<PAGE>
Registration No. 33-74184
811-8304
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF
SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM
N-8B-2
Post-Effective Amendment No. 7
INHEIRITAGE ACCOUNT
OF FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
(Exact Name of Registrant)
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
440 Lincoln Street
Worcester MA 01653
(Address of Principal Executive Office)
Abigail M. Armstrong, Esq.
440 Lincoln Street
Worcester, Massachusetts 01653
(Name and Address of Agent for Service of Process)
It is proposed that this filing will become effective:
X immediately upon filing pursuant to paragraph (b)
----
on (date) pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a) (1)
----
on (date) pursuant to paragraph (a) (1)
----
on (date) pursuant to paragraph (a) (2) of Rule 485
----
this post-effective amendment designates a new effective date
----
for a previously filed post-effective amendment.
FLEXIBLE PREMIUM VARIABLE LIFE
Pursuant to Reg. Section 270.24f-2 of the Investment Company Act of 1940,
Registrant hereby declares that an indefinite amount of its securities is being
registered under the Securities Act of 1933. The Rule 24f-2 Notice for the
issuer's fiscal year ended December 31, 1997 will be filed on or before February
27, 1998.
<PAGE>
RECONCILIATION AND TIE BETWEEN ITEMS
IN FORM N-8B-2 AND THE PROSPECTUS
ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
- ----------- ---------------------
1. . . . . . . . . . Cover Page
2. . . . . . . . . . Cover Page
3. . . . . . . . . . Not Applicable
4. . . . . . . . . . Distribution
5. . . . . . . . . . The Company, The Inheiritage Account
6. . . . . . . . . . The Inheiritage Account
7. . . . . . . . . . Not Applicable
8. . . . . . . . . . Not Applicable
9. . . . . . . . . . Legal Proceedings
10 . . . . . . . . . Prospectus A: Summary; Description of the Company,
the Inheiritage Account, Allmerica Investment Trust,
Variable Insurance Products Fund, Variable Insurance
Products Fund II T. Rowe Price International Series,
Inc., and Delaware Group Premium Fund, Inc.;The
Policy; Policy Termination and Reinstatement; Other
Policy Provisions
Prospectus B: Summary; Description of the Company,
The Inheiritage Account, Allmerica Investment Trust,
Variable Insurance Products Fund, and T. Rowe Price
International Series, Inc.; The Policy; Policy
Termination and Reinstatement; Other Policy
Provisions; Prospectus Supplement Dated February 10,
1998 to Prospectus Dated May 1 1997
11 . . . . . . . . . Prospectus A: Summary; Description of the Company, the
Inheiritage Account, Allmerica Investment Trust,
Variable Insurance Products Fund, Variable Insurance
Products Fund Ii, T. Rowe Price International Series,
Inc., and Delaware Group Premium Fund, Inc..;
Investment Objectives and Policies
Prospectus B: Summary; Allmerica Investment Trust;
Variable Insurance Products Fund; and T. Rowe Price
International Series, Inc. Investment Objectives and
Policies; Prospectus Supplement Dated February 10, 1998
to Prospectus Dated May 1, 1997
12 . . . . . . . . . Prospectus A: Summary; Allmerica Investment Trust,
Variable Insurance Products Fund, Variable Insurance
Products Fund II, T. Rowe Price International Series,
Inc., and Delaware Group Premium Fund, Inc.
Prospectus B: Summary; Allmerica Investment Trust;
Variable Insurance Products Fund; and T. Rowe Price
International Series; Prospectus Supplement Dated
February 10, 1998 to Prospectus Dated May 1, 1997
13 . . . . . . . . . Prospectus A: Summary; Allmerica Investment Trust,
Variable Insurance Products Fund, Variable Insurance
Products Fund II, T. Rowe Price International Series,
Inc., and Delaware Group Premium Fund, Inc. Investment
Advisory Services to Allmerica Investment Trust,
Investment Advisory Services to Variable Insurance
Products Fund and Variable Insurance Products Fund II,
Investment Advisory Services to T. Rowe Price
International Series, Inc.; Investment Advisory
Services to Delaware Group Premium Fund, Inc. ;
Charges and Deductions
Prospectus B: Summary; Allmerica Investment Trust;
Variable Insurance Products Fund; T. Rowe Price
International Series, Inc.; Investment Advisory
Services to the Trust; Investment Advisory Services to
Variable Insurance Products Fund ; Investment
Advisory Services to T. Rowe Price International
Series, Inc.; Charges and Deductions; Prospectus Dated
February 10, 1998 to Prospectus Dated May 1, 1997
14 . . . . . . . . . Summary; Application for a Policy
15 . . . . . . . . . Summary; Application for a Policy; Premium Payments;
Allocation of Net Premiums
<PAGE>
16 . . . . . . . . . Prospectus A: The Inheiritage Account: Allmerica
Investment Trust, Variable Insurance Products Fund and
Variable Insurance Products Fund II, T. Rowe Price
International Series, Inc., and Delaware Group Premium
Fund, Inc.; International Series, Inc.; Premium
Payments; Allocation of Net Premiums
Prospectus B: The Inheiritage Account; Allmerica
Investment Trust; Variable Insurance Products Fund; and
T. Rowe Price International Series, Inc.; Premium
Payments; Allocation of Net Premiums; Prospectus
Supplement Dated February 10, 1998 to Prospectus Dated
May 1, 1997
17 . . . . . . . . . Summary; Surrender; Partial Withdrawal; Charges and
Deductions; Policy Termination and Reinstatement
18 . . . . . . . . . Prospectus A: The Inheiritage Account: Allmerica
Investment Trust, Variable Insurance Products Fund and
Variable Insurance Products Fund II, T. Rowe Price
International Series, Inc., and Delaware Group Premium
Fund, Inc.; International Series, Inc.; Premium
Payments
Prospectus B: The Inheiritage Account; Allmerica
Investment Trust; Variable Insurance Products Fund; and
T. Rowe Price International Series, Inc.; Premium
Payments; Prospectus Supplement Dated February 10,1998
to Prospectus Dated May 1, 1997
19 . . . . . . . . . Reports; Voting Rights
20 . . . . . . . . . Not Applicable
21 . . . . . . . . . Summary; Policy Loans; Other Policy Provisions
22 . . . . . . . . . Other Policy Provisions
23 . . . . . . . . . Not Required
24 . . . . . . . . . Other Policy Provisions
25 . . . . . . . . . The Company
26 . . . . . . . . . Not Applicable
27 . . . . . . . . . The Company
28 . . . . . . . . . Directors and Principal Officers of the Company
29 . . . . . . . . . The Company
30 . . . . . . . . . Not Applicable
31 . . . . . . . . . Not Applicable
32 . . . . . . . . . Not Applicable
33 . . . . . . . . . Not Applicable
34 . . . . . . . . . Not Applicable
35 . . . . . . . . . Distribution
36 . . . . . . . . . Not Applicable
37 . . . . . . . . . Not Applicable
38 . . . . . . . . . Summary; Distribution
39 . . . . . . . . . Summary; Distribution
40 . . . . . . . . . Not Applicable
41 . . . . . . . . . The Company, Distribution
42 . . . . . . . . . Not Applicable
43 . . . . . . . . . Not Applicable
44 . . . . . . . . . Premium Payments; Policy Value and Cash Surrender Value
45 . . . . . . . . . Not Applicable
46 . . . . . . . . . Policy Value and Cash Surrender Value; Federal Tax
Considerations
47 . . . . . . . . . The Company
48 . . . . . . . . . Not Applicable
49 . . . . . . . . . Not Applicable
50 . . . . . . . . . The Inheiritage Account
51 . . . . . . . . . Cover Page; Summary; Charges and Deductions; The
Policy; Policy Termination and Reinstatement; Other
Policy Provisions
52 . . . . . . . . . Addition, Deletion or Substitution of Investments
53 . . . . . . . . . Federal Tax Considerations
54 . . . . . . . . . Not Applicable
<PAGE>
55 . . . . . . . . . Not Applicable
56 . . . . . . . . . Not Applicable
57 . . . . . . . . . Not Applicable
58 . . . . . . . . . Not Applicable
59 . . . . . . . . . Not Applicable
<PAGE>
This Post-Effective Amendment No. 7 under the Securities Act of 1933 is being
filed for the purposes of adding a supplement to Prospectus B of the Inheiritage
Account of First Allmerica Financial Life Insurance Company dated May 1, 1997
and to generally update corporate information for the Company and the
Registrant. All other pertinent information regarding the Registration
Statement including the Prospectus was previously filed in Registrant's
Post-Effective Amendment No. 7 on April 30, 1997 and is incorporated by
reference herein.
<PAGE>
INHEIRITAGE ACCOUNT
ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
SUPPLEMENT DATED FEBRUARY 10, 1998 TO PROSPECTUS DATED MAY 1, 1997
***
Effective February 10, 1998, three additional Sub-Accounts will be available
under the Contract. The Sub-Accounts will invest exclusively in shares of the
Select Emerging Markets Fund, the Select Value Opportunity Fund and the Select
Strategic Growth Fund of the Allmerica Investment Trust. As such, the following
information supplements the corresponding sections of the Prospectus. Please
consult the Prospectus for the full text of each supplemented section.
The listing of funds on page 1 and page 22 of the prospectus is amended by
adding the following:
Fund Investment Adviser
---- ------------------
Select Emerging Markets Fund Schroder Capital Management International Inc.
Select Value Opportunity Fund Cramer Rosenthal McGlynn, LLC
Select Strategic Growth Fund Cambiar Investors, Inc.
* * *
The number "eleven" is changed to "fourteen" in the third sentence under "THE
INHEIRITAGE ACCOUNT" on page 19 of the Prospectus. "Seven" is changed to
"ten" in the second sentence of the second paragraph under "ALLMERICA INVESTMENT
TRUST" on page 20, and the three new funds are added to the listing of available
funds.
* * *
The second paragraph under "INVESTMENT ADVISORY SERVICES TO THE TRUST" is
amended to read in its entirety as follows:
Allmerica Investment Management Company, Inc. ("Manager"), an
affiliate of the Company is the investment manager of the Trust.
The Manager has entered into agreements with investment advisors
("Sub-Advisers") selected by the Manager and Trustees in
consultation with RogersCasey. The Sub-Advisers (other than
Allmerica Asset Management, Inc.) are not affiliated with the
Company or the Trust. In addition, Rogers, Casey Sponsor
Services, Inc. a wholly owned subsidiary of RogersCasey, provides
asset allocation recommendations that may be utilized at no cost
by registered representatives who are assisting clients in
developing diversified portfolios.
1
<PAGE>
The Fund Expenses table on page 11 of the Prospectus is deleted and the
following inserted in its place:
FUND EXPENSES: The following table shows the expenses (unaudited) of the
Underlying Funds as a percentage of average net assets for the year ended
December 31, 1997.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Other Fund
Management Expenses (After Any Total Fund
Fund Fee Applicable Reimbursements) Expenses
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Select Emerging Markets Fund@ . . . . . . . . . . . . 1.35% 0.65%(1) 2.00%
Select International Equity Fund. . . . . . . . . . . 0.92%* 0.20%(1) 1.12%(3)
T. Rowe Price International Stock Portfolio . . . . . 1.05% 0.00% 1.05%
Select Aggressive Growth Fund . . . . . . . . . . . . 0.89%* 0.09%(1) 0.98%(3)
Select Capital Appreciation Fund. . . . . . . . . . . 0.95%* 0.15%(1) 1.10%
Select Value Opportunity. . . . . . . . . . . . . . . 0.90%** 0.14%(1) 1.04%(3)
Select Growth Fund. . . . . . . . . . . . . . . . . . 0.85% 0.08%(1) 0.93%(3)
Select Strategic Growth Fund@ . . . . . . . . . . . . 0.85% 0.13%(1) 0.98%
Fidelity VIP Growth Portfolio . . . . . . . . . . . . 0.60% 0.09% 0.69%(2)
Select Growth and Income Fund . . . . . . . . . . . . 0.70%* 0.07%(1) 0.77%(3)
Fidelity VIP Equity-Income Portfolio. . . . . . . . . 0.50% 0.08% 0.58%(2)
Fidelity VIP High Income Portfolio. . . . . . . . . . 0.59% 0.12% 0.71%
Select Income Fund. . . . . . . . . . . . . . . . . . 0.58%* 0.13%(1) 0.71%
Money Market Fund . . . . . . . . . . . . . . . . . . 0.27% 0.08%(1) 0.35%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
@ These Portfolios commenced operations in February 1998. Expenses shown are
annualized and are based on estimated amounts for the current fiscal year.
Actual expenses may be greater or less than shown.
*Effective September 1, 1997, the management fee rates for these funds were
revised. The management fees ratios shown in the table above have been adjusted
to assume that the revised rates took effect on January 1, 1997.
** The Select Value Opportunity Fund was formerly known as the "Small-Mid Cap
Value Fund." Effective April 1, 1997, the management fee rate of the former
Small-Mid Cap Value Fund was revised. In addition, effective April 1, 1997 and
until further notice, the management fee for this fund has been voluntarily
limited to an annual rate of 0.90% of average daily net assets. The management
fee ratio shown above for the Select Value Opportunity Fund has been adjusted to
assume that the revised rate and the voluntary limitation took effect on January
1, 1997. Had the voluntary limitation of 0.90% not been effective on January 1,
1997 and had the management fee rate revision discussed above been effective on
January 1, 1997, the management fee ratio and the total fund expense ratio would
have been 0.95% and 1.09%, respectively.
(1) Until further notice, Allmerica Investment Management Company, Inc.
("Manager"), under the Management Agreement with Allmerica Investment Trust, has
declared a voluntary expense limitation of 1.50% of average net assets for
Select International Equity Fund, 1.35% for Select Aggressive Growth Fund and
Select Capital Appreciation Fund, 1.25% for Select Value Opportunity Fund, 1.20%
for Select Strategic Growth and Select Growth Fund, 1.10% for Select Growth and
Income Fund, 1.00% for Select Income Fund and 0.60% for Money Market Fund. In
addition, the Manager has agreed to waive voluntarily its management fee to the
extent that expenses of the Select Emerging Markets Fund exceed 2.00% of the
Fund's average daily assets, except that such waiver
2
<PAGE>
shall not exceed the net amount of management fees earned by the Manager from
the fund after subtracting fees paid by the Manager to Schroder Capital
Management International Inc. for sub-advisory fees. The total operating
expenses of the funds of the Trust were less than their respective expense
limitations throughout 1997. The declaration of a voluntary expense
limitation in any year does not bind Allmerica Investments to declare future
expense limitations with respect to these funds.
(2) A portion of the brokerage commissions the Portfolio paid was used to reduce
Fund expenses. Including these reductions, total operating expenses would have
been 0.57% for the Fidelity VIP Equity-Income Portfolio and 0.67% for the
Fidelity VIP Growth Portfolio.
(3) These Funds have entered into agreements with brokers whereby the brokers
rebate a portion of commissions. Had these amounts been treated as reductions of
expenses, the total operating expenses would have been 1.10% for Select
International Equity Fund, 0.91% for Select Growth Fund, 0.74% for Select Growth
and Income Fund, 0.93% for Select Aggressive Growth, and 0.98% for Select Value
Opportunity Fund.
* * *
3
<PAGE>
* * *
The following summaries of investment objectives and policies are added as
the first, sixth and eighth summaries respectively under "INVESTMENT
OBJECTIVES AND POLICIES" beginning on page 20 of the Prospectus:
SELECT EMERGING MARKETS FUND -- seeks long-term growth of
capital by investing in the world's emerging markets.
SELECT VALUE OPPORTUNITY FUND -- seeks long-term growth of
capital by investing primarily in a diversified portfolio of
common stocks of small and mid-size companies, whose securities
at the time of purchase are considered by the Sub-Adviser to be
undervalued.
SELECT STRATEGIC GROWTH FUND -- seeks long-term growth of capital
by investing primarily in common stocks of established companies.
The following information is added to the next-to-last paragraph under
"INVESTMENT ADVISORY SERVICES TO THE TRUST" on page 20 of the Prospectus:
The Manager's fee, computed daily at an annual rate based on the
average daily net asset value of the Fund, will be 1.35% for
Select Emerging Markets Fund and 0.85% for Select Strategic
Growth Fund. For the Select Value Opportunity Fund, the fee will
be 1.00% for net asset value up to $100,000,000; 0.85% on the
next $150,000,000; 0.80% on the next $250,000,000; 0.75% on the
next $250,000,000 and 0.70% on the remainder.
* * *
Footnote 23. SUBSEQUENT EVENT (UNAUDITED) under "Notes to Financial
Statements" on page F-36 is deleted and replaced in its entirety with the
following:
23. SUBSEQUENT EVENT (UNAUDITED)
On April 14, 1997, the Company entered into an agreement in
principle to transfer the Company's individual disability income
business under a 100% coinsurance agreement to Metropolitan
Life Insurance Company. The coinsurance agreement became effective
October 1, 1997. The transaction has resulted in the recognition
of a $53.9 million pre-tax loss in the first quarter of 1997.
On July 16, 1997, Allmerica Financial Corporation ("AFC") announced
the closing of the merger ("Merger") of Allmerica P&C and AFC.
Through the transaction, AFC acquired the approximately 24.2 million
shares of Allmerica P&C that it did not already own, indirectly
through FAFLIC, for approximately $426 million in cash and 9.7
million shares of AFC common stocks. On July 15, 1997, The
Certificate of Incorporation of Allmerica P&C was amended and
restated to authorize a Class B Common Stock of Allmerica P&C,
$5.00 par value. Immediately prior to consummation of the
Merger, each share of Allmerica P&C Common Stock owned by AFC and
its subsidiaries was exchanged for one share of Class B Common
Stock.
In late July 1997, a lawsuit was instituted in Louisiana against
Allmerica Financial Corporation and certain of its subsidiaries,
including the Company, by individual plaintiffs alleging fraud,
unfair or deceptive acts, breach of contracts, misrepresentations
and related claims in the sale of life insurance policies. In
October 1997, plaintiffs voluntarily dismissed the Louisiana suit
and refiled the action in Federal District Court in Worcester,
Massachusetts. The plaintiffs seek to be certified as a class. The
case is in the early stages of discovery and the Company is
evaluating the claims. Although the Company believes it has
meritorious defenses to plaintiff's claims, there can be no assurance
that the claim will be resolved on a basis which is satisfactory
to the Company.
Following are unaudited financial statements for the Inheiritage Separate
Account and the nine-month period ended September 30, 1997.
* * *
Supplement Dated February 10, 1998
4
<PAGE>
premium = $10,000
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
INHERITAGE POLICY
INSURED #1: UNISEX NONSMOKER ISSUE AGE 55
INSURED #2: UNISEX NONSMOKER ISSUE AGE 55
SPECIFIED FACE AMOUNT = $1,000,000
SUM INSURED OPTION 1
BASED ON CURRENT MONTHLY INSURANCE PROTECTION
CHARGES WITHOUT RIDERS
<TABLE>
<CAPTION>
Premiums Hypothetical 0%
Paid Plus Gross Investment Return
Interest -----------------------
Policy At 5% Surrender Policy Death
Year Per Year Value Value Benefit
------ -------- --------- ------ -------
<S> <C> <C> <C> <C>
1 10,500 0 9,357 1,000,000
2 21,525 5,763 18,424 1,000,000
3 33,101 8,695 27,195 1,000,000
4 45,256 17,908 35,668 1,000,000
5 58,019 27,188 43,838 1,000,000
6 71,420 36,164 51,704 1,000,000
7 85,491 44,832 59,262 1,000,000
8 100,266 53,183 66,503 1,000,000
9 115,779 61,207 73,417 1,000,000
10 132,068 68,893 79,993 1,000,000
11 149,171 77,233 86,113 1,000,000
12 167,130 85,067 91,727 1,000,000
13 185,986 92,349 96,789 1,000,000
14 205,786 99,029 101,249 1,000,000
15 226,575 105,047 105,047 1,000,000
16 248,404 108,411 108,411 1,000,000
17 271,324 110,917 110,917 1,000,000
18 295,390 112,518 112,518 1,000,000
19 320,660 112,997 112,997 1,000,000
20 347,193 112,167 112,167 1,000,000
Age 60 58,019 27,188 43,838 1,000,000
Age 65 132,068 68,893 79,993 1,000,000
Age 70 226,575 105,047 105,047 1,000,000
Age 75 347,193 112,167 112,167 1,000,000
<CAPTION>
Hypothetical 6%
Gross Investment Return
-----------------------
Policy Surrender Policy Death
Year Value Value Benefit
------ --------- ------ -------
<S> <C> <C> <C>
1 0 9,934 1,000,000
2 7,498 20,158 1,000,000
3 12,174 30,674 1,000,000
4 23,722 41,482 1,000,000
5 35,935 52,585 1,000,000
6 48,448 63,988 1,000,000
7 61,261 75,691 1,000,000
8 74,376 87,696 1,000,000
9 87,788 99,998 1,000,000
10 101,494 112,594 1,000,000
11 116,496 125,376 1,000,000
12 131,637 138,297 1,000,000
13 146,877 151,317 1,000,000
14 162,170 164,390 1,000,000
15 177,460 177,460 1,000,000
16 190,945 190,945 1,000,000
17 204,300 204,300 1,000,000
18 217,486 217,486 1,000,000
19 230,315 230,315 1,000,000
20 242,624 242,624 1,000,000
Age 60 35,935 52,585 1,000,000
Age 65 101,494 112,594 1,000,000
Age 70 177,460 177,460 1,000,000
Age 75 242,624 242,624 1,000,000
<CAPTION>
Hypothetical 12%
Gross Investment Return
-----------------------
Policy Surrender Policy Death
Year Value Value Benefit
------ ---------- ------ -------
<S> <C> <C> <C>
1 0 10,511 1,000,000
2 9,301 21,962 1,000,000
3 15,937 34,437 1,000,000
4 30,267 48,027 1,000,000
5 46,184 62,834 1,000,000
6 63,433 78,973 1,000,000
7 82,139 96,569 1,000,000
8 102,437 115,757 1,000,000
9 124,472 136,682 1,000,000
10 148,410 159,510 1,000,000
11 175,438 184,318 1,000,000
12 204,606 211,266 1,000,000
13 236,101 240,541 1,000,000
14 270,134 272,354 1,000,000
15 306,938 306,938 1,000,000
16 345,363 345,363 1,000,000
17 387,271 387,271 1,000,000
18 433,074 433,074 1,000,000
19 483,142 483,142 1,000,000
20 537,960 537,960 1,000,000
Age 60 46,184 62,834 1,000,000
Age 65 148,410 159,510 1,000,000
Age 70 306,938 306,938 1,000,000
Age 75 537,960 537,960 1,000,000
</TABLE>
A-1
<PAGE>
premium = $10,000
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
INHERITAGE POLICY
INSURED #1: UNISEX NONSMOKER ISSUE AGE 55
INSURED #2: UNISEX NONSMOKER ISSUE AGE 55
SPECIFIED FACE AMOUNT = $1,000,000
SUM INSURED OPTION 1
BASED ON GUARANTEED MONTHLY INSURANCE PROTECTION
CHARGES WITHOUT RIDERS
<TABLE>
<CAPTION>
Premiums Hypothetical 0%
Paid Plus Gross Investment Return
Interest -----------------------
Policy At 5% Surrender Policy Death
Year Per Year Value Value Benefit
------ -------- --------- ------ -------
<S> <C> <C> <C> <C>
1 10,500 0 9,353 1,000,000
2 21,525 5,739 18,400 1,000,000
3 33,101 8,623 27,123 1,000,000
4 45,256 17,743 35,503 1,000,000
5 58,019 26,867 43,517 1,000,000
6 71,420 35,592 51,132 1,000,000
7 85,491 43,878 58,308 1,000,000
8 100,266 51,671 64,991 1,000,000
9 115,779 58,896 71,106 1,000,000
10 132,068 65,463 76,563 1,000,000
11 149,171 72,388 81,268 1,000,000
12 167,130 78,448 85,108 1,000,000
13 185,986 83,535 87,975 1,000,000
14 205,786 87,522 89,742 1,000,000
15 226,575 90,259 90,259 1,000,000
16 248,404 89,549 89,549 1,000,000
17 271,324 86,993 86,993 1,000,000
18 295,390 82,386 82,386 1,000,000
19 320,660 75,139 75,139 1,000,000
20 347,193 64,655 64,655 1,000,000
Age 60 58,019 26,867 43,517 1,000,000
Age 65 132,068 65,463 76,563 1,000,000
Age 70 226,575 90,259 90,259 1,000,000
Age 75 347,193 64,655 64,655 1,000,000
<CAPTION>
Hypothetical 6%
Gross Investment Return
-----------------------
Policy Surrender Policy Death
Year Value Value Benefit
------ --------- ------ -------
<S> <C> <C> <C>
1 0 9,930 1,000,000
2 7,473 20,133 1,000,000
3 12,098 30,598 1,000,000
4 23,546 41,306 1,000,000
5 35,588 52,238 1,000,000
6 47,824 63,364 1,000,000
7 60,213 74,643 1,000,000
8 72,702 86,022 1,000,000
9 85,212 97,422 1,000,000
10 97,649 108,749 1,000,000
11 111,022 119,902 1,000,000
12 124,100 130,760 1,000,000
13 136,761 141,201 1,000,000
14 148,866 151,086 1,000,000
15 160,251 160,251 1,000,000
16 168,881 168,881 1,000,000
17 176,217 176,217 1,000,000
18 182,031 182,031 1,000,000
19 185,734 185,734 1,000,000
20 186,719 186,719 1,000,000
Age 60 35,588 52,238 1,000,000
Age 65 97,649 108,749 1,000,000
Age 70 160,251 160,251 1,000,000
Age 75 186,719 186,719 1,000,000
<CAPTION>
Hypothetical 12%
Gross Investment Return
-----------------------
Policy Surrender Policy Death
Year Value Value Benefit
------ ---------- ------ -------
<S> <C> <C> <C>
1 0 10,506 1,000,000
2 9,276 21,936 1,000,000
3 15,857 34,357 1,000,000
4 30,080 47,840 1,000,000
5 45,810 62,460 1,000,000
6 62,755 78,295 1,000,000
7 80,988 95,418 1,000,000
8 100,584 113,904 1,000,000
9 121,603 133,813 1,000,000
10 144,106 155,206 1,000,000
11 169,271 178,151 1,000,000
12 196,059 202,719 1,000,000
13 224,563 229,003 1,000,000
14 254,888 257,108 1,000,000
15 287,153 287,153 1,000,000
16 319,977 319,977 1,000,000
17 355,041 355,041 1,000,000
18 392,602 392,602 1,000,000
19 432,740 432,740 1,000,000
20 475,663 475,663 1,000,000
Age 60 45,810 62,460 1,000,000
Age 65 144,106 155,206 1,000,000
Age 70 287,153 287,153 1,000,000
Age 75 475,663 475,663 1,000,000
</TABLE>
A-2
<PAGE>
premium = $10,000
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
INHERITAGE POLICY
INSURED #1: UNISEX NONSMOKER ISSUE AGE 55
INSURED #2: UNISEX NONSMOKER ISSUE AGE 55
SPECIFIED FACE AMOUNT = $1,000,000
SUM INSURED OPTION 2
BASED ON CURRENT MONTHLY INSURANCE PROTECTION
CHARGES WITHOUT RIDERS
<TABLE>
<CAPTION>
Premiums Hypothetical 0%
Paid Plus Gross Investment Return
Interest -----------------------
Policy At 5% Surrender Policy Death
Year Per Year Value Value Benefit
------ -------- --------- ------ -------
<S> <C> <C> <C> <C>
1 10,500 0 9,357 1,009,357
2 21,525 5,760 18,421 1,018,421
3 33,101 8,685 27,185 1,027,185
4 45,256 17,885 35,645 1,035,645
5 58,019 27,143 43,793 1,043,793
6 71,420 36,086 51,626 1,051,626
7 85,491 44,706 59,136 1,059,136
8 100,266 52,994 66,314 1,066,314
9 115,779 60,933 73,143 1,073,143
10 132,068 68,511 79,611 1,079,611
11 149,171 76,705 85,585 1,085,585
12 167,130 84,345 91,005 1,091,005
13 185,986 91,376 95,816 1,095,816
14 205,786 97,739 99,959 1,099,959
15 226,575 103,362 103,362 1,103,362
16 248,404 106,239 106,239 1,106,239
17 271,324 108,149 108,149 1,108,149
18 295,390 109,036 109,036 1,109,036
19 320,660 108,662 108,662 1,108,662
20 347,193 106,822 106,822 1,106,822
Age 60 58,019 27,143 43,793 1,043,793
Age 65 132,068 68,511 79,611 1,079,611
Age 70 226,575 103,362 103,362 1,103,362
Age 75 347,193 106,822 106,822 1,106,822
<CAPTION>
Hypothetical 6%
Gross Investment Return
-----------------------
Policy Surrender Policy Death
Year Value Value Benefit
------ --------- ------ -------
<S> <C> <C> <C>
1 0 9,933 1,009,933
2 7,494 20,155 1,020,155
3 12,162 30,662 1,030,662
4 23,695 41,455 1,041,455
5 35,879 52,529 1,052,529
6 48,348 63,888 1,063,888
7 61,096 75,526 1,075,526
8 74,117 87,437 1,087,437
9 87,398 99,608 1,099,608
10 100,929 112,029 1,112,029
11 115,684 124,564 1,124,564
12 130,486 137,146 1,137,146
13 145,268 149,708 1,149,708
14 159,953 162,173 1,162,173
15 174,450 174,450 1,174,450
16 186,905 186,905 1,186,905
17 198,934 198,934 1,198,934
18 210,442 210,442 1,210,442
19 221,143 221,143 1,221,143
20 230,765 230,765 1,230,765
Age 60 35,879 52,529 1,052,529
Age 65 100,929 112,029 1,112,029
Age 70 174,450 174,450 1,174,450
Age 75 230,765 230,765 1,230,765
<CAPTION>
Hypothetical 12%
Gross Investment Return
-----------------------
Policy Surrender Policy Death
Year Value Value Benefit
------ ---------- ------ -------
<S> <C> <C> <C>
1 0 10,510 1,010,510
2 9,298 21,959 1,021,959
3 15,924 34,424 1,034,424
4 30,235 47,995 1,047,995
5 46,116 62,766 1,062,766
6 63,307 78,847 1,078,847
7 81,922 96,352 1,096,352
8 102,082 115,402 1,115,402
9 123,919 136,129 1,136,129
10 147,575 158,675 1,158,675
11 174,192 183,072 1,183,072
12 202,767 209,427 1,209,427
13 233,426 237,866 1,237,866
14 266,295 268,515 1,268,515
15 301,503 301,503 1,301,503
16 337,750 337,750 1,337,750
17 376,703 376,703 1,376,703
18 418,559 418,559 1,418,559
19 463,338 463,338 1,463,338
20 511,093 511,093 1,511,093
Age 60 46,116 62,766 1,062,766
Age 65 147,575 158,675 1,158,675
Age 70 301,503 301,503 1,301,503
Age 75 511,093 511,093 1,511,093
</TABLE>
A-3
<PAGE>
premium = $10,000
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
INHERITAGE POLICY
INSURED #1: UNISEX NONSMOKER ISSUE AGE 55
INSURED #2: UNISEX NONSMOKER ISSUE AGE 55
SPECIFIED FACE AMOUNT = $1,000,000
SUM INSURED OPTION 2
BASED ON GUARANTEED MONTHLY INSURANCE PROTECTION
CHARGES WITHOUT RIDERS
<TABLE>
<CAPTION>
Premiums Hypothetical 0%
Paid Plus Gross Investment Return
Interest -----------------------
Policy At 5% Surrender Policy Death
Year Per Year Value Value Benefit
------ -------- --------- ------ -------
<S> <C> <C> <C> <C>
1 10,500 0 9,353 1,009,353
2 21,525 5,736 18,397 1,018,397
3 33,101 8,612 27,112 1,027,112
4 45,256 17,715 35,475 1,035,475
5 58,019 26,809 43,459 1,043,459
6 71,420 35,488 51,028 1,051,028
7 85,491 43,703 58,133 1,058,133
8 100,266 51,393 64,713 1,064,713
9 115,779 58,472 70,682 1,070,682
10 132,068 64,839 75,939 1,075,939
11 149,171 71,494 80,374 1,080,374
12 167,130 77,200 83,860 1,083,860
13 185,986 81,834 86,274 1,086,274
14 205,786 85,256 87,476 1,087,476
15 226,575 87,304 87,304 1,087,304
16 248,404 85,760 85,760 1,085,760
17 271,324 82,208 82,208 1,082,208
18 295,390 76,460 76,460 1,076,460
19 320,660 67,928 67,928 1,067,928
20 347,193 56,064 56,064 1,056,064
Age 60 58,019 26,809 43,459 1,043,459
Age 65 132,068 64,839 75,939 1,075,939
Age 70 226,575 87,304 87,304 1,087,304
Age 75 347,193 56,064 56,064 1,056,064
<CAPTION>
Hypothetical 6%
Gross Investment Return
-----------------------
Policy Surrender Policy Death
Year Value Value Benefit
------ --------- ------ -------
<S> <C> <C> <C>
1 0 9,929 1,009,929
2 7,469 20,130 1,020,130
3 12,084 30,584 1,030,584
4 23,513 41,273 1,041,273
5 35,518 52,168 1,052,168
6 47,691 63,231 1,063,231
7 59,982 74,412 1,074,412
8 72,321 85,641 1,085,641
9 84,610 96,820 1,096,820
10 96,727 107,827 1,107,827
11 109,650 118,530 1,118,530
12 122,106 128,766 1,128,766
13 133,930 138,370 1,138,370
14 144,929 147,149 1,147,149
15 154,877 154,877 1,154,877
16 161,648 161,648 1,161,648
17 166,596 166,596 1,166,596
18 169,414 169,414 1,169,414
19 169,364 169,364 1,169,364
20 165,708 165,708 1,165,708
Age 60 35,518 52,168 1,052,168
Age 65 96,727 107,827 1,107,827
Age 70 154,877 154,877 1,154,877
Age 75 165,708 165,708 1,165,708
Hypothetical 12%
Gross Investment Return
-----------------------
Policy Surrender Policy Death
Year Value Value Benefit
------ ---------- ------ -------
<S> <C> <C> <C>
1 0 10,506 1,010,506
2 9,271 21,932 1,021,932
3 15,842 34,342 1,034,342
4 30,040 47,800 1,047,800
5 45,724 62,374 1,062,374
6 62,587 78,127 1,078,127
7 80,685 95,115 1,095,115
8 100,065 113,385 1,113,385
9 120,750 132,960 1,132,960
10 142,748 153,848 1,153,848
11 167,165 176,045 1,176,045
12 192,870 199,530 1,199,530
13 219,835 224,275 1,224,275
14 248,013 250,233 1,250,233
15 277,325 277,325 1,277,325
16 306,094 306,094 1,306,094
17 335,614 335,614 1,335,614
18 365,722 365,722 1,365,722
19 395,809 395,809 1,395,809
20 425,233 425,233 1,425,233
Age 60 45,724 62,374 1,062,374
Age 65 142,748 153,848 1,153,848
Age 70 277,325 277,325 1,277,325
Age 75 425,233 425,233 1,425,233
</TABLE>
A-4
<PAGE>
INHEIRITAGE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
NOTE 1 -- ORGANIZATION
The Inheiritage Account (Inheiritage) is a separate investment account
of First Allmerica Financial Life Insurance Company (the Company),
established on May 1, 1995 for the purpose of separating from the general
assets of the Company those assets used to fund the variable portion of
certain flexible premium variable life policies issued by the Company. The
Company is a wholly-owned subsidiary of Allmerica Financial Corporation
(AFC). Under applicable insurance law, the assets and liabilities of
Inheiritage are clearly identified and distinguished from the other assets
and liabilities of the Company. Inheiritage cannot be charged with
liabilities arising out of any other business of the Company.
Inheiritage is registered as a unit investment trust under the Investment
Company Act of 1940, as amended (the 1940 Act). Inheiritage currently offers
eighteen Sub-Accounts (See Note 3). Each Sub-Account invests exclusively in a
corresponding investment portfolio of the Allmerica Investment Trust (the Trust)
managed by Allmerica Investment Management Company, Inc., a wholly-owned
subsidiary of the Company, or of the Variable Insurance Products Fund
(Fidelity VIP), or the Variable Insurance Products Fund II (Fidelity VIP II)
managed by Fidelity Management & Research Company (FMR), or of T. Rowe Price
International Series, Inc. (T. Rowe Price) managed by Rowe Price-Fleming
International, Inc. or of the Delaware Group Premium Fund, Inc. (DGPF) managed
by Delaware International Advisers, Ltd. The Trust, Fidelity VIP, Fidelity VIP
II, T. Rowe Price, and DGPF (the Funds) are open-end, diversified management
investment companies registered under the 1940 Act.
Effective April 1, 1997, the Sub-Account formerly known as Small Cap Value
of the Trust changed its name to Small-Mid Cap Value. At the Meeting of
Shareholders of the Small Cap Value Fund, held on March 18, 1997, shareholders
approved the revisions in the investment objective, name and policies of the
Fund to change from investing primarily in small cap value stocks to investing
primarily in small and mid-cap value stocks.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
INVESTMENTS -- Security transactions are recorded on the trade date.
Investments held by the Sub-Accounts are stated at the net asset value per share
of the respective investment portfolio of the Trust, Fidelity VIP, Fidelity VIP
II, T. Rowe Price, or DGPF. Net realized gains and losses on securities sold are
determined on the average cost method. Dividends and capital gain
distributions are recorded on the ex-dividend date and are reinvested in
additional shares of the respective investment portfolio of the Trust, Fidelity
VIP, Fidelity VIP II, T. Rowe Price, or DGPF at net asset value.
FEDERAL INCOME TAXES -- The Company is taxed as a "life insurance
company" under Subchapter L of the Internal Revenue Code and files a
consolidated federal income tax return. The Company anticipates no tax
liability resulting from the operations of Inheiritage. Therefore, no
provision for income taxes has been charged against Inheiritage.
<PAGE>
INHEIRITAGE ACCOUNT
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
SEPTEMBER 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
INVESTMENT
GROWTH GRADE INCOME MONEY MARKET EQUITY INDEX GOVERNMENT BOND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
1 2 3 4 5
----------- ------------ ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C>
ASSETS :
Investments in shares of Allmerica Investment Trust $ 232,640 $ 2,368 $ 338,987 $ 244,891 $ 5,967
---------- ----------- ----------- ----------- -----------
Investments in shares of Fidelity Variable
Insurance Products Funds . . . . . . . . . . . . - - - - -
Investment in shares of T. Rowe Price
International Series, Inc. . . . . . . . . . . . - - - - -
Investment in shares of Delaware Group
Premium Fund, Inc. . . . . . . . . . . . . . . . - - - - -
---------- ----------- ----------- ----------- -----------
Total assets. . . . . . . . . . . . . . . . . 232,640 2,368 338,987 244,891 5,967
LIABILITIES: - - - - -
---------- ----------- ----------- ----------- -----------
Net assets . . . . . . . . . . . . . . . . . . $ 232,640 $ 2,368 $ 338,987 $ 244,891 $ 5,967
---------- ----------- ----------- ----------- -----------
---------- ----------- ----------- ----------- -----------
Net asset distribution by category:
Variable life policies . . . . . . . . . . . . . $ 232,640 $ 2,138 $ 338,987 $ 244,891 $ 5,967
Value of investment by First Allmerica
Financial Life Insurance
Company (Sponsor). . . . . . . . . . . . . . . - 230 - - -
---------- ----------- ----------- ----------- -----------
$ 232,640 $ 2,368 $ 338,987 $ 244,891 $ 5,967
---------- ----------- ----------- ----------- -----------
---------- ----------- ----------- ----------- -----------
Units outstanding, September 30, 1997 . . . . 149,006 2,241 314,002 152,120 5,498
Net asset value per unit, September 30, 1997. $ 1.561278 $ 1.056775 $ 1.079570 $ 1.609857 $ 1.085345
<CAPTION>
SELECT SELECT SMALL MID-CAP
AGGRESSIVE GROWTH SELECT GROWTH GROWTH AND INCOME VALUE
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
6 7 8 9
----------------- ------------- ----------------- -------------
<S> <C> <C> <C> <C>
ASSETS:
Investments in shares of Allmerica Investment Trust $ 303,232 $ 221,440 $ 121,488 $ 223,558
Investments in shares of Fidelity Variable
Insurance Products Funds . . . . . . . . . . . . - - - -
Investment in shares of T. Rowe Price
International Series, Inc. . . . . . . . . . . . - - - -
Investment in shares of Delaware Group
Premium Fund, Inc. . . . . . . . . . . . . . . . - - - -
---------- ----------- ----------- -----------
Total assets. . . . . . . . . . . . . . . . . 303,232 221,440 121,488 223,558
LIABILITIES: - - - -
---------- ----------- ----------- -----------
Net assets . . . . . . . . . . . . . . . . . . $ 303,232 $ 221,440 $ 121,488 $ 223,558
---------- ----------- ----------- -----------
---------- ----------- ----------- -----------
Net asset distribution by category:
Variable life policies . . . . . . . . . . . . . $303,232 $221,440 $121,488 $223,558
Value of investment by First Allmerica
Financial Life Insurance
Company (Sponsor) . . . . . . . . . . . . . . . - - - -
---------- ----------- ----------- -----------
$ 303,232 $ 221,440 $ 121,488 $ 223,558
---------- ----------- ----------- -----------
---------- ----------- ----------- -----------
Units outstanding, September 30, 1997 . . . . 191,649 143,008 80,695 143,472
Net asset value per unit, September 30, 1997. $ 1.582227 $ 1.548442 $ 1.505515 $ 1.558201
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 1
<PAGE>
INHEIRITAGE ACCOUNT
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
SEPTEMBER 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
SELECT SELECT
INTERNATIONAL CAPITAL VIPF
EQUITY APPRECIATION HIGH INCOME
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
11 12 102
------------- ------------ -----------
<S> <C> <C> <C>
ASSETS:
Investments in shares of Allmerica Investment Trust. . . . . . . . . . $ 170,824 $ 136,539 -
Investments in shares of Fidelity Variable Insurance Products Funds. . - - 123,926
Investment in shares of T. Rowe Price International Series, Inc. . . . - - -
Investment in shares of Delaware Group Premium Fund, Inc.. . . . . . . - - -
----------- ----------- -----------
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . 170,824 136,539 123,926
LIABILITIES: - - -
----------- ----------- -----------
Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 170,824 $ 136,539 $ 123,926
----------- ----------- -----------
----------- ----------- -----------
Net asset distribution by category:
Variable life policies . . . . . . . . . . . . . . . . . . . . . . . $ 170,824 $ 136,539 $ 123,926
Value of investment by Allmerica Financial Life Insurance and
Annuity Company (Sponsor). . . . . . . . . . . . . . . . . . . . . - - -
----------- ----------- -----------
$ 170,824 $ 136,539 $ 123,926
----------- ----------- -----------
----------- ----------- -----------
Units outstanding, September 30, 1997 . . . . . . . . . . . . . . 115,127 82,613 94,353
Net asset value per unit, September 30, 1997. . . . . . . . . . . $ 1.483790 $ 1.652759 $ 1.313434
<CAPTION>
VIPF VIPF VIPF
EQUITY-INCOME GROWTH OVERSEAS
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
103 104 105
------------- ----------- -----------
<S> <C> <C> <C>
ASSETS:
Investments in shares of Allmerica Investment Trust. . . . . . . . . . - - -
Investments in shares of Fidelity Variable Insurance Products Funds. . $ 285,172 $ 356,804 $ 7,690
Investment in shares of T. Rowe Price International Series, Inc. . . . - - -
Investment in shares of Delaware Group Premium Fund, Inc.. . . . . . . - - -
----------- ----------- -----------
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . 285,172 356,804 7,690
LIABILITIES: - - -
----------- ----------- -----------
Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 285,172 $ 356,804 $ 7,690
----------- ----------- -----------
----------- ----------- -----------
Net asset distribution by category:
Variable life policies . . . . . . . . . . . . . . . . . . . . . . . $ 285,172 $ 356,804 $ 7,690
Value of investment by Allmerica Financial Life Insurance and
Annuity Company (Sponsor). . . . . . . . . . . . . . . . . . . . . - - -
----------- ----------- -----------
$ 285,172 $ 356,804 $ 7,690
----------- ----------- -----------
----------- ----------- -----------
Units outstanding, September 30, 1997 . . . . . . . . . . . . . . 184,725 257,331 5,675
Net asset value per unit, September 30, 1997. . . . . . . . . . . $ 1.543761 $ 1.386555 $ 1.354913
Caption>
VIPF II T. ROWE PRICE DGPF
ASSET MANAGER ITERNATIONAL STOCK INTERNATIONAL EQUITY
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
106 150 207
------------- ------------------ --------------------
<S> <C> <C> <C>
ASSETS:
Investments in shares of Allmerica Investment Trust. . . . . . . . . . - - -
Investments in shares of Fidelity Variable Insurance Products Funds. . $ 34,339 - -
Investment in shares of T. Rowe Price International Series, Inc. . . . - $ 92,314 -
Investment in shares of Delaware Group Premium Fund, Inc.. . . . . . . - - $ 89,154
----------- ----------- -----------
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . 34,339 92,314 89,154
LIABILITIES: - - -
----------- ----------- -----------
Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 34,339 $ 92,314 $ 89,154
----------- ----------- -----------
----------- ----------- -----------
Net asset distribution by category:
Variable life policies . . . . . . . . . . . . . . . . . . . . . . . $ 34,339 $ 92,314 $ 89,154
Value of investment by Allmerica Financial Life Insurance and
Annuity Company (Sponsor). . . . . . . . . . . . . . . . . . . . . - - -
----------- ----------- -----------
$ 34,339 $ 92,314 $ 89,154
----------- ----------- -----------
----------- ----------- -----------
Units outstanding, September 30, 1997 . . . . . . . . . . . . . . 22,683 71,762 63,947
Net asset value per unit, September 30, 1997. . . . . . . . . . . $ 1.516511 $ 1.286403 $ 1.394176
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 2
<PAGE>
INHEIRITAGE ACCOUNT
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
GROWTH
SUB-ACCOUNT 1
----------------------------------------------------------------------
FOR THE NINE FOR THE
MONTHS ENDED YEAR ENDED FOR THE PERIOD
9/30/97 (UNAUDITED) 12/31/96 9/15/95* TO 12/31/95
-------------------- -------------------- --------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . . $ 3,984 $ 5,906 $ 652
EXPENSES :
Mortality and expense risk fee . .. . . . . . . . . . . 685 338 22
Administrative expenses . . . . . . . . . . . . . . . . 193 94 6
-------------------- -------------------- --------------------
Total expenses.. . . . . . . . . . . . . . . . . . . . 878 432 28
-------------------- -------------------- --------------------
Net investment income (loss) .. . . . . . . . . . . . . 3,106 5,474 624
-------------------- -------------------- --------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain distributions from portfolio sponsors. . . - - -
Net realized gain (loss) from sales of investments . . . 8,690 (915) -
-------------------- -------------------- --------------------
Net realized gain (loss) from gain distributions
and sales of investments . . . . . . . . . . . . . 8,690 (915) -
Net unrealized gain (loss) . . . . . . . . . . . . . . . 10,272 1,497 (223)
-------------------- -------------------- --------------------
Net realized and unrealized gain (loss) on
investments . . . . . . . . . . . . . . . . . . . . 18,962 582 (223)
-------------------- -------------------- --------------------
Net increase (decrease) in net assets from
operations .. . . . . . . . . . . . . . . . . . . . $ 22,068 $ 6,056 $ 401
-------------------- -------------------- --------------------
-------------------- -------------------- --------------------
<CAPTION>
INVESTMENT GRADE INCOME
SUB-ACCOUNT 2
----------------------------------------------------------------------
FOR THE NINE FOR THE
MONTHS ENDED YEAR ENDED FOR THE YEAR
9/30/97 (UNAUDITED) 12/31/96 ENDED 12/31/95(a)
-------------------- -------------------- --------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . . $ 77 $ 1 $ -
EXPENSES :
Mortality and expense risk fee . .. . . . . . . . . . . 8 1 -
Administrative expenses . . . . . . . . . . . . . . . . 3 - -
-------------------- -------------------- --------------------
Total expenses.. . . . . . . . . . . . . . . . . . . . 11 1 -
-------------------- -------------------- --------------------
Net investment income (loss) .. . . . . . . . . . . . . 66 - -
-------------------- -------------------- --------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain distributions from portfolio sponsors. . . - - -
Net realized gain (loss) from sales of investments . . . - - -
-------------------- -------------------- --------------------
Net realized gain (loss) from gain distributions
and sales of investments . . . . . . . . . . . . . - - -
Net unrealized gain (loss) . . . . . . . . . . . . . . . 36 (1) -
-------------------- -------------------- --------------------
Net realized and unrealized gain (loss) on
investments . . . . . . . . . . . . . . . . . . . . 36 (1) -
-------------------- -------------------- --------------------
Net increase (decrease) in net assets from
operations .. . . . . . . . . . . . . . . . . . . . $ 102 $ (1) $ -
-------------------- -------------------- --------------------
-------------------- -------------------- --------------------
<CAPTION>
MONEY MARKET
SUB-ACCOUNT 3
----------------------------------------------------------------------
FOR THE NINE FOR THE
MONTHS ENDED YEAR ENDED FOR THE PERIOD
9/30/97 (UNAUDITED) 12/31/96 11/20/95* TO 12/31/96
-------------------- -------------------- ---------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . . $ 10,049 $ 4,621 $ 32
EXPENSES :
Mortality and expense risk fee . . . . . . . . . . . . . 1,690 808 5
Administrative expenses . . . . . . . . . . . . . . . . 477 224 1
-------------------- -------------------- --------------------
Total expenses.. . . . . . . . . . . . . . . . . . . . 2,167 1,032 6
-------------------- -------------------- --------------------
Net investment income (loss) .. . . . . . . . . . . . . 7,882 3,589 26
-------------------- -------------------- --------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain distributions from portfolio sponsors. . . - - -
Net realized gain (loss) from sales of investments . . . - - -
-------------------- -------------------- --------------------
Net realized gain (loss) from gain distributions
and sales of investments .. . . . . . . . . . . . - - -
Net unrealized gain (loss) . . . . . . . . . . . . . . . - - -
-------------------- -------------------- --------------------
Net realized and unrealized gain (loss) on
investments. . . . . . . . . . . . . . . . . . . . - - -
-------------------- -------------------- --------------------
Net increase (decrease) in net assets from
operations .. . . . . . . . . . . . . . . . . . . $ 7,882 $ 3,589 $ 26
-------------------- -------------------- --------------------
-------------------- -------------------- --------------------
</TABLE>
**Date of initial investment.
The accompanying notes are an integral part of these financial statements.
Page 1
<PAGE>
INHEIRITAGE ACCOUNT
STATEMENTS OF OPERATIONS (Continued)
<TABLE>
<CAPTION>
EQUITY INDEX
SUB-ACCOUNT 4
----------------------------------------------------------------------
FOR THE NINE FOR THE
MONTHS ENDED YEAR ENDED FOR THE PERIOD
9/30/97 (UNAUDITED) 12/31/96 10/19/95* TO 12/31/95
-------------------- -------------------- ---------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . . $ 1,663 $ 2,298 $ -
EXPENSES :
Mortality and expense risk fee . .. . . . . . . . . . . 785 363 22
Administrative expenses . . . . . . . . . . . . . . . . 222 101 6
-------------------- -------------------- --------------------
Total expenses.. . . . . . . . . . . . . . . . . . . . 1,007 464 28
-------------------- -------------------- --------------------
Net investment income (loss) .. . . . . . . . . . . . . 656 1,834 (28)
-------------------- -------------------- --------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain distributions from portfolio sponsors. . . - - -
Net realized gain (loss) from sales of investments . . . 18,662 5,463 (1,224)
-------------------- -------------------- --------------------
Net realized gain (loss) from gain distributions
and sales of investments . . . . . . . . . . . . . 18,662 5,463 (1,224)
Net unrealized gain (loss) . . . . . . . . . . . . . . . 11,857 (927) (26)
-------------------- -------------------- --------------------
Net realized and unrealized gain (loss) on
investments . . . . . . . . . . . . . . . . . . . . 30,519 4,356 (1,250)
-------------------- -------------------- --------------------
Net increase (decrease) in net assets from
operations .. . . . . . . . . . . . . . . . . . . . $ 31,175 $ 6,370 $ (1,278)
-------------------- -------------------- --------------------
-------------------- -------------------- --------------------
<CAPTION>
GOVERNMENT BOND
SUB-ACCOUNT 5
----------------------------------------------------------------------
FOR THE NINE FOR THE
MONTHS ENDED YEAR ENDED FOR THE PERIOD
9/30/97 (UNAUDITED) 12/31/96 10/19/95* TO 12/31/95
-------------------- -------------------- ---------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . . $ 254 $ 307 $ 78
EXPENSES :
Mortality and expense risk fee . .. . . . . . . . . . . 39 49 6
Administrative expenses . . . . . . . . . . . . . . . . 10 14 2
-------------------- -------------------- --------------------
Total expenses.. . . . . . . . . . . . . . . . . . . . 49 63 8
-------------------- -------------------- --------------------
Net investment income (loss) .. . . . . . . . . . . . . 205 244 70
-------------------- -------------------- --------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain distributions from portfolio sponsors. . . - - -
Net realized gain (loss) from sales of investments . . . - (36) -
-------------------- -------------------- --------------------
Net realized gain (loss) from gain distributions
and sales of investments . . . . . . . . . . . . . - (36) -
Net unrealized gain (loss) . . . . . . . . . . . . . . . 25 (65) 6
-------------------- -------------------- --------------------
Net realized and unrealized gain (loss) on
investments . . . . . . . . . . . . . . . . . . . . 25 (101) 6
-------------------- -------------------- --------------------
Net increase (decrease) in net assets from
operations .. . . . . . . . . . . . . . . . . . . . $ 230 $ 143 $ 76
-------------------- -------------------- --------------------
-------------------- -------------------- --------------------
<CAPTION>
SELECT AGGRESSIVE GROWTH
SUB-ACCOUNT 6
----------------------------------------------------------------------
FOR THE NINE FOR THE
MONTHS ENDED YEAR ENDED FOR THE PERIOD
9/30/97 (UNAUDITED) 12/31/96 8/28/96* TO 12/31/95
-------------------- -------------------- --------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . . $ 3,068 $ 7,614 $ 30
EXPENSES :
Mortality and expense risk fee . . . . . . . . . . . . . 1,320 681 30
Administrative expenses . . . . . . . . . . . . . . . . 373 189 8
-------------------- -------------------- --------------------
Total expenses.. . . . . . . . . . . . . . . . . . . . 1,693 870 38
-------------------- -------------------- --------------------
Net investment income (loss) .. . . . . . . . . . . . . 1,373 6,744 (38)
-------------------- -------------------- --------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain distributions from portfolio sponsors. . . - - -
Net realized gain (loss) from sales of investments . . . 27,427 15,832 -
-------------------- -------------------- --------------------
Net realized gain (loss) from gain distributions
and sales of investments .. . . . . . . . . . . . 27,427 15,832 -
Net unrealized gain (loss) . . . . . . . . . . . . . . . 43,088 (5,567) (74)
-------------------- -------------------- --------------------
Net realized and unrealized gain (loss) on
investments. . . . . . . . . . . . . . . . . . . . 70,515 10,265 (74)-
-------------------- -------------------- --------------------
Net increase (decrease) in net assets from
operations .. . . . . . . . . . . . . . . . . . . $ 71,888 $ 17,009 $ (112)
-------------------- -------------------- --------------------
-------------------- -------------------- --------------------
</TABLE>
**Date of initial investment.
The accompanying notes are an integral part of these financial statements.
Page 2
<PAGE>
<TABLE>
<CAPTION>
INHEIRITAGE ACCOUNT
STATEMENTS OF OPERATIONS (CONTINUED)
SELECT GROWTH
SUB-ACCOUNT 7
----------------------------------------------------------------------
FOR THE NINE FOR THE
MONTHS ENDED YEAR ENDED FOR THE PERIOD
9/30/97 (UNAUDITED) 12/31/96 8/28/95* TO 12/31/95
-------------------- -------------------- --------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends. . . . . . . . . . . . . . . . . . . . . . . . $ 678 $ 3,756 $ 1
EXPENSES:
Mortality and expense risk fee . . . . . . . . . . . . . 614 139 24
Administrative expenses. . . . . . . . . . . . . . . . . 173 38 7
-------------------- -------------------- --------------------
Total expenses . . . . . . . . . . . . . . . . . . . . 787 177 31
-------------------- -------------------- --------------------
Net investment income (loss) . . . . . . . . . . . . . . (109) 3,579 (30)
-------------------- -------------------- --------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain distributions from portfolio sponsors. . . - - -
Net realized gain (loss) from sales of investments . . . 7,764 3,602 -
-------------------- -------------------- --------------------
Net realized gain (loss) from gain distributions
and sales of investments. . . . . . . . . . . . . . 7,764 3,602 -
Net unrealized gain (loss) . . . . . . . . . . . . . . . 20,585 (2,989) (317)
-------------------- -------------------- --------------------
Net realized and unrealized gain (loss) on
investments . . . . . . . . . . . . . . . . . . . . 28,349 613 (317)
-------------------- -------------------- --------------------
Net increase (decrease) in net assets from
operations. . . . . . . . . . . . . . . . . . . . . $ 28,240 $ 4,192 $ (347)
-------------------- -------------------- --------------------
-------------------- -------------------- --------------------
SELECT GROWTH AND INCOME
SUB-ACCOUNT 8
----------------------------------------------------------------------
FOR THE NINE FOR THE
MONTHS ENDED YEAR ENDED FOR THE PERIOD
9/30/97 (UNAUDITED) 12/31/96 9/8/95* TO 12/31/95
-------------------- -------------------- --------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends. . . . . . . . . . . . . . . . . . . . . . . . $ 2,245 $ 4,778 $ 1,150
EXPENSES:
Mortality and expense risk fee . . . . . . . . . . . . . 623 284 12
Administrative expenses. . . . . . . . . . . . . . . . . 176 79 3
-------------------- -------------------- --------------------
Total expenses . . . . . . . . . . . . . . . . . . . . 799 363 15
-------------------- -------------------- --------------------
Net investment income (loss) . . . . . . . . . . . . . . 1,446 4,415 1,135
-------------------- -------------------- --------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain distributions from portfolio sponsors. . . - - -
Net realized gain (loss) from sales of investments . . . 390 (255) 86
-------------------- -------------------- --------------------
Net realized gain (loss) from gain distributions
and sales of investments. . . . . . . . . . . . . . 390 (255) 86
Net unrealized gain (loss) . . . . . . . . . . . . . . . 15,772 1,076 (834)
-------------------- -------------------- --------------------
Net realized and unrealized gain (loss) on
investments . . . . . . . . . . . . . . . . . . . . 16,162 821 (748)
-------------------- -------------------- --------------------
Net increase (decrease) in net assets from
operations. . . . . . . . . . . . . . . . . . . . . $ 17,608 $ 5,236 $ 387
-------------------- -------------------- --------------------
-------------------- -------------------- --------------------
SMALL MID-CAP VALUE
SUB-ACCOUNT 9
----------------------------------------------------------------------
FOR THE NINE FOR THE
MONTHS ENDED YEAR ENDED FOR THE PERIOD
9/30/97 (UNAUDITED) 12/31/96 9/15/95* TO 12/31/95
-------------------- -------------------- --------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends. . . . . . . . . . . . . . . . . . . . . . . . $ 556 $ 1,667 $ 290
EXPENSES:
Mortality and expense risk fee . . . . . . . . . . . . . 676 189 21
Administrative expenses. . . . . . . . . . . . . . . . . 190 53 6
-------------------- -------------------- --------------------
Total expenses . . . . . . . . . . . . . . . . . . . . 866 242 27
-------------------- -------------------- --------------------
Net investment income (loss) . . . . . . . . . . . . . . (310) 1,425 263
-------------------- -------------------- --------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain distributions from portfolio sponsors. . . - - -
Net realized gain (loss) from sales of investments . . . 14,555 3,045 -
-------------------- -------------------- --------------------
Net realized gain (loss) from gain distributions
and sales of investments. . . . . . . . . . . . . . 14,555 3,045 -
Net unrealized gain (loss) . . . . . . . . . . . . . . . 12,670 (26) (121)
-------------------- -------------------- --------------------
Net realized and unrealized gain (loss) on
investments . . . . . . . . . . . . . . . . . . . . 27,225 3,019 (121)
-------------------- -------------------- --------------------
Net increase (decrease) in net assets from
operations. . . . . . . . . . . . . . . . . . . . . $ 26,915 $ 4,444 $ 142
-------------------- -------------------- --------------------
-------------------- -------------------- --------------------
**Formerly Small Cap Value Fund. See Note 1
**Date of initial investment.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INHEIRITAGE ACCOUNT
STATEMENTS OF OPERATIONS (CONTINUED)
SELECT INTERNATIONAL EQUITY
SUB-ACCOUNT 11
----------------------------------------------------------------------
FOR THE YEAR ENDED
FOR THE NINE DECEMBER 31,
MONTHS ENDED ---------------------------------------------
9/30/97 (UNAUDITED) 1996 1995
-------------------- -------------------- --------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends. . . . . . . . . . . . . . . . . . . . . . . . $ 1,041 $ 1,184 $ 1
EXPENSES :
Mortality and expense risk fee . . . . . . . . . . . . . 741 214 1
Administrative expenses. . . . . . . . . . . . . . . . . 209 59 -
-------------------- -------------------- --------------------
Total expenses . . . . . . . . . . . . . . . . . . . . 950 273 1
-------------------- -------------------- --------------------
Net investment income (loss) . . . . . . . . . . . . . . 91 911 -
-------------------- -------------------- --------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain distributions from portfolio sponsors. . . - - -
Net realized gain (loss) from sales of investments . . . 2,565 685
-------------------- -------------------- --------------------
Net realized gain (loss) from gain distributions
and sales of investments. . . . . . . . . . . . . . 2,565 685 -
Net unrealized gain (loss) . . . . . . . . . . . . . . . 9,191 3,572 17
-------------------- -------------------- --------------------
Net realized and unrealized gain (loss) on
investments . . . . . . . . . . . . . . . . . . . . 11,756 4,257 17
-------------------- -------------------- --------------------
Net increase (decrease) in net assets from
operations. . . . . . . . . . . . . . . . . . . . . $ 11,847 $ 5,168 $ 17
-------------------- -------------------- --------------------
-------------------- -------------------- --------------------
SELECT CAPITAL APPRECIATION
SUB-ACCOUNT 12
----------------------------------------------------------------------
FOR THE NINE FOR THE
MONTHS ENDED YEAR ENDED FOR THE PERIOD
9/30/97 (UNAUDITED) 12/31/96 4/28/95* TO 12/31/95
-------------------- -------------------- --------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends. . . . . . . . . . . . . . . . . . . . . . . . $ - $ 28 $ 86
EXPENSES :
Mortality and expense risk fee . . . . . . . . . . . . . 536 165 10
Administrative expenses. . . . . . . . . . . . . . . . . 151 46 3
-------------------- -------------------- --------------------
Total expenses . . . . . . . . . . . . . . . . . . . . 687 211 13
-------------------- -------------------- --------------------
Net investment income (loss) . . . . . . . . . . . . . . (687) (183) 73
-------------------- -------------------- --------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain distributions from portfolio sponsors. . . - - -
Net realized gain (loss) from sales of investments . . . 372 (724) 1
-------------------- -------------------- --------------------
Net realized gain (loss) from gain distributions
and sales of investments. . . . . . . . . . . . . . 372 (724) 1
Net unrealized gain (loss) . . . . . . . . . . . . . . . 17,313 (814) 322
-------------------- -------------------- --------------------
Net realized and unrealized gain (loss) on
investments . . . . . . . . . . . . . . . . . . . . 17,685 (1,538) 323
-------------------- -------------------- --------------------
Net increase (decrease) in net assets from
operations. . . . . . . . . . . . . . . . . . . . . $ 16,998 $ (1,721) $ 396
-------------------- -------------------- --------------------
-------------------- -------------------- --------------------
VIPF HIGH INCOME
SUB-ACCOUNT 102
----------------------------------------------------------------------
FOR THE NINE FOR THE
MONTHS ENDED YEAR ENDED FOR THE PERIOD
9/30/97 (UNAUDITED) 12/31/96 12/5/95* TO 12/31/95
-------------------- -------------------- --------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends. . . . . . . . . . . . . . . . . . . . . . . . $ 6,061 $ 1,470 $ -
EXPENSES :
Mortality and expense risk fee . . . . . . . . . . . . . 788 506 9
Administrative expenses. . . . . . . . . . . . . . . . . 222 141 3
-------------------- -------------------- --------------------
Total expenses . . . . . . . . . . . . . . . . . . . . 1,010 647 12
-------------------- -------------------- --------------------
Net investment income (loss) . . . . . . . . . . . . . . 5,051 823 (12)
-------------------- -------------------- --------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain distributions from portfolio sponsors. . . - - -
Net realized gain (loss) from sales of investments . . . 12,730 5,531 -
-------------------- -------------------- --------------------
Net realized gain (loss) from gain distributions
and sales of investments. . . . . . . . . . . . . . 12,730 5,531 -
Net unrealized gain (loss) . . . . . . . . . . . . . . . 2,287 625 138
-------------------- -------------------- --------------------
Net realized and unrealized gain (loss) on
investments . . . . . . . . . . . . . . . . . . . . 15,017 6,156 138
-------------------- -------------------- --------------------
Net increase (decrease) in net assets from
operations. . . . . . . . . . . . . . . . . . . . . $ 20,068 $ 6,979 $ 126
-------------------- -------------------- --------------------
-------------------- -------------------- --------------------
**Date of initial investment.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INHEIRITAGE ACCOUNT
STATEMENTS OF OPERATIONS (CONTINUED)
VIPF EQUITY INCOME
SUB-ACCOUNT 103
----------------------------------------------------------------------
FOR THE NINE FOR THE
MONTHS ENDED YEAR ENDED FOR THE PERIOD
9/30/97 (UNAUDITED) 12/31/96 9/15/95* TO 12/31/95
-------------------- -------------------- --------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends. . . . . . . . . . . . . . . . . . . . . . . . $ 15,412 $ 2,654 $ 85
EXPENSES:
Mortality and expense risk fee . . . . . . . . . . . . . 1,283 815 25
Administrative expenses. . . . . . . . . . . . . . . . . 361 227 7
-------------------- -------------------- --------------------
Total expenses . . . . . . . . . . . . . . . . . . . . 1,644 1,042 32
-------------------- -------------------- --------------------
Net investment income (loss) . . . . . . . . . . . . . . 13,768 1,612 53
-------------------- -------------------- --------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain distributions from portfolio sponsors. . . - - -
Net realized gain (loss) from sales of investments . . . 164 (844) 1
-------------------- -------------------- --------------------
Net realized gain (loss) from gain distributions
and sales of investments. . . . . . . . . . . . . . 164 (844) 1
Net unrealized gain (loss) . . . . . . . . . . . . . . . 28,820 9,822 673
-------------------- -------------------- --------------------
Net realized and unrealized gain (loss) on
investments . . . . . . . . . . . . . . . . . . . . 28,984 8,978 674
-------------------- -------------------- --------------------
Net increase (decrease) in net assets from
operations. . . . . . . . . . . . . . . . . . . . . $ 42,752 $ 10,590 $ 727
-------------------- -------------------- --------------------
-------------------- -------------------- --------------------
<CAPTION>
VIPF EQUITY INCOME
SUB-ACCOUNT 104
----------------------------------------------------------------------
FOR THE NINE FOR THE
MONTHS ENDED YEAR ENDED FOR THE PERIOD
9/30/97 (UNAUDITED) 12/31/96 9/15/95* TO 12/31/95
-------------------- -------------------- --------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends. . . . . . . . . . . . . . . . . . . . . . . . $ 6,630 $ 5,578 $ 0
-------------------- -------------------- --------------------
EXPENSES:
Mortality and expense risk fee . . . . . . . . . . . . . 1,454 1,017 46
Administrative expenses. . . . . . . . . . . . . . . . . 410 282 12
-------------------- -------------------- --------------------
Total expenses . . . . . . . . . . . . . . . . . . . . 1,864 1,299 58
-------------------- -------------------- --------------------
Net investment income (loss) . . . . . . . . . . . . . . 4,766 4,279 (58)
-------------------- -------------------- --------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain distributions from portfolio sponsors. . . - - -
Net realized gain (loss) from sales of investments . . . 1,115 (57) -
-------------------- -------------------- --------------------
Net realized gain (loss) from gain distributions
and sales of investments. . . . . . . . . . . . . . 1,115 (57) -
Net unrealized gain (loss) . . . . . . . . . . . . . . . 41,641 11,462 (947)
-------------------- -------------------- --------------------
Net realized and unrealized gain (loss) on
investments . . . . . . . . . . . . . . . . . . . . 42,756 11,405 (947)
-------------------- -------------------- --------------------
Net increase (decrease) in net assets from
operations. . . . . . . . . . . . . . . . . . . . . $ 47,522 $ 15,684 $ (1,005)
-------------------- -------------------- --------------------
-------------------- -------------------- --------------------
<CAPTION>
VIPF OVERSEAS
SUB-ACCOUNT 105
----------------------------------------------------------------------
FOR THE NINE FOR THE
MONTHS ENDED YEAR ENDED FOR THE PERIOD
9/30/97 (UNAUDITED) 12/31/96 9/15/95* TO 12/31/95
-------------------- -------------------- --------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends. . . . . . . . . . . . . . . . . . . . . . . . $ 426 $ 32 $ -
EXPENSES:
Mortality and expense risk fee . . . . . . . . . . . . . 93 27 9
Administrative expenses. . . . . . . . . . . . . . . . . 26 7 2
-------------------- -------------------- --------------------
Total expenses . . . . . . . . . . . . . . . . . . . . 119 34 11
-------------------- -------------------- --------------------
Net investment income (loss) . . . . . . . . . . . . . . 307 (2) (11)
-------------------- -------------------- --------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain distributions from portfolio sponsors. . . - - -
Net realized gain (loss) from sales of investments . . . 9,534 338 339
-------------------- -------------------- --------------------
Net realized gain (loss) from gain distributions
and sales of investments. . . . . . . . . . . . . . 9,534 338 339
Net unrealized gain (loss). . . . . . . . . . . . . . . 100 267 (35)
-------------------- -------------------- -------------------
Net realized and unrealized gain (loss) on
investments . . . . . . . . . . . . . . . . . . . . 9,634 605 304
-------------------- -------------------- -------------------
Net increase (decrease) in net assets from
operations. . . . . . . . . . . . . . . . . . . . . $ 9,941 $ 603 $ 293
-------------------- -------------------- -------------------
-------------------- -------------------- -------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
** Date of initial investment.
<PAGE>
<TABLE>
<CAPTION>
INHEIRITAGE ACCOUNT
STATEMENTS OF OPERATIONS (CONTINUED)
VIPF II ASSET
MANAGER SUB-ACCOUNT 106
----------------------------------------------------------------------
FOR THE NINE FOR THE
MONTHS ENDED YEAR ENDED FOR THE PERIOD
9/30/97 (UNAUDITED) 12/31/96 5/10/95* TO 12/31/95
-------------------- -------------------- --------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends. . . . . . . . . . . . . . . . . . . . . . . . $ 1,418 $ 178 $ 2
EXPENSES :
Mortality and expense risk fee . . . . . . . . . . . . . 149 58 4
Administrative expenses. . . . . . . . . . . . . . . . . 42 16 1
-------------------- -------------------- --------------------
Total expenses . . . . . . . . . . . . . . . . . . . . 191 74 5
-------------------- -------------------- --------------------
Net investment income (loss) . . . . . . . . . . . . . . 1,227 104 (3)
-------------------- -------------------- --------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain distributions from portfolio sponsors. . . - - -
Net realized gain (loss) from sales of investments . . . 16 17 -
-------------------- -------------------- --------------------
Net realized gain (loss) from gain distributions
and sales of investments. . . . . . . . . . . . . . 16 17 -
Net unrealized gain (loss) . . . . . . . . . . . . . . . 2,957 750 87
-------------------- -------------------- --------------------
Net realized and unrealized gain (loss) on
investments . . . . . . . . . . . . . . . . . . . . 2,973 767 87
-------------------- -------------------- --------------------
Net increase (decrease) in net assets from
operations. . . . . . . . . . . . . . . . . . . . . $ 4,200 $ 871 $ 84
-------------------- -------------------- --------------------
-------------------- -------------------- --------------------
<CAPTION>
T. ROWE PRICE INTERNATIONAL STOCK
SUB-ACCOUNT 150
----------------------------------------------------------------------
FOR THE NINE FOR THE
MONTHS ENDED YEAR ENDED FOR THE PERIOD
9/30/97 (UNAUDITED) 12/31/96 9/15/95* TO 8/28/95
-------------------- -------------------- --------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends. . . . . . . . . . . . . . . . . . . . . . . . $ - $ 271 $ -
EXPENSES :
Mortality and expense risk fee . . . . . . . . . . . . . 393 102 2
Administrative expenses. . . . . . . . . . . . . . . . . 111 28 1
-------------------- -------------------- --------------------
Total expenses . . . . . . . . . . . . . . . . . . . . 504 130 3
-------------------- -------------------- --------------------
Net investment income (loss) . . . . . . . . . . . . . . (504) 141 (3)
-------------------- -------------------- --------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain distributions from portfolio sponsors. . . - - -
Net realized gain (loss) from sales of investments . . . 8,886 3,240 -
-------------------- -------------------- --------------------
Net realized gain (loss) from gain distributions
and sales of investments. . . . . . . . . . . . . . 8,886 3,240 -
Net unrealized gain (loss) . . . . . . . . . . . . . . . 360 (74) 23
-------------------- -------------------- --------------------
Net realized and unrealized gain (loss) on
investments . . . . . . . . . . . . . . . . . . . . 9,246 3,166 23
-------------------- -------------------- --------------------
Net increase (decrease) in net assets from
operations. . . . . . . . . . . . . . . . . . . . . $ 8,742 $ 3,307 $ 20
-------------------- -------------------- --------------------
-------------------- -------------------- --------------------
<CAPTION>
DGPF INTERNATIONAL EQUITY
SUB-ACCOUNT 207
----------------------------------------------------------------------
FOR THE NINE FOR THE
MONTHS ENDED YEAR ENDED FOR THE PERIOD
9/30/97 (UNAUDITED) 12/31/96 10/19/95* TO 12/31/95
-------------------- -------------------- ---------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends. . . . . . . . . . . . . . . . . . . . . . . . $ 1,076 $ 742 $ -
EXPENSES :
Mortality and expense risk fee . . . . . . . . . . . . . 403 180 6
Administrative expenses. . . . . . . . . . . . . . . . . 114 50 2
-------------------- -------------------- --------------------
Total expenses . . . . . . . . . . . . . . . . . . . . 517 230 8
-------------------- -------------------- --------------------
Net investment income (loss) . . . . . . . . . . . . . . 559 512 (8)
-------------------- -------------------- --------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain distributions from portfolio sponsors. . . - - -
Net realized gain (loss) from sales of investments . . . 931 12 -
-------------------- -------------------- --------------------
Net realized gain (loss) from gain distributions
and sales of investments. . . . . . . . . . . . . . 931 12 -
Net unrealized gain (loss) . . . . . . . . . . . . . . . 7,644 2,667 169
-------------------- -------------------- --------------------
Net realized and unrealized gain (loss) on
investments . . . . . . . . . . . . . . . . . . . . 8,575 2,679 169
-------------------- -------------------- --------------------
Net increase (decrease) in net assets from
operations. . . . . . . . . . . . . . . . . . . . . $ 9,134 $ 3,191 $ 161
-------------------- -------------------- --------------------
-------------------- -------------------- --------------------
</TABLE>
** Date of initial investment.
(a) For the period ended December 31,1995, there were no transactions for
Sub-Account 2.
(b) For the periods ended December 31, 1995 and 1996, there were no
transactions for Sub-Account 10.
The accompanying notes are an integral part of these financial statements.
<PAGE>
INHEIRITAGE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
GROWTH
SUB-ACCOUNT 1
-----------------------------------------------------------
NINE
MONTHS ENDED YEAR ENDED PERIOD FROM
9/30/97 (UNAUDITED) 12/31/96 9/15/95* TO 12/31/95
------------------- ------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS :
FROM OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . . . . . $ 3,106 $ 5,474 $ 624
Net realized gain (loss) on investments. . . . . . . . . . . . . . $ 8,690 (915) -
Net unrealized gain (loss) on investments. . . . . . . . . . . . . $ 10,272 1,497 (223)
------------------- ------------------------------------
Net increase (decrease) in net assets from operations . . . . . . 22,068 6,056 401
------------------- ------------------------------------
FROM CAPITAL TRANSACTIONS :
Net premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,960 22,048 2,038
Terminations . . . . . . . . . . . . . . . . . . . . . . . . . . . - - -
Insurance charges. . . . . . . . . . . . . . . . . . . . . . . . . (404) - -
Other transfers from (to) the General Account of First Allmerica
Financial Life Insurance Company (Sponsor) . . . . . . . . . . 121,339 23,612 6,522
Net increase (decrease) in investment by First Allmerica Financial
Life Insurance Company (Sponsor) . . . . . . . . . . . . . . . - - -
------------------- ------------------------------------
Net increase (decrease) in net assets from capital transactions. . 149,895 45,660 8,560
------------------- ------------------------------------
Net increase (decrease) in net assets. . . . . . . . . . . . . . . 171,963 51,716 8,961
NET ASSETS:
Beginning of period. . . . . . . . . . . . . . . . . . . . . . . . . 60,677 8,961 -
------------------- ------------------------------------
End of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 232,640 $ 60,677 $ 8,961
------------------- ------------------------------------
------------------- ------------------------------------
<CAPTION>
INVESTMENT GRADE INCOME
SUB-ACCOUNT 2
-----------------------------------------------------------
NINE
MONTHS ENDED YEAR ENDED YEAR ENDED
9/30/97 (UNAUDITED) 12/31/96 12/31/95*
------------------- ------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS :
FROM OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . . . . . $ 66 $ - $ -
Net realized gain (loss) on investments. . . . . . . . . . . . . . - - -
Net unrealized gain (loss) on investments. . . . . . . . . . . . . 36 (1) -
------------------- ------------------------------------
Net increase (decrease) in net assets from operations . . . . . . 102 (1) -
------------------- ------------------------------------
FROM CAPITAL TRANSACTIONS :
Net premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,229 85 -
Terminations . . . . . . . . . . . . . . . . . . . . . . . . . . . - - -
Insurance charges. . . . . . . . . . . . . . . . . . . . . . . . . (48) - -
Other transfers from (to) the General Account of First Allmerica
Financial Life Insurance Company (Sponsor) . . . . . . . . . . 5 (4) -
Net increase (decrease) in investment by First Allmerica Financial
Life Insurance Company (Sponsor) . . . . . . . . . . . . . . . - - -
------------------- ------------------------------------
Net increase (decrease) in net assets from capital transactions. . 2,186 81 -
------------------- ------------------------------------
Net increase (decrease) in net assets. . . . . . . . . . . . . . . 2,288 80 -
NET ASSETS:
Beginning of period. . . . . . . . . . . . . . . . . . . . . . . . . 80 - -
------------------- ------------------------------------
End of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,368 $ 80 $ -
------------------- ------------------------------------
------------------- ------------------------------------
<CAPTION>
MONEY MARKET
SUB-ACCOUNT 3
-----------------------------------------------------------
NINE
MONTHS ENDED YEAR ENDED PERIOD FROM
9/30/97 (UNAUDITED) 12/31/96 11/20/95* TO 12/31/96
------------------- ------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS :
FROM OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . . . . . $ 7,882 $ 3,589 $ 26
Net realized gain (loss) on investments. . . . . . . . . . . . . . - - -
Net unrealized gain (loss) on investments. . . . . . . . . . . . . - - -
------------------- ------------------------------------
Net increase (decrease) in net assets from operations . . . . . . 7,882 3,589 26
------------------- ------------------------------------
FROM CAPITAL TRANSACTIONS :
Net premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . 245,191 71,860 971
Terminations . . . . . . . . . . . . . . . . . . . . . . . . . . . - - -
Insurance charges. . . . . . . . . . . . . . . . . . . . . . . . . (5,268) - -
Other transfers from (to) the General Account of First Allmerica
Financial Life Insurance Company (Sponsor) . . . . . . . . . . (188,849) 203,620 (35)
Net increase (decrease) in investment by First Allmerica Financial
Life Insurance Company (Sponsor) . . . . . . . . . . . . . . . - - -
------------------- ------------------------------------
Net increase (decrease) in net assets from capital transactions. . 51,074 275,480 936
------------------- ------------------------------------
Net increase (decrease) in net assets. . . . . . . . . . . . . . . 58,956 279,069 962
NET ASSETS:
Beginning of period. . . . . . . . . . . . . . . . . . . . . . . . . 280,031 962 -
------------------- ------------------------------------
End of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 338,987 $ 280,031 $ 962
------------------- ------------------------------------
------------------- ------------------------------------
</TABLE>
**Date of initial investment.
The accompanying notes are an integral part of these financial statements.
<PAGE>
INHEIRITAGE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
EQUITY INDEX
SUB-ACCOUNT 4
-----------------------------------------------------------
NINE
MONTHS ENDED YEAR ENDED PERIOD FROM
9/30/97 (UNAUDITED) 12/31/96 10/19/96* TO 12/31/96
------------------- ------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS :
FROM OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . . . . . $ 656 $ 1,834 $ (28)
Net realized gain (loss) on investments. . . . . . . . . . . . . . 18,662 5,463 (1,224)
Net unrealized gain (loss) on investments. . . . . . . . . . . . . 11,857 (927) (26)
------------------- ------------------------------------
Net increase (decrease) in net assets from operations . . . . . . 31,175 6,370 (1,278)
------------------- ------------------------------------
FROM CAPITAL TRANSACTIONS :
Net premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,952 8,653 71,958
Terminations . . . . . . . . . . . . . . . . . . . . . . . . . . . - - -
Insurance charges. . . . . . . . . . . . . . . . . . . . . . . . . (11,212) - -
Other transfers from (to) the General Account of First Allmerica
Financial Life Insurance Company (Sponsor) . . . . . . . . . . 115,598 29,518 (56,843)
Net increase (decrease) in investment by First Allmerica Financial
Life Insurance Company (Sponsor) . . . . . . . . . . . . . . . - - -
------------------- ------------------------------------
Net increase (decrease) in net assets from capital transactions. . 155,338 38,171 15,115
------------------- ------------------------------------
Net increase (decrease) in net assets. . . . . . . . . . . . . . . 186,513 44,541 13,837
NET ASSETS:
Beginning of period. . . . . . . . . . . . . . . . . . . . . . . . . 58,378 13,837 -
------------------- ------------------------------------
End of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 244,891 $ 58,378 $ 13,837
------------------- ------------------------------------
------------------- ------------------------------------
<CAPTION>
GOVERNMENT BOND
SUB-ACCOUNT 5
-----------------------------------------------------------
NINE
MONTHS ENDED YEAR ENDED PERIOD FROM
9/30/97 (UNAUDITED) 12/31/96 10/9/95 TO 12/31/95
------------------- ------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS :
FROM OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . . . . . $ 205 $ 244 $ 70
Net realized gain (loss) on investments. . . . . . . . . . . . . . - (36) -
Net unrealized gain (loss) on investments. . . . . . . . . . . . . 25 (65) 6
------------------- ------------------------------------
Net increase (decrease) in net assets from operations . . . . . . 230 143 76
------------------- ------------------------------------
FROM CAPITAL TRANSACTIONS :
Net premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . - 3,490 2,326
Terminations . . . . . . . . . . . . . . . . . . . . . . . . . . . - - -
Insurance charges. . . . . . . . . . . . . . . . . . . . . . . . . (6) - -
Other transfers from (to) the General Account of First Allmerica
Financial Life Insurance Company (Sponsor) . . . . . . . . . . - (2,939) 2,647
Net increase (decrease) in investment by First Allmerica Financial
Life Insurance Company (Sponsor) . . . . . . . . . . . . . . . - - -
------------------- ------------------------------------
Net increase (decrease) in net assets from capital transactions. . (6) 551 4,973
------------------- ------------------------------------
Net increase (decrease) in net assets. . . . . . . . . . . . . . . 224 694 5,049
NET ASSETS:
Beginning of period. . . . . . . . . . . . . . . . . . . . . . . . . 5,743 5,049 -
------------------- ------------------------------------
End of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,967 $ 5,743 $ 5,049
------------------- ------------------------------------
------------------- ------------------------------------
<CAPTION>
SELECT AGGRESSIVE GROWTH
SUB-ACCOUNT 6
-----------------------------------------------------------
NINE
MONTHS ENDED YEAR ENDED PERIOD FROM
9/30/97 (UNAUDITED) 12/31/96 8/28/95 TO 12/31/95
------------------- ------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS :
FROM OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . . . . . $ 1,373 $ 6,744 $ (38)
Net realized gain (loss) on investments. . . . . . . . . . . . . . 27,427 15,832 -
Net unrealized gain (loss) on investments. . . . . . . . . . . . . 43,088 (5,567) (74)
------------------- ------------------------------------
Net increase (decrease) in net assets from operations . . . . . . 71,888 17,009 (112)
------------------- ------------------------------------
FROM CAPITAL TRANSACTIONS :
Net premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,790 45,627 3,536
Terminations . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,454) - -
Insurance charges. . . . . . . . . . . . . . . . . . . . . . . . . (719) - -
Other transfers from (to) the General Account of First Allmerica
Financial Life Insurance Company (Sponsor) . . . . . . . . . . 85,334 40,948 13,385
Net increase (decrease) in investment by First Allmerica Financial
Life Insurance Company (Sponsor) . . . . . . . . . . . . . . . - - -
------------------- ------------------------------------
Net increase (decrease) in net assets from capital transactions. . 110,951 86,575 16,921
------------------- ------------------------------------
Net increase (decrease) in net assets. . . . . . . . . . . . . . . 182,839 103,584 16,809
NET ASSETS:
Beginning of period. . . . . . . . . . . . . . . . . . . . . . . . . 120,393 16,809 -
------------------- ------------------------------------
End of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 303,232 $ 120,393 $ 16,809
------------------- ------------------------------------
------------------- ------------------------------------
</TABLE>
**Date of initial investment.
The accompanying notes are an integral part of these financial statements.
<PAGE>
INHEIRITAGE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
SELECT GROWTH
SUB-ACCOUNT 7
-----------------------------------------------------------
NINE
MONTHS ENDED YEAR ENDED PERIOD FROM
9/30/97 (UNAUDITED) 12/31/96 8/28/95 TO 12/31/95
------------------- ------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS :
FROM OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . . . . . $ (109) $ 3,579 $ (30)
Net realized gain (loss) on investments . . . . . . . . . . . . . 7,764 3,602 -
Net unrealized gain (loss) on investments . . . . . . . . . . . . 20,585 (2,989) (317)
------------------- ------------------------------------
Net increase (decrease) in net assets from operations . . . . . . 28,240 4,192 (347)
------------------- ------------------------------------
FROM CAPITAL TRANSACTIONS :
Net premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,543 12,649 3,045
Terminations . . . . . . . . . . . . . . . . . . . . . . . . . . . - - -
Insurance charges . . . . . . . . . . . . . . . . . . . . . . . . (408) - -
Other transfers from (to) the General Account of First Allmerica
Financial Life Insurance Company (Sponsor) . . . . . . . . . . 152,987 22 6,517
Net increase (decrease) in investment by First Allmerica Financial
Life Insurance Company (Sponsor) . . . . . . . . . . . . . . . - - -
------------------- ------------------------------------
Net increase (decrease) in net assets from capital transactions. . 167,122 12,671 9,562
------------------- ------------------------------------
Net increase (decrease) in net assets. . . . . . . . . . . . . . . 195,362 16,863 9,215
NET ASSETS:
Beginning of period. . . . . . . . . . . . . . . . . . . . . . . . . 26,078 9,215 -
------------------- ------------------------------------
End of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 221,440 $ 26,078 $ 9,215
------------------- ------------------------------------
------------------- ------------------------------------
<CAPTION>
SELECT GROWTH AND INCOME
SUB-ACCOUNT 8
-----------------------------------------------------------
NINE
MONTHS ENDED YEAR ENDED PERIOD FROM
9/30/97 (UNAUDITED) 12/31/96 9/15/95* TO 12/31/95
------------------- ------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS :
FROM OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . . . . . $ 1,446 $ 4,415 $ 1,135
Net realized gain (loss) on investments. . . . . . . . . . . . . . 390 (255) 86
Net unrealized gain (loss) on investments. . . . . . . . . . . . . 15,772 1,076 (834)
------------------- ------------------------------------
Net increase (decrease) in net assets from operations . . . . . . 17,608 5,236 387
------------------- ------------------------------------
FROM CAPITAL TRANSACTIONS:
Net premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,416 37,896 2,580
Terminations . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,515) - -
Insurance charges. . . . . . . . . . . . . . . . . . . . . . . . . (512) - -
Other transfers from (to) the General Account of First Allmerica
Financial Life Insurance Company (Sponsor) . . . . . . . . . . 16,187 (5,757) 24,962
Net increase (decrease) in investment by First Allmerica Financial
Life Insurance Company (Sponsor) . . . . . . . . . . . . . . . - - -
------------------- ------------------------------------
Net increase (decrease) in net assets from capital transactions. . 38,576 32,139 27,542
------------------- ------------------------------------
Net increase (decrease) in net assets. . . . . . . . . . . . . . . 56,184 37,375 27,929
NET ASSETS:
Beginning of period. . . . . . . . . . . . . . . . . . . . . . . . . 65,304 27,929 -
------------------- ------------------------------------
End of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 121,488 $ 65,304 $ 27,929
------------------- ------------------------------------
------------------- ------------------------------------
<CAPTION>
SMALL MID-CAP VALUE
SUB-ACCOUNT 9
-----------------------------------------------------------
NINE
MONTHS ENDED YEAR ENDED PERIOD FROM
9/30/97 (UNAUDITED) 12/31/96 9/15/95* TO 12/31/95
------------------- ------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS :
FROM OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . . . . . $ (310) $ 1,425 $ 263
Net realized gain (loss) on investments . . . . . . . . . . . . . 14,555 3,045 -
Net unrealized gain (loss) on investments . . . . . . . . . . . . 12,670 (26) (121)
------------------- ------------------------------------
Net increase (decrease) in net assets from operations . . . . . . 26,915 4,444 142
------------------- ------------------------------------
FROM CAPITAL TRANSACTIONS :
Net premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,624 10,199 2,038
Terminations . . . . . . . . . . . . . . . . . . . . . . . . . . . - - -
Insurance charges . . . . . . . . . . . . . . . . . . . . . . . . (471) - -
Other transfers from (to) the General Account of First Allmerica
Financial Life Insurance Company (Sponsor) . . . . . . . . . . 137,356 10,789 6,522
Net increase (decrease) in investment by First Allmerica Financial
Life Insurance Company (Sponsor) . . . . . . . . . . . . . . . - - -
------------------- ------------------------------------
Net increase (decrease) in net assets from capital transactions. . 162,509 20,988 8,560
------------------- ------------------------------------
Net increase (decrease) in net assets . . . . . . . . . . . . . . 189,424 25,432 8,702
NET ASSETS:
Beginning of period. . . . . . . . . . . . . . . . . . . . . . . . . 34,134 8,702 -
------------------- ------------------------------------
End of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 223,558 $ 34,134 $ 8,702
------------------- ------------------------------------
------------------- ------------------------------------
</TABLE>
**Date of initial investment.
The accompanying notes are an integral part of these financial statements.
<PAGE>
INHEIRITAGE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
SELECT INTERNATIONAL EQUITY
SUB-ACCOUNT 11
-----------------------------------------------------------
NINE
MONTHS ENDED YEAR ENDED PERIOD FROM
9/30/97 (UNAUDITED) 12/31/96 6/25/95* TO 12/31/95
------------------- ------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS :
FROM OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . . . . . $ 91 $ 911 $ -
Net realized gain (loss) on investments . . . . . . . . . . . . . 2,565 685 -
Net unrealized gain (loss) on investments . . . . . . . . . . . . 9,191 3,572 17
------------------- ------------------------------------
Net increase (decrease) in net assets from operations . . . . . . 11,847 5,168 17
------------------- ------------------------------------
FROM CAPITAL TRANSACTIONS :
Net premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,789 32,320 -
Terminations . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,344) - -
Insurance charges . . . . . . . . . . . . . . . . . . . . . . . . (342) - -
Other transfers from (to) the General Account of First Allmerica
Financial Life Insurance Company (Sponsor) . . . . . . . . . . 89,117 21,288 -
Net increase (decrease) in investment by First Allmerica Financial
Life Insurance Company (Sponsor) . . . . . . . . . . . . . . . - (132) -
------------------- ------------------------------------
Net increase (decrease) in net assets from capital transactions. . 100,220 53,476 -
------------------- ------------------------------------
Net increase (decrease) in net assets . . . . . . . . . . . . . . 112,067 58,644 17
NET ASSETS:
Beginning of period. . . . . . . . . . . . . . . . . . . . . . . . . 58,757 113 96
------------------- ------------------------------------
End of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 170,824 $ 58,757 $ 113
------------------- ------------------------------------
------------------- ------------------------------------
<CAPTION>
SELECT CAPITAL APPRECIATION
SUB-ACCOUNT 12
-----------------------------------------------------------
NINE
MONTHS ENDED YEAR ENDED PERIOD FROM
9/30/97 (UNAUDITED) 12/31/96 4/28/95* TO 12/31/95
------------------- ------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS :
FROM OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . . . . . $ (687) $ (183) $ 73
Net realized gain (loss) on investments . . . . . . . . . . . . . 372 (724) 1
Net unrealized gain (loss) on investments . . . . . . . . . . . . 17,313 (814) 322
------------------- ------------------------------------
Net increase (decrease) in net assets from operations . . . . . . 16,998 (1,721) 396
------------------- ------------------------------------
FROM CAPITAL TRANSACTIONS :
Net premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,594 17,225 3,918
Terminations . . . . . . . . . . . . . . . . . . . . . . . . . . . - - -
Insurance charges . . . . . . . . . . . . . . . . . . . . . . . . (545) - -
Other transfers from (to) the General Account of First Allmerica
Financial Life Insurance Company (Sponsor) . . . . . . . . . . 53,769 21,018 (19)
Net increase (decrease) in investment by First Allmerica Financial
Life Insurance Company (Sponsor) . . . . . . . . . . . . . . . - (294) 200
------------------- ------------------------------------
Net increase (decrease) in net assets from capital transactions. . 78,818 37,949 4,099
------------------- ------------------------------------
Net increase (decrease) in net assets . . . . . . . . . . . . . . 95,816 36,228 4,495
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . . 40,723 4,495 -
------------------- ------------------------------------
End of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 136,539 $ 40,723 $ 4,495
------------------- ------------------------------------
------------------- ------------------------------------
<CAPTION>
VIPF HIGH INCOME
SUB-ACCOUNT 102
-----------------------------------------------------------
NINE
MONTHS ENDED YEAR ENDED PERIOD FROM
9/30/97 (UNAUDITED) 12/31/96 12/5/95* TO 12/31/95
------------------- ------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS :
FROM OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . . . . . $ 5,051 $ 823 $ (12)
Net realized gain (loss) on investments . . . . . . . . . . . . . 12,730 5,531 -
Net unrealized gain (loss) on investments . . . . . . . . . . . . 2,287 625 138
------------------- ------------------------------------
Net increase (decrease) in net assets from operations . . . . . . 20,068 6,979 126
------------------- ------------------------------------
FROM CAPITAL TRANSACTIONS :
Net premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,908 39,315 1,957
Terminations . . . . . . . . . . . . . . . . . . . . . . . . . . . - - -
Insurance charges . . . . . . . . . . . . . . . . . . . . . . . . (712) - -
Other transfers from (to) the General Account of First Allmerica
Financial Life Insurance Company (Sponsor) . . . . . . . . . . (1,358) 11,905 13,738
Net increase (decrease) in investment by First Allmerica Financial
Life Insurance Company (Sponsor) . . . . . . . . . . . . . . . - - -
------------------- ------------------------------------
Net increase (decrease) in net assets from capital transactions. . 29,838 51,220 15,695
------------------- ------------------------------------
Net increase (decrease) in net assets . . . . . . . . . . . . . . 49,906 58,199 15,821
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . . 74,020 15,821 -
------------------- ------------------------------------
End of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 123,926 $ 74,020 $ 15,821
------------------- ------------------------------------
------------------- ------------------------------------
</TABLE>
**Date of initial investment.
The accompanying notes are an integral part of these financial statements.
<PAGE>
INHEIRITAGE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
VIPF EQUITY-INCOME
SUB-ACCOUNT 103
-----------------------------------------------------------
NINE
MONTHS ENDED YEAR ENDED PERIOD FROM
9/30/97 (UNAUDITED) 12/31/96 8/28/95* TO 12/31/95
------------------- ------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS :
FROM OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . . . . . $ 13,768 $ 1,612 $ 53
Net realized gain (loss) on investments . . . . . . . . . . . . . 164 (844) 1
Net unrealized gain (loss) on investments . . . . . . . . . . . . 28,820 9,822 673
------------------- ------------------------------------
Net increase (decrease) in net assets from operations . . . . . . 42,752 10,590 727
------------------- ------------------------------------
FROM CAPITAL TRANSACTIONS :
Net premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,009 58,682 11,736
Terminations . . . . . . . . . . . . . . . . . . . . . . . . . . . - - -
Insurance charges . . . . . . . . . . . . . . . . . . . . . . . . (1,318) - -
Other transfers from (to) the General Account of First Allmerica
Financial Life Insurance Company (Sponsor) . . . . . . . . . . 46,752 16,840 46,402
Net increase (decrease) in investment by First Allmerica Financial
Life Insurance Company (Sponsor) . . . . . . . . . . . . . . . - - -
------------------- ------------------------------------
Net increase (decrease) in net assets from capital transactions. . 97,443 75,522 58,138
------------------- ------------------------------------
Net increase (decrease) in net assets . . . . . . . . . . . . . . 140,195 86,112 58,865
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . . 144,977 58,865 -
------------------- ------------------------------------
End of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 285,172 $ 144,977 $ 58,865
------------------- ------------------------------------
------------------- ------------------------------------
<CAPTION>
VIPF GROWTH
SUB-ACCOUNT 104
-----------------------------------------------------------
NINE
MONTHS ENDED YEAR ENDED PERIOD FROM
9/30/97 (UNAUDITED) 12/31/96 8/28/95* TO 12/31/95
------------------- ------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS :
FROM OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . . . . . $ 4,766 $ 4,279 $ (58)
Net realized gain (loss) on investments . . . . . . . . . . . . . 1,115 (57) -
Net unrealized gain (loss) on investments . . . . . . . . . . . . 41,641 11,462 (947)
------------------- ------------------------------------
Net increase (decrease) in net assets from operations . . . . . . 47,522 15,684 (1,005)
------------------- ------------------------------------
FROM CAPITAL TRANSACTIONS :
Net premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,930 60,044 12,819
Terminations . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,119) - -
Insurance charges . . . . . . . . . . . . . . . . . . . . . . . . (1,482) - -
Other transfers from (to) the General Account of First Allmerica
Financial Life Insurance Company (Sponsor) . . . . . . . . . . 96,987 68,439 15,985
Net increase (decrease) in investment by First Allmerica Financial
Life Insurance Company (Sponsor) . . . . . . . . . . . . . . . - - -
------------------- ------------------------------------
Net increase (decrease) in net assets from capital transactions. . 137,316 128,483 28,804
------------------- ------------------------------------
Net increase (decrease) in net assets. . . . . . . . . . . . . . . 184,838 144,167 27,799
NET ASSETS:
Beginning of period. . . . . . . . . . . . . . . . . . . . . . . . . 171,966 27,799 -
------------------- ------------------------------------
End of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 356,804 $ 171,966 $ 27,799
------------------- ------------------------------------
------------------- ------------------------------------
<CAPTION>
VIPF OVERSEAS
SUB-ACCOUNT 105
-----------------------------------------------------------
NINE
MONTHS ENDED YEAR ENDED PERIOD FROM
9/30/97 (UNAUDITED) 12/31/96 9/15/95* TO 12/31/95
------------------- ------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS :
FROM OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . . . . . $ 307 $ (2) $ (11)
Net realized gain (loss) on investments . . . . . . . . . . . . . 9,534 338 339
Net unrealized gain (loss) on investments . . . . . . . . . . . . 100 267 (35)
------------------- ------------------------------------
Net increase (decrease) in net assets from operations . . . . . . 9,941 603 293
------------------- ------------------------------------
FROM CAPITAL TRANSACTIONS :
Net premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,330 3,103 1,032
Terminations . . . . . . . . . . . . . . . . . . . . . . . . . . . - - -
Insurance charges . . . . . . . . . . . . . . . . . . . . . . . . (211) - -
Other transfers from (to) the General Account of First Allmerica
Financial Life Insurance Company (Sponsor) . . . . . . . . . . (8,763) (355) (283)
Net increase (decrease) in investment by First Allmerica Financial
Life Insurance Company (Sponsor) . . . . . . . . . . . . . . . - - -
------------------- ------------------------------------
Net increase (decrease) in net assets from capital transactions. . (6,644) 2,748 749
------------------- ------------------------------------
Net increase (decrease) in net assets . . . . . . . . . . . . . . 3,297 3,351 1,042
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . . 4,393 1,042 -
------------------- ------------------------------------
End of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,690 $ 4,393 $ 1,042
------------------- ------------------------------------
------------------- ------------------------------------
</TABLE>
**Date of initial investment.
The accompanying notes are an integral part of these financial statements.
<PAGE>
INHEIRITAGE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
VIPF II ASSET MANAGER
SUB-ACCOUNT 106
-----------------------------------------------------------
NINE
MONTHS ENDED YEAR ENDED YEAR ENDED
9/30/97 (UNAUDITED) 12/31/96 12/31/96
------------------- ------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS :
FROM OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . . . . . $ 1,227 $ 104 $ (3)
Net realized gain (loss) on investments . . . . . . . . . . . . . 16 17 -
Net unrealized gain (loss) on investments . . . . . . . . . . . . 2,957 750 87
------------------- ------------------------------------
Net increase (decrease) in net assets from operations . . . . . . 4,200 871 84
------------------- ------------------------------------
FROM CAPITAL TRANSACTIONS :
Net premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,331 7,874 2,064
Terminations . . . . . . . . . . . . . . . . . . . . . . . . . . . - - -
Insurance charges . . . . . . . . . . . . . . . . . . . . . . . . (323) - -
Other transfers from (to) the General Account of First Allmerica
Financial Life Insurance Company (Sponsor) . . . . . . . . . . 13,549 (186) (35)
Net increase (decrease) in investment by First Allmerica Financial
Life Insurance Company (Sponsor) . . . . . . . . . . . . . . . - (128) -
------------------- ------------------------------------
Net increase (decrease) in net assets from capital transactions. . 19,557 7,560 2,029
------------------- ------------------------------------
Net increase (decrease) in net assets . . . . . . . . . . . . . . 23,757 8,431 2,113
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . . 10,642 2,211 98
------------------- ------------------------------------
End of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 34,399 $ 10,642 $ 2,211
------------------- ------------------------------------
------------------- ------------------------------------
<CAPTION>
T. ROWE PRICE INTERNATIONAL STOCK
SUB-ACCOUNT 150
-----------------------------------------------------------
NINE
MONTHS ENDED YEAR ENDED PERIOD FROM
9/30/97 (UNAUDITED) 12/31/96 9/15/95* TO 12/31/95
------------------- ------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS :
FROM OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . . . . . $ (504) $ 141 $ (3)
Net realized gain (loss) on investments . . . . . . . . . . . . . 8,886 3,240 -
Net unrealized gain (loss) on investments . . . . . . . . . . . . 360 (74) 23
------------------- ------------------------------------
Net increase (decrease) in net assets from operations . . . . . . 8,742 3,307 20
------------------- ------------------------------------
FROM CAPITAL TRANSACTIONS :
Net premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,982 15,072 671
Terminations . . . . . . . . . . . . . . . . . . . . . . . . . . . - - -
Insurance charges . . . . . . . . . . . . . . . . . . . . . . . . (302) - -
Other transfers from (to) the General Account of First Allmerica
Financial Life Insurance Company (Sponsor) . . . . . . . . . . 43,689 2,136 (3)
Net increase (decrease) in investment by First Allmerica Financial
Life Insurance Company (Sponsor) . . . . . . . . . . . . . . . - - -
------------------- ------------------------------------
Net increase (decrease) in net assets from capital transactions. . 62,369 17,208 668
------------------- ------------------------------------
Net increase (decrease) in net assets . . . . . . . . . . . . . . 71,111 20,515 688
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . . 21,203 688 -
------------------- ------------------------------------
End of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 92,314 $ 21,203 $ 688
------------------- ------------------------------------
------------------- ------------------------------------
<CAPTION>
DGPF INTERNATIONAL EQUITY
SUB-ACCOUNT 207
-----------------------------------------------------------
NINE
MONTHS ENDED YEAR ENDED PERIOD FROM
9/30/97 (UNAUDITED) 12/31/96 9/15/95* TO 12/31/95
------------------- ------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS :
FROM OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . . . . . $ 559 $ 512 $ (8)
Net realized gain (loss) on investments . . . . . . . . . . . . . 931 12 -
Net unrealized gain (loss) on investments . . . . . . . . . . . . 7,644 2,667 169
------------------- ------------------------------------
Net increase (decrease) in net assets from operations . . . . . . 9,134 3,191 161
------------------- ------------------------------------
FROM CAPITAL TRANSACTIONS :
Net premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,946 1,484 2,326
Terminations . . . . . . . . . . . . . . . . . . . . . . . . . . . - - -
Insurance charges . . . . . . . . . . . . . . . . . . . . . . . . (175) - -
Other transfers from (to) the General Account of First Allmerica
Financial Life Insurance Company (Sponsor) . . . . . . . . . . 48,602 15,838 2,647
Net increase (decrease) in investment by First Allmerica Financial
Life Insurance Company (Sponsor) . . . . . . . . . . . . . . . - - -
------------------- ------------------------------------
Net increase (decrease) in net assets from capital transactions. . 54,373 17,322 4,973
------------------- ------------------------------------
Net increase (decrease) in net assets . . . . . . . . . . . . . . 63,507 20,513 5,134
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . . 25,647 5,134 -
------------------- ------------------------------------
End of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 89,154 $ 25,647 $ 5,134
------------------- ------------------------------------
------------------- ------------------------------------
</TABLE>
**Date of initial investment.
The accompanying notes are an integral part of these financial statements.
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
NINE
QUARTER ENDED MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
(IN MILLIONS) 1997 1996 1997 1996
----------------------------------------------- ------- ------- --------- ---------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
REVENUES
Premiums................................... $ 585.6 $ 557.1 $ 1,726.7 $ 1,658.4
Universal life and investment product
policy fees.............................. 61.4 49.9 174.8 144.9
Net investment income...................... 162.1 173.3 488.2 499.6
Net realized investment gains (losses)..... 19.1 (0.4) 60.8 53.7
Other income............................... 29.5 26.9 86.4 79.8
------- ------- --------- ---------
Total revenues......................... 857.7 806.8 2,536.9 2,436.4
------- ------- --------- ---------
BENEFITS, LOSSES AND EXPENSES
Policy benefits, claims, losses and loss
adjustment expenses...................... 515.1 474.6 1,516.1 1,457.3
Policy acquisition expenses................ 117.3 113.1 353.9 348.8
Loss from cession of disability income
business................................. -- -- 53.9 --
Other operating expenses................... 126.8 125.9 382.6 363.9
------- ------- --------- ---------
Total benefits, losses and expenses.... 759.2 713.6 2,306.5 2,170.0
------- ------- --------- ---------
Income before federal income taxes............. 98.5 93.2 230.4 266.4
------- ------- --------- ---------
FEDERAL INCOME TAX EXPENSE (BENEFIT)
Current.................................... 34.7 37.2 67.7 81.5
Deferred................................... (7.7) (11.6) (11.2) (19.1)
------- ------- --------- ---------
Total federal income tax expense....... 27.0 25.6 56.5 62.4
------- ------- --------- ---------
Income before minority interest................ 71.5 67.6 173.9 204.0
Minority interest.............................. (14.4) (21.2) (55.6) (59.6)
------- ------- --------- ---------
Net income..................................... $ 57.1 $ 46.4 $ 118.3 $ 144.4
------- ------- --------- ---------
------- ------- --------- ---------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
UF-1
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
(IN MILLIONS) 1996
- ------------------------------------------------------------------------------------ SEPTEMBER 30, ------------
1997
-------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Investments:
Fixed maturities at fair value (amortized cost of $7,062.9 and $7,279.1)........ $ 7,341.2 $ 7,461.5
Equity securities at fair value (cost of $284.7 and $327.9)..................... 475.6 473.1
Mortgage loans.................................................................. 564.7 650.1
Real estate..................................................................... 72.5 120.7
Policy loans.................................................................... 139.3 132.4
Other long term investments..................................................... 125.6 128.8
------------- ------------
Total investments........................................................... 8,718.9 8,966.6
------------- ------------
Cash and cash equivalents....................................................... 159.5 175.9
Accrued investment income....................................................... 140.7 148.6
Deferred policy acquisition costs............................................... 881.2 822.7
Reinsurance receivables on paid and unpaid losses, benefits and unearned
premiums....................................................................... 828.9 875.6
Deferred federal income taxes................................................... 33.3 93.2
Premiums, accounts and notes receivable......................................... 548.4 533.0
Other assets.................................................................... 504.9 302.2
Closed block assets............................................................. 805.6 811.8
Separate account assets......................................................... 9,233.6 6,233.0
------------- ------------
Total assets................................................................ $21,855.0 $ 18,962.6
------------- ------------
LIABILITIES
Policy liabilities and accruals:
Future policy benefits.......................................................... $ 2,591.3 $ 2,613.7
Outstanding claims, losses and loss adjustment expenses......................... 2,852.0 2,944.1
Unearned premiums............................................................... 869.7 822.5
Contractholder deposit funds and other policy liabilities....................... 1,724.7 2,060.4
------------- ------------
Total policy liabilities and accruals....................................... 8,037.7 8,440.7
------------- ------------
Expenses and taxes payable........................................................ 677.2 615.3
Reinsurance premiums payable...................................................... 45.6 31.4
Short-term debt................................................................... 48.2 38.4
Deferred federal income taxes..................................................... -- 34.6
Long-term debt.................................................................... 2.7 2.7
Closed block liabilities.......................................................... 881.3 892.1
Separate account liabilities...................................................... 9,228.0 6,227.2
------------- ------------
Total liabilities........................................................... 18,920.7 16,282.4
------------- ------------
Minority interest................................................................. 866.0 784.0
Committments and contingencies
SHAREHOLDER'S EQUITY
Common stock, $10 par value, 1 million shares authorized, 500,000 shares issued
and
outstanding..................................................................... 5.0 5.0
Additional paid in capital........................................................ 392.5 392.4
Unrealized appreciation on investments, net....................................... 185.1 131.4
Retained earnings................................................................. 1,485.7 1,367.4
------------- ------------
Total shareholder's equity.................................................. 2,068.3 1,896.2
------------- ------------
Total liabilities and shareholder's equity.................................. $21,855.0 $ 18,962.6
------------- ------------
------------- ------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
UF-2
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
(IN MILLIONS) 1997 1996
- ------------------------------------------------------------------------------------------ ---------- ----------
(UNAUDITED)
<S> <C> <C>
COMMON STOCK
Balance at beginning and end of period................................................ $ 5.0 $ 5.0
---------- ----------
ADDITIONAL PAID-IN-CAPITAL
Balance at beginning of period........................................................ 392.4 392.4
Capital paid in....................................................................... .1 --
---------- ----------
Balance at end of period.............................................................. 392.5 392.4
---------- ----------
RETAINED EARNINGS
Balance at beginning of period........................................................ 1,367.4 1,173.9
Net income............................................................................ 118.3 144.4
---------- ----------
Balance at end of period.............................................................. 1,485.7 1,318.3
---------- ----------
NET UNREALIZED APPRECIATION ON INVESTMENTS
Balance at beginning of period........................................................ 131.4 153.0
Net appreciation (depreciation) on available for sale securities...................... 109.0 (126.3)
(Provision) benefit for deferred federal income taxes................................. (28.9) 36.5
Minority interest..................................................................... (26.4) 20.4
---------- ----------
Balance at end of period.............................................................. 185.1 83.6
---------- ----------
Total shareholder's equity........................................................ $ 2,068.3 $ 1,799.3
---------- ----------
---------- ----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
UF-3
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
(IN MILLIONS) 1997 1996
- ---------------------------------------------------------------------------------------- ----------- -----------
(UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income.......................................................................... $ 118.3 $ 144.4
Adjustments to reconcile net income to net cash provided by operating activities:
Minority interest............................................................... 55.6 59.6
Net realized gains.............................................................. (61.9) (53.9)
Net amortization and depreciation............................................... 20.3 34.3
Deferred federal income taxes................................................... (11.2) (18.9)
Change in deferred acquisition costs............................................ (70.2) (55.7)
Change in premiums and notes receivable, net of reinsurance..................... (0.9) (20.4)
Change in accrued investment income............................................. 7.2 6.6
Change in policy liabilities and accruals, net.................................. (86.1) (31.3)
Change in reinsurance receivable................................................ 46.8 30.2
Change in expenses and taxes payable............................................ 52.8 0.4
Separate account activity, net.................................................. 0.2 5.6
Other, net...................................................................... (13.2) 45.5
----------- -----------
Net cash provided by operating activities................................... 57.7 146.4
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposals and maturities of available-for-sale fixed maturities....... 2,040.8 3,052.1
Proceeds from disposals of equity securities........................................ 126.6 218.3
Proceeds from disposals of other investments........................................ 96.0 60.3
Proceeds from mortgages matured or collected........................................ 157.4 122.9
Purchase of available-for-sale fixed maturities..................................... (2,033.4) (3,223.9)
Purchase of equity securities....................................................... (45.8) (80.4)
Purchase of other investments....................................................... (94.3) (91.1)
Capital expenditures................................................................ (5.4) (8.0)
Other investing activities, net..................................................... 1.2 2.7
----------- -----------
Net cash provided by investing activities................................... 243.1 52.9
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Deposits and interest credited to contractholder deposit funds...................... 173.8 241.6
Withdrawals from contractholder deposit funds....................................... (501.2) (790.4)
Change in short-term debt........................................................... 9.8 298.1
Change in long-term debt............................................................ (0.1) (0.1)
Dividends paid to minority shareholders............................................. (2.4) (2.9)
Proceeds from capital paid in....................................................... 0.1 --
Subsidiary treasury stock purchased, at cost........................................ -- (42.0)
----------- -----------
Net cash used in financing activities....................................... (320.0) (295.7)
----------- -----------
Net change in cash and cash equivalents................................................. (19.2) (96.4)
Net change in cash held in the Closed Block............................................. 2.8 11.2
Cash and cash equivalents, beginning of period.......................................... 175.9 236.6
----------- -----------
Cash and cash equivalents, end of period................................................ $ 159.5 $ 151.4
----------- -----------
----------- -----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
UF-4
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)
1. BASIS OF PRESENTATION
First Allmerica Financial Life Insurance Company ("FAFLIC" or "the Company") is
a wholly owned subsidiary of Allmerica Financial Corporation ("AFC"). The
accompanying unaudited consolidated financial statements of FAFLIC have been
prepared in accordance with generally accepted accounting principles for stock
life insurance companies for interim financial information.
The interim consolidated financial statements of FAFLIC include the accounts of
FAFLIC, its wholly-owned life insurance subsidiary, Allmerica Financial Life
Insurance and Annuity Company ("AFLIAC"), non-insurance subsidiaries
(principally brokerage and investment advisory subsidiaries), and Allmerica
Property & Casualty Companies, Inc. ("Allmerica P&C", a 59.5%-owned
non-insurance holding company). The Closed Block assets and liabilities at
September 30, 1997 and December 31, 1996 are presented in the consolidated
financial statements as single line items. Results of operations for the Closed
Block for the nine month and three month periods ended September 30, 1997 and
1996 are included in other income in the consolidated financial statements. All
significant intercompany accounts and transactions have been eliminated.
Minority interest relates to the Company's investment in Allmerica P&C and its
subsidiary, The Hanover Insurance Company ("Hanover"). Hanover's 82.5%-owned
subsidiary is Citizens Corporation, the holding company for Citizens Insurance
Company of America ("Citizens"). Minority interest also includes an amount
related to the minority interest in Citizens Corporation.
The accompanying interim consolidated financial statements reflect, in the
opinion of the Company's management, all adjustments, consisting of only normal
and recurring adjustments, necessary for a fair presentation of the financial
position and results of operations. Certain reclassifications have been made to
the 1996 consolidated statements of income in order to conform to the 1997
presentation. The results of operations for the nine months ended and quarter
ended September 30, 1997 are not necessarily indicative of the results to be
expected for the full year. These financial statements should be read in
conjunction with the annual audited financial statements.
In June 1997, the FASB issued Statement of Financial Accounting Standards No.
130, "Reporting Comprehensive Income" (FAS No. 130). FAS No. 130 established
standards for the reporting and display of comprehensive income and its
components in a full set of general-purpose financial statements. All items that
are required to be recognized under accounting standards as components of
comprehensive income are to be reported in a financial statement that is
displayed with the same prominence as other financial statements. This statement
stipulates that comprehensive income reflect the change in equity of an
enterprise during a period from transactions and other events and circumstances
from non-owner sources. Comprehensive income will thus represent the sum of net
income and other comprehensive income, although FAS No. 130 does not require the
use of the terms comprehensive income or other comprehensive income. The
accumulated balance of other comprehensive income shall be displayed separately
from retained earnings and additional paid-in capital in the statement of
financial position. This statement is effective for fiscal years beginning after
December 15, 1997. The Company anticipates that the adoption of FAS No. 130 will
result primarily in reporting unrealized gains and losses on investments in debt
and equity securities in comprehensive income.
In June 1997, the FASB also issued Statement of Financial Accounting Standards
No. 131, "Disclosures About Segments of an Enterprise and Related Information"
(FAS No. 131). FAS No. 131 establishes standards for the way that public
enterprises report information about operating segments in annual financial
UF-5
<PAGE>
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
statements and requires that selected information about those operating segments
be reported in interim financial statements. This statement supersedes Statement
of Financial Accounting Standards No. 14, "Financial Reporting for Segments of a
Business Enterprise" (FAS No. 14). FAS No. 131 requires that all public
enterprises report financial and descriptive information about its reportable
operating segments. Operating segments are defined as components of an
enterprise about which separate financial information is available that is
evaluated regularly by the chief operating decision maker in deciding how to
allocate resources and in assessing performance. This statement is effective for
fiscal years beginning after December 15, 1997. The Company is currently
determining the impact of the adoption of FAS No. 131.
2. SIGNIFICANT TRANSACTIONS
In July 1997, Hanover reached an agreement with Travelers Property Casualty to
facilitate Travelers' writing of certain Hanover Insurance policies, as they
expire, in Alabama, California, Kansas, Mississippi, Missouri, and Texas. In
these six states, Hanover has approximately 250 agents generating approximately
$90 million in premium annually. Hanover intends to cease writing personal and
commercial policies in these states except for employer and
association-sponsored group property and casualty business, surety bonds and
specialty program commercial policies. The plan is conditioned upon the
appropriate regulatory approval in each state.
On April 14, 1997, the Company entered into an agreement in principle to
transfer the Company's individual disability income business under a 100%
coinsurance agreement to Metropolitan Life Insurance Company. The coinsurance
agreement became effective October 1, 1997. The transaction has resulted in the
recognition of a $53.9 million pre-tax loss in the first quarter of 1997.
3. PARENT COMPANY TRANSACTIONS
On July 16, 1997, AFC acquired all of the outstanding common stock of Allmerica
P&C that it did not already own, through its ownership of FAFLIC, in exchange
for cash of $425.6 million and approximately 9.7 million shares of AFC stock
valued at $372.5 million. Pursuant to the merger, each outstanding share of
Allmerica P&C Common Stock, other than those shares owned by the Company or its
subsidiaries, became a right to receive $17.60 in cash, without interest, and
0.4 shares of AFC Common Stock, resulting in the issuance of approximately 9.7
million shares of AFC Common Stock. On July 15, 1997, the Certificate of
Incorporation of Allmerica P&C was amended and restated to authorize a class B
common stock of Allmerica P&C, $5.00 par value. Each share of Allmerica P&C
Common Stock owned by the Company or its subsidiaries was exchanged for one
share of Class B Common Stock immediately prior to the consummation of the
merger.
In June 1997, AFC entered into a credit agreement with The Chase Manhattan Bank
("Chase") providing for a $225 million revolving line of credit that expires on
December 15, 1997. Borrowings under the line of credit are unsecured and bear
interest at a rate per annum equal to, at AFC's option, Chase's base rate or the
eurodollar rate plus an applicable margin. The credit agreement requires AFC to
comply with certain financial ratios. As of September 30, 1997, AFC had borrowed
$140.0 million under the line of credit provided by this credit agreement.
On February 3, 1997, AFC Capital Trust (the "Trust"), a wholly-owned subsidiary
business trust of AFC, issued $300.0 million Series A Capital Securities
("Capital Securities"), which pay cumulative dividends at a rate of 8.207%
semiannually commencing August 15, 1997. The Trust exists for the sole purpose
of issuing the Capital Securities and investing the proceeds thereof in an
equivalent amount of 8.207% Junior Subordinated Deferrable Interest Debentures
due 2027 of AFC (the "Subordinated Debentures"). Through certain guarantees, the
Subordinated Debentures and the terms of related agreements, AFC has irrevocably
and unconditionally guaranteed the obligations of the Trust under the Capital
Securities. Net proceeds from the offering of approximately $296.3 million
funded a portion of the acquisition of the 24.2 million publicly held shares of
Allmerica P&C pursuant to the merger on July 16, 1997. On August 7, 1997, AFC
and the Trust
UF-6
<PAGE>
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
exchanged the Series A Capital Securities for a like amount of Series B Capital
Securities and related guarantees which are registered under the Securities Act
of 1933 as required under the terms of the initial transaction. During the nine
months ended September 30, 1997, $12.3 million in distributions was paid on the
Capital Securities.
Dividends from the Company are one of the sources of cash for repayment of the
above-mentioned debt by AFC.
4. FEDERAL INCOME TAXES
Federal income tax expense for the periods ended September 30, 1997 and 1996,
has been computed using estimated effective tax rates. These rates are revised,
if necessary, at the end of each successive interim period to reflect the
current estimates of the annual effective tax rates.
5. CLOSED BLOCK
Included in other income in the Consolidated Statements of Income in the third
quarter and first nine months of 1997 and 1996 is a net pre-tax contribution
from the Closed Block of $2.3 million and $8.3 million, and $1.9 million and
$7.9 million, respectively. Summarized financial information of the Closed Block
is as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
(IN MILLIONS) 1997 1996
- --------------------------------------------------------------------------- ------------------ -----------------
<S> <C> <C>
(UNAUDITED)
ASSETS
Fixed maturities-at fair value (amortized cost of $414.4 and $397.2)..... $ 421.0 $ 403.9
Mortgage loans........................................................... 101.5 114.5
Policy loans............................................................. 223.2 230.2
Cash and cash equivalents................................................ 21.3 24.1
Accrued investment income................................................ 15.0 14.3
Deferred policy acquisition costs........................................ 18.8 21.1
Other assets............................................................. 4.8 3.7
------ ------
Total assets........................................................... $ 805.6 $ 811.8
------ ------
------ ------
LIABILITIES
Policy liabilities and accruals.......................................... $ 875.7 $ 883.4
Other liabilities........................................................ 5.6 8.7
------ ------
Total liabilities...................................................... $ 881.3 $ 892.1
------ ------
------ ------
</TABLE>
UF-7
<PAGE>
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- --------------------
(IN MILLIONS) 1997 1996 1997 1996
- ------------------------------------------------------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED)
REVENUES
Premiums..................................................................... $ 9.3 $ 10.4 $ 48.3 $ 50.9
Net investment income........................................................ 13.1 13.3 39.8 39.4
Net realized investment gains (losses)....................................... 0.1 (0.2) 1.1 0.2
--------- --------- --------- ---------
Total revenues............................................................. 22.5 23.5 89.2 90.5
--------- --------- --------- ---------
BENEFITS AND EXPENSES
Policy benefits.............................................................. 19.3 20.7 78.4 79.8
Policy acquisition expenses.................................................. 0.7 0.7 2.1 2.3
Other operating expenses..................................................... 0.2 0.2 0.4 0.5
--------- --------- --------- ---------
Total benefits and expenses................................................ 20.2 21.6 80.9 82.6
--------- --------- --------- ---------
Contribution from the Closed Block....................................... $ 2.3 $ 1.9 $ 8.3 $ 7.9
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
Many expenses related to Closed Block operations are charged to operations
outside the Closed Block; accordingly, the contribution from the Closed Block
does not represent the actual profitability of the Closed Block operations.
Operating costs and expenses outside of the Closed Block are, therefore,
disproportionate to the business outside the Closed Block.
6. SEGMENT INFORMATION
The Company offers financial products and services in two major areas: Risk
Management and Retirement and Asset Management. Within these broad areas, the
Company conducts business principally in five operating segments.
The Risk Management group includes two segments: Regional Property and Casualty
and Corporate Risk Management Services. The Regional Property and Casualty
segment includes property and casualty insurance products, such as automobile
insurance, homeowners insurance, commercial multiple-peril insurance, and
workers' compensation insurance. These products are offered by Allmerica P&C
through its operating subsidiaries, Hanover and Citizens. Substantially all of
the Regional Property and Casualty segment's earnings are generated in Michigan
and the Northeast (Connecticut, Massachusetts, New York, New Jersey, New
Hampshire, Rhode Island, Vermont and Maine). The Corporate Risk Management
Services segment includes group life and health insurance products and services
which assist employers in administering employee benefit programs and in
managing the related risks.
The Retirement and Asset Management group includes three segments: Retail
Financial Services, Institutional Services and Allmerica Asset Management. The
Retail Financial Services segment includes variable annuities, variable
universal life, and traditional insurance products distributed via retail
channels to individuals across the country. The Institutional Services segment
primarily includes group retirement products such as 401(k) plans, tax sheltered
annuities and GIC contracts which are distributed to institutions across the
country via worksite marketing and other arrangements. Allmerica Asset
Management is a Registered Investment Advisor which provides investment advisory
services, primarily to affiliates, and to other institutions, such as insurance
companies and pension plans.
UF-8
<PAGE>
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Summarized below is financial information with respect to business segments for
the periods indicated.
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30,] SEPTEMBER 30,
-------------------- ----------------------
(IN MILLIONS) 1997 1996 1997 1996
- ---------------------------------------------------------------------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED)
Revenues:
Risk Management
Regional Property and Casualty.................................... $ 577.3 $ 540.2 $ 1,707.1 $ 1,638.1
Corporate Risk Management Services................................ 100.1 90.7 294.2 267.1
--------- --------- ---------- ----------
Subtotal........................................................ 677.4 630.9 2,001.3 1,905.2
--------- --------- ---------- ----------
Retirement and Asset Management
Retail Financial Services......................................... 119.9 112.2 353.5 332.7
Institutional Services............................................ 60.5 64.6 183.1 201.7
Allmerica Asset Management........................................ 2.1 1.7 6.4 6.2
--------- --------- ---------- ----------
Subtotal........................................................ 182.5 178.5 543.0 540.6
--------- --------- ---------- ----------
Eliminations........................................................ (2.2) (2.6) (7.4) (9.4)
--------- --------- ---------- ----------
Total............................................................. $ 857.7 $ 806.8 $ 2,536.9 $ 2,436.4
--------- --------- ---------- ----------
--------- --------- ---------- ----------
Income (loss) from continuing operations before income taxes:
Risk Management
Regional Property and Casualty.................................... $ 47.3 $ 57.8 $ 157.1 $ 162.4
Corporate Risk Management Services................................ 6.7 3.7 12.9 11.2
--------- --------- ---------- ----------
Subtotal........................................................ 54.0 61.5 170.0 173.6
--------- --------- ---------- ----------
Retirement and Asset Management
Retail Financial Services......................................... 27.2 18.9 15.2 54.0
Institutional Services............................................ 16.8 12.8 44.1 38.3
Allmerica Asset Management........................................ 0.5 -- 1.1 0.5
--------- --------- ---------- ----------
Subtotal........................................................ 44.5 31.7 60.4 92.8
--------- --------- ---------- ----------
Total............................................................. $ 98.5 $ 93.2 $ 230.4 $ 266.4
--------- --------- ---------- ----------
--------- --------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
(IN MILLIONS) 1997 1996
- ------------------------------------------------------------------------------------ ------------- ------------
<S> <C> <C>
(UNAUDITED)
Identifiable assets:
Risk Management
Regional Property and Casualty.................................................. $ 5,837.4 $ 5,703.9
Corporate Risk Management Services.............................................. 560.5 506.0
------------- ------------
Subtotal...................................................................... 6,397.9 6,209.9
------------- ------------
Retirement and Asset Management
Retail Financial Services....................................................... 11,454.0 8,871.3
Institutional Services.......................................................... 3,998.8 3,879.0
Allmerica Asset Management...................................................... 4.3 2.4
------------- ------------
Subtotal...................................................................... 15,457.1 12,752.7
------------- ------------
Total........................................................................... $ 21,855.0 $ 18,962.6
------------- ------------
------------- ------------
</TABLE>
UF-9
<PAGE>
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
7. COMMITMENTS AND CONTINGENCIES
In late July 1997, a lawsuit was instituted in Louisiana against AFC and certain
of its subsidiaries by individual plaintiffs alleging fraud, unfair or deceptive
acts, breach of contract, misrepresentation and related claims in the sale of
life insurance policies. In October 1997, plaintiffs voluntarily dismissed the
Louisiana suit and refiled the action in Federal District Court in Worcester,
Massachusetts. The plaintiffs seek to be certified as a class. The case is in
early stages of discovery and the Company is evaluating the claims. Although the
Company believes it has meritorious defenses to plaintiffs' claims, there can be
no assurance that the claims will be resolved on a basis which is satisfactory
to the Company.
UF-10
<PAGE>
PART II
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents, and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to authority conferred
in that section.
RULE 484 UNDERTAKING
Article VIII of Registrant's Bylaws provides: Each Director and each Officer of
the Corporation, whether or not in office, (and his executors or
administrators), shall be indemnified or reimbursed by the Corporation against
all expenses actually and necessarily incurred by him in the defense or
reasonable settlement of any action, suit, or proceeding in which he is made a
party by reason of his being or having been a Director or Officer of the
Corporation, including any sums paid in settlement or to discharge judgment,
except in relation to matters as to which he shall be finally adjudged in such
action, suit, or proceeding to be liable for negligence or misconduct in the
performance of his duties as such Director or Officer; and the foregoing right
of indemnification or reimbursement shall not affect any other rights to which
he may be entitled under the Articles of Incorporation, any statute, bylaw,
agreement, vote of stockholders, or otherwise.
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 liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question 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.
REPRESENTATIONS PURSUANT TO SECTION 26(e) OF THE INVESTMENT COMPANY ACT OF 1940
The Company hereby represents that the aggregate fees and charges under the
Policy are reasonable in relation to the services rendered, the expenses
expected to be incurred, and the risks assumed by the Company.
<PAGE>
CONTENTS OF THE REGISTRATION STATEMENT
This registration statement comprises the following papers and documents:
The facing sheet.
Cross-reference to items required by Form N-8B-2 in Prospectus A
Cross-reference to items required by form N-8B-2 in Prospectus B
Prospectus A consisting of ____ pages.
Prospectus B consisting of ____ pages.
The undertaking to file reports.
The undertaking pursuant to Rule 484 under the Securities Act of 1933.
Representations Pursuant to Section 26(e) of the Investment Company Act of 1940
The signatures.
Written consents of the following persons:
1. Price Waterhouse LLP
2. Opinion and Consent of Counsel
3. Actuarial Opinion and Consent
The following exhibits:
1. Exhibit 1 (Exhibits required by paragraph A of the instructions to
Form N-8B-2)
(1) Certified copy of Resolutions of the Board of Directors of the
Company of August 20, 1991 establishing the Inheiritage Account
was previously filed on May 11, 1992 in Registration Statement
No. 33-47858 and is herein incorporated by reference.
(2) Not Applicable.
(3) (a) Form of Sales and Administrative Services Agreement between
the Company and Allmerica Investments, Inc. was previously
filed on January 21, 1994 and is herein incorporated by
reference.
(b) Registered Representative Agreement and Resident Sponsor
Agreement of Allmerica Investment, Inc. (formerly "SMA
Equities, Inc.") were previously filed by the Company on
June 3, 1987, Registration No. 33-14672 and are incorporated
herein by reference.
(4) Not Applicable.
(5) Forms of Policy and initial Policy riders were previously filed
on January 21, 1994 and are herein incorporated by reference. The
Preferred Loan Endorsement was previously filed in Post-Effective
Amendment No. 6 and is incorporated by reference herein.
(6) Company's restated Articles of incorporation and Bylaws were
filed Post-Effective Amendment No. 3 on October 1, 1995 and are
incorporated herein by reference. Revised By Laws were
previously filed on April 30, 1996 in Post-Effective Amendment
No.4 and are incorporated by reference herein.
(7) Not Applicable.
(8) (a) Form of Participation Agreement with Allmerica Investment
Trust was previously filed by the Company on May 11, 1992,
in Registration Statement No. 33-47858, and is incorporated
herein by reference.
<PAGE>
(b) Form of Participation Agreement with Variable Insurance
Products Fund and Variable Insurance Products Fund II was
previously filed by the Company on June 3, 1987, in
Registration Statement No. 33-14672, and is incorporated
herein by reference.
(c) Form of Participation Agreement with Delaware Group Premium
Fund, Inc. was previously filed by the Company on December
27, 1991 in Registration Statement No. 33-44830, and is
incorporated herein by reference.
(d) Form of Participation Agreement with T. Rowe Price
International Series, Inc. was previously filed on May 1,
1995 and is incorporated herein by reference.
(e) Services Agreement with Fidelity Management, et.al, was
previously filed on April 30, 1996 in Post-Effective
Amendment No.4 and is incorporated by reference herein.
(9) Not Applicable.
(10) Form of Application was previously filed on January 21, 1994 and
is herein incorporated by reference.
2. Form of Policy and Policy riders are as set forth Exhibit 1 above.
3. Opinion and Consent of Counsel is filed herewith.
4. Not Applicable.
5. Not Applicable.
6. Actuarial Opinion and Consent is filed herewith.
7. Procedures Memorandum pursuant to Rule 6e-3(T)(b)(12)(iii) under the
1940 Act which includes conversion procedures pursuant to Rule
6e-3(T)(b)(13)(v)(B) was previously filed on October 25, 1993 and is
herein incorporated by reference.
8. Consent of Independent Accountants is filed herewith.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 the Registrant certifies that it meets all the requirements
for effectiveness of this Registration Statement pursuant to Rule 485(b) under
the Securities Act of 1933 and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereto duly authorized, in the City of
Worcester, and Commonwealth of Massachusetts, on the 2nd day of February, 1998.
INHEIRITAGE ACCOUNT OF
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
By: /s/ Abigail M. Armstrong
---------------------------------
Abigail M. Armstrong, Secretary
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ John F. O'Brien Director, President and February 2, 1998
- ------------------------- Chief Executive Officer
John F. O'Brien
/s/ Bruce C. Anderson Director and
- ------------------------- Vice President
Bruce C. Anderson
/s/ Robert E. Bruce Director and
- ------------------------- Vice President
Robert E. Bruce
/s/ John P. Kavanaugh Director, Vice President
- ------------------------- and Chief Investment
John P. Kavanaugh Officer
/s/ John F. Kelly Director, Senior Vice
- ------------------------- President and
John F. Kelly General Counsel
/s/ J. Barry May Director
- -------------------------
J. Barry May
/s/ James R. McAuliffe Director
- -------------------------
James R. McAuliffe
/s/ Edward J. Parry, III Director, Vice President
- ------------------------- and Chief Financial
Edward J. Parry, III Officer
/s/ Richard M. Reilly Director and
- ------------------------- Vice President
Richard M. Reilly
/s/ Eric A. Simonsen Director and
- ------------------------- Vice President
Eric A. Simonsen
/s/ Phillip E. Soule Director and
- ------------------------- Vice President
Phillip E. Soule
<PAGE>
FORM S-6 EXHIBIT TABLE
Exhibit 3 Opinion and Consent of Counsel
Exhibit 6 Actuarial Opinion and Consent
Exhibit 8 Consent of Independent Accountants
<PAGE>
February 2, 1998
First Allmerica Financial Life Insurance Company
440 Lincoln Street
Worcester MA 01653
RE: INHEIRITAGE ACCOUNT OF FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
FILE NO.'S: 33-74184 AND 811-8304
Gentlemen:
In my capacity as Counsel of First Allmerica Financial Life Insurance Company
(the "Company"), I have participated in the preparation of this Post-Effective
Amendment to the Registration Statement for the Inheiritage Account on Form S-6
under the Securities Act of 1933 with respect to the Company's individual
flexible premium second-to-die variable life insurance policies.
I am of the following opinion:
1. The Inheiritage Account is a separate account of the Company validly
existing pursuant to the Massachusetts Insurance Code and the regulations
issued thereunder.
2. The assets held in the Inheiritage Account equal to the reserves and other
Policy liabilities of the Policies which are supported by the Inheiritage
Account are not chargeable with liabilities arising out of any other
business the Company may conduct.
3. The individual flexible premium variable life insurance policies, when
issued in accordance with the Prospectuses contained in the Registration
Statement and upon compliance with applicable local law, will be legal and
binding obligations of the Company in accordance with their terms and when
sold will be legally issued, fully paid and non-assessable.
In arriving at the foregoing opinion, I have made such examination of law and
examined such records and other documents as in my judgment are necessary or
appropriate.
I hereby consent to the filing of this opinion as an exhibit to this
Post-Effective Amendment to the Registration Statement of the Inheiritage
Account on Form S-6 filed under the Securities Act of 1933.
Very truly yours,
/s/ Sheila B. St. Hilaire
Sheila B. St. Hilaire
Assistant Vice President and Counsel
<PAGE>
February 2, 1998
First Allmerica Financial Life Insurance Company
440 Lincoln Street
Worcester MA 01653
RE: INHEIRITAGE ACCOUNT OF FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
FILE NO.'S: 33-74184 AND 811-8304
Gentlemen:
This opinion is furnished in connection with the filing by First Allmerica
Financial Life Insurance Company of a Post-Effective Amendment to the
Registration Statement on Form S-6 of its second-to-die flexible premium
variable life insurance policies ("Policies") allocated to the Inheiritage
Account under the Securities Act of 1933. The prospectuses included in the
Post-Effective Amendment to the Registration Statement describe the Policies. I
am familiar with and have provided actuarial advice concerning the preparation
of the Post-Effective Amendment to the Registration Statement, including
exhibits.
In my professional opinion, the illustration of death benefits and cash values
included in Appendix C of the prospectuses, based on the assumptions stated in
the illustrations, are consistent with the provisions of the Policy. The rate
structure of the Policies has not been designed so as to make the relationship
between premiums and benefits, as shown in the illustrations, appear more
favorable to a prospective purchaser of a Policy for Insureds age 55 than to
prospective purchasers of Policies for Insureds at other ages or underwriting
classes.
I am also of the opinion that the aggregate fees and charges under the Policy
are reasonable in relation to the services rendered, the expenses expected to be
incurred, and the risks assumed by the Company.
I hereby consent to the use of this opinion as an exhibit to the amendment to
the Registration Statement.
Sincerely,
/s/ William H. Mawdsley
William H. Mawdsley, FSA, MAAA
Vice President and Actuary
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Post-Effective Amendment No. 7 to the Registration Statement on Form S-6 of
our report dated February 3, 1997, except as to Notes 1 and 2 which are as of
February 19, 1997 relating to the financial statements of First Allmerica
Financial Life Insurance Company, and our report dated March 26, 1997
relating to the financial statements of the Inheiritage Account of First
Allmerica Financial Life Insurance Company, both of which appear in such
Prospectus. We also consent to the reference to us under the heading
"Independent Accountants" in such Prospectus.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Boston, Massachusetts
February 9, 1998
