As filed with the Securities and Exchange Commission on April 28, 1997
Registration No. 33-71748
811-8160
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |_|
Pre-Effective Amendment No. |_|
Post-Effective Amendment No. 4 |X|
-----
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |_|
Amendme t No. 5 |X|
-----
SEPARATE ACCOUNT VA-5NLNY
(Exact Name of Registrant)
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
(formerly called, First Transamerica Life Insurance Company)
(Name of Depositor)
100 Manhattanville Road, Purchase, NY 10577
-------------------------------------
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number, including Area Code: (914) 701-6000
Name and Address of Agent for Service: Copy to:
James W. Dederer, Esquire Frederick R. Bellamy, Esquire
Chairman of the Board, General Counsel and Sutherland, Asbill & Brennan, L.L.P.
Corporate Secretary 1275 Pennsylvania Avenue, N.W.
Transamerica Life Insurance Company of New York Washington, D.C. 20004-2404
100 Manhattanville Road
Purchase, NY 10577
Approximate date of proposed sale to the
public: As soon as practicable after effectiveness of the
Registration Statement.
The Registrant has previously filed a declaration of indefinite registration of
its shares pursuant to Rule 24f-2 under the Investment Company Act of 1940. The
Rule 24f-2 Notice for the year ended December 31, 1996 was filed on February 25,
1997
It is proposed that this filing will become effective: |_|
immediately upon filing pursuant to paragraph (b) |X| on May
1, 1997pursuant to paragraph (b) |_| 60 days after filing
pursuant to paragraph (a)(i) |_| on ________________ pursuant
to paragraph (a)(i) |_| 75 days after filing pursuant to
paragraph (a)(ii) |_| on ________________ pursuant to
paragraph (a)(ii) of Rule 485
If appropropriate, check the following box:
|_| this Post-Effective Amendment designates
a new effective date for a previously
filed Post-Effective Amendment.
<PAGE>
<PAGE>
CROSS REFERENCE SHEET
Pursuant to Rule 495
Showing Location in Part A (Prospectus),
Part B (Statement of Additional Information) and Part C
of Registration Statement Information Required by Form N-4
PART A
<TABLE>
<CAPTION>
Item of Form N-4 Prospectus Caption
<S> <C>
1. Cover Page............................................... Cover Page
2. Definitions.............................................. Definitions
3. Synopsis................................................. Key Features of the Contracts
4. Condensed Financial Information.......................... Condensed Financial Information
5. General
(a) Depositor Transamerica Occidental Life Insurance Company;
Available Information
(b) Registrant The Variable Account
(c) Portfolio Company The Portfolios
(d) Portfolio Prospectus The Portfolios
(e) Voting Rights Voting Rights
6. Deductions and Expenses..................................
(a) General Charges and Deductions
(b) Sales Load % Not Applicable
(c) Special Purchase Plan Not Applicable
(d) Commissions Distribution of the Contracts
(e) Fund Expenses The Funds
(f) Operating Expenses Variable Account Fee Table
7. Contracts
(a) Persons with Rights The Contract; Application and Purchase
Payments; Cash Withdrawals; Account Value;
Death Benefit; Voting Rights
(b) (i) Allocation of Purchase Payments
Payments..................................... Allocation of Purchase Payments
(ii) Transfers.................................... Transfers
(iii) Exchanges.................................... Federal Tax Matters
(c) Changes Addition, Deletion, or Substitution
(d) Inquiries Key Features of the Contracts; Available
Information
8. Annuity Period........................................... Annuity Payments
9. Death Benefit............................................ Death Benefit
<PAGE>
10. Purchase and Contract Balances
(a) Purchases Application and Purchase Payments
(b) Valuation Account Value; Appendix A
(c) Daily Calculation Account Value
(d) Underwriter Distribution of the Contracts
11. Redemptions
(a) By Contract Owners Cash Withdrawals; Automatic Payout Option
By Annuitant....................................... Not Applicable
(b) Texas ORP Not Applicable
(c) Check Delay Cash Withdrawals
(d) Lapse Not Applicable
(e) Free Look Key Features of the Contracts; Application and
Purchase Payments
12. Taxes.............................................. Federal Tax Matters
13. Legal Proceedings.................................. Legal Proceedings
14. Table of Contents for the
Statement of
Additional Information................................... Statement of Additional Information Table of
Contents
PART B
Item of Form N-4 Statement of Additional
Information Caption
15. Cover Page......................................... Cover Page
16. Table of Contents.................................. Table of Contents
17. General Information
and History.............................................. (Prospectus) Transamerica Occidental Life
Insurance Company; (Prospectus) Available
Information; Transamerica
18. Services...........................................
(a) Fees and Expenses
of Registrant...................................... (Prospectus) Variable Account Fee Table;
(Prospectus) The Portfolios
(b) Management Contracts (Prospectus) Third Party Administrator
(c) Custodian Safekeeping of Account Assets; Records and
Reports
Independent Auditors ............................. Experts
(d) Assets of Registrant Not Applicable
(e) Affiliated Person Not Applicable
(f) Principal Underwriter Not Applicable
<PAGE>
19. Purchase of Securities
Being Offered............................................ (Prospectus) The Contract
Offering Sales Load...................................... Not Applicable
20. Underwriters....................................... (Prospectus) Distribution of the Contracts
21. Calculation of Performance
Data..................................................... (Prospectus) Performance Data; Performance Data
22. Annuity Payments................................... (Prospectus) Annuity Payments; Annuity Period
23. Financial Statements............................... Financial Statements
PART C -- OTHER INFORMATION
Item of Form N-4 Part C Caption
24. Financial Statements
and Exhibits............................................. Financial Statements and Exhibits
(a) Financial Statements Financial Statements
(b) Exhibits Exhibits
25. Directors and Officers of
the Depositor............................................ Directors and Officers of the Depositor
26. Persons Controlled By or Under Common Control
with the Depositor or Registrant Persons Controlled By or Under Common Control
with the Depositor or Registrant
27. Number of Contract Owners.......................... Number of Contract Owners
28. Indemnification.................................... Indemnification
29. Principal Underwriters............................. Principal Underwriter
30. Location of Accounts
and Records.............................................. Location of Accounts and Records
31. Management Services................................ Management Services
32. Undertakings....................................... Undertakings
Signature Page........................................... Signature Page
</TABLE>
<PAGE>
April 24, 1997
DISTINCT ASSETS from TRANSAMERICAsm
A VARIABLE ANNUITY
Issued by
Transamerica Life
Insurance Company of New York
The Distinct Assets from Transamericasm, a Variable Annuity (formerly called the
Schwab Investment Advantage) ("Contract") is a variable annuity issued by
Transamerica Life Insurance Company of New York (formerly called First
Transamerica Life Insurance Company). It allows you to invest in your choice of
eleven different mutual fund Portfolios offered by eight different mutual fund
investment advisers. You may withdraw funds in the Contract as a lump sum,
through a systematic withdrawal program, or from a choice of Annuity Payment
Options.
The Contract is not currently being sold. However, additional Purchase Payments
may be made to existing Contracts. There are no sales charges, redemption,
surrender or withdrawal charges. The Contract provides a Free Look Period of 30
days from your receipt of the Contract, during which you may cancel your
investment in the Contract.
Your investment in the Contract may be allocated among eleven Sub-Accounts of
Transamerica Separate Account VA-5NLNY ("Variable Account"). Based on your
instructions, your investment in the Contract is invested in Portfolios of
various mutual funds (open-end investment companies or series thereof) offered
by fund families such as American Century, Federated, INVESCO, Janus, Lexington,
Schwab Funds(R), SteinRoe, and Strong.
The wide array of mutual fund choices allows you to select a mix of investment
vehicles specifically suited to your particular risk tolerances, as well as
investment objectives and adviser preferences. Prior to the Annuity Date, you
are free to transfer amounts among the Portfolios. This ability to transfer
assets among the various Portfolios allows you to change your investment mix in
response to changes in your personal objectives or investment outlook.
Your Account Value will increase or decrease based on the investment performance
of the Portfolios you select. You bear the entire investment risk under the
Contract prior to the Annuity Date. While there is a guaranteed death benefit,
there is no guaranteed or minimum Account Value. Therefore, the Account Value
you receive could be less than the total amount you have invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus Dated May 1, 1997
The Contracts are not deposits of, or guaranteed or endorsed by, any
bank, nor is the Contract federally insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other government agency. The
Contracts involve certain investment risks, including possible loss of
principal.
<PAGE>
The Contract offers a number of ways of withdrawing funds at a future date,
including a lump sum payment and several annuity payment forms. You may choose
the Annuity Date on which the annuity payments begin.
Full or partial withdrawals from the Contract may be made at any time before the
Annuity Date. Generally, withdrawals made prior to age 59 1/2 are subject to
ordinary income taxes and a 10% federal income penalty tax.
To Place Orders and for Account Information: Contact the Service Center, at 800
258- 4261 or P.O. Box 31728, Charlotte, North Carolina 28231-1728.
About This Prospectus: This Prospectus concisely presents important information
you should have before investing in the Contract. Please read it carefully and
retain it for future reference. You can find more detailed information
pertaining to the Contract in the Statement of Additional Information dated May
1, 1997 (as may be amended from time to time), and filed with the Securities and
Exchange Commission. The Statement of Additional Information is incorporated by
reference into this Prospectus, and may be obtained without charge by contacting
the Service Center at at 800-258-4261 or P.O. Box 31728, Charlotte, North
Carolina 28231-1728.
ii
<PAGE>
TABLE OF CONTENTS
Page
DEFINITIONS.......................................................... 1
KEY FEATURES OF THE CONTRACT......................................... 2
CONDENSED FINANCIAL INFORMATION...................................... 8
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK AND THE VARIABLE
ACCOUNT........................................................... 9
THE PORTFOLIOS....................................................... 10
THE CONTRACT......................................................... 14
PURCHASE PAYMENTS.................................... 15
ACCOUNT VALUE........................................................ 17
TRANSFERS............................................................ 18
CASH WITHDRAWALS..................................................... 20
DEATH BENEFIT........................................................ 23
CHARGES AND DEDUCTIONS............................................... 25
ANNUITY PAYMENTS..................................................... 27
FEDERAL TAX MATTERS.................................................. 31
PERFORMANCE DATA..................................................... 36
DISTRIBUTION OF THE CONTRACTS........................................ 38
VOTING RIGHTS........................................................ 38
LEGAL PROCEEDINGS.................................................... 39
LEGAL MATTERS........................................................ 39
ACCOUNTANTS.......................................................... 40
AVAILABLE INFORMATION................................................ 40
STATEMENT OF ADDITIONAL INFORMATION--TABLE OF CONTENTS............... 41
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO DEALER, SALESMAN, OR OTHER PERSON IS
AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION
WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED ON.
The Contract is available only in New York.
iii
<PAGE>
DEFINITIONS
Account Value: The Account Value of a particular Contract is the total dollar
amount of all Variable Accumulation Units under each Sub-Account held for you
prior to the Annuity Date.
Annuitant: The person named on the application and whose life is used to
determine the amount of monthly annuity payments on the Annuity Date. The
Annuitant cannot be changed after the Contract has been issued, except upon the
Annuitant's death prior to the Annuity Date if a Contingent Annuitant has
previously been named.
In the case of a Qualified Contract, the Owner must be the Annuitant.
Annuity Date: The date on which the Account Value, less any applicable premium
taxes, will be applied to provide an Annuity for you, under the annuity form you
selected. Unless a different Annuity Date is elected under the annuity payment
provisions, the Annuity Date will be as described in the Contract. The date
annuity payments start is the Commencement of Annuity Payment Date shown in the
Contract.
Code: The Internal Revenue Code of 1986, as amended, and the rules and
regulations issued thereunder.
Contract: A certificate issued to an individual which evidences his or her
coverage under a group annuity contract.
Net Purchase Payment: A Purchase Payment reduced by any applicable premium tax
charge (including any charge for retaliatory premium taxes) (see "Premium
Taxes," page 27).
Owner or You: The person or persons who, while living, controls all rights and
benefits under the Contract.
Joint Owners must be husband and wife as of the Annuity Issue
Date. Qualified Contracts cannot have Joint Owners.
Payee: The person who receives the annuity payments after the Annuity Date. The
Payee will be the Annuitant,
unless you designate that some other person shall be the Payee.
Portfolio: (1) A separate "series" or portfolio of investments within a mutual
fund or (2) a mutual fund available for
investment under the Contract.
Qualified Contract: A Contract used in connection with an individual retirement
annuity ("IRA") which receives special federal income tax treatment under
Section 408 of the Code.
Receipt: Receipt and acceptance by us at our Service Center.
Service Center: The Annuity Service Center, at 800 258-4261 or P.O. Box 31728,
Charlotte, North Carolina 28231-
1728.
Sub-Account: A subdivision of the Variable Account investing solely in shares
of one of the Portfolios.
We, our, us, or Transamerica: Transamerica Life Insurance Company of New York
(formerly called First Transamerica Life Insurance Company).
KEY FEATURES OF THE CONTRACT
The Distinct Assets from Transamericasm, a Variable Annuity (formerly called the
Schwab Investment Advantage) ("Contract") allows you to invest currently in your
choice of eleven different mutual fund Portfolios offered by eight
1
<PAGE>
different mutual fund investment advisers. You may withdraw funds in the
Contract as a lump sum, through a systematic withdrawal program, or from a
choice of annuity payment options. Your Account Value will vary with the
investment performance of the Portfolios you select. You bear the entire
investment risk for all amounts invested in the Contract. The Account Value
could be less than the total amount you have invested.
Who should invest. The Contract is designed for individual investors who are
seeking long-term tax-deferred asset accumulation with a wide range of
investment options. The Contract can be used for retirement or other long-term
investment purposes. The deferral of income taxes is particularly attractive to
investors in high federal and state tax brackets who have already taken full
advantage of their ability to make IRA contributions or "pre-tax" contributions
to their employer- sponsored retirement or savings plans.
A Wide Range of Investment Choices. The Contract gives you an opportunity to
select among eleven different Portfolios offered by eight different mutual fund
investment advisers. The investment options cover a wide range of investment
objectives as follows:
Aggressive Growth SteinRoe Capital Appreciation Fund
Strong Discovery Fund II
Growth Janus Aspen Growth Portfolio
American Century VP Capital Appreciation
Growth & Income Federated American Leaders Fund II
INVESCO VIF-Industrial Income Portfolio
Balanced/Asset Allocation INVESCO VIF-Total Return Portfolio
International Lexington Emerging Markets Fund
High Yield Bond INVESCO VIF-High Yield Portfolio
Government Bond Federated Fund for U.S.
Government Securities II
Money Market Schwab Money Market Portfolio
The American Century VP Captial Appreciation was called the TCI Growth Portfolio
previous to May 1, 1997. The assets of each Portfolio are separate, and each
Portfolio has distinct investment objectives and policies as described in their
individual Fund Prospectuses, which are available, without charge, from the
Service Center, at 800 258-4261 or P.O. Box 31728, Charlotte, North Carolina
28231-1728. (See "The Portfolios," page 10.)
How to Invest. Effective May 1, 1997, new Contracts will not be sold. After May
1, 1997, additional Purchase Payments of at least $1,000 may be made to
Contracts purchased before May 1, 1997. Sales of new Contracts may resume in the
future. (See "Application and Purchase Payments," page 15.)
2
<PAGE>
Charges and Deductions Under the Contract. The Contract is a "no load" variable
annuity and imposes no sales charges, redemption or withdrawal charges.
There is a Mortality and Expense Risk Charge at an effective annual rate of
0.85% of the value of the net assets in the Variable Account. An Annual Contract
Charge of $25 (or 2% of Account Value, if lower) will be deducted from your
Account Value.
Although we currently do not deduct any additional charge for administrative
expenses, we reserve the right to deduct one. We guarantee that this charge will
never exceed an effective annual rate of 0.15% of your Account Value, if
imposed.
New York currently has no premium tax or retaliatory premium tax. If New York
imposes these taxes in the future, or if you become a resident of a state other
than New York where such taxes apply, we may deduct a charge for these premium
taxes from purchase payments, from amounts withdrawn, or at the Annuity Date.
(See "Charges and Deductions," page 25.)
Switching Investments. You may switch investments among the Portfolios as often
as you like by making a written request to our Service Center. The minimum
amount which may be transferred is $1,000 (or the entire value of the Portfolio
being transferred, if less). You may make as many transfers as you like. Ten
free transfers will be allowed per Contract year and a charge of $10 (or 2% of
the amount of the transfer, whichever is less) will be imposed for each
subsequent transfer during that Contract Year.
Full and Partial Withdrawals. You may withdraw all or part of your Account Value
before the earlier of the Annuity Date you selected or the Annuitant's or
Owner's death. Withdrawals may be taxable and if made prior to age 59 1/2 of the
Owner may be subject to a 10% penalty tax.
Annuity Forms. Beginning on the first day of the month immediately following the
Annuity Date you select (which generally may not be later than Annuitant's age
85), you may receive annuity payments on a fixed basis. A wide range of annuity
forms are available to provide flexibility in choosing an annuity payment
schedule that meets your particular needs. These annuity forms include
alternatives designed to provide payments for life (for either a single or joint
life) with or without a guaranteed minimum number of payments.
Death Benefit. If the death of the Owner or the Annuitant specified in your
Contract occurs prior to the Annuity Date, a Death Benefit will be payable to
the appropriate Beneficiary. The Death Benefit will be the greater of the sum of
your Investments, less withdrawals and any applicable premium taxes, or the then
current Account Value. The beneficiary may elect to receive the Death Benefit
proceeds as a lump sum or as Annuity Payments.
Customer Service. Transamerica's professionals are available toll-free to assist
you. If you have any questions about your Contract, please telephone the Service
Center at 800 258-4261 or P.O. Box 31728, Charlotte, North Carolina 28231-1728.
All inquiries should include the Contract Number, your name and the Annuitant's
name. As a Contract Owner you will receive confirmations regarding any
transactions relating to your Contract, as well as a quarterly statements and
the Annual and Semi-Annual Report of the Portfolios.
3
<PAGE>
VARIABLE ANNUITY FEE TABLE
The purpose of this table and the examples that follow is to assist you in
understanding the various costs and expenses that you will bear directly or
indirectly when investing in the Contract. The table and examples reflect
expenses of the Variable Account as well as of the Portfolios. The information
set forth should be considered together with the narrative provided under the
heading "Charges and Deductions" on page 25 of this Prospectus, and with the
Funds' prospectuses. In addition to the expenses listed below, premium taxes may
be applicable.
Contract Owner Transaction Expenses
Sales Load........................................ None
Surrender Fee..................................... None
Transfer Fee (First 10 Per Year)(1)............... None
Annual Contract Charge(2)......................... $25.00
Variable Account Annual Expenses
(as a percentage of average Variable
Account assets)
Mortality and Expense Risk Charge................ 0.85%
Administrative Expense Charge(3)................. 0.00%
Other Fees and Expenses of the Variable Account.. 0.00%
------
Total Variable Account Annual Expenses........... 0.85%
(1) There is a fee of $10 (or 2% of the amount of the transfer, whichever is
less) for each transfer in excess of 10 in any Contract Year. (2) This is a
maximum annual charge. The Annual Contract Charge is the lesser of $25 or 2% of
Account Value. (3) There is currently no Administrative Expense Charge. If one
is added in the future, it will not exceed an annual rate of 0.15% of the
Variable Account assets.
4
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<TABLE>
<CAPTION>
Portfolio Annual Expenses(1)
(as a percentage of Portfolio net assets, after expenses reimbursements)
Total
Management Other Portfolio
Fees Expenses Expenses
Portfolio
<S> <C> <C> <C> <C>
American Century VP Capital Appreciation (2) 1.00% 0.00% 1.00%
- ---------------------------------------------------------------- ----- ----- -----
Federated American Leaders Fund II............................ 0.53% 0.32% 0.85%
Federated Fund for U.S. Government Securities II.............. 0.00% 0.80% 0.80%
INVESCO VIF-High Yield Portfolio.............................. 0.60% 0.27% 0.87%
INVESCO VIF-Industrial Income Portfolio....................... 0.75% 0.20% 0.95%
INVESCO VIF-Total Return Portfolio............................ 0.75% 0.19% 0.94%
Janus Aspen Growth Portfolio.................................. 0.65% 0.04% 0.69%
Lexington Emerging Markets Fund............................... 0.85% 0.79% 1.64 %
Schwab Money Market Portfolio................................. 0.44% 0.06% 0.50%
SteinRoe Capital Appreciation Fund............................ 0.50% 0. 25% 0. 75%
Strong Discovery Fund II...................................... 1.00% 0. 21% 1. 21%
</TABLE>
(1) The figures given above are based on expenses that would have been incurred
in the absence of expense offset arrangements, if any, for 1996. If expense
offset arrangements were in place, the actual amount paid by the Portfolio would
be less than that specified above; see the Portfolios' prospectuses for more
information. Additionally, from time to time, a Portfolio's investment adviser,
in its sole discretion, may waive all or part of its fees and/or voluntarily
assume certain Portfolio expenses. For a more complete description of the
Portfolios' fees and expenses, see the Portfolio's prospectuses. As of the date
of this Prospectus, certain fees are being waived or expenses are being assumed,
in each case on a voluntary basis. Without such waivers or reimbursements, the
Total Portfolio Annual Expenses that would have been incurred for the last
completed fiscal year would be: 1.07%% for Federated American Leaders Fund II;
1.81%% for Federated Fund for U.S. Government Securities II; 1.32%% for INVESCO
VIF-High Yield Portfolio; 1.19%% for INVESCO VIF-Industrial Income Portfolio;
1.30%% for INVESCO VIF-Total Return Portfolio; 0.83% for Janus Aspen Growth
Portfolio; 2.23% for Lexington Emerging Markets Fund; and 0.95%% for Schwab
Money Market Portfolio. See the Portfolios' prospectuses for a discussion of fee
waiver and expense reimbursements.
(2) The American Century VP Capital Appreciation was called the TCI Growth
Portfolio previous to May 1, 1997.
5
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EXAMPLES(1)
The following chart reflects the $25 Annual Contract Charge as an
annual charge of % of assets based on an approximate average Account Value of $,
assuming a 5% annual return before expenses. The tabular information also
assumes that the entire Account Value is allocated to the particular
Sub-Account. These examples assume that no premium taxes have been assessed
(although premium taxes may be applicable - see "Premium Taxes," page 33).
If you retain, annuitize, or surrender the Contract at the end of the
applicable time period, assuming a $1,000 Purchase Payment, you would pay the
following fees and expenses:
<TABLE>
<CAPTION>
Sub-Account 1 Year 3 Years 5 Years 10 Years
- -------------------------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
American Century VP Capital Appreciation 19.28 59.64 102.54 222.01
Federated American Leaders Fund II............. 17.76 55.05 94.79 206.03
Federated Fund for U.S. Government Securities II 17.26 53.51 92.20 200.65
INVESCO VIF-High Yield Portfolio............... 17.90 55.46 95.50 207.49
INVESCO VIF-Industrial Income Portfolio........ 18.71 57.91 99.64 216.03
INVESCO VIF-Total Return Portfolio............. 18.61 57.61 99.12 214.97
Janus Aspen Growth Portfolio................... 16.09 49.93 86.13 188.01
Lexington Emerging Markets Fund................ 25.63 78.80 134.63 286.72
Schwab Money Market Portfolio.................. 14.23 44.25 76.48 167.76
SteinRoe Capital Appreciation Fund............. 16.69 51.78 89.26 194.55
Strong Discovery Fund II....................... 21.32 65.84 112.97 243.28
</TABLE>
THESE EXAMPLES SHOULD NOT BE CONSIDERED REPRESENTATIONS OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES PAID MAY BE GREATER OR LESS THAN THOSE SHOWN, SUBJECT
TO THE GUARANTEES IN THE CONTRACT.
(1) The Portfolio Annual Expenses and these examples are based on data provided
by the Portfolios. Transamerica has no reason to doubt the accuracy or
completeness of that data, but Transamerica has not verified the Funds' figures.
In preparing the Portfolio Expense table and the Examples above, Transamerica
has relied on the figures provided by the Portfolios.
(2) The American Century VP Capital Appreciation was called the TCI Growth
Portfolio previous to May 1, 1997.
Federal Income Tax Consequences
A Contract Owner who is a natural person generally should not be taxed on
increases in the Account Value (if any) until a distribution under a Contract
occurs (e.g., a withdrawal or Annuity Payment) or is deemed to occur (e.g., a
pledge, loan, or assignment of the Contract). Generally, a portion (up to 100%)
of any distribution or deemed distribution is taxable as ordinary income. The
taxable portion of distributions is generally subject to income tax withholding
unless the recipient (if permitted) elects otherwise. In addition, a federal
penalty tax may apply to certain
6
<PAGE>
distributions or deemed distributions. (See "Federal Tax Matters," page 31.)
NOTES:
The foregoing summary is qualified in its entirety by the detailed
information in the remainder of this Prospectus and in the prospectuses for the
Portfolios which should be referred to for more detailed information.
With respect to Qualified Contracts, it should be noted that the
requirements of a particular retirement plan, an endorsement to the Contract, or
limitations or penalties imposed by the Code, as amended, may impose additional
limits or restrictions on Purchase Payments, withdrawals, surrenders,
distributions, or benefits, or on other provisions of the Contract. This
Prospectus does not describe any such limitations or restrictions. (See "Federal
Tax Matters," page 31.)
CONDENSED FINANCIAL INFORMATION
The following condensed financial information is derived from the
financial statements of the Variable Account. The data should be read in
conjunction with the financial statements, related notes, and other financial
information in the Statement of Additional Information.
The following table sets forth certain information regarding the
Sub-Accounts for the period from commencement of business operation of the
Sub-Accounts on January 1, 1995, through December 31, 1996.
7
<PAGE>
Financial statements for the Variable Account and Transamerica and
reports of the independent certified public accountants are available in the
Statement of Additional Information.
<TABLE>
<CAPTION>
Accumulation Accumulation No. of Units
Unit Values Unit Values Outstanding
as of as of as of
Sub-Accounts 1/1/95 12/31/95 12/31/95
<S> <C> <C> <C>
American Century VP Balanced $9.773 $11.736 176.896
American Century VP Capital Appreciation
$9.695 $12.603 34,669.264
Federated American Leaders Fund II $10.024 $13.350 10,878.374
Federated Fund for U.S. Government Securities II $10.114 $10.950 3,759.299
INVESCO VIF-High Yield Portfolio $9.996 $11.870 11,645.434
INVESCO VIF-Industrial Income Portfolio $10.058 $12.891 20,026.115
INVESCO VIF-Total Return Portfolio $10.110 $12.310 5,210.993
Janus Aspen Growth Portfolio $9.950 $12.843 17,259.094
Lexington Emerging Markets Fund $10.011 $9.536 29,955.147
Schwab Money Market Portfolio $1.019 $1.064 1,085,225.895
SteinRoe Capital Appreciation Fund $10.204 $11.307 8,002.306
Strong Discovery Fund II $10.848 $14.550 25,802.320
Accumulation Accumulation No. of Units
Unit Values Unit Values Outstanding
as of as of as of
Sub-Accounts 1/1/96 12/31/96 12/31/96
American Century VP Balanced $11.736 $13.054 .428
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American Century VP Capital Appreciation $12.603 $11.942 41,642.157
Federated American Leaders Fund II $13.350 $16.092 64,920.490
Federated Fund for U.S. Government Securities II $10.950 $11.313 12,061.284
INVESCO VIF-High Yield Portfolio $11.870 $13.722 42,632.792
INVESCO VIF-Industrial Income Portfolio $12.891 $15.629 77,033.017
INVESCO VIF-Total Return Portfolio $12.310 $13.693 19,328.612
Janus Aspen Growth Portfolio $12.843 $15.084 65,009.033
Lexington Emerging Markets Fund $9.536 $10.161 47,399.974
Schwab Money Market Portfolio $1.064 $1.108 1,005,527.898
SteinRoe Capital Appreciation Fund $11.307 $14.232 63,413.267
Strong Discovery Fund II $14.550 $14.543 42,573.916
</TABLE>
(1) The American Century VP Balanced Sub-Account, which was offered prior to May
1, 1995, remains part of the Variable Account and is included in the Condensed
Financial Information and financial statement. However, the American Century VP
Balanced Sub-Account is no longer available for investment.
(2) The American Century VP Capital Appreciation was called the TCI Growth
Portfolio previous to May 1, 1997.
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
AND THE VARIABLE ACCOUNT
Transamerica Life Insurance Company of New York
Transamerica Life Insurance Company of New York, formerly called First
Transamerica Life Insurance Company ("Transamerica"), is a stock life insurance
company incorporated under the laws of the state of New York on February 5,
1986. It is principally engaged in the sale of life insurance and annuity
policies. Transamerica is a wholly-owned subsidiary of Transamerica Occidental
Life Insurance Company which, in turn, is an indirect subsidiary of Transamerica
Corporation. The address of Transamerica is 100 Manhattanvilee Road, Purchase,
New York 10577, and the telephone number for Transamerica is 914-701-6000. The
name change to Transamerica Life Insurance Company of New York is effective May
1, 1997.
Published Ratings
We may from time to time publish in advertisements, sales literature and
reports, the ratings and other information assigned to Transamerica by one or
more independent rating organizations such as A.M. Best Company, Standard &
Poor's, Moody's and Duff & Phelps. The purpose of the ratings is to reflect our
financial strength and/or claims-paying ability and should not be considered as
bearing on the investment performance of assets held in the Variable Account.
Each year the A.M. Best Company reviews the financial status of thousands of
insurers, culminating in the assignment of Best's Ratings. These ratings reflect
their current opinion of the relative financial strength and operating
performance of an insurance company in comparison to the norms of the
life/health insurance industry. In addition, our claims-paying ability as
measured by Standard & Poor's Insurance Ratings Services or Duff & Phelps may be
referred to in advertisements or sales literature or in reports. These ratings
are opinions of an operating insurance company's financial capacity to meet the
obligations of its insurance and annuity policies in accordance with their
terms. Such ratings do not reflect the investment performance of the Variable
Account or the degree of risk associated with an investment in the Variable
Account.
The Variable Account
Separate Account VA-5NLNY of Transamerica ("Variable Account") was
established by us as a separate account under the laws of the State of New York
on November 10, 1993, pursuant to resolutions of our Board of Directors. The
Variable Account is registered with the Securities and Exchange Commission
("Commission") under
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the Investment Company Act of 1940 ("1940 Act") as a unit investment trust. It
meets the definition of a separate account under the federal securities laws.
However, the Commission does not supervise the management or the investment
practices or policies of the Variable Account.
The assets of the Variable Account are owned by Transamerica but they are
held separately from our other assets. Section 4240 of the New York Insurance
Law provides that the assets of a separate account are not chargeable with
liabilities incurred in any other business operation of the insurance company
(except to the extent that assets in the separate account exceed the reserves
and other liabilities of the separate account) if and to the extent provided in
the applicable agreements, and the Contracts contain such a provision. Income,
gains and losses incurred on the assets in the Variable Account, whether or not
realized, are credited to or charged against the Variable Account without regard
to our other income, gains or losses. Therefore, the investment performance of
the Variable Account is entirely independent of the investment performance of
our general account assets or any other separate account maintained by us.
The Variable Account currently has eleven Sub-Accounts, each of which
invests solely in a specific corresponding mutual fund Portfolio. (See "The
Portfolios," page 10.) Changes to the Sub-Accounts may be made at our
discretion. (See "Addition, Deletion, or Substitution," page 13.)
THE PORTFOLIOS
The Portfolios described below are exclusively for use as funding vehicles
for insurance products and qualified plans, in certain circumstances, and,
consequently, are not publicly available mutual funds. Each Portfolio has
separate investment objectives and policies. As a result, each Portfolio
operates as a separate investment portfolio and the investment performance of
one Portfolio has no effect on the investment performance of any other
Portfolio.
See the Portfolios' prospectuses for more information.
American Century Variable Portfolios, Inc.
American Century VP Capital Appreciation: Seeks capital growth by
investing in common stocks (including securities convertible into common
stocks and other equity equivalents) and other securities that meet
certain fundamental and technical standards of selection and have, in the
opinion of the investment manager, better-than-average potential for
appreciation. The Portfolio's investment manager intends to stay fully
invested in such securities, regardless of the movement of stock prices
generally.
Federated Insurance Series
Federated American Leaders Fund II: Seeks to achieve long-term growth of
capital as a primary objective and seeks to provide income as a secondary
objective through investment of at least 65% of its total assets (under
normal circumstances) in common stocks of "blue-chip" companies.
Federated Fund for U.S. Government Securities II: Seeks to provide current
income through investment of at
least 65% of its total assets (under normal circumstances) in securities
which are primary or direct obligations
of the U.S. government or its agencies or instrumentalities or which are
guaranteed by the U.S. government,
its agencies, or instrumentalities and in collateralized mortgage
obligations issued by U.S. government agencies
and instrumentalities.
INVESCO Variable Investment Funds, Inc.
INVESCO VIF-Industrial Income Portfolio: Seeks the best possible current
income while following sound investment practices. Capital growth
potential is an additional consideration in the selection of portfolio
securities. The Industrial Income Portfolio normally invests at least 65%
of its total assets in dividend-paying common stocks. Up to 10% of the
Portfolio's total assets may be invested in equity securities that do
10
<PAGE>
not pay regular dividends.
INVESCO VIF-Total Return Portfolio: Seeks a high total return on
investment through capital appreciation and current income. The Total
Return Portfolio seeks to achieve its investment objective by investing in
a combination of equity securities (consisting of common stocks and, to a
lesser degree, securities convertible into common stock) and fixed income
securities.
INVESCO VIF-High Yield Portfolio: Seeks a high level of current income by
investing substantially all of its assets in lower-rated bonds and other
debt securities and in preferred stock. These bonds and other securities
are sometimes referred to as "junk bonds." The High Yield Portfolio
pursues its investment objective through investment in a variety of
long-term, intermediate-term, and short-term bonds. Potential capital
appreciation is a factor in the selection of investments, but is secondary
to the Portfolio's primary objective.
Janus Aspen Series
Janus Aspen Growth Portfolio: Seeks long-term growth of capital in a
manner consistent with the preservation of capital. Realization of income
is not a significant investment consideration and any income realized on
the Growth Portfolio's investments will be incidental to its primary
objective. The Growth Portfolio seeks to achieve its investment objective
by investing substantially all of its assets in common stock when its
portfolio manager believes that the relevant market environment favors
profitable investing in those securities. Generally, the Portfolio
emphasizes issuers with larger market capitalizations.
Lexington Emerging Markets Fund, Inc.
Lexington Emerging Markets Fund: Seeks long term growth of capital by
investing primarily in emerging country and emerging market equity
securities. For purposes of its investment objective, the Fund considers
emerging country equity securities to be any country whose economy and
market the World Bank or United Nations considers to be emerging or
developing. The Fund may also invest in equity securities and equivalents
traded in any market, of companies that derive 50% or more of their total
revenue from either goods or services produced in such emerging countries
or markets or sales made in such countries.
Schwab Annuity Portfolios
Schwab Money Market Portfolio: Seeks maximum current income consistent
with liquidity and stability of capital. It seeks to achieve its objective
by investing in short-term money market instruments. This Portfolio is
neither insured nor guaranteed by the United States Government and there
can be no assurance that it will be able to maintain a stable net asset
value of $1.00 per share.
SteinRoe Variable Investment Trust
SteinRoe Capital Appreciation Fund: Seeks growth of capital. The Fund
pursues this objective by investing primarily in common stocks,
convertible securities, and other securities having common stock
characteristics selected for prospective capital growth.
Strong Discovery Fund II, Inc.
Strong Discovery Fund II: Seeks capital growth. The Fund invests in
securities that the Fund's investment adviser believes represent
attractive growth opportunities. The Fund normally emphasizes equity
investments, although it has the flexibility to invest in any security the
Fund's investment adviser believes has the potential for capital
appreciation.
11
<PAGE>
The American Century VP Capital Appreciation is advised by American
Century Investment Management, Inc. of Kansas City, Missouri, advisers to the
American Century family of mutual funds. The two Federated Insurance Series
Portfolios are advised by Federated Advisers of Pittsburgh, Pennsylvania. The
three INVESCO Variable Investment Funds, Inc., Portfolios are advised by INVESCO
Funds Group, Inc., of Denver, Colorado. The Janus Aspen Growth Portfolio is
advised by Janus Capital Corporation of Denver, Colorado. The Lexington Emerging
Markets Fund is advised by Lexington Management Corporation of Saddle Brook, New
Jersey. The Schwab Money Market Portfolio is advised by Charles Schwab
Investment Management, Inc., of San Francisco, California. The SteinRoe Capital
Appreciation Fund is advised by Stein Roe & Farnham Incorporated of Chicago,
Illinois. Strong Discovery Fund II is advised by Strong Capital Management, Inc.
of Milwaukee, Wisconsin.
* * *
Meeting investment objectives depends on various factors, including,
but not limited to, how well the
portfolio managers anticipate changing economic and market conditions. THERE IS
NO ASSURANCE THAT ANY
OF THESE PORTFOLIOS WILL ACHIEVE THEIR STATED OBJECTIVES.
The Contracts are not deposits of, or guaranteed or endorsed by, any
bank, nor is the Contract federally insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other government agency. The
Contracts involve certain investment risks, including possible loss of
principal.
Each Portfolio is registered with the Commission as an open-end,
management investment company or a series thereof. The Commission does not
supervise the management or the investment practices and policies of any of the
Portfolios.
Since some of the Portfolios are available to registered separate
accounts of other insurance companies offering variable annuity and variable
life products and to qualified plans in certain circumstances, there is a
possibility that a material conflict may arise between the interests of the
Variable Account and one or more other separate accounts or qualified plans
investing in the Portfolios. In the event of a material conflict, the affected
insurance companies or qualified plans are required to take any necessary steps
to resolve the matter, including stopping their separate accounts or qualified
plans from investing in the Portfolios. See the Portfolios' prospectuses for
more details.
Additional information concerning the investment objectives and
policies of all of the Portfolios and the investment adviser services and
administrative services and charges can be found in the current prospectuses for
the Funds, which can be obtained by calling the Service Center at P.O. Box
31720, Purchase, New York 28231-1728, telephone 800-258-4261. The Portfolios'
prospectuses should be read carefully before any decision is made concerning the
allocation of Purchase Payments to, or transfers among, the Sub-Accounts.
Addition, Deletion, or Substitution
Transamerica does not control the Portfolios and cannot guarantee that any
of the Portfolios will always be available for allocation of Purchase Payments
or transfers, so Transamerica retains the right to make changes in the Variable
Account and in its investments.
Transamerica reserves the right to eliminate the shares of any Portfolio
held by a Sub-Account and to substitute shares of another Portfolio or of
another investment company, for the shares of any Portfolio, if the shares of
the Portfolio are no longer available for investment or if, in our judgment,
investment in any Portfolio would be inappropriate in view of the purposes of
the Variable Account. To the extent required by the 1940 Act, a substitution of
shares attributable to the Owner's interest in a Sub-Account will not be made
without prior notice to the Owners and the prior approval of the Commission.
Nothing contained herein shall prevent the Variable
12
<PAGE>
Account from purchasing other securities for other series or classes of variable
annuity policies, or from effecting an exchange between series or classes of
variable policies on the basis of requests made by Owners.
New Sub-Accounts may be established when, in our discretion, marketing,
tax, investment or other conditions so warrant. Any new Sub-Accounts will be
made available to existing Owners on a basis to be determined by us. Each
additional Sub-Account will purchase shares in a Portfolio or in another mutual
fund or investment vehicle. We may also eliminate one or more Sub-Accounts if,
in our sole discretion, marketing, tax, investment or other conditions so
warrant. In the event any Sub-Account is eliminated, we will notify the Owners
and request a reallocation of the amounts invested in the eliminated
Sub-Account. We also reserve the right to restrict the transfer privilege.
In the event of any such substitution or change, we may make such changes
to your Contract as may be necessary or appropriate to reflect such substitution
or change. Furthermore, if deemed to be in the best interests of persons having
voting rights under the Contracts, the Variable Account may be operated as a
management company under the 1940 Act or any other form permitted by law, may be
de-registered under such Act in the event such registration is no longer
required, or may be combined with one or more other separate accounts.
THE CONTRACT
The Contract is a deferred variable annuity contract. Your rights and
benefits are described below and in the certificate and group contract; however,
we reserve the right to make any modification to conform the group contract and
certificates thereunder to, or give you the benefit of, any federal or state
statute or rule or regulation.
The obligations under the Contract are our obligations.
You as Owner will designate the Annuitant. You can be the Annuitant and
must be the Annuitant in the case of a Qualified Contract issued to fund an IRA.
(See "Qualified Contracts" on page 15.)
Annuity payments will be made to the Annuitant after the Annuity Date
unless, in the case of a NonQualified Contract, you designate a different Payee.
The term "Contract" as used herein refers to a certificate issued under
a group annuity contract. For each Contract, a different Account will be
established and values and benefits will be calculated separately. The various
administrative rules described below will apply separately to each Contract,
unless otherwise noted.
Qualified Contracts
The Contracts may be used to fund IRA rollovers for use in connection
with Section 408(b) of the Code. If a Contract is purchased to fund an IRA, the
Annuitant must also be the Owner and Joint Onwers cannot be named. In addition,
minimum distributions from IRAs must commence not later than April 1st of the
calendar year following the calendar year in which you attain age 701/2. You
should consult your tax adviser concerning these matters.
The Contract and prototype IRA endorsement have received IRS approval
that they are acceptable under Section 408 of the Code, and that each individual
who purchases a Contract with an IRA endorsement will be considered to have
adopted a retirement savings program that satisfies the requirements of Section
408 of the Code. The IRS approval is a determination only as to the form of the
Contract and does not represent a determination of the merits of the Contract.
An IRA rollover is a rollover of certain kinds of distributions from
qualified plans, Section 403(b) tax sheltered annuities, and individual
retirement plans, following the rules set out in the Code to maintain special
tax treatment, to an Individual Retirement Annuity.
13
<PAGE>
PURCHASE PAYMENTS
Purchase Payments
All Purchase Payments can be paid to the Service Center by a check
payable to Transamerica. A confirmation will be issued to you upon the
acceptance of each Purchase Payment. Acceptance is subject to the there being
sufficient information in a form acceptable to us, and we reserve the right to
reject any Purchase Payment.
Your Contract will be issued and your Net Purchase Payment derived from
the Initial Purchase Payment generally will be accepted and credited within two
business days after receipt of an acceptable application and receipt of the
Initial Purchase Payment at the Service Center.
Purchase Payments may be made at any time prior to the Annuity Date, as
long as the Annuitant (or Contingent Annuitant, if applicable) is living.
Additional Purchase Payments must be at least $1,000. In addition, minimum
allocation amounts apply (see "Allocation of Purchase Payments" page 17).
Purchase Payments made by check are credited to your Contract as of the date of
receipt of the payment at the Service Center.
Total Purchase Payments may not exceed $1,000,000 without our prior
approval.
In no event may the sum of all Purchase Payments for a Contract during
any taxable year exceed the limits imposed by any applicable federal or state
law, rules, or regulations.
14
<PAGE>
Allocation of Purchase Payments
You specify either in a form and manner acceptable to Transamerica how
Purchase Payments will be allocated among the Sub-Accounts. You may allocate
each Net Purchase Payment to one or more of the Sub-Accounts as long as the
portions are whole number percentages and any allocation percentage for a
Sub-Account is at least 10%.
Each Net Purchase Payment will be subject to the allocation percentages
in effect at the time of receipt of such Purchase Payment. (A Net Purchase
Payment is the Purchase Payment less any applicable premium taxes, including any
retaliatory premium taxes should such taxes be levied in the future in New York
or should you live in a state with such taxes in the future.) The allocation
percentages for new Purchase Payments among the SubAccounts may be changed by
you at any time by request in a manner and form acceptable to us. Any change
will take effect with the first Purchase Payment received with or after receipt
of notice of the change by our Service Center and will continue in effect until
subsequently changed. The minimum amount of any new Purchase Payment that can be
allocated to establish a SubAccount is $1,000.
ACCOUNT VALUE
Before the Annuity Date, your Account Value is the total dollar amount
of each Sub-Account credited to your Contract. The Account Value is equal to:
(a) Net Purchase Payments; plus or minus (b) any increase or decrease in the
value of the Sub-Accounts due to investment results; less (c) the Mortality and
Expense Risk Charge; less (d) the Administrative Expense Charge (if one is
imposed); less (e) Annual Contract Charge; less (f) any Transfer Fees; and less
(g) withdrawals from the Sub-Accounts less any premium taxes applicable to those
withdrawals.
A Valuation Period is the period between successive Valuation Days. It
begins at the close of the New York Stock Exchange (generally 4:00 p.m. ET) on
each Valuation Day and ends at the close of the New York Stock Exchange on the
next succeeding Valuation Day. A Valuation Day is each day that the New York
Stock Exchange is open for regular business. The value of the Variable Account
assets is determined at the end of each Valuation Day. To determine the value of
an asset on a day that is not a Valuation Day, the value of that asset as of the
end of the next Valuation Day will be used.
The Account Value is expected to change from Valuation Period to
Valuation Period, reflecting the investment experience of the selected
Portfolios as well as the deductions for charges.
Any time the value in a Sub-Account is less than $250, whether by
transfer, withdrawal or investment experience, we reserve the right to transfer
the balance in the Sub-Account to the Money Market Sub-account.
Net Purchase Payments are used to purchase Variable Accumulation Units
in the Sub-Account or SubAccounts you select. The number of Variable
Accumulation Units to be credited for each Sub-Account will be determined by
dividing the portion of each Net Purchase Payment allocated to the Sub-Account
by the Variable Accumulation Unit Value determined at the end of the Valuation
Period during which the Net Purchase Payment was received.
15
<PAGE>
Variable Accumulation Units for Purchase Payments will be credited at the end of
the Valuation Period during which we receive the payment. The value of a
Variable Accumulation Unit for each SubAccount for a Valuation Period is
established at the end of each Valuation Period and is calculated by multiplying
the value of that unit at the end of the prior Valuation Period by the
Sub-Account's Net Investment Factor for the Valuation Period.
The Net Investment Factor is a formula that reflects the changes in the
value of a share of the applicable Portfolio (and any dividends declared by the
Portfolio); it is used to determine the value of Accumulation Units. The
applicable formula can be found in the Statement of Additional Information. The
value of a Variable Accumulation Unit may go up or down.
Unlike a brokerage account, this account is not covered by the
Securities Investor Protection Corporation ("SIPC").
TRANSFERS
In General
Prior to the Annuity Date you may transfer all or part of your Account
Value among the Sub-Accounts by sending a written request to our Service Center.
The minimum amount which may be transferred is the lesser of $1,000 or the
entire value of the Sub-Account from which the transfer is being made. The
request must specify the amounts being transferred from each Sub-Account, and
the amounts being transferred to each Sub-Account that will receive the
transfer.
Currently, there is no limit on the number of transfers you can make
and there is no charge for the first ten transfers each Contract Year, but there
is a charge of $10 (or 2% of the amount of the transfer, whichever is less) for
each additional transfer in each Contract Year. We reserve the right to limit
the number of transfers you can make.
A transfer generally will be effective on the date the request for
transfer is received by our Service Center if received before 4:00 p.m. Eastern
Time. Under current law, there will not be any tax liability to you if you make
a transfer.
Transfers may also be subject to such terms and conditions as may be
imposed by the Portfolios.
Transfers among the Sub-Accounts will result in the purchase and/or
cancellation of Variable Accumulation Units having a total value equal to the
dollar amount being transferred to or from a particular Sub-Account. The
purchase and/or cancellation of such units generally shall be made using the
Variable Accumulation Unit value of the applicable Sub-Accounts as of the end of
the Valuation Day in which the transfer is effective.
Possible Restrictions
We reserve the right, without prior notice, to modify,
restrict, suspend or eliminate the transfer privileges (including telephone
transfers) at any time and for any reason. For example, restrictions may be
necessary to protect Contract Owners from adverse impacts on portfolio
management of large and/or numerous transfers by market timers or others. We
have determined that the movement of significant Sub-Account values from one
SubAccount to another may prevent the underlying Portfolio from taking advantage
of investment opportunities because the Portfolio must maintain a significant
cash position in order to handle redemptions. Such movement may also cause a
substantial increase in Portfolio transaction costs which must be indirectly
borne by Contract Owners. Therefore, we reserve the right to require that all
transfer requests be made by the Owners and not by a
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<PAGE>
third party holding a power of attorney and to require that each transfer
request be made by a separate communication to us. We also reserve the right to
request that each transfer request be submitted in writing and be manually
signed by the Owner(s); facsimile transfer requests may not be allowed.
Dollar Cost Averaging (Automatic Transfers)
Prior to the Annuity Date, you may automatically transfer without
charge amounts from one Sub-Account selected, from among those being allowed
under this option, to any of the other Sub-Accounts on a monthly basis. The
transfers will begin on the tenth day of the next month following receipt of the
request, provided that automatic transfers will not commence until the later of
(a) 30 days after the Annuity Issue Date, or (b) the estimated end of the Free
Look Period. Transfers will continue unless terminated by you or automatically
terminated by us because there are insufficient funds in the applicable
Sub-Account, or for other reasons as set forth in the Contract.
Automatic transfers must meet the following conditions: (1) the minimum
amount that can be transferred out of the selected Sub-Account is $250 per
month; and (2) the minimum amount transferred into any other SubAccount is the
greater of $250 or 10% of the amount being transferred that month. At the time
of your election and of the first automatic transfer made under this option, the
amount in the selected Sub-Account from which the transfers are to be made must
be at least $5,000.
Automatic transfers will not count toward the limitation of 10 free
transfers per Contract Year.
CASH WITHDRAWALS
Withdrawals
You (the Owner) may withdraw all or part of your Account Value at any
time during the life of the Annuitant and prior to the Annuity Date by request
in a manner and form acceptable to us at our Service Center, subject to the
rules below. Federal or state laws, rules or regulations may apply. The amount
payable to you if you surrender your Contract on or before the Annuity Date is
your Account Value less any applicable premium taxes.
No withdrawals may be made after the Annuity Date.
A full surrender will result in a cash withdrawal payment equal to the
Account Value (less any applicable premium taxes) at the end of the Valuation
Period during which the request is received. A request for a partial withdrawal
will result in a reduction in your Account Value equal to the sum of the dollar
amount withdrawn.
Partial withdrawals must be at least $1,000. You may instruct our
Service Center as to the amounts to be withdrawn from each Sub-Account. If not
so instructed, our Service Center will effect such withdrawal pro rata from all
Sub-Accounts in which your Account Value is invested.
A partial withdrawal will not be processed if it would reduce the
Account Value to less than $2,000. In that case, you will be contacted to decide
either to: (a) withdraw a lesser amount (subject to the $1,000 minimum) leaving
an Account Value of at least $2,000; or (b) completely surrender the Contract.
You will have ten days to notify us of your decision. Amounts payable will be
determined as of the end of the Valuation Period during which the subsequent
instructions are received. If, after the expiration of the 10-day period, no
election is received from you, the withdrawal request will be considered null
and void, and no withdrawal will be processed.
Withdrawals are generally taxable transactions (this includes APO
withdrawals and Systematic Withdrawals discussed below). Moreover, the Code
provides that a 10% penalty tax may be imposed on the taxable portions of
certain early withdrawals. The Code generally requires us to withhold federal
income tax from withdrawals. However, generally you will be entitled to elect,
in writing, not to have tax withholding apply. Withholding applies to the
portion of the withdrawal which is included in your income and subject to
federal income tax. The current tax withholding rate is
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<PAGE>
10% of the taxable amount of the withdrawal. Withholding applies only if the
taxable amount of the withdrawal is
at least $200. Some states also require withholding for state income taxes.
(See "Federal Tax Matters," page 31.)
Withdrawal requests must be made in writing to ensure that your
instructions regarding withholding are followed.
Since you assume the investment risk under the Contract, the total
amount paid upon surrender of your Contract (taking into account any prior
withdrawals) may be more or less than the total Purchase Payments you made.
Withdrawal (including surrender) requests generally will be processed
as of the end of the Valuation Period during which the completed request,
including any necessary forms, is received by the Service Center. Payment of any
cash withdrawal or lump sum death benefit due from the Variable Account will
occur no longer than seven days from the date the request is received, except
that we may postpone such payment if: (1) the New York Stock Exchange is closed
for other than usual weekends or holidays, or trading on the Exchange is
otherwise restricted; or (2) an emergency exists as defined by the Commission,
or the Commission requires that trading be restricted; or (3) the Commission
permits a delay for the protection of Owners. The withdrawal request will be
effective when any necessary withdrawal request forms are received. Payments of
any amounts derived from Purchase Payment paid by check may be delayed until the
check has cleared the Owner's bank.
After a surrender of your total Account Value, or at any time that your
Account Value is zero, all your rights under the Contract will terminate.
Since the Qualified Contracts offered by this Prospectus will be issued
in connection with retirement plans which meet the requirements of the Code,
reference should be made to the Code and the terms of the particular retirement
plans for any additional limitations or restrictions on cash withdrawals.
Systematic Withdrawal Option
Under the Systematic Withdrawal Option, you can instruct Transamerica
to make automatic payments of a predetermined dollar amount or fixed percentage
of the Account Value to you monthly. To be eligible for systematic withdrawal,
the Account Value must be at least $15,000 at the time you elect the Systematic
Withdrawal Option and at the time of the first withdrawal. The minimum
systematic withdrawal payment is $150.
Systematic withdrawals will commence on the fourth day of the month
following receipt of the election at our Service Center. Such date may not be
earlier than: (a) 30 days after the Annuity Issue Date shown on the Certificate
Data page; or (b) the end of the Free Look Period, whichever is later. If the
fourth day is not a Valuation Day, systematic withdrawals will start on the next
following Valuation Day. Subsequent withdrawals will be made on the fourth day
of each month thereafter. To ensure that your instructions regarding withholding
are followed, requests for systematic withdrawal must be in a manner and form
acceptable to the Service Center. You may specify the Sub-Accounts from which
systematic withdrawals will be made, but if you do not specify the Sub-Accounts
from which systematic withdrawals are to be taken, systematic withdrawals will
be taken pro-rata from all SubAccounts on the date of each systematic
withdrawal.
When using systematic withdrawals, an Owner may not simultaneously
participate in the Automatic Payout Option.
Systematic withdrawals may be taxable, subject to income tax
withholding, and subject to the 10% penalty tax. (See "Federal Tax Matters,"
page 31.)
Qualified Policies are subject to complex rules with respect to
restrictions on and taxation of distributions,
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including the applicability of penalty taxes. A qualified tax adviser should be
consulted before a Systematic
Withdrawal Option is requested. (See "Federal Tax Matters," page 31.)
Automatic Payout Option ("APO") For Qualified Plans
Prior to the Annuity Date, for Qualified Contracts (IRAs) only, you may
elect the Automatic Payout Option ("APO") to satisfy minimum distribution
requirements under Section 408(b)(3) of the Code with regard to this Contract.
This may be elected no earlier than six months prior to the calendar year in
which you attain age 701/2, but payments may not begin earlier than January 1 of
such calendar year and APO cannot be elected later than the month immediately
preceding the month in which you attain age 84.
The APO may not be elected while systematic withdrawals are in effect. Payments
will continue unless terminated by you or automatically terminated by us as
stated in the Contract.
To be eligible for this option, the following conditions must be met:
(1) your Account Value must be at least $15,000 at the time of election and the
time of the first APO withdrawal; and (2) the annual withdrawal amount is the
larger of the required minimum distribution for this contract as defined under
Code Section 408(b)(3) or $1,000.
APO allows the required minimum distribution to be paid periodically
from any of the Sub-Accounts. If there are insufficient funds in any of the
Sub-Accounts to make a withdrawal, or for other reasons as set forth in the
Contract, this option will terminate. If you have more than one qualified plan
subject to the Code's minimum distribution requirement, you must consider all
such plans in the calculation of your minimum annual distribution requirement,
but Transamerica will make calculations and distributions with regard to this
Contract only. Termination of distributions from this Contract will not relieve
you from your distribution requirements if you own multiple contracts.
You may also make partial withdrawals in addition to APO withdrawals,
subject to the withdrawal provisions of the Contract.
APO withdrawals may be taxable and subject to income tax withholding.
APO is not available with respect to the Fixed Account. Therefore, it
may be necessary to transfer amounts from the Fixed Account to the Variable
Account to continue APO withdrawals and if such transfers are from a Gruarantee
Period before its Expiration Date, the amount will be subject to an interest
adjustment.
DEATH BENEFIT
Before the Annuity Date, the death benefit will equal the larger of (1)
the sum of the Purchase Payments, less withdrawals and less premium or similar
taxes as of the date of death of you or the Annuitant, or (2) your Account
Value, as of the end of the Valuation Period during which the later of (a) due
Proof of Death is received by our Service Center and (b) a written notice of the
method of settlement elected by the Beneficiary is received at our Service
Center. (See "Designation of Beneficiaries," page 24.) If no settlement method
is elected, the death benefit will be paid in a lump sum no later than one year
after the date of death. Until the death benefit is paid, the Account Value
remains in the Variable Account, and fluctuates with the investment performance
of the applicable Portfolio(s). Accordingly, the amount of the death benefit
depends on the Account Value at the time the death benefit is paid (not on the
date of death).
Due Proof of Death may be: (a) a certified copy of a death certificate;
(b) a copy of a certified decree of a court of competent jurisdiction as to the
finding of death; or (c) a written statement by a medical doctor who attended
the deceased; and any other proof and documents satisfactory to us.
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Payment of Death Benefit
The death benefit is generally payable upon receipt of Proof of Death
of you or the Annuitant. Upon receipt of this proof and an election of a method
of settlement, the death benefit generally will be paid within seven days, or as
soon thereafter as we have sufficient information about the Beneficiary to make
the payment. The Beneficiary may receive the amount payable in a lump sum cash
benefit or, subject to any limitations under any state or federal law, rule, or
regulation, under one of the annuity forms, unless a settlement agreement is
effective under the Contract preventing such election. If no settlement method
is elected within one year of the date of death, the death benefit will be paid
in a lump sum based upon the Account Value at that time (i.e., one year after
the date of death). The payment of the death benefit may be subject to certain
distribution requirements under the federal income tax laws.
(See "Federal Tax Matters," page 31.)
Designation of Beneficiaries
You may select one or more Beneficiaries and name them in the
application or a Beneficiary designation form. If you select more than one
Beneficiary, unless you otherwise indicate, they will share equally in any death
benefits payable in the event of the Annuitant's death before the Annuity Date
if there is no Contingent Annuitant or upon your death if there is no Joint
Owner. Different Beneficiaries may be named with respect to the Annuitant's
death ("Annuitant's Beneficiary") and your death ("Owner's Beneficiary"). Before
the Annuitant's death, you may change any Beneficiary by written notice to the
Service Center. You may also make the designation of a Beneficiary irrevocable
by sending written notice to and obtaining approval from our Service Center.
Irrevocable Beneficiaries may be changed only with the written consent of the
designated Irrevocable Beneficiaries, except to the extent required by law.
The interest of any Beneficiary who dies before you or the Annuitant
will terminate at the death of the Beneficiary. The interest of any Beneficiary
who dies at the time of, or within 30 days after your or the Annuitant's death,
will also terminate if no benefits have been paid, unless the Contract has been
endorsed to provide otherwise. The benefits will then be paid as though the
Beneficiary has died before you or the Annuitant. If the interest of all
designated Beneficiaries has terminated, or if you do not designate a
Beneficiary, any benefits payable will be paid to your estate.
We may rely on an affidavit by any responsible person in determining
the identity or non-existence of any Beneficiary not identified by name.
Death of Annuitant Prior to the Annuity Date
If the Annuitant dies prior to the Annuity Date, the Annuitant is not
an Owner, and there is no Contingent Annuitant, a death benefit under the
Contract relating to that Annuitant will be paid to the Annuitant's Beneficiary.
If there is a Contingent Annuitant, then the Contingent Annuitant will become
the Annuitant and no Death Benefit shall be payable.
Death of Owner Prior to the Annuity Date
If an Owner dies before the Annuity Date, a death benefit will be paid
to the Owner's Beneficiary. If your Joint Owner or Beneficiary is your spouse,
then your spouse may elect to treat the Contract as his or her own.
Death of Owner or Annuitant After the Annuity Date
If an Owner or the Annuitant dies after the Annuity Date, the remaining
undistributed portion, if any, of the Contract will be distributed at least as
rapidly as under the method of distribution being used as of the date of such
death. Under some annuity forms, there will be no death benefit.
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CHARGES AND DEDUCTIONS
THIS PRODUCT HAS NO SALES CHARGE AND NO WITHDRAWAL OR SURRENDER
CHARGES.
No deductions are made from Purchase Payments except for any applicable
premium taxes. Therefore, the full amount of the Purchase Payments (less any
applicable premium tax charges) is invested in the Variable Account.
As more fully described below, charges under the Contract are assessed
only as deductions for premium taxes, if applicable, as charges against the
assets of the Variable Account for our assumption of mortality and expense risks
and administrative expenses (if charged), for certain transfers, and as an
Annual Contract Charge.
In addition, certain deductions are made from the assets of the
Portfolios for investment management fees and expenses. These fees and expenses
are described in the Portfolios' prospectuses and their Statements of Additional
Information.
Mortality and Expense Risk Charge
We deduct a Mortality and Expense Risk Charge from the Variable Account
at the end of each Valuation Period to compensate us for bearing certain
mortality and expense risks under the Contracts. This is a daily charge equal to
an effective annual rate of 0.85% of the value of the net assets in the Variable
Account. We guarantee that this charge will never increase beyond 0.85%.
The Mortality and Expense Risk Charge is reflected in the Variable
Accumulation Unit Values for each SubAccount.
Account Values and annuity payments are not affected by changes in
actual mortality experience incurred by us. The mortality risks assumed by us
arise from our contractual obligations to make annuity payments determined in
accordance with the annuity tables and other provisions contained in the
Contract. Thus you are assured that neither the Annuitant's longevity nor an
unanticipated improvement in general life expectancy will adversely affect the
annuity payments under the Contract.
We also bear substantial risk in connection with the death benefit
before the Annuity Date, since we will pay a death benefit equal to the greater
of your Account Value or your Purchase Payments less withdrawals and premium
taxe applicable to such withdrawals (so we bear the risk of unfavorable
experience in the Sub-Accounts).
The expense risk assumed by us is the risk that our actual expenses in
administering the Contracts and the Variable Account will be greater than
anticipated, or exceed the amount recovered through the Annual Contract Charge
plus the amount, if any, recovered through Transfer Fees and the Administrative
Expense Charge (currently not being charged).
If the Mortality and Expense Risk Charge is insufficient to cover
actual costs and risks assumed, the loss will fall on us. Conversely, if this
charge is more than sufficient, any excess will be profit to us. Currently, we
expect a profit from this charge. Our expenses for distributing the Contracts
will be borne by our general assets, including any profits from this charge.
Administrative Expense Charges
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We currently deduct a $25 (or 2% of Account Value if less) Annual
Contract Charge from the Account Value on each Contract Anniversary to partially
cover our costs for administering the Contracts and the Variable Account. The
Annual Contract Charge is deducted from the Money Market Sub-Account. If there
are not sufficient funds in the Money Market Sub-Account to cover the Annual
Contract Charge, then the Charge or any portion thereof will be deducted pro
rata from the other Sub-Accounts in the proportion that the Account Value in a
SubAccount bears to the total Account Value in all Sub-Accounts.
We currently do not deduct any other administrative expense charge.
However, we reserve the right to deduct such a charge from the Variable Account
at the end of each Valuation Period at an effective annual rate that is
guaranteed not to exceed 0.15% of the assets held in the Variable Account. We
will provide you at least 30 days written notice before any such charge is
imposed.
Premium Tax Charge
We may be required to pay state premium taxes or retaliatory taxes
currently ranging from 0% to 3.5% in connection with Purchase Payments or values
under the Contracts. Depending upon applicable state law, we will deduct charges
for the premium taxes we incur with respect to a particular Contract from the
Purchase Payments, from amounts withdrawn, or from amounts applied on the
Annuity Date. In some states, charges for both direct premium taxes and
retaliatory premium taxes may be imposed at the same or different times with
respect to the same Purchase Payment, depending on applicable state law.
Other Taxes
Under present laws, we will incur state or local taxes (in addition to
the premium taxes described above) in several states. No charges are currently
made for taxes other than state premium taxes. However, we reserve the right to
deduct charges in the future for federal, state, and local taxes or the economic
burden resulting from the application of any tax laws that we determine to be
attributable to the Contracts.
Portfolio Expenses
The value of the assets in the Variable Account reflects the value of
Portfolio shares and therefore the fees and expenses paid by each Portfolio. A
complete description of the fees, expenses, and deductions from the Portfolios
are found in the Funds' prospectuses. (See "The Portfolios," page 10.) Current
prospectuses for the Portfolios can be obtained by calling the Service Center at
at 800-258-4261 or P.O. Box 31728, Charlotte, North Carolina 28231-1728.
Transfer Fee
There will be a $10 (or 2% of the amount of the transfer, if less)
charge for each transfer in excess of ten transfers in any Contract Year.
ANNUITY PAYMENTS
Election of Annuity Date and Annuity Form
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The Annuity Date is the date that your Account Value (less any
applicable premium taxes) is applied to provide the annuity payments under your
selected annuity form (unless your entire Account Value has been withdrawn or
the death benefit has been paid to the Beneficiary prior to that date). When the
contract is issued, the designated annuity form is a Life Annuity with period
certain of 120 months (10 years). Before the Annuity Date, and while the
Annuitant is living, you may change the Annuity Date or annuity form by written
request. The request for change of the Annuity Date or annuity form must be
received by the Service Center at least 30 days prior to the Annuity Date. We
will provide you with at least 90 days notice of your Annuity Date so you can
change the date or the annuity form, if you so desire.
The Annuity Date must not be earlier than the first day of the calendar
month coinciding with or next following the first Contract Anniversary. The
latest Annuity Date which may be elected is the first day of the calendar month
immediately preceding the month of the Annuitant's 85th birthday. The Annuity
Date must be the first day of a calendar month and initially will be the first
day of the month prior to the Commencement of Annuity Payment Date selected by
you at the time the application is completed. The first annuity payment will be
on the Commencement of Annuity Payment Date, which is the first day of the month
immediately following the Annuity Date.
Fixed Annuity Payment
The amount of each annuity payment is fixed and will remain constant
pursuant to the terms of the annuity form elected (variable annuity payment
options are not currently offered). On the Annuity Date, the Account Value will
be transferred to our general account assets. The amount of annuity payments
will be established by the fixed annuity forms selected and the age and sex
(unless unisex rates are required by law) of the Annuitant. The annuity payments
will not reflect investment experience after the Annuity Date. The fixed annuity
payment amounts are determined by applying the Annuity Purchase Rate specified
in your Contract to the annuity form selected by you. Payments may change after
the death of the Annuitant under some annuity forms; the amounts of these
changes are fixed on the Annuity Date.
Choice of Annuity Forms
You may choose any of the four annuity forms described below. Subject
to our approval, you may select any other annuity forms then being offered by
us.
(1) Life Annuity. Payments start on the first day of the month
immediately following the Annuity Date, if the Annuitant is living. Payments end
with the payment due just before the Annuitant's death. There is no death
benefit under this form. It is possible that only one payment will be made under
this form if the Annuitant dies before the second payment is due; only two
payments will be made if the Annuitant dies before the third payment is due, and
so forth.
(2) Life and Contingent Annuity. Payments start on the first day of the
month immediately following the Annuity Date, if the Annuitant is living.
Payments will continue for as long as the Annuitant lives. After the Annuitant
dies, payments will be made to the Contingent Annuitant, if living, for as long
as the Contingent Annuitant lives. The continued payments can be in the same
amount as the original payments, or in an amount equal to one-half or two-thirds
thereof. Payments will end with the payment due just before the death of the
Contingent Annuitant. There is no death benefit after both die. If the
Contingent Annuitant does not survive the Annuitant, payments will end with the
payment due just before the death of the Annuitant. It is possible that only one
payment or very few payments will be made under this form, if the Annuitant and
Contingent Annuitant die shortly after payments begin.
The request for this form must: (a) name the Contingent Annuitant; and
(b) state the percentage of payments for the Contingent Annuitant. Once Annuity
Payments start under this annuity form, the person named as Contingent
Annuitant, for purposes of being the measuring life, may not be changed. We will
require proof of age for the Annuitant and for the Contingent Annuitant before
payments start.
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(3) Life Annuity With Period Certain. Payments start on the first day
of the month immediately following
the Annuity Date, if the Annuitant is living. Payments will be made for the
longer of: (a) the Annuitant's life; or (b)
the period certain. The period certain may be 120 or 180 or 240 months, but in
no event may it exceed the life
expectancy of the Annuitant.
If the Annuitant dies after all payments have been made for the period
certain, payments will cease with the payment due just before the Annuitant's
death. No benefit will then be payable to the Annuitant's Beneficiary.
If the Annuitant dies during the period certain, the rest of the period
certain payments will be made to the Annuitant's Beneficiary; you may elect to
have the commuted value of these payments paid in a single sum. We will
determine the commuted value by discounting the rest of the payments at the then
current rate of interest used by us for commuted values.
If after the Annuitant's death, you have not elected to have the
commuted value paid in a single sum and if the Annuitant's Beneficiary dies
before all of the payments under the period certain have been made, you may
designate a Payee to receive any remaining payments. If the Annuitant's
Beneficiary dies before receiving all of the remaining period certain payments
and a designated Payee does not survive the Annuitant's Beneficiary for at least
30 days, then the remaining payments will be paid to you, if living, otherwise
in a single sum to your estate.
The request for this form must: (a) state the length of the period
certain; and (b) name the Annuitant's
Beneficiary.
(4) Joint and Survivor Annuity. Payments will be made to the Annuitant,
starting on the first day of the month immediately following the Annuity Date,
if and for as long as the Annuitant and the Joint Annuitant are living. After
the Annuitant or the Joint Annuitant dies, payments will continue for as long as
the survivor lives. The continued payments can be in the same amount as the
original payments, or in an amount equal to one-half or two-thirds thereof. It
is possible that only one payment or very few payments will be made under this
form if the Annuitant and the Joint Annuitant both die shortly after payments
begin.
The selection of the Joint and Survivor Annuity form may have adverse
tax consequences and competent tax and legal counsel should be sought before you
select it.
The request for this form must: (a) name the Joint Annuitant; and (b)
state the percentage of continued payments for the survivor. Once payments start
under this annuity form, the person named as Joint Annuitant, for the purpose of
being the measuring life, may not be changed. We will need proof of age for the
Joint Annuitant before payments start.
(5) Other Forms of Payment. Benefits can be provided under any other
annuity form not described in this section subject to our agreement and any
applicable state or federal law or regulation. Requests for any other annuity
form must be made in writing to our Service Center at least 30 days before the
Annuity Date.
* * *
For annuity forms involving life income, the actual age and/or sex of
the Annuitant, or a Joint or Contingent Annuitant will affect the amount of each
payment. We reserve the right to ask for satisfactory proof of the Annuitant's
(or Joint or Contingent Annuitant's) age. We may delay annuity payments until
satisfactory proof is received. Since payments to older Annuitants are expected
to be fewer in number, the amount of each annuity payment under a selected
annuity form will be greater for older Annuitants than for younger Annuitants.
In the event that an annuity form is not selected at least 30 days before the
Annuity Date, we will make annuity payments in accordance with the "Life Annuity
With Period Certain" of 120 months, and the applicable provisions of the
Contract.
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The Annuity Date and annuity forms available for Qualified Contracts
may also be controlled by endorsements, the plan documents, or applicable law.
If the amount of the monthly annuity payment would be less than $20 or
if your Account Value (less any applicable premium tax charge) is less than
$2,000, we reserve the right to offer a less frequent mode of payment or to pay
that amount in a lump sum cash payment to you.
Once payments start under the annuity form selected by the Owner: (a)
no changes can be made in the annuity form; (b) no additional Purchase Payments
will be accepted under the Contract; and (c) no further withdrawals other than
withdrawals made to provide annuity benefits, will be allowed.
You may, at any time after the Annuity Date, request, in a manner and
form acceptable to us, the Service Center to change the Payee of annuity
benefits being provided under the Contract. The effective date of change in
Payee will be the later of: (a) the date we receive the notice for such change;
or (b) the date specified by you. If the Contract is issued as an IRA, you may
not change the Payee on or after the Annuity Date.
* * *
A portion or the entire amount of the annuity payments may be taxable
as ordinary income. If, at the time the annuity payments begin, we have not
received a proper written election not to have federal income taxes withheld, we
must by law withhold such taxes from the taxable portion of such annuity
payments and remit that amount to the federal government. State income tax
withholding may also apply. (See "Federal Tax Matters," page 31.)
Alternate Fixed Annuity Rates
The amount of any fixed annuity payments will be determined on the
Annuity Date by using either the guaranteed fixed annuity rates or our current
single Purchase Payment fixed annuity rates at that time, whichever would result
in a higher amount of monthly fixed annuity payments.
FEDERAL TAX MATTERS
Introduction
The following discussion is a general description of federal tax
considerations relating to the Contracts and is not intended as tax advice. This
discussion is not intended to address the tax consequences resulting from all of
the situations in which a person may be entitled to or may receive a
distribution under the Contract. Any person concerned about these tax
implications should consult a competent tax adviser before initiating any
transaction. This discussion is based upon our understanding of the present
federal income tax laws as they are currently interpreted by the Internal
Revenue Service. No representation is made as to the likelihood of the
continuation of the present federal income tax laws or of the current
interpretation by the Internal Revenue Service. Moreover, no attempt has been
made to consider any applicable state or other tax laws.
The Contract may be purchased on a non-tax qualified basis
("Non-Qualified Contract") or purchased and used in connection with plans
qualifying for special tax treatment ("Qualified Contract"). Qualified Contracts
are designed for use in connection with plans entitled to special income tax
treatment under Section 408 of the Code. The ultimate effect of federal income
taxes on the amounts held under a Contract, on annuity payments, and on the
economic benefit to you, the Annuitant, or the Beneficiary may depend on the
type of retirement plan, and on the tax status of the individual concerned. In
addition, certain requirements must be satisfied in purchasing a Qualified
Contract and receiving distributions from a Qualified Contract in order to
continue receiving special tax treatment. Therefore, purchasers of Qualified
Contracts should seek competent legal and tax advice regarding the suitability
of the Contract for their situation, the applicable
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requirements, and the tax treatment of the rights and benefits of the Contract.
The following discussion assumes that a Qualified Contract is purchased with
proceeds from and/or contributions under retirement plans that qualify for the
intended special federal income tax treatment.
The following discussion is based on the assumption that the Contract
qualifies as an annuity contract for federal income tax purposes. The Statement
of Additional Information discusses the requirements for qualifying as an
annuity.
Taxation of Annuities
In General
Section 72 of the Code governs taxation of annuities in general. We
believe that an Owner who is a natural person generally is not taxed on
increases (if any) in the value of an Account Value until distribution occurs by
withdrawing all or part of the Account Value (e.g., withdrawals or annuity
payments under the annuity form elected). For this purpose, the assignment,
pledge, or agreement to assign or pledge any portion of the Account Value
generally will be treated as a distribution. The taxable portion of a
distribution (in the form of a single sum payment or an annuity) is taxable as
ordinary income. Qualified Contracts cannot be assigend or pledged.
The Owner of any annuity contract who is not a natural person generally
must include in income any increase in the excess of the Account Value over the
"investment in the contract" (discussed below) during each taxable year. There
are some exceptions to this rule and a prospective Owner that is not a natural
person may wish to discuss these with a competent tax adviser.
The following discussion generally applies to a Contract owned by a
natural person.
Withdrawals
In the case of a withdrawal under a Qualified Contract, including
withdrawals under the Automatic Payout Option, a ratable portion of the amount
received is taxable, generally based on the ratio of the "investment in the
contract" to the individual's total accrued benefit under the retirement plan.
The "investment in the contract" generally equals the amount of any
non-deductible Purchase Payments paid by or on behalf of any individual. For a
Contract issued in connection with qualified plans, the "investment in the
contract" can be zero. Special tax rules may be available for certain
distributions from a Qualified Contract.
With respect to Non-Qualified Contracts, partial withdrawals, including
systematic withdrawals, are generally treated as taxable income to the extent
that the Account Value immediately before the withdrawal exceeds the "investment
in the contract" at that time. The "investment in the Contract" generally is
equal to the amount of Purchase Payments made. Full surrenders are treated as
taxable income to the extent that the amount received exceeds the "investment in
the contract."
Annuity Payments
Although the tax consequences may vary depending on the annuity form
elected under the Contract, in general, only the portion of the annuity payment
that represents the amount by which the Account Value exceeds the "investment in
the contract" will be taxed; after the investment in the contract is recovered,
the full amount of any additional annuity payments is taxable. For fixed annuity
payments, in general there is no tax on the portion of each payment which
represents the same ratio that the "investment in the contract" bears to the
total expected value of the annuity payments for the term of the payments;
however, the remainder of each annuity payment is taxable. Once the investment
in the Contract has been fully recovered, the full amount of any additional
annuity payments is taxable. If the annuity payments cease as a result of an
Annuitant's death before full recovery of the "investment
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in the contract," you should consult a competent tax adviser regarding the
deductibility of the unrecovered amount.
Penalty Tax
In the case of a distribution pursuant to a Non-Qualified Contract,
there may be imposed a federal income tax penalty equal to 10% of the amount
treated as taxable income. In general, however, there is no penalty tax on
distributions: (1) made on or after the date on which the Owner attains age 59
1/2; (2) made as a result of death or disability of the Owner; or (3) received
in substantially equal periodic payments as a life annuity or a joint and
survivor annuity for the lives or life expectancies of the Owner and a
"designated beneficiary." Other tax penalties may apply to certain distributions
pursuant to a Qualified Contract.
Taxation of Death Benefit Proceeds
Amounts may be distributed from the Contract because of the death of an
Owner or the Annuitant. Generally such amounts are includible in the income of
the recipient as follows: (1) if distributed in a lump sum, they are taxed in
the same manner as a full surrender, as described above, or (2) if distributed
under an annuity form, they are taxed in the same manner as annuity payments, as
described above. For these purposes, the investment in the Contract is not
affected by the Owner's or Annuitant's death. That is, the investment in the
Contract remains the amount of any Purchase Payments paid which were not
excluded from gross income.
Required Distributions upon Owner's Death
Notwithstanding any provision of the Contract or this prospectus to the
contrary, no payment of benefits provided under the Contract will be allowed
that does not satisfy the requirements of Section 72(s) of the Code.
Notwithstanding any other provision of the Contract or this prospectus,
if the Owner dies before the Annuity Date, the Death Benefit payable to the
Owner's Beneficiary will be distributed as follows:
(a) the Death Benefit must be completely distributed within five
years of the Owner's date of death;
or
(b) the Owner's Beneficiary may elect, within the one year period
after the Owner's date of death, to receive the Death Benefit
in the form of an annuity from us, provided that: (1) such
annuity is distributed in substantially equal installments
over the life of such Owner's Beneficiary or over a period not
extending beyond the life expectancy of such Owner's
Beneficiary; and (2) such distributions begin not later than
one year after the Owner's date of death.
Notwithstanding (a) and (b) above, if the sole Owner's Beneficiary is
the deceased Owner's surviving spouse, then such spouse may elect, within the
one year period after the Owner's date of death, to continue the contract under
the same terms as before the Owner's death. Upon receipt of such election from
the spouse, in a form and manner acceptable to us, at our Service Office: (1)
all rights of the spouse as Owner's Beneficiary under the contract in effect
prior to such election will cease; (2) the spouse will become the Owner of the
contract and will also be treated as the Contingent Annuitant, if none has been
named and only if the deceased Owner was the Annuitant; and (3) all rights and
privileges granted by the contract or allowed by Transamerica will belong to the
spouse as Owner of the Contract. This election will be deemed to have been made
by the spouse if such spouse makes a Purchase Payment to the Contract or fails
to make a timely election as described in this paragraph.
If the Owner's Beneficiary is a nonspouse, the distribution provisions described
in subparagraphs (a) and (b) above, will apply even if the Annuitant and/or
Contingent Annuitant are alive at the time of the Owner's death. If the
nonspouse Owner's Beneficiary is not an individual, then only a cash payment
will be paid.
If no election is received by us from a nonspouse Owner's Beneficiary within the
one year period after the Owner's
date of death, then we will pay the Death Benefit to the Owner's Beneficiary in
a cash payment. The Death Benefit
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will be determined as of the date we make the cash payment. Such cash payment
will be in full settlement of all our liability under the contract.
If the Annuitant dies after the annuity starts, any benefit payable
will be distributed at least as rapidly as under the Annuity Form then in
effect.
If the Owner dies after the annuity starts, any benefit payable will
continue to be distributed at least as rapidly as under the Annuity Form then in
effect. All of the Owner's rights granted under the contract or allowed by us
will pass to the Owner's Beneficiary.
Joint Ownership - For purposes of this section, if the contract has
Joint Owners we will consider the date of death of the first Joint Owner as the
death of the Owner and the surviving Joint Owner will become the Owner of the
Contract.
Transfers, Assignments, or Exchanges
Transfer of ownership of a Contract, the designation of an Annuitant,
Payee or other Beneficiary who is not also the Owner, or the exchange of a
Contract may result in certain tax consequences to the Owner that are not
discussed herein. An Owner contemplating any such designation, transfer,
assignment, or exchange of a Contract should contact a competent tax adviser
with respect to the potential tax effects of such a transaction.
Multiple Contracts
All deferred, non-qualified contracts that are issued by us (or our
affiliates) to the same Owner during any calendar year are treated as one
annuity contract for purposes of determining the amount includible in gross
income under section 72(e) of the Code. In addition, the Treasury Department has
specific authority to issue regulations that prevent the avoidance of section
72(e) through the serial purchase of annuity contracts or otherwise. Congress
has also indicated that the Treasury Department may have authority to treat the
combination purchase of an immediate annuity contract and separate deferred
annuity contracts as a single annuity contract under its general authority to
prescribe rules as may be necessary to enforce the income tax laws.
Withholding
Pension and annuity distributions generally are subject to withholding
for the recipient's federal income tax liability at rates that vary according to
the type of distribution and the recipient's tax status. Recipients, however,
generally are provided the opportunity to elect not to have tax withheld from
distributions. (See discussion of this election under "Withdrawals" on page 20.)
Possible Changes in Taxation
In past years, legislation has been proposed that would have adversely
modified the federal taxation of certain annuities. For example, one such
proposal would have changed the tax treatment of non-qualified annuities that
did not have "substantial life contingencies" by taxing income as it is credited
to the annuity. Although as of the date of this prospectus Congress is not
actively considering any legislation regarding the taxation of annuities, there
is always the possibility that the tax treatment of annuities could change by
legislation or other means (such as IRS regulations, revenue rulings, judicial
decisions, etc.). Moreover, it is also possible that any change could be
retroactive (that is, effective prior to the date of the change).
Other Tax Consequences
As noted above, the foregoing discussion of the federal income tax
consequences is not exhaustive and
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special rules are provided with respect to other tax situations not discussed in
this Prospectus. Further, the federal
30
<PAGE>
income tax consequences discussed herein reflect our understanding of current
law and the law may change. Federal estate tax consequences and state and local
estate, inheritance, and other tax consequences of ownership or receipt of
distributions under a Contract depend on the individual circumstances of each
Owner or recipient of the distribution. A competent tax adviser should be
consulted for further information.
Qualified Plans --- Individual Retirement Annuities
The Contract is designed for use with IRA rollovers. Section 408 of the
Code permits eligible individuals to contribute to an individual retirement
program known as an Individual Retirement Annuity (each referred to as an
"IRA"). Also, distributions from certain other types of qualified plans may be
"rolled over" on a tax-deferred basis into an IRA. The sale of a Contract for
use with an IRA may be subject to special disclosure requirements of the
Internal Revenue Service. Purchasers of the Contract for use with IRAs will be
provided with supplemental information required by the Internal Revenue Service
or other appropriate agency. Such purchasers will have the right to revoke their
purchase within seven days of the earlier of the establishment of the IRA or
their purchase. Various tax penalties may apply to contributions in excess of
specified limits, aggregate distributions in excess of certain limits annually,
distributions that do not satisfy specified requirements, and certain other
transactions. In addition, IRAs are subject to limitations on the amount that
can be contributed and deducted and the time when distributions can commence. A
Qualified Contract will be amended as necessary to conform to the requirements
of the Code. Purchasers should seek competent advice as to the suitability of
the Contract for use with IRAs.
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Restrictions under Qualified Contracts
Other restrictions with respect to the election, commencement, or
distribution of benefits may apply under Qualified Contracts.
General
At the time the Initial Purchase Payment is paid, a prospective
purchaser must specify whether he or she is purchasing a Non-Qualified Contract
or a Qualified Contract. If the Initial Purchase Payment is derived from an
exchange or surrender of another annuity contract, we may require that the
prospective purchaser provide information with regard to the federal income tax
status of the previous annuity contract. We will require that persons purchase
separate Contracts if they desire to invest monies qualifying for different
annuity tax treatment under the Code. Each such separate Contract would require
the minimum Initial Purchase Payment stated above. Additional Purchase Payments
under a Contract must qualify for the same federal income tax treatment as the
Initial Purchase Payment under the Contract; we will not accept an additional
Purchase Payment under a Contract if the federal income tax treatment of such
Purchase Payment would be different from that of the Initial Purchase Payment.
PERFORMANCE DATA
From time to time, we may advertise yields and average annual total
returns for the Sub-Accounts of the Variable Account. In addition, we may
advertise the effective yield of the Money Market Sub-Account. These figures
will be based on historical information and are not intended to indicate future
performance.
The yield of the Money Market Sub-Account refers to the annualized
income generated by an investment in that Sub-Account over a specified seven-day
period. The yield is calculated by assuming that the income generated for that
seven-day period is generated each seven-day period over a 52-week period and is
shown as a percentage of the investment. The effective yield is calculated
similarly but, when annualized, the income earned by an investment in that
Sub-Account is assumed to be reinvested. The effective yield will be slightly
higher than the yield because of the compounding effect of this assumed
reinvestment.
The yield of a Sub-Account (other than the Money Market Sub-Account)
refers to the annualized income generated by an investment in the Sub-Account
over a specified thirty-day period. The yield is calculated by assuming that the
income generated by the investment during that thirty-day period is generated
each thirty-day period over a twelve-month period and is shown as a percentage
of the investment.
The yield calculations do not reflect the effect of any premium taxes
that may be applicable to a particular Contract. To the extent that premium
taxes are applicable to a particular Contract, the yield of that Contract will
be reduced. For a description of the methods used to determine yield and total
returns, see the Statement of Additional Information.
The average annual total return of a Sub-Account refers to return
quotations assuming an investment has been held in the Sub-Account for various
periods of time including, but not limited to, a period measured from the date
the Sub-Account commenced operations. When a Sub-Account has been in operation
for 1, 5, and 10 years, respectively, the average annual total return for these
periods will be provided. The average annual total return quotations will
represent the average annual compounded rates of return that would equate an
initial investment of $1,000 to the redemption value of that investment
(excluding premium taxes) as of the last day of each of the periods for which
total return quotations are provided. For additional information regarding
yields and total returns calculated using the standard formats briefly described
herein, please refer to the Statement of Additional Information.
Performance information for any Sub-Account reflects only the
performance of a hypothetical Contract under which Account Value is allocated to
a Sub-Account during a particular time period on which the calculations are
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based. Performance information should be considered in light of the investment
objectives and policies and characteristics of the Portfolios in which the
Sub-Account invests, and the market conditions during the given time period, and
should not be considered as a representation of what may be achieved in the
future.
Reports and promotional literature may also contain other information
including (1) the ranking of any SubAccount derived from rankings of variable
annuity separate accounts or their investment products tracked by Lipper
Analytical Services, Inc., VARDS, Morningstar, Value Line, IBC/Donoghue's Money
Fund Report, Financial Planning Magazine, Money Magazine, Bank Rate Monitor,
Standard & Poor's Indices, Dow Jones Industrial Average, and other rating
services, companies, publications, or other persons who rank separate accounts
or other investment products on overall performance or other criteria, and (2)
the effect of tax deferred compounding on Sub-Account investment returns, or
returns in general, which may be illustrated by graphs, charts, or otherwise,
and which may include a comparison, at various points in time, of the return
from an investment in a Contract (or returns in general) on a tax-deferred basis
(assuming one or more tax rates) with the return on a currently taxable basis.
Other ranking services and indices may be used.
We may from time to time also disclose cumulative (non-annualized)
total returns for the Sub-Accounts. We may from time to time also disclose yield
and standard total returns for any or all Sub-Accounts.
We may also advertise performance figures for the Sub-Accounts based on
the performance of a Portfolio prior to the time the Variable Account commenced
operations.
For additional information regarding the calculation of other
performance data, please refer to the Statement of Additional Information.
DISTRIBUTION OF THE CONTRACTS
Transamerica Securities Sales Corporation ("TSSC") is the principal
underwriter and distributor of the Contracts. TSSC is registered with the
Commission as a broker/dealer and
is a member of the National Association of Securities Dealers, Inc. ("NASD").
Its principal offices are located at
1150 South Olive Street, Los Angeles,
California 90015, telephone 213-741-7702
VOTING RIGHTS
To the extent required by applicable law, all Portfolio shares held in
the Variable Account will be voted by us at regular and special shareholder
meetings of the respective Funds in accordance with instructions received from
persons having voting interests in the corresponding Sub-Account. If, however,
the 1940 Act or any regulation thereunder should be amended, or if the present
interpretation thereof should change, or if we determine that we are allowed to
vote all Portfolio shares in our own right, we may elect to do so.
Before the Annuity Date, you, the Owner, have the voting interest. The
number of votes which are available to you will be calculated separately for
each Sub-Account. That number will be determined by applying your percentage
interest, if any, in a particular Sub-Account to the total number of votes
attributable to that Sub-Account. You hold a voting interest in each Sub-Account
to which your Contract Value is allocated. You have no voting interest after the
Annuity Date.
The number of votes of a Portfolio will be determined as of the date
coincident with the date established by that Portfolio for determining
shareholders eligible to vote at the meeting of the Funds. Voting instructions
will be solicited by written communication prior to such meeting in accordance
with procedures established by the
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respective Funds.
Shares as to which no timely instructions are received and shares held
by us as to which Owners have no beneficial interest will be voted in proportion
to the voting instructions which are received with respect to all Contracts
participating in the Sub-Account. Voting instructions to abstain on any item to
be voted upon will be applied on a pro rata basis to reduce the votes eligible
to be cast.
Each person or entity having a voting interest in a Sub-Account will
receive proxy material, reports and other material relating to the appropriate
Portfolio.
It should be noted that generally the Funds are not required to, and do
not intend to, hold annual or other regular meetings of shareholders.
LEGAL PROCEEDINGS
There is at present no pending material legal proceeding to which the
Variable Account is a party or to which the assets of the Variable Account are
subject. We are involved in various kinds of litigation which, in management's
judgment, is not of material importance in relation to our total assets or to
the assets of the Variable Account.
LEGAL MATTERS
Advice regarding certain legal matters concerning the federal
securities laws applicable to the issue and sale of the Contract has been
provided by Sutherland, Asbill & Brennan, L.L.P. The organization of
Transamerica, Transamerica's authority to issue the Contract, and the validity
of the form of the Contract have been passed upon by James W. Dederer, Secretary
and General Counsel of Transamerica.
ACCOUNTANTS
The financial statements of First Transamerica Life Insurance Company
at December 31, 1996, and for each of the three years in the period then ended,
and the financial statements for the Variable Account at December 31, 1996, have
been audited by Ernst & Young LLP, Independent Auditors, as set forth in their
report appearing in the Statement of Additional Information, and have been
included in reliance upon their reports given on their authority as experts in
accounting and auditing.
AVAILABLE INFORMATION
We have filed a registration statement ("Registration Statement") with
the Commission under the Securities Act of the 1933 Act relating to the
Contracts offered by this Prospectus. This Prospectus has been filed as a part
of the Registration Statement and does not contain all of the information set
forth in the Registration Statement and exhibits thereto, and reference is
hereby made to the Registration Statement and exhibits for further information
relating to us and the Contracts. Statements contained in this Prospectus, as to
the content of the Contracts and other legal instruments are summaries. For a
complete statement of the terms thereof, reference is made to the instruments as
filed as exhibits to the Registration Statement. The Registration Statement and
its exhibits may be inspected and copied at the offices of the Commission,
located at 450 Fifth Street, N.W., Washington, D.C.
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STATEMENT OF ADDITIONAL INFORMATION
A Statement of Additional Information is available upon request which
contains more details concerning the subjects discussed in this Prospectus. The
following is the Table of Contents for that Statement:
TABLE OF CONTENTS
Page
THE CONTRACT..................................................... 3
ADDITIONAL DEFINITIONS........................................... 3
NET INVESTMENT FACTOR............................................ 4
GENERAL PROVISIONS............................................... 5
CALCULATION OF PERFORMANCE DATA.................................. 7
HISTORIC PERFORMANCE DATA........................................ 10
TERMINATION OF DOLLAR COST AVERAGING............................. 14
FEDERAL TAX MATTERS.............................................. 14
DISTRIBUTION OF THE CONTRACTS.................................... 15
SAFEKEEPING OF ACCOUNT ASSETS.................................... 15
TRANSAMERICA..................................................... 16
STATE REGULATION................................................. 16
RECORDS AND REPORTS.............................................. 16
FINANCIAL STATEMENTS............................................. 16
Distinct Assets from Transamericasm, a Variable Annuity issued by Transamerica
Life Insurance Company of New York, Policy form FTCG-101-193.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
for the
DISTINCT ASSEST from TRANSAMERICAsm
A VARIABLE ANNUITY
Issued by
Transamerica Life
Insurance Company of New York
100 Manhattanville Road
Purchase, New York 10577
(914)701-6000
This Statement of Additional Information expands upon subjects
discussed in the current Prospectus for the deferred variable annuity contract
("Contract") offered by Transamerica Life Insurance Company of New York
(formerly called First Transamerica Life Insurance Company) ("Transamerica") and
its Separate Account VA-5NLNY ("Variable Account"). You may obtain a copy of the
Prospectus dated May 1, 1997, as supplemented from time to time, by writing to
the Service Center, at 800-258-4261 or P.O. Box 31728, Charlotte, North Carolina
28231- 1728. . Terms used in the current Prospectus 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.
Dated May 1, 1997
<PAGE>
TABLE OF CONTENTS
Page
THE CONTRACT (page 14)....................................... 3
ADDITIONAL DEFINITIONS....................................... 3
NET INVESTMENT FACTOR ....................................... 4
GENERAL PROVISIONS........................................... 5
CALCULATION OF PERFORMANCE DATA.............................. 7
..........................
TERMINATION OF DOLLAR COST AVERAGING......................... 14
FEDERAL TAX MATTERS (page 31)................................ 14
DISTRIBUTION OF THE CONTRACTS (page 38)...................... 15
SAFEKEEPING OF ACCOUNT ASSETS................................ 15
TRANSAMERICA (page 9)........................................ 16
STATE REGULATION............................................. 16
RECORDS AND REPORTS.......................................... 16
FINANCIAL STATEMENTS (page 8)................................ 16
(Additional page references refer to the current
Prospectus.)
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<PAGE>
THE CONTRACT
As a supplement to the description in the Prospectus, the following
provides additional information about the Contract which may be of interest to
you.
The contract will be issued as a certificate under a group annuity
contract. The term "Contract: as used herein refers to a certificate issued
under the group contract. The group contract has been issued to a trust
organized under Missouri law. However, the sole purpose of the trust is to hold
the Contract. You, the Owner, have all rights and benefits under the Contract.
ADDITIONAL DEFINITIONS
Account: The account established and maintained for you under the Contract to
which your Net
Purchase Payments are credited.
Account Value: The Account Value is equal to: (a) Net Purchase Payments; plus
or minus
(b) any increase or decrease in the value of the Sub-Accounts due to investments
results; less (c)
charges; and less (d) withdrawals from the Sub-Accounts.
Age: The applicable person's age nearest birthday.
Annuitant's Beneficiary: The person or persons named by you, the Owner, who may
receive the death benefits under the Contract if: (a) there is no named
Contingent Annuitant and the Annuitant dies before the Annuity Date; or (b) the
Annuitant dies after the Annuity Date under an Annuity Form containing a period
certain option.
Annuity Issue Date: The effective date of your Contract as shown on the
Contract.
Code: The U.S. Internal Revenue Code of 1986, as amended, and the rules and
regulations
issued thereunder.
Contingent Annuitant: The person who: (a) becomes the Annuitant if the Annuitant
dies before the Annuity Date; or (b) may receive benefits under the Contract if
the Annuitant dies after the Annuity Date under an Annuity Form containing a
contingent annuity option.
Contract Anniversary: The same month and day as the Annuity Issue Date in each
calendar year after the calendar year in which the Annuity Issue Date occurs.
Contract Year: A 12-month period from the Annuity Issue Date and ending with the
day before the Contract Anniversary and each twelve month period thereafter.
Owner's Beneficiary: The person who becomes the Owner of the Contract is the
Owner dies.
If the Contract has Joint Owners, the surviving Joint Owner will be the Owner's
Beneficiary.
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Valuation Day: Any day the New York Stock Exchange is open for trading.
Valuation occurs
currently as of 4:00 p.m. ET each Valuation Day.
Valuation Period: The time interval between the closing of the New York Stock
Exchange on
consecutive Valuation Days.
Withdrawals: Refers to partial withdrawals, full surrenders, and withdrawals
under the
Automatic Payout Option that are paid in cash to you.
NET INVESTMENT FACTOR
For any Sub-Account of the Variable Account, the Net Investment Factor
for a Valuation Period, before the Annuity Date, is (a) divided by (b), minus
(c),
Where (a) is
The net asset value per share held in the Sub-Account, as of the end of
the Valuation
Period,
plus or minus
The per-share amount of any dividend or capital gain distribution
if
the "ex-dividend" date occurs in the Valuation Period,
plus or minus
A per-share charge or credit as of the end of the Valuation Period for
tax reserves for realized and unrealized capital gains, if any.
Where (b) is
The net asset value per-share held in the Sub-Account as of the end of
the last prior Valuation Period.
Where (c) is
The daily charge of 0.002319% (0.85% annually) for assuming the
mortality and expense risks under this Contract times the number of calendar
days in the current Valuation Period, plus
The daily Administrative Expense Charge (currently zero) times the
number of calendar days in the current Valuation Period. This charge will not
exceed 0.000411% (0.15% annually).
A Valuation Day is defined as any day that the New York Stock Exchange is open.
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<PAGE>
Example of Variable Accumulation Unit Value Calculations
Assume the net asset value per share of a Portfolio at he end of the
current Valuation Period is $20.15; at the end of the immediately preceding
Valuation Period was $20.10; the Valuation Period is one day; and no dividends
or distribution caused the Portfolio shares to go "ex-dividend" during the
current Valuation Period. $20.15 divided by $20.10 is 1.002488. Subtracting the
one day risk factor for the Mortality and Expense Risk Charge 0.002319% (the
daily equivalent of the current charge of 0.85% on an annual basis) gives a Net
Investment Factor of 1.002464810. If the value of the Variable Accumulation Unit
for the immediately preceding Valuation Period had been 15.500000, the value for
the current Valuation Period would be 15.538204555 (15.5 x 1.002464810).
GENERAL PROVISIONS
IRS Required Distributions
If you have a non-qualified Contract and any Owner dies before the
entire interest in the Contract is distributed, the remaining value generally
must be distributed to the designated Beneficiary so that the Contract qualifies
as an annuity under the Code. (See "Federal Tax Matters," page 13.)
Non-Participating
The Contract is non-Participating. No dividends are payable and the
Contract will not share in the profits or surplus earnings of Transamerica.
Misstatement of Age or Sex
If the age or sex of any measuring life has been misstated, the Annuity
Payments under the Contract will be whatever the Annuity Purchase Amount applied
on the Annuity Date would purchase on the basis of the correct age or sex of you
and/or the other measuring life. Any overpayments or underpayments by
Transamerica as a result of any such misstatement bay be respectively charged
against or credited to the Annuity Payment or Annuity Payments to be made after
the correction so as to adjust for such overpayment or underpayment.
Proof of Existence and Age
Before making any payment under the Contract, Transamerica may require
proof of the existence and/or proof of the age of you or any other measuring
life, or any other information Transamerica deems necessary in order to provide
benefits under the Contract.
Transamerica will not be liable for obligations which depend on
receiving information from or about a Payee or measuring life until such
information is received in a satisfactory form.
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<PAGE>
Assignment
No assignment of a Contract will be binding on Transamerica unless made
in writing and given to Transamerica at its Service Center. Transamerica is not
responsible for the adequacy of any assignment. Your rights and the interest of
any Annuitant or Beneficiary will be subject to the rights of any assignee of
record. Qualified Contracts are not transferable.
Annual Report
At least once each Contract Year prior to the Annuity Date, you will be
given a report of the current Account Value allocated to each Sub-Account. This
report will also include any other information required by law or regulation.
Incontestability
Each Contract is incontestable from the Annuity Issue Date.
Ownership
Only you will be entitled to the rights granted by the Contract or
allowed by Transamerica under the Contract. If you die, your rights belong to
your estate unless you have previously named an Owner's Beneficiary.
Entire Contract
Transamerica issues a Contract in consideration and acceptance of the
application and making of the Initial Purchase Payment. All statements made by
or for you and the Annuitant in the application are considered representations
and not warranties. Transamerica will not use any statement in defense of a
claim unless it is made in the application and a copy of the application is
attached to the Contract when issued.
Changes in the Contract
Only two authorized officers of Transamerica, acting together, have the
authority to bind Transamerica or to make any changes in the Contract and then
only in writing. Transamerica will not be bound by any promise or representation
made by any other persons.
Transamerica may not change or amend the Contract, except as expressly
provided in the Contract without your consent. However, Transamerica may change
or amend the Contract if such change or amendment is necessary for the Contract
to comply with any state or federal law, rule or regulation.
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Protection of Benefits
To the extent permitted by law, no benefit under the Contract will be
subject to any claim or process of law by any creditor.
Delay of Payments
Payment of any amounts due from the Variable Account generally will
occur within seven days from the date an acceptable Written Request, including
all completed forms Transamerica requires, is received at the Service Center,
except that Transamerica is permitted to postpone such payment if: (1) the New
York Stock Exchange is closed for reasons other than usual weekends or holidays,
or trading on the Exchange is otherwise restricted; or (2) an emergency exists
as defined by the Securities and Exchange Commission ("Commission") or the
Commission requires that trading be restricted; or (3) the Commission permits a
delay for your protection.
Notices and Directions
We will not be bound by any authorization, direction,. election or
notice which is not made in a manner and form acceptable to us and, if required
to be in writing, not received at our Service Office.
Any Written Notice requirement by us to you will be satisfied by our
mailing of any such required Written Notice, by first-class mail to your last
known address as shown on our records.
CALCULATION OF PERFORMANCE DATA
Money Market Sub-Account Yield Calculation
In accordance with regulations adopted by the Securities and Exchange
Commission, Transamerica is required to compute the Money Market Sub-Account's
current annualized yield for a seven-day period in a manner which does not take
into consideration any realized or unrealized gains or losses on shares of the
Money Market Portfolio or on its portfolio securities. This current annualized
yield is computed by determining the net change (exclusive of realized gains and
losses on the sale of securities and unrealized appreciation and depreciation)
in the value of a hypothetical account having a balance of one unit of the Money
Market Sub-Account at the beginning of such seven-day period, dividing such net
change in account value by the value of the account at the beginning of the
period to determine the base period return and annualizing this quotient on a
365-day basis. The net change in account value reflects the deductions for the
Mortality and Expense Risk Charge and Annual Contract Charge and income and
expenses accrued during the period. Because of these deductions, the yield for
the Money Market Sub-Account of the Variable Account will be lower than the
yield for the Money Market Portfolio or any comparable substitute funding
vehicle.
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<PAGE>
The Commission also permits Transamerica to disclose the effective
yield of the Money Market Sub-Account for the same seven-day period, determined
on a compounded basis. The effective yield is calculated by compounding the
unannualized base period return by adding one tot he base period return, raising
the sum to a power equal to 365 divided by 7, and subtracting one from the
result.
The yield on amounts held in the Money Market Sub-Account normally will
fluctuate on a daily basis. Therefore, the disclosed yield for any given past
period is not an indication or representation of future yields or rated of
return. The Money Market Sub-Account's actual yield is affected by changes in
interest rates on money market securities, average portfolio maturity of the
Money Market Portfolio or substitute funding vehicle, the types and quality of
portfolio securities held by the Money Market Portfolio or substitute funding
vehicle, and operating expenses.
Other Sub-Account Yield Calculations
Transamerica may from time to time disclose the current annualized
yield of one or more of the Sub-Accounts (except the Money Market Sub-Account)
for 30-day periods. The annualized yield of a Sub-Account refers to the income
generated by the Sub-Account over a specified 30-day period. Because this yield
is annualized, the yield generated by a Sub-Account during the 30-day period is
assumed to be generated each 30-day period. The yield is computed by dividing
the period by the price per unit on the last day of the period, according to the
following formula:
YIELD - 2 [ {a-b +1}6 - 1]
---
cd
Where:
a = net investment income earned during the period by the
Portfolio
attributable to the shares owned by the Sub-Account.
b = expenses for the Sub-Account accrued for the period
(net of
reimbursements).
c = the average daily number of Variable Accumulation
Units outstanding
during the period.
d = the maximum offering price per Variable Accumulation
Unit on the last
day of the period.
Net investment income will be determined in accordance with rules
established by the Commission. Accrued expenses will include all recurring fees
that are charged to all Contracts.
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Because of the charges and deductions imposed by the Variable Account,
the yield for the Sub-Account will be lower than the yield for the corresponding
Portfolio. The yield on amounts held in the Sub-Accounts normally will fluctuate
over time. therefore, the disclosed yield for any given period is not an
indication or representation of future yields or rates of return. The
Sub-Account's actual yield will be affected by the type and quality of portfolio
securities held by the Portfolio and its operating expenses.
Standard Total Return Calculations
Transamerica may from time to time also disclose average annual total
returns for one of more of the Sub-Accounts for various periods of time. Average
annual total return quotations are computed by finding the average annual
compounded rates of return over one, five, and ten year periods that would
equate the initial amount invested to the ending redeemable value, according to
the following formula:
P{1 + T}n = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number or years
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the one, five or
ten-year period at the end of the one, five or
ten-year period (or fractional portion thereof).
All recurring fees that are charged to all Contracts are recognized in
the ending redeemable value.
Other Performance Data
Transamerica may from time to time also disclose cumulative total
returns in conjunction with the standard format described above. the cumulative
returns will be calculated using the following formula.
CTR = {ERV/P} - 1
Where:
CTR = the cumulative total return net of Sub-Account
recurring charges for the
period.
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ERV = ending redeemable value of a hypothetical $1,000
payment at the beginning of the one, five, or
ten-year period at the end of the one, five, or
ten-year period (or fractional portion thereof).
P = a hypothetical initial payment of $1,000.
Hypothetical Performance Data
Transamerica may also disclose "hypothetical" performance data for a
Sub-Account, for periods before the Sub-Account commenced operations. Such
performance information for the Sub-Account will be calculated based on the
performance of the corresponding Portfolio and the assumption that the
Sub-Account was in existence for the same periods as the Portfolio, with a level
of Contract charges currently n effect. The Portfolio used for these
calculations will be the actual Portfolio that the Sub-Account will invest in.
This type of hypothetical performance data may be disclosed on both an average
annual total return and a cumulative total return basis.
10
<PAGE>
11
<PAGE>
12
<PAGE>
TERMINATION OF DOLLAR COST AVERAGING
We reserve the right to send written notification to you as
to the options available if termination of Dollar Cost Averaging, either by you
or by us, results in the value in the receiving Sub-Account(s) to which monthly
transfers were made to be less than $1,000. You will have 10 days from the date
our notice is mailed to:
(a) transfer the value of the Sub-Account(s) to another
Sub-Account with a
current value; or
(b) transfer funds from another Sub-Account (either
$1,000 or the entire value of the Sub-Account) into
the receiving Sub-Account(s) to bring the value of
that Sub-Account to at least $1,000; or
(c) submit an additional Purchase Payment (subject to the
$1,000 minimum)
to make the value of the Sub-Account equal to greater
than $1,000; or
(d) transfer the entire value of the receiving
Sub-Account(s) back into the Sub-Account from which
the automatic transfers were made.
If no written election is made by you and received by us at
our Service Center prior to the end of the 10 day period, we reserve the right
to transfer the value of the receiving Sub-Account(s) back into the Sub-Account
from which the automatic transfers were made. Transfers made as a result of (a),
(b), or (d) above will not be counted for purposes of the ten allowable
transfers per Contract Year limitation.
FEDERAL TAX MATTERS
The Contract is designed for use by individuals in retirement
plans which may be qualified for special tax treatment under Section 408 of the
Internal Revenue Code of 1986, as amended (the "Code"). The ultimate effect of
federal income taxes on the Account Value, on Annuity Payments, and on the
economic benefit to you, the Annuitant or the Beneficiary may depend on the type
of retirement plan for which the Contract is purchases, on the tax and
employment status of the individual concerned and on Transamerica's tax status.
THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED AS TAX ADVICE. Any
person concerned about these tax implications should consult a competent tax
adviser. This discussion is based upon Transamerica's understanding of the
present federal income tax laws as they are currently interpreted by the
Internal Revenue Service. No representation is made as to the likelihood of
continuation of these present federal income tax laws or of the current
interpretations by the Internal Revenue Service. Moreover, no attempt has been
made to consider any applicable state of other tax laws.
13
<PAGE>
Taxation of Transamerica
Transamerica is taxed as a life insurance company under Part
I of Subchapter L of the Code. Since he Variable Account is not an entity
separate from Transamerica, and its operations form a part of Transamerica, it
will not be taxed separately as a "regulated investment company" under
Subchapter M of the Code. Investment income and realized capital gains are
automatically applied to increase reserves under the Contract. Under existing
federal income tax law, Transamerica believes that the Variable Account
investment income and realized net capital gains will not be taxed to the extent
that such income and gains are applied to increase the reserves under the
Contract.
Accordingly, Transamerica does not anticipate that it will
incur any federal income tax liability attributable to the Variable Account and,
therefore, Transamerica does not intend to make any provisions for any such
taxes. However, if changes in the federal tax laws or interpretations thereof
result in Transamerica being taxed on income or gains attributable tot he
Variable Account, then Transamerica may impose a charge against the Variable
Account (with respect to some or all Contracts) in order to set aside provisions
to pay such taxes.
Tax Status of the Contracts
Section 817(h) of the Code requires that with respect to
Non-Qualifies Contracts, the investment of the Portfolio be "adequately
diversified" in accordance with Treasury regulations in order for the Contracts
to qualify as annuity contracts under federal tax law. The Variable Account,
through the Portfolios, intends to comply with the diversification requirements
prescribed by the Treasury in Reg. Sec. 1.817-5, which affect how the
Portfolios' assets may be invested.
In certain circumstances, owners of variable annuity
contracts may be considered the owners, for federal income tax purposes, of the
assets of the separate account used to support their contracts. In those
circumstances, income and gains from the separate account assets would be
includible in the variable annuity contract owner's gross income. Several years
ago, the IRS stated in published rulings that a variable contract owner will be
considered the owner of separate account assets if the contract owner possesses
incidents of ownership in those areas. More recently, the Treasury Department
announced, in connection with the issuance of regulations concerning investment
diversification, that those regulation "do not provide guidance concerning the
circumstances in which control of the investments of a segregated asset account
may cause the investor (i.e., the contract owner), rather than the insurance
company, to be treated s the owner of the assets in the account." This
announcement also states that guidance would be issued by way of regulations or
rulings on the "extent to which policyholders may direct their investment to
particular subaccounts without being treated as owners of the underlying
assets."
The ownership rights under the Contract are similar to, but
different in certain respects from, those described by the IRS in rulings in
which it was determined that contract owners were not owners of separate account
assets. For example, the owner of a Contract has
14
<PAGE>
the choice of more Sub-Accounts in which to allocate net purchase payments and
Contract Values, may be able to transfer among Sub-Accounts more frequently, and
the Sub-Accounts may have narrower investment strategies, than in such rulings.
These differences could result in an Owner being treated as the owner of the
assets of the Variable Account. In addition, Transamerica does not know what
standards will be set forth, if any, in the regulations or rulings which the
Treasury Department has stated it expects to issue. Transamerica therefore
reserves the right to modify the Contract as necessary to attempt to prevent an
Owner from being considered the owner of a pro rata share of the assets of the
Variable Account.
In order to be treated as an annuity contract for federal
income tax purposes, section 72(s) of the Code requires any Non-Qualified
Contract to provide that (a) if any Owner dies on or after the Annuity Date but
prior to the time the entire interest has been distributed, the remaining
portion of such interest will be distributed at least as rapidly as under the
method of distribution being used as of the date of that Owner's death; and (b)
if any Owner dies prior to the Annuity Date, the entire interest in the Contract
will be distributed within five years after the date of the Owner's death.
These requirements will be considered satisfied as to any
portion of your interest which is payable to or for the benefit of a "designated
beneficiary" and which is distributed over the life of such "designated
beneficiary" or over a period not extending beyond the life expectancy of that
Beneficiary, provided that such distributions begin within one year of your
death. Your "designated beneficiary" is a natural person designated by you as a
Beneficiary and to whom ownership of the Contract passes by reason of death.
However, if your "designated beneficiary" is your surviving spouse, the Contract
may be continued with the surviving spouse as the new owner.
The non-qualified Contracts contain provisions which are
designed to comply with the requirements of section 72(s) of the Code, although
no regulations interpreting these requirements have yet been issued.
Transamerica intends to review such provisions and modify them if necessary to
assure that they comply with the requirements of Code section 72(s) when
clarified by regulation or otherwise. Other ruled may apply to the Qualified
Contracts.
DISTRIBUTION OF THE CONTRACTS
Transamerica Securities Sales Corporation, located at 1150
South Olive Street, Los Angeles, California 90015, telephone (213) 741-7702, is
the principal underwriter and distributor of the Contracts. Transamerica
Securities Sales Corporation is registered with the Commission as a
broker/dealer and is a member of the National Association of Securities Dealers,
Inc. ("NASD"). Effective May 1, 1997, the Contracts are no longer being offered;
additional Purchase Payments may be made to Contracts purchased before May 1,
1997. No underwriting commissions have been paid to Charles Schwab & Co., Inc.,
the previous distributor, or to Transamerica Securities Sales Corporation since
commencement of sale of the Policies.
15
<PAGE>
SAFEKEEPING OF ACCOUNT ASSETS
Title to the assets of the Variable Account is held by
Transamerica. The assets are kept separate and apart from Transamerica's general
account assets. Records are maintained of all purchases and redemptions of
Portfolio shares by each of the Sub-Accounts.
TRANSAMERICA
General Information and History
Transamerica is wholly-owned by Transamerica Occidental Life
Insurance Company, which is in turn an indirect subsidiary off Transamerica
Corporation. Transamerica corporation is a financial services organization which
engages through its subsidiaries in two primary businesses: finance and
insurance. Finance consists of consumer lending, commercial lending, leasing and
real estate services. In addition, Transamerica Corporation has retained a
minority ownership interest in its former property and casualty insurance
subsidiary.
STATE REGULATION
Transamerica is subject to the insurance laws and regulations
of all the states where it is licensed to operate. The availability of certain
Contract rights and provisions depends on state approval and/r filing and review
processes. Where required by state law or regulation, the Contract will be
modified accordingly.
RECORDS AND REPORTS
All records and accounts relating to the Variable Account
will be maintained by Transamerica or by our Service Center. As presently
required by the 1940 Act and regulations promulgated thereunder, which pertain
to the Variable Account, reports containing such information as may be required
under the 1940 Act or by other applicable law or regulation will be sent to you
semi-annually at your last known address of record.
FINANCIAL STATEMENTS
The financial statements of Transamerica should be considered
only as bearing on the ability of Transamerica to meet its obligations under the
Contracts. They should not be considered as bearing on the investment
performance of the assets held in the Variable Account.
This Statement of Additional Information contains the
financial statement for the Variable Account as of December 31, 1996.
16
<PAGE>
Distinct Assets from Transamericasm, a Variable Annuity issued by Transamerica
Life Insurance Company of New York, Policy form FTCG-101-193.
17
<PAGE>
Audited Financial Statements
First Transamerica Life
Insurance Company
December 31, 1996
<PAGE>
FIRST TRANSAMERICA LIFE INSURANCE COMPANY
Audited Financial Statements
December 31, 1996
Report of Independent Auditors.................. 1
Balance Sheet................................... 2
Statement of Income............................. 3
Statement of Shareholder's Equity............... 4
Statement of Cash Flows......................... 5
Notes to Financial Statements................... 6
<PAGE>
1
REPORT OF INDEPENDENT AUDITORS
Transamerica Corporation
and
Board of Directors
First Transamerica Life Insurance Company
We have audited the accompanying balance sheet of First Transamerica Life
Insurance Company as of December 31, 1996 and 1995, and the related statements
of income, shareholder's equity, and cash flows for each of the three years in
the period ended December 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of First Transamerica Life
Insurance Company at December 31, 1996 and 1995, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.
As discussed in Note A, First Transamerica Life Insurance Company changed its
method of accounting for certain debt securities effective January 1, 1994.
February 12, 1997
<PAGE>
FIRST TRANSAMERICA LIFE INSURANCE COMPANY
16
2
FIRST TRANSAMERICA LIFE INSURANCE COMPANY
BALANCE SHEET
<TABLE>
<CAPTION>
December 31
1996 1995
--------------------- --------------
(In thousands, except
for share data)
ASSETS
Investments:
<S> <C> <C>
Fixed maturities available for sale $ 464,153 $ 433,428
Investment real estate 353 363
Policy loans 11,973 10,764
--------------------- ---------------------
476,479 444,555
Cash 9,079 16,257
Accrued investment income 8,840 7,511
Accounts receivable 3,214 4,542
Reinsurance recoverable on paid and unpaid losses 12,241 11,136
Deferred policy acquisitions costs 56,632 35,588
Other assets 7,047 5,993
Separate account assets 195,363 109,222
--------------------- ---------------------
$ 768,895 $ 634,804
===================== =====================
LIABILITIES AND SHAREHOLDER'S EQUITY
Policy liabilities:
Policyholder contract deposits $ 461,059 $ 420,826
Reserves for future policy benefits 10,264 10,075
Policy claims and other 3,890 6,707
--------------------- ---------------------
475,213 437,608
Income tax liabilities 3,849 4,533
Accounts payable and other liabilities 28,496 17,172
Separate account liabilities 195,363 109,222
--------------------- ---------------------
702,921 568,535
Shareholder's equity:
Common stock ($1,000 par value):
Authorized--2,000 shares
Issued and outstanding--2,000 shares 2,000 2,000
Additional paid-in capital 52,320 52,320
Retained earnings 9,397 5,068
Net unrealized investment gains 2,257 6,881
--------------------- ---------------------
65,974 66,269
--------------------- ---------------------
$ 768,895 $ 634,804
===================== =====================
</TABLE>
See notes to financial statements.
<PAGE>
STATEMENT OF INCOME
<TABLE>
<CAPTION>
Year Ended December 31
1996 1995 1994
--------------- --------------- ----------
(In thousands)
Revenues:
<S> <C> <C> <C>
Premiums and other considerations $ 15,624 $ 13,495 $ 10,836
Net investment income 34,834 30,897 26,468
Net realized investment gains (losses) 99 19 (36)
--------------- --------------- ---------------
TOTAL REVENUES 50,557 44,411 37,268
Benefits:
Benefits paid or provided 34,455 31,984 26,628
Increase (decrease) in policy reserves and liabilities (711) 316 381
--------------- --------------- ---------------
33,744 32,300 27,009
Expenses:
Amortization of deferred policy acquisition costs 3,002 2,197 1,536
Salaries and salary related expenses 3,518 3,206 2,726
Other expenses 3,789 3,219 3,499
--------------- --------------- ---------------
10,309 8,622 7,761
--------------- --------------- ---------------
TOTAL BENEFITS AND EXPENSES 44,053 40,922 34,770
--------------- --------------- ---------------
INCOME BEFORE INCOME TAXES 6,504 3,489 2,498
Provision for income taxes 2,175 1,331 986
--------------- --------------- ---------------
NET INCOME $ 4,329 $ 2,158 $ 1,512
=============== =============== ===============
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF SHAREHOLDER'S EQUITY
Net
Unrealized
Additional Investment
Common Stock Paid-in Retained Gains
Shares Amount Capital Earnings (Losses)
(In thousands, except for share data)
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1994 2,000 $ 2,000 $ 39,920 $ 1,398
Cumulative effect of change in
accounting for investments $ 12,075
Net income 1,512
Capital contributions from parent 7,400
Change in net unrealized
investment gains (losses) (15,987)
Balance at December 31, 1994 2,000 2,000 47,320 2,910 (3,912)
Net income 2,158
Capital contributions from parent 5,000
Change in net unrealized
investment gains (losses) 10,793
Balance at December 31, 1995 2,000 2,000 52,320 5,068 6,881
Net income 4,329
Change in net unrealized
investment gains (4,624)
Balance at December 31, 1996 2,000 $ 2,000 $ 52,320 $ 9,397 $ 2,257
============ ============ ============ =========== ==============
</TABLE>
See notes to financial statements.
<PAGE>
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31
1996 1995 1994
--------------- --------------- ----------
(In thousands)
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income $ 4,329 $ 2,158 $ 1,512
Adjustments to reconcile net income to net cash
used by operating activities:
Changes in:
Reinsurance recoverable and accounts
receivable 223 2,498 (8,129)
Accrued investment income (1,329) (1,351) (1,099)
Policy liabilities 7,850 11,693 9,489
Other assets, accounts payable and other
liabilities, and income taxes 10,549 786 10,791
Policy acquisition costs deferred (12,288) (12,126) (14,387)
Amortization of deferred policy acquisition costs 3,002 2,197 1,536
Net realized losses (gains) on investment transactions (99) (19) 36
Other 1,179 (698) 92
--------------- --------------- ---------------
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES 13,416 5,138 (159)
INVESTMENT ACTIVITIES
Purchases of securities and other investments (92,243) (79,260) (66,255)
Sales of investments 39,469 28,738 20,742
Maturities of securities 2,500 2,000 -
Other (75) (77) 3,852
--------------- --------------- ---------------
NET CASH USED
BY INVESTING ACTIVITIES (50,349) (48,599) (41,661)
FINANCING ACTIVITIES
Additions to policyholder contract deposits 60,604 65,019 67,951
Withdrawals from policyholder contract deposits (30,849) (26,078) (22,729)
Capital contributions from parent - 5,000 7,400
--------------- --------------- ---------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 29,755 43,941 52,622
--------------- --------------- ---------------
INCREASE (DECREASE) IN CASH (7,178) 480 10,802
Cash at beginning of year 16,257 15,777 4,975
--------------- --------------- ---------------
CASH AT END OF YEAR $ 9,079 $ 16,257 $ 15,777
=============== =============== ===============
</TABLE>
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
NOTE A--SIGNIFICANT ACCOUNTING POLICIES
Business: First Transamerica Life Insurance Company (the "Company") is
domiciled in New York. The Company is a
wholly owned subsidiary of Transamerica Occidental Life Insurance Company
("TOLIC"), which is an indirect
subsidiary of Transamerica Corporation.
The Company engages in providing life insurance, annuity products, reinsurance,
and structured settlements. The Company's customers are primarily in the state
of New York.
Basis of Presentation: The accompanying financial statements have been prepared
in accordance with generally accepted accounting principles which differ from
statutory accounting practices prescribed or permitted by regulatory
authorities.
Use of Estimates: Certain amounts reported in the accompanying financial
statements are based on the management's best estimates and judgment. Actual
results could differ from those estimates.
New Accounting Standards: In June of 1996, the Financial Accounting Standards
Board issued a new standard on accounting for transfers of financial assets,
servicing of financial assets and extinguishment of liabilities. The Company
must adopt the standard in 1997. The standard requires that a transfer of
financial assets be accounted for as a sale only if certain specified conditions
for surrender of control over the transferred assets exist. When adopted, the
standard is not expected to new standard on accounting for transfers of
financial assets, servicing of financial assets and have a material effect on
the financial position or results of operations of the Company.
In 1996, the Company adopted the Financial Accounting Standards Board's new
standard on accounting for the impairment of long-lived assets and for
long-lived assets to be disposed of. The standard requires that an impaired
long-lived asset be measured based on the fair value of the asset to be held and
used or the fair value less cost to sell of the asset to be disposed of. There
was no material effect on the financial position or results of operations of the
Company.
In 1994, the Company adopted the Financial Accounting Standards Board's standard
on accounting for certain investments in debt and equity securities which
requires the Company to report at fair value, with unrealized gains and losses
excluded from earnings and reported on an after tax basis as a separate
component of shareholder's equity, its investments in debt securities for which
the Company does not have the positive intent and ability to hold to maturity.
Additionally, such unrealized gains and losses are considered in evaluating
deferred policy acquisition costs with any resultant adjustment also excluded
from earnings and reported on an after tax basis in shareholder's equity. As of
January 1, 1994, the impact of adopting the standard was to increase
shareholder's equity by $12.1 million (net of deferred taxes of $6.5 million)
with no effect on net income.
Investments: Investments are reported on the following bases.
Fixed maturities --All debt securities are classified as available for
sale and carried at fair value. The Company does not carry any debt
securities principally for the purpose of trading. Prepayments are
considered in establishing amortization periods for premiums and discounts
and amortized cost is further adjusted for other-than-temporary fair value
declines.
Investment real estate--Investment real estate is carried at depreciated
cost less allowance for possible impairment.
Policy loans--at unpaid balances.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1996
NOTE A--SIGNIFICANT ACCOUNTING POLICIES (Continued)
Realized gains and losses on disposal of investments are determined on a
specific identification basis. Changes in fair values of fixed maturities
available for sale are included in net unrealized investment gains or losses
after adjustment of deferred policy acquisition costs and deferred income taxes
as a separate component of shareholder's equity and, accordingly, have no effect
on net income.
Deferred Policy Acquisition Costs (DPAC): Certain costs of acquiring new and
renewal insurance contracts, principally commissions, medical examination and
inspection report fees, and certain variable underwriting and issue expenses,
all of which vary with and are primarily related to the production of such
business, have been deferred. DPAC for non-traditional life and investment-type
products are amortized over the life of the related policies generally in
relation to estimated future gross profits. DPAC for traditional life insurance
products are amortized over the premium-paying period of the related policies in
proportion to premium revenue recognized, using principally the same assumptions
used for computing future policy benefit reserves. DPAC is adjusted as if
unrealized gains or losses on securities available for sale were realized.
Changes in such adjustments are included in net unrealized investment gains or
losses on an after tax basis as a separate component of shareholder's equity
and, accordingly, have no effect on net income.
Separate Accounts: The Company administers segregated asset accounts for
variable annuity contracts. The assets held in these Separate Accounts are
invested in various mutual fund portfolios managed by third party companies. The
Separate Account assets are stated at fair value and are not subject to
liabilities arising out of any other business the Company may conduct.
Investment risks associated with fair value changes are borne by the contract
holders. Accordingly, investment income and realized gains and losses
attributable to Separate Accounts are not reported in the Company's results of
operations.
Policyholder Contract Deposits: Non-traditional life insurance products include
universal life and other interest-sensitive life insurance policies.
Investment-type products include single and flexible premium deferred annuities
and single premium immediate annuities. Policyholder contract deposits on
universal life and investment products represent premiums received plus
accumulated interest, less mortality charges on universal life products and
other administration charges as applicable under the contract. Interest credited
to these policies ranged from 5.2% to 7.2% in 1996 and from 5.5% to 7.8% in 1995
and 1994.
Reserves for Future Policy Benefits: Traditional life insurance products
primarily include those contracts with fixed and guaranteed premiums and
benefits and consist principally of whole life and term insurance policies,
limited-payment life insurance policies and certain annuities with life
contingencies. The reserve for future policy benefits for traditional life
insurance products has been provided on a net-level premium method based upon
estimated investment yields, withdrawals, mortality, and other assumptions which
were appropriate at the time the policies were issued. Such estimates are based
on past experience with a margin for adverse deviation. The interest assumptions
range from 4.0% to 5.5%.
Recognition of Revenue and Costs: Traditional life insurance contract premiums
are recognized as revenue over the premium-paying period, with reserves for
future policy benefits established from such premiums.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1996
NOTE A--SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenues for universal life and investment products consist of policy charges
for the cost of insurance, policy administration charges, amortization of policy
initiation fees, and surrender charges assessed against policyholder account
balances during the period. Expenses related to these products consist of
interest credited to policyholder account balances and benefit claims incurred
in excess of policyholder account balances.
Policy liabilities include provisions for reported claims and claims incurred
but not reported.
Reinsurance: Coinsurance premiums, commissions, expense reimbursements, and
reserves related to reinsured business are accounted for on bases consistent
with those used in accounting for the original policies and the terms of the
reinsurance contracts. Yearly renewable term reinsurance is accounted for the
same as direct business. Premiums ceded and recoverable losses have been
reported as a reduction of premium income and benefits, respectively. The ceded
amounts related to policy liabilities have been reported as an asset.
Income Taxes: The Company is included in the consolidated federal income tax
return of TOLIC which, with its domestic subsidiaries and affiliates, is
included in the consolidated federal income tax returns filed by Transamerica
Corporation, which by the terms of a tax sharing agreement generally requires
the Company to accrue and settle income tax obligations in amounts that would
result from filing separate tax returns with federal taxing authorities.
Deferred income taxes arise from temporary differences between the bases of
assets and liabilities for financial reporting purposes and income tax purposes,
based on enacted tax rates in effect for the years in which the temporary
differences are expected to reverse.
Fair Values of Financial Instruments: Fair values for debt securities are based
on quoted market prices, where
available.
Fair values for policy loans are estimated using discounted cash flow
calculations, based on interest rates currently being offered for similar loans
to borrowers.
The carrying amounts of cash and accrued investment income approximate their
fair value.
Fair values for liabilities under investment-type contracts are estimated using
discounted cash flow calculations, based on interest rates currently being
offered by similar contracts with maturities consistent with those remaining for
the contracts being valued. The liabilities under investment-type contracts are
included in policyholder contract deposits in the accompanying balance sheet.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1996
NOTE B--INVESTMENTS
<TABLE>
<CAPTION>
The cost and fair value of fixed maturities available for sale are as follows
(in thousands):
Gross Gross
Unrealized Unrealized Fair
Cost Gain Loss Value
December 31, 1996
U.S. Treasury securities and
obligations of U.S. government
<S> <C> <C> <C> <C>
corporations and agencies $ 843 $ 58 $ 901
Obligations of states and political
subdivisions 23,193 801 $ 6 23,988
Corporate securities 280,021 10,485 2,473 288,033
Public utilities 114,746 4,267 1,136 117,877
Mortgage-backed securities 32,722 632 - 33,354
---------------- ---------------- ---------------- ----------------
$ 451,525 $ 16,243 $ 3,615 $ 464,153
================ ================ ================ ================
December 31, 1995
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies $ 1,356 $ 117 $ 1,473
Obligations of states and political
subdivisions 14,381 522 14,903
Corporate securities 210,276 20,010 $ 63 230,223
Public utilities 104,238 9,190 52 113,376
Mortgage-backed securities 71,513 1,942 2 73,453
---------------- ---------------- ---------------- ----------------
$ 401,764 $ 31,781 $ 117 $ 433,428
================ ================ ================ ================
</TABLE>
The cost and fair value of fixed maturities available for sale at December 31,
1996, by contractual maturity, are shown below. Expected maturities will differ
from contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties (in thousands):
<TABLE>
<CAPTION>
Fair
Cost Value
<S> <C> <C> <C>
Due in 1997 $ 3,661 $ 3,723
Due in 1998-2001 38,387 40,230
Due in 2002-2006 105,319 107,752
Due after 2006 271,436 279,094
---------------- ----------------
418,803 430,799
Mortgage-backed securities 32,722 33,354
---------------- ----------------
$ 451,525 $ 464,153
================ ================
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1996
NOTE B--INVESTMENTS (Continued)
As of December 31, 1996, the Company held a total investment in one issuer,
other than the United States Government or a United States Government agency or
authority, which exceeded 10% of total shareholder's equity as follows (in
thousands):
Name of Issuer Carrying Value
Panenergy Corporation $ 7,011
The carrying value of those assets that were on deposit with public officials in
compliance with regulatory requirements was $0.9 million at December 31, 1996.
Net investment income (expense) by major investment category is summarized as
follows (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
-------------- -------------- ---------
<S> <C> <C> <C>
Fixed maturities $ 34,262 $ 30,329 $ 26,085
Short-term, policy loans and other
investments 631 582 576
-------------- -------------- --------------
34,893 30,911 26,661
Investment expenses (59) (14) (193)
-------------- -------------- --------------
Net investment income $ 34,834 $ 30,897 $ 26,468
============== ============== ==============
The following summarizes realized investment gains and losses and other
information related to investments (in thousands):
1996 1995 1994
-------------- -------------- ---------
Gross gains on disposition of investment in
fixed maturities $ 99 $ 283
Gross losses on disposition of investment in
fixed maturities - (264) $ (36)
-------------- -------------- --------------
Net gains (losses) on disposition of
investment in fixed maturities $ 99 $ 19 $ (36)
============== ============== ==============
Proceeds from disposition of investment in
fixed maturities $ 41,969 $ 30,738 $ 20,742
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1996
NOTE B--INVESTMENTS (Continued)
The components of net unrealized investment gains in the accompanying balance
sheet are as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
------------ ---------
Unrealized gains on investment in fixed
<S> <C> <C>
maturities $ 12,628 $ 31,664
Fair value adjustments to DPAC (9,320) (21,078)
Related deferred taxes (1,051) (3,705)
------------ -------------
$ 2,257 $ 6,881
============ =============
</TABLE>
NOTE C--DEFERRED POLICY ACQUISITION COSTS (DPAC)
Significant components of changes in DPAC are as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
-------------- -------------- ---------
<S> <C> <C> <C>
Balance at beginning of year $ 35,588 $ 61,435 $ 33,884
Amounts deferred:
Commissions 9,045 8,645 10,617
Other 3,243 3,481 3,770
Amortization (3,002) (2,197) (1,536)
Fair value adjustment 11,758 (35,776) 14,700
-------------- -------------- --------------
Balance at end of year $ 56,632 $ 35,588 $ 61,435
============== ============== ==============
</TABLE>
NOTE D--POLICY LIABILITIES
Components of policyholder contract deposits are as follows (in thousands):
<TABLE>
<CAPTION>
December 31
1996 1995
<S> <C> <C>
Liabilities for investment-type products $ 268,260 $ 272,839
Liabilities for non-traditional life insurance
products 192,799 147,987
------------- -------------
$ 461,059 $ 420,826
============= =============
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1996
NOTE E--INCOME TAXES
Components of income tax liabilities are as follows (in thousands):
December 31
1996 1995
Current tax liabilities $ 951 $ 512
Deferred tax liabilities 2,898 4,021
------------- -------------
$ 3,849 $ 4,533
============= =============
Significant components of deferred tax liabilities (assets) are as follows (in
thousands):
December 31
1996 1995
Deferred policy acquisition costs $ 18,046 $ 16,899
Life insurance policy liabilities (16,335) (16,563)
Unrealized investment gains 1,051 3,705
Other - net 136 (20)
------------- -------------
$ 2,898 $ 4,021
============= =============
The Company offsets all deferred tax assets and liabilities and presents them in
a single amount in the balance sheet.
Components of provision for income taxes (benefits) are as follows (in
thousands):
<TABLE>
<CAPTION>
1996 1995 1994
-------------- -------------- ---------
<S> <C> <C> <C>
Current tax expense (benefit) $ 751 $ (665) $ 1,016
Deferred tax expense (benefit) 1,424 1,996 (30)
-------------- -------------- --------------
$ 2,175 $ 1,331 $ 986
============== ============== ==============
</TABLE>
The differences between federal income taxes computed at the statutory rate and
provision for income taxes are primarily due to the amortization of goodwill.
An income tax payment of $0.3 million, an income tax refund of $0.1 million, and
an income tax payment of $1.1 million in 1996, 1995 and 1994, respectively, were
paid to and received from TOLIC.
NOTE F--REINSURANCE
The Company is involved in the cession of reinsurance to affiliated companies.
Risks are reinsured with other companies to permit the recovery of a portion of
the direct losses, however, the Company remains liable to the extent the
reinsuring companies do not meet their obligations under these reinsurance
agreements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1996
NOTE F--REINSURANCE (Continued)
The components of the Company's life insurance in force and premiums and other
considerations, and benefits paid or provided are summarized as follows (in
thousands):
<TABLE>
<CAPTION>
Ceded to
Gross Ceded to Non-Affiliated Net
Amount TOLIC Companies Amount
1996
Life insurance in force,
<S> <C> <C> <C> <C>
at end of year $ 4,769,031 $ 177,437 $ 2,323,447 $ 2,268,147
================== ================= ================== ==================
Premiums and other
considerations $ 24,652 $ 753 $ 8,275 $ 15,624
================== ================= ================== ==================
Benefits paid or
provided $ 43,440 $ 539 $ 8,446 $ 34,455
================== ================= ================== ==================
1995
Life insurance in force,
at end of year $ 5,216,397 $ 198,199 $ 2,643,198 $ 2,375,000
================== ================= ================== ==================
Premiums and other
considerations $ 23,367 $ 0 $ 9,872 $ 13,495
================== ================= ================== ==================
Benefits paid or
provided $ 39,432 $ 1,822 $ 5,626 $ 31,984
================== ================= ================== ==================
1994
Life insurance in force,
at end of year $ 5,399,638 $ 687,608 $ 2,473,081 $ 2,238,949
================== ================= ================== ==================
Premiums and other
considerations $ 21,631 $ 3,024 $ 7,771 $ 10,836
================== ================= ================== ==================
Benefits paid or
provided $ 37,700 $ 1,302 $ 9,770 $ 26,628
================== ================= ================== ==================
</TABLE>
NOTE G--PENSION PLAN AND OTHER POSTRETIREMENT BENEFITS
Substantially all employees of the Company are covered by the Retirement Plan
for Salaried Employees of Transamerica Corporation and Affiliates (the "Plan").
Pension benefits are based on the employee's compensation during the highest
paid 60 consecutive months during the 120 months before retirement. Annual
contributions to the Plan generally include a provision for current service
costs plus amortization of prior service costs over periods ranging from 10 to
30 years. Assets of the plans are primarily invested in publicly traded stocks
and bonds.
The Company's pension costs charged to income were not significant in 1996,
1995, and 1994.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1996
NOTE G--PENSION PLAN AND OTHER POSTRETIREMENT BENEFITS (Continued)
The Company also participates in various contributory defined benefit programs
sponsored by Transamerica Corporation that provide medical and certain other
benefits to eligible retirees. Postretirement benefit costs charged to income
were not significant.
NOTE H--RELATED PARTY TRANSACTIONS
The Company has various transactions with TOLIC and certain of its other
affiliates in the normal course of operations, including reinsurance
transactions, computer services, investment services and advertising services.
The reinsurance recoverable from TOLIC, including the amount receivable for
policy claims paid, amounted to $0.3 million and $0.1 million at December 31,
1996 and 1995, respectively.
NOTE I--REGULATORY MATTERS
The Company is subject to state insurance laws and regulations, principally
those of the State of New York. Such regulations include the risk-based capital
requirement and the restriction on the payment of dividends. Generally,
dividends during any year may not be paid, without prior regulatory approval, in
excess of the greater of 10% of the Company's statutory capital and surplus as
of the preceding year end or the Company's statutory net income from operations
for the preceding year. Those statutory amounts are determined in conformity
with statutory accounting practices prescribed or permitted by the Department of
Insurance of New York ("New York Department"). Currently, no dividends can be
paid by the Company without prior approval of the New York Department.
The Company's statutory net income income (loss) and capital and surplus are
summarized as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
-------------- -------------- ---------
<S> <C> <C> <C>
Statutory net income (loss) $ (551) $ 1,779 $ (5,238)
Statutory capital and surplus, at end of year 22,822 22,713 16,612
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1996
NOTE J--COMMITMENTS AND CONTINGENCIES
Substantially all leases of the Company are operating leases principally for the
rental of real estate. Rental expenses for equipment and properties were $0.9
million for both 1996 and 1995 and $1.1 million for 1994. The following is a
schedule by years of future minimum rental payments required under operating
leases that have initial or remaining noncancelable lease terms in excess of one
year as of December 31, 1996 (in thousands):
Year ending December 31:
1997 $ 1,187
1998 1,187
1999 1,016
2000 743
2001 394
Later years 4,541
$ 9,068
================
The Company is a defendant in various legal actions arising from its operations.
These include legal actions similar to those faced by many other major life
insurers which allege damages related to sales practices for universal life
policies sold between January 1981 and June 1996. In one such action, the
Company and plaintiffs' counsel are working toward a settlement. Any such
proposed settlement is subject to significant contingencies, including approval
by the court. The lawsuit may proceed if such contingencies are not satisfied.
In the opinion of the Company, any ultimate liability which might result from
such litigation would not have a materially adverse effect on the financial
position of the Company or the results of its operations.
NOTE K--FINANCIAL INSTRUMENTS
The carrying values and estimated fair values of financial instruments are as
follows (in thousands):
<TABLE>
<CAPTION>
December 31
1996 1995
------------------------------- ------------------
Carrying Fair Carrying Fair
Value Value Value Value
Financial Assets:
<S> <C> <C> <C> <C>
Fixed maturities $ 464,153 $ 464,153 $ 433,428 $ 433,428
Policy loans 11,973 11,973 10,764 10,910
Cash 9,079 9,079 16,257 16,257
Accrued investment income 8,840 8,840 7,511 7,511
Financial Liabilities:
Liabilities for investment-type
contracts:
Single and flexible premium
deferred annuities 125,022 122,705 154,292 151,433
Single premium immediate
annuities 143,238 130,297 118,547 114,553
</TABLE>
<PAGE>
Audited Financial Statements
Separate Account VA-5NLNY of
Transamerica Occidental
Life Insurance Company
Year ended December 31, 1996
with Report of Independent Auditors
<PAGE>
- 2 -
Report of Independent Auditors
Unitholders of Separate Account VA-5NLNY of
First Transamerica Life Insurance Company
Board of Directors, First Transamerica Life Insurance Company
We have audited the accompanying statement of assets and liabilities of Separate
Account VA-5NLNY of First Transamerica Life Insurance Company (comprised of the
Federated American Leaders Fund II, Federated Fund for U.S. Government
Securities II, INVESCO VIF-Industrial Income Portfolio, INVESCO VIF-Total Return
Portfolio, INVESCO VIF-High Yield Portfolio, Janus Aspen Growth Portfolio,
Lexington Emerging Markets Fund, Schwab Money Market Portfolio, SteinRoe Capital
Appreciation Fund, Strong Discovery Fund II, TCI Balanced Portfolio and TCI
Growth Portfolio Sub-Accounts) as of December 31, 1996, and the related
statement of operations for the year then ended, and the statements of changes
in net assets for each of the two years in the period then ended. These
financial statements are the responsibility of Separate Account VA-5NLNY's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1996, by correspondence with
the fund managers. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of each of the respective
sub-accounts comprising Separate Account VA-5NLNY of First Transamerica Life
Insurance Company as of December 31, 1996, and the results of their operations
for the year then ended, and the changes in their net assets for each of the two
years in the period then ended in conformity with generally accepted accounting
principles.
Charlotte, North Carolina
March 3, 1997
<PAGE>
Separate Account VA-5NLNY of
First Transamerica Life Insurance Company
Statement of Assets and Liabilities
December 31, 1996
<TABLE>
<CAPTION>
Federated Federated INVESCO INVESCO
American Fund for U.S. VIF VIF
Leaders Government Industrial Total
Fund II Securities II Income Return
Sub-account Sub-account Sub-account Sub-account
--------------- ---------------- --------------- ---------------
Assets:
<S> <C> <C> <C> <C> <C>
Investments, at fair value (Notes 1, 2) $ 1,044,816 $ 136,453 $ 1,203,980 $ 264,738
Receivable for net units sold - - - -
Due from Transamerica Life 1 - - -
------------- ------------- ------------- -------------
Total assets $ 1,044,817 $ 136,453 $ 1,203,980 $ 264,738
Liabilities:
Payable for net units redeemed 98 3 28 80
Due to Transamerica Life - - - -
------------- ------------- ------------- -------------
Total liabilities 98 3 28 80
------------- ------------- ------------- -------------
Net assets $ 1,044,719 $ 136,450 $ 1,203,952 $ 264,658
============= ============= ============= =============
Accumulation units outstanding 64,920.490 12,061.284 77,033.017 19,328.612
============= ============= ============= =============
Net asset value and redemption price per unit $ 16.092282 $ 11.313001 $ 15.629036 $ 13.692536
============= ============= ============= =============
Other sub-account information:
Number of shares 68,467.619 13,523.540 84,018.119 20,040.691
Net asset value per share $ 15.26 $ 10.09 $ 14.33 $ 13.21
Investment cost $ 956,992 $ 136,591 $ 1,158,882 $ 254,363
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESCO
VIF Janus Lexington Schwab SteinRoe Strong
High Aspen Emerging Money Capital Discovery TCI TCI
Yield Growth Markets Market Appreciation Fund II Balanced Growth
Sub-accoSub-account Sub-account Sub-account Sub-account Sub-account Sub-account Sub-account
- ------ --------------- ---------------- ---------------- ---------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
$ 5$5,020980,609 $ 481,673 $ 1,104,165 $ 902,468 $ 619,137 $ 3 $ 497,343
- - - 10,002 - - - -
- - - - 1 1 - -
- ----- ------------- ------------- --------------- ------------- ------------- ------------- -------------
$ 5$5,020980,609 $ 481,673 $ 1,114,167 $ 902,469 $ 619,138 $ 3 $ 497,343
- - 44 - - - 2 46
- - - 135 - - 1 -
- ----- ------------- ------------- --------------- ------------- ------------- ------------- -------------
- - 44 135 - - 3 46
- ----- ------------- ------------- --------------- ------------- ------------- ------------- -------------
$ 5$5,020980,609 $ 481,629 $ 1,114,032 $ 902,469 $ 619,138 $ - $ 497,297
==================== ============= =============== ============= ============= ============= =============
42,632.65,009.033 47,399.974 1,005,527.898 63,413.267 42,573.916 $ .428 41,642.157
==================== ============= =============== ============= ============= ============= =============
$ 13.$22315.084193 $ 10.160945 $ 1.107907 $ 14.231545 $ 14.542662 $ 13.053944 $ 11.942138
==================== ============= =============== ============= ============= ============= =============
49,662.63,224.279 47,785.032 1,104,165.190 43,534.385 57,327.531 0.406 48,568.606
$11.78 $ 15.51 $ 10.08 $ 1.00 $ 20.73 $ 10.80 $ 7.54 $ 10.24
$ 5$8,521938,303 $ 480,642 $ 1,104,165 $ 828,991 $ 662,450 $ 3 $ 544,173
</TABLE>
See accompanying notes.
<PAGE>
Separate Account VA-5NLNY of
First Transamerica Life Insurance Company
Statement of Operations
Year ended December 31, 1996
<TABLE>
<CAPTION>
Federated Federated INVESCO INVESCO
American Fund for U.S. VIF VIF
Leaders Government Industrial Total
Fund II Securities II Income Return
Sub-account Sub-account Sub-account Sub-account
--------------- ----------------- ------------------ -----------------
<S> <C> <C> <C> <C> <C>
Investment Income (Note 2) $ 12,235 $ 3,847 $ 82,372 $ 7,953
Expenses (Note 3):
Mortality and expense risk charge 5,401 548 6,002 1,606
------------ ------------ ------------ ------------
Net investment income (loss) 6,834 3,299 76,370 6,347
Net realized and unrealized gain (loss) on investments:
Realized gain (loss) on investment transactions 16,253 (10) 20,943 6,216
Unrealized appreciation (depreciation) of 83,084 (1,148) 39,883 7,395
------------ ------------ ------------ ------------
investments
Net gain (loss) on investments 99,337 (1,158) 60,826 13,611
------------ ------------ ------------ ------------
Increase (decrease) in net assets resulting from $ 106,171 $ 2,141 $ 137,196 $ 19,958
============ ============ ============ ============
operations
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESCO
VIF Janus Lexington Schwab SteinRoe Strong
High Aspen Emerging Money Capital Discovery TCI TCI
Yield Growth Markets Market Appreciation Fund II Balanced Growth
Sub-accouSub-account Sub-account Sub-account Sub-account Sub-account Sub-account Sub-account
- -------- ---------------- --------------- ---------------- ---------------- ---------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
$49,631 $ 18,283 $ - $ 50,346 $ - $ 118,631 $ 98 $ 58,540
2,870 5,083 3,858 8,975 3,970 4,713 14 4,381
- ------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
46,761 13,200 (3,858) 41,371 (3,970) 113,918 84 54,159
15,261 35,277 6,082 - 8,656 (56,578) 400 (21,541)
(2,546) 33,339 8,698 - 66,061 (58,304) (241) (53,367)
- ------- ------------- ------------- ------------- ------------- ------------- -------------- -------------
12,715 68,616 14,780 - 74,717 (114,882) 159 (74,908)
- ------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
$59,476 $ 81,816 $ 10,922 $ 41,371 $ 70,747 $ (964) $ 243 $ (20,749)
======= ============= ============= ============= ============= ============== ============= =============
</TABLE>
See accompanying notes.
<PAGE>
Separate Account VA-5NLNY of
First Transamerica Life Insurance Company
Statement of Changes in Net Assets
Year ended December 31, 1996
<TABLE>
<CAPTION>
Federated Federated INVESCO INVESCO
American Fund for U.S. VIF VIF
Leaders Government Industrial Total
Fund II Securities II Income Return
Sub-account Sub-account Sub-account Sub-account
---------------- ---------------- ----------------- ----------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C>
Net investment income (loss) $ 6,834 $ 3,299 $ 76,370 $ 6,347
Realized gain (loss) on investment transactions 16,253 (10) 20,943 6,216
Unrealized appreciation (depreciation) of 83,084 (1,148) 39,883 7,395
------------ ------------- ------------ ------------
investments
Increase (decrease) in net assets resulting from operations 106,171 2,141 137,196 19,958
Changes from accumulation unit transactions (Note 5) 793,325 93,146 808,596 180,553
------------ ------------ ------------ ------------
Total increase (decrease) in net assets 899,496 95,287 945,792 200,511
Net assets at beginning of year 145,223 41,163 258,160 64,147
------------ ------------ ------------ ------------
Net assets at end of year $ 1,044,719 $ 136,450 $ 1,203,952 $ 264,658
============ ============ ============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESCO
VIF Janus Lexington Schwab SteinRoe Strong
High Aspen Emerging Money Capital Discovery TCI TCI
Yield Growth Markets Market Appreciation Fund II Balanced Growth
Sub-acSub-account Sub-account Sub-account Sub-account Sub-account Sub-account Sub-account
- ----- --------------- ---------------- --------------- ----------------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
$ $6,76113,200 $ (3,858) $ 41,371 $ (3,970) $ 113,918 $ 84 $ 54,159
15,26135,277 6,082 - 8,656 (56,578) 400 (21,541)
33,339 8,698 - 66,061 (58,304) (241) (53,367)
- ------------------ ------------ ------------- ------------ ------------ ------------ ------------
(2,546)
59,47681,816 10,922 41,371 70,747 (964) 243 20,749
387,31677,129 185,043 (82,309) 740,562 244,684 (2,319) 81,111
- ------------------ ------------ ------------- ------------ ------------ ------------ ------------
446,78758,945 195,965 (40,938) 811,309 243,720 (2,076) 60,362
138,23221,664 285,664 1,154,970 91,160 375,418 2,076 436,935
- ------------------ ------------ ------------- ------------ ------------ ------------ ------------
$ 5$5,02980,609 $ 481,629 $ 1,114,032 $ 902,469 $ 619,138 $ - $ 497,297
================== ============ ============= ============ ============ ============ ============
</TABLE>
See accompanying notes.
<PAGE>
Separate Account VA-5NLNY of
First Transamerica Life Insurance Company
Statement of Changes in Net Assets
Year ended December 31, 1995
<TABLE>
<CAPTION>
Federated Federated INVESCO INVESCO
American Fund for U.S. VIF VIF
Leaders Government Industrial Total
Fund II Securities II Income Return
Sub-account Sub-account Sub-account Sub-account
---------------- ---------------- ----------------- -----------------
Increase in net assets:
Operations:
<S> <C> <C> <C> <C>
Net investment income (loss) $ 551 $ 1,008 $ 3,383 $ 1,101
Realized gain on investment transactions 1,678 4 8,725 276
Unrealized appreciation (depreciation) of 4,740 1,009 5,214 2,980
------------ ------------ ------------ ------------
investments
Increase (decrease) in net assets resulting from operations 6,969 2,021 17,322 4,357
Changes from accumulation unit transactions (Note 5) 138,254 39,142 240,838 59,790
------------ ------------ ------------ ------------
Total increase in net assets 145,223 41,163 258,160 64,147
Net assets at beginning of year - - - -
------------ ------------ ------------ ------------
Net assets at end of year $ 145,223 $ 41,163 $ 258,160 $ 64,147
============ ============ ============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESCO
VIF Janus Lexington Schwab SteinRoe Strong
High Aspen Emerging Money Capital Discovery TCI TCI
Yield Growth Markets Market Appreciation Fund II Balanced Growth
Sub-accountSub-account Sub-account Sub-account Sub-account Sub-account Sub-account Sub-account
- ---------- --------------- --------------- ---------------- ---------------- -------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 8,043 $ 3,601 $ 2,038 $ 26,162 $ 454 $ 4,394 $ 27 $ (926)
9,559 8,359 984 - 751 10,964 1 10,086
(955) 8,967 (7,666) - 7,415 14,991 241 6,536
- --------- ------------- ------------- -------------- ------------- ------------- ------------- -------------
16,647 20,927 (4,644) 26,162 8,620 30,349 269 15,696
121,585 200,737 290,308 1,078,808 82,540 345,069 1,807 421,239
- --------- ------------- ------------- -------------- ------------- ------------- ------------- -------------
138,232 221,664 285,664 1,104,970 91,160 375,418 2,076 436,935
- - - 50,000 - - - -
- --------- ------------- ------------- -------------- ------------- ------------- ------------- -------------
$ 138,232 $ 221,664 $ 285,664 $ 1,154,970 $ 91,160 $ 375,418 $ 2,076 $ 436,935
========= ============= ============= ============== ============= ============= ============= =============
</TABLE>
See accompanying notes.
<PAGE>
Separate Account VA-5NLNY of
First Transamerica Life Insurance Company
Notes to Financial Statements
December 31, 1996
1. Organization
Separate Account VA-5NLNY of First Transamerica Life Insurance Company
("Separate Account") was established by First Transamerica Life Insurance
Company ("Transamerica Life") as a separate account under the laws of the State
of New York on September 28, 1993. The Separate Account is registered with the
Securities and Exchange Commission (the Commission) under the Investment Company
Act of 1940 as a unit investment trust and is designed to provide annuity
benefits pursuant to deferred annuity contracts ("Contract") issued by
Transamerica Life. The Separate Account commenced operations when initial
deposits were received on December 19, 1994.
In accordance with the terms of the Contract, all payments allocated to the
Separate Account by contract owners must be allocated to purchase units of any
or all of the Separate Account's twelve sub-accounts, each of which invests
exclusively in a specific corresponding mutual fund portfolio. The mutual fund
portfolios are: Federated American Leaders Fund II, Federated Fund for U.S.
Government Securities II, INVESCO VIF-High Yield Portfolio, INVESCO
VIF-Industrial Income Portfolio, INVESCO VIF-Total Return Portfolio, Janus Aspen
Growth Portfolio, Lexington Emerging Markets Fund, Schwab Money Market
Portfolio, SteinRoe Capital Appreciation Fund, Strong Discovery Fund II, TCI
Balanced Portfolio and TCI Growth Portfolio (together "the Funds"). The Funds
are open-end, diversified investment companies registered under the Investment
Company Act of 1940.
2. Significant Accounting Policies
The accompanying financial statements of the Separate Account have been prepared
in accordance with generally accepted accounting principles. The preparation of
financial statements requires management to make estimates and assumptions that
affect amounts reported in the financial statements and accompanying notes. Such
estimates and assumptions could change in the future as more information becomes
known which could impact the amounts reported and disclosed herein. The
accounting principles followed and the methods of applying those principles are
presented below:
<PAGE>
Separate Account VA-5NLNY of
First Transamerica Life Insurance Company
Notes to Financial Statements (continued)
2. Significant Accounting Policies (continued)
Investment Valuation--Investments in the Funds' shares are carried at fair (net
asset) value. Realized investment gains or losses on investments are determined
on a specific identification basis which approximates average cost. Investment
transactions are accounted for on the date the order to buy or sell is executed
(trade date).
Investment Income--Investment income consists of dividend income (both ordinary
and capital gains) and is recognized on the ex-dividend date. All distributions
received are reinvested in the respective sub-accounts.
Federal Income Taxes--Operations of the Separate Account are part of, and will
be taxed with, those of Transamerica Life, which is taxed as a "life insurance
company" under the Internal Revenue Code. Under current federal income tax law,
income from assets maintained in the Fund for the exclusive benefit of
participants are generally not subject to federal income tax.
3. Expenses and Charges
Mortality and expense risk charges are deducted by Transamerica Life from each
sub-account of the Separate Account on a daily basis which is equal, on an
annual basis, to 0.85% of the daily net asset value of the sub-account. This
amount can never increase and is paid to Transamerica Life. No administrative
expense charge is currently deducted from each sub-account but Transamerica Life
may deduct such a charge not to exceed a maximum effective annual rate of .15%
of the daily net asset value of the sub-account.
The following charges are deducted from a contract holder's account by
Transamerica Life and not directly from the Separate Account. An annual contract
charge of $25 (or 2% of the account value, if less) is deducted at the end of
each contract year. Additionally, there is a $10 (or 2% of the transfer amount,
if less) fee for each transfer in excess of 10 in any contract year.
<PAGE>
Separate Account VA-5NLNY of
First Transamerica Life Insurance Company
Notes to Financial Statements (continued)
4. Remuneration
The Separate Account pays no remuneration to directors, advisory boards or
officers or such other persons who may from time to time perform services for
the Separate Account.
5. Accumulation Units
The changes in accumulation units and amounts are as follows:
<TABLE>
<CAPTION>
Federated Federated INVESCO INVESCO
American Fund for U.S. VIF VIF
Leaders Government Industrial Total
Fund II Securities II Income Return
Sub-account Sub-account Sub-account Sub-account
-------------------- -------------------- -------------------- --------------------
Year ended December 31, 1996
Accumulation Units:
<S> <C> <C> <C> <C>
Units sold 6,042.706 1,169.464 7,644.653 1,746.951
Units redeemed (745.404) (1.722) (1,270.459) (15.226)
Units transferred 48,744.814 7,134.243 50,632.708 12,385.894
----------------- ------------------ ----------------- -----------------
Net increase 54,042.116 8,301.985 57,006.902 14,117.619
================= ================== ================= =================
INVESCO
VIF Janus Lexington Schwab
High Aspen Emerging Money
Yield Growth Markets Market
Sub-account Sub-account Sub-account Sub-account
-------------------- -------------------- -------------------- --------------------
Accumulation Units:
Units sold 16,296.669 8,169.079 3,447.003 3,567,814.007
Units redeemed (474.101) (1,218.016) (1,008.470) (404,068.451)
Units transferred 15,164.790 40,798.876 15,006.294 (3,243,443.553)
----------------- ----------------- ------------------ ------------------
Net increase (decrease) 30,987.358 47,749.939 17,444.827 (79,697.997)
================= ================= ================== ==================
</TABLE>
<PAGE>
Separate Account VA-5NLNY of
First Transamerica Life Insurance Company
Notes to Financial Statements (continued)
<TABLE>
<CAPTION>
5. Accumulation Units (continued)
SteinRoe Strong
Capital Discovery TCI TCI
Appreciation Fund II Balanced Growth
Sub-account Sub-account Sub-account Sub-account
-------------------- -------------------- ------------------- ---------------------
Accumulation Units:
<S> <C> <C> <C> <C>
Units sold 8,017.075 2,420.802 2.046 3,710.627
Units redeemed (1,167.273) (1,037.366) - (23.014)
Units transferred 48,501.159 15,388.160 (178.514) 3,285.280
---------------- ----------------- ------------------ -----------------
Net increase (decrease) 55,350.961 16,771.596 (176.468) 6,972.893
================ ================= ================== =================
Federated Federated INVESCO INVESCO
American Fund for U.S. VIF VIF
Leaders Government Industrial Total
Fund II Securities II Income Return
Sub-account Sub-account Sub-account Sub-account
-------------------- -------------------- -------------------- --------------------
Year ended December 31, 1996 Amounts:
Sales $ 89,358 $ 12,861 $ 108,616 $ 22,653
Redemptions (11,506) (18) (18,931) (199)
Transfers 715,473 80,303 718,911 158,099
------------------- ------------------- ------------------- -------------------
Net increase $ 793,325 $ 93,146 $ 808,596 $ 180,553
=================== =================== =================== ===================
INVESCO
VIF Janus Lexington Schwab
High Aspen Emerging Money
Yield Growth Markets Market
Sub-account Sub-account Sub-account Sub-account
-------------------- -------------------- -------------------- --------------------
Amounts:
Sales $ 190,932 $ 116,291 $ 36,832 $ 3,877,975
Redemptions (6,276) (18,154) (10,350) (441,699)
Transfers 202,656 578,992 158,561 (3,518,585)
------------------- ------------------- ------------------- -------------------
Net increase (decrease) $ 387,312 $ 677,129 $ 185,043 $ (82,309)
=================== =================== =================== ===================
</TABLE>
<PAGE>
Separate Account VA-5NLNY of
First Transamerica Life Insurance Company
Notes to Financial Statements (continued)
<TABLE>
<CAPTION>
5. Accumulation Units (continued)
SteinRoe Strong
Capital Discovery TCI TCI
Appreciation Fund II Balanced Growth
Sub-account Sub-account Sub-account Sub-account
-------------------- -------------------- -------------------- --------------------
Amounts:
<S> <C> <C> <C> <C>
Sales $ 110,705 $ 33,836 $ 24 $ 45,167
Redemptions (16,417) (14,576) (5) (286)
Transfers 646,274 225,424 (2,338) 36,230
------------------- ------------------- ------------------- -------------------
Net increase (decrease) $ 740,562 $ 244,684 $ (2,319) $ 81,111
=================== =================== =================== ===================
Federated Federated INVESCO INVESCO
American Fund for U.S. VIF VIF
Leaders Government Industrial Total
Fund II Securities II Income Return
Sub-account Sub-account Sub-account Sub-account
-------------------- -------------------- ------------------- ---------------------
Year ended December 31, 1995
Accumulation Units:
Units sold 5,112.972 361.570 7,444.353 -
Units redeemed - - - -
Units transferred 5,765.402 3,397.729 12,581.762 5,210.993
------------------ ------------------ ------------------ -------------------
Net increase 10,878.374 3,759.299 20,026.115 5,210.993
================== ================== ================== ===================
INVESCO
VIF Janus Lexington Schwab
High Aspen Emerging Money
Yield Growth Markets Market
Sub-account Sub-account Sub-account Sub-account
-------------------- -------------------- ------------------- --------------------
Accumulation Units:
Units sold 799.529 2,648.407 4,810.144 2,734,101.749
Units redeemed - - - (285,697.353)
Units transferred 10,845.905 14,610.687 25,145.003 (1,363,178.501)
------------------- ------------------- ------------------ ------------------
Net increase 11,645.434 17,259.094 29,955.147 1,085,225.895
=================== =================== ================== ===================
</TABLE>
<PAGE>
Separate Account VA-5NLNY of
First Transamerica Life Insurance Company
Notes to Financial Statements (continued)
<TABLE>
<CAPTION>
5. Accumulation Units (continued)
SteinRoe Strong
Capital Discovery TCI TCI
Appreciation Fund II Balanced Growth
Sub-account Sub-account Sub-account Sub-account
-------------------- -------------------- -------------------- --------------------
Accumulation Units:
<S> <C> <C> <C>
Units sold 2,643.631 6,366.662 - 12,143.219
Units redeemed - - - -
Units transferred 5,418.675 19,435.658 176.896 22,526.045
------------------- ------------------- ------------------- ----------------
Net increase 8,062.306 25,802.320 176.896 34,669.264
=================== =================== =================== ================
Federated Federated INVESCO INVESCO
American Fund for U.S. VIF VIF
Leaders Government Industrial Total
Fund II Securities II Income Return
Sub-account Sub-account Sub-account Sub-account
-------------------- -------------------- -------------------- --------------------
Year ended December 31, 1995 Amounts:
Sales $ 67,154 $ 3,923 $ 93,148 $ 135
Redemptions - - - -
Transfers 71,100 35,219 147,690 59,655
------------------- ------------------- ------------------- -------------------
Net increase $ 138,254 $ 39,142 $ 240,838 $ 59,790
=================== =================== =================== ===================
INVESCO
VIF Janus Lexington Schwab
High Aspen Emerging Money
Yield Growth Markets Market
Sub-account Sub-account Sub-account Sub-account
-------------------- -------------------- -------------------- --------------------
Amounts:
Sales $ 4,181 $ 32,806 $ 45,014 $ 2,803,883
Redemptions - - - (298,649)
Transfers 117,404 167,931 245,294 (1,426,426)
------------------ ------------------- ------------------- ------------------
Net increase $ 121,585 $ 200,737 $ 290,308 $ 1,078,808
================== =================== =================== ===================
</TABLE>
<PAGE>
Separate Account VA-5NLNY of
First Transamerica Life Insurance Company
Notes to Financial Statements (continued)
<TABLE>
<CAPTION>
5. Accumulation Units (continued)
SteinRoe Strong
Capital Discovery TCI TCI
Appreciation Fund II Balanced Growth
Sub-account Sub-account Sub-account Sub-account
------------------ ----------------- -------------------- -------------------
Amounts:
<S> <C> <C> <C> <C>
Sales $ 28,732 $ 87,586 $ - $ 152,204
Redemptions - - - -
Transfers 53,808 257,483 1,807 269,035
--------------- ---------------- ------------------ ------------------
Net increase $ 82,540 $ 345,069 $ 1,807 $ 421,239
=============== ================ ================== ==================
</TABLE>
6. Investment Transactions
The aggregate cost of purchases and the aggregate proceeds from the sales of
investments for the year ended December 31, 1996 were:
<TABLE>
<CAPTION>
Federated Federated INVESCO INVESCO
American Fund for U.S. VIF VIF
Leaders Government Industrial Total
Fund II Securities II Income Return
Sub-account Sub-account Sub-account Sub-account
------------------ ------------------ ------------------- ------------------
<S> <C> <C> <C> <C>
Aggregate purchases $ 963,444 $ 129,379 $ 1,017,050 $ 289,109
=============== =============== =============== ===============
Aggregate proceeds from sales $ 163,269 $ 32,683 $ 132,203 $ 102,168
=============== =============== =============== ===============
INVESCO
VIF Janus Lexington Schwab
High Aspen Emerging Money
Yield Growth Markets Market
Sub-account Sub-account Sub-account Sub-account
------------------ ------------------ ------------------- ------------------
Aggregate purchases $ 681,714 $ 1,052,727 $ 291,008 $ 5,608,378
=============== =============== =============== ===============
Aggregate proceeds from sales $ 297,069 $ 362,527 $ 109,944 $ 5,659,104
=============== =============== =============== ===============
</TABLE>
<PAGE>
Separate Account VA-5NLNY of
First Transamerica Life Insurance Company
Notes to Financial Statements (continued)
<TABLE>
<CAPTION>
6. Investment Transactions (continued)
SteinRoe Strong
Capital Discovery TCI TCI
Appreciation Fund II Balanced Growth
Sub-account Sub-account Sub-account Sub-account
------------------ ------------------ ------------------- ------------------
<S> <C> <C> <C> <C>
Aggregate purchases $ 1,273,320 $ 664,163 $ 123 $ 462,700
=============== =============== =============== ===============
Aggregate proceeds from sales $ 536,757 $ 340,164 $ 2,356 $ 327,629
=============== =============== =============== ===============
</TABLE>
<PAGE>
PART C
Other Information
Item 24. Financial Statements and Exhibits
(a) Financial Statements
All required financial statements are included in Parts A or B of this
Registration Statement.
(b) Exhibits
(1) Resolution of the Board of Directors of First
Transamerica Life Insurance
Company authorizing establishment of the Variable
Account. (5)
(2) Not Applicable.
(3) (a) Principal Underwriting Agreement between
First Transamerica Life
Insurance Company and Charles Schwab & Co., Inn (10)
(b) Agency Agreement between First Transamerica
Life Insurance
Company and Charles Schwab & Co., Inn (10)
(c) Distribution Agreement between First
Transamerica Life Insurance Company
and Transamerica Securities Sales Corporation 11/
(4) Group Contract Form, Certificate Form, and
Endorsements. (6)
(a) Group Contract Form and Endorsements.
(i) Form of Flexible Purchase Payment
Deferred Group Annuity
Contract (Form No. FTGP-501-193).
(ii) Form of Dollar Cost Averaging Option
Endorsement to Contract
(Form No. FTGE-003-193).
(iii) Form of Automatic Payout Option
Endorsement to Contract
(Form No. FTGE-004-193).
(iv) Form of Systematic Withdrawal Option
Endorsement to Contract
(Form No. FTGE-005-193).
(b) Certificate of Participation Form and
Endorsements.
(i) Form of Certificate of Participation
(Form No. FTCG-101-193).
(ii) Form of IRA Endorsement to
Certificate (Form No.
FTCE-005-193).
(iii) Form of Benefit Distribution
Endorsement to Certificate (Form
No. FTCE 006 193).
(iv) Form of Dollar Cost Averaging Option
Endorsement to
Certificate (Form No. FTCE-007-193).
(v) Form of Automatic Payout Option
Endorsement to Certificate
(Form No. FTCE-009-193).
(vi) Form of Systematic Withdrawal Option
Endorsement to
Certificate (Form No. FTCE 009-193).
(vii) Form of Annuity Rate Table
Endorsement to Certificate
(Form No. FTCE-010-193).
<PAGE>
(5) (a) Form of Acceptance of Group Annuity Contract
(Form No. FTGA-003193) (6)
(b) Form of Variable Annuity Application to
Certificate (Form No. FTGA
004-193). (6)
(6) (a) Declaration of Intention and Charter of
First Transamerica Life
Insurance Company. (1)
(b) By-Laws of First Transamerica Life Insuranc
Company. (1)
(7) Not applicable.
(8) (a) Draft Participation Agreement among SteinRoe
Variable Investment
Trust, Stein Roe & Farnam Incorporated,
First Transamerica Life
Insurance Company, and Charles Schwab & Co., Ink (8)
(b) Draft Participation Agreement among INVESCO Variable Investment
Funds, Inc., INVESCO Funds Group, Inc. First
Transamerica Life
Insurance Company, and Charles Schwab & Co., Ink (8)
(c) Draft Participation Agreement among Schwab Annuity Portfolios, Charles
Schwab Investment Management, Inc. First
Transamerica Life Insurance
Company, and Charles Schwab & Co., Inc. (8)
(d) Draft Participation Agreement among
Lexington Emerging Markets Fund,
Inc., Lexington Management Corporation,
First Transamerica Life
Insurance Company, and Charles Schwab & Co., Inc. (8)
(e) Draft Participation Agreement among TCI Portfolios, Inc. Investors
Research Corporation, First Transamerica
Life Insurance Company, and
Charles Schwab & Co., Inc. (8)
(f) Draft Participation Agreement among Insurance Management Series,
Federated Advisers, Federated Securities Corporation, First Transamerica
Life Insurance Company, and Charles Schwab & Co., Ink (8)
(g) Drab Participation Agreement among Strong Discovery Fund II, Inc.
Strong/Corneliuson Capital Management, Inc. Strong Funds Distributors,
First Transamerica Life Insurance Company, and Charles Schwab & Co.,
Ink (8)
(h) Draft Participation Agreement among Janus Aspen Series, Janus Capital
Corporation, First Transamerica Life Insurance Company, and Charles
Schwab & Co., Inc. (8)
(i) Draft Administrative Services Agreement between Charles Schwab & Co.,
Inc. and First Transamerica Life Insurance Company. (8)
(9) Opinion and Consent of Counsel. (10)
(10) (a) Consent of Counsel. (11)
(b) Consent of Independent Auditors. (11)
(11) No financial statements are omitted from item 23.
(12) Not applicable.
(13) Performance Data Calculations. (7) (9)
(14) Not applicable.
<PAGE>
(15) Powers of Attorney.
Alan T. Cunningham (11) Robert Abeles (11)
Marc C. Abrahms (6) James Inzerillo (6)
Daniel E. Jund (10)
James T. Byrne, Jr. (6) Cecelia Kempler (4)
Thomas J. Cusack (10)
James W. Dederer (3) John A. Paganelli (3)
John A. Fibiger (3) James B. Roszak (3)
David E. Gooding (3)
(1) Incorporated by reference to the like-numbered exhibit to the initial
filing of the Registration Statement of Transamerica Occidental Life
Insurance Company's Separate Account VA-2NLNY on Form N-4, File No.
33-55154 (December 1, 1992).
(2) Incorporated by reference to the like-numbered exhibit to Post-
Effective Amendment No. 1 to the
Registration Statement of First Transamerica Life Insurance Company's
Separate Account VA
2LNY on Form N-4, File No. 33-55152 (June 8, 1993).
(3) Incorporated by reference to the like-numbered exhibit to Pre-Effective
Amendment No.1 to the Registration Statement of First Transamerica Life
Insurance Company's Separate Account VA 2LNY on Form N-4, File No.
33-55152 (February 10, 1993).
(4) Incorporated by reference to the like-numbered exhibit to Pre-Effective
Amendment No. 1 the
Registration Statement of First Transamerica Life Insurance Company's
Separate Account VA
2NLNY on Form N-4, File No. 33-55154 (October 18, 1993).
(5) Incorporated by reference to the like-numbered exhibit to the initial
filing of the Registration Statement of First Transamerica Life
Insurance Company's Separate Account VA-5NLNY on Form N-4, File No.
33-71748 (November 17, 1993).
(6) Incorporated by reference to the like-numbered exhibit to Pre-Effective
Amendment No. 1 to the
Registration Statement of First Transamerica Life Insurance Company's
Separate Account VA
5NLNY, on Form N-4, File No. 33-71748 (February 2, 1994).
(7) Incorporated by reference to the like-numbered exhibit to Post-
Effective Amendment No. 1 to the
Registration Statement of Transamerica Occidental Life Insurance
Company's Separate Account
VA-5 on Form 4, File No. 33-71746 (May 2, 1994).
(8) Incorporated by reference to the like-numbered exhibit to Post-
Effective Amendment No. 1 to this Form
N-4 Registration Statement, File No. 33-71748 (October 4, 1994).
(9) Incorporated by reference to the like-numbered exhibit to Post-
Effective Amendment No. 2 to this Form
N-4 Registration Statement, File No. 33-71748 (April 28, 1995).
(10) Incorporated by reference to the like-numbered exhibit to Post-
Effective Amendment
No.3 to this Form N-4 Registration Statement, File No. 33-71748
(April 26, 1996).
(11) Filed herewith.
<PAGE>
<TABLE>
<CAPTION>
Item 25. Directors and Officers of the Depositor
NAME AND PRINCIPAL
BUSINESS ADDRESS POSITION AND OFFICES WITH DEPOSITOR
<S> <C>
James W. Dederer Director, Chairman, General Counsel and Corporate
Secretary
Alan T. Cunningham Director and President
Robert Rubinstein Senior Vice President, Chief Actuary and Assistant Secretary
Gary Rolle'
Investment Officer
Susan Silbert Investment Officer
Paul Hankowitz MD Vice President and Chief Medical Director
James D. Lamb FSA Vice President and Actuary
Katharine Lomeli Vice President and Assistant Secretary
William J. Lyons Vice President and Chief Underwriter
Alison B. Pettingall Vice President - Marketing
Martin V. Mondato Second Vice President and Director of Operations
Kamran Haghighi Tax Officer
William M. Hurst Assistant Secretary
Sally S. Yamada Treasurer
Robert Abeles Director
Marc C. Abrahms Director
James T. Byrne, Jr. Director
Thomas J. Cusack Director
John A. Fibiger Director
David E. Gooding Director
Allan D. Greenberg Director
James Inzerillo Director
Daniel E. Jund Director
Ceceilia Kemper Director
John A. Paganelli Director
James B. Roszak Director
</TABLE>
<PAGE>
<PAGE>
Item 26. Person Controlled by or Under Common Control With the Depositor or
Registrant.
The Depositor, First Transamerica Life Insurance Company
(Transamerica), is wholly owned by Transamerica Occidental Life Insurance
Company. The Registrant is a segregated asset account of Transamerica.
The following chart indicates the persons controlled by or
under common control with Transamerica.
TRANSAMERICA CORPORATION AND SUBSIDIARIES
WITH STATE OR COUNTRY OF INCORPORATION
Transamerica Corporation
<PAGE>
<PAGE>
<PAGE>
<PAGE>
ARC Reinsurance Corporation - Hawaii
Inter-America Corporation - California
Mortgage Corporation of America - California
Pyramid Insurance Company, Ltd. - Hawaii
Pacific Cable Ltd. - Bermuda
TC Cable, Inc. - Delaware
River Thames Insurance Company Limited - England
RTI Holdings, Inc. - Delaware
Transamerica Airlines, Inc. - Delaware
Transamerica Asset Management Group, Inc. - Delaware
Criterion Investment Management Company - Texas
Transamerica CBO I, Inc. - Delaware
Transamerica Corporation (Oregon) - Oregon
Transamerica Delaware, L.P. - Delaware
Transamerica Finance Group, Inc. - Delaware
BWAC Twelve, Inc. - Delaware
Transamerica Insurance Finance Corporation - Maryland
Transamerica Insurance Finance Company (Europe) - Maryland
Transamerica Insurance Finance Corporation, California -
California
Transamerica Insurance Finance Corporation, Canada - Ontario
Transamerica Finance Corporation - Delaware
TA Leasing Holding Co., Inc. - Delaware
Trans Ocean Ltd. - Delaware
Trans Ocean Container Corp. - Delaware
Cool Solutions, Inc. - Delaware
TOD Liquidating Corp. - California
TOL S.R.L. - Italy
Trans Ocean Leasing Deutschland GMBH - Germany
Trans Ocean Leasing PTY Limited - Australia
Trans Ocean Management Corporation -
Trans Ocean Regional Corporate Holdings - California
Trans Ocean SARL - France
Trans Ocean Tank Services Corporation - Delaware
Trans Ocean Container Finance Corp. - Delaware
Transamerica Leasing Inc. - Delaware
Better Asset Management Company LLC - Delaware
Greybox L.L.C. - Delaware
Transamerica Leasing Holdings Inc. - Delaware
Greybox Services Limited - United Kingdom
Intermodal Equipment, Inc. - Delaware
Transamerica Leasing N.V. - Belgium
Transamerica Leasing SRL - Italy
Transamerica Distribution Services Inc. - Delaware
Transamerica Leasing Coordination Center - Belgium
Transamerica Leasing do Brasil Ltda. - Brazil
Transamerica Leasing GmbH - West Germany
Transamerica Leasing Limited - United Kingdom
ICS Terminals (UK) Limited - United Kingdom
Transamerica Leasing Pty. Ltd. - Australia
<PAGE>
Transamerica Leasing (Canada) Inc. - Canada
Transamerica Leasing (HK) Ltd. - Hong Kong
Transamerica Leasing (Proprietary) Limited - South Africa
Transamerica Tank Container Leasing Pty. Limited -
Australia
Transamerica Trailer Holdings I Inc. - Delaware
Transamerica Trailer Holdings II Inc. - Delaware
Transamerica Trailer Holdings III Inc. - Delaware
Transamerica Trailer Leasing AB - Sweden
Transamerica Trailer Leasing A/S - Denmark.
Transamerica Trailer Leasing GmbH - Germany
Transamerica Trailer Leasing S.A. - Fra.
Transamerica Trailer Leasing S.p.A. - Italy
Transamerica Trailer Leasing (Belgium) N.V. - Belg.
Transamerica Trailer Leasing (Netherlands) B.V. - Neth.
Transamerica Trailer Spain S.A. - Spn.
Transamerica Transport Inc. - NJ
TELColorado Holding Co., Inc. - Delaware
Transamerica Commercial Finance Corporation, I - Delaware
BWAC Credit Corporation - Delaware
BWAC International Corporation - Delaware
Transamerica Business Credit Corporation - Delaware
The Plain Company - Delaware
Transamerica Global Distribution Finance Corporation - Delaware
Transamerica Inventory Finance Corporation - Delaware
BWAC Seventeen, Inc. - Delaware
Transamerica Commercial Finance Canada, Limited - Ontario
Transamerica Commercial Finance Corporation, Canada -
Canada
TCF Commercial Leasing Corporation, Canada - Ontario
BWAC Twenty-One, Inc. - Delaware
Transamerica Commercial Holdings Limited - United Kingdom
Transamerica Commercial Finance Limited - United Kingdom
Transamerica Trailer Leasing Limited - United Kingdom
Transamerica Commercial Finance Corporation - Delaware
TCF Asset Management Corporation - Colorado
Transamerica Joint Ventures, Inc. - Delaware
Transamerica Commercial Finance France S.A. - France
Transamerica GmbH Inc. - Delaware
Transamerica Financieringsmaatschappij B.V. - Netherlands
Transamerica GmbH - Germany - Germany
Transamerica Finance Loan Company - Delaware
Transamerica Financial Services Holding Company - Delaware
Arcadia General Insurance Company - Arizona
Arcadia National Life Insurance Company - Arizona
First Credit Corporation - Delaware
Pacific Agency, Inc. - Indiana
Pacific Agency, Inc. - Nevada
Pacific Finance Loans - California
Pacific Service Escrow Inc. - Delaware
Transamerica Acceptance Corporation - Delaware
Transamerica Financial Services Limited, United Kingdom -
United Kingdom
Transamerica Credit Corporation - Nevada
<PAGE>
Transamerica Credit Corporation (Washington) - Washington
Transamerica Financial Consumer Discount Company (Pennsylvania)
- Pennsylvania
Transamerica Financial Corporation - Nevada
Transamerica Financial Services Mortgage Company - Delaware
Transamerica Financial Professional Services, Inc. - California
Transamerica Financial Services - California
NAB Services, Inc. - California
Transamerica Financial Services Company - Ohio
Transamerica Financial Services Inc. - Hawaii
Transamerica Financial Services Inc. - Minnesota
Transamerica Financial Services of Dover, Inc. - Delaware
Transamerica Financial Services, Inc. - Alabama
Transamerica Financial Services, Inc. - British Columbia
Transamerica Financial Services, Inc. - New Jersey
Transamerica Financial Services, Inc. - Texas
Transamerica Financial Services, Inc. - West Virginia
Transamerica Insurance Administrators, Inc. - Delaware
Transamerica Mortgage Company - Delaware
Transamerica Financial Services Finance Co. - Delaware
Transamerica HomeFirst, Inc. - California
Transamerica Foundation - California
Transamerica Information Management Services, Inc. - Delaware
Transamerica Insurance Corporation of California - California
Arbor Life Insurance Company - Arizona
Plaza Insurance Sales, Inc. - California
Transamerica Advisors, Inc. - California
Transamerica Annuity Service Corporation - New Mexico
Transamerica Financial Resources, Inc. - Delaware
Financial Resources Insurance Agency of Texas - Texas
TBK Insurance Agency of Ohio, Inc. - Ohio
Transamerica Financial Resources Insurance Agency of Alabama Inc.
- - Alabama
Transamerica Financial Resources Insurance Agency of Massachusetts
Inc. - Massachusetts
Transamerica International Insurance Services, Inc. - Delaware
Home Loans and Finance Ltd. - United Kingdom
Transamerica Occidental Life Insurance Company - California Bulkrich
Trading Limited - Hong Kong First Transamerica Life Insurance
Company - New York NEF Investment Company - California Transamerica
Life Insurance and Annuity Company - North Carolina
Transamerica Assurance Company - Colorado
Transamerica Life Insurance Company of Canada - Canada
Transamerica Variable Insurance Fund, Inc. - Maryland
USA Administration Services, Inc. - Kansas
Transamerica Products, Inc. - California
Transamerica Leasing Ventures, Inc. - California
Transamerica Products II, Inc. - California
Transamerica Products IV, Inc. - California
Transamerica Products I, Inc. - California
Transamerica Securities Sales Corporation - Maryland
Transamerica Service Company - Delaware
Transamerica International Holdings, Inc. - Delaware
<PAGE>
Transamerica Investment Services, Inc. - Delaware
Transamerica Income Shares, Inc. (managed by TA Investment Services)
- Maryland
Transamerica LP Holdings Corp. - Delaware
Transamerica Properties, Inc. - Delaware
Transamerica Retirement Management Corporation - Delaware
Transamerica Real Estate Tax Service (A Division of Transamerica
Corporation) - N/A
Transamerica Flood Hazard Certification (A Division of TA Real Estate
Tax Service) - N/A
Transamerica Realty Services, Inc. - Delaware
Bankers Mortgage Company of California - California
Pyramid Investment Corporation - Delaware
The Gilwell Company - California
Transamerica Affordable Housing, Inc. - California
Transamerica Minerals Company - California
Transamerica Oakmont Corporation - California
Ventana Inn, Inc. - California
Transamerica Telecommunications Corporation - Delaware
*Designates INACTIVE COMPANIES
oA Division of Transamerica Corporation
ss.Limited Partner; Transamerica Corporation is General Partner
Item 27. Number of Contract Owners
As of April 1, 1997, there were 155 Owners of Non-Qualified Individual
Contract and 3 Owner of Qualified Individual Contracts.
Item 28. Indemnification
Transamerica's Bylaws provide in Article VIII as follows:
Section 1. Indemnification: (a) The Corporation shall indemnify to the
fullest extent now or hereafter provided for or permitted by law each person
involved in, or made or threatened to be made a party to, any action, suit,
claim or proceeding, whether civil or criminal, including any investigative,
administrative, legislative, or other proceeding, and including any action by or
in the right of the Corporation or any other corporation, or any partnership,
joint venture, trust, employee benefit plan, or other enterprise (any such
entity, other than the Corporation, being hereinafter referred to as an
"Enterprise"), and including appeals therein (any such action or process being
hereinafter referred to as a Proceeding), by reason of the fact that such
person, such person's testator or intestate (i) is or was a director or officer
of the Corporation, or (ii) is or was serving, at the request of the
Corporation, as a director, officer, or in any other capacity, of any other
Enterprise, against any and all judgments, amounts paid in settlement, and
expenses, including attorneys' fees, actually and reasonably incurred as a
result of or in connection with any Proceeding, except as provided in Subsection
(b) below.
(b) No indemnification shall be made to or on behalf of any such person
if a judgment or other final adjudication adverse to such person establishes
that such person's acts were committed in bad faith or were the result of active
and deliberate dishonesty and were material to the cause of action so
adjudicated, or that such person personally gained in fact a financial profit or
other advantage to which such person was not legally entitled. In addition, no
indemnification shall be made with respect to any Proceeding initiated by any
such
<PAGE>
person against the Corporation, or a director or officer of the Corporation,
other than to enforce the terms of this Article VIII, unless such Proceeding was
authorized by the Board of Directors. Further, no indemnification shall be made
with respect to any settlement or compromise of any Proceeding unless and until
the Corporation has consented to such settlement or compromise.
(c) Written notice of any Proceeding for which indemnification may be
sought by any peon shall be given to the Corporation as soon as practicable. The
Corporation shall then be permitted to participate in the defense of any such
proceeding or, unless conflicts of interest or position exist between such peon
and the Corporation in the conduct of such defense, to assume such defense. In
the event that the Corporation assumes the defense of any such Proceeding, legal
counsel selected by the Corporation shall be reasonably acceptable to such
person. After such an assumption, the Corporation shall not be liable to such
person for any legal or other expenses subsequently incurred unless such
expenses have been expressly authorized by the Corporation. In the event that
the Corporation participates in the defense of any such Proceeding, such person
may select counsel to represent him in regard to such a Proceeding; however,
such peon shall cooperate in good faith with any request that common counsel be
utilized by the parties to any Proceeding who are similarly situated, unless to
do so would be inappropriate due to actual or potential differing interests
between or among such parties.
(d) In making any determination regarding any person's entitlement to
indemnification hereunder, it shall be presumed that such person is entitled to
indemnification, and the Corporation shall have the burden of proving the
contrary.
Section 2. Advancement of Expenses. Except in the case of a Proceeding
against a director, officer, or other person specifically approved by the Board
of Directors, the Corporation shall, subject to Section 1 of this Article VIII
above, pay expenses actually and reasonably incurred by or on behalf of such a
person in defending any Proceeding in advance of the final disposition of such
Proceeding. Such payments shall be made promptly upon receipt by the
Corporation, from time to time, of a written demand by such person for such
advancement, together with an undertaking by or on behalf of such person to
repay any expenses so advanced to the extent that the person receiving the
advancement is ultimately found not to be entitled to indemnification for pan or
all of such expenses.
Section 3. Rights Not Exclusive. The rights to indemnification and
advancement of expenses granted by or pursuant to this Article VIII (i) shall
not limit or exclude, but shall be in addition to, any other rights which may be
granted by or pursuant to any statute, corporate charter, by-law, resolution of
stockholders or directors or agreement, (ii) shall be deemed to constitute
contractual obligations of the Corporation to any person who serves in a
capacity referred to in Section 1 of this Article VIII at any time while this
Article VIII is in effect, (iii) shall continue to exist after the repeal of
modification of this Article VIII with respect to events occurring prior thereto
and (iv) shall continue as to a person who has ceased to be a director or
officer and shall inure to the benefit of the estate, spouse, heirs, executors,
administrators or assigns of such person. It is the intent of this Article VIII
to require the Corporation to indemnify the persons referred to herein for the
aforementioned judgments, amounts paid in settlement, and expenses, including
attorneys' fees, in each and every circumstance in which such indemnification
could lawfully be permitted by express provisions of by-laws, and the
indemnification required by this Article VIII shall not be limited by the
absence of an express recital of such circumstances.
Section 4. Indemnification of Employees and Others. The Corporation
may, from time to time, with the approval of the Board of Directors, and to the
extent authorized, grant rights to indemnification, and to the advancement of
expenses, to any employee or agent of the Corporation or to any person serving
at the request of the Corporation as a director or officer, or in any other
capacity, of any other Enterprise, to the fullest extent of the provisions of
this Article VIII with respect to the indemnification and advancement of
expenses of directors and officers of the Corporation.
<PAGE>
Section 5. Authorization of Contracts. The Corporation may, with the
approval of the Board of Directors, enter into an agreement with any person who
is, or is about to become, a director, officer, employee or agent of the
Corporation, or who is serving, or is about to serve, at the request of the
Corporation, as a director, officer, or in any other capacity, of any other
Enterprise, which agreement may provide for indemnification of such person and
advancement of expenses to such person upon terms, and to the extent, not
prohibited by law. The failure to enter into any such agreement shall not affect
or limit the rights of any such person under this Article VIII.
Section 6. Insurance. The Corporation may purchase and maintain
insurance to indemnify the
Corporation and any person eligible to be indemnified under this Article VIII
within the limits permitted by law.
Section 7. Severability. If any provision of this Article VIII is
determined at any time to be
unenforceable in any respect, the other provisions shall not in any way be
affected or impaired thereby.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling person of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the 1933 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by the director, officer or controlling person of the registrant in the
successful defense of any anion, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
The directors and officers of First Transamerica Life Insurance Company
are covered under a Directors and Officers liability program which includes
$55,000,000 for corporate reimbursement for the directors and officers of
Transamerica Occidental Life Insurance Company and its subsidiaries as insureds.
Such directors and officers are indemnified for loss arising from any covered
claim by reason of any Wrongful Act in their capacities as directors or
officers. The term Glossy means any amount which the insureds are legally
obligated to pay for claim for Wrongful Acts. The term "Wrongful Acts" means any
breach or alleged breach of duty, neglect, error, misstatement, misleading
statement or omission actually or allegedly caused, committed or attempted by a
director or officer while acting individually or collectively in their capacity
as such, claimed against them solely by reason of their being directors and
officers. The limit of liability under the program is $65,000,000 for the policy
year 11/25/94 to 11/25/95. The primary policy is with Corporate Officers and
Directors Assurance Holding Limited (CODA).
Item 29. Principal Underwriter
Transamerica Securities Sales Corporation ("TSSC") is the underwriter
of the Certificates and the Individual Contracts as defined in the Investment
Company Act of 1940. TSSC will become Principal Underwriter effective May 1,
1997.
NAME AND PRINCIPAL POSITION AND OFFICE WITH
BUSINESS ADDRESS* TRANSAMERICA SECURITIES SALES CORPORATION
Barbara A. Kelley President and Director
Regina M. Fink Secretary and Director
Benjamin Tang Treasurer
James B. Roszak Director
Nooruddin Veerjee Director
<PAGE>
Dan S. Trivers Senior Vice President
Nicki A. Bair Vice President
Chris Shaw Second Vice President
*The Principal business address for each officer and director is 1150 South
Olive, Los Angeles, CA 90015.
The following table lists the amounts of commissions paid to the
principal underwriter during the last fiscal year.
Name of
Principal Net Underwriting
Underwriter Discounts & Commission
Compensation on Brokerage
Redemption Commissions Compensation
Schwab
Item 30. Location and Accounts and Records
All accounts and records required to be maintained by Section 31 (a) of the 1940
Act and the rules under it are maintained by Transamerica or the Service Office
at their administrative offices.
<PAGE>
Item 31. Management Services
All management contracts are discussed in Parts A or B.
Item 32. Undertakings
(a)Registrant undertakes that it will file a post-effective amendment to this
registration statement as frequently as necessary to ensure that the audited
financial statements in the registration statement are never more than 16 months
old for so long as payments under the variable annuity contracts may be
accepted.
(b)Registrant undertakes that it will include either (1) as pan of any
application to
purchase a Policy offered by the Prospectus, a space that an applicant can check
to request a Statement of Additional Information, or (2) a post card or similar
written communication affixed to or included in the Prospectus that the
applicant can remove to send for a Statement of Additional Information.
(c)Registrant undertakes to deliver any Statement of Additional Information and
any
financial statements required to be made available under this Form promptly upon
written or oral request to Transamerica at the address or phone number listed in
the Prospectus.
(d) Transamerica hereby represents that the fees and charges dedcuted under
policy are reasonable in the aggregate in relation to services rendered,
expenses and risks assumed by Transamerica.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, First Transamerica Life Insurance Company certifies that
this Amendment meets the requirements of Securities Act Rule 485(b) for
effectiveness of this Registration Statement and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, in the
City of Los Angeles, State of California on this 28th day of April, 1997
SEPARATE ACCOUNT VA-5NLNY
OF FIRST TRANSAMERICA
LIFE INSURANCE COMPANY
(REGISTRANT)
FIRST TRANSAMERICA
LIFE INSURANCE COMPANY
(DEPOSITOR)
BY: _______________________________
James W. Dederer, Chairman, Director,
General Counsel and Corporate Secretary
As required by the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
_________________________ * President and Director April 28, 1997
Alan T. Cunningham
__________________________ * Vice Presidentand Controller, April 28, 1997
Alexander Smith
__________________________ * Director April 28, 1997
Marc C. Abrahms
_________________________ * Director April 28, 1997
James T. Byrne, Jr.
__________________________ * Director April 28, 1997
Thomas J. Cusack
__________________________ * Director April 28, 1997
John Fibiger
__________________________ * Director April 28, 1997
David E. Gooding
C-22
<PAGE>
Signature Title Date
___________________________ * Director April 28, 1997
Allan D. Greenberg
___________________________ * Director April 28, 1997
James B. Roszak
___________________________ * Director April 28, 1997
James Inzerillo
___________________________ * Director April 28, 1997
Daniel E. Jund
___________________________ * Director April 28, 1997
Cecelia Kempler
_________________________ * Director April 28, 1997
John A. Paganelli
_________________________ * Director April 28, 1997
James B. Roszak
</TABLE>
___________________________ on April 28, 1997 as Attorney-in-Fact
*By: James W. Dederer pursuant to powers of attorney previously
filed and in his own capacity as Chairman
of the Board, Director, General Counsel,
and Corporate Secretary.
<PAGE>
EXHIBIT INDEX
Exhibit Description
No. of Exhibit
(3) (c) Distribution Agreement between First Transamerica Life
Insurance Company
and Transamerica Securities Sales Corporation 11/
(10) (a) Consent of Counsel
(b) Consent of Independent Auditors
(15) Powers of Attorney
<PAGE>
EXHIBIT (3) (c)
Distribution Agreement between
First Transamerica Life Insurance Company
and Transamerica Securities Sales Corporation
<PAGE>
DISTRIBUTION AGREEMENT BETWEEN
FIRST TRANSAMERICA LIFE INSURANCE COMPANY
AND TRANSAMERICA INSURANCE SECURITIES SALES CORPORATION
This Agreement (the "Agreement") made as of this 24th day of August, 1994,
by and between TRANSAMERICA INSURANCE SECURITIES SALES CORPORATION (the
"Distributor"), a corporation organized and existing under the laws of the State
of Maryland with its principal place of business in Los Angeles, California, and
FIRST TRANSAMERICA LIFE INSURANCE COMPANY (the "Company"), an insurance company
organized and existing under the laws of the State of California with its
principal place of business in Los Angeles, California, for itself and on behalf
of certain of its separate accounts.
W I T N E S S E T H
WHEREAS, the Company has established and maintains the class or classes of
variable annuity contracts set forth on Schedule 1 to this Agreement as in
effect at the time this Agreement is executed, and such other classes of
variable annuity contracts and variable life insurance contracts (collectively,
"variable insurance products") that may be added to Schedule 1 from time to time
in accordance with Section 18 of this Agreement, and including any riders to
such contracts and any other contract offered in connection therewith
(collectively the "Contracts") (A "class of Contracts" shall mean those
Contracts issued by the Company on the same policy form or forms and covered by
the same Registration Statement.); and
WHEREAS, the Distributor, a wholly-owned subsidiary of Transamerica
Insurance Corporation of California, is registered as a broker-dealer with the
Securities and Exchange Commission (the "SEC") under the Securities Exchange Act
of 1934, as amended (the "1934 Act") and is a member of the National Association
of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, the parties desire to have the Distributor act as the principal
underwriter for and in connection with the sale of the Contracts to the public
and assume full responsibility for the securities activities of each "associated
person" (as that term is defined in Section 3(a)(18) of the 1934 Act) of the
Distributor, including each associated person of the Distributor engaged in the
offer and sale of the Contracts (a "Representative"); and
WHEREAS, the Distributor and the Company acknowledge that the Company is
best suited to provide certain administrative functions in connection with the
Contracts, subject at all times to the control and direction of the Distributor
with respect to the broker-dealer operations;
NOW, THEREFORE, in consideration of the mutual promises and undertakings
herein contained, the Distributor and the Company agree as follows:
<PAGE>
1. Definitions
a. Fund -- An investment company serving as the funding medium for any
Contracts, specified in Schedule 2 to this Agreement as in effect at the
time this Agreement is executed, and such other investment companies that
may be added to Schedule 2 from time to time in accordance with Section 18
of this Agreement.
b. Intermediary Distributors -- A person registered as a broker-dealer
and licensed as a life insurance agent or affiliated with a person so
licensed, and authorized to distribute the Contracts pursuant to a sales
agreement as provided for in Section 2 of this Agreement (the "Sales
Agreement").
c. Separate Account -- Each separate account of the Company specified
on Schedule 3 to this Agreement as in effect at the time this Agreement is
executed, and such other separate accounts of the Company that may be added
to Schedule 3 from time to time in accordance with Section 18 of this
Agreement, each of which will be approved by the Commissioner of Insurance
of the State of California under Section 10506 of the California Insurance
Code.
2. Distribution Duties and Responsibilities. The Distributor shall act as
principal underwriter for the Contracts in connection with their sale during the
term of this Agreement in each state or other jurisdiction where they may
legally be sold (the "Territory"). The Distributor is authorized to solicit
applications for the Contracts ("Applications") directly from customers and
prospective customers in the Territory and to select all persons who will be
authorized to engage in solicitation activities with respect to the Contracts.
Such selection activity shall include the recruitment and appointment of third
parties to act as distributors. In turn such third parties may be authorized as
Intermediary Distributors to engage in solicitation activities, including the
solicitation of Applications directly from customers and prospective customers
in the Territory and/or as Intermediary Distributors to recruit other third
parties to act as Intermediary Distributors, in each case as the Company and the
Distributor shall agree to. The Distributor shall enter into separate written
Sales Agreements with each such Intermediary Distributor. Such Sales Agreements
will be substantially in the form attached to this Agreement as Exhibit A, but
may include such additional or alternative terms and conditions that are not
otherwise inconsistent with this Agreement, subject to the Company's review and
prior written consent (which may be given by facsimile), which consent will not
be unreasonably withheld, and which will be deemed to have been given if the
Company has not responded in writing (by facsimile or otherwise) within 10
calendar days. The Distributor will provide the Company with a profile on each
Intermediary Distributor. The Distributor shall use its best efforts to market
the Contracts actively, both directly and through Intermediary Distributors.
The Distributor shall have the power and authority to select and recommend
Representatives of the Distributor, and to authorize an Intermediary Distributor
to select and recommend representatives of such Intermediary Distributor (the
"Intermediary's Representatives"), for appointment as agents of the Company, and
only such Representatives and Intermediary's Representatives shall become agents
<PAGE>
of the Company with authority to engage in solicitation activities with respect
to the Contracts. The Distributor shall be solely responsible for background
investigations of its Representatives to determine their qualifications, good
character and moral fitness to sell the Contracts, and pursuant to the Sales
Agreement, each Intermediary Distributor shall be solely responsible for
background investigations of its Intermediary's Representatives to determine
their qualifications, good character and moral fitness to sell the Contracts.
The Company shall appoint in the appropriate states or jurisdictions such
selected and recommended agents, provided that the Company reserves the right,
which right shall not be exercised unreasonably, to refuse to appoint as agent
any Representative or Intermediary's Representative, or, once appointed, to
terminate the same at any time with or without cause. No other individuals,
persons or entities, other than affiliates of the Company, shall have authority
to engage in solicitation activities with respect to the Contracts, without the
express prior written consent of the Distributor.
The Distributor shall at all times be an independent contractor, and shall
be under no obligation to produce any particular amount of sales of the
Contracts. Anything in this Agreement to the contrary notwithstanding, the
Company retains ultimate responsibility for the direction and control of the
services provided under this Agreement, and the ultimate right to control the
sale of the Contracts, including the right to suspend sales in any jurisdiction
or jurisdictions, to appoint and discharge agents of the Company, or to refuse
to sell a Contract to any applicant for purchase of a Contract (an "Applicant")
for any reason whatsoever. The Distributor and the Distributor's Representatives
shall not have the authority, and shall not grant the authority to Intermediary
Distributors or the Intermediary's Representatives, on behalf of the Company: to
make, alter or discharge any Contract or other contract entered into pursuant to
a Contract; to waive any Contract forfeiture provision; to extend the time of
paying any premium on the Contracts; or to receive any monies or premiums
(except for the sole purpose of forwarding such monies or premiums to the
Company). The Distributor shall not possess or exercise any authority on behalf
of the Company other than that expressly conferred upon the Distributor by this
Agreement.
3. Filings, Marketing Materials and Representatives. The Distributor will assume
full responsibility for the securities activities of its Representatives, and,
similarly, each Intermediary Distributor shall assume, pursuant to the Sales
Agreement, full responsibility for the Intermediary's Representatives'
securities activities, including compliance with the NASD Rules of Fair Practice
and any applicable state securities laws and regulations. The Distributor,
either directly or indirectly through the Company as its agent, shall: (a) make
timely filings with the SEC, the NASD, and any other appropriate securities
regulatory authorities of any advertisements, sales literature, or other
materials relating to the Contracts, as required by law or regulation to be
filed; (b) make available to the Company for approval copies of all agreements
and other written plans and documents relating to the sale of the Contracts, and
shall, if necessary, submit such agreements and other plans and documents to the
<PAGE>
appropriate securities regulatory authorities for approval prior to their use;
(c) assist its Representatives in their efforts to prepare themselves to pass
any and all applicable NASD and state insurance qualification examinations; (d)
register its Representatives with the NASD and any other appropriate securities
regulatory authorities; and (e) supervise and control their Representatives in
the performance of their selling activities. The Intermediary Distributors,
pursuant to each Sales Agreement, shall have similar responsibilities with
regard to the assistance, registration, supervision and control of the
Intermediary's Representatives. In connection with obtaining the clearances of
the appropriate regulatory authorities, the parties agree to use their best
efforts to obtain such clearances as expeditiously as possible, and shall not
use any sales material, plan, or other agreement in any jurisdiction unless the
appropriate filings have been made and approvals obtained that are necessary to
make their use proper and legal therein.
The Distributor will take reasonable steps to ensure that the
Representatives do not make any recommendations to Applicants for the purchase
of a Contract(s) in the absence of reasonable grounds to believe that the
purchase of such Contracts is suitable for the Applicants. Determinations of
suitability will be based on various types of information including, but not
limited to, information furnished to a Representative by an Applicant after
reasonable inquiry by the Representative concerning the Applicant's insurance
and investment objectives, financial situation, and needs, including the
likelihood that the Applicant will be financially able to make sufficient
premium payments to derive the benefits from the Contracts. Likewise, pursuant
to each Sales Agreement, each Intermediary Distributor shall take reasonable
steps to ensure that the Intermediary's Representatives do not make any
recommendations to any Applicant in the absence of reasonable grounds to believe
that the purchase of such Contracts is suitable for the Applicant, with
determinations of suitability based upon the factors set forth immediately
above.
The Distributor will not encourage a prospective Applicant to surrender or
exchange an insurance contract in order to purchase a Contract, nor will the
Distributor encourage any existing holder of a Contract (a "Contractholder") to
surrender or exchange a Contract in order to purchase another insurance
contract. Likewise, each Intermediary Distributor, pursuant to each Sales
Agreement with the Distributor, shall not encourage a prospective Applicant to
surrender or exchange an insurance contract in order to purchase a Contract, nor
encourage any Contractholder to surrender or exchange a Contract in order to
purchase another insurance contract. The obligations under this paragraph are
subject to applicable NASD Rules of Fair Practice and any other applicable laws,
regulations and regulatory guidelines.
The Distributor and each Intermediary Distributor, pursuant to each Sales
Agreement, each shall take reasonable steps to ensure that their respective
Representatives or Intermediary's Representatives do not use any advertisement,
sales literature, or other promotional material which has not been specifically
approved in advance by the Company; and the Company, as agent for the
Distributor, shall be responsible for filing such items, as necessary, with the
SEC, the NASD, and any other appropriate securities regulatory authorities, and,
<PAGE>
where necessary, shall obtain the approvals of such authorities. No associated
person, either of the Distributor or of any Intermediary Distributor, shall, in
connection with the offer and sale of the Contracts, make any representation or
communicate any information regarding the Contracts or the Company, which is not
inconsistent with (i) materials approved by the Company for distribution to the
public, or (ii) a current prospectus relating to the Contracts, or (iii) the
then effective registration statements under the Securities Act of 1933 (the
"1933 Act") for the Contracts.
4. Offer, Sale and Acceptance of Applications. The Company will undertake
to appoint the Representatives and Intermediary's Representatives as life
insurance agents of the Company, and will be responsible for ensuring that only
agents properly qualified under the insurance laws of all relevant jurisdictions
will engage in the offer and sale of the Contracts. Completed Applications shall
be transmitted directly to the Company for acceptance or rejection by the
Company in its sole discretion, in accordance with its insurance underwriting
and selection rules. Initial and subsequent premium payments under the Contracts
shall be made payable to the Company, and when such payments are received by a
Representative or Intermediary's Representative they shall be held in a
fiduciary capacity and forwarded promptly, and in any event not later than two
business days, in full to the Company. All such premium payments, whether by
check, money order or wire, shall be the property of the Company.
5. Undertakings. The Distributor, in order to discharge its duties under
this Agreement, may designate certain employees of the Company to become limited
or general securities principals of the Distributor, and the Company will use
its best efforts to ensure the cooperation of such employees. These individuals
will perform various functions on behalf of the Distributor, including, but not
limited to, supervision of the securities sales activities of the
Representatives and enforcement of the compliance rules and procedures of the
Distributor. All books and records relating to the Distributor's operations
shall: (a) be maintained and preserved by the Company as agent for the
Distributor, in conformity with the requirements of SEC Rules 17a-3 and 17a-4
under the 1934 Act; (b) be and remain the property of the Distributor; and (c)
be at all times subject to inspection by the SEC and the NASD in accordance with
Section 17(a) of the 1934 Act.
The Distributor will fully cooperate with the Company in executing such
papers and performing such acts as may be reasonably requested by the Company
from time to time for the purpose of: (a) maintaining the registration of the
Contracts under the 1933 Act, and of the Separate Account(s) under the
Investment Company Act of 1940 (the "1940 Act"); and (b) maintaining the
qualification of the Contracts for sale under applicable state laws.
Upon the completion of each transaction relating to the Contracts for which
a confirmation is legally required, the Company shall, acting as agent of the
Distributor, send a written confirmation of such transaction to the customer.
6. Servicing of the Contracts. The Company shall provide all necessary
insurance operations, including such actuarial, financial, statistical, premium
<PAGE>
billing and collection, accounting, data processing, and investment services as
may be required with respect to the Contracts. In addition to these services, or
other services provided hereunder, the Company shall provide such executive,
legal, clerical, and other personnel related services as may be required to
carry out the Company's obligations under this Agreement, including its
obligation to perform certain functions on behalf of the Distributor.
7. Recordkeeping. The Company shall provide recordkeeping and general
office administration services incidental to or necessary for the proper
performance of the services to be performed by the Company and, to the extent
the Distributor does not elect to perform said recordkeeping and administration
functions, the Distributor in accordance with this Agreement. In addition, the
Company shall maintain all book and records relating to the Contracts, which
materials will be available to the Distributor (to the extent that they relate
to the broker-dealer operations) and to the appropriate regulatory authorities
upon request.
All books, accounts, and records of the Company and the Distributor as may
pertain to the Contracts and this Agreement shall be maintained so as to clearly
and accurately disclose the nature and details of all Contract transactions and
all other transactions relating to this Agreement. The Company shall own and
control all records pertinent to its variable insurance products operations that
are maintained by the Distributor under this Agreement, and in the event this
Agreement is terminated for any reason, all such records shall promptly be
returned to the Company without charge, free from any claim or retention of
rights of the Distributor.
8. Confidentiality. The Distributor shall keep confidential any information
obtained pursuant to this Agreement, and shall disclose such information only if
the Company has authorized such disclosure, or if such disclosure is expressly
required by the appropriate federal or state regulatory authorities.
9. Expenses and Fees. The Company shall pay commissions to the Distributor
on premiums paid under all Contracts sold pursuant to this Agreement and any
Sales Agreements entered into pursuant to Section 2 of this Agreement. The
Company shall, in connection with the sale of the Contracts, pay all amounts,
including sales commissions, owed by the Distributor to the Representatives or
Intermediary Distributors. The Distributor shall be responsible for all tax
reporting information which the Distributor is required to provide under
applicable tax law to its agents, Representatives or employees with respect to
the Contracts.
The Company shall pay, or cause another person to pay, all expenses related
to: (a) registering the Distributor's associated persons with the NASD and all
other appropriate securities regulatory authorities; (b) preparing the
Distributor's associated persons to pass the applicable NASD and state
qualification examinations; (c) preparing and distributing all prospectuses
(including all amendments and supplements thereto), Contracts, notices,
confirmations, periodic reports, proxy solicitation materials, sales literature
and advertising relating to the sale of the Contracts; and (d) ensuring
<PAGE>
compliance with all applicable insurance and securities laws and regulations
relating to the registration of the Contracts and the activities of the
Representatives in connection with the offer and sale of the Contracts. Except
as otherwise indicated herein, or by written agreement of the parties, the
Company shall pay, or cause another person to pay, all expenses resulting from
this Agreement.
10. Dual Interests. It is understood that any shareholder, director,
officer, employee, or agent of the Distributor, or of any organization
affiliated with the Distributor, or of any organization which the Distributor
may have an interest, or of any organization which may have an interest in the
Distributor may be a Contractholder; and that the existence of any such dual
interest shall not affect the validity thereof or the validity of any
transaction hereunder except as may be otherwise provided in the articles of
incorporation or by-laws of the Distributor, or by the specific provisions of
applicable law. For the purpose of this Section 10, the term "affiliated person"
shall have the same definition as set forth in the 1940 Act subject, however, to
such exemptions as may be granted pursuant to the 1940 Act.
11. Customer Claims. The Company shall provide all services relating to
claims made under the Contracts, including investigation, adjustment, and
defense of claims, and shall make all payments relating to the Contracts,
including payments representing claims, Contract loans, full and partial
surrenders, and amounts paid under Contract settlement options. The Company
shall retain ultimate authority for adjustments and claim payments, which
payments shall be final and conclusive.
12. Cooperation Regarding Investigations and Proceedings. The Distributor
and the Company agree to fully cooperate with each other in any insurance
regulatory examination, investigation, or proceeding, or in any judicial
proceeding arising in connection with the Contracts distributed under this
Agreement. The Distributor and the Company further agree to fully cooperate with
each other in any securities regulatory examination, investigation, or
proceeding, or in any judicial proceeding with respect to the Company, the
Distributor, their affiliates and agents, or representatives, to the extent that
such examination, investigation, or proceeding is in connection with Contracts
distributed under this Agreement. The Distributor shall, upon request by the
appropriate federal and state regulatory authorities, furnish such authorities
with any information or reports in connection with the Distributor's services
under this Agreement.
13. Sharing of Information. Each party hereto will promptly advise the
other of: (a) any action taken by the SEC, the NASD, or other regulatory
authorities, of which it has knowledge, affecting the registration or
qualification of the Contracts, or the right to offer the Contracts for sale;
and (b) the happening of any event which makes untrue any statement contained in
the registration statements or prospectus, or which requires the making of any
change in the registration statements or prospectus in order to make the
<PAGE>
statements therein not misleading.
14. Indemnification.
a. The Company. The Company shall indemnify and hold harmless the
Distributor and each person who controls or is associated with the
Distributor within the meaning of such terms under the federal securities
laws, and any officer, director, employee or agent of the foregoing,
against any and all losses, claims, damages or liabilities, joint or
several (including any investigative, legal and other expenses reasonably
incurred in connection with, and any amounts paid in settlement of any
action, suit or proceeding or any claim asserted), to which the Distributor
and/or any such person may become subject, under any statute or regulation,
any NASD rule or interpretation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact or omission or alleged
omission to state a materials fact required to be stated therein or
necessary to make the statements therein not misleading, in light of
the circumstances in which they were made, contained in any (A)
registration statement or in any prospectus; or (B) a blue-sky
application or other document executed by the Company specifically for
the purpose of qualifying any or all of the Contracts for sale under
the securities laws of any jurisdiction; provided that the Company
shall not be liable in any such case to the extent that such loss,
claim, damage or liability arises out of, or is based upon, an untrue
statement or alleged untrue statement or omission or alleged omission:
(A) made in reliance upon information furnished in writing to the
Company by the Distributor specifically for use in the preparation of
any registration statement or any such blue-sky application or any
amendment thereof or supplement thereto; or (B) contained in any
registration statement, or any post-effective amendment thereto which
becomes effective, filed by a Fund with the SEC relating to shares of
such Fund (the "Shares"), including any financial statements included
in, or any exhibit to, such registration statement or post-effective
amendment, any prospectus of a Fund relating to the Shares either
contained in any such registration statement or post-effective
amendment or filed pursuant to Rule 497(c) or Rule 497(e) under the
1933 Act, any blue-sky application or other document executed by a
Fund specifically for the purpose of qualifying any or all of the
shares of such Fund for sale under the securities laws of any
jurisdiction or any promotional, sales or advertising material or
written information relating to the Shares authorized by a Fund; or
(ii) result because of the terms of any Contract or because of
any breach by the Company of any provision of this Agreement or of any
Contract or which proximately result from any activities of the
Company's officers, directors, employees or agents or their failure to
take any action in connection with the sale, processing or
administration of the Contracts. This indemnification agreement shall
<PAGE>
be in addition to any liability that the Company may otherwise have;
provided, however, that no person shall be entitled to indemnification
pursuant to this provision if such loss, claim, damage or liability is due
to the willful misfeasance, bad faith, gross negligence or reckless
disregard of duty by the person seeking indemnification.
b. The Distributor. The Distributor shall indemnify and hold harmless
the Company and each person who controls or is associated with the Company
within the meaning of such terms under the federal securities laws, and any
officer, director, employee or agent of the foregoing, against any and all
losses, claims, damages or liabilities, joint or several (including any
investigative, legal and other expenses reasonably incurred in connection
with, and any amounts paid in settlement of any action, suit or proceeding
or any claim asserted), to which the Company and/or any such person may
become subject, under any statute or regulation, any NASD rule or
interpretation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities arise out of or are based upon:
(i) violations(s) by the Distributor or a Representative of
federal or state securities law(s) or regulation(s), applicable
banking law(s) or regulation(s), insurance law(s) or regulation(s) or
any rule or requirement of the NASD; or
(ii) any unauthorized use of sales or advertising material, any
oral or written misrepresentations, or any unlawful sales practices
concerning the Contracts, by the Distributor or a Representative; or
(iii) claims by the Representatives or other agents or
representatives of the Distributor
for commissions or other compensation or remuneration of any type; or
(iv) any action or inaction by a clearing broker through whom
the Distributor
purchases any transaction pursuant to this Agreement; or
(v) any failure on the part of the Distributor or a
Representative to submit premiums or Applications to the Company, or
to submit the correct amount of a premium, on a timely basis and in
accordance with Section 4 of this Agreement, subject to applicable
law; or
(vi) any failure on the part of the Distributor or a
Representative to deliver the
Contracts to purchasers thereof on a timely basis; or
(vii) a breach by the Distributor of any provisions of this
Agreement.
This indemnification agreement shall be in addition to any liability
that the Distributor may
otherwise have; provided, however, that no person shall be entitled to
indemnification pursuant to this provision if such loss, claim, damage or
liability is due to the willful misfeasance, bad faith, gross negligence or
reckless disregard of duty by the person seeking indemnification.
c. In General. After receipt by a party entitled to indemnification
(the "indemnified party") under this Section 14 of notice of the
commencement of any action, if a claim in respect thereof is to be made
<PAGE>
against any person obligated to provide indemnification under this Section
14 (the "indemnifying party"), such indemnified party shall notify the
indemnifying party in writing of the commencement thereof as soon as
practicable thereafter, provided that the omission to so notify the
indemnifying party shall not relieve the indemnifying party from any
liability under this Section 14, except to the extent that the omission
results in a failure of actual notice to the indemnifying party and such
indemnifying party is damaged solely as a result of the failure to give
such notice. The indemnifying party, upon the request of the indemnified
party, shall retain counsel reasonably satisfactory to the indemnified
party to represent the indemnified party and any others the indemnifying
party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified
party and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them.
The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party shall indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment.
The indemnification provisions contained in this Section 14 shall
remain operative in full force and effect, regardless of (i) any
investigation made by or on behalf of the Company or by or on behalf of any
controlling person thereof, (ii) delivery of any Contracts and premiums
therefor, and (iii) any termination of this Agreement. A successor by law
of the Distributor or the Company, as the case may be, shall be entitled to
the benefits of the indemnification provisions contained in this Section
14.
15. Standard of Care. Neither the Company nor the Distributor shall be
liable to the other for any action taken or omitted by any of their officers,
directors, employees, or agents, in connection with the good faith performance
of their responsibilities under this Agreement, except for willful misconduct,
bad faith, negligence, or reckless disregard of the duties of the parties under
this Agreement.
16. Assignment. The Distributor may not assign or delegate its
responsibilities under this
Agreement without the prior written consent of the Company.
17. Termination. This Agreement shall become effective as of the date of
its execution, shall continue in full force and effect until terminated, and may
<PAGE>
be terminated by either party at any time without penalty upon sixty (60) days
written notice to the other party. This Agreement may be terminated upon ten
days notice upon the other party's material breach of any provision of this
Agreement, unless such breach has been cured to the satisfaction of the
non-breaching party within ten days of receipt by the breaching party of notice
of such breach from the non-breaching party. This Agreement may also be
terminated at any time without penalty if, in the sole discretion of the
Company, the Distributor is not performing its duties in a satisfactory manner.
Upon termination of this Agreement all authorizations, rights and
obligations shall cease except for the obligation to settle accounts hereunder,
including commissions on premiums subsequently received for Contracts in effect
at the time of termination or issued pursuant to Applications received by the
Company prior to termination, and the obligations contained in Sections 7, 10,
11, 12, 13, and 14.
18. Amendment. This Agreement and the Schedules hereto may be amended at
any time by a
writing executed by both of the parties hereto.
19. Governing Law. This Agreement, and the rights and liabilities of the
parties hereunder, shall
be construed in accordance with the internal laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
TRANSAMERICA INSURANCE SECURITIES
SALES CORPORATION
By: ____________________________
----------------------------
Name
----------------------------
Title
FIRST TRANSAMERICA LIFE INSURANCE COMPANY
By: _____________________________
<PAGE>
-----------------------------
Name
-----------------------------
Title
<PAGE>
EXHIBIT (10) (a)
CONSENT OF COUNSEL
<PAGE>
Sutherland, Asbill & Brennan
1275 Pennsylvania Avenue
Washington, D.C. 20004
202-383-0100
Transamerica Life Insurance Company of New York
100 Manhattanville Road
Purchase, NY 10577
Re: Separate Account VA-5NLNY
Gentlemen:
We hereby consent to the reference to our name under the caption "Legal Matters"
in the prospectus filed as part of Post-Effective Amendment No,. 4 to the Form
N-4 Registration Statement for Separate Account VA-5NLNY. In giving this
consent, we do not admit that we are in the category of persons whose consent
is required under Section 7 of the Securities Act of 19933.
Very truly yours,
SUTHERLAND, ASBILL & BRENNAN, L.L.P.
By: /s/ Frederick R. Bellamy
<PAGE>
EXHIBIT (10) (b)
CONSENT OF INDEPENDENT AUDITORS
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of our firm under the captions "Condensed Financial
Information" and "Accountants" in the Prospectus dated May 1, 1997, and to the
use of our reports dated March 3, 1997 and February 12, 1997 with respect to the
financial statements of Separate Account VA-5NLNY of First Transamerica Life
Insurance Company and First Transamerica Life Insurance Company, respectively,
contained in the Statement of Additional Information.
Ernst & Young LLP
Charlotte, North Carolina
April 28, 1997
<PAGE>
Exhibit 15
Power of Attorney
<PAGE>
POWER OF ATTORNEY
The undersigned director of First Transamerica Life Insurance Company,
a New York corporation (the "Company"), hereby constitutes and appoints Aldo
Davanzo, James W. Dederer, David E. Gooding and Charles E. LeDoyen and each of
them (with full power to each of them to act alone), his true and lawful
attorney-in-fact and agent, with full power of substitution to each, for his and
on his behalf and in his name, place and stead, to execute and file any of the
documents referred to below relating to registrations under the Securities Act
of 1933 and under the Investment Company Act of 1940 with respect to any life
insurance or annuity policies: registration statements on any form or forms
under the Securities Act of 1933 and under the Investment Company Act of 1940,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his or their substitutes being empowered to act
with or without the others or other, and to have full power and authority to do
or cause to be done in the name and on behalf of the undersigned each and every
act and thing requisite and necessary or appropriate with respect thereto to be
done in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this 21st day of
January, 1997.
- -----------------------------
Alan T. Cunningham
<PAGE>
POWER OF ATTORNEY
The undersigned director of First Transamerica Life Insurance Company,
a New York corporation (the "Company"), hereby constitutes and appoints Aldo
Davanzo, James W. Dederer, David E. Gooding and Charles E. LeDoyen and each of
them (with full power to each of them to act alone), his true and lawful
attorney-in-fact and agent, with full power of substitution to each, for his and
on his behalf and in his name, place and stead, to execute and file any of the
documents referred to below relating to registrations under the Securities Act
of 1933 and under the Investment Company Act of 1940 with respect to any life
insurance or annuity policies: registration statements on any form or forms
under the Securities Act of 1933 and under the Investment Company Act of 1940,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his or their substitutes being empowered to act
with or without the others or other, and to have full power and authority to do
or cause to be done in the name and on behalf of the undersigned each and every
act and thing requisite and necessary or appropriate with respect thereto to be
done in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his
hand, this _________ day of October, 1996.
- --------------------------
Robert Abeles
<PAGE>
