
for the Contracts. The Fund agrees to share equitably in
expenses incurred by
Transamerica as a result of actions taken by the Fund, as
set forth in the
allocation of expenses contained in Schedule D.
2.8. Transamerica represents, assuming that the Fund
complies with Article
VI of this Agreement, that the Contracts are currently
treated as annuity
contracts under applicable provisions of the Internal Revenue
Code of 1986, as
amended, and that it will make every effort to maintain such
treatment and that
it will notify the Underwriter immediately upon having a
reasonable basis for
believing that the Contracts have ceased to be so treated or that
they might not
be so treated in the future.
2.9. The Fund represents that it is currently qualified
as a Regulated
Investment Company under Subchapter M of the Internal Revenue
Code of 1986, as
amended (the "Code") and that it will make every effort to
maintain such
qualification (under Subchapter M or any successor or similar
provision) and
that it will notify Transamerica immediately upon having a
reasonable basis for
believing that it has ceased to so qualify or that it might
not so qualify in
the future.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1(a). At least annually, the Fund, at its expense,
shall provide
Transamerica or its designee with as many copies of the
Fund's current
prospectuses for the Designated Portfolios as Transamerica
may reasonably
request for marketing purposes (including distribution to
Contract owners with
respect to new sales of a Contract). If requested by
Transamerica in lieu
thereof, the Fund shall provide such documentation (including
a final "camera
ready" copy of the new prospectuses for the Designated Portfolios
as set in type
at the Fund's expense or, at the request of Transamerica, as a
diskette or such
other form as is required by the financial printer) and other
assistance as is
reasonably necessary in order for Transamerica once each
year (or more
frequently if the prospectus for the Designated Portfolio is
amended) to have
the prospectus for the Contract and the Fund's prospectus for
the Designated
Portfolios printed together in one document (the cost of such
printing to be
born by the Fund and Transamerica in proportion to the size of
the prospectuses
for the Fund and the Contracts).
3.1(b). The Fund agrees that the prospectuses for the
Designated Portfolios
will describe only the Designated Portfolios and will not name
or describe any
other portfolios or series that may be in the Fund, and that the
Fund will bear
the cost of preparing and producing the prospectuses for
the Designated
Portfolios that are so custom tailored for use in connection with
the Contracts.
3.2. If applicable state or Federal laws or regulations
require that the
Statement of Additional Information ("SAI") for the Fund be
distributed to all
purchasers of the Contract, then the Fund shall provide
Transamerica with the
Fund's SAI or documentation thereof for the Designated
Portfolios in such
quantities and/or with expenses to be borne in accordance with
paragraph 3.1(a)
hereof.
3.3. The Fund, at its expense, shall provide
Transamerica with as many
copies of the SAI for the Designated Portfolios as may
reasonably be requested.
The Fund, at its expense, shall also provide such SAI free
of charge to any
owner of a Contract or prospective owner who requests such SAI.
3.4. The Fund, at its expense, shall provide Transamerica
with copies of
its prospectus, SAI, proxy material, reports to
shareholders and other
communications to shareholders for the Designated Portfolios in
such quantity as
Transamerica shall reasonably require for distributing to
Contract owners. If
the Contract and Fund prospectuses are printed together in one
document, the
Fund shall bear the portion of such printing expense as is
attributable to the
Fund's prospectus. If applicable SEC rules require that any
of the foregoing
Fund prospectuses, Fund SAIs, proxy materials, Fund reports to
shareholders or
other communications to shareholders be filed with the SEC, then
the Fund or its
designee shall prepare and file with the SEC such
prospectus, SAI, proxy
materials, reports to shareholders, or other communications to
shareholders in
such format as required by such applicable rules and shall
notify Transamerica
of such filing.
3.5. It is understood and agreed that, except with respect
to information
regarding Transamerica provided in writing by Transamerica,
Transamerica shall
not be responsible for the content of the prospectus or SAI for
the Designated
Portfolios. It is also understood and agreed that, except
with respect to
information regarding the Fund and provided in writing by the
Fund, the Fund
shall not be responsible for the content of the prospectus
or SAI for the
Contracts.
3.6. If and to the extent required by law Transamerica
shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Designated Portfolio shares in
accordance with
instructions received from Contract owners:
and
(iii) vote Designated Portfolio shares for which
no instruction
have been received in the same proportion
as Designated
Portfolio shares for which instructions
have been received
from Contract owners, so long as and to the
extent that the
SEC continues to interpret the 1940
Act to require
pass-through voting privileges for variable
contract owners.
Transamerica reserves the right to vote Fund
shares held in
any segregated asset account in its own
right, to the extent
permitted by law.
3.7. Participating Insurance Companies shall be
responsible for assuring
that each of their separate accounts holding shares of a
Designated Portfolio
calculates voting privileges in the manner required by the
Shared Funding
Exemptive Order. The Fund agrees to promptly notify
Transamerica of any
amendments or changes of interpretations of the Shared Funding
Exemptive Order.
3.8. The Fund will comply with all provisions of the 1940
Act requiring
voting by shareholders, and in particular the Fund will
either provide for
annual meetings (except insofar as the SEC may interpret Section
16 of the 1940
Act not to require such meetings) or, as the Fund currently
intends, comply with
Section 16(c) of the 1940 Act (although the Fund is not one
of the trusts
described in Section 16(c) of that Act) as well as with Sections
16(a) and, if
and when applicable, 16(b). Further, the Fund will act in
accordance with the
SEC's interpretation of the requirements of Section 16(a)
with respect to
periodic elections of directors and with whatever rules the
Commission may
promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
4.1. Transamerica shall furnish, or shall cause to be
furnished, to the
Fund or its designee, each piece of sales literature and
other promotional
material that Transamerica develops or uses and in which
the Fund (or a
Portfolio thereof), its investment adviser or one of its
sub-advisers or the
Underwriter for the Fund shares is named in connection with the
Contracts, at
least 10 (ten) Business Days prior to its use. No such material
shall be used if
the Fund or its designee objects to such use within 10 (ten)
Business Days after
receipt of such material.
4.2. Transamerica shall not give any information
or make any
representations or statements on behalf of the Fund or
concerning the Fund in
connection with the sale of the Contracts inconsistent with the
information or
representations contained in the registration statement or
prospectus for the
Fund shares, as such registration statement and prospectus
may be amended or
supplemented from time to time, or in reports or proxy
statements for the Fund,
or in sales literature or other promotional material approved by
the Fund or its
designee, except with the permission of the Fund.
4.3. The Fund shall furnish, or shall cause to be
furnished, to
Transamerica, each piece of sales literature and other
promotional material in
which Transamerica and/or the Account is named at least 10
(ten) Business Days
prior to its use. No such material shall be used if Transamerica
objects to such
use within 10 (ten) Business Days after receipt of
such material.
Notwithstanding the fact that Transamerica or its designee may
not initially
object to a piece of sales literature or other
promotional material,
Transamerica reserves the right to object at a later date to the
continued use
of any such sales literature or promotional material in which
Transamerica is
named, and no such material shall be used thereafter if
Transamerica or its
designee so objects.
4.4. The Fund shall not give any information or make any
representations on
behalf of Transamerica or concerning Transamerica, the Account,
or the Contracts
other than the information or representations contained in
a registration
statement or prospectus for the Contracts, as such registration
statement and
prospectus may be amended or supplemented from time to time, or
in reports for
the Account, or in sales literature or other promotional
material approved by
Transamerica or its designee, except with the permission of
Transamerica.
4.5. The Fund will provide to Transamerica at least one
complete copy of
all registration statements, prospectuses, Statements of
Additional Information,
all supplements thereto, reports, proxy statements, sales
literature and other
promotional materials, applications for exemptions, requests
for no-action
letters, and all amendments to any of the above, that relate to
the Designated
Portfolios, contemporaneously with the filing of such
document(s) with the SEC,
NASD or other regulatory authorities.
4.6. Transamerica will provide to the Fund at least one
complete copy of
all registration statements, prospectuses, Statements of
Additional Information,
all supplements thereto, reports, solicitations for voting
instructions, sales
literature and other promotional materials, applications
for exemptions,
requests for no-action letters, and all amendments to any of
the above, that
relate to the Contracts or the Account, contemporaneously
with the filing of
such document(s) with the SEC, NASD, or other regulatory
authority.
4.7. For purposes of this Article IV, the phrase "sales
literature and
other promotional material" includes, but is not limited to,
advertisements
(material published, or designed for use in, a newspaper,
magazine, or other
periodical, radio, television, telephone or tape recording,
videotape display,
signs or billboards, motion pictures, telephone directories
(other than routine
listings), electronic or other public media), sales
literature (i.e., any
written or electronic communication distributed or made
generally available to
customers or the public, including brochures, circulars,
research reports,
market letters, performance reports or summaries, form letters,
telemarketing
scripts, seminar texts, reprints or excerpts of any other
advertisement, sales
literature, or published article), educational or training
materials or other
communications distributed or made generally available to some
or all agents or
employees, and registration statements, prospectuses,
Statements of Additional
Information, supplements thereto, shareholder reports, and proxy
materials.
4.8. At the request of any party to this Agreement, each
other party will
make available to the other party's independent auditors and/or
representative
of the appropriate regulatory agencies, all records, data
and access to
operating procedures that may be reasonably requested in
connection with
compliance and regulatory requirements related to this Agreement
or any party's
obligations under this Agreement.
ARTICLE V. Fees and Expenses
5.1. The Fund shall pay no fee or other compensation to
Transamerica under
this Agreement, except that if the Fund or any Designated
Portfolio adopts and
implements a plan pursuant to Rule 12b-1 of the 1940 Act to
finance distribution
and shareholder servicing expenses, then the Underwriter may
make payments to
Transamerica or to the distributor for the Contracts if and in
amounts agreed to
by the Underwriter in writing and such payments will be made
out of existing
fees otherwise payable to the Underwriter, past profits of the
Underwriter or
other resources available to the Underwriter. No such
payments shall be made
directly by the Fund. Nothing herein shall prevent the
parties hereto from
otherwise agreeing to perform, and arrange for appropriate
compensation for,
other services relating to the Fund and/or the Account.
Transamerica shall pay
no fee or other compensation to the Fund under this Agreement,
although the
parties hereto will bear certain expenses in accordance
with Schedule D,
Articles III, V, and other provisions of this Agreement.
5.2. All expenses incident to performance by the Fund under
this Agreement
shall be paid by the Fund, as further provided in Schedule E. The
Fund shall see
to it that all shares of the Designated Portfolios are registered
and authorized
for issuance in accordance with applicable federal law and, if
and to the extent
required, in accordance with applicable state laws prior to their
sale. The Fund
shall bear the expenses for the cost of registration and
qualification of the
Fund's shares, preparation and filing of the Fund's prospectus
and registration
statement, supplements thereto, proxy materials and
reports, setting the
prospectus in type, printing prospectuses for distribution to
Contract owners,
setting in type, printing and filing the proxy materials
and reports to
shareholders (including the costs of printing a prospectus that
constitutes an
annual report), the preparation of all statements and notices
required by any
federal or state law, all taxes on the issuance or transfer
of the Fund's
shares, and the costs of distributing the Fund's
prospectuses and proxy
materials to such Contract owners and any expenses permitted
to be paid or
assumed by the Fund pursuant to a plan, if any, under Rule 12b-1
under the 1940
Act.
5.3. Transamerica shall bear the expenses of routine annual
distribution of
the Fund's prospectus to owners of Contracts issued by
Transamerica and of
distributing the Fund's proxy materials and reports to such
Contract owners;
this shall not include distribution of the Fund's prospectus with
respect to new
sales of a Contract. Transamerica shall bear all expenses
associated with the
registration, qualification, and filing of the Contracts
under applicable
federal securities and state insurance laws; the cost of
preparing, printing,
and distributing the Contract prospectus and SAI; and the
cost of preparing,
printing and distributing annual individual account statement to
Contract owners
as required by state insurance laws.
5.4. The Fund acknowledges that a principal feature of the
Contracts is the
Contract owner's ability to choose from a number of
unaffiliated mutual funds
(and portfolios or series thereof), including the
Designated Portfolios
("Unaffiliated Funds"), and to transfer the Con- tract's cash
value between
funds and portfolios. The Fund and Underwriter agree to
cooperate with
Transamerica in facilitating the operation of the Account and
the Contracts as
intended, including but not limited to cooperation in
facilitating transfers
between Unaffiliated Funds.
ARTICLE VI. Diversification and Qualification
6.1. The Fund and Underwriter represent and warrant that
the Fund will at
all times sell its shares and invest its assets in such a
manner as to ensure
that the Contracts will be treated as annuity contracts
under the Internal
Revenue Code of 1986, as amended (the "Code"), and the
regulations issued
thereunder. Without limiting the scope of the foregoing,
the Fund and
Underwriter represent and warrant that the Fund and each
Designated Portfolio
thereof will at all times comply with Section 817(h) of the
Code and Treasury
Regulation
1.817-5, as amended from time to time, and any Treasury
interpretations
thereof, relating to the diversification requirements for
variable annuity,
endowment, or life insurance contracts and any amendments or
other modifications
or successor provisions to such Section or Regulations.
The Fund and the
Underwriter agree that shares of the Designated Portfolios will
be sold only to
Participating Insurance Companies and their separate
accounts and qualified
pension and retirement plans.
6.2. No shares of any series or portfolio of the Fund
will be sold to
the general public.
6.3. The Fund and Underwriter represent and warrant that
the Fund and each
Designated Portfolio is currently qualified as a Regulated
Investment Company
under Subchapter M of the Code, and that it will maintain such
qualification
(under Subchapter M or any successor or similar provisions)
as long as this
Agreement is in effect.
6.4. The Fund or Underwriter will notify Transamerica
immediately upon
having a reasonable basis for believing that the Fund or any
Portfolio has
ceased to comply with the aforesaid Section 817(h)
diversification or Subchapter
M qualification requirements or might not so comply in the
future.
6.5. The Fund and Underwriter acknowledge that full
compliance with the
requirements referred to in Sections 6.1, 6.2, and 6.3 hereof
is absolutely
essential because any failure to meet those requirements would
result in the
Contracts not being treated as annuity contracts for
federal income tax
purposes, which would have adverse tax consequences for
Contract owners and
could also adversely affect Transamerica's corporate tax
liability. The Fund and
Underwriter also acknowledge that it is solely within their power
and control to
meet those requirements. Accordingly, without in any way
limiting the effect of
Section 8.3 hereof and without in any way limiting or
restricting any other
remedies available to Transamerica, the Underwriter will
pay all costs
associated with or arising out of any failure, or any
anticipated or reasonably
foreseeable failure, of the Fund or any Designated Portfolio
to comply with
Sections 6.1, 6.2, or 6.3 hereof, including all costs associated
with correcting
or responding to any such failure; such costs may include, but
are not limited
to, the costs involved in creating, organizing, and registering a
new investment
company as a funding medium for the Contracts and/or the
costs of obtaining
whatever regulatory authorizations are required to substitute
shares of another
investment company for those of the failed Portfolio (including
but not limited
to an order pursuant to Section 26(b) of the 1940 Act);
such costs are to
include, but are not limited to, fees and expenses of legal
counsel and other
advisors to Transamerica and any federal income taxes or tax
penalties (or "toll
charges" or exactments or amounts paid in settlement) incurred
by Transamerica
in connection with any such failure or anticipated or
reasonably foreseeable
failure.
6.6. The Fund shall provide Transamerica or its
designee with reports
certifying compliance with the aforesaid Section 817(h)
diversification and
Subchapter M qualification requirements, at times provided for
and substantially
in the form attached hereto as Schedule E; provided, however,
that providing
such reports does not relieve the Fund or Underwriter of their
responsibility
for such compliance or of their liability for any non-compliance.
6.7. The Fund and the Underwriter represent and warrant
that the Fund will
comply with the investment limitations under applicable state law
for investment
companies funding separate accounts.
ARTICLE VII. Potential Conflicts and Compliance With
Shared Funding Exemptive Order
7.1. The Board will monitor the Fund for the existence
of any material
irreconcilable conflict between the interests of the contract
owners of all
separate accounts investing in the Fund. An irreconcilable
material conflict may
arise for a variety of reasons, including: (a) an action by any
state insurance
regulatory authority; (b) a change in applicable federal or
state insurance,
tax, or securities laws or regulations, or a public ruling,
private letter
ruling, no-action or interpretative letter, or any similar
action by insurance,
tax, or securities regulatory authorities; (c) an
administrative or judicial
decision in any relevant proceeding; (d) the manner in which the
investments of
any Portfolio are being managed; (e) a difference in voting
instructions given
by variable annuity contract and variable life insurance contract
owners; or (f)
a decision by a Participating Insurance Company to
disregard the voting
instructions of contract owners. The Board shall promptly inform
Transamerica if
it determines that an irreconcilable material conflict
exists and the
implications thereof.
7.2. Transamerica will report any potential or existing
conflicts of which
it is aware to the Board. Transamerica will assist the Board in
carrying out its
responsibilities under the Shared Funding Exemptive Order,
by providing the
Board with all information reasonably necessary for the Board
to consider any
issues raised. This includes, but is not limited to, an
obligation by
Transamerica to inform the Board whenever contract owner voting
instructions are
disregarded. Such responsibilities shall be carried out by
Transamerica with a
view only to the interests of its Contract Owners.
7.3. If it is determined by a majority of the Board, or a
majority of its
directors who are not interested persons of the Fund, its
adviser or any
sub-adviser to any of the Portfolios (the "Independent
Directors"), that a
material irreconcilable conflict exists, Transamerica and
other Participating
Insurance Companies shall, at their expense and to the
extent reasonably
practicable (as determined by a majority of the Independent
Directors), take
whatever steps are necessary to remedy or eliminate the
irreconcilable material
conflict, up to and including: (1) withdrawing the assets
allocable to some or
all of the separate accounts from the Fund or any Portfolio and
reinvesting such
assets in a different investment medium, including (but not
limited to) another
Portfolio of the Fund, or submitting the question whether
such segregation
should be implemented to a vote of all affected contract
owners and, as
appropriate, segregating the assets of any appropriate group
(i.e., annuity
contract owners, life insurance contract owners, or variable
contract owners of
one or more Participating Insurance Companies) that votes
in favor of such
segregation, or offering to the affected contract owners the
option of making
such a change; and (2) establishing a new registered
management investment
company or managed separate account. Transamerica shall not be
required by this
Section 7.3 to establish a new funding medium for the Contracts
if an offer to
do so has been declined by vote of a majority of Contract
owners materially
adversely affected by the irreconcilable material conflict.
7.4. If a material irreconcilable conflict arises because
of a decision by
Transamerica to disregard contract owner voting instructions
and that decision
represents a minority position or would preclude a majority
vote, Transamerica
may be required, at the Fund's election, to withdraw the
Account's investment in
the Fund and terminate this Agreement; provided, however that
such withdrawal
and termination shall be limited to the extent required by
the foregoing
material irreconcilable conflict as determined by a majority of
the Independent
Directors. Any such withdrawal and termination must take place
within six (6)
months after the Fund gives written notice that this
provision is being
implemented, and until the end of that six month period the
Underwriter and the
Fund shall continue to accept and implement orders by
Transamerica for the
purchase (and redemption) of shares of the Fund.
7.5. If a material irreconcilable conflict arises
because a particular
state insurance regulator's decision applicable to Transamerica
conflicts with
the majority of other state regulators, then Transamerica
will withdraw the
Account's investment in the Fund and terminate this Agreement
within six months
after the Board informs Transamerica in writing that it has
determined that such
decision has created an irreconcilable material conflict;
provided, however,
that such withdrawal and termination shall be limited to the
extent required by
the foregoing material irreconcilable conflict as determined
by a majority of
the disinterested members of the Board. Until the end of the
foregoing six month
period, the Underwriter and the Fund shall continue to accept
and implement
orders by Transamerica for the purchase (and redemption) of
shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this
Agreement, a majority
of the Independent Directors shall determine whether any
proposed action
adequately remedies any irreconcilable material conflict, but
in no event will
the Fund be required to establish a new funding medium for the
Contracts.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T)
are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any
provision of the Act
or the rules promulgated thereunder with respect to mixed or
shared funding (as
defined in the Shared Funding Exemptive Order) on terms
and conditions
materially different from those contained in the Shared Funding
Exemptive Order,
then (a) the Fund and/or the Participating Insurance Companies,
as appropriate,
shall take such steps as may be necessary to comply with Rules
6e-2 and 6e-3(T),
as amended, and Rule 6e-3, as adopted, to the extent such rules
are applicable:
and (b) Sections 3.6, 3.7, 3.8, 7.1, 7.2, 7.3, 7.4, and 7.5 of
this Agreement
shall continue in effect only to the extent that terms
and conditions
substantially identical to such Sections are contained in
such Rule(s) as so
amended or adopted.
ARTICLE VIII. Indemnification
8.1. Indemnification By Transamerica
8.1(a). Transamerica agrees to indemnify and hold
harmless the Fund
and its officers and each member of its Board (collectively,
the "Indemnified
Parties" for purposes of this Section 8.1) against any and all
losses, claims,
damages, liabilities (including amounts paid in settlement
with the written
consent of Transamerica) or litigation (including legal and other
expenses), to
which the Indemnified Parties may become subject under
any statute or
regulation, at common law or otherwise, insofar as such losses,
claims, damages,
liabilities or expenses (or actions in respect thereof) or
settlements are
related to the sale or acquisition of the Fund's shares or the
Contracts and:
(i) arise out of or are based upon any untrue statements
or alleged
untrue statements of any material fact contained in
the registration
statement or
prospectus or SAI for the Contracts or contained in
the Contracts
(or any
amendment or supplement to any of the foregoing), or
arise out of
or are
based upon the omission or the alleged omission to
state therein a
material fact required to be stated therein or
necessary to make the
statements therein not misleading, provided that this
Agreement to
indemnify shall not apply as to any Indemnified Party
if such
statement or
omission or such alleged statement or omission was
made in reliance
upon and in conformity with information furnished in
writing to
Transamerica by or on behalf of the Underwriter or
Fund for use in
the
registration statement or prospectus for the
Contracts or in the
Contracts
or sales literature (or any amendment or supplement)
or otherwise
for use
in connection with the sale of the Contracts or Fund
shares; or
(ii) arise out of or as a result of statements or
representations (other
than statements or representations contained in
the registration
statement, prospectus or sales literature of the
Fund not supplied
by Transamerica or persons under its control) or
wrongful conduct of
Transamerica or persons under its control, with
respect to the sale
or distribution of the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged
untrue statement of
a material fact contained in a
registration statement,
prospectus, or sales literature of the Fund or
any amendment
thereof or supplement thereto or the omission or
alleged omission
to state therein a material fact required to be
stated therein or
necessary to make the statements therein not
misleading if such a
statement or omission was made in reliance
upon information
furnished in writing to the Fund by or on behalf
of Transamerica;
or
(iv) arise as a result of any failure by Transamerica to
provide the
services and furnish the materials under the terms of
this
Agreement; or
(v) arise out of or result from any material
breach of any
representation and/or warranty made by
Transamerica in this
Agreement or arise out of or result from any other
material breach
of this Agreement by Transamerica,
as limited by and in accordance with the provisions of Sections
8.1(b) and 8.1
(c) hereof.
8.1(b). Transamerica shall not be liable under this
indemnification
provision with respect to any losses, claims, damages,
liabilities or
litigation to which an Indemnified Party would otherwise be
subject if caused
by such Indemnified Party's willful misfeasance, bad faith, or
negligence in
the performance of such Indemnified Party's duties or by reason
of such
Indemnified Party's reckless disregard of obligations or
duties under
this Agreement or to the Fund, whichever is applicable.
8.1(c). Transamerica shall not be liable under this
indemnification
provision with respect to any claim made against an
Indemnified Party unless
such Indemnified Party shall have notified Transamerica in
writing within a
reasonable time after the summons or other first legal
process giving
information of the nature of the claim shall have been
served upon such
Indemnified Party (or after such Indemnified Party shall have
received notice of
such service on any designated agent), but failure to notify
Transamerica of any
such claim shall not relieve Transamerica from any liability
which it may have
to the Indemnified Party against whom such action is brought
otherwise than on
account of this indemnification provision. In case any such
action is brought
against the Indemnified Parties, Transamerica shall be entitled
to participate,
at its own expense, in the defense of such action. Transamerica
also shall be
entitled to assume the defense thereof, with counsel
satisfactory to the party
named in the action. After notice from Transamerica to
such party of
Transamerica's election to assume the defense thereof, the
Indemnified Party
shall bear the fees and expenses of any additional counsel
retained by it, and
Transamerica will not be liable to such party under this
Agreement for any legal
or other expenses subsequently incurred by such party
independently in
connection with the defense thereof other than
reasonable costs of
investigation.
8.1(d). The Indemnified Parties will promptly notify
Transamerica of
the commencement of any litigation or proceedings against
them in connection
with the issuance or sale of the Fund Shares or the Contracts or
the operation
of the Fund.
8.2. Indemnification by the Underwriter
8.2(a). The Underwriter agrees to indemnify and
hold harm-less
Transamerica and each of its directors and officers and each
person, if any, who
controls Transamerica within the meaning of Section 15 of
the 1933 Act
(collectively, the "Indemnified Parties" for purposes of
this Section 8.2)
against any and all losses, claims, damages, liabilities
(including amounts paid
in settlement with the written consent of the Underwriter)
or litigation
(including legal and other expenses) to which the Indemnified
Parties may become
subject under any statute or regulation, at common law or
otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or
actions in respect
thereof) or settlements are related to the sale or acquisition
of the Fund's
shares or the Contracts and:
(i) arise out of or are based upon any untrue statement or
alleged untrue
statement of any material fact contained in the
registration statement or
prospectus or SAI or sales literature of the Fund (or any
amendment or
supplement to any of the foregoing), or arise out of or are
based upon the
omission or the alleged omission to state therein a material
fact required to
be stated therein or necessary to make the statements therein
not misleading,
provided that this Agreement to indemnify shall not apply
as to any
Indemnified Party if such statement or omission or such
alleged statement or
omission was made in reliance upon and in conformity with
information fur-
nished in writing to the Underwriter or Fund by or on
behalf of
Transamerica for use in the Registration Statement or
prospectus for the
Fund or in sales literature (or any amendment or
supplement) or otherwise
for use in connection with the sale of the Contracts or
Fund shares; or
(ii) arise out of or as a result of statements or
representations (other
than statements or representations contained in
the Registration
Statement, prospectus or sales literature for the
Contracts not
supplied by the Underwriter or persons under
its control) or
wrongful conduct of the Fund or Underwriter or
persons under their
control, with respect to the sale or distribution
of the Contracts
or Fund shares; or
(iii)arise out of any untrue statement or alleged untrue
statement of a material
fact contained in a registration statement, prospectus or sales
literature cov-
ering the Contracts, or any amendment thereof or supplement
thereto, or the
omission or alleged omission to state therein a material fact
required to be
stated therein or necessary to make the statement or
statements therein not
misleading, if such statement or omission was made in
reliance upon
information furnished in writing to Transamerica by or on
behalf of the
Underwriter or Fund; or
(iv) arise as a result of any failure by the Fund or
Underwriter to
provide the services and furnish the materials
under the terms of
this Agreement (including a failure, whether
unintentional or in
good faith or otherwise, to comply with the
diversification and
other qualification requirements specified in
Article VI of this
Agreement); or
(v) arise out of or result from any material
breach of any
representation and/or warranty made by the Fund or
Underwriter in
this Agreement or arise out of or result from any
other material
breach of this Agreement by the Fund or Underwriter;
as limited by and in accordance with the provisions of
Sections 8.2(b) and
8.2(c) hereof. This indemnification is in addition to and
apart from the
responsibilities and obligations of the Underwriter
specified in Article VI
hereof.
8.2(b). The Underwriter shall not be liable under this
indemnification
provision with respect to any losses, claims, damages,
liabilities or litigation
to which an Indemnified Party would otherwise be subject by
reason of such
Indemnified Party's willful misfeasance, bad faith, or
negligence in the
performance or such Indemnified Party's duties or by reason of
such Indemnified
Party's reckless disregard of obligations and duties under this
Agreement or to
Transamerica or the Account, whichever is applicable.
8.2(c). The Underwriter shall not be liable under this
indemnification
provision with respect to any claim made against an
Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in
writing within a
reasonable time after the summons or other first legal
process giving
information of the nature of the claim shall have been
served upon such
Indemnified Party (or after such Indemnified Party shall have
received notice of
such service on any designated agent), but failure to notify the
Underwriter of
any such claim shall not relieve the Underwriter from any
liability which it may
have to the Indemnified Party against whom such action is brought
otherwise than
on account of this indemnification provision. In case any such
action is brought
against the Indemnified Parties, the Underwriter will
be entitled to
participate, at its own expense, in the defense thereof. The
Underwriter also
shall be entitled to assume the defense thereof, with counsel
satisfactory to
the party named in the action. After notice from the
Underwriter to such party
of the Underwriter's election to assume the defense thereof,
the Indemnified
Party shall bear the fees and expenses of any additional counsel
retained by it,
and the Underwriter will not be liable to such party under this
Agreement for
any legal or other expenses subsequently incurred by such party
independently in
connection with the defense thereof other than
reasonable costs of
investigation.
8.2(d). Transamerica agrees promptly to notify the
Underwriter of the
commencement of any litigation or proceedings against it or any
of its officers
or directors in connection with the issuance or sale of the
Contracts or the
operation of the Account.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the
provisions hereof
interpreted under and in accordance with the laws of the State of
California.
9.2. This Agreement shall be subject to the provisions of
the 1933, 1934
and 1940 Acts, and the rules and regulations and rulings
thereunder, including
such exemptions from those statutes, rules and regulations as the
Securities and
Exchange Commission may grant (including, but not limited to, the
Shared Funding
Exemptive Order) and the terms hereof shall be interpreted
and construed in
accordance therewith.
ARTICLE X. Termination
10.1. This Agreement shall terminate:
(a) at the option of any party, with or without cause,
with respect to
some or all Portfolios, upon one (1) year advance
written notice
delivered to the other parties; provided, however,
that such notice
shall not be given earlier than one year following
the date of this
Agreement; or (b) at the option of Transamerica by
written notice to
the other parties with respect to any
Portfolio based upon
Transamerica's determination that shares of such
Portfolio are not
reasonably available to meet the requirements of the
Contracts; or (c)
at the option of Transamerica by written notice to
the other parties
with respect to any Portfolio in the event any of
the Portfolio's
shares are not registered, issued or sold in
accordance with
applicable state and/ or federal law or such law
precludes the use of
such shares as the underlying investment media of the
Contracts issued
or to be issued by Transamerica; or (d) at the option
of the Fund in
the event that formal administrative proceedings
are instituted
against Transamerica by the National Association
of Securities
Dealers, Inc. ("NASD"), the Securities and Exchange
Commission, the
Insurance Commissioner or like official of any
state or any other
regulatory body regarding Transamerica's duties under
this Agreement
or related to the sale of the Contracts, the operation
of any Account,
or the purchase of the Fund shares, provided,
however, that the Fund
determines in its sole judgment exercised in good
faith, that any such
administrative proceedings will have a material
adverse effect upon
the ability of Transamerica to perform its
obligations under this
Agreement; or (e) at the option of Transamerica in
the event that
formal administrative proceedings are instituted
against the Fund or
Underwriter by the NASD, the Securities and Exchange
Commission, or
any state securities or insurance department or any
other regulatory
body, provided, however, that Transamerica
determines in its sole
judgment exercised in good faith, that any such
administrative
proceedings will have a material adverse effect upon
the ability of
the Fund or Underwriter to perform its
obligations under this
Agreement; or (f) at the option of Transamerica by
written notice to
the Fund and the Underwriter with respect to any
Portfolio if
Transamerica reasonably believes that the Portfolio
may fail to meet
the Section 817(h) diversification requirements or
Subchapter M
qualifications specified in Article VI hereof; or (g)
at the option of
either the Fund or the Underwriter, if (i) the Fund
or Underwriter,
respectively, shall determine, in their sole
judgement reasonably
exercised in good faith, that Transamerica has
suffered a material
adverse change in its business or financial
condition or is the
subject of material adverse publicity and that material
adverse change
or publicity will have a material adverse impact on
Transamerica's
ability to perform its obligations under this
Agreement, (ii) the Fund
or Underwriter notifies Transamerica of that
determination and its
intent to terminate this Agreement, and (iii) after
considering the
actions taken by Transamerica and any other changes in
circumstances
since the giving of such a notice, the determination
of the Fund or
Underwriter shall continue on the sixtieth (60th)
day following the
giving of that notice, which sixtieth day shall be the
effective date
of termination; or (h) at the option of
Transamerica, if (i)
Transamerica shall determine, in its sole
judgement reasonably
exercised in good faith, that either the Fund or the
Underwriter have
suffered a material adverse change in their business
or financial
condition or is the subject of material adverse
publicity and that
material adverse change or publicity will have a
material adverse
impact on the Fund's or Underwriter's ability
to perform its
obligations under this Agreement, (ii) Transamerica
notifies the Fund
or Underwriter, as appropriate, of that determination
and its intent
to terminate this Agreement, and (iii) after
considering the actions
taken by the Fund or Underwriter and any
other changes in
circumstances since the giving of such a notice, the
determination of
Transamerica shall continue on the sixtieth (60th)
day following the
giving of that notice, which sixtieth day shall be the
effective date
of termination; or (i) at the option of any party to
this Agreement,
upon another party's material breach of any
provision of this
Agreement; or (j) upon assignment of this Agreement,
unless made with
the written consent of the parties hereto; or (k)
at the option of
Transamerica or the Fund by written notice to the
other party upon a
determination by the Fund's Board that a material
irreconcilable
conflict exists among the interests of (i) all
contract owners of all
separate accounts investing in the Fund or (ii) the
interests of the
Participating Insurance Companies; or (l) at
the option of
Transamerica by written notice to the Fund or the
Underwriter upon the
sale, acquisition or change of control of the
Underwriter.
10.2. Notice Requirement. No termination of this
Agreement shall be
effective unless and until the party terminating this
Agreement gives prior
written notice to all other parties of its intent to
terminate, which notice
shall set forth the basis for the termination.
10.3. Effect of Termination. Notwithstanding any
termination of this
Agreement, the Fund and the Underwriter shall, at the option of
Transamerica,
continue to make available additional shares of the Fund for
all Contracts in
effect on the effective date of termination of this
Agreement (hereinafter
referred to as "Existing Contracts") pursuant to the terms and
conditions of
this Agreement. Specifically, without limitation, the owners
of the Existing
Contracts shall be permitted to reallocate investments in
the Fund, redeem
investments in the Fund and/or invest in the Fund upon the
making of additional
purchase payments under the Existing Contracts. The parties
agree that this
Section 10.3 shall not apply to any terminations under
Article VII and the
effect of such Article VII terminations shall be governed by
Article VII of this
Agreement.
10.4. Surviving Provisions. Notwithstanding any
termination of this
Agreement, each party's obligations under Article VIII to
indemnify other
parties shall survive and not be affected by any termination of
this Agreement.
In addition, with respect to Existing Contracts, all
provisions of this
Agreement shall also survive and not be affected by any
termination of this
Agreement.
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by
registered or certified
mail or by overnight mail sent through a nationally-recognized
delivery service
to the other party at the address of such party set forth below
or at such other
address as such party may from time to time specify in
writing to the other
party.
If to the Fund:
Transamerica Variable Insurance Fund, Inc.
Transamerica Center
1150 South Olive Street
Los Angeles, CA 90015
Attention: General Counsel
If to Transamerica:
Transamerica Life Insurance Company of New York
Transamerica Center
1150 South Olive Street
Los Angeles, CA 90015
Attention: President, Living Benefits Division
If to the Underwriter:
Transamerica Securities Sales Corporation, Inc.
Transamerica Center
1150 South Olive Street
Los Angeles, CA 90015
Attention: General Counsel
ARTICLE XII. Miscellaneous
12.1. Subject to the requirements of legal process
and regulatory
authority, each party hereto shall treat as confidential the
names and addresses
of the owners of the Contracts and all information reasonably
identified as
confidential in writing by any other party hereto and, except
as permitted by
this Agreement, shall not disclose, disseminate or utilize
such names and
addresses and other confidential information without the express
written consent
of the affected party until such time as such information
may come into the
public domain. Without limiting the foregoing, no party hereto
shall disclose
any information that another party reasonably considers to be
proprietary.
12.2. The captions 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.
12.3. This Agreement may be executed simultaneously in
two or more
counterparts, each of which taken together shall constitute
one and the same
instrument.
12.4. If any provision of this Agreement shall be held or
made invalid by a
court decision, statute, rule or otherwise, the remainder of the
Agreement shall
not be affected thereby.
12.5. Each party hereto shall cooperate with each other
party and all
appropriate governmental authorities (including without
limitation the
Securities and Exchange Commission, the NASD and state insurance
regulators) and
shall permit such authorities reasonable access to its books
and records in
connection with any investigation or inquiry relating to this
Agreement or the
transactions contemplated hereby. Notwithstanding the
generality of the
foregoing, each party hereto further agrees to furnish the
California Insurance
Commissioner with any information or reports in connection
with services
provided under this Agreement which such Commissioner may
request in order to
ascertain whether the variable annuity operations of
Transamerica are being
conducted in a manner consistent with the California
Variable Annuity
Regulations and any other applicable law or regulations.
12.6. 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.
12.7. This Agreement or any of the rights and obligations
hereunder may not
be assigned by any party without the prior written consent
of all parties
hereto.
12.8. The Schedules attached hereto, as modified from
time to time, are
incorporated herein by reference and are part of this Agreement.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to
be executed in its name and on its behalf by its duly authorized
representative
and its seal to be hereunder affixed hereto as of the date
specified below.
TRANSAMERICA OCCIDENTAL LIFE INSURANCE
COMPANY
By its authorized officer
SEAL By:
Title:
Date:
TRANSAMERICA VARIABLE INSURANCE FUND, INC.:
By its authorized officer,
SEAL By:
Title:
Date:
TRANSAMERICA SECURITIES SALES CORPORATION:
By its authorized officer,
SEAL By:
Title:
Date:
<PAGE>
SCHEDULE A
Contracts Form Numbers
<PAGE>
SCHEDULE B
Designated Portfolios
<PAGE>
SCHEDULE C
Certain Investment Policies and Restrictions
Imposed by the
California Department of Insurance
Pursuant to Section 2.4 hereof, the Fund represents and
warrants that it is
and shall all times remain in compliance with the following
investment policies
and restrictions. THESE ARE IN ADDITION TO other related
obligations of the
Fund, including the general obligation to comply with all
applicable laws and
regulation, including but not limited to California
insurance laws and
regulations, the Investment Company Act of 1940, and other
applicable insurance
and securities laws.
[Note: The following are derived from a questionnaire used by
the California
Department of Insurance as part of an insurance company's
application for
qualification to transact a variable annuity business. The
parenthetical
references below are to question numbers in that questionnaire.]
The Fund represents and warrants that:
1. All repurchase agreements will be transacted only with
entities meeting
specific credit and solvency standards administered and
verified by the
Underwriter (46(a)).
2. All repurchase transactions will be executed pursuant to a
comprehensive
master repurchase agreement setting forth the terms and
conditions of the
transaction, and having the incidents of a valid promissory note
in favor of the
Fund (46(b)).
3. A valid, binding security interest in favor of the Fund or
portfolio thereof
will be created and perfected in all collateral securing
such repurchase
agreements (46(c)).
4. All such repurchase agreements will be secured at all times
by collateral
consisting of liquid assets having a market value of not less
than 102% of the
cash or assets transferred to the other party (46(d)).
5. All securities lending activities will be entered into
only with entities
meeting specific credit and solvency standards administered and
verified by the
Underwriter (47).
6. All investments in instruments or certificates of any sort
issued by the U.S.
Office of a bank or other savings institution domiciled in a
foreign nation, or
a foreign branch of a U.S. savings institution, will be
instruments or
certificates payable in the United States and in U.S.
dollars (48).
7. All investments of the Fund which possess a
readily-available market value
will be valued either at their market value on the date of
valuation, or at
amortized cost if it approximates market value within the limits
and constraints
imposed by the U.S. Securities and Exchange Commission (49).
8. All investments of the Fund which lack a readily-available
market will be
valued according to specific, objective methods or
procedures set forth in
writing (50).
9. The investment manager of each portfolio or series of the
Fund possesses
substantial expertise and experience as an investment manager
or advisor of a
portfolio consisting of asset and investments of the same type as
he or she will
manage in regard to the portfolio or series. (If experience is
less than three
years, please provide resume of investment manager; note that in
this case, the
Company must provide notarized certifications that it has fully
investigated and
is satisfied with the qualifications, background, and
expertise of the
investment manager.) (52).
10. At no time during the past ten years have the managers of
any portfolio or
series resigned to avoid dismissal or been dismissed or requested
to resign from
any position involving investment duties, on account of
violation of any law,
rule or ethical standard relating to insurance, annuities, or
securities (53).
11. The investment advisory agreements concerning the Fund's
operations provide
in substance that notwithstanding any other provisions of the
agreement, it is
understood and agreed that the Fund shall retain the ultimate
responsibility for
and control of all investments made pursuant to the agreement,
and reserve the
right to direct, approve or disapprove any action taken on
its behalf by the
investment advisor (54).
12. Every custodian holding securities or other assets of
the Fund is an
institution permitted to serve in such capacity by the Investment
Company Act of
1940 and/or reviewed and approved for such purpose by the U.S.
Securities and
Exchange Commission (55).
13. The Fund refuses to employ in any material connection with
the handling of
assets of the Fund, any person who:
(a) In the last 10 years has been convicted of any felony or
misdemeanor arising
out of conduct involving embezzlement, fraudulent
conversion, or
misappropriation of funds or securities, or involving
violations of Title 18,
United States Code 1341, 1342, or 1343 (58(a)).
(b) Within the last 10 years has been found by any-state
regulatory authority to
have violated, or has acknowledged violation of, any
provision of any state
insurance law involving fraud, deceit or knowing
misrepresentation (59(b)).
(c) Within the last 10 years has been found by any federal or
state regulatory
authorities to have violated, or have acknowledged violation of,
any provisions
of federal or state securities laws involving fraud,
deceit, or knowing
misrepresentation (58(c)).
14. The Fund will make inquiries and attempt to determine
that no persons,
firms, or employees of firms which supply
consulting, investment,
administrative, custodial or other services affecting the
administration of the
Company's variable annuity business (including such services for
the Fund), have
been subject to the sanctions described in the preceding
representation (59).
15. The Fund will seek to prevent its officers and Board members,
and officers,
directors and portfolio managers of the investment advisor,
from receiving,
directly or indirectly, any commission, or any other
compensation with respect
to the purchase or sale of assets of the Fund (61).
16. No officer, director, trustee, or member of any governing
board or body of
the Fund will receive directly or indirectly any
commissions or any other
compensation contingent upon the writing, issuance, sale,
procurement of
application for, or renewal, of any variable annuity contract
(62).
17. All service agreements affecting the administration of the
Fund allow the
Fund to terminate such contracts without payment of any
penalty, forfeiture,
compulsory buyout amount, or performance of any other
obligation which could
deter termination (65).
18. All service agreements affecting the administration of the
Fund afford the
Fund a right to cancel the contract and discharge the servicing
entity or person
in the event such entity or person fails to perform in a
satisfactory manner
(66).
19. All service agreements affecting the administration of the
Fund provide that
the Fund shall own and control all the pertinent records
pertaining to its
operations (67).
20. All service agreements affecting the administration of the
Fund provide that
the Fund shall have the right to inspect, audit and copy all
records pertaining
to performance of services under the agreement (68).
<PAGE>
SCHEDULE D
Expenses
ITEM
FUNCTION
RESPONSIBLE
PARTY
PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION
MARKETING
1. Prospectus
2. Initial Sales
Printing
Supply copies of prospectus described in Parts 3.1 and 3.3 in
numbers equal to
Transamerica's reasonable request.
If requested by Transamerica in lieu thereof such
documentation and other
assistance as is reasonably necessary for Transamerica to have
the prospectus
for the Contracts and the prospectus for the Fund printed
together in one
document.
Distribution
Printing
Distribution
EXISTING OWNERS
1. Annual
Updates
2. Interim
Updates
Printing
Distribution
Printing & Distribution
(a) If required by Fund or Adviser or Distributor (b)
If required by
Transamerica (c) If required by other participating insurance
company (PIC)
PROXY MATERIALS OF
THE FUND
Printing and Distribution
(a) If required by law
(b) If required by Transamerica
(c) If required by other participating insurance company
(d) If required by Fund or Adviser or Distributor
SHAREHOLDER REPORTS
Printing
Distribution
OTHER COMMUNICATIONS
WITH SHAREHOLDERS OF
THE FUND
Printing & Distribution
(a) If required by law
(b) If required by Transamerica
(c) If required by other participating insurance company
(d) If required by Fund or Adviser or Distributor
OPERATIONS OF FUND
All operations and related expenses, including the cost of
registration and
qualification of the Fund's shares, preparation and filing
of the Fund's
prospectus and registration statement, proxy materials and
reports, the
preparation of all statements and notices required by any
federal or state law
and all taxes on the issuance or transfer of the Fund's shares,
and all costs of
management of the business affairs of the Fund
<PAGE>
SCHEDULE E
Reports per Section 6.6
With regard to the reports relating to the
quarterly testing of
compliance with the requirement of Section 817(h) and
Subchapter M under the
Internal Revenue Code (the "Code") and the regulations
thereunder, the Fund
shall provide within twenty (20) Business Days of the close
of the calendar
quarter a report [in a form to be attached] regarding the
status under such
sections of the Code of the Designated Portfolios, and
if necessary,
identification of any remedial action to be taken to remedy
non-compliance.
With regard to the reports relating to the
year-end testing of
compliance with the requirements of Subchapter M of the
Code, referred to
hereinafter as "RIC status," the Fund will provide the reports
on the following
basis: (i) the last quarter's quarterly reports can be
supplied within the
20-day period, and (ii) the year-end report [in a form to be
attached] will be
provided 45 days after the end of the calendar year, but prior
thereto, the Fund
will provide the additional interim and supplemental reports,
described below.
The additional reports are as follows:
1. A report in the usual reporting format and
content, as of
November 30, of each future fiscal year. The
report will be
provided under cover of a letter from
the Underwriter
stating that the Fund is in full
compliance with the
requirements of Section 817(h) and Subchapter
M of the Code.
Assuming such satisfactory report, the Fund
will not provide
any additional interim reports. The report
will be delivered
by facsimile by the twentieth day of
December.
2.In the alternative, if a problem, as defined below, is
identified in the
November report or its accompanying transmittal letter,
additional interim
reports, on a weekly basis, starting on the 15th of December
and through the
30th of December, also will be supplied ("additional interim
reports"). The
additional interim reports will not follow the format of the
regular reports,
but will specifically address the problem identified in the
November 30 report.
If any interim report, thereafter, memorialize the cure of the
problem,
subsequent additional reports will not be required.
With regard to delivery of the additional
reports, they will be
transmitted by facsimile on the next Business Day,
subject to the
following schedule of special dates: if the 15th
of December is a
Saturday, the required report date will be
accelerated to the 14th
of December; if the 15th of December is a Sunday, the
report will be
transmitted on the 16th of December.
3. A problem with regard to RIC status is defined as any
violation of the
following standards, as referenced to the applicable
sections of the Code:
(a) Less than ninety-five percent of gross income is
derived from sources
of income specified in Section 851(b)(2);
(b) Twenty-five percent or greater gross income is derived
from the sale
or disposition of assets specified in Section
851(b)(3);
(c) Fifty-five percent or less of the value of total assets
consists of assets
specified in Section 851(b)(4)(A); and
(d) Twenty percent or more of the value of total
assets is
invested in the securities of one issuer, as
that
requirement is set forth in Section 851(b)(4)(B).
<PAGE>
<PAGE>
Exhibit 10(a) Consent of Counsel
SUTHERLAND, ASBILL & BRENNAN
1275 PENNSYLVANIA AVENUE, N.W.
WASHINGTON, D.C. 20004
April 28, 1998
Transamerica Life Insurance COmpany of New YOrk
100 Manhattanville Road
Purchase, NY 10577
We hereby consent to the referebce to our name under the caption "Legal Matters"
in the prospectus filed as part of Post-Effective Amendment No. 7 to the Form
N-4 registration statement for Separate Account VA-2LNY (File NO. 333-55152).
In giving this consent we do not admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act of 1933.
Sincerely,
SUTHERLAND, ASBILL & BRENNAN LLP
/s/ Frederick R. Bellamy
<PAGE>
Exhibit 10(b) Consent of Independent Auditors
We consent to the reference to our firm under the caption "Accountants" in
Post-Effective Amendment No. 7 under the Securities Act of 1933 and
Post-Effective Amendment No. 8 under the Investment Company Act of 1940 to the
Registration Statement (Form N-4 No. 33-55152) and related Prospectus and
Statement of Additional Information of Separate Account VA-2LNY of Transamerica
Life Insurance Company of New York and to the use of our report dated January
23, 1998 with respect to the financial statements of Transamerica Life Insurance
Company of New York and our report dated April 13, 1998 with respect to the
financial statements of Separate Account VA-2LNY, both included in the Statement
of Additional Information.
/s/Ernst & Young LLP
Los Angeles, California
April 28, 1998
<PAGE>
Exhibit 15 Powers of ATtorney
POWER OF ATTORNEY
The undersigned director of Transamerica Life Insurance Company of New
York, a New York corporation (the "Company"), hereby constitutes and appoints
Aldo Davanzo, James W. Dederer, David M. Goldstein, David E. Gooding, and
William M. Hurst and each of them (with full power to each of them to act
alone), his true and lawful attorney-in-fact and agent, with full power of
substitution to each, for him and on his behalf and in his name, place and
stead, to execute and file any of the documents referred to below relating to
registrations under the Securities Act of 1933 and under the Investment Company
Act of 1940 with respect to any life insurance and annuity policies:
registration statements on any form or forms under the Securities Act of 1933
and under the Investment Company Act of 1940, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his or their substitutes being empowered to act with or without the others
or other, and to have full power and authority to do or cause to be done in the
name and on behalf of the undersigned each and every act and thing requisite and
necessary or appropriate with respect thereto to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as the undersigned might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may do or cause to
be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this
20th day of March, 1998.
------------------------------
Robert Abeles
<PAGE>
POWER OF ATTORNEY
The undersigned director of Transamerica Life Insurance Company of New
York, a New York corporation (the "Company"), hereby constitutes and appoints
Aldo Davanzo, James W. Dederer, David M. Goldstein, David E. Gooding, and
William M. Hurst and each of them (with full power to each of them to act
alone), his true and lawful attorney-in-fact and agent, with full power of
substitution to each, for him and on his behalf and in his name, place and
stead, to execute and file any of the documents referred to below relating to
registrations under the Securities Act of 1933 and under the Investment Company
Act of 1940 with respect to any life insurance and annuity policies:
registration statements on any form or forms under the Securities Act of 1933
and under the Investment Company Act of 1940, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his or their substitutes being empowered to act with or without the others
or other, and to have full power and authority to do or cause to be done in the
name and on behalf of the undersigned each and every act and thing requisite and
necessary or appropriate with respect thereto to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as the undersigned might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may do or cause to
be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this
20th day of March, 1998.
------------------------------
Thomas J. Cusack
<PAGE>
POWER OF ATTORNEY
The undersigned director of Transamerica Life Insurance Company of New
York, a New York corporation (the "Company"), hereby constitutes and appoints
Aldo Davanzo, James W. Dederer, David M. Goldstein, David E. Gooding, and
William M. Hurst and each of them (with full power to each of them to act
alone), his true and lawful attorney-in-fact and agent, with full power of
substitution to each, for him and on his behalf and in his name, place and
stead, to execute and file any of the documents referred to below relating to
registrations under the Securities Act of 1933 and under the Investment Company
Act of 1940 with respect to any life insurance and annuity policies:
registration statements on any form or forms under the Securities Act of 1933
and under the Investment Company Act of 1940, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his or their substitutes being empowered to act with or without the others
or other, and to have full power and authority to do or cause to be done in the
name and on behalf of the undersigned each and every act and thing requisite and
necessary or appropriate with respect thereto to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as the undersigned might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may do or cause to
be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this
20th day of March, 1998.
------------------------------
James W. Dederer
<PAGE>
POWER OF ATTORNEY
The undersigned director of Transamerica Life Insurance Company of New
York, a New York corporation (the "Company"), hereby constitutes and appoints
Aldo Davanzo, James W. Dederer, David M. Goldstein, David E. Gooding, and
William M. Hurst and each of them (with full power to each of them to act
alone), his true and lawful attorney-in-fact and agent, with full power of
substitution to each, for him and on his behalf and in his name, place and
stead, to execute and file any of the documents referred to below relating to
registrations under the Securities Act of 1933 and under the Investment Company
Act of 1940 with respect to any life insurance and annuity policies:
registration statements on any form or forms under the Securities Act of 1933
and under the Investment Company Act of 1940, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his or their substitutes being empowered to act with or without the others
or other, and to have full power and authority to do or cause to be done in the
name and on behalf of the undersigned each and every act and thing requisite and
necessary or appropriate with respect thereto to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as the undersigned might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may do or cause to
be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this
20th day of March, 1998.
------------------------------
Marc C. Abrahms
<PAGE>
POWER OF ATTORNEY
The undersigned director of Transamerica Life Insurance Company of New
York, a New York corporation (the "Company"), hereby constitutes and appoints
Aldo Davanzo, James W. Dederer, David M. Goldstein, David E. Gooding, and
William M. Hurst and each of them (with full power to each of them to act
alone), his true and lawful attorney-in-fact and agent, with full power of
substitution to each, for him and on his behalf and in his name, place and
stead, to execute and file any of the documents referred to below relating to
registrations under the Securities Act of 1933 and under the Investment Company
Act of 1940 with respect to any life insurance and annuity policies:
registration statements on any form or forms under the Securities Act of 1933
and under the Investment Company Act of 1940, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his or their substitutes being empowered to act with or without the others
or other, and to have full power and authority to do or cause to be done in the
name and on behalf of the undersigned each and every act and thing requisite and
necessary or appropriate with respect thereto to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as the undersigned might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may do or cause to
be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this
20th day of March, 1998.
------------------------------
David E. Gooding
<PAGE>
POWER OF ATTORNEY
The undersigned director of Transamerica Life Insurance Company of New
York, a New York corporation (the "Company"), hereby constitutes and appoints
Aldo Davanzo, James W. Dederer, David M. Goldstein, David E. Gooding, and
William M. Hurst and each of them (with full power to each of them to act
alone), his true and lawful attorney-in-fact and agent, with full power of
substitution to each, for him and on his behalf and in his name, place and
stead, to execute and file any of the documents referred to below relating to
registrations under the Securities Act of 1933 and under the Investment Company
Act of 1940 with respect to any life insurance and annuity policies:
registration statements on any form or forms under the Securities Act of 1933
and under the Investment Company Act of 1940, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his or their substitutes being empowered to act with or without the others
or other, and to have full power and authority to do or cause to be done in the
name and on behalf of the undersigned each and every act and thing requisite and
necessary or appropriate with respect thereto to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as the undersigned might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may do or cause to
be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this
20th day of March, 1998.
------------------------------
James T. Byrne, Jr.
<PAGE>
POWER OF ATTORNEY
The undersigned director of Transamerica Life Insurance Company of New
York, a New York corporation (the "Company"), hereby constitutes and appoints
Aldo Davanzo, James W. Dederer, David M. Goldstein, David E. Gooding, and
William M. Hurst and each of them (with full power to each of them to act
alone), his true and lawful attorney-in-fact and agent, with full power of
substitution to each, for him and on his behalf and in his name, place and
stead, to execute and file any of the documents referred to below relating to
registrations under the Securities Act of 1933 and under the Investment Company
Act of 1940 with respect to any life insurance and annuity policies:
registration statements on any form or forms under the Securities Act of 1933
and under the Investment Company Act of 1940, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his or their substitutes being empowered to act with or without the others
or other, and to have full power and authority to do or cause to be done in the
name and on behalf of the undersigned each and every act and thing requisite and
necessary or appropriate with respect thereto to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as the undersigned might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may do or cause to
be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this
20th day of March, 1998.
------------------------------
Alan T. Cunningham
<PAGE>
POWER OF ATTORNEY
The undersigned director of Transamerica Life Insurance Company of New
York, a New York corporation (the "Company"), hereby constitutes and appoints
Aldo Davanzo, James W. Dederer, David M. Goldstein, David E. Gooding, and
William M. Hurst and each of them (with full power to each of them to act
alone), his true and lawful attorney-in-fact and agent, with full power of
substitution to each, for him and on his behalf and in his name, place and
stead, to execute and file any of the documents referred to below relating to
registrations under the Securities Act of 1933 and under the Investment Company
Act of 1940 with respect to any life insurance and annuity policies:
registration statements on any form or forms under the Securities Act of 1933
and under the Investment Company Act of 1940, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his or their substitutes being empowered to act with or without the others
or other, and to have full power and authority to do or cause to be done in the
name and on behalf of the undersigned each and every act and thing requisite and
necessary or appropriate with respect thereto to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as the undersigned might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may do or cause to
be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this
20th day of March, 1998.
------------------------------
John A. Fibiger
<PAGE>
POWER OF ATTORNEY
The undersigned director of Transamerica Life Insurance Company of New
York, a New York corporation (the "Company"), hereby constitutes and appoints
Aldo Davanzo, James W. Dederer, David M. Goldstein, David E. Gooding, and
William M. Hurst and each of them (with full power to each of them to act
alone), his true and lawful attorney-in-fact and agent, with full power of
substitution to each, for him and on his behalf and in his name, place and
stead, to execute and file any of the documents referred to below relating to
registrations under the Securities Act of 1933 and under the Investment Company
Act of 1940 with respect to any life insurance and annuity policies:
registration statements on any form or forms under the Securities Act of 1933
and under the Investment Company Act of 1940, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his or their substitutes being empowered to act with or without the others
or other, and to have full power and authority to do or cause to be done in the
name and on behalf of the undersigned each and every act and thing requisite and
necessary or appropriate with respect thereto to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as the undersigned might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may do or cause to
be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this
20th day of March, 1998.
------------------------------
Allan D. Greenberg
<PAGE>
POWER OF ATTORNEY
The undersigned director of Transamerica Life Insurance Company of New
York, a New York corporation (the "Company"), hereby constitutes and appoints
Aldo Davanzo, James W. Dederer, David M. Goldstein, David E. Gooding, and
William M. Hurst and each of them (with full power to each of them to act
alone), his true and lawful attorney-in-fact and agent, with full power of
substitution to each, for him and on his behalf and in his name, place and
stead, to execute and file any of the documents referred to below relating to
registrations under the Securities Act of 1933 and under the Investment Company
Act of 1940 with respect to any life insurance and annuity policies:
registration statements on any form or forms under the Securities Act of 1933
and under the Investment Company Act of 1940, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his or their substitutes being empowered to act with or without the others
or other, and to have full power and authority to do or cause to be done in the
name and on behalf of the undersigned each and every act and thing requisite and
necessary or appropriate with respect thereto to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as the undersigned might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may do or cause to
be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this
20th day of March, 1998.
------------------------------
James Inzerillo
<PAGE>
POWER OF ATTORNEY
The undersigned director of Transamerica Life Insurance Company of New
York, a New York corporation (the "Company"), hereby constitutes and appoints
Aldo Davanzo, James W. Dederer, David M. Goldstein, David E. Gooding, and
William M. Hurst and each of them (with full power to each of them to act
alone), his true and lawful attorney-in-fact and agent, with full power of
substitution to each, for him and on his behalf and in his name, place and
stead, to execute and file any of the documents referred to below relating to
registrations under the Securities Act of 1933 and under the Investment Company
Act of 1940 with respect to any life insurance and annuity policies:
registration statements on any form or forms under the Securities Act of 1933
and under the Investment Company Act of 1940, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his or their substitutes being empowered to act with or without the others
or other, and to have full power and authority to do or cause to be done in the
name and on behalf of the undersigned each and every act and thing requisite and
necessary or appropriate with respect thereto to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as the undersigned might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may do or cause to
be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this
20th day of March, 1998.
------------------------------
Daniel E. Jund
<PAGE>
POWER OF ATTORNEY
The undersigned director of Transamerica Life Insurance Company of New
York, a New York corporation (the "Company"), hereby constitutes and appoints
Aldo Davanzo, James W. Dederer, David M. Goldstein, David E. Gooding, and
William M. Hurst and each of them (with full power to each of them to act
alone), his true and lawful attorney-in-fact and agent, with full power of
substitution to each, for him and on his behalf and in his name, place and
stead, to execute and file any of the documents referred to below relating to
registrations under the Securities Act of 1933 and under the Investment Company
Act of 1940 with respect to any life insurance and annuity policies:
registration statements on any form or forms under the Securities Act of 1933
and under the Investment Company Act of 1940, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his or their substitutes being empowered to act with or without the others
or other, and to have full power and authority to do or cause to be done in the
name and on behalf of the undersigned each and every act and thing requisite and
necessary or appropriate with respect thereto to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as the undersigned might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may do or cause to
be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this
20th day of March, 1998.
------------------------------
Nooruddin Veerjee
<PAGE>
POWER OF ATTORNEY
The undersigned director of Transamerica Life Insurance Company of New
York, a New York corporation (the "Company"), hereby constitutes and appoints
Aldo Davanzo, James W. Dederer, David M. Goldstein, David E. Gooding, and
William M. Hurst and each of them (with full power to each of them to act
alone), his true and lawful attorney-in-fact and agent, with full power of
substitution to each, for him and on his behalf and in his name, place and
stead, to execute and file any of the documents referred to below relating to
registrations under the Securities Act of 1933 and under the Investment Company
Act of 1940 with respect to any life insurance and annuity policies:
registration statements on any form or forms under the Securities Act of 1933
and under the Investment Company Act of 1940, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his or their substitutes being empowered to act with or without the others
or other, and to have full power and authority to do or cause to be done in the
name and on behalf of the undersigned each and every act and thing requisite and
necessary or appropriate with respect thereto to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as the undersigned might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may do or cause to
be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this
20th day of March, 1998.
------------------------------
John A. Paganelli
<PAGE>
POWER OF ATTORNEY
The undersigned director of Transamerica Life Insurance Company of New
York, a New York corporation (the "Company"), hereby constitutes and appoints
Aldo Davanzo, James W. Dederer, David M. Goldstein, David E. Gooding, and
William M. Hurst and each of them (with full power to each of them to act
alone), his true and lawful attorney-in-fact and agent, with full power of
substitution to each, for him and on his behalf and in his name, place and
stead, to execute and file any of the documents referred to below relating to
registrations under the Securities Act of 1933 and under the Investment Company
Act of 1940 with respect to any life insurance and annuity policies:
registration statements on any form or forms under the Securities Act of 1933
and under the Investment Company Act of 1940, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his or their substitutes being empowered to act with or without the others
or other, and to have full power and authority to do or cause to be done in the
name and on behalf of the undersigned each and every act and thing requisite and
necessary or appropriate with respect thereto to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as the undersigned might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may do or cause to
be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this
20th day of March, 1998.
------------------------------
James B. Roszak
