File Nos. 33-74174
811-8306
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. 1 [X]
Post-Effective Amendment No. [ ]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 1 [X]
(Check appropriate box or boxes.)
FIRST COVA VARIABLE ANNUITY ACCOUNT ONE
_______________________________________
(Exact Name of Registrant)
FIRST COVA LIFE INSURANCE COMPANY
__________________________________
(Name of Depositor)
120 Broadway, New York, New York 10271
____________________________________________________ _________
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code (800) 469-4545
Name and Address of Agent for Service
Lorry J. Stensrud, President
First Cova Life Insurance Company
120 Broadway
New York, NY 10271
(800) 469-4545
Copies to:
Judith A. Hasenauer and Jeffery K. Hoelzel
Blazzard, Grodd & Hasenauer, P.C. Vice President,
P.O Box 5108 General Counsel and Secretary
Westport, CT 06881 First Cova Life Insurance
Company
(203) 226-7866 120 Broadway
New York, NY 10271
Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of this Filing.
Calculation of Registration Fee under the Securities Act of 1933:
$500 - Registrant is registering an indefinite number of securities
under the Securities Act pursuant to Investment Company Act Rule 24f-2.
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The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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CROSS REFERENCE SHEET
(required by Rule 495)
Item No. Location
- -------- --------------------------------
PART A
Item 1. Cover Page . . . . . . . . . . . . . . Cover Page
Item 2. Definitions . . . . . . . . . . . . . Index of Special Terms
Item 3. Synopsis . . . . . . . . . . . . . . . Summary
Item 4. Condensed Financial Information . . . Not Applicable
Item 5. General Description of Registrant,
Depositor, and Portfolio Companies . . Other Information - Cova; The
Separate Account; Cova
Series Trust; Lord Abbett Series
Fund, Inc.; General American
Capital Company
Item 6. Deductions and Expenses. . . . . . . . Expenses
Item 7. General Description of Variable
Annuity Contracts. . . . . . . . . . . The Annuity Contract
Item 8. Annuity Period . . . . . . . . . . . . Annuity Payments
(The Income Phase)
Item 9. Death Benefit. . . . . . . . . . . . . Death Benefit
Item 10. Purchases and Contract Value . . . . . Purchase
Item 11. Redemptions. . . . . . . . . . . . . . Access to Your Money
Item 12. Taxes. . . . . . . . . . . . . . . . . Taxes
Item 13. Legal Proceedings. . . . . . . . . . . None
Item 14. Table of Contents of the Statement of
Additional Information . . . . . . . . Table of Contents of the
Statement of Additional
Information
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CROSS REFERENCE SHEET
(required by Rule 495)
Item No. Location
- -------- -----------------------
PART B
Item 15. Cover Page . . . . . . . . . . . . . . Cover Page
Item 16. Table of Contents. . . . . . . . . . . Table of Contents
Item 17. General Information and History. . . . Company
Item 18. Services . . . . . . . . . . . . . . . Not Applicable
Item 19. Purchase of Securities Being Offered . Not Applicable
Item 20. Underwriters . . . . . . . . . . . . . Distribution
Item 21. Calculation of Performance Data. . . . Performance Information
Item 22. Annuity Payments . . . . . . . . . . . Annuity Provisions
Item 23. Financial Statements . . . . . . . . . Financial Statements
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PART C
Information required to be included in Part C is set forth under the
appropriate Item so numbered in Part C to this Registration Statement.
PART A
THE FIXED AND VARIABLE ANNUITY
issued by
FIRST COVA VARIABLE ANNUITY ACCOUNT ONE
and
FIRST COVA LIFE INSURANCE COMPANY
(FORMERLY, FIRST XEROX LIFE INSURANCE COMPANY)
This prospectus describes the Fixed and Variable Annuity Contract offered by
First Cova Life Insurance Company (Cova).
The annuity contract has 9 investment choices - a fixed account which offers
an interest rate which is guaranteed by Cova, and 8 investment portfolios
listed below. The 8 investment portfolios are part of the Cova Series Trust,
the Lord Abbett Series Fund, Inc. or the General American Capital Company.
You can put your money in the fixed account and/or any of these investment
portfolios.
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COVA SERIES TRUST
Managed by J.P. Morgan Investment
Management Inc.:
Select Equity
Large Cap Stock
Small Cap Stock
International Equity
Quality Bond
Managed by Lord, Abbett & Co.:
Bond Debenture
LORD ABBETT SERIES FUND, INC.:
Managed by Lord, Abbett & Co.:
Growth and Income
GENERAL AMERICAN CAPITAL COMPANY
Managed by General American Investment
Management Company:
Money Market
</TABLE>
Please read this prospectus before investing and keep it on file for future
reference. It contains important information about the Cova Fixed and
Variable Annuity Contract.
To learn more about the Cova Fixed and Variable Annuity Contract, you can
obtain a copy of the Statement of Additional Information (SAI) dated
______, 1996. The SAI has been filed with the Securities and Exchange
Commission (SEC) and is legally a part of the prospectus. The Table of Contents
of the SAI is on Page __ of this prospectus. For a free copy of the SAI, call
us at (800) 831-5433 or write us at : One Tower Lane, Suite 3000,
Oakbrook Terrace, Illinois 60181-4644.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
__________, 1996.
TABLE OF CONTENTS
PAGE
INDEX OF SPECIAL TERMS
SUMMARY
FEE TABLE
EXAMPLES
1. THE ANNUITY CONTRACT
2. ANNUITY PAYMENTS (THE INCOME PHASE)
3. PURCHASE
Purchase Payments
Allocation of Purchase Payments
Accumulation Units
4. INVESTMENT OPTIONS
Cova Series Trust
Lord Abbett Series Fund, Inc.
General American Capital Company
Transfers
Dollar Cost Averaging Program
Automatic Rebalancing Program
Voting Rights
Substitution
5. EXPENSES
Insurance Charges
Contract Maintenance Charge
Withdrawal Charge
Reduction or Elimination of the Withdrawal Charge
Premium Taxes
Transfer Fee
Income Taxes
Investment Portfolio Expenses
6. TAXES
Annuity Contracts in General
Qualified and Non-Qualified Contracts
Withdrawals - Non-Qualified Contracts
Withdrawals - Qualified Contracts
Diversification
7. ACCESS TO YOUR MONEY
Systematic Withdrawal Program
8. PERFORMANCE
9. DEATH BENEFIT
Upon Your Death
Death of Annuitant
10. OTHER INFORMATION
Cova
The Separate Account
Distributor
Ownership
Beneficiary
Assignment
Suspension of Payments or Transfers
Financial Statements
TABLE OF CONTENTS OF THE STATEMENT
OF ADDITIONAL INFORMATION
APPENDIX A
Performance Information
INDEX OF SPECIAL TERMS
We have tried to make this prospectus as readable and understandable for you
as possible. By the very nature of the contract, however, certain technical
words or terms are unavoidable. We have identified the following as some of
these words or terms. They are identified in the text in italic and the page
that is indicated here is where we believe you will find the best explanation
for the word or term.
PAGE
Accumulation Phase . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulation Unit. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Annuitant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Annuity Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Annuity Options. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Annuity Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Annuity Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Beneficiary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income Phase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment Portfolios. . . . . . . . . . . . . . . . . . . . . . . . . .
Joint Owner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-Qualified. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Owner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Qualified. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax Deferral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SUMMARY
The sections in this Summary correspond to sections in this prospectus which
discuss the topics in more detail.
1. THE ANNUITY CONTRACT: The fixed and variable annuity contract offered by
Cova is a contract between you, the owner, and Cova, an insurance company.
The Contract provides a means for investing on a tax-deferred basis in a fixed
account of Cova and 8 investment portfolios. The Contract is intended for
retirement savings or other long-term investment purposes and provides for a
death benefit and guaranteed income options.
The fixed account offers an interest rate that is guaranteed by the insurance
company, Cova. This interest rate is set once each year. While your money is
in the fixed account, the interest your money will earn as well as your
principal is guaranteed by Cova.
This Contract also offers 8 investment portfolios which are listed in
Section 4. These portfolios are designed to offer a better return than the
fixed account. However, this is NOT guaranteed. You can also lose your money.
You can put money into any or all of the investment portfolios
and the fixed account. You can transfer between accounts up to 12 times
a year without charge or tax implications. After 12 transfers, the charge is
$25 or 2% of the amount transferred, which ever is less.
The Contract, like all deferred annuity contracts, has two phases: the
accumulation phase and the income phase. During the accumulation phase,
earnings accumulate on a tax-deferred basis and are taxed as income when you
make a withdrawal. The income phase occurs when you begin receiving regular
payments from your Contract.
The amount of money you are able to accumulate in your account during the
accumulation phase will determine the amount of income payments during the
income phase.
2. ANNUITY PAYMENTS (THE INCOME PHASE): If you want to receive regular
income from your annuity, you can choose one of three options: (1) monthly
payments for your life (assuming you are the annuitant); (2) monthly payments
for your life, but with payments continuing to the beneficiary for 5, 10 or 20
years (as you select) if you die before the end of the selected period; and
(3) monthly payments for your life and for the life of another person (usually
your spouse) selected by you. Once you begin receiving regular payments, you
cannot change your payment plan.
During the income phase, you have the same investment choices you had during
the accumulation phase. You can choose to have payments come from the fixed
account, the investment portfolios or both. If you choose to have any part of
your payments come from the investment portfolios, the dollar amount of your
payments may go up or down.
3. PURCHASE: You can buy this Contract with $5,000 or more under most
circumstances. You can add $2,000 or more any time you like during the
accumulation phase. Your registered representative can help you fill out the
proper forms.
4. INVESTMENT OPTIONS: You can put your money in any or all of these
investment portfolios which are described in the prospectuses for the funds:
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MANAGED BY J.P. MORGAN INVESTMENT MANAGED BY LORD, ABBETT & CO.
MANAGEMENT INC. Bond Debenture
Select Equity Growth and Income
Large Cap Stock
Small Cap Stock
International Equity MANAGED BY GENERAL AMERICAN INVESTMENT
Quality Bond MANAGEMENT COMPANY
Money Market
</TABLE>
Depending upon market conditions, you can make or lose money in any of these
portfolios.
5. EXPENSES: The Contract has insurance features and investment features,
and there are costs related to each.
Each year Cova deducts a $30 contract fee from your Contract. Cova currently
waives this charge if the value of your Contract is at least $50,000. Cova
also deducts for its insurance charges which total 1.40% of the average daily
value of your Contract allocated to the investment portfolios.
There are also investment charges which range from .205% to .95% of the average
daily value of the investment portfolio depending upon the investment
portfolio.
If you take your money out, Cova may assess a withdrawal charge which is equal
to 7% of each payment you take out in the first and second years after Cova
receives the payment, 5% of each payment you take out in the third, fourth and
fifth years, and 3% of each payment you take out in the sixth and seventh years.
When you make a complete withdrawal or you begin receiving regular income
payments from your annuity, Cova will assess a state premium tax which ranges
from 0-4% depending upon the state.
6. TAXES: Your earnings are not taxed until you take them out. If you take
money out, earnings come out first and are taxed as income. If you are
younger than 59 1/2 when you take money out, you may be charged a 10% federal
tax penalty on the earnings. Payments during the income phase are considered
partly a return of your original investment. That part of each payment is not
taxable as income.
7. ACCESS TO YOUR MONEY: You can take money out at any time during the
accumulation phase. After the first year, you can take up to 10% of your total
purchase payments each year without charge from Cova. Withdrawals in excess
of that will be charged 7% of each payment you take out in the first and
second years after Cova receives the payment, 5% of each payment you take out
in the third, fourth and fifth years, and 3% of each payment you take out in
the sixth and seventh years. After Cova has had a payment for 7 years, there
is no charge for withdrawals. Of course, you may also have to pay income tax
and a tax penalty on any money you take out. Each purchase payment you add to
your Contract has its own 7 year withdrawal charge period.
8. PERFORMANCE: The value of the Contract will vary up or down depending
upon the investment performance of the Portfolio(s) you choose. Cova may
provide total return figures for each investment portfolio.
9. DEATH BENEFIT: If you die before moving to the income phase, the person
you have chosen as your beneficiary will receive a death benefit. This death
benefit will be the greater of three amounts: 1) the money you've put in less
any money you've taken out, and the related withdrawal charges, or 2) the
current value of your Contract, or 3) the value of your Contract at the most
recent 7th-year-anniversary plus any money you've added since that anniversary
minus any money you've taken out since that anniversary, and the related
withdrawal charges. If you die after age 80, slightly different rules apply.
10. OTHER INFORMATION: Free Look. If you cancel the Contract within 10
days after receiving it we will send your money back without assessing
a withdrawal charge. You will receive whatever your Contract is worth on the
day we receive your request. This may be more or less than your original
payment. If you have purchased the contract as an Individual Retirement Annuity
(IRA) you will receive back your purchase payment.
No Probate. In most cases, when you die, the person you choose as your
beneficiary will receive the Death Benefit without going through probate.
Who should purchase the Contract? This Contract is designed for people
seeking long-term tax-deferred accumulation of assets, generally for
retirement or other long-term purposes. The tax-deferred feature is most
attractive to people in high federal and state tax brackets. You should not
buy this Contract if you are looking for a short-term investment or if you
cannot take the risk of getting back less money than you put in.
Additional Features. This Contract has additional features you might be
interested in. These include:
* You can arrange to have money automatically sent to you each month
while your Contract is still in the accumulation phase. Of course, you'll have
to pay taxes on money you receive. We call this feature the Systematic
Withdrawal Program.
* You can arrange to have a regular amount of money automatically
invested in investment portfolios each month, theoretically giving you a lower
average cost per unit over time than a single one time purchase. We call this
feature Dollar Cost Averaging.
* Cova will automatically readjust the money between investment
portfolios periodically to keep the blend you select. We call this feature
Automatic Rebalancing.
11. INQUIRIES: If you need more information about buying a contract,
please contact us at:
Cova Life Sales Company
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181
800-523-1661
If you have any other questions, please contact us at our Home Office:
120 Broadway
New York, NY 10271
(800) 469-4545
(212) 766-0012
FIRST COVA VARIABLE ANNUITY ACCOUNT ONE FEE TABLE
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OWNER TRANSACTION EXPENSES
Withdrawal Charge (as a percentage Years Since
of purchase payments) (see Note 2 below) Payment Charge
1 7%
2 7%
3 5%
4 5%
5 5%
6 3%
7 3%
8+ 0%
Transfer Fee (see Note 3 below) No charge for first 12 transfers in a
contract year; thereafter, the fee is
$25 per transfer or, if less, 2% of the
amount transferred.
Contract Maintenance Charge (see Note 4 below) $30 per contract per year
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VARIABLE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
Mortality and Expense Risk Premium 1.25%
Administrative Expense Charge .15%
-----
TOTAL VARIABLE ACCOUNT ANNUAL EXPENSES 1.40%
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Other Expenses
INVESTMENT PORTFOLIO CHARGES (after expense
(as a percentage of the average daily net reimbursement for
assets of an investment portfolio) Management certain Portfolios- Total Portfolio
Fees see Note 5 below) Annual Expenses
----------- ------------------- ----------------
COVA SERIES TRUST
Managed by J.P. Morgan Investment Management Inc.
Select Equity* .75% .10% .85%
Large Cap Stock* .65% .10% .75%
Small Cap Stock* .85% .10% .95%
International Equity* .85% .10% .95%
Quality Bond* .55% .10% .65%
Managed by Lord, Abbett & Co.
Bond Debenture* .75% .10% .85%
LORD ABBETT SERIES FUND, INC.
Managed by Lord, Abbett & Co.
Growth and Income# .50% .02% .52%
GENERAL AMERICAN CAPITAL COMPANY
Managed by General American Investment Management
Company
Money Market .205% .00% .205%
<FN>
* Estimated. The Portfolio commenced regular investment operations on April 1, 1996.
# Although the expenses for the Growth and Income Portfolio of Lord Abbett Series Fund, Inc. do not
reflect a 12b-1 plan, one has been adopted which provides for payments to Lord, Abbett & Co. for
remittance to a life insurance company for certain distribution expenses (see the Fund Prospectus).
The 12b-1 Plan provides that such remittances, in the aggregate, will not exceed .15%, on an annual
basis, of the daily net asset value of shares of the Growth and Income Portfolio. The 12b-1 plan has
not been implemented. The examples below for this Portfolio do not reflect the imposition of the 12b-1
fee.
</TABLE>
EXAMPLES:
You will pay the following expenses on a $1,000 investment, assuming a 5%
annual return on assets:
(a) upon surrender at the end of each time period;
(b) if the contract is not surrendered or is annuitized.
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Time Periods
1 year 3 years 5 years 10 years
COVA SERIES TRUST
Managed by J.P. Morgan Investment Management Inc.
Select Equity (a) $93.80 (a) $118.16 (a) $169.99 (a) $266.24
(b) $23.80 (b) $ 73.16 (b) $124.99 (b) $266.24
Large Cap Stock (a) $92.80 (a) $115.15 (b) $164.95 (a) $256.13
(b) $22.80 (b) $ 70.15 (a) $119.95 (b) $256.13
Small Cap Stock (a) $94.80 (a) $121.17 (a) $175.00 (a) $276.23
(b) $24.80 (b) $ 76.17 (b) $130.00 (b) $276.23
International Equity (a) $94.80 (a) $121.17 (a) $175.00 (a) $276.23
(b) $24.80 (b) $ 76.17 (b) $130.00 (b) $276.23
Quality Bond (a) $91.79 (a) $112.12 (a) $159.89 (a) $245.92
(b) $21.79 (b) $ 67.12 (b) $114.89 (b) $245.92
Managed by Lord, Abbett & Co.
Bond Debenture (a) $93.80 (a) $118.16 (a) $169.99 (a) $266.24
(b) $23.80 (b) $ 73.16 (b) $124.99 (b) $266.24
LORD ABBETT SERIES FUND, INC.
Managed by Lord, Abbett & Co.
Growth and Income (a) $90.49 (a) $108.17 (a) $153.26 (a) $232.47
(b) $20.49 (b) $ 63.17 (b) $108.26 (b) $232.47
GENERAL AMERICAN CAPITAL COMPANY
Managed by General American Investment Management
Company
Money Market (a) $87.31 (a) $ 98.54 (a) $137.02 (a) $199.08
(b) $17.31 (b) $ 53.54 (b) $ 92.02 (b) $199.08
</TABLE>
Explanation of Fee Table and Examples
1. The purpose of the Fee Table is to show you the various expenses you will
incur directly or indirectly with the contract.
2. The withdrawal charge is 7% of each payment you take out in the first and
second years after Cova receives the payment, 5% of each payment you take out
in the third, fourth and fifth years, and 3% of each payment you take out in the
sixth and seventh years. After Cova has had a purchase payment for 7 years,
there is no charge by Cova for a withdrawal of that purchase payment. You may
also have to pay income tax and a tax penalty on any money you take out. After
the first year, you can take up to 10% of your total purchase payments each
year without a charge from Cova.
3. Cova will not charge you the transfer fee even if there are more than 12
transfers in a year if the transfer is for the Dollar Cost Averaging
or Automatic Rebalancing Programs.
4. Cova will not charge the contract maintenance charge if the value
of your contract is $50,000 or more, although, if you make a complete
withdrawal, Cova will charge the contract maintenance charge.
5. Cova currently reimburses certain investment portfolios of Cova Series
Trust for all operating expenses (exclusive of the management fees) in excess
of approximately .10%.
6. Premium taxes are not reflected. Premium taxes may apply depending on the
state where you live.
7. The assumed average contract size is $30,000.
8. THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
There is an accumulation unit value history contained in Appendix A -
Condensed Financial Information.
1. THE ANNUITY CONTRACT
This Prospectus describes the Fixed and Variable Annuity Contract offered
by Cova.
An annuity is a contract between you, the owner, and an insurance company
(in this case Cova), where the insurance company promises to pay you an
income, in the form of annuity payments, beginning on a designated date that's
at least 30 days in the future. Until you decide to begin receiving annuity
payments, your annuity is in the accumulation phase. Once you begin
receiving annuity payments, your contract switches to the income phase. The
Contract benefits from tax deferral.
Tax deferral means that you are not taxed on earnings or appreciation on
the assets in your contract until you take money out of your contract.
The contract is called a variable annuity because you can choose among 8
investment portfolios. Depending upon market conditions, you can make or lose
money in any of these portfolios. If you select the variable annuity portion
of the Contract, the amount of money you are able to accumulate in your
contract during the accumulation phase depends upon the investment performance
of the investment portfolio(s) you select. The amount of the annuity payments
you receive during the income phase from the variable annuity portion of the
contract also depends upon the investment performance of the investment
portfolios you select for the income phase.
The contract also contains a fixed account. The fixed account offers
an interest rate that is guaranteed by Cova. This interest rate is set once
each year. Cova guarantees that the interest credited to the fixed account
will not be less than 4% per year. If you select the fixed account, your
money will be placed with the other general assets of Cova. If you select
the fixed account, the amount of money you are able to accumulate in your
contract during the accumulation phase depends upon the total interest
credited to your contract. The amount of the annuity payments you receive
during the income phase from the fixed account portion of the contract will
remain level for the entire income phase.
As owner of the contract, you exercise all rights under the contract.
You can change the owner at any time by notifying Cova in writing. You and
another person can be named joint owners. We have described more information on
this in Section 10 - Other Information.
2. ANNUITY PAYMENTS (THE INCOME PHASE)
Under the contract you can receive regular income payments. You can
choose the month and year in which those payments begin. We call that date
the annuity date. Your annuity date must be the first day of a
calendar month. You can also choose among income plans. We call those
annuity options.
We ask you to choose your annuity date and annuity option when you
purchase the contract. You can change either at any time before the annuity
date with 30 days notice to us. Your annuity date cannot be any earlier than
one month after you buy the contract. Annuity payments must begin by the
annuitant's 85th birthday. The annuitant is the person whose life we look to
when we make annuity payments.
If you do not choose an annuity option at the time you purchase the
contract, we will assume that you selected Option 2 which provides a life
annuity with 10 years of guaranteed payments.
During the income phase, you have the same investment choices you had
just before the start of the income phase. At the annuity date, you can choose
whether payments will come from the fixed account, the investment portfolio(s)
or a combination of both. If you don't tell us otherwise, your annuity
payments will be based on the investment allocations that were in place on the
annuity date.
If you choose to have any portion of your annuity payments come from the
investment portfolio(s), the dollar amount of your payment will depend upon 3
things: 1) the value of your contract in the investment portfolio(s) on the
annuity date, 2) the 3% assumed investment rate used in the annuity table for
the contract, and 3) the performance of the investment portfolios you
selected. If the actual performance exceeds the 3% assumed rate, your annuity
payments will increase. Similarly, if the actual rate is less than 3%, your
annuity payments will decrease.
You can choose one of the following annuity options. After annuity
payments begin, you cannot change the annuity option.
OPTION 1. LIFE ANNUITY. Under this option, we will make an annuity
payment each month so long as the annuitant is alive. After the annuitant
dies, we stop making annuity payments.
OPTION 2. LIFE ANNUITY WITH 5, 10 OR 20 YEARS GUARANTEED. Under this
option, we will make an annuity payment each month so long as the annuitant is
alive. However, if, when the annuitant dies, we have made annuity payments
for less than the selected guaranteed period, we will then continue to make
annuity payments for the rest of the guaranteed period to the beneficiary. If
the beneficiary does not want to receive annuity payments, he or she can ask
us for a single lump sum.
OPTION 3. JOINT AND LAST SURVIVOR ANNUITY. Under this option, we will
make annuity payments each month so long as the annuitant and a second person
are both alive. When either of these people dies, we will continue to make
annuity payments, so long as the survivor continues to live. The amount of
the annuity payments we will make to the survivor can be equal to 100%, 66
2/3% or 50% of the amount that we would have paid if both were alive.
Annuity payments are made monthly unless you have less than $2,000 to
apply toward a payment. In that case, Cova may provide your annuity payment
in a single lump sum. Likewise, if your annuity payments would be less than
$20 a month, Cova has the right to change the frequency of payments so that
your annuity payments are at least $20.
3. PURCHASE
PURCHASE PAYMENTS
A purchase payment is the money you give us to buy the contract. The
minimum we will accept is $5,000 when the contract is bought as a non-
qualified contract. If you are buying the contract as part of an IRA
(Individual Retirement Annuity) the minimum we will accept is $2,000.
(Currently, the contract is not available under an IRA until the IRA
Endorsement is approved by the State of New York Insurance Department.)
The maximum we accept is $1 million without our prior approval. You can
make additional purchase payments of $2,000 or more to either type of contract.
ALLOCATION OF PURCHASE PAYMENTS
When you purchase a contract, we will allocate your purchase payment to
the fixed account and/or one or more of the investment portfolios you have
selected. If you make additional purchase payments, we will allocate them in
the same way as your first purchase payment unless you tell us otherwise.
There is a $500 minimum balance requirement for the fixed account and for each
investment portfolio.
If you change your mind about owning this contract, you can cancel it
within 10 days after receiving it. When you cancel the contract within
this time period, Cova will not assess a withdrawal charge. You will receive
back whatever your contract is worth on the day we receive your request.
If you have purchased the contract as an IRA, we are required to give you
back your purchase payment if you decide to cancel your contract within 10 days
after receiving it.
Once we receive your purchase payment and the necessary information, we
will issue your contract and allocate your first purchase payment within 2
business days. If you do not give us all of the information we need, we will
contact you to get it. If for some reason we are unable to complete this
process within 5 business days, we will either send back your money or get
your permission to keep it until we get all of the necessary information. If
you add more money to your contract by making additional purchase payments, we
will credit these amounts to your contract within one business day. Our
business day closes when the New York Stock Exchange closes, usually 4:00 P.M.
Eastern time.
ACCUMULATION UNITS
The value of the variable annuity portion of your contract will go up or
down depending upon the investment performance of the investment portfolio(s)
you choose. In order to keep track of the value of your contract, we use a
unit of measure we call an accumulation unit. (An accumulation unit
works like a share of a mutual fund.) During the income phase of the
contract we call the unit an annuity unit.
Every day we determine the value of an accumulation unit for each of the
investment portfolios. We do this by:
(1) determining the total amount of money invested in the particular
investment portfolio;
(2) subtracting from that amount any insurance charges and any other
charges such as taxes we have deducted; and
(3) dividing this amount by the number of outstanding accumulation units.
The value of an accumulation unit may go up or down from day to day.
When you make a purchase payment, we credit your contract with
accumulation units. The number of accumulation units credited is determined
by dividing the amount of the purchase payment allocated to an investment
portfolio divided by the value of the accumulation unit for that investment
portfolio.
We calculate the value of an accumulation unit for each investment
portfolio after the New York Stock Exchange closes each day and then credit
your contract.
Example:
On Monday we receive an additional purchase payment of $5,000 from
you. You have told us you want this to go to the Quality Bond Portfolio.
When the New York Stock Exchange closes on that Monday, we determine that the
value of an accumulation unit for the Quality Bond Portfolio is $13.90. We
then divide $5,000 by $13.90 and credit your contract on Monday night with
360.23 accumulation units for the Quality Bond Portfolio.
4. INVESTMENT OPTIONS
The Contract offers 8 investment portfolios which are described below.
Additional investment portfolios may be available in the future.
YOU SHOULD READ THE PROSPECTUSES FOR THESE FUNDS CAREFULLY BEFORE
INVESTING. COPIES OF THESE PROSPECTUSES ARE ATTACHED TO THIS PROSPECTUS.
COVA SERIES TRUST
Cova Series Trust is managed by Cova Advisory, which is an indirect
subsidiary of Cova. Cova Series Trust is a mutual fund with multiple
portfolios. Each investment portfolio has a different investment objective.
Cova Advisory has engaged sub-advisers to provide investment advice for
the individual investment portfolios. The following investment portfolios are
available under the contract:
J.P. Morgan Investment Management Inc. is the sub-adviser to the following
portfolios:
Select Equity Portfolio
Large Cap Stock Portfolio
Small Cap Stock Portfolio
International Equity Portfolio
Quality Bond Portfolio
Lord, Abbett & Co. is the sub-adviser to the following portfolio:
Bond Debenture Portfolio
LORD ABBETT SERIES FUND, INC.
Lord Abbett Series Fund, Inc. is a mutual fund with multiple portfolios.
Each portfolio is managed by Lord, Abbett & Co. The following portfolio is
available under the contract:
Growth and Income Portfolio
GENERAL AMERICAN CAPITAL COMPANY
General American Capital Company is a mutual fund with multiple
portfolios. Each portfolio is managed by General American Investment
Management Company. The following portfolio is available under the contract:
Money Market Fund
TRANSFERS
You can transfer money among the fixed account and the 8 investment
portfolios.
TRANSFERS DURING THE ACCUMULATION PHASE. You can make 12 transfers every
year during the accumulation phase without charge. We measure a year from the
annivesary of the day we issued your Contract. You can make a transfer to or
from the fixed account and to or from any investment portfolio. If you make
more than 12 transfers in a year, there is a transfer fee deducted. The fee is
$25 per transfer or, if less, 2% of the amount transferred. The following
apply to any transfer during the accumulation phase:
1. The minimum amount which you can transfer is $500 or your entire
value in the investment portfolio or fixed account.
2. Your request for transfer must clearly state which investment
portfolio(s) or the fixed account are involved in the transfer.
3. Your request for transfer must clearly state how much the
transfer is for.
4. You cannot make any transfers within 7 calendar days of the
annuity date.
TRANSFERS DURING THE INCOME PHASE. You can only make transfers between
the investment portfolios once each year. We measure a year from the
anniversary of the day we issued your contract. You cannot transfer from the
fixed account to an investment portfolio, but you can transfer from one or
more investment portfolios to the fixed account at any time. If you make more
than 12 transfers in a year, a transfer fee will be charged.
You can make transfers by telephone. If you own the contract with a joint
owner, unless Cova is instructed otherwise, Cova will accept instructions from
either you or the other owner. Cova will use reasonable procedures to confirm
that instructions given us by telephone are genuine. If Cova fails to use such
procedures, we may be liable for any losses due to unauthorized or fraudulent
instructions. Cova tape records all telephone instructions.
DOLLAR COST AVERAGING PROGRAM
The Dollar Cost Averaging Program allows you to systematically transfer a
set amount each month from the Money Market Fund of General American Capital
Company or the fixed account to any of the other investment portfolio(s).
By allocating amounts on a regular schedule as opposed to allocating the total
amount at one particular time, you may be less susceptible to the impact of
market fluctuations.
The minimum amount which can be transferred each month is $500. You must
have at least $6,000 in the Money Market Fund of General American Capital
Company or the fixed account, (or the amount required to complete your program,
if less) in order to participate in the Dollar Cost Averaging Program.
All Dollar Cost Averaging transfers will be made on the 15th day of the
month unless that day is not a business day. If it is not, then the transfer
will be made the next business day.
If you participate in the Dollar Cost Averaging Program, the transfers
made under the program are not taken into account in determining any transfer
fee.
AUTOMATIC REBALANCING PROGRAM
Once your money has been allocated among the investment portfolios, the
performance of each portfolio may cause your allocation to shift. You can
direct us to automatically rebalance your contract to return to your original
percentage allocations by selecting our Automatic Rebalancing Program. You
can tell us whether to rebalance quarterly, semi-annually or annually. We
will measure these periods from the anniversary of the date we issued your
contract. The transfer date will be the 1st day after the end of the period
you selected. If you participate in the Automatic Rebalancing Program, the
transfers made under the program are not taken into account in determining any
transfer fee.
EXAMPLE:
Assume that you want your initial purchase payment split between 2
investment portfolios. You want 40% to be in the Quality Bond Portfolio and
60% to be in Select Equity Portfolio. Over the next 2 1/2 months the bond
market does very well while the stock market performs poorly. At the end of
the first quarter, the Quality Bond Portfolio now represents 50% of your
holdings because of its increase in value. If you had chosen to have your
holdings rebalanced quarterly, on the first day of the next quarter, Cova
would sell some of your units in the Quality Bond Portfolio to bring its value
back to 40% and use the money to buy more units in the Select Equity Portfolio
to increase those holdings to 60%.
VOTING RIGHTS
Cova is the legal owner of the investment portfolio shares. However,
Cova believes that when an investment portfolio solicits proxies in
conjunction with a vote of shareholders, it is required to obtain from you and
other owners instructions as to how to vote those shares. When we receive
those instructions, we will vote all of the shares we own in proportion to
those instructions. This will also include any shares that Cova owns on its
own behalf. Should Cova determine that it is no longer required to comply
with the above, we will vote the shares in our own right.
SUBSTITUTION
Cova may be required to substitute one of the investment portfolios you
have selected with another portfolio. We would not do this without the prior
approval of the Securities and Exchange Commission. We will give you notice
of our intent to do this.
5. EXPENSES
There are charges and other expenses associated with the contracts that
reduce the return on your investment in the contract. These charges and
expenses are:
INSURANCE CHARGES
Each day, Cova makes a deduction for its insurance charges. Cova does
this as part of its calculation of the value of the accumulation units and the
annuity units. The insurance charge has two parts: 1) the mortality and
expense risk premium and 2) the administrative expense charge.
Mortality and Expense Risk Premium. This charge is equal, on an annual
basis, to 1.25% of the daily value of the contracts invested in an investment
portfolio, after expenses have been deducted. This charge is for all the
insurance benefits e.g., guarantee of annuity rates, the death benefits, for
certain expenses of the contract, and for assuming the risk (expense risk)
that the current charges will be sufficient in the future to cover the cost of
administering the contract. If the charges under the contract are not
sufficient, then Cova will bear the loss. Cova does, however, expect to
profit from this charge. The mortality and expense risk premium cannot be
increased. Cova may use any profits we make from this charge to pay for the
costs of distributing the contract.
Administrative Expense Charge. This charge is equal, on an annual
basis, to .15% of the daily value of the contracts invested in an investment
portfolio, after expenses have been deducted. This charge, together with the
contract maintenance charge (see below) is for all the expenses associated
with the administration of the contract. Some of these expenses are:
preparation of the contract, confirmations, annual reports and statements,
maintenance of contract records, personnel costs, legal and accounting fees,
filing fees, and computer and systems costs. Because this charge is taken out
of every unit value, you may pay more in administrative costs than those that
are associated solely with your contract. Cova does not intend to profit from
this charge. However, if this charge and the contract maintenance charge are
not enough to cover the costs of the contracts in the future, Cova will bear
the loss.
CONTRACT MAINTENANCE CHARGE
During the accumulation phase, every year on the anniversary of the date
when your contract was issued, Cova deducts $30 from your contract as a
contract maintenance charge. This charge is for administrative expenses
see above). This charge can not be increased.
Cova will not deduct this charge, if when the deduction is to be made,
the value of your contract is $50,000 or more. Cova may some time in the
future discontinue this practice and deduct the charge.
If you make a complete withdrawal from your contract, the contract
maintenance charge will also be deducted. A prorata portion of the charge
will be deducted if the annuity date is other than an anniversary. After the
annuity date, the charge will be collected monthly out of the annuity payment.
WITHDRAWAL CHARGE
During the accumulation phase, you can make withdrawals from your
contract. Cova keeps track of each purchase payment. Once a year after the
first year, you can withdraw up to 10% of your total purchase payments and no
withdrawal charge will be assessed on the 10%, if on the day you make your
withdrawal the value of your contract is $5,000 or more. Otherwise, the
charge is 7% of each payment you take out in the first and second years after
Cova receives the payment, 5% of each payment you take out in the third, fourth
and fifth years, and 3% of each payment you take out in the sixth and seventh
years. After Cova has had a purchase payment for 7 years, there is no charge
when you withdraw that purchase payment. For purposes of the withdrawal
charge, Cova treats withdrawals as coming from the oldest purchase payment
first. When the withdrawal is for only part of the value of your contract,
the withdrawal charge is deducted from the remaining value in your contract.
NOTE: For tax purposes, withdrawals are considered to have come from the last
money into the contract. Thus, for tax purposes, earnings are considered to
come out first.
Cova does not assess the withdrawal charge on any payments paid out as
annuity payments or as death benefits.
REDUCTION OR ELIMINATION OF THE WITHDRAWAL CHARGE
Cova will reduce or eliminate the amount of the withdrawal charge when
the contract is sold to an officer, director or employee of Cova. In no event
will elimination of the Withdrawal Charge be permitted where elimination will
be unfairly discriminatory to any person.
PREMIUM TAXES
Some states and other governmental entities (e.g., municipalities) charge
premium taxes or similar taxes. Cova is responsible for the payment of these
taxes and will make a deduction from the value of the contract for them. Some
of these taxes are due when the contract is issued, others are due when
annuity payments begin. It is Cova's current practice to not charge anyone
for these taxes until annuity payments begin or a complete withdrawal is made.
Cova may some time in the future discontinue this practice and assess the
charge when the tax is due. Premium taxes generally range from 0% to 4%,
depending on the state.
TRANSFER FEE
You can make 12 free transfers every year. We measure a year from the
day we issue your contract. If you make more than 12 transfers a year, we
will deduct a transfer fee of $25 or 2% of the amount that is transferred
whichever is less.
If the transfer is part of the Dollar Cost Averaging Program or
the Automatic Rebalancing Program it will not count in determining the
transfer fee.
INCOME TAXES
Cova will deduct from the contract for any income taxes which it incurs
because of the contract. At the present time, we are not making any such
deductions.
INVESTMENT PORTFOLIO EXPENSES
There are deductions from and expenses paid out of the assets of the
various investment portfolios, which are described in the attached fund
prospectuses.
6. TAXES
NOTE: Cova has prepared the following information on taxes as a general
discussion of the subject. It is not intended as tax advice to any
individual. You should consult your own tax adviser about your own
circumstances. Cova has included in the Statement of Additional Information
an additional discussion regarding taxes.
ANNUITY CONTRACTS IN GENERAL
Annuity contracts are a means of setting aside money for future needs -
usually retirement. Congress recognized how important saving for retirement
was and provided special rules in the Internal Revenue Code (Code) for
annuities.
Simply stated these rules provide that you will not be taxed on the
earnings on the money held in your annuity contract until you take the money
out. This is referred to as tax deferral. There are different rules as to
how you will be taxed depending on how you take the money out and the type of
contract - qualified or non-qualified (see following sections).
You, as the owner, will not be taxed on increases in the value of your
contract until a distribution occurs - either as a withdrawal or as annuity
payments. When you make a withdrawal you are taxed on the amount of the
withdrawal that is earnings. For annuity payments, different rules apply. A
portion of each annuity payment is treated as a partial return of your
purchase payments and will not be taxed. The remaining portion of the annuity
payment will be treated as ordinary income. How the annuity payment is
divided between taxable and non-taxable portions depends upon the period over
which the annuity payments are expected to be made. Annuity payments received
after you have received all of your purchase payments are fully includible in
income.
When a non-qualified contract is owned by a non-natural person
(e.g., corporation or certain other entities other than tax-qualified trusts),
the contract will generally not be treated as an annuity for tax purposes.
QUALIFIED AND NON-QUALIFIED CONTRACTS
If you purchase the contract as an individual and not under an Individual
Retirement Annuity (IRA), your contract is referred to as a non-qualified
contract.
If you purchase the contract under an IRA, your contract is referred to
as a qualified contract. Currently, the contract is not available under an IRA
until the IRA Endorsement is approved by the State of New York Insurance
Department.
WITHDRAWALS - NON-QUALIFIED CONTRACTS
If you make a withdrawal from your contract, the Code treats such a
withdrawal as first coming from earnings and then from your purchase payments.
Such withdrawn earnings are includible in income.
The Code also provides that any amount received under an annuity contract
which is included in income may be subject to a penalty. The amount of the
penalty is equal to 10% of the amount that is includible in income. Some
withdrawals will be exempt from the penalty. They include any amounts: (1)
paid on or after the taxpayer reaches age 59 1/2; (2) paid after you die; (3)
paid if the taxpayer becomes totally disabled (as that term is defined in the
Code); (4) paid in a series of substantially equal payments made annually (or
more frequently) under a lifetime annuity, (5) paid under an immediate
annuity; or (6) which come from purchase payments made prior to August 14,
1982.
WITHDRAWALS - QUALIFIED CONTRACTS
The above information describing the taxation of non-qualified contracts
does not apply to qualified contracts. There are special rules that govern
with respect to qualified contracts. We have provided a more complete
discussion in the Statement of Additional Information.
DIVERSIFICATION
The Code provides that the underlying investments for a variable annuity
must satisfy certain diversification requirements in order to be treated as an
annuity contract. Cova believes that the investment portfolios are being
managed so as to comply with the requirements.
Neither the Code nor the Internal Revenue Service Regulations issued to
date provide guidance as to the circumstances under which you, because of the
degree of control you exercise over the underlying investments, and not Cova
would be considered the owner of the shares of the investment portfolios. If
this occurs, it will result in the loss of the favorable tax treatment for the
contract. It is unknown to what extent owners are permitted to select
investment portfolios, to make transfers among the investment portfolios or
the number and type of investment portfolios owners may select from. If
any guidance is provided which is considered a new position, then the guidance
would generally be applied prospectively. However, if such guidance is
considered not to be a new position, it may be applied retroactively. This
would mean that you, as the owner of the contract, could be treated as the
owner of the investment portfolios.
Due to the uncertainty in this area, Cova reserves the right to modify
the contract in an attempt to maintain favorable tax treatment.
7. ACCESS TO YOUR MONEY
You can have access to the money in your contract: (1) by making a
withdrawal (either a partial or a complete withdrawal); (2) by electing to
receive annuity payments; or (3) when a death benefit is paid to your
beneficiary. Withdrawals can only be made during the accumulation phase.
When you make a complete withdrawal you will receive the value of the
contract on the day you made the withdrawal less any applicable withdrawal
charge, less any premium tax and less any contract maintenance charge. (See
Section 5. Expenses for a discussion of the charges.)
Unless you instruct Cova otherwise, any partial withdrawal will be made
pro-rata from all the investment portfolios and the fixed account you
selected. Under most circumstances the amount of any partial withdrawal must
be for at least $500. Cova requires that after a partial withdrawal is made
you keep at least $500 in any selected investment portfolio.
INCOME TAXES, TAX PENALTIES AND CERTAIN RESTRICTIONS MAY APPLY TO ANY
WITHDRAWAL YOU MAKE.
SYSTEMATIC WITHDRAWAL PROGRAM
If you are 59 1/2 or older, you may use the Systematic Withdrawal
Program. This program provides an automatic monthly payment to you of up to
10% of your total purchase payments each year. No withdrawal charge will be
made for these payments. Cova does not have any charge for this program.
If you use this program, you may not also make a single 10% free
withdrawal. For a discussion of the withdrawal charge and the 10% free
withdrawal, see Section 5. Expenses.
All Systematic Withdrawals will be paid on the 15th day of the month
unless that day is not a business day. If it is not, then the payment will be
the next business day.
Income taxes may apply to Systematic Withdrawals.
8. PERFORMANCE
Cova periodically advertises performance of the various investment
portfolios. Cova will calculate performance by determining the percentage
change in the value of an accumulation unit by dividing the increase
(decrease) for that unit by the value of the accumulation unit at the
beginning of the period. This performance number reflects the deduction of
the insurance charges. It does not reflect the deduction of any applicable
contract maintenance charge and withdrawal charge. The deduction of any
applicable contract maintenance charge and withdrawal charges would reduce the
percentage increase or make greater any percentage decrease. Any
advertisement will also include total return figures which reflect the
deduction of the insurance charges, contract maintenance charges, and
withdrawal charges.
Appendix A contains performance information that you may find
informative. It is divided into various parts, depending upon the type of
performance information shown. Future performance will vary and the results
shown are not necessarily representative of future results.
PART 1. This section shows the actual investment performance of the
Lord Abbett Series Fund, Inc. Growth and Income Portfolio and the General
American Capital Company Money Market Fund, each of which has been in
existence for some time and therefore has an investment performance
history. In order to show how investment experience of the Growth and
Income Portfolio and the Money Market Fund affects accumulation unit
values, hypothetical performance information was developed.
Chart 1 contained in Appendix A sets out hypothetical information based
upon the historical experience of the Growth and Income Portfolio and the Money
Market Fund and is for the periods shown. The performance figures for the
Growth and Income Portfolio and the Money Market Fund reflect the deduction of
the actual fees and expenses paid by the Growth and Income Portfolio and the
Money Market Fund. There are performance figures for the accumulation units
which reflect the insurance charges as well as the fees and expenses of the
Growth and Income Portfolio and the Money Market Fund. There are also
performance figures for the accumulation units which reflect the insurance
charges, the contract maintenance charge, the fees and expenses of each of the
Growth and Income Portfolio and the Money Market Fund, and assume that you
make a withdrawal at the end of the period and therefore the withdrawal charge
is reflected.
PART 2. The Bond Debenture investment portfolio is newly created and
therefore does not yet have its own performance record. However, it has the
same investment objectives and follows substantially the same investment
strategies as a certain mutual fund advised by the same
sub-adviser. This fund is sold to the public (Public Fund) and has an
investment performance record. In order to demonstrate how the performance of
the Public Fund affects accumulation unit values, hypothetical performance
information was developed.
Chart 2 contained in Appendix A shows the historical performance of the
Public Fund. These performance figures reflect the deduction of the
historical fees and expenses paid by the Public Fund and not those paid by the
investment portfolio. The hypothetical figures for the accumulation units
assume the deduction of the fees and expenses anticipated to actually be paid
by the investment portfolio, but use the actual performance results of the
Public Fund. There are hypothetical performance figures for the accumulation
units which reflect the insurance charges as well as the portfolio expenses.
There are also hypothetical performance figures for the accumulation units
which reflect the insurance charges, the contract maintenance charge, the
portfolio expenses, and assume that you make a withdrawal at the end of the
period and therefore the withdrawal charge is reflected.
PART 3. J.P. Morgan Investment Management Inc. is the sub-adviser for
five investment portfolios. The portfolios are newly formed and have no
performance history. However, all of these investment portfolios (except the
International Equity Portfolio) have investment objectives, policies and
strategies substantially similar to those employed by the sub-adviser with
respect to certain private accounts (Private Accounts). Thus the
performance information derived from these Private Accounts is deemed relevant
to the investor. In order to demonstrate how the actual investment experience
of these Private Accounts affects accumulation unit values, hypothetical
performance information was developed.
Chart 3 contained in Appendix A shows hypothetical performance
information derived from the historical performance of composites of the
comparable Private Accounts with respect to the Select Equity, Large Cap
Stock, Small Cap Stock and Quality Bond investment portfolios. The
hypothetical performance figures for the investment portfolios represent the
actual performance results of the composites of comparable Private Accounts,
adjusted to reflect the deduction of the fees and expenses anticipated to be
paid by the investment portfolio. The actual composite performance figures of
the Private Accounts are time-weighted rates of return which include all
income and accrued income and realized and unrealized gains or losses, but do
not reflect the deduction of investment advisory fees actually charged to the
Private Accounts. There are hypothetical performance figures for the
accumulation units which reflect the actual performance results of the
composites of comparable Private Accounts, adjusted to reflect the deduction
of the fees and expenses anticipated to be paid by the investment portfolio
and the insurance charges. There are also hypothetical performance figures for
the accumulation units which reflect the actual performance results of the
composites of comparable Private Accounts, adjusted to reflect the deduction
of the fees and expenses anticipated to be paid by the investment portfolio
plus the insurance charges, the contract maintenance charge, and also assume
that you make a withdrawal at the end of the period and therefore the
withdrawal charge is reflected.
Please note that Appendix A does not contain performance information for the
International Equity Portfolio.
9. DEATH BENEFIT
UPON YOUR DEATH
If you die before annuity payments begin, Cova will pay a death benefit
to your beneficiary (see below). If you have a joint owner, the death benefit
will be paid when the first of you dies. The surviving joint owner will be
treated as the beneficiary.
The amount of the death benefit depends on how old you or your joint
owner is.
Prior to you, or your joint owner, reaching age 80, the death benefit
will be the greater of:
1. Total purchase payments, less withdrawals (and any withdrawal
charges paid on the withdrawals);
2. The value of your Contract at the time the death benefit is to
be paid; or
3. The value of your Contract on the most recent seven year
anniversary before the date of death, plus any subsequent purchase payments,
less any withdrawals (and any withdrawal charges paid on the withdrawals.)
After you, or your joint owner, reaches age 80, the death benefit will be
the greater of:
1. Total purchase payments, less any withdrawals (and any withdrawal
charges paid on the withdrawals);
2. The value of your contract at the time the death benefit is to be
paid; or
3. The value of your contract on the most recent seven year
anniversary on or before you or your joint owner reaches age 80, plus any
subsequent purchase payments, less any withdrawals (and any withdrawal charges
paid on the withdrawals).
The entire death benefit must be paid within 5 years of the date of death
unless the beneficiary elects to have the death benefit payable under an
annuity option. The death benefit payable under an annuity option must be
paid over the beneficiary's lifetime or for a period not extending beyond
the beneficiary's life expectancy. Payment must begin within one year of the
date of death. If the beneficiary is the spouse of the owner, he/she can
continue the contract in his/her own name at the then current value. If a
lump sum payment is elected and all the necessary requirements are met,
the payment will be made within 7 days.
DEATH OF ANNUITANT
If the annuitant, not an owner or joint owner, dies before annuity
payments begin, you can name a new annuitant. If no annuitant is named within
30 days of the death of the annuitant, you will become the annuitant. However,
if the owner is a non-natural person (for example, a corporation), then the
death or change of annuitant will be treated as the death of the owner, and a
new annuitant may not be named.
Upon the death of the annuitant after annuity payments begin, the death
benefit, if any, will be as provided for in the annuity option selected.
10. OTHER INFORMATION
COVA
First Cova Life Insurance Company (Cova) was organized under the laws
of the State of New York on December 31, 1992. Cova is a wholly-owned
subsidiary of Cova Financial Services Life Insurance Company, a Missouri
insurance company. On June 1, 1995, a wholly-owned subsidiary of General
American Life Insurance Company purchased Cova which on that date changed
its name to First Cova Life Insurance Company.
Cova is licensed to do business only in the state of New York.
THE SEPARATE ACCOUNT
Cova has established a separate account, First Cova Variable Annuity
Account One (Separate Account), to hold the assets that underlie the contracts.
The Board of Directors of Cova adopted a resolution to establish the Separate
Account under New York insurance law on December 31, 1992. We have registered
the Separate Account with the Securities and Exchange Commission as a unit
investment trust under the Investment Company Act of 1940.
The assets of the Separate Account are held in Cova's name on behalf of
the Separate Account and legally belong to Cova. However, those assets that
underlie the contracts, are not chargeable with liabilities arising out of any
other business Cova may conduct. All the income, gains and losses (realized or
unrealized) resulting from these assets are credited to or charged against the
contracts and not against any other contracts the Company may issue.
DISTRIBUTOR
Cova Life Sales Company (Life Sales), One Tower Lane, Suite 3000,
Oakbrook Terrace, Illinois 60181-4644, acts as the distributor of the
contracts. Life Sales is an affiliate of Cova.
Commissions will be paid to broker-dealers who sell the contracts.
Broker-dealers will be paid commissions of up to 3.5% of purchase payments.
In addition, under certain circumstances, an expense allowance of up to 2.75%
of purchase payments may be payable. The New York Insurance Department has
recently issued a proposed regulation which permits asset based compensation
under certain circumstances. Cova may, in the future, adopt an asset based
compensation program in addition to, or in lieu of, the present compensation
program. To the extent that the withdrawal charge is insufficient to cover the
actual cost of distribution,Cova may use any of its corporate assets,
including any profit from the mortality and expense risk premium, to make up
any difference.
OWNERSHIP
Owner. You, as the owner of the contract, have all the rights
under the contract. Prior to the annuity date, the owner is as designated at
the time the contract is issued, unless changed. On and after the annuity
date, the annuitant is the owner. The beneficiary becomes the owner when a
death benefit is payable.
Joint Owner. The contract can be owned by joint owners.
Upon the death of either joint owner, the surviving owner will be the
designated beneficiary. Any other beneficiary designation at the time the
contract was issued or as may have been later changed will be treated as a
contingent beneficiary unless otherwise indicated.
BENEFICIARY
The beneficiary is the person(s) or entity you name to receive any
death benefit. The beneficiary is named at the time the contract is issued
unless changed at a later date. Unless an irrevocable beneficiary has been
named, you can change the beneficiary at any time before you die.
ASSIGNMENT
You can assign the contract at any time during your lifetime. Cova will
not be bound by the assignment until it receives the written notice of the
assignment. Cova will not be liable for any payment or other action we take
in accordance with the contract before we receive notice of the assignment.
AN ASSIGNMENT MAY BE A TAXABLE EVENT.
If the contract is issued pursuant to a qualified plan, there may be
limitations on your ability to assign the contract.
SUSPENSION OF PAYMENTS OR TRANSFERS
Cova may be required to suspend or postpone payments for withdrawal or
transfers for any period when:
1. the New York Stock Exchange is closed (other than customary
weekend and holiday closings);
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of shares of the
investment portfolios is not reasonably practicable or Cova cannot reasonably
value the shares of the investment portfolios;
4. during any other period when the Securities and Exchange
Commission, by order, so permits for the protection of owners.
Cova has reserved the right to defer payment for a withdrawal or transfer
from the fixed account for the period permitted by law but not for more than
six months.
FINANCIAL STATEMENTS
The financial statements of Cova have been included in the Statement of
Additional Information.
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Page
Company
Experts
Legal Opinions
Distribution
Performance Information
Tax Status
Annuity Provisions
Financial Statements
APPENDIX A
PERFORMANCE INFORMATION
FUTURE PERFORMANCE WILL VARY AND THE RESULTS SHOWN ARE NOT NECESSARILY
REPRESENTATIVE OF FUTURE RESULTS.
PART 1 GENERAL AMERICAN CAPITAL COMPANY MONEY MARKET FUND AND LORD ABBETT
SERIES FUND, INC. GROWTH AND INCOME PORTFOLIO
The General American Capital Company Money Market Fund and the Lord Abbett
Series Fund, Inc. Growth and Income Portfolio have been in existence for
sometime and therefore have an investment performance history. In order to
show how investment performance of the Money Market Fund and the Growth and
Income Portfolio affects accumulation unit values, we have developed
hypothetical performance information.
The chart below shows the actual investment performance of the Money
Market Fund and the Growth and Income Portfolio and the hypothetical
accumulation unit performance calculated by assuming that accumulation units
were invested in each of the Money Market Fund and the Growth and Income
Portfolio for the same periods.
The performance figures in Column A below for each of the Money Market Fund
and the Growth and Income Portfolio reflect the actual fees and expenses paid
by each of the Money Market Fund and the Growth and Income Portfolio. Column B
presents hypothetical performance figures for the accumulation
units which reflects the insurance charges as well as the fees and expenses of
the Money Market Fund and the Growth and Income Portfolio. Column C presents
hypothetical performance figures for the accumulation units which reflects
the insurance charges, the contract maintenance charge, the fees and expenses
of each of the Money Market Fund and the Growth and Income Portfolio, and
assumes that you make a withdrawal at the end of the period and therefore the
withdrawal charge is reflected.
Average Annual Total Return
For the periods ended 12/31/95
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GAIMCO Money Market Fund
------------ ------- ------------- -------------
Column A Column B Column C
Fund Performance Hypothetical Accumulation Unit
Performance
Portfolio 1 year 5 years 10 years 1 year 5 years 10 years 1 year 5 years 10 years
- ------------- ------- -------- ------------ ------- ------------- ------------- ------- ------------ ---------
Money Market 6.17% 4.82% 6.46% 4.77% 3.42% 5.06% (2.33)% (1.18)% 4.96%
- ------------- ------- -------- ------------ ------- ------------- ------------- ------- ------------ ---------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Lord Abbett Series Fund, Inc.
---------- ------- ------------- -----------
Column A Column B Column C
Portfolio Performance Accumulation Unit Performance
Portfolio 1 year 5 years since 1 year 5 years since 1 year 5 years since
- ----------------- ---------- ------------ ---------- ------- ------------- ----------- ------------ -------- ----------
inception inception inception
---------- ----------- ----------
Growth and Income 29.82% 17.59% 14.86% 28.03% 15.99% 13.31% 20.46% 14.86% 12.55%
- ----------------- ---------- ------------ ---------- ------- ------------- ----------- ------------ -------- ----------
</TABLE>
PART 2 PUBLIC FUND
The investment portfolio set out in the chart below is newly created and does
not yet have its own performance record. However, it has the same investment
objectives and follows substantially the same investment strategies as a
mutual fund advised by the same sub-adviser. This fund is sold to the public
and is referred to here as a Public Fund.
The chart below shows the historical performance of the Public Fund. The
performance figures in Column A reflect the deduction of the historical fees
and expenses paid by the Public Fund and not those paid by the investment
portfolio. Column B presents hypothetical performance figures for the
accumulation units which reflect the insurance charges and the deduction of
the fees and expenses anticipated to actually be paid by the investment
portfolio. Column C presents hypothetical performance figures for the
accumulation units which reflect the insurance charges, the contract
maintenance charge, the deduction of the fees and expenses anticipated to
actually be paid by the investment portfolio and assumes that you make a
withdrawal at the end of the period and therefore the withdrawal charge is
reflected.
Average Annual Total Return
For the periods ended 12/31/95
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Public Fund
------- -------------
Column A Column B Column C
Public Fund Performance Hypothetical Accumulation Unit
Performance
Portfolio 1 year 5 years 10 years 1 year 5 years 10 years 1 year 5 years 10 years
- ------------------- ------- -------- ------------ ------- ------------- ------------- ------- ------------ ---------
Lord Abbett Bond
Debenture Fund 17.50% 16.00% 10.10% 16.10% 14.60% 8.70% 9.00% 10.00% 8.60%
- ------------------- ------- -------- ------------ ------- ------------- ------------- ------- ------------ ---------
</TABLE>
PART 3 HYPOTHETICAL PERFORMANCE INFORMATION DERIVED FROM PRIVATE ACCOUNTS
The investment portfolios set out in the chart below are newly created and do
not yet have their own performance record. However, they have investment
objectives, policies and strategies substantially similar to those employed by
J.P. Morgan Investment Management Inc. with respect to certain Private
Accounts. Thus, the performance information derived from these Private
Accounts is deemed relevant to the investor. The performance of the
investment portfolios may vary from the Private Account composite information
because each investment portfolio will be actively managed and its investments
will vary from time to time and will not be identical to the past portfolio
investments of the Private Accounts. Moreover, the Private Accounts are not
registered under the 1940 Act and therefore are not subject to certain
investment restrictions that are imposed by the 1940 Act, which, if imposed,
could have adversely affected the Private Accounts' performances.
The chart below shows hypothetical performance information derived from
historical composite performance of the Private Accounts included in the
Active Equity Composite, Structured Stock Selection Composite, Small Cap
Directly Invested Composite and Public Bond Composite. The hypothetical
performance figures for the investment portfolios in Column A represent the
actual performance results of the composites of comparable Private Accounts,
adjusted to reflect the deduction of the fees and expenses anticipated to be
paid by the investment portfolio. The actual Private Account composite
performance figures are time-weighted rates of return which include all
income and accrued income and realized and unrealized gains or losses, but
do not reflect the deduction of investment advisory fees actually charged
to the Private Accounts. Column B presents the hypothetical performance
figures for the accumulation units which reflect the actual performance
results of the composites of comparable Private Accounts, adjusted to
reflect the deduction of the fees and expenses anticipated to be paid by
the investment portfolio and the insurance charges. Column C presents the
hypothetical performance figures for the accumulation units which reflect
the insurance charges, the contract maintenance charge, and the actual
performance results of the composites of comparable Private Accounts, adjusted
to reflect the deduction of the fees and expenses anticipated to be paid by the
investment portfolio. Column C also assumes that you make a withdrawal
at the end of the period and therefore the withdrawal charge is reflected.
Inception was June 1, 1987 for the Public Bond Composite and November 1, 1989
for the Structured Stock Selection Composite.
Hypothetical Performance Information Derived from Private Account Composite
Performance Reduced by Anticipated Investment Portfolio Fees and Expenses
For the periods ended 12/31/95
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Hypothetical Investment Portfolio Performance
Column A Column B
Hypothetical
Portfolio 1 year 5 years 10 Years 1 year 5 years 10 Years or
or Since Inception Since Inception
- ---------------------------- ------------- ----------- --------------- ------- --------- ----------------
Active Equity Composite 32.56% 17.71% 15.51% 31.16% 16.31% 14.11%
(Select Equity Portfolio)
Structured Stock Selection
Composite 37.47% 17.40% 14.05% 36.07% 16.00% 12.65%
(Large Cap Stock Portfolio)
Small Cap Directly Invested
Composite 35.29% 20.75 12.00% 33.89% 19.35% 10.60%
(Small Cap Stock Portfolio)
Public Bond Composite 17.71% 9.46% 9.52% 16.31% 8.06% 8.12%
(Quality Bond Portfolio)
- ----------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Unit Performance
Column C
Portfolio 1 Year 5 years 10 Years
Or Since Inception
- ---------------------------- ------- ------------ -------------------
Active Equity Composite 24.06% 11.71% 14.01%
(Select Equity Portfolio)
Structured Stock Selection
Composite 28.97% 11.40% 12.55%
(Large Cap Stock Portfolio)
Small Cap Directly Invested
Composite 26.79% 14.75% 10.50%
(Small Cap Stock Portfolio)
Public Bond Composite 9.21% 3.46% 8.02%
(Quality Bond Portfolio)
- ----------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RECAP
Perfor- Accumu-
Chart mance lation
Column A Column B
10 Yrs or 10 Yrs or
Portfolio Type # 1 Yr 5 Yrs Since Inception 1 Yr 5 Yrs Since Inception
------- ------ ------- ---------------- ------ ----- ----------------
----------
MANAGED BY J. P. MORGAN
INVESTMENT MANAGEMENT INC.
Select Equity Private Account 3 32.56% 17.71% 15.51% 31.16% 16.31% 14.11%
Composite
Large Cap Stock Private Account 3 37.47% 17.40% 14.05% 36.07% 16.00% 12.65%
Composite
Small Cap Stock Private Account 3 35.29% 20.75% 12.00% 33.89% 19.35% 10.60%
Composite
Quality Bond Private Account 3 17.71% 9.46% 9.52% 16.31% 8.06% 8.12%
Composite
MANAGED BY LORD, ABBETT & CO.
Growth and Income Existing Portfolio 1 29.82% 17.59% 14.86% 28.03% 15.99% 13.31%
Bond Debenture Public Fund 2 17.50% 16.00% 10.10% 16.10% 14.60% 8.70%
MANAGED BY GENERAL AMERICAN
INVESTMENT MANAGEMENT COMPANY
Money Market 1 6.17% 4.82% 6.46% 4.77% 3.42% 5.06%
<S> <C> <C> <C>
Perfor-
Unit mance
Column C
Portfolio 1 Yr 5 Yrs 10 Yrs
or Since Inception
------ ------- --------------------
MANAGED BY J. P. MORGAN
INVESTMENT MANAGEMENT INC.
Select Equity 24.06% 11.71% 14.01%
Large Cap Stock 28.97% 11.40% 12.55%
Small Cap Stock 26.79% 14.75% 10.50%
Quality Bond 9.21% 3.46% 8.02%
MANAGED BY LORD, ABBETT & CO.
Growth and Income 20.46% 14.86% 12.55%
Bond Debenture 9.00% 10.00% 8.60%
MANAGED BY GENERAL AMERICAN
INVESTMENT MANAGEMENT COMPANY
Money Market (2.33)% (1.18)% 4.96%
- ----------------------------- --------- ------ --------
/TABLE
<PAGE>
PART B
STATEMENT OF ADDITIONAL INFORMATION
INDIVIDUAL FIXED AND VARIABLE DEFERRED ANNUITY CONTRACT
issued by
FIRST COVA VARIABLE ANNUITY ACCOUNT ONE
AND
FIRST COVA LIFE INSURANCE COMPANY
(FORMERLY, FIRST XEROX LIFE INSURANCE COMPANY)
THIS IS NOT A PROSPECTUS. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE
READ IN CONJUNCTION WITH THE PROSPECTUS DATED __________ 1996, FOR THE
INDIVIDUAL FIXED AND VARIABLE DEFERRED ANNUITY CONTRACT WHICH IS DESCRIBED
HEREIN.
THE PROSPECTUS CONCISELY SETS FORTH INFORMATION THAT A PROSPECTIVE INVESTOR
OUGHT TO KNOW BEFORE INVESTING. FOR A COPY OF THE PROSPECTUS CALL OR WRITE
THE COMPANY AT: One Tower Lane, Suite 3000, Oakbrook Terrace, Illinois
60181-4644, (800) 831-5433.
THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED _______, 1996.
TABLE OF CONTENTS
Page
COMPANY
EXPERTS
LEGAL OPINIONS
DISTRIBUTION
PERFORMANCE INFORMATION
Total Return
Historical Unit Values
Reporting Agencies
Hypothetical Information - Money Market Fund and Growth and Income Portfolio
Hypothetical Information - Public Fund Performance
Hypothetical Information - Private Accounts
TAX STATUS
General
Diversification
Multiple Contracts
Contracts Owned by Other than Natural Persons
Tax Treatment of Assignments
Income Tax Withholding
Tax Treatment of Withdrawals - Non-Qualified Contracts
Qualified Plans
Tax Treatment of Withdrawals - Qualified Contracts
ANNUITY PROVISIONS
Variable Annuity
Fixed Annuity
Annuity Unit
Net Investment Factor
Mortality and Expense Guarantee
FINANCIAL STATEMENTS
COMPANY
First Cova Life Insurance Company (the "Company") was organized under the laws
of the state of New York on December 31, 1992. The Company is presently licensed
to do business only in the state of New York. The Company is a wholly-owned
subsidiary of Cova Financial Services Life Insurance Company ("Cova Life"), a
Missouri Insurance Company. On December 31, 1992, Cova Life acquired Wausau
Underwriters Life Insurance Company ("Wausau"), a stock life insurance company
organized under the laws of the state of Wisconsin. On April 16, 1993, Wausau
was merged into the Company, with the Company as the surviving corporation.
On June 1, 1995, a wholly-owned subsidiary of General American Life Insurance
Company ("General American") purchased Cova Life from Xerox Financial Services,
Inc. ("XFS"). The acquisition of Cova Life included related companies, including
the Company ("Acquisition"). On June 1, 1995, the Company changed its name to
First Cova Life Insurance Company.
General American is a St. Louis-based mutual company with more than $235 billion
of life insurance in force and approximately $9.6 billion in assets. It provides
life and health insurance, retirement plans, and related financial services
to individuals and groups.
In conjunction with the Acquisition, Cova Life also entered into a financing
reinsurance transaction that caused OakRe Life Insurance Company ("OakRe"), a
Missouri licensed insurer and a wholly-owned XFS subsidiary, to assume the
benefits and risks of existing single premium deferred annuity deposits
(SPDAs) which aggregated to $3,059 million at December 31, 1994. In exchange,
Cova Life transferred specifically identified assets to OakRe which had a
carrying value of $3,150.4 million at December 31, 1994. Ownership of OakRe
was retained by XFS subsequent to the Acquisition. The receivable from OakRe
to Cova Life that was created by this transaction will be liquidated over the
remaining crediting rate guaranty periods (which will be substantially all
expired in five years) by the transfer of cash in the amount of the then
current account value, less a recapture fee to OakRe on policies retained
beyond their 30-day no-fee surrender window by Cova Life, upon the next
crediting reset date of each annuity policy. Cova Life may then retain and
assume the benefits and risks of those deposits thereafter.
All of Cova Life's deposit obligations are fully guaranteed by General American
and the receivable from OakRe equal to the SPDA obligations are guaranteed by
OakRe's parent, XFS. In the event that both OakRe and XFS default on the
receivable, Cova Life may draw funds from a standby bank irrevocable letter of
credit established by XFS in the amount of $500 million.
In substance, the structure of the Acquisition allowed the seller, XFS, to
retain substantially all of the existing financial benefits and risks of
the existing business, while General American obtained the corporate
licenses, marketing and administrative capabilities of Cova Life, and
access to the retention of the policyholder deposit base that persists
beyond the next crediting rate reset date.
EXPERTS
The statutory financial statements of the Company included in this
Prospectus and the Statement of Additional Information, have been included
herein in reliance upon the reports of KPMG Peat Marwick LLP, independent
certified public accountants, appearing elsewhere herein, and upon the
authority of said firm as experts in accounting and auditing.
The report of KPMG Peat Marwick LLP covering the financial statements of
the Company contains an explanatory paragrapgh which states that the
financial statements are presented in conformity with accounting practices
prescribed or permitted by the Insurance Department of the State of New
York. These practices differ in some respects from generally accepted
accounting principles. These financial statements do not include any
adjustments that might result from the differences.
LEGAL OPINIONS
Legal matters in connection with the Contracts described herein are being
passed upon by the law firm of Blazzard, Grodd & Hasenauer, P.C., Westport,
Connecticut.
DISTRIBUTION
Cova Life Sales Company ("Life Sales") acts as the distributor. Prior to June
1, 1995, Cova Life Sales Company was known as Xerox Life Sales Company. Life
Sales is an affiliate of the Company. The offering is on a continuous basis.
reductions or elimination will be unfairly discriminatory to any person.
PERFORMANCE INFORMATION
Total Return
From time to time, the Company may advertise performance data. Such data will
show the percentage change in the value of an Accumulation Unit based on the
performance of an investment portfolio over a period of time, usually a
calendar year, determined by dividing the increase (decrease) in value for
that unit by the Accumulation Unit value at the beginning of the period.
Any such advertisement will include total return figures for the time periods
indicated in the advertisement. Such total return figures will reflect the
deduction of a 1.25% Mortality and Expense Risk Premium, a .15% Administrative
Expense Charge, the investment advisory fee for the underlying investment
portfolio being advertised and any applicable Contract Maintenance Charges and
Withdrawal Charges.
The hypothetical value of a Contract purchased for the time periods described
in the advertisement will be determined by using the actual Accumulation Unit
values for an initial $1,000 purchase payment, and deducting any applicable
Contract Maintenance Charges and any applicable Withdrawal Charge to arrive at
the ending hypothetical value. The average annual total return is then
determined by computing the fixed interest rate that a $1,000 purchase payment
would have to earn annually, compounded annually, to grow to the hypothetical
value at the end of the time periods described. The formula used in these
calculations is:
n
P (1 + T) = ERV
<TABLE>
<CAPTION>
<S> <C> <C>
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the time periods
used (or fractional portion thereof) of a hypothetical
$1,000 payment made at the beginning of the time
periods used.
</TABLE>
The Company may also advertise performance data which will be calculated in
the same manner as described above but which will not reflect the deduction of
any Withdrawal Charge. The deduction of any Withdrawal Charge would reduce
any percentage increase or make greater any percentage decrease.
Owners should note that the investment results of each investment portfolio
will fluctuate over time, and any presentation of the investment portfolio's
total return for any period should not be considered as a representation of
what an investment may earn or what an Owner's total return may be in any
future period.
Historical Unit Values
The Company may also show historical Accumulation Unit values in certain
advertisements containing illustrations. These illustrations will be based on
actual Accumulation Unit values.
In addition, the Company may distribute sales literature which compares the
percentage change in Accumulation Unit values for any of the investment
portfolios against established market indices such as the Standard & Poor's
500 Composite Stock Price Index, the Dow Jones Industrial Average or other
management investment companies which have investment objectives similar to
the investment portfolio being compared. The Standard & Poor's 500
Composite Stock Price Index is an unmanaged, unweighted average of 500 stocks,
the majority of which are listed on the New York Stock Exchange. The Dow
Jones Industrial Average is an unmanaged, weighted average of thirty blue chip
industrial corporations listed on the New York Stock Exchange. Both the
Standard & Poor's 500 Composite Stock Price Index and the Dow Jones
Industrial Average assume quarterly reinvestment of dividends.
Reporting Agencies
The Company may also distribute sales literature which compares the
performance of the Accumulation Unit values of the Contracts with the
unit values of variable annuities issued by other insurance companies. Such
information will be derived from the Lipper Variable Insurance Products
Performance Analysis Service, the VARDS Report or from Morningstar.
The Lipper Variable Insurance Products Performance Analysis Service is
published by Lipper Analytical Services, Inc., a publisher of statistical data
which currently tracks the performance of almost 4,000 investment
companies.The rankings compiled by Lipper may or may not reflect the deduction
of asset-based insurance charges. The Company's sales literature utilizing
these rankings will indicate whether or not such charges have been deducted.
Where the charges have not been deducted, the sales literature will indicate
that if the charges had been deducted, the ranking might have been lower.
The VARDS Report is a monthly variable annuity industry analysis compiled by
Variable Annuity Research & Data Service of Roswell, Georgia and published by
Financial Planning Resources, Inc. The VARDS rankings may or may not reflect
the deduction of asset-based insurance charges. In addition, VARDS prepares
risk adjusted rankings, which consider the effects of market risk on total
return performance. This type of ranking may address the question as to which
funds provide the highest total return with the least amount of risk. Other
ranking services may be used as sources of performance comparison, such as
CDA/Weisenberger.
Morningstar rates a variable annuity against its peers with similar investment
objectives. Morningstar does not rate any variable annuity that has less than
three years of performance data.
Hypothetical Information - Money Market Fund
Although the Accumulation Units which invest in the General American
Capital Company Money Market Fund and the Lord Abbett Series Fund, Inc.
Growth and Income Portfolio have no investment performance history as yet,
each of these funds has been in existence for some time and consequently has an
investment performance history. In order to demonstrate how actual investment
experience of the Money Market Fund and the Growth and Income Portfolio affects
Accumulation Unit values, hypothetical performance information was developed.
The information is based upon the historical experience of the Money Market
Fund and is for the periods shown. The prospectus contains a chart of
hypothetical information.
Future performance of the Money Market Fund and the Growth and Income
Portfolio will vary and the hypothetical results shown are not necessarily
representative of future results. Performance for periods ending after
those shown may vary substantially from the examples shown. The hypothetical
performance of the Money Market Fund and the Growth and Income Portfolio is
calculated for a specified period of time by assuming an initial Purchase
Payment of $1,000 allocated to the Portfolio. There are hypothetical
performance figures for the Accumulation Units which reflect the insurance
charges as well as the portfolio expenses. There are also hypothetical
performance figures for the Accumulation Units which reflect the insurance
charges, the contract maintenance charge, the portfolio expenses, and assume
that you make a withdrawal at the end of the period and therefore the
withdrawal charge is reflected. The percentage increases (decreases) are
determined by subtracting the initial Purchase Payment from the ending value
and dividing the remainder by the beginning value. The hypothetical
performance may also show figures when no withdrawal is assumed.
Hypothetical Information - Public Fund Performance
Lord, Abbett & Co. is the sub-adviser for the Bond Debenture investment
portfolio. This portfolio is newly-organized and does not yet have its own
performance record. However, it has the same investment objective and follows
substantially the same investment strategies as a mutual fund advised by the
same sub-adviser whose shares are sold to the public (Public Fund).
Set forth in the prospectus is the historical performance of this Public Fund.
Investors should not consider this performance data as an indication of the
future performance of this portfolio. The performance figures reflect the
deduction of the historical fees and expenses paid by the Public Fund and not
those to be paid by the investment portfolio. The figures do not reflect the
deduction of the insurance charges and the contract maintenance charge.
Investors should refer to the prospectus for the Contracts for information
pertaining to those charges. The results shown reflect the reinvestment of
dividends and distributions, and were calculated in the same manner that will
be used by the investment portfolio to calculate its own performance.
The performance of the Public Fund is commonly measured as total return. An
average annual compounded rate of return ("T") may be computed by using the
redeemable value at the end of a specified period ("ERV") of a hypothetical
initial investment of $1,000 ("P") over a period of time ("n") according to
the formula:
n
P (1 + T) = ERV
The table contained in the prospectus shows the average annualized total
returns for the fiscal year ended December 31, 1995, of a 1-year, 5-year and
10-year investment in the Public Fund.
In order to demonstrate how the performance of the Public Fund would
affect Accumulation Unit values, the prospectus contains hypothetical
performance information. In determining the hypothetical performance of the
Accumulation Units, the actual performance of the Public Fund was used.
The performance of the Accumulation Units will vary and the hypothetical
results shown are not necessarily representative of future results.
Performance for periods ending after those shown may vary substantially
from the examples shown. The performance of the Accumulation Units is
calculated for the specified period of time by assuming an initial Purchase
Payment of $1,000 allocated to the investment portfolio and a deduction
of all charges and deductions. The hypothetical performance figures for the
Accumulation Units assume the deduction of the fees and expenses anticipated
to actually be paid by the investment portfolio, but use the actual performance
results of the Public Fund. There are hypothetical performance figures for the
Accumulation Units which reflect the insurance charges as well as the fees
and expenses of the investment portfolio. There are also hypothetical
performance figures for the Accumulation Units which reflect the insurance
charges, the contract maintenance charge, the withdrawal charge and the fees
and expenses of the investment portfolio. The percentage increases
(decreases) are determined by subtracting the initial Purchase Payment from
the ending value and dividing the remainder by the beginning value.
Hypothetical Information - Private Accounts
J.P. Morgan Investment Management Inc. is the sub-adviser for the Select
Equity, Large Cap Stock, Small Cap Stock, and Quality Bond investment
portfolios. These portfolios are newly formed and have no performance history.
They have investment objectives, policies and strategies substantially
similar to those employed by the sub-adviser with respect to certain private
accounts (Private Accounts) represented in the Active Equity Composite, the
Structured Stock Selection Composite, the Small Cap Directly Invested
Composite and the Public Bond Composite, respectively. Thus the performance
information derived from these Private Accounts is deemed relevant to the
investor.
Set forth in the prospectus is the hypothetical performance information
derived from the historical composite performance of these Private Accounts
included in the Active Equity Composite, the Structured Stock Selection
Composite, the Small Cap Directly Invested Composite and the Public Bond
Composite. Investors should not consider this performance data as an
indication of the future performance of the comparable investment portfolios.
The actual composite performance figures of the Private Accounts are
time-weighted rates of return which include all income and accrued income
and realized and unrealized gains or losses, but do not reflect the deduction
of investment advisory fees actually charged to the Private Accounts.
The table contained in the prospectus shows the average annualized total
returns for the fiscal year ended December 31, 1995, of a 1-year, 5-year and
10 year (where available) or since inception investment in the composite of
comparable Private Accounts adjusted to reflect the deduction of the
investment advisory fees and expenses which are anticipated to be paid by the
respective investment portfolios.
In order to demonstrate how the actual investment experience of these Private
Accounts would affect Accumulation Unit values, the hypothetical composite
performance information was developed. The composite information is based
upon the performance of the composites of comparable Private Accounts with
substantially similar investment objectives, policies and strategies as the
respective portfolios reduced by the investment advisory fees and expenses
which are anticipated to be paid by the respective investment portfolios. The
hypothetical performance of these Accumulation Units is calculated for a
specified period of time by assuming an initial Purchase Payment of $1,000
allocated to the investment portfolios. There are hypothetical performance
figures for the Accumulation Units which reflect the actual performance
results of the composites of comparable Private Accounts, adjusted to reflect
the deduction of the fees and expenses anticipated to be paid by the
investment portfolio and the insurance charges. There are also hypothetical
performance figures for the Accumulation Units which reflect the insurance
charges, the contract maintenance charge, the withdrawal charge and the actual
performance results of the composites of comparable Private Accounts, adjusted
to reflect the deduction of the fees and expenses anticipated to be paid by
the investment portfolio. The percentage increases (decreases) are determined
by subtracting the initial Purchase Payment from the ending value and dividing
the remainder by the beginning value.
The performance of the comparable investment portfolios may be at variance
from the composite performance of the Private Accounts because such accounts
are not mutual funds and are not subject to the various requirements and
limitations applicable to mutual funds under the Investment Company Act of
1940 and the Internal Revenue Code.
There is no performance information for the International Equity Portfolio,
which is also managed by J.P. Morgan Investment Management Inc., in the
Prospectus.
The future performance of the investment portfolios will vary and the
hypothetical results shown are not necessarily representative of future
results.
TAX STATUS
GENERAL
NOTE: THE FOLLOWING DESCRIPTION IS BASED UPON THE COMPANY'S UNDERSTANDING OF
CURRENT FEDERAL INCOME TAX LAW APPLICABLE TO ANNUITIES IN GENERAL. THE COMPANY
CANNOT PREDICT THE PROBABILITY THAT ANY CHANGES IN SUCH LAWS WILL BE MADE.
PURCHASERS ARE CAUTIONED TO SEEK COMPETENT TAX ADVICE REGARDING THE
POSSIBILITY OF SUCH CHANGES. THE COMPANY DOES NOT GUARANTEE THE TAX STATUS OF
THE CONTRACTS. PURCHASERS BEAR THE COMPLETE RISK THAT THE CONTRACTS MAY NOT BE
TREATED AS "ANNUITY CONTRACTS" UNDER FEDERAL INCOME TAX LAWS. IT SHOULD BE
FURTHER UNDERSTOOD THAT THE FOLLOWING DISCUSSION IS NOT EXHAUSTIVE AND THAT
SPECIAL RULES NOT DESCRIBED HEREIN MAY BE APPLICABLE IN CERTAIN
SITUATIONS. MOREOVER, NO ATTEMPT HAS BEEN MADE TO CONSIDER ANY APPLICABLE
STATE OR OTHER TAX LAWS.
Section 72 of the Code governs taxation of annuities in general. An Owner is
not taxed on increases in the value of a Contract until distribution occurs,
either in the form of a lump sum payment or as annuity payments under the
Annuity Option selected. For a lump sum payment received as a total withdrawal
(total surrender), the recipient is taxed on the portion of the payment that
exceeds the cost basis of the Contract. For Non-Qualified Contracts, this cost
basis is generally the purchase payments, while for Qualified Contracts there
may be no cost basis. The taxable portion of the lump sum payment is taxed at
ordinary income tax rates.
For annuity payments, a portion of each payment in excess of an exclusion
amount is includible in taxable income. The exclusion amount for payments
based on a fixed annuity option is determined by multiplying the payment by
the ratio that the cost basis of the Contract (adjusted for any period or
refund feature) bears to the expected return under the Contract. The exclusion
amount for payments based on a variable annuity option is determined by
dividing the cost basis of the Contract (adjusted for any period certain or
refund guarantee) by the number of years over which the annuity is expected to
be paid. Payments received after the investment in the Contract has been
recovered (i.e. when the total of the excludable amount equals the
investment in the Contract) are fully taxable. The taxable portion is taxed
at ordinary income tax rates. For certain types of Qualified Plans there
may be no cost basis in the Contract within the meaning of Section 72 of
the Code. Owners, Annuitants and Beneficiaries under the Contracts should seek
competent financial advice about the tax consequences of any distributions.
The Company is taxed as a life insurance company under the Code. For federal
income tax purposes, the Separate Account is not a separate entity from the
Company, and its operations form a part of the Company.
DIVERSIFICATION
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not, in
accordance with regulations prescribed by the United States Treasury
Department ("Treasury Department"), adequately diversified. Disqualification
of the Contract as an annuity contract would result in the imposition of
federal income tax to the Owner with respect to earnings allocable to the
Contract prior to the receipt of payments under the Contract. The Code
contains a safe harbor provision which provides that annuity contracts such as
the Contract meet the diversification requirements if, as of the end of each
quarter, the underlying assets meet the diversification standards for a
regulated investment company and no more than fifty-five percent (55%) of the
total assets consist of cash, cash items, U.S. Government securities and
securities of other regulated investment companies.
On March 2, 1989, the Treasury Department issued Regulations (Treas.
Reg.1.817-5), which established diversification requirements for the
investment portfolios underlying variable contracts such as the Contract. The
Regulations amplify the diversification requirements for variable contracts
set forth in the Code and provide an alternative to the safe harbor provision
described above. Under the Regulations, an investment portfolio will be deemed
adequately diversified if: (1) no more than 55% of the value of the total
assets of the portfolio is represented by any one investment; (2) no more than
70% of the value of the total assets of the portfolio is represented by any
two investments; (3) no more than 80% of the value of the total assets of the
portfolio is represented by any three investments; and (4) no more than 90% of
the value of the total assets of the portfolio is represented by any four
investments.
The Code provides that, for purposes of determining whether or not the
diversification standards imposed on the underlying assets of variable
contracts by Section 817(h) of the Code have been met, "each United States
government agency or instrumentality shall be treated as a separate issuer."
The Company intends that all investment portfolios underlying the Contracts
will be managed in such a manner as to comply with these diversification
requirements.
The Treasury Department has indicated that the diversification Regulations do
not provide guidance regarding the circumstances in which Owner control of the
investments of the Separate Account will cause the Owner to be treated as the
owner of the assets of the Separate Account, thereby resulting in the loss of
favorable tax treatment for the Contract. At this time it cannot be determined
whether additional guidance will be provided and what standards may be
contained in such guidance.
The amount of Owner control which may be exercised under the Contract is
different in some respects from the situations addressed in published rulings
issued by the Internal Revenue Service in which it was held that the policy
owner was not the owner of the assets of the separate account. It is unknown
whether these differences, such as the Owner's ability to transfer among
investment choices or the number and type of investment choices available,
would cause the Owner to be considered as the owner of the assets of the
Separate Account resulting in the imposition of federal income tax to the
Owner with respect to earnings allocable to the Contract prior to receipt of
payments under the Contract.
In the event any forthcoming guidance or ruling is considered to set forth a
new position, such guidance or ruling will generally be applied only
prospectively. However, if such ruling or guidance was not considered to set
forth a new position, it may be applied retroactively resulting in the Owners
being retroactively determined to be the owners of the assets of the Separate
Account.
Due to the uncertainty in this area, the Company reserves the right to modify
the Contract in an attempt to maintain favorable tax treatment.
MULTIPLE CONTRACTS
The Code provides that multiple non-qualified annuity contracts which are
issued within a calendar year to the same contract owner by one company or its
affiliates are treated as one annuity contract for purposes of determining the
tax consequences of any distribution. Such treatment may result in adverse tax
consequences including more rapid taxation of the distributed amounts from
such combination of contracts. Owners should consult a tax adviser prior to
purchasing more than one non-qualified annuity contract in any calendar year.
CONTRACTS OWNED BY OTHER THAN NATURAL PERSONS
Under Section 72(u) of the Code, the investment earnings on premiums for the
Contracts will be taxed currently to the Owner if the Owner is a non-natural
person, e.g., a corporation or certain other entities. Such Contracts
generally will not be treated as annuities for federal income tax purposes.
However, this treatment is not applied to a Contract held by a trust or other
entity as an agent for a natural person nor to Contracts held by Qualified
Plans. Purchasers should consult their own tax counsel or other tax adviser
before purchasing a Contract to be owned by a non-natural person.
TAX TREATMENT OF ASSIGNMENTS
An assignment or pledge of a Contract may be a taxable event. Owners should
therefore consult competent tax advisers should they wish to assign or pledge
their Contracts.
INCOME TAX WITHHOLDING
All distributions or the portion thereof which is includible in the gross
income of the Owner are subject to federal income tax withholding. Generally,
amounts are withheld from periodic payments at the same rate as wages and at
the rate of 10% from non-periodic payments. However, the Owner, in most cases,
may elect not to have taxes withheld or to have withholding done at a
different rate.
Effective January 1, 1993, certain distributions from retirement plans
qualified under Section 401 or Section 403(b) of the Code, which are not
directly rolled over to another eligible retirement plan or individual
retirement account or individual retirement annuity, are subject to a
mandatory 20% withholding for federal income tax. The 20% withholding
requirement generally does not apply to: a) a series of substantially equal
payments made at least annually for the life or life expectancy of the
participant or joint and last survivor expectancy of the participant and a
designated beneficiary or for a specified period of 10 years or more; or
b) distributions which are required minimum distributions; or c) the portion
of the distributions not includible in gross income (i.e. returns of after-tax
contributions). Participants should consult their own tax counsel or other
tax adviser regarding withholding requirements.
TAX TREATMENT OF WITHDRAWALS - NON-QUALIFIED CONTRACTS
Section 72 of the Code governs treatment of distributions from annuity
contracts. It provides that if the Contract Value exceeds the aggregate
purchase payments made, any amount withdrawn will be treated as coming first
from the earnings and then, only after the income portion is exhausted, as
coming from the principal. Withdrawn earnings are includible in gross income.
It further provides that a ten percent (10%) penalty will apply to the income
portion of any premature distribution. However, the penalty is not imposed on
amounts received: (a) after the taxpayer reaches age 59 1/2; (b) after
the death of the Owner; (c) if the taxpayer is totally disabled (for this
purpose disability is as defined in Section 72(m)(7) of the Code); (d) in a
series of substantially equal periodic payments made not less frequently
than annually for the life (or life expectancy) of the taxpayer or for the
joint lives (or joint life expectancies) of the taxpayer and his or her
Beneficiary; (e) under an immediate annuity; or (f) which are allocable to
purchase payments made prior to August 14, 1982.
The above information does not apply to Qualified Contracts. However, separate
tax withdrawal penalties and restrictions may apply to such Qualified
Contracts. (See "Tax Treatment of Withdrawals - Qualified Contracts" below.)
QUALIFIED PLANS
The Contracts offered herein may also be used as Qualified Contracts. Owners,
Annuitants and Beneficiaries are cautioned that benefits under a Qualified
Contract may be subject to the terms and conditions of the plan regardless
of the terms and conditions of the Contracts issued pursuant to the plan.
The following discussion of Qualified Contracts is not exhaustive and is for
general informational purposes only. The tax rules regarding Qualified
Contracts are very complex and will have differing applications depending
on individual facts and circumstances. Each purchaser should obtain competent
tax advice prior to purchasing Qualified Contracts.
Qualified Contracts include special provisions restricting Contract provisions
that may otherwise be available as described herein. Generally, Qualified
Contracts are not transferable except upon surrender or annuitization.
On July 6, 1983, the Supreme Court decided in Arizona Governing Committee v.
Norris that optional annuity benefits provided under an employer's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women. Qualified Contracts will utilize annuity tables
which do not differentiate on the basis of sex. Such annuity tables
will also be available for use in connection with certain non-qualified
deferred compensation plans.
Section 408(b) of the Code permits eligible individuals to contribute to an
individual retirement program known as an Individual Retirement Annuity
(IRA). THE CONTRACTS ARE NOT AVAILABLE AS QUALIFIED CONTRACTS UNTIL AN IRA
ENDORSEMENT IS APPROVED BY THE STATE OF NEW YORK INSURANCE DEPARTMENT.
Under applicable limitations, certain amounts may be contributed to
an IRA which will be deductible from the individual's gross income. These IRAs
are subject to limitations on eligibility, contributions, transferability and
distributions. (See "Tax Treatment of Withdrawals - Qualified Contracts"
below.) Under certain conditions, distributions from other IRAs and other
Qualified Plans may be rolled over or transferred on a tax-deferred basis into
an IRA. Sales of Contracts for use with IRAs are subject to special
requirements imposed by the Code, including the requirement that certain
informational disclosure be given to persons desiring to establish an IRA.
Purchasers of Contracts to be qualified as Individual Retirement Annuities
should obtain competent tax advice as to the tax treatment and suitability of
such an investment.
TAX TREATMENT OF WITHDRAWALS - QUALIFIED CONTRACTS
Section 72(t) of the Code imposes a 10% penalty tax on the taxable
portion of any distribution from qualified retirement plans, including
Contracts issued and qualified under Code Section 408(b)(Individual
Retirement Annuities). To the extent amounts are not includible in
gross income because they have been rolled over to an IRA or to
another eligible Qualified Plan, no tax penalty will be imposed.
The tax penalty will not apply to the following distributions:
(a) if distribution is made on or after the date on which the Annuitant
reaches age 59 1/2; (b) distributions following the death or disability
of the Annuitant (for this purpose disability is as defined in Section
72(m)(7) of the Code); or (c) distributions that are part of substantially
equal periodic payments made not less frequently than annually for the
life (or life expectancy) of the Annuitant or the joint lives (or joint
life expectancies) of the Annuitant and his or her designated Beneficiary.
Generally, distributions from a qualified plan must commence no later than
April 1 of the calendar year following the year in which the employee attains
age 70 1/2. Required distributions must be over a period not exceeding the
life expectancy of the individual or the joint lives or life expectancies of
the individual and his or her designated beneficiary. If the required
minimum distributions are not made, a 50% penalty tax is imposed as to the
amount not distributed. In addition, distributions in excess of $150,000 per
ANNUITY PROVISIONS
VARIABLE ANNUITY
A variable annuity is an annuity with payments which: (1) are not
predetermined as to dollar amount; and (2) will vary in amount with the net
investment results of the applicable investment portfolio(s) of the Separate
Account. At the Annuity Date, the Contract Value in each investment portfolio
will be applied to the applicable Annuity Tables. The Annuity Table used will
depend upon the Annuity Option chosen. If, as of the Annuity Date, the then
current Annuity Option rates applicable to this class of Contracts provide a
first Annuity Payment greater than guaranteed under the same Annuity Option
under this Contract, the greater payment will be made. The dollar amount of
Annuity Payments after the first is determined as follows:
<TABLE>
<CAPTION>
<S> <C>
(1) the dollar amount of the first Annuity Payment is divided by the
value of an Annuity Unit as of the Annuity Date. This
establishes the number of Annuity Units for each monthly
payment. The number of Annuity Units remains fixed during the
Annuity Payment period.
(2) the fixed number of Annuity Units is multiplied by the Annuity
Unit value for the last Valuation Period of the month preceding
the month for which the payment is due. This result is the
dollar amount of the payment.
</TABLE>
The total dollar amount of each Variable Annuity Payment is the sum of all
investment portfolios' Variable Annuity Payments reduced by the applicable
Contract Maintenance Charge.
FIXED ANNUITY
A fixed annuity is a series of payments made during the Annuity Period which
are guaranteed as to dollar amount by the Company and do not vary with the
investment experience of the Separate Account. The General Account Value on
the day immediately preceding the Annuity Date will be used to determine the
Fixed Annuity monthly payment. The first monthly Annuity Payment will be
based upon the Annuity Option elected and the appropriate Annuity Option
Table.
ANNUITY UNIT
The value of an Annuity Unit for each Investment Portfolio was arbitrarily
set initially at $10. This was done when the first investment portfolio shares
were purchased. The investment portfolio Annuity Unit value at the end of any
subsequent Valuation Period is determined by multiplying the investment
portfolio Annuity Unit value for the immediately preceding Valuation Period by
the product of (a) the Net Investment Factor for the day for which the Annuity
Unit value is being calculated, and (b) 0.999919.
NET INVESTMENT FACTOR
The Net Investment Factor for any investment portfolio for any Valuation
Period is determined by dividing:
<TABLE>
<CAPTION>
<S> <C>
(a) the Accumulation Unit value as of the close of the current
Valuation Period, by
(b) the Accumulation Unit value as of the close of the immediately
preceding Valuation Period.
</TABLE>
The Net Investment Factor may be greater or less than one, as the Annuity Unit
value may increase or decrease.
MORTALITY AND EXPENSE GUARANTEE
The Company guarantees that the dollar amount of each Annuity Payment after
the first Annuity Payment will not be affected by variations in mortality or
expense experience.
FINANCIAL STATEMENTS
The financial statements of the Company included herein should be
considered only as bearing upon the ability of the Company to meet its
obligations under the Contracts.
FIRST COVA LIFE INSURANCE
COMPANY
Statutory Financial Statements
December 31, 1995, 1994 and 1993
(With Independent Auditors' Report Thereon)
INDEPENDENT AUDITORS' REPORT
The Board of Directors
First Cova Life Insurance Company:
We have audited the accompanying statutory statements of admitted assets,
liabilities, and capital stock and surplus of First Cova Life Insurance
Company as of December 31, 1995 and 1994, and the related statutory statements
of operations, capital stock and surplus, and cash flow for each of the years
in the three year period ended December 31, 1995. These statutory financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these statutory financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
As described in note 2, the accompanying financial statements have been
prepared in conformity with accounting practices prescribed or permitted by
the State of New York Department of Insurance. These practices differ in some
respects from generally accepted accounting principles. Accordingly, the
financial statements referred to above are not intended to present, and in our
opinion do not present fairly, the financial position, results of operations,
and cash flow in conformity with generally accepted accounting principles.
Also, in our opinion, the financial statements referred to above present
fairly, in all material respects, the admitted assets, liabilities, and
capital stock and surplus of First Cova Life Insurance Company as of December
31, 1995 and 1994, and the results of its operations and its cash flow for
each of the years in the three-year period ended December 31, 1995, on the
basis of accounting described in note 2.
April 15, 1996
FIRST COVA LIFE INSURANCE COMPANY
Statutory Statements of Admitted Assets, Liabilities,
and Capital Stock and Surplus
December 31, 1995 and 1994
<TABLE>
<CAPTION>
ADMITTED ASSETS 1995 1994
- --------------------------------------------------------- ------------ ------------
<S> <C> <C>
Bonds $154,785,930 163,744,844
Mortgage loans on real estate 10,059,682 -
Policy loans 16,922,627 15,645,926
Cash on hand and on deposit 21,446 (183,927)
Short-term investments 3,119,160 6,971,000
------------ ------------
Total cash and investments 184,908,845 186,177,843
Federal income tax recoverable - 361,694
Investment income due and accrued 2,584,922 3,191,777
Other assets 2,696 13
------------
Total admitted assets $187,496,463 189,731,327
------------ ------------
LIABILITIES AND CAPITAL STOCK AND SURPLUS
- ---------------------------------------------------------
Aggregate reserve for life policies and annuity contracts 159,232,113 157,321,533
Supplementary contracts without life contingencies 25,347 -
Life policy and annuity contract claims 296,837 157,134
General expenses due or accrued 47,586 95,961
Taxes, licenses, and fees due or accrued
excluding federal income taxes 233,343 440,158
Federal income taxes 45,000 -
Remittances and items not allocated 62 10,094
Interest maintenance reserve 1,407,616 5,844,332
Asset Valuation Reserve 1,185,008 830,336
Payable to parent, subsidiaries, and affiliates 58,912 11,208
Reinsurance payable 3,161,595 2,308,667
Checks outstanding 274,310 -
------------ ------------
Total liabilities 165,967,729 167,019,423
------------ ------------
Common capital stock, $10 par value.
Authorized 200,000 shares; issued
and outstanding 200,000 shares 2,000,000 2,000,000
Gross paid-in and contributed surplus 11,501,272 10,501,272
Unassigned surplus 8,027,462 10,210,632
Total capital stock and surplus 21,528,734 22,711,904
------------ ------------
Total liabilities and capital stock and surplus $187,496,463 189,731,327
------------ ------------
</TABLE>
See accompanying notes to statutory financial statements
FIRST COVA LIFE INSURANCE COMPANY
Statutory Statements of Operations
Years ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
------------ ----------- -----------
<S> <C> <C> <C>
Income:
Premium and annuity considerations $ 126,602 19,259,281 136,375,300
Considerations for supplementary contracts
without life contingencies 32,526 - -
Net investment income 12,526,475 14,267,469 10,586,167
Amortization of interest maintenance
reserve (210,681) 278,726 397,801
------------ -----------
Total 12,474,922 33,805,476 147,359,268
------------ -----------
Expense:
Death benefits 2,101,255 1,571,941 1,064,163
Annuity benefits 359,487 46,038 -
Surrender benefits and other fund withdrawals 9,184,900 4,448,864 1,821,775
Interest on policy or contract funds 9,097 6,143 2,385
Increase in aggregate reserves for life
policies and annuity contracts 1,910,580 24,000,789 133,320,744
Payment on supplementary contracts without
life contingencies 5,838 - -
Increase in reserve for supplementary
contracts without life contingencies 25,347 - -
Commissions and expense allowances on
reinsurance assumed 439,112 555,205 213,390
Commissions on premiums and annuity
considerations 2,460 658,827 175,670
General insurance expenses 664,633 1,057,081 613,735
Insurance, taxes, licenses, and fees,
excluding federal income taxes 810,899 473,845 308,103
------------ ----------- -----------
Total 15,513,608 32,818,733 137,519,965
------------ ----------- -----------
Income (loss) from operations before federal
income taxes and realized capital gains (3,038,686) 986,743 9,839,303
Federal income tax expense (benefit),
excluding tax on capital gains (1,006,592) (1,045,049) 1,602,659
------------ ----------- -----------
Net gain (loss) from operations before
realized capital gains (2,032,094) 2,031,792 8,236,644
------------ ----------- -----------
Realized capital gains (losses) (net of tax
benefit of $3,509,040 in 1995, tax
expense of $122,826 in 1994, and tax
expense of $3,607,541 in 1993 and net
of amounts transferred to the IMR of
$(4,647,397), $162,816 and $6,358,041
in 1995, 1994 and 1993, respectively) - - -
------------ ----------- -----------
Net income (loss) $(2,032,094) 2,031,792 8,236,644
------------ ----------- -----------
</TABLE>
See accompanying notes to statutory financial statements
FIRST COVA LIFE INSURANCE COMPANY
Statutory Statements of Capital Stock and Surplus
Years ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
------------ -----------
<S> <C> <C> <C>
Common capital stock - balance at beginning
and end of year $ 2,000,000 2,000,000 2,000,000
------------ ----------- -----------
Gross paid-in and contributed surplus:
Balance at beginning of year 10,501,272 10,501,272 4,000,000
Capital contribution 1,000,000 - 6,501,272
------------ ----------- -----------
Balance at end of year 11,501,272 10,501,272 10,501,272
------------ ----------- -----------
Unassigned surplus:
Balance at beginning of year 10,210,632 8,498,465 906,742
Net income (loss) (2,032,094) 2,031,792 8,236,644
Change in non-admitted assets 203,596 98,589 (302,185)
Change in Asset Valuation Reserve (354,672) (418,214) (342,736)
------------ -----------
Balance at end of year 8,027,462 10,210,632 8,498,465
------------ -----------
Total capital stock and surplus $21,528,734 22,711,904 20,999,737
------------ ----------- -----------
</TABLE>
See accompanying notes to statutory financial statements.
FIRST COVA LIFE INSURANCE COMPANY
Statutory Statements of Cash Flow
Years ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
------------- ----------- ------------
<S> <C> <C> <C>
Premium and annuity considerations $ 126,602 19,259,281 136,375,300
Other premiums, considerations, and
deposits 32,526 - -
Investment income received, excluding
realized gains/losses and net of
investment expenses 13,036,731 14,540,436 6,052,977
------------- ----------- ------------
13,195,859 33,799,717 142,428,277
------------- -----------
Life and accident and health claims paid 1,955,156 1,541,350 944,017
Surrender benefits and other fund
withdrawals paid 9,184,900 4,448,864 1,821,775
Other benefits to policyholders,
primarily annuity benefits 380,819 45,783 2,385
Commissions, other expenses, and taxes
paid, excluding Federal income tax 1,169,881 2,637,951 936,159
Federal income taxes paid (recovered),
excluding tax on capital gains (1,413,286) (472,742) 1,392,047
Net increase in policy loans and
premium notes 1,276,701 2,081,756 13,564,170
12,554,171 10,282,962 18,660,553
------------- ----------- ------------
Net cash from operations 641,688 23,516,755 123,767,724
------------- ----------- ------------
Proceeds from bond sales 156,912,941 54,622,631 70,194,768
Proceeds from mortgage loans 111,873 - -
Net gains/(losses) on cash and
short-term investments (19,990) - 7,988
Taxes recovered (paid) on capital
losses (gains) 2,526,724 (208,136) (3,487,953)
Capital and surplus paid-in 1,000,000 - 6,501,272
Other cash provided 1,378,538 1,144,173 3,287,422
------------- -----------
Total investments proceeds and other
cash provided 161,910,086 55,558,668 76,503,497
------------- ----------- ------------
Cost of bonds acquired 156,014,905 77,674,404 199,556,033
Cost of mortgage loans acquired 10,170,620 - -
Other cash applied 12,716 2,002,738 265,004
------------- ----------- ------------
Total investments acquired and other
cash applied 166,198,241 79,677,142 199,821,037
------------- ----------- ------------
Net change in cash and short-term
investments $ (3,646,467) (601,719) 450,184
Cash and short-term investments at
beginning of year 6,787,073 7,388,792 6,938,608
------------- ----------- ------------
Cash and short-term investments at
end of year $ 3,140,606 6,787,073 7,388,792
------------- ----------- ------------
</TABLE>
See accompanying notes to statutory financial statements
FIRST COVA LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
December 31, 1995, 1994 and 1993
(1) COMPANY OWNERSHIP AND NATURE OF BUSINESS
COMPANY OWNERSHIP
The Company is a wholly owned subsidiary of Cova Financial Services Life
Insurance Company (CFSLIC). On June 1, 1995, a subsidiary of General American
Life Insurance Company (GALIC), a Missouri domiciled life insurance company,
purchased the Companys parent and its affiliates from their previous owner,
Xerox Financial Services Incorporated (XFSI), a wholly owned subsidiary of
Xerox Corporation, for approximately $106.1 million in cash and additional
future contingent consideration. Following the acquisition, the Companys name
changed from First Xerox Life Insurance Company to First Cova Life Insurance
Company.
NATURE OF BUSINESS
The Company is licensed to do business in the state of New York. The Company
markets and services single premium deferred annuities. Most of the policies
issued present no significant mortality nor longevity risk to the Company, but
rather represent investment deposits by the policyholders. Life insurance
policies provide policy beneficiaries with mortality benefits amounting to a
multiple, which declines with age, of the original premium.
Under the deferred annuity contracts, interest rates credited to policyholder
deposits are guaranteed by the Company for periods from one to five years, but
in no case may renewal rates be less than 3%. The Company may assess
surrender fees against amounts withdrawn prior to scheduled rate reset and
adjust account values based on current crediting rates. Policyholders may
also incur certain Federal income tax penalties on withdrawals.
Approximately 99% of the Companys sales have been through two specific
distributors, Dime Agency and Advest Balanced Capital during 1993, 1994 and
1995.
(2) BASIS OF PRESENTATION
The accompanying statutory financial statements have been prepared in
conformity with accounting practices prescribed or permitted by the Insurance
Department of the State of New York, which is a comprehensive basis of
accounting other than generally accepted accounting principles. Prescribed
statutory accounting practices include state laws, regulations, and general
administrative rules, as well as a variety of publications of the National
Association of Insurance Commissioners (the Association). Permitted statutory
accounting practices encompass all accounting practices that are not
prescribed; such practices differ from state to state, may differ from company
to company within a state, and may change in the future. All material
transactions recorded by the Company during 1995, 1994 and 1993 are in
conformity with prescribed practices.
In preparing the statutory financial statements, management is required to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities as of the
date of the balance sheet and revenues and expenses for the period. Actual
results could differ significantly from those estimates. Investment valuation
is most affected by the use of estimates and assumptions.
The market value of the Companys investments is subject to the risk that
interest rates will change and cause a temporary increase or decrease in the
liquidation value of debt securities. To the extent that fluctuations in
interest rates cause the cash
flow of assets and liabilities to change, the Company might have to liquidate
assets prior to their maturity and recognize a gain or a loss. Interest rate
exposure for the investment portfolio is managed through asset/liability
management techniques
(Continued)
FIRST COVA LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
which attempt to control the risks presented by differences in the probable
cash flows and reinvestment of assets with the timing of crediting rate
changes in the Companys policies and contracts. Changes in the estimated
prepayments of mortgage-backed securities also may cause retrospective changes
in the amortization period of such securities and the related recognition of
income.
(3) BASIS OF VALUATION AND INCOME RECOGNITION OF INVESTED ASSETS
Asset values are generally stated as follows:
Bonds not backed by other loans are valued at amortized cost using the
interest method.
Loan-backed bonds, included in bonds, are valued at amortized cost.
Amortization of the discount or premium from the purchase of these securities
is recognized using a level-yield method which considers the estimated timing
and amount of prepayments of the underlying mortgage loans. Actual prepayment
experience is periodically reviewed and effective yields are recalculated when
differences arise between the prepayments originally anticipated and the
actual prepayments received and currently anticipated. When such differences
occur, the net investment in the mortgage-backed bond is adjusted to the
amount that would have existed had the new effective yield been applied since
the acquisition of the bond with a corresponding charge or credit to interest
income (the retrospective method).
Mortgage loans and policy loans are stated at the aggregate unpaid principal
value. Short-term investments are carried at cost which approximates market
value.
Investment income is recorded when earned. Realized capital gains and losses
on the sales of investments are determined on the basis of specific costs of
investments and are credited or charged to income net of federal income taxes.
(4) REVENUE AND EXPENSE RECOGNITION
Premiums and annuity considerations are credited to revenue when collected.
Expenses, including acquisition costs related to acquiring new business, are
charged to operations as incurred.
(5) ASSET VALUATION RESERVE AND INTEREST MAINTENANCE RESERVE
Life insurance companies are required to establish an Asset Valuation Reserve
(AVR) and an Interest Maintenance Reserve (IMR). The AVR provides for a
standardized statutory investment valuation reserve for bonds, preferred
stocks, short-term investments, mortgage loans, common stocks, real estate,
and other invested assets. The IMR is designed to defer net realized capital
gains and losses presumably resulting from changes in the level of interest
rates in the market and to amortize them into income over the remaining life
of the bond or mortgage loan sold. The IMR represents the unamortized portion
not yet taken into income.
FIRST COVA LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
(6) FEDERAL INCOME TAXES
Federal income taxes are charged to operations based on income that is
currently taxable. No charge to operations is made nor liability established
for the tax effect of timing differences between financial reporting and
taxable income. The Company will file a consolidated federal income tax
return for the first five months of 1995 with the Company's former ultimate
owner, Xerox Corporation, a New York corporation, along with Xerox
Corporation's other eligible subsidiaries.
For the last seven months of 1995, the Company will file a consolidated
federal income tax return with its parent company, CFSLIC.
The method of allocation between the companies for the first five months of
1995, as well as for the last seven months, are both subject to written
agreement, approved by the Board of Directors. Allocation is to be based upon
separate return calculations, adjusted for any tax deferred intercompany
transactions, with current credit for net losses to the extent recoverable in
the consolidated return. Intercompany tax balances are to be settled not
later than thirty days after related returns are filed.
Amounts payable or recoverable related to periods before June 1, 1995 are
subject to an indemnification agreement with Xerox Corporation which has the
effect that the Company is not at risk for any income taxes nor entitled to
recoveries related to those periods.
The actual federal income tax expense differed from the expected tax expense
computed by applying the U.S. federal statutory rate to the 1995, 1994 and
1993 net gain from operations before federal income taxes as follows (000's
omitted):
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
Computed expected tax (benefit) expense $(1,064) 35.0% $ 345 35.0% $ 3,444 35.0%
Tax basis reserve adjustment 847 (27.9) 80 8.1 38 0.4
IMR amortization 74 (2.4) (98) (9.9) (139) (1.4)
Proxy tax on insurance acquisition costs (455) 15.0 1 .1 410 4.2
Adjustment for prior years - - (444) (45.0) - -
Intangible Amortization (126) 4.1 - - - -
Tax-exempt income, net - - (963) (97.7) - -
Coinsurance from affiliate - - - - (2,093) (21.3)
Other (283) 9.3 34 3.5 (57) (0.6)
$(1,007) 33.1% $(1,045) (105.9)% $ 1,603 16.3%
======== ====== ======== ======== ======== ======
</TABLE>
The Budget Reconciliation Act of 1990 requires life insurers to capitalize
and amortize a "proxy" amount of policy acquisition costs beginning in 1990.
This proxy amount is based on a percentage of the life insurance company's
premium income and not on actual policy acquisition costs.
FIRST COVA LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
(7) INFORMATION CONCERNING PARENT AND AFFILIATES
The Company was organized under the laws of the State of New York on December
31, 1992 and became licensed to do business in the State of New York on March
12, 1993. The Company is a wholly owned subsidiary of CFSLIC (formerly Xerox
Financial Services Life Insurance Company), a Missouri life insurance company.
On December 31, 1992 Xerox Financial Services Life Insurance Company acquired
Wausau Underwriters Life Insurance Company (Wausau Life), a stock life
insurance company organized under the laws of the state of Wisconsin and
licensed to transact life insurance in Wisconsin and New York. On April 16,
1993 Wausau Life was merged into the Company, with the Company as the
surviving corporation.
The Company has entered into a service agreement and an investment accounting
service agreement with its parent, CFSLIC. The Company has also entered into
an investment services agreement with General American Investment Management
Company, a Missouri corporation and an affiliate of the Company, pursuant to
which the Company receives investment advice. Under the terms of the
agreements, the companies (Service Providers) perform various services for the
Company which include investment, underwriting, claims, and certain
administrative functions. The Service Providers are reimbursed for their
services. Expenses and fees paid to affiliated companies during 1995, 1994
and 1993 were $349,771, $348,262 and $344,896, respectively.
(8) CAPITAL STOCK AND SURPLUS RESTRICTIONS
The amount of dividends which can be paid by State of New York insurance
companies to shareholders is subject to prior approval of the Insurance
Commissioner. There have been no other restrictions placed on the unassigned
surplus funds.
(9) FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures About Fair
Value of Financial Instruments" (SFAS 107), extends fair value disclosure
practices with regard to financial instruments, both assets and liabilities,
for which it is practical to estimate fair value. In cases where quoted
market prices are not readily available, fair values are based on estimates
that use present value or other valuation techniques.
These techniques are significantly affected by the assumptions used, including
the discount rate and estimates of future cash flows. Although fair value
estimates are calculated using assumptions that management believes are
appropriate, changes in assumptions or market conditions could cause these
estimates to vary materially. In that regard, the derived fair value
estimates cannot be substantiated by comparison to independent markets and, in
many cases, could not be realized in the immediate settlement of the
instruments. SFAS 107 excludes certain financial instruments and all
nonfinancial instruments from its disclosure requirements. Accordingly, the
aggregate fair value amounts presented do not represent the underlying value
of the Company.
The following methods and assumptions were used by the Company in estimating
its fair value disclosures for financial instruments:
FIRST COVA LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
CASH AND CASH EQUIVALENTS, SHORT-TERM INVESTMENTS AND ACCRUED INVESTMENT
INCOME:
The carrying value amounts reported in the balance sheets for these
instruments approximate their fair values.
INVESTMENT SECURITIES (INCLUDING MORTGAGE-BACKED SECURITIES):
Fair value for bonds are based on quoted market prices, where available. For
bonds not actively traded, fair values are estimated using values obtained
from independent pricing services. In some cases, such as private placements
and certain mortgage-backed securities, fair values are estimated by
discounting expected future cash flows using a current market rate applicable
to the yield, credit quality, and maturity of the investments. (See note 11
for fair value disclosures). Fair values for mortgages are based on
management estimates and incorporate independent appraisals of underlying
property. As of December 31, 1995, fair value of the Company's mortgage loans
approximate the carrying value.
INVESTMENT CONTRACTS:
The Companys policy contracts require the beneficiaries commence receipt of
payments by the later of age 85 or 10 years after purchase, and substantially
all permit earlier surrenders, generally subject to fees and adjustments.
Fair values for the Companys liabilities under investment type contracts are
estimated as the amount payable on demand. As of December 31, 1995 the cash
surrender value of policyholder funds on deposit was $155,449,472 and the
carrying value was $159,232,113.
(10) LIFE AND ANNUITY ACTUARIAL RESERVES
There are no deferred fractional premiums on any policies sold or currently in
force. There are no premiums beyond the date of death. There are no required
reserves for the waiver of deferred fractionals or refund of premiums beyond
the date of death.
Substandard policies are valued using a modification of the standard valuation
tables based on the substandard rating. The modification is 25% additional
mortality increase of the standard table for each table rating.
As of December 31, 1995, the Company had no insurance in force for which the
gross premiums were less than the net premiums according to the standard
valuation set by the State of New York.
The tabular interest has been determined from the basic data for the
calculation of policy reserves.
Tabular interest for funds not involving life contingencies for each valuation
rate and contractual guaranteed rate was determined as the statutory amount
required to support the required statutory reserve based on the Commissioner's
annuity reserve valuation method. Generally it is 1/100 of the product of
such valuation rate of interest times the mean funds at the beginning and end
of the valuation period or issue date of the policy if less.
The life and annuity actuarial reserves as provided in the accompanying
statutory financial statements segregated by type and valuation
characteristics for 1995 are given below.
FIRST COVA LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
<TABLE>
<CAPTION>
1995 1994 Valuation Withdrawal
Type Reserve Reserve basic/rate characteristic
- ---------------------- ------------- ------------ ---------------------------------- -----------------------
<S> <C> <C> <C> <C>
Structured Settlements $ - 518,456 Group conversion excess mortality No withdrawal permitted
Structured Settlements 997,873 969,933 1983 IAM 8.25% No withdrawal permitted
SPDA - 1 year 11,711,777 11,651,080 CARVM 5.75% - 7.00% Fixed surrender charge
SPDA - 5 year 13,103,310 12,659,501 CARVM 7.00% - 8.00% Withdrawal limited to
10% per year
Ordinary Life 104,780 103,032 1958 CSO 3.5% NL Fixed surrender charge
Ordinary Life 31,786 28,057 1980 CSO CRVM Fixed surrender charge
Ordinary Life 207,602 191,334 1980 CSO 4.5% NO Fixed surrender charge
Ordinary Life 1,600 1,642 Group conversion excess mortality Fixed surrender charge
Ordinary Life 2,544 2,423 Guaranteed insurability Fixed surrender charge
Ordinary Life 19,738,477 20,265,767 1958 CSO ALB 5.5% NL Fixed surrender charge
Group Life 32,132,826 33,214,196 1958 CSO ALB 5.5% NL Fixed surrender charge
Ordinary Life 19,945,505 20,043,530 1980 CSO ANB Male 5.5% NL Fixed surrender charge
Group Life 20,927,470 21,070,781 1980 CSO ANB Male 5.5% NL Fixed surrender charge
Ordinary Life 17,864,242 17,761,006 1980 CSO ANB Female 5.5% NL Fixed surrender charge
Group Life 20,210,970 19,928,114 1980 CSO ANB Female 5.5% NL Fixed surrender charge
Immediate payment of
claim reserves 3,597,536 727,559 - -
Miscellaneous 6,867 6,921 - -
Reinsurance ceded (1,353,052) (1,821,799) - -
$159,232,113 157,321,533
------------- ------------
</TABLE>
FIRST COVA LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
(11) INVESTMENTS
The cost or amortized cost and estimated fair value of bonds at December 31,
1995 and 1994 is as follows (000's omitted):
<TABLE>
<CAPTION>
1995
-----------
Cost or Gross Gross Estimated
amortized unrealized unrealized fair Carrying
cost gains losses value value
---------- ----------- --------- --------
<S> <C> <C> <C> <C> <C>
Bonds:
Governments $ 737 6 - 743 737
States, territories,
and possessions - - - - -
Political subdivisions - - - - -
Nonguaranteed bonds -
U.S. government 42,749 1,247 (33) 43,963 42,749
Public utilities 5,000 175 - 5,175 5,000
Industrial and miscellaneous 106,300 2,521 (588) 108,233 106,300
Total bonds $ 154,786 3,949 (621) 158,114 154,786
---------- ---------- ----------- --------- --------
1994
-----------
Cost or Gross Gross Estimated
amortized unrealized unrealized fair Carrying
cost gains losses value value
---------- ---------- ----------- --------- --------
Bonds:
Governments $ 708 - (74) 634 708
States, territories,
and possessions 10,945 294 - 11,239 10,945
Political subdivisions 7,314 729 - 8,043 7,314
Nonguaranteed bonds -
U.S. government 50,226 - (5,443) 44,783 50,226
Public utilities 26,069 151 (2,468) 23,752 26,069
Industrial and
Miscellaneous 68,483 13 (6,844) 61,652 68,483
---------- ---------- ----------- --------- --------
Total bonds $ 163,745 1,187 (14,829) 150,103 163,745
---------- ---------- ----------- --------- --------
</TABLE>
FIRST COVA LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
The amortized cost and estimated fair value of bonds at December 31, 1995, by
contractual maturity, are shown in the following table. Expected maturities
will differ from contractual maturities because borrowers may have the right
to call or prepay obligations with or without call or prepayment penalties.
Maturities of mortgage-backed securities will be substantially shorter than
their contractual maturity because they may require monthly principal
installments and mortgages may prepay principal.
<TABLE>
<CAPTION>
Estimated
Carrying fair
value value
(in thousands of dollars)
<S> <C> <C>
Due in one year or less $ 5,318 5,378
Due after one year through five years 15,293 15,773
Due after five years through ten years 50,352 52,041
Due after ten years 10,735 10,945
Mortgage-backed securities 73,088 73,977
Total $ 154,786 158,114
==============
</TABLE>
Approximately 60% of the Company's bonds are of highest quality, 39% are of
high quality, and 1% are of medium quality based on NAIC rating methodology.
No provision was made for possible decline in the market value of individual
bonds, other than the establishment of AVR, as of December 31, 1995 or 1994 as
the Company intends to hold the investments until such time as no significant
loss would result.
The fair value of mortgage loans on real estate were $10,059,682, which
approximates their unpaid principle balance. The Company has no impaired
loans and no valuation allowances established for potential losses on mortgage
loans at December 31, 1995.
The components of net investment income were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Income on bonds 7,907 12,999 9,553
Income on mortgage loans 373 - -
Income on short-term investments 3,132 332 396
Income on cash on deposit - - -
Income on policy loans 1,281 1,182 791
Miscellaneous interest - - 6
Total investment income 12,693 14,513 10,746
Investment expenses (167) (246) (160)
Net investment income 12,526 14,267 10,586
Realized capital gains/(losses) were:
follows:
Bonds (8,136) 286 9,958
Short-term investments (20) - 8
Net realized gains/(losses) on investments (8,156) 286 9,966
</TABLE>
FIRST COVA LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
Proceeds from sales of investments in bonds during 1995 were $156,912,944.
Gross gains of $1,830,297 and gross losses of $9,966,745 were realized on
those sales. Included in these amounts were gains of $293,977 and losses of $0
on non-investment grade securities.
Proceeds from sales of investments in bonds during 1994 were $54,622,631.
Gross gains of $941,714 and gross losses of $656,072 were realized on those
sales.
Proceeds from sales of investments in bonds in 1993 were $70,194,768. Gross
gains of $9,957,595 and gross losses of $0 were realized on those sales.
Bonds with a book value of approximately $771,867 at December 31, 1995 were
deposited with governmental authorities as required by law.
As of December 31, 1995 the Company held the following individual securities
which exceeded 10% of shareholders' equity:
<TABLE>
<CAPTION>
Long-term Debt Amortized Long-term Debt
Amortized
Securities Cost Securities Cost
<S> <C> <C> <C>
Countrywide Mtg 1993-12 A4 $8,849,196 Telecommunications Inc $4,707,031
Capital Desjardin Inc 144A 6,000,000 Nabisco Inc 4,491,761
Time Warner 5,572,607 Res Funding Mtg Svcs 1993-S26 A8 4,012,328
American Airlines 5,398,931 Union Acceptance Corp Senior Notes 4,000,000
Develop Div Rlty 5,090,900 Independent Natl Mtg Corp 1995-M A2 3,997,516
Price Costco Inc 5,061,616 Pru Home Mtg Sec 1993 Ser 31-A10 3,782,629
Kirby Corp 5,044,336 Sears Mtg Securities 1993-7 T5 3,725,555
Swire Pacific Finance Ltd 5,003,560 S-B Properties Ltd Commercial Mtg 3,684,850
CS First Bost Fin Co Sr Sec 1995-A 144A 5,000,000 Cary Robert Falk 3,184,414
Washington Water Power Co 5,000,000 Shawmutt National Bank 3,154,147
Advanta Corp 4,917,535 Salem Real Estate Commercial Mtg 2,204,252
RJR Nabisco Inc 4,871,332 John Hancock Capital Corp Comm Paper 2,164,645
Salomon Inc 4,834,305
</TABLE>
As of December 31, 1994 the Company held the following individual securities
which exceeded 10% of shareholders' equity:
<TABLE>
<CAPTION>
Long-term Debt Amortized Long-term Debt Amortized
Securities Cost Securities Cost
<S> <C> <C> <C>
Phillips Petroleum $11,120,220 Washington Water Power Co $5,000,000
Countrywide Mtg 1994 Ser L-AB 10,603,498 American Airlines Etc 1991 Ser B2 5,000,000
DQU II Funding 9,086,596 Advanta Corp 4,828,795
Louisiana Power & Light (Waterford 3) 6,000,000 New York City 4,684,550
United Airlines 1991 Etc Ser A2 6,000,000 Res Funding Corp 1993 Ser S26-A8 4,013,228
Oryx Energy 5,982,618 System Energy Resources 4,000,000
California St Dept Water Cent VLY E 5,945,402 Pru Home Mtg Sec 1993 Ser 31-A10 3,787,810
G E Capital Mtg 1994 Ser 4-A3 5,444,357 Shawmutt National Bank 3,186,830
Chase Mtg Fin Corp 1993 Ser J2-A8 5,015,800 Calhoun County Michigan 2,629,585
Alaska Hsg Finance Corp 5,000,000 First USA Bank 2,500,000
</TABLE>
FIRST COVA LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
(12) NON-ADMITTED ASSETS
Assets must be included in the statements of assets and liabilities at
admitted asset value, and non-admitted assets, principally agents balances,
must be excluded through a charge against unassigned surplus.
(13) REINSURANCE
In 1993 the Company entered into a reinsurance treaty with its parent, CFSLIC.
The underlying block of business assumed was single premium whole life
policies. Reserves assumed at December 31, 1995 and 1994 approximated $134.4
million and $133.0 million, respectively.
Wausau Life maintained a closed block of whole life policies and structured
settlements which were ceded 100% to Nationwide Life Insurance Company as of
the purchase date of Wausau Life, December 31, 1992.
Total reserves ceded to Nationwide at December 31, 1995 and 1994 were
$1,353,052 and $1,303,343 respectively.
(14) POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
In December 1992, the National Association of Insurance Commissioners issued
guidelines regarding the accrual of postretirement health care benefits. The
effective date of implementation was January 1, 1993. The effects of
implementing these guidelines are not considered material.
(15) RISK-BASED CAPITAL
The National Association of Insurance Commissioners has developed certain
Risk-based Capital (RBC) requirements for life insurers. If prescribed levels
of RBC are not maintained, certain actions may be required on the part of the
Company or its regulators. At December 31, 1995 the Companys Total Adjusted
Capital and Authorized Control Level - RBC were $22,713,742 and $1,883,600,
respectively. At this level of adjusted capital, no action is required.
(16) GUARANTY FUND ASSESSMENTS
The Company participates, along with all life insurance companies licensed in
New York, in an association formed to guarantee benefits to policyholders of
insolvent life insurance companies. Under the state law, the Company is
contingently liable for its share of claims covered by the guaranty
association for insolvencies incurred through 1995 but for which assessments
have not yet been determined.
The Company has not established an estimated liability for unassessed
guarantee fund claims incurred prior to December 31, 1995. Management
believes that such assessments would not have a material adverse impact on the
financial statements.
(17) GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
Generally accepted accounting principles (GAAP) differ in certain respects
from the accounting practices prescribed or permitted by insurance regulatory
authorities (statutory accounting principles).
FIRST COVA LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
Major differences arise from premium and annuity considerations being recorded
as revenue when collected on a statutory basis whereas premiums on a GAAP
basis are recorded as deposits and revenue is composed of sales loads, policy
fees and surrender charges.
Under GAAP, reinsurance ceded recoverables are recorded as assets whereas
statutory accounting permits reinsurance recoverables to be netted against the
related direct liabilities.
Other major differences arise principally from the immediate expense
recognition of policy acquisition costs and intangible assets for statutory
reporting, determination of policy reserves based on different discount rates
and methods, the non-recognition of financial reinsurance for GAAP reporting,
the establishment of an Asset Valuation Reserve as a contingent liability
based on the credit quality of the Company's investment securities on a
statutory basis, and the establishment of an Interest Maintenance Reserve on a
statutory basis as an unearned liability to defer the realized gains and
losses of fixed income investments presumably resulting from changes to
interest rates and amortize them into income over the remaining life of the
investment sold.
In addition, adjustments to record the carrying values of debt securities and
certain equity securities at market are applied only under GAAP reporting and
capital contributions in the form of notes receivable from an affiliated
company are not recognized under GAAP reporting.
Another difference arises from Federal income taxes being charged to
operations based on income that is currently taxable. Deferred income taxes
are not provided for on a statutory basis for the tax effect of temporary
differences between book and tax basis of assets and liabilities.
Purchase accounting creates another difference as it requires the restatement
of GAAP assets and liabilities to their estimated fair values and shareholders
equity to the net purchase price. Statutory accounting does not recognize the
purchase method of accounting.
(18) COMMITMENTS AND CONTINGENCIES
In the ordinary course of business the Company is involved in various legal
actions for which it establishes reserves where appropriate. In the opinion
of the Company's management, based upon the advice of legal counsel, the
resolution of such litigation is not expected to have a material adverse
effect on the statutory financial statements. Under an indemnification
agreement with Xerox Corporation, the Company is not liable for any
litigation expenses arising from events occurring prior to the sale of the
Company on June 1, 1995.
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
<TABLE>
<CAPTION>
<S> <C> <C>
a. Financial Statements
---------------------------------------------------------------
The following financial statements of the Company
are included in Part B hereof:
1. Independent Auditors' Report.
2. Statutory Statements of Admitted Assets, Liabilities, and
Capital Stock and Surplus - December 31, 1995 and 1994.
3. Statutory Statements of Operations for the Years Ended
December 31, 1995, 1994 and 1993.
4. Statutory Statements of Capital Stock and Surplus for
the Years Ended December 31, 1995, 1994 and 1993.
5. Statutory Statements of Cash Flow for the Years Ended
December 31, 1995, 1994 and 1993.
6. Notes to Statutory Financial Statements - December 31, 1995,
1994 and 1993.
b. Exhibits
---------------------------------------------------------------
1. Resolution of Board of Directors of the Company authorizing the
establishment of the Variable Account.*
2. Not Applicable.
3. Principal Underwriter's Agreement.*
4. Individual Flexible Purchase Payment Deferred Variable Annuity
Contract.
(i) Rebalancing Transfers Endorsement.
(ii) Automatic Withdrawals Endorsement.
(iii)Dollar Cost Averaging Endorsement.
5. Application for Variable Annuity.
6.(i) Copy of Articles of Incorporation of the Company.*
(ii) Copy of the Bylaws of the Company.*
7. Not Applicable.
8. Not Applicable.
9. Opinion and Consent of Counsel.
10. Consent of Independent Accountants.
11. Not Applicable.
12. Not Applicable.
13. Calculation of Performance Information.
14. Company Organizational Chart.
<FN>
* incorporated by reference to Registrant's initial filing on
Form N-4 (File No. 811-8306) as filed on January 21, 1994.
</TABLE>
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
The following are the Officers and Directors of the Company:
<TABLE>
<CAPTION>
<S> <C>
Name and Principal Positions and Offices
Business Address with Depositor
Leonard M. Rubenstein Chairman of the Board and Director
700 Market Street
St. Louis, MO 63101
Lorry J. Stensrud President and Director
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181-4644
John W. Barber Director
13045 Tesson Ferry Road
St. Louis, MO 63128
Norse M. Blazzard Director
101 North Ocean Drive
Ocean Walk Mall, Suite 213
Hollywood, FL 33019
Judy M. Drew Vice President
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181-4644
Francis A. Goodhue III Director
Morgan Guaranty
9 West 57th Street
New York, NY 10019
Patricia E. Gubbe Vice President
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181-4644
Philip A. Haley Vice President
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181-4644
Richard A. Hemmings Director
Lord, Bissell & Brook
115 S. LaSalle Street
Chicago, IL 60603
Eric T. Henry Vice President
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181-4644
Jeffery K. Hoelzel Vice President, General Coun-
One Tower Lane, Suite 3000 sel, Secretary and Director
Oakbrook Terrace, IL 60181-4644
J. Robert Hopson Vice President,
One Tower Lane, Suite 3000 Chief Actuary and Director
Oakbrook Terrace, IL 60181-4644
E. Thomas Hughes, Jr. Treasurer
700 Market St.
St. Louis, MO 63101
Sum Leong Vice President, Chief
120 Broadway Administrative Officer
New York, NY 10271 and Assistant Secretary
William C. Mair Vice President,
One Tower Lane, Suite 3000 Controller and Director
Oakbrook Terrace, IL 60181-4644
Matthew P. McCauley Assistant Secretary and Director
700 Market St.
St. Louis, MO 63101
Patrice L. Peltier Vice President and Director
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181-4644
Thomas A. Price Director
Bank of New York
1 Wall Street
New York, NY 10286
Br. Thomas J. Scanlan, F.S.C. Director
Manhattan College
Riverdale, NY 10471
</TABLE>
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
A company organizational chart is set forth in Exhibit 14.
ITEM 27. NUMBER OF CONTRACT OWNERS
Not Applicable.
ITEM 28. INDEMNIFICATION
The Bylaws of the Company (Article II, Section 13) provide that:
Each person who is or was a director, officer or employee of the Corporation
or is or was serving at the request of the Corporation as a director, officer
or employee of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise (including the heirs, executors, administrators
or estate of such person) shall be indemnified by the Corporation as of right
to the full extent that officers and directors are permitted to be indemnified
by the laws of the State of New York, as now in effect and as hereafter amended,
against any liability, judgment, fine, amount paid in settlement,cost orexpense
including attorneys' fees) asserted or threatened against or incurred by such
person in his capacity as or arising out of his status as a director, officer
or employee of the Corporation or if serving at the request of the Corporation,
as a director, officer or employee of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise. The indemnification
provided by this By-Law provision shall not be exclusive of any other rights to
which those indemnified may be entitled under any other By-Law or under any
agreement, resolution of shareholders or directors or otherwise, which forms of
indemnification are hereby expressly authorized, and shall not limit in any way
any right which the Corporation may have to make different or further
indemnification with respect to the same or different persons or classes of
persons. Notwithstanding the foregoing, a director shall not be entitled to
indemnification for liability to the Corporation or any of its shareholders
under the By-Laws or under any agreement or resolution of shareholders or
directors, if such liability is of the type described in subsections (i) or
(ii) of Section 10 of the Corporation's Certificate of Incorporation and
Charter.
The Corporation shall have the power, in furtherance of the provisions of this
Section 13, to apply for, purchase and maintain insurance of the type and in
such amounts as is or may hereafter be permitted by Section 726 of the Business
Corporation Law.
No payment of indemnification, advancement or allowance under Sections 721 to
726, inclusive, of the Business Corporation Law shall be made unless a notice
has been filed with the Superintendent of Insurance of the State of New York,
not less than thirty days prior to such payment, specifying the payees, the
amounts, the manner in which such payment is authorized and the nature and
status, at the time of such notice, of the litigation or threatened litigation.
If any action with respect to indemnification of directors and officers of the
Corporation shall be taken by resolution of directors, or by agreement or
otherwise, a notice shall be filed with the Superintended of Insurance of the
State of New York not less than thirty days thereafter specifying the action
taken.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted directors and officers or controlling persons of the
Company pursuant to the foregoing, or otherwise, the Company 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,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company
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 Company 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.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Not Applicable.
(b) Cova Life Sales Company is the principal underwriter for the
Contracts. The following persons are the officers and directors of Cova Life
Sales Company. The principal business address for each officer and director
of Cova Life Sales Company is One Tower Lane, Suite 3000, Oakbrook Terrace,
Illinois 60181-4644.
<TABLE>
<CAPTION>
<S> <C>
Name and Principal Positions and Offices
Business Address with Underwriter
Judy M. Drew President, Chief Operations Officer and Director
Lorry J. Stensrud Director
Patricia E. Gubbe Vice President and Chief Compliance Officer
Patrice L. Peltier Vice President and Director
William C. Mair Director
Jeffery K. Hoelzel Secretary
Philip A. Haley Vice President
Frances S. Cook Assistant Secretary
Robert A. Miner Treasurer
</TABLE>
(c) Not Applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Christopher Harden, whose address is One Tower Lane, Suite 3000, Oakbrook
Terrace, Illinois 60181-4644 maintains physical possession of the accounts,
books or documents of the Variable Account required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the rules promulgated
thereunder.
ITEM 31. MANAGEMENT SERVICES
Not Applicable.
ITEM 32. UNDERTAKINGS
a. Registrant hereby undertakes to file a post-effective amendment to
this registration statement as frequently as is necessary to ensure that the
audited financial statements in the registration statement are never more than
sixteen (16) months old for so long as payment under the variable annuity
contracts may be accepted.
b. Registrant hereby undertakes to include either (1) as part of any
application to purchase a contract offered by the Prospectus, a space that an
applicant can check to request a Statement of Additional Information, or (2) a
postcard or similar written communication affixed to or included in the
Prospectus that the applicant can remove to send for a Statement of Additional
Information.
c. Registrant hereby undertakes to deliver any Statement of Additional
Information and any financial statement required to be made available under
this Form promptly upon written or oral request.
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that has caused this Registration Statement to
be signed on its behalf, in the City of Oakbrook Terrace, and State of
Illinois on this 14th day of May, 1996.
<TABLE>
<CAPTION>
<S> <C>
FIRST COVA VARIABLE ANNUITY ACCOUNT ONE
(Registrant)
By: FIRST COVA LIFE INSURANCE COMPANY
By: /s/ JEFFERY K. HOELZEL
____________________________________
Jeffery K. Hoelzel
FIRST COVA LIFE INSURANCE COMPANY
Depositor
By: /s/ JEFFERY K. HOELZEL
____________________________________
Jeffery K. Hoelzel
</TABLE>
As required by the Securities Act of 1933, this Registration Statement has
been signed by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
/S/ LORRY J. STENSRUD President and Director 5/14/96
- ---------------------- -------
Lorry J. Stensrud Date
Chairman of the Board and
- ---------------------- Director ------
Leonard M. Rubenstein Date
/s/ J. ROBERT HOPSON Director 5/14/96
- ---------------------- -------
J. Robert Hopson Date
/s/ WILLIAM C. MAIR Controller and Director 5/14/96
- ---------------------- -------
William C. Mair Date
/s/ JEFFERY K. HOELZEL Director 5/14/96
- ---------------------- -------
Jeffery K. Hoelzel Date
/s/ MATTHEW P. MCCAULEY Director 5/14/96
- ------------------------ -------
Matthew P. McCauley Date
Director
- ---------------------- -------
Patrice L. Peltier Date
Director
- ---------------------- -------
John W. Barber Date
/s/ NORSE N. BLAZZARD 5/14/96
- ---------------------- Director -------
Norse N. Blazzard Date
/s/ FRANCIS A. GOODHUE III 5/14/96
- --------------------------- Director -------
Francis A. Goodhue III Date
/s/ RICHARD A. HEMMINGS 5/14/96
- ---------------------- Director -------
Richard A. Hemmings Date
/s/ THOMAS A. PRICE 5/14/96
- ---------------------- Director -------
Thomas A. Price Date
/s/ THOMAS J. SCANLAN 5/14/96
- ---------------------- Director -------
Thomas J. Scanlan, FSC Date
</TABLE>
*By: /s/ JEFFERY K. HOELZEL
____________________________________
Jeffery K. Hoelzel Attorney-in-Fact
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Norse N. Blazzard, a Director of
First Cova Life Insurance Company, a corporation duly organized under the laws
of the State of New York, do hereby appoint Lorry J. Stensrud and/or Jeffery
K. Hoelzel, or either one of the foregoing individually, as my attorney and
agent, for me, and in my name as a Director of this Company on behalf of the
Company or otherwise, with full power to execute, deliver and file with the
Securities and Exchange Commission all documents required for registration of
variable annuity and variable life insurance contracts under the Securities
Act of 1933, as amended, and the registration of unit investment trusts under
the Investment Company Act of 1940, as amended, and to do and perform each and
every act that said attorney may deem necessary or advisable to comply with
the intent of the aforesaid Acts.
WITNESS my hand this 14th day of May, 1996.
WITNESS:
/s/ ELAINE MAHAFFEY /s/ NORSE N. BLAZZARD
________________________________ ______________________________________
Norse N. Blazzard
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Francis A. Goodhue III, a
Director of First Cova Life Insurance Company, a corporation duly organized
under the laws of the State of New York, do hereby appoint Lorry J. Stensrud
and/or Jeffery K. Hoelzel, or either one of the foregoing individually, as my
attorney and agent, for me, and in my name as a Director of this Company on
behalf of the Company or otherwise, with full power to execute, deliver and
file with the Securities and Exchange Commission all documents required for
registration of variable annuity and variable life insurance contracts under
the Securities Act of 1933, as amended, and the registration of unit
investment trusts under the Investment Company Act of 1940, as amended, and to
do and perform each and every act that said attorney may deem necessary or
advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand this 13th day of May, 1996.
WITNESS:
/s/ E. SMYTH /s/ FRANCIS A. GOODHUE III
________________________________ ______________________________________
Francis A. Goodhue III
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Richard A. Hemmings, a Director
of First Cova Life Insurance Company, a corporation duly organized under the
laws of the State of New York, do hereby appoint Lorry J. Stensrud and/or
Jeffery K. Hoelzel, or either one of the foregoing individually, as my
attorney and agent, for me, and in my name as a Director of this Company on
behalf of the Company or otherwise, with full power to execute, deliver and
file with the Securities and Exchange Commission all documents required for
registration of variable annuity and variable life insurance contracts under
the Securities Act of 1933, as amended, and the registration of unit
investment trusts under the Investment Company Act of 1940, as amended, and to
do and perform each and every act that said attorney may deem necessary or
advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand this 13th day of May, 1996.
WITNESS:
/S/ HELEN M. DULEK /s/ RICHARD A. HEMMINGS
________________________________ ______________________________________
Richard A. Hemmings
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Jeffery K. Hoelzel, a Director of
First Cova Life Insurance Company, a corporation duly organized under the laws
of the State of New York, do hereby appoint Lorry J. Stensrud as my attorney
and agent, for me, and in my name as a Director of this Company on behalf of
the Company or otherwise, with full power to execute, deliver and file with
the Securities and Exchange Commission all documents required for registration
of variable annuity and variable life insurance contracts under the Securities
Act of 1933, as amended, and the registration of unit investment trusts under
the Investment Company Act of 1940, as amended, and to do and perform each and
every act that said attorney may deem necessary or advisable to comply with
the intent of the aforesaid Acts.
WITNESS my hand this 9th day of May, 1996.
WITNESS:
/s/ DOLORES DELGADO /s/ JEFFERY K. HOELZEL
________________________________ ______________________________________
Jeffery K. Hoelzel
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, J. Robert Hopson, a Director of
First Cova Life Insurance Company, a corporation duly organized under the laws
of the State of New York, do hereby appoint Lorry J. Stensrud and/or Jeffery
K. Hoelzel, or either one of the foregoing individually, as my attorney and
agent, for me, and in my name as a Director of this Company on behalf of the
Company or otherwise, with full power to execute, deliver and file with the
Securities and Exchange Commission all documents required for registration of
variable annuity and variable life insurance contracts under the Securities
Act of 1933, as amended, and the registration of unit investment trusts under
the Investment Company Act of 1940, as amended, and to do and perform each and
every act that said attorney may deem necessary or advisable to comply with
the intent of the aforesaid Acts.
WITNESS my hand this 13th day of May, 1996.
WITNESS:
/s/ DOLORES DELGADO /s/ J. ROBERT HOPSON
________________________________ ______________________________________
J. Robert Hopson
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, William C. Mair, Senior Vice
President and Controller and a Director of First Cova Life Insurance Company,
a corporation duly organized under the laws of the State of New York, do
hereby appoint Lorry J. Stensrud and/or Jeffery K. Hoelzel, or either one of
the foregoing individually, as my attorney and agent, for me, and in my name
as Senior Vice President and Controller and a Director of this Company on
behalf of the Company or otherwise, with full power to execute, deliver and
file with the Securities and Exchange Commission all documents required for
registration of variable annuity and variable life insurance contracts under
the Securities Act of 1933, as amended, and the registration of unit
investment trusts under the Investment Company Act of 1940, as amended, and to
do and perform each and every act that said attorney may deem necessary or
advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand this 14th day of May, 1996.
WITNESS:
/s/ DOLORES DELGADO /s/ WILLIAM C. MAIR
________________________________ ______________________________________
William C. Mair
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Matthew P. McCauley, a Director
of First Cova Life Insurance Company, a corporation duly organized under the
laws of the State of New York, do hereby appoint Lorry J. Stensrud and/or
Jeffery K. Hoelzel, or either one of the foregoing individually, as my
attorney and agent, for me, and in my name as a Director of this Company on
behalf of the Company or otherwise, with full power to execute, deliver and
file with the Securities and Exchange Commission all documents required for
registration of variable annuity and variable life insurance contracts under
the Securities Act of 1933, as amended, and the registration of unit
investment trusts under the Investment Company Act of 1940, as amended, and to
do and perform each and every act that said attorney may deem necessary or
advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand this 13th day of May, 1996.
WITNESS:
/s/ VICTORIA QUINT /s/ MATTHEW P. MCCAULEY
________________________________ ______________________________________
Matthew P. McCauley
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Thomas A. Price, a Director of
First Cova Life Insurance Company, a corporation duly organized under the laws
of the State of New York, do hereby appoint Lorry J. Stensrud and/or Jeffery
K. Hoelzel, or either one of the foregoing individually, as my attorney and
agent, for me, and in my name as a Director of this Company on behalf of the
Company or otherwise, with full power to execute, deliver and file with the
Securities and Exchange Commission all documents required for registration of
variable annuity and variable life insurance contracts under the Securities
Act of 1933, as amended, and the registration of unit investment trusts under
the Investment Company Act of 1940, as amended, and to do and perform each and
every act that said attorney may deem necessary or advisable to comply with
the intent of the aforesaid Acts.
WITNESS my hand this 13th day of May, 1996.
WITNESS:
/s/ RICHARD ALNESS /s/ THOMAS A. PRICE
________________________________ ______________________________________
Thomas A. Price
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Thomas J. Scanlan, FSC, a
Director of First Cova Life Insurance Company, a corporation duly organized
under the laws of the State of New York, do hereby appoint Lorry J. Stensrud
and/or Jeffery K. Hoelzel, or either one of the foregoing individually, as my
attorney and agent, for me, and in my name as a Director of this Company on
behalf of the Company or otherwise, with full power to execute, deliver and
file with the Securities and Exchange Commission all documents required for
registration of variable annuity and variable life insurance contracts under
the Securities Act of 1933, as amended, and the registration of unit
investment trusts under the Investment Company Act of 1940, as amended, and to
do and perform each and every act that said attorney may deem necessary or
advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand this 13th day of May, 1996.
WITNESS:
/s/ ANN C. CLOHESSY /s/ THOMAS J. SCANLAN, FSC
________________________________ ______________________________________
Thomas J. Scanlan, FSC
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Lorry J. Stensrud, President and
a Director of First Cova Life Insurance Company, a corporation duly organized
under the laws of the State of New York, do hereby appoint Jeffery K. Hoelzel,
as my attorney and agent, for me, and in my name as President and a Director
of this Company on behalf of the Company or otherwise, with full power to
execute, deliver and file with the Securities and Exchange Commission all
documents required for registration of variable annuity and variable life
insurance contracts under the Securities Act of 1933, as amended, and the
registration of unit investment trusts under the Investment Company Act of
1940, as amended, and to do and perform each and every act that said attorney
may deem necessary or advisable to comply with the intent of the aforesaid
Acts.
WITNESS my hand this 14th day of May, 1996.
WITNESS:
/s/ DOLORES DELGADO /s/ LORRY J. STENSRUD
________________________________ ______________________________________
Lorry J. Stensrud
INDEX TO EXHIBITS
EXHIBIT NO.
99.B4 Individual Flexible Purchase Payment Deferred Variable
Annuity Contract
99.B4(i) Rebalancing Transfers Endorsement
99.B4(ii) Automatic Withdrawals Endorsement
99.B4(iii) Dollar Cost Averaging Transfers Endorsement
99.B5 Application for Variable Annuity
99.B9 Opinion and Consent of Counsel
99.B10 Consent of Independent Accountants
99.B13 Calculation of Performance Information
99.B14 Company Organizational Chart
EXHIBITS
TO
PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM N-4
FOR
FIRST COVA VARIABLE ANNUITY ACCOUNT ONE
COVA LIFE INSURANCE COMPANY
FIRST COVA LIFE INSURANCE COMPANY
A NEW YORK STOCK INSURANCE COMPANY
120 BROADWAY
NEW YORK, NEW YORK 10271
FIRST COVA LIFE INSURANCE COMPANY (the "Company") will make Annuity Payments
to the Annuitant starting on the Annuity Date subject to the terms of this
Contract.
This Contract is issued in return for the Application and payment of the
initial Purchase Payment. A copy of the Application is attached to and made a
part of the Contract.
This is a legal contract between the Owner and the Company.
TEN DAY FREE LOOK
Within 10 days of the date of receipt of this Contract by the Owner, it may be
returned by delivering or mailing it to the Company or to the agent through
whom it was purchased. When this Contract is received by the Company, it will
be voided as if it had never been in force. The Company will refund the
Contract Value computed at the end of the Valuation Period during which this
Contract is mailed to or delivered to the Company at its Home Office or the
agent through whom it was purchased.
Signed for the Company.
__________________________________
INDIVIDUAL FLEXIBLE PURCHASE PAYMENT
DEFERRED VARIABLE AND FIXED ANNUITY CONTRACT
NONPARTICIPATING
NO DIVIDENDS
READ YOUR CONTRACT CAREFULLY
ANNUITY PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE
INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT
GUARANTEED AS TO DOLLAR AMOUNT. VARIABLE ACCOUNT EXPENSES CONSIST OF A
MORTALITY AND EXPENSE RISK PREMIUM, AN ADMINISTRATIVE EXPENSE CHARGE, A
CONTRACT MAINTENANCE CHARGE AND A TRANSFER FEE. THESE CHARGES ARE SHOWN ON THE
CONTRACT DATA PAGE. VARIABLE ANNUITY PAYMENTS WILL NOT DECREASE AS LONG AS THE
INVESTMENT EXPERIENCE OF THE VARIABLE ACCOUNT EQUALS OR EXCEEDS 3% PER YEAR.
THE VARIABLE PROVISIONS OF THIS CONTRACT CAN BE FOUND ON PAGES 9 AND 11.
INDEX
PAGE
GENERAL PROVISIONS
The Contract
Incontestability
Non-Participating
Misstatement of Age or Sex
Contract Settlement
Reports
Taxes
Evidence of Survival
Modification of Contract
ANNUITANT, OWNERSHIP, ASSIGNMENT PROVISIONS
Annuitant
Ownership
Assignment
BENEFICIARY PROVISIONS
Beneficiary
Change of Beneficiary
PURCHASE PAYMENT PROVISIONS
Purchase Payments
Change in Purchase Payments
Allocation of Purchase Payments
No Default
GENERAL ACCOUNT PROVISIONS
General Account Value
Interest to Be Credited
CONTRACT VALUE PROVISION
Contract Value
VARIABLE ACCOUNT PROVISIONS
The Variable Account
Investments of the Variable Account
Valuation of Assets
Accumulation Unit
MORTALITY AND EXPENSE RISK PREMIUM
Administrative Expense Charge
Mortality and Expense Guarantee
CONTRACT MAINTENANCE CHARGE
Deduction for Contract Maintenance Charge
TRANSFER PROVISION
Transfers
DEATH BENEFIT
Death of Annuitant
Death of Owner
Payment of Death Benefit
ANNUITY PROVISIONS
Annuity Date
Election of Annuity Option
Frequency and Amount of Annuity Payments
Annuity Options
Annuity
Fixed Annuity
Variable Annuity
Annuity Unit
Net Investment Factor
Transfers During the Annuity Period
Protection of Proceeds
Withdrawals
Withdrawal Charge
Waiver of Withdrawal Charge
SUSPENSION OR DEFERRAL OF PAYMENTS OR TRANSFERS FROM THE VARIABLE ACCOUNT
Deferral of Payments or Transfers from the General Account
RESERVES, VALUES AND BENEFITS
CONTRACT DATA PAGE
ANNUITANT: [John Doe] AGE AT ISSUE: [35]
OWNER: [John Doe] AGE AT ISSUE: [35]
CONTRACT NUMBER: [123] ISSUE DATE: [6/1/1995]
INITIAL PURCHASE PAYMENT: [$25,000] ANNUITY DATE: [6/1/2025]
MINIMUM SUBSEQUENT PURCHASE PAYMENT: [$2,000]
BENEFICIARY: as stated in the Application for this Contract unless changed in
accordance with the Contract provisions.
INITIAL INTEREST RATE APPLICABLE TO THE GENERAL ACCOUNT:
[7% guaranteed through the end of the current calendar year]
MINIMUM GUARANTEED INTEREST RATE: 4% PER YEAR.
CONTRACT MAINTENANCE CHARGE: $30.00 each Contract Year. After the Annuity
Date, the Contract Maintenance Charge will be collected on a monthly basis.
MORTALITY AND EXPENSE RISK PREMIUM: Equal on an annual basis to 1.25% of the
average daily net asset value of the variable account.
ADMINISTRATIVE EXPENSE CHARGE: Equal on an annual basis to .15% of the
average daily net asset value of the variable account.
TRANSFER FEE: $25 or, if smaller, 2% of the amount transferred per
transaction if there are more than 12 transfers in a Contract Year.
ELIGIBLE INVESTMENTS:
- COVA SERIES TRUST
- J.P. Morgan Investment Management
- Select Equity Portfolio
- Large Cap Stock Portfolio
- Small Cap Stock Portfolio
- International Equity Portfolio
- Quality Bond Portfolio
- Lord Abbett Bond Debenture Portfolio
- LORD ABBETT SERIES FUND, INC.
- Lord Abbett Growth and Income Portfolio
- GENERAL AMERICAN CAPITAL COMPANY
- GAIMCO Money Market Portfolio
VARIABLE ACCOUNT: First Cova Variable Annuity Account One
HOME OFFICE: First Cova Life Insurance Company
120 Broadway
New York, New York 10271
1 (800) 469-4545
(212) 766-0012
FOR USE WITH FIRST COVA VARIABLE ANNUITY ACCOUNT ONE
A SEPARATE INVESTMENT ACCOUNT OF FIRST COVA LIFE INSURANCE COMPANY
DEFINITIONS
ACCOUNT - General Account and/or one or more of the Subaccount(s) of the
Variable Account.
ACCUMULATION UNIT - An accounting unit of measure used to calculate the
Contract Value in a Subaccount of the Variable Account.
ANNUITANT - The natural person on whose life Annuity Payments are based.
ANNUITY OR ANNUITY PAYMENTS - The series of payments made to the Annuitant
after the Annuity Date under the Annuity Option elected.
ANNUITY DATE - The date on which Annuity Payments begin. The Annuity Date is
shown on the Contract Data Page.
ANNUITY PERIOD - The period starting on the Annuity Date.
ANNUITY UNIT - An accounting unit of measure used to calculate Variable
Annuity Payments after the Annuity Date.
ATTAINED AGE - The age on the birthday prior to any date for which age is to
be determined.
BENEFICIARY - The person(s) who will receive the Death Benefit.
COMPANY - First Cova Life Insurance Company at its Home Office shown on the
Contract Data Page.
CONTRACT ANNIVERSARY - An anniversary of the Issue Date.
CONTRACT VALUE - The sum of the Owner's interest in the General Account and
the Subaccounts of the Variable Account.
CONTRACT YEAR - One year from the Issue Date and from each Contract
Anniversary.
ELIGIBLE INVESTMENT(S) - An investment entity shown on the Contract Data Page.
FIXED ANNUITY - A series of payments made during the Annuity Period which are
guaranteed as to dollar amount by the Company and do not vary with the
investment experience of the Variable Account.
GENERAL ACCOUNT - The Company's general investment account which contains all
the assets of the Company with the exception of Cova Variable Annuity Account
One (the "Variable Account") and other segregated asset accounts.
GENERAL ACCOUNT VALUE - The Owner's interest in the General Account.
ISSUE DATE - The date this Contract is issued. The Issue Date is shown on the
Contract Data Page.
OWNER - The person or entity named in the Application who/which has all rights
under this Contract.
PORTFOLIO - A segment of an Eligible Investment which constitutes a separate
and distinct class of shares.
SUBACCOUNT - A segment of the Variable Account.
SUBACCOUNT VALUE - The Owner's interest in a Subaccount.
VALUATION DATE - The Variable Account will be valued each day that the New
York Stock Exchange is open for trading.
VALUATION PERIOD - The period beginning at the close of business of the New
York Stock Exchange on each Valuation Date and ending at the close of business
for the next succeeding Valuation Date.
VARIABLE ACCOUNT - A separate investment account of the Company designated on
the Contract Data Page.
VARIABLE ACCOUNT VALUE - The sum of the Owner's interest in each of the
Subaccounts of the Variable Account.
VARIABLE ANNUITY - A series of payments made during the Annuity Period which
vary in amount with the investment experience of each applicable Subaccount.
WITHDRAWAL VALUE - The Withdrawal Value is:
1) the Contract Value for the Valuation Period next following the
Valuation Period during which a written request for a withdrawal is received
at the Company; less
2) any applicable taxes not previously deducted; less
3) the Withdrawal Charge, if any; less
4) the Contract Maintenance Charge, if any.
GENERAL PROVISIONS
THE CONTRACT - The entire contract consists of:
1) this Contract;
2) the Application which is attached to this Contract; and
3) any riders or endorsements attached to this Contract.
This Contract may be changed or altered only by the President or Secretary of
the Company. A change or alteration must be made in writing.
INCONTESTABILITY - The Company will not contest this Contract from the Issue
Date.
NON-PARTICIPATING - This Contract will not share in any distribution of
dividends.
MISSTATEMENT OF AGE OR SEX - The Company may require proof of age or sex of
the Annuitant before making any life Annuity Payments under this Contract. If
the age or sex of the Annuitant has been misstated, the amount payable will be
the amount that the Contract Value would have provided at the correct age or
sex.
After the Annuity Date, any under payments will be made up in one sum,
including interest at 6% per year, with the next Annuity Payment. Any
overpayments, including interest at 6% per year, will be deducted from future
Annuity Payments until the total is repaid.
CONTRACT SETTLEMENT - This Contract must be returned to the Company prior to
any settlement. Prior to any payment as a death claim, due proof of death must
be submitted to the Company.
REPORTS - At least once each calendar year, the Company will furnish the
Owner with a report showing the Contract Value and any other information as
may be required by law. The Company will also furnish an annual report of the
Variable Account. Reports will be sent to the last known address of the Owner.
TAXES - Any taxes paid to any governmental entity relating to this Contract
will be deducted from the Purchase Payments or Contract Value when incurred.
The Company will, in its sole discretion, determine when taxes have resulted
from: the investment experience of the Variable Account; receipt by the
Company of the Purchase Payments; or commencement of Annuity Payments. The
Company may, at its sole discretion, pay taxes when due and deduct that amount
from the Contract Value at a later date. Payment at an earlier date does not
waive any right the Company may have to deduct amounts at a later date. The
Company will deduct any withholding taxes required by applicable law.
EVIDENCE OF SURVIVAL - The Company may require satisfactory evidence of the
continued survival of any person(s) on whose life Annuity Payments are based.
MODIFICATION OF CONTRACT - This Contract may not be modified by the Company
without the consent of the Owner except as may be required by applicable law.
ANNUITANT, OWNERSHIP, ASSIGNMENT PROVISIONS
ANNUITANT - The Annuitant is the person on whose life Annuity Payments are
based. The Annuitant is the person designated in the Application, unless
changed.
OWNERSHIP - The Owner has all rights and may receive all benefits under this
Contract. Prior to the Annuity Date, the Owner is the person designated in the
Application, unless changed. On and after the Annuity Date:
1) the Annuitant is the Owner; and
2) upon the death of the Annuitant, the Beneficiary is the Owner. The
Owner may change the Owner at any time. A change of Owner will automatically
revoke any prior designation of Owner. A request for change must be:
1) made in writing; and
2) received at the Company.
The change will become effective as of the date the written request is signed.
A new designation of Owner will not apply to any payment made or action taken
by the Company prior to the time it was received.
ASSIGNMENT - The Owner may, at any time during his or her lifetime, assign
his or her rights under this Contract. The Company will not be bound by any
assignment until written notice is received by the Company. The Company is not
responsible for the validity of any assignment. The Company will not be liable
as to any payment or other settlement made by the Company before receipt of
the assignment.
BENEFICIARY PROVISIONS
BENEFICIARY - The Beneficiary is named in the Application, unless changed.
The Beneficiary is entitled to receive the benefits to be paid at the death of
the Owner.the Owner provides otherwise, the Death Benefit will be paid in
equal shares or all to the survivor as follows:
1) to the Primary Beneficiaries who survive the Owner's death; or if
there are none,
2) to the Contingent Beneficiaries who survive the Owner's death; or if
there are none,
3) to the estate of the Owner.
CHANGE OF BENEFICIARY - Subject to the rights of any irrevocable Beneficiary,
the Owner may change the Primary Beneficiary or Contingent Beneficiary. A
change may be made by filing a written request with the Company. The change
will take effect as of the date the notice is signed. The Company will not be
liable for any payment made or action taken before it records the change.
PURCHASE PAYMENT PROVISIONS
PURCHASE PAYMENTS - The Initial Purchase Payment is due on the Issue Date.
Thereafter, a Purchase Payment may be made at any time in any amount, subject
to the Minimum Subsequent Purchase Payment shown on the Contract Data Page.
The Company reserves the right to reject any Application or Purchase Payment.
CHANGE IN PURCHASE PAYMENTS - Subject to the minimum shown on the Contract
Data Page, the Owner may increase or decrease or change the frequency of
subsequent Purchase Payments.
ALLOCATION OF PURCHASE PAYMENTS - The allocation of the initial Purchase
Payment is elected by the Owner on the Application. Unless elected otherwise
by the Owner, subsequent Purchase Payments are allocated in the same manner as
the initial Purchase Payment. Allocation of the Purchase Payments is subject
to the terms and conditions imposed by the Company.
NO DEFAULT - Unless the Owner makes a total withdrawal, this Contract will
remain in force until the Annuity Date. This Contract will not be in default
if subsequent Purchase Payments are not made.
GENERAL ACCOUNT PROVISIONS
GENERAL ACCOUNT VALUE - The General Account Value at any time is equal to:
1) the Purchase Payments allocated to the General Account; plus
2) amounts transferred to the General Account; plus
3) interest credited to the General Account; less
4) any prior partial withdrawals and Withdrawal Charges deducted from
the General Account; less
5) amounts transferred from the General Account; less
6) any applicable premium taxes, Contract Maintenance Charge or Transfer
Fee.
INTEREST TO BE CREDITED -The Company guarantees that the interest rate
credited to the General Account will not be less than the Minimum Guaranteed
Interest Rate. The Minimum Guaranteed Interest Rate is 4% per year. The
Company may credit additional interest at its sole discretion.
CONTRACT VALUE PROVISION
CONTRACT VALUE - Each Purchase Payment is allocated to a Subaccount of the
Variable Account and/or the General Account. A Purchase Payment allocated to a
Subaccount of the Variable Account is converted into Accumulation Units. The
number of Accumulation Units in a Subaccount credited to this Contract is
determined by dividing the Purchase Payment allocated to that Subaccount by
the Accumulation Unit Value for that Subaccount. The Contract Value on any
Valuation Date is the sum of the Owner's interest in the General Account and
the Subaccounts of the Variable Account. The value of the Owner's interest in
a Subaccount is determined by multiplying the number of Accumulation Units
attributable to that Subaccount by the Accumulation Unit Value for that
Subaccount.
Withdrawals will result in the cancellation of Accumulation Units in a
Subaccount or a reduction of the General Account Value.
VARIABLE ACCOUNT PROVISIONS
THE VARIABLE ACCOUNT - The Variable Account is a separate investment account
of the Company. It is shown on the Contract Data Page. The Company has
allocated a part of its assets for this and certain other contracts to the
Variable Account. The assets of the Variable Account are the property of the
Company. However, they are not chargeable with the liabilities arising out of
any other business the Company may conduct.
INVESTMENTS OF THE VARIABLE ACCOUNT - Purchase Payments applied to the
Variable Account are allocated to a Subaccount of the Variable Account. The
assets of the Subaccount are allocated to the Eligible Investment(s) and the
Portfolio(s), if any, within an Eligible Investment shown on the Contract Data
Page. The Company may, from time to time, and with the prior approval of the
Superintendent of Insurance of the state of New York, add additional Eligible
Investments or Portfolios to those shown on the Contract Data Page. The Owner
may be permitted to transfer Contract Values to the additional Eligible
Investments or Portfolios. However, the right to make any transfer will be
limited by the terms and conditions imposed by the Company. If the shares of
any of the Eligible Investment(s) or any Portfolio(s) within the Eligible
Investments become unavailable for investment by the Variable Account, or the
Company's Board of Directors deems further investment in these shares
inappropriate, the Company may substitute shares of another Eligible
Investment for shares already purchased under this Contract.
VALUATION OF ASSETS - Assets of the Variable Account are valued at their fair
market value in accordance with procedures of the Company.
ACCUMULATION UNIT - A Purchase Payment allocated to the Variable Account is
converted into Accumulation Units for each elected Subaccount. The number of
Accumulation Units in a Subaccount credited to this Contract is determined by
dividing the Purchase Payment allocated to that Subaccount by the Accumulation
Unit Value for that Subaccount as of the Valuation Period during which the
Purchase Payment is allocated to the Subaccount. The Accumulation Unit Value
for each Subaccount was arbitrarily set initially at $10. The Accumulation
Unit Value for any later Valuation Period is determined by subtracting (b)
from (a) and dividing the result by (c) where:
(a) is the net result of
1) the assets of the Subaccount; i.e., the aggregate value of the
underlying Eligible Investment shares held at the end of such Valuation
Period; plus or minus
2) the cumulative charge or credit for taxes reserved which is
determined by the Company to have resulted from the operation of the
Subaccount of the Variable Account;
(b) is the cumulative unpaid charge for the Mortality and Expense Risk
Premium and for the Administrative Expense Charge which are shown on the
Contract Data Page; and
(c) is the number of Accumulation Units in a Subaccount of the Variable
Account outstanding at the end of the Valuation Period.
Withdrawals from a Subaccount will result in the cancellation of Accumulation
Units in each Subaccount of the Variable Account. The Contract Value
attributable to a Subaccount of the Variable Account is determined by
multiplying the number of Accumulation Units attributable to the Subaccount by
the Accumulation Unit Value for that Subaccount. An Accumulation Unit Value
may increase or decrease from Valuation Period to Valuation Period.
MORTALITY AND EXPENSE RISK PREMIUM
The Company deducts a Mortality and Expense Risk Premium from the Variable
Account which is equal, on an annual basis, to the amount shown on the
Contract Data Page. The Mortality and Expense Risk Premium compensates the
Company for assuming the mortality and expense risks under this Contract.
ADMINISTRATIVE EXPENSE CHARGE - The Company deducts an Administrative Expense
Charge from the Variable Account which is equal, on an annual basis, to the
amount shown on the Contract Data Page. The Administrative Expense Charge
compensates the Company for the costs associated with the administration of
this Contract and the Variable Account.
MORTALITY AND EXPENSE GUARANTEE - The Company guarantees that the dollar
amount of each Annuity Payment after the first Annuity Payment will not be
affected by variations in mortality or expense experience.
CONTRACT MAINTENANCE CHARGE
DEDUCTION FOR CONTRACT MAINTENANCE CHARGE - The Company deducts an annual
Contract Maintenance Charge from the Contract Value by cancelling Accumulation
Units from each applicable Subaccount or reducing the General Account Value to
reimburse it for expenses relating to maintenance of this Contract. The
Contract Maintenance Charge is shown on the Contract Data Page. The Contract
Maintenance Charge will be deducted from the Contract Value on each Contract
Anniversary while this Contract is in force. If a total withdrawal is made on
other than a Contract Anniversary, the Contract Maintenance Charge will be
deducted at the time of withdrawal. If the Annuity Date is not a Contract
Anniversary, a prorata portion of the annual Contract Maintenance Charge will
be deducted on the Annuity Date. After the Annuity Date, the Contract
Maintenance Charge will be collected on a monthly basis and will result in a
reduction of each Annuity Payment.
TRANSFER PROVISION
TRANSFERS - Prior to the Annuity Date, the Owner may transfer all or part of
an Account without the imposition of any fee or charge if there have been no
more than 12 transfers made in the Contract Year. All transfers are subject to
the following:
1) if more than 12 transfers have been made in the Contract Year, the
Company will deduct a Transfer Fee. The Transfer Fee is shown on the Contract
Data Page. The Transfer Fee will be deducted from the Account from which the
transfer is made. However, if the entire interest in an Account is being
transferred, the Transfer Fee will be deducted from the amount which is
transferred.
2) the minimum amount which may be transferred is the lesser of:
(A) $500; or
(B) the Owner's entire interest in the Account.
3) transfers will be effected during the Valuation Period next following
receipt by the Company of a written transfer request containing all required
information. However, no transfer may be made effective within seven calendar
days of the Annuity Date.
4) any transfer direction must clearly specify: (A) the amount which is
to be transferred; and (B) the Accounts which are to be affected. If the Owner
elects to use the transfer privilege, neither the Company nor its Home Office
will be liable for transfers made in accordance with the Owner's instructions.
DEATH BENEFIT
DEATH OF ANNUITANT - Upon death of the Annuitant prior to the Annuity Date,
the Owner must designate a new Annuitant. If no designation is made within 30
days of the death of the Annuitant, the Owner will become the Annuitant.
Upon death of the Annuitant after the Annuity Date, the Death Benefit, if any,
will be as specified in the Annuity Option elected and the remaining Annuity
Payments will be distributed at least as rapidly as prior to the Annuitant's
death.
DEATH OF OWNER - Upon death of the Owner prior to the Annuity Date, the Death
Benefit will be paid to the Beneficiary designated by the Owner. Upon death of
the Owner after the Annuity Date, the Death Benefit, if any, will be as
specified in the Annuity Option elected and the remaining Annuity Payments
will be distributed at least as rapidly as prior to the Owner's death.
Prior to the Owner, or a Joint Owner, attaining age 80, the Death Benefit will
be the greater of:
1) the Purchase Payments less any Withdrawals and any applicable
Withdrawal Charge;
2) the Contract Value; or
3) the Contract Value on the most recent seven year Contract Anniversary
plus any subsequent Purchase Payments less any subsequent Withdrawals and any
applicable Withdrawal Charge.
After the Owner, or a Joint Owner, attains age 80, the Death Benefit will be
the greater of:
1) Purchase Payments less any Withdrawals and any applicable Withdrawal
Charge;
2) the Contract Value; or
3) the Contract Value on the most recent seven year Contract Anniversary
on or before the Owner's 80th birthday plus any subsequent Purchase Payments
less any subsequent Withdrawals and any applicable Withdrawal Charge.
If Joint Owners are named, the Death Benefit is payable upon the first death
of a Joint Owner. However, a surviving Joint Owner who is both the spouse of
the other Joint Owner and the Beneficiary may elect that this Contract remain
in effect.
The Death Benefit will be determined and paid as of the Valuation Period next
following the date of receipt by the Company of both due proof of death and an
election for a single sum payment or election under an Annuity Option.
If a single sum payment is requested, the proceeds will be paid within seven
(7) days of receipt of proof of death and the election. Payment under an
Annuity Option may only be elected during the sixty-day period beginning with
the date of receipt of proof of death or a single sum payment will be made to
the Beneficiary at the end of the sixty-day period.
The entire Death Benefit must be paid within five (5) years of the date of
death unless the Beneficiary elects to have the Death Benefit payable under an
Annuity Option over the Beneficiary's lifetime or for a period not extending
beyond the Beneficiary's life expectancy, beginning within one (1) year of the
date of death.
If the Beneficiary is the spouse of the Owner, the spouse may elect to become
the Owner and continue this Contract in effect at the then current Contract
Value.
PAYMENT OF DEATH BENEFIT - The Company will require due proof of death before
any Death Benefit is paid. Due proof of death will be:
1) a certified death certificate;
2) a certified decree of a court of competent jurisdiction as to the
finding of death;
3) a written statement by a medical doctor who attended the deceased; or
4) any other proof satisfactory to the Company.
Any Death Benefit will be paid in accordance with applicable law or
regulations governing death benefit payments.
ANNUITY PROVISIONS
ANNUITY DATE - The Annuity Date is elected by the Owner on the Application.
The Annuity Date is shown on the Contract Data Page. The Annuity Date must be
the first day of a calendar month and must be at least one year after the
Issue Date. The Annuity Date may not be later than the first day of the
calendar month following the Annuitant's 85th birthday.
Prior to the Annuity Date, the Owner may, subject to the above, change the
Annuity Date upon 30 days prior written notice to the Company.
ELECTION OF ANNUITY OPTION - The Annuity Option is elected by the Owner on
the Application. If no Annuity Option is elected, Option 2 with 10 years
guaranteed will automatically be applied. Prior to the Annuity Date, the Owner
may, upon 30 days prior written notice to the Company, change the Annuity
Option.
FREQUENCY AND AMOUNT OF ANNUITY PAYMENTS - Annuity Payments will be paid as
monthly installments. The Contract Value on the Annuity Date is applied to the
Annuity Table for the Annuity Option elected. If the amount of the Contract
Value to be applied under an Annuity Option is less than $2,000, the Company
reserves the right to make one lump sum payment in lieu of Annuity Payments.
If the amount of any Annuity Payment would be or become less than $20, the
Company will reduce the frequency of payments to an interval which will result
in each payment being at least $20. The Annuity Tables are based on the 1983
Individual Annuity Mortality Tables with interest at the rate of 3% per year.
ANNUITY OPTIONS - The following Annuity Options or any other Annuity Option
acceptable to the Company may be elected.
OPTION 1 - LIFE ANNUITY. The Company will make monthly payments during
the life of the Annuitant.
OPTION 2 - LIFE ANNUITY WITH 5, 10 OR 20 YEARS GUARANTEED. The Company
will make monthly Annuity Payments during the life of the Annuitant. If
payments have been made for less than the guaranteed period at the death of
the Annuitant, payments will continue to the Beneficiary for the remainder of
the guaranteed period. However, the Beneficiary may elect to receive a single
sum payment. A single sum payment will be equal to the present value of
remaining payments as of the date of receipt of due proof of death commuted at
the assumed investment rate of 3%. If any life income optional settlement with
a period certain provides for installment payments of the same amount at some
ages for different periods certain, the contract must provide that the insurer
will deem an election to have been made for the longest period certain which
could have been elected for such age and amount.
OPTION 3 - JOINT AND LAST SURVIVOR ANNUITY. The Company will make
monthly Annuity Payments for the joint lifetime of the Annuitant and another
person. At the death of either Payee, Annuity Payments will continue to be
made to the survivor Payee. The survivor's Annuity Payments will be equal to
100%, 66 2/3% or 50% of the amount payable during the joint lifetime, as
chosen.
ANNUITY - If all of the Contract Value on the seventh calendar day before the
Annuity Date is allocated to the General Account, the Annuity will be paid as
a Fixed Annuity. If all of the Contract Value on the Annuity Date is allocated
to the Variable Account, the Annuity will be paid as a Variable Annuity. If
the Contract Value on the Annuity Date is allocated to both the General
Account and the Variable Account, the Annuity will be paid as a combination of
a Fixed Annuity and a Variable Annuity to reflect the allocation between the
Accounts. Variable Annuity Payments will reflect the investment performance of
the Variable Account in accordance with the allocation of the Contract Value
to the Subaccounts on the Annuity Date.
The Contract Value will be applied to the applicable Annuity Tables. The
Annuity Table used will depend upon the Annuity Option elected. The amount of
the first payment for each $1,000 of Contract Value is shown in the Annuity
Tables. If, as of the Annuity Date, the then current Single Premium Immediate
Annuity rates applicable to this class of contracts provide a first Annuity
Payment greater than guaranteed under the same Annuity Option under this
Contract, the greater payment will be made.
FIXED ANNUITY - The General Account Value on the day immediately preceding
the Annuity Date will be used to determine the Fixed Annuity monthly payment.
The first monthly Annuity Payment will be based upon the Annuity Option
elected and the appropriate Annuity Option Table.
VARIABLE ANNUITY - Variable Annuity Payments:
1) are not predetermined as to dollar amount; and
2) will vary in amount with the net investment results of the applicable
Subaccount(s) of the Variable Account at the Annuity Date.
The dollar amount of Variable Annuity Payments for each applicable
Subaccount after the first is determined as follows:
1) the dollar amount of the first Variable Annuity Payment is divided
by the value of an Annuity Unit for each applicable Subaccount as of the
Annuity Date. This establishes the number of Annuity Units for each monthly
payment. The number of Annuity Units for each applicable Subaccount remains
fixed during the Annuity Period;
2) the fixed number of Annuity Units per payment in each Subaccount is
multiplied by the Annuity Unit Value for that Subaccount for the last
Valuation Period of the month preceding the month for which the payment is
due. This result is the dollar amount of the payment for each applicable
Subaccount.
The total dollar amount of each Variable Annuity Payment is the sum of all
Subaccount Variable Annuity Payments reduced by the applicable Contract
Maintenance Charge.
ANNUITY UNIT - The value of an Annuity Unit for each Subaccount of the
Variable Account was initially set on an arbitrary basis. This was done when
the first Eligible Investment shares were purchased.
The Subaccount Annuity Unit Value at the end of any subsequent Valuation
Period is determined by multiplying the Subaccount Annuity Unit Value for the
immediately preceding Valuation Period by the net investment factor for the
day for which the Annuity Unit Value is being calculated; and multiplying the
result by 0.999919 for each day within the Valuation Period.
NET INVESTMENT FACTOR - The Net Investment Factor for any Subaccount of the
Variable Account for any Valuation Period is determined by dividing:
1) the Accumulation Unit Value as of the close of the current Valuation
Period; by
2) the Accumulation Unit Value as of the close of the immediately
preceding Valuation Period.
The Net Investment Factor may be greater or less than one, as the Annuity Unit
Value may increase or decrease.
TRANSFERS DURING THE ANNUITY PERIOD - During the Annuity Period, the Owner
may make transfers, by written request, as follows:
1) the Owner may make a transfer once each Contract Year between
Subaccounts of the Variable Account.
2) the Owner may at any time, make a transfer from one or more
Subaccounts to the General Account. The Owner may not make a transfer from the
General Account to the Variable Account.
The amount transferred to the General Account from a Subaccount of the
Variable Account will be equal to the annuity reserve for the payee's interest
in that Subaccount. The annuity reserve is the product of "(a)" multiplied by
"(b)" multiplied by "(c)", where (a) is the number of Annuity Units
representing the Owner's interest in the Subaccount per Annuity Payment; (b)
is the Annuity Unit Value for the Subaccount; and (c) is the present value of
$1.00 per payment period as of the Attained Age of the Owner at time of
transfer for the Annuity Option, determined using the 1983 Individual Annuity
Mortality Tables with interest at 3% per year. Amounts transferred to the
General Account will be applied under the Annuity Option elected at the
attained age of the Owner at the time of the transfer. All amounts and Annuity
Unit Values will be determined as of the end of the Valuation Period preceding
the effective date of the transfer.
PROTECTION OF PROCEEDS - No Payee may commute, encumber, alienate or assign
any payments under this Contract. To the extent permitted by law, no
payments will be subject to the debts, contracts or engagements of any Payee
or to any judicial process to levy upon or attach the same for payment
thereof.
WITHDRAWAL PROVISIONS
WITHDRAWALS - Prior to the Annuity Date, the Owner may, upon written request
received by the Company, make a total or partial withdrawal of the Withdrawal
Value. A withdrawal will result in the cancellation of Accumulation Units from
each applicable Subaccount of the Variable Account or a reduction in the
General Account Value in the ratio that the Subaccount Value and/or the
General Account Value bears to the total Contract Value. The Owner must
specify in writing in advance which units are to be cancelled or values are to
be reduced if other than the above method is desired. The Company will pay the
amount of any withdrawal within seven (7) days of receipt of a request in good
order unless the Suspension Or Deferral Of Payments Or Transfers From The
Variable Account provision or the Deferral Of Payments Or Transfers From The
General Account provision is in effect.
Each partial withdrawal must be for an amount which is not less than $500 or,
if smaller, the remaining Withdrawal Value. The remaining Withdrawal Value
must be at least $1,000 after a partial withdrawal is completed.
WITHDRAWAL CHARGE - A Withdrawal Charge may be deducted in the event of a
withdrawal of all or a portion of the Contract Value. The Withdrawal Charge is
imposed on a withdrawal of Contract Value attributable to a Purchase Payment
within seven (7) years of receipt of the Purchase Payment. The Withdrawal
Charge, if any, is equal to 7% of the Purchase Payment withdrawn within first
and second years following receipt, 5% of the Purchase Payment withdrawn
during third, fourth and fifth years following receipt and 3% of the Purchase
Payment withdrawn during sixth and seventh years following receipt.
For a partial withdrawal, the Withdrawal Charge will be deducted from the
remaining Withdrawal Value, if sufficient, or from the amount withdrawn. The
Withdrawal Charge will be deducted by cancelling Accumulation Units from each
applicable Subaccount or reducing the General Account Value in the ratio that
the Subaccount Value and/ or General Account bears to the total Contract
Value. The Owner must specify in writing in advance if other than the above
method of cancellation is desired.
WAIVER OF WITHDRAWAL CHARGE - A withdrawal of 10% of the aggregate Purchase
Payments may be made without the Withdrawal Charge on a non-cumulative basis
as follows:
1) Once each Contract Year after the first Contract Year, as a single
sum payment if the Contract Value prior to the withdrawal exceeds $5,000; or
2) At any time, subject to any conditions the Company may impose, as
equal periodic installments.
Any equal periodic installments made to which the Waiver of Withdrawal Charge
applies are made in accordance with the following:
1) Total monthly withdrawals cannot exceed 10% of Purchase Payments in
any 12 month period; and
2) The Owner must be over age 59-1/2.
SUSPENSION OR DEFERRAL OF PAYMENTS OR TRANSFERS FROM THE VARIABLE
ACCOUNT
The Company reserves the right to suspend or postpone payments for a
withdrawal or transfer for any period when:
1) the New York Stock Exchange is closed (other than customary weekend
and holiday closings);
2) trading on the New York Stock Exchange is restricted;
3) an emergency exists as a result of which disposal of securities held
in the Variable Account is not reasonably practicable or it is not reasonably
practicable to determine the value of the Variable Account's net assets; or
4) during any other period when the Securities and Exchange Commission,
by order, so permits for the protection of Owners; provided that applicable
rules and regulations of the Securities and Exchange Commission will govern as
to whether the conditions described in (2) and (3) exist.
DEFERRAL OF PAYMENTS OR TRANSFERS FROM THE GENERAL ACCOUNT - The Company
reserves the right to defer payment for a withdrawal or transfer from the
General Account for the period permitted by law but not for more than six
months after written election is received by the Company.
RESERVES, VALUES AND BENEFITS
All reserves are greater to or equal to those required by statute. Any values
and death benefits that may be available under this Contract are not less than
the minimum benefits required by any statute of the state in which this
Contract is delivered.
ANNUITY TABLE 1
Monthly Annuity Payment Under Option 1
For Each $1,000 Of Contract Value Applied
<TABLE>
<CAPTION>
Male Female Male Female Male Female
Monthly Monthly Monthly Monthly Monthly Monthly
Age Payment Payment Age Payment Payment Age Payment Payment
<S> <C> <C> <C> <C> <C> <C> <C> <C>
5 2.82 2.76 32 3.35 3.19 59 5.18 4.63
6 2.83 2.77 33 3.38 3.21 60 5.31 4.74
7 2.85 2.78 34 3.42 3.24 61 5.45 4.85
8 2.86 2.79 35 3.46 3.27 62 5.61 4.97
9 2.87 2.80 36 3.50 3.30 63 5.77 5.10
10 2.88 2.81 37 3.54 3.33 64 5.95 5.24
11 2.90 2.82 38 3.58 3.37 65 6.13 5.38
12 2.91 2.83 39 3.62 3.40 66 6.34 5.54
13 2.93 2.84 40 3.67 3.44 67 6.55 5.71
14 2.94 2.85 41 3.72 3.48 68 6.78 5.89
15 2.96 2.87 42 3.77 3.52 69 7.02 6.08
16 2.97 2.88 43 3.83 3.56 70 7.29 6.29
17 2.99 2.90 44 3.88 3.60 71 7.57 6.51
18 3.01 2.91 45 3.94 3.65 72 7.87 6.76
19 3.03 2.93 46 4.01 3.70 73 8.19 7.02
20 3.05 2.94 47 4.07 3.75 74 8.53 7.31
21 3.07 2.96 48 4.14 3.80 75 8.90 7.62
22 3.09 2.97 49 4.21 3.86 76 9.30 7.96
23 3.11 2.99 50 4.29 3.92 77 9.72 8.33
24 3.13 3.01 51 4.36 3.98 78 10.18 8.73
25 3.15 3.03 52 4.45 4.05 79 10.67 9.16
26 3.18 3.05 53 4.53 4.12 80 11.19 9.63
27 3.20 3.07 54 4.63 4.19 81 11.75 10.14
28 3.23 3.09 55 4.72 4.27 82 12.35 10.69
29 3.26 3.11 56 4.83 4.36 83 12.99 11.29
30 3.29 3.14 57 4.94 4.44 84 13.66 11.94
31 3.32 3.16 58 5.05 4.54 85+ 14.37 12.64
</TABLE>
ANNUITY TABLE 2
Monthly Annuity Payment Under Option 2
For Each $1,000 Of Contract Value Applied
<TABLE>
<CAPTION>
Male 5 Years 10 Years 20 Years Male 5 Years 10 Years 20 Years
Age Guaranteed Guaranteed Guaranteed Age Guaranteed Guaranteed Guaranteed
<S> <C> <C> <C> <C> <C> <C> <C>
5 2.82 2.82 2.82 46 4.00 3.98 3.88
6 2.83 2.83 2.83 47 4.06 4.04 3.94
7 2.84 2.84 2.84 48 4.13 4.10 3.99
8 2.86 2.86 2.85 49 4.20 4.17 4.04
9 2.87 2.87 2.86 50 4.27 4.27 4.10
10 2.88 2.88 2.88 51 4.35 4.31 4.16
11 2.90 2.89 2.89 52 4.43 4.39 4.22
12 2.91 2.91 2.90 53 4.52 4.47 4.28
13 2.92 2.92 2.92 54 4.61 4.56 4.34
14 2.94 2.94 2.93 55 4.70 4.65 4.40
15 2.96 2.95 2.95 56 4.80 4.74 4.47
16 2.97 2.97 2.96 57 4.91 4.84 4.53
17 2.99 2.99 2.98 58 5.03 4.94 4.60
18 3.01 3.00 3.00 59 5.15 5.05 4.66
19 3.03 3.02 3.02 60 5.28 5.17 4.73
20 3.04 3.04 3.04 61 5.41 5.29 4.79
21 3.06 3.06 3.05 62 5.56 5.42 4.86
22 3.09 3.08 3.07 63 5.72 5.55 4.92
23 3.11 3.10 3.10 64 5.88 5.69 4.98
24 3.13 3.13 3.12 65 6.06 5.84 5.04
25 3.15 3.15 3.14 66 6.25 5.99 5.10
26 3.18 3.17 3.16 67 6.45 6.15 5.15
27 3.20 3.20 3.19 68 6.66 6.31 5.20
28 3.23 3.23 3.21 69 6.88 6.48 5.24
29 3.26 3.25 3.24 70 7.12 6.65 5.29
30 3.29 3.28 3.27 71 7.37 6.82 5.32
31 3.32 3.31 3.30 72 7.63 7.00 5.36
32 3.34 3.34 3.33 73 7.91 7.18 5.39
33 3.38 3.38 3.36 74 8.20 7.36 5.41
34 3.42 3.41 3.39 75 8.51 7.53 5.43
35 3.45 3.45 3.42 76 8.83 7.71 5.45
36 3.49 3.49 3.46 77 9.16 7.88 5.47
37 3.53 3.53 3.49 78 9.51 8.05 5.48
38 3.58 3.57 3.53 79 9.88 8.21 5.49
39 3.62 3.61 3.57 80 10.25 8.37 5.50
40 3.67 3.66 3.61 81 10.64 8.51 5.51
41 3.72 3.71 3.65 82 11.03 8.65 5.51
42 3.77 3.76 3.70 83 11.42 8.78 5.52
43 3.82 3.81 3.74 84 11.82 8.90 5.52
44 3.88 3.86 3.79 85+ 12.21 9.00 5.52
45 3.91 3.92 3.84
</TABLE>
ANNUITY TABLE 2
Monthly Annuity Payment Under Option 2
For Each $1,000 Of Contract Value Applied
<TABLE>
<CAPTION>
Female 5 Years 10 Years 20 years Female 5 Years 10 Years 20 Years
Age Guaranteed Guaranteed Guaranteed Age Guaranteed Guaranteed Guaranteed
<S> <C> <C> <C> <C> <C> <C> <C>
5 2.76 2.76 2.75 46 3.70 3.69 3.65
6 2.77 2.77 2.76 47 3.75 3.74 3.69
7 2.78 2.78 2.77 48 3.80 3.79 3.74
8 2.79 2.79 2.78 49 3.86 3.84 3.79
9 2.80 2.80 2.79 50 3.92 3.90 3.84
10 2.81 2.81 2.80 51 3.98 3.96 3.89
11 2.82 2.82 2.82 52 4.04 4.03 3.94
12 2.83 2.83 2.83 53 4.11 4.09 4.00
13 2.84 2.84 2.84 54 4.19 4.16 4.06
14 2.85 2.85 2.85 55 4.26 4.24 4.12
15 2.87 2.87 2.86 56 4.35 4.32 4.18
16 2.88 2.88 2.88 57 4.43 4.40 4.25
17 2.90 2.90 2.89 58 4.53 4.49 4.31
18 2.91 2.91 2.91 59 4.62 4.58 4.38
19 2.92 2.92 2.92 60 4.73 4.68 4.45
20 2.94 2.94 2.94 61 4.84 4.78 4.52
21 2.96 2.96 2.95 62 4.95 4.89 4.60
22 2.97 2.97 2.97 63 5.08 5.00 4.67
23 2.99 2.99 2.99 64 5.21 5.12 4.74
24 3.01 3.01 3.00 65 5.35 5.25 4.81
25 3.03 3.03 3.02 66 5.50 5.38 4.88
26 3.05 3.05 3.04 67 5.66 5.53 4.95
27 3.07 3.07 3.06 68 5.83 5.68 5.02
28 3.09 3.09 3.08 69 6.02 5.83 5.08
29 3.11 3.11 3.10 70 6.22 6.00 5.14
30 3.14 3.14 3.13 71 6.43 6.17 5.20
31 3.16 3.16 3.15 72 6.66 6.35 5.25
32 3.19 3.19 3.17 73 6.90 6.54 5.29
33 3.21 3.21 3.20 74 7.17 6.73 5.33
34 3.24 3.24 3.23 75 7.45 6.93 5.37
35 3.27 3.27 3.25 76 7.75 7.13 5.40
36 3.30 3.30 3.28 77 8.06 7.33 5.43
37 3.33 3.33 3.31 78 8.40 7.53 5.45
38 3.36 3.36 3.34 79 8.76 7.73 5.47
39 3.40 3.40 3.38 80 9.14 7.93 5.48
40 3.44 3.44 3.41 81 9.54 8.12 5.49
41 3.47 3.47 3.45 82 9.95 8.30 5.50
42 3.51 3.51 3.48 83 10.39 8.47 5.51
43 3.56 3.56 3.52 84 10.83 8.63 5.51
44 3.60 3.60 3.56 85+ 11.29 8.78 5.52
45 3.65 3.65 3.60
</TABLE>
ANNUITY TABLE 3
Monthly Annuity Payment Under Option 3
For Each $1,000 Of Contract Value Applied
Joint And 50% Survivor Annuity
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Female
Age Male Age
50 55 60 65 70 75
50 4.03 4.21 4.42 4.68 4.98 5.32
55 4.20 4.40 4.63 4.92 5.25 5.62
60 4.41 4.63 4.89 5.21 5.58 6.01
65 4.67 4.91 5.21 5.57 6.00 6.49
70 4.97 5.25 5.59 6.01 6.52 7.10
75 5.34 5.67 6.06 6.56 7.17 7.87
</TABLE>
Joint And 66 2/3% Survivor Annuity
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Female
Age Male Age
50 55 60 65 70 75
50 3.86 4.00 4.16 4.33 4.51 4.70
55 4.02 4.19 4.38 4.58 4.79 5.02
60 4.20 4.40 4.63 4.87 5.14 5.41
65 4.40 4.64 4.91 5.22 5.55 5.89
70 4.61 4.90 5.23 5.62 6.04 6.49
75 4.85 5.18 5.58 6.06 6.62 7.22
</TABLE>
Joint And 100% Survivor Annuity
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Female
Age Male Age
50 55 60 65 70 75
50 3.57 3.65 3.72 3.76 3.80 3.82
55 3.71 3.83 3.94 4.02 4.08 4.13
60 3.83 4.01 4.17 4.31 4.42 4.50
65 3.94 4.17 4.41 4.64 4.83 4.98
70 4.02 4.31 4.63 4.96 5.28 5.54
75 4.09 4.42 4.82 5.27 5.74 6.19
</TABLE>
Information about different age combinations will be furnished upon request.
INDIVIDUAL FLEXIBLE PURCHASE PAYMENT
DEFERRED VARIABLE AND FIXED ANNUITY CONTRACT
NONPARTICIPATING
NO DIVIDENDS
First Cova Life Insurance Company
120 Broadway
New York, New York 10271
First Cova Life Insurance Company
120 Broadway
New York, New York 10271
ENDORSEMENT
This Endorsement forms a part of the Contract to which it is attached. The
effective date of this Endorsement is the Issue Date shown on the Contract
Data Page.
REBALANCING TRANSFERS - Rebalancing Transfers may be made by the Owner
subject to the following conditions:
1) Rebalancing Transfers are not subject to assessment of the Transfer
Fee.
2) Rebalancing Transfers may not be made simultaneously with Dollar Cost
Averaging Transfers.
3) The Company has received written notice of an election to initiate
Rebalancing Transfers from the Owner.
All other terms and conditions of the Contract remain unchanged.
First Cova Life Insurance Company has caused this Endorsement to be signed by
its President and Secretary.
First Cova Life Insurance Company
120 Broadway
New York, New York 10271
ENDORSEMENT
This Endorsement forms a part of the Contract to which it is attached. The
effective date of this Endorsement is the Issue Date shown on the Contract
Data Page.
AUTOMATIC WITHDRAWALS - Automatic Withdrawals may be made by the Owner
subject to the following conditions:
1) An Owner making Automatic Withdrawals must be over age 59-1/2.
2) Total monthly withdrawals cannot exceed 10% of the purchase payments
made in any 12 month period.
3) The Company reserves the right to impose a fee for Automatic
Withdrawals.
4) The Company has received written notice of an election to initiate
Automatic Withdrawals from the Owner.
All other terms and conditions of the Contract remain unchanged.
First Cova Life Insurance Company has caused this Endorsement to be signed by
its President and Secretary.
First Cova Life Insurance Company
120 Broadway
New York, New York 10271
ENDORSEMENT
This Endorsement forms a part of the Contract to which it is attached. The
effective date of this Endorsement is the Issue Date shown on the Contract
Data Page.
DOLLAR COST AVERAGING TRANSFERS - Dollar Cost Averaging Transfers may
be made by the Owner subject to the following conditions:
1) The minimum amount which may be transferred each month is $500.
2) The minimum amount required in the General Account or Subaccount from
which transfers are made is $6,000 or the amount required to complete all
transfers.
3) Dollar Cost Averaging Transfers are not subject to assessment of the
Transfer Fee.
4) Dollar Cost Averaging Transfers may not be made simultaneously with
Rebalancing Transfers.
5) The Company has received written notice of an election to initiate
Dollar Cost Averaging Transfers from the Owner.
All other terms and conditions of the Contract remain unchanged.
First Cova Life Insurance Company has caused this Endorsement to be signed by
its President and Secretary.
<TABLE>
<CAPTION>
<S> <C>
COVA Send application and check to:
First Cova Life Insurance Company
FIRST COVA LIFE INSURANCE COMPANY 120 Broadway
New York, New York 10271
______________________________________________________________________________
</TABLE>
FLEXIBLE PURCHASE PAYMENT VARIABLE AND FIXED ANNUITY APPLICATION
______________________________________________________________________________
<TABLE>
<CAPTION>
<S> <C>
1. OWNER (Correspondence is sent to the Owner.)
Name [John J. Doe]
-----------------------------------------------------------------------------------------------------------
(First) (Middle) (Last)
Address [123 Main Street]
-----------------------------------------------------------------------------------------------------------
(Street)
[Anytown IL 60001]
-----------------------------------------------------------------------------------------------------------
(City) (State) (Zip)
Sex [X] M [ ] F Phone [708] 123-4567] Birthdate [ 4 / 12 / 58 ]
-----------------------------------------------------------------------------------------------------------
(Month) (Day) (Year)
Social Security Number [ 123 - 45 - 6789 ]
-----------------------------------------------------------------------------------------------------------
_______________________________________________________________________
2. JOINT OWNER
Name
-----------------------------------------------------------------------------------------------------------
(First) (Middle) (Last)
Address
-----------------------------------------------------------------------------------------------------------
(Street) (City) (State) (Zip)
Birthdate / / Soc. Sec. No. - - Sex [ ]M [ ]F
-----------------------------------------------------------------------------------------------------------
Phone ( )
-----------------------------------------------------------------------------------------------------------
Unless otherwise provided upon the death
of a Joint Owner who is the spouse of the
other Joint Owner, the surviving spouse --------------------------
will be the Beneficiary. (Signature of Joint Owner)
_______________________________________________________________________
3. ANNUITANT (Complete only if different than Owner.)
Name Birthdate / / Sex [ ]M [ ]F
-----------------------------------------------------------------------------------------------------------
(First) (Middle) (Last)
Address Soc. Sec. No. - -
-----------------------------------------------------------------------------------------------------------
(Street) (City) (State) (Zip) Phone ( )
-----------------------------------------------------------------------------------------------------------
_______________________________________________________________________
4. BENEFICIARY
(Show full name(s), relationship(s), Social Security number(s),
percentage each is to receive and address. Use Special Requests Section
if additional space is needed.)
Primary [Mary J. Doe, Wife, 100%]
-----------------------------------------------------------------------------------------------------------
Primary [Mary J. Doe, Wife, 100%]
-----------------------------------------------------------------------------------------------------------
[234-56-7890]
-----------------------------------------------------------------------------------------------------------
[123 Main Street, Anytown, IL]
-----------------------------------------------------------------------------------------------------------
Contingent
_______________________________________________________________________
5. PURCHASE PAYMENT ALLOCATION
Initial Purchase Payment $ [10,000]
-----------------------------------------------------------------------------------------------------------
Must be whole percentages with a minimum of 10% in any Account or
Portfolio. Unless otherwise directed, subsequent purchase payments will
be allocated as shown. Total Allocation must equal 100%.
- ---- % General Account
- ---- J.P. Morgan Investment Management Lord Abbett
- ---- % Select Equity Portfolio [30]% Growth & Income Portfolio
-----
-----------------------------------------------------------------------------------------------------------
- ---- % Large Cap Stock Portfolio [20]% Bond Debenture Portfolio
----
-----------------------------------------------------------------------------------------------------------
- ---- % Small Cap Stock Portfolio
- ---- % International Equity Portfolio GAIMCO
[50] % Quality Bond Portfolio ----% Money Market Portfolio
- ----
-----------------------------------------------------------------------------------------------------------
_______________________________________________________________________
6. TYPE OF PLAN
Non-Qualified
_______________________________________________________________________
7. SPECIAL REQUESTS
_______________________________________________________________________
8. DOLLAR COST AVERAGING TRANSFERS- I authorize Dollar Cost Averaging
Transfers of $____________ to be transferred each month ($500 minimum)
from the GAIMCO Money Market Portfolio or the General Account ($6,000
minimum required in the GAIMCO Money Market Portfolio or the General
Account or amount needed to complete all transfers.)
FROM TO
Check One J.P. Morgan Investment Management
[ ] GAIMCO ----% Select Equity Portfolio
Money ----% Large Cap Stock Portfolio
Market ----% Small Cap Stock Portfolio
Portfolio ----% International Equity Portfolio
[ ] General ----% Quality Bond Portfolio
Account
Lord Abbett
----% Growth and Income Portfolio
----% Bond Debenture Portfolio
GAIMCO
----% Money Market Portfolio
(if transfers are made from the
General Account)
----
100% Total
I authorize transfers to be made for: [ ] 12 months [ ] 24 months
[ ] 36 months [ ] 48 months [ ] 60 months Other ____ months
Dollar Cost Averaging Transfers and Rebalancing Transfers are not
available simultaneously.
_______________________________________________________________________
9. AUTOMATIC WITHDRAWALS - I authorize automatic monthly withdrawals of
__________. Total monthly withdrawals cannot exceed 10% of purchase
payments in any 12 month period.
I understand that Automatic Withdrawals are available only if I am over
age 59 1/2.
FEDERAL AND STATE INCOME TAX WITHHOLDING
Check one: [ ] I elect to have Federal Income Tax withheld from these
distributions.
[ ] I elect NOT to have Federal Income Tax withheld from
these distributions.
Note: Even if you elect not to have Federal Income Tax withheld from a
distribution, you are liable for payment of Federal Income Tax on the
taxable portion of your contract. You may also be subject to tax
penalties under the estimated tax payment rules if your payments of
estimated tax and withholding, if any, are not adequate.
If applicable, a State Income Tax election will be made as elected
above for Federal Income Tax withholding.
_______________________________________________________________________
10. REBALANCING TRANSFERS - I authorize Rebalancing Transfers to be made in
the applicable percentages elected in the Purchase Payment Allocation
section. Rebalancing transfers are not made to or from the General
Account.
Transfers are to be made: [ ] quarterly [ ] semi-annually [ ] annually.
Dollar Cost Averaging Transfers and Rebalancing Transfers are not
available simultaneously.
_______________________________________________________________________
11. ANNUITY OPTION - If no Annuity Option is
specified, the Life Annuity with 10 years ______________________
Guaranteed Option will be automatically applied. Indicate Annuity Option
_______________________________________________________________________
12. ANNUITY DATE - The Annuity Date must always be
on the first day of a calendar month and must
be at least one month after the Issue Date. The
Annuity Date may not be later than the first day
of the calendar month following the Annuitant's _____________________
85th birthday. Indicate Annuity Date
_______________________________________________________________________
13. Will the annuity applied for replace or change any existing life insurance or annuity? [ ] Yes [ ] No
_______________________________________________________________________
14. ACKNOWLEDGMENT AND AUTHORIZATION - I (We) agree that the above
information and statements and those made on the reverse side are true
and correct to the best of my (our) knowledge and belief and are made
as the basis of my (our) application. I (We) acknowledge receipt of the
current prospectus(es) of First Cova Variable Annuity Account One, Cova
Series Trust, Lord Abbett Series Fund, Inc. and General American
Capital Company. PAYMENTS AND VALUES PROVIDED BY THE CONTRACT FOR
WHICH APPLICATION IS MADE ARE VARIABLE AND ARE NOT GUARANTEED AS TO
DOLLAR AMOUNT. Complete Form W-9.
-----------------------------------------------------------------------------------------------------------
(Signature of Owner(s), Annuitant unless otherwise noted)
-----------------------------------------------------------------------------------------------------------
(Signature of Annuitant if other than Owner)
Signed at [Anytown, IL] Date [May 15, 1995]
_______________________________________________________________________
15. AGENT'S REPORT - Will the annuity replace or change any existing life
insurance or annuity? [ ] No [ ] Yes (Indicate type and cost basis information.)
TYPE COST BASIS
[ ] Life Pre-TEFRA $______________ $______________
(Cost Basis) (Gain)
[ ] Annuity Post-TEFRA $______________ $______________
(Cost Basis) (Gain)
Complete any required replacement forms.
Agent's Signature [Richard Roe] Phone [(312) 456-7890]
-----------------------------------------------------------------------------------------------------------
Agent's Name and Number [Richard Roe] [#723]
-----------------------------------------------------------------------------------------------------------
Name and Address of Firm [ABC Agency] [456 Main, Chicago, IL]
-----------------------------------------------------------------------------------------------------------
_______________________________________________________________________
</TABLE>
Blazzard, Grodd & Hasenauer, P.C.
943 Post Road East
Westport, CT 06880
(203) 226-7866
May 14, 1996
Board of Directors
First Cova Life Insurance Company
120 Broadway
New York, NY 10271
RE: Opinion of Counsel - First Cova Variable Annuity Account One
Gentlemen:
You have requested our Opinion of Counsel in connection with the filing with
the Securities and Exchange Commission of a Pre-Effective Amendment to a
Registration Statement on Form N-4 for the Fixed and Variable Annuity
Contracts (the "Contracts") to be issued by First Cova Life Insurance
Company and its separate account, First Cova Variable Annuity Account One.
We have made such examination of the law and have examined such records and
documents as in our judgment are necessary or appropriate to enable us to
render the opinions expressed below.
We are of the following opinions:
1. First Cova Life Insurance Company is a valid and existing stock life
insurance company of the state of New York.
2. First Cova Variable Annuity Account One is a separate investment
account of First Cova Life Insurance Company created and validly existing
pursuant to the New York Laws and the Regulations thereunder.
3. Upon the acceptance of purchase payments made by an Owner pursuant to
a Contract issued in accordance with the Prospectus contained in the
Registration Statement and upon compliance with applicable law, such an Owner
will have a legally-issued, fully paid, non-assessable contractual interest
under such Contract.
You may use this opinion letter, or a copy thereof, as an exhibit to the
Registration Statement.
We consent to the reference to our Firm under the caption "Legal Opinions"
contained in the Statement of Additional Information which forms a part of the
Registration Statement.
Sincerely,
BLAZZARD, GRODD & HASENAUER, P.C.
By: /S/ RAYMOND A. O'HARA III
_____________________________________
Raymond A. O'Hara III
CONSENT OF INDEPENDENT ACCOUNTANTS
The Contract Owners and Board of Directors of
First Cova Variable Annuity Account One of First Cova Life
Insurance Company
We consent to the use of our report included herein and to the reference to
our firm under the heading "Experts" in the statement of additional
information.
KPMG PEAT MARWICK LLP
St. Louis, Missouri
May 14, 1996
COVA VARIABLE ANNUITY HYPOTHETICAL PERFORMANCE CALCULATIONS
A. ASSUMPTIONS
1.40% INSURANCE CHARGE
WITHDRAWAL CHARGE OF 7% IN YEAR 1, 5% IN YEAR 5
$30 CONTRACT MAINTENANCE CHARGE, ALLOCATED BASED ON THE AVERAGE POLICY SIZE OF
$30,000
B. PORTFOLIO PERFORMANCE
<TABLE>
<CAPTION>
<S> <C> <C> <C>
10 YR.
PORTFOLIO OR ITD 5 YR. 1 YR.
- ----------------------- ------ ----- -----
ACTIVE EQUITY COMPOSITE 15.51 17.71 32.56
STRUCTURED STOCK
SELECTION COMPOSITE 14.05 17.40 37.47
SMALL CAP DIRECTLY
INVESTED COMPOSITE 12.00 20.75 35.29
ACTIVE FIXED INCOME
COMPOSITE 9.52 9.46 17.71
L.A. BOND DEBENTURE 10.10 16.00 17.50
GAIMCO MONEY MARKET 6.46 4.82 6.17
- ----------------------- ------ ----- -----
</TABLE>
C. CALCULATIONS
NON-STANDARD STANDARD
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
10 YR. 10 YR.
PORTFOLIO OR ITD 5 YR. 1 YR. OR ITD 5 YR. 1 YR.
- ----------------------- ------ ----- ----- ------ ------ ------
ACTIVE EQUITY COMPOSITE 14.11 16.31 31.16 14.01 11.71 24.06
STRUCTURED STOCK
SELECTION COMPOSITE 12.65 16.00 36.07 12.55 11.40 28.97
SMALL CAP DIRECTLY
INVESTED COMPOSITE 10.60 19.35 33.89 10.50 14.75 26.79
ACTIVE FIXED INCOME
COMPOSITE 8.12 8.06 16.31 8.02 3.46 9.21
L.A. BOND DEBENTURE 8.70 14.60 16.10 8.60 10.00 9.00
GAIMCO MONEY MARKET 5.06 3.42 4.77 4.96 (1.18) (2.33)
- ----------------------- ------ ----- ----- ------ ------ ------
</TABLE>
COVA VARIABLE ANNUITY ACTUAL PERFORMANCE CALCULATIONS
<TABLE>
<CAPTION>
Monthly Returns
Variable Anuity - Since Inception
Original Purchase - 12/11/89
Valuation Date - 12/29/95
<S> <C> <C> <C> <C> <C> <C> <C>
GROWTH AND INCOME Units This Total Total
- -----------------
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ----------------- ------------------------ ---- ---------- ---------- ------------ ---------- ----------
12/11/89 Purchase $1,000.00 10.000000 100.000 100.000 $ 1,000.00
12/11/90 Contract Fee (7.39) 9.991916 (0.740) 99.260 $ 991.80
12/31/91 Contract Fee (5.26) 11.635826 (0.452) 98.808 $ 1,149.72
12/11/92 Contract Fee (5.07) 14.232895 (0.356) 98.452 $ 1,401.26
12/11/93 Contract Fee (5.10) 16.227131 (0.314) 98.138 $ 1,592.50
12/11/94 Contract Fee (5.25) 16.145116 (0.325) 97.813 $ 1,579.20
12/11/95 Contract Fee (5.70) 21.265128 (0.268) 97.545 $ 2,074.30
12/29/95 Value before Wthdrwl Chg 21.306277 0.000 97.545 $ 2,078.31
12/29/95 Withdrawl Charge and
Cont Fee 0.03 ($32.68) 21.306277 (1.534) 96.011 $ 2,045.63
12/29/95 Remaining Value 21.306277 0.000 96.011 $ 2,045.63
</TABLE>
<TABLE>
<CAPTION>
VA Standard Inception to Date Return
Valuation Date - 12/29/95
ANNUALIZED
<S> <C> <C> <C>
Total Value Total
Portfolio Purchase Amount Units Held Return
- ------------------ ------------------- ------------ -------
LA Growth & Income $ 1,000.00 $ 2,045.63 12.55%
</TABLE>
<TABLE>
<CAPTION>
Monthly Returns
Variable Anuity - Since Inception
Original Purchase - 12/11/89
Valuation Date - 12/29/95
<S> <C> <C> <C> <C> <C> <C> <C>
GROWTH AND INCOME Units This Total Total
- -----------------
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ----------------- ------------------------ ---- ---------- ---------- ------------ ---------- ----------
12/11/89 Purchase $1,000.00 10.000000 100.000 100.000 $ 1,000.00
12/11/90 Contract Fee 9.991916 0.000 100.000 $ 999.19
12/31/91 Contract Fee 11.635826 0.000 100.000 $ 1,163.58
12/11/92 Contract Fee 14.232895 0.000 100.000 $ 1,423.29
12/11/93 Contract Fee 16.227131 0.000 100.000 $ 1,622.71
12/11/94 Contract Fee 16.145116 0.000 100.000 $ 1,614.51
12/11/95 Contract Fee 21.265128 0.000 100.000 $ 2,126.51
12/29/95 Value before Wthdrwl Chg 21.306277 0.000 100.000 $ 2,130.63
12/29/95 Withdrawl Charge and
Cont Fee 0.03 ($32.68) 21.306277 (2.379) 97.621 $ 2,079.95
12/29/95 Remaining Value 21.306277 0.000 97.621 $ 2,079.95
</TABLE>
<TABLE>
<CAPTION>
VA Non-Standard Inception to Date Return
Valuation Date - 12/29/95
ANNUALIZED
<S> <C> <C> <C>
Total Value Total
Portfolio Purchase Amount Units Held Return
- ------------------ ------------------- ------------ -------
LA Growth & Income $ 1,000.00 $ 2,130.63 13.31%
</TABLE>
<TABLE>
<CAPTION>
Monthly Returns
Variable Anuity - Year-to-Date
Original Purchase - 12/31/94
Valuation Date - 12/31/95
<S> <C> <C> <C> <C> <C> <C> <C>
GROWTH AND INCOME Units This Total Total
- -----------------
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ----------------- ------------------------ ---- ---------- ---------- ------------ ---------- ----------
12/31/94 Purchase $1,000.00 16.642028 60.089 60.089 $ 1,000.00
12/29/95 Value before Wthdrwl Chg 21.306277 0.000 60.089 $ 1,280.27
12/29/95 Withdrawl Charge 0.07 ($70.00) 21.306277 (3.285) 56.803 $ 1,210.27
12/29/95 Contract Fee (5.68) 21.306277 (0.267) 56.537 $ 1,204.59
12/29/95 Remaining Value 21.306277 0.000 56.537 $ 1,204.59
</TABLE>
<TABLE>
<CAPTION>
VA Standard Year-to-Date Return
Valuation Date - 12/31/95
ANNUALIZED
<S> <C> <C> <C>
Total Value Total
Portfolio Purchase Amount Units Held Return
- ------------------ ------------------- ------------ -------
LA Growth & Income $ 1,000.00 $ 1,204.59 20.46%
</TABLE>
<TABLE>
<CAPTION>
Monthly Returns
Variable Anuity - Year-to-Date
Original Purchase - 12/31/94
Valuation Date - 12/31/95
<S> <C> <C> <C> <C> <C> <C> <C>
GROWTH AND INCOME Units This Total Total
- -----------------
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ----------------- ------------------------ ---- ---------- ---------- ------------ ---------- ----------
12/31/94 Purchase $1,000.00 16.642028 60.089 60.089 $ 1,000.00
12/29/95 Value before Wthdrwl Chg 21.306277 0.000 60.089 $ 1,280.27
12/29/95 Withdrawl Charge 0.07 ($70.00) 21.306277 (3.285) 56.803 $ 1,210.27
12/29/95 Contract Fee (5.68) 21.306277 (0.267) 56.537 $ 1,204.59
12/29/95 Remaining Value 21.306277 0.000 56.537 $ 1,204.59
</TABLE>
<TABLE>
<CAPTION>
VA Non-Standard Year-to-Date Return
Valuation Date - 12/31/95
ANNUALIZED
<S> <C> <C> <C>
Total Value Total
Portfolio Purchase Amount Units Held Return
- ------------------ ------------------- ------------ -------
LA Growth & Income $ 1,000.00 $ 1,280.27 28.03%
</TABLE>
<TABLE>
<CAPTION>
Monthly Returns
Variable Anuity - 5 Years
Original Purchase - 12/11/89
Valuation Date - 12/29/95
<S> <C> <C> <C> <C> <C> <C> <C>
GROWTH AND INCOME Units This Total Total
- -----------------
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ----------------- ------------------------ ---- ---------- ---------- ------------ ---------- ----------
12/31/90 Purchase $1,000.00 10.146589 98.555 98.555 $ 1,000.00
12/31/91 Contract Fee (7.88) 12.725687 (0.619) 97.936 $ 1,246.31
12/31/92 Contract Fee (8.23) 14.504325 (0.567) 97.369 $ 1,412.27
12/31/93 Contract Fee (7.99) 16.424494 (0.486) 96.883 $ 1,591.25
12/30/94 Contract Fee (8.31) 16.642028 (0.499) 96.384 $ 1,604.02
12/29/95 Contract Fee (9.04) 21.306277 (0.424) 95.959 $ 2,044.53
12/29/95 Value before Wthdrwl Chg 21.306277 0.000 95.959 $ 2,044.53
12/29/95 Withdrawl Charge and
Cont Fee 0.05 ($45.00) 21.306277 (2.112) 93.847 $ 1,999.53
12/29/95 Remaining Value 21.306277 0.000 93.847 $ 1,999.53
</TABLE>
<TABLE>
<CAPTION>
VA Standard 5 Year Return
Valuation Date - 12/29/95
ANNUALIZED
<S> <C> <C> <C>
Total Value Total
Portfolio Purchase Amount Units Held Return
- ------------------ ------------------- ------------ -------
LA Growth & Income $ 1,000.00 $ 1,999.53 14.86%
</TABLE>
<TABLE>
<CAPTION>
Monthly Returns
Variable Anuity - 5 Years
Original Purchase - 12/11/89
Valuation Date - 12/29/95
<S> <C> <C> <C> <C> <C> <C> <C>
GROWTH AND INCOME Units This Total Total
- -----------------
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ----------------- ------------------------ ---- ---------- ---------- ------------ ---------- ----------
12/31/90 Purchase $1,000.00 10.146589 98.555 98.555 $ 1,000.00
12/31/91 Contract Fee 12.725687 0.000 98.555 $ 1,254.18
12/31/92 Contract Fee 14.504325 0.000 98.555 $ 1,429.48
12/31/93 Contract Fee 16.424494 0.000 98.555 $ 1,618.72
12/30/94 Contract Fee 16.642028 0.000 98.555 $ 1,640.16
12/29/95 Contract Fee 21.306277 0.000 98.555 $ 2,099.85
12/29/95 Value before Wthdrwl Chg 21.306277 0.000 98.555 $ 2,099.85
12/29/95 Withdrawl Charge and
Cont Fee 0.05 ($45.00) 21.306277 (2.112) 96.443 $ 2,054.85
12/29/95 Remaining Value 21.306277 0.000 96.443 $ 2,054.85
</TABLE>
<TABLE>
<CAPTION>
VA Non-Standard 5 Year Return
Valuation Date - 12/29/95
ANNUALIZED
<S> <C> <C> <C>
Total Value Total
Portfolio Purchase Amount Units Held Return
- ------------------ ------------------- ------------ -------
LA Growth & Income $ 1,000.00 $ 2,099.85 15.99%
</TABLE>
COMPANY ORGANIZATIONAL CHART - COVA CORPORATION
Cova Corporation, a Missouri corporation, is owned by General American Life
Insurance Company, a Missouri corporation.
Cova Corporation owns 100% of Cova Financial Services Life Insurance Company,
a Missouri company, Cova Financial Life Insurance Company, a California
company, and Cova Life Management Company, a Delaware company.
Cova Financial Services Life Insurance Company owns 100% of First Cova Life
Insurance Company, a New York company.
Cova Life Management Company owns 100% of Cova Investment Advisory
Corporation, an Illinois company, Cova Investment Allocation Corporation, an
Illinois company, and Cova Life Sales Company, a Delaware company.
