<PAGE>
As filed with the Securities and Exchange File No. 33-80750
Commission, September 18, 1995 File No. 811-8582
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
------------------------------------------------------------
POST-EFFECTIVE AMENDMENT NO. 4 TO
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
and Amendment to
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
------------------------------------------------------------
Variable Annuity Account I of Aetna Insurance Company of America
(Exact Name of Registrant)
Aetna Insurance Company of America
(Name of Depositor)
151 Farmington Avenue, RE4C, Hartford, Connecticut 06156
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code (203) 273-7834
Susan E. Bryant, Counsel
Aetna Insurance Company of America
151 Farmington Avenue, RE4C, Hartford, Connecticut 06156
(Name and Address of Agent for Service)
------------------------------------------------------------
It is proposed that this filing will become effective (Check appropriate space):
immediately upon filing pursuant to paragraph (b) of Rule 485
---
X on September 30, 1995 pursuant to paragraph (b) of Rule 485
---
60 days after filing pursuant to paragraph (a)(i) of Rule 485
---
on _______________________ pursuant to paragraph (a)(ii) of Rule 485
---
75 days after filing pursuant to paragraph (a)(ii) of Rule 485
---
on _______________________ pursuant to (a)(ii) of Rule 485
---
If appropriate check the following space:
___ This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant has
registered an indefinite number of securities under the Securities Act of 1933.
Pursuant to paragraph (b)(2) of Rule 24f-2, Registrant need not file a Rule 24f-
2 Notice for fiscal year ended December 31, 1994 because it did not sell any
securities pursuant to such declaration during such fiscal year.
<PAGE>
VARIABLE ANNUITY ACCOUNT I
CROSS REFERENCE SHEET
PURSUANT TO RULE 481(A)
<TABLE>
<CAPTION>
Form N-4
--------
Item No. Part A (Prospectus) Location
-------- --------------------------- -----------------------------------------
<C> <S> <C>
1 Cover Page................. Cover Page
2 Definitions................ Glossary of Terms
3 Synopsis or Highlights..... Fee Table; Synopsis
4 Condensed Financial
Information................ Performance Data
5 General Description of
Registrant, Depositor, and
Portfolio Companies........ Description of the Company, the
Distributor, Variable Annuity Account I,
the Funds, and the Adviser
6 Deductions and Expenses.... Charges and Deductions; Distribution
7 General Description of
Variable Annuity Contracts. Contract Rights; Miscellaneous
8 Annuity Period............. Annuity Period
9 Death Benefit.............. Death Benefit
10 Purchases and Contract
Value...................... Contract Purchase; Certificate Holder's
Account Value
11 Redemptions................ Contract Rights - Withdrawals During
Accumulation Period; Contract Rights -
Right to Cancel; Additional Withdrawal
Options
12 Taxes...................... Tax Status
13 Legal Proceedings.......... Miscellaneous - Legal Proceedings
14 Table of Contents of the
Statement of Additional
Information................ Table of Contents - Statement of
Additional Information
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Form N-4
-------- Part B (Statement of
Item No. Additional Information) Location
-------- --------------------------- -----------------------------------------
<C> <S> <C>
15 Cover Page................. Cover page
16 Table of Contents.......... Table of Contents
17 General Information and
History.................... General Information and History
18 Services................... General Information and History;
Independent Auditors
19 Purchase of Securities
Being Offered.............. Offering and Purchase of Contracts
20 Underwriters............... Offering and Purchase of Contracts
21 Calculation of Performance
Data....................... Performance Data
22 Annuity Payments........... Annuity Payments
23 Financial Statements....... Financial Statements
</TABLE>
Part C (Other Information)
-----------------------------------------
Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C to this Registration Statement.
<PAGE>
[LOGO] AETNA INSURANCE COMPANY OF AMERICA
VARIABLE ANNUITY
Service Unit ACCOUNT I
151 Farmington Avenue Prospectus Dated:
Hartford, Connecticut 06156 SEPTEMBER 30, 1995
Telephone: 1-800-531-4547
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
GROWTH PLUS
--------------------------------------------------------------------------------
This Prospectus describes the Growth Plus variable deferred annuity
contracts ("Contracts") issued by Aetna Insurance Company of America
(the "Company"). The Contracts allow individuals to accumulate values
and elect payment of annuity benefits on a fixed or a variable basis.
Group Contracts are offered to certain broker-dealers which have agreed
to act as Distributors of the Contracts. See "Contract Purchase--
Distribution." Individuals who have established accounts with those
broker-dealers are eligible to participate in the Contract. Individual
Contracts are offered only in those states where the group Contracts are
not authorized for sale.
The Contracts described in this Prospectus are (a) nonqualified deferred
annuity contracts, and (b) contracts which may be available for use
under Section 408(b) of the Internal Revenue Code of 1986, as amended
(the "Code") as Individual Retirement Annuities. See "Contract
Purchase--How to Purchase" and "Tax Status."
The securities offered in this Prospectus are distributed through Aetna
Life Insurance and Annuity Company, an affiliate of the Company as the
Underwriter and by registered broker-dealers selected by it as
Distributors. See "Contract Purchase--Distribution."
Purchase Payments received under the Contracts on behalf of persons
participating under group Contracts or individual Contract owners
(collectively, "Certificate Holders") will be allocated at the
Certificate Holder's direction to variable funding options or to a
credited interest option for accumulation of values for the Certificate
Holder's Account. Amounts allocated to the variable funding options will
be deposited in Variable Annuity Account I (the "Separate Account"), a
separate account of the Company, for investment in the variable funding
options.
This Prospectus is intended to describe the Contract provisions relating
to the variable funding options (the "Funds") and the fees and expenses
that may be charged in connection with investment in the Separate
Account. Information with respect to the credited interest option, the
AICA Guaranteed Account ("Guaranteed Account"), is included in the
Appendix to this Prospectus and in the prospectus for the AICA
Guaranteed Account which should accompany this Prospectus. The AICA
Guaranteed Account is offered only in those jurisdictions where it has
been qualified for sale.
The following investment series of the Insurance Management Series
("Trust"), a Massachusetts business trust that is not affiliated with
the Company, are available as variable funding options under the
Contract:
. Equity Growth and Income Fund
. Utility Fund
. Prime Money Fund
. U.S. Government Bond Fund
. Corporate Bond Fund
. International Stock Fund
. Growth Stock Fund
Information about the Funds is found in "The Funds," and in the
prospectus for the Trust which must accompany this Prospectus.
THE PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT FUND
PROSPECTUS AND THE CURRENT AICA GUARANTEED ACCOUNT PROSPECTUS. ALL
PROSPECTUSES SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
THE SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
NO PERSON IS AUTHORIZED BY THE COMPANY TO GIVE INFORMATION OR TO MAKE
ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN
CONNECTION WITH OFFERS OF THE SECURITIES DESCRIBED IN THIS PROSPECTUS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN
WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
<PAGE>
THIS PROSPECTUS SETS FORTH CONCISELY THE INFORMATION ABOUT THE CONTRACTS AND
THE SEPARATE ACCOUNT THAT A PROSPECTIVE INVESTOR OUGHT TO KNOW BEFORE INVEST-
ING. ADDITIONAL INFORMATION IS CONTAINED IN A STATEMENT OF ADDITIONAL INFORMA-
TION ("SAI") DATED SEPTEMBER 30, 1995, WHICH HAS BEEN FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION ("SEC") AND IS INCORPORATED HEREIN BY REFERENCE. THE
TABLE OF CONTENTS FOR THE SAI IS FOUND IN THIS PROSPECTUS. AN SAI MAY BE
OBTAINED WITHOUT CHARGE BY CALLING 1-800-531-4547.
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
GLOSSARY OF TERMS.......................................................... 4
PROSPECTUS SUMMARY......................................................... 6
FEE TABLE.................................................................. 8
PERFORMANCE DATA........................................................... 11
THE COMPANY................................................................ 12
VARIABLE ANNUITY ACCOUNT I................................................. 12
THE FUNDS.................................................................. 12
General................................................................... 12
Mixed and Shared Funding.................................................. 13
The Adviser............................................................... 14
Fund Additions, Limitations and Substitutions............................. 14
CONTRACT PURCHASE.......................................................... 14
How to Purchase........................................................... 14
Designations of Beneficiary and Annuitant................................. 16
Distribution.............................................................. 16
CERTIFICATE HOLDER'S ACCOUNT VALUE......................................... 16
Accumulation Units........................................................ 16
Net Investment Factor..................................................... 17
CONTRACT RIGHTS............................................................ 17
Right to Cancel........................................................... 17
Rights to the Contract and Account........................................ 17
Joint Certificate Holders................................................. 18
Transfers Among Investment Options........................................ 18
Dollar Cost Averaging Program............................................. 18
Account Rebalancing Program............................................... 19
Withdrawals............................................................... 19
CHARGES AND DEDUCTIONS..................................................... 20
Maintenance Charge........................................................ 20
Mortality and Expense Risk Charge......................................... 20
Administrative Charge..................................................... 20
Transfer Charges.......................................................... 21
Deferred Sales Charge..................................................... 21
Fund Expenses............................................................. 22
Premium Tax............................................................... 22
Commissions and Distribution Expenses..................................... 23
</TABLE>
<TABLE>
<CAPTION>
Page
<S> <C>
ADDITIONAL WITHDRAWAL OPTIONS.............................................. 23
General................................................................... 23
Estate Conservation Option................................................ 24
Systematic Withdrawal Option.............................................. 24
ANNUITY PERIOD............................................................. 25
Annuity Period Elections.................................................. 25
Annuity Options........................................................... 26
DEATH BENEFITS............................................................. 26
Death of a Certificate Holder Prior to
the Annuity Date......................................................... 26
Death Benefit Amount Prior to the Annuity Date............................ 27
Payment Methods for Death Before Annuity Date............................. 28
Death of Certificate Holder On or After
the Annuity Date......................................................... 28
Death of the Annuitant.................................................... 29
TAX STATUS................................................................. 29
Introduction.............................................................. 29
Taxation of the Company................................................... 29
Tax Status of the Contract................................................ 29
Taxation of Annuities..................................................... 30
Qualified Contracts....................................................... 32
Withholding............................................................... 32
Possible Changes in Taxation.............................................. 32
Other Tax Consequences.................................................... 33
MISCELLANEOUS.............................................................. 33
Voting Rights............................................................. 33
Modification of the Contract.............................................. 33
Transfer of Ownership--Assignment......................................... 34
Certificate Holder Inquiries.............................................. 34
Telephone Transfers....................................................... 34
Legal Proceedings......................................................... 35
Legal Matters............................................................. 35
TABLE OF CONTENTS -- STATEMENT OF ADDITIONAL INFORMATION................... 36
APPENDIX--AICA GUARANTEED ACCOUNT.......................................... 37
</TABLE>
3
<PAGE>
GLOSSARY OF TERMS
As used in this prospectus, the following terms have the meanings shown.
ACCUMULATION PERIOD: The period during which one or more Net Purchase Payments
applied to a Certificate Holder's Account accumulate(s) to provide future
Annuity payments.
ACCUMULATION UNIT: A measure of the value of the Separate Account assets
attributable to each Fund used as a variable funding option.
ADJUSTED ACCOUNT VALUE: For any Valuation Period, the Certificate Holder's
Account Value, plus or minus the Certificate Holder's aggregate AICA
Guaranteed Account market value adjustment, if applied during that period.
ADVISER: Federated Advisers, the investment adviser of the Funds.
AICA GUARANTEED ACCOUNT: The AICA Guaranteed Account, a credited interest
option offered as a funding option under the Contract and which guarantees a
specified rate of interest for specified periods of time.
ANNUITANT: The natural person on whose life the Annuity benefit under the
Contract is based.
ANNUITY: A series of payments made for life, for a definite period, or for a
combination of the two.
ANNUITY DATE: The date on which Annuity payments commence under an Annuity
Option.
ANNUITY OPTIONS: Annuity payment methods available during the Annuity Period.
ANNUITY PERIOD: The period of time during which Annuity payments are made.
ANNUITY UNIT: A unit of measure used to calculate the amount of each variable
Annuity payment.
BENEFICIARY: The person(s) entitled to receive any death benefit under the
Certificate Holder's Account.
CERTIFICATE: The document issued to a Certificate Holder under a group
Contract to evidence the Certificate Holder's interest in the Contract.
CERTIFICATE HOLDER: A person who acquires an interest in a group Contract or
who purchases an individual Contract. More than one Certificate Holder may
have an interest in the same Certificate Holder's Account as joint Certificate
Holders. References to "Certificate Holder" in this prospectus mean both of
the Certificate Holders on joint accounts.
CERTIFICATE HOLDER'S ACCOUNT: A record established for each Certificate Holder
to maintain values under a Contract during the Accumulation Period.
CERTIFICATE HOLDER'S ACCOUNT VALUE: The dollar value as of any Valuation
Period of all amounts accumulated in a Certificate Holder's Account, including
the value of the Certificate Holder's Accumulation Units, AICA Guaranteed
Account (if any) and amounts deposited pursuant to the guaranteed death
benefit, when applicable.
CODE: The Internal Revenue Code of 1986, as amended.
COMPANY ("US" OR "WE"): Aetna Insurance Company of America.
CONTRACT HOLDER: The entity to which a group Contract is issued and the
individual who has purchased an individual Contract.
4
<PAGE>
CONTRACTS: Group variable deferred annuity contracts and individual variable
deferred annuity contracts which are described in this prospectus.
DISTRIBUTORS: The registered broker-dealers which have entered into selling
agreements with the Underwriter to distribute interests in the Contracts. The
Underwriter may also serve as a Distributor.
EFFECTIVE DATE: The date a Certificate is issued to a Certificate Holder or
the date the Contract is issued to an individual Contract Holder.
FUNDS: The mutual funds offered as variable options for the accumulation of
values under the Contracts.
GENERAL ACCOUNT: The account into which all Company assets not held in
separate accounts are deposited. The General Account is subject to all
liabilities of the Company.
HOME OFFICE: The principal executive offices of the Company located at 151
Farmington Avenue, Hartford, Connecticut 06156.
INDIVIDUAL RETIREMENT ANNUITY: A Certificate Holder's Account which is
established so that it qualifies for special tax treatment under Section
408(b) of the Code.
MARKET VALUE ADJUSTMENT (MVA): an amount deducted or added to amount withdrawn
early from the AICA Guaranteed Account to reflect changes in the market value
of the investment since the date of deposit. See the Appendix and the
prospectus for the Guaranteed Account for a discussion of how the market value
adjustment is actually calculated.
NET PURCHASE PAYMENT: The Purchase Payment less premium taxes, if applicable.
1940 ACT: The Investment Company Act of 1940, as amended.
PURCHASE PAYMENT: The gross payment made to a Certificate Holder's Account
pursuant to the terms of the Contract. The Company reserves the right to
refuse to accept any Purchase Payment at any time for any reason.
REGISTERED REPRESENTATIVE: The individual who is registered with the
Distributor to offer and sell securities and who is licensed to sell variable
annuity contracts.
SEC: Securities and Exchange Commission.
SEPARATE ACCOUNT: Variable Annuity Account I, an account where assets are
segregated from other assets of the Company. The Separate Account holds shares
of the Funds acquired as funding options under the Contracts. The Separate
Account is not subject to other liabilities of the Company.
UNDERWRITER: The registered broker-dealer which contracts with other
registered broker-dealers to offer and sell the Contracts. Aetna Life
Insurance and Annuity Company will serve as Underwriter.
VALUATION PERIOD: The period of time for which a Fund determines its net asset
value, usually from 4:15 p.m. eastern time each day the New York Stock
Exchange is open until 4:15 p.m. the next such business day, or such other day
that one or more of the Funds determines its net asset value.
VALUATION RESERVE: A reserve established pursuant to the insurance laws of the
state of Connecticut to measure voting rights during the Annuity Period. It
also measures the value of a commutation right under the "Payments For a
Stated Period of Time" Annuity Option when elected on a variable basis.
VARIABLE ANNUITY CONTRACT: An annuity contract providing for the accumulation
of values and/or for Annuity payments, which vary in amount based on
investment results.
5
<PAGE>
PROSPECTUS SUMMARY
CONTRACTS
The Contracts described in this Prospectus are designed to provide retirement
benefits. The Contracts are group variable deferred annuity contracts under
which accounts are established for persons in the group. Individual variable
deferred annuity contracts will be issued where required in certain states.
Persons participating under a group contract and individuals acquiring
individual contracts are all referred to as "Certificate Holders." The group
and individual contracts are referred to as "Contracts."
The Contracts allow for one or more Purchase Payments to be made. The minimum
initial purchase Payment is $1,500 and additional Purchase Payments must be at
least $500 or, if paid by automatic check plan, $50 per month. See "Contract
Purchase."
Contracts may be purchased by two individuals as Joint Certificate Holders,
except for Contracts acquired by individuals for purposes of establishing an
Individual Retirement Account or Annuity under Sections 408(a) or 408(b) of
the Code. A Joint Certificate Holder must be the spouse of the other Joint
Certificate Holder (unless otherwise prohibited by state law). The Contract
gives Certificate Holders certain rights. See "Contract Rights."
A Contract is issued to a group Contract Holder once a completed master
application form is received and accepted. An account is established for an
individual when an enrollment form and/or other forms and the initial Purchase
Payment is received and accepted. See "Contract Purchase." Upon acceptance, a
Certificate is issued for each account under the group Contract. In those
states where an individual Contract is offered, an individual applies for a
Contract by completing an individual Contract application and submitting it
with the Purchase Payment to the Registered Representative or the Underwriter.
See "Contract Purchase -- How to Purchase."
WITHDRAWAL
A Certificate Holder may redeem all or a portion of his or her account value
during the Accumulation Period by completing the Company's withdrawal request
form. The maximum deferred sales charge that could be assessed on a full or
partial withdrawal is 7% of each Net Purchase Payment. In no event may
aggregate charges for deferred sales charges assessed against a Certificate
Holder exceed 8.5% of the Certificate Holder's aggregate Purchase Payments.
The Contract also provides for certain systematic withdrawal options. Amounts
withdrawn from the AICA Guaranteed Account may be subject to a market value
adjustment. See "Charges and Deductions -- Deferred Sales Charge" and the
Appendix. A 10% federal penalty tax may also be imposed on the taxable portion
withdrawn. See "Tax Status."
GUARANTEED DEATH BENEFIT
The Contracts contain a death benefit feature. Upon the death of the
Certificate Holder, and subject to certain conditions, the Certificate
Holder's Account Value may be increased. If the Certificate Holder is a non-
natural person, the death benefit is paid upon the death of the Annuitant. See
"Death Benefits."
CONTRACT CHARGES
Certain charges are associated with these Contracts; for example, deferred
sales charges, mortality and expense risk charges, administrative expense
charges, fund expenses, maintenance charges and premium taxes. See "Charges
and Deductions."
SEPARATE ACCOUNT
Variable Annuity Account I is a separate account established by the Company
and registered as a unit investment trust under the 1940 Act. The Company
holds title to the assets held in the Separate
6
<PAGE>
Account. The assets of the Separate Account are not charged with Company
liabilities. Separate Account assets attributable to the Contract are invested
in shares of one or more of the Funds at the direction of the Certificate
Holder. See "Variable Annuity Account I."
FREE LOOK PROVISION
The Certificate Holder may cancel his or her interest in the Contract within
ten days after receiving the Certificate or Contract or as otherwise provided
by state law. Unless applicable state law requires otherwise, the amount the
Certificate Holder will receive on cancellation under this provision may
reflect the investment performance of the Purchase Payments deposited in the
Separate Account while invested. In certain cases, this may be less than the
amount of the Purchase Payments. For Individual Retirement Annuities, the full
Purchase Payment will be refunded. See "Contract Rights -- Right to Cancel."
7
<PAGE>
FEE TABLE
(BASED ON THE YEAR ENDED DECEMBER 31, 1994)
THE PURPOSE OF THE FEE TABLE IS TO ASSIST CONTRACT AND CERTIFICATE HOLDERS IN
UNDERSTANDING THE VARIOUS COSTS AND EXPENSES THAT WILL BE BORNE, DIRECTLY OR
INDIRECTLY, UNDER THE CONTRACT. THE INFORMATION LISTS REFLECTS THE CHARGES DUE
UNDER THE CONTRACT AS WELL AS THE FEES AND EXPENSES DEDUCTED FROM THE FUNDS.
ADDITIONAL INFORMATION REGARDING THE CHARGES AND DEDUCTIONS ASSESSED UNDER THE
CONTRACT CAN BE FOUND UNDER "CHARGES AND DEDUCTIONS" IN THIS PROSPECTUS.
CHARGES AND EXPENSES SHOWN DO NOT TAKE INTO ACCOUNT PREMIUM TAXES THAT MAY BE
APPLICABLE.
CERTIFICATE HOLDER TRANSACTION EXPENSES
---------------------------------------
Deferred Sales Charge (as a percentage of each Net Purchase Payment
deposited)/(1)/
<TABLE>
<CAPTION>
YEARS FROM RECEIPT OF DEFERRED SALES
NET PURCHASE PAYMENT CHARGE
<S> <C>
Less than 1 year 7%
1 year or more but less than 2 6%
2 years or more but less than 3 5%
3 years or more but less than 4 4%
4 years or more but less than 5 3%
5 years or more but less than 6 2%
6 years or more but less than 7 1%
7 years or more 0%
</TABLE>
Transfer Fee/(2)/ $ 0.00
ANNUAL MAINTENANCE CHARGE/(3)/ $30.00
------------------------------
SEPARATE ACCOUNT CHARGES
------------------------
Deductions are made from the Separate Account during both the Accumulation
Period and the Annuity Period and are the daily equivalent of the annual
effective percentage shown in the following chart:
<TABLE>
<S> <C>
During the Accumulation Period:
Administrative Expense Charge 0.15%
Mortality and Expense Risk Charge 1.25%
-----
Total Separate Account Annual
Charges 1.40%
=====
</TABLE>
<TABLE>
<S> <C>
During the Annuity Period:
Administrative Expense Charge/(4)/ 0.00%
Mortality and Expense Risk Charge 1.25%
-----
Total Separate Account Annual Charges 1.25%
=====
</TABLE>
--------
/(1)/ The total amount deducted for the deferred sales charge will not exceed
8.5% of the aggregate Purchase Payments made to the Certificate Holder's
Account. See "Charges and Deductions -- Deferred Sales Charge," for a
description of the deferred sales charge and instances in which this
charge may be waived or reduced.
/(2)/ The Company currently allows an unlimited number of transfers without
charge. However, we reserve the right to assess a fee of $10 for each
transfer in excess of 12 per year. See "Charges and Deductions -- Transfer
Charges."
/(3)/ The maintenance charge is only charged during the Accumulation Period and
is waived when the Certificate Holder's Account is $50,000 or more on the
date the maintenance charge is due. A maintenance charge is also deducted
upon withdrawal of the Certificate Holder's entire Account Value. See
"Charges and Deductions -- Maintenance Charge."
/(4)/ The Company does not currently impose an administrative expense charge
during the Annuity Period. However, the Company reserves the right to
deduct, on a daily basis, a charge of not more than 0.25% per year from
the Separate Account during such period. See "Charges and Deductions --
Administrative Expense Charge."
8
<PAGE>
MUTUAL FUND ANNUAL EXPENSES
As a percentage of average net assets:
<TABLE>
<CAPTION>
TOTAL MUTUAL
OTHER FUND EXPENSES
INVESTMENT EXPENSES (AFTER FEE WAIVER
ADVISORY FEE(/1/) (AFTER EXPENSE AND/OR EXPENSE
(AFTER FEE WAIVER) REIMBURSEMENT) REIMBURSEMENT)
------------------ -------------- -----------------
<S> <C> <C> <C>
Equity Growth and Income
Fund/(2)/ 0.00% 0.85% 0.85%
Utility Fund/(2)/ 0.00% 0.85% 0.85%
Prime Money Fund/(2)/ 0.00% 0.80% 0.80%
U.S. Government Bond
Fund/(2)/ 0.00% 0.80% 0.80%
Corporate Bond Fund/(2)/ 0.00% 0.80% 0.80%
International Stock
Fund/(3)/ 0.52% 0.73% 1.25%
Growth Stock Fund/(4)/ 0.00% 0.85% 0.85%
</TABLE>
--------
/(1)/ The Adviser has agreed to reimburse the Company for certain costs incurred
in connection with administering the Funds by payment of an amount based
on assets in the Funds attributable to the Contracts. These amounts are
not charged to the Funds or Certificate Holders, but are paid from other
assets of the Adviser.
/(2)/ The Fund's Adviser has agreed to waive all or a portion of its advisory
fee and reimburse certain expenses so that the total annual expenses for
the Equity Growth and Income Fund and the Utility Fund would not exceed
0.85% of average net assets, and the total annual expenses for the Prime
Money Fund, the U.S. Government Bond Fund and the Corporate Bond Fund
would not exceed 0.80% of average net assets. Without this waiver and
reimbursement, the maximum advisory fees and the maximum total annual
expenses for the Funds, respectively, would have been 0.75% and 25.96% for
the Equity Growth and Income Fund, 0.75% and 55.43% for the Utility Fund,
0.50% and 72.54% for the Prime Money Fund, 0.60% and 33.35% for the U.S.
Government Bond Fund, and 0.60% and 10.42% for the Corporate Bond Fund.
The Adviser can terminate this voluntary waiver or reimbursement of
expenses at any time at its sole discretion.
/(3)/ The estimated management fee has been reduced to reflect the anticipated
voluntary waiver of a portion of the management fee. The Adviser can
terminate this voluntary waiver at any time at its sole discretion. The
maximum management fee is 1.00%. The Total Fund Annual Expenses are
estimated to be 1.73% absent the anticipated voluntary waiver of a portion
of the management fee. Total Fund Annual Expenses are estimated based on
average expenses expected to be incurred during the period ending December
31, 1995. During the course of this period, expenses may be more or less
than the average amount shown.
/(4)/ The estimated management fee has been reduced to reflect the anticipated
voluntary waiver of the management fee. The Adviser can terminate this
voluntary waiver at any time at its sole discretion. The maximum
management fee is 0.75%. The Total Fund Annual Expenses are estimated to
be 5.81% absent the anticipated voluntary waiver of the management fee and
the anticipated voluntary reimbursement of certain other operating
expenses. Total Fund Annual Expenses are estimated based on average
expenses expected to be incurred during the period ending December 31,
1995. During the course of this period, expenses may be more or less than
the average amount shown.
9
<PAGE>
HYPOTHETICAL ILLUSTRATION (EXAMPLE)
-----------------------------------
THIS EXAMPLE IS PURELY HYPOTHETICAL. IT SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OR EXPECTED RETURN. ACTUAL EXPENSES
AND/OR RETURNS MAY BE MORE OR LESS THAN THOSE SHOWN BELOW.
Assuming a 5% annual return on assets, the Certificate Holder would have paid
the following expenses on a $1,000 investment/(1)/:
<TABLE>
<CAPTION>
For a complete If no withdrawal is
withdrawal at the made, or if the
end of the applicable Certificate Holder
time period: annuitizes:
1 year 3 years 1 year 3 years
------ ------- ------ -------
<S> <C> <C> <C> <C>
Equity Growth and Income Fund $85 $116 $24 $73
Utility Fund $85 $116 $24 $73
Prime Money Fund $85 $115 $23 $71
U.S. Government Bond Fund $85 $115 $23 $71
Corporate Bond Fund $85 $115 $23 $71
International Stock Fund $89 $128 $28 $85
Growth Stock Fund $85 $116 $24 $73
</TABLE>
--------
/(1)/ The illustration reflects the $30.00 annual maintenance charge as an
annual charge of 0.090% of assets.
10
<PAGE>
PERFORMANCE DATA
From time to time, the Company may advertise different types of historical
performance for the variable funding options of the Separate Account available
under the Contracts described in this Prospectus. The Company may advertise
the "standardized average annual total returns" of the variable funding
options, calculated in a manner prescribed by the SEC, as well as the "non-
standardized return." Both methods are described below. Further information is
contained in the SAI.
"Standardized average annual total returns" are computed according to a
formula in which a hypothetical investment of $1,000 is applied to the
variable funding options under the Contract and then related to the ending
redeemable values over the most recent one, five and ten-year periods (or
fractional periods thereof). Standardized returns will reflect the deduction
of all recurring charges during each period (e.g., mortality and expense risk
charges, the annual maintenance fee, any administrative charge and any
applicable deferred sales charge).
"Non-standardized return" will be calculated in a similar manner, except that
non-standardized figures will not reflect the deduction of any applicable
deferred sales charge (which would decrease the level of performance shown if
reflected in these calculations). The non-standardized figures may also
include a three-year period.
We may distribute sales literature that compares the percentage change in
Accumulation Unit values for any of the Funds to established market indexes
such as the Standard & Poor's Composite 500 Stock Price Index and the Dow
Jones Industrial Average or to the change in values of other management
investment companies that have investment objectives similar to the Fund being
compared.
We may publish in advertisements and reports to Certificate Holders the
ratings and other information assigned to the Company by one or more
independent rating organizations such as A.M. Best Company, Duff & Phelps,
Standard & Poor's Corporation and Moody's Investors Service, Inc. The purpose
of the ratings is to reflect the Company's financial strength and/or claims-
paying ability. We may also quote ranking services, such as Morningstar's
Variable Annuity/Life Performance Report and Lipper's Variable Insurance
Products Performance Analysis Service (VIPPAS) which rank variable annuity or
life subaccounts by performance and/or investment objective. From time to
time, we will quote articles from newspapers and magazines or other
publications or reports including but not limited to, The Wall Street Journal,
Money Magazine, USA Today and The VARDS (R) Report.
11
<PAGE>
THE COMPANY
Aetna Insurance Company of America, the depositor for Variable Annuity Account
I, is a stock life insurance company organized in 1990 under the laws of the
state of Connecticut, and is a wholly owned subsidiary of Aetna Life Insurance
and Annuity Company ("ALIAC"). ALIAC is a wholly owned subsidiary of Aetna
Life and Casualty Company. Together, the Aetna Companies constitute one of the
nation's largest diversified financial services organizations. The Company's
Home Office is located at 151 Farmington Avenue, Hartford, Connecticut 06156.
Between 1990 and December 31, 1994, all of the Company's income and expense
was related to investment activity on its own behalf.
VARIABLE ANNUITY ACCOUNT I
Variable Annuity Account I is a separate account established by the Company in
1994 under the insurance laws of the State of Connecticut. The Separate
Account was formed for the purpose of segregating assets attributable to the
variable portions of Contracts from other assets of the Company. Account I is
registered as a unit investment trust under the 1940 Act, and meets the
definition of "separate account" under federal securities laws.
Although the Company holds title to the assets of the Separate Account, such
assets are not chargeable with liabilities arising out of any other business
the Company may conduct. Income, gains or losses of the Separate Account,
realized or unrealized, are credited to or charged against the assets of the
Separate Account, without regard to income, gains or losses of the Company.
All obligations of the Company arising under the Contracts are general
corporate obligations of the Company.
THE FUNDS
GENERAL
Certificate Holders can choose one or more of the Funds of the Insurance
Management Series (the "Trust") as variable funding options under the
Contract. The Trust is an open-end management investment company established
under the laws of the Commonwealth of Massachusetts under a Declaration of
Trust dated September 15, 1993. The Trust was formed as a series trust to
provide funding options for variable life insurance policies and variable
annuity contracts. The Trust currently includes the following seven separate
investment portfolios (individually referred to as a "Fund" or collectively as
the "Funds"), each having distinct investment objectives and policies:
EQUITY GROWTH AND INCOME FUND. The primary investment objective of the Fund is
to achieve long-term growth of capital. The Fund's secondary objective is to
provide income. The Fund pursues its investment objectives by investing, under
normal circumstances, at least 65% of its total assets in common stock of
"blue-chip" companies. "Blue-chip" companies generally are top-quality,
established growth companies which, in the opinion of the Adviser, meet
certain criteria.
UTILITY FUND. The investment objective of the Fund is to achieve high current
income and moderate capital appreciation by investing primarily in a
professionally managed and diversified portfolio of equity and debt securities
of utility companies. Under normal market conditions, the Fund will invest at
least 65% of its total assets in securities of utility companies.
PRIME MONEY FUND. The investment objective of the Fund is to provide current
income consistent with stability of principal and liquidity. The Fund pursues
its investment objective by investing exclusively in a portfolio of money
market instruments maturing in 397 days or less. The average maturity of the
money market instruments in the Fund's portfolio, computed on a dollar-
weighted basis,
12
<PAGE>
will be 90 days or less. An investment in this Fund is neither insured nor
guaranteed by the U.S. government.
U.S. GOVERNMENT BOND FUND. The investment objective of the Fund is to provide
current income. The Fund invests only in securities which are primary or
direct obligations of the U.S. government or its agencies or instrumentalities
or which are guaranteed by the U.S. government, its agencies or
instrumentalities and in certain collateralized mortgage obligations and
repurchase agreements.
CORPORATE BOND FUND. The investment objective of the Fund is to seek high
current income by investing primarily in a diversified portfolio of
professionally managed fixed income securities. The fixed-income securities in
which the Fund intends to invest are lower-rated corporate debt obligations.
Lower-rated corporate debt obligations are commonly known as "junk bonds" or
"high yield, high risk bonds" and involve a significant degree of risk (see
the funds' prospectus for a discussion of the risk factors involved in
investing in lower-rated corporate debt obligations). Some of the fixed income
securities may involve equity features. Capital growth will be considered, but
only when consistent with the investment objective of high current income.
INTERNATIONAL STOCK FUND. The investment objective of the Fund is to seek
total return on its assets by investing at least 65% of its assets (and under
normal market conditions, substantially all of its assets) in equity
securities of issuers located in at least three different countries outside of
the United States, investing in non-U.S. securities carries substantial risks
in addition to those associated with domestic investments. In an attempt to
reduce some of these risks, the Fund diversifies its investments broadly among
foreign countries, including both developed and developing countries. At least
three countries will always be represented. Other risks may also be
attributable to investments in developing countries due to less mature
economies and less stable political systems. Investors should consult the
Fund's prospectus for a discussion of these risks before investing.
GROWTH STOCK FUND. The investment objective of the Fund is capital
appreciation. The Fund pursues its objective by investing at least 65% of its
assets in equity securities of companies with prospects for above-average
growth in earnings and dividends or companies where significant fundamental
changes are taking place. Equity securities include common stocks, preferred
stocks, and securities (including debt securities) that are convertible into
common stocks.
There is no assurance that the Funds will achieve their investment objectives.
Certificate Holders bear the complete investment risk of investments in the
Funds attributable to their Account.
Some of the above Funds may use instruments known as derivatives as part of
their investment strategies, as described in their respective prospectuses.
The use of certain derivatives such as inverse floaters and principal only
debt instruments may involve higher risk of volatility to a Fund. The use of
leverage in connection with derivatives can also increase risk of losses. See
the prospectus for the Funds for a discussion of the risks associated with an
investment in those funds.
More comprehensive information, including a discussion of potential risks, is
found in the current prospectus for the Funds, which is included with this
Prospectus. Additional prospectuses and the Statement of Additional
Information can be obtained from your Registered Representative or by writing
to us at our Home Office, Attention Service Unit, or by calling us at 1-800-
531-4547.
MIXED AND SHARED FUNDING
Shares of the Funds are sold to us for allocation to our separate accounts
established for the purpose of funding variable annuity contracts and also for
purposes of funding variable life insurance contracts. This is referred to as
"mixed funding." They are also used for allocation to separate accounts of
insurance companies not affiliated with us for the same purpose (i.e., funding
variable annuity contracts and variable life insurance policies). This is
referred to as "shared funding."
13
<PAGE>
It is conceivable that, in the future, it may be disadvantageous for variable
annuity separate accounts and variable life insurance separate accounts to
invest in these Funds simultaneously, since the interests of such policy
owners may differ. The Board of Trustees of the Trust has agreed to monitor
events in order to identify any material irreconcilable conflicts that may
possibly arise and to determine what action, if any, should be taken in
response thereto. If such a conflict were to occur, one of the separate
accounts might withdraw its investment in the Trust. This might force the
Trust to sell portfolio securities at disadvantageous prices.
THE ADVISER
The Trust is managed by Federated Advisers, a Delaware business trust
organized on April 11, 1989, with its principal place of business in
Pittsburgh, Pennsylvania. Federated Advisers is a registered investment
adviser under the Investment Advisers Act of 1940, as amended.
Prospective Certificate Holders should read the accompanying prospectus for
the Funds carefully before investing. The Trust's' prospectus may be obtained
from a Distributor or by calling 1-800-531-4547.
FUND ADDITIONS, LIMITATIONS AND SUBSTITUTIONS
We may, from time to time, add additional mutual funds as eligible variable
funding options under the Contracts. In such event, the Certificate Holder may
be permitted to select from these other funds, subject to any conditions that
may be imposed in connection with these options.
The Company's current policy is to allow all of the Funds noted above to be
used as investment options during the Annuity Period. However, the Company has
reserved the right to limit which Funds can be used as investment options
during the Annuity Period. Currently, a Certificate Holder may elect no more
than four funding options during the Annuity Period. See "Annuity Period
Elections."
If the shares of any Fund should no longer be available for investment by the
Separate Account or if in the judgment of the Company, further investment in
such shares should become inappropriate in view of the purpose of the
Contract, we may cease to make such Fund shares available for investment under
the Contract prospectively. The Company may, alternatively, substitute shares
of another Fund for shares already acquired. The Company reserves the right to
substitute shares of another Fund for shares already acquired without a proxy
vote. Any elimination, substitution or addition of Funds will be done in
accordance with applicable state and federal securities laws.
CONTRACT PURCHASE
HOW TO PURCHASE
GROUP CONTRACTS -- Groups will consist of those eligible individuals who have
established an account with a broker-dealer who has agreed to act as a
Distributor for the Contracts. The Distributor or its designee will execute a
master application and return it to the Underwriter. The master application
will then be delivered to the Company for its approval. Once the application
is approved, the Contract will be issued and the Contract Holder will be
entitled to exercise certain limited rights under the Contract. See "Contract
Rights." Under certain circumstances, the person who would otherwise be the
Contract Holder may designate a trustee or other third party to act as
Contract Holder in its place subject to applicable insurance laws. In that
event, the third party would exercise the Contract rights for the group
Contract.
Eligible individuals who want to purchase an interest in a Contract as part of
the group will fill out an enrollment form and return it with their initial
Purchase Payment to their Registered Representative or
14
<PAGE>
to the Underwriter for delivery to the Company. Once the enrollment is
accepted, a Certificate will be issued to the individual evidencing his or her
interest in the group Contract.
INDIVIDUAL CONTRACTS -- Certain states will not allow a group Contract to be
offered due to provisions in their insurance laws. In those states, an
individual will be issued a Contract rather than a Certificate. Individuals
who want to purchase a Contract must fill out an application and return it
with their initial Purchase Payment to their Registered Representative or to
the Underwriter for delivery to the Company. Once the application is accepted,
an individual Contract will be issued to the purchaser.
INDIVIDUAL RETIREMENT ANNUITIES -- The Contract has been approved by the
Internal Revenue Service as a prototype for an Individual Retirement Annuity
under Section 408(b) of the Code. Persons acquiring Contracts for Individual
Retirement Annuities may do so by transferring amounts previously accumulated
(rollover amounts) under another Individual Retirement Annuity, an Individual
Retirement Account (as defined by the Code), or a retirement plan qualified
under Section 401 or 403 of the Code or by making contributions. Once the
application is accepted and the initial amount is credited to the Certificate
Holder's Account, subsequent Purchase Payments may be made either by
contributions (subject to the requirements of the Code) or by rolling over
additional amounts from other appropriate plans. Certificate Holders making
any contributions to Individual Retirement Annuities are urged to consult with
their tax advisers to determine if the payments meet the conditions for
contributions under the Code. See "Tax Status." Prohibitions apply to
purchasing Individual Retirement Annuities as joint Certificate Holders. See
"Joint Certificate Holders," below.
CERTIFICATE HOLDERS -- The term "Certificate Holders," as used in this
prospectus, includes individuals purchasing an interest in the Contract as
part of a group and individuals who acquire individual Contracts. Generally,
Certificate Holders must be natural persons. The maximum issue age for a
Certificate Holder is 90; however, tax laws or some state laws may limit
issuance to persons younger than 90.
JOINT CERTIFICATE HOLDERS -- Contracts may be purchased by two individuals as
joint Certificate Holders, except for Contracts acquired by individuals for
purposes of establishing an Individual Retirement Annuity under Sections
408(a) or 408(b) of the Code. A Joint Certificate Holder must be the spouse of
the other Joint Certificate Holder unless otherwise prohibited by state law.
See "Tax Status" and "Contract Rights."
REJECTION -- Any application or enrollment form and initial Purchase Payment
tendered by a prospective Certificate Holder may be rejected for any reason by
the Company. The Company will also return any forms that are incomplete or
that do not include sufficient information to set up a Certificate Holder's
Account, unless the forms are completed within five business days from the
date the Company receives them, or unless the prospective Certificate Holder
consents to the forms being held for a longer period of time. All forms that
are rejected will be returned with a refund of all Purchase Payments submitted
with them.
MINIMUM PURCHASE PAYMENTS -- The minimum initial Purchase Payment is $1,500
whether made by Purchase Payment or rollover from another account. Additional
Purchase Payments must be at least $500, or if made by automatic check plan,
$50 per month.
ADDITIONAL PURCHASE PAYMENTS -- Additional Purchase Payments may be made
subject to the terms and conditions published at the time the Purchase Payment
is tendered. The Company reserves the right to limit the total dollar amount
it will accept or to reject any Purchase Payment without advance notice. A
Purchase Payment of more than $500,000 will be allowed only with the Company's
consent. Additional payments may be delivered to your Registered
Representative or sent directly to the Underwriter at the Company's Home
Office, attention: Service Unit.
15
<PAGE>
CREDITING OF PURCHASE PAYMENTS -- Once the application or enrollment form is
accepted, the initial Purchase Payment, less any premium taxes required to be
deducted at that time, is credited to the Certificate Holder's Account. See
"Charges and Deductions -- Premium Tax."
The Certificate Holder may elect to have each Net Purchase Payment accumulate
(a) on a variable basis by investment in shares of one or more of the Funds;
(b) on a fixed basis under the AICA Guaranteed Account; or (c) in a
combination of (a) and (b). Net Purchase Payments allocated to the Funds will
be deposited in the Separate Account. Net Purchase Payments must be allocated
in terms of whole percentages. Purchase Payments received after the initial
payment will be allocated in the same proportions as the last allocation,
unless new allocation instructions are received with the Purchase Payment.
DESIGNATIONS OF BENEFICIARY AND ANNUITANT
The Certificate Holder designates the Beneficiary and the Annuitant on the
enrollment or application form. For an Individual Retirement Annuity, the
Certificate Holder must be the Annuitant. For all other Contracts, the
Certificate Holder may, but need not, select a different person as the
Annuitant. See "Contract Rights -- Rights to the Contract and Account."
DISTRIBUTION
Aetna Life Insurance and Annuity Company ("ALIAC") will serve as Underwriter
for the securities sold by this Prospectus. ALIAC is registered as a broker-
dealer with the SEC and is a member of the National Association of Securities
Dealers, Inc. ("NASD"). As Underwriter, ALIAC will contract with one or more
registered broker-dealers ("Distributors") to offer and sell the Contracts.
The Underwriter and one or more affiliates may also sell the Contracts
directly. All Registered Representatives for the Distributors will also be
licensed as insurance agents to sell Variable Annuity Contracts. See "Charges
and Deductions -- Commissions and Distribution Expenses."
Federated Securities Corp. ("FSC"), an affiliate of the Adviser, may enter
into agreements with some of the Distributors to provide services to customers
in connection with the Funds acquired through the Contracts. These services
will include providing customers with information concerning the Funds, their
investment objectives, policies and limitations; portfolio securities;
performance, responding to customer inquiries and providing such other
services as the parties may agree. Fees for these services may be based on the
total number of assets in the Funds attributable to the Distributors'
customers.
CERTIFICATE HOLDER'S ACCOUNT VALUE
ACCUMULATION UNITS
A Net Purchase Payment that is allocated to one or more of the Funds is
credited to the Certificate Holder's Account in the form of Accumulation Units
in the Separate Account. The number of Accumulation Units credited is
determined by dividing the applicable portion of the Net Purchase Payment by
that Contract's Accumulation Unit value of the appropriate Fund. The
Accumulation Unit value used is computed for the Valuation Period in which the
Purchase Payment and a completed application or enrollment form are received
at the Home Office and accepted by the Company. Accumulation Units will be
credited within two business days of the initial application. Subsequent
Purchase Payments, if any, will be credited at the Accumulation Unit value
next determined following receipt of the payment. Shares in the Funds are
purchased by the Separate Account at the net asset value next determined by
the Fund following receipt of Net Purchase Payments by the Separate Account,
which will be no later than one business day following the purchase of the
Accumulation Units attributable to the Funds. The value of Accumulation Units
attributable to the Funds will be affected by the investment performance,
expenses and charges of those Funds. Generally, if the net asset value
16
<PAGE>
of the fund increases, so does the Accumulation Unit value; however,
performance of the Separate Account is reduced by charges and deductions under
the contract.
Accumulation Units acquired through the Contract are valued separately for
each Fund. Therefore, if the Certificate Holder elects to have a Net Purchase
Payment invested in a combination of Funds, the Certificate Holder will have
Accumulation Units credited from more than one source. The value of the
Certificate Holder's Account as of the most recent Valuation Period is
determined by adding the value of any Accumulation Units attributed to the
Fund(s) to the value of any amounts attributed to the AICA Guaranteed Account.
NET INVESTMENT FACTOR
The value of an Accumulation Unit for any Valuation Period is calculated by
multiplying the Accumulation Unit value for the immediately preceding
Valuation Period by the net investment factor of the appropriate investment
option for the current period.
The net investment factor is calculated separately for each Fund in which
assets of the Separate Account are invested. It is determined by adding
1.0000000 to the net investment rate.
The net investment rate equals (a) the net assets of the Fund held by the
Separate Account at the end of a Valuation Period, minus (b) the net assets of
the Fund held by the Separate Account at the beginning of a Valuation Period,
plus or minus (c) taxes or provision for taxes, if any, attributable to the
operation of the Separate Account divided by (d) the value of the Fund's
Accumulation and Annuity Units held by the Separate Account at the beginning
of the Valuation Period, minus (e) a daily charge at the annual effective rate
of 1.25% for mortality and expense risks, and a daily administrative expense
charge at the annual effective rate of 0.15% during the Accumulation Period
and up to 0.25% during the Annuity Period. The net investment rate may be more
or less than zero percent (0%).
CONTRACT RIGHTS
RIGHT TO CANCEL
A Contract Holder may cancel the Contract no later than ten days after
receiving it from the Company by returning the Contract to the Company with a
written notice of cancellation, or to the person from whom the Contract was
purchased. A Certificate Holder under a Group Contract may cancel his or her
interest in a Contract no later than ten days after receiving the Certificate
from the Company, by returning the Certificate to the Company with a written
notice of cancellation. Certain state laws provide a longer period of time to
exercise these cancellation rights. The Contract or Certificate will state the
period of time for which a right to cancel may be exercised. The Company will
produce a refund not later than seven calendar days after we receive the
Contract or Certificate and the written notice of cancellation at our Home
Office. Unless applicable state law requires a refund of the Purchase
Payments, the Purchase Payments plus any increase or minus any decrease in the
value attributable to the Purchase Payments allocated to the variable
option(s) will be refunded. For Individual Retirement Annuities, the Purchase
Payments will be refunded.
RIGHTS TO THE CONTRACT AND ACCOUNT
The Contract Holder has title to the Contract and has the right to accept or
reject any modifications to the Contract. For group Contracts, this is the
only right the Contract Holder has. All other rights, specifically those
relating to the Certificate Holder's Account under the Contract, are held by
the Certificate Holder. Certificate Holders' rights are subject to rights of
any assignee under an assignment filed with the Company and to the rights of
any irrevocably named beneficiary.
17
<PAGE>
JOINT CERTIFICATE HOLDERS
Two individuals may have an interest in the same Certificate Holder's Account
as Joint Certificate Holders. See "Contract Purchase -- How to Purchase --
Joint Certificate Holders." Joint Certificate Holders have equal rights under
the Contract and with respect to their Certificate Holder's Account. On the
death of a Joint Certificate Holder prior to the Annuity Date, the surviving
Certificate Holder may retain all ownership rights under the Contract or elect
to have the proceeds distributed. See "Death Benefits." All rights under the
Contract must be exercised by both Joint Certificate Holders except, at the
Company's discretion, one Joint Certificate Holder can elect or change
investment options after the account has been established.
TRANSFERS AMONG INVESTMENT OPTIONS
The Company currently allows unlimited transfers of accumulated amounts to
available investment options during the Accumulation Period; however, it
reserves the right to charge up to $10 if more than 12 transfers are made in a
calendar year. See "Charges and Deductions -- Transfer Charges." The Company
reserves the right to establish a minimum transfer amount. Unless the transfer
is made from the one-year term in connection with the Dollar Cost Averaging
Program (where regulatory approval has been received), transfers from the AICA
Guaranteed Account, will be subject to a market value adjustment, if
applicable. (See "Dollar Cost Averaging Program" below, as well as the
Appendix and the prospectus for the AICA Guaranteed Account.) Any transfer
will be based on the Accumulation Unit value next determined after the Company
receives a valid request at its Home Office. During the Annuity Period,
transfers are not available.
DOLLAR COST AVERAGING PROGRAM
Dollar Cost Averaging (DCA) is a system for investing a fixed amount of money
at regular intervals over a period of time. It is based on the economic fact
that buying a variably priced item with a constant sum of money at fixed
intervals affords the buyer the opportunity to automatically buy more of that
item when prices are low and less of it when prices are high, thus reducing
the average cost per item. Dollar Cost Averaging does not ensure a profit nor
guarantee against loss in a declining market. Certificate Holders should
consider their financial ability to continue purchases through periods of low
price levels.
The Dollar Cost Averaging Program permits Certificate Holders to
systematically transfer amounts from any of the variable funding options and
the one-year Guaranteed Account Term, to any of the variable investment
options. Where state regulatory approval has been received, a market value
adjustment will not be applied to Dollar Cost Averaging transfers from the
one-year Guaranteed Account Term. Consult your representative to determine
whether the waiver is approved in your state. (See the Appendix for a
discussion of the restrictions and features attributable to the AICA
Guaranteed Account.)
You must have an Account Value of at least $5,000 to participate in the Dollar
Cost Averaging Program. The minimum amount that may be transferred into a
particular variable funding option is $50. DCA can be elected at any time
during the Accumulation Period by completing the DCA section of the
application or by completing a DCA Election Form available from the Company at
its Home Office. All DCA transfers will be made on the 15th of each month (or
the next Valuation Period, if applicable). Any transfer made under the DCA
program will not affect any transfer limitations imposed under the Contract. A
Certificate Holder may terminate the Dollar Cost Averaging program at any
time. The Company reserves the right to modify or terminate the DCA program at
any time.
Dollar Cost Averaging is not available to individuals who have elected the
Systematic Withdrawal Option or the Account Rebalancing Program (described
below).
18
<PAGE>
ACCOUNT REBALANCING PROGRAM
The Account Rebalancing Program allows Certificate Holders to have portions of
their Account automatically reallocated annually to a specified percentage.
Only those Purchase Payments accumulating in the variable funding options can
be rebalanced. Certificate Holders may participate in this program by
completing the Account Rebalancing Section of the Contract Application, or by
requesting the service in writing from the Company's Home Office.
Account Rebalancing is not available to Certificate Holders who have elected
the Dollar Cost Averaging Program.
Account Rebalancing does not ensure a profit nor guarantee against loss in a
declining market.
WITHDRAWALS
The Certificate Holder may withdraw all or a portion of his or her Certificate
Holder's Account during the Accumulation Period by properly completing a
withdrawal request form provided by us and sending it to our Home Office. The
following types of withdrawals may be requested:
. Full Withdrawal: The Adjusted Account Value minus any applicable deferred
sales charge and maintenance fee.
. Partial Withdrawal (Percentage): The percentage of the Adjusted Account
Value requested minus any applicable deferred sales charge.
. Partial Withdrawal (Specified Dollar Amount): The dollar amount
requested. However, the amount withdrawn from the Certificate Holder's
Account Value will equal the dollar amount requested plus any applicable
deferred sales charge, plus or minus any applicable market value
adjustment.
The Company will pay all amounts based on the Certificate Holder's Account
Value next computed after the request is received in the Home Office or at a
later date, if specified. For any partial withdrawal, if instructions from the
Certificate Holder are not provided, amounts are withdrawn on a pro rata basis
from the Certificate Holder's interests in the Fund(s) and the AICA Guaranteed
Account. See the Appendix and the prospectus for the AICA Guaranteed Account
for the treatment of amounts withdrawn from the AICA Guaranteed Account and
see "Charges and Deductions -- Deferred Sales Charge" for information
regarding deferred sales charges. Amounts withdrawn may be subject to income
taxes or withholding for taxes. See "Tax Status --Taxation of Annuities."
The Company reserves the right to close out, upon 90 days' written notice, any
Certificate Holder's Account which has a value of $2,500 or less immediately
following a partial withdrawal. However, an Individual Retirement Annuity may
only be closed out when Purchase Payments have not been received for a 24-
month period and the paid-up annuity benefit at maturity would be less than
$20 per month. If the Company closes out a Certificate Holder's Account, no
deferred sales charge will be deducted. The Company does not intend to
exercise this right in cases where the Certificate Holder's Account Value is
reduced to $2,500 or less solely due to investment performance.
The Company's policy is to make payments for withdrawal requests, subject to
SEC requirements, within seven calendar days after receipt of a properly
completed withdrawal request form in its Home Office or within seven calendar
days of the date the withdrawal request may specify. Payments may be delayed
for: (a) any period in which the New York Stock Exchange ("Exchange") is
closed (other than customary weekend and holiday closings) or in which trading
on the Exchange is restricted; (b) any period in which an emergency exists
where disposal of securities held by the Funds is not reasonably practicable
or it is not reasonably practicable for the value of the assets of the Funds
to be fairly determined; or (c) such other periods as the SEC by order may
permit for the protection of Certificate Holders. The conditions under which
restricted trading or an emergency exists will be determined by the rules and
regulations of the SEC.
19
<PAGE>
If a Certificate Holder has an account under more than one Contract issued
within a calendar year by the Company or its affiliates, all accounts may have
to be aggregated in determining the tax consequences of any amounts
distributed to the Certificate Holder. See "Tax Status -- Taxation of
Annuities."
The Company reserves the right to defer payment of amounts requested to be
withdrawn or transferred from the AICA Guaranteed Account for up to six months
from the time a written request is received by the Company.
CHARGES AND DEDUCTIONS
This section describes the maximum charges that may be deducted for
maintenance fees, administrative expenses, sales-related expenses and transfer
charges. A description of mortality and expense risk charges and Fund expenses
is also included.
MAINTENANCE CHARGE
We will deduct an annual maintenance charge of $30 from the Certificate
Holder's Account Value during the Accumulation Period. This charge is to
reimburse us for administrative expenses relating to the establishment and
maintenance of the Certificate Holder's Account. We will deduct the charge on
the anniversary of the Effective Date (or the next valuation date, if the
anniversary is not a valuation date). The charge is also deducted upon
withdrawal of the entire Certificate Holder's Account. The fee is deducted
proportionately from each investment option used, including the AICA
Guaranteed Account.
We will not deduct a maintenance charge when the Certificate Holder's Account
is $50,000 or more on the day the maintenance charge is due.
MORTALITY AND EXPENSE RISK CHARGE
We make a daily deduction from the Separate Account for mortality and expense
risks (insurance charges). The deduction, equal to the annual effective rate
of 1.25% per year, is made as part of the calculation of Accumulation and
Annuity Unit value(s).
The mortality risk charge is to compensate us for the risks we assume (a) for
the death benefit and (b) when we promise to continue making lifetime payments
according to annuity rates specified in our Contract. The expense risk charge
is to compensate us for the risk that actual expenses for costs incurred under
the Contract will exceed the maximum costs that can be charged under the
Contract. We hope to profit from the daily deduction for mortality and expense
risks. Any such profit, as well as any other profit realized by us and held in
our General Account (that supports insurance and annuity obligations), would
be available for any proper corporate purpose, including, but not limited to,
payment of sales and distribution expenses.
ADMINISTRATIVE CHARGE
During the Accumulation Period, we deduct a daily charge of 0.15% per year
from the Separate Account. This charge is to reimburse us for expenses we
incur in administering the Contract. Since the administrative charge is a
percentage of the assets of the Separate Account there may be no relationship
between the amount so deducted and the amount of expenses attributable to a
Certificate Holder's Account. We do not profit from this charge.
An administrative expense charge will also be established for the Annuity
Period. The administrative expense charge applicable will be that charge in
effect for the valuation date when annuitization begins. This charge will not
exceed 0.25% per year, deducted on a daily basis from any variable
20
<PAGE>
portion of the benefit payments. Through April 30, 1996, this charge is
guaranteed to be zero percent (0%). Once an Annuity Option is elected and an
administrative expense charge is established, that Certificate Holder's
Account charge will not change.
TRANSFER CHARGES
For each Certificate Holder's Account, unlimited transfers are allowed during
the Accumulation Period. Twelve free transfers are allowed per calendar year
without charge. Thereafter, the Company reserves the right to charge up to $10
for each additional transfer. If the charge is assessed, it will be deducted
from the Certificate Holder's Account Value. During the Annuity Period,
transfers are not available.
DEFERRED SALES CHARGE
The Certificate Holder may withdraw the Adjusted Account Value at any time;
however, if all or any portion of the Adjusted Account Value is withdrawn
during the Accumulation Period, a deferred sales charge may be deducted so
that the Company may recover sales expenses.
A deferred sales charge only applies to the portion of a Certificate Holder's
Account Value that represents Net Purchase Payments (not to any associated
changes in value), and gradually decreases so that seven years after the date
of receipt of a Net Purchase Payment, the charge associated with that payment
is $0. To satisfy a partial withdrawal, amounts are withdrawn proportionately
from each investment option elected, including the AICA Guaranteed Account.
See the Appendix. For purposes of determining deferred sales charges, all
amounts attributable to Net Purchase Payments are withdrawn before any amounts
attributable to increases in value. Amounts withdrawn from the values
attributable to Net Purchase Payments are treated as withdrawn from the oldest
payments first received. The deferred sales charge attributable to each Net
Purchase Payment is determined by multiplying the Net Purchase Payment
withdrawn by the appropriate percentage, depending on the number of years
completed since the Net Purchase Payment was received as shown in the table
below. The total charge will be the sum of the charges applicable for all of
the Net Purchase Payments withdrawn. In no event may the aggregate deferred
sales charges assessed against a Certificate Holder's Account exceed 8.5% of
the Certificate Holder's aggregate Purchase Payments. Reduced charges apply to
Purchase Payments in excess of $1.5 million.
<TABLE>
<CAPTION>
YEARS FROM RECEIPT OF DEFERRED
NET PURCHASE PAYMENT SALES CHARGE
--------------------- ------------
<S> <C>
Less than 1 year 7%
1 year or more but less than 2 6%
2 years or more but less than 3 5%
3 years or more but less than 4 4%
4 years or more but less than 5 3%
5 years or more but less than 6 2%
6 years or more but less than 7 1%
7 years or more 0%
</TABLE>
We will not deduct a deferred sales charge from any Net Purchase Payment that
is:
(a) paid to a Beneficiary as a death benefit, except for the withdrawal of
Purchase Payments that were made by a surviving joint Certificate
Holder after the Company has received at its Home Office due proof of
the death of the first joint Certificate Holder, where the surviving
joint Certificate Holder elects to continue the Certificate Holder's
Account in his or her own name;
(b) paid as premium for an Annuity Option;
(c) withdrawn due to the election of the Systematic Withdrawal Option or
Estate Conservation Option. (See "Additional Withdrawal Options.");
21
<PAGE>
(d) paid due to the full withdrawal of a Certificate Holder's Account for
which the value is $2,500 or less and no withdrawals have been made in
the prior 12 months;
(e) paid at least 12 months after the date of the first Purchase Payment to
the Certificate Holder's Account in an amount equal to or less than 15%
of the Certificate Holder's Account Value. This applies to the first
withdrawal request, partial or full, in a calendar year. The
Certificate Holder's Account Value is calculated as of the date the
withdrawal request is received in good order at our Home Office. If a
withdrawal is made that exceeds 15%, the applicable deferred sales
charge on the amount over 15% will be deducted from the Certificate
Holder's Account. See "Withdrawals During Accumulation Period." This
provision may not be exercised if SWO is elected; or
(f) paid if we close out a Certificate Holder's Account when the value is
less than $2,500. See "Contract Rights -- Withdrawals During
Accumulation Period."
In some states, the Contract has been endorsed to provide that the deferred
sales charge will not be deducted when Net Purchase Payments are withdrawn
after the Certificate Holder has spent at least 45 consecutive days in a
licensed nursing care facility (in New Hampshire only, the facility does not
have to be licensed). The withdrawal must be made after the first year
anniversary of the Effective Date and must be requested within three (3) years
of admission to a licensed nursing care facility. This waiver does not apply
if the Certificate Holder is in a licensed nursing care facility at the time
the Certificate Holder's Account is established.
In the instances cited above, no deferred sales charge is deducted. However,
the amount withdrawn may be subject to a 10% federal penalty tax. See "Tax
Status." A market value adjustment may also apply to amounts withdrawn from
the AICA Guaranteed Account in instances other than withdrawals from the one-
year term in connection with the Dollar Cost Averaging Program.
Based on our actuarial determination, we do not anticipate that the deferred
sales charge will cover all sales and administrative expenses that we will
incur in connection with the Contract. The balance will be paid from the
Company's other profits and from its reimbursements for mortality and expense
risks.
FUND EXPENSES
Pursuant to an investment advisory contract with the Funds, the Adviser is
entitled to receive an annual investment advisory fee from each of the Funds
for its services as investment adviser. These fees are based on each Fund's
average net assets, is and are deducted from the assets of each Fund and paid
to the adviser monthly. The Fee Table sets forth an estimate at the daily
advisory fee and other expenses of each Fund as of 1994.
For further details on each Fund's expenses, prospective Certificate Holders
should read the accompanying prospectus for the Funds and refer to the Fee
Table in this Prospectus.
PREMIUM TAX
Several states and municipalities impose a premium tax on Annuities either
when made or when an Annuity Option is elected. Currently such taxes range up
to 4%. Ordinarily, the Company will pay the amount of any premium taxes on
behalf of the Certificate Holder and any state premium tax will be deducted
from the Certificate Holder's Account Value when it is applied to an Annuity
Option.
Any municipal premium tax assessed at a rate in excess of 1% will be deducted
from the Purchase Payments or from the amount applied to an Annuity Option
based on our determination of when such tax is due. We will absorb any
municipal premium tax which is assessed at 1% or less. We reserve the right,
however, to reflect this added expense in our Annuity purchase rates for
residents of such municipalities.
22
<PAGE>
COMMISSIONS AND DISTRIBUTION EXPENSES
Commissions will be paid to broker-dealers who sell the Contracts. Broker-
dealers will be paid commissions, up to an amount currently equal to 6.5% of
Purchase Payments.The Company may, by agreement with the broker-dealer, pay
commissions as a combination of a certain percentage amount at the time of
sale and a trail commission of up to 0.40% of assets attributable to Purchase
Payments (which, when combined, could exceed 6.5% of Purchase Payments).
Other than the mortality and expense risk charge, the administrative expense
charge and the reimbursements by Federated Advisers for administrative
charges, all expenses incurred in the operations of the Separate Account are
borne by the Company.
ADDITIONAL WITHDRAWAL OPTIONS
GENERAL
The Company offers two withdrawal options that are not considered Annuity
options -- the Estate Conservation Option ("ECO"), which is available only for
individual retirement Annuity Contracts, and the Systematic Withdrawal Option
("SWO"). These options may be withdrawn at any time by the Company and are
subject to any state law or tax law that may affect their availability. These
options are available to Certificate Holders whose Certificate Holder's
Account Value is equal to at least $25,000 at the time of election and are
available at certain ages, as described below. (The Company reserves the right
to change the Minimum Account Value required.) Under SWO, the Certificate
Holder receives a series of partial withdrawals from the account based on the
payment method selected. It is designed for those who want a periodic income
while retaining investment flexibility for amounts accumulating under the
Contract. ECO offers the same investment flexibility as SWO, but is designed
for those who want to receive only the minimum distribution that the Code
requires each year. Under ECO, the Company calculates the minimum distribution
amount required by law and pays that amount once a year.
No deferred sales charges will be assessed on amounts distributed under an ECO
or SWO election. Additionally, where state regulatory approval has been
received, no market value adjustment will be applied to amounts distributed
under an ECO or SWO election. (See your representative to determine whether
the waiver is approved in your state.) As these options are not annuity
options, the Annuity Date is not reached and the Certificate Holder's Account
is still in the Accumulation Period. All the rights and obligations relating
to the Accumulation Period remain in effect with respect to the Certificate
Holder's Account, including fees and charges.
Amounts required to meet either a SWO or ECO payment will be obtained by
liquidating Accumulation Units attributable to the Funds allocable to the
Certificate Holder's Account and liquidating amounts from the Certificate
Holder's AICA Guaranteed Account. Amounts will be withdrawn pro rata from each
funding option currently attributable to the Certificate Holder's Account. See
the Appendix for the treatment of withdrawals from the AICA Guaranteed
Account.
Once elected, the applicable option(s) may be revoked by the Certificate
Holder at any time, by submitting a written request to our Home Office. Any
revocation will apply only to the amounts not yet paid. Once ECO or SWO is
revoked, it may not be elected again. The Company reserves the right to change
the terms of these options for future elections and discontinue the
availability of these options.
SWO is different from ECO in the following ways: (1) SWO payments are made for
a fixed dollar amount, fixed time period or fixed percentage whereas ECO
payments vary in dollar amount and can continue indefinitely during your
lifetime; and (2) generally, SWO payments will be higher than expected ECO
payments; and (3) ECO is available only for amounts in an Individual
Retirement
23
<PAGE>
Annuity Contract, whereas SWO payments are available under both Individual
Retirement Annuity Contracts and nonqualified deferred annuity contracts. You
should carefully assess your future income needs when considering the election
of these withdrawal options.
Amounts withdrawn pursuant to an ECO or SWO may be subject to income taxes or
withholding from taxes, including possible penalties for withdrawals before
the Certificate Holder attains age 59 1/2. See "Tax Status -- Taxation of
Annuities." Certificate Holders should consult their tax advisers prior to
electing either of these options concerning the tax consequences of the
election.
For a discussion of certain provisions that will apply if the Certificate
Holder or beneficiary dies after SWO or ECO has been elected, see "Death
Benefits."
ESTATE CONSERVATION OPTION
The first distribution may not be made before the calendar year in which the
Certificate Holder attains age 70 1/2. ECO is available only for amounts in an
Individual Retirement Annuity Contract.
We will calculate and distribute an annual amount using the method contained
in the Code's minimum distribution regulations. The annual distribution is
determined generally by dividing the Certificate Holder's Account Value by a
life expectancy factor from tables designated under Treasury regulations. The
factor will be based on either the Certificate Holder's life expectancy or the
joint life expectancies of the Certificate Holder and his or her designated
beneficiary. If ECO is based on the Certificate Holder's life expectancy, the
full Certificate Holder's portion of the Account must be distributed in the
year following the Certificate Holder's death as required by current Treasury
regulations. This calculation will be changed, if necessary, to conform to
changes in the Code or applicable regulations.
SYSTEMATIC WITHDRAWAL OPTION
SWO payments are available on a monthly, quarterly, semiannual, or annual
basis. The Certificate Holder specifies the initial distribution date.
Subsequent distributions will be made on such date as we may designate or
allow.
A Certificate Holder may elect one of the following methods of distribution:
(1) Specified Payment: Payments of a designated dollar amount. The annual
amount may not be greater than 10% of the Certificate Holder's Account
Value at time of the election. This annual dollar amount will remain
constant. At our discretion, we may require a minimum payment amount;
or
(2) Specified Period: Payments which are made over a period of time which
must be at least 10 years. The annual amount paid each year is
calculated by dividing the Certificate Holder's Account Value as of
December 31 of the prior year by the number of payment years remaining;
or
(3) Specified Percentage: Payment of a designated percentage which cannot
be greater than 10% of the Certificate Holder's Account Value at the
time of election. The percentage chosen may be changed by written
request. We reserve the right to limit the number of times the
percentage may be changed. The annual amount is calculated by
multiplying the Certificate Holder's Account Value as of December 31 of
the year prior to the payment by the designated percentage.
Note: For an Individual Retirement Annuity, the annual minimum SWO
distribution, or maximum SWO time period, as the Certificate Holder directs,
will be determined by a life expectancy factor from tables designated by
Treasury regulations. Under both the Specified Payment and Specified Period
methods, a higher amount will be paid in any year, if required under the
Treasury's minimum distribution rules. Life expectancy factors will be reduced
by one for each distribution year.
24
<PAGE>
ANNUITY PERIOD
ANNUITY PERIOD ELECTIONS
The Certificate Holder must notify the Company in writing of the Annuity Date
and Annuity Option elected. Until a date and option are elected, the
Certificate Holder's Account will remain in the Accumulation Period. Once an
Annuity Option is elected, it cannot be changed. The Certificate Holder elects
the Annuity Date. Current underwriting rules require that payment must begin
no later than the later of the Annuitant's 90th birthday or the tenth
anniversary of the last Purchase Payment. As required by the Code,
distributions from an Individual Retirement Annuity must begin no later than
April 1 of the calendar year after the calendar year in which the Certificate
Holder attains age 70 1/2. The Certificate Holder designates the Annuitant.
During the Accumulation Period, the Certificate Holder may change the
designated Annuitant. The Annuitant must be the Certificate Holder for
Individual Retirement Annuities.
At least 30 days before the Annuity Date, the Certificate Holder must notify
the Company in writing to elect or change (a) the date on which Annuity
payments are to begin, (b) the Annuity Option, (c) whether the payments are to
be made monthly, quarterly, semiannually, or annually, and (d) the investment
option(s) used to provide Annuity payments (i.e., a fixed annuity using the
general account, one or more of the available Funds or any combination
thereof). The Company has reserved the right to limit which funding options
and the number of funding options which will be available as investment
options during the Annuity Period. Currently, a Certificate Holder may elect
no more than four funding options during the Annuity Period. Once Annuity
Payments begin, the Annuity Option may not be changed, nor may transfers be
made among funding options.
If Annuity payments are on a variable basis (i.e., one or more of the Funds
are chosen), the first and subsequent Annuity payments will depend on the
assumed net investment rate (3 1/2% annually, unless a 5% annual rate is
elected). Use of the 3 1/2% assumed rate causes a lower first payment, but
subsequent payments would increase more rapidly or decline more slowly as
changes occur in the net investment rate. A 5% rate causes a higher first
payment, but Annuity payments will increase thereafter only to the extent that
the net investment rate exceeds 5% annually (plus up to 0.25% to offset any
applicable administrative charge). Annuity payments would decline if the rate
were below 5% (assuming an administrative charge of zero).
For purposes of Annuity payments, the Annuitant's adjusted age (and joint
Annuitant's, if applicable) will be used. The Annuitant's adjusted age is his
or her age as of the birthday closest to the date of the first Annuity
payment, reduced by one year for Annuity start dates occurring from July 1,
1994 through December 31, 1999. The Annuitant's age (and joint Annuitant's, if
applicable) will be reduced by two years for Annuity start dates occurring
from January 1, 2000 through December 31, 2009. The Annuitant's adjusted age
(and joint Annuitant's, if applicable) will be reduced by one additional year
for Annuity start dates in each succeeding decade.
No election may be made that would result in an Annuity payment of less than
$50 per month or total yearly Annuity payments of less than $250 (less if
required by state law). If the Certificate Holder's Account Value on the
Annuity Date is insufficient to elect an option for the minimum amount
specified, a lump-sum payment must be elected.
For an Individual Retirement Annuity, the payments must satisfy the minimum
distribution incidental death benefit rule described in Treasury regulations.
This rule assures that any death benefits payable are incidental to the
primary purpose of the Contract, which is to provide the Certificate Holder
with retirement benefits. The amount to be distributed under this rule is
determined based on age and tables contained in the Treasury regulations.
25
<PAGE>
ANNUITY OPTIONS
Option 1 -- Payments For a Stated Period of Time -- An Annuity will be paid
for the number of years chosen. The number of years must be at least 5 and not
more than 30.
If payments for this option are made under a variable annuity, the present
value of any remaining payments may be withdrawn at any time; however, amounts
withdrawn under this provision before 5 years of payments have been made will
be treated as occurring during the Accumulation Period and any applicable
deferred sales charge will apply.
Option 2 -- Life Income -- An Annuity will be paid for the life of the
Annuitant. If also chosen, we will guarantee payments for 60, 120, 180, or 240
months.
Option 3 -- Life Income Based upon the Lives of Two Annuitants -- An Annuity
will be paid during the lives of the Annuitant and a second Annuitant.
Payments will continue until both Annuitants have died. When this option is
chosen, a choice must be made of:
(a) 100% of the payment to continue after the first death;
(b) 66 2/3% of the payment to continue after the first death;
(c) 50% of the payment to continue after the first death;
(d) Payments for a minimum of 120 months with 100% of the payment to
continue after the first death; or
(e) 100% of the payment to continue at the death of the second Annuitant
and 50% of the payment to continue at the death of the Annuitant.
We may make other options available as allowed by law.
We make a daily deduction for mortality and expense risks from any amounts
held on a variable basis. See "Charges and Deductions -- Mortality and Expense
Risk Charges." Therefore, electing Option 1 or any other nonlifetime option on
a variable basis will result in a deduction being made even though the Company
assumes no mortality risk.
DEATH BENEFITS
The following section provides information about the death benefit, should a
Certificate Holder or the Annuitant die. In many cases, the rights available
will depend on whether the Beneficiary is the Certificate Holder's spouse and
whether they are joint Certificate Holders.
Note: The Company will not allow Annuity payments made to a Beneficiary to
extend beyond the Beneficiary's life or any period certain greater than the
Beneficiary's life expectancy.
DEATH OF A CERTIFICATE HOLDER PRIOR TO THE ANNUITY DATE
In the event of the death of a Certificate Holder prior to the Annuity Date, a
death benefit is payable to the Beneficiary(ies) designated by the Certificate
Holder. Upon the death of a joint Certificate Holder, the surviving
Certificate Holder, if any, will be the designated Beneficiary. Any other
Beneficiary designation on record with the Company at the time of death will
be treated as a contingent Beneficiary and payments will be made to such
Beneficiary only upon the death of the surviving Certificate Holder. If the
Certificate Holder is a non-natural person, the death benefit will be paid to
the beneficiary(ies) at the death of the Annuitant.
A Beneficiary may elect the death benefit to be paid under one of the options
described below or if the designated Beneficiary is the spouse of the
Certificate Holder, he or she may continue as a Certificate Holder and
exercise all the deceased Certificate Holder's rights under the Contract.
26
<PAGE>
DEATH BENEFIT AMOUNT PRIOR TO THE ANNUITY DATE
(a) Except as described in Section (b), the value of the guaranteed death
benefit is equal to the greater of:
(i) the Certificate Holder's Account Value at the end of the Valuation
Period during which we receive at our Home Office proof of death
and election of the type of payment to be made; or
(ii) the amount of the death benefit determined as of the Valuation
Period corresponding to the date of death as follows:
Until the first Effective Date anniversary, the death benefit is
equal to the Purchase Payments made by the Certificate Holder
during that year, less any withdrawals and any amounts applied to
an Annuity Option.
For each year thereafter, the death benefit during the year is
equal to the death benefit at the beginning of the year plus all
Purchase Payments made during the year less any withdrawals and any
amounts applied to an Annuity Option during that year.
On the anniversary of the Effective Date each year, the death
benefit is determined as follows:
(A) The death benefit on the previous Effective Date anniversary
increased by the death benefit factor of 4%; plus
(B) Purchase Payments made by the Certificate Holder during the
year since the last anniversary of the Effective Date increased
by the death benefit factor of 4% for the portion of the year
since the Purchase Payment was made; less
(C) Any withdrawals or amounts applied to an Annuity Option during
the year increased by the death benefit factor of 4% for the
portion of the year since the withdrawal or election of an
Annuity Option; or
(iii) The Certificate Holder's Account Value on the most recent seventh
year anniversary of the Effective Date plus any Purchase Payments
made after such Effective Date anniversary less any withdrawals
and any amounts applied to an Annuity Option.
Currently there is no limitation on the maximum death benefit payable;
however, the Company reserves the right, in the future, to impose a
limitation on the maximum allowable death benefit under subsections
(ii) and (iii). The Company currently does not anticipate imposing such
a limitation prior to May 1, 1996.
The death benefit calculation described in (ii) and (iii) above applies
until the Certificate Holder attains 85 years of age. Thereafter, the
death benefit is only adjusted for Purchase Payments, withdrawals and
amounts applied to Annuity Options. If the Certificate Holder attains
85 years of age prior to the seventh anniversary of the Effective Date,
the death benefit will be the greater of (i) or (ii) above.
The excess, if any, of the guaranteed death benefit value over the
Certificate Holder's Account Value is determined when the Company
receives at its Home Office proof of death. Any excess amount is
allocated through the Separate Account to the Prime Money Fund. The
Certificate Holder's Account Value plus any excess amount deposited
becomes the Certificate Holder's Account Value.
(b) In the case of a Beneficiary of a surviving joint Certificate Holder
who continues the Certificate Holder's Account in his or her own name,
the death benefit shall be equal to the Adjusted Account Value less any
applicable deferred sales charge on any Purchase Payment made after the
Company receives at its Home Office proof of death of the first joint
Certificate Holder.
27
<PAGE>
For amounts held in the AICA Guaranteed Account: The death benefit, if paid
within the first six months of the date of the Certificate Holder's death, is
the greater of the Certificate Holder's Account Value or the aggregate market
value adjusted amount. This provision does not apply at the death of a spousal
beneficiary or joint Certificate Holder who continued the Account in his or
her own name after the first death. If amounts are withdrawn after the six-
month period, the death benefit will be the aggregate Market Value Adjustment.
The aggregate Market Value Adjustment may be more or less than the Certificate
Holder's Account Value. (See the Appendix.)
PAYMENT METHODS FOR DEATH BEFORE ANNUITY DATE
A Beneficiary who is the spouse of the Certificate Holder, or spouse of the
Annuitant if the Certificate Holder is a non-natural person, may (a) elect to
continue the Certificate Holder's Account in his or her name, in which case
the account value will continue to be affected by the investment performance
of the investment option(s) selected, (b) elect a lump sum payment of the
death benefit, or (c) apply the Certificate Holder's Adjusted Account Value to
an Annuity Option, in which case the amount of payout will depend on the
annuity option elected and the investment option(s) used to provide such
payments.
A Beneficiary who is not the spouse of the Certificate Holder must elect one
of the following options for payment of the death benefit in the event of the
death of the Certificate Holder prior to the Annuity Date:
Option 1 -- lump sum payment of the death benefit; or
Option 2 -- the payment of the entire death benefit within 5 years of the
date of the Certificate Holder's death; or
Option 3 -- payment of the death benefit over the lifetime of the
designated Beneficiary or over a period not extending beyond the life
expectancy of the designated Beneficiary with distribution beginning within
one year of the date of death of the Certificate Holder.
In general, regardless of the method of payment, payments received by your
Beneficiaries after your death are taxed in the same manner as if you had
received those payments. See "Tax Status."
Any portion of the death benefit not applied under Option 3 within one year of
the date of the Certificate Holder's death, must be distributed within five
years of the date of death. A market value adjustment will apply at the time
the death benefit is paid.
Until the election of a method of payment, amounts will remain invested as
they were before death, and the Beneficiary will assume rights under the
Contracts. However, the Code requires that distributions begin within a
certain time period as described above. If no elections are made, no
distributions will be made. Failure to commence distributions within the above
time periods can result in tax penalties.
DEATH OF CERTIFICATE HOLDER ON OR AFTER THE ANNUITY DATE
If the Certificate Holder is the Annuitant, and the Annuity Payments are
solely life contingent, the death of the Certificate Holder after the Annuity
Date terminates the Annuity payments. If the Certificate Holder is not the
Annuitant, or if Annuity Payments are for a stated period of time, the
Certificate Holder's death after the Annuity Date will not affect the Annuity
payment except as provided under "Death of the Annuitant." The remaining
payments under the Annuity Option elected will be made to the Beneficiary at
least as rapidly as under the method of distribution in effect at the time of
the Certificate Holder's death. See "Annuity Options."
28
<PAGE>
DEATH OF THE ANNUITANT
If the Certificate Holder is a non-natural person and a death benefit is paid
at the death of the Annuitant, a new Annuitant may not be named. In all other
circumstances, if the Annuitant who is not a Certificate Holder dies on or
before the Annuity Date, a new Annuitant may be named. If no Annuitant is
named, the Certificate Holder will be the Annuitant. If the Annuitant dies
after the Annuity Date, the death benefit, if any, will be payable to the
Beneficiary as specified in the Annuity Option elected. We will require proof
of the Annuitant's death. Death benefits will be paid at least as rapidly as
would have been paid under the method of distribution in effect at the time of
the Annuitant's death.
TAX STATUS
INTRODUCTION
The following discussion is a general discussion of federal income tax
considerations relating to the Contract and is not intended as tax advice.
This discussion is not intended to address the tax consequences resulting from
all of the situations in which a person may be entitled to or may receive a
distribution under the Contract. Any person concerned about these tax
implications should consult a competent tax adviser before initiating any
transaction. This discussion is based upon the Company's understanding of the
present federal income tax laws as they are currently interpreted by the
Internal Revenue Service ("IRS"). No representation is made as to the
likelihood of the continuation of the present federal income tax laws or of
the current interpretation by the IRS. Moreover, no attempt has been made to
consider any applicable state or other tax laws.
The Contract may be purchased on a non-tax qualified basis ("Nonqualified
Contract") or purchased and used in connection with certain arrangements
entitled to special income tax treatment under section 408 of the Code
("Qualified Contracts"). The ultimate effect of federal income taxes on the
amounts held under a Contract, on Annuity Payments, and on the economic
benefit to the Certificate Holder, the Annuitant, or the Beneficiary may
depend on the tax status of the individual concerned.
TAXATION OF THE COMPANY
The Company is taxed as an insurance company under Subchapter L of the Code.
Since the Separate Account is not an entity separate from the Company, and its
operation forms a part of the Company, it will not be taxed separately as a
"regulated investment company" under Subchapter M of the Code or as any other
separate entity. Investment income and capital gains are automatically applied
to increase reserves under the Contracts. Under existing federal income tax
law, the Company believes that the Separate Account investment income and net
capital gains will not be taxed to the extent that such income and gains are
applied to increase the reserves under the Contracts.
Accordingly, the Company does not anticipate that it will incur any federal
income tax liability attributable to the Separate Account and, therefore, the
Company does not intend to make provisions for any such taxes. However, if
changes in the federal tax laws or interpretations thereof result in the
Company being taxed on income or gains attributable to the Separate Account,
then the Company may impose a charge against the Separate Account (with
respect to some or all Contracts) in order to set aside provisions to pay such
taxes.
TAX STATUS OF THE CONTRACT
DIVERSIFICATION. Section 817(h) of the Code requires that with respect to
Nonqualified Contracts, the investments of the Funds be "adequately
diversified" in accordance with Treasury Regulations in order for the
Contracts to qualify as annuity contracts under federal tax law. The Separate
Account, through the Funds, intends to comply with the diversification
requirements prescribed by the Treasury in Reg. Sec. 1.817-5, which affect how
the Fund's assets may be invested.
29
<PAGE>
In certain circumstances, owners of variable annuity contracts may be
considered the owners, for federal income tax purposes, of the assets of the
separate accounts used to support their contracts. In these circumstances,
income and gains from the separate account assets would be includible in the
variable contract owner's gross income. The IRS has stated in published
rulings that a variable contract owner will be considered the owner of
separate account assets if the contract owner possesses incidents of
investment control over the assets. The ownership rights under the contract
are similar to, but different in certain respects from those described by the
IRS in rulings in which it was determined that contract owners were not owners
of separate account assets. For example, a Certificate Holder has additional
flexibility in allocating premium payments and account values. In addition,
the number of funds provided under the Contract is greater than the number of
funds offered in contracts on which rulings have been issued. These
differences could result in a Certificate Holder being treated as the owner of
a pro rata portion of the assets of the Separate Account. The Company reserves
the right to modify the Contract as necessary to attempt to prevent a
Certificate Holder from being considered the owner of a pro rata share of the
assets of the Separate Account.
REQUIRED DISTRIBUTIONS. In order to be treated as an annuity contract for
federal income tax purposes, section 72(s) of the Code requires Nonqualified
Contracts to provide that (a) if any Certificate Holder or Joint Certificate
Holder dies on or after the annuity date but prior to the time the entire
interest in the Contract has been distributed, the remaining portion of such
interest will be distributed at least as rapidly as under the method of
distribution being used as of the date of such owner's death; and (b) if any
Certificate Holder or Joint Certificate Holder dies prior to the annuity date,
the entire interest in the Contract will be distributed within five years
after the date of such Certificate Holder's death. These requirements will be
considered satisfied as to any portion of a Certificate Holder's interest
which is payable to or for the benefit of a "designated beneficiary" and which
is distributed over the life of such "designated beneficiary" or over a period
not extending beyond the life expectancy of that beneficiary, provided that
such distributions begin within one year of the Certificate Holder's death.
The "designated beneficiary" refers to a natural person designated by the
Certificate Holder as a Beneficiary and to whom ownership of the contract
passes by reason of death. However, if the "designated beneficiary" is the
surviving spouse of the deceased Certificate Holder, the contract may be
continued with the surviving spouse as the new Certificate Holder.
The Nonqualified Contracts contain provisions which are intended to comply
with the requirements of section 72(s) of the Code, although no regulations
interpreting these requirements have yet been issued. The Company intends to
review such provisions and modify them if necessary to assure that they comply
with the requirements of Code section 72(s) when clarified by regulation or
otherwise. Other rules may apply to Qualified Contracts.
The following discussion is based on the assumption that the Contract
qualifies as an annuity contract for federal income tax purposes.
TAXATION OF ANNUITIES
IN GENERAL. Section 72 of the Code governs taxation of annuities in general.
The Company believes that a Certificate Holder who is a natural person
generally is not taxed on increases in the Certificate Holder's Account Value
until distribution occurs by withdrawing all or part of such Account Value
(e.g., withdrawals or Annuity payments under the Annuity Option elected). The
assignment, pledge, or agreement to assign or pledge any portion of the
Account Value generally will be treated as a distribution. The taxable portion
of a distribution (in the form of a single sum payment or an annuity) is
taxable as ordinary income.
The following discussion generally applies to a Contract owned by a natural
person.
30
<PAGE>
WITHDRAWALS. In the case of a withdrawal under a Qualified Contract, including
withdrawals under SWO or ECO, the amount taxable is generally based on the
ratio of the "investment in the contract" to the Certificate Holder's Account
Value. The "investment in the contract" generally equals the amount of any
nondeductible Purchase Payments paid by or on behalf of any individual less
any amount received previously which was excludable from gross income. For a
Qualified Contract, the "investment in the contract" can be zero. Special tax
rules may be available for certain distributions from a Qualified Contract.
With respect to Nonqualified Contracts, partial withdrawals, including
withdrawals under SWO, are generally treated as taxable income to the extent
that the Account Value immediately before the withdrawal exceeds the
"investment in the contract" at that time. The Account Value immediately
before a withdrawal may have to be increased by any positive market value
adjustment (MVA) that results from such a withdrawal. There is, however, no
definitive guidance on the proper tax treatment of MVAs in these
circumstances, and a Certificate Holder should contact a competent tax advisor
with respect of the potential tax consequences of any MVA that arises as a
result of a partial withdrawal.
Full withdrawals of a Nonqualified Contract are treated as taxable income to
the extent that the amount received exceeds the "investment in the contract."
ANNUITY PAYMENTS. Although the tax consequences may vary depending on the
Annuity payment elected under the Contract, in general, only the portion of
the Annuity payment that represents the amount by which the Account Value
exceeds the "investment in the contract" will be taxed; after the "investment
in the contract" is recovered, the full amount of any additional Annuity
payments is taxable. For Variable Annuity payments, the taxable portion is
generally determined by an equation that establishes a specific dollar amount
of each payment that is not taxed. The dollar amount is determined by dividing
the "investment in the contract" by the total number of expected periodic
payments. However, the entire distribution will be taxable once the recipient
has recovered the dollar amount of his or her "investment in the contract."
For Fixed Annuity payments, in general there is no tax on the portion of each
payment which represents the same ratio that the "investment in the contract"
bears to the total expected value of the Annuity payments for the term of the
payments; however, the remainder of each Annuity payment is taxable. Once the
"investment in the contract" has been fully recovered, the full amount of any
additional Annuity payments is taxable. If Annuity payments cease as a result
of an Annuitant's death before full recovery of the "investment in the
contract," consult a competent tax advisor regarding deductibility of the
unrecovered amount.
PENALTY TAX. In the case of a distribution pursuant to a Non-Qualified
Contract, there may be imposed a federal income tax penalty equal to 10% of
the amount treated as taxable income. In general, however, there is no penalty
tax on distributions: (1) made on or after the date on which the taxpayer
attains age 59 1/2; (2) made as a result of death or disability of a
Certificate Holder; (3) received in substantially equal periodic payments as a
life annuity or a joint and survivor annuity for the lives or life
expectancies of the Certificate Holder and a "designated beneficiary." Other
tax penalties may apply to certain distributions pursuant to a Qualified
Contract.
TAXATION OF DEATH BENEFIT PROCEEDS. Amounts may be distributed from the
Contract because of the death of a Certificate Holder or the Annuitant.
Generally, such amounts are includible in the income of the recipient as
follows: (1) if distributed in a lump sum, they are taxed in the same manner
as a full surrender as described above, or (2) if distributed under an Annuity
Option, they are taxed in the same manner as Annuity payments, as described
above.
TRANSFERS, ASSIGNMENTS, OR EXCHANGES OF THE CONTRACT. A transfer of ownership
of a Contract, the designation of an Annuitant, Payee or other Beneficiary who
is not also a Certificate Holder, the selection of certain Annuity Dates, or
the exchange of a Contract may result in certain tax consequences that are not
discussed herein. Assignments or transfers of ownership of an IRA are not
31
<PAGE>
allowed except as permitted under Section 408(d)(6) of the Code in connection
with a divorce. Anyone contemplating any such designation, transfer,
assignment, selection, or exchange should contact a competent tax adviser with
respect to the potential tax effects of such a transaction. (See also
"Transfer of Ownership -- Assignment.")
MULTIPLE CONTRACTS. All deferred nonqualified annuity contracts that are
issued by the Company (or its affiliates) to the same owner during any
calendar year are treated as one annuity contract for purposes of determining
the amount includible in gross income under section 72(e) of the Code. In
addition, the Treasury Department has specific authority to issue regulations
that prevent the avoidance of section 72(e) through the serial purchase of
annuity contracts or otherwise. Congress has also indicated that the Treasury
Department may have authority to treat the combination purchase of an
immediate annuity contract and separate deferred annuity contracts as a single
annuity contract under its general authority to prescribe rules as may be
necessary to enforce the income tax laws.
QUALIFIED CONTRACTS
IN GENERAL. The Qualified Contract is designed for use as an Individual
Retirement Annuity. The tax rules applicable to participants and beneficiaries
in Individual Retirement Annuities are complex. Special favorable tax
treatment may be available for certain types of contributions and
distributions. Adverse tax consequences may result from contributions in
excess of specified limits; distributions prior to age 59 1/2 (subject to
certain exceptions); distributions that do not conform to specified
commencement and minimum distribution rules; aggregate distributions in excess
of a specified annual amount; and in other specified circumstances.
INDIVIDUAL RETIREMENT ANNUITIES. Section 408 of the Code permits eligible
individuals to contribute to an individual retirement program known as an
Individual Retirement Annuity or Individual Retirement Account, each
hereinafter referred to as an "IRA." Also, distributions from certain other
types of qualified plans may be "rolled over" on a tax-deferred basis into an
IRA. The sale of a Contract for use with an IRA may be subject to special
disclosure requirements of the Internal Revenue Service. Purchasers of a
Contract for use with IRAs will be provided with supplemental information
required by the Internal Revenue Service or other appropriate agency. Such
purchasers will have the right to revoke their purchase within 7 days of the
earlier of the establishment of the IRA or their purchase. A Qualified
Contract issued in connection with an IRA will be amended as necessary to
conform to the requirements of the Code. Purchasers should seek competent
advice as to the suitability of the Contract for use with IRAs.
WITHHOLDING
Pension and annuity distributions generally are subject to withholding for the
recipient's federal income tax liability at rates that vary according to the
type of distribution and the recipient's tax status. Recipients, however,
generally are provided the opportunity to elect not have tax withheld from
distributions.
POSSIBLE CHANGES IN TAXATION
In past years, legislation has been proposed that would have adversely
modified the federal taxation of certain annuities. For example, one such
proposal would have changed the tax treatment of nonqualified annuities that
did not have "substantial life contingencies" by taxing income as it is
credited to the annuity. Although as of the date of this prospectus Congress
is not actively considering any legislation regarding the taxation of
annuities, there is always the possibility that the tax treatment of annuities
could change by legislation or other means (such as IRS regulations, revenue
rulings, judicial decisions, etc.). Moreover, it is also possible that any
change could be retroactive (that is, effective prior to the date of the
change).
32
<PAGE>
OTHER TAX CONSEQUENCES
As noted above, the foregoing discussion of the federal income tax
consequences is not exhaustive and special rules are provided with respect to
other tax situations not discussed in this Prospectus. Further, the federal
income tax consequences discussed herein reflect the Company's understanding
of the current law and the law may change. Federal estate and gift tax
consequences of ownership or receipt of distributions under the Contract
depend on the individual circumstances of each Certificate Holder or recipient
of a distribution. A competent tax adviser should be consulted for further
information.
MISCELLANEOUS
VOTING RIGHTS
Each Certificate Holder may direct the Company in the voting of shares at
meetings of shareholders of the appropriate Fund(s). The number of votes to
which each Certificate Holder may give direction will be determined as of the
record date. The number of votes each Certificate Holder is entitled to direct
with respect to a particular Fund during the Accumulation Period is equal to
the portion of the current value of the Certificate Holder's Account Value
attributable to that Fund divided by the net asset value of one share of that
Fund. During the Annuity Period, the number of votes is equal to the Valuation
Reserve for the portion of the Contract attributable to the Certificate
Holder's interest in that Fund, divided by the net asset value of one share of
that Fund. In determining the number of votes, fractional votes will be
recognized. Where the value of the Contract or Valuation Reserve relates to
more than one Fund, the calculation of votes will be performed separately for
each Fund.
Certificate Holders have a fully vested (100%) interest in the benefits
provided under a group Contract. Therefore, Certificate Holders may instruct
the Contract Holder of a group Contract how to direct the Company to cast the
votes for the portion of the value or Valuation Reserve attributable to their
Certificate Holder's Account. Votes attributable to Certificate Holders who do
not direct the Company will be cast by the Company in the same proportion as
votes for which directions have been received by the Company.
Each Certificate Holder will receive a notice of each meeting of shareholders,
together with any proxy solicitation materials, and a statement of the number
of votes attributable to his or her Certificate Holder's Account.
MODIFICATION OF THE CONTRACT
The Company may modify the Contract when it deems an amendment appropriate,
subject to the limitations described below, by notifying Contract Holders in
writing at least 30 days before the effective date of any change to a
Contract. No change will affect the amount or terms of any Annuity which
begins before the change.
The Company may make any change that affects the AICA Guaranteed Account
market value adjustment with at least thirty (30) days' advance written notice
to the Contract Holder and the Certificate Holder. Any such change shall
become effective for any new guaranteed term and will apply to all present and
future Certificate Holders' Accounts.
The Company reserves the right to change the terms of the Estate Conservation
and Systematic Withdrawal Options for future elections and discontinue the
availability of these options at any time.
33
<PAGE>
Any change to any of the following provisions under an existing Contract will
not apply to Certificate Holder's Accounts established under that Contract
before the effective date of the change:
(a) Net Purchase Payment
(b) AICA Guaranteed Account Guaranteed Interest Rate
(c) Net Investment Factor
(d) Certificate Holder's Account Value
(e) Increasing the Deferred Sales Charge
(f) Annuity Unit Value
(g) Annuity Options
(h) Fixed Annuity Interest Rates
(i) Transfers
Modification of items (a), (c) and (e) above specifically require the approval
by the SEC to the extent the proposed charges are not currently authorized by
existing orders issued to us by the SEC.
Any change that affects the Annuity Option and the tables for the Annuity
Options may be made no earlier than twelve (12) months after the Effective
Date, and no earlier than twelve (12) months after the effective date of any
prior change.
Any Certificate Holder's Account established on or after the effective date of
any change will be subject to the change. If the Group Contract Holder does
not agree to any change under this provision, the Company reserves the right
to disallow any new Certificate Holder's Accounts from being established under
this Contract. The Contract may also be changed as deemed necessary by the
Company to comply with federal or state law.
TRANSFER OF OWNERSHIP--ASSIGNMENT
The Company generally will accept assignments or transfers of ownership of
Contracts or Certificate Holder's Accounts with proper notification. The date
of any such transfer will be the date on which the Company receives such
notification. Assignments or transfers of ownership of an Individual
Retirement Annuity are restricted under the Code. Certificate Holders
contemplating a transfer of ownership or assignment should consult a tax
adviser due to the potential for tax liability. See "Tax Status of the
Contract."
CERTIFICATE HOLDER INQUIRIES
Certificate Holders may direct inquiries to their Registered Representatives
or they may contact the Company by writing to the address shown on the cover
page of this Prospectus or by calling 1-800-531-4547.
TELEPHONE TRANSFERS
Certificate Holders are automatically given the right to make transfers among
investment options by telephone, using the Company's "800" number. The Company
has enacted procedures to prevent abuses in account transactions made by
telephone. The procedures include requiring the use of a personal
identification number (PIN) to execute transactions. The Certificate Holder is
responsible for safeguarding his or her PIN, and for keeping account
information confidential. To ensure authenticity, the Company records all
calls on the "800" line. Where two individuals have an interest in a
Certificate Holder's Account as joint Certificate Holders, either may make
telephone transfers. If the Company does not maintain reasonable safeguards,
it would be liable for any losses to the Certificate Holder's Account
resulting from the failure.
34
<PAGE>
LEGAL PROCEEDINGS
The Company knows of no material legal proceedings pending to which the
Company is a party or which would materially affect the Company.
LEGAL MATTERS
The validity of the securities offered by this Prospectus has been passed upon
by Susan E. Bryant, Esq., Counsel to the Company.
35
<PAGE>
TABLE OF CONTENTS -- STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<S> <C>
General Information and History............................................. 2
Variable Annuity Account I.................................................. 2
Offering and Purchase of Contracts.......................................... 3
Performance Data............................................................ 3
General................................................................... 3
Average Annual Total Return Quotations.................................... 4
Annuity Payments............................................................ 4
Dollar-Cost Averaging....................................................... 5
Sales Material.............................................................. 6
Independent Auditors........................................................ 6
Financial Statements of Aetna Insurance Company of America ................. F-1
</TABLE>
36
<PAGE>
APPENDIX
AICA GUARANTEED ACCOUNT
GENERAL
The AICA Guaranteed Account ("Guaranteed Account") is a credited interest
option available during the Accumulation Period under the Contracts described
in this prospectus. The AICA Guaranteed Account is only offered in states
where the offer and sale has been authorized by the appropriate regulatory
authorities. The AICA Guaranteed Account is a funding option under the
Contract which is described in the accompanying AICA Guaranteed Account
prospectus. Certificate Holders should read that prospectus carefully before
investing payments in the AICA Guaranteed Account. This Appendix is intended
as a summary description of the AICA Guaranteed Account and is not intended as
a replacement for the AICA Guaranteed Account prospectus.
INTEREST RATES
The AICA Guaranteed Account is a guaranteed interest option for which the
Company guarantees stipulated rates of interest for stated periods of time on
amounts invested in the AICA Guaranteed Account. A guaranteed rate is credited
for the full term. The interest rate stipulated is an annual effective yield;
that is, it reflects a full year's interest. Interest is credited daily at a
rate that will provide the guaranteed annual effective yield over the period
of one year. The Company has guaranteed that interest rates for investments in
the AICA Guaranteed Account through the Contracts will never be less than an
annual effective rate of 3%.
ALLOCATION TO GUARANTEED TERMS
During the deposit period, amounts may be applied to any of the available
guaranteed terms. Purchase Payments received after the initial payment will be
allocated in the same proportions as the last allocation, if no new allocation
instructions are received with the Purchase Payment. For amounts allocated to
the AICA Guaranteed Account, if the same guaranteed term(s) are not available,
the next shortest will be used. If no shorter guaranteed term is available,
the next longer guaranteed term will be used.
WITHDRAWALS
Except for transfers from the one-year Guaranteed Term taken in connection
with the Dollar Cost Averaging Program, and withdrawals taken in connection
with an Estate Conservation or Systematic Withdrawal distribution option
(where regulatory approval for such waivers has been received) withdrawals or
transfers from a guaranteed term before the guaranteed term matures may be
subject to a market value adjustment ("MVA"). An MVA reflects the change in
the value of the investment due to changes in interest rates since the date of
deposit. When interest rates increase after the date of deposit, the value of
the investment decreases, and the MVA is negative. Conversely, when interest
rates decrease after the date of deposit, the value of the investment
increases, and the MVA is positive. It is possible that a negative MVA could
result in the payment of an amount that is less than the amount initially
allocated to the AICA Guaranteed Account. If a Certificate Holder requests a
partial withdrawal of the Certificate Holder's Account Value without
designating from which investment option it should be taken, a proportionate
share will be withdrawn from the AICA Guaranteed Account. The amount will be
withdrawn from all guaranteed term groups as defined in the prospectus.
MATURITY OF A GUARANTEED TERM
As a guaranteed term matures, assets accumulating under the AICA Guaranteed
Account may be (a) transferred to a new guaranteed term, (b) transferred to
any other available investment option, or (c) withdrawn. Amounts withdrawn may
be subject to a deferred sales charge. If no direction is received
37
<PAGE>
by the Company at its Home Office by the maturity date of a guaranteed term,
the amount from the maturing guaranteed term will be transferred to a similar-
length guaranteed term during the current deposit period. If the same
guaranteed term is no longer available, the next shortest guaranteed term
available in the current deposit period will be used. If no shorter guaranteed
term is available, the next longer guaranteed term will be used.
If the Certificate Holder does not provide instructions concerning the
maturity value of a maturing guaranteed term, the maturity value transfer
provision applies. This provision allows Certificate Holders to transfer
without an MVA to available guaranteed terms of the current deposit period or
to other available investment options, or surrender without an MVA. A deferred
sales charge may be assessed, if applicable, on the surrendered amount. The
provision is available only during the calendar month immediately following a
guaranteed term maturity date and only applies to the first transaction
regardless of the amount involved in the transaction.
MORTALITY AND EXPENSE RISK CHARGES
We make no deductions from the credited interest rate for mortality and
expense risks; these risks are considered in determining the credited interest
rate.
TRANSFERS
Amounts applied to a guaranteed term during a deposit period may not be
transferred to any other funding option or to another guaranteed term during
that deposit period or for 90 days after the close of that deposit period
except for matured term value(s) during the calendar month following the
guaranteed term's maturity date. This does not apply to (1) amounts
transferred on the Maturity Date or under the maturity value transfer
provision; (2) amounts transferred from the Guaranteed Account before the
Maturity Date due to the election of an Annuity Option; (3) amounts
transferred from the one-year Guaranteed Term in connection with the Dollar
Cost Averaging Program; and (4) amounts distributed under the Estate
Conservation or Systematic Withdrawal distribution option. Transfers after the
90-day period are permitted from guaranteed term(s) to other guaranteed
term(s) available during a deposit period or to other available investment
options. Except for transactions described in items (1), (3) and (4) above,
amounts withdrawn or transferred from the Guaranteed Account prior to the
Maturity Date will be subject to a Market Value Adjustment. However, only a
positive aggregate MVA will be applied to transfers made due to annuitization
under one of the lifetime Annuity Options described in item (2) above. These
waivers are subject to regulatory approval and may not be available in all
states. See your representative to determine whether the waiver is approved in
your state.
Transfers of AICA Guaranteed Account values on or within one calendar month of
a term's maturity date are not counted against any free transfer limit.
Full and partial withdrawals and transfers made from the AICA Guaranteed
Account within six months after the date of the Certificate Holder's death
(including transfers due to annuitization) will be the greater of:
(a) the aggregate Market Value Adjustment (i.e., the sum of all Market
Value Adjustments calculated due to a withdrawal of amounts). This
total may be greater or less than the Certificate Holder's Account
Value of those amounts; or
(b) the applicable portion of the Certificate Holder's Account Value
attributable to the AICA Guaranteed Account.
After the six-month period, the surrender or transfer amount will be adjusted
for the aggregate Market Value Adjustment, which may be greater or less than
the Certificate Holder's Account Value of those amounts. However, only a
positive aggregate Market Value Adjustment will be applied to transfers made
due to annuitization under one of the lifetime Annuity Options.
38
<PAGE>
VARIABLE ANNUITY ACCOUNT I
OF
AETNA INSURANCE COMPANY OF AMERICA
STATEMENT OF ADDITIONAL INFORMATION DATED SEPTEMBER 30, 1995
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the current prospectus for the Growth Plus contract funded
by Variable Annuity Account I (the "Separate Account") dated September 30, 1995.
A free prospectus is available upon request from the local Aetna Insurance
Company of America office or by writing to or calling:
Aetna Insurance Company of America
Service Unit
151 Farmington Avenue
Hartford, Connecticut 06156
1-800-531-4547
Read the prospectus before you invest. Terms used in this Statement of
Additional Information shall have the same meaning as in the prospectus.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
General Information and History........... 2
Variable Annuity Account I................ 2
Offering and Purchase of Contracts........ 3
Performance Data.......................... 3
General................................. 3
Average Annual Total Return Quotations.. 4
Annuity Payments.......................... 4
Dollar-Cost Averaging..................... 5
Sales Material............................ 6
Independent Auditors...................... 6
Financial Statements of Aetna Insurance
Company of America....................... F-1
</TABLE>
<PAGE>
GENERAL INFORMATION AND HISTORY
Aetna Insurance Company of America (the "Company" or "AICA") is a stock life
insurance company which was organized in 1990 under the insurance laws of the
State of Connecticut. The Company is a wholly owned subsidiary of Aetna Life
Insurance and Annuity Company ("ALIAC"). ALIAC, in turn, is a wholly owned
subsidiary of Aetna Life and Casualty Company which, with its subsidiaries,
constitutes one of the nation's largest diversified financial services
organizations. The Company's Home Office is located at 151 Farmington Avenue,
Hartford, Connecticut 06156.
ALIAC, a registered broker-dealer under the Securities Exchange Act of 1934,
serves as the principal underwriter for Account I. ALIAC is also a registered
investment adviser under the Investment Advisers Act of 1940, and provides
investment advice to several of the registered management investment companies
offered as variable investment options under the Contracts funded by Account I
(see "Charges and Deductions" below).
Other than the mortality and expense risk charges and administrative expense
charge described in the prospectus, all expenses incurred in the operations of
the Separate Account are borne by the Company. See "Charges and Deductions" in
the prospectus. The Company receives reimbursement for certain administrative
costs from the Funds' investment adviser used as funding options under the
Contract.
The assets of the Separate Account are held by the Company. The Separate Account
has no custodian. However, the Funds in whose shares the assets of the Separate
Account are invested each have custodians, as discussed in their respective
prospectuses.
VARIABLE ANNUITY ACCOUNT I
Variable Annuity Account I (the "Separate Account") is a separate account
established by the Company for the purpose of funding variable annuity contracts
issued by the Company. The Separate Account is registered with the Securities
and Exchange Commission as a unit investment trust under the Investment Company
Act of 1940, as amended. The assets of Account I will be invested exclusively
in shares of the mutual funds described in the Prospectus. Purchase Payments
made under the Contract may be allocated to one or more of the variable
investment options. The Company may make additions to or deletions from
available investment options as permitted by law. The Funds currently available
under the Contract are as follows:
Equity Growth and Income Fund
Utility Fund
Prime Money Fund
U.S. Government Bond Fund
Corporate Bond Fund
International Stock Fund
Growth Stock Fund
Complete descriptions of each of the Funds, including their investment
objectives, policies, risks and fees and expenses, are contained in the
prospectuses and statements of additional information for each of the Funds.
2
<PAGE>
OFFERING AND PURCHASE OF CONTRACTS
As principal underwriter, ALIAC offers the Contracts through life insurance
agents licensed to sell variable annuities who are registered representatives of
ALIAC or of other registered broker-dealers who have sales agreements with
ALIAC. The offering of the Contracts is continuous. A description of the
manner in which Contracts are purchased may be found in the prospectus under the
sections titled "Contract Purchase" and "Certificate Holder's Account Value."
PERFORMANCE DATA
GENERAL
From time to time, the Company may advertise different types of historical
performance for the variable options of the Separate Account available under the
Contracts issued by the Company in connection with Plans described in the
Prospectus. The Company may advertise the "standardized average annual total
returns," calculated in a manner prescribed by the Securities and Exchange
Commission (the "standardized return"), as well as the "non-standardized total
return," both of which are described below.
The standardized and non-standardized total return figures are computed
according to a formula in which a hypothetical initial Purchase Payment of
$1,000 is applied to the variable options under the Contract, and then related
to the ending redeemable values over one, three, five and ten year periods (or
fractional periods thereof). The standardized figures reflect the deduction of
all recurring charges during each period (e.g., mortality and expense risk
charges, maintenance fees, administrative charges, and deferred sales charges).
These charges will be deducted on a pro rata basis in the case of fractional
periods. The maintenance fee is converted to a percentage of assets based on
the estimated average account size under these Contracts.
The non-standardized figures will be calculated in a similar manner, except that
non-standardized figures will not reflect the deduction of any applicable
deferred sales charge (which would decrease the level of performance shown if
reflected in these calculations). The non-standardized figures may also include
a three year period.
The total return quotations are based upon historical earnings and are not
necessarily representative of future performance. Investment results of the
Funds will fluctuate over time, and any presentation of the Funds' total return
quotations for any prior period should not be considered as a representation of
how the variable options will perform in any future period. Additionally, your
Contract Value upon redemption may be more or less than your original cost.
3
<PAGE>
AVERAGE ANNUAL TOTAL RETURN QUOTATIONS - STANDARDIZED AND NON-STANDARDIZED
The table shown below reflects the average annual standardized and non-
standardized quotation figures for the periods ended December 31, 1994 for the
variable options available under the Contract.
<TABLE>
<CAPTION>
FUND
STANDARDIZED NON-STANDARDIZED INCEPTION DATE
--------------------------- ----------------------------------- ---------------
INSTALLMENT PAYMENT CONTRACT
($30 ANNUAL MAINTENANCE FEE) 1 Year 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years
----------------------------- ------- ------- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
* *
Equity Growth and Income Fund (7.61)% N/A N/A (1.64)% N/A N/A N/A 02/10/94
----------------------------------------------------------------------------------------------------------------------
* *
Utility Fund (12.85)% N/A N/A (6.83)% N/A N/A N/A 02/10/94
----------------------------------------------------------------------------------------------------------------------
* *
Prime Money Fund (5.69)% N/A N/A 0.25% N/A N/A N/A 11/15/94
----------------------------------------------------------------------------------------------------------------------
* *
U.S. Government Bond Fund (6.12)% N/A N/A (0.17)% N/A N/A N/A 03/28/94
----------------------------------------------------------------------------------------------------------------------
*
Corporate Bond Fund (15.84)% N/A N/A (9.79)% N/A N/A N/A 03/01/94
----------------------------------------------------------------------------------------------------------------------
</TABLE>
* Although results are not available for the full calendar indicated, the
percentage shown is an average annual return since inception.
ANNUITY PAYMENTS
When Annuity payments are to commence, the value of the Certificate Holder's
Account is determined using Accumulation Unit values as of the tenth Valuation
Period before the first Annuity payment is due. Such value (less any applicable
premium tax) is applied to provide an Annuity in accordance with the Annuity and
investment options elected.
The Annuity option tables found in the Contract show, for each form of Annuity,
the amount of the first Annuity payment for each $1,000 of value applied.
Thereafter, variable Annuity payments fluctuate as the Annuity Unit value(s)
fluctuates with the investment experience of the selected investment option(s).
The first payment and subsequent payments also vary depending on the assumed net
investment rate selected (3.5% or 5% per annum). Selection of a 5% rate causes a
higher first payment, but Annuity payments will increase thereafter only to the
extent that the net investment rate increases by more than 5% on an annual
basis. Annuity payments would decline if the rate failed to increase by 5%. Use
of the 3.5% assumed rate causes a lower first payment, but subsequent payments
would increase more rapidly or decline more slowly as changes occur in the net
investment rate.
When the Annuity Period begins, the Annuitant is credited with a fixed number of
Annuity Units (which does not change thereafter) of the variable options
selected. This number is calculated by dividing (a) the amount of the first
Annuity payment based on a particular investment medium by (b) the then current
Annuity Unit value for that investment medium. As noted, Annuity Unit values
fluctuate from one Valuation Period to the next; such fluctuations reflect
changes in the net investment factor for the appropriate Fund(s) (with a ten
Valuation Period lag which gives the Company time to process Annuity payments)
and a mathematical adjustment which offsets the assumed net investment rate of
3.5% or 5% per annum.
4
<PAGE>
The operation of all these factors can be illustrated by the following
hypothetical example. These procedures will be performed separately for
investment options selected during the Annuity Period.
EXAMPLE:
Assume that, at the date Annuity payments are to commence, there are 3,000
Accumulation Units credited under a particular Certificate Holder's Account and
that the value of an Accumulation Unit for the tenth Valuation Period prior to
retirement was $13.650000. This produces a total value of $40,950.
Assume also that no premium tax is payable and that the Annuity table in the
Contract provides, for the option elected, a first monthly variable Annuity
payment of $6.68 per $1000 of value applied; the Annuitant's first monthly
payment would thus be 40.950 multiplied by $6.68, or $273.55.
Assume then that the value of an Annuity Unit for the Valuation Period in which
the first payment was due was $13.400000. When this value is divided into the
first monthly payment, the number of Annuity Units is determined to be 20.414.
The value of this number of Annuity Units will be paid in each subsequent month.
If the net investment factor with respect to the appropriate Fund is 1.0015000
as of the tenth Valuation Period preceding the due date of the second monthly
payment, multiplying this factor by .9999058* (to neutralize the assumed net
investment rate of 3.5% per annum built into the number of Annuity Units
determined above) produces a result of 1.0014057. This is then multiplied by the
Annuity Unit value for the prior Valuation Period (assume such value to be
$13.504376) to produce an Annuity Unit value of $13.523359 for the Valuation
Period in which the second payment is due.
The second monthly payment is then determined by multiplying the number of
Annuity Units by the current Annuity Unit value, or 20.414 times $13.523359,
which produces a payment of $276.07.
*If an assumed net investment rate of 5% is elected, the appropriate factor to
neutralize such assumed rate would be .9998663.
DOLLAR-COST AVERAGING
The term "dollar-cost averaging" describes a system of investing a uniform sum
of money at regular intervals over an extended period of time. It is based on
the economic fact that buying a variably priced item with a constant sum of
money at fixed intervals results in acquiring more of the item when prices are
low and less of it when prices are high. In order to maximize the effectiveness
of dollar-cost averaging, it is important that investors consider their
financial ability to continue purchasing the securities through periods of high
and low price levels. Investors should also note that no system can protect
against reduced values in a declining market.
5
<PAGE>
SALES MATERIAL
The Company or ALIAC may include hypothetical illustrations in their sales
literature that explain the mathematical principles of dollar cost averaging,
compounded interest, tax deferred accumulation, and the mechanics of variable
annuity contracts. The Company or ALIAC may also discuss the difference between
variable annuity contracts and other types of savings or investment products,
including, but not limited to, personal savings accounts and Certificates of
Deposit (CD).
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP, CityPlace II, Hartford, Connecticut 06103-4103, are the
independent auditors for the Separate Account and for the Company. The services
provided to the Separate Account include primarily the examination of the
Separate Account's financial statements and the review of filings made with the
SEC.
6
<PAGE>
FINANCIAL STATEMENTS
AETNA INSURANCE COMPANY OF AMERICA
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report.............................................. 2
Financial Statements:
Statements of Income for the Years Ended December 31, 1994, 1993 and 1992. 3
Balance Sheets as of December 31, 1994 and 1993........................... 4
Statements of Changes in Shareholder's Equity for the Years Ended December
31, 1994, 1993 and 1992.................................................. 5
Statements of Cash Flows for the Years Ended December 31, 1994, 1993 and
1992..................................................................... 6
Notes to Financial Statements December 31, 1994, 1993 and 1992............ 7
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholder and Board of Directors
Aetna Insurance Company of America:
We have audited the accompanying balance sheets of Aetna Insurance Company of
America as of December 31, 1994 and 1993, and the related statements of income,
changes in shareholder's equity, and cash flows for each of the years in the
three-year period ended December 31, 1994. 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 Aetna Insurance Company of
America at December 31, 1994 and 1993, and the results of its operations and
its cash flows for each of the years in the three-year period ended December
31, 1994, in conformity with generally accepted accounting principles.
As discussed in Note 1 to the financial statements, in 1993 the Company changed
its methods of accounting for certain investments in debt and equity
securities.
KPMG Peat Marwick LLP
Hartford, Connecticut
March 17, 1995
F-2
<PAGE>
AETNA INSURANCE COMPANY OF AMERICA
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE INSURANCE AND ANNUITY COMPANY)
STATEMENTS OF INCOME
(THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Revenue:
Net investment income............................. $ 619.3 $ 560.0 $ 645.0
-------- -------- --------
Total revenue................................... 619.3 560.0 645.0
-------- -------- --------
Expenses:
Operating expenses................................ 83.0 79.5 135.6
-------- -------- --------
Total expenses.................................. 83.0 79.5 135.6
-------- -------- --------
Income before federal income taxes.................. 536.3 480.5 509.4
Federal income taxes.............................. 187.7 168.2 173.2
-------- -------- --------
Net income.......................................... $ 348.6 $ 312.3 $ 336.2
======== ======== ========
</TABLE>
See Notes to Financial Statements.
F-3
<PAGE>
AETNA INSURANCE COMPANY OF AMERICA
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE INSURANCE AND ANNUITY COMPANY)
BALANCE SHEETS
(THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1993
--------- ---------
<S> <C> <C>
ASSETS
------
Investments:
Debt securities, available for sale: (amortized cost
$7,043.9 and $7,132.0) $ 6,906.5 $ 7,316.7
--------- ---------
Total investments..................................... 6,906.5 7,316.7
Cash and cash equivalents................................. 4,732.7 4,512.9
Accrued investment income................................. 91.5 91.5
Deferred tax asset........................................ 0.4 --
Other assets.............................................. 5.1 0.2
--------- ---------
Total assets.......................................... $11,736.2 $11,921.3
========= =========
LIABILITIES AND SHAREHOLDER'S EQUITY
------------------------------------
Liabilities:
Due to parent and affiliates............................. 10.5 89.7
Other liabilities........................................ 21.0 14.9
Federal income taxes payable.............................
Current................................................... 29.4 167.9
Deferred.................................................. -- 64.6
--------- ---------
Total liabilities..................................... 60.9 337.1
--------- ---------
Shareholder's equity:
Common capital stock, par value $2,000 (1,275 shares
authorized, issued and outstanding)..................... 2,550.0 2,550.0
Paid-in capital.......................................... 7,550.0 7,550.0
Net unrealized capital gains (losses).................... (137.4) 120.1
Retained earnings........................................ 1,712.7 1,364.1
--------- ---------
Total shareholder's equity............................ 11,675.3 11,584.2
--------- ---------
Total liabilities and shareholder's equity............ $11,736.2 $11,921.3
========= =========
</TABLE>
See Notes to Financial Statements.
F-4
<PAGE>
AETNA INSURANCE COMPANY OF AMERICA
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE INSURANCE AND ANNUITY COMPANY)
STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
(THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Shareholder's equity, beginning of year....... $11,584.2 $11,151.8 $10,815.6
Net change in unrealized capital gains (loss-
es) ......................................... (257.5) 120.1 0.0
Net income.................................... 348.6 312.3 336.2
--------- --------- ---------
Shareholder's equity, end of year............. $11,675.3 $11,584.2 $11,151.8
========= ========= =========
</TABLE>
See Notes to Financial Statements.
F-5
<PAGE>
AETNA INSURANCE COMPANY OF AMERICA
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE INSURANCE AND ANNUITY COMPANY)
STATEMENTS OF CASH FLOWS
(THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income..................................... $ 348.6 $ 312.3 $ 336.2
Decrease in accrued investment income.......... -- 46.3 51.4
Increase (decrease) in amounts due to/from par-
ent and affiliates............................ (79.2) 184.9 (44.9)
Decrease (increase) in other assets and liabil-
ities......................................... 1.2 (76.0) 71.1
Increase (decrease) in federal income taxes
payable....................................... (138.9) 50.2 (2.8)
Net amortization of premium on debt securities. 88.1 78.4 38.3
-------- -------- --------
Net cash provided by operating activities.... 219.8 596.1 449.3
-------- -------- --------
Cash Flows from Investing Activities:
Proceeds from maturities and repayments of debt
securities.................................... -- 2,290.0 1,485.0
Cost of investments purchased.................. -- (2,452.8) (1,532.4)
-------- -------- --------
Net cash used for investing activities....... -- (162.8) (47.4)
-------- -------- --------
Net increase in cash and cash equivalents........ 219.8 433.3 401.9
Cash and cash equivalents, beginning of year..... 4,512.9 4,079.6 3,677.7
-------- -------- --------
Cash and cash equivalents, end of year........... $4,732.7 $4,512.9 $4,079.6
======== ======== ========
Supplemental cash flow information:
Income taxes paid, net......................... $ 326.6 $ 118.0 $ 176.0
======== ======== ========
</TABLE>
See Notes to Financial Statements.
F-6
<PAGE>
AETNA INSURANCE COMPANY OF AMERICA
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE INSURANCE AND ANNUITY COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994, 1993 AND 1992
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
---------------------
Aetna Insurance Company of America (the "Company") is a stock life insurance
company organized in 1990 under the insurance laws of Connecticut. The Company
is a wholly owned subsidiary of Aetna Life Insurance and Annuity Company
("ALIAC"). ALIAC is a wholly owned subsidiary of Aetna Life and Casualty
Company ("Aetna"). The Company is expected to begin marketing and servicing
individual and group annuity contracts in 1995. These financial statements
have been prepared in conformity with generally accepted accounting
principles.
Accounting changes
------------------
Accounting for Certain Investments in Debt and Equity Securities
On December 31, 1993, the Company adopted Financial Accounting Standard
("FAS") No. 115, Accounting for Certain Investments in Debt and Equity
Securities, which requires the classification of debt securities into three
categories: "held to maturity", which are carried at amortized cost;
"available for sale", which are carried at fair value with changes in fair
value recognized as a component of shareholder's equity; and "trading", which
are carried at fair value with immediate recognition in income of changes in
fair value.
Initial adoption of this standard in 1993 resulted in a net increase of $120.1
thousand, net of taxes of $64.6 thousand, to net unrealized gains in
shareholder's equity.
Cash and Cash Equivalents
-------------------------
Cash and cash equivalents include cash on hand, money market instruments and
other debt issues with a maturity of ninety days or less when purchased.
Investments
-----------
At December 31, 1993 and 1994, all of the Company's debt securities are
classified as available for sale and carried at fair value. These securities
are written down (as realized losses) for other than temporary decline in
value. Unrealized gains and losses are reflected in shareholder's equity. Fair
values for debt securities are based on quoted market prices or dealer
quotations. Purchases and sales of debt securities are recorded on the trade
date.
Federal Income Taxes
--------------------
The Company is included in the consolidated federal income tax return of
Aetna. The Company is taxed at regular corporate rates after adjusting income
reported for financial statement purposes for certain items. Deferred income
tax benefits result from changes during the year in cumulative temporary
differences between the tax basis and book basis of assets and liabilities.
F-7
<PAGE>
AETNA INSURANCE COMPANY OF AMERICA
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE INSURANCE AND ANNUITY COMPANY)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
2. INVESTMENTS
Investments in debt securities available for sale were as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- --------
(Thousands)
<S> <C> <C> <C> <C>
1994
U.S. Treasury securities............ $7,043.9 4.2 141.6 $6,906.5
======== ===== ===== ========
1993
U.S. Treasury securities............ $7,132.0 184.7 -- $7,316.7
======== ===== ===== ========
</TABLE>
The amortized cost and fair value of debt securities for the year ended
December 31, 1994 are shown below by contractual maturity. Actual maturities
may differ from contractual maturities because securities may be restructured,
called or prepaid.
<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
--------- --------
(Thousands)
<S> <C> <C>
Due to mature:
One year or less.............................. $3,016.0 $3,019.7
After one year through five years............. 4,027.9 3,886.8
-------- --------
Total....................................... $7,043.9 $6,906.5
======== ========
</TABLE>
At December 31, 1994 and 1993, debt securities with an amortized cost of $3.9
million were on deposit as required by various state regulatory agencies.
3. CAPITAL GAINS AND LOSSES ON INVESTMENTS
Realized capital gains or losses are the difference between proceeds received
from investments sold or prepaid and amortized cost. For the three years ended
December 31, 1994, there were no realized capital gains or losses.
Unrealized gains and losses on investments carried at fair value, net of
related taxes, reflected in shareholder's equity, were as follows for December
31,
<TABLE>
<CAPTION>
1994 1993
------- ------
(Thousands)
<S> <C> <C>
Debt securities
Gross unrealized gains................................ $ 4.2 $184.7
Gross unrealized losses............................... (141.6) --
------- ------
(137.4) 184.7
Deferred federal income taxes (See Note 6).............. -- 64.6
------- ------
Net unrealized capital gains (losses)................. $(137.4) $120.1
======= ======
</TABLE>
F-8
<PAGE>
AETNA INSURANCE COMPANY OF AMERICA
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE INSURANCE AND ANNUITY COMPANY)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
4. NET INVESTMENT INCOME
Sources of net investment income were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
(Thousands)
<S> <C> <C> <C>
Debt securities.................................. $414.1 $425.7 $492.7
Cash equivalents................................. 205.2 135.3 152.3
------ ------ ------
Gross investment income.......................... 619.3 561.0 645.0
Less investment expenses......................... -- 1.0 --
------ ------ ------
Net investment income............................ $619.3 $560.0 $645.0
====== ====== ======
</TABLE>
5. DIVIDEND RESTRICTIONS AND SHAREHOLDER'S EQUITY
The amount of dividends that may be paid to the shareholder in 1995 without
prior approval by the Insurance Commissioner of the State of Connecticut is
$922.8 thousand.
The Insurance Department of the State of Connecticut (the "Department")
recognizes as net income and shareholder's equity those amounts determined in
conformity with statutory accounting practices prescribed or permitted by the
Department, which differ in certain respects from generally accepted accounting
principles ("GAAP"). Statutory net income was $348.1 thousand, $312.3 thousand
and $336.2 thousand for the years ended December 31, 1994, 1993 and 1992,
respectively. Statutory shareholder's equity was $11.8 million and $11.4
million as of December 31, 1994 and 1993, respectively.
As of December 31, 1994, the Company does not utilize any statutory accounting
practices which are not prescribed by insurance regulators that, individually
or in the aggregate, materially affect statutory shareholder's equity.
6. FEDERAL INCOME TAXES
The Company is included in the consolidated federal income tax return of Aetna.
Aetna allocates to each member an amount approximating the tax it would have
incurred were it not a member of the consolidated group, and credits the member
for the use of its tax saving attributes in the consolidated return.
In August 1993, the Omnibus Budget Reconciliation Act of 1993 (OBRA) was
enacted which resulted in an increase in the federal corporate tax rate from
34% to 35% retroactive to January 1, 1993. The enactment of OBRA resulted in an
increase in current taxes of $4.8 thousand which is included in the 1993
current tax expense.
F-9
<PAGE>
AETNA INSURANCE COMPANY OF AMERICA
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE INSURANCE AND ANNUITY COMPANY)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Components of income tax expense (benefits) were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
(thousands)
<S> <C> <C> <C>
Current tax expense:
Income from operations............................... $188.1 $168.2 $173.2
Deferred tax benefit:
Income from operations............................... (.4) -- --
------ ------ ------
Total................................................ $187.7 $168.2 $173.2
====== ====== ======
</TABLE>
Income tax expense was equal to the federal income tax rate applied to income
before federal income taxes as shown below:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
(thousands)
<S> <C> <C> <C>
Income before federal income taxes................... $536.3 $480.5 $509.4
Tax rate............................................. 35% 35% 34%
------ ------ ------
Income tax expense................................. $187.7 $168.2 $173.2
====== ====== ======
</TABLE>
The tax effects of temporary differences that give rise to deferred tax assets
and deferred tax liabilities under FAS No. 109 at December 31, 1994 and 1993
are presented below:
<TABLE>
<CAPTION>
1994 1993
----- -----
(thousands)
<S> <C> <C>
Deferred tax assets:
Net unrealized capital losses.............................. $48.1 $ --
Other, net................................................. .4 --
----- -----
Total gross assets........................................... 48.5 --
Less valuation allowance..................................... 48.1 --
----- -----
Assets net of valuation.................................... .4 --
----- -----
Deferred tax liabilities:
Net unrealized capital gains............................... -- 64.6
----- -----
Total gross liabilities...................................... -- 64.6
----- -----
Net deferred tax liability (asset)......................... $ (.4) $64.6
===== =====
</TABLE>
Net unrealized capital gains and losses are presented in shareholder's equity
net of deferred taxes. At December 31, 1994, $137.4 thousand of net unrealized
capital losses were reflected in shareholder's equity without deferred tax
benefits. For federal income tax purposes, capital losses are deductible only
against capital gains in the year of sale or during the carryback and
carryforward periods (three and five years, respectively). Due to the expected
full utilization of capital gains in the carryback period and the uncertainty
of future capital gains, a valuation
F-10
<PAGE>
AETNA INSURANCE COMPANY OF AMERICA
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE INSURANCE AND ANNUITY COMPANY)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
allowance of $48.1 thousand related to the net unrealized capital losses has
been reflected in shareholder's equity. Any reversals of the valuation
allowance are contingent upon the recognition of future capital gains in
Aetna's federal income tax return or a change in circumstances which causes the
recognition of the benefits to become more likely than not. Non-recognition of
the deferred tax benefits on net unrealized losses described above had no
impact on net income for 1994, but has the potential to adversely affect future
results if such losses are realized.
The Internal Revenue Service ("Service") has completed examinations of the
consolidated federal income tax returns of Aetna through 1986. Discussions are
being held with the Service with respect to proposed adjustments. However,
management believes there are adequate defenses against, or sufficient reserves
to provide for, such adjustments. The Service has commenced its examinations
for the years 1987 through 1990.
7. BENEFIT PLANS
The Company has no employees, when it does, the employees of the Company will
be eligible for the same benefit plans as the employees of ALIAC. The following
is a discussion of benefit plans as they apply to ALIAC. Charges were allocated
to the Company based on appropriate measures. There were no charges to
operations during 1994 and 1993 for the benefit plans described below. Charges
to operations during 1992 were $2.8 thousand.
Employee Pension Plans -- ALIAC, in conjunction with Aetna, has non-
contributory defined benefit pension plans covering substantially all
employees. The plans provide pension benefits based on years of service and
average annual compensation (measured over sixty consecutive months of highest
earnings in a 120 month period). Contributions are determined using the Entry
Age Normal Cost Method and, for qualified plans subject to ERISA requirements,
are limited to the amounts that are currently deductible for tax reporting
purposes. The accumulated plan assets exceed accumulated plan benefits.
Agent Pension Plans -- ALIAC, in conjunction with Aetna, has a non-qualified
pension plan covering certain agents. The plan provides pension benefits based
on annual commission earnings. The accumulated plan assets exceed accumulated
plan benefits. There has been no funding to the plan for the years 1992 through
1994.
Employee Postretirement Benefits -- In addition to providing pension benefits,
Aetna also provides certain postretirement health care and life insurance
benefits, subject to certain caps, for retired employees. Medical and dental
benefits are offered to all full-time employees retiring at age 50 with at
least 15 years of service or at age 65 with at least 10 years of service.
Retirees are required to contribute to the plans based on their years of
service with Aetna.
Aetna implemented FAS No. 106, Employers' Accounting for Postretirement
Benefits Other Than Pensions on the immediate recognition basis in 1992. The
cumulative effect charge for all Aetna employees was reflected in Aetna's 1992
Statement of Income. Prior to the adoption of FAS No. 106, cost of
postretirement benefits was charged to operations as payments were made.
Agent Postretirement Benefits -- ALIAC, in conjunction with Aetna, also
provides certain postemployment health care and life insurance benefits for
certain agents.
F-11
<PAGE>
AETNA INSURANCE COMPANY OF AMERICA
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE INSURANCE AND ANNUITY COMPANY)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Incentive Savings Plan -- Substantially all employees are eligible to
participate in a savings plan under which designated contributions, which may
be invested in common stock of Aetna or certain other investments, are matched,
up to 5% of compensation, by Aetna.
Stock Plans -- Aetna has a stock incentive plan that provides for stock options
and deferred contingent common stock or cash awards to certain key employees.
Aetna also has a stock option plan under which executive and middle management
employees of Aetna may be granted options to purchase common stock of Aetna at
the market price on the date of grant or, in connection with certain business
combinations, may be granted options to purchase common stock on different
terms.
8. RELATED PARTY TRANSACTIONS
Substantially all of the administrative and support functions of the Company
are provided by Aetna and its affiliates. The financial statements reflect
allocated charges for these services based upon measures appropriate for the
type and nature of service provided. Total charges allocated to the Company,
including rent, salaries and other administrative expenses, were $1.0 thousand
in 1993. There were no charges allocated to the Company for these services in
1994 and 1992.
9. ESTIMATED FAIR VALUE
The carrying values and estimated fair values of the Company's financial
instruments at December 31, 1994 and 1993 were as follows:
<TABLE>
<CAPTION>
1994 1993
----------------- -----------------
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
-------- -------- -------- --------
(Thousands)
<S> <C> <C> <C> <C>
Assets:
Cash and cash equivalents................ $4,732.7 $4,732.7 $4,512.9 $4,512.9
Debt securities.......................... 6,906.5 6,906.5 7,316.7 7,316.7
</TABLE>
Fair value estimates are made at a specific point in time, based on available
market information and judgments about the financial instrument, such as
estimates of timing and amount of expected future cash flows. Such estimates do
not reflect any premium or discount that could result from offering for sale at
one time the Company's entire holdings of a particular financial instrument,
nor do they consider the tax impact of the realization of unrealized gains or
losses. In evaluating the Company's management of interest rate and liquidity
risk, the fair values of all assets and liabilities should be taken into
consideration, not only those above.
F-12
<PAGE>
VARIABLE ANNUITY ACCOUNT I
PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits
------- ---------------------------------
(a) Financial Statements:
(1) Included in Part A:
Not Applicable
(2) Included in Part B:
Financial Statements of Depositor:
- Independent Auditors' Report
- Statements of Income for the years ended December 31, 1994,
1993 and 1992
- Balance Sheets for the year ended December 31, 1994 and 1993
- Statements of Changes in Shareholder's Equity for the years
ended December 31, 1994, 1993 and 1992
- Statements of Cash Flows for the years ended December 31, 1994,
1993 and 1992
- Notes to Financial Statements
(b) Exhibits
(1) Resolution of the Board of Directors of Aetna Insurance
Company of America establishing Variable Annuity Account I/1/
(2) Not applicable
(3.1) Form of Selling Agreement/1/
(3.2) Form of Principal Underwriting Agreement/1/
(4) Form of Variable Annuity Contracts including endorsements:
(G-CDA-GP2, I-CDA-GP2, C-GP2QEND, GP2QEND, and GP2NHEND)/2/
(5) Form of Application for Aetna Growth Plus Group Variable,
Fixed or Combination Annuity Contract (Nonparticipating)/3/
(6) Certification of Incorporation and By-Laws of Depositor/1/
(7) Form of Reinsurance Agreement/3/
(8) Form of Fund Participation Agreement between Insurance
Management Series, Federated Advisors and Aetna Insurance
Company of America/3/
(9) Consent and Opinion of Counsel
(10) Consent of Independent Auditors
(11) Not applicable
(12) Not applicable
(13) Computation of Performance Data/4/
(14) Not applicable
(15.1) Powers of Attorney/5/
(15.2) Authorization for Signatures/1/
<PAGE>
1. Incorporated by reference to Registration Statement on Form N-4
(File Nos. 33-59749) electronically filed by Variable Annuity
Account I of Aetna Insurance Company of America on, May 31, 1995.
2. Incorporated by reference to Registration Statement on Form N-4
(File No. 33-80750) filed by Variable Annuity Account I of Aetna
Insurance Company of America on June 23, 1994.
3. Incorporated by reference to Post-Effective Amendment No. 3 to
Registration Statement on Form N-4 (File No. 33-80750)
electronically filed on August 15, 1995.
4. Incorporated by reference to Post-Effective Amendment No. 2 to
Registration Statement on Form N-4 (File No. 33-80750) filed by
Variable Annuity Account I of Aetna Insurance Company of America on
April 27, 1995.
5. Power of Attorney for Shaun P Mathews is incorporated by reference
to Post-Effective Amendment to Registration Statement No. 3 on Form
N-4 (File No. 33-80750) electronically filed by Variable Annuity
Account I of Aetna Insurance Company of America on August 15, 1995.
Powers of Attorney for James C. Hamilton, Daniel P. Kearney and
Scott A. Striegel are incorporated by reference to Post-Effective
Amendment No. 2 to Registration Statement on Form S-1 (File No. 33-
81010) electronically filed by Variable Annuity Account I of Aetna
Insurance Company of America on July 7, 1995.
Item 25. Directors and Officers of the Depositor
---------------------------------------------------
Name and Principal
Business Address* Positions and Offices with Depositor
------------------ ---------------------------------------------------
[S] [C]
Daniel P. Kearney Director and President
James C. Hamilton Director, Vice President, Treasurer & Alternate
Qualified Actuary
Shaun P. Mathews Director and Senior Vice President
Scott A. Striegel Director and Senior Vice President
Maria F. McKeon Corporate Secretary and Counsel
*The principal business address of all directors and officers listed is 151
Farmington Avenue, Hartford, Connecticut 06156.
Item 26. Persons Controlled by or Under Common Control with the Depositor or
-------- -------------------------------------------------------------------
Registrant
----------
Incorporated herein by reference to Exhibit 24(c) Registration
Statement on Form N-4 (File No. 33-88720) filed by Variable Annuity Account C of
Aetna Life Insurance and Annuity Company on January 20, 1995.
<PAGE>
Item 27. Number of Contract Owners
-------- -------------------------
As of June 30, 1995, there were five contract owners of variable
annuity contracts funded through Variable Annuity Account I.
Item 28. Indemnification
-------- ---------------
Reference is hereby made to Section 33-320a of the Connecticut General
Statutes ("C.G.S.") regarding indemnification of directors and officers of
Connecticut corporations. The statute provides in general that Connecticut
corporations shall indemnify their officers, directors, employees, agents, and
certain other defined individuals against judgments, fines, penalties, amounts
paid in settlement and reasonable expenses actually incurred in connection with
proceedings against the corporation. The corporation's obligation to provide
such indemnification does not apply unless (1) the individual is successful on
the merits in the defense of any such proceeding; or (2) a determination is made
(by a majority of the board of directors not a party to the proceeding by
written consent; by independent legal counsel selected by a majority of the
directors not involved in the proceeding; or by a majority of the shareholders
not involved in the proceeding) that the individual acted in good faith and in
the best interests of the corporation; or (3) the court, upon application by the
individual, determines in view of all the circumstances that such person is
reasonably entitled to be indemnified.
C.G.S. Section 33-320a provides an exclusive remedy: a Connecticut
corporation cannot indemnify a director or officer to an extent either greater
or less than that authorized by the statute, e.g., pursuant to its certificate
of incorporation, bylaws, or any separate contractual arrangement. However, the
statute does specifically authorize a corporation to procure indemnification
insurance to provide greater indemnification rights. The premiums for such
insurance may be shared with the insured individuals on an agreed basis.
Consistent with the statute, Aetna Life and Casualty Company has
procured insurance from Lloyd's of London and several major United States excess
insurers for its directors and officers and the directors and officers of its
subsidiaries, including the Depositor, which supplements the indemnification
rights provided by C.G.S. Section 33-320a to the extent such coverage does not
violate public policy.
Item 29. Principal Underwriters
-------- ----------------------
(a) In addition to serving as the principal underwriter for the
Registrant, Aetna Life Insurance and Annuity Company ("ALIAC")
also acts as the principal underwriter for Aetna Variable Fund,
Aetna Income Shares, and Aetna GET Fund. ALIAC is also the
depositor of Variable Life Account B and Variable Annuity Accounts
B, C and G (separate accounts of ALIAC registered as unit
investment trusts). Additionally, ALIAC is the investment adviser
for Aetna Variable Fund, Aetna Income Shares, Aetna Variable
Encore Fund, Aetna Investment Advisers Fund, Inc., Aetna GET Fund,
Aetna Series Fund, Inc., and Aetna Generation Portfolios, Inc.
<PAGE>
(b) Directors and Officers of the Underwriter
Name and Principal
Business Address* Positions and Offices with Underwriter
--------------------------- ---------------------------------------------------
Daniel P. Kearney Director and President
Gary G. Benanav Director
Christopher J. Burns Director and Senior Vice President, Life
Laura R. Estes Director and Senior Vice President, ALIAC Pensions
Shaun P. Mathews Director and Senior Vice President, Strategic
Markets & Products
Scott A. Striegel Director and Senior Vice President, Annuity
James C. Hamilton Director, Vice President and Treasurer
Dominick J. Agostino Director, Senior Vice President and Chief
Financial Officer
David E. Bushong Acting Chief Financial Officer
John Y. Kim Director and Senior Vice President, ALIAC
Investments
Robert E. Broatch Senior Vice President and Corporate Controller
Zoe Baird Senior Vice President and General Counsel
Fred J. Franklin Vice President and Chief Compliance Officer
Susan E. Schechter Corporate Secretary and Counsel
* The principal business address of all directors and officers listed
is 151 Farmington Avenue, Hartford, Connecticut 06156.
(c) Not applicable.
<PAGE>
Item 30. Location of Accounts and Records
-------- --------------------------------
All records concerning contract owners of Variable Annuity Account I
are located at the home office of the Registrant as follows:
Aetna Insurance Company of America
151 Farmington Avenue
Hartford, Connecticut 06156
Item 31. Management Services
-------- -------------------
Not applicable
Item 32. Undertakings
-------- ------------
Registrant hereby undertakes:
(a) to file a post-effective amendment to this registration
statement on Form N-4 as frequently as is necessary to ensure that
the audited financial statements in the registration statement are
never more than sixteen months old for as long as payments under
the variable annuity contracts may be accepted;
(b) to include as part of any application to purchase a contract
offered by a prospectus which is part of this registration
statement on Form N-4, a space that an applicant can check to
request a Statement of Additional Information; and
(c) to deliver any Statement of Additional Information and any
financial statements required to be made available under this
Form N-4 promptly upon written or oral request.
(d) Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, as amended and the Investment
Company Act of 1940, the Registrant, Variable Annuity Account I of Aetna
Insurance Company of America, certifies that it meets the requirements of
Securities Act Rule 485(b) for effectiveness of this Post-Effective Amendment
No. 4 to its Registration Statement on Form N-4 (File No. 33-80750) and has duly
caused this Post-Effective Amendment No. 4 to Registration Statement on Form N-4
(File No. 33-80750) to be signed on its behalf in the City of Hartford, and
State of Connecticut, on the 18th day of September, 1995.
VARIABLE ANNUITY ACCOUNT I OF AETNA
INSURANCE COMPANY OF AMERICA
(Registrant)
By: AETNA INSURANCE COMPANY OF AMERICA
(Depositor)
By Daniel P. Kearney*
-----------------------------------
Daniel P. Kearney
President
As required by the Securities Act of 1933, as amended, this Post-Effective
Amendment No. 4 to Registration Statement on Form N-4 (File No. 33-80750) has
been signed by the following persons in the capacities and on the dates
indicated.
Signature Title Date
------------------------- --------------------------------------- ---------
Daniel P. Kearney* Director and President )
------------------------- (principal executive officer) )
Daniel P. Kearney )
)
James C. Hamilton* Director, Vice President and Treasurer )
------------------------- (principal accounting and financial )
James C. Hamilton officer ) September
) 18, 1995
Shaun P. Mathews* Director )
------------------------- )
Shaun P. Mathews )
)
Scott A. Striegel* Director )
------------------------- )
Scott A. Striegel )
/s/ Susan E. Bryant
By: ------------------------
Susan E. Bryant
*Attorney-in-Fact
<PAGE>
VARIABLE ANNUITY ACCOUNT I
EXHIBIT INDEX
Exhibit No. Exhibit Page
----------- ------- ----
99-B.1 Resolution of the Board of Directors of *
Aetna Insurance Company of America
establishing Variable Annuity Account I
99-B.3.1 Form of Selling Agreement *
99-B.3.2 Form of Principal Underwriting Agreement *
99-B.4 Form of Variable Annuity Contracts including *
endorsements:
(G-CDA-GP2, I-CDA-GP2-C-GP2QEND, GP2QEND and
GP2NHEND)
99-B.5 Form of Application for Aetna Growth Plus *
Group Variable, Fixed or Combination Annuity
Contract (Nonparticipating)
99-B.6 Certification of Incorporation and By-Laws *
of Depositor
99-B.7 Form of Reinsurance Agreement *
99-B.8 Form of Fund Participation Agreement between *
Insurance Management Series, Federated
Advisors and Aetna Insurance Company of
America
99-B.9 Consent and Opinion of Counsel
---
99-B.10 Consent of Independent Auditors
---
99-B.13 Computation of Performance Data *
99-B.15.1 Powers of Attorney *
99-B.15.2 Authorization for Signatures *
* Incorporated by reference
<PAGE>
EXHIBIT 99.(B)(9)
LOGO AETNA LIFE INSURANCE AND SUSAN E. BRYANT
ANNUITY COMPANY Counsel
151 Farmington Avenue Law & Regulatory Affairs, RE4C
Hartford, CT 06156 (203) 273-7834
Fax: (203) 273-8340
September 18, 1995
Securities and Exchange Commission
450 Fifth Street N.W.
Washington, DC 20549
Re: Aetna Insurance Company of America and its Variable Annuity Account I
Post-Effective Amendment No. 4 to Registration Statement on Form N-4
File No. 33-80750
Prospectus Title: AICA Growth Plus
Dear Sirs:
As Counsel of Aetna Insurance Company of America (the "Company"), I have
represented the Company in connection with AICA Growth Plus, a group and
individual variable annuity contract (the "Contract"), to be funded by the
Company's Variable Annuity Account I and the Post-Effective Amendment No. 4 to
the Registration Statement on Form N-4 under the Securities Act of 1933 and the
Investment Company Act of 1940 relating to the Contract.
In connection with such representation, I have reviewed the Registration
Statement for the Contract, including the prospectus, and relevant proceedings
of the Board of Directors.
Based upon this review, and assuming the securities represented by the Contract
are issued in accordance with the provisions of the prospectus, I am of the
opinion that the securities, when issued, will have been validly issued, and
will constitute a legal and binding obligation of the Company.
I further consent to the use of this opinion as an exhibit to the Registration
Statement and to my being named under the caption "Legal Matters" therein.
Sincerely,
/s/ Susan E. Bryant
Susan E. Bryant
Counsel
Aetna Insurance Company of America
<PAGE>
EXHIBIT 99.(B)(10)
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors of Aetna Insurance Company of America and
Contract Owners of Variable Annuity Account 1:
We consent to the use of our report dated March 17, 1995 included herein
and to the reference to our Firm under the caption "INDEPENDENT AUDITORS"
in the Statement of Additional Information.
Our report dated March 17, 1995 refers to a change in 1993 in the
Company's methods of accounting for certain investrnents in debt and
equity securities.
/s/ KPMG Peat Marwick LLP
-------------------------
KPMG Peat Manvick LLP
Hartford, Connecticut
September 18, 1995
