<PAGE>
SECURITIES AND EXCHANGE COMMISSION 33-79750
Washington, DC 20549
---------------------
FORM S-1
POST-EFFECTIVE AMENDMENT NO. 2
Under
The Securities Act of 1933
--------------------------
MML BAY STATE LIFE INSURANCE COMPANY
------------------------------------
(Exact name of registrant as specified in its charter)
Missouri 43-0581430
-------------- ------------
(State or other jurisdiction of (I.R.S. Employer Number)
incorporation or organization)
63
--------------------
(Primary Standard Industrial Classification Code Number)
1295 State Street
Springfield, Massachusetts 01111
---------------------------------
(413)744-8441
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Thomas J. Finnegan, Jr.
Vice President, Secretary and Associate General Counsel
MML Bay State Life Insurance Company
Springfield, MA 01111
(413)744-8891
(Name, address and telephone number of agent for service of process)
-----------------------------------------------
Approximate date of commencement
of proposed sale to the public: May 1, 1996
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 of the Securities Act of 1933
check the following box. [X]
---
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MML BAY STATE LIFE INSURANCE COMPANY
Cross Reference Sheet Pursuant to
Regulation S-K, Item 501(b)
Form S-1 Item Number and Caption Heading in Prospectus
------------------------------------------------------
<TABLE>
<S> <C>
1. Forepart of the Registration
Statement and Outside Front
Cover Page of Prospectus..................... Outside Front Cover Page
2. Inside Front and Outside
Back Pages of Prospectus..................... Inside Front Cover
3. Summary Information,
Risk Factors and
Ratio of Earnings to
Fixed Charges................................ Financial Statements
4. Use of Proceeds.............................. Investments by MML Bay State
5. Determination of
Offering Price............................... Not Applicable
6. Dilution..................................... Not Applicable
7. Selling Security Holders..................... Not Applicable
8. Plan of Distribution......................... Distribution of Contracts
9. Description of Securities
to be Registered............................. Product Description
10. Interests and Named
Experts and Counsel.......................... Not Applicable
11. Information with Respect
to the Registrant............................ MML Bay State &
MassMutual -- Description
of the Business; Management's
Discussion and Analysis;
Executive Officers and
Directors; Executive
Compensation; Legal
Proceedings; Financial
Statements
12. Position on Indemnification
for Securities Act
Liabilities.................................. Not Applicable
</TABLE>
<PAGE>
PROSPECTUS
MAY 1, 1965
MML Bay State Life Insurance Company
Fixed Account with Market Value Adjustment
Offered through OppenheimerFunds LifeTrust Variable Annuity
This prospectus (the "Prospectus") describes MML Bay State Life Insurance
Company's ("MML Bay State" or the "Company") Fixed Account (the "Fixed Account")
with Market Value Adjustment. The Fixed Account is available for use with the
OppenheimerFunds LifeTrust Variable Annuity Contract (the ``Contract'') issued
by MML Bay State. The Fixed Account constitutes an account to which a Contract
Owner may allocate purchase payments or Accumulated Value in accordance with the
Contract's transfer rules. (For a discussion of the transfer restrictions
applicable to the Contract, please consult the Contract prospectus). Since the
Fixed Account is available only through the Contract, an investor should
carefully review the discussion of the Contract contained in that prospectus.
The focus of this Prospectus is limited to the Fixed Account's operations and
features.
MML Bay State guarantees specified rates of interest for amounts allocated to
the Fixed Account for specified periods of time. The interest rate stipulated
for a particular period (the Guaranteed Rate) is an annual effective yield.
Additionally, although Guaranteed Rates will fluctuate, they will never go below
3%. MML Bay State's assets, including amounts allocated to the Fixed Account,
are available to meet the guarantees associated with the Fixed Account. These
assets are chargeable with liabilities arising out of other business of the
Company. Purchase payments and transfers of Accumulated Value may be made among
the Fixed Account and to the Divisions of MML Bay State Variable Annuity
Separate Account 1 (the "Separate Account").
Please note that amounts taken from the Fixed Account by partial or full
redemption, received from payment of a death benefit following the death of the
Contract Owner who is not the annuitant, and transfers made prior to an
Expiration Date are subject to a Market Value Adjustment. Therefore a Contract
Owner may experience a negative investment return.
The annuity benefits available under the Contract may be either fixed or
variable amounts or a combination of both. The Accumulated Value prior to
maturity and the amount of any variable annuity payments thereafter will vary
with the investment performance of the Divisions selected and the amounts
allocated to the Fixed Account.
The date of this Prospectus is May 1, 1996.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
THIS PROSPECTUS MUST BE ACCOMPANIED BY THE PROSPECTUSES OF MML BAY STATE'S
OPPENHEIMERFUNDS LIFETRUST VARIABLE ANNUITY, MML SERIES INVESTMENT FUND, AND
OPPENHEIMER VARIABLE ACCOUNT FUNDS.
MML Bay State Life Insurance Company
1295 State Street
Springfield, MA 01111
(413) 744-8441
<PAGE>
Table of Contents
Section
- -------
Glossary........................................................... 3
I. Product Description........................................... 4
The Nature of the Contract and the MVA........................ 4
Availability of the Fixed Account............................. 4
The Fixed Account and the Market Value Adjustment Feature..... 4
Market Value Adjustment....................................... 4
Accumulation Period of a Contract............................. 5
Establishment of the Guaranteed Rate.......................... 5
The MVA's Applicability on Redemptions........................ 5
II. Investments by MML Bay State.................................. 6
III. Distribution of Contracts..................................... 6
IV. Federal Discussion Taxation................................... 6
V. Accounting Practices.......................................... 6
VI. Management's Discussion and Analysis of Financial Condition and
Results of Operations......................................... 7
Results of Operations......................................... 7
Statement of Financial Position............................... 10
Liquidity and Capital Resources............................... 10
Investments................................................... 10
VII. MML Bay State & MassMutual - Description of the Business...... 12
VIII.Directors and Officers of MML Bay State....................... 13
IX. Executive Compensation........................................ 14
X. Experts and Legal Proceedings................................. 14
Experts....................................................... 14
XI. Selected Historical Financial Data............................ 15
Audited Financial Statements.................................. 17
2
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Glossary
As used in this Prospectus, the following terms mean:
Accumulated Amount: For each amount credited to a Segment of the Fixed Account
the Accumulated Amount on any date is the amount credited to the Segment
accumulated to that date at the Guaranteed Rate for that amount.
Accumulated Value: The value of a Contract on or prior to the Maturity Date
equal to the Variable Value plus the Fixed Value.
Accumulation Period: The period prior to the Maturity Date, during the lifetime
of the Annuitant and Owner.
Accumulation Unit: A unit of measurement used in determining the value of
amounts credited to a Contract in a Division of the Separate Account on or prior
to the Maturity Date.
Annuitant: The person on whose life the Contract is issued.
Beneficiary: The person(s) or entity(ies) designated by the Contract Owner to
receive a death benefit under the Contract, if any, upon the death of the
Contract Owner or the Annuitant.
Cash Redemption Value: The value of a Contract which a Contract Owner will
receive if the Contract is redeemed, equal to Accumulated Value less
Administrative Charges, Sales Charges, premium taxes, and a Market Value
Adjustment, if any such charges are applicable.
Contract: The OppenheimerFunds LifeTrust Variable Annuity Contract issued by
MML Bay State.
Contract Owner(s): The owner (and in some instances the owners) of a Contract.
Contract Owners may include the Annuitant, an employer, a trust, or any entity
specified in an employee benefit plan.
Division(s): A sub-account of the Separate Account, the assets of which consist
of shares of a specified Fund of either MML Series Investment Fund or
Oppenheimer Variable Account Funds.
Expiration Date: The Date on which the Guarantee Period for an Accumulated
Amount ends.
Fixed Account: An account which pays interest at a Guaranteed Rate. If such
amounts are withdrawn prior to the end of the Guarantee Period, a Market Value
Adjustment will be made. Assets attributable to the Fixed Account are not part
of the assets which are allocated to the Divisions of the Separate Account.
Fixed Value: On any date, the Fixed Value of the Contract is the sum of the
Accumulated Amounts credited to all Segments of the Fixed Account.
Funds: The separate series of shares of Oppenheimer Variable Account Funds and
MML Series Investment Fund, both of which are open-end, diversified management
investment companies, registered with the Securities and Exchange Commission, in
which the Divisions of the Separate Account invest.
Guarantee Period: The period for which interest accrues at the Guaranteed Rate
on an amount credited to a Segment. Guarantee Periods range in whole-year
periods from one to ten years.
Guaranteed Rate: The effective annual interest rate MML Bay State uses to
accrue interest on an amount credited to a Segment as of a certain date.
Guarantee Rates are level for the entire Guarantee Period and are fixed at the
time an amount is credited to the Segment.
Market Value Adjustment ("MVA"): An adjustment made to the amount that the
Contract Owner will receive if money is taken from an Accumulated Amount prior
to the Expiration Date of its Guarantee Period.
Maturity Date: The date designated by the Contract Owner as of which Variable
Monthly Income payments (or, if elected, Fixed Income payments or a payment in
one sum) will begin. This date may be no later than the Annuitant's 90th
birthday (unless an earlier date is required by law.)
Purchase Payment: An amount paid to MML Bay State by, or on behalf of, the
Annuitant.
Segment: All Guarantee Periods of a given length constitute a Segment.
Segments for all Guarantee Periods may not be available at one time.
Service Center: The office at which the administration of the Contract occurs.
Valuation Date: A valuation date is any date on which the net asset value of the
shares of the Funds is determined. Generally, this will be any date on which
the New York Stock Exchange (or its successor) is open for trading.
Valuation Period: The period of time from the end of one Valuation Date to the
end of the next Valuation Date.
Valuation Time: The time of the close of the New York Stock Exchange (or its
successor) (currently 4:00 p.m. New York time) on a Valuation Date. All actions
to be performed on a Valuation Date will be performed as of the Valuation Time.
Variable Monthly Income: A benefit providing for monthly payments that vary
with, and reflect the investment performance of, one or more Divisions of the
Separate Account.
Variable Value: On any date, the Variable Value of a Contract is the sum of the
values of the Accumulation Units credited to each Division of the Separate
Account. The value in each Division is equal to the Accumulation Unit Value
multiplied by the number of units in that Division You own.
You or Your refers to the Contract Owner.
3
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I. Product Description
The Nature of the Contract and the MVA
The investment option described in this Prospectus is a Fixed Account with
Market Value Adjustment ("MVA") available in conjunction with the Flexible
Premium Variable Annuity Contract (the "Contract") offered by MML Bay State Life
Insurance Company ("MML Bay State"). The Contract is described in greater
detail in the prospectus for OppenheimerFunds LifeTrust Variable Annuity.
Investors should review that prospectus in conjunction with this prospectus
before deciding whether to invest in the Contract or allocate sums to the Fixed
Account.
Allocations may be made to the Fixed Account either at the time a purchase
payment is made or by transferring monies held in an investment division of MML
Bay State Variable Annuity Separate Account 1 (the "Separate Account") to the
Fixed Account. Allocations to a Guarantee Period (or Segment) must be for at
least $1,000. The Accumulated Value of the Fixed Account is not guaranteed
against the claims of the Company's creditors.
When an amount is allocated to the Fixed Account, a corresponding Guarantee
Period is selected. If the allocated amount remains in the Fixed Account until
the applicable Expiration Date, its value will be equal to the amount originally
allocated multiplied, on a annually compounded basis, by its Guaranteed Rate.
A Market Value Adjustment will be made if sums are withdrawn from the Fixed
Account prior to their Expiration Date.
As is also discussed in the Contract prospectus, the Contract provides for the
accumulation of values prior to maturity and for the distribution of annuity
benefits thereafter. Additionally, a death benefit is also available under the
Contract. The earnings on deposits allocated to the Fixed Account will have an
impact on the Contract's Accumulated Value, its Maturity Value, its Cash
Redemption Value and the death benefit.
Availability of the Fixed Account
The Fixed Account is not available in all states.
The Fixed Account and the Market Value
Adjustment Feature
The Fixed Account is available during the Accumulation Period of the Contract.
(See, Accumulation Pay-in Period of the Contract prospectus.) The Fixed Account
offers different Guarantee Periods, which provide the option of earning interest
at various Guaranteed Rates on all or a portion of Your Accumulated Value.
Please note that amounts credited to a Guarantee Period at different times may
have different Guaranteed Rates, Current Rates, and Expiration Dates since MML
Bay State changes the Current and Guaranteed Rates periodically.
You may allocate purchase payments or transfer all or a portion of Your
Accumulated Value to the Fixed Account. Amounts credited to the Fixed Account
will earn interest at the Guaranteed Rate applicable for the Guarantee Period
selected on the date the amounts are credited. The applicable Guaranteed Rate
does not change during the Guarantee Period. The Guaranteed Rate may never be
less than 3%.
To the extent permitted by law, we reserve the right at any time to offer
Guarantee Periods that differ from those available when Your Contract was
issued. We also reserve the right, at any time, to stop accepting purchase
payments, transfers, or renewals for a particular Guarantee Period. Guarantee
Periods may be available in periods of one to ten years. Since the specific
Guarantee Periods available may change periodically, please contact the Service
Center to determine the Guarantee Periods currently being offered.
Market Value Adjustment
Any withdrawal of Your Accumulated Amount will be subject to a Market Value
Adjustment ("MVA") unless the effective date of the withdrawal is within 30 days
prior to the end of a Guarantee Period. For this purpose, redemptions,
transfers, death benefits based on a Contract Owner's death (where the Contract
Owner and the Annuitant are different), and maturity amounts are treated as
withdrawals. The MVA is an adjustment that will be applied to the amount being
withdrawn which is subject to the MVA, after the deduction of any applicable
Administrative Charge and before the deduction of any applicable Sales Charge.
The MVA can be positive or negative. The amount being withdrawn after
application of the MVA can therefore be greater than or less than the amount
withdrawn before the application of the MVA.
An MVA will not be applied upon the payment of a Death Benefit following the
death of the Annuitant.
The MVA will reflect the relationship between the Current Rate (as defined
below) for the Accumulated Amount being withdrawn and the Guaranteed Rate. It
also reflects the time remaining in the applicable Guarantee Period. Generally,
if the Guaranteed Rate is lower than the applicable Current Rate, then the
application of the MVA will result in a lower payment upon withdrawal.
Similarly, if the Guaranteed Rate is higher than the applicable Current Rate,
the application of the MVA will result in a higher payment upon withdrawal.
The Market Value Adjustment which is applied to the amount being withdrawn is
determined by using the following formula:
-- --
| n |
MVA = Amount X | (1 + i)--- |
| (-----)365 - 1 |
| (1 + j) |
-- --
where,
Amount is the amount being withdrawn from a given accumulated amount less any
applicable administrative charges.
i is the Guaranteed Rate being credited to the Accumulated Amount subject to the
MVA; and
j, the "Current Rate," is the Guaranteed Rate, available as of the effective
date of the application of the MVA, for current allocations to the Segment with
a Guarantee Period equal to the time remaining to the Expiration Date for the
amount being
4
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withdrawn rounded to the next higher number of complete years; and
n, is the number of days remaining in the Guarantee Period of the amount subject
to the MVA.
In the determination of "j," if the Company currently does not offer the
applicable Segment, we will determine "j" above by interpolation or
extrapolation of the Guaranteed Rate for the Guarantee Periods then available.
EXAMPLES
The following examples illustrate how the MVA operates on amounts held in a
particular Segment:
Example 1
$1,000 is applied on May 10, 1994, into a Segment with a 5 year Guarantee
period. The Guaranteed Rate for amounts applied to this Segment on May 10,
1994, is 6%. If the $1,000 is left in that Segment until May 10, 1999, it will
accumulate at a 6% effective annual rate of interest for the full 5 years to
$1,338.23.
If, however, the full amount is taken from the Segment as of May 10, 1998:
(1) The Guaranteed Rate applied on May 10, 1998 to amounts credited to a
1-year Segment is 4%; and
(2) The accumulated amount prior to the application of the MVA as of
May 10, 1998 equals:
$1,000 x 1.06/4/ = $1,262.48
(3) The number of days remaining = 365 (n = 365);
(4) The MVA equals $24.28, and is calculated according to the following
formula:
[ 365 ]
[ (1.06) --- ]
$24.28 = $1,262.48 X [ (----) 365 - 1 ]
[ (1.04) ]
[ ]
The market value for the purposes of surrender on May 10, 1998, of the amount
credited to the 5-year segment on May 10, 1994, is therefore equal to $1,286.76
($1,262.48 + $24.28).
Example 2
$1,000 is applied to a 7-year Segment on May 10, 1992, with a Guaranteed Rate of
5% and will accumulate to $1,407.10 if left in the Segment until May 10, 1999.
If, however, the full amount is taken from the Segment as of May 10, 1995:
(1) The Guaranteed Rate applied on May 10, 1995 to amounts credited to a 4-
year Segment is 10%; and
(2) The accumulated amount prior to the application of
MVA as of May 10, 1995 equals:
$1,000 x 1.05/3/ = $1,157.63
(3) The period of time from May 10, 1995 to the end of the Guarantee
Period is 4 years or 1460 days
(n = 1460);
(4) The MVA equals $-196.56, and is calculated according to the following
formula:
[ 1400 ]
[ ( 1.05) ---- ]
$ - 196.56 = $1,157.63 X [ ( ----) 365 - 1 ]
[ ( 1.10) ]
[ ]
The market value for purposes of surrender on May 10, 1995, of the amount
credited to the 7-year Segment on May 10, 1992, is therefore equal to $961.07
($1,157.63 - $196.56 = $961.07).
THE EXAMPLES SET FORTH ABOVE ARE HYPOTHETICAL AND ARE NOT INDICATIVE OF FUTURE
OR PAST PERFORMANCE.
Accumulation Period of a Contract
Variable annuities are designed to permit a Contract Owner to accumulate values
over a period of time. Generally, a Contract Owner will use such accumulated
values for long term needs such as retirement planning. Accordingly, in many
instances, amounts allocated to the Fixed Account will be subject to several
Guarantee Periods over the life of the Contract.
The end of a Guarantee Period for a specific amount credited to a Segment is
called its Expiration Date. At least 45 days, but not more than 75 days, before
the Expiration Date for an Accumulation Amount, we will inform You of the
Guaranteed Rates being offered and the Guarantee Periods available as of the
date of such notice. The Guaranteed Rates on the date of a renewal may be more
or less than the rates quoted in such notice.
The Guarantee Period normally "renews", and in the absence of instructions on
the Expiration Date, we begin crediting interest for a new Guarantee Period
lasting the same amount of time as the one just ended. The Accumulated Amount
then earns interest at the new Guaranteed Rate applicable at the time of
renewal. You may choose different Guarantee Periods from among those we are
then offering, or You may transfer all or a portion of the Accumulated Amount to
the Separate Account.
If Your Accumulated Amount's Segment is no longer available for new amounts
credited, or You choose a different Segment that is no longer available, we will
try to reach You so that You may make another choice.
If a choice is not made at this point, the Segment with the next shorter
Guarantee Period available will be used and if not available, the Segment with
the next longer Period will be used.
Establishment of the Guaranteed Rate
MML Bay State will make the final determination concerning future Guarantee
Rates for future deposits, transfers or renewals. Although we cannot predict
future Guarantee Rates, such Guarantee Rates will never be less than three
percent (3%) per annum.
The MVA's Applicability on Redemptions
As noted above, an MVA will apply if a partial or full redemption of the
Contract is made prior to an Expiration Date. Where a redemption occurs, the
Accumulated Value of the
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Contract will be reduced by the amount surrendered from the Fixed Account prior
to any MVA.
The Cash Redemption Value may also be subject to Contingent Deferred Sales
Charges ("Sales Charges") under the Contract pursuant to the schedule set forth
below:
Year Since Payment Sales Charge Assessed
1st 7%
2nd 6%
3rd 5%
4th 4%
5th 3%
6th 2%
7th 1%
We make this adjustment for Sales Charges since we make no deduction for Sales
Charges when a purchase payment is received. The amount of Sales Charges is
computed based on the date the particular payment is received into the Contract.
Purchase Payments received and redeemed after year 7 are not subject to Sales
Charges. Amounts in the Fixed Account, however, continue to be subject to a
Market Value Adjustment. For more information concerning the application of
Sales Charges, please consult the Contract prospectus.
Please note that other charges are also imposed against the Contract including
mortality and expense risk and administrative charges. For a more detailed
explanation of applicable charges, please see the "Charges and Deductions"
section of the Contract Prospectus.
II. Investments by
MML Bay State
Assets of MML Bay State must be invested in accordance with the requirements
established by applicable state laws regarding the nature and quality of
investments that may be made by life insurance companies and the percentage of
their assets that may be committed to any particular type of investment. In
general, these laws permit investments, within specified limits and subject to
certain qualifications, in federal, state, and municipal obligations, corporate
bonds, preferred and common stocks, real estate mortgages, real estate and
certain other investments.
Proceeds from the Fixed Account will be deposited in a non-unitized segment of
MML Bay State's general account organized as a separate account for accounting
purposes. Proceeds will be used to fund MML Bay State's obligations under the
Contract and amounts not required to fund such obligations may accrue to MML Bay
State as profit. Obligations under the Contract are also met through the
operation of the Divisions to which a Contract Owner has allocated Accumulated
Value. All assets of MML Bay State would be available to meet the guarantees
under the Contracts.
In establishing Guaranteed Rates, MML Bay State intends to take into account the
yields available on the instruments in which it intends to invest the proceeds
from the Contracts. MML Bay State's investment strategy with respect to the
proceeds attributable to allocations made to the Fixed Account will generally be
to invest in investment-grade debt instruments having durations tending to match
the applicable Guarantee Periods.
III. Distribution of Contracts
Effective May 1, 1996, MML Distributors, LLC (``MML Distributors''), 1414 Main
Street, Springfield, MA 01144-1013, a wholly-owned subsidiary of Massachusetts
Mutual Life Insurance Company (``MassMutual''), (the ``Parent''), acts as the
principal underwriter of the Contracts. Both MML Distributors and MMLISI are
registered as broker-dealers under the Securities Exchange Act of 1934 and are
members of the National Association of Securities Dealers, Inc. (the ``NASD'').
The maximum commission a broker-dealer will receive for selling a Contract is
6.25%.
MML Distributors may enter into selling agreements with other broker-dealers
which are registered with the Securities and Exchange Commission and are members
of the NASD (``selling brokers''). The Contracts are sold through agents who are
licensed by state insurance officials to sell the policies. These agents are
also registered representatives of selling brokers or MMLISI. Contracts with the
Fixed Account are offered in states where MML Bay State has received authority
to write modified guarantee annuity business and the Fixed Account and the
Contracts have been approved.
Additionally, Contracts are offered through Oppenheimer's distribution network,
Oppenheimer Funds Distributor, Inc. (``OFDI''). OFDI, MML Bay State Variable
Annuity Separate Account 1, MML Bay State and MML Distributors have entered into
an agreement pursuant to which OFDI has agreed to promote sales of the product
through wholesale distribution arrangements with broker-dealers. Registered
representatives of the particular broker-dealer, who are also properly licensed
to sell MML Bay State products may make such sales.
IV. Federal Taxation Discussion
Please consult pages 18 through 19 of the Contract prospectus for a discussion
of the tax status of the Contract.
V. Accounting Practices
The information presented below should be read in conjunction with the audited
financial statements and other information included elsewhere in this
prospectus.
The financial statements and other financial information included in this
prospectus have been prepared in conformity with accounting practices of the
National Association of Insurance Commissioners and the accounting practices
prescribed or permitted by the Division of Insurance of the State of Missouri
("statutory accounting practices"), which are currently considered to be in
accordance with generally accepted accounting principles ("GAAP") for stock life
insurance subsidiaries of a mutual life insurance company.
The Financial Accounting Standards Board, which has no role in establishing
regulatory accounting practices, issued Interpretation 40, Applicability of
Generally Accepted Accounting Principles to Mutual Life Insurance and Other
Enterprises, and Statement of Financial Accounting Standards No. 120, Accounting
and Reporting by Mutual Life Insurance
6
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Enterprises and by Insurance Enterprises for Certain Long-Duration Participating
Contracts. The American Institute of Certified Public Accountants, which also
has no role in establishing regulatory accounting practices, issued Statement of
Position 95-1, Accounting for Certain Insurance Activities of Mutual Life
Insurance Enterprises. These pronouncements will require mutual life insurance
companies and their stock life insurance subsidiaries to modify their financial
statements in order to continue to be in accordance with generally accepted
accounting principles, effective for 1996 financial statements. The manner in
which policy reserves, new business acquisition costs, asset valuations and the
related tax effects are recorded will change. Management has not determined the
impact of such changes on the Company's statements, but believes implementation
of these pronouncements will cause shareholders' equity to increase. The
financial statements included in this prospectus have been prepared on the basis
as filed with regulatory authorities.
VI. Management's Discussion
and Analysis of Financial
Condition and Results of
Operations
GENERAL
The Company and its Parent's main priority has been to balance financial
strength, policyholders' value and growth with emphasis on financial strength.
With regard to profitability, management believes that net gain from operations,
rather than net income, is the most relevant measure of operating results for
the Company. Net gain from operations represents the excess of income derived
from the Company's business over the costs of business operations (after
deducting taxes). Net income is net gain from operations adjusted by any
realized capital gains or losses (net of taxes). Management's investment
philosophy and practice do not emphasize capital gains as a recurring source of
income or capital and the Company does not manage its investment portfolio to
realize gains for non-economic purposes.
RESULTS OF OPERATIONS
Year Ended December 31, 1995
Compared to Year Ended December 31, 1994
The net loss from operations of $4,575 thousand in 1995 compares unfavorably to
the $1,605 thousand gain for 1994. This loss was primarily due to the September
30, 1995 termination of the Company's coinsurance agreement with MassMutual.
Under the terms of the cancelled agreement, MassMutual had assumed 80% to 100%
of specific plans of insurance. A one-time fee of $6,200 thousand was paid to
MassMutual for which the Company reacquires the right to retain the underwriting
results for these policies. The Company continues to cede specific plans of
insurance on a yearly renewal term basis with MassMutual.
Premium income increased to $92,733 thousand in 1995 from $54,481 thousand in
1994. The 70.2% growth was primarily the result of an annuity product
introduced in late 1994 that recorded increased sales of $22,977 thousand.
Additionally, sales of individual variable life and corporate owned life
policies increased by 28.1%. Corporate owned life policy sales represent a
small number of very large cases sold to corporate clients. Subsequent to
December 31, 1995, the sale of one exceptionally large case resulted in premiums
which exceeded $182,000 thousand, nearly twice the premiums received by the
Company in all of 1995.
The following table sets forth premium, sales and other information for the
Company's products:
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------
1995 1994
----------- -----------
(In Thousands)
<S> <C> <C>
Premium Income:
Variable Life $ 57,874 $ 47,994
Annuities 23,008 31
Corporate Owned Life 11,851 6,456
---------- ----------
Total $ 92,733 $ 54,481
========== ==========
Life Insurance Sales - Face Amount:
Variable Life $1,989,275 $1,705,108
Corporate Owned Life 6,631 18,112
---------- ----------
Total $1,995,906 $1,723,220
========== ==========
Life Insurance In Force
Face Amount:
Variable Life $6,553,122 $4,757,377
Corporate Owned Life 383,725 366,526
---------- ----------
Total 6,936,847 5,123,903
Less reinsurance ceded 1,088,642 2,965,198
---------- ----------
$5,848,205 $2,158,705
========== ==========
Number of Policies
In Force: (In Whole Units)
Variable Life 36,227 27,409
Annuities 610 2
Corporate Owned Life 733 737
---------- ----------
Total 37,570 28,148
========== ==========
Average Face Value of a
new Policy Sold: (In Whole Dollars)
Variable Life $ 192,685 $ 183,168
Corporate Owned Life $ 947,241 $ 646,857
</TABLE>
7
<PAGE>
Net investment and other income increased 21.9%, or $774 thousand in 1995
compared to 1994. This resulted from a 19.5% increase in the average balance of
invested assets and an increase in investment yields on the general investment
account's portfolio. The components of net investment income are set forth
below.
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------
1995 1994
---- ----
(In Thousands)
<S> <C> <C>
Gross investment income:
Bonds $3,229 $2,235
Policy loans 309 229
Cash and short-term investments 104 66
------ ------
Total gross investment income 3,642 2,530
Less investment expenses (107) (96)
------ ------
Net investment income $3,535 $2,434
====== ======
</TABLE>
The expense allowances on reinsurance ceded to the Parent represents a
reimbursement for policy acquisition costs from the Parent, partially offset by
the ceding of policy charges to the Parent under the coinsurance agreement.
Policy charges include charges to policy values for the cost of mortality and
other administrative charges. The expense allowance on reinsurance ceded
increased $394 thousand in 1995, which reflects a $3,184 thousand decrease in
the ceding of policy charges partially offset by a $2,790 thousand decrease in
reimbursed policy acquisition costs. These decreases were caused by the
termination of the coinsurance agreement late in 1995.
Policy benefits and payments for 1995 increased $2,751 thousand, or 93.6% from
1994. This increase was due principally to an $1,849 thousand increase in death
benefits and an $843 thousand increase in surrenders on variable life policies.
Addition to policyholders' reserves and funds increased by $36,552 thousand or
120.1% to $66,974 thousand in 1995 from $30,422 thousand in 1994. The increase
was primarily due to increases in variable life premiums and the introduction of
the new variable annuity product partially offset by the increase in policy
benefits and payments described above.
Operating expenses, which includes administrative services provided by the
Parent, decreased by $738 thousand, or 6.2%, compared to 1994. This decrease is
primarily attributable to a reduction in fees paid to the Parent.
Commissions increased by $4,325 thousand, or 40.2%, in 1995 compared to 1994,
resulting from the increases in individual life insurance and annuity business
and corresponding increases in first year commissions. The increase in
commissions was lower than the increase in premiums due to a reduced commission
structure for the annuity policies.
Federal income taxes increased to $633 thousand in 1995 compared to a $935
thousand tax benefit for 1994. The increase in federal income tax was primarily
due to the tax on policy acquisition costs inherent in a period of substantial
sales growth. The tax benefit in 1994 resulted from the ceding of the surrender
charge offset, resulting from the use of the commissioners' reserve valuation
method for establishing reserves.
Net realized capital losses were $43 thousand for 1995 and $24 thousand for
1994, after the transfer to Interest Maintenance Reserve ("IMR"). The IMR
captures after-tax realized capital gains and losses due to changes in interest
rates for all types of fixed income investments. Net realized capital losses
were comprised of the following:
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------
1995 1994
---- ----
(In Thousands)
<S> <C> <C>
Bonds $ 448 (7)
Federal and state taxes (241) (24)
----- -----
Net realized capital gain (loss) before
transfer to IMR 207 (31)
Transfer to IMR (250) 7
----- -----
Net realized capital loss $ (43) $ (24)
===== =====
</TABLE>
Gross capital gains in 1995 of $535 thousand were the result of bond sales in a
decreasing interest rate environment. The net capital losses after transfer to
the IMR are credit related. In 1994, net realized capital losses from the sales
of bonds consisted of gross capital losses of $52 thousand offset by $45
thousand in gross capital gains.
As a result of the foregoing factors, a net loss of $4,618 thousand was incurred
in 1995, compared to net income of $1,581 thousand in 1994.
Results of Operations
Year Ended December 31, 1994
Compared to Year Ended December 31, 1993
Net gain from operations in 1994 increased by 141.4% to $1,605 thousand from
$665 thousand for 1993. This increase was primarily the result of a current year
tax benefit partially offset by increased sales, which causes increased
acquisition costs that are immediately expensed under statutory accounting
principles and increased production related operating expenses.
Premium income increased to $54,481 thousand for 1994 from $43,469 thousand for
1993. The 25.3% growth rate of premiums in 1994 was the result of strong
individual variable life sales partially offset by a reduction in the sales of
corporate owned life policies. The coinsurance agreement which the Company
entered into with the Parent in 1992 remained in effect. Under the agreement,
the Parent assumes a portion of the business written by the Company.
8
<PAGE>
The following table sets forth premium, sales and other information for the
Company's products:
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------
1994 1993
----------- -----------
(In Thousands)
<S> <C> <C>
Premium Income:
Variable Life & Annuities $ 48,025 $ 33,751
Corporate Owned Life 6,456 9,718
---------- ----------
Total $ 54,481 $ 43,469
========== ==========
Life Insurance Sales - Face Amount:
Variable Life $1,705,108 $1,340,301
Corporate Owned Life 18,112 30,316
---------- ----------
Total $1,723,220 $1,370,617
========== ==========
Life Insurance In force Face Amount:
Variable Life $4,757,377 $3,186,692
Corporate Owned Life 366,526 332,038
---------- ----------
Total 5,123,903 3,518,730
Less reinsurance ceded 2,965,198 1,853,428
---------- ----------
Net amount $2,158,705 $1,665,302
========== ==========
Number of Policies In Force: (in whole units)
Variable Life 27,411 19,177
Corporate Owned Life 737 710
---------- ----------
Total 28,148 19,887
========== ==========
Average Size of a New Policy Sold: (In Whole Dollars)
Variable Life $ 183,168 $ 168,910
Corporate Owned Life $ 646,857 $ 977,935
</TABLE>
Net investment and other income increased 21.8% in 1994 compared to 1993,
resulting from an increase in invested assets partly offset by a decline in
investment yields on the general investment account's portfolio. The ratio of
investment income to mean invested assets declined in 1994 to 5.9% from 6.3% in
1993. The drop in the portfolio yield is a result of maturing higher yielding
securities being replaced by investments with the lower yields in the current
market place. The components of net investment income are set forth below.
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------
1994 1993
----------- -----------
(In Thousands)
<S> <C> <C>
Gross investment income:
Bonds $2,235 $1,777
Policy loans 229 100
Cash and short-term
investments 66 59
------ ------
Total gross investment income 2,530 1,936
Less investment expenses (96) (210)
------ ------
Net investment income $2,434 $1,726
====== ======
</TABLE>
The expense allowance on reinsurance ceded to the Parent was $132 thousand in
1994, compared to $3,776 thousand in 1993. The decrease in 1994 reflects a
$2,776 thousand increase in commissions and operating expenses ceded, which was
more than offset by a $2,281 thousand increase in policy charges ceded and a
$4,094 thousand surrender charge offset ceded (see note 3 in the audited
financial statements). Policy charges include charges to policy values for the
cost of mortality and other administrative charges.
Policy benefits and payments for 1994 increased $761 thousand, or 35.0% from
1993. This increase was due principally to an increase in variable life
surrenders partially offset by a reduction in variable life death benefits paid.
Addition to policyholders' reserves and funds increased by 11.9% to $30,422
thousand in 1994 from $27,192 thousand in 1993. The increase was primarily due
to increases in variable life premiums partially offset by the increase in
policy benefits and payments described above.
Operating expenses, which includes administrative services provided by the
Parent, for 1994 increased by $3,004 thousand, or 33.5%, compared to 1993. This
increase is attributable to increases in salaries and agency expense allowances,
resulting from rising production related expenses which are consistent with the
growth in business.
Commissions increased by $2,483 thousand, or 30.0%, in 1994 compared to 1993,
primarily due to increases in individual variable life insurance business and
corresponding increases in first year commissions.
Federal income taxes in 1994 decreased by $2,218 thousand to a tax benefit of
$935 thousand from a tax expense of $1,283 thousand for 1993. This decrease was
primarily due to the tax benefit of ceding the 1993 and 1994 surrender charge
offset to the Parent. See note 3 to the audited financial statements.
Net realized capital losses were $24 thousand for 1994 and $19 thousand for
1993, after the transfer to Interest Maintenance Reserve ("IMR"). The IMR
captures after-tax realized capital gains and losses due to changes in interest
rates for all types of fixed income investments. Net realized capital losses
were comprised of the following:
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------
1994 1993
----------- -----------
(In Thousands)
<S> <C> <C>
Bonds (7) 112
Federal and state taxes (24) (78)
----- -----
Net realized capital gain (loss) before
transfer to IMR (31) 34
Transfer to IMR 7 (53)
----- -----
Net realized capital loss $ (24) $ (19)
===== =====
</TABLE>
Gross capital losses in 1994 were caused by bond sales in an increasing interest
rate environment. In 1994, net realized capital losses from the sales of bonds
consisted of gross capital losses of $52 thousand offset by $45 thousand in
gross capital gains. All interest related gains and losses were transferred to
the IMR during 1994. In 1993, 25% of interest related gains and losses from the
sale of U.S. government securities were excluded from the IMR and recognized
immediately. The $7 thousand transferred to the IMR for 1994 was comprised of
$7 thousand of net realized capital losses. In 1993, the amounts transferred to
the IMR included $83 thousand of net realized capital gains less $30 thousand in
taxes.
As a result of the foregoing factors, net income increased to $1,581 thousand
for 1994 from $646 thousand for 1993.
9
<PAGE>
STATEMENT OF FINANCIAL POSITION
Assets
Total assets rose from $230,696 thousand at December 31, 1994 to $343,993
thousand at December 31, 1995, an increase of 49.1%. Asset growth was
concentrated in the Company's separate investment account.
General account assets decreased from $79,638 thousand at December 31, 1994 to
$78,805 thousand at December 31, 1995 due to assets used to fund policy
acquisition costs and the termination of the coinsurance agreement with
MassMutual.
Policy loans increased by 64.5% to $6,445 thousand in 1995 primarily due to
loans on individual variable life products.
Separate account assets increased by 75.6% to $265,189 thousand at December 31,
1995 due to increased sales of individual variable life and annuity policies,
where the policyholders primarily invest in the Company's separate investment
accounts, and to increases in market values in the equity and fixed income
markets. In 1995, more than $23,008 thousand in sales were recorded for an
annuity product developed in late 1994. The total number of individual life
policies issued in 1995 was 10,324, up from 9,309 in 1994. More than 600
annuity policies were issued in 1995, up from 2 policies issued in 1994.
Liabilities
Total liabilities increased by $118,917 thousand, or 68.1%, to $293,651 thousand
at December 31, 1995 due to increased individual variable life and annuity
sales. Of the $118,917 thousand increase, $113,741 thousand was in the
Company's separate investment account reserves and liabilities. The $7,269
thousand increase in policyholders' reserves and funds was primarily due to
increases in variable life reserves.
Shareholder's Equity
Shareholder's equity was $50,343 thousand at December 31, 1995, a decrease of
$5,620 thousand, or 10.0%, from December 31, 1994. This decrease was composed
of (i) 1995 net loss of $4,618 thousand, (ii) a decrease of $1,299 thousand due
to a correction of prior year variable life policy reserves, (iii) a decrease of
$47 thousand due to the increase in the asset valuation reserve ("AVR"), and
(iv) an increase of $344 thousand due to the change in surplus of the separate
investment accounts.
LIQUIDITY AND CAPITAL RESOURCES
The Company's operating activities normally result in a net use of cash due to
acquisition costs associated with growing product sales. Additionally, during
1995 a $6,200 thousand recapture fee was paid to the Parent to terminate the
coinsurance agreement. These factors resulted in an $8,638 thousand net use of
cash from operating activities.
The Company has structured its investment portfolio to ensure a strong liquidity
position in order to permit timely payment of policy and contract benefits and
future acquisition costs without requiring an untimely sale of assets. The
Company manages its liquidity position by matching its exposure to cash demands
with adequate sources of cash and other liquid assets.
The Company's liquid assets include substantial Treasury holdings and short-term
money market investments. Cash and short-term investments totaled $491 thousand
at December 31, 1995. The market value of other highly liquid securities,
including NAIC Category 1 and 2 publicly traded bonds, exceeded $41,260 thousand
at December 31, 1995.
The liquidity position of the Company is proactively managed on an ongoing
basis to meet cash needs while minimizing adverse impacts on investment returns.
The Company also employs quantitative asset/liability cash flow management
techniques to optimize and control the investment return and liquidity for the
portfolio.
INVESTMENTS
As directed by the policyholders, the majority of the Company's assets are
policyholders' investments in the Company's separate investment accounts
("SIA"). The assets in the SIA are recorded at market value, and all investment
risks are passed on to the policyholders. The following discussion focuses on
the general investment account portfolio, which does not include the Company's
SIA assets.
At December 31, 1995, the Company had $48,196 thousand of invested assets in its
general investment account. The portfolio of invested assets is managed to
support the liabilities of the business in light of yield, liquidity and
diversification considerations.
The following table sets forth the Company's invested assets in the general
investment account and gross investment yield thereon as of the dates indicated:
<TABLE>
<CAPTION>
December 31,
-------------------------------------------------------------------------------------------------
1995 1994 1993
------------------------------- --------------------------- ---------------------------
Carrying % of Carrying % of Carrying % of
Value Total Yield Value Total Yield Value Total Yield
------- ------ ------ ------- ------ ------ ------- ------ ------
($ In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bonds $41,261 85.6% 7.1% $52,337 91.5% 5.7% $27,833 89.9% 6.4%
Policy loans 6,445 13.4 6.1 3,918 6.8 7.2 2,631 8.5 4.8
Cash and short-
term investments 490 1.0 15.6 950 1.7 9.5 501 1.6 6.5
------- ----- ---- ------- ----- --- ------- ----- ---
Total investments $48,196 100.0% 7.2% $57,205 100.0% 5.9% $30,965 100.0% 6.3%
======= ===== ==== ======= ===== === ======= ===== ===
</TABLE>
10
<PAGE>
The yield on total investments before indirect expenses was 7.2%, 5.9% and 6.3%
for the years ended December 31, 1995, 1994 and 1993, respectively. If
remaining investment expenses were deducted, net yields would be 6.9%, 5.7% and
5.6%, respectively. The yield on each investment category before federal income
taxes is calculated as: (a) gross investment income divided by (b) the average
carrying value, which does not include investment reserves. The increase in the
portfolio yield is partially due to an overall increase in the maturity
distribution of bonds.
The Company carries its investments in accordance with methods and values
prescribed by the NAIC and adopted by state insurance authorities. Generally,
bonds are valued at amortized cost. Policy loans are carried at the outstanding
loan balance less amounts unsecured by the cash surrender value of the policy.
Short-term investments are stated at amortized cost which approximates fair
value.
Bonds
The following table provides certain information regarding the maturity
distribution of bonds (excluding short-term securities):
<TABLE>
<CAPTION>
Bond Maturities
December 31,
----------------------------------
1995 1994
---------------- ----------------
Carrying % of Carrying % of
Value Total Value Total
-------- ------ -------- ------
($ In Thousands)
<S> <C> <C> <C> <C>
Due in one year
or less $ 2,065 5.0% $20,487 39.1%
Due after one year
through five years 9,638 23.4 13,114 25.1
Due after five years
through ten years 7,141 17.3 7,749 14.8
Due after ten years 7,000 17.0 -0- 0.0
Mortgage-backed
securities (1) 15,417 37.3 10,987 21.0
------- ----- ------- -----
$41,261 100.0% $52,337 100.0%
======= ===== ======= =====
</TABLE>
(1) Including securities guaranteed by the U.S. Government.
The maturities of portfolio bonds are considered by the Company to be
sufficiently diversified and are carefully monitored and managed in light of the
Company's liquidity needs.
Bonds consist of $40,261 thousand of publicly traded and $1,000 thousand of
privately placed debt securities. Substantially all of the publicly traded and
privately placed bonds held by the Company are evaluated by the NAIC's
Securities Valuation Office ("SVO"), which assigns securities to one of six NAIC
investment credit categories, with Category 1 securities being the highest
quality and Category 6 securities being the lowest quality. Categories 1 and 2
are investment grade, Category 3 is medium quality and Categories 4, 5 and 6 are
non-investment grade. The remainder of the securities which have not as yet
received NAIC ratings are rated under an internal system which the Company
believes to be equivalent to that used by the SVO. At December 31, 1995 and
1994, the portfolio was 100% invested in NAIC Categories 1 and 2.
The following table sets forth by industry category the carrying value and the
percentage breakdown of the bond portfolio, including short-term securities, as
of December 31, 1995:
<TABLE>
<CAPTION>
Bond Portfolio By Industry
December 31, 1995
----------------------------
($ In Thousands)
Carrying % of
Industry Category Value (1) Total
- ----------------- ---------- -----
<S> <C> <C>
Collateralized (2) $23,400 56.3%
Finance 5,718 13.8
U.S. Government 4,492 10.8
Retail 1,088 2.6
Media 1,050 2.5
Other Services 1,049 2.5
Consumer Goods 813 2.0
Transportation 750 1.8
Aerospace 655 1.6
Natural Resources 543 1.3
Others 2,003 4.8
------- -----
Total $41,561 100.0%
======= =====
</TABLE>
(1) Includes short-term securities.
(2) These bonds are collateralized by mortgages backed by FNMA or FHLMC and
include collateralized mortgage obligations and $1,000
thousand in privately placed bonds.
The estimated fair value of bonds is based upon quoted market prices for
actively traded securities. The Company subscribes to commercial pricing
services that provide estimated fair values of fixed income securities that are
not actively traded.
The tables below set forth the carrying value, gross unrealized gains and
losses, net unrealized gains and estimated fair value of the bond portfolio
(excluding short-term securities) at December 31, 1995 and 1994.
<TABLE>
<CAPTION>
December 31, 1995
--------------------------------------------------------------------
Gross Gross Net Estimated
Carrying Unrealized Unrealized Unrealized Fair
Value Gains Losses Gain (Loss) Value
-------- ---------- ---------- ----------- ---------
(In Thousands)
<S> <C> <C> <C> <C> <C>
U. S. Treasury Securities
and Obligations of U. S.
Government Corporations
and Agencies $ 7,929 $108 $ 1 $107 $ 8,036
Mortgage-backed securities 11,980 115 36 79 12,058
Industrial securities 21,352 684 2 682 22,035
------- ---- --- ---- -------
$41,261 $907 $39 $868 $42,129
======= ==== === ==== =======
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
December 31, 1994
--------------------------------------------------
Gross Gross Net Estimated
Carrying Unrealized Unrealized Unrealized Fair
Value Gains Losses Gain (Loss) Value
-------- ---------- ---------- ----------- ---------
(In Thousands)
<S> <C> <C> <C> <C> <C>
U. S. Treasury Securities
and Obligations of U. S.
Government Corporations
and Agencies $36,163 $2 $ 975 $ (973) $35,190
Debt Securities issued by
Foreign Governments 494 0 68 (68) 426
Industrial securities 15,180 0 440 (440) 14,740
Utilities 500 0 5 (5) 495
------- -- ------ ------- -------
$52,337 $2 $1,488 $(1,486) $50,851
======= == ====== ======= =======
</TABLE>
Portfolio Surveillance and Under-performing Investments
Bonds
The Company reviews all bonds on a regular basis utilizing the following
criteria: (i) material declines in revenues or margins, (ii) significant
uncertainty regarding the issuer's industry, (iii) debt service coverage or cash
flow ratios that fall below industry-specific thresholds, (iv) violation of
financial covenants, (v) trading of public securities at a substantial discount
due to specific credit concerns and (vi) other subjective factors that relate to
the issuer. The bond portfolio is actively reviewed to estimate the likelihood
and amount of financial defaults or write-downs in the portfolio and to make
timely decisions as to the potential sale or renegotiation of terms of specific
investments.
As defined by the NAIC, under-performing bonds are those whose deferral of
interest and/or principal payments are deemed to be caused by the inability of
the obligor to make such payments as called for in the bond contract. At
December 31, 1995 and 1994 there were no under-performing bonds.
Write-downs and Allowances
When the Company determines that it is probable that the net realizable value of
an asset is less than the carrying value of such asset, appropriate write-downs
or allowances are established and recorded in accordance with statutory
practice.
In the case of bonds, the net realizable value is determined in accordance with
principles established by the SVO using criteria such as the net worth and
capital structure of the borrower, the value of the collateral, the presence of
additional credit support and the Company's evaluation of the borrower's ability
to compete in a relevant market.
Investment Reserves
In compliance with regulatory requirements, the Company maintains the AVR. The
AVR stabilizes shareholder's equity (surplus) against non-interest rate related
fluctuations in the value of stocks, bonds, mortgage loans and real estate
investments.
The following table presents the change in AVR for the years 1995 and 1994:
<TABLE>
<CAPTION>
ASSET VALUATION RESERVES
Years Ended
December 31,
--------------
1995 1994
---- ----
(In Thousands)
<S> <C> <C>
Balance at Beginning of the Year $ 107 $ 64
Reserve contributions (1) 47 43
----- -----
Balance at End of the Year $ 154 $ 107
===== =====
</TABLE>
(1) Amounts represent contributions calculated on a statutory formula.
Represents the net impact on shareholder's equity for investment gains and
losses not related to changes in interest rates. This net change in
reserves is recorded as a charge to shareholder's equity.
VII. MML Bay State & MassMutual - Description of the Business
MML Bay State is a life insurance company and a wholly-owned subsidiary of
MassMutual. Organized in 1894 under the laws of the state of Missouri, the
Company (formerly known as Western Life Insurance Company of America) was
purchased in 1981 by the Parent. Its name was changed in March 1982. The
Company is an issuer of variable life and variable annuity contracts. The
Company currently is licensed to sell variable life insurance in all states
except New York and in the District of Columbia. The Company plans to obtain
authority to sell variable annuity contracts in all states except New York, and,
as of March 15, 1995, it had obtained such authority in 42 states and the
District of Columbia.
Currently, aside from the Contract, the Company offers certain variable
universal life insurance policies. These products provide a policyholder,
within guidelines established by the terms of the policy, the ability to select
and change premium levels, amounts of death benefits, and account value
investment options. Premiums in excess of specified sales charges are credited
to the account value of the policies allocated either to a fixed account backed
by the general investment account of the Company, or to one or more of the
available divisions of the policies' separate accounts.
12
<PAGE>
The Company's Home Office is located in Jefferson City, Missouri. The Company's
principal administrative office is located at 1295 State Street, Springfield,
Massachusetts. The Company believes that it has adequate space, equipment and
resources to meet its obligations with regard to the Fixed Account and the
Contract. The Company currently has an agreement with Vantage Computers
Systems, Inc., to provide most of the administrative services for the Contract
through the operation of the Service Center.
Functionally, the Company is part of the Parent's operations, and as a result, a
discussion of the Parent's business and the Company's position within the
Parent's operations is useful for an understanding of the Company's business.
VIII. Directors And Officers
Of MML Bay State
Directors:
Paul D. Adornato
Director (since 1987), MML Bay State; Senior Vice President (since 1986),
MassMutual; Director (1987-1991), MML Life Insurance Company; Director (1987-
1994), MML Pension Insurance Company; Chief Executive Officer (since 1994) and
Director (since 1993), MML Insurance Agency, Inc.; Chief Executive Officer
(since 1994) and Director (since 1993), MML Insurance Agency of Ohio, Inc.;
Director (since 1989), MML Investors Services, Inc.
Donald D. Cameron
Director (since 1993) and Senior Vice President-Corporate Marketing (since
1991), MML Bay State; Senior Vice President (since 1987), MassMutual; Director
(since 1986), MML Investors Services, Inc.
Daniel J. Fitzgerald
Director (since 1994), President and Chief Executive Officer (1991-1993) and
President (1987-1990), MML Bay State; Executive Vice President (since 1994),
Senior Vice President (1991-1994), Vice President and Controller (1986-1991),
MassMutual; Vice President (since 1994) and Director (since 1993), MassMutual
Holding Company; Director (1987-1991) and President (1987-1990), MML Life
Insurance Company; Director (1992-1993), MML Life Insurance Agency, Inc.;
Director and President (1987-1990), Bay Colony of Arizona; Director and
President (1987-1990), Bay Colony of Vermont, Inc.; Director (since 1994),
Cornerstone Real Estate Advisers, Inc.; Director (since 1994), MML Investors
Services, Inc.; Director (1994-1995), MML Real Estate Corporation; Director
(since 1994), MML Realty Management Corporation; Director (since 1994),
MassMutual of Ireland, Inc.; Director and President (1987-1990), Mass Life
Insurance Company of New York; Director (since 1993), Concert Capital
Management, Inc.; Director (since 1995), DLB Acquisition Corporation; Director
(since 1994, 1987-1993), Chief Executive Officer (1991-1993), President (1987-
1990), MML Pension Insurance Company; Director and Vice President (since 1994),
MassMutual Holding Company Two, Inc.; Director and Vice President (since 1994),
MassMutual Holding Company Two MSC, Inc.
Arthur D. Foresi
Director (since 1994), MML Bay State; Vice President (since 1991) and Second
Vice President (1987-1991), MassMutual; Director (1993-1994), MML Pension
Insurance Company.
Gary T. Huffman
Director (since 1994), MML Bay State; Senior Vice President (since 1994),
General Agent (1981-1994), MassMutual; Director and Chief Executive Officer
(since 1994), MML Investors Services, Inc.; Director (since 1994), MML
Insurance Agency, Inc.
Douglas J. Jangraw
Director (since 1992), MML Bay State; Second Vice President and Actuary (since
1988), MassMutual.
Isadore Jermyn
Chairman, Chief Executive Officer and President (since 1993) and Chief
Executive Officer and President (1990-1991), MML Bay State; Senior Vice
President and Actuary (since 1995) and Vice President and Actuary (1987-1995),
MassMutual; Director (1990-1991), MML Life Insurance Company; Chairman and
President (1993-1994) and Director (1990-1994), MML Pension Insurance
Company;Director (since 1992), MML Investors Service, Inc.; Director (since
1993), MML Insurance Agency, Inc.; Director (since 1993), MML Insurance Agency
of Ohio, Inc.; Director (since 1994), Cornerstone Real Estate Advisers, Inc.
John J. Libera, Jr.
Director (since 1991), MML Bay State; Senior Vice President (since 1987),
MassMutual; Director (1987-1990), MML Life Insurance Company; Director (1987-
1990 and 1991-1994), MML Pension Insurance Company; Director (since 1993), MML
Investors Services, Inc.; Director (since 1992), MML Insurance Agency, Inc.;
Director (since 1994), MML Insurance Agency of Ohio, Inc.
William T. McElmurray
Director (since 1991), MML Bay State; Senior Vice President (since 1991), Vice
President (1979-1991), MassMutual; Director (1991-1994), MML Pension Insurance
Company; Director (since 1993), MML Investors Services, Inc.; Director (since
1993), MML Insurance Agency, Inc; Director (since 1993), MML Insurance Agency
of Ohio, Inc.
Stuart H. Reese
Director (since 1994), MML Bay State; Senior Vice President (since 1993),
MassMutual; President (since 1993), MML Series Investment Funds; President
(since 1994), MassMutual Institutional Funds; Executive Vice President (since
1993), MassMutual Corporate Investors; Executive Vice President (since 1993),
MassMutual Participation Investors; Director (since 1994), MML Pension
Insurance Company; Director (since 1994), MassMutual/Corporate Value Partners,
Ltd.; Director (since
13
<PAGE>
1994) MassMutual Corporate Value Ltd.; Director (since 1994),
MassMutual/Carlson CBO N.V.
Jeanne L. Stamant
Director (since 1990), MML Bay State; Vice President and Actuary (since 1980),
MassMutual; Director (1990-1991), MML Life Insurance Company; Director (1991-
1994), MML Pension Insurance Company; Director (since 1994), MML Investors
Services, Inc.
Principal Officers (other than Directors):
Yek Soan S. Cheng
Vice President-Actuarial (since 1988), MML Bay State; Vice President (since
1995), Actuary (since 1986), MassMutual; Vice President-Actuarial (1988-1991),
MML Life Insurance Company; Vice President-Actuarial (1988-1994), MML Pension
Insurance Company.
Thomas J. Finnegan, Jr.
Secretary (since 1991), Director (1990-1991), MML Bay State; Vice President,
Secretary and Associate General Counsel (since 1984), MassMutual; Director
(1990-1991), MML Life Insurance Company; Director (1990-1991), MML Pension
Insurance Company; Clerk (since 1994), Assistant Clerk (1992-1994) and Director
(1982-1992), Concert Capital Management, Inc.; Clerk (since 1994), Cornerstone
Real Estate Advisers, Inc.; Clerk (since 1991), MML Realty Management
Corporation; Secretary (since 1995), DLB Acquisition Corporation; Secretary
(1991-1995), MML Real Estate Corporation; Secretary (since 1991), MML
Reinsurance (Bermuda) Ltd.; Secretary (since 1984), MassMutual Holding Company;
Secretary (since 1994), Westheimer 335 Suites, Inc.; Secretary and Clerk (since
1994), MML Insurance Agency, Inc.; Secretary and Clerk (since 1994), MML
Investors Services, Inc.; Secretary and Clerk (since 1994), MassMutual Holding
Company Two, Inc.; Secretary and Clerk (since 1994), MassMutual Holding Company
Two MSC, Inc.; Associate Secretary (since 1990), MML Series Investment Fund;
Associate Secretary (since 1990), MassMutual Corporate Investors; Associate
Secretary (since 1994), MassMutual Institutional Funds; Associate Secretary
(since 1990), MassMutual Participation Investors; Secretary (1992-1993),
Bedford Hotel Company, Inc.; Secretary (since 1990), Crestwood Realty
Investors, Inc.; Secretary (1990-1991), MML Syndicate, Inc.
Ann Iseley
Treasurer (since 1996), MML Bay State; Treasurer (since 1996), MassMutual;
Chief Financial Officer and Operations Officer (1994-1996), Connecticut Mutual
Life Insurance Company; Corporate Controller (1993-1994), The Mack Company;
Vice President (1990-1993), Mutual of New York.
Efrem Marder
Vice President-Investments (since 1990), MML Bay State; Senior Managing
Director (since 1996), Vice President and Managing Director (1989-1996), Vice
President (1987-1989), MassMutual; Vice President-Investments (1990-1991), MML
Life Insurance Company; Vice President-Investments (1990-1994), MML Pension
Insurance Company.
Mary E. Wilson
Vice President-Investments (since 1990), MML Bay State; Senior Managing
Director (since 1996), Vice President and Managing Director (1991-1996), Vice
President (1990-1991), Second Vice President (1989-1990), MassMutual; Vice
President-Investments (1990-1991), MML Life Insurance Company; Vice President-
Investments (1990-1994), MML Pension Insurance Company; Senior Vice President
(since 1993), Vice President (1991-1993) and Second Vice President (1990-1991),
MML Series Investment Fund; Vice President (since 1992), MassMutual Corporate
Investors; Vice President (since 1991), MassMutual Participation Investors.
IX. Executive Compensation
All of the executive officers of MML Bay State also serve as officers of
Massachusetts Mutual Life Insurance Company and receive no compensation directly
from MML Bay State. Allocations have been made as to such officer's time
devoted to duties as executive officers of the Company and its subsidiaries. No
officer or Director of MML Bay State received allocated compensation in excess
of $100,000.
No shares of MML Bay State are owned by any executive officer or director. MML
Bay State is a wholly-owned subsidiary of Massachusetts Mutual Life Insurance
Company, 1295 State Street, Springfield, MA 01111.
X. Experts and Legal Proceedings
The Company's business activities may give rise to various legal proceedings;
however, as of the date of this prospectus, the Company is not aware of any such
proceedings pending or threatened which name the Company as a party.
In recent years, the life insurance industry has faced increasing exposure to
litigation, including class actions, in which multimillion dollar jury awards of
punitive and compensatory damages have occurred. The Company cannot predict the
occurrence or outcome of any future litigation.
Experts
The audited statement of financial position of MML Bay State as of December 31,
1995 and 1994 and the related statements of operations, changes in shareholder's
equity and cash flows for each of the years in the three year period ended
December 31, 1995 included in this prospectus have been so included in reliance
on the report, which includes explanatory paragraphs relating to prior year
adjustments and the pending merger between Massachusetts Mutual Life Insurance
Company and Connecticut Mutual Life Insurance Company, of Coopers
& Lybrand L.L.P., independent accountants, given on the authority of that firm
as experts in accounting and auditing.
14
<PAGE>
XI. Selected Historical
Financial Data
The following summary financial information has been derived from the financial
statements of the Company, which have been audited by Coopers & Lybrand L.L.P.,
independent auditors. The results for past accounting periods are not
necessarily indicative of the results to be expected for any future accounting
period.
The information presented below should be read in conjunction with the
"Management's Discussion and Analysis of Financial Condition and Results of
Operations", the audited financial statements and other information included
elsewhere in this prospectus.
<TABLE>
<CAPTION>
MML Bay State Life Insurance Company
Selected Financial Data
Years Ended December 31,
------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
(In Thousands)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenue:
Premium income $ 92,733 $ 54,481 $ 43,469 $ 33,473 $34,914
Net investment and other income 4,306 3,533 2,899 2,657 3,193
Expense allowance on reinsurance ceded (1) 526 132 3,776 2,944 0
-------- -------- -------- -------- -------
Total revenue 97,565 58,146 50,144 39,074 38,107
-------- -------- -------- -------- -------
Disposition of Revenue:
Policy benefits and payments 5,691 2,940 2,179 1,191 1,486
Addition to policyholders' reserves and funds 66,974 30,422 27,192 21,815 26,783
Expenses, commissions and state taxes 28,842 24,114 18,825 10,597 6,591
-------- -------- -------- -------- -------
Total Disposition of revenue 101,507 57,476 48,196 33,603 34,860
-------- -------- -------- -------- -------
Net gain from operations before federal income taxes (3,942) 670 1,948 5,471 3,247
Federal income taxes (1) 633 (935) 1,283 2,352 1,445
-------- -------- -------- -------- -------
Net gain from operations (4,575) 1,605 665 3,119 1,802
Net realized capital gain (loss) (43) (24) (19) 346 (27)
-------- -------- -------- -------- -------
Net income $ (4,618) $ 1,581 $ 646 $ 3,465 $ 1,775
======== ======== ======== ======== =======
Balance Sheet Data (at period end):
Assets:
General account $ 78,805 $ 79,638 $ 47,352 $ 44,363 $37,425
Separate account 265,188 151,058 112,748 74,209 45,365
-------- -------- -------- -------- -------
Total Assets $343,993 $230,696 $160,100 $118,572 $82,790
======== ======== ======== ======== =======
Liabilities:
Policyholders' reserves and funds 19,096 $ 11,827 $ 9,546 $ 7,570 $ 6,096
Payable to parent 3,165 4,368 0 0 0
Asset valuation reserve 154 107 64 34 8
Separate account reserves and liabilities 262,834 149,093 110,951 72,418 43,685
Other liabilities 8,401 9,338 6,142 5,775 3,776
-------- -------- -------- -------- -------
Total liabilities 293,650 174,733 126,703 85,797 53,565
Total shareholder's
equity (2) 50,343 55,963 33,397 32,775 29,225
-------- -------- -------- -------- -------
Total liabilities and shareholder's equity $343,993 $230,696 $160,100 $118,572 $82,790
======== ======== ======== ======== =======
Total Adjusted Capital Data (at period end) (3):
Total surplus (shareholder's equity) $ 50,343 $ 55,963 $ 33,397 $ 32,775 $29,225
Asset Valuation reserve 154 107 64 34 8
-------- -------- -------- -------- -------
Total adjusted capital $ 50,497 $ 56,070 $ 33,461 $ 32,809 $29,233
======== ======== ======== ======== =======
</TABLE>
(1) Starting in 1992, Expense allowances on reinsurance ceded were recorded per
the reinsurance agreement with the Parent. Starting in 1994, ceded surrender
charge offset reduced Expense allowances on reinsurance ceded. This created a
tax benefit in 1994. See notes to financial statements.
(2) In 1994, the Company received a surplus contribution of $25 million and
recorded a prior year adjustment of $4 million throught the Statement of Changes
in shareholder's Equity. See notes to financial statements.
(3) Defined by the NAIC as surplus plus Asset Valuation Reserve.
15
<PAGE>
Report Of Independent Accountants
To the Board of Directors
MML Bay State Life Insurance Company
We have audited the statement of financial position of MML Bay State Life
Insurance Company as of December 31, 1995 and 1994, and the related statements
of operations, changes in shareholder's equity, and cash flows for each of the
years in the three year period ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of MML Bay State Life Insurance
Company as of December 31, 1995 and 1994, and the results of its operations and
its cash flows for each of the years in the three year period ended December 31,
1995, in conformity with generally accepted accounting principles.
As discussed in Notes 2 and 3 to the financial statements, during 1995 and 1994
the Company recorded prior year adjustments through the Statement of Changes in
Shareholder's Equity.
As discussed in Note 7 to the financial statements, the parent company of MML
Bay State Life Insurance Company, Massachusetts Mutual Life Insurance Company,
has entered into a definitive agreement to merge with Connecticut Mutual Life
Insurance Company.
Coopers & Lybrand L.L.P.
Springfield, Massachusetts
February 23, 1996
16
<PAGE>
MML BAY STATE LIFE INSURANCE COMPANY
STATEMENT OF FINANCIAL POSITION
<TABLE>
<CAPTION>
December 31,
1995 1994
---------- ----------
(In Thousands)
<S> <C> <C>
Assets:
Bonds........................................ $ 41,260.6 $ 52,336.9
Policy loans................................. 6,444.9 3,918.0
Cash and short-term investments.............. 490.5 950.0
Investment and insurance amounts receivable.. 1,268.0 1,245.3
Receivable from separate account............. 29,015.6 21,108.0
Federal income tax receivable................ 215.5 0.0
Other assets................................. 109.8 80.1
Separate account assets...................... 265,188.5 151,057.9
---------- ----------
$343,993.4 230,696.2
========== ==========
Liabilities:
Policyholders' reserves and funds............ $ 19,095.9 $ 11,826.7
Policy claims and other benefits............. 1,507.6 166.0
Payable to parent............................ 3,165.2 4,368.2
Federal income taxes......................... 0.0 803.2
Asset valuation reserve...................... 153.8 106.8
Other liabilities............................ 6,894.2 8,369.6
Separate account reserves and liabilities.... 262,833.9 149,092.7
---------- ----------
293,650.6 174,733.2
---------- ----------
Shareholder's equity:
Common stock, $200 par value
25,000 shares authorized
10,001 shares issued and outstanding........ 2,000.2 2,000.2
Paid-in capital and contributed surplus...... 46,736.9 46,736.9
Surplus...................................... 1,605.7 7,225.9
---------- ----------
50,342.8 55,963.0
---------- ----------
$343,993.4 $230,696.2
========== ==========
</TABLE>
See notes to financial statements.
17
<PAGE>
MML BAY STATE LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended December 31,
1995 1994 1993
------ ------ ------
(In Thousands)
<S> <C> <C> <C>
Income:
Premium income........................... $92,732.8 $54,481.4 $43,469.2
Net investment and other income.......... 4,305.8 3,531.8 2,898.8
Expense allowance on reinsurance ceded... 526.5 132.4 3,776.2
--------- --------- ---------
97,565.1 58,145.6 50,144.2
--------- --------- ---------
Benefits and expenses:
Policy benefits and payments............. 5,691.0 2,939.9 2,178.5
Addition to policyholders' reserves,
funds and separate accounts............. 66,974.4 30,422.1 27,192.4
Operating expenses....................... 11,222.9 11,960.6 8,956.8
Commissions.............................. 15,072.4 10,747.5 8,264.8
State taxes, licenses and fees........... 2,546.8 1,405.1 1,603.4
--------- --------- ---------
101,507.5 57,475.2 48,195.9
--------- --------- ---------
Net gain (loss) from operations before
federal income taxes.................... (3,942.4) 670.4 1,948.3
Federal income taxes (benefit)........... 632.8 (934.8) 1,283.1
--------- --------- ---------
Net gain (loss) from operations.......... (4,575.2) 1,605.2 665.2
Net realized capital loss................ (42.8) (24.4) (19.3)
--------- --------- ---------
Net income (loss)........................ $(4,618.0) $ 1,580.8 $ 645.9
========= ========= =========
</TABLE>
See notes to financial statements.
18
<PAGE>
MML BAY STATE LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
Years Ended December 31,
1995 1994 1993
------ ------ ------
(In Thousands)
<S> <C> <C> <C>
Shareholder's equity, beginning of year.. $55,963.0 $33,396.9 $32,774.5
--------- --------- ---------
Increases (decreases) due to:
Net income (loss)....................... (4,618.0) 1,580.8 645.9
Additions to asset valuation reserve.... (47.0) (43.3) (29.4)
Change in separate account surplus...... 344.2 108.6 5.9
Surplus contribution.................... 0.0 25,000.0 0.0
Prior year adjustment................... (1,299.4) (4,101.5) 0.0
Change in accounting for
mortgage-backed securities............. 0.0 21.5 0.0
--------- --------- ---------
(5,620.2) 22,566.1 622.4
--------- --------- ---------
Shareholder's equity, end of year........ $50,342.8 $55,963.0 $33,396.9
========= ========= =========
</TABLE>
See notes to financial statements.
19
<PAGE>
MML BAY STATE LIFE INSURANCE COMPANY
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended December 31,
1995 1994 1993
------ ------ ------
(In Thousands)
<S> <C> <C> <C>
Operating activities:
Net income (loss)........................ $(4,618.0) $ 1,580.8 $ 645.9
Additions to policyholders' reserves,
funds and net of transfers to separate
accounts............................... 8,610.8 2,064.6 2,001.9
Net realized capital (gain) loss........ 42.8 24.4 19.3
Change in receivable from separate
accounts............................... (7,907.6) (6,456.2) (6,148.2)
Change in receivable (payable) from
parent................................. (1,203.0) 5,145.0 1,352.4
Change in federal taxes receivable
(payable).............................. (1,018.7) (910.3) (1,335.4)
Other changes............................ (2,543.9) (1,178.9) 1,898.4
--------- ---------- ---------
Net cash provided by (used in)
operating activities.................... (8,637.6) 269.4 (1,565.7)
--------- ---------- ---------
Investing activities:
Loans and purchases of investments...... 28,440.1 43,275.8 20,020.2
Sales or maturities of investments
and receipts from repayments of loans.. 36,618.2 18,455.4 20,711.1
--------- ---------- ---------
Net cash provided by (used in)
investing activities.................... 8,178.1 (24,820.4) 690.9
--------- ---------- ---------
Financing activity:
Surplus contribution..................... 0.0 25,000.0 0.0
--------- ---------- ---------
Net cash provided by financing
activities.............................. 0.0 25,000.0 0.0
--------- ---------- ---------
Increase (decrease) in cash and
short-term investments.................. (459.5) 449.0 (874.8)
Cash and short-term investments,
beginning of year....................... 950.0 501.0 1,375.8
--------- ---------- ---------
Cash and short-term investments, end
of year................................. $ 490.5 $ 950.0 $ 501.0
========= ========== =========
</TABLE>
See notes to financial statements.
20
<PAGE>
Notes To Financial Statements
1. OPERATIONS
MML Bay State Life Insurance Company ("the Company") is a wholly-owned
subsidiary of Massachusetts Mutual Life Insurance Company ("MassMutual"). The
Company's insurance operation consists primarily of flexible and limited premium
variable whole life insurance and variable annuities distributed through career
agents.
2. SUMMARY OF ACCOUNTING PRACTICES
The accompanying financial statements, except as to form, have been prepared in
conformity with the practices of the National Association of Insurance
Commissioners and the accounting practices prescribed or permitted by the
Division of Insurance of the State of Missouri which are currently considered
generally accepted accounting principles for stock life insurance subsidiaries
of a mutual life insurance company.
The Financial Accounting Standards Board, which has no role in establishing
regulatory accounting practices, issued Interpretation 40, Applicability of
Generally Accepted Accounting Principles to Mutual Life Insurance and Other
Enterprises, and Statement of Financial Accounting Standards No. 120, Accounting
and Reporting by Mutual Life Insurance Enterprises and by Insurance Enterprises
for Certain Long-Duration Participating Contracts. The American Institute of
Certified Public Accountants, which also has no role in establishing regulatory
accounting practices, issued Statement of Position 95-1, Accounting for Certain
Insurance Activities of Mutual Life Insurance Enterprises. These pronouncements
will require mutual life insurance companies to modify their financial
statements in order to continue to be in accordance with generally accepted
accounting principles, effective for 1996 financial statements. The manner in
which policy reserves, new business acquisition costs, asset valuations and
related tax effects are recorded will change. Management has not determined the
impact of such changes on the Company's Statement of Operations, but believes
implementation of these pronouncements will cause shareholders' equity to
increase.
The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, as
well as disclosures of contingent assets and liabilities at the date of the
financial statements. Management must also make estimates and assumptions that
affect the amounts of revenues and expenses during the reporting period.
Future events, including the levels of mortality, morbidity, interest rates and
asset valuations, could cause actual results to differ from the estimates used
in these financial statements.
The following is a description of the Company's current principal accounting
policies and practices.
a. Investments
Bonds are valued in accordance with rules established by the National
Association of Insurance Commissioners. Generally, bonds are valued at
amortized cost.
As promulgated by the National Association of Insurance Commissioners, the
Company adopted the retrospective method of accounting for amortization of
premium and discount on mortgage backed securities as of December 31, 1994.
Prepayment assumptions for mortgage backed securities were obtained from a
prepayment model, which factors in mortgage type, seasoning, coupon, current
interest rate and the economic environment. The effect of this change, $21.5
thousand, was recorded as of December 31, 1994 as an increase to shareholders'
equity on the Statement of Financial Position and had no material effect on 1995
net income. Through December 31, 1994, premium and discount on bonds were
amortized into investment income over the stated lives of the securities.
Policy loans are carried at the outstanding loan balance less amounts unsecured
by the cash surrender value of the policy. Short-term investments are stated at
amortized cost, which approximates fair value.
In compliance with regulatory requirements, the Company maintains an Asset
Valuation Reserve and an Interest Maintenance Reserve. The Asset Valuation
Reserve stabilizes the shareholders' equity against declines in the value of
bonds.
The Interest Maintenance Reserve captures after-tax realized capital gains and
losses which result from changes in the overall level of interest rates for all
types of fixed income investments and amortizes these capital gains and losses
into income using the grouped method over the remaining life of the investment
sold or over the remaining life of the underlying asset. Net realized after tax
capital gains of $250.2 thousand in 1995 and net realized after tax capital
losses of $7.0 thousand in 1994 and net realized after-tax capital gains of
$53.5 thousand in 1993 were charged to the Interest Maintenance Reserve.
Amortization of the Interest Maintenance Reserve into net investment income
amounted to $42.1 thousand in 1995, $86.9 thousand in 1994 and $99.8 thousand in
1993. The Interest Maintenance Reserve is included in other liabilities on the
Statement of Financial Position.
Realized capital gains and losses, less taxes, not includable in the Interest
Maintenance Reserve, are recognized in net income. Realized capital gains and
losses are determined using the specific identification method. Unrealized
capital gains and losses are included in shareholders' equity.
21
<PAGE>
Notes To Financial Statements (Continued)
b. Separate Accounts
Separate account assets and liabilities represent segregated funds administered
and invested by the Company for the benefit of variable life insurance
policyholders. Assets, consisting of holdings in an open-end series investment
fund affiliated with MassMutual, bonds, common stocks, and short-term
investments, are reported at fair value. Separate account reserves and
liabilities are determined based upon the performance of the related assets
within the separate account. Premiums, benefits and expenses of the separate
accounts are reported on the Statement of Operations. The Company receives
compensation for providing administrative services to the separate account and
for assuming mortality and expense risks in connection with the policies. The
Company had $2,354.6 thousand and $1,965.3 thousand of its assets invested in
the separate account as of December 31, 1995 and 1994, respectively.
The net transfers to separate accounts of $59,792.6 thousand, $28,141.7 thousand
and $25,216.2 thousand in 1995, 1994 and 1993, respectively, are included in
addition to policyholders' reserves, funds and separate accounts.
c. Policyholders' Reserves
Policyholders' reserves for life contracts were developed using accepted
actuarial methods computed principally on the net level premium and the
Commissioners' Reserve Valuation Method bases using the 1958 and 1980
Commissioners' Standard Ordinary mortality tables with assumed interest rates
ranging from 3.5 to 5.5 percent. Reserves for individual annuities are based on
accepted actuarial methods, principally at interest rates ranging from 5.5 to
6.0 percent.
During 1994, actuarial guidelines became effective, requiring additional
reserves for immediate payment of claims. While the Company's aggregate
reserves were sufficient, the reserves for certain products were not recorded.
The effect of correctly recording these reserves was $1,299.4 thousand at
December 31, 1994 and was recorded as an adjustment to shareholders' equity
during 1995.
d. Premium and Related Expense Recognition
Premium revenue is recognized annually on the anniversary date of the policy.
Commissions and other costs related to issuance of new policies, maintenance and
settlement costs are charged to current operations.
e. Cash and Short-term Investments
For purposes of the Statement of Cash Flows, the Company considers all highly
liquid short-term investments purchased with a maturity of three months or less
to be cash equivalents.
3. Related Party Transactions
Investment and administrative services are provided to the Company pursuant to a
management services agreement with MassMutual. Service fees are accrued based
upon estimated costs and are billed the following period, when actual costs are
available. Fees incurred under the terms of this agreement were $6,588.1
thousand, $7,762.9 thousand and $5,941.6 thousand in 1995, 1994 and 1993,
respectively.
The Company had reinsurance agreements with MassMutual in which MassMutual
assumed specific plans of insurance on a coinsurance basis and on a yearly
renewal term basis. The coinsurance agreement was terminated in 1995. A
termination fee of $6,200.0 thousand was recorded as an expense and paid to
MassMutual for the rights to retain future fees and charges on the reinsurance
business. While the agreement was in effect, the Company ceded premiums
amounting to $29,597.0 thousand, $26,115.1 thousand and $21,862.4 thousand in
1995, 1994 and 1993, respectively. Additionally, the Company ceded
administrative and insurance charges of $4,310.3 thousand in 1995, $4,208.3
thousand in 1994 and $1,845.0 thousand in 1993 for policies issued in those
years. The Company received $4,836.8 thousand, $8,434.7 thousand and $5,621.2
thousand in 1995, 1994 and 1993, respectively, as commissions and an expense
allowance. Reserves on all business ceded amounted to $8,027.9 thousand in
1995, immediately preceding the termination, which reduced policyholders'
reserves and funds. The Company's separate accounts retained the assets
applicable to variable life reserves of the policies reinsured under the
agreement with MassMutual. Premium income and the expense allowance on
reinsurance ceded differ from annual statement presentation.
A provision in the Company's coinsurance agreement with MassMutual required
surrender charge offsets to be included in the ceding provisions of the
reinsurance contract with MassMutual. This surrender charge offset, inherent in
the reserve calculations of the separate account liabilities, is considered
funds which would be due to the general account of MassMutual if the life
policies were surrendered. During 1993, this provision was incorrectly excluded
from amounts recorded for the contract. The effect of correctly recording this
provision was $4,101.5 thousand at December 31, 1993 and was recorded as an
adjustment to shareholders' equity during 1994. The effects of this adjustment
in 1994 were included in the expense allowance on reinsurance ceded and all
related tax benefits were recorded in 1995 and 1994 on the Statement of
Operations in accordance with the accounting practices of the National
Association of Insurance Commissioners.
During 1994, MassMutual contributed additional paid in capital of $25,000.0
thousand to the Company.
22
<PAGE>
Notes To Financial Statements (Continued)
4. Federal Income Taxes
Provision for federal income taxes is based upon the Company's best estimate of
its tax liability. No deferred tax effect is recognized for temporary
differences that may exist between financial reporting and taxable income.
Accordingly, the reporting of equity tax, using most current information, and
other miscellaneous temporary differences, such as reserves and acquisition
costs, resulted in an effective tax rate which is other than the statutory tax
rate.
The Internal Revenue Service has completed examining the Company's income tax
returns through the year 1989, and is currently examining the years 1990 through
1992. The Company believes any adjustments resulting from such examinations
will not materially affect its financial statements.
The Company plans to file its 1995 federal income tax return on a consolidated
basis with MassMutual and MassMutual's other life and non-life affiliates. The
Company and its life and non-life affiliates are subject to a written tax
allocation agreement which allocates tax liability in a manner permitted under
Treasury regulations. Generally, the agreement provides that loss members shall
be compensated for the use of their losses and credits by other members.
The Company made federal tax payments of $1,892.0 thousand during 1995 and
$2,696.5 thousand during 1993. No federal tax payments were made during 1994.
At December 31, 1995 and 1994, the Company established a recoverable for
federal income taxes of $215.5 thousand and a liability of $803.2 thousand,
respectively.
5. Investments
The Company maintains a diversified investment portfolio. Investment policies
limit concentration in any asset class, geographic region, industry group,
economic characteristic, investment quality or individual investment.
a. Bonds
The carrying value and estimated fair value of bonds are as follows:
<TABLE>
<CAPTION>
December 31, 1995
----------------------
Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
-------- ---------- ---------- ---------
(In Thousands)
<S> <C> <C> <C> <C>
U.S. Treasury Securities and
Obligations of U.S. Government
Corporations and Agencies $ 7,929.3 $ 107.8 $ 1.0 $ 8,036.1
Mortgage-backed securities 11,979.4 114.9 35.9 12,058.4
Industrial securities 21,351.9 684.2 1.7 22,034.4
--------- -------- -------- ---------
TOTAL $41,260.6 $ 906.9 $ 38.6 $42,128.9
December 31, 1994
----------------------
Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
-------- ---------- ---------- ---------
(In Thousands)
<S> <C> <C> <C> <C>
U.S. Treasury Securities and
Obligations of U.S. Government
Corporations and Agencies $36,162.6 $ 1.7 $ 974.3 $35,190.0
Debt Securities issued by Foreign
Governments 494.4 0.0 68.6 425.8
Industrial securities 15,179.9 0.0 439.9 14,740.0
Utilities 500.0 0.0 4.7 495.3
--------- -------- -------- ---------
TOTAL $52,336.9 $ 1.7 $1,487.5 $50,851.1
</TABLE>
The carrying value and estimated fair value of bonds at December 31, 1995 by
contractual maturity are shown below. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without prepayment penalties.
23
<PAGE>
Notes To Financial Statements (Continued)
<TABLE>
<CAPTION>
Estimated
Carrying Fair
Value Value
-------- ---------
(In Thousands)
<S> <C> <C>
Due in one year or less $ 2,065.0 $ 2,076.4
Due after one year through five years 9,637.9 10,010.1
Due after five years through ten years 7,140.6 7,301.7
Due after ten years 7,000.0 7,216.3
--------- ---------
25,843.5 26,604.5
Mortgage-backed securities, including securities
guaranteed by the U.S. Government 15,417.1 15,524.4
--------- ---------
TOTAL $41,260.6 $42,128.9
</TABLE>
Proceeds from sales of investments in bonds were $36,584.5 thousand during 1995,
$17,742.4 thousand during 1994 and $20,374.8 thousand during 1993. Gross
capital gains of $535.0 thousand in 1995, $44.5 thousand in 1994 and $154.5
thousand in 1993 and gross capital losses of $87.0 thousand in 1995, $52.3
thousand in 1994 and $42.5 thousand in 1993 were realized on those sales, as
portion of which were included in the Interest Maintenance Reserve. The
estimated fair value of non-publicly traded bonds is determined by the Company
using a pricing matrix.
b. Other
It is not practicable to determine the fair value of policy loans which do not
have a stated maturity.
6. Liquidity
The withdrawal characteristics of the policyholders' reserves and funds,
including separate accounts, and the invested assets which support them at
December 31, 1995 are illustrated below:
<TABLE>
<CAPTION>
(In Thousands)
<S> <C> <C>
Total policyholders' reserves and funds and separate account liabilities $281,929.8
Policy loans (6,444.9)
----------
Subject to discretionary withdrawal $275,484.9
----------
Total invested assets, including separate investment accounts $313,384.4
Policy loans and other invested assets (6,444.9)
----------
Readily marketable investments $306,939.5
----------
</TABLE>
7. SUBSEQUENT EVENT
The Company's parent, MassMutual, entered into a definitive agreement to merge
with Connecticut Mutual Life Insurance Company. This merger has been approved
by the Boards of Directors and policyholders of MassMutual and Connecticut
Mutual Life Insurance Company, as well as by the insurance regulatory
authorities in Massachusetts and Connecticut. This merger will be effective
March 1, 1996.
24
<PAGE>
Notes To Financial Statements (Continued)
8. Affiliated Companies
The relationship of the Company, its parent and affiliated companies as of
December 31, 1995 is illustrated below.
Parent
- ------
Massachusetts Mutual Life Insurance Company
Subsidiaries
- ------------
MML Bay State Life Insurance Company
MassMutual Holding Company
MassMutual Holding Company Two, Inc.
MML Series Investment Fund
MassMutual Institutional Funds
Oppenheimer Value Stock Fund
Subsidiaries of MassMutual Holding Company
------------------------------------------
Cornerstone Real Estate Advisors, Inc.
DLB Acquisition Corporation
MML Investors Services, Inc.
MML Real Estate Corporation (liquidated in 1995)
MML Realty Management Corporation
MML Reinsurance (Bermuda) Ltd.
Mass Seguros De Vida S. A. (Chile)
MassLife Seguros De Vida S. A. (Argentina)
MassMutual/Carlson CBO N.V.
MassMutual Corporate Value Limited
MassMutual International (Bermuda) Limited
Oppenheimer Acquisition Corporation
Westheimer 335 Suites, Inc.
Subsidiaries of DLB Acquisition Corporation
-------------------------------------------
Concert Capital Management, Inc.
Subsidiaries of MassMutual Corporate Value Limited
--------------------------------------------------
MassMutual Corporate Value Partners Limited
Subsidiaries of MassMutual Holding Company Two, Inc.
----------------------------------------------------
MassMutual Holding Company Two MSC, Inc.
Subsidiaries of MassMutual Holding Company Two MSC, Inc.
--------------------------------------------------------
Benefit Panel Services, Inc.
MML Pension Insurance Company
MassMutual of Ireland, Limited
National Capital Health Plan, Inc.
National Capital Preferred Provider Organization
Sloans Lake Management Corporation
Affiliates
- ----------
MassMutual Corporate Investors
MassMutual Participation Investors
25
<PAGE>
PART II. INFORMATION NOT REQUIRED IN A PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
-------------------------------------------
Not applicable.
Item 14. Indemnification of Directors and Officers
-----------------------------------------
MML Bay State directors and officers are indemnified under its by-laws. MML Bay
State indemnifies each person who was or is a party to any threatened, pending
or completed action, suit or to any liability to any entity which is registered
as an investment company under the Investment Company Act of 1940 or to the
security holders thereof provided that:
(a) Such person acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation;
(b) With respect to any criminal action or proceeding, such person had no
reasonable cause to believe thier conduct was unlawful;
(c) Unless ordered by a court, indemnification shall be made only as
authorized in the specific case upon a determination that indemnification
of the director, officer, employee or agent is proper in the circumstances
set forth in subparagraphs (a) and (b) above, such determination to be made
(i) by the Board of Directors of the MML Bay State by a majority vote of a
quorum consisting of Directors who were not parties to such action, suit or
proceeding, or (ii) if such quorum is not obtainable, or, even if
obtainable a quorum of disinterested Directors so directs, by independent
legal counsel in a written opinion, or (iii) by the stockholders of the
corporation.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
MML Bay State pursuant to the foregoing provisions, or otherwise, MML Bay
State has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in
the Securities Act of 1933, and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by MML Bay State of expenses incurred or paid by a director,
officer or controlling person of MML Bay State 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, MML
Bay State 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 Securities Act of 1933 and will be
governed by the final adjudication of such issues.
Item 15. Recent Sales of Unregistered Securities
---------------------------------------
MML Bay State offers two unregistered privately placed variable universal
life insurance products. These products are offered by MML Bay State
Variable Life Separate Account II and MML Bay State Variable Life III
respectively. The product offered by Separate Account II is for use
primarily as a means of funding long-term corporate obligations such as
retiree health care obligations. The variable life product offered by
Separate Account III is sold primarily to individuals and families with
significant resources for wealth accumulation and estate planning purposes.
Item 16. Exhibits and Financial Statement Schedules
------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
Exhibit Number Description....................... Method of Filing
- -------------- ----------- ----------------
<S> <C> <C>
(1) Form of Underwriting Agreement.... Filed herewith
(3)(i) MML Bay State Articles of
Incorporation..................... *
(3)(ii) MML Bay State Bylaws.............. *
4 Individual Annuity Contract....... *
5 Opinion re legality............... Filed herewith
21 List of MML Bay State
Subsidiaries...................... *
23 Consent of
Coopers & Lybrand L.L.P,
independent accountants........... Filed herewith
Financial Statement
Schedules......................... Filed herewith
Powers of Attorney................ Filed Herewith
</TABLE>
*Incorporated by reference pursuant to Rule 411 of the Securities Act of 1933
from the Registrant's Registration Statement No. 33-79750 filed on June 6, 1994.
Item 17. Undertakings
------------
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i.) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii.) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement;
(iii.) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement, including (but not limited to) any
addition or deletion of a managing underwriter;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement
<PAGE>
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has
duly caused this Post-Effective Amendment to Registration Statement No. 33-79750
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Springfield, Commonwealth of Massachusetts, on April 5, 1996.
-------------
(Signature) /s/ Isadore Jermyn
--------------------------
(Registrant) MML Bay State Life Insurance Company
---------------------------------------
/s/ Richard M. Howe On April 24, 1996, as Attorney-in-Fact pursuant
---------------- to powers of attorney filed herewith.
*Richard M. Howe
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
By: /s/ Isadore Jermyn*
-------------------------
Isadore Jermyn, President and Chief Executive Officer
MML Bay State Life Insurance Company
/s/ Richard M. Howe On April 24, 1996, as Attorney-in-Fact pursuant
- -------------------- to powers of attorney filed herewith.
*Richard M. Howe
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Isadore Jermyn* President, Chief Executive April 5, 1996
- ------------------------- Officer and Chairman of the Board
Isadore Jermyn
/s/ Ann Iseley* Treasurer (Principal Financial
- ------------------------- Officer)
Ann Iseley
/s/ Paul D. Adornato* Director
- -------------------------
Paul D. Adornato
/s/ Donald D. Cameron* Director
- -------------------------
Donald D. Cameron
/s/ Daniel F. Fitzgerald* Director
- -------------------------
Daniel F. Fitzgerald
/s/ Arthur D. Foresi* Director
- -------------------------
Arthur D. Foresi
/s/ Gary T. Huffman* Director
- --------------------------
Gary T. Huffman
/s/ Douglas J. Jangraw* Director
- --------------------------
Douglas J. Jangraw
/s/ John J. Libera, Jr.* Director
- --------------------------
John J. Libera, Jr.
/s/ William T. McElmurray* Director
- --------------------------
William T. McElmurray
/s/ Stuart H. Reese* Director
- --------------------------
Stuart H. Reese
/s/ Jeanne M. Stamant* Director
- --------------------------
Jeanne M. Stamant
/s/ Richard M. Howe On April 5, 1996, as Attorney-in-Fact pursuant
- -------------------------- to powers of attorney filed herewith.
*Richard M. Howe
</TABLE>
<PAGE>
Exhibit 1
Form of Underwriting Agreement with MML Investors Services, Inc.
<PAGE>
UNDERWRITING AND
SERVICING AGREEMENT
This UNDERWRITING AND SERVICING AGREEMENT is made this 1st day of May,
1996, by and between MML Investors Services, Inc. ("MMLISI") and MML Bay State
Life Insurance Company ("Bay State"), on its own behalf and on behalf of
________________________ Separate Account (the "Separate Account"), a separate
account of Bay State, as follows:
WHEREAS, the Separate Account was established on ____________________,
pursuant to authority of the Board of Directors of Bay State in order to set
aside and invest assets attributable to certain variable annuity contracts (the
"Contracts") issued by Bay State; and
WHEREAS, Bay State has registered the Separate Account under the Investment
Company Act of 1940, as amended, (the "1940 Act") and has registered the
Contracts under the Securities Act of 1933, as amended, (the "1933 Act"); and
WHEREAS, Bay State will continue the effectiveness of the registrations of
the Separate Account under the 1940 Act and the Contracts under the 1933 Act;
and
WHEREAS, Bay State intends for the Contracts to be sold by its agents and
brokers who are required to be registered representatives of a broker-dealer
that is registered with the Securities and Exchange Commission (the "SEC") under
the Securities Exchange Act of 1934 ("1934 Act") and a member of the National
Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, Bay State desires to engage MMLISI, a broker-dealer registered
with the SEC under the 1934 Act and a member of the NASD, to act as a co-
underwriter ("Co-underwriter") in connection with the distribution of the
Contracts by the full-time career contracted agents of Bay State ("Agents") and
certain other brokers, and in connection therewith, to provide certain services
and supervision to such Agents and brokers who are also registered
representatives of MMLISI and who sell the Contracts, and to otherwise perform
certain duties and functions that are necessary and proper for the distribution
of the Contracts as required under applicable federal and state securities laws
and NASD regulations, and MMLISI desires to act as Co-underwriter for the sale
of the Contracts and to assume such responsibilities;
NOW, THEREFORE, the parties hereto agree as follows:
1. Underwriter. Bay State hereby appoints MMLISI as, and MMLISI agrees to serve
as, Co-underwriter of the Contracts during the term of this Agreement for
purposes of federal and state securities laws. Bay State reserves the right,
however, to refuse at any time or times to sell any Contracts hereunder for any
reason, and Bay State maintains ultimate responsibility for the sales of the
Contracts.
2. Services. MMLISI agrees, on behalf of Bay State and in its capacity as Co-
underwriter, to undertake at its own expense except as otherwise provided
herein, to provide certain sales, administrative and supervisory services
relative to the Contracts as described below, and otherwise to perform all
duties that are necessary and proper for the distribution of the Contracts as
required under applicable federal and state securities laws and NASD
regulations.
<PAGE>
3. Best Efforts. MMLISI shall use reasonable efforts to sell the Contracts but
does not agree hereby to sell any specific number of Contracts and shall be free
to act as underwriter of other securities. MMLISI agrees to offer the Contracts
for sale in accordance with the prospectus then in effect for the Contracts.
4. Compliance and Supervision. All persons who are engaged directly or
indirectly in the operations of MMLISI and Bay State in connection with the
offer or sale of the Contracts shall be considered a "person associated" with
MMLISI as defined in Section 3(a)(18) of the 1934 Act. MMLISI shall have full
responsibility for the securities activities of each such person as contemplated
by Section 15 of the 1934 Act.
MMLISI shall be fully responsible for carrying out all compliance,
supervisory and other obligations hereunder with respect to the activities of
its registered representatives as required by the NASD Rules of Fair Practice
(the "Rules") and applicable federal and state securities laws. Without limiting
the generality of the foregoing, MMLISI agrees that it shall be fully
responsible for:
(a) ensuring that no representative of MMLISI shall offer or sell the
Contracts until such person is appropriately licensed, registered, or otherwise
qualified to offer and sell such Contracts under the federal securities laws and
any applicable securities laws of each state or other jurisdiction in which such
Contracts may be lawfully sold, in which Bay State is licensed to sell the
Contracts, and in which such person shall offer or sell the Contracts; and
(b) training and supervising Bay State's Agents and brokers who are also
registered representatives of MMLISI for purposes of complying on a continuous
basis with the Rules and with federal and state securities laws applicable in
connection with the offering and sale of the Contracts. In this connection,
MMLISI shall:
(i) jointly conduct with Bay State such training (including the
preparation and utilization of training materials) as in the opinion of MMLISI
and Bay State is necessary to accomplish the purposes of this Agreement;
(ii) establish and implement reasonable written procedures for
supervision of sales practices of registered representatives of MMLISI who sell
the Contracts;
(iii) provide a sufficient number of registered principals and an
adequately staffed compliance department to carry out the responsibilities as
set forth herein;
(iv) take reasonable steps to ensure that Bay State Agents and brokers
who are also registered representatives of MMLISI recommend the purchase of the
Contracts only upon reasonable grounds to believe that the purchase of the
Contracts is suitable for such applicant; and
(v) impose disciplinary measures on agents of Bay State who are also
registered representatives of MMLISI as required.
The parties hereto recognize that any registered representative of MMLISI
selling the Contracts as contemplated by this Agreement shall also be acting as
an insurance agent of Bay State or as an insurance broker, and that the rights
of MMLISI to supervise such persons shall be limited to the extent specifically
described herein or required under applicable federal or state securities laws
or NASD regulations. Such persons shall not be considered employees of MMLISI
and shall be considered agents of MMLISI only as and to the extent required by
such laws and regulations. Further, it is intended by the parties hereto that
such persons are and shall continue to be considered to have a common law
independent contractor relationship with Bay State and not to be common law
10
<PAGE>
employees of Bay State.
5. Registration and Qualification of Contracts. Bay State has prepared or caused
to be prepared a registration statement describing the Contracts, together with
exhibits thereto (hereinafter referred to as the "Registration Statement"). The
Registration Statement includes a prospectus (the "Prospectus") for the
Contracts.
Bay State agrees to execute such papers and to do such acts and things as shall
from time-to-time be reasonably requested by MMLISI for the purpose of
qualifying and maintaining qualification of the Contracts for sale under
applicable state law and for maintaining the registration of the Separate
Account and interests therein under the 1933 Act and the 1940 Act, to the end
that there will be available for sale from time-to-time such amounts of the
Contracts as MMLISI may reasonably be expected to sell. Bay State shall advise
MMLISI promptly of any action of the SEC or any authorities of any state or
territory, of which it is aware, affecting registration or qualification of the
Separate Account, or rights to offer the Contracts for sale.
If any event shall occur as a result of which it is necessary to amend or
supplement the Registration Statement in order to make the statements therein,
in light of the circumstances under which they were or are made, true, complete
or not misleading, Bay State will forthwith prepare and furnish to MMLISI,
without charge, amendments or supplements to the Registration Statement
sufficient to make the statements made in the Registration Statement as so
amended or supplemented true, complete and not misleading in light of the
circumstances under which they were made.
6. Representations of Bay State. Bay State represents and warrants to MMLISI as
follows:
(a) Bay State is an insurance company duly organized under the laws of
the State of Missouri and is in good standing and is authorized to conduct
business under the laws of each state in which the Contracts are sold, that the
Separate Account was legally and validly established as a segregated asset
account under the Insurance Code of Missouri, and that the Separate Account has
been properly registered as a unit investment trust in accordance with the
provisions of the 1940 Act to serve as a segregated investment account for the
Contracts.
(b) All persons that will be engaging in the offer or sale of the Contracts
will be authorized insurance agents of Bay State.
(c) The Registration Statement does not and will not contain any
misstatements of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were or are made, not
materially misleading.
(d) Bay State shall make available to MMLISI copies of all financial
statements that MMLISI reasonably requests for use in connection with the
offer and sale of the Contracts.
(e) No federal or state agency or bureau has issued an order preventing or
suspending the offer of the Contracts or the use of the Registration
Statement, or of any part thereof, with respect to the sale of the
Contracts.
(f) The offer and sale of the Contracts is not subject to registration, or
if necessary, is registered, under the Blue Sky laws of the states in which
the Contracts will be offered and sold.
(g) The Contracts are qualified for offer and sale under the applicable
state insurance laws in
11
<PAGE>
those states in which the Contracts shall be offered for sale. In each
state where such qualification is effected, Bay State shall file and make
such statements or reports as are or may be required by the laws of such
state.
(h) This Agreement has been duly authorized, executed and delivered by Bay
State and constitutes the valid and legally binding obligation of Bay
State. Neither the execution and delivery of this Agreement by Bay State
nor the consummation of the transactions contemplated herein will result in
a breach or violation of any provision of the state insurance laws
applicable to Bay State, any judicial or administrative orders in which it
is named or any material agreement or instrument to which it is a party or
by which it is bound.
7. Representations of MMLISI. MMLISI represents and warrants to Bay State as
follows:
(a) MMLISI is duly registered as a broker-dealer under the 1934 Act and is
a member in good standing of the NASD and, to the extent necessary to
perform the activities contemplated hereunder, is duly registered, or
otherwise qualified, under the applicable securities laws of every state or
other jurisdiction in which the Contracts are available for sale.
(b) This Agreement has been duly authorized, executed and delivered by
MMLISI and constitutes the valid and legally binding obligation of MMLISI.
Neither the execution and delivery of this Agreement by MMLISI nor the
consummation of the transactions contemplated herein will result in a
breach or violation of any provision of the federal or state securities
laws or the Rules, applicable to MMLISI, or any judicial or administrative
orders in which it is named or any material agreement or instrument to
which it is a party or by which it is bound.
(c) MMLISI shall comply with the Rules and the securities laws of any
jurisdiction in which it sells, directly or indirectly, any Contracts.
8. Expenses. MMLISI shall be responsible for all expenses incurred in
connection with its provision of services and the performance of its
obligations hereunder, except as otherwise provided herein.
Bay State shall be responsible for all expenses of printing and
distributing the Prospectuses, and all other expenses of preparing,
printing and distributing all other sales literature or material for use in
connection with offering the Contracts for sale.
9. Sales Literature and Advertising. MMLISI agrees to ensure that its
registered representatives use only the Prospectus, statements of
additional information, or other applicable and authorized sales literature
then in effect in selling the Contracts. MMLISI is not authorized to give
any information or to make any representations concerning the Contracts
other than those contained in the current Registration Statement filed with
the SEC or in such sales literature as may be authorized by Bay State.
MMLISI agrees to make timely filings with the SEC, the NASD, and such other
regulatory authorities as may be required of any sales literature or
advertising materials relating to the Contracts and intended for
distribution to prospective investors. Bay State shall review and approve
all advertising and sales literature concerning the Contracts utilized by
MMLISI. MMLISI also agrees to furnish to Bay State copies of all agreements
and plans it intends to use in connection with any sales of the Contracts.
10. Applications. All applications for Contracts shall be made on
application forms supplied
12
<PAGE>
by Bay State, and shall be remitted by MMLISI promptly, together with such
forms and any other required documentation, directly to Bay State at the
address indicated on such application or to such other address as Bay State
may, from time to time, designate in writing. All applications are subject
to acceptance or rejection by Bay State at its sole discretion.
11. Payments. All money payable in connection with any of the Contracts,
whether as premiums, purchase payments or otherwise, and whether paid by,
or on behalf of any applicant or Contract owner, is the property of Bay
State and shall be transmitted immediately in accordance with the
administrative procedures of Bay State without any deduction or offset for
any reason, including by example but not limitation, any deduction or
offset for compensation claimed by MMLISI. Checks or money orders as
payment on any Contract shall be drawn to the order of "MML Bay State Life
Insurance Company." No cash payments shall be accepted by MMLISI in
connection with the Contracts. Unless otherwise agreed to by Bay State in
writing, neither MMLISI nor any of Bay State's Agents nor any broker shall
have an interest in any surrender charges, deductions or other fees payable
to Bay State as set forth herein.
12. Insurance Licenses. Bay State shall apply for and maintain the proper
insurance licenses and appointments for each of the Agents and brokers
selling the Contracts in all states or jurisdictions in which the Contracts
are offered for sale by such person. Bay State reserves the right to refuse
to appoint any proposed Agent or broker, and to terminate an Agent or
broker once appointed. Bay State agrees to be responsible for all licensing
or other fees required under pertinent state insurance laws to properly
authorize Agents or brokers for the sale of the Contracts; however, the
foregoing shall not limit Bay State's right to collect such amount from any
person or entity other than MMLISI.
13. Agent/Broker Compensation. Commissions or other fees due all brokers
and Agents in connection with the sale of Contracts shall be paid by Bay
State, on behalf of MMLISI, to the persons entitled thereto in accordance
with the applicable agreement between each such broker or Agent and Bay
State or a general agent thereof. MMLISI shall assist Bay State in the
payment of such amounts as Bay State shall reasonably request, provided
that MMLISI shall not be required to perform any acts that would subject it
to registration under the insurance laws of any state. The responsibility
of MMLISI shall include the performance of all activities by MMLISI
necessary in order that the payment of such amounts fully complies with all
applicable federal and state securities laws. Unless applicable federal or
state securities law shall require, Bay State retains the ultimate right to
determine the commission rate paid to its Agents.
14. MMLISI Compensation. As payment for its services hereunder, MMLISI
shall receive an annual fee in the amount of $______ per year. Payments
shall commence and be made no later than December 31 of the year in which a
Contract is issued.
15. Books and Records. MMLISI and Bay State shall each cause to be
maintained and preserved for the period prescribed such accounts, books,
and other documents as are required of it by the 1934 Act and any other
applicable laws and regulations. In particular, without limiting the
foregoing, MMLISI shall cause all the books and records in connection with
the offer and sale of the Contracts by its registered representatives to be
maintained and preserved in conformity with the requirements of Rules 17a-3
and 17a-4 under the 1934 Act, to the extent that such requirements are
applicable to the Contracts. The books, accounts, and records of MMLISI and
Bay State as to all transactions hereunder shall be maintained so as to
disclose clearly and accurately the nature and details of the transactions.
The payment of premiums, purchase payments, commissions and other fees and
payments in connection with the Contracts by its registered representatives
shall be reflected on the books and records of
13
<PAGE>
MMLISI as required under applicable NASD regulations and federal and state
securities laws requirements.
MMLISI and Bay State, from time to time during the term of this
Agreement, shall divide the administrative responsibility for maintaining
and preserving the books, records and accounts kept in connection with the
Contracts; provided, however, in the case of books, records and accounts
kept pursuant to a requirement of applicable law or regulation, the
ultimate and legal responsibility for maintaining and preserving such
books, records and accounts shall be that of the party which is required to
maintain or preserve such books, records and accounts under the applicable
law or regulation, and such books, records and accounts shall be maintained
and preserved under the supervision of that party. MMLISI and Bay State
shall each cause the other to be furnished with such reports as it may
reasonably request for the purpose of meeting its reporting and
recordkeeping requirements under such regulations and laws, and under the
insurance laws of the Commonwealth of Massachusetts and any other
applicable states or jurisdictions.
MMLISI and Bay State each agree and understand that all documents,
reports, records, books, files and other materials required under
applicable Rules and federal and state securities laws shall be the
property of MMLISI, unless such documents, reports, records, books, files
and other materials are required by applicable regulation or law to be also
maintained by Bay State, in which case such material shall be the joint
property of MMLISI and Bay State. All other documents, reports, records,
books, files and other materials maintained relative to this Agreement
shall be the property of Bay State. Upon termination of this Agreement, all
said material shall be returned to the applicable party.
MMLISI and Bay State shall establish and maintain facilities and
procedures for the safekeeping of all books, accounts, records, files, and
other materials related to this Agreement. Such books, accounts, records,
files, and other materials shall remain confidential and shall not be
voluntarily disclosed to any other person or entity except as described
below in section 16..
16. Availability of Records. MMLISI and Bay State shall each submit to all
regulatory and administrative bodies having jurisdiction over the sales of
the Contracts, present or future, any information, reports, or other
material that any such body by reason of this Agreement may request or
require pursuant to applicable laws or regulations. In particular, without
limiting the foregoing, Bay State agrees that any books and records it
maintains pursuant to paragraph 15 of this Agreement which are required to
be maintained under Rule 17a-3 or 17a-4 of the 1934 Act shall be subject to
inspection by the SEC in accordance with Section 17(a) of the 1934 Act and
Sections 30 and 31 of the 1940 Act.
17. Confirmations. Bay State agrees to prepare and mail a confirmation for
each transaction in connection with the Contracts at or before the
completion thereof as required by the 1934 Act and applicable
interpretations thereof, including Rule 10b-10 thereunder. Each such
confirmation shall reflect the facts of the transaction, and the form
thereof will show that it is being sent on behalf of MMLISI acting in the
capacity of agent for Bay State.
18. Indemnification. Bay State shall indemnify MMLISI, its registered
representatives, officers, directors, employees, agents and controlling
persons and hold such persons harmless, from and against any and all
losses, damages, liabilities, claims, demands, judgments, settlements,
costs and expenses of any nature whatsoever (including reasonable
attorneys' fees and disbursements) resulting or arising out of or based
upon an allegation or finding that: (i) the Registration Statement or any
application or other document or written information
14
<PAGE>
provided by or on behalf of Bay State includes any untrue statement of a
material fact or omits to state a material fact necessary to make the
statements therein, in light of the circumstances under which they are
made, not misleading, unless such statement or omission was made in
reliance upon, and in conformity with, written information furnished to Bay
State by MMLISI or its registered representatives specifically for use in
the preparation thereof, or (ii) there is a misrepresentation, breach of
warranty or failure to fulfill any covenant or warranty made or undertaken
by Bay State hereunder.
MMLISI will indemnify Bay State, its officers, directors, employees,
agents and controlling persons and hold such persons harmless, from and
against any and all losses, damages, liabilities, claims, demands,
judgments, settlements, costs and expenses of any nature whatsoever
(including reasonable attorneys' fees and disbursements) resulting or
arising out of or based upon an allegation or finding that: (i) MMLISI or
its registered representatives offered or sold or engaged in any activity
relating to the offer and sale of the Contracts which was in violation of
any provision of the federal securities laws or, (ii) there is a material
misrepresentation, material breach of warranty or material failure to
fulfill any covenant or warranty made or undertaken by MMLISI hereunder.
Promptly after receipt by an indemnified party under this paragraph 18
of notice of the commencement of any action by a third party, such
indemnified party will, if a claim in respect thereof is to be made against
the indemnifying party under this paragraph 18, notify the indemnifying
party of the commencement thereof; but the omission to notify the
indemnifying party will not relieve the indemnifying party from liability
which the indemnifying party may have to any indemnified party otherwise
than under this paragraph. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, to assume the
defense thereof, with counsel satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this paragraph for any legal or
other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation.
19. Independent Contractor. MMLISI shall be an independent contractor.
MMLISI is responsible for its own conduct and the employment, control and
conduct of its agents and employees and for injury to such agents or
employees or to others through its agents or employees. MMLISI assumes full
responsibility for its agents and employees under applicable statutes and
agrees to pay all employer taxes thereunder.
20. Termination. Subject to termination as hereinafter provided, this
Agreement shall remain in full force and effect for the initial term of the
Agreement, which shall be for a two year period commencing on the date
first above written, and this Agreement shall continue in full force and
effect from year to year thereafter, until terminated as herein provided.
This Agreement may be terminated by either party hereto upon 30 days
written notice to the other party, or at any time upon the mutual written
consent of the parties hereto. This Agreement shall automatically be
terminated in the event of its assignment. Subject to Bay State's approval,
however, MMLISI may delegate any duty or function assigned to it in this
agreement provided that such delegation is permissible under applicable
law. Upon termination of this Agreement, all authorizations, rights and
obligations shall cease except the the obligations to settle accounts
hereunder, including the settlement of monies due in connection with the
Contracts in effect at the time of termination or issued pursuant to
15
<PAGE>
applications received by Bay State prior to termination.
21. Interpretation. This Agreement shall be subject to the provisions of the
1934 Act and the rules, regulations, and rulings thereunder and of the NASD,
from time to time in effect, and the terms hereof shall be interpreted and
construed in accordance therewith. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule, or otherwise, the
remainder of this Agreement shall not be affected thereby. This Agreement shall
be interpreted in accordance with the laws of the Commonwealth of Massachusetts.
22. Non-exclusivity. The services of MMLISI and Bay State to the Separate
Account hereunder are not to be deemed exclusive and MMLISI and Bay State shall
be free to render similar services to others so long as their services hereunder
are not impaired or interfered with hereby.
23. Amendment. This Agreement constitutes the entire Agreement between the
parties hereto and may not be modified except in a written instrument executed
by all parties hereto.
24. Interests in and of MMLISI. It is understood that any of the policyholders,
directors, officers, employees and agents of Bay State may be a shareholder,
director, officer, employee, or agent of, or be otherwise interested in, MMLISI,
any affiliated person of MMLISI, any organization in which MMLISI may have an
interest, or any organization which may have an interest in MMLISI; that MMLISI,
any such affiliated person or any such organization may have an interest in Bay
State; and that the existence of any such dual interest shall not affect the
validity hereof or of any transaction hereunder except as otherwise provided in
the Charter, Articles of Incorporation, or By-Laws of Bay State and MMLISI,
respectively, or by specific provision of applicable law.
16
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed by their respective officials thereunto duly authorized and seals to
be affixed, as of the day and year first above written.
ATTEST: MML BAY STATE LIFE
INSURANCE COMPANY, on its behalf
and on behalf of _________SEPARATE
ACCOUNT
By:
------------------------------
ATTEST: MML INVESTORS SERVICES, INC.
By:
------------------------------
17
<PAGE>
EXHIBIT 5
OPINION RE LEGALITY
18
<PAGE>
April 5, 1996
MML Bay State Life Insurance Company
1295 State Street
Springfield, MA 01111
RE: MML Bay State Fixed Account with Market Value
Adjustment; Commission File No. 33-79750
Ladies and Gentlemen:
This opinion is furnished in connection with the filing of Post-Effective
Amendment No. 2 to the Registration Statement on Form S-1 (the "Registration
Statement") under the Securities Act of 1933 for MML Bay State Fixed Account
with Market Value Adjustment (the "Fixed Account") offered in connection with
OppenheimerFunds LifeTrust Variable Annuity contract, issued by MML Bay State.
The Fixed Account offers investors the choice among various guarantee periods to
which account value may be allocated. If such amounts remain in the Fixed
Account for the chosen guarantee period, then a guaranteed rate of interest will
be paid. If, however, amounts are withdrawn prior to the expiration of the
selected guarantee period, such withdrawal will be subject to a market value
adjustment.
As Chief Legal Officer and Assistant Secretary for MML Bay State Life Insurance
Company, ("MML Bay State"), I provide legal advice to MML Bay State in
connection with the operation of its variable products. In such role I have
participated in the preparation of Post-Effective Amendment No. 2 to the
Registration Statement for the Fixed Account. In so acting, I have made such
examination of the law and examined such records and documents as in my judgment
are necessary or appropriate to enable me to render the opinion expressed below.
I am of the following opinion:
1. MML Bay State is a valid and subsisting corporation, organized and operated
under Missouri law, and subject to regulation by the Missouri Commissioner of
Insurance.
2. The securities being registered, when sold will be legally issued, fully paid
and non-assessable.
I hereby consent to the use of this opinion as an exhibit to the Post-Effective
Amendment.
Very truly yours,
Thomas F. English
-----------------
Thomas F. English
Chief Legal Officer and
Assistant Secretary
19
<PAGE>
EXHIBIT 23
CONSENTS OF EXPERTS
Consent of Coopers & Lybrand L.L.P.
20
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
MML Bay State Life Insurance Company
We consent to the inclusion in this registration statement on Form S-1 (File No.
33-79750) of our reports dated February 23, 1996 on our audits of the financial
statements and financial statement schedules of MML Bay State Life Insurance
Company, which include explanatory paragraphs relating to prior year adjustments
and the pending merger between Massachusetts Mutual Life Insurance Company and
Connecticut Mutual Life Insurance Company. We also consent to the reference to
our Firm under the caption "Experts."
Coopers & Lybrand L.L.P.
Springfield, Massachusetts
April 4, 1996
21
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
MML Bay State Life Insurance Company
In connection with our audits of the financial statements of MML Bay State Life
Insurance Company as of December 31, 1995 and 1994, and for each of the three
years in the period ended December 31, 1995, which financial statements are
included in the Prospectus, we have also audited the financial statement
schedules listed in Item 16 herein.
In our opinion, these financial statement schedules, when considered in relation
to the basic financial statements taken as a whole, present fairly, in all
material respects, the information required to be included therein.
As discussed in Notes 2 and 3 to the financial statements, during 1995 and 1994
the Company recorded prior year adjustments through the Statement of Changes in
Shareholder's Equity.
As discussed in Note 7 to the financial statements, the parent company of MML
Bay State Life Insurance Company, Massachusetts Mutual Life Insurance Company,
has entered into a definitive agreement to merge with Connecticut Mutual Life
Insurance Company.
Coopers & Lybrand L.L.P.
Springfield, Massachusetts
February 23, 1996
22
<PAGE>
EXHIBIT 23 (i)
FINANCIAL STATEMENT SCHEDULES
23
<PAGE>
MML BAY STATE LIFE INSURANCE COMPANY
SCHEDULE I: SCHEDULE OF INVESTMENTS - OTHER THAN INVESTMENTS IN RELATED PARTIES
December 31, 1995
(In Thousands)
<TABLE>
<CAPTION>
Amount at
which shown on
Type of Investment Cost Fair Value Balance Sheet
- ------------------ ---- ---------- --------------
<S> <C> <C> <C>
Bonds:
U.S. Treasury Securities and
Obligations of U.S. Government
Corporations and Agencies $ 7,929 $ 8,036 $ 7,929
Mortgage-backed securities 11,980 12,059 11,980
Industrial Securities 21,352 22,034 21,352
------- ------- -------
Total Bonds $41,261 $42,129 $41,261
------- ======= -------
Policy Loans 6,445 6,445
Cash and Short-term investments 490 490
------- -------
Total Investments $48,196 $48,196
======= =======
</TABLE>
<PAGE>
MML BAY STATE LIFE INSURANCE COMPANY
SCHEDULE IV: REINSURANCE
<TABLE>
<CAPTION>
(In Thousands)
Ceded Assumed Percentage of
Gross to Other from Other Net Amount Assumed
Year ended December 31, 1995 Amount Companies Companies Amount to Net
- ---------------------------- ------ --------- --------- ------ ------
<S> <C> <C> <C> <C> <C>
Life Insurance in Force $6,936,847 $1,088,642 $0.0 $5,848,205 0.0%
========== ========== ==== ========== =====
Premiums and other considerations
Individual life & annuities $ 90,730 $ 9,848 $0.0 $ 80,882 $0.0
Group life & annuities 12,504 653 0.0 11,851 0.0
---------- ---------- ---- ---------- -----
Total Premium and other considerations $ 103,234 $ 10,501 $0.0 $ 92,733 $0.0
========== ========== ==== ========== =====
Year ended December 31, 1994
- ----------------------------
Life Insurance in Force $5,123,903 $2,965,198 $0.0 $2,158,705 0.0%
========== ========== ==== ========== =====
Premiums and other considerations
Individual life & annuities $ 52,156 $ 4,131 $0.0 $ 48,025 0.0%
Group life & annuities 6,988 532 0.0 6,456 0.0
---------- ---------- ---- ---------- -----
Total Premium and other considerations $ 59,144 $ 4,663 $0.0 $ 54,481 0.0%
========== ========== ==== ========== =====
Year ended December 31, 1993
- ----------------------------
Life Insurance in Force $3,518,730 $1,853,428 $0.0 $1,665,302 0.0%
========== ========== ==== ========== =====
Premiums and other considerations
Individual life & annuities $ 36,489 $ 2,738 $0.0 $ 33,751 0.0%
Group life & annuities 11,590 1,872 0.0 9,718 0.0
---------- ---------- ---- ---------- -----
Total Premium and other considerations $ 48,079 $ 4,610 $0.0 $ 43,469 0.0%
========== ========== ==== ========== =====
</TABLE>
<PAGE>
MML BAY STATE LIFE INSURANCE COMPANY
SCHEDULE V - VALUATION AND QUALIFYING ACCOUNTS
(In Thousands)
<TABLE>
<CAPTION>
Additions
Balance at Reserve Balance at
beginning of Contributions end of
Description period (1) period
- ----------- ------ --- ------
<S> <C> <C> <C>
As of and for the year ended
December 31, 1993
- ----------------------------
Bonds and Short-term Investments $ 34 $ 30 $ 64
---- ---- ----
Total Asset Valuation Reserve $ 34 $ 30 $ 64
==== ==== ====
As of and for the year ended
December 31, 1994
- ----------------------------
Bonds and Short-term Investments $ 64 $ 43 $107
---- ---- ----
Total Asset Valuation Reserve $ 64 $ 43 $107
==== ==== ====
As of and for the year ended
December 31, 1995
- ----------------------------
Bonds and Short-term Investments $107 $ 47 $154
---- ---- ----
Total Asset Valuation Reserve $107 $ 47 $154
==== ==== ====
</TABLE>
(1) Amounts represent contributions calculated using a statutory formula.
Represents the net impact on Shareholder's Equity for investment gains and
losses not related to changes in interest rates. This net change in
reserves is recorded as a charge to Shareholder's Equity.
<PAGE>
POWERS OF ATTORNEY
27
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, Isadore Jermyn, President, Chief Executive Officer and Chairman
of the Board of Directors of MML Bay State Life Insurance Company ("MML Bay
State"), does hereby constitute and appoint Lawrence V. Burkett, Thomas F.
English, Richard M. Howe, and Michael Berenson, and each of them individually,
as his true and lawful attorneys and agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as a member of the Board of Directors of MML Bay State that said attorneys and
agents may deem necessary or advisable to enable MML Bay State to comply with
the Securities Act of 1933, as amended (the "1933 Act"), the Investment Company
Act of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of MML Bay State separate
investment accounts (the "MML Bay State Separate Accounts"). This power of
attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as a member of the Board of Directors of MML Bay State to the
Registration Statements and to any instruments or documents filed or to be filed
with the Commission under the 1933 Act and the 1940 Act in connection with such
Registration Statements, including any and all amendments to such statements,
documents or instruments of any MML Bay State Separate Account, including but
not limited to those listed below.
MML Bay State Variable Annuity Separate Account 1
MML Bay State Variable Life Separate Account I
MML Bay State Variable Life Separate Account II
MML Bay State Variable Life Separate Account III
MML Bay State Variable Life Separate Account IV
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this day of , 1996.
/s/ Isadore Jermyn
- ------------------------------ ---------------------------
Isadore Jermyn Witness
President, Chief Executive Officer
and Chairman of the Board of Directors
28
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, Ann Iseley, Chief Financial Officer of MML Bay State Life
Insurance Company ("MML Bay State"), does hereby constitute and appoint Lawrence
V. Burkett, Thomas F. English, Richard M. Howe, and Michael Berenson, and each
of them individually, as his true and lawful attorneys and agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as a member of the Board of Directors of MML Bay State that said attorneys and
agents may deem necessary or advisable to enable MML Bay State to comply with
the Securities Act of 1933, as amended (the "1933 Act"), the Investment Company
Act of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of MML Bay State separate
investment accounts (the "MML Bay State Separate Accounts"). This power of
attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as a member of the Board of Directors of MML Bay State to the
Registration Statements and to any instruments or documents filed or to be filed
with the Commission under the 1933 Act and the 1940 Act in connection with such
Registration Statements, including any and all amendments to such statements,
documents or instruments of any MML Bay State Separate Account, including but
not limited to those listed below.
MML Bay State Variable Annuity Separate Account 1
MML Bay State Variable Life Separate Account I
MML Bay State Variable Life Separate Account II
MML Bay State Variable Life Separate Account III
MML Bay State Variable Life Separate Account IV
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this day of , 1996.
/s/ Ann Iseley
- ------------------- -------------------
Ann Iseley Witness
Chief Financial Officer
29
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, Paul D. Adornato, a member of the Board of Directors of MML Bay
State Life Insurance Company ("MML Bay State"), does hereby constitute and
appoint Lawrence V. Burkett, Thomas F. English, Richard M. Howe, and Michael
Berenson, and each of them individually, as his true and lawful attorneys and
agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as a member of the Board of Directors of MML Bay State that said attorneys and
agents may deem necessary or advisable to enable MML Bay State to comply with
the Securities Act of 1933, as amended (the "1933 Act"), the Investment Company
Act of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of MML Bay State separate
investment accounts (the "MML Bay State Separate Accounts"). This power of
attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as a member of the Board of Directors of MML Bay State to the
Registration Statements and to any instruments or documents filed or to be filed
with the Commission under the 1933 Act and the 1940 Act in connection with such
Registration Statements, including any and all amendments to such statements,
documents or instruments of any MML Bay State Separate Account, including but
not limited to those listed below.
MML Bay State Variable Annuity Separate Account 1
MML Bay State Variable Life Separate Account IMML Bay State Variable
Life Separate Account II
MML Bay State Variable Life Separate Account IIIMML Bay State Variable
Life Separate Account IV
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this day of , 1996.
/s/ Paul D. Adornato
- ------------------------ -----------------------
Paul D. Adornato Witness
Member, Board of Directors
30
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, Donald D. Cameron, Senior Vice President and a member of the
Board of Directors of MML Bay State Life Insurance Company ("MML Bay State"),
does hereby constitute and appoint Lawrence V. Burkett, Thomas F. English,
Richard M. Howe, and Michael Berenson, and each of them individually, as his
true and lawful attorneys and agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as a member of the Board of Directors of MML Bay State that said attorneys and
agents may deem necessary or advisable to enable MML Bay State to comply with
the Securities Act of 1933, as amended (the "1933 Act"), the Investment Company
Act of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of MML Bay State separate
investment accounts (the "MML Bay State Separate Accounts"). This power of
attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as a member of the Board of Directors of MML Bay State to the
Registration Statements and to any instruments or documents filed or to be filed
with the Commission under the 1933 Act and the 1940 Act in connection with such
Registration Statements, including any and all amendments to such statements,
documents or instruments of any MML Bay State Separate Account, including but
not limited to those listed below.
MML Bay State Variable Annuity Separate Account 1
MML Bay State Variable Life Separate Account I
MML Bay State Variable Life Separate Account II
MML Bay State Variable Life Separate Account III
MML Bay State Variable Life Separate Account IV
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this day of , 1996.
/s/ Donald D. Cameron
- ------------------------------ ------------------------
Donald D. Cameron Witness
Senior Vice President and a
member of the Board of Directors
31
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, Daniel J. Fitzgerald, a member of the Board of Directors of MML
Bay State Life Insurance Company ("MML Bay State"), does hereby constitute and
appoint Lawrence V. Burkett, Thomas F. English, Richard M. Howe, and Michael
Berenson, and each of them individually, as his true and lawful attorneys and
agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as a member of the Board of Directors of MML Bay State that said attorneys and
agents may deem necessary or advisable to enable MML Bay State to comply with
the Securities Act of 1933, as amended (the "1933 Act"), the Investment Company
Act of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of MML Bay State separate
investment accounts (the "MML Bay State Separate Accounts"). This power of
attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as a member of the Board of Directors of MML Bay State to the
Registration Statements and to any instruments or documents filed or to be filed
with the Commission under the 1933 Act and the 1940 Act in connection with such
Registration Statements, including any and all amendments to such statements,
documents or instruments of any MML Bay State Separate Account, including but
not limited to those listed below.
MML Bay State Variable Annuity Separate Account 1
MML Bay State Variable Life Separate Account I
MML Bay State Variable Life Separate Account II
MML Bay State Variable Life Separate Account III
MML Bay State Variable Life Separate Account IV
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this day of , 1996.
/s/ Daniel J. Fitzgerald
- --------------------------- -----------------------
Daniel J. Fitzgerald Witness
Member, Board of Directors
32
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, Arthur D. Foresi, a member of the Board of Directors of MML Bay
State Life Insurance Company ("MML Bay State"), does hereby constitute and
appoint Lawrence V. Burkett, Thomas F. English, Richard M. Howe, and Michael
Berenson, and each of them individually, as his true and lawful attorneys and
agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as a member of the Board of Directors of MML Bay State that said attorneys and
agents may deem necessary or advisable to enable MML Bay State to comply with
the Securities Act of 1933, as amended (the "1933 Act"), the Investment Company
Act of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of MML Bay State separate
investment accounts (the "MML Bay State Separate Accounts"). This power of
attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as a member of the Board of Directors of MML Bay State to the
Registration Statements and to any instruments or documents filed or to be filed
with the Commission under the 1933 Act and the 1940 Act in connection with such
Registration Statements, including any and all amendments to such statements,
documents or instruments of any MML Bay State Separate Account, including but
not limited to those listed below.
MML Bay State Variable Annuity Separate Account 1
MML Bay State Variable Life Separate Account I
MML Bay State Variable Life Separate Account II
MML Bay State Variable Life Separate Account III
MML Bay State Variable Life Separate Account IV
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this day of , 1996.
/s/ Arthur D. Foresi
- --------------------------- -----------------------------
Arthur D. Foresi Witness
Member, Board of Directors
33
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, Gary T. Huffman, a member of the Board of Directors of MML Bay
State Life Insurance Company ("MML Bay State"), does hereby constitute and
appoint Lawrence V. Burkett, Thomas F. English, Richard M. Howe, and Michael
Berenson, and each of them individually, as his true and lawful attorneys and
agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as a member of the Board of Directors of MML Bay State that said attorneys and
agents may deem necessary or advisable to enable MML Bay State to comply with
the Securities Act of 1933, as amended (the "1933 Act"), the Investment Company
Act of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of MML Bay State separate
investment accounts (the "MML Bay State Separate Accounts"). This power of
attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as a member of the Board of Directors of MML Bay State to the
Registration Statements and to any instruments or documents filed or to be filed
with the Commission under the 1933 Act and the 1940 Act in connection with such
Registration Statements, including any and all amendments to such statements,
documents or instruments of any MML Bay State Separate Account, including but
not limited to those listed below.
MML Bay State Variable Annuity Separate Account 1
MML Bay State Variable Life Separate Account I
MML Bay State Variable Life Separate Account II
MML Bay State Variable Life Separate Account III
MML Bay State Variable Life Separate Account IV
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this day of , 1996.
/s/ Gary T. Huffman
- -------------------------- ----------------------------
Gary T. Huffman Witness
Member, Board of Directors
34
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, Douglas J. Jangraw, a member of the Board of Directors of MML
Bay State Life Insurance Company ("MML Bay State"), does hereby constitute and
appoint Lawrence V. Burkett, Thomas F. English, Richard M. Howe, and Michael
Berenson, and each of them individually, as his true and lawful attorneys and
agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as a member of the Board of Directors of MML Bay State that said attorneys and
agents may deem necessary or advisable to enable MML Bay State to comply with
the Securities Act of 1933, as amended (the "1933 Act"), the Investment Company
Act of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of MML Bay State separate
investment accounts (the "MML Bay State Separate Accounts"). This power of
attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as a member of the Board of Directors of MML Bay State to the
Registration Statements and to any instruments or documents filed or to be filed
with the Commission under the 1933 Act and the 1940 Act in connection with such
Registration Statements, including any and all amendments to such statements,
documents or instruments of any MML Bay State Separate Account, including but
not limited to those listed below.
MML Bay State Variable Annuity Separate Account 1
MML Bay State Variable Life Separate Account I
MML Bay State Variable Life Separate Account II
MML Bay State Variable Life Separate Account III
MML Bay State Variable Life Separate Account IV
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this day of , 1996.
/s/ Douglas J. Jangraw
- ----------------------------- ----------------------
Douglas J. Jangraw Witness
Member, Board of Directors
35
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, John J. Libera, Jr., a member of the Board of Directors of MML
Bay State Life Insurance Company ("MML Bay State"), does hereby constitute and
appoint Lawrence V. Burkett, Thomas F. English, Richard M. Howe, and Michael
Berenson, and each of them individually, as his true and lawful attorneys and
agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as a member of the Board of Directors of MML Bay State that said attorneys and
agents may deem necessary or advisable to enable MML Bay State to comply with
the Securities Act of 1933, as amended (the "1933 Act"), the Investment Company
Act of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of MML Bay State separate
investment accounts (the "MML Bay State Separate Accounts"). This power of
attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as a member of the Board of Directors of MML Bay State to the
Registration Statements and to any instruments or documents filed or to be filed
with the Commission under the 1933 Act and the 1940 Act in connection with such
Registration Statements, including any and all amendments to such statements,
documents or instruments of any MML Bay State Separate Account, including but
not limited to those listed below.
MML Bay State Variable Annuity Separate Account 1
MML Bay State Variable Life Separate Account I
MML Bay State Variable Life Separate Account II
MML Bay State Variable Life Separate Account III
MML Bay State Variable Life Separate Account IV
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this day of , 1996.
/s/ John J. Libera, Jr.
- ---------------------------- ----------------------
John J. Libera, Jr. Witness
Member, Board of Directors
36
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, William T. McElmurray, a member of the Board of Directors of
MML Bay State Life Insurance Company ("MML Bay State"), does hereby constitute
and appoint Lawrence V. Burkett, Thomas F. English, Richard M. Howe, and Michael
Berenson, and each of them individually, as his true and lawful attorneys and
agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as a member of the Board of Directors of MML Bay State that said attorneys and
agents may deem necessary or advisable to enable MML Bay State to comply with
the Securities Act of 1933, as amended (the "1933 Act"), the Investment Company
Act of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of MML Bay State separate
investment accounts (the "MML Bay State Separate Accounts"). This power of
attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as a member of the Board of Directors of MML Bay State to the
Registration Statements and to any instruments or documents filed or to be filed
with the Commission under the 1933 Act and the 1940 Act in connection with such
Registration Statements, including any and all amendments to such statements,
documents or instruments of any MML Bay State Separate Account, including but
not limited to those listed below.
MML Bay State Variable Annuity Separate Account 1
MML Bay State Variable Life Separate Account I
MML Bay State Variable Life Separate Account II
MML Bay State Variable Life Separate Account III
MML Bay State Variable Life Separate Account IV
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this day of , 1996.
/s/ William T. McElmurray
- ---------------------------- ---------------------
William T. McElmurray Witness
Member, Board of Directors
37
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, Stuart H. Reese, a member of the Board of Directors of MML Bay
State Life Insurance Company ("MML Bay State"), does hereby constitute and
appoint Lawrence V. Burkett, Thomas F. English, Richard M. Howe, and Michael
Berenson, and each of them individually, as his true and lawful attorneys and
agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as a member of the Board of Directors of MML Bay State that said attorneys and
agents may deem necessary or advisable to enable MML Bay State to comply with
the Securities Act of 1933, as amended (the "1933 Act"), the Investment Company
Act of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of MML Bay State separate
investment accounts (the "MML Bay State Separate Accounts"). This power of
attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as a member of the Board of Directors of MML Bay State to the
Registration Statements and to any instruments or documents filed or to be filed
with the Commission under the 1933 Act and the 1940 Act in connection with such
Registration Statements, including any and all amendments to such statements,
documents or instruments of any MML Bay State Separate Account, including but
not limited to those listed below.
MML Bay State Variable Annuity Separate Account 1
MML Bay State Variable Life Separate Account I
MML Bay State Variable Life Separate Account II
MML Bay State Variable Life Separate Account III
MML Bay State Variable Life Separate Account IV
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this day of , 1996.
/s/ Stuart H. Reese
- ------------------------- -------------------------
Stuart H. Reese Witness
Member, Board of Directors
38
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, Jeanne M. Stamant, a member of the Board of Directors of MML
Bay State Life Insurance Company ("MML Bay State"), does hereby constitute and
appoint Lawrence V. Burkett, Thomas F. English, Richard M. Howe, and Michael
Berenson, and each of them individually, as his true and lawful attorneys and
agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as a member of the Board of Directors of MML Bay State that said attorneys and
agents may deem necessary or advisable to enable MML Bay State to comply with
the Securities Act of 1933, as amended (the "1933 Act"), the Investment Company
Act of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of MML Bay State separate
investment accounts (the "MML Bay State Separate Accounts"). This power of
attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as a member of the Board of Directors of MML Bay State to the
Registration Statements and to any instruments or documents filed or to be filed
with the Commission under the 1933 Act and the 1940 Act in connection with such
Registration Statements, including any and all amendments to such statements,
documents or instruments of any MML Bay State Separate Account, including but
not limited to those listed below.
MML Bay State Variable Annuity Separate Account 1
MML Bay State Variable Life Separate Account I
MML Bay State Variable Life Separate Account II
MML Bay State Variable Life Separate Account III
MML Bay State Variable Life Separate Account IV
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this day of , 1996.
/s/ Jeanne M. Stamant
- ----------------------------- -----------------------
Jeanne M. Stamant Witness
Member, Board of Directors
39
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of MML Bay State Life Insurance Company and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<DEBT-HELD-FOR-SALE> 0<F1>
<DEBT-CARRYING-VALUE> 41,261
<DEBT-MARKET-VALUE> 42,129
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 48,196<F2>
<CASH> 491<F3>
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 0<F1>
<TOTAL-ASSETS> 343,993
<POLICY-LOSSES> 19,096
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 1,508
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 0
0
0
<COMMON> 2,000
<OTHER-SE> 48,343<F4>
<TOTAL-LIABILITY-AND-EQUITY> 343,993
92,733
<INVESTMENT-INCOME> 4,306<F5>
<INVESTMENT-GAINS> (43)<F6>
<OTHER-INCOME> 526<F7>
<BENEFITS> 72,665<F8>
<UNDERWRITING-AMORTIZATION> 0<F1>
<UNDERWRITING-OTHER> 28,842<F9>
<INCOME-PRETAX> (3,985)<F10>
<INCOME-TAX> 633
<INCOME-CONTINUING> (4,618)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,618)
<EPS-PRIMARY> 0<F1>
<EPS-DILUTED> 0<F1>
<RESERVE-OPEN> 0<F1>
<PROVISION-CURRENT> 0<F1>
<PROVISION-PRIOR> 0<F1>
<PAYMENTS-CURRENT> 0<F1>
<PAYMENTS-PRIOR> 0<F1>
<RESERVE-CLOSE> 0<F1>
<CUMULATIVE-DEFICIENCY> 0<F1>
<FN>
<F1>As a wholly owned stock insurance subsidiary of a mutual insurance company,
this item is not applicable in accordance with statutory accounting
requirements. See notes to the financial statements.
<F2>Derived from the statement of financial position, by adding bonds, policy
loans, and cash and short-term investments. Separate account assets are not
included.
<F3>Cash includes short-term investments. See note 2e to the financial statements.
<F4>Derived from the statement of financial position, by adding paid-in capital and
contributed surplus and surplus.
<F5>Investment income includes other income and is presented as "net investment and
other income" in the statement of operations.
<F6>Investment gains is presented as "net realized capital loss" in the statement
of operations. See note 2a to the financial statements.
<F7>Other income is presented as "expense allowance on reinsurance ceded" in the
statement of operations.
<F8>Derived from the statement of operations, by adding policy benefits and
payments, and addition to policyholder's reserves, funds and separate accounts.
<F9>Derived from the statement of operations, by adding operating expenses;
commissions, and state taxes, licenses and fees.
<F10>Derived from the statement of operations, by adding net income (loss) and
federal income taxes.
</FN>
</TABLE>
