<PAGE>
As filed with the Securities and Exchange Commission on December 21, 2000
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. 12 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 13 [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:
<PAGE>
James W. Dederer, Esquire Frederick R. Bellamy, Esquire
Chairman of the Board, General Counsel and Sutherland, Asbill & Brennan L.L.P.
Corporate Secretary 1275 Pennsylvania Avenue, N.W.
Transamerica Life Insurance Company of New York Washington, D.C. 20004-2404
100 Manhatten 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 this filing pursuant to paragraph (b)
[X] on January 22, 2001 pursuant to paragraph (b)
[_] 60 days after filing pursuant to paragraph (a) (i)
[_] on pursuant to paragraph (a) (i)
If appropriate, check the following box:
[] this Post-Effective Amendment designates a
new effective date for a previously filed
Post-Effective Amendment.
<PAGE>
PROFILE of The
DREYFUS/TRANSAMERICA
TRIPLE ADVANTAGE(R)
VARIABLE ANNUITY
Issued By
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
January 22, 2001
This profile is a summary of some of the more important points that you should
know and consider before purchasing a certificate. The certificate is more
fully described in the full prospectus which accompanies this profile. Please
read the prospectus carefully.
1. The Annuity Certificate. The Dreyfus/Transamerica Triple Advantage(R)
("certificate") is an annuity certificate or a contract between you and
Transamerica Life Insurance Company of New York. In the certificate you can
invest in your choice of 27 sub-accounts corresponding to 27 funds
("portfolios") in the variable account and the fixed account. You could gain
or lose money you invest in the portfolios.
The certificate 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 certificate, 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 we 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 us. 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 Certificate. Generally, you must invest at least $5,000 to
purchase a certificate, 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 certificate during the free look
period explained in item 10 on page 5 of this profile.
The Dreyfus/Transamerica Triple Advantage(R) 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 certificate for short-term
purposes or if you cannot take the risk of losing some of your investment.
There are various additional fees and charges associated with variable
annuities. You should consider whether the features and benefits unique to
variable annuities, such as the opportunity for lifetime payments, are
appropriate for your needs. Variable annuities also provide tax-deferral. The
tax-deferral features of variable annuities are unnecessary when purchased to
fund a qualified plan.
1
<PAGE>
4. Investment Options -- VARIABLE ACCOUNT: You can invest in any of the sub-
accounts corresponding to the following portfolios:
<TABLE>
<S> <C>
Appreciation(/1/) -- Service Class Core Bond -- Service Class
-------------------------------------------------------------------------------
Balanced -- Service Class Core Value -- Service Class
-------------------------------------------------------------------------------
Disciplined Stock -- Service Class Emerging Leaders -- Service Class
-------------------------------------------------------------------------------
Growth and Income -- Service Class Emerging Markets -- Service Class
-------------------------------------------------------------------------------
International Equity -- Service
Class European Equity -- Service Class
-------------------------------------------------------------------------------
International Value -- Service
Class Founders Discovery -- Service Class
-------------------------------------------------------------------------------
Limited Term High Income -- Service
Class Founders Growth -- Service Class
-------------------------------------------------------------------------------
Founders International Equity -- Service
Money Market Class
-------------------------------------------------------------------------------
Quality Bond -- Service Class Founders Passport -- Service Class
-------------------------------------------------------------------------------
Small Cap -- Service Class Japan -- Service Class
-------------------------------------------------------------------------------
Small Company Stock -- Service
Class MidCap Stock -- Service Class
-------------------------------------------------------------------------------
Special Value -- Service Class Technology Growth -- Service Class
-------------------------------------------------------------------------------
Stock Index -- Service Class Transamerica VIF Growth
-------------------------------------------------------------------------------
Socially Responsible Growth --
Service Class
</TABLE>
(1) Formerly known as Capital Appreciation.
These portfolios are described in their own prospectuses. You can earn or lose
money in any of these portfolios. All portfolios may not be available in all
states.
FIXED ACCOUNT: In most states, you can also invest in a fixed account option,
where we guarantee the principal invested plus at least 3% annual interest.
5. Expenses. The contract provides many benefits and features that you do not
get with a regular mutual fund. It costs us money to provide these benefits,
so there are charges in connection with the contract. 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 contract year we deduct an account
fee of no more than $30 (there is no fee if your account value is over
$50,000). We deduct insurance and administrative charges of 1.40% per year
against your average daily value in the variable account and a $10 fee for
transfers over 18 in one year. Advisory fees are also deducted by the
portfolios' managers, and the portfolios pay other expenses which, in total,
vary from 0.26% to 4.67% per year of the amounts in the portfolios. Finally,
there might be premium taxes ranging from 0 to 3.5% of your investment and/or
on amounts you use to purchase annuity benefits (depending on your state's
law).
The following chart shows these charges (except transfer fees premium taxes).
The $30 annual account fee is not included in the first column because the fee
is waived for account values over $50,000 and the approximate average account
value is over $50,000. The Annual Portfolio Charges reflect a fee waiver
and/or expense reimbursement. 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.
EXAMPLES:
<TABLE>
<CAPTION>
Annual Annual Total Total Expenses Total Expenses
Portfolio/ Insurance Portfolio Annual at end of at end of
Sub-Account Charges Charges Charges One Year Ten Years
----------- --------- --------- ------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Appreciation -- Service
Class 1.40% 1.03% 2.43% $78 $277
Balanced -- Service
Class 1.40% 1.00% 2.40% $78 $274
Disciplined Stock --
Service Class 1.40% 1.00% 1.40% $78 $274
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Annual Annual Total Total Expenses Total Expenses
Portfolio/ Insurance Portfolio Annual at end of at end of
Sub-Account Charges Charges Charges One Year Ten Years
----------- --------- --------- ------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Growth and Income --
Service Class 1.40% 1.00% 1.40% $78 $274
International Equity --
Service Class 1.40% 1.27% 2.67% $81 $300
International Value --
Service Class 1.40% 1.40% 2.80% $82 $313
Limited Term High
Income -- Service Class 1.40% 0.90% 2.30% $77 $264
Money Market 1.40% 0.58% 1.98% $74 $231
Quality Bond -- Service
Class 1.40% 0.99% 2.39% $78 $273
Small Cap -- Service
Class 1.40% 1.03% 2.43% $78 $277
Small Company Stock --
Service Class 1.40% 1.22% 2.62% $80 $295
Special Value -- Service
Class 1.40% 1.00% 2.40% $78 $274
Stock Index -- Service
Class 1.40% 0.51% 1.91% $73 $223
Socially Responsible
Growth -- Service Class 1.40% 1.04% 2.44% $79 $278
Core Bond -- Service
Class 1.40% 0.80% 2.20% $76 $253
Core Value -- Service
Class 1.40% 1.00% 2.40% $78 $109
Emerging Leaders --
Service Class 1.40% 1.50% 2.90% $83 $322
Emerging Markets --
Service Class 1.40% 2.00% 3.40% $88 $368
European Equity --
Service Class 1.40% 1.25% 2.65% $81 $298
Founders Discovery --
Service Class 1.40% 1.50% 2.90% $83 $322
Founders Growth --
Service Class 1.40% 1.00% 2.40% $78 $274
Founders International
Equity -- Service Class 1.40% 1.50% 2.90% $83 $322
Founders Passport --
Service Class 1.40% 1.50% 2.90% $83 $322
Japan -- Service Class 1.40% 1.50% 2.90% $83 $322
MidCap Stock -- Service
Class 1.40% 1.00% 2.40% $78 $274
Technology Growth --
Service Class 1.40% 1.04% 2.44% $79 $278
Transamerica VIF Growth 1.40% 0.85% 2.25% $77 $258
</TABLE>
Expense information regarding the portfolios has been provided by the funds. We
have no reason to doubt the accuracy of the information, but have not verified
those figures. In preparing the table above, we have relied on the figures
provided by the funds. These figures are for the year ended December 31, 1999,
except that the figures for the European Equity, Technology Growth, Core Bond,
Emerging Leaders, Emerging Markets, Founders Discovery, and Japan Portfolios
are estimates for the 1999 fiscal year. Actual expenses in future years may be
higher or lower than the figures given above.
6. Federal Income Taxes. Individuals generally are not taxed on increases in
the certificate 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 certificate). 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 certificate, whether distributed or not.
7. Access to Your Money. You can generally take money out at any time during
the accumulation phase. We may deduct a withdrawal charge of up to 6% of a
premium, but we will not deduct a withdrawal charge on money that has been in
the certificate for seven years. In addition, after the first certificate year,
you may withdraw, without a withdrawal charge, up to 10% of premiums received
at least one, but less than seven years ago. Additionally, at any time, also
without a withdrawal charge, you can withdraw all accumulated earnings on your
premiums (not previously withdrawn).
3
<PAGE>
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 certificate fee, the fund
manager's fee and all the expenses of the portfolio, but these figures do not
include the withdrawal charge, which would reduce performance if it applied.
Remember, past performance is no guarantee of future performance or earnings.
CALENDAR YEAR
<TABLE>
<CAPTION>
Portfolio/
Sub-account 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
----------- ------ ------ ------ ------ ------ ------ ------ ------ ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Appreciation(/2/)* 9.84% 28.34% 26.21% 22.71% 32.82% 1.45% N/A N/A N/A N/A
Balanced(/6/)* 6.56% 20.57% N/A N/A N/A N/A N/A N/A N/A N/A
Disciplined Stock(/5/)* 16.74% 24.90% 29.62% N/A N/A N/A N/A N/A N/A N/A
Growth and Income(/4/)* 15.20% 10.19% 14.53% 18.63% 59.58% N/A N/A N/A N/A N/A
International
Equity(/4/)* 57.49% 2.97% 8.02% 9.82% 6.62% N/A N/A N/A N/A N/A
International
Value(/5/)* 25.98% 7.16% 7.13% N/A N/A N/A N/A N/A N/A N/A
Limited Term High
Income(/6/)* (2.97%) (1.17%) N/A N/A N/A N/A N/A N/A N/A N/A
Money Market(/1/) 3.27% 3.59% 3.66% 3.53% 4.21% 3.00% 1.86% 2.71% 4.54% N/A
Quality Bond(/1/)* (1.29%) 3.96% 7.83% 1.63% 18.91% (6.17%) 13.66% 10.45% 12.47% N/A
Small Cap(/1/)* 21.37% (4.86%) 15.06% 15.06% 28.84% 4.95% 65.77% 68.98% 156.07% N/A
Small Company
Stock(/5/)* 9.00% (7.35%) 20.01% N/A N/A N/A N/A N/A N/A N/A
Special Value(/1/)* 5.72% 14.02% 21.36% (5.67%) (0.48%) (3.48%) 26.74% (0.41%) 8.99% N/A
Stock Index(/1/)* 18.86% 26.37% 31.05% 19.80% 35.92% (0.60%) 7.75% 5.55% 27.98% (6.52%)
Socially
Responsible(/3/)* 28.21% 27.52% 26.59% 19.00% 33.67% (0.08%) N/A N/A N/A N/A
Core Bond(/10/)* N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Core Value(/7/)* 18.00% N/A N/A N/A N/A N/A N/A N/A N/A N/A
Emerging Leaders(/10/)* N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Emerging Markets(/10/)* N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
European Equity(/9/)* N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Founders
Discovery(/10/)* N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Founders Growth(/8/)* N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Founders International
Equity(/9/)* N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Founders Passport(/8/)* N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Japan(/10/)* N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
MidCap Stock(/7/)* 9.21% N/A N/A N/A N/A N/A N/A N/A N/A N/A
Technology Growth(/9/)* N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Transamerica Growth(/7/) N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
</TABLE>
* Since the Service Class Shares of the Portfolios/Sub-accounts were not
available as of December 31, 1999, the figures shown reflect performance
from the Initial Class Shares for each portfolio. Performance would have
been lower for the Service Class Shares if they had been in existence.
(1)Sub-Account (4)Sub-Account (7)Sub-Account (10) Sub-Account
Inception 1-4-93 Inception 12-15-94 Inception 5-1-98 Inception
(2)Sub-Account (5)Sub-Account (8)Sub-Account 5-1-2000
Inception 4-5-93 Inception 5-1-96 Inception 5-3-99
(3)Sub-Account (6)Sub-Account (9)Sub-Account
Inception 10-7-93 Inception 5-1-97 Inception 10-1-99
4
<PAGE>
Data is for full years only. The Technology Growth, European Equity, Founders
Growth, Founders Passport and Founders International Equity sub-accounts were
not in operation for all of 1999, and the Core Bond, Emerging Leaders,
Emerging Markets, Founders Discovery, and Japan sub-accounts began operations
in 2000, therefore no performance is reported for these sub-accounts.
9. Death Benefit. If you or the annuitant die during the accumulation phase,
we guarantee that the beneficiary will receive a death benefit.
If death occurs before age 85, the death benefit will be the greatest of: (1)
the certificate value; (2) the premiums paid, less any amounts you have
withdrawn (less any premium taxes applicable to those withdrawals); or (3) the
highest certificate anniversary value before the owner's or annuitant's 75th
birthday (adjusted for additional investments and withdrawals since that
anniversary, and less premium taxes). After age 85, the death benefit is the
certificate value.
10. Other Information. The certificate offers other features that might
interest you. These features may not be suitable for your particular
situation. Some of these features include:
FREE LOOK. After you get your certificate, you have ten days to look it over
and decide if it is really right for you. If you decide not to keep the
certificate, 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 us to automatically transfer amounts
from the premiums you allocated to the Money Market, Quality Bond, Limited
Term High Income, or the Dollar Cost Averaging account of the fixed account or
possibly from another sub-account 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 assets among the sub-accounts to change. You may instruct us to
periodically automatically rebalance the amounts in the sub-accounts.
SYSTEMATIC WITHDRAWAL OPTION. During the accumulation phase, you can arrange
to have us send you money automatically each month out of your certificate
value. 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 calling the Transamerica Service Center at 877-717-8861 or by writing us
at:
Transamerica Annuity Service Center
4333 Edgewood Road N.E.
Cedar Rapids, Iowa 52499-0001
5
<PAGE>
Dreyfus/Transamerica Triple
Advantage(R) Variable Annuity
A Flexible Premium Deferred Variable Annuity
Issued By
Transamerica Life Insurance Company of New York
Offering 27 Sub-Accounts within the Variable Account
Designated as Separate Account VA-2LNY
In Addition to A Fixed Account
Prospectus
January 22, 2001
. This prospectus contains information you should know before investing.
Please keep this prospectus for future reference.
. You can obtain more information about the contract by requesting a copy of
the Statement of Additional Information (SAI) dated January 22, 2001. The
SAI is available free by writing to Transamerica Life Insurance Company of
New York, Annuity Service Center, 4333 Edgewood Road N.E., Cedar Rapids,
Iowa 52499-0001 or by calling 877-717-8861. The current SAI has been filed
with the Securities and Exchange Commission ("SEC") and is incorporated by
reference into this prospectus. The table of contents of the SAI is included
at the end of this prospectus.
. The SEC's web site is http://www.sec.gov
. Transamerica's web site is http://www.transamerica.com
. The contracts and the investment options are:
. subject to risks, including loss of your investment;
. not guaranteed to achieve their goal;
. not bank deposits; and
. not insured.
. Neither the SEC nor any state securities commission has approved this
investment offering or determined that this prospectus is accurate or
complete. Any representation to the contrary is a criminal offense.
DREYFUS VARIABLE INVESTMENT FUND -- SERVICE CLASS
Managed by The Dreyfus Corporation
Appreciation Portfolio
Balanced Portfolio
Disciplined Stock Portfolio
Growth and Income Portfolio
International Equity Portfolio
International Value Portfolio
Limited Term High Income Portfolio
Quality Bond Portfolio
Small Cap Portfolio
Small Company Stock Portfolio
Special Value Portfolio
DREYFUS VARIABLE INVESTMENT FUND --
Managed by The Dreyfus Corporation
Money Market Portfolio
DREYFUS STOCK INDEX FUND --SERVICE CLASS
Managed by The Dreyfus Corporation and Mellon Equity Associates
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC. --SERVICE CLASS
Managed by The Dreyfus Corporation
DREYFUS INVESTMENT PORTFOLIOS -- SERVICE CLASS
Managed by The Dreyfus Corporation
Core Bond Portfolio
Core Value Portfolio
Emerging Leaders Portfolio
Emerging Markets Portfolio
European Equity Portfolio
Founders Discovery Portfolio
Founders Growth Portfolio
Founders International Equity Portfolio
Founders Passport Portfolio
Japan Portfolio
MidCap Stock Portfolio
Technology Growth Portfolio
TRANSAMERICA VARIABLE INSURANCE FUND, INC.
Managed by Transamerica Investment Management, LLC
Transamerica VIF Growth Portfolio
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS Page
<S> <C>
SUMMARY.................. 4
PERFORMANCE DATA......... 14
TRANSAMERICA LIFE
INSURANCE COMPANY OF NEW
YORK AND THE VARIABLE
ACCOUNT................. 15
Transamerica Life
Insurance Company of
New York............... 15
Published Ratings....... 15
Insurance Marketplace
Standards Association.. 16
The Variable Account.... 16
THE FUNDS................ 16
Resolution of Possible
Conflicts.............. 17
Sources of Additional
Information............ 18
Addition, Deletion or
Substitution........... 18
The Establishment of New
Sub-Accounts........... 18
THE FIXED ACCOUNT........ 18
The Interest Rate of the
Fixed Account.......... 19
Transfers from the Fixed
Account................ 19
Transfers into the Fixed
Account................ 19
THE CERTIFICATE.......... 19
CERTIFICATE APPLICATION
AND PREMIUMS............ 19
Premiums................ 19
Ten Day Cancellation
Option................. 20
Additional Premiums..... 20
Choosing One or More
Investment Options..... 20
Investment Option
Limit.................. 21
CERTIFICATE VALUE........ 21
How Your Variable
Accumulation Units Are
Created................ 21
How Variable
Accumulation Units
Values Are Calculated.. 21
Transferring Among Sub-
Accounts............... 22
TRANSFERS................ 22
Transfers Before the
Annuity Date........... 22
Possible Restrictions... 22
Dollar Cost Averaging... 23
Special Dollar Cost
Averaging Option....... 23
Automatic Asset
Rebalancing............ 23
Eligibility
Requirements........... 24
After the Annuity Date.. 24
CASH WITHDRAWALS......... 24
Withdrawals............. 24
Fees Relating to
Withdrawals or
Surrenders............. 25
Additional Withdrawal
and Surrender
Provisions............. 25
</TABLE>
<TABLE>
<CAPTION>
Page
<S> <C>
Systematic Withdrawal Option.............................................. 26
Eligibility and Rules of the Systematic Withdrawal Option................. 26
Automatic Payout Option, or APO........................................... 26
DEATH BENEFIT.............................................................. 26
Payment of Death Benefit.................................................. 27
Designation of Beneficiaries.............................................. 27
Death of Annuitant Before the Annuity Date................................ 27
Death of Owner Before the Annuity Date.................................... 27
Death of Annuitant or Owner After the Annuity Date........................ 28
CHARGES AND DEDUCTIONS..................................................... 28
Contingent Deferred Sales Load/Surrender Charge........................... 28
Administrative Charges.................................................... 29
Mortality and Expense Risk Charge......................................... 30
Premium Taxes............................................................. 30
Transfer Fee.............................................................. 30
Systematic Withdrawal Option.............................................. 31
Automatic Asset Rebalancing Option........................................ 31
Taxes..................................................................... 31
Portfolio Expenses........................................................ 31
Sales in Special Situations............................................... 31
DISTRIBUTION OF THE CERTIFICATE............................................ 31
ANNUITY PAYMENTS........................................................... 32
Annuity Date.............................................................. 32
Annuity Payment........................................................... 32
Election of Annuity Forms and Payment Options............................. 33
Annuity Payment Options................................................... 33
Fixed Annuity Payment Option.............................................. 33
Variable Annuity Payment Option........................................... 33
Annuity Forms............................................................. 33
Alternate Fixed Annuity Rates............................................. 35
QUALIFIED CERTIFICATES..................................................... 35
Various Tax Penalties May Apply........................................... 35
Automatic Payout Option, or APO........................................... 35
Restrictions under Section 403(b) Programs................................ 36
FEDERAL TAX MATTERS........................................................ 36
Introduction.............................................................. 36
Premium................................................................... 37
Taxation of Annuities In General.......................................... 37
Withdrawals............................................................... 37
Annuity Payments.......................................................... 38
Withholding............................................................... 38
Penalty Tax............................................................... 38
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
(continued) Page
<S> <C>
Taxation of Death
Benefit Proceeds....... 39
Required Distributions
upon Owner's Death..... 39
Transfers, Assignments,
or Exchanges of the
Certificate............ 40
Multiple Certificates... 40
QUALIFIED CERTIFICATES... 40
In General.............. 40
Qualified Pension and
Profit Sharing Plans... 41
Individual Retirement
Annuities, Simplified
Employee Plans and Roth
IRAs................... 41
Tax Sheltered
Annuities.............. 42
Restrictions under
Qualified
Certificates........... 42
Possible Changes in
Taxation............... 42
Other Tax Consequences.. 42
LEGAL PROCEEDINGS........ 43
LEGAL MATTERS............ 43
ACCOUNTANTS AND FINANCIAL
STATEMENTS.............. 43
</TABLE>
<TABLE>
<CAPTION>
Page
<S> <C>
VOTING RIGHTS.............................................................. 43
AVAILABLE INFORMATION...................................................... 43
STATEMENT OF ADDITIONAL INFORMATION -- TABLE OF CONTENTS................... 44
APPENDIX A................................................................. 45
Example of Variable Accumulation Unit Value Calculations.................. 45
Example of Variable Annuity Unit Value Calculations....................... 45
Example of Variable Annuity Payment Calculations.......................... 45
APPENDIX B................................................................. 46
Condensed Financial Information........................................... 46
APPENDIX C................................................................. 49
Definitions............................................................... 49
APPENDIX D................................................................. 52
Disclosure Statement for Individual Retirement Annuities.................. 52
</TABLE>
3
<PAGE>
SUMMARY
You will find a list of definitions of the terms used in this prospectus in
Appendix C.
The Certificate
We designed the flexible premium deferred variable annuity, the certificate
described in this prospectus, to aid individuals in long-term financial
planning for retirement or other purposes. You may use the certificate:
. with non-qualified plans;
. as an individual retirement annuity that qualifies for special tax treatment
under Internal Revenue Code (the "Code") Section 408, IRA; or
. as an individual retirement annuity that qualifies for special tax treatment
under Code Section 408A, Roth IRA.
Additionally, with our prior approval, you may use the certificate:
. as an annuity under Code Section 403(b) Revenue Rule 90-24 (transfers only);
and
. with various types of qualified pension and profit-sharing plans under
Section 401(a) of the Code.
Variable Account Fee Table
The purpose of the following table is to help you understand the various costs
and expenses that you, as the owner will bear directly and indirectly. The
table reflects expenses of the variable account and the portfolios. The table
assumes that the entire certificate value is in the variable account. The
information set forth should be considered together with the narrative provided
under the heading Charges and Deductions in this prospectus, and with the
funds' prospectuses. In addition to the expenses listed below, premium taxes
may apply.
--------------------------------------------------------------------------------
4
<PAGE>
ANNUITY CONTRACT FEE TABLE
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Certificate Owner
Transaction Expenses(/1/)
---------------------------------------
<S> <C>
Sales Charge Imposed On
Premiums.................... 0
Maximum Contingent Deferred
Sales Load(/2/)............. 6%
Transfer Fee(/3/)............ $0 - $10
Annual Certificate Fee(/4/).. $30
</TABLE>
<TABLE>
<CAPTION>
Variable Account Annual Expenses
(as a percentage of average
account value)
<S> <C>
Mortality and Expense Risk
Charges........................ 1.25%
Administrative Expense
Charge(/5/).................... 0.15%
TOTAL VARIABLE ACCOUNT
ANNUAL EXPENSES................ 1.40%
</TABLE>
--------------------------------------------------------------------------------
Portfolio Annual Expenses
(as a percentage of assets after fee waiver and/or expense reimbursement)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Rule
Management Other 12b-1 Total Portfolio
Fees Expenses Fees(/6/)(/7/)(/8/) Annual Expenses
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Appreciation(/9/) 0.75% 0.03% 0.25% 1.03%
Balanced(/9/)(/10/) 0.75% 0.11% 0.14% 1.00%
Disciplined
Stock(/9/)(/10/) 0.75% 0.06% 0.19% 1.00%
Growth and
Income(/9/)(/10/) 0.75% 0.04% 0.21% 1.00%
International
Equity(/9/) 0.75% 0.27% 0.25% 1.27%
International
Value(/9/)(/10/) 1.00% 0.35% 0.05% 1.40%
Limited Term High
Income(/9/)(/10/) 0.65% 0.19% 0.06% 0.90%
Money Market 0.50% 0.08% -- 0.58%
Quality Bond(/9/) 0.65% 0.09% 0.25% 0.99%
Small Cap(/9/) 0.75% 0.03% 0.25% 1.03%
Small Company Stock(/9/) 0.75% 0.22% 0.25% 1.22%
Special Value(/9/)(/10/) 0.75% 0.11% 0.14% 1.00%
Stock Index(/9/) 0.25% 0.01% 0.25% 0.51%
Socially Responsible
Growth(/9/) 0.75% 0.04% 0.25% 1.04%
Core Bond(/10/)(/11/) 0.12% 0.68% 0.00% 0.80%
Core Value(/9/)(/10/) 0.25% 0.75% 0.00% 1.00%
Emerging
Leaders(/10/)(/11/) 0.56% 0.94% 0.00% 1.50%
Emerging
Markets(/10/)(/11/) 0.49% 1.51% 0.00% 2.00%
European
Equity(/9/)(/10/) 0.00% 1.25% 0.00% 1.25%
Founders
Discovery(/10/)(/11/) 0.87% 0.63% 0.00% 1.50%
Founders
Growth(/9/)(/10/) 0.00% 1.00% 0.00% 1.00%
Founders International
Equity(/9/)(/10/) 0.00% 1.50% 0.00% 1.50%
Founders
Passport(/9/)(/10/) 0.00% 1.50% 0.00% 1.50%
Japan(/10/)(/11/) 0.00% 1.50% 0.00% 1.50%
MidCap Stock(/9/)(/10/) 0.29% 0.71% 0.00% 1.00%
Technology Growth(/9/) 0.75% 0.04% 0.25% 1.04%
Transamerica VIF
Growth(/12/) 0.70% 0.15% -- 0.85%
</TABLE>
5
<PAGE>
Expense information regarding the portfolios has been provided by the funds. We
have no reason to doubt the accuracy of the information, but have not verified
those figures. In preparing the table above and the examples that follow, we
have relied on the figures provided by the funds. These figures are for the
year ended December 31, 1999, except that they have been restated to reflect
the Rule 12b-1 fee for the Service Class Shares. Actual expenses in future
years may be higher or lower than the figures given above.
Notes to Fee Table:
1. The certificate transaction expenses apply to each certificate, regardless
of how the certificate value is allocated between the variable account and
the fixed account. The variable account annual expenses do not apply to the
fixed account.
2. You may withdraw a portion of the premiums each year after the first
certificate year without any contingent deferred sales load (CDSL). After
we have held a premium for seven certificate years, you may withdraw the
remaining premium payments without any CDSL. You may always withdraw
accumulated earnings without a CDSL.
3. There is currently no fees for transfers. However, Transamerica may charge
a transfer fee equal to the lesser of $10 or 2% of the amount transfers in
excess of 18 per year. Transamerica may also charge a fee of up to $25 per
year if you elect the systematic withdrawal option, but we currently do not
deduct this charge.
4. The current annual certificate fee is the lesser of $30 or 2% of the
certificate value. We may change the fee annually, but it will not exceed
the lesser of $60 or 2% of the certificate value. This fee is waived if
your account value is over $50,000.
5. The current annual administrative expense charge is 0.15%. We may increase
it to 0.25%.
6. The Fees shown are for the Service Class Shares, except for the Money
market Portfolio and Transamerica VIF Growth Portfolio. If you are invested
in the Initial Class Shares of each portfolio, the Total Portfolio Annual
Expenses would be lower, since the Initial Class Shares are not subject to
a Rule 12b-1 Fee.
7. The Rule 12b-1 Fees deducted from the Service Class Shares of these
portfolios cover certain distribution and shareholder support services
provided by Transamerica Occidental Life Insurance Company selling
contracts investing in those portfolios. The maximum amount of the Rule
12b-1 Fee is 0.25%.
8. The Dreyfus Corporation has agreed, until December 31, 2001, to waiver
receipt of its fees and/or assume the expenses of the portfolio so that the
expenses of neither class (excluding taxes, brokerage commission,
extraordinary expenses, interest expenses and commitment fees on borrowing)
exceed the Total Portfolio Annual Expenses.
9. Other Expenses for Service Shares are based on other expenses for Initial
Shares for the past fiscal year.
10. Total Portfolio Annual Expenses shown are net of any fee waiver and/or
expense reimbursement. The Dreyfus Corporation does not differentiate
between expense reimbursements and fee waivers. Total Portfolio Annual
Expenses in the Fee Table, without such fee waiver and/or expense
reimbursement, would be as follows: 1.11% - Balanced; 1.06% - Disciplined
Stock; 1.04% - Growth and Income; 1.60%- International Value; 1.09% -
Limited Term High Income; 1.11% - Special Value; 1.53% - Core Bond;
1.75% - Core Value; 2.09% - Emerging Leaders; 3.01% - Emerging Markets;
5.28% - European Equity; 1.78% - Founders Discovery; 2.58% - Founders
Growth; 4.02% - Founders International Equity; 3.89% -Founders Passport;
3.04% - Japan; and 1.71% - Mid Cap Stock.
11. Other expenses are estimated fees to be paid by the portfolio for the
current fiscal year.
6
<PAGE>
12. From time to time, the 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 expense table reflect the portfolio's adviser's waiver of fees or
reimbursement of expenses, if applicable, for calendar year 1999. Without
such waivers or reimbursements, the management fee, other expenses and
total portfolio annual expenses for 1999 for the Transamerica VIF Growth
Portfolio would have been, as a percentage of assets: 0.75%, 0.15%, 0.90%,
respectively.
7
<PAGE>
Examples(/1/)
The following three examples reflect no account fee deduction because the
approximate average account value is more than $50,000. The account fee is
waived for account values over $50,000. The examples assume that the entire
account value is allocated to the variable account.
These examples all assume that no transfer fees, systematic withdrawal fee or
premium tax have been assessed. Premium taxes may be applicable. See Premium
Taxes on page 33. These examples show expenses reflecting fee waivers and
reimbursements for 1999.
<TABLE>
<CAPTION>
If the certificate is annuitized
at the end of the applicable time
period under an annuity form
If the certificate is surrendered with life contingencies,(/2/) or if
at the end of the applicable the certificate is not
time period. surrendered or annuitized.
-----------------------------------------------------------------------------------------------------
Subaccounts 1 Year 3 Years 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Appreciation(/3/) $ 78 $ 110 $ 147 $ 277 $ 25 $ 76 $ 130 $ 277
-----------------------------------------------------------------------------------------------------
Balanced(/3/) $ 78 $ 109 $ 145 $ 274 $ 24 $ 75 $ 128 $ 274
-----------------------------------------------------------------------------------------------------
Disciplined Stock(/3/) $ 78 $ 109 $ 145 $ 274 $ 24 $ 75 $ 128 $ 274
-----------------------------------------------------------------------------------------------------
Growth and income(/3/) $ 78 $ 109 $ 145 $ 274 $ 24 $ 75 $ 128 $ 274
-----------------------------------------------------------------------------------------------------
International
Equity(/3/) $ 81 $ 117 $ 159 $ 300 $ 27 $ 83 $ 141 $ 300
-----------------------------------------------------------------------------------------------------
International Value(/3/) $ 82 $ 121 $ 166 $ 313 $ 28 $ 87 $ 148 $ 313
-----------------------------------------------------------------------------------------------------
Limited Term High
Income(/3/) $ 77 $ 106 $ 140 $ 264 $ 23 $ 72 $ 123 $ 264
-----------------------------------------------------------------------------------------------------
Money Market $ 74 $ 96 $ 124 $ 231 $ 20 $ 62 $ 107 $ 231
-----------------------------------------------------------------------------------------------------
Quality Bond(/3/) $ 78 $ 108 $ 145 $ 273 $ 24 $ 75 $ 128 $ 273
-----------------------------------------------------------------------------------------------------
Small Cap(/3/) $ 78 $ 110 $ 147 $ 277 $ 25 $ 76 $ 130 $ 277
-----------------------------------------------------------------------------------------------------
Small Company Stock(/3/) $ 80 $ 115 $ 157 $ 295 $ 27 $ 81 $ 139 $ 295
-----------------------------------------------------------------------------------------------------
Special Value(/3/) $ 78 $ 109 $ 145 $ 274 $ 24 $ 75 $ 128 $ 274
-----------------------------------------------------------------------------------------------------
Stock Index(/3/) $ 73 $ 94 $ 120 $ 223 $ 19 $ 60 $ 103 $ 223
-----------------------------------------------------------------------------------------------------
Socially Responsible
Growth Fund(/3/) $ 79 $ 110 $ 147 $ 278 $ 25 $ 76 $ 130 $ 278
-----------------------------------------------------------------------------------------------------
Core Bond(/3/) $ 76 $ 103 $ 135 $ 253 $ 22 $ 69 $ 118 $ 253
-----------------------------------------------------------------------------------------------------
Core Value(/3/) $ 78 $ 109 $ 145 $ 274 $ 24 $ 75 $ 128 $ 274
-----------------------------------------------------------------------------------------------------
Emerging Leaders(/3/) $ 83 $ 124 $ 171 $ 322 $ 29 $ 90 $ 153 $ 322
-----------------------------------------------------------------------------------------------------
Emerging Markets(/3/) $ 88 $ 139 $ 195 $ 368 $ 34 $ 104 $ 177 $ 368
-----------------------------------------------------------------------------------------------------
European Equity(/3/) $ 81 $ 116 $ 158 $ 298 $ 27 $ 82 $ 141 $ 298
-----------------------------------------------------------------------------------------------------
Founders Discovery(/3/) $ 83 $ 124 $ 171 $ 322 $ 29 $ 90 $ 153 $ 322
-----------------------------------------------------------------------------------------------------
Founders Growth(/3/) $ 78 $ 109 $ 145 $ 274 $ 24 $ 75 $ 128 $ 274
-----------------------------------------------------------------------------------------------------
Founders International
Equity(/3/) $ 83 $ 124 $ 171 $ 322 $ 29 $ 90 $ 153 $ 322
-----------------------------------------------------------------------------------------------------
Founders Passport(/3/) $ 83 $ 124 $ 171 $ 322 $ 29 $ 90 $ 153 $ 322
-----------------------------------------------------------------------------------------------------
Japan(/3/) $ 83 $ 124 $ 171 $ 322 $ 29 $ 90 $ 153 $ 322
-----------------------------------------------------------------------------------------------------
MidCap Stock(/3/) $ 78 $ 109 $ 145 $ 274 $ 24 $ 75 $ 128 $ 274
-----------------------------------------------------------------------------------------------------
Technology Growth(/3/) $ 79 $ 110 $ 147 $ 278 $ 25 $ 76 $ 130 $ 278
-----------------------------------------------------------------------------------------------------
Transamerica VIF Growth $ 77 $ 104 $ 138 $ 258 $ 23 $ 70 $ 120 $ 258
</TABLE>
(/1/In)preparing the examples above, we have relied on the data provided by the
funds. We have no reason to doubt the accuracy of that information.
However, we have not verified those figures.
(/2/For)annuitization under a form that does not include life contingencies, a
contingent deferred sales load may apply.
(/3/The)above expense figures are calculated using the Service Class Shares.
The figures would have been slightly lower if the Initial Class Shares were
used because the Initial Class Shares are not subject to a Rule 12b-1 Fee.
8
<PAGE>
You should not consider these examples to represent past or future expenses.
Actual expenses paid may be greater or less than those shown, subject to the
guarantees in the certificate. 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.
--------------------------------------------------------------------------------
Condensed Financial Information
You will find condensed financial information on each sub-account in Appendix
B. You will find the full financial statements and reports of independent
auditors for the variable account in the Statement of Additional Information.
The Issuer
The certificate is issued by Transamerica Life Insurance Company of New York
(Transamerica, we, us or our).
We will issue to the owner a certificate under a group annuity contract. The
contract and the certificates are available only in New York.
This prospectus does not offer the sub-accounts or the fixed account in any
jurisdiction where they are not allowed to be sold. We do not authorize any
dealer, salesperson or other person to give information or make representations
not contained in this prospectus. You should not rely on any information or
representation that is not in this prospectus.
Certificate Value
The certificate provides that the certificate value, after certain adjustments,
will be applied to an annuity form and payment option on a selected future
date.
The certificate value will depend on the investment experience of each sub-
account of the variable account you select. All payments and values provided
under the certificate when based on the investment experience of the variable
account are variable and are not guaranteed as to dollar amount. Therefore,
before the annuity date you, as the owner, bear the entire investment risk
under the certificate.
There is no guaranteed or minimum cash surrender value, so the proceeds of a
surrender could be less than the total premiums.
Initial Premium
The initial premium for each certificate must generally be at least $5,000. We
will waive this minimum if the certificate is sold as a qualified certificate
to certain retirement plans. Generally, each additional premium must be at
least $500. We will waive this minimum if you select an automatic payment plan.
In no event, however, may the total of all premiums under a certificate exceed
$1,000,000 without our prior approval. The minimum net premium that may be
allocated to a sub-account with no current allocations is $500. See Certificate
Application and Premiums on page 22.
The Variable Account
The variable account is a separate account, designated as Separate Account VA-
2LNY, divided into sub-accounts. Assets of each sub-account are invested in a
specified mutual fund portfolio.
The Sub-Accounts
The following 27 sub-accounts are currently available for investment in the
variable account.
. Appreciation(/1/)
. Balanced
. Disciplined Stock
. Growth and Income
. International Equity
. International Value
. Limited Term High Income
. Money Market
. Quality Bond
. Small Cap
. Small Company Stock
. Special Value
. Stock Index
. Socially Responsible Growth
9
<PAGE>
. Core Bond
. Core Value
. Emerging Leaders
. Emerging Markets
. European Equity
. Founders Discovery
. Founders Growth
. Founders International Equity
. Founders Passport
. Japan
. Mid Cap Stock
. Technology Growth
. Transamerica VIF Growth
/(1)/ Formerly known as Capital Appreciation.
As of January 22, 2001, new contract owners may only invest in the Service
Class sub-accounts, with the exception of the Money Market Sub-account and the
Transamerica VIF Growth Sub-account. The Initial Class sub-accounts (other than
the Money Market Sub-account and Transamerica VIF Growth Sub-account) are only
available to contract owners that purchased a contract before January 22, 2001.
The funds pay their investment adviser and administrators certain fees charged
against the assets of each portfolio. The certificate value, if any, and the
amount of any variable annuity payments will vary to reflect the investment
performance of all of the sub-accounts you select and the deduction of the
charges. See Charges and Deductions on page 30. For more information about the
funds see The Funds on page 15 and the accompanying funds' prospectuses.
The Fixed Account
We will credit interest to the amounts in the fixed account at a rate of not
less than 3% annually. We may credit interest at a rate in excess of 3% at our
discretion for any class. We guarantee to credit each interest rate for at
least 12 months.
Investment Option Limit
Currently, you may not elect more than a total of 18 investment options over
the life of the certificate. Investment options include each sub-account of the
variable account and the fixed account.
Transfers Before the Annuity Date
Before the annuity date, you may make transfers among the sub-accounts. A
"transfer" is the reallocation of amounts among the sub-accounts of the
variable account.
We charge a fee of $10 for each transfer in excess of 18 per certificate year.
Transfers under certain programs, such as Dollar Cost Averaging, will not count
towards the 18 free transfers per certificate year.
Withdrawals
You may withdraw all or part of the cash surrender value on or before the
annuity date. However, amounts you withdraw may be subject to a contingent
deferred sales load. Amounts you withdraw may also be subject to a premium tax
or similar tax, depending upon the state in which you live. Withdrawals may
further be subject to any federal, state or local income tax, and a penalty
tax. Withdrawals from qualified certificates may be subject to severe
restrictions. Except for IRAs and Roth IRAs, qualified certificates are sold
only with our prior approval. We will generally deduct the annual certificate
fee on a full surrender of a certificate. See Cash Withdrawals.
Contingent Deferred Sales Load/ Surrender Charge
We do not deduct a sales charge from premiums, although we may deduct premium
taxes.
However, if any part of the certificate value is withdrawn, a contingent
deferred sales load, or surrender charge, of up to 6% of premiums withdrawn may
be assessed by us to cover certain expenses relating to the sale of the
certificates, including commissions to registered representatives and other
promotional expenses. We guarantee that the total contingent deferred sales
load will never exceed 6% of the premiums.
10
<PAGE>
Range of Contingent Deferred Sales Load Over Time
<TABLE>
<CAPTION>
Certificate Years Since Contingent Deferred
Premiums Receipt Sales Load
----------------------- -------------------
<S> <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%
</TABLE>
After we have held a premium for seven certificate years, you may withdraw the
remaining premium without a contingent deferred sales load/surrender charge.
You may make withdrawals each certificate year before the annuity date of up to
the allowed amount described below without incurring a contingent deferred
sales load.
The allowed amount is equal to:
. during the first certificate year, the accumulated earnings not previously
withdrawn;
. after you have held your certificate for at least one full certificate year,
and only for the first withdrawal in a certificate year, the sum of:
1. 100% of premiums not previously withdrawn and received at least seven
certificate years before the date of withdrawal; plus,
2. the greater of:
a) the accumulated earnings not previously withdrawn; or,
b) 10% of premiums received at least one but less than seven complete
certificate years before the date of withdrawal not reduced to take
into account any withdrawals deemed to be made from such premiums.
. after the first certificate year and after the first withdrawal in a
certificate year, the sum of:
1. 100% of premiums not previously withdrawn and received at least seven
complete certificate years before the date of withdrawal; plus,
2. accumulated earnings not previously withdrawn.
Other Charges and Deductions
We deduct a daily charge referred to as the Mortality and Expense Risk Charge.
This charge is 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 your certificate. See Mortality and Expense
Risk Charge on page 32. We guarantee that this mortality and expense risk
charge will not be increased.
We also deduct a daily charge referred to as the Administrative Expense Charge.
This charge equals 0.15% annually of you net asset value in the variable
account. It helps cover some of the costs of administering the certificate and
the variable account. This charge may change, but it is guaranteed not to
exceed 0.25% annually. See Administrative Charges on page 32.
There is also an administrative charge deducted each year for certificate
maintenance, referred to as the Certificate Fee. This fee is currently $30, or
2% of the certificate value, if less. It will not be assessed for certificate
years in which the certificate value exceeds $50,000 on the last business day
of the certificate year or as of the date the certificate is surrendered. For
certificates valued less than $50,000, we will deduct the certificate fee at
the end of the certificate year or when you surrender the certificate, if
earlier. We may change the certificate fee for any certificate year. But we
guarantee it will not exceed the lesser of $60 or 2% of the certificate value.
After the annuity date this fee is referred to as the annuity fee. The annuity
fee is $30 and will not change.
We charge a transfer fee of $10 or 2% of the amount of withdrawal for each
transfer in excess of eighteen during a certificate year. See Transfer Fee on
page 33.
Also, New York currently has no premium tax or retaliatory premium tax. If New
York imposes these taxes in the future, or if you are, or become, a resident of
a state other than New York where such taxes apply, the charges could be
deducted from
11
<PAGE>
premiums and/or from the annuity purchase mount upon annuitization. See Premium
Taxes on page 33.
Annuity Payments
We will make annuity payments either on a fixed basis or a variable basis, or a
combination of a fixed and variable basis, as you select. You have flexibility
in choosing the annuity date. In no event may the annuity date be later than
the first day of the month immediately preceding the month of your 85th
birthday. The annuity date cannot be earlier than the first day of the month
coinciding with or immediately following the third certificate anniversary. We
will begin annuity payments on the first day of the calendar month following
the annuity date.
You have a choice of four annuity forms:
1. Life Annuity;
2. Life and Contingent Annuity;
3. Life Annuity with Period Certain;
4. Joint and Survivor Annuity; and
5. Other annuity forms, subject to our agreement.
Payments on Death Before the Annuity Date
We pay a death benefit on the death of either the owner or annuitant before the
annuity date. If the deceased owner or annuitant, as applicable, had not
attained their 85th birthday, the death benefit is the greatest of:
(a) the certificate value;
(b) all premiums paid to the certificate less withdrawals and any premium taxes
applicable to those withdrawals; or
(c) the greatest certificate anniversary value before the earliest of the
annuitant's or owner's 75th birthday, increased by premiums paid since that
certificate 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 certificate value. We will generally pay the death
benefit within seven days of receipt of the required proof of death. We must
have sufficient information about the beneficiary to make the payment. We must
receive the beneficiary's election of the method of settlement. If we receive
no election of the settlement method, we will pay the death benefit no later
than one year from the date of death. We do not charge a contingent deferred
sales load. The beneficiary may elect to receive the death benefit as either a
lump sum or as an annuity.
Federal Income Tax Consequences
An owner who is a natural person, meaning an individual, rather than a
corporation or trust, generally should not be taxed on increases in the
certificate value until a distribution under the certificate occurs. A
withdrawal or annuity distribution will trigger a taxable event. A deemed
distribution would also trigger a taxable event. Deemed distributions occur
when owners pledge, loan, or assign a certificate as collateral. 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. Mandatory
withholding may apply for certain qualified certificates. In addition, a
federal penalty tax may apply to certain distributions or deemed distributions.
Right to Cancel
You have the right to examine the certificate for a limited period. This is
known as a free look period. You can cancel the certificate by delivering or
mailing a written notice or by sending a telegram to:
. the agent from whom you purchased the certificate; or
. our service center.
You must do this before midnight of the tenth day, or longer if required by the
New York Department of Insurance, after you receive the certificate.
If you give us notice and return the certificate by mail, properly addressed
and postage prepaid, we will deem it to have been made on the date postmarked.
We will refund the amounts allocated to the fixed account and the variable
account accumulated value determined as of the date the notice is postmarked
within seven days after we
12
<PAGE>
receive such notice to cancel and the returned certificate. See Premiums on
page 22.
You may request more information concerning your contract by contacting:
Transamerica Annuity Service Center
4333 Edgewood Road N.E.
Cedar Rapids, Iowa 52499-0001
1-877-717-8861
You should provide the certificate number and the owner's and annuitant's names
when requesting information regarding a specific certificate.
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. They should be referred to for more detailed information.
For qualified certificates, limits or restrictions may be imposed on premiums,
withdrawals, distributions, benefits or other certificate provisions due to:
. the requirements of a particular retirement plan;
. an endorsement to the certificate; or
. limitations or penalties imposed by the Code or the Employee Retirement
Income Security Act of 1974, as amended.
This prospectus does not describe such limitations or restrictions.
There are various additional fees and charges associated with variable
annuities. You should consider whether the features and benefits unique to
variable annuities, such as the opportunity for lifetime payments, a guaranteed
death benefit, and the guaranteed level of certain charges are appropriate for
your needs. Variable annuities also provide tax-deferral. The tax deferral
features of variable annuities are unnecessary when purchased to fund a
qualified plan.
13
<PAGE>
PERFORMANCE DATA
From time to time, we may advertise yields and average annual total returns for
the sub-accounts of the variable account. In addition, we may advertise the
effective yield of the Money Market Sub-Account.
These figures will be based on historical information and do not indicate
future performance.
Yield Calculations
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:
. the income generated for that seven-day period is generated each seven-day
period over a 52-week period; and
. it 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 that of 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 apply to a particular certificate. When
the contingent deferred sales load is applied to a particular certificate, the
yield of that certificate will be reduced. For additional information about how
yields and total returns are calculated, please refer to the Statement of
Additional Information.
Total Returns
Average annual total returns for each sub-account are based on performance data
compiled since the sub-account commenced operations. Performance results are
also measured over 1, 5 and 10 year time periods. Each return 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. This will
include the deduction of any applicable contingent deferred sales load, but
exclude the deduction of any premium taxes.
Performance Information
Performance information for any sub-account reflects only the performance of a
hypothetical certificate under which certificate value is allocated to a sub-
account during a particular time period on which the calculations are based. It
should be considered in light of:
. the investment objectives;
. investment policies;
. characteristics of the portfolios in which the sub-account invests; and
. the market conditions during the given time period.
14
<PAGE>
You should not consider it 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
but not limited to:
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, and
. Bank Rate Monitor.
It may also include 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.
These may include a comparison, at various points in time, of the return from
an investment, or returns in general, on a tax-deferred basis, assuming one or
more tax rates, with the return on a currently taxable basis. We may also use
other ranking services and indices. In our advertisements and sales literature,
we may use charts and graphs to discuss and illustrate:
. the implications of longer life expectancy for retirement planning;
. the tax and other consequences of long-term investments;
. the effects of the lifetime payout option;
. the operation of certain special investment features in the certificate--
such as the dollar cost averaging option;
. the effects of certain investment strategies; and
. the Social Security system and its projected payout levels and retirement
plans generally.
We may, from time to time, disclose average annual total returns and cumulative
total returns for the sub-accounts in non-standard formats. We will assume that
no contingent deferred sales load is applicable to these returns. Whenever we
show non-standard performance, we will also show standardized performance. You
will find additional information about the calculation of performance data in
the Statement of Additional Information.
We may also advertise performance figures for the sub-accounts based on their
performance before the time the variable account started.
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, hereafter referred to as
Transamerica, is a stock life insurance company incorporated under the laws of
the State of New York on February 5, 1986. It is mainly engaged in the sale of
life insurance and annuity policies. The address for Transamerica is 100
Manhattanville Road, Purchase, New York 10577.
Transamerica is a wholly-owned subsidiary of Transamerica Occidental Life
Insurance Company. Our principal office is at 100 Manhattanville Road,
Purchase, New York, 10577, telephone (914) 701-6000. The certificate is only
available in New York. Transamerica Corporation indirectly owns the issuing
company, Transamerica Life Insurance Company of New York. On July 21, 1999
Transamerica Corporation was acquired by AEGON N.V., one of the worlds leading
international insurance groups.
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
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claims-paying ability of Transamerica. These ratings 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. Once it has completed its analysis of each insurer's
financial strength, A.M. Best assigns the insurer a Best Rating.
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, other rating companies, such
as by Standard & Poor's Insurance Ratings Services or Duff & Phelps assess our
claims-paying ability. They also 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.
Insurance Marketplace Standards Association
In recent years, the insurance industry has recognized the need to develop
specific principles and practices to help maintain the highest standards of
marketplace behavior and enhance credibility with consumers. As a result, the
industry established the Insurance Marketplace Standards Association (IMSA).
As an IMSA member, we agree to follow a set of standards in our advertising,
sales and service for individual life insurance and annuity products. The IMSA
logo, which you will see on our advertising and promotional materials,
demonstrates that we take our commitment to ethical conduct seriously.
The Variable Account
On June 23, 1992, Transamerica's Board of Directors passed resolutions to
establish the Separate Account VA-2LNY of Transamerica, also referred to as the
variable account, under the laws of the State of New York. The variable account
is registered with the Securities and Exchange Commission under the Investment
Company Act of 1940 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. This protection remains in place so long as assets in the separate
account do not exceed the reserves and other requirements of the separate
account are maintained.
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 Transamerica's other income, gains or losses.
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 Transmerica maintains.
The variable account has 27 sub-accounts, each of which invests solely in a
specific corresponding portfolio. Changes to the sub-accounts may be made at
Transamerica's discretion.
THE FUNDS
The companies that provide investment advice and administrative services for
the portfolios offered through this policy are listed below. The following
portfolios are currently offered through this contract:
DREYFUS VARIABLE INVESTMENT FUND -- SERVICE CLASS
Managed by The Dreyfus Corporation
Appreciation Portfolio
Balanced Portfolio
Disciplined Stock Portfolio
Growth and Income Portfolio
International Equity Portfolio
International Value Portfolio
Limited Term High Income Portfolio
Quality Bond Portfolio
Small Cap Portfolio
Small Company Stock Portfolio
Special Value Portfolio
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DREYFUS VARIABLE INVESTMENT FUND
Managed by The Dreyfus Corporation
Money Market Portfolio
DREYFUS STOCK INDEX FUND -- SERVICE CLASS
Managed by The Dreyfus Corporation and Mellon Equity Associates
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC. -- SERVICE CLASS
Managed by The Dreyfus Corporation
DREYFUS INVESTMENT PORTFOLIOS -- SERVICE CLASS
Managed by The Dreyfus Corporation
Core Bond Portfolio
Core Value Portfolio
Emerging Leaders Portfolio
Emerging Markets Portfolio
European Equity Portfolio
Founders Discovery Portfolio
Founders Growth Portfolio
Founders International Equity Portfolio
Founders Passport Portfolio
Japan Portfolio
MidCap Stock Portfolio
Technology Growth Portfolio
TRANSAMERICA VARIABLE INSURANCE FUND, INC.
Managed by Transamerica Investment Management, LLC
Transamerica VIF Growth Portfolio
As of January 22, 2001, new contract owners may only invest in the Service
Class sub-accounts, with the exception of the Money Market Sub-account and the
Transamerica VIF Growth Sub-account. The Initial Class sub-accounts (other than
the Money Market Sub-account and Transamerica VIF Growth Sub-account) are only
available to contract owners that purchased a contract before January 22, 2001.
Meeting objectives depends on various factors, including, but not limited to,
how well the portfolio managers anticipate changing economic and market
conditions. You should be aware of the following risks:
. There is no assurance that any of these portfolios will achieve their stated
objectives.
. An investment in the contract is not insured or guaranteed by the FDIC or
any other government agency.
. Investing in the contract involves certain investment risks, including
possible loss of principal.
The portfolios are open-end management investment companies, or portfolios or
series of, open-end management companies registered with the SEC under the 1940
Act, that are often referred to as mutual funds. This SEC registration does not
involve SEC supervision of the investments or investment policies of the
portfolios.
Shares of the portfolios are not offered to the public but solely to the
insurance company separate accounts and other qualified purchasers as limited
by federal tax laws. These portfolios are not the same as mutual funds that may
have very similar names that are sold directly to the public, and the
performance of such publicly available funds, which have different portfolios
and expenses, should not be considered as an indication of the performance of
the portfolios.
The assets of each portfolio are held separate from the assets of the other
portfolios. Each portfolio operates as a separate investment vehicle. The
income or losses of one portfolio have no effect on the investment performance
of another portfolio.
The sub-accounts reinvest dividends and/or capital gains distributions received
from a portfolio in more shares of that portfolio as retained assets.
The Rule 12b-1 Fees deducted from the Service Class Shares of these portfolios
cover certain distribution and shareholder support services provided by
Transamerica Occidental Life Insurance Company selling contracts investing in
those portfolios.
Resolution of Possible Conflicts
Since variable insurance products from other companies as well as Transamerica
can invest in all of the portfolios, there is a possibility that a material
conflict may arise between the interests of the variable account and other
companies. If conflict occurs, the affected insurance companies will take the
needed steps to resolve the matter. This may
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include stopping their separate account from investing in the portfolios.
Sources of Additional Information
You will find additional information in the current prospectuses for the
portfolios, which accompany this prospectus, including:
. the investment objectives;
. the investment policies;
. the investment advisory services;
. the administrative services; and
. charges
You should read the portfolios' prospectuses carefully before you make any
decision concerning the allocation of premiums to, or transfers among, the sub-
accounts.
Addition, Deletion or Substitution
Transamerica does not control the portfolios. We therefore cannot guarantee
that any of the sub-accounts of the variable account or any of the portfolios
will always be available to investors for allocation of premiums or transfers.
We retain the right to make changes in the variable account and in its
investments.
We reserve the right to:
. eliminate the shares of any portfolio held by a sub-account; or
. substitute shares of another portfolio or of another investment company for
the shares of any portfolio.
If the shares of a portfolio are no longer available for investment or if, in
our judgement, a portfolio is not fulfilling its intended purpose within the
variable account, we reserve the right to remove it. To the extent required by
the 1940 Act, we will inform shareholders in advance of any substitutions. We
will also seek the Commission's advance approval before making substitutions.
These potentially necessary substitutions should not be construed in any way as
preventing or limiting the variable account from purchasing other securities
for other series or classes of variable annuity certificates, or from effecting
an exchange between series or classes of variable certificates on the basis of
requests made by owners.
The Establishment of New Sub-Accounts
At our discretion, based on marketing, tax, investment or other conditions, we
can elect to establish new sub-accounts. We will make these new sub-accounts
available to our existing certificate owners on a basis which we will determine
at that time. Each additional sub-account will purchase shares in a portfolio
or in another mutual fund or investment vehicle. We may also eliminate one or
more sub-accounts if, in our sole discretion, marketing, tax, investment or
other conditions so warrant. In the event any sub-account is eliminated, we
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, we may change the certificates in a
way that appropriately reflects substitutions or changes. Furthermore, if we
believe it to be in the best interests of persons having voting rights under
the certificates, the variable account may be operated as a management company
under the 1940 Act or any other form permitted by law. It may also be
deregistered under this 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 owners as a disclosure document
only for the certificate and the variable account. For complete details
regarding the fixed account, see the certificate 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. 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. The Securities and Exchange
Commission has not reviewed the disclosures in this prospectus which relate to
the fixed account.
The fixed account is part of the general account of Transamerica. The general
account consists of all of
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Transamerica's general assets, other than those in the variable account, or
assets in any other segregated asset account. We have the right to determine
how it will invest the assets of its general account while adhering to
applicable laws. The allocation or transfer of funds to the fixed account does
not entitle the owner to share in the overall investment returns of our general
account.
The Interest Rate of the Fixed Account
We guarantee that we will credit interest at a rate of not less than 3% per
year, compounded annually, to amounts allocated to the fixed account under the
certificates. We 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 we 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;
. anticipated returns on our investments;
. regulatory and tax requirements; and
. competitive factors.
Interest credited to amounts allocated to the fixed account in excess of 3% per
year will be determined in our sole discretion. You, as the owner, assume the
risk that interest credited to the fixed account allocations may not exceed the
minimum guarantee of 3% for any given year.
Interest rates 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. After the end of the twelve month period for a particular
allocation, we may change the annual rate of interest for that class. The new
annual rate of interest will remain in effect for at least twelve months. New
premiums paid to the certificate 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
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 we 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 certificate year. The maximum amount you may transfer from
the fixed account will be the maximum transfer amount in effect on the date of
such transfer during a certificate year. The maximum transfer amount is a
percentage of the value of the fixed account as of the date of the last
certificate anniversary. The percentage rate, which we will declare from time
to time, will be a minimum of 25% and, currently, is 25%.
Transfers into the Fixed Account
You must wait 90 days before you are allowed to make a second or additional
transfer from a sub-account of the variable account into the fixed account.
THE CERTIFICATE
The certificate is a flexible premium multi-funded individual deferred annuity
certificate. The rights and benefits under the certificate are described below
and in the certificate. We reserve the right to modify the certificate so that
it conforms to any federal or state stature, or rule or regulation. Such
modifications will give certificate owners the benefits of these changes. We
are responsible for the obligations stated in the certificate.
The certificates may be used for contributory and rollover IRAs and for
contributory and rollover Roth IRAs that qualify for special federal income tax
treatment. With our prior approval, the certificates may be used as Section
403(b) annuities and for use in Section 401(a) qualified pension and profit
sharing plans established by corporate employers. Generally, qualified
certificates contain restrictive provisions limiting the timing and amount of
payments and distributions from the qualified certificate.
CERTIFICATE APPLICATION AND PREMIUMS
Premiums
Please send all of your premium payments to our service center. We will send
you a confirmation to acknowledge the acceptance of each premium.
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The initial premium for each certificate must generally be at least $5,000. We,
may, at our discretion, accept lower initial premiums for certain qualified
certificates.
We will ordinarily issue the certificate and derive the net premium from the
initial premium within two days of receipt of a properly completed application
and the premium. At this time, the certificate is accepted and funded with your
premium. A net premium is defined as a premium minus any applicable premium
taxes. Acceptance of the application is subject to it being received in good
order. We reserve the right to reject any application. Certificates normally
will not be issued with annuitants more than 80 years old, although we in our
discretion may waive this restriction in certain cases.
If the initial premium allocated to the variable sub-account(s) cannot be
credited within two days of receipt because the information is incomplete, or
for any other reason, we will contact you. We will explain the reason for the
delay and will refund the initial premium within five business days, unless you
consent to our retaining the initial premium. Then, we will credit it to the
variable sub-account of your choice as soon as the requirements are fulfilled.
Ten Day Cancellation Option
You have the right to examine the certificate for a limited period known as a
free look period. You may cancel the certificate by delivering or mailing a
written notice or by sending a telegram to:
. the agent through whom the certificate was purchased; or
. our service center.
This must be done before midnight of the tenth day after receipt of the
certificate. If you give notice by mail and return the certificate by mail,
properly addressed with postage paid, the request for cancellation will be
deemed to have been made on the date postmarked. We will refund your premiums
allocated to the fixed account plus the variable account accumulated value,
determined by the date postmarked. The return of these amounts will occur
within seven days after we receive your returned certificate and request to
cancel.
Additional Premiums
You may make additional premiums into the certificate at any time before the
annuity date, as long as the annuitant or contingent annuitant (if any) is
living. Additional premiums must be at least $500, or at least $100 if paid
through an automatic payment plan. If you use an automatic payment plan, we
will automatically deduct the additional premiums from a bank account. In
addition, minimum allocation amounts apply. Additional net premiums are
credited to the certificate as of the date the payment is received. Currently,
additional premiums may not be made to Section 401(a) and Section 403(b)
annuity certificates.
Total premiums for any certificate may not exceed $1,000,000 without our prior
approval. In no event may the sum of all premiums for a certificate during any
taxable year exceed the limits imposed by any applicable federal or state laws,
rules, or regulations.
Choosing One or More Investment Options
You specify how premiums will be allocated under the certificate. You may
select one or more sub-accounts, and you may allocate your premium dollars in
the percentages of your choice. Any premium allocation you choose is allowed,
as long as it is 10% or more, and you use whole numbers. 25% is allowed, for
example, whereas an allocation of 25.50% is not allowed. In addition, the
initial premium allocated to any sub-account must be at least $500. You have
the choice of which sub-accounts to invest, or not invest in. For all non-IRA
certificates, the net premium derived from the initial premium will be
allocated directly to the sub-account or sub-accounts you choose. These net
premiums will be allocated as you have chosen, in the percentages you selected
when we receive the premium.
You may change your allocation percentages at any time. To do this, simply
submit a request for such a change to our service center in a form and manner
acceptable to us. Any changes to the allocation percentages are subject to this
limitation above. Please call our service center in advance to determine how
your request for allocation changes should be made. Your requested changes will
take effect:
. with the first we receive after you have submitted your request; or
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. with any request deemed acceptable by us that is accompanied by a premium.
Your requested changes will remain in effect until you change them again or
surrender your certificate.
Investment Option Limit
Currently, you may not allocate account value to more than eighteen investment
options over the life of the certificate. 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. We may waive this limit in
the future.
For example, if you make an allocation to the Money Market Sub-Account and
later transfer 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
you transfer from a sub-account to another sub-account and later back to the
first, the count towards the limitation would be two, not three.
CERTIFICATE VALUE
Before the annuity date, the certificate value is the sum of:
. the fixed account accumulated value; plus
. the variable account accumulated value.
The variable account accumulated value is expected to change from valuation
period to valuation period. The changes reflect the investment performance of
the selected portfolios, and also reflect the deductions for charges.
The variable account accumulated value is determined with the use of valuation
periods. 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. It 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.
How Your Variable Accumulation Units Are Created
When you pay premiums into your certificate, those premiums are used to
purchase variable accumulation units in the sub-accounts in which you have
chosen to invest. At the end of each valuation period during which we received
premiums from you, yours will be credited with additional variable accumulation
units. The number of units you receive is determined by dividing:
. the portion of each net premium allocated to the sub-accounts; by
. the variable accumulation unit value, at the end of the valuation period.
When you pay your first premium, which is defined as the initial net premium,
variable accumulation units for that payment are credited to the certificate
value. That credit is then held in the Money Market Sub-Account for fifteen
calendar days after the certificate date.
The variable accumulation units credited to your certificate as the result of
your initial net premium are credited to your certificate's value within two
valuation days of the later of:
1. the date on which our service center receives an acceptable and properly
completed application; or
2. the date on which our service center receives the initial premium.
The variable accumulation units credited to your certificate as the result of
subsequent premiums will be credited to your certificate's value at the end of
the valuation period during which we received your payment.
How Variable Accumulation Unit Values Are Calculated
The value of a variable accumulation unit for each sub-account for a valuation
period is established at the end of each valuation period. It 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.
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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.
Transferring Among Sub-Accounts
When you transfer premium dollars among the sub-accounts, those transfers will
result in the purchase and/or cancellation of variable accumulation units. The
value of these units will equal the total dollar amount you are transferring to
or from a sub-account. These transactions are valued at the end of the
valuation day on which you performed your transaction.
TRANSFERS
Transfers Before the Annuity Date
Before the annuity date, you may transfer all or part of the certificate value
among the sub-accounts by giving a written request to our service center
subject to the following conditions:
1. the minimum amount that 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. Transfers are also
subject to terms and conditions that may be imposed by the portfolios.
Your transfer request must specify the amounts you wish to transfer from each
sub-account or the fixed account and the amounts you wish to transfer into each
sub-account or the fixed account.
We impose a transfer fee equal to the lesser of $10 or 2% of the amount of
transfer for each transfer over 18 in a certificate year. We also reserve the
right to:
. waive the transfer fee;
. vary the number of transfers without charge, but not fewer than 12; or
. not count transfers under certain options or services.
If a transfer request would reduce the value in a sub-account or the fixed
account to less than $500, then we reserve the right to transfer the remaining
amount along with the amount you requested to be transferred. This will be done
according to your transfer instructions. Under current law, there will not be
any tax liability to you as the owner if you make a transfer.
Possible Restrictions
We reserve 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. We have determined that the movement of significant sub-account values
from one sub-account to another may prevent the portfolio impacted by these
transfers from taking advantage of investment opportunities. This occurs
because the portfolio must maintain a significant cash position in order to
handle redemptions.
The certificate you are purchasing was not designed for professional market
timing organizations or other persons that use programmed, large, or frequent
transfers. The use of such transfers may be disruptive to an underlying fund
portfolio. We reserve the right to reject any premium payment or transfer
request from any person, if, in our judgment, an underlying fund portfolio
would be unable to invest effectively in accordance with its investment
objectives and policies or would otherwise be potentially adversely affected or
if an underlying portfolio would reject our purchase order.
Such large and sudden movement of assets in any one portfolio may also cause a
substantial increase in portfolio transaction costs. These costs must be
indirectly borne by owners. Therefore, we reserve the right to require that all
transfer requests be made by you, the owner, and not by a third party holding a
power of attorney. We also require that each transfer request be made by a
separate communication to us. We also reserve 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.
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Dollar Cost Averaging
You may elect to participate in dollar cost averaging. Dollar cost averaging
allows you to invest monthly the dollar amount you designate, from $250
upwards, into the portfolio of your choice. The main benefit of this systematic
investment technique is that it enables you to average out the cost of your
unit prices over time, as you invest regularly to meet your personal investment
objectives.
Before the annuity date, you may request that a designated amount of money be
automatically transferred from one, and only one, of the sub-accounts which
invests in:
. the Money Market;
. the Quality Bond Portfolio;
. the Limited High Term Income Portfolio; or
. the Fixed Account.
This money may be transferred to any of the sub-accounts on a monthly basis by
submitting a request to our service center. The request must be in a form and
manner acceptable to us. You may not dollar cost average into the fixed
account. Your transfers will begin the month after we receive your request
(however, you must wait at least one week after we receive it). Dollar cost
averaging transfers will not begin until the later of:
1. 30 days after the certificate date; or
2. the estimated end of the free look period, allowing 5 days for delivery of
the certificate by mail.
Transfers will continue for the duration you selected unless terminated:
1. by you;
2. automatically by us because there are insufficient funds in the applicable
sub-account or fixed account; or
3. for other reasons as set forth in the certificate.
You may request that monthly transfers be continued for an additional period of
time. You can accomplish this by giving notice to our service center in a form
and manner acceptable to us within 30 days before the last monthly transfer. If
no request to continue the monthly transfers is made by you, as the owner, this
option will terminate automatically with the last transfer.
Special Dollar Cost Averaging Option
When you make a purchase payment to the contract, you may elect to allocate the
entire purchase payment to either the six or twelve month special Dollar Cost
Averaging accounts of the fixed account. The purchase payment will be credited
with interest at a guaranteed fixed rate. Amounts will then be transferred from
the special Dollar Cost Averaging account to the variable sub-accounts pro rata
on a monthly basis for six or twelve months (depending on the option you
select) in the allocations you specified when you applied for the contract.
Amounts from the sub-accounts and/or fixed account options may not be
transferred into the special Dollar Cost Averaging accounts. In addition, if
you request a transfer (other than a Dollar Cost Averaging transfer) or a
withdrawal from a special Dollar Cost Averaging account, any amounts remaining
in the special account will be transferred to the variable sub-accounts
according to your original allocation instructions. The special Dollar Cost
Averaging option will end and cannot be reelected. The special Dollar Cost
Averaging Option cannot be in effect at the same time the regular Dollar Cost
Averaging is in effect.
Automatic Asset Rebalancing
When you allocate purchase payments to certain portfolios in certain
percentages, you define how you want your investments balanced. Changing market
conditions affect each portfolio's performance, and can throw your allocations
out of balance. You may instruct us to automatically rebalance the amounts by
reallocating them among the variable sub-accounts, at the time and in the
percentages that you specify. You must specify automatic asset rebalancing in
your instructions to us. As the owner, you may elect to have the rebalancing
done on an annual, semi-annual or quarterly basis. You may also elect to have
amounts allocated among the sub-accounts using whole percentages, with a
minimum of 10% allocated to each sub-account.
You may elect to establish, change or terminate the automatic asset rebalancing
by submitting a request to our service center in a form and manner acceptable
to us. Automatic asset rebalancing will
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not count towards the limit of 18 free transfers in a contract year. There is
currently no charge for the automatic asset rebalancing. However, we reserve
the right to charge a nominal amount for this feature. We also reserve the
right to discontinue offering automatic asset rebalancing any time for any
reason.
Eligibility Requirements
In order to be eligible for dollar cost averaging, you must meet the following
conditions:
1. the value of the selected sub-account (from which your transfers are made)
must be at least $5,000;
2. the minimum amount that you may transfer 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.
Please note that dollar cost averaging transfers can not be made from a sub-
account from which you are receiving systematic withdrawals or automatic
payouts.
You will not be charged for the dollar cost averaging service and transfers
that result from dollar cost averaging practices. Nor will these transfers
count toward the 18 transfers without charge per certificate year.
After the Annuity Date
If you elect a variable annuity payout option, you may transfer variable
account amounts after the annuity date by submitting a request in a form
acceptable to us at our service center. Transfers will generally be processed
as of the date of the request for the transfer.
Your request will be 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.
Your 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
You may generally withdraw all or part of your contract's cash surrender value
at any time during the life of the annuitant and before the annuity date. You
can do this by giving a written request to our service center. Your request
will be subject to the rules below. Federal or state laws, rules or regulations
may also apply. If you surrender your certificate on or before the annuity date
we will pay you the cash surrender value. The cash surrender value is equal to:
. the certificate value; minus
. any certificate fee; minus
. any applicable contingent deferred sales load, and minus
. any applicable premium taxes.
A surrender of your certificate will result in a cash withdrawal payment equal
to the certificate's cash surrender value at the end of the valuation period
during which we receive your request along with all of your completed forms.
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.
In the case of a partial withdrawal, you may instruct our service center as to
the amounts to be withdrawn from each sub-account or fixed account. If you do
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 to less than $500, we reserve
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. You will be notified in writing of any such transfer.
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A partial withdrawal will not be processed if it would reduce the certificate
value to less than $2,000. In that case, you will be notified that you will
have 10 days from the date notice is mailed to:
a. withdraw a lesser amount, subject to the $500 minimum, leaving a certificate
value of at least $2,000; or
b. surrender the certificate 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 you, your withdrawal
request will be considered null and void, and no withdrawal will be processed.
Fees Relating to Withdrawals or Surrenders
The certificate fee, unless waived, and premium taxes, if applicable, will be
deducted from a full surrender before the application of any contingent
deferred sales load. Your withdrawals may be taxable transactions.
The Code also requires us to withhold federal income tax from certain
withdrawals.
However, as an owner, you generally will be entitled to elect, in writing, not
to have tax withholding apply. This is true except for distributions from
certain qualified certificates 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. In addition,
under New York law you may request us to withhold New York income tax from
withdrawals.
Withdrawals, 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 we receive your request, except that we 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;
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 forms are
received. Payments of any amounts derived from premiums paid by check may be
delayed until the check has cleared your bank. The payment of a withdrawal from
the fixed account may be delayed for up to six months. If payment from the
fixed account is delayed for more than 10 days, interest will be paid on the
withdrawal amount up to the date of payment.
You, as the owner, assume the investment risk for amounts allocated to the
variable account. Certain withdrawals are subject to a contingent deferred
sales load. The total amount paid upon surrender of the certificate, taking
into account any prior withdrawals, may be more or less than the total premiums
paid.
Additional Withdrawal and Surrender Provisions
After a withdrawal of the total cash surrender value, or at any time that the
certificate value is zero, all of your rights as the owner will terminate.
Qualified certificates offered by the prospectus, except for IRAs and Roth
IRAs, are only offered with our prior approval. They will be issued in
connection with retirement plans which meet the requirements of the Code. You
should refer to the terms of the particular retirement plan for any additional
limitations or restrictions on your cash withdrawals, as these limitations or
restrictions may supercede those of the certificate issued by us.
You 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 before the annuity date.
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Systematic Withdrawal Option
Before the annuity date, you may elect to have withdrawals automatically made
from one or more sub-account(s) on a monthly basis. You can accomplish this by
giving written notice to our service center. Other distribution modes may be
allowed. The withdrawals will begin the month following, but no sooner than one
week following, receipt of your written notice. Please note, however, payments
will not begin sooner than the later of:
a. 30 days after the certificate date; or
b. the end of the free look period, allowing 5 days for delivery of the
certificate by mail.
Upon written notice to you, we may change the day of the month on which
withdrawals are made under this option. Withdrawals will be from the sub-
account, or sub-accounts, and in the percentage allocations specified by you
the owner. If no specifications are made, withdrawals will be pro rata from all
sub-accounts. Systematic withdrawals can not be made from a sub-account from
which dollar cost averaging transfers are being made.
Eligibility and Rules of the Systematic Withdrawal Option
To be eligible for the systematic withdrawal option:
. the certificate value must be at least $12,000 at the time you elect to use
this option;
. the minimum monthly amount that can be withdrawn is $100; and
. 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 certificate years old, and
b) 10% of remaining premiums that are at least seven certificate years old.
Systematic withdrawals are not subject to the contingent deferred sales load
but may be reduced by any applicable premium tax. Systematic withdrawals may be
taxable, subject to withholding, and subject to the 10% penalty tax.
Systematic withdrawals will continue unless you terminate them or they are
automatically terminated by us as described in the certificate. If this option
is terminated it may not be used again until the next certificate anniversary.
You may make only one partial withdrawal while the systematic withdrawal option
is in effect. If you make a second partial withdrawal while this option is in
effect, it will automatically terminate the systematic withdrawal option. Upon
any second partial withdrawal, any amount requested as a partial withdrawal,
including the first in a certificate year, will be subject to a contingent
deferred sales load to the extent it exceeds accumulated earnings.
We reserve the right to impose an annual fee of an amount not to exceed $25 per
certificate 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 certificate
year. Consult your tax adviser and, if applicable, the particular retirement
plan, before requesting withdrawals from a qualified certificate. There may be
severe restrictions on withdrawals from qualified certificates.
Automatic Payout Option, or APO
Before the annuity date you may elect the automatic payout option, referred to
as the APO, to satisfy minimum distribution requirements under the Internal
Revenue Code for certain qualified certificates.
DEATH BENEFIT
If an owner or annuitant dies before the annuity date, a death benefit on the
certificate is payable. If the deceased owner or annuitant, as applicable, had
not reached age 85, the death benefit will be the greatest of:
a. the certificate value;
b. all premiums paid less all withdrawals and any premium taxes applicable to
those withdrawals; or
c. the greatest certificate anniversary value before the earliest of the
annuitant's or owner's 75th birthday plus all premiums paid since that
certificate anniversary, minus all withdrawals and any premium taxes
applicable to those withdrawals since that certificate anniversary.
If the deceased owner or annuitant, as applicable, had attained age 85, the
death benefit will be equal to the certificate value.
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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 our service center;
or
b. written notice of the method of settlement elected by the beneficiary is
received at our 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
certificate value will remain in the sub-accounts as previously specified by
the owner or as reallocated according to instructions received by us from all
beneficiaries. Therefore, the certificate value will fluctuate with the
investment performance of the applicable sub-accounts. As a result, the amount
of the death benefit will depend on the certificate 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. Once our service center receives this proof and the
beneficiary's choice of a method of settlement, the death benefit generally
will be paid within seven days, or as soon thereafter as we have sufficient
information to make the payment. The death benefit may be paid in a lump sum
cash benefit. Subject to any limitations under any state or federal law, rule,
or regulation, it may be paid under one of the annuity forms, unless a
settlement agreement effective under the certificate prevents this choice. 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.
Designation of Beneficiaries
You, as the owner, may select one or more beneficiaries and name them in the
application. If you select more than one beneficiary, unless you indicate
otherwise they will each share equally in any death benefits payable. Different
beneficiaries may be named with respect to the annuitant's death and the
owner's death. Respectively, these individuals are referred to as the
annuitant's beneficiary and the owner's beneficiary. Before the annuitant's
death, you may change the beneficiary by notice to our service center in a form
and manner acceptable to us. The owner may also make the designation of
beneficiary irrevocable by sending notice to and obtaining approval from our
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 said 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
certificate 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.
We 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 Before the Annuity Date
If the annuitant dies before the annuity date and the annuitant is not the
owner and there is no contingent annuitant, a death benefit under the
certificate 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 Before the Annuity Date
If an owner dies before the annuity date, a death benefit will be paid to that
owner's beneficiary. If the contract has joint owners, the surviving joint
owner will be deemed the owner's beneficiary. If the owner's beneficiary is the
deceased owner's spouse, then the spouse may elect to continue the contract as
his or her own or receive payment of the death benefit. If the spouse elects to
continue the contract, an amount equal to the excess, if any, of the Death
Benefit over the account value will then be added to the account value. This
amount will be added only once, at the time of such election. Furthermore, all
future contingent deferred sales loads will be waived. The payment of the death
benefit may be
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subject to certain distribution requirements under the federal income tax laws.
Death of Annuitant or Owner After the Annuity Date
If the annuitant or an owner dies after the annuity payments start, the
remaining undistributed portion, if any, of the certificate 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 certificate are assessed in
three ways:
1. as deductions for the certificate or annuity fees, any transfer fees,
systematic withdrawal option or asset rebalancing fees, (if any), 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/ Surrender Charge
No deduction for sales charges is made from your premiums. However, a
contingent deferred sales load, or surrender charge, 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 us
relating to the sale of the certificates, including commissions paid to
salespersons, the costs of preparation of sales literature and other
promotional costs and acquisition expenses.
We may also deduct the contingent deferred sales load if you annuitize your
certificate.
The contingent deferred sales load/surrender charge percentage varies according
to the number of certificate years between the certificate year in which a net
premium was credited to the certificate and the certificate year in which the
withdrawal is made. This charge is determined by multiplying the amount
withdrawn that is subject to the contingent deferred sales load by the
contingent deferred sales load percentage according to the following table.
<TABLE>
<CAPTION>
Contingent
Deferred Sales
Load As a
Number of Certificate Years Percentage
Since Receipt of Each Premium of Premium
----------------------------- --------------
<S> <C>
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%
</TABLE>
In no event will the total contingent deferred sales load/surrender charge
assessed against the certificate exceed 6% of the aggregate premiums paid to a
certificate.
Certain amounts may be withdrawn free of any contingent deferred sales load.
You may make withdrawals up to this "allowed amount" without incurring a
contingent deferred sales load/surrender charge each certificate year before
the annuity date. During the first certificate year, the allowed amount is
equal to accumulated earnings not previously withdrawn.
For the first withdrawal, and only the first withdrawal in a certificate year
after the first certificate year, the available allowed amount you may withdraw
is equal to the sum of:
1. 100% of premiums not previously withdrawn and received at least seven
certificate years before the date of withdrawal; plus
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2. the greater of:
a. accumulated earnings not previously withdrawn; or
b. 10% of premiums received at least one but less than seven complete
certificate years before the date of withdrawal not reduced to take into
account any prior withdrawals deemed to be made from such premiums.
After the first withdrawal in a certificate year after the first certificate
year, the available allowed amount is equal to the sum of:
1. 100% of premiums not previously withdrawn and received at least seven
certificate years before the date of withdrawal; plus
2. accumulated earnings not previously withdrawn.
Withdrawals will always be made first from your accumulated earnings, and then
from your premiums on a first-in first-out basis. This is done 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 certificate year, it does not
carry over to the next certificate year. However, accumulated earnings, if any,
in your certificate value are always available as the allowed amount. No
withdrawals are allowed from premiums made by a check which has not cleared.
Some certificate owners may hold certificates issued before 1995 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 than seven certificate
years; plus
2. 10% of premiums held between one and seven certificate years not reduced by
any withdrawals made by the owner from such premiums.
Under these certificates, withdrawals were made first from premiums on a first-
in first-out basis, then from earnings. The allowed amount that applies to
these 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 charged:
1. upon annuitization to an option involving life contingencies on or after the
third certificate anniversary;
2. on distributions resulting from the death of the owner or annuitant before
the annuity date;
3. upon withdrawals of certificate value among the sub-accounts under the
systematic withdrawal option; or
4. in some circumstances, under the automatic payout option.
Any applicable contingent deferred sales load will be deducted from the amount
you requested for both partial withdrawals and full surrenders.
Administrative Charges
At the end of each certificate year before the annuity date, we deduct an
annual certificate fee as partial compensation for expenses relating to the
issue and maintenance of the certificate and the variable account. The annual
certificate fee is equal to the lesser of $30 or 2% of the certificate value.
No certificate fee will be deducted for a certificate year if your certificate
value exceeds $50,000 on the last business day of the certificate year or as of
the date the certificate is surrendered. The certificate fee may be changed
upon 30 days advance written notice to you, the owner, subject to the prior
approval of the New York State Insurance Department. In no event may this fee
exceed the lesser of $60 or 2% of the certificate value.
Such increases in the certificate fee will apply only to future deductions
after the effective date of the change. If you surrender your certificate, we
will deduct the certificate fee in full at the time of the surrender. The
certificate fee will be deducted on a pro rata basis from each sub-account in
which the certificate 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. If monthly
payments are made, the amount paid per month will be $2.50. This fee will not
be changed.
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No annuity fee will be deducted from fixed annuity payments.
We also deduct an 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. This
deduction is for administrative expenses attributable to the certificates and
the variable account which exceed the revenues received from the certificate
fee, any transfer fee, and any fee imposed for systematic withdrawals.
We have the ability to increase or decrease this charge, but the charge is
guaranteed not to exceed 0.25%. We 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 certificate. The administrative
expense charge is reflected in the variable accumulation or variable annuity
unit values for each sub-account.
Mortality and Expense Risk Charge
We impose a charge called the mortality and expense risk charge to compensate
us for bearing certain mortality and expense risks under the certificates. For
assuming these risks, we make 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 both and after the annuity date. We
guarantee 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 us. The mortality risks assumed by us arise
from our contractual obligations to make annuity payments and to pay death
benefits before the annuity date. These payments are determined according to
the annuity tables and other provisions contained in the certificate. Thus, you
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 certificate.
We also bear substantial risk in connection with the death benefit before the
annuity date, since we will pay a death benefit that may be greater than the
certificate value. In this way, we bear the risk of unfavorable experience in
the sub-accounts.
The expense risk assumed by us is the risk that our actual expenses in
administering the certificate and the variable account will exceed the amount
recovered through the administrative expense charge, certificate 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 us. Conversely, if this charge is more
than sufficient, any excess will be profit to us. Currently, we expect a profit
from this charge.
We anticipate that the contingent deferred sales load will not generate
sufficient funds to pay the cost of distributing the certificates. To the
extent that the contingent deferred sales load is insufficient to cover the
actual cost of certificate distribution, the deficiency will be met from our
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 you, as the owner are presently or
become a resident of a state where such taxes apply, we will deduct applicable
premium taxes, including any retaliatory taxes, paid with respect to a
particular certificate from the premiums, from amounts withdrawn, or from
amounts applied on the annuity date. These taxes may range up to 3.5%.
In certain limited circumstances, a broker-dealer or other entity distributing
the certificates may elect to pay us an amount equal to the premium taxes that
would otherwise be attributable to that entity's customers. In such cases, we
will not impose a premium tax charge on those certificates.
Transfer Fee
A fee equal to the lesser of $10 or 2% of the amount of the transfer is charged
for each transfer in excess of 18 in a certificate year. Currently, no fee is
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charged for automatic asset rebalancing. However, we reserve the right to
impose a nominal fee.
Systematic Withdrawal Option
We reserve the right to impose an annual fee, not to exceed $25 for
administrative expenses associated with processing systematic withdrawals.
This fee, which is currently waived, will be deducted in equal installments
from each systematic withdrawal you take during a certificate year.
Automatic Asset Rebalancing Option
We currently do not charge for automatic asset rebalancing, but we reserve the
right to impose a nominal fee for this feature in the future.
Taxes
Under present laws, we 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, we reserve 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 we
determine to be attributable to the certificates.
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.
Sales in Special Situations
We may sell the certificates in special situations that are expected to
involve reduced expenses for us. These instances may include:
1 sales in certain group arrangements, such as employee savings plans;
2 sales to current or former officers, directors, employees and their
families, of Transamerica and its affiliates;
3 sales to officers, directors, employees and their families, of the
portfolios' investment advisers and their affiliates; or
4 sales to officers, directors, employees and sales agents, including
registered representatives and their families, or broker-dealers and other
financial institutions that have sales agreements with us to sell the
certificates.
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; or
3 certain amounts may be credited to the certificate account value, for
example, amounts related to commissions or sales compensation otherwise
payable to a broker-dealer may be credited to the certificate account
value.
These reductions in fees or charges or credits to certificate value will not
unfairly discriminate against any certificate 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.
DISTRIBUTION OF THE CERTIFICATE
Transamerica Securities Sales Corporation, also referred to as TSSC, is the
principal underwriter of the certificates under a Distribution Agreement with
Transamerica. TSSC may also serve as an underwriter and distributor of other
certificates issued through the variable account and certain other separate
accounts of Transamerica and any affiliates of Transamerica. TSSC is an
indirect 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., (the 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 certificates through registered representatives who are
licensed to sell securities and variable insurance products. These agreements
provide that applications for the certificates may be solicited by registered
representatives of the broker/ dealers appointed by Transamerica to sell its
variable life insurance and
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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 certificates 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., referred to as TFR, also is an
underwriter and distributor of the certificates. TFR is a wholly-owned
subsidiary of Transamerica Insurance Corporation of California and is
registered with the SEC and the NASD as a broker/dealer.
ANNUITY PAYMENTS
Annuity Date
The annuity date is the date that the annuity purchase amount is applied to
provide the annuity payments under the certificate. The annuity date will be
used together with the annuity form and payment option you selected. The
annuity date will remain effective unless the entire certificate value has been
withdrawn or the death benefit has been paid to the beneficiary before that
date.
Initially, as the owner, you select the annuity date at the time you pay the
initial premium. After that, you may change the annuity date from time to time
by giving notice to our service center, provided that our service center
receives notice of each change at least 30 days before the then-current annuity
date. The annuity date must not be earlier than the third certificate
anniversary.
The latest annuity date that you may elect 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 purchase amount is the certificate value, minus any applicable
contingent deferred sales load and minus any applicable premium taxes. Any
contingent deferred sales load will be waived if the annuity form selected
involves life contingencies and begins on or after the third certificate
anniversary.
If the amount of the monthly annuity payment from the payment options which you
select results in a monthly annuity payment of less than $20, or if the annuity
purchase amount is less than $2,000, we reserve the right to offer a less
frequent mode of payment or pay the certificate 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.
You may choose from the annuity forms below and we may consent to other plans
of payment before the annuity date. For annuity forms involving life
contingencies, 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 certificates. We reserve the
right to ask for satisfactory proof of the annuitant's, or the joint or
contingent annuitant's age. We 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 will be greater for older
annuitants than for younger annuitants.
You may choose from the fixed annuity payment option, the variable annuity
payment option or a combination of both. The annuity date and annuity forms
available for qualified certificates 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, we have not
received a proper written election not to have federal income taxes withheld,
we 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.
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Election of Annuity Forms and Payment Options
Before the annuity date and while the annuitant is living, you may, by written
request, change the annuity form or annuity payment option or may request
payment of the cash surrender value of the certificate. The request for change
of the annuity date or annuity payment option must be received by our service
center at least 30 days before the annuity date.
If you do not select an annuity form and payment option within at least 30 days
before the annuity date, we will make fixed and/or variable annuity payments
under the 120 month period certain and life annuity form and the applicable
provisions of the certificate (we would apply the variable accumulated value to
variable payments and the fixed accumulated value to fixed payments).
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, will reflect the investment experience of the sub-account or sub-
accounts you choose.
You may elect a fixed annuity, a variable annuity, or a combination of both, in
25% increments of the annuity purchase amount. If you elect a combination, you
must specify what part of the annuity purchase amount is to be applied to the
fixed and variable payment options.
Unless you specify otherwise, the applied annuity purchase amount will be used
to provide a variable annuity. The initial allocation of variable annuity units
for the variable sub-accounts will be in proportion to the certificate's value
in the sub-accounts on the annuity date.
Fixed Annuity Payment Option
A fixed annuity provides for annuity payments that will remain constant
according 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 our general account assets. 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 performance after the annuity date.
The fixed annuity payment amounts are determined by applying the annuity
purchase rate specified in the certificate to the portion of the annuity
purchase amount applied to the fixed annuity option by you. 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-accounts of the variable
account. The variable annuity purchase rate tables in the certificate reflect
an assumed, but not guaranteed, annual interest rate of 4%, so if the actual
net investment performance of the sub-accounts 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-accounts 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 performance of the sub-accounts
which you select, and on the allocations you make among the sub-accounts. For
further details as to the determination of variable annuity payments, see the
Statement of Additional Information.
Annuity Forms
You may choose any of the annuity forms described below. Subject to our
approval, you may also select any other annuity form we may offer in the
future.
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
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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 the
annuitant and the contingent annuitant 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. We will need 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. You may elect
to have the present value of any remaining period certain payments paid to
you in a single sum.
If you do not elect to have the commuted value paid in a single sum after
the annuitant's death, you 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 you, if living, otherwise in a single sum to your 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
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changed. We will need proof of age for the joint annuitants before payments
start.
5. Other Forms of Payment. Benefits can be provided under any other annuity
form not described in this section subject to our agreement and any
applicable state or federal law or regulation. Requests for any other
annuity form must be made in writing to our service center at least 30 days
before the annuity date.
Once payments start under the annuity form and payment option selected by
you:
a) no changes can be made in the annuity form and payment option;
b) no additional premium will be accepted under the certificate; and
c) no further withdrawals will be allowed.
General
You 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 certificate.
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 certificate is issued as a qualified certificate, you 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 our current single
premium fixed annuity rates at the time, whichever would result in a higher
amount of monthly fixed annuity payments.
QUALIFIED CERTIFICATES
Qualified certificates may be used to fund contributory and rollover IRAs and
Roth IRAs. With our prior approval, qualified certificates may also be used for
various types of qualified pension and profit sharing plans under Code Section
401, 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 certificates 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 the conditions of the plan
itself.
Various Tax Penalties May Apply to:
a) contributions in excess of specified limits;
b) distributions before age 59 1/2, subject to certain exceptions;
c) distributions that do not satisfy specified requirements; and
d) certain other transactions subject to qualified plans.
If you are purchasing a certificate for use in a qualified plan, you (the
owner) should seek competent advice regarding the suitability of the proposed
plan documents and the certificates to their specific needs. We reserve the
right to decline to sell the certificate to certain qualified plans or
terminate the certificate if, in our judgment, the certificate is not
appropriate for the plan.
If a certificate is purchased to fund an IRA or a Roth IRA, you must also be
the annuitant. In addition, under current tax law, minimum distributions are
required from certain qualified certificates. You should consult your tax
adviser concerning these matters.
The Automatic Payout Option, or APO
Before the annuity date, for qualified certificate other than Roth IRAs, you
may elect the automatic payout option, or APO, to satisfy minimum distribution
requirements under Code Sections 401(a)(9), 403(b), and 408(b)(3).
For IRAs and SEP/IRAs, (and if you are a 5% owner, for other qualified
contracts) this may be elected no earlier than six months before the calendar
year in which the owner attains age 70 1/2,
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and payments may not begin earlier than January of such calendar year.
For other qualified certificates, APO can be elected no earlier than six months
before the later of when you:
a) attain age 70 1/2; and
a) retire from employment.
Additionally, APO withdrawals may not begin before the later of:
a) 30 days after the certificate 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-accounts and in
the percentage allocations which you specify. If no specifications are made,
withdrawals will be pro rata from all sub-accounts 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 you or
automatically terminated by you as set forth in the certificate. 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. However, if a partial withdrawal is taken,
that partial withdrawal and any subsequent withdrawals in that certificate year
will be subject to a contingent deferred sales load to the extent they exceed
the allowed amount.
To be eligible for this option, the following conditions must be met:
1. the certificate 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-accounts
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
certificate, 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 we will make calculations and
distribution with regard to this certificate only.
Restrictions under Section 403(b) Programs
Certain restrictions apply to annuity contracts used in connection with Code
Section 403(b) retirement plans. Code Section 403(b) provides for tax-deferred
retirement savings plans for employees of certain non-profit and educational
organizations.
According to the requirements of the Code, Section 403(b) annuities generally
may not permit distribution of:
a) elective contributions made in years beginning after December 31, 1988;
b) earnings on those contributions; or
c) 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 certificate 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 certificate. If you are concerned about these tax implications, you
should consult a competent tax adviser before initiating any transaction. This
discussion is based upon our understanding of the present federal income tax
laws as they are currently interpreted by the Internal Revenue Service, or
simply the IRS. No representation is made as to the likelihood of the
continuation of the present federal income tax laws
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or of the current interpretation by the IRS. Moreover, no attempt has been made
to consider any applicable state or other tax laws.
The certificate may be purchased:
a) on a non-tax qualified basis for use as a non-qualified certificate; or
b) in connection with plans qualifying for special tax treatment as a qualified
certificate.
Qualified certificates are designed for use by individuals solely as plans
entitled to special income tax treatment under Code Sections 401, 403(b), 408
and 408A.
The ultimate effect of federal income taxes on the amounts held under a
certificate, on annuity payments, and on the economic benefit to the owner, the
annuitant, or the beneficiary may depend on:
a) the type of retirement plan or arrangement for which the certificate is
purchased;
b) the tax status of the individual concerned; or
c) our tax status.
In addition, certain requirements must be satisfied in purchasing a qualified
certificate with proceeds from a tax qualified retirement plan or other
arrangement. Certain requirements must also be met when receiving distributions
from a qualified certificate in order to continue receiving special tax
treatment. Therefore, if you are considering the purchase of a qualified
certificate, you should seek competent legal and tax advice regarding the
suitability of the certificate for your situation. You will also need to be
aware of the applicable requirements, and the tax treatment of the rights and
benefits of the certificate.
The following discussion assumes that a qualified certificate 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 also
based on the assumption that the certificate 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, as a prospective purchaser, you must
specify whether you are purchasing a non-qualified certificate or a qualified
certificate. If the initial premium is derived from an exchange or surrender of
another annuity certificate, we may require that the prospective purchaser
provide information with regard to the federal income tax status of the
previous annuity certificate. We will require that you purchase separate
certificates if you desire to invest monies qualifying for different annuity
tax treatment under the Code.
Each such separate certificate would require the minimum initial premium stated
above. Additional premiums under a certificate must qualify for the same
federal income tax treatment as the initial premium under the certificate. We
will not accept an additional premium under a certificate if the federal income
tax treatment of such premium would be different from that of the initial
premium.
Taxation of Annuities In General
Code Section 72 governs taxation of annuities in general. We believe that the
owner who is a natural person generally is not taxed on increases in the value
of a certificate until distribution occurs by withdrawing all or part of the
certificate value, for example, through 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 certificate value, and in the
case of a qualified certificate, 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 certificate who is not a natural person
generally must include as income any increase in the excess of the certificate
value over the investment in the contract during the taxable year. There are
some exceptions to this rule and a prospective owner that is not a natural
person, for example, a trust, may wish to discuss these with a competent tax
adviser.
The following discussion generally applies to certificates owned by natural
persons.
Withdrawals
In the case of a withdrawal under a qualified certificate, including
withdrawals under the systematic withdrawal option or the automatic
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payout option, a ratable portion of the amount received is taxable. This
portion is 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 certificate generally equals the amount of any non-
deductible premiums paid by or on behalf of any individual. For a qualified
certificate, the investment in the certificate can be zero. Special tax rules
may apply to certain distributions from a qualified certificate.
With respect to non-qualified certificates, partial withdrawals, including
withdrawals under the systematic withdrawal option, are generally treated as
taxable income to the extent that the certificate 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 certificate, in general, only the portion of the annuity payment that
represents the amount by which the certificate value exceeds the investment in
the certificate will be taxed. After the investment in the certificate 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
certificate 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 certificate.
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 certificate
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 certificate 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
certificate, consult a competent tax adviser regarding deductibility of the
unrecovered amount.
Withholding
The Code requires us to withhold federal income tax from distributions under
the certificates. However, except for distributions from certain qualified
certificates, 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,
Section 403(a) annuities, 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
A federal income tax penalty equal to 10% of the amount treated as taxable
income may be imposed on distributions. 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 designated beneficiary.
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Other tax penalties may apply to certain distributions under a qualified
certificate.
Taxation of Death Benefit Proceeds
Amounts may be distributed from the certificate 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 certificate is not affected by the
owner's or annuitant's death. That is, the investment in the certificate
remains the amount of any premiums paid which were not excluded from gross
income. Other rules relating to distributions at death apply to qualified
certificates. You should consult your legal counsel and tax adviser regarding
these rules and their impact on qualified certificates.
Required Distributions upon Owner's Death
Notwithstanding any provision of the certificate or this prospectus to the
contrary, no payment of benefits provided under a non-qualfied certificate will
be allowed that does not satisfy the requirements of Code Section 72(s). 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.
Please note that item b) is based on the following provisions:
1. the annuity must be distributed in substantially equal installments over the
life of the owner's beneficiary or over a period not extending beyond the
life expectancy of the owner's beneficiary; and
2. the distributions must not begin not later than one year after the owner's
date of death.
Notwithstanding items a) and b) above, if the sole owner's beneficiary is the
deceased owner's surviving spouse, then the surviving spouse may elect, within
the one year period after the owner's date of death, to continue the
certificate 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 certificate in
effect before such election will cease;
2. the spouse will become the owner of the certificate 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 certificate or allowed by us will
belong to the spouse as owner of the certificate.
This election will be deemed to have been made by the spouse if such spouse
makes a premium payment to the certificate 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 certificate.
If The Annuitant Dies After The 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.
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If The Owner Dies After The 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 certificate or allowed by us will pass to the owner's
beneficiary.
Joint Ownership -- For purposes of this section, if the certificate 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
certificate, subject to the provisions described above.
Similar rules apply to qualified certificates.
Transfers, Assignments, or Exchanges of the Certificate
For a transfer of ownership of a non-qualified certificate, the designation of
an annuitant, payee, or beneficiary who is not also the owner, or the exchange
of a certificate may result in certain tax consequences to the owner that are
not discussed herein.
As an owner, if you are contemplating any such designation, transfer,
assignment, or exchange, you should contact a competent tax adviser with
respect to the potential tax effects of such a transaction. Certain qualified
certificates cannot be transferred or assigned, except as permitted by the Code
or the Employee Retirement Income Security Act of 1974, also referred to simply
as ERISA.
Multiple Certificates
All deferred non-qualified annuity certificates that are issued by us, or our
affiliates, to the same owner during any calendar year are treated as one
annuity certificate for purposes of determining the amount includible in gross
income under Code Section 72(e). 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 certificates or otherwise.
Congress has also indicated that the Treasury Department may have authority to
treat the combination purchase of an immediate annuity certificate and a
separate deferred annuity certificate as a single annuity certificate under its
general authority to prescribe rules as may be necessary to enforce the income
tax laws.
QUALIFIED CERTIFICATES
In General
The qualified certificate is designed for use as an IRA or Roth IRA. With our
prior approval, the certificate may also be used for 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 before age 59 1/2, subject to certain exceptions;
. distributions that do not conform to specified commencement and minimum
distribution rules; and
. other specified circumstances.
We make no attempt to provide more than general information about use of the
certificates 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
certificates may be subject to the terms and conditions of the plans
themselves, regardless of the terms and conditions of the certificate issued in
connection with such a plan.
Some retirement plans are subject to distribution and other requirements that
are not incorporated in the certificates or the administration of the
certificates. Owners are responsible for determining that contributions,
distributions and other transactions with respect to the certificates satisfy
applicable law. Purchasers of certificates for use with any retirement plan
should consult their legal counsel and tax adviser regarding the suitability of
the certificate.
For qualified plans under Sections 401(a), 403(a) and 403(b), the Code requires
that distributions generally must commence no later than the later of
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April 1 of the calendar year following the calendar year in which the owner or
plan participant:
1. reaches age 70 1/2; or
2. retires; and
3. distribution is made in a specified 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 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 before the owner's death.
Qualified Pension and Profit Sharing Plans
Code Section 401(a) permits employers to establish various types of retirement
plans for employees. Such retirement plans may permit the purchase of the
certificate 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.
The death benefit could be characterized as an incidental death benefit, the
amount of which is limited in any pension or profit-sharing plan. Because the
death benefit may exceed this limitation, employers using the contract in
connection with such plans should consult their tax adviser.
Adverse tax consequences to the plan, to the participant, or to both, may
result if this certificate is assigned or transferred to any individual as a
means to provide benefits payments. If you are purchasing a certificate for use
with such plans, you should seek competent advice regarding the suitability of
the proposed plan documents and the certificate to their specific needs. The
certificate is designed to invest retirement savings and not to distribute
retirement benefits.
Individual Retirement Annuities, Simplified Employee Plans and Roth IRAs
The certificate is designed for use with contributory and rollover IRAs and
Roth IRAs.
Code Section 408 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. A contributory IRA
is a certificate in which initial and subsequent purchase payments are subject
to limitations imposed by the Code. Also, distributions from certain other
qualified plans may be rolled over, or transferred on a tax-deferred basis into
an IRA described in Code Section 408.
A Section 408 IRA is an IRA described in Sections 408(a) or 408(b), other than
a Roth 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.
This includes 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.
Other than nondeductible contributions, amounts in the IRA are taxed when
distributed from the IRA. Distributions before 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 certificate for use with IRAs.
Eligible employers that meet specified criteria under Code Section 408(k) could
establish simplified employee pension plans, also referred to as 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.
A contributory Roth IRA is a certificate to which initial and subsequent
purchase payments are subject to limitations imposed by the Code. Code Section
408A 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.
41
<PAGE>
Distributions from a Roth IRA generally are not taxed, except that, once total
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 any Roth IRA of the individual.
Purchasers should seek competent advice as to the suitability of the
certificate for use with Roth IRAs. The sale of a certificate for use with an
IRA, SEP-IRA or Roth IRA may be subject to special disclosure requirements of
the IRS. Purchasers of these certificates will be provided with supplemental
information required by the IRS 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:
. elective contributions made in years beginning after December 31, 1988;
. earnings on those contributions; or
. 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
certificate from a Section 403(b)(7) custodial account will be subject to the
restrictions.
The death benefit could be characterized as an incidental death benefit, the
amount of which is limited in any Code Section 403(b) annuity contract. Because
the death benefit may exceed this limitation, employers using the contract in
connection with such plan should consult their tax adviser.
Restrictions under Qualified Certificates
Other restrictions may apply to the election, commencement, or distribution of
benefits under qualified certificates or under the terms of the plans in
respect of which qualified certificates are issued. A qualified certificate
will be amended as necessary to conform to the requirements of the Code.
Possible Changes in Taxation
Legislation has been proposed in the past that, if enacted, would adversely
modify the federal taxation of certain insurance and annuity certificates. For
example, one proposal would tax transfers among investment options and tax
exchanges involving variable certificates. A second proposal would reduce the
investment in the certificate under cash value life insurance and certain
annuity certificates 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 certificates could be changed by legislation or other means.
Moreover, it is also possible that any change could be retroactive, that is,
effective before the date of the change. You should consult a tax adviser with
respect to legislative developments and their effect on the certificate.
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 our 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
42
<PAGE>
certificate depend on the individual circumstances of each owner or recipient
of the distribution. A competent tax adviser should be consulted for further
information.
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
The organization of Transamerica, its authority to issue the certificates and
the validity of the form of the certificates have been passed upon by James W.
Dederer, general counsel of Transamerica.
ACCOUNTANTS AND FINANCIAL STATEMENTS
The unaudited consolidated financial statements of Transamerica for the six
months ended June 30, 2000 appear in the Statement of Additional Information.
The statutory-basis financial statements of Transamerica at December 31, 1999
and 1998, and for each of the three years in the period ended December 31,
1999, and the financial statements of Separate Account VA-2LNY at December 31,
1999 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 appearing in the Statement
of Additional Information. The financial statements audited by Ernst & Young
LLP have been included in reliance upon such reports given upon the authority
of such firm as experts in accounting and auditing.
VOTING RIGHTS
To the extent required by applicable law, all portfolio shares held in the
variable account will be voted by Transamerica at regular and special
shareholder meetings of the respective funds in accordance with instructions
received from persons having voting interests in the corresponding sub-account.
If, however, the 1940 Act or any regulation thereunder should be amended, or if
the present interpretation thereof should change, or if Transamerica determines
that it is allowed to vote all portfolio shares in its own right, Transamerica
may elect to do so.
The person with the voting interest is the owner. The number of votes which are
available to an owner will be calculated separately for each sub-account of the
variable account. Before the annuity date, that number will be determined by
applying his or her percentage interest, if any, in a particular sub-account to
the total number of votes attributable to that sub-account. The owner holds a
voting interest in each sub-account to which the certificate value is
allocated. After the annuity date, the number of votes decreases as annuity
payments are made and as the reserves for the certificate 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 before 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
certificates 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 with the Securities and
Exchange Commission under the Securities Act of 1933 relating to the
certificate 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. Reference is
hereby made to such Registration
43
<PAGE>
Statement and exhibits for further information relating to Transamerica and the
certificate.
Statements contained in this prospectus, as to the content of the certificate
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.
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
THE CERTIFICATE
DOLLAR COST AVERAGING
NET INVESTMENT FACTOR
ANNUITY PERIOD
GENERAL PROVISIONS
CALCULATIONS OF YIELDS AND TOTAL RETURNS
HISTORICAL PERFORMANCE DATA
FEDERAL TAX MATTERS
DISTRIBUTION OF THE CERTIFICATE
SAFEKEEPING OF ACCOUNT ASSETS
TRANSAMERICA
STATE REGULATION
RECORDS AND REPORTS
FINANCIAL STATEMENTS
APPENDIX
44
<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, which is 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 certificate.
Example of Variable Annuity Payment Calculations
Suppose that the account is currently credited with 3,200 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).
45
<PAGE>
Appendix B
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,
1999. 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>
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value Units Outstanding
Subaccount Beginning of Period at End of Period at End of Period
---------------------------------------------------------------------------------
<S> <C> <C> <C>
Appreciation*(/2/)
1999.................. $35.36 $38.862415 2,778,082.022
1998.................. $27.532 $35.36 2,358,609.519
1997.................. $21.802 $27.532 1,798,913.636
1996.................. $17.610 $21.802 1,074,614.761
1995.................. $13.373 $17.610 587,928.246
1994.................. $13.160 $13.373 285,265.910
1993.................. $6.590 $13.160 44,612.892
---------------------------------------------------------------------------------
Balanced*(/6/)
1999.................. $14.16 $15.101489 1,540,794.857
1998.................. $11.738 $14.16 857,333.328
1997.................. $10.000 $11.738 333,714.857
---------------------------------------------------------------------------------
Disciplined Stock*(/5/)
1999.................. $19.09 $22.295427 2,764,507.486
1998.................. $15.272 $19.09 2,262,990.153
1997.................. $11.776 $15.272 1,196,912.676
1996.................. $10.00 $11.776 381,884.114
---------------------------------------------------------------------------------
Growth and Income*(/4/)
1999.................. $29.23 $33.694444 1,902,864.700
1998.................. $26.509 $29.23 2,071,117.603
1997.................. $23.131 $26.509 2,179,109.968
1996.................. $19.426 $23.131 1,906,011.179
1995.................. $12.235 $19.426 734,393.096
---------------------------------------------------------------------------------
International
Equity*(/4/)
1999.................. $15.89 $25.037701 458,935.429
1998.................. $15.422 $15.89 431,892.273
1997.................. $14.267 $15.422 378,355.293
1996.................. $12.964 $14.267 226,976.242
1995.................. $12.024 $12.964 61,152.467
---------------------------------------------------------------------------------
International
Value*(/5/)
1999.................. $11.78 $14.846150 325,359.228
1998.................. $10.982 $11.78 240,526.824
1997.................. $10.244 $10.982 172,941.244
1996.................. $10.00 $10.244 47,815.855
</TABLE>
46
<PAGE>
<TABLE>
<CAPTION>
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value Units Outstanding
Subaccount Beginning of Period at End of Period at End of Period
---------------------------------------------------------------------------------
<S> <C> <C> <C>
Limited Term High
Income*(/6/)
1999.................. $10.73 $10.421888 1,076,017.149
1998.................. $10.852 $10.73 1,308,425.217
1997.................. $10.000 $10.852 473,373.863
---------------------------------------------------------------------------------
Money Market(/1/)
1999.................. $1.22 $1.258459 18,055,789.503
1998.................. $1.175 $1.22 17,914,765.700
1997.................. $1.132 $1.175 12,049,327.817
1996.................. $1.093 $1.132 10,392,468.634
1995.................. $1.048 $1.093 9,084,943.487
1994.................. $1.018 $1.048 8,547,165.659
1993.................. $1.021 $1.018 2,678,280.492
---------------------------------------------------------------------------------
Quality Bond*(/1/)
1999.................. $15.88 $15.683297 1,277,828.172
1998.................. $15.260 $15.88 1,282,534.621
1997.................. $14.142 $15.260 987,773.886
1996.................. $13.908 $14.142 664,469.782
1995.................. $11.710 $13.908 454,139.991
1994.................. $12.445 $11.710 164,657.770
1993.................. $12.310 $12.445 86,752.856
---------------------------------------------------------------------------------
Small Cap*(/1/)
1999.................. $64.44 $78.255479 830,844.928
1998.................. $67.668 $64.44 949,334.076
1997.................. $58.773 $67.668 1,031,483.594
1996.................. $51.121 $58.773 1,000,594.786
1995.................. $40.064 $51.121 817,445.023
1994.................. $37.702 $40.064 612,327.237
1993.................. $39.620 $37.702 138,557.449
---------------------------------------------------------------------------------
Small Company
Stock*(/5/)
1999.................. $11.99 $13.083267 490,455.380
1998.................. $12.935 $11.99 582,290.495
1997.................. $10.772 $12.935 513,524.112
1996.................. $10.00 $10.772 212,878.654
---------------------------------------------------------------------------------
Special Value*(/1/)
1999.................. $16.19 $17.122305 1,025,465.093
1998.................. $14.185 $16.19 1,081,841.670
1997.................. $11.682 $14.185 1,017,390.458
1996.................. $12.292 $11.682 489,733.637
1995.................. $12.496 $12.292 666,488.480
1994.................. $12.861 $12.496 820,985.237
1993.................. $12.797 $12.861 167,686.797
---------------------------------------------------------------------------------
Stock Index*(/1/)
1999.................. $44.42 $52.827945 1,484,609.136
1998.................. $35.128 $44.42 1,117,569.153
1997.................. $26.791 $35.128 808,857.987
1996.................. $22.172 $26.791 585,454.420
1995.................. $16.437 $22.172 365,482.688
1994.................. $16.521 $16.437 190,496.642
1993.................. $16.590 $16.521 32,543.274
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value Units Outstanding
Subaccount Beginning of Period at End of Period at End of Period
---------------------------------------------------------------------------------
<S> <C> <C> <C>
Socially Responsible
Growth*(/3/)
1999.................. $34.30 $43.995552 590,500.643
1998.................. $26.879 $34.30 346,500.316
1997.................. $21.221 $26.879 230,281.724
1996.................. $17.752 $21.221 103,732.717
1995.................. $13.377 $17.752 49,020.846
1994.................. $13.364 $13.377 24,171.591
1993.................. $12.490 $13.364 3,555.254
---------------------------------------------------------------------------------
Core Value*(/7/)
1999.................. $9.29 $10.966574 245,134.002
1998.................. $10.00 $9.29 32,398.128
---------------------------------------------------------------------------------
European Equity*(/9/)
1999.................. $10.00 $12.824421 41,298.363
---------------------------------------------------------------------------------
Founders Growth*(/8/)
1999.................. $10.00 $12.632215 101,842.513
---------------------------------------------------------------------------------
Founders International
Equity*(/9/)
1999.................. $10.00 $13.894486 14,166.033
---------------------------------------------------------------------------------
Founders Passport*(/8/)
1999.................. $10.00 $16.144478 53,674.766
---------------------------------------------------------------------------------
MidCap Stock*(/7/)
1999.................. $9.63 $10.528777 321,171.239
1998.................. $10.00 $9.63 221,581.308
---------------------------------------------------------------------------------
Technology Growth*(/9/)
1999.................. $10.00 $15.383368 1,272,158.607
---------------------------------------------------------------------------------
Transamerica VIF
Growth(/7/)
1999.................. $11.35 $15.422192 938,179.247
1998.................. $10.00 $11.35 337,225.242
</TABLE>
(1)Sub-Account inception January 4, 1993.(6)Sub-Account inception May 1,
(2)Sub-Account inception April 5, 1993. 1997.
(3)Sub-Account inception October 7, 1993.(7)Sub-Account inception May 1,
(4)Sub-Account inception January 5, 1995.1998.
(5)Sub-Account inception May 1, 1996. (8)Sub-Account inception May 3,
1999.
*The figures shown reflect information for the Initial Class Shares.
(9)Sub-Account inception October 1,
1999.
The Initial Class Shares of the Core Bond Sub-account, Emerging Leaders Sub-
account, Emerging Markets Sub-account, Founders Discovery Sub-account and Japan
Sub-account had not commenced operations as of December 31, 1999, therefore
comparable information is not available.
The Service Class Shares of the Appreciation Sub-account, Balanced Sub-account,
Disciplined Stock Sub-account, Growth and Income Sub-account, International
Equity Sub-account, International Value Sub-account, Limited Term High Income
Sub-account, Quality Bond Sub-account, Small Cap Sub-account, Small Company
Stock Sub-account, Special Value Sub-account, Dreyfus Stock Index Fund Sub-
account, The Dreyfus Socially Responsible Growth Fund, Inc. Sub-account, Core
Bond Sub-account, Core Value Sub-account, Emerging Leaders Sub-account,
Emerging Markets Sub-account, European Equity Sub-account, Founders Discovery
Sub-account, Founders Growth Sub-account, Founders International Equity Sub-
account, Founders Passport Sub-account, Japan Sub-account, MidCap Stock Sub-
account, and Technology Growth Sub-account were not available as of December
31, 1999, therefore comparable information for the Service Class Shares is not
available.
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.
48
<PAGE>
Appendix C
DEFINITIONS
Active Sub-Account: A sub-account of the variable account in which the
certificate 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 certificate has been
issued, except upon the annuitant's death before the annuity date if a
contingent annuitant has previously been named. In the case of a qualified
certificate used to fund an IRA, Roth IRA, or a 403(b) annuity, the owner must
be the annuitant.
Annuitant's Beneficiary: The person or persons named by the owner who may
receive the death benefit under the certificate, 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 or owners; 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 certificate, the annuity date will be as shown in the
certificate. 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 certificate 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
certificate. The annuity purchase amount is equal to the certificate 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 involves life contingencies
and the annuity date occurs on or after the third certificate 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 certificate is
surrendered on or before the annuity date. The cash surrender value is equal to
the certificate value, less the certificate fee, less any applicable contingent
deferred sales load, and less applicable premium taxes.
Certificate Anniversary: The same month and day as the certificate date in each
calendar year after the calendar year in which the certificate date occurs.
Certificate Date: The effective date of the certificate as shown on the
certificate.
Certificate Value: The sum of the fixed accumulated value plus the variable
accumulated value.
Certificate Year: The 12-month period from the certificate date and ending with
the day before the first certificate anniversary and each twelve month period
thereafter. The first certificate year for any particular net premium is the
certificate year in which the premium is received by our service center.
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
certificate 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
49
<PAGE>
at any time by the owner while the annuitant is living and before the annuity
date.
Contingent Deferred Sales Load or Surrender Charge: A charge equal to a
percentage of premiums withdrawn from the certificate that are less than seven
years old. See Contingent Deferred Sales Load/Surrender Charge on page 35 for
the specific percentages.
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 certificate before the annuity date. The fixed
accumulated value before the annuity date is equal to: (a) net premiums
allocated to the fixed account plus interest credited; less (b) reductions for
the annual certificate fee deducted on the last business day of each
certificate 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 certificate, during which the owner has the right to
cancel the certificate.
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
certificate 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 Certificate: A certificate that does not receive special tax
treatment under the Code.
Owner or Joint Owners: The person or persons who, while living, control all
rights and benefits under the certificate. Joint owners own the certificate
equally with the right of survivorship. The right of survivorship means that if
a joint owner dies, his or her interest in the certificate will pass to the
surviving joint owner in accordance with the death benefit provision. Qualified
certificates may not have joint owners.
Owner's Beneficiary: The person who becomes the owner of the certificate if the
owner dies. If the certificate 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.
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 us.
Qualified Certificate: A certificate issued in connection with a retirement
plan or program that qualifies for special tax treatment under Section 401(a),
403(b), 408 or 408A of the Code.
Receipt: Receipt and acceptance by us at our service center.
Service Center: Transamerica's Annuity Service Center, at 4333 Edgewood Road
N.E., Cedar Rapids, IA 52499-0001 and at telephone (877) 717-8861.
Source Account: A sub-account of the variable account or the fixed account, as
permitted, from which dollar cost averaging transfers are being made.
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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. 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
certificate before the annuity date. The variable accumulated value before 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 certificate fee deducted on the last business day of
each certificate 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 certificate
value before 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 to any person or persons
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.
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Appendix D
Transamerica Life Insurance Company of New York
DISCLOSURE STATEMENT
for Individual Retirement Annuities
The following information is being provided to you, the owner, in accordance
with the requirements of the Internal Revenue Service (IRS). This Disclosure
Statement contains information about opening and maintaining an Individual
Retirement Account or Annuity (IRA), and summarizes some of the financial and
tax consequences of establishing an IRA.
Part I of this Disclosure Statement discusses Traditional IRAs, while Part II
addresses Roth IRAs. Because the tax consequences of the two categories of IRAs
differ significantly, it is important that you review the correct part of this
Disclosure Statement to learn about your particular IRA. This Disclosure
Statement does not discuss Education IRAs or SIMPLE-IRAs, except as necessary
in the context of discussing other types of IRAs.
Your Transamerica Life Insurance Company of New York's Individual Retirement
Annuity, also referred to as a Transamerica Life IRA Contract has been approved
as to form by the IRS. In addition, we are using an IRA and a Roth IRA
Endorsement based the IRS-approved text. Please note that IRS approval applies
only to the form of the contract and does not represent a determination of the
merits of such IRA contract.
It may be necessary for us to amend your Transamerica Life IRA or Roth IRA
Contract in order for us to obtain or maintain IRS approval of its tax
qualification. In addition, laws and regulations adopted in the future may
require changes to your contract in order to preserve its status as an IRA. We
will send you a copy of any such amendment.
No contribution to a Transamerica Life IRA will be accepted under a SIMPLE plan
established by any employer pursuant to Internal Revenue Code Section 408(p).
No transfer or rollover of funds attributable to contributions made by an
employer to your SIMPLE IRA under the employer's SIMPLE plan may be transferred
or rolled over to your Transamerica Life IRA before the expiration of the two
year period beginning on the date you first participated in the employer's
SIMPLE plan. In addition, depending on the annuity contract you purchased,
contributory IRAs may or may not be available.
This Disclosure Statement includes the non-technical explanation of some of the
changes made by the Tax Reform Act of 1986 applicable to IRAs and more recent
changes made by the Small Business Job Protection Act of 1996, the Health
Insurance Portability and Accountability Act of 1996, the Tax Relief Act of
1997 and the IRS Restructuring and Reform Act of 1998.
The information provided applies to contributions made and distributions
received after December 31, 1986, and reflects the relevant provisions of the
Code as in effect on January 1, 1999. This Disclosure Statement is not intended
to constitute tax advice, and you should consult a tax professional if you have
questions about your own circumstances.
Revocation of Your IRA or Roth IRA
You have the right to revoke your Traditional IRA or Roth IRA issued by us
during the seven calendar day period following its establishment. The
establishment of your Traditional IRA or Roth IRA contract will be the contract
effective date. This seven day calendar period may or may not coincide with the
free look period of your contract.
In order to revoke your Traditional IRA or Roth IRA, you must notify us in
writing and you must mail or deliver your revocation to us postage prepaid, at:
401 North Tryon Street, Charlotte, NC 28202. The date of the postmark, or the
date of certification or registration if sent by certified or registered mail,
will be considered your revocation date. If you revoke your Traditional IRA or
Roth IRA during the seven day period, an amount equal to your premium will be
returned to you without any adjustment.
Definitions
Code -- Internal Revenue Code of 1986, as amended, and regulations issued
thereunder.
Contributions -- Purchase payments paid to your contract.
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Contract -- The annuity policy, certificate or contract which you purchased.
Compensation -- For purposes of determining allowable contributions, the term
compensation includes all earned income, including net earnings from self-
employment and alimony or separate maintenance payments received under a decree
of divorce or separate maintenance and includable in your gross income, but
does not include deferred compensation or any amount received as a pension or
annuity.
Regular Contributions -- In General
As is more fully discussed below, for 1998 and later years, the maximum total
amount that you may contribute for any tax year to your regular IRAs and your
regular Roth IRAs combined is $2,000, or if less, your compensation for that
year. Once you attain age 70 1/2, this limit is reduced to zero only for your
regular IRAs, not for your Roth IRAs, but the separate limit on Roth IRA
contributions can be reduced to zero for taxpayers with adjusted gross income,
also referred to as AGI, above certain levels, as described below in Part II,
Section 1. While your Roth IRA contributions are never deductible, your regular
IRA contributions are fully deductible, unless you, or your spouse, is an
active participant in some form of tax-qualified retirement plan for the tax
year. In the latter case, any deductible portion of your regular IRA
contributions for each year is subject to the limits that are described below
in Part I, Section 2, and any remaining regular IRA contributions for that year
must be reported to the IRS as nondeductible IRA contributions, along with your
Roth IRA contributions.
IRA PART I: TRADITIONAL IRAs
The rules that apply to a Traditional Individual Retirement Account or Annuity,
which is referred to in this Disclosure Statement simply as an "IRA" or as a
"Traditional IRA" and which includes a regular or Spousal IRA and a rollover
IRA, generally also apply to IRAs under Simplified Employee Pension plans or
SEP-IRAs, unless specific rules for SEP-IRAs are stated.
1. Contributions
(a) Regular IRA. Regular IRA contributions must be in cash and are subject to
the limits described above. Such contributions are also subject to the minimum
amount under the Transamerica IRA contract. In addition, any of your regular
contributions to an IRA for a tax year must be made by the due date, not
including extensions, for your federal tax return for that tax year. See also
Part II, Section 4 below about recharacterizing IRA and Roth IRA contributions
by such date.
(b) Spousal IRA. If you and your spouse file a joint federal income tax return
for the taxable year and if your spouse's compensation, if any, includable in
gross income for the year is less than the compensation includable in your
gross income for the year, you and your spouse may each establish your own
separate regular IRA, and Roth IRA, and may make contributions to such IRAs for
your spouse that are not limited by your spouse's lower amount of compensation.
Instead, the limit for the total contribution to spousal IRAs that can be made
by you or your spouse for the tax year is:
1. $2,000; or
2. if less, the total combined compensation for both you and your spouse
reduced by any deductible IRA contributions and any Roth IRA contributions
for such year.
As with any regular IRA contributions, those for your spouse cannot be made for
any tax year in which your spouse has attained age 70 1/2, must be in cash, and
must be made by the due date, not including extensions, for your federal income
tax return for that tax year.
(c) Rollover IRA. Rollover contributions to a Traditional IRA are unlimited in
dollar amount. These can include rollover contributions of eligible
distributions received by you from another Traditional IRA or tax-qualified
retirement plan. Generally, any distribution from a tax-qualified retirement
plans, such as a pension or profit sharing plan, Code Section 401(k) plan, H.R.
10 or Keogh plan, or a Traditional IRA can be rolled over to a Traditional IRA
unless it is a required minimum distribution as discussed below in Part I,
Section 4(a) or it is part of a series of payments to be paid to you over your
life, life expectancy or a period of at least 10 years. In addition,
distributions of "after-tax" plan contributions, i.e., amounts which are not
subject to federal income tax when distributed from a tax-qualified retirement
plan, are not eligible to be rolled over to an IRA. If a distribution from a
tax-qualified plan or a Traditional IRA is paid to you
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and you want to roll over all or part of the eligible distributed amount to a
Transamerica Life Traditional IRA, the rollover must be accomplished within 60
days of the date you receive the amount to be rolled over. However, you may
roll over any amount from one Traditional IRA into another Traditional IRA only
once in any 365-day period.
A timely rollover of an eligible distributed amount that has been paid to you
directly will prevent its being taxable to you at the time of distribution;
that is, none of it will be includable in your gross income until you withdraw
some amount from your rollover IRA. However, any such distribution directly to
you from a tax-qualified retirement plan is generally subject to a mandatory
20% withholding tax.
By contrast, a direct transfer from a tax-qualified retirement plan to a
Traditional IRA is considered a "direct" rollover and is not subject to any
mandatory withholding tax, or other federal income tax, upon the direct
transfer. If you elect to make such a "direct" rollover from a tax-qualified
plan to a Transamerica Life Traditional IRA, the transferred amount will be
deposited directly into your rollover IRA.
Strict limitations apply to rollovers, and you should seek competent tax advice
in order to comply with all the rules governing rollovers.
(d) Direct Transfers from another Traditional IRA. You may make an initial or
subsequent contribution to your Transamerica Life Traditional IRA by directing
the fiduciary or issuer of any of your existing IRAs to make a direct transfer
of all or part of such IRAs in cash to your Transamerica Life Traditional IRA.
Such a direct transfer between Traditional IRAs is not considered a rollover,
e.g., for purposes of the 1-year waiting period or withholding.
(e) Simplified Employee Pension Plan, or SEP-IRA. If an IRA is established that
meets the requirements of a SEP-IRA, generally your employer may contribute an
amount not to exceed the lesser of 15% of your includable compensation
($160,000 for 1999, adjusted for inflation thereafter) or $30,000, even after
you attain age 70 1/2. The amount of such contribution is not includable in
your income for federal income tax purposes. In the case of a SEP-IRA that has
a grandfathered qualifying form of salary reduction, referred to as a SARSEP,
that was established by an employer before 1997, generally any employee,
including a self-employed individual, who:
1. has worked for the employer for 3 of the last 5 preceding tax years;
2. is at least age 21; and
3. has received from the employer compensation of at least $400 for the
current tax year, adjusted for inflation after 1999.
is eligible to make a before tax salary reduction contribution to the SARSEP
for the current tax year of up to $10,000, adjusted for inflation after 1998,
subject to the overall limits for SEP-IRA contributions.
Your employer is not required to make a SEP-IRA contribution in any year nor
make the same percentage contribution each year. But if contributions are made,
they must be made to the SEP-IRA for all eligible employees and must not
discriminate in favor of highly compensated employees. If these rules are not
met, any SEP-IRA contributions by the employer could be treated as taxable to
the employees and could result in adverse tax consequences to the participating
employee. For further details about SARSEPs and SEP-IRAs, e.g., for computing
contribution limits for self-employed individuals, see IRS Publication 590, as
indicated below.
(f) Responsibility of the Owner. Contributions, rollovers, or transfers to any
IRA must be made in accordance with the appropriate sections of the Code. It is
your full and sole responsibility to determine the tax deductibility of any
contribution to your Traditional IRA, and to make such contributions in
accordance with the Code. Transamerica does not provide tax advice, and assumes
no liability for the tax consequences of any contribution to your Transamerica
Life Traditional IRA.
2. Deductibility of Contributions for a Regular IRA
(a) General Rules. The deductible portion of the contributions made to the
regular IRAs for you, or your spouse, for a tax year depends on whether you, or
your spouse, is an "active participant" in some
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type of a tax-qualified retirement plan for such year, as described in Section
2(b) immediately below.
If you and your spouse file a joint return for a tax year and neither of you is
an active participant for such year, then the permissible contributions to the
regular IRAs for each of you are fully deductible up to $2,000 each, i.e., your
combined deductible IRA contribution limit for the tax year could be $4,000.
Similarly, if you are not married, or treated as such, for the tax year and you
are not an active participant for such year, the permissible contributions to
your regular IRAs for the tax year are fully deductible up to $2,000. For
instance, if you and your spouse file separate returns for the tax year and you
did not live together at any time during such tax year, then you are treated as
unmarried for such year, and if you were not an active participant for the tax
year, then your deductible limit for your regular IRA contribution is $2,000,
even if your spouse was an active participant for such year.
If you are an active participant for the tax year, then your $2,000 limit is
subject to a phase-out rule if your AGI for such year exceeds a Threshold
Level, depending on your tax filing status and the calendar year. If, however,
you are not an active participant for the tax year but your spouse is, then
your $2,000 limit is subject to the phase-out rule only if your AGI exceeds a
higher Threshold Level. See Part I, Section 2(c), below.
(b) Active Participant. You are an "active participant" for a year if you
participate in some type of tax-qualified retirement plan. For example, if you
participate in a qualified pension or profit sharing plan, a Code Section
401(k) plan, certain government plans, a tax-sheltered arrangement under Code
Section 403, a SIMPLE plan or a SEP-IRA plan, you are considered to be an
active participant. Your Form W-2 for the year should indicate your
participation status.
(c) Adjusted Gross Income, also referred to as AGI. If you are an active
participant, you must look at your AGI for the year, or if you and your spouse
file a joint tax return, you use your combined AGI, to determine whether you
can make a deductible IRA contribution for that taxable year. The instructions
for your tax return will show you how to calculate your AGI for this purpose.
If you are at or below a certain AGI level, called the Threshold Level, you are
treated as if you were not an active participant and you can make a deductible
contribution under the same rules as a person who is not an active participant.
If you are an active participant for the tax year, then your Threshold Level
depends upon whether you are a married taxpayer filing a joint tax return, an
unmarried taxpayer, or a married taxpayer filing a separate tax return. If you
are a married taxpayer but file a separate tax return, the Threshold Level is
$0. If you are a married taxpayer filing a joint tax return, or an unmarried
taxpayer, your Threshold Level depends upon the taxable year, and can be
determined using the appropriate table below:
<TABLE>
<CAPTION>
Married Filing Jointly Unmarried
Taxable Threshold Taxable Threshold
Year Level Year Level
-----------------------------------------------------------------------
<S> <C> <C> <C>
1998 $50,000 1998 $30,000
1999 $51,000 1999 $31,000
2000 $52,000 2000 $32,000
2001 $53,000 2001 $33,000
2002 $54,000 2002 $34,000
2003 $60,000 2003 $40,000
2004 $65,000 2004 $45,000
2005 $70,000 2005 and thereafter $50,000
2006 $75,000
2007 and thereafter $80,000
-----------------------------------------------------------------------
</TABLE>
Beginning in 1998, if you are not an active participant for the tax year but
your spouse is, and you are not treated as unmarried for filing purposes, then
your Threshold Level is $150,000.
If your AGI is less than $10,000 above your Threshold Level, or $20,000 for
married taxpayers filing jointly for the taxable year beginning on or after
January 1, 2007, you will still be able to make
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a deductible contribution, but it will be limited in amount. The amount by
which your AGI exceeds your Threshold Level is called your Excess AGI. The
Maximum Allowable Deduction is $2,000, even for Spousal IRAs. You can calculate
your Deduction Limit as follows:
10,000--Excess AGI x Maximum Allowable Deduction = Deduction Limit 10,000
For taxable years beginning on or after January 1, 2007, married taxpayers
filing jointly should substitute 20,000 for 10,000 in the numerator and
denominator of the above equation.
You must round up any computation of the Deduction Limit to the next highest
$10 level, that is, to the next highest number which ends in zero. For example,
if the result is $1,525, you must round it up to $1,530. If the final result is
below $200 but above zero, your Deduction Limit is $200. Your Deduction Limit
cannot in any event exceed 100% of your compensation.
3. Nondeductible Contributions to Regular IRAs
The amounts of your regular IRA contributions which are not deductible will be
nondeductible contributions to such IRAs. You may also choose to make a
nondeductible contribution to your regular IRA, even if you could have deducted
part or all of the contribution. Interest or other earnings on your regular IRA
contributions, whether from deductible or nondeductible contributions, will not
be taxed until taken out of your IRA and distributed to you.
If you make a nondeductible contribution to an IRA, you must report the amount
of the nondeductible contribution to the IRS as a part of your tax return for
the year, e.g., on Form 8606.
4. Distributions
(a) Required Minimum Distributions, or simply, RMD. Distributions from your
Traditional IRAs must be made or begin no later than April 1 of the calendar
year following the calendar year in which you attain age 70 1/2, the required
beginning date. You may take RMDs from any Traditional IRA you maintain, but
not from any Roth IRA, as long as:
a) distributions begin when required;
b) distributions are made at least once a year; and
c) the amount to be distributed is not less than the minimum required under
current federal tax law.
If you own more than one Traditional IRA, you can choose whether to take your
RMD from one Traditional IRA or a combination of your Traditional IRAs. A
distribution may be made at once in a lump sum, as qualifying partial
withdrawals or as qualifying settlement option payments. Qualifying partial
withdrawals and settlement option payments must be made in equal or
substantially equal amounts over:
a) your life or the joint lives of you and your beneficiary; or
b) a period not exceeding your life expectancy, as redetermined annually under
IRS tables in the income tax regulations, or the joint life expectancy of
you and your beneficiary, as redetermined annually, if that beneficiary is
your spouse.
Also, special rules may apply if your designated beneficiary, other than your
spouse, is more than ten years younger than you.
If qualifying settlement option payments start before the April 1 following the
year you turn age 70 1/2, then the annuity date of such settlement option
payments will be treated as the required beginning date for purposes of the RMD
provisions, above, and the death benefit provisions, below.
If you die before the entire interest in your Traditional IRAs is distributed
to you, but after your required beginning date, the entire interest in your
Traditional IRAs must be distributed to your beneficiaries at least as rapidly
as under the method in effect at your death. If you die before your required
beginning date and if you have a designated beneficiary, distributions to your
designated beneficiary can be made in substantially equal installments over the
life or life expectancy of the designated beneficiary, beginning by December 31
of the calendar year that is one year after the year of your death. Otherwise,
if you die before your required beginning date and your surviving spouse is not
your designated beneficiary, distributions must
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be completed by December 31 of the calendar year that is five years after the
year of your death.
If your designated beneficiary is your surviving spouse, and you die before
your required beginning date, your surviving spouse can become the new
owner/annuitant and can continue the Transamerica Life Traditional IRA on the
same basis as before your death. If your surviving spouse does not wish to
continue the contract as his or her IRA, he or she may elect to receive the
death benefit in the form of qualifying settlement option payments in order to
avoid the 5-year rule. Such payments must be made in substantially equal
amounts over your spouse's life or a period not extending beyond his or her
life expectancy. Your surviving spouse must elect this option and begin
receiving payments no later than the later of the following dates:
a) December 31 of the year following the year you died; or
b) December 31 of the year in which you would have reached the required
beginning date if you had not died.
Either you or, if applicable, your beneficiary, is responsible for assuring
that the RMD is taken in a timely manner and that the correct amount is
distributed.
(b) Taxation of IRA Distributions. Because nondeductible Traditional IRA
contributions are made using income which has already been taxed, that is, they
are not deductible contributions, the portion of the Traditional IRA
distributions consisting of nondeductible contributions will not be taxed again
when received by you. If you make any nondeductible contributions to your
Traditional IRAs, each distribution from any of your Traditional IRAs will
consist of a nontaxable portion, return of nondeductible contributions, and a
taxable portion, return of deductible contributions, if any, and earnings.
Thus, if you receive a distribution from any of your Traditional IRAs and you
previously made deductible and nondeductible contributions to such IRAs, you
may not take a Traditional IRA distribution which is entirely tax-free. The
following formula is used to determine the nontaxable portion of your
distributions for a taxable year.
Remaining nondeductible contributions
Divided by
Year-end total adjusted Traditional IRA balances
Multiplied by
Total distributions for the year
Equals:
Nontaxable distributions for the year
To figure the year-end total adjusted Traditional IRA balance, you must treat
all of your Traditional IRAs as a single Traditional IRA. This includes all
regular IRAs, as well as SEP-IRAs, SIMPLE IRAs and Rollover IRAs, but not Roth
IRAs. You also add back to your year-end total Traditional IRA balances,
specifically the distributions taken during the year from your Traditional
IRAs. Please refer to IRS Publication 590, Individual Retirement Arrangements
for instructions, including worksheets, that can assist you in these
calculations. Transamerica Life Insurance and Annuity Company will report all
distributions from your Transamerica Traditional IRA to the IRS as fully
taxable income to you.
Even if you withdraw all of the assets in your Traditional IRAs in a lump sum,
you will not be entitled to use any form of lump sum treatment or income
averaging to reduce the federal income tax on your distribution. Also, no
portion of your distribution qualifies as a capital gain. Moreover, any
distribution made before you reach age 59 1/2, may be subject to a 10% penalty
tax on early distributions, as indicated below.
(c) Withholding. Unless you elect not to have withholding apply, federal income
tax will be withheld from your Traditional IRA distributions. If you receive
distributions under a settlement option, tax will be withheld in the same
manner as taxes withheld on wages, calculated as if you were married and claim
three withholding allowances. If you are receiving any other type of
distribution, tax will be withheld in the amount of 10% of the distribution. If
payments are delivered to foreign countries, federal income, tax will generally
be withheld at a 10% rate unless you certify to Transamerica that you are not a
U. S. citizen residing abroad or a tax avoidance expatriate as defined in Code
Section 877. Such certification may
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result in mandatory withholding of federal income taxes at a different rate.
5. Penalty Taxes
(a) Excess Contributions. If at the end of any taxable year the total regular
IRA contributions you made to your Traditional IRAs and your Roth IRAs, other
than rollovers or transfers, exceed the maximum allowable deductible and
nondeductible contributions for that year, the excess contribution amount will
be subject to a nondeductible 6% excise penalty tax. Such penalty tax cannot
exceed 6% of the value of your IRAs at the end of such year.
However, if you withdraw the excess contribution, plus any earnings on it,
before the due date for filing your federal income tax return, including
extensions, for the taxable year in which you made the excess contribution, the
excess contribution will not be subject to the 6% penalty tax. The amount of
the excess contribution withdrawn will not be considered an early distribution,
nor otherwise be includible in your gross income if you have not taken a
deduction for the excess amount.
However, the earnings withdrawn will be taxable income to you and may be
subject to the 10% penalty tax on early distributions. Alternatively, excess
contributions for one year may be withdrawn in a later year or may be carried
forward as regular IRA contributions in the following year to the extent that
the excess, when aggregated with your regular IRA contributions, if any, for
the subsequent year, does not exceed the maximum allowable deductible and
nondeductible amount for that year. The 6% excise tax will be imposed on excess
contributions in each subsequent year they are neither returned to you nor
applied as permissible regular IRA contributions for such year.
(b) Early Distributions. Since the purpose of an IRA is to accumulate funds for
retirement, your receipt or use of any portion of your IRA before you attain
age 59 1/2 constitutes an early distribution subject to a 10% penalty tax
unless the distribution occurs as a result of your death or disability or is
part of a series of substantially equal payments made over your life expectancy
or the joint life expectancies of you and your beneficiary, as determined from
IRS tables in the income tax regulations.
Also, the 10% penalty tax will not apply if distributions are used to pay for
medical expenses in excess of 7.5% of your AGI or if distributions are used to
pay for health insurance premiums for you, your spouse and/or your dependents
if you are an unemployed individual who is receiving unemployment compensation
under federal or state programs for at least 12 consecutive weeks. Effective
for distributions made in 1998 or later, the 10% penalty tax also will not
apply to an early distribution made to pay for certain qualifying first-time
homebuyer expenses of you or certain family members, or for certain qualifying
higher education expenses for you or certain family members.
First-time homebuyer expenses must be paid within 120 days of the distribution
from the IRA and include up to $10,000 of the costs of acquiring, constructing,
or reconstructing a principal residence, including any usual or reasonable
settlement, financing or other closing costs. Higher education expenses include
tuition, fees, books, supplies, and equipment required for enrollment,
attendance, and room and board at a post-secondary educational institution. The
amount of an early distribution, excluding any nondeductible contribution
included therein, is includable in your gross income and may be subject to the
10% penalty tax unless you transfer it to another IRA as a qualifying rollover
contribution.
(c) Failure To Satisfy RMD. If the RMD rules described above in Part I, Section
4(a) apply to you and if the amount distributed during a calendar year is less
than the minimum amount required to be distributed, you will be subject to a
penalty tax equal to 50% of the excess of the amount required to be distributed
over the amount actually distributed.
(d) Policy Loans and Prohibited Transactions. If you or any beneficiary engage
in any prohibited transaction, such as any sale, exchange or leasing of any
property between you and the Traditional IRA, or any interference with the
independent status of such IRA, the Traditional IRA will lose its tax exemption
and be treated as having been distributed to you. The value of the entire
Traditional IRA, excluding any nondeductible contributions included therein,
will be includable in your gross income; and, if at the time of the prohibited
transaction you are under age 59 1/2, you may also be subject to the 10%
penalty tax on early distributions, as described above in Part I, Section 5(b).
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If you borrow from or pledge your Traditional IRA, or your benefits under the
contract, as security for a loan, the portion borrowed or pledged as security
will cease to be tax-qualified, the value of that portion will be treated as
distributed to you, and you will have to include the value of the portion
borrowed or pledged as security in your income that year for federal tax
purposes. You may also be subject to the 10% penalty tax on early
distributions.
(e) Overstatement or Understatement of Nondeductible Contributions. If you
overstate your nondeductible Traditional IRA contributions on your federal
income tax return, without reasonable cause, you may be subject to a reporting
penalty. Such a penalty also applies for failure to file any form required by
the IRS to report nondeductible contributions. These penalties are in addition
to any ordinary income or penalty taxes, interest, and penalties for which you
may be liable if you underreport income upon receiving a distribution from your
Traditional IRA. See Part I, Section 4(b) above for the tax treatment of such
distributions.
IRA PART II: ROTH IRAs
1. Contributions
(a) Regular Roth IRA. You may make contributions to a regular Roth IRA in any
amount up to the contribution limits described in Part II, Section 3, below.
Such contributions are also subject to the minimum amount under the
Transamerica Life Roth IRA contract. Such contribution must be in cash. Your
contribution for a tax year must be made by the due date, not including
extensions, for your federal income tax return for that tax year. Unlike
Traditional IRAs, you may continue making Roth IRA contributions after reaching
age 70 1/2 to the extent that your AGI does not exceed the levels described
below.
(b) Spousal Roth IRA. If you and your spouse file a joint federal income tax
return for the taxable year and if your spouse's compensation, if any,
includable in gross income for the year is less than the compensation
includable in your gross income for the year, you and your spouse may each
establish your own individual Roth IRA and may make contributions to those Roth
IRAs in accordance with the rules and limits for contributions contained in the
Code, which are described in Part II, Section 3, below. Such contributions must
be in cash. Your contribution to a Spousal Roth IRA for a tax year must be made
by the due date, not including extensions, for your federal income tax return
for that tax year.
(c) Rollover Roth IRA. You may make contributions to a Rollover Roth IRA within
60 days after receiving a distribution from an existing Roth IRA, subject to
certain limitations discussed in Part II, Section 3, below.
(d) Transfer Roth IRA. You may make an initial or subsequent contribution to
your Transamerica Life Roth IRA by directing a fiduciary or issuer of any of
your existing Roth IRAs to make a direct transfer of all or a portion of the
assets from such Roth IRAs to your Transamerica Life Roth IRA.
(e) Conversion Roth IRA. You may make contributions to a Conversion Roth IRA
within 60 days of receiving a distribution from an existing Traditional IRA or
by instructing the fiduciary or issuer of any of your existing Traditional IRAs
to make a direct transfer of all or a portion of the assets from such a
Traditional IRA to your Transamerica Life Roth IRA, subject to certain
restrictions and subject to income tax on some or all of the converted amounts.
If your AGI, not including the conversion amount, is greater than $100,000 for
the tax year, or if you are married and you and your spouse file separate tax
returns, you may not convert or transfer any amount from a Traditional IRA to a
Roth IRA.
(f) Responsibility of the Owner. Contributions, rollovers, transfers or
conversions to a Roth IRA must be made in accordance with the appropriate
sections of the Code. It is your full and sole responsibility to make
contributions to your Roth IRA in accordance with the Code. Transamerica Life
Insurance and Annuity Company does not provide tax advice, and assumes no
liability for the tax consequences of any contribution to your Roth IRA.
2. Deductibility of Contributions
Your Roth IRA permits only nondeductible after-tax contributions. However,
distributions from your Roth IRA are generally not subject to federal income
tax. See Part II, 4(b) below. This is unlike a Traditional IRA, which permits
deductible and nondeductible contributions, but which provides that most
distributions are subject to federal income tax.
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3. Contribution Limits
Contributions for each taxable year to all Traditional and Roth IRAs may not
exceed the lesser of 100% of your compensation or $2,000 for any calendar year,
subject to AGI phase-out rules described below in Section 3(a). Rollover,
transfer and conversion contributions, if properly made, do not count towards
your maximum annual contribution limit, nor do employer contributions to a SEP-
IRA or SIMPLE IRA.
(a) Regular Roth IRAs. The maximum amount you may contribute to a regular Roth
IRA will depend on the amount of your AGI for the calendar year. Your maximum
$2,000 contribution limit begins to phase out when your AGI reaches $95,000 as
unmarried or $150,000 when married filing jointly. Under this phase out, your
maximum regular Roth IRA contributions generally will not be less than $200;
however, no contribution is allowed if your AGI exceeds $110,000 as unmarried
or $160,000 when married filing jointly. If you are married and you and your
spouse file separate tax returns, your maximum regular Roth IRA contribution
phases out between $0 and $10,000. If you are married but you and your spouse
lived apart for the entire taxable year and file separate federal income tax
returns, your maximum contribution is calculated as if you were not married.
You should consult your tax adviser to determine your maximum contribution.
You may make contributions to a regular Roth IRA after age 70 1/2, subject to
the phase-out rules. Regular Roth IRA contributions for a tax year should be
reported on your tax return for that year, specifically, on Form 8606.
(b) Spousal Roth IRAs. Contributions to your lower-earning spouse's Spousal
Roth IRA may not exceed the lesser of:
1. 100% of both spouses' combined compensation minus any Roth IRA or
deductible Traditional IRA contribution for the spouse with the higher
compensation for the year; or
2. $2,000, as reduced by the phase-out rules described above for regular Roth
IRAs.
A maximum of $4,000 may be contributed to both spouses' Roth IRAs.
Contributions can be divided between the spouses' Roth IRAs as you and your
spouse wish, but no more than $2,000 in regular Roth IRA contributions can be
contributed to either individual's Roth IRA each year.
(c) Rollover Roth IRAs. There is no limit on the amounts that you may rollover
from one Roth IRA into another Roth IRA, including your Transamerica Life Roth
IRA. You may roll over a distribution from any single Roth IRA to another Roth
IRA only once in any 365-day period.
(d) Transfer Roth IRAs. There is no limit on amounts that you may transfer
directly from one Roth IRA into another Roth IRA, including your Transamerica
Life Roth IRA. Such a direct transfer does not constitute a rollover for
purposes of the 1-year waiting period.
(e) Conversion Roth IRAs. There is no limit on amounts that you may convert
from your Traditional IRA into your Transamerica Life Roth IRA if you are
eligible to open a Conversion Roth IRA as described in Part II, Section 1(e),
above. In the case of a conversion from a SIMPLE-IRA, the conversion may only
be done after the expiration of your 2-year participation period described in
Code Section 72(t)(6). However, the distribution proceeds from your Traditional
IRA are includable in your taxable income to the extent that they represent a
return of deductible contributions and earnings on any contributions. The
distribution proceeds from your Traditional IRA are not subject to the 10%
early distribution penalty tax, described below, if the distribution proceeds
are deposited to your Roth IRA within 60 days.
You can also make contributions to a Roth IRA by instructing the fiduciary or
issuer, custodian or trustee of your existing Traditional IRAs to transfer the
assets in your Traditional IRAs to the Roth IRA, which can be a successor to
your existing Traditional IRAs. The transfer will be treated as a distribution
from your Traditional IRAs, and that amount will be includable in your taxable
income to the extent that it represents a return of deductible contributions
and earnings on any contributions, but will not be subject to the 10% early
distribution penalty tax.
If you converted from a Traditional IRA to a Roth IRA during 1998, the income
reportable upon distribution from the Traditional IRA may be
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reportable entirely for 1998 or reportable ratably over four years beginning in
1998.
4. Recharacterization of IRA Contributions
(a) Eligibility. By making a timely transfer and election, you generally can
treat a contribution made to one type of IRA as made to a different type of IRA
for a taxable year. For example, if you make contributions to a Roth IRA and
later discover that you are not eligible to make Roth IRA contributions, you
may recharacterize all or a portion of the contribution as a Traditional IRA
contribution by the filing due date, including extensions, for the applicable
tax year.
You may not recharacterize amounts paid into a Traditional IRA that represented
tax-free rollovers or transfers, or employer contributions.
(b) Election. You may elect to recharacterize a contribution amount made to one
type of IRA by simply making a trustee-to-trustee transfer of such amount, plus
net income attributable to it, to a second type of IRA on or before the federal
income tax due date, including extensions, for the tax year for which the
contribution was initially made. After the recharacterization has been made,
you may not revoke or modify the election.
(c) Taxation of a Recharacterization. For federal income tax purposes, a
recharacterized contribution will be treated as having been contributed to the
transferee IRA, rather than to the transferor IRA, on the same date and for the
same tax year that the contribution was initially made to the transferor IRA. A
recharacterized transfer is not considered a rollover for purposes of the 1-
year waiting period.
The transfer of the contribution amount being recharacterized must include the
net income attributable to such amount. If such amount has experienced net
losses as of the time of the recharacterization transfer, the amount
transferred, the original contribution amount less any losses, will generally
constitute a transfer of the entire contribution amount. You must treat the
contribution amount as made to the transferee IRA on your federal income tax
return for the year to which the original contribution amount related.
For reconversions following a recharacterization, see Publication 590 and
Treasury Regulation Section 1.408A-5.
5. Distributions
(a) Required Minimum Distribution, or simply, RMD. Unlike a Traditional IRA,
there are no rules that require that any distribution be made to you from your
Roth IRA during your lifetime.
If you die before the entire value of your Roth IRA is distributed to you, the
balance of your Roth IRA must be distributed by December 31 of the calendar
year that is five years after your death. However, if you die and you have a
designated beneficiary, your beneficiary may elect to take distributions in the
form of qualifying settlement option payments in substantially equal
installments over the life or life expectancy of the designated beneficiary,
beginning by December 31 of the calendar year that is one year after your
death.
If your beneficiary is your surviving spouse, he or she can become the new
owner/annuitant and can continue the Transamerica Life Roth IRA on the same
basis as before your death. If your surviving spouse does not wish to continue
the Transamerica Life Roth IRA as his or her Roth IRA, he or she may elect to
receive the death benefit in the form of qualifying settlement option payments
in order to avoid the 5-year distribution requirement. Such payments must be
made in substantially equal amounts over your spouse's life or a period not
extending beyond his or her life expectancy. Your surviving spouse must elect
this option and begin receiving payments no later than the later of the
following dates:
a) December 31 of the year following the year you died; or
b) December 31 of the year in which you would have reached age 70 1/2.
Your beneficiary is responsible for assuring that the RMD following your death
is taken in a timely manner and that the correct amount is distributed.
(b) Taxation of Roth IRA Distributions. The amounts that you withdraw from your
Roth IRA are generally tax-free. For federal income tax purposes, all of your
Roth IRAs are aggregated and Roth IRA distributions are treated as made first
from Roth IRA contributions and second from earnings. Distributions that are
treated as made from Roth IRA contributions are treated as made first from
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regular Roth IRA contributions, which are always tax-free, and second from
conversion or rollover Roth IRA contributions on a first-in, first-out basis. A
distribution allocable to a particular conversion or rollover Roth IRA
contribution is treated as consisting first of the portion, if any, of the
conversion contribution that was previously includable in gross income by
reason of the conversion.
In any event, since the purpose of a Roth IRA is to accumulate funds for
retirement, your receipt or use of Roth IRA earnings before you attain age 59
1/2 , or within 5 years of your first contribution to the Roth IRA, including a
contribution rolled over, transferred or converted from a Traditional IRA, will
generally be treated as an early distribution subject to regular income tax and
to the 10% penalty tax described below in Section 6(b).
No income tax will apply to earnings that are withdrawn before you attain age
59 1/2, but which are withdrawn five or more years after the first contribution
to the Roth IRA, including a rollover or transfer contribution or conversion
from a Traditional IRA, where the withdrawal is made:
a) upon your death or disability; or
b) to pay qualified first-time homebuyer expenses of you or certain family
members.
No portion of your Roth IRA distribution qualifies as a capital gain. There is
also a separate 5-year rule for the recapture of the 10% penalty tax that is
described below in Section 6(b) and that applies to any Roth IRA distribution
made before age 59 1/2 if any conversion or rollover contribution has been made
to any Roth IRA owned by the individual within the 5 most recent taxable years,
even if this current distribution from the Roth IRA is otherwise tax-free under
the rules described in this Subsection 5(b).
(c) Withholding. If the distribution from your Roth IRA is subject to federal
income tax, unless you elect not to have withholding apply, federal income tax
will be withheld from your Roth IRA distributions. If you receive distributions
under a settlement option, tax will be withheld in the same manner as taxes
withheld on wages, calculated as if you were married and claim three
withholding allowances. If you are receiving any other type of distribution,
tax will be withheld in the amount of 10% of the amount of the distribution. If
payments are delivered to foreign countries, federal income tax will generally
be withheld at a 10% rate unless you certify to Transamerica Life Insurance
Company of New York that you are not a U. S. citizen residing abroad or a "tax
avoidance expatriate" as defined in Code Section 877. Such certification may
result in mandatory withholding of federal income taxes at a different rate.
6. Penalty Taxes
(a) Excess Contributions. If at the end of any taxable year your total regular
Roth IRA contributions, other than rollovers, transfers or conversions, exceed
the maximum allowable contributions for that year, taking into account
Traditional IRA contributions, the excess contribution amount will be subject
to a nondeductible 6% excise penalty tax. Such penalty tax cannot exceed 6% of
the value of your Roth IRAs at the end of such year. However, if you withdraw
the excess contribution, plus any earnings on it, before the due date for
filing your federal income tax return, including extensions, for the taxable
year in which you made the excess contribution, the excess contribution will
not be subject to the 6% penalty tax.
The amount of the excess contribution withdrawn will not be considered an early
distribution, but the earnings withdrawn will be taxable income to you and may
be subject to the 10% penalty tax on early distributions. Alternatively, excess
contributions for one year may be withdrawn in a later year or may be carried
forward as Roth IRA contributions in a later year to the extent that the
excess, when aggregated with your regular Roth IRA contributions, if any, for
the subsequent year, does not exceed the maximum allowable contribution for
that year. The 6% excise tax will be imposed on excess contributions in each
subsequent year they are neither returned to you nor applied as permissible
regular Roth IRA contributions for such year.
(a) Early Distributions. Since the purpose of a Roth IRA is to accumulate funds
for retirement, your receipt or use of any portion of your Roth IRA before you
attain age 59 1/2 constitutes an early distribution subject to the 10% penalty
tax on the earnings in your Roth IRA. This penalty tax will not apply if the
distribution occurs as a result of your death or disability or is part of a
series of
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substantially equal payments made over your life expectancy or the joint life
expectancies of you and your beneficiary, as determined from IRS tables in the
income tax regulations. Also, the 10% penalty tax will not apply if
distributions are used to pay for medical expenses in excess of 7.5% of your
AGI; or if distributions are used to pay for health insurance premiums for you,
your spouse and/or your dependents if you are an unemployed individual who is
receiving unemployment compensation under federal or state programs for at
least 12 consecutive weeks.
The 10% penalty tax also will not apply to an early distribution made to pay
for certain qualifying first-time homebuyer expenses for you or certain family
members, or for certain qualifying higher education expenses for you or certain
family members. First-time homebuyer expenses must be paid within 120 days of
the distribution from the Roth IRA and include up to $10,000 of the costs of
acquiring, constructing, or reconstructing a principle residence, including any
usual or reasonable settlement, financing or other closing costs. Higher
education expenses include tuition, fees, books, supplies, and equipment
required for enrollment, attendance, and room and board at a post-secondary
educational institution.
There is also a separate 5-year recapture rule for the 10% penalty tax in the
case of a Roth IRA distribution made before age 59 1/2 that is made within 5
years after a conversion or rollover contribution from a Traditional IRA. This
recapture rule exists because such a prior Roth IRA contribution avoided the
10% penalty tax when it was rolled over or converted from the Traditional IRA.
Under this 5-year recapture rule, any Roth IRA distribution made before age 59
1/2 that is attributable to any conversion or rollover contribution from a
Traditional IRA made within the previous 5 years to any of the individual's
Roth IRAs is generally subject to the 10% penalty tax, and its exceptions, to
the extent that such prior Roth IRA contribution was subject to ordinary tax
upon the conversion or rollover, even if the Roth IRA distribution is otherwise
tax-free.
Under the distribution ordering rules for a Roth IRA, all of an individual's
Roth IRAs and distributions therefrom are treated as made: first from regular
Roth IRA contributions; then from conversion or rollover Roth IRA contributions
on a first-in, first-out basis; and last from earnings. However, whenever any
Roth IRA distribution amount is attributable to any conversion or rollover
contribution made within the 5 most recent tax years, this distributed amount
is attributed first to the taxable portion of such prior contribution, for
purposes of determining the amount of this Roth IRA distribution that is
subject to the recapture of the 10% penalty tax, unless some exception to the
penalty tax applies to the current Roth IRA distribution, such as age 59 1/2,
disability or certain health, education or homebuyer expenses, as described
above in this Subsection 6(b).
(c) Failure to Satisfy RMDs Upon Death. If the RMD rules described above in
Part II, Section 4(a) apply to the beneficiary of your Roth IRA after your
death and if the amount distributed during a calendar year is less than the
minimum amount required to be distributed, your beneficiary will be subject to
a penalty tax equal to 50% of the excess of the amount required to be
distributed over the amount actually distributed.
(d) Policy Loans and Prohibited Transactions. If you or any beneficiary engage
in any prohibited transaction, such as any sale, exchange or leasing of any
property between you and the Roth IRA, or any interference with the independent
status of the Roth IRA, the Roth IRA will lose its tax exemption and be treated
as having been distributed to you. The value of any earnings on your Roth IRA
contributions will be includable in your gross income; and if at the time of
the prohibited transaction, you are under age 59 1/2 you may also be subject to
the 10% penalty tax on early distributions, as described above in Part II,
Section 5(b). If you borrow from or pledge your Roth IRA, or your benefits
under the contract, as a security for a loan, the portion borrowed or pledged
as security will cease to be tax-qualified, the value of that portion will be
treated as distributed to you, and you may be subject to the 10% penalty tax on
early distributions from a Roth IRA.
IRA PART III: OTHER INFORMATION
(1) Federal Estate and Gift Taxes
Any amount in or distributed from your Traditional and/or Roth IRAs upon your
death may be subject to federal estate tax, although certain credits and
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deductions may be available. The exercise or non-exercise of an option that
would pay a survivor an annuity at or after your death should not be considered
a transfer for federal gift tax purposes.
(2) Tax Reporting
You must report contributions to, and distributions from, your Traditional IRA
and Roth IRA, including the year-end aggregate account balance of all
Traditional IRAs and Roth IRAs, on your federal income tax return for the year
specifically on IRS Form 8606. For Traditional IRAs, you must designate on the
return how much of your annual contribution is deductible and how much is
nondeductible. You need not file IRS Form 5329 with your income tax return for
a particular year unless for that year you are subject to a penalty tax because
there has been an excess contribution to, an early distribution from, or
insufficient RMDs from your Traditional IRA or Roth IRA, as applicable.
(3) Vesting
Your interest in your Traditional IRA or Roth IRA is nonforfeitable at all
times.
(4) Exclusive Benefit
Your interest in your Traditional IRA or Roth IRA is for the exclusive benefit
of you and your beneficiaries.
(5) IRS Publication 590
Additional information about your Traditional IRA or Roth IRA or about SEP-IRAs
and SIMPLE-IRAs can be obtained from any district office of the IRS or by
calling 1-800-TAX-FORM for a free copy of IRS Publication 590, Individual
Retirement Arrangements.
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STATEMENT OF ADDITIONAL INFORMATION FOR
DREYFUS/TRANSAMERICA TRIPLE ADVANTAGE(R)
VARIABLE ANNUITY CERTIFICATE
SEPARATE ACCOUNT VA-2LNY
Issued By
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
The Statement of Additional Information expands upon subjects discussed in the
January 22, 2001, prospectus for the Dreyfus/Transamerica Triple Advantage(R)
Variable Annuity Certificate ("certificate") 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 by writing
to Transamerica Life Insurance Company of New York, Annuity Service Center,
4333 Edgewood Road N.E., Cedar Rapids, Iowa 52499-0001 or by calling 877-717-
8861. Terms used in the current prospectus for the certificate 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 certificate.
Dated January 22, 2001
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
THE CERTIFICATE........................................................... 3
DOLLAR COST AVERAGING..................................................... 3
NET INVESTMENT FACTOR..................................................... 3
ANNUITY PERIOD............................................................ 4
Variable Annuity Units and Payments..................................... 4
Variable Annuity Unit Value............................................. 4
Transfers After the Annuity Date........................................ 4
GENERAL PROVISIONS........................................................ 4
IRS Required Distributions.............................................. 4
Non-Participating....................................................... 4
Misstatement of Age or Sex.............................................. 5
Proof of Existence and Age.............................................. 5
Assignment.............................................................. 5
Annuity Data............................................................ 5
Annual Report........................................................... 5
Incontestability........................................................ 5
Ownership............................................................... 5
Entire Contract......................................................... 5
Changes in the Certificate.............................................. 6
Protection of Benefits.................................................. 6
Delay of Payments and Transfers......................................... 6
Notices and Directions.................................................. 6
Sales in Special Situations............................................. 7
CALCULATION OF YIELDS AND TOTAL RETURNS................................... 7
Money Market Sub-Account Yield Calculation.............................. 7
Other Sub-Account Yield Calculations.................................... 8
Average Total Return Calculations....................................... 8
Adjusted Historical Performance Data.................................... 9
Other Performance Data.................................................. 9
HISTORICAL PERFORMANCE DATA............................................... 9
General Limitations..................................................... 9
Money Market Sub-Account Yield.......................................... 10
Sub-Account Performance Figures Including Adjusted Historical
Performance............................................................ 10
Since Commencement of the Sub-Accounts.................................. 10
Since Commencement of the Portfolios.................................... 14
FEDERAL TAX MATTERS....................................................... 17
Taxation of Transamerica................................................ 17
Tax Status of the Certificates.......................................... 17
DISTRIBUTION OF THE CERTIFICATE........................................... 18
SAFEKEEPING OF VARIABLE ACCOUNT ASSETS.................................... 19
TRANSAMERICA.............................................................. 19
General Information and History......................................... 19
STATE REGULATION.......................................................... 19
RECORDS AND REPORTS....................................................... 19
FINANCIAL STATEMENTS...................................................... 19
APPENDIX.................................................................. 20
Accumulation Transfer Formula........................................... 20
</TABLE>
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THE CERTIFICATE
As a supplement to the description in the prospectus, the following provides
additional information about the certificate which may be of interest to some
owners.
DOLLAR COST AVERAGING
We reserve the right to send written notification to you as to the options
available if termination of dollar cost averaging, either by you or by us,
results in the value in the receiving sub-account(s) to which monthly
transfers were made to be less than $500. You 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 us, is made by you before
to the end of the 10 day period, we reserve the right to transfer the value of
the receiving sub-account(s) back into the source account from which the
automatic transfers were made. Transfers made as a result of (a), (b), or (d)
above will not be counted for purposes of the eighteen free transfers per
certificate 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 we 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 the certificate 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.
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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 portion of the value
to be applied to the sub-account multiplied by the variable annuity purchase
rate specified in the certificate 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, you 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 certificate is intended to qualify as an annuity contract for federal
income tax purposes. All provisions in the certificate will be interpreted to
maintain such tax qualification. We may make changes in order to maintain this
qualification or to conform the certificate to any applicable changes in the
tax qualification requirements. We will provide you with a copy of any changes
made to the certificate. If any owner under a non-qualified certificate dies
before the entire interest in the certificate is distributed, the value
generally must be distributed to the designated beneficiary so that the
certificate qualifies as an annuity under the Code. (See "Federal Tax Matters"
page 39.)
Non-Participating
The certificates are non-participating. No dividends are payable and the
certificates will not share in the profits or surplus earnings of Transamerica.
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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 certificate 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 us 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 certificate, we 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 certificate.
Assignment
No assignment of a certificate will be binding us unless made in writing and
given to us at our service center. We are not responsible for the adequacy of
any assignment. Your rights and the interest of any annuitant or non-
irrevocable beneficiary will be subject to the rights of any assignee of
record.
Annuity Data
We 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 certificate year prior to the annuity date, you will be
given a report of the current certificate 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 certificates are incontestable from the certificate date.
Ownership
Only you, as the owner, will be entitled to the rights granted by the
certificate, or allowed by us under the certificate. 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 Contract
We have issued the certificate 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 certificate and along with the certificate
constitutes the entire contract. All statements made by you are considered
representations and not warranties. We 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 certificate when issued.
5
<PAGE>
Changes in the Certificate
Only two of our authorized officers, acting together, have the authority to
bind Transamerica or to make any change in the certificate and then only in
writing. We will not be bound by any promise or representation made by any
other persons.
We may not change or amend the certificate, except as expressly provided in
the certificate, without your consent. However, we may change or amend the
certificate if such change or amendment is necessary for the certificate 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 certificate will be subject to any claim or process of law by any
creditor.
Delay of Payments and Transfers
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 we 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 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 certificate 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.
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. We
delay payment for more than 30 days, we will pay interest on the withdrawal
amount up to the date of payment. (See "Cash Withdrawals" page 26 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 us, and received at
our service center.
Any written notice we are required to send to you will be satisfied by our
mailing of any such required written notice, by first-class mail, to your last
known address as shown on our records.
6
<PAGE>
Sales in Special Situations
We may sell the contracts in special situations that are expected to involve
reduced expenses for us. These instances may include:
1. sales in certain group arrangements, such as employee savings plans;
2. sales to current or former officers, directors, employees and their
families, of Transamerica and its affiliates;
3. sales to officers, directors, employees and their families, of the
portfolios' investment advisers and their affiliates; or
4. sales to officers, directors, employees and sales agents, including
registered representatives and their families, or broker-dealers and
other financial institutions that have sales agreements with us to sell
the contracts.
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; or
3. certain amounts may be credited to the contract account value, for
example, amounts related to commissions or sales compensation otherwise
payable to a broker-dealer may be credited to the contract account
value.
These reductions in fees or charges or credits to the account value will not
unfairly discriminate against any contract owner. These reductions in fees or
charges or credits to the account value are generally taxable and treated as
purchase payments for purposes of income tax and any possible premium tax.
CALCULATION OF YIELDS AND TOTAL RETURNS
Money Market Sub-Account Yield Calculation
In accordance with regulations adopted by the Commission, we are 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 certificate 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
certificate value reflects the deductions for the annual certificate 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.
The Commission also permits us 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, the types and quality of portfolio securities
7
<PAGE>
held by the Money Market Portfolio, 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 certificate.
Other Sub-Account Yield Calculations
We 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:
<TABLE>
<C> <C> <S>
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.
</TABLE>
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 certificates. The yield calculations do not reflect the effect
of any contingent deferred sales load that may be applicable to a particular
certificate. Contingent deferred sales load range from 6% to 0% of the amount
of certificate value withdrawn depending on the elapsed time since the receipt
of each premium attributable to the portion of the certificate 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.
Average Total Return Calculations
We 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:
<TABLE>
<C> <C> <S>
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).
</TABLE>
8
<PAGE>
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.
Adjusted Historical Performance Data
We may also disclose adjusted historical 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 certificate 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 adjusted historical 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 certificate is not surrendered (i.e., with
no deduction for the contingent deferred sales load) and assuming that the
certificate is surrendered at the end of the applicable period (i.e.,
reflecting a deduction for any applicable contingent deferred sales load).
Other Performance Data
We 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%.
We 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:
<TABLE>
<C> <C> <S>
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.
</TABLE>
All non-standard performance data will be advertised only if the standard
performance data is also disclosed.
HISTORICAL 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, we have relied on the data provided by the funds. While we have
no reason to doubt the accuracy of the figures provided by the funds, we have
not verified those figures.
9
<PAGE>
Money Market Sub-Account Yields
The annualized yield for the Money Market Sub-Account for the seven-day period
ending December 31, 1999 was 3.84%. The effective yield for the Money Market
Sub-Account for the seven-day period ending December 31, 1999 was 3.92%.
Sub-Account Performance Figures Including Adjusted Historical Performance
The charts below show historical performance data for the sub-accounts. Charts
1 through 3 show performance since the commencement of the sub-accounts.
Charts 4 through 6 include, for certain sub-accounts, adjusted historical
performance 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
certificates. 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.
Since Commencement of the Sub-Accounts
The dates to the right of the sub-account names indicate the date of
commencement of operation of the sub-accounts.
10
<PAGE>
1. Average annual total returns for periods since inception of the 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>
Inception
SUB-ACCOUNT of the
(Sub-account Inception 1 Year Ended 3 Year Ended 5 Year Ended Sub-account
Date) 12/31/99 12/31/99 12/31/99 to 12/31/99
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Appreciation
(4/5/93)(1)(2) 3.85% 20.04% 23.41% 18.19%
-------------------------------------------------------------------------------
Balanced (5/1/97)(2) 0.77% N/A N/A 15.16%
-------------------------------------------------------------------------------
Disciplined Stock
(5/1/96)(2) 10.74% 22.55% N/A 23.59%
-------------------------------------------------------------------------------
Growth and Income
(12/15/94)(2) 9.20% 11.98% 22.12% 22.01%
-------------------------------------------------------------------------------
International Equity
(12/15/94)(2) 51.49% 15.01% 19.39% 14.92%
-------------------------------------------------------------------------------
International Value
(5/1/96)(2) 19.98% 11.78% N/A 10.26%
-------------------------------------------------------------------------------
Limited Term High Income
(4/30/97)(2) (8.37%) N/A N/A (0.26%)
-------------------------------------------------------------------------------
Money Market (1/4/93) (2.32%) 1.93% 2.94% 3.04%
-------------------------------------------------------------------------------
Quality Bond (1/4/93)(2) (6.69%) 1.86% 5.36% 5.00%
-------------------------------------------------------------------------------
Small Cap (1/4/93)(2) 15.37% 8.55% 14.07% 19.18%
-------------------------------------------------------------------------------
Small Company Stock
(5/1/96)(2) 3.06% 5.14% N/A 6.39%
-------------------------------------------------------------------------------
Special Value (1/4/93)(2) (0.03%) 12.22% 5.93% 7.52%
-------------------------------------------------------------------------------
Stock Index (1/4/93)(2) 12.86% 24.27% 25.94% 19.19%
-------------------------------------------------------------------------------
Socially Responsible
Growth (10/7/93)(2) 22.21% 26.42% 26.63% 22.19%
-------------------------------------------------------------------------------
Core Bond (5/1/2000)(2) N/A N/A N/A N/A
-------------------------------------------------------------------------------
Core Value (5/1/98)(2) 12.00% N/A N/A 2.10%
-------------------------------------------------------------------------------
Emerging Leaders
(5/1/2000)(2) N/A N/A N/A N/A
-------------------------------------------------------------------------------
Emerging Markets
(5/1/2000)(2) N/A N/A N/A N/A
-------------------------------------------------------------------------------
European Equity
(10/1/99)(2) N/A N/A N/A N/A
-------------------------------------------------------------------------------
Founders Discovery
(5/1/2000)(2) N/A N/A N/A N/A
-------------------------------------------------------------------------------
Founders Growth
(5/3/99)(2) N/A N/A N/A N/A
-------------------------------------------------------------------------------
Founders International
Equity (10/1/99)(2) N/A N/A N/A N/A
-------------------------------------------------------------------------------
Founders Passport
(5/3/99)(2) N/A N/A N/A N/A
-------------------------------------------------------------------------------
Japan (5/1/2000)(2) N/A N/A N/A N/A
-------------------------------------------------------------------------------
MidCap Stock (5/1/98)(2) 3.26% N/A N/A (0.35%)
-------------------------------------------------------------------------------
Technology Growth
(10/1/99)(2) N/A N/A N/A N/A
-------------------------------------------------------------------------------
Transamerica VIF Growth
(5/1/98)(3) 32.19% N/A N/A 27.85%
</TABLE>
11
<PAGE>
2. Average annual total returns for period since inception of the 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. Performance data with no contingent
deferred sales load deduction will only be disclosed if the performance data
for the required periods with the contingent deferred sales load deduction is
also disclosed.
<TABLE>
<CAPTION>
Inception
SUB-ACCOUNT of the
(Sub-account Inception 1 Year Ended 3 Year Ended 5 Year Ended Sub-account
Date) 12/31/99 12/31/99 12/31/99 to 12/31/99
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Appreciation
(4/5/93)(/1/)(/2/) 9.84% 21.19% 23.76% 18.31%
-------------------------------------------------------------------------------
Balanced (5/1/97)(/2/) 6.56% N/A N/A 16.65%
-------------------------------------------------------------------------------
Disciplined Stock
(5/1/96)(/2/) 16.74% 23.65% N/A 24.37%
-------------------------------------------------------------------------------
Growth and Income
(12/15/94)(/2/) 15.20% 13.29% 22.47% 22.36%
-------------------------------------------------------------------------------
International Equity
(12/15/94)(/2/) 57.49% 20.55% 15.46% 15.37%
-------------------------------------------------------------------------------
International Value
(5/1/96)(/2/) 25.98% 13.09% N/A 11.31%
-------------------------------------------------------------------------------
Limited Term High
Income(4/30/97)(/2/) (2.97%) N/A N/A 1.51%
-------------------------------------------------------------------------------
Money Market (1/4/93) 3.27% 3.51% 3.64% 3.27%
-------------------------------------------------------------------------------
Quality Bond
(1/4/93)(/2/) (1.29%) 3.44% 6.00% 5.22%
-------------------------------------------------------------------------------
Small Cap (1/4/93)(/2/) 21.37% 9.94% 14.54% 19.28%
-------------------------------------------------------------------------------
Small Company Stock
(5/1/96)(/2/) 9.00% 6.63% N/A 7.54%
-------------------------------------------------------------------------------
Special Value
(1/4/93)(/2/) 5.72% 13.53% 6.55% 7.71%
-------------------------------------------------------------------------------
Stock Index (1/4/93)(/2/) 18.86% 25.34% 26.26% 19.29%
-------------------------------------------------------------------------------
Socially Responsible
Growth (10/7/93)(/2/) 28.21% 27.45% 26.94% 22.31%
-------------------------------------------------------------------------------
Core Bond (5/1/2000)(/2/) N/A N/A N/A N/A
-------------------------------------------------------------------------------
Core Value (5/1/98)(/2/) 18.00% N/A N/A 5.64%
-------------------------------------------------------------------------------
Emerging Leaders
(5/1/2000)(/2/) N/A N/A N/A N/A
-------------------------------------------------------------------------------
Emerging Markets
(5/1/2000)(/2/) N/A N/A N/A N/A
-------------------------------------------------------------------------------
European Equity
(10/1/99)(/2/) N/A N/A N/A N/A
-------------------------------------------------------------------------------
Founders Discovery
(5/1/2000)(/2/) N/A N/A N/A N/A
-------------------------------------------------------------------------------
Founders Growth
(5/3/99)(/2/) N/A N/A N/A N/A
-------------------------------------------------------------------------------
Founders International
Equity (10/1/99)(/2/) N/A N/A N/A N/A
-------------------------------------------------------------------------------
Founders Passport
(5/3/99)(/2/) N/A N/A N/A N/A
-------------------------------------------------------------------------------
Japan (5/1/2000)(/2/) N/A N/A N/A N/A
-------------------------------------------------------------------------------
MidCap Stock
(5/1/98)(/2/) 9.21% N/A N/A 3.08%
-------------------------------------------------------------------------------
Technology Growth
(10/1/99)(/2/) N/A N/A N/A N/A
-------------------------------------------------------------------------------
Transamerica VIF Growth
(5/1/98)(/3/) 35.88% N/A N/A 29.65%
</TABLE>
12
<PAGE>
3. Cumulative total returns for periods since inception of the sub-accounts
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. Performance data with no contingent
deferred sales load deduction will only be disclosed if performance data for
the required periods with the contingent deferred sales load deduction is also
disclosed.
<TABLE>
<CAPTION>
Inception
of
SUB-ACCOUNT 1 Year Ended Sub-account
(Sub-Account Inception Date) 12/31/99 to 12/31/99
------------------------------------------------------------------------
<S> <C> <C>
Appreciation (4/5/93)(/1/)(/2/) 9.84% 211.08%
------------------------------------------------------------------------
Balanced (5/1/97)(/2/) 6.56% 50.85%
------------------------------------------------------------------------
Disciplined Stock (5/1/96)(/2/) 16.74% 122.64%
------------------------------------------------------------------------
Growth and Income (12/15/94)(/2/) 15.20% 177.11%
------------------------------------------------------------------------
International Equity (12/15/94)(/2/) 57.49% 105.86%
------------------------------------------------------------------------
International Value (5/1/96)(/2/) 25.98% 48.18%
------------------------------------------------------------------------
Limited Term High Income(4/30/97)(/2/) (2.97%) 4.08%
------------------------------------------------------------------------
Money Market (1/4/93) 3.27% 25.29%
------------------------------------------------------------------------
Quality Bond (1/4/93)(/2/) (1.29%) 42.75%
------------------------------------------------------------------------
Small Cap (1/4/93)(/2/) 21.37% 243.45%
------------------------------------------------------------------------
Small Company Stock (5/1/96)(/2/) 9.00% 30.58%
------------------------------------------------------------------------
Special Value (1/4/93)(/2/) 5.72% 68.17%
------------------------------------------------------------------------
Stock Index (1/4/93)(/2/) 18.86% 243.69%
------------------------------------------------------------------------
Socially Responsible Growth (10/7/93)(/2/) 28.21% 251.31%
------------------------------------------------------------------------
Core Bond (5/1/2000)(/2/) N/A N/A
------------------------------------------------------------------------
Core Value (5/1/98)(/2/) 18.00% 9.59%
------------------------------------------------------------------------
Emerging Leaders (5/1/2000)(/2/) N/A N/A
------------------------------------------------------------------------
Emerging Markets (5/1/2000)(/2/) N/A N/A
------------------------------------------------------------------------
European Equity (10/1/99)(/2/) N/A 28.24%
------------------------------------------------------------------------
Founders Discovery (5/1/2000)(/2/) N/A N/A
------------------------------------------------------------------------
Founders Growth (5/3/99)(/2/) N/A 26.32%
------------------------------------------------------------------------
Founders International Equity (10/1/99)(/2/) N/A 38.95%
------------------------------------------------------------------------
Founders Passport (5/3/99)(/2/) N/A 61.45%
------------------------------------------------------------------------
Japan (5/1/2000)(/2/) N/A N/A
------------------------------------------------------------------------
MidCap Stock (5/1/98)(/2/) 9.21% 5.20%
------------------------------------------------------------------------
Technology Growth (10/1/99)(/2/) N/A 53.83%
------------------------------------------------------------------------
Transamerica VIF Growth (5/1/98)(/3/) 35.88% 54.22%
</TABLE>
13
<PAGE>
Since Commencement of the Portfolios
The dates to the right of the sub-account names indicate the date of
commencement of operation of the Portfolios.
4. Average annual total returns for periods since inception of the portfolio,
including adjusted historical performance 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>
Inception of the
PORTFOLIO Corresponding
(Corresponding Portfolio 1 Year Ended 3 Year Ended 5 Year Ended Portfolio to
Inception Date) 12/31/99 12/31/99 12/31/99 12/31/99
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Appreciation
(4/5/93)(/1/)(/2/) 3.85% 20.04% 23.41% 18.19%
------------------------------------------------------------------------------------
Balanced (5/1/97)(/2/) 0.77% N/A N/A 15.16%
------------------------------------------------------------------------------------
Disciplined Stock
(5/1/96)(/2/) 10.74% 22.55% N/A 23.59%
------------------------------------------------------------------------------------
Growth and Income
(5/2/94)(/2/) 9.20% 11.98% 22.12% 19.28%
------------------------------------------------------------------------------------
International Equity
(5/2/94)(/2/) 51.49% 15.01% 19.39% 12.97%
------------------------------------------------------------------------------------
International Value
(5/1/96)(/2/) 19.98% 11.78% N/A 10.26%
------------------------------------------------------------------------------------
Limited Term High Income
(4/30/97)(/2/) (8.37%) N/A N/A (0.26%)
------------------------------------------------------------------------------------
Money Market (8/31/90) (2.32%) 1.93% 2.94% 3.43%
------------------------------------------------------------------------------------
Quality Bond
(8/31/90)(/2/) (6.69%) 1.86% 5.36% 6.55%
------------------------------------------------------------------------------------
Small Cap (8/31/90)(/2/) 15.37% 8.55% 14.07% 33.76%
------------------------------------------------------------------------------------
Small Company Stock
(5/1/96)(/2/) 3.06% 5.14% N/A 6.39%
------------------------------------------------------------------------------------
Special Value
(8/31/90)(/2/) (0.03%) 12.22% 5.93% 6.81%
------------------------------------------------------------------------------------
Stock Index
(9/29/89)(/2/) 12.86% 24.27% 25.94% 15.78%
------------------------------------------------------------------------------------
Socially Responsible
(10/7/93)(/2/) 22.21% 26.42% 26.63% 22.19%
------------------------------------------------------------------------------------
Core Bond (N/A)(/2/) N/A N/A N/A N/A
------------------------------------------------------------------------------------
Core Value (5/1/98)(/2/) 12.00% N/A N/A 2.10%
------------------------------------------------------------------------------------
Emerging Leaders
(12/15/99)(/2/) N/A N/A N/A N/A
------------------------------------------------------------------------------------
Emerging Markets
(12/15/99)(/2/) N/A N/A N/A N/A
------------------------------------------------------------------------------------
European Equity
(4/30/99)(/2/) N/A N/A N/A N/A
------------------------------------------------------------------------------------
Founders Discovery
(12/15/99)(/2/) N/A N/A N/A N/A
------------------------------------------------------------------------------------
Founders Growth
(9/30/98)(/2/) 30.95% N/A N/A 51.12%
------------------------------------------------------------------------------------
Founders International
Equity (9/30/98)(/2/) 52.41% N/A N/A 56.66%
------------------------------------------------------------------------------------
Founders Passport
(9/30/98)(/2/) 67.56% N/A N/A 70.05%
------------------------------------------------------------------------------------
Japan (12/15/99)(/2/) N/A N/A N/A N/A
------------------------------------------------------------------------------------
MidCap Stock
(5/1/98)(/2/) 3.26% N/A N/A (0.35%)
------------------------------------------------------------------------------------
Technology Growth
(8/31/99)(/2/) N/A N/A N/A N/A
------------------------------------------------------------------------------------
Transamerica VIF Growth
(2/26/69)(/3/) 32.19% 38.24% 44.99% 27.47%
</TABLE>
14
<PAGE>
5. Average annual total returns for period since inception of the portfolio
including adjusted historical performance 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.
Performance data with no contingent deferred sales load deduction will only be
disclosed if the performance data for the required periods with no contingent
deferred sales load deduction is also disclosed.
<TABLE>
<CAPTION>
Inception of the
PORTFOLIO Corresponding
(Corresponding Portfolio 1 Year Ended 3 Year Ended 5 Year Ended Portfolio to
Inception Date) 12/31/99 12/31/99 12/31/99 12/31/99
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Appreciation
(4/5/93)(/1/)(/2/) 9.84% 21.19% 23.76% 18.31%
------------------------------------------------------------------------------------
Balanced (5/1/97)(/2/) 6.56% N/A N/A 16.65%
------------------------------------------------------------------------------------
Disciplined Stock
(5/1/96)(/2/) 16.74% 23.65% N/A 24.37%
------------------------------------------------------------------------------------
Growth and Income
(5/2/94)(/2/) 15.20% 13.29% 22.47% 19.59%
------------------------------------------------------------------------------------
International Equity
(5/2/94)(/2/) 57.49% 20.55% 15.46% 13.38%
------------------------------------------------------------------------------------
International Value
(5/1/96)(/2/) 25.98% 13.09% N/A 11.31%
------------------------------------------------------------------------------------
Limited Term High Income
(4/30/97)(/2/) (2.97%) N/A N/A 1.51%
------------------------------------------------------------------------------------
Money Market (8/31/90) 3.37% 3.51% 3.64% 3.43%
------------------------------------------------------------------------------------
Quality Bond
(8/31/90)(/2/) (1.29%) 3.44% 6.00% 6.55%
------------------------------------------------------------------------------------
Small Cap (8/31/90)(/2/) 21.37% 9.94% 14.54% 33.76%
------------------------------------------------------------------------------------
Small Company Stock
(5/1/96)(/2/) 9.00% 6.63% N/A 7.54%
------------------------------------------------------------------------------------
Special Value
(8/31/90)(/2/) 5.72% 13.53% 6.55% 6.82%
------------------------------------------------------------------------------------
Stock Index
(9/29/89)(/2/) 18.86% 25.34% 26.26% 15.78%
------------------------------------------------------------------------------------
Socially Responsible
(10/7/93)(/2/) 28.21% 27.45% 26.94% 22.31%
------------------------------------------------------------------------------------
Core Bond (N/A)(/2/) N/A N/A N/A N/A
------------------------------------------------------------------------------------
Core Value (5/1/98)(/2/) 18.00% N/A N/A 5.64%
------------------------------------------------------------------------------------
Emerging Leaders
(12/15/99)(/2/) N/A N/A N/A N/A
------------------------------------------------------------------------------------
Emerging Markets
(12/15/99)(/2/) N/A N/A N/A N/A
------------------------------------------------------------------------------------
European Equity
(4/30/99)(/2/) N/A N/A N/A N/A
------------------------------------------------------------------------------------
Founders Discovery
(12/15/99)(/2/) N/A N/A N/A N/A
------------------------------------------------------------------------------------
Founders Growth
(9/30/98)(/2/) 36.95% N/A N/A 55.50%
------------------------------------------------------------------------------------
Founders International
Equity (9/30/98)(/2/) 58.41% N/A N/A 61.00%
------------------------------------------------------------------------------------
Founders Passport
(9/30/98)(/2/) 73.56% N/A N/A 74.29%
------------------------------------------------------------------------------------
Japan (12/15/99)(/2/) N/A N/A N/A N/A
------------------------------------------------------------------------------------
MidCap Stock
(5/1/98)(/2/) 9.21% N/A N/A 3.08%
------------------------------------------------------------------------------------
Technology Growth
(8/31/99)(/2/) N/A N/A N/A N/A
------------------------------------------------------------------------------------
Transamerica VIF Growth
(2/26/69)(/3/) 35.88% 39.80% 44.99% 27.47%
</TABLE>
15
<PAGE>
6. Cumulative total returns for periods since inception of the portfolio,
including hypothetical performance 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. Performance
data with no contingent deferred sales load deduction will only be disclosed
if performance data for the required periods with no contingent deferred sales
load deduction is also disclosed.
<TABLE>
<CAPTION>
Inception of the
Corresponding
PORTFOLIO 1 Year Ended Portfolio to
(Corresponding Portfolio Inception Date) 12/31/99 12/31/99
-----------------------------------------------------------------------------
<S> <C> <C>
Appreciation (4/5/93)(/1/)(/2/) 9.84% 211.08%
-----------------------------------------------------------------------------
Balanced (5/1/97)(/2/) 6.56% 50.85%
-----------------------------------------------------------------------------
Disciplined Stock (5/1/96)(/2/) 16.74% 122.64%
-----------------------------------------------------------------------------
Growth and Income (5/2/94)(/2/) 15.20% 175.82%
-----------------------------------------------------------------------------
International Equity (5/2/94)(/2/) 57.49% 103.77%
-----------------------------------------------------------------------------
International Value (5/1/96)(/2/) 25.98% 48.18%
-----------------------------------------------------------------------------
Limited Term High Income (4/30/97)(/2/) (2.97%) 4.08%
-----------------------------------------------------------------------------
Money Market (8/31/90) 3.27% 37.07%
-----------------------------------------------------------------------------
Quality Bond (8/31/90)(/2/) (1.29%) 80.90%
-----------------------------------------------------------------------------
Small Cap (8/31/90)(/2/) 21.37% 33.78%
-----------------------------------------------------------------------------
Small Company Stock (5/1/96)(/2/) 9.00% 30.58%
-----------------------------------------------------------------------------
Special Value (8/31/90)(/2/) 5.72% 85.11%
-----------------------------------------------------------------------------
Stock Index (9/29/89)(/2/) 18.86% 349.74%
-----------------------------------------------------------------------------
Socially Responsible (10/7/93)(/2/) 28.21% 251.31%
-----------------------------------------------------------------------------
Core Bond (N/A)(/2/) N/A N/A
-----------------------------------------------------------------------------
Core Value (5/1/98)(/2/) 18.00% 9.59%
-----------------------------------------------------------------------------
Emerging Leaders (12/15/99)(/2/) N/A 7.50%
-----------------------------------------------------------------------------
Emerging Markets (12/15/99)(/2/) N/A 8.98%
-----------------------------------------------------------------------------
European Equity (4/30/99)(/2/) N/A 28.00%
-----------------------------------------------------------------------------
Founders Discovery (12/15/99)(/2/) N/A 11.06%
-----------------------------------------------------------------------------
Founders Growth (9/30/98)(/2/) 36.95% 73.64%
-----------------------------------------------------------------------------
Founders International Equity (9/30/98)(/2/) 58.41% 81.35%
-----------------------------------------------------------------------------
Founders Passport (9/30/98)(/2/) 73.56% 100.26%
-----------------------------------------------------------------------------
Japan (12/15/99)(/2/) N/A 2.66%
-----------------------------------------------------------------------------
MidCap Stock (5/1/98)(/2/) 9.21% 5.20%
-----------------------------------------------------------------------------
Technology Growth (8/31/99)(/2/) N/A 54.88%
-----------------------------------------------------------------------------
Transamerica VIF Growth (2/26/69)(/3/) 35.88% 1,032.80%
</TABLE>
(1) Formerly known as Capital Appreciation.
(2) The Service Class Shares were not available as of December 31, 1999,
therefore, the figures shown reflect performance for the Initial Class
Shares. Performance for Service Class Shares would be lower because they
are subject to a 12b-1 Fee.
(3) 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.
16
<PAGE>
FEDERAL TAX MATTERS
The Dreyfus/Transamerica Triple Advantage(R) Variable Annuity may be purchased
on a non-tax-qualified basis ("non-qualified certificates") or purchased and
used in connection with plans qualifying for special tax treatment ("qualified
certificates"). Qualified certificates are designed for use by individual
retirement plans qualified for special tax treatment under Section 401,
403(b), 408 or 408A of the Internal Revenue Code of 1986, as amended (the
"Code").The ultimate effect of federal income taxes on the certificate 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
certificate is purchased, on the tax and employment status of the individual
concerned and on our 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 our
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 IRS. Moreover, no attempt has been
made to consider any applicable state or other tax laws.
Taxation of Transamerica
We are 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 certificate. Under existing federal income tax
law, we believe 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 certificate.
Accordingly, we do not anticipate that we will incur any federal income tax
liability attributable to the variable account and, therefore, we do not
intend to make provisions for any such taxes. However, if changes in the
federal tax laws or interpretations thereof result in our being taxed on
income or gains attributable to the variable account, then we may impose a
charge against the variable account (with respect to some or all certificates)
in order to set aside provisions to pay such taxes.
Tax Status of the Certificates
Code Section 817(h) requires that with respect to non-qualified certificates,
the investments of the funds be "adequately diversified" in accordance with
Treasury regulations in order for the certificates 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 certificates may be
considered the owners, for federal income tax purposes, of the assets of the
separate accounts used to support their certificates. In those circumstances,
income and gains from the separate account assets would be includible in the
variable certificate owner's gross income. The IRS has stated in published
rulings that a variable certificate owner will be considered the owner of
separate account assets if the certificate 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 certificateholders may direct their investments to particular
sub-accounts without being treated as owners of the underlying assets."
17
<PAGE>
The ownership rights under the certificate 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
certificate 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, we do 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. We therefore reserve the right to modify the certificate 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,
Code Section 72(s) requires any non-qualified certificate to provide that: (a)
if any owner dies on or after the annuity date but prior to the time the entire
interest in the certificate 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 certificate
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
certificate passes by reason of death. However, if the owner's "designated
beneficiary" is the surviving spouse of the deceased owner, the certificate may
be continued with the surviving spouse as the new owner.
The non-qualified certificates contain provisions which are intended to comply
with the requirements of Code Section 72(s), although no regulations
interpreting these requirements have yet been issued. We intend 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 certificates.
DISTRIBUTION OF THE CERTIFICATE
Transamerica Securities Sales Corporation ("TSSC") is principal underwriter of
the certificates. 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 ot its affiliates. 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 certificates through registered representatives who are
licensed to sell securities and variable insurance products. These agreements
provide that applications for the certificates 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 certificates. 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 certificates will be sold by
broker/dealers which will receive compensation as described in the prospectus.
The offering of the certificates is expected to be continuous and neither TSSC
nor TFR anticipate discontinuing the offering of the certificates. However,
TSSC and TFR reserve the right to discontinue the offering of the certificates.
18
<PAGE>
During fiscal year 1999, $6,181,972.47 in commissions were paid to TSSC as
underwriter of the certificates; no amounts were retained by TSSC. During
fiscal year 1999, $3,127.87 in commissions were paid to TFR as underwriter of
the certificates; no amounts were retained by TFR.
SAFEKEEPING OF VARIABLE ACCOUNT ASSETS
Title to assets of the variable account is held by Transamerica. The assets of
the variable account 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 was acquired by AEGON N.V. of The
Netherlands on July 21, 1999. AEGON N.V., a holding company, conducts its
business through subsidiary companies engaged primarily in the insurance
business.
STATE REGULATION
We are subject to the insurance laws and regulations of all the states where
we are licensed to operate. The availability of certain certificate rights and
provisions depends on state approval and/or filing and review processes. Where
required by state law or regulation, the certificates will be modified
accordingly.
RECORDS AND REPORTS
All records and accounts relating to the variable account will be maintained
by us or by our service center. 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, 1999.
The statutory-basis 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 certificates.
They should not be considered as bearing on the investment performance of the
assets held in the variable account.
19
<PAGE>
APPENDIX
Accumulation Transfer Formula
Transfers after the annuity date are implemented according to the following
formulas:
(1) Determine the number of units to be transferred from the variable sub-
account as follows:
= AT/AUV1
(2) Determine the number of variable accumulation units remaining in such
variable sub-account (after the transfer):
= UNIT1 AT/AUV1
(3) Determine the number of variable accumulation units in the transferee
variable sub-account (after the transfer):
= UNIT2 + AT/AUV2
(4) Subsequent variable accumulation payments will reflect the changes in
variable accumulation units in each variable sub-account as of the next
variable accumulation payment's due date.
Where:
(AUV1) is the variable accumulation unit value of the variable sub-account
that the transfer is being made from as of the end of the valuation period in
which the transfer request was received.
(AUV2) is the variable accumulation unit value of the variable sub-account
that the transfer is being made to as of the end of the valuation period in
which the transfer request was received.
(UNIT1) is the number of variable accumulation units in the variable sub-
account that the transfer is being made from, before the transfer.
(UNIT2) is the number of variable accumulation units in the variable sub-
account that the transfer is being made to, before the transfer.
(AT) is the dollar amount being transferred from the variable sub-account.
20
<PAGE>
Transamerica Life Insurance Company of New York
Balance Sheet - Statutory Basis
As of September 30, 2000
(In Thousands)(Unaudited)
<TABLE>
<S> <C>
Admitted Assets
Cash and invested assets:
Cash and short-term investments $ 99,920
Bonds 803,373
Policy loans 14,768
Other invested assets 5,017
----------
Total cash and invested assets 923,078
Premiums deferred and uncollected 139
Transfers from separate accounts 23,874
Accrued investment income 16,116
Federal income tax recoverable 3,293
Other assets 2,901
Separate account assets 634,697
----------
Total admitted assets $1,604,098
==========
Liabilities and capital and surplus
Liabilities:
Aggregate reserves for policies and contracts:
Life 212,611
Annuity 646,153
Accident and health 249
Policy and contract claim reserves 3,807
Other policyholders' funds 651
Remittances and items not allocated 22,906
Asset valuation reserve 4,906
Funds held under coinsurance 30,622
Other liabilities 11,303
Separate account liabilities 634,697
----------
Total liabilities 1,567,905
Capital and surplus:
Common stock, $1,000 par value, 2,000 shares
authorized, issued and outstanding 2,000
Paid-in surplus 83,920
Unassigned surplus (49,727)
----------
Total capital and surplus 36,193
----------
Total liabilities and capital and surplus $1,604,098
==========
</TABLE>
<PAGE>
Transamerica Life Insurance Company of New York
Statement of Operations - Statutory Basis
for the Nine Months Ended September 30, 2000
(In Thousands)(Unaudited)
<TABLE>
<S> <C>
Revenues:
Premiums and other considerations, net of reinsurance
Life $ 18,708
Annuity 202,377
Net investment income 45,795
Amortization of interest maintenance reserve (228)
Commissions and expense allowances on
reinsurance ceded 2,120
Income from fees associated with investment management,
administration and contract guarantees for separate accounts 6,372
Other income 1,793
--------
276,937
Benefits and expenses:
Benefits paid or provided for:
Life and accident and health 6,439
Surrender benefits 91,055
Other benefits 13,545
Increase (decrease) in aggregate reserves for
policies and contracts:
Life 78,050
Annuity 25,327
Other (390)
--------
214,026
Insurance expenses:
Commissions 15,201
General insurance expenses 12,154
Taxes, licenses and fees 210
Transfer to separate accounts 41,277
Other (221)
--------
68,621
--------
282,647
--------
Loss from operations before federal income
tax expense and net realized capital gains on
investments (5,710)
Federal income tax expense (2,178)
--------
Loss from operations before net realized
capital gains on investments (3,532)
Net realized capital gains on investments
(net of related federal income taxes and
amounts transferred to interest maintenance
reserve) 222
--------
Net loss (3,310)
========
</TABLE>
<PAGE>
Transamerica Life Insurance Company of New York
Statement of Changes in Capital and Surplus - Statutory Basis
(In Thousands)(Unaudited)
<TABLE>
<CAPTION>
Total
Capital
Common Paid-in Unassigned and
Stock Surplus Surplus Surplus
--------- -------- ----------- --------
<S> <C> <C> <C> <C>
Balance at January 1, 2000 $2,000 $83,920 $(35,512) $ 50,408
Net loss 0 0 (3,310) (3,310)
Change in non-admitted assets 0 0 (10,105) (10,105)
Change in asset valuation reserve 0 0 (800) (800)
--------- -------- --------- ---------
Balance at September 30, 2000 2,000 83,920 (49,727) 36,193
========= ======== ========= =========
</TABLE>
<PAGE>
Transamerica Life Insurance Company of New York
Statement of Cash Flow - Statutory Basis
for the Nine Months Ended September 30, 2000
(In Thousands)(Unaudited)
<TABLE>
<S> <C>
Operating Activities
Premiums and other considerations, net of reinsurance $229,706
Net investment income 46,870
Life and accident and health claims (5,485)
Surrender benefits to policyholders (93,387)
Other benefits to policyholders (13,400)
Commissions, other expenses and other taxes (26,930)
Federal income taxes, excluding tax on capital gains (2,865)
Other, net (2,610)
Net transfers to separate accounts (36,732)
--------
Net cash provided by operating activities 95,167
Investing Activities
Proceeds from investments sold, matured or repaid:
Bonds and preferred stocks 281,806
Real estate 511
--------
282,317
Cost of investments acquired:
Bonds and preferred stocks 332,743
Policy loans 1,249
Other (3,981)
--------
330,011
--------
Net cash used in investing activities (47,694)
--------
Financing Activities
Other, net 12,327
--------
Net cash provided by financing activities 12,327
Increase in cash and short-term investments 59,800
Cash and short-term investments at beginning of year 40,120
--------
Cash and short-term investments at end of year 99,920
========
</TABLE>
<PAGE>
Transamerica Life Insurance Company of New York
Notes to Financial Statements - Statutory Basis
for the Nine Months Ended September 30, 2000
(In Thousands)(Unaudited)
1. Basis of Presentation
The accompanying unaudited statutory basis financial statements have been
prepared in accordance with statutory accounting principles for interim
financial information and the instructions to Article 10 of Regulation S-X.
Accordingly, they do not include all the information and notes required by
generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the nine month period ended September 30, 2000 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2000. For further information, refer to the accompanying
statutory basis financial statements and notes thereto for the year ended
December 31, 1999.
<PAGE>
FINANCIAL STATEMENTS - STATUTORY BASIS
Transamerica Life Insurance Company of New York
Years ended December 31, 1999, 1998 and 1997
with Report of Independent Auditors
<PAGE>
Transamerica Life Insurance Company of New York
Financial Statements-Statutory Basis
Years ended December 31, 1999, 1998 and 1997
Contents
Report of Independent Auditors.................................................1
Audited Financial Statements
Balance Sheets - Statutory Basis...............................................3
Statements of Operations - Statutory Basis.....................................5
Statements of Changes in Capital and Surplus - Statutory Basis.................6
Statements of Cash Flow - Statutory Basis......................................7
Notes to Financial Statements - Statutory Basis................................9
Statutory-Basis Financial Statement Schedules
Summary of Investments - Other Than Investments in Related Parties -
Statutory Basis............................................................27
Supplementary Insurance Information - Statutory Basis.........................28
Reinsurance - Statutory Basis.................................................30
<PAGE>
Report Of Independent Auditors
Board of Directors
Transamerica Life Insurance
Company of New York
We have audited the accompanying statutory-basis balance sheets of Transamerica
Life Insurance Company of New York as of December 31, 1999 and 1998, and the
related statutory-basis statements of operations, changes in capital and
surplus, and cash flow for each of the three years in the period ended December
31, 1999. Our audits also include the accompanying statutory-basis financial
statement schedules required by Article 7 of Regulation S-X. These financial
statements and schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedules based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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.
As described in Note 1 to the financial statements, the Company presents its
financial statements in conformity with accounting practices prescribed or
permitted by the State of New York Insurance Department, which practices differ
from accounting principles generally accepted in the United States. The
variances between such practices and accounting principles generally accepted in
the United States also are described in Note 1. The effects on the financial
statements of these variances are not reasonably determinable but are presumed
to be material.
In our opinion, because of the effects of the matters described in the preceding
paragraph, the financial statements referred to above do not present fairly, in
conformity with generally accepted accounting principles, the financial position
of Transamerica Life Insurance Company of New York at December 31, 1999 and
1998, or the results of its operations or its cash flows for each of the three
years in the period ended December 31, 1999.
<PAGE>
However, 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, 1999 and 1998, and the results of
its operations and its cash flow for each of the three years in the period ended
December 31, 1999, in conformity with accounting practices prescribed or
permitted by the State of New York Insurance Department. Also, in our opinion,
the related financial statement schedules, when considered in relation to the
basic statutory-basis financial statements taken as a whole, present fairly in
all material respects the information set forth therein.
March 14, 2000
2
<PAGE>
Transamerica Life Insurance Company of New York
Balance Sheets - Statutory Basis
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
December 31
1999 1998
------------------------------------
<S> <C> <C>
Admitted assets
Cash and invested assets:
Bonds $ 764,615 $ 564,092
Real estate 323 333
Policy loans 14,398 13,297
Cash and short-term investments 40,120 45,804
Receivable for securities sold 3,574 1,593
------------------------------------
Total cash and invested assets 823,030 625,119
Accrued investment income 14,577 11,205
Reinsurance balances recoverable 3,240 3,550
Receivable from parent and affiliates 2,840 -
Deferred and uncollected premiums 742 1,121
Separate account assets 587,827 431,905
------------------------------------
Total admitted assets $ 1,432,256 $ 1,072,900
====================================
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
December 31
1999 1998
------------------------------------
<S> <C> <C>
Liabilities and capital and surplus
Liabilities:
Reserves for future policy benefits $ 755,636 $ 566,814
Policy and contract claims payable 2,684 1,867
Supplementary contracts without life contingencies 979 1,306
Reinsurance balances 29,694 26,243
Accounts payable and accrued expenses 12,693 2,625
Other liabilities (primarily remittances and item not
allocated) 9,565 27,995
Payable to parent and affiliates - 3,961
Asset valuation reserve 4,107 3,116
Interest maintenance reserve 711 1,689
Separate accounts reserve adjustment (22,048) (17,643)
Separate account liabilities 587,827 431,905
------------------------------------
Total liabilities 1,381,848 1,049,878
Capital and surplus:
Common Stock ($1,000 par value):
Authorized, issued and outstanding -
2,000,000 shares 2,000 2,000
Contributed surplus 83,920 59,920
Unassigned surplus (35,512) (38,898)
------------------------------------
Total capital and surplus 50,408 23,022
------------------------------------
Total liabilities and capital and surplus $ 1,432,256 $ 1,072,900
====================================
</TABLE>
See accompanying notes.
4
<PAGE>
Transamerica Life Insurance Company of New York
Statements of Operations - Statutory Basis
(Dollars in thousands)
<TABLE>
<CAPTION>
Year ended December 31
1999 1998 1997
-------------------------------------------------
Revenues:
<S> <C> <C> <C>
Premiums and annuity considerations $ 19,360 $ 17,988 $ 36,216
Fund deposits 321,513 246,760 103,949
Net investment income 48,557 36,867 35,415
Commissions and expense allowances on
reinsurance ceded 4,221 4,934 4,834
Other 8,409 6,249 4,255
-------------------------------------------------
402,060 312,798 184,669
Benefits and expenses:
Benefits paid or provided for:
Death benefits 5,446 5,465 6,315
Annuity benefits 14,285 14,173 13,134
Health and disability benefits 434 275 167
Surrender benefits and other fund
withdrawals 72,716 52,986 55,947
Increase in reserves 188,495 134,474 14,426
Other 309 438 268
-------------------------------------------------
281,685 207,811 90,257
Expenses:
Commissions and expense allowances 24,441 21,026 11,629
Other operating expenses 15,212 12,390 11,151
Transfers to separate accounts 75,468 77,955 71,478
-------------------------------------------------
115,121 111,371 94,258
-------------------------------------------------
396,806 319,182 184,515
-------------------------------------------------
Gain from operations before federal income
taxes and net realized gains (losses) 5,254 (6,384) 154
Federal income tax expense (benefit) 2,627 (1,570) (271)
-------------------------------------------------
Gain from operations before net realized
gains (losses) 2,627 (4,814) 425
Net realized gains (losses) on investment
transactions 7 (77) (30)
-------------------------------------------------
Net income $ 2,634 $ (4,891) $ 395
=================================================
</TABLE>
See accompanying notes.
5
<PAGE>
Transamerica Life Insurance Company of New York
Statements of Changes in Capital and Surplus - Statutory Basis
(Dollars in thousands)
<TABLE>
<CAPTION>
Year ended December 31
1999 1998 1997
------------------------------------------------------
<S> <C> <C> <C>
Capital and surplus at beginning of year $ 23,022 $ 23,591 $ 22,822
Net income (loss) 2,634 (4,891) 395
Decrease (increase) in non-admitted assets
and related items 1,834 (249) (464)
Increase in liability for reinsurance in
unauthorized companies (91) - -
(Increase) decrease in asset valuation
reserve (991) (429) 1,000
Contributed capital 24,000 5,000 -
Prior year adjustments - - (162)
------------------------------------------------------
Capital and surplus at end of year $ 50,408 $ 23,022 $ 23,591
======================================================
</TABLE>
See accompanying notes.
6
<PAGE>
Transamerica Life Insurance Company of New York
Statements of Cash Flow - Statutory Basis
(Dollars in thousands)
<TABLE>
<CAPTION>
Year ended December 31
1999 1998 1997
------------------------------------------------------
<S> <C> <C> <C>
Operating activities
Premiums and annuity considerations $ 12,266 $ 26,673 $ 37,024
Fund deposits 321,513 246,760 103,949
Allowances and reserve adjustments
received on reinsurance ceded 3,920 1,242 4,939
Investment income received 43,839 36,613 34,141
Other revenues 7,922 5,939 4,949
Life and accident and health claims paid (4,636) (7,929) (5,258)
Surrender benefits and other fund
withdrawals paid (72,727) (53,876) (55,947)
Annuity and other benefits paid to
policyholders (14,782) (14,613) (13,666)
Commissions, other expenses and taxes
paid (40,579) (31,129) (21,906)
Net transfer (to) from separate accounts (79,873) (83,072) (75,587)
Federal income taxes received (paid) 860 (615) (418)
------------------------------------------------------
Net cash provided by operating activities 177,723 125,993 12,220
Investing activities
Proceeds from bonds sold, matured
or repaid 180,402 101,518 88,795
Cost of bonds acquired (382,306) (209,941) (90,776)
Net increase in policy loans (1,101) (1,602) (863)
------------------------------------------------------
Net cash used in investing activities (203,005) (110,025) (2,844)
</TABLE>
7
<PAGE>
Transamerica Life Insurance Company of New York
Statements of Cash Flow - Statutory Basis (continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Year ended December 31
1999 1998 1997
------------------------------------------------------
<S> <C> <C> <C>
Financing and miscellaneous activities
Other cash provided:
Capital and surplus paid-in $ 24,000 $ 5,000 $ -
Other sources 21,149 24,417 3,397
------------------------------------------------------
Total other cash provided 45,149 29,417 3,397
Other cash applied:
Other applications, net (25,551) (2,790) (18,643)
------------------------------------------------------
Total other cash applied (25,551) (2,790) (18,643)
------------------------------------------------------
Net cash provided by (used in) financing
and miscellaneous activities 19,598 26,627 (15,246)
------------------------------------------------------
Net (decrease) increase in cash and short-
term investments (5,684) 42,595 (5,870)
Cash and short-term investments:
Beginning of year 45,804 3,209 9,079
------------------------------------------------------
End of year $ 40,120 $ 45,804 $ 3,209
======================================================
</TABLE>
See accompanying notes.
8
<PAGE>
Transamerica Life Insurance Company of New York
Notes to Financial Statements - Statutory Basis
(Dollars in thousands)
December 31, 1999
1. Organization and Summary of Significant Accounting Policies
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. During 1999, Transamerica Corporation was acquired by a subsidiary
of AEGON N.V., a holding company organized under the laws of the Netherlands.
Nature of Business
The Company engages primarily in providing life insurance, fixed and variable
pension and annuity products, structured settlements and investment products
which are distributed through a network of independent and company-affiliated
agents and independent brokers. The Company's customers are primarily in the
state of New York.
Basis of Presentation
Certain amounts reported in the accompanying financial statements are based on
management's best estimates and judgment, subject to the minimum requirements
imposed by regulatory authorities. Actual results could differ from those
estimates.
The accompanying financial statements have been prepared in conformity with
accounting practices prescribed or permitted (SAP) by the State of New York
Insurance Department (the Department), which practices vary from generally
accepted accounting principles (GAAP). The more significant variances from GAAP
are as follows:
Bonds, where permitted, are carried at amortized cost. Under GAAP, those
bonds that are classified as "available for sale" are carried at their fair
value.
The costs of acquiring new and renewal business, such as commissions and
underwriting and policy issue costs, are expensed when incurred rather than
deferred and amortized over the terms of the related policies.
9
<PAGE>
Transamerica Life Insurance Company of New York
Notes to Financial Statements - Statutory Basis (continued)
(Dollars in thousands)
1. Organization and Summary of Significant Accounting Policies (continued)
Basis of Presentation (continued)
Certain assets recognized under GAAP, principally agents' debit balances
and furniture and equipment, are "non-admitted" and excluded from the
accompanying financial statements under SAP and are charged directly to
unassigned surplus.
Reserves for future policy benefits generally are calculated based on
mortality and interest assumptions that are statutorily required rather
than using estimated expected experience or actual account balances. The
policy liabilities are reported net, rather than gross, of ceded
reinsurance amounts.
Revenues for interest-sensitive life policies and investment-type contracts
consist of the entire premium received and benefits incurred represent the
total of death benefits paid and the change in policy reserves. Under GAAP,
premiums received in excess of policy charges are not recognized as revenue
and benefits represent the excess of benefits paid over the policy account
value and interest credited to the account value.
An Interest Maintenance Reserve (IMR) is provided which defers certain
realized capital gains and losses attributable to changes in the general
level of interest rates. Such deferred gains or losses are amortized into
investment income over the remaining period to maturity based on groupings
of individual securities sold in five-year bands.
An Asset Valuation Reserve (AVR) is provided which reclassifies a portion
of surplus to liabilities. The AVR is calculated according to a specified
formula as prescribed by the National Association of Insurance
Commissioners (NAIC) and is intended to stabilize the Company's surplus
against possible fluctuations in the market values of bonds, equity
securities, mortgage loans, real estate, and other invested assets. Changes
in the required AVR balance are charged or credited directly to unassigned
surplus.
10
<PAGE>
Transamerica Life Insurance Company of New York
Notes to Financial Statements - Statutory Basis (continued)
(Dollars in thousands)
1. Organization and Summary of Significant Accounting Policies (continued)
Basis of Presentation (continued)
Deferred federal income taxes are not provided for differences between the
financial statement amounts and tax bases of assets and liabilities.
A liability for reinsurance balances has been provided for unsecured policy
reserves ceded to reinsurers not authorized by license to assume such
business ($91 in 1999, $0 in 1998 and 1997). Changes to those amounts are
credited or charged directly to unassigned surplus. Under GAAP, an
allowance for amounts deemed uncollectible would be established through a
charge to earnings.
Other significant accounting policies are as follows:
Investments
Investments are shown on the following bases:
Bonds - where permitted, at amortized cost; all others are carried at
values prescribed by the Securities Valuation Office of the NAIC (NAIC
statement values); premiums and discounts are amortized using the interest
method. For loan-backed bonds, the interest method including anticipated
prepayments at the date of purchase is used. Prepayment assumptions for
loan-backed bonds are estimated using broker dealer survey values and are
based on the current interest rate and economic environment. The
retrospective adjustment method is used to value all securities, except for
interest-only securities which are valued using the prospective method.
Real estate - at depreciated cost less encumbrances.
Policy loans - at the aggregate unpaid principal balances.
11
<PAGE>
Transamerica Life Insurance Company of New York
Notes to Financial Statements - Statutory Basis (continued)
(Dollars in thousands)
1. Organization and Summary of Significant Accounting Policies (continued)
Investments (continued)
Gains and losses on disposal of investments are recognized on the
specific-identification basis. Changes in the statutory fair values of bonds
carried at NAIC statement values, rather than amortized cost, are reported as
unrealized gains or losses directly in unassigned surplus and, accordingly, have
no effect on net income.
Short-term investments include investments with maturities of less than one year
at date of acquisition.
Separate Accounts
The Company administers segregated asset accounts for variable annuity
contracts. The assets of the separate accounts are not subject to liabilities
arising out of any business the Company may conduct and are reported at fair
value. Investment risks associated with fair value changes are primarily borne
by the contract holders. Accordingly, investment income and realized investment
gains and losses attributable to separate accounts are not reported in the
Company's results of operation.
The assets and liabilities of the separate accounts are reported at market
value. In reporting reserve liabilities for the separate accounts, the Company
considers the impact of surrender charges and records this amount as a separate
account reserve adjustment.
Policy Reserves for Future Policy Benefits and Contract Claims
Life, annuity, and accident and health benefit reserves are calculated based
upon published tables using such interest rate assumptions and valuation methods
that will provide, in the aggregate, reserves that meet the amounts required by
the Department. The Company waives deduction of deferred fractional premiums
upon death of the insureds and returns any portion of the final premium beyond
the date of death. Additional reserves are established where the gross premiums
on any insurance in force are less than the net premiums according to the
standard valuation set by the Department.
12
<PAGE>
Transamerica Life Insurance Company of New York
Notes to Financial Statements - Statutory Basis (continued)
(Dollars in thousands)
1. Organization and Summary of Significant Accounting Policies (continued)
Policy Reserves for Future Policy Benefits and Contract Claims (continued)
Contract claim liabilities include provisions for reported claims and claims
incurred but not reported, net of reinsurance ceded.
Premium Revenues
Premiums from life insurance policies are recognized as revenue when due and
premiums from annuity contracts are recognized when received. Accident and
health premiums are earned pro rata over the terms of the policies.
Other Revenues
Other revenues consists primarily of fee income earned as a percentage of
separate account assets.
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.
Premiums ceded and recoverable losses have been reported as a reduction of
premium income and benefits, respectively.
Reclassifications
Certain reclassifications of 1997 and 1998 amounts have been made to conform
with the 1999 presentation.
13
<PAGE>
Transamerica Life Insurance Company of New York
Notes to Financial Statements - Statutory Basis (continued)
(Dollars in thousands)
2. Fair Values of Financial Instruments
Fair values for bonds are based on market values prescribed by the Securities
Valuation Office of the NAIC (NAIC market values) rather than on actual or
estimated market values. For bonds without available NAIC market values,
amortized costs are used as estimated fair values. As of December 31, 1999 and
1998, the fair value of investments in bonds includes $220,551 and $166,749,
respectively, of bonds that were valued at amortized cost.
Fair values for policy loans are estimated using discounted cash flow
calculations, based on current interest rates.
The carrying amounts of cash and short-term investments and accrued investment
income approximate their fair value.
Fair values for liabilities under investment-type contracts, included in
reserves for future policy benefits and other policy liabilities, 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 carrying values and fair values of financial instruments are as follows:
<TABLE>
<CAPTION>
December 31
1999 1998
-----------------------------------------------------------------------
Carrying Fair Carrying Fair
Value Value Value Value
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Financial assets:
Bonds $ 764,615 $ 737,519 $ 564,092 $ 591,868
Policy loans 14,398 17,636 13,297 15,577
Cash and short-term investments 40,120 40,120 45,804 45,804
Accrued investment income 14,577 14,577 11,205 11,205
</TABLE>
14
<PAGE>
Transamerica Life Insurance Company of New York
Notes to Financial Statements - Statutory Basis (continued)
(Dollars in thousands)
2. Fair Values of Financial Instruments (continued)
Financial instruments which potentially subject the Company to concentration of
credit risk consist principally of temporary cash investments, bonds, and
reinsurance recoverables. The Company places its temporary cash investments with
high credit quality financial institutions. Concentration of credit risk with
respect to investments in bonds is limited due to the large number of such
investments and their dispersion across many different industries and geographic
areas. The Company places reinsurance with only highly rated insurance
companies. At December 31, 1999, the Company had no significant concentration of
credit risk.
3. Investments
The carrying value and fair value of investments in debt securities are
summarized as follows:
<TABLE>
<CAPTION>
Gross Gross
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
December 31, 1999
U.S. Treasury securities
and obligations of U.S.
government corporations
and agencies $ 2,102 $ 31 $ 12 $ 2,121
Obligations of states and
political subdivisions 17,216 265 247 17,234
Corporate securities 603,827 2,636 26,068 580,395
Public utilities 140,670 270 3,971 136,969
Other asset-backed securities 800 - - 800
-----------------------------------------------------------------------
$ 764,615 $ 3,202 $ 30,298 $ 737,519
=======================================================================
</TABLE>
15
<PAGE>
Transamerica Life Insurance Company of New York
Notes to Financial Statements - Statutory Basis (continued)
(Dollars in thousands)
3. Investments (continued)
<TABLE>
<CAPTION>
Gross Gross
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
December 31, 1998
U.S. Treasury securities and
obligations of U.S.
government corporations
and agencies $ 812 $ 100 $ - $ 912
Obligations of states and
political subdivisions 17,214 1,863 - 19,077
Foreign governments - - - -
Corporate securities 451,726 24,615 1,247 475,094
Public utilities 93,238 2,451 6 95,683
Other asset-backed securities 1,102 - - 1,102
-----------------------------------------------------------------------
$ 564,092 $ 29,029 $ 1,253 $ 591,868
=======================================================================
</TABLE>
The carrying value and fair value of bonds at December 31, 1999, by contractual
maturity, are shown below. Expected maturities may differ from contractual
maturities because certain borrowers have the right to call or prepay
obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Carrying Fair
Value Value
------------------------------------
<S> <C> <C>
Due in one year or less $ 12,838 $ 12,551
Due after one year through five years 61,054 61,464
Due after five years through ten years 243,852 233,274
Due after ten years 446,071 429,430
------------------------------------
763,815 736,719
Other asset-backed securities 800 800
------------------------------------
$ 764,615 $ 737,519
====================================
</TABLE>
16
<PAGE>
Transamerica Life Insurance Company of New York
Notes to Financial Statements - Statutory Basis (continued)
(Dollars in thousands)
3. Investments (continued)
Net investment income (expense) by major category of investments is summarized
as follows:
<TABLE>
<CAPTION>
Year ended December 31
1999 1998 1997
--------------------------------------------------
<S> <C> <C> <C>
Bonds $ 48,490 $ 36,818 $ 35,850
Policy loans 1,034 896 739
Cash and short-term investments 1,255 736 594
Other investments (1,922) (1,345) (1,532)
--------------------------------------------------
48,857 37,105 35,651
Investment expense (300) (238) (236)
--------------------------------------------------
$ 48,557 $ 36,867 $ 35,415
==================================================
</TABLE>
The realized gains and losses and other information related to investments are
summarized as follows:
<TABLE>
<CAPTION>
Year ended December 31
1999 1998 1997
--------------------------------------------------
<S> <C> <C> <C>
Net (losses) gains on disposition of
investments in:
Bonds $ (1,063) $ 1,422 $ 6
Related income taxes 379 (575) (32)
Transfer from (to) the IMR 691 (924) (4)
--------------------------------------------------
Net investment gains (losses) $ 7 $ (77) $ (30)
==================================================
Gross gains on disposition of investment in
bonds $ 224 $ 1,547 $ 6
Gross losses on disposition of investment in
bonds $ (1,287) $ (125) $ -
</TABLE>
17
<PAGE>
Transamerica Life Insurance Company of New York
Notes to Financial Statements - Statutory Basis (continued)
(Dollars in thousands)
4. Reinsurance
The Company is involved in the cession of reinsurance to affiliated and
nonaffiliated companies. Risks are reinsured with other companies to permit the
recovery of a portion of the direct losses. These reinsured risks are treated as
though, to the extent of the reinsurance, they are risks for which the Company
is not liable.
Policy liabilities and accruals are reported in the accompanying financial
statements net of reinsurance ceded. The Company remains liable to the extent
the reinsuring companies do not meet their obligations under these reinsurance
treaties.
The following summarizes reinsurance transactions:
<TABLE>
<CAPTION>
Ceded to Ceded to
Direct Affiliated Unaffiliated Net
Amount Companies Companies Amount
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Year ended
December 31, 1999:
Premium revenue $ 40,938 $ 830 $ 20,748 $ 19,360
=======================================================================
At December 31, 1999:
Life insurance in force $ 4,272,811 $ 262,213 $ 2,625,743 $ 1,384,855
=======================================================================
Reserves for future policy benefits $ 802,895 $ 1,295 $ 45,964 $ 755,636
Policy and contract claims payable 4,395 - 1,711 2,684
-----------------------------------------------------------------------
$ 807,290 $ 1,295 $ 47,675 $ 758,320
=======================================================================
</TABLE>
Included in reinsurance balances in the accompanying balance sheet is $27,709 at
December 31, 1999, and $24,439 at December 31, 1998, of funds held under
coinsurance agreements.
18
<PAGE>
Transamerica Life Insurance Company of New York
Notes to Financial Statements - Statutory Basis (continued)
(Dollars in thousands)
4. Reinsurance (continued)
<TABLE>
<CAPTION>
Ceded to Ceded to
Direct Affiliated Unaffiliated Net
Amount Companies Companies Amount
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Year ended
December 31, 1998:
Premium revenue $ 37,996 $ 741 $ 19,267 $ 17,988
=======================================================================
At December 31, 1998:
Life insurance in force $ 4,521,321 $ 258,795 $ 2,539,998 $ 1,722,528
=======================================================================
Reserves for future policy
benefits $ 610,849 $ 1,511 $ 42,524 $ 566,814
Policy and contract claims
payable 3,358 1,491 1,867
-----------------------------------------------------------------------
$ 614,207 $ 1,511 $ 44,015 $ 568,681
=======================================================================
Year ended
December 31, 1997:
Premium revenue $ 54,182 $ 768 $ 17,198 $ 36,216
=======================================================================
At December 31, 1997:
Life insurance in force $ 4,588,120 $ 297,518 $ 2,765,285 $ 1,525,317
=======================================================================
Reserves for future policy
benefits $ 471,364 $ 1,653 $ 36,879 $ 432,832
Policy and contract 2,014 73 692 1,249
-----------------------------------------------------------------------
$ 473,378 $ 1,726 $ 37,571 $ 434,081
=======================================================================
</TABLE>
19
<PAGE>
Transamerica Life Insurance Company of New York
Notes to Financial Statements - Statutory Basis (continued)
(Dollars in thousands)
5. Income Taxes
The Company was included in a consolidated income tax return with Transamerica
Corporation through July 21, 1999. Under a tax sharing agreement with
Transamerica Corporation tax payments are made to, or refunds are received from,
Transamerica Corporation in amounts which would result if the Company filed
separate tax returns with federal taxing authorities. For the period from July
22, 1999 to December 31, 1999, the Company will file a separate tax return.
Amounts due to (from) Transamerica Corporation for federal income taxes were
$1,700 and $(1,400) at December 31, 1999 and 1998, respectively, and are
included in accounts payable and other liabilities in the accompanying balance
sheet.
Following is a reconciliation of federal income taxes computed at the statutory
rate with the income tax provision, excluding income taxes related to net
realized gains on investment transactions:
<TABLE>
<CAPTION>
Year ended December 31
1999 1998 1997
------------------------------------------------------
<S> <C> <C> <C>
Federal income taxes (recovery) at
statutory rate $ 1,839 $ (2,234) $ 54
Difference between statutory and tax
reserves 26 (181) (57)
Deferred acquisition costs capitalized,
net of amortization 784 692 684
Difference in statutory and tax bases
of investments (72) (118) (74)
Adjustment to prior year tax
provision 76 393 (532)
Other (26) (122) (346)
------------------------------------------------------
Provision (benefit) for income taxes $ 2,627 $ (1,570) $ (271)
======================================================
</TABLE>
20
<PAGE>
Transamerica Life Insurance Company of New York
Notes to Financial Statements - Statutory Basis (continued)
(Dollars in thousands)
6. Deferred and Uncollected Premiums
Components of deferred and uncollected premiums are as follows:
<TABLE>
<CAPTION>
Gross Loading Net
------------------------------------------------------
<S> <C> <C> <C>
December 31, 1999
Life and annuity:
Ordinary first-year business $ 2 $ 2 $ -
Ordinary renewal business 792 50 742
------------------------------------------------------
$ 794 $ 52 $ 742
======================================================
December 31, 1998
Life and annuity:
Ordinary first-year business $ 6 $ 13 $ (7)
Ordinary renewal business 888 58 830
Accident and health 298 - 298
------------------------------------------------------
$ 1,192 $ 71 $ 1,121
======================================================
</TABLE>
The gross deferred and uncollected premiums balance at December 31, 1999, of
$794 is composed of $1,115 direct deferred and uncollected premiums less
reinsurance premiums payable of $321.
The gross deferred and uncollected premiums balance at December 31, 1998, of
$1,192 is composed of $4,134 direct deferred and uncollected premiums less
reinsurance premiums payable of $2,942.
21
<PAGE>
Transamerica Life Insurance Company of New York
Notes to Financial Statements - Statutory Basis (continued)
(Dollars in thousands)
7. Annuity Reserves and Deposit Liabilities
A portion of the Company's policy reserves and other policyholders' funds
(including separate account liabilities) relates to liabilities established on a
variety of the Company's products that are not subject to significant mortality
or morbidity risk; however, there may be certain restrictions placed upon the
amount of funds that can be withdrawn without penalty. The amount of reserves on
these products, by withdrawal characteristics, is summarized as follows:
<TABLE>
<CAPTION>
December 31
1999 1998
----------------------------------------------------------------
Amount Percent Amount Percent
----------------------------------------------------------------
<S> <C> <C> <C> <C>
Subject to discretionary withdrawal -
with adjustment:
At book value less surrender
charge $ 154,139 13% $ 116,903 14%
At market value 561,722 47 414,263 50
----------------------------------------------------------------
715,861 60 531,166 64
Subject to discretionary withdrawal -
without adjustment 293,388 25 130,824 16
Not subject to discretionary
withdrawal provision 174,176 15 168,830 20
----------------------------------------------------------------
Total annuity reserves and deposit
liabilities 1,183,425 100% 830,820 100%
=============== =============
Less reinsurance 101 -
-------------------- -------------------
Net annuity reserves and deposit
liabilities $ 1,183,324* $ 830,820*
==================== ===================
</TABLE>
*Includes $561,722 and $414,263 of annuity reserves and deposit liabilities
reported in the separate account liability at December 31, 1999 and 1998,
respectively. Funding agreement liabilities that are a part of the separate
account liabilities are excluded from the above amounts.
22
<PAGE>
Transamerica Life Insurance Company of New York
Notes to Financial Statements - Statutory Basis (continued)
(Dollars in thousands)
8. Capital and Surplus
The Company is subject to the requirements of the NAIC approved Risk Based
Capital (RBC) rules and at December 31, 1999 and 1998, the Company met the RBC
requirement.
The amount of dividends which can be paid by the Company without prior approval
of the State of New York Insurance Department is subject to restrictions related
to statutory surplus and gains from operations. No dividends were declared or
paid in 1999.
9. 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. Pension
benefits are based on the employee's compensation during the highest paid 60
consecutive months during the 120 months before retirement. The general policy
is to fund current service costs currently and prior service costs over periods
ranging from 10 to 30 years. Assets of those plans are invested principally in
publicly traded stocks and bonds.
The Company's total pension costs charged to income were not significant in
1999, 1998 nor 1997.
The Company also participates in various contributory defined benefit programs
sponsored by Transamerica Corporation that provide medical and certain other
benefits to eligible retirees. The Company accounts for the costs of such
benefit programs under the accrual method and amortizes its transition
obligation for retirees and fully eligible or vested employees over 20 years.
Postretirement benefit costs charged to income were not significant in 1999,
1998 nor 1997.
23
<PAGE>
Transamerica Life Insurance Company of New York
Notes to Financial Statements - Statutory Basis (continued)
(Dollars in thousands)
10. Assets on Deposit
At December 31, 1999 and 1998, $811 of the Company's assets were on deposit with
public officials in compliance with regulatory requirements.
11. Related Party Transactions
The Company has various transactions with Transamerica Corporation and its
affiliated companies in the normal course of operations. These transactions
include reinsurance transactions, computer services, investment services and
advertising.
The Company had amounts due from affiliates of $2,840 as of December 31, 1999,
and $3,961 due to affiliates as of December 31, 1998.
12. Leases
Rental expense for equipment and properties occupied by the Company was $804 in
1999, $673 in 1998 and $880 in 1997. The following is a schedule by years of
future minimum rental payments required under operating leases that have initial
or remaining noncancelable lease terms in excess of one year as of December 31,
1999:
Year ending December 31:
2000 $ 743
2001 328
2002 328
2003 328
2004 328
Later years 3,440
--------------
$ 5,495
==============
24
<PAGE>
Transamerica Life Insurance Company of New York
Notes to Financial Statements - Statutory Basis (continued)
(Dollars in thousands)
13. 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 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 for the Company were not material and have been borne to date by
TOLIC. Additional costs related to the settlement are not expected to be
material and will be incurred over a period of years. In the opinion of the
Company, any ultimate liability which might result from other litigation would
not have a materially adverse effect on the combined financial position of the
Company or the results of its operations.
14. 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 my conduct. Investment risks associated with
fair value changes are borne by the contract holders. Accordingly, investment
income and realized investment gains and losses attributable to separate
accounts are not reported in the Company's income statement.
25
<PAGE>
Transamerica Life Insurance Company of New York
Notes to Financial Statements - Statutory Basis (continued)
(Dollars in thousands)
14. Separate Accounts (continued)
A reconciliation of the amounts transferred to and from the separate accounts is
presented below:
<TABLE>
<CAPTION>
1999 1998 1997
------------------------------------------------------
<S> <C> <C> <C>
Transfer as reported in the summary of
operations of the separate accounts
statement:
Transfers to separate accounts $ 114,905 $ 108,969 $ 93,929
Transfers from separate accounts 39,437 31,014 22,451
------------------------------------------------------
Transfers as reported in the statements
of net income $ 75,468 $ 77,955 $ 71,478
======================================================
</TABLE>
15. NAIC Codification
In 1998, the NAIC adopted codified statutory accounting principles
(Codification). Codification will likely change, to some extent, prescribed
statutory accounting practices and may result in changes to the accounting
practices that the Company uses to prepare its statutory-basis financial
statements. Codification will require adoption by the various states before it
becomes the prescribed statutory basis of accounting for insurance companies
domesticated within those states. Accordingly, before Codification becomes
effective for the Company, the state of New York must adopt Codification as the
prescribed basis of accounting on which domestic insurers must report their
statutory-basis results to the Insurance Department. At this time it is
anticipated that the state of New York will adopt Codification. Based on current
guidance, management believes that the impact of Codification will not be
material to the Company's statutory-basis financial statements.
26
<PAGE>
Statutory-Basis
Financial Statement Schedules
<PAGE>
Transamerica Life Insurance Company of New York
Summary of Investments - Other Than Investments in Related Parties -
Statutory Basis
(Dollars in thousands)
December 31, 1999
Schedule I
<TABLE>
<CAPTION>
Amount at
Estimated Which Shown
Fair in the
Type of Investment Cost (1) Value Balance Sheet
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fixed maturities
Bonds:
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies $ 2,102 $ 2,121 $ 2,102
Obligations of states and political
subdivision 17,216 17,234 17,216
Public utilities 140,670 136,969 140,670
All other corporate bonds 603,827 580,395 603,827
Other asset-backed securities 800 800 800
-----------------------------------------------------------
Total fixed maturities 764,615 737,519 764,615
Real estate 323 525 323
Policy loans 14,398 17,636 14,398
Other long-term investments 3,574 3,574 3,574
Cash and short-term investments 40,120 40,120 40,120
-----------------------------------------------------------
Total investments $ 823,030 $ 799,374 $ 823,030
===========================================================
</TABLE>
(1) Original cost of fixed maturities is reduced by repayments and adjusted
for amortization of premiums or accrual discounts.
27
<PAGE>
Transamerica Life Insurance Company of New York
Supplementary Insurance Information - Statutory Basis
(Dollars in thousands)
December 31, 1999
Schedule III
<TABLE>
<CAPTION>
Future Policy Policy and
Benefits and Contract Premium
Expenses Liabilities Revenue
------------------------------------------------------
<S> <C> <C> <C>
Year ended December 31, 1999
Individual life $ 132,388 $ 2,886 $ 12,423
Group life and health 2,646 250 1,140
Annuity 620,602 (452) 327,310
------------------------------------------------------
755,636 2,684 340,873
Year ended December 31, 1998
Individual life 130,094 2,212 12,748
Group life and health 2,049 - 916
Annuity 434,671 (345) 251,084
------------------------------------------------------
566,814 1,867 264,748
Year ended December 31, 1997
Individual life 125,586 1,593 13,456
Group life and health 26 - 622
Annuity 306,819 (344) 126,087
------------------------------------------------------
$ 432,431 $ 1,249 $ 140,165
======================================================
</TABLE>
28
<PAGE>
Transamerica Life Insurance Company of New York
Supplementary Insurance Information - Statutory Basis (continued)
(Dollars in thousands)
December 31, 1999
Schedule III
<TABLE>
<CAPTION>
Benefits,
Claims
Net Losses and Other
Investment Settlement Operating Premiums
Income* Expenses Expenses* Written
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Year ended December 31, 1999
Individual life $ 9,794 $ 12,923 $ 13,321 $ 29,740
Group life and health 171 613 1,323 5,035
Annuity 38,592 79,654 25,009 327,676
-----------------------------------------------------------------------
48,557 93,190 39,653 362,451
Year ended December 31, 1998
Individual life 9,460 11,981 12,845 29,822
Group life and health 134 217 1,053 3,850
Annuity 27,273 61,139 19,518 251,084
-----------------------------------------------------------------------
36,867 73,337 33,416 284,756
Year ended December 31, 1997
Individual life 10,096 14,574 11,935 30,131
Group life and health 102 107 484 1,912
Annuity 25,217 61,150 10,361 126,087
-----------------------------------------------------------------------
$ 35,415 $ 75,831 $ 22,780 $ 158,130
=======================================================================
</TABLE>
* Allocations of net investment income and other operating expenses are based
on a number of assumptions of estimates, and the results would change if
different methods were applied.
29
<PAGE>
Transamerica Life Insurance Company of New York
Reinsurance - Statutory Basis
(Dollars in thousands)
December 31, 1999
Schedule IV
<TABLE>
<CAPTION>
Ceded to
Gross Other Net
Amount Companies Amount
------------------------------------------------------
<S> <C> <C> <C>
Year ended December 31, 1999
Life insurance in force $ 4,272,811 $ 2,887,956 $ 1,384,855
======================================================
Premiums:
Individual life $ 35,537 $ 17,317 $ 18,220
Group life and health 5,035 3,895 1,140
Annuity 321,879 366 321,513
------------------------------------------------------
$ 362,451 $ 21,578 $ 340,873
======================================================
Year ended December 31, 1998
Life insurance in force $ 4,521,321 $ 2,798,793 $ 1,722,528
======================================================
Premiums:
Individual life $ 34,146 $ 17,074 $ 17,072
Group life and health 3,850 2,934 916
Annuity 246,760 - 246,760
------------------------------------------------------
$ 284,756 $ 20,008 $ 264,748
======================================================
Year ended December 31, 1997
Life insurance in force $ 4,588,120 $ 3,062,803 $ 1,525,317
======================================================
Premiums:
Individual life $ 52,270 $ 16,676 $ 35,594
Group life and health 1,912 1,290 622
Annuity 103,949 - 103,949
------------------------------------------------------
$ 158,131 $ 17,966 $ 140,165
======================================================
</TABLE>
30
<PAGE>
Audited Financial Statements
Separate Account VA-2LNY of
Transamerica Life Insurance Company
of New York
Year ended December 31, 1999
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, 1999
Contents
<TABLE>
<S> <C>
Report of Independent Auditors........................................... 1
Statement of Assets and Liabilities...................................... 2
Statement of Operations.................................................. 7
Statements of Changes in Net Assets...................................... 12
Notes to Financial Statements............................................ 21
</TABLE>
<PAGE>
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, Small
Company Stock, Limited Term High Income, Balanced, Core Value, Mid-Cap, TA VIF
Growth, Founders Growth, Founders Passport, Founders International Equity,
European Equity, and Technology Growth Sub-Accounts) as of December 31, 1999,
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 auditing standards generally accepted
in the United States. 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,
1999, 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, 1999, the results of their operations for
the year then ended, and the changes in their net assets for each of the two
years in the period then ended in conformity with accounting principles
generally accepted in the United States.
March 24, 2000
1
<PAGE>
Separate Account VA-2LNY of
Transamerica Life Insurance Company of New York
Statement of Assets and Liabilities
December 31, 1999
<TABLE>
<CAPTION>
Zero
Money Managed Coupon Quality
Market Assets 2000 Bond
Sub-account Sub-account Sub-account Sub-account
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Investments, at fair value $ 22,625,256 $ 17,556,323 $ 8,605,847 $ 20,046,110
Receivable for units sold 103,780 2,011 984 -
Due from Transamerica Life - - - 221
-------------------------------------------------------------
Total assets 22,729,036 17,558,334 8,606,831 20,046,331
Liabilities:
Payable for units redeemed - - - 5,772
Due to Transamerica Life 42 11 220 -
-------------------------------------------------------------
Total liabilities 42 11 220 5,772
-------------------------------------------------------------
Net assets $ 22,728,994 $ 17,558,323 $ 8,606,611 $ 20,040,559
=============================================================
Accumulation units outstanding 18,055,789.500 1,025,465.090 510,563.310 1,277,828.170
=============================================================
Net asset value and redemption price per unit $ 1.258820 $ 17.122302 $ 16.857089 $ 15.683297
=============================================================
Investment sub-account information:
Number of mutual fund shares 22,625,256.870 1,199,202.406 707,136.221 1,840,781.512
Net asset value per share $ 1.00 $ 14.64 $ 12.17 $ 10.89
Investment cost $ 22,625,256 $ 16,755,668 $ 8,732,543 $ 21,265,064
</TABLE>
See accompanying notes.
3
<PAGE>
<TABLE>
<CAPTION>
Socially
Small Capital Stock Responsible Growth and International
Cap Appreciation Index Fund Fund Income Equity
Sub-account Sub-account Sub-account Sub-account Sub-account Sub-account
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 64,998,163 $ 108,118,949 $ 78,428,794 $ 25,990,244 $ 64,089,054 $ 11,489,367
19,958 - 30 - 26,842 1,309
45 68 24 11 77 9
-----------------------------------------------------------------------------------------------------------------------------
65,018,166 108,119,017 78,428,848 25,990,255 64,115,973 11,490,685
- 156,043 - 10,855 - -
- - - - - -
-----------------------------------------------------------------------------------------------------------------------------
- 156,043 - 10,855 - -
-----------------------------------------------------------------------------------------------------------------------------
$ 65,018,166 $ 107,962,974 $ 78,428,848 $ 25,979,400 $ 64,115,973 $ 11,490,685
=============================================================================================================================
830,844.930 2,778,082.020 1,484,609.140 590,500.640 1,902,864.700 458,935.430
=============================================================================================================================
$ 78.255477 $ 38.862414 $ 52.827944 $ 43.995549 $ 33.694447 $ 25.037694
=============================================================================================================================
979,773.343 2,711,787.048 2,039,760.595 665,222.540 2,515,268.999 514,295.748
$ 66.34 $ 39.87 $ 38.45 $ 39.07 $ 25.48 $ 22.34
$ 53,845,493 $ 86,068,884 $ 60,123,644 $ 21,332,732 $ 53,988,867 $ 8,257,770
</TABLE>
4
<PAGE>
Separate Account VA-2LNY of
Transamerica Life Insurance Company of New York
Statement of Assets and Liabilities (continued)
December 31, 1999
<TABLE>
<CAPTION>
Small Limited Term
International Disciplined Company High
Value Stock Stock Income
Sub-account Sub-account Sub-account Sub-account
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Investments, at fair value $ 4,830,410 $ 61,629,744 $ 6,415,925 $ 11,122,450
Receivable for units sold - 6,108 804 101,689
Due from Transamerica Life 4 18 32 -
---------------------------------------------------------------------------
Total assets 4,830,414 61,635,870 6,416,761 11,224,139
Liabilities:
Payable for units redeemed 82 - - -
Due to Transamerica Life - - - 10,006
---------------------------------------------------------------------------
Total liabilities 82 - - 10,006
---------------------------------------------------------------------------
Net assets $ 4,830,332 $ 61,635,870 $ 6,416,761 $ 11,214,133
===========================================================================
Accumulation units outstanding 325,359.230 2,764,507.490 490,455.380 1,076,017.150
===========================================================================
Net asset value and redemption price per unit $ 14.846150 $ 22.295425 $ 13.083272 $ 10.421891
===========================================================================
Investment sub-account information:
Number of mutual fund shares 308,258.508 2,289,366.445 384,417.364 1,065,368.774
Net asset value per share $ 15.67 $ 26.92 $ 16.69 $ 10.44
Investment cost $ 4,528,218 $ 49,419,261 $ 6,049,195 $ 12,715,183
</TABLE>
See accompanying notes.
4
<PAGE>
<TABLE>
<CAPTION>
TA VIF Founders Founders
Balanced Core Value Mid-Cap Growth Growth Passport
Sub-account Value Sub-account Sub-account Sub-account Sub-account
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 23,269,087 $ 2,827,741 $ 3,384,628 $ 14,438,413 $ 1,291,339 $ 895,586
- - - 30,342 - -
- 1 9 24 8 17
---------------------------------------------------------------------------------------------------------------
23,269,087 2,827,742 3,384,637 14,468,779 1,291,347 895,603
786 139,465 3,093 - 4,852 29,089
7 - - - - -
---------------------------------------------------------------------------------------------------------------
793 139,465 3,093 - 4,852 29,089
$ 23,268,294 $ 2,688,277 $ 3,381,544 $ 14,468,779 $ 1,286,495 $ 866,514
===============================================================================================================
1,540,794.860 245,134.000 321,171.240 938,179.250 101,842.510 53,674.770
===============================================================================================================
$ 15.101487 $ 10.966561 $ 10.528788 $ 15.422190 $ 12.632200 $ 16.143786
===============================================================================================================
1,452,502.340 202,415.251 251,832.464 542,593.508 65,022.118 37,598.105
$ 16.02 $ 13.97 $ 13.44 $ 26.61 $ 19.86 $ 23.82
$ 22,882,271 $ 2,723,209 $ 2,896,564 $ 1,538,289 $ 1,099,957 $ 739,768
</TABLE>
5
<PAGE>
Separate Account VA-2LNY of
Transamerica Life Insurance Company of New York
Statement of Assets and Liabilities (continued)
December 31, 1999
<TABLE>
<CAPTION>
Founders
International European Technology
Equity Equity Growth
Sub-account Sub-account Sub-account
--------------------------------------------------------
<S> <C> <C> <C>
Assets:
Investments, at fair value $ 200,805 $ 529,563 $ 19,749,001
Receivable for units sold - 60 -
Due from Transamerica Life 1 3 16
--------------------------------------------------------
Total assets 200,806 529,626 19,749,017
Liabilities:
Payable for units redeemed 3,978 - 178,935
Due to Transamerica Life - - -
--------------------------------------------------------
Total liabilities 3,978 - 178,935
Net assets $ 196,828 $ 529,626 $ 19,570,082
========================================================
Accumulation units outstanding 14,166.030 41,298.360 1,272,158.610
========================================================
Net asset value and redemption price per unit $ 13.894366 $ 12.824383 $ 15.383366
========================================================
Investment sub-account information:
Number of mutual fund shares $ 9,275.061 33,180.643 1,015,372.810
Net asset value per share $ 21.65 $ 15.96 $ 19.45
Investment cost $ 189,263 $ 475,214 $ 15,837,381
</TABLE>
See accompanying notes.
6
<PAGE>
Separate Account VA-2LNY of
Transamerica Life Insurance Company of New York
Statement of Operations
Year ended December 31, 1999
<TABLE>
<CAPTION>
Zero
Money Managed Coupon Quality
Market Assets 2000 Bond
Sub-account Sub-account Sub-account Sub-account
----------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income $1,046,454 $ 1,539,469 $ 456,701 $ 1,142,883
Expenses:
Mortality and expense risk charge 311,372 252,928 119,657 283,940
----------------------------------------------------
Net investment income (loss) 735,082 1,286,541 337,044 858,943
Net realized and unrealized gain (loss) on investments:
Realized gain (loss) on investment transactions - 941,799 (5,768) (295,342)
Unrealized appreciation (depreciation) of investments - (1,243,978) (222,123) (813,247)
----------------------------------------------------
Net gain (loss) on investments - (302,179) (227,891) (1,108,589)
----------------------------------------------------
Increase (decrease) in net assets resulting from
operations $ 735,082 $ 984,362 $ 109,153 $ (249,646)
====================================================
</TABLE>
See accompanying notes.
7
<PAGE>
<TABLE>
<CAPTION>
Socially
Small Capital Stock Responsible Growth and International
Cap Appreciation Index Fund Fund Income Equity
Sub-account Sub-account Sub-account Sub-account Sub-account Sub-account
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 43,319 $1,002,770 $ 1,330,988 $ 869,782 $2,319,611 $ 396,810
822,089 1,375,068 890,492 241,568 836,237 103,518
------------------------------------------------------------------------------------------------------
(778,770) (372,298) 440,496 628,214 1,483,374 293,292
4,623,349 8,262,729 4,966,158 1,435,316 1,615,612 231,636
7,663,521 1,343,357 5,952,865 2,810,807 5,533,192 3,499,868
------------------------------------------------------------------------------------------------------
12,286,880 9,606,086 10,919,023 4,246,123 7,148,804 3,731,504
------------------------------------------------------------------------------------------------------
$11,508,110 $9,233,788 $11,359,519 $4,874,337 $8,632,178 $4,024,796
======================================================================================================
</TABLE>
8
<PAGE>
Separate Account VA-2LNY of
Transamerica Life Insurance Company of New York
Statement of Operations (continued)
Year ended December 31, 1999
<TABLE>
<CAPTION>
Small Limited Term
International Disciplined Company High
Value Stock Stock Income
Sub-account Sub-account Sub-account Sub-account
-------------------------------------------------------
<S> <C> <C> <C> <C>
Investment income $394,780 $ 597,378 $ - $ 1,360,342
Expenses:
Mortality and expense risk charge 50,151 726,472 89,332 185,108
-------------------------------------------------------
Net investment income (loss) 344,629 (129,094) (89,332) 1,175,234
Net realized and unrealized gain (loss) on
investments:
Realized gain (loss) on investment transactions 68,421 3,248,891 (163,464) (1,067,849)
Unrealized appreciation (depreciation) of investments 473,153 5,304,677 766,817 (469,579)
-------------------------------------------------------
Net gain (loss) on investments 541,574 8,553,568 603,353 (1,537,428)
-------------------------------------------------------
Increase (decrease) in net assets resulting from operations $886,203 $8,424,474 $ 514,021 $ (362,194)
=======================================================
</TABLE>
See accompanying notes.
9
<PAGE>
<TABLE>
<CAPTION>
TA VIF Founders Founders
Balanced Core Value Mid-Cap Growth Growth Passport
Sub-account Sub-account Sub-account Sub-account Sub-account Sub-account
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$1,525,540 $ 11,533 $ 8,356 $ 101 $ 9,972 $ 53,393
256,659 20,989 37,100 125,605 3,377 2,478
---------------------------------------------------------------------------------------------------
1,268,881 (9,456) (28,744) (125,504) 6,595 50,915
343,239 58,346 (16,936) 461,642 6,780 (15,832)
(417,767) 94,248 345,024 2,674,469 191,382 155,818
---------------------------------------------------------------------------------------------------
(74,528) 152,594 328,088 3,136,111 198,162 139,986
---------------------------------------------------------------------------------------------------
$1,194,353 $143,138 $299,344 $3,010,607 $204,757 $190,901
===================================================================================================
</TABLE>
10
<PAGE>
Separate Account VA-2LNY of
Transamerica Life Insurance Company of New York
Statement of Operations (continued)
Year ended December 31, 1999
<TABLE>
<CAPTION>
Founders
International European Technology
Equity Equity Growth
Sub-account Sub-account Sub-account
---------------------------------------------------------
<S> <C> <C> <C>
Investment income $ 12,070 $ 5,883 $ -
Expenses:
Mortality and expense risk charge 181 650 31,673
---------------------------------------------------------
Net investment income (loss) 11,889 5,233 (31,673)
Net realized and unrealized gain (loss) on investments:
Realized gain (loss) on investment transactions 45 4,103 550,586
Unrealized appreciation (depreciation) of investments 11,541 54,348 3,911,619
---------------------------------------------------------
Net gain (loss) on investments 11,586 58,451 4,462,205
---------------------------------------------------------
Increase (decrease) in net assets resulting from operations $ 23,475 $ 63,684 $4,430,532
=========================================================
</TABLE>
See accompanying notes.
11
<PAGE>
Separate Account VA-2LNY of
Transamerica Life Insurance Company of New York
Statement of Changes in Net Assets
Year ended December 31, 1999
<TABLE>
<CAPTION>
Zero
Money Managed Coupon Quality
Market Assets 2000 Bond
Sub-account Sub-account Sub-account Sub-account
----------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (loss) $ 735,082 $ 1,286,541 $ 337,044 $ 858,943
Realized gain (loss) on investment transactions - 941,799 (5,768) (295,342)
Unrealized appreciation (depreciation) of investments - (1,243,978) (222,123) (813,247)
-----------------------------------------------------------
Increase (decrease) in net assets resulting from operations 735,082 984,362 109,153 (249,646)
Changes from accumulation unit transactions 179,084 (935,749) 143,178 (70,273)
-----------------------------------------------------------
Total increase (decrease) in net assets 914,166 48,613 252,331 (319,919)
Net assets at beginning of year 21,814,828 17,509,710 8,354,280 20,360,478
-----------------------------------------------------------
Net assets at end of year $22,728,994 $17,558,323 $8,606,611 $20,040,559
===========================================================
</TABLE>
See accompanying notes.
12
<PAGE>
<TABLE>
<CAPTION>
Socially
Small Capital Stock Responsible Growth and International
Cap Appreciation Index Fund Fund Income Equity
Sub-account Sub-account Sub-account Sub-account Sub-account Sub-account
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ (778,770) $ (372,298) $ 440,496 $ 628,214 $ 1,483,374 $ 293,292
4,623,359 8,262,729 4,966,158 1,435,316 1,615,612 231,636
7,663,521 1,343,357 5,952,865 2,810,807 5,533,192 3,499,868
----------------------------------------------------------------------------------------------------------------------------
11,508,110 9,233,788 11,359,519 4,874,337 8,632,178 4,024,796
(7,660,694) 15,336,913 17,430,908 9,221,583 (5,057,166) 602,744
----------------------------------------------------------------------------------------------------------------------------
3,847,416 24,570,701 28,790,427 14,095,920 3,575,012 4,627,540
61,170,750 83,392,273 49,638,421 11,883,480 60,540,961 6,863,145
----------------------------------------------------------------------------------------------------------------------------
$ 65,018,166 $ 107,962,974 $78,428,848 $25,979,400 $64,115,973 $11,490,685
============================================================================================================================
</TABLE>
13
<PAGE>
Separate Account VA-2LNY of
Transamerica Life Insurance Company of New York
Statement of Changes in Net Assets (continued)
Year ended December 31, 1999
<TABLE>
<CAPTION>
Small Limited Term
International Disciplined Company High
Value Stock Stock Income
Sub-account Sub-account Sub-account Sub-account
----------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (loss) $ 344,629 $ (129,094) $ (89,332) $ 1,175,234
Realized gain (loss) on investment transactions 68,421 3,248,891 (163,464) (1,067,849)
Unrealized appreciation (depreciation) of investments 473,153 5,304,677 766,817 (469,579)
----------------------------------------------------------
Increase (decrease) in net assets resulting from operations 886,203 8,424,474 514,021 (362,194)
Changes from accumulation unit transactions 1,111,298 10,018,772 (1,081,711) (2,466,959)
----------------------------------------------------------
Total increase (decrease) in net assets 1,997,501 18,443,246 (567,690) (2,829,153)
Net assets at beginning of year 2,832,831 43,192,624 6,984,451 14,043,286
----------------------------------------------------------
Net assets at end of year $4,830,332 $61,635,870 $ 6,416,761 $11,214,133
==========================================================
</TABLE>
See accompanying notes.
14
<PAGE>
<TABLE>
<CAPTION>
TA VIF Founders Founders
Balanced Core Value Mid-Cap Growth Growth Passport
Sub-account Sub-account Sub-account Sub-account Sub-account Sub-account
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 1,268,881 $ (9,456) $ (28,744) $ (125,504) $ 6,595 $ 50,915
343,239 58,346 (16,936) 461,642 6,780 (15,832)
(417,767) 94,248 345,024 2,674,469 191,382 155,818
1,194,353 143,138 299,344 3,010,607 204,757 190,901
9,932,884 2,244,234 947,421 7,630,815 1,081,738 675,613
-------------------------------------------------------------------------------------------------------------
11,127,237 2,387,372 1,246,765 10,641,815 1,286,495 866,514
12,141,057 300,905 2,134,779 3,827,357 - -
-------------------------------------------------------------------------------------------------------------
$ 23,268,294 $ 2,688,277 $ 3,381,544 $14,468,779 $ 1,286,495 $ 866,514
=============================================================================================================
</TABLE>
15
<PAGE>
Separate Account VA-2LNY of
Transamerica Life Insurance Company of New York
Statement of Changes in Net Assets (continued)
Year ended December 31, 1999
<TABLE>
<CAPTION>
Founders
International European Technology
Equity Equity Growth
Sub-account Sub-account Sub-account
------------------------------------------------------
<S> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (loss) $ 11,889 $ 5,233 $ (31,673)
Realized gain (loss) on investment transactions 45 4,103 550,586
Unrealized appreciation (depreciation) of investments 11,541 54,348 3,911,619
------------------------------------------------------
Increase (decrease) in net assets resulting from operations 23,475 63,684 4,430,532
Changes from accumulation unit transactions 173,353 465,942 15,139,550
------------------------------------------------------
Total increase (decrease) in net assets 196,828 529,626 19,570,082
Net assets at beginning of year - - -
------------------------------------------------------
Net assets at end of year $196,828 $529,626 $19,570,082
======================================================
</TABLE>
See accompanying notes.
16
<PAGE>
Separate Account VA-2LNY of
Transamerica Life Insurance Company of New York
Statement of Changes in Net Assets
Year ended December 31, 1998
<TABLE>
<CAPTION>
Zero
Money Managed Coupon Quality
Market Assets 2000 Bond
Sub-account Sub-account Sub-account Sub-account
--------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (loss) $ 629,058 $ (117,341) $ 297,866 $ 1,076,380
Realized gain (loss) on investment transactions - 563,661 23,745 197,397
Unrealized appreciation (depreciation) of investments - 1,591,674 89,084 (666,270)
--------------------------------------------------------
Increase in net assets resulting from operations 629,058 2,037,994 410,695 607,507
Changes from accumulation unit transactions 7,032,148 1,039,572 1,266,393 4,679,811
--------------------------------------------------------
Total increase (decrease) in net assets 7,661,206 3,077,566 1,677,088 5,287,318
Net assets at beginning of year 14,153,622 14,432,144 6,677,192 15,073,160
--------------------------------------------------------
Net assets at end of year $21,814,828 $17,509,710 $8,354,280 $20,360,478
========================================================
</TABLE>
See accompanying notes.
17
<PAGE>
<TABLE>
<CAPTION>
Socially
Small Capital Stock Responsible Growth and International
Cap Appreciation Index Fund Fund Income Equity
Sub-account Sub-account Sub-account Sub-account Sub-account Sub-account
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 310,599 $ (429,685) $ 87,189 $ 327,550 $ 808,881 $ (23,403)
4,237,631 5,742,774 2,858,345 558,765 895,236 72,014
(8,580,789) 10,602,193 5,910,339 1,272,916 3,635,826 (10,479)
----------------------------------------------------------------------------------------------------------------------------
(4,032,559) 15,915,282 8,855,873 2,159,231 5,339,943 38,132
(4,594,890) 17,948,742 12,368,807 3,534,558 (2,565,068) 990,203
----------------------------------------------------------------------------------------------------------------------------
(8,627,449) 33,864,024 21,224,680 5,693,789 2,774,875 1,028,335
69,798,199 49,528,249 28,413,741 6,189,691 57,766,086 5,834,810
----------------------------------------------------------------------------------------------------------------------------
$ 61,170,750 $ 83,392,273 $49,638,421 $11,883,480 $60,540,961 $6,863,145
============================================================================================================================
</TABLE>
18
<PAGE>
Separate Account VA-2LNY of
Transamerica Life Insurance Company of New York
Statement of Changes in Net Assets (continued)
Year ended December 31, 1998
<TABLE>
<CAPTION>
Small Limited Term
International Disciplined Company High
Value Stock Stock Income
Sub-account Sub-account Sub-account Sub-account
-----------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (loss) $ 189,219 $ (71,187) $ (60,788) $ 873,897
Realized gain (loss) on investment transactions 91,735 1,634,591 380,669 (207,330)
Unrealized appreciation (depreciation) of investments (148,169) 4,963,843 (1,011,209) (1,026,343)
-----------------------------------------------------------
Increase in net assets resulting from operations 132,785 6,527,247 (691,328) (359,776)
Changes from accumulation unit transactions 800,698 18,385,488 1,033,249 9,266,069
-----------------------------------------------------------
Total increase (decrease) in net assets 933,483 24,912,735 341,921 8,906,293
Net assets at beginning of year 1,899,348 18,279,889 6,642,530 5,136,993
-----------------------------------------------------------
Net assets at end of year $2,832,831 $43,192,624 $ 6,984,451 $14,043,286
===========================================================
</TABLE>
See accompanying notes.
19
<PAGE>
<TABLE>
<CAPTION>
TA VIF
Balanced Core Value Mid-Cap Growth
Sub-account Sub-account Sub-account Sub-account
----------------------------------------------------------------
<S> <C> <C> <C>
$ 667,505 $ 61 $ (9,416) $ 298,463
84,665 (2,272) (52,439) (16,276)
853,483 10,282 143,039 225,653
----------------------------------------------------------------
1,605,653 8,071 81,184 507,840
6,618,341 292,834 2,053,595 3,319,517
----------------------------------------------------------------
8,223,994 300,905 2,134,779 3,827,357
3,917,063 - - -
----------------------------------------------------------------
$ 12,141,057 $300,905 $2,134,779 $3,827,357
================================================================
</TABLE>
20
<PAGE>
Separate Account VA-2LNY of
Transamerica Life Insurance Company of New York
Notes to Financial Statements
December 31, 1999
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 Contract, all payments allocated to the
Separate Account by contract owners must be allocated to purchase units of any
or all of the Separate Account's twenty-three sub-accounts, each of which
invests exclusively in a specific corresponding mutual fund portfolio. The
mutual fund portfolios are: twenty series of Dreyfus Variable Investment Fund
(Variable Fund), The Dreyfus Stock Index Fund (Stock Index Fund), The Dreyfus
Socially Responsible Growth Fund (Socially Responsible Fund) and The
Transamerica VIF Growth Fund (TA VIF Fund) (together "the Funds"). The Variable
Fund's twenty series are: Money Market, Managed Assets, Zero Coupon 2000,
Quality Bond, Small Cap, Capital Appreciation, Growth and Income, International
Equity, International Value, Disciplined Stock, Small Company Stock, Limited
Term High Income, Balanced, Core Value, Mid-Cap, Founders Growth, Founders
Passport, Founders International Equity, European Equity, and Technology Growth
sub-accounts. 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 accounting principles generally accepted in the United
States. 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:
21
<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 contract holder's account by
Transamerica Life and not directly from the Separate Account. An annual
contract fee is deducted at the end of each contract year prior to the annuity
date. Currently, this charge is $30 (or 2% of account 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 contract holder withdraws all or a portion of the contract
holder's account, a contingent deferred sales load (CDSL) not exceeding 6% of
premiums may be applied to the amount of the contract value withdrawn to cover
certain expenses relating to the sale of contracts. The amount of the CDSL is
based upon elapsed time since the premium was received and disappears after the
seventh year. During 1999, CDSL amounted to $908,204.
22
<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
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1999
--------------------------------
Accumulation Units:
Units sold 12,422,983.507 106,948.056 66,632.597 188,498.634 60,070.840
Units redeemed (1,659,215.451) (62,379.283) (41,799.971) (63,854.741) (53,254.599)
Units transferred (10,622,744.256) (100,945.353) (16,141.313) (129,350.344) (125,305.387)
----------------------------------------------------------------------------
Net increase (decrease) 141,023.800 (56,376.580) 8,691.313 (4,706.451) (118,489.146)
============================================================================
</TABLE>
<TABLE>
<CAPTION>
Capital Stock Socially Growth and International
Appreciation Index Fund Responsible Income Equity
Sub-account Sub-account Sub-account Sub-account Sub-account
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Accumulation Units:
Units sold 441,807.724 272,590.665 171,195.461 141,286.888 35,211.043
Units redeemed (171,777.643) (68,455.011) (41,274.653) (136,910.641) (15,371.235)
Units transferred 149,442.420 162,904.333 114,079.516 (172,629.150) 7,203.349
-------------------------------------------------------------------------
Net increase (decrease) 419,472.501 367,039.987 244,000.324 (168,252.903) 27,043.157
=========================================================================
</TABLE>
23
<PAGE>
Separate Account VA-2LNY of
Transamerica Life Insurance Company of New York
Notes to Financial Statements
5. Accumulation Units (continued)
<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>
Accumulation Units:
Units sold 51,826.434 525,290.407 57,171.677 203,499.075 431,566.501
Units redeemed (9,849.787) (122,367.481) (31,175.108) (148,908.954) (79,432.817)
Units transferred 42,855.759 98,594.411 (117,831.684) (286,998.188) 331,327.848
-----------------------------------------------------------------------
Net increase (decrease) 84,832.406 501,517.337 (91,835.115) (232,408.067) 683,461.532
=======================================================================
</TABLE>
<TABLE>
<CAPTION>
Core TA VIF Founders Founders
Value Mid-Cap Growth Growth Passport
Sub-account Sub-account Sub-account Sub-account Sub-account
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Accumulation Units:
Units sold 117,269.843 80,979.439 220,841.861 25,835.109 21,897.837
Units redeemed (34,518.880) (21,268.452) (38,367.831) (2,022.429) -
Units transferred 129,984.909 39,878.945 418,479.978 78,029.830 31,776.933
-----------------------------------------------------------------------------------------------
Net increase (decrease) 212,735.872 99,589.932 600,954.008 101,842.510 53,674.770
===============================================================================================
</TABLE>
<TABLE>
<CAPTION>
Founders
International European Technology
Equity Equity Growth
Sub-account Sub-account Sub-account
----------------------------------------------------------
<S> <C> <C> <C>
Accumulation Units:
Units sold 3,578.218 16,921.869 341,785.608
Units redeemed (.339) (5.834) (18,152.920)
Units transferred 10,588.151 24,382.325 948,525.922
----------------------------------------------------------
Net increase (decrease) 14,166.030 41,298.360 1,272,158.610
==========================================================
</TABLE>
24
<PAGE>
Separate Account VA-2LNY of
Transamerica Life Insurance Company of New York
Notes to Financial Statements
5. Accumulation Units (continued)
<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>
Year ended December 31, 1999
--------------------------------
Amounts:
Sales $ 26,762,022 $ 1,775,143 $1,097,682 $ 4,125,753 $ 3,883,767
Redemptions (3,574,340) (1,035,383) (688,598) (1,397,617) (3,443,076)
Transfers (23,008,598) (1,675,509) (265,906) (2,798,409) (8,101,385)
----------------------------------------------------------------------
Net increase (decrease) $ 179,084 $ (935,749) $ 143,178 $ (70,273) (7,660,694)
======================================================================
</TABLE>
<TABLE>
<CAPTION>
Capital Stock Socially Growth and International
Appreciation Index Fund Responsible Income Equity
Sub-account Sub-account Sub-account Sub-account Sub-account
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Amounts:
Sales $16,153,542 $12,945,464 $ 6,470,045 $ 4,246,650 $ 784,792
Redemptions (6,280,599) (3,250,962) (1,559,906) (4,115,114) (342,598)
Transfers 5,463,970 7,736,406 4,311,444 (5,188,702) 160,550
--------------------------------------------------------------------------
Net increase (decrease) $15,336,913 $17,430,908 $ 9,221,583 $(5,057,166) $ 602,744
==========================================================================
</TABLE>
<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>
Amounts:
Sales $ 678,922 $10,493,685 $ 673,415 $ 2,160,097 $ 6,272,043
Redemptions (129,031) (2,444,525) (367,206) (1,580,635) (1,154,413)
Transfers 561,407 1,969,612 (1,387,920) (3,046,421) 4,815,254
------------------------------------------------------------------------
Net increase (decrease) $1,111,298 $10,018,772 $(1,081,711) $(2,466,959) $ 9,932,884
========================================================================
</TABLE>
25
<PAGE>
Separate Account VA-2LNY of
Transamerica Life Insurance Company of New York
Notes to Financial Statements
5. Accumulation Units (continued)
<TABLE>
<CAPTION>
Core TA VIF Founders Founders
Value Mid-Cap Growth Growth Passport
Sub-account Sub-account Sub-account Sub-account Sub-account
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Amounts:
Sales $1,237,125 $ 770,375 $2,804,213 $ 274,412 $275,632
Redemptions (364,153) (202,331) (487,188) (21,481) -
Transfers 1,371,262 379,377 5,313,790 828,807 399,981
-----------------------------------------------------------------------------------------------
Net increase (decrease) $2,244,234 $ 947,421 $7,630,815 $1,081,738 $675,613
===============================================================================================
</TABLE>
<TABLE>
<CAPTION>
Founders
International European Technology
Equity Equity Growth
Sub-account Sub-account Sub-account
----------------------------------------------------------
<S> <C> <C> <C>
Amounts:
Sales $ 43,787 $190,918 $ 4,334,576
Redemptions (4) (65) (1,224,373)
Transfers 129,570 275,089 12,029,347
----------------------------------------------------------
Net increase (decrease) $173,353 $465,942 $15,139,550
==========================================================
</TABLE>
<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>
Year ended December 31, 1998
--------------------------------
Accumulation Units:
Units sold 25,447,082.400 213,542.430 77,227.750 364,955.330 122,904.460
Units redeemed (1,678,332.460) (64,528.640) (28,491.380) (156,513.280) (61,157.260)
Units transferred (17,903,312.057) (84,562.578) 28,809.811 86,318.685 (143,896.718)
---------------------------------------------------------------------------
Net increase (decrease) 5,865,437.883 64,451.212 77,546.181 294,760.735 (82,149.518)
===========================================================================
</TABLE>
26
<PAGE>
Separate Account VA-2LNY of
Transamerica Life Insurance Company of New York
Notes to Financial Statements
5. Accumulation Units (continued)
<TABLE>
<CAPTION>
Capital Stock Socially Growth and International
Appreciation Index Fund Responsible Income Equity
Sub-account Sub-account Sub-account Sub-account Sub-account
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Accumulation Units:
Units sold 436,254.560 209,687.110 96,827.560 261,574.990 48,980.950
Units redeemed (102,343.470) (46,087.010) (13,138.640) (164,068.580) (22,538.460)
Units transferred 225,784.793 145,111.066 32,529.672 (205,498.775) 27,094.490
-----------------------------------------------------------------------------
Net increase (decrease) 559,695.883 308,711.166 116,218.592 (107,992.365) 53,536.980
=============================================================================
</TABLE>
<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>
Accumulation Units:
Units sold 49,224.920 692,393.160 107,895.800 649,946.190 246,123.390
Units redeemed (14,104.180) (105,184.520) (28,735.160) (75,260.830) (26,104.040)
Units transferred 32,464.840 478,868.837 (10,394.257) 260,365.994 303,599.121
----------------------------------------------------------------------------
Net increase (decrease) 67,585.580 1,066,077.477 68,766.383 835,051.354 523,618.471
============================================================================
</TABLE>
<TABLE>
<CAPTION>
Core TA VIF
Value Mid-Cap Growth
Sub-account Sub-account Sub-account
-----------------------------------------------------
<S> <C> <C> <C>
Accumulation Units:
Units sold 20,998.960 131,482.260 130,149.420
Units redeemed (2,249.800) (21,435.670) (3,914.980)
Units transferred 13,648.967 111,534.718 210,990.802
-------------------------------------------------------
Net increase (decrease) 32,398.127 221,581.308 337,225.242
=======================================================
</TABLE>
27
<PAGE>
Separate Account VA-2LNY of
Transamerica Life Insurance Company of New York
Notes to Financial Statements
5. Accumulation Units (continued)
<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>
Year ended December 31, 1998
----------------------------
Amounts:
Sales $ 30,508,062 $ 3,448,122 $ 1,260,849 $ 5,794,920 $ 6,900,528
Redemptions (2,012,072) (1,043,388) (465,029) (2,486,206) (3,428,523)
Transfers (21,463,842) (1,365,162) 470,573 1,371,097 (8,066,895)
------------------------------------------------------------------------
Net increase (decrease) $ 7,032,148 $ 1,039,572 $ 1,266,393 $ 4,679,811 $(4,594,890)
========================================================================
</TABLE>
<TABLE>
<CAPTION>
Capital Stock Socially Growth and International
Appreciation Index Fund Responsible Income Equity
Sub-account Sub-account Sub-account Sub-account Sub-account
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Amounts:
Sales $ 13,987,543 $ 8,397,364 $ 2,941,926 $ 6,191,957 $ 906,364
Redemptions (3,283,659) (1,846,848) (399,035) (3,888,648) (418,210)
Transfers 7,244,858 5,818,291 991,667 (4,868,377) 502,049
------------------------------------------------------------------------
Net increase (decrease) $ 17,948,742 $12,368,807 $ 3,534,558 $(2,565,068) $ 990,203
========================================================================
</TABLE>
<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>
Amounts:
Sales $ 583,512 $11,943,710 $1,619,444 $7,212,244 $3,110,644
Redemptions (167,501) (1,806,592) (431,278) (835,237) (329,489)
Transfers 384,687 8,248,370 (154,917) 2,889,062 3,837,186
---------------------------------------------------------------------
Net increase (decrease) $ 800,698 $18,385,488 $1,033,249 $9,266,069 $6,618,341
=====================================================================
</TABLE>
28
<PAGE>
Separate Account VA-2LNY of
Transamerica Life Insurance Company of New York
Notes to Financial Statements
5. Accumulation Units (continued)
<TABLE>
<CAPTION>
Core TA VIF
Value Mid-Cap Growth
Sub-account Sub-account Sub-account
---------------------------------------------------------
<S> <C> <C> <C>
Amounts:
Sales $189,907 $1,218,026 $1,279,388
Redemptions (20,316) (198,759) (38,635)
Transfers 123,243 1,034,328 2,078,764
----------------------------------------------------------
Net increase (decrease) $292,834 $2,053,595 $3,319,517
==========================================================
</TABLE>
6. Investment Transactions
The aggregate cost of purchases and the aggregate proceeds from the sales of
investments for the year ended December 31, 1999 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 $50,684,870 $4,749,928 $2,308,395 $7,810,660 $11,248,129
========================================================================================
Aggregate proceeds from sales $49,766,047 $4,394,190 $1,840,337 $7,055,248 $19,687,921
========================================================================================
</TABLE>
<TABLE>
<CAPTION>
Capital Stock Socially Growth and International
Appreciation Index Fund Responsible Income Equity
Sub-account Sub-account Sub-account Sub-account Sub-account
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aggregate purchases $32,264,077 $27,797,226 $14,819,592 $10,301,960 $3,326,404
==========================================================================================
Aggregate proceeds from sales $17,247,053 $ 9,914,595 $ 4,953,660 $13,905,348 $2,355,165
==========================================================================================
</TABLE>
<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>
Aggregate purchases $4,260,017 $19,375,116 $1,145,023 $5,031,884 $14,136,421
===========================================================================================
Aggregate proceeds from sales $2,803,925 $ 9,530,236 $2,311,297 $6,414,260 $ 2,921,362
===========================================================================================
</TABLE>
29
<PAGE>
Separate Account VA-2LNY of
Transamerica Life Insurance Company of New York
Notes to Financial Statements (continued)
6. Investment Transactions (continued)
<TABLE>
<CAPTION>
Core TA VIF Founders Founders
Value Mid-Cap Growth Growth Passport
Sub-account Sub-account Sub-account Sub-account Sub-account
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aggregate purchases $3,495,406 $1,649,710 $10,191,801 $1,251,290 $2,622,232
===========================================================================================
Aggregate proceeds from sales $1,121,289 $ 739,612 $ 2,725,965 $ 158,114 $1,866,631
===========================================================================================
</TABLE>
<TABLE>
<CAPTION>
Founders
International European Technology
Equity Equity Growth
Sub-account Sub-account Sub-account
--------------------------------------------------------
<S> <C> <C> <C>
Aggregate purchases $189,426 $518,802 $17,682,227
========================================================
Aggregate proceeds from sales $ 208 $ 47,691 $ 2,395,432
========================================================
</TABLE>
30
<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
InsuranceCompany, 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. (5)
(b) Form of IRA Endorsement. (5)
C-1
<PAGE>
(c) Form of Automatic Payout Option Endorsement. (5)
(d) Form of Dollar Cost Averaging Option Endorsement. (5)
(e) Form of Systematic Withdrawal Option Endorsement. (5)
(f) Form of Unisex Annuity Rates Endorsement. (5)
(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)
(a)(1) Amendment to Participation Agreement between First
Transamerica Life Insurance Company and Dreyfus Variable
Investment Fund. (13)
(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. (9)
(9) (a) Opinion and Consent of Counsel. (7)
(10) (a) Consent of Counsel. (9)
(b) Consent of Independent Auditors. (12)
(11) No financial statements are omitted from item 23.
(12) Not applicable.
(13) Performance Data Calculations. (5)
(14) Not applicable.
C-2
<PAGE>
(15) Powers of Attorney.
Alan T. Cunningham (9) Marc C. Abrahms (9)
Daniel E. Jund (9) Thomas O'Neill (12)
James T. Byrne, Jr. (9) Robert Rubinstein (12)
John A. Fibiger (9) James B. Roszak (9)
Nooruddin S. Veerjee (9) Alexander Smith, Jr. (12)
(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 with Post-Effective Amendment No. 7 to the Form N-4 Registration
Statement File No. 33-55152 (April 28, 1998).
(10) Filed with Post-Effective Amendment No. 8 to the Form N-4 Registration
Statement File No. 33-55152 (February 26, 1999).
(11) Filed with Post-Effective Amendment No. 10 to the Form N-4 Registration
Statement File No. 33-55152 (September 24, 1999).
(12) Filed with Post-Effective Amendment No. 11 to the Form N-4 Registration
Statement File No. 33-55152 (April 28, 2000)
(13) To be filed by Amendment.
Item 25. Directors and Officers of the Depositor
Name and Principal
Business Address Position and Offices with Depositor
--------------------------------------------------------------
Nooruddin S. Veerjee Director and Chairman
James W. Dederer General Counsel
Alan T. Cunningham Director and President
C-3
<PAGE>
Robert Rubinstein Director, Senior Vice President,
Chief Actuary and Chief Operating
Officer and Secretary
Gary 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
Alexander Smith, Jr. Vice President, Administration and
Controller
Kamran Haghighi Tax Officer
William M. Hurst Assistant Secretary
Timothy Weis Vice President
Sally S. Yamada Treasurer
Marc C. Abrahms Director
James T. Byrne, Jr. Director
John A. Fibiger Director
Daniel E. Jund Director
Thomas O'Neill Director
James B. Roszak Director
The Depositor, Transamerica Life Insurance Company of New York
(Transamerica), is wholly owned by Transamerica Occidental Life Insurance
Company. The Registrant is a segregated asset account of Transamerica.
Item 26. Person Controlled by or under Common Control With the Depositor or
Registrant.
<TABLE>
<CAPTION>
Jurisdiction of Percent of Voting
Name Incorporation Securities Owned Business
---- ------------- ---------------- --------
<S> <C> <C> <C>
AEGON N.V. Netherlands 51.16% of Vereniging Holding company
AEGON Netherlands
Membership Association
Groninger Financieringen B.V. Netherlands 100% AEGON N.V. Holding company
AEGON Netherland N.V. Netherlands 100% AEGON N.V. Holding company
AEGON Nevak Holding B.V. Netherlands 100% AEGON N.V. Holding company
AEGON International N.V. Netherlands 100% AEGON N.V. Holding company
Voting Trust Trustees: Delaware Voting Trust
K.J. Storm
Donald J. Shepard H.B.
Van Wijk Dennis Hersch
AEGON U.S. Holding Corporation Delaware 100% Voting Trust Holding company
Short Hills Management Company New Jersey 100% AEGON U.S. Holding company
Holding Corporation
CORPA Reinsurance Company New York 100% AEGON U.S. Holding company
Holding Corporation
</TABLE>
C-4
<PAGE>
<TABLE>
<S> <C> <C> <C>
AEGON Management Company Indiana 100% AEGON U.S. Holding company
Holding Corporation
RCC North America Inc. Delaware 100% AEGON U.S. Holding company
Holding Corporation
AEGON USA, Inc. Iowa 100% AEGON U.S. Holding company
Holding Corporation
Transamerica Holding Company Delaware 100% AEGON USA, Inc. Holding Company
AEGON Funding Corp. Delaware 100% Transamerica Issue debt securities-net
Holding Company proceeds used to make
loans to affiliates
First AUSA Life Insurance Maryland 100% AEGON USA, Inc. Insurance holding
Company company
AUSA Life Insurance New York 82.33% First AUSA Life Insurance
Company, Inc. Insurance Company
17.67% Veterans Life
Insurance Company
Life Investors Insurance Iowa 100% First AUSA Life Ins. Co. Insurance
Company of America
Life Investors Alliance, LLC Delaware 100% LIICA Purchase, own, and
hold the equity interest
of other entities
Great American Insurance Iowa 100% LIICA Marketing
Agency, Inc.
Bankers United Life Iowa 100% Life Investors Ins. Insurance
Assurance Company Company of America
PFL Life Insurance Company Iowa 100% First AUSA Life Ins. Co. Insurance
AEGON Financial Services Minnesota 100% PFL Life Insurance Co. Marketing
Group, Inc.
AEGON Assignment Corporation Kentucky 100% AEGON Financial Administrator of
of Kentucky Services Group, Inc. structured settlements
AEGON Assignment Corporation Illinois 100% AEGON Financial Administrator of
Services Group, Inc. structured settlements
Southwest Equity Life Ins. Co. Arizona 100% of Common Voting Stock Insurance
First AUSA Life Ins. Co.
Iowa Fidelity Life Insurance Co. Arizona 100% of Common Voting Stock Insurance
First AUSA Life Ins. Co.
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Western Reserve Life Assurance Ohio 100% First AUSA Life Ins. Co. Insurance
Co. of Ohio
WRL Series Fund, Inc. Maryland Various Mutual fund
WRL Investment Services, Inc. Florida 100% Western Reserve Life Provides administration
Assurance Co. of Ohio for affiliated mutual
fund
WRL Investment Florida 100% Western Reserve Life Registered investment
Management, Inc. Assurance Co. of Ohio advisor
ISI Insurance Agency, Inc. California 100% Western Reserve Life Insurance agency
And Subsidiaries Assurance Co. of Ohio
ISI Insurance Agency Alabama 100% ISI Insurance Agency, Inc. Insurance Agency
of Alabama, Inc.
ISI Insurance Agency Ohio 100% ISI Insurance Agency, Inc. Insurance agency
of Ohio, Inc.
ISI Insurance Agency Massachusetts 100% ISI Insurance Agency Inc. Insurance Agency
of Massachusetts, Inc.
ISI Insurance Agency Texas 100% ISI Insurance Agency, Inc. Insurance agency
of Texas, Inc.
ISI Insurance Agency Hawaii 100% ISI Insurance Insurance agency
of Hawaii, Inc. Agency, Inc.
ISI Insurance Agency New Mexico 100% ISI Insurance Insurance agency
New Mexico, Inc. Agency, Inc.
AEGON Equity Group, Inc. Florida 100% Western Reserve Life Insurance Agency
Assurance Co. of Ohio
Monumental General Casualty Co. Maryland 100% First AUSA Life Ins. Co. Insurance
United Financial Services, Inc. Maryland 100% First AUSA Life Ins. Co. General agency
Bankers Financial Life Ins. Co. Arizona 100% First AUSA Life Ins. Co. Insurance
The Whitestone Corporation Maryland 100% First AUSA Life Ins. Co. Insurance agency
Cadet Holding Corp. Iowa 100% First AUSA Life Holding company
Insurance Company
Monumental General Life Puerto Rico 51% First AUSA Life Insurance
Insurance Company of Insurance Company
Puerto Rico 49% Baldrich & Associates
of Puerto Rico
AUSA Holding Company Maryland 100% AEGON USA, Inc. Holding company
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Monumental General Insurance Maryland 100% AUSA Holding Co. Holding company
Group, Inc.
Trip Mate Insurance Agency, Inc. Kansas 100% Monumental General Sale/admin. of travel
Insurance Group, Inc. insurance
Monumental General Maryland 100% Monumental General Provides management
Administrators, Inc. Insurance Group, Inc. srvcs. to unaffiliated
third party
administrator
Executive Management and Maryland 100% Monumental General Provides actuarial
Consultant Services, Inc. Administrators, Inc. consulting services
Monumental General Mass Maryland 100% Monumental General Marketing arm for sale
Marketing, Inc. Insurance Group, Inc. of mass marketed
insurance coverages
AUSA Financial Markets, Inc. Iowa 100% AUSA Holding Co. Marketing
Transamerica Capital, Inc. California 100% AUSA Holding Co. Broker/Dealer
Endeavor Management Company California 100% AUSA Holding Co. Investment
Management
Universal Benefits Corporation Iowa 100% AUSA Holding Co. Third party
administrator
Investors Warranty of Iowa 100% AUSA Holding Co. Provider of automobile
America, Inc. extended maintenance
contracts
Massachusetts Fidelity Trust Co. Iowa 100% AUSA Holding Co. Trust company
Money Services, Inc. Delaware 100% AUSA Holding Co. Provides financial
counseling for
employees and agents
of affiliated companies
ADB Corporation Delaware 100% Money Services, Inc. Special purpose limited
Liability company
ORBA Insurance Services, Inc. California 10.56% Money Services, Inc. Insurance agency
Zahorik Company, Inc. California 100% AUSA Holding Co. Broker-Dealer
ZCI, Inc. Alabama 100% Zahorik Company, Inc. Insurance agency
Zahorik Texas, Inc. Texas 100% Zahorik Company, Inc. Insurance agency
Long, Miller & Associates, L.L.C. California 33-1/3% AUSA Holding Co. Insurance agency
AEGON Asset Management Delaware 100% AUSA Holding Co. Registered investment
Services, Inc. advisor
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
InterSecurities, Inc. Delaware 100% AUSA Holding Co. Broker-Dealer
Associated Mariner Financial Michigan 100% InterSecurities, Inc. Holding company/
Group, Inc. management services
Associated Mariner Ins. Agency Massachusetts 100% Associated Mariner Insurance agency
of Massachusetts, Inc. Agency, Inc.
Associated Mariner Agency Ohio 100% Associated Mariner Insurance agency
Ohio, Inc. Agency, Inc.
Associated Mariner Agency Texas 100% Associated Mariner Insurance agency
Texas, Inc. Agency, Inc.
Idex Investor Services, Inc. Florida 100% AUSA Holding Co. Shareholder services
Idex Management, Inc. Delaware 100% AUSA Holding Co. Investment advisor
IDEX Mutual Funds Massachusetts Various Mutual fund
Diversified Investment Delaware 100% AUSA Holding Co. Registered investment
Advisors, Inc. advisor
Diversified Investors Securities Delaware 100% Diversified Investment Broker-Dealer
Corp. Advisors, Inc.
George Beram & Company, Inc. Massachusetts 100% Diversified Investment Employee benefit and
Advisors, Inc. actuarial consulting
AEGON USA Securities, Inc. Iowa 100% AUSA Holding Co. Broker-Dealer
(De-registered)
Creditor Resources, Inc. Michigan 100% AUSA Holding Co. Credit insurance
CRC Creditor Resources Canada 100% Creditor Resources, Inc. Insurance agency
Canadian Dealer Network Inc.
Weiner Agency, Inc. Maryland 100% Creditor Resources, Inc. Insurance agency
AEGON USA Investment Iowa 100% AUSA Holding Co. Investment advisor
Management, Inc.
AEGON USA Realty Iowa 100% AUSA Holding Co. Provides real estate
Advisors, Inc. administrative and real
estate investment
services
AEGON USA Real Estate Delaware 100% AEGON USA Realty Real estate and
Services, Inc. Advisors, Inc. mortgage holding
company
QSC Holding, Inc. Delaware 100% AEGON USA Realty Real estate and financial
Advisors, Inc. software production and
sales
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
LRA, Inc. Iowa 100% AEGON USA Realty Real estate counseling
Advisors, Inc.
Landauer Associates, Inc. Delaware 100% AEGON USA Realty Real estate counseling
Advisors, Inc.
Landauer Realty Associates, Inc. Texas 100% Landauer Associates, Inc. Real estate counseling
Realty Information Systems, Inc. Iowa 100% AEGON USA Realty Information Systems for
Advisors, Inc. real estate investment
management
USP Real Estate Investment Trust Iowa 12.89% First AUSA Life Ins. Co. Real estate investment
13.11% PFL Life Ins. Co. trust
4.86% Bankers United Life
Assurance Co.
RCC Properties Limited Iowa AEGON USA Realty Advisors, Limited Partnership
Partnership Inc. is General Partner and 5%
owner.
Commonwealth General Delaware 100% AEGON USA, Inc. Holding company
Corporation ("CGC")
AFSG Securities Corporation Pennsylvania 100% CGC Broker-Dealer
Benefit Plans, Inc. Delaware 100% CGC TPA for Peoples
Security Life
Insurance Company
Durco Agency, Inc. Virginia 100% Benefit Plans, Inc. General agent
Capital 200 Block Corporation Delaware 100% CGC Real estate holdings
Capital Real Estate Delaware 100% CGC Furniture and
Development Corporation equipment lessor
Commonwealth General. Kentucky 100% CGC Administrator of
Assignment Corporation structured settlements
Diversified Financial Products Inc. Delaware 100% CGC Provider of investment,
marketing and admin.
services to ins. cos.
Monumental Agency Group, Inc. Kentucky 100% CGC Provider of srvcs. To
ins. cos.
PB Investment Advisors, Inc. Delaware 100% CGC Registered investment
advisor (de-registered)
Southlife, Inc. Tennessee 100% CGC Investment subsidiary
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Commonwealth General LLC Turks & 100% CGC Special-purpose
Caicos Islands subsidiary
Ampac Insurance Agency, Inc. Pennsylvania 100% CGC Provider of
(EIN 23-1720755) management support
services
Compass Rose Development Pennsylvania 100% Ampac Insurance Special-purpose
Corporation Agency, Inc. subsidiary
Financial Planning Services, Inc. Dist. Columbia 100% Ampac Insurance Special-purpose
Agency, Inc. subsidiary
Frazer Association Illinois 100% Ampac Insurance TPA license-holder
Consultants, Inc. Agency, Inc.
National Home Life Corporation Pennsylvania 100% Ampac Insurance Special-purpose
Agency, Inc. subsidiary
Valley Forge Associates, Inc. Pennsylvania 100% Ampac Insurance Furniture & equipment
Agency, Inc. lessor
Veterans Benefits Plans, Inc. Pennsylvania 100% Ampac Insurance Administrator of group
Agency, Inc. insurance programs
Veterans Insurance Services, Inc. Delaware 100% Ampac Insurance Special-purpose
Agency, Inc. subsidiary
Academy Insurance Group, Inc. Delaware 100% CGC Holding company
Academy Life Insurance Co. Missouri 100% Academy Insurance Insurance company
Group, Inc.
Pension Life Insurance New Jersey 100% Academy Life Insurance company
Company of America Insurance Company
FED Financial, Inc. Delaware 100% Academy Insurance Special-purpose
Group, Inc. subsidiary
Ammest Development Corp. Inc. Kansas 100% Academy Insurance Special-purpose
Group, Inc. subsidiary
Ammest Insurance Agency, Inc. California 100% Academy Insurance General agent
Group, Inc.
Ammest Massachusetts Massachusetts 100% Academy Insurance Special-purpose
Insurance Agency, Inc. Group, Inc. subsidiary
Ammest Realty, Inc. Pennsylvania 100% Academy Insurance Special-purpose
Group, Inc. subsidiary
Ampac, Inc. Texas 100% Academy Insurance Managing general agent
Group, Inc.
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Ampac Insurance Agency, Inc. Pennsylvania 100% Academy Insurance Special-purpose
(EIN 23-2364438) Group, Inc. subsidiary
Force Financial Group, Inc. Delaware 100% Academy Insurance Special-purpose
Group, Inc. subsidiary
Force Financial Services, Inc. Massachusetts 100% Force Fin. Group, Inc. Special-purpose
subsidiary
Military Associates, Inc. Pennsylvania 100% Academy Insurance Special-purpose
Group, Inc. subsidiary
NCOAA Management Company Texas 100% Academy Insurance Special-purpose
Group, Inc. subsidiary
NCOA Motor Club, Inc. Georgia 100% Academy Insurance Automobile club
Group, Inc.
Unicom Administrative Pennsylvania 100% Academy Insurance Provider of admin.
Services, Inc. Group, Inc. services
Unicom Administrative Germany 100% Unicom Administrative Provider of admin.
Services, GmbH Services, Inc. services
Capital General Development Delaware 100% CGC Holding company
Corporation
Monumental Life Maryland 73.23% Capital General Insurance company
Insurance Company Development Company
26.77% First AUSA Life
Insurance Company
AEGON Special Markets Maryland 100% Monumental Life Marketing company
Group, Inc. Insurance Company
Peoples Benefit Life Missouri 3.7% CGC Insurance company
Insurance Company 20.0% Capital Liberty, L.P.
76.3% Monumental Life
Insurance Company
Veterans Life Insurance Co. Illinois 100% Peoples Benefit Insurance company
Life Insurance Company
Peoples Benefit Services, Inc. Pennsylvania 100% Veterans Life Ins. Co. Special-purpose
subsidiary
Coverna Direct Insurance Maryland 100% Peoples Benefit Insurance agency
Insurance Services, Inc. Life Insurance Company
Ammest Realty Corporation Texas 100% Monumental Life Special purpose
Insurance Company subsidiary
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
JMH Operating Company, Inc. Mississippi 100% Monumental Life Real estate holdings
Insurance Company
Capital Liberty, L.P. Delaware 99.0% Monumental Life Holding Company
Insurance Company
1.0% CGC
Transamerica Corporation Delaware 100% AEGON NV Major interest in
insurance and finance
Transamerica Pacific Insurance Hawaii 100% Transamerica Corp. Life insurance
Company, Ltd.
TREIC Enterprises, Inc. Delaware 100% Transamerica Corp. Investments
ARC Reinsurance Corporation Hawaii 100% Transamerica Corp. Property & Casualty
Ins.
Transamerica Management, Inc. Delaware 100% ARC Reinsurance Corp. Asset management
Inter-America Corporation California 100% Transamerica Corp. Insurance Broker
Pyramid Insurance Company, Ltd. Hawaii 100% Transamerica Corp. Property & Casualty
Ins.
Pacific Cable Ltd. Bmda. 100% Pyramid Ins. Co., Ltd. Sold 25% of TC Cable,
Inc. stock in 1998
Transamerica Business Tech Corp. Delaware 100% Transamerica Corp. Telecommunications
and data processing
Transamerica CBO I, Inc. Delaware 100% Transamerica Corp. Owns and manages a
pool of high-yield
bonds
Transamerica Corporation (Oregon) Oregon 100% Transamerica Corp. Name holding only-
Inactive
Transamerica Finance Corp. Delaware 100% Transamerica Corp. Commercial &
Consumer Lending &
equip. leasing
TA Leasing Holding Co., Inc. Delaware 100% Transamerica Fin. Corp. Holding company
Trans Ocean Ltd. Delaware 100% TA Leasing Hldg Co. Inc. Holding company
Trans Ocean Container Corp. Delaware 100% Trans Ocean Ltd. Intermodal Leasing
("TOCC")
SpaceWise Inc. Delaware 100% TOCC Intermodal leasing
Trans Ocean Container
Finance Corp. Delaware 100% TOCC Intermodal leasing
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Trans Ocean Leasing
Deutschland GmbH Germany 100% TOCC Intermodal leasing
Trans Ocean Leasing PTY Ltd. Austria 100% TOCC Intermodal leasing
Trans Ocean Management S.A. Switzerland 100% TOCC Intermodal leasing
Trans Ocean Regional
Corporate Holdings California 100% TOCC Holding company
Trans Ocean Tank Services Corp. Delaware 100% TOCC Intermodal leasing
Transamerica Leasing Inc. Delaware 100% TA Leasing Holding Co. Leases & Services
intermodal equipment
Transamerica Leasing Holdings Delaware 100% Transamerica Leasing Inc. Holding Company
Inc. ("TLHI")
Greybox Logistics Services Inc. Delaware 100% TLHI Intermodal Leasing
Greybox L.L.C. Delaware 100% TLHI Intermodal freight
container interchange
facilitation service
Transamerica Trailer France 100% Greybox L.L.C. Leasing
Leasing S.N.C.
Greybox Services Limited U.K. 100% TLHI Intermodal Leasing
Intermodal Equipment, Inc. Delaware 100% TLHI Intermodal leasing
Transamerica Leasing N.V. Belg. 100% Intermodal Equipment Inc. Leasing
Transamerica Leasing SRL Italy 100% Intermodal Equipment Inc. Leasing
Transamerica Distribution Delaware 100% TLHI Provided door-to-door
Services, Inc. services for the
domestic transportation
of temperature-sensitive
products
Transamerica Leasing Belg. 100% TLHI Leasing
Coordination Center
Transamerica Leasing do Braz. 100% TLHI Container Leasing
Brasil Ltda.
Transamerica Leasing GmbH Germany 100% TLHI Leasing
Transamerica Leasing Limited U.K. 100% TLHI Leasing
ICS Terminals (UK) Limited U.K. 100% Transamerica. Leasing
Leasing Limited
Transamerica Leasing Pty. Ltd. Australia 100% TLHI Leasing
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Transamerica Leasing (Canada) Inc. Canada 100% TLHI Leasing
Transamerica Leasing (HK) Ltd. H.K. 100% TLHI Leasing
Transamerica Leasing S. Africa 100% TLHI Intermodal leasing
(Proprietary) Limited
Transamerica Tank Container Australia 100% TLHI The Australian
Leasing Pty. Limited ( domestic) leasing of
tank containers
Transamerica Trailer Holdings I Inc. Delaware 100% TLHI Holding company
Transamerica Trailer Holdings II, Inc. Delaware 100% TLHI Holding company
Transamerica Trailer Holdings III, Inc. Delaware 100% TLHI Holding company
Transamerica Trailer Leasing AB Swed. 100% TLHI Leasing
Transamerica Trailer Leasing AG Switzerland 100% TLHI Leasing
Transamerica Trailer Leasing A/S Denmark 100% TLHI Leasing
Transamerica Trailer Leasing GmbH Germany 100% TLHI Leasing
Transamerica Trailer Leasing Belgium 100% TLHI Leasing
(Belgium) N.V.
Transamerica Trailer Leasing Netherlands 100% TLHI Leasing
(Netherlands) B.V.
Transamerica Trailer Spain S.A. Spain 100% TLHI Leasing
Transamerica Transport Inc. New Jersey 100% TLHI Dormant
Transamerica Commercial Delaware 100% Transamerica Fin. Corp. Holding company for
Finance Corporation, I ("TCFCI") Commercial/consumer
finance subsidiaries
Transamerica Equipment Financial Delaware 100% TCFCI
Services Corporation
BWAC Credit Corporation Delaware 100% TCFCI
BWAC International Corporation Delaware 100% TCFCI
BWAC Twelve, Inc. Delaware 100% TCFCI Holding company for
premium finance
subsidiaries
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
TIFCO Lending Corporation Illinois 100% BWAC Twelve, Inc. General financing &
other services in the US
& elsewhere
Transamerica Insurance Finance Maryland 100% BWAC Twelve, Inc. Provides insurance
Corporation ("TIFC") premium financing in
the US with the
exception of CA and HI
Transamerica Insurance Finance Maryland 100% TIFC Provides Insurance
Company (Europe) premium financing in
California
Transamerica Insurance Finance California 100% TIFC Disability ins. &
Corporation, California holding co. for various
insurance subsidiaries
of Transamerica
Corporation
Transamerica Insurance Finance ON 100% TIFC Provides ins. premium
Corporation, Canada financing in Canada
Transamerica Business Credit Delaware 100% TCFCI Provides asset based
Corporation ("TBCC") lending, leasing &
equip. financing
Transamerica Mezzanine Delaware 100% TBCC Holds investments in
Financing, Inc. several joint
ventures/partnerships
Transamerica Business Advisory Grp. Delaware 100% TBCC
Bay Capital Corporation Delaware 100% TBCC Special purpose
company for
the purchase of real
estate tax liens
Coast Funding Corporation Delaware 100% TBCC Special purpose
company for
the purchase of real
estate tax liens
Transamerica Small Business Delaware 100% TBCC
Capital, Inc. ("TSBC")
Emergent Business Capital Delaware 100% TSBC
Holdings, Inc.
Gulf Capital Corporation Delaware 100% TBCC Special purpose
company for
the purchase of real
estate tax liens
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Direct Capital Equity Investment, Inc. Delaware 100% TBCC Small business loans
TA Air East, Corp Delaware 100% TBCC Special purpose corp.
which hold an
ownership interest
or leases aircraft
TA Air I, Corp. Delaware 100% TBCC Special purpose corp.
which hold an
ownership interest
or leases aircraft
TA Air II, Corp. Delaware 100% TBCC Special purpose corp.
which hold an
ownership interest
or leases aircraft
TA Air III, Corp. Delaware 100% TBCC special purpose corp.
which hold an
ownership interest
or leases aircraft
TA Air IV, Corp. Delaware 100% TBCC Special purpose corp.
which hold an
ownership interest
or leases aircraft
TA Air V, Corp. Delaware 100% TBCC Special purpose corp.
which hold an
ownership interest
or leases aircraft
TA Air VI, Corp. Delaware 100% TBCC Special purpose corp.
which hold an
ownership interest
or leases aircraft
TA Air VII, Corp. Delaware 100% TBCC Special purpose corp.
which hold an
ownership interest or
leases aircraft
TA Air VIII, Corp. Delaware 100% TBCC Special purpose corp.
which hold an
ownership interest or
leases aircraft
TA Air IX, Corp. Delaware 100% TBCC Special purpose corp.
which hold an
ownership interest
or leases aircraft
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
TA Air X, Corp. Delaware 100% TBCC Special purpose corp.
which hold an
ownership interest
or leases aircraft
TA Air XI, Corp. Delaware 100% TBCC Special purpose corp.
which hold an
ownership interest
or leases aircraft
TA Air XII, Corp. Delaware 100% TBCC Special purpose corp.
which hold an
ownership interest
or leases aircraft
TA Air XIII, Corp. Delaware 100% TBCC Special purpose corp.
which hold an
ownership interest
or leases aircraft
TA Air XIV, Corp. Delaware 100% TBCC Special purpose corp.
which hold an
ownership interest
or leases aircraft
TA Air XV, Corp. Delaware 100% TBCC Special purpose corp.
which hold an
ownership interest
or leases aircraft
TA Marine I Corp. Delaware 100% TBCC Special purpose corp.
which hold an
ownership interest or
leases barges or ships
TA Marine II Corp. Delaware 100% TBCC Special purpose corp.
which hold an
ownership interest or
leases barges or ships
TBC I, Inc. Delaware 100% TBCC Special purpose corp.
TBC II, Inc. Delaware 100% TBCC Special purpose corp.
TBC III, Inc. Delaware 100% TBCC Special purpose corp.
TBC IV, Inc. Delaware 100% TBCC Special purpose corp.
TBC V, Inc. Delaware 100% TBCC Special purpose corp.
TBC VI, Inc. Delaware 100% TBCC Special purpose corp.
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
TBC Tax I, Inc. Delaware 100% TBCC Special purpose co. for
the purchase of real
estate tax lien
TBC Tax II, Inc. Delaware 100% TBCC Special purpose co. for
the purchase of real
estate tax lien
TBC Tax III, Inc. Delaware 100% TBCC Special purpose co. for
the purchase of real
estate tax lien
TBC Tax IV, Inc. Delaware 100% TBCC Special purpose co. for
the purchase of real
estate tax lien
TBC Tax V, Inc. Delaware 100% TBCC Special purpose co. for
the purchase or real
estate tax lien
TBC Tax VI, Inc. Delaware 100% TBCC Special purpose co. for
the purchase or real
estate tax lien
TBC Tax VII, Inc. Delaware 100% TBCC Special purpose co. for
the purchase or real
estate tax lien
TBC Tax VIII, Inc. Delaware 100% TBCC Special purpose co. for
the purchase of real
estate tax lien
TBC Tax IX, Inc. Delaware 100% TBCC Special purpose co. for
the purchase of real
estate tax lien
The Plain Company Delaware 100% TBCC Special purpose corp.
which hold an
ownership interest or
leases aircraft.
Transamerica Distribution Delaware 100% TCFCI Holding corp. for
Finance Corporation ("TDFC") inventory, comm.
Leasing, retail finance
comm. Recovery
service and accounts
Transamerica Accounts Holding Corp. Delaware 100% TDFC
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Transamerica Commercial Delaware 100% TDFC Wholesale floor plan
Finance Corporation ("TCFC") for appliances,
electronics, computers,
office equip. and
marine equipment.
Transamerica Acquisition Canada 100% TCFC Holding company
Corporation, Canada
Transamerica Distribution Finance Delaware 100% TCFC
Corporation - Overseas, Inc.
("TDFCO")
TDF Mauritius Limited Mauritius 100% TDFCO Mauritius holding
company of our Indian
Joint Venture
Inventory Funding Trust Delaware 100% TCFC
Inventory Funding Company, LLC Delaware 100% Inventory Funding Trust
TCF Asset Management Corporation Colorado 100% TCFC A depository for
foreclosed real and
personal property
Transamerica Joint Ventures, Inc. Delaware 100% TCFC To enter into general
partnerships for the
ownership of comm. &
finance business
Transamerica Inventory Delaware 100% TDFC Holding co. for
Finance Corporation ("TIFC") inventory finance
subsidiaries
Transamerica GmbH, Inc. Delaware 100% TIFC Commercial lending in
Germany
Transamerica Fincieringsmaatschappij
B.V. Netherlands 100% Trans. GmbH, Inc. Commercial lending in
Europe
BWAC Seventeen, Inc. Delaware 100% TIFC Holding co. for
principal Canadian
operation, Trans-
America Comm.
Finance Corp, Canada
Transamerica Commercial ON 100% BWAC Seventeen, Inc. Shell corp.- Dormant
Finance Canada, Limited
Transamerica Commercial Canada 100% BWAC Seventeen, Inc. Commercial finance
Finance Corporation, Canada
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
BWAC Twenty-One, Inc. Delaware 100% TIFC Holding co. for United
Kingdom operation,
Transamerica Comm.
Finance Limited
Transamerica Commercial U.K. 100% BWAC Twenty-One Inc. Commercial lending in
Finance Limited ("TCFL") the United Kingdom.
Whirlpool Financial Corporation 100% TCFL Inactive commercial
Polska Spzoo finance Company in
Poland
Transamerica Commercial U.K. 100% BWAC Twenty-One Inc. Holding Company
Holdings Limited
Transamerica Commercial Finance U.K. 100% Trans. Commercial
Limited Holdings Limited
Transamerica Commercial Finance France 100% BWAC Twenty-One Inc. Carries out factoring
France S.A. transactions in France
& abroad
Transamerica GmbH Inc. Delaware 100% BWAC Twenty-One Inc. Holding co. for
Transamerica
Financieringsmaatschappij
B.V.
Transamerica Retail Financial Delaware 100% TIFC Provides retail
Services Corporation ("TRFSC") financing
Transamerica Bank, NA Delaware 100% TRFSC Bank (Credit Cards)
Transamerica Consumer Finance Delaware 100% TRFSC Consumer finance
Holding Company ("TCFHC") holding company
Transamerica Mortgage Company Delaware 100% TCFHC Consumer mortgages
Transamerica Consumer Mortgage Delaware 100% TCFHC Securitization company
Receivables Company
Metropolitan Mortgage Company Florida 100% TCFHC Consumer mortgages
Easy Yes Mortgage, Inc. Florida 100% Metropolitan Mtg. Co. No active
business/Name
holding only
Easy Yes Mortgage, Inc. Georgia 100% Metropolitan Mtg. Co. No active
business/Name
holding only
First Florida Appraisal Services, Inc. Georgia 100% Metropolitan Mtg. Co. Appraisal and
inspection services
First Georgia Appraisal Services, Inc. Georgia 100% First FL App. Srvc, Inc. Appraisal services
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Freedom Tax Services, Inc. Florida 100% Metropolitan Mtg. Co. Property tax
information services
J.J. & W. Advertising, Inc. Florida 100% Metropolitan Mtg. Co. Advertising and
marketing services
J.J. & W. Realty Corporation Florida 100% Metropolitan Mtg. Co. To hold problem REO
properties
Liberty Mortgage Company of Florida 100% Metropolitan Mtg. Co. No active
Ft. Myers, Inc. business/Name
holding only
Metropolis Mortgage Company Florida 100% Metropolitan Mtg. Co. No active
business/Name
holding only
Perfect Mortgage Company Florida 100% Metropolitan Mtg. Co. No active
business/Name
holding only
Transamerica Vendor Financial Srvc. Delaware 100% TDFC Provides commercial
lease
Transamerica Distribution Finance 100% TCFCI
Corporation de Mexico ("TDFCM")
TDF de Mexico Mexico 100% TDFCM
Transamerica Corporate Services 100% TDFCM
De Mexico
Transamerica Home Loan California 100% TFC Consumer mortgages
Transamerica Lending Company Delaware 100% TFC Consumer lending
Transamerica Financial Products, Inc. California 100% Transamerica Corp. Service investments
Transamerica Insurance Corporation California 100% Transamerica Corp. Provides insurance
of California ("TICC") premium financing in
California
Arbor Life Insurance Company Arizona 100% TICC Life insurance,
disability insurance
Plaza Insurance Sales Inc. California 100% TICC Casualty insurance
placement
Transamerica Advisors, Inc. California 100% TICC Retail sale of
investment advisory
services
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Transamerica Annuity Services Corp. New Mexico 100% TICC Performs services
required for
structured settlements
Transamerica Financial Resources, Inc. Delaware 100% TICC Retail sale of securities
products
Financial Resources Insurance Texas 100% Transamerica Fin. Res. Retail sale of securities
Agency of Texas products
TBK Insurance Agency of Ohio, Inc. Ohio 100% Transamerica Fin. Res. Variable insurance
contract sales in state of
Ohio
Transamerica Financial Resources Alabama 100% Transamerica Fin. Res. Insurance agent &
Agency of Alabama, Inc. broker
Transamerica Financial Resources Ins. Massachusetts 100% Transamerica Fin. Res. Insurance agent &
Agency of Massachusetts, Inc. broker
Transamerica International Insurance Delaware 100% TICC Holding &
Services, Inc. ("TIIS") administering
foreign operations
Home Loans and Finance Ltd. U.K. 100% TIIS Inactive
Transamerica Occidental Life California 100% TICC Licensed in all forms of
Insurance Company ("TOLIC") life insurance, accident
and sickness insurance
NEF Investment Company California 100% TOLIC Real estate development
Transamerica Life Insurance and N. Carolina 100% TOLIC Writes life and pension
Annuity Company ("TLIAC") ins. originally
incorporated in CA
April 14, 1966
Transamerica Assurance Company Missouri 100% TLIAC Life and disability
insurance
Gemini Investments, Inc. Delaware 100% TLIAC Investment subsidiary
Transamerica Life Insurance Company Canada 100% TOLIC Sells individual life
of Canada insurance & investment
products in all
provinces and
territories of Canada
Transamerica Life Insurance Company New York 100% TOLIC Licensed in NY to
of New York market life insurance,
annuities and health
insurance
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Transamerica South Park Delaware 100% TOLIC Provide market analysis
Resources, Inc. of certain undeveloped
land holdings held by
TOLIC
Transamerica Variable Insurance Maryland 100% TOLIC Mutual Fund
Fund, Inc.
USA Administration Services, Inc. Kansas 100% TOLIC Third party administrator
Transamerica Products Inc. California 100% TICC Parent co. of various
subsidiary corp. which
are formed to be co-
general partners of
proprietary limited
Transamerica Securities Sales Corp. Maryland 100% Transamerica Prod. Inc. Retail sale of the
variable life ins. and
variable annuity
products of the
Transamerica
life companies
Transamerica Service Company Delaware 100% Transamerica Prod. Inc. Passive loss tax service
for Lloyd's U.S. names
Transamerica Intellitech, Inc. Delaware 100% TICC Real estate information
and technology services
Transamerica International Delaware 100% TICC Investments
Holdings, Inc.
Transamerica Investment Services, Inc. Delaware 100% TICC Investment adviser
Transamerica Income Shares, Inc. Maryland 100% Trans. Invest. Srvc. Inc. Transamerica
investment services
Transamerica LP Holdings Corp. Delaware 100% TICC Limited partnership
Investment (initial
limited partner of
Transamerica Delaware,
L.P.)
Transamerica Real Estate Tax Service N/A 100% TICC Real estate tax
(A Division of Transamerica Corp) reporting and
processing services
Transamerica Realty Services, Inc. Delaware 100% TICC Responsible for real
estate investments for
Transamerica
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Bankers Mortgage Company of CA California 100% Transamerica Realty Srv. Holds bank account and
owns certain residual
investments in certain
French real estate
projects which are
managed special
purpose company for
the purchase of real
estate tax liens.
Pyramid Investment Corporation Delaware 100% Transamerica Realty Srv. Owns office buildings
in San Francisco and
other properties
The Gilwell Company California 100% Transamerica Realty Srv. Ground lessee of 517
Washington Street,
San Francisco
Transamerica Affordable Housing, Inc. California 100% Transamerica Realty Srv. Owns general
partnership interests in
low-income housing tax
credit partnerships
Transamerica Minerals Company California 100% Transamerica Realty Srv. Owner and lessor of oil
and gas properties
Transamerica Oakmont Corporation California 100% Transamerica Realty Srv. General partner in
Transamerica/Oakmont
Retirement Associates
Transamerica Senior Properties, Inc. Delaware 100% TICC Owns congregate care
and assisted living
retirement properties
Transamerica Senior Living, Inc. Delaware 100% Trans. Sr. Prop. Inc. Manages congregate
care and assisted living
retirement properties.
</TABLE>
Item 27. Number of Policy Owners
As of December 31, 1999, there were 7,620 Owners 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
<PAGE>
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
<PAGE>
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 Transamerica Life Insurance Company of New
York 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) and Transamerica Financial
Resources (TFR) are the co-underwriters of the Certificates and the Individual
Contracts as defined in the Investment Company Act of 1940. TSSC became
Principal Underwriter effective 8-24-94.
NAME AND PRINCIPAL POSITION AND OFFICES WITH
BUSINESS ADDRESS* TRANSAMERICA SECURITIES SALES CORPORATION
--------------------------------------------------------------------------------
Nooruddin Veerjee Chairman of the Board and Director
<PAGE>
Nicki Bair President and Director
Sandy Brown Senior Vice President, Treasurer and Director
Roy Chong-Kit Director
George Chuang Vice President and Chief Financial Officer
Chris Shaw Vice President and Chief Compliance Officer
*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
--------------------------------------------------------------------------------
Nooruddin S. Veerjee Chairman of the Board and Director
Sandra C. Brown Director, President and Chief Operating Officer
Nicki Bair Director
Kenneth Kilbane Director
William Tate Director
Dan Trivers Vice President
Monica Suryapranata Treasurer
Susan Vivino Assistant Secretary
*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.
Name of Net Underwriting
Principal Discounts & Compensation on Brokerage
Underwriter Commission Redemption Commissions Compensation
--------------------------------------------------------------------------------
TSSC -0- -0- $6,181,972.47 -0-
TFR -0- -0- $3,127.87 -0-
Transamerica Securities Sales Corporation, the principal underwriter, is also
the underwriter for: Transamerica Investors, Inc.; Transamerica Variable
Insurance Fund, Inc.; Transamerica Occidental Life Insurance Company's Separate
Accounts: VA-2L; VA-2NL; VUL-1; VUL-2; VUL-3 and VL; Transamerica Life Insurance
and Annuity Company's Separate Accounts VA-1; VA-6 and VA-7; and Transamerica
Life Insurance Company of New York VA-2LNY; VA-2NLNY; VA-5NLNY; and VA-6NY.
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.
<PAGE>
(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
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant hereby certifies that this Amendment to the Registration
Statement meets the requirements for effectiveness pursuant to paragraph (b) of
Rule 485 and has caused this Registration Statement to be signed on its behalf,
by the undersigned in the City of Los Angeles, State of California on the 20 day
of December, 2000.
SEPARATE ACCOUNT VA-2LNY
TRANSAMERICA LIFE INSURANCE
COMPANY OF NEW YORK
(DEPOSITOR)
By: /s/ William M. Hurst
------------------------------
William M. Hurst
Assistant Secretary
As Required by the Securities Act of 1933, this Registration Statement has
been signed by the following persons in the capacities and on the date
indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Chairman and Director ____________, 2000
------------------------------
Nooruddin S. Veerjee
* President and Director ____________, 2000
------------------------------
Alan T. Cunningham
* Senior Vice President, ____________, 2000
------------------------------ Chief Actuary, Chief Operating
Robert Rubinstein Officer, Secretary and Director
* Vice President - Administration ____________, 2000
------------------------------ and Controller
Alexander Smith, Jr.
* Director ____________, 2000
------------------------------
Marc C. Abrahms
* Director ____________, 2000
------------------------------
James T. Byrne, Jr.
* Director ____________, 2000
------------------------------
John A. Fibiger
* Director ____________, 2000
------------------------------
James B. Roszak
* Director ____________, 2000
------------------------------
Daniel E. Jund
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
* Director ___________, 2000
------------------------------
Thomas P. O'Neill
/s/ William M. Hurst Attorney -in-Fact pursuant to December 20, 2000
------------------------------ powers of attorney filed previously
*By: William M. Hurst and herewith, and in his own
capacity as Assistant Secretary
</TABLE>
