<PAGE>
MARKED TO SHOW CHANGES MADE
TO POST-EFFECTIVE AMENDMENT NO. 5
REGISTRATION NO. 33-60442
-----------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
(Check appropriate box or boxes)
AMERICAN NATIONAL VARIABLE ANNUITY SEPARATE ACCOUNT
(Exact Name of Registrant)
POST-EFFECTIVE AMENDMENT NO. 6
AMERICAN NATIONAL INSURANCE COMPANY
(Exact Name of Depositor)
ONE MOODY PLAZA
GALVESTON, TEXAS 77550
(Address of Depositor's Principal Executive Offices)
(409) 763-4661
(Depositor's Telephone Number, including Area Code)
REX HEMME JERRY L. ADAMS
VICE PRESIDENT, ACTUARY GREER, HERZ & ADAMS, L.L.P.
AMERICAN NATIONAL WITH COPY TO: ONE MOODY PLAZA
INSURANCE COMPANY GALVESTON, TEXAS 77550
ONE MOODY PLAZA
GALVESTON, TEXAS 77550
(Name and Address of Agent for Service)
- -------------------------------------------------------------------------------
Declaration Required by Rule 24f-2(a)(1): An indefinite number of securities of
the Registrant has been registered under the Securities Act of 1933 pursuant to
Rule 24f-2 under the Investment Company Act of 1940. Notice required by Rule
24f-2(b)(1) has been filed in the Office of the Securities and Exchange
Commission on February 28, 1996 for the Registrant's fiscal year
ending December 31, 1995.
- -------------------------------------------------------------------------------
It is proposed that this filing will become effective (check appropriate box):
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on April 30, 1996 pursuant to paragraph (B) OF RULE 485
[ ] 60 days after filing pursuant to paragraph (a)(i) of Rule 485
[ ] on (date) pursuant to paragraph (a)(i) of Rule 485
[ ] 75 days after filing pursuant to paragraph (a)(ii) of rule 485
[ ] on (date) pursuant to paragraph (a)(ii) of rule 485
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment
1
<PAGE>
AMERICAN NATIONAL VARIABLE ANNUITY SEPARATE ACCOUNT
CROSS REFERENCE SHEETS
----------------------
Cross reference sheet pursuant to Rule 495(a) of the Securities Act of 1933
showing location in the prospectuses and statement of additional information of
items required by the Form N-4.
Location in the individual variable annuity prospectus of items required by
the Form N-4.
PART A ITEM CAPTION IN PROSPECTUS
- ----------- ---------------------
1. Cover Page
(a)(i) Cover Page
(a)(ii) Cover Page
(a)(iii) Cover Page
(a)(iv) Not Applicable
(a)(v)(A) Cover Page
(a)(v)(B) Cover Page
(a)(v)(C) Cover Page
(a)(vi) Cover Page
(a)(vii) Cover Page
(a)(viii) Cover Page
(a)(ix) Not Applicable
(b) Not Applicable
2. Definitions GLOSSARY OF TERMS
3. Synopsis
(a) SUMMARY OF EXPENSES - Expenses during
the Accumulation Period
(b) SUMMARY OF THE CONTRACTS
(c) SUMMARY OF THE CONTRACTS
(d) Not Applicable
4. Condensed Financial Information
<PAGE>
(a) ACCUMULATION UNIT VALUES; FINANCIAL
STATEMENTS
(b) PERFORMANCE
(c) FINANCIAL STATEMENTS
5. General Description of Registrant, Depositor, and Portfolio Companies
(a)(i) AMERICAN NATIONAL INSURANCE COMPANY AND
THE SEPARATE ACCOUNT - American
National Insurance Company
(a)(ii) AMERICAN NATIONAL INSURANCE COMPANY AND
THE SEPARATE ACCOUNT - American
National Insurance Company
(a)(iii) AMERICAN NATIONAL INSURANCE COMPANY AND
THE SEPARATE ACCOUNT - American
National Insurance Company
(b)(i) AMERICAN NATIONAL INSURANCE COMPANY AND
THE SEPARATE ACCOUNT - The Separate
Account
(b)(ii)(A) AMERICAN NATIONAL INSURANCE COMPANY AND
THE SEPARATE ACCOUNT - The Separate
Account
(b)(ii)(B) AMERICAN NATIONAL INSURANCE COMPANY AND
THE SEPARATE ACCOUNT - The Separate
Account
(b)(ii)(C) AMERICAN NATIONAL INSURANCE COMPANY AND
THE SEPARATE ACCOUNT - The Separate
Account
(b)(iii) AMERICAN NATIONAL INSURANCE COMPANY AND
THE SEPARATE ACCOUNT - The Separate
Account
(c)(i) Cover Page; AMERICAN NATIONAL INSURANCE
COMPANY AND THE SEPARATE
ii
<PAGE>
ACCOUNT - The American National Fund;
AMERICAN NATIONAL INSURANCE COMPANY AND
THE SEPARATE ACCOUNT - The Fidelity
Funds
(c)(ii) AMERICAN NATIONAL INSURANCE COMPANY AND
THE SEPARATE ACCOUNT - The American
National Fund; AMERICAN NATIONAL
INSURANCE COMPANY AND THE SEPARATE
ACCOUNT - The Fidelity Funds
(c)(iii) AMERICAN NATIONAL INSURANCE COMPANY AND
THE SEPARATE ACCOUNT - The American
National Fund; AMERICAN NATIONAL
INSURANCE COMPANY AND THE SEPARATE
ACCOUNT - The Fidelity Funds
(d) Cover Page; AMERICAN NATIONAL INSURANCE
COMPANY AND THE SEPARATE ACCOUNT - The
American National Fund; AMERICAN
NATIONAL INSURANCE COMPANY AND THE
SEPARATE ACCOUNT - The Fidelity Funds
(e) VOTING RIGHTS
(f) DISTRIBUTOR OF THE CONTRACTS
6. Deductions
(a) SUMMARY OF EXPENSES - Expenses During
the Accumulation Period; AMERICAN
NATIONAL INSURANCE COMPANY AND THE
SEPARATE ACCOUNT - The American
National Fund; AMERICAN NATIONAL
INSURANCE COMPANY AND THE SEPARATE
ACCOUNT - The Fidelity Funds; CHARGES
AND DEDUCTIONS DURING THE ACCUMULATION
PERIOD
iii
<PAGE>
(b) SUMMARY OF EXPENSES - Expenses During
the Accumulation Period; CHARGES AND
DEDUCTIONS DURING THE ACCUMULATION
PERIOD
(c) CHARGES AND DEDUCTIONS DURING THE
ACCUMULATION PERIOD - Exceptions to
Charges
(d) DISTRIBUTOR OF THE CONTRACTS
(e) SUMMARY OF EXPENSES
(f) SUMMARY OF EXPENSES
7. General Description of Variable Annuity Contracts
(a) DISTRIBUTIONS UNDER THE CONTRACT -
Accumulation Period - Full and Partial
Surrenders; DISTRIBUTIONS UNDER THE
CONTRACT - Accumulation Period - Policy
Loans; DISTRIBUTIONS UNDER THE CONTRACT
- Accumulation Period - Death Benefit
During Accumulation Period; ANNUITY
PERIOD
(b)(i) CONTRACTS - Contract Application and
Purchase Payments; CONTRACTS -
Allocation of Purchase Payments
(b)(ii) CONTRACTS - Contract Application and
Purchase Payments; CONTRACTS -
Allocation of Purchase Payments
(b)(iii) Not Applicable
(c)(i) AMERICAN NATIONAL INSURANCE COMPANY AND
THE SEPARATE ACCOUNT - Addition,
Deletion or Substitution of
Investments; CONTRACTS - Purpose of the
Contracts
iv
<PAGE>
(c)(ii) AMERICAN NATIONAL INSURANCE COMPANY AND
THE SEPARATE ACCOUNT - Addition,
Deletion or Substitution of
Investments; CONTRACTS - Purpose of the
Contracts
(c)(iii) AMERICAN NATIONAL INSURANCE COMPANY AND
THE SEPARATE ACCOUNT - Addition,
Deletion or Substitution of
Investments; CONTRACTS - Purpose of the
Contracts
(d) CONTRACTS - Contractowner Inquiries
8. Annuity Period
(a) ANNUITY PERIOD - Annuity Provisions
(b) ANNUITY PERIOD - Election of Annuity
Date and Form of Annuity
(c) ANNUITY PERIOD - Annuity Options
(d) ANNUITY PERIOD - Value of Variable
Annuity Payments: Assumed Investment
Rates
(e) CONTRACTS - Contract Application and
Purchase Payments; ANNUITY PERIOD -
Annuity Options
(f) ANNUITY PERIOD - Election of Annuity
Date and Form of Annuity; ANNUITY
PERIOD - Annuity Options
9. Death Benefit
(a) DISTRIBUTIONS UNDER THE CONTRACT -
Death Benefit During Accumulation
Period; ANNUITY PERIOD - Annuity
Options
v
<PAGE>
(b) DISTRIBUTIONS UNDER THE CONTRACT -
Death Benefit During Accumulation
Period; ANNUITY PERIOD - Annuity
Options
10. Purchases and Contract Value
(a)(i) CONTRACTS - Contract Application and
Purchase Payments
(a)(ii) CONTRACTS - Contract Application and
Purchase Payments; CONTRACTS -
Allocation of Purchase Payments
(a)(iii)(A) CONTRACTS - Crediting of Accumulation
Units
(a)(iii)(B) CONTRACTS - Determining the
Accumulation Unit Values
(a)(iii)(C) CONTRACTS - Crediting of Accumulation
Units; CONTRACTS - Determining the
Accumulation Unit Values
(b) CONTRACTS - Determining the
Accumulation Unit Values
(c) CONTRACTS - Crediting of Accumulation
Units; CONTRACTS - Determining the
Accumulation Unit Values
(d) DISTRIBUTOR OF THE CONTRACTS
11. Redemptions
(a) DISTRIBUTIONS UNDER THE CONTRACT -
Accumulation Period - Full and Partial
Surrenders; ANNUITY PERIOD
(b) Not Applicable
vi
<PAGE>
(c) Not Applicable
(d) DISTRIBUTIONS UNDER THE CONTRACT -
Accumulation Period - Full and Partial
Surrenders; DISTRIBUTIONS UNDER THE
CONTRACT - Accumulation Period - Policy
Loans; ANNUITY PERIOD - Election of
Annuity Date and Form of Annuity
(e) CONTRACTS - Contract Application and
Purchase Payments
12. Taxes
(a) FEDERAL TAX MATTERS
(b) FEDERAL TAX MATTERS - Qualified
Contracts
(c) Not Applicable
13. Legal Proceedings LEGAL PROCEEDINGS
14. Table of Contents of the Statement of Additional Information
TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION
Location in the group unallocated variable annuity prospectus of information
required by Items of Form N-4.
PART A ITEM CAPTION IN PROSPECTUS
- ----------- ---------------------
1. Cover Page
(a)(i) Cover Page
(a)(ii) Cover Page
(a)(iii) Cover Page
(a)(iv) Not Applicable
(a)(v)(A) Cover Page
(a)(v)(B) Cover Page
(a)(v)(C) Cover Page
(a)(vi) Cover Page
vii
<PAGE>
(a)(vii) Cover Page
(a)(viii) Cover Page
(a)(ix) Not Applicable
(b) Not Applicable
2. Definitions GLOSSARY OF TERMS
3. Synopsis
(a) SUMMARY OF EXPENSES - Expenses
(b) SUMMARY OF THE CONTRACTS
(c) SUMMARY OF THE CONTRACTS
(d) Not Applicable
4. Condensed Financial Information
(a) ACCUMULATION UNIT VALUES; FINANCIAL
STATEMENTS
(b) PERFORMANCE
(c) FINANCIAL STATEMENTS
5. General Description of Registrant, Depositor, and Portfolio Companies
(a)(i) AMERICAN NATIONAL INSURANCE COMPANY AND
THE SEPARATE ACCOUNT - American
National Insurance Company
(a)(ii) AMERICAN NATIONAL INSURANCE COMPANY AND
THE SEPARATE ACCOUNT - American
National Insurance Company
(a)(iii) AMERICAN NATIONAL INSURANCE COMPANY AND
THE SEPARATE ACCOUNT - American
National Insurance Company
(b)(i) AMERICAN NATIONAL INSURANCE COMPANY AND
THE SEPARATE ACCOUNT - The Separate
Account
viii
<PAGE>
(b)(ii)(A) AMERICAN NATIONAL INSURANCE COMPANY AND
THE SEPARATE ACCOUNT - The Separate
Account
(b)(ii)(B) AMERICAN NATIONAL INSURANCE COMPANY AND
THE SEPARATE ACCOUNT - The Separate
Account
(b)(ii)(C) AMERICAN NATIONAL INSURANCE COMPANY AND
THE SEPARATE ACCOUNT - The Separate
Account
(b)(iii) AMERICAN NATIONAL INSURANCE COMPANY AND
THE SEPARATE ACCOUNT - The Separate
Account
(c)(i) Cover Page; AMERICAN NATIONAL INSURANCE
COMPANY AND THE SEPARATE ACCOUNT - The
American National Fund; AMERICAN
NATIONAL INSURANCE COMPANY AND THE
SEPARATE ACCOUNT - The Fidelity Funds
(c)(ii) AMERICAN NATIONAL INSURANCE COMPANY AND
THE SEPARATE ACCOUNT - The American
National Fund; AMERICAN NATIONAL
INSURANCE COMPANY AND THE SEPARATE
ACCOUNT - The Fidelity Funds
(c)(iii) AMERICAN NATIONAL INSURANCE COMPANY AND
THE SEPARATE ACCOUNT - The American
National Fund; AMERICAN NATIONAL
INSURANCE COMPANY AND THE SEPARATE
ACCOUNT - The Fidelity Funds
(d) Cover Page; AMERICAN NATIONAL INSURANCE
COMPANY AND THE SEPARATE ACCOUNT - The
American National Fund; AMERICAN
NATIONAL INSURANCE COMPANY AND THE
SEPARATE ACCOUNT - The Fidelity Funds
ix
<PAGE>
(e) VOTING RIGHTS
(f) DISTRIBUTOR OF THE CONTRACTS
6. Deductions
(a) SUMMARY OF EXPENSES - Expenses;
AMERICAN NATIONAL INSURANCE COMPANY AND
THE SEPARATE ACCOUNT - The American
National Fund; AMERICAN NATIONAL
INSURANCE COMPANY AND THE SEPARATE
ACCOUNT - The Fidelity Funds; CHARGES
AND DEDUCTIONS
(b) SUMMARY OF EXPENSES - Expenses; CHARGES
AND DEDUCTIONS
(c) CHARGES AND DEDUCTIONS - Exceptions to
Charges
(d) DISTRIBUTOR OF THE CONTRACTS
(e) SUMMARY OF EXPENSES
(f) SUMMARY OF EXPENSES
7. General Description of Variable Annuity Contracts
(a) DISTRIBUTIONS UNDER THE CONTRACT - Full
and Partial Surrenders; -
(b)(i) CONTRACTS - Contract Application and
Purchase Payments; CONTRACTS -
Allocation of Purchase Payments
(b)(ii) CONTRACTS - Contract Application and
Purchase Payments; CONTRACTS -
Allocation of Purchase Payments
(b)(iii) Not Applicable
(c)(i) AMERICAN NATIONAL INSURANCE COMPANY AND
x
<PAGE>
THE SEPARATE ACCOUNT - Addition,
Deletion or Substitution of
Investments; CONTRACTS - Purpose of the
Contracts
(c)(ii) AMERICAN NATIONAL INSURANCE COMPANY AND
THE SEPARATE ACCOUNT - Addition,
Deletion or Substitution of
Investments; CONTRACTS - Purpose of the
Contracts
(c)(iii) AMERICAN NATIONAL INSURANCE COMPANY AND
THE SEPARATE ACCOUNT - Addition,
Deletion or Substitution of
Investments; CONTRACTS - Purpose of the
Contracts
(d) CONTRACTS - Contractowner Inquiries
8. Annuity Period
(a) ANNUITY PAYMENTS - Annuity Options;
ANNUITY PAYMENTS - Annuity Provisions
(b) Not Applicable
(c) ANNUITY PAYMENTS - Annuity Options;
ANNUITY PAYMENTS - Annuity Provisions
(d) Not Applicable
(e) Not Applicable
(f) ANNUITY PAYMENTS - Annuity Options
9. Death Benefit
(a) Not Applicable
(b) Not Applicable
10. Purchases and Contract Value
xi
<PAGE>
(a)(i) CONTRACTS - Contract Application and
Purchase Payments
(a)(ii) CONTRACTS - Contract Application and
Purchase Payments; CONTRACTS -
Allocation of Purchase Payments
(a)(iii)(A) CONTRACTS - Crediting of Accumulation
Units
(a)(iii)(B) CONTRACTS - Determining the
Accumulation Unit Values
(a)(iii)(C) CONTRACTS - Crediting of Accumulation
Units; CONTRACTS - Determining the
Accumulation Unit Values
(b) CONTRACTS - Determining the
Accumulation Unit Values
(c) CONTRACTS - Crediting of Accumulation
Units; CONTRACTS - Determining the
Accumulation Unit Values
(d) DISTRIBUTOR OF THE CONTRACTS
11. Redemptions
(a) DISTRIBUTIONS UNDER THE CONTRACT - Full
and Partial Surrenders
(b) Not Applicable
(c) Not Applicable
(d) DISTRIBUTIONS UNDER THE CONTRACT - Full
and Partial Surrenders
(e) CONTRACTS - Contract Application and
Purchase Payments
12. Taxes
xii
<PAGE>
(a) FEDERAL TAX MATTERS
(b) FEDERAL TAX MATTERS - Qualified
Contracts
(c) Not Applicable
13. Legal Proceedings LEGAL PROCEEDINGS
14. Table of Contents of the Statement of Additional Information
TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION
Location in the Statement of Additional Information of information required by
Items of Form N-4.
CAPTION IN STATEMENT OF
PART B ITEM ADDITIONAL INFORMATION
- ----------- ----------------------
15. Cover Page
(a)(i) Cover Page
(a)(ii) Cover Page
(a)(iii)(A) Cover Page
(a)(iii)(B) Cover Page
(a)(iii)(C) Cover Page
(a)(iv) Cover Page
(a)(v) Cover Page
(b) Not Applicable
16. Table of Contents TABLE OF CONTENTS
17. General Information and History
(a) Not Applicable
(b) Not Applicable
(c) See Prospectus (AMERICAN NATIONAL
INSURANCE COMPANY AND THE SEPARATE
ACCOUNT - American National Insurance
Company)
18. Services
xiii
<PAGE>
(a) Not Applicable
(b) See Prospectus (DISTRIBUTOR OF THE
CONTRACTS)
(c) Cover Page
(d) Not Applicable
(e) Not Applicable
(f) Not Applicable
19. Purchase of Securities Being Offered
(a) See Prospectus (CONTRACTS - Contract
Application and Purchase Payments;
CHARGES AND DEDUCTIONS DURING THE
ACCUMULATION PERIOD - Exceptions to
Charges)
(b) See Prospectus (SUMMARY OF EXPENSES -
Expenses during the Accumulation
Period; CHARGES AND DEDUCTIONS DURING
THE ACCUMULATION PERIOD - Surrender
Charge)
20. Underwriters
(a) See Prospectus (DISTRIBUTOR OF THE
CONTRACTS)
(b) DISTRIBUTION OF THE CONTRACTS
(c) Not Applicable
(d)(i) Not Applicable
(d)(ii) Not Applicable
(d)(iii) Not Applicable
(d)(iv) Not Applicable
21. Calculation of Performance Data
(a)(i) PERFORMANCE
(a)(ii) PERFORMANCE
xiv
<PAGE>
(a)(iii) PERFORMANCE
(a)(iv) PERFORMANCE
(b)(i)(A) PERFORMANCE
(b)(i)(B) PERFORMANCE
(b)(i)(C) PERFORMANCE
(b)(ii)(A) PERFORMANCE
(b)(ii)(B) PERFORMANCE
(b)(ii)(C) PERFORMANCE
(b)(iii)(A) PERFORMANCE
(b)(iii)(B) PERFORMANCE
(b)(iii)(C) PERFORMANCE
22. Annuity Payments THE CONTRACT - Computation of Variable
Annuity Payments
23. Financial Statements
(a) Not Applicable
(b) FINANCIAL STATEMENTS; FINANCIAL
STATEMENT SCHEDULES
Part C Other Information
- ------------------------
Information required to be included in Part C is set forth under the appropriate
Item, so numbered, in Part C to this Registration Statement.
xv
<PAGE>
INVE$TRAC
GOLD
Variable Annuity
PROSPECTUS
FOR
VARIABLE ANNUITY CONTRACTS
ISSUED BY
AMERICAN NATIONAL INSURANCE COMPANY
<PAGE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT BE LAWFULLY MADE. NO DEALER, SALESMAN, OR OTHER PERSON IS
AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION
WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON.
<PAGE>
VARIABLE ANNUITY CONTRACTS
issued by
AMERICAN NATIONAL INSURANCE COMPANY
ONE MOODY PLAZA
GALVESTON, TEXAS 77550-7999
(409) 763-4661
This Prospectus describes the deferred annuity and immediate annuity forms
of individual Variable Annuity Contracts (the "Contracts") offered by American
National Insurance Company ("American National"). The Contracts are designed to
provide an investment vehicle for the accumulation of capital on a tax-deferred
basis for retirement or other long-term purposes. The Deferred Annuity
Contracts provide for annuity payments commencing at some later date specified
by the Contractowner. The Immediate Annuity Contracts provide for annuity
payments commencing immediately.
Unlike traditional guaranteed annuities, the Contracts provide for
Accumulation Values and annuity payment amounts which are based on and vary
with the investment performance of Subaccounts of the American National
Variable Annuity Separate Account (the "Separate Account") and/or the American
National Fixed Account. The assets of the Subaccounts are invested in the
portfolios of American National Investment Accounts, Inc. (the "American
National Fund") and in the portfolios of Variable Insurance Products Fund and
Variable Insurance Products Fund II (sometimes referred to, collectively, as
the "Fidelity Funds"). The portfolios of the American National Fund and the
portfolios of the Fidelity Funds that are available for investment will
sometimes be referred to, individually, as an "Eligible Portfolio" and,
collectively, as the "Eligible Portfolios".
The Separate Account is registered with the Securities and Exchange
Commission (the "SEC") under the Investment Company Act of 1940 (the "1940
Act") as a unit investment trust, which is a type of investment company. The
Separate Account currently has fourteen separate Subaccounts: the AN Money
Market, the AN Growth, the Balanced, the Managed, the Investment Grade Bond,
the Asset Manager, the Index 500, the FID Money Market, the Equity-Income, the
High Income, the FID Growth, the Overseas, the Contrafund and the Asset
Manager: Growth Subaccounts. The assets of such Subaccounts are invested in
shares of a corresponding Eligible Portfolio. The accompanying prospectuses for
the American National Fund and the Fidelity Funds describe the investment
objectives, policies and the risks of each of the Eligible Portfolios.
The Fixed Account is funded by the general assets of American National.
Although the contracts are designed primarily to offer benefits based on
investment performance, all or a portion of the annuity payments can be in the
form of a traditional guaranteed annuity.
The Contractowner has the right to examine a Contract and return it to
American National during what is generally known as the "free look" period.
American National will then refund the greater of all Purchase Payments made by
the Contractowner or the Accumulation Value plus the amount of any charges for
state premium taxes, mortality and expense risk and advisory fees. The "free
look" period is established by state law and generally runs ten days after the
Contractowner receives the Contract.
This Prospectus sets forth the information that a prospective investor
should know before investing. A Statement of Additional Information about the
Contract is free and may be obtained by writing American National at the
address above. The Statement of Additional Information which has the same date
as this Prospectus, has been filed with the Securities and Exchange Commission.
The Table of Contents of such Statement of Additional Information is set forth
in this Prospectus on page 26.
This Prospectus is valid only when accompanied by
Current Prospectuses For The American National Investment Accounts, Inc.,
Variable Insurance Products Fund and Variable Insurance Products Fund II.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, OR BY ANY STATE SECURITIES
REGULATORY AUTHORITY, NOR HAS THE COMMISSION, OR ANY STATE
SECURITIES REGULATORY AUTHORITY,
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Please Read This Prospectus Carefully And Retain It For Future Reference.
The Date of This Prospectus is April 30, 1996.
1
<PAGE>
2
<PAGE>
TABLE OF CONTENTS
Page
Glossary of Terms 5
Summary of the Contracts 7
Purpose of the Contracts 7
Investment Options 7
Purchasing a Variable Annuity Contract 7
Allocations and Transfers 7
How the Death Benefit Varies 7
Surrenders from the Contract prior to Annuity Date 7
How Annuity Payments are Determined 7
Your Right to Cancel the Variable Annuity Contract 7
Summary of Expenses 8
Expenses During the Accumulation Period 8
Expenses During the Annuity Period 11
Accumulation Unit Values 11
American National Insurance Company
and the Separate Account 12
American National Insurance Company 12
The Separate Account 12
The American National Fund 12
The Fidelity Funds 13
Addition, Deletion or Substitution of Investments 14
Fixed Account 15
Contracts 15
Purpose of the Contracts 15
Types of Contracts 15
Contract Application and Purchase Payments 16
Allocation of Purchase Payments 16
Crediting of Accumulation Units 16
Determining the Accumulation Unit Values 16
Transfers Prior to Annuity Date 16
Contractowner Inquiries 17
Charges and Deductions During the Accumulation Period 17
Surrender Charge 17
Other Charges 17
(a) Administrative Charges 17
(b) State Premium Taxes 17
(c) Mortality and Expense Risk Fee 18
(d) Distribution Expense Charge 18
(e) Charges for Taxes 18
(f) Exchange Fee 18
Deduction of Fees 18
Exceptions to Charges 18
Distributions Under the Contract Accumulation Period 19
Full and Partial Surrenders 19
Policy Loans in Special Circumstances 19
Policy Loans 19
Death Benefit During Accumulation Period 20
Annuity Period 20
Election of Annuity Date and Form of Annuity 20
Allocation of Benefits 21
Annuity Options 21
Value of Variable Annuity Payments: Assumed Investment Rates 21
Annuity Provisions 22
Federal Tax Matters 22
Introduction 22
Taxation of Annuities in General 22
3
<PAGE>
Page
Penalty Tax on Distributions 23
Qualified Contracts 23
Performance 23
Distributor of the Contracts 24
Safekeeping of the Separate Account's Assets 24
Voting Rights 24
State Regulation of American National 25
Legal Matters 25
Legal Proceedings 25
Experts 25
Additional Information 25
Financial Statements 25
Table of Contents of Statement of Additional Information 26
4
<PAGE>
GLOSSARY OF TERMS
The following definitions may be useful in reading this Prospectus.
Certain additional terms are defined in the text.
Accumulation Period - The period from the date Accumulation Units are first
purchased under a Contract to the earliest of the Annuity Date, the date the
Contract is surrendered for its then current value or the date of the
individual Contractowner's death.
Accumulation Unit - A standard of measurement used with respect to each
Subaccount to calculate the value of a Contract during the Accumulation Period.
The value of an Accumulation Unit fluctuates with the value of the shares of
the corresponding Eligible Portfolio owned by each Subaccount less any
applicable deductions (see "Charges and Deductions," page 17).
Accumulation Unit Value - The value of an Accumulation Unit.
Accumulation Value - The Accumulation Value of a Contract is the sum of: (i)
the total Accumulation Units in Subaccounts times the respective Accumulation
Unit Values of such Subaccounts, (ii) the Contractowner's value in the Fixed
Account, and (iii) the Contractowner's value held in American National's
General Account to secure policy loans on such Contracts.
Annuitant - The person or persons upon whose life expectancy the Contract is
written. The Annuitant may also be the Contractowner.
Annuity Date - The date on which the Accumulation Period changes to the
Annuity Period.
Annuity Period - The period of time during which annuity payments are being
made.
Annuity Unit - A standard of measurement used with respect to each
Subaccount to calculate the dollar amount of annuity payments during the
Annuity Period. The value of an Annuity Unit fluctuates with the value of
shares of the corresponding Eligible Portfolio owned by each Subaccount less
any applicable deductions. (See "Charges and Deductions," page 17).
Contract - A Variable Annuity Contract issued pursuant to this Prospectus
which sets forth the obligations and contractual promises which American
National makes to the Contractowner.
Contractowner - The person or entity entitled to exercise rights of
ownership in a Contract prior to the Annuity Date or termination of the
Contract. The Contractowner and the Annuitant need not be the same.
Contract Year - The period from the date the first Purchase Payment is
credited to the Contract until the immediately preceding day of the succeeding
year. (February 29 will be treated as February 28 for the purpose of this
definition).
Deferred Annuity Contract - A Contract in which annuity payments commence at
some future date specified by the Contractowner.
Eligible Portfolio - A Portfolio of The American National Fund or the
Fidelity Funds which corresponds to and in which a Subaccount can be invested.
Fixed Account - An account that is a part of American National's General
Account to which all or a portion of Net Purchase Payments and transfers may be
allocated for accumulation at fixed rates of interest.
General Account - The General Account of American National which includes
all of American National's assets except those assets segregated into its
separate accounts.
Guaranteed Annuity - An annuity under which the amount of each annuity
payment is guaranteed by American National during the Annuity Period.
Immediate Annuity - A Contract purchased with a single Purchase Payment,
which provides immediate annuity payments on an annual, semi-annual, quarterly
or monthly schedule to the Contractowner.
Minimum Guaranteed Death Benefit - For all dates up to and including the
first Six-Year Anniversary Date, the Minimum Guaranteed Death Benefit will
equal Purchase Payments less Partial Surrender Reductions made on or before
such date. For all subsequent Six-Year Anniversary Dates, the Minimum
Guaranteed Death Benefit will equal the greater of: (i) the Accumulation Value
on such Six-Year Anniversary Date, or (ii) the Minimum Guaranteed Death Benefit
for the immediately preceding Six-Year Anniversary Date, plus Purchase Payments
and less Partial Surrender Reductions made since such immediately preceding
Six-Year Anniversary Date. For all other dates, the Minimum Guaranteed Death
Benefit will equal the Minimum Guaranteed Death Benefit for the immediately
preceding Six-Year Anniversary Date plus Purchase Payments and less Partial
Surrender Reductions made since such immediately preceding Six-Year Anniversary
Date.
Mortality and Expense Risk Fee - The amount payable to American National for
accepting mortality and expense risks.
Net Purchase Payment - The Purchase Payment less any government entity
premium tax charge.
Non-Qualified Contract - A Contract issued in connection with a retirement
plan that does not receive favorable tax treatment under the Internal Revenue
Code.
Partial Surrender Reduction - An amount equal to (i) the amount of a
surrender, multiplied by (ii) the Minimum Guaranteed Death Benefit on the date
immediately prior to a surrender over the Accumulation Value on the date
immediately prior to the surrender.
Plan - A document or agreement defining the retirement benefits and those
eligible to receive them. The Plan is not a part of a Contract and American
National is not a party to a Plan.
5
<PAGE>
Policy Debt - The sum of all unpaid policy loans and accrued interest
thereon.
Portfolio - A separate series of capital securities designed to meet
specified investment objectives. The American National Fund currently consists
of four portfolios, all of which are Eligible Portfolios. The Fidelity Funds
currently consist of ten portfolios, all of which are Eligible Portfolios.
Purchase Payment - A payment made into a Contract during the Accumulation
Period.
Qualified Contract - A Contract issued in connection with a Plan that
receives favorable tax treatment under the Internal Revenue Code of 1986.
Six-Year Anniversary Date - The last day of each Contract Year prior to the
Annuitant's 75th birthday which is evenly divisible by six.
Subaccount - A subdivision of the Separate Account. Each Subaccount invests
exclusively in the shares of a corresponding Eligible Portfolio.
Valuation Date - A valuation date is each day on which the New York Stock
Exchange ("NYSE") is open for trading.
Valuation Period - The period commencing at the close of regular trading on
the NYSE on one Valuation Date and ending at the close of regular trading on
the NYSE on the next succeeding Valuation Date.
Variable Annuity - An annuity providing payments which vary in dollar amount
depending on the investment results of the American National Fund or the
Fidelity Funds.
6
<PAGE>
SUMMARY OF THE CONTRACTS
Purpose of the Contracts
The purpose of the Contracts is to provide Accumulation Values and/or
Annuity Payments which are expected to reflect changes in the cost of living to
a greater degree than a traditional Guaranteed Annuity. The Contracts offer
Contractowners the opportunity to vary the Accumulation Value based on the
performance of the investments chosen by the Contractowner through two
different types of Variable Annuity Contracts: a Deferred Annuity and an
Immediate Annuity.
There is no assurance that a Subaccount will obtain its investment
objective. Because a Variable Annuity's value is based on the investment
performance of Eligible Portfolios and is not guaranteed, a Variable Annuity
Contract entails more investment risk than a traditional Guaranteed Annuity.
There is also American National's Fixed Account option for Contractowners
who prefer more conservative investments. (See Fixed Account, page 15.)
Investment Options
Net Purchase Payments may be invested in the Subaccounts and/or in American
National's Fixed Account. The fourteen Subaccounts are: the AN Money Market,
the AN Growth, the Balanced, the Managed, the Investment Grade Bond, the Asset
Manager, the Index 500, the FID Money Market, the Equity-Income, the High
Income, FID Growth, the Overseas, the Contrafund and the Asset Manager: Growth
Subaccounts. Each of the Subaccounts invests exclusively in the shares of a
corresponding Eligible Portfolio. Each such Subaccount and corresponding
Eligible Portfolio has a different investment objective (See "The American
National Fund" at page 12, and "The Fidelity Funds" at page 13).
Purchasing a Variable Annuity Contract
Individuals wishing to purchase a Variable Annuity Contract must complete an
application and pay the minimum initial Purchase Payment to American National's
Home Office. The minimum and maximum amounts of Purchase Payments vary
depending upon the type of Contract purchased. (See "Contract Application and
Purchase Payments," page 16.)
Allocation and Transfers
Net Purchase Payments will be initially allocated to each Subaccount and/or
American National's Fixed Account as instructed in the application. Thereafter,
the allocation may be changed by the Contractowner. All allocations must be at
least 10% of the Net Purchase Payment.
During the Accumulation Period, transfers can be made between Subaccounts
and American National's Fixed Account. American National allows twelve free
transfers per Contract Year. Any additional transfer will be subject to a
$10.00 exchange fee. Transfers out of the Fixed Account are limited as
described in the section "TRANSFERS" on page 16.
Transfers and allocation changes can be made by either writing to American
National's home office or by telephone instructions. A Telephone Transfer
Authorization Form must to be on file at American National's home office before
telephone instructions will be allowed.
How the Death Benefit Varies
In the event of the Annuitant's death prior to the Annuity Date, the death
benefit for Deferred Annuity Contracts will equal the greater of: (i)
Accumulation Value less Policy Debt on the date that notice of death is
received by American National at its home office in Galveston, Texas, or (ii)
the Minimum Guaranteed Death Benefit on the Contract, less Policy Debt. During
the Annuity Period, death benefits, if any, depend upon the annuity option
selected. (See Annuity Options at page 21).
Surrenders from the Contract Prior to Annuity Date
Prior to the Annuity Date, all or part of a Variable Annuity's Accumulation
Value may be surrendered upon the Contractowner's written request. A surrender
may be subject to a Surrender Charge, an IRS penalty tax for early withdrawal
and potentially an income tax. Contracts purchased in connection with
retirement plans may also be subject to restrictions imposed by the Plan.
Surrenders from Contracts qualified under Section 403(b) of the Code may be
restricted. (See "Qualified Contracts" under "Federal Tax Matters" at page 23).
The sum of surrender charges and distribution expense charges will never be
more than 9.0% of total Purchase Payments paid.
How Annuity Payments Are Determined
There are a number of ways to receive annuity payments. They include monthly
payments for a specified number of years, payments for life guaranteed for 10
or 20 years, or payments made jointly (See Annuity Options, page 21). Payments
may also be received on a fixed basis and/or on a variable basis. Variable
Annuity payments will increase or decrease according to the investment
experience of the Eligible Portfolios and the declared rate paid by American
National on the Fixed Account.
Your Right to Cancel the Variable Annuity Contract - The "free look" Period
State law requires that Contractowners be given a "free look" period,
generally running ten days after the Contractowner receives the Contract,
within which a Contractowner may return the Contract to American National's
Home Office. In such cases, American National will then refund the greater of
all Purchase Payments made by the Contractowner or the Accumulation Value plus
the amount of any charges for state premium taxes, mortality and expense risk
and advisory fees. (See "Contract Application and Purchase Payments," page 16).
7
<PAGE>
SUMMARY OF EXPENSES
Expenses During The Accumulation Period
The purpose of the following table is to illustrate the costs and expenses
that are borne, directly and indirectly, by Contractowners during the
Accumulation Period. The information set forth should be considered together
with the narrative provided under the heading "Charges and Deductions" in this
Prospectus. In addition to the expenses listed below, premium taxes may also be
applicable. For information concerning the fees and expenses assessed during
the Annuity Period, including the fees and expenses assessed in connection with
Immediate Annuity Contracts, see "Expenses During the Annuity Period", page 11.
CONTRACTOWNERS TRANSACTION EXPENSES
Sales Load as a percentage of Purchase Payments 0%
Deferred Sales Load ("Surrender Charge")
An amount of Accumulation Value equal to the greater of (i) 10% of
Accumulation Value in a Contract Year, or (ii) Accumulation Value less total
Purchase Payments made, may be withdrawn without Surrender Charge.
On surrenders of that portion of Accumulation Value in excess of the above
described free surrender amount, a Surrender Charge is imposed based upon the
number of Contract Years since the Contract Year in which the Purchase Payments
withdrawn were paid, on a first paid, first withdrawn basis. The Surrener
Charge is deducted from the remaining Accumulation Value, or, if the remaining
Accumulation Value is insufficient to cover the Surrender Charge, a portion of
the Surrender Charge will be deducted from the withdrawal amount. Such
Surrender Charge will be a percentage of each Purchase Payment or portion
thereof withdrawn as illustrated in the following table:
Applicable Surrender Charge
Contract Years as a Percentage
Chargeable Withdrawal of Each Purchase
Amount or Portion Payment or Portion
Thereof Made Thereof Withdrawn
1 7.0
2 7.0
3 6.0
4 5.0
5 4.0
6 3.0
7 2.0
8 and thereafter 0.0
Non-qualified Qualified
Deferred Deferred
Annuity Annuity
Exchange Fee $ 10 $ 10
(there is no exchange fee for
the first 12 transfers)
Annual Contract Fee $ 25 $ 30
Separate Account Annual Expenses
(as percentage of average net assets)
Mortality Risk Fees 0.80% 0.80%
Expense Risk Fees 0.45% 0.45%
Administrative Asset Fees 0.10% 0.10%
Distribution Expense Charge 0.25% 0.25%
Total Separate Account
Annual Expenses 1.60% 1.60%
AN Money Market Portfolio Annual Expenses
(as a percentage of average net assets)
Management Fees after reimbursement * ** 0.52% 0.52%
Other Expenses 0.39% 0.39%
Total AN Money Market Portfolio
Annual Expenses 0.91% 0.91%
* Without reimbursement, management fees would have been 0.75% and the total
portfolio annual expense would have been 1.14%.
AN Growth Portfolio Annual Expenses
(as a percentage of average net assets)
Management Fees after reimbursement * ** 0.52% 0.52%
Other Expenses 0.38% 0.38%
Total AN Growth Portfolio Annual Expenses 0.90% 0.90%
* Without reimbursement, management fees would have been 0.75% and the total
portfolio annual expense would have been 1.13%.
Balanced Portfolio Annual Expenses
(as a percentage of average net assets)
Management Fees after reimbursement * ** 0.46% 0.46%
Other Expenses 0.50% 0.50%
Total Balanced Portfolio Annual Expenses 0.96% 0.96%
* Without reimbursement, management fees would have been 0.75% and the total
portfolio annual expense would have been 1.25%.
8
<PAGE>
Managed Portfolio Annual Expenses
(as a percentage of average net assets)
Management Fees after reimbursement * ** 0.50% 0.50%
Other Expenses 0.48% 0.48%
Total Managed Portfolio Annual Expenses 0.98% 0.98%
* Without reimbursement, management fees would have been 0.75% and the total
portfolio annual expense would have been 1.23%.
** Under its Administrative Service Agreement with the Fund, Securities
Management and Research, Inc. ("SM&R"), the Fund's Investment Adviser and
Manager, has agreed to pay (or to reimburse each Portfolio for) each
Portfolio's expenses (including the advisory fee and administrative service fee
paid to SM&R, but exclusive of interest, commissions and other expenses
incidental to portfolio transactions) in excess of 1.50% per year of such
Portfolio's average daily net assets. In addition, SM&R has entered into a
separate undertaking with the Fund effective May 1, 1994 until April 30, 1997,
pursuant to which SM&R has agreed to reimburse the Money Market Portfolio and
the Growth Portfolio for expenses in excess of .87%; the Balanced Portfolio for
expenses in excess of .90% and the Managed Portfolio for expenses in excess of
.93%, of each of such Portfolios' average daily net assets during such period.
SM&R is under no obligation to renew this undertaking for any Portfolio at the
end of such period.
Investment Grade Bond Portfolio Annual Expenses
(as a percentage of average net assets)
Management Fees 0.45% 0.45%
Other Expenses 0.14% 0.14%
Total Investment Grade Bond Portfolio
Annual Expenses 0.59% 0.59%
Asset Manager Portfolio Annual Expenses
(as a percentage of average net assets)
Management Fees 0.71% 0.71%
Other Expenses 0.08% 0.08%
Total Asset Manager Portfolio Annual Expenses * 0.79% 0.79%
* A portion of the brokerage commissions the portfolio paid was used to
reduce its expenses. Without the deduction, total portfolio expenses would have
been 0.81%.
Index 500 Portfolio Annual Expenses
(as a percentage of average net assets)
Expenses 0.28% 0.28%
Total Index 500 Portfolio Annual Expenses * 0.28% 0.28%
* The portfolio's expenses were voluntarily reduced by the portfolio's
investment advisor. Absent reimbursement, management fee,other expenses and
total expenses would have been 0.28%, 0.19% and.0.47%, respectively.
FID Money Market Portfolio Annual Expenses
(as a percentage of average net assets)
Management Fees 0.24% 0.24%
Other Expenses 0.09% 0.09%
Total Asset Manager Portfolio Annual Expenses 0.33% 0.33%
Equity-Income Portfolio Annual Expenses
(as a percentage of average net assets)
Management Fees 0.51% 0.51%
Other Expenses 0.10% 0.10%
Total Equity-Income Portfolio Annual Expenses 0.61% 0.61%
High Income Portfolio Annual Expenses
(as a percentage of average net assets)
Management Fees 0.60% 0.60%
Other Expenses 0.11% 0.11%
Total High Income Portfolio Annual Expenses 0.71% 0.71%
FID Growth Portfolio Annual Expenses
(as a percentage of average net assets)
Management Fees 0.61% 0.61%
Other Expenses 0.09% 0.09%
Total FID Growth Portfolio
Annual Expenses 0.70% 0.70%
Overseas Portfolio Annual Expenses
(as a percentage of average net assets)
Management Fees 0.76% 0.76%
Other Expenses 0.15% 0.15%
Total Overseas Portfolio
Annual Expenses 0.91% 0.91%
Contrafund Portfolio Annual Expenses
(as a percentage of average net assets)
Management Fees 0.61% 0.61%
Other Expenses 0.11% 0.11%
Total Contrafund Portfolio
Annual Expenses * 0.72% 0.72%
* A portion of the brokerage commissions the portfolio paid was used to
reduce its expenses. Without the deduction, total portfolio expenses would have
been 0.73%.
Asset Manager: Growth Portfolio Annual Expenses
(as a percentage of average net assets)
Management Fees 0.71% 0.71%
Other Expenses 0.29% 0.29%
Total Asset Manager: Growth Portfolio
Annual Expenses * 1.00% 1.00%
* A portion of the brokerage commissions the portfolio paid was used to
reduce its expenses. Without the deduction, total portfolio expenses would have
been 1.13%. The portfolio's expenses were voluntarily reduced by the
portfolio's investment advisor. Absent reimbursement, management fee,other
expenses and total expenses would have been 0.71%, 0.42% and 1.13%,
respectively.
9
<PAGE>
Example: Non-qualified Deferred Annuity Contract
If you surrender your Deferred Annuity Contract at the end of the applicable
time period:
You would pay the following expenses on a $1,000 investment, assuming 5%
annual return on assets:
1 3 5 10
Fund Year Years Years Years
AN Money Market Portfolio $ 90 $ 137 $ 174 $ 286
AN Growth Portfolio $ 90 $ 136 $ 174 $ 285
Balanced Portfolio $ 91 $ 138 $ 177 $ 291
Managed Portfolio $ 91 $ 139 $ 177 $ 293
Investment Grade Bond Portfolio $ 87 $ 128 $ 159 $ 254
Asset Manager Portfolio $ 89 $ 133 $ 168 $ 274
Index 500 Portfolio $ 84 $ 119 $ 143 $ 222
FID Money Market Portfolio $ 85 $ 120 $ 146 $ 227
Equity-Income Portfolio $ 87 $ 128 $ 160 $ 256
High Income Portfolio $ 88 $ 131 $ 164 $ 266
FID Growth Portfolio $ 88 $ 131 $ 164 $ 265
Overseas Portfolio $ 90 $ 137 $ 174 $ 286
Contrafund Portfolio $ 88 $ 131 $ 165 $ 267
Asset Manager: Growth Portfolio $ 91 $ 139 $ 178 $ 295
If you do not surrender your Deferred Annuity Contract:
You would pay the following expenses on a $1,000 investment, assuming 5%
annual return on assets:
1 3 5 10
Fund Year Years Years Years
AN Money Market Portfolio $ 26 $ 79 $ 134 $ 286
AN Growth Portfolio $ 25 $ 78 $ 134 $ 285
Balanced Portfolio $ 26 $ 80 $ 137 $ 291
Managed Portfolio $ 26 $ 81 $ 138 $ 293
Investment Grade Bond Portfolio $ 22 $ 69 $ 118 $ 254
Asset Manager Portfolio $ 24 $ 75 $ 128 $ 274
Index 500 Portfolio $ 19 $ 60 $ 103 $ 222
FID Money Market Portfolio $ 20 $ 61 $ 105 $ 227
Equity-Income Portfolio $ 23 $ 70 $ 119 $ 256
High Income Portfolio $ 24 $ 73 $ 124 $ 266
FID Growth Portfolio $ 23 $ 72 $ 124 $ 265
Overseas Portfolio $ 26 $ 79 $ 134 $ 286
Contrafund Portfolio $ 24 $ 73 $ 125 $ 267
Asset Manager: Growth Portfolio $ 26 $ 81 $ 139 $ 295
Example: Qualified Deferred Annuity Contract
If you surrender your Deferred Annuity Contract at the end of the applicable
time period:
You would pay the following expenses on a $1,000 investment, assuming 5%
annual return on assets:
1 3 5 10
Fund Year Years Years Years
AN Money Market Portfolio $ 91 $ 139 $ 178 $ 295
AN Growth Portfolio $ 91 $ 139 $ 178 $ 294
Balanced Portfolio $ 91 $ 141 $ 181 $ 300
Managed Portfolio $ 92 $ 141 $ 182 $ 302
Investment Grade Bond Portfolio $ 88 $ 130 $ 163 $ 263
Asset Manager Portfolio $ 90 $ 136 $ 173 $ 283
Index 500 Portfolio $ 85 $ 121 $ 148 $ 231
FID Money Market Portfolio $ 86 $ 123 $ 150 $ 236
Equity-Income Portfolio $ 88 $ 131 $ 164 $ 265
High Income Portfolio $ 89 $ 134 $ 169 $ 275
FID Growth Portfolio $ 89 $ 133 $ 168 $ 274
Overseas Portfolio $ 91 $ 139 $ 178 $ 295
Contrafund Portfolio $ 89 $ 134 $ 169 $ 276
Asset Manager: Growth Portfolio $ 92 $ 142 $ 183 $ 304
If you do not surrender your Deferred Annuity Contract:
You would pay the following expenses on a $1,000 investment, assuming 5%
annual return on assets:
1 3 5 10
Fund Year Years Years Years
AN Money Market Portfolio $ 26 $ 81 $ 139 $ 295
AN Growth Portfolio $ 26 $ 81 $ 138 $ 294
Balanced Portfolio $ 27 $ 83 $ 141 $ 300
Managed Portfolio $ 27 $ 83 $ 142 $ 302
Investment Grade Bond Portfolio $ 23 $ 72 $ 123 $ 263
Asset Manager Portfolio $ 25 $ 78 $ 133 $ 283
Index 500 Portfolio $ 20 $ 62 $ 107 $ 231
FID Money Market Portfolio $ 21 $ 64 $ 110 $ 236
Equity-Income Portfolio $ 23 $ 72 $ 124 $ 265
High Income Portfolio $ 24 $ 75 $ 129 $ 275
FID Growth Portfolio $ 24 $ 75 $ 128 $ 274
Overseas Portfolio $ 26 $ 81 $ 139 $ 295
Contrafund Portfolio $ 25 $ 76 $ 129 $ 276
Asset Manager: Growth Portfolio $ 27 $ 84 $ 143 $ 304
10
<PAGE>
The examples should not be considered to be a representation of past or
future expenses, and the examples do not include the deduction of state premium
taxes which may be assessed by a number of states.
The purpose of the preceding table is to assist Contractowners in
understanding the various costs and expenses that a Contractowner will bear
directly or indirectly and, thus, the table reflects expenses of both the
Separate Account and the American National Fund and/or the Fidelity Funds.
Actual expenses may be greater or lesser than those shown. The example assumes
a 5% annual rate of return pursuant to the requirements of the SEC. This
hypothetical rate of return is not intended to be representative of past or
future performance of an Eligible Portfolio. The annual contract fees are
deducted pro rata from each Subaccount and Fixed Account. For a more complete
description of the various costs and expenses of the American National Fund and
the Fidelity Funds, see their Prospectuses.
Expenses During the Annuity Period
The Separate Account will be assessed a mortality and expense risk fee at an
annual rate of 1.25% during the Annuity Period. The Separate Account will also
be charged during the Annuity Period with the expenses of the Eligible
Portfolios in which the Contractowner has invested. In addition to the
Mortality and Expense Risk Fee and portfolio expenses, the Immediate Annuity
Contract will incur a contract fee of $100.00 at the time the single Purchase
Payment is paid. No other fees or expenses are charged against the Contracts
during the Annuity Period. To the extent that American National derives profits
from the Mortality and Expense Risk Fee, those profits may be used to pay for
other expenses, including distribution expenses.
ACCUMULATION UNIT VALUES
The following table shows the accumulation unit values of the Separate
Account as of December 31, 1994 and as of December 31, 1995 as well as the
units outstanding at December 31, 1995:
<TABLE>
<CAPTION>
AN Fidelity
AN Money AN AN VIP
Growth Market Managed Balanced Money
Portfolio Portfolio Portfolio Portfolio Market
<S> <C> <C> <C> <C> <C>
Accumulation unit value as of:
December 31, 1994 $ 0.990 $ 1.000 $ 0.990 $ 1.000 $ 1.010
December 31, 1995 $ 1.255 $ 1.036 $ 1.255 $ 1.136 $ 1.049
Units Outstanding at December 31, 1995 326,360 10,421 275,204 43,097 382,247
Fidelity Fidelity
VIP VIP Fidelity Fidelity
High Equity VIP VIP
Income Fund Income Fund Growth Overseas
Accumulation unit value as of:
December 31, 1994 $ 1.000 $ 1.000 $ 1.010 $ 0.970
December 31, 1995 $ 1.189 $ 1.322 $ 1.341 $ 1.048
Units Outstanding at December 31, 1995 126,513 301,955 281,102 147,599
Fidelity Fidelity Fidelity Fidelity
VIP VIP VIP Fidelity VIP
Investment Asset Index VIP Asset Manager
Grade Bond Manager 500 Contra Growth
Accumulation unit value as of:
December 31, 1994 $ 1.000 $ 0.990 $ 1.010 $ 1.000 $ 1.000
December 31, 1995 $ 1.159 $ 1.134 $ 1.365 $ 1.157 $ 1.024
Units Outstanding at December 31, 1995 26,194 332,773 92,340 20,680 24,995
</TABLE>
11
<PAGE>
AMERICAN NATIONAL INSURANCE COMPANY
AND THE SEPARATE ACCOUNT
American National Insurance Company
American National is a stock life insurance company chartered in 1905 in the
State of Texas. It is licensed to do life insurance business in 49 states, the
District of Columbia, Puerto Rico, Guam, and American Samoa. American
National's home office is located at the American National Insurance Building,
One Moody Plaza, Galveston, Texas 77550-7999. The Moody Foundation (the
"Foundation"), a charitable foundation established for charitable and
educational purposes, owns approximately 23.7% of American National's common
stock and the Libbie S. Moody Trust, a private trust, owns approximately 37.6%
of such shares. Robert L. Moody ("RLM"), Chairman of the Board and a Director
of American National, RLM's son, Ross R. Moody, and Frances Moody Newman, RLM's
mother, are trustees of the Foundation.
The Moody National Bank of Galveston (the "Bank") is trustee of the Libbie
S. Moody Trust. RLM is Chairman of the Board and Chief Executive Officer of the
Bank and of Moody Bank Holding Company, Inc. ("MBHC"), the Bank's controlling
stockholder. RLM is also Chairman of the Board and President of Moody
Bancshares, Inc. ("Bancshares"), MBHC's sole shareholder. The Three R Trusts,
trusts established by RLM for the benefit of his children, own 100% of
Bancshares' Class B stock (which elects a majority of Bancshares' directors)
and 47.5% of its Class A Stock. The trustee of the Three R Trusts is Irwin M.
Herz, Jr., a partner in Greer, Herz & Adams, L.L.P., 18th Floor, One Moody
Plaza, Galveston, Texas, General Counsel to American National, the Bank,
Bancshares, MBHC, the American National Fund and Securities Management and
Research, Inc.
American National's total assets on December 31, 1995 were $ 5,770,926,692
on a statutory basis.
American National writes life, health and accident insurance and annuities.
The Separate Account
The Separate Account was established by American National on July 30, 1991
pursuant to the insurance laws of the State of Texas. American National is the
depositor of the Separate Account. Under Texas law, the assets of the Separate
Account are held exclusively for the benefit of Contractowners and persons
entitled to payments under the Contracts. At present the Separate Account is
used only to support Variable Annuity Contracts. American National is the legal
holder of the assets in the Separate Account and will at all times maintain
assets in the Separate Account with a total market value at least equal to the
reserve and other contract liabilities for the Separate Account. The assets of
the Separate Account attributable to the Contracts are not chargeable with
liabilities arising out of any other business which American National may
conduct. Income, as well as both realized and unrealized gains or losses from
the assets of the Separate Account, is credited to or charged against the
Separate Account without regard to income, gains or losses arising out of other
business that American National conducts. Nevertheless, these assets shall be
available to cover the liabilities of American National's General Account, but
only to the extent that the Separate Account's assets exceed its liabilities
arising under the Contracts supported by it. In addition to these assets, the
Separate Account assets may include accumulations of the charges American
National makes against Policies and Contracts participating in the Separate
Account. From time to time, any such assets due American National may be
transferred in cash to American National's General Account. Obligations under
the Variable Annuity Contracts are obligations of American National.
The Separate Account is registered with the Securities and Exchange
Commission ("SEC") under the Investment Company Act of 1940 ("1940 Act") as a
unit investment trust, which is a type of investment company. Such registration
does not involve any SEC supervision of the management or investment policies
or practices of the Separate Account. For state law purposes, the Separate
Account is treated as a division of American National. There are currently
fourteen Subaccounts within the Separate Account available to Contractowners
and each invests only in a corresponding Eligible Portfolio.
The American National Fund
Four of the Subaccounts of the Separate Account invest in the shares of a
corresponding portfolio of the American National Fund. The American National
Fund is registered with the SEC under the 1940 Act as an open-end diversified,
series management investment company. The American National Fund shares are
also purchased by American National Variable Life Separate Account.
The Separate Account will purchase and redeem shares from the American
National Fund at net asset value.
12
<PAGE>
The investment objectives and policies of each portfolio of the American
National Fund are summarized below. There is no assurance that any of the
portfolios will achieve their stated objectives. More detailed information,
including a description of investment objectives, policies, restrictions,
expenses and risks, is in the prospectus for the American National Fund, which
must accompany this Prospectus and which should be read carefully together with
this Prospectus and retained.
The American National Fund currently has a Money Market Portfolio, a Growth
Portfolio, a Balanced Portfolio and a Managed Portfolio.
AN Money Market Portfolio ... seeks to obtain as high a level of current
income as is consistent with preserving capital and providing liquidity. The
Money Market Portfolio will invest only in money market instruments of high
quality determined by the American National Fund's investment adviser. The
Money Market Portfolio of the American National Funds shall be referred to
herein as "AN Money Market".
AN Growth Portfolio ... seeks to achieve capital appreciation, normally
through the purchase of common stocks (although such Portfolio investments are
not restricted to any one type of security). Capital appreciation may also be
sought in other types of securities, including bonds and preferred stocks. This
Growth Portfolio of the American National Fund is referred to herein as "AN
Growth".
Balanced Portfolio ... seeks to provide conservation of principal,
reasonable current income and long-term capital appreciation by investing in a
balanced portfolio of fixed-income securities such as bonds, preferred stock
and short-term obligations combined with common stocks and securities
convertible into common stocks.
Managed Portfolio ... seeks to achieve growth of capital and/or current
income by investing in a diversified portfolio consisting of, at the American
National Fund's investment adviser's discretion, money market instruments, debt
securities, stock or a combination thereof. It is anticipated that over longer
periods a larger portion of the Managed Portfolio will consist of equity
securities.
Securities Management and Research, Inc. ("SM&R") is the investment adviser
and manager of the American National Fund. It also provides investment advisory
and portfolio management services to American National and other clients. It
maintains a staff of experienced investment personnel and related support
facilities. Detailed information about the American National Fund Management
Fees is contained in the American National Fund Prospectus. Such fees exceed
the industry average for advisory and administrative fees.
The Fidelity Funds
Pursuant to a Participation Agreement between American National, Fidelity
Distributors Corporation and the Fidelity Funds, ten of the Subaccounts of the
Separate Account invest in the shares of ten corresponding portfolios of the
Fidelity Funds. The Fidelity Funds are registered with the SEC under the 1940
Act as open-end diversified, series management investment companies organized
as Massachusetts business trusts. The Fidelity Funds' shares are also purchased
by American National Variable Life Separate Account.
Fidelity Management & Research Company ("FMR"), the Fidelity Funds'
investment adviser, was founded in 1946. FMR provides a number of mutual funds
and other clients with investment research and portfolio management services.
It maintains a large staff of experienced investment personal and a full
compliment of related support facilities. Fidelity Management & Research (U.K.)
Inc. ("FMR U.K.") and Fidelity Management and Research (Far East) Inc. ("FMR
Far East") are wholly owned subsidiaries of FMR that provide research with
respect to foreign securities. FMR U.K. and FMR Far East maintain their
principal business offices in London and Tokyo, respectively. As of December
31, 1995, FMR advised funds having more than 22 million shareholder accounts
with a total value of more than $270 billion. Fidelity Distributors Corporation
distributes shares for the Fidelity funds. FMR Corp. is the holding company for
the Fidelity companies. Through ownership of voting common stock, Edward C.
Johnson 3d, President and a Trustee of the Fidelity Funds, and various trusts
for the benefit of Johnson family members form a controlling group with respect
to FMR Corp.
The Management, Distribution and Service Fees for the Fidelity Funds are
explained in the Fidelity Funds' Prospectuses.
The Separate Account will purchase and redeem shares from the Fidelity Funds
at net asset value.
The investment objectives and policies of each portfolio of the Fidelity
Funds are summarized below. There is no assurance that
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any of the portfolios will achieve their stated objectives. More detailed
information, including a description of investment objectives, policies,
restrictions, expenses and risks, is in the prospectus for each of the Fidelity
Funds which must accompany this Prospectus and which should be read carefully
together with this Prospectus and retained.
Investment Grade Bond Portfolio ... seeks as high a level of current income
as is consistent with the preservation of capital by investing in a broad range
of investment-grade fixed-income securities. The Investment Grade Bond
Portfolio will maintain a dollar-weighted average portfolio maturity of ten
years or less.
Equity-Income Portfolio ... seeks reasonable income by investing primarily
in income-producing equity securities. In choosing these securities, the
Equity-Income Portfolio will also consider the potential for capital
appreciation. The Equity-Income Portfolio's goal is to achieve a yield which
exceeds the composite yield on the securities comprising the Standard & Poor's
500 Composite Stock Price Index.
High Income Portfolio ... seeks to obtain a high level of current income by
investing primarily in high-yielding, lower-rated, fixed-income securities,
while also considering growth of capital. High yielding, lower-rated securities
present higher risks of untimely interest and principal payments, default and
price volatility than higher-quality securities, and may present problems of
liquidity and valuation. See the prospectus describing the High Income
Portfolio for more information on the risks of investing in high-yielding,
lower-rated securities.
FID Growth Portfolio ... seeks to achieve capital appreciation. The FID
Growth Portfolio normally purchases common stocks, although its investments are
not restricted to any one type of security. Capital appreciation may also be
found in other types of securities, including bonds and preferred stocks. This
Growth Portfolio of the Fidelity Funds shall be referred to herein as "FID
Growth."
Overseas Portfolio ... seeks long term growth of capital primarily through
investments in foreign securities. Overseas Portfolio provides a means for
investors to diversify their own portfolios by participating in companies and
economies outside of the United States.
FID Money Market Portfolio ... seeks to obtain as high a level of current
income as is consistent with preserving capital and providing liquidity. The
Money Market Portfolio will invest only in high quality U.S. dollar denominated
money market securities of domestic and foreign issuers. The Money Market
Portfolio of the Fidelity Funds shall be referred to herein as "FID Money
Market."
Asset Manager Portfolio ... seeks high total return with reduced risk over
the long-term by allocating its assets among stocks, bonds and short-term
fixed-income instruments.
Index 500 Portfolio ... seeks to provide investment results that correspond
to the total return (i.e., the combination of capital charges and income) of
common stocks publicly traded in the United States. In seeking this objective,
the Index 500 Portfolio attempts to duplicate the composition and total return
of the Standard & Poor's 500 Composite Stock Price Index while keeping
transaction cost and other expense low. The Index 500 Portfolio is designed as
a long-term investment option.
Contrafund Portfolio ... seeks capital appreciation by investing in
companies FMR believes to be undervalued due to an overly pessimistic appraisal
by the public. In pursuit of the fund's goal, FMR looks for companies with the
following characteristics: (i) unpopular, but improvements seem possible due to
developments such as a change in management, a new product line, or an improved
balance sheet, (ii) recently popular, but temporarily out of favor due to
short-term or one-time factors, or (iii) undervalued compared to other
companies in the same industry.
Asset Manager: Growth Portfolio ... seeks to maximize total return over the
long term by allocating its assets among stocks, bonds, and short-term
instruments. Allocating among different types of investments allows the fund to
take advantage of opportunities wherever they may occur, but also subjects the
fund to the risks of a given investment type.
Addition, Deletion or Substitution of Investments
American National reserves the right, subject to applicable law, to make
additions to, deletions from, or substitutions for the shares that are held in
the Separate Account or that the Separate Account may purchase. If the shares
of an Eligible Portfolio are no longer available for investment or if in
American National's judgment further investment in any Eligible Portfolio
should become inappropriate in view of the purposes of the Separate Account,
American National may redeem the shares, if any, of that Eligible Portfolio,
and substitute shares of another registered open-end management company.
American National will not substitute any shares attributable to a
Contractowner's interest in a Subaccount of the Separate Account without notice
and prior approval of the SEC and possibly state insurance authorities, to the
extent required by the 1940 Act or other applicable law. The Separate Account
may, to the extent permitted by law, purchase other securities for other
contracts or permit a conversion between contracts upon request by the
Contractowners.
American National also reserves the right to establish additional
Subaccounts of the Separate Account, each of which would invest in shares
corresponding to a new portfolio of the American National Fund or in shares of
another investment company having a corresponding investment objective.
American National may eliminate one or more Subaccounts with SEC approval if
marketing needs, tax considerations or investment conditions warrant. Any new
Subaccounts may be made available to existing Contractowners on a basis to be
determined by American National.
If any of these substitutions or changes are made, American National may by
appropriate endorsement change the Contract to reflect the substitution or
change. If American National deems it to be in the best interest of
Contractowners, and subject to any
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approvals that may be required under applicable law, the Separate Account
may be operated as a management company under the 1940 Act, it may be
registered under that Act if registration is no longer required, or it may be
combined with other American National Separate Accounts. In addition, American
National may, when permitted by law, restrict or eliminate any voting rights as
to the Separate Account.
The Contractowner will be notified of any material change in the investment
policy of any Eligible Portfolio in which the Contractowner has an interest.
Unless Contractowners have directed a different allocation, shares of the
American National Fund and the Fidelity Funds will be redeemed, pro rata, to
the extent necessary for American National to collect charges under the
Contract, to pay the surrender value upon full or partial surrenders of the
Contracts, to make policy loans, to provide benefits under the Contract, or to
transfer assets from one Subaccount to another or to the Fixed Account. Any
dividend or capital gain distribution received from an Eligible Portfolio will
be reinvested immediately at net asset value in shares of that Eligible
Portfolio and retained as assets of the corresponding subaccount.
Each Contractowner should periodically consider the allocation among the
Subaccounts and the Fixed Account in light of current market conditions and the
investment risks attendant to investing in the American National Fund's and the
Fidelity Funds' various portfolios.
FIXED ACCOUNT
During the Accumulation Period, Contractowners may elect to allocate all or
a portion of their Net Purchase Payment to the Fixed Account and, subject to
certain limitations, they may also transfer Accumulation Value from the
Subaccount to the Fixed Account. Transfers from the Fixed Account to the
Subaccount are restricted. (See Transfers Prior to Annuity Date, page 16.)
Net Purchase Payments allocated to the Fixed Account and transfers from a
Subaccount to the Fixed Account are placed in the General Account of American
National. The General Account includes all of American National's assets except
those segregated in its separate accounts. American National has the sole
discretion to invewst the assets of its General Account, subject to applicable
law. American National bears an investment risk for all amounts allocated or
transferred to the Fixed Account and interest credited thereto, less any
deduction for charges and expenses, whereas the Contract owner bears the
investment risk that the declared rate will fall to a lower rate after the
expiration of a declared rate period. Because of exemptive and exclusionary
provisions, interests in the General Account have not been registered under the
Securities Act (the "1933 Act"), nor is the General Account registered as an
investment company under the 1940 Act. Accordingly, neither the General Account
nor any interest therein is generally subject to the provisions of the 1933 or
1940 Act. American National understands that the staff of the SEC has not
reviewed the disclosures in this Prospectus relating to the Fixed Account
portion of the Contract; however, disclosures regarding the Fixed Account
portion of the Contract may be subject to generally applicable provisions of
the federal securities laws regarding the accuracy and completeness of
statements made in prospectuses.
American National guarantees that it will credit interest to the Fixed Account
at an effective annual rate of at least 3.0% compounded daily. American National
may, at its discretion, declare higher interest rate(s) for amounts allocated or
transferred to the Fixed Account.
CONTRACTS
Purpose of the Contracts
The Contracts described in this Prospectus may be issued for use with
retirement plans and trusts qualified under the Internal Revenue Code of 1986,
as amended (the "Code"), for favorable tax treatment ("Qualified Contracts")
and for use with plans and trusts which are not so qualified ("Non-Qualified
Contracts"). See section entitled "Federal Tax Matters-Qualified Contracts,"
page 23 for further details.
The terms of the Contracts may only be changed by mutual agreement between
American National and each Contractowner, except as described in "Substitution
of Investments, on page 14; for changes required to make the Contracts comply
with any law or regulation issued by a governmental agency to which American
National or the Contracts are subject; and for changes necessary to assure
continued qualification of the Contracts under the Internal Revenue Code.
Types of Contracts
This Prospectus offers the following two general types of Variable Annuity
Contracts:
DEFERRED ANNUITY CONTRACT
This type of Contract allows an individual to vary the Purchase Payments or
pay a single Purchase Payment. There are two types
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of Flexible or Single Purchase Payment Deferred Annuities: Non-qualified and
Qualified. Annuity payments will commence at a later date.
IMMEDIATE ANNUITY CONTRACT
This form of Immediate Annuity Contract is used by an individual making a
single Purchase Payment. The individual will receive Immediate Annuity payments
annually, semi-annually, quarterly or monthly.
The availability of any Variable Annuity Contract described herein in any
particular state is dependent upon the approval of that Contract by that state.
Contract Application and Purchase Payments
Individuals wishing to purchase a Contract must complete an application and
provide the required initial Purchase Payment which will be sent to American
National's Home Office. (See page 16, Allocation of Purchase Payments.) If an
incomplete application cannot be completed within five days of its receipt, the
applicant will be notified of the reasons for the delay and any payment
received will be returned immediately unless the applicant specifically
consents to have American National retain the payment pending completion of the
application.
As indicated earlier, Contractowners have a "free look" period, generally
ten days, within which a Contractowner can return the Contract to American
National's Home Office and American National will then refund the greater of
all Purchase Payments made by the Contractowner or the Accumulation Value plus
any premium taxes, mortality and risk fees and advisory fees deducted. The
"free look" period is established by state law and generally runs ten days
after the Contractowner receives the Contract. American National requires that
all Net Purchase Payments received by American National during the 15-day
period after the Date of Issue are allocated to the Subaccount of the Money
Market Portfolio of the Fidelity Funds. Thereafter, such amounts allocated to
the Subaccount of the Money Market Portfolio and Net Purchase Payments paid are
allocated as directed by the Contractowner. No surrender charges are assessed
on premiums returned during this "free look" period.
Deferred Annuity Contracts require certain minimum initial and subsequent
Purchase Payments. For Flexible Purchase Payment Deferred Annuity Contracts,
the minimum initial monthly and subsequent payments are $100. Single Purchase
Payment Deferred Annuity Contracts require a minimum single payment of $5,000.
The maximum Purchase Payment under any Deferred Annuity Contract is $1,000,000
without the prior approval of American National. For Immediate Annuity
Contracts, the minimum initial investment is $2,000. These amounts may be
changed at the sole discretion of American National. In addition, American
National reserves the right to terminate any Deferred Annuity Contract for
certain specified reasons, including failure of the Accumulation Value to meet
certain specified minimums.
For a Flexible Purchase Payment Deferred Annuity Contract, Purchase Payments
may be made at such intervals as desired, but are usually made on an annual,
semi-annual, quarterly or monthly basis. The frequency of Purchase Payments may
be changed by the Contractowners. If Purchase Payments cease, they may be
resumed at a future date, subject to the Annuity Date requirements. The number
of changes permitted and the maximum payments allowed under the Internal
Revenue Code for Qualified Contracts vary depending on the type of Plan.
Failure to comply with those limitations may subject the Contract to adverse
tax treatment.
Allocation of Purchase Payments
After the "free look" period, Net Purchase Payments will be allocated to
each Subaccount in accordance with the written instructions contained in the
application. The Contractowner may by written instruction to the Home Office
indicate one or more Subaccounts and/or the Fixed Account to which a specified
portion or portions of the Net Purchase Payment should be applied, except that
no allocation will be permitted which would result in less than 10% of the Net
Purchase Payment being allocated to any one Subaccount and/or the Fixed
Account. Changes in allocation of future Net Purchase Payments (with the same
10% minimum) may be made at any time by written instruction to the Home Office
or by telephone instruction, provided that a properly completed Telephone
Transfer Authorization Form is on file with American National.
Crediting of Accumulation Units
During the Accumulation Period, all Net Purchase Payments received will
purchase Accumulation Units in the Subaccount selected and/or allocated to the
Fixed Account. The number of Accumulation Units purchased is determined by
dividing the dollar amount of the Net Purchase Payment allocated to the
Subaccount by the Accumulation Unit Value for that Subaccount next computed
following allocation of the Net Purchase Payment to such Subaccount.
Determining the Accumulation Unit Values
The Accumulation Unit Value of each Subaccount reflects the investment
performance of that Subaccount. The Accumulation Unit Value of each Subaccount
shall be calculated by: (i) multiplying the per share net asset value of the
corresponding Eligible Portfolio on the Valuation Date times the number of
shares held by the Subaccount, after the purchase or redemption of any shares
on that date; (ii) subtracting therefrom a charge for the administrative fee,
distribution expense charge and the mortality and expense risk fee for that
Subaccount and (iii) dividing the result by the total number of units held in
the Subaccount on the Valuation Date, before the purchase or redemption of any
units on that date. The Accumulation Unit Value for each Subaccount shall be
calculated at the end of each Valuation Period. Investment performance of the
portfolio companies, portfolio company expenses, and the deduction of certain
charges affect the Accumulation Unit Value for each Subaccount.
Transfers Prior to Annuity Date
Accumulation Value may be transferred among the Subaccounts and/or the Fixed
Account subject to the following limits. The transfers may be requested in
person, by mail, or by telephone. A Telephone Transfer Authorization Form must
be on
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file at American National's home office before any telephone instructions
will be allowed. The total amount transferred from each Subaccount must be at
least $250, or the balance of the Subaccount, if less. The minimum amount that
may remain in a Subaccount after a transfer is $100. American National will
effectuate transfers and determine all values in connection with transfers on
the later of the date designated in the request or at the end of the Valuation
Period during which the transfer request is received. Transfers from the Fixed
Account to the Subaccounts are allowed subject to the following limits. Once
each Contract Year, during the thirty-day period beginning on the Contract
anniversary, the maximum amount which may be transferred from the Fixed Account
to the Subaccounts is the greater of (a) twenty-five percent of the amount in
the Fixed Account, or (b) $1,000.
The first twelve transfers per Contract Year will be permitted free of
charge. Any additional transfers will be charged a $10.00 fee at the time of
the transfer and will be deducted from the amount transferred. (See Exchange
Fee, page 18). Transfers resulting from policy loans will not be subject to a
transfer charge. In addition, such policy loans will not be counted for
purposes of the limitation on the number of free transfers allowed in each
year. American National may at any time revoke or modify the transfer
privilege, including the number and minimum amount transferable. For a
discussion of transfers after the Annuity Date, see "Allocation of Benefits" at
page 21).
CONTRACTOWNER INQUIRIES
Contractowner inquiries should be addressed to American National Insurance
Company, One Moody Plaza, Galveston, Texas 77550-7999, or made by calling (409)
763-4661.
CHARGES AND DEDUCTIONS DURING THE ACCUMULATION PERIOD
Surrender Charge
Since no deduction for a sales charge is made from Purchase Payments, a
contingent deferred sales charge (a "Surrender Charge") is imposed on certain
partial and full withdrawals to cover certain expenses relating to the
distribution of the Contracts. An amount of the Accumulation Value equal to the
greater of (i) Accumulation Value less total Purchase Payments made, or (ii)
10% of the Accumulation Value in a Contract Year, may be withdrawn without a
Surrender Charge. On withdrawals of that portion of the Accumulation Value
representing Purchase Payments, a Surrender Charge is imposed based upon the
number of Contract Years since the Contract Year in which the Purchase Payments
withdrawn were paid, on a first paid, first withdrawn basis. The Surrender
Charge is a maximum of 7% of the Purchase Payment withdrawn and grades down to
zero in the eighth Contract Year after the Purchase Payment being withdrawn was
made.
In no event will the sum of all surrender charges and the distribution
expense charges assessed exceed 9.0% of total Purchase Payments paid. (See the
chart under "Contractowners Transaction Expenses" at Page 8)
Other Charges
(a) Administrative Charges
American National's administrative charges consist of an annual contract fee
and a daily administrative asset fee. These administrative charges are to
cover all fixed and varying costs of administering the Contract. These
charges are designed only to reimburse American National for the cost of
administration and are not intended to produce a profit.
The annual contract fee is charged at the end of each Contract Year to cover
American National's fixed cost of administration of the Contract. The charge
is $25.00 for Non-qualified Deferred Annuity Contracts and $30.00 for all
Qualified Deferred Annuity Contracts. When a Contract is surrendered for its
full value, a pro rata portion of the annual contract fee will be deducted
at the time of full surrender.
Immediate Annuity Contracts have a one time contract fee of $100.00 when the
single Purchase Payment is paid.
An administrative asset fee is charged daily at an annual rate of 0.10% to
each Subaccount to cover the varying costs of a Deferred Annuity Contract.
(b) State Premium Taxes
An amount for state premium taxes (which presently range from 0% to 3.5%)
will be deducted if assessed by a given state. American National's current
practice is to deduct any state premium tax imposed by a State upon
annuitization of the Contracts. In some states, however, premium taxes must
be deducted from Purchase Payments made under the Contracts
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when the payments are received by American National.
(c) Mortality and Expense Risk Fee
American National assumes a number of risks under the Contracts. While
annuity payments will vary in accordance with the investment performance of
the selected Subaccounts, the amount of such payments will not be decreased
because of adverse mortality experiences of Annuitants as a class or because
of an increase in actual expenses of American National over the expense
charges provided for in the Contracts. American National assumes the risk
that Annuitants as a class may live longer than expected (necessitating a
greater number of annuity payments) and that fees deducted may not prove
sufficient to cover its actual costs. In assuming these risks, American
National agrees to continue annuity payments under life-contingent annuity
options determined in accordance with the annuity tables and other
provisions of the Contracts, to the Annuitant or other payee for as long as
he or she may live. In addition, American National is at risk for the death
benefits payable under the Contracts, to the extent that the death benefit
in such cases exceeds the Accumulation Value.
For American National's contractual promises to accept these risks, a 0.80%
per annum Mortality Risk Fee and a 0.45% per annum Expense Risk Fee will be
assessed daily against the Separate Account based on the value of its net
assets. This fee is assessed during the Accumulation Period and during the
Annuity Period. American National could realize a gain or a loss from such
fee depending on the mortality and expenses actually incurred.
(d) Distribution Expense Charge
A distribution expense is assessed daily to each Subaccount to compensate
American National for the risk that surrender charges assessed under the
Contracts may be insufficient to cover the costs of distributing the
Contracts. The distribution expense charge is 0.25% annually for Qualified
and Non-Qualified Deferred Annuity Contracts. If the distribution expense
charge is insufficient to cover the actual risk assumed, American National
will bear the loss; however if the charge is more than sufficient, any
excess will be a profit to American National. The sum of all surrender
charges and the distribution expense charges assessed will at no time exceed
9.0% of all Purchase Payments paid.
(e) Charges for Taxes
Currently, no charge will be made against the Separate Account for federal,
state or local income taxes. American National may, however, make such a
charge in the future if income or gains within the Separate Account will
incur any federal, or any significant state or local tax treatment or if tax
treatment of American National changes. Charges for such taxes, if any,
would be deducted from the Separate Account and/or the Fixed Account.
American National would not realize a profit on such taxes with respect to
the Contracts.
(f) Exchange Fee
An exchange fee of $10.00 will be imposed for each additional transfer among
the Subaccounts and Fixed Account after twelve transfers per Contract Year
to compensate American National for the costs of effecting the transfer.
Since the fee reimburses American National for the cost of effecting the
transfer only, American National does not expect to make any profit from the
exchange fee. This fee will be deducted from the amount transferred. The
exchange fee will not be imposed on transfers that occur as a result of
policy loans. The amount of the transfer charge will not be increased.
Deduction of Fees
When annual contract fees are deducted from the Accumulation Value of a
Contract, the deductions shall be allocated among the Subaccounts and the Fixed
Account in the same proportion as the Accumulation Value in each Subaccount and
the Fixed Account bears to the total Accumulation Value on that date.
Exceptions to Charges
The surrender charges, distribution expense charges or other administrative
charges or deductions may be reduced for sales of Contracts to a trustee,
employer, or similar entity representing a group where American National
determines that such sales result in savings of sales or administrative
expenses. In addition, directors, officers and bona fide full-time employees
(and their spouses and minor children) of SM&R and American National are
permitted to purchase Contracts with substantial reduction of the surrender
charges or other administrative charges or deductions.
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DISTRIBUTIONS UNDER THE CONTRACT
ACCUMULATION PERIOD
Full and Partial Surrenders
Any Contract may be surrendered in full or partially during the Accumulation
Period, subject to the limitations discussed herein. If a partial surrender
would leave less than $250 total Accumulation Value in the Contract, then the
Contract will be fully surrendered. A request for a partial surrender should
specify the allocation of that surrender, as applicable, from the Fixed Account
and each Subaccount. In the absence of specification, American National will
take amounts in the same proportion as needed to satisfy the surrender in the
manner set forth in "Deduction of Fees," on page 18. Upon a partial surrender,
any charges will be deducted from the amount of the surrender.
Upon receipt of an application for a partial or full surrender of a Contract
signed by the Contractowner, the applicable Accumulation Unit Value will be
that next determined after such application is received in American National's
Home Office. The Accumulation Value of a Contract which is available for full
surrender may be determined by multiplying the number of Accumulation Units for
each Subaccount times the Accumulation Unit Value at that time, adding any
Accumulation Value in the Fixed Account and deducting pro rata annual
administrative fees and any surrender charge. Partial or full surrenders will
be paid within seven days of receipt of the written request in proper form,
except as described below.
If at the time the Contractowner makes a surrender request, he or she has
not provided American National with a written election not to have federal and
state income taxes withheld, American National is required by law to withhold
such taxes from the taxable portion of any surrender, and to remit that amount
to the federal and/or state government.
Policy Loans in Special Circumstances
Policy loans are allowed on Qualified Deferred Annuity Contracts where
Federal Law permits policy loans to be taken without being considered a taxable
distribution. Policy loans are not allowed on Non-Qualified Deferred Annuity
Contracts because of adverse tax consequences.
Policy Loans
After the first year, the Contractowner may borrow money from American
National using the Contract as the only security for the policy loan. Policy
loans are usually funded within seven days after receipt of a written request
in proper form. Only one loan will be permitted at any time. Policy loans may
have a tax consequence (See Federal Tax Matters, page 22).
(a) Policy Loan Amount
The policy loan amount cannot be less than $2,500 nor exceed the lesser of:
(1) 50% of the Contract's Accumulation Value less surrender charges on the
date of the policy loan; or
(2) $50,000.00.
(b) Loan Interest
American National will charge interest daily on any policy loan at an annual
loan interest rate not to exceed 8%. Interest is due:
(1) at the end of each Contract Year; or
(2) when the policy loan is paid back, if that comes first.
If interest is not paid when due, it will become part of the policy loan and
will accrue interest charges.
(c) Effect of Policy Loans
When a policy loan is made, Accumulation Value equal to the amount of the
policy loan will be transferred from the Accumulation Value in the Separate
Account and/or the Fixed Account to American National's General Account as
security for the Policy Debt. The Accumulation Value securing the policy
loan will earn interest at an annual rate not less than 3.0% which will be
credited at the end of the Contract Year. The Accumulation Value securing
the policy loan will be allocated among the Subaccounts and/or the Fixed
Account in accordance with the instructions given by the Contractowner when
the policy loan is requested. The minimum amount which can remain in a
Subaccount or the Fixed Account after a policy loan is $100. In the event no
allocation instructions are provided or the allocation instructions conflict
with this minimum held in Subaccounts, the policy loan amount will be
processed in the manner as set forth in the "Deduction of Fees" on page 18.
American National will transfer Accumulation Value from the Subaccounts
and/or the Fixed Account to secure loan interest which is not paid when due
in any Contract Year. (Refer to "Deduction of Fees" on page 18.)
A policy loan will permanently affect the Accumulation Value of a Contract
even if the policy loan is repaid. The effect could be favorable or
unfavorable depending on whether the investment performance of the
Subaccount(s) selected by the Contractowner is less than or greater than the
interest rate credited to the Accumulation Value held in the General Account
to secure the policy loan. In comparison to a Contract under which no policy
loan was made, the Accumulation Value will be lower if the General Account
interest rate is less than the investment performance of the Subaccount(s),
and greater if the General Account interest rate is higher than the
investment performance of the Subaccount(s).
Interest earned on amounts held in the General Account will be allocated to
the Subaccounts and the Fixed Account on each Contract anniversary in the
same proportion that Net Purchase Payments are being allocated to those
Subaccounts and the Fixed Account at the time. Upon repayment of Policy
Debt, the portion of the repayment allocated in
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accordance with the repayment of indebtedness provision will be transferred
to increase the Accumulation Value in that Subaccount and/or the Fixed
Account.
(d) Policy Debt
All outstanding policy loans together with accrued interest thereon will be
a Policy Debt. The Contract will terminate and have no value if at any time
the Policy Debt on the Contract equals or exceeds the Accumulation Value
less surrender charges. The effective date of termination will be 31 days
after American National has mailed notice of termination to the
Contractowner's last known address and the Contractowner has not paid the
Policy Debt exceeding surrender amount.
If a surrender is requested while any policy loan is outstanding, the
Accumulation Value will be reduced by the Policy Debt, if any, and any
surrender charges.
If any death benefit proceeds or annuity benefits become due and payable
while any policy loan is outstanding, the amount of proceeds will be reduced
by the Policy Debt.
(e) Policy Loan Repayment
All policy loans, other than "Home Loans," must be repaid in full on or
before the fifth anniversary of the date of the policy loan. All policy
loans may be repaid in a lump sum payment or, at American National's
discretion in installments. All policy loan payments must be at least
$10.00.
Any Policy Debt, other than Policy Debt on a "Home Loan," which remains
unpaid after the fifth anniversary of the date of policy loan will be deemed
a distribution of the Contract proceeds. The Contract will be reduced by the
amount of any such balance. (Refer to Tax Section.)
"Home Loan" means any policy loan obtained for the purpose of acquiring,
constructing, reconstructing or substantially rehabilitating a dwelling unit
for use by the Contractowner (as defined in Section 267(c) of the Internal
Revenue Code) as a principal place of residence for a reasonable period of
time.
"Home Loans" may be repaid over a period of time not to exceed 15 years,
with level installment payments made not less frequently than quarterly.
Death Benefit During Accumulation Period
In the event of Annuitant's death prior to the Annuity Date, a death benefit
will be payable equal to the greater of: (i) Accumulation Value less Policy
Debt on the date that notice of death is received by American National at its
home office in Galveston, Texas, or (ii) the Minimum Guaranteed Death Benefit
on the Contract less Policy Debt. The death benefit will be paid in a lump sum
to the beneficiary named in the contract within seven business days of receipt
of proof of death in proper form.
In lieu of payment in one lump sum, the Contractowner may elect that the
death benefit be applied under any one of the annuity options described on page
21. If the Contractowner did not make such an election, the beneficiary may do
so. The person selecting the annuity option settlement may also designate
contingent beneficiaries to receive any further amounts due, should the first
beneficiary die before completion of the specified payments. The manner in
which annuity payments to the beneficiary are determined and in which they may
vary from month to month are described under "Annuity Period," on page 20.
ANNUITY PERIOD
All or a part of any amount payable at the Annuity Date for Deferred Annuity
Contracts may be applied to any of the Annuity Options. American National will
discharge in a single sum any liability under an assignment of the Contract and
any applicable federal or state taxes, fees or assessments based on or
predicated on the purchase payments of this contract which have not otherwise
been deducted or offset. The remaining amount is the net sum payable. The
minimum amount that American National will apply to an Annuity Option is
$2,000. American National's consent is required for any payment to a
corporation, association, partnership, or trustee.
Election of Annuity Date and Form of Annuity
(a) Non-Qualified Contracts
The date on which annuity payments are to begin and the form of annuity are
elected in the application. A Contract may not be purchased after age 85 and
annuity payments must begin no later than age 95.
(b) Qualified Contracts
The date on which annuity payments are to begin and the form of annuity are
elected in the application. A Contract may not be purchased after age 70 and
annuity payments must begin no later than April 1st of the calendar year
following the calendar year in which the Annuitant reaches 70-1/2.
If no election of an Annuity Date is made under a Contract, American
National reserves the right to automatically begin payments at age 65 (or if
age at purchase was over 55, then 10 years after issue) under Option 2, Life
Annuity with 120 monthly payments certain. Once an Annuity Payment is made,
the Annuity Option can not be changed to another Annuity Option. (See
"Federal Tax Matters" on page 22.)
20
<PAGE>
Allocation of Benefits
If no election is made to the contrary, the Accumulation Units of each
Subaccount will be changed into Annuity Units and applied to provide a Variable
Annuity based on that Subaccount.
In lieu of this automatic allocation of annuity benefits the Contractowner
may elect to transfer his or her Accumulation Units to any other Eligible
Portfolio. After the Annuity Date, transfers among Subaccounts may be made
twelve times each Contract year. Each Contractowner may transfer Annuity Units
of one Subaccount into Annuity Units of another Subaccount and/or Fixed
Accounts as discussed above at any time other than during the five-day interval
prior to and including any annuity payment date. There are no transfers allowed
during the Annuity Period from the Fixed Account to the Separate Account.
No election may be made for any individual unless such election would
produce an initial annuity payment of at least $20.
Annuity Options
The following annuity options are available.
Option 1 - Life Annuity - Annuity payment payable monthly during the
lifetime of an individual, ceasing with the last annuity payment due prior to
the death of the individual. This option offers the maximum level of monthly
annuity payments since there is no provision for a minimum number of annuity
payments or a death benefit for beneficiaries. It would be possible under this
option for an individual to receive only one annuity payment if death occurred
prior to the due date of the second annuity payment, two if death occurred
before the third annuity payment date, etc.
Option 2 - Life Annuity with 10 or 20 Years Certain - An annuity payable
monthly during the lifetime of an individual with payments made for a period
certain of not less than 10 or 20 years, as elected. The annuity payments will
be continued to a designated beneficiary until the end of the period certain.
Option 3 - Unit Refund Life Annuity - An annuity payable monthly during the
lifetime of an individual with annuity payments made for a period certain not
less than the number of months determined by dividing the amount applied under
this option by the amount of the first monthly annuity payment. This option
guarantees that the annuity units but not the dollar value applied under a
Variable Annuity payout will be repaid to the Annuitant or his beneficiary.
Option 4 - Joint and Survivor Annuity - An annuity payable monthly during
the joint lifetime of an individual and another named individual and thereafter
during the lifetime of the survivor, ceasing with the last annuity payment due
prior to the death of the survivor. It would be possible under this option, for
only one annuity payment to be made if both individuals under the option died
prior to the second annuity payment date, or only two annuity payments if both
died prior to the third annuity payment date, etc.
Option 5 - Installment Payments, Fixed Period - An amount payable monthly
for any specified number of years not exceeding 20. The amount of each Variable
Annuity payment will be determined by multiplying (a) and (b) where (a) is the
Annuity Unit Value on the day the annuity payment is made and (b) is the number
of Annuity Units applied under this Option divided by the number of remaining
monthly annuity payments.
Option 6 - Equal Installment Payments, Fixed Amount - An amount payable in
equal monthly installments (not less than $6.25 per $1,000 applied) until the
amount applied, adjusted daily by the investment results, is exhausted. The
final annuity payment will be the remaining sum left with American National.
Option 7 - Deposit Option - The amount due may be left on deposit with
American National for placement in its Fixed Account with interest at the rate
of not less than 3.0% per year. Interest will be paid annually, semiannually,
quarterly or monthly as elected. This option may not be available under certain
Qualified Contracts.
Option 8 - IRC Age Recalculation - An annuity payment based upon the
Annuitant's life expectancy, or the joint life expectancies of the Annuitant
and a beneficiary, at the Annuitant's attained age (and the beneficiary's
attained or adjusted age, if applicable) each year as computed in reference to
actuarial tables prescribed by the Treasury Secretary, until the amount
applied, adjusted daily by the investment results, is exhausted.
At any time, any amount remaining under Option 5, 6 or 7 may be withdrawn as
a lump sum or, if that amount is at least $2,000, may be applied under any one
of the first four Options. The lump sum payment requested will be paid within
seven days of receipt of the request at the Home Office based on the value next
computed after receipt of the request.
Other Annuity Forms - Provision may be made for annuity payments in any
reasonable arrangement mutually agreed upon.
If the beneficiary dies while receiving annuity payments certain under
Option 2, 3, 5, 6 or 8 above, the present value will be paid in a lump sum to
the estate of the beneficiary.
Value of Variable Annuity Payments:
Assumed Investment Rates
The annuity tables in the Contract which are used to calculate the annuity
payments are based on an "assumed investment rate" of 3.0%. If the actual
investment performance of the particular Subaccount selected is such that the
net investment return to the Contract is 3.0% per annum, the annuity payments
will remain constant. If the net investment return exceeds 3.0%, the annuity
payments will increase and if the return is less than 3.0%, the annuity
payments will decline.
The annuity payment will be greater for shorter guaranteed periods than for
longer guaranteed periods, and greater for life annuities than for joint and
survivor annuities, because the life annuities are expected to be made for a
shorter period.
21
<PAGE>
At the election of the Contractowner, where state law permits, an Immediate
Annuity Contract may provide annuity benefits based on an assumed investment
rate other than 3.0%. The annuity rates for Immediate Annuity Contracts are
available upon request from American National's home office.
Annuity Provisions
Non-qualified life contingent annuity payments are determined on the basis
of the mortality table (1983 Table a projected to 1993, and 3.0% interest)
which generally reflects the age and sex of the Annuitant and the type of
annuity option selected, and varies with the investment performance of the
Eligible Portfolios in which the Contractowner has invested.
Qualified life contingent annuity payments are determined on the basis of
the mortality table [1983 Table a (female) projected to 1993, and 3.0%
interest] which generally reflects the age of the Annuitant and type of annuity
option selected and varies with the investment performance of the Eligible
Portfolios in which the Contractowner has invested. Payment of any amount upon
surrender, upon a request for policy loans, benefits payable in connection with
death, annuity payments, and transfers may be postponed whenever: (i) the New
York Stock Exchange is closed other than customary week-end and holiday
closings, or trading on the New York Stock Exchange is restricted as determined
by the Securities and Exchange Commission ("Commission"); (ii) the Commission
by order permits postponement for the protection of the Policyowners; or (iii)
an emergency exists, as determined by the Commission, as a result of which
disposal of securities is not reasonably practicable or it is not reasonably
practicable to determine the value of the Separate Account's net assets.
FEDERAL TAX MATTERS
Introduction
The following discussion is general in nature and is not intended as tax
advice for each Contractowner. It does not address the tax consequences
resulting from all situations in which each Contractowner may be entitled to or
may receive a distribution under a Contract. Tax advice should be sought from a
competent source prior to purchase. The discussion below is based on American
National's understanding of the present federal tax law as currently
interpreted by the Internal Revenue Service. No representation is made as to
the continuation of present federal tax law or its current interpretation.
State tax law may also be applicable.
Taxation of Annuities in General
A Contractowner, other than a corporate owner or an owner that is not a
natural person, is not generally subject to income tax on increases in the
Accumulation Value of the Contract until payments are received under the
Contract. Income taxation of the benefits received under the Contract, whether
before or after the Annuity Date, is determined under Section 72 of the Code.
Any distribution whether a full or partial surrender, prior to the Annuity
Date may subject the Contractowner to income tax. For this purpose, a policy
loan under any Contract, or an assignment or pledge (or an agreement to assign
or pledge) is considered a distribution prior to the Annuity Date.
If the distribution prior to Annuity Date is by full surrender, the
Contractowner is taxed on the amount distributed less Purchase Payments less
any prior partial surrenders which were not subject to income tax.
If the distribution prior to the Annuity Date is by partial surrender, it is
deemed to come first from any previously untaxed Accumulation Value and then
from Purchase Payments. The Contractowner is subject to income tax on any
previously untaxed Accumulation Value which is distributed.
Purchase Payments may be paid by means of a tax free exchange of annuity
Contracts under Section 1035 of the Code. Contracts exchanged under Code
Section 1035 will be subject to the annuity income tax rules of Section 72 of
the Code in effect after that date, with exceptions set out in the description
of the Penalty Tax regarding the First-in First-out treatment of pre-August 14,
1982 contracts.
Withdrawals of amounts attributable to contributions made pursuant to a
salary reduction agreement (in accordance with Code Section 403(b)(11)) are
limited to circumstances only: when the Contractowner attains age 59-1/2,
separates from service, dies, becomes disabled (within the meaning of Section
72(m)(7) of the Code), or in the case of hardship. Withdrawals for hardship are
restricted to the portion of the Accumulation Value which represents
contributions made by the Contractowner and does not include any investment
results. These limitations on withdrawals apply to: (1) salary reduction
contributions made after December 31, 1988; (2) income attributable to such
contributions; and (3) income attributable to amounts held as of December 31,
1988. The limitations on withdrawals do not affect rollovers or exchanges
between certain qualified plans. Tax penalties may also apply. While the
foregoing limitations only apply to certain Contracts issued in connection with
Section 403(b) qualified plans, all Contractowners should seek competent tax
advice regarding any withdrawals or distributions.
If distributions are received after the Annuity Date under an annuity
option, that portion of each annuity payment which represents the
Contractowner's investment in the Contract is excluded from gross income for
income tax purposes. The "investment in the contract" is equal to the total
Purchase Payments for the Contract less any payments under the Contract that
were excluded from gross income. Once the Contractowner's investment in the
Contract is returned in full, the entire amount of each annuity payment is
taxable as ordinary income.
22
<PAGE>
The Technical and Miscellaneous Revenue Act of 1988 made several changes in
the Code. Among those changes is a provision that provides that all annuity
Contracts issued by the same life insurance company to the same Contractowner
during a twelve month period shall be treated as one annuity Contract for
purposes of determining the amount includable in the Contractowner's income for
amounts not received as an annuity. This rule will apply to a distribution
received under the Contract, including a distribution by full or partial
surrender, or other distribution that is not in the form of a payment received
under an annuity option of the Contract.
If the Contractowner dies before the Annuity Date, the Accumulation Value
must be distributed within a specified period. This distribution requirement
does not apply where the spouse of the Contractowner is the successor owner.
Annuity payments and other amounts received under Contracts are subject to
income tax withholding unless the recipient elects not to have taxes withheld.
Notwithstanding the recipient's election, withholding may be required with
respect to certain payments to be delivered outside the United States.
The United State Treasury Department has adopted regulations under Section
817(h) of the Code which set standards of diversification for the investment
underlying the Contracts, in order for the Contracts to be treated as annuities
for income tax purposes. American National intends that these diversification
standards will be satisfied. American National reserves the right to amend the
Contracts in any way necessary to maintain compliance with these standards.
Penalty Tax On Distributions
If there is a taxable distribution from the annuity, there is a penalty tax
equal to 10% of the taxable amount distributed to the extent the taxable
distribution is considered to be an early distribution under the annuity
Contract. The penalty tax does not apply to taxable distributions made as a
result of the death or disability of the Contractowner or distributions made
after the Contractowner reaches age 59-1/2; to distributions made under
Immediate Annuities; to distributions made under Settlement Options 1 or 4,
provided the distribution under such plans are substantially equal; and to
distributions attributable to Purchase Payments prior to August 14, 1982. The
penalty tax will not apply to distributions attributable to Purchase Payments
within ten years or more prior to the distribution. For this purpose,
distributions will be attributed to Purchase Payments on a "first-in first-out"
basis (to the earliest Purchase Payment which has not been fully allocated to
prior distributions).
Qualified Contracts
Qualified Contracts are designed for use with several types of qualified
plans including those subject to Code sections 401, 403(b), 408, and 457. The
tax rules applicable to Annuitants in such qualified plans vary according to
the type of plan and the terms and conditions of the plan itself. Annuitants in
qualified plans may include: individuals purchasing Individual Retirement
Annuities (IRAs); business owners (both self-employed and stockholders) who
establish pensions, profit sharing plans, and SEPs; employees of 501(c)(3)
organizations or public schools contributing to 403(b) annuities; and
government employees covered by a 457 deferred compensation plan.
As a general rule, Purchase Payments made by or for Annuitants in qualified
plans are not subject to current taxation. To the extent any such amounts are
taxed prior to or at the time of Purchase Payment, such amounts establish a
cost basis exempt from tax at the time of distribution.
Distributions from Qualified Contracts must satisfy certain minimum
distribution requirements. These requirements relate to both the time and
amount of distribution which include premature payments. Failure to comply may
result in penalty taxes which would be in addition to normal taxes.
Distributions from 401 plans and 403(b) annuities paid to the plan
participant/annuitant will be subject to mandatory Federal withholding of
twenty percent (20%). No withholding will apply if there is a direct rollover
among plans.
The Retirement Equity Act of 1984 imposes certain requirements with respect
to payments from qualified plans for married Annuitants and provides certain
restrictions involving qualified domestic relations orders.
PERFORMANCE
Performance information for the Subaccounts may appear in reports and
advertising to current and prospective Contractowners. The performance
information is based on historical investment experience of the Subaccounts and
the Funds and does not indicate or represent future performance.
Total returns are based on the overall dollar or percentage change in value
of a hypothetical investment. Total return quotations reflect changes in Fund
share price, the automatic reinvestment by the separate account of all
distributions and the deduction of applicable annuity charges (including any
contingent deferred sales charges that would apply if a Contractowner
surrendered the Contract at the end of the period indicated). Quotations of
total return may also be shown that do not take into account certain
contractual charges such as a contingent deferred sales load. The total return
percentage will be higher under this method than under the standard method
described above.
A cumulative total return reflects performance over a stated period of time.
An average annual total return reflects the hypothetical annually compounded
return that would have produced the same cumulative total return if the
performance had
23
<PAGE>
been constant over the entire period. Because average annual total returns
tend to smooth out variations in a Subaccount's returns, you should recognize
that they are not the same as actual year-by-year results.
Some Subaccounts may also advertise yield. These measures reflect the income
generated by an investment in the Subaccount over a specified period of time.
This income is annualized and shown as a percentage. Yields do not take into
account capital gains or losses or the contingent deferred sales load.
The FID Money Market Subaccount and the AN Money Market Subaccount may
advertise its current and effective yield. Current yield reflects the income
generated by an investment in the Subaccount over a 7-day period. Effective
yield is calculated in a similar manner except that income earned is assumed to
be reinvested. The Investment Grade Bond and the High Income Subaccounts may
advertise a 30-day yield which reflects the income generated by an investment
in the Subaccount over a 30-day period.
DISTRIBUTOR OF THE CONTRACTS
SM&R, One Moody Plaza, Galveston, Texas 77550-7999, a wholly-owned
subsidiary of American National will act as the principal underwriter of the
Contracts pursuant to a Distribution and Administrative Services Agreement
between itself and American National. SM&R was organized under the laws of the
State of Florida in 1964, and is a registered broker/dealer pursuant to the
Securities Exchange Act of 1934 and a member of the National Association of
Securities Dealers. (See the American National Fund's Prospectus.)
Registered representatives of SM&R who sell Variable Annuities will receive
commissions from SM&R based upon a commission schedule. After issuance of the
Contract, broker-dealers will receive sales commissions aggregating no more
than 6.1% of the Purchase Payments. In addition to such sales commissions,
after the first Contract year, broker-dealers who have entered into
distribution agreements with American National may receive an annual override
commission of no more than 0.25% of the Contract's accumulation value. SM&R and
American National may authorize other registered broker/dealers and their
Registered Representatives to sell the Contracts subject to applicable law.
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS
American National holds the assets of the Separate Account. The assets are
kept physically segregated and held separate and apart from the General Account
assets, except for the Fixed Account. American National maintains records of
all purchases and redemptions of shares of Eligible Portfolios by each of the
Subaccounts.
VOTING RIGHTS
All of the assets held in the Subaccounts of the Separate Account will be
invested in shares of the corresponding Eligible Portfolios. American National
is the legal holder of those shares and as such has the right to vote to elect
the Board of Directors of the American National Fund and the Fidelity Funds, to
vote upon certain matters that are required by the 1940 Act to be approved or
ratified by the shareholders of a mutual fund, and to vote upon any other
matter that may be voted upon at a shareholders' meeting. To the extent
required by law, American National will vote all shares of Eligible Portfolios
held in the Separate Account at regular and special shareholder meetings in
accordance with instructions received from Contractowners. The number of votes
for which each Contractowner has the right to provide instructions will be
determined as of the record date selected by the Board of Directors of the
American National Fund or the Fidelity Funds, as the case may be. American
National will furnish Contractowners with the proper forms, materials and
reports to enable them to give it these instructions.
The number of shares of an Eligible Portfolio in a Subaccount for which
instructions may be given by a Contractowner is determined by dividing the
Accumulation Value held in that Subaccount by the net asset value of one share
in the corresponding Eligible Portfolio. Fractional shares will be counted.
Shares of an Eligible Portfolio held in each Subaccount for which no timely
instructions from Contractowners are received and shares of an Eligible
Portfolio held in each Subaccount which do not support Contractowner interests
will be voted by American National in the same proportion as those shares in
that Subaccount for which timely instructions are received. Voting instructions
to abstain on any item to be voted will be applied on a pro rata basis to
reduce the votes eligible to be cast. Should applicable federal securities laws
or regulations permit, American National may elect to vote shares of the
Eligible Portfolios in its own right.
Matters on which Contractowners may give voting instructions include the
following: (1) election of the Board of Directors of the American National Fund
or the Fidelity Funds (2) ratification of the independent accountant of the
American National Fund or the Fidelity Funds; (3) approval of the Investment
Advisory Agreement for the Eligible Portfolio(s) corresponding to the
Contractowner's selected Subaccount; (4) any change in the fundamental
investment Policies of the Eligible Portfolio(s) corresponding to the
Contractowner's selected Subaccount(s); and (5) any other matter requiring a
vote of the shareholders of the American National Fund or the Fidelity Funds
under the 1940 Act.
24
<PAGE>
STATE REGULATION OF AMERICAN NATIONAL
American National, a stock life insurance company organized under the laws
of Texas, is subject to regulation by the Texas Department of Insurance. On or
before March 1 of each year a National Association of Insurance Commissioners
convention blank covering the operations and reporting on the financial
condition of American National and the Separate Account as of December 31 of
the preceding year must be filed with the Texas Department of Insurance.
Periodically, the Texas Department of Insurance examines the liabilities and
reserves of American National and the Separate Account and certifies their
adequacy. A full examination of American National's operations is also
conducted periodically by the National Association of Insurance Commissioners.
In addition, American National is subject to the insurance laws and
regulations of other states within which it is licensed or may become licensed
to operate. The Contracts offered by the Prospectus are available in the
various states as approved. Generally, the Insurance Department of any other
state applies the laws of the state of domicile in determining permissible
investments. However, differences in state laws may require American National
to offer a Contract in one or more states which are more favorable to a
Contractowner than provisions in a Contract offered in other states.
LEGAL MATTERS
All matters of Texas law pertaining to the Contract, including the validity
of the Contract and American National's right to issue the Contract under Texas
Insurance Law, have been passed upon by Greer, Herz and Adams, L.L.P., General
Counsel.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Separate Account is a party or
to which the assets of the Separate Account are subject. American National is
not involved in any litigation that is of material importance in relation to
its total assets or that relates to the Separate Account.
EXPERTS
The consolidated financial statements of American National Insurance Company
and subsidiaries as of December 31, 1995 and for the year then ended, and the
financial statements of American National Variable Annuity Separate Account as
of December 31, 1995 and for the year then ended, included in the registration
statement have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
accounting and auditing in giving said report.
The consolidated financial statements of American National Insurance Company
and subsidiaries as of December 31, 1994 and for the year then ended, and the
financial statements of American National Variable Annuity Separate Account as
of December 31, 1994 and for the period April 20, 1994, through December 31,
1994, included in this prospectus and elsewhere in the registration statement
have been audited by KPMG Peat Marwick LLP, independent public accountants, as
indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said report.
ADDITIONAL INFORMATION
A registration statement has been filed with the Securities and Exchange
Commission, under the Securities Act of 1933, as amended, with respect to the
Contract offered hereby. This Prospectus does not contain all the information
set forth in the registration statement and the amendments and exhibits to the
registration statement, to all of which reference is made for further
information concerning the Separate Account, American National and the Contract
offered hereby. Statements contained in this Prospectus as to the contents of
the Contract and other legal instruments are summaries. For a complete
statement of the terms thereof reference is made to such instruments as filed.
FINANCIAL STATEMENTS
The financial statements of American National should be considered only as
bearing on the ability of American National to meet its obligations under the
Contracts. They should not be considered as bearing on the investment
performance of the assets held in the Separate Account. The financial
statements can be found in the Statement of Additional Information.
25
<PAGE>
TABLE OF CONTENTS OF STATEMENT OF
ADDITIONAL INFORMATION
Page
The Contract 3
Valuation of Accumulation Units 3
Computation of Variable Annuity Payments 3
Annuity Unit Value 3
Summary 4
Exceptions to Charges 4
Termination of Contract 4
Group Unallocated Contract 4
Additional Federal Tax Matters 4
Limits on Subsequent Purchase Payments
(Under the Internal Revenue Code) 4
Taxation of American National 5
Tax Status of the Contracts 5
Assignment 5
Distribution of the Contracts 5
Safekeeping of Separate Account Assets 5
State Regulation of American National 5
Records and Reports 6
Performance 6
Total Return 6
Yields 6
Legal Matters 7
Legal Proceedings 7
Experts 7
Additional Information 7
Financial Statements 7
Financials 8
26
<PAGE>
<TABLE>
<C> <C> <C>
[LOGO OF AMERICAN Purchaser Suitability Form
NATIONAL APPEARS HERE] New Account Information & Arbitration
AMERICAN NATIONAL INSURANCE COMPANY Agreement
One Moody Plaza, Galveston, Texas
77550-7999
This form must accompany all applications to establish new accounts in
American National's Variable products, American National Investment Accounts,
Inc., Variable Insurance Products Fund and Variable Insurance Products Fund II.
Article III, Sections 2 & 21 of the Rules of Fair Practice require a
Representative to obtain the information contained in this form in order to
accept a new account in the American National Variable products.
- --------------------------------------------------------------------------------
Date Registered Representative
- --------------------------------------------------------------------------------
A. Securities Registration of Customer
Name(s) and Age(s)
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
Social Security No. (Individual, Taxpayer ID No. (Trust,
Joint Accounts, Custodial Accounts Estate, Pension Trust,
for Minors) Corporation, Partnership, etc.)
- --------------------------------------------------------------------------------
B. Is the Purchaser or proposed insured employed by or associated with a
member of the NASD or NYSE?
[ ] Yes [ ] No If he/she is, provide the name, address and phone number
of the firm:
- --------------------------------------------------------------------------------
If yes, provide the name, address and phone number of the firm:
- --------------------------------------------------------------------------------
C. Does Customer have other securities holdings? [ ] Yes [ ] No
[ ] Stocks [ ] Bonds [ ] Mutual Funds [ ] Variable Products [ ] Other
Are they redeeming other mutual fund shares and/or variable products to
make this purchase? [ ] Yes [ ] No
- --------------------------------------------------------------------------------
D. Pertinent Additional Information (Check Appropriate Boxes)
[ ] Application Attached Check Attached Payable To:
[ ] Signed Arbitration Agreement ________________________________________
[ ] Signed Statement of Refusal [ ] Other______________________________
to Provide Financial Information
if Applicable
- --------------------------------------------------------------------------------
- -------------------------------------- ----------------------------------------
Registered Representative's Name Representative's Personal Code
(print)
- -------------------------------------- ----------------------------------------
Registered Representative's Signature Date
- -------------------------------------- ----------------------------------------
B/O# PSO# Home Office Approval Date Received
Signature required on the reverse side
Investment Suitability To be completed by Registered Representative and
Purchaser
NASD rules require the Registered Representative to have reasonable grounds
for believing that any sale is suitable for the customer. Therefore, Registered
Representatives are required to make inquiries concerning the financial
condition of a proposed purchaser (the "Purchaser") of American National's
Variable products. Purchasers are urged to supply such information so that the
representative can make an informed judgment as to the suitability for a
particular Purchaser of variable products. However, Purchasers are not required
to divulge such information. If the Purchaser chooses not to do so, the
Purchaser must execute the signature line on the reverse side signifying
his/her refusal and acknowledge that the representative requested the
suitability information.
- --------------------------------------------------------------------------------
Investment Suitability Continued To be completed by Registered
Representative and Purchaser
1. OCCUPATION: Phone No. Employer
-------------------------------- ---------------
Name and Address Employer:
------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2. TAX STATUS: [ ] Single [ ] Head of Household
[ ] Married filing separate returns
[ ] Married filing joint return or Qualifying [ ] Corporation
widow(er) with dependent child [ ] Other
-------------------
Continued on the reverse side
</TABLE>
27
<PAGE>
<TABLE>
<C> <C> <C> <C>
3. Marital Status
A. [ ] Married B. [ ] Single C. [ ] Widowed
4. Dependents
A. [ ] Spouse B. [ ] Children: Ages C. [ ]
5. Sources of Funds for Investment
A. [ ] Current Earnings C. [ ] Gift or Inheritance E. [ ] Death Benefit G. [ ] Other Policy Proceeds
B. [ ] Savings D. [ ] Sale of Assets F. [ ] Maturity Proceeds H. [ ]
6. Primary Purpose of Investment:
Individual Business
A. [ ] Education D. [ ] Tax Shelter A. [ ] Retirement Plan D. [ ] Buy-Sell
B. [ ] Savings E. [ ] B. [ ] Key Man E. [ ] Depreciation Reserve
C. [ ] Estate Plan C. [ ] Deferred Compensation F. [ ]
7. Investment Profile:
1. What is your current investment preference?
[ ] High Growth Potential [ ] Income Growth Potential [ ] Maximum Safety/Modest Return
2. What is your Risk comfort level?
[ ] High [ ] Moderate [ ] Limited
3. What is your financial goal time horizon?
[ ] 1-5 Years [ ] 5-10 Years [ ] 10 Years and Beyond
4. What is your age range?
[ ] 21-40 [ ] 41-59 [ ] 60+
5. What is your tax bracket?
[ ] 15% [ ] 28% [ ] 28%+
6. Are you concerned with having adequate income during retirement: [ ] Yes [ ] No
7. Are you responsible for the financial welfare of anyone other than your immediate family (i.e. alimony, child,
parental support, etc.) [ ] Yes [ ] No
- ----------------------------------------------------------------------------------------------------------------------------------
Estimated Annual Income *Estimated Net Worth Life Insurance Is the applicant a policyholder of American
Face Amount National?
- ----------------------------------------------------------------------------------------------------------------------------------
$ $ $ [ ] Yes [ ] No
- ----------------------------------------------------------------------------------------------------------------------------------
*Net Worth is exclusive of home furnishings and automobile.
- ----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF REFUSAL TO PROVIDE FINANCIAL INFORMATION
I fully understand that the Registered Representative, acting on behalf of American National Insurance Company and Securities
Management and Research, Inc., has requested the above suitability information to determine whether my purchase of American
National's Variable products is an appropriate investment considering my financial condition. I refuse to provide the requested
information and by my/our signature(s) below agree not to seek rescission of the applicable variable product issued or damages based
on its unsuitability.
- --------------------------------------------------------- -----------------------------------------------------------
Signature Purchaser Signature Joint Owner (Must Sign)
REPRESENTATIVE EXPLANATION OF CUSTOMERS REFUSAL TO PROVIDE INFORMATION ON THIS FORM
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
PURCHASER AGREEMENT TO ARBITRATION
THIS SECTION IS NOT APPLICABLE TO MISSOURI RESIDENTS! The following conditions are agreed to by all parties to this
agreement.
1. Arbitration is final and binding on the parties.
2. The parties are waiving their right to seek remedies in court, including the right to jury trial.
3. Pre-arbitration discovery is generally more limited and different from court proceedings.
4. The arbitrators' award is not required to include factual findings or legal reasoning and any party's right to appeal or to seek
modification of rulings by arbitrators is strictly limited.
5. The panel of arbitrators will typically include a minority of arbitrators who were or are affiliated with the securities
industry.
By signature below, I (we) understand that I (we) have the right to any dispute between us arising under the federal
securities laws to be resolved through litigation in the courts. In lieu of using the courts, I (we) may agree, after any such
dispute has arisen, to settle it by arbitration before an appropriate group of arbitrators. However, I (we) understand that any
other dispute between us arising out of any transaction or this agreement shall be settled by arbitration before the National
Association of Securities Dealers, Inc., which must be commenced by a written notice of intent to arbitrate. Judgement upon any
award rendered may be entered in any appropriate court.
I (we) further understand that we may not bring a punitive or certified class action to arbitration, nor seek to enforce any
pre-dispute arbitration agreement against anyone who has initiated in court a punitive class action; or who is a member of a
punitive class action until (1) the class action certification is denied; or (2) the class is decertified; or (3) I (we) are
excluded from the class action by the court. Such forbearance to enforce an agreement to arbitrate shall not constitute a waiver of
any rights under this agreement except to the extent stated herein.
- ------------------------------------------------------ --------------------------------------------------------
Signature Purchaser Signature Joint Owner (Must Sign)
</TABLE>
28
<PAGE>
29
<PAGE>
Distributor
Securities Management & Research, Inc.
One Moody Plaza
Galveston, Texas 77550-7999
Custodian
American National Insurance Company
One Moody Plaza
Galveston, Texas 77550-7999
Investment Manager
Securities Management & Research, Inc.
One Moody Plaza
Galveston, Texas 77550-7999
Insurer
American National Insurance Company
One Moody Plaza
Galveston, Texas 77550-7999
[AMERICAN NATIONAL ARTWORK HERE]
[BAR CODE HERE]
Form 5774 4-96
30
<PAGE>
INVE$TRAC
GOLD
Variable Annuity Contracts
PROSPECTUS
FOR
GROUP UNALLOCATED
VARIABLE ANNUITY CONTRACTS
ISSUED BY
AMERICAN NATIONAL INSURANCE COMPANY
American National Insurance Company
<PAGE>
THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT BE LAWFULLY MADE.
NO DEALER, SALESMAN, OR OTHER PERSON IS
AUTHORIZED TO GIVE ANY INFORMATION OR
MAKE ANY REPRESENTATIONS IN CONNECTION
WITH THIS OFFERING OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON.
<PAGE>
VARIABLE ANNUITY CONTRACTS
ISSUED BY
AMERICAN NATIONAL INSURANCE COMPANY
ONE MOODY PLAZA, GALVESTON, TEXAS 77550-7999
(409) 763-4661
This Prospectus describes the group unallocated form of Variable Annuity
Contracts (the "Contract") offered by American National Insurance Company
("American National"). The Contract is designed to provide an investment
vehicle for the accumulation of capital on a tax-deferred basis for retirement
or other long-term purposes.
Unlike traditional guaranteed annuities, the Contract provides
Accumulation Values which are based on and vary with the investment performance
of Subaccounts of the American National Variable Annuity Separate Account (the
"Separate Account") and/or the American National Fixed Account. The assets of
the Subaccounts are invested in the portfolios of American National Investment
Accounts, Inc. (the "American National Fund") and in the portfolios of Variable
Insurance Products Fund and Variable Insurance Products Fund II (sometimes
referred to, collectively, as the "Fidelity Funds"). The portfolios of the
American National Fund and the portfolios of the Fidelity Funds that are
available for investment will sometimes be referred to, individually, as an
"Eligible Portfolio" and, collectively, as the "Eligible Portfolios."
The Contractowner may request that all or a portion of the Accumulation
Value of the Contract be annuitized. At that time, a portion of the
Accumulation Value is allocated to the Fixed Account and annuity payments are
made according to the option provided by the Plan.
The Separate Account is registered with the Securities and Exchange
Commission (the "SEC") under the Investment Company Act of 1940 (the "1940
Act") as a unit investment trust, which is a type of investment company. The
Separate Account currently has fourteen separate Subaccounts: the AN Money
Market, the AN Growth, the Balanced, the Managed, the Investment Grade Bond,
the Asset Manager, the Index 500, the FID Money Market, the Equity-Income,
the High Income, the FID Growth, the Overseas, the Contrafund and the Asset
Manager: Growth Subaccounts. The assets of such Subaccounts are invested in
shares of a corresponding Eligible Portfolio. The accompanying prospectuses for
the American National Fund and the Fidelity Funds describe the investment
objectives, policies and the risks of each of the Eligible Portfolios.
The Fixed Account is funded by the general assets of American National.
Although the Contract is designed primarily to offer benefits based on
investment performance, all or a portion of the Accumulation Value can be in
the form of a traditional guaranteed annuity.
The Contractowner has the right to examine a Contract and return it to
American National during what is generally known as the "free look" period.
American National will then refund the greater of all Purchase Payments made by
the Contractowner or the Accumulation Value plus the amount of any charges for
state premium taxes, mortality and expense risk and advisory fees. The "free
look" period is established by state law and generally runs ten days after the
Contractowner receives the Contract. State law generally does not provide such
a "free look" period for the Plan Participants.
This Prospectus sets forth the information that a prospective investor
should know before investing. A Statement of Additional Information about the
Contract is free and may be obtained by writing American National at the
address above. The Statement of Additional Information which has the same date
as this Prospectus, has been filed with the Securities and Exchange Commission.
The Table of Contents of such Statement of Additional Information is set forth
in this Prospectus on page 21.
This Prospectus is valid only when accompanied by
Current Prospectuses For The American National Investment Accounts, Inc.,
Variable Insurance Products Fund and Variable Insurance Products Fund II
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, OR BY ANY STATE SECURITIES
REGULATORY AUTHORITY, NOR HAS THE COMMISSION, OR ANY STATE
SECURITIES REGULATORY AUTHORITY,
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Please Read This Prospectus Carefully And Retain It For Future Reference.
The Date of This Prospectus is April 30, 1996.
2
<PAGE>
TABLE OF CONTENTS
Page
Glossary of Terms.................................................... 4
Summary of the Contracts............................................. 5
Purpose of the Contracts..................................... 5
Investment Options........................................... 5
Purchasing a Variable Annuity Contract....................... 5
Allocations and Transfers.................................... 5
Death Benefit................................................ 5
Surrenders from the Contract................................. 5
How Annuity Payments are Determined.......................... 5
Your Right to Cancel the Variable Annuity Contract........... 5
Summary of Expenses.................................................. 6
Expenses..................................................... 6
American National Insurance Company and the Separate Account. 9
American National Insurance Company.......................... 9
The Separate Account......................................... 9
The American National Fund................................... 9
The Fidelity Funds........................................... 10
Addition, Deletion or Substitution of Investments.................... 11
Fixed Account........................................................ 12
Contract............................................................. 13
Purpose of the Contract...................................... 13
Type of Contract............................................. 13
Contract Application and Purchase Payments................... 13
Allocation of Purchase Payments.............................. 13
Crediting of Accumulation Units.............................. 13
Determining the Accumulation Unit Values..................... 13
Transfers.................................................... 13
Contractowner Inquiries.............................................. 15
Charges and Deductions............................................... 15
Surrender Charge............................................. 15
Other Charges................................................ 15
(a) Administrative Charges................................... 15
(b) State Premium Taxes...................................... 15
(c) Mortality and Expense Risk Fee........................... 15
(d) Charges for Taxes........................................ 15
(e) Exchange Fee............................................. 15
Exceptions to Charges........................................ 15
Distributions Under the Contract..................................... 16
Full and Partial Surrenders.................................. 16
Annuity Payments..................................................... 17
Annuity Options.............................................. 17
Annuity Provisions........................................... 17
Federal Tax Matters.................................................. 18
Introduction................................................. 18
Taxation of Annuities in General............................. 18
Qualified Contracts.......................................... 18
Performance.......................................................... 18
Distributor of the Contracts......................................... 19
Safekeeping of the Separate Account's Assets......................... 19
Voting Rights........................................................ 19
Legal Matters........................................................ 19
State Regulation of American National................................ 20
Legal Proceedings.................................................... 20
Experts.............................................................. 20
Additional Information............................................... 20
Financial Statements................................................. 20
Table of Contents of Statement of Additional Information............. 21
3
<PAGE>
GLOSSARY OF TERMS
The following definitions may be useful in reading this Prospectus. Certain
additional terms are defined in the text.
Accumulation Period - The period from the date Accumulation Units are first
purchased under a Contract to the date the Contract is surrendered for its then
current value.
Accumulation Unit - A standard of measurement used with respect to each
Subaccount to calculate the value of a Contract during the Accumulation Period.
The value of an Accumulation Unit fluctuates with the value of the shares of
the corresponding Eligible Portfolio owned by each Subaccount less any
applicable deductions (see "Charges and Deductions," page 15).
Accumulation Unit Value - The value of an Accumulation Unit.
Accumulation Value - The Accumulation Value of a Contract is the sum of: (i)
the total Accumulation Units in Subaccounts times the respective Accumulation
Unit Values of such Subaccounts, and (ii) the Contractowner's value in the
Fixed Account.
Contract - A Variable Annuity Contract issued pursuant to this Prospectus
which sets forth the obligations and contractual promises which American
National makes to the Contractowner.
Contractowner - The entity entitled to exercise rights of ownership in a
Contract prior to termination of the Contract.
Contract Year - The period from the date the first Purchase Payment is
credited to the immediately preceding day of the succeeding year. (February 29
will be treated as February 28 for the purpose of this definition).
Deferred Annuity Contract - A Contract in which annuity payments commence at
some future date specified by the Contractowner.
Eligible Portfolio - A Portfolio of The American National Fund or the
Fidelity Funds which corresponds to and in which a Subaccount can be invested.
Fixed Account - An account that is a part of American National's General
Account to which all or a portion of Net Purchase Payments and transfers may be
allocated for accumulation at fixed rates of interest.
General Account - The General Account of American National which includes
all of American National's assets except those assets segregated into its
separate accounts.
Group Unallocated Contract - A Contract between the Contractowner and
American National under which all Accumulation Units are credited to one
accumulation account.
Immediate Annuity - A Contract purchased with a single Purchase Payment,
which provides immediate annuity payments on an annual, semiannual, quarterly
or monthly schedule to the Contractowner.
Mortality and Expense Risk Fee - The amount payable to American National for
accepting mortality and expense risks.
Net Purchase Payment - The Purchase Payment less any government entity
premium tax charge.
Non-Qualified Contract - A Contract issued in connection with a retirement
plan that does not receive favorable tax treatment under the Internal Revenue
Code.
Plan - A document or agreement defining the retirement or other benefits and
those eligible to receive them. The Plan is not a part of a Contract and
American National is not a party to a Plan.
Plan Participant - a participant in a Plan.
Portfolio - A separate series of capital securities designed to meet
specified investment objectives. The American National Fund currently consists
of four portfolios, all of which are Eligible Portfolios. The Fidelity Funds
currently consist of ten portfolios, all of which are Eligible Portfolios.
Purchase Payment - A payment made into a Contract.
Qualified Contract - A Contract issued in connection with a Plan that
receives favorable tax treatment under the Internal Revenue Code of 1986.
Subaccount - A subdivision of the Separate Account. Each Subaccount invests
exclusively in the shares of a corresponding Eligible Portfolio.
Valuation Date - A valuation date is each day on which the New York Stock
Exchange ("NYSE") is open for trading.
Valuation Period - The period commencing at the close of regular trading on
the NYSE on one Valuation Date and ending at the close of regular trading on
the NYSE on the next succeeding Valuation Date.
Variable Annuity - An annuity providing Accumulation Value which varies in
dollar amount depending on the investment results of the American National Fund
or the Fidelity Funds.
4
<PAGE>
SUMMARY OF THE CONTRACTS
Purpose of the Contracts
The purpose of the Contract is to provide Accumulation Values which are
expected to reflect changes in the cost of living to a greater degree than a
traditional guaranteed annuity. The Contract offers Contractowners the
opportunity to vary the Accumulation Value based on the performance of the
investments chosen by the Contractowner
There is no assurance that a Subaccount will obtain its investment
objective. Because a Variable Annuity's value is based on the investment
performance of Eligible Portfolios and is not guaranteed, a Variable Annuity
Contract entails more investment risk than a traditional guaranteed annuity.
There is also American National's Fixed Account option for Contractowners
who prefer more conservative investments. (See Fixed Account, page 12.)
Investment Options
Net Purchase Payments may be invested in the Subaccounts and/or in American
National's Fixed Account. The fourteen Subaccounts are: the AN Money Market,
the AN Growth, the Balanced, the Managed, the Investment Grade Bond, the Asset
Manager, the Index 500, the FID Money Market, the Equity-Income, the High
Income, FID Growth, the Overseas, the Contrafund and the Asset Manager: Growth
Subaccounts. Each of the Subaccounts invests exclusively in the shares of a
corresponding Eligible Portfolio. Each such Subaccount and corresponding
Eligible Portfolio has a different investment objective (See "The American
National Fund" at page 9, and "The Fidelity Funds" at page 10.)
Purchasing a Variable Annuity Contract
If a legal entity wishes to purchase a Contract, the legal entity must
complete an application and pay the minimum initial Purchase Payment to
American National's home office.
Allocation and Transfers
Net Purchase Payments will be initially allocated to each Subaccount and/or
American National's Fixed Account as instructed in the application. Thereafter,
the allocation may be changed by the Contractowner.
Transfers can be made between Subaccounts and American National's Fixed
Account. American National allows twelve free transfers per Contract Year. Any
additional transfer will be subject to a $10.00 exchange fee. Transfers out of
the Fixed Account are limited as described in the section "TRANSFERS" on page
13.
Transfers and allocation changes can be made by either writing to American
National's home office or by telephone instructions. A Telephone Transfer
Authorization Form must to be on file at American National's home office before
telephone instructions will be allowed.
Death Benefit
The death benefit, if any will be determined by the provisions of the Plan
pursuant to which the Contract is issued.
Surrenders from the Contract
All or part of a Accumulation Value may be surrendered upon the
Contractowner's written request. The surrender is subject to a Surrender
Charge. Contracts purchased in connection with retirement plans may be subject
to restrictions imposed by the Plan. The sum of surrender charges and
distribution expense charges will never be more than 9.0% of total Purchase
Payments paid.
How Annuity Payments Are Determined
The Contractowner may request that all or a portion of the Accumulation
Value of the Contract be annuitized. At that time, a portion of the
Accumulation Value is allocated to the Fixed Account and annuity payments are
made according to the option provided by the Plan. There are a number of
different annuity options, each of which provides a different level and number
of annuity payments. The annuity options include payments for the life of a
Plan Participant, payments for the life of an Plan Participant with a guarantee
that such payments will continue for at least 10 or 20 years, or payments made
jointly to a Plan Participant and another named individual with a right of
survivorship (See Annuity Options, page 17.)
Your Right to Cancel the Variable Annuity Contract
The "free look" Period
State law requires that Contractowners be given a "free look" period,
generally running ten days after the Contractowner receives the Contract,
within which the Contractowner may return the Contract to American National's
home office. State law does not generally provide a "free look" period for the
Plan Participants. If a Contract is returned during the Contractowner's "free
look" period, American National will then refund the greater of all Purchase
Payments made or the Accumulation Value plus the amount of any charges for
state premium taxes, mortality and expense risk and advisory fees. (See
"Contract Application and Purchase Payments," page 13.)
5
<PAGE>
SUMMARY OF EXPENSES
Expenses
The purpose of the following table is to illustrate the costs and expenses
that are borne, directly and indirectly, by Contractowners. The information set
forth should be considered together with the narrative provided under the
heading "Charges and Deductions" in this Prospectus. In addition to the
expenses listed below, premium taxes may also be applicable.
CONTRACTOWNER TRANSACTION EXPENSES
Sales Load as a percentage of Purchase Payments.................... 0%
Deferred Sales Load ("Surrender Charge")
A Surrender Charge is imposed based upon the Contract Year in which the
withdrawal is made. The Surrender Charge is deducted from the remaining
Accumulation Value, or, if the remaining Accumulation Value is insufficient to
cover the Surrender Charge, a portion of the Surrender Charge will be deducted
from the withdrawal amount. Such Surrender Charge will be a percentage of each
withdrawal as illustrated in the following table:
Contract Years Applicable Surrender Charge
as a Percentage of Each Withdrawal
1...................... 4.0
2...................... 3.5
3...................... 3.0
4...................... 2.5
5...................... 2.0
6...................... 1.5
7...................... 1.0
8 and thereafter....... 0.0
Exchange Fee $10.
(there is no exchange fee for the first twelve transfers)
Annual Contract Fee $ 0.
Separate Account Annual Expenses
(as a percent of average net assets)
Mortality Risk Fee 0.40%
Expense Risk Fee 0.45%
Administrative Asset Fee 0.10%
Total Separate Account Annual Expense 0.95%
AN Money Market Portfolio Annual Expenses
(as a percentage of average net assets)
Management Fees after expense reimbursement ***0.52%
Other Expenses 0.39%
Total AN Money Market Portfolio Annual Expense 0.91%
*Without reimbursement the management fees would have been 0.75% and the
total portfolio annual expense would have been 1.14%.
AN Growth Portfolio Annual Expenses
(as a percentage of average net assets)
Management Fees after reimbursement * **0.52%
Other Expenses 0.38%
Total AN Growth Portfolio Annual Expenses 0.90%
*Without reimbursement the management fees would have been 0.75% and the
total portfolio annual expense would have been 1.13%.
Balanced Portfolio Annual Expenses
(as a percentage of average net assets)
Management Fees after reimbursement * **0.46%
Other Expenses 0.50%
Total Balanced Portfolio Annual Expenses 0.96%
*Without reimbursement the management fees would have been 0.75% and the
total portfolio annual expense would have been 1.25%.
Managed Portfolio Annual Expenses
(as a percentage of average net assets)
Management Fees after reimbursement * **0.50%
Other Expenses 0.48%
Total Managed Portfolio Annual Expenses 0.98%
*Without reimbursement the management fees would have been 0.75% and the
total portfolio annual expense would have been 1.23%.
**Under its Administrative Service Agreement with the Fund, Securities
Management and Research, Inc. ("SM&R"), the Fund's Investment Adviser and
Manager, has agreed to pay (or to reimburse each Portfolio for) each
Portfolio's expenses (including the advisory fee and administrative service fee
paid to SM&R, but exclusive of interest, commissions and other expenses
incidental to portfolio transactions) in excess of 1.50% per year of such
Portfolio's average daily net assets. In addition, SM&R has entered into a
separate undertaking with the Fund effective May 1, 1994 until April 30, 1997,
pursuant to which SM&R has agreed to reimburse the Money Market Portfolio and
the Growth Portfolio for expenses in excess of .87%; the Balanced Portfolio for
expenses in excess of .90% and the Managed Portfolio for expenses in excess of
.93%, of each of such Portfolios' average daily net assets during such period.
SM&R is under no obligation to renew this undertaking for any Portfolio at the
end of such period.
Investment Grade Bond Portfolio Annual Expenses
(as a percentage of average net assets)
Management Fees 0.45%
Other Expenses 0.14%
Total Investment Grade Bond Portfolio
Annual Expenses 0.59%
6
<PAGE>
Asset Manager Portfolio Annual Expenses
(as a percentage of average net assets)
Management Fees 0.71%
Other Expenses 0.08%
Total Asset Manager Portfolio Annual Expenses after reduction *0.79%
*A portion of the brokerage commissions the portfolio paid was used to
reduce its expenses. Without this reduction, total portfolio expenses would
have been 0.81%.
Index 500 Portfolio Annual Expenses
(as a percentage of average net assets)
Management Fees 0.00%
Other Expenses 0.28%
Total Index 500 Portfolio Annual Expenses after reduction *0.28%
*The portfolio's expenses were voluntarily reduced by the portfolio's
investment adviser. Absent reimbursement, management fees, other expenses and
total portfolio expenses would have been 0.28%, 0.19% and 0.47%, respectively.
FID Money Market Portfolio Annual Expenses
(as a percentage of average net assets)
Management Fees 0.24%
Other Expenses 0.09%
Total Asset Manager Portfolio Annual Expenses 0.33%
Equity-Income Portfolio Annual Expenses
(as a percentage of average net assets)
Management Fees 0.51%
Other Expenses 0.10%
Total Equity-Income Portfolio Annual Expenses after reduction 0.61%
High Income Portfolio Annual Expenses
(as a percentage of average net assets)
Management Fees 0.60%
Other Expenses 0.11%
Total High Income Portfolio Annual Expenses 0.71%
FID Growth Portfolio Annual Expenses
(as a percentage of average net assets)
Management Fees 0.61%
Other Expenses 0.09%
Total FID Growth Portfolio Annual Expenses after reduction 0.70%
Overseas Portfolio Annual Expenses
(as a percentage of average net assets)
Management Fees 0.76%
Other Expenses 0.15%
Total Overseas Portfolio Annual Expenses 0.91%
Contrafund Portfolio Annual Expenses
(as a percentage of average net assets)
Management Fees 0.61%
Other Expenses 0.11%
Total Contrafund Portfolio Annual Expenses *0.72%
*A portion of the brokerage commissions the portfolio paid was used to reduce
its expenses. Without the deduction, total portfolio expenses would have been
0.73%.
Asset Manager: Growth Portfolio Annual Expenses
(as a percentage of average net assets)
Management Fees 0.71%
Other Expenses 0.29%
Total Asset Manager: Growth Portfolio Annual Expenses *0.93%
*A portion of the brokerage commissions the portfolio paid was used to
reduce its expenses. Without the deduction, total portfolio expenses would have
been 1.13%. The portfolio's expenses were voluntarily reduced by the
portfolio's investment advisor. Absent reimbursement, management fee,other
expenses and total expenses would have been 0.71%, 0.42% and 1.13%,
respectively.
7
<PAGE>
Example: Group Unallocated Contract
If you surrender your Group Unallocated Contract at the end of the
applicable time period:
You would pay the following expenses on a $1,000 investment, assuming 5%
annual return on assets:
Fund 1 Year 3 Years 5 Years 10 Years
AN Money Market Portfolio $60 $92 $125 $219
AN Growth Portfolio $60 91 124 218
Balanced Portfolio $61 93 127 224
Managed Portfolio $61 94 128 227
Investment Grade Bond Portfolio $57 82 108 185
Asset Manager Portfolio $59 88 118 206
Index 500 Portfolio $54 73 92 150
FID Money Market Portfolio $55 74 95 156
Equity-Income Portfolio $57 83 109 187
High Income Portfolio $58 86 114 198
FID Growth Portfolio $58 85 114 197
Overseas Portfolio $60 92 125 219
Contrafund Portfolio $58 86 115 199
Asset Manager: Growth Portfolio $61 94 129 229
If you do not surrender your Group Unallocated Contract:
You would pay the following expenses on a $1,000 investment, assuming 5%
annual return on assets:
Fund 1 Year 3 Years 5 Years 10 Years
AN Money Market Portfolio $20 $60 $102 $219
AN Growth Portfolio $20 60 101 218
Balanced Portfolio $21 61 105 224
Managed Portfolio $21 62 106 227
Investment Grade Bond Portfolio $17 50 85 185
Asset Manager Portfolio $19 56 96 206
Index 500 Portfolio $14 40 69 150
FID Money Market Portfolio $15 42 72 156
Equity-Income Portfolio $17 51 86 187
High Income Portfolio $18 54 92 198
FID Growth Portfolio $18 53 91 197
Overseas Portfolio $20 60 102 219
Contrafund Portfolio $18 54 92 199
Asset Manager: Growth Portfolio $21 63 107 229
The examples should not be considered to be a representation of past or
future expenses, and the examples do not include the deduction of state premium
taxes which may be assessed by a number of states.
The purpose of the preceding table is to assist Contractowners in
understanding the various costs and expenses that a Contractowner will bear
directly or indirectly and, thus, the table reflects expenses of both the
Separate Account and the American National Fund and/or the Fidelity Funds.
Actual expenses may be greater or lesser than those shown. The example assumes
a 5% annual rate of return pursuant to the requirements of the SEC. This
hypothetical rate of return is not intended to be representative of past or
future performance of an Eligible Portfolio. For a more complete description of
the various costs and expenses of the American National Fund and the Fidelity
Funds, see their Prospectuses.
8
<PAGE>
AMERICAN NATIONAL INSURANCE COMPANY
AND THE SEPARATE ACCOUNT
American National Insurance Company
American National is a stock life insurance company chartered in 1905 in the
State of Texas. It is licensed to do life insurance business in 49 states, the
District of Columbia, Puerto Rico, Guam, and American Samoa. American
National's home office is located at the American National Insurance Building,
One Moody Plaza, Galveston, Texas 77550-7999. The Moody Foundation (the
"Foundation"), a charitable foundation established for charitable and
educational purposes, owns approximately 23.7% of American National's common
stock and the Libbie S. Moody Trust, a private trust, owns approximately 37.6%
of such shares. Robert L. Moody ("RLM"), Chairman of the Board and a Director
of American National, RLM's son, Ross R. Moody, and Frances Moody Newman, RLM's
mother, are trustees of the Foundation.
The Moody National Bank of Galveston (the "Bank") is trustee of the Libbie
S. Moody Trust. RLM is Chairman of the Board and Chief Executive Officer of the
Bank and of Moody Bank Holding Company, Inc. ("MBHC"), the Bank's controlling
stockholder. RLM is also Chairman of the Board and President of Moody
Bancshares, Inc. ("Bancshares"), MBHC's sole shareholder. The Three R Trusts,
trusts established by RLM for the benefit of his children, own 100% of
Bancshares' Class B stock (which elects a majority of Bancshares' directors)
and 47.5% of its Class A Stock. The trustee of the Three R Trusts is Irwin M.
Herz, Jr., a partner in Greer, Herz & Adams, L.L.P., 18th Floor, One Moody
Plaza, Galveston, Texas, General Counsel to American National, the Bank,
Bancshares, MBHC, the American National Fund and Securities Management and
Research, Inc.
American National's total assets on December 31, 1995 were $5,770,926,692 on
a statutory basis.
American National writes life, health and accident insurance and annuities.
The Separate Account
The Separate Account was established by American National on July 30, 1991
pursuant to the insurance laws of the State of Texas. American National is the
depositor of the Separate Account. Under Texas law, the assets of the Separate
Account are held exclusively for the benefit of Contractowners and persons
entitled to payments under the Contracts. At present the Separate Account is
used only to support Variable Annuity Contracts. American National is the legal
holder of the assets in the Separate Account and will at all times maintain
assets in the Separate Account with a total market value at least equal to the
reserve and other contract liabilities for the Separate Account. The assets of
the Separate Account attributable to the Contracts are not chargeable with
liabilities arising out of any other business which American National may
conduct. Income, as well as both realized and unrealized gains or losses from
the assets of the Separate Account, is credited to or charged against the
Separate Account without regard to income, gains or losses arising out of other
business that American National conducts. Nevertheless, these assets shall be
available to cover the liabilities of American National's General Account, but
only to the extent that the Separate Account's assets exceed its liabilities
arising under the Contract's supported by it. In addition to these assets, the
Separate Account assets may include accumulations of the charges American
National makes against Policies and Contracts participating in the Separate
Account. From time to time, any such assets due American National may be
transferred in cash to American National's General Account. Obligations under
the Variable Annuity Contracts are obligations of American National.
The Separate Account is registered with the Securities and Exchange
Commission ("SEC") under the Investment Company Act of 1940 ("1940 Act") as a
unit investment trust, which is a type of investment company. Such registration
does not involve any SEC supervision of the management or investment policies
or practices of the Separate Account. For state law purposes, the Separate
Account is treated as a division of American National. There are currently
fourteen Subaccounts within the Separate Account available to Contractowners
and each invests only in a corresponding Eligible Portfolio.
The American National Fund
Four of the Subaccounts of the Separate Account invest in the shares of a
corresponding portfolio of the American National Fund. The American National
Fund is registered with the SEC under the 1940 Act as an open-end diversified,
series management investment company. The American National Fund shares are
also purchased by American National Variable Life Separate Account.
The Separate Account will purchase and redeem shares from the American
National Fund at net asset value.
The investment objectives and policies of each portfolio of the American
National Fund are summarized below. There is no assurance that any of the
portfolios will achieve their stated objectives. More detailed information,
including a description of investment objectives, policies, restrictions,
expenses and risks, is in the prospectus for the American National Fund, which
must accompany this Prospectus and which should be read carefully together with
this Prospectus and retained.
The American National Fund currently has a Money Market Portfolio, a Growth
Portfolio, a Balanced Portfolio and a Managed Portfolio.
AN Money Market Portfolio ... seeks to obtain as high a level of current
income as is consistent with preserving capital and providing liquidity. The
Money Market Portfolio will invest only in money market instruments of high
quality determined by the American National Fund's investment adviser. The
Money Market Portfolio of the American National Funds shall be referred to
herein as "AN Money Market."
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AN Growth Portfolio ... seeks to achieve capital appreciation normally through
the purchase of common stocks (although such Portfolio investments are not
restricted to any one type of security). Capital appreciation may also be
sought in other types of securities, including bonds and preferred stocks. This
Growth Portfolio of the American National Fund is referred to herein as "AN
Growth."
Balanced Portfolio ... seeks to provide conservation of principal,
reasonable current income and long-term capital appreciation by investing in a
balanced portfolio of fixed-income securities such as bonds, preferred stock
and short-term obligations combined with common stocks and securities
convertible into common stocks.
Managed Portfolio ... seeks to achieve growth of capital and/or current
income by investing in a diversified portfolio consisting of, at the American
National Fund's investment adviser's discretion, money market instruments, debt
securities, stock or a combination thereof. It is anticipated that over longer
periods a larger portion of the Managed Portfolio will consist of equity
securities.
Securities Management and Research, Inc. ("SM&R") is the investment adviser
and manager of the American National Fund. It also provides investment advisory
and portfolio management services to American National and other clients. It
maintains a staff of experienced investment personnel and related support
facilities. Detailed information about the American National Fund Management
Fees is contained in the American National Fund Prospectus. Such fees exceed
the industry average for advisory and administrative fees.
The Fidelity Funds
Pursuant to a Participation Agreement between American National, Fidelity
Distributors Corporation and the Fidelity Funds, ten of the Subaccounts of the
Separate Account invest in the shares of ten corresponding portfolios of the
Fidelity Funds. The Fidelity Funds are registered with the SEC under the 1940
Act as open-end diversified, series management investment companies organized
as Massachusetts business trusts. The Fidelity Funds' shares are also purchased
by American National Variable Life Separate Account.
Fidelity Management & Research Company ("FMR"), the Fidelity Funds'
investment adviser, was founded in 1946. FMR provides a number of mutual funds
and other clients with investment research and portfolio management services.
It maintains a large staff of experienced investment personal and a full
compliment of related support facilities. Fidelity Management & Research (U.K.)
Inc. ("FMR U.K.") and Fidelity Management and Research (Far East) Inc. ("FMR
Far East") are wholly owned subsidiaries of FMR that provide research with
respect to foreign securities. FMR U.K. and FMR Far East maintain their
principal business offices in London and Tokyo, respectively. As of December
31, 1995, FMR advised funds having more than 22 million shareholder accounts
with a total value of more than $270 billion. Fidelity Distributors Corporation
distributes shares for the Fidelity Funds. FMR Corp. is the holding company for
the Fidelity companies. Through ownership of voting common stock, Edward C.
Johnson 3d, President and a Trustee of the Fidelity Funds, and various trusts
for the benefit of Johnson family members form a controlling group with respect
to FMR Corp.
The Management, Distribution and Service Fees for the Fidelity Funds are
explained in the Fidelity Funds' Prospectuses.
The Separate Account will purchase and redeem shares from the Fidelity Funds
at net asset value.
The investment objectives and policies of each portfolio of the Fidelity
Funds are summarized below. There is no assurance that any of the portfolios
will achieve their stated objectives. More detailed information, including a
description of investment objectives, policies, restrictions, expenses and
risks, is in the prospectus for each of the Fidelity Funds which must
accompany this Prospectus and which should be read carefully together with this
Prospectus and retained.
Investment Grade Bond Portfolio ... seeks as high a level of current income
as is consistent with the preservation of capital by investing in a broad range
of investment-grade fixed-income securities. The Investment Grade Bond
Portfolio will maintain a dollar-weighted average portfolio maturity of ten
years or less.
Equity-Income Portfolio ... seeks reasonable income by investing primarily
in income-producing equity securities. In choosing these securities, the
Equity-Income Portfolio will also consider the potential for capital
appreciation. The Equity-Income Portfolio's goal is to achieve a yield which
exceeds the composite yield on the securities comprising the Standard & Poor's
500 Composite Stock Price Index.
High Income Portfolio ... seeks to obtain a high level of current income by
investing primarily in high-yielding, lower-rated, fixed-income securities,
while also considering growth of capital. High yielding, lower-rated securities
present higher risks of untimely interest and principal payments, default and
price volatility than higher-quality securities, and may present problems of
liquidity and valuation. See the prospectus describing the High Income
Portfolio for more information on the risks of investing in high-yielding,
lower-rated securities.
FID Growth Portfolio ... seeks to achieve capital appreciation. The FID
Growth Portfolio normally purchases common stocks, although its investments are
not restricted to any one type of security. Capital appreciation may also be
found in other types of securities, including bonds and preferred stocks. This
Growth Portfolio of the Fidelity Funds shall be referred to herein as "FID
Growth."
Overseas Portfolio ... seeks long term growth of capital primarily through
investments in foreign securities. Overseas Portfolio provides a means for
investors to diversify their own portfolios by participating in companies and
economies outside of the United States.
FID Money Market Portfolio ... seeks to obtain as high a level of current
income as is consistent with preserving capital and providing liquidity. The
Money Market Portfolio will invest only in high quality U.S. dollar denominated
money market securities of domestic and foreign issuers. The Money Market
Portfolio of the Fidelity Funds shall be referred to herein as "FID Money
Market."
Asset Manager Portfolio ... seeks high total return with reduced risk over
the long-term by allocating its assets among stocks, bonds and short-term
fixed-income instruments.
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Index 500 Portfolio ... seeks to provide investment results that correspond
to the total return (i.e., the combination of capital charges and income) of
common stocks publicly traded in the United States. In seeking this objective,
the Index 500 Portfolio attempts to duplicate the composition and total return
of the Standard & Poor's 500 Composite Stock Price Index while keeping
transaction cost and other expense low. The Index 500 Portfolio is designed as
a long-term investment option.
Contrafund Portfolio ... seeks capital appreciation by investing in
companies FMR believes to be undervalued due to an overly pessimistic appraisal
by the public. In pursuit of the fund's goal, FMR looks for companies with the
following characteristics: (i) unpopular, but improvements seem possible due to
developments such as a change in management, a new product line, or an improved
balance sheet, (ii) recently popular, but temporarily out of favor due to
short-term or onetime factors, or (iii) undervalued compared to other companies
in the same industry.
Asset Manager: Growth Portfolio ... seeks to maximize total return over the
long term by allocating its assets among stocks, bonds, and short-term
instruments. Allocating among different types of investments allows the fund to
take advantage of opportunities wherever they may occur, but also subjects the
fund to the risks of a given investment type.
Addition, Deletion or Substitution of Investments
American National reserves the right, subject to applicable law, to make
additions to, deletions from, or substitutions for the shares that are held in
the Separate Account or that the Separate Account may purchase. If the shares
of an Eligible Portfolio are no longer available for investment or if in
American National's judgment further investment in any Eligible Portfolio
should become in appropriate in view of the purposes of the Separate Account,
American National may redeem the shares, if any, of that Eligible Portfolio,
and substitute shares of another registered open-end management company.
American National will not substitute any shares attributable to a
Contractowner's interest in a Subaccount of the Separate Account without notice
and prior approval of the SEC and possible state insurance authorities, to the
extent required by the 1940 Act or other applicable law. The Separate Account
may, to the extent permitted by law, purchase other securities from other
contracts or permit a conversion between contracts upon request by the
Contractowners.
American National also reserves the right to establish additional
Subaccounts of the Separate Account, each of which would invest in shares
corresponding to a new portfolio of the American National Fund or in shares of
another investment company having a corresponding investment objective.
American National may eliminate one or more Subaccounts with SEC approval if
marketing needs, tax considerations or investment conditions warrant. Any new
Subaccounts may be made available to existing Contractowners on a basis to be
determined by American National.
If any of these substitutions or changes are made, American National may by
appropriate endorsement change the Contract to reflect the substitution or
change. If American National deems it to be in the best interest of
Contractowners, and subject to any approvals that may be required under
applicable law, the Separate Account may be operated as a management company
under the 1940 Act, it may be registered under that Act if registration is no
longer required, or it may be combined with other American National Separate
Accounts. In addition, American National may, when permitted by law, restrict
or eliminate any voting rights as to the Separate Account.
The Contractowner will be notified of any material change in the investment
policy of any Eligible Portfolio in which the Contractowner has an interest.
Unless Contractowners have directed a different allocation, shares of the
American National Fund and the Fidelity Funds will be redeemed, pro rata, to
the extent necessary for American National to collect charges under the
Contract, to pay the surrender value upon full or partial surrenders of the
Contracts, to make policy loans, to provide benefits under the Contract, or to
transfer assets from one Subaccount to another or to the Fixed Account. Any
dividend or capital gain distribution received from an Eligible Portfolio will
be reinvested immediately at net asset value in shares of that Eligible
Portfolio and retained as assets of the corresponding subaccount.
Each Contractowner should periodically consider the allocation among the
Subaccounts and the Fixed Account in light of current market conditions and the
investment risks attendant to investing in the American National Fund's and the
Fidelity Funds' various portfolios.
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FIXED ACCOUNT
Contractowners may elect to allocate all or a portion of their Net Purchase
Payment to the Fixed Account and, subject to certain limitations, they may also
transfer Accumulation Value from the Subaccount to the Fixed Account. Transfers
from the Fixed Account to the Subaccount are restricted.
Net Purchase Payments allocated to the Fixed Account and transfers from a
Subaccount to the Fixed Account are placed in the General Account of American
National. The General Account includes all of American National's assets except
those assets segregated in its separate accounts. American National has the
sole discretion to invest the assets of its General Account, subject to
applicable law. American National bears an investment risk for all amounts
allocated or transferred to the Fixed Account and interest credited thereto,
less any deduction for charges and expenses, whereas the Contractowner bears
the investment risk that the declared rate will fall to a lower rate after the
expiration of a declared rate period. Because of exemptive and exclusionary
provisions, interests in the General Account have not been registered under the
Securities Act of 1933 (the "1933 Act"), nor is the General Account registered
as an investment company under the 1940 Act. Accordingly, neither the General
Account nor any interest therein is generally subject to the provisions of the
1933 or 1940 Act. American National understands that the staff of the SEC has
not reviewed the disclosures in this Prospectus relating to the Fixed Account
portion of the Contract; however, disclosures regarding the Fixed Account
portion of the Contract may be subject to generally applicable provisions of
the federal securities laws regarding the accuracy and completeness of
statements made in prospectuses.
American National guarantees that it will credit interest to the Fixed
Account at an effective annual rate of at least 3.0% compounded daily. American
National may, at its discretion, declare higher interest rate(s) for amounts
allocated or transferred to the Fixed Account.
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CONTRACT
Purpose of the Contract
The Contract described in retirement plans and trusts as amended (the "Code"),
for favorable tax treatment ("Qualified Contracts") and for use with plans and
trusts which are not so qualified ("Non-Qualified Contracts"). See section
entitled "Federal Tax Matters-Qualified Contracts," page 18 for further details.
The terms of the Contracts may only be changed by mutual agreement between
American National and each Contractowner, except as described in "Substitution
of Investments, on page 10; for changes required to make the Contracts comply
with any law or regulation issued by a governmental agency to which American
National or the Contracts are subject; and for changes necessary to assure
continued qualification of the Contracts under the Internal Revenue Code.
Type of Contract
This Prospectus offers a Group Unallocated Contract which is a form of a
Deferred Annuity Contract.
The availability of the Contract described herein in any particular state is
dependent upon the approval of that Contract by that state.
Contract Application and Purchase Payments
An entity wishing to purchase a Contract must complete an application and
provide the required initial Purchase Payment which will be sent to American
National's home office. See page 13, Allocation of Purchase Payments. If an
incomplete application cannot be completed within five days of its receipt, the
applicant will be notified of the reasons for the delay and any payment
received will be returned immediately unless the applicant specifically
consents to have American National retain the payment pending completion of the
application.
As indicated earlier, Contractowners have a "free look" period, generally
ten days, within which a Contractowner can return the Contract to American
National's home office and American National will then refund the greater of
all Purchase Payments made by the Contractowner or the Accumulation Value plus
any premium taxes, mortality and risk fees and advisory fees deducted. The
"free look" period is established by state law and generally runs ten days
after the Contractowner receives the Contract. The "free look" period is not
based on the date which a Plan Participant receives a Contract. Therefore, the
"free look" period may have expired before a Plan Participant makes his or her
initial contribution to a Plan. American National requires that all Net
Purchase Payments received by American National during the 15-day period after
the Date of Issue are allocated to the Subaccount of the Money Market Portfolio
of the Fidelity Funds. Thereafter, such amounts allocated to the Subaccount of
the Money Market Portfolio and Net Purchase Payments paid are allocated as
directed by the Contractowner. No surrender charges are assessed on premiums
returned during this "free look" period.
The Contract requires a minimum initial payment of $2000 and subsequent
payments of $100. The maximum Purchase Payment is $1,000,000 without the prior
approval of American National. These amounts may be changed at the sole
discretion of American National. In addition, American National reserves the
right to terminate any Contract for certain specified reasons, including failure
of the Accumulation Value to meet certain specified minimums.
Allocation of Purchase Payments
After the "free look" period, Net Purchase Payments will be allocated to
each Subaccount in accordance with the written instructions contained in the
application. The Contractowner may by written instruction to the home office
indicate one or more Subaccounts and/or the Fixed Account to which a specified
portion or portions of the Net Purchase Payment should be applied. Changes in
allocation of future Net Purchase Payments may be made at any time by written
instruction to the American National home office or by telephone instruction,
provided that a properly completed Telephone Transfer Authorization Form is on
file with American National.
Crediting of Accumulation Units
All Net Purchase Payments received will purchase Accumulation Units in the
Subaccount selected and/or allocated to the Fixed Account. The number of
Accumulation Units purchased is determined by dividing the dollar amount of the
Net Purchase Payment allocated to the Subaccount by the Accumulation Unit Value
for that Subaccount next computed following allocation of the Net Purchase
Payment to such Subaccount. The Net Purchase Payments are not credited to a
Subaccount until actually received by American National. A Plan Participant's
contribution to a Plan will not be credited to the Contract until the
Contractowner forwards such contribution to American National.
Determining the Accumulation Unit Values
The Accumulation Unit Value of each Subaccount reflects the investment
performance of that Subaccount. The Accumulation Unit Value of each Subaccount
shall be calculated by: (i) multiplying the per share net asset value of the
corresponding Eligible Portfolio on the Valuation Date times the number of
shares held by the Subaccount, after the purchase or redemption of any shares
on that date; (ii) subtracting therefrom a charge for the administrative fee,
distribution expense charge and the mortality and expense risk fee for that
Subaccount and (iii) dividing the result by the total number of units held in
the Subaccount on the Valuation Date, before the purchase or redemption of any
units on that date. The Accumulation Unit Value for each Subaccount shall be
calculated at the end of each Valuation Period. Investment performance of the
portfolio companies, portfolio company expenses, and the deduction of certain
charges affect the Accumulation Unit Value for each Subaccount.
Transfers
Accumulation Value may be transferred among the subaccounts and/or the Fixed
Accounts subject to the following limits. The transfer may be requested in
person, by mail or by telephone. A
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Telephone Transfer Authorization Form must be on file at American National's
home office before any telephone instructions will be allowed. The total amount
transferred from each subaccount must be at least $250., or the balance of the
Subaccount, if less. The minimum amount that may remain in a Subaccount after a
transfer is $100. American National will effectuate transfers and determine all
values in connection with transfers on the later of the date designated in the
request or at the end of the Valuation Period during which the transfer request
is received. Transfers from the Fixed Account to the Subaccounts are allowed
subject to the following limits. Once each Contract Year, during the thirty-day
period beginning on the Contract anniversary, the maximum amount which may be
transferred from the Fixed Account to the Subaccounts is the greater of (a)
twenty-five percent of the amount in the Fixed Account, or (b) $1,000. The
first twelve transfers per Contract Year will be permitted free of charge. Any
additional transfers will be charged a $10.00 fee at the time of the transfer
and will be deducted from the amount transferred. (See Exchange Fee, page 15.)
American National may at any time revoke or modify the transfer privilege,
including the number and minimum amount transferable.
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CONTRACTOWNER INQUIRIES
Contractowner inquiries should be addressed to American National Insurance
Company, One Moody Plaza, Galveston, Texas 77550-7999, or made by calling
763-4661.
CHARGES AND DEDUCTIONS
Surrender Charge
Since no deduction for a sales charge is made from Purchase Payments, a
contingent deferred sales charge (a "Surrender Charge") is imposed on certain
partial and full withdrawals to cover certain expenses relating to the
distribution of the Contracts. A Surrender Charge is imposed based upon the
Contract Year in which the withdrawal is made. The Surrender Charge is a
maximum of 4% of the Accumulation Value withdrawn and grades down to zero in
the eighth Contract Year.
In no event will the sum of all surrender charges and the distribution
expense charges assessed exceed 9.0% of total Purchase Payments paid. (See the
chart under "Contractowner Transaction Expenses" at Page 6.)
Other Charges
(a) Administrative Charges
American National's administrative charges consist of a daily
administrative asset fee. The administrative charge is to cover all fixed
and varying costs of administering the Contract. This charge is designed
only to reimburse American National for the cost of administration and is
not intended to produce a profit.
An administrative asset fee is charged daily at an annual rate of 0.10% to
each Subaccount to cover the varying costs of a Contract.
(b) State Premium Taxes
An amount for state premium taxes (which presently range from 0% to 3.5%)
will be deducted if assessed by a given state. American National's current
practice is to deduct any state premium tax imposed by a State from
Purchase Payments made under the Contracts when the payments are received
by American National.
(c) Mortality and Expense Risk Fee
American National assumes a number of risks under the Contracts. While
annuity payments will vary in accordance with the investment performance of
the selected Subaccounts, the amount of such payments will not be decreased
because of adverse mortality experiences of Plan Participants as a class or
because of an increase in actual expenses of American National over the
expense charges provided for in the Contracts. American National assumes
the risk that Plan Participants as a class may live longer than expected
(necessitating a greater number of annuity payments) and that fees deducted
may not prove sufficient to cover its actual costs. In assuming these
risks, American National agrees to continue annuity payments under life-
contingent annuity options determined in accordance with the annuity tables
and other provisions of the Contracts, to the Plan Participant or other
payee for as long as he or she may live. American National assumes the risk
that fees deducted may not prove sufficient to cover its actual costs.
For American National's contractual promises to accept this risks, a 0.85%
per annum Mortality and Expense Risk Fee will be assessed daily against the
Separate Account based on the value of its net assets. American National
could realize a gain or a loss from such fee depending on the mortality and
expenses actually incurred.
(d) Charges for Taxes
Currently, no charge will be made against the Separate Account for federal,
state or local income taxes. American National may, however, make such a
charge in the future if income or gains within the Separate Account will
incur any federal, or any significant state or local tax treatment or if
tax treatment of American National changes. Charges for such taxes, if any,
would be deducted from the Separate Account and/or the Fixed Account.
American National would not realize a profit on such taxes with respect to
the Contracts.
(e) Exchange Fee
An exchange fee of $10.00 will be imposed for each additional transfer
among the Subaccounts and Fixed Account after twelve transfers per Contract
Year to compensate American National for the costs of effecting the
transfer. Since the fee reimburses American National for the cost of
effecting the transfer only, American National does not expect to make any
profit from the exchange fee. This fee will be deducted from the amount
transferred. The amount of the transfer charge will not be increased.
Exceptions to Charges
The surrender charges or other administrative charges or deductions may be
reduced for sales of Contracts to a trustee, employer, or similar entity
representing a group where American National determines that such sales result
in savings of sales or administrative expenses. In addition, directors,
officers and bona fide full-time employees (and their spouses and minor
children) of SM&R and American National are permitted to purchase Contracts
with substantial reduction of the surrender charges or other administrative
charges or deductions.
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DISTRIBUTIONS UNDER THE CONTRACT
Full and Partial Surrenders
To the extent permitted by the Plan under the terms of which the Contract
was purchased, any Contract may be surrendered in full or partially during the
Accumulation Period, subject to the limitations discussed herein. If a partial
surrender would leave less than $250 total Accumulation Value in the Contract,
then the Contract will be fully surrendered. A request for a partial surrender
should specify the allocation of that surrender, as applicable, from the Fixed
Account and each Subaccount. In the absence of specification, such surrender
shall be allocated among the Subaccounts and the Fixed Account in the same
proportion as the Accumulation Value in each Subaccount and the Fixed Account
bears to the total Accumulation Value of the Contract on the date of surrender.
Upon receipt of an application for a partial or full surrender of a Contract
signed by the Contractowner, the applicable Accumulation Unit Value will be
that next determined after such application is received in American National's
home office. The Accumulation Value of a Contract which is available for full
surrender may be determined by multiplying the number of Accumulation Units for
each Subaccount times the Accumulation Unit Value at that time, adding any
Accumulation Value in the Fixed Account and deducting any surrender charge.
Partial or full surrenders will be paid within seven days of receipt of the
written request in proper form, except as described below.
If at the time the Contractowner makes a surrender request, he or she has
not provided American National with a written election not to have federal and
state income taxes withheld, American National is required by law to withhold
such taxes from the taxable portion of any surrender, and to remit that amount
to the federal and/or state government.
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ANNUITY PAYMENTS
All or a part of the Accumulation Value may be applied to any of the Annuity
Options. Any such Accumulation Value will be transferred into the Fixed Account
and annuity payments will be based upon the annuity option selected. If any of
the Accumulation Value is applied to an Annuity Option, such Accumulation Value
shall be segregated and annuity payments shall be made according to the annuity
option selected and to the Plan Participant designated by the Contractowner.
Accumulation Value which is applied to an Annuity Option is treated as an
immediate variable annuity contract for the Plan Participant designated,
however the Contract is not subject to the onetime $100 charge normally
applicable to individual immediate variable annuity contracts issued by
American National. (See the Prospectus for the individual forms of Variable
Annuity Contracts issued by American National for more information.)
Annuity Options
The following annuity options are available to Contractowners. The Plans
will specify which of these options are available to individual Plan
Participants.
Option 1 - Life Annuity - Annuity payment payable monthly during the
lifetime of an individual, ceasing with the last annuity payment due prior to
the death of the individual. This option offers the maximum level of monthly
annuity payments since there is no provision for a minimum number of annuity
payments or a death benefit for beneficiaries. It would be possible under this
option for an individual to receive only one annuity payment if death occurred
prior to the due date of the second annuity payment, two if death occurred
before the third annuity payment date, etc.
Option 2 - Life Annuity with 10 or 20 Years Certain - An annuity payable
monthly during the lifetime of an individual with payments made for a period
certain of not less than 10 or 20 years, as elected. The annuity payments will
be continued to a designated beneficiary until the end of the period certain.
Option 3 - Joint and Survivor Annuity - An annuity payable monthly during
the joint lifetime of an individual and another named individual and thereafter
during the lifetime of the survivor, ceasing with the last annuity payment due
prior to the death of the survivor. It would be possible under this option, for
only one annuity payment to be made if both individuals under the option died
prior to the second annuity payment date, or only two annuity payments if both
died prior to the third annuity payment date, etc.
Option 4 - Deposit Option - The amount due may be left on deposit with
American National for placement in its Fixed Account with interest at the rate
of not less than 3.0% per year. Interest will be paid annually, semiannually,
quarterly or monthly as elected. This option may not be available under certain
Qualified Contracts.
Option 5 - IRC Age Recalculation - An annuity payment based upon the Plan
Participant's life expectancy, or the joint life expectancies of the Plan
Participant and a beneficiary, at the Plan Participant's attained age (and the
beneficiary's attained or adjusted age, if applicable) each year as computed in
reference to actuarial tables prescribed by the Treasury Secretary, until the
amount applied, adjusted daily by the investment results, is exhausted.
At any time, any amount remaining under Option 4 may be withdrawn as a lump
sum or, if that amount is at least $2,000, may be applied under any one of the
first three Options. The lump sum payment requested will be paid within seven
days of receipt of the request at the home office based on the value next
computed after receipt of the request.
Other Annuity Forms - Provision may be made for annuity payments in any
reasonable arrangement mutually agreed upon.
If the beneficiary dies while receiving annuity payments certain under
Option 2, 3, or 5 above, the present value will be paid in a lump sum to the
estate of the beneficiary.
Annuity Provisions
Non-qualified life contingent annuity payments are determined on the basis
of the mortality table (1983 Table a projected to 1993, and 3.0% interest)
which generally reflects the age and sex of the Plan Participant and the type
of annuity option selected.
Qualified life contingent annuity payments are determined on the basis of
the mortality table [1983 Table a (female) projected to 1993, and 3.0%
interest] which generally reflects the age of the Plan Participant and type of
annuity option selected.
Payment of any amount upon surrender, partial withdrawal or transfer may be
postponed whenever: (i) the New York Stock Exchange is closed other than
customary weekend and holiday closings, or trading on the New York Stock
Exchange is restricted as determined by the Securities and Exchange Commission
("Commission"); (ii) the Commission by order permits postponement for the
protection of the Contractowners; or (iii) an emergency exists, as determined
by the Commission, as a result of which disposal of securities is not
reasonably practicable or it is not reasonably practicable to determine the
value of the Separate Account's net assets.
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FEDERAL TAX MATTERS
Introduction
The following discussion is general in nature and is not intended as tax
advice for each Contractowner. It does not address the tax consequences
resulting from all situations in which a Contractowner may maintain such a
Contract. Tax advice should be sought from a competent source prior to
purchase. The discussion below is based on American National's understanding of
the present federal tax law as currently interpreted by the Internal Revenue
Service. No representation is made as to the continuation of present federal
tax law or its current interpretation. State tax law may also be applicable.
Taxation of Annuities in General
Since a Group Unallocated Contract is not purchased directly by individuals,
those portions of the Code relating to individual ownership are not applicable
to the Group Unallocated Contractowner. Certain provisions of Section 72 of the
Code would apply if the Contractowner is a corporation or is not a natural
person and the Contract is not maintained under a plan which has favorable tax
treatment under the Code.
The United States Treasury Department has adopted regulations under Section
817(h) of the Code which set standards of diversification for the investment
underlying the Contract, in order for the Contract to be treated as annuities
for income tax purposes. American National intends that these diversification
standards will be satisfied. American National reserves the right to amend the
Contract in any way necessary to maintain compliance with these standards.
Qualified Contracts
The Group Unallocated Contract is designed for use with several types of
qualifying Plans subject to Code sections 401 and 457. The tax rules applicable
to such qualified Plans vary according to the type of Plan and the terms and
conditions of the Plan itself. Participants in qualified Plans may include
business owners (both self-employed and stockholders) and their employees for
whom pension and profit sharing plans have been established and government
employees covered by a section 457 deferred compensation plan.
As a general rule, purchase payments made by or for participants in
qualified Plans are not subject to taxation at the time such payments are made
in the Contract. In their capacity as Plan trustees or administrators,
Contractowners are responsible for the communication of appropriate information
about the operation of the Plan and the tax consequences of distributing
benefits. Distribution of benefits and tax withholding thereon is the sole
responsibility of the Contractowner.
Due to the complexity of the tax rules associated with the sponsorship and
operation of qualified Plans, entities contemplating establishment of such
Plans should seek advice from competent sources with respect to the
responsibilities and obligations associated with such Plans.
PERFORMANCE
Performance information for the Subaccounts may appear in reports and
advertising to current and prospective Contractowners. The performance
information is based on historical investment experience of the Subaccounts and
the Funds and does not indicate or represent future performance.
Total returns are based on the overall dollar or percentage change in value
of a hypothetical investment. Total return quotations reflect changes in Fund
share price, the automatic reinvestment by the separate account of all
distributions and the deduction of applicable annuity charges (including any
contingent deferred sales charges that would apply if a Contractowner
surrendered the Contract at the end of the period indicated). Quotations of
total return may also be shown that do not take into account certain
contractual charges such as a contingent deferred sales load. The total return
percentage will be higher under this method than under the standard method
described above.
A cumulative total return reflects performance over a stated period of time.
An average annual total return reflects the hypothetical annually compounded
return that would have produced the same cumulative total return if the
performance had been constant over the entire period. Because average annual
total returns tend to smooth out variations in a Subaccount's returns, you
should recognize that they are not the same as actual year-by-year results.
Some Subaccounts may also advertise yield. These measures reflect the income
generated by an investment in the Subaccount over a specified period of time.
This income is annualized and shown as a percentage. Yields do not take into
account capital gains or losses or the contingent deferred sales load.
The FID Money Market Subaccount may advertise its current and effective
yield. Current yield reflects the income generated by an investment in the
Subaccount over a 7-day period. Effective yield is calculated in a similar
manner except that income earned is assumed to be reinvested. The Investment
Grade Bond and the High Income Subaccounts may advertise a 30-day yield which
reflects the income generated by an investment in the Subaccount over a 30-day
period.
18
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DISTRIBUTOR OF THE CONTRACTS
SM&R, One Moody Plaza, Galveston, Texas 77550-7999, a wholly-owned
subsidiary of American National will act as the principal underwriter of the
Contracts pursuant to a Distribution and Administrative Services Agreement
between itself and American National. SM&R was organized under the laws of the
State of Florida in 1964, and is a registered broker/dealer pursuant to the
Securities Exchange Act of 1934 and a member of the National Association of
Securities Dealers. (See the American National Fund's Prospectus.) Registered
representatives of SM&R who sell Variable Annuities will receive commissions
from SM&R based upon a commission schedule. After issuance of the Contract,
broker-dealers will receive sales commissions aggregating no more than 6.1% of
the Purchase Payments. In addition to such sales commissions, after the first
Contract year, broker-dealers who have entered into distribution agreements
with American National may receive an annual override commission of no more
than 0.25% of the Contract's accumulation value. SM&R and American National may
authorize other registered broker/dealers and their Registered Representatives
to sell the Contracts subject to applicable law.
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS
American National holds the assets of the Separate Account. The assets are
kept physically segregated and held separate and apart from the General Account
assets, except for the Fixed Account. American National maintains records of
all purchases and redemptions of shares of Eligible Portfolios by each of the
Subaccounts.
VOTING RIGHTS
All of the assets held in the Subaccounts of the Separate Account will be
invested in shares of the corresponding Eligible Portfolios. American National
is the legal holder of those shares and as such has the right to vote to elect
the Board of Directors of the American National Fund and the Fidelity Funds, to
vote upon certain matters that are required by the 1940 Act to be approved or
ratified by the shareholders of a mutual fund, and to vote upon any other
matter that may be voted upon at a shareholders' meeting. To the extent
required by law, American National will vote all shares of Eligible Portfolios
held in the Separate Account at regular and special shareholder meetings in
accordance with instructions received from Contractowners. The number of votes
for which each Contractowner has the right to provide instructions will be
determined as of the record date selected by the Board of Directors of the
American National Fund or the Fidelity Funds, as the case may be. American
National will furnish Contractowners with the proper forms, materials and
reports to enable them to give it these instructions.
The number of shares of an Eligible Portfolio in a Subaccount for which
instructions may be given by a Contractowner is determined by dividing the
Accumulation Value held in that Subaccount by the net asset value of one share
in the corresponding Eligible Portfolio. Fractional shares will be counted.
Shares of an Eligible Portfolio held in each Subaccount for which no timely
instructions from Contractowners are received and shares of an Eligible
Portfolio held in each Subaccount which do not support Contractowner interests
will be voted by American National in the same proportion as those shares in
that Subaccount for which timely instructions are received. Voting instructions
to abstain on any item to be voted will be applied on a pro rata basis to
reduce the votes eligible to be cast. Should applicable federal securities laws
or regulations permit, American National may elect to vote shares of the
Eligible Portfolios in its own right.
Matters on which Contractowners may give voting instructions include the
following: (1) election of the Board of Directors of the American National
Fund or the Fidelity Funds (2) ratification of the independent accountant of
the American National Fund or the Fidelity Funds; (3) approval of the
Investment Advisory Agreement for the Eligible Portfolio(s) corresponding to
the Contractowner's selected Subaccount; (4) any change in the fundamental
investment Policies of the Eligible Portfolio(s) corresponding to the
Contractowner's selected Subaccount(s); and (5) any other matter requiring a
vote of the shareholders of the American National Fund or the Fidelity Funds
under the 1940 Act.
LEGAL MATTERS
All matters of Texas law pertaining to the Contract, including the validity
of the Contract and American National's right to issue the Contract under Texas
Insurance Law, have been passed upon by Greer, Herz and Adams, L.L.P., General
Counsel.
19
<PAGE>
STATE REGULATION OF AMERICAN NATIONAL
American National, a stock life insurance company organized under the laws
of Texas, is subject to regulation by the Texas Department of Insurance. On or
before March 1 of each year a National Association of Insurance Commissioners
convention blank covering the operations and reporting on the financial
condition of American National and the Separate Account as of December 31 of
the preceding year must be filed with the Texas Department of Insurance.
Periodically, the Texas Department of Insurance examines the liabilities and
reserves of American National and the Separate Account and certifies their
adequacy. A full examination of American National's operations is also
conducted periodically by the National Association of Insurance Commissioners.
In addition, American National is subject to the insurance laws and
regulations of other states within which it is licensed or may become licensed
to operate. The Contracts offered by the Prospectus are available in the
various states as approved. Generally, the Insurance Department of any other
state applies the laws of the state of domicile in determining permissible
investments. However, differences in state laws may require American National
to offer a Contract in one or more states which are more favorable to a
Contractowner than provisions in a Contract offered in other states.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Separate Account is a party or
to which the assets of the Separate Account are subject. American National is
not involved in any litigation that is of material importance in relation to
its total assets or that relates to the Separate Account.
EXPERTS
The consolidated financial statements of American National Insurance Company
and subsidiaries as of December 31, 1995 and for the year then ended, and the
financial statements of American National Variable Annuity Separate Account as
of December 31, 1995 and for the year then ended, included in the registration
statement have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
accounting and auditing in giving said report.
The consolidated financial statements of American National Insurance Company
and subsidiaries as of December 31, 1994 and for the year then ended, and the
financial statements of American National Variable Annuity Separate Account as
of December 31, 1994 and for the period April 20, 1994, through December 31,
1994, included in this prospectus and elsewhere in the registration statement
have been audited by KPMG Peat Marwick LLP, independent public accountants, as
indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said report.
ADDITIONAL INFORMATION
A registration statement has been filed with the Securities and Exchange
Commission, under the Securities Act of 1933, as amended, with respect to the
Contract offered hereby. This Prospectus does not contain all the information
set forth in the registration statement and the amendments and exhibits to the
registration statement, to all of which reference is made for further
information concerning the Separate Account, American National and the Contract
offered hereby. Statements contained in this Prospectus as to the contents of
the Contract and other legal instruments are summaries. For a complete
statement of the terms thereof reference is made to such instruments as filed.
FINANCIAL STATEMENTS
The financial statements of American National should be considered only as
bearing on the ability of American National to meet its obligations under the
Contracts. They should not be considered as bearing on the investment
performance of the assets held in the Separate Account. The financial
statements can be found in the Statement of Additional Information.
20
<PAGE>
TABLE OF CONTENTS
OF STATEMENT OF ADDITIONAL INFORMATION
Page
The Contract.................................................... 3
Valuation of Accumulation Units................................. 3
Computation of Variable Annuity Payments........................ 3
Annuity Unit Value.............................................. 3
Summary......................................................... 4
Exceptions to Charges........................................... 4
Termination of Contract......................................... 4
Group Unallocated Contract...................................... 4
Additional Federal Tax Matters.................................. 4
Limits on Subsequent Purchase Payments
(Under the Internal Revenue Code).............................. 4
Taxation of American National................................... 5
Tax Status of the Contracts..................................... 5
Assignment...................................................... 5
Distribution of the Contracts................................... 5
Safekeeping of Separate Account Assets.......................... 5
State Regulation of American National........................... 5
Records and Reports............................................. 6
Performance..................................................... 6
Total Return.................................................... 6
Yields.......................................................... 6
Legal Matters................................................... 7
Legal Proceedings............................................... 7
Experts......................................................... 7
Additional Information.......................................... 7
Financial Statements............................................ 7
Financials...................................................... 8
21
<PAGE>
Distributor
Securities Management & Research, Inc.
One Moody Plaza
Galveston, Texas 77550-7999
Custodian
American National Insurance Company
One Moody Plaza
Galveston, Texas 77550-7999
Investment Manager
Securities Management & Research, Inc.
One Moody Plaza
Galveston, Texas 77550-7999
Insurer
American National Insurance Company
One Moody Plaza
Galveston, Texas 77550-7999
[LOGO OF AMERICAN NATIONAL APPEARS HERE]
Form 1005
[BAR CODE HERE]
22
<PAGE>
AMERICAN NATIONAL INSURANCE COMPANY
ONE MOODY PLAZA
GALVESTON, TEXAS 77550-7999
AMERICAN NATIONAL
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Additional Information
April 30, 1996
Relating to the Prospectuses dated April 30, 1996
(409) 763-4661
INVESTMENT MANAGER
Securities Management and Research, Inc.
One Moody Plaza
Galveston, Texas 77550-7999
UNDERWRITER
Securities Management and Research, Inc.
One Moody Plaza
Galveston, Texas 77550-7999
CUSTODIAN
American National Insurance Company
One Moody Plaza
Galveston, Texas 77550-7999
INDEPENDENT AUDITORS
Arthur Andersen LLP
711 Louisiana, Suite 1300
Houston, Texas 77002-2786
1
<PAGE>
AMERICAN NATIONAL INSURANCE COMPANY
One Moody Plaza
Galveston, Texas 77550-7999
AMERICAN NATIONAL
VARIABLE ANNUITY SEPARATE ACCOUNT
STATEMENT OF
ADDITIONAL INFORMATION
April 30, 1996
This Statement of Additional Information expands upon subjects discussed in
the current Prospectuses for the Variable Annuity Contracts ("the Contracts")
offered by American National Insurance Company ("American National"). You may
obtain a copy of the Prospectuses dated April 30, 1996, by calling (409)
763-4661, or writing to American National Insurance Company, One Moody Plaza,
Galveston, Texas 77550-7999. Terms used in the current Prospectuses for the
Contract 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 CONTRACT.
TABLE OF CONTENTS
Page
The Contract.............................................................. 3
Valuation of Accumulation Units........................................... 3
Computation of Variable Annuity Payments.................................. 3
Annuity Unit Value........................................................ 3
Summary................................................................... 4
Exceptions to Charges..................................................... 4
Termination of Contract................................................... 4
Group Unallocated Contract................................................ 4
Additional Federal Tax Matters............................................ 4
Limits on Subsequent Purchase Payments (Under the Internal Revenue Code).. 4
Taxation of American National............................................. 5
Tax Status of the Contracts............................................... 5
Assignment................................................................ 5
Distribution of the Contracts............................................. 5
Safekeeping of Separate Account Assets.................................... 5
State Regulation of American National..................................... 5
Records and Reports....................................................... 6
Performance............................................................... 6
Total Return.............................................................. 6
Yields.................................................................... 6
Legal Matters............................................................. 7
Legal Proceedings......................................................... 7
Experts................................................................... 7
Additional Information.................................................... 7
Financial Statements...................................................... 7
Financials................................................................ 8
2
<PAGE>
THE CONTRACT
The following provides additional information about the contracts which
supplements the description in the Prospectus and which may be of interest to
some Contractowners.
Valuation of Accumulation Units
The Accumulation Unit Value for a Subaccount on any day is equal to (a)
divided by (b), where (a) is the net asset value of the corresponding Eligible
Portfolio of the underlying fund owned by each Subaccount less any applicable
deductions and (b) is the number of Accumulation Units of that Subaccount at
the beginning of that day.
Computation of Variable Annuity Payments
The amount of the first variable annuity payment to the annuitant will
depend on the amount of his/her accumulation value applied to affect the
variable annuity as of the tenth day immediately preceding the date annuity
payments commence, the amount of any premium tax owed (if applicable), the
annuity option selected, and the age of the annuitant. The contracts contain
tables indicating the dollar amount of the first annuity payment under annuity
options 1, 2, 3, and 4 for each $1,000 of accumulation value at various ages.
These tables are based upon the 1983 Table a (promulgated by the Society of
Actuaries) and an Assumed Investment Rate (the AIR) of 3.0% per annum.
In any subsequent month, the dollar amount of the variable annuity payment
is determined by multiplying the number of annuity units in the applicable
division(s) by the value of such annuity unit on the tenth day preceding the
due date of such payment. The annuity unit value will increase or decrease in
proportion to the net investment return of the division(s) underlying the
variable annuity since the date of the previous annuity payment, less an
adjustment to neutralize the 3.0% or other AIR referred to above.
Therefore, the dollar amount of variable annuity payments after the first
will vary with the amount by which the net investment return is greater or less
than the 3.0% (or other AIR) per annum. For example, assuming a 3.5% AIR, if an
Eligible Portfolio has a cumulative net investment return of 5% over a one year
period, the first annuity payment in the next year will be approximately 1.5
percentage points greater than the payment on the same date in the preceding
year, and subsequent payments will continue to vary with the investment
experience of the Eligible Portfolio.
If such net investment return is 1% over a one year period, the first
annuity payment in the next year will be approximately 2.5 percentage points
less than the payment on the same date in the preceding year, and subsequent
payments will continue to vary with the investment experience of the applicable
division.
ANNUITY UNIT VALUE
The value of an annuity unit is calculated at the same time that the value
of an accumulation unit is calculated and is based on the same values for
shares of Eligible Portfolios and other assets and liabilities. The following
illustrations show, by use of hypothetical examples, the method of determining
the annuity unit value and the amount of variable annuity payments.
Illustration: Calculation of Annuity Unit Value
Annuity at age 65: Life with 120 payments certain
1. Annuity unit value, beginning of period $ .980000
2. Net investment factor for Period 1.001046
3. Daily adjustment for
3.0% Assumed Investment Rate .999919
4. (2) x (3) 1.000965
5. Annuity unit value, end of period (1) x (4) $ .980946
Illustration: Annuity Payments
Annuity at age 65: Life with 120 payments certain
1. Number of accumulation units at annuity date 10,000.00
2. Accumulation Unit value
(10 days prior to date of first monthly payment) $1.800000
3. Accumulation Value of Contract (1) x (2) $18,000.00
4. First monthly annuity payment per
$1,000 of Accumulation Value $ 5.63
5. First monthly annuity payment (3) x (4) / 1,000 $ 101.34
6. Annuity Unit value
(10 days prior to date of first monthly payment) $ .980000
7. Number of annuity units (5) / (6) 103.408
8. Assume annuity unit value for
second month equal to $ .997000
9. Second monthly annuity payment (7) x (8) $ 103.10
10. Assume annuity unit value for
third month equal to $ .953000
11. Third monthly annuity payment (7) x (10) $ 98.55
3
<PAGE>
SUMMARY
In conclusion, for a variable annuity the key element to pricing the annuity
is unknown; there is no interest rate guarantee made and interest credited will
depend upon actual future results. The technique used to overcome this obstacle
is the calculation of the premium for the annuity using an AIR. The initial
variable annuity payment is based upon this premium; subsequent payments will
increase or decrease depending upon the relationship between the AIR and the
actual investment performance of Eligible Portfolios to be passed to the
annuitant. Suppose an Eligible Portfolio showed a monthly return of 1% after
the first month, the participant's second monthly payment would be (assuming 30
days between payments):
$100 x 1.01 = $100.75
-----
(1.03) 30/365
Hence, we have shown that the AIR methodology means that at each payment
date the value in a participant's annuity is updated to reflect actual
investment results to date, but continued assumption of the AIR for the
remainder of the annuity period.
Exceptions To Charges
The surrender charges or other administration charges or deductions may be
reduced for sales of contracts to a trustee, employer or similar entity
representing a group where such sales result in savings of sales or
administrative expenses. The entitlement to such a reduction in surrender
charges or other charges or deductions will be determined by American National
based on the following factors: (1) the size of the group; (2) the total amount
of purchase payments to be received from a group; (3) the purpose for which the
contracts are being purchased; (4) the nature of the group for which the
contracts are being purchased; and (5) any other circumstances of which
American National is not presently aware but that could result in reduced sales
or administrative expenses.
Directors, officers and bona fide full-time employees (and their spouses and
minor children) of Securities Management and Research, Inc. and American
National are permitted to purchase contracts with substantial reduction of
surrender charges or other administrative charges or deductions. No sales
commission will be paid on such contracts.
Termination of Contract
American National reserves the right to terminate any Group Unallocated
Contract under the following circumstances: (1) the contract value is less than
$2,000 after the end of the first contract year, or $5,000 after the end of the
third contract year; (2) the Plan pursuant to which the contract is issued is
terminated for any reason or becomes disqualified under Section 401 or 403 of
the Internal Revenue Code or (3) for any reason after the eighth policy year.
American National may also terminate individual contracts during the
accumulation period if certain conditions exist. These conditions are that (1)
no purchase payments have been received by American National for the contract
for three full years; (2) the Accumulation Value of the contract is less than
$200; and (3) the value of the contract allocated to the Fixed Account,
projected to the maturity date, would produce installments of less than $20 per
month using contractual guarantees. Termination of a Contract may have adverse
tax consequences. (See the prospectus at "Federal Tax Matters," page 18.)
Group Unallocated Contracts
Group Unallocated Contract is a contract between the Contractowner and
American National. Individual accounts are not established for Plan
Participants unless the one of the annuity payment options is selected.
ADDITIONAL FEDERAL TAX MATTERS
Limits On Subsequent Purchase Payments
(Under The Internal Revenue Code)
The amount of subsequent Purchase Payments may be increased or decreased on
any date, and submission of a Purchase Payment different from the previous
Purchase Payment will automatically effect such an increase or decrease.
However, U.S. Treasury Regulations currently permit only one change to a salary
deduction agreement in any taxable year for contracts issued to qualify under
Section 403(b) of the Internal Revenue Code (the Code). Contracts issued under
Section 408(b) of the Code provide that the maximum Purchase Payments for each
Participant for a taxable year shall be $2,000 or other such amount as may
become permissible under amended laws. Contracts issued to qualify under Section
408(k) of the Code provide that the maximum annual Purchase Payment by an
employer for each employee shall be the lesser of 25% of the employee's
compensation or $30,000 or such other amount as may become permissible under
amended law.
Contracts issued to qualify under Section 457 of the Code provide that the
maximum Purchase Payment in any taxable year shall be $7,500 for each
Participant or such other amount as may become permissible under amended law.
Such contracts further provide for an increase in Purchase Payments for one or
more of the Participant's last three taxable years ending before normal
retirement age in accordance with the provisions of the applicable Plan
agreement.
Purchase Payments pursuant to the salary deduction agreements to contracts
issued under Section 403(b), 408(k), 401(k) or 457 of the Code that are in
excess of $7,000 in a taxable year ($9,500 in the case of Section 403(b)
contracts and the lesser of $7,000 or 1/3 of employee's compensation for 457)
may be subject to adverse tax treatment.
4
<PAGE>
TAXATION OF AMERICAN NATIONAL
American National is taxed as a life insurance company under Part 1 of
Subchapter L of the Code. Since the Separate Account is not an entity separate
from American National and its operations form a part of American National, it
will not be taxed separately as a "regulated investment company" under
Subchapter M of the code. Investment income and realized net capital gains on
Separate Account assets are reinvested and are taken into account in
determining the contract values. As a result, such investment income and
realized net capital gains are automatically retained as part of the reserves
under the Contract. Under existing federal income tax law, American National
believes that the Separate Account's investment income and realized net capital
gains should not be taxed to the extent that such income and gains are retained
as part of the reserves under the Contract.
TAX STATUS OF THE CONTRACTS
To comply with regulations under 817(h) of the Code, the investment of the
Separate Account must be "adequately diversified" in order for the Contracts to
qualify as annuity contracts under section 72 of the code. The Separate
Account, through the underlying funds, intends to comply with the
diversification requirements prescribed by the Treasury which affect how the
Separate Account's assets may be invested. American National will monitor
compliance with this requirement. Thus, American National believes that the
Contracts will be treated as annuity contracts for federal tax purposes.
ASSIGNMENT
The Contracts may be assigned by the Contractowner except when issued to
plans or trusts qualified under Section 403(b) or 408 of the Internal Revenue
Code. 401(k) Contracts are not assignable.
DISTRIBUTION OF THE CONTRACTS
Subject to arrangements with American National, the Contracts are sold as
part of a continuous offering by independent broker-dealers who are members of
the National Association of Security Dealers, Inc., and who become licensed to
sell life insurance and variable annuities for American National. Pursuant to a
Distribution and Administrative Services Agreement, Securities Management and
Research, Inc. ("SM&R") acts as the principal underwriter on behalf of American
National for distribution of the Contracts. Under the Agreement, SM&R is to use
commercially reasonable efforts to sell the Contracts through registered
representatives. In connection with these sales activities SM&R is responsible
for (i) compliance with the requirements of any applicable state broker-dealer
regulations and the Securities Exchange Act of 1934, (ii) keeping correct
records and books of account in accordance with Rules 17a-3 and 17a-4 of the
Securities Exchange Act, (iii) training agents of American National for the sale
of Contracts, and (iv) forwarding all purchase payments under the Contracts
directly to American National. SM&R is not entitled to any renumeration for its
services as underwriter under the Distribution and Administrative Services
Agreement, however SM&R is entitled to reimbursement for all reasonable expenses
incurred in connection with its duties as underwriter.
Safekeeping of the Separate Account Assets
All assets of the Separate Account are held in the custody and safekeeping
of American National. The assets are kept physically segregated and held
separate and apart from the General Account assets. American National maintains
records of all purchases and redemptions of shares of the Eligible Portfolios
by each of the Subaccounts.
State Regulation of American National
American National, a stock life insurance company organized under the laws
of Texas, is subject to regulation by the Texas Department of Insurance. On or
before March 1 of each year an NAIC convention blank covering the operations
and reporting on the financial condition of American National and the Separate
Account as of December 31 of the preceding year must be filed with the Texas
Department of Insurance. Periodically, the Texas Department of Insurance
examines the liabilities and reserves of American National and the Separate
Account and certifies their adequacy. A full examination of American National's
operations is also conducted periodically by the National Association of
Insurance Commissioners.
In addition, American National is subject to the insurance laws and
regulations of other states within which it is licensed or may become licensed
to operate. The Policies offered by the Prospectus are available in the various
states as approved. Generally, the Insurance Department of any other state
applies the laws of the state of domicile in determining permissible
investment. However, differences in state laws may require American National to
offer a Contract in one or more states which has suicide, incontestability and
refund provisions which are more favorable to a Contractowner than provisions
in a Contract offered in other states.
5
<PAGE>
RECORDS AND REPORTS
Reports concerning each Contract will be sent annually to each
Contractowner. Contractowners will additionally receive annual and semiannual
reports concerning the underlying funds and annual reports concerning the
Separate Account. Contractowners will also receive confirmations of receipt of
purchase payments, changes in allocation of purchase payments and transfer of
Accumulation Units and Annuity Units.
Performance
Performance information for any Subaccount may be compared, in reports and
advertising to: (1) the Standard & Poor's 500 Composite Stock Price Index ("S &
P 500"), Dow Jones Industrial Average ("DJIA"), Donoghue's Money Market
Institutional Averages; (2) other variable annuity separate accounts or other
investment products tracked by Lipper Analytical Services, Lehman-Brothers,
Morningstar, or the Variable Annuity Research and Data Service, widely used
independent research firms which rank mutual funds and other investment
companies by overall performance, investment objectives, and assets; and (3)
the Consumer Price Index (measure for inflation) to assess the real rate of
return from an investment in a contact. Unmanaged indices may assume the
reinvestment of dividends but generally do not reflect deductions for annuity
charges and investment management costs.
Total returns, yields and other performance information may be quoted
numerically or in a table, graph, or similar illustration. Reports and
advertising may also contain other information including (i) the ranking of any
subaccount derived from rankings of variable annuity separate accounts or other
investment products tracked by Lipper Analytical Series or by rating services,
companies, publications or other persons who rank separate accounts or other
investment products on overall performance or other criteria, and (ii) the
effect of tax deferred compounding on a subaccount's investment returns, or
returns in general, which may be illustrated by graphs, charts, or otherwise,
and which may include a comparison, at various points in time, of the return
from an investment in a Contract (or returns in general) on a tax-deferred basis
(assuming one or more tax rates) with the return on a taxable basis.
Total Return
Total Return quoted in advertising reflects all aspects of a Subaccount's
return, including the automatic reinvestment by the separate account of all
distributions and any change in the Subaccount's value over the period. Average
annual returns are calculated by determining the growth or decline in value of
a hypothetical historical investment in the Subaccount over a stated period,
and then calculating the annually compounded percentage rate that would have
produced the same result if the rate of growth or decline in value had been
constant over the period. For example, a cumulative return of 100% over ten
years would produce an average annual return of 7.18%, which is the steady rate
that would equal 100% growth on a compounded basis in ten years. While average
annual returns are a convenient means of comparing investment alternatives,
investors should realize that the subaccount's performance is not constant over
time, but changes from year to year, and that average annual returns represent
averaged figures as opposed to the actual year-to-year performance of a
subaccount.
Average annual total returns are computed by finding the average annual
compounded rates of return over the periods shown that would equate the initial
amount invested to the withdrawal value, in accordance with the following
formula:
P(1+T)/n/ = ERV where P is a hypothetical investment payment of $1,000, T is the
average annual total return, n is the number of years, and ERV is the withdrawal
value at the end of the periods shown. Since the Contract is intended as a long-
term product, the average annual total returns assume that no money was
withdrawn from the Contract prior to the end of the period.
In addition to average annual returns, the Subaccounts may advertise
unaveraged or cumulative total returns reflecting the simple change in value of
an investment over a stated period.
Yields
Some Subaccounts may also advertise yields. Yields quoted in advertising
reflect the change in value of a hypothetical investment in the Subaccount over
a stated period of time, not taking into account capital gains or losses.
Yields are annualized and stated as a percentage. Yields do not reflect the
impact of any contingent deferred sales load. Yields quoted in advertising may
be based on historical seven day periods. Current yield for the FID Money
Market Subaccount and the AN Money Market Subaccount will reflect the income
generated by a Subaccount over a 7-day period. Current yield is calculated by
determining the net change, exclusive of capital changes, in the value of a
hypothetical account having one Accumulation Unit at the beginning of the
period and dividing the difference by the value of the account at the beginning
of the base period to obtain the base period return, and multiplying the base
period return by (365/7). The resulting yield figure will be carried to the
nearest hundredth of a percent. Effective yield for the FID Money Market
Subaccount and the AN Money Market Subaccount is calculated in a similar
manner to current yield except that investment income is assumed to be
reinvested throughout the year at the 7-day rate. Effective yield is obtained
by taking the base period returns as computed above, and then compounding the
base period return by adding 1, raising the sum to a power equal to (365/7) and
subtracting one from the result, according to the formula Effective Yield =
[(Base Period Return +1)/365/7/] - 1. Since the reinvestment of income is
assumed in the calculation of effective yield, it will generally be higher than
current yield.
A 30-day yield for bond subaccounts will reflect the income generated by a
Subaccount over a 30-day period. Yield will be computed by dividing the net
investment income per Accumulation Unit earned during the period by the maximum
offering price per Accumulation Unit on the last day of the period, according
to the following formula: Yield = 2[((a - b)/cd + 1)/6/-1] where a = net
investment income earned by the applicable portfolio, b = expenses for the
period including expenses charged to the contract owner accounts, c = the
average daily number of Accumulation Units outstanding during the period, and d
= the maximum offering price per Accumulation Unit on the last day of the
period.
6
<PAGE>
LEGAL MATTERS
All matters of Texas law pertaining to the Contract, including the validity
of the Contract and American National's right to issue the Contract under Texas
Insurance Law, have been passed upon by Greer, Herz and Adams, L.L.P., General
Counsel.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Separate Account is a party or
to which the assets of the Separate Account are subject. American National is
not involved in any litigation that is of material importance in relation to its
total assets or that relates to the Separate Account.
EXPERTS
The consolidated financial statements of American National Insurance Company
and subsidiaries as of December 31, 1995 and for the year then ended, and the
financial statements of American National Variable Annuity Separate Account as
of December 31, 1995 and for the year then ended, included in the registration
statement have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
accounting and auditing in giving said report.
The consolidated financial statements of American National Insurance Company
and subsidiaries as of December 31, 1994 and for the year then ended, and the
financial statements of American National Variable Annuity Separate Account as
of December 31, 1994 and for the period April 20, 1994, through December 31,
1994, included in this prospectus and elsewhere in the registration statement
have been audited by KPMG Peat Marwick LLP, independent public accountants, as
indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said report.
ADDITIONAL INFORMATION
A registration statement has been filed with the Securities and Exchange
Commission, under the Securities Act of 1933, as amended, with respect to the
Contract offered hereby. This Statement of Additional Information does not
contain all the information set forth in the registration statement and the
amendments and exhibits to the registration statement, to all of which
reference is made for further information concerning the Separate Account,
American National and the Contracts offered hereby. For a complete statement of
the terms thereof reference is made to such instruments as filed.
FINANCIAL STATEMENTS
The financial statements of American National should be considered only as
bearing on the ability of American National to meet its obligations under the
Contracts. They should not be considered as bearing on the investment
performance of the assets held in the Separate Account.
7
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To The Board of Directors and Contract Owners of American National Variable
Annuity Separate Account:
We have audited the accompanying statement of net assets of the American
National Variable Annuity Separate Account (comprised of American National (AN)
Growth, AN Money Market, AN Balanced, AN Managed, Fidelity VIP Money Market,
Fidelity VIP High Income, Fidelity VIP Equity Income, Fidelity VIP Growth,
Fidelity VIP Overseas, Fidelity VIP Investment Grade Bond, Fidelity VIP Asset
Manager, Fidelity VIP Index 500, Fidelity VIP Contra, and Fidelity VIP Asset
Manager Growth Portfolio Subaccounts) as of December 31, 1995, the related
statement of operations and changes in net assets for the year then ended, and
the condensed financial information for the year ended December 31, 1995. These
financial statements and condensed financial information are the responsibility
of the Account's management. Our responsibility is to express an opinion on
these financial statements and condensed financial information based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of December 31, 1995 by
correspondence with the custodians. 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statement referred to above present fairly, in
all material respects, the financial position of the American National Variable
Annuity Separate Account (comprised of American National (AN) Growth, AN Money
Market, AN Balanced, AN Managed, Fidelity VIP Money Market, Fidelity VIP High
Income, Fidelity VIP Equity Income, Fidelity VIP Growth, Fidelity VIP Overseas,
Fidelity VIP Investment Grade Bond, Fidelity VIP Asset Manager, Fidelity VIP
Index 500, Fidelity VIP Contra, and Fidelity VIP Asset Manager Growth Portfolio
Subaccounts) as of December 31, 1995 and the results of operations, changes in
net assets and condensed financial information for the year then ended, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Houston, Texas
February 16, 1996
8
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To The Board of Directors and Contract Owners of American National Variable
Annuity Separate Account
We have audited the accompanying statement of operations and changes in net
assets of the American National (AN) Growth, AN Money Market, AN Managed,
Fidelity VIP Money Market, Fidelity VIP High Income, Fidelity VIP Equity
Income, Fidelity VIP Growth, Fidelity VIP Overseas, Fidelity VIP Investment
Grade Bond, Fidelity VIP Asset Manager and Fidelity VIP Index 500 Portfolio
Subaccounts of American National Variable Annuity Separate Account and the
condensed financial information (presented in Note 5) for the period April 20,
1994 (commencement of operations) through December 31, 1994. This financial
statement and the condensed financial information are the responsibility of the
Account's management. Our responsibility is to express an opinion on this
financial statement and the condensed financial information based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform our audit to obtain
reasonable assurance about whether the financial statements are free from
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Investments
owned at December 31, 1994 were verified by examination of the underlying
portfolios of the American National Funds or through confirmation for Fidelity
Funds. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the results of operations and changes in net assets
and condensed financial information of the American National (AN) Growth, AN
Money Market, AN Managed, Fidelity VIP Money Market, Fidelity VIP High Income,
Fidelity VIP Equity Income, Fidelity VIP Growth, Fidelity VIP Overseas,
Fidelity VIP Investment Grade Bond, Fidelity VIP Asset Manager, and Fidelity
VIP Index 500 Portfolio Subaccounts of American National Variable Annuity
Separate Account for the period April 20, 1994 through December 31, 1994 in
conformity with generally accepted accounting principles.
[FN]
KPMG PEAT MARWICK LLP
Houston, Texas
February 15, 1995
9
<PAGE>
AMERICAN NATIONAL VARIABLE ANNUITY SEPARATE ACCOUNT
STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
For the year ended December 31, 1995
(In thousands)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------
SUBACCOUNTS
---------------------------------------------------------------------------------
FIDELITY FIDELITY
AN FIDELITY VIP VIP
AN MONEY AN AN VIP HIGH EQUITY
GROWTH MARKET BALANCED MANAGED MONEY INCOME INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO MARKET FUND FUND
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend distributions received $ 7 $ 2 $ 1 $ 6 $ 15 $ -- $ 7
EXPENSES
Charges to contract owners for assuming
mortality and expense risks (3) (1) -- (2) (4) (1) (4)
- -----------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME $ 4 $ 1 $ 1 $ 4 $ 11 $ (1) $ 3
REALIZED GAINS ON SALES
OF INVESTMENTS
Proceeds from sales 11 680 -- 1 1,085 11 33
Cost of investments sold (9) (680) -- (1) (1,085) (11) (29)
- -----------------------------------------------------------------------------------------------------------------------------------
$ 2 $ -- $ -- $ -- $ -- $ -- $ 4
CAPITAL GAINS DISTRIBUTIONS RECEIVED 13 -- -- 7 -- -- 1
UNREALIZED INVESTMENT GAINS 20 -- 1 15 -- 10 57
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 39 $ 1 $ 2 $ 26 $ 11 $ 9 $ 65
TRANSFERS TO SPONSOR FOR BENEFITS
AND TERMINATIONS (1) (2) -- -- -- (1) (16)
PREMIUM PAYMENTS AND OTHER
OPERATING TRANSFERS* 360 11 47 310 197 137 398
- ------------------------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS $398 $ 10 $ 49 $ 336 $ 208 $145 $447
NET ASSETS:
Beginning of period 12 1 -- 9 193 5 5
- ------------------------------------------------------------------------------------------------------------------------------------
End of period $410 $ 11 $ 49 $ 345 $ 401 $150 $452
====================================================================================================================================
FIDELITY FIDELITY
VIP FIDELITY FIDELITY FIDELITY VIP
FIDELITY FIDELITY INVESTMENT VIP VIP VIP ASSET
VIP VIP GRADE ASSET INDEX CONTRA MANAGER
GROWTH OVERSEAS BOND MANAGER 500 FUND GROWTH
INVESTMENT INCOME
Dividend distributions received $ -- $ -- $ -- $ 1 $ -- $ -- $ --
EXPENSES
Charges to contract owners for assuming
mortality and expense risks (2) (2) -- (4) (1) -- --
- -----------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME $ (2) $ (2) $ -- $ (3) $ (1) $ -- $ --
REALIZED GAINS ON SALES
OF INVESTMENTS
Proceeds from sales -- 49 -- 73 7 -- --
Cost of investments sold -- (46) -- (68) (7) -- --
- -----------------------------------------------------------------------------------------------------------------------------------
$ -- $ 3 $ -- $ 5 $ -- $ -- $ --
CAPITAL GAINS DISTRIBUTIONS RECEIVED -- -- -- -- -- -- 1
UNREALIZED INVESTMENT GAINS 16 9 1 41 11 1 --
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 14 $ 10 $ 1 $ 43 $ 10 $ 1 $ 1
TRANSFERS TO SPONSOR FOR BENEFITS
AND TERMINATIONS -- (9) -- (14) -- -- --
PREMIUM PAYMENTS AND OTHER
OPERATING TRANSFERS* 361 159 28 389 111 23 25
- ------------------------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS $375 $ 160 $ 29 $ 418 $ 121 $ 24 $ 26
NET ASSETS:
Beginning of period 2 18 1 8 5 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
End of period $377 $ 178 $ 30 $ 426 $ 126 $ 24 $ 26
====================================================================================================================================
* Includes transfer activity from (to) other portfolios.
See accompanying notes to financial statements.
</TABLE>
10
<PAGE>
AMERICAN NATIONAL VARIABLE ANNUITY SEPARATE ACCOUNT
STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
For the period from April 20 through December 31, 1994
(In thousands)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------
SUBACCOUNTS
---------------------------------------------------------------------------------
FIDELITY FIDELITY
AN FIDELITY VIP VIP
AN MONEY AN VIP HIGH EQUITY
GROWTH MARKET MANAGED MONEY INCOME INCOME
PORTFOLIO PORTFOLIO PORTFOLIO MARKET FUND FUND
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend distributions received $ -- $ -- $ -- $ 2 $ -- $ --
EXPENSES
Charges to contract owners for assuming
mortality and expense risks -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME $ -- $ -- $ -- $ 2 $ -- $ --
REALIZED GAINS ON SALES
OF INVESTMENTS
Proceeds from sales -- 251 -- 1 47 19
Cost of investments sold -- (251) -- (1) (47) (19)
- ------------------------------------------------------------------------------------------------------------------------
$ -- $ -- $ -- $ -- $ -- $ --
CAPITAL GAINS DISTRIBUTIONS RECEIVED 1 -- 1 -- -- --
UNREALIZED INVESTMENT (LOSSES) (1) -- (1) -- -- --
- -------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ -- $ -- $ -- $ 2 $ -- $ --
TRANSFERS TO SPONSOR FOR BENEFITS
AND TERMINATIONS -- -- -- -- -- --
PREMIUM PAYMENTS AND OTHER
OPERATING TRANSFERS* 12 1 9 191 5 5
- -------------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS $ 12 $ 1 $ 9 $ 193 $ 5 $ 5
NET ASSETS:
Beginning of period -- -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------
End of period $ 12 $ 1 $ 9 $ 193 $ 5 $ 5
====================================================================================================================================
FIDELITY
VIP FIDELITY FIDELITY
FIDELITY FIDELITY INVESTMENT VIP VIP
VIP VIP GRADE ASSET INDEX
GROWTH OVERSEAS BOND MANAGER 500
INVESTMENT INCOME
Dividend distributions received $ -- $ -- $ -- $ -- $ --
EXPENSES
Charges to contract owners for assuming
mortality and expense risks -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME $ -- $ -- $ -- $ -- $ --
REALIZED GAINS ON SALES
OF INVESTMENTS
Proceeds from sales 26 23 38 19 --
Cost of investments sold (25) (23) (38) (19) --
- ------------------------------------------------------------------------------------------------------------
$ 1 $ -- $ -- $ -- $ --
CAPITAL GAINS DISTRIBUTIONS RECEIVED -- -- -- -- --
UNREALIZED INVESTMENT (LOSSES) -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 1 $ -- $ -- $ -- $ --
TRANSFERS TO SPONSOR FOR BENEFITS
AND TERMINATIONS -- -- -- -- --
PREMIUM PAYMENTS AND OTHER
OPERATING TRANSFERS* 1 18 1 8 5
- -------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS $ 2 $ 18 $ 1 $ 8 $ 5
NET ASSETS:
Beginning of period -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------
End of period $ 2 $ 18 $ 1 $ 8 $ 5
=============================================================================================================
* Includes transfer activity from (to) other portfolios.
See accompanying notes to financial statements.
</TABLE>
11
<PAGE>
AMERICAN NATIONAL VARIABLE ANNUITY SEPARATE ACCOUNT
STATEMENT OF NET ASSETS
December 31, 1995
(In thousands, except for share and unit information)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------
SUBACCOUNTS
---------------------------------------------------------------------------------
FIDELITY FIDELITY
AN FIDELITY VIP VIP
AN MONEY AN AN VIP HIGH EQUITY
GROWTH MARKET BALANCED MANAGED MONEY INCOME INCOME
ASSETS PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO MARKET FUND FUND
<S> <C> <C> <C> <C> <C> <C> <C>
Investment in shares of Mutual Funds
at net asset value $ 410 $ 11 $ 49 $ 345 $ 401 $ 150 $ 452
===================================================================================================================================
NET ASSETS, representing
Equity of group contract owners $ -- $ -- $ -- $ -- $ -- $ -- $ 53
Equity of individual contract owners 410 11 49 345 401 150 399
- -----------------------------------------------------------------------------------------------------------------------------------
$ 410 $ 11 $ 49 $ 345 $ 401 $ 150 $ 452
===================================================================================================================================
INVESTMENT PORTFOLIO INFORMATION
Number of Shares 322,507 10,801 41,494 285,478 400,788 12,487 23,458
Cost $ 391 $ 11 $ 48 $ 331 $ 401 $ 141 $ 395
POLICY UNIT INFORMATION
Number of Units Held by Group
Contract Owners -- -- -- -- -- -- 39,570
Net Asset Value Per Unit $ -- $ -- $ -- $ -- $ -- $ -- $ 1.338
Number of Units Held by Individual
Contract Owners 326,360 10,421 43,097 275,204 382,247 126,513 301,955
Net Asset Value Per Unit $ 1.255 $ 1.036 $ 1.136 $ 1.255 $ 1.049 $ 1.189 $ 1.322
FIDELITY FIDELITY
VIP FIDELITY FIDELITY FIDELITY VIP
FIDELITY FIDELITY INVESTMENT VIP VIP VIP ASSET
VIP VIP GRADE ASSET INDEX CONTRA MANAGER
GROWTH OVERSEAS BOND MANAGER 500 FUND GROWTH
Investment in shares of Mutual Funds
at net asset value $ 377 $ 178 $ 30 $ 426 $ 126 $ 24 $ 26
===================================================================================================================================
NET ASSETS, representing
Equity of group contract owners $ -- $ 23 $ -- $ 48 $ -- $ -- $ --
Equity of individual contract owners 377 155 30 378 126 24 26
- -----------------------------------------------------------------------------------------------------------------------------------
$ 377 178 30 426 126 24 26
===================================================================================================================================
INVESTMENT PORTFOLIO INFORMATION
Number of Shares 12,914 10,433 2,433 26,953 1,664 1,737 2,172
Cost $ 361 $ 168 $ 29 $ 384 $ 115 $ 23 $ 26
POLICY UNIT INFORMATION
Number of Units Held by Group
Contract Owners -- 21,832 -- 41,926 -- -- --
Net Asset Value Per Unit $ -- $ 1.061 $ -- $ 1.149 $ -- $ -- $ --
Number of Units Held by Individual
Contract Owners 281,102 $147,599 26,194 332,773 92,340 20,680 24,995
Net Asset Value Per Unit $ 1.341 $ 1.048 $ 1.159 $ 1.134 $ 1.365 $ 1.157 $ 1.024
</TABLE>
See accompanying notes to financial statements.
12
<PAGE>
American National Variable Annuity Separate Account
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General ... American National Variable Annuity Separate Account (Separate
Account) was established on July 30,1991 under Texas law as a separate
investment account of American National Insurance Company (the Sponsor). The
Separate Account began operations on April 20, 1994. The assets of the
Separate Account are segregated from the Sponsor's other assets and are used
only to support variable annuity products issued by the Sponsor.
The Separate Account is registered under the Investment Company Act of 1940,
as amended, as a unit investment trust. There are currently fourteen active
subaccounts within the Separate Account, each of which is invested only in a
corresponding portfolio of the American National (AN) or Fidelity Funds. The
American National Fund was organized and is managed for a fee by Securities
Management & Research, Inc. (SM&R) which is a wholly-owned subsidiary of the
Sponsor. The Fidelity Funds were organized and are managed for a fee by
Fidelity Management & Research Co. ("FMR")
Basis of Presentation ... The financial statements of the Separate Account
have been prepared on an accrual basis in accordance with generally accepted
accounting principles.
Federal Taxes ... The operations of the Separate Account form a part of, and
are taxed with, the operations of the Sponsor. Under the Internal Revenue
Code, all ordinary income and capital gains allocated to the contract owners
are not taxed to the Sponsor. As a result, the net asset values of the
subaccounts are not affected by federal income taxes on distributions received
by subaccounts. Accordingly, no provision for income taxes is required in the
accompanying financial statements.
Use of Estimates ... The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the financial statements and the reported amounts
of income and expenses during the period. Operating results in the future could
vary from the amounts derived from management's estimates.
(2) INVESTMENT INFORMATION
Investments in shares of the separate investment portfolios are stated at
market value which is the net asset value per share as determined by the
respective portfolios on a daily basis. Dividends received from the portfolios
are reinvested daily in additional shares of the portfolios and are recorded as
dividend income on the record date.
The Separate Account's purchases of the separate investment portfolios,
including reinvestment of dividend distributions, were as follows during the
year ended December 31, 1995 (period from April 28, 1995 to December 31, 1995
for the Fidelity VIP Contra and Asset Manager Growth Funds) and for the period
from April 20 to December 31, 1994:
April 20 to
1995 Deccember 31, 1994
AN Growth Portfolio $ 386,965 $ 13,502
AN Money Market Portfolio $ 689,260 $ 252,085
AN Balanced Portfolio $ 48,468 $ --
AN Managed Portfolio $ 322,699 $ 9,543
Fidelity VIP Money Market $ 1,292,862 $ 193,637
Fidelity VIP High Income Fund $ 146,447 $ 52,206
Fidelity VIP Equity Income Fund $ 418,464 $ 24,353
Fidelity VIP Growth $ 359,691 $ 26,678
Fidelity VIP Overseas $ 196,029 $ 40,999
Fidelity VIP Investment Grade Bond $ 28,474 $ 39,048
Fidelity VIP Asset Manager $ 444,685 $ 27,183
Fidelity VIP Index 500 $ 115,710 $ 5,383
Fidelity VIP Contra Fund $ 23,494 $ --
Fidelity VIP Asset Manager Growth $ 26,097 $ --
13
<PAGE>
(3) CHARGES AND DEDUCTIONS FOR THE SEPARATE ACCOUNT INCLUDE THE FOLLOWING:
Monthly Administrative Charges ... American National's administrative
charges consist of an annual contract fee and a daily administrative asset fee.
The annual contract fee is $25 for non-qualified Flexible Purchase Payment
Annuity Contracts and $30 for all qualified Flexible Purchase Payment Annuity
Contracts. At the time of full surrender, the annual contract fee will be
deducted on a pro rata basis. Immediate Annuity Contracts have a one time
contract fee of $100 when the single purchase payment is paid. The Group
Unallocated Deferred Annuity Contract has no annual contract fee. The
administrative asset fee is 0.10% annually for all contracts. These charges are
deducted through termination of units of interest from applicable contract
owners' accounts.
Surrender Charge ... On withdrawals of that portion of the accumulation
value representing purchase payments, a surrender charge is imposed based upon
the number of years since the year in which the purchase payments withdrawn
were paid, on a first paid, first withdrawn basis. For Flexible Purchase
Payment Deferred Annuities in the first policy year, the surrender charge is a
maximum of 7% of the purchase payment withdrawn and grades down to zero in the
eighth contract year after the purchase payment being withdrawn was made. For
Group Unallocated Deferred Annuity Contracts the surrender charge is a maximum
of 4% and grades down to zero in the eighth policy year.
Transfer Charge ... A $10 transfer charge is imposed after the first twelve
transfers in any one policy year for transfers made among the subaccounts.
Premium Charges ... Premium taxes for certain jurisdictions are deducted
from premiums paid at rates ranging form zero to 3.5%. American National's
current practice is to deduct any state imposed premium tax from Purchase
Payments. If a state only imposes premium taxes upon annuitization, American
National will deduct these taxes from the contract value upon annuitization.
Distribution Expense Charge ... A distribution expense is assessed daily to
each Subaccount. The distribution expense charge is 0.25% annually for
Flexible Purchase Payment Deferred Annuity Contracts. Group Unallocated
Deferred Annuity Contracts do not incur a distribution expense charge. The sum
of all surrender charges and the distribution expense charges assessed will at
no time exceed 9.0% of all Purchase Payments paid.
Mortality and Expense Risk Charges ... Mortality risk and expense risk
charges, at an effective annual rate of 1.25%, are assessed daily against the
Separate Account's net asset value for both qualified and non-qualified
Flexible Purchase Payment Annuity Contracts. These charges are assessed at a
rate of 0.85% for the Group Unallocated Deferred Annuity Contracts. This fee
is assessed during both the accumulation period and the annuity period.
The total of cash value charges for each subaccount for the year ended
December 31, 1995 (period from April 28, 1995 to December 31, 1995 for the
Fidelity VIP Contra and Asset Manager Growth Funds) and the period from April
20 to December 31, 1994 are as follows:
April 20 to
1995 December 31, 1994
AN Growth Portfolio $ 2,855 $ 45
AN Money Market Portfolio $ 454 $ 273
AN Balanced Portfolio $ 206 $ --
AN Managed Portfolio $ 2,208 $ 25
Fidelity VIP Money Market $ 4,143 $ 955
Fidelity VIP High Income Fund $ 1,117 $ 48
Fidelity VIP Equity Income Fund $ 3,631 $ 12
Fidelity VIP Growth $ 1,886 $ 18
Fidelity VIP Overseas $ 1,775 $ 64
Fidelity VIP Investment Grade Bond $ 146 $ 23
Fidelity VIP Asset Manager $ 4,007 $ 30
Fidelity VIP Index 500 $ 692 $ 14
Fidelity VIP Contra Fund $ 109 $ --
Fidelity VIP Asset Manager Growth $ 81 $ --
14
<PAGE>
Notes to Variable Annuity Separate Account Financial Statements continued
(4) UNIT ACTIVITY FROM POLICY TRANSACTIONS
Transactions in units for each subaccount for the year ended December 31,
1995 (period from April 28, 1995 to December 31, 1995 for the Fidelity VIP
Contra and Asset Manager Growth Funds) and for the period from April 20, 1994
to December 31, 1994 were as follows:
<TABLE>
<CAPTION>
AN
AN MONEY AN AN
GROWTH MARKET BALANCED MANAGED
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Units outstanding April 20, 1994 -- -- -- --
Policy purchase payments 12,430 250,319 -- 8,725
Deductions for policy withdrawals and charges -- (249,101) -- --
Units outstanding December 31, 1994 12,430 1,218 -- 8,725
Policy purchase payments 322,228 719,574 43,097 266,821
Deductions for policy withdrawals and charges (8,298) (710,371) -- (342)
Units outstanding December 31, 1995 326,360 10,421 43,097 275,204
</TABLE>
<TABLE>
<CAPTION>
FIDELITY FIDELITY FIDELITY
VIP VIP VIP FIDELITY
MONEY HIGH EQUITY VIP
MARKET INCOME FUND INCOME FUND GROWTH
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Units outstanding April 20, 1994 -- -- -- --
Policy purchase payments 191,834 52,095 24,335 26,670
Deductions for policy withdrawals and charges -- (47,371) (18,869) (24,777)
Units outstanding December 31, 1994 191,834 4,724 5,466 1,893
Policy purchase payments 1,551,766 132,980 380,863 281,565
Deductions for policy withdrawals and charges (1,361,353) (11,191) (44,804) (2,356)
Units outstanding December 31, 1995 382,247 126,513 341,525 281,102
</TABLE>
<TABLE>
<CAPTION>
FIDELITY FIDELITY FIDELITY
FIDELITY VIP VIP VIP
VIP INVESTMENT ASSET INDEX
OVERSEAS GRADE BOND MANAGER 500
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Units outstanding April 20, 1994 -- -- -- --
Policy purchase payments 41,300 39,011 27,281 5,385
Deductions for policy withdrawals and charges (22,871) (38,309) (19,332) --
Units outstanding December 31, 1994 18,429 702 7,949 5,385
Policy purchase payments 203,667 25,604 446,561 87,293
Deductions for policy withdrawals and charges (52,665) (112) (79,811) (338)
Units outstanding December 31, 1995 169,431 26,194 374,699 92,340
</TABLE>
<TABLE>
<CAPTION>
FIDELITY FIDELITY
VIP VIP
CONTRA ASSET MANAGER
FUND GROWTH
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Units outstanding April 28, 1995 -- --
Policy purchase payments 20,680 24,995
Deductions for policy withdrawals and charges -- --
Units outstanding December 31, 1995 20,680 24,995
</TABLE>
15
<PAGE>
(5) CONDENSED FINANCIAL INFORMATION
The following tables for each subaccount show selected data for an
accumulation unit outstanding during the year ended December 31, 1995 (period
from April 28, 1995 to December 31, 1995 for the Fidelity VIP Contra and Asset
Manager Growth Funds) and the period from April 20, 1994 to December 31, 1994
(per unit information is based on the average of the combined group and
individual units outstanding at the beginning and ending of the period):
4/20/94
1995 To 12/31/94
- --------------------------------------------------------------------------------
AN GROWTH PORTFOLIO
Investment income $ 0.040 $ 0.036
Expenses (0.018) --
- --------------------------------------------------------------------------------
Investment income (loss)- net 0.022 0.036
Net realized and unrealized gains (losses)
on investments 0.243 (0.046)
- --------------------------------------------------------------------------------
Net increase (decrease) in unit value 0.265 $(0.010)
Beginning of year 0.990 1.000
- --------------------------------------------------------------------------------
End of year $ 1.255 $ 0.990
================================================================================
4/20/94
1995 To 12/31/94
- --------------------------------------------------------------------------------
AN BALANCED PORTFOLIO
Investment income $ 0.066 $ --
Expenses -- --
- --------------------------------------------------------------------------------
Investment income (loss)- net 0.066 --
Net realized and unrealized gains (losses)
on investments 0.070 --
- --------------------------------------------------------------------------------
Net increase (decrease) in unit value 0.136 --
Beginning of year 1.000 --
- --------------------------------------------------------------------------------
End of year $ 1.136 $ --
================================================================================
4/20/94
1995 To 12/31/94
- --------------------------------------------------------------------------------
FIDELITY VIP MONEY MARKET
Investment income $ 0.053 $ 0.010
Expenses (0.014) --
- --------------------------------------------------------------------------------
Net increase (decrease) in unit value 0.039 0.010
Beginning of year 1.010 1.000
- --------------------------------------------------------------------------------
End of year $ 1.049 $ 1.010
================================================================================
4/20/94
1995 To 12/31/94
- --------------------------------------------------------------------------------
FIDELITY VIP EQUITY INCOME FUND
Investment income $ 0.036 $ 0.001
Expenses (0.023) --
- --------------------------------------------------------------------------------
Investment income (loss)- net 0.013 0.001
Net realized and unrealized gains (losses)
on investments 0.311 (0.001)
- --------------------------------------------------------------------------------
Net increase (decrease) in unit value 0.324 --
Beginning of year 1.000 1.000
- --------------------------------------------------------------------------------
End of year $ 1.324 $ 1.000
================================================================================
4/20/94
1995 To 12/31/94
- --------------------------------------------------------------------------------
AN MONEY MARKET PORTFOLIO
Investment income $ 0.208 $ --
Expenses (0.172) --
- --------------------------------------------------------------------------------
Net increase (decrease) in unit value 0.036 --
Beginning of year 1.000 1.000
- --------------------------------------------------------------------------------
End of year $ 1.036 $ 1.000
================================================================================
4/20/94
1995 To 12/31/94
- --------------------------------------------------------------------------------
AN MANAGED PORTFOLIO
Investment income $ 0.042 $ 0.044
Expenses (0.014) --
- --------------------------------------------------------------------------------
Investment income (loss)- net 0.028 0.044
Net realized and unrealized gains (losses)
on investments 0.237 (0.054)
- --------------------------------------------------------------------------------
Net increase (decrease) in unit value 0.265 (0.010)
Beginning of year 0.990 1.000
- --------------------------------------------------------------------------------
End of year $ 1.255 $ 0.990
================================================================================
4/20/94
1995 To 12/31/94
- --------------------------------------------------------------------------------
FIDELITY VIP HIGH INCOME FUND
Investment income $ 0.006 $ 0.001
Expenses (0.015) --
- --------------------------------------------------------------------------------
Investment income (loss)- net (0.009) 0.001
Net realized and unrealized gains (losses)
on investments 0.198 (0.001)
- --------------------------------------------------------------------------------
Net increase (decrease) in unit value 0.189 --
Beginning of year 1.000 1.000
- --------------------------------------------------------------------------------
End of year $ 1.189 $ 1.000
================================================================================
4/20/94
1995 To 12/31/94
- --------------------------------------------------------------------------------
FIDELITY VIP GROWTH
Investment income $ -- $ --
Expenses (0.014) --
- --------------------------------------------------------------------------------
Investment income (loss)- net (0.014) --
Net realized and unrealized gains (losses)
on investments 0.345 0.010
- --------------------------------------------------------------------------------
Net increase (decrease) in unit value 0.331 0.010
Beginning of year 1.010 1.000
- --------------------------------------------------------------------------------
End of year $ 1.341 $ 1.010
================================================================================
16
<PAGE>
4/20/94
1995 To 12/31/94
- --------------------------------------------------------------------------------
FIDELITY VIP OVERSEAS
Investment income $ 0.001 $ --
Expenses (0.021) --
- --------------------------------------------------------------------------------
Investment income (loss)- net (0.020) --
Net realized and unrealized gains (losses)
on investments 0.100 (0.030)
- --------------------------------------------------------------------------------
Net increase (decrease) in unit value 0.080 (0.030)
Beginning of year 0.970 1.000
- --------------------------------------------------------------------------------
End of year $ 1.050 $ 0.970
================================================================================
4/20/94
1995 To 12/31/94
- --------------------------------------------------------------------------------
FIDELITY VIP ASSET MANAGER
Investment income $ 0.003 $ --
Expenses (0.021) --
- --------------------------------------------------------------------------------
Investment income (loss)- net (0.018) --
Net realized and unrealized gains (losses)
on investments 0.164 (0.010)
- --------------------------------------------------------------------------------
Net increase (decrease) in unit value 0.146 (0.010)
Beginning of year 0.990 1.000
- --------------------------------------------------------------------------------
End of year $ 1.136 $ 0.990
================================================================================
04/28/95
To 12/31/95
- --------------------------------------------------------------------------------
FIDELITY VIP CONTRA FUND
Investment income $ 0.010
Expenses --
- --------------------------------------------------------------------------------
Investment income (loss)- net 0.010
Net realized and unrealized gains (losses) on investments 0.147
- --------------------------------------------------------------------------------
Net increase (decrease) in unit value 0.157
Beginning of year 1.000
- --------------------------------------------------------------------------------
End of year $ 1.157
================================================================================
4/20/94
1995 To 12/31/94
- --------------------------------------------------------------------------------
FIDELITY VIP INVESTMENT GRADE BOND
Investment income $ 0.002 $ --
Expenses -- --
- --------------------------------------------------------------------------------
Investment income (loss)- net 0.002 --
Net realized and unrealized gains (losses)
on investments 0.157 --
- --------------------------------------------------------------------------------
Net increase (decrease) in unit value 0.159 --
Beginning of year 1.000 1.000
- --------------------------------------------------------------------------------
End of year $ 1.159 $ 1.000
================================================================================
4/20/94
1995 To 12/31/94
- --------------------------------------------------------------------------------
FIDELITY VIP INDEX 500
Investment income $ 0.002 $ --
Expenses (0.020) --
- --------------------------------------------------------------------------------
Investment income (loss)- net (0.018) --
Net realized and unrealized gains (losses)
on investments 0.373 0.010
- --------------------------------------------------------------------------------
Net increase (decrease) in unit value 0.355 0.010
Beginning of year 1.010 1.000
- --------------------------------------------------------------------------------
End of year $ 1.365 $ 1.010
================================================================================
04/28/95
To 12/31/95
- --------------------------------------------------------------------------------
FIDELITY VIP ASSET MANAGER GROWTH
Investment income $ 0.018
Expenses --
- --------------------------------------------------------------------------------
Investment income (loss)- net 0.018
Net realized and unrealized gains (losses) on investments 0.006
- --------------------------------------------------------------------------------
Net increase (decrease) in unit value 0.024
Beginning of year 1.000
- --------------------------------------------------------------------------------
End of year $ 1.024
================================================================================
17
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and Board of Directors,
American National Insurance Company:
We have audited the accompanying consolidated statement of financial
position of American National Insurance Company and subsidiaries (the Company)
as of December 31, 1995, and the related consolidated statements of income,
changes in stockholders' equity and cash flows for the year then ended. These
consolidated financial statements (pages 20 through 35) are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management as well as evaluating the overall financial
statement presentation. We believe that our audit provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of American
National Insurance Company and subsidiaries as of December 31, 1995, and the
results of their operations and their cash flows for the year then ended in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Houston, Texas
February 16, 1996
18
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and Board of Directors,
American National Insurance Company
We have audited the accompanying consolidated statements of financial
position of American National Insurance Company and subsidiaries (the Company)
as of December 31, 1994, and the related consolidated statements of income,
changes in stockholders' equity and cash flows for the year then ended. These
consolidated financial statements (pages 20 through 35) are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of American
National Insurance Company and subsidiaries at December 31, 1994, and the
results of their operations and their cash flows for the year then ended in
conformity with generally accepted accounting principles.
As discussed in Note 1 to the consolidated financial statements, the Company
adopted the provisions of the Financial Accounting Standards Board (FASB)
Statement of Financial Accounting Standard No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," in 1994.
KPMG PEAT MARWICK LLP
Houston, Texas
February 15, 1995
19
<PAGE>
American National Insurance Company and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except for per share data)
- --------------------------------------------------------------------------------
1995 1994
- --------------------------------------------------------------------------------
PREMIUMS AND OTHER REVENUE
Life and annuity premiums $ 308,949 $ 289,099
Accident and health premiums 360,420 384,703
Property and casualty premiums 233,512 202,160
Other policy revenues 78,260 70,499
Net investment income 386,910 333,312
Gain from sale of investments 76,335 92,361
Other income 26,576 23,304
-------------------------------------------------------------------------------
$1,470,962 $1,395,438
- --------------------------------------------------------------------------------
BENEFITS AND EXPENSES
Death and other benefits:
Life and annuity $ 312,018 $ 266,412
Accident and health 243,560 253,458
Property and casualty 193,453 150,922
Increase (decrease) in liability
for future policy benefits:
Life and annuity 32,582 18,420
Accident and health (2,558) 1,057
Commissions for acquiring and
servicing policies 287,506 242,963
Increase in deferred policy
acquisition costs, net of
amortization (98,285) (61,978)
Other operating costs and expenses 159,185 170,979
Taxes, licenses and fees 39,394 37,688
-------------------------------------------------------------------------------
$1,166,855 $1,079,921
-------------------------------------------------------------------------------
INCOME FROM OPERATIONS BEFORE EQUITY IN
EARNINGS OF UNCONSOLIDATED AFFILIATES
AND FEDERAL INCOME TAXES $ 304,107 $ 315,517
EQUITY IN EARNINGS OF UNCONSOLIDATED
AFFILIATES 2,170 407
- -------------------------------------------------------------------------------
GAIN FROM OPERATIONS BEFORE FEDERAL INCOME
TAXES $ 306,277 $ 315,924
PROVISION (BENEFIT) FOR FEDERAL INCOME TAXES
Current $ 109,471 $ 103,598
Deferred (9,558) (2,761)
- --------------------------------------------------------------------------------
NET INCOME $ 206,364 $ 215,087
===============================================================================
NET INCOME PER SHARE $ 7.79 $ 8.12
================================================================================
See accompanying notes to consolidated financial statements.
20
<PAGE>
American National Insurance Company and Subsidiaries
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(In thousands)
- --------------------------------------------------------------------------------
December 31,
- --------------------------------------------------------------------------------
1995 1994
- --------------------------------------------------------------------------------
ASSETS
Investments, other than investments in unconsolidated affiliates:
Debt securities:
Bonds held-to-maturity, at amortized cost $2,966,939 $2,477,090
Bonds available-for-sale, at market 482,687 99,511
Redeemable preferred stocks, at amortized cost -- 7,881
Marketable equity securities, at market:
Preferred stocks 53,983 29,717
Common stocks 710,717 623,709
Mortgage loans on real estate 925,581 930,840
Policy loans 301,589 300,068
Investment real estate, net of accumulated
depreciation of $105,082 and $94,872 330,684 313,435
Short-term investments 15,066 12,620
Other invested assets 33,739 16,569
-------------------------------------------------------------------------------
$5,820,985 $4,811,440
Cash 13,945 2,857
Investments in unconsolidated affiliates 98,790 103,670
Accrued investment income 82,541 71,007
Reinsurance ceded receivables 38,436 30,510
Prepaid reinsurance premiums 84,648 70,652
Premiums due and other receivables 74,015 73,152
Deferred policy acquisition costs 675,656 576,801
Property and equipment 31,357 34,682
Other assets 77,052 65,003
Separate account assets 142,608 121,420
- --------------------------------------------------------------------------------
TOTAL ASSETS $7,140,033 $5,961,194
================================================================================
LIABILITIES
Policyowner funds
Future policy benefits:
Life and annuity $1,905,547 $1,873,104
Accident and health 108,128 110,756
Policy account balances 1,775,641 1,016,057
Policy and contract claims 278,228 263,022
Other policyowner funds 296,934 256,901
-------------------------------------------------------------------------------
$4,364,478 $3,519,840
Deferred federal income taxes 194,412 146,289
Notes payable 10,382 12,423
Other liabilities 107,040 88,914
Separate account liabilities 142,608 121,420
- --------------------------------------------------------------------------------
TOTAL LIABILITIES $4,818,920 $3,888,886
- --------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Capital stock $ 30,832 $ 30,832
Additional paid-in capital 211 211
Net unrealized gains on securities 158,898 52,907
Retained earnings 2,233,899 2,091,085
Treasury stock, at cost (102,727) (102,727)
- --------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY $2,321,113 $2,072,308
-------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $7,140,033 $5,961,194
================================================================================
See accompanying notes to consolidated financial statements.
21
<PAGE>
American National Insurance Company and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(In thousands, except for per share data)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Net
Additional Unrealized Total
Capital Paid-In Gains On Retained Treasury Stockholders'
Stock Capital Securities Earnings Stock Equity
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE DECEMBER 31, 1993 $ 30,832 $ 211 $ 98,084 $ 1,935,310 $ (102,727) $ 1,961,710
Net income 215,087 215,087
Dividends to stockholders
($2.24 per share) (59,312) (59,312)
Decrease in unrealized gains on
marketable securities, net
of applicable federal
income taxes (45,177) (45,177)
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE DECEMBER 31, 1994 $ 30,832 $ 211 $ 52,907 $ 2,091,085 $ (102,727) $ 2,072,308
Net income 206,364 206,364
Dividends to stockholders
($2.40 per share) (63,550) (63,550)
Increase in unrealized gains on
marketable securities, net
of applicable federal
income taxes 105,991 105,991
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE DECEMBER 31, 1995 $ 30,832 $ 211 $ 158,898 $ 2,233,899 $ (102,727) $ 2,321,113
====================================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
22
<PAGE>
American National Insurance Company and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
- --------------------------------------------------------------------------------
1995 1994
- --------------------------------------------------------------------------------
OPERATING ACTIVITIES
Net income $ 206,364 $ 215,087
Adjustments to reconcile net income to net cash
provided by operating activities:
Increase in liabilities for policyholders' funds 85,054 64,103
Charges to policy account balances (61,454) (67,296)
Interest credited to policy account balances 86,051 46,685
Deferral of policy acquisition costs (195,253) (151,206)
Amortization of deferred policy acquisition costs 96,398 88,727
Deferred federal income tax benefit (9,558) (2,761)
Depreciation 19,378 19,222
Accrual and amortization of discounts (6,713) (8,914)
Gain from sale of investments (76,335) (92,361)
Equity in earnings of unconsolidated affiliates (2,170) (407)
Decrease (increase) in premiums receivable (863) 5,106
Increase in accrued investment income (11,534) (11,654)
Capitalization of interest on policy and mortgage
loans (14,335) (15,078)
Other changes, net (20,060) (19,019)
- --------------------------------------------------------------------------------
Net cash provided by operating activities $ 94,970 $ 70,234
- --------------------------------------------------------------------------------
INVESTING ACTIVITIES
Proceeds from sale or maturity of investments:
Bonds $ 269,704 $ 228,288
Stocks 215,684 221,032
Real estate 12,556 32,874
Other invested assets 12,456 9,524
Principal payments received on:
Mortgage loans 137,545 96,607
Policy loans 37,296 39,245
Purchases of investments:
Bonds (1,087,283) (772,530)
Stocks (120,699) (137,160)
Real estate (25,187) (23,085)
Mortgage loans (152,856) (113,282)
Policy loans (24,615) (23,780)
Other invested assets (28,776) (7,402)
Decrease (increase) in short-term investments, net (2,446) 35,519
Decrease (increase) in investment in unconsolidated
affiliates, net 7,050 (277)
Increase in property and equipment, net (3,706) (3,909)
- --------------------------------------------------------------------------------
Net cash used in investing activities $ (753,277) $(418,336)
- --------------------------------------------------------------------------------
FINANCING ACTIVITIES
Policyholders' deposits to policy account balances $ 867,077 $ 455,380
Policyholders' withdrawals from policy
account balances (132,091) (50,096)
Dividends to stockholders (63,550) (59,312)
Net decrease in notes payable (2,041) (11,754)
- -------------------------------------------------------------------------------
Net cash provided by financing activities $ 669,395 $ 334,218
- --------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH $ 11,088 $ (13,884)
Cash:
Beginning of the year 2,857 16,741
- --------------------------------------------------------------------------------
End of the year $ 13,945 $ 2,857
================================================================================
See accompanying notes to consolidated financial statements.
23
<PAGE>
Notes to Consolidated Financial Statements
(1) NATURE OF OPERATIONS
American National Insurance Company (American National) is a multiline
insurance company offering a broad line of insurance coverages, including
individual and group life, health, and annuities; personal lines property and
casualty; and credit insurance. In addition, through subsidiaries, American
National also offers mutual funds and real estate management services. The
majority (99%) of revenues are generated by the insurance business. With the
exception of New York, business is conducted in all states, as well as Puerto
Rico, Guam, American Samoa and Western Europe. Various distribution systems are
utilized, including home service, multiline ordinary, group brokerage, credit
and independent third party marketing organizations.
American National's insurance subsidiaries are American National Life
Insurance Company of Texas, Garden State Life Insurance Company, Standard Life
and Accident Insurance Company, American National Property and Casualty Company
and American National General Insurance Company. The major non-insurance
subsidiaries are Securities Management & Research, Inc. and ANREM Corporation.
As part of its investment portfolio, American National also owns interests in
unconsolidated affiliates, including several real estate joint ventures and
partnerships.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES
Principles of consolidation and basis of presentation--The consolidated
financial statements include the accounts of American National Insurance
Company and its wholly-owned subsidiaries. All significant intercompany
transactions have been eliminated in consolidation. Investments in
unconsolidated affiliates are shown at cost plus equity in undistributed
earnings since the dates of acquisition.
The consolidated financial statements have been prepared on the basis of
generally accepted accounting principles which, for the insurance subsidiaries,
differs from the basis of accounting followed in reporting to insurance
regulatory authorities. (See Note 11.) The preparation of financial statements
in conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect:
1) The reported amounts of assets and liabilities
2) The disclosure of contingent assets and liabilities at the date of the
financial statements
3) The reported amounts of revenues and expenses during the reporting period
Actual results could differ from those estimates. Future events, which could
impact the estimates used in these financial statements, include changes in
the levels of mortality, morbidity and interest rates.
Investments
FASB 115--Effective January 1, 1994, American National adopted FASB Statement
No. 115, "Accounting for Certain Investments in Debt and Equity Securities."
This statement requires that all securities be classified into one of three
categories :
Held-to-maturity securities - Securities which the company intends and is
able to hold to maturity are carried at amortized value.
Trading securities - Securities purchased with the intent of selling them in
the near term are classified as trading securities and are reported at fair
market value, with the unrealized gains and losses included in earnings.
(American National had no securities classified in the trading category at
December 31, 1995 or 1994.)
Available-for-sale securities - Securities which are not classified in one
of the other categories are held as available-for-sale and are reported at fair
market value, with the unrealized gains and losses reported as a separate
component of stockholders' equity, net of tax.
The adoption of FASB 115 did not have a significant effect on American
National's financial position or results from operations.
Debt securities--Bonds which are intended to be held-to-maturity are carried
at amortized cost. The carrying value of these debt securities is expected to
be realized due to American National's ability and intent to hold these
securities until maturity.
Bonds which are held as available-for-sale are carried at market.
The market values for debt securities represent quoted market values from
published sources or bid prices obtained from securities dealers. The bond
portfolio is generally rated by external rating agencies. The bond portfolio at
December 31, 1995 included less than 1% of investments that are considered
"below investment grade," defined as securities that carry a rating of BB and
lower.
Bonds with an amortized value of $95,913,000 at December 31, 1995 were on
deposit with various state insurance departments, as required by law.
Preferred stocks--At December 31, 1994, redeemable preferred stocks were
classified as held-to-maturity and were carried at amortized cost.
Non-redeemable (equity) preferred stocks were classified as available-for-sale
and were carried at market.
At December 31, 1995 all preferred stocks are classified as
available-for-sale and are carried at market.
24
<PAGE>
Notes to Consolidated Financial Statements continued
Common stocks--Common stocks are carried at market.
Unrealized gains and losses--For all investments carried at market, the
unrealized gains or losses (differences between amortized cost and market), net
of applicable federal income taxes, are reflected in stockholders' equity.
Mortgage loans--Mortgage loans on real estate are carried at amortized cost,
less allowance for possible losses. Interest is not accrued on mortgage loans
or bonds for which principal or interest payments are determined to be
uncollectible.
The fair market value of mortgage loans is estimated using discounted cash
flow analyses based on interest rates currently being offered for similar
loans. Loans with similar characteristics are aggregated for purposes of the
calculations. The fair market value of these loans may not represent the
amounts that would be realized upon sale.
The mortgage loan portfolio is closely monitored through the review of loan
and property information such as debt service coverage, annual operating
statements and property inspection reports. This information is evaluated in
light of current economic conditions and other factors, such as geographic
location and property type. As a result of this review, impaired loans are
identified and valuation reserves are established. Impaired loans are loans
where, based on current information and events, it is probable that American
National will be unable to collect all amounts due according to the contractual
terms of the loan agreement.
Effective January 1, 1995, American National adopted FASB Statement No. 114,
"Accounting by Creditors for Impairment of a Loan" and the statement which
amended it, FASB Statement No. 118, "Accounting by Creditors for Impairment of
a Loan - Income Recognition and Disclosures." These two statements require that
impaired loans be measured based on the present value of expected future cash
flows discounted at the loan's effective interest rate, the loan's observable
market price, or the fair value of the collateral if the loan is
collateral-dependent. When the measure of the impaired loan is less than the
recorded investment, the impairment is recorded as a valuation reserve. As
American National utilized similar methods to calculate valuation reserves in
prior years, the adoption of these new standards did not have a material effect
on American National's consolidated financial position or results of operations.
Policy loans--Policy loans are carried at cost. The carrying amount in the
consolidated statements of financial position for policy loans approximates
their fair value.
Investment real estate--Investment real estate is carried at cost, less
allowances for depreciation and reserves for possible losses. Depreciation is
provided over the estimated useful lives of the properties (15 to 50 years)
using straight-line and accelerated methods.
American National maintains a valuation reserve for real estate investments
to reflect any amounts considered unrecoverable upon future sale. American
National calculates the valuation reserve based upon the historical loss
experience of its real estate portfolio. For real estate considered to be
"non-performing," a specific reserve is established.
"Non-performing" real estate is defined as investments which possess
marginal yields or values considered to be permanently impaired.
Short-term investments--Short-term investments are carried at amortized cost.
The carrying amounts for short-term investments approximate fair market value.
Other invested assets--Other invested assets are carried at cost, less
allowance for possible losses. Valuation reserves for other invested assets are
considered on an individual basis in accordance with management's analysis of
current information.
Investment valuation reserves and impairments--Investment valuation reserves
are established for mortgage loans, real estate and other invested assets in
accordance with the policies established for each class of invested asset. The
increase or decrease in the valuation reserves is reflected in the gain from
sale of investments.
When an investment has been determined to have an other than temporary
impairment, the asset is written down to fair value and the amount of the
write-down is reflected in income in the current period as a realized loss.
Management believes that the valuation reserves are adequate. However, it is
reasonably possible that a significant change in economic conditions in the
near term could result in losses exceeding the amount reserved.
Cash--American National considers cash on hand and in banks as cash for
purposes of the consolidated statements of cash flows.
Investments in unconsolidated affiliates--These assets are primarily
investments in real estate joint ventures, and are accounted for under the
equity method of accounting.
Property and equipment--These assets consist of buildings occupied by the
companies, electronic data processing equipment, and furniture and equipment.
These assets are carried at cost, less accumulated depreciation. Depreciation
is provided using straight-line and accelerated methods over the estimated
useful lives of the assets (3 to 50 years).
25
<PAGE>
Notes to Consolidated Financial Statements continued
Insurance specific assets and liabilities
Deferred policy acquisition costs--Certain costs of acquiring new insurance
business have been deferred. For life, annuity and accident and health
business, such costs consist of inspection report and medical examination fees,
commissions, related fringe benefit costs, and the cost of insurance in force
gained through acquisitions. The amount of commissions deferred includes
first-year commissions and certain subsequent year commissions which are in
excess of ultimate level commission rates.
The deferred policy acquisition costs on traditional life and health
products are amortized with interest over the anticipated premium-paying period
of the related policies, in proportion to the ratio of annual premium revenue
to be received over the life of the policies. Expected premium revenue is
estimated by using the same mortality and withdrawal assumptions used in
computing liabilities for future policy benefits. The amount of deferred policy
acquisition costs is reduced by a provision for possible inflation of
maintenance and settlement expenses in the determination of such amounts by
means of grading interest rates.
Costs deferred on universal life, limited pay and investment type contracts
are amortized as a level percentage of the present value of anticipated gross
profits from investment yields, mortality, and surrender charges. In the near
term it is reasonably possible that a change in interest rates could have a
significant impact on the deferred acquisition costs calculated for these
contracts.
Deferred policy acquisition costs associated with property and casualty
insurance business consist principally of commissions, underwriting and issue
costs. These costs are amortized over the coverage period of the related
policies, in relation to premium revenue recognized.
Future policy benefits--For traditional products, liabilities for future
policy benefits have been provided on a net level premium method based on
estimated investment yields, withdrawals, mortality and other assumptions which
were appropriate at the time the policies were issued. Estimates used are based
on the companies' experience, as adjusted to provide for possible adverse
deviation. These estimates are periodically reviewed and compared with actual
experience. When it is determined that future expected experience differs
significantly from the assumed, the estimates are revised for current and
future issues.
Future policy benefits for universal life and investment-type contracts
reflect the current account value before applicable surrender charges. In the
near term, it is possible that a change in interest rates could have a
significant impact on the values calculated for these contracts.
Investment contracts--Investment contracts are defined as long-duration
contracts which do not subject the company to risks arising from policyholder
mortality or morbidity. The fair market value of investment contract
liabilities is estimated using a discounted cash flow model, assuming the
companies' current interest rates on new products. The estimated fair market
value for these investment contracts approximates the carrying values of
$1,271,041,000 and $537,825,000 at December 31, 1995 and 1994, respectively. A
significant change in the prevailing interest rates in the near term could have
an effect on the interest credited to these policies and, therefore, to the
carrying and market values.
Recognition of premium revenue and policy benefits
Traditional ordinary life and health--Life and accident and health premium is
recognized as revenue when due. Benefits and expenses are associated with
earned premiums to result in recognition of profits over the life of the policy
contracts. This association is accomplished by means of the provision for
liabilities for future policy benefits and the amortization of deferred policy
acquisition costs.
Annuities--Revenues from annuity contracts represent amounts assessed against
contract holders. Such assessments are principally surrender charges and, in
the case of variable annuities, administrative fees. Policy account balances
for annuities represent the premiums received plus accumulated interest, less
applicable accumulated administrative fees. In the near term it is possible
that a change in interest rates could have a significant impact on the values
calculated for these contracts.
Universal life and single premium whole life--Revenues from universal life
policies and single premium whole life policies represent amounts assessed
against policyholders. Included in such assessments are mortality charges,
surrender charges and earned policy service fees. Policyholder account balances
consist of the premiums received plus credited interest, less accumulated
policyholder assessments. Amounts included in expense represent benefits in
excess of account balances returned to policyholders.
Property and casualty--Property and casualty premiums are recognized as
revenue proportionately over the contract period. Policy benefits consist of
actual claims and the change in reserves for losses and loss adjustment
expenses. The reserves for losses and loss adjustment expenses are estimates of
future payments of reported and unreported claims and the related expenses with
respect to insured events that have occurred. These reserves are calculated
using case basis estimates for reported losses and historical experience for
claims incurred but not reported. These loss reserves are reported net of an
allowance for salvage and subrogation. Management believes that American
National's reserves have been appropriately calculated based on available
information as of December 31, 1995. However, it is reasonably possible that
the ultimate liabilities may vary significantly from these estimated amounts.
26
<PAGE>
Notes to Consolidated Financial Statements continued
Participating insurance policies--The allocation of dividends to
participating policyholders is based upon a comparison of experience rates of
mortality, interest and expense, as determined periodically for representative
plans of insurance, issue ages and policy durations, with the corresponding
rates assumed in the calculation of premiums. Participating business comprised
approximately 2.7% of the life insurance in force at December 31, 1995, and
4.6% of life premiums in 1995.
Federal income taxes--American National and its subsidiaries file a
consolidated life/non-life federal income tax return, except for Garden State
Life Insurance Company, which files a separate return.
Deferred federal income tax assets and liabilities have been recognized to
reflect the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled.
Realization of the deferred tax assets is dependent on generating sufficient
taxable income in the future. Management believes that it is more likely than
not that sufficient income will be generated to realize the net deferred tax
assets.
Separate account assets and liabilities--The separate account assets and
liabilities reflected in the consolidated financial statements represent funds
which are separately administered. American National maintains three separate
accounts. The first administers assets primarily for certain of the company's
own employee benefit plans. The second administers assets deposited by contract
holders of American National's variable universal life policies. The third
administers assets deposited by contract holders of American National's
variable annuity policies.
The investment income and investment gains and losses from these separate
funds accrue directly to, and investment risk is borne by, the contract holders
of the policies supported by the separate accounts. The assets of these
accounts are carried at market value. Deposits, net investment income and
realized investment gains and losses for these accounts are excluded from
revenues, and related liability increases are excluded from benefits and
expenses in this report.
Net income per share--Net income per share is based on the weighted average
number of shares outstanding (26,479,165 shares for 1995 and 1994).
Fair value disclosures--The fair value disclosures for various assets and
liabilities are shown at the references as given below:
Investment contracts Footnote 2
All applicable invested assets Footnote 3
Mortgage loan commitments Footnote 14
Planned accounting changes--FASB 121 "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets To Be Disposed Of." This statement
requires that long-lived assets be reviewed for impairment whenever
circumstances indicate that the carrying value may not be recoverable. The
review must be done by estimating future cash flows to be received, or by
determining the fair value of the asset. If the sum of the expected future cash
flows or the fair value of the asset is less than the carrying value, an
impairment loss is recognized.
American National will adopt FASB 121 on January 1, 1996. Management
believes that the adoption of FASB 121 will not have a significant effect on
American National's financial position or results from operations.
Reclassifications--Certain items in the 1994 consolidated financial
statements have been reclassified to conform with the 1995 presentation.
27
<PAGE>
Notes to Consolidated Financial Statements continued
(3) INVESTMENTS
Carrying values:
The following tables present information on the values of investments
(amortized cost is net of depreciation, amortization of premium, or accrual of
discount where applicable) as of December 31, 1995 and 1994 (in thousands):
<TABLE>
<CAPTION>
Investment Gross Gross Estimated
Amortized Valuation Unrealized Unrealized Market Carrying
Cost Reserves Gains Losses Value Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1995:
Debt securities
Bonds held-to-maturity:
U.S. government and agencies $ 176,345 $ -- $ 10,317 $ (33) $ 186,629 $ 176,345
States and political subdivisions 22,542 -- 1,293 (75) 23,760 22,542
Foreign governments 94,727 -- 8,178 -- 102,905 94,727
Public utilities 1,001,988 -- 45,204 (1,956) 1,045,236 1,001,988
All other corporate bonds 1,258,303 -- 90,154 (808) 1,347,649 1,258,303
Mortgage-backed securities 413,034 -- 24,526 (85) 437,475 413,034
- ------------------------------------------------------------------------------------------------------------------------------------
Total bonds held-to-maturity $2,966,939 $ -- $179,672 $ (2,957) $3,143,654 $2,966,939
Bonds available-for-sale:
U.S. government and agencies 21,568 -- 1,512 -- 23,080 23,080
Foreign governments 42,839 -- 5,089 -- 47,928 47,928
Public utilities 168,890 -- 15,526 -- 184,416 184,416
All other corporate bonds 202,745 -- 24,518 -- 227,263 227,263
- ------------------------------------------------------------------------------------------------------------------------------------
Total bonds available-for-sale $ 436,042 $ -- $ 46,645 $ -- $ 482,687 $ 482,687
- ------------------------------------------------------------------------------------------------------------------------------------
Total debt securities $3,402,981 $ -- $226,317 $ (2,957) $3,626,341 $3,449,626
Marketable equity securities
Preferred stock 52,642 -- 1,716 (375) 53,983 53,983
Common stock 514,781 -- 217,092 (21,156) 710,717 710,717
- ------------------------------------------------------------------------------------------------------------------------------------
Total marketable equity securities $ 567,423 $ -- $218,808 $ (21,531) $ 764,700 $ 764,700
Mortgage loans on real estate 938,405 (12,824) 160,059 (1,198) 1,084,442 925,581
Policy loans 301,589 -- -- -- 301,589 301,589
Investment real estate 369,477 (38,793) -- -- XXX 330,684
Short-term investments 15,066 -- -- -- 15,066 15,066
Other invested assets 33,739 -- -- -- XXX 33,739
- ------------------------------------------------------------------------------------------------------------------------------------
Total investments $5,628,680 $(51,617) $605,184 $ (25,686) XXXXXX $5,820,985
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Investment Gross Gross Estimated
Amortized Valuation Unrealized Unrealized Market Carrying
Cost Reserves Gains Losses Value Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1994:
Debt securities
Bonds held-to-maturity:
U.S. government and agencies $ 29,093 $ -- $ 303 $ (774) $ 28,622 $ 29,093
States and political subdivisions 56,560 -- 430 (2,969) 54,021 56,560
Foreign governments 126,694 -- 29 (6,281) 120,442 126,694
Public utilities 783,192 -- 768 (79,317) 704,643 783,192
All other corporate bonds 972,850 -- 8,120 (31,087) 949,883 972,850
Mortgage-backed securities 508,701 -- 8,531 (9,286) 507,946 508,701
- ------------------------------------------------------------------------------------------------------------------------------------
Total bonds held-to-maturity $2,477,090 $ -- $ 18,181 $(129,714) $2,365,557 $2,477,090
Bonds available-for-sale:
States and political subdivisions 24,996 -- 59 (33) 25,022 25,022
Foreign governments 9,384 -- -- (363) 9,021 9,021
Public utilities 26,639 -- -- (1,257) 25,382 25,382
All other corporate bonds 42,135 -- -- (2,049) 40,086 40,086
- -----------------------------------------------------------------------------------------------------------------------------------
Total bonds available-for-sale $ 103,154 $ -- $ 59 $ (3,702) $ 99,511 $ 99,511
- -----------------------------------------------------------------------------------------------------------------------------------
Total bonds $2,580,244 $ -- $ 18,240 $(133,416) $2,465,068 $2,576,601
Redeemable preferred stock:
Corporate securities 7,881 -- 19 (646) 7,254 7,881
- -----------------------------------------------------------------------------------------------------------------------------------
Total debt securities $2,588,125 $ -- $ 18,259 $(134,062) $2,472,322 $2,584,482
Marketable equity securities 569,321 -- 129,784 (45,679) 653,426 653,426
Mortgage loans on real estate 940,127 (9,287) 35,196 (11,290) 954,746 930,840
Policy loans 300,068 -- -- -- 300,068 300,068
Investment real estate 346,323 (32,888) -- -- XXX 313,435
Short-term investments 12,620 -- -- -- 12,620 12,620
Other invested assets 16,569 -- -- -- XXX 16,569
- -----------------------------------------------------------------------------------------------------------------------------------
Total investments $4,773,153 $(42,175) $183,239 $(191,031) XXXXXX $4,811,440
===================================================================================================================================
</TABLE>
28
<PAGE>
Notes to Consolidated Financial Statements continued
Additional information on investments is as follows:
Debt securities:
The amortized cost and estimated market value of debt securities at December
31, 1995 by contractual maturity, are shown below. Expected maturities will
differ from contractual maturities because borrowers may have the right to call
or prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Bonds Held-to-Maturity Bonds Available-for-Sale
================================================================================
Estimated Estimated
Amortized Market Amortized Market
Cost Value Cost Value
================================================================================
<S> <C> <C> <C> <C>
Due in one year
or less $ 61,767 $ 62,771 $ 2,343 $ 2,591
Due after one year
through five years 239,148 253,975 10,940 11,735
Due after five years
through ten years 2,019,616 2,133,156 373,895 412,902
Due after ten years 231,795 254,560 48,864 55,459
- --------------------------------------------------------------------------------
$ 2,552,326 $ 2,704,462 $ 436,042 $ 482,687
Without single
maturity date 414,613 439,192
- --------------------------------------------------------------------------------
$ 2,966,939 $ 3,143,654 $ 436,042 $ 482,687
================================================================================
</TABLE>
As of November 30, 1995, management determined that it would be advantageous to
have a larger percentage of the bond portfolio classified as available-for-sale.
As a result, bonds with an amortized cost of $340,171,000 were reclassified from
held-to-maturity to available-for-sale. Unrealized gains of $29,576,000 and
unrealized losses of $2,703,000 were recognized in stockholders' equity at the
time of the transfer. This transfer was done in conjunction with the onetime
reassessment allowed by the FASB Special Report "A Guide to Implementation of
Statement 115 on Accounting for Certain Investments in Debt and Equity
Securities."
Proceeds from sales of investments in securities classified as available-for-
sale (bonds and stocks) were $251,800,000 for 1995. Gross gains of $89,912,000
and gross losses of $7,155,000 were realized on those sales. Bonds were called
by the issuers during 1995, which resulted in proceeds from the disposal of
$105,489,000. Gross gains of $1,575,000 and gross losses of $4,000 were realized
on those disposals.
Proceeds from sales of investments in securities classified as available-for-
sale (bonds and stocks) were $223,909,000 for 1994. Gross gains of $91,413,000
and gross losses of $3,213,000 were realized on those sales. Bonds were called
by the issuers during 1994 which resulted in proceeds from the disposal of
$104,669,000. Gross gains of $1,369,000 and gross losses of $81,000 were
realized on those disposals.
All gains and losses were determined using specific identification of the
securities sold.
Unrealized gains on securities:
Unrealized gains on marketable equity securities and bonds
available-for-sale, presented in the stockholder's equity section of the
consolidated statements of financial position, are net of deferred tax
liabilities of $85,024,000 and $27,555,000 for 1995 and 1994, respectively.
The changes in the net unrealized gains on investments for the years ended
December 31 are summarized as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994
================================================================================
<S> <C> <C>
Bonds available-for-sale $ 50,288 $ (3,643)
Preferred stocks $ 5,792 $ (5,742)
Common stocks 107,380 (59,826)
- --------------------------------------------------------------------------------
$ 163,460 $ (69,211)
Benefit (provision) for federal
income taxes (57,469) 24,034
- --------------------------------------------------------------------------------
$ 105,991 $ (45,177)
================================================================================
</TABLE>
Mortgage loans:
In general, mortgage loans are secured by first liens on income-producing
real estate. The loans are expected to be repaid from the cash flows or
proceeds from the sale of real estate. American National generally allows a
maximum loan-to-collateral-value ratio of 75% to 90% on newly funded mortgage
loans. As of December 31, 1995, mortgage loans have both fixed rates from 5.25%
to 13% and variable rates from 7.04% to 10.48%. The majority of the mortgage
loan contracts require periodic payments of both principal and interest and
have amortization periods of 2 to 31 years.
American National has investments in first lien mortgage loans on real
estate with carrying values of $925,581,000 and $930,840,000 at December 31,
1995 and 1994, respectively. In addition, included in the other invested assets
category are second lien mortgage loans with carrying values of $28,097,000 and
$15,573,000 at December 31, 1995 and 1994, respectively. Impaired loans, on
which specific valuation reserves were established, totaled $7,950,000 and
$36,389,000 at December 31, 1995 and 1994, respectively.
29
<PAGE>
Notes to Consolidated Financial Statements continued
Policy loans:
Policy loans have interest rates ranging from 2.5% to 12%. Approximately 98%
of the policy loan portfolio carried interest rates of 5% to 8% at December 31,
1995.
Investment income and realized gains (losses):
Investment income and realized gains (losses) from disposals of investments
before federal income taxes for the years ended December 31 are summarized as
follows (in thousands):
<TABLE>
<CAPTION>
Gains (Losses) from
Investment Income Disposals of Investments
================================================================================
1995 1994 1995 1994
================================================================================
<S> <C> <C> <C> <C>
Bonds $ 238,262 $ 183,043 $ (900) $ 1,183
Preferred stocks 3,419 3,138 23 (4)
Common stocks 18,737 21,905 85,205 88,309
Mortgage loans 89,152 88,999 1,301 (8,438)
Real estate 73,304 69,709 648 10,209
Other invested assets 27,566 27,736 2,153 (89)
Investment in
unconsolidated
affiliates -- -- (1,236) --
- --------------------------------------------------------------------------------
$ 450,440 $ 394,530 $ 87,194 $ 91,170
Investment expenses (63,530) (61,218) -- --
Decrease (increase) in
valuation reserves -- -- (10,859) 1,191
- --------------------------------------------------------------------------------
$ 386,910 $ 333,312 $ 76,335 $ 92,361
================================================================================
</TABLE>
Notes payable:
At December 31, there were various notes payable, primarily related to
investment real estate, totaling $382,000 for 1995 and $2,423,000 for 1994. In
addition, a $10,000,000 note payable related to investment in unconsolidated
affiliates was outstanding at December 31, 1995 and 1994. These notes are due
at various dates after December 31, 1995 and are carried at a value which
approximates fair market value.
(4) OFF-BALANCE SHEET RISK AND CONCENTRATIONS OF CREDIT RISK ON INVESTMENTS
American National employs a strategy to invest funds at the highest return
possible commensurate with sound and prudent underwriting practices to ensure a
well diversified investment portfolio.
Bonds:
American National's bond portfolio is of high investment quality and is well
diversified. The bond portfolio, distributed by quality rating at December 31,
is summarized as follows:
<TABLE>
<CAPTION>
1995 1994
================================================================================
<S> <C> <C>
AAA 15% 23%
AA 11% 7%
A 51% 47%
BBB & below 18% 21%
Not rated 5% 2%
- --------------------------------------------------------------------------------
100% 100%
================================================================================
</TABLE>
Common stock:
American National's stock portfolio by market sector distribution at
December 31 is summarized as follows:
<TABLE>
<CAPTION>
1995 1994
================================================================================
<S> <C> <C>
Consumer non-durables 32% 35%
Capital goods 16% 16%
Energy 6% 6%
Information systems 7% 6%
Chemicals 4% 5%
Merchandising 3% 5%
Publishing 4% 4%
Miscellaneous 28% 23%
- --------------------------------------------------------------------------------
100% 100%
================================================================================
</TABLE>
Mortgage loans and investment real estate:
American National invests primarily in the commercial sector in areas that
offer the potential for property value appreciation. Generally, mortgage loans
are secured by first liens on income-producing real estate.
Mortgage loans and investment real estate by property type distribution at
December 31 are summarized as follows:
<TABLE>
<CAPTION>
Investment
Mortgage Real
Loans Estate
================================================================================
1995 1994 1995 1994
================================================================================
<S> <C> <C> <C> <C>
Office buildings 25% 26% 31% 28%
Shopping centers 52% 49% 26% 29%
Commercial 5% 5% 15% 17%
Apartments 1% 3% 6% 3%
Hotels/motels 3% 4% 12% 11%
Industrial 12% 11% 4% 4%
Residential 1% 1% -- --
Other 1% 1% 6% 8%
- --------------------------------------------------------------------------------
100% 100% 100% 100%
================================================================================
</TABLE>
Although American National has a diversified portfolio, a substantial
portion of its mortgage loans and real estate properties are dependent upon the
stability of the Texas and California economies. Mortgage loans and real estate
investments by geographic distribution at December 31 are as follows:
<TABLE>
<CAPTION>
Investment
Mortgage Real
Loans Estate
================================================================================
1995 1994 1995 1994
================================================================================
<S> <C> <C> <C> <C>
Texas 18% 22% 55% 55%
South Central, except Texas 3% 3% 2% 2%
California 17% 17% 10% 11%
Western, except California 6% 8% 4% 4%
Southeastern 11% 13% 13% 12%
North Central 8% 8% 10% 10%
Northeastern 37% 29% 6% 6%
- --------------------------------------------------------------------------------
100% 100% 100% 100%
================================================================================
</TABLE>
For discussion of other off-balance sheet risks see Note 14.
30
<PAGE>
Notes to Consolidated Financial Statements continued
(5) DEFERRED POLICY ACQUISITION COSTS
Deferred policy acquisition costs and premiums for the years ended December
31, 1995 and 1994, are summarized as follows (in thousands):
<TABLE>
<CAPTION>
Life Accident Property
& Annuity & Health & Casualty Total
================================================================================
<S> <C> <C> <C> <C>
Balance at
December 31, 1993 $ 405,559 $ 104,047 $ 4,716 $ 514,322
- --------------------------------------------------------------------------------
Additions $ 109,374 $ 22,683 $ 18,648 $ 150,705
Amortization (50,384) (20,420) (17,923) (88,727)
- --------------------------------------------------------------------------------
Net change $ 58,990 $ 2,263 $ 725 $ 61,978
Acquisitions $ 479 $ 22 $ -- $ 501
- --------------------------------------------------------------------------------
Balance at
December 31, 1994 $ 465,028 $ 106,332 $ 5,441 $ 576,801
- --------------------------------------------------------------------------------
Additions $ 154,688 $ 20,052 $ 19,943 $ 194,683
Amortization (57,774) (19,976) (18,648) (96,398)
- --------------------------------------------------------------------------------
Net change $ 96,914 $ 76 $ 1,295 $ 98,285
Acquisitions $ 451 $ 120 $ (1) $ 570
- --------------------------------------------------------------------------------
Balance at
December 31, 1995 $ 562,393 $ 106,528 $ 6,735 $ 675,656
================================================================================
1995 Premiums $ 308,949 $ 360,420 $ 233,512 $ 902,881
================================================================================
1994 Premiums $ 289,099 $ 384,703 $ 202,160 $ 875,962
================================================================================
</TABLE>
Commissions comprise the majority of the additions to deferred policy
acquisition costs for each year.
Acquisitions relate to the acquisition of various insurance portfolios under
assumption reinsurance agreements.
(6) FUTURE POLICY BENEFITS
Life insurance:
Interest assumptions used in the calculation of future policy benefits for
life policies are as follows:
<TABLE>
<CAPTION>
Percentage of
Future Policy
Policy Issue Interest Benefits
Year Rate So Valued
================================================================================
<S> <C> <C>
Ordinary--
1981-1995 8% for years 1 through 5, graded to 6% at the
end of year 25, and level thereafter............. 13%
1976-1981 7% for years 1 through 5, graded to 5% at the
end of year 25, and level thereafter............. 23%
1972-1975 6% for years 1 through 5, graded to 4% at the
end of year 25, and level thereafter............. 10%
1969-1971 6% for years 1 through 5, graded to 3.5% at the
end of year 30, and level thereafter............. 8%
1962-1968 4.5% for years 1 through 5, graded to 3.5% at the
end of year 15, and level thereafter............. 15%
1948-1961 4% for years 1 through 5, graded to 3.5% at the
end of year 10, and level thereafter............. 15%
1947 and prior Statutory rates of 3% or 3.5%.................... 2%
Industrial--
1948-1967 4% for years 1 through 5, graded to 3.5% at the
end of year 10, and level thereafter............. 8%
1947 and prior Statutory rates of 3%............................ 6%
- ----------------------------------------------------------------------------
100%
============================================================================
</TABLE>
Future policy benefit liabilities for universal life are calculated from the
current account value.
Future policy benefit liabilities for other policies have been calculated
using level interest rates principally as follows: annuities at 6% and group at
4%.
Mortality and withdrawal assumptions are based on American National's
experience.
Health insurance:
Interest assumptions used for future policy benefits on health policies are
calculated using a level interest rate of 6%.
Morbidity and termination assumptions are based on American National's
experience.
(7) LIABILITY FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES
Activity in the liability for accident and health, and property and casualty
unpaid claims and claim adjustment expenses is summarized as follows:
<TABLE>
<CAPTION>
1995 1994
- -----------------------------------------------------------
<S> <C> <C>
Balance at January 1 $213,406 $219,452
Less reinsurance recoverables 1,741 2,669
- -----------------------------------------------------------
Net balance at January 1 $211,665 $216,783
- -----------------------------------------------------------
Incurred related to:
Current year 456,721 417,491
Prior years (19,587) (5,765)
- -----------------------------------------------------------
Total incurred $437,134 $411,726
- -----------------------------------------------------------
Paid related to:
Current year 337,421 280,196
Prior years 98,125 136,648
- -----------------------------------------------------------
Total paid $435,546 $416,844
- -----------------------------------------------------------
Net balance at December 31 213,253 211,665
Plus reinsurance recoverables 1,346 1,741
- -----------------------------------------------------------
Balance at December 31 $214,599 $213,406
===========================================================
</TABLE>
The balances at December 31 are included in policy and contract claims on
the consolidated statements of financial position.
(8) REINSURANCE
As is customary in the insurance industry, the companies reinsure portions
of certain insurance policies they write, thereby providing a greater
diversification of risk and minimizing exposure on larger risks. The maximum
amount that would be retained by one company (American National) would be
$700,000 individual life, $250,000 individual accidental death, $100,000 group
life and $125,000 credit life (total $1,175,000). If individual, group and
credit were in force in all companies at the same time, the maximum risk on any
one life could be $1,875,000.
The companies remain contingently liable with respect to any reinsurance
ceded, and would become actually liable if the assuming companies were unable
to meet their obligations under any reinsurance treaties.
31
<PAGE>
Notes to Consolidated Financial Statements continued
American National evaluates the financial condition of its reinsurers and
monitors concentrations of credit risk arising from similar geographic regions,
activities, or economic characteristics of the reinsurers to minimize its
exposure to significant losses from reinsurer insolvencies. At December 31,
1995, amounts recoverable from reinsurers with a carrying value of $57,416,000
were associated with various auto dealer credit insurance program reinsurers
located in the Turks & Caicos Islands. The company holds collateral related to
these credit reinsurers totaling $48,863,000. This collateral is in the form of
custodial accounts controlled by the company, which can be drawn on for amounts
that remain unpaid for more than 120 days. American National believes that the
failure of any single reinsurer to meet its obligations would not have a
significant effect on its financial position or results of operations.
Premiums, premium-related reinsurance amounts and reinsurance recoveries for
the years ended December 31 are summarized as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994
- --------------------------------------------------------------
<S> <C> <C>
Direct premiums $962,190 $922,635
Reinsurance premiums assumed
from other companies 24,109 20,853
Reinsurance premiums ceded to
other companies (83,418) (67,526)
- --------------------------------------------------------------
Net premiums $902,881 $875,962
==============================================================
Reinsurance recoveries $ 53,849 $ 33,197
==============================================================
</TABLE>
Life insurance in force and related reinsurance amounts at December 31 are
summarized as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994
- ---------------------------------------------------------------
<S> <C> <C>
Direct life insurance in force $ 40,940,321 $ 39,592,367
Reinsurance risks assumed from
other companies 549,337 477,192
- ---------------------------------------------------------------
Total life insurance in force $ 41,489,658 $ 40,069,559
Reinsurance risks ceded to
other companies (5,359,378) (4,606,300)
- ---------------------------------------------------------------
Net life insurance in force $ 36,130,280 $ 35,463,259
===============================================================
</TABLE>
(9) SEGMENT INFORMATION
American National and its subsidiaries are engaged principally in the
insurance business, and operate primarily in six segments (lines of business)
within the insurance industry.
The following table summarizes the premiums and other revenue, gain (loss)
from operations before equity in earnings of unconsolidated affiliates and
federal income taxes, and assets by line of business for the years ended
December 31, 1995 and 1994 (in thousands):
<TABLE>
<CAPTION>
Gain (Loss) Before
Applicable
Federal
Premiums Income Taxes
and Other and Other
Line of business: Revenue Items Assets
- ----------------------------------------------------------------------------
1995
- ----
<S> <C> <C> <C>
Individual life insurance $ 502,160 $ 77,817 $ 2,523,463
Individual accident and
health insurance 212,062 3,642 111,862
Annuities 96,716 627 1,309,626
Group life and health
insurance 146,579 8,011 38,344
Credit insurance 48,616 1,679 103,382
Property and casualty insurance 243,933 10,361 258,346
- -----------------------------------------------------------------------------
Total insurance lines $ 1,250,066 $ 102,137 $ 4,345,023
Capital and surplus 124,403 125,899 2,709,441
Non-insurance 20,158 (264) 85,569
- -----------------------------------------------------------------------------
$ 1,394,627 $ 227,772 $ 7,140,033
Gain from sale of investments 76,335 76,335 -
- -----------------------------------------------------------------------------
$ 1,470,962 $ 304,107 $ 7,140,033
=============================================================================
1994
- ----
Individual life insurance $ 491,946 $ 78,561 $ 2,482,313
Individual accident and
health insurance 231,178 10,822 116,542
Annuities 43,153 457 591,876
Group life and health insurance 157,799 7,086 31,083
Credit insurance 36,606 1,395 80,954
Property and casualty insurance 210,702 11,569 227,104
- -----------------------------------------------------------------------------
Total insurance lines $ 1,171,384 $ 109,890 $ 3,529,872
Capital and surplus 111,644 113,635 2,337,777
Non-insurance 20,049 (369) 93,545
- -----------------------------------------------------------------------------
$ 1,303,077 $ 223,156 $ 5,961,194
Gain from sale of investments 92,361 92,361 -
- -----------------------------------------------------------------------------
$ 1,395,438 $ 315,517 $ 5,961,194
=============================================================================
</TABLE>
Net investment income from fixed income assets (bonds and mortgage loans on
real estate) is allocated to insurance lines based on the funds generated by
each line at the average yield available from these fixed income assets at the
time such funds become available. Net investment income from policy loans is
allocated to the insurance lines according to the amount of loans made by each
line. Net investment income from all other assets is allocated to capital and
surplus.
Identifiable commissions and expenses are charged directly to the
appropriate line of business. The remaining expenses are allocated to the lines
based upon various factors, including premium and commission ratios within the
respective lines.
Fixed-income assets and policy loans have been directly assigned to the
insurance lines to the extent required for reserves. Equity-type assets, such
as stocks and real estate and all other assets not required for the insurance
lines, have been assigned to capital and surplus.
Policy account deposits totaled $867,077,000 in 1995 and $455,380,000 in
1994. The majority of these deposits were in the annuity line which totaled
$763,049,000 and $354,508,000 in 1995 and 1994, respectively. The large
increase in annuity deposits resulted in the significant increase in assets for
that line of business.
32
<PAGE>
Notes to Consolidated Financial Statements continued
A significant portion of American National's insurance business is written
through one third-party marketing organization. Approximately 35% in 1995 and
22% in 1994 of the total premium revenues and policy account deposits were
written through that organization. Of the total business written by this one
organization, the majority was annuities.
(10) FEDERAL INCOME TAXES
The federal income tax provisions vary from the amounts computed when
applying the statutory federal income tax rate. A reconciliation of the
effective tax rate of the companies to the statutory federal income tax rate
follows (in thousands, except percentages):
<TABLE>
<CAPTION>
1995 1994
- --------------------------------------------------------------------------
Amount Rate% Amount Rate%
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Income tax on pre-tax income $ 107,197 35.00% $ 110,573 35.00%
Tax-exempt investment income (465) (0.15)% (568) (0.18)%
Dividend exclusion (4,031) (1.32)% (4,075) (1.29)%
Tax refund (2,225) (0.73)% (1,368) (0.43)%
Prior year reserve method change - - (3,500) (1.11)%
Other items, net (563) (0.18)% (225) (0.07)%
- ---------------------------------------------------------------------------
$ 99,913 32.62% $ 100,837 31.92%
===========================================================================
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December
31, 1995 and December 31, 1994 are as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994
- --------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Investment in real estate and
other invested assets, principally
due to allowance for losses $ 18,066 $ 14,761
Policyowner funds, principally
due to policy reserve discount 73,361 41,129
Policyowner funds, principally
due to unearned premium reserve 6,794 5,790
Other assets 6,225 9,039
- --------------------------------------------------------------------------
Total gross deferred tax assets $ 104,446 $ 70,719
Less valuation allowance (3,000) (3,000)
- --------------------------------------------------------------------------
Net deferred tax assets $ 101,446 $ 67,719
- --------------------------------------------------------------------------
Deferred tax liabilities:
Marketable equity securities, principally
due to net unrealized gains on stock $ (85,024) $ (25,160)
Investment in bonds, principally
due to accrual of discount on bonds (12,223) (10,953)
Deferred policy acquisition costs, due to
difference between GAAP and tax (175,250) (150,845)
Property, plant and equipment, principally
due to difference between GAAP
and tax depreciation methods (14,329) (16,196)
Prepaid pensions, principally due to
difference between GAAP and tax (7,038) (6,756)
Other liabilities (1,994) (4,098)
- --------------------------------------------------------------------------
Net deferred tax liabilities $ (295,858) $ (214,008)
- --------------------------------------------------------------------------
Total deferred tax $ (194,412) $ (146,289)
==========================================================================
</TABLE>
Management believes that a sufficient level of taxable income will be
achieved to utilize the net deferred tax assets.
Through 1983, under the provision of the Life Insurance Company Income Tax
Act of 1959, life insurance companies were permitted to defer from taxation a
portion of their income (within certain limitations) until and unless it was
distributed to stockholders, at which time it was taxed at regular corporate
tax rates. No provision for deferred federal income taxes applicable to such
untaxed income has been made because management is of the opinion that no
distributions of such untaxed income (designated by federal law as
"policyholders' surplus") will be made in the foreseeable future. There was no
change in the "policyholders' surplus" between December 31, 1994 and December
31, 1995, and the cumulative balance was approximately $63,000,000 at both
dates.
Federal income taxes totaling approximately $101,243,000 and $108,850,000
were paid to the Internal Revenue Service in 1995 and 1994, respectively.
Federal income tax returns for American National and its subsidiaries have been
examined by the Internal Revenue Service through 1991. All deficiencies have
been paid or provided for, and American National has filed appropriate claims
for refunds through 1991. In the opinion of management, adequate provision has
been made for any tax deficiencies that may be sustained.
(11) RECONCILIATION TO STATUTORY ACCOUNTING
American National and its insurance subsidiaries are required to file
statutory financial statements with state insurance regulatory authorities.
Accounting principles used to prepare these statutory financial statements
differ from those used to prepare financial statements on the basis of
generally accepted accounting principles.
Reconciliations of statutory net income and capital and surplus, as
determined using statutory accounting principles, to the amounts included in
the accompanying consolidated financial statements, for the years ended
December 31, are as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994
- ----------------------------------------------------------------------------
<S> <C> <C>
Statutory net income of insurance subsidiaries $ 131,866 $ 175,362
Net loss of non-insurance subsidiaries (4,455) (517)
- -----------------------------------------------------------------------------
Combined net income $ 127,411 $ 174,845
Increases/(decreases):
Deferred policy acquisition costs 98,285 61,978
Policyholder funds (33,461) (26,853)
Deferred federal income tax benefit 9,558 2,761
Premiums deferred and other receivables (1,444) (4,114)
Gain on sale of investments 2,886 2,688
Change in interest maintenance reserve 291 413
Allowance for losses on investments (4,764) 1,191
Statutory realized loss on subsidiary - 11,607
Dividend income from subsidiaries (1,577) (16,043)
Other adjustments, net 6,979 4,354
Consolidating eliminations and adjustments 2,200 2,260
- -----------------------------------------------------------------------------
Net income reported herein $ 206,364 $ 215,087
=============================================================================
</TABLE>
33
<PAGE>
Notes to Consolidated Financial Statements continued
<TABLE>
<CAPTION>
1995 1994
================================================================================
<S> <C> <C>
Statutory capital and
surplus of insurance subsidiaries $ 1,639,304 $ 1,456,188
Stockholders equity
of non-insurance subsidiaries 89,856 100,900
- --------------------------------------------------------------------------------
Combined capital and surplus $ 1,729,160 $ 1,557,088
Increases/(decreases):
Deferred policy acquisition costs 675,656 576,801
Policyholder funds 142,991 171,485
Deferred federal income taxes (194,412) (146,289)
Premiums deferred and other receivables (83,781) (82,337)
Reinsurance in "unauthorized companies" 16,542 12,975
Asset valuation reserve 305,655 259,755
Interest maintenance reserve 6,922 6,630
Investment valuation reserves (44,668) (43,032)
Non-admitted assets and
other adjustments, net 320,301 271,668
Consolidating eliminations and adjustments (553,253) (512,436)
- --------------------------------------------------------------------------------
Stockholders' equity reported herein $ 2,321,113 $ 2,072,308
================================================================================
</TABLE>
(12) STOCKHOLDERS' EQUITY
At December 31, 1995 and 1994 American National had 50,000,000 authorized
shares of $1.00 par value common stock. At December 31, 1995 and 1994, issued
shares were 30,832,449; treasury shares were 4,353,284; and outstanding shares
were 26,479,165.
American National has a qualified stock option plan for key employees. For
this plan, American National is permitted to purchase shares of stock which
have been previously issued. A total of 1,000,000 shares may be optioned under
this plan. No option shall be granted to an employee who would own more than 5%
of the voting stock of American National. Options cannot be exercised during
the first two years, are exercisable to the extent of one-third of the optioned
shares for each of the next three years, and expire after five years. The
purchase price of the shares optioned shall not be less than the greater of
fair market or par value of the shares on the date the option is granted. At
December 31, 1995 and 1994, there were no options outstanding and 971,000
shares were available for grant.
American National's payment of dividends to stockholders is restricted by
statutory regulations. Generally, the restrictions require life insurance
companies to maintain minimum amounts of capital and surplus, and limit the
payment of dividends to statutory net gain from operations on an annual,
noncumulative basis in the absence of special approval. Additionally, insurance
companies are not permitted to distribute the excess of stockholders' equity as
determined on a GAAP basis over that determined on a statutory basis.
Generally, the same restrictions apply to American National's insurance
subsidiaries regarding amounts which can transfer in the form of dividends,
loans or advances to the parent company.
At December 31, 1995, approximately $464,445,000 of American National's
consolidated stockholders' equity represents net assets of its insurance
subsidiaries. Any transfer of these net assets to American National would be
subject to statutory restrictions and approval.
(13) RETIREMENT BENEFITS
American National and its subsidiaries have one tax-qualified pension plan,
which has three separate programs. Two of the programs are contributory, and
cover substantially all hourly employees and home service agents. The third
program is noncontributory, and covers salaried and management employees. The
program covering salaried and management employees provides pension benefits
that are based on years of service and the employee's compensation during the
five years before retirement. The programs covering hourly employees and agents
generally provide benefits that are based on the employee's average monthly
compensation during the five highest compensated years within the last ten
years before retirement, or career average earnings, as applicable, and years
of service. American National also sponsors a non-tax-qualified pension plan
for key executives that restores benefits that would otherwise be curtailed by
statutory limits on qualified plan benefits.
The companies' funding policy for the pension plans is to make annual
contributions in accordance with the minimum funding standards of the Employee
Retirement Income Security Act of 1974.
Actuarial computations of pension expense produced a pension debit of
$15,000 for 1995 and $1,973,000 for 1994.
The pension debit comprised (in thousands):
<TABLE>
<CAPTION>
1995 1994
================================================================================
<S> <C> <C>
Service cost--benefits earned during period $ 4,515 $ 5,233
Interest cost on projected benefit obligation 6,168 5,508
Actual return on plan assets (14,988) 65
Net amortization and deferral 4,320 (8,833)
- --------------------------------------------------------------------------------
Total pension debit $ 15 $ 1,973
================================================================================
</TABLE>
The following table sets forth the funded status and amounts recognized in
the consolidated statements of financial position at December 31 for the
companies' pension plans.
Actuarial present value of benefit obligation:
<TABLE>
<CAPTION>
1995 1994
================================================================================
<S> <C> <C>
Vested benefit obligation $ (78,098) $ (67,957)
================================================================================
Accumulated benefit obligation $ (82,018) $ (71,578)
================================================================================
Projected benefit obligation $ (100,436) $ (90,448)
Plan assets at fair value (long-term securities) 126,591 116,654
- --------------------------------------------------------------------------------
Plan assets in excess of projected
benefit obligation $ 26,155 $ 26,206
Unrecognized net loss 6,437 8,421
Prior service cost not yet recognized
in periodic pension cost 2,412 3,011
Unrecognized net transition asset at
January 1 being recognized over 15 years (15,716) (18,336)
Adjustment required to recognize additional
liability (1,279) (1,168)
- --------------------------------------------------------------------------------
Prepaid pension cost included in other assets $ 18,009 $ 18,134
================================================================================
</TABLE>
34
<PAGE>
Notes to Consolidated Financial Statements continued
Assumptions used at December 31:
<TABLE>
<CAPTION>
1995 1994
================================================================================
<S> <C> <C>
Weighted-average discount rate on benefit obligation 6.40% 6.50%
Rate of increase in compensation levels 4.80% 5.00%
Expected long-term rate of return on plan assets 8.00% 8.00%
</TABLE>
Under American National and its subsidiaries' various group benefit plans
for active employees, a $2,500 paid up life insurance certificate is provided
upon retirement for eligible participants who meet certain age and length of
service requirements.
American National has one retiree health benefit plan for retirees of all
companies in the consolidated group, with the exception of Standard Life and
Accident Insurance Company (Standard). The retirees of Standard are covered
under a separate health plan. Participation in either of these plans is limited
to current retirees and their dependents, and those employees and their
dependents who met certain age and length of service requirements as of
December 31, 1993. No new participants will be added to these plans in the
future.
The retiree health benefit plans provide major medical benefits for
participants under the age of 65 and Medicare supplemental benefits for those
over 65. Prescription drug benefits are provided to both age groups. The plans
are contributory, with the company's contribution limited to $80 per month for
retirees and spouses under the age of 65 and $40 per month for retirees and
spouses over the age of 65. All additional contributions necessary, over the
amount to be contributed by the companies, are to be made by the retirees.
The accrued post-retirement benefit obligation, included in other
liabilities, was $13,105,000 and $13,214,000 at December 31, 1995 and 1994,
respectively. These amounts were approximately equal to the unfunded
accumulated post-retirement benefit obligation. Since the companies'
contributions to the cost of the retiree benefit plans are fixed, the health
care cost trend rate will have no effect on the future expense or the
accumulated post-retirement benefit obligation.
(14) COMMITMENTS AND CONTINGENCIES
American National and its subsidiaries lease office space in various cities
for their insurance sales offices. The long-term lease commitments at December
31, 1995 are approximately $6,203,000.
In the ordinary course of their operations, the companies also had
commitments outstanding at December 31, 1995 to purchase, expand or improve
real estate, and to fund mortgage loans aggregating $83,070,000, all of which
is expected to be funded in 1996. Of the commitment amount, $72,470,000 of
mortgage loan commitments have interest rates that are fixed. The fair market
value of these commitments is not significant at December 31, 1995.
The companies are defendants in various lawsuits concerning alleged failure
to honor certain loan commitments, alleged breach of certain agency and real
estate contracts, and in other litigation arising in the ordinary course of
operations. Several of these lawsuits include claims for punitive damages.
Management is of the opinion, after reviewing the above matters with legal
counsel, that the ultimate liability, if any, resulting from any of or all of
the above matters would not have a material adverse effect on the companies'
consolidated financial position or results of operations.
In the summer of 1995 there was a series of fires in Houston, Texas at a
warehouse which American National owns. American National leased the warehouse
to a company which in turn rented out space to various other parties to store
materials. As a result of the fire, some of the materials stored in the
warehouse caused damage at the warehouse site. As the owner of the warehouse,
American National is now named in numerous lawsuits concerning alleged damages
arising from the fire. After reviewing this situation with legal counsel,
management believes that American National has meritorious defenses against
these lawsuits and also has a cause to recover any damages from the third
parties who actually owned the materials which caused the fire. Therefore, no
provision for this matter has been recorded in the financial statements. Since
the outcome of this situation is not foreseeable, no estimate of any potential
loss is possible. However, if the defenses and recoveries do not work out in
the manner which management anticipates, it is possible that the resulting
liability could have a material impact on the consolidated financial results.
35
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and Board of Directors,
American National Insurance Company:
We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements of American National Insurance Company
and subsidiaries included in this registration statement and have issued our
report thereon dated February 16, 1996. Our audit was made for the purpose of
forming an opinion on the basic consolidated financial statements taken as a
whole. The accompanying schedules are the responsibility of the Company's
management and are presented for purposes of complying with the Securities and
Exchange Commission's rules and are not a required part of the basic
consolidated financial statements. These schedules have been subjected to the
auditing procedures applied in our audit of the basic consolidated financial
statements and, in our opinion, are fairly stated in all material respects in
relation to the basic consolidated financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Houston, Texas
February 16, 1996
36
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and Board of Directors,
American National Insurance Company
Under date of February 15, 1995, we reported on the consolidated statements
of financial position of American National Insurance Company and subsidiaries
as of December 31, 1994, and the related consolidated statements of income,
changes in stockholders' equity and cash flows for the year then ended which
are included herein. In connection with our audits of the aforementioned
consolidated financial statements, we also audited the related consolidated
financial statement schedules in the registration statement. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.
In our opinion, such schedules, when considered in relation to the
consolidated financial statements taken as a whole, present fairly, in all
material respects, the information set forth herein.
As discussed in Note 1 to the consolidated financial statements, the Company
adopted the provisions of the Financial Accounting Standards Board (FASB)
Statement of Financial Accounting Standard No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," in 1994.
KPMG PEAT MARWICK LLP
Houston, Texas
February 15, 1995
37
<PAGE>
American National Insurance Company and Subsidiaries
SCHEDULE I - SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS
IN RELATED PARTIES
(In thousands)
<TABLE>
<CAPTION>
====================================================================================================================================
DECEMBER 31, 1995
Column A Column B Column C Column D
Amount at Which
Market Shown in the
Type of Investment Cost (a) Value Balance Sheet
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fixed Maturities:
Bonds Held-to-Maturity:
United States Government and government agencies
and authorities $ 176,345 $ 186,629 $ 176,345
States, municipalities and political subdivisions 22,542 23,760 22,542
Foreign governments 94,727 102,905 94,727
Public utilities 1,001,988 1,045,236 1,001,988
All other corporate bonds 1,671,337 1,785,124 1,671,337
Bonds Available-for-Sale:
United States Government and government agencies
and authorities $ 21,568 $ 23,080 $ 23,080
Foreign governments 42,839 47,928 47,928
Public utilities 168,890 184,416 184,416
All other corporate bonds 202,745 227,263 227,263
Redeemable preferred stock 52,642 53,983 53,983
- ------------------------------------------------------------------------------------------------------------------------------------
Total fixed maturities $ 3,455,623 $ 3,680,324 $ 3,503,609
- ------------------------------------------------------------------------------------------------------------------------------------
Equity Securities:
Common stocks:
Public utilities $ 27,922 $ 34,034 $ 34,034
Banks, trust and insurance companies 13,294 18,056 18,056
Industrial, miscellaneous and all other 473,565 658,627 658,627
- ------------------------------------------------------------------------------------------------------------------------------------
Total equity securities $ 514,781 $ 710,717 $ 710,717
- ------------------------------------------------------------------------------------------------------------------------------------
Mortgage loans on real estate $ 925,581 XXXXXX $ 925,581
Investment real estate 238,862 XXXXXX 238,862
Real estate acquired in satisfaction of debt 91,822 XXXXXX 91,822
Policy loans 301,589 XXXXXX 301,589
Other long-term investments 33,739 XXXXXX 33,739
Short-term investments 15,066 XXXXXX 15,066
- ------------------------------------------------------------------------------------------------------------------------------------
Total investments $ 5,577,063 XXXXXX $ 5,820,985
====================================================================================================================================
</TABLE>
(a) Original cost of equity securities and, as to fixed maturities, original
cost reduced by repayments and adjusted for amortization of premiums or
accrual of discounts and, where applicable, reserve for losses.
38
<PAGE>
AMERICAN NATIONAL INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE III--SUPPLEMENTARY INSURANCE INFORMATION
(In Thousands)
<TABLE>
<CAPTION>
====================================================================================================================================
Column A Column B Column C Column D Column E Column F Column G
Future Policy
Deferred Benefits, Other Policy
Policy Losses, Claims Claims and Net
Acquisition and Loss Unearned Benefits Premium Investment
Segment Cost Expenses Premiums Payable Revenue Income (a)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1995
- ----
Individual life insurance $420,737 $2,299,547 $ 5,610 $ 56,267 $271,387 $154,740
Individual accident and health insurance 60,260 95,966 4,634 65,581 204,187 7,797
Annuities 123,788 1,359,143 4 5,857 13,348 74,275
Group life and A & H insurance 17,803 34,660 3,881 35,567 141,374 3,940
Credit insurance 46,333 -- 175,538 29,428 39,073 4,291
Property and casualty insurance 6,735 -- 85,442 107,353 233,512 10,864
Capital and surplus -- -- -- -- -- 123,948
Non-insurance -- -- -- -- -- 7,055
- ------------------------------------------------------------------------------------------------------------------------------------
Total $675,656 $3,789,316 $275,109 $300,053 $902,881 $386,910
====================================================================================================================================
1994
- ----
Individual life insurance $412,670 $2,281,960 $ 6,525 $ 54,911 $265,476 $156,078
Individual accident and health insurance 64,733 98,198 5,141 69,559 222,823 8,250
Annuities 38,804 592,930 -- 1,852 4,197 32,758
Group life and A & H insurance 16,375 26,829 3,856 36,241 151,901 4,620
Credit insurance 38,778 -- 144,360 25,577 29,405 3,651
Property and casualty insurance 5,441 -- 73,160 98,741 202,160 9,088
Capital and surplus -- -- -- -- -- 111,403
Non-insurance -- -- -- -- -- 7,464
- ------------------------------------------------------------------------------------------------------------------------------------
Total $576,801 $2,999,917 $233,042 $286,881 $875,962 $333,312
===================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
====================================================================================================================================
Column A Column H Column I Column J Column K
Benefits Amortization
Claims, Losses of Deferred
and Policy Other
Settlement Acquisition Operating Premiums
Segment Expenses Costs Expenses (b) Written
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995
- ----
Individual life insurance $229,989 $49,009 $124,599 --
Individual accident and health insurance 143,034 6,176 61,511 --
Annuities 71,748 2,182 10,253 --
Group life and A & H insurance 93,351 7,683 37,814 --
Credit insurance 17,456 12,700 16,828 --
Property and casualty insurance 193,453 18,648 21,471 245,527
Capital and surplus -- -- (1,496) --
Non-insurance -- -- 20,422 --
- ------------------------------------------------------------------------------------------------------------------------------------
Total $749,031 $96,398 $291,402 $245,527
====================================================================================================================================
1994
- ----
Individual life insurance $228,572 $43,861 $127,758 --
Individual accident and health insurance 147,804 6,750 66,000 --
Annuities 28,406 654 8,441 --
Group life and A & H insurance 101,607 8,360 39,486 --
Credit insurance 13,481 11,179 10,525 --
Property and casualty insurance 150,922 17,923 30,288 213,963
Capital and surplus -- -- (1,991) --
Non-insurance -- -- 20,418 --
- ------------------------------------------------------------------------------------------------------------------------------------
Total $670,792 $88,727 $300,925 $213,963
===================================================================================================================================
</TABLE>
(a) Net investment income from fixed income assets (bonds and mortgage loans on
real estate) is allocated to insurance lines based on the funds generated by
each line at the average yield available from these fixed income assets at
the time such funds become available. Net investment income from all other
assets is allocated to capital and surplus.
(b) Identifiable commissions and expenses are charged directly to the
appropriate line of business. The remaining expenses are allocated to the
lines based upon various factors including premium and commission ratios
within the respective lines.
39
<PAGE>
American National Insurance Company and Subsidiaries
SCHEDULE IV - REINSURANCE
(In thousands)
<TABLE>
<CAPTION>
====================================================================================================================================
Column A Column B Column C Column D Column E Column F
Ceded to Assumed Percentage of
Gross Other from Other Net Amount Assumed
Amount Companies Companies Amount to Net
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1995
- ----
Life insurance in force $ 40,940,321 $ 5,359,378 $ 549,337 $ 36,130,280 1.5 %
====================================================================================================================================
Premiums:
Life insurance $ 341,766 $ 40,501 $ 7,684 $ 308,949 2.5 %
Accident and health insurance 387,976 36,309 8,753 360,420 2.4 %
Property and liability insurance 232,448 6,608 7,672 233,512 3.3 %
- ------------------------------------------------------------------------------------------------------------------------------------
Total premiums $ 962,190 $ 83,418 $ 24,109 $ 902,881 2.7 %
====================================================================================================================================
1994
- ----
Life insurance in force $ 39,592,367 $ 4,606,300 $ 477,192 $ 35,463,259 1.3 %
====================================================================================================================================
Premiums:
Life insurance $ 314,070 $ 31,611 $ 6,640 $ 289,099 2.3 %
Accident and health insurance 407,924 30,522 7,301 384,703 1.9 %
Property and liability insurance 200,641 5,393 6,912 202,160 3.4 %
- ------------------------------------------------------------------------------------------------------------------------------------
Total premiums $ 922,635 $ 67,526 $ 20,853 $ 875,962 2.4 %
====================================================================================================================================
</TABLE>
40
<PAGE>
American National Insurance Company and Subsidiaries
SCHEDULE V - VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Deductions - Describe
--------------------------------
Balance at Additions Amounts Balance at
Beginning of Charged to Written off Due Amounts End of
Description Period Expense to Disposal (a) Commuted (b) Period
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1995
- ----
Investment valuation reserves:
Mortgage loans on real estate 9,287 4,526 981 8 12,824
Investment real estate 32,888 9,973 1,608 2,460 38,793
Investment in unconsolidated
affiliates 1,696 -- -- 583 1,113
Other assets -- 2,000 -- -- 2,000
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 43,871 $ 16,499 $ 2,589 $ 3,051 $ 54,730
====================================================================================================================================
1994
- ----
Investment valuation reserves:
Bonds $ 6,537 -- -- $ 6,537 --
Mortgage loans on real estate 13,626 2,864 3,675 3,528 9,287
Investment real estate 24,899 5,577 4,514 (6,926) 32,888
Investment in unconsolidated
affiliates -- 1,696 -- -- 1,696
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 45,062 $ 10,137 $ 8,189 $ 3,139 $ 43,871
====================================================================================================================================
</TABLE>
(a) Amounts written off due to disposal represent reductions in the reserve
balance due to sales, transfers or other disposals of the asset with which
the reserve is associated.
(b) Amounts commuted represent reductions in the reserve balance due to
changes in reserve requirements or investment conditions.
41
<PAGE>
PART C ITEM AND CAPTION
Items 24. Financial Statements and Exhibits.
(a) Financial Statements FINANCIAL STATEMENTS and FINANCIAL STATEMENT
SCHEDULES sections of Statement of
Additional Information
(b) Exhibits
Exhibit "99.B1" - copy of the resolutions of the board of directors of
the depositor authorizing the establishment of the
Registrant
Exhibit "99.B2" - Not Applicable
Exhibit "99.B3" - Distribution and Administrative Services Agreement
Exhibit "99.B4" - the form of each variable annuity contract
Exhibit "99.B5" - the form of application used with any variable annuity
contract
Exhibit "99.B6a - copy of the articles of incorporation of the depositor
Exhibit "99.B6b" - copy of the by-laws of the depositor
Exhibit "99.B7" - Not Applicable
Exhibit "99.B8a" American National Investment Account, Inc.
Participation Agreement
Exhibit "99.B8b" Fidelity Investments' Variable Insurance Products Fund
Participation Agreement
i
<PAGE>
Exhibit "99.B8c" Variable Insurance Products Fund II Participation
Agreement
Exhibit "99.B9" - an opinion of counsel and consent to its use as to the
legality of the securities being registered,
indicating whether they will be legally issued and
will represent binding obligations of the
depositor
Exhibit "99.B10" - Consent of independent accountants
Exhibit "99.B11" - Not Applicable
Exhibit "99.B12" - Not Applicable
Exhibit "99.B13" - Not Applicable
Exhibit "99.B14" - Control chart of depositor
Exhibit "27" - Financial Data Schedule
Item 25. Directors and Officers of the Depositor.
Directors
- ---------
Name Business Address
- ---- ----------------
Irwin M. Herz, Jr. Greer, Herz & Adams, L.L.P.
One Moody Plaza, 18th Floor
ii
<PAGE>
Galveston, Texas 77550
R. Eugene Lucas Gal-Tex Hotel Corporation
2302 Postoffice, Suite 504
Galveston, Texas 77550
Harold C. MacDonald The Moody Foundation
2302 Postoffice, Suite 704
Galveston, Texas 77550
E. Douglas McLeod The Moody Foundation
2302 Postoffice, Suite 704
Galveston, Texas 77550
Frances Anne Moody 7031 Inwood
Dallas, Texas 75209
Robert L. Moody 2302 Postoffice, Suite 702
Galveston, Texas 77550
Russell S. Moody 6016 Mount Bonnell Hollow
Austin, Texas 78731
W.L. Moody, IV 2302 Postoffice, Suite 502
Galveston, Texas 77550
Joe Max Taylor Galveston County Sheriff's Department
715 19th Street
Galveston, Texas 77550
Officers
- --------
The principal business address of the officers, unless otherwise indicated in
the "Directors" section, is American National Insurance Company, One Moody
Plaza, Galveston, Texas 77550.
Name Office
- ---- ------
R.L. Moody Chairman of the Board, President
Chief Executive Officer
C.R. Robertson Senior Executive Vice President, Home Office
Administration
R.A. Fruend Executive Vice President, Director of
Ordinary Agencies
B.J. Garrison Executive Vice President, Director of Home
Service Division
iii
<PAGE>
M.W. McCroskey Executive Vice President - Investments
C.H. Addison Senior Vice President, Systems Planning and Computing
A.L. Amato, Jr. Senior Vice President, Life Policy Administration
W.J. Davis Senior Vice President, Claims
G.R. Ferdinandtsen Senior Vice President, Health Insurance Operations
J.E. Pozzi Senior Vice President, Corporate Planning and
Development
J.R. Thomason Senior Vice President, Credit Insurance Services
R.J. Welch Senior Vice President & Chief Actuary
V.E. Soler, Jr. Vice President, Secretary & Treasurer
S.E. Pavlicek Vice President & Controller
J.J. Antkowiak Vice President, Director of Computing Services
D. D. Brichler Vice President, Mortgage Loan Production
F.V. Broll, Jr. Vice President & Actuary
A.C. Deetjen Vice President, Director of Marketing & Product
Services
R.D. Graves Vice President, Director of Manpower Development,
Ordinary Agencies
G.D. Dixon Vice President, Stocks
J.F. Grant, Jr. Vice President, Group Actuary
Dr. H.B. Kelso, Jr. Vice President & Medical Director
G.G. Kirk Vice President, Pension& Payroll Deduction Marketing
iv
<PAGE>
D.D. Lagrone Vice President, Home Office Services
G.C. Langley Vice President, Assistant Personnel Director
George A. Macke Vice President, General Auditor
G.W. Marchand Vice President, Life Underwriting
R.G. McCrary Vice President, Application Development
Division
W.T. Porter Vice President, Group Marketing
G.W. Tolman Vice President, Corporate Affairs
W.H. Watson III Vice President, Health Actuary
D.M. Azur Asst. Vice President, Life Claims
W.F. Carlton Asst. Vice President, Financial Reports
J. R. Cramer Asst. Vice President, Health Claims
R. T. Crawford Asst. Vice President, General Accounting
J.D. Ferguson Asst. Vice President, Director of Marketing Services
D.S. Fuentes Asst. Vice President, Director of Group Claims
M. E. Hogan Asst. Vice President, Credit Insurance Operations
C.J. Jones Asst. Vice President, Health Underwriting & New
Business
P.E. Kennedy Asst. Vice President, Personnel
C.H. Lee Asst. Vice President and Actuary
D.L. Leining Asst. Vice President, Life Underwriting
D.N. McDaniel Asst. Vice President, Home Service Administration
R.J. Ostermayer Asst. Vice President, Director of Group Quality
Assurance
E.B. Pavelka Asst. Vice President, Life Premium Accounting &
Policy Service
v
<PAGE>
J.J. Rooney Asst. Vice President, Group Legal/Audit
G.A. Schillaci Asst. Vice President & Actuary
M.J. Soler Asst. Vice President, Group Administration
G.A. Sparks, Sr. Asst. Vice President, Director of Field Services
M.A. Trevino Asst. Vice President, Life Systems,
Training & New Business
V.M. Young Asst. Vice President, Securities Investments
J.N. Bell Assistant Secretary
Item 26. Persons Controlled by or Under Common Control with Depositor of
Registrant.
Exhibit "14" - control chart of depositor
Item 27. Number of Contractowners.
As of February 29 , 199 6 , the Registrant had 242
Contractowners of the Qualified Flexible Purchase Payment Deferred Annuity
Contracts, 77 Contractowners of the Non-qualified Flexible Purchase
Payment Deferred Annuity Contracts, no Contractowners of the Single Premium
Immediate Annuity Contracts, and 1 Contractowners of the Group Unallocated
Annuity Contracts.
Item 28. Indemnification.
The following provision is in the Distribution and Administrative Services
Agreement:
"American National agrees to indemnify SM&R for any liability that SM&R may
incur to a Contractowner or party-in-interest under a Contract (i)
arising out of any act or omission in the course of, or in connection
with, rendering services under this Agreement, or (ii) arising out of
the purchase, retention or surrender of a Contract; provided, however,
that American National will not indemnify SM&R for any such liability
that results from the willful misfeasance, bad faith or gross
negligence of SM&R, or from the reckless disregard, by SM&R, of its
duties and obligations arising under this Agreement."
The officers and directors of American National are indemnified by American
National in the American National By-Laws for liability incurred by reason of
the officer and directors
vi
<PAGE>
serving in such capacity. This indemnification would cover liability arising out
of the variable annuity sales of American National
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefor, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 29. Principal Underwriters.
(a) American National Funds Group consisting of American National Growth Fund,
Inc., American National Income Fund, Inc. and American National Triflex Fund,
Inc.; SM&R Capital Funds, Inc. consisting of American National Government Income
Fund Series, American National Primary Fund Series and American National Tax
Free Fund Series; American National Investment Accounts, Inc.
(b) The Registrant's principal underwriter is Securities Management and
Research, Inc. The following are the officers and directors of Securities
Management and Research, Inc.
Principal Business
Name Position Address
- ----- --------- ------------------------
Robert A. Fruend, C.L.U. Director American National
Insurance Company
One Moody Plaza
Galveston, Texas 77550
R. Eugene Lucas Director Gal-Tenn Hotel Corporation
504 Moody National Bank
Tower
Galveston, Texas 77550
vii
<PAGE>
Carl R. Robertson Director American National
Insurance Company
One Moody Plaza
Galveston, Texas 77550
Michael W. McCroskey Director, Securities Management
President and Research, Inc.
and Chief One Moody Plaza
Executive Galveston, Texas 77550
Officer
Gordon D. Dixon Senior Vice Securities Management President
and Research, Inc.
Chief One Moody Plaza
Investment Galveston, Texas 77550
Officer
Vera M. Young Vice American National
President Insurance Company
One Moody Plaza
Galveston, Texas 77550
Emerson V. Unger, C.L.U. Vice Securities Management and
President Research, Inc.
One Moody Plaza
Galveston, Texas 77550
Brenda T. Koelemay Vice Securities Management and
President Research, Inc.
and One Moody Plaza
Treasurer Galveston, Texas 77550
Teresa E. Axelson Vice Securities Management and
President Research, Inc.
and One Moody Plaza
Secretary Galveston, Texas 77550
(c) Not Applicable
Item 30. Location of Accounts and Records.
All accounts, books and other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 and the Rules promulgated thereunder
will be maintained at the offices of American National Insurance Company, One
Moody Plaza, Galveston, Texas 77550.
Item 31. Management Services.
viii
<PAGE>
Not Applicable
Item 32. Undertakings.
(a) Registrant undertakes to file a post-effective amendment to this
registration statement as frequently as is necessary to ensure that the audited
financial statements in the registration statement are never more than 16 months
old for so long as payments under the variable annuity contracts may be
accepted.
(b) Registrant undertakes to include as part of any application to purchase a
contract offered by the prospectus, a space that an applicant can check to
request 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.
(d) The Registrant hereby represents that it is relying upon a No Action Letter
issued to the American Council of Life Insurance dated November 28, 1988
(Commission ref. IP-6-88) and that the following provisions have been complied
with:
(i) Include appropriate disclosure regarding the redemption
restrictions imposed by Section 403 (b) (11) in each
registration statement, including the prospectus, used in
connection with the offer of the contract;
(ii) Include appropriate disclosure regarding the redemption
restrictions imposed by Section 403 (b) (11) in any sales
literature used in connection with the offer of the
contract;
(iii) Instruct sales representatives who solicit participants to
purchase the contract specifically to bring the redemption
restrictions imposed by Section 403(b) (11) to the attention
of the potential participants;
(iv) Obtain from each plan participant who purchases a Section
403 (b) annuity contract, prior to or at the time of such
purchase, a signed statement acknowledging the participant's
understanding of (1) the restrictions on redemption imposed
by Section 403 (b) (11), and (2) other investment
alternatives available under the employer's Section 403 (b)
arrangement to which the participant may elect to transfer
his contract value.
ix
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it meets the requirements of Securities
Act Rule 485 for effectiveness of this Registration Statement and has caused
this Post-Effective Amendment No. 6 to the Registration Statement to be
signed on its behalf, in the City of Galveston, and the State of Texas on the
24th day of April, 1995 6 .
AMERICAN NATIONAL VARIABLE ANNUITY
SEPARATE ACCOUNT
(Registrant)
By: AMERICAN NATIONAL INSURANCE COMPANY
By: Robert L. Moody
------------------------------
Robert L. Moody, Chairman of the
Board , President and Chief Executive Officer
AMERICAN NATIONAL INSURANCE COMPANY
(Sponsor)
By: Robert L. Moody
------------------------------
Robert L. Moody, Chairman of the
Board , President and Chief Executive Officer
ATTEST:
Vincent E. Soler, Jr.
------------------------------
Vincent E. Soler, Jr., Vice
President, Secretary and Treasurer
As required by the Securities Act of 1933, t This Post-Effective
Amendment No. 6 to the Registration Statement has been signed by the
following persons in their capacities and on the dates indicated:
Signature Title Date
- --------- ----- ------
Michael W. McCroskey Executive Vice President - 4-24-96
- ------------------------ Investments (Principal Financial
Michael W. McCroskey Officer)
Stephen E. Pavlicek Vice President and Controller 4-24-96
- ------------------------ (Principal Accounting Officer)
Stephen E. Pavlicek
x
<PAGE>
Signature Title Date
- --------- ----- ------
Robert L. Moody Chairman of the Board, 4-24-96
- ----------------------
Robert L. Moody Director , President and
Chief Executive Officer
Irwin M. Herz, Jr. Director 4-24-96
- ----------------------
Irwin M. Herz, Jr.
Director 4-24-96
R. Eugene Lucas
- ----------------------
R. Eugene Lucas
Harold C. MacDonald Director 4-24-96
- ----------------------
Harold C. MacDonald
E. Douglas McLeod Director 4-24-96
- ----------------------
E. Douglas McLeod
Director ______
- ----------------------
Frances Anne Moody
Director ______
- ----------------------
Russell S. Moody
Director ______
- ----------------------
W. L. Moody IV
Director ______
- ----------------------
Joe Max Taylor
xi
<PAGE>
Exhibit 99.B1
STATE OF TEXAS )
)
COUNTY OF GALVESTON )
I, the undersigned, Assistant Secretary of the AMERICAN NATIONAL INSURANCE
COMPANY, Galveston, Texas, do hereby certify that the following is a true and
correct copy from the corporate records of said Corporation, of a resolution
duly adopted by the Board of Directors thereof, at a regular meeting of said
Board, a quorum thereof present and acting, on the 20th day of December, 1991,
to wit:
Resolution Establishing Separate Account
Variable Annuity Contracts
RESOLVED, That the officers of the Company be, and they hereby are,
authorized to establish one or more separate accounts of this Company, in
accordance with the insurance laws of the State of Texas, to provide an
investment medium for variable annuity contracts issued by this company as
may be designated as participating therein. Any such separate account shall
receive, hold, invest and reinvest only the monies arising from: (1)
premiums, contributions or payments made pursuant to variable annuity
contracts participating therein; (2) such assets of the company as may be
necessary for the establishment of such separate account or accounts; and
(3) the dividends, interest and gains produced by the foregoing; and
FURTHER RESOLVED, that the separate account may be divided into various
sub-accounts as determined necessary by the officers of the Company to fund
such variable annuity contracts. Purchase payments (net of any applicable
deductions) remitted to the Company under the variable annuity contracts
and allocated to the separate account shall be allocated to the appropriate
sub-account in accordance with the terms of the variable annuity contracts.
Each sub-account, in turn, shall invest in the shares of one or more
registered management investment companies, or designated investment series
thereof, as specified for investment by its, at net asset value per share
next to be determined following receipt of an order for purchase by such
sub-account. To the extent that such registered management investment
company, or companies, establishes additional investment series, the
officers of the Company are empowered and authorized to establish such
additional sub-accounts as there are additional investment series, with
each such sub-account to invest solely in the shares of a specified
additional investment series; and
<PAGE>
FURTHER RESOLVED, that the separate account shall be administered and
accounted for as part of the general business of the Company, but the
income, gains and losses of the separate account shall be credited to or
charged solely against the assets held in the separate account, without
regard to any other income arising out of other business that this Company
may conduct. The assets of the separate account shall not be chargeable
with the liabilities arising out of any other business that this Company
may conduct; and
FURTHER RESOLVED, each sub-account shall be administered and accounted for
as part of the general business of the Company, but the income (including
capital gains, or losses, if any) of each sub-account shall be credited to
or charged against the assets held in that sub-account in accordance with
the terms of the policies funded therein, without regard to other income of
the remaining sub-accounts or arising out of any other business that this
Company may conduct. The assets of each sub-account shall not be chargeable
with liabilities arising out of the business conducted by another sub-
account, nor shall a sub-account be chargeable with liabilities arising out
of any other business that this Company may conduct; and
FURTHER RESOLVED, that the officers of the Company be, and they hereby are,
authorized:
(i) to register the variable annuity contracts issued or to be issued
by the Company under the provisions of the Securities Act of 1933 to
the extent that they shall determine that such registration is
necessary;
(ii) to register any such separate account or accounts with the
Securities and Exchange Commission under the provisions of the
Investment Company Act of 1940 to the extent that they shall determine
that such registration is necessary;
(iii) to prepare, execute and file such amendments to any registration
statements filed under the aforementioned Acts (including such pre-
effective and post-effective amendments), supplements and exhibits
thereto as they may deem necessary or desirable;
(iv) to apply for exemption from those provisions of the
aforementioned Acts and the rules promulgated thereunder as they may
deem necessary or desirable and to take any and all other actions
which they may deem necessary, desirable or appropriate in connection
with such Acts;
<PAGE>
(v) to file the variable annuity contracts participating in any such
separate accounts with the appropriate state insurance departments and
to prepare and execute all necessary documents to obtain approval of
the insurance departments; and
(vi) to prepare or have prepared and execute all necessary documents
to obtain approval of, or clearance with, or other appropriate actions
required, or any other regulatory authority that may be necessary in
connection with the foregoing matters; and
(vii) to enter into agreements with appropriate entities for the
provisions of administrative and other required services on behalf of
the Separate Account(s) and for the safekeeping of assets of such
Separate Account(s); and
FURTHER RESOLVED, that the form of any resolutions required by any state
authority to be filed in connection with any variable annuity contracts or
any of the other documents or instruments referred to in any of the
preceding resolutions be, and the same hereby are, adopted as fully set
forth herein if (i) in the opinion of the officers of the Company the
adoption of the resolutions is advisable; and (ii) the Corporate Secretary
or Assistant Secretary of the Company evidences such adoption by inserting
into these minutes copies of such resolutions; and
FURTHER RESOLVED, that the officers of the Company, and each of them, are
hereby authorized to prepare and to execute the necessary documents and to
take such further actions as may be deemed necessary or appropriate, in
their discretion, to cause the issuance and sale of variable annuity
contracts and/or to fully implement the purpose of the foregoing
resolutions.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the seal of
the said Corporation, this 24th day of March, 1993.
Jean N. Bell
-----------------------------
Assistant Secretary
SUBSCRIBED AND SWORN TO BEFORE ME, this 24th day of March, 1993.
Vicky Martinez
-----------------------------
Notary Public
State of Texas
<PAGE>
Exhibit 99.B3
DISTRIBUTION AND ADMINISTRATIVE SERVICES AGREEMENT
THIS AGREEMENT, made and entered into on this _____ day of ________________, by
and between AMERICAN NATIONAL INSURANCE COMPANY ("American National"), a life
insurance company organized under the laws of the State of Texas, American
National Variable Life Separate Account ("Separate Account"), a separate account
established by American National pursuant to the Texas Insurance Code and
SECURITIES MANAGEMENT AND RESEARCH, INC. ("SM&R"), a corporation organized under
the laws of the State of Florida.
W I T N E S S E T H:
WHEREAS, American National proposes to issue to the public certain variable
contracts ("Contracts") and has authorized the creation of one or more separate
investment accounts in connection therewith; and
WHEREAS, American National has established the Separate Account for the purpose
of issuing the Contracts and is registering the Separate Account with the
Securities and Exchange Commission ("Commission") as a unit investment trust
under the Investment Company Act of 1940; and
WHEREAS, the Contracts to be issued by the Separate Account are to be registered
with the Commission under the Securities Act of 1933 for offer and sale to the
public, and otherwise in compliance with all applicable laws; and
WHEREAS, SM&R, a broker-dealer registered under the Securities Exchange Act of
1934 and a member of the National Association of Securities Dealers, Inc.,
proposes to act as the distributor in the offering and sale of said Contracts;
WHEREAS, SM&R also proposes to perform certain administrative, processing and
clerical services for American National in connection with the offering and sale
of said Contracts; and
WHEREAS, American National desires to obtain such distribution and other
services from SM&R;
NOW, THEREFORE, in consideration of the foregoing, and of the mutual covenants
and conditions set forth herein, and for other good and valuable consideration,
American National, the Separate Account and SM&R hereby agree as follows:
1. SM&R will serve as distributor for the Contracts which will be issued
by American National through the Separate Account and will be
registered with the Commission for offer and sale to the public. As
Distributor, SM&R will use its best efforts to effect offers and sales
of the Contracts to the public on a continuing basis. SM&R shall be
responsible for compliance with the requirements of any applicable
state broker-dealer regulations and the Securities Exchange Act of
1934 as each applies to SM&R in connection with its duties as
Distributor of said Contracts. Moreover, SM&R shall conduct its
affairs in accordance with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. (NASD).
<PAGE>
2. SM&R will assist American National in identifying, training and
qualifying (under appropriate NASD and/or state requirements)
insurance agents desiring to sell the Contracts. SM&R will register
such agents as its registered representatives before they engage in
the sale of the Contracts and will supervise and control such agents
in the sale of the Contracts in the manner and to the extent required
by the applicable rules of the NASD and the Commission. If any such
agent of American National should fail or refuse to submit to the
supervision of SM&R in accordance with the terms of this Agreement or
otherwise fail to meet the rules and standards imposed by SM&R on its
registered representatives, SM&R shall take whatever steps may be
necessary to terminate the sales activities of such agent relating to
the Contracts.
3. As distributor, SM&R will be responsible for the preparation of
marketing materials (and where appropriate obtaining regulatory
approval), for actively recruiting additional sales agents and sales
organizations and for providing sales training (including continuing
education required for license maintenance).
4. SM&R may contract with other broker-dealers registered under the
Securities Exchange Act of 1934 and authorized by applicable law to
sell variable contracts issued by the Separate Account. Any such
contractual arrangement is expressly made subject to this Agreement,
and SM&R will at all times be responsible to American National for the
distribution of all Contracts issued by the Separate Account.
5. The amount of any commissions payable in connection with the sale of
Contracts will be made by American National to the sales personnel of
SM&R and this function is being performed as a purely ministerial
service and the Records in respect thereof are properly reflected on
the Books and Records maintained by or for SM&R. The gross amounts
paid or advances made by American National on behalf of SM&R will be
transmitted to SM&R for proper reporting.
6. Warranties.
(a) American National represents and warrants to SM&R that:
(i) Any and all Registration Statements required for the
Contracts or the Separate Account have been filed with the
Commission in the form previously delivered to SM&R and
that copies of any and all amendments thereto will be
forwarded to SM&R at the time that they were filed with the
Commission;
(ii) The Registration Statements and any further amendments or
supplements thereto will, when they become effective,
conform in all material respects to the requirements of the
Securities Act of 1933, the Investment Company Act of 1940
and the rules and regulations of the Commission thereunder,
and will not contain untrue statements of material facts or
omit to state a material fact required to be stated
2
<PAGE>
therein or necessary to make the statements therein not
misleading; PROVIDED, HOWEVER, that this representation and
warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information
furnished in writing to American National by SM&R expressly
for use herein;
(iii) American National is validly existing as a stock life
insurance company in good standing under the laws of the
State of Texas with corporate power to own its properties
and conduct its business as described in the Prospectus,
and has been duly qualified for the transaction of business
and is in good standing under the laws of each other
jurisdiction in which its owns or leases properties, or
conducts any business, so as to require such qualification;
(iv) The Contracts to be issued by the Separate Account through
SM&R hereunder have been duly and validly authorized and,
when issued and delivered against payment therefor as
provided herein, will be duly and validly issued and will
conform to the description of such Contracts contained in
the Prospectuses relating thereto;
(v) Those persons who offer and sell the Contracts are
appropriately licensed in a manner as to comply with the
state insurance laws;
(vi) The performance of this Agreement and the consummation of
the transactions herein contemplated will not result in a
breach or violation of any of the terms or provisions of,
or constitute a default under, any statutes, any indenture,
mortgage, deed of trust, note agreement or other agreement
or instrument to which American National is a party or by
which American National is bound, American National's
Charter as a stock life insurance company or By-Laws, or
any order, rule or regulation of any court or governmental
agency or body having jurisdiction over American National
or any of its properties; and no consent, approval,
authorization or order of any court or governmental agency
or body is required for the consummation by American
National of the transactions contemplated by this
Agreement, except such as may be required under the
Securities Exchange Act of 1934 or state insurance or
securities laws in connection with the purchase and
distribution of the Contracts by SM&R; and
(vii) There are no material legal or governmental proceedings
pending to which American National or the Separate Account
is a party or of which any property of American National or
the Separate Account is the subject, other than as set
forth in the Prospectus relating to the Contracts, and
other than litigation incident to the kind of business
conducted by American National which, if determined
adversely to American National, would individually or in
the aggregate have a
3
<PAGE>
material adverse effect on the financial position, surplus
or operations of American National.
(b) SM&R represents and warrants to American National that:
(i) It is a broker-dealer duly registered with the Commission
pursuant to the Securities Exchange Act of 1934 and a
member in good standing of the National Association of
Securities Dealers and is in compliance with the securities
laws in those states in which it conducts business as a
broker-dealer;
(ii) It shall permit the offer and sale of Contracts only by and
through persons who are appropriately licensed under both
the securities laws and state insurance laws;
(iii) The performance of this Agreement and the consummation of
the transactions herein contemplated will not result in a
breach or violation of any of the terms or provisions of or
constitute a default under, any statute, any indenture,
mortgage, deed of trust, note agreement or other agreement
or instrument to which SM&R is a party or by which SM&R is
bound, the Certificate of Incorporation and By-Laws of
SM&R, or any other rule or regulation of any court or
governmental agency or body having jurisdiction over SM&R
or its property;
(iv) No offering, sale or other disposition of any Contracts
will be made until SM&R is notified by American National
that the subject Registration Statement has been declared
effective and that the Contracts have been released for
sale by American National; and such offering, sale or other
disposition shall be limited to those jurisdictions that
have approved or otherwise permit the offer and sale of the
Contracts by American National.
(v) To the extent that any statements or omissions made in the
Registration Statements with respect to the Contracts, or
any amendment or supplement thereto are made in reliance
upon and in conformity with written information furnished
to American National by SM&R expressly for use therein,
such Registration Statements and any amendments or
supplements thereto will, when they become effective or are
filed with the Commission, as the case may be, conform in
all material respects to the requirements of the Securities
Act of 1933 and the rules and regulations of the Commission
thereunder and will not contain any untrue statement of a
material fact or omit to state any material fact required
to be stated therein or necessary to make the statements
therein not misleading.
7. SM&R shall keep, in manner and form prescribed or approved by American
National
4
<PAGE>
and in accordance with Rules 17a-3 and 17a-4 under the Securities
Exchange Act of 1934 correct records and books of account as required
to be maintained by a registered broker-dealer acting as distributor
of all transactions entered into on behalf of American National and
with respect to variable contract business it conducts of American
National. SM&R shall make such records and books of account available
for inspection by the Commission, and American National shall have the
right to inspect, make copies of or take possession of such records
and books of accounts at any time on demand.
SM&R, however, may request that some or all of the books and records
relating to the sales of the Contracts which are required to be
maintained by it as a registered broker-dealer pursuant to Rule 17a-3
and 17a-4 under the 1934 Act be prepared and maintained in accordance
with such rules by American National on behalf of and as agent for
SM&R. American National agrees that for the purposes of this
Agreement, such books and records shall be deemed to be the property
of SM&R and shall be subject at all times to examination by the
Securities and Exchange Commission in accordance with Section 17(a) of
the 1934 Act and SM&R shall have the right to inspect and make copies
of such books and records of accounts at any time on demand.
8. Upon the request of SM&R, American National agrees to prepare and send
all confirmations required to be sent by SM&R in connection with
crediting purchase payments under the Contracts. Any such
confirmation shall be sent upon or before the completion of each
"transaction", as that term is used in Rule 15c1-4 of the 1934 Act,
and shall reflect the facts of the transaction and indicate that the
confirmation is forwarded on behalf of SM&R in its capacity of
Distributor of Contracts.
9. Subsequent to having been authorized to commence with the offering
contemplated herein, SM&R will utilize the currently effective
Prospectus relating to the subject Contracts in connection with its
selling efforts. As to the other types of sales material, SM&R agrees
that it will use only sales materials which conform to the
requirements of federal and state laws and regulations, and which have
been filed where necessary with the appropriate regulatory
authorities, including the National Association of Securities Dealers.
10. SM&R will not use any Prospectus, sales literature, or any other
printed matter or material in the offer or sale of any Contract if, to
the knowledge of SM&R, any of the foregoing misstates the duties,
obligations or liabilities of American National, the Separate Account
or SM&R.
11. SM&R shall not be entitled to any remuneration for its services as
distributor. However, in payment for the administrative, processing
and clerical services provided by SM&R, American National shall pay
SM&R a processing fee of $50 for each Contract application submitted
by SM&R and accepted by American National. In addition, upon
presentation of proper evidence of expenditures, American National
5
<PAGE>
will reimburse SM&R for all of SM&R's reasonable charges and expenses
directly incurred in connection with the performance of its duties and
obligations contained in this Agreement.
12. SM&R makes no representation or warranties regarding the number of
Contracts to be sold or the amount to be paid thereunder. SM&R does,
however, represent that it will actively market such Contracts on a
continuous basis while there is an effective registration thereof with
the Commission.
13. SM&R may render similar services or act as a distributor or dealer for
issuers other than the Separate Account or sponsors other than
American National in the offering of their Contracts.
14. The Contracts shall be offered for sale on the terms described in the
currently effective Prospectus describing such Contracts.
15. American National will use its best efforts to register for sale, from
time to time if necessary, additional dollar amounts of the Contracts
under the Securities Act of 1933 and should it ever be required, under
state Blue Sky Laws and to file for approval under state insurance
laws when necessary. American National may require SM&R to assist it
in obtaining any necessary clearance or approval of prospectuses,
sales literature and proxy materials in accordance with the
requirements of the Commission, the NASD or other regulatory bodies.
16. American National reserves the right at any time to suspend or limit
the public offering of the subject Contracts upon one day's written
notice to SM&R.
17. American National agrees to advise SM&R immediately:
(a) of any request by the Commission (i) for amendment of the
Securities Act Registration Statement relating to the Contracts,
or (ii) for additional information;
(b) of issuance by the Commission of any stop order suspending the
effectiveness of its Registration Statement or the initiation of
any proceedings for that purpose; and
(c) of the happening of any material event, if known, which makes
untrue any statement made in its Registration Statement or which
requires the making of a change therein in order to make any
statement made therein not misleading.
18. American National will furnish to SM&R such information with respect
to the Separate Account and the Contracts in such form and signed by
such of its officers as SM&R may reasonably request; and will warrant
that the statements therein contained when so signed will be true and
correct.
6
<PAGE>
19. Each of the undersigned parties agrees to notify the other in writing
upon being apprised of the institution of any proceeding investigation
or hearing involving the offer or sale of the subject Contracts.
20. Absent the prior written consent of American National, this Agreement
will terminate automatically upon its assignment.
21. This Agreement shall terminate without payment of any penalty by
either party:
(a) at the option of American National or of SM&R upon sixty (60)
days' advance written notice to the other; or
(b) at the option of American National upon institution of formal
proceedings against SM&R by the National Association of
Securities Dealers or by the Commission; or
(c) at the option of American National, if SM&R or any representative
thereof at any time (i) employs any device, scheme, or artifice
to defraud; makes any untrue statement of a material fact or
omits to state a material fact necessary in order to make the
statements made, in light of the circumstances under which they
were made, not misleading; or engages in any act, practice, or
course of business which operates or would operate as a fraud or
deceit upon any person; (ii) fails to promptly account and pay
over the American National money due it according to its records;
or (iii) violates the conditions of this Agreement.
22. Each notice required by this Agreement may be given by wire or
facsimile transmission and confirmed in writing to :
Securities Management and Research, Inc.
One Moody Plaza
Galveston, Texas 77550
Attn: President
[Name of Separate Account]
One Moody Plaza
Galveston, Texas 77550
American National Insurance Company
One Moody Plaza
Galveston, Texas 77550
Attn: President
23. American National agrees to indemnify SM&R for any liability that SM&R
may incur to a Contract Owner or party-in-interest under a Contract
(i) arising out of any act or omission in the course of, or in
connection with, rendering services under this
7
<PAGE>
Agreement, or (ii) arising out of the purchase, retention or surrender
of a Contract; PROVIDED, HOWEVER, that American National will not
indemnify SM&R for any such liability that results from the willful
misfeasance, bad faith or gross negligence of SM&R, or from the
reckless disregard, by SM&R, of its duties and obligations arising
under this Agreement.
24. This Agreement shall be subject to the laws of the State of Texas and
construed so as to interpret the Contracts as insurance products
written within the business operation of American National.
25. This Agreement covers and includes all agreements, verbal and written,
between SM&R and American National with regard to the offer and sale
of the Contracts, and supersedes and annuls any and all agreements
between the parties with regards to the distribution of the Contracts;
except that this Agreement shall not effect the operation of previous
agreements entered into between SM&R and American National unrelated
to the sale of the Contracts. This Agreement may be amended from time
to time by the mutual fund agreement and consent of the undersigned
parties; PROVIDED, that such amendment shall not affect the rights of
existing Contract Owners, and that such amendment be in writing and
duly executed.
IN WITNESS WHEREOF, the undersigned parties have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested on the date first stated above.
AMERICAN NATIONAL INSURANCE COMPANY
By: _____________________________________________________________________
Carl R. Robertson, Senior Executive Vice President
AMERICAN NATIONAL VARIABLE LIFE SEPARATE ACCOUNT
By: AMERICAN NATIONAL INSURANCE COMPANY
By: _____________________________________________________________________
Carl R. Robertson, Senior Executive Vice President
SECURITIES MANAGEMENT AND RESEARCH, INC.
By: _____________________________________________________________________
Michael W. McCroskey, President
8
<PAGE>
Exhibit 99.B4
AMERICAN NATIONAL INSURANCE COMPANY
STOCK LIFE INSURANCE COMPANY
Annuitant John Doe April 1, 1995 Date of Issue
Policy Number VA123456 April 1, 2025 Annuity Date
Home Office: One Moody Plaza
Galveston, Texas 77550
AMERICAN NATIONAL INSURANCE COMPANY ("We, Us, Our") will pay an annuity payment
to the Annuitant at its home office in Galveston, Texas, subject to the
provisions of this Policy. The annuity payment will begin on the annuity date
if the annuitant is then living. The annuity payment will be payable according
to the annuity option selected by the owner ("You, Your"). The amount of the
annuity payment will be based on the Accumulation Value on the Annuity Date.
Prior to the Annuity Date, You may elect to have the Policy surrendered and the
Surrender Value paid in a single sum or, with Our consent, under an annuity
option as designated in this Policy. Such payment will be in lieu of the annuity
payment on the Annuity Date.
If the Annuitant dies before the Annuity Date, this Policy will be terminated.
We will pay to the beneficiary a death benefit, subject to the Provisions of the
Policy.
This Policy is issued in consideration of the application and receipt of the
first Purchase Payment by Us. Your Policy is a legal contract that You have
entered in to with Us. READ YOUR POLICY CAREFULLY.
RIGHT TO CANCEL POLICY. You may cancel this Policy by returning it to Us or Our
agent within ten days after You receive it, and We will refund the greater of
all Purchase Payments made or the Accumulation Value plus the amount for any
charges for state premium taxes and Separate Account Expenses.
THE ACCUMULATION VALUE IN AMERICAN NATIONAL VARIABLE ANNUITY SEPARATE ACCOUNT IS
BASED ON THE INVESTMENT EXPERIENCE OF THAT SEPARATE ACCOUNT AND MAY INCREASE OR
DECREASE DAILY. THE ACCUMULATION VALUE IS NOT GUARANTEED.
Signed for Us at Galveston, Texas, on the date of issue.
SECRETARY PRESIDENT
NONPARTICIPATING FLEXIBLE PURCHASE PAYMENT DEFERRED VARIABLE ANNUITY.
NO DIVIDENDS. ANNUITY BENEFITS PAYABLE AT THE ANNUITY DATE.
DEATH BENEFIT PAYABLE IN EVENT OF DEATH PRIOR TO ANNUITY DATE.
Form VA95-PQ
1
<PAGE>
POLICY PROVISIONS
<TABLE>
<CAPTION>
PAGE
<C> <S> <C>
1. DEFINITIONS OF POLICY TERMS 2,3
2. OPTIONAL ANNUITY DATE 3
3. NONPARTICIPATING POLICY 3
4. PURCHASE PAYMENTS 3,4
5. OWNERSHIP AND BENEFICIARY 4,5
6. POLICY ACCOUNTS 5,6
7. NONFORFEITURE BENEFITS 6-8
8. POLICY LOANS 8-9
9. DEATH BENEFIT 9
10. ANNUITY OPTIONS 10-11
11. GENERAL PROVISIONS 13
</TABLE>
See the last page for an Alphabetic Guide to this Policy.
SECTION 1 DEFINITIONS OF POLICY TERMS
ACCUMULATION PERIOD - The period from the date Accumulation Units are first
purchased under the Policy to the earliest of the Annuity Date, the date the
Policy is surrendered for its then current value or the date of the Annuitants
death.
ACCUMULATION UNIT - A standard of measurement used with respect to each
Subaccount to calculate the value of the Policy during the Accumulation Period.
The value of an Accumulation Unit fluctuates with the value of the shares of the
corresponding Portfolio owned by each Subaccount less any applicable deductions.
ACCUMULATION UNIT VALUE - The value of an Accumulation Unit.
ACCUMULATION VALUE - The Accumulation value of the Policy is the sum of the
total Accumulation Units in Subaccounts times the respective Accumulation Unit
Value of such Subaccounts. Your value in the Fixed Account, and any value held
in American National's General Account to secure policy loans.
ANNUITANT - The person on whose life the Policy is written. The Annuitant may
also be the Owner.
ANNUITY DATE - The date on which the Accumulation Period changes to the Annuity
Period.
ANNUITY PERIOD - The period of time during which annuity payments are being
made.
ANNUITY UNIT - A standard of measurement used with respect to each ssubaccount
to calculate the dollar amount of annuity payments during the Annuity Period.
The value of an Annuity Unit fluctuates with the value of shares of the
corresponding Portfolio owned by each Subaccount less any applicable deductions.
DISTRIBUTION EXPENSE CHARGES - A part of the Separate Account Expenses. This
charge reimburses Us for the risk that surrender charges assessed may be
insufficient to cover the cost of distributing the Policy.
FIXED ACCOUNT - An account that is a part of American National's General Account
to which all or a portion of Net Purchase Payments and transfers may be
allocated for accumulation at fixed rates of interest.
GENERAL ACCOUNT - The General Account of American National which includes all of
American National's assets except those assets segregated into its separate
accounts.
NET PURCHASE PAYMENT - The Purchase Payment less any government entity premium
tax charge.
OWNER ("YOU, YOUR") - The person or entity entitled to exercise all legal rights
of ownership in the Policy prior to the Annuity Date or termination of the
Policy. You or the Annuitant need not be the same.
POLICY - Variable Annuity issued pursuant to the Prospectus which sets forth the
obligations and contractual promises which American National makes to You.
2
<PAGE>
DATA PAGE
OWNER ANNUITANT
BENEFICIARY AS DESIGNATED IN COPY OF APPLICATION ATTACHED UNLESS
SUBSEQUENTLY CHANGED IN COMPLIANCE WITH POLICY PROVISIONS.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AGE AT ISSUE 35 DATE OF ISSUE APRIL 1, 1995
ANNUITANT JOHN DOE ANNUITY DATE APRIL 1, 2025
POLICY NUMBER VA123456
FORM
NUMBER BENEFIT
VA95-PQ FLEXIBLE PURCHASE PAYMENT DEFERRED VARIABLE ANNUITY
</TABLE>
INITIAL PURCHASE PAYMENT - $100.00
PLANNED PERIODIC BILLING - $100.00 MONTHLY
MINIMUM PLANNED PERIODIC BILLING - $100.00
PREMIUM TAX CHARGE - 0.00% OF EACH PURCHASE PAYMENT RECEIVED FOR
PREMIUM TAX IN THE STATE OF TEXAS
ANNUAL CONTRACT FEE - $30 IS CHARGED AT THE END OF EACH POLICY YEAR
SEPARATE ACCOUNT EXPENSES - A DAILY CHARGE OF .00438% OF THE ACCUMULATION
VALUE IS DEDUCTED FROM EACH SUBACCOUNT
POLICY LOAN - AFTER THE FIRST CONTRACT YEAR - MINIMUM POLICY LOAN $2500,
MAXIMUM POLICY LOAN IS THE LESSOR OF
(1) 50% OF THE ACCUMULATION VALUE LESS THE SURRENDER
CHARGE OR
(2) $50,000
POLICY LOAN RATE - 8%
NET PURCHASE PAYMENT ALLOCATION
<TABLE>
<CAPTION>
SUBACCOUNTS
<S> <C> <C> <C>
AN GROWTH 100% FID MONEY MARKET 0%
AN MONEY MARKET 0% HIGH INCOME 0%
BALANCED 0% EQUITY - INCOME 0%
MANAGED 0% FID GROWTH 0%
OVERSEAS 0%
INVESTMENT GRADE BOND 0%
ASSET MANAGER 0%
INDEX 500 0%
CONTRA 0%
ASSET MANAGER: GROWTH 0%
FIXED ACCOUNT 0%
</TABLE>
3
<PAGE>
POLICY DEBT - The sum of all unpaid policy loans and accrued interest thereon.
POLICY YEAR - The period from the date the first Purchase Payment is credited to
the Policy until the immediately preceding day of the succeeding year.
PORTFOLIO - A separate series of capital securities designed to meet specified
investment objectives.
PURCHASE PAYMENT - A payment made into the Policy during the Accumulation
Period.
SEPARATE ACCOUNT EXPENSES - A daily charge deducted from the Accumulation Value
of each Subaccount. These expenses reimburse Us for accepting mortality and
expense risks, Distribution Expense Charges and administrative expenses.
SIX-YEAR ANNIVERSARY DATE - The last day of each Policy Year prior to the
Annuitant's 75th birthday which is evenly divisible by six.
SUBACCOUNT - A subdivision of the Separate Account. Each Subaccount invests
exclusively in the shares of the corresponding Portfolio.
SURRENDER VALUE -The Accumulation Value on the date of surrender less any
surrender charge and any Policy Debt.
VALUATION DATE - Valuation Date is any day on which the New York Stock Exchange
("NYSE") is open for trading.
VALUATION PERIOD - The period commencing at the close of regular trading on the
NYSE on one Valuation Date and ending at the close of regular trading on the
NYSE on the next succeeding Valuation Date.
VARIABLE ANNUITY - An annuity providing payments which vary in dollar amount
depending on the investment results of the portfolio's.
SECTION 2 OPTIONAL ANNUITY DATE
While this Policy is in force, You may request a change of the Annuity Date.
The new Annuity Date:
(1) must be after the date that We receive Your request;
(2) must be on the same day of the month as the policy date of issue; and
(3) must be no later than the Annuitant's 95th birthday.
If no change is requested, the Annuity Date will remain as shown on the data
page. We must agree in writing to any change in the Annuity Date. Your request
for a change in the Annuity Date must be:
(1) in writing; and
(2) sent to Our home office.
You will have the same annuity options available on any new Annuity Date that
would have been available on the original Annuity Date.
SECTION 3 NONPARTICIPATING POLICY
This Policy is nonparticipating. It does not share in Our profits or surplus.
SECTION 4 PURCHASE PAYMENTS
FLEXIBILITY. This Policy is a Flexible Purchase Payment Annuity. After the
first Purchase Payment, You can choose:
(1) the amount of Purchase Payment to pay; and
(2) how often Purchase Payments will be paid.
PURCHASE PAYMENT BILLING. As specified in the application, the amount and
frequency of the Purchase Payments You intend to pay on this Policy is shown on
the data page. We will prepare Purchase Payment billings at the rate of payment
shown. Upon Your written request, the amount, frequency,
Form VA95-PQ
4
<PAGE>
or method of Purchase Payment billing can be changed. The amount of the
Purchase Payment billing will never be less than the minimum amount specified on
the data page.
PURCHASE PAYMENTS. You may pay Purchase Payments on this Policy until:
(1) the Annuity Date; or
(2) the Annuitants death, whichever comes first.
Purchase Payments may be paid:
(1) at the home office; or
(2) to Our authorized agent in exchange for an official signed receipt.
NONPAYMENT OF PURCHASE PAYMENTS. If no Purchase Payment is received by Us for a
period of 13 months, We will stop Purchase Payment billing. We will resume
Purchase Payment billing only if:
(1) a Purchase Payment is paid; and
(2) You request in writing that the Purchase Payment billing resume.
If no Purchase Payment is received by Us for a period of 36 months and the
Accumulation Value is less than $250.00 and will not be of sufficient value to
purchase $20.00 of monthly income on the Annuity Date, then We may terminate
this Policy by payment of the total surrender value to You. If no Purchase
Payment is received by Us for a period of 36 months and the Accumulation Value
is not below the stated limits, then this Policy will remain in full force and
effect on a Purchase Payment paying basis, and at the Annuity Date of this
Policy, annuity payments will automatically begin by Us according to the
annuity option selected in the application, unless another annuity option is
specified by You prior to the date such annuity payments begin. The amount of
the annuity payments will be based on the actual Accumulation Value on the
Annuity Date.
DATE OF CREDITING. The amount of the initial Purchase Payment is shown on the
data page. The initial Purchase Payment will be credited as of the date of
issue. All Purchase Payments after the initial Purchase Payment will be
credited on the date the Purchase Payment is received at the home office.
SECTION 5 OWNERSHIP AND BENEFICIARY
OWNERSHIP. The Owner is shown on the data page. You may exercise all rights of
ownership before the Annuity Date or the Annuitants death. Your rights are
subject to the rights of:
(1) any assignee of record; or
(2) any irrevocable beneficiary.
WHEN OWNER IS A MINOR. So long as You are a minor, first the Annuitant, then the
beneficiary, if living and competent, has the right to:
(1) ask for and receive all Surrender Values and
other benefits;
(2) assign this Policy;
(3) exercise all rights and options in this Policy; and
(4) agree with Us to any Policy changes or release.
All rights of the Annuitant and the beneficiary are subject to the rights of:
(1) any assignee of record; and
(2) any irrevocable beneficiary.
TRANSFER OF OWNERSHIP. You may die while the Annuitant is living. If so,
ownership will pass to Your estate unless this Policy states otherwise.
BENEFICIARY INTEREST. The beneficiary will be as shown in this Policy's
application. The beneficiary will receive the death benefit. Any relationship
shown is to the Annuitant. Unless changed by endorsement or written request
filed at Our home office:
(1) all class members will share proceeds equally;
(2) surviving class members will share equally that portion of the death benefit
to which a deceased beneficiary would have been entitled; and
(3) if no beneficiary survives the Annuitant, the death benefit will be paid to
the Annuitant's estate.
A beneficiary will not share in the death benefit if the beneficiary dies within
6 days after the Annuitant's death. If any beneficiary dies within 6 days after
the Annuitant's death and if there are no surviving beneficiary class members,
the proceeds will be paid to the estate of the Annuitant.
5
<PAGE>
If the beneficiary is not a natural person, the beneficiary must still exist at
the time of the Annuitant's death. All beneficiaries interests are subject to
any assignment on record at the home office.
CHANGE OF BENEFICIARY. You may change a beneficiary if:
(1) the Annuitant is living; and
(2) written request in a form acceptable by Us is filed at the home office.
The change will not take effect until it is recorded at Our home office.
However, once such change is recorded the change is effective as of the date the
request was signed. The change is subject to:
(1) the rights of an assignee of record; and
(2) the rights of an irrevocable beneficiary.
SECTION 6 POLICY ACCOUNTS
AMERICAN NATIONAL FIXED ACCOUNT. You may elect to allocate or transfer all or a
part of the amount credited under the Policy to a Fixed Account. Such amounts
allocated or transferred become part of American National's General Account.
Subject to applicable law, We have sole discretion over the investment of the
assets of the Fixed Account and You do not share in the investment experience of
those assets. Instead, We guarantee that the part of the Accumulation Value in
the Fixed Account will accrue interest daily at an annual interest rate that We
will declare periodically. The declared rate will not be less than 3% per year,
compounded daily.
AMERICAN NATIONAL VARIABLE ANNUITY SEPARATE ACCOUNT. The variable benefits under
this Policy are provided through investments in the American National Variable
Annuity Separate Account. We established the American National Variable Annuity
Separate Account as a separate investment account to support Variable Annuity
contracts.
We own the assets of the American National Variable Annuity Separate Account.
Assets equal to the reserves and other liabilities of the American National
Variable Annuity Separate Account will not be charged with liabilities that
arise from any other business We conduct. We may transfer to American
National's General Account any assets which exceed the reserves and other
liabilities of the American National Variable Annuity Separate Account.
American National Variable Annuity Separate Account is registered with the
Securities and Exchange Commission as a investment trust under the Investment
Company Act of 1940. It is also subject to the laws of the state of Texas.
SUBACCOUNTS. The American National Variable Annuity Separate Account has
multiple Subaccounts. Each Subaccount invests exclusively in shares of a
corresponding Portfolio. Each Portfolio is a separate series of capital
securities designed to meet specified investment objectives. All Subaccounts of
the American National Variable Annuity Separate Account are shown on the Policy
data page.
You will share only in the income, gains and losses of the particular
Subaccounts to which Net Purchase Payments have been allocated. We will value
the assets of each Subaccount of the American National Variable Annuity Separate
Account at the end of each Valuation Period.
TRANSFERS. At any time that this Policy is in the Accumulation Period, You may
transfer all or a portion of the amounts from one Subaccount to another
Subaccount, or to the Fixed Account.
The minimum amount that may be transferred is $250. You may make 12 transfers
each Policy Year without charge. The exchange fee for each additional transfer
during the Policy Year is $10.
Form VA95-PQ
6
<PAGE>
Transfers from the Fixed Account to the Subaccounts are permitted only once each
Policy Year and only during the thirty day period beginning on the policy
anniversary. This transfer is without charge. The maximum amount which may be
transferred out of the Fixed Account each year is the greater of: (a) 25% of the
amount in the Fixed Account, or (b) $1,000. Such transfer requests received
prior to the policy anniversary will be effected on the policy anniversary.
Transfer requests received within the thirty day period beginning on the policy
anniversary will be effected as of the end of the Valuation Period in which a
proper transfer request is received by Us.
TRANSFERS DURING THE ANNUITY PERIOD. Transfers from the Fixed Account to the
Subaccounts are not permitted during the Annuity Period. Transfers among
Subaccounts may be made 12 times each Policy Year. You may transfer Annuity
Units of one Subaccount into Annuity Units of another Subaccount and/or the
Fixed Account except during the five day period prior to an annuity payment
date.
ADDITION, DELETION, OR SUBSTITUTION OF INVESTMENTS. We have the right, subject
to compliance with applicable law, to make additions to, deletions from, or
substitutions for the shares of a Subaccount that are held by the American
National Variable Annuity Separate Account or that the American National
Variable Annuity Separate Account may purchase. We reserve the right to
eliminate the shares of any Portfolio and to substitute shares of another
Portfolio of another open-end management investment company if the shares of
the Portfolio are no longer available for investment or if, in Our judgment,
further investment in the Portfolio should become inappropriate in view of the
purposes of American National Variable Annuity Separate Account.
We will not substitute any shares attributable to Your interest in a Subaccount
of the American National Variable Annuity Separate Account without notice to You
and prior approval of the Securities and Exchange Commission, to the extent
required by the Investment Company Act of 1940.
We have the right to establish additional Subaccounts of the American National
Variable Annuity Separate Account, each of which would invest only in a new and
corresponding Portfolio or in shares of another open-end management investment
company. We also have the right to eliminate existing Subaccounts of the
American National Variable Annuity Separate Account. In the event of any
substitution or change, We may, by appropriate endorsement, make such changes in
this Policy as may be necessary or appropriate. The investment objectives will
not be changed without the approval of the Insurance Commissioner of the State
of Texas.
We also have the right, where permitted by law:
(1) to operate the American National Variable Annuity Separate Account as a
management company under the Investment Company Act of 1940;
(2) to deregister the American National Variable Variable Annuity Separate
Account under the Act if registration is no longer required; and
(3) to combine the American National Variable Annuity Separate Account with
other separate accounts.
SECTION 7 NONFORFEITURE BENEFITS
ACCUMULATION VALUE. The Accumulation Value is the sum of the total Accumulation
Units in the Subaccounts times the respective Accumulation Unit Values of such
Subaccounts, the value in the Fixed Account and the value held in the General
Account securing policy loans. Net Purchase Payments will be added to the
Accumulation Value the same day as the Purchase Payment is credited. The annual
contract fee of $30.00 will be deducted from the Accumulation Value on the last
day of each Policy Year. Partial surrenders and any surrender charges applicable
to such partial surrenders will be deducted from the Accumulation Value as of
the date of each partial surrender.
SEPARATE ACCOUNT ACCUMULATION VALUE. The Accumulation Value attributable to this
Policy in the Subaccounts of the American National Variable Annuity Separate
Account will vary daily with the performance of the Subaccounts in which You
have an Accumulation Value, any Net Purchase Payments paid, transfers, partial
surrenders, and charges assessed. There is no guaranteed minimum Surrender
Value on these separate account Accumulation Values.
On each Valuation Date, the Accumulation Value in a Subaccount is:
7
<PAGE>
(1) the Accumulation Units times the Accumulation Unit Value on the immediately
preceding Valuation Date, plus;
(2) any Net Purchase Payment received and allocated to the Subaccount during
the current Valuation Period, plus;
(3) any Accumulation Value transferred to the Subaccount during the current
Valuation Period, minus;
(4) any Accumulation Value transferred from the Subaccount during the current
Valuation Period, minus;
(5) any partial surrenders plus applicable surrender charges from the
Subaccount during the current Valuation Period, minus;
(6) the Separate Account Expenses as listed on the data page.
FIXED ACCOUNT ACCUMULATION VALUE. THE Fixed Account Accumulation Value on any
date shall be the sum of (a), (b), (c), and (d), less the sum of (e) and (f),
where:
(a) is the Fixed Account Accumulation Value on the immediately preceding date;
(b) is accumulated interest on (a);
(c) is all Net Purchase Payments received and allocated to the Fixed Account
and any Accumulation Value transferred into the Fixed Account since the
immediately preceding date;
(d) is interest accumulated on (c) from the date of receipt of the Net Purchase
Payment allocated to the Fixed Account or the date any Accumulation Value
was transferred into the Fixed Account;
(e) is the sum of any partial surrenders from the Fixed Account since the
immediately preceding date, and applicable surrender charges; and
(f) is any Accumulation Value transferred out of the Fixed Account since the
last date.
The guaranteed interest rate applied in the calculation of the Fixed Account
Accumulation Value is 3% per year, compounded daily, on all Fixed Account
Accumulation Values. Fixed Account Accumulation Values may earn interest at a
higher rate.
FULL SURRENDER. You may surrender this Policy for its Surrender Value at any
time during the lifetime of the Annuitant and before the Annuity Date. The
request for a full surrender must be in writing and accompanied by this Policy.
We will pay the Surrender Value to You generally within days after We receive
Your written request. We reserve the right to defer payment of any Surrender
Value taken from the Fixed Account for up to 6 months from the date of receipt
of the request.
The Surrender Value of the Policy will be the Accumulation Value as of the date
of surrender less any surrender charges. An amount of Accumulation Value equal
to the greater of: (1) 10% of the Accumulation Value in a Policy Year; or (2)
Accumulation Value less total Purchase Payments made, can be withdrawn without
the deduction of surrender charges. On withdrawals of that portion of
Accumulation Value in excess of the amount available without surrender charges a
surrender charge will be assessed. This surrender charge will be a percentage of
the Purchase Payments made in each Policy Year. In no event will the sum of
surrender charges and Distribution Expense Charges exceed 9% of total Purchase
Payments paid.
<TABLE>
<CAPTION>
Policy Year Applicable
Since Each Purchase Surrender Charge
Payment Made Percentage
<S> <C>
1 7%
2 7
3 6
4 5
5 4
6 3
7 2
8 and thereafter 1
</TABLE>
We will waive the surrender charge if the Surrender Value will be left with Us:
(1) under annuity option 1 or 3 with annuity payments to be made for at least 5
years; or (2) under annuity option 2.
PARTIAL SURRENDERS. You may surrender a part of the Accumulation Value at any
time during the lifetime of the Annuitant and before the Annuity Date. This
Policy will remain in force after a partial surrender. The request for a
partial surrender must be: (1) in writing; and (2) for the amount to be paid to
You.
We will pay the partial surrender amount to You generally within 7 days after We
receive the written request. We reserve the right to defer payment of any
partial surrender amount taken from the Fixed Account for up to 6 months from
the date of receipt of the request.
Form VA95-PQ
8
<PAGE>
We will grant the partial surrender if: (1) the request is for at least $250.00;
and (2) an Accumulation Value of at least $250.00 will remain after deduction of
the amount of the partial surrender and its surrender charge if any. Unless You
request otherwise, We will allocate partial surrenders to the Fixed Account and
Subaccounts in proportion to the Accumulation Value in the Fixed Account and
in each Subaccount on the date the partial surrender is made. An amount of
Accumulation Value equal to the greater of:
(1) 10% of the Accumulation Value in a Policy Year; or
(2) Accumulation Value less total Purchase Payments made, can be withdrawn
without the deduction of surrender charges.
On partial surrenders representing Purchase Payments, a surrender charge, if
any, is imposed based upon the number of Policy Years since the Policy Year in
which the Purchase Payments surrendered were paid, on a first paid, first
surrendered basis. The surrender charge will be a percentage of each Purchase
Payment or portion thereof surrendered. See the surrender charge schedule in
the Full Surrender provision for the appropriate percentage. The amount of the
partial surrender and the amount of the surrender charge, if any, will be
deducted from the Accumulation Value.
BASIS OF VALUES. All Surrender Values of this Policy are not less than the
minimum required by the laws of the state where this Policy is delivered.
TRANSFERS FROM OTHER POLICIES. With Our consent, values from other policies on
the life of the Annuitant may be transferred to this Policy and added to the
Accumulation Value. This transfer will be subject to the terms, conditions and
charges We stipulate on the date the transfer occurs.
SECTION 8 POLICY LOANS
POLICY LOAN PROVISION.You may obtain a policy loan on this Policy by filing a
written request with Us. You may file a policy loan request after the first
Policy Year. We will pay the loan amount to you generally within 7 days after
We receive Your request for the loan in Our home office. We reserve the right
to defer payment of any loan from the Fixed Account for up to six months after
We receive the request. Unless You request otherwise, We will allocate policy
loans to the Fixed Account and Subaccounts in proportion to the Accumulation
Value in the Fixed Account and in each Subaccount on the date the policy loan is
made. Accumulation Value in each Subaccount equal to the portion allocated to
the Subaccount and Fixed Account will be transferred into the General Account.
The value equal to the Policy Debt in the General Account will earn interest at
an annual rate of 4%. Only one policy loan will be permitted. The policy loan
must be repaid in full before another policy loan can be taken. The
accumulation value will be the sole security for all policy loans.'
POLICY LOAN AMOUNT. Policy loan amount cannot be less than $2,500 nor, exceed
the lessor of: (1) 50% of the Surrender Value on the date of the policy loan; or
(2) $50,000.00.
LOAN INTEREST. We will charge interest daily on any policy loan at the loan
interest rate listed on the data page. interest is due:
(1) on each Policy Year; or
(2) when the policy loan is paid back, if that comes first.
If interest is not paid when due, it will become part of the policy loan.
POLICY INDEBTEDNESS. All policy loans together with accrued interest will be
Policy Debt. The Policy will terminate and have no value if Policy Debt equals
or exceeds the Surrender Value. The effective date of termination will be 31
days after we have mailed notice of termination to your last known address.
If the Policy is surrendered, the Accumulation Value will be reduced by the
surrender charge and the amount of Policy Debt.
If any death benefit proceeds or annuity payments become due and payable, the
amount of proceeds will be reduced by the amount of Policy Debt.
9
<PAGE>
POLICY LOAN REPAYMENT. All policy loans, other than "Home Loans," must be repaid
in full on or before the fifth anniversary of the Policy loan effective date
while the Policy is in force. All policy loans may be repaid in a lump sum
payment or, at Our discretion, in installments. We will not accept a policy loan
payment of less than $10.00.
Policy Debt, other than the balance on a "Home Loan," which remains unpaid after
the fifth anniversary of the policy loan effective date will be deemed a
distribution of the Policy proceeds. The Accumulation Value will be reduced by
the amount of any such balance.
"Home Loan" means any policy loan obtained for the purpose of acquiring,
constructing, reconstructing or substantially rehabilitating a dwelling unit for
use by Yourself (as defined in Section 267 (c) of the Internal Revenue Code) as
a principal place of residence for a reasonable period of time.
"Home Loans" may be repaid over a period of time not to exceed 15 years, with
level installment payments made not less frequently than quarterly.
INTEREST EARNED MAY BE AFFECTED. That portion of the Accumulation Value which
acts as security for a policy loan will earn interest at a rate not less than
4%. If interest in excess of 4% is declared, it may apply to that portion of
the Accumulation Value securing a policy loan.
DEFERMENT OF PAYMENTS AND EMERGENCY PROCEDURE. We may suspend or delay all
procedures which require valuation of a Subaccount if the New York Stock
Exchange is closed (except for holidays or weekends) or trading is restricted
due to an existing emergency as defined by the Securities and Exchange
Commission so that We cannot value the Subaccounts. Any provision of this
Policy which specified Valuation Date will be superseded by this emergency
procedure.
SECTION 9 DEATH BENEFIT
DEATH BENEFIT. In the event of Annuitant's death prior to the Annuity Date, a
death benefit will be payable equal to the greater of: (1) Accumulation Value on
the date that notice of death is received by Us; or (2) the minimum guaranteed
death benefit on the Policy.
The death benefit will be paid in a lump sum to the beneficiary named in the
Policy within seven days of receipt of proof of death in proper form.
MINIMUM GUARANTEED DEATH BENEFIT. For all dates up to and including the first
Six-Year Anniversary Date, the minimum guaranteed death benefit will equal
Purchase Payments less partial surrender reductions made on or before such date.
For all subsequent Six-Year Anniversary Dates, the minimum guaranteed death
benefit will equal the greater of:
(1) the Accumulation Value on such Six-Year Anniversary date, or
(2) the minimum guaranteed death benefit for the immediately preceding Six-Year
Anniversary Date, plus Purchase Payments and less partial surrender reductions
made since such immediately preceding Six-Year Anniversary Date.
For all other dates, the minimum guaranteed death benefit will equal the minimum
guaranteed death benefit for the immediately preceding Six-Year Anniversary Date
plus purchase payments and less partial surrender reductions made since such
immediately preceding Six-Year Anniversary Date.
PARTIAL SURRENDER REDUCTION. An amount equal to (i) the amount of a surrender,
multiplied by (ii) the minimum guaranteed death benefit on the date
immediately prior to the surrender, divided by (iii) the Accumulation Value on
the date immediately prior to the surrender.
Form VA95-PQ
10
<PAGE>
SECTION 10 ANNUITY OPTIONS
AVAILABILITY. All or a part of any amount payable in settlement of this Policy
may be applied to any of the following annuity options. We will first discharge
in a single sum any liability under an assignment of the Policy and any
applicable federal or state taxes, fees or assessments which have not otherwise
been deducted or offset and which are based or predicated on the Purchase
Payments payable on this Policy. The remaining amount is the net sum payable.
Other annuity options can be used if agreed to by Us. If you have not elected an
annuity option before the Annuitant's death, the beneficiary can choose one. The
minimum amount that We will apply to any annuity option is $2,000.00. Any
election or change must be written in a form that satisfies Us. Our consent is
required for:
(1) any payment to any entity other than a natural person; or
(2) any change in an elected annuity option.
HOW ANNUITY PAYMENTS ARE DETERMINED. There are a number of ways to receive
annuity payments. Annuity payments may be received on a fixed basis and/or on
Variable Basis. All or a portion of the net sum payable may be allocated to any
Subaccount. Annuity payments will increase or decrease according to the
investment experience of the Subaccount. All or a portion of the net sum payable
may be allocated to the Fixed Account. Annuity payments from the Fixed Account
will remain the same.
EXPENSES DURING THE ANNUITY PERIOD. The Separate Account will be assessed a
daily Separate Account
EXPENSE OF 0.0034%.
ANNUITY OPTIONS. The following annuity options are available: Option 1. Life
Annuity. Annuity payment payable monthly during the lifetime of the Annuitant,
ceasing with the last annuity payment due prior to the death of the Annuitant.
This option offers the maximum level of monthly annuity payments since there is
no provision for a minimum number of annuity payments or a death benefit for
beneficiaries. It would be possible under this option for the Annuitant to
receive only one annuity payment if death occurred prior to the due date of the
second annuity payment, two if death occurred before the third annuity payment,
etc.
Option 2. Life Annuity with 10 or 20 Years Certain and Life Thereafter. An
annuity payable monthly during the lifetime of the Annuitant with payments made
for a period certain of not less than 10 or 20 years, as elected. The annuity
payments will be continued to a designated beneficiary until the end of the
period certain upon the death of the Annuitant.
Option 3. Refund Life Annuity. An annuity payable monthly during the lifetime of
the Annuitant with annuity payments made for a period certain not less than the
number of months determined by dividing the amount applied under this option by
the amount of the first monthly annuity payment. This option guarantees that the
Annuity Units but not the dollar value applied under Variable Annuity payout
will be repaid to the Annuitant or his beneficiary.
Option 4. Joint and Survivor Annuity. An annuity payable monthly during the
joint lifetime of the Annuitant and another named individual and thereafter
during the lifetime of the survivor, ceasing with the last annuity payment due
prior to the death of the survivor. It would be possible under this option, for
only one annuity payment to be made if both individuals under the option died
prior to the second annuity payment date, or only two annuity payments if both
died prior to the third annuity payment date, etc.
Option 5. Installment Payments, Fixed Period. An amount payable monthly for any
specified number of years not exceeding 30. The amount of each Variable Annuity
payment will be determined by multiplying (a) and (b) where (a) is the
Accumulation Unit Value on the day the annuity payment is made and (b) is the
number of Annuity Units applied under this option divided by the number of
remaining monthly annuity payments.
Option 6. Equal Installment Payments, Fixed Amount. An amount payable in equal
monthly installments (not less than $6.25 per $1,000 applied) until the amount
applied, adjusted daily by the investment results, is exhausted. The final
annuity payment will be the remaining sum left with Us.
11
<PAGE>
Option 7. Deposit Option. The amount due may be left on deposit with Us for
placement in its Fixed Account with interest at the rate of not less than 3% per
year. Interest will be paid annually, semiannually, quarterly or monthly as
elected. This option may not be available under certain Qualified Contracts.
Option 8. IRC Age Recalculation. An annuity payment based upon the Annuitant's
life expectancy, or the joint life expectancies of the Annuitant and a
beneficiary, at the Annuitant's attained age (and the beneficiary's attained or
adjusted age, if applicable) each year as computed in reference to actuarial
tables prescribed by the Treasury Secretary, until the amount applied, adjusted
daily by the investment results, is exhausted
At any time, any amount remaining under Option 5, 6 or 7 may be withdrawn as a
lump sum or, if that amount is at least $2,000, may be applied under any one of
the first four options. The lump sum payment requested will be paid within seven
days of receipt of the request at the Home Office based on the value next
computed after receipt of the request. Other annuity options may be made for
annuity payments in any reasonable arrangement mutually agreed upon by Us.
If the beneficiary dies while receiving annuity payments certain under option 2,
3, 5, 6 or 8 above, the present value will be paid in a lump sum to the estate
of the beneficiary.
VALUE OF VARIABLE ANNUITY PAYMENTS: ASSUMED INVESTMENT RATES. The annuity tables
in the contract which are used to calculate the annuity payments are based on an
"assumed investment rate" of 3%. If the actual investment performance of the
particular Subaccount selected is such that the net investment return to the
Contract is 3% per annum, the annuity payments will remain constant. If the net
investment return exceeds 3%, the annuity payments will increase and if the
return is less than 3%, the annuity payments will decrease.
The annuity payment will be greater for shorter guaranteed periods than for
longer guaranteed periods, and greater for life annuities than for joint and
survivor annuities, because the life annuities are expected to be made for a
shorter period.
ANNUITY PROVISIONS. The payment amounts illustrated in the annuity option tables
are based on the 1983 Table "A" (female) projected to 1993, and 3% interest.
The attained age at annuitization will be adjusted downward by one year for each
full five year period that has elapsed since January 1, 1993.
ANNUITY OPTION TABLES FOR ANNUITY PAYMENTS
ON A FIXED BASIS
OPTION 5
MONTHLY ANNUITY PAYMENTS FOR EACH $1,000.00 OF THE NET SUM PAYABLE
Multiply the monthly annuity payment by 2.993 to obtain the quarterly payment,
by 5.963 to obtain the semi-annual payment, and by 11.840 to obtain the annual
payment.
<TABLE>
<CAPTION>
Years Amount Years Amount Years Amount Years Amount Years Amount
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $84.46 7 $13.16 13 $7.71 19 $5.72 25 $4.71
2 42.85 8 11.68 14 7.26 20 5.51 26 4.59
3 28.99 9 10.53 15 6.87 21 5.32 27 4.47
4 22.06 10 9.61 16 6.53 22 5.15 28 4.37
5 17.91 11 8.86 17 6.23 23 4.99 29 4.27
6 15.14 12 8.24 18 5.96 24 4.84 30 4.19
</TABLE>
Form VA95-PQ
12
<PAGE>
MONTHLY ANNUITY PAYMENT FOR LIFE FOR EACH $1,000.00 OF THE NET SUM PAYABLE
Age in years means age of payee on birthday prior to the due date of the first
payment. Amounts for annuity payments other than monthly are available on
request.
<TABLE>
<CAPTION>
AGE IN OPTION 2 OPTION 2 OPTION 1 AGE IN OPTION 2 OPTION 2 OPTION 1
YEARS Guaranteed Guaranteed Life Only YEARS Guaranteed Guaranteed Life Only
Period Period Period Period
10 Years 20 Years 10 Years 20 Years
---------------------------------- --------------------------------
Amount Amount Amount Amount Amount Amount
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
11 * $2.75 $2.74 $2.76 46 $3.50 $3.44 $3.54
12 2.77 2.75 2.79 47 3.54 3.48 3.58
13 2.78 2.76 2.80 48 3.58 3.52 3.63
14 2.79 2.77 2.81 49 3.63 3.56 3.68
15 2.80 2.78 2.82 50 3.68 3.60 3.73
16 2.81 2.79 2.83 51 3.73 3.64 3.79
17 2.82 2.80 2.84 52 3.78 3.69 3.83
18 2.83 2.81 2.86 53 3.83 3.74 3.89
19 2.85 2.83 2.87 54 3.89 3.79 3.95
20 2.86 2.84 2.88 55 3.95 3.83 4.02
21 2.88 2.85 2.90 56 4.01 3.89 4.08
22 2.89 2.86 2.91 57 4.08 3.94 4.16
23 2.91 2.88 2.93 58 4.15 3.99 4.23
24 2.92 2.90 2.95 59 4.22 4.05 4.31
25 2.94 2.91 2.96 60 4.30 4.11 4.40
26 2.95 2.93 2.98 61 4.38 4.17 4.49
27 2.97 2.95 3.00 62 4.47 4.22 4.58
28 2.99 2.97 3.02 63 4.56 4.28 4.68
29 3.01 2.98 3.04 64 4.65 4.34 4.79
30 3.03 3.00 3.06 65 4.75 4.40 4.90
31 3.05 3.02 3.08 66 4.85 4.46 5.02
32 3.07 3.05 3.10 67 4.96 4.52 5.15
33 3.09 3.07 3.12 68 5.07 4.57 5.28
34 3.12 3.09 3.15 69 5.19 4.63 5.42
35 3.14 3.11 3.17 70 5.31 4.68 5.58
36 3.17 3.14 3.20 71 5.44 4.72 5.74
37 3.20 3.16 3.23 72 5.57 4.76 5.91
38 3.22 3.19 3.25 73 5.70 4.80 6.10
39 3.25 3.22 3.28 74 5.84 4.83 6.30
40 3.28 3.25 3.32 75 5.98 4.86 6.50
41 3.31 3.27 3.35 76 6.12 4.88 6.72
42 3.35 3.31 3.38 77 6.27 4.90 6.96
43 3.38 3.34 3.42 78 6.39 4.92 7.20
44 3.42 3.37 3.46 79 6.52 4.94 7.46
45 3.46 3.41 3.50 80** 6.64 4.96 7.72
- -------------------------------------------------------------------------------------------
</TABLE>
* and under ** and over
13
<PAGE>
OPTION 4
JOINT AND SURVIVOR MONTHLY ANNUITY PAYMENT FOR EACH $1,000.00 OF NET SUM PAYABLE
Age in years means age of the payee on the birthday prior to the due date of the
first payment. Monthly annuity payment to the Annuitant with annuity payment to
the surviving spouse based on the elected Specified Amount Payment.
<TABLE>
<CAPTION>
Age Specified Specified Specified Age Specified Specified Specified
in Amount Amount Amount in Amount Amount Amount
Years One-Half Two-Thirds Full Years One-Half Two-Thirds Full
payment payment payment payment payment payment
<S> <C> <C> <C> <C> <C> <C> <C>
55 $4.38 $4.22 $3.94 63 $5.06 $4.83 $4.43
56 4.44 4.28 3.99 64 5.17 4.93 4.51
57 4.52 4.35 4.04 65 5.29 5.03 4.59
58 4.59 4.42 4.10 66 5.42 5.15 4.68
59 4.68 4.49 4.16 67 5.55 5.27 4.77
60 4.76 4.57 4.22 68 5.69 5.39 4.88
61 4.86 4.65 4.28 69 5.85 5.53 4.98
62 4.95 4.74 4.35 70 6.01 5.67 5.10
</TABLE>
Amounts shown apply if both payees are the same age. Amounts for annuity
payments other than monthly and for other ages are available on request.
SECTION 10 GENERAL PROVISIONS
CONTRACT AND REPRESENTATIONS. This Policy and the attached copy of the
application forms the entire contract. All statements in the application will be
deemed representations and not warranties. Only statements in the application
will be used to defend a claim or to contest the contract.
MODIFICATION OF CONTRACT. Only Our president, a vice-president, or secretary has
the power to change this Policy. Any change must be in writing signed by one of
the above-named officers.
EFFECTIVE DATE. This Policy takes effect on the date of issue shown on the
data page upon:
(1) payment of the first Purchase Payment; and
(2) Policy delivery during the Annuitant's lifetime.
Policy Years, months, and anniversaries are measured from the date of issue.
INCONTESTABILITY. This Policy will not be contested after it has been in force
during the lifetime of the Annuitant for 2 years from the date of issue.
ASSIGNMENT. No assignment will bind Us until recorded at Our home office. We are
not obliged to see that an assignment is valid or sufficient. Any claim by an
assignee is subject to proof of the validity and extent of the assignees
interest in the Policy.
CONTRACT SETTLEMENT. All amounts due under this Policy are payable at Our home
office. We must be given: (1) this Policy for inspection or surrender for final
settlement; plus (2) proof that the Annuitant is living or proof of death in the
event of claim by death.
ANNUAL REPORT. While this Policy is in force prior to the Annuity Date, We will
provide You with an annual report of the Accumulation Value.
MISSTATEMENT OF AGE AND SEX. If age or sex, of the Annuitant is misstated, any
benefits or amounts payable will be changed to what the Accumulation Value would
have bought for the correct age and sex. In the event We made any underpayments
on account of such misstatement, the total amount of underpayment due to the
payees shall be paid immediately in one sum. Any overpayments by us shall be
deducted from any succeeding payments due under this Policy.
Form VA95-PQ
14
<PAGE>
NONPARTICIPATING FLEXIBLE PURCHASE PAYMENT DEFERRED VARIABLE ANNUITY.
NO DIVIDENDS. ANNUITY BENEFITS PAYABLE AT THE ANNUITY DATE.
DEATH BENEFIT PAYABLE IN EVENT OF DEATH PRIOR TO ANNUITY DATE.
ALPHABETIC GUIDE
<TABLE>
<CAPTION>
PAGE
<S> <C>
Accumulation Value 6
Addition, Deletion or Substitution of Investments 6
Age at Issue Data Page
American National Fixed Account 5
American National Variable Annuity Separate Account 5
Annual Report 13
Annuity Date Data Page
Annuity Options 10,11
Annuity Option Tables for Annuity Payments on a Fixed Basis 11-13
Annuity Provisions 11
Assignment 13
Availability 10
Basis of Values 8
Beneficiary Interest 4,5
Change of Beneficiary 5
Contract and Representations 13
Contract Settlement 13
Date of Crediting 4
Date of Issue Data Page
Death Benefit 9
Deferment of Payments and Emergency Procedure 9
Effective Date 13
Expenses During The Annuity Period 10
Fixed Account Accumulation Value 7
Flexibility 3
Full Surrender 7
How Annuity Payments Are Determined 10
Incontestability 13
Interest May be Affected 9
Loan Interest 8
Minimum Guaranteed Death Benefit 9
Misstatement of Age and Sex 13
Modification of Contract 13
Nonpayment of Purchase Payments 4
Ownership 4
Partial Surrender Reduction 9
Partial Surrenders 7,8
Policy Data Data Page
Policy Indebtedness 8
Policy Loan Amount 8
Policy Loan Provision 8
Policy Loan repayment 9
Purchase Payment Billing 3,4
Purchase Payments 4
Separate Account Accumulation Value 6,7
Subaccounts 5
Transfers 5,6
Transfers During The Annuity Period 6
Transfers From Other Policies 8
Transfer of Ownership 4
Value of Variable Annuity Payments: Assumed Investment Rates 11
When Owner Is a Minor 4
</TABLE>
15
<PAGE>
Exhibit 99.B4
AMERICAN NATIONAL INSURANCE COMPANY
STOCK LIFE INSURANCE COMPANY
Annuitant John Doe April 1, 1995 Date of Issue
Policy Number VA123456 April 1, 2025 Annuity Date
Home Office: One Moody Plaza
Galveston, Texas 77550
AMERICAN NATIONAL INSURANCE COMPANY ("We, Us, Our") will pay an annuity payment
to the Annuitant at its home office in Galveston, Texas, subject to the
provisions of this Policy. The annuity payment will begin on the Annuity Date
if the Annuitant is then living. The annuity payment will be payable according
to the annuity option selected by the Owner ("You, Your"). The amount of the
annuity payment will be based on the Accumulation Value on the Annuity Date.
Prior to the Annuity Date, You may elect to have the Policy surrendered and the
Surrender Value paid in a single sum or, with Our consent, under an annuity
option as designated in this Policy. Such payment will be in lieu of the annuity
payment on the Annuity Date.
If the Annuitant dies before the Annuity Date, this Policy will be terminated.
We will pay to the beneficiary a death benefit, subject to the Provisions of the
Policy.
This Policy is issued in consideration of the application and receipt of the
first Purchase Payment by Us. Your Policy is a legal contract that You have
entered in to with Us. READ YOUR POLICY CAREFULLY.
RIGHT TO CANCEL POLICY. You may cancel this Policy by returning it to Us or Our
agent within ten days after You receive it, and We will refund the greater of
all purchase payments made or the accumulation value plus the amount for any
charges for state premium taxes and Separate Account Expenses.
THE ACCUMULATION VALUE IN AMERICAN NATIONAL VARIABLE ANNUITY SEPARATE ACCOUNT IS
BASED ON THE INVESTMENT EXPERIENCE OF THAT SEPARATE ACCOUNT AND MAY INCREASE OR
DECREASE DAILY. THE ACCUMULATION VALUE IS NOT GUARANTEED.
Signed for Us at Galveston, Texas, on the date of issue.
SECRETARY PRESIDENT
NONPARTICIPATING FLEXIBLE PURCHASE PAYMEcNT DEFERRED VARIABLE ANNUITY.
NO DIVIDENDS. ANNUITY BENEFITS PAYABLE AT THE ANNUITY DATE.
DEATH BENEFIT PAYABLE IN EVENT OF DEATH PRIOR TO ANNUITY DATE.
Form VA95-NQ
<PAGE>
POLICY PROVISIONS
PAGE
1. DEFINITIONS OF POLICY TERMS 2,3
2. OPTIONAL ANNUITY DATE 3
3. NONPARTICIPATING POLICY 3
4. PURCHASE PAYMENTS 3,4
5. OWNERSHIP AND BENEFICIARY 4,5
6. POLICY ACCOUNTS 5,6
7. NONFORFEITURE BENEFITS 6-8
8. DEATH BENEFIT 8
9. ANNUITY OPTIONS 9-10
10. GENERAL PROVISIONS 12
See the last page for an Alphabetic Guide to this Policy.
SECTION 1 DEFINITIONS OF POLICY TERMS
ACCUMULATION PERIOD - The period from the date Accumulation Units are first
purchased under the Policy to the earliest of the Annuity Date, the date the
Policy is surrendered for its then current value or the date of the Annuitants
death.
ACCUMULATION UNIT - A standard of measurement used with respect to each
Subaccount to calculate the value of the Policy during the Accumulation Period.
The value of an Accumulation Unit fluctuates with the value of the shares of
the corresponding Portfolio owned by each Subaccount less any applicable
deductions.
ACCUMULATION UNIT VALUE - THE VALUE OF AN ACCUMULATION UNIT.
ACCUMULATION VALUE - The Accumulation Value of the Policy is the sum of the
total Accumulation Units in Subaccounts times the respective Accumulation Unit
Value of such Subaccounts and Your value in the Fixed Account.
ANNUITANT - The person on whose life the Policy is written. The Annuitant may
also be the Owner.
ANNUITY DATE - The date on which the Accumulation Period changes to the Annuity
Period.
ANNUITY PERIOD - The period of time during which annuity payments are being
made.
ANNUITY UNIT - A standard of measurement used with respect to each Subaccount
to calculate the dollar amount of annuity payments during the Annuity Period.
The value of an Annuity Unit fluctuates with the value of shares of the
corresponding Portfolio owned by each Subaccount less any applicable deductions.
DISTRIBUTION EXPENSE CHARGES - A part of the Separate Account Expenses. This
charge reimburses Us for the risk that surrender charges assessed may be
insufficient to cover the cost of distributing the Policy.
FIXED ACCOUNT - An account that is a part of American National's General Account
to which all or a portion of Net Purchase Payments and transfers may be
allocated for accumulation at fixed rates of interest.
GENERAL ACCOUNT - The General Account of American National which includes all of
American National's assets except those assets segregated into its separate
accounts.
NET PURCHASE PAYMENT - The Purchase Payment less any government entity premium
tax charge.
NON-QUALIFIED CONTRACT - A Policy issued in connection with a retirement plan
that does not receive favorable tax treatment under the Internal Revenue Code.
OWNER ("YOU, YOUR") - The person or entity entitled to exercise all legal rights
of ownership in the Policy prior to the Annuity Date or termination of the
Policy. You or the Annuitant need not be the same.
2
<PAGE>
DATA PAGE
OWNER ANNUITANT
BENEFICIARY AS DESIGNATED IN COPY OF APPLICATION ATTACHED UNLESS
SUBSEQUENTLY CHANGED IN COMPLIANCE WITH POLICY PROVISIONS.
AGE AT ISSUE 35 DATE OF ISSUE APRIL 1, 1995
ANNUITANT JOHN DOE ANNUITY DATE APRIL 1, 2025
POLICY NUMBER VA123456
FORM
NUMBER BENEFIT
VA95-NQ FLEXIBLE PURCHASE PAYMENT DEFERRED VARIABLE ANNUITY
INITIAL PURCHASE PAYMENT - $100.00
PLANNED PERIODIC BILLING - $100.00 MONTHLY
MINIMUM PLANNED PERIODIC BILLING - $100.00
PREMIUM TAX CHARGE - 0.00% OF EACH PURCHASE PAYMENT RECEIVED FOR
PREMIUM TAX IN THE STATE OF TEXAS
ANNUAL CONTRACT FEE - $25 IS CHARGED AT THE END OF EACH POLICY YEAR
SEPARATE ACCOUNT EXPENSES - A DAILY CHARGE OF .00438% OF THE ACCUMULATION
VALUE IS DEDUCTED FROM EACH SUBACCOUNT
NET PURCHASE PAYMENT ALLOCATION
SUBACCOUNTS
AN GROWTH 100% FID MONEY MARKET 0%
AN MONEY MARKET 0% HIGH INCOME 0%
BALANCED 0% EQUITY - INCOME 0%
MANAGED 0% FID GROWTH 0%
OVERSEAS 0%
INVESTMENT GRADE BOND 0%
ASSET MANAGER 0%
INDEX 500 0%
CONTRA 0%
ASSET MANAGER: GROWTH 0%
FIXED ACCOUNT 0%
<PAGE>
POLICY - Variable Annuity issued pursuant to the Prospectus which sets forth the
obligations and contractual promises which American National makes to You.
POLICY YEAR - The period from the date the first Purchase Payment is credited to
the Policy until the immediately preceding day of the succeeding year.
PORTFOLIO - A separate series of capital securities designed to meet specified
investment objectives.
PURCHASE PAYMENT - A payment made into the Policy during the Accumulation
Period.
SEPARATE ACCOUNT EXPENSES - A daily charge deducted from the Accumulation Value
of each Subaccount. These expenses reimburse Us for accepting mortality and
expense risks, Distribution Expense Charges and administrative expenses.
SIX-YEAR ANNIVERSARY DATE - The last day of each Policy Year prior to the
Annuitant's 75th birthday which is evenly divisible by six.
SUBACCOUNT - A subdivision of the Separate Account. Each Subaccount invests
exclusively in the shares of the corresponding Portfolio.
SURRENDER VALUE - THE Accumulation Value on the date of surrender less any
surrender charge.
EVALUATION DATE - Valuation Date is any day on which the New York Stock Exchange
("NYSE") is open for trading.
EVALUATION PERIOD - The period commencing at the close of regular trading on the
NYSE on one Valuation Date and ending at the close of regular trading on the
NYSE on the next succeeding Valuation Date.
VARIABLE ANNUITY - An annuity providing payments which vary in dollar amount
depending on the investment results of the Portfolio's.
SECTION 2 OPTIONAL ANNUITY DATE
While this Policy is in force, You may request a change of the Annuity Date.
The new Annuity Date:
(1) must be after the date that We receive Your request;
(2) must be on the same day of the month as the policy date of issue; and
(3) must be no later than the Annuitants 95th birthday.
If no change is requested, the Annuity Date will remain as shown on the data
page. We must agree in writing to any change in the Annuity Date. Your request
for a change in the Annuity Date must be:
(1) in writing; and
(2) sent to Our home office.
You will have the same annuity options available on any new Annuity Date that
would have been available on the original Annuity Date.
SECTION 3 NONPARTICIPATING POLICY
This Policy is nonparticipating. It does not share in Our profits or surplus.
SECTION 4 PURCHASE PAYMENTS
FLEXIBILITY. This Policy is a Flexible Purchase Payment Annuity. After the
first Purchase Payment, You can choose:
(1) the amount of Purchase Payment to pay; and
(2) how often Purchase Payments will be paid.
PURCHASE PAYMENT BILLING. As specified in the application, the amount and
frequency of the Purchase Payments You intend to pay on this Policy is shown on
the data page. We will prepare Purchase Payment billings at the rate of payment
shown. Upon Your written request, the amount, frequency,
3
Form VA95-NQ
<PAGE>
or method of Purchase Payment billing can be changed. The amount of the
Purchase Payment billing will never be less than the minimum amount specified on
the data page.
PURCHASE PAYMENTS. You may pay Purchase Payments on this Policy until:
(1) the Annuity Date; or
(2) the Annuitants death, whichever comes first.
Purchase Payments may be paid:
(1) at the home office; or
(2) to Our authorized agent in exchange for an official signed receipt.
NONPAYMENT OF PURCHASE PAYMENTS. If no Purchase Payment is received by Us for a
period of 13 months, We will stop Purchase Payment billing. We will resume
Purchase Payment billing only if:
(1) a Purchase Payment is paid; and
(2) You request in writing that the Purchase Payment billing resume.
If no Purchase Payment is received by Us for a period of 36 months and the
Accumulation Value is less than $250.00 and will not be of sufficient value to
purchase $20.00 of monthly income on the Annuity Date, then We may terminate
this Policy by payment of the total surrender value to You. If no Purchase
Payment is received by Us for a period of 36 months and the Accumulation value
is not below the stated limits, then this Policy will remain in full force and
effect on a Purchase Payment paying basis, and at the Annuity Date of this
Policy, annuity payments will automatically begin by Us according to the
annuity option selected in the application, unless another annuity option is
specified by You prior to the date such annuity payments begin. The amount of
the annuity payments will be based on the actual Accumulation value on the
Annuity Date.
DATE OF CREDITING. The amount of the initial Purchase Payment is shown on the
data page. The initial Purchase Payment will be credited as of the date of
issue. All Purchase Payments after the initial Purchase Payment will be
credited on the date the Purchase Payment is received at the home office.
SECTION 5 OWNERSHIP AND BENEFICIARY
OWNERSHIP. The Owner is shown on the data page. You may exercise all rights of
ownership before the Annuity Date or the Annuitants death. Your rights are
subject to the rights of:
(1) any assignee of record; or
(2) any irrevocable beneficiary.
WHEN OWNER IS A MINOR. So long as You are a minor, first the Annuitant, then the
beneficiary, if living and competent, has the right to:
(1) ask for and receive all Surrender Values and
other benefits;
(2) assign this Policy;
(3) exercise all rights and options in this Policy; and
(4) agree with Us to any Policy changes or release.
All rights of the Annuitant and the beneficiary are subject to the rights of:
(1) any assignee of record; and
(2) any irrevocable beneficiary.
TRANSFER OF OWNERSHIP. You may die while the Annuitant is living. If so,
ownership will pass to your estate unless this Policy states otherwise.
BENEFICIARY INTEREST. The beneficiary will be as shown in this Policy's
application. The beneficiary will receive the death benefit. Any relationship
shown is to the Annuitant. Unless changed by endorsement or written request
filed at Our home office:
(1) all class members will share proceeds equally;
(2) surviving class members will share equally that portion of the death benefit
to which a deceased beneficiary would have been entitled; and
(3) if no beneficiary survives the Annuitant, the death benefit will be paid to
the Annuitant's estate.
A beneficiary will not share in the death benefit if the beneficiary dies within
6 days after the Annuitant's death. If any beneficiary dies within 6 days after
the Annuitant's death and if there are no surviving beneficiary class members,
the proceeds will be paid to the estate of the Annuitant.
4
<PAGE>
If the beneficiary is not a natural person, the beneficiary must still exist at
the time of the Annuitant's death. All beneficiaries' interests are subject to
any assignment on record at the home office.
CHANGE OF BENEFICIARY. You may change a beneficiary if:
(1) the Annuitant is living; and
(2) written request in a form acceptable by Us is filed at the home office.
The change will not take effect until it is recorded at Our home office.
However, once such change is recorded the change is effective as of the date the
request was signed. The change is subject to:
(1) the rights of an assignee of record; and
(2) the rights of an irrevocable beneficiary.
SECTION 6 POLICY ACCOUNTS
AMERICAN NATIONAL FIXED ACCOUNT. You may elect to allocate or transfer all or a
part of the amount credited under the Policy to a Fixed Account. Such amounts
allocated or transferred become part of American National's General Account.
Subject to applicable law, We have sole discretion over the investment of the
assets of the Fixed Account and You do not share in the investment experience of
those assets. Instead, We guarantee that the part of the Accumulation Value in
the Fixed Account will accrue interest daily at an annual interest rate that We
will declare periodically. The declared rate will not be less than 3% per year,
compounded daily.
AMERICAN NATIONAL VARIABLE ANNUITY SEPARATE ACCOUNT. The variable benefits under
this Policy are provided through investments in the American National Variable
Annuity Separate Account. We established the American National Variable Annuity
Separate Account as a separate investment account to support Variable Annuity
contracts.
We own the assets of the American National Variable Annuity Separate Account.
Assets equal to the reserves and other liabilities of the American National
Variable Annuity Separate Account will not be charged with liabilities that
arise from any other business We conduct. We may transfer to American
National's General Account any assets which exceed the reserves and other
liabilities of the American NationalVariable Annuity Separate Account. American
National Variable Annuity Separate Account is registered with the Securities and
Exchange Commission as a investment trust under the Investment Company Act of
1940. It is also subject to the laws of the state of Texas.
SUBACCOUNTS. The American National Variable Annuity Separate Account has
multiple Subaccounts. Each Subaccount invests exclusively in shares of a
corresponding Portfolio. Each Portfolio is a separate series of capital
securities designed to meet specified investment objectives. All Subaccounts of
the American National Variable Annuity Separate Account are shown on the Policy
data page.
You will share only in the income, gains and losses of the particular
Subaccounts to which Net Purchase Payments have been allocated. We will value
the assets of each Subaccount of the American National Variable Annuity Separate
Account at the end of each Valuation Period.
TRANSFERS. At any time that this Policy is in the Accumulation Period, you may
transfer all or a portion of the amounts from one Subaccount to another
Subaccount, or to the Fixed Account.
The minimum amount that may be transferred is $250. You may make 12 transfers
each Policy Year without charge. The exchange fee for each additional transfer
during the Policy Year is $10.
5
Form VA95-NQ
<PAGE>
Transfers from the Fixed Account to the Subaccounts are permitted only once each
Policy Year and only during the thirty day period beginning on the policy
anniversary. This transfer is without charge. The maximum amount which may be
transferred out of the Fixed Account each year is the greater of: (a) 25% of the
amount in the Fixed Account, or (b) $1,000. Such transfer requests received
prior to the policy anniversary will be effected on the policy anniversary.
Transfer requests received within the thirty day period beginning on the policy
anniversary will be effected as of the end of the Valuation Period in which a
proper transfer request is received by Us.
TRANSFERS DURING THE ANNUITY PERIOD. Transfers from the Fixed Account to the
Subaccounts are not permitted during the Annuity Period. Transfers among
Subaccounts may be made 12 times each Policy Year. You may transfer Annuity
Units of one Subaccount into Annuity Units of another Subaccount and/or the
Fixed Account except during the five day period prior to an annuity payment
date.
ADDITION, DELETION, OR SUBSTITUTION OF INVESTMENTS. We have the right, subject
to compliance with applicable law, to make additions to, deletions from, or
substitutions for the shares of a Subaccount that are held by the American
National Variable Annuity Separate Account or that the American National
Variable Annuity Separate Account may purchase. We reserve the right to
eliminate the shares of any Portfolio and to substitute shares of another
Portfolio of another open-end management investment company if the shares of
the Portfolio are no longer available for investment or if, in Our judgment,
further investment in the Portfolio should become inappropriate in view of the
purposes of American National Variable Annuity Separate Account.
We will not substitute any shares attributable to Your interest in a Subaccount
of the American National Variable Annuity Separate Account without notice to You
and prior approval of the Securities and Exchange Commission, to the extent
required by the Investment Company Act of 1940.
We have the right to establish additional Subaccounts of the American National
Variable Annuity Separate Account, each of which would invest only in a new and
corresponding Portfolio or in shares of another open-end management investment
company. We also have the right to eliminate existing Subaccounts of the
American National Variable Annuity Separate Account. In the event of any
substitution or change, We may, by appropriate endorsement, make such changes in
this Policy as may be necessary or appropriate. The investment objectives will
not be changed without the approval of the Insurance Commissioner of the State
of Texas.
We also have the right, where permitted by law:
(1) to operate the American National Variable Annuity Separate Account as a
management company under the Investment Company Act of 1940;
(2) to deregister the American National Variable Variable Annuity Separate
Account under the Act if registration is no longer required; and
(3) to combine the American National Variable Annuity Separate Account with
other separate accounts.
SECTION 7 NONFORFEITURE BENEFITS
ACCUMULATION VALUE. The Accumulation Value is the sum of the total Accumulation
Units in the Subaccounts times the respective Accumulation Unit Values of such
Subaccounts and the value in the Fixed Account. Net Purchase Payments will be
added to the Accumulation Value the same day as the Purchase Payment is
credited. The annual contract fee of $25.00 will be deducted from the
Accumulation Value on the last day of each Policy Year. Partial surrenders and
any surrender charges applicable to such partial surrenders will be deducted
from the Accumulation Value as of the date of each partial surrender.
SEPARATE ACCOUNT ACCUMULATION VALUE. The Accumulation Value attributable to this
Policy in the Subaccounts of the American National Variable Annuity Separate
Account will vary daily with the performance of the Subaccounts in which you
have an Accumulation Value, any Net Purchase Payments paid, transfers, partial
surrenders, and charges assessed. There is no guaranteed minimum Surrender
Value on these separate account Accumulation Values.
On each Valuation Date, the Accumulation Value in a Subaccount is:
6
<PAGE>
(1) the Accumulation Units times the Accumulation Value on the immediately
preceding Valuation Date, plus;
(2) any Net Purchase Payment received and allocated to the Subaccount during
the current Valuation Period, plus;
(3) any Accumulation Value transferred to the Subaccount during the current
Valuation Period, minus;
(4) any Accumulation Value transferred from the Subaccount during the current
Valuation Period, minus;
(5) any partial surrenders plus applicable surrender charges from the
Subaccount during the current Valuation Period, minus;
(6) the Separate Account Expenses as listed on the data page.
FIXED ACCOUNT ACCUMULATION VALUE. The Fixed Account Accumulation Value on any
date shall be the sum of (a), (b), (c), and (d), less the sum of (e) and (f),
where:
(a) is the Fixed Account Accumulation Value on the immediately preceding date;
(b) is accumulated interest on (a);
(c) is all Net Purchase Payments received and allocated to the Fixed Account
and any Accumulation Value transferred into the Fixed Account since the
immediately preceding date;
(d) is interest accumulated on (c) from the date of receipt of the Net Purchase
Payment allocated to the Fixed Account or the date any Accumulation Value
was transferred into the Fixed Account;
(e) is the sum of any partial surrenders from the Fixed Account since the
immediately preceding date, and applicable surrender charges; and
(f) is any Accumulation Value transferred out of the Fixed Account since the
last date.
The guaranteed interest rate applied in the calculation of the Fixed Account
Accumulation Value is 3% per year, compounded daily, on all Fixed Account
Accumulation lues. Fixed Account Accumulation Values may earn interest at a
higher rate.
FULL SURRENDER. You may surrender this Policy for its Surrender Value at any
time during the lifetime of the Annuitant and before the Annuity Date. The
request for a full surrender must be in writing and accompanied by this Policy.
We will pay the Surrender Value to you generally within days after we receive
your written request. We reserve the right to defer payment of any Surrender
Value taken from the Fixed Account for up to 6 months from the date of receipt
of the request.
The Surrender Value of the Policy will be the Accumulation Value as of the date
of surrender less any surrender charges. An amount of Accumulation Value equal
to the greater of:
(1) 10% of the Accumulation Value in a Policy Year; or
(2) Accumulation Value less total Purchase Payments made,
can be withdrawn without the deduction of surrender charges. On withdrawals of
that portion of Accumulation Value in excess of the amount available without
surrender charges a surrender charge will be assessed. This surrender charge
will be a percentage of the Purchase Payments made in each Policy Year. In no
event will the sum of surrender charges and Distribution Expense Charges exceed
9% of total Purchase Payments paid.
<TABLE>
<CAPTION>
Policy Year Applicable
Since Each Purchase Surrender Charge
Payment Made Percentage
<S> <C>
1 7%
2 7
3 6
4 5
5 4
6 3
7 2
8 and thereafter 1
</TABLE>
We will waive the surrender charge if the Surrender Value will be left with Us:
(1) under annuity option 1 or 3 with annuity payments to be made for at least 5
years; or (2) under annuity option 2.
PARTIAL SURRENDERS. You may surrender a part of the Accumulation Value at any
time during the lifetime of the Annuitant and before the Annuity Date. This
Policy will remain in force after a partial surrender. The request for a
partial surrender must be: (1) in writing; and (2) for the amount to be paid to
You.
We will pay the partial surrender amount to You generally within 7 days after We
receive the written request. We reserve the right to defer payment of any
partial surrender amount taken from the Fixed Account for up to 6 months from
the date of receipt of the request.
7
Form VA95-NQ
<PAGE>
We will grant the partial surrender if: (1) the request is for at least $250.00;
and (2) an Accumulation Value of at least $250.00 will remain after deduction of
the amount of the partial surrender and its surrender charge if any. Unless You
request otherwise, We will allocate partial surrenders to the Fixed Account and
Subaccounts in proportion to the Accumulation Value in the Fixed Account and
in each Subaccount on the date the partial surrender is made. An amount of
Accumulation Value equal to the greater of:
(1) 10% of the Accumulation Value in a Policy Year; or
(2) Accumulation Value less total Purchase Payments made,
can be withdrawn without the deduction of surrender charges.
On partial surrenders representing Purchase Payments, a surrender charge, if
any, is imposed based upon the number of Policy Years since the Policy Year in
which the Purchase Payments surrendered were paid, on a first paid, first
surrendered basis. The surrender charge will be a percentage of each Purchase
Payment or portion thereof surrendered. See the surrender charge schedule in
the Full Surrender provision for the appropriate percentage. The amount of the
partial surrender and the amount of the surrender charge, if any, will be
deducted from the Accumulation Value.
BASIS OF VALUES. All Surrender Values of this Policy are not less than the
minimum required by the laws of the state where this Policy is delivered.
TRANSFERS FROM OTHER POLICIES. With Our Consent, values from other policies on
the life of the Annuitant may be transferred to this Policy and added to the
Accumulation Value. This transfer will be subject to the terms, conditions and
charges We stipulate on the date the transfer occurs.
DEFERMENT OF PAYMENTS AND EMERGENCY PROCEDURE. We may suspend or delay all
procedures which require valuation of a Subaccount if the New York Stock
Exchange is closed (except for holidays or weekends) or trading is restricted
due to an existing emergency as defined by the Securities and Exchange
Commission so that We cannot value the Subaccounts. Any provision of this
Policy which specified Valuation Date will be superseded by this emergency
procedure.
SECTION 8 DEATH BENEFIT
DEATH BENEFIT. In the event of Annuitants death prior to the Annuity Date, a
death benefit will be payable equal to the greater of: (1) Accumulation Value on
the date that notice of death is received by Us; or
(2) the minimum guaranteed death benefit
on the Policy.
The death benefit will be paid in a lump sum to the beneficiary named in the
Policy within seven days of receipt of proof of death in proper form.
MINIMUM GUARANTEED DEATH BENEFIT. For all dates up to and including the first
Six-Year Anniversary Date, the minimum guaranteed death benefit will equal
Purchase Payments less partial surrender reductions made on or before such date.
For all subsequent Six-Year Anniversary Dates, the minimum guaranteed death
benefit will equal the greater of:
(1) the Accumulation Value on such Six-Year Anniversary date, or
(2) the minimum guaranteed death benefit for the immediately preceding Six-Year
Anniversary Date, plus Purchase Payments and less partial surrender reductions
made since such immediately preceding Six-Year Anniversary Date.
For all other dates, the minimum guaranteed death benefit will equal the minimum
guaranteed death benefit for the immediately preceding Six-Year Anniversary Date
plus purchase payments and less partial surrender reductions made since such
immediately preceding Six-Year Anniversary Date.
PARTIAL SURRENDER REDUCTION. An amount equal to (i) the amount of a surrender,
multiplied by (ii) the minimum guaranteed death benefit on the date
immediately prior to the surrender, divided by (iii) the Accumulation Value on
the date immediately prior to the surrender.
8
<PAGE>
SECTION 9 ANNUITY OPTIONS
AVAILABILITY. All or a part of any amount payable in settlement of this Policy
may be applied to any of the following annuity options. We will first discharge
in a single sum any liability under an assignment of the Policy and any
applicable federal or state taxes, fees or assessments which have not otherwise
been deducted or offset and which are based or predicated on the Purchase
Payments payable on this Policy. The remaining amount is the net sum payable.
Other annuity options can be used if agreed to by Us. If you have not elected an
annuity option before the Annuitants death, the beneficiary can choose one. The
minimum amount that We will apply to any annuity option is $2,000.00. Any
election or change must be written in a form that satisfies Us. Our consent is
required for:
(1) any payment to any entity other than a natural person; or
(2) any change in an elected annuity option.
HOW ANNUITY PAYMENTS ARE DETERMINED. There are a number of ways to receive
annuity payments. Annuity Payments may be received on a fixed basis and/or on
Variable basis. All or a portion of the net sum payable may be allocated to any
Subaccount. Annuity payments will increase or decrease according to the
investment experience of the Subaccount. All or a portion of the net sum payable
may be allocated to the Fixed Account. Annuity payments from the Fixed Account
will remain the same.
EXPENSES DURING THE ANNUITY PERIOD. The Separate Account will be assessed a
daily Separate Account Expense of 0.0034%.
ANNUITY OPTIONS. The following annuity options are available: Option 1. Life
Annuity. Annuity payment payable monthly during the lifetime of the Annuitant,
ceasing with the last annuity payment due prior to the death of the Annuitant.
This option offers the maximum level of monthly annuity payments since there is
no provision for a minimum number of annuity payments or a death benefit for
beneficiaries. It would be possible under this option for the Annuitant to
receive only one annuity payment if death occurred prior to the due date of the
second annuity payment, two if death occurred before the third annuity payment,
etc.
Option 2. Life Annuity with 10 or 20 Years Certain and Life Thereafter. An
annuity payable monthly during the lifetime of the Annuitant with payments made
for a period certain of not less than 10 or 20 years, as elected. The annuity
payments will be continued to a designated beneficiary until the end of the
period certain upon the death of the Annuitant.
Option 3. Refund Life Annuity. An annuity payable monthly during the lifetime
of the Annuitant with annuity payments made for a period certain not less than
the number of months determined by dividing the amount applied under this
option by the amount of the first monthly annuity payment. This option
guarantees that the Annuity Units but not the dollar value applied under
Variable Annuity payout will be repaid to the Annuitant or his beneficiary.
Option 4. Joint and Survivor Annuity. An annuity payable monthly during the
joint lifetime of the Annuitant and another named individual and thereafter
during the lifetime of the survivor, ceasing with the last annuity payment due
prior to the death of the survivor. It would be possible under this option,
for only one annuity payment to be made if both individuals under the option
died prior to the second annuity payment date, or only two annuity payments if
both died prior to the third annuity payment date, etc.
Option 5. Installment Payments, Fixed Period. An amount payable monthly for any
specified number of years not exceeding 30. The amount of each Variable Annuity
payment will be determined by multiplying (a) and (b) where (a) is the
Accumulation Unit Value on the day the annuity payment is made and (b) is the
number of Annuity Units applied under this option divided by the number of
remaining monthly annuity payments.
Option 6. Equal Installment Payments, Fixed Amount. An amount payable in equal
monthly installments (not less than $6.25 per $1,000 applied) until the amount
applied, adjusted daily by the investment results, is exhausted. The final
annuity payment will be the remaining sum left with Us.
9
Form VA95-NQ
<PAGE>
Option 7. Deposit Option. The amount due may be left on deposit with Us for
placement in its Fixed Account with interest at the rate of not less than 3% per
year. Interest will be paid annually, semiannually, quarterly or monthly as
elected. This option may not be available under certain Qualified Contracts.
Option 8. IRC Age Recalculation. An annuity payment based upon the Annuitants
life expectancy, or the joint life expectancies of the Annuitant and a
beneficiary, at the Annuitants attained age (and the beneficiary's attained or
adjusted age, if applicable) each year as computed in reference to actuarial
tables prescribed by the Treasury Secretary, until the amount applied, adjusted
daily by the investment results, is exhausted.
At any time, any amount remaining under Option 5, 6 or 7 may be withdrawn as a
lump sum or, if that amount is at least $2,000, may be applied under any one of
the first four options. The lump sum payment requested will be paid within
seven days of receipt of the request at the Home Office based on the value
next computed after receipt of the request. Other annuity options may be made
for annuity payments in any reasonable arrangement mutually agreed upon by Us.
If the beneficiary dies while receiving annuity payments certain under option
2, 3, 5, 6 or 8 above, the present value will be paid in a lump sum to the
estate of the beneficiary.
VALUE OF VARIABLE ANNUITY PAYMENTS: ASSUMED INVESTMENT RATES. The annuity
tables in the Contract which are used to calculate the annuity payments are
based on an "assumed investment rate" of 3%. If the actual investment
performance of the particular Subaccount selected is such that the net
investment return to the contract is 3% per annum, the annuity payments will
remain constant. If the net investment return exceeds 3%, the annuity payments
will increase and if the return is less than 3%, the annuity payments will
decrease.
The annuity payment will be greater for shorter guaranteed periods than for
longer guaranteed periods, and greater for life annuities than for joint and
survivor annuities, because the life annuities are expected to be made for a
shorter period.
ANNUITY PROVISIONS. The payment amounts illustrated in the annuity option tables
are based on the 1983 Table "a", projected to 1993, and 3% interest. The
attained age at annuitization will be adjusted downward by one year for each
full five year period that has elapsed since January 1, 1993.
ANNUITY OPTION TABLES FOR ANNUITY PAYMENTS
ON A FIXED BASIS
OPTION 5
MONTHLY ANNUITY PAYMENTS FOR EACH $1,000.00 OF THE NET SUM PAYABLE
Multiply the monthly annuity payment by 2.993 to obtain the quarterly payment,
by 5.963 to obtain the semi-annual payment, and by 11.840 to obtain the annual
payment.
<TABLE>
<CAPTION>
Years Amount Years Amount Years Amount Years Amount Years Amount
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $84.46 7 $13.16 13 $7.71 19 $5.72 25 $4.71
2 42.85 8 11.68 14 7.26 20 5.51 26 4.59
3 28.99 9 10.53 15 6.87 21 5.32 27 4.47
4 22.06 10 9.61 16 6.53 22 5.15 28 4.37
5 17.91 11 8.86 17 6.23 23 4.99 29 4.27
6 15.14 12 8.24 18 5.96 24 4.84 30 4.19
</TABLE>
10
<PAGE>
MONTHLY ANNUITY PAYMENT FOR LIFE FOR EACH $1,000.00 OF THE NET SUM PAYABLE
Age in years means age of payee on birthday prior to the due date of the first
payment. Amounts for annuity payments other than monthly are available on
request. Amounts for ages 0 - 45 for all tables are available on request.
<TABLE>
<CAPTION>
AGE IN OPTION 2 OPTION 2 OPTION 1 AGE IN OPTION 2 OPTION 2 OPTION 1
YEARS Guaranteed Guaranteed Life Only YEARS Guaranteed Guaranteed Life Only
Period Period Period Period
10 Years 20 Years 10 Years 20 Years
- -------------------------------------------------------------------------------------------
Male Amount Amount Amount Female Amount Amount Amount
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
46 $3.79 $3.70 $3.85 46 $3.50 $3.44 $3.54
47 3.85 3.74 3.91 47 3.54 3.48 3.58
48 3.90 3.79 3.97 48 3.58 3.52 3.63
49 3.96 3.84 4.04 49 3.63 3.56 3.68
50 4.02 3.89 4.10 50 3.68 3.60 3.73
51 4.09 3.94 4.17 51 3.73 3.64 3.79
52 4.16 3.99 4.24 52 3.78 3.69 3.83
53 4.23 4.05 4.32 53 3.83 3.74 3.89
54 4.30 4.10 4.40 54 3.89 3.79 3.95
55 4.39 4.16 4.49 55 3.95 3.83 4.02
56 4.46 4.22 4.58 56 4.01 3.89 4.08
57 4.55 4.28 4.68 57 4.08 3.94 4.16
58 4.64 4.34 4.78 58 4.15 3.99 4.23
59 4.73 4.40 4.89 59 4.22 4.05 4.31
60 4.84 4.46 5.00 60 4.30 4.11 4.40
61 4.94 4.53 5.13 61 4.38 4.17 4.49
62 5.05 4.59 5.26 62 4.47 4.22 4.58
63 5.17 4.65 5.40 63 4.56 4.28 4.68
64 5.29 4.71 5.55 64 4.65 4.34 4.79
65 5.42 4.77 5.71 65 4.75 4.40 4.90
66 5.55 4.83 5.88 66 4.85 4.46 5.02
67 5.69 4.89 6.06 67 4.96 4.52 5.15
68 5.84 4.94 6.26 68 5.07 4.57 5.28
69 5.98 4.99 6.47 69 5.19 4.63 5.42
70 6.14 5.04 6.69 70 5.31 4.68 5.58
71 6.29 5.08 6.92 71 5.44 4.72 5.74
72 6.45 5.12 7.18 72 5.57 4.76 5.91
73 6.62 5.16 7.44 73 5.70 4.80 6.10
74 6.78 5.19 7.73 74 5.84 4.83 6.30
75 6.95 5.22 8.04 75 5.98 4.86 6.50
76 7.12 5.25 8.37 76 6.12 4.88 6.72
77 7.29 5.27 8.72 77 6.27 4.90 6.96
78 7.45 5.29 9.09 78 6.39 4.92 7.20
79 7.61 5.31 9.49 79 6.52 4.94 7.46
80** 7.77 5.32 9.92 80** 6.64 4.96 7.72
- ---------------------------------------------------------------------------------------------
</TABLE>
** and over
11
Form VA95-NQ
<PAGE>
OPTION 4
JOINT AND SURVIVOR MONTHLY ANNUITY PAYMENT FOR EACH $1,000.00 OF NET SUM
PAYABLE
Age in years means age of the payee on the birthday prior to the due date of the
first payment. Monthly annuity payment to the Annuitant with annuity payment to
the surviving spouse based on the elected Specified Amount Payment.
<TABLE>
<CAPTION>
Age Specified Specified Specified Age Specified Specified Specified
in Amount Amount Amount in Amount Amount Amount
Years One-Half Two-Thirds Full Years One-Half Two-Thirds Full
payment payment payment payment payment payment
<S> <C> <C> <C> <C> <C> <C> <C>
55 $4.38 $4.22 $3.94 63 $5.06 $4.83 $4.43
56 4.44 4.28 3.99 64 5.17 4.93 4.51
57 4.52 4.35 4.04 65 5.29 5.03 4.59
58 4.59 4.42 4.10 66 5.42 5.15 4.68
59 4.68 4.49 4.16 67 5.55 5.27 4.77
60 4.76 4.57 4.22 68 5.69 5.39 4.88
61 4.86 4.65 4.28 69 5.85 5.53 4.98
62 4.95 4.74 4.35 70 6.01 5.67 5.10
</TABLE>
Amounts shown apply if both payees are the same age. Amounts for annuity
payments other than monthly and for other ages are available on request.
SECTION 10 GENERAL PROVISIONS
CONTRACT AND REPRESENTATIONS. This Policy and the attached copy of the
application forms the entire contract. All statements in the application will be
deemed representations and not warranties. Only statements in the application
will be used to defend a claim or to contest the contract.
MODIFICATION OF CONTRACT. Only Our president, a vice-president, or secretary has
the power to change this Policy. Any change must be in writing signed by one of
the above-named officers.
EFFECTIVE DATE. This Policy takes effect on the date of issue shown on the data
page upon:
(1) payment of the first Purchase Payment; and
(2) Policy delivery during the Annuitant's lifetime.
Policy Years, months, and anniversaries are measured from the date of issue.
INCONTESTABILITY. This Policy will not be contested after it has been in force
during the lifetime of the Annuitant for 2 years from the date of issue.
ASSIGNMENT. No assignment will bind Us until recorded at Our home office. We are
not obliged to see that an assignment is valid or sufficient. Any claim by an
assignee is subject to proof of the validity and extent of the assignees
interest in the Policy.
CONTRACT SETTLEMENT. All amounts due under this Policy are payable at Our home
office. We must be given: (1) this Policy for inspection or surrender for final
settlement; plus (2) proof that the Annuitant is living or proof of death in the
event of claim by death.
ANNUAL REPORT. While this Policy is in force prior to the Annuity Date, We will
provide You with an annual report of the Accumulation Value.
MISSTATEMENT OF AGE AND SEX. If age or sex, of the Annuitant is misstated, any
benefits or amounts payable will be changed to what the Accumulation Value would
have bought for the correct age and sex. In the event we made any underpayments
on account of such misstatement, the total amount of underpayment due to the
payees shall be paid immediately in one sum. Any overpayments by Us shall be
deducted from any succeeding payments due under this Policy.
12
<PAGE>
Intentionally Left Blank
Form VA95-NQ
13
<PAGE>
Form VA95-NQ
NONPARTICIPATING FLEXIBLE PURCHASE PAYMENT DEFERRED VARIABLE ANNUITY.
NO DIVIDENDS. ANNUITY BENEFITS PAYABLE AT THE ANNUITY DATE.
DEATH BENEFIT PAYABLE IN EVENT OF DEATH PRIOR TO ANNUITY DATE.
ALPHABETIC GUIDE
<TABLE>
<CAPTION>
PAGE
<S> <C>
Accumulation Value 6
Addition, Deletion or Substitution of Investments 6
Age at Issue Data Page
American National Fixed Account 5
American National Variable Annuity Separate Account 5
Annual Report 12
Annuity Date Data Page
Annuity Options 9,10
Annuity Option Tables for Annuity Payments on a Fixed Basis 10-12
Annuity Provisions 10
Assignment 12
Availability 9
Basis of Values 8
Beneficiary Interest 4,5
Change of Beneficiary 5
Contract and Representations 12
Contract Settlement 12
Date of Crediting 4
Date of Issue Data Page
Death Benefit 8
Deferment of Payments and Emergency Procedure 8
Effective Date 12
Expenses During The Annuity Period 9
Fixed Account Accumulation Value 7
Flexibility 3
Full Surrender 7
How Annuity Payments Are Determined 9
Incontestability 12
Minimum Guaranteed Death Benefit 8
Misstatement of Age and Sex 12
Modification of Contract 12
Nonpayment of Purchase Payments 4
Ownership 4
Partial Surrender Reduction 8
Partial Surrenders 7,8
Policy Data Data Page
Purchase Payment Billing 3,4
Purchase Payments 4
Separate Account Accumulation Value 6,7
Subaccounts 5
Transfers 5,6
Transfers During The Annuity Period 6
Transfers From Other Policies 8
Transfer of Ownership 4
Value of Variable Annuity Payments: Assumed Investment Rates 10
When Owner Is a Minor 4
</TABLE>
14
<PAGE>
Exhibit 99.B4
AMERICAN NATIONAL INSURANCE COMPANY
A STOCK LIFE INSURANCE COMPANY
HOME OFFICE: ONE MOODY PLAZA, GALVESTON, AS 77550
POLICY NUMBER VA123456 DATE OF ISSUE APRIL 1, 1994
DATE OF FIRST PAYMENT MAY 1, 1994
DATE OF LAST PAYMENT
ANNUITANT JOHN DOE AGE 65 SEX MALE
JOINT ANNUITANT AGE SEX
PURCHASE PAYMENT $10,000
OWNER - ANNUITANT
ANNUITY OPTION LIFE ANNUITY WITH 20 YEARS CERTAIN
ANNUITY PAYMENT $47.77 MONTHLY
BENEFICIARY- JANE DOE, WIFE
AMERICAN NATIONAL INSURANCE COMPANY ("We, Us, Our") will pay an annuity payment
to the Annuitant and Joint Annuitant, if applicable, at its Home Office in
Galveston, as, subject to the provisions of this Policy. The Date of the First
Payment is shown above. This Policy is issued in consideration of the
application and receipt of the Single Purchase Payment by Us. This Policy is a
legal contract between the Owner ("You, Your") and American National Insurance
Company. READ YOUR POLICY CAREFULLY.
RIGHT TO CANCEL POLICY. You may cancel this Policy by returning it to Us or Our
agent within ten(10) days after You receive it, and We will refund the Single
Purchase Payment made.
THE ANNUITY UNITS IN AMERICAN NATIONAL VARIABLE ANNUITY SEPARATE ACCOUNT IS
BASED ON THE INVESTMENT EXPERIENCE OF THAT SEPARATE ACCOUNT AND MAY INCREASE OR
DECREASE DAILY. THE ANNUITY PAYMENT IS NOT GUARANTEED.
Signed for Us at Galveston, Texas.
SECRETARY PRESIDENT
SINGLE PURCHASE PAYMENT VARIABLE ANNUITY. NONPARTICIPATING. NO DIVIDENDS.
DEATH BENEFITS, IF ANY, BASED ON ANNUITY OPTION.
Form SPIVA94
<PAGE>
TABLE OF CONTENTS
PAGE
1. DEFINITIONS 2
2. NONPARTICIPATING POLICY 3
3. OWNERSHIP 3
4. BENEFICIARY 3
5. GENERAL PROVISIONS 3,4
6. POLICY ACCOUNTS 4,5
7. DEATH BENEFIT 5,6
8. SURRENDER BENEFIT 6
See the last page for an Alphabetic Guide to this policy.
SECTION 1 DEFINITIONS OF POLICY TERMS
ANNUITANT-The person whose life expectancy the Policy is written. The
Annuitant may also be the Owner. The Policy may include a Joint Annuitant.
ANNUITY PERIOD-The period of time during which annuity payments are being made.
ANNUITY UNIT-A standard of measurement used with respect to each Subaccount to
calculate the dollar amount of annuity payments during the Annuity Period.
The value of an Annuity Unit fluctuates with the value of shares of the
corresponding Portfolio owned by each Subaccount less any applicable deductions.
CONTRACT FEE-A one time fee of $100.00 is deducted from the Single Purchase
Payment to cover the cost of the administration of the Policy.
FIXED ACCOUNT-An account that is part of American National's General Account to
which all or a portion of the Net Purchase Payment or transfers may be allocated
for accumulation at fixed rates of interest.
GENERAL ACCOUNT-The General Account of American National which includes all of
American National's assets except those assets segregated into its separate
accounts.
MORTALITY AND EXPENSE RISK FEE-The amount payable to American National for
accepting mortality and expense risks. The Subaccounts will be assessed a
daily asset charge of 0.0034%.
NET PURCHASE PAYMENT-The Single Purchase Payment less the Contract Fee and any
government entity premium tax charge.
OWNER ("YOU, YOUR")-The person or entity entitled to exercise all legal rights
of ownership in the Policy prior to the termination of the Policy. You or the
Annuitant need not be the same.
POLICY-A Variable Annuity issued pursuant to the prospectus which sets forth
the obligations and contractual promises which American National makes to You.
PORTFOLIO-A separate series of capital securities designed to meet specified
investment objectives.
SINGLE PURCHASE PAYMENT-A payment made into the Policy.
SUBACCOUNT-A subdivision of the American National Variable Annuity Separate
Account. Each Subaccount invests exclusively in the shares of the corresponding
Portfolio.
VALUATION DATE-A Valuation Date is each day on which the New York Stock
Exchange ("NYSE") is open for trading.
VALUATION PERIOD-The period commencing at the close of regular trading on the
NYSE on one Valuation Date and ending at the close of regular trading on the
NYSE on the next succeeding Valuation Date.
VARIABLE ANNUITY-An annuity providing payments which vary in dollar amount
depending on the investment results of the Portfolios.
2
<PAGE>
SECTION 2 NONPARTICIPATING POLICY
This policy is nonparticipating. It does not share in the Company's profits or
surplus.
SECTION 3 OWNERSHIP
OWNERSHIP. The Owner is named on the front page. You may exercise all rights of
ownership before Annuity Payments under this Policy are discontinued.
The Owners rights are subject to the rights of:
(1) any assignee of record; or
(2) any irrevocable beneficiary.
TRANSFER OF OWNERSHIP. You may die while the Annuitant is living. If so,
ownership will pass to your estate unless this Policy states otherwise.
SECTION 4 BENEFICIARY
BENEFICIARY INTEREST. The Beneficiary will be shown on the front page. A
beneficiary or class of beneficiaries will receive proceeds, if any, at the
death of the Annuitant in the order shown. Any relationship shown is to the
Annuitant. Unless changed by endorsement or written request filed at Our home
office:
(1) all class members will share proceeds equally;
(2) surviving class members will share equally that portion of the proceeds to
which a deceased beneficiary would have been entitled; and
(3) if no beneficiary survives the Annuitant, proceeds will be paid to the
Annuitant's estate.
A beneficiary will not share in any proceeds if:
(1) the beneficiary dies within 6 days after the Annuitant's death; and
(2) We have not received proof of the Annuitant's death.
If the beneficiary is not a natural person, the beneficiary must still exist at
the time of the Annuitant's death. All beneficiaries interests are subject to
any assignment on record at the home office.
CHANGE OF BENEFICIARY. YOU MAY CHANGE A BENEFICIARY IF:
(1) the Annuitant is living; and
(2) written request in a form acceptable by Us is filed at the home office.
The change will not take effect until it is recorded at Our home office.
However, once such change is recorded, the change is effective as of the date
the request was signed. The change is subject to:
(1) the rights of an assignee of record; and
(2) the rights of an irrevocable beneficiary.
SECTION 5 GENERAL PROVISIONS
ENTIRE CONTRACT. This Policy and the application attached on the date of issue,
form the entire contract.
POWER TO MODIFY. Only Our president, a vice president, or secretary has the
power to change the Policy. Any change must be in writing signed by one
of the above-named officers.
EFFECTIVE DATE. This Policy takes effect on the date of issue shown on the front
page upon payment of the Single Purchase Payment.
INCONTESTABILITY. This Policy will not be contested.
MISSTATEMENT OF AGE OR SEX. If age or sex is misstated, any future benefits or
amounts payable will be changed to what the premium would have
3
Form SPIVA94
<PAGE>
bought for the correct age and sex. An adjustment will be made for any prior
underpayments or overpayments. Amounts will be based on Our rates on the date
of issue. As used in the Policy, "age" means age last birthday.
ASSIGNMENT. No assignment will bind us until recorded at the Home Office. We
are not obligated to see that an assignment is valid or sufficient. Any claim
by an assignee is subject to proof of the validity and extent of the assignees
interest in the Policy.
CONTRACT SETTLEMENT. All amounts due under this Policy are payable at the Home
Office. We may require proof the Annuitant is living or proof of death in the
event of a claim by death before payment is made by Us.
SECTION 6 POLICY ACCOUNTS
AMERICAN NATIONAL FIXED ACCOUNT. You may elect to allocate all or part of the
amount credited under the Policy to a Fixed Account. Such amounts allocated
become part oF American National's General Account, which consists of all assets
owned by Us other than those in the various separate accounts of American
National.
Subject to applicable law, We have sole discretion over the investment of the
assets of the Fixed Account and You do not share in the investment experience of
those assets. Instead, We guarantee the part of the Net Purchase Payment
allocated to the Fixed Account will accrue interest daily at an annual interest
rate that We will declare periodically. The declared rate will not be less
than 3% per year, compounded daily.
AMERICAN NATIONAL VARIABLE ANNUITY SEPARATE ACCOUNT. The variable benefits
under this Policy are provided through investments in the American National
Variable Annuity Separate Account. We established the American National
Variable Annuity Separate Account as a separate investment account to support
Variable Annuity contracts.
We own the assets of the American National Variable Annuity Separate Account.
Assets equal to the reserves and other liabilities of the American National
Variable Annuity Separate Account will not be charged with liabilities that
arise from any other business We conduct. We may transfer to American
National's General Account any assets which exceed the reserves and other
liabilities of the American National Variable Annuity Separate Account.
American National Variable Annuity Separate Account is registered with the
Securities and Exchange Commission as a unit investment trust under the
Investment Company Act of 1940. It is also subject to the laws of the state of
Texas.
SUBACCOUNTS. The American National Variable Annuity Separate Account has
multiple Subaccounts. Each Subaccount invests exclusively in shares of a
corresponding Portfolio. Each Portfolio is a separate series of capital
securities designed to meet specified investment objectives. All Subaccounts
of the American National Variable Annuity Separate Account are shown on the
application.
You will share only in the income, gains, and losses of the particular
Subaccounts to which the Net Purchase Payment has been allocated. We will value
the assets of each Subaccount of the American National Variable Annuity Separate
Account at the end of each Valuation Period.
A Valuation Date is each day on which there is a sufficient degree of trading in
the Portfolio securities that the net asset values of the American National
Variable Annuity Separate Accounts redeemable securities might be materially
affected. In general, Valuation Dates will be days when the New York Stock
Exchange is open for trading.
4
<PAGE>
TRANSFERS. Transfers from the Fixed Account to the Subaccounts are not
permitted. Transfers among Subaccounts may be made four times each Policy
Year. You may transfer Annuity Units of one Subaccount into Annuity Units of
another Subaccount and/or the Fixed Account except during the five day period
prior to the annuity payment date.
ADDITION, DELETION, OR SUBSTITUTION OF INVESTMENTS. We have the right, subject
to compliance with applicable law, to make additions to, deletions from, or
substitutions for the shares of a Subaccount that are held by the American
National Variable Annuity Separate Account or that the American National
Variable Annuity Separate Account may purchase. We reserve the right to
eliminate the share of any Portfolio and to substitute shares of another
Portfolio of another open-end management investment company if the shares of the
Portfolio are no longer available for investment or if, in Our judgment, further
investment in the Portfolio should become inappropriate in view of the purposes
of the American National Variable Annuity Separate Account.
We will not substitute any shares attributable to Your interest in a
Subaccount of the American National Variable Annuity Separate Account with-
out notice to You and prior approval of the Securities and Exchange
Commission, to the extent required by the Investment Company Act of 1940.
We have the right to establish additional Sub-accounts of the American
National Variable Annuity Separate Account, each of which would invest only in
a new and corresponding Portfolio or in the shares of another open-end
management investment company. We also have the right to eliminate existing
Subaccounts of the American National Variable Annuity Separate Account. In
the event of any substitution or change, We may, by appropriate endorsement,
make such changes in this Policy as may be necessary or appropriate. The
investment objectives will not be changed without the approval of the
Insurance Commissioner of the State of Texas.
We also have the right, where permitted by law:
(1) to operate the American National Variable Annuity Separate Account as a
management company under the Investment Company Act of 1940;
(2) to deregister the American National Variable Annuity Separate Account under
the Act if registration is no longer required; and
(3) to combine the American National Variable Annuity Separate Account with
other separate accounts.
SECTION 7 DEATH BENEFIT
Upon death of the Annuitant while this Policy is in force, a benefit at death
may be payable depending upon the annuity option issued and when the Annuitant's
death occurs. The benefit at death, if any, will be based on the annuity
option listed on the front page is as follows:
(1) Life Annuity. No benefit at death will be available. We will have no
liability upon the death of the Annuitant.
(2) Life Annuity With 10 or 20 Years Certain. The period certain is shown on the
Front Page if this Policy has been issued under this annuity option. A benefit
at death will be payable only if the death of the Annuitant occurs before the
full number of annuity payments have been made for the period certain. We will
pay to the beneficiary the annuity payments remaining after the date of death
until the period certain is completed. The beneficiary may elect a single sum
payment in lieu of the annuity payments. The single sum payment will be the
present value of the remaining Annuity Units.
(3) Unit Refund Life Annuity. The annuity payments are made for a period
certain not less than the number of months determined by dividing the Net
Purchase Payment by the amount of the first monthly annuity payment. A benefit
at death will be payable only if the death of the Annuitant occurs before the
full number of annuity payments have been made for the period certain. We will
pay to the beneficiary the annuity payments remaining after the date of death
until the period certain is completed. The beneficiary may elect a single sum
payment in lieu of the annuity payments. The single sum payment will be the
present value of the remaining Annuity Units.
5
Form SPIVA94
<PAGE>
(4) Joint and Survivor Annuity. No benefit at death will be available. We will
have no liability upon the death of both Annuitants. Annuity payments
continue after the death of one of the Annuitants.
(5) Installment Payments, Fixed Period. A benefit at death will be payable only
if the death of the Annuitant occurs before the specified number of annuity
payments are completed. We will continue to pay to the beneficiary annuity
payments until the specified number of annuity payments are completed. The
beneficiary may elect a single sum payment in lieu of the annuity payments.
The single sum payment will be the present value of the remaining Annuity
Units.
(6) Equal Installment Payments, Fixed Amount. A benefit at death will be payable
if the death of the Annuitant occurs before the amount applied is exhausted. We
will continue to pay to the beneficiary annuity payments until the amount
applied, adjusted daily by the investment results, is exhausted. The final
annuity payment will be the remaining sum left with Us.
(7) Deposit Option. A benefit will be payable to the beneficiary upon the death
of the Annuitant. The beneficiary will receive in a lump sum the amount on
deposit in the Fixed Account including any interest earned which was not paid to
the Annuitant.
(8) IRC Age Recalculation. A benefit at death will be payable if the death of
the Annuitant occurs before the amount applied is exhausted. We will continue
to pay to the beneficiary annuity payments until the amount applied, adjusted
daily by the investment results, is exhausted.
SECTION 8 SURRENDER BENEFIT
CASH VALUE. During the lifetime of the Annuitant, a cash value may be available
to You depending upon the annuity option issued and when the surrender request
is made. If so, You may surrender this Policy for its cash value. The request
for surrender must: (1) be in writing; and (2) accompanied by this Policy.
We will pay the Cash Value to You generally within 7 days after We receive Your
written request. We have the right to postpone payment of the cash value for
up to 6 months for any amount in the Fixed Account from the date of receipt of
the request.
The cash value available will be based on the annuity option shown on the Front
Page. The cash value for each Annuity Option is as follows:
(1) Life Annuity. No cash value will be available at any time. The annuity
payments will continue as long as the Annuitant lives.
(2) Life Annuity With 10 or 20 Years Certain. The period certain is shown on the
front page if the Policy has been issued for this annuity option. A cash value
is available only if all of the period certain payments have not yet been made
by Us before We receive the request to surrender the Policy. The cash value will
be the present value of the remaining period certain payments.
(3) Unit Refund Life Annuity. A cash value is available only if the Policy is
surrendered before the full number of annuity payments have been made for the
period certain. The cash value will be the present value of the remaining
Annuity Units.
(4) Joint and Survivor Annuity. No cash value will be available at any time.
The annuity payments will continue as long as either Annuitant is living.
(5) Installment Payments, Fixed Period. A cash value is available only if the
Policy is surrendered before the specified number of annuity payments are
completed. The cash value will be the present value of the remaining Annuity
Units.
(6) Equal Installment Payments, Fixed Amount. A cash value is available only if
the Policy is surrendered before the amount applied is exhausted. The cash
value will be the present value of the remaining Annuity Units less one annuity
payment.
(7) Deposit Option. The cash value is the amount on deposit in the Fixed Account
including any interest earned which was not paid to the Annuitant discounted at
8% interest per year compounded each year.
(8) IRC Age Recalculation. A cash value is available only if the Policy is
surrendered before the amount applied is exhausted. The cash values will be the
present value of the remaining Annuity Units.
6
<PAGE>
Intentionally Left Blank
7
Form SP1VA94
<PAGE>
Form SP1VA94
SINGLE PURCHASE PAYMENT VARIABLE ANNUITY. NONPARTICIPATING. NO DIVIDENDS.
DEATH BENEFITS, IF ANY, BASED ON ANNUITY OPTION.
ALPHABETIC GUIDE
PAGE
1. Addition, Deletion, or Substitution of Investments 5
2. Age Front Page
3. American National Fixed Account 4
4. American National Variable Annuity Separate Account 4
5. Annuity Plan Front Page
6. Assignment 4
7. Beneficiary Interest 3
8. Cash Value 6
9. Change of Beneficiary 3
10. Contract Settlement 4
11. Death Benefit 5
12. Effective Date 3
13. Entire Contract 3
14. Incontestability 3
15. Misstatement of Age or Sex 3,4
16. Nonparticipating Policy 3
17. Ownership 3
18. Power to Modify 3
19. Subaccounts 4
20. Surrender Benefit 6
21. Transfers 5
22. Transfer of Ownership 3
8
<PAGE>
Exhibit 99.B4
AMERICAN NATIONAL INSURANCE COMPANY
A STOCK LIFE INSURANCE COMPANY
Trustee of ABC COMPANY APRIL 1, 1995 Date of Issue
Policy Number VA12345
Home Office: One Moody Plaza
Galveston, Texas 7755
AMERICAN NATIONAL INSURANCE COMPANY ("We, Us, Our") agrees, in accordance with
and subject to the provisions of this Policy, to provide benefits in
consideration for the payment by the Trustee ("You, Your") of Purchase Payments.
This Policy is issued in consideration of the application and receipt of the
first Purchase Payment by Us. Your Policy is a legal contract that You have
entered into with Us. READ YOUR POLICY CAREFULLY.
RIGHT TO CANCEL POLICY. You may cancel this Policy by returning it to Us or Our
agent within ten days after You receive it, and We will refund the greater of
all Purchase Payments made or the Accumulation Value plus the amount for any
charges for state premium taxes and Separate Account Expenses.
THE ACCUMULATION VALUE IN AMERICAN NATIONAL VARIABLE ANNUITY SEPARATE ACCOUNT IS
BASED ON THE INVESTMENT EXPERIENCE OF THAT SEPARATE ACCOUNT AND MAY INCREASE OR
DECREASE DAILY. THE ACCUMULATION VALUE IS NOT GUARANTEED.
Signed for Us at Galveston, Texas, on the date of issue.
SECRETARY PRESIDENT
NONPARTICIPATING GROUP UNALLOCATED DEFERRED VARIABLE ANNUITY.
NO DIVIDENDS.
Form GUA95
<PAGE>
POLICY PROVISIONS
PAGE
1. DEFINITIONS OF POLICY TERMS 2,3
2. NONPARTICIPATING POLICY 3
3. PURCHASE PAYMENTS 3
4. POLICY ACCOUNTS 3,4
5. NONFORFEITURE BENEFITS 5,6
6. ANNUITY PROVISIONS 6-8
7. GENERAL PROVISIONS 9
See the last page for an Alphabetic Guide to this Policy.
SECTION 1 DEFINITIONS OF POLICY TERMS
ACCUMULATION UNIT - A standard of measurement used with respect to each
Subaccount to calculate the value of the Policy. The value of an Accumulation
Unit fluctuates with the value of the shares of the corresponding Portfolio
owned by each Subaccount less any applicable deductions.
ACCUMULATION UNIT VALUE - The value of an Accumulation Unit.
ACCUMULATION VALUE - The Accumulation Value of the Policy is the sum of the
total Accumulation Units in Subaccounts times the respective Accumulation Unit
Value of such Subaccounts and Your value in the Fixed Account.
FIXED ACCOUNT - An account that is apart of American National's General Account
to which all or a portion of Net Purchase Payments and transfers may be
allocated for accumulation at fixed rates of interest.
GENERAL ACCOUNT - The General Account of American National which includes all of
American National's assets except those assets segregated into its separate
accounts.
NET PURCHASE PAYMENT - The Purchase Payment less any government entity premium
tax charge.
PLAN - A document or agreement defining the retirement benefits and those
eligible to receive them. The Plan is not a part of the Policy and We are not
a party to a Plan.
POLICY - A Variable Annuity issued pursuant to the Prospectus which sets forth
the obligations and contractual promises which American National makes to You.
POLICY YEAR - The period from the date the first Purchase Payment is credited
to the Policy until the immediately preceding day of the succeeding year.
PORTFOLIO - A separate series of capital securities designed to meet specified
investment objectives.
PURCHASE PAYMENT - A payment made into the Policy.
SEPARATE ACCOUNT EXPENSES - A daily charge deducted from the Separate Account
Accumulation Value. This charge reimburses Us for expense risks and
administrative expenses.
SUBACCOUNT - A subdivision of the Separate Account. Each Subaccount invests
exclusively in the shares of the corresponding Portfolio.
2
<PAGE>
DATA PAGE
TRUSTEE OF ABC COMPANY
POLICY NUMBER VA123456 DATE OF ISSUE APRIL 1, 1995
FORM
NUMBER BENEFIT
GUA95 GROUP UNALLOCATED DEFERRED VARIABLE ANNUITY
INITIAL PURCHASE PAYMENT - $50,000
PLANNED TAX CHARGE - 0.00% OF EACH PURCHASE PAYMENT RECEIVED FOR
PREMIUM TAX IN THE STATE OF TEXAS
SEPARATE ACCOUNT EXPENSES - A DAILY CHARGE OF .00020% OF THE ACCUMULATION
VALUE IS DEDUCTED FROM EACH SUBACCOUNT
NET PURCHASE PAYMENT ALLOCATION
SUBACCOUNTS
AN GROWTH 100% FID MONEY MARKET 0%
AN MONEY MARKET 0% HIGH INCOME 0%
BALANCED 0% EQUITY - INCOME 0%
MANAGED 0% FID GROWTH 0%
OVERSEAS 0%
INVESTMENT GRADE BOND 0%
ASSET MANAGER 0%
INDEX 500 0%
CONTRA 0%
ASSET MANAGER: GROWTH 0%
FIXED ACCOUNT 0%
<PAGE>
SURRENDER VALUE - The Accumulation Value on the date of surrender less any
surrender charge.
TRUSTEE ("YOU, YOUR") - The person or entity entitled to exercise all legal
rights of ownership in the Policy prior to the termination of the Policy.
VALUATION DATE - A Valuation Date is any day on which the New York Stock
Exchange ("NYSE") is open for trading.
VALUATION PERIOD - The period commencing at the close of regular trading on the
NYSE on one Valuation Date and ending at the close of regular trading on the
NYSE on the next succeeding Valuation Date.
VARIABLE ANNUITY - An annuity providing Accumulation Value which varies in
dollar amount depending on the investment results of the Portfolios.
SECTION 2 NONPARTICIPATING POLICY
This Policy is nonparticipating. It does not share in Our profits or surplus.
SECTION 3 PURCHASE PAYMENTS
FLEXIBILITY. This Policy has Flexible Purchase Payments. After the first
Purchase Payment, You can choose:
(1) the amount of Purchase Payment to pay; and
(2) how often Purchase Payments will be paid.
PURCHASE PAYMENTS. Purchase Payments may be paid:
(1) at the home office; or
(2) to Our authorized agent in exchange for an official signed receipt.
DATE OF CREDITING. The amount of the initial Purchase Payment is shown on the
data page. The initial Purchase Payment will be credited as of the date of
issue. All Purchase Payments after the initial Purchase Payment will be
credited on the date the Purchase Payment is received at the home office.
SECTION 4 POLICY ACCOUNTS
AMERICAN NATIONAL FIXED ACCOUNT. You may elect to allocate or transfer all or a
part of the amount credited under the Policy to a Fixed Account. Such amounts
allocated or transferred become part of American National's General Account.
Subject to applicable law, We have sole discretion over the investment of the
assets of the Fixed Account and You do not share in the investment experience of
those assets. Instead, We guarantee that the part of the Accumulation Value in
the Fixed Account will accrue interest daily at an annual interest rate that We
will declare periodically. The declared rate will not be less than 3% per year,
compounded daily.
AMERICAN NATIONAL VARIABLE ANNUITY SEPARATE ACCOUNT. The variable benefits under
this Policy are provided through investments in the American National Variable
Annuity Separate Account. We established the American National Variable Annuity
Separate Account as a separate investment account to support Variable Annuity
contracts.
We own the assets of the American National Variable Annuity Separate Account.
Assets equal to the reserves and other liabilities of the American National
Variable Annuity Separate Account will not be charged with liabilities that
arise from any other business We conduct. We may transfer to American
National's General Account any assets which exceed the reserves and other
liabilities of the American National Variable Annuity Separate Account.
3
Form GUA95
<PAGE>
The American National Variable Annuity Separate Account is registered with the
Securities and Exchange Commission as a unit investment trust under the
Investment Company Act of 1940. It is also subject to the laws of the state
of Texas.
SUBACCOUNTS. The American National Variable Annuity Separate Account has
multiple Subaccounts. Each Subaccount invests exclusively in shares of a
corresponding Portfolio. Each Portfolio is a separate series of capital
securities designed to meet specified investment objectives. All Subaccounts of
the American National Variable Annuity Separate Account are shown on the data
page.
You will share only in the income, gains and losses of the particular
Subaccounts to which Net Purchase Payments have been allocated. We will value
the assets of each Subaccount of the American National Variable Annuity Separate
Account at the end of each Valuation Period.
TRANSFERS. At any time that this Policy is in the Accumulation Period, You may
transfer all or a portion of the amounts from one Subaccount to another
Subaccount, or to the Fixed Account.
The minimum amount that may be transferred is $250. You may make 12 transfers
each Policy Year without charge. The exchange fee for each additional transfer
during the Policy Year is $10.
Transfers from the Fixed Account to the Subaccounts are permitted only once each
Policy Year and only during the thirty day period beginning on the policy
anniversary. This transfer is without charge. The maximum amount which may be
transferred out of the Fixed Account each year is the greater of: (a) 25% of the
amount in the Fixed Account, or (b)$1,000. Such transfer requests received
prior to the policy anniversary will be effected on the policy anniversary.
Transfer requests received within the thirty day period beginning on the policy
anniversary will be effected as of the end of the Valuation Period in which
a proper transfer request is received by Us.
ADDITION, DELETION, OR SUBSTITUTION OF INVESTMENTS. We have the right, subject
to compliance with applicable law, to make additions to, deletions from, or
substitutions for the shares of a Subaccount that are held by the American
National Variable Annuity Separate Account or that the American National
Variable Annuity Separate Account may purchase. We reserve the right to
eliminate the shares of any Portfolio and to substitute shares of another
Portfolio or of another open-end management investment company if the shares of
the Portfolio are no longer available for investment or if, in our judgment,
further investment in the Portfolio should become inappropriate in view of the
purposes of the American National Variable Annuity Separate Account.
We will not substitute any shares attributable to Your interest in a Subaccount
of the American National Variable Annuity Separate Account without notice to You
and prior approval of the Securities and Exchange Commission, to the extent
required by the Investment Company Act of 1940.
We have the right to establish additional Subaccounts of the American National
Variable Annuity Separate Account, each of which would invest only in a new
and corresponding Portfolio or in shares of another open-end management
investment company. We also have the right to eliminate existing Subaccounts
of the American National Variable Annuity Separate Account. In the event of
any substitution or change, We may, by appropriate endorsement, make such
changes in this Policy as may be necessary or appropriate. The investment
objectives will not be changed without the approval of the Insurance
Commissioner of the State of Texas.
We also have the right, where permitted by law:
(1) to operate the American National Variable Annuity Separate Account as a
management company under the Investment Company Act of 1940;
(2) to deregister the American National Variable Annuity Separate Account
under the Act if registration is no longer required; and
(3) to combine the American National Variable Annuity Separate Account with
other separate accounts.
4
<PAGE>
SECTION 5 NONFORFEITURE BENEFITS
ACCUMULATION VALUE. The Accumulation Value is the sum of the total
Accumulation Units in the Subaccounts times the respective Accumulation Unit
Values of such Subaccounts and the value in the Fixed Account. Net Purchase
Payments will be added to the Accumulation Value the same day as the Purchase
Payment is credited. Partial surrenders and any surrender charges applicable
to such partial surrenders will be deducted from the Accumulation Value as of
the date of each partial surrender.
SEPARATE ACCOUNT ACCUMULATION VALUE. The Accumulation Value attributable to
this Policy in the Subaccounts of the American National Variable Annuity
Separate Account will vary daily with the performance of the Subaccounts in
which you have an Accumulation Value, any Net Purchase Payments paid,
transfers, partial surrenders, and charges assessed. There is no guaranteed
minimum Surrender Value on these separate account Accumulation Values.
On each Valuation Date, the Accumulation Value in a Subaccount is:
(1) the Accumulation Units times the Accumulation Unit Value on the immediately
preceding Valuation Date, plus;
(2) any Net Purchase Payment received and allocated to the Subaccount during
the current Valuation Period, plus;
(3) any Accumulation Value transferred to the Subaccount during the current
Valuation Period, minus;
(4) any Accumulation Value transferred from the Subaccount during the current
Valuation Period, minus;
(5) any partial surrenders plus applicable surrender charges from the
Subaccount during the current Valuation Period, minus;
(6) the Separate Account Expense as listed on the data page.
FIXED ACCOUNT ACCUMULATION VALUE. The Fixed Account Accumulation Value on any
date shall be the sum of (a), (b), (c), and (d), less the sum of (e) and (f),
where:
(a) is the Fixed Account Accumulation Value on the immediately preceding date;
(b) is accumulated interest on (a);
(c) is all Net Purchase Payments received and allocated to the Fixed Account
and any Accumulation Value transferred into the Fixed Account since the
immediately preceding date;
(d) is interest accumulated on (c) from the date of receipt of the Net
Purchase Payment allocated to the Fixed Account or the date any
Accumulation Value was transferred into the Fixed Account;
(e) is the sum of any partial surrenders from the Fixed Account since the
immediately preceding date, and applicable surrender charges; and
(f) is any Accumulation Value transferred out of the Fixed Account since the
last date.
The guaranteed interest rate applied in the calculation of the Fixed Account
Accumulation Value is 3% per year, compounded daily, on all Fixed Account
Accumulation Values. Fixed Account Accumulation Values may earn interest at a
higher rate.
FULL SURRENDER. You may surrender this Policy for its Surrender Value at any
time. The request for a full surrender must be in writing and accompanied by
this Policy. We will pay the Surrender Value to You generally within 7 days
after We receive your written request. We reserve the right to defer payment
of any Surrender Value taken from the Fixed Account for up to 6 months from
the date of receipt of the request.
The Surrender Value of the Policy will be the Accumulation Value as of the
date of surrender less any surrender charges. The surrender charge will be a
percentage of the Accumulation Value withdrawn in each Policy Year. The
surrender charge will never be more than 9% of total Purchase Payments paid.
5
Form GUA95
<PAGE>
Applicable Surrender
Policy Year Charge Percentage
1 4.0%
2 3.5
3 3.0
4 2.5
5 2.0
6 1.5
7 1.0
8 and thereafter 0.0
PARTIAL SURRENDERS. You may surrender a part of the Accumulation Value at any
time. This Policy will remain in force after a partial surrender. The request
for a partial surrender must be:
(1) in writing; and
(2) for the amount to be paid to You.
We will pay the partial surrender amount to You generally within 7 days after We
receive the written request. We reserve the right to defer payment of any
partial surrender amount taken from the Fixed Account for up to 6 months from
the date of receipt of the request.
We will grant the partial surrender if:
(1) the request is for at least $250.00; and
(2) an Accumulation Value of at least $250.00 will remain after deduction of
the amount of the partial surrender and its surrender charge if any.
Unless You request otherwise, We will allocate partial surrenders to the Fixed
Account and Subaccounts in proportion to the Accumulation Value in the Fixed
Account and in each Subaccount on the date the partial surrender is made.
On partial surrenders the surrender charge will be a percentage of the
Accumulation Value withdrawn. See the surrender charge schedule in the Full
Surrender provision for the appropriate percentage. The amount of the partial
surrender and the amount of the partial surrender charge will be deducted from
the Accumulation Value.
BASIS OF VALUES. All Surrender Values of this Policy are not less than the
minimum required by the laws of the state where this Policy is delivered.
DEFERMENT OF PAYMENTS AND EMERGENCY PROCEDURE. We may suspend or delay all
procedures which require valuation of a Subaccount if the New York Stock
Exchange is closed (except for holidays or weekends) or trading is restricted
due to an existing emergency as defined by the Securities and Exchange
Commission so that We cannot value the Subaccounts. Any provision of this
Policy which specified a Valuation Date will be superseded by this emergency
procedure.
SECTION 6 ANNUITY OPTIONS
AVAILABILITY. All or a part of any amount payable in settlement of this Policy
may be applied to any of the following annuity options. We will first discharge
in a single sum any liability under an assignment of the Policy and any
applicable federal or state taxes, fees or assessments which have not otherwise
been deducted or offset and which are based or predicated on the Purchase
Payments payable on this Policy. The remaining amount is the net sum payable.
Other annuity options can be used if agreed to by Us. If You have not elected
an annuity option before the Annuitant's death, the beneficiary can choose one.
The minimum amount that We will apply to any annuity option is $2,000.00. Any
election or change must be written in a form that satisfies Us. Our consent
is required for: (1) any payment to any entity other than a natural person; or
(2) any change in an elected annuity option.
ANNUITY OPTIONS. The following annuity options are available:
Option 1. Life Annuity. Annuity payment payable monthly during the lifetime of
the Annuitant, ceasing with the last annuity payment due prior to the death of
the Annuitant. This option offers the maximum level of monthly annuity
payments since there is no provision for a minimum number of annuity payments or
a death benefit for beneficiaries. It would be possible under this option for
the Annuitant to receive only one annuity payment if death occurred prior to the
due date of the second annuity payment, two if death occurred before the third
annuity payment, etc.
Option 2. Life Annuity with 10 or 20 Years Certain and Life Thereafter. An
annuity payable monthly during the lifetime of the Annuitant with payments made
for a period certain of not less than 10 or 20 years, as elected. The annuity
payments will be continued to a designated beneficiary until the end of the
period certain upon the death of the Annuitant.
6
<PAGE>
Option 3. Joint and Survivor Annuity. An annuity payable monthly during the
joint lifetime of the Annuitant and another named individual and thereafter
during the lifetime of the survivor, ceasing with the last annuity payment due
prior to the death of the survivor. It would be possible under this option,
for only one annuity payment to be made if both individuals under the option
died prior to the second annuity payment date, or only two annuity payments if
both died prior to the third annuity payment date, etc.
Option 4. Deposit Option. The amount due may be left on deposit with Us for
placement in its Fixed Account with interest at the rate of not less than 3%
per year. Interest will be paid annually, semiannually, quarterly or monthly
as elected. This option may not be available under certain Qualified Contracts.
Option 5. IRC Age Recalculation. An annuity payment based upon the Annuitant's
life expectancy, or the joint life expectancies of the Annuitant and a
beneficiary, at the Annuitant's attained age (and the beneficiary's attained or
adjusted age, if applicable) each year as computed in reference to actuarial
tables prescribed by the Treasury Secretary, until the amount applied,
adjusted daily by the investment results, is exhausted.
At any time, any amount remaining under Option 4 may be withdrawn as a lump sum
or, if that amount is at least $2,000, may be applied under any one of the first
three options. Other annuity options may be made for annuity payments in any
reasonable arrangement mutually agreed upon by Us. If the beneficiary dies while
receiving annuity payments certain under option 2 or 5 above, the present value
will be paid in a lump sum to the estate of the beneficiary.
ANNUITY PROVISIONS. The payment amounts illustrated in the annuity option tables
are based on the 1983 Table "a" (female), projected to 1993, and 3% interest.
The attained age at annuitization will be adjusted downward by one year for
each full five year period that has elapsed since January 1, 1993.
OPTION 3
JOINT AND SURVIVOR MONTHLY ANNUITY PAYMENT FOR EACH $1,000.00 OF NET SUM
PAYABLE
Age in years means age of the payee on the birthday prior to the due date of
the first payment. Monthly annuity payment to the Annuitant with annuity
payment to the surviving spouse based on the elected Specified Amount Payment.
<TABLE>
<CAPTION>
Age Specified Specified Specified Age Specified Specified Specified
in Amount Amount Amount in Amount Amount Amount
Years One-Half Two-Thirds Full Years One-Half Two-Thirds Full
payment payment payment payment payment payment
<S> <C> <C> <C> <C> <C> <C> <C>
55 $4.38 $4.22 $3.94 63 $5.06 $4.83 $4.43
56 4.44 4.28 3.99 64 5.17 4.93 4.51
57 4.52 4.35 4.04 65 5.29 5.03 4.59
58 4.59 4.42 4.10 66 5.42 5.15 4.68
59 4.68 4.49 4.16 67 5.55 5.27 4.77
60 4.76 4.57 4.22 68 5.69 5.39 4.88
61 4.86 4.65 4.28 69 5.85 5.53 4.98
62 4.95 4.74 4.35 70 6.01 5.67 5.10
</TABLE>
Amounts shown apply if both payees are the same age. Amounts for payments other
than monthly and for other ages are available on request.
7
Form GUA95
<PAGE>
MONTHLY ANNUITY PAYMENT FOR LIFE FOR EACH $1,000.00 OF THE NET SUM PAYABLE
Age in years means age of payee on birthday prior to the due date of the first
payment. Amounts for annuity payments other than monthly are available on
request.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
AGE IN YEARS OPTION 2 OPTION 2 OPTION 1 AGE IN YEARS OPTION 2 OPTION 2 OPTION 1
Guaranteed Guaranteed Life Only Guaranteed Guaranteed Life Only
Period Period Period Period
10 Years 20 Years 10 Years 20 Years
----------------------------------- -----------------------------------
Amount Amount Amount Amount Amount Amount
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
11 * $2.75 $2.74 $2.76 46 $3.50 $3.44 $3.54
12 2.77 2.75 2.79 47 3.54 3.48 3.58
13 2.78 2.76 2.80 48 3.58 3.52 3.63
14 2.79 2.77 2.81 49 3.63 3.56 3.68
15 2.80 2.78 2.82 50 3.68 3.60 3.73
16 2.81 2.79 2.83 51 3.73 3.64 3.79
17 2.82 2.80 2.84 52 3.78 3.69 3.83
18 2.83 2.81 2.86 53 3.83 3.74 3.89
19 2.85 2.83 2.87 54 3.89 3.79 3.95
20 2.86 2.84 2.88 55 3.95 3.83 4.02
21 2.88 2.85 2.90 56 4.01 3.89 4.08
22 2.89 2.86 2.91 57 4.08 3.94 4.16
23 2.91 2.88 2.93 58 4.15 3.99 4.23
24 2.92 2.90 2.95 59 4.22 4.05 4.31
25 2.94 2.91 2.96 60 4.30 4.11 4.40
26 2.95 2.93 2.98 61 4.38 4.17 4.49
27 2.97 2.95 3.00 62 4.47 4.22 4.58
28 2.99 2.97 3.02 63 4.56 4.28 4.68
29 3.01 2.98 3.04 64 4.65 4.34 4.79
30 3.03 3.00 3.06 65 4.75 4.40 4.90
31 3.05 3.02 3.08 66 4.85 4.46 5.02
32 3.07 3.05 3.10 67 4.96 4.52 5.15
33 3.09 3.07 3.12 68 5.07 4.57 5.28
34 3.12 3.09 3.15 69 5.19 4.63 5.42
35 3.14 3.11 3.17 70 5.31 4.68 5.58
36 3.17 3.14 3.20 71 5.44 4.72 5.74
37 3.20 3.16 3.23 72 5.57 4.76 5.91
38 3.22 3.19 3.25 73 5.70 4.80 6.10
39 3.25 3.22 3.28 74 5.84 4.83 6.30
40 3.28 3.25 3.32 75 5.98 4.86 6.50
41 3.31 3.27 3.35 76 6.12 4.88 6.72
42 3.35 3.31 3.38 77 6.27 4.90 6.96
43 3.38 3.34 3.42 78 6.39 4.92 7.20
44 3.42 3.37 3.46 79 6.52 4.94 7.46
45 3.46 3.41 3.50 80** 6.64 4.96 7.72
- --------------------------------------------------------------------------------------------------
* and under ** and over
</TABLE>
8
<PAGE>
SECTION 7 GENERAL PROVISIONS
CONTRACT AND REPRESENTATIONS. This Policy and the attached copy of the
application forms the entire contract. All statements in the application will
be deemed representations and not warranties. Only statements in the
application will be used to defend a claim or to contest the contract.
MODIFICATION OF CONTRACT. Only Our president, a vice-president, or secretary
has the power to change this Policy. Any change must be in writing signed by
one of the above-named officers.
EFFECTIVE DATE. This Policy takes effect on the date of issue shown on the data
page upon payment of the first Purchase Payment. Policy Years, months, and
anniversaries are measured from the date of issue.
INCONTESTABILITY. This Policy will not be contested after it has been in force
for 2 years from the date of issue.
TERMINATION. This Policy will terminate upon sixty days written notice from You.
We may terminate the Policy under the following conditions:
(1) the Accumulation Value is less than $2,000 after the first Policy Year;
(2) the Accumulation Value is less than $5,000 after the end of the third
Policy Year;
(3) the Plan pursuant to which this Policy is issued is terminated; or
(4) for any reason after the eighth Policy Year.
ASSIGNMENT. No assignment will bind Us until recorded at Our home office. WE
are not obliged to see that an assignment is valid or sufficient. Any claim
by an assignee is subject to proof of the validity and extent of the assignee's
interest in the Policy.
CONTRACT SETTLEMENT. All amounts due under this Policy are payable at Our home
office. We must be given this Policy for inspection or surrender for final
settlement.
ANNUAL REPORT. While this Policy is in force, We will provide You with an annual
report of the Accumulation Value.
9
Form GUA95
<PAGE>
Form GUA95
NONPARTICIPATING GROUP UNALLOCATED DEFERRED VARIABLE ANNUITY.
NO DIVIDENDS.
ALPHABETIC GUIDE
PAGE
Accumulation Value 5
Addition, Deletion or Substitution of Investments 4
American National Fixed Account 3
American National Variable Annuity Separate Account 3,4
Annual Report 9
Annuity Options 6,7
Annuity Provisions 7
Assignment 9
Availability 6
Basis of Values 6
Contract and Representations 9
Contract Settlement 9
Date of Crediting 3
Date of Issue Data Page
Deferment of Payments and Emergency Procedure 6
Effective Date 9
Fixed Account Accumulation Value 5
Flexibility 3
Full Surrender 5,6
Incontestability 9
Modification of Contract 9
Partial Surrenders 6
Policy Data Data Page
Purchase Payments 3
Separate Account Accumulation Value 5
Subaccounts 4
Termination 9
Transfers 4
10
<PAGE>
APP5939 EXHIBIT 99.B5
APPLICATION FOR GROUP UNALLOCATED DEFERRED ANNUITY CONTRACT
[Logo of
American National AMERICAN NATIONAL INSURANCE COMPANY
appears here]
GALVESTON, TEXAS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AS TRUSTEE FOR
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HEREBY APPLIES TO
AMERICAN NATIONAL INSURANCE COMPANY
for a Group Unallocated Deferred Annuity Contract to become effective
on
--------------------------------------------------------------------
The purpose of the Contract shall be the accumulation of funds to purchase
retirement annuities for Participants in the Plan named above. There shall be
approximately Participants in the Plan on the Effective Date of the Contract.
Such retirement plan is a qualified pension plan under section 401 of the
Internal Revenue Code, or is exempt from such qualification.
An initial Purchase Payment of $ is submitted with this application, and
additional Purchase Payments may be made in accordance with the terms of the
Contract.
Allocation of Purchase Payment(s) (Minimum Allocation is 10%. Total Allocation
must equal 100%.)
AMERICAN NATIONAL GROWTH FUND
Growth % Money Market % Fixed Account %
----------- ---------- ----------
Balanced % Managed %
--------- ---------------
FIDELITY FUNDS
Money Market % Growth %
----- ---------------------
High Income % Overseas % Asset Manager %
------ ------------------- ----
Equity Income % Investment Grade Bond % Index 500 %
---- ------ --------
As Trustee, I/We agree to notify the American National Insurance Company if the
Plan ceases to meet the requirements of a qualified plan. I also agree to notify
the American National Insurance Company if this Trust is to be terminated.
The Contract herein applied for, when issued by the American National Insurance
Company and delivered to the undersigned, will constitute the entire agreement
between the two parties.
Dated this day of , 19
------------- ------------------------------- ----
at
------------------------------------------------------------------
- --------------------------------------------------------------------
- --------------------------------------------------------------------
- --------------------------------------------------------------------
(Full or Corporate Name of Applicant)
- --------------------------------------------------------------------
(Full Address)
By:
-----------------------------------------------------------------
(Signature and Title)
By:
-----------------------------------------------------------------
(Signature and Title)
Countersigned: State License No.
------------------------------- ------
(To Be Countersigned by Resident
Agent when Required by Law)
Print Agent's Name
---------------------------------- -------------
(B/O Code and
PC Code)
Form 5939
<PAGE>
EXHIBIT 99.B5
APPLICATION FOR VARIABLE ANNUITY A1-
[LOGO OF AMERICAN NATIONAL INSURANCE COMPANY, GALVESTON, TEXAS
AMERICAN NATIONAL
APPEARS HERE]
- --------------------------------------------------------------------------------
1. NAME OF ANNUITANT SEX DATE OF BIRTH AGE SOCIAL SECURITY NO.
Mo./Day/Yr.
---------------------------------------------------
[ ] M
[ ] F
- --------------------------------------------------------------------------------
2. ADDRESS OF ANNUITANT
- --------------------------------------------------------------------------------
3. OWNER IF OTHER THAN ANNUITANT (c) RELATIONSHIP TO ANNUITANT
(a) NAME
- --------------------------------------------------------------------------------
(b) ADDRESS (Street) (City & State) (d) OWNERS SOC. SEC. NO. OR EIN
- --------------------------------------------------------------------------------
4. SEND PREMIUM NOTICES TO: [ ] OWNER [ ] ANNUITANT [ ] IF OTHER, GIVE NAME AND
ADDRESS
- --------------------------------------------------------------------------------
5. BENEFICIARY RELATIONSHIP TO ANNUITANT DATE OF BIRTH
- --------------------------------------------------------------------------------
6. TYPE OF VARIABLE ANNUITY CONTRACT
[ ] FLEXIBLE PURCHASE PAYMENT DEFERRED ANNUITY
[ ] TAX QUALIFIED
[ ] NON-TAX QUALIFIED
AGE AT MATURITY____________(If left blank, age 65 is used)
(Not to exceed 70.5 for tax qualified)
[ ] IMMEDIATE ANNUITY DATE OF FIRST ANNUITY INCOME PAYMENT______________
(mo/day/yr)
- --------------------------------------------------------------------------------
7. PURCHASE PAYMENT MODE PURCHASE PAYMENT METHOD
[ ] ANNUAL [ ] DIRECT
[ ] SEMI-ANNUAL [ ] PRE-AUTHORIZED PAY
[ ] QUARTERLY [ ] GOV'T ALLOTMENT
[ ] MONTHLY [ ] SALARY DEDCUTION
# ___________________
- --------------------------------------------------------------------------------
8. PURCHASE PAYMENT
AMOUNT PAID WITH APPLICATION $______________________
AMOUNT TO BE BILLED ON ABOVE MODE $__________________
- --------------------------------------------------------------------------------
9. HAVE YOU RECEIVED A PROSPECTUS FOR THE CONTRACT APPLIED FOR? [ ] YES [ ] NO
- --------------------------------------------------------------------------------
10. (a) ANNUITY OPTIONS (DEFAULTS TO 10 YEARS CERTAIN AND LIFE IF OPTION IS NOT
SELECTED)
1. [ ] LIFE ANNUITY
2. [ ] LIFE ANNUITY WITH 10 [ ] OR 20 [ ] YRS. CERTAIN
3. [ ] UNIT REFUND LIFE ANNUITY
4. [ ] INSTALLMENT PAYMENTS, FIXED PERIOD
5. [ ] EQUAL INSTALLMENT PAYMENTS
6. [ ] DEPOSIT OPTION
7. [ ] JOINT & SURVIVOR
NAME_____________________________SEX______________
AGE___________SS#_________________________________
DOB____________________% to survivor______________
8. [ ] IRC AGE RECALCULATION
(b) FREQUENCY OF ANNUITY PAYMENTS
1. [ ] ANNUALLY
2. [ ] SEMI-ANNUALLY
3. [ ] QUARTERLY
4. [ ] MONTHLY
- --------------------------------------------------------------------------------
11. IF INTENDED TO BE TAX QUALIFIED, POLICY IS TO BE ISSUED AS PART OF THE
FOLLOWING TYPE OF PLAN
[ ] PENSION OR PROFIT SHARING PLAN (401(a))
[ ] TAX SHELTERED ANNUITY PLAN (403(b))
[ ] I.R.A. (408)
[ ] SIMPLIFIED EMPLOYEE PENSION PLAN (408(k))
[ ] DEFERRED COMPENSATION (457)
[ ] OTHER____________________________________
- --------------------------------------------------------------------------------
12. ALLOCATION OF PURCHASE PAYMENT(S) (MINIMUM ALLOCATION IS 10%. TOTAL
ALLOCATION MUST EQUAL 100%)
AMERICAN NATIONAL FUNDS FIDELITY FUNDS
GROWTH ____% MONEY MARKET ____% INVESTMENT GRADE BOND ____%
BALANCED ____% HIGH INCOME ____% ASSET MANAGER ____%
MONEY MARKET ____% EQUITY-INCOME ____% INDEX 500 ____%
MANAGED ____% GROWTH ____% CONTRAFUND ____%
FIXED ACCOUNT____% OVERSEAS ____% ASSET MANAGER: GROWTH ____%
- --------------------------------------------------------------------------------
13. WILL THE ANNUITY APPLIED FOR REPLACE OR USE VALUES OF ANY EXISTING INSURANCE
OR ANNUITY POLICY ISSUED BY ANY COMPANY? [ ] YES [ ] NO IF "YES", GIVE
DETAILS:
All of the undersigned declare for themselves, and for all other interested
parties, that all of the answers in this application and any supplements to it
are full, complete and true to the best of their knowledge and belief. They also
agree that: (1) these answers as written: (i) were given to induce the Company
to issue an Annuity Contract; and (ii) shall form the basis for and become a
part of any Annuity Contract issued on this application; (2) the Company may
issue an Annuity Contract different than that specified in this application; no
change will be effective unless agreed to by the owner in writing; and (3) only
an authorized Officer of the Company has the authority to waive any of the
Company rights or requirements or to waive or alter any provision of (i) this
application; or (ii) any Annuity Contract issued on this application.
- --------------------------------------------------------------------------------
I CERTIFY THAT THE SOCIAL SECURITY NUMBER PROVIDED HEREIN IS CORRECT, AND THAT I
AM NOT SUBJECT TO BACKUP WITHHOLDING. I UNDERSTAND THE CONTRACT APPLIED FOR,
THAT THE AMOUNT OF CASH SURRENDER VALUE MAY INCREASE OR DECREASE DEPENDING UPON
INVESTMENT EXPERIENCE, AND THAT THE CONTRACT HAS NO MINIMUM GUARANTEED SURRENDER
VALUE.
Dated at ________________________ this ________ day of_____________, 19____
_____________________________________ ___________________________________
JOINT ANNUITANT SIGNATURE
_____________________________________ ___________________________________
LICENSED AGENT (State License Number) OWNER (if other than annuitant)
Form 5742 Rev. 5-95
CONDITIONAL RECEIPT A-1
AMERICAN NATIONAL INSURANCE COMPANY
ONE MOODY PLAZA, GALVESTON, TEXAS 77550-7999
Valid only for a Variable Annuity and for the purchase payment amount shown in
the application paid for a Variable Annuity.
Received from______________________ this____________ day of____________, 19___
the sum of_________________ ($___________) in cash as purchase payment on a
Variable Annuity on ____________________________ for which an application has
been made to this Company, bearing the same number and date as this receipt.
The Company accepts payment by check, draft, or
money order subject to its being honored upon
- --------------------------- presentation. Checks, drafts, money orders must
AGENT be made payable to American National Insurance
Co. Do NOT leave payee blank or make payable to
agent.
<PAGE>
AGENT'S REPORT
Has any insurance with this Company on the life of the Annuitant been lapsed
within the last six months; or is any such action now in process or planned?
[ ] Yes [ ] No If "Yes", give details:_____________________________________
- -------------------------------------------------------------------------------
As Agent, do you have knowledge or reason to believe that replacement of
existing Insurance/Annuities may be involved? [ ] Yes [ ] No
If "Yes", give details:________________________________________________________
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
As Agent, have you complied with State Replacement Regulations? Yes [ ] No [ ]
If, as Agent, you included individualized sales proposals in your presentation
and the Annuitant replaces plans, then, comparative information forms for each
policy to be replaced and copies of all sales material must be included with
this application and sent to Home Office.
- -------------------------------------------------------------------------------
What Agent under contract besides yourself is entitled to any commission hereon
and how much?
Agent__________________________ Personal Code____________________ ______%
Agent__________________________ Personal Code____________________ ______%
- -------------------------------------------------------------------------------
I certify that on the date of this application I asked the Annuitant(s) each
question in the application, recorded the answers given me, witnessed such
person(s) signature and collected the initial purchase payment shown in the
application.
Dated at________________________ this_______ day of _________________, 19____
____________________________________ _____________________________________
SOLICITING AGENT PRINT SOLICITING AGENT'S NAME
Field Office Code________ Agent P.C. No._________ Soc. Sec. No.____ _____ ____
- -------------------------------------------------------------------------------
FIELD OFFICE CHECK LIST:
Has the application been reviewed for omissions and errors? [ ] Yes [ ] No
By whom_______________________________________
- -------------------------------------------------------------------------------
TELEPHONE TRANSFER PRIVILEGE
I (We) hereby authorize and direct American National Insurance Company to make
transfers from subaccount to subaccount and/or change the allocation of future
investments based upon telephone instruction. I (We) agree to hold harmless and
indemnify American National Insurance Company, its affiliates and employees and
this account for any claim, loss, liability or expense arising out of any
telephone transfer effected or any failure or overload of the telephone system.
Initial this box. [ ]
- -------------------------------------------------------------------------------
IF YOU WOULD LIKE A STATEMENT OF ADDITIONAL INFORMATION,
PLEASE CHECK THIS BOX [ ]
- -------------------------------------------------------------------------------
INSTRUCTIONS FOR COMPLETING APPLICATION!
To apply for a Flexible Purchase Payment Contract complete questions 1-13.
To apply for an Immediate Annuity complete questions 1-3, 5, 6, 8, 9, 10, 11, 12
and 13.
<PAGE>
Exhibit 99.B6a
AMENDMENT
TO THE
RESTATED ARTICLES OF INCORPORATION
OF
AMERICAN NATIONAL INSURANCE COMPANY
Pursuant to the applicable provision of the Texas Business Corporation Act and
the Texas Insurance Code, American National Insurance Company adopts the
following Articles of Amendment to its Restated Articles of Incorporation:
ARTICLE ONE
The name of the corporation is AMERICAN NATIONAL INSURANCE COMPANY.
ARTICLE TWO
A new Article, to be numbered ARTICLE X of the Restated Articles of
Incorporation, was adopted by the shareholders of the corporation on April 29,
1988. The full text of the new ARTICLE X being added to the Restated Articles
of Incorporation reads as follows:
"ARTICLE X
"A director of the Company shall not abe personally liable to the Company
or its shareholders for monetary damages for an act or omission in the
director's capacity as a director, except for liability:
"(i) for any breach of director's duty of loyalty to the
Company or its shareholders,
"(ii) for acts or omissions not in good faith or that involves
intentional misconduct or a knowing violation of the laws,
"(iii) for any transaction from which a director received an
improper benefit, whether or not the benefit resulted from
an action taken within the scope of the director's office,
"(iv) for any act or omission for which the liability of a
director is expressly provided for by statute, or
"(v) for an act related to an unlawful stock repurchase or
payment of a dividend."
ARTICLE THREE
<PAGE>
The number of shares of the corporation outstanding at the time of such
adoption was 28,267,340; and the number of shares entitled to vote thereon was
28,267,340.
ARTICLE FOUR
The number of shares voted for such amendment was 21,471,433; and the number
of shares voted against such amendment was 89,944.
DATED: May 27, 1988.
AMERICAN NATIONAL INSURANCE COMPANY
By: Orson C Clay
--------------------------------
Orson C. Clay
President
By: Jean N. Bell
--------------------------------
Jean N. Bell
Assistant Secretary
THE STATE OF TEXAS )
)
COUNTY OF GALVESTON )
I, Cheri Brown, a Notary Public, do hereby certify that on the 27th day of
May, 1988, personally appeared before me ORSON C CLAY, known to me to be the
person whose name is subscribed to the foregoing document and, being by me first
duly sworn, declared to me that he is President of the corporation and that he
executed the foregoing document in the capacity therein stated, and he declared
that the statements therein contained are true and correct.
IN WITNESS WHEREOF I have hereunto set my hand and seal of office this 27th
day of May, 1988.
Cheri Brown
-------------------------------
Notary Public in and for
The State of Texas
Cheri Brown
Printed or Typed Name of Notary
My commission expires: 2-21-89
<PAGE>
RESTATED ARTICLES OF INCORPORATION
(with Amendments)
OF
AMERICAN NATIONAL INSURANCE COMPANY
1. American National Insurance Company (the "Corporation") hereby restates and
amends its previously filed Restated Articles of Incorporation, restating the
entire text of its Restated Articles of Incorporation, and amending such
Restated Articles of Incorporation as set forth herein (such Restated and
amended Restated Articles of Incorporation, all prior amendments, and the
amendments effected hereby being called the "Restated Articles").
2. These Restated Articles accurately copy the Articles of Incorporation and
all amendments thereto that are in effect to date and as further amended by
these Restated Articles, and contain no other changes of a substantive nature in
any provision thereof, except for the following:
(a) Article VI of the previously filed Restated Articles of Incorporation
is hereby amended by these Restated Articles to decrease and
reclassify the authorized capital stock of the Corporation from
62,000,000 common shares (such 62,000,000 common shares being
previously classified into 50,000,000 shares of Class A Common Stock
with a par value of $1 per share and 12,000,000 shares of nonvoting
Class B Common Stock with a par value of $1 per share) to 50,000,000
shares of voting common stock having a par value of $1 per share (of
which at least 50% has been fully subscribed and fully paid for), and
deleting all of the previously authorized 12,000,000 shares of
nonvoting Class B Common Stock (none of which has been issued), as
more fully described in such Article VI.
(b) The amendment made by these Restated Articles has been effected in
conformity with the applicable provisions of the Texas Business
Corporation Act and the Texas Insurance Code.
3. These Restated Articles were duly adopted by the shareholders of the
Corporation at a special stockholder's meeting held on January 3, 1979.
4. The number of shares of the Corporation outstanding and entitled to vote on
these Restated Articles was 32,793,416; the number of such shares voted FOR and
the number of such shares voted AGAINST such Restated Articles was as follows:
Percentage Percent of Total
FOR AGAINST for Adoption Outstanding Shares
- --- ------- ------------ ------------------
32,793,416 -0- 100% 100%
<PAGE>
5. The previously filed Restated Articles of Incorporation, are hereby
superseded in their entirety by the following Restated Articles:
RESTATED ARTICLES OF INCORPORATION
OF
AMERICAN NATIONAL INSURANCE COMPANY
ARTICLE I
The name of the Corporation is AMERICAN NATIONAL INSURANCE COMPANY.
ARTICLE II
The names of the initial incorporators, all of Galveston, Texas, are shown
below:
W.L. Moody, Jr.
I.H. Kempner
M.O. Kopperl
ARTICLE III
The location of the Home Office of the Corporation shall be Galveston,
Galveston County, Texas.
ARTICLE IV
The purpose for which the Corporation is formed is to transact the following
types of insurance business:
A. Life insurance business, involving the payment of money or other thing
of value, conditioned on the continuance or cessation of human life,
or involving an insurance, guaranty, contract or pledge for the
payment of endowments or annuities.
B. Accident insurance business, involving the payment of money or other
thing of value, conditioned upon the injury, disablement or death of
persons resulting from general accident or from traveling by land,
air, or water.
C. Health insurance business, involving the payment of any amount of
money, or other thing of value, conditioned upon loss by reason of
disability caused by sickness or ill health.
D. Legal services insurance, involving the issuance of legal services
contracts on individual, group, or franchise bases.
<PAGE>
ARTICLE V
The period of duration of the Corporation is five hundred (500) years.
ARTICLE VI
The total number of shares of stock which the Corporation shall have authority
to issue is 50,000,000 shares of voting common stock with a par value of $1
each.
ARTICLE VII
32,793,416 shares of common stock of the Corporation having full voting rights
have been fully subscribed, are fully paid for and are presently outstanding.
All of such outstanding shares are hereby designated and shall continue to
constitute shares of the voting common stock of the Corporation.
ARTICLE VIII
No holder of any of the voting common stock of the corporation, whether now or
hereafter authorized and issued, shall be entitled as a matter of right to
purchase or subscribe for (1) any unissued shares of stock of any class, or (2)
any additional shares of any class, common or preferred, authorized to be
issued, or (3) any bonds, certificates of indebtedness, debentures, or other
securities convertible into stock of the Corporation, or carrying any right to
purchase stock of any class, but any such unissued stock or such additional
authorized issue of any stock or of other securities convertible into stock, or
carrying any right to purchase stock, may be issued and disposed of pursuant to
resolution of the Board of Directors of the Corporation to such persons, firms,
corporations or associations and upon such terms as may be deemed advisable by
such Board of Directors in the exercise of its discretion.
ARTICLE IX
At each election for Directors every holder of voting common stock entitled to
vote at such election shall have the right to vote, in person or by proxy, the
number of shares owned by him for as many persons as there are Directors to be
elected and for whose election the stockholder has a right to vote. It is
expressly prohibited for any stockholder to cumulate his votes in any election
of Directors.
DATED 1/3/79
AMERICAN NATIONAL INSURANCE COMPANY
By: Orson C Clay
--------------------------------
Orson C Clay, President
<PAGE>
C.D. Thompson
--------------------------------
C. D. Thompson, Secretary
THE STATE OF TEXAS )
)
COUNTY OF GALVESTON )
I, Mildred Jones, a Notary Public, do hereby certify that on this 3rd day of
January, 1979, personally appeared before me ORSON C. CLAY, who declared he is
the President of the Corporation executing the foregoing document, and being
first duly sworn, acknowledged that he had signed the foregoing document in the
capacity therein set forth, and declared that the statements therein contained
are true and correct.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this day and year
before written.
Mildred Jones
------------------------------------
Notary Public in and for
Galveston County, Texas
My Commission Expires:
November 30, 1980
<PAGE>
Exhibit 99.B6b
AMERICAN NATIONAL INSURANCE COMPANY
GALVESTON, TEXAS
BYLAWS
ARTICLE I
---------
Name and Object
Section 1. The name of this corporation shall be American National Insurance
Company (the "Company"), and its object shall be to transact a life insurance
business, making contracts upon any and all conditions appertaining to or
connected with life risks. The Company shall also transact the business of
issuing accident and health insurance and credit insurance, conditioned upon the
injury, disablement, or death of the insured resulting from accident or illness,
and the business of issuing legal services contracts on an individual, group, or
franchise basis. The Company may also reinsure any risk insured by the Company
with any other solvent life, accident and health company, and it may also
reinsure the risks insured of other life, health and accident companies or
purchase and take over all or part of the risks of such companies.
ARTICLE II
----------
Home Office
Section 1. The general Home Office of the Company shall be in the City of
Galveston, Galveston County, Texas.
ARTICLE III
-----------
Stockholders
Section 1. The Annual Meeting of the Stockholders shall be held in the City of
Galveston, Texas, or at such other place within or without the State of Texas as
may be, from time to time determined by the Board of Directors, on April 30 of
each year (provided that if April 30 is a legal holiday, then such meeting shall
be held on Friday immediately preceding such legal holiday) or on such other day
prior to April 30 as shall be determined from time to time by the Board of
Directors.
Each Stockholder shall be entitled to one vote for each share of the subscribed
Capital Stock standing in his name on the books of the Company, which vote may
be cast in person or by proxy.
A majority of the subscribed Capital Stock represented at any meeting of the
Stockholders shall constitute a quorum.
1
<PAGE>
At said Annual Meeting the Stockholders shall elect fourteen (14) Directors, or
such other number of Directors not less than seven (7), nor more than fifteen
(15), as the Board of Director shall, from time to time, determined, who shall
hold their office for one year, and until their successors are elected. It
shall require a majority vote of the Capital Stock represented at such meeting
to elect a Director, and such Director need not be a citizen of Texas or a
Stockholder of the Company.
The Chairman of the Board or President shall call special meetings of the
Stockholders whenever, in his judgment, it is necessary and shall call a special
meeting when requested to do so by a majority of the Directors, or by
Stockholders holding or representing not less than thirty-five percent (35%) of
the outstanding stock.
Notice of special meetings shall be given by the Secretary to all Stockholders,
in person, or by mailing such notice to the last known address of the
Stockholders, at least ten (10) days in advance of the date for such meeting.
ARTICLE IV
----------
Officers
Section 1. The officers of this corporation shall consist of a Chairman of the
Board, a President, one or more Senior Executive Vice Presidents, one or more
Executive Vice Presidents, one or more Senior Vice Presidents, one or more Vice
Presidents, one or more Assistant Vice Presidents, a Secretary, one or more
Assistant Secretaries, a Treasurer, one or more Assistant Treasurers, a
Controller, one or more Assistant Controllers, one or more Actuaries, one or
more Assistant Actuaries, a Medical Director, and General Counsel, all of whom
shall be elected by the Board of Directors. One person may hold more than one
office, except that the offices of President and Secretary may not be held by
the same person.
Section 2. The Board of Directors may from time to time create additional
offices and elect persons to fill such posts, and the Board may appoint such
committees as it may deem appropriate or necessary. The Board may delegate to
any officer or committee such duties as it may deem appropriate.
Section 3. The employment and salary of all officers shall be from month to
month.
2
<PAGE>
ARTICLE V
---------
Directors
Section 1. The Directors shall hold an Annual Meeting for the election of
officers and such other business that may come before them immediately upon the
adjournment of the Annual Stockholders' Meeting, and they shall also have four
(4) regular meetings, and the first three (3) of which shall be held on the last
Thursday of the months of February, July and October and the fourth of which
shall be held on the second or third Friday of December as the Directors shall
determine; provided that if any of such last Thursdays shall fall on a holiday
observed by the Company, then such meeting shall be held on the weekday
immediately preceding such holiday; and provided further that the Board may, at
any special or regular meeting, cancel one or more subsequent regular meetings
or it may reschedule the date of one or more subsequent regular meetings, and
the Chairman of the Board and the President, acting jointly between meetings,
may cancel or reschedule not more than two (2) successive regular meetings; but
in any event, the Secretary shall give notice to all Directors that one or more
specified regular meetings have been canceled or rescheduled for stated dates;
and such notice shall be given by the Secretary to each Director, in person, by
telephone or by mailing such notice to the last address of the Director, such
notice to be given as soon as practicable after cancellation or rescheduling of
one or more such regular meetings.
A special meeting of the Directors may be held at any time, upon call of the
Chairman of the Board, the President, or upon call of a majority of the members
of the Board of Directors. Notice of such special meeting shall be given by the
Secretary to each Director, in person, by telephone, or by mailing such notice
to the last address of the Director at least four (4) days in advance of the
date of such meeting.
Quorum
Section 2. A majority of the duly elected Directors shall constitute a quorum
for the transaction of business.
Place of Meeting
Section 3. All meetings of the Directors shall be held at the office of the
Company in the City of Galveston, or at such other place designated by the Board
of Directors.
Filling of Vacancies
Section 4. Should any vacancy occur in the Directorship, the same may be filled
for the unexpired term by a majority of the remaining Directors.
3
<PAGE>
Finance Committee
Section 5. The Board of Directors may appoint a Finance Committee consisting of
not less than five (5) officers or directors of the Company. The members of
such Finance Committee shall serve at the pleasure of the Board of Directors.
Such Finance Committee shall have the authority to approve and authorize for and
on the Company's behalf (1) investments and loans permitted by the Texas
Insurance Code and regulations thereunder, and (2) all purchases, sales and
other transactions of any kind including or relating to real estate or interest
in real estate. Such Finance Committee shall also be charged with the duty of
supervising all of the Company's investments and loans.
It shall require three (3) or more members of the Finance Committee to
constitute a quorum at any meeting of the Finance Committee, and its every
decision must receive a majority vote of those present, and in no case less than
three (3) affirmative votes. Such Finance Committee shall keep minutes of all
of its meetings, fully reflecting all actions taken by it, which shall be
recorded in a permanent minute book.
In the exercise of its authority and the discharge of its duty, such Finance
Committee shall have the right to appoint one or more subcommittees and to
delegate to such subcommittees authority to make minor investments and small
loans, not to exceed a predetermined dollar amount, and to act on matters not
involving material investment decisions without prior approval of the Finance
Committee.
The Finance Committee shall determine the number and appoint the membership of
each such subcommittee, and the detailed authority of each shall be fully set
forth in the resolutions creating each and amendments thereto. There shall be
included in such resolutions requirements that:
(a) at least one member of each subcommittee shall also be a member
of the Finance Committee; (b) that the presence of at least four
(4) members of each subcommittee shall be necessary to constitute
a quorum at any meeting thereof; and (c) that no affirmative
action shall be authorized without at least three (3) affirmative
votes.
The Finance Committee shall carefully supervise all operations of its
subcommittees and shall periodically review all actions taken by them.
4
<PAGE>
Executive Committee
Section 6. The Board of Directors may, by resolution adopted by a majority of
the whole Board, create an Executive Committee and designate the members
thereof. All members of such Committee shall serve at the pleasure of the
Board.
The Executive Committee shall have such powers and shall perform such duties as
the Board may delegate to it by resolution from time to time; provided, however
that such Committee shall have no authority with respect to matters where action
of the Board of Directors is required to be taken by the provisions of the Texas
Business Corporation Act or other applicable law.
The Executive Committee shall be organized and shall perform its functions as
directed by the Board of Directors, and minutes of all meetings of the Executive
Committee shall be kept in a book provided for such purpose. Any action taken
by the Executive Committee within the course and scope of its authority shall be
binding on the Company.
The membership of the Executive Committee may, from time to time, be increased
or decreased and the powers and duties of the Committee may, from time to time,
be changed by the Board of Directors as it may deem appropriate. The Executive
Committee may be abolished at any time by the vote of a majority of the whole
Board of Directors.
Dividends
Section 7. The Board of Directors may, from time to time, declare and order
paid out of the Company's current earnings or surplus or both, dividends, either
in cash or stock, as it may determine to be in the best interest of the Company.
ARTICLE VI
----------
Duties of Officers
Chairman of the Board
Section 1. The Chairman of the Board shall be the Chief Executive Officer of
the Company and shall preside at all meetings of the Stockholders and Board of
Directors. He shall have general and active management responsibilities for the
business and affairs of the Company, and shall see that all orders and
resolutions of the Board are carried into effect. He shall also do such other
things, perform such other duties and have such other powers as the bylaws, the
Board of Directors or Executive Committee may from time to time prescribe.
5
<PAGE>
President
Section 2. The President shall be the Chief Administrative Officer of the
Company, his activities as such subject to the direction and approval of the
Chief Executive Officer, and shall be responsible for the implementation of the
details of managing the administrative affairs of the Company. He shall also do
such other things, perform such other duties and have such other powers as the
bylaws, the Board of Directors or Executive Committee may from time to time
prescribe. The President, in the absence and/or disability of the Chairman of
the Board, shall perform the duties and exercise the powers of the Chairman of
the Board.
Senior Executive Vice Presidents
Section 3. The Senior Executive Vice Presidents shall perform such duties and
have such powers as the Board of Directors may prescribe. One of such Senior
Executive Vice Presidents shall be the Chief Marketing Officer.
Executive Vice Presidents
Section 4. The Executive Vice President shall perform such duties and have such
powers as the Board of Directors may prescribe.
Senior Vice Presidents
Section 5. Senior Vice Presidents shall perform such duties and have such
powers as the Board of Directors may prescribe.
Vice Presidents
Section 6. Vice Presidents shall perform such duties and have such powers as
the Board of Directors may prescribe.
Assistant Vice Presidents
Section 7. Assistant Vice Presidents shall perform such duties and have such
powers as the Board of Directors may prescribe.
Secretary
Section 8. The Secretary shall be custodian of all the Company's records, books
and papers and shall see that the books, reports, statements, certificates and
all other documents and reports required by law are properly executed and filed.
He shall keep such other records and reports as the Board of Directors may
prescribe, and render reports as may be called for by the Chairman of the Board
or the President. He shall have custody of the corporate seal with authority to
affix the same, attested by his signature, to all instruments requiring
execution under seal, and shall act with the Chairman of the Board and the
President in the
6
<PAGE>
general care and supervision of the Company's business. He shall attend the
meetings of the Stockholders, Board of Directors, and Finance Committee, keeping
a full account of their proceedings, and furnishing such information, accounts,
and papers as may be required and calling to their attention any matter coming
under his province on which their action is needed. He shall perform such other
duties and have such other powers as the Board of Directors may prescribe.
Assistant Secretaries
Section 9. The Assistant Secretary, or if there be more than one, the Assistant
Secretaries in the order determined by the Board of Directors, shall in the
absence or disability of the Secretary, perform the duties and exercise the
powers of the Secretary. He, or they, as the case may be, shall perform such
other duties and have such other powers as the board of Directors may prescribe.
Treasurer
Section 10. The Treasurer shall receive, in the name of the Company, all monies
due or owing to it from any source whatever, and deposit same in the name and to
the account of the Company in authorized depositories, and he shall keep an
accurate account of all cash transactions of the Company. He shall perform such
duties and have such powers as the Board of Directors may prescribe.
Assistant Treasurer
Section 11. The Assistant Treasurer, or if there be more than one, the
Assistant Treasurers in the order determined by the Board of Directors, shall,
in the absence or disability of the Treasurer, perform the duties and exercise
the powers of the Treasurer. He, or they, as the case may be, shall perform
such other duties and have such other powers as the Board of Directors may
prescribe.
Controller
Section 12. The Controller shall act as the principal accounting officer in
charge of the general accounting books, accounting records and forms of the
Company; have general supervision of the accounting records and forms of the
Company; have general supervision of the accounting practices of all subsidiary
corporations; obtain from agents and from departments of the Company all reports
needed for recording the general operations of the Company or for supervising or
directing its accounts. He shall cause to be enforced and maintained the
classification and other accounting rules and regulations prescribed by any
regulatory body; cause to be prepared, compiled and filed such statutory
accounting reports, statements, statistics, returns, and other data as may be
required by law, prepare the Company's financial reports, and such reports as
required and submit same to the President.
7
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He shall approve for payment all vouchers, drafts, and other accounts payable
where authorized or approved by the President or persons authorized to do so by
the President; and countersign warrants with the Treasurer or Secretary for
deposit or withdrawal of securities from custodian banks; have charge over
preparation and supervision of budgets; and supervision over the purchasing
functions of the Company, and shall perform such other duties and have such
other powers as the Board of Directors may prescribe.
Assistant Controllers
Section 13. The Assistant Controller, or if there shall be more than one, the
Assistant Controllers, in the order determined by the Board of Directors, shall,
in the absence or disability of the Controller, perform the duties and exercise
the powers of the Controller. He, or they, as the case may be, shall perform
such other duties and have such other powers as the Board of Directors may
prescribe.
Actuary
Section 14. The Actuary, or if there shall be more than one, the Actuaries in
the order determined by the Board of Directors, shall have charge of the
Actuarial Department of the Company, and all special work connected therewith.
He shall make all calculations required in transacting the insurance operations
of the Company, and perform such other duties as shall be assigned him by the
Chairman of the Board, President, or Board of Directors.
Assistant Actuaries
Section 15. The Assistant Actuary, or if there be more than one, the Assistant
Actuaries in the order determined by the Board of Directors shall, in the
absence or disability of the Actuary, perform the duties and exercise the powers
of the Actuary. He, or they, as the case may be, shall perform such other
duties and have such other powers as the Board of Directors may prescribe.
Medical Directors
Section 16. The Medical Director shall have general supervision of the Medical
Department of the Company. He shall make recommendations of medical standards
to be adopted by the Company in the selection of risks. He shall examine, or
cause to be examined, every application for insurance and approve or reject
same; shall examine all proofs of death submitted for his opinion, and shall
perform such other duties as the President or Board of Directors may require.
8
<PAGE>
General Counsel
Section 17. General Counsel, which may be a firm of attorneys, shall, subject
to the instructions of the Board of Directors, have charge and control of the
legal business and affairs of the Company; shall give legal advice pertaining to
the Company's business submitted to Counsel by any officer of the Company, by
the Chairman of the Board of Directors, or by the Chairman of the Finance
Committee; shall prepare or cause to be prepared legal documents and papers for
the Company; shall, at the request of the Chairman of the Board or the
President, attend any meeting of the Board of Directors or the Finance
Committee; and shall perform such other services as are necessary or appropriate
in the discharge of the Counsel's responsibilities with respect to the business
and affairs of the Company.
ARTICLE VII
-----------
Designation of Banks and Withdrawal of Funds
Section 1. Jointly, any two (2) of the following officers: The Chairman of the
Board, the President, a Senior Executive Vice President, an Executive Vice
President, the Secretary, or the Treasurer are authorized and directed to
designate the banks in which funds of this corporation shall be deposited, and
the Treasurer shall deposit or cause to be deposited all of its funds in the
banks so selected. Said banks shall pay out such funds on deposit only upon
drafts or checks signed and countersigned by the persons designated for such
purposes.
Section 2. Jointly, any two (2) of the following officers: the Chairman of the
Board, the President, a Senior Executive Vice President, an Executive Vice
President, the Secretary or the Treasurer are authorized and directed to
designate in writing the persons who are authorized to sign and countersign the
drafts or checks for withdrawal of the funds on deposit.
ARTICLE VIII
------------
Fidelity Bond
Section 1. The Board of Directors shall require a Fidelity Bond, in an amount
fixed by such Board of Directors and payable to the Company, on all officers and
employees, conditioned that each will well and faithfully discharge the duties
of his office and account for all the Company's monies coming into his hands.
9
<PAGE>
ARTICLE IX
----------
Directors' Fees
Section 1. All Directors who are not full-time salaried officers shall be paid
a basic fee for each year or part of a year they serve as Directors of the
Company. Such basic fee will be set from time to time by the Board, shall be
payable in a lump sum immediately after the election of a Director. In
addition, all Directors who are not full-time salaried officers shall be paid an
amount set by the Board from time to time for each Board meeting or Executive
Committee meeting attended, payable after each meeting. The Board shall also
set from time to time the amount any Director who is a member of the Audit
Committee and/or Compensation Committee of the Board of Directors and who is not
a full-time salaried officer shall be paid per committee meeting attended.
Section 2. All Directors who are full-time salaried officers shall be paid no
fee for attendance at any regular or special meeting of the Board of Directors.
Section 3. The necessary expenses incurred by the Directors in attending the
meetings of the Board of Directors, and also their necessary expenses when
absent from the place of their residence in the discharge of the official duty
of the Company's business shall be paid by the Company.
ARTICLE X
---------
Capital Stock
Section 1. The amount, classes and par value of the stock of this Company shall
be as stated in the Company's Restated Articles of Incorporation, as such
articles may be amended and restated from time to time.
Certificate of Shares
Section 2. Each Stockholder shall be entitled to a certificate or certificates
for the number of shares of Capital Stock held by him and fully paid for, signed
with the facsimile signature of the Chairman of the Board or the President and
the Secretary, attested with the facsimile seal of the Company.
All transfer of stock, before effective, shall be made upon the proper books of
the Company, by the written order or request of the Stockholders, and the Board
of Directors may require that the certificate of stock be returned and canceled
before a new certificate is issued in name of the person to whom the transfer is
to be made.
10
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ARTICLE XI
----------
Corporate Seal
Section 1. The seal of the Company shall be as follows:
ARTICLE XII
-----------
Amendments
Section 1. The Bylaws may be amended, altered or repealed and additional Bylaws
enacted at any Annual Meeting of the stockholders or any regular meeting of the
Board of Directors, or at any special or rescheduled meeting of either, if in
the notice for such special or rescheduled meeting there is incorporated notice
of the proposed action.
ARTICLE XIII
------------
Indemnification of Officers, Directors,
Employees and Agents
Section 1. (a) The Corporation shall indemnify any person who serves or has
served as a director or officer of the Corporation, or who at the Corporation's
request serves or has served as a director, officer, partner, venturer,
proprietor, trustee, employee, agent, or similar functionary (herein
collectively called "director or officer") of another foreign or domestic
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan, or other enterprise (herein collectively called "business
enterprise"), and the respective heirs, administrators, successors and assigns
of any such director or officer against any and all expenses, including
attorneys' fees, judgments, penalties (including excise or similar taxes),
fines, costs and amounts paid in settlement (before or after suit is commenced)
actually and necessarily incurred by any such person in connection with the
defense, settlement or investigation of any actual or threatened claim, action,
suit or proceeding, whether civil, criminal, administrative, arbitrative, or
investigative, asserted against such person or at which such person is made a
party by reason of being or having been a director or officer of the Corporation
or such other business enterprise; provided that:
(1) The Corporation shall not indemnify any such person (or his heirs,
administrators, successors or assigns) for obligations resulting from
a proceeding (i) in which the person is found liable on the basis that
personal benefit was improperly received by him, whether or not the
benefit resulted from an action taken in the person's official
capacity, or (ii) in which the person is found liable to the
Corporation, unless and only to the extent indemnification is
permitted by the Court;
11
<PAGE>
(2) In the case of settlement (before or after suit is commenced) of any
actual or threatened action, suit or proceeding in which any such
person is involved by reason of his having been a director or officer,
indemnification shall be provided if the Board of Directors
determines, in a manner set forth herein that such person conducted
himself in good faith and in a manner he reasonably believed: (i) in
the case of conduct in his official capacity as a director of the
Corporation, that his conduct was in the Corporation's best interest;
and (ii) in all other cases that his conduct was at least not opposed
to the Corporation's best interests; and (iii) in the case of any
criminal proceeding, had no reasonable cause to believe his conduct
was unlawful;
(3) A determination of indemnification under Section 1(a)(2) of this
Article shall be made (i) by a majority vote of a quorum consisting of
directors who at the time of the vote are not named defendants or
respondents in the proceeding; (ii) if a quorum cannot be obtained by
a majority vote of a committee of the Board of Directors designated to
act in the matter by a majority vote of all directors consisting
solely of two or more directors who at the time of the vote are not
named defendants or respondents in the proceeding; (iii) by special
legal counsel selected by the Board of Directors or a committee of the
Board by vote as set forth in Subparagraph (i) or (ii) of this Section
1(a)(3), or, if such quorum cannot be obtained and such a committee
cannot be established, by a majority vote of all directors; or (iv) by
the shareholders in a vote that excludes the shares held by directors
who are named defendants or respondents in the proceeding.
(b) Reasonable expenses, including attorney's fees, incurred by a director or
officer who was, is, or is threatened to be made a named defendant or respondent
in a proceeding may be paid or reimbursed by the Corporation in advance of the
final disposition or the proceeding after:
(1) The Corporation received a written affirmation by the director or
officer of his good faith belief that he has met the standard of
conduct necessary for indemnification under this Article and a written
undertaking by or on behalf of the director or officer to repay the
amount paid or reimbursed if it is ultimately determined that he has
not met those requirements; and
(2) A determination that the facts then known to those making the
determination would not preclude indemnification under this Article.
12
<PAGE>
(c) The written undertaking required by Section 1(b)(1) of this Article must be
an unlimited general obligation of the director or officer, but need not be
secured. It may be accepted without financial ability to make payment.
Determinations and authorization of payments under Section 1(b) must be made in
the manner specified by Section 1(a)(3) of this Article for determining that
indemnification is possible.
(d) The Corporation shall indemnify a director or officer against reasonable
expenses, including costs and attorney's fees, incurred by him in connection
with an action, suit, or proceeding in which he is a party because he is a
director or officer if he has been wholly successful on the merits or otherwise,
in the defense of the action, suit, or proceeding.
(e) The indemnification provided for in this Article is not exclusive of any
other rights to which persons covered by this Article may be entitled under any
bylaw, agreement, vote of shareholders or disinterested directors or otherwise.
The right to indemnification provided under this Article shall inure to the
benefit of the heirs, executors or administrators of any person covered by this
Article.
(f) The Board of Directors shall have the power to abide by resolution for the
indemnification of individual employees or agents who face exceptional risks of
liability because of the nature of their jobs.
(g) Any indemnification of or advance of expenses to a director in accordance
with this Article shall be reported in writing to the shareholders with or
before the notice or waiver of notice of the next stockholders' meeting or with
or before the next submission to stockholders of a consent to action without a
meeting pursuant to Section A, Article 9.10, of the Texas Business Corporation
Act and in any case, within the 12-month period immediately following the date
of the indemnification or advance.
Section 2. The Corporation shall have the power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation or who is or was serving at the request of the
Corporation as a director, officer, partner, venturer, proprietor, trustee,
employee, agent, or similar functionary of another foreign or domestic
corporation, partnership, joint venture, sole proprietorship, trust, other
enterprise, or employee benefit plan, against any liability asserted against him
and incurred by him in such a capacity or arising out of his status as such a
person, whether or not the Corporation would have the power to indemnify him
against that liability under this Article.
Section 3. This Article XIII is intended to provide the fullest indemnification
possible under the law in consistent with the
13
<PAGE>
provisions of this Article. If any provision of this Article or the application
of this Article to any person or circumstance shall be found to be invalid or
unenforceable, the remainder of this Article or the application of this Article
to any person or circumstance which is not invalid or unenforceable shall not be
affected and each provision of this Article shall be valid and enforced to the
full extent permitted by law.
ARTICLE XIV
-----------
General Auditor
Section 1. The General Auditor shall assist members of Management in achieving
the most efficient and effective discharge of their responsibilities by
furnishing them with independent and objective analyses, appraisals, and
pertinent comments in order to provide a basis for appropriate corrective action
for the Company and its affiliates, including the recommendation of changes for
the improvement of various phases of their operations. He shall be responsible
for reviewing and appraising the soundness, adequacy, and application of
accounting, financial and operating controls; ascertaining the extent of
compliance with established policies, plans, and procedures; the extent to which
Company and affiliate assets are accounted for and safeguarded from losses of
all kinds; ascertaining the reliability of accounting, financial, and operating
data developed within the Company and its affiliates; appraising the quality of
performance in carrying out assigned responsibilities. He shall report to the
Board of Directors through the President, and shall perform such other duties as
the Board of Directors may prescribe.
14
<PAGE>
Exhibit 99.B8a
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT, entered into on this 1st day of August, 1994, among AMERICAN
NATIONAL INSURANCE COMPANY ("COMPANY"), a life insurance company organized under
the laws of the State of Texas, on behalf of itself and AMERICAN NATIONAL
VARIABLE ANNUITY SEPARATE ACCOUNT ("Separate Account"), a separate account
established by the Company in accordance with the laws of the State of Texas,
AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC. ("Fund"), an open-end management
investment company organized under the laws of the State of Maryland, and
SECURITIES MANAGEMENT AND RESEARCH, INC. ("Distributor"), a Florida corporation.
W I T N E S S E T H:
WHEREAS, the Separate Account has been established by the Company pursuant to
the Texas Insurance Code in connection with certain variable contracts
("Contracts") issued to the public by the Company; and
WHEREAS, the Separate Account is registered as a unit investment trust under
the Investment Company Act of 1940;
WHEREAS, the income, gains and losses, whether or not realized, from assets
allocated to the Separate Account are, in accordance with the applicable
Contracts, to be credited to or charged against such Separate Account without
regard to other income, gains or losses of the Company; and
WHEREAS, the Separate Account is subdivided into various Subaccounts under
which income, gains and losses, whether or not realized, form assets allocated
to each such Subaccount are, in accordance with the applicable Contracts, to be
credited to or charged against such Subaccounts without regard to other income,
gains or losses of other Subaccounts or of the Company; and
WHEREAS, the Fund is registered as an open-end diversified management
investment company under the Investment Company Act of 1940; and
WHEREAS, the Fund is divided into various series ("Portfolios"), each
Portfolio having a different investment objective and being subject to separate
investment policies and restrictions which may not be changed without the
majority vote of shareowners of such Portfolio; and
WHEREAS, the Fund agrees to make its shares available to serve as underlying
investment media for the Separate Account, with shares of each Portfolio of the
Fund to serve as the underlying investment medium for each of the various
Subaccounts in the Separate Account; and
WHEREAS, Distributor, the principal underwriter for the Contracts to be
funded in the Separate Account, is a broker-dealer registered as such under the
Securities Exchange Act of 1934;
<PAGE>
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and conditions set forth herein and for other good and valuable consideration,
the Company, the Separate Account, the Fund and the Distributor hereby agree as
follows:
1. The Contracts funded through the Separate Account will provide for the
allocation of net amounts among the various Subaccounts of the
Separate Account for investment in the shares of the Portfolios of the
Fund underlying each Subaccount. The selection of the particular
Subaccount is to be made by the Contract Owner and such selection may
be changed in accordance with the termS of the Contracts.
2. No representation is made as to the number or amount of such Contracts
to be sold. The Company and the Distributor will make reasonable
efforts to market such Contracts and will comply with all applicable
federal or state laws in connection therewith.
3. Fund shares to be made available to each Subaccount of the Separate
Account shall be sold by each of the respective Portfolio of the Fund
and purchased by the Company for the corresponding Subaccount at the
net asset value (without the imposition of a sales load) next computed
after receipt of each order, as established in accordance with the
provisions of the then current prospectus of the Fund. Shares of a
particular Portfolio shall be ordered in such quantities and at such
times as determined by the Company to be necessary to meet the
requirements of those Contracts issued by the Company in that
Subaccount of the Separate Account for which the Portfolio shares
serve as the underlying investment medium. Orders or payments for
shares purchases will be sent promptly to the Fund and will be made
payable in the manner established from time to time by the Fund for
the receipt of such payments. The Fund reserves the right to delay
transfer of its shares until the payment check has cleared. The Fund
has the obligation to insure that its shares are registered at all
times.
4. Transfer of the Fund's shares will be by book entry only. No stock
certificate will be issued to the Separate Account. Shares ordered
from a particular Portfolio of the Fund will be recorded in an
appropriate title for the corresponding Subaccount of the Separate
Account by the Company.
5. The Fund shall furnish notice promptly to the Company of any dividend
or distribution payable on its shares. All such dividends and
distributions as are payable on each Portfolio's shares in the title
for the corresponding Subaccount of the Separate Account shall be
automatically reinvested in additional shares of that Portfolio. The
Fund shall notify the Company of the number of shares so issued.
6. All expenses incident to the performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall ensure that all
its shares are registered and authorized for issue in accordance with
applicable federal and state laws prior to their purchase for the
Separate Account. The Company shall bear none of the expenses for the
cost of registration of the Fund's shares, preparation of the Fund's
prospectuses, proxy materials and reports, the
<PAGE>
preparation of all statements and notices required by any federal or
state law, or taxes on the issue or transfer of the Fund's shares
subject to this Agreement.
7. The Company and the Distributor shall make no representations
concerning the Fund's shares except those contained in the then
current prospectus of the Fund and in printed information subsequently
issued on behalf of the Fund as supplemental to such prospectus.
8. This Agreement shall terminate:
(a) at the option of the Company or of the Fund upon sixty (60) days'
advance written notice to all other parties to this Agreement;
(b) at the option of the Company if any of the Fund's shares are not
reasonably available to meet the requirements of the Contracts as
determined by the Company. Prompt notice of election to
terminate shall be furnished by the Company;
(c) at the option of the Company upon institution of formal
proceedings against the Fund by the Securities and Exchange
Commission;
(d) upon requisite vote of the Contract Owners having an interest in
a particular Subaccount of the Separate Account to substitute the
shares of another investment company for the corresponding Fund
shares in accordance with the terms of the Contracts for which
those Fund shares had been selected to serve as the underlying
investment medium. The Company will give thirty (30) days' prior
written notice to the Fund of the date of any proposed vote to
replace the Fund shares;
(e) in the event the Fund's shares are not registered, issued or sold
in accordance with applicable state and/or federal law or such
law precludes the use of such shares as the underlying investment
medium of the Contracts issued or to be issued by the Company.
Prompt notice shall be given by any party to all other parties in
the event that the conditions stated in this subsection (e) or in
any subsection of this Section 8. should occur.
9. Each notice required by this agreement may be given by wire or
facsimile transmission and confirmed in writing to:
Securities Management and Research, Inc.
One Moody Plaza
Galveston, Texas 77550
ATTN: President
American National Investment Accounts, Inc.
One Moody Plaza
Galveston, Texas 77550
ATTN: President
<PAGE>
<PAGE>
American National Variable Annuity Separate Account
One Moody Plaza
Galveston, Texas 77550
ATTN: President
American National Insurance Company
One Moody Plaza
Galveston, Texas 77550
ATTN: President
10. This agreement shall be construed in accordance with the laws of the
State of Texas.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be duly
executed and attested on the date first stated above.
AMERICAN NATIONAL INSURANCE COMPANY
By:
______________________________________
Carl R. Robertson,
Senior Executive Vice President
AMERICAN NATIONAL VARIABLE ANNUITY
SEPARATE ACCOUNT
By: ________________________________________
Carl R. Robertson,
Senior Executive Vice President
AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
By:
________________________________________
Michael W. McCroskey, President
SECURITIES MANAGEMENT AND RESEARCH, INC.
By:
________________________________________
Michael W. McCroskey, President
<PAGE>
Exhibit 99.B8b
PARTICIPATION AGREEMENT
Among
VARIABLE INSURANCE PRODUCTS FUND,
FIDELITY DISTRIBUTORS CORPORATION
and
AMERICAN NATIONAL INSURANCE COMPANY
THIS AGREEMENT, made and entered into this 16th day of August, 1993 by and among
AMERICAN NATIONAL INSURANCE COMPANY, (hereinafter the "Company"), a Texas
corporation, on its own behalf and on behalf of each segregated asset account of
the Company set forth on Schedule A hereto as may be amended from time to time
(each such account hereinafter referred to as the "Account"), and the VARIABLE
INSURANCE PRODUCTS FUND, an unincorporated business trust organized under the
laws of the Commonwealth of Massachusetts (hereinafter the "Fund") and FIDELITY
DISTRIBUTORS CORPORATION (hereinafter the "Underwriter"), a Massachusetts
corporation.
WHEREAS, the Fund engages in business as an open-end management investment
company and is available to act as the investment vehicle for separate accounts
established for variable life insurance policies and variable annuity contracts
(collectively, the "Variable Insurance Products") to be offered by insurance
companies which have entered into participation agreements with the Fund and the
Underwriter (hereinafter "Participating Insurance Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several series of
shares, each designated a "Portfolio" and representing the interest in a
particular managed portfolio of securities and other assets; and
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission, dated October 15, 1985 (File No. 812-6102), granting Participating
Insurance Companies and variable annuity and variable life insurance separate
accounts exemptions from the provisions of sections 9(a), 13(a), 15(a), and
15(b) of the Investment Company Act of 1940, as amended, (hereinafter the "1940
Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent
necessary to permit shares of the Fund to be sold to and held by variable
annuity and variable life insurance separate accounts of both affiliated and
unaffiliated life insurance companies (hereinafter the "Shared Funding Exemptive
Order"); and
WHEREAS, the Fund is registered as an open-end management investment company
under the 1940 Act and its shares are registered
<PAGE>
under the Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser") is duly
registered as an investment adviser under the federal Investment Advisers Act of
1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain variable life and
variable annuity contracts under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated asset
account, established by resolution of the Board of Directors of the Company, on
the date shown for such Account on Schedule A hereto, to set aside and invest
assets attributable to one or more variable life and annuity contracts; and
WHEREAS, the Company has registered or will register each Account as a unit
investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the Securities
and Exchange Commission ("SEC") under the Securities Exchange Act of 1934, as
amended, (hereinafter the "1934 Act"), and is a member in good standing of the
National Association of Securities Dealers, Inc. (hereinafter "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
the Company intends to purchase shares in the Portfolios on behalf of each
Account to fund certain of the aforesaid variable life and variable annuity
contracts and the Underwriter is authorized to sell such shares to unit
investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the Fund
and the Underwriter agree as follows:
ARTICLE I. SALE OF FUND SHARES
-------------------
1.1 The Underwriter agrees to sell to the Company those shares of the Fund
which each Account orders, executing such orders on a daily basis at the net
asset value next computed after receipt by the Fund or its designee of the order
for the shares of the Fund. For purposes of this Section 1.1., the Company
shall be the designee of the Fund for receipt of such orders from each Account
and receipt by such designee shall constitute receipt by the Fund; provided
that the Fund receives notice of such order by 10:00 a.m. Boston time on the
next following Business Day. "Business Day" shall mean any day on which the New
York Stock Exchange is open for trading and on which the Fund calculates its
2
<PAGE>
net asset value pursuant to the rules of the Securities and Exchange Commission.
1.2 The Fund agrees to make its shares available indefinitely for purchase at
the applicable net asset value per share by the Company and its Accounts on
those days on which the Fund calculates its net asset value pursuant to rules of
the Securities and Exchange Commission and the Fund shall use reasonable efforts
to calculate such net asset value on each day which the New York Stock Exchange
is open for trading. Notwithstanding the foregoing, the Board of Trustees of
the Fund (hereinafter the "Board") may refuse to sell shares of any Portfolio to
any person, or suspend or terminate the offering of shares of any Portfolio if
such action is required by law or by regulatory authorities having jurisdiction
or is, in the sole discretion of the Board acting in good faith and in light of
their fiduciary duties under federal and any applicable state laws, necessary in
the best interests of the shareholders of such Portfolio.
1.3 The Fund and the Underwriter agree that shares of the Fund will be sold
only to Participating Insurance Companies and their separate accounts. No
shares of any Portfolio will be sold to the general public.
1.4 The Fund and the Underwriter will not sell Fund shares to any insurance
company or separate account unless an agreement containing provisions
substantially the same as Articles I, III, V, VII and Section 2.5 of Article II
of this Agreement is in effect to govern such sales.
1.5 The Fund agrees to redeem for cash, on the Company's request, any full or
fractional shares of the Fund held by the Company, executing such requests on a
daily basis at the net asset value next computed after receipt by the Fund or
its designee of the request for redemption. For purposes of this Section 1.5,
the Company shall be the designee of the Fund for receipt of requests for
redemption from each Account and receipt by such designee shall constitute
receipt by the Fund; provided that the Fund receives notice of such request for
redemption on the next following Business Day.
1.6 The Company agrees to purchase and redeem the shares of each Portfolio
offered by the then current prospectus of the Fund and in accordance with the
provisions of such prospectus. The Company agrees that all net amounts
available under the variable life and variable annuity contracts with the form
number(s) which are listed on Schedule B attached hereto and incorporated herein
by this reference, as such Schedule B may be amended from time to time hereafter
by mutual written agreement of all the parties hereto, (the "Contracts") shall
be invested in the Fund, in such other Funds advised by the Adviser as may be
mutually agreed to in
3
<PAGE>
writing by the parties hereto, or in the Company's general account, provided
that such amounts may also be invested in an investment company other than the
Fund if (a) such other investment company, or series thereof, has investment
objectives or policies that are substantially different from the investment
objectives and policies of all the Portfolios of the Fund; or (b) the Company
gives the Fund and the Underwriter 45 days written notice of its intention to
make such other investment company available as a funding vehicle for the
Contracts; or (c) such other investment company was available as a funding
vehicle for the Contracts prior to the date of this Agreement and the Company so
informs the Fund and Underwriter prior to their signing this Agreement; or (d)
the Fund or Underwriter consents to the use of such other investment company.
1.7 The company shall pay for Fund shares on the next business Day after an
order to purchase Fund shares is made in accordance with the provisions of
Section 1.1 hereof. Payment shall be in federal funds transmitted by wire. For
purpose of Section 2.10 and 2.11, upon receipt by the Fund of the federal funds
so wired, such funds shall cease to be the responsibility of the Company and
shall become the responsibility of the Fund.
1.8 Issuance and transfer of the Fund's shares will be by book entry only.
Stock certificates will not be issued to the Company or any account. Shares
ordered from the Fund will be recorded in an appropriate title for each Account
or the appropriate subaccount of each Account.
1.9 The Fund shall furnish same day notice (by wire or telephone, followed by
written confirmation) to the Company of any income, dividends or capital gain
distributions payable on the Fund's shares. The Company hereby elects to
receive all such income dividends and capital gain distributions as are payable
on the Portfolio shares in additional shares of that Portfolio. The Company
reserves the right to revoke this election and to receive all such income
dividends and capital gain distributions in cash. The Fund shall notify the
Company of the number of shares so issued as payment of such dividends and
distributions.
1.10 The Fund shall make the net asset value per share for each Portfolio
available to the Company on a daily basis as soon as reasonably practical after
the net asset value per share is calculated (normally 6:30 p.m. Boston time) and
shall use its best efforts to make such net asset value per share available by 7
p.m. Boston time.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
------------------------------
2.1 The Company represents and warrants that the Contracts are or will be
registered under the 1933 Act; that the Contracts will be issued and sold in
compliance in all material
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respects with all applicable Federal and State laws and that the sale of the
Contracts shall comply in all material respects with state insurance suitability
requirements. The Company further represents and warrants that it is an
insurance company duly organized and in good standing under applicable law and
that it has legally and validly established each Account prior to any issuance
or sale thereof as a segregated asset account under Section 3.75 of the Texas
Insurance Code and has registered or, prior to any issuance or sale of the
Contracts, will register each Account as a unit investment trust in accordance
with the provisions of the 1940 Act to serve as a segregated investment account
for the Contracts.
2.2 The Fund represents and warrants that Fund shares sold pursuant to this
Agreement shall be registered under the 1933 Act, duly authorized for issuance
and sold in compliance with the laws of the State of Texas and all applicable
federal and state securities laws and that the Fund is and shall remain
registered under the 1940 Act. The Fund shall amend the Registration Statement
for its shares under the 1933 Act and the 1940 Act from time to time as required
in order to effect the continuous offering of its shares. The Fund shall
register and qualify the shares for sale in accordance with the laws of the
various states only if and to the extent deemed advisable by the Fund or the
Underwriter.
2.3 The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended, (the "Code") and that it will make every effort to maintain such
qualification (under Subchapter M or any successor or similar provision) and
that it will notify the Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might not so qualify in
the future.
2.4 The Company represents that the Contracts are currently treated as
endowment, annuity or life insurance contracts, under applicable provisions of
the Code and that it will make every effort to maintain such treatment and that
it will notify the Fund and the Underwriter immediately upon having a reasonable
basis for believing that the Contracts have ceased to be so treated or that they
might not be so treated in the future.
2.5 The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or otherwise,
although it may make such payments in the future. The Fund has adopted a "no
fee" or "defensive" Rule 12b-1 Plan under which it makes no payments for
distribution expenses. To the extent that it decides to finance distribution
expenses pursuant to Rule 12b-1, the Fund undertakes to have a board of
trustees, a majority of whom are not interested persons of the Fund, formulate
and approve any plan under Rule 12b-1 to finance distribution expenses.
5
<PAGE>
2.6 The Fund makes no representation as to whether any aspect of its operations
(including, but not limited to, fees and expenses and investment policies)
complies with the insurance laws or regulations of the various states except
that the Fund represents that the Fund's investment policies, fees and expenses
are and shall at all times remain in compliance with the laws of the State of
Texas and the Fund and the Underwriter represent that their respective
operations are and shall at all times remain in material compliance with the
laws of the State of Texas to the extent required to perform this Agreement.
2.7 The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Fund shares
in accordance with the laws of the State of Texas and all applicable state and
federal securities laws, including without limitation the 1933 Act, the 1934
Act, and the 1940 Act.
2.8 The Fund represents that it is lawfully organized and validly existing
under the laws of the Commonwealth of Massachusetts and that it does and will
comply in all material respects with the 1940 Act.
2.9 The Underwriter represents and warrants that the Adviser is and shall
remain duly registered in all material respects under all applicable federal and
state securities laws and that the Adviser shall perform its obligations for the
Fund in compliance in all material respects with the laws of the State of Texas
and any applicable state and federal securities laws.
2.10 The Fund and Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.11 The Company represents and warrants that all of its directors, officers,
employees, investment advisers, and other individuals/entities dealing with the
money and/or securities of the Fund are and shall continue to be at all times
covered by a blanket fidelity bond or similar coverage for the benefit of the
Fund, in an amount not less than the minimal coverage as required currently by
entities subject to the requirements of Rule 17g-1 of the 1940 Act or related
provisions as may be promulgated from time to time. The aforesaid Bond shall
include coverage for larceny and embezzlement and shall be issued by a reputable
bonding company.
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ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS: VOTING
-----------------------------------------
3.1 The Underwriter shall provide the Company (at the Company's expense) with
as many copies of the Fund's current prospectus as the Company may reasonably
request. If requested by the Company in lieu thereof, the Fund shall provide
such documentation (including a final copy of the new prospectus as set in type
at the Fund's expense) and other assistance as is reasonably necessary in order
for the Company once each year (or more frequently if the prospectus for the
Fund is amended) to have the prospectus for the Contracts and the Fund's
prospectus printed together in one document (such printing to be at the
Company's expense).
3.2 The Fund's prospectus shall state that the statement of Additional
Information for the Fund is available from the Underwriter (or in the Fund's
discretion, the Prospectus shall state that such Statement is available from the
Fund), and the Underwriter (or the Fund), at its expense, shall print and
provide such Statement free of charge to the Company and to any owner of a
Contract or prospective owner who requests such Statement.
3.3 The Fund, at its expense, shall provide the Company with copies of its
proxy material, reports to shareholders, and other communications to
shareholders in such quantity as the Company shall reasonably require for
distributing to Contract owners.
3.4 If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions received
from Contract owners; and
(iii)vote Fund shares for which no instructions have been received in
the same proportion as Fund shares of such portfolio for which
instructions have been received;
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to vote Fund
shares held in any segregated asset account in its own right, to the extent
permitted by law. Participating Insurance Companies shall be responsible for
assuring that each of their separate accounts participating in the Fund
calculates voting privileges in a manner consistent with the standards set forth
on Schedule C attached hereto and incorporated herein by this reference, which
standards will also be provided to the other Participating Insurance Companies.
3.5 The Fund will comply with all provisions of the 1940
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Act requiring voting by shareholders, and in particular the Fund will either
provide for annual meetings or comply with Section 16(c) of the 1940 Act
(although the Fund is not one of the trusts described in Section 16(c) of that
Act) as well as with Sections 16(a) and, if and when applicable, 16(b). Further,
the Fund will act in accordance with the Securities and Exchange Commission's
interpretation of the requirements of Section 16(a) with respect to periodic
elections of trustees and with whatever rules the Commission may promulgate with
respect thereto.
ARTICLE IV. SALES MATERIAL AND INFORMATION
------------------------------
4.1 The Company shall furnish, or shall cause to be furnished, to the Fund or
its designee, each piece of sales literature or other promotional material in
which the Fund or its investment adviser or the Underwriter is named, at least
fifteen Business Days prior to its use. No such material shall be used if the
Fund or its designee object to such use within fifteen business days after
receipt of such material.
4.2 The Company shall not give any information or make any representations or
statements on behalf of the Fund or concerning the Fund in connection with the
sale of the Contracts other than the information or representations contained in
the registration statement or prospectus for the Fund shares, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in reports or proxy statements for the Fund, or in sales literature
or other promotional material approved by the Fund or its designee or by the
Underwriter, except with the permission of the Fund or the Underwriter or the
designee of either.
4.3 The Fund, Underwriter, or its designee shall furnish, or shall cause to be
furnished, to the Company or its designee, each piece of sales literature or
other promotional material in which the Company and/or its separate account(s),
is named at least fifteen Business Days prior to its use. No such material
shall be used if the Company or its designee object to such use within fifteen
Business Days after receipt of such material.
4.4 The Fund and the Underwriter shall not give any information or make any
representations on behalf of the Company or concerning the Company, each
Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
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<PAGE>
4.5 The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, Statements of Additional Information,
reports, proxy statements, sales literature and other promotional materials,
application for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to the Fund or its shares, contemporaneously
with the filing of such document with the Securities and Exchange Commission or
other regulatory authorities.
4.6 The company will provide to the Fund at least one complete copy of all
registration statements, prospectuses, Statements of Additional Information,
reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no action
letters, and all amendments to any of the above, that relate to the Contracts or
each Account, contemporaneously with the filing of such document with the SEC or
other regulatory authorities.
4.7 For purposes of this Article IV, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements (such as
material published, or designed for use in, a newspaper, magazine, or other
periodical, radio, television, telephone or tape recording, videotape display,
signs or billboards, motion pictures, or other public media), sales literature
(i.e., any written communication distributed or made generally available to
customers or the public, including brochures, circulars, research reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, and registration statements, prospectuses,
Statements of Additional Information, shareholder reports, and proxy materials.
ARTICLE V. FEES AND EXPENSES
-----------------
5.1 The Fund and Underwriter shall pay no fee or other compensation to the
Company under this agreement, except that if the Fund or any Portfolio adopts
and implements a plan pursuant to Rule 12b-1 to finance distribution expenses,
then the Underwriter may make payments to the Company or to the underwriter for
the Contracts if and in amounts agreed to by the Underwriter in writing and such
payments will be made out of existing fees otherwise payable to the Underwriter,
past profits of the Underwriter or other resources available to the Underwriter.
No such payments shall be made directly by the Fund. Currently, no such
payments are contemplated.
5.2 All expenses incident to performance by the Fund under this Agreement
shall be paid by the Fund. The Fund shall see to it that all its shares are
registered and authorized for issuance in accordance with applicable federal law
and, if and to
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<PAGE>
the extent deemed advisable by the Fund, in accordance with applicable state
laws prior to their sale. The Fund shall bear the expenses for the cost of
registration and qualification of the Fund's shares, preparation and filing of
the Fund's prospectus and registration statement, proxy materials and reports,
setting the prospectus in type, setting in type and printing the proxy materials
and reports to shareholders (including the costs of printing a prospectus that
constitutes an annual report), the preparation of all statements and notices
required by any federal or state law, all taxes on the issuance or transfer of
the Fund's shares.
5.3 The Company shall bear the expenses of printing and distributing the Fund's
prospectus to owners of Contracts issued by the Company and of distributing the
Fund's proxy materials and reports to such Contract owners.
ARTICLE VI. DIVERSIFICATION
---------------
6.1 The Fund will at all times invest money from the Contracts in such a manner
as to ensure that the Contracts will be treated as variable contracts under the
Code and the regulations issued thereunder. Without limiting the scope of the
foregoing, the Fund will at all times comply with Section 817(h) of the Code and
Treasury Regulation 1.817-5, relating to the diversification requirements for
variable annuity, endowment, or life insurance contracts and any amendments or
other modifications to such Section or Regulations.
ARTICLE VII. POTENTIAL CONFLICTS
-------------------
7.1 The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling, private
letter ruling, no-action or interpretative letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life insurance
contract owners; or (f) a decision by an insurer to disregard the voting
instructions of contract owners. The Board shall promptly inform the Company if
it determines that an irreconcilable material conflict exists and the
implications thereof.
7.2 The Company will report any potential or existing
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<PAGE>
conflicts of which it is aware to the Board. The Company will assist the Board
in carrying out its responsibilities under the Shared Funding Exemptive Order,
by providing the Board with all information reasonably necessary for the Board
to consider any issues raised. This includes, but is not limited to, an
obligation by the Company to inform the Board whenever contract owner voting
instructions are disregarded.
7.3 If it is determined by a majority of the Board, or a majority of its
disinterested trustees, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1),
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2), establishing a new
registered management investment company or managed separate account.
7.4 If a material irreconcilable conflict arises because of a decision by the
Company to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the affected Account's
investment in the Fund and terminate this Agreement with respect to such
Account; provided, however that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested members of the Board. Any such
withdrawal and termination must take place within six (6) months after the Fund
gives written notice that this provision is being implemented, and until the end
of that six month period the Underwriter and Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the Fund.
7.5 If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to the Company conflicts with the
majority of other state regulators, then the Company will withdraw the affected
Account's investment in the Fund and terminate this Agreement with respect to
such Account within six months after the Board informs the Company in writing
that it has determined that such decision has created an
11
<PAGE>
irreconcilable material conflict; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board. Until the end of the foregoing six month period, the Underwriter
and Fund shall continue to accept and implement orders by the Company for the
purchase (and redemption) of shares of the Fund.
7.6 For purposes of Sections 7.3 through 7.6 of this Agreement, a majority of
the disinterested members of the Board shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the Fund be required to establish a new funding medium for the Contracts.
The Company shall not be required by Section 7.3 to establish a new funding
medium for the Contracts if an offer to do so has been declined by vote of a
majority of Contract owners materially adversely affected by the irreconcilable
material conflict. In the event that the Board determines that any proposed
action does not adequately remedy any irreconcilable material conflict, then the
Company will withdraw the Account's investment in the Fund and terminate this
Agreement within six (6) months after the Board informs the Company in writing
of the foregoing determination, provided, however, that such withdrawal and
termination shall be limited to the extent required by any such material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board.
7.7 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule
6e-3 is adopted, to provide exemptive relief from any provision of the Act or
the rules promulgated thereunder with respect to mixed or shared funding (as
defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
then (a) the Fund and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T),
as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable;
and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall
continue in effect only to the extent that terms and conditions substantially
identical to such Sections are contained in such Rule(s) as so amended or
adopted.
ARTICLE VIII. INDEMNIFICATION
---------------
8.1 Indemnification By The Company
------------------------------
8.1(a). The Company agrees to indemnify and hold harmless the Fund and each
trustee of the Board and officers and each person, if any, who controls the Fund
within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of Section 8.1) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the
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<PAGE>
written consent of the Company) or litigation (including legal and other
expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of the Fund's shares or the Contracts
and:
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the Registration
Statement or prospectus for the Contracts or contained in the
Contracts or sales literature for the Contracts (or any amendment or
supplement to any of the foregoing), or arise out of or are based upon
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in reliance
upon and in conformity with information furnished to the Company by or
on behalf of the Fund for use in the Registration Statement or
prospectus for the Contracts or in the Contracts or sales literature
(or any amendment or supplement) or otherwise for use in connection
with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations (other
than statements or representations contained in the Registration
Statement, prospectus or sales literature of the Fund not supplied by
the Company, or persons under its control) or wrongful conduct of the
Company or persons under its control, with respect to the sale or
distribution of the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a Registration Statement, prospectus, or
sales literature of the Fund or any amendment thereof or supplement
thereto or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading if such a statement or omission was
made in reliance upon information furnished to the Fund by or on
behalf of the Company; or
(iv) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this Agreement;
or
(v) arise out of or result from any material breach of any representation
and/or warranty made by the Company
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<PAGE>
in this Agreement or arise out of or result from any other material
breach of this Agreement by the Company, as limited by and in
accordance with the provisions of Sections 8.1(b) and 8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation incurred
or assessed against an Indemnified Party as such may arise from such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations or duties under this Agreement or to the Fund,
whichever is applicable.
8.1(c). The Company shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Company in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of such service on any
designated agent), but failure to notify the Company of any such claim shall not
relieve the Company from any liability which it may have to the Indemnified
Party against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against the
Indemnified Parties, the Company shall be entitled to participate, at its own
expense, in the defense of such action. The Company also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Company to such party of the Company's election
to assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Company will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.1(d). The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund Shares or the Contracts or the operation of the
Fund.
8.2. Indemnification by the Underwriter
----------------------------------
8.2(a). The Underwriter agrees to indemnify and hold harmless the Company and
each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.2) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Underwriter) or litigation
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<PAGE>
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Fund's shares or the
Contracts and:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement
or prospectus or sales literature of the Fund (or any amendment or
supplement to any of the foregoing), or arise out of or are based upon
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in reliance
upon and in conformity with information furnished to the Underwriter
or Fund by or on behalf of the Company for use in the Registration
Statement or prospectus for the Fund or in sales literature (or any
amendment or supplement) or otherwise for use in connection with the
sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations (other
than statements or representations contained in the Registration
Statement, prospectus or sales literature for the Contracts not
supplied by the Underwriter or persons under its control) or wrongful
conduct of the Fund, Adviser or Underwriter or persons under their
control, with respect to the sale or distribution of the Contracts or
Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a Registration Statement, prospectus, or
sales literature covering the Contracts, or any amendment thereof or
supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statement or statements therein not misleading, if such
statement or omission was made in reliance upon information furnished
to the Company by or on behalf of the Fund; or
(iv) arise as a result of any failure by the Fund to provide the services
and furnish the materials under the terms of this Agreement (including
a failure, whether unintentional or in good faith or otherwise, to
comply with the diversification requirements specified in Article VI
of this Agreement); or
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<PAGE>
(v) arise out of or result from any material breach of any representation
and/or warranty made by the Underwriter in this Agreement or arise out
of or result from any other material breach of this Agreement by the
Underwriter; as limited by and in accordance with the provisions of
Section 8.2(b) and 8.2(c) hereof.
8.2(b) The Underwriter shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation to which
an Indemnified Party would otherwise be subject by reason of such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations and duties under this Agreement or to each
Company or the Account whichever is applicable.
8.2(c) The Underwriter shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is
brought against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Underwriter will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.2(d). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of each Account.
8.3 Indemnification By the Fund
---------------------------
8.3(a) The Fund agrees to indemnify and hold harmless the Company, and each of
its directors and officers and each person, if any, who controls the Company
within the meaning of
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Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes
of this Section 8.3) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the Fund) or
litigation (including legal and other expenses) to which the Indemnified Parties
may become subject under any statute, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements result from the gross negligence, bad faith or willful
misconduct of the Board or any member thereof, are related to the operations of
the Fund and:
(i) arise as a result of any failure by the Fund to provide the services
and furnish the materials under the terms of this Agreement (including
a failure to comply with the diversification requirements specified in
Article VI of this Agreement); or
(ii) arise out of or result from any material breach of any representation
and/or warranty made by the Fund in this Agreement or arise out of or
result from any other material breach of this Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b) The Fund shall not be liable under this indemnification provision with
respect to any losses, claims, damages, liabilities or litigation incurred or
assessed against an Indemnified Party as such may arise from such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations and duties under this Agreement or to the
Company, the Fund, the Underwriter or each Account, whichever is applicable.
8.3(c) The Fund shall not be liable under this indemnification provision with
respect to any claim made against an Indemnified Party unless such Indemnified
Party shall have notified the Fund in writing within a reasonable time after the
summons or other first legal process giving information of the nature of the
claim shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify the Fund of any such claim shall not relieve the
Fund from any liability which it may have to the Indemnified Party against whom
such action is brought otherwise than on account of this indemnification
provision. In case any such action is brought against the Indemnified Parties,
the Fund will be entitled to participate, at its own expense, in the defense
thereof. The Fund also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After notice from the
Fund to such party of the Fund's election to assume the defense thereof,
17
<PAGE>
the Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Fund will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.
8.3(d) The Company and the Underwriter agree promptly to notify the Fund of the
commencement of any litigation or proceedings against it or any of its
respective officers or directors in connection with this Agreement, the issuance
or sale of the Contracts, with respect to the operation of either Account, or
the sale or acquisition of shares of the Fund.
ARTICLE IX. APPLICABLE LAW
--------------
9.1 This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the Commonwealth of Massachusetts.
9.2 This Agreement shall be subject to the provisions of the 1933, 1934 and
1940 acts, and the rules and regulations and rulings thereunder, including such
exemptions from those statutes, rules and regulations as the Securities and
Exchange Commission may grant (including, but not limited to, the Shared Funding
Exemptive Order) and the terms hereof shall be interpreted and construed in
accordance therewith.
ARTICLE X. TERMINATION
-----------
10.1 This Agreement shall continue in full force and effect until the first
to occur of:
(a) termination by any party for any reason by sixty (60) days advance written
notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio based upon the Company's
determination that shares of such Portfolio are not reasonably available to
meet the requirements of the Contracts; or
(c) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event any of the
Portfolio's shares are not registered, issued or sold in accordance with
applicable state and/or federal law or such law precludes the use of such
shares as the underlying investment media of the Contracts issued or to be
issued by the Company; or
(d) termination by the Company by written notice to the
18
<PAGE>
Fund and the Underwriter with respect to any Portfolio in the event that
such Portfolio ceases to qualify as a Regulated Investment Company under
Subchapter M of the Code or under any successor or similar provision, or if
the Company reasonably believes that the Fund may fail to so qualify; or
(e) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event that such Portfolio
fails to meet the diversification requirements specified in Article VI
hereof; or
(f) termination by either the Fund or the Underwriter by written notice to the
Company, if either one or both of the Fund or the Underwriter respectively,
shall determine, in their sole judgment exercised in good faith, that the
Company and/or its affiliated companies has suffered a material adverse
change in its business, operations, financial condition or prospects since
the date of this Agreement or is the subject of material adverse publicity;
or
(g) termination by the Company by written notice to the Fund and the
Underwriter, if the Company shall determine, in its sole judgment exercised
in good faith, that either the Fund or the Underwriter has suffered a
material adverse change in its business, operations, financial condition or
prospects since the date of this Agreement or is the subject of material
adverse publicity; or
(h) termination by the Fund or the Underwriter by written notice to the
Company, if the Company gives the Fund and the Underwriter the written
notice specified in Section 1.6(b) hereof and at the time such notice was
given there was no notice of termination outstanding under any other
provision of this Agreement; provided, however any termination under this
Section 10.1(h) shall be effective forty-five (45) days after the notice
specified in Section 1.6(b) was given.
10.2. Effect of Termination. Notwithstanding any termination of this
Agreement, the Fund and the Underwriter shall at the option of the Company,
continue to make available additional shares of the Fund pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.2 shall not apply to any terminations under Article VII and the
effect of such Article VII terminations shall be governed by Article VII of this
Agreement.
19
<PAGE>
10.3 The Company shall not redeem Fund shares attributable to the Contracts (as
opposed to Fund shares attributable to the Company's assets held in the Account)
except (i) as necessary to implement Contract Owner initiated transactions, or
(ii) as required by state and/or federal laws or regulations or judicial or
other legal precedent of general application (hereinafter referred to as a
"Legally Required Redemption"). Upon request, the Company will promptly furnish
to the Fund and the Underwriter the opinion of counsel for the Company (which
counsel shall be reasonably satisfactory to the Fund and the Underwriter) to the
effect that any redemption pursuant to clause (ii) above is a Legally Required
Redemption. Furthermore, except in cases where permitted under the terms of the
Contracts, the Company shall not prevent Contract Owners from allocating
payments to a Portfolio that was otherwise available under the Contracts without
first giving the Fund or the Underwriter 90 days notice of its intention to do
so.
ARTICLE XI. NOTICES
-------
Any notice shall be sufficiently given when sent by registered or certified mail
to the other party at the address of such party set forth below or at such other
address as such party may from time to time specify in writing to the other
party.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company:
One Moody Plaza
Galveston, Texas 77550
Attention: Sr. VP & Chief Actuary
with a copy to:
Jerry L. Adams
Greer, Herz & Adams, L.L.P.
One Moody Plaza, 18th Floor
Galveston, Texas 77550
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. MISCELLANEOUS
-------------
12.1 All persons dealing with the Fund must look solely to the property of the
Fund for the enforcement of any claims against the Fund as neither the Board,
officers, agents or shareholders assume any personal liability for obligations
entered
20
<PAGE>
into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory authority,
each party hereto shall treat as confidential the names and addresses of the
owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
12.3 The captions in this Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions hereof or otherwise
affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together shall constitute one and the same instrument.
12.5 If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the variable life
insurance operations of the Company are being conducted in a manner consistent
with the California Variable Life Insurance Regulations and any other applicable
law or regulations.
12.7 The Fund and Underwriter agree that to the extent any advisory or other
fees received by the Fund, the Underwriter or the Adviser are determined to be
unlawful in legal or administrative proceedings under the 1973 NAIC model
variable life insurance regulation in the states of California, Colorado,
Maryland or Michigan, the Underwriter shall indemnify and reimburse the Company
for any out of pocket expenses and actual damages the Company has incurred as a
result of any such proceeding; provided however that the provisions of Section
8.2(b) of this and 8.2(c) shall apply to such indemnification and reimbursement
obligation. Such indemnification and reimbursement obligation shall be in
addition to any other indemnification and reimbursement obligations
21
<PAGE>
of the Fund and/or the Underwriter under this Agreement.
12.8 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
12.9 This Agreement or any of the rights and obligations hereunder may not be
assigned by any party without the prior written consent of all parties hereto;
provided, however, that the Underwriter may assign this Agreement or any rights
or obligations hereunder to any affiliate of or company under common control
with the Underwriter, if such assignee is duly licensed and registered to
perform the obligations of the Underwriter under this Agreement.
12.10 The Company shall furnish, or shall cause to be furnished, to the Fund or
its designee copies of the following reports:
(a) the Company's annual statement (prepared under statutory accounting
principles) and annual report (prepared under generally accepted
accounting principles ("GAAP"), as soon as practical and in any event
within 105 days after the end of each fiscal year;
(b) the Company's quarterly statements (statutory and GAAP), as soon as
practical and in any event within 45 days after the end of each
quarterly period;
(c) any financial statement, proxy statement, notice or report of the
Company sent to stockholders and/or policyholders, as soon as
practical after the delivery thereof to stockholders;
(d) any registration statement (without exhibits) and financial reports
of the Company filed with the Securities and Exchange Commission or
any state insurance regulator, as soon as practical after the filing
thereof;
(e) any other report submitted to the Company by independent accountants
in connection with any annual, interim or special audit made by them
of the books of the Company, as soon as practical after the receipt
thereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed in its name and on its behalf by its duly authorized representative and
its seal to be hereunder affixed hereto as of the date specified below.
COMPANY:
AMERICAN NATIONAL INSURANCE
22
<PAGE>
COMPANY
By its authorized officer,
By____________________________
Title:Vice President and
----------------------
Chief Actuary
----------------------
Date: ________________________
FUND:
VARIABLE INSURANCE PRODUCTS
FUND
By its authorized officer,
By:___________________________
Title:Senior Vice President
---------------------
Date:_________________________
UNDERWRITER:
FIDELITY DISTRIBUTORS
CORPORATION
By its authorized officer,
By:___________________________
Title: President
---------------------
Date:_________________________
23
<PAGE>
Schedule A
----------
Accounts
--------
Name of Account Date of Resolution of Company's
Board which Established the
Account
Variable Universal Life July 30, 1987
Insurance
Variable Annuity Contracts December 20, 1991
24
<PAGE>
Schedule B
----------
Contracts
---------
1. Contract Forms:
FL89
VA93-NQ
VA93-PQ
GUA93
SPIVA93
25
<PAGE>
SCHEDULE C
----------
PROXY VOTING PROCEDURE
----------------------
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the Fund by the Underwriter, the Fund and the
Company. The defined terms herein shall have the meanings assigned in the
Participation Agreement except that the term "Company" shall also include the
department or third party assigned by the Insurance Company to perform the steps
delineated below.
1. The number of proxy proposals is given to the Company by the Underwriter as
early as possible before the date set by the Fund for the shareholder
meeting to facilitate the establishment of tabulation procedures. At this
time the Underwriter will inform the Company of the Record, Mailing and
Meeting dates. This will be done verbally approximately two months before
meeting.
2. Promptly after the Record Date, the Company will perform a "tape run", or
other activity, which will generate the names, addresses and number of
units which are attributed to each contractowner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2. The Company will use its best efforts to call in the
number of Customers to Fidelity, as soon as possible, but no later than two
weeks after the Record Date.
3. The Fund's Annual Report must be sent to each Customer by the Company
either before or together with the Customers' receipt of a proxy statement.
Underwriter will provide at least one copy of the last Annual Report to the
Company.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card") is
provided to the Company by the Fund. The Company, at its expense, shall
produce and personalize the Voting Instruction Cards. The Legal Department
of the Underwriter or its affiliate ("Fidelity Legal") must approve the
Card before it is printed. Allow approximately 2-4 business days for
printing information on the Cards. Information commonly found on the Cards
includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
26
<PAGE>
e. individual Card number for use in tracking and verification of
votes (already on Cards as printed by the Fund)
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
5. During this time, Fidelity Legal will develop, produce, and the Fund will
pay for the Notice of Proxy and the Proxy Statement (one document).
Printed and folded notices and statements will be sent to Company for
insertion into envelopes (envelopes and return envelopes are provided and
paid for by the Insurance Company). Contents of envelope sent to Customers
by Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent
d. "urge buckslip" - optional, but recommended. (this is a small,
single sheet of paper that requests Customers to vote as quickly
as possible and that their vote is important. One copy will be
supplied by the Fund.)
e. cover letter - optional, supplied by Company and reviewed and
approved in advance by Fidelity Legal.
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews
and approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to Fidelity Legal.
7. Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation time to the Company
as the shareholder. (A 5-week period is recommended.) Solicitation
time is calculated as calendar days from (but not including) the
meeting, counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An
often used procedure is to sort Cards on arrival by proposal into vote
categories of all yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for
postmark information would be due to an insurance company's
internal procedure and has not been required by Fidelity in the
past.
9. Signatures on Card checked against legal name on account registration which
was printed on the Card.
27
<PAGE>
Note: For Example, If the account registration is under "Bertram C. Jones,
Trustee", then that is the exact legal name to be printed on the Card and
is the signature needed on the Card.
10. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to Customer with an explanatory letter, a new
Card and return envelope. The mutilated or illegible Card is disregarded
and considered to be not received for purposes of vote tabulation. Any
Cards that have "kicked out" (e.g. mutilated, illegible) of the procedure
are "hand verified," i.e., examined as to why they did not complete the
system. Any questions on those Cards are usually remedied individually.
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then converted to
shares. (It is very important that the Fund receives the tabulations
stated in terms of a percentage and the number of shares.) Fidelity Legal
must review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to Fidelity
Legal on the morning of the meeting not later than 10:00 a.m. Boston time.
Fidelity Legal may request an earlier deadline if required to calculate the
vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
Fidelity Legal will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from the
Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, Fidelity Legal
will be permitted reasonable access to such Cards.
16. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
28
<PAGE>
Exhibit 99.B8c
PARTICIPATION AGREEMENT
Among
VARIABLE INSURANCE PRODUCTS FUND II,
FIDELITY DISTRIBUTORS CORPORATION
and
AMERICAN NATIONAL INSURANCE COMPANY
THIS AGREEMENT, made and entered into this 16th day of August, 1993 by and among
AMERICAN NATIONAL INSURANCE COMPANY, (hereinafter the "Company"), a Texas
corporation, on its own behalf and on behalf of each segregated asset account of
the Company set forth on Schedule A hereto as may be amended from time to time
(each such account hereinafter referred to as the "Account"), and the VARIABLE
INSURANCE PRODUCTS FUND II, an unincorporated business trust organized under the
laws of the Commonwealth of Massachusetts (hereinafter the "Fund") and FIDELITY
DISTRIBUTORS CORPORATION (hereinafter the "Underwriter"), a Massachusetts
corporation.
WHEREAS, the Fund engages in business as an open-end management investment
company and is available to act as the investment vehicle for separate accounts
established for variable life insurance policies and variable annuity contracts
(collectively, the "Variable Insurance Products") to be offered by insurance
companies which have entered into participation agreements with the Fund and the
Underwriter (hereinafter "Participating Insurance Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several series of
shares, each designated a "Portfolio" and representing the interest in a
particular managed portfolio of securities and other assets; and
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission, dated September 17, 1986 (File No. 812-6422), granting Participating
Insurance Companies and variable annuity and variable life insurance separate
accounts exemptions from the provisions of sections 9(a), 13(a), 15(a), and
15(b) of the Investment Company Act of 1940, as amended, (hereinafter the "1940
Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent
necessary to permit shares of the Fund to be sold to and held by variable
annuity and variable life insurance separate accounts of both affiliated and
unaffiliated life insurance companies (hereinafter the "Shared Funding Exemptive
Order"); and
WHEREAS, the Fund is registered as an open-end management investment company
under the 1940 Act and its shares are registered
<PAGE>
under the Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser") is duly
registered as an investment adviser under the federal Investment Advisers Act of
1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain variable life and
variable annuity contracts under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated asset
account, established by resolution of the Board of Directors of the Company, on
the date shown for such Account on Schedule A hereto, to set aside and invest
assets attributable to one or more variable life and annuity contracts; and
WHEREAS, the Company has registered or will register each Account as a unit
investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the Securities
and Exchange Commission ("SEC") under the Securities Exchange Act of 1934, as
amended, (hereinafter the "1934 Act"), and is a member in good standing of the
National Association of Securities Dealers, Inc. (hereinafter "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
the Company intends to purchase shares in the Portfolios on behalf of each
Account to fund certain of the aforesaid variable life and variable annuity
contracts and the Underwriter is authorized to sell such shares to unit
investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the Fund
and the Underwriter agree as follows:
ARTICLE I. SALE OF FUND SHARES
-------------------
1.1 The Underwriter agrees to sell to the Company those shares of the Fund
which each Account orders, executing such orders on a daily basis at the net
asset value next computed after receipt by the Fund or its designee of the order
for the shares of the Fund. For purposes of this Section 1.1., the Company
shall be the designee of the Fund for receipt of such orders from each Account
and receipt by such designee shall constitute receipt by the Fund; provided
that the Fund receives notice of such order by 10:00 a.m. Boston time on the
next following Business Day. "Business Day" shall mean any day on which the New
York Stock Exchange is open for trading and on which the Fund calculates its
2
<PAGE>
net asset value pursuant to the rules of the Securities and Exchange Commission.
1.2 The Fund agrees to make its shares available indefinitely for purchase at
the applicable net asset value per share by the Company and its Accounts on
those days on which the Fund calculates its net asset value pursuant to rules of
the Securities and Exchange Commission and the Fund shall use reasonable efforts
to calculate such net asset value on each day which the New York Stock Exchange
is open for trading. Notwithstanding the foregoing, the Board of Trustees of
the Fund (hereinafter the "Board") may refuse to sell shares of any Portfolio to
any person, or suspend or terminate the offering of shares of any Portfolio if
such action is required by law or by regulatory authorities having jurisdiction
or is, in the sole discretion of the Board acting in good faith and in light of
their fiduciary duties under federal and any applicable state laws, necessary in
the best interests of the shareholders of such Portfolio.
1.3 The Fund and the Underwriter agree that shares of the Fund will be sold
only to Participating Insurance Companies and their separate accounts. No
shares of any Portfolio will be sold to the general public.
1.4 The Fund and the Underwriter will not sell Fund shares to any insurance
company or separate account unless an agreement containing provisions
substantially the same as Articles I, III, V, VII and Section 2.5 of Article II
of this Agreement is in effect to govern such sales.
1.5 The Fund agrees to redeem for cash, on the Company's request, any full or
fractional shares of the Fund held by the Company, executing such requests on a
daily basis at the net asset value next computed after receipt by the Fund or
its designee of the request for redemption. For purposes of this Section 1.5,
the Company shall be the designee of the Fund for receipt of requests for
redemption from each Account and receipt by such designee shall constitute
receipt by the Fund; provided that the Fund receives notice of such request for
redemption on the next following Business Day.
1.6 The Company agrees to purchase and redeem the shares of each Portfolio
offered by the then current prospectus of the Fund and in accordance with the
provisions of such prospectus. The Company agrees that all net amounts
available under the variable life and variable annuity contracts with the form
number(s) which are listed on Schedule B attached hereto and incorporated herein
by this reference, as such Schedule B may be amended from time to time hereafter
by mutual written agreement of all the parties hereto, (the "Contracts") shall
be invested in the Fund, in such other Funds advised by the Adviser as may be
mutually agreed to in
3
<PAGE>
writing by the parties hereto, or in the Company's general account, provided
that such amounts may also be invested in an investment company other than the
Fund if (a) such other investment company, or series thereof, has investment
objectives or policies that are substantially different from the investment
objectives and policies of all the Portfolios of the Fund; or (b) the Company
gives the Fund and the Underwriter 45 days written notice of its intention to
make such other investment company available as a funding vehicle for the
Contracts; or (c) such other investment company was available as a funding
vehicle for the Contracts prior to the date of this Agreement and the Company so
informs the Fund and Underwriter prior to their signing this Agreement; or (d)
the Fund or Underwriter consents to the use of such other investment company.
1.7 The company shall pay for Fund shares on the next business Day after an
order to purchase Fund shares is made in accordance with the provisions of
Section 1.1 hereof. Payment shall be in federal funds transmitted by wire. For
purpose of Section 2.10 and 2.11, upon receipt by the Fund of the federal funds
so wired, such funds shall cease to be the responsibility of the Company and
shall become the responsibility of the Fund.
1.8 Issuance and transfer of the Fund's shares will be by book entry only.
Stock certificates will not be issued to the Company or any account. Shares
ordered from the Fund will be recorded in an appropriate title for each Account
or the appropriate subaccount of each Account.
1.9 The Fund shall furnish same day notice (by wire or telephone, followed by
written confirmation) to the Company of any income, dividends or capital gain
distributions payable on the Fund's shares. The Company hereby elects to
receive all such income dividends and capital gain distributions as are payable
on the Portfolio shares in additional shares of that Portfolio. The Company
reserves the right to revoke this election and to receive all such income
dividends and capital gain distributions in cash. The Fund shall notify the
Company of the number of shares so issued as payment of such dividends and
distributions.
1.10 The Fund shall make the net asset value per share for each Portfolio
available to the Company on a daily basis as soon as reasonably practical after
the net asset value per share is calculated (normally 6:30 p.m. Boston time) and
shall use its best efforts to make such net asset value per share available by 7
p.m. Boston time.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
------------------------------
2.1 The Company represents and warrants that the Contracts are or will be
registered under the 1933 Act; that the Contracts will be issued and sold in
compliance in all material respects with all applicable Federal and State laws
and that the sale of the Contracts shall comply in all material
4
<PAGE>
respects with state insurance suitability requirements. The Company further
represents and warrants that it is an insurance company duly organized and in
good standing under applicable law and that it has legally and validly
established each Account prior to any issuance or sale thereof as a segregated
asset account under Section 3.75 of the Texas Insurance Code and has registered
or, prior to any issuance or sale of the Contracts, will register each Account
as a unit investment trust in accordance with the provisions of the 1940 Act to
serve as a segregated investment account for the Contracts.
2.2 The Fund represents and warrants that Fund shares sold pursuant to this
Agreement shall be registered under the 1933 Act, duly authorized for issuance
and sold in compliance with the laws of the State of Texas and all applicable
federal and state securities laws and that the Fund is and shall remain
registered under the 1940 Act. The Fund shall amend the Registration Statement
for its shares under the 1933 Act and the 1940 Act from time to time as required
in order to effect the continuous offering of its shares. The Fund shall
register and qualify the shares for sale in accordance with the laws of the
various states only if and to the extent deemed advisable by the Fund or the
Underwriter.
2.3 The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended, (the "Code") and that it will make every effort to maintain such
qualification (under Subchapter M or any successor or similar provision) and
that it will notify the Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might not so qualify in
the future.
2.4 The Company represents that the Contracts are currently treated as
endowment, annuity or life insurance contracts, under applicable provisions of
the Code and that it will make every effort to maintain such treatment and that
it will notify the Fund and the Underwriter immediately upon having a reasonable
basis for believing that the Contracts have ceased to be so treated or that they
might not be so treated in the future.
2.5 The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or otherwise,
although it may make such payments in the future. The Fund has adopted a "no
fee" or "defensive" Rule 12b-1 Plan under which it makes no payments for
distribution expenses. To the extent that it decides to finance distribution
expenses pursuant to Rule 12b-1, the Fund undertakes to have a board of
trustees, a majority of whom are not interested persons of the Fund, formulate
and approve any plan under Rule 12b-1 to finance distribution expenses.
5
<PAGE>
2.6 The Fund makes no representation as to whether any aspect of its operations
(including, but not limited to, fees and expenses and investment policies)
complies with the insurance laws or regulations of the various states except
that the Fund represents that the Fund's investment policies, fees and expenses
are and shall at all times remain in compliance with the laws of the State of
Texas and the Fund and the Underwriter represent that their respective
operations are and shall at all times remain in material compliance with the
laws of the State of Texas to the extent required to perform this Agreement.
2.7 The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Fund shares
in accordance with the laws of the State of Texas and all applicable state and
federal securities laws, including without limitation the 1933 Act, the 1934
Act, and the 1940 Act.
2.8 The Fund represents that it is lawfully organized and validly existing
under the laws of the Commonwealth of Massachusetts and that it does and will
comply in all material respects with the 1940 Act.
2.9 The Underwriter represents and warrants that the Adviser is and shall
remain duly registered in all material respects under all applicable federal and
state securities laws and that the Adviser shall perform its obligations for the
Fund in compliance in all material respects with the laws of the State of Texas
and any applicable state and federal securities laws.
2.10 The Fund and Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.11 The Company represents and warrants that all of its directors, officers,
employees, investment advisers, and other individuals/entities dealing with the
money and/or securities of the Fund are and shall continue to be at all times
covered by a blanket fidelity bond or similar coverage for the benefit of the
Fund, in an amount not less than the minimal coverage as required currently by
entities subject to the requirements of Rule 17g-1 of the 1940 Act or related
provisions as may be promulgated from time to time. The aforesaid Bond shall
include coverage for larceny and embezzlement and shall be issued by a reputable
bonding company.
6
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ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS: VOTING
-----------------------------------------
3.1 The Underwriter shall provide the Company (at the Company's expense) with
as many copies of the Fund's current prospectus as the Company may reasonably
request. If requested by the Company in lieu thereof, the Fund shall provide
such documentation (including a final copy of the new prospectus as set in type
at the Fund's expense) and other assistance as is reasonably necessary in order
for the Company once each year (or more frequently if the prospectus for the
Fund is amended) to have the prospectus for the Contracts and the Fund's
prospectus printed together in one document (such printing to be at the
Company's expense).
3.2 The Fund's prospectus shall state that the statement of Additional
Information for the Fund is available from the Underwriter (or in the Fund's
discretion, the Prospectus shall state that such Statement is available from the
Fund), and the Underwriter (or the Fund), at its expense, shall print and
provide such Statement free of charge to the Company and to any owner of a
Contract or prospective owner who requests such Statement.
3.3 The Fund, at its expense, shall provide the Company with copies of its
proxy material, reports to shareholders, and other communications to
shareholders in such quantity as the Company shall reasonably require for
distributing to Contract owners.
3.4 If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions received
from Contract owners; and
(iii)vote Fund shares for which no instructions have been received in
the same proportion as Fund shares of such portfolio for which
instructions have been received;
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to vote Fund
shares held in any segregated asset account in its own right, to the extent
permitted by law. Participating Insurance Companies shall be responsible for
assuring that each of their separate accounts participating in the Fund
calculates voting privileges in a manner consistent with the standards set forth
on Schedule C attached hereto and incorporated herein by this reference, which
standards will also be provided to the other Participating Insurance Companies.
3.5 The Fund will comply with all provisions of the 1940
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Act requiring voting by shareholders, and in particular the Fund will either
provide for annual meetings or comply with Section 16(c) of the 1940 Act
(although the Fund is not one of the trusts described in Section 16(c) of that
Act) as well as with Sections 16(a) and, if and when applicable, 16(b). Further,
the Fund will act in accordance with the Securities and Exchange Commission's
interpretation of the requirements of Section 16(a) with respect to periodic
elections of trustees and with whatever rules the Commission may promulgate with
respect thereto.
ARTICLE IV. SALES MATERIAL AND INFORMATION
------------------------------
4.1 The Company shall furnish, or shall cause to be furnished, to the Fund or
its designee, each piece of sales literature or other promotional material in
which the Fund or its investment adviser or the Underwriter is named, at least
fifteen Business Days prior to its use. No such material shall be used if the
Fund or its designee object to such use within fifteen business days after
receipt of such material.
4.2 The Company shall not give any information or make any representations or
statements on behalf of the Fund or concerning the Fund in connection with the
sale of the Contracts other than the information or representations contained in
the registration statement or prospectus for the Fund shares, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in reports or proxy statements for the Fund, or in sales literature
or other promotional material approved by the Fund or its designee or by the
Underwriter, except with the permission of the Fund or the Underwriter or the
designee of either.
4.3 The Fund, Underwriter, or its designee shall furnish, or shall cause to be
furnished, to the Company or its designee, each piece of sales literature or
other promotional material in which the Company and/or its separate account(s),
is named at least fifteen Business Days prior to its use. No such material
shall be used if the Company or its designee object to such use within fifteen
Business Days after receipt of such material.
4.4 The Fund and the Underwriter shall not give any information or make any
representations on behalf of the Company or concerning the Company, each
Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
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4.5 The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, Statements of Additional Information,
reports, proxy statements, sales literature and other promotional materials,
application for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to the Fund or its shares, contemporaneously
with the filing of such document with the Securities and Exchange Commission or
other regulatory authorities.
4.6 The company will provide to the Fund at least one complete copy of all
registration statements, prospectuses, Statements of Additional Information,
reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no action
letters, and all amendments to any of the above, that relate to the Contracts or
each Account, contemporaneously with the filing of such document with the SEC or
other regulatory authorities.
4.7 For purposes of this Article IV, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements (such as
material published, or designed for use in, a newspaper, magazine, or other
periodical, radio, television, telephone or tape recording, videotape display,
signs or billboards, motion pictures, or other public media), sales literature
(i.e., any written communication distributed or made generally available to
customers or the public, including brochures, circulars, research reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, and registration statements, prospectuses,
Statements of Additional Information, shareholder reports, and proxy materials.
ARTICLE V. FEES AND EXPENSES
-----------------
5.1 The Fund and Underwriter shall pay no fee or other compensation to the
Company under this agreement, except that if the Fund or any Portfolio adopts
and implements a plan pursuant to Rule 12b-1 to finance distribution expenses,
then the Underwriter may make payments to the Company or to the underwriter for
the Contracts if and in amounts agreed to by the Underwriter in writing and such
payments will be made out of existing fees otherwise payable to the Underwriter,
past profits of the Underwriter or other resources available to the Underwriter.
No such payments shall be made directly by the Fund. Currently, no such
payments are contemplated.
5.2 All expenses incident to performance by the Fund under this Agreement
shall be paid by the Fund. The Fund shall see to it that all its shares are
registered and authorized for issuance in accordance with applicable federal law
and, if and to
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the extent deemed advisable by the Fund, in accordance with applicable state
laws prior to their sale. The Fund shall bear the expenses for the cost of
registration and qualification of the Fund's shares, preparation and filing of
the Fund's prospectus and registration statement, proxy materials and reports,
setting the prospectus in type, setting in type and printing the proxy materials
and reports to shareholders (including the costs of printing a prospectus that
constitutes an annual report), the preparation of all statements and notices
required by any federal or state law, all taxes on the issuance or transfer of
the Fund's shares.
5.3 The Company shall bear the expenses of printing and distributing the Fund's
prospectus to owners of Contracts issued by the Company and of distributing the
Fund's proxy materials and reports to such Contract owners.
ARTICLE VI. DIVERSIFICATION
---------------
6.1 The Fund will at all times invest money from the Contracts in such a manner
as to ensure that the Contracts will be treated as variable contracts under the
Code and the regulations issued thereunder. Without limiting the scope of the
foregoing, the Fund will at all times comply with Section 817(h) of the Code and
Treasury Regulation 1.817-5, relating to the diversification requirements for
variable annuity, endowment, or life insurance contracts and any amendments or
other modifications to such Section or Regulations.
ARTICLE VII. POTENTIAL CONFLICTS
-------------------
7.1 The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling, private
letter ruling, no-action or interpretative letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life insurance
contract owners; or (f) a decision by an insurer to disregard the voting
instructions of contract owners. The Board shall promptly inform the Company if
it determines that an irreconcilable material conflict exists and the
implications thereof.
7.2 The Company will report any potential or existing
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<PAGE>
conflicts of which it is aware to the Board. The Company will assist the Board
in carrying out its responsibilities under the Shared Funding Exemptive Order,
by providing the Board with all information reasonably necessary for the Board
to consider any issues raised. This includes, but is not limited to, an
obligation by the Company to inform the Board whenever contract owner voting
instructions are disregarded.
7.3 If it is determined by a majority of the Board, or a majority of its
disinterested trustees, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1),
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2), establishing a new
registered management investment company or managed separate account.
7.4 If a material irreconcilable conflict arises because of a decision by the
Company to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the affected Account's
investment in the Fund and terminate this Agreement with respect to such
Account; provided, however that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested members of the Board. Any such
withdrawal and termination must take place within six (6) months after the Fund
gives written notice that this provision is being implemented, and until the end
of that six month period the Underwriter and Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the Fund.
7.5 If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to the Company conflicts with the
majority of other state regulators, then the Company will withdraw the affected
Account's investment in the Fund and terminate this Agreement with respect to
such Account within six months after the Board informs the Company in writing
that it has determined that such decision has created an
11
<PAGE>
irreconcilable material conflict; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board. Until the end of the foregoing six month period, the Underwriter
and Fund shall continue to accept and implement orders by the Company for the
purchase (and redemption) of shares of the Fund.
7.6 For purposes of Sections 7.3 through 7.6 of this Agreement, a majority of
the disinterested members of the Board shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the Fund be required to establish a new funding medium for the Contracts.
The Company shall not be required by Section 7.3 to establish a new funding
medium for the Contracts if an offer to do so has been declined by vote of a
majority of Contract owners materially adversely affected by the irreconcilable
material conflict. In the event that the Board determines that any proposed
action does not adequately remedy any irreconcilable material conflict, then the
Company will withdraw the Account's investment in the Fund and terminate this
Agreement within six (6) months after the Board informs the Company in writing
of the foregoing determination, provided, however, that such withdrawal and
termination shall be limited to the extent required by any such material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board.
7.7 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule
6e-3 is adopted, to provide exemptive relief from any provision of the Act or
the rules promulgated thereunder with respect to mixed or shared funding (as
defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
then (a) the Fund and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T),
as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable;
and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall
continue in effect only to the extent that terms and conditions substantially
identical to such Sections are contained in such Rule(s) as so amended or
adopted.
ARTICLE VIII. INDEMNIFICATION
---------------
8.1 Indemnification By The Company
------------------------------
8.1(a). The Company agrees to indemnify and hold harmless the Fund and each
trustee of the Board and officers and each person, if any, who controls the Fund
within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of Section 8.1) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the
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<PAGE>
written consent of the Company) or litigation (including legal and other
expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of the Fund's shares or the Contracts
and:
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the Registration
Statement or prospectus for the Contracts or contained in the
Contracts or sales literature for the Contracts (or any amendment or
supplement to any of the foregoing), or arise out of or are based upon
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in reliance
upon and in conformity with information furnished to the Company by or
on behalf of the Fund for use in the Registration Statement or
prospectus for the Contracts or in the Contracts or sales literature
(or any amendment or supplement) or otherwise for use in connection
with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations (other
than statements or representations contained in the Registration
Statement, prospectus or sales literature of the Fund not supplied by
the Company, or persons under its control) or wrongful conduct of the
Company or persons under its control, with respect to the sale or
distribution of the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a Registration Statement, prospectus, or
sales literature of the Fund or any amendment thereof or supplement
thereto or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading if such a statement or omission was
made in reliance upon information furnished to the Fund by or on
behalf of the Company; or
(iv) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this Agreement;
or
(v) arise out of or result from any material breach of any representation
and/or warranty made by the Company
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<PAGE>
in this Agreement or arise out of or result from any other material
breach of this Agreement by the Company, as limited by and in
accordance with the provisions of Sections 8.1(b) and 8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation incurred
or assessed against an Indemnified Party as such may arise from such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations or duties under this Agreement or to the Fund,
whichever is applicable.
8.1(c). The Company shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Company in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of such service on any
designated agent), but failure to notify the Company of any such claim shall not
relieve the Company from any liability which it may have to the Indemnified
Party against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against the
Indemnified Parties, the Company shall be entitled to participate, at its own
expense, in the defense of such action. The Company also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Company to such party of the Company's election
to assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Company will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.1(d). The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund Shares or the Contracts or the operation of the
Fund.
8.2. Indemnification by the Underwriter
----------------------------------
8.2(a). The Underwriter agrees to indemnify and hold harmless the Company and
each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.2) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Underwriter) or litigation
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<PAGE>
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Fund's shares or the
Contracts and:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement
or prospectus or sales literature of the Fund (or any amendment or
supplement to any of the foregoing), or arise out of or are based upon
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in reliance
upon and in conformity with information furnished to the Underwriter
or Fund by or on behalf of the Company for use in the Registration
Statement or prospectus for the Fund or in sales literature (or any
amendment or supplement) or otherwise for use in connection with the
sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations (other
than statements or representations contained in the Registration
Statement, prospectus or sales literature for the Contracts not
supplied by the Underwriter or persons under its control) or wrongful
conduct of the Fund, Adviser or Underwriter or persons under their
control, with respect to the sale or distribution of the Contracts or
Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a Registration Statement, prospectus, or
sales literature covering the Contracts, or any amendment thereof or
supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statement or statements therein not misleading, if such
statement or omission was made in reliance upon information furnished
to the Company by or on behalf of the Fund; or
(iv) arise as a result of any failure by the Fund to provide the services
and furnish the materials under the terms of this Agreement (including
a failure, whether unintentional or in good faith or otherwise, to
comply with the diversification requirements specified in Article VI
of this Agreement); or
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<PAGE>
(v) arise out of or result from any material breach of any representation
and/or warranty made by the Underwriter in this Agreement or arise out
of or result from any other material breach of this Agreement by the
Underwriter; as limited by and in accordance with the provisions of
Section 8.2(b) and 8.2(c) hereof.
8.2(b) The Underwriter shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation to which
an Indemnified Party would otherwise be subject by reason of such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations and duties under this Agreement or to each
Company or the Account whichever is applicable.
8.2(c) The Underwriter shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is
brought against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Underwriter will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.2(d). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of each Account.
8.3 Indemnification By the Fund
---------------------------
8.3(a) The Fund agrees to indemnify and hold harmless the Company, and each of
its directors and officers and each person, if any, who controls the Company
within the meaning of
16
<PAGE>
Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes
of this Section 8.3) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the Fund) or
litigation (including legal and other expenses) to which the Indemnified Parties
may become subject under any statute, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements result from the gross negligence, bad faith or willful
misconduct of the Board or any member thereof, are related to the operations of
the Fund and:
(i) arise as a result of any failure by the Fund to provide the services
and furnish the materials under the terms of this Agreement (including
a failure to comply with the diversification requirements specified in
Article VI of this Agreement); or
(ii) arise out of or result from any material breach of any representation
and/or warranty made by the Fund in this Agreement or arise out of or
result from any other material breach of this Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b) The Fund shall not be liable under this indemnification provision with
respect to any losses, claims, damages, liabilities or litigation incurred or
assessed against an Indemnified Party as such may arise from such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations and duties under this Agreement or to the
Company, the Fund, the Underwriter or each Account, whichever is applicable.
8.3(c) The Fund shall not be liable under this indemnification provision with
respect to any claim made against an Indemnified Party unless such Indemnified
Party shall have notified the Fund in writing within a reasonable time after the
summons or other first legal process giving information of the nature of the
claim shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify the Fund of any such claim shall not relieve the
Fund from any liability which it may have to the Indemnified Party against whom
such action is brought otherwise than on account of this indemnification
provision. In case any such action is brought against the Indemnified Parties,
the Fund will be entitled to participate, at its own expense, in the defense
thereof. The Fund also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After notice from the
Fund to such party of the Fund's election to assume the defense thereof,
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<PAGE>
the Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Fund will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.
8.3(d) The Company and the Underwriter agree promptly to notify the Fund of the
commencement of any litigation or proceedings against it or any of its
respective officers or directors in connection with this Agreement, the issuance
or sale of the Contracts, with respect to the operation of either Account, or
the sale or acquisition of shares of the Fund.
ARTICLE IX. APPLICABLE LAW
--------------
9.1 This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the Commonwealth of Massachusetts.
9.2 This Agreement shall be subject to the provisions of the 1933, 1934 and
1940 acts, and the rules and regulations and rulings thereunder, including such
exemptions from those statutes, rules and regulations as the Securities and
Exchange Commission may grant (including, but not limited to, the Shared Funding
Exemptive Order) and the terms hereof shall be interpreted and construed in
accordance therewith.
ARTICLE X. TERMINATION
-----------
10.1 This Agreement shall continue in full force and effect until the first
to occur of:
(a) termination by any party for any reason by sixty (60) days advance written
notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio based upon the Company's
determination that shares of such Portfolio are not reasonably available to
meet the requirements of the Contracts; or
(c) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event any of the
Portfolio's shares are not registered, issued or sold in accordance with
applicable state and/or federal law or such law precludes the use of such
shares as the underlying investment media of the Contracts issued or to be
issued by the Company; or
(d) termination by the Company by written notice to the
18
<PAGE>
Fund and the Underwriter with respect to any Portfolio in the event that
such Portfolio ceases to qualify as a Regulated Investment Company under
Subchapter M of the Code or under any successor or similar provision, or if
the Company reasonably believes that the Fund may fail to so qualify; or
(e) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event that such Portfolio
fails to meet the diversification requirements specified in Article VI
hereof; or
(f) termination by either the Fund or the Underwriter by written notice to the
Company, if either one or both of the Fund or the Underwriter respectively,
shall determine, in their sole judgment exercised in good faith, that the
Company and/or its affiliated companies has suffered a material adverse
change in its business, operations, financial condition or prospects since
the date of this Agreement or is the subject of material adverse publicity;
or
(g) termination by the Company by written notice to the Fund and the
Underwriter, if the Company shall determine, in its sole judgment exercised
in good faith, that either the Fund or the Underwriter has suffered a
material adverse change in its business, operations, financial condition or
prospects since the date of this Agreement or is the subject of material
adverse publicity; or
(h) termination by the Fund or the Underwriter by written notice to the
Company, if the Company gives the Fund and the Underwriter the written
notice specified in Section 1.6(b) hereof and at the time such notice was
given there was no notice of termination outstanding under any other
provision of this Agreement; provided, however any termination under this
Section 10.1(h) shall be effective forty-five (45) days after the notice
specified in Section 1.6(b) was given.
10.2. Effect of Termination. Notwithstanding any termination of this
Agreement, the Fund and the Underwriter shall at the option of the Company,
continue to make available additional shares of the Fund pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.2 shall not apply to any terminations under Article VII and the
effect of such Article VII terminations shall be governed by Article VII of this
Agreement.
19
<PAGE>
10.3 The Company shall not redeem Fund shares attributable to the Contracts (as
opposed to Fund shares attributable to the Company's assets held in the Account)
except (i) as necessary to implement Contract Owner initiated transactions, or
(ii) as required by state and/or federal laws or regulations or judicial or
other legal precedent of general application (hereinafter referred to as a
"Legally Required Redemption"). Upon request, the Company will promptly furnish
to the Fund and the Underwriter the opinion of counsel for the Company (which
counsel shall be reasonably satisfactory to the Fund and the Underwriter) to the
effect that any redemption pursuant to clause (ii) above is a Legally Required
Redemption. Furthermore, except in cases where permitted under the terms of the
Contracts, the Company shall not prevent Contract Owners from allocating
payments to a Portfolio that was otherwise available under the Contracts without
first giving the Fund or the Underwriter 90 days notice of its intention to do
so.
ARTICLE XI. NOTICES
-------
Any notice shall be sufficiently given when sent by registered or certified mail
to the other party at the address of such party set forth below or at such other
address as such party may from time to time specify in writing to the other
party.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company:
One Moody Plaza
Galveston, Texas 77550
Attention: Sr. VP & Chief Actuary
with a copy to:
Jerry L. Adams
Greer, Herz & Adams, L.L.P.
One Moody Plaza, 18th Floor
Galveston, Texas 77550
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. MISCELLANEOUS
-------------
12.1 All persons dealing with the Fund must look solely to the property of the
Fund for the enforcement of any claims against the Fund as neither the Board,
officers, agents or shareholders assume any personal liability for obligations
entered
20
<PAGE>
into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory authority,
each party hereto shall treat as confidential the names and addresses of the
owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
12.3 The captions in this Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions hereof or otherwise
affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together shall constitute one and the same instrument.
12.5 If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the variable life
insurance operations of the Company are being conducted in a manner consistent
with the California Variable Life Insurance Regulations and any other applicable
law or regulations.
12.7 The Fund and Underwriter agree that to the extent any advisory or other
fees received by the Fund, the Underwriter or the Adviser are determined to be
unlawful in legal or administrative proceedings under the 1973 NAIC model
variable life insurance regulation in the states of California, Colorado,
Maryland or Michigan, the Underwriter shall indemnify and reimburse the Company
for any out of pocket expenses and actual damages the Company has incurred as a
result of any such proceeding; provided however that the provisions of Section
8.2(b) of this and 8.2(c) shall apply to such indemnification and reimbursement
obligation. Such indemnification and reimbursement obligation shall be in
addition to any other indemnification and reimbursement obligations
21
<PAGE>
of the Fund and/or the Underwriter under this Agreement.
12.8 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
12.9 This Agreement or any of the rights and obligations hereunder may not be
assigned by any party without the prior written consent of all parties hereto;
provided, however, that the Underwriter may assign this Agreement or any rights
or obligations hereunder to any affiliate of or company under common control
with the Underwriter, if such assignee is duly licensed and registered to
perform the obligations of the Underwriter under this Agreement.
12.10 The Company shall furnish, or shall cause to be furnished, to the Fund or
its designee copies of the following reports:
(a) the Company's annual statement (prepared under statutory accounting
principles) and annual report (prepared under generally accepted
accounting principles ("GAAP"), as soon as practical and in any event
within 105 days after the end of each fiscal year;
(b) the Company's quarterly statements (statutory and GAAP), as soon as
practical and in any event within 45 days after the end of each
quarterly period;
(c) any financial statement, proxy statement, notice or report of the
Company sent to stockholders and/or policyholders, as soon as
practical after the delivery thereof to stockholders;
(d) any registration statement (without exhibits) and financial reports
of the Company filed with the Securities and Exchange Commission or
any state insurance regulator, as soon as practical after the filing
thereof;
(e) any other report submitted to the Company by independent accountants
in connection with any annual, interim or special audit made by them
of the books of the Company, as soon as practical after the receipt
thereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed in its name and on its behalf by its duly authorized representative and
its seal to be hereunder affixed hereto as of the date specified below.
COMPANY:
AMERICAN NATIONAL INSURANCE
22
<PAGE>
COMPANY
By its authorized officer,
By____________________________
Title:Vice President and
----------------------
Chief Actuary
----------------------
Date: ________________________
FUND:
VARIABLE INSURANCE PRODUCTS
FUND II
By its authorized officer,
By:___________________________
Title:Senior Vice President
---------------------
Date:_________________________
UNDERWRITER:
FIDELITY DISTRIBUTORS
CORPORATION
By its authorized officer,
By:___________________________
Title: President
---------------------
Date:_________________________
23
<PAGE>
Schedule A
----------
Accounts
--------
Name of Account Date of Resolution of Company's
Board which Established the
Account
Variable Universal Life July 30, 1987
Insurance
Variable Annuity Contracts December 20, 1991
24
<PAGE>
Schedule B
----------
Contracts
---------
1. Contract Forms:
FL89
VA93-NQ
VA93-PQ
GUA93
SPIVA93
25
<PAGE>
SCHEDULE C
----------
PROXY VOTING PROCEDURE
----------------------
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the Fund by the Underwriter, the Fund and the
Company. The defined terms herein shall have the meanings assigned in the
Participation Agreement except that the term "Company" shall also include the
department or third party assigned by the Insurance Company to perform the steps
delineated below.
1. The number of proxy proposals is given to the Company by the Underwriter as
early as possible before the date set by the Fund for the shareholder
meeting to facilitate the establishment of tabulation procedures. At this
time the Underwriter will inform the Company of the Record, Mailing and
Meeting dates. This will be done verbally approximately two months before
meeting.
2. Promptly after the Record Date, the Company will perform a "tape run", or
other activity, which will generate the names, addresses and number of
units which are attributed to each contractowner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step#2. The Company will use its best efforts to call in the
number of Customers to Fidelity, as soon as possible, but no later than two
weeks after the Record Date.
3. The Fund's Annual Report must be sent to each Customer by the Company
either before or together with the Customers' receipt of a proxy statement.
Underwriter will provide at least one copy of the last Annual Report to the
Company.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card") is
provided to the Company by the Fund. The Company, at its expense, shall
produce and personalize the Voting Instruction Cards. The Legal Department
of the Underwriter or its affiliate ("Fidelity Legal") must approve the
Card before it is printed. Allow approximately 2-4 business days for
printing information on the Cards. Information commonly found on the Cards
includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
26
<PAGE>
e. individual Card number for use in tracking and verification of
votes (already on Cards as printed by the Fund)
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
5. During this time, Fidelity Legal will develop, produce, and the Fund will
pay for the Notice of Proxy and the Proxy Statement (one document).
Printed and folded notices and statements will be sent to Company for
insertion into envelopes (envelopes and return envelopes are provided and
paid for by the Insurance Company). Contents of envelope sent to Customers
by Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent
d. "urge buckslip" - optional, but recommended. (this is a small,
single sheet of paper that requests Customers to vote as quickly
as possible and that their vote is important. One copy will be
supplied by the Fund.)
e. cover letter - optional, supplied by Company and reviewed and
approved in advance by Fidelity Legal.
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews
and approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to Fidelity Legal.
7. Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation time to the Company
as the shareholder. (A 5-week period is recommended.) Solicitation
time is calculated as calendar days from (but not including) the
meeting, counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An
often used procedure is to sort Cards on arrival by proposal into vote
categories of all yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for
postmark information would be due to an insurance company's internal
procedure and has not been required by Fidelity in the past.
9. Signatures on Card checked against legal name on account registration which
was printed on the Card.
27
<PAGE>
Note: For Example, If the account registration is under "Bertram C. Jones,
Trustee", then that is the exact legal name to be printed on the Card and
is the signature needed on the Card.
10. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to Customer with an explanatory letter, a new
Card and return envelope. The mutilated or illegible Card is disregarded
and considered to be not received for purposes of vote tabulation. Any
Cards that have "kicked out" (e.g. mutilated, illegible) of the procedure
are "hand verified," i.e., examined as to why they did not complete the
system. Any questions on those Cards are usually remedied individually.
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then converted to
shares. (It is very important that the Fund receives the tabulations
stated in terms of a percentage and the number of shares.) Fidelity Legal
must review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to Fidelity
Legal on the morning of the meeting not later than 10:00 a.m. Boston time.
Fidelity Legal may request an earlier deadline if required to calculate the
vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
Fidelity Legal will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from the
Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, Fidelity Legal
will be permitted reasonable access to such Cards.
16. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
28
<PAGE>
Exhibit 99.B9
Law Offices
Greer, Herz & Adams, L.L.P.
a registered limited liability partnership
including professional corporations
One Moody Plaza
Galveston, Texas 77550
Galveston (409) 765-5525
Houston (713) 480-5278
Telecopier (409) 766-6424
April 24, 1996
---------------
Securities and Exchange Commission
450 Fifth Street, N.W.
Judicial Plaza
Washington, D.C. 20549
RE: American National Variable Annuity Separate Account ("Separate
Account") Post-Effective Amendment No. 6 to Form N-4; Opinion
and Consent of Counsel
- --------------------------------------------------------------------------------
Gentlemen:
We are counsel to American National Insurance Company ("ANICO"), the depositor
of the Separate Account. As such, we participated in the formation of the
Separate Account and the registration of such separate account with the
Securities and Exchange Commission. Accordingly, we are familiar with the
corporate records, certificates, and consents of officers of ANICO as we have
deemed necessary or appropriate for the purpose of this opinion.
Based upon the foregoing, and our consideration of such other matters of fact
and questions of law as we have deemed necessary and proper in the
circumstances, we are of the opinion that:
1. ANICO is a duly organized and existing corporation under the laws of the
State of Texas and that its principal business is to be an insurer.
2. The Separate Account is a duly organized and existing separate account of
ANICO under the laws of the State of Texas and is registered as a unit
investment trust under the Investment Company Act of 1940.
1
<PAGE>
3. The Variable Annuity Contracts registered by this Registration Statement
under the Securities Act of 1933 and the Investment Company Act of 1940 (File
No. 33-60442) will, upon issuance thereof, be validly authorized and issued.
We hereby consent to the use of our opinion of counsel in the Post-Effective
Amendment No. 6 to Form N-4 Registration Statement (File No. 33-60442)
filed on behalf of the Separate Account. We further consent to the statements
made regarding us and to the use of our name under the caption "Legal Matters"
in the prospectuses constituting a part of such Post-Effective Amendment No.
6 to such Registration Statement.
Yours very truly,
GREER, HERZ & ADAMS, L.L.P.
Jerry L. Adams
------------------------------
Jerry L. Adams
2
<PAGE>
Exhibit 99.B10
Independent Auditors' Consent
The Board of Directors
American National Insurance Company
We consent to the use of our reports included herein and to the reference to our
firm in the prospectuses and in the statement of additional information.
KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP
----------------------------
Houston, Texas
April 24, 1996
<PAGE>
Exhibit 99.B10
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our reports
(and to all references to our Firm) included in or made a part of this
registration statement.
Arthur Andersen LLP
Houston, Texas
April 24, 1996
<PAGE>
Exhibit 99.B14
CONTROL LIST
------------
The Registrant, American National Variable Annuity Separate Account, is a
separate account organized under the laws of the State of Texas. The Registrant
is a separate account of American National Insurance Company, a Texas insurance
company. The Moody Foundation owns approximately 23.7% and the Libbie Shearn
Moody Trust owns approximately 37.58% of the outstanding stock of American
National Insurance Company.
The Trustees of The Moody Foundation are Mrs. Frances Moody Newman, Robert
L. Moody and Ross Rankin Moody. Robert L. Moody is a beneficiary of the Libbie
Shearn Moody Trust and Chairman of the Board, Director, President and Chief
Executive Officer of American National Insurance Company. Robert L. Moody is
also Chairman of the Board, a Director and controlling shareholder of National
Western Life Insurance Company, a Colorado insurance company. National Western
Life Insurance Company directly or indirectly owns the following entities: The
Westcap Corporation, Westcap Securities Management, Inc., Westcap Securities
Investment, Inc. and Westcap Securities, L.P.
The Moody National Bank of Galveston is the trustee of the Libbie Shearn
Moody Trust and various other trusts which, in the aggregate, own approximately
46.87% of the outstanding stock of American National Insurance Company. Moody
Bank Holding Company, Inc. owns approximately 97% of the outstanding shares of
The Moody National Bank of Galveston. Moody Bank Holding Company, Inc. is a
wholly owned subsidiary of Moody Bancshares, Inc. The Three R Trusts, trusts
created by Robert L. Moody for the benefit of his children, are controlling
stockholders of Moody Bancshares, Inc.
The Moody Foundation owns 33.0% and the Libbie Shearn Moody Trust owns
51.0% of the outstanding stock of Gal-Tex Hotel Corporation, a Texas
corporation. Gal-Tex Hotel Corporation has the following wholly-owned
subsidiaries, listed in alphabetical order:
Gal-Tenn Corporation
Gal-Tex Management Company
Gal-Tex Woodstock, Inc.
GTG Corporation
New Paxton Hotel Corporation
American National owns a direct or indirect interest in the
<PAGE>
following entities, listed in alphabetical order:
Entity: American Hampden Joint Venture
Entity Form: a Texas joint venture
Ownership or Other Basis of Control: American National Insurance Company owns a
98% interest.
Entity: American National - Clear Lake 2 Joint Venture
Entity Form: a Texas joint venture
Ownership or Other Basis of Control: American National Insurance Company owns a
88% interest.
Entity: American National of Delaware Corporation
Entity Form: a Delaware corporation (inactive)
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Insurance Company
Entity: American National Financial Corporation
Entity Form: a Texas corporation (inactive)
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Property and Casualty Company
Entity: American National Financial Corporation (Delaware)
Entity Form: a Delaware corporation (inactive)
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Insurance Company.
Entity: American National Financial Corporation (Nevada)
2
<PAGE>
Entity Form: a Nevada corporation (inactive)
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Insurance Company.
Entity: American National General Insurance Company
Entity Form: a Missouri insurance company
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Property and Casualty Company.
Entity: American National Growth Fund, Inc.
Entity Form: a Maryland corporation - registered investment company
Ownership or Other Basis of Control: Investment Advisory Agreement with
Securities Management and Research, Inc. Also, Securities Management and
Research, Inc. owns .88 percent of the outstanding stock of the Company.
American National Insurance Company owns 3.13 percent of the outstanding stock
of the Company.
Entity: American National Income Fund, Inc.
Entity Form: a Maryland corporation - registered investment company
Ownership or Other Basis of Control: Investment Advisory Agreement with
Securities Management and Research, Inc. Also, Securities Management and
Research, Inc. owns .21 percent of the outstanding stock of the Company.
3
<PAGE>
Entity: American National Insurance Service Company
Entity Form: a Missouri corporation
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Property and Casualty Company.
Entity: American National Investment Accounts, Inc.
Entity Form: a Maryland corporation - registered investment company
Ownership or Other Basis of Control: Investment Advisory Agreement with
Securities Management and Research, Inc. Also, Securities Management and
Research, Inc. owns 10.2 percent of the outstanding stock of the Company, and
American National Insurance Company owns 89.8 percent of the outstanding stock
of the Company.
Entity: American National Life Insurance Company of Texas
Entity Form: a Texas insurance company
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Insurance Company
Entity: American National Lloyds Insurance Company
Entity Form: a Texas corporation
Ownership or Other Basis for Control: Wholly owned subsidiary of American
National Property and Casualty Company
Entity: American National Property and Casualty Company
Entity Form: a Missouri insurance company
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Insurance Company.
Entity: ANPAC General Agency of Texas
Entity Form: a Texas corporation
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Property and Casualty Company.
4
<PAGE>
Entity: ANPAC Lloyds Insurance Management, Inc.
Entity Form: a Texas corporation
Ownership or Other Basis for Control: Wholly owned subsidiary of American
National Property and Casualty Company
Entity: ANREM Corporation
Entity Form: a Texas corporation
Ownership or Other Basis of Control: Wholly owned subsidiary of Securities
Management and Research, Inc.
Entity: ANTAC, Inc.
Entity Form: a Texas corporation
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Insurance Company.
Entity: Base Securities Systems, Inc.
Entity Form: a Texas corporation
Ownership or Other Basis of Control: Wholly owned subsidiary of ANREM Corp.
Entity: Garden State Life Insurance Company
Entity Form: a New Jersey insurance company
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Insurance Company.
Entity: Gateway Park Joint Venture
Entity Form: a Texas joint venture
5
<PAGE>
Ownership or Other Basis of Control: South Shore Harbour Development, Ltd. has
a 50% interest.
Entity: Harbour Title Company
Entity Form: a Texas corporation
Ownership or Other Basis of Control: South Shore Harbour Development, Ltd. owns
50% of the outstanding stock.
Entity: Kearns Building Joint Venture
Entity Form: a Texas joint venture
Ownership or Other Basis of Control: American National owns a 85% interest.
Entity: Lighthouse Refreshment Company, Inc.
Entity Form: a Texas corporation
Ownership or Other Basis of Control: Wholly owned subsidiary of ANREM
Corporation
Entity: Maya Energy Limited Partnership
Entity Form: a Texas limited partnership
Ownership or Other Basis of Control: American National Insurance Company owns a
99% limited partnership interest.
Entity: National Institute of Family Economics, Inc.
Entity Form: a Texas corporation (inactive)
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Insurance Company
6
<PAGE>
Entity: Pacific Property and Casualty Company
Entity Form: a California corporation
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Property and Casualty Company
Entity: Panther Creek Limited Partnership
Entity Form: a Texas limited partnership
Ownership or Other Basis of Control: American National Insurance Company owns a
99% limited partnership interest
Entity: Ridgedale Festival Joint Venture
Entity Form: a Texas joint venture
Ownership or Other Basis of Control: American National Insurance Company owns a
50% interest.
Entity: Rodeo Square
Entity Form: a Texas joint venture
Ownership or Other Basis of Control: American National Insurance Company owns a
95% interest. ANREM Corp. owns a 5% interest.
Entity: Securities Management and Research, Inc.
Entity Form: a Florida corporation - registered broker-dealer and registered
investment adviser
Ownership or Other Basis of Control: 100% owned by American National Insurance
Company
Entity: SM&R Capital Funds, Inc.
7
<PAGE>
Entity Form: a Maryland corporation - a registered investment company
Ownership or Other Basis of Control: Investment Advisory Agreement with
Securities Management and Research, Inc. Also, Company consists of three (3)
different series: Government Income Fund Series, Primary Fund Series, and Tax
Free Fund Series. Securities Management and Research, Inc. owns 10.03 percent
of the outstanding stock of the Government Income Fund Series, and American
National Insurance Company owns 27.65 percent of the outstanding stock of the
Government Income Fund Series. Securities Management and Research, Inc. owns
13.71 percent of the outstanding stock of the Primary Fund Series, and American
National Insurance Company owns 17.22 percent of the outstanding stock of the
Primary Fund Series. Securities Management and Research, Inc. owns 12.06 percent
of the outstanding stock of the Tax Free Fund Series, and American National
Insurance Company owns 59.78 percent of the outstanding stock of the Tax Free
Fund Series.
Entity: South Shore Harbour Development, Ltd.
Entity Form: a Texas limited partnership
Ownership or Other Basis of Control: American National Insurance Company owns a
95% limited partnership interest. ANREM Corp. owns a 5% general partnership
interest.
Entity: Standard Life and Accident Insurance Company
Entity Form: an Oklahoma insurance company
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Insurance Company.
Entity: Terra Venture Bridgeton Project Joint Venture
Entity Form: a Texas joint venture
Ownership or Other Basis of Control: Wholly owned by American National
Insurance Company.
8
<PAGE>
Entity: Third and Catalina, Ltd.
Entity Form: a Texas limited partnership
Ownership or Other Basis of Control: American National Insurance Company owns a
49% limited partnership interest.
Entity: Timbermill, Ltd.
Entity Form: a Texas joint venture
Ownership or Other Basis of Control: American National Insurance Company owns a
99% limited partnership interest.
Entity: Town and Country Joint Venture
Entity Form: a Texas joint venture
Ownership or Other Basis of Control: American National Insurance Company owns a
99% limited partnership interest.
Entity: Triflex Fund, Inc.
Entity Form: a Maryland corporation - a registered investment company
Ownership or Other Basis of Control: Investment Advisory Agreement with
Securities Management and Research, Inc. Also, Securities Management and
Research, Inc. owns 7.68 percent of the outstanding stock of the Company, and
American National Insurance Company owns 12.86 percent of the outstanding stock
of the Company.
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AMERICAN
NATIONAL VARIABLE ANNUITY SEPARATE ACCOUNT AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 2,824
<INVESTMENTS-AT-VALUE> 3,005
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,005
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 3,005
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</TABLE>
