<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 2
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 2
THE TRAVELERS FUND BD FOR VARIABLE ANNUITIES
(Exact name of Registrant)
THE TRAVELERS INSURANCE COMPANY
(Name of Depositor)
ONE TOWER SQUARE, HARTFORD, CONNECTICUT 06183
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number, including area code: (203) 277-0111
ERNEST J. WRIGHT
Assistant Secretary
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: __________________
It is proposed that this filing will become effective (check
appropriate box):
______ immediately upon filing pursuant to paragraph (b) of
Rule 485
__X___ on May 1, 1995 pursuant to paragraph (b) of Rule 485
______ 60 days after filing pursuant to paragraph (a)(i) of
Rule 485
______ on May 1, 1995 pursuant to paragraph (a)(i) of Rule 485
______ 75 days after filing pursuant to paragraph (a)(ii)
______ on May 1, 1995 pursuant to paragraph (a)(ii) of Rule 485
If appropriate, check the following box:
______ This Post-Effective Amendment designates a new effective
date for a previously filed Post-Effective Amendment.
Pursuant to Rule 24f-2 of the Investment Company Act of 1940, the
Registrant hereby declares that an indefinite amount of Variable
Annuity Contracts was registered under the Securities Act of
1933. A Rule 24f-2 Notice for the fiscal year ended December 31,
1994 was filed on February 27, 1995.
<PAGE>
THE TRAVELERS FUND BD FOR VARIABLE ANNUITIES
Cross-Reference Sheet
Form N-4
ITEM
NO. CAPTION IN PROSPECTUS
1. Cover Page Prospectus
2. Definitions Glossary of Special Terms
3. Synopsis Prospectus Summary
4. Condensed Financial Information Condensed Financial
Information
5. General Description of Registrant, The Insurance Company;
Depositor, and Portfolio Companies The Separate
Account and the
Underlying Funds
6. Deductions Charges and Deductions;
Distribution of
Variable Annuity Contracts
7. General Description of Variable The Contract
Annuity Contracts
8. Annuity Period The Annuity Period
9. Death Benefit Death Benefit
10. Purchases and Contract Value The Contract
11. Redemptions Surrenders and Redemptions
12. Taxes Federal Tax Considerations
13. Legal Proceedings Legal Proceedings and
Opinions
14. Table of Contents of Statement Appendix C - Contents of
of Additional Information the Statement of
Additional Information
Caption in Statement of
Additional Information
15. Cover Page The Separate Account
16. Table of Contents Table of Contents
17. General Information and History The Insurance Company;
The Separate Account and
The Underlying Funds
18. Services Principal Underwriter;
Distribution and
Management Agreement
19. Purchase of Securities Valuation of Assets
Being Offered
20. Underwriters Principal Underwriter
21. Calculation of Performance Data Performance Information
22. Annuity Payments Not Applicable
23. Financial Statements Financial Statements
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
<PAGE>
PROSPECTUS
This Prospectus describes an individual flexible premium variable
annuity contract (the "Contract") offered by The Travelers
Insurance Company (the "Company"). The Contract is currently
available for use in connection with (1) individual non-qualified
purchases; (2) Individual Retirement Annuities (IRAs) pursuant to
Section 408 of the Internal Revenue Code of 1986, as amended (the
"Code"); and (3) qualified retirement plans. Qualified contracts
include contracts qualifying under Section 401(a), 403(b) or 408(b)
of the Code.
Purchase Payments made under the Contract will accumulate on a
fixed and/or a variable basis, as selected by the Contract Owner.
If on a variable basis, the value of the Contract prior to the
Maturity Date will vary continuously to reflect the investment
experience of The Travelers Fund BD for Variable Annuities ("Fund
BD"). Purchase Payments may currently be allocated to any one or
more of the sub-accounts (the "Sub-Accounts") available under Fund
BD. The assets in each Sub-Account are invested in a separate
series of shares of the Smith Barney/Travelers Series Fund Inc., a
"series" type of mutual fund. Each series of shares is a separate
investment portfolio. The investment portfolios currently
available are: Smith Barney Income and Growth Portfolio, Alliance
Growth Portfolio, American Capital Enterprise Portfolio, Smith
Barney International Equity Portfolio, Smith Barney Pacific Basin
Portfolio, TBC Managed Income Portfolio, Putnam Diversified Income
Portfolio, G.T. Global Strategic Income Portfolio, Smith Barney
High Income Portfolio, MFS Total Return Portfolio, Smith Barney
Money Market Portfolio; and Smith Barney Total Return Portfolio of
the Smith Barney Series Fund (collectively, the "Underlying
Funds").
This Prospectus provides the information about Fund BD that you
should know before investing. Please read it and retain it for
future reference. Additional information about Fund BD is
contained in a Statement of Additional Information dated May 1,
1995 which has been filed with the Securities and Exchange
Commission and is incorporated by reference into this Prospectus.
A copy may be obtained, without charge, by writing to The Travelers
Insurance Company, Annuity Investor Services--5 SHS, One Tower
Square, Hartford, Connecticut 06183-9061, or by calling 1-800-842-
8573. The Table of Contents of the Statement of Additional
Information appears in Appendix A of this Prospectus.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT
PROSPECTUS FOR THE UNDERLYING FUNDS. BOTH THE CONTRACT PROSPECTUS
AND THE UNDERLYING FUND PROSPECTUS SHOULD BE READ AND RETAINED FOR
FUTURE REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THIS PROSPECTUS IS DATED MAY 1, 1995
<PAGE>
TABLE OF CONTENTS
GLOSSARY OF SPECIAL TERMS iv
PROSPECTUS SUMMARY 1
FEE TABLE 4
CONDENSED FINANCIAL INFORMATION 6
THE INSURANCE COMPANY 7
THE SEPARATE ACCOUNT AND THE UNDERLYING FUNDS 7
THE TRAVELERS FUND BD FOR VARIABLE ANNUITIES (FUND BD) 7
THE UNDERLYING FUNDS 7
UNDERLYING FUND INVESTMENT MANAGERS 9
SUBSTITUTION 9
GENERAL 10
PERFORMANCE INFORMATION 10
THE CONTRACT 10
Purchase Payments 11
Right to Return 11
Accumulation Units 11
Net Investment Factor 11
CHARGES AND DEDUCTIONS 12
Contingent Deferred Sales Charge 12
Administrative Charges 13
Insurance Charge 13
Reduction or Elimination of Contract Charges 14
Underlying Fund Charges 14
Premium Tax 14
Changes In Taxes Based Upon Premium or Value 14
OWNERSHIP PROVISIONS 14
Types of Ownership 14
Beneficiary 15
Annuitant 15
TRANSFERS 15
Dollar-Cost Averaging (Automated Transfers) 16
Telephone Transfers 16
SURRENDERS AND REDEMPTIONS 17
Systematic Withdrawals 17
DEATH BENEFIT 17
Death Proceeds Prior to the Maturity Date 18
<PAGE>
Death Proceeds After the Maturity Date 19
THE ANNUITY PERIOD 19
Maturity Date 19
Allocation of Annuity 19
Variable Annuity 19
Fixed Annuity 20
PAYMENT OPTIONS 20
Election of Options 20
Annuity Options 21
Income Options 21
MISCELLANEOUS CONTRACT PROVISIONS 22
Termination 22
Misstatement 22
Required Reports 22
Suspension of Payments 22
FEDERAL TAX CONSIDERATIONS 23
General Taxation of Annuities 23
Tax Law Diversification Requirements
for Variable Annuities 23
Ownership of the Investments 23
Penalty Tax for Premature Distributions 24
Mandatory Distributions for Qualified Plans 24
Nonqualified Annuity Contracts 24
Individual Retirement Annuities 24
Qualified Pension and Profit-Sharing Plans 25
Federal Income Tax Withholding 25
VOTING RIGHTS 26
DISTRIBUTION OF VARIABLE ANNUITY CONTRACTS 27
STATE REGULATION 27
Conformity with State and Federal Laws 27
LEGAL PROCEEDINGS AND OPINIONS 27
THE FIXED ACCOUNT 28
Transfers 28
APPENDIX A 30
APPENDIX B 32
APPENDIX C 33
<PAGE>
GLOSSARY OF SPECIAL TERMS
The following terms are used throughout the Prospectus and have the
indicated meanings:
ACCUMULATION UNIT -- an accounting unit of measure used to
calculate the value of a Contract before Annuity Payments begin.
ANNUITANT -- the person on whose life the Maturity Date and the
amount of the monthly Annuity Payments depend.
ANNUITY PAYMENTS -- a series of periodic payments for life; for
life with either a minimum number of payments or a determinable sum
assured; or for the joint lifetime of the Annuitant and another
person and thereafter during the lifetime of the survivor.
ANNUITY UNIT -- an accounting unit of measure used to calculate the
amount of Annuity Payments.
CASH SURRENDER VALUE -- the amount payable to the Contract Owner or
other payee upon full or partial surrender of the Contract during
the lifetime of the Annuitant.
COMPANY'S HOME OFFICE -- the principal offices of The Travelers
Insurance Company located at One Tower Square, Hartford,
Connecticut 06183-9061.
CONTRACT DATE -- the date on which the Contract, benefits and the
contract provisions become effective.
CONTRACT OWNER (YOU, YOUR) -- the person or entity to whom the
Contract is issued.
CONTRACT VALUE -- the current value of Accumulation Units credited
to the Contract less any administrative charges.
CONTRACT YEARS -- twelve-month periods beginning on the Contract
Date.
FIXED ACCOUNT -- an additional account into which Purchase Payments
may be allocated and which is included in the Contract Value.
Purchase Payments allocated to the Fixed Account will earn interest
at a rate guaranteed by the Company; this rate will change from
time to time.
INCOME PAYMENTS -- optional forms of payments made by the Company
which are based on an agreed-upon number of payments or payment
amount.
MATURITY DATE -- the date on which the first Annuity or Income
Payment is to begin.
PURCHASE PAYMENT -- a gross amount paid to the Company during the
accumulation period.
SEPARATE ACCOUNT -- assets set aside by the Company, the investment
experience of which is kept separate from that of other assets of
the Company; for example, Fund BD.
SUB-ACCOUNT -- the portion of the assets of the Separate Account
which is allocated to a particular Underlying Fund.
UNDERLYING FUND(S) -- an open-end diversified management investment
company which serves as an investment option under the Separate
Account.
VALUATION DATE -- generally, a day on which the Sub-Account is
valued. A Valuation Date is any day on which the New York Stock
Exchange is open for trading and the Company is open for business.
The value of Accumulation Units and Annuity Units will be
determined as of the close of trading on the New York Stock
Exchange.
VALUATION PERIOD -- the period between the close of business on
successive Valuation Dates.
VARIABLE ANNUITY -- an annuity contract which provides for
accumulation and for Annuity Payments which vary in amount in
accordance with the investment experience of a Separate Account.
<PAGE>
PROSPECTUS SUMMARY
INTRODUCTION
The Contract described in this Prospectus is issued by The
Travelers Insurance Company (the "Company"), an indirect
wholly owned subsidiary of Travelers Group Inc. The Company
has established The Travelers Fund BD for Variable Annuities
("Fund BD"), a registered unit investment trust separate
account, for the purpose of investing exclusively in shares
of the Underlying Funds described herein.
The purpose of the Contract is to provide for an individual
flexible premium variable annuity which allows you to invest
in any or all of the Sub-Accounts currently available under
Fund BD, as well as in the Fixed Account.
Certain changes and elections must be made in writing to the
Company. Where the term "written request" is used, it means
that written information must be sent to the Company's Home
Office in a form and content satisfactory to the Company.
RIGHT TO RETURN
You may return the Contract and receive a full refund of the
Contract Value (including charges) within twenty days after
the Contract is delivered to you, unless state law requires
a longer period. The Contract Value returned may be greater
or less than your Purchase Payment; however, if applicable
state law so requires, your Purchase Payment will be
refunded in full for some or all of the free-look period.
If you purchased the Contract as an Individual Retirement
Annuity (IRA), your Purchase Payment will be refunded in
full for the first seven days of the free-look period. (See
"Right to Return," page 11.)
THE SEPARATE ACCOUNT AND THE UNDERLYING FUNDS
Fund BD is registered with the Securities and Exchange
Commission as a unit investment trust under the Investment
Company Act of 1940. Purchase Payments allocated to the
Sub-Accounts of Fund BD will be invested at net asset value
in shares of the following Underlying Funds in accordance
with the selection made by the Contract Owner:
Smith Barney Income and Growth Portfolio Putnam Diversified Income
Portfolio
Alliance Growth Portfolio G.T. Global Strategic Income
Portfolio
American Capital Enterprise Portfolio Smith Barney High Income
Portfolio
Smith Barney International Equity Portfolio MFS Total Return Portfolio
Smith Barney Pacific Basin Portfolio Smith Barney Money Market
Portfolio
TBC Managed Income Portfolio Smith Barney Total Return
Portfolio
Each Underlying Fund is a separate series of shares of the
Smith Barney/Travelers Series Fund Inc., except for Smith
Barney Total Return Portfolio, which is a separate series of
the Smith Barney Series Fund Inc. For a description of each
Fund's investment objectives, as well as the investment
advisers that provide investment management and advisory
services for the funds, please refer to "The Underlying
Funds" on page 7, and the prospectuses for the Underlying
Funds.
PURCHASE PAYMENTS
An initial lump-sum Purchase Payment of at least $5,000 must
be made to the Contract, and additional Purchase Payments of
at least $500 may be made at any time following the initial
payment. All Purchase Payments will be allocated to the
Sub-Account(s) or the Fixed Account, as chosen by the
Contract Owner. (See "Purchase Payments," page 11.)
<PAGE>
CHARGES AND EXPENSES
There is no sales charge deducted from Purchase Payments
when they are received. However, a Contingent Deferred
Sales Charge ("surrender charge") applies if you make a full
or partial surrender of the Contract Value during the first
six years following a Purchase Payment. The maximum
surrender charge that could be assessed is 6% of the amount
withdrawn. (See "Contingent Deferred Sales Charge,"
page 12.)
The Company will deduct $30 annually from the Contract to
cover administrative expenses associated with the Contract.
This charge will not apply (1) at the time of a distribution
resulting from the death of the Contract Owner, or the death
of the Annuitant with no Contingent Annuitant surviving; (2)
after an annuity payout has begun; or (3) if the Contract
Value is equal to or greater than $40,000 on the date of the
assessment of the charge. The Company will also deduct from
each Sub-Account an amount equal to 0.15% on an annual basis
of the daily net asset value of the Sub-Account for
administrative and operating expenses related to the Sub-
Accounts. (See "Administrative Charges," page 13.)
An insurance charge is deducted daily from the Sub-Accounts
of Fund BD to compensate for mortality and expense risks
assumed by the Company. For those Contract Owners who elect
a standard death benefit, the insurance charge will be
equivalent on an annual basis to 1.02% of the daily net
assets of the Sub-Account. For those Contract Owners who
elect an enhanced death benefit, the insurance charge will
be equivalent on an annual basis to 1.30% of the daily net
assets of the Sub-Account. (See "Insurance Charge,"
page 13.)
Premium taxes may apply to annuities in a few states. These
taxes currently range from 0.5% to 5.0%, depending upon
jurisdiction. Where required, the Company will deduct any
applicable premium tax from the Contract Value either upon
death, surrender or annuitization, or at the time Purchase
Payments are made to the Contract, but no earlier than when
the Company has a tax liability under state law. (See
"Premium Tax," page 14.)
TRANSFERS
Prior to the Maturity Date, your investments may be
reallocated among the Fixed Account and any of the Sub-
Accounts available under Fund BD. You may request a
reallocation of your investment either in writing, sent to
the Company's Home Office, or by telephone in accordance
with the Company's telephone transfer procedures. Transfers
between the Fixed Account and any of the variable Sub-
Accounts are subject to certain restrictions. (See
"Transfers," page 15, and "The Fixed Account," page 28.)
You may also request that the Company establish automated
transfers of Contract Values from the Fixed Account or any
of the Sub-Accounts to other Sub-Accounts through written
request or other method acceptable to the Company. The
minimum automated transfer amount is $400. (See "Dollar-
Cost Averaging (Automated Transfers)," on page 16.)
SURRENDERS
You may also elect to surrender all or part of the Contract
Value prior to the Maturity Date, subject to certain charges
and limitations. You will be liable for income tax on the
taxable portion of any full or partial surrender, and you
will incur a 10% tax penalty if such surrender is made prior
to the age of 59 1/2, unless you qualify for a statutory
exception. (See "Surrenders and Redemptions," page 17 and
"Penalty Tax For Premature Distributions," page 24.)
You may elect to take systematic withdrawals from the
Contract by surrendering a specified dollar amount of at
least $100 on a monthly, quarterly, semiannual or annual
basis. All applicable surrender charges and premium taxes
will be deducted. The minimum Contract Value required to
begin systematic withdrawals is $15,000. (See "Systematic
Withdrawals," on page 17.)
<PAGE>
DEATH BENEFIT
A death benefit is payable to the Beneficiary upon the death
of the Annuitant prior to the Maturity Date with no
Contingent Annuitant surviving. Two different types of
death benefits are available under the Contract: a Standard
Death Benefit and an Enhanced Death Benefit. The insurance
charges under the Contract will be higher for Contract
Owners who elect the Enhanced Death Benefit. The death
benefits will vary based on the Annuitant's age at the time
of death. In addition, for nonqualified Contracts, upon
distributions resulting from the death of the Contract Owner
prior to the Maturity Date and with the Annuitant or
Contingent Annuitant surviving, the value of the Contract
will be recalculated as if a Death Benefit had been payable
based on the Contract Owner's age at the time of death.
Such value will be credited to the party taking
distributions upon the death of the Contract Owner with the
Annuitant or Contingent Annuitant surviving. This party may
be either the surviving joint owner, the succeeding owner,
or the Beneficiary, depending upon all the circumstances and
the terms of the Contract. (See "Death Benefit," page 17.)
THE ANNUITY PERIOD
On the Maturity Date, or other agreed-upon payment date, the
Company will provide Annuity or Income Payments to the
Contract Owner or his or her designee in accordance with the
payment option selected by the Contract Owner. If a payment
option has not been selected at or prior to the Maturity
Date, the Company will pay to the Contract Owner the first
of a series of monthly payments based on the life of the
Annuitant, in accordance with Annuity Option 2 (Life Annuity
with 120 Monthly Payments Assured), or for certain qualified
contracts, in accordance with Annuity Option 4 (Joint and
Last Survivor Joint Life Annuity - Annuity Reduced on Death
of Primary Payee) (the "Automatic Option"). If a variable
payout is selected, the payments will continue to vary with
the investment performance of the selected Underlying Fund.
If monthly Annuity Payments are less than $100, the Company
reserves the right to reduce the frequency of payments or to
pay the Contract Value in one lump-sum payment. (See "The
Annuity Period," page 19.)
THE FIXED ACCOUNT
Although this Prospectus specifically applies only to the
variable features of the Contract, the Contract also allows
you to allocate Purchase Payments to a Fixed Account where
they will earn interest at a rate guaranteed by the Company,
which interest rate will not be less than 3% per year.
Transfers may also be made from the Fixed Account to the
Sub-Accounts twice a year during the 30 days following the
semiannual Contract Date anniversary in an amount of up to
15% of the Fixed Account value on the semiannual Contract
Date anniversary. Additionally, automated transfers from
the Fixed Account to any of the Sub-Accounts may begin at
any time. Other restrictions may also apply. (See "The
Fixed Account," page 28.)
<PAGE>
FEE TABLE
FUND BD
AND ITS UNDERLYING FUNDS
The purpose of the Fee Table is to assist Contract Owners in
understanding the various costs and expenses that will be
borne, directly or indirectly, under the Contract. The
information listed reflects expenses of the Sub-Accounts as
well as of the Underlying Fund Expenses. Additional
information regarding the charges and deductions assessed
under the Contract can be found on page 12. Expenses shown
do not include premium taxes, which may be applicable.
CONTRACT OWNER TRANSACTION EXPENSES
Contingent Deferred Sales Charge (as a percentage of
purchase payments):
<TABLE>
<CAPTION>
LENGTH OF TIME FROM PURCHASE PAYMENT SURRENDER
(NUMBER OF YEARS) CHARGE
<C> <C>
1 6%
2 6%
3 6%
4 3%
5 2%
6 1%
7 and thereafter 0%
Annual Contract Administrative Charge $30
(Waived if Contract Value is $40,000 or more)
ANNUAL SUB-ACCOUNT CHARGES
</TABLE>
<TABLE>
<CAPTION>
STANDARD ENHANCED
DEATH BENEFIT DEATH BENEFIT
<S> <C> <C>
Mortality and Expense Risk Fee (as a percentage of daily net asset value) 1.02% 1.30%
Sub-Account Administrative Charge (as a percentage of daily net asset value) 0.15% 0.15%
TOTAL SUB-ACCOUNT CHARGES 1.17% 1.45%
</TABLE>
UNDERLYING FUND EXPENSES
<TABLE>
<CAPTION> TOTAL
MANAGEMENT OTHER UNDERLYING FUND
FEE EXPENSES EXPENSES
<S> <C> <C> <C>
Smith Barney Income and Growth Portfolio 0.65% 0.10% 0.75%
Alliance Growth Portfolio 0.80% 0.10% 0.90%
American Capital Enterprise Portfolio 0.70% 0.17% 0.87%
Smith Barney International Equity Portfolio 0.90% 0.35% 1.25%
Smith Barney Pacific Basin Portfolio 0.90% 0.40% 1.30%
TBC Managed Income Portfolio 0.65% 0.22% 0.87%
Putnam Diversified Income Portfolio 0.75% 0.20% 0.95%
G.T. Global Strategic Income Portfolio 0.80% 0.30% 1.10%
Smith Barney High Income Portfolio 0.60% 0.10% 0.70%
MFS Total Return Portfolio 0.80% 0.15% 0.95%
Smith Barney Money Market Portfolio 0.60% 0.10% 0.70%
Smith Barney Total Return Portfolio 0.75% 0.25% 1.00%
</TABLE>
Other expenses are as of October 31, 1994, taking into
account the current expense limitations agreed to by the
Managers. The Managers waived all of their fees for the
period and reimbursed the Funds for their expenses. If such
fees were not waived and expenses were not reimbursed, Total
Underlying Expenses for the Smith Barney/Travelers Series
Fund Portfolios would have been: Smith Barney Income and
Growth Portfolio, 2.08%; Alliance Growth Portfolio, 1.76%;
American Capital Enterprise Portfolio, 2.66%; Smith Barney
International Equity Portfolio, 2.00%; Smith Barney Pacific
Basin Portfolio, 2.82%; TBC Managed Income Portfolio, 2.91%;
Putnam Diversified Income Portfolio, 2.92%; G.T. Global
Strategic Income Portfolio, 4.53%; Smith Barney High Income
Portfolio, 2.60%; MFS Total Return Portfolio, 2.51%; Smith
Barney Money Market Portfolio, 2.11%. If such fees were not
waived and expenses were not reimbursed, Total Underlying
Expenses for the Smith Barney Series Fund Total Return
Portfolio would have been 21.47%.
<PAGE>
EXAMPLE *
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE SHOWN.
<TABLE>
<CAPTION>
STANDARD DEATH BENEFIT ELECTION
A $1,000 investment would be subject If the Contract is NOT surrendered at
to the following expenses, assuming a the end of the period shown, a $1,000
5% annual return on assets, if the Con- investment would be subject to the
tract is surrendered or if certain income following expenses, assuming a 5%
options are elected at the end of the annual return on assets:
period shown **:
One Year Three Years One Year Three Years
<S> <C> <C> <C> <C>
Smith Barney Income and Growth Portfolio $ 80 $123 $ 20 $ 63
Alliance Growth Portfolio 82 127 22 67
American Capital Enterprise Portfolio 81 126 21 66
Smith Barney International Equity Portfolio 85 138 25 78
Smith Barney Pacific Basin Portfolio 86 139 26 79
TBC Managed Income Portfolio 81 126 21 66
Putnam Diversified Income Portfolio 82 129 22 69
G.T. Global Strategic Income Portfolio 84 133 24 73
Smith Barney High Income Portfolio 80 121 20 61
MFS Total Return Portfolio 82 129 22 69
Smith Barney Money Market Portfolio 80 121 20 61
Smith Barney Total Return Portfolio 83 130 23 70
</TABLE>
ENHANCED DEATH BENEFIT ELECTION
<TABLE>
<CAPTION>
A $1,000 investment would be subject If the Contract is NOT surrendered at
to the following expenses, assuming a the end of the period shown, a $1,000
5% annual return on assets, if the Con- investment would be subject to the
tract is surrendered or if certain income following expenses, assuming a 5%
options are elected at the end of the annual return on assets:
period shown **:
One Year Three Years One Year Three Years
<S> <C> <C> <C> <C>
Smith Barney Income and Growth Portfolio $ 83 $ 131 $ 23 $ 71
Alliance Growth Portfolio 85 136 25 76
American Capital Enterprise Portfolio 84 135 24 75
Smith Barney International Equity Portfolio 88 146 28 86
Smith Barney Pacific Basin Portfolio 89 148 29 88
TBC Managed Income Portfolio 84 135 24 75
Putnam Diversified Income Portfolio 85 137 25 77
G.T. Global Strategic Income Portfolio 87 142 27 82
Smith Barney High Income Portfolio 83 130 23 70
MFS Total Return Portfolio 85 137 25 77
Smith Barney Money Market Portfolio 83 130 23 70
Smith Barney Total Return Portfolio 86 139 26 79
</TABLE>
* The Example reflects the $30 Annual Contract
Administrative Charge as an annual charge of 0.075% of
assets based on an anticipated average account value of
$40,000.
** The Contingent Deferred Sales Charge is waived if an
annuity payout has begun or if an income option of at least
five years duration is begun after the first Contract Year
(see "Charges and Deductions - Contingent Deferred Sales
Charge," page 12.)
<PAGE>
CONDENSED FINANCIAL INFORMATION
THE TRAVELERS FUND BD FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES
(Unaudited)
<TABLE>
<CAPTION>
PERIOD ENDING
DECEMBER 31, 1994*
SMITH BARNEY/TRAVELERS SERIES FUND INC.: STANDARD ENHANCED
-------- --------
<S> <C> <C>
ALLIANCE GROWTH PORTFOLIO
Unit Value at beginning of period (1) $ 1.000 $ 1.000
Unit Value at end of period 1.047 1.046
Number of units outstanding at end of period (thousands) 16,522 7,338
AMERICAN CAPITAL ENTERPRISE PORTFOLIO
Unit Value at beginning of period (2) $ 1.000 $ 1.000
Unit Value at end of period 1.039 1.037
Number of units outstanding at end of period (thousands) 2,941 1,618
TBC MANAGED INCOME PORTFOLIO
Unit Value at beginning of period (3) $ 1.000 $ 1.000
Unit Value at end of period 0.997 0.995
Number of units outstanding at end of period (thousands) 2,849 980
G.T. GLOBAL STRATEGIC INCOME PORTFOLIO
Unit Value at beginning of period (2) $ 1.000 $ 1.000
Unit Value at end of period 0.945 0.944
Number of units outstanding at end of period (thousands) 2,400 1,063
SMITH BARNEY HIGH INCOME PORTFOLIO
Unit Value at beginning of period (4) $ 1.000 $ 1.000
Unit Value at end of period 0.988 0.986
Number of units outstanding at end of period (thousands) 3,105 1,147
SMITH BARNEY INTERNATIONAL EQUITY PORTFOLIO
Unit Value at beginning of period (1) $ 1.000 $ 1.000
Unit Value at end of period 0.955 0.954
Number of units outstanding at end of period (thousands) 14,141 5,898
SMITH BARNEY INCOME AND GROWTH PORTFOLIO
Unit Value at beginning of period (1) $ 1.000 $ 1.000
Unit Value at end of period 0.981 0.980
Number of units outstanding at end of period (thousands) 6,654 3,015
SMITH BARNEY MONEY MARKET PORTFOLIO
Unit Value at beginning of period (1) $ 1.000 $ 1.000
Unit Value at end of period 1.016 1.014
Number of units outstanding at end of period (thousands) 7,171 3,736
PUTNAM DIVERSIFIED INCOME PORTFOLIO
Unit Value at beginning of period (1) $ 1.000 $ 1.000
Unit Value at end of period 1.009 1.007
Number of units outstanding at end of period (thousands) 5,803 3,669
SMITH BARNEY PACIFIC BASIN PORTFOLIO
Unit Value at beginning of period (2) $ 1.000 $ 1.000
Unit Value at end of period 0.899 0.898
Number of units outstanding at end of period (thousands) 1,842 978
MFS TOTAL RETURN PORTFOLIO
Unit Value at beginning of period (1) $ 1.000 $ 1.000
Unit Value at end of period 0.979 0.977
Number of units outstanding at end of period (thousands) 9,099 3,480
SMITH BARNEY SERIES FUND:
SMITH BARNEY TOTAL RETURN PORTFOLIO
Unit Value at beginning of period (5) $ 1.000 $ 1.000
Unit Value at end of period 1.010 1.010
Number of units outstanding at end of period (thousands) 1,109 277
</TABLE>
(1) Period covers June 20, 1994 (date investment
option became available under Fund BD) to December 31, 1994.
(2) Period covers June 21, 1994 (date investment
option became available under Fund BD) to December 31, 1994.
(3) Period covers June 28, 1994 (date investment
option became available under Fund BD) to December 31, 1994.
(4) Period covers June 22, 1994 (date investment
option became available under Fund BD) to December 31, 1994.
(5) Period covers November 21, 1994 (date investment
option became available under Fund BD) to December 31, 1994.
The financial statements of Fund BD are contained
in the 1994 Annual Report to Contract Owners.
The consolidated financial statements of The Travelers Insurance
Company and Subsidiaries are contained in the Statement of
Additional Information.
<PAGE>
THE INSURANCE COMPANY
The Travelers Insurance Company (the "Company"), an indirect
wholly owned subsidiary of Travelers Group Inc., is a stock
insurance company chartered in 1864 in the State of
Connecticut and continuously engaged in the insurance
business since that time. The Company is licensed to
conduct a life insurance business in all states of the
United States, the District of Columbia, Puerto Rico, Guam,
the U.S. and British Virgin Islands, and the Bahamas. The
Company's Home Office is located at One Tower Square,
Hartford, Connecticut 06183.
THE SEPARATE ACCOUNT AND THE UNDERLYING FUNDS
THE TRAVELERS FUND BD FOR VARIABLE ANNUITIES (FUND BD)
Fund BD was established on October 22, 1993 and is
registered with the Securities and Exchange Commission as a
unit investment trust under the Investment Company Act of
1940, as amended (the "1940 Act"). The assets of Fund BD
will be invested exclusively in the shares of the Underlying
Funds. Fund BD meets the definition of a separate account
under the federal securities laws, and will comply with the
provisions of the 1940 Act. Additionally, the operations of
Fund BD are subject to the provisions of Section 38a-433 of
the Connecticut General Statutes which authorizes the
Connecticut Insurance Commissioner to adopt regulations
under it. Section 38a-433 contains no restrictions on the
investments of the Separate Account, and the Commissioner
has adopted no regulations under the Section that affect the
Separate Account.
Under Connecticut law, the assets of Fund BD will be held
for the exclusive benefit of the owners of, and the persons
entitled to payment under, the Contract offered by this
Prospectus and under all other contracts which provide for
accumulated values or dollar amount payments to reflect
investment results of the Separate Account. Incomes, gains
and losses, whether or not realized, for assets allocated to
Fund BD are in accordance with the Contracts, credited to or
charged against Fund BD without regard to other gains and
losses of the Company. The assets held in Fund BD are not
chargeable with liabilities arising out of any other
business which the Company may conduct. The obligations
arising under the Contract are obligations of the Company.
THE UNDERLYING FUNDS
Purchase Payments applied to the Sub-Accounts of Fund BD
will be invested in one or more of the available Underlying
Funds at net asset value in accordance with the selection
made by the Contract Owner. Contract Owners may change
their selection in accordance with the provisions of the
Contract. Underlying Funds available under the Contract may
be added or withdrawn as permitted by applicable law. Please
read carefully the complete risk disclosure in the Funds'
prospectuses before investing.
Fund BD currently invests in the following Underlying Funds,
each of which is a separate series of shares of the Smith
Barney/Travelers Series Fund Inc.:
SMITH BARNEY INCOME AND GROWTH PORTFOLIO. The objective of
the Income and Growth Portfolio is current income and long-
term growth of income and capital by investing primarily,
but not exclusively, in common stocks.
ALLIANCE GROWTH PORTFOLIO. The objective of the Growth
Portfolio is long-term growth of capital by investing
predominantly in equity securities of companies with a
favorable outlook for earnings and whose rate of growth is
expected to exceed that of the U.S. economy over time.
Current income is only an incidental consideration.
<PAGE>
AMERICAN CAPITAL ENTERPRISE PORTFOLIO. The Enterprise
Portfolio's objective is capital appreciation through
investment in securities believed to have above-average
potential for capital appreciation. Any income received on
such securities is incidental to the objective of capital
appreciation.
SMITH BARNEY INTERNATIONAL EQUITY PORTFOLIO. The objective
of the International Equity Portfolio is total return on
assets from growth of capital and income by investing at
least 65% of its assets in a diversified portfolio of equity
securities of established non-U.S. issuers.
SMITH BARNEY PACIFIC BASIN PORTFOLIO. The Pacific Basin
Portfolio's objective is long-term capital appreciation
through investment primarily in equity securities of
companies in Asian Pacific Countries.
TBC MANAGED INCOME PORTFOLIO. The objective of the Managed
Income Portfolio is to seek high current income consistent
with prudent risk of capital through investments in
corporate debt obligations, preferred stocks, and
obligations issued or guaranteed by the U.S. Government or
its agencies or instrumentalities.
PUTNAM DIVERSIFIED INCOME PORTFOLIO. The objective of the
Diversified Income Portfolio is to seek high current income
consistent with preservation of capital. The Portfolio will
allocate its investments among the U.S. Government Sector,
the High Yield Sector, and the International Sector of the
fixed income securities markets.
G.T. GLOBAL STRATEGIC INCOME PORTFOLIO. The Strategic
Income Portfolio's investment objective is primarily to seek
high current income and secondarily to seek capital
appreciation. The Portfolio allocates its assets among debt
securities of issuers in the United States, developed
foreign countries, and emerging markets.
SMITH BARNEY HIGH INCOME PORTFOLIO. The investment
objective of the High Income Portfolio is high current
income. Capital appreciation is a secondary objective. The
Portfolio will invest at least 65% of its assets in high-
yielding corporate debt obligations and preferred stock.
MFS TOTAL RETURN PORTFOLIO. The Total Return Portfolio's
objective is to obtain above-average income (compared to a
portfolio entirely invested in equity securities) consistent
with the prudent employment of capital. Generally, at least
40% of the Portfolio's assets will be invested in equity
securities.
SMITH BARNEY MONEY MARKET PORTFOLIO. The investment
objective of the Money Market Portfolio is maximum current
income and preservation of capital by investing in high
quality, short-term money market instruments.
The following is a separate series of shares of the Smith
Barney Series Fund Inc., and is also an investment option
under Fund BD:
SMITH BARNEY TOTAL RETURN PORTFOLIO. The investment
objective of the Smith Barney Total Return Portfolio is to
provide total return, consisting of long-term capital
appreciation and income. The Portfolio will seek to achieve
its goal by investing primarily in a diversified portfolio
of dividend-paying common stock.
<PAGE>
UNDERLYING FUND INVESTMENT MANAGERS
The Underlying Funds receive investment management and
advisory services from the following investment
professionals:
<TABLE>
<CAPTION>
FUND INVESTMENT MANAGER SUB-ADVISER
<S> <C> <C>
Smith Barney Income and Smith Barney Mutual Funds
Growth Portfolio Management Inc.
Alliance Growth Portfolio Smith Barney Mutual Funds Alliance Capital Management L.P.
Management Inc.
American Capital Enterprise Portfolio Smith Barney Mutual Funds American Capital Asset Management, Inc.
Management Inc.
Smith Barney Int'l Equity Portfolio Smith Barney Mutual Funds
Management Inc.
Smith Barney Pacific Basin Portfolio Smith Barney Mutual Funds
Management Inc.
TBC Managed Income Portfolio Smith Barney Mutual Funds The Boston Company Asset
Management Inc. Management, Inc.
Putnam Diversified Income Portfolio Smith Barney Mutual Funds Putnam Investment Management, Inc.
Management Inc.
G.T. Global Strategic Income Portfolio Smith Barney Mutual Funds G.T. Capital Management, Inc.
Management Inc.
Smith Barney High Income Portfolio Smith Barney Mutual Funds
Management Inc.
MFS Total Return Portfolio Smith Barney Mutual Funds Massachusetts Financial
Management Inc. Services Company
Smith Barney Money Market Portfolio Smith Barney Mutual Funds
Management Inc.
Smith Barney Total Return Portfolio Smith Barney Mutual Funds
Management Inc.
</TABLE>
SUBSTITUTION
If shares of any of the Underlying Funds should not be
available for purchase by the appropriate Sub-Account, or
if, in the judgment of the Company further investment in
such shares becomes inappropriate for the purposes of the
Contract, shares of another registered, open-end management
investment company may be substituted for shares of the
Underlying Funds held in the Sub-Accounts. Substitution may
be made with respect to both existing investments and the
investment of any future Purchase Payments. However, no
such substitution will be made without notice to Contract
Owners, state approval if applicable, and without prior
approval of the Securities and Exchange Commission, to the
extent required by the 1940 Act, or other applicable law.
The Company may also add other available Underlying Funds
under the Contract as it deems appropriate.
See Appendix A for Contracts issued in the state of New
York.
<PAGE>
GENERAL
All investment income and other distributions of Fund BD are
reinvested in shares of the Underlying Funds at net asset
value. The Underlying Funds are required to redeem fund
shares at net asset value and to make payment within seven
days. Shares of the Underlying Funds listed above are
currently sold only to life insurance company separate
accounts to fund benefits under variable annuity and
variable life insurance contracts issued by insurance
companies. Fund shares are not sold to the general public.
More detailed information may be found in the current
prospectus for the Underlying Funds; this prospectus is
included with and must accompany this Prospectus. Read it
carefully before investing.
PERFORMANCE INFORMATION
From time to time, the Company may advertise different types
of historical performance for the Sub-Accounts of Fund BD.
The Company may advertise the "standardized average annual
total returns" of the Sub-Accounts, calculated in a manner
prescribed by the Securities and Exchange Commission, as
well as the "non-standardized total return," as described
below.
"Standardized average annual total return" will show the
percentage rate of return of a hypothetical initial
investment of $1,000 for the most recent one, five and ten
year periods (or fractional periods thereof). This
standardized calculation reflects the deduction of all
applicable charges made to the Contract, except for premium
taxes which may be imposed by certain states. "Non-
standardized total return" will be calculated in a similar
manner, except non-standardized total returns will not
reflect the deduction of any applicable Contingent Deferred
Sales Charge or the $30 annual contract administrative
charge, which would decrease the level of performance shown
if reflected in these calculations.
Performance information may be quoted numerically or may be
presented in a table, graph or other illustration.
Advertisements may include data comparing performance to
well-known indices of market performance (including, but not
limited to, the Dow Jones Industrial Average, the Standard &
Poor's (S&P) 500 Index and the S&P 400 Index, the Lehman
Brothers Long T-Bond Index, the Russell 1000, 2000 and 3000
Indices, the Value Line Index, and the Morgan Stanley
Capital International's EAFE Index). Advertisements may
also include published editorial comments and performance
rankings compiled by independent organizations (including,
but not limited to, Lipper Analytical Services, Inc. and
Morningstar, Inc.) and publications that monitor the
performance of Fund BD and the Underlying Funds.
The total return quotations are based upon historical
earnings and are not necessarily representative of future
performance. A Contract Owner's Contract Value at
redemption may be more or less than original cost. The
Statement of Additional Information contains more detailed
information about these performance calculations, including
actual examples of each type of performance advertised.
THE CONTRACT
The Contract described in this Prospectus is both an
insurance product and a security. As an insurance product,
it is subject to the insurance laws and regulations of each
state in which it is available for distribution. The
underlying product is an Annuity whereby Purchase Payments
are paid to the Company and credited to the Contract Owner's
account to accumulate until the Maturity Date. A variable
annuity differs from a fixed annuity in that during the
accumulation period, the Contract Value may vary from day to
day. The Contract Owner assumes the risk of gain or loss
according to the performance of the selected Sub-Account(s).
There is generally no guarantee that the Contract Value at
the Maturity Date will equal or exceed the total Purchase
<PAGE>
Payments made under the Contract, except as specified or
elected under the Death Benefit provisions described on page
17.
PURCHASE PAYMENTS
An initial lump-sum Purchase Payment must be made to the
Contract with certain limitations. The minimum initial
Purchase Payment must be at least $5,000, and additional
payments of at least $500 may be made under the Contract at
any time following the initial payment. In some states,
subsequent Purchase Payments are not allowed to this
Contract. The initial Purchase Payment is due and payable
before the Contract becomes effective.
The Company will apply each Purchase Payment to purchase
Accumulation Units of the designated Sub-Account(s). The
Company will apply the initial Purchase Payment within two
business days following its receipt at the Company's Home
Office; all subsequent Purchase Payments will be applied as
of the next valuation date following their receipt.
RIGHT TO RETURN
The Contract may be returned for a full refund of the
Contract Value (including charges) within twenty days after
delivery of the Contract to the Contract Owners (the "free-
look period"), unless state law requires a longer period.
The Contract Owner bears the investment risk during the
free-look period; therefore, the Contract Value returned may
be greater or less than your Purchase Payment. However, if
you purchased the Contract as an Individual Retirement
Annuity, (1) your Purchase Payment will be refunded in full
if you return the Contract within the first seven days after
delivery, and (2) the Contract Value (including charges)
will be refunded if you return the Contract during the
remainder of the free-look period. In addition, certain
states require that Purchase Payments be refunded in full
for all Contracts or for Contracts issued in replacement
situations, during the entire free-look period or for some
portion of it. All Contract Values will be determined as of
the next valuation date following the Company's receipt of
the Owner's written request for refund.
See Appendix A for Contracts issued in the state of New
York.
ACCUMULATION UNITS
The number of Accumulation Units of each Sub-Account to be
credited to the Contract once a Purchase Payment has been
received by the Company will be determined by dividing the
Purchase Payment applied to the Sub-Account by the current
Accumulation Unit Value of the Sub-Account.
The Accumulation Unit Value for each Sub-Account was
established at $1.00 at inception. The value of an
Accumulation Unit on any Valuation Date is determined by
multiplying the value on the immediately preceding Valuation
Date by the net investment factor for the Valuation Period
just ended. The value of an Accumulation Unit on any date
other than a Valuation Date will be equal to its value as of
the next succeeding Valuation Date. The value of an
Accumulation Unit may increase or decrease.
NET INVESTMENT FACTOR
The net investment factor is used to measure the investment
performance of a Sub-Account from one Valuation Period to
the next. The net investment factor for a Sub-Account for
any Valuation Period is equal to the sum of 1.000000 plus
the net investment rate (the gross investment rate less any
applicable Sub-Account deductions during the Valuation
Period relating to the Insurance Charge and the Sub-Account
Administrative Charge). The gross investment rate of a Sub-
Account is equal to (a) minus (b) divided by (c) where:
(a) = investment income plus capital gains and losses (whether
realized or unrealized);
(b) = any deduction for applicable taxes (presently zero); and
(c) = the value of the assets of the Underlying Fund at the
beginning of the Valuation Period.
<PAGE>
The gross investment rate may be either positive or
negative. A Sub-Account's assets are based on the net asset
value of the Underlying Fund, and investment income includes
any distribution whose ex-dividend date occurs during the
Valuation Period.
CHARGES AND DEDUCTIONS
CONTINGENT DEFERRED SALES CHARGE
There are no sales charges deducted from Purchase Payments
when they are received and applied under the Contract.
However, a Contingent Deferred Sales Charge ("surrender
charge") will be applied if a full or partial surrender of
the Contract Value is made during the first six years
following a Purchase Payment. The length of time from
receipt of the Purchase Payment to the time of surrender
determines the amount of the charge.
The purpose of the surrender charge is to help defray
expenses incurred in the sale of the Contract, including
commissions and other expenses associated with the printing
and distribution of prospectuses and sales material.
However, the Company expects that the Contingent Deferred
Sales Charges assessed under the Contract will be
insufficient to cover these expenses; the difference will be
covered by the general assets of the Company which are
attributable, in part, to mortality and expense risk charges
under the Contract which are described below.
The surrender charge is equal to a percentage of the amount
withdrawn from the Contract (not to exceed the aggregate
amount of the Purchase Payments made under the Contract),
and is calculated as follows:
<TABLE>
<CAPTION>
LENGTH OF TIME FROM
PURCHASE PAYMENT SURRENDER
(NUMBER OF YEARS) CHARGE
<C> <C>
1 6%
2 6%
3 6%
4 3%
5 2%
6 1%
7 and thereafter 0%
</TABLE>
For purposes of determining the amount of any surrender
charge, surrenders will be deemed to be taken first from any
applicable free withdrawal amount (as described below); next
from remaining Purchase Payments (on a first-in, first-out
basis); and then from contract earnings (in excess of any
free withdrawal amount). Unless the Company receives
instructions to the contrary, the surrender charge will be
deducted from the amount requested.
No Contingent Deferred Sales Charge will be assessed (1) in
the event of distributions resulting from the death of the
Contract Owner or the death of the Annuitant with no
Contingent Annuitant surviving; (2) if an annuity payout has
begun; or (3) if an income option of at least five years'
duration is begun after the first Contract Year.
FREE WITHDRAWAL ALLOWANCE. There is a 15% free withdrawal
allowance available each year after the first Contract Year.
The available withdrawal amount will be calculated as of the
first Valuation Date of any given Contract Year. The free
withdrawal allowance applies to partial surrenders of any
amount and to full surrenders, except those full surrenders
transferred directly to annuity contracts issued by other
financial institutions. See Appendix A for Contracts issued
in the state of New York.
<PAGE>
ADMINISTRATIVE CHARGES
CONTRACT ADMINISTRATIVE CHARGE. An administrative charge of
$30 will be deducted annually from the Contract to
compensate the Company for expenses incurred in establishing
and administering the Contract. The contract administrative
charge will be deducted from the Contract Value on the
fourth Friday of August of each year by cancelling
Accumulation Units in each Sub-Account on a pro rata basis.
This charge will be prorated from the date of purchase to
the next date of assessment of charge. A prorated charge
will also be assessed upon voluntary or involuntary
surrender of the Contract. The Contract Administrative
Charge will not be assessed upon distributions resulting
from the death of the Contract Owner or the Annuitant with
no Contingent Annuitant surviving, or after an annuity
payout has begun, or if the Contract Value is equal to or
greater than $40,000 on the date of the assessment of the
charge.
SUB-ACCOUNT ADMINISTRATIVE CHARGE. A Sub-Account
administrative charge is deducted daily from the Sub-
Accounts of Fund BD in order to compensate the Company for
certain administrative and operating expenses of the Sub-
Accounts. The charge is equivalent, on an annual basis, to
0.15% of the daily net asset value of the Sub-Accounts and
is deducted on each Valuation Date at the rate of 0.000411%
for each day in the Valuation Period.
Neither the Contract Administrative Charge nor the Sub-
Account Administrative Charge can be increased. The charges
are set at a level which does not exceed the average
expected cost of the administrative services to be provided
while the Contract is in force, and the Company does not
expect to make a profit from these charges.
INSURANCE CHARGE
An insurance charge is deducted daily from the Sub-Accounts
of Fund BD. This charge is intended to cover the mortality
and expense risks associated with guarantees which the
Company provides under the Contract. As discussed below, a
portion of the insurance charge is for the assumption of
mortality risk, while the remainder is for the assumption of
expense risk. The mortality risk portion of the insurance
charge compensates the Company for guaranteeing to provide
Annuity Payments to an Annuitant according to the terms of
the Contract regardless of how long the Annuitant lives and
no matter what the actual mortality experience of other
Annuitants under the Contract might be, and for guaranteeing
to provide the standard or the enhanced death benefit if an
Annuitant dies prior to the Maturity Date. The expense risk
charge compensates the Company for the risk that the charges
under the Contract, which cannot be increased during the
duration of the Contract, will be insufficient to cover
actual costs.
For those Contract Owners who have elected a standard death
benefit provision, the insurance charge is equivalent, on an
annual basis, to 1.02% of the daily net asset value of the
Sub-Accounts. The Company reserves the right to lower this
charge at any time. The charge is deducted on each
Valuation Date at the rate of 0.002795% for each day in the
Valuation Period. The Company estimates that approximately
75% of the standard death benefit insurance charge is for
the assumption of mortality risk.
For those Contract Owners who have elected an enhanced death
benefit provision, the insurance charge is equivalent, on an
annual basis, to 1.30% of the daily net asset value of the
Sub-Accounts. The Company reserves the right to lower this
charge at any time. The charge is deducted on each
Valuation Date at the rate of .003562% for each day in the
Valuation Period. The Company estimates that approximately
80% of the enhanced death benefit insurance charge is for
the assumption of mortality risk.
If the amount deducted for mortality and expense risks is
not sufficient to cover the mortality costs and expense
shortfalls, the loss is borne by the Company. If the
deduction is more than sufficient, the excess will be a
profit to the Company. The Company expects to make a profit
from the insurance charge.
<PAGE>
REDUCTION OR ELIMINATION OF CONTRACT CHARGES
The Contingent Deferred Sales Charge and the administrative
charges under the Contract may be reduced or eliminated when
certain sales of the Contract result in savings or reduction
of sales expenses. The entitlement to such a reduction in
the Contingent Deferred Sales Charges or the administrative
charge will be based on the following: (1) the size and type
of group to which sales are to be made; (2) the total amount
of Purchase Payments to be received; and (3) any prior or
existing relationship with the Company. There may be other
circumstances, of which the Company is not presently aware,
which could result in fewer sales expenses. In no event
will reduction or elimination of the Contingent Deferred
Sales Charge or the administrative charge be permitted where
such reduction or elimination will be unfairly
discriminatory to any person.
UNDERLYING FUND CHARGES
Fund BD purchases shares of the Underlying Funds at net
asset value. The net asset value of each Underlying Fund
reflects investment management fees and other expenses
already deducted from the assets of the Underlying Funds.
For a complete description of these investment advisory fees
and other expenses, refer to the prospectus for the
Underlying Funds.
PREMIUM TAX
Certain state and local governments impose premium taxes.
These taxes currently range from 0.5% to 5.0%, depending
upon jurisdiction. The Company, in its sole discretion and
in compliance with any applicable state law, will determine
the method used to recover premium tax expenses incurred.
Where required, the Company will deduct any applicable
premium taxes from the Contract Value either upon death,
surrender, annuitization, or at the time Purchase Payments
are made to the Contract, but no earlier than when the
Company has a tax liability under state law.
CHANGES IN TAXES BASED UPON PREMIUM OR VALUE
If there is any change in a law assessing taxes against the
Company based upon the premiums of the contract, gains in
the contract or value of the contract, we reserve the right
to charge you proportionately for this tax. This would
include a tax based upon our realized net capital gains in
the Sub-Accounts on which we are not currently taxed.
OWNERSHIP PROVISIONS
TYPES OF OWNERSHIP
OWNER. The Contract belongs to the Owner designated on the
Contract Specifications page, or to any other person
subsequently named pursuant to a valid assignment. An
assignment of ownership or a collateral assignment may be
made only for nonqualified contracts. The Owner has sole
power during the Annuitant's lifetime to exercise any rights
and to receive all benefits given in the contract provided
the Owner has not named an irrevocable beneficiary and
provided the Contract is not assigned.
The Owner is the recipient of all payments while the
Annuitant is alive unless the Owner directs them to an
alternate recipient. An alternate recipient under a payment
direction does not become the Owner.
JOINT OWNER. For nonqualified contracts only, Joint Owners
may be named in a written request prior to the Contract
Date. Joint Owners may independently exercise transfers
between the Sub-Accounts or between the Fixed Account and
the Sub-Accounts. All other rights of ownership must be
exercised by joint action.
<PAGE>
Joint owners own equal shares of any benefits accruing or payments
made to them. All rights of a Joint Owner end at death if another
Joint Owner survives. The entire interest of the deceased Joint
Owner in the Contract will pass to the surviving Joint Owner.
SUCCEEDING OWNER. For nonqualified contracts only, if Joint
Owners are not named, the Contract Owner may name a
Succeeding Owner in a written request. The Succeeding Owner
becomes the Owner if living when the Owner dies. The
Succeeding Owner has no interest in the Contract before
then. The Owner may change or delete a Succeeding Owner by
written request.
BENEFICIARY
The Beneficiary is the party named by the Owner in a written
request. The Beneficiary has the right to receive any
remaining contractual benefits upon the death of the
Annuitant. If there is more than one Beneficiary surviving
the Annuitant, the Beneficiaries will share equally in
benefits unless different shares are recorded with the
Company by written request prior to the death of the
Annuitant.
With nonqualified contracts, the Beneficiary may differ from
the designated beneficiary as defined by the distribution
provisions of the Contract. The designated beneficiary may
take the contract benefits in lieu of the Beneficiary upon
the death of the Contract Owner.
Unless an irrevocable Beneficiary has been named, the Owner
has the right to change any Beneficiary by written request
during the lifetime of the Annuitant and while the Contract
continues.
ANNUITANT
The Annuitant is designated on the Contract Specifications
page, and is the individual on whose life the Maturity Date
and the amount of the monthly annuity payments depend. The
Annuitant may not be changed after the Contract Date.
For nonqualified contracts only, the Contract Owner may also
name one individual as a Contingent Annuitant by written
request prior to the Contract Date. A Contingent Annuitant
may not be changed, deleted or added to the Contract after
the Contract Date.
See Appendix A for Contracts issued in the state of New
York.
If an Annuitant who is not also an owner or a joint owner
dies prior to the Maturity Date while this Contract is in
effect and while the Contingent Annuitant is living:
1) the Contract Value will not be payable upon the Annuitant's
death;
2) the Contingent Annuitant becomes the Annuitant; and
3) all other rights and benefits provided by this Contract will
continue in effect.
When a Contingent Annuitant becomes the Annuitant, the
Maturity Date remains the same as previously in effect,
unless otherwise provided.
TRANSFERS
Prior to the Maturity Date, the Contract Owner may transfer
all or part of the Contract Value between Sub-Accounts.
Although there are currently no charges, penalties or
restrictions on the amount or frequency of transfers, the
Company reserves the right to charge a fee for any transfer
request, and to limit the number of transfers to no more
than one in any six month period.
Some Underlying Funds have higher investment advisory fees
than others; therefore, a transfer from one Sub-Account to
another could result in a Contract Owner's investment
becoming subject to higher or lower investment advisory
fees. A transfer between Sub-Accounts has no other effect
on the amount or timing of any of the other charges under
the Contract. Specifically, for purposes of computing the
applicability of the
<PAGE>
Contingent Deferred Sales Charge, the date of the Purchase
Payments made pursuant to the Contract will not be affected by
transfers among Sub-Accounts.
DOLLAR-COST AVERAGING (AUTOMATED TRANSFERS)
Dollar-cost averaging permits the Contract Owner to transfer
the same dollar amount to other Sub-Accounts on a regular
basis so that more Accumulation Units are purchased in a
Sub-Account if the value per unit is low and less
Accumulation Units are purchased if the value per unit is
high. Therefore, a lower-than-average value per unit may be
achieved over the long run.
You may establish automated transfers of Contract Values on
a monthly or quarterly basis from the Fixed Account and
certain of the Sub-Accounts to other Sub-Accounts through
written request or other method acceptable to the Company.
(See Appendix A for Contracts issued in the state of New
York.) You must have a minimum total Contract Value of
$5,000 to enroll in the Dollar-Cost Averaging program. The
minimum total automated transfer amount is $400.
Certain restrictions apply for automated transfers from the
Fixed Account that do not apply to automated transfers from
any of the Sub-Accounts. You may establish automated
transfers of Contract Values from the Fixed Account at any
time. Automated transfers from the Fixed Account may not
deplete your Fixed Account Value in a period of less than
twelve months from your enrollment in the Dollar-Cost
Averaging program.
You may start or stop participation in the Dollar-Cost
Averaging program at any time, but you must give the Company
at least 30 days' notice to change any automated transfer
instructions that are currently in place. Automated
transfers are subject to all of the other provisions and
terms of the Contract, including provisions relating to the
transfer of money between Sub-Accounts. The Company
reserves the right to suspend or modify transfer privileges
at any time and to assess a processing fee for this service.
Before transferring any part of the Contract Value, Contract
Owners should consider the risks involved in switching
between investments available under this Contract. Dollar-
cost averaging requires regular investments regardless of
fluctuating price levels, and does not guarantee profits or
prevent losses in a declining market. A potential investor
should consider his or her financial ability to continue
purchases through periods of low price levels.
TELEPHONE TRANSFERS
A Contract Owner may also place a request for all or part of
the Contract Value to be transferred by telephone. The
telephone transfer privilege is available automatically; no
special election is necessary for a Contract Owner to have
this privilege available. All transfers must be in
accordance with the terms of the Contract. Transfer
instructions are currently accepted on each Valuation Date
between 9:00 a.m. and 4:00 p.m., Eastern time, at 1-800-842-
8573. Once instructions have been accepted, they may not be
rescinded; however, new telephone instructions may be given
the following day. If the transfer instructions are not in
good order, the Company will not execute the transfer and
will promptly notify the caller.
The Company will make a reasonable effort to record each
telephone transfer conversation, but in the event that no
recording is effective or available, the Contract Owner will
remain liable for each telephone transfer effected.
Additionally, the Company is not liable for acting upon
instructions believed to be genuine and in accordance with
the procedures described above. As a result of this policy,
the Contract Owner may bear the risk of loss in the event
that the Company follows instructions that prove to be
fraudulent. The Securities and Exchange Commission is
currently considering the propriety of such a policy.
<PAGE>
SURRENDERS AND REDEMPTIONS
A Contract Owner may redeem all or any portion of the Cash
Surrender Value of the Contract at any time prior to the
Maturity Date. The Contract Owner must submit a written
request (in the proper form) specifying the Sub-Account (or
the Fixed Account) from which surrender is to be made. The
Cash Surrender Value will be determined as of the next
valuation following receipt of the Owner's surrender request
at the Company's Home Office.
The Company may defer payment of any Cash Surrender Value
for a period of not more than seven days after the request
is received in the mail, but it is its intent to pay as soon
as possible. Requests for surrender that are not in good
order will not be processed until the deficiencies are
corrected. The Company will contact the Contract Owner to
advise of the reason for the delay and what is needed to act
upon the surrender request.
The Cash Surrender Value on any date will be equal to the
Contract Value less any applicable surrender charge and any
premium tax not previously deducted. The Cash Surrender
Value may be more or less than the Purchase Payments made
depending on the Contract Value at the time of surrender.
SYSTEMATIC WITHDRAWALS
Prior to the Maturity Date of the Contract, a Contract Owner
may elect in writing on a form provided by the Company to
take systematic withdrawals from the Contract by
surrendering a specified dollar amount of at least $100 on a
monthly, quarterly, semiannual or annual basis. Any
applicable surrender charges above the free withdrawal
allowance and any applicable premium taxes will be deducted.
The minimum Contract Value required to begin systematic
withdrawals is $15,000. The Company will process the
withdrawals as directed by surrendering on a pro-rata basis
Accumulation Units from all Sub-Accounts and/or the Fixed
Account in which the Contract Owner has an interest, unless
otherwise directed. The Contract Owner may begin or
discontinue systematic withdrawals at any time by notifying
the Company in writing, but at least 30 days' notice must be
given to change any systematic withdrawal instructions that
are currently in place.
The Company reserves the right to discontinue offering
systematic withdrawals or to assess a processing fee for
this service upon 30 days' written notice to Contract
Owners. See Appendix A for Contracts issued in the state of
New York.
Each systematic withdrawal is subject to federal income
taxes on the taxable portion. In addition, a 10% federal
penalty tax may be assessed on systematic withdrawals if the
Contract Owner is under age 59 1/2. Contract Owners should
consult with their tax adviser regarding the tax
consequences of systematic withdrawals.
DEATH BENEFIT
A Death Benefit is payable to the Beneficiary upon the death
of the Annuitant prior to the Maturity Date with no
Contingent Annuitant surviving. Two different types of
death benefits are available under the Contract: a Standard
Death Benefit and an Enhanced Death Benefit (the Enhanced
Death Benefit may not be available in all jurisdictions).
Death Benefits are payable upon the Company's receipt of due
proof of death at its Home Office. A Beneficiary may
request that a death benefit payable under the Contract be
applied to one of the settlement options available under the
Contract, subject to the contract provisions. (See also
"Nonqualified Annuity Contracts," page 24.) See Appendices
A and B, respectively, for Contracts issued in the states of
New York and Florida.
In addition, for nonqualified contracts, if the Contract
Owner dies (including the first of joint owners) before the
Maturity Date with the Annuitant or Contingent Annuitant
surviving, and if a distribution is made as a result of such
death, as required by the minimum distribution rules of the
federal tax law, the Company will recalculate the value of
the Contract under the provisions of "Death Proceeds Prior
to the Maturity Date," below. The value of the Contract,
as recalculated, will be credited to the party taking
distributions upon the death of the Contract Owner with the
Annuitant or Contingent Annuitant surviving. This will
generally be the surviving joint owner or succeeding owner,
or otherwise the Beneficiary in accordance with all the
circumstances and the terms of the Contract. This party may
differ from the Beneficiary who was named by the Owner in a
written request and who would receive any remaining
contractual benefits upon the death of the Annuitant. This
party may be paid in a single lump sum, or by other options,
but should take distributions as required by minimum
distribution rules of the federal tax law. If the Contract
Owner's spouse is the surviving joint or succeeding owner,
the spouse may elect to continue the Contract as owner in
lieu of taking a distribution under the Contract. (See
generally, "Nonqualified Annuity Contracts," page 24.) All
references to age in the "Death Proceeds Prior to the
Maturity Date" section will be based on the Contract Owner's
age rather than the Annuitant's age.
DEATH PROCEEDS PRIOR TO THE MATURITY DATE
STANDARD DEATH BENEFIT. Under the standard death benefit,
if the Annuitant dies BEFORE AGE 75 and before the Maturity
Date, the Company will pay to the Beneficiary a death
benefit in an amount equal to the greatest of (1), (2) or
(3) below, less any applicable premium tax or prior
surrenders not previously deducted:
1) the Contract Value;
2) the total Purchase Payments made under the Contract; or
3) the Contract Value on the latest fifth contract year
anniversary immediately preceding the date on which the
Company receives due proof of death.
If the Annuitant dies ON OR AFTER AGE 75, BUT BEFORE AGE 85
and before the Maturity Date, the Company will pay to the
Beneficiary a death benefit in an amount equal to the
greatest of (1), (2) or (3) below, less any applicable
premium tax or prior surrenders not previously deducted:
1) the Contract Value;
2) the total Purchase Payments made under the Contract; or
the Contract Value on the latest fifth contract year
anniversary occurring on or before the Annuitant's 75th
birthday.
If the Annuitant dies ON OR AFTER AGE 85 and before the
Maturity Date, the Company will pay to the Beneficiary a
death benefit in an amount equal to the Contract Value, less
any applicable premium tax.
See Appendix B for Contracts issued in the state of Florida.
ENHANCED DEATH BENEFIT. Under the enhanced death benefit,
if the Annuitant dies BEFORE AGE 75 and before the Maturity
Date, the Company will pay to the Beneficiary a death
benefit equal to the greater of (1) the guaranteed death
benefit, or (2) the Contract Value less any applicable
premium tax.
The guaranteed death benefit is equal to the Purchase
Payments made to the Contract (minus surrenders and
applicable premium tax) increased by 5% on each contract
date anniversary, but not beyond the contract date
anniversary following the Annuitant's 75th birthday, with a
maximum guaranteed death benefit of 200% of the total of
Purchase Payments minus surrenders and minus applicable
premium tax.
If the Annuitant dies ON OR AFTER AGE 75, BUT BEFORE AGE 85
and before the Maturity Date, the Company will pay to the
Beneficiary a death benefit in an amount equal to the
greater of (1) the guaranteed death benefit as of the
Annuitant's 75th birthday, plus additional purchase
payments, minus surrenders and applicable premium tax; or
(2) the Contract Value less any applicable premium tax.
<PAGE>
If the Annuitant dies ON OR AFTER AGE 85 but before the
Maturity Date, the Company will pay to the Beneficiary a
death benefit equal to the Contract Value less any
applicable premium tax.
DEATH PROCEEDS AFTER THE MATURITY DATE
If the Annuitant dies on or after the Maturity Date, the
Company will pay the Beneficiary a death benefit consisting
of any benefit remaining under the Annuity or Income Option
then in effect.
THE ANNUITY PERIOD
MATURITY DATE
Annuity Payments will ordinarily begin on the Maturity Date
stated in the Contract. If no Maturity Date is elected, the
Maturity Date will be the Annuitant's 70th birthday for
qualified contracts and the Annuitant's 75th birthday, or
ten years after the Contract Date, if later, for
nonqualified contracts. The Maturity Date is the date on
which the Company will begin paying the first of a series of
Annuity or Income Payments in accordance with the Settlement
Option selected by the Contract Owner. Annuity or Income
Payments will begin on the Maturity Date unless the Contract
has been fully surrendered or the proceeds have been paid to
the Beneficiary prior to that date. The Company may require
proof that the Annuitant is alive before Annuity Payments
are made.
See Appendices A and B, respectively, for Contracts issued
in the states of New York and Florida.
For Nonqualified Contracts, at least 30 days before the
original Maturity Date, a Contract Owner may elect to extend
the Maturity Date to any time prior to the Annuitant's 85th
birthday or, for qualified Contracts, to a later date with
the Company's consent. Certain annuity options taken at the
Maturity Date may be used to meet the minimum required
distribution requirements of federal tax law, or a program
of partial surrenders may be used instead. These mandatory
distribution requirements take effect generally upon the
death of the Contract Owner, or with qualified contracts
upon either the Contract Owner's attainment of age 70 1/2 or
the death of the Contract Owner. Independent tax advice
should be sought regarding the election of minimum required
distributions.
See Appendix B for Contracts issued in the state of Florida.
ALLOCATION OF ANNUITY
At the time election of one of the Annuity Options is made,
the person electing the Option may further elect to have the
Contract Value applied to provide a Variable Annuity, a
Fixed Annuity, or a combination of both. If at the time
when Annuity Payments begin no election has been made to the
contrary, the value of a Sub-Account or the Fixed Account
shall be applied to provide an annuity funded by that same
Sub-Account or Fixed Account. A Contract Owner may elect to
transfer Contract Values from one account to another prior
to the date Annuity Payments commence in order to reallocate
the basis on which Annuity Payments will be determined.
(See "Transfers," page 15.)
VARIABLE ANNUITY
ANNUITY UNIT VALUE. The initial value of an Annuity Unit
for each Sub-Account was established at $1. The Annuity
Unit Value for each Sub-Account as of any Valuation Date is
equal to (a) the value of the Annuity Unit on the
immediately preceding Valuation Date, multiplied by (b) the
net investment factor for that Sub-Account for the Valuation
Period just ended, divided by (c) the assumed net investment
factor for the Valuation Period. (For example, the assumed
net investment factor based on an annual assumed net
investment rate of 3.0% for a Valuation Period of one day is
1.000081 and, for a period of two days, is 1.000081
<PAGE>
x 1.000081.) The value of an Annuity Unit as of any date
other than a Valuation Date is equal to its value on the
next succeeding Valuation Date.
The number of Annuity Units credited to the Contract is
determined by dividing the first monthly Annuity Payment
attributable to each Sub-Account by the Sub-Account's
Annuity Unit Value as of 14 days prior to the date Annuity
Payments commence. The number of Annuity Units remains
fixed during the annuity period.
DETERMINATION OF FIRST ANNUITY PAYMENT. The Contract
contains tables used to determine the first monthly Annuity
Payment. The amount applied to effect an Annuity will be
the Contract Value as of 14 days before the date Annuity
Payments commence less any applicable premium taxes not
previously deducted.
The amount of the first monthly payment depends on the
Annuity Option elected. A formula for determining the
adjusted age is contained in the Contract. The total first
monthly Annuity Payment is determined by multiplying the
benefit per $1,000 of value shown in the tables of the
Contract by the number of thousands of dollars of value of
the Contract applied to that Annuity Option. The Company
reserves the right to require satisfactory proof of age of
any person on whose life Annuity Payments are based before
making the first payment under any of the Settlement
Options.
DETERMINATION OF SECOND AND SUBSEQUENT ANNUITY PAYMENTS.
The dollar amount of the second and subsequent Annuity
Payments is not predetermined and may change from month to
month based on the investment experience of the applicable
Sub-Account. The total amount of each Annuity Payment will
be equal to the sum of the basic payments in each Sub-
Account. The actual amounts of these payments are
determined by multiplying the number of Annuity Units
credited to each Sub-Account by the corresponding Annuity
Unit Value as of the date 14 days prior to the date before
payment is due.
See Appendix B for Contracts issued in the state of
Florida.
FIXED ANNUITY
A Fixed Annuity is an annuity with payments which remain
fixed as to dollar amount throughout the payment period.
The dollar amount of the first Fixed Annuity Payment will be
calculated as described under "Variable Annuity" above. All
subsequent payments will be made in the same amount, and
that amount will be assured throughout the payment period.
If it would produce a larger payment, the Company agrees
that the first Fixed Annuity Payment will be determined
using the Life Annuity Tables in effect on the Maturity
Date.
PAYMENT OPTIONS
ELECTION OF OPTIONS
On the Maturity Date, or other agreed-upon date, the Company
will pay an amount payable under the Contract in one lump
sum, or in accordance with the payment option selected by
the Contract Owner. Election of an option must be made in
writing in a form satisfactory to the Company. Any election
made during the lifetime of the Annuitant must be made by
the Contract Owner. While the Annuitant is alive, the
Contract Owner may change a Settlement Option election by
written request at any time prior to the Maturity Date.
Once Annuity or Income Payments have begun, no further
election changes are allowed. During the Annuitant's
lifetime, if no election has been made prior to the Maturity
Date, the Company will pay to the Contract Owner the first
of a series of monthly Annuity Payments based on the life of
the Annuitant, in accordance with Annuity Option 2 (Life
Annuity with 120 monthly payments assured). For certain
qualified contracts, Annuity Option 4 (Joint and Last
Survivor Joint Life Annuity - Annuity Reduced on Death of
Primary Payee) will be the automatic option as described in
the contract.
<PAGE>
The minimum amount that can be placed under an Annuity or
Income Option will be $2,000 unless the Company consents to
a lesser amount. If any monthly periodic payment due any
payee is less than $100.00, the Company reserves the right
to make payments at less frequent intervals, or to pay the
Contract Value in one lump-sum payment.
See Appendix B for Contracts issued in the state of Florida.
ANNUITY OPTIONS
Subject to the conditions described in "Election of Options"
above, all or any part of the Cash Surrender Value of the
Contract may be paid under one or more of the following
Annuity Options. Payments under the Annuity Options may be
elected on a monthly, quarterly, semiannual or annual basis.
OPTION 1--LIFE ANNUITY--NO REFUND. The Company will make
Annuity Payments during the lifetime of the Annuitant,
terminating with the last payment preceding death. This
option offers the maximum periodic payment, since there is
no assurance of a minimum number of payments or provision
for a death benefit for beneficiaries. (It would be
possible under this option to receive only one Annuity
Payment if the Annuitant died before the due date of the
second Annuity Payment, only two if the Annuitant died
before the third Annuity Payment, etc.)
OPTION 2--LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS
ASSURED. The Company will make monthly Annuity Payments
during the lifetime of the Annuitant, with the agreement
that if, at the death of that person, payments have been
made for less than 120, 180 or 240 months, as elected,
payments will be continued during the remainder of the
period to the Beneficiary designated.
OPTION 3--JOINT AND LAST SURVIVOR LIFE ANNUITY--NO REFUND.
The Company will make Annuity Payments during the joint
lifetime of the two persons on whose lives payments are
based, and during the lifetime of the survivor. No further
payments will be made following the death of the survivor.
OPTION 4--JOINT AND LAST SURVIVOR LIFE ANNUITY--ANNUITY
REDUCED ON DEATH OF PRIMARY PAYEE. The Company will make
Annuity Payments during the lifetime of the two persons on
whose lives payments are based. One of the two persons will
be designated as the primary payee, the other will be
designated as the secondary payee. On the death of the
secondary payee, if survived by the primary payee, the
Company will continue to make Annuity Payments to the
primary payee in the same amount that would have been
payable during the joint lifetime of the two persons. On
the death of the primary payee, if survived by the secondary
payee, the Company will continue to make Annuity Payments to
the secondary payee in an amount equal to 50% of the
payments which would have been made during the lifetime of
the primary payee. No further payments will be made
following the death of the survivor.
OPTION 5--OTHER ANNUITY OPTIONS. The Company will make any
other arrangements for Annuity Payments as may be mutually
agreed upon.
INCOME OPTIONS
Instead of one of the Annuity Options described above, and
subject to the conditions described under "Election of
Options," all or part of the Cash Surrender Value of the
Contract may be paid under one or more of the following
Income Options, provided that they are consistent with
federal tax law qualification requirements. Payments under
the Income Options may be elected on a monthly, quarterly,
semiannual or annual basis:
OPTION 1--PAYMENTS OF A FIXED AMOUNT. The Company will make
equal payments of the amount elected until the Contract
Value applied under this option has been exhausted. The
first payment and all later payments will be paid from each
Sub-Account or the Fixed Account in proportion to the Cash
Surrender Value attributable to that Account. The final
payment will include any amount insufficient to make another
full payment.
<PAGE>
OPTION 2--PAYMENTS FOR A FIXED PERIOD. The Company will
make payments for the period selected. The amount of each
payment will be equal to the remaining Contract Value
applied under this option divided by the number of remaining
payments.
OPTION 3--OTHER INCOME OPTIONS. The Company will make any
other arrangements for Income Payments as may be mutually
agreed upon.
The amount applied to effect an Income Option will be the
Contract Value as of 14 days before the date Income Payments
commence, less any applicable premium taxes not previously
deducted and any applicable contingent deferred sales
charge. The Contract Value used to determine the amount of
any Income Payment will be determined on the same basis as
the Contract Value during the Accumulation Period, including
the deduction for mortality and expense risks and the Sub-
Account Administrative Charge. Income Options differ from
Annuity Options in that the amount of the payments made
under Income Options are unrelated to the length of life of
any person. Although the Company continues to deduct the
charge for mortality and expense risks, it assumes no
mortality risks for amounts applied under any Income Option.
Moreover, payments are unrelated to the actual life span of
any person. Thus, the Annuitant may outlive the payment
period.
MISCELLANEOUS CONTRACT PROVISIONS
TERMINATION
No Purchase Payments after the first are required to keep
the Contract in effect. However, the Company reserves the
right to terminate the Contract on any Valuation Date if the
Contract Value as of that date is less than $1,000 and no
Purchase Payments have been made for at least two years,
unless otherwise specified by state law. Termination will
not occur until 31 days after the Company has mailed notice
of termination to the Contract Owner at his or her last
known address and to any assignee of record. If the
Contract is terminated, the Company will pay to the Contract
Owner the Cash Surrender Value (Contract Value, in the
states of Washington, New York and New Jersey), less any
applicable administrative charge or premium tax.
See Appendix A for Contracts issued in the state of New
York.
MISSTATEMENT
If the Annuitant's or Contract Owner's sex or date of birth
was misstated, all benefits under the Contract are what the
Purchase Payment paid would have purchased at the correct
sex and age. Proof of the Annuitant's or Contract Owner's
age may be filed at any time at the Company's Home Office.
REQUIRED REPORTS
As often as required by law, but at least once in each
Contract Year before the due date of the first Annuity
Payment, the Company will furnish a report showing the
number of Accumulation Units credited to the Contract and
the corresponding Accumulation Unit Value as of the date of
the report for each Sub-Account in which the Contract Owner
has invested during the applicable period. The Company will
keep all records required under federal or state laws.
SUSPENSION OF PAYMENTS
The Company reserves the right to suspend or postpone the
date of any payment of any benefit or values for any
Valuation Period (1) when the New York Stock Exchange is
closed; (2) when trading on the Exchange is restricted; (3)
an emergency exists as determined by the Securities and
Exchange Commission so that disposal of the securities held
in the Sub-Accounts is not reasonably practicable or it is
not reasonably practicable to determine the value of the
Sub-Account's net assets; or (4) during any other period
when the Securities and Exchange Commission, by order, so
permits for the protection of securityholders.
<PAGE>
FEDERAL TAX CONSIDERATIONS
The following description of the federal income tax
consequences under this Contract is not exhaustive and is
not intended to cover all situations. Because of the
complexity of the law and the fact that the tax results will
vary according to the factual status of the individual
involved, tax advice may be needed by a person contemplating
purchase of an annuity contract and by a Contract Owner or
Beneficiary who may make elections under a contract. For
further information, a qualified tax adviser should be
consulted.
GENERAL TAXATION OF ANNUITIES
Amounts credited to the Contract are not generally taxable
until they are received by the Contract Owner or the
Beneficiary, either in the form of Annuity Payments or other
distributions. Distributions from annuities that include
previously taxed amounts may be taxed on either an income-
first basis or an income-last basis, or on a pro-rata basis
according to the type of plan or due to other circumstances.
TAX LAW DIVERSIFICATION REQUIREMENTS FOR VARIABLE ANNUITIES
The Code requires that any nonqualified variable annuity
contracts based on a segregated asset account shall not be
treated as an annuity for any period if investments made in
the account are not adequately diversified. Final tax
regulations define how segregated assets accounts must be
diversified. The Company monitors the diversification of
investments constantly and believes that its accounts are
adequately diversified. The consequence of any failure is
essentially the loss to the contract owner of tax deferred
treatment. The Company intends to administer all contracts
subject to this provision of law in a manner that will
maintain adequate diversification.
OWNERSHIP OF THE INVESTMENTS
Assets in the segregated asset accounts must be owned by the
Company and not by the contract owner for federal income tax
purposes. Otherwise, the deferral of taxes is lost and
income and gains from the accounts would be includable
annually in the contract owner's gross income.
The Internal Revenue Service has stated in published rulings
that a variable contract owner will be considered the owner
of the assets of a segregated asset account if the owner
possesses an incident of ownership in those assets, such as
the ability to exercise investment control over the assets.
The Treasury Department announced, in connection with the
issuance of temporary regulations concerning investment
diversification, that those regulations "do not provide
guidance concerning the circumstances in which investor
control of the investments of a segregated asset account may
cause the investor, rather than the insurance company, to be
treated as the owner of the assets of the account." This
announcement, dated September 15, 1986, also stated that the
guidance would be issued by way of regulations or rulings on
the "extent to which policyholders may direct their
investments to particular subaccounts [of a segregated asset
account] without being treated as owners of the underlying
assets." As of the date of this prospectus, no such guidance
has been issued.
The Company does not know if such guidance will be issued,
or if it is, what standards it may set. Furthermore, the
Company does not know if such guidance may be issued with
retroactive effect. New regulations are generally issued
with a prospective-only effect as to future sales or as to
future voluntary transactions in existing contracts. The
Company therefore reserves the right to modify the contract
as necessary to attempt to prevent contract owners from
being considered the owner of the assets of the accounts.
The remaining tax discussion assumes that the Policy
qualifies as a life insurance contract for federal income
tax purposes.
<PAGE>
PENALTY TAX FOR PREMATURE DISTRIBUTIONS
Taxable distributions taken before the Contract Owner has
attained the age of 59 1/2 will be subject to a 10%
additional tax penalty unless the distribution is taken in a
series of periodic distributions for life or life
expectancy, or unless the distribution follows the death or
disability of the Contract Owner. Other exceptions may be
available in certain tax-benefited plans.
MANDATORY DISTRIBUTIONS FOR QUALIFIED PLANS
Federal tax law requires that minimum annual distributions
begin by April 1st of the calendar year following the
calendar year in which a participant under a qualified plan,
a Section 403(b) annuity, or an IRA attains age 70 1/2.
Distributions must also begin or be continued according to
required patterns following the death of the Owner or the
Annuitant.
NONQUALIFIED ANNUITY CONTRACTS
Individuals may purchase tax-deferred annuities without tax
law funding limits. The Purchase Payments receive no tax
benefit, deduction or deferral, but increases in the value
of the contract are generally deferred from tax until
distribution. If a nonqualified annuity is owned by other
than an individual, however (e.g., by a corporation), the
increases in value attributable to Purchase Payments made
after February 28, 1986 are includable in income annually.
Furthermore, for contracts issued after April 22, 1987, all
deferred increases in value will be includable in the income
of a Contract Owner when the Contract Owner transfers the
contract without adequate consideration.
If two or more annuity contracts are purchased from the same
insurer within the same calendar year, distributions from
any of them will be taxed based upon the amount of income in
all of the same calendar year series of annuities. This
will generally have the effect of causing taxes to be paid
sooner on the deferred gain in the contracts.
Those receiving partial distributions made before the
Maturity Date will generally be taxed on an income-first
basis to the extent of income in the contract. If you are
exchanging another annuity contract for this annuity,
certain pre-August 14, 1982 deposits into an annuity
contract that have been placed in the contract by means of a
tax-deferred exchange under Section 1035 of the Code may be
withdrawn first without income tax liability. This
information on deposits must be provided to the Company by
the other insurance company at the time of the exchange.
There is income in the contract generally to the extent the
Cash Value exceeds the investment in the contract. The
investment in the contract is equal to the amount of
premiums paid less any amount received previously which was
excludable from gross income. Any direct or indirect
borrowing against the value of the contract or pledging of
the contract as security for a loan will be treated as a
cash distribution under the tax law.
The federal tax law requires that nonqualified annuity
contracts meet minimum mandatory distribution requirements
upon the death of the Contract Owner, including the first of
joint owners. Failure to meet these requirements will cause
the surviving joint owner, the succeeding Contract Owner, or
the Beneficiary to lose the tax benefits associated with
annuity contracts, i.e., primarily the tax deferral prior to
distribution. The distribution required depends, among
other things, upon whether an Annuity Option is elected or
whether the new Contract Owner is the surviving spouse.
Contracts will be administered by the Company in accordance
with these rules and the Company will make a notification
when payments should be commenced.
INDIVIDUAL RETIREMENT ANNUITIES
To the extent of earned income for the year and not
exceeding $2,000 per individual, an individual may make
deductible contributions to an individual retirement annuity
(IRA). There are certain limits on the deductible amount
based on the adjusted gross income of the individual and
spouse and based on their participation in a retirement
plan. If an individual is married and the spouse does not
have earned income,
<PAGE>
the individual may establish IRAs for the individual and spouse.
Purchase Payments may then be made annually into IRAs for both
spouses in the maximum amount of 100% of earned income up to a
combined limit of $2,250.
The Code provides for the purchase of a Simplified Employee
Pension (SEP) plan. A SEP is funded through an IRA with an
annual employer contribution limit of 15% of compensation up
to $30,000 for each participant.
QUALIFIED PENSION AND PROFIT-SHARING PLANS
Under a qualified pension or profit-sharing plan, Purchase
Payments made by an employer are not currently taxable to
the participant and increases in the value of a contract are
not subject to taxation until received by a participant or
Beneficiary.
Distributions are taxable to the participant or Beneficiary
as ordinary income in the year of receipt. Any distribution
that is considered the participant's "investment in the
contract" is treated as a return of capital and is not
taxable. Certain lump-sum distributions may be eligible for
special forward averaging tax treatment for certain classes
of individuals.
FEDERAL INCOME TAX WITHHOLDING
The portion of a distribution which is taxable income to the
recipient will be subject to federal income tax withholding
as follows:
1. ELIGIBLE ROLLOVER DISTRIBUTION FROM SECTION 403(B) PLANS OR
ARRANGEMENTS OR FROM QUALIFIED PENSION AND PROFIT-SHARING
PLANS
There is a mandatory 20% tax withholding for plan
distributions that are eligible for rollover to an IRA or to
another retirement plan but that are not directly rolled
over. A distribution made directly to a participant or
Beneficiary may avoid this result if:
(a) a periodic settlement distribution is elected based upon a
life or life expectancy calculation, or
(b) a term-for-years settlement distribution is elected for a
period of ten years or more, payable at least annually, or
(c) a minimum required distribution as defined under the tax law
is taken after the attainment of the age of 70 1/2 or as
otherwise required by law.
A distribution including a rollover that is not a direct
rollover will be subject to the 20% withholding, and a 10%
additional tax penalty may apply to any amount not added
back in the rollover. The 20% withholding may be recovered
when the participant or Beneficiary files a personal income
tax return for the year if a rollover was completed within
60 days of receipt of the funds, except to the extent that
the participant or spousal Beneficiary is otherwise
underwithheld or short on estimated taxes for that year.
2. OTHER NON-PERIODIC DISTRIBUTIONS (FULL OR PARTIAL
REDEMPTIONS)
To the extent not described as requiring 20% withholding in
1 above, the portion of a non-periodic distribution which
constitutes taxable income will be subject to federal income
tax withholding, if the aggregate distributions exceed $200
for the year, unless the recipient elects not to have taxes
withheld. If no such election is made, 10% of the taxable
distribution will be withheld as federal income tax.
Election forms will be provided at the time distributions
are requested. This form of withholding applies to all
annuity programs.
<PAGE>
3. PERIODIC DISTRIBUTIONS (DISTRIBUTIONS PAYABLE OVER A PERIOD
GREATER THAN ONE YEAR)
The portion of a periodic distribution which constitutes
taxable income will be subject to federal income tax
withholding under the wage withholding tables as if the
recipient were married claiming three exemptions. A
recipient may elect not to have income taxes withheld or
have income taxes withheld at a different rate by providing
a completed election form. Election forms will be provided
at the time distributions are requested. This form of
withholding applies to all annuity programs. As of January
1, 1994, a recipient receiving periodic payments (e.g.,
monthly or annual payments under an Annuity Option) which
total $13,700 or less per year, will generally be exempt
from periodic withholding.
Recipients who elect not to have withholding made are liable
for payment of federal income tax on the taxable portion of
the distribution. All recipients may also be subject to
penalties under the estimated tax payment rules if
withholding and estimated tax payments are not sufficient to
cover tax liabilities.
Recipients who do not provide a social security number or
other taxpayer identification number will not be permitted
to elect out of withholding. Additionally, United States
citizens residing outside of the country, or U.S. legal
residents temporarily residing outside the country, are not
permitted to elect out of withholding.
VOTING RIGHTS
The Contract Owner has certain voting rights in Fund BD and
the Underlying Funds. The number of votes which a Contract
Owner may cast in the accumulation period is equal to the
number of Accumulation Units credited to the account under
the Contract. During the annuity period, the Contract Owner
may cast the number of votes equal to (i) the reserve
related to the Contract divided by (ii) the value of an
Accumulation Unit, and a Contract Owner's voting rights will
decline as the reserve for the Contract declines.
Upon the death of the Contract Owner, all voting rights will
vest in the Beneficiary of the Contract, except in the case
of contracts where the surviving spouse may succeed to the
ownership.
In accordance with its view of present applicable law, the
Company will vote shares of Underlying Funds held by Fund BD
at regular and special meetings of the Underlying Fund
shareholders in accordance with instructions received from
persons having a voting interest in Fund BD. The Company
will vote shares for which it has not received instructions
in the same proportion as it votes shares for which it has
received instructions. However, if the 1940 Act or any
regulation thereunder should be amended, or if the present
interpretation thereof should change, and as a result the
Company determines that it is permitted to vote shares of
the Underlying Funds in its own right, it may elect to do so.
The number of shares which a person has a right to vote will
be determined as of the date concurrent with the date
established by the respective Underlying Fund for
determining shareholders eligible to vote at the meeting of
the fund, and voting instructions will be solicited by
written communication before the meeting in accordance with
the procedures established by the Underlying Fund.
Each person having a voting interest in Fund BD will receive
periodic reports relating to the Underlying Fund(s) in which
he or she has an interest, as well as any proxy materials,
including a form on which to give voting instructions with
respect to the proportion of the Underlying Fund shares held
by Fund BD which correspond to his or her interest in the
Sub-Account.
<PAGE>
DISTRIBUTION OF VARIABLE ANNUITY CONTRACTS
The Company intends to sell the Contracts in all
jurisdictions where it is licensed to do business and where
the Contract is approved. The Contracts will be sold by
life insurance sales agents who represent the Company, and
who are licensed registered representatives of the Company
or certain other registered broker-dealers. The
compensation paid to sales representatives will not exceed
6.25% of the payments made under the Contracts.
Any sales representative or employee will have been
qualified to sell Variable Annuities under applicable
federal and state laws. Each broker-dealer is registered
with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, and all are members of the
National Association of Securities Dealers, Inc. Effective
February 1, 1995, Travelers Equities Sales, Inc., an
affiliate of the Company, became the principal underwriter
for the Contracts.
From time to time the Company may pay or permit other
promotional incentives, in cash, credit or other
compensation.
STATE REGULATION
The Company is subject to the laws of the state of
Connecticut governing insurance companies and to regulation
by the Insurance Commissioner of the state of Connecticut.
An annual statement covering the operations of the Company
for the preceding year, as well as its financial conditions
as of December 31 of such year, must be filed with the
Commissioner in a prescribed format on or before March 1 of
each year. The Company's books and assets are subject to
review or examination by the Commissioner or his agents at
all times, and a full examination of its operations is
conducted at least once every four years.
The Company is also subject to the insurance laws and
regulations of all other states in which it is licensed to
operate. However, the insurance departments of each of
these states generally apply the laws of the jurisdiction of
domicile in determining the field of permissible
investments.
CONFORMITY WITH STATE AND FEDERAL LAWS
The Contract is governed by the laws of the state in which
it is delivered. Any paid-up Annuity, Cash Surrender Value
or death benefits that are available under the Contract are
not less than the minimum benefits required by the statutes
of the state in which the Contract is delivered. The
Company may at any time make any changes, including
retroactive changes, in the Contract to the extent that the
change is required to meet the requirements of any law or
regulation issued by any governmental agency to which the
Company, the Contract or the Contract Owner is subject.
LEGAL PROCEEDINGS AND OPINIONS
There are no pending material legal proceedings affecting
Fund BD. Legal matters in connection with the federal laws
and regulations affecting the issue and sale of the Contract
described in this Prospectus, as well as the organization of
the Company, its authority to issue variable annuity
contracts under Connecticut law and the validity of the
forms of the variable annuity contracts under Connecticut
law, have been reviewed by the General Counsel of the Life
and Annuities Division of the Company.
<PAGE>
THE FIXED ACCOUNT
Purchase Payments allocated to the Fixed Account portion of
the Contract and any transfers made to the Fixed Account
become part of the general account of the Company which
supports insurance and annuity obligations. Because of
exemptive and exclusionary provisions, interests in the
general account have not been registered under the
Securities Act of 1933 ("1933 Act"), nor is the general
account registered as an investment company under the 1940
Act. Accordingly, neither the general account nor any
interest therein is generally subject to the provisions of
the 1933 or 1940 Acts, and the staff of the Securities and
Exchange Commission does not generally review the disclosure
in the prospectus relating to the Fixed Account. Disclosure
regarding the Fixed Account and the general account may,
however, be subject to certain generally applicable
provisions of the federal securities laws relating to the
accuracy and completeness of statements made in the
prospectus.
Under the Fixed Account, the Company assumes the risk of
investment gain or loss, guarantees a specified interest
rate, and guarantees a specified periodic annuity payment.
The investment gain or loss of Fund BD or any of the Sub-
Accounts does not affect the Fixed Account portion of the
Contract Owner's Contract Value, or the dollar amount of
fixed annuity payments made under any payout option.
The Fixed Account is secured by part of the general assets
of the Company. The general assets of the Company include
all assets of the Company other than those held in Fund BD
or any other separate account sponsored by the Company or
its affiliates. Purchase Payments will be allocated to the
Fixed Account at the direction of the Contract Owner at the
time of purchase or at a later date.
The Company will invest the assets of the Fixed Account in
those assets chosen by the Company and allowed by applicable
law. Investment income from such Fixed Account assets will
be allocated by the Company between itself and the Contracts
participating in the Fixed Account.
Investment income from the Fixed Account allocated to the
Company includes compensation for mortality and expense
risks borne by the Company in connection with Fixed Account
Contracts. The amount of such investment income allocated
to the Contracts will vary from year to year in the sole
discretion of the Company at such rate or rates as the
Company prospectively declares from time to time. The
initial rate for any deposit into the Fixed Account is
guaranteed for one year from the date of such deposit.
Subsequent renewal rates will be guaranteed for the calendar
quarter. The Company also guarantees that for the life of
the Contract it will credit interest at not less than 3% per
year. ANY INTEREST CREDITED TO AMOUNTS ALLOCATED TO THE
FIXED ACCOUNT IN EXCESS OF 3% PER YEAR WILL BE DETERMINED IN
THE SOLE DISCRETION OF THE COMPANY. THE CONTRACT OWNER
ASSUMES THE RISK THAT INTEREST CREDITED TO THE FIXED ACCOUNT
MAY NOT EXCEED THE MINIMUM GUARANTEE OF 3% FOR ANY GIVEN YEAR.
The Company guarantees that, at any time, the Fixed Account
Contract Value will not be less than the amount of the
Purchase Payments allocated to the Fixed Account, plus
interest credited as described above, less any applicable
premium taxes or prior surrenders. If the Contract Owner
effects a surrender, the amount available from the Fixed
Account will be reduced by any applicable Contingent
Deferred Sales Charge.
TRANSFERS
Transfers from the Fixed Account to any of the Sub-Accounts
will be permitted twice a year during the 30 days following
the semiannual Contract Date anniversary in an amount of up
to 15% of the Fixed Account Value on the semiannual Contract
Date anniversary. (This restriction does not apply to
transfers from the Dollar-Cost Averaging Program.) Amounts
previously transferred from the Fixed Account to the Sub-Accounts
<PAGE>
may not be transferred back to the Fixed Account
for a period of at least 6 months from the date of transfer.
The Company reserves the right to waive either of these
restrictions in its discretion.
Automated transfers from the Fixed Account to any of the
Sub-Accounts may begin at any time. Automated transfers
from the Fixed Account may not deplete your Fixed Account
value in a period of less than twelve months from your
enrollment in the Dollar-Cost Averaging program.
<PAGE>
APPENDIX A
FOR CONTRACTS ISSUED IN THE STATE OF NEW YORK
SUBSTITUTION
No substitution of shares of any of the Underlying Funds for
shares of another open-end management investment company
will be made without prior approval of the New York
Insurance Commissioner.
RIGHT TO RETURN
The Contract may be returned for a full refund of the
Contract Value (including charges) within twenty days after
delivery of the Contract to the Contract Owner (the "free-
look period"). For purposes of determining the refund
amount, all Contract Values will be determined as of the
Return Date, which is the next valuation after the date you
mail or deliver the Written Request to the Company's Home
Office or to your Agent. If the Contract is returned within
the first 7 days of the free-look period, we will calculate
the Contract Value by using the investment experience of the
Smith Barney Money Market Portfolio Sub-Account as of the
Return Date. If the Contract is returned during the last 8
to 20 days of the free-look period, we will calculate the
Contract Value Date by using the investment experience of
the Sub-Accounts(s) selected on your application, or as you
have instructed us more recently. If Purchase Payments are
allocated to the Fixed Account during the free-look period,
then the full Contract Value will be returned. After the
Contract is returned, it will be considered as if never in
effect.
FREE WITHDRAWAL ALLOWANCE
There is a 10% free withdrawal allowance available each year
after the first Contract Year. The available withdrawal
amount will be calculated as of the first Valuation Date of
any given Contract Year. The free withdrawal allowance
applies to partial surrenders of any amount and to full
surrenders, except those full surrenders transferred
directly to annuity contracts issued by other financial
institutions.
ANNUITANT
If the Owner of a Contract is also the Annuitant, a
Contingent Annuitant may not be named.
DOLLAR-COST AVERAGING (AUTOMATED TRANSFERS)
You may establish automated transfers of Contract Values on
a monthly or quarterly basis from the Fixed Account and
certain of the Sub-Accounts to other Sub-Accounts only
through written request.
SYSTEMATIC WITHDRAWALS
The Company waives the right to discontinue offering
systematc withdrawals or to assess a processing fee for this
service.
DEATH BENEFIT
The Enhanced Death Benefit is not available in New York.
MATURITY DATE
The Maturity Date may not be any date beyond the Annuitant's
85th birthday.
<PAGE>
TERMINATION
No Purchase Payments after the first are required to keep
the Contract in effect. However, the Company reserves the
right to terminate the Contract on any Valuation Date if the
Contract Value as of that date is less than $1,000 and no
Purchase Payments have been made for at least three years,
unless otherwise specified by state law. However, the
Company reserves the right to terminate the Contract on any
Valuation Date if the Contract Value as of that date is less
than $1,000 and no Purchase Payments have been made for at
least THREE years. Termination will not occur until 31 days
after the Company has mailed notice of termination to the
Contract Owner at his or her last known address and to any
assignee of record. If the Contract is terminated, the
Company will pay to the Contract Owner the Contract Value,
if any, less any applicable administrative charge or premium
tax. No Contingent Deferred Sales Charge will apply in the
event of termination by the Company.
<PAGE>
APPENDIX B
FOR CONTRACTS ISSUED IN THE STATE OF FLORIDA
DEATH BENEFIT
DEATH PROCEEDS PRIOR TO THE MATURITY DATE
The Enhanced Death Benefit is not available in Florida.
STANDARD DEATH BENEFIT. Under the standard death benefit,
if the Annuitant dies BEFORE AGE 75 and before the Maturity
Date, the Company will pay to the Beneficiary a death
benefit in an amount equal to the greatest of (1), (2) or
(3) below, less any applicable premium tax or prior
surrenders not previously deducted:
1) the Contract Value;
2) the total Purchase Payments made under the Contract; or
3) the Contract Value on the latest fifth contract year
anniversary immediately preceding the date on which the
Company receives due proof of death.
IF THE ANNUITANT DIES ON OR AFTER AGE 75, BUT BEFORE AGE 90
and before the Maturity Date, the Company will pay to the
Beneficiary a death benefit in an amount equal to the
greatest of (1), (2) or (3) below, less any applicable
premium tax or prior surrenders not previously deducted:
1) the Contract Value;
2) the total Purchase Payments made under the Contract; or
3) the Contract Value on the latest fifth contract year
anniversary occurring on or before the Annuitant's 75th
birthday.
THE ANNUITY PERIOD
MATURITY DATE
The maturity date may not be any date beyond the Annuitant's
90th birthday.
THE VARIABLE ANNUITY
Variable payouts are not permitted in Florida. Contract
Owners may only have their Contract Values applied to
provide a Fixed Annuity.
Disregard the "Variable Annuity" section described on page 19.
ELECTION OF OPTIONS
ON THE MATURITY DATE, OR OTHER AGREED-UPON DATE, THE COMPANY
WILL PAY AN AMOUNT PAYABLE UNDER THE CONTRACT IN ACCORDANCE
WITH THE PAYMENT OPTION SELECTED BY THE CONTRACT OWNER.
Election of an option must be made in writing in a form
satisfactory to the Company. Any election made during the
lifetime of the Annuitant must be made by the Contract
Owner. While the Annuitant is alive, the Contract Owner may
change a Settlement Option election by Written Request at
any time prior to the Maturity Date. Once Annuity or Income
Payments have begun, no further election changes are
allowed. During the Annuitant's lifetime, if no election
has been made prior to the Maturity Date, the Company will
pay to the Contract Owner the first of a series of monthly
Annuity Payments based on the life of the Annuitant, in
accordance with Annuity Option 2 (Life Annuity with 120
monthly payments assured). For certain tax-qualified
contracts, Annuity Option 4 (Joint and Last Survivor Joint
Life Annuity - Annuity Reduced on Death of Primary Payee)
will be the automatic option as described in the contract.
The minimum amount that can be placed under an Annuity or
Income Option will be $2,000 unless the Company consents to
a lesser amount. If any monthly periodic payment due any
payee is less than $100.00, the Company reserves the right
to make payments at less frequent intervals, or to pay the
Contract Value in one lump-sum payment.
<PAGE>
APPENDIX C
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
The Statement of Additional Information contains more
specific information and financial statements relating to
the Separate Account and The Travelers Insurance Company. A
list of the contents of the Statement of Additional
Information is set forth below:
The Insurance Company
The Separate Account and the Underlying Funds
The Travelers Fund BD for Variable Annuities
The Underlying Funds
Valuation of Assets
Performance Data
Distribution and Management Services
Principal Underwriter
Securities Custodian
Independent Accountants
Financial Statements
COPIES OF THE STATEMENT OF ADDITIONAL INFORMATION DATED MAY
1, 1995 (FORM NO. L-12253S) ARE AVAILABLE WITHOUT CHARGE.
TO REQUEST A COPY, PLEASE CLIP THIS COUPON ON THE DOTTED
LINE ABOVE, ENTER YOUR NAME AND ADDRESS IN THE SPACES
PROVIDED BELOW, AND MAIL TO: THE TRAVELERS INSURANCE
COMPANY, ANNUITY INVESTOR SERVICES -- 5SHS, ONE TOWER
SQUARE, HARTFORD, CONNECTICUT 06183-9061.
Name: ____________________________________________________________
Address: __________________________________________________________
___________________________________________________________________
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This page intentionally left blank.
<PAGE>
(THIS DOCUMENT IS NOT A PART OF THE PROSPECTUS)
THE TRAVELERS INSURANCE COMPANY IRA DISCLOSURE STATEMENT
This disclosure statement describes the general requirements of an
Individual Retirement Annuity (IRA) as well as the specific
features of The Travelers Insurance Company's Individual Retirement
Annuity (The Travelers IRA). It is provided in accordance with
Internal Revenue Service regulations.
REVOCATION
You may revoke your Travelers IRA at any time within 20 days after
the contract is delivered to you by mailing or delivering a
postmarked or dated written notice of revocation to The Travelers
within that 20-day period. Notice of revocation should be
submitted to: The Travelers Insurance Company, Annuity Investor
Services -- 6 NB, One Tower Square, Hartford, Connecticut
06183-9061. You may also mail or deliver the revocation notice to
our Agent. If you return the Contract within seven days of
delivery, then upon revocation you will be entitled to a full
refund of your IRA contribution without adjustment for
administrative expenses, sales commissions (if any) or
fluctuations in market value. If you return the Contract during the
remainder of the 20-day period, then upon revocation you will
receive your Contract Value, without reduction for contract
charges, but including the effects of any fluctuations in market
value. In addition, certain states require that your purchase
payments be refunded in full for all contracts, or for contracts
issued in replacement situations, for some or all of the 20-day
period. If you have any questions concerning your right of
revocation, please call 1-800-842-8573 during normal business
hours.
ANNUITY CONTRACT DESCRIPTION
Your Travelers IRA is an annuity contract issued in your name for
the exclusive benefit of you or your beneficiaries. The Contract
has the following features:
1. Your interest in the Contract is nonforfeitable.
2. Ownership of the Contract is not transferable.
3. The Contract may not be pledged or used as security for a loan.
4. The premiums are flexible. The initial minimum rollover amount
is $5,000. Annual contributions may not exceed $2,000 per year
except for rollover contributions or employer contributions to a
Simplified Employee Pension IRA, as discussed below.
5. You may begin to receive distributions under the Contract at any
time. The distributions may consist of a single sum, or of a
periodic annuity based upon life expectancy, or of a guaranteed
amount per year for a period of years, or of any other distribution
method agreed to by the Company.
6. You must begin to receive a minimum pattern of required
distributions from your IRA generally by no later than April 1st of
the year following the calendar year in which you reach the age of
70 1/2. By current regulatory grace, you may meet this requirement
alternatively by taking an appropriate amount from another IRA to
cover the required distribution from your Travelers IRA. The
required distribution may be taken in a single sum or over one of
the periods discussed below under "DISTRIBUTIONS."
7. If you die before distribution has begun, or after distribution
has begun but before the entire interest has been distributed, your
beneficiaries must receive distributions in the manner described
under "DISTRIBUTIONS."
8. CHARGES
(a) Contingent Deferred Sales Charges. There are no sales charges
deducted from purchase payments when they are received and applied
under the Contract. However, a contingent deferred sales charge
("surrender charge") will be applied if a full or partial surrender
of the contract value (from either the Fixed Account or any of the
Sub-Accounts) is made during the first six years following a
purchase payment. The surrender charge is equal to a percentage of
the amount withdrawn from the Contract (not to exceed the
aggregate amount of purchase payments made under the Contract), and
is calculated as follows:
<PAGE>
Length of time from
Purchase Payment Surrender
(Number of Years) Charge
1 6%
2 6%
3 6%
4 3%
5 2%
6 1%
7 and thereafter 0%
(b) Administrative Charges. An administrative charge of $30 will be
deducted annually from the Contract to compensate the Company for
expenses incurred in establishing and administering the Contract.
In addition, a Sub-Account Administrative Charge is deducted daily
from the Sub-Accounts in order to compensate the Company for
certain administrative and operating expenses of the Sub-Accounts.
The charge is equivalent, on an annual basis, to 0.15% of the
daily net asset value of the Sub-Accounts.
(c) Other Charges. Other charges deducted under the Contract are
set forth in the accompanying contract prospectus.
ELIGIBLE INDIVIDUALS
Anyone with earned income or compensation for services may
contribute to an IRA. If you or your spouse are active participants
in an employer sponsored retirement plan, your deductible
contributions may be limited as described under "CONTRIBUTIONS"
below.
CONTRIBUTIONS
MAXIMUM DEDUCTIBLE AMOUNT. If you are not married and you are not
an active participant in an employer-sponsored retirement plan, you
may make a fully deductible IRA contribution in any amount up to
the lesser of 100% of your earned income or compensation for the
year or $2,000. The same limits apply if you are married and
neither you nor your spouse is an active participant in an
employer-sponsored retirement plan. An "employer-sponsored
retirement plan" includes any of the following types of retirement
plans:
* a qualified pension/profit sharing described in IRC Section
401 (a) or 401 (k);
* a Simplified Employee Pension plan (SEP) described in IRC
Section 408(k);
* a pension or retirement plan maintained by a federal, state
or local government or agency or instrumentality thereof
(other than a plan described in IRC Section 457);
* tax sheltered annuities and custodial accounts described in
IRC Section 403(b);
* a qualified annuity plan under IRC Section 403(a); or
* a trust described in IRC Section 501 (c)(18).
You are an active participant in an employer-sponsored retirement
plan even if you do not have a vested right to any benefits under
the plan. Whether you are an "active participant" depends on the
type of plan maintained by your employer. Generally, you are
considered an active participant in a defined contribution plan if
an employer contribution or forfeiture was credited to your account
under the plan for the year. You are considered an active
participant in a defined benefit plan if you are eligible to
participate in the plan, even though you may elect not to
participate. You are also treated as an active participant for a
year during which you make a voluntary or mandatory contribution to
any type of plan, even though your employer makes no contribution
to the plan.
If you (or your spouse, if you are filing a joint tax return) are
covered by an employer-sponsored retirement plan, your
IRA contribution is tax deductible only to the extent that your
adjusted gross income does not exceed the limits discussed below.
The maximum deductible amount of your IRA contribution is reduced
proportionately for adjusted gross income which exceeds the
"applicable dollar amount." The applicable dollar amount is $25,000
for an individual and $40,000 for married couples filing a joint
tax return. The applicable dollar amount for married individuals
filing separate returns is $0. A husband and a wife who file
separate returns for a taxable year and who live apart at all times
during such taxable year are not treated as married individuals for
this purpose. If your
<PAGE>
adjusted gross income exceeds the applicable dollar amount by not
more than $10,000, you may make a deductible IRA contribution
but the deductible contribution will be proportionately less than
the maximum. "Adjusted gross income" for this purpose is computed
before your IRA deduction has been taken.
If you qualify for less than the maximum deductible amount, use the
following calculation to determine the amount of your deductible
contribution:
1. Subtract the applicable dollar amount (discussed above) from
your adjusted gross income. If the result is $10,000 or more, you
can only make a nondeductible contribution.
2. Subtract the amount determined in Step 1 from $10,000.
3. Divide the amount determined in Step 2 by $10,000.
4. Multiply $2,000 (or $2,250 if a spousal IRA) times the fraction
determined under Step 3. This is your maximum deductible
contribution limit.
If the adjusted dollar deduction limit is not a multiple of $10, it
should be rounded up to the next highest $10 increment. If the
amount calculated is less than $200 but more than zero, the
deductible contribution limit equals $200. The $200 minimum floor
on the deduction limit applies if your adjusted gross income does
not exceed $35,000 (for a single taxpayer), $50,000 (for married
taxpayers filing jointly), or $10,000 (for a married taxpayer
filing separately).
Adjusted gross income for married couples filing a joint tax return
is calculated by aggregating the compensation of both spouses. The
deduction limitations determined above apply to each individual.
NONDEDUCTIBLE AMOUNT. If you or your spouse are not eligible to
make the maximum deductible contribution to an IRA, you may make a
nondeductible contribution of up to the lesser of $2,000 ($2,250 if
a spousal IRA) or 100% of your compensation reduced by any
deductible IRA contribution. Earnings on all IRA contributions are
tax deferred until distribution.
You are required to report to the IRS on Form 8606 the extent to
which your IRA contribution is nondeductible. If you overstate the
amount of nondeductible contributions for a taxable year, a penalty
of $100 will be assessed for each overstatement unless you can show
that the overstatement was due to a reasonable cause and that steps
have been taken to correct the overstatement.
COMPENSATION. Compensation means wages, salaries, professional
fees, or other amounts derived from or received from personal
service actually rendered (including, but not limited to,
commissions) and includes earned income as defined in IRC Section
401 (c)(2). Compensation does not include amounts received as
earnings or profits from property or amounts not includible in
gross income. Compensation also does not include any amount
received as a pension or annuity or as deferred compensation. The
term "compensation" shall include any amount includible in the
individual's gross income under IRC Section 71 with respect to a
divorce or separation instrument.
TIME OF CONTRIBUTION. You may make contributions to your IRA at any
time up to and including the due date for filing your tax return
(without extensions) for the year. You may continue to make annual
contributions to your IRA up to (but not including) the calendar
year in which you reach age 70 1/2. You may continue to make annual
contributions to your spousal IRA up to (but not including) the
calendar year in which your spouse reaches age 70 1/2.
SIMPLIFIED EMPLOYEE PENSION (SEP-IRA)
A Simplified Employee Pension or "SEP" is a special IRA plan which
permits employers to make deductible Contributions to separate IRAs
established for their employees. If your employer has adopted a SEP
plan, your employer may make deductible SEP contributions directly
to your Travelers IRA each year in an amount of up to the lesser of
$30,000 or 15% of your current year compensation. The contributions
and any earnings thereon are not taxable until withdrawn. In
addition, you may make your own annual contributions to your IRA
each year up to the lesser of $2,000 or 100% of current year
compensation.
ELIGIBLE PARTICIPANTS. You will be able to participate in the SEP
maintained by your employer if:
1. You have attained age 21;
2. You have performed services for your employer during at least
three of the immediately preceding five years; and
3. You have received at least $300 in compensation from your
employer for the year.
<PAGE>
A sole proprietor or partnership may be eligible to establish a SEP
and make deductible SEP contributions to the separate IRAs established
by the sole proprietor or by the partners as well as for the IRAs
of any eligible common-law employees.
AGE 70 1/2 OR OLDER. A deductible contribution may be made by your
employer to a SEP even for years when you are age 70 1/2 or older.
ELECTIVE DEFERRALS. Certain employers that had 25 or fewer eligible
employees at all times during the preceding year and that have at
least 50% of eligible employees willing to elect a deferral may
make elective deferrals (or "pre-tax" salary reduction
contributions) of up to an indexed dollar amount for each year
($9,240 for 1994). Elective deferrals are treated as employer
contributions and are therefore counted against the $30,000/15%
overall compensation limit. Elective deferral contributions are
subject to Social Security, Medicare and unemployment tax
assessments or withholdings.
SPOUSAL IRA
REQUIREMENTS. You may establish a spousal IRA for your spouse
provided he or she has not received any compensation for the
taxable year or earned less than $250 and elects to be treated as
having no compensation for the taxable year, has not attained age
70 1/2 during your taxable year, and you file a joint tax return.
A separate annuity must be established for your spouse. The total
deduction for both your IRA and the spousal IRA is limited to the
lesser of $2,250 or 100% of the annual compensation includible in
your gross income. The contributions may be divided between each
IRA any way you wish, provided the total amount contributed to
either IRA does not exceed $2,000.
EXCESS CONTRIBUTIONS
EXCISE TAX. Generally, any contributions exceeding the limitations
discussed in "CONTRIBUTIONS" are excess contributions subject to a
nondeductible 6% excise tax. This excise tax is not applied if the
excess contribution and any interest earned on it up to the date
of distribution are withdrawn no later than the due date of your
return, plus any extensions. The interest element will be taxable
income to you in the tax year in which you receive it.
WITHDRAWAL OF EXCESS CONTRIBUTION . If the excess contribution and
interest thereon is withdrawn after the due date for filing your
return, and the excess contribution did not cause your total
contribution for the year to exceed $2,250 ($30,000 if a
Simplified Employee Pension) the 10% premature distribution tax
penalty will not apply. The excess contribution will not be
included in your gross income, provided no deduction was taken for
such excess contribution. The 6% excise tax will generally apply to
such amount, however.
ALTERNATE METHOD. An excess contribution may be eliminated in later
years where the maximum allowable contribution is not made. Thus,
if you make less than the maximum contribution allowed in any year
after the excess contribution is made, the difference between the
maximum allowable deduction and the amount contributed is used to
reduce the excess contribution and accumulated earnings. You may
use part of your current year allowable deduction to correct an
excess contribution provided no deduction was taken for the excess
contribution in the prior tax year.
FAILURE TO ELIMINATE EXCESS CONTRIBUTION. If an excess amount is
contributed in one year and not eliminated in later years, the
excess will be subject to a 6% excise tax each year until it has
been eliminated.
TAX STATUS
EXEMPT FROM TAX. Your contributions are generally tax deductible to
the extent described in "CONTRIBUTIONS" and any income earned from
the investment is not taxable until it is distributed.
LOSS OF EXEMPT STATUS. If any of the events prohibited under
Section 4975 of the Code (such as any sale, exchange or leasing of
any property between you and your IRA) occurs during the existence
of your IRA, your account will be disqualified and the entire
balance in your account will be treated as if distributed to you as
of the first day of the year in which the prohibited event occurs.
The "distribution" will be subject to ordinary income tax and, if
you are under age 59 1/2 at the time, it will also be subject to
the 10% penalty tax on premature distributions during the year in
which you make such a prohibited sale, exchange or leasing of
property or the like.
<PAGE>
ANNUAL INFORMATION. Financial information pertaining to your IRA
will be provided to you annually by the Company.
IRS FORM 5329. IRS Form 5329 should be filed with your tax return
for each taxable year during which penalty taxes are imposed on
excess contributions, premature distributions, prohibited
transactions, and excess accumulations.
DISTRIBUTIONS
COMMENCEMENT OF DISTRIBUTIONS. Distributions must begin by April
1st of the calendar year following the year in which you attain age
70 1/2. You may elect to receive your entire interest in a single
sum or you may elect a periodic distribution over either (a) your
life, (b) the lives of you and your designated beneficiary, (c) a
period not extending beyond your life expectancy, or (d) a period
not extending beyond the life expectancy of you and your designated
beneficiary.
DEATH AFTER COMMENCEMENT OF DISTRIBUTIONS. If you die after
distributions have begun, but before the entire interest has been
distributed, the entire remaining balance must be distributed at
least as rapidly as under the method of distribution in effect as
of the date of death.
DEATH BEFORE COMMENCEMENT OF DISTRIBUTIONS. If you die before
distributions have begun, the entire interest must be distributed
within 5 years after your death unless you have named a
beneficiary. The interest payable to the beneficiary may be
distributed over the life of the beneficiary (or over a period not
extending beyond the beneficiary's life expectancy) provided
distributions begin not later than one year after your death.
If your surviving spouse is the sole beneficiary, distributions are
not required until the date you would have attained age 70 1/2. If
your spouse then dies before distributions begin he or she will be
treated as the IRA contract owner, and the restrictions of the
above paragraph apply.
ORDINARY INCOME. Distributions from your IRA are taxed as ordinary
income regardless of their source. (See "Nondeductible
Contributions" below.) IRA distributions are not eligible for
capital gains treatment or the special 5 or 10-year averaging rules
that may apply to lump-sum distributions from qualified
pension/profit sharing plans. Payments from a life annuity spread
the tax over the duration of your life. Payments under the IRA
contract are taxable as you receive them.
ESTATE AND GIFT TAX. The value of an annuity or other payment
received by your beneficiary is generally includible in your gross
estate, but does not constitute a taxable gift to the beneficiary.
NONDEDUCTIBLE CONTRIBUTIONS. To the extent that a distribution
constitutes a return of your nondeductible contributions, it will
not be included in your income. The amount of any distribution
includible in income is the portion that bears the same ratio to
the total distribution that your aggregate nondeductible
contributions bear to the balance at the end of the year
(calculated after adding back distributions during the year) of
all your IRAs.
PREMATURE DISTRIBUTIONS. If you receive a payment from your IRA
before you attain age 59 1/2, the payment will be considered a
premature distribution unless such distribution is made on account
of death or disability, the distribution is made over life or life
expectancy, or a rollover contribution of the entire amount is made
to another IRA within 60 days. The amount received will then be
included in your gross income for the taxable year of receipt. In
addition, if no exception applies, your income tax liability for
that tax year is increased by an amount equal to 10% of the amount
includible in your gross income. Distributions up to the amount of
your nondeductible contributions are not subject to the 10% penalty
tax, but any earnings on your nondeductible contributions will be
subject to the 10% penalty tax. Use IRS Form 5329 to report and
calculate the 10% tax penalty.
50% EXCISE TAX. Once payments are required to commence, a minimum
distribution is calculated based on your life expectancy or the
joint life expectancy of you and your beneficiary. A 50%
nondeductible excise tax may be imposed on an under-distribution,
representing the difference between the minimum payout required for
the tax year in question and the amount actually paid out to you.
Use IRS Form 5329 to calculate and report the tax.
For example, if the minimum payout that you should receive is
$1,000 for the taxable year and you only receive $600, an excise
tax of $200 (50% of the $400 under-payment) may apply. Payments
received under a life annuity commencing not later than age 70 1/2
avoid this excise tax.
<PAGE>
ROLLOVER TO ANOTHER IRA. The proceeds of your IRA or any portion
may be used as a rollover contribution to another IRA. This
rollover will avoid taxation to the extent you reinvest the
distribution within 60 days of when you receive it. A rollover of
this nature may occur only once a year.
ROLLOVER CONTRIBUTIONS
QUALIFIED RETIREMENT PLAN TO IRA. You may roll over to an IRA any
taxable portion of your balance in a qualified pension or
profit-sharing plan, or in a tax-sheltered annuity qualified under
Section 403(b) of the Internal Revenue Code, except generally for
the following:
(a) any distribution that is part of a series of substantially
equal payments made over your life or life expectancy or the joint
life expectancies of you and your spouse;
(b) any distribution made for a specified period of ten years or
more; and
(c) any distribution which is a required minimum distribution
described above under "DISTRIBUTIONS."
If you are subsequently covered under another qualified pension or
profit-sharing plan which accepts rollover contributions, you may
transfer the assets of a rollover IRA into the new plan, provided
the rollover IRA assets were not commingled with other IRA
contributions.
If an IRA rollover from a qualified pension or profit-sharing plan
or from a tax-sheltered annuity is not conducted by means of a
"direct rollover" of funds between qualified plan and IRA trustees,
custodians or issuers, then 20% mandatory federal income tax
withholding will be taken from the distribution. You will not have
the right to elect out of this withholding. Qualified plans and
tax-sheltered annuity plans and arrangements must offer you the
option of transferring distributed amounts eligible for rollover by
direct rollover. If you elect not to use a direct rollover but do
deposit the net taxable distribution in an IRA within 60 days from
your receipt of the amount, you may make up the 20% withheld from
any other funds that you have available. If you receive a
distribution check from a qualified plan or tax-sheltered annuity
that is negotiable only by the IRA trustee, custodian or issuer of
the IRA to which you want the rollover to go, you may forward that
check immediately but no later than 60 days to the IRA trustee,
custodian or issuer and the Internal Revenue Service will accept
the transaction as a direct rollover.
LIMITATIONS. Rollovers must be completed within 60 days after
receipt of the distribution. If the distribution is from a
qualified pension/profit sharing plan or a tax sheltered annuity
and if property other than cash is distributed, you must roll over
the property in the form received and may not first convert it to
cash.
IRS APPROVAL
The annuity contracts used in our IRA Program have not received
Internal Revenue Service approval as to form. We have filed for
this approval. The approval, when obtained, does not represent a
determination of the merits of such contracts.
FURTHER INFORMATION Further information may be obtained from any
district office of the Internal Revenue Service.
<PAGE>
FINANCIAL INFORMATION FIXED ACCOUNT
The following tables illustrate the potential growth of The
Travelers Fixed Account based on assumed contribution levels:
1. Assumed annual premium of $1,000
2. Assumed single premium rollover of $1,000, and
3. Assumed initial $1,000 rollover plus $1,000 level annual
premium.
The tables show guaranteed contract values and cash surrender
values. These tables are applicable only to the Fixed Account of
the Contract.
SALES CHARGES
There are no initial sales charges.
DEFERRED SALES CHARGES
See "Annuity Contract Description - Contingent Deferred Sales
Charges."
Vintage Annuity
Cash Values
Assumed Annual Premium $1,000
Guaranteed Minimum Interest Rate is 3.00%
AT END OF WITH WITHOUT
CONTRACT SURRENDER SURRENDER
YEAR CHARGE CHARGE
---- ------- ---------
1 $970 $1,030
2 $1,970 $2,090
3 $3,003 $3,183
4 $4,099 $4,309
5 $5,238 $5,468
6 $6,422 $6,662
Vintage Annuity
Cash Values
Assumed Single Premium Rollover of $1000
Guaranteed Minimum Interest Rate is 3.00%
AT END OF WITH WITHOUT
CONTRACT SURRENDER SURRENDER
YEAR CHARGE CHARGE
---- ------- ---------
1 $970 $1,030
2 $1,000 $1,060
3 $1,032 $1,092
4 $1,095 $1,125
5 $1,139 $1,159
6 $1,184 $1,194
<PAGE>
Vintage Annuity
Cash Values
Assumed Annual Premium $1,000
Guaranteed Minimum Interest Rate is 3.00%
<TABLE>
<CAPTION>
ISSUE
AGE ATTAINED AGE 60 ATTAINED AGE 65 ATTAINED AGE 70
WITH WITHOUT WITH WITHOUT WITH WITHOUT
SURRENDER SURRENDER SURRENDER SURRENDER SURRENDER SURRENDER
CHARGE CHARGE CHARGE CHARGE CHARGE CHARGE
<S> <C> <C> <C> <C> <C> <C>
18 84,243 84,483 103,168 103,408 125,107 125,347
19 80,783 81,023 99,156 99,396 120,456 120,696
20 77,423 77,663 95,261 95,501 115,940 116,180
21 74,161 74,401 91,479 91,719 111,556 111,796
22 70,994 71,234 87,808 88,048 107,300 107,540
23 67,919 68,159 84,243 84,483 103,168 103,408
24 64,934 65,174 80,783 81,023 99,156 99,396
25 62,035 62,275 77,423 77,663 95,261 95,501
26 59,222 59,462 74,161 74,401 91,479 91,719
27 56,490 56,730 70,994 71,234 87,808 88,048
28 53,837 54,077 67,919 68,159 84,243 84,483
29 51,262 51,502 64,934 65,174 80,783 81,023
30 48,762 49,002 62,035 62,275 77,423 77,663
31 46,335 46,575 59,222 59,462 74,161 74,401
32 43,978 44,218 56,490 56,730 70,994 71,234
33 41,690 41,930 53,837 54,077 67,919 68,159
34 39,469 39,709 51,262 51,502 64,934 65,174
35 37,313 37,553 48,762 49,002 62,035 62,275
36 35,219 35,459 46,335 46,575 59,222 59,462
37 33,186 33,426 43,978 44,218 56,490 56,730
38 31,212 31,452 41,690 41,930 53,837 54,077
39 29,296 29,536 39,469 39,709 51,262 51,502
40 27,436 27,676 37,313 37,553 48,762 49,002
41 25,630 25,870 35,219 35,459 46,335 46,575
42 23,876 24,116 33,186 33,426 43,978 44,218
43 22,174 22,414 31,212 31,452 41,690 41,930
44 20,521 20,761 29,296 29,536 39,469 39,709
45 18,916 19,156 27,436 27,676 37,313 37,553
46 17,358 17,598 25,630 25,870 35,219 35,459
47 15,846 16,086 23,876 24,116 33,186 33,426
48 14,377 14,617 22,174 22,414 31,212 31,452
49 12,952 13,192 20,521 20,761 29,296 29,536
50 11,567 11,807 18,916 19,156 27,436 27,676
51 10,223 10,463 17,358 17,598 25,630 25,870
52 8,919 9,159 15,846 16,086 23,876 24,116
53 7,652 7,892 14,377 14,617 22,174 22,414
54 6,422 6,662 12,952 13,192 20,521 20,761
55 5,238 5,468 11,567 11,807 18,916 19,156
56 4,099 4,309 10,223 10,463 17,358 17,598
57 3,003 3,183 8,919 9,159 15,846 16,086
58 1,970 2,090 7,652 7,892 14,377 14,617
59 970 1,030 6,422 6,662 12,952 13,192
60 5,238 5,468 11,567 11,807
61 4,099 4,309 10,223 10,463
62 3,003 3,183 8,919 9,159
63 1,970 2,090 7,652 7,892
64 970 1,030 6,422 6,662
65 5,238 5,468
66 4,099 4,309
67 3,003 3,183
68 1,970 2,090
69 970 1,030
70
</TABLE>
<PAGE>
Vintage Annuity
Cash Values
Assumed Single Premium Rollover $1,000
Guaranteed Minimum Interest Rate is 3.00%
<TABLE>
<CAPTION>
ISSUE
AGE ATTAINED AGE 60 ATTAINED AGE 65 ATTAINED AGE 70
WITH WITHOUT WITH WITHOUT WITH WITHOUT
SURRENDER SURRENDER SURRENDER SURRENDER SURRENDER SURRENDER
CHARGE CHARGE CHARGE CHARGE CHARGE CHARGE
<S> <C> <C> <C> <C> <C> <C>
18 3,460 3,460 4,011 4,011 4,650 4,650
19 3,359 3,359 3,895 3,895 4,515 4,515
20 3,262 3,262 3,781 3,781 4,383 4,383
21 3,167 3,167 3,671 3,671 4,256 4,256
22 3,074 3,074 3,564 3,564 4,132 4,132
23 2,985 2,985 3,460 3,460 4,011 4,011
24 2,898 2,898 3,359 3,359 3,895 3,895
25 2,813 2,813 3,262 3,262 3,781 3,781
26 2,731 2,731 3,167 3,167 3,671 3,671
27 2,652 2,652 3,074 3,074 3,564 3,564
28 2,575 2,575 2,985 2,985 3,460 3,460
29 2,500 2,500 2,898 2,898 3,359 3,359
30 2,427 2,427 2,813 2,813 3,262 3,262
31 2,356 2,356 2,731 2,731 3,167 3,167
32 2,287 2,287 2,652 2,652 3,074 3,074
33 2,221 2,221 2,575 2,575 2,985 2,985
34 2,156 2,156 2,500 2,500 2,898 2,898
35 2,093 2,093 2,427 2,427 2,813 2,813
36 2,032 2,032 2,356 2,356 2,731 2,731
37 1,973 1,973 2,287 2,287 2,652 2,652
38 1,916 1,916 2,221 2,221 2,575 2,575
39 1,860 1,860 2,156 2,156 2,500 2,500
40 1,806 1,806 2,093 2,093 2,427 2,427
41 1,753 1,753 2,032 2,032 2,356 2,356
42 1,702 1,702 1,973 1,973 2,287 2,287
43 1,652 1,652 1,916 1,916 2,221 2,221
44 1,604 1,604 1,860 1,860 2,156 2,156
45 1,557 1,557 1,806 1,806 2,093 2,093
46 1,512 1,512 1,753 1,753 2,032 2,032
47 1,468 1,468 1,702 1,702 1,973 1,973
48 1,425 1,425 1,652 1,652 1,916 1,916
49 1,384 1,384 1,604 1,604 1,860 1,860
50 1,343 1,343 1,557 1,557 1,806 1,806
51 1,304 1,304 1,512 1,512 1,753 1,753
52 1,266 1,266 1,468 1,468 1,702 1,702
53 1,229 1,229 1,425 1,425 1,652 1,652
54 1,184 1,194 1,384 1,384 1,604 1,604
55 1,139 1,159 1,343 1,343 1,557 1,557
56 1,095 1,125 1,304 1,304 1,512 1,512
57 1,032 1,092 1,266 1,266 1,468 1,468
58 1,000 1,060 1,229 1,229 1,425 1,425
59 970 1,030 1,184 1,194 1,384 1,384
60 1,139 1,159 1,343 1,343
61 1,095 1,125 1,304 1,304
62 1,032 1,092 1,266 1,266
63 1,000 1,060 1,229 1,229
64 970 1,030 1,184 1,194
65 1,139 1,159
66 1,095 1,125
67 1,032 1,092
68 1,000 1,060
69 970 1,030
70
</TABLE>
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
<PAGE>
VINTAGE
STATEMENT OF ADDITIONAL INFORMATION
dated
May 1, 1995
for
THE TRAVELERS FUND BD FOR VARIABLE ANNUITIES
ISSUED BY
THE TRAVELERS INSURANCE COMPANY
This Statement of Additional Information is not a prospectus but relates to,
and should be read in conjunction with, the Individual Variable Annuity
Contract Prospectus dated May 1, 1995. A copy of the Prospectus may be
obtained by writing to The Travelers Insurance Company, Annuity Services - 5
SHS, One Tower Square, Hartford, Connecticut 06183-9061, or by calling
1-800-842-8573.
TABLE OF CONTENTS
THE INSURANCE COMPANY 2
THE SEPARATE ACCOUNT AND THE UNDERLYING FUNDS 2
The Travelers Fund BD for Variable Annuities (Fund BD) 2
The Underlying Funds 2
PERFORMANCE INFORMATION 3
VALUATION OF ASSETS 5
PRINCIPAL UNDERWRITER 5
DISTRIBUTION AND MANAGEMENT AGREEMENT 5
INDEPENDENT ACCOUNTANTS 6
FINANCIAL STATEMENTS 6
<PAGE>
THE INSURANCE COMPANY
The Travelers Insurance Company (the "Company"), is a stock insurance
company chartered in 1864 in Connecticut and continuously engaged in
the insurance business since that time. The Company is licensed to conduct
a life insurance business in all states of the United States, the District
of Columbia, Puerto Rico, Guam, the U.S. and British Virgin Islands,
and the Bahamas. The Company's Home Office is located at One Tower Square,
Hartford, Connecticut 06183, and its telephone number is (203) 277-0111.
The Company is a wholly owned subsidiary of The Travelers Insurance
Group Inc., which is indirectly owned, through a wholly owned subsidiary, by
Travelers Group Inc., a financial services holding company engaged, through
its subsidiaries, principally in four business segments: (i) Investment
Services; (ii) Consumer Finance Services; (iii) Life Insurance Services; and
(iv) Property and Casualty Insurance Services.
THE SEPARATE ACCOUNT AND THE UNDERLYING FUNDS
THE TRAVELERS FUND BD FOR VARIABLE ANNUITIES (FUND BD)
Fund BD was established on October 22, 1993 pursuant to the
insurance laws of the State of Connecticut, and is registered with the
Securities and Exchange Commission ("SEC") as a unit investment trust under
the Investment Company Act of 1940, as amended (the "1940 Act"). The assets
of Fund BD will be invested exclusively in shares of the Underlying Funds.
Fund BD meets the definition of a separate account under the federal
securities laws, and will comply with the provisions of the 1940 Act.
Registration of Fund BD with the SEC does not involve supervision
by the SEC of the management or investment policies of Fund BD.
Additionally, the operations of each of the Separate Accounts are subject to
the provisions of Section 38a-433 of the Connecticut General Statutes which
authorizes the Connecticut Insurance Commissioner to adopt regulations under
it. The Section contains no restrictions on the investments of Fund BD, and
the Commissioner has adopted no regulations under the Section that affect
the Separate Account.
Under Connecticut law, the assets of Fund BD will be held for the
exclusive benefit of Contract Owners and the persons entitled to payment
under the Contract offered by the Prospectus. The assets held in Fund BD are
not chargeable with liabilities arising out of any other business which the
Company may conduct. Any obligations arising under the Contract are general
obligations of the Company.
THE UNDERLYING FUNDS
Purchase Payments applied to Fund BD will be invested in one or
more of the available Underlying Funds at net asset value in accordance with
the selection made by the Contract Owner. Contract Owners may change their
selection without fee, penalty or charge. All investment income and other
distributions of Fund BD are reinvested in fund shares at net asset value.
The funds are required to redeem fund shares at net asset value and to make
payment within seven days. Shares of the Underlying Funds described below
are currently sold to separate accounts of the Company in connection with its
variable annuity products; additionally, some of the Underlying Fund shares
may also be sold to other separate accounts of the Company in connection with
its variable life insurance products, or to other insurance companies in
connection with such companies' variable annuity and variable life insurance
products. Fund shares are not sold to the general public. Available mutual
funds may be added or withdrawn as permitted by applicable law.
Fund BD currently invests in the following Underlying Funds:
SMITH BARNEY/TRAVELERS SERIES FUND INC.:
SMITH BARNEY INCOME AND GROWTH PORTFOLIO. The objective of the Income and
Growth Portfolio is current income and long-term growth of income and
capital by investing primarily, but not exclusively, in common stocks.
ALLIANCE GROWTH PORTFOLIO. The objective of the Growth Portfolio is
long-term growth of capital by investing predominantly in equity
securities of companies with a favorable outlook for earnings and whose
rate of growth is expected to exceed that of the U.S. economy over time.
Current income is only an incidental consideration.
<PAGE>
AMERICAN CAPITAL ENTERPRISE PORTFOLIO. The Enterprise Portfolio's
objective is capital appreciation through investment in securities
believed to have above-average potential for capital appreciation. Any
income received on such securities is incidental to the objective of
capital appreciation.
SMITH BARNEY INTERNATIONAL EQUITY PORTFOLIO. The objective of the
International Equity Portfolio is total return on assets from growth of
capital and income by investing at least 65% of its assets in a
diversified portfolio of equity securities of established non-U.S.
issuers.
SMITH BARNEY PACIFIC BASIN PORTFOLIO. The Pacific Basin Portfolio's
objective is long-term capital appreciation through investment primarily
in equity securities of companies in Asian Pacific Countries.
TBC MANAGED INCOME PORTFOLIO. The objective of the Managed Income
Portfolio is to seek high current income consistent with prudent risk of
capital through investments in corporate debt obligations, preferred
stocks, and obligations issued or guaranteed by the U.S. Government or
its agencies or instrumentalities.
PUTNAM DIVERSIFIED INCOME PORTFOLIO. The objective of the Diversified
Income Portfolio is to seek high current income consistent with
preservation of capital. The Portfolio will allocate its investments
among the U.S. Government Sector, the High Yield Sector, and the
International Sector of the fixed income securities markets. (Please
read carefully the complete risk disclosure in the Portfolio's
prospectus before investing.)
G.T. GLOBAL STRATEGIC INCOME PORTFOLIO. The Strategic Income Portfolio's
investment objective is primarily to seek high current income and
secondarily to seek capital appreciation. The Portfolio allocates its
assets among debt securities of issuers in the United States, developed
foreign countries, and emerging markets. (Please read carefully the
complete risk disclosure in the Portfolio's prospectus before
investing.)
SMITH BARNEY HIGH INCOME PORTFOLIO. The investment objective of the High
Income Portfolio is high current income. Capital appreciation is a
secondary objective. The Portfolio will invest at least 65% of its
assets in high-yielding corporate debt obligations and preferred stock.
(Please read carefully the complete risk disclosure in the Portfolio's
prospectus before investing.)
MFS TOTAL RETURN PORTFOLIO. The Total Return Portfolio's objective is to
obtain above-average income (compared to a portfolio entirely invested
in equity securities) consistent with the prudent employment of capital.
Generally, at least 40% of the Portfolio's assets will be invested in
equity securities. (Please read carefully the complete risk disclosure
in the Portfolio's prospectus before investing.)
SMITH BARNEY MONEY MARKET PORTFOLIO. The investment objective of the Money
Market Portfolio is maximum current income and preservation of capital
by investing in high quality, short-term money market instruments.
The following is a separate series of shares of the Smith Barney Series Fund
Inc. and is also an investment option under Fund BD:
SMITH BARNEY TOTAL RETURN PORTFOLIO. The investment objective of the Smith
Barney Total Return Portfolio is to provide total return, consisting of
long-term capital appreciation and income. The Portfolio will seek to
achieve its goal by investing primarily in a diversified portfolio of
dividend-paying common stocks. (Please read carefully the complete risk
disclosure in the Portfolio's prospectus before investing.)
Each Underlying Fund is subject to certain investment restrictions
which may not be changed without the approval of a "majority vote of the
outstanding voting securities" of that Portfolio (as defined in the 1940
Act). There is no assurance that the Underlying Funds will achieve their
stated objectives.
More detailed information regarding the Underlying Funds may be
found in the current Prospectuses and Statements of Additional Information
for the Underlying Funds.
PERFORMANCE INFORMATION
From time to time, the Company may advertise several types of
historical performance for Sub-Accounts of Fund BD. The Company may
advertise the "standardized average annual total returns" of the
Sub-Accounts, calculated in a manner prescribed by the Securities and
Exchange Commission, as well as the "non-standardized total return", as
described below:
STANDARDIZED METHOD. Quotations of average annual total return are
computed according to a formula in which a hypothetical initial investment of
$1,000 is applied to the Sub-Account, and then related to ending
<PAGE>
redeemable values over one, five and ten year periods, or for a period
covering the time during which the Underlying Fund held in the Sub-Account
has been in existence if the Underlying Fund has not been in existence for
one of the prescribed periods. These quotations reflect the deduction of all
recurring charges during each period (on a pro rata basis in the case of
fractional periods). The deduction for the semiannual administrative charge
($15) is converted to a percentage of assets based on the actual fee
collected, divided by the average net assets per contract sold under the
Prospectus to which this Statement of Additional Information relates. Each
quotation assumes a total redemption at the end of each period with the
assessment of any applicable Contingent Deferred Sales Charge at that time.
NON-STANDARDIZED METHOD. Non-standardized "total return" will be
calculated in a similar manner based on the performance of the Sub-Account
over a period of time, usually for the calendar year-to-date, and for the
past one-, three-, five- and seven-year periods. Non-standardized total
return will not reflect the deduction of any applicable Contingent Deferred
Sales Charge or the $15 semiannual contract administrative charge, which, if
reflected, would decrease the level of performance shown. The Contingent
Deferred Sales Charge is not reflected because the Contract is designed for
long-term investment.
GENERAL. Within the guidelines prescribed by the SEC and the
National Association of Securities Dealers, Inc. ("NASD"), performance
information may be quoted numerically or may be presented in a table, graph
or other illustration. Advertisements may include data comparing performance
to well-known indices of market performance (including, but not limited to,
the Dow Jones Industrial Average, the Standard & Poor's (S&P) 500 Index and
the S&P 400 Index, the Lehman Brothers Long T-Bond Index, the Russell 1000,
2000 and 3000 Indices, the Value Line Index, and the Morgan Stanley Capital
International's EAFE Index). Advertisements may also include published
editorial comments and performance rankings compiled by independent
organizations (including, but not limited to, Lipper Analytical Services,
Inc. and Morningstar, Inc.) and publications that monitor the performance of
Fund BD and the Underlying Funds.
For Sub-Accounts that invest in Underlying Funds that were in
existence prior to the date the Underlying Funds became available under Fund
BD, the standardized average total return and non-standardized total return
quotations will show the investment performance that such Underlying Funds
would have achieved (reduced by the applicable charges) had they been held as
Sub-Accounts under the Contract for the period quoted. The total return
quotations are based upon historical earnings and are not necessarily
representative of future performance. An Owner's Contract Value at redemption
may be more or less than original cost.
Average annual total returns for each of the Sub-Accounts computed
according to the standardized and non-standardized methods for the period
ending December 31, 1994 (beginning at inception date) are set forth in the
following table.
<TABLE>
<CAPTION>
TOTAL RETURN CALCULATIONS
SUB-ACCOUNTS OF FUND BD
STANDARDIZED NON-STANDARDIZED
Regular Enhanced Regular Enhanced Inception
1 Year 1 Year 1 Year 1 Year Date
<S> <C> <C> <C> <C> <C>
Smith Barney Income
and Growth Portfolio (7.78)% (7.91)% (1.85)% (2.00)% 6/94
Alliance Growth Portfolio (1.32)% (1.48)% 4.72% 4.56% 6/94
American Capital Enterprise
Portfolio (2.18)% (2.33)% 3.86% 3.71% 6/94
Smith Barney International
Equity Portfolio (10.27)% (10.40)% (4.51)% (4.65)% 6/94
Smith Barney Pacific Basin
Portfolio (15.50)% (15.62)% (10.07)% (10.20)% 6/94
TBC Managed Income
Portfolio (6.35)% (6.48)% (0.33)% (0.48)% 6/94
<PAGE>
TOTAL RETURN CALCULATIONS
SUB-ACCOUNTS OF FUND BD (Continued)
STANDARDIZED NON-STANDARDIZED
Regular Enhanced Regular Enhanced Inception
1 Year 1 Year 1 Year 1 Year Date
Putnam Diversified Income
Portfolio (5.19)% (5.34)% 0.85% 0.70% 6/94
G.T. Global Strategic
Income Portfolio (11.21)% (11.34)% (5.51)% (5.64)% 6/94
Smith Barney High Income
Portfolio (7.20)% (7.34)% (1.24)% (1.39)% 6/94
MFS Total Return Portfolio (8.03)% (8.17)% (2.12)% (2.46)% 6/94
Smith Barney Money Market
Portfolio (4.47)% (4.62)% 1.57% 1.42% 6/94
Smith Barney Total Return
Portfolio (4.99)% (5.02)% 1.36% 1.12% 11/94
</TABLE>
VALUATION OF ASSETS
The value of the assets of each Underlying Fund is determined on
each Valuation Date as of the close of the New York Stock Exchange. Each
security traded on a national securities exchange is valued at the last
reported sale price on the Valuation Date. If there has been no sale on that
day, then the value of the security is taken to be the mean between the
reported bid and asked prices on the Valuation Date or on the basis of
quotations received from a reputable broker or any other recognized source.
Any security not traded on a securities exchange but traded in the
over-the-counter-market and for which market quotations are readily available
is valued at the mean between the quoted bid and asked prices on the
Valuation Date or on the basis of quotations received from a reputable broker
or any other recognized source.
Securities traded on the over-the-counter-market and listed securities with
no reported sales are valued at the mean between the last reported bid and
asked prices or on the basis of quotations received from a reputable broker
or other recognized source.
Short-term investments for which a quoted market price is available
are valued at market. Short-term investments maturing in more than sixty days
for which there is no reliable quoted market price are valued by computing a
market value based upon quotations from dealers or issuers for securities of
a similar type, quality and maturity. This computation takes into account
unrealized appreciation or depreciation due to changes in interest rates or
other factors which would influence the current fair values of such
securities. Short-term investments maturing in sixty days or less for which
there is no reliable quoted market price are valued at amortized cost which
approximates market.
PRINCIPAL UNDERWRITER
Travelers Equities Sales, Inc. ("TESI"), an affiliate of the
Company, serves as principal underwriter for Fund BD and the Contracts. The
offering is continuous. TESI is an indirect wholly owned subsidiary of
Travelers Group Inc. and its principal executive offices are located at One
Tower Square, Hartford, Connecticut.
DISTRIBUTION AND MANAGEMENT AGREEMENT
Under the terms of the Distribution and Management Agreement among
Fund BD, the Company and TESI, the Company provides all administrative
services and mortality and expense risk guarantees related to variable
annuity contracts sold by the Company in connection with the Fund BD. TESI
performs the sales functions related to the Contracts. The Company
reimburses TESI for commissions paid, other sales expenses and certain
overhead expenses connected with sales functions. The Company also pays all
costs (including costs associated with
<PAGE>
the preparation of sales literature); all costs of qualifying the Fund BD
and the variable annuity contract with regulatory authorities; the costs
of proxy solicitation; and all custodian, accountant's and legal fees.
The Company also provides without cost to the Fund BD all necessary office
space, facilities, and personnel to manage its affairs.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., Independent Accountants, 100 Pearl
Street, Hartford, Connecticut, are the independent auditors for Fund BD. The
services provided to Fund BD include primarily the examination of the Fund's
financial statements. The Financial Statements have been audited by Coopers
& Lybrand L.L.P., as indicated in their reports thereon, and are included
herein in reliance upon the authority of said firm as expers in accounting
and auditing.
FINANCIAL STATEMENTS
The financial statements of Fund BD for the year ended December 31,
1994 are contained herein.
The financial statements of the Company as of December 31, 1994 are
also contained herein; however they should be considered only as bearing upon
the Company's ability to meet its obligations under the Contract, and they
should not be considered as bearing on the investment performance of Fund BD.
<PAGE>
VINTAGE
STATEMENT OF ADDITIONAL INFORMATION
Individual Variable Annuity Contract
issued by
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183
L-12253S
May, 1995
<PAGE> 1
Independent Auditors' Report
The Board of Directors and Shareholder of
The Travelers Insurance Company and Subsidiaries:
We have audited the accompanying consolidated balance sheets of The Travelers
Insurance Company and Subsidiaries as of December 31, 1994 and 1993, and the
related consolidated statements of operations and retained earnings and cash
flows for the year ended December 31, 1994. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of The Travelers
Insurance Company and Subsidiaries as of December 31, 1994 and 1993, and the
results of their operations and their cash flows for the year ended December
31, 1994, in conformity with generally accepted accounting principles.
As discussed in Note 2 to the consolidated financial statements, the Company
adopted the provisions of Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities", in 1994.
/s/KPMG PEAT MARWICK LLP
Hartford, Connecticut
January 17, 1995
16
<PAGE> 2
Report of Independent Accountants
To the Board of Directors and Shareholder of
The Travelers Insurance Company and Subsidiaries:
We have audited the consolidated statements of operations and retained earnings
and cash flows of The Travelers Insurance Company and Subsidiaries for the year
ended December 31, 1993. These consolidated financial statements are the
responsibility of Company management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management as well as
evaluating the overall consolidated financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated results of operations and
cash flows of The Travelers Insurance Company and Subsidiaries for the year
ended December 31, 1993 in conformity with generally accepted accounting
principles.
/S/ COOPERS & LYBRAND
Hartford, Connecticut
January 24, 1994
17
<PAGE> 3
Report of Independent Accountants
To the Board of Directors and Shareholder of
The Travelers Insurance Company and Subsidiaries:
We have audited the consolidated statements of operations and retained earnings
and cash flows for The Travelers Insurance Company and Subsidiaries for the
year ended December 31, 1992. These consolidated financial statements are the
responsibility of Company management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall consolidated financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated results of
operations and cash flows of The Travelers Insurance Company and Subsidiaries
for the year ended December 31, 1992 in conformity with generally accepted
accounting principles.
As discussed in Notes 2, 5, 10 and 13 to the consolidated financial statements,
the Company changed its method of accounting for postretirement benefits other
than pensions, accounting for income taxes and accounting for foreclosed assets
in 1992.
/S/ COOPERS & LYBRAND
Hartford, Connecticut
February 9, 1993, except for Notes 2 and 5,
as to which the date is January 24, 1994
18
<PAGE> 4
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS AND RETAINED EARNINGS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------|------------------------------
(for the year ended December 31, in millions) 1994 | 1993 1992
- --------------------------------------------------------------------------|------------------------------
|
<S> <C> | <C> <C>
REVENUES |
Premiums $ 3,861 | $ 2,725 $ 2,686
Net investment income 1,849 | 1,884 2,101
Realized investment gains (losses) 14 | (21) (747)
Other 1,023 | 859 785
- --------------------------------------------------------------------------|------------------------------
6,747 | 5,447 4,825
- --------------------------------------------------------------------------|------------------------------
BENEFITS AND EXPENSES |
Current and future insurance benefits 3,421 | 3,121 3,000
Interest credited to contractholders 967 | 1,206 1,456
Claim settlement expenses 193 | 231 264
Amortization of deferred acquisition costs and value of |
insurance in force 284 | 55 61
General and administrative expenses 1,025 | 751 987
- --------------------------------------------------------------------------|------------------------------
5,890 | 5,364 5,768
- --------------------------------------------------------------------------|------------------------------
|
Income (loss) before federal income taxes |
and cumulative effects |
of changes in accounting principles 857 | 83 (943)
- --------------------------------------------------------------------------|------------------------------
|
Federal income taxes: |
Current 36 | 20 2
Deferred 276 | (78) (340)
- --------------------------------------------------------------------------|------------------------------
312 | (58) (338)
- --------------------------------------------------------------------------|------------------------------
|
Income (loss) before cumulative effects of changes |
in accounting principles 545 | 141 (605)
Cumulative effect of change in accounting |
for postretirement benefits other than |
pensions, net of tax - | - (126)
Cumulative effect of change in accounting |
for income taxes - | - 350
- --------------------------------------------------------------------------|------------------------------
|
Net income (loss) 545 | 141 (381)
Retained earnings beginning of year 1,017 | 888 1,281
Dividends to parent company - | (14) (14)
Preference stock tax benefit allocated by parent - | 2 2
- --------------------------------------------------------------------------|------------------------------
Retained earnings end of year $ 1,562 | $ 1,017 $ 888
- --------------------------------------------------------------------------|------------------------------
</TABLE>
See notes to consolidated financial statements.
19
<PAGE> 5
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
(at December 31, in millions) 1994 1993
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Fixed maturities, available for sale at market in 1994 (cost, $18,579);
at lower of aggregate cost or market in 1993 (market, $18,284) $17,260 $18,045
Bonds, held for investment (market, $18) - 18
Equity securities, at market (cost, $173; $199) 169 220
Mortgage loans 4,938 6,845
Real estate held for sale, net of accumulated depreciation of $9; $0 383 954
Policy loans 1,581 1,366
Short-term securities 2,279 1,376
Other investments 885 687
- ---------------------------------------------------------------------------------------------------------
Total investments 27,495 29,511
- ---------------------------------------------------------------------------------------------------------
Cash 102 50
Investment income accrued 362 379
Premium balances receivable 215 224
Reinsurance recoverable 2,915 2,883
Deferred acquisition costs and value of insurance in force 1,939 1,794
Deferred federal income taxes 950 855
Separate and variable accounts 5,160 4,666
Other assets 1,397 979
- ---------------------------------------------------------------------------------------------------------
Total assets $40,535 $41,341
- ---------------------------------------------------------------------------------------------------------
LIABILITIES
Contractholder funds $16,354 $17,850
Future policy benefits 11,480 11,263
Policy and contract claims 1,222 1,274
Separate and variable accounts 5,128 4,644
Short-term debt 74 -
Other liabilities 1,923 2,007
- ---------------------------------------------------------------------------------------------------------
Total liabilities 36,181 37,038
- ---------------------------------------------------------------------------------------------------------
SHAREHOLDER'S EQUITY
Common stock, par value $2.50; 40 million
shares authorized, issued and outstanding 100 100
Additional paid-in capital 3,452 3,179
Unrealized investment gains (losses), net of taxes (760) 7
Retained earnings 1,562 1,017
- ---------------------------------------------------------------------------------------------------------
Total shareholder's equity 4,354 4,303
- ---------------------------------------------------------------------------------------------------------
Total liabilities and shareholder's equity $40,535 $41,341
- ---------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
20
<PAGE> 6
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Increase (Decrease) in Cash
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
(for the year ended December 31, in millions) 1994 | 1993 1992
- ----------------------------------------------------------------------------|--------------------------------
<S> <C> | <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES |
Premiums collected $ 3,722 | $ 2,530 $ 2,594
Net investment income received 1,895 | 1,794 2,134
Other revenues received 734 | 568 568
Benefits and claims paid (3,572) | (2,902) (3,123)
Interest credited to contractholders (922) | (1,154) (1,404)
Operating expenses paid (972) | (859) (869)
Income taxes (paid) refunded (27) | 25 (2)
Trading account investments, (purchases) sales, net - | (1,576) (364)
Other (141) | 202 522
- ----------------------------------------------------------------------------|--------------------------------
Net cash provided by (used in) operating activities 717 | (1,372) 56
- ----------------------------------------------------------------------------|--------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES |
Investment repayments |
Fixed maturities 2,783 | 2,624 2,084
Mortgage loans 1,337 | 1,210 1,063
Proceeds from investments sold |
Fixed maturities 1,370 | 102 175
Equity securities 359 | 75 173
Mortgage loans 557 | 310 254
Real estate 728 | 949 235
Investments in |
Fixed maturities (4,767) | (3,269) (2,471)
Equity securities (340) | (51) (119)
Mortgage loans (94) | (246) (63)
Policy loans, net (215) | (2) (184)
Short-term securities, (purchases) sales, net (903) | 860 (615)
Other investments, (purchases) sales, net (50) | 53 191
Securities sold under repurchase agreement (209) | - -
Cash from disposition of operations 53 | - 5
- ----------------------------------------------------------------------------|--------------------------------
Net cash provided by investing activities 609 | 2,615 728
- ----------------------------------------------------------------------------|--------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES |
Issuance (redemption) of short-term debt, net 74 | - -
Contractholder fund deposits 2,197 | 3,159 3,047
Contractholder fund withdrawals (3,529) | (4,418) (5,003)
Dividends to parent company - | (14) (14)
Return of capital to parent company (23) | - -
Contributions from parent company - | - 500
Other 7 | 6 2
- ----------------------------------------------------------------------------|--------------------------------
Net cash used in financing activities (1,274) | (1,267) (1,468)
- ----------------------------------------------------------------------------|--------------------------------
Net increase (decrease) in cash $ 52 | $ (24) $ (684)
- ----------------------------------------------------------------------------|--------------------------------
|
Cash at December 31 $ 102 | $ 50 $ 74
- -------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
21
<PAGE> 7
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Travelers Insurance Company and its subsidiaries (the Company) is a
wholly owned subsidiary of The Travelers Insurance Group Inc. (TIG).
TIG is an indirect wholly owned subsidiary of The Travelers Inc.
Significant accounting policies used in the preparation of the
accompanying financial statements follow.
Basis of presentation
In December 1992, Primerica Corporation (Primerica) acquired
approximately 27% of the common stock of the Company's then parent, The
Travelers Corporation (the Acquisition). The Acquisition was accounted
for as a purchase. In connection with the Acquisition, Primerica
transferred 100% of the preferred provider organization and third party
administrator networks of Transport Life Insurance Company (a wholly
owned subsidiary of Primerica) to The Travelers Corporation, which
contributed them to the Company. The Company realized an increase to
shareholder's equity of $23 million related to this contribution.
Effective December 31, 1993, Primerica acquired the approximately 73% of
The Travelers Corporation common stock which it did not already own, and
The Travelers Corporation was merged into Primerica, which was renamed
The Travelers Inc. This was effected through the exchange of .80423
shares of The Travelers Inc. common stock for each share of The
Travelers Corporation common stock (the Merger). All subsidiaries of
The Travelers Corporation were contributed to TIG. In conjunction with
the Merger, The Travelers Inc. contributed Travelers Insurance Holdings
Inc. (formerly Primerica Insurance Holdings, Inc.) and its subsidiaries
(TIHI) to TIG, which in turn contributed TIHI to the Company.
TIHI is an intermediate holding company whose primary subsidiaries are
Primerica Life Insurance Company (Primerica Life) and its subsidiary
National Benefit Life Insurance Company (NBL), and Transport Life
Insurance Company (Transport). Through its subsidiaries, TIHI primarily
offers individual insurance and specialty accident and health insurance.
The Company realized an increase to shareholder's equity of $2.1 billion
at December 31, 1993 related to the contribution of TIHI. At December
31, 1993 and subsequent, TIHI is included in the Life and Annuities
segment.
The consolidated financial statements and the accompanying notes reflect
the historical operations of the Company for the years ended December 31,
1993 and 1992. The results of operations of TIHI and its subsidiaries
are not included in the 1993 and 1992 financial statements. The
Company's consolidated balance sheet and related data at December 31,
1994 and 1993 include TIHI on a fully consolidated basis. The
Acquisition and the Merger are being accounted for as a "step
acquisition." The consolidated balance sheet and related data at
December 31, 1993 reflect adjustments of assets and liabilities of the
Company (except TIHI) to their fair values determined at each acquisition
date (i.e., 27% of values at December 31, 1992 as carried forward and 73%
of the values at December 31, 1993). These assets and liabilities are
reflected in the consolidated balance sheet at December 31, 1993 based
upon management's then best estimate of their fair values. Evaluation and
appraisal of assets and liabilities, including investments, the value of
insurance in force, reinsurance recoverable, other insurance assets and
liabilities and related deferred income taxes were completed during 1994.
22
<PAGE> 8
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
The excess of the 27% share of assigned value of identifiable net assets
over cost at December 31, 1992, which was allocated to the Company
through the "pushdown" basis of accounting, was approximately $56
million and is being amortized over ten years on a straight-line basis.
The excess of the purchase price of the common stock over the fair value
of the 73% of net assets acquired at December 31, 1993, which was
allocated to the Company through the "pushdown" basis of accounting, was
approximately $340 million and is being amortized over 40 years on a
straight-line basis.
The consolidated statement of operations and retained earnings, the
consolidated statement of cash flows and the related accompanying notes
for the year ended December 31, 1994, which are presented on a purchase
accounting basis, are separated from the corresponding 1993 and 1992
information, which is presented on a historical accounting basis, to
indicate the difference in valuation bases.
Principles of Consolidation
The financial statements have been prepared in conformity with generally
accepted accounting principles and include the Company and its
significant insurance and noninsurance subsidiaries. Certain prior
year amounts have been reclassified to conform with the 1994
presentation.
Investments
Fixed maturities include bonds, notes and redeemable preferred stocks.
Fixed maturities are valued based upon quoted market prices, or if
quoted market prices are not available, discounted expected cash flows
using market rates commensurate with the credit quality and maturity of
the investment. Securities are classified as "available for sale" and
are reported at fair value, with unrealized investment gains and losses,
net of income taxes, charged or credited directly to shareholder's
equity. As of December 31, 1993, in conjunction with the Merger, the
majority of fixed maturities were classified as "available for sale" and
recorded at the lower of aggregate cost or market value. Fixed
maturities classified as "held for investment" were carried at amortized
cost.
Equity securities, which include common and nonredeemable preferred
stocks, are available for sale and carried at fair value based primarily
on quoted market prices. Changes in fair values of equity securities
are charged or credited directly to shareholder's equity, net of income
taxes.
Mortgage loans are carried at amortized cost. Real estate held for sale
is carried at the lower of cost or fair value less estimated costs to
sell. Fair value was established at time of foreclosure by appraisers,
both internal and external, using discounted cash flow analyses and
other acceptable techniques.
23
<PAGE> 9
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
Accrual of income is suspended on fixed maturities or mortgage loans
that are in default, or on which it is likely that future interest
payments will not be made as scheduled. Interest income on investments
in default is recognized only as payment is received.
Gains or losses arising from futures contracts used to hedge investments
are treated as basis adjustments and are recognized in income over the
life of the hedged investments.
Gains and losses arising from forward contracts used to hedge foreign
investments in the Company's U.S. portfolios are a component of realized
investment gains and losses. Gains and losses arising from forward
contracts used to hedge investments in foreign operations (primarily
Canadian) are reflected directly in shareholder's equity, net of income
taxes.
Interest rate swaps are used to manage interest rate risk in the
investment portfolio and are marked to market with unrealized gains and
losses recorded as a component of shareholder's equity, net of income
taxes. Rate differentials on interest rate swap agreements are accrued
between settlement dates and are recognized as an adjustment to interest
income from the related investment.
Investment Gains and Losses
Realized investment gains and losses are included as a component of
pretax revenues based upon specific identification of the investments
sold on the trade date and, prior to the Merger, included adjustments to
investment valuation reserves. These adjustments reflected changes
considered to be other than temporary in the net realizable value of
investments. Also included are gains and losses arising from the
translation of the local currency value of foreign investments to U.S.
dollars, the functional currency of the Company.
Policy Loans
Policy loans are carried at the amount of the unpaid balances that are
not in excess of the net cash surrender values of the related insurance
policies. The carrying value of policy loans, which have no defined
maturities, is considered to be fair value.
Deferred Acquisition Costs
Costs of acquiring individual life insurance, annuities, and health
business, principally commissions and certain expenses related to policy
issuance, underwriting and marketing, all of which vary with and are
primarily related to the production of new business, are deferred.
Acquisition costs relating to traditional life insurance and guaranteed
renewable health contracts are amortized over the period of anticipated
premiums; universal life in relation to estimated gross profits; and
annuity contracts employing a level yield method. For life insurance, a
10- to 25-year amortization period is used; for guaranteed renewable
health, a 10-year period, and a 10- to 15-year period is employed for
annuities. Deferred acquisition costs are reviewed periodically for
recoverability to determine if any adjustment is required.
24
<PAGE> 10
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
Value of Insurance In Force
The value of insurance in force represents the actuarially determined
present value of anticipated profits to be realized from life insurance,
annuities and health contracts at the date of the Merger using the same
assumptions that were used for computing related liabilities where
appropriate. The value of insurance in force was the actuarially
determined present value of the projected future profits discounted at
interest rates ranging from 14% to 18% for the business acquired. The
value of the business in force is amortized over the contract period
using current interest crediting rates to accrete interest and using
amortization methods based on the specified products. Traditional life
insurance and guaranteed renewable health policies are amortized over
the period of anticipated premiums; universal life is amortized in
relation to estimated gross profits; and annuity contracts are amortized
employing a level yield method. The value of insurance in force is
reviewed periodically for recoverability to determine if any adjustment
is required.
Separate and Variable Accounts
Separate and variable accounts primarily represent funds for which
investment income and investment gains and losses accrue directly to,
and investment risk is borne by, the contractholders. Each account has
specific investment objectives. The assets of each account are legally
segregated and are not subject to claims that arise out of any other
business of the Company. The assets of these accounts are carried at
market value. Certain other separate accounts provide guaranteed levels
of return or benefits and the assets of these accounts are carried at
amortized cost, except at December 31, 1993 the assets and liabilities
of these accounts were recorded at the value assigned at the acquisition
dates. Amounts assessed to the contractholders for management services
are included in revenues. Deposits, net investment income and realized
investment gains and losses for these accounts are excluded from
revenues, and related liability increases are excluded from benefits and
expenses.
Goodwill
The excess of the 27% share of assigned value of identifiable assets
over cost at December 31, 1992 allocated to the Company as a result of
the Acquisition amounted to approximately $56 million and is being
amortized over 10 years on a straight-line basis. Goodwill resulting
from the excess of the purchase price over the fair value of the 73% of
net assets acquired related to the Merger amounted to approximately $340
million at December 31, 1993 and is being amortized over 40 years on a
straight-line basis. TIHI has goodwill of $246 million.
25
<PAGE> 11
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
Contractholder Funds
Contractholder funds represent receipts from the issuance of universal
life, pension investment and certain individual annuity contracts. Such
receipts are considered deposits on investment contracts that do not
have substantial mortality or morbidity risk. Account balances are also
increased by interest credited and reduced by withdrawals, mortality
charges and administrative expenses charged to the contractholders.
Calculations of contractholder account balances for investment contracts
reflect lapse, withdrawal and interest rate assumptions based on
contract provisions, the Company's experience and industry standards.
Interest rates credited to contractholder funds range from 3.4% to 8.0%.
Contractholder funds also include other funds that policyholders leave
on deposit with the Company.
Benefit Reserves
Benefit reserves represent liabilities for future insurance policy
benefits. Benefit reserves for traditional life insurance, annuities,
and accident and health policies have been computed based upon
mortality, morbidity, persistency and interest assumptions applicable to
these coverages, which range from 2.5% to 12.0%, including adverse
deviation. These assumptions consider Company experience and industry
standards and may be revised if it is determined that the future
experience will differ substantially from that previously assumed. The
assumptions vary by plan, age at issue, year of issue and duration.
Appropriate recognition has been given to experience rating and
reinsurance.
Operating Leases
At December 31, 1993, operating leases were recorded at the value
assigned at the acquisition dates and included in the consolidated
balance sheet as a component of other liabilities. This liability is
being amortized over the average lease period.
Permitted Statutory Accounting Practices
The Company, domiciled principally in Connecticut and Massachusetts,
prepares statutory financial statements in accordance with the
accounting practices prescribed or permitted by the insurance
departments of those states. Prescribed statutory accounting practices
include a variety of publications of the National Association of
Insurance Commissioners as well as state laws, regulations, and general
administrative rules. Permitted statutory accounting practices
encompass all accounting practices not so prescribed. The impact of any
permitted accounting practices on statutory surplus of the Company is
not material.
Premiums
Premiums are recognized as revenues when due. Reserves are established
for the portion of premiums that will be earned in future periods and
for deferred profits on limited-payment policies that are being
recognized in income over the policy term. At December 31, 1993, the
deferred profits on limited-payment policies were recorded at the values
assigned at the acquisition dates.
26
<PAGE> 12
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
Other Revenues
Other revenues include surrender, mortality and administrative charges
and fees as earned on investment, universal life and other insurance
contracts. Other revenues also include gains and losses on dispositions
of assets and operations other than realized investment gains and
losses, revenues of noninsurance subsidiaries, and the pretax operating
results of real estate joint ventures.
Interest Credited to Contractholders
Interest credited to contractholders represents amounts earned by
universal life, pension investment and certain individual annuity
contracts in accordance with contract provisions.
Federal Income Taxes
The provision for federal income taxes is comprised of two components,
current income taxes and deferred income taxes. Deferred federal income
taxes arise from changes in the Company's deferred federal income tax
asset during the year. The deferred federal income tax asset is
recognized to the extent that future realization of the tax benefit is
more likely than not, with a valuation allowance for the portion that is
not likely to be recognized.
Accounting Standards not yet Adopted
Statement of Financial Accounting Standards No. 118, "Accounting by
Creditors for Impairment of a Loan - Income Recognition and Disclosures"
(FAS 118), and Statement of Financial Accounting Standards No. 114,
"Accounting by Creditors for Impairment of a Loan" (FAS 114), describe
how impaired loans should be measured when determining the amount of a
loan loss accrual. These statements also amend existing guidance on the
measurement of restructured loans in a troubled debt restructuring
involving a modification of terms. The adoption of these statements,
effective January 1, 1995, will not have a material effect on results of
operations or financial position.
2. CHANGES IN ACCOUNTING PRINCIPLES
Accounting for Certain Debt and Equity Securities
Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities" (FAS 115), which addresses accounting and
reporting for investments in equity securities that have a readily
determinable fair value and for all debt securities. Investment
securities have been classified as "available for sale" and are
reported at fair value, with unrealized gains and losses, net of income
taxes, charged or credited directly to shareholder's equity. Previously,
securities classified as available for sale were carried at the lower
of aggregate cost or market value. Initial adoption of this standard
resulted in an increase of approximately $232 million (net of taxes) to
net unrealized gains which is included in shareholder's equity. This
increase included an unrealized gain of $133 million (net of income
taxes) on TIHI's investment in the common stock of The Travelers Inc.
See note 15 for additional disclosures.
27
<PAGE> 13
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
2. CHANGES IN ACCOUNTING PRINCIPLES, Continued
Offsetting of Amounts Related to Certain Contracts
Effective January 1, 1994, the Company adopted Financial Accounting
Standards Board Interpretation No. 39, "Offsetting of Amounts Related to
Certain Contracts" (Interpretation 39). The general principle of
Interpretation 39 states that amounts due from and due to another party
may not be offset in the consolidated balance sheet unless a right of
setoff exists and the parties intend to exercise the right of setoff.
Implementation of Interpretation 39 did not have a material impact on the
Company's financial position; however, assets and liabilities were both
increased by $68 million as of December 31, 1994.
Accounting and Reporting for Reinsurance Contracts
In the first quarter of 1993, the Company implemented Statement of
Financial Accounting Standards No. 113, "Accounting and Reporting for
Reinsurance of Short-Duration and Long-Duration Contracts" (FAS 113).
FAS 113 requires the reporting of reinsurance receivables and prepaid
reinsurance premiums as assets and precludes the immediate recognition
of gains for all reinsurance contracts unless the liability to the
policyholder has been extinguished. Implementation of FAS 113 did not
have an impact on the Company's earnings, however, assets and
liabilities increased by like amounts. See note 5 for additional
reinsurance disclosures.
Postretirement Benefits Other Than Pensions
In 1992, the Company adopted Statement of Financial Accounting Standards
No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions" (FAS 106). As required, the Company changed its method of
accounting for retiree benefit plans effective January 1, 1992, to
accrue for the Company's share of the costs of postretirement benefits
over the service period rendered by employees. Previously these
benefits were charged to expense when paid. The Company elected
to recognize immediately the liability for postretirement benefits as
the cumulative effect of a change in accounting principle. This
resulted in a noncash after-tax charge to net income of $126 million.
See note 10 for additional information relating to FAS 106.
Accounting for Income Taxes
In the third quarter of 1992, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (FAS 109)
with retroactive application to January 1, 1992. FAS 109 establishes new
principles for calculating and reporting the effects of federal income
taxes in financial statements. FAS 109 replaces the income statement
orientation inherent in the prior income tax accounting standard with a
balance sheet approach. Under the new approach, deferred tax assets and
liabilities are generally determined based on the difference between the
financial statement and tax bases of assets and liabilities using
enacted tax rates in effect for the year in which the differences are
expected to reverse. FAS 109 allows recognition of deferred tax assets
if future realization of the tax benefit is more likely than not, with a
valuation allowance for the portion that is not likely to be recognized.
28
<PAGE> 14
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
2. CHANGES IN ACCOUNTING PRINCIPLES, Continued
The implementation of FAS 109 resulted in a one time increase to
earnings of $350 million in the first quarter of 1992. This increase in
earnings was principally due to tax rate differences and the recognition
of a portion of previously unrecognized deferred tax assets. See note
13 for further discussion of FAS 109.
Accounting for Foreclosed Assets
In February 1993, The Travelers Corporation announced its intent to
accelerate the sale of foreclosed real estate and, effective December
31, 1992, changed its method of accounting for foreclosed assets in
compliance with the American Institute of Certified Public Accountants'
Statement of Position 92-3, "Accounting for Foreclosed Assets" (SOP
92-3). This guidance requires that in-substance foreclosures and
foreclosed assets held for sale be carried at the lower of cost or
fair value less estimated costs to sell. Previously, all foreclosed
assets were carried at cost less accumulated depreciation. This
accounting change resulted in a pretax charge of $412 million to
realized investment losses in 1992.
3. ACQUISITIONS AND DISPOSITIONS
In December 1994, the Company and its affiliates sold its group dental
insurance business to Metropolitan Life Insurance Company (MetLife) and
realized a gain on the sale of $9 million (aftertax).
On January 3, 1995, the Company and its affiliates completed the sale of
its group life and related businesses to MetLife, and completed the
formation of The MetraHealth Companies, Inc. (MetraHealth), a joint
venture of the medical businesses of the Company and its affiliates and
MetLife.
The Company and its affiliates sold its group life business as well as
related non-medical group insurance businesses to MetLife for $350
million. The assets transferred included customer lists, books and
records, and furniture and equipment. In connection with the sale, the
Company and its affiliates agreed to cede 100% of its risks in the
group life and related businesses to MetLife on an indemnity reinsurance
basis, effective January 1, 1995. In connection with the reinsurance
transaction, the Company and its affiliates transferred assets with a
fair market value of approximately $1.5 billion to MetLife, equal to the
statutory reserves and other liabilities transferred.
On January 3, 1995, the Company and MetLife and certain of their
affiliates formed the MetraHealth joint venture by contributing their
group medical businesses to MetraHealth, in exchange for shares of
common stock of MetraHealth. The assets transferred included cash,
fixed assets, customer lists, books and records, certain trademarks and
other assets used exclusively or primarily in the medical businesses.
The Company also contributed all of the capital stock of its wholly
owned subsidiary, The Travelers Employee Benefits Company, to
MetraHealth. The total contribution by the Company amounted to $336
million at carrying value on the date of contribution. No gain was
recognized upon the formation of the joint venture. Upon formation of
the joint venture the Company owned 42.6% of the outstanding capital
stock of MetraHealth, TIG owned 7.4% and the other 50% was owned by
MetLife and its affiliates.
29
<PAGE> 15
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
3. ACQUISITIONS AND DISPOSITIONS, Continued
In connection with the formation of the joint venture, the transfer of
the fee based medical business (Administrative Services Only) and other
noninsurance business to MetraHealth was completed on January 3, 1995.
As the medical insurance business of the Company comes due for renewal
and after obtaining regulatory approvals, the risks will be transferred
to MetraHealth. In the interim the related operating results for this
medical insurance business will be reported by the Company.
All of the businesses sold to MetLife or contributed to MetraHealth were
included in the Company's Managed Care and Employee Benefits Operations
(MCEBO). Revenues and net income from MCEBO for the year ended 1994
amounted to $3.5 billion and $157 million, respectively. Beginning in
1995 the Company's results will reflect the runoff medical insurance
business, plus its equity interest in the earnings of MetraHealth.
On December 31, 1993, in conjunction with the Merger, The Travelers Inc.
contributed TIHI to TIG, which TIG then contributed to the Company at a
carrying value of $2.1 billion. Through its subsidiaries TIHI primarily
offers individual life insurance and specialty accident and health
insurance.
In December 1992, in conjunction with the Acquisition, The Travelers
Corporation acquired Transport Life Insurance Company's preferred
provider and third party administrator organizations from Primerica
Corporation (see note 1), and on December 30, 1992 contributed these
businesses to the Company.
4. COMMERCIAL PAPER AND LINES OF CREDIT
The Company issues commercial paper directly to investors and had $74
million outstanding at December 31, 1994. The Company maintains unused
credit availability under bank lines of credit at least equal to the
amount of the outstanding commercial paper.
In 1994, The Travelers Inc., Commercial Credit Company (an indirect
wholly owned subsidiary of The Travelers Inc.) and the Company entered
into an agreement with a syndicate of banks to provide $1.5 billion of
revolving credit, to be allocated to any of the above-indicated
companies. The revolving credit facility consists of a 364-day
revolving credit in the amount of $300 million and a 5-year revolving
credit in the amount of $1.2 billion. The participation of the Company
in this facility is limited to $300 million, and at December 31, 1994,
the Company's allocation was $200 million, all of which was unused.
30
<PAGE> 16
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
5. REINSURANCE
The Company participates in reinsurance in order to limit losses,
minimize exposure to large risks, provide additional capacity for future
growth and to effect business-sharing arrangements. Reinsurance is
accomplished through various plans of reinsurance, primarily
coinsurance, modified coinsurance and yearly renewable term. The
Company remains primarily liable as the direct insurer on all risks
reinsured. It is the policy of the Company to obtain reinsurance for
amounts above certain retention limits on individual life policies which
vary with age and underwriting classification. Generally, the maximum
retention on an ordinary life risk is $1.5 million. The Company writes
workers' compensation business through its Accident Department. This
business is ceded 100% to the Travelers Indemnity Company.
A summary of reinsurance financial data reflected within the
consolidated statement of operations and retained earnings is presented
below (in millions):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------|------------------------------
1994 | 1993 1992
- -----------------------------------------------------------------|------------------------------
<S> <C> | <C> <C>
Written Premiums: |
Direct $ 4,529 | $ 3,308 $ 3,163
|
Assumed from: |
Affiliated companies 59 | 31 15
Non-affiliated companies 33 | 60 115
|
Ceded to: |
Affiliated companies (358) | (496) (522)
Non-affiliated companies (341) | (98) (62)
- -----------------------------------------------------------------|------------------------------
|
Total Net Written Premiums $ 3,922 | $ 2,805 $ 2,709
=================================================================|==============================
|
Earned Premiums: |
Direct $ 4,475 | $ 3,256 $ 3,124
|
Assumed from: |
Affiliated companies 65 | 32 15
Non-affiliated companies 30 | 32 110
|
Ceded to: |
Affiliated companies (384) | (512) (491)
Non-affiliated companies (333) | (87) (64)
- -----------------------------------------------------------------|------------------------------
|
Total Net Earned Premiums $ 3,853 | $ 2,721 $ 2,694
=================================================================|==============================
</TABLE>
31
<PAGE> 17
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
5. REINSURANCE, Continued
Reinsurance recoverables at December 31 include amounts recoverable on
unpaid and paid losses and were as follows (in millions):
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
1994 1993
------------------------------------------------------------------------------
<S> <C> <C>
Reinsurance Recoverables:
Life and accident and health business:
Affiliated companies $ 3 $ 3
Non-affiliated companies 661 689
Property-casualty business:
Affiliated companies 2,251 2,191
------------------------------------------------------------------------------
Total Reinsurance Recoverables $ 2,915 $ 2,883
==============================================================================
</TABLE>
6. SHAREHOLDER'S EQUITY
Additional Paid-In Capital
The increase of $273 million in additional paid-in capital during 1994
is due primarily to the finalization of the evaluations and appraisals
used to assign fair values to assets and liabilities under purchase
accounting.
The increase of $1.7 billion in additional paid-in capital during 1993
arose from a contribution of $400 million from The Travelers Corporation
and the contribution of TIHI (see notes 1 and 3). This was partially
offset by the impact of the initial evaluations and appraisals used to
assign fair values to assets and liabilities under purchase accounting.
The increase in additional paid-in capital during December 31, 1992
arose from a contribution of $500 million in 1992 from The Travelers
Corporation and the contribution of Transport Life Insurance Company's
preferred provider and third party administrator organizations in 1992
(see note 3).
Unrealized Investment Gains (Losses)
An analysis of the change in unrealized gains and losses on investments
is shown in note 15.
32
<PAGE> 18
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
6. SHAREHOLDER'S EQUITY, Continued
Shareholder's Equity and Dividend Availability
The statutory net income, including TIHI, was $100 million for the year
ended December 31, 1994. The statutory net loss, excluding TIHI, was
$648 million and $346 million for the years ended December 31, 1993 and
1992, respectively.
Statutory capital and surplus was $2.1 billion and $1.8 billion at
December 31, 1994 and 1993, respectively.
The Company is currently subject to various regulatory restrictions that
limit the maximum amount of dividends available to TIG without prior
approval of insurance regulatory authorities. Under statutory
accounting practices, there is no statutory surplus available in 1995
for dividends to TIG without prior approval of the Connecticut Insurance
Department.
Dividend payments to the Company from its insurance subsidiaries are
subject to similar restrictions and statutory surplus of the
subsidiaries is not available in 1995 for dividends to the Company
without prior approval of insurance regulatory authorities.
7. ADDITIONAL OPERATING INFORMATION
The Company has segmented its business by major product lines. TIHI was
contributed to the Company on December 31, 1993, and its assets at that
date and subsequent and its operations for the year ended December 31,
1994 are included in the following table in the Life and Annuities
segment. Transport Life Insurance Company's preferred provider and
third party administrator organizations were contributed to the Company
in December 1992 and are included in the Managed Care and Employee
Benefits segment.
33
<PAGE> 19
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
7. ADDITIONAL OPERATING INFORMATION, continued
Results included in the table below reflect 1993 fourth quarter
after-tax charges of $103 million for an addition to reserves for
foreclosed properties held for sale and 1992 fourth quarter after-tax
charges of $272 million for implementation of SOP 92-3 and $193 million
for an addition to mortgage loan valuation reserves.
<TABLE>
<CAPTION>
Managed Care Corporate
Travelers Life and Employee and Other
(in millions) and Annuities Benefits Operations Consolidated
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1994
- ----
Revenues
Premiums $ 1,492 $ 2,369 $ - $ 3,861
Net investment income 1,603 246 - 1,849
Realized investment gains 13 - 1 14
Other 173 850 - 1,023
- ------------------------------------------------------------------------------------------------------------------------
Total $ 3,281 $ 3,465 $ 1 $ 6,747
- ------------------------------------------------------------------------------------------------------------------------
Income (loss) before federal income taxes $ 604 $ 257 $ (4) $ 857
Net income (loss) 392 157 (4) 545
Assets 33,078 5,131 2,326 40,535
- ------------------------------------------------------------------------------------------------------------------------
1993
- ----
Revenues
Premiums $ 330 $ 2,395 $ - $ 2,725
Net investment income 1,616 265 3 1,884
Realized investment gains (losses) (45) 24 - (21)
Other 120 737 2 859
- ------------------------------------------------------------------------------------------------------------------------
Total $ 2,021 $ 3,421 $ 5 $ 5,447
- ------------------------------------------------------------------------------------------------------------------------
Income (loss) before federal income taxes $ (87) $ 173 $ (3) $ 83
Net income (loss) 19 123 (1) 141
Assets (purchase accounting value) 34,155 4,744 2,442 41,341
- ------------------------------------------------------------------------------------------------------------------------
1992
- ----
Revenues
Premiums $ 278 $ 2,408 $ - $ 2,686
Net investment income 1,799 290 12 2,101
Realized investment gains (losses) (725) (22) - (747)
Other 140 645 - 785
- ------------------------------------------------------------------------------------------------------------------------
Total $ 1,492 $ 3,321 $ 12 $ 4,825
- ------------------------------------------------------------------------------------------------------------------------
Income (loss) before federal
income taxes and cumulative effects of
changes in accounting principles $ (844) $ (100) $ 1 $ (943)
Cumulative effect of change in
accounting for postretirement
benefits other than pensions, net of tax (25) (101) - (126)
Cumulative effect of change in
accounting for income taxes 223 124 3 350
Net income (loss) (343) (42) 4 (381)
Assets 31,378 4,498 2,191 38,067
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
34
<PAGE> 20
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
8. DISCLOSURE ABOUT DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE OF
FINANCIAL INSTRUMENTS
The Company uses derivative financial instruments, including financial
futures, interest rate swaps and forward contracts, as a means of
prudently hedging exposure to price, foreign currency and/or interest
rate risk on anticipated investment purchases or existing assets and
liabilities. Also, in the normal course of business, the Company has
fixed and variable rate loan commitments and unfunded commitments to
partnerships. The Company does not hold or issue derivative instruments
for trading purposes.
These derivative financial instruments have off-balance-sheet risk.
Financial instruments with off-balance-sheet risk involve, to varying
degrees, elements of credit and market risk in excess of the amount
recognized in the consolidated balance sheet. The contract or notional
amounts of these instruments reflect the extent of involvement the
Company has in a particular class of financial instrument. However, the
maximum credit loss or cash flow associated with these instruments can be
less than these amounts. For forward contracts and interest rate swaps,
credit risk is limited to the amounts calculated to be due the Company on
such contracts. For unfunded commitments to partnerships, credit
exposure is the amount of the unfunded commitments. For fixed and
variable rate loan commitments, credit exposure is represented by the
contractual amount of these instruments.
The Company monitors creditworthiness of counterparties to these
financial instruments by using criteria of acceptable risk that are
consistent with on-balance-sheet financial instruments. The controls
include credit approvals, limits and other monitoring procedures. Many
transactions include the use of collateral to minimize credit risk and
lower the effective cost to the borrower.
The Company may occasionally enter into interest rate swaps in
connection with other financial instruments to provide greater risk
diversification and better match an asset with a corresponding
liability. Under interest rate swaps, the Company agrees with other
parties to exchange, at specified intervals, the difference between
fixed-rate and floating rate interest amounts calculated by reference to
an agreed notional principal amount. Generally, no cash is exchanged at
the outset of the contract and no principal payments are made by either
party. A single net payment is usually made by one counterparty at each
due date. Swap agreements are not exchange traded so they are subject
to the risk of default by the counterparty. In all cases,
counterparties under these agreements are major financial institutions
with the risk of non-performance considered remote. At December 31,
1994 and 1993, the Company had entered into interest rate swaps with
contract values of $145 million and $153 million, respectively. At both
December 31, 1994 and 1993, the fair value of interest rate swaps was $1
million (loss position) which is determined using a discounted cash flow
method.
The off-balance-sheet risks of financial futures contracts, forward
contracts, fixed and variable rate loan commitments and unfunded
commitments to partnerships were not considered significant at December
31, 1994 and 1993.
35
<PAGE> 21
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
8. DISCLOSURE ABOUT DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE OF
FINANCIAL INSTRUMENTS, Continued
Fair Value of Certain Financial Instruments
The Company uses various financial instruments in the normal course of
its business. Fair values of financial instruments which are considered
insurance contracts are not required to be disclosed and are not
included in the amounts discussed.
At December 31, 1994 and 1993, investments in fixed maturities have a
fair value of $17.3 billion and $18.3 billion, respectively. See note
15.
At December 31, 1994, mortgage loans have a carrying value of $4.9
billion, which approximates fair value, compared with a carrying value
and a fair value of $6.8 billion at December 31, 1993. In estimating
fair value, the Company used interest rates reflecting the higher
returns required in the current real estate financing market.
The carrying value of $417 million and $320 million of financial
instruments classified as other assets approximates fair values at
December 31, 1994 and 1993, respectively. The carrying value of $1.2
billion and $878 million of financial instruments classified as other
liabilities also approximates their fair values at December 31, 1994 and
1993, respectively. Fair value is determined using various methods
including discounted cash flows and carrying value, as appropriate for
the various financial instruments.
At December 31, 1994, contractholder funds with defined maturities have
a carrying value of $4.2 billion and a fair value of $4.0 billion,
compared with a carrying value and a fair value of $5.0 billion at
December 31, 1993. The fair value of these contracts is determined by
discounting expected cash flows at an interest rate commensurate with
the Company's credit risk and the expected timing of cash flows.
Contractholder funds without defined maturities have a carrying value of
$9.1 billion and a fair value of $8.8 billion at December 31, 1994,
compared with a carrying value of $13.0 billion and a fair value of
$12.7 billion at December 31, 1993. These contracts generally are
valued at surrender value.
The assets of separate accounts providing a guaranteed return have a
carrying value and a fair value of $1.5 billion and $1.4 billion,
respectively, at December 31, 1994, compared with a carrying value and a
fair value of $1.5 billion and $1.6 billion, respectively, at December
31, 1993. The liabilities of separate accounts providing a guaranteed
return have a carrying value and a fair value of $1.5 billion and $1.3
billion, respectively, at December 31, 1994, compared with a carrying
value and a fair value of $1.5 billion and $1.7 billion, respectively,
at December 31, 1993.
36
<PAGE> 22
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
8. DISCLOSURE ABOUT DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE OF
FINANCIAL INSTRUMENTS, Continued
The carrying values of cash, short-term securities and investment income
accrued approximate their fair values.
The carrying value of policy loans, which have no defined maturities, is
considered to be fair value.
9. COMMITMENTS AND CONTINGENCIES
Financial Instruments with Off-Balance-Sheet Risk
See Note 8 for a discussion of financial instruments with
off-balance-sheet risk.
Litigation
In April 1989, a lawsuit was filed against the Company by the federal
government alleging the Company improperly handled health benefit claims
for individuals who are actively employed and eligible for Medicare
coverage. In November 1992, the court ruled on cross motions for
summary judgment. The court found that the Company had no liability
when acting in the capacity of an administrator of claims. However, the
court also recognized that, while the government's right of recovery
with respect to insured claims is governed by the substantive terms of
our customers' health benefit plan, the right of recovery is independent
of procedural limitations in the Company's contracts.
The Company is a defendant or codefendant in various litigation matters.
Although there can be no assurances, as of December 31, 1994, the
Company believes, based on information currently available, that the
ultimate resolution of these legal proceedings would not be likely to
have a material adverse effect on its results of operations, financial
condition or liquidity.
10. BENEFIT PLANS
Pension Plans
The Company participates in qualified and nonqualified, noncontributory
defined benefit pension plans covering the majority of the Company's
U.S. employees. Benefits for the qualified plan are based on an account
balance formula. Under this formula, each employee's accrued benefit
can be expressed as an account that is credited with amounts based upon
the employee's pay, length of service and a specified interest rate, all
subject to a minimum benefit level. This plan is funded in accordance
with the Employee Retirement Income Security Act of 1974 and the
Internal Revenue Code. For the nonqualified plan, contributions are
based on benefits paid.
Certain subsidiaries of TIHI participate in a noncontributory defined
benefit plan sponsored by their ultimate parent, The Travelers Inc.
37
<PAGE> 23
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
10. BENEFIT PLANS, Continued
The Company's share of net pension expense was $6 million, $8 million
and $22 million for 1994, 1993 and 1992, respectively.
Through plans sponsored by TIG, the Company also provides defined
contribution pension plans for certain agents. Company contributions
are primarily a function of production. The expense for these plans was
$2 million in 1994, 1993 and 1992. Certain non-U.S. employees of TIHI
are covered by noncontributory defined benefit plans. These plans are
funded based upon local laws.
Other Benefit Plans
In addition to pension benefits, the Company provides certain health
care and life insurance benefits for retired employees through a plan
sponsored by TIG. This plan does not include employees of TIHI.
Covered employees may become eligible for these benefits if they reach
retirement age while working for the Company. These retirees may elect
certain prepaid health care benefit plans. Life insurance benefits
generally are set at a fixed amount. The cost recognized by the Company
for these benefits represents its allocated share of the total costs of
the plan, net of employee contributions.
In the third quarter of 1992, TIG adopted FAS 106 and elected to
recognize the accumulated postretirement benefit obligation (i.e., the
transition obligation) as a change in accounting principle retroactive
to January 1, 1992. The Company's pretax share of the total cost of the
plan for 1994, 1993 and 1992 was $14 million, $29 million and $26
million, respectively.
The Merger resulted in a change in control of The Travelers Corporation
as defined in the applicable plans, and provisions of some employee
benefit plans secured existing compensation and benefit entitlements
earned prior to the change in control, and provided a salary and benefit
continuation floor for employees whose employment was affected. The
costs related to these changes have been assumed by TIG.
Savings, Investment and Stock Ownership Plan
Under the savings, investment and stock ownership plan available to
substantially all employees of TIG (except TIHI), the Company matches a
portion of employee contributions. Effective April 1, 1993, the match
decreased from 100% to 50% of an employee's first 5% contribution and a
variable match based on TIG's profitability was added. The Company's
matching obligations were $7 million, $10 million and $16 million in
1994, 1993 and 1992, respectively.
38
<PAGE> 24
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
11. RELATED PARTY TRANSACTIONS
The principal banking functions for certain subsidiaries and affiliates
of TIG, and salaries and expenses for TIG and its insurance subsidiaries
(excluding TIHI), are handled by the Company. Settlements for these
functions between the Company and its affiliates are made regularly.
The Company provides various insurance coverages, principally life and
health, to employees of certain subsidiaries of TIG. The premiums for
these coverages were charged in accordance with normal cost allocation
procedures. In addition, investment advisory and management services,
data processing services and claims processing services are provided by
affiliated companies.
TIG and its subsidiaries maintain short-term investment pools in which
the Company participates. The positions of each company participating
in the pools are calculated and adjusted daily. At December 31, 1994
and 1993, the pools totaled approximately $1.5 billion and $1.3 billion,
respectively. The Company's share of the pools amounted to $1.1 billion
and $439 million at December 31, 1994 and 1993, respectively, and is
included in short-term securities in the consolidated balance sheet.
The Company markets a variable annuity product through its affiliate,
Smith Barney. Sales of this product were $158 million in 1994.
The Company leases new furniture and equipment from a noninsurance
subsidiary of TIG. The rental expense charged to the Company for this
furniture and equipment was $9 million, $10 million and $9 million in
1994, 1993 and 1992, respectively.
At December 31, 1994 and 1993, TIC has an investment of $23 million and
$27 million, respectively, in bonds of its affiliate, Commercial Credit
Company. This is included in fixed maturities in the consolidated
balance sheet.
TIHI has an investment of $231 million and $110 million in common stock
of The Travelers Inc. at December 31, 1994 and 1993, respectively.
This is carried at fair value at December 31, 1994 and at cost at
December 31, 1993. At December 31, 1994, TIHI has an investment of $35
million in redeemable preferred stock of The Travelers Inc. which is
carried at fair value. TIHI has notes receivable from The Travelers
Inc. of $30 million at December 31, 1994 and 1993, which are carried at
cost. These assets are included in other investments in the
consolidated balance sheet.
39
<PAGE> 25
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
12. LEASES
The Company has entered into various operating and capital lease
agreements for office space and data processing and certain other
equipment. Rental expense under operating leases was $99 million, $113
million and $122 million in 1994, 1993 and 1992, respectively. Future
net minimum rental and lease payments are estimated as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
Minimum operating Minimum capital
------------------------------------------------------------------------------------------
(in millions) rental payments lease payments
------------------------------------------------------------------------------------------
<S> <C> <C>
Year ending December 31,
1995 $ 112 $ 7
1996 85 7
1997 69 4
1998 54 4
1999 47 4
Thereafter 36 64
------------------------------------------------------------------------------------------
$ 403 $ 90
------------------------------------------------------------------------------------------
</TABLE>
The Company is reimbursed by affiliates of TIG for utilization of space
and equipment.
The following is a summary of assets under capital leases:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
(in millions) 1994 1993
-------------------------------------------------------------------------
<S> <C> <C>
Buildings $ 25 $ 25
Equipment 14 14
-------------------------------------------------------------------------
39 39
Less accumulated depreciation 17 14
-------------------------------------------------------------------------
Net $ 22 $ 25
-------------------------------------------------------------------------
</TABLE>
The net carrying value of the assets is recorded at amortized cost and
at the value assigned at the acquisition dates at December 31, 1994 and
1993, respectively.
40
<PAGE> 26
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
13. FEDERAL INCOME TAXES
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
(in millions) 1994 | 1993 1992
------------------------------------------------------------|------------------------------
<S> <C> | <C> <C>
Effective tax rate |
|
Income (loss) before federal |
income taxes $ 857 | $ 83 $ (943)
------------------------------------------------------------|------------------------------
Statutory tax rate 35% | 35% 34%
------------------------------------------------------------|------------------------------
|
Expected federal income taxes $ 300 | $ 29 $ (321)
Tax effect of: |
Nontaxable investment income (4) | (1) (1)
Adjustments to benefit and other reserves - | (46) (18)
Adjustment to deferred tax asset for |
enacted change in tax rates from |
34% to 35% - | (25) -
Goodwill 12 | - -
Other 4 | (15) 2
------------------------------------------------------------|------------------------------
Federal income taxes $ 312 | $ (58) $ (338)
------------------------------------------------------------|------------------------------
|
Effective tax rate 36% | (70%) 36%
------------------------------------------------------------|------------------------------
|
Composition of federal income taxes |
Current: |
United States $ 22 | $ 17 $ (3)
Foreign 14 | 3 5
------------------------------------------------------------|------------------------------
Total 36 | 20 2
------------------------------------------------------------|------------------------------
|
Deferred: |
United States 271 | (78) (340)
Foreign 5 | - -
------------------------------------------------------------|------------------------------
Total 276 | (78) (340)
------------------------------------------------------------|------------------------------
Federal income taxes $ 312 | $ (58) $ (338)
-------------------------------------------------------------------------------------------
</TABLE>
41
<PAGE> 27
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
13. FEDERAL INCOME TAXES, Continued
The net deferred tax assets at December 31, 1994 and 1993 were comprised
of the tax effects of the temporary differences related to the following
assets and liabilities:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
(in millions) 1994 1993
----------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Benefit, reinsurance and other reserves $ 453 $ 575
Contractholder funds 158 184
Investments 690 492
Other employee benefits 87 65
Other 257 146
----------------------------------------------------------------------------------------------
Total 1,645 1,462
----------------------------------------------------------------------------------------------
Deferred tax liabilities:
Deferred acquisition costs and value of insurance in force 529 504
Prepaid pension expense 5 3
Other 61 -
----------------------------------------------------------------------------------------------
Total 595 507
----------------------------------------------------------------------------------------------
Net deferred tax asset before valuation allowance 1,050 955
Valuation allowance for deferred tax assets (100) (100)
----------------------------------------------------------------------------------------------
Net deferred tax asset after valuation allowance $ 950 $ 855
----------------------------------------------------------------------------------------------
</TABLE>
Starting in 1994 and continuing for at least five years, the Company and
its life insurance subsidiaries will file a consolidated federal income
tax return. Federal income taxes are allocated to each member of the
consolidated return on a separate return basis adjusted for credits and
other amounts required by the consolidation process. Any resulting
liability will be paid currently to the Company. Any credits for losses
will be paid by the Company to the extent that such credits are for tax
benefits that have been utilized in the consolidated federal income tax
return. The Company has no receivable for unreimbursed credits from its
previous allocation agreement with The Travelers Corporation.
42
<PAGE> 28
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
13. FEDERAL INCOME TAXES, Continued
A net deferred tax asset valuation allowance of $100 million has been
established to reduce the net deferred tax asset on investment losses to
the amount that, based upon available evidence, is more likely than not
to be realized. Reversal of the valuation allowance is contingent upon
the recognition of future capital gains in the Company's consolidated
life insurance company federal income tax return through 1998, and the
consolidated federal income tax return of The Travelers Inc. commencing
in 1999 or a change in circumstances which causes the recognition of the
benefits to become more likely than not. There was no net change in the
valuation allowance during 1994. The initial recognition of any benefit
produced by the reversal of the valuation allowance will be recognized
by reducing goodwill.
The Company has a net deferred tax asset, after the valuation allowance
of $100 million, which relates to temporary differences that are
expected to reverse as net ordinary deductions except for a deferred tax
asset of $319 million which relates to the unrealized loss on fixed
maturity investments. Management does not intend to realize the
unrealized loss on the fixed maturity investments except to the extent
of offsetting capital gains. The Company will have to generate
approximately $1.8 billion of taxable income, before reversal of these
temporary differences, primarily over the next 10 to 15 years, to
realize the remainder of the deferred tax asset, exclusive of the
unrealized loss on fixed maturity investments. Management expects to
realize the remainder of the deferred tax asset based upon its
expectation of future positive taxable income, after the reversal of
these deductible temporary differences, in the consolidated life
insurance company federal income tax return through 1998, and the
consolidated federal income tax return of The Travelers Inc. commencing
in 1999. The taxable income of The Travelers Inc. consolidated return,
after reversal of the deductible temporary differences, is expected to
be at least $1 billion annually. At December 31, 1994, the Company has
no ordinary or capital loss carryforwards.
The "policyholders surplus account", which arose under prior tax law, is
generally that portion of the gain from operations that has not been
subjected to tax, plus certain deductions. The balance of this account,
which, under provisions of the Tax Reform Act of 1984, will not increase
after 1983, is estimated to be $932 million. This amount has not been
subjected to current income taxes but, under certain conditions that
management considers to be remote, may become subject to income taxes in
future years. At current rates, the maximum amount of such tax (for
which no provision has been made in the financial statements) is
approximately $326 million.
See note 2 for a discussion of the implementation of new principles for
accounting for income taxes.
43
<PAGE> 29
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
14. NET INVESTMENT INCOME
<TABLE>
<CAPTION>
------------------------------------------------------------------|------------------------------
(For the year ended December 31, in millions) 1994 | 1993 1992
------------------------------------------------------------------|------------------------------
<S> <C> | <C> <C>
Gross investment income |
Fixed maturities $ 1,253 | $ 1,221 $ 1,242
Mortgage loans 534 | 692 868
Real estate 177 | 383 384
Policy loans 112 | 106 109
Other 7 | (23) -
------------------------------------------------------------------|------------------------------
2,083 | 2,379 2,603
------------------------------------------------------------------|------------------------------
|
Investment expenses 234 | 495 502
------------------------------------------------------------------|------------------------------
Net investment income $ 1,849 | $ 1,884 $ 2,101
------------------------------------------------------------------|------------------------------
</TABLE>
15. INVESTMENTS AND INVESTMENT GAINS (LOSSES)
Realized investment gains (losses) for the periods were as follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------------|-----------------------------
(For the year ended December 31, in millions) 1994 | 1993 1992
-------------------------------------------------------------------|-----------------------------
<S> <C> | <C> <C>
Realized |
|
Fixed maturities $ (3) | $ 182 $ (11)
Equity securities 19 | 14 9
Mortgage loans - | (32) (386)
Real estate - | (222) (400)
Other (2) | 37 41
-------------------------------------------------------------------|-----------------------------
Realized investment gains (losses) $ 14 | $ (21) $ (747)
-------------------------------------------------------------------|-----------------------------
</TABLE>
44
<PAGE> 30
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
15. INVESTMENTS AND INVESTMENT GAINS (LOSSES), Continued
Changes in net unrealized investment gains (losses) that are included as
a separate component of shareholder's equity were as follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
(For the year ended December 31, in millions) 1994 | 1993 1992
-------------------------------------------------------------------|-----------------------------
<S> <C> | <C> <C>
Unrealized |
|
Fixed maturities $ (1,319) | $ (235) $ 146
Equity securities (25) | (17) 6
Other 165 | 28 4
-------------------------------------------------------------------|-----------------------------
(1,179) | (224) 156
Related taxes (412) | (83) 53
-------------------------------------------------------------------|-----------------------------
|
Net unrealized investment gains (losses) (767) | (141) 103
Contribution of TIHI - 5 | -
Balance beginning of year 7 143 | 40
--------------------------------------------------------------------------------------|----------
Balance end of year $ (760) $ 7 | $ 143
-------------------------------------------------------------------------------------------------
</TABLE>
The initial adoption of FAS 115 resulted in an increase of approximately
$232 million (net of taxes) to net unrealized gains in 1994.
Fixed Maturities
Proceeds from sales of fixed maturities classified as available for sale
were $1.4 billion in 1994, resulting in gross realized gains of $15
million and gross realized losses of $27 million. There were no sales
of fixed maturities classified as available for sale in 1993 or 1992 as,
in conjunction with the Merger, fixed maturities were first classified
as "available for sale" effective December 31, 1993.
Prior to December 31, 1993, fixed maturities that were intended to be
held to maturity were recorded at amortized cost and classified as held
for investment. Sales from the amortized cost portfolios have been made
periodically. Such sales were $97 million and $195 million in 1993 and
1992, respectively. Gross gains of $7 million and $10 million in 1993
and 1992, respectively, and gross losses of $1 million and $6 million in
1993 and 1992, respectively, were realized on those sales.
Prior to December 31, 1993, the carrying values of the trading portfolio
fixed maturities were adjusted to market value as it was likely they
would be sold prior to maturity. At December 31, 1992, these fixed
maturities had market values of $4.8 billion. Sales of trading
portfolio fixed maturities were $4.0 billion and $642 million in 1993
and 1992, respectively. Gross gains of $165 million and $24 million in
1993 and 1992, respectively, and gross losses of $2 million and $4
million in 1993 and 1992, respectively, were realized on those sales.
45
<PAGE> 31
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
15. INVESTMENTS AND INVESTMENT GAINS (LOSSES), Continued
The amortized cost and market value of investments in fixed maturities
were as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
December 31, 1994
------------------------------------------------------------------------------------------------
Gross Gross
Amortized unrealized unrealized Market
(in millions) cost gains losses value
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Available for sale:
Mortgage-backed securities -
CMOs and pass through
securities $ 3,779 $ 3 $ 304 $ 3,478
U.S. Treasury securities
and obligations of U.S.
Government and
government agencies
and authorities 3,080 3 306 2,777
Obligations of states,
municipalities and
political subdivisions 87 - 7 80
Debt securities issued by
foreign governments 398 - 26 372
All other corporate bonds 11,225 14 696 10,543
Redeemable preferred stock 10 - - 10
------------------------------------------------------------------------------------------------
Total $ 18,579 $ 20 $ 1,339 $ 17,260
------------------------------------------------------------------------------------------------
</TABLE>
46
<PAGE> 32
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
15. INVESTMENTS AND INVESTMENT GAINS (LOSSES), Continued
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
December 31, 1993
------------------------------------------------------------------------------------------------
Gross Gross
Carrying unrealized unrealized Market
(in millions) value gains losses value
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Available for sale:
Mortgage-backed securities -
CMOs and pass through
securities $ 4,219 $ 18 $ 18 $ 4,219
U.S. Treasury securities
and obligations of U.S.
Government and
government agencies
and authorities 2,807 67 6 2,868
Obligations of states,
municipalities and
political subdivisions 259 9 - 268
Debt securities issued by
foreign governments 333 6 - 339
All other corporate bonds 10,474* 125 29 10,570
Redeemable preferred stock 20 - - 20
Held for investment 18 - - 18
------------------------------------------------------------------------------------------------
Total $ 18,130 $ 225 $ 53 $ 18,302
------------------------------------------------------------------------------------------------
</TABLE>
* Before valuation reserves of $67 million.
The amortized cost and market value of fixed maturities at December 31,
1994, by contractual maturity, are shown below. Actual maturities will
differ from contractual maturities because borrowers may have the right
to call or prepay obligations with or without call or prepayment
penalties.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
Maturity Amortized Market
(in millions) cost value
------------------------------------------------------------------------------------------------
<S> <C> <C>
Due in one year or less $ 1,217 $ 1,197
Due after 1 year through 5 years 4,691 4,434
Due after 5 years through 10 years 5,731 5,310
Due after 10 years 3,161 2,841
------------------------------------------------------------------------------------------------
14,800 13,782
Mortgage-backed securities 3,779 3,478
------------------------------------------------------------------------------------------------
Total $ 18,579 $ 17,260
------------------------------------------------------------------------------------------------
</TABLE>
47
<PAGE> 33
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
15. INVESTMENTS AND INVESTMENT GAINS (LOSSES), Continued
The Company makes significant investments in collateralized mortgage
obligations (CMOs). CMOs typically have high credit quality, offer good
liquidity, and provide a significant advantage in yield and total return
compared to U.S. Treasury securities. The Company's investment strategy
is to purchase CMO tranches which are protected against prepayment risk,
primarily planned amortization class (PAC) tranches. Prepayment
protected tranches are preferred because they provide stable cash flows
in a variety of scenarios. The Company does invest in other types of
CMO tranches if a careful assessment indicates a favorable risk/return
tradeoff. The Company does not purchase residual interests in CMOs.
At December 31, 1994 and 1993, the Company held CMOs with a market value
of $2.2 billion and $2.5 billion, respectively. Approximately 88% of
the Company's CMO holdings are fully collateralized by GNMA, FNMA or
FHLMC securities at December 31, 1994 and 1993. The majority of these
are GNMA-backed securities. In addition, the Company held $1.3 billion
and $1.9 billion of GNMA, FNMA or FHLMC mortgage-backed securities at
December 31, 1994 and 1993, respectively. Virtually all of these
securities are rated AAA. The Company also held $927 million and $899
million of securities that are backed primarily by credit card or car
loan receivables at December 31, 1994 and 1993, respectively.
Equity Securities
The cost and market values of investments in equity securities were as
follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
December 31, 1994
------------------------------------------------------------------------------------------------
Gross Gross
unrealized unrealized Market
(in thousands) Cost gains losses value
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stocks $ 133 $ 19 $ 21 $ 131
Nonredeemable preferred stocks 40 - 2 38
------------------------------------------------------------------------------------------------
Total $ 173 $ 19 $ 23 $ 169
------------------------------------------------------------------------------------------------
December 31, 1993
------------------------------------------------------------------------------------------------
Common stocks $ 129 $ 22 $ 3 $ 148
Nonredeemable preferred stocks 70 3 1 72
------------------------------------------------------------------------------------------------
Total $ 199 $ 25 $ 4 $ 220
------------------------------------------------------------------------------------------------
</TABLE>
Proceeds from sales of equity securities were $359 million in 1994,
resulting in gross realized gains of $24 million and gross realized
losses of $6 million.
48
<PAGE> 34
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
15. INVESTMENTS AND INVESTMENT GAINS (LOSSES), Continued
Mortgage loans and real estate
Underperforming assets include delinquent mortgage loans, loans in the
process of foreclosure, foreclosed loans and loans modified at interest
rates below market. The Company continues its strategy, adopted in
conjunction with the Merger, to dispose of these real estate assets and
some of the mortgage loans and to reinvest the proceeds to obtain
current market yields.
At December 31, 1994 and 1993, the Company's mortgage loan and real
estate held for sale portfolios consisted of the following (in
millions):
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
1994 1993
------------------------------------------------------------------------------
<S> <C> <C>
Current mortgage loans $ 4,467 $ 5,680
Underperforming mortgage loans 471 1,165
------------------------------------------------------------------------------
Total mortgage loans 4,938 6,845
------------------------------------------------------------------------------
Real estate held for sale 383 954
------------------------------------------------------------------------------
Total mortgage loans and real estate $ 5,321 $ 7,799
------------------------------------------------------------------------------
</TABLE>
Aggregate annual maturities on mortgage loans at December 31, 1994 are as
follows:
<TABLE>
<CAPTION>
-----------------------------------------------------
(in millions)
-----------------------------------------------------
<S> <C>
Past maturity $ 196
1995 708
1996 517
1997 550
1998 614
1999 611
Thereafter 1,742
-----------------------------------------------------
Total $ 4,938
-----------------------------------------------------
</TABLE>
Concentrations
At December 31, 1994 and 1993, the Company had no concentration of
credit risk in a single investee exceeding 10% of consolidated
shareholder's equity.
The Company participates in two short-term investment pools maintained by
TIG and its subsidiaries. These pools are discussed in note 11.
49
<PAGE> 35
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
15. INVESTMENTS AND INVESTMENT GAINS (LOSSES), Continued
Included in fixed maturities are below investment grade assets totaling
$922 million and $814 million at December 31, 1994 and 1993,
respectively. The Company defines its below investment grade assets as
those securities rated "Ba1" or below by external rating agencies, or
the equivalent by the internal analysts when a public rating does not
exist. Such assets include publicly traded below investment grade
bonds, highly leveraged transactions and certain other privately issued
bonds that are classified as below investment grade loans.
The Company also has significant concentrations of investments in the
following industries:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
(in millions) 1994 1993
------------------------------------------------------------------------------------------------
<S> <C> <C>
Finance $ 1,241 $ 1,442
Electric utilities 1,222 1,348
Banking 953 743
Oil and gas 859 651
------------------------------------------------------------------------------------------------
</TABLE>
Below investment grade assets included in the totals above, are as
follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
(in millions) 1994 1993
------------------------------------------------------------------------------------------------
<S> <C> <C>
Finance $ 75 $ 45
Electric utilities 32 47
Banking 21 21
Oil and gas 33 38
------------------------------------------------------------------------------------------------
</TABLE>
At December 31, 1994 and 1993, significant concentrations of mortgage
loans were for properties located in highly populated areas in the
states listed below. The amounts are shown below:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
(in millions) 1994 1993
------------------------------------------------------------------------------------------------
<S> <C> <C>
California $ 929 $ 1,174
New York 558 780
Florida 432 588
Texas 380 584
Illinois 347 485
------------------------------------------------------------------------------------------------
</TABLE>
Other mortgage loan investments are fairly evenly dispersed throughout
the United States, with no holdings in any state exceeding $273 million
and $324 million at December 31, 1994 and 1993, respectively.
50
<PAGE> 36
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
15. INVESTMENTS AND INVESTMENT GAINS (LOSSES), Continued
Concentrations of mortgage loans by property type at December 31, 1994
and 1993 are shown below:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
(in millions) 1994 1993
-----------------------------------------------------------------------------------------------
<S> <C> <C>
Office $ 2,065 $ 2,769
Apartment 1,029 1,635
Retail 606 891
Agricultural 540 643
Hotel 402 547
-----------------------------------------------------------------------------------------------
</TABLE>
Real estate investments are dispersed throughout the United States, with
no holdings in any state exceeding $111 million or $191 million at
December 31, 1994 or 1993, respectively.
Real estate assets at December 31, 1994 and 1993 included office
properties with carrying values of $205 million and $568 million,
respectively.
The Company monitors creditworthiness of counterparties to all financial
instruments by using controls that include credit approvals, limits and
other monitoring procedures. Collateral for fixed maturities often
includes pledges of assets, including stock and other assets, guarantees
and letters of credit. The Company's underwriting standards with
respect to new mortgage loans generally require loan to value ratios of
75% or less at the time of mortgage origination.
Investment Valuation Reserves
At December 31, 1994, 1993 and 1992, total investment valuation
reserves, which are deducted from the applicable investment carrying
values in the consolidated balance sheet, were as follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
(in millions) 1994 | 1993 1992
------------------------------------------------------------------|------------------------------
<S> <C> | <C> <C>
Beginning of year $ 67 | $ 1,417 $ 864
Increase - | 195 821
Impairments, net of gains/recoveries - | (602) (268)
FAS 115/Purchase accounting adjustment (67) | (943) -
-------------------------------------------------------------------------------------------------
End of year $ - $ 67 | $ 1,417
-------------------------------------------------------------------------------------------------
</TABLE>
At December 31, 1993, investment valuation reserves were comprised of
$67 million for securities. Increases in the investment valuation
reserves are reflected as realized investment losses.
51
<PAGE> 37
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
15. INVESTMENTS AND INVESTMENT GAINS (LOSSES), Continued
Nonincome Producing
Investments included in the consolidated balance sheets that were
nonincome producing for the preceding 12 months were as follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
(in millions) 1994 1993
-----------------------------------------------------------------------------------------------
<S> <C> <C>
Mortgage loans $ 127 $ 249
Real estate 73 147
Fixed maturities 6 24
-----------------------------------------------------------------------------------------------
Total $ 206 $ 420
-----------------------------------------------------------------------------------------------
</TABLE>
Restructured
The Company has mortgage loans and debt securities which were
restructured at below market terms totaling approximately $259 million
and $796 million at December 31, 1994 and 1993, respectively. At
December 31, 1993, the Company's restructured assets are recorded at
purchase accounting value. The new terms typically defer a portion of
contract interest payments to varying future periods. The accrual of
interest is suspended on all restructured assets, and interest income is
reported only as payment is received. Gross interest income on
restructured assets that would have been recorded in accordance with the
original terms of such loans amounted to $52 million in 1994 and $121
million in 1993. Interest on these assets, included in net investment
income, aggregated $17 million and $52 million in 1994 and 1993,
respectively.
16. LIFE AND ANNUITY DEPOSIT FUNDS AND RESERVES
At December 31, 1994, the Company has $23.2 billion of life and annuity
deposit funds and reserves. Of that total, $11.6 billion are not
subject to discretionary withdrawal based on contract terms and related
market conditions. The remaining $11.6 billion are for life and annuity
products that are subject to discretionary withdrawal by the
contractholder. Included in the amount that is subject to discretionary
withdrawal are $1.9 billion of liabilities that are surrenderable with
market value adjustments. An additional $5.7 billion of the life
insurance and individual annuity liabilities are subject to
discretionary withdrawals with an average surrender charge of 5.5%.
Another $1.4 billion of liabilities are surrenderable at book value over
5 to 10 years. In the payout phase, these funds are credited at
significantly reduced interest rates. The remaining $2.6 billion of
liabilities are surrenderable without charge. Approximately 30% of
these liabilities relate to individual life products. These risks would
have to be underwritten again if transferred to another carrier, which
is considered a significant deterrent for long-term policyholders.
Insurance liabilities that are surrendered or withdrawn from the Company
are reduced by outstanding policy loans and related accrued interest
prior to payout.
52
<PAGE> 38
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
17. RESTRUCTURING COSTS
During 1992, the Company announced a series of organizational
restructuring initiatives associated with its plan to streamline its
business and corporate operations. These initiatives have been
substantially completed. These initiatives resulted in a pretax charge
in 1992 of $151 million, consisting of $96 million for severance,
benefits, accrued vacation and outplacement costs, $5 million for
relocation costs due to consolidation efforts, $19 million for lease
costs, $15 million for writeoff of goodwill related to identified
divestitures and $16 million of miscellaneous other costs.
18. RECONCILIATION OF NET INCOME (LOSS) TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
In the first quarter of 1992, the Company changed its presentation of
cash flows from operating activities from the indirect method to the
direct method. The following table reconciles net income (loss) to net
cash provided by operating activities:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
(For the year ended December 31, in millions) 1994 | 1993 1992
----------------------------------------------------------------|-------------------------------
<S> <C> | <C> <C>
Net income (loss) $ 545 | $ 141 $ (381)
Reconciling adjustments |
Realized gains (losses) (14) | 21 747
Deferred federal income taxes 276 | (78) (340)
Amortization of deferred policy acquisition |
costs and value of insurance in force 284 | 55 61
Additions to deferred policy acquisition costs (429) | 5 (2)
Trading account investments, |
(purchases) sales, net - | (1,576) (364)
Investment income accrued 17 | 1 29
Premium balances receivable 9 | 41 3
Insurance reserves and accrued expenses 165 | 542 (81)
Restructuring reserves - | (79) 121
Cumulative effects of changes in |
accounting principles - | - (224)
Other, including investment valuation reserves |
in 1993 and 1992 (136) | (445) 487
----------------------------------------------------------------|-------------------------------
|
Net cash provided by (used in) |
operating activities $ 717 | $ (1,372) $ 56
------------------------------------------------------------------------------------------------
</TABLE>
53
<PAGE> 39
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
19. NONCASH INVESTING AND FINANCING ACTIVITIES
Significant noncash investing and financing activities include: a) the
1994 exchange of $23 million of TIHI's investment in The Travelers Inc.
common stock for $35 million of The Travelers Inc. nonredeemable
preferred stock; b) the acquisition of real estate through foreclosures
of mortgage loans amounting to $229 million, $563 million and $753
million in 1994, 1993 and 1992, respectively; c) the acceptance of
purchase money mortgages for sales of real estate aggregating $96
million, $190 million and $72 million in 1994, 1993 and 1992,
respectively; d) the 1993 contribution of TIHI by The Travelers Inc. (see
note 3); e) the 1993 contribution of $400 million of bond investments by
The Travelers Corporation (see note 6); f) increases in investment
valuation reserves in 1993 and 1992 for securities, mortgage loans and/or
investment real estate (see note 15); g) the 1993 transfer of $352
million of mortgage loans and bonds from the Company's general account to
two separate accounts; and h) the contribution in 1992 of Transport Life
Insurance Company's preferred provider and third party administrator
organizations by The Travelers Corporation (see note 3).
54
<PAGE>
COPY OF ANNUAL REPORT DATED DECEMBER 31, 1994
TO WHICH THE REGISTRANT'S FINANCIAL STATEMENTS
ARE INCORPORATED IN THE PROSPECTUS/STATEMENT OF
ADDITIONAL INFORMATION BY REFERENCE TO THIS FILING
Annual Report
For
Fund BD
<PAGE>
UNIVERSAL ANNUITY
ANNUAL REPORT
THE TRAVELERS FUND BD FOR VARIABLE ANNUITIES
DECEMBER 31, 1994
THETRAVELERS (Logo with Umbrella)
THE TRAVELERS INSURANCE COMPANY
ONE TOWER SQUARE
HARTFORD, CONNECTICUT 06183
<PAGE>
<TABLE>
THE TRAVELERS FUND BD
FOR VARIABLE ANNUITIES
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1994
<S> <C>
ASSETS:
Investments in eligible mutual funds at market value:
Smith Barney/Travelers Series Fund Inc.:
Alliance Growth Portfolio, 2,415,317 shares (cost $24,711,667) $ 24,853,616
American Capital Enterprise Portfolio, 469,913 shares (cost $4,695,039) 4,727,321
TBC Managed Income Portfolio, 384,511 shares (cost $3,854,776) 3,802,811
G.T. Global Strategic Income Portfolio, 346,568 shares (cost $3,441,026) 3,261,205
Smith Barney High Income Portfolio, 428,158 shares (cost $4,279,170) 4,165,976
Smith Barney International Equity Portfolio, 1,970,581 shares (cost $20,119,285) 18,937,279
Smith Barney Income and Growth Portfolio, 963,045 shares (cost $9,663,692) 9,466,733
Smith Barney Money Market Portfolio, 10,892,441 shares (cost $10,892,441) 10,892,441
Putnam Diversified Income Portfolio, 947,955 shares (cost $9,598,662) 9,536,432
Smith Barney Pacific Basin Portfolio, 275,866 shares (cost $2,715,769) 2,496,586
MFS Total Return Portfolio, 1,254,970 shares (cost $12,429,289) 12,223,406
Smith Barney Series Fund:
Total Return Portfolio, 126,310 shares (cost $1,347,744) 1,361,617
Dividends receivable 1,592
Receivable for purchase payments and transfers from other Travelers accounts 790,761
Other assets 187
----------
Total Assets 106,517,963
----------
LIABILITIES:
Payable for contract surrenders and transfers to other Travelers accounts 668
Accrued liabilities 14,448
----------
Total Liabilities 15,116
----------
NET ASSETS: $ 106,502,847
----------
----------
See Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
THE TRAVELERS FUND BD
FOR VARIABLE ANNUITIES
<CAPTION>
STATEMENT OF OPERATIONS
FOR THE PERIOD JUNE 20, 1994 (DATE
OPERATIONS COMMENCED) TO DECEMBER 31, 1994
<S> <C> <C>
INVESTMENT INCOME:
Dividends $ 756,136
EXPENSES:
Insurance charges 283,663
Administrative fees 38,302
---------
Total expenses 321,965
---------
Net investment income 434,171
---------
REALIZED AND CHANGE IN UNREALIZED LOSS ON INVESTMENTS:
Realized loss from investment transactions:
Proceeds from investments sold $ 1,718,442
Cost of investments sold 1,721,578
---------
Net realized loss (3,136)
Unrealized loss on investments:
December 31, 1994 (2,023,137)
---------
Net realized and change in unrealized loss (2,026,273)
---------
Net decrease in net assets resulting from operations $ (1,592,102)
---------
---------
See Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
THE TRAVELERS FUND BD
FOR VARIABLE ANNUITIES
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD JUNE 20, 1994 (DATE
OPERATIONS COMMENCED) TO DECEMBER 31, 1994
1994
----
<S> <C>
OPERATIONS:
Net investment income $ 434,171
Net realized loss from investment transactions (3,136)
Net change in unrealized loss on investments (2,023,137)
-----------
Net decrease in net assets resulting from operations (1,592,102)
-----------
UNIT TRANSACTIONS:
Participant purchase payments
(applicable to 107,339,545 units) 108,566,524
Participant transfers from other Travelers accounts
(applicable to 6,423,931 units) 6,471,798
Contract surrenders
(applicable to 761,887 units) (767,511)
Participant transfers to other Travelers accounts
(applicable to 5,473,688 units) (5,520,208)
Other payments to participants
(applicable to 651,396 units) (655,654)
-----------
Net increase in net assets resulting from unit transactions 108,094,949
-----------
Net increase in net assets 106,502,847
NET ASSETS:
Beginning of period --
-----------
End of period $ 106,502,847
-----------
-----------
See Notes to Financial Statements
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Travelers Fund BD for Variable Annuities ("Fund BD") is a
separate account of The Travelers Insurance Company ("Travelers
Insurance"), an indirect wholly owned subsidiary of The Travelers
Inc., and is available for funding certain variable annuity
contracts issued by Travelers Insurance. Fund BD is registered
under the Investment Company Act of 1940, as amended, as a unit
investment trust.
Participant purchase payments applied to Fund BD are invested in
one or more eligible mutual funds in accordance with the selection
made by the contract owner. The eligible mutual funds currently
available under Fund BD are: Alliance Growth Portfolio, American
Capital Enterprise Portfolio, TBC Managed Income Portfolio, G.T.
Global Strategic Income Portfolio, Smith Barney High Income
Portfolio, Smith Barney International Equity Portfolio, Smith
Barney Income and Growth Portfolio, Smith Barney Money Market
Portfolio, Putnam Diversified Income Portfolio, Smith Barney
Pacific Basin Portfolio, and MFS Total Return Portfolio of Smith
Barney/Travelers Series Fund Inc.; and Total Return Portfolio of
Smith Barney Series Fund. Smith Barney/Travelers Series Fund Inc.
is incorporated under Maryland law. Smith Barney Series Fund is
registered as a Massachusetts business trust.
The following is a summary of significant accounting policies
consistently followed by Fund BD in the preparation of its
financial statements.
SECURITIES VALUATION. Investments are valued daily at the net
asset values per share of the underlying mutual funds.
FEDERAL INCOME TAXES. The operations of Fund BD form a part of the
total operations of Travelers Insurance and are not taxed
separately. Travelers Insurance is taxed as a life insurance
company under the Internal Revenue Code of 1986, as amended (the
"Code"). Under existing federal income tax law, no taxes are
payable on the investment income of Fund BD. Fund BD is not taxed
as a "regulated investment company" under Subchapter M of the
Code.
OTHER. Security transactions are accounted for on the trade date.
Dividend income is recorded on the ex-dividend date.
2. INVESTMENTS
Purchases and sales of investments aggregated $109,470,138 and
$1,718,442, respectively, for the period ended December 31, 1994.
Realized gains and losses from investment transactions are
reported on an identified cost basis. The cost of investments in
eligible mutual funds was $107,748,560 at December 31, 1994.
Gross unrealized appreciation for all investments at December 31,
1994 was $188,104. Gross unrealized depreciation for all
investments at December 31, 1994 was $2,211,241.
3. CONTRACT CHARGES
Insurance charges are paid to Travelers Insurance for the
mortality and expense risks assumed by Travelers Insurance. For
contracts with a standard death benefit provision, these charges
are equivalent to 1.02% of the average net assets of Fund BD on an
annual basis. For contracts with an enhanced death benefit
provision, these charges are equivalent to 1.30% of the average
net assets of Fund BD on an annual basis.
For contracts in the accumulation phase with a contract value less
than $40,000, an annual charge of $30 (prorated for partial
periods and the level of participation in other Travelers
Insurance separate accounts) is deducted from participant account
balances and paid to Travelers Insurance to cover contract
administrative charges.
An investment administrative charge is paid to Travelers Insurance
for investment administrative expenses incurred by Travelers
Insurance. This charge is equivalent to 0.15% of the average net
assets of Fund BD on an annual basis.
No sales charge is deducted from participant purchase payments
when they are received. However, Travelers Insurance generally
assesses a contingent deferred sales charge of up to 6% if a
participant's purchase payment is surrendered within six years of
its payment date. Contract surrender payments are stated prior to
the deduction of $70 of contingent deferred sales charges for the
period June 20, 1994 (date operations commenced) to December 31,
1994.
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
4. NET CONTRACT OWNERS' EQUITY
<TABLE>
<CAPTION> DECEMBER 31, 1994
-------------- ----------- -------------- --------------
ACCUMULATION ANNUITY UNIT NET
UNITS UNITS VALUE ASSETS
----- ----- ----- -----
<S> <C> <C> <C> <C>
Smith Barney/Travelers Series Fund Inc.:
Alliance Growth Portfolio
Standard 16,522,104 -- $ 1.047 $17,301,106
Enhanced 7,338,495 -- 1.046 7,673,101
American Capital Enterprise Portfolio
Standard 2,941,129 -- 1.039 3,054,543
Enhanced 1,617,614 -- 1.037 1,677,522
TBC Managed Income Portfolio
Standard 2,849,032 -- 0.997 2,839,409
Enhanced 980,035 -- 0.995 975,339
G.T. Global Strategic Income Portfolio
Standard 2,399,733 -- 0.945 2,267,542
Enhanced 1,062,722 -- 0.944 1,002,703
Smith Barney High Income Portfolio
Standard 3,105,349 -- 0.988 3,066,710
Enhanced 1,147,182 15,190 0.986 1,146,210
Smith Barney International Equity Portfolio
Standard 14,141,474 -- 0.955 13,503,866
Enhanced 5,897,670 -- 0.954 5,623,430
Smith Barney Income and Growth Portfolio
Standard 6,653,987 -- 0.981 6,530,589
Enhanced 3,014,766 -- 0.980 2,954,465
Smith Barney Money Market Portfolio
Standard 7,171,388 -- 1.016 7,283,650
Enhanced 3,736,192 11,682 1.014 3,800,900
Putnam Diversified Income Portfolio
Standard 5,803,299 -- 1.009 5,852,457
Enhanced 3,669,211 13,965 1.007 3,708,873
Smith Barney Pacific Basin Portfolio
Standard 1,842,690 -- 0.899 1,657,099
Enhanced 977,874 -- 0.898 878,097
MFS Total Return Portfolio
Standard 9,098,534 -- 0.979 8,905,025
Enhanced 3,479,312 -- 0.977 3,400,283
Smith Barney Series Fund:
Total Return Portfolio
Standard 1,109,223 -- 1.010 1,120,536
Enhanced 276,653 -- 1.010 279,392
-----------
Net Contract Owners' Equity $ 106,502,847
-----------
-----------
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
5. SCHEDULE OF FUND BD OPERATIONS AND CHANGES IN NET
ASSETS FOR THE PERIOD JUNE 20, 1994 (DATE
OPERATIONS COMMENCED) TO DECEMBER 31, 1994
<TABLE>
<CAPTION>
AMERICAN TBC
ALLIANCE CAPITAL MANAGED
GROWTH ENTERPRISE INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- ---------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends $282,361 $21,050 $49,991
--------- --------- ---------
EXPENSES:
Insurance charges 67,623 14,518 10,802
Administrative fees 9,140 1,949 1,489
--------- --------- ---------
Net investment income (loss) 205,598 4,583 37,700
--------- --------- ---------
REALIZED AND CHANGE IN UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Realized gain (loss) from investment transactions:
Proceeds from investments sold 5,096 35,014 20,259
Cost of investments sold 5,111 33,739 20,167
--------- --------- ---------
Net realized gain (loss) (15) 1,275 92
--------- --------- ---------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) at beginning of period -- -- --
Unrealized gain (loss) at end of period 141,949 32,282 (51,965)
--------- --------- ---------
Net change in unrealized gain (loss) for the period 141,949 32,282 (51,965)
--------- --------- ---------
Net increase (decrease) in net assets resulting
from operations 347,532 38,140 (14,173)
--------- --------- ---------
UNIT TRANSACTIONS:
Participant purchase payments 23,776,112 4,637,048 3,694,743
Participant transfers from other Travelers accounts 1,597,148 232,338 182,215
Contract surrenders (67,786) (24,780) (6,935)
Participant transfers to other Travelers accounts (595,026) (88,314) (33,091)
Other payments to participants (83,773) (62,367) (8,011)
--------- --------- ---------
Net increase in net assets resulting from unit transactions 24,626,675 4,693,925 3,828,921
--------- --------- ---------
Net increase in net assets 24,974,207 4,732,065 3,814,748
NET ASSETS:
Beginning of period -- -- --
--------- --------- ---------
End of period $24,974,207 $4,732,065 $3,814,748
--------- --------- ---------
--------- --------- ---------
<CAPTION>
SMITH
G.T. GLOBAL BARNEY
STRATEGIC HIGH
INCOME INCOME
PORTFOLIO PORTFOLIO
--------- ---------
<S> <C> <C>
INVESTMENT INCOME:
Dividends $31,413 $86,229
--------- ---------
EXPENSES:
Insurance charges 9,319 10,840
Administrative fees 1,269 1,461
--------- ---------
Net investment income (loss) 20,825 73,928
--------- ---------
REALIZED AND CHANGE IN UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Realized gain (loss) from investment transactions:
Proceeds from investments sold 27,857 59,482
Cost of investments sold 28,070 59,585
--------- ---------
Net realized gain (loss) (213) (103)
--------- ---------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) at beginning of period -- --
Unrealized gain (loss) at end of period (179,821) (113,195)
--------- ---------
Net change in unrealized gain (loss) for the period (179,821) (113,195)
--------- ---------
Net increase (decrease) in net assets resulting
from operations (159,209) (39,370)
--------- ---------
UNIT TRANSACTIONS:
Participant purchase payments 3,465,431 4,196,111
Participant transfers from other Travelers accounts 89,455 149,421
Contract surrenders (30,999) (5,694)
Participant transfers to other Travelers accounts (89,376) (86,624)
Other payments to participants (5,057) (924)
--------- ---------
Net increase in net assets resulting from unit transactions 3,429,454 4,252,290
--------- ---------
Net increase in net assets 3,270,245 4,212,920
NET ASSETS:
Beginning of period -- --
--------- ---------
End of period $3,270,245 $4,212,920
--------- ---------
--------- ---------
</TABLE>
<PAGE>
<TABLE>
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
<CAPTION>
SMITH SMITH SMITH
BARNEY BARNEY BARNEY
INTERNATIONAL INCOME MONEY
EQUITY AND GROWTH MARKET
PORTFOLIO PORTFOLIO PORTFOLIO
------------- ---------- ---------
<C> <C> <C>
INVESTMENT INCOME
Dividends $ -- $ 51,640 $ 94,196
------------- ---------- ----------
51,391 25,244 23,636
EXPENSES: 6,926 3,390 3,180
Insurance charges ------------- ---------- ----------
Administrative fees (58,317) 23,006 67,380
------------- ---------- -----------
Net investment income (loss)
REALIZED AND CHANGE IN UNREALIZED GAIN (LOSS) 3,916 144,879 1,183,375
ON INVESTMENTS 4,123 146,756 1,183,375
Realized gain (loss) from investment transactions: ------------- --------- ----------
Proceeds from investments sold (207) (1,877) --
Cost of investments sold ------------- --------- ----------
Net realized gain (loss) -- -- --
(1,182,006) (196,959) --
Change in unrealized gain (loss) on investments: ------------- ---------- ----------
Unrealized gain (loss) at beginning of period (1,182,006) (196,959) --
Unrealized gain (loss) at end of period ------------- ---------- ----------
Net change in unrealized gain (loss) for the period (1,240,530) (175,830) 67,380
------------- ---------- ----------
Net increase (decrease) in net assets resulting
from operations 19,715,616 9,570,839 14,531,209
1,189,569 355,350 705,274
UNIT TRANSACTIONS: (59,929) (47,547) (387,224)
Participant purchase payments (405,848) (150,971) (3,580,900)
Participant transfers from other Travelers accounts (71,582) (66,787) (251,189)
Contract surrenders ------------- ----------- ----------
Participant transfers to other Travelers accounts
Other payments to participants 20,367,826 9,660,884 11,017,170
------------- ----------- ----------
Net increase in net assets resulting from unit transactions 19,127,296 9,485,054 11,084,550
Net increase in net assets
-- -- -
NET ASSETS: ------------ ---------- ------------
Beginning of period $ 19,127,296 $9,485,054 $11,084,550
------------ ---------- ----------
End of period ------------ ---------- ----------
<PAGE>
SMITH
PUTNAM BARNEY MFS
DIVERSIFIED PACIFIC TOTAL
INCOME BASIN RETURN
PORTFOLIO PORTFOLIO PORTFOLIO
----------- --------- ---------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 78,181 $ -- $ 61,075
----------- --------- ---------
26,796 7,615 35,131
EXPENSES: 3,552 1,035 4,808
Insurance charges ----------- --------- ---------
Administrative fees 47,833 (8,650) 21,136
----------- --------- ---------
Net investment income (loss)
REALIZED AND CHANGE IN UNREALIZED GAIN (LOSS) 110,000 51,475 76,984
ON INVESTMENTS 108,632 55,325 76,589
Realized gain (loss) from investment transactions: ---------- --------- ---------
Proceeds from investments sold 1,368 (3,850) 395
Cost of investments sold ----------- --------- ---------
Net realized gain (loss) -- -- --
(62,230) (219,183) (205,882)
Change in unrealized gain (loss) on investments: ------------ ----------- ----------
Unrealized gain (loss) at beginning of period (62,230) (219,183) (205,882)
Unrealized gain (loss) at end of period ------------ ----------- ----------
Net change in unrealized gain (loss) for the period (13,029) (231,683) (184,351)
------------ ----------- ----------
Net increase (decrease) in net assets resulting
from operations 9,015,388 2,824,957 11,987,268
650,976 113,041 971,906
UNIT TRANSACTIONS: (31,403) (24,265) (80,949)
Participant purchase payments (51,683) (111,286) (327,089)
Participant transfers from other Travelers accounts (8,919) (35,568) (61,477)
Contract surrenders ------------ ----------- -----------
Participant transfers to other Travelers accounts
Other payments to participants 9,574,359 2,766,879 12,489,659
------------ ------------ -----------
Net increase in net assets resulting from unit transactions 9,561,330 2,535,196 12,305,308
Net increase in net assets
-- -- --
NET ASSETS: ------------ ----------- ------------
Beginning of period $9,561,330 $2,535,196 $12,305,308
------------ ----------- ------------
End of period ------------ ----------- ------------
<PAGE>
TOTAL
RETURN
PORTFOLIO TOTAL
--------- ---------
<C> <C>
INVESTMENT INCOME:
Dividends $ -- $ 756,136
----------- ---------
EXPENSES:
Insurance charges 748 283,663
Administrative fees 103 38,302
----------- ----------
Net investment income (loss) (851) 434,171
----------- ----------
REALIZED AND CHANGE IN UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Realized gain (loss) from investment transactions:
Proceeds from investments sold 105 1,718,442
Cost of investments sold 106 1,721,578
---------- ----------
(1) (3,136)
Net realized gain (loss) --------- ----------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) at beginning of period -- --
Unrealized gain (loss) at end of period 13,873 (2,023,137)
--------- -----------
Net change in unrealized gain (loss) for the period 13,873 (2,023,137)
--------- -----------
Net increase (decrease) in net assets resulting
from operations 13,021 (1,592,102)
--------- ------------
UNIT TRANSACTIONS:
Participant purchase payments 1,151,802 108,566,524
Participant transfers from other Travelers accounts 235,105 6,471,798
Contract surrenders -- (767,511)
Participant transfers to other Travelers accounts -- (5,520,208)
Other payments to participants -- (655,654)
---------- ------------
Net increase in net assets resulting from unit transactions 1,386,907 108,094,949
---------- ------------
Net increase in net assets 1,399,928 106,502,847
NET ASSETS:
Beginning of period -- --
------------ ------------
End of period $1,399,928 $106,502,847
------------ ------------
------------ ------------
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONTINUED
6. SCHEDULE OF ACCUMULATION AND ANNUITY
UNITS FOR FUND BD FOR THE PERIOD JUNE
20, 1994 (DATE OPERATIONS COMMENCED)
TO DECEMBER 31, 1994
<TABLE>
<CAPTION>
AMERICAN TBC G.T. GLOBAL
ALLIANCE CAPITAL MANAGED STRATEGIC
GROWTH ENTERPRISE INCOME INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Accumulation and annuity units
beginning of period -- -- -- --
Accumulation units purchased and
transferred from other Travelers accounts 24,584,144 4,729,348 3,877,253 3,588,907
Accumulation units redeemed and
transferred to other Travelers accounts (723,545) (170,605) (48,186) (126,452)
Annuity units -- -- -- --
---------- ---------- ---------- ----------
Accumulation and annuity units
end of period 23,860,599 4,558,743 3,829,067 3,462,455
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
<CAPTION>
SMITH SMITH BARNEY SMITH BARNEY SMITH
BARNEY INTERNATIONAL INCOME BARNEY MONEY
HIGH INCOME EQUITY AND GROWTH MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Accumulation and annuity units
beginning of period -- -- -- --
Accumulation units purchased and
transferred from other Travelers accounts 4,360,944 20,573,922 9,936,934 15,099,263
Accumulation units redeemed and
transferred to other Travelers accounts (92,280) (534,778) (268,181) (4,179,275)
Annuity units (943) -- -- (726)
---------- ----------- ---------- -----------
Accumulation and annuity units
end of period 4,267,721 20,039,144 9,668,753 10,919,262
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
<CAPTION>
PUTNAM SMITH BARNEY
DIVERSIFIED PACIFIC MFS TOTAL
INCOME BASIN TOTAL RETURN RETURN
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Accumulation and annuity units
beginning of period -- -- -- --
Accumulation units purchased and
transferred from other Travelers accounts 9,577,518 2,997,045 13,052,322 1,385,876
Accumulation units redeemed and
transferred to other Travelers accounts (90,159) (176,481) (474,476) --
Annuity units (884) -- -- --
---------- ---------- ----------- ----------
Accumulation and annuity units
end of period 9,486,475 2,820,564 12,577,846 1,385,876
---------- ---------- ----------- ----------
---------- ---------- ----------- ----------
</TABLE>
<PAGE>
INDEPENDENT ACCOUNTANTS
-------------------------
COOPERS & LYBRAND, L.L.P.
HARTFORD, CONNECTICUT
VG-FNDBD (Annual) (2-95) Printed in U.S.A.
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) The financial statements of the Registrant and the Report of
Independent Accountants thereto are contained in the Statement
of Additional Information. The financial statements of the
Registrant include:
Statement of Assets and Liabilities as of December 31, 1994
Statement of Operations for the period June 20, 1994 (date
operations commenced) to December 31, 1994
Statement of Changes in Net Assets for the period
June 20, 1994 (date operations commenced) to
December 31, 1994
Statement of Investments as of December 31, 1994
Notes to Financial Statements
The consolidated financial statements of The Travelers
Insurance Company and Subsidiaries and the Reports of
Independent Accountants, are contained in the Statement of
Additional Information. The consolidated financial statements
of The Travelers Insurance Company and Subsidiaries include:
Consolidated Statement of Operations and Retained Earnings
for the years ended December 31, 1994, 1993 and 1992
Consolidated Balance Sheet as of December 31, 1994 and
1993
Consolidated Statement of Cash Flows for the years ended
December 31, 1994, 1993 and 1992
Notes to Consolidated Financial Statements
(b) Exhibits
*1.Resolution of The Travelers Insurance Company Board of
Directors authorizing the establishment of the Registrant.
(Incorporated herein by reference to the Registration
Statement on Form N-4, File No. 33-73466, filed on December
27, 1993.)
2.Exempt.
3.Form of Distribution and Management Agreement among the
Registrant, The Travelers Insurance Company and Travelers
Equities Sales, Inc.
*4.Form of Variable Annuity Contracts. (Incorporated herein by
reference to Pre-Effective Amendment No. 1 to the
Registration Statement on Form N-4, File No. 33-73466, filed
on May 20, 1994.)
*6(a).Charter of The Travelers Insurance Company, as amended on
October 19, 1994. (Incorporated herein by reference to
Exhibit 3(a)(i) to Registration Statement on Form S-2,
File No. 33-58677, filed via Edgar on April 18, 1995.)
*6(b).By-Laws of The Travelers Insurance Company, as amended
on October 20, 1994. (Incorporated herein by reference to
Exhibit 3(b)(i) to the Registration Statement on Form
S-2, File No.33-58677, filed via Edgar on April 18,
1995.)
*9.Opinion of Counsel as to the legality of securities being
registered. (Incorporated by reference to the Registrant's
most recent 24f-2 Notice filed on February 27, 1995.)
<PAGE>
10(a).Consent of Coopers & Lybrand L.L.P., Independent
Accountants, to the inclusion of their report on the
audited Financial Statements of the Registrant and their
reports on the consolidated financial statements of The Travelers
Insurance Company contained in Part B of this Registration Statement,
and to reference in the Statement of Additional Information to such
firm as "Experts" in accounting and auditing.
10(b).Consent of KPMG Peat Marwick LLP, Independent Auditors,
to the inclusion in this Form N-4 of their report on the
consolidated financial statements of The Travelers
Insurance Company contained in Part B of this
Registration Statement.
13.Schedule for Computation of Total Return Calculations --
Standardized and Non-Standardized.
14.Representation concerning reliance upon No-Action Letter
IP-6-88.
15(a). Power of Attorney authorizing Ernest J. Wright as signatory
for Jay S. Fishman.
15(b).Powers of Attorney authorizing Jay S. Fishman as a
signatory for Robert I. Lipp, Charles O. Prince, III, Marc P. Weill,
Irwin R. Ettinger, Michael A. Carpenter and
Donald T. DeCarlo.
27.Financial Data Schedule.
*Previously filed and incorporated herein by reference
<PAGE>
Item 25. Directors and Officers of the Depositor
Name and Principal Positions and Offices
Business Address with Depositor
Robert I. Lipp* Director, Chairman and President
Jay S. Fishman* Director and Chief Financial
Officer
Charles O. Prince, III** Director
Marc P. Weill** Director and Senior Vice
President
Irwin R. Ettinger** Director
Michael A. Carpenter* Director
Donald T. DeCarlo* Director, General Counsel and
Secretary
Jay S. Benet* Senior Vice President
Robert E. Evans* Senior Vice President
James L. Morgan* Senior Vice President
and Chief Accounting Officer
William H. White* Vice President and Treasurer
Ian R. Stuart* Vice President and Financial
Officer
Kathleen A. D'Auria* Vice President
George C. Kokulis* Vice President
Gene S. Lunman* Vice President and Actuary
Kathleen A. Preston* Vice President
Charles N. Vest* Vice President and Actuary
Robert Hamilton* Second Vice President
Kyle Rotherie* Second Vice President
Elizabeth Charron* Second Vice President
Ernest J. Wright* Counsel and Assistant Secretary
Principal Business Address: **
* The Travelers Insurance Company Travelers Group Inc.
One Tower Square 388 Greenwich Street
Hartford, CT 06183 New York, N.Y. 10013
<PAGE>
Item 26.Persons Controlled by or Under Common Control with the
Depositor or Registrant
<PAGE>
OWNERSHIP OF THE TRAVELERS INSURANCE COMPANY
<TABLE>
<CAPTION>
Company State of Organization Ownership Principal Business
- ------- --------------------- --------- ------------------
<S> <C> <C> <C>
Travelers Group Inc. Delaware Publicly Held --------------
Associated Madison Companies Inc. Delaware 100.00 --------------
The Travelers Insurance Group, Inc. Connecticut 100.00 --------------
The Travelers Insurance Company Connecticut 100.00 Insurance
- --------------------------------------------------------------------------------------------------------------
</TABLE>
PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
THE TRAVELERS INSURANCE COMPANY
<TABLE>
<CAPTION>
% of Voting
Securities
Owned
Directly
or
Indirectly
by
Travelers
State of Group
Organization Inc. Principal Business
------------ --------- -------------------
<S> <C> <C> <C>
AC Health Ventures, Inc. Delaware 100.00 Inactive
AMCO Biotech, Inc. Delaware 100.00 Inactive
Associated Madison Companies, Inc. Delaware 100.00 Holding company.
American National Life Insurance Turks and Caicos 100.00 Insurance
(T & C), Ltd. Islands
ERISA Corporation New York 100.00 Inactive
Mid-America Insurance Services, Inc. Georgia 100.00 Third party administrator
National Marketing Corporation Pennsylvania 100.00 Inactive
PFS Custodial Services, Inc. Georgia 100.00 General partner
PFS Distributors, Inc. Georgia 100.00 General partner
PFS Investments Inc. Georgia 100.00 Broker dealer
PFS Services, Inc. Georgia 100.00 General partner
Primerica Finance Corporation Delaware 100.00 Holding company
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
% of Voting
Securities
Owned
Directly
or
Indirectly
by
Travelers
State of Group
Organization Inc. Principal Business
------------ --------- -------------------
<S> <C> <C> <C>
American Capital Custodial Delaware 100.00 Limited partner
Services, Inc.
American Capital T.A., Inc. Delaware 100.00 Joint venture partner
Primerica Financial Services Home Georgia 100.00 Mortgage loan broker
Mortgages, Inc.
Primerica Financial Services, Inc. Nevada 100.00 General agency
Primerica Financial Services New York 100.00 General agency licensing
Agency of New York, Inc.
Primerica Financial Services Connecticut 100.00 General agency licensing
Insurance Marketing of
Connecticut, Inc.
Primerica Financial Services Idaho 100.00 General agency licensing
Insurance Marketing of
Idaho, Inc.
Primerica Financial Services Nevada 100.00 General agency licensing
Insurance Marketing of
Nevada, Inc.
Primerica Financial Services Pennsylvania 100.00 General agency licensing
Insurance Marketing of
Pennsylvania, Inc.
Primerica Financial Services United States 100.00 General agency licensing
Insurance Marketing of Virgin Islands
the Virgin Islands, Inc.
Primerica Financial Services Wyoming 100.00 General agency licensing
Insurance Marketing of
Wyoming, Inc.
Primerica Financial Services Delaware 100.00 General agency licensing
Insurance Marketing, Inc.
Primerica Financial Services of Alabama 100.00 General agency licensing
Alabama, Inc.
Primerica Financial Services of New Mexico 100.00 General agency licensing
New Mexico, Inc.
Primerica Insurance Agency of Massachusetts 100.00 General agency licensing
Massachusetts, Inc.
Primerica Insurance Marketing Puerto Rico 100.00 Insurance agency
Services of
Puerto Rico, Inc.
Primerica Insurance Services of Louisiana 100.00 General agency licensing
Louisiana, Inc.
Primerica Insurance Services of Maryland 100.00 General agency licensing
Maryland, Inc.
Primerica Services, Inc. Georgia 100.00 Inactive
RCM Acquisition Inc. Delaware 100.00 Investments
SCN Acquisitions Company Delaware 100.00 Investments
SL&H Reinsurance, Ltd. Turks and Caicos 100.00 Reinsurance
Islands
Southwest Service Agreements, North Carolina 100.00 Warranty/service agreements
Inc.
Southwest Warranty Corporation Florida 100.00 Extended automobile warranty
The Travelers Insurance Group Inc. Connecticut 100.00 Holding company
Harbour Associates I, Inc. Delaware 100.00 Real estate holding
Deer Run II, Inc. Delaware 100.00 Real estate holding
Net & Twine II Corporation Delaware 100.00 Real estate holding
KP Properties Corporation Massachusetts 100.00 Real estate
KPI 85, Inc. Massachusetts 100.00 Real estate
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
% of Voting
Securities
Owned
Directly
or
Indirectly
by
Travelers
State of Group
Organization Inc. Principal Business
------------ --------- -------------------
<S> <C> <C> <C>
KRA Advisers Corporation Massachusetts 100.00 Real estate
KRP Corporation Massachusetts 100.00 Real estate
La Metropole S.A. Belgium 98.83 P-C insurance/reinsurance
The Plaza Corporation Connecticut 100.00 Holding company
Joseph A. Wynne Agency California 100.00 Inactive
The Copeland Companies New Jersey 100.00 Holding company
American Odyssey Funds New Jersey 100.00 Investment advisor
Management, Inc.
American Odyssey Maryland 100.00 Investment management
Funds, Inc.
Copeland Administrative New Jersey 100.00 Administrative services
Services, Inc.
Copeland Associates, Delaware 100.00 Fixed/variable annuities
Inc.
Copeland Ohio 99.00 Fixed/variable annuities
Associates
Agency of
Ohio, Inc.
Copeland Alabama 100.00 Fixed/variable annuities
Associates of
Alabama, Inc.
Copeland Montana 100.00 Fixed/variable annuities
Associates of
Montana, Inc.
Copeland Benefits New Jersey 51.00 Investment marketing
Management
Company
Copeland Equities, New Jersey 100.00 Fixed/variable annuities
Inc.
H.C. Copeland Massachusetts 100.00 Fixed annuities
Associates,
Inc. of
Massachusetts
Copeland Financial New Jersey 100.00 Investment advisory services.
Services, Inc.
Copeland Healthcare New Jersey 100.00 Life insurance marketing
Services, Inc.
H.C. Copeland and Texas 100.00 Fixed/variable annuities
Associates, Inc. of
Texas
The Parker Realty and Vermont 57.98 Real estate
Insurance Agency, Inc.
Travelers General Agency of Hawaii 100.00 Insurance agency
Hawaii, Inc.
The Prospect Company Delaware 100.00 Investments
89th & York Avenue New York 100.00 Real estate
Corporation
979 Third Avenue Delaware 100.00 Real estate
Corporation
Meadow Lane, Inc. Georgia 100.00 Real estate development
Panther Valley, Inc. New Jersey 100.00 Real estate management
Prospect Management Delaware 100.00 Real estate management
Services Company
The Travelers Asset Funding Connecticut 100.00 Investment adviser
Corporation
Travelers Capital Connecticut 100.00 Furniture/equipment
Funding Corporation
The Travelers Corporation of Bermuda 99.99 Pensions
Bermuda Limited
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
% of Voting
Securities
Owned
Directly
or
Indirectly
by
Travelers
State of Group
Organization Inc. Principal Business
------------ --------- -------------------
<S> <C> <C> <C>
The Travelers Indemnity Company Connecticut 100.00 P-C insurance
Commercial Insurance Delaware 100.00 Holding company
Resources, Inc.
Gulf Insurance Company Missouri 100.00 P-C insurance
Atlantic Insurance Texas 100.00 P-C insurance
Company
Gulf Risk Delaware 100.00 Claims/risk management
Services, Inc.
Gulf Underwriters North Carolina 100.00 P-C ins/surplus lines
Insurance
Company
Penn Casualty Missouri 100.00 P-C insurance
Insurance
Company
Select Insurance Texas 100.00 P-C insurance
Company
Countersignature Agency, Florida 100.00 Countersign ins policies
Inc.
First Trenton Indemnity New Jersey 100.00 P-C insurance
Company
Laramia Insurance Agency, North Carolina 100.00 Flood insurance
Inc.
Lynch, Ryan & Associates, Massachusetts 100.00 Cost containment
Inc.
The Charter Oak Fire Connecticut 100.00 P-C insurance
Insurance Company
The Exchange Agency, Inc. Delaware 100.00 Insurance agency
The Phoenix Insurance Connecticut 100.00 P-C insurance
Company
Constitution State Montana 100.00 Service company
Service Company
The Travelers Georgia 100.00 P-C insurance
Indemnity Company
of America
The Travelers Connecticut 100.00 Insurance
Indemnity Company
of Connecticut
The Travelers Illinois 100.00 P-C insurance
Indemnity Company
of Illinois
The Premier Insurance Massachusetts 100.00 Insurance
Company of Massachusetts
The Travelers Home and Indiana 100.00 P-C insurance
Marine Insurance Company
The Travelers Lloyds Texas 100.00 Non-life insurance
Insurance Company
TI Home Mortgage Brokerage, Delaware 100.00 Mortgage brokerage services
Inc.
TravCo Insurance Company Indiana 100.00 P-C insurance
Travelers Medical Delaware 100.00 Managed care
Management Services Inc.
The Travelers Insurance Company Connecticut 100.00 Insurance
Delaware Windtree Realty Delaware 100.00 Real estate holdings
Corporation
Market Funding Corporation Delaware 100.00 Real estate management
I
Market Funding Corporation Delaware 100.00 Real estate management
II
Red Oak Plaza Holding Delaware 100.00 Inactive
Company, Inc.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
% of Voting
Securities
Owned
Directly
or
Indirectly
by
Travelers
State of Group
Organization Inc. Principal Business
------------ --------- -------------------
<S> <C> <C> <C>
The Travelers Life and Connecticut 100.00 Life insurance
Annuity Company
Three Parkway Inc. - I Pennsylvania 100.00 Investment real estate
Three Parkway Inc. - II Pennsylvania 100.00 Investment real estate
Three Parkway Inc. - III Pennsylvania 100.00 Investment real estate
Travelers Insurance Georgia 100.00 Holding company
Holdings Inc.
AC RE, Ltd. Bermuda 100.00 Reinsurance
American Financial Texas 100.00 Insurance
Life Insurance
Company
Transport Life Texas 100.00 Insurance
Insurance
Company
Continental Texas 100.00 Insurance
Life
Insurance
Company
Primerica Life Massachusetts 100.00 Life insurance
Insurance Company
National Benefit New York 100.00 Insurance
Life Insurance
Company
Primerica Canada 100.00 Holding company
Financial
Services
(Canada) Ltd.
PFSL Canada 100.00 Mutual fund dealer
Investments
Canada Ltd.
Primerica Canada 82.82 General agent
Financial
Services
Ltd.
Primerica Canada 100.00 Life insurance
Life
Insurance
Company of
Canada
The Travelers Insurance Australia 100.00 Inactive
Corporation Proprietary
Limited
The Travelers Marine Corporation California 100.00 General insurance brokerage
The Travelers Realty Investment Connecticut 100.00 Real estate investment advisor
Company
AdVision, Inc. Connecticut 100.00 Advertising agency
Constitution Plaza, Inc. Connecticut 100.00 Real estate brokerage
Travelers Asset Management New York 100.00 Investment adviser
International Corporation
Travelers Canada Corporation Canada 100.00 Inactive
Travelers Equities Sales, Inc. Connecticut 100.00 Broker dealer
Travelers Mortgage Securities Delaware 100.00 Collateralized obligations
Corporation
Travelers of Ireland Limited Ireland 99.90 Data processing
Travelers Specialty Property Connecticut 100.00 Insurance management
Casualty Company, Inc.
CCC Holdings, Inc. Delaware 100.00 Holding company
Commercial Credit Company Delaware 100.00 Holding company.
American Health and Life Maryland 100.00 LH&A Insurance
Insurance Company
Brookstone Insurance Company Vermont 100.00 Insurance managers
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
% of Voting
Securities
Owned
Directly
or
Indirectly
by
Travelers
State of Group
Organization Inc. Principal Business
------------ --------- -------------------
<S> <C> <C> <C>
CC Finance Company, Inc. New York 100.00 Consumer lending
CC Financial Services, Inc. Hawaii 100.00 Financial services
CCC Fairways, Inc. Delaware 100.00 Investment company
City Loan Financial Services, Ohio 100.00 Consumer finance
Inc.
Commercial Credit Banking Oregon 100.00 Consumer finance
Corporation
Commercial Credit Consumer Minnesota 100.00 Consumer finance
Services, Inc.
Commercial Credit Corporation Alabama 100.00 Consumer finance
(AL)
Commercial Credit Corporation California 100.00 Consumer finance
(CA)
Commercial Credit Corporation Iowa 100.00 Consumer finance
(IA)
Commercial Credit Corporation Kentucky 100.00 Consumer finance
(KY)
Certified Insurance Agency, Kentucky 100.00 Insurance agency
Inc.
Commercial Credit Kentucky 100.00 Investment company
Investment, Inc.
National Life Insurance Kentucky 100.00 Insurance agency
Agency of Kentucky, Inc.
Union Casualty Insurance Kentucky 100.00 Insurance agency
Agency, Inc.
Commercial Credit Corporation Maryland 100.00 Consumer finance
(MD)
Action Data Services, Inc. Missouri 100.00 Data processing
Commercial Credit Plan, Oklahoma 100.00 Consumer finance
Incorporated (OK)
Commercial Credit Corporation New Jersey 100.00 Consumer finance
(NJ)
Commercial Credit Corporation New York 100.00 Consumer finance
(NY)
Commercial Credit Corporation South Carolina 100.00 Consumer finance
(SC)
Commercial Credit Corporation West Virginia 100.00 Consumer finance
(WV)
Commercial Credit Corporation NC North Carolina 100.00 Consumer finance
Commercial Credit Europe, Inc. Delaware 100.00 Inactive
Commercial Credit Far East Inc. Delaware 100.00 Inactive
Commercial Credit Insurance Maryland 100.00 Insurance broker
Services, Inc.
Commercial Credit Insurance Mississippi 100.00 Insurance agency
Agency (P&C) of
Mississippi, Inc.
Commercial Credit Insurance Alabama 100.00 Insurance agency
Agency of Alabama, Inc.
Commercial Credit Insurance Kentucky 100.00 Insurance agency
Agency of Kentucky, Inc.
Commercial Credit Insurance Massachusetts 100.00 Insurance agency
Agency of Massachusetts,
Inc.
Commercial Credit Insurance Nevada 100.00 Credit LH&A, P-C insurance
Agency of Nevada, Inc.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
% of Voting
Securities
Owned
Directly
or
Indirectly
by
Travelers
State of Group
Organization Inc. Principal Business
------------ --------- -------------------
<S> <C> <C> <C>
Commercial Credit Insurance Ohio 100.00 Insurance agency/broker
Agency of Ohio, Inc.
Commercial Credit Insurance New Mexico 100.00 Insurance agency/broker
Agency of New Mexico,
Inc.
Commercial Credit International, Delaware 100.00 Holding company
Inc.
Commercial Credit Oregon 100.00 International lending
International Banking
Corporation
Commercial Credit Canada 100.00 Second mortgage loans
Corporation CCC
Limited
Commercial Credit Brazil 99.00 Inactive
Services do
Brazil Ltda.
Commercial Credit Services Belgium 100.00 Inactive
Belgium S.A.
Commercial Credit Services Israel 100.00 Equipment leasing
Israel Limited
Industrial Leasing Israel 99.71 Equipment leasing
Services Limited
Comlease Ltd. Israel 99.99 Equipment leasing
Commercial Credit Limited Delaware 100.00 Inactive
Commercial Credit Loan, Inc. New York 100.00 Consumer finance
(NY)
Commercial Credit Loans, Inc. Delaware 100.00 Consumer finance
(DE)
Commercial Credit Loans, Inc. Ohio 100.00 Consumer finance
(OH)
Commercial Credit Loans, Inc. Virginia 100.00 Consumer finance
(VA)
Commercial Credit Management Maryland 100.00 Intercompany services
Corporation
Commercial Credit Plan Tennessee 100.00 Consumer finance
Incorporated (TN)
Commercial Credit Plan Utah 100.00 Consumer finance
Incorporated (UT)
Commercial Credit Plan Delaware 100.00 Consumer finance
Incorporated of Georgetown
Commercial Credit Plan Virginia 100.00 Consumer finance
Industrial Loan Company
Commercial Credit Plan, Colorado 100.00 Consumer finance
Incorporated (CO)
Commercial Credit Plan, Delaware 100.00 Consumer finance
Incorporated (DE)
Commercial Credit Plan, Georgia 100.00 Consumer finance
Incorporated (GA)
Commercial Credit Plan, Missouri 100.00 Consumer finance
Incorporated (MO)
Commercial Credit Securities, Delaware 100.00 Broker dealer
Inc.
DeAlessandro & Associates, Inc. Delaware 100.00 Insurance consulting
Park Tower Holdings, Inc. Delaware 100.00 Holding company
CC Retail Services, Inc. Delaware 100.00 Leasing, financing
Troy Textiles, Inc. Delaware 100.00 Factoring. Company is inactive.
COMCRES, Inc. Delaware 100.00 Inactive
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
% of Voting
Securities
Owned
Directly
or
Indirectly
by
Travelers
State of Group
Organization Inc. Principal Business
------------ --------- -------------------
<S> <C> <C> <C>
Commercial Credit Delaware 100.00 Direct loan
Development Corporation
Myers Park Properties, Delaware 100.00 Inactive
Inc.
Penn Re, Inc. North Carolina 100.00 Management company
Plympton Concrete Products, Inc. Delaware 100.00 Inactive
Resource Deployment, Inc. Texas 100.00 Management company
The Travelers Bank Delaware 100.00 Banking services
The Travelers Bank USA Delaware 100.00 Credit card bank
Travelers Home Equity, Inc. 100.00 Financial services
CC Consumer Services of Alabama 100.00 Financial services
Alabama, Inc.
CC Home Lenders Financial, Georgia 100.00 Financial services
Inc.
CC Home Lenders, Inc. Ohio 100.00 Financial services
Commercial Credit Texas 100.00 Consumer finance
Corporation (TX)
Commercial Credit Financial Kentucky 100.00 Consumer finance
of Kentucky, Inc.
Commercial Credit Financial West Virginia 100.00 Consumer finance
of West Virginia, Inc.
Commercial Credit Plan Pennsylvania 100.00 Financial services
Consumer Discount Company
Commercial Credit Services Kentucky 100.00 Financial services.
of Kentucky, Inc.
Travelers Home Equity North Carolina 100.00 Financial services
Services, Inc.
Verochris Corporation Delaware 100.00 Joint venture company
AMC Aircraft Corp. Delaware 100.00 Aviation
Voyager Guaranty Insurance Missouri 100.00 P-C insurance
Company
World Service Life Insurance Colorado 100.00 Life insurance
Company
D.I.R.E.C.T. Resources, Inc. Delaware 100.00 Fraud/subrogation recovery
Greenwich Street Capital Partners, Inc. Delaware 100.00 Investments
Greenwich Street Investments, Inc. Delaware 100.00 Investments
Greenwich Street Capital Partners Delaware 100.00 Investments
Offshore Holdings, Inc.
Margco Holdings, Inc. Delaware 100.00 Holding company
Berg Associates New Jersey 100.00 Inactive
Berg Enterprises Realty, Inc. (NY) New York 100.00 Inactive
Dublin Escrow, Inc. California 100.00 Inactive
M.K.L. Realty Corporation New Jersey 66.67 Holding company
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
% of Voting
Securities
Owned
Directly
or
Indirectly
by
Travelers
State of Group
Organization Inc. Principal Business
------------ --------- -------------------
<S> <C> <C> <C>
MFC Holdings, Inc. Delaware 100.00 Inactive
MRC Holdings, Inc. Delaware 100.00 Real estate
The Berg Agency, Inc. (NJ) 100.00 Inactive
Mirasure Insurance Company, Ltd. Bermuda 100.00 Inactive
PA/RCM Corporation Delaware 100.00 Inactive
Pacific Basin Investments Ltd. Delaware 100.00 Inactive
Primerica Corporation (WY) Wyoming 100.00 Inactive
Primerica, Inc. Delaware 100.00 Name saver
RCM Capital Trust Company California 100.00 Trust company
Smith Barney Corporate Trust Company 100.00 Trust company
Smith Barney Holdings Inc. Delaware 100.00 Holding company
Mutual Management Corp. New York 100.00 Investment adviser
Smith Barney Asset Management Japan 100.00 Investment manager
Co., Ltd.
R-H Sports Enterprises Inc Georgia 100.00 Investment banking
SB Cayman Holdings I Inc. Delaware 100.00 Holding company
SB Cayman Holdings II Inc. Delaware 100.00 Holding company
SBS Software Inc. Delaware 100.00 Financial software
Smith Barney (Delaware) Inc. Delaware 100.00 Investment banking
1345 Media Corp. Delaware 100.00 Holding company
Americas Avenue Corporation Delaware 100.00 Holding company
Corporate Realty Advisors, Inc. Delaware 100.00 Investment adviser
CRA Acquisition Corp. Delaware 100.00 Real estate
IPO Holdings Inc. Delaware 100.00 Holding company
Institutional Property Delaware 100.00 Sale leaseback transactions
Owners, Inc. IV
Institutional Property Delaware 100.00 Sale leaseback transactions
Owners, Inc. V
Institutional Property Delaware 100.00 Sale leaseback transactions
Owners, Inc. VI
Institutional Property Delaware 100.00 Sale leaseback transactions
Owners, Inc. VII
MLA 50 Corporation Delaware 100.00 Real estate
MLA GP Corporation Delaware 100.00 Real estate
Municipal Markets Advisors Delaware 100.00 Real estate
Incorporated
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
% of Voting
Securities
Owned
Directly
or
Indirectly
by
Travelers
State of Group
Organization Inc. Principal Business
------------ --------- -------------------
<S> <C> <C> <C>
SBF Corp. Delaware 100.00 General partner
Smith Barney Acquisition Delaware 100.00 Investment advisor
Corporation
Smith Barney Commercial Corp. Delaware 100.00 Consumer credit
Smith Barney Funding Holding Delaware 100.00 Broker dealer
Corp.
Smith Barney Global Capital Delaware 100.00 Investment advisor
Management, Inc.
Smith Barney Investment, Inc. Delaware 100.00 Investment advisor
Smith Barney Offshore, Inc. Delaware 100.00 Investment advisor
Decathlon Offshore Limited Cayman Islands 100.00 Commodity fund
Smith Barney Pension Advisors Delaware 100.00 Investment advisor
Corp.
Smith Barney Realty Advisors, Delaware 100.00 Inactive
Inc.
Smith Barney Realty, Inc. Delaware 100.00 Real estate broker
Smith Barney Risk Investors, Inc. Delaware 100.00 General partner
Smith Barney Venture Corp. Delaware 100.00 Venture capital
First Century Company Delaware 100.00 Holding company
First Century Management Delaware 100.00 Investment adviser
Company
Smith Barney Asia Inc. Delaware 100.00 Corporate finance
Smith Barney Asset Management Group Singapore 100.00 Asset management
(Asia) Pte. Ltd.
Smith Barney Canada Inc. Canada 100.00 Investment advisor
Smith Barney Capital Services Inc. Delaware 100.00 Derivative product transactions
Smith Barney Cayman Islands, Ltd. Cayman Islands 100.00 Market debt securities
Smith Barney Commercial Corporation Hong Kong 99.00 Investment adviser
Asia Limited
Smith Barney Europe Holdings, Ltd. United Kingdom 100.00 Holding company
Smith Barney Europe, Ltd. United Kingdom 100.00 Broker dealer
Smith Barney Shearson Futures, United Kingdom 100.00 Broker dealer
Ltd.
Smith Barney Futures Management Inc. Delaware 100.00 Investment banking
Harbourer Fund, Ltd. Bahama Islands 100.00 Investment fund
Smith Barney Offshore Fund Ltd. 100.00 Investment fund
Smith Barney Shearson Overview Dublin 100.00 Investment company
Fund PLC
Smith Barney Inc. Delaware 100.00 Broker dealer
SBHU Life Agency, Inc. Delaware 100.00 Insurance broker
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
% of Voting
Securities
Owned
Directly
or
Indirectly
by
Travelers
State of Group
Organization Inc. Principal Business
------------ --------- -------------------
<S> <C> <C> <C>
Robinson-Humphrey Insurance Georgia 100.00 Insurance
Services Inc.
Robinson-Humphrey Alabama 100.00 Insurance
Insurance Services
of Alabama, Inc.
SBHU Life & Health Agency, Delaware 100.00 Insurance broker
Inc.
SBHU Life Agency of Arizona, Arizona 100.00 Insurance broker
Inc.
SBHU Life Agency of Indiana, Indiana 100.00 Insurance broker
Inc.
SBHU Life Agency of Utah, Utah 100.00 Insurance broker
Inc.
SBHU Life Insurance Agency Massachusetts 100.00 Insurance broker
of Massachusetts, Inc.
SBS Insurance Agency of Hawaii 100.00 Insurance broker
Hawaii, Inc.
SBS Insurance Agency of Idaho 100.00 Insurance broker
Idaho, Inc.
SBS Insurance Agency of Maine 100.00 Insurance broker
Maine, Inc.
SBS Insurance Agency of Montana 100.00 Insurance broker
Montana, Inc.
SBS Insurance Agency of Nevada 100.00 Insurance broker
Nevada, Inc.
SBS Insurance Agency of North Carolina 100.00 Insurance broker
North Carolina, Inc.
SBS Insurance Agency of Ohio 100.00 Insurance broker
Ohio, Inc.
SBS Insurance Agency of South Dakota 100.00 Insurance broker
South Dakota, Inc.
SBS Insurance Agency of Wyoming 100.00 Insurance broker
Wyoming, Inc.
SBS Insurance Brokerage Arkansas 100.00 Insurance broker
Agency of Arkansas, Inc.
SBS Insurance Brokers of Arizona 100.00 Insurance broker
Arizona, Inc.
SBS Insurance Brokers of Kentucky 100.00 Insurance broker
Kentucky, Inc.
SBS Insurance Brokers of Louisiana 100.00 Insurance broker
Louisiana, Inc.
SBS Insurance Brokers of New Hampshire 100.00 Insurance broker
New Hampshire, Inc.
SBS Insurance Brokers of North Dakota 100.00 Insurance broker
North Dakota, Inc.
SBS Life Insurance Agency of Puerto Rico 100.00 Insurance broker
Puerto Rico, Inc.
SLB Insurance Agency of Maryland 100.00 Insurance broker
Maryland, Inc.
Smith Barney Life Agency Louisiana 100.00 Insurance broker
Inc.
Smith Barney (France) S.A. France 100.00 Commodities trading
Smith Barney (Hong Kong) Limited Hong Kong 100.00 Commodities trading
Smith Barney (Netherlands) Inc. Delaware 100.00 Commodities trading
Smith Barney International Oregon 100.00 Commodities trading
Incorporated
Smith Barney Pacific British Virgin 100.00 Holding company
Holdings, Inc. Islands
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
% of Voting
Securities
Owned
Directly
or
Indirectly
by
Travelers
State of Group
Organization Inc. Principal Business
------------ --------- -------------------
<S> <C> <C> <C>
Smith Barney Shearson Hong Kong 100.00 Commodities trading
(Asia) Limited
Smith Barney Shearson Singapore 100.00 Futures broker
(Singapore) Pte Ltd
Smith Barney Shearson, HG Singapore 100.00 Securities broker
Asia (Singapore) Pte Ltd
HG Asia (Singapore) Singapore 100.00 Securities broker
Pte. Ltd.
The Robinson-Humphrey Company, Delaware 100.00 Broker dealer
Inc.
Smith Barney Mortgage Brokers Inc. Delaware 100.00 Home equity loans
Smith Barney Mortgage Capital Corp. Delaware 100.00 Sponsor CMOs
Smith Barney Mortgage Capital Group, Delaware 100.00 Trade whole loans
Inc.
Smith Barney Mutual Funds Management Delaware 100.00 Investment adviser
Inc.
Smith Barney Strategy Advisers Delaware 100.00 Investment advisor
Inc.
E.C. Tactical Management Luxembourg 100.00 Investment advisor
S.A.
Smith Barney Private Trust Company Cayman Islands 100.00 Trust company
(Cayman) Limited
Greenwich (Cayman) Services I Cayman Islands 100.00 Investment advisor
Limited
Greenwich (Cayman) Services II Cayman Islands 100.00 Investment advisor
Limited
Greenwich (Cayman) Services III Cayman Islands 100.00 Investment advisor
Limited
Smith Barney S.A. France 99.00 Commodities trading
Smith Barney Shearson (Chile) Chile 100.00 Commodities trading
Corredora de Seguro Limitada
Smith Barney Shearson (Ireland) Ireland 100.00 Commodities trading
Limited
Structured Mortgage Securities Delaware 100.00 Issue CMOs
Corporation
The Travelers Investment Management Connecticut 100.00 Investment advisor
Company
Smith Barney Private Trust Company New York 100.00 Trust company.
Smith Barney Private Trust Company of Florida 100.00 Trust company
Florida
Tinmet Corporation Delaware 100.00 Inactive
Travelers Services Inc. Delaware 100.00 Holding company
TRV Employees Investments, Inc. Delaware 100.00 Investments
</TABLE>
12
<PAGE>
Item 27.Number of Contract Owners
As of March 31, 1995, 3,583 qualified and non-qualified contract
owners held contracts offered by the Registrant.
Item 28.Indemnification
Section 33-320a of the Connecticut General Statutes ("C.G.S.")
regarding indemnification of directors and officers of Connecticut
corporations provides in general that Connecticut corporations
shall indemnify their officers, directors and certain other defined
individuals against judgments, fines, penalties, amounts paid in
settlement and reasonable expenses actually incurred in connection
with proceedings against the corporation. The corporation's
obligation to provide such indemnification generally does not apply
unless (1) the individual is successful on the merits in the
defense of any such proceeding; or (2) a determination is made (by
persons specified in the statute) that the individual acted in good
faith and in the best interests of the corporation; or (3) the
court, upon application by the individual, determines in view of
all of the circumstances that such person is fairly and reasonably
entitled to be indemnified, and then for such amount as the court
shall determine. With respect to proceedings brought by or in the
right of the corporation, the statute provides that the corporation
shall indemnify its officers, directors and certain other defined
individuals, against reasonable expenses actually incurred by them
in connection with such proceedings, subject to certain
limitations.
C.G.S. Section 33-320a provides an exclusive remedy; a Connecticut
corporation cannot indemnify a director or officer to an extent
either greater or less than that authorized by the statute, e.g.,
pursuant to its certificate of incorporation, by-laws, or any
separate contractual arrangement. However, the statute does
specifically authorize a corporation to procure indemnification
insurance to provide greater indemnification rights. The premiums
for such insurance may be shared with the insured individuals on an
agreed basis.
Travelers Group Inc. also provides liability insurance for its
directors and officers and the directors and officers of its
subsidiaries, including the Depositor. This insurance provides for
coverage against loss from claims made against directors and
officers in their capacity as such, including, subject to certain
exceptions, liabilities under the Federal securities laws.
Rule 484 Undertaking
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liability (other than the payment by
the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
<PAGE>
Item 29.Principal Underwriter
(a) In addition to The Travelers Fund BD for Variable Annuities,
Travelers Equities Sales, Inc. also serves as the principal
underwriter for:
The Travelers Growth and Income Stock Account for Variable
Annuities
The Travelers Quality Bond Account for Variable Annuities
The Travelers Money Market Account for Variable Annuities
The Travelers Timed Growth and Income Stock Account for Variable
Annuities
The Travelers Timed Short-Term Bond Account for Variable Annuities
The Travelers Timed Aggressive Stock Account for Variable Annuities
The Travelers Timed Bond Account for Variable Annuities
The Travelers Fund U for Variable Annuities
The Travelers Fund UL for Variable Life Insurance
The Travelers Fund VA for Variable Annuities
<TABLE>
<S> <C> <C>
(b) Name and Principal Positions and Offices Positions and Offices
Business Address * With Underwriter With Registrant
George C. Kokulis Chairman of the Board -----
and President
Robert E. Evans Director -----
Gregory C. MacDonald Director -----
Kathleen A. Preston Director and Executive -----
Vice President
Robert C. Hamilton Director and Senior -----
Vice President
Donald R. Munson, Jr. Director and Vice President, -----
Annuity Marketing
Thomas P. Tooley Vice President, Life Marketing -----
George A. Ryan Vice President -----
Jeffrey A. Barker Regional Vice President -----
Walter Melnik, Jr. Regional Vice President -----
Raymond W. Sheridan Regional Vice President -----
William F. Scully, III Treasurer -----
William H. White Assistant Treasurer -----
Charles B. Chamberlain Assistant Treasurer -----
George M. Quaggin Assistant Treasurer -----
Kathleen A. McGah General Counsel and Secretary Assistant Secretary
Alison K. George Director of Compliance -----
and Assistant Corporate Secretary
</TABLE>
* Principal business address: One Tower Square, Hartford,
Connecticut 06183
<PAGE>
(c) Prior to February 1, 1995, The Travelers Insurance company
served as the principal underwriter. The compensation listed
below is for the year ending December 31, 1994.
<TABLE>
<S> <C> <C> <C> <C>
Name of Net Underwriting Compensation on
Principal Discounts and Redemption or Brokerage Other
Underwriter Commissions Annuitization Commissions Compensation*
The Travelers $0 $0 $0 $422,035
Insurance Co.
</TABLE>
* As of December 31, 1994, other compensation consisted of $383,663
in mortality and expense risk fees and $38,372 in contingent
deferred sales charges.
Item 30. Location of Accounts and Records
(1) The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183
Item 31. Management Services
Not applicable.
Item 32. Undertakings
The undersigned Registrant hereby undertakes:
(a) To file a post-effective amendment to this registration
statement as frequently as is necessary to ensure that the
audited financial statements in the registration statement are
never more than sixteen months old for so long as payments
under the variable annuity contracts may be accepted;
(b) To include either (1) as part of any application to purchase
a contract offered by the prospectus, a space that an applicant
can check to request a Statement of Additional Information, 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) To deliver any Statement of Additional Information and any
financial statements required to be made available under this
Form N-4 promptly upon written or oral request; and
(d) To include in any registration statement filed in connection
with a contract used as a funding vehicle for retirement plans
meeting the requirements of Section 403(b) of the Internal
Revenue Code, a representation that the Registrant is relying
upon No-Action Letter IP-6-88 issued to the American Council
of Life Insurance.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets the
requirements of Securities Act Rule 485(b) for effectiveness of
this post-effective amendment to this Registration Statement and
has duly caused this post-effective amendment to this Registration
Statement to be signed on its behalf in the City of Hartford, State
of Connecticut, on April 27, 1995.
THE TRAVELERS FUND BD FOR VARIABLE ANNUITIES
(Registrant)
THE TRAVELERS INSURANCE COMPANY
(Depositor)
By: *JAY S. FISHMAN
Jay S. Fishman
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following
persons in the capacities indicated on April 27, 1995.
*ROBERT I. LIPP Director, Chairman of the Board
(Robert I. Lipp) and principal executive officer
*JAY S. FISHMAN Director and Chief Financial
(Jay S. Fishman) Officer
*CHARLES O. PRINCE, III Director
(Charles O. Prince, III)
*MARC P. WEILL Director
(Marc P. Weill)
*IRWIN R. ETTINGER Director
(Irwin R. Ettinger)
*MICHAEL A. CARPENTER Director
(Michael A. Carpenter)
*DONALD T. DeCARLO Director
(Donald T. DeCarlo)
/s/JAMES L. MORGAN Senior Vice President and
(James L. Morgan) Chief Accounting Officer
*By: /s/Ernest J. Wright
Ernest J.Wright, Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description Method of Filing
1 Resolution of The Travelers Insurance
Company Board of Directors authorizing
the establishment of the Registrant.
(Incorporated herein by reference to the
Registration Statement on Form N-4, File
No. 33-73466, filed on December 27, 1993.)
3 Form of Distribution and Management Electronically
Agreement among the Registrant,
The Travelers Insurance Company and Travelers
Equities Sales, Inc.
4 Form of Variable Annuity Contracts.
(Incorporated herein by reference to Pre-
Effective Amendment No. 1 to the
Registration Statement on Form N-4, File No.
33-73466, filed on May 20, 1994.)
6(a) Charter of The Travelers Insurance Company, as
amended on October 19, 1994. (Incorporated
herein by reference to Exhibit 3(a)(i) to
the Registration Statement
on Form S-2, File No. 33-58677, filed via
Edgar on April 18, 1995.)
6(b) By-Laws of The Travelers Insurance Company, as
amended on October 20, 1994. (Incorporated
herein by reference to Exhibit 3(b)(i) to the
Registration Statement on Form S-2, File
No. 33-58677, filed via Edgar on April
18, 1995.)
9 Opinion of Counsel as to the legality of
securities being registered by Registrant. Electronically
10(a) Consent of Coopers & Lybrand L.L.P., Electronically
Independent Accountants, to the inclusion of
their report on the audited financial statements
of the Registrant and their reports on the
consolidated financial statements of The
Travelers Insurance Company contained in Part B
of this Registration Statement and to the
Statement of Additional Information to such
firm as "Experts" in accounting and auditing.
10(b) Consent of KPMG Peat Marwick LLP, Independent Electronically
Auditors, to the inclusion in this Form N-4
of their report on the consolidated financial
statements of The Travelers Insurance Company
contained in Part B of this Registration
Statement.
13 Schedule for Computation of Total Return Electronically
Calculations - Standardized and
Non-Standardized.
14 Representation concerning reliance upon Electronically
No-Action Letter IP-6-88.
15(a) Power of Attorney authorizing Ernest J.Wright Electronically
as signatory for Jay S.Fishman
15(b) Powers of Attorney authorizing Jay S. Fishman Electronically
or Ernest J. Wright as a signatory for Robert I.
Lipp, Charles O. Prince,III, Marc P. Weill, Irwin
R. Ettinger, Michael A. Carpenter and Donald T.
DeCarlo.
27. Financial Data Schedule. Electronically
<PAGE>
-3-
EXHIBIT 3
FORM OF
DISTRIBUTION AND MANAGEMENT AGREEMENT
DISTRIBUTION AND MANAGEMENT AGREEMENT made this 1sth day of
February, 1995, by and among The Travelers Insurance Company, a
Connecticut stock insurance company (hereinafter the "Company"),
Travelers Equities Sales, Inc., a Connecticut general business
corporation (hereinafter "TESI"), and The Travelers Fund BD for
Variable Annuities (hereinafter "Fund BD"), a separate account of
the Company established by its President and Chief Executive
Officer pursuant to a resolution of the Company's Board of
Directors on October 22, 1993, pursuant to Section 38-433 of the
Connecticut General Statutes.
1. The Company hereby agrees to provide all administrative
services relative to variable annuity contracts and revisions
thereof (hereinafter "Contracts") sold by the Company, the net
proceeds of which or reserves for which are maintained in Fund
BD.
2. TESI hereby agrees to perform all sales functions
relative to the Contracts. The Company agrees to reimburse TESI
for commissions paid, other sales expenses and properly allocable
overhead expenses incurred in performance thereof.
3. For providing the administrative services referred to in
paragraph 1 above and reimbursing TESI for the sales functions
referred to in paragraph 2 above, the Company will receive the
deductions for sales and administrative expenses which are stated
in the Contracts.
4. The Company will furnish at its own expense and without
cost to Fund BD the administrative expenses of Fund BD, including
but not limited to:
(a) office space in the offices of the Company or in such
other place as may be agreed upon from time to time,
and all necessary office facilities and equipment;
(b) necessary personnel for managing the affairs of Fund BD,
including clerical, bookkeeping, accounting and other
office personnel;
(c) all information and services, including legal services,
required in connection with registering and qualifying
Fund BD or the Contracts with federal and state
regulatory authorities, preparation of registration
<PAGE>
statements and prospectuses, including amendments and
revisions thereto, and annual, semi-annual and periodic
reports, notices and proxy solicitation materials
furnished to variable annuity Contract Owners or
regulatory authorities, including the costs of printing
and mailing such items;
(d) the costs of preparing, printing, and mailing all sales
literature;
(e) all registration, filing and other fees in connection
with compliance requirements of federal and state
regulatory authorities;
(f) the charges and expenses of any custodian or depository
appointed by Fund BD for the safekeeping of its cash,
securities and other property; and
(g) the charges and expenses of independent accountants
retained by Fund BD.
5. The services of the Company and TESI to Fund BD hereunder
are not to be deemed exclusive and the Company and TESI shall be
free to render similar services to others so long as its services
hereunder are not impaired or interfered with thereby.
6. The Company agrees to guarantee that the annuity payments
will not be affected by mortality experience (under Contracts the
reserves for which are invested in Fund BD) and as such assumes
the risks (a) that the actuarial estimate of mortality rates
among annuitants may prove erroneous and that reserves set up on
the basis of such estimates will not be sufficient to meet the
Company's variable annuity payment obligations, and (b) that the
charges for services and expenses of the Company set forth in the
Contracts may not prove sufficient to cover its actual expenses.
For providing these mortality and expense risk guarantees, the
Company will receive from Fund BD an amount per valuation period
of Fund BD, as provided from time to time.
7. This Agreement will be effective on the date executed,
and will remain effective until terminated by any party upon
sixty (60) days notice; provided, however, that this agreement
will terminate automatically in the event of its assignment by
any of the parties hereto.
8. Notwithstanding termination of this Agreement, the
Company shall continue to provide administrative services and
mortality and expense risk guarantees provided for herein with
respect to Contracts in effect on the date of termination, and
the Company shall continue to receive the compensation provided
under this Agreement.
<PAGE>
9. This Agreement is subject to the provisions of the
Investment Company Act of 1940, as amended, and the rules of the
Securities and Exchange Commission.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective officials thereunto
duly authorized and, in the case of the Company and TESI, seals
to be affixed as of the day and year first above written.
THE TRAVELERS INSURANCE COMPANY
(Seal)
By:_____________________________
Title:__________________________
ATTEST:
______________________
Assistant Secretary
THE TRAVELERS FUND BD FOR VARIABLE
ANNUITIES
By:________________________________
Title:_____________________________
WITNESS:
_______________________
TRAVELERS EQUITIES SALES, INC.
By: ______________________________
Title: ___________________________
ATTEST: (SEAL)
______________________
Corporate Secretary
<PAGE>
EXHIBIT 9
April 25, 1995
The Travelers Insurance Company
The Travelers Fund BD for Variable Annuities
One Tower Square
Hartford, Connecticut 06183
Gentlemen:
With reference to the Post-Effective Amendment No. 2 to the
Registration Statement on Form N-4 filed by The Travelers Insurance
Company with the Securities and Exchange Commission covering
Flexible Premium Variable Annuity Contracts, I have examined such
documents and such law as I have considered necessary and
appropriate, and on the basis of such examination, it is my opinion
that:
1. The Travelers Insurance Company is duly organized and
existing under the laws of the State of Connecticut and
has been duly authorized to do business and to issue
variable annuity contracts by the Insurance Commissioner
of the State of Connecticut.
2. The Travelers Fund BD for Variable Annuities is a duly
authorized and validly existing separate account
established pursuant to Section 38a-433 of the Connecticut
General Statutes.
3. The variable annuity contracts covered by the above
Registration Statement, and all Post-Effective Amendments
related thereto, have been approved and authorized by the
Insurance Commissioner of the State of Connecticut and
when issued will be valid, legal and binding obligations
of The Travelers Insurance Company and of The Travelers
Fund BD for Variable Annuities.
4. Assets of The Travelers Fund BD for Variable Annuities
are not chargeable with liabilities arising out of any
other business The Travelers Insurance Company may
conduct.
I hereby consent to the filing of this opinion as an exhibit to
the above-referenced Post-Effective Amendment and to the reference
to this opinion under the caption "Legal Proceedings and Opinion"
in the Prospectus constituting a part of such Post-Effective
Amendment.
Very truly yours,
/s/Ernest J. Wright
Ernest J. Wright
General Counsel
Life and Annuities Division
The Travelers Insurance Company
<PAGE>
COOPERS Coopers & Lybrand L.L.P.
&LYBRAND a professional services firm
EXHIBIT 10(A)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Post-Effective Amendment No. 2 of this
Registration Statement on Form N-4 of our report dated February 15, 1995,
on our audits of the financial statements of The Travelers Fund BD for Variable
Annuities and of our reports on the financial statements of The Travelers
Insurance Company and Subsidiaries (the "Company") dated January 24, 1994 and
February 9, 1993 (except for Notes 2 and 5, as to which the date is
January 24, 1994), which includes an explanatory paragraph regarding the
change in the methods of accounting for post-retirement benefits other than
pensions, income taxes, and foreclosed assets in 1992, on our audits of the
consolidated financial statements of the Company. We also consent to the
reference to our Firm as experts under the caption "Independent Accountants".
/s/COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
April 24, 1995
<PAGE>
Exhibit 10 (b)
The Board of Directors
The Travelers Insurance Company:
We consent to the inclusion in this Post-Effective Amendment No. 2 to the
registration statement (No. 33-73466) on Form N-4, filed for The Travelers
Fund BD for Variable Annuities, of our reports, dated January 17, 1995. Our
reports refer to a change in accounting for investments in accordance
with the provisions of Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities."
/s/KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP
Hartford, Connecticut
April 12, 1995
<PAGE>
EXHIBIT 13
THE TRAVELERS FUND BD FOR VARIABLE ANNUITIES
SCHEDULE FOR COMPUTATION OF TOTAL RETURN CALCULATIONS
Total Return Calculation (Standardized)
The "1-year rate" represents fund performance for the period
January 1, 1994 through December 31, 1994.
The "5-year rate" is for the period January 1, 1990 through
December 31, 1994.
The "10-year rate" is from January 1, 1985 through December 31,
1994.
T = (ERV/P)1/n where:
T = average annual total return
P = a hypothetical initial payment of $1,000
n = 1 for the "1-year rate", 5 for the "5-year rate", and 10
for the "10-year rate"
ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of each of the periods
For calculating the redeemable value, the $15 semiannual
administrative charge was expressed as a percentage of assets
based on the actual fee collected divided by the average net
assets per contracts sold under that prospectus for each year for
which performance was shown, and was assumed to be deducted on
June 30 and December 31 of each year.
The unit values used in the calculation reflect the deduction for
the investment advisory fees for the fund and the mortality and
expense risk charge. Since the 5% contingent deferred sales
charge applies only for five years, the ERV for the end of the
5-year period and the 10-year period does not reflect this
charge.
Total Return Calculation (Non-Standardized)
The non-standardized rate represents fund performance for the
calendar year-to-date, and for the most recent 1-year, 3-year,
5-year and 10-year periods. The 1-year rate is for the period
January 1, 1994 through December 31, 1994; the 3-year rate is for
the period January 1, 1992 through December 31, 1994; the 5-year
rate is for the period January 1, 1990 through December 31, 1994;
and the 10-year rate is for the period January 1, 1985 through
December 31, 1994.
The non-standardized total returns reflect a percentage change in
the value of an Accumulation Unit based on the performance of an
account over periods of 1 year, 3 years, 5 years and 10 years,
determined by dividing the increase (decrease) in value for that
unit by the Accumulation Unit Value at the beginning of the
period. This percentage figure reflects the deduction of asset
based charges, but does not reflect the deduction of semiannual
administrative charges or contingent deferred sales charges. The
deduction of the semiannual administrative charge or the
contingent deferred sales charge would reduce any percentage
increase or make greater any percentage decrease.
For a Schedule of the Computation of the Total Return Quotations,
both Standardized and Non-Standardized, see attached.
<PAGE>
Universal Annuity
Group Standarized Performance
Alliance Growth Portfolio
Date Price Dollars Units Semfee
06/20/94 0.955337 1000 1046.751 0.002910
06/30/94 0.941425 -0.079 -0.084 0.002910
09/30/94 1.006821 0.002910
12/30/94 1.000000 -1.478 -1.478 0.002910
Since Inception
Ending Units 1045.189
Account Value $1045.19
Surrender Value $995.19
Total Return -0.48%
Annualized Return
Universal Annuity
Individual Standarized Performance
Alliance Growth Portfolio
Date Price Dollars Units Semfee
06/20/94 0.955337 1000 1046.751 0.001790
06/30/94 0.941425 -0.049 -0.052 0.001790
09/30/94 1.006821 0.001790
12/30/94 1.000000 -0.909 -0.909 0.001790
Since Inception
Ending Units 1045.790
Account Value $1045.79
Surrender Value $995.79
Total Return -0.42%
Annualized Return
<PAGE>
Universal Annuity
Group Standarized Performance
G.T. Global Strategic Income Portfolio
Date Price Dollars Units Semfee
06/21/94 1.058696 1000 944.558 0.002910
06/30/94 1.053078 -0.072 -0.068 0.002910
09/30/94 1.053993 0.002910
12/30/94 1.000000 -1.411 -1.411 0.002910
Since Inception
Ending Units 943.079
Account Value $943.08
Surrender Value $895.93
Total Return -10.41%
Annualized Return
Universal Annuity
Individual Standarized Performance
G.T. Global Strategic Income Portfolio
Date Price Dollars Units Semfee
06/21/94 1.058696 1000 944.558 0.001790
06/30/94 1.053078 -0.044 -0.042 0.001790
09/30/94 1.053993 0.001790
12/30/94 1.000000 -0.868 -0.868 0.001790
Since Inception
Ending Units 943.648
Account Value $943.65
Surrender Value $896.47
Total Return -10.35%
Annualized Return
<PAGE>
Universal Annuity
Group Standarized Performance
Smith Barney High Income Portfolio
Date Price Dollars Units Semfee
06/22/94 1.012981 1000 987.185 0.002910
06/30/94 1.013716 -0.064 -0.063 0.002910
09/30/94 1.020623 0.002910
12/30/94 1.000000 -1.446 -1.446 0.002910
Since Inception
Ending Units 985.676
Account Value $985.68
Surrender Value $936.39
Total Return -6.36%
Annualized Return
Universal Annuity
Individual Standarized Performance
Smith Barney High Income Portfolio
Date Price Dollars Units Semfee
06/22/94 1.012981 1000 987.185 0.001790
06/30/94 1.013716 -0.039 -0.039 0.001790
09/30/94 1.020623 0.001790
12/30/94 1.000000 -0.890 -0.890 0.001790
Since Inception
Ending Units 986.256
Account Value $986.26
Surrender Value $936.94
Total Return -6.31%
Annualized Return
<PAGE>
Universal Annuity
Group Standarized Performance
Smith Barney International Income Portfolio
Date Price Dollars Units Semfee
06/20/94 1.047617 1000 954.548 0.002910
06/30/94 1.075537 -0.081 -0.075 0.002910
09/30/94 1.071119 0.002910
12/30/94 1.000000 -1.441 -1.441 0.002910
Since Inception
Ending Units 953.032
Account Value $953.03
Surrender Value $905.38
Total Return -9.46%
Annualized Return
Universal Annuity
Individual Standarized Performance
Smith Barney International Income Portfolio
Date Price Dollars Units Semfee
06/20/94 1.047617 1000 954.548 0.001790
06/30/94 1.075537 -0.050 -0.046 0.001790
09/30/94 1.071119 0.001790
12/30/94 1.000000 -0.887 -0.887 0.001790
Since Inception
Ending Units 953.615
Account Value $953.62
Surrender Value $905.93
Total Return -9.41%
Annualized Return
<PAGE>
Universal Annuity
Group Standarized Performance
Smith Barney Income and Growth Portfolio
Date Price Dollars Units Semfee
06/20/94 1.019281 1000 981.084 0.002910
06/30/94 1.005699 -0.079 -0.079 0.002910
09/30/94 1.030959 0.002910
12/30/94 1.000000 -1.431 -1.431 0.002910
Since Inception
Ending Units 979.574
Account Value $979.57
Surrender Value $930.60
Total Return -6.94%
Annualized Return
Universal Annuity
Individual Standarized Performance
Smith Barney Income and Growth Portfolio
Date Price Dollars Units Semfee
06/20/94 1.019281 1000 981.084 0.001790
06/30/94 1.005699 -0.049 -0.048 0.001790
09/30/94 1.030959 0.001790
12/30/94 1.000000 -0.881 -0.881 0.001790
Since Inception
Ending Units 980.155
Account Value $980.16
Surrender Value $931.15
Total Return -6.89%
Annualized Return
<PAGE>
<EDG>
EXHIBIT 14
In connection with the solicitation and sale of variable
annuity contracts to participants of plans qualified under
Section 403(b) of the Internal Revenue Code, the Registrant
hereby represents, in reliance upon No-Action Letter IP-6-88,
that it has:
(1) included appropriate disclosure regarding the
redemption restrictions imposed by Section 403(b)(11) in
each registration statement, including the prospectus,
used in connection with the offer of the contract;
(2) included appropriate disclosure regarding the
redemption restrictions imposed by Section 403(b)(11) in
any sales literature used in connection with the offer
of the contract;
(3) instructed sales representatives who solicit
participants to purchase the contract specifically to
bring the redemption restrictions imposed by Section
403(b)(11) to the attention of the potential
participants; and
(4) obtained from each plan participant who purchases a
Section 403(b) annuity contact, prior to or at the time
of such purchase, a signed statement acknowledging the
participant's understanding of (i) the restrictions on
redemption imposed by Section 403(b)(11), and (ii) the
investment alternatives available under the employer's
Section 403(b) arrangement, to which the participant may
elect to transfer his or her contract value.
By: /s/Robert C. Hamilton
Name: Robert C. Hamilton
Title: Second Vice President
Date: April 25, 1995
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, JAY S. FISHMAN of Haworth, New Jersey, director and
Chief Financial Officer of The Travelers Insurance Company
(hereinafter the "Company"), do hereby make, constitute and appoint
ERNEST J. WRIGHT, Assistant Secretary of said Company, and KATHLEEN
A. McGAH, Assistant Secretary of said Company, or either one of
them acting alone, my true and lawful attorney-in-fact, for me, and
in my name, place and stead, to sign registration statements on
behalf of said Company on Form N-3, Form N-4, S-2 and Form S-6 or
other appropriate form under the Securities Act of 1933 which
registrants are dedicated specifically to the funding of variable
annuity contracts, modified guaranteed annuity contracts and
variable life insurance contracts to be offered by the Company, and
further, to sign any and all amendments thereto, including
post-effective amendments, that may be filed by the Company on
behalf of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 24th day
of April, 1995.
/s/ Jay S. Fishman
____________________________________
Director and Chief Financial Officer
The Travelers Insurance Company
THE TRAVELERS FUND BD FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, Robert I. Lipp of Scarsdale, New York, director of The Travelers
Insurance Company (hereafter the "Company"), do hereby make, constitute and
appoint JAY S. FISHMAN, Director and Chief Financial Officer of said Company,
and ERNEST J. WRIGHT, Assistant Secretary of said Company, or either one of
them acting alone, my true and lawful attorney-in-fact, for me, and in my
name, place and stead, to sign registration statements on behalf of said
Company on Form N-4 or other appropriate form under the Securities Act of 1933
for The Travelers Fund BD for Variable Annuities, a separate account of the
Company dedicated specifically to the funding of variable annuity contracts to
be offered by the Company, and further, to sign any and all amendments
thereto, including post-effective amendments, that may be filed by the Company
on behalf of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 26th day of April,
1995.
/s/Robert I. Lipp
Director
The Travelers Insurance Company
<PAGE>
THE TRAVELERS FUND BD FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, Charles O. Prince, III of Weston, Connecticut, director of The
Travelers Insurance Company (hereafter the "Company"), do hereby make,
constitute and appoint JAY S. FISHMAN, Director and Chief Financial Officer of
said Company, and ERNEST J. WRIGHT, Assistant Secretary of said Company, or
either one of them acting alone, my true and lawful attorney-in-fact, for me,
and in my name, place and stead, to sign registration statements on behalf of
said Company on Form N-4 or other appropriate form under the Securities Act of
1933 for The Travelers Fund BD for Variable Annuities, a separate account of
the Company dedicated specifically to the funding of variable annuity
contracts to be offered by the Company, and further, to sign any and all
amendments thereto, including post-effective amendments, that may be filed by
the Company on behalf of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 26th day of April,
1995.
/s/Charles O. Prince, III
Director
The Travelers Insurance Company
<PAGE>
EXHIBIT 15
THE TRAVELERS FUND BD FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, Marc P. Weill of New York, New York, director of The
Travelers Insurance Company (hereinafter the "Company"), do
hereby make, constitute and appoint JAY S. FISHMAN, Director and
Chief Financial Officer of said Company, and ERNEST J. WRIGHT,
Assistant Secretary of said Company, or either one of them acting
alone, my true and lawful attorney-in-fact, for me, and in my
name, place and stead, to sign registration statements on behalf
of said Company on Form N-4 or other appropriate form under the
Securities Act of 1933 for The Travelers Fund BD for Variable
Annuities, a separate account of the Company dedicated specifi-
cally to the funding of variable annuity contracts to be offered
by the Company, and further, to sign any and all amendments
thereto, including post-effective amendments, that may be filed
by the Company on behalf of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 28th
day of November, 1994.
/s/Marc P. Weill
Director
The Travelers Insurance Company
<PAGE>
EXHIBIT 15
THE TRAVELERS FUND BD FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, Irwin R. Ettinger of Stamford, Connecticut, director of The
Travelers Insurance Company (hereinafter the "Company"), do
hereby make, constitute and appoint JAY S. FISHMAN, Director and
Chief Financial Officer of said Company, and ERNEST J. WRIGHT,
Assistant Secretary of said Company, or either one of them acting
alone, my true and lawful attorney-in-fact, for me, and in my
name, place and stead, to sign registration statements on behalf
of said Company on Form N-4 or other appropriate form under the
Securities Act of 1933 for The Travelers Fund BD for Variable
Annuities, a separate account of the Company dedicated specifi-
cally to the funding of variable annuity contracts to be offered
by the Company, and further, to sign any and all amendments
thereto, including post-effective amendments, that may be filed
by the Company on behalf of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 26th
day of April, 1995.
/s/Irwin R. Ettinger
Director
The Travelers Insurance Company
<PAGE>
EXHIBIT 15
THE TRAVELERS FUND BD FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, MICHAEL A. CARPENTER of Greenwich, Connecticut, a
director of The Travelers Insurance Company (hereinafter the
"Company"), do hereby make, constitute and appoint JAY S.
FISHMAN, Director and Chief Financial Officer of said Company,
and ERNEST J. WRIGHT, Assistant Secretary of said Company, or
either one of them acting alone, my true and lawful attorney-
in-fact, for me, and in my name, place and stead, to sign regis-
tration statements on behalf of said Company on Form N-4 or other
appropriate form under the Securities Act of 1933 for The Trav-
elers Fund BD for Variable Annuities, a separate account of the
Company dedicated specifically to the funding of variable annuity
contracts to be offered by the Company, and further, to sign any
and all amendments thereto, including post-effective amendments,
that may be filed by the Company on behalf of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 3rd day
of February, 1995.
/s/Michael A. Carpenter
Director
The Travelers Insurance Company
<PAGE>
EXHIBIT 15
THE TRAVELERS FUND BD FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, Donald T. DeCarlo of Douglaston, New York, director
of The Travelers Insurance Company (hereinafter the "Company"),
do hereby make, constitute and appoint JAY S. FISHMAN, Director
and Chief Financial Officer of said Company, and ERNEST J.
WRIGHT, Assistant Secretary of said Company, or either one of
them acting alone, my true and lawful attorney-in-fact, for me,
and in my name, place and stead, to sign registration statements
on behalf of said Company on Form N-4 or other appropriate form
under the Securities Act of 1933 for The Travelers Fund BD for
Variable Annuities, a separate account of the Company dedicated
specifically to the funding of variable annuity contracts to be
offered by the Company, and further, to sign any and all amend-
ments thereto, including post-effective amendments, that may be
filed by the Company on behalf of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 10th
day of April, 1995.
/s/Donald T. DeCarlo
Director
The Travelers Insurance Company
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