As filed with the Securities and Exchange Registration No.
Commission on September 15, 1999 Registration No. 811-8582
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
- --------------------------------------------------------------------------------
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
Aetna Insurance Company of America
151 Farmington Avenue, TS31, Hartford, Connecticut 06156
Depositor's Telephone Number, including Area Code: (860) 273-4686
Julie E. Rockmore, Counsel
Aetna Insurance Company of America
151 Farmington Avenue, TS31, Hartford, Connecticut 06156
(Name and Address of Agent for Service)
- --------------------------------------------------------------------------------
Approximate date of Proposed Public Offering: As soon as practicable
after the effectiveness of this Registration Statement.
The Registrant hereby amends this Registration Statement on such dates as may be
necessary to delay its effective date until the Registrant shall file a further
amendment which specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of the Securities
Act of 1933 or until the Registration Statement shall become effective on such
date as the Commission, acting pursuant to said Section 8(a), may determine.
<PAGE>
VARIABLE ANNUITY ACCOUNT I
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
FORM N-4
ITEM NO. PART A (PROSPECTUS) LOCATION - PROSPECTUS
<S> <C> <C>
1 Cover Page.......................... Cover Page
2 Definitions......................... Not Applicable
3 Synopsis............................ Contract Overview; Fee Table
4 Condensed Financial Information..... Condensed Financial Information
5 General Description of Registrant,
Depositor, and Portfolio Companies.. Other Topics - The Company;
Variable Annuity Account I;
Appendix III - Fund
Descriptions
6 Deductions and Expenses............. Fees
7 General Description of Variable
Annuity Contracts................... Contract Overview; Other Topics
8 Annuity Period...................... Income Phase
9 Death Benefit....................... Death Benefit
10 Purchases and Contract Value........ Contract Purchase and
Participation; Your Account
Value
11 Redemptions......................... Right to Cancel
12 Taxes............................... Taxation
13 Legal Proceedings................... Other Topics - Legal Matters and
Proceedings
14 Table of Contents of the Statement of
Additional Information.............. Contents of the Statement of
Additional Information
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FORM N-4 PART B (STATEMENT OF ADDITIONAL LOCATION - STATEMENT OF
ITEM NO. INFORMATION) ADDITIONAL INFORMATION
<S> <C> <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 Offering and Purchase of
Offered............................ Contracts
20 Underwriters....................... Offering and Purchase of
Contracts
21 Calculation of Performance Data.... Performance Data; Average
Annual Total Return Quotations
22 Annuity Payments................... Income Phase 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>
Prospectus - [insert]
The Funds
Aetna Ascent VP
Aetna Balanced VP, Inc.
Aetna Income Shares d/b/a Aetna Bond VP
Aetna Crossroads VP
Aetna Growth VP
Aetna Variable Fund d/b/a Aetna Growth and Income VP
Aetna High Yield VP
Aetna Index Plus Large Cap VP
Aetna Index Plus Mid Cap VP
Aetna Index Plus Small Cap VP
Aetna International VP
Aetna Legacy VP
Aetna Variable Encore Fund d/b/a Aetna Money Market VP
Aetna Real Estate Securities VP
Aetna Small Company VP
Aetna Value Opportunity VP
AIM V.I. Capital Appreciation Fund
AIM V.I. Growth Fund
AIM V.I. Growth and Income Fund
AIM V.I. Value Fund
Calvert Social Balanced Portfolio
Fidelity Variable Insurance Products Fund (VIP) Equity-Income Portfolio
Fidelity Variable Insurance Products Fund (VIP) Growth Portfolio
Fidelity Variable Insurance Products Fund (VIP) Overseas Portfolio
Fidelity Variable Insurance Products Fund II (VIP II) Contrafund Portfolio
Janus Aspen Aggressive Growth Portfolio
Janus Aspen Balanced Portfolio
Janus Aspen Flexible Income Portfolio
Janus Aspen Growth Portfolio
Janus Aspen Worldwide Growth Portfolio
Oppenheimer Global Securities Fund/VA
Oppenheimer Strategic Bond Fund/VA
Portfolio Partners MFS Emerging Equities Portfolio
Portfolio Partners MFS Research Growth Portfolio
Portfolio Partners MFS Value Equity Portfolio
Portfolio Partners Scudder International Growth Portfolio
Portfolio Partners T. Rowe Price Growth Equity Portfolio
The Contracts. The contracts described in this prospectus are group deferred
variable annuity contracts issued by Aetna Insurance Company of America (the
Company). They are intended to be used as funding vehicles for certain types of
retirement plans that qualify for beneficial tax treatment and/or provide
current income reduction under certain sections of the Internal Revenue Code of
1986, as amended (Tax Code).
Why Reading This Prospectus is Important. Before you participate in a contract
through your retirement plan, you should read this prospectus. It provides facts
about the contract and its investment options. Plan sponsors (generally your
employer or a trust) should read this prospectus to help determine if the
contract is appropriate for their plan. Keep this document for future reference.
Table of Contents . . . page 3
Contract Design. The contracts, and the plans they support, are designed to:
>Help you save for retirement while receiving beneficial tax treatment;
>Offer a variety of investment options to help meet long-term financial goals;
>Provide a benefit to a beneficiary in the event of death; and
>Provide future income payments over a lifetime or for a specified period.
Investment Options. The contracts offer variable investment options and a fixed
interest option. When we establish your account(s), the contract holder, or you
if permitted by the plan, instructs us to direct account dollars to any of the
available options. Some investment options may be unavailable through certain
contracts and plans, or in some states.
Variable Investment Options. These options are called subaccounts. The
subaccounts are within Variable Annuity Account I (the separate account), a
separate account of the Company. Each subaccount invests in one of the mutual
funds (funds) listed on this page. Earnings on amounts invested in a subaccount
will vary depending on the performance and fees of its underlying fund. You do
not invest directly in or hold shares of the funds.
The funds in which the subaccounts invest have various risks. For information
about risks of investing in the funds see "Investment Options" in this
prospectus and each fund prospectus. Read this prospectus in conjunction with
the fund prospectuses, and retain the fund prospectuses for future reference.
Fixed Interest Option.
>Fixed Plus Account
Except as specifically mentioned, this prospectus describes only the variable
investment options. However, we describe the Fixed Plus Account in an appendix
to this prospectus.
<PAGE>
Prospectus - _______________, 1999 (continued)
Getting Additional Information. You may obtain the ______________, 1999,
Statement of Additional Information (SAI) by indicating your request on your
enrollment materials or calling the Company at 1-800-525-4225. You may also
obtain an SAI for any of the funds by calling that number. This prospectus, the
SAI and other information about the separate account are posted on the
Securities and Exchange Commission (SEC) web site, http://www.sec.gov and may
also be obtained, free of charge, by contacting the SEC Public Reference Room at
202-942-8090. The SAI table of contents is listed on page 34 of this prospectus.
The SAI is incorporated into this prospectus by reference.
Additional Disclosure Information. Neither the SEC, nor any state securities
commission, has approved or disapproved the securities offered through this
prospectus or passed on the accuracy or adequacy of this prospectus. Any
representation to the contrary is a criminal offense. We do not intend for this
prospectus to be an offer to sell or a solicitation of an offer to buy these
securities in any state that does not permit their sale. We have not authorized
anyone to provide you with information that is different from that contained in
this prospectus.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Contract Overview 4
Who's Who
The Contract and Your Retirement Plan
Contract Rights
Contract Facts
Contract Phases: Accumulation Phase, Income Phase
Questions: Contacting the Company
Sending Requests in Good Order
Fee Table............................................................. 6
Condensed Financial Information.......................................10
Investment Options....................................................10
Transfers.............................................................11
Contract Purchase and Participation...................................12
Contract Ownership and Rights.........................................13
Right to Cancel.......................................................13
Fees..................................................................14
Your Account Value....................................................16
Withdrawals...........................................................18
Systematic Distribution Options.......................................19
Death Benefit.........................................................20
Income Phase..........................................................21
Taxation..............................................................25
Other Topics..........................................................30
</TABLE>
The Company - Variable Annuity Account I - Performance Reporting - Voting Rights
- - Contract Distribution - Contract Modification - Legal Matters and Proceedings
- - Payment Delay or Suspension - Transfer of Ownership; Assignment - Account
Termination - Year 2000 Readiness
<TABLE>
<S> <C>
Contents of the Statement of Additional Information...................34
Appendix I - Fixed Plus Account.......................................35
Appendix II - Employee Appointment of Employee as Agent...............37
Appendix III - Fund Descriptions......................................38
</TABLE>
3
<PAGE>
The Contract and Your
Retirement Plan
Retirement Plan (plan): A plan sponsor has established a retirement plan for
you. This contract is offered as a funding option for that plan. We are not a
party to the plan.
Plan Type: We refer to the retirement plan by the Tax Code section under which
it qualifies. For example: a "403(b) plan" is a plan that qualifies for tax
treatment under Tax Code section 403(b). To learn which Tax Code section applies
to your plan, contact your plan sponsor, your Aetna representative or the
Company.
Contract Rights: Rights under the contract, and who may exercise those rights,
may vary by plan type. Also, while the contract may reserve certain rights for
the contract holder, the contract holder may permit you to exercise those rights
through the plan.
Contract Overview
- -----------------
The following is a summary. Please read each section of this prospectus for
additional information.
Who's Who
You (the participant): The individual who participates in the contract through a
retirement plan.
Plan Sponsor: The sponsor of your retirement plan. Generally, your employer or a
trust.
Contract Holder: The person to whom we issue the contract. Generally, the plan
sponsor.
We (the Company): Aetna Insurance Company of America. We issue the contract.
For greater detail please review "Contract Ownership and Rights" and "Contract
Purchase and Participation."
Contract Facts
Free look/Right to Cancel: Contract holders may cancel the contract no later
than 10 days after they receive the contract. Participants in 403(b) plans or in
some plans under 401(a) may cancel their participation in the contract no later
than 10 days after they receive evidence of participation in the contract. See
"Right to Cancel."
Death Benefit: A beneficiary may receive a benefit in the event of your death
prior to the income phase. Death benefits during the income phase depend on the
payment option selected. See "Death Benefit" and "Income Phase."
Withdrawals: During the accumulation phase, you may, under some plans, withdraw
all or part of your account value. Amounts withdrawn may be subject to
deductions, tax withholding and taxation. See "Withdrawals" and "Taxation."
Systematic Distribution Options: These allow you to receive regular payments
from your account, while retaining the account in the accumulation phase. See
"Systematic Distribution Options."
Fees: Certain fees are deducted from your account value. See "Fee Table" and
"Fees."
Taxation: The Tax Code has certain rules that apply to amounts accumulated and
distributed under the contract. Tax penalties may apply if rules are not
followed. See "Taxation."
4
<PAGE>
Contract Phases
I. The Accumulation Phase (accumulating retirement benefits)
+ +
| Payments to |
| Your Account |
----------------
+ +
Step 1 [arrow down]
-------------------
+ +
| Aetna Insurance Company of America|
-------------------------------------
+ +
a. [arrow down] Step 2 b. [arrow down]
--------------- ------ ---------------
+ + + +
| Fixed | | Variable Annuity |
|Interest| | Account I |
|Option | | |
| | | Variable Investment Options|
+ + + +
The Subaccounts
---------------
+ + + +
| A | B | Etc. |
- - ----
Step 2(b)[arrow down]
---------------------
+ + + +
| Mutual | Mutual | Etc. |
| Fund A | Fund B | |
---------- --------
+ + + +
STEP 1: You or the contract
holder provide Aetna
Insurance
Company of America with your completed
enrollment materials.
According to the plan, we set
up one or more accounts for you.
We may set up account(s) for
employer contributions and/or
for contributions from your
salary.
STEP 2: The contract holder,
or you if permitted by your
plan, directs us to invest your
account dollars in any of the following:
(a) Fixed Interest Option
(b) Variable Investment
Options. (The variable investment
options are the subaccounts of
Variable Annuity Account I. Each
one invests in a specific mutual
fund.)
STEP 2(b), continued: The subaccount(s)
selected purchases shares of its
corresponding fund.
II. The Income Phase
The contract offers several payment options (see "Income Phase.") In general,
you may:
> Receive payments over a lifetime or for a specified period;
> Receive payments monthly, quarterly, semi-annually or annually;
> Select an option that provides a death benefit to beneficiaries; and
> Select fixed payments or payments that vary based on the performance of the
variable investment options you select.
Questions? Contact your local representative or write or call the Service
Office:
Aetna Financial Services
Annuity Services
151 Farmington Avenue
Hartford, CT 06156-1277
1-800-525-4225
Sending forms and written requests in good order
If you are writing to change your beneficiary, request a withdrawal, or for any
other purpose, contact your local representative or the Company to learn what
information is required in order for the request to be in "good order." We can
only act upon written requests that are received in good order.
5
<PAGE>
In This Section:
>Maximum Fees Deducted From Investments in the Subaccounts
>Fund Fees
>Examples of Fee Deductions
See "Fees" for:
>How, When and Why Fees are Deducted
>Reduction, Waiver and/or Elimination of Certain Fees
>Premium and Other Taxes
See "Income Phase" for:
>Fees during the income phase
Fee Table
- ---------
The tables and examples in this section show the fees your account may incur
while accumulating dollars under the contract (the accumulation phase). See
"Income Phase" for fees that may apply after you begin receiving payments under
the contract. The fees shown below do not include premium taxes that may be
applicable.
Fees Deducted From the Subaccounts
(Daily deductions equal to the given percentage on an annual basis)
<TABLE>
<S> <C>
Mortality and Expense Risk Charge...................................... 1.00%(1)
Administrative Expense Charge.......................................... 0.00%(2)
--------
Total Separate Account Expenses........................................ 1.00%
-----
</TABLE>
(1) This is the maximum mortality and expense risk charge during the
accumulation phase. This charge may be reduced for certain plans. The
maximum mortality and expense risk charge increases to 1.25% during the
income phase. See "Fees - Mortality and Expense Risk Charge."
(2) We currently do not impose an administrative expense charge; however, we
reserve the right to charge not more than 0.25% on an annual basis from the
subaccounts. See "Fees - Administrative Expense Charge."
6
<PAGE>
Fees Deducted by the Funds
Using this Information. The following table shows the investment advisory fees
and other expenses charged annually by each fund. Fund fees are one factor that
impacts the value of a fund share. To learn about additional factors, refer to
the fund prospectuses.
How Fees are Deducted. Fund fees are not deducted from account values. Instead,
fees are deducted from the value of the fund shares on a daily basis, which in
turn will affect the value of each subaccount on a daily basis. Except as noted
below, the following figures are a percentage of the average net assets of each
fund, and are based on figures for the year ended December 31, 1998.
<TABLE>
<CAPTION>
Total Fund Net Fund
Annual Annual
Expenses Expenses
Investment Without Total After
Advisory Other Waivers or Waivers and Waivers or
Fees(1) Expenses Reductions Reductions Reductions
------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Aetna Ascent VP(2)(3) 0.60% 0.15% 0.75% 0.00% 0.75%
Aetna Balanced VP, Inc.(3) 0.50% 0.09% 0.59% -- 0.59%
Aetna Bond VP(3) 0.40% 0.10% 0.50% -- 0.50%
Aetna Crossroads VP(2)(3) 0.60% 0.15% 0.75% 0.00% 0.75%
Aetna Growth VP(2)(3) 0.60% 0.15% 0.75% 0.00% 0.75%
Aetna Growth and Income VP(3) 0.50% 0.08% 0.58% -- 0.58%
Aetna High Yield VP(2)(3) 0.65% 0.40% 1.05% 0.25% 0.80%
Aetna Index Plus Large Cap VP(2)(3) 0.35% 0.10% 0.45% 0.00% 0.45%
Aetna Index Plus Mid Cap VP(2)(3) 0.40% 0.51% 0.91% 0.31% 0.60%
Aetna Index Plus Small Cap VP(2)(3) 0.40% 0.61% 1.01% 0.41% 0.60%
Aetna International VP(2)(3) 0.85% 1.22% 2.07% 0.92% 1.15%
Aetna Legacy VP(2)(3) 0.60% 0.16% 0.76% 0.00% 0.76%
Aetna Money Market VP(3) 0.25% 0.09% 0.34% -- 0.34%
Aetna Real Estate Securities VP(2)(3) 0.75% 0.73% 1.48% 0.53% 0.95%
Aetna Small Company VP(2)(3) 0.75% 0.14% 0.89% 0.00% 0.89%
Aetna Value Opportunity VP(2)(3) 0.60% 0.14% 0.74% 0.00% 0.74%
AIM V.I. Capital Appreciation Fund(4) 0.62% 0.05% 0.67% -- 0.67%
AIM V.I. Growth Fund(4) 0.64% 0.08% 0.72% -- 0.72%
AIM V.I. Growth and Income Fund(4) 0.61% 0.04% 0.65% -- 0.65%
AIM V.I. Value Fund(4) 0.61% 0.05% 0.66% -- 0.66%
Calvert Social Balanced Portfolio(5) 0.70% 0.18% 0.88% 0.02% 0.86%
Fidelity VIP Equity-Income Portfolio(6) 0.49% 0.09% 0.58% 0.01% 0.57%
Fidelity VIP Growth Portfolio(6) 0.59% 0.09% 0.68% 0.02% 0.66%
Fidelity VIP Overseas Portfolio(6) 0.74% 0.17% 0.91% 0.02% 0.89%
Fidelity VIP II Contrafund Portfolio(6) 0.59% 0.11% 0.70% 0.04% 0.66%
Janus Aspen Aggressive Growth Portfolio(7) 0.72% 0.03% 0.75% 0.00% 0.75%
Janus Aspen Balanced Portfolio(7) 0.72% 0.02% 0.74% 0.00% 0.74%
Janus Aspen Flexible Income Portfolio(7) 0.65% 0.08% 0.73% 0.00% 0.73%
Janus Aspen Growth Portfolio(7) 0.72% 0.03% 0.75% 0.07% 0.68%
Janus Aspen Worldwide Growth Portfolio(7) 0.67% 0.07% 0.74% 0.02% 0.72%
Oppenheimer Global Securities Fund/VA(4) 0.68% 0.06% 0.74% -- 0.74%
Oppenheimer Strategic Bond Fund/VA(4) 0.74% 0.06% 0.80% -- 0.80%
Portfolio Partners MFS Emerging Equities Portfolio (8) 0.68% 0.13% 0.81% 0.00% 0.83%
Portfolio Partners MFS Research Growth Portfolio (8) 0.70% 0.15% 0.85% -- 0.85%
Portfolio Partners MFS Value Equity Portfolio(8) 0.65% 0.25% 0.90% -- 0.90%
Portfolio Partners Scudder International Growth
Portfolio(8) 0.80% 0.20% 1.00% -- 1.00%
Portfolio Partners T. Rowe Price Growth Equity Portfolio(8) 0.60% 0.15% 0.75% -- 0.75%
</TABLE>
7
<PAGE>
Footnotes to the "Fund Expense Table"
(1) Certain of the fund advisers reimburse the Company for administrative
costs incurred in connection with administering the funds as variable
funding options under the contract. These reimbursements are generally paid
out of the management fees and are not charged to investors. For the AIM
Funds, the reimbursements may be paid out of fund assets in an amount up to
0.25% annually. Any such reimbursements paid from the AIM Funds' assets are
included in the "Other Expenses" column.
(2) The investment adviser is contractually obligated through December 31,
1999 to waive all or a portion of its investment advisory fee and/or its
administrative services fee and/or to reimburse a portion of other expenses
in order to ensure that the portfolio's Total Fund Annual Expenses do not
exceed the percentage reflected under Net Fund Annual Expenses After
Waivers or Reductions.
(3) Prior to May 1, 1998, the portfolio's investment adviser provided
administrative services to the portfolio and assumed the portfolio's
ordinary recurring direct costs under an administrative services agreement.
After that date, the portfolio's investment adviser provided administrative
services but no longer assumed all of the portfolio's ordinary recurring
direct costs under an administrative services agreement. The administrative
fee is 0.075% on the first $5 billion in assets and 0.050% on all assets
over $5 billion. The "Other Expenses" shown are not based on actual figures
for the year ended December 31, 1998, but reflect the fee payable under the
new administrative services agreement and estimates the portfolio's
ordinary recurring direct costs.
(4) Fee waiver/expense reimbursement obligations do not apply to these
portfolios.
(5) The figures above are based on expenses for fiscal year 1998, and have
been restated to reflect the elimination of a performance adjustment. The
restatement includes an addition of 0.01% to the portfolio management fee.
Other Expenses reflect an indirect fee of 0.02% relating to an expense
offset arrangement with the portfolio's custodian. Amount shown under Total
Waivers and Reductions reflect a voluntary reduction of fees paid
indirectly.
(6) A portion of the brokerage commissions that certain funds pay was used
to reduce fund expenses. In addition, certain funds, or the investment
adviser on behalf of certain funds, have entered into arrangements with
their custodian whereby credits realized as a result of uninvested cash
balances were used to reduce custodian expenses. These credits are included
under Total Waivers and Reductions.
(7) All expenses are stated both with and without contractual waivers and
fee reductions by Janus Capital. Fee reductions for the Aggressive Growth,
Balanced, Growth and Worldwide Growth Portfolios reduce the management fee
to the level of the corresponding Janus retail fund. Other waivers, if
applicable, are first applied against the management fee and then against
"Other Expenses." Janus Capital has agreed to continue other waivers and
fee reduction until at least the next annual renewal of the advisory
agreement.
(8) The investment adviser has agreed to reimburse the portfolios for
expenses and/or waive its fees, so that, through at least April 30, 2000,
the aggregate of each portfolio's expenses will not exceed the combined
investment advisory fees and other expenses shown under the Net Fund Annual
Expenses After Waivers or Reductions column above. For the Portfolio
Partners MFS Emerging Equities Portfolio, the Total Fund Annual Expenses
Without Waivers or Reductions for 1998 were less than the percentage
reflected under the Net Fund Annual Expenses After Waivers or Reductions
column. Nevertheless, the investment adviser will waive fees and/or
reimburse expenses if that portfolio's Total Fund Annual Expenses Without
Waivers or Reductions for 1999 exceed the percentage reflected under the
Net Fund Annual Expenses After Waivers or Reductions column.
8
<PAGE>
Hypothetical Example
Account Fees Incurred Over Time. The following hypothetical examples show the
fees paid over time if $1,000 is invested in a subaccount, assuming a 5% annual
return on the investment. For the purpose of these examples, we deducted total
fund annual expenses and a mortality and expense risk charge of 1.00% on an
annual basis. The total fund annual expenses used are those shown in the column
"Total Fund Annual Expenses Without Waivers or Reductions" in the Fund Expense
Table.
> These examples are purely hypothetical.
> They should not be considered a
representation of past or future fees or expected returns.
> Actual fees and/or returns may be more or
less than those shown in these examples.
<TABLE>
<CAPTION>
Whether or not you withdraw your entire
account value or if you select an income
phase payment option at the end of the
periods shown, you would pay the
following fees:
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Aetna Ascent VP $18 $55 $95 $206
Aetna Balanced VP, Inc. $16 $50 $87 $189
Aetna Bond VP $15 $47 $82 $179
Aetna Crossroads VP $18 $55 $95 $206
Aetna Growth VP $18 $55 $95 $206
Aetna Growth and Income VP $16 $50 $86 $188
Aetna High Yield VP $21 $64 $110 $238
Aetna Index Plus Large Cap VP $15 $46 $79 $174
Aetna Index Plus Mid Cap VP $19 $60 $103 $223
Aetna Index Plus Small Cap VP $20 $63 $108 $234
Aetna International VP $31 $95 $161 $338
Aetna Legacy VP $18 $55 $95 $207
Aetna Money Market VP $14 $42 $73 $161
Aetna Real Estate Securities VP $25 $77 $132 $282
Aetna Small Company VP $19 $59 $102 $221
Aetna Value Opportunity VP $18 $55 $94 $205
AIM V.I. Capital Appreciation Fund $17 $53 $91 $198
AIM V.I. Growth Fund $17 $54 $93 $203
AIM V.I. Growth and Income Fund $17 $52 $90 $195
AIM V.I. Value Fund $17 $52 $90 $197
Calvert Social Balanced Portfolio $19 $59 $102 $220
Fidelity VIP Equity-Income Portfolio $16 $50 $86 $188
Fidelity VIP Growth Portfolio $17 $53 $91 $199
Fidelity VIP II Contrafund Portfolio $19 $60 $103 $223
Fidelity VIP Overseas Portfolio $17 $54 $92 $201
Janus Aspen Aggressive Growth Portfolio $18 $55 $95 $206
Janus Aspen Balanced Portfolio $18 $55 $94 $205
Janus Aspen Flexible Income Portfolio $18 $54 $94 $204
Janus Aspen Growth Portfolio $18 $55 $95 $206
Janus Aspen Worldwide Growth Portfolio $18 $55 $94 $205
Oppenheimer Global Securities Fund/VA $18 $55 $94 $205
Oppenheimer Strategic Bond Fund/VA $18 $57 $97 $212
Portfolio Partners MFS Emerging Equities
Portfolio $18 $57 $98 $213
Portfolio Partners MFS Research Growth
Portfolio $19 $58 $100 $217
Portfolio Partners MFS Value Equity Portfolio $19 $60 $103 $222
Portfolio Partners Scudder International
Growth Portfolio $20 $63 $108 $233
Portfolio Partners T. Rowe Price Growth
Equity Portfolio $18 $55 $95 $206
</TABLE>
9
<PAGE>
Condensed Financial Information
- -------------------------------
As of the date of this prospectus, we had not begun selling the contracts and
the subaccounts did not have any assets attributable to the contracts.
Therefore, no condensed financial information is presented herein.
Investment Options
- ------------------
The contract offers variable investment options and a fixed interest option.
When we establish your account(s), the contract holder, or you if permitted by
the plan, instructs us to direct account dollars to any of the available
options.
Variable Investment Options. These options are called subaccounts. The
subaccounts are within Variable Annuity Account I (the separate account), a
separate account of the Company. Earnings on amounts invested in the subaccount
will vary depending on the performance and fees of its underlying mutual fund.
You do not invest directly in or hold shares of the funds.
>Fund Descriptions. We provide brief descriptions of the funds in Appendix III.
Please refer to the fund prospectuses for additional information. Fund
prospectuses may be obtained, free of charge, by calling the Company at the
telephone number listed on the cover of this prospectus, by contacting the SEC's
website, or by contacting the SEC Public Reference Room.
Fixed Interest Option. For a description of the Fixed Plus Account, see Appendix
I.
Selecting Investment Options
o Choose options appropriate for you. Your Aetna representative can help you
evaluate which subaccounts and/or fixed interest option may be appropriate for
your financial goals.
o Understand the risks associated with the options you choose. Some subaccounts
invest in funds that are considered riskier than others. Funds with additional
risks are expected to have a value that rises and falls more rapidly and to a
greater degree than other funds. For example, funds investing in foreign or
international securities are subject to additional risks not associated with
domestic investments, and their performance may vary accordingly. Also, funds
using derivatives in their investment strategy may be subject to additional
risks.
o Be informed. Read this prospectus, the fund prospectuses and the Fixed Plus
Account appendix.
Limits on Option Availability. Some funds and the fixed interest option may not
be available through certain contracts and plans, or in some states. We may add,
withdraw or substitute funds, subject to the conditions in the contract and in
compliance with regulatory requirements.
Limits on Number of Options Selected. Generally, the contract holder, or you if
permitted by the plan, may select no more than 18 investment options at one time
during the accumulation phase of your account. Each subaccount and the Fixed
Plus Account counts toward these limits.
Limits Imposed by the Underlying Fund. Orders for the purchase of fund shares
may be subject to acceptance by the fund. We reserve the right to reject,
without prior notice, any allocation of payments to a subaccount if the
subaccount's investment in the corresponding fund is not accepted by the fund
for any reason.
Additional Risks of Investing in the Funds. (Mixed and Shared Funding)
"Shared funding" occurs when shares of a fund, which the subaccounts buy for
variable annuity contracts, are also bought by other insurance companies for
their variable annuity contracts.
"Mixed funding" occurs when shares of a fund, which the subaccounts buy for
variable annuity contracts, are bought for variable life insurance contracts
issued by us or other insurance companies.
>Shared--bought by more than one company.
>Mixed--bought for annuities and life insurance.
It is possible that a conflict of interest may arise due to mixed and/or shared
funding, that could adversely impact the value of a fund. For example, if a
conflict of interest occurred and one of the subaccounts withdrew its investment
in a fund, the fund may be forced to sell its securities at disadvantageous
prices, causing its share value to decrease. Each fund's board of directors or
trustees will monitor events in order to identify any conflicts which may arise
and to determine what action, if any, should be taken to address such conflicts.
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<PAGE>
Transfers
- ---------
Transfers Among Investment Options. During the accumulation phase and the income
phase, the contract holder, or you if permitted by the plan, may transfer
amounts among investment options. Transfers from the Fixed Plus Account are
restricted as outlined in Appendix I. Transfers may be requested in writing, by
telephone or, where available, electronically. Transfers must be made in
accordance with the terms of the contract.
Value of Transferred Dollars. The value of amounts transferred in or out of
subaccounts will be based on the subaccount unit values next determined after we
receive your request in good order at our Service Office.
Telephone Transfers: Security Measures. To prevent fraudulent use of telephone
transactions, we have established security procedures. These include recording
calls on our toll-free telephone lines and requiring use of a personal
identification number (PIN) to execute transactions. You are responsible for
keeping your PIN and account information confidential. If we fail to follow
reasonable security procedures, we may be liable for losses due to unauthorized
or fraudulent telephone transactions. We are not liable for losses resulting
from following telephone instructions we believe to be genuine. If a loss occurs
when we rely on such instructions, you will bear the loss.
Limits on Frequent Transfers. The contracts are not designed to serve as
vehicles for frequent trading in response to short-term fluctuations in the
market. Such frequent trading can disrupt management of a fund and raise its
expenses. This in turn can have an adverse effect on fund performance.
Accordingly, organizations or individuals that use market-timing investment
strategies and make frequent transfers should not purchase the contracts.
We reserve the right to restrict, in our sole discretion and without prior
notice, transfers initiated by a market-timing organization or individual or
other party authorized to give transfer instructions on behalf of multiple
contract holders or participants. Such restrictions could include:
(1) Not accepting transfer instructions from an agent acting on behalf of more
than one contract holder or participant; and (2) Not accepting preauthorized
transfer forms from market timers or other entities acting on behalf of more
than one contract holder or participant at a time.
We further reserve the right to impose, without prior notice, restrictions on
any transfers that we determine, in our sole discretion, will disadvantage or
potentially hurt the rights or interests of other contract holders or
participants.
The Dollar Cost Averaging Program. Certain contracts allow you to participate in
our Dollar Cost Averaging Program. There is no additional charge for this
service. Dollar cost averaging is a system of investing that buys fixed dollar
amounts of an investment at regular intervals, regardless of price. Our program
transfers, at regular intervals, a fixed dollar amount to one or more
subaccounts that you select. Dollar cost averaging neither ensures a profit nor
guarantees against loss in a declining market. You should consider your
financial ability to continue purchases through periods of low price levels. For
additional information about this program, contact your local representative or
call the Company at the number listed in "Contract Overview--Questions."
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<PAGE>
Contract Purchase and Participation
- -----------------------------------
Contracts Available for Purchase. The contracts available for purchase are group
deferred annuity contracts that the Company offers in connection with plans
established by eligible organizations under Tax Code sections 401(a) and 403(b).
Purchasing the Contract.
1. The contract holder submits the required forms and application to the
Company.
2. We approve the forms and issue a contract to the contract holder.
Participating in the Contract.
1. We provide you with enrollment materials for completion and return to us
(occasionally enrollment is conducted by someone unaffiliated with us who is
assisting the contract holder).
2. If your enrollment materials are complete and in good order, we establish one
or more accounts for you. Under certain plans we establish an employee account
for contributions from your salary and an employer account for employer
contributions.
Acceptance or Rejection. We must accept or reject an application or your
enrollment materials within two business days of receipt. If the forms are
incomplete, we may hold any forms and accompanying payments for five business
days, unless you consent to our holding them longer. Under limited
circumstances, we may also agree, for a particular plan, to hold payments for
longer periods with the permission of the contract holder. If we agree to do
this, we will deposit the payments in the Aetna Money Market VP subaccount until
the forms are completed (or for a maximum of 105 days). If we reject the
application or enrollment, we will return the forms and any payments.
Methods of Payment. The contract may allow one or more of the following payment
methods:
>Lump sum payments--A one-time payment to your account in the form of a transfer
from a previous plan.
>Installment payments--More than one payment made over time to your account.
The plan and the contract may have certain rules or restrictions that apply to
use of these two methods. For example, we may require that installment payments
meet certain minimums.
Allocation of Payments. The contract holder or you, if the contract holder
permits, directs us to allocate initial contributions to the investment options
available under the plan. Generally, you will specify this information on your
enrollment materials. After your enrollment, changes to allocations for future
payments or transfer of existing balances among investment options may be
requested in writing and, where available, by telephone or electronically.
Allocations must be in whole percentages, and there may be limitations on the
number of investment options that can be selected. (See "Investment Options" and
"Transfers.")
Transfer Credits. The Company provides a transfer credit in some cases on
transferred assets, as defined by the Company, subject to certain conditions and
state approvals. This benefit is provided on a nondiscriminatory basis. If a
transfer credit is due under the contract, you will be provided with additional
information specific to the contract.
Tax Code Restrictions. The Tax Code places some limitations on contributions to
your account. (See "Taxation.")
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<PAGE>
Contract Ownership and Rights
- -----------------------------
Who Owns the Contract? The contract holder. This is the person or entity to whom
we issue the contract.
Who Owns Money Accumulated Under the Contract?
Under the contract, we may establish one or more accounts for you. Generally, we
establish an employee account to receive salary reduction and rollover amounts
and an employer account to receive employer contributions. You have the right to
the value of your employee account and any employer account to the extent that
you are vested under the plan as interpreted by the contract holder.
Who Holds Rights under the Contract?
> Under all contracts, except those issued through a voluntary 403(b) plan, the
contract holder holds all rights under the contract. The contract holder may
permit you to exercise some of those rights. For example, the contract holder
may allow you to choose investment options.
>If you participate in the contract through a voluntary 403(b) plan, you hold
all rights under the contract.
Right to Cancel
- ---------------
When and How to Cancel. If the contract holder chooses to cancel a contract, we
must receive the contract and a written notice of cancellation within 10 days
(or a longer period if required by state law) after the contract holder's
receipt of the contract.
If you wish to cancel participation in the contract and are allowed to do so
under the contract and the plan, you must send the document evidencing your
participation and a written notice of cancellation to the Company within 10 days
after you receive confirmation of your participation in the contract.
Refunds. We will produce a refund not later than seven days after we receive the
required documents and written notice in good order at our Service Office. The
refund will equal amounts contributed to the contract or account(s), as
applicable, plus any earnings or less any losses attributable to the investment
options in which amounts were invested. In certain states, we are required to
refund contributions. When a refund of contributions is not required, the
investor bears any investment risk.
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<PAGE>
Types of Fees
There are two types of fees which you may incur under the contract:
>Fees Deducted from the Subaccounts
o Mortality and Expense Risk Charge
o Administrative Expense Charge
>Fees Deducted by the Funds
o Investment Advisory Fees
o Other Expenses
Fees
I. Fees Deducted from the Subaccounts
Mortality and Expense Risk Charge
Maximum Amount: 1.00% annually of your account value invested in the subaccounts
during the accumulation phase and 1.25% annually of your account value invested
in the subaccounts during the income phase.
When/How: This fee is deducted daily from the subaccounts. We do not deduct this
from the Fixed Plus Account.
Purpose: The fee compensates us for the mortality and expense risks we assume
under the contracts.
>The mortality risks are those risks associated with our promise to make
lifetime payments based on annuity rates specified in the contracts and our
funding of the death benefits and other payments we make to owners or
beneficiaries of the accounts.
>The expense risk is the risk that the actual expenses we incur under the
contracts will exceed the maximum costs that we can charge.
If the amount we deduct for this fee is not enough to cover our mortality costs
and expenses under the contracts, we will bear the loss. We may use any excess
to recover distribution costs relating to the contract and as a source of
profit. We expect to make a profit from this fee.
Reduction: We may reduce the mortality and expense risk charge from the maximum
when the plan meets certain criteria and we agree to the reduction with the
contract holder in writing. Some contracts have a reduced mortality and expense
risk charge only during the accumulation phase of the account which then
increases during the income phase. Any reduction will reflect differences in
expenses for administration based on such factors as:
>The expected level of assets under the plan. Under some contracts, we may
aggregate accounts under different contracts issued by the Company to the same
contract holder.
>The size of the prospective group, projected annual number of eligible
participants and the program's participation rate.
>The plan design. For example, the plan may favor stability of invested assets
and limit the conditions for withdrawals and available investment options, which
in turn lowers administrative expenses.
>The frequency, consistency and method of submitting payments.
>The method and extent of onsite services we provide and the contract holder's
involvement in services such as enrollment and ongoing participant services.
>The contract holder's support and involvement in the communication, enrollment,
participant education and other administrative services.
>The projected frequency of distributions.
>The type and level of other factors that affect the overall administrative
expense.
We will determine any reduction of mortality and expense risk on a basis that is
not unfairly discriminatory according to our rules in effect at the time a
contract application is approved. We reserve the right to change these rules
from time to time.
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<PAGE>
Administrative Expense Charge
Maximum Amount: We currently do not impose this fee. However, we reserve the
right to charge an administrative expense charge of up to 0.25% annually of your
account value invested in the subaccounts.
When/How: If charged, this fee is deducted daily from the subaccounts. We will
not deduct this from the Fixed Plus Account. This fee may be assessed during the
accumulation phase and/or the income phase. If we are imposing this fee under
the contract issued in connection with your plan when you enter the income
phase, the fee will apply to you during the entire income phase.
Purpose: This fee helps defray our administrative expenses that cannot be
covered by the mortality and expense charge described above. The fee is not
intended to exceed our average expected cost of administering the contracts. We
do not expect to make a profit from this fee.
Reduction: If we charge the administrative expense charge, we may reduce it from
the maximum when the plan meets certain criteria and we agree to the reduction
with the contract holder, in writing. The level of the fee may be reassessed and
increased or decreased at each contract anniversary as the characteristics of
the group change.
II. Fund Expenses
Maximum Amount: Each fund determines its own advisory fees and expenses. For a
list of fund fees see "Fee Table." The fees are described in more detail in each
fund prospectus.
When/How: Fund fees are not deducted from your account. Fund advisory fees and
expenses are reflected in the daily value of the fund shares, which will in turn
affect the daily value of each subaccount.
Purpose: These amounts help to pay the fund's investment advisor and operating
expenses.
III. Premium and Other Taxes
Maximum Amount: Some states and municipalities charge a premium tax on
annuities. These taxes currently range from 0% to 4%, depending on the
jurisdiction.
When/How: We reserve the right to deduct premium taxes from your account value
or from payments to the account at any time, but not before there is a tax
liability under state law. Our current practice is to deduct premium taxes at
the time of a full withdrawal or the commencement of income phase payments. We
will not deduct any municipal premium tax of 1% or less, but we reserve the
right to reflect such an expense in our annuity purchase rates.
In addition, the Company reserves the right to assess a charge for any federal
taxes due against the separate account. (See "Taxation.")
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<PAGE>
Your Account Value
- ------------------
During the accumulation phase, your account value at any given time equals:
>Account dollars directed to the Fixed Plus Account, including interest earnings
to date; less
>Any deductions from the Fixed Plus Account (e.g. withdrawals, fees); plus
>The current dollar value of amounts invested in the subaccounts.
Subaccount Accumulation Units. When a fund is selected as an investment option,
your account dollars invest in "accumulation units" of the Variable Annuity
Account I subaccount corresponding to that fund. The subaccount invests directly
in the fund shares. The value of your interests in a subaccount is expressed as
the number of accumulation units you hold multiplied by an "Accumulation Unit
Value," as described below, for each unit.
Accumulation Unit Value (AUV). The value of each accumulation unit in a
subaccount is called the accumulation unit value or AUV. The value of
accumulation units vary daily in relation to the underlying fund's investment
performance. The value also reflects deductions for fund fees and expenses, the
mortality and expense risk charge, and the administrative expense charge (if
any). We discuss these deductions in more detail in "Fee Table" and "Fees."
Valuation. We determine the AUV every business day after the close of the New
York Stock Exchange. At that time, we calculate the current AUV by multiplying
the AUV last calculated by the "net investment factor" of the subaccount. The
net investment factor measures the investment performance of the subaccount from
one valuation to the next.
Current AUV = Prior AUV x Net Investment Factor
Net Investment Factor. The net investment factor for a subaccount between two
consecutive valuations equals the sum of 1.0000 plus the net investment rate.
Net Investment Rate. The net investment rate is computed according to a formula
that is equivalent to the following:
>The net assets of the fund held by the subaccount as of the current valuation;
minus
>The net assets of the fund held by the subaccount at the preceding valuation;
plus or minus
>Taxes or provisions for taxes, if any, due to subaccount operations (with any
federal income tax liability offset by foreign tax credits to the extent
allowed);
>Divided by the total value of the subaccount's units at the preceding
valuation;
>Minus a daily deduction for the mortality and expense risk charge and the
administrative expense charge (if any). See "Fees."
The net investment rate may be either positive or negative.
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<PAGE>
Hypothetical Illustration. As a hypothetical illustration, assume that an
investor contributes $5,000 to his account and directs us to invest $3,000 in
Fund A and $2,000 in Fund B. After receiving the contribution and following the
next close of business of the New York Stock Exchange, the applicable AUV's are
$10 for Subaccount A, and $25 for Subaccount B. The investor's account is
credited with 300 accumulation units of subaccount A, and 80 accumulation units
of subaccount B.
+ +
|$5,000 contribution|
+ +
Step 1 [arrow down]
-------------------
+ +
|Aetna Insurance Company of America|
+ +
Step 2 [arrow down]
+ +
| Variable Annuity Account I |
--------------------------
+ + + +
| Subaccount A | Subaccount B | Etc. |
| 300 | 80 | |
| accumulation | accumulation | |
| units | units | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
+ + + +
Step 3 [arrow down]
-------------------
+ + + +
|Fund A| |Fund B|
-------- --------
+ + + +
Step 1: An Investor
contributes $5000
Step 2:
A. He directs us to invest
$3,000 in Fund A. His
dollars purchase 300
accumulation units of
Subaccount A ($3,000
divided by the current
$10 AUV).
B. He directs us to invest
$2,000 in Fund B. His
dollars purchase 80
accumulation units of
Subaccount B ($2,000
divided by the current
$25 AUV).
Step 3: The separate account
then purchases shares of the
applicable funds at the
current market value (NAV).
The fund's subsequent investment performance, expenses and charges, and the
daily charges deducted from the subaccount, will cause the AUV to move up or
down on a daily basis.
Payments to Your Account. If all or a portion of initial payments are directed
to the subaccounts, they will purchase subaccount accumulation units at the AUV
next computed after our acceptance of the applicable application or enrollment
forms, as described in "Contract Purchase and Participation." Subsequent
payments or transfers directed to the subaccounts that we receive by the close
of business of the New York Stock Exchange (Exchange) will purchase subaccount
accumulation units at the AUV computed after the close of the Exchange on that
day. The value of subaccounts may vary day to day.
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<PAGE>
Taxes, Fees and Deductions
Amounts withdrawn may be subject to tax penalties and withholding (see
"Taxation"). To determine which may apply, refer to the appropriate sections of
this prospectus, contact your Aetna representative or call the Company at the
number listed in "Contract Overview--Questions."
Withdrawals
- -----------
Making a Withdrawal. Subject to limitations on withdrawals from the Fixed Plus
Account and other restrictions (see "Withdrawal Restrictions" below), the
contract holder, or you if permitted by the plan, may withdraw all or a portion
of your account value at any time during the accumulation phase.
Steps for Making a Withdrawal. The contract holder, or you if permitted by the
plan, must:
>Select the withdrawal amount.
o Full Withdrawal: You will receive, reduced by any required withholding
tax, your account value allocated to the subaccounts, plus the amount
available for withdrawal from the Fixed Plus Account.
o Partial Withdrawal (Percentage or Specified Dollar Amount): You will
receive, reduced by any required withholding tax, the amount you specify,
subject to the value available in your account. The amount available from
the Fixed Plus Account may be limited.
For a description of limitations on withdrawals from the Fixed Plus
Account, see Appendix I.
>Select investment options. If this is not specified, we will withdraw dollars
proportionally from each investment option in which you have an account value.
>Properly complete a disbursement form and submit it to the Service Office.
Calculation of Your Withdrawal. We determine your account value every normal
business day after the close of the New York Stock Exchange. We pay withdrawal
amounts based on your account value either:
(1) As of the next valuation after we receive a request for withdrawal in good
order at our Service Office; or
(2) On such later date as specified on the disbursement form.
Delivery of Payment. Payments for withdrawal requests will be made in accordance
with SEC requirements. Normally, we will send your payment not later than seven
calendar days following our receipt of your disbursement form in good order.
Reinvestment Privilege. The contracts allow a one-time use of a reinvestment
privilege. Within 30 days after a full withdrawal, if allowed by law, you may
elect to reinvest all or a portion of the proceeds. We must receive reinvested
amounts within 60 days of the withdrawal. We will credit the account for the
amount reinvested based on the subaccount values next computed following our
receipt of your request and the amount to be reinvested. We will reinvest in the
same investment options and proportions in place at the time of withdrawal. Seek
competent advice regarding the tax consequences associated with reinvestment.
Withdrawal Restrictions. Some plans may have other limits on withdrawals, other
than or in addition to those listed below.
>Section 403(b)(11) of the Tax Code prohibits withdrawal under 403(b) contracts
prior to your death, disability, attainment of age 59-1/2, separation from
service, or financial hardship, of the following: (1) Salary reduction
contributions made after December 31, 1988 and; (2) Earnings on those
contributions and earnings on amounts held before 1989 and credited after
December 31, 1988.
>The contract may require that the contract holder certify that you are eligible
for the distribution.
18
<PAGE>
Features of a Systematic Distribution Option (SDO)
If available under your plan, an SDO allows you to receive regular payments from
your account without moving into the income phase. By remaining in the
accumulation phase, you retain certain rights and investment flexibility not
available during the income phase. Because the account remains in the
accumulation phase, all accumulation phase charges continue to apply.
Systematic Distribution Options
- -------------------------------
Availability of Systematic Distribution Options (SDOs). To exercise one of these
options the account value must meet any minimum dollar amount and age criteria
applicable to that option. To determine what SDOs are available, check with the
contract holder or the Company. The Company reserves the right to discontinue
the availability of one or all of the SDOs at any time, and/or to change the
terms for future elections.
SDOs currently available under the contract include the following:
>SWO--Systematic Withdrawal Option. SWO is a series of partial withdrawals from
your account based on a payment method you select. It is designed for those who
want a periodic income while retaining accumulation phase investment flexibility
for amounts accumulated under the account.
>ECO--Estate Conservation Option. Also allows you to maintain the account in the
accumulation phase and provides periodic payments designed to meet the Tax
Code's minimum distribution requirement.
Under ECO, the Company calculates the minimum distribution amount required by
law at age 70-1/2 (for certain plans, 70-1/2 or retirement, if later) and pays
you that amount once a year.
>Other SDOs may be available from time to time. Additional information relating
to any of the SDOs may be obtained from your local representative or from the
Company's Service Office.
Electing an SDO. The contract holder, or you if permitted by the plan, makes the
election of an SDO. For some contracts, the contract holder must provide the
Company with certification that the distribution is in accordance with terms of
the plan.
Terminating an SDO. Once you elect an SDO, you may revoke it at any time through
a written request to our Service Office. Once revoked, an option may not be
elected again, nor may any other SDO be elected, unless the Tax Code permits it.
Tax Consequences. Withdrawals received through these options may have tax
consequences. See "Taxation."
19
<PAGE>
During the Income Phase
This section provides information about the accumulation phase. For death
benefit information applicable to the income phase, see "Income Phase".
Death Benefit
- -------------
The contract provides a death benefit in the event of your death, which is
payable to the beneficiary named under the contract (contract beneficiary).
>Under contracts issued in connection with most types of plans, the contract
holder must be named as the contract beneficiary, but may direct that we make
any payments to the beneficiary you name under the plan (plan beneficiary).
>Under contracts issued in connection with voluntary 403(b) plans, you may
generally designate your own contract beneficiary, who will normally be your
plan beneficiary as well.
During the Accumulation Phase
Payment Process
1. Following your death, the contract beneficiary (on behalf of the plan
beneficiary if applicable), must provide the Company with proof of death
acceptable to us and a payment request in good order. 2. The payment request
should include selection of a benefit payment option. 3. Within seven days after
we receive proof of death acceptable to us and payment request in good order at
our Service Office, we will mail payment, unless otherwise requested.
Until a payment option is selected, account dollars will remain invested as at
the time of your death, and no distributions will be made.
Benefit Payment Options. The following payment options are available, if allowed
by the Tax Code:
>Lump-sum payment;
>Payment under an available income phase payment option (see "Income
Phase--Payment Options"); or
>If the contract beneficiary or plan beneficiary is your spouse, payment under
an available systematic distribution option (not available under all plans).
The following option is also available, however, the Tax Code limits how long
the death benefit proceeds may be left in this option:
>Leaving the account value invested in the contract.
Death Benefit Calculation. The death benefit will be based on your account
value. The death benefit is calculated as of the next time we value your account
following the date on which we receive proof of death and payment request in
good order. In addition to this amount, some states require we pay interest
calculated from date of death at a rate specified by state law.
The contracts provide a guaranteed death benefit if the contract beneficiary (on
behalf of the plan beneficiary, if applicable) elects a lump-sum distribution or
an income phase payment option within six months of your death. The guaranteed
death benefit is the greater of:
(a) Your account value on the day that notice of death and request for payment
are received in good order at our Service Office; or
(b) The sum of payments (minus any applicable premium tax) made to your account,
minus withdrawals made from your account.
Tax Code Requirements. The Tax Code requires distribution of death benefit
proceeds within a certain period of time. Failure to begin receiving death
benefit payments within those time periods can result in tax penalties.
Regardless of the method of payment, death benefit proceeds will generally be
taxed to the beneficiary in the same manner as if you had received those
payments. See "Taxation" for additional information.
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<PAGE>
Income Phase
- ------------
During the income phase you receive payments from your accumulated account
value.
Initiating Payments. At least 30 days prior to the date you want to start
receiving payments, the contract holder, or you if permitted by the plan, must
notify us in writing of the following:
>Start date;
>Payment option (see the payment options table in this section);
>Payment frequency (i.e., monthly, quarterly, semi-annually or annually);
>Choice of fixed or variable payments;
>Selection of an assumed net investment rate (only if variable payments are
elected); and
>Under some plans, certification from your employer and/or submission of the
appropriate forms is also required.
The account will continue in the accumulation phase until the contract holder or
you, as applicable, properly initiate payments. Once a payment option is
selected, it may not be changed; however, certain options allow you to withdraw
a lump sum.
What Affects Payment Amounts? Some of the factors that may affect payment
amounts include: your age, your account value, the payment option selected,
number of guaranteed payments (if any) selected, and whether you select variable
or fixed payments.
Fixed Payments. Amounts funding fixed payments will be held in the Company's
general account. Fixed payments will remain the same over time.
Variable Payments. Amounts funding your income phase payments will be held in
the subaccount(s) selected, or a combination of subaccounts and the Company's
general account. Some contracts restrict the subaccounts available, the number
of investment options to be selected and how many transfers, if any, are allowed
among options. For variable payments, an assumed net investment rate must be
selected.
Payments from the Fixed Plus Account. If a nonlifetime payment option is
selected, payments from the Fixed Plus Account may only be made on a fixed
basis.
Assumed Net Investment Rate. For variable payments, an assumed net investment
rate must be selected. If you select a 5% rate, your first payment will be
higher, but subsequent payments will increase only if the investment performance
of the subaccounts you selected is greater than 5% annually, after deduction of
fees. Payment amounts will decline if the investment performance is less than
5%, after deduction of fees.
If you select a 3-1/2% rate, your first payment will be lower and subsequent
payments will increase more rapidly or decline more slowly depending on the
investment performance of the subaccounts you selected. For more information
about selecting an assumed net investment rate, request a copy of the Statement
of Additional Information by calling the Company. (see "Contract
Overview--Questions").
Selecting an Increasing Payment. Under certain payment options, if you select
fixed payments, you may elect an increase of one, two, or three percent,
compounded annually. The higher your percentage, the lower your initial payment
will be, while future payments will increase each year at a greater rate.
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<PAGE>
Fees Deducted
>If variable payments are elected, we make a daily deduction for mortality and
expense risks from any amounts held in the subaccounts. The maximum mortality
and expense risk charge during the income phase is 1.25% on an annual basis.
Under some contracts, we may reduce this fee based on certain factors. (See
"Fees--Mortality and Expense Risk Charge.")
>We may also deduct a daily administrative charge from amounts held in the
subaccounts. We are not currently deducting this charge, but reserve the right
to do so in the future. The maximum amount is 0.25% on an annual basis. If we
are imposing this fee under the contract issued in connection with your plan
when you enter the income phase, the fee will apply throughout the entire income
phase.
Required Minimum Payment Amounts. The initial payment or the annual payment
total must meet the minimums stated in the contract. If your account value is
too low to meet these minimum payment amounts, you will receive one lump sum
payment.
Death Benefit During the Income Phase. The death benefits that may be available
to a beneficiary are outlined in the payment option table below. If a lump sum
payment is due as a death benefit, we will make payment within seven calendar
days after we receive proof of death acceptable to us and the payment request at
our Service Office.
Taxation. To avoid certain tax penalties, you and any beneficiary must meet the
distribution rules imposed by the Tax Code. (See "Taxation.")
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Payment Options
The following tables list the payment options and accompanying death benefits
which may be available under the contracts. Some contracts restrict the options
and the terms available. Refer to your certificate or check with your contract
holder for details. We may offer additional payment options under the contract
from time to time.
Terms used in the Tables:
Annuitant: The person(s) on whose life expectancy the income phase payments are
calculated.
Beneficiary: The person designated to receive the death benefit payable under
the contract.
<TABLE>
<CAPTION>
Lifetime Payment Options
<S> <C>
Length of Payments: For as long as the annuitant lives. It is possible that only one payment will
Life Income be made should the annuitant die prior to the second payment's due date.
Death Benefit--None: All payments end upon the annuitant's death.
Length of Payments: For as long as the annuitant lives, with payments guaranteed for your
Life Income-- choice of 5-30 years or as otherwise specified in the contract.
Guaranteed Pay- Death Benefit--Payment to the Beneficiary: If the annuitant dies before we have made all the
ments guaranteed payments, we will pay the beneficiary a lump-sum (unless otherwise requested) equal
to the present value of the remaining guaranteed payments.
Length of Payments: For as long as either annuitant lives. It is possible that only one payment
will be made should both annuitants die before the second payment's due date.
Continuing Payments:
Life Income--Two (a) When you select this option you choose for 100%, 662/3% or 50% of the payment to continue
Lives after the first death; or
(b) 100% of the payment to continue on the second annuitant's death, and 50% of the payment
to continue on the annuitant's death.
Death Benefit--None: All payments end after the death of both annuitants.
Length of Payments: For as long as either annuitant lives, with payments guaranteed from 5 to
30 years, or as otherwise specified in the contract.
Life Income--Two Continuing Payments: 100% of the payment to continue after the first death.
Lives--Guaranteed Death Benefit--Payment to the Beneficiary: If both annuitants die before the guaranteed pay-
Payments ments have all been paid, we will pay the beneficiary a lump-sum (unless otherwise requested)
equal to the present value of the remaining guaranteed payments.
Life Income--Cash Length of Payments: For as long as the annuitant lives.
Refund Option Death Benefit--Payment to the Beneficiary: Following the annuitant's death, we will pay a lump
(fixed payment sum payment equal to the amount originally applied to the payment option (less any premium
only) tax) and less the total amount of fixed payments paid.
Life Income--Two Length of Payments: For as long as either annuitant lives.
Lives--Cash Continuing Payment: 100% of the payment to continue after the first death.
Refund Option Death Benefit--Payment to the Beneficiary: When both annuitants die, we will pay a lump sum
(fixed payment payment equal to the amount applied to the payment option (less any premium tax) and less
payment only) the total amount of fixed payments paid.
</TABLE>
Table continued [arrow right]
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<PAGE>
Payment options continued
<TABLE>
<CAPTION>
Nonlifetime Payment Options
<S> <C>
Length of Payments: Payments will continue for the number of years you choose, based on what is
Nonlifetime-- available under the contract. For amounts held in the Fixed Plus Account during the accumulation
Guaranteed phase, the payment must be on a fixed basis. In certain cases a lump sum payment ,au be requested at
Payments any time (see below).
Death Benefit--Payment to the Beneficiary: If the annuitant dies before we make all the guaranteed
payments, any remaining guaranteed payments will continue to the beneficiary unless the beneficiary
elects to receive the present value of the remaining guaranteed payments in a lump sum.
</TABLE>
Lump-sum Payment: If the Nonlifetime--Guaranteed Payments option is elected with
variable payments, you may request at any time that all or a portion of the
present value of the remaining payments be paid in one sum. Lump sum payments
will be sent within seven calendar days after we receive the request for payment
in good order at the Service Office.
Calculation of Lump Sum Payments: If a lump sum payment is available to a
beneficiary or to you in the options above, the rate we use to calculate the
present value of the remaining guaranteed payments is the same rate we use to
calculate the income phase payments (i.e., the actual fixed rate used for the
fixed payments, or the 3-1/2% or 5% assumed net investment rate for variable
payments).
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<PAGE>
In This Section
I. Introduction
II. Your Retirement Plan
III. Withdrawals and other Distributions
o Taxation of Distributions
o 10% Penalty Tax o Withholding
IV. Minimum Distribution Requirements
o 50% Excise Tax
V. Rules Specific to Certain Plans
o Tax Code Section 403(b) Plans
o Tax Code Section 401(a) Plans
VI. Taxation of the Company
When consulting a tax advisor, be certain that he or she has expertise in
the Tax Code sections applicable to your tax concerns.
Taxation
- --------
I. Introduction
This section discusses our understanding of current federal income tax laws
affecting the contract. You should keep the following in mind when reading it:
>Your tax position (or the tax position of the beneficiary, as applicable)
determines federal taxation of amounts held or paid out under the contract.
>Tax laws change. It is possible that a change in the future could affect
contracts issued in the past.
>This section addresses federal income tax rules and does not discuss federal
estate and gift tax implications, state and local taxes or any other tax
provisions.
>We do not make any guarantee about the tax treatment of the contract or
transactions involving the contract.
We do not intend this information to be tax advice. For advice about the effect
of federal income taxes or any other taxes on amounts held or paid out under the
contract, consult a tax adviser. For more comprehensive information contact the
Internal Revenue Service.
II. Your Retirement Plan
The tax rules applicable to retirement plans vary according to plan type, and
terms and conditions of the plan. To understand what tax rules apply, you need
to know the Tax Code section under which your plan qualifies. Contact your plan
sponsor, local representative or the Company to learn which Tax Code section
applies to your plan.
Plan Types. The contract is designed for use with retirement plans that qualify
under Tax Code sections 401(a) or 403(b). The contract provides the investment
options, payout options, and other features described in this prospectus, but
does not provide tax benefits beyond those provided by the Plan.
The Contract and Retirement Plans. Contract holders and contract participants
are responsible for determining that contributions, distributions and other
transactions satisfy applicable laws. Legal counsel and a tax adviser should be
consulted regarding the suitability of the contract.
Because the plan is not part of the contract, we are not bound by any plan's
terms or conditions.
25
<PAGE>
III. Withdrawals and Other Distributions
Certain tax rules apply to distributions from the contract. A distribution is
any amount taken from the contract including withdrawals, income payments,
rollovers and any death benefit.
We report the taxable portion of all distributions to the IRS.
Taxation of Distributions.
All distributions from 401(a) and 403(b) plans are taxed as received unless:
>The distribution is rolled over to another plan of the same type or to a
traditional individual retirement annuity/account (IRA) in accordance with the
Tax Code; or
>You made after-tax contributions to the plan. In this case, depending on the
type of distribution, a portion may be excluded from gross income according to
rules detailed in the Tax Code.
Taxation of Death Benefits
In general, payments received by your beneficiaries after your death are taxed
in the same manner as if you had received those payments.
10% Penalty Tax
The Tax Code imposes a 10% penalty tax on the taxable portion of any
distribution from a 401(a) or 403(b) plan, unless one or more of the following
have occurred:
(a) You have attained age 59-1/2;
(b) You have become totally and permanently disabled;
(c) You have died;
(d) You have separated from service with the plan sponsor at or after age 55;
(e) The distribution amount is rolled over into another plan of the same type or
to an IRA in accordance with the terms of the Tax Code;
(f) The distribution amount is made in substantially equal periodic payments (at
least annually) over your life or life expectancy or the joint lives or joint
life expectancies of you and your beneficiary, and you have separated from
service with the plan sponsor; or
(g) The distribution is equal to unreimbursed medical expenses that qualify for
deduction as specified in the Tax Code.
The Tax Code may impose other penalty taxes in other circumstances.
Withholding for Federal Income Tax Liability
Any distributions under the contracts are generally subject to withholding.
Federal income tax liability rates vary according to the type of distribution
and the recipient's tax status.
Generally, under these plans you or a beneficiary may elect not to have tax
withheld from distributions. However, certain distributions from these plans are
subject to a mandatory 20% federal income tax withholding.
Non-resident Aliens. If you or a beneficiary is a non-resident alien, then any
withholding is governed by Tax Code section 1441 based on the individual's
citizenship, the country of domicile and treaty status.
IV. Minimum Distribution Requirements
To avoid certain tax penalties, you and any beneficiary must meet the minimum
distribution requirements imposed by the Tax Code. These rules may dictate one
or more of the following:
>Start date for distributions;
>The time period in which all amounts in your account(s) must be distributed;
and
>Distribution amounts.
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<PAGE>
Start Date. Generally, you must begin receiving distributions by April 1 of the
calendar year following the calendar year in which you attain age 70-1/2 or
retire, whichever occurs later, unless:
>You are a 5% owner, in which case such distributions must begin by April 1st of
the calendar year following the calendar year in which you attain age 70-1/2; or
>Under 403(b) plans, if the Company maintains records of amounts held as of
December 31, 1986. In this case, distribution of these amounts generally must
begin by the end of the calendar year in which you attain age 75 or retire, if
later. However, if you take any distributions in excess of the minimum required
amount, then special rules require that some or all of the December 31, 1986
balance be distributed earlier.
Time Period. We must pay out distributions from the contract over one of the
following time periods:
>Over your life or the joint lives of you and your beneficiary; or
>Over a period not greater than your life expectancy or the joint life
expectancies of you and your beneficiary.
50% Excise Tax. If you fail to receive the minimum required distribution for any
tax year, a 50% excise tax is imposed on the required amount that was not
distributed.
Minimum Distribution of Death Benefits. Different distribution requirements
apply if your death occurs:
>After you begin receiving minimum distributions under the contract; or
>Before you begin receiving such distributions.
If your death occurs after you begin receiving minimum distributions under the
contract, distributions must be made at least as rapidly as under the method in
effect at the time of your death. Tax Code section 401(a)(9) provides specific
rules for calculating the minimum required distributions at your death. The
rules differ, dependent upon:
>Whether your minimum required distribution was calculated each year based on
your single life expectancy or the joint life expectancies of you and your
beneficiary; and
>Whether life expectancy was recalculated.
The rules are complex and any beneficiary should consult with a tax adviser
before electing the method of calculation to satisfy the minimum distribution
requirements.
Should you die before you begin receiving minimum distributions under the
contract, your entire balance must be distributed by December 31 of the calendar
year containing the fifth anniversary of the date of your death. For example, if
you die on September 1, 1999, your entire balance must be distributed to the
beneficiary by December 31, 2004. However, if the distribution begins by
December 31 of the calendar year following the calendar year of your death, then
payments may be made in one of the following time-frames:
>Over the life of the beneficiary; or
>Over a period not extending beyond the life expectancy of the beneficiary.
Start Dates for Spousal Beneficiaries. If the beneficiary is your spouse, the
distribution must begin on or before the later of the following:
>December 31 of the calendar year following the calendar year of your death; or
>December 31 of the calendar year in which you would have attained age 70-1/2.
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<PAGE>
V. Rules Specific to Certain Plans
403(b) Plans
Under Tax Code section 403(b), contributions made by public school systems or
nonprofit healthcare organizations and other Tax Code section 501(c)(3) tax
exempt organizations to purchase annuity contracts for their employees are
generally excludable from the gross income of the employee. Adverse tax
consequences to the plan and/or to you may result if your beneficial interest in
the contract is assigned or transferred to any person except to an alternate
payee under a qualified domestic relations order in accordance with Tax Code
section 414(p) or to the Company as collateral for a loan.
Exclusions from Gross Income. In order to be excludable from gross income, total
annual contributions made by you and your employer cannot exceed the lesser of
the following limits set by the Tax Code.
>The first limit, under Tax Code section 415, is generally the lesser of 25% of
your compensation or $30,000. Compensation means your compensation from the
employer sponsoring the plan and, for years beginning after December 31, 1997,
includes any elective deferrals under Tax Code section 402(g) and any amounts
not includible in gross income under Tax Code section 125 or 457.
>The second limit, which is the exclusion allowance under Tax Code section
403(b), is usually calculated according to a formula that takes into account
your length of employment, any pretax contributions you and your employer have
already made under the plan, and any pretax contributions to certain other
retirement plans.
These two limits apply to your contributions as well as to any contributions
made by your employer on your behalf.
>An additional limit specifically limits your salary reduction contributions to
generally no more than $10,000 annually (subject to indexing). Your own limit
may be higher or lower, depending on certain conditions.
Payments to your account(s) will be excluded from your gross income only if the
plan meets certain nondiscrimination requirements.
Restrictions on Distributions. Tax Code section 403(b)(11) restricts the
distribution under Section 403(b) contracts of:
>Salary reduction contributions made after December 31, 1988;
>Earnings on those contributions; and
>Earnings during such period on amounts held as of December 31, 1988.
Distribution of those amounts may only occur upon your death, attainment of age
59-1/2, separation from service, disability, or financial hardship. Income
attributable to salary reduction contributions and credited on or after January
1, 1989 may not be distributed in the case of hardship.
Transfers from 403(b)(7) Custodial Accounts. If, pursuant to Revenue Ruling
90-24, the Company agrees to accept, under any of the contracts, amounts
transferred from a Tax Code section 403(b)(7) custodial account, such amounts
will be subject to the withdrawal restrictions set forth in Tax Code section
403(b)(7)(A)(ii).
Taxation of Gains Prior to Distribution. Generally no amounts accumulated under
the plan will be taxable prior to the time of actual distribution.
However, the IRS has stated in published rulings that a variable contract owner,
including participants under Tax Code section 403(b) plans, will be considered
the owner of separate account assets if the contract owner possesses incidents
of investment control over the assets. In these circumstances, income and gains
from the separate account assets would be currently includible in the variable
contract owner's gross income.
The Treasury announced that it will issue guidance regarding the extent to which
owners could direct their investments among subaccounts without being treated as
owners of the underlying assets of the separate account. It is possible that the
Treasury's position, when announced, may adversely affect the tax treatment of
existing contracts. The Company therefore reserves the right to modify the
contract as necessary to attempt to prevent the owner from being considered the
federal tax owner of a pro rata share of the assets of the separate account.
28
<PAGE>
401(a) Plans
Tax Code section 401(a) permits certain employers to establish various types of
retirement plans for employees, and permits self-employed individuals to
establish various types of retirement plans for themselves and for their
employees. These retirement plans may permit the purchase of the contracts to
accumulate retirement savings under the plans.
Assignment or Transfer of Contracts. Adverse tax consequences to the plan and/or
to you may result if your beneficial interest in the contract is assigned or
transferred to persons other than: a plan participant as a means to provide
benefit payments; an alternate payee under a qualified domestic relations order
in accordance with Tax Code section 414(p); or to the Company as collateral for
a loan.
Exclusion From Gross Income. The Tax Code imposes a maximum limit on annual
payments to your account(s) that may be excluded from gross income. The employer
must calculate this limit under the plan in accordance with Tax Code section
415. This limit is generally the lesser of 25% of your compensation or $30,000.
Compensation means your compensation from the employer sponsoring the plan and,
for years beginning after December 31, 1997, includes any elective deferrals
under Tax Code section 402(g) and any amounts not includible in gross income
under Tax Code sections 125 or 457. The limit applies to your contributions as
well as any contributions made by your employer on your behalf. Your own limits
may be higher or lower, depending on certain conditions. In addition, payments
to your account(s) will be excluded from your gross income only if the plan
meets certain nondiscrimination requirements.
VI. Taxation of the Company
We are taxed as a life insurance company under the Tax Code. Variable Annuity
Separate Account I is not a separate entity from us. Therefore, it is not taxed
separately as a "regulated investment company," but is taxed as part of the
Company.
We automatically apply investment income and capital gains attributable to the
separate account to increase reserves under the contracts. Because of this,
under existing federal tax law we believe that any such income and gains will
not be taxed to the extent that such income and gains are applied to increase
reserves under the contracts. In addition, any foreign tax credits attributable
to the separate account will be first used to reduce any income taxes imposed on
the separate account before being used by the Company.
In summary, we do not expect that we will incur any federal income tax liability
attributable to the separate account and we do not intend to make any provision
for such taxes. However, changes in federal tax laws and/or their interpretation
may result in our being taxed on income or gains attributable to the separate
account. In this case, we may impose a charge against the separate account (with
respect to some or all of the contracts) to set aside provisions to pay such
taxes. We may deduct this amount from the separate account, including from your
account value invested in the subaccounts.
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<PAGE>
Other Topics
- ------------
The Company
Aetna Insurance Company of America (the Company, we) issues the contracts
described in this prospectus and is responsible for providing each contract's
insurance and annuity benefits.
We are a stock life insurance company organized under the insurance laws of the
State of Connecticut in 1990 and redomesticated under the insurance laws of the
State of Florida in 1999. We are an indirect wholly owned subsidiary of Aetna
Inc.
We are engaged in the business of issuing life insurance and annuities.
Our principal executive offices are located at:
5100 West Lemon Street
Suite 213
Tampa, Florida 33609
Variable Annuity Account I
We established Variable Annuity Account I (the "separate account") in 1994 as a
segregated asset account to fund our variable annuity contracts. The separate
account is registered as a unit investment trust under the Investment Company
Act of 1940 (the "40 Act"). It also meets the definition of "separate account"
under the federal securities laws.
The separate account is divided into "subaccounts." These subaccounts invest
directly in shares of a corresponding fund.
Although we hold title to the assets of the separate account, such assets are
not chargeable with the liabilities of any other business that we conduct.
Income, gains or losses of the separate account are credited to or charged
against the assets of the separate account without regard to other income, gains
or losses of the Company. All obligations arising under the contracts are
obligations of the Company.
Performance Reporting
We may advertise different types of historical performance for the subaccounts
including:
>Standardized average annual total returns; and
>Non-standardized average annual total returns.
We may also advertise certain ratings, rankings or other information related to
the Company, the subaccounts or the funds. For further details regarding
performance reporting and advertising, request a Statement of Additional
Information at the number listed in "Contract Overview--Questions."
Standardized Average Annual Total Returns. We calculate standardized average
annual total returns according to a formula prescribed by the SEC. This shows
the percentage return applicable to $1,000 invested in the subaccount over the
most recent one, five and 10-year periods. If the investment option was not
available for the full period, we give a history from the date money was first
received in that option under the separate account.
We include all recurring charges during each period (e.g., mortality and expense
risk charges and administrative expense charges (if any)).
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<PAGE>
Non-Standardized Average Annual Total Returns. We calculate non-standardized
average annual total returns in a similar manner as that stated above, except
non-standardized returns may also include performance from the fund's inception
date, if that date is earlier than the one we use for standardized returns.
Voting Rights
Each of the subaccounts holds shares in a fund and each is entitled to vote at
regular and special meetings of that fund. Under our current view of applicable
law, we will vote the shares for each subaccount as instructed by persons having
a voting interest in the separate account. Generally, under contracts issued in
connection with section 403(b) or 401(a) plans, you have a fully vested interest
in the value of your employee account, and in your employer account to the
extent of your vested percentage in the plan. Therefore, under such plans you
generally have the right to instruct the contract holder how to direct us to
vote shares attributable to your account. We will vote shares for which
instructions have not been received in the same proportion as those for which we
received instructions. Each person who has a voting interest in the separate
account will receive periodic reports relating to the funds in which he or she
has an interest, as well as any proxy materials and a form on which to give
voting instructions. Voting instructions will be solicited by a written
communication at least 14 days before the meeting.
The number of votes, whole and fractional, any person is entitled to direct will
be determined as of the record date set by any fund in which that person invests
through the subaccounts.
>During the accumulation phase the number of votes is equal to the portion of
your account value invested in the fund, divided by the net asset value of one
share of that fund.
>During the income phase the number of votes is equal to the portion of reserves
set aside for the contract's share of the fund, divided by the net asset value
of one share of that fund.
Contract Distribution
Aetna Life Insurance and Annuity Company (ALIAC), an affiliate of the Company,
serves as the principal 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.
As principal underwriter, ALIAC will enter into arrangements with one or more
registered broker-dealers, including affiliates of the Company, to offer and
sell the contracts described in this prospectus. We call these entities
"distributors."
All individuals offering and selling the contracts must be registered
representatives of a broker-dealer, and must be licensed as insurance agents to
sell variable annuity contracts.
Commission Payments. Commissions may be paid to persons who offer and sell the
contracts. Pursuant to agreements between ALIAC (as underwriter) and the
distributor, commissions will be paid in varying amounts. The maximum percentage
amount paid with respect to a given purchase payment is the first-year
percentage which ranges from 1% to a maximum of 7% of the first year of payments
to an account. Renewal commissions may also be paid on payments made after the
first year and may include asset-based service fees. The average of all
commissions and asset-based service fees paid is estimated to equal
approximately 3% of the total payments made over the life of an average
contract. Some sales personnel may receive various types of non-cash
compensation as special sales incentives, including trips and educational and/or
business seminars. However, any such compensation will be paid in accordance
with NASD rules. In addition, additional compensation may be paid to the
Company's supervisory and other management personnel if the overall amount of
investments in funds advised by the Company or its affiliates increases over
time.
The distributor may be reimbursed for certain expenses. The names of the
distributor and the registered representative responsible for your account are
stated in your enrollment materials. No additional deductions or charges are
imposed for commissions and related expenses.
Third Party Compensation Arrangements. Occasionally, ALIAC may:
>Pay commissions and fees to distributors affiliated or associated with the
contract holder, you and/or other contract participants.
>Enter into agreements with entities associated with the contract holder, you
and/or other participants. Through such agreements, ALIAC may pay the entities
for certain services in connection with administering the contract.
In both these circumstances there may be an understanding that the distributor
or entities would endorse the Company as a provider of the contract. You will be
notified if you are purchasing a contract that is subject to these arrangements.
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<PAGE>
Contract Modification
We may change the contract as required by federal or state law. In addition, we
may, upon 30 days' written notice to the contract holder, make other changes to
group contracts that would apply only to individuals who become participants
under that contract after the effective date of such changes. If the group
contract holder does not agree to a change, we reserve the right to refuse to
establish new accounts under the contract, and under some contracts, to
discontinue accepting payments to existing accounts. Certain changes will
require the approval of appropriate state or federal regulatory authorities.
In addition, we reserve the right, without contract holder consent, to change
the tables for determining the amount of income payments or the income payment
options available. Such a change would only apply to income payments
attributable to contributions accepted after the date of change.
Legal Matters and Proceedings
We are aware of no material legal proceedings pending which involve the separate
account or the Company as a party or which would materially affect the separate
account. The validity of the securities offered by this prospectus has been
passed upon by counsel to the Company.
Payment Delay or Suspension
We reserve the right to suspend or postpone the date of any payment of benefits
or values under the following circumstances:
(a) On any valuation date when the New York Stock Exchange is closed
(except customary weekend and holiday closings), or when trading on the
Exchange is restricted;
(b) When an emergency exists as determined by the SEC so that disposal of
securities held in the subaccounts is not reasonably practicable or it is
not reasonably practicable for us fairly to determine the value of the
subaccount's assets; or
(c) During any other periods the SEC may by order permit for the protection
of investors.
The conditions under which restricted trading or an emergency exists shall be
determined by the rules and regulations of the SEC.
Transfer of Ownership; Assignment
An assignment of a contract will only be binding on us if it is made in writing
and sent to us at our Service Office. We will use reasonable procedures to
confirm that the assignment is authentic, including verification of signature.
If we fail to follow our own procedures, we will be liable for any losses to you
directly resulting from the failure. Otherwise, we are not responsible for the
validity of any assignment. The rights of the contract holder and the interest
of the annuitant and any beneficiary will be subject to the rights of any
assignee we have on our records.
Account Termination
Where allowed by state law, we reserve the right to terminate an individual
account if the account value is less than $3,500 and this value is not due to
negative investment performance. We will notify you or the contract holder 90
days prior to terminating the account.
Year 2000 Readiness
As a healthcare and financial services enterprise, Aetna Inc. (referred to
collectively with its affiliates and subsidiaries as "Aetna"), is dependent on
information technology ("IT") systems and other systems and facilities, such as
telephones, building access control systems and heating an ventilation equipment
("embedded systems") to conduct its business. The Company also has business
relationships with financial institutions, financial intermediaries, public
utilities and other critical vendors, as well as regulators and customers, who
are themselves reliant on IT and embedded systems to conduct their businesses.
In 1997, the Company's ultimate parent, Aetna, organized a multi-disciplinary
Year 2000 Project Team, including outside consultants. The Year 2000 Project
Team and Aetna's businesses and subsidiaries, including the Company have
developed and are currently executing a comprehensive plan designed to make
their mission-critical IT systems and embedded systems Year 2000 ready. Outside
consultants have reviewed Aetna's overall process, plan and progress to date.
Aetna's plan for IT systems consists of five phases: (i) assessment, (ii)
remediation, (iii) testing, (iv) implementation and (v) Year 2000 approval. At
year end 1997, Aetna, including the Company, had substantially completed the
assessment phase for all of its IT systems. Aetna completed the remediation,
testing and approval of substantially all of its IT systems and those of its
subsidiaries, including all of the IT systems of the Company by June 30, 1999.
The costs of these efforts will not affect the separate account.
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<PAGE>
The Company also faces the risk that one or more of its critical suppliers
("external relationships") will not be able to interact with the Company due to
the third party's inability to resolve its own Year 2000 issues, including those
associated with its own external relationships. The Company, its affiliates and
the mutual funds that serve as investment options for the separate account also
have relationships with investment advisers, broker dealers, transfer agents,
custodians or other securities industry participants or other service providers
that are not affiliated with Aetna. The Company has completed its inventory of
external relationships and risk rated each external relationship based upon the
potential business impact, available alternatives and cost of substitution. In
the case of mission-critical suppliers such as certain banks, telecommunications
providers and other utilities, mutual fund companies, IT vendors and financial
market data providers, either Aetna or the Company is engaged in discussions
with the third parties and is attempting to obtain detailed information as to
those parties' Year 2000 plans and state of readiness. A significant portion of
the Company's critical external relationships have informed the Company that
they are not aware of any Year 2000 related reason that they will not be able to
perform their obligations to the Company in all material respects.
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<PAGE>
Contents of the Statement of Additional Information
- ---------------------------------------------------
The Statement of Additional Information contains more specific information on
the separate account and the contract, as well as the financial statements of
the separate account and the Company. A list of the contents of the SAI is set
forth below:
General Information and History
Variable Annuity Account I
Offering and Purchase of Contracts
Performance Data
General
Average Annual Total Return Quotations
Income Phase Payments
Sales Material and Advertising
Independent Auditors
Financial Statements of the Separate Account
Financial Statements of the Company
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Appendix I
Fixed Plus Account
------------------
The Fixed Plus Account is an investment option available during the accumulation
phase.
Amounts allocated to the Fixed Plus Account are held in the Company's general
account which supports insurance and annuity obligations.
Additional information about this option may be found in the contract.
General Disclosure. Interests in the Fixed Plus Account have not been registered
with the SEC in reliance on exemptions under the Securities Act of 1933, as
amended. Disclosure in this prospectus regarding the Fixed Plus Account may be
subject to certain generally applicable provisions of the federal securities
laws relating to the accuracy and completeness of the statements. Disclosure in
this Appendix regarding the Fixed Plus Account has not been reviewed by the SEC.
Certain Restrictions. We reserve the right to limit investment in or transfers
to the Fixed Plus Account. You may not elect certain withdrawal options,
including the systematic distribution option, if you have requested a Fixed Plus
Account transfer or withdrawal in the prior 12-month period. Under certain
emergency conditions, we may defer payment of a withdrawal from the Fixed Plus
Account for a period of up to six months or as provided by federal law.
Interest Rates. The Fixed Plus Account guarantees that amounts allocated to this
option will earn the minimum interest rate specified in the contract. We may
credit a higher interest rate from time to time, but the rate we credit will
never fall below the guaranteed minimum specified in the contract. Amounts
applied to the Fixed Plus Account will earn the interest rate in effect at the
time money is applied. Amounts in the Fixed Plus Account will reflect a compound
interest rate as credited by us. The rate we quote is an annual effective yield.
Our determination of interest rates reflects the investment income earned on
invested assets and the amortization of any capital gains and/or losses realized
on the sale of invested assets. Under this option, we assume the risk of
investment gain or loss by guaranteeing the amounts you allocate to this option
and promising a minimum interest rate and income phase payment.
Requests for Partial Withdrawals. The contract holder or you, if permitted by
the plan, may take up to 20% of the Fixed Plus Account value as a partial
withdrawal in each twelve (12) month period. We determine the amount eligible
for partial withdrawal as of the date we receive a request for partial
withdrawal in good order at our Service Office. The amount allowed for partial
withdrawal is reduced by any Fixed Plus Account withdrawals, transfers or
amounts applied to income phase payment options made in the prior 12 months. In
calculating the 20% limit, we reserve the right to include payments made due to
the election of a systematic distribution option.
Waiver of Partial Withdrawal Limits. We waive the 20% limit if the partial
withdrawal is due to the election of an income phase payment option. We also
waive the 20% limit for withdrawals due to your death before income phase
payments begin. The waiver upon death may only be exercised once, must occur
within six months after your date of death and must be made proportionally from
all subaccounts and the Fixed Plus Account in which the account was invested.
Additionally, we may allow other waivers of the percentage limit on partial
withdrawals to participants in certain plans. You can determine what additional
waivers, if any, apply to you by referring to the contract or certificate.
Requests for Full Withdrawals. If the contract holder or you, if allowed by the
plan, request a full withdrawal of your Fixed Plus Account value, we will pay
any amounts held in the Fixed Plus Account, with interest, in five annual
payments that will be equal to:
>One-fifth of the Fixed Plus Account value on the day the request is received in
good order, reduced by any Fixed Plus Account withdrawals, transfers or amounts
used to fund income phase payments made during the prior 12 months; >One-fourth
of the remaining Fixed Plus Account value 12 months later;
>One-third of the remaining Fixed Plus Account value 12 months later;
>One-half of the remaining Fixed Plus Account value 12 months later; and
>The balance of the Fixed Plus Account value 12 months later.
Once we receive a request for a full withdrawal, no further withdrawals or
transfers will be permitted from the Fixed Plus Account. A full withdrawal from
the Fixed Plus Account may be canceled at any time before the end of the
five-payment period.
35
<PAGE>
Waiver of Full Withdrawal Provisions. We will waive the Fixed Plus Account
five-installment payout for full withdrawals made due to one or more of the
following:
(a) Due to the election of an income phase payment option;
(b) Due to your death during the accumulation phase; or
(c) When the Fixed Plus Account value is $3,500 or less and no withdrawals,
transfers or elections of income phase payment options have been made from
the account within the prior 12 months.
Additionally, we will waive the five-payment full withdrawal provision due to
one or more of the following:
1. Due to hardship from an unforeseeable emergency, as defined by the Tax Code,
if all of the following conditions are met:
>The hardship is certified by the employer;
>The amount is paid directly to you; and
>The amount paid for all withdrawals due to hardship during the previous
12-month period does not exceed 10% of the average value of your account(s) and
all other accounts under the relevant contract during that same period.
2. Due to your separation from service with the employer, provided that all the
following apply:
>The withdrawal is due to your separation from service with your employer;
>The employer certifies that you have separated from service;
>The amount withdrawn is paid directly to you; and
> The amount paid for all partial and full withdrawals due to separation from
service during the previous 12-month period does not exceed 20% of the average
value of all your account(s) and all other accounts under the relevant contract
during that same period.
3. If we terminate your account based on our right to do so for accounts below
$3,500.
4. Additionally, we may allow other waivers of the five installment payout for
full withdrawals to participants in certain plans. You can determine what
additional waivers, if any, apply to you by referring to the contract or
certificate.
Charges. We do not make deductions from amounts in the Fixed Plus Account to
cover mortality and expense risks. We consider these risks when determining the
credited rate.
Transfers. The contract holder or you, if allowed by the plan, may transfer 20%
of your account value held in the Fixed Plus Account in each rolling 12-month
period. We determine the amount eligible for transfer on the day we receive a
transfer request in good order at our Service Office. We will reduce amounts
allowed for transfer by any Fixed Plus Account withdrawals, transfers or amounts
applied to income phase payment options during the prior 12 months. We also
reserve the right to include payments made due to the election of any of the
systematic distribution options. We will waive the percentage limit on transfers
when the value in the Fixed Plus Account is $1,000 or less.
Income Phase. Amounts accumulating under the Fixed Plus Account can be
transferred to subaccounts to fund variable payments during the income phase.
Availability of subaccounts may vary during the income phase. The contracts do
not permit Fixed Plus Account values to fund nonlifetime income options with
variable payments.
Transfer Credits. The Company provides a transfer credit in certain
circumstances. See "Contract Purchase and Participation--Transfer Credits." The
transfer credit is a specified percentage of the assets transferred to the
Company under a contract that remain in the accounts for the period of time
specified by the Company, plus the interest that would have been credited had
that amount been deposited in the Fixed Plus Account on the first business day
of the calendar month following its calculation. We apply the transfer credit to
the current value held in the Fixed Plus Account.
36
<PAGE>
Appendix II
Employee Appointment of Employer as Agent
Under an Annuity Contract
-------------------------
For Plans under Section 403(b) or 401(a) of the Tax Code
(except voluntary Section 403(b) plans)
My employer has adopted a plan under Internal Revenue Tax Code Sections 403(b)
or 401(a) ("Plan") and has purchased an Aetna Insurance Company of America
("Company") group variable annuity contract ("Contract") as the funding vehicle.
Contributions under this Plan will be made by me through salary reduction to an
Employee Account, and by my employer to an Employer Account.
By electing to participate in my employer's Plan, I voluntarily appoint my
employer, who is the Contract Holder, as my agent for the purposes of all
transactions under the Contract in accordance with the terms of the Plan. The
Company is not a party to the Plan and does not interpret the Plan provisions.
As a Participant in the Plan, I understand and agree to the following terms and
conditions:
>I own the value of my Employee Account subject to the restrictions of Sections
403(b)or 401(a) and the terms of the Plan. Subject to the terms of the vesting
schedule in the Plan and the restrictions of Sections 403(b) or 403(a), I have
ownership in the value of my Employer Account.
>I understand that the Company will process transactions only with my employer's
written direction to the Company. I agree to be bound by my employer's
interpretation of the Plan provisions and its written direction to the Company.
>My employer may permit me to make investment selections under the Employee
Account and/or the Employer Account directly with the Company under the terms of
the Contract. Without my employer's written permission, I will be unable to make
any investment selections under the Contract.
>In the event of my death, my employer is the named Beneficiary under the terms
of the Contract. I have the right to name a personal Beneficiary as determined
under the terms of the Plan and file that Beneficiary election with my employer.
It is my employer's responsibility to direct the Company to properly pay any
death benefits.
37
<PAGE>
Appendix III
Fund Descriptions
-----------------
The investment results of the mutual funds (funds) are likely to differ
significantly and there is no assurance that any of the funds will achieve their
respective investment objectives. Shares of the funds will rise and fall in
value and you could lose money by investing in the funds. Shares of the funds
are not bank deposits and are not guaranteed, endorsed or insured by any
financial institution, the Federal Deposit Insurance Corporation or any other
government agency. Except as noted, all funds are diversified, as defined under
the Investment Company Act of 1940.
>Aetna Balanced VP, Inc. seeks to maximize investment return, consistent with
reasonable safety of principal by investing in a diversified portfolio of one or
more of the following asset classes: stocks, bonds, and cash equivalents, based
on the investment adviser's judgment of which of those sectors or mix thereof
offers the best investment prospects.(1)
>Aetna Income Shares d/b/a Aetna Bond VP seeks to maximize total return,
consistent with reasonable risk, through investments in a diversified portfolio
consisting primarily of debt securities. It is anticipated that capital
appreciation and investment income will both be major factors in achieving total
return.(1)
>Aetna Variable Fund d/b/a Aetna Growth and Income VP seeks to maximize total
return through investments in a diversified portfolio of common stocks and
securities convertible into common stock. It is anticipated that capital
appreciation and investment income will both be major factors in achieving total
return.(1)
>Aetna Variable Encore Fund d/b/a Aetna Money Market VP seeks to provide high
current return, consistent with preservation of capital and liquidity, through
investment in high-quality money market instruments. An investment in the fund
is neither insured nor guaranteed by the U.S. Government.(1)
>Aetna Generation Portfolios, Inc.--Aetna Ascent VP seeks to provide capital
appreciation. The Portfolio is designed for investors who generally have an
investment horizon exceeding 15 years and who have a high level of risk
tolerance.(1)
>Aetna Generation Portfolios, Inc.--Aetna Crossroads VP seeks to provide total
return (i.e., income and capital appreciation, both realized and unrealized).
The Portfolio is designed for investors who generally have an investment horizon
exceeding 10 years and who have a moderate level of risk tolerance.(1)
>Aetna Generation Portfolios, Inc.--Aetna Legacy VP seeks to provide total
return consistent with preservation of capital. The Portfolio is designed for
investors who generally have an investment horizon exceeding five years and who
have a low level of risk tolerance.(1)
>Aetna Variable Portfolios, Inc.--Aetna Growth VP seeks growth of capital
through investment in a diversified portfolio of common stocks and securities
convertible into common stocks believed to offer growth potential.(1)
>Aetna Variable Portfolios, Inc.--Aetna High Yield VP seeks high current income
and growth of capital primarily through investment in a diversified portfolio of
fixed-income securities rated lower than BBB- by Standard and Poor's Corporation
or lower than Baa3 by Moody's Investors Service, Inc.(1)
>Aetna Variable Portfolios, Inc.--Aetna Index Plus Large Cap VP seeks to
outperform the total return performance of the Standard & Poor's 500 Composite
Index (S&P 500), while maintaining a market level of risk.(1)
>Aetna Variable Portfolios, Inc.--Aetna Index Plus Mid Cap VP seeks to
outperform the total return performance of the Standard & Poor's MidCap 400
Index (S&P 400), while maintaining a market level of risk.(1)
>Aetna Variable Portfolios, Inc.--Aetna Index Plus Small Cap VP seeks to
outperform the total return performance of the Standard & Poor's SmallCap 600
Index (S&P 600), while maintaining a market level of risk.(1)
>Aetna Variable Portfolios, Inc.--Aetna International VP seeks long-term capital
growth primarily through investment in a diversified portfolio of common stocks
principally traded in countries outside of the U.S. Aetna International VP will
not target any given level of current income.(1)
>Aetna Variable Portfolios, Inc.--Aetna Real Estate Securities VP seeks maximum
total return primarily through investment in a diversified portfolio of equity
securities issued by real estate companies, the majority of which are real
estate investment trusts (REITs).(1)
38
<PAGE>
>Aetna Variable Portfolios, Inc.--Aetna Small Company VP seeks growth of capital
primarily through investment in a diversified portfolio of common stocks and
securities convertible into common stocks of companies with smaller market
capitalizations.(1)
>Aetna Variable Portfolios, Inc.--Aetna Value Opportunity VP seeks growth of
capital primarily through investment in a diversified portfolio of common stocks
and securities convertible into common stocks.(1)(a)
>AIM V.I. Capital Appreciation Fund seeks growth of capital through investment
in common stocks, with emphasis on medium- and small-sized growth companies.(2)
>AIM V.I. Growth Fund seeks growth of capital primarily by investing in seasoned
and better capitalized companies considered to have strong earnings momentum.(2)
>AIM V.I. Growth and Income Fund seeks growth of capital with a secondary
objective of current income.(2)
>AIM V.I. Value Fund seeks to achieve long-term growth of capital by investing
primarily in equity securities judged by the fund's investment advisor to be
undervalued relative to the investment advisor's appraisal of the current or
projected earnings of the companies issuing the securities, or relative to
current market values of assets owned by the companies issuing the securities or
relative to the equity market generally. Income is a secondary objective.(2)
>Calvert Social Balanced Portfolio is a nondiversified portfolio that seeks to
achieve a competitive total return through an actively managed, nondiversified
portfolio of stocks, bonds, and money market instruments which offer income and
capital growth opportunity and which satisfy the investment and social criteria
established for the Portfolio.(3)
>Fidelity Variable Insurance Products Fund (VIP)--Equity-Income Portfolio seeks
reasonable income. The fund will also consider the potential for capital
appreciation. The fund seeks a yield which exceeds the composite yield on the
securities comprising the S&P 500.(4)
>Fidelity Variable Insurance Products Fund (VIP)--Growth Portfolio seeks capital
appreciation by investing primarily in common stocks of companies the investment
adviser believes have above-average growth potential.(4)
>Fidelity Variable Insurance Products Fund (VIP)--Overseas Portfolio seeks
long-term growth of capital by investing in foreign securities, primarily in
common stocks.(4)
>Fidelity Variable Insurance Products Fund II (VIP II)--Contrafund Portfolio
seeks long term capital appreciation by investing primarily in common stocks of
companies whose value the investment adviser believes is not fully recognized by
the public.(4)
>Janus Aspen Series--Aggressive Growth Portfolio is a nondiversified portfolio
that seeks long-term growth of capital. The Portfolio pursues its investment
objective by investing primarily in common stocks selected for their growth
potential, and normally invests at least 50% of its equity assets in
medium-sized companies. Medium-sized companies are those whose market
capitalizations at the time of investment fall within the range of companies in
the S&P MidCap 400 Index. Market capitalization is a commonly used measure of
the size and value of a company. The market capitalizations within the Index
will vary, but as of December 31, 1998, they ranged from approximately $142
million to $73 billion.(5)
>Janus Aspen Series--Balanced Portfolio seeks long-term capital growth,
consistent with preservation of capital and balanced by current income. The
Portfolio pursues its investment objective by normally investing 40%-60% of its
assets in securities selected primarily for their growth potential and 40%-60%
of its assets in securities selected primarily for their income potential. This
Portfolio normally invests at least 25% of its assets in fixed-income
securities.(5)
>Janus Aspen Series--Flexible Income Portfolio seeks to obtain maximum total
return, consistent with preservation of capital. The Portfolio pursues its
investment objective by primarily investing in a wide variety of
income-producing securities such as corporate bonds and notes, government
securities and preferred stock. As a fundamental policy, the Portfolio will
invest at least 80% of its assets in income-producing securities. The Portfolio
may own an unlimited amount of high-yield/high-risk securities, and these may be
a big part of the portfolio. This Portfolio generates total return from a
combination of current income and capital appreciation, but income is usually
the dominant portion.(5)
>Janus Aspen Series--Growth Portfolio seeks long-term growth of capital in a
manner consistent with the preservation of capital. The Portfolio pursues its
investment objective by investing primarily in common stocks selected for their
growth potential. Although the Portfolio can invest in companies of any size, it
generally invests in larger, more established issuers.(5)
39
<PAGE>
>Janus Aspen Series--Worldwide Growth Portfolio seeks long-term growth of
capital in a manner consistent with the preservation of capital. The Portfolio
pursues its investment objective by investing primarily in common stocks of
companies of any size throughout the world. The Portfolio normally invests in
issuers from at least five different countries, including the United States. The
Portfolio may at times invest in fewer than five countries or even a single
country.(5)
>Oppenheimer Global Securities Fund/VA seeks long-term capital appreciation by
investing a substantial portion of its assets in securities of foreign issuers,
"growth-type" companies, cyclical industries and special situations which are
considered to have appreciation possibilities.(6)
>Oppenheimer Strategic Bond Fund/VA seeks a high level of current income
principally derived from interest on debt securities and seeks to enhance such
income by writing covered call options on debt securities.(6)
>Portfolio Partners, Inc.--MFS Emerging Equities Portfolio seeks long-term
growth of capital.(7)(a)
>Portfolio Partners, Inc.--MFS Research Growth Portfolio seeks long-term growth
of capital and future income.(7)(a)
>Portfolio Partners, Inc.--MFS Value Equity Portfolio seeks capital
appreciation.(7)(a)
>Portfolio Partners, Inc.--Scudder International Growth Portfolio seeks
long-term growth of capital.(7)(b)
>Portfolio Partners, Inc.--T. Rowe Price Growth Equity Portfolio seeks long-term
capital growth, and, secondarily, increasing dividend income.(7)(c)
Investment Advisers for each of the Funds:
(1) Aeltus Investment Management, Inc.
(a) Bradley, Foster & Sargent, Inc. (subadviser)
(2) AIM Advisors, Inc.
(3) Calvert Asset Management Company, Inc.
(4) Fidelity Management & Research Company
(5) Janus Capital Corporation
(6) OppenheimerFunds, Inc.
(7) Aetna Life Insurance and Annuity Company (adviser);
(a) Massachusetts Financial Services Company (subadviser)
(b) Scudder Kemper Investments, Inc. (subadviser)
(c) T. Rowe Price Associates, Inc. (subadviser)
40
<PAGE>
For Master Applications Only
----------------------------
I hereby acknowledge receipt of an Account I prospectus dated [insert], as well
as all current prospectuses for the funds available under the Contracts.
________ Please send an Account I Statement of Additional Information (Form No.
SAI.[insert]) dated [insert].
CONTRACT HOLDER'S SIGNATURE
DATE
PROS.[insert]-99
41
<PAGE>
- --------------------------------------------------------------------------------
VARIABLE ANNUITY ACCOUNT I
OF
AETNA INSURANCE COMPANY OF AMERICA
- --------------------------------------------------------------------------------
Statement of Additional Information dated __________________, 1999
Retirement Plans for Educational Institutions
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the current prospectus for Variable Annuity Account I (the
"separate account") dated _________________, 1999.
A free prospectus is available upon request from the local Aetna Insurance
Company of America office or by writing to or calling:
Aetna Financial Services
Annuity Services
151 Farmington Avenue
Hartford, Connecticut 06156-1277
1-800-531-4547
Read the prospectus before you invest. Unless otherwise indicated, 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..................................................... 3
Income Phase Payments............................................................................ 6
Sales Material and Advertising................................................................... 7
Independent Auditors............................................................................. 7
Financial Statements of the Separate Account..................................................... S-1
Financial Statements of Aetna Insurance Company of America....................................... F-1
</TABLE>
<PAGE>
GENERAL INFORMATION AND HISTORY
Aetna Insurance Company of America (the Company, we, us) issues the contracts
described in the prospectus and is responsible for providing each contract's
insurance and annuity benefits. We are a stock life insurance company which was
organized under the insurance laws of the State of Connecticut in 1990 and
redomesticated under the laws of the State of Florida in 1999. We are an
indirect wholly-owned subsidiary of Aetna Inc. Our Home Office is located at
5100 West Lemon Street, Suite 213, Tampa, Florida 33609.
Aetna Life Insurance and Annuity Company (ALIAC), a registered broker-dealer
under the Securities Exchange Act of 1934, serves as the principal underwriter
for the separate account. ALIAC is also a registered investment adviser under
the Investment Advisers Act of 1940.
Other than the mortality and expense risk charge and administrative expense
charge described in the prospectus, all expenses incurred in the operations of
the separate account are borne by the Company. See "Fees" in the prospectus. We
receive reimbursement for certain administrative costs from some advisers of the
funds used as funding options under the contract. These fees generally range up
to 0.425%. 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.
From this point forward, the term "contract(s)" refers only to those offered
through the prospectus.
VARIABLE ANNUITY ACCOUNT I
Variable Annuity Account I 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.
Payments to accounts under the contract may be allocated to one or more of the
subaccounts. Each subaccount invests in the shares of only one of the funds
listed below. We may make additions to, deletions from or substitutions of
available investment options as permitted by law and subject to the conditions
of the contract. The availability of the funds is subject to applicable
regulatory authorization. Not all funds are available in all jurisdictions or
under all contracts. The funds currently available under the contracts are as
follows:
<TABLE>
<S> <C>
Aetna Ascent VP Fidelity Variable Insurance Products Fund (VIP) Equity-Income
Aetna Balanced VP, Inc. Portfolio
Aetna Income Shares d/b/a Aetna Bond VP Fidelity Variable Insurance Products Fund (VIP) Growth
Aetna Crossroads VP Portfolio
Aetna Growth VP Fidelity Variable Insurance Products Fund (VIP) Overseas
Aetna Variable Fund d/b/a Aetna Growth and Income VP Portfolio
Aetna High Yield VP Fidelity Variable Insurance Products Fund II (VIP II)
Aetna Index Plus Large Cap VP Contrafund Portfolio
Aetna Index Plus Mid Cap VP Janus Aspen Aggressive Growth Portfolio
Aetna Index Plus Small Cap VP Janus Aspen Balanced Portfolio
Aetna International VP Janus Aspen Flexible Income Portfolio
Aetna Legacy VP Janus Aspen Growth Portfolio
Aetna Variable Encore Fund d/b/a Aetna Money Market VP Janus Aspen Worldwide Growth Portfolio
Aetna Real Estate Securities VP Oppenheimer Global Securities Fund/VA
Aetna Small Company VP Oppenheimer Strategic Bond Fund/VA
Aetna Value Opportunity VP Portfolio Partners MFS Emerging Equities Portfolio
AIM V.I. Capital Appreciation Fund Portfolio Partners MFS Research Growth Portfolio
AIM V.I. Growth Fund Portfolio Partners MFS Value Equity Portfolio
AIM V.I. Growth and Income Fund Portfolio Partners Scudder International Growth Portfolio
AIM V.I. Value Fund Portfolio Partners T. Rowe Price Growth Equity Portfolio
Calvert Social Balanced Portfolio
</TABLE>
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
The Company is the depositor and ALIAC is the principal underwriter for the
securities sold under the prospectus. 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 the contracts are purchased can be found in
the prospectus under the sections titled "Contract Purchase and Participation"
and "Your Account Value."
PERFORMANCE DATA
GENERAL
From time to time, we may advertise different types of historical performance
for the subaccounts of the separate account available under the contracts. We
may advertise the "standardized average annual total returns," calculated in a
manner prescribed by the Securities and Exchange Commission (the "standardized
total return"), as well as "non-standardized total returns," 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 payment of $1,000 is
applied to the various subaccounts under the contract, and then related to the
ending redeemable values over one, five and ten year periods (or fractional
periods thereof). The redeemable value is then divided by the initial investment
and this quotient is taken to the Nth root (N represents the number of years in
the period) and 1 is subtracted from the result which is then expressed as a
percentage, carried to at least the nearest hundredth of a percent. The
standardized figures use the actual returns of the fund since the date
contributions were first received in the fund under the separate account,
adjusted to reflect the deduction of the maximum recurring charges under the
contracts during each period. These charges will be deducted on a pro rata basis
in the case of fractional periods.
The non-standardized figures will be calculated in a similar manner, except that
they may also include monthly, quarterly, year-to-date and three-year periods,
and may include returns calculated from the fund's inception date and/or the
date the fund was added to the separate account.
Investment results of the subaccounts will fluctuate over time, and any
presentation of the subaccounts' total return quotations for any prior period
should not be considered as a representation of how the subaccounts will perform
in any future period. Additionally, the contract value and/or account value upon
redemption may be more or less than your original cost.
AVERAGE ANNUAL TOTAL RETURN QUOTATIONS - Standardized and Non-Standardized
The tables below show the average annual standardized and non-standardized total
return quotation figures for the periods ended December 31, 1998 for the
subaccounts under the contract. Both sets of returns below reflect a mortality
and expense risk charge of 1.00% annually.
For the subaccounts funded by the Portfolio Partners portfolios, two sets of
performance returns are shown for each subaccount: one showing performance based
solely on the performance of the Portfolio Partners portfolio from November 28,
1997, the date the portfolio commenced operations; and one quotation based on
(a) performance through November 26, 1997 of the fund it replaced under many
contracts and; (b) after November 26, 1997, based on the performance of the
Portfolio Partners portfolio.
For those subaccounts where results are not available for the full calendar
period indicated, performance for such partial periods is shown in the column
labeled "Since Inception." For standardized performance, the "Since Inception"
column shows the average annual return since the date contributions were first
received in the fund under the separate account. For non-standardized
performance, the "Since Inception" column shows average annual total return
since the fund's inception date.
-3-
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------
Date
Contributions
STANDARDIZED First Received
Under the
Separate Account
- ------------------------------------------------------------------------------------------------------------------------------------
Since
SUBACCOUNT 1 Year 5 Year 10 Year Inception*
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aetna Ascent VP 3.27% 15.11% 07/31/1996
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Balanced VP, Inc. 15.77% 17.17% 02/29/1996
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Bond VP 7.07% 5.55% 01/31/1996
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Crossroads VP 4.86% 13.44% 07/31/1996
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Growth VP 36.31% 35.70% 05/30/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Growth and Income VP 13.35% 20.89% 01/31/1996
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna High Yield VP (7.44%) 05/04/1998
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Index Plus Large Cap VP 30.29% 31.42% 10/31/1996
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Index Plus Mid Cap VP 7.93% 05/04/1998
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Index Plus Small Cap VP (11.67%) 05/04/1998
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna International VP (3.63%) 05/05/1998
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Legacy VP 5.88% 10.56% 05/31/1996
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Money Market VP(1) 4.41% 4.37% 02/29/1996
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Real Estate Securities VP (12.14%) 05/05/1998
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Small Company VP 0.09% 12.72% 05/30/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Value Opportunity VP 21.18% 27.22% 05/30/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Calvert Social Balanced Portfolio 15.12% 15.23% 11/28/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio 10.52% 16.03% 01/31/1996
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio 38.10% 24.39% 01/31/1996
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Overseas Portfolio 11.63% 11.07% 03/29/1996
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Contrafund Portfolio 28.69% 24.33% 03/29/1996
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Aggressive Growth Portfolio 32.92% 14.45% 03/29/1996
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Balanced Portfolio 32.95% 23.32% 03/29/1996
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Flexible Income Portfolio 8.02% 10.32% 04/30/1996
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Growth Portfolio 34.31% 23.01% 03/29/1996
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Worldwide Growth Portfolio 27.64% 24.96% 01/31/1996
- ------------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Securities Fund/VA 12.97% 13.63% 05/30/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Strategic Bond Fund/VA 1.87% 4.69% 05/30/1997
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio Partners MFS Emerging Equities Portfolio 28.38% 24.34% 11/28/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Alger American Small Cap/Portfolio Partners MFS Emerging Equities(2) 28.38% 13.00% 01/31/1996
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio Partners MFS Research Growth Portfolio 21.78% 17.70% 11/28/1997
- ------------------------------------------------------------------------------------------------------------------------------------
American Century VP Capital Appreciation/Portfolio Partners MFS
Research Growth(2) 21.78% 3.94% 03/30/1996
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio Partners MFS Value Equity Portfolio 25.48% 24.80% 11/28/1997
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio Partners Scudder International Growth Portfolio 17.91% 17.67% 11/28/19997
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio Partners T. Rowe Price Growth Equity Portfolio 26.33% 26.25% 11/28/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Alger American Growth/Portfolio Partners T. Rowe Price Growth
Equity(2) 26.33% 21.04% 01/31/1996
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Please refer to the discussion preceding the tables for an explanation of the
charges included and methodology used in the standardized and non-standardized
figures. These figures represent historical performance and should not be
considered a projection of future performance. As of the date of this statement
of additional information, the AIM V.I. Capital Appreciation Fund, AIM V.I.
Growth Fund, AIM V.I. Growth and Income Fund, and the AIM V.I. Value Fund had
not been offered under this separate account. Therefore, no standardized
performance is presented for these funds.
* Reflects performance from the date contributions were first received in the
fund under the separate account.
(1) The current yield for the subaccount for the seven-day period ended
December 31, 1998 (on an annualized basis) was 4.02%. Current yield more closely
reflects current earnings than does total return. The current yield reflects the
deduction of all charges under the contract that are deducted from the total
return quotations shown above.
(2) The fund first listed was replaced with the applicable Portfolio Partners
Portfolio after the close of business on November 26, 1997. The performance
shown is based on the performance of the replaced fund until November 26, 1997,
and the performance of the applicable Portfolio Partners Portfolio after that
date. The replaced fund may not have been available under all contracts. The
"Date Contributions First Received Under Separate Account" refers to the
applicable date for the replaced fund.
-4-
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------
Fund
NON-STANDARDIZED Inception
Date
- ------------------------------------------------------------------------------------------------------------------------------------
Since
SUBACCOUNT 1 Year 3 Years 5 Years 10 Years Inception**
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Aetna Ascent VP 3.27% 14.46% 15.40% 07/05/1995
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Balanced VP, Inc. 15.77% 16.98% 14.75% 11.85% 04/03/1989
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Bond VP(1) 7.07% 5.59% 5.58% 8.19%
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Crossroads VP 4.86% 12.81% 13.62% 07/05/1995
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Growth VP 36.31% 34.02% 12/13/1996
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Growth and Income VP(1) 13.35% 21.55% 18.19% 15.46%
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna High Yield VP (1.27%) 0.15% 12/10/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Index Plus Large Cap VP 30.29% 32.00% 09/16/1996
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Index Plus Mid Cap VP 23.06% 26.08% 12/16/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Index Plus Small Cap VP (2.34%) 1.77% 12/19/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Internatioanl VP 17.74% 20.34% 12/22/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Legacy VP 5.88% 10.71% 11.50% 07/05/1995
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Money Market VP(1)(2) 4.41% 4.38% 4.24% 4.70%
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Real Estate Securities VP (13.71%) (10.20%) 12/15/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Small Company VP 0.09% 16.05% 12/27/1996
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Value Opportunity VP 21.18% 29.82% 12/13/1996
- ------------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund 18.13% 15.62% 16.08% 17.60% 05/05/1993
- ------------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Growth Fund 26.43% 23.18% 21.29% 05/02/1994
- ------------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Growth and Income Fund 32.80% 24.95% 20.24% 19.68% 05/05/1993
- ------------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Value Fund 31.10% 22.29% 20.51% 20.70% 05/05/1993
- ------------------------------------------------------------------------------------------------------------------------------------
Calvert Social Balanced Portfolio(1) 15.12% 15.12% 13.44% 11.76%
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio(1) 10.52% 16.62% 17.60% 14.48%
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio(1) 38.10% 24.23% 20.53% 18.23%
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Overseas Portfolio(1) 11.63% 11.36% 8.61% 8.99%
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Contrafund Portfolio 28.69% 23.81% 27.37% 01/03/1995
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Aggressive Growth Portfolio 32.92% 16.58% 18.16% 20.71% 09/13/1993
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Balanced Portfolio 32.95% 22.73% 17.93% 18.31% 09/13/1993
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Flexible Income Portfolio 8.02% 8.92% 9.23% 8.77% 09/13/1993
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Growth Portfolio 34.31% 24.16% 20.21% 19.68% 09/13/1993
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Worldwide Growth Portfolio 27.64% 25.40% 20.11% 22.80% 09/13/1993
- ------------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Securities Fund/VA 12.97% 16.88% 8.57% 11.37% 11/12/1990
- ------------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Strategic Bond Fund/VA 1.87% 6.75% 5.76% 5.72% 05/03/1993
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio Partners MFS Emerging Equities Portfolio 28.38% 11/28/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Alger American Small Cap/Portfolio Partners MFS Emerging Equities(3) 28.38% 12.71% 14.14% 19.80%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio Partners MFS Research Growth Portfolio 21.78% 11/28/1997
- ------------------------------------------------------------------------------------------------------------------------------------
American Century VP Capital Appreciation/Portfolio Partners MFS
Research Growth(3) 21.78% 3.48% 7.08% 10.15%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio Partners MFS Value Equity Portfolio 25.48% 11/28/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Neuberger & Berman AMT Growth/Portfolio Partners MFS Value Equity(3) 25.48% 19.25% 15.78% 13.58%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio Partners Scudder International Growth Portfolio 17.91% 11/28/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Scudder International Portfolio Class A/Portfolio Partners Scudder
International Growth(3) 17.91% 13.07% 9.32% 10.90%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio Partners T. Rowe Price Growth Equity Portfolio 26.33% 11/28/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Alger American Growth/Portfolio Partners T. Rowe Price Growth
Equity(3) 26.33% 21.64% 19.54% 19.28% 01/09/1989
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Please refer to the discussion preceding the tables for an explanation of the
charges included and methodology used in the standardized and non-standardized
figures. These figures represent historical performance and should not be
considered a projection of future performance.
** Reflects performance from the fund's inception date.
(1) These funds have been in operation for more than ten years.
(2) The current yield for the subaccount for the seven-day period ended
December 31, 1998 (on an annualized basis) was 4.02%. Current yield more closely
reflects current earnings than does total return. The current yield reflects the
deduction of all charges under the contract that are deducted from the total
return quotations shown above.
(3) The fund first listed was replaced with the applicable Portfolio Partners
Portfolio after the close of business on November 26, 1997. The performance
shown is based on the performance of the replaced fund until November 26, 1997,
and the performance of the applicable Portfolio Partners Portfolio after that
date. The replaced fund may not have been available under all contracts. The
"Fund Inception Date" refers to the applicable date for the replaced fund. If no
date is shown, the replaced fund has been in operation for more than ten years.
-5-
<PAGE>
INCOME PHASE PAYMENTS
When you begin receiving payments under the contract during the income phase
(see "Income Phase" in the prospectus), the value of your account is determined
using accumulation unit values as of the tenth valuation before the first
payment is due. Such value (less any applicable premium tax) is applied to
provide payments to you in accordance with the payment option and investment
options elected.
The annuity option tables found in the contract show, for each option, the
amount of the first payment for each $1,000 of value applied. Thereafter, the
variable 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 payments will increase thereafter only to the extent that the net
investment rate increases by more than 5% on an annual basis. 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 income phase begins, the annuitant is credited with a fixed number of
annuity units (which does not change thereafter) in each of the designated
investment options. This number is calculated by dividing (a) by (b), where (a)
is the amount of the first payment based on a particular investment option, and
(b) is the then current annuity unit value for that investment option. As noted,
annuity unit values fluctuate from one valuation to the next (see "Your Account
Value" in the prospectus); such fluctuations reflect changes in the net
investment factor for the appropriate subaccount(s) (with a ten valuation lag
which gives the Company time to process payments) and a mathematical adjustment
which offsets the assumed net investment rate of 3.5% or 5% per annum.
The operation of all these factors can be illustrated by the following
hypothetical example. These procedures will be performed separately for the
investment options selected during the income phase.
EXAMPLE:
- --------
Assume that, at the date payments are to begin, there are 3,000 accumulation
units credited under a particular contract or account and that the value of an
accumulation unit for the tenth valuation 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 payment option elected, a first monthly variable
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 on 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 subaccount is
1.0015000 as of the tenth valuation 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 (assume such value to be $13.504376)
to produce an annuity unit value of $13.523359 for the valuation occurring when
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.
-6-
<PAGE>
SALES MATERIAL AND ADVERTISING
We may include hypothetical illustrations in our sales literature that explain
the mathematical principles of dollar cost averaging, compounded interest, tax
deferred accumulation, and the mechanics of variable annuity contracts. We may
also discuss the difference between variable annuity contracts and other types
of savings or investment products such as personal savings accounts and
certificates of deposit.
We may distribute sales literature that compares the percentage change in
accumulation unit values for any of the subaccounts to established market
indices such as the Standard & Poor's 500 Stock Index and the Dow Jones
Industrial Average or to the percentage change in values of other management
investment companies that have investment objectives similar to the subaccount
being compared.
We may publish in advertisements and reports, the ratings and other information
assigned to us 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 our 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 or their underlying funds by performance and/or
investment objective. We may categorize the underlying funds in terms of the
assets classes they represent and use such categories in marketing materials for
the contracts. We may illustrate in advertisements the performance of the
underlying funds, if accompanied by performance which also shows the performance
of such funds reduced by applicable charges under the separate account. We may
also show in advertisements the portfolio holdings of the underlying funds,
updated at various intervals. From time to time, we will quote articles from
newspapers and magazines or other publications or reports such as The Wall
Street Journal, Money magazine, USA Today and The VARDS Report.
We may provide in advertising, sales literature, periodic publications or other
materials information on various topics of interest to current and prospective
contract holders. These topics may include the relationship between sectors of
the economy and the economy as a whole and its effect on various securities
markets, investment strategies and techniques (such as value investing, market
timing, dollar cost averaging, asset allocation, constant ratio transfer and
account rebalancing), the advantages and disadvantages of investing in
tax-deferred and taxable investments, customer profiles and hypothetical
purchase and investment scenarios, financial management and tax and retirement
planning, and investment alternatives to certificates of deposit and other
financial instruments, including comparison between the contracts and the
characteristics of and market for such financial instruments.
INDEPENDENT AUDITORS
KPMG 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 review of filings made with the SEC.
-7-
<PAGE>
FINANCIAL STATEMENTS OF THE SEPARATE ACCOUNT
VARIABLE ANNUITY ACCOUNT I
Index
<TABLE>
<S> <C>
Statement of Assets and Liabilities........................................ S-2
Statements of Operations and Changes in Net Assets......................... S-6
Condensed Financial Information............................................ S-8
Notes to Financial Statements.............................................. S-10
Independent Auditors' Report............................................... S-26
</TABLE>
S-1
<PAGE>
Variable Annuity Account I
Statement of Assets and Liabilities - December 31, 1998
ASSETS:
Investments at net asset value: (Note 1)
<TABLE>
<CAPTION>
Net
Shares Cost Assets
------ ---- ------
<S> <C> <C> <C>
Aetna Ascent VP: 104,739 $ 1,543,462 $ 1,468,439
Aetna Balanced VP: 466,540 7,374,965 7,338,678
Aetna Bond VP: 628,747 8,330,232 8,211,438
Aetna Crossroads VP: 58,972 785,680 785,501
Aetna Growth and Income VP: 982,351 33,447,658 31,297,697
Aetna Growth VP: 451,105 5,319,141 6,103,448
Aetna Index Plus Large Cap VP: 849,667 13,688,423 14,945,637
Aetna International VP: 3,797 41,261 44,011
Aetna Legacy VP: 133,748 1,660,761 1,654,467
Aetna Money Market VP: 1,975,904 26,236,238 26,452,214
Aetna Real Estate Securities VP: 4,651 43,996 39,671
Aetna Small Company VP: 294,544 3,279,774 3,767,223
Aetna Value Opportunity VP: 434,406 5,636,469 6,259,793
Alger American Funds:
Balanced Portfolio: 108,171 1,100,460 1,404,059
Income and Growth Portfolio: 310,627 3,299,115 4,075,424
Leveraged AllCap Portfolio: 104,148 2,270,569 3,634,760
American Century Investments:
Balanced Fund: 66,794 515,655 557,006
International Fund: 243,103 1,624,446 1,852,446
Calvert Social Balanced Portfolio: 124,088 259,747 265,177
Fidelity Investments Variable Insurance Product Fund:
Equity-Income Portfolio: 2,013,434 47,204,298 51,181,501
Growth Portfolio: 854,304 31,178,486 38,326,577
High Income Portfolio: 1,512,768 19,151,904 17,442,220
Overseas Portfolio: 206,337 4,004,605 4,136,808
Fidelity Investments Variable Insurance Product Fund II:
Asset Manager Portfolio: 447,745 7,570,709 8,131,050
Contrafund Portfolio: 1,620,361 31,130,912 39,601,618
Index 500 Portfolio: 326,815 38,214,324 46,168,328
Investment Grade Bond Portfolio: 94,123 1,128,605 1,219,839
Insurance Management Series:
American Leaders Fund II: 6,824,761 109,150,633 147,960,825
Equity Income Fund II: 2,004,210 24,767,711 28,359,570
Growth Strategies Fund II: 1,962,559 28,120,682 35,149,425
High Income Bond Fund II: 2,717,067 28,282,860 29,670,377
International Equity Fund II: 1,796,331 21,260,207 27,645,530
Prime Money Fund II: 4,666,589 4,665,273 4,666,589
U.S. Government Securities Fund II: 585,366 6,085,740 6,526,831
Utility Fund II: 1,734,312 20,695,200 26,482,939
Janus Aspen Series:
Aggressive Growth Portfolio: 386,923 9,583,635 10,675,204
Balanced Portfolio: 921,338 16,804,227 20,730,112
Flexible Income Portfolio: 386,017 4,666,753 4,655,365
</TABLE>
S-2
<PAGE>
Variable Annuity Account I
Statement of Assets and Liabilities - December 31, 1998 (continued):
<TABLE>
<CAPTION>
Net
Shares Cost Assets
------ ---- ------
<S> <C> <C> <C>
Growth Portfolio: 774,377 $ 14,923,215 $ 18,228,835
Worldwide Growth Portfolio: 2,418,350 60,413,840 70,349,793
Lexington Emerging Markets Fund: 110,605 1,133,387 627,133
Lexington Natural Resources Trust Fund: 78,858 1,151,725 869,806
MFS Funds:
Total Return Series: 904,731 15,015,459 16,393,724
Worldwide Government Series: 70,397 727,002 765,918
Oppenheimer Funds:
Aggressive Growth Fund: 75,688 3,107,624 3,393,073
Global Securities Fund: 93,561 1,992,083 2,064,889
Growth & Income Fund: 561,831 11,689,993 11,506,303
Strategic Bond Fund: 868,342 4,445,390 4,445,909
Portfolio Partners, Inc. (PPI):
PPI MFS Emerging Equities Portfolio: 666,143 30,422,970 36,930,956
PPI MFS Research Growth Portfolio: 1,700,156 17,369,033 20,299,859
PPI MFS Value Equity Portfolio: 155,399 5,324,611 5,881,864
PPI Scudder International Growth Portfolio: 75,410 1,213,809 1,263,880
PPI T. Rowe Price Growth Equity Portfolio: 535,071 23,443,670 29,594,758
------------ ------------
NET ASSETS $762,498,627 $891,504,497
============ ============
</TABLE>
Net assets represented by:
Reserves for annuity contracts in accumulation and payment period:
(Notes 1 and 5)
<TABLE>
<S> <C>
Aetna Ascent VP:
Annuity contracts in accumulation ................................................... $ 1,468,439
Aetna Balanced VP:
Annuity contracts in accumulation ................................................... 7,338,678
Aetna Bond VP:
Annuity contracts in accumulation ................................................... 8,211,438
Aetna Crossroads VP:
Annuity contracts in accumulation ................................................... 785,501
Aetna Growth and Income VP:
Annuity contracts in accumulation ................................................... 31,263,322
Annuity contracts in payment period ................................................. 34,375
Aetna Growth VP:
Annuity contracts in accumulation ................................................... 6,066,474
Annuity contracts in payment period ................................................. 36,974
Aetna Index Plus Large Cap VP:
Annuity contracts in accumulation ................................................... 14,945,637
Aetna International VP:
Annuity contracts in accumulation ................................................... 44,011
Aetna Legacy VP:
Annuity contracts in accumulation ................................................... 1,628,799
Annuity contracts in payment period ................................................. 25,668
Aetna Money Market VP:
Annuity contracts in accumulation ................................................... 26,452,214
Aetna Real Estate Securities VP:
Annuity contracts in accumulation ................................................... 39,671
Aetna Small Company VP:
Annuity contracts in accumulation ................................................... 3,767,223
</TABLE>
S-3
<PAGE>
Variable Annuity Account I
Statement of Assets and Liabilities - December 31, 1998 (continued):
<TABLE>
<S> <C>
Aetna Value Opportunity VP:
Annuity contracts in accumulation .................. $ 6,259,793
Alger American Funds:
Balanced Portfolio:
Annuity contracts in accumulation .................. 1,404,059
Income and Growth Portfolio:
Annuity contracts in accumulation .................. 4,075,424
Leveraged AllCap Portfolio:
Annuity contracts in accumulation .................. 3,634,760
American Century Investments:
Balanced Fund:
Annuity contracts in accumulation .................. 557,006
International Fund:
Annuity contracts in accumulation .................. 1,852,446
Calvert Social Balanced Portfolio:
Annuity contracts in accumulation .................. 265,177
Fidelity Investments Variable Insurance Product Fund:
Equity-Income Portfolio:
Annuity contracts in accumulation .................. 51,181,501
Growth Portfolio:
Annuity contracts in accumulation .................. 38,326,577
High Income Portfolio:
Annuity contracts in accumulation .................. 17,442,220
Overseas Portfolio:
Annuity contracts in accumulation .................. 4,136,808
Fidelity Investments Variable Insurance Product Fund II:
Asset Manager Portfolio:
Annuity contracts in accumulation .................. 8,131,050
Contrafund Portfolio:
Annuity contracts in accumulation .................. 39,601,618
Index 500 Portfolio:
Annuity contracts in accumulation .................. 46,168,328
Investment Grade Bond Portfolio:
Annuity contracts in accumulation .................. 1,219,839
Insurance Management Series:
American Leaders Fund II:
Annuity contracts in accumulation .................. 147,843,450
Annuity contracts in payment period ................ 117,375
Equity Income Fund II:
Annuity contracts in accumulation .................. 28,317,427
Annuity contracts in payment period ................ 42,143
Growth Strategies Fund II:
Annuity contracts in accumulation .................. 35,149,425
High Income Bond Fund II:
Annuity contracts in accumulation .................. 29,644,378
Annuity contracts in payment period ................ 25,999
International Equity Fund II:
Annuity contracts in accumulation .................. 27,616,968
Annuity contracts in payment period ................ 28,562
</TABLE>
S-4
<PAGE>
Variable Annuity Account I
Statement of Assets and Liabilities - December 31, 1998 (continued):
<TABLE>
<S> <C>
Prime Money Fund II:
Annuity contracts in accumulation .................. $ 4,666,589
U.S. Government Securities Fund II:
Annuity contracts in accumulation .................. 6,526,831
Utility Fund II:
Annuity contracts in accumulation .................. 26,418,108
Annuity contracts in payment period ................ 64,831
Janus Aspen Series:
Aggressive Growth Portfolio:
Annuity contracts in accumulation .................. 10,675,204
Balanced Portfolio:
Annuity contracts in accumulation .................. 20,730,112
Flexible Income Portfolio:
Annuity contracts in accumulation .................. 4,655,365
Growth Portfolio:
Annuity contracts in accumulation .................. 18,191,718
Annuity contracts in payment period ................ 37,117
Worldwide Growth Portfolio:
Annuity contracts in accumulation .................. 70,349,793
Lexington Emerging Markets Fund:
Annuity contracts in accumulation .................. 627,133
Lexington Natural Resources Trust Fund:
Annuity contracts in accumulation .................. 869,806
MFS Funds:
Total Return Series:
Annuity contracts in accumulation .................. 16,393,724
Worldwide Government Series:
Annuity contracts in accumulation .................. 765,918
Oppenheimer Funds:
Aggressive Growth Fund:
Annuity contracts in accumulation .................. 3,393,073
Global Securities Fund:
Annuity contracts in accumulation .................. 2,064,889
Growth & Income Fund:
Annuity contracts in accumulation .................. 11,506,303
Strategic Bond Fund:
Annuity contracts in accumulation .................. 4,445,909
Portfolio Partners, Inc. (PPI):
PPI MFS Emerging Equities Portfolio:
Annuity contracts in accumulation .................. 36,930,956
PPI MFS Research Growth Portfolio:
Annuity contracts in accumulation .................. 20,299,859
PPI MFS Value Equity Portfolio:
Annuity contracts in accumulation .................. 5,846,092
Annuity contracts in payment period ................ 35,772
PPI Scudder International Growth Portfolio:
Annuity contracts in accumulation .................. 1,263,880
PPI T. Rowe Price Growth Equity Portfolio:
Annuity contracts in accumulation .................. 29,594,758
------------
$891,504,497
============
</TABLE>
See Notes to Financial Statements
S-5
<PAGE>
Variable Annuity Account I
Statements of Operations and Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended December 31,
1998 1997
---- ----
<S> <C> <C>
INVESTMENT INCOME:
Income: (Notes 1, 3 and 5)
Dividends .......................................................... $ 36,268,129 $ 13,569,495
Expenses: (Notes 2 and 5)
Valuation period deductions ........................................ (10,257,915) (5,565,448)
------------- -------------
Net investment income ............................................... 26,010,214 8,004,047
------------- -------------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on sales of investments: (Notes 1, 4 and 5)
Proceeds from sales ................................................ 438,314,806 170,076,421
Cost of investments sold ........................................... 412,797,023 157,030,583
------------- -------------
Net realized gain .................................................. 25,517,783 13,045,838
Net unrealized gain on investments: (Note 5)
Beginning of year .................................................. 62,528,168 13,871,018
End of year ........................................................ 129,005,870 62,528,168
------------- -------------
Net change in unrealized gain ..................................... 66,477,702 48,657,150
------------- -------------
Net realized and unrealized gain on investments ..................... 91,995,485 61,702,988
------------- -------------
Net increase in net assets resulting from operations ................ 118,005,699 69,707,035
------------- -------------
FROM UNIT TRANSACTIONS:
Variable annuity contract purchase payments ......................... 168,355,044 230,999,062
Transfers from the Company's fixed account options .................. 75,081,637 55,038,062
Redemptions by contract holders ..................................... (31,854,396) (14,064,451)
Annuity payments .................................................... (83,247) (14,846)
Other ............................................................... 1,337,372 99,606
------------- -------------
Net increase in net assets from unit transactions (Note 5) ......... 212,836,410 272,057,433
------------- -------------
Change in net assets ................................................ 330,842,109 341,764,468
NET ASSETS:
Beginning of year ................................................... 560,662,388 218,897,920
------------- -------------
End of year ......................................................... $ 891,504,497 $ 560,662,388
============= =============
</TABLE>
See Notes to Financial Statements
S-6
<PAGE>
Variable Annuity Account I
Condensed Financial Information - Year Ended December 31, 1998
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Value
Per Unit Increase (Decrease) Units
-------- in Value of Outstanding Reserves
Beginning End of Accumulation at End at End
of Year Year Unit of Year of Year
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Aetna Ascent VP:
AICA I $ 14.983 $ 15.409 2.84% 83,798.0 $ 1,291,246
AICA II 10.694 10.059 ( 5.94%) (1) 17,615.1 177,193
- ---------------------------------------------------------------------------------------------------------------------------
Aetna Balanced VP:
AICA I 14.228 16.405 15.30% 369,651.5 6,063,987
AICA II 10.708 11.312 5.64% (1) 112,689.3 1,274,691
- ---------------------------------------------------------------------------------------------------------------------------
Aetna Bond VP:
AICA I 11.201 11.943 6.62% 500,098.0 5,972,864
AICA II 10.118 10.606 4.82% (1) 211,071.3 2,238,574
- ---------------------------------------------------------------------------------------------------------------------------
Aetna Crossroads VP:
AICA I 14.054 14.676 4.43% 40,711.8 597,491
AICA II 10.504 10.270 ( 2.23%) (1) 18,307.3 188,010
- ---------------------------------------------------------------------------------------------------------------------------
Aetna Growth and Income VP:
AICA I 16.354 18.461 12.88% 1,217,448.2 22,475,910
AICA II 11.063 11.063 0.00% (1) 794,334.9 8,787,412
Annuity contracts in payment period 34,375
- ---------------------------------------------------------------------------------------------------------------------------
Aetna Growth VP:
AICA I 13.158 17.862 35.75% 284,771.1 5,086,654
AICA II 11.455 12.977 13.29% (1) 75,505.9 979,820
Annuity contracts in payment period 36,974
- ---------------------------------------------------------------------------------------------------------------------------
Aetna Index Plus Large Cap VP:
AICA I 14.414 18.704 29.76% 654,766.9 12,246,441
AICA II 11.157 12.535 12.35% (1) 215,324.4 2,699,196
- ---------------------------------------------------------------------------------------------------------------------------
Aetna International VP:
AICA I 10.149 9.754 ( 3.89%) (1) 1,816.4 17,717
AICA II 9.851 9.764 ( 0.88%) (2) 2,693.0 26,294
- ---------------------------------------------------------------------------------------------------------------------------
Aetna Legacy VP:
AICA I 13.112 13.825 5.44% 95,815.1 1,324,652
AICA II 10.404 10.380 ( 0.23%) (1) 29,301.4 304,147
Annuity contracts in payment period 25,668
- ---------------------------------------------------------------------------------------------------------------------------
Aetna Money Market VP:
AICA I 10.900 11.335 3.99% 2,041,170.4 23,136,033
AICA II 10.097 10.371 2.71% (1) 319,752.5 3,316,181
- ---------------------------------------------------------------------------------------------------------------------------
Aetna Real Estate Securities VP:
AICA I 10.115 8.863 (12.38%) (1) 2,216.9 19,648
AICA II 9.918 8.872 (10.55%) (1) 2,256.8 20,023
- ---------------------------------------------------------------------------------------------------------------------------
Aetna Small Company VP:
AICA I 13.638 13.595 ( 0.32%) 225,981.5 3,072,277
AICA II 11.126 9.724 (12.60%) (1) 71,464.8 694,946
- ---------------------------------------------------------------------------------------------------------------------------
Aetna Value Opportunity VP:
AICA I 13.246 15.985 20.68% 311,396.8 4,977,799
AICA II 11.097 11.644 4.93% (1) 110,096.6 1,281,994
- ---------------------------------------------------------------------------------------------------------------------------
Alger American Funds:
Balanced Portfolio:
AICA I 12.657 16.412 29.67% 85,549.6 1,404,059
- ---------------------------------------------------------------------------------------------------------------------------
Income and Growth Portfolio:
AICA I 15.229 19.880 30.54% 205,001.6 4,075,424
- ---------------------------------------------------------------------------------------------------------------------------
Leveraged AllCap Portfolio:
AICA I 13.203 20.547 55.62% 176,900.2 3,634,760
- ---------------------------------------------------------------------------------------------------------------------------
American Century Investments:
Balanced Fund:
AICA I 12.885 14.709 14.16% 37,869.0 557,006
- ---------------------------------------------------------------------------------------------------------------------------
International Fund:
AICA I 13.538 15.853 17.10% 116,852.2 1,852,446
- ---------------------------------------------------------------------------------------------------------------------------
Calvert Social Balanced Portfolio:
AICA I 9.976 11.437 14.65% 12,287.9 140,540
AICA II 10.596 11.208 5.78% (1) 11,120.5 124,637
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-7
<PAGE>
Variable Annuity Account I
Condensed Financial Information - Year Ended December 31, 1998 (continued):
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Value
Per Unit Increase (Decrease) Units
-------- in Value of Outstanding Reserves
Beginning End of Accumulation at End at End
of Year Year Unit of Year of Year
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Fidelity Investments Variable
Insurance Product Fund:
Equity-Income Portfolio:
AICA I $ 14.974 $ 16.482 10.07% 2,792,888.9 $ 46,031,203
AICA II 10.957 10.806 ( 1.38%) (1) 476,634.1 5,150,298
- ----------------------------------------------------------------------------------------------------------------------------
Growth Portfolio:
AICA I 13.320 18.320 37.54% 1,869,305.9 34,245,624
AICA II 11.094 13.253 19.46% (1) 307,937.0 4,080,953
- ----------------------------------------------------------------------------------------------------------------------------
High Income Portfolio:
AICA I 13.238 12.488 ( 5.67%) 1,196,921.6 14,946,591
AICA II 10.292 9.222 (10.40%) (1) 270,626.6 2,495,629
- ----------------------------------------------------------------------------------------------------------------------------
Overseas Portfolio:
AICA I 12.590 13.997 11.18% 261,377.1 3,658,529
AICA II 11.082 10.487 ( 5.37%) (1) 45,606.3 478,279
Fidelity Investments Variable Insurance
- ----------------------------------------------------------------------------------------------------------------------------
Product Fund II:
Asset Manager Portfolio:
AICA I 13.888 15.754 13.44% 408,018.8 6,428,060
AICA II 10.607 11.165 5.26% (1) 152,533.0 1,702,990
- ----------------------------------------------------------------------------------------------------------------------------
Contrafund Portfolio:
AICA I 14.802 18.970 28.16% 1,853,911.1 35,169,124
AICA II 11.136 12.537 12.58% (1) 353,547.6 4,432,494
- ----------------------------------------------------------------------------------------------------------------------------
Index 500 Portfolio:
AICA I 16.646 21.063 26.53% 1,953,506.1 41,145,842
AICA II 11.159 12.259 9.86% (1) 409,684.6 5,022,486
- ----------------------------------------------------------------------------------------------------------------------------
Investment Grade Bond Portfolio:
AICA I 11.242 12.066 7.33% 101,099.9 1,219,839
- ----------------------------------------------------------------------------------------------------------------------------
Insurance Management Series:
American Leaders Fund II:
AICA I 17.796 20.639 15.98% 7,163,133.1 147,843,450
Annuity contracts in payment period 117,375
- ----------------------------------------------------------------------------------------------------------------------------
Equity Income Fund II:
AICA I 12.305 14.022 13.95% 2,019,440.7 28,317,427
Annuity contracts in payment period 42,143
- ----------------------------------------------------------------------------------------------------------------------------
Growth Strategies Fund II:
AICA I 15.777 18.269 15.80% 1,923,943.6 35,149,425
- ----------------------------------------------------------------------------------------------------------------------------
High Income Bond Fund II:
AICA I 13.379 13.547 1.26% 2,188,220.6 29,644,378
Annuity contracts in payment period 25,999
- ----------------------------------------------------------------------------------------------------------------------------
International Equity Fund II:
AICA I 11.858 14.682 23.82% 1,881,029.6 27,616,968
Annuity contracts in payment period 28,562
- ----------------------------------------------------------------------------------------------------------------------------
Prime Money Fund II:
AICA I 10.877 11.253 3.46% 414,692.7 4,666,589
U.S. Government Securities Fund II:
AICA I 11.572 12.284 6.15% 531,319.3 6,526,831
- ----------------------------------------------------------------------------------------------------------------------------
Utility Fund II:
AICA I 15.434 17.341 12.36% 1,523,423.7 26,418,108
Annuity contracts in payment period 64,831
- ----------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series:
Aggressive Growth Portfolio:
AICA I 12.637 16.729 32.38% 601,046.9 10,054,808
AICA II 11.125 13.003 16.88% (1) 47,713.2 620,396
- ----------------------------------------------------------------------------------------------------------------------------
Balanced Portfolio:
AICA I 14.492 19.189 32.41% 927,778.7 17,802,853
AICA II 10.904 12.689 16.37% (1) 230,692.8 2,927,259
- ----------------------------------------------------------------------------------------------------------------------------
Flexible Income Portfolio:
AICA I 12.272 13.202 7.58% 267,030.6 3,525,265
AICA II 10.191 10.599 4.00% (1) 106,625.5 1,130,100
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-8
<PAGE>
Variable Annuity Account I
Condensed Financial Information - Year Ended December 31, 1998 (continued):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
Value
Per Unit
--------
Beginning End of
of Year Year
- --------------------------------------------------------------------
<S> <C> <C>
Growth Portfolio:
AICA I $ 14.731 $ 19.704
AICA II 11.091 12.784
Annuity contracts in payment period
- --------------------------------------------------------------------
Worldwide Growth Portfolio:
AICA I 16.131 20.506
AICA II 11.375 11.960
- --------------------------------------------------------------------
Lexington Emerging Markets Fund:
AICA I 9.007 6.399
- --------------------------------------------------------------------
Lexington Natural Resources Trust Fund:
AICA I 13.939 11.047
- --------------------------------------------------------------------
MFS Funds:
Total Return Series:
AICA I 13.030 14.432
AICA II 10.639 10.942
- --------------------------------------------------------------------
Worldwide Government Series:
AICA I 10.207 10.860
AICA II 10.032 10.514
- --------------------------------------------------------------------
Oppenheimer Funds:
Aggressive Growth Fund:
AICA I 12.204 13.520
AICA II 11.304 10.886
- --------------------------------------------------------------------
Global Securities Fund:
AICA I 11.539 12.982
AICA II 10.941 10.949
- --------------------------------------------------------------------
Growth & Income Fund:
AICA I 12.785 13.199
AICA II 11.377 10.111
- --------------------------------------------------------------------
Strategic Bond Fund:
AICA I 10.764 10.921
AICA II 10.118 10.037
- --------------------------------------------------------------------
Portfolio Partners, Inc. (PPI):
PPI MFS Emerging Equities Portfolio:
AICA I 10.554 13.494
AICA II 11.104 11.797
- --------------------------------------------------------------------
PPI MFS Research Growth Portfolio:
AICA I 8.786 10.656
AICA II 11.178 11.634
- --------------------------------------------------------------------
PPI MFS Value Equity Portfolio:
AICA I 10.152 12.686
AICA II 11.503 12.005
Annuity contracts in payment period
- --------------------------------------------------------------------
PPI Scudder International Growth Portfolio:
AICA I 9.912 11.640
AICA II 11.145 10.995
- --------------------------------------------------------------------
PPI T. Rowe Price Growth Equity Portfolio:
AICA I 13.834 17.406
AICA II 11.120 12.103
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Increase (Decrease) Units
in Value of Outstanding Reserves
Accumulation at End at End
Unit of Year of Year
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Growth Portfolio:
AICA I 33.76% 807,575.7 $15,912,701
AICA II 15.26% (1) 178,276.3 2,279,017
Annuity contracts in payment period 37,117
- ---------------------------------------------------------------------------------------------------
Worldwide Growth Portfolio:
AICA I 27.12% 3,185,556.5 65,321,610
AICA II 5.14% (1) 420,428.4 5,028,183
- ---------------------------------------------------------------------------------------------------
Lexington Emerging Markets Fund:
AICA I (28.96%) 98,010.6 627,133
- ---------------------------------------------------------------------------------------------------
Lexington Natural Resources Trust Fund:
AICA I (20.75%) 78,736.7 869,806
- ---------------------------------------------------------------------------------------------------
MFS Funds:
Total Return Series:
AICA I 10.76% 943,853.4 13,621,896
AICA II 2.85% (1) 253,311.0 2,771,828
- ---------------------------------------------------------------------------------------------------
Worldwide Government Series:
AICA I 6.40% 69,956.8 759,700
AICA II 4.80% (2) 591.4 6,218
- ---------------------------------------------------------------------------------------------------
Oppenheimer Funds:
Aggressive Growth Fund:
AICA I 10.78% 179,860.9 2,431,715
AICA II (3.70%) (1) 88,309.9 961,358
- ---------------------------------------------------------------------------------------------------
Global Securities Fund:
AICA I 12.51% 134,448.6 1,745,444
AICA II 0.07% (1) 29,175.9 319,445
- ---------------------------------------------------------------------------------------------------
Growth & Income Fund:
AICA I 3.24% 693,694.9 9,156,069
AICA II (11.13%) (1) 232,433.2 2,350,234
- ---------------------------------------------------------------------------------------------------
Strategic Bond Fund:
AICA I 1.46% 328,545.6 3,588,020
AICA II (0.80%) (1) 85,476.9 857,889
- ---------------------------------------------------------------------------------------------------
Portfolio Partners, Inc. (PPI):
PPI MFS Emerging Equities Portfolio:
AICA I 27.86% 2,557,154.8 34,505,993
AICA II 6.24% (1) 205,549.0 2,424,963
- ---------------------------------------------------------------------------------------------------
PPI MFS Research Growth Portfolio:
AICA I 21.28% 1,761,234.3 18,766,935
AICA II 4.08% (1) 131,760.5 1,532,924
- ---------------------------------------------------------------------------------------------------
PPI MFS Value Equity Portfolio:
AICA I 24.96% 358,518.3 4,548,303
AICA II 4.36% (1) 108,102.4 1,297,789
Annuity contracts in payment period 35,772
- ---------------------------------------------------------------------------------------------------
PPI Scudder International Growth Portfolio:
AICA I 17.43% 79,756.2 928,340
AICA II (1.35%) (1) 30,516.2 335,540
- ---------------------------------------------------------------------------------------------------
PPI T. Rowe Price Growth Equity Portfolio:
AICA I 25.82% 1,616,747.9 28,140,515
AICA II 8.84% (1) 120,156.6 1,454,243
- ---------------------------------------------------------------------------------------------------
</TABLE>
AICA I - Certain individual and group contracts issued as non-qualified deferred
annuity contracts or Individual Retirement Annuity contracts issued since June
28, 1995.
AICA II - Certain individual and group contracts issued as
non-qualified deferred annuity contracts or Individual Retirement Annuity
contracts issued since May 1, 1998.
Notes to Condensed Financial Information:
(1) - Reflects less than a full year of performance activity. Funds were first
received in this option during May 1998.
(2) - Reflects less than a full year of
performance activity. Funds were first received in this option during June 1998.
See Notes to Financial Statements
S-9
<PAGE>
Variable Annuity Account I
Notes to Financial Statements - December 31, 1998
1. Summary of Significant Accounting Policies
Variable Annuity Account I (the "Account") is a separate account established
by Aetna Insurance Company of America (the "Company") and is registered under
the Investment Company Act of 1940 as a unit investment trust. The Account is
sold exclusively for use with variable annuity contracts that may be entitled
to tax-deferred treatment under specific sections of the Internal Revenue
Code of 1986, as amended. The Account commenced operations on June, 1995.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect amounts reported therein. Although actual results could differ
from these estimates, any such differences are expected to be immaterial to
the net assets of the Account.
a. Valuation of Investments
Investments in the following Funds are stated at the closing net asset value
per share as determined by each Fund on December 31, 1998:
Aetna Ascent VP
Aetna Balanced VP
Aetna Bond VP
Aetna Crossroads VP
Aetna Growth and Income VP
Aetna Growth VP
Aetna Index Plus Large Cap VP
Aetna International VP
Aetna Legacy VP
Aetna Money Market VP
Aetna Real Estate Securities VP
Aetna Small Company VP
Aetna Value Opportunity VP
Alger American Funds:
o Balanced Portfolio
o Income and Growth Portfolio
o Leveraged AllCap Portfolio
American Century Investments:
o Balanced Fund
o International Fund
Calvert Social Balanced Portfolio
Fidelity Investments Variable Insurance Products Fund:
o Equity-Income Portfolio
o Growth Portfolio
o High Income Portfolio
o Overseas Portfolio
Fidelity Investments Variable Insurance Products Fund II:
o Asset Manager Portfolio
o Contrafund Portfolio
o Index 500 Portfolio
o Investment Grade Bond Portfolio
Insurance Management Series:
o American Leaders Fund II
o Equity Income Fund II
o Growth Strategies Fund II
o High Income Bond Fund II
o International Equity Fund II
o Prime Money Fund II
o U.S. Government Securities Fund II
o Utility Fund II
Janus Aspen Series:
o Aggressive Growth Portfolio
o Balanced Portfolio
o Flexible Income Portfolio
o Growth Portfolio
o Worldwide Growth Portfolio
Lexington Emerging Markets Fund
Lexington Natural Resources Trust Fund
MFS Funds:
o Total Return Series
o Worldwide Government Series
Oppenheimer Funds:
o Aggressive Growth Fund
o Global Securities Fund
o Growth & Income Fund
o Strategic Bond Fund
Portfolio Partners, Inc. (PPI):
o PPI MFS Emerging Equities Portfolio
o PPI MFS Research Growth Portfolio
o PPI MFS Value Equity Portfolio
o PPI Scudder International Growth Portfolio
o PPI T. Rowe Price Growth Equity Portfolio
b. Other
Investment transactions are accounted for on a trade date basis and dividend
income is recorded on the ex-dividend date. The cost of investments sold is
determined by specific identification.
S-10
<PAGE>
Variable Annuity Account I
Notes to Financial Statements - December 31, 1998 (continued):
c. Federal Income Taxes
The operations of the Account form a part of, and are taxed with, the total
operations of the Company which is taxed as a life insurance company under
the Internal Revenue Code of 1986, as amended.
d. Annuity Reserves
Annuity reserves held in the Separate Accounts are computed for currently
payable contracts according to the 83a and 83GAM tables using various assumed
interest rates. Mortality experience is monitored by the Company. Charges to
annuity reserves for mortality experience are reimbursed to the Company if
the reserves required are less than originally estimated. If additional
reserves are required, the Company reimburses the Account.
2. Valuation Period Deductions
Deductions by the Account for mortality and expense risk charges are made in
accordance with the terms of the contracts and are paid to the Company.
3. Dividend Income
On an annual basis, the Funds distribute substantially all of their taxable
income and realized capital gains to their shareholders. Distributions to the
Account are automatically reinvested in shares of the Funds. The Account's
proportionate share of each Fund's undistributed net investment income
(distributions in excess of net investment income) and accumulated net
realized gain (loss) on investments is included in net unrealized gain (loss)
in the Statements of Operations and Changes in Net Assets.
4. Purchases and Sales of Investments
The cost of purchases and proceeds from sales of investments other than
short-term investments for the years ended December 31, 1998 and 1997
aggregated $677,161,429 and $438,314,806; $450,137,902 and $170,076,421,
respectively.
S-11
<PAGE>
Variable Annuity Account I
Notes to Financial Statements - December 31, 1998 (continued):
5. Supplemental information to Statements of Operations and Changes in Net
Assets
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1998
Valuation Proceeds Cost of Net
Period from Investments Realized
Dividends Deductions Sales Sold Gain (Loss)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aetna Ascent VP: (1) $ 71,800 ($19,502) $ 673,031 $ 668,648 $ 4,383
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------
Aetna Balanced VP: (2) 990,418 (80,461) 1,792,080 1,696,266 95,814
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------
Aetna Bond VP: (3) 431,716 (72,965) 4,486,268 4,387,120 99,148
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------
Aetna Crossroads VP: (4) 29,801 (8,675) 155,691 141,072 14,619
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------
Aetna Growth and Income VP: (5) 4,637,602 (297,037) 33,298,888 34,084,318 (785,430)
Annuity contracts in accumulation
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------------------------------------
Aetna Growth VP: (6) 11,767 (50,232) 2,569,530 2,639,070 (69,540)
Annuity contracts in accumulation
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------------------------------------
Aetna Index Plus Large Cap VP: (7) 660,099 (124,498) 9,779,183 9,124,915 654,268
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------
Aetna International VP: (8) 2,114 (215) 38,105 39,540 (1,435)
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------
Aetna Legacy VP: (9) 71,808 (17,570) 157,163 143,237 13,926
Annuity contracts in accumulation
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------------------------------------
Aetna Money Market VP: (10) 821,419 (301,700) 85,211,294 84,897,725 313,569
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------
Aetna Real Estate Securities VP: (11) 1,888 (319) 19,063 21,385 (2,322)
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------
Aetna Small Company VP: (12) 34,904 (47,717) 5,571,439 6,248,167 (676,728)
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------
Aetna Value Opportunity VP: (13) 61,137 (49,913) 1,542,126 1,589,981 (47,855)
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------
Alger American Funds:
Balanced Portfolio: 121,184 (20,212) 372,244 302,913 69,331
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------
Income and Growth Portfolio:
Annuity contracts in accumulation 379,349 (53,943) 785,199 640,145 145,054
- -----------------------------------------------------------------------------------------------------------------------
Leveraged AllCap Portfolio:
Annuity contracts in accumulation 141,107 (43,691) 747,610 539,018 208,592
- -----------------------------------------------------------------------------------------------------------------------
American Century Investments:
Balanced Fund: 81,193 (8,558) 189,467 179,893 9,574
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------
International Fund: 127,270 (27,807) 562,465 470,481 91,984
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------
Calvert Social Balanced Portfolio: 19,179 (1,776) 24,753 27,598 (2,845)
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
S-12
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Net Unrealized Net
Gain (Loss) Net Increase (Decrease) Net Assets
----------- Change in In Net Assets ----------
Beginning End Unrealized from Unit Beginning End
of Year of Year Gain (Loss) Transactions of Year of Year
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
($42,941) ($75,022) ($32,081) $359,326
$1,084,513 $1,468,439
- ---------------------------------------------------------------------------------------------------------
93,604 (36,287) (129,891) 1,988,879
4,473,919 7,338,678
- ---------------------------------------------------------------------------------------------------------
(10,865) (118,794) (107,929) 4,840,848
3,020,620 8,211,438
- ---------------------------------------------------------------------------------------------------------
3,424 (178) (3,602) 338,325
415,033 785,501
- ---------------------------------------------------------------------------------------------------------
(1,131,268) (2,149,960) (1,018,692) 13,277,579
15,483,675 31,263,322
0 34,375
- ---------------------------------------------------------------------------------------------------------
(264,795) 784,306 1,049,101 4,256,569
905,783 6,066,474
0 36,974
- ---------------------------------------------------------------------------------------------------------
106,638 1,257,214 1,150,576 8,689,925
3,915,267 14,945,637
- ---------------------------------------------------------------------------------------------------------
0 2,750 2,750 40,797
0 44,011
- ---------------------------------------------------------------------------------------------------------
4,308 (6,294) (10,602) 769,986
793,678 1,628,799
33,241 25,668
- ---------------------------------------------------------------------------------------------------------
203,382 215,976 12,594 10,238,451
15,367,881 26,452,214
- ---------------------------------------------------------------------------------------------------------
0 (4,325) (4,325) 44,749
0 39,671
- ---------------------------------------------------------------------------------------------------------
(169,978) 487,449 657,427 1,224,164
2,575,173 3,767,223
- ---------------------------------------------------------------------------------------------------------
(130,696) 623,324 754,020 4,650,918
891,486 6,259,793
- ---------------------------------------------------------------------------------------------------------
125,129 303,599 178,470 (345,746)
1,401,032 1,404,059
- ---------------------------------------------------------------------------------------------------------
245,881 776,309 530,428 (693,378)
3,767,914 4,075,424
- ---------------------------------------------------------------------------------------------------------
265,618 1,364,191 1,098,573 (689,303)
2,919,482 3,634,760
- ---------------------------------------------------------------------------------------------------------
44,098 41,409 (2,689) (179,238)
656,724 557,006
- ---------------------------------------------------------------------------------------------------------
108,904 228,000 119,096 (505,703)
2,047,606 1,852,446
- ---------------------------------------------------------------------------------------------------------
(5,832) 5,430 11,262 206,857
32,500 265,177
- ---------------------------------------------------------------------------------------------------------
</TABLE>
S-13
<PAGE>
Variable Annuity Account I
Notes to Financial Statements - December 31, 1998 (continued):
5. Supplemental Information to Statements of Operations and Changes in Net
Assets (continued):
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Year Ended December 31, 1998
Valuation
Period
Dividends Deductions
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Fidelity Investments Variable Insurance Products Fund:
Equity-Income Portfolio: $2,271,527 ($618,549)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------
Growth Portfolio: 2,644,108 (381,295)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------
High Income Portfolio: 1,474,357 (221,958)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------
Overseas Portfolio: 233,121 (53,772)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Product Fund II:
Asset Manager Portfolio: 523,249 (84,936)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------
Contrafund Portfolio: 1,534,561 (426,807)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------
Index 500 Portfolio: 981,068 (488,490)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------
Investment Grade Bond Portfolio: 73,857 (18,586)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------
Insurance Management Series:
American Leaders Fund II: 8,099,929 (1,877,678)
Annuity contracts in accumulation
Annuity contracts in payment period
- ------------------------------------------------------------------------------------------
Equity Income Fund II: 91,670 (295,623)
Annuity contracts in accumulation
Annuity contracts in payment period
- ------------------------------------------------------------------------------------------
Growth Strategies Fund II: 1,646,118 (414,206)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------
High Income Bond Fund II: 795,943 (408,858)
Annuity contracts in accumulation
Annuity contracts in payment period
- ------------------------------------------------------------------------------------------
International Equity Fund II: 28,894 (359,609)
Annuity contracts in accumulation
Annuity contracts in payment period
- ------------------------------------------------------------------------------------------
Prime Money Fund II: 211,667 (62,627)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------
U.S. Government Securities Fund II: 99,559 (83,453)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------
Utility Fund II: 1,407,516 (327,505)
Annuity contracts in accumulation
Annuity contracts in payment period
- ------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Year Ended December 31, 1998
Proceeds Cost of Net
from Investments Realized
Sales Sold Gain (Loss)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fidelity Investments Variable Insurance Products Fund:
Equity-Income Portfolio: $15,606,753 $12,759,366 $2,847,387
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------
Growth Portfolio: 12,032,669 9,870,234 2,162,435
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------
High Income Portfolio: 5,402,639 5,517,939 (115,300)
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------
Overseas Portfolio: 15,311,424 15,163,882 147,542
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Product Fund II:
Asset Manager Portfolio: 1,323,072 1,302,771 20,301
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------
Contrafund Portfolio: 7,291,380 5,323,524 1,967,856
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------
Index 500 Portfolio: 8,828,912 6,299,987 2,528,925
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------
Investment Grade Bond Portfolio: 375,674 366,141 9,533
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------
Insurance Management Series:
American Leaders Fund II: 4,239,643 2,620,457 1,619,186
Annuity contracts in accumulation
Annuity contracts in payment period
- -------------------------------------------------------------------------------------------------------
Equity Income Fund II: 1,065,676 844,287 221,389
Annuity contracts in accumulation
Annuity contracts in payment period
- -------------------------------------------------------------------------------------------------------
Growth Strategies Fund II: 1,857,899 1,425,043 432,856
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------
High Income Bond Fund II: 3,342,335 3,079,403 262,932
Annuity contracts in accumulation
Annuity contracts in payment period
- -------------------------------------------------------------------------------------------------------
International Equity Fund II: 1,808,323 1,321,140 487,183
Annuity contracts in accumulation
Annuity contracts in payment period
- -------------------------------------------------------------------------------------------------------
Prime Money Fund II: 4,154,382 4,154,382 0
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------
U.S. Government Securities Fund II: 1,719,925 1,600,469 119,456
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------
Utility Fund II: 1,448,374 1,070,900 377,474
Annuity contracts in accumulation
Annuity contracts in payment period
- -------------------------------------------------------------------------------------------------------
</TABLE>
S-14
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Net Unrealized Net
Gain (Loss) Net Increase (Decrease) Net Assets
----------- Change in In Net Assets ----------
Beginning End Unrealized from Unit Beginning End
of Year of Year Gain (Loss) Transactions of Year of Year
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$4,573,383 $3,977,202 ($596,181) $12,941,401
$34,335,916 $51,181,501
- -----------------------------------------------------------------------------------------------------------
2,613,104 7,153,104 4,540,000 10,721,202
18,640,127 38,326,577
- -----------------------------------------------------------------------------------------------------------
678,175 (1,709,684) (2,387,859) 7,278,178
11,414,802 17,442,220
- -----------------------------------------------------------------------------------------------------------
83,223 131,756 48,533 772,708
2,988,676 4,136,808
- -----------------------------------------------------------------------------------------------------------
247,841 560,341 312,500 3,571,525
3,788,411 8,131,050
- -----------------------------------------------------------------------------------------------------------
3,303,522 8,470,707 5,167,185 6,461,571
24,897,252 39,601,618
- -----------------------------------------------------------------------------------------------------------
2,903,863 7,949,380 5,045,517 15,200,754
22,900,554 46,168,328
- -----------------------------------------------------------------------------------------------------------
63,100 91,234 28,134 (314,286)
1,441,187 1,219,839
- -----------------------------------------------------------------------------------------------------------
27,572,894 38,810,192 11,237,298 14,814,848
114,050,410 147,843,450
16,832 117,375
- -----------------------------------------------------------------------------------------------------------
716,240 3,591,859 2,875,619 12,524,130
12,942,385 28,317,427
0 42,143
- -----------------------------------------------------------------------------------------------------------
4,379,010 7,028,743 2,649,733 6,249,006
24,585,918 35,149,425
- -----------------------------------------------------------------------------------------------------------
1,855,372 1,387,517 (467,855) 3,527,318
25,944,158 29,644,378
16,739 25,999
- -----------------------------------------------------------------------------------------------------------
1,842,212 6,385,323 4,543,111 2,840,676
20,105,275 27,616,968
0 28,562
- -----------------------------------------------------------------------------------------------------------
0 1,316 1,316 757,047
3,759,186 4,666,589
- -----------------------------------------------------------------------------------------------------------
224,916 441,091 216,175 530,017
5,645,077 6,526,831
- -----------------------------------------------------------------------------------------------------------
4,421,460 5,787,739 1,366,279 2,535,912
21,104,322 26,418,108
18,941 64,831
- -----------------------------------------------------------------------------------------------------------
</TABLE>
S-15
<PAGE>
Variable Annuity Account I
Notes to Financial Statements - December 31, 1998 (continued):
5. Supplemental Information to Statements of Operations and Changes in Net
Assets (continued):
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1998
Valuation Proceeds Cost of Net
Period from Investments Realized
Dividends Deductions Sales Sold Gain (Loss)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Janus Aspen Series:
Aggressive Growth Portfolio: $0 ($115,274) $50,864,976 $48,298,175 $2,566,801
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
Balanced Portfolio: 595,970 (174,733) 2,029,779 1,535,395 494,384
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
Flexible Income Portfolio: 235,389 (45,468) 1,385,219 1,308,029 77,190
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
Growth Portfolio: 870,829 (185,099) 5,214,196 4,131,907 1,082,289
Annuity contracts in accumulation
Annuity contracts in payment period
- ------------------------------------------------------------------------------------------------------------------------------
Worldwide Growth Portfolio: 2,336,194 (835,432) 24,476,251 18,059,755 6,416,496
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
Lexington Emerging Markets Fund: 66,337 (11,442) 369,448 511,215 (141,767)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
Lexington Natural Resources Trust Fund: 73,010 (15,445) 348,129 355,188 (7,059)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
MFS Funds:
Total Return Series: 295,218 (157,641) 1,431,298 1,180,363 250,935
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
Worldwide Government Series: 8,377 (9,148) 309,659 301,566 8,093
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Funds:
Aggressive Growth Fund: 37,225 (35,416) 47,122,397 46,966,784 155,613
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
Global Securities Fund: 149,505 (24,845) 719,379 757,991 (38,612)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
Growth & Income Fund: 475,900 (140,773) 5,499,885 5,888,453 (388,568)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
Strategic Bond Fund: 65,788 (43,976) 704,382 714,269 (9,887)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio Partners, Inc. (PPI):
PPI MFS Emerging Equities Portfolio: 88,752 (435,112) 11,342,689 10,460,671 882,018
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
PPI MFS Research Growth Portfolio: 4,104 (238,253) 4,855,332 4,530,115 325,217
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
PPI MFS Value Equity Portfolio: 7,644 (70,872) 4,030,146 3,786,613 243,533
Annuity contracts in accumulation
Annuity contracts in payment period
- ------------------------------------------------------------------------------------------------------------------------------
PPI Scudder International Growth Portfolio: 4,297 (11,632) 40,667,463 40,626,409 41,054
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
PPI T. Rowe Price Growth Equity Portfolio: 140,691 (356,611) 3,159,498 2,822,708 336,790
Annuity contracts in accumulation
Total Variable Annuity Account I $36,268,129 ($ 10,257,915) $438,314,806 $412,797,023 $25,517,783
==============================================================================================================================
</TABLE>
(1) Effective May 1, 1998, Aetna Ascent Variable Portfolio's name changed to
Aetna Ascent VP.
(2) Effective May 1, 1998, Aetna Investment Advisors Fund's name changed to
Aetna Balanced VP.
(3) Effective May 1, 1998, Aetna Income Shares' name changed to Aetna Bond Fund
VP.
(4) Effective May 1, 1998, Aetna Crossroads Variable Portfolio's name changed
to Aetna Crossroads VP.
(5) Effective May 1, 1998, Aetna Variable Fund's name changed to Aetna Growth
and Income VP.
(6) Effective May 1, 1998, Aetna Variable Growth Portfolio's name changed to
Aetna Growth VP.
(7) Effective May 1, 1998, Aetna Variable Index Plus Portfolio's name changed
to Aetna Index Plus Large Cap VP.
(8) Effective May 1, 1998, Aetna International Portfolio's name changed to
Aetna International VP.
(9) Effective May 1, 1998, Aetna Legacy Variable Portfolio's name changed to
Aetna Legacy VP.
(10) Effective May 1, 1998, Aetna Variable Encore Fund's name changed to Aetna
Money Market VP.
(11) Effective May 1, 1998, Aetna Real Estate Securities Portfolio's name
changed to Aetna Real Estate Securities VP.
(12) Effective May 1, 1998, Aetna Variable Small Company Portfolio's name
changed to Aetna Small Company VP.
(13) Effective May 1, 1998, Aetna Variable Capital Appreciation Portfolio's name
changed to Aetna Value Opportunity VP.
S-16
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Net Unrealized Net
Gain (Loss) Net Increase (Decrease) Net Assets
----------- Change in In Net Assets ----------
Beginning End Unrealized from Unit Beginning End
of Year of Year Gain (Loss) Transactions of Year of Year
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 685,946 $ 1,091,568 $ 405,622 $ 1,263,440
$ 6,554,615 $ 10,675,204
- -------------------------------------------------------------------------------------------------------------
746,135 3,925,885 3,179,750 8,908,355
7,726,386 20,730,112
- -------------------------------------------------------------------------------------------------------------
32,134 (11,388) (43,522) 2,430,909
2,000,867 4,655,365
- -------------------------------------------------------------------------------------------------------------
1,026,518 3,305,620 2,279,102 4,104,069
10,077,645 18,191,718
0 37,117
- -------------------------------------------------------------------------------------------------------------
4,733,621 9,935,954 5,202,333 12,501,656
44,728,546 70,349,793
- -------------------------------------------------------------------------------------------------------------
(302,429) (506,254) (203,825) (312,229)
1,230,059 627,133
- -------------------------------------------------------------------------------------------------------------
11,212 (281,919) (293,131) (322,903)
1,435,334 869,806
- -------------------------------------------------------------------------------------------------------------
595,567 1,378,265 782,698 8,404,056
6,818,458 16,393,724
- -------------------------------------------------------------------------------------------------------------
4,445 38,917 34,472 190,257
533,867 765,918
- -------------------------------------------------------------------------------------------------------------
(12,997) 285,448 298,445 2,135,488
801,718 3,393,073
- -------------------------------------------------------------------------------------------------------------
6,826 72,806 65,980 902,520
1,010,341 2,064,889
- -------------------------------------------------------------------------------------------------------------
136,910 (183,690) (320,600) 7,350,914
4,529,430 11,506,303
- -------------------------------------------------------------------------------------------------------------
(6,794) 519 7,313 3,041,102
1,385,569 4,445,909
- -------------------------------------------------------------------------------------------------------------
(271,841) 6,507,986 6,779,827 4,339,155
25,276,316 36,930,956
- -------------------------------------------------------------------------------------------------------------
(235,756) 2,930,826 3,166,582 2,849,219
14,192,990 20,299,859
- -------------------------------------------------------------------------------------------------------------
24,196 557,253 533,057 2,972,891
2,195,611 5,846,092
0 35,772
- -------------------------------------------------------------------------------------------------------------
(460) 50,071 50,531 1,154,164
25,466 1,263,880
- -------------------------------------------------------------------------------------------------------------
432,009 6,151,086 5,719,077 1,997,336
21,757,475 29,594,758
- -------------------------------------------------------------------------------------------------------------
$62,528,168 $129,005,870 $66,477,702 $212,836,410 $560,662,388 $891,504,497
=============================================================================================================
</TABLE>
S-17
<PAGE>
Variable Annuity Account I
Notes to Financial Statements - December 31, 1998 (continued):
5. Supplemental Information to Statements of Operations and Changes in Net
Assets (continued):
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1997
Valuation Proceeds Cost of Net
Period from Investments Realized
Dividends Deductions Sales Sold Gain (Loss)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aetna Variable Fund: $2,917,442 ($ 125,993) $ 772,972 $ 648,307 $ 124,665
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------------------------
Aetna Income Shares: 151,053 (26,889) 754,709 750,000 4,709
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------------------------
Aetna Variable Encore Fund: 322,525 (170,170) 19,808,667 19,627,696 180,971
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------------------------
Aetna Investment Advisers Fund, Inc.: 443,088 (36,303) 411,120 371,132 39,988
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------------------------
Aetna Ascent Variable Portfolio: 66,289 (9,238) 1,580,817 1,443,402 137,415
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------------------------
Aetna Crossroads Variable Portfolio: 26,978 (2,883) 5,444 4,842 602
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------------------------
Aetna Legacy Variable Portfolio: 45,122 (6,136) 199,255 188,641 10,614
Annuity contracts in accumulation
Annuity contracts in payment period
- -------------------------------------------------------------------------------------------------------------------------
Aetna Variable Portfolios, Inc.:
Aetna Variable Capital Appreciation Portfolio: 141,848 (2,366) 140,737 134,978 5,759
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------------------------
Aetna Variable Growth Portfolio: 242,318 (2,483) 311,238 305,917 5,321
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------------------------
Aetna Variable Index Plus Portfolio: 156,860 (28,110) 1,772,894 1,552,332 220,562
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------------------------
Aetna Variable Small Company Portfolio: 155,307 (7,993) 104,643 86,811 17,832
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------------------------
Alger American Funds:
Balanced Portfolio: 24,076 (13,590) 120,684 99,159 21,525
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------------------------
Growth Portfolio: (1) 89,153 (132,536) 15,600,119 13,181,627 2,418,492
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------------------------
Income and Growth Portfolio: 65,111 (31,295) 1,374,610 1,109,169 265,441
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------------------------
Leveraged AllCap Portfolio: 0 (36,689) 1,293,544 1,102,668 190,876
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------------------------
MidCap Portfolio: (1) 80,363 (75,046) 9,541,316 8,551,109 990,207
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------------------------
Small Capitalization Portfolio: (2) 338,930 (118,559) 12,725,130 12,057,293 667,837
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------------------------
American Century Investments:
- -------------------------------------------------------------------------------------------------------------------------
Balanced Fund: 29,309 (8,128) 203,349 186,540 16,809
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-18
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Net Unrealized
Gain (Loss) Net Increase (Decrease) Net Assets
----------- Change in In Net Assets ----------
Beginning End Unrealized from Unit Beginning End
of Year of Year Gain (Loss) Transactions of Year of Year
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
($143,001) ($1,131,268) ($988,267) $9,726,519
$3,829,309 $15,483,675
- ---------------------------------------------------------------------------------------------------------
(21,783) (10,865) 10,918 1,877,585
1,003,244 3,020,620
- ---------------------------------------------------------------------------------------------------------
61,606 203,382 141,776 6,513,403
8,379,376 15,367,881
- ---------------------------------------------------------------------------------------------------------
15,913 93,604 77,691 3,246,840
702,615 4,473,919
- ---------------------------------------------------------------------------------------------------------
56,427 (42,941) (99,368) (175,693)
1,165,108 1,084,513
- ---------------------------------------------------------------------------------------------------------
(282) 3,424 3,706 309,890
76,740 415,033
- ---------------------------------------------------------------------------------------------------------
(3,582) 4,308 7,890 669,065
100,364 793,678
0 33,241
- ---------------------------------------------------------------------------------------------------------
0 (130,696) (130,696) 876,941
0 891,486
- ---------------------------------------------------------------------------------------------------------
0 (264,795) (264,795) 925,422
0 905,783
- ---------------------------------------------------------------------------------------------------------
(786) 106,638 107,424 3,426,210
32,321 3,915,267
- ---------------------------------------------------------------------------------------------------------
0 (169,978) (169,978) 2,580,005
0 2,575,173
- ---------------------------------------------------------------------------------------------------------
19,051 125,129 106,078 755,128
507,815 1,401,032
- ---------------------------------------------------------------------------------------------------------
331,002 0 (331,002) (8,508,847)
6,464,740 0
- ---------------------------------------------------------------------------------------------------------
43,184 245,881 202,697 2,618,690
647,270 3,767,914
- ---------------------------------------------------------------------------------------------------------
53,728 265,618 211,890 540,838
2,012,567 2,919,482
- ---------------------------------------------------------------------------------------------------------
172,467 0 (172,467) (4,925,256)
4,102,199 0
- ---------------------------------------------------------------------------------------------------------
(40,650) 0 40,650 (7,934,029)
7,005,171 0
- ---------------------------------------------------------------------------------------------------------
10,011 44,098 34,087 211,174
373,473 656,724
- ---------------------------------------------------------------------------------------------------------
</TABLE>
S-19
<PAGE>
Variable Annuity Account I
Notes to Financial Statements - December 31, 1998 (continued):
5. Supplemental Information to Statements of Operations and Changes in Net
Assets (continued):
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Year Ended December 31, 1997
Valuation
Period
Dividends Deductions
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Capital Appreciation Fund: (3) $ 13,359 ($10,581)
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
International Fund: 43,440 (24,794)
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
Calvert Social Balanced Portfolio: 0 (2)
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products Fund:
Equity-Income Portfolio: 1,381,407 (329,134)
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
Growth Portfolio: 387,748 (199,645)
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
High Income Portfolio: 258,910 (88,291)
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
Overseas Portfolio: 123,104 (32,314)
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products Fund II:
Asset Manager Portfolio: 167,003 (32,759)
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
Contrafund Portfolio: 273,634 (226,793)
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
Index 500 Portfolio: 198,117 (197,448)
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
Investment Grade Bond Portfolio: 34,282 (13,109)
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
Insurance Management Series:
American Leaders Fund II: 2,021,951 (1,254,649)
Annuity contracts in accumulation
Annuity contracts in payment period
- ---------------------------------------------------------------------------------------------------------
Equity Income Fund II: 42,089 (75,051)
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
Growth Strategies Fund II: 83,791 (249,588)
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
High Income Bond Fund II: 1,053,521 (275,549)
Annuity contracts in accumulation
Annuity contracts in payment period
- ---------------------------------------------------------------------------------------------------------
International Equity Fund II: 15,632 (226,665)
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
Prime Money Fund II: 210,825 (62,256)
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Year Ended December 31, 1997
Proceeds Cost of Net
from Investments Realized
Sales Sold Gain (Loss)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital Appreciation Fund: (3) $1,483,901 $1,555,024 ($71,123)
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
International Fund: 793,249 675,144 118,105
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
Calvert Social Balanced Portfolio: 6,738 7,426 (688)
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products Fund:
Equity-Income Portfolio: 1,006,879 870,117 136,762
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
Growth Portfolio: 1,523,787 1,391,777 132,010
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
High Income Portfolio: 1,389,256 1,263,386 125,870
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
Overseas Portfolio: 372,931 345,379 27,552
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products Fund II:
Asset Manager Portfolio: 95,686 90,640 5,046
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
Contrafund Portfolio: 624,535 485,003 139,532
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
Index 500 Portfolio: 2,562,053 1,860,408 701,645
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
Investment Grade Bond Portfolio: 292,775 284,565 8,210
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
Insurance Management Series:
American Leaders Fund II: 3,672,802 2,283,020 1,389,782
Annuity contracts in accumulation
Annuity contracts in payment period
- ---------------------------------------------------------------------------------------------------------
Equity Income Fund II: 125,938 117,498 8,440
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
Growth Strategies Fund II: 644,437 464,629 179,808
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
High Income Bond Fund II: 1,329,211 1,199,797 129,414
Annuity contracts in accumulation
Annuity contracts in payment period
- ---------------------------------------------------------------------------------------------------------
International Equity Fund II: 792,013 683,940 108,073
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
Prime Money Fund II: 5,616,613 5,616,577 36
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
</TABLE>
S-20
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Net Unrealized Net
Gain (Loss) Net Increase (Decrease) Net Assets
----------- Change in In Net Assets ----------
Beginning End Unrealized from Unit Beginning End
of Year of Year Gain (Loss) Transactions of Year of Year
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
($11,204) $0 $11,204 ($403,000)
$460,141 $0
- ---------------------------------------------------------------------------------------------------------
47,176 108,904 61,728 1,023,868
825,259 2,047,606
- ---------------------------------------------------------------------------------------------------------
0 (5,832) (5,832) 39,022
0 32,500
- ---------------------------------------------------------------------------------------------------------
763,902 4,573,383 3,809,481 17,482,048
11,855,352 34,335,916
- ---------------------------------------------------------------------------------------------------------
339,925 2,613,104 2,273,179 6,518,902
9,527,933 18,640,127
- ---------------------------------------------------------------------------------------------------------
99,376 678,175 578,799 7,802,056
2,737,458 11,414,802
- ---------------------------------------------------------------------------------------------------------
66,703 83,223 16,520 1,531,886
1,321,928 2,988,676
- ---------------------------------------------------------------------------------------------------------
56,785 247,841 191,056 2,241,299
1,216,766 3,788,411
- ---------------------------------------------------------------------------------------------------------
438,859 3,303,522 2,864,663 15,304,885
6,541,331 24,897,252
- ---------------------------------------------------------------------------------------------------------
375,527 2,903,863 2,528,336 14,780,907
4,888,997 22,900,554
- ---------------------------------------------------------------------------------------------------------
10,325 63,100 52,775 910,396
448,634 1,441,187
- ---------------------------------------------------------------------------------------------------------
7,073,040 27,572,894 20,499,854 33,372,942
58,037,362 114,050,410
0 16,832
- ---------------------------------------------------------------------------------------------------------
0 716,240 716,240 12,250,666
0 12,942,385
- ---------------------------------------------------------------------------------------------------------
890,268 4,379,010 3,488,742 11,282,487
9,800,678 24,585,918
- ---------------------------------------------------------------------------------------------------------
442,872 1,855,372 1,412,500 12,049,585
11,591,426 25,944,158
0 16,739
- ---------------------------------------------------------------------------------------------------------
599,852 1,842,212 1,242,360 7,630,546
11,335,329 20,105,275
- ---------------------------------------------------------------------------------------------------------
0 0 0 102,916
3,507,665 3,759,186
- ---------------------------------------------------------------------------------------------------------
</TABLE>
S-21
<PAGE>
Variable Annuity Account I
Notes to Financial Statements - December 31, 1998 (continued):
5. Supplemental Information to Statements of Operations and Changes in Net
Assets (continued):
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1997
Valuation Proceeds Cost of Net
Period from Investments Realized
Dividends Deductions Sales Sold Gain (Loss)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. Government Securities Fund II: $136,009 ($57,878) $815,197 $816,209 ($1,012)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Utility Fund II: 698,490 (236,725) 1,251,178 1,013,333 237,845
Annuity contracts in accumulation
Annuity contracts in payment period
- ------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series:
Aggressive Growth Portfolio: 0 (64,625) 1,801,019 1,701,173 99,846
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Balanced Portfolio: 181,361 (69,510) 417,457 346,860 70,597
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Flexible Income Portfolio: 87,894 (14,471) 333,439 322,660 10,779
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Growth Portfolio: 219,777 (99,435) 947,759 774,701 173,058
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Short-Term Bond Portfolio: (4) 10,649 (6,397) 1,087,777 1,072,304 15,473
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Worldwide Growth Portfolio: 522,386 (448,359) 2,135,232 1,701,774 433,458
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Lexington Emerging Markets Fund: 1,295 (21,167) 1,232,664 1,305,131 (72,467)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Lexington Natural Resources Trust Fund: 41,210 (18,555) 1,350,194 1,215,906 134,288
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
MFS Funds:
Emerging Growth Series: (2) 0 (116,977) 15,517,072 13,662,725 1,854,347
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Research Series: (3) 0 (100,752) 13,471,461 12,125,968 1,345,493
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Total Return Series: 0 (54,566) 831,314 702,549 128,765
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Value Series: (5) 0 (5,724) 1,671,063 1,502,195 168,868
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
World Government Series: 15,615 (8,914) 711,009 723,530 (12,521)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Oppenheimer Funds:
Capital Appreciation Fund: 0 (2,638) 62,476 58,435 4,041
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Global Securities Fund: 0 (3,510) 38,265 35,536 2,729
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Growth and Income Fund: 12,626 (13,385) 107,192 95,273 11,919
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-22
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Net Unrealized Net
Gain (Loss) Net Increase (Decrease) Net Assets
----------- Change in In Net Assets ----------
Beginning End Unrealized from Unit Beginning End
of Year of Year Gain (Loss) Transactions of Year of Year
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
($201) $224,916 $225,117 $2,886,389
$2,456,452 $5,645,077
- ---------------------------------------------------------------------------------------------------
1,106,478 4,421,460 3,314,982 3,773,450
13,335,221 21,104,322
0 18,941
- ---------------------------------------------------------------------------------------------------
17,905 685,946 668,041 3,097,139
2,754,214 6,554,615
- ---------------------------------------------------------------------------------------------------
46,718 746,135 699,417 4,857,371
1,987,150 7,726,386
- ---------------------------------------------------------------------------------------------------
5,974 32,134 26,160 1,497,111
393,394 2,000,867
- ---------------------------------------------------------------------------------------------------
90,906 1,026,518 935,612 5,734,794
3,113,839 10,077,645
- ---------------------------------------------------------------------------------------------------
(1,799) 0 1,799 (335,569)
314,045 0
- ---------------------------------------------------------------------------------------------------
658,071 4,733,621 4,075,550 26,343,094
13,802,417 44,728,546
- ---------------------------------------------------------------------------------------------------
(4,649) (302,429) (297,780) 854,308
765,870 1,230,059
- ---------------------------------------------------------------------------------------------------
98,720 11,212 (87,508) 36,049
1,329,850 1,435,334
- ---------------------------------------------------------------------------------------------------
13,628 0 (13,628) (5,940,064)
4,216,322 0
- ---------------------------------------------------------------------------------------------------
66,161 0 (66,161) (3,668,017)
2,489,437 0
- ---------------------------------------------------------------------------------------------------
22,362 595,567 573,205 4,989,205
1,181,849 6,818,458
- ---------------------------------------------------------------------------------------------------
156 0 (156) (207,849)
44,861 0
- ---------------------------------------------------------------------------------------------------
3,877 4,445 568 324,691
214,428 533,867
- ---------------------------------------------------------------------------------------------------
0 (12,997) (12,997) 813,312
0 801,718
- ---------------------------------------------------------------------------------------------------
0 6,826 6,826 1,004,296
0 1,010,341
- ---------------------------------------------------------------------------------------------------
0 136,910 136,910 4,381,360
0 4,529,430
- ---------------------------------------------------------------------------------------------------
</TABLE>
S-23
<PAGE>
Variable Annuity Account I
Notes to Financial Statements - December 31, 1998 (continued):
5. Supplemental Information to Statements of Operations and Changes in Net
Assets (continued):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Year Ended December 31, 1997
Valuation
Period
Dividends Deductions
- --------------------------------------------------------------------------------
<S> <C> <C>
Strategic Bond Fund: $37,598 ($5,530)
Annuity contracts in accumulation
- --------------------------------------------------------------------------------
Portfolio Partners, Inc.:
PPI MFS Emerging Equities Portfolio: 0 (33,567)
Annuity contracts in accumulation
- --------------------------------------------------------------------------------
PPI MFS Research Growth Portfolio: 0 (18,615)
Annuity contracts in accumulation
- --------------------------------------------------------------------------------
PPI MFS Value Equity Portfolio: 0 (2,523)
Annuity contracts in accumulation
- --------------------------------------------------------------------------------
PPI Scudder International Growth Portfolio: 0 (5)
Annuity contracts in accumulation
- --------------------------------------------------------------------------------
PPI T. Rowe Price Growth Equity Portfolio: 0 (28,585)
Annuity contracts in accumulation
Total Variable Annuity Account I $13,569,495 ($5,565,448)
================================================================================
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Year Ended December 31, 1997
Proceeds Cost of Net
from Investments Realized
Sales Sold Gain (Loss)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Strategic Bond Fund: $50,466 $49,763 $703
Annuity contracts in accumulation
- ----------------------------------------------------------------------------------------------
Portfolio Partners, Inc.:
PPI MFS Emerging Equities Portfolio: 14,301,627 14,309,825 (8,198)
Annuity contracts in accumulation
- ----------------------------------------------------------------------------------------------
PPI MFS Research Growth Portfolio: 13,341,021 13,351,443 (10,422)
Annuity contracts in accumulation
- ----------------------------------------------------------------------------------------------
PPI MFS Value Equity Portfolio: 1,560,760 1,560,280 480
Annuity contracts in accumulation
- ----------------------------------------------------------------------------------------------
PPI Scudder International Growth Portfolio: 4 4 0
Annuity contracts in accumulation
- ----------------------------------------------------------------------------------------------
PPI T. Rowe Price Growth Equity Portfolio: 7,986,723 7,987,053 (330)
Annuity contracts in accumulation
Total Variable Annuity Account I $170,076,421 $157,030,583 $13,045,838
==============================================================================================
</TABLE>
(1) Effective November 28, 1997, assets from these funds were transferred to
the PPI T. Rowe Price Growth Equity Portfolio.
(2) Effective November 28, 1997, assets from these funds were transferred to
the PPI MFS Emerging Equities Portfolio.
(3) Effective November 28, 1997, assets from these funds were transferred to
the PPI MFS Research Growth Portfolio.
(4) Effective November 28, 1997, assets from these funds were transferred to
the Aetna Variable Encore Fund.
(5) Effective November 28, 1997, assets from these funds were transferred to
the PPI MFS Value Equity Portfolio.
S-24
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Net Unrealized Net
Gain (Loss) Net Increase (Decrease) Net Assets
----------- Change in In Net Assets ----------
Beginning End Unrealized from Unit Beginning End
of Year of Year Gain (Loss) Transactions of Year of Year
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$0 ($6,794) ($6,794) $1,359,592
$0 $1,385,569
- -----------------------------------------------------------------------------------------------------------
0 (271,841) (271,841) 25,589,922
0 25,276,316
- -----------------------------------------------------------------------------------------------------------
0 (235,756) (235,756) 14,457,783
0 14,192,990
- -----------------------------------------------------------------------------------------------------------
0 24,196 24,196 2,173,458
0 2,195,611
- -----------------------------------------------------------------------------------------------------------
0 (460) (460) 25,931
0 25,466
- -----------------------------------------------------------------------------------------------------------
0 432,009 432,009 21,354,381
0 21,757,475
- -----------------------------------------------------------------------------------------------------------
$13,871,018 $62,528,168 $48,657,150 $272,057,433 $218,897,920 $560,662,388
===========================================================================================================
</TABLE>
S-25
<PAGE>
Independent Auditors' Report
The Board of Directors of Aetna Life Insurance and Annuity Company and Contract
Owners of Variable Annuity Account I:
We have audited the accompanying statement of assets and liabilities of Aetna
Life Insurance and Annuity Company Variable Annuity Account I (the "Account") as
of December 31, 1998, and the related statements of operations and changes in
net assets for each of the years in the two-year period then ended and condensed
financial information for the year ended December 31, 1998. These financial
statements and condensed financial information are the responsibility of the
Account's management. Our responsibility is to express an opinion on these
financial statements and condensed financial information 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 and condensed
financial information are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and condensed financial information. Our procedures
included confirmation of securities owned as of December 31, 1998, by
correspondence with the custodian. 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 and condensed financial information
referred to above present fairly, in all material respects, the financial
position of Aetna Life Insurance and Annuity Company Variable Annuity Account I
as of December 31, 1998, the results of its operations and changes in its net
assets for each of the years in the two-year period then ended and condensed
financial information for the year ended December 31, 1998, in conformity with
generally accepted accounting principles.
/s/ KPMG LLP
Hartford, Connecticut
February 26, 1999
S-26
<PAGE>
AETNA INSURANCE COMPANY OF AMERICA
Index to Financial Statements
------------------------------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report F-2
Financial Statements:
Statements of Income for the Years Ended
December 31, 1998, 1997 and 1996 F-3
Balance Sheets as of December 31, 1998 and 1997 F-4
Statements of Changes in Shareholder's Equity
For the Years Ended December 31, 1998, 1997 and 1996 F-5
Statements of Cash Flows for the Years
Ended December 31, 1998, 1997 and 1996 F-6
Notes to Financial Statements F-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, 1998 and 1997, 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, 1998. 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, 1998 and 1997, and the results of its operations and its
cash flows for each of the years in the three-year period ended December 31,
1998, in conformity with generally accepted accounting principles.
As discussed in Note 1 to the financial statements, in 1997, the Company changed
its method for accounting for guaranty-fund and other insurance related
assessments.
/s/ KPMG LLP
Hartford, Connecticut
March 24, 1999
F-2
<PAGE>
AETNA INSURANCE COMPANY OF AMERICA
(A wholly owned subsidiary of Aetna Life Insurance and Annuity Company)
Statements of Income
(Millions)
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------------
1998 1997 1996
-------- ------- -------
<S> <C> <C> <C>
Revenue:
Charges assessed against policyholders $ 11.5 $ 6.1 $ 1.3
Net investment income 10.4 7.1 1.5
Net realized capital gains (losses) (0.2) 0.1 --
Other income 0.6 0.2 0.1
-------- ------- -------
Total revenue 22.3 13.5 2.9
Benefits and expenses:
Current and future benefits 9.0 6.5 1.7
Operating expenses 6.2 3.7 2.4
Amortization of deferred policy acquisition costs 3.9 0.8 0.2
-------- ------- -------
Total benefits and expenses 19.1 11.0 4.3
Income (loss) before income taxes (benefits)
and cumulative effect adjustment 3.2 2.5 (1.4)
Income taxes (benefits) 0.6 0.8 (0.7)
-------- ------- -------
Income (loss) before cumulative effect
adjustments 2.6 1.7 (0.7)
Cumulative effect adjustment, net of tax -- 0.5 --
-------- ------- -------
Net income (loss) $ 2.6 $ 1.2 $ (0.7)
======== ======= ========
</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
(Millions, except share data)
<TABLE>
<CAPTION>
December 31, December 31,
1998 1997
----------------- -----------------
<S> <C> <C>
Assets
Investments:
Debt securities, available for sale, at fair value
(amortized cost: $138.2 and $135.8) $ 142.3 $ 137.9
Equity securities, available for sale
Nonredeemable preferred stock (amortized cost: $3.1) 3.0 --
Cash and cash equivalents 16.5 12.5
Deferred policy acquisition costs 59.9 45.4
Accrued investment income 2.1 2.0
Premiums due and other receivables 13.3 1.6
Deferred tax asset -- 2.1
Income taxes receivable -- 1.4
Other assets 0.4 2.5
Separate Accounts assets 1,008.0 676.7
----------- ----------
Total assets $ 1,245.5 $ 882.1
=========== ==========
Liabilities and Shareholder's Equity
Liabilities:
Policyholders' funds left with the Company $ 153.2 $ 145.6
Other liabilities 13.3 6.8
Due to parent and affiliates 0.9 0.8
Income taxes
Current 0.1 --
Deferred 0.7 --
Separate Accounts liabilities 1,006.5 676.7
----------- ----------
Total liabilities 1,174.7 829.9
----------- ----------
Shareholder's equity:
Common capital stock, par value $2,000 (1,275 shares authorized,
issued and outstanding) 2.5 2.5
Paid-in capital 62.5 47.5
Accumulated other comprehensive income 1.2 0.2
Retained earnings 4.6 2.0
----------- ----------
Total shareholder's equity 70.8 52.2
----------- ----------
Total liabilities and shareholder's equity $ 1,245.5 $ 882.1
=========== ==========
</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
(Millions)
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------------------------------
1998 1997 1996
-------------- -------------- --------------
<S> <C> <C> <C>
Shareholder's equity, beginning of year $ 52.2 $ 31.3 $ 12.1
Comprehensive income:
Net income (loss) 2.6 1.2 (0.7)
Other comprehensive income (loss), net of tax
Unrealized gains (losses), on securities
($1.5 million, $0.0 million and $(0.1)
million, pretax) 1.0 -- (0.1)
----------- ----------- -----------
Total comprehensive income (loss) 3.6 1.2 (0.8)
----------- ----------- -----------
Capital contributions 15.0 20.0 20.0
Other changes -- (0.3) --
----------- ----------- -----------
Shareholder's equity, end of year $ 70.8 $ 52.2 $ 31.3
=========== =========== ===========
</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
(Millions)
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------------
1998 1997 1996
---------- ---------- -----------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income (loss) $ 2.6 $ 1.2 $ (0.7)
Adjustments to reconcile net income (loss) to net cash
used for operating activities:
Net amortization of discount on debt securities (0.1) (0.4) (0.1)
------- -------- --------
Cash flows provided by (used for) operating activities
and net realized capital (gains) losses before changes
in assets and liabilities 2.5 0.8 (0.8)
Net realized capital (gains) losses 0.2 (0.1) --
------- -------- --------
Cash flows provided by (used for) operating activities
before changes in assets and liabilities 2.7 0.7 (0.8)
Changes in assets and liabilities:
Increase in accrued investment income (0.1) (1.7) (0.2)
Increase in deferred policy acquisition costs (14.5) (24.3) (19.0)
Net change in amounts due to/from parent and affiliates 0.9 0.5 0.2
Net (decrease) increase in other assets and liabilities (2.2) 0.9 --
Net change in income taxes 2.4 (1.4) (2.7)
------- -------- --------
Net cash used for operating activities (10.8) (25.3) (22.5)
------- -------- --------
Cash Flows from Investing Activities:
Proceeds from sales of:
Debt securities available for sale 27.8 16.6 2.5
Investment maturities and repayments of:
Debt securites available for sale 3.4 3.2 --
Short-term investments -- 1.0 --
Cost of investment purchases in:
Debt securities available for sale (36.8) (132.8) (16.7)
Short-term investments -- (1.0) --
------- -------- --------
Net cash used for investing activities (5.6) (113.0) (14.2)
------- -------- --------
Cash Flows from Financing Activities:
Deposits and interest credited for investment contracts 19.7 84.7 65.0
Withdrawals of investment contracts (14.3) (5.7) (0.4)
Capital contributions 15.0 20.0 20.0
------- -------- --------
Net cash provided by financing activities 20.4 99.0 84.6
------- -------- --------
Net increase (decrease) in cash and cash equivalents 4.0 (39.3) 47.8
Cash and cash equivalents, beginning of year 12.5 51.8 4.0
------- -------- --------
Cash and cash equivalents, end of year $ 16.5 $ 12.5 $ 51.8
======= ======== ========
Supplemental cash flow information:
Income taxes (received) paid, net $ (3.3) $ 1.5 $ 1.9
======= ======== ========
</TABLE>
See Notes to Financial Statements.
F-6
<PAGE>
Notes to Financial Statements
1. Summary of Significant Accounting Policies
Aetna Insurance Company of America (the "Company") is a provider of financial
services in the United States. The Company is a wholly owned subsidiary of
Aetna Life Insurance and Annuity Company ("ALIAC"). ALIAC is a wholly owned
subsidiary of Aetna Retirement Holdings, Inc. ("HOLDCO"). HOLDCO is a wholly
owned subsidiary of Aetna Retirement Services, Inc., whose ultimate parent is
Aetna Inc. ("Aetna").
Basis of Presentation
These financial statements have been prepared in conformity with generally
accepted accounting principles. Certain reclassifications have been made to
1997 and 1996 financial information to conform to the 1998 presentation.
New Accounting Standards
Disclosures about Segments of an Enterprise and Related Information
As of December 31, 1998, the Company adopted Financial Accounting Standard
("FAS") No. 131, Disclosures about Segments of an Enterprise and Related
Information. This statement establishes standards for the reporting of
information relating to operating segments. This statement supersedes FAS No.
14, Financial Reporting for Segments of a Business Enterprise, which requires
reporting segment information by industry and geographic area (industry
approach). Under FAS No. 131, operating segments are defined as components of
a company for which separate financial information is available and is used
by management to allocate resources and assess performance (management
approach). The adoption of this statement did not change the composition or
the results of operations of the operating segment of the Company, which are
consistent with the management approach.
Accounting for the costs of Computer Software Developed and Obtained for
Internal Use
On January 1, 1998, the Company adopted Statement of Position ("SOP") 98-1,
Accounting for the costs of Computer Software Developed or Obtained for
Internal Use, issued by the American Institute of Certified Public
Accountants ("AICPA"). This statement requires that certain costs incurred in
developing internal-use computer software (in process at, and subsequent to
the adoption date) be capitalized, and provides guidance for determining
whether computer software is considered to be for internal use. The Company
will amortize these costs over a period of 3 to 5 years. Previously, the
Company expensed the cost of internal-use computer software as incurred. The
Company did not receive any allocation of benefits due to the adoption of
this statement.
Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities
In June 1996, the Financial Accounting Standard Board ("FASB") issued No. 125
, Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities, that provides accounting and reporting
standards for transfers of financial assets and extinguishments of
liabilities. FAS No. 125 was effective for 1997 financial statements,
however, certain provisions
F-7
<PAGE>
Notes to Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
relating to accounting for repurchase agreements and securities lending are
not effective until January 1, 1998. The adoption of those provisions
effective in 1998 did not have a material effect on the Company's financial
position or results of operations.
Accounting by Insurance and Other Enterprises for Insurance-Related
Assessments
In 1997, the Company adopted the AICPA's SOP 97-3, Accounting by Insurance
and Other Enterprises for Insurance-Related Assessments, effective as of
January 1, 1997. This statement required that the Company recognize a
liability for guaranty-fund and other insurance related assessments when such
assessments were probable and could not be reasonably estimated. A cumulative
effect charge of $0.5 million, net of taxes of $0.3 million, related to the
adoption of this statement is reflected in the 1997 Statements of Income.
There was no after-tax charge to earnings for guaranty fund obligations for
the year ended December 31, 1998.
Future Application Accounting Standards
Accounting for Derivative Instruments and Hedging Activities
In June 1998, the Financial Accounting Standards Board issued FAS No. 133,
Accounting for Derivative Instruments and Hedging Activities. This standard
requires companies to record all derivatives on the balance sheet as either
assets or liabilities and measure those instruments at fair value. The manner
in which companies are to record gains or losses resulting from changes in
the values of those derivatives depends on the use of the derivative and
whether it qualifies for hedge accounting. This standard is effective for the
Company's financial statements beginning January 1, 2000, with early adoption
permitted. The Company is currently evaluating the impact of adoption of this
statement and the potential effect on its financial position and results of
operations.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from reported results using those
estimates.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, money market instruments and
other debt issues with a maturity of 90 days or less when purchased.
F-8
<PAGE>
Notes to Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
Investments
Debt and equity securities are classified as available for sale and carried
at fair value. These securities are written down (as realized capital losses)
for other than temporary declines in value. Unrealized capital gains and
losses related to available for sale investments, other than amounts
allocable to experience-rated contractholders, are reflected in shareholder's
equity, net of related taxes.
Fair values for debt and equity securities are based on quoted market prices
or dealer quotations. Where quoted market prices or dealer quotations are not
available, fair values are measured utilizing quoted market prices for
similar securities or by using discounted cash flow methods. Cost for
mortgage-backed securities is adjusted for unamortized premiums and
discounts, which are amortized using the interest method over the estimated
remaining term of the securities, adjusted for anticipated prepayments.
The Company engages in securities lending whereby certain securities from its
portfolio are loaned to other institutions for short periods of time. Initial
collateral, primarily cash, is required at a rate of 102% of the market value
of a loaned domestic security and 105% of the market value of a loaned
foreign security. The collateral is deposited by the borrower with a lending
agent, and retained and invested by the lending agent according to the
Company's guidelines to generate additional income. The market value of the
loaned securities is monitored on a daily basis with additional collateral
obtained or refunded as the market value of the loaned securities fluctuates.
At December 31, 1998 and 1997, the Company had no securities out on loan.
Purchases and sales of debt and equity securities are recorded on the trade
date.
Short-term investments, consisting primarily of money market instruments and
other debt issues purchased with a maturity of 91 days to one year, are
considered available for sale and are carried at fair value, which
approximates amortized cost.
Deferred Policy Acquisition Costs
Certain costs of acquiring insurance business are deferred. These costs, all
of which vary with and are primarily related to the production of new and
renewal business, consist principally of commissions, certain expenses of
underwriting and issuing contracts and certain agency expenses. Such costs
are amortized in proportion to estimated gross profits and adjusted to
reflect actual gross profits and are amortized over a period of up to twenty
years. Deferred policy acquisition costs are written off to the extent that
it is determined that future policy premiums and investment income or gross
profits are not adequate to cover related losses and expenses.
Reserves
Policyholders' funds left with the Company include reserves for deferred
annuity investment contracts and immediate annuities without life contingent
payouts. Reserves on such contracts are
F-9
<PAGE>
Notes to Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
equal to cumulative deposits less charges and withdrawals plus credited
interest thereon (rates range from 3.00% to 8.10% for all years presented),
net of adjustments for investment experience that the Company is entitled to
reflect in future credited interest. Reserves on contracts subject to
experience rating reflect the rights of contractholders, plan participants
and the Company. These reserves also include unrealized gains/losses related
to FAS No. 115. Reserves on contracts subject to experience rating reflect
the rights of contractholders, plan participants and the Company.
Charges Assessed Against Policyholders and Other Income
Charges assessed against policyholders' funds for surrender charges,
actuarial margin and other fees are recorded as revenue when earned. Other
amounts received for these contracts are reflected as deposits and are not
recorded as revenue.
Separate Accounts
Assets held under variable annuity contracts are segregated in Separate
Accounts and are invested, as designated by the contractholder (who bears the
investment risk subject, in some cases, to minimum guarantee) in shares of
mutual funds that are managed by Aeltus Investment Management, Inc.
("Aeltus") or other selected mutual funds not managed by Aeltus.
As of December 31, 1998 Separate Accounts assets are carried at fair value.
At December 31, 1998, unrealized gains of $1.0 million, after taxes, on
assets supporting the guaranteed interest option are reflected in
shareholder's equity. At December 31, 1997, Separate Accounts assets
supporting the guaranteed interest option were carried at an amortized cost
of $90.8 million (fair value $91.5 million). Separate Accounts liabilities
are carried at fair value, except those relating to the guaranteed interest
option. Reserves relating to the guaranteed interest option are maintained at
fund value and reflect interest credited at rates ranging from 3.00% to 8.10%
in 1998 and 4.10% to 8.00% in 1997.
Separate Accounts assets and liabilities are shown as separate captions in
the Balance Sheets. Deposits, investment income and net realized and
unrealized capital gains and losses of the Separate Accounts are not
reflected in the Financial Statements (with the exception of realized and
unrealized capital gains and losses on the assets supporting the guaranteed
interest option). The Statements of Cash Flows do not reflect investment
activity of the Separate Accounts.
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 expenses/benefits result from changes during the year in cumulative
temporary differences between the tax basis and book basis of assets and
liabilities.
F-10
<PAGE>
Notes to Financial Statements (continued)
2. Investments
Debt securities available for sale as of December 31, were as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
1998 (Millions) Cost Gains Losses Value
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. government and government
agencies and authorities $ 22.6 $ 0.7 $ -- $ 23.3
- --------------------------------------------------------------------------------------------------------
U.S. corporate securities:
Utilities 7.0 0.1 -- 7.1
Financial 37.9 1.2 0.1 39.0
Transportation/capital goods 8.6 0.3 -- 8.9
Health care/consumer products 15.3 0.6 -- 15.9
Natural resources 8.6 0.3 -- 8.9
Other corporate securities 0.7 0.2 -- 0.9
- --------------------------------------------------------------------------------------------------------
Total U.S. corporate securities 78.1 2.7 0.1 80.7
- --------------------------------------------------------------------------------------------------------
Foreign securities:
Government 1.1 -- -- 1.1
Other 8.0 0.2 0.3 7.9
- --------------------------------------------------------------------------------------------------------
Total foreign securities 9.1 0.2 0.3 9.0
- --------------------------------------------------------------------------------------------------------
Residential mortgage-backed securities:
Pass-throughs 0.7 -- -- 0.7
Collateralized mortgage obligations 8.7 0.4 -- 9.1
- --------------------------------------------------------------------------------------------------------
Total residential mortgage-backed securities 9.4 0.4 -- 9.8
- --------------------------------------------------------------------------------------------------------
Commercial/multifamily mortgage-
backed securities 10.3 0.3 -- 10.6
- --------------------------------------------------------------------------------------------------------
Other asset-backed securities 8.7 0.2 -- 8.9
- --------------------------------------------------------------------------------------------------------
Total debt securities $ 138.2 $ 4.5 $ 0.4 $ 142.3
========================================================================================================
</TABLE>
F-11
<PAGE>
Notes to Financial Statements (continued)
2. Investments (continued)
Debt securities available for sale as of December 31, were as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
1997 (Millions) Cost Gains Losses Value
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. government and government
agencies and authorities $ 37.8 $ 1.0 $ -- $ 38.8
- --------------------------------------------------------------------------------------------------------
U.S. corporate securities:
Financial 31.3 0.7 -- 32.0
Healthcare & consumer products 6.5 0.2 -- 6.7
Media & broadcast 1.0 0.1 -- 1.1
Natural resources 5.1 0.1 -- 5.2
Transportation & capital goods 5.3 0.1 -- 5.4
Utilities 6.0 0.1 -- 6.1
Other corporate securities 0.8 -- -- 0.8
- --------------------------------------------------------------------------------------------------------
Total U.S. corporate securities 56.0 1.3 -- 57.3
- --------------------------------------------------------------------------------------------------------
Foreign securities:
Government 1.0 -- 0.3 0.7
Other 12.2 0.2 0.8 11.6
- --------------------------------------------------------------------------------------------------------
Total foreign securities 13.2 0.2 1.1 12.3
- --------------------------------------------------------------------------------------------------------
Residential mortgage-backed securities:
Pass-throughs 1.2 -- -- 1.2
Collateralized mortgage obligations 8.6 0.4 -- 9.0
- --------------------------------------------------------------------------------------------------------
Total residential mortgage-backed securities 9.8 0.4 -- 10.2
- --------------------------------------------------------------------------------------------------------
Commercial/multifamily mortgage
backed securities 8.6 0.2 -- 8.8
- --------------------------------------------------------------------------------------------------------
Other asset-backed securities 10.4 0.1 -- 10.5
- --------------------------------------------------------------------------------------------------------
Total Debt Securities $ 135.8 $ 3.2 $ 1.1 $ 137.9
========================================================================================================
</TABLE>
F-12
<PAGE>
Notes to Financial Statements (continued)
2. Investments (continued)
At December 31, 1998 and 1997 net unrealized appreciation of $4.1 million and
$2.1 million respectively, on available-for-sale debt securities included
unrealized gains of $3.8 million and $1.8 million, respectively, related to
experience-rated contracts, which were not reflected in shareholder's equity
but in policyholders' funds left with the Company.
The amortized cost and fair value of debt securities for the year ended
December 31, 1998 are shown below by contractual maturity. Actual maturities
may differ from contractual maturities because securities may be
restructured, called or prepaid.
<TABLE>
<CAPTION>
December 31, 1998
-----------------------------------------------------------------
Amortized Fair
(Millions) Cost Value
-----------------------------------------------------------------
<S> <C> <C>
Due to mature:
One year or less $ 12.0 $ 12.0
After one year through five years 53.2 54.4
After five years through ten years 20.1 21.2
After ten years 24.5 25.4
Mortgage-backed securities 19.7 20.4
Other asset-backed securities 8.7 8.9
-----------------------------------------------------------------
Total $ 138.2 $ 142.3
=================================================================
</TABLE>
At December 31, 1998 and 1997, debt securities carried at $5.4 million and
$5.0 million, respectively, were on deposit as required by various state
regulatory agencies.
Investments in equity securities available for sale as of December 31, were
as follows:
<TABLE>
<CAPTION>
(Millions) 1998 1997
--------------------------------------------
<S> <C> <C>
Cost $ 3.1 --
Gross unrealized gains -- --
Gross unrealized losses (0.1) --
--------------------------------------------
Fair value $ 3.0 --
=============================================
</TABLE>
The Company does not have any investments in a single issuer, other than
obligations of the U.S. government, with a carrying value in excess of 10% of
the Company's shareholder's equity at December 31, 1998.
F-13
<PAGE>
Notes to Financial Statements (continued)
3. Financial Instruments
Estimated Fair Value
The carrying values and estimated fair values of certain of the Company's
financial instruments at December 31, 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
1998 1997
------------------------ ------------------------
Carrying Fair Carrying Fair
(Millions) Value Value Value Value
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Liabilities:
Investment contract liabilities:
With a fixed maturity $ 0.6 $ 0.5 $ 0.3 $ 0.3
Without a fixed maturity $ 152.6 $ 143.8 $ 145.3 $ 134.8
----------------------------------------------------------------------------------------
</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 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 many cases, the fair value estimates cannot be substantiated by
comparison to independent markets, nor can the disclosed value be realized in
immediate settlement of the instrument. In evaluating the Company's
management of interest rate, price and liquidity risks, the fair values of
all assets and liabilities should be taken into consideration, not only those
presented above.
The following valuation methods and assumptions were used by the Company in
estimating the fair value of the above financial instruments:
Investment contract liabilities (included in policyholders' funds left with
the Company):
With a fixed maturity: Fair value is estimated by discounting cash flows at
interest rates currently being offered by, or available to, the Company for
similar contracts.
Without a fixed maturity: Fair value is estimated as the amount payable to
the contractholder upon demand. However, the Company has the right under such
contracts to delay payment of withdrawals which may ultimately result in
paying an amount different than that determined to be payable.
Off-Balance-Sheet and Other Financial Instruments
The Company did not have transactions in off-balance-sheet instruments in
1998 or 1997.
F-14
<PAGE>
Notes to Financial Statements (continued)
4. Net Investment Income
Sources of net investment income were as follows:
<TABLE>
<CAPTION>
(Millions) 1998 1997 1996
------------------------------------------------------------------------
<S> <C> <C> <C>
Debt securities $ 9.0 $ 6.0 $ 0.5
Nonredeemable preferred stock 0.3 -- --
Cash equivalents 0.7 1.2 1.0
Other 0.6 -- --
------------------------------------------------------------------------
Gross investment income 10.6 7.2 1.5
Less: investment expenses 0.2 0.1 --
------------------------------------------------------------------------
Net investment income $ 10.4 $ 7.1 $ 1.5
========================================================================
</TABLE>
Net investment income includes amounts allocable to experience-rated
contractholders of $8.9 million, $7.0 million and $0.9 million for the years
ended December 31, 1998, 1997 and 1996, respectively. Interest credited to
contractholders is included in current and future benefits.
5. Dividend Restrictions and Shareholder's Equity
All dividends that may be paid to the shareholder in 1999 must have prior
approval by the Insurance Commissioner of the State of Connecticut.
The Insurance Department of the State of Connecticut (the "Department")
recognizes as net income and shareholder's capital and surplus, 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 (loss) was
$(5.2) million, $0.4 million and $(7.9) million for the years ended December
31, 1998, 1997 and 1996, respectively. Statutory capital and surplus was
$53.4 million and $43.4 million as of December 31, 1998 and 1997,
respectively. The Company has entered into support agreements with ALIAC
under which ALIAC has agreed to cause the Company to have sufficient capital
to meet a certain capital and surplus level. The Company received capital
contributions relating to these agreements of $15.0 million and $20.0 million
from ALIAC in 1998 and 1997, respectively.
As of December 31, 1998, the Company does not utilize any statutory
accounting practices which are not prescribed by state regulatory authorities
that, individually or in the aggregate, materially affect statutory capital
and surplus.
6. Capital Gains and Losses on Investment Operations
Realized capital gains or losses are the difference between the carrying
value and sale proceeds of specific investments sold.
Net realized capital gains (losses) on debt securities, as reflected in the
Statements of Income for the years ended December 31, 1998 and 1997, were
$(0.2) million and $0.1 million, respectively. Net realized capital gains
(losses) on debt securities for 1996 were immaterial.
F-15
<PAGE>
Notes to Financial Statements (continued)
6. Capital Gains and Losses on Investment Operations (continued)
Net realized capital (losses) gains of $(0.2) million and $0.2 million
allocable to experience-rated contracts, were deducted from net realized
capital gains and an offsetting amount was reflected in policyholders' funds
left with the Company in 1998 and 1997, respectively. Net unamortized gains
were $0.2 million at December 31, 1997. The amounts in 1998 were immaterial.
There were no such amounts for 1996.
Proceeds from the sale of available-for-sale debt securities and the related
gross gains and losses (excluding those related to experience rated
contractholders in 1998 and 1997) were as follows:
<TABLE>
<CAPTION>
(Millions) 1998 1997 1996
---------------------------------------------------------
<S> <C> <C> <C>
Proceeds on sales $ 27.8 $ 16.6 $ 2.5
Gross gains 0.6 0.1 --
Gross losses 0.8 -- --
---------------------------------------------------------
</TABLE>
Changes in shareholder's equity related to changes in accumulated other
comprehensive income (unrealized capital gains and losses on securities),
(excluding those related to experience-rated contractholders in 1998 and
1997), were as follows:
<TABLE>
<CAPTION>
(Millions) 1998 1997 1996
----------------------------------------------------------------------------------
<S> <C> <C> <C>
Debt securities $ 0.1 -- $ (0.1)
Equity securities (0.1) -- --
Other 1.6 --
----------------------------------------------------------------------------------
Subtotal 1.6 -- (0.1)
Increase in deferred income taxes (See Note 7) 0.6 -- --
----------------------------------------------------------------------------------
Net change in accumulated other
comprehensive income $ 1.0 -- $ (0.1)
==================================================================================
</TABLE>
Net unrealized capital gains (losses) allocable to experience-rated contracts
of $3.8 million and $1.8 million at December 31, 1998 and 1997, respectively,
are reflected on the Balance Sheets in policyholders' funds left with the
Company and are not included in shareholder's equity.
F-16
<PAGE>
Notes to Financial Statements (continued)
6. Capital Gains and Losses on Investment Operations (continued)
Shareholder's equity included the following accumulated other comprehensive
income, which is net of amounts allocable to experience rated contractholders
in 1998 and 1997, at December 31:
<TABLE>
<CAPTION>
(Millions) 1998 1997 1996
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Debt securities:
Gross unrealized gains $ 0.3 $ 0.2 $ 0.2
Gross unrealized losses -- -- --
---------------------------------------------------------------------------------------
0.3 0.2 0.2
---------------------------------------------------------------------------------------
Equity securities:
Gross unrealized gains -- -- --
Gross unrealized losses (0.1) -- --
---------------------------------------------------------------------------------------
(0.1) -- --
---------------------------------------------------------------------------------------
Other:
Gross unrealized gains 1.9 -- --
Gross unrealized losses (0.3) -- --
---------------------------------------------------------------------------------------
1.6 -- --
---------------------------------------------------------------------------------------
Less: deferred federal income taxes (see Note 7) 0.6 -- --
---------------------------------------------------------------------------------------
Net unrealized capital gains $ 1.2 $ 0.2 $ 0.2
=======================================================================================
</TABLE>
Changes in accumulated other comprehensive income related to changes in
unrealized gains (losses) on securities (excluding those related to
experience-rated contractholders) were as follows:
<TABLE>
<CAPTION>
(Millions) 1998 1997 1996
------------------------------------------------------------------------------------
<S> <C> <C> <C>
Unrealized holding gains (losses) arising
during the period (1) $ 0.9 $ 0.3 $ --
Less: reclassification adjustment for gains and
other items included in net income (2) (0.1) 0.3 0.1
------------------------------------------------------------------------------------
Net unrealized gains (losses) on securities $ 1.0 $ -- $ (0.1)
====================================================================================
</TABLE>
(1) Pretax unrealized holding gains (losses) arising during the period were
$1.3 million and $0.4 million for 1998 and 1997, respectively. There were
no unrealized holding gains (losses) arising in 1996.
(2) Pretax reclassification adjustments for gains and other items included in
net income were $(0.2) million, $0.4 million and $0.1 million for 1998,
1997 and 1996, respectively.
F-17
<PAGE>
Notes to Financial Statements (continued)
7. Income Taxes
The Company is included in the consolidated federal income tax return of
Aetna and combined Connecticut state 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 used in the consolidated
returns.
Income taxes for the years ended December 31, consist of:
<TABLE>
<CAPTION>
(Millions) 1998 1997 1996
----------------------------------------------------------------------------
<S> <C> <C> <C>
Current taxes (benefits):
Federal $ (1.7) $ 1.2 $ 0.1
State 0.1 -- (0.1)
Net realized capital gains (losses) (0.1) 0.1 --
----------------------------------------------------------------------------
(1.7) 1.3 --
----------------------------------------------------------------------------
Deferred taxes (benefits):
Federal 2.3 (0.4) (0.7)
Net realized capital losses -- (0.1) --
----------------------------------------------------------------------------
2.3 (0.5) (0.7)
----------------------------------------------------------------------------
Total $ 0.6 $ 0.8 $ (0.7)
============================================================================
</TABLE>
Income taxes were different from the amount computed by applying the federal
income tax rate to income before income taxes for the following reasons:
<TABLE>
<CAPTION>
(Millions) 1998 1997 1996
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income (loss) before income taxes (benefits) and
cumulative effect adjustment $ 3.2 $ 2.5 $ (1.4)
Tax rate 35% 35% 35%
---------------------------------------------------------------------------------------
Application of the tax rate 1.1 0.9 (0.5)
Tax effect of:
Excludable dividends (0.5) (0.1) (0.2)
---------------------------------------------------------------------------------------
Income taxes (benefits) $ 0.6 $ 0.8 $ (0.7)
=======================================================================================
</TABLE>
F-18
<PAGE>
Notes to Financial Statements (continued)
7. Income Taxes (continued)
The tax effects of temporary differences that give rise to deferred tax
assets and deferred tax liabilities at December 31 are presented below:
<TABLE>
<CAPTION>
(Millions) 1998 1997
-------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Policyholders' funds left with the Company $ 16.6 $ 14.3
Unrealized gains allocable to experience-rated
contracts 1.3 0.7
Guaranty fund assessments 0.1 0.1
Pension -- 0.2
Other 0.1 --
-------------------------------------------------------------------------
Total gross assets 18.1 15.3
-------------------------------------------------------------------------
Deferred tax liabilities:
Deferred policy acquisition costs 16.9 12.5
Net unrealized capital gains 1.9 0.7
-------------------------------------------------------------------------
Total gross liabilities 18.8 13.2
-------------------------------------------------------------------------
Net deferred tax (asset) liability $ 0.7 $ (2.1)
=========================================================================
</TABLE>
Net unrealized capital gains and losses are presented in shareholder's equity
net of deferred taxes. As of December 31, 1998 and 1997, no valuation
allowances were required for unrealized capital gains and losses.
The Internal Revenue Service (the "Service") has completed examinations of
the consolidated federal income tax returns of Aetna through 1990.
Discussions are being held with the Service with respect to proposed
adjustments. Management believes there are adequate defenses against, or
sufficient reserves to provide for, any such adjustments. The Service has
commenced its examinations for the years 1991 through 1994.
8. Benefit Plans
The Company utilizes the employees of Aetna and its affiliates (primarily
ALIAC). The benefit plan charges allocated to the Company were $0.2 million
in 1998. In 1997 and 1996 the charges were immaterial.
As of December 31, 1996, Aetna transferred to the Company approximately $0.1
million of accrued liabilities, primarily related to the allocation of ALIAC
pension and postretirement benefit plans that had been previously recorded by
Aetna. The after-tax amount of this transfer (approximately $0.1 million) is
reported as a reduction in retained earnings. In 1997, other changes in
shareholder's equity includes an additional $0.3 million reduction reflecting
revisions to the allocation of these accrued liabilities.
F-19
<PAGE>
Notes to Financial Statements (continued)
9. 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, at cost, 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 $10.5 million and $7.3 million for the years ended December
31, 1998 and 1997, respectively, (of which $5.5 million and $4.5 million,
respectively, were capitalized as deferred policy acquisition costs).
The Company is compensated by the Separate Accounts for bearing mortality and
expense risks pertaining to variable annuity contracts. Under the insurance
contracts, the Separate Accounts pay the Company a daily fee which, on an
annual basis, ranged from 1.25% to 1.40% of their average daily net assets.
The amount of compensation and fees received from the Separate Accounts,
included in charges assessed against policyholders, amounted to $10.3
million, $5.6 million and $1.3 million for the years ended December 31, 1998,
1997 and 1996, respectively.
The Company received capital contributions of $15.0 million in cash from
ALIAC in 1998 and $20.0 million in both 1997 and 1996.
Since August 1996, Aeltus, an affiliate of the Company, has been acting as
adviser for the general account assets. The Company pays Aeltus a fee which,
on an annual basis, is .06% of the average daily net assets under management.
The amount of such fees for the years ended December 31, 1998 and 1997
amounted to $0.2 million and $0.1 million, respectively. The amount for such
fees in 1996 was immaterial.
10. Commitments and Contingent Liabilities
Commitments
At December 31, 1998 and 1997 the Company had no commitments or contingent
liabilities.
Litigation
The Company is not currently involved in any material litigation.
F-20
<PAGE>
Form No. SAI.________-99 AICA Ed. _________ 1999
<PAGE>
VARIABLE ANNUITY ACCOUNT I
PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits
- ------------------------------------------
(a) Financial Statements:
(1) Included in Part A:
Condensed Financial Information
(2) Included in Part B:
Financial Statements of Variable Annuity Account I:
- Statement of Assets and Liabilities as of December 31, 1998
- Statements of Operations and Changes in Net Assets for
the years ended December 31, 1998 and 1997
- Condensed Financial Information for the year ended
December 31, 1998
- Notes to Financial Statements
- Independent Auditors' Report
Financial Statements of Depositor:
- Independent Auditors' Report
- Statements of Income for the years ended December 31,
1998, 1997 and 1996
- Balance Sheets for the years ended December 31, 1998 and 1997
- Statements of Changes in Shareholder's Equity for the
years ended December 31, 1998, 1997 and 1996
- Statements of Cash Flows for the years ended December
31, 1998, 1997 and 1996
- 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) Selling Agreement(1)
(3.2) Principal Underwriting Agreement(2)
(3.3) First Amendment dated January 11, 1996 to Principal Underwriting
Agreement(2)
(4.1) Form of Variable Annuity Contract (G2-CDA-99(TORP)FL)
(4.2) Form of Variable Annuity Contract (G2-CDA-99(ORP)FL)*
(4.3) Form of Certificate (GTCC2-99(TORP)FL) (G2-CDA-99(TORP)FL)
(4.4) Form of Certificate (GTCC2-99(ORP)FL) to Variable Annuity Contract
(G2-CDA-99(ORP)FL)*
(5) Variable Annuity Contract Application*
(6.1) Certificate of Incorporation of Aetna Insurance Company of
America(1)
<PAGE>
(6.2) By-laws of Aetna Insurance Company of America(1)
(7) Not Applicable
(8.1) Fund Participation Agreement between Aetna Insurance Company of
America and AIM*
(8.2) Service Agreement between Aetna Insurance Company of America and
AIM*
(8.3) Fund Participation Agreement among Aetna Insurance Company of
America, Alger American Fund and Fred Alger Management, Inc. dated
August 30, 1995(3)
(8.4) Fund Participation Agreement among Calvert Responsibly Invested
Balanced Portfolio, Calvert Asset Management Company, Inc. and
Aetna Insurance Company of America dated December 1, 1997(4)
(8.5) Service Agreement between Calvert Asset Management Company, Inc.
and Aetna Insurance Company of America dated December 1, 1997(4)
(8.6) Fund Participation Agreement by and among Insurance Management
Series, Federated Advisers and Aetna Insurance Company of America
dated July 1, 1994(5)
(8.7) Fund Participation Agreement among Aetna Insurance Company of
America, Variable Insurance Products Fund and Fidelity Distributors
Corporation dated October 20, 1995(3)
(8.8) Fund Participation Agreement among Aetna Insurance Company of
America, Variable Insurance Products Fund II and Fidelity
Distributors Corporation dated October 20, 1995(3)
(8.9) Fund Participation Agreement among Janus Capital Corporation, Aetna
Insurance Company of America and Janus Aspen Series dated December
8, 1997
(8.10) Amendment to Fund Participation Agreement made as of October 12,
1998 to Fund Participation Agreement among Janus Capital
Corporation, Aetna Insurance Company of America and Janus Aspen
Series dated December 8, 1997
(8.11) Service Agreement between Janus Capital Corporation and Aetna
Insurance Company of America dated as of December 8, 1997
(8.12) Fund Participation Agreement among MFS Variable Insurance Trust,
Aetna Insurance Company of America and Massachusetts Financial
Services Company dated April 30, 1996(3)
(8.13) First Amendment dated September 3, 1996 to Fund Participation
Agreement among MFS Variable Insurance Trust, Aetna Insurance
Company of America and Massachusetts Financial Services Company
dated April 30, 1996(6)
(8.14) Fund Participation Agreement between Aetna Insurance Company of
America, Oppenheimer Variable Account Funds and Oppenheimer Fund,
Inc. dated April 1, 1997(7)
<PAGE>
(8.15) Service Agreement between Aetna Insurance Company of America and
Oppenheimer Funds, Inc. dated April 1, 1997(7)
(8.16) Fund Participation Agreement among Aetna Insurance Company of
America, TCI Portfolios, Inc. and Investors Research Corporation
dated October 9, 1995(3)
(8.17) Administrative Service Agreement between Aetna Insurance Company of
America and Agency, Inc.(3)
(9) Opinion and Consent of Counsel*
(10) Consent of Independent Auditors
(11) Not applicable
(12) Not applicable
(13) Schedule for Computation of Performance Data*
(14) Not applicable
(15.1) Powers of Attorney(8)
(15.2) Certificate of Resolution Authorizing Signatures(1)
*To be filed by Amendment
1. Incorporated by reference to Registration Statement on Form N-4 (File No.
33-59749), as filed on June 1, 1995.
2. Incorporated by reference to Registration Statement on Form S-2 (File No.
333-22723), as filed on March 4, 1997.
3. Incorporated by reference to Post-Effective Amendment No. 1 to Registration
Statement on Form N-4 (File No. 33-59749), as filed on April 22, 1996.
4. Incorporated by reference to Post-Effective Amendment No. 7 to Registration
Statement on Form N-4 (File No. 33-59749), as filed on February 13, 1998.
5. Incorporated by reference to Post-Effective Amendment No. 5 to Registration
Statement on Form N-4 (File No. 33-59749), as filed on July 29, 1997.
6. Incorporated by reference to Post-Effective Amendment No. 3 to Registration
Statement on Form N-4 (File No. 33-59749), as filed on September 16, 1996.
7. Incorporated by reference to Post-Effective Amendment No. 4 to Registration
Statement on Form N-4 (File No. 33-59749), as filed on April 16, 1997.
8. Incorporated by reference to Post-Effective Amendment No. 9 to Registration
Statement on Form N-4 (File No. 33-59749), as filed on April 9, 1999.
<PAGE>
Item 25. Directors and Officers of the Depositor
- ------------------------------------------------
<TABLE>
<CAPTION>
Name and Principal
Business Address* Positions and Offices with Depositor
- ----------------- ------------------------------------
<S> <C>
Thomas J. McInerney Director and President
Deborah Koltenuk Vice President, Corporate Controller,
and Assistant Treasurer
Shaun P. Mathews Director and Senior Vice President
Steven A. Haxton Director
David W. O'Leary Director
Catherine H. Smith Director
Jane A. Boyle Corporate Secretary and Counsel
Therese A. Squillacote Vice President and Chief Compliance
Officer
Alastair G. Longley-Cook Vice President and Corporate Actuary
</TABLE>
* 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
- -------------------------------------------------------------------------
Attached is a listing of all persons directly or indirectly controlled by or
under common control with the Registrant. The listing indicates (1) the state or
other sovereign power under the laws of which the entity is organized, (2) the
percentage of voting securities owned or other basis of control by the person,
if any, immediately controlling it (percentages are rounded to the nearest whole
percentage and are based on ownership of voting rights), and (3) its principal
business.
<PAGE>
June 30, 1999
COMPANY ORGANIZATION LIST
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aetna Inc. CT (1) Publicly Held Holding Company
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Services, Inc. CT (1) (*) Aetna Inc. 100% Holding Company
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare Inc. PA (1) (*) Aetna Inc. 100% Holding Company
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Risk Indemnity
Company Limited Bermuda (1) (*) Aetna Inc. 100% Insurance
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Life Insurance Company CT (1) (*) Aetna Services, Inc. 100% Life and Health Insurance and Related
Services
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Retirement Services, Inc. CT (1) (*) Aetna Services, Inc. 100% Holding Company
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna International, Inc. CT (1) (*) Aetna Services, Inc. 100% Holding Company for
International Subsidiaries
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Health and Life
Company Insurance CT (1) (*) Aetna Services, Inc. 100% Life and Health Insurance
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Capital Trust I DE (4) (*) Aetna Services, Inc. 100% Business Trust
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Capital Trust II DE (4) (*) Aetna Services, Inc. 100% Business Trust
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Capital Trust III DE (4) (*) Aetna Services, Inc. 100% Business Trust
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Capital Trust IV DE (4) (*) Aetna Services, Inc. 100% Business Trust
- -----------------------------------------------------------------------------------------------------------------------------------
AUSHC Holdings, Inc. CT (1) (*) Aetna Services, Inc. 100% Holding Company
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- -------------------
(1) Corporation (*) Fully Consolidated
(2) Partnership (**) One Line Consolidation
(3) Joint Venture (***) Not Consolidated
(4) Trust
(5) Limited Liability Company
+ Percentages are rounded to the nearest whole percent and are based on
ownership of voting rights.
<PAGE>
June 30, 1999
COMPANY ORGANIZATION LIST
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aetna Foundation, Inc. CT (1) (***) Aetna Services, Inc. 100%(a) Supports Charitable Scientific,
Literary and Educational
Activities
- -----------------------------------------------------------------------------------------------------------------------------------
Imperial Fire & Marine U.K. (1) (***) Aetna Services, Inc. 10% Reinsurance
Re-Insurance
Company Limited
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Business Resources, Inc. CT (1) (*) Aetna Services, Inc. 100% Provides Business Services to
External Clients
- -----------------------------------------------------------------------------------------------------------------------------------
AE Fifteen, Incorporated CT (1) (*) Aetna Services, Inc. 100% Shell Corp. for Interest in
Cogeneration
- -----------------------------------------------------------------------------------------------------------------------------------
Luettgens Limited CT (1) (*) Aetna Services, Inc. 100% Retail Specialty Store
- -----------------------------------------------------------------------------------------------------------------------------------
AE Housing Corp. CT (1) (*) Aetna Services, Inc. 100% Real Estate
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Capital L.L.C. DE (5) (*) Aetna Services, Inc. 95%(b) Finance - Limited Liability
Company
- -----------------------------------------------------------------------------------------------------------------------------------
A.S.I. Wings, L.L.C. DE (5)(*) Aetna Services, Inc. 100% General Business Corporation
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Realty Investments I, Inc. CT (1) (*) Aetna Services, Inc. 100% Real Estate Investment
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Properties I Limited CT (2) (***) Aetna Realty Investments I, 84%(c) Real Estate Investment
Partnership Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
PHPSNE Parent Corporation DE (1) (*) AUSHC Holdings, Inc. 55% Holding Company
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Health Plans of Southern CT (1)(*) PHPSNE Parent Corporation 100% Health Care
New England, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- -------------------
(a) Nonstock Corporation
(b) Aetna Capital Holdings, Inc. owns 5% of this Limited Liability Company.
(c) Aetna Realty Investments, I, Inc. is a 1% general partner and an 83%
limited partner.
<PAGE>
June 30, 1999
COMPANY ORGANIZATION LIST
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CMBS Holdings, Inc. TX (1) (*) Aetna Life Insurance Company 100% Real Estate Investment and
Management
- -----------------------------------------------------------------------------------------------------------------------------------
CMBS Holdings, Inc. - II CT (1) (*) Aetna Life Insurance Company 100% Real Estate
- -----------------------------------------------------------------------------------------------------------------------------------
CMBS Holdings, L.L.C. CT (5) (*) Aetna Life Insurance Company 99%(d) Real Estate
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Real Estate Properties, Inc. CT (1) (*) Aetna Life Insurance Company 100% Acquire, Develop and Lease
Real Estate
- -----------------------------------------------------------------------------------------------------------------------------------
AE Fourteen, Inc. CT (1) (*) Aetna Life Insurance Company 100% Cogeneration
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Life Assignment Company CT (1) (*) Aetna Life Insurance Company 100% Assignment Company for Structured
Settlements
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna/Area Corporation CT (1) (*) Aetna Life Insurance Company 100% Real Estate Investment
and Management
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Institutional Investors I CT (2) (**) Aetna Life Insurance Company 13%(e) Real Estate Investment
Limited Partnership
- -----------------------------------------------------------------------------------------------------------------------------------
Shadow Ridge At Oak Park CA (2) (**) Aetna Life Insurance Company 80% Real Estate
Condominium Associates
- -----------------------------------------------------------------------------------------------------------------------------------
BPC Equity, Inc. DE (1) (*) Aetna Life Insurance Company 100% General Business Corporation
- -----------------------------------------------------------------------------------------------------------------------------------
BPC Equity, L.L.C. DE (5) (**) Aetna Life Insurance Company 99%(f) General Business Corporation
- -----------------------------------------------------------------------------------------------------------------------------------
85 L.L.C. DE (5) (**) Aetna Life Insurance Company 100% General Business Corporation
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- -------------------
(d) CMBS Holdings, Inc.-II owns 1% of this Limited Liability Company.
(e) Aetna Real Estate Properties, Inc. is a 1% general partner.
(f) BPC Equity, Inc. owns 1% of this Limited Liability Company.
<PAGE>
June 30, 1999
COMPANY ORGANIZATION LIST
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aetna Affordable Housing, Inc. CT (1) (*) Aetna Life Insurance Company 100% Real Estate Investment
- -----------------------------------------------------------------------------------------------------------------------------------
AHP Holdings, Inc. CT (1) (*) Aetna Life Insurance Company 100% Holding Company
- -----------------------------------------------------------------------------------------------------------------------------------
ALEC Coinvestment Fund 1, L.L.C. DE (5) (**) Aetna Life Insurance Company 100% Real Estate
- -----------------------------------------------------------------------------------------------------------------------------------
Bay Area Mall, Inc. DE (1) (*) Aetna Life Insurance Company 100% Real Estate
- -----------------------------------------------------------------------------------------------------------------------------------
455 Market Street CA (2) (**) Aetna Life Insurance Company 90%(g) Real Estate
- -----------------------------------------------------------------------------------------------------------------------------------
Circulation L.L.C. CT (5) (**) Aetna Life Insurance Company 100% General Business Corporation
- -----------------------------------------------------------------------------------------------------------------------------------
Koll Center Newport A CA (2) (**) Aetna Life Insurance Company 50%(h) Real Estate Investment
- -----------------------------------------------------------------------------------------------------------------------------------
Koll Center Newport Number 8 CA (2) (**) Aetna Life Insurance Company 50%(i) Real Estate Investment
- -----------------------------------------------------------------------------------------------------------------------------------
Koll Center Newport Number 9 CA (2) (**) Aetna Life Insurance Company 50%(j) Real Estate Investment
- -----------------------------------------------------------------------------------------------------------------------------------
Koll Center Newport Number 10 CA (2) (**) Aetna Life Insurance Company 50%(k) Real Estate Investment
- -----------------------------------------------------------------------------------------------------------------------------------
Koll Center Newport Number 11 CA (2) (**) Aetna Life Insurance Company 50%(l) Real Estate Investment
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- -----------------
(g) 89% general partner and 1% limited partner.
(h) Aetna Life Insurance Company is a 49% general partner and a 1% limited
partner.
(i) Aetna Life Insurance Company is a 49% general partner and a 1% limited
partner.
(j) Aetna Life Insurance Company is a 49% general partner and a 1% limited
partner.
(k) Aetna Life Insurance Company is a 49% general partner and a 1% limited
partner.
(l) Aetna Life Insurance Company is a 49% general partner and a 1% limited
partner.
<PAGE>
June 30, 1999
COMPANY ORGANIZATION LIST
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Koll Center Newport Number 14 CA (3) (**) Aetna Life Insurance Company 60% Real Estate Investment
- ------------------------------------------------------------------------------------------------------------------------------------
Pinnacle McDowell Investors, L.L.C. DE (5) (*** Aetna Life Insurance Company 100% Real Estate Holding Company
- ------------------------------------------------------------------------------------------------------------------------------------
1111 Pasquinelli Dr. L.L.C. DE (5) (***) Aetna Life Insurance Company 100% Real Estate Holding Company
- ------------------------------------------------------------------------------------------------------------------------------------
1400 Busch Parkway, L.L.C. DE (5) (***) Aetna Life Insurance Company 100% Real Estate Holding Company
- ------------------------------------------------------------------------------------------------------------------------------------
Hayward Industrial Park Associates CT (2) (**) Aetna Life Insurance Company 99% Real Estate Investment
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Hamilton Partnership IL (2) (**) Aetna Life Insurance Company 62% Real Estate
- ------------------------------------------------------------------------------------------------------------------------------------
Waterloo Associates Limited NC (2) (**) Aetna Life Insurance Company 99%(m) Real Estate Investment
Partnership
- ------------------------------------------------------------------------------------------------------------------------------------
Gables At Farmington Associates CT (2) (**) Aetna Life Insurance Company 60% Real Estate Investment
- ------------------------------------------------------------------------------------------------------------------------------------
Country Club Heights at Woburn MA (2) (**) Aetna Life Insurance Company 60% Real Estate Investment
Associates
- ------------------------------------------------------------------------------------------------------------------------------------
Carlyle Club Apartments Investors, DE (5) (***) Aetna Life Insurance Company 100% Real Estate Holding Company
L.L.C.
- ------------------------------------------------------------------------------------------------------------------------------------
Citation Club Investors, L.L.C. DE (5) (***) Aetna Life Insurance Company 100% Real Estate Holding Company
- ------------------------------------------------------------------------------------------------------------------------------------
Birtcher Aetna-Laguna Hills CA (2) (**) Aetna Life Insurance Company 68% Real Estate Investment
- ------------------------------------------------------------------------------------------------------------------------------------
Harbor Business Park CA (2) (**) Aetna Life Insurance Company 99% Real Estate Investment
- ------------------------------------------------------------------------------------------------------------------------------------
Ensenada De Las Colinas I Associates TX (2) (**) Aetna Life Insurance Company 99%(n) Real Estate Investment
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- -----------------
(m) Aetna Life Insurance Company is a 99% general partner and Trumbull Three,
Inc. is a 1% limited partner.
(n) Aetna Life Insurance Company is a 99% general partner and Trumbull One, Inc.
is a 1% limited partner.
<PAGE>
June 30, 1999
COMPANY ORGANIZATION LIST
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Trevose Hospitality, Inc. CT (1) (**) Aetna Life Insurance Company 100% Real Estate Investment
- ------------------------------------------------------------------------------------------------------------------------------------
Oaks at Valley Ranch I TX (2) (**) Aetna Life Insurance Company 99%(o) Real Estate Investment
- ------------------------------------------------------------------------------------------------------------------------------------
Oaks at Valley Ranch II TX (2) (**) Aetna Life Insurance Company 99%(p) Real Estate Investment
- ------------------------------------------------------------------------------------------------------------------------------------
KBC-RED Hill Limited Partnership CA (2) (**) Aetna Life Insurance Company 80% Real Estate Investment
- ------------------------------------------------------------------------------------------------------------------------------------
KBC-Eastside Limited Partnership AZ (2) (**) Aetna Life Insurance Company 80% Real Estate Investment
- ------------------------------------------------------------------------------------------------------------------------------------
Sturbridge Square Apartments DE (5) (***) Aetna Life Insurance Company 100% Real Estate Holding Company
Investors LLC
- ------------------------------------------------------------------------------------------------------------------------------------
900 North Stuart Street Investors DE (5) (***) Aetna Life Insurance Company 100% Real Estate Holding Company
L.L.C.
- ------------------------------------------------------------------------------------------------------------------------------------
Stuart Park Associates, L.L.C. VA (5) (***) 900 North Stuart Street 50% Real Estate Holding Company
Investors L.L.C.
- ------------------------------------------------------------------------------------------------------------------------------------
Trumbull One, Inc. CT (1) (*) Aetna Life Insurance Company 100% Real Estate Investment
- ------------------------------------------------------------------------------------------------------------------------------------
Trumbull Three, Inc. CT (1) (*) Aetna Life Insurance Company 100% Real Estate Investment
- ------------------------------------------------------------------------------------------------------------------------------------
Trumbull Four, Inc. CT (1) (*) Aetna Life Insurance Company 100% Real Estate Investment
- ------------------------------------------------------------------------------------------------------------------------------------
Southfield Partners MD (2) (**) Aetna Life Insurance Company 99%(q) Real Estate Investment
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- -----------------
(o) Aetna Life Insurance Company is a 99% general partner and Trumbull One, Inc.
is a 1% limited partner.
(p) Aetna Life Insurance Company is a 99% general partner and Trumbull One, Inc.
is a 1% limited partner.
(q) Aetna Life Insurance Company is a 99% general partner and Trumbull One, Inc.
is a 1% limited partner.
<PAGE>
June 30, 1999
COMPANY ORGANIZATION LIST
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Lincoln Rancho Cucamonga Associates CA (2) (**) Aetna Life Insurance Company 60% Real Estate Investment
- -----------------------------------------------------------------------------------------------------------------------------------
Metroplace Office Investors L.L.C. DE (5) (***) Aetna Life Insurance Company 100% Real Estate Investment
- -----------------------------------------------------------------------------------------------------------------------------------
1010 Executive Court, L.L.C. DE (5) (***) Aetna Life Insurance Company 100% Real Estate Holding Company
- -----------------------------------------------------------------------------------------------------------------------------------
Becknell Properties IL (2) (**) Aetna Life Insurance Company 75% Real Estate Investment
- -----------------------------------------------------------------------------------------------------------------------------------
3365 Enterprise Avenue Investors, DE (5) (***) Aetna Life Insurance Company 100% Real Estate Holding Company
L.L.C.
- -----------------------------------------------------------------------------------------------------------------------------------
Cherry Hill Investors L.L.C. CT (5) (***) Aetna Life Insurance Company 100% Real Estate Holding Company
- -----------------------------------------------------------------------------------------------------------------------------------
Evergreen Industrial Park DE (5) (***) Aetna Life Insurance Company 100% Real Estate Holding Company
Investors, L.L.C.
- -----------------------------------------------------------------------------------------------------------------------------------
1135 Arbor Drive Investors L.L.C. DE (5) (***) Aetna Life Insurance Company 100% Real Estate Holding Company
- -----------------------------------------------------------------------------------------------------------------------------------
Centrum Associates CA (2) (**) Aetna Life Insurance Company 65% Real Estate Investment
- -----------------------------------------------------------------------------------------------------------------------------------
Tri-City Mall Associates AZ (2) (**) Aetna Life Insurance Company 50% Real Estate Investment
- -----------------------------------------------------------------------------------------------------------------------------------
Southwest Financial Associates AZ (2) (**) Aetna Life Insurance Company 60% Real Estate Investment
- -----------------------------------------------------------------------------------------------------------------------------------
B&H Ventures IV Limited Partnership CT (2) (**) Aetna Life Insurance Company 75% Real Estate Investment
- -----------------------------------------------------------------------------------------------------------------------------------
Champions Richland Northcourte TX (2) (*) Aetna Life Insurance Company 99%(r) Real Estate Investment
Partnership
- -----------------------------------------------------------------------------------------------------------------------------------
Chris-Town Village Associates AZ (2) (**) Aetna Life Insurance Company 50% Real Estate Investment
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- -----------------
(r) Aetna Life Insurance Company is a 99% general partner and Trumbull One, Inc.
is a 1% limited partner.
<PAGE>
June 30, 1999
COMPANY ORGANIZATION LIST
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Arshaw Partners I TX (2) (**) Aetna Life Insurance Company 50% Real Estate Investment
- -----------------------------------------------------------------------------------------------------------------------------------
Arshaw Partners II TX (2) (**) Aetna Life Insurance Company 50% Real Estate Holding Company
- -----------------------------------------------------------------------------------------------------------------------------------
Assembly Square Mall LLC DE (5) (**) Aetna Life Insurance Company 99%(s) Real Estate Investment
- -----------------------------------------------------------------------------------------------------------------------------------
Spectrum Fashion Center AZ (2) (**) Aetna Life Insurance Company 50% Real Estate Investment
- -----------------------------------------------------------------------------------------------------------------------------------
Canyon Springs Investment Partners TX (2) (**) Aetna Life Insurance Company 100%(t) Real Estate Holding Company
L.P.
- -----------------------------------------------------------------------------------------------------------------------------------
Cambridgeside Galleria MA (2) (**) Aetna Life Insurance Company 50% Real Estate Investment
- -----------------------------------------------------------------------------------------------------------------------------------
Stamford Town Center Investors DE (5) (***) Aetna Life Insurance Company 100% Real Estate Holding Company
L.L.C.
- -----------------------------------------------------------------------------------------------------------------------------------
Rich-Taubman Associates MA (2) (***) Stamford Town Center 50% Real Estate Holding Company
Investors L.L.C.
- -----------------------------------------------------------------------------------------------------------------------------------
ADBI Partnership FL (2) (**) Aetna Life Insurance Company 30% Real Estate Investment
- -----------------------------------------------------------------------------------------------------------------------------------
Marriott Inner Harbor Hotel MD (2) (*) Aetna Life Insurance Company 99% Real Estate Investment
- -----------------------------------------------------------------------------------------------------------------------------------
737 North Michigan Avenue Investors DE (5) (***) Aetna Life Insurance Company 100% Real Estate Holding Company
L.L.C.
- -----------------------------------------------------------------------------------------------------------------------------------
Meridian Business Campus Investors DE (5) (***) Aetna Life Insurance Company 100% Real Estate Holding Company
I L.L.C.
- -----------------------------------------------------------------------------------------------------------------------------------
1501 Fourth Ave. Limited WA (2) (**) Aetna Life Insurance Company 91%(v) Real Estate Investment
Partnership
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- -----------------
(s) Aetna Life Insurance Company is a 99% general partner and Bay Area Mall,
Inc., is a 1% general partner.
(t) Aetna Life Insurance Company is a 99% general partner and Trumbull One, Inc.
is a 1% limited partner.
(v) Aetna Life Insurance Company is a 99% general partner and a 1% limited
partner.
<PAGE>
June 30, 1999
COMPANY ORGANIZATION LIST
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thace Associates MI (2) (**) Aetna Life Insurance Company 25% Real Estate Investment
- -----------------------------------------------------------------------------------------------------------------------------------
Eastmeadow Distribution Center GA (2) (**) Aetna Life Insurance Company 99%(w) Real Estate Investment
- -----------------------------------------------------------------------------------------------------------------------------------
Limited Partnership
- -----------------------------------------------------------------------------------------------------------------------------------
Eastmeadow Distribution Center GA (2) (**) Aetna Life Insurance Company 99%(x) Real Estate Investment
Phase II Limited Partnership
777 Oak Lane, L.L.C. DE (5) (***) Aetna Life Insurance Company 100% Real Estate Holding Company
- -----------------------------------------------------------------------------------------------------------------------------------
Azalea Mall, L.L.C. DE (5) (**) Aetna Life Insurance Company 100% Real Estate Holding Company
- -----------------------------------------------------------------------------------------------------------------------------------
Southeast Second Avenue, Inc. DE (1) (*) Aetna Life Insurance Company 100% Real Estate Investment
- -----------------------------------------------------------------------------------------------------------------------------------
Central Trust Center Associates OH (2) (**) Aetna Life Insurance Company 15% Real Estate Investment
- -----------------------------------------------------------------------------------------------------------------------------------
South Center I & II Investors L.L.C. DE (5) (***) Aetna Life Insurance Company 100% Real Estate Holding Company
- -----------------------------------------------------------------------------------------------------------------------------------
South Center III & IV Investors DE (5) (***) Aetna Life Insurance Company 100% Real Estate Holding Company
L.L.C.
- -----------------------------------------------------------------------------------------------------------------------------------
3360 Enterprise Avenue Investors DE (5) (***) Aetna Life Insurance Company 100% Real Estate Holding Company
L.L.C.
- -----------------------------------------------------------------------------------------------------------------------------------
Corporate Center II Investors L.L.C. DE (5) (***) Aetna Life Insurance Company 100% Real Estate Holding Company
- -----------------------------------------------------------------------------------------------------------------------------------
Dakota McDowell Investors L.L.C. DE (5) (***) Aetna Life Insurance Company 100% Real Estate Holding Company
- -----------------------------------------------------------------------------------------------------------------------------------
Meridian Business Campus Investors DE (5) (***) Aetna Life Insurance Company 100% Real Estate Holding Company
II L.L.C.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- -----------------
(w) Aetna Life Insurance Company is a 98% general partner and a 1% limited
partner.
(x) Aetna Life Insurance Company is a 98% general partner and a 1% limited
partner.
<PAGE>
June 30, 1999
COMPANY ORGANIZATION LIST
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Meridian Business Campus DE (5) (***) Aetna Life Insurance Company 100% Real Estate Holding Company
Investors III L.L.C.
- ------------------------------------------------------------------------------------------------------------------------------------
Mountain View Crossing Investors DE (5) (***) Aetna Life Insurance Company 100% Real Estate Holding Company
L.L.C.
- ------------------------------------------------------------------------------------------------------------------------------------
Parcel 6 Meridian Parkway Investors DE (5) (***) Aetna Life Insurance Company 100% Real Estate Holding Company
L.L.C.
- ------------------------------------------------------------------------------------------------------------------------------------
The Vintage at Hyland Hills DE (5) (***) Aetna Life Insurance Company 100% Real Estate Holding Company
Investors L.L.C.
- ------------------------------------------------------------------------------------------------------------------------------------
Westlake Greens Apartments DE (5) (***) Aetna Life Insurance Company 100% Real Estate Holding Company
Investors, LLC
- ------------------------------------------------------------------------------------------------------------------------------------
Airport Square Holdings III, L.L.C. DE (5) (***) Aetna Life Insurance Company 100% Real Estate Holding Company
- ------------------------------------------------------------------------------------------------------------------------------------
Airport Square Holdings VI and VII DE (5) (***) Aetna Life Insurance Company 100% Real Estate Holding Company
L.L.C.
- ------------------------------------------------------------------------------------------------------------------------------------
Airport Square Holdings VIII, L.L.C. DE (5)(***) Aetna Life Insurance Company 100% Real Estate Holding Company
- ------------------------------------------------------------------------------------------------------------------------------------
Airport Square Holdings IX, L.L.C. DE (5)(***) Aetna Life Insurance Company 100% Real Estate Holding Company
- ------------------------------------------------------------------------------------------------------------------------------------
Capitol District Energy Center CT (2) (**) AE Fourteen, Inc. 50% Cogeneration of Electrical Power
Cogeneration Associates
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Insurance Company of CT (1) (*) AHP Holdings, Inc. 100% Insurance
Connecticut
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Retirement Holdings, Inc. CT (1) (*) Aetna Retirement Services, 100% Holding Company
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Investment Adviser Holding CT (1)(*) Aetna Retirement Holdings, 100% Holding Company for Investment
Company, Inc. Inc. Adviser Companies
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
June 30, 1999
COMPANY ORGANIZATION LIST
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aetna Life Insurance and Annuity CT (1) (*) Aetna Retirement Holdings, 100% Life Insurance, Pensions
Company Inc. And Annuities
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Retail Holding Company, Inc. CT (1)(*) Aetna Retirement Holdings, 100% Holding Company for Retail
Inc. Distribution Companies
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Services Holding Company, Inc. CT (1)(*) Aetna Retirement Holdings, 100% Holding Company for Service
Inc. Contract Companies
- ------------------------------------------------------------------------------------------------------------------------------------
Systematized Benefits CT (1) (*) Aetna Services Holding 100% Third Party Administrator
Administrators, Inc. Company, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Aeltus Investment Management, Inc. CT (1) (*) Aetna Investment Adviser 100% Investment Advisor
holding Company, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Insurance Agency Holdings CT (1) (*) Aetna Retail Holding Company, 100% Holding Company
Company, Inc. Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Investment Services, Inc. CT (1) (*) Aetna Retail Holding Company, 100% Distribute Securities Products -
Inc. ALIAC and Outside Funds
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Financial Services, Inc. CT (1) (*) Aetna Retirement Holdings, 100% Broker-Dealer and Investment
Inc. Advisor
- ------------------------------------------------------------------------------------------------------------------------------------
FNI International, Inc. CA (1) (*) Aetna Retail Holding Company, 100% Holding Company
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Insurance Company of America CT (1) (*) Aetna Life Insurance and 100% Write/Reinsure Life and Annuity
Annuity Company Business
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna New Series Fund, Inc. MD (1) (**) Aetna Life Insurance and 100% Regulated Investment Company
Annuity Company (Mutual Fund)
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Income Shares MA (4) (**) Aetna Life Insurance and 99% Regulated Investment Company
Annuity Company (Mutual Fund)
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Variable Encore Fund MA (4) (**) Aetna Life Insurance and 100% Regulated Investment Company
Annuity Company (Mutual Fund)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
June 30, 1999
COMPANY ORGANIZATION LIST
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aetna GET Fund MA (4) (**) Aetna Life Insurance and 100% Regulated Investment Company
Annuity Company (Mutual Fund)
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Variable Portfolios, Inc. MD (1) (**) Aetna Life Insurance and 99%(x) Regulated Investment Company
Annuity Company (Mutual Fund)
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Variable Fund MA (4) (**) Aetna Life Insurance and 98% Regulated Investment Company
Annuity Company (Mutual Fund)
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Generation Portfolios, Inc. MD (1) (**) Aetna Life Insurance and 100% Regulated Investment Company
Annuity Company (Mutual Fund)
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Balanced VP, Inc. MD (1) (**) Aetna Life Insurance and 100% Regulated Investment Company
Annuity Company (Mutual Fund)
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Series Fund, Inc. MD (1) (**) Aetna Life Insurance and 43%(y) Regulated Investment Company
Annuity Company (Mutual Fund)
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio Partners, Inc. MD (1) (**) Aetna Life Insurance and 97%(z) Regulated Investment Company
Annuity Company (Mutual Fund)
- -----------------------------------------------------------------------------------------------------------------------------------
Financial Network Investment CA (1) (*) FNI International, Inc. 100% Broker/Dealer
Corporation
- -----------------------------------------------------------------------------------------------------------------------------------
Financial Network Investment HI (1) (*) FNI International, Inc. 100% Solicitation of Insurance
Corporation of Hilo, Inc. Business
- -----------------------------------------------------------------------------------------------------------------------------------
Financial Network Investment HI (1) (*) FNI International, Inc. 100% Solicitation of Insurance
Corporation of Kauai, Inc. Business
- -----------------------------------------------------------------------------------------------------------------------------------
FN Insurance Agency of MA (1) (*) FNI International, Inc. 100% Solicitation of Insurance
Massachusetts, Inc. Business
- -----------------------------------------------------------------------------------------------------------------------------------
FN Insurance Services, Inc. CA (1) (*) FNI International, Inc. 100% Solicitation of Insurance
Business
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------------------------
(x) Aetna Life Insurance Company owns 1% of these funds.
(y) Aetna Life Insurnace Company owns 2% of these funds.
(z) Aetna Life Insurance Company owns 3% of these funds.
<PAGE>
June 30, 1999
COMPANY ORGANIZATION LIST
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FN Insurance Services of Alabama, AL (1)(*) FNI International, Inc. 100% Solicitation of Insurance
Inc. Business
- ------------------------------------------------------------------------------------------------------------------------------------
FN Insurance Services of Nevada, NV (1)(*) FNI International, Inc. 100% Solicitation of Insurance
Inc. Business
- ------------------------------------------------------------------------------------------------------------------------------------
Financial Network Investment HI (1)(*) Financial Network Investment 100% Solicitation of Insurance
Corporation of Hawaii Corporation Business
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Investment Management Bermuda (1)(*) Aeltus Investment Management, 100% Holding Company
(Bermuda) Holdings Limited Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Aeltus Trust Company CT (1)(*) Aeltus Investment Management, 100% Fiduciary powers re banking
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Aeltus Capital, Inc. CT (1)(*) Aeltus Investment Management, 100% Broker-Dealer Related Functions
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
China Dynamic Investment Management Hong Kong (1)(**) Aetna Investment Management 50% Establish and Manage Collective
(Hong Kong) Limited (Bermuda) Holdings Limited Investment Scheme
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Insurance Agency, Inc. CT (1)(*) Aetna Insurance Agency 100% Insurance agency for the
Holding Company, Inc. marketing of registered and
nonregistered insurance products
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Insurance Agency of MA (1)(*) Aetna Insurance Agency 100% Insurance agency for the
Massachusetts, Inc. Holding Company, Inc. marketing of registered and
nonregistered insurance products
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Insurance Agency of Alabama, AL (1)(*) Aetna Insurance Agency 100% Insurance agency for the
Inc. Holding Company, Inc. marketing of registered and
nonregistered insurance products
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Insurance Agency of Ohio, Ohio (1)(*) Aetna Insurance Agency 90% Insurance agency for the
Inc. Holding Company, Inc. marketing of registered and
nonregistered insurance products
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
June 30, 1999
COMPANY ORGANIZATION LIST
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aetna International Holdings (Hong Hong Kong (1) (*) Aetna International, Inc. 100% Holding Company for Insurance
Kong) I Limited and Financial Services
- ------------------------------------------------------------------------------------------------------------------------------------
East Asia Aetna Insurance Company Bermuda (1) (**) Aetna International, Inc. 50% Life Disability and Employee
(Bermuda) Ltd. Benefits Ins. in H.K.
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna International Fund Management CT (1) (*) Aetna International, Inc. 100% Investment Management Services
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Information Technology PRC (1) (*) Aetna International, Inc. 100% Information Services Company
(Guanghzou) Limited
- ------------------------------------------------------------------------------------------------------------------------------------
AII 1, L.L.C. CT (1) (**) Aetna International, Inc. 100% Holding Company
- ------------------------------------------------------------------------------------------------------------------------------------
AII 2, L.L.C. CT (1) (**) Aetna International, Inc. 100% Holding Company
- ------------------------------------------------------------------------------------------------------------------------------------
AII 3, L.L.C. CT (1) (**) Aetna International, Inc. 100% Holding Company
- ------------------------------------------------------------------------------------------------------------------------------------
AII 4, L.L.C. CT (1) (**) Aetna International, Inc. 100% Holding Company
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Holdings (Cayman) Ltd. Cayman (1) (**) Aetna International, Inc. 100% Insurance Company
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Argentina S.A. Argentina (1)(*) Aetna International, Inc. 100% Holding Company
- ------------------------------------------------------------------------------------------------------------------------------------
ALICA Holdings, Inc. CT (1) (*) Aetna International, Inc. 80% Dedicated Holding Company
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Life Insurance Company of CT (1) (*) Aetna International, Inc. 100% Life Insurance
America
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna International Holdings (Hong Hong Kong (1)(*) Aetna International, Inc. 100% Holding Company
Kong) II Limited
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Internacional y Compania, S. Mexico (1) (*) Aetna International, Inc. 64%cc Holding Company
de R.L. de C.V.
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna S.A. Chile (1) (*) Aetna International, Inc. 100% Holding Co.
- ------------------------------------------------------------------------------------------------------------------------------------
Arcella Limited Hong Kong (1)(*) Aetna International, Inc. 100% Investment & Holding Co. for
Aetna's Asia Pacific Operations
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
June 30, 1999
COMPANY ORGANIZATION LIST
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aetna Life & Casualty Bermuda Bermuda (1) (*) Aetna International, Inc. 100% Insurance, Guaranteed and
Limited Indemnity Business
- ------------------------------------------------------------------------------------------------------------------------------------
Inversiones Mercantil Aetna, C.A. Venezuela (1) (*) Aetna International, Inc. 50% Insurance Company
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Heart Investment Holdings Taiwan (1) (*) Aetna International, Inc. 80% Holding Company
Limited
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Life and Casualty Netherlands Aetna International, Inc. 100% Finance Investment Company
International Finance N.V. Antilles (1) (*)
- ------------------------------------------------------------------------------------------------------------------------------------
Sul America Aetna Seguros de Brazil(1) (**) Aetna International, Inc. 49% Insurance
Previdencia S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Capital Holdings, Inc. CT (1) (*) Aetna International, Inc. 100% Holding Company
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Securities Investment Taiwan (1) (*) Aetna International, Inc. 80% Securities Investment Advisor
Management (Taiwan) Ltd.
- ------------------------------------------------------------------------------------------------------------------------------------
AE Five Incorporated CT (1) (*) Aetna International, Inc. 100% Holding Company
- ------------------------------------------------------------------------------------------------------------------------------------
Powszechne Towarzystwo Emerytalne Poland (1) (*) Aetna International, Inc. 40% Insurance Joint Venture
PBK
- ------------------------------------------------------------------------------------------------------------------------------------
Pacific-Aetna Life Insurance Co., PRC (3) (**) Aetna International, Inc. 50%(aa) Life Insurance
LTD
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna MPF Limited Hong Kong (1) (*) Aetna International, Inc. 100% Investment Management & Advisory
Services for Individual Clients
and Investment Funds
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Canada Holdings Limited Canada (1) (*) Aetna International, Inc. 100% Investment Holding Company
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------------
(aa) Aetna Life Insurance Company owns 1% of Pacific -
Aetna Life Insurance Co. Ltd.
<PAGE>
June 30, 1999
COMPANY ORGANIZATION LIST
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aetna Investment Management Taiwan (1) (*) Aetna International, Inc. 80% Provide Non-Security Business
(Taiwan) Limited and Investment Advice
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna International (N.Z.) Limited New Zealand(1)(* Aetna International, Inc. 100% Holding Company
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Investment Management (F.E.) Hong Kong (1) (*) Aetna International, Inc. 100% Investment Holding Company
Holdings Limited
- ------------------------------------------------------------------------------------------------------------------------------------
Osatspa Insurance Co. Ltd. Thailand (1) (**) Aetna International, Inc. 20% Holding Company
- ------------------------------------------------------------------------------------------------------------------------------------
Osatspa Life Insurance Co., Ltd. Thailand (1) (**) Aetna International, Inc. 80% Life Insurance
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Phillippine Ventures, Inc. Phillippine(1)(*) Aetna International, Inc. 100% Holding Company
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Life Insurance Inc. Philippines(1)(*) Aetna Philippine Ventures, 100% Life Insurance
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Healthcare, Inc. Philippines(1)(*) Aetna Philippine Ventures, 100% Insurance
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Blue Cross (Asia Pacific) Insurance Hong Kong(1)(**) Aetna International Holdings 35%(bb) Underwriter Casualty and
Ltd. (Hong Kong) I Limited General Insurance in Hong Kong
and Macau
- ------------------------------------------------------------------------------------------------------------------------------------
East Asia Aetna Services Company Hong Kong(1)(**) East Asia Aetna Insurance 100% Management services to associate
Limited Company (Bermuda) Ltd. companies
- ------------------------------------------------------------------------------------------------------------------------------------
PT Aetna Life Insurance Indonesia Indonesia(1)(**) Aetna Life Insurance Company 80% Limited Liability Life Insurance
of America Company
- ------------------------------------------------------------------------------------------------------------------------------------
Daya Aetna (Malaysia) SDN. BHD. Malaysia (1) (*) Aetna International Holdings 82%(cc) Holding Company
(Hong Kong) II Limited
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------
(bb) East Asia Aetna Insurance Company (Bermuda) Ltd. Owns 30% of Blue Cross
(Asia Pacific) Insurance Ltd.
(cc) Arcelia Limited owns 18% of Daya Aetna (Malaysia) SDN.BHD
<PAGE>
June 30, 1999
COMPANY ORGANIZATION LIST
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aetna Universal Insurance Berhad Malaysia (1) (*) Daya Aetna (Malaysia) SDN. 100% Individual Life, Home Service,
BHD. Group and General Insurance
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Heart Co., Ltd. Taiwan (1) (**) Aetna Heart Investment 100% Trading Company - Marketing of
Holdings Limited Gifts and Souvenirs
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna South Life Agency Co., Ltd. Taiwan (1) (**) Aetna Heart Investment 100% Administrative Support
Holdings Limited
- ------------------------------------------------------------------------------------------------------------------------------------
Huei Hong Securities Co., Ltd. Taiwan (1) (*) Aetna Heart Investment 20% Securities Trading
Holdings Limited
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Heart Publishing Company Ltd. Taiwan (1) (*) Aetna Heart Investment 100% Trading Company
Holdings Limited
- ------------------------------------------------------------------------------------------------------------------------------------
Dowszechne Towarzystwo Emerytaine Poland (1) (*) Aetna International, Inc. 40% Pension Fund Corporation
PBK S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
Seguros Mercantil, C.A. Venezuela (1) (*) Inveriones Mercantil Aetna, 100% Insurance Company
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Inversiones Veninversa, C.A. Venezuela (1) (*) Seguros Mercantil, C.A. 100% Holding Company
- ------------------------------------------------------------------------------------------------------------------------------------
Estacionamiento Vence, C.A. Venezuela (1) (*) Seguros Mercantil, C.A. 100% Holding Company
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna (Netherlands) Holdings B.V. Netherlands(1)(*) Aetna Life and Casualty 100% Finance Company
International Finance N.V.
- ------------------------------------------------------------------------------------------------------------------------------------
Travelguard Limited Hong Kong (1) (*) Blue Cross (Asia Pacific) 100% Insurance Agent
Insurance Ltd.
- ------------------------------------------------------------------------------------------------------------------------------------
Toursafe Limited Hong Kong (1) (*) Blue Cross (Asia Pacific) 100% Insurance Agent
Insurance Ltd.
- ------------------------------------------------------------------------------------------------------------------------------------
Travelsafe Limited Hong Kong (1) (*) Blue Cross (Asia Pacific) 100% Insurance Agent for its Ultimate
Insurance Ltd. Holding Company
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
June 30, 1999
COMPANY ORGANIZATION LIST
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Multiasistencia, S.A. de C.V. Mexico (1) (**) Seguros Bancomer, S.A. de C.V. 50%(dd) Administrative Services in
Connection with Insurance Claims
- ------------------------------------------------------------------------------------------------------------------------------------
Meximed, S.A. de C.V. Mexico (1) (**) Seguros Bancomer, S.A. de C.V. 50%(dd) Services for Insureds for
Hospitals Admissions and Claims
Processing
- ------------------------------------------------------------------------------------------------------------------------------------
Seguros Bancomer, S.A. de C.V. Mexico (1) (**) Aetna Internacional Compania 49% Insurance and Reinsurance
S en N.C. de C.V. Company
- ------------------------------------------------------------------------------------------------------------------------------------
Pensiones Bancomer S.A. de C.V. Mexico (1) (**) Aetna Internacional Compania 49% Insurance Company
S en N.C. de C.V.
- ------------------------------------------------------------------------------------------------------------------------------------
Seguros Monterrey Aetna, S.A. Mexico (1) (**) Aetna Internacional Compania 21%(ee) Insurance and Reinsurance
S en N.C. de C.V.
- ------------------------------------------------------------------------------------------------------------------------------------
Fianzas Monterrey Aetna, S.A. Mexico (1) (**) Aetna Internacional Compania 21%(ee) Issuance of Bonds
S en N.C. de C.V.
- ------------------------------------------------------------------------------------------------------------------------------------
Centro Nacional de Servicios Y Mexico (1) (**) Seguros Monterrey Aetna, S.A. 70% Operation Support Services
Operaciones S.A. de C.V. Company
- ------------------------------------------------------------------------------------------------------------------------------------
Centro de Capacitacion Monterrey, Mexico (1) (**) Seguros Monterrey Aetna, S.A. 99% Trining Services Company
A.C.
- ------------------------------------------------------------------------------------------------------------------------------------
Futuro Familiar S.A. de C.V. Mexico (1) (**) Seguros Monterrey Aetna, S.A. 99% Marketing of Financial Services
& Products
- ------------------------------------------------------------------------------------------------------------------------------------
Corporativo Seguros S.A. de C.V. Mexico (1) (**) Seguros Monterrey Aetna, S.A. 40% Corporate Services Company
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- -----------------------
(dd) Seguros Monterrey Aetna, S.A. owns 50% of the Multiasistencia, S.A. de C.V.
and Meximed S.A. de C.V.
(ee) Aetna International, Inc. and AE Five, Inc. own 14% each of Seguros
Monterrey Aetna S.A. and Fianzas Monterrey Aetna S.A.
<PAGE>
June 30, 1999
COMPANY ORGANIZATION LIST
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operadora FMA S.A. de C.V. Mexico (1) (**) Fianzas Monterrey Aetna, S.A. 99% Corporate Services Company
- ------------------------------------------------------------------------------------------------------------------------------------
Administradora de Fondos Para el Mexico (1) (**) Aetna Internacional Compania 49%(ff) Retirement Funds Management
Retiro Bancomer, S.A. de C.V. S en N.C. de C.V. Company
- ------------------------------------------------------------------------------------------------------------------------------------
Grupo Vamsa, S.A. de C.V. Mexico (1) (**) Aetna Internacional Compania 49% Legal Administration and
S en N.C. de C.V. Financial Services
- ------------------------------------------------------------------------------------------------------------------------------------
Asesores en Promocion Segunomina Mexico (1) (**) Seguros Bancomer, S.A. de C.V. 33%(gg) Marketing of Seguros Products/
S.A. de C.V. Payroll Discounts
- ------------------------------------------------------------------------------------------------------------------------------------
Inverval De Mexico S.A. de C.V. Mexico (1) (*) Aetna Internacional Compania 100% Holding Company
S en N.C. de C.V.
- ------------------------------------------------------------------------------------------------------------------------------------
AE Five Compania S. de R.L. de C.V. Mexico (1) (*) Aetna Ninernacional Compania 100% Limited Limitability Company
S en N.C. de C.V. formed under Mex. Law for the
purpose of issuing CPOs in
Mexico.
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Salud S.A. Argentina (1) (*) Aetna Argentina, S.A. 100% Managing of Health Services
- ------------------------------------------------------------------------------------------------------------------------------------
Assistencia Medica Social Argentina Argentina (1) (*) Aetna Argentina, S.A. 100% Healthcare Management
S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Vida S.A. Argentina (1) (*) Aetna Argentina, Inc.. 100% Health and Life Insurance
- ------------------------------------------------------------------------------------------------------------------------------------
Clinica Nabara S.A. Argentina (1) (*) Assistencia Medica Social 100% Healthcare Management
Argentina S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
FE Productora S.A. Argentina (1) (*) Assistencia Medica Social 100% Healthcare Management
Argentina S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
Policlinica Privada de Medicina y Argentina (1) (*) Assistencia Medica Social 100% Healthcare Management
Cirugia S.A. Argentina S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------------------
(ff) Administradora de Fondos de Pensiones Santa Maria S.A. owns 16% of
Administradora de Fondos Para el Retiro Bancomer, S.A. de C.V.
<PAGE>
June 30, 1999
COMPANY ORGANIZATION LIST
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aetna Chile Seguros Generales S.A. Chile (1) (*) Aetna S.A. 98% Casualty Insurance Company
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Administradora de Fondos de Chile (1) (*) Aetna S.A. 100% Real Estate Investment Trust
Inversion S.A. Management Co.
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Chile Seguros de Vida S.A. Chile (1) (*) Aetna S.A. 100% Life Insurance Company
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Pensiones S.A. Chile (1) (*) Aetna S.A. 100% Holding Company
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Credito Hipotecario S.A. Chile (1) (*) Aetna S.A. 100% Mortgage Company
- ------------------------------------------------------------------------------------------------------------------------------------
Cruz-Blanca Isapre, S.A. Chile (1) (*) Aetna S.A. 75% Insurance Company
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna International Peru S.A. Peru (1) (*) Aetna S.A. 86%(hh) Holding Company
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Salud S.A. Chile (1) (*) Aetna S.A. 90% Health Indemnity - Chile
- ------------------------------------------------------------------------------------------------------------------------------------
Servicios Corporativos Bancomer S.A. Mexico (1) (**) Aetna Administradora de 99% Pension Administration
Fondos de Inversion S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
Administradora de Fondos de Chile (1) (*) Aetna Pensiones S.A. 71% Pension Funds Management Company
Pensiones Santa Maria S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
Santa Maria Internacional S.A. Chile (1) (*) Administradora de Fondos de 100% Pension Administration
Pensiones Santa Maria S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Pensiones Peru S.A. Peru (1) (**) Santa Maria Internacional S.A. 66%(ii) Investment
- ------------------------------------------------------------------------------------------------------------------------------------
Administradora de Fondos de Peru (1) (**) Aetna Pensiones Peru S.A. 40%(jj) Pension Funds Management Company
Pensiones Integra S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------
(hh) Aetna Chile Seguros De Vida S.A. and Aetna Chile Seguros Generales S.A.
have combined ownership of 14%.
(ii) Aetna S.A. owns 34% of this company.
(jj) Aetna Pensiones Peru S.A. owns 40% of this company.
<PAGE>
June 30, 1999
COMPANY ORGANIZATION LIST
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Wiese Aetna Compania de Seguros Peru (1) (**) Aetna International Peru S.A. 34% Insurance and Reinsurance
S.A.
- -----------------------------------------------------------------------------------------------------------------------------------
Novasalud Peru S.A. Entidad Peru (1) (**) Wiese Aetna Compania de 50% Insurance subsidiary
Prestadora de Salud Seguros S.A.
- -----------------------------------------------------------------------------------------------------------------------------------
Immobilaria Padre Marinano S.A. Chile (1) (*) Aetna Credito Hipotecario S.A. 99%(kk) Real Estate Development
- -----------------------------------------------------------------------------------------------------------------------------------
Sul America Aetna Companhia Brazil (1) (*) Sul America Aetna Seguros de 100% Pension
Nacional de Seguros e Previdencia Previdencia S.A.
Privada
- -----------------------------------------------------------------------------------------------------------------------------------
Sul America Servicos Medicos S.A. Brazil (1) (*) Sul America Aetna Seguros de 100% Health Administrator
Previdencia S.A.
- -----------------------------------------------------------------------------------------------------------------------------------
Clube Dos Executivos, S.A. Brazil (1) (*) Sul American Aetna Seguros de 100% Life insurance sponsor
Previdencia S.A.
- -----------------------------------------------------------------------------------------------------------------------------------
Executivos S/A Administracao e Brazil (1) (*) Clube Dos Executivos S.A. 99% Administrative Services
Promocao de Seguros
- -----------------------------------------------------------------------------------------------------------------------------------
Executivos Corretorae Brazil (1) (*) C;ibe Dps Execitovps S.A. 99% Administrative Services
Administradora de Seguros S/C LTDA
- -----------------------------------------------------------------------------------------------------------------------------------
Sulalet Servisos Medicos Brazil (1) (*) Sul America Aetna Companhia 100% Healthcare Services
Nacional de Seguros e
Previdencia Privada
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- -----------------------
(kk) Aetna S.A. owns 1% of this company.
<PAGE>
June 30, 1999
COMPANY ORGANIZATION LIST
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Brasilprev Previdencia Privada S.A. Brazil (1) (**) Sul America Aetna Companhia 22% Pension
Nacional de Seguros e
Previdencia Privada
- ------------------------------------------------------------------------------------------------------------------------------------
Brasilsaude Companhia de Segoros Brazil (1) (*) Sul America Aetna Companhia 51% Insurance
Nacional de Seguros e
Previdencia Privada.
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Health Management Canada, Inc. Ontario (1)(*) Aetna Canada Holdings 100% Managed Healthcare
Limited
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Life Acceptance Corporation Ontario (1) (*) Aetna Canada Holdings 100% Provision of Financial
Limited Limited Assistanceto Agents to Assist in
Growth of Business
- ------------------------------------------------------------------------------------------------------------------------------------
Equinox Financial Group Inc. Canada (1) (*) Aetna Canada Holdings 92%(ll) Distributor of Life Insurance,
Limited Financial and Related Products
- ------------------------------------------------------------------------------------------------------------------------------------
2733854 Canada Ltd. Canada (1) (*) Aetna Canada Holdings 70%(mm) Marketing of Life Ins. And
Limited Related Products
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Life Insurance Company of Canada (1) (*) Aetna Canada Holdings 100% Life, Accident and Sickness
Canada Limited Insurance
- ------------------------------------------------------------------------------------------------------------------------------------
Aynsley La Vergne Financial Quebec (1) (*) Equinox Financial Group Inc. 100%
Services, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
First Canadian Health Management Canada (1) (**) Aetna Health Management 49% Managed Health Services
Corporation, Inc. Canada, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Canadian Corporate Health Solutions Canada (1) (*) Aetna Health Management 100% Managed Health Services
Inc. Canada, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------------------
(ll) Aetna Life Insurance Company of Canada owns 8% of this corporation.
(mm) Equinox Financial Group, Inc. owns 30% of this corporation.
<PAGE>
June 30, 1999
COMPANY ORGANIZATION LIST
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Equinox Investors Services Inc. Canada(1)(*) Equinox Financial Group Inc. 80% Mutual Funds
- ------------------------------------------------------------------------------------------------------------------------------------
Landex Properties Ltd. British Aetna Life Insurance Company 100% Real Estate Acquisitions
Columbia(1)(*) of Canada
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Benefits Management, Inc. Canada(1)(*) Aetna Life Insurance Company 100% Claims Administration and
of Canada Actuarial Services
- ------------------------------------------------------------------------------------------------------------------------------------
Mount-Batten Properties Limited Ontario(1)(*) Aetna Life Insurance Company 100% Acquisition, Development and
of Canada Management of Real Estate
- ------------------------------------------------------------------------------------------------------------------------------------
3158047 Canada Limited Canada(1)(*) Aetna Life Insurance Company 100% Acquisition, Development and
of Canada Management of Real Estate
- ------------------------------------------------------------------------------------------------------------------------------------
Financial Life Assurance Company of Canada(1)(*) Aetna Life Insurance Company 100% Insurance company
Canada of Canada
- ------------------------------------------------------------------------------------------------------------------------------------
Eclipse Claims Services Inc. Canada(1)(**) Aetna Life Insurance Company 25% Electronic Claims Adjudication
of Canada Services
- ------------------------------------------------------------------------------------------------------------------------------------
PVS Preferred Vision Services Inc. Canada(1)(**) Aetna Benefits Management, 20% Provider of Ophthalmic, Service
Inc. for Four Major Shareholders
- ------------------------------------------------------------------------------------------------------------------------------------
Churchill Office Park Limited Canada(1)(**) Mount-Batten Properties 45% Real Estate Development of
Limite Ottawa Site
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Health (N.Z.) Limited New Zealand Aetna International (N.Z) 100% Health Insurance Underwriting
(1)(**) Limited
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Life Insurance (N.Z.) Limited New Zealand(1)(*) Aetna Health (N.Z.) Limited 100% Group Benefits/Pension
Management
- ------------------------------------------------------------------------------------------------------------------------------------
Human Affairs Limited (N.Z.) New Zealand(1)(*) Aetna Health (N.Z.) Limited 100% Indemnity Health Insurance
- ------------------------------------------------------------------------------------------------------------------------------------
First Health (New Zealand Limited) New Zealand(1)(*) Aetna Health (N.Z.) Limited 100% Super Annuitization/Long
Term Care
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
June 30, 1999
COMPANY ORGANIZATION LIST
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Prime Health Limited New Zealan (1)(*) First Health (New Zealand) 50% Buying and Managing Risk for
Limited Publicly Funded Health Services
and Providing Management
Services and Infrastructure To
itsNetwork of Doctors
- ------------------------------------------------------------------------------------------------------------------------------------
Managed Care New Zealand Limited New Zealand(1)(*) Human Affairs (NZ) Limited 100% Long Term Care provider
- ------------------------------------------------------------------------------------------------------------------------------------
PLJ Holdings Limited Hong Kong(1)(*) Aetna Investment Management 100% Investment Management &
(F.E.) Holdings Limited Securities Trading
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Investment Management (F.E.) Hong Kong(1)(*) Aetna Investment Management 100% Nominee Services Holding Assets
Limited (F.E.) Holdings Limited of AIM F.E.'s Customers in
Street Name
- ------------------------------------------------------------------------------------------------------------------------------------
Kwang HUA Securities Investment & Taiwan(1)(***) Aetna Investment Management 20% Securities Investment & Trust
Trust Co. Ltd. (F.E.) Holdings Limited
- ------------------------------------------------------------------------------------------------------------------------------------
Kwang Hua Investment & Trust (H.K.) Hong Kong(1)(***) Kwang HUA Securities 100% Investment Company
Co. Ltd Investment & Trust Co. Ltd.
- ------------------------------------------------------------------------------------------------------------------------------------
Kwang HUA Securities Investment Taiwan(1)(***) PLJ Holdings Limited 20% Investment Consulting Company
Consultant Co. Ltd.
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Healthcare Financial Services, DE (1) (*) Aetna U.S. Healthcare Inc. 100% Holding Company
Inc. (PA)
- ------------------------------------------------------------------------------------------------------------------------------------
Primary Holdings, Inc. DE (1) (*) Aetna U.S. Healthcare Inc. 100% Holding Company
(PA)
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Health Management, Inc. DE (1) (*) Aetna U.S. Healthcare Inc. 100% HMO Management Company
(PA)
- ------------------------------------------------------------------------------------------------------------------------------------
NYLCare Health Plans, Inc. DE (1) (*) Aetna U.S. Healthcare Inc. 100% Holding Company
(PA)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
June 30, 1999
COMPANY ORGANIZATION LIST
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aetna U.S. Healthcare Dental Plan, PA (1) (*) Aetna U.S. Healthcare Inc. 100% Dental
Inc. (PA)
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Healthcare Dental Plan, Inc. NJ (1) (*) Aetna U.S. Healthcare Inc. 100% Dental
(PA)
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Healthcare Dental Plan, Inc. DE (1) (*) Aetna U.S. Healthcare Inc. 100% Dental
(PA)
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Health Insurance Company NY (1) (*) Aetna U.S. Healthcare Inc. 100% Accident and Health Insurance
(PA) Company
- ------------------------------------------------------------------------------------------------------------------------------------
Corporate Health Insurance Company PA (1) (*) Aetna U.S. Healthcare Inc. 100% Accident and Health Insurance
(PA) Company
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Managed Care, Inc. MD (1) (*) Aetna U.S. Healthcare Inc. 100% Utilization Review
(PA)
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare, Inc. NJ (1) (*) Aetna U.S. Healthcare Inc. 100% HMO
(PA)
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare, Inc. NY (1) (*) Aetna U.S. Healthcare Inc. 100% HMO
(PA)
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare, Inc. CT (1) (*) Aetna U.S. Healthcare Inc. 100% HMO
(PA)
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare, Inc. MA (1) (*) Aetna U.S. Healthcare Inc. 100% HMO
(PA)
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare, Inc. (DE) DE (1) (*) Aetna U.S. Healthcare Inc. 100% HMO
(PA)
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare of New NH (1) (*) Aetna U.S. Healthcare Inc. 100% HMO
Hampshire, Inc. (PA)
- ------------------------------------------------------------------------------------------------------------------------------------
Advent Investments, Inc. DE (1) (*) U.S. Healthcare Financial 100% DE Holding Company
Services, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Independent Investments, Inc. DE (1) (*) U.S. Healthcare Financial 100% DE Holding Company
Services, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
United States Physicians Care PA (1) (*) U.S. Healthcare Financial 100% Financial Services to Physicians
Systems, Inc. Services, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
June 30, 1999
COMPANY ORGANIZATION LIST
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
United States Home Health Care PA (1) (*) U.S. Healthcare Financial 100% Inactive - other Medical Services
Systems, Inc. Services, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Health Aviation Corp. PA (1) (*) U.S. Healthcare Financial 100% Ownership and Operation of
Services, Inc. Airplanes
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Healthcare Properties, Inc. PA (1) (*) U.S. Healthcare Financial 100% Holding Company for Real Estate
Services, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
Intelihealth, Inc. DE (1) (*) U.S. Healthcare Financial 98% Software Development
Services, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
USHC Management Services DE (1) (*) U.S. Healthcare Financial 100% Management and Financial Services
Corporation Services, Inc. to Network Providers
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Healthcare Advantage, Inc. DE (1) (*) Advent Investments, Inc. 100% Holding Company
- -----------------------------------------------------------------------------------------------------------------------------------
Wissahickon Payment Administrators, DE (1) (*) Advent Investments, Inc. 100% Third Party Administrator
Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
Advent Financial Services, Inc. DE (1) (*) U.S. Healthcare Advantage, 100% Holding Company
Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
Corporate Health Administrators, PA (1) (*) Advent Financial Services, 100% Third Party Administrator for
Inc. Inc. Self-Insured Plans
- -----------------------------------------------------------------------------------------------------------------------------------
Managed Care Coordinators, Inc. DE (1) (*) Advent Financial Services, 100% Evaluation and Administration of
Inc. Multiple Health Plans
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Phoenix Corporation PA (1) (*) Advent Financial Services, 100% Shell
Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Quality Algorithms, Inc. PA (1) (*) Advent Financial Services, 100% Services to Analyze the Quality
Inc. and Effectiveness of Medical Care
- -----------------------------------------------------------------------------------------------------------------------------------
Workers Comp Advantage, Inc. PA (1) (*) Advent Financial Services, 100% Case Management and other Medical
Inc. Management Services for Employers
on Costs Related to Workers'
Compensation Claims
- -----------------------------------------------------------------------------------------------------------------------------------
Primary Investments, Inc. DE (1) (*) Primary Holdings, Inc. 100% Holding Company
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
June 30, 1999
COMPANY ORGANIZATION LIST
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
United States Health Care Systems PA (1) (*) Primary Investments, Inc. 100% HMO
of Pennsylvania, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare Inc. VA (1) (*) Primary Investments, Inc. 26%(nn) HMO
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Healthcare, Inc. OH (1) (*) Primary Investments, Inc. 100% HMO
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare of the NC (1) (*) Primary Investments, Inc. 100% HMO
Carolinas, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
Chickering Claims Administrators, MA (1) (**) Primary Investments, Inc. 47% Third Party Claims Administration
Inc. Business
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare of Georgia, GA (1) (*) Primary Investments, Inc. 63% HMO
Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare of Alabama, AL (1) (*) Primary Investments, Inc. 100% HMO
Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Health Insurance Company CT (1) (*) Primary Investments, Inc. 100% Accident and Health Insurance
Company
- -----------------------------------------------------------------------------------------------------------------------------------
AUSHC Inc. AL (1)(*) Primary Investments, Inc. 100% HMO
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare, Inc. MI (1) (*) Primary Investments, Inc. 100% HMO
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare, Inc. OK (1) (*) Primary Investments, Inc. 100% HMO
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Healthcare, Inc. MO (1) (*) Primary Investments, Inc. 100% HMO
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare Holdings, Inc. DE (1) (*) Primary Investments, Inc. 100% Holding Company
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- -------------------
(nn) Aetna Health Management, Inc. owns 74% of Aetna U.S. Healthcare, Inc. (VA)
<PAGE>
June 30, 1999
COMPANY ORGANIZATION LIST
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aetna U.S. Healthcare Inc. WA (1) (*) Primary Investments, Inc. 100% HMO
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare, Inc. CO (1) (*) Aetna U.S. Healthcare 100% HMO
Holdings, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare Dental Plan CA (1) (*) Aetna Health Management, Inc. 100% Provide Pre-Paid Dental Services
of California Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare, Inc. FL (1) (*) Aetna Health Management, Inc. 100% HMO
- -----------------------------------------------------------------------------------------------------------------------------------
Informed Health, Inc. DE (1) (*) Aetna Health Management, Inc. 100% Sponsors Health Information
Service
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare, Inc. TN (1) (*) Aetna Health Management, Inc. 100% HMO
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare of Georgia, GA (1) (*) Aetna Health Management, Inc. 37%(oo) HMO
Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Dental Care of New Jersey, NJ (1) (*) Aetna Health Management, Inc. 100% Dental Care
Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
AUSHC Holdings, Inc. DE (1) (*) Aetna Health Management, Inc. 100% Holding Company
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare, Inc. VA (1) (*) Aetna Health Management, Inc. 74%(pp) HMO
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare, Inc. AZ (1) (*) Aetna Health Management, Inc. 100% HMO
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Dental Care of Texas, Inc. TX (1)(*) Aetna Health Management, Inc. 100% HMO offering single health
service plan - dental
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare of Illinois, IL (1) (*) Aetna Health Management, Inc. 100% HMO
Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------------
(oo) Primary Investments, Inc. owns 63% of Aetna U.S. Healthcare of Georgia,
Inc.
(pp) Primary Investments, Inc. owns 26% of Aetna U.S. Healthcare, Inc. (VA)
<PAGE>
June 30, 1999
COMPANY ORGANIZATION LIST
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aetna Dental Care of Kentucky, Inc. KY (1) (*) Aetna Health Management, Inc. 100% Dental Plan Organization
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Health Plans of Central and PA (1) (*) Aetna Health Management, Inc. 100% HMO
Eastern Pennsylvania, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare, Inc. TX (1) (*) Aetna Health Management, Inc. 100% HMO
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare, Inc. LA (1) (*) Aetna Health Management, Inc. 100% HMO
- ------------------------------------------------------------------------------------------------------------------------------------
MED Southwest, Inc. TX (1) (*) Aetna Health Management, Inc. 55% Holding Company
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Government Health Plans, Inc. CA (1) (*) Aetna Health Management, Inc. 100% Sponsors Champus Business
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare of CA (1) (*) Aetna Health Management, Inc. 100% HMO
California, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Health Plans of New York, Inc. NY (1) (*) AUSHC Holdings, Inc. 100% HMO
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Health Plans of New Jersey, NJ (1) (*) AUSHC Holdings, Inc. 100% HMO
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Southwest Physicians Life Insurance TX (1) (*) MED Southwest, Inc. 100% Life and Health Insurer
Company
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare of North TX (1) (*) MED Southwest, Inc. 100% HMO
Texas Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
NYLCare Health Plans of the OK (1) (*) NYLCare Health Plans, Inc. 100% Holding Company
Southwest (Oklahoma), Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Lonestar Holding Co. DE (1) (*) NYLCare Health Plans, Inc. 100% Holding Company
- ------------------------------------------------------------------------------------------------------------------------------------
NYLCare of Texas, Inc. TX (1) (*) NYLCare Health Plans, Inc. 100% Management Company for PPO
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
June 30, 1999
COMPANY ORGANIZATION LIST
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NYLCare Health Plans of Louisiana, LA (1) (*) NYLCare Health Plans, Inc. 100% HMO
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
NYLCare Health Plans of PA (1) (*) NYLCare Health Plans, Inc. 100% HMO
Pennsylvania, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
One Liberty Plaza Holdings, Inc. DE (1) (*) NYLCare Health Plans, Inc. 100% Special Purpose Funding Entity
for Industrial Development
Agency Transaction
- ------------------------------------------------------------------------------------------------------------------------------------
Benefit Panel Services, Inc. CA (1) (*) NYLCare Health Plans, Inc. 50% Manages HMOs
- ------------------------------------------------------------------------------------------------------------------------------------
NYLCare Dental Plans of the TX (1) (*) NYLCare Health Plans, Inc. 100% Dental HMO
Southwest, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Sanus Preferred Providers West, Inc. CA (1) (*) NYLCare Health Plans, Inc. 100% PPO
- ------------------------------------------------------------------------------------------------------------------------------------
NYLCare of New England, Inc. DE (1) (*) NYLCare Health Plans, Inc. 100% Management Company
- ------------------------------------------------------------------------------------------------------------------------------------
NYLCare Health Plans of New York, NY (1) (*) NYLCare Health Plans, Inc. 100% HMO
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
NYLCare Health Plans of New Jersey, NJ (1) (*) NYLCare Health Plans, Inc. 100% HMO
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
NYLCare Health Plans of CT (1) (*) NYLCare Health Plans, Inc. 100% HMO
Connecticut, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
NYLCare Preferred Services, Inc. MD (1) (*) NYLCare Health Plans, Inc. 100% PPO
- ------------------------------------------------------------------------------------------------------------------------------------
Sanus of New York and New Jersey, NY (1) (*) NYLCare Health Plans, Inc. 100% PPO
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Sanus Dental Plan of N.J., Inc. NJ (1) (*) NYLCare Health Plans, Inc. 100% Dental HMO
- ------------------------------------------------------------------------------------------------------------------------------------
The Ethix Corporation DE (1) (*) NYLCare Health Plans, Inc. 100% Holding Company of PPO Network
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
June 30, 1999
COMPANY ORGANIZATION LIST
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aetna US Healthcare, Inc. ME (1) (*) NYLCare Health Plans, Inc. 100% HMO
- -----------------------------------------------------------------------------------------------------------------------------------
New York Life and Health Insurance DE (1) (*) NYLCare Health Plans, Inc. 100% Reinsurance
Company
- -----------------------------------------------------------------------------------------------------------------------------------
NYLCare Health Plans of the MD (1) (*) NYLCare Health Plans, Inc. 80%(qq) HMO
Mid-Atlantic, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
Physicians Health Services, MD (1) (*) NYLCare Health Plans of the 100% Physicians Independent Practice
Foundation, Inc. Mid-Atlantic, Inc. Association
- -----------------------------------------------------------------------------------------------------------------------------------
Lone star Health Plan, Inc. TX (1) (*) Lonestar Holding Co. 90%(rr) Holding Company
- -----------------------------------------------------------------------------------------------------------------------------------
NYLCare Passport PPO of the TX (1) (*) NYLCare of Texas, Inc. 100% PPO
Southwest, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
BPS Health Plan Administrators CA (1) (*) Benefit Panel Services, Inc. 100% Third Party Administrator
- -----------------------------------------------------------------------------------------------------------------------------------
VivaHealth, Incorporated CA (1) (*) Benefit Panel Services, Inc. 100% HMO
- -----------------------------------------------------------------------------------------------------------------------------------
NYLCare Health Plans of the Gulf TX (1) (*) Lonestar Health Plan, Inc. 100% HMO
Coast, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
Ethix Northwest, Inc. WA (1) (*) The Ethix Corporation 100% PPO
- -----------------------------------------------------------------------------------------------------------------------------------
Ethix Northwest Public Services, WA (1) (*) The Ethix Corporation 100% Managed Care Services to Medicaid
Inc. Recipients
- -----------------------------------------------------------------------------------------------------------------------------------
Ethix Pacific, Inc. OR (1) (*) The Ethix Corporation 100% PPO
- -----------------------------------------------------------------------------------------------------------------------------------
Ethix Risk Management, Inc. OR (1) (*) The Ethix Corporation 100% Inactive Shell Corporation
- -----------------------------------------------------------------------------------------------------------------------------------
Ethix Midlands, Inc. DE (1) (*) The Ethix Corporation 100% PPO
- -----------------------------------------------------------------------------------------------------------------------------------
Ethix Great Lakes, Inc. MI (1) (*) The Ethix Corporation 100% PPO
- -----------------------------------------------------------------------------------------------------------------------------------
Ethix Mid-Rivers, Inc. MO (1) (*) The Ethix Corporation 100% PPO
- -----------------------------------------------------------------------------------------------------------------------------------
Ethix Southwest, Inc. TX (1) (*) The Ethix Corporation 100% PPO
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------------------
(qq) Physicians Health Services Foundation, Inc. owns 20% of this company.
(rr) NYLCare Health Plans, Inc. owns 10% of this company.
<PAGE>
June 30, 1999
COMPANY ORGANIZATION LIST
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aetna U.S. Healthcare of WA (1) (*) Ethix Northwest, Inc. 100% HMO
Washington, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Item 27. Number of Contract Owners
- ----------------------------------
As of July 31, 1999, there were 15,813 individuals holding interests in
variable annuity contracts funded through Variable Annuity Account I.
Item 28. Indemnification
- ------------------------
Section 21 of Public Act No. 97-246 of the Connecticut General Assembly (the
"Act") provides that a corporation may provide indemnification of or advance
expenses to a director, officer, employee or agent only as permitted by Sections
33-770 to 33-778, inclusive, of the Connecticut General Statutes, as amended by
Sections 12 to 20,
<PAGE>
inclusive, of this Act. Reference is hereby made to Section 33-771(e) of the
Connecticut General Statutes ("CGS") regarding indemnification of directors and
Section 33-776(d) of CGS regarding indemnification of officers, employees and
agents of Connecticut corporations. These statutes provide in general that
Connecticut corporations incorporated prior to January 1, 1997 shall, except to
the extent that their certificate of incorporation expressly provides otherwise,
indemnify their directors, officers, employees and agents against "liability"
(defined as the obligation to pay a judgment, settlement, penalty, fine,
including an excise tax assessed with respect to an employee benefit plan, or
reasonable expenses incurred with respect to a proceeding) when (1) a
determination is made pursuant to Section 33-775 that the party seeking
indemnification has met the standard of conduct set forth in Section 33-771 or
(2) a court has determined that indemnification is appropriate pursuant to
Section 33-774. Under Section 33-775, the determination of and the authorization
for indemnification are made (a) by the disinterested directors, as defined in
Section 33-770(3); (b) by special counsel; (c) by the shareholders; or (d) in
the case of indemnification of an officer, agent or employee of the corporation,
by the general counsel of the corporation or such other officer(s) as the board
of directors may specify. Also, Section 33-772 provides that a corporation shall
indemnify an individual who was wholly successful on the merits or otherwise
against reasonable expenses incurred by him in connection with a proceeding to
which he was a party because he was a director of the corporation. In the case
of a proceeding by or in the right of the corporation or with respect to conduct
for which the director, officer, agent or employee was adjudged liable on the
basis that he received a financial benefit to which he was not entitled,
indemnification is limited to reasonable expenses incurred in connection with
the proceeding against the corporation to which the individual was named a
party.
The statute does specifically authorize a corporation to procure indemnification
insurance on behalf of an individual who was a director, officer, employer or
agent of the corporation. Consistent with the statute, Aetna Inc. 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.
Item 29. Principal Underwriter
- ------------------------------
(a) In addition to serving as the principal underwriter for the
Registrant, Aetna Life Insurance and Annuity Company (Aetna) also acts as the
principal underwriter, only, for Aetna Variable Encore Fund, Aetna Variable
Fund, Aetna Generation Portfolios, Inc., Aetna Income Shares, Aetna Balanced VP,
Inc. (formerly Aetna Investment Advisers Fund, Inc.), Aetna GET Fund and Aetna
Variable Portfolios, Inc. and as the principal underwriter and investment
adviser for Portfolio Partners, Inc. (all management investment companies
registered under the Investment Company Act of 1940 (1940 Act)). Additionally,
Aetna also acts as the principal underwriter and depositor for Variable Life
Account B of Aetna, Variable Annuity Account B of Aetna, Variable Annuity
Account C of Aetna and Variable Annuity Account G of Aetna (separate accounts of
Aetna registered as unit investment trusts under the 1940 Act).
<PAGE>
(b) Directors and Officers of the Underwriter:
<PAGE>
<TABLE>
<CAPTION>
Name and Principal
Business Address* Positions and Offices with Depositor
- ----------------- ------------------------------------
<S> <C>
Thomas J. McInerney Director and President
Catherine H. Smith Director, Senior Vice President and
Chief Financial Officer
Shaun P. Mathews Director and Senior Vice President
Deborah Koltenuk Vice President, Corporate Controller,
and Assistant Treasurer
Therese M. Squillacote Vice President and Chief Compliance
Officer
Kirk P. Wickman Senior Vice President, General
Counsel and Corporate Secretary
</TABLE>
* The principal business address of all directors and officers listed is 151
Farmington Avenue, Hartford, Connecticut 06156.
(c) Compensation as of December 31, 1998:
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Name of Net Underwriting Compensation
Principal Discounts and on Redemption Brokerage
Underwriter Commissions or Annuitization Commissions Compensation*
- ----------- ----------- ---------------- ----------- -------------
<S> <C> <C> <C> <C>
Aetna Life $486,000 $10,435,000
Insurance and
Annuity Company
</TABLE>
* Compensation shown in column 5 includes deductions for mortality and
expense risk guarantees and contract charges assessed to cover costs
incurred in the sales and administration of the contracts issued under
Variable Annuity Account I.
Item 30. Location of Accounts and Records
- -----------------------------------------
All accounts, books and other documents required to be maintained by Section
31(a) of the 1940 Act and the rules under it relating to the securities
described in and issued under this Registration Statement are located at the
service office of the Depositor as follows:
<PAGE>
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) The Company hereby represents that it is relying upon and complies with
the provisions of Paragraphs (1) through (4) of the SEC Staff's No-Action
Letter dated November 28, 1988 with respect to language concerning
withdrawal restrictions applicable to plans established pursuant to
Section 403(b) of the Internal Revenue Code. See American Counsel of Life
Insurance; SEC No-Action Letter, [1988 WL 235221 * 13 (S.E.C.)]
(e) 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>
(f) Aetna Insurance Company of America represents that the fees and charges
deducted under the contracts covered by this registration statement, in
the aggregate, are reasonable in relation to the services rendered, the
expenses expected to be incurred, and the risks assumed by the insurance
company.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant, Variable Annuity Account I of Aetna Insurance Company of
America, has duly caused this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Hartford, State of
Connecticut, on the 15th day of September, 1999.
VARIABLE ANNUITY ACCOUNT I OF AETNA
INSURANCE COMPANY OF AMERICA
(Registrant)
By: AETNA INSURANCE COMPANY OF AMERICA
(Depositor)
By: /s/ Thomas J. McInerney
------------------------------------------
Thomas J. McInerney
President
As required by the Securities Act of 1933 this Registration Statement has
been signed by the following persons in the capacities and on the dates
indicated. Each person whose signature appears below hereby constitutes and
appoints Kirk P. Wickman, Julie E. Rockmore and J. Neil McMurdie, and each of
them individually, such person's true and lawful attorneys, and agents with full
power of substitution and resubstitution, for him or her and in his or her name,
place and stead, in any and all capacities, to sign for such person and in such
persons' name and capacity indicated below, any and all amendments to this
Registration Statement, hereby ratifying and confirming such persons' signature
as it may be signed by said attorneys to any and all amendments.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Thomas J. McInerney Director and President )
- ----------------------- (principal executive officer) )
Thomas J. McInerney )
)
/s/ Deborah Koltenuk Vice President, Corporate Controller, ) September
- ----------------------- and Assistant Treasurer ) 15, 1999
Deborah Koltenuk (principal accounting and financial officer) )
)
/s/ Steven A. Haxton Director )
- ----------------------- )
Steven A. Haxton )
)
/s/ Shaun P. Mathews Director )
- ----------------------- )
Shaun P. Mathews )
)
/s/ David W. O'Leary Director )
- ----------------------- )
David W. O'Leary )
)
/s/ Catherine H. Smith Director )
- ----------------------- )
Catherine H. Smith )
</TABLE>
<PAGE>
VARIABLE ANNUITY ACCOUNT I
Exhibit Index
<TABLE>
<CAPTION>
Exhibit No. Exhibit
- ----------- -------
<S> <C> <C>
99-B.4.1 Form of Variable Annuity Contract
(G2-CDA-99(TORP)FL) -------------
99-B.4.2 Form of Variable Annuity Contract (G2-CDA-99(ORP)FL) *
-------------
99-B.4.3 Form of Certificate (GTCC2-99(TORP)FL) to Variable Annuity
Contract (G2-CDA-99(TORP)FL)
-------------
99-B.4.4 Form of Certificate (GTCC2-99(ORP)FL) to Variable Annuity
Contract (G2-CDA-99(ORP)FL) *
-------------
99-B.8.1 Fund Participation Agreement between Aetna Insurance *
Company of America and AIM
99-B.8.2 Service Agreement between Aetna Insurance Company of *
America and AIM
99-B.8.9 Fund Participation Agreement among Janus Capital
Corporation, Aetna Insurance Company of America and
Janus Aspen Series dated December 8, 1997
-------------
99-B.8.10 Amendment to Fund Participation Agreement made as of
October 12, 1998 to Fund Participation Agreement
among Janus Capital Corporation, Aetna Insurance
Company of America and Janus Aspen Series dated
December 8, 1997
-------------
99-B.8.11 Service Agreement between Janus Capital Corporation
and Aetna Insurance Company of America dated as of
December 8, 1997
-------------
99-B.9 Opinion and Consent of Counsel *
99-B.10 Consent of Independent Auditors
-------------
99-B.13 Schedule for Computation of Performance Data *
-------------
- --------
</TABLE>
*To be filed by Amendment
Form of Contract G2-CDA-99(TORP)FL
---------------------------------------------------
Aetna Insurance Company of America
Home Office: 5100 West Lemon Street, Suite 213
Hartford, Connecticut 06156 Tampa, Florida 33609
(800) 525-4225
This telephone number may be used to request information about
this contract.
Aetna Insurance Company of America, herein called Aetna, agrees
to pay the benefits stated in this Contract.
Specifications
- --------------------------------------------------------------------------------
Plan
SPECIMEN
- --------------------------------------------------------------------------------
Type of Plan
SPECIMEN
- --------------------------------------------------------------------------------
Contract Holder
SPECIMEN
- --------------------------------------------------------------------------------
Contract No.
SPECIMEN
- --------------------------------------------------------------------------------
Effective Date
SPECIMEN
- --------------------------------------------------------------------------------
This Contract is Delivered in FLORIDA and is Subject to the Laws of that
Jurisdiction
THE VARIABLE FEATURES OF THE GROUP CONTRACT ARE DESCRIBED IN PARTS III AND V.
Right to Cancel
- --------------------------------------------------------------------------------
The Contract Holder may cancel this Contract within 10 days of receiving it by
returning this Contract along with a written notice to Aetna at the above
address or to the agent from whom it was purchased. Within 7 days after it
receives the notice of cancellation and this Contract at its Home Office, Aetna
will return the entire consideration paid plus any increase or minus any
decrease in the current value of any funds allocated to the Separate Account.
Signed at the Home Office on the Effective Date.
President Secretary
Group Combination Annuity Contract
Nonparticipating
ALL PAYMENTS AND VALUES PROVIDED BY THE GROUP CONTRACT, WHEN BASED ON INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
FIXED DOLLAR AMOUNT.
G2-CDA-99(TORP)FL
<PAGE>
Specifications
- --------------------------------------------------------------------------------
Deductions from There will be deductions for mortality and
the Separate expense risks. There also may be deductions for
Account administrative charges and asset based sales
charges. (See 3.06 and 5.06.)
- --------------------------------------------------------------------------------
Deductions from Contribution(s) are subject to a deduction for
Contribution(s) premium taxes, if any. (See 3.02.)
This Contract is a legal contract. This contract and any attached document and
subsequent endorsements constitutes the entire legal relationship between Aetna
and the Contract Holder.
This Contract sets forth, in detail, all of the rights and obligations of both
you and Aetna. IT IS, THEREFORE, IMPORTANT THAT YOU READ THIS CONTRACT
CAREFULLY.
G2-CDA-99(TORP)FL
<PAGE>
Contract Schedule I
Accumulation Period
Separate Account
- -------------------------------------------------------------------------------
Separate Account:
Variable Annuity Account I
Charges to Separate Account:
A daily charge is deducted from any portion of the Current Value
allocated to the Separate Account. The daily charge is at an
annual effective rate that will not exceed 1.00% for Annuity
mortality and expense risks, 0.00% for asset based sales charge
and a daily administrative charge which will not exceed 0.25% on
an annual basis.
Fixed Plus Account Is Available
- --------------------------------------------------------------------------------
Minimum Guaranteed Interest Rate:
3% (effective annual rate of return).
Partial Withdrawal:
The 20% limit applicable to partial withdrawal from the Fixed Plus
Account will be waived when the withdrawal is:
(a) due to the Participant's death, (and made within six (6)
months of the Participant's date of death), before Annuity
payments begin. This partial withdrawal may only be
exercised once; or
(b) used to purchase Annuity benefits.
G2-CDA-99(TORP)FL i
<PAGE>
Contract Schedule I
Accumulation Period (Cont'd)
Separate Account and Fixed Plus Account
- --------------------------------------------------------------------------------
Systematic Withdrawal Option (SWO):
Is Available
The Specified Payment may not be greater than 20% of the
Individual Account's Current Value at the time of election.
The Specified Period may not be less than five years.
The Specified Percentage may not be greater than 20%.
Estate Conservation Option (ECO):
Is Available
Life Expectancy Option (LEO):
Is Available
See Section 1. - DEFINITIONS for explanations.
G2-CDA-99(TORP)FL ii
<PAGE>
Contract Schedule II
Annuity Period
Separate Account
- --------------------------------------------------------------------------------
Fund Transfers:
Maximum number of allowable transfers in the Annuity Period is 4.
Charges to Separate Account:
A daily charge at an annual effective rate that will not
exceed 1.25% for Annuity mortality and expense risks. The
administrative charge is established upon election of an Annuity
option. This charge will not exceed 0.25%.
Variable Annuity Assumed Annual Net Return Rate:
If a Variable Annuity is chosen, an assumed annual net return rate
of 5.0% may be elected. If 5.0% is not elected, Aetna will use an
assumed annual net return rate of 3.5%.
The assumed annual net return rate factor for 3.5% per year is
0.9999058.
The assumed annual net return rate factor for 5.0% per year is
0.9998663.
If the portion of a Variable Annuity payment for any Fund is not
to decrease, the Annuity return factor under the Separate Account
for that Fund must be:
(a) 4.75% on an annual basis plus an annual return of up to
0.25% to offset the administrative charge set at the time
Annuity payments commence if an assumed annual net return
rate of 3.5% is chosen; or
(b) 6.25% on an annual basis plus an annual return of up to
0.25% to offset the administrative charge set at the time
Annuity payments commence, if an assumed annual net return
rate of 5% is chosen.
Annuity Option:
Under the option "Payments for a Stated Period of Time":
For amounts invested in one or more of the Fund(s), the number of
years must be at least five (5) and not more than thirty (30) and
the Annuity may be a Fixed or Variable Annuity.
For amounts invested in the Fixed Plus Account, the number of
years must be at least five (5) and not more than thirty (30) and
the Annuity must be a Fixed Annuity.
Fixed Annuity
- --------------------------------------------------------------------------------
Minimum Guaranteed Interest Rate:
3% (effective annual rate of return).
See Section 1. - DEFINITIONS for explanations.
G2-CDA-99(TORP)FL iii
<PAGE>
TABLE OF GUARANTEED VALUES -
FIXED PLUS
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
End of Minimum Contract Withdrawal
Years Value Value
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 1,219.41 1,219.41
2 2,475.41 2,475.41
3 3,769.08 3,769.08
4 5,101.56 5,101.56
5 6,474.02 6,474.02
6 7,887.66 7,887.66
7 9,343.70 9,343.70
8 10,843.42 10,843.42
9 12,388.14 12,388.14
10 13,979.19 13,979.19
11 15,617.98 15,617.98
12 17,305.93 17,305.93
13 19,044.52 19,044.52
14 20,835.27 20,835.27
15 22,679.74 22,679.74
16 24,579.54 24,579.54
17 26,536.34 26,536.34
18 28,551.84 28,551.84
19 30,627.81 30,627.81
20 32,766.06 32,766.06
21 34,968.45 34,968.45
22 37,236.91 37,236.91
23 39,573.43 39,573.43
24 41,980.05 41,980.05
25 44,458.86 44,458.86
30 58,014.03 58,014.03
35 73,728.18 73,728.18
40 91,945.20 91,945.20
45 113,063.71 113,063.71
50 137,545.85 137,545.85
-----------------------------------------------------------------------------------------------------------
</TABLE>
Values illustrated are based on monthly purchase payments of $100 and a minimum
interest rate of 3%.
Full withdrawal is available in certain limited situations as described in the
contract. Otherwise, no full withdrawal is available under this option.
The payout schedule is as follows:
1/5 of contract value at the time requested;
1/4 of remaining current value 12 months later;
1/3 of remaining current value 12 months later;
1/2 of remaining current value 12 months later;
and the balance of current value 12 months later.
G2-CDA-99(TORP)FL iv
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
I. DEFINITIONS
- ------------------------------------------------------------------------------------------------------------
Page
<S> <C>
1.01 Accumulation Period....................................................................
1.02 Adjusted Current Value.................................................................
1.03 Annuitant..............................................................................
1.04 Annuity................................................................................
1.05 Beneficiary............................................................................
1.06 Code...................................................................................
1.07 Contract Holder........................................................................
1.08 Contribution............................................................................
1.09 Current Value..........................................................................
1.10 Fixed Plus Account.....................................................................
1.11 Fixed Plus Account Guaranteed Interest Rate............................................
1.12 Fixed Annuity..........................................................................
1.13 Fund(s)................................................................................
1.14 Fund Transfer(s).......................................................................
1.15 General Account........................................................................
1.16 Individual Account.....................................................................
1.17 Net Contribution.......................................................................
1.18 Participant............................................................................
1.19 Plan...................................................................................
1.20 Separate Account.......................................................................
1.21 Valuation Date.........................................................................
1.22 Valuation Period.......................................................................
1.23 Variable Annuity.......................................................................
II. GENERAL PROVISIONS
- -----------------------------------------------------------------------------------------------------
2.01 Change of Contract.....................................................................
2.02 Change of Fund.........................................................................
2.03 Nonparticipating Contract..............................................................
2.04 Payments...............................................................................
2.05 State Laws.............................................................................
</TABLE>
G2-CDA-99(TORP)FL
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C>
2.06 Control of Contract....................................................................
2.07 Designation of Beneficiary.............................................................
2.08 Misstatements and Adjustments..........................................................
2.09 Incontestability.......................................................................
2.10 Grace Period...........................................................................
2.11 Individual Certificates................................................................
III. CONTRIBUTIONS, CURRENT VALUE, and WITHDRAWAL PROVISIONS
- -----------------------------------------------------------------------------------------------------
3.01 Limitations on Contributions...........................................................
3.02 Net Contribution(s)....................................................................
3.03 Experience Credits.....................................................................
3.04 Fund Record Units......................................................................
3.05 Fund Record Unit Value.................................................................
3.06 Fund Net Return Factors................................................................
3.07 Fund Transfer(s).......................................................................
3.08 Notice to the Participant..............................................................
3.09 Withdrawal Restrictions................................................................
3.10 Manner and Timing of Distributions.....................................................
3.11 Withdrawal.............................................................................
3.12 Partial Withdrawal from the Fixed Plus Account.........................................
3.13 Payment of Fixed Plus Account Full Withdrawal..........................................
3.14 Payment of Minimum Current Value.......................................................
3.15 Amount Payable at Death (Before Annuity Payments Start)................................
3.16 Reinstatement..........................................................................
IV. NON-ANNUITY DISTRIBUTION OPTIONS
- -----------------------------------------------------------------------------------------------------
4.01 Distribution Options...................................................................
4.02 Estate Conservation Option.............................................................
4.03 Life Expectancy Option.................................................................
4.04 Systematic Withdrawal Option...........................................................
V. ANNUITY PROVISIONS
- -----------------------------------------------------------------------------------------------------
5.01 General Provisions.....................................................................
5.02 Annuity Options........................................................................
5.03 Payments...............................................................................
5.04 Investment Option......................................................................
5.05 Fund Annuity Units.....................................................................
5.06 Fund Annuity Unit Value................................................................
5.07 Fund Annuity Net Return Factor.........................................................
5.08 Fund Transfers During the Annuity Period...............................................
5.09 Death Benefit..........................................................................
</TABLE>
G2-CDA-99(TORP)FL
<PAGE>
I. DEFINITIONS
- --------------------------------------------------------------------------------
1.01 Accumulation Period:
The period during which Net Contribution(s) are applied to an
Individual Account.
1.02 Adjusted Current Value:
The Current Value (See 1.09) of an Individual Account (See 1.16).
1.03 Annuitant:
If an Annuity provides lifetime benefits, the person whose life
expectancy determines the amount and/or duration of Annuity
benefit payments.
1.04 Annuity:
Payment of an income under the Annuity Provisions of Section V:
(a) For the life of one or two persons;
(b) For a stated period; or
(c) For some combination of (a) and (b).
1.05 Beneficiaries:
The person(s) named to receive any benefits which remain under the
Contract after the Participant's death. Participants designate a
Beneficiary for their Individual Account(s). (See 2.07)
1.06 Code:
The Internal Revenue Code of 1986, as amended.
1.07 Contract Holder:
The entity, named on the cover of this Contract, to which the
Contract is issued.
1.08 Contribution:
A payment received at Aetna's Service Office and allocated to this
Contract.
1.09 Current Value:
For an Individual Account (See 1.16), the Current Value is the
total of:
(a) The amount, if any, in the Fixed Plus Account, with interest
earned to date and
(b) The value of all Fund record units (See 3.05), if any, as of
the most recent Valuation Period.
1.10 Fixed Plus Account:
If offered as an investment option under the Contract (see
Contract Schedule I) the Fixed Plus Account is an accumulation
option with a guaranteed minimum interest rate. Aetna may credit a
higher rate which is not guaranteed. The portion that may be
withdrawn or transferred in a 12 month period is restricted (See
3.07, 3.12 and 3.13).
1.11 Fixed Plus Account Guaranteed Interest Rate:
If the Fixed Plus Account is an investment option under the Plan
(see Contract Schedule I) then Aetna will add interest at an
annual rate no less than that shown on Contract Schedule I on any
Net Contribution(s) to the Fixed Plus Account. Aetna may add
interest at a higher rate determined by its Board of Directors.
1.12 Fixed Annuity:
An Annuity with payments that do not vary in amount.
<PAGE>
1.13 Fund(s):
The open-end registered management investment companies whose
shares are purchased by the Separate Account to fund the benefits
provided by the Contract.
1.14 Fund Transfers:
The movement of invested amounts among the available Fund(s) and
the Fixed Plus Account (if available).
1.15 General Account:
The account holding the assets of Aetna, other than those assets held in Aetna's
Separate Account(s) and Nonunitized Separate Account(s).
1.16 Individual Account:
This Contract is issued to the Contract Holder. However, Aetna
will maintain Individual Accounts for each Participant to keep a
record of Current Value (See 1.09) and transactions. These may
include:
(a) An Employer Account: This Individual Account will be
credited with employer Net Contribution(s) and transferred
amounts of 403(b) funds, attributable to employer
contributions; and
(b) An Employee Account: This Individual Account will be
credited with employee Net Contribution(s) and transferred
amounts of 403(b) funds, attributable to employee
contributions including after tax contributions.
1.17 Net Contribution:
A Contribution less any applicable premium taxes.
1.18 Participant:
A person who participates in the Plan named on the cover of this
Contract.
1.19 Plan:
The Plan named on the cover of this Contract and established under
Section 403(b) of the Code. The Plan is not a part of the Contract
and Aetna is not bound by its terms.
1.20 Separate Account:
An account, established by Aetna under Florida Law, that buys and
holds shares of the Fund(s) available under this Contract. Income,
gains or losses, realized or unrealized are credited or charged to
the Separate Account without regard to other income, gains or
losses of Aetna. Aetna owns the assets held in the Separate
Account and is not a trustee of such amounts. Amounts in the
Separate Account are not generally guaranteed and are held at
market value. The assets of the Separate Account, to the extent of
reserves and other contract liabilities of the Account, cannot be
charged with other Aetna liabilities.
1.21 Valuation Date:
The date and time on which a Fund annuity unit value and a Fund
record unit value are calculated. Currently, this calculation will
be determined at the close of business of the New York Stock
Exchange on any normal business day, Monday through Friday, that
the New York Stock Exchange is open.
1.22 Valuation Period:
The period of time commencing at the end of one Valuation Date and
ending at the end of the next Valuation Date.
<PAGE>
1.23 Variable Annuity:
An Annuity with payments that vary with the net investment results
of the Funds available during the Annuity period.
II. GENERAL PROVISIONS
- --------------------------------------------------------------------------------
2.01 Change of Contract:
Only an authorized officer of Aetna may change the terms of this
Contract. Aetna reserves the right to modify this Contract to meet
the requirements of applicable state and federal laws or
regulations. Aetna will notify the Contract Holder in writing of
any changes.
Aetna may change the tables for determining the amount of Annuity
benefit payments attributable only to Contributions accepted after
the effective date of change, without Contract Holder consent.
Such a change will not become effective earlier than twelve months
after (1) the effective date of the Contract, or (2) the effective
date of a previous change. Aetna will notify the Contract Holder
in writing at least thirty days before the effective date of the
change. Aetna may not make Contract changes which adversely affect
the Annuity benefits attributable to Contributions already made to
the Contract.
2.02 Change of Fund:
The assets of the Separate Account are segregated by Fund. If the
shares of any Fund are no longer available for investment by the
Separate Account or if in our judgment, further investment in such
shares should become inappropriate in view of the purpose of the
Contract, Aetna may cease to make such Fund shares available for
investment under the Contract prospectively, or Aetna may
substitute shares of another Fund for shares already acquired.
Aetna may also, from time to time, add additional Funds. Any
elimination, substitution or addition of Funds will be done in
accordance with applicable state and federal securities laws.
Aetna reserves the right to substitute shares of another Fund for
shares already acquired without a proxy vote.
2.03 Nonparticipating Contract:
The Contract Holder, Participants, or Beneficiaries will not have
a right to share in the earnings of Aetna.
2.04 Payments:
(a) Aetna will make distributions as directed by the Contract
Holder. Aetna will determine the amount of payments based
on the Individual Account's Current Value as of the date
on which a request is received in good order at Aetna's
Service Office. Payments will be made within seven (7)
calendar days of receipt of a written request in good
order at Aetna's Service Office.
(b) Aetna may defer payments: (1) for a period of up to six
(6) months (unless not allowed by state law); and (2) as
allowed by federal law.
2.05 State Laws:
This Contract complies with the laws of the state in which it is
delivered. Any cash, death or Annuity payments are equal to or
greater than the minimum required by such laws. Annuity tables for
legal reserve valuation shall be as required by state law. Such
tables may be different from Annuity tables used to determine
Annuity payments.
2.06 Control of Contract:
This Contract is designed to fund a plan which provides for
retirement income.
The Contract Holder may, by written direction to Aetna, allow
Participants to select the investment options of their Employer
and/or Employee Accounts. Choices made under this Contract must be
in writing or in a form satisfactory to Aetna. Until receipt of
such choices in its Service Office, Aetna may rely on any previous
choices made. An in-service transfer pursuant to IRS Revenue
Ruling 90-24, may be made only by written direction from the
Contract Holder and Participant to Aetna. Checks for in-service
transfers will be made payable only to the acquiring investment
provider.
(a) Nontransferable and Nonassignable: This Contract and any
Individual Accounts are nontransferable and nonassignable,
except pursuant to a "qualified domestic relations order"
as set forth under the Internal Revenue Code of 1986, as
it may be amended from time to time.
<PAGE>
(b) Distributions: A Participant may apply for a distribution
from his or her Employee Account or Employer Account.
However, the Contract Holder must certify in writing that
the distribution is in accordance with the terms of the
Plan.
(c) Participant Rights/Employee Account: The Participant has a
nonforfeitable right to the value of his or her Employee
Account pursuant to the terms of the Plan as interpreted
by the Contract Holder.
(d) Participant Rights/Employer Account: The Participant has a
nonforfeitable right to the value of his or her Employer
Account pursuant to the terms of, and to the extent of his
or her vested percentage under, the Plan as interpreted by
the Contract Holder. It is the Contract Holder's
responsibility to maintain records of the Participant's
vesting percentages. Aetna will not maintain nor keep such
records.
2.07 Designation of Beneficiary:
The Participant shall designate a Beneficiary.
2.08 Misstatements and Adjustments:
If Aetna finds the age of any payee to be misstated, the correct
facts will be used to adjust payments.
2.09 Incontestability:
Aetna cannot cancel this Contract because of any error of fact.
2.10 Grace Period:
This Contract will remain in effect even if Contributions are not
continued except as provided in 3.14.
2.11 Individual Certificates:
Aetna shall issue certificates to Participants as required by the
state in which this Contract is delivered. The certificate will
summarize certain provisions of the Contract. Certificates are for
information only and are not a part of the Contract.
III. CONTRIBUTIONS, CURRENT VALUE, AND WITHDRAWAL PROVISIONS
- --------------------------------------------------------------------------------
3.01 Limitations on Contributions:
The Contribution(s) made to the Employee and Employer Account in
any year, other than transferred amounts, cannot exceed the lesser
of the amount determined under the exclusion allowance of Code
Section 403(b)(2) or the annual additions limitation of Code
Section 415(c)(1). In addition, in no event may the
Contribution(s) attributable to elective deferrals as defined in
Code Section 402(g) exceed $9,500 (or, such larger amount as
adjusted by the Secretary of the Treasury) during any calendar
year, unless the alternate limitation of Code Section 402(g)(8)
applies.
3.02 Net Contribution(s):
The Net Contribution equals the actual Contribution less any
applicable premium tax. Generally, Aetna will deduct the premium
tax when Annuity benefits are purchased (See Section V). If Aetna
determines that under applicable state law, it must pay a premium
tax when the Contribution is received, or at any other time, it
may deduct the tax at that time. The Net Contribution(s) may be
allocated among the following investment options:
(a) The Fixed Plus Account (if available); and
(b The Fund(s) in which the Separate Account invests.
Aetna must be told the percentage of all Net Contributions to
allocate to one or more of the investment options. Aetna reserves
the right to require a minimum Contribution amount per Individual
Account.
Aetna reserves the right not to accept any Contribution.
3.03 Experience Credits:
Aetna may apply experience credits under this Contract. Any such
credits will be computed as decided by Aetna.
<PAGE>
3.04 Fund Record Units:
The portion of the Net Contribution(s) applied to each Fund under
the Separate Account will determine the number of Fund record
units credited to the Individual Account for that Fund. This
number is equal to the Net Contribution applied to the Fund
divided by the Fund record unit value (See 3.05) for the Valuation
Period in which the Contribution is received in good order.
3.05 Fund Record Unit Value:
A Fund record unit value is computed by multiplying the net return
factor (See 3.06) for the current Valuation Date by the Fund
record unit value for the previous Date. The dollar value of a
Fund record unit, Separate Account assets, and Variable Annuity
payments may go up or down due to investment gain or loss.
3.06 Fund Net Return Factors:
The net return factor(s) are used to compute all Separate Account
record units for any Fund. The net return factor for each Fund is
equal to 1.0000000 plus the net return rate.
The net return rate is equal to:
(a) The value of the shares of the Fund held by the Separate
Account at the end of a Valuation Period, minus
(b) The value of the shares of the Fund held by the Separate
Account at the start of the Valuation Period, plus or
minus
(c) Taxes (or reserves for taxes) on the Separate Account (if
any); divided by
(d) The total value of the Fund record units and Fund annuity
units of the Separate Account at the start of the
Valuation Period; minus
(e) A Separate Account charge at an annual effective rate as
shown on Contract Schedule I for Annuity mortality and
expense risks, asset based sales charge, if any and a
daily administrative charge which will not exceed the
amount shown on Contract Schedule I on an annual basis.
The administrative charge may be changed annually except
for amounts which have been used to purchase an Annuity.
A net return rate may be more or less than 0%.
The value of a share of the Fund is equal to the net assets of the
Fund divided by the number of shares outstanding.
3.07 Fund Transfers(s);
All or any portion of the Adjusted Current Value of the Individual
Account (subject to the limitations described below) many be
transferred from any Fund or the Fixed Plus Account (if available).
(a) To any Fund; or
(b) To the Fixed Plus Account ( if available)
Fund Transfers can be submitted as a percentage or as a dollar amount.
Aetna may establish a minimum Fund Transfer amount.
During each rolling twelve (12) month period, up to 20% of the Fixed
Plus Account value may be transferred to one or more of the Fund(s).
The 20% limit is reduced by any partial withdrawals, Fund Transfers or
amounts taken to purchase an Annuity during the twelve(12) month
period. Aetna reserves the right to include amounts paid under ECO, LEO
and SWO for purposes of applying this 20% limit. This limit is waived
when the balance in the Fixed Plus Account is $1,000 or less on the
date the Fund Transfer request is received in good order at Aetna's
Service Office.
3.08 Notice to the Participant:
Each year, Aetna will notify the Participant of:
<PAGE>
(a) The value of any amounts held in:
(i) The Fixed Plus Account (if available),
(ii) The Fund(s) for the Separate Account;
(b) The number of any fund(s) record units;
(c) The fund(s) record unit value(s) and
(d) The amount available for withdrawal.
This information will be as of a date no more than sixty (60) days
before the date of the notice.
3.09 Withdrawal Restrictions:
Limitations apply to withdrawals of any Restricted Amount from
this Contract, as required by Code Section 403(b)(11). The
Restricted Amount is the sum of:
(a) Net Contributions attributable to Participant salary
reduction contributions made on and after January 1, 1989
if any; plus
(b) The net increase, if any, in the Current Value of the
Employee Account after December 31, 1988 attributable to
investment gains and losses and credited interest.
The Restricted Amount may be fully or partially surrendered only
if one or more of the following conditions are met:
(a) The Participant has reached age 59 1/2;
(b) The Participant has separated from service;
(c) The Participant has died;
(d) The Participant has become disabled, totally and
permanently within the meaning of Code Section 72 (m)(7);
or
(e) The withdrawal is otherwise allowed by federal law,
regulations or rulings.
A full or partial withdrawal is also allowed if the Participant
incurs a "hardship" as that term is defined in the Code or
regulations under Code Section 403(b).
However, the amount available for hardship is limited to the
lesser of the amount necessary to satisfy the need, or the Net
Contributions attributable to Participant salary reduction
contributions made on and after January 1, 1989.
The Contract Holder must certify that one of these conditions has
been met before a withdrawal request will be considered to be in
good order. The Contract Holder must notify Aetna in writing when
a lump sum payment is to be made or Annuity payments are to
commence. Also, for all withdrawals, the Contract Holder must
certify in writing that they are being made in accordance with the
Plan.
If, pursuant to IRS Revenue Ruling 90-24, Aetna agrees to accept
under this Contract amounts transferred from a Code Section
403(b)(7) custodial account, such amounts will be subject to the
withdrawal restrictions set forth in Code Section
403(b)(7)(A)(ii).
3.10 Manner and Timing of Distributions:
(a) As directed by the Contract Holder, a distribution to a
Participant or Beneficiary may be made in a lump sum, as
one of the Distribution Options described in Section IV,
or as one of the Annuity options in Section V. The
Participant or Beneficiary may elect the form of
distribution subject to certification in writing by the
Contract Holder that the Participant or Beneficiary is
eligible both as to the timing and form of distribution.
All distributions must satisfy the minimum distribution
rules set forth in Code Section 401(a)(9).
(b) The distribution of benefits from the Employee and
Employer Accounts must generally begin no later than April
1 of the calendar year following the calendar year in
which the Participant attains age 70 1/2 or in the case of
a governmental or church plan the calendar year in which
the Participant attains age 70 1/2 or retires, whichever
occurs later. For a Participant who attained age 70 1/2
before January 1, 1988, the distribution of such benefits
must be made or must begin not later than the April 1 of
the calendar
<PAGE>
year following the calendar year in which the Participant
retires.
The entire value of the Individual Account must be
distributed, or distribution must be made over the life of
the Participant, the joint lives of the Participant and
Beneficiary or over a period that does not extend beyond
the life expectancy of the Participant or the joint life
expectancies of the Participant and Beneficiary.
(c) If the Participant does not request commencement of
benefits from the Employee and Employer Accounts as
described above, Aetna will not be responsible for
compliance with the Code Section 401(a)(9) minimum
distribution requirements or for any adverse tax or other
consequences that may result.
If Aetna maintains separate records of the value as of
December 31, 1986, this value is not required to be taken
before the year the Participant attains age 75. Aetna will
maintain separate records provided the Participant does
not take any distribution other than the minimum
distribution required under Code Section 401(a)(9).
3.11 Withdrawal:
(a) The Participant may withdraw any portion or all of an
Individual Account Adjusted Current Value and transfer
such amount to another investment provider under the Plan.
The withdrawal and transfer request must be submitted in
writing to Aetna.
(b) Except as described in Section 3.12, unless the
Participant specifies otherwise, partial withdrawals are
satisfied by withdrawing amounts on a pro rata basis from
each of the investment options in which the Individual
Account is invested.
(c) Any amount withdrawn from the Fixed Plus Account will be
subject to the limitations in 3.12, 3.13 and 3.14.
3.12 Partial Withdrawal from the Fixed Plus Account:
The amount eligible for partial withdrawal is 20% of the Current
Value of the amount held in the Fixed Plus Account on the day
Aetna's Service Office receives a written request, reduced by any
previous Fund Transfer, partial withdrawal or amounts taken to
purchase Annuity benefits during the prior 12 months. Aetna
reserves the right to include amounts paid under ECO, LEO and SWO
for purposes of applying this 20% limit. However, SWO and LEO are
unavailable if a Fixed Plus Account Transfer or withdrawal is
requested within the current 12 month period.
The 20% limit applicable to partial withdrawals from the Fixed
Plus Account will be waived under certain conditions and will
apply when the partial withdrawal is made on a pro rata basis from
all options used under the Participant's Individual Account. (See
Contract Schedule I).
3.13 Payment of Fixed Plus Account Full Withdrawal:
When Aetna receives a full withdrawal request, no additional
partial withdrawals or Fund Transfers from the Fixed Plus Account
are permitted during the payout period. If a full withdrawal is
requested, Aetna will pay any Current Value from the Fixed Plus
Account in five payments as follows:
(a) One-fifth of the Current Value on the day the request is
received in good order at Aetna's Service Office, reduced
by any amount from the Fixed Plus Account that was
transferred withdrawn or usedto purchase Annuity benefits
during the prior 12 months;
(b) One-fourth of the remaining Current Value 12 months later;
(c) One-third of the remaining Current Value 12 months later;
(d) One-half of the remaining Current Value 12 months later;
and
(e) The balance of the Current Value 12 months later.
The Fixed Plus Account full withdrawal payment provision will be
waived when a withdrawal is:
(a) Due to the Participant's death before Annuity benefit
payments begin;
(b) Used to purchase Annuity benefits;
(c) When the amount in the Fixed Plus Account is $3,500 or
less and no amount has been withdrawn, transferred, or
used to purchase Annuity benefits during the previous 12
months;
<PAGE>
(d) Due to hardship when the following conditions are met:
(1) the withdrawal is due to an employer certified
hardship;
(2) the amount withdrawn is paid directly to the
Participant; and
(3) the amount paid for all partial and full
withdrawals due to hardship during the previous
12-month period does not exceed 10% of the average
Current Value for all Individual Accounts during
the same period of time; or
(e) Due to separation from service provided that:
(1) the withdrawal is due to the Participant's
separation from service with the employer;
(2) the employer certifies that the Participant has
separated from service;
(3) the amount withdrawn is paid directly to the
Participant; and
(4) the amount paid for all partial and full
withdrawals due to separation from service during
the previous 12-month period does not exceed 20% of
the average Current Value of all Individual
Accounts during that same period of time.
Any full withdrawal from the Fixed Plus Account may be cancelled
at any time before the end of the payment period.
3.14 Payment of Minimum Current Value:
If the Individual Accounts Current Value is less than $3,500, and
no Contributions have been received for three (3) years, Aetna may
close the Account and pay the Current Value as directed by the
Contract Holder in one lump sum.
3.15 Amount Payable at Death (Before Annuity Payments Start):
Aetna will pay any portion of the Individual Account(s) Current
Value, to the Beneficiary when:
(a) The Participant dies before Annuity payments start; and
(b) The certified copy of the death certificate is received by
Aetna; and
(c) A completed and signed election form is submitted to the
Service Office. The form must include Contract Holder
certification that the Beneficiary is eligible for a
distribution under the terms of the Plan.
A guaranteed death benefit is available if the Beneficiary
requests either a lump-sum payment or an Annuity option within six
months of the Participant's death.
For each Individual Account, the death benefit is guaranteed to be
the greater of:
(a) The Current Value of the Individual Account on the date
the notice of death and the request for payment are
received in good order at Aetna's Service Office; or
(b) The total of Net Contribution(s) made to the Individual
Account minus the total of all partial withdrawals and
annuitizations made from the Individual Account.
If the Participant dies before distributions begin in accordance
with the provisions of Code Section 401(a)(9), the entire value of
the Account must be distributed by December 31 of the calendar
year containing the fifth anniversary of the date of the
Participant's death. Alternatively, if the Participant has a
designated Beneficiary, payments may be made over the life of the
Beneficiary or over a period not extending beyond the life
expectancy of the Beneficiary provided distribution to a
non-spouse Beneficiary begins by December 31 of the calendar year
following the calendar year of the Participant's death. For a
spousal Beneficiary, such payments must begin by the later of
December 31 of the calendar year following the calendar year of
the Participant's death or December 31 of the calendar year in
which the Participant would have attained age 70 1/2.
If the Participant dies after distributions begin in accordance
with the provisions of Code Section 401(a)(9), payments to the
Beneficiary must be made at least as rapidly as the method of
distribution in effect at the time of the Participant's death. If
the minimum distribution requirements have been met by partial
withdrawals based on the participant's life expectancy or the
joint life expectancies of the Participant and Beneficiary, death
benefit payments to the Beneficiary must also satisfy any
additional requirements of Code Section 401(a)(9).
3.16 Reinstatement:
<PAGE>
All or a portion of the proceeds of a full withdrawal of an
Individual Account may be reinvested within 30 days after the
surrender if allowed by law. Amounts will be reinstated among the
Fixed Plus Accountand the Fund(s) in the same proportion as they
were at the time of withdrawal. The number of record units
reinstated will be based on the record unit value(s) next computed
after receipt at Aetna's Service Office of the reinstatement
request and the amount to be reinvested.
Any Individual Account(s) closed because the Current Value was
less than $3,500 may not be reinstated (see 3.14).
A Reinstatement is permitted only once per Individual Account.
IV. NON-ANNUITY DISTRIBUTION OPTIONS
- --------------------------------------------------------------------------------
4.01 Distribution Options:
Distribution Options: ECO, LEO and SWO are distribution options
under which a portion of the Individual Account Current Value will
automatically be surrendered and distributed each calendar year.
The distributed amount is withdrawn pro rata from each investment
option under the Individual Account. The Contract Holder must
certify in writing that distributions are being made in accordance
with the Plan.
Minimum Current Value: At its discretion, Aetna may require a
minimum initial Current Value for election of a distribution
option. If after election of the option the Current Value is
insufficient to make a scheduled payment, Aetna will distribute
the entire Individual Account balance.
Reservations of Rights: Aetna reserves the right to change the
terms of ECO, LEO or SWO for future elections, to discontinue the
availability of these options after proper notification, or to
make other distribution options available as allowed by the state
in which this Contract is delivered. Aetna also reserves the right
to allow ECO and LEO payments to be made more frequently than
annually.
Election and Revocation: The Participant or Beneficiary may elect
a distribution option by submitting a completed and signed
election form to Aetna's Service Office. However, the Contract
Holder must certify in writing that the distribution option is in
accordance with the terms of the Plan. If the Individual Account
is subject to ERISA, the Contract Holder must certify in writing
that the waiver and spousal consent requirements of ERISA Section
205 have been satisfied.
Once elected, the Participant or Beneficiary may revoke the option
by submitting a written request to Aetna's Service Office. Any
revocation will apply only to amounts not yet paid.
Availability of ECO, LEO and SWO: The Participant may elect any
one of the following three distribution options, if they are
available as an option under the Contract (see Contract Schedule
I) and if the Contract Holder certifies that the election is in
accordance with the terms of the Plan. The Beneficiary may elect
either ECO or SWO, if they are available as an option under the
Contract (see Contract Schedule I) and if the Contract Holder
certifies that the election is in accordance with the terms of the
Plan.
An individual who has revoked ECO, LEO or SWO may not subsequently
elect that option again, nor may the individual elect another
withdrawal option unless permitted under the Code minimum
distribution rules.
LEO and SWO are not available if a Fixed Plus Account transfer or
surrender has occurred within the prior 12 month period.
If LEO is in effect and the Participant dies, or if ECO or SWO is
in effect and the Participant dies before the required beginning
date for minimum distributions, payments will cease. A Beneficiary
may elect ECO or SWO provided the election satisfies the Code
minimum distribution rules.
If ECO or SWO is in effect and the Participant dies after the
required beginning date for minimum distributions, payments will
continue as permitted under the Code minimum distribution rules,
unless revoked.
4.02 Estate Conservation Option (ECO):
Amount of Distribution: Each year that ECO is in effect, Aetna
will calculate and distribute an amount equal to the minimum
required distribution under the Code. The annual distribution will
be determined by dividing the Individual Account Current Value as
of December 31 of the year prior to the year for which payment is
to be made by a life expectancy factor based on expected return
multiples in Table V and VI of Section 1.72-9 of the Income Tax
Regulations.
<PAGE>
If Aetna maintains separate records of the value as of December
31, 1986, payments made during or after the year in which the
Participant attains age 70 1/2 and before the year the Participant
attains age 75, will only be calculated on amounts contributed
after December 31, 1986, plus all earnings on all amounts after
that date. If age 70 1/2 was attained prior to 1988, the
Participant must be retired in order to qualify for this
exception.
The Participant may elect either the single or joint life
expectancy factor. If the joint life expectancy factor is elected,
the second life must be the Beneficiary under the Plan. If the
Beneficiary selects ECO after the Participant's death, only a
single life expectancy factor may be used. The life expectancy or
joint life expectancy factor will be recalculated each year in
accordance with the rules under Code Section 401(a)(9).
Date of Distribution: The Participant shall specify the initial
distribution date. The earliest date is the first day of the
calendar year in which the Participant attains age 70 1/2 or, for
plans of government or church employers, the date the Participant
retires, whichever is later. If a Beneficiary elects ECO, the
earliest date is the date of the Participant's death. Subsequent
distribution will be made annually on such date as Aetna may
designate or allow.
4.03 Life Expectancy Option (LEO):
Amount of Distribution: Each year that LEO is in effect, Aetna
will calculate and distribute an amount determined by dividing the
Individual Account Current Value as of December 31 of the year
prior to the year for which payment is to be made by a life
expectancy factor based on expected return multiples in Table V
and VI of Section 1.72-9 of the Income Tax Regulations. Payments
will be made each year until the year the Participant attains age
70 1/2, or until the Participant dies, if earlier.
The Participant may elect either the single or joint life
expectancy factor. If the joint life expectancy factor is elected,
the second life must be the Beneficiary under the Plan. The life
expectancy or joint life expectancy factor will be recalculated
each year in accordance with the rules under Code Section
401(a)(9), or reduced by one for each calendar year which has
elapsed since the life expectancy was first calculated, as elected
by the Participant.
Date of Distribution: The Participant shall specify the initial
distribution date. The earliest date is the date on which the
Participant separates from service with the employer. Subsequent
distribution will be made annually on such date as Aetna may
designate or allow.
4.04 Systematic Withdrawal Option (SWO):
Amount of Distribution: The Participant may elect one of the three
payment methods described below.
(1) Specified Payment: Payments of a designated dollar amount.
The annual amount may not be greater than the percentage
of the Current Value at time of election as shown in
Contract Schedule I. This annual dollar amount will remain
constant, unless a higher amount is required under Code
minimum distribution rules. At its discretion, Aetna may
require a minimum initial payment amount; or
(2) Specified Period: Payments which are made over a period of
time which must be at least the minimum number of years
shown in Contract Schedule I. The annual amount paid each
year is calculated by dividing the Current 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 the percentage of the Current
Value at the time of election as shown in Contract
Schedule I. The percentage may be changed by written
request. Aetna reserves the right to limit the number of
times the percentage may be changed. The annual amount is
calculated by multiplying the Current Value as of December
31 of the year prior to the payment by the designated
percentage. Payments will be made each year until the year
the Participant attains age 70 1/2.
Minimum Distribution Requirements: If distributions are made under
SWO after payments are required to begin under the minimum
distribution requirements of Code Section 401(a)(9), the amount
distributed in any year will be increased if required under the
Code minimum distribution rules.
For this purpose, the minimum required distribution will be
determined each year by dividing the Individual Account Current
Value as of December 31 of the year prior to the year for which
payment is to be made by a life expectancy factor, which for the
initial distribution year shall be based on either the single life
expectancy factor or joint life expectancy factor in Table V or VI
of Section 1.72.9 of the Income Tax Regulations, as elected by the
Participant. If the joint life expectancy factor is elected, the
second life must be the Beneficiary under the Plan. If a
Beneficiary elects SWO after the Participant's death, only a
single life expectancy factor may be used. Minimum distributions
for any subsequent year will be calculated based on such life
expectancy factor reduced by one for each calendar year which has
elapsed since the life expectancy was first calculated. If the
specified period method is elected, the maximum specified period
will be limited by the single life
<PAGE>
expectancy factor or joint life expectancy factor in Table V or VI
of Section 1.72-9 of the Income Tax Regulations, as elected by the
Participant. If elected by a Beneficiary, only a single life
expectancy may be used.
Date of Distribution: The Participant shall specify the initial
distribution date. The earliest date is the date on which the
Participant attains age 59 1/2 or age 55, if separated from
service with the employer at or after age 55. If a Beneficiary
elects SWO, the earliest date is the date of the Participant's
death.
SWO payments will be made on a monthly, quarterly, semi-annual or
annual basis, as elected by the Participant or Beneficiary. If SWO
payments are made more frequently than annually, the designated
annual amount is divided by the number of payments due each
calendar year. Subsequent distribution will be made periodically
on such date as Aetna may designate or allow.
V. ANNUITY PROVISIONS
- --------------------------------------------------------------------------------
5.01 General Provisions:
(a) Upon certification by the Contract Holder of the
Participants' total disability, acceptance of retirement
or separation from service, the Participant has the right
to elect an Annuity option.
(b) The Participant may elect an Annuity option by telling
Aetna to pay all or any portion of the Individual
Account(s) Current Value (minus any applicable premium tax
if not previously deducted) as a premium for an Annuity
under Option 1, 2, or 3 (See 5.02).
(c) A completed and signed election form must be submitted to
the Service Office. The form must include Contract Holder
certification that the Participant is eligible for a
distribution under the terms of the Plan and that the
Annuity option chosen is permitted under the terms of the
Plan.
(d) Any election of an Annuity option must comply with the
minimum distribution requirements of Code Section
401(a)(9), including the incidental death benefit rule,
and the regulations thereunder. This restriction does not
apply if Option 3 is chosen and the second Annuitant is
the spouse of the Participant.
(e) Once elected, an Annuity option may not be revoked, except
for Option 1 when elected on a variable basis.
5.02 Annuity Options:
Option 1 - Payments for a Stated Period of Time.
An Annuity will be paid for the number of years chosen (See
Contract Schedule II). If payments for this option are made under
a Variable Annuity, the present value of any remaining payments
may be withdrawn at any time.
Option 2 - Life Income based on the life of the Annuitant.
Payments will be made until the death of the Annuitant. When this
option is chosen, a choice of the following must be made:
(a) Payments cease at the death of the Annuitant;
(b) Payments may be guaranteed for 5-30 years; or
(c) Payments may be guaranteed for the amount applied to the
Annuity option. If the Annuitant dies prior to the payment
of the amount applied to the Annuity option (less any
premium tax), any remaining balance will be paid in one
sum to the Beneficiary. This option is only available on a
fixed basis.
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 of the following
must be made:
(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) 100% of the payment to continue after the first death with
a guarantee of 5-30 years;
(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; or
<PAGE>
(f) 100% of the payment to continue after the first death.
Payments are guaranteed for the amount applied to the
Annuity option. If both Annuitants die prior to the total
payment of the amount applied to the Annuity option (less
any premium tax), any remaining balance will be paid in
one sum to the Beneficiary. This option is only available
on a fixed basis.
If a Fixed Annuity option is chosen under Option 1, Option 2 (a)
or (b) or Option 3 (a) or (d), then the Participant may elect a
payment increase of 1, 2 or 3%, compounded annually. An election
of such a payment increase will result in an adjustment of the
policy guarantees by an actuarially equivalent payment factor.
Other Options - Aetna may make other options available as allowed
by the laws of the state in which this Contract is delivered.
5.03 Payments:
(a) Upon written direction from the Contract Holder, Aetna
will pay Annuity benefits directly to the Participant and
as payor, Aetna will be responsible for withholding any
applicable federal or state taxes and reporting such sums
and filing any related forms with the Internal Revenue
Service and/or to any applicable state taxing authorities.
(b) Generally, the first Annuity payment must be made by April
1 of the calendar year following the year in which the
Participant turns age 70 1/2, or in the case of a
governmental or church plan, the year in which the
Participant attains age 70 1/2 or retires, whichever
occurs later. For a Participant who attained age 70 1/2
before January 1, 1988, the distribution of such benefits
must be made or must begin not later than April 1 of the
calendar year following the calendar year in which the
Participant retires.
(c) Payments will be made on a monthly basis unless the
Participant requests otherwise. If payments are made on a
quarterly, semi-annual or annual basis, Aetna will
calculate an actuarially equivalent payment factor.
(d) No choice of any Annuity option may be made if the first
payment would be less than $50 per month or if the
total payments in a year would be less than $250.
(e) For purposes of calculating the first payment of a
Variable Annuity or the guaranteed payments for a Fixed
Annuity, the Annuitant's and second Annuitant's adjusted
age will be used. The Annuitant's and second Annuitant's
adjusted age is his or her age as of the birthday closest
to the Annuity commencement date reduced by one year for
Annuity commencement dates occurring during the period of
time from July 1, 1992 through December 31, 1999. The
Annuitant's and second Annuitant's age will be reduced by
two years for Annuity commencement dates occurring during
the period of time from January 1, 2000 through December
31, 2009. The Annuitant's and second Annuitant's age will
be reduced by one additional year for Annuity commencement
dates occurring in each succeeding decade.
(f) If a Fixed Annuity under Option 1, 2 or 3 is elected,
Aetna will use the applicable current settlement option
rates if these will provide higher Fixed Annuity payments.
5.04 Investment Option:
(a) When an Annuity option is chosen the Participant must
designate whether the Annuity will be fixed or variable
and whether the underlying investment will be:
(1) The General Account;
(2) One or more of the available Fund(s) ; or
(3) A combination of (1) and (2).
If a Fixed Annuity is chosen, the Annuity purchase rate for the
option chosen reflects at least the Minimum Guaranteed Interest
Rate (See Contract Schedule II), but may reflect a higher interest
rate.
If a Variable Annuity is chosen, the initial Annuity payment for
the option chosen reflects the Assumed Annual Net Return Rate
elected (See Contract Schedule II). The Assumed Annual Net Return
Rate is the interest rate used to determine the amount of the
first Annuity payment under a Variable Annuity. The Separate
Account must earn this rate plus enough to cover the mortality and
expense risks charges (which may include profit) (at the annual
rate shown on Contract Schedule II) and a daily administrative
charge if future Variable Annuity payments are to remain level.
5.05 Fund Annuity Units:
<PAGE>
The number of Fund(s) annuity units is based on the amount of the
first Variable Annuity payment which is equal to:
(a) The portion of the Current Value (minus any premium tax)
applied to pay a variable Annuity; divided by (b) 1,000;
multiplied by (c) the payment rate for the option chosen.
Such amount, or portion, of the variable payment will be divided
by the appropriate Fund(s) Annuity unit value (See 5.06) on the
tenth Valuation Date before the due date of the first payment to
determine the number of each Fund Annuity units. The number of
each Fund Annuity units remains fixed. Each future payment is
equal to the sum of the products of each Fund Annuity unit value
multiplied by the appropriate number of Units. The Fund Annuity
unit value on the tenth Valuation Date prior to the due date of
the payment is used.
5.06 Fund Annuity Unit Value:
For any Valuation Date, a Fund(s) Annuity unit value is equal to:
(a) The value for the previous Valuation Date; multiplied by
(b) The Annuity net return factor(s) (See 5.07) for the
Period; multiplied by
(c) A factor to reflect the assumed annual net return rate.
(See Contract Schedule II).
The dollar value of a Fund Annuity unit and Annuity payments may
go up or down due to investment gain or loss. Payments shall not
be changed due to changes in the mortality or expense results or
administrative charges.
5.07 Fund Annuity Net Return Factor:
The Annuity net return factor(s) are used to compute all Separate
Account Annuity payments for any Fund.
The Annuity net return factor(s) for each Fund is equal to
1.0000000 plus the net return rate.
The net return rate is equal to:
(a) The value of the shares of the Fund held by the Separate
Account at the end of a Valuation Period, minus
(b) The value of the shares of the Fund held by the Separate
Account at the start of the Valuation Period, plus or
minus
(c) Taxes (or reserves for taxes) on the Separate Account (if
any); divided by
(d) The total value of the Fund(s) record units and Fund(s)
Annuity units of the Separate Account at the start of the
Valuation Period; minus
(e) A daily charge for Annuity mortality and expense risks,
which may include a profit, (at the annual rate as shown
on Contract Schedule II) and a daily administrative
charge.
A net return rate may be more or less than 0%. The value of a
share of the Fund is equal to the net assets of the Fund divided
by the number of shares outstanding.
5.08 Fund Transfers During the Annuity Period:
At the request of the Contract Holder or the Participant if the
Contract Holder has directed Aetna to accept such a request from
the Participant, all or any portion of the Current Value may be
transferred from any variable Fund to any other allowable Fund.
Aetna reserves the right to allow no more than four Funds to be
selected at any one time. Fund Transfers will be processed as of
the Valuation Date next following when a transfer request is
received in good order at Aetna's Service Office. The maximum
number of allowable transfers (during the Annuity period) in a
calendar year is shown on Contract Schedule II.
Fund Transfer requests must be expressed as a percentage of each
Fund's allocation to the Annuity payment. Aetna may establish a
minimum transfer amount.
5.09 Death Benefit:
Upon the death of the Annuitant(s), any remaining guaranteed
payments will continue to the Beneficiary unless the Beneficiary
elects to receive the present value of any remaining guaranteed
payments in a lump sum. Such payments will be paid at least as
rapidly as under the method of distribution then in effect. If the
Beneficiary dies while receiving payments, the present value of
any remaining guaranteed payments will be paid in one sum to the
Beneficiary's estate.
<PAGE>
The interest rate used to determine the first Annuity payment will
be used to calculate the present value. The present value will be
determined as of the Valuation Period in which proof of death
acceptable to Aetna and a request for payment is received at
Aetna's Service Office.
G2-CDA-99(TORP)FL
<PAGE>
OPTION 1
Payments for a Stated Period of Time
Amount of Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Monthly Monthly
Years Payment Years Payment
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
5 17.91 18 5.96
6 15.14 19 5.73
7 13.16 20 5.51
8 11.68 21 5.32
9 10.53 22 5.15
10 9.61 23 4.99
11 8.86 24 4.84
12 8.24 25 4.71
13 7.71 26 4.59
14 7.26 27 4.47
15 6.87 28 4.37
16 6.53 29 4.27
17 6.23 30 4.18
- --------------------------------------------------------------------------------------------------------
</TABLE>
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Monthly Monthly
Years Payment Years Payment
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
5 18.12 18 6.20
6 15.35 19 5.97
7 13.38 20 5.75
8 11.90 21 5.56
9 10.75 22 5.39
10 9.83 23 5.24
11 9.09 24 5.09
12 8.46 25 4.96
13 7.94 26 4.84
14 7.49 27 4.73
15 7.10 28 4.63
16 6.76 29 4.53
17 6.47 30 4.45
- --------------------------------------------------------------------------------------------------------
</TABLE>
G2-CDA-99(TORP)FL
<PAGE>
OPTION 1
Payments for a Stated Period of Time
Amount of Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Monthly Monthly
Years Payment Years Payment
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
5 18.74 18 6.94
6 15.99 19 6.71
7 14.02 20 6.51
8 12.56 21 6.33
9 11.42 22 6.17
10 10.51 23 6.02
11 9.77 24 5.88
12 9.16 25 5.76
13 8.64 26 5.65
14 8.20 27 5.54
15 7.82 28 5.45
16 7.49 29 5.36
17 7.20 30 5.28
- --------------------------------------------------------------------------------------------------------
</TABLE>
G2-CDA-99(TORP)FL
<PAGE>
OPTION 2
Life Income
Amount of Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
Payments Guaranteed for a Stated Period of Years
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Adjusted
Age of None 5 10 15 20 Cash
Annuitant Refund
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
50 $4.05 $4.05 $4.03 $3.99 $3.93 $3.89
51 4.12 4.11 4.09 4.05 3.99 3.94
52 4.19 4.19 4.16 4.11 4.04 4.00
53 4.27 4.26 4.23 4.18 4.10 4.06
54 4.35 4.34 4.31 4.25 4.16 4.12
55 4.44 4.42 4.39 4.32 4.22 4.19
56 4.53 4.51 4.47 4.40 4.29 4.26
57 4.62 4.61 4.56 4.48 4.35 4.33
58 4.72 4.71 4.65 4.56 4.42 4.41
59 4.83 4.81 4.75 4.64 4.49 4.49
60 4.95 4.93 4.86 4.73 4.55 4.57
61 5.07 5.05 4.97 4.83 4.62 4.66
62 5.20 5.17 5.08 4.92 4.69 4.76
63 5.34 5.31 5.20 5.02 4.76 4.85
64 5.49 5.45 5.33 5.12 4.83 4.96
65 5.65 5.61 5.47 5.22 4.89 5.06
66 5.82 5.77 5.61 5.33 4.96 5.18
67 6.01 5.94 5.75 5.44 5.02 5.30
68 6.20 6.13 5.91 5.54 5.08 5.42
69 6.41 6.33 6.07 5.65 5.14 5.56
70 6.64 6.54 6.23 5.76 5.19 5.70
71 6.88 6.76 6.41 5.86 5.24 5.84
72 7.14 7.00 6.59 5.97 5.28 6.00
73 7.43 7.26 6.77 6.06 5.32 6.16
74 7.73 7.53 6.96 6.16 5.35 6.33
75 8.06 7.82 7.14 6.25 5.38 6.51
- --------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
G2-CDA-99(TORP)FL
<PAGE>
OPTION 2
Life Income
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
Payments Guaranteed for a Stated Period of Years
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Adjusted
Age of None 5 10 15 20
Annuitant
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
50 $4.34 $4.34 $4.31 $4.27 $4.22
51 4.41 4.40 4.38 4.33 4.27
52 4.48 4.47 4.45 4.40 4.32
53 4.56 4.55 4.52 4.46 4.38
54 4.64 4.63 4.59 4.53 4.44
55 4.72 4.71 4.67 4.60 4.50
56 4.81 4.80 4.75 4.67 4.56
57 4.91 4.89 4.84 4.75 4.62
58 5.01 4.99 4.93 4.83 4.69
59 5.12 5.10 5.03 4.92 4.75
60 5.23 5.21 5.13 5.00 4.82
61 5.36 5.33 5.24 5.09 4.88
62 5.49 5.45 5.35 5.19 4.95
63 5.63 5.59 5.47 5.28 5.02
64 5.78 5.73 5.60 5.38 5.08
65 5.94 5.89 5.73 5.48 5.15
66 6.11 6.05 5.87 5.58 5.21
67 6.29 6.22 6.02 5.69 5.27
68 6.49 6.41 6.17 5.79 5.33
69 6.70 6.60 6.33 5.90 5.38
70 6.92 6.81 6.49 6.00 5.43
71 7.17 7.04 6.66 6.10 5.48
72 7.43 7.27 6.84 6.20 5.52
73 7.71 7.53 7.02 6.30 5.55
74 8.02 7.80 7.20 6.39 5.59
75 8.35 8.08 7.38 6.48 5.62
- --------------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
G2-CDA-99(TORP)FL
<PAGE>
OPTION 2
Life Income
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
Payments Guaranteed for a Stated Period of Years
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Adjusted
Age of None 5 10 15 20
Annuitant
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
50 $5.26 $5.25 $5.22 $5.17 $5.11
51 5.33 5.32 5.28 5.23 5.15
52 5.40 5.38 5.34 5.29 5.20
53 5.47 5.45 5.41 5.35 5.26
54 5.54 5.53 5.48 5.41 5.31
55 5.63 5.61 5.56 5.47 5.36
56 5.71 5.69 5.63 5.54 5.42
57 5.80 5.78 5.72 5.61 5.47
58 5.90 5.88 5.81 5.69 5.53
59 6.01 5.98 5.90 5.77 5.59
60 6.12 6.09 6.00 5.85 5.65
61 6.24 6.21 6.10 5.93 5.71
62 6.37 6.33 6.21 6.02 5.77
63 6.51 6.46 6.33 6.11 5.83
64 6.66 6.60 6.45 6.20 5.89
65 6.82 6.75 6.57 6.30 5.95
66 6.99 6.91 6.71 6.39 6.01
67 7.17 7.08 6.85 6.49 6.06
68 7.36 7.27 6.99 6.59 6.12
69 7.57 7.46 7.15 6.69 6.17
70 7.80 7.67 7.30 6.78 6.21
71 8.05 7.89 7.47 6.88 6.25
72 8.31 8.13 7.64 6.97 6.29
73 8.59 8.38 7.81 7.06 6.33
74 8.90 8.64 7.99 7.15 6.36
75 9.23 8.93 8.16 7.23 6.38
- --------------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
G2-CDA-99(TORP)FL
<PAGE>
OPTION 3
Life Income for Two Annuitants
Amount of Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Adjusted Ages
- ------------------------------ Option 3d
Second 10 Years
Annuitant Annuitant Option 3a Option 3b Option 3c Guaranteed Option 3e Option 3f
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
55 50 $3.69 $4.05 $4.27 $3.69 $4.03 $3.69
55 55 3.88 4.25 4.47 3.87 4.14 3.87
55 60 3.99 4.44 4.71 3.98 4.20 3.98
60 55 3.99 4.44 4.71 3.98 4.42 3.98
60 60 4.24 4.71 4.99 4.23 4.57 4.23
60 65 4.38 4.97 5.32 4.38 4.65 4.38
65 60 4.38 4.97 5.32 4.38 4.93 4.38
65 65 4.72 5.33 5.70 4.71 5.14 4.72
65 70 4.93 5.68 6.15 4.91 5.27 4.91
70 65 4.93 5.68 6.15 4.91 5.66 4.91
70 70 5.40 6.21 6.70 5.36 5.96 5.38
70 75 5.69 6.68 7.32 5.62 6.13 5.66
75 70 5.69 6.68 7.32 5.62 6.67 5.66
75 75 6.37 7.45 8.15 6.23 7.12 6.33
75 80 6.78 8.11 8.99 6.54 7.36 6.71
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
G2-CDA-99(TORP)FL
<PAGE>
OPTION 3
Life Income for Two Annuitants
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Adjusted Ages
- ---------------------------------- Option 3d
Second 10 Years
Annuitant Annuitant Option 3a Option 3b Option 3c Guaranteed Option 3e
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $3.97 $4.35 $4.56 $3.97 $4.31
55 55 4.16 4.54 4.76 4.15 4.42
55 60 4.27 4.73 5.00 4.26 4.48
60 55 4.27 4.73 5.00 4.26 4.70
60 60 4.51 4.99 5.27 4.50 4.84
60 65 4.66 5.25 5.61 4.65 4.93
65 60 4.66 5.25 5.61 4.65 5.22
65 65 4.99 5.61 5.99 4.98 5.42
65 70 5.19 5.97 6.44 5.17 5.54
70 65 5.19 5.97 6.44 5.17 5.93
70 70 5.67 6.49 6.99 5.62 6.23
70 75 5.95 6.96 7.61 5.87 6.40
75 70 5.95 6.96 7.61 5.87 6.95
75 75 6.64 7.73 8.43 6.48 7.40
75 80 7.04 8.39 9.29 6.79 7.64
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
G2-CDA-99(TORP)FL
<PAGE>
OPTION 3
Life Income for Two Annuitants
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Adjusted Ages
- -------------------------------- Option 3d
Second 10 Years
Annuitant Annuitant Option 3a Option 3b Option 3c Guaranteed Option 3e
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $4.88 $5.26 $5.48 $4.88 $5.23
55 55 5.04 5.44 5.66 5.04 5.32
55 60 5.15 5.63 5.91 5.14 5.38
60 55 5.15 5.63 5.91 5.14 5.59
60 60 5.37 5.87 6.16 5.37 5.72
60 65 5.52 6.14 6.51 5.51 5.80
65 60 5.52 6.14 6.51 5.51 6.10
65 65 5.83 6.49 6.87 5.82 6.29
65 70 6.04 6.84 7.34 6.00 6.41
70 65 6.04 6.84 7.34 6.00 6.81
70 70 6.49 7.35 7.87 6.44 7.08
70 75 6.77 7.84 8.51 6.68 7.25
75 70 6.77 7.84 8.51 6.68 7.81
75 75 7.45 8.60 9.33 7.27 8.25
75 80 7.86 9.28 10.20 7.57 8.49
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
G2-CDA-99(TORP)FL
<PAGE>
- --------------------------------------------------------------------------------
Aetna Insurance Company of America
Home Office: 5100 West Lemon Street, Suite 213
Tampa, Florida 33609
(800) 525-4225
Group Combination Annuity Contract
Nonparticipating
- --------------------------------------------------------------------------------
ALL PAYMENTS AND VALUES PROVIDED BY THE GROUP CONTRACT, WHEN BASED ON INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
FIXED DOLLAR AMOUNT.
G2-CDA-99(TORP)FL
Form of Certificate GTCC2-99(TORP)FL
---------------------------------------------------
Aetna Insurance Company of America
Home Office: 5100 West Lemon Street, Suite 213
Tampa, Florida 33609
(800) 525-4225
This telephone number may be used to request
information about this certificate.
Aetna Insurance Company of America, herein called
Aetna, agrees to pay the benefits stated in this
Contract.
Certificate of Group Annuity Coverage
- --------------------------------------------------------------------------------
To the Certificate Holder:
Aetna certifies that coverage is in force for you under the stated Group Annuity
Contract and Certificate numbers. All data shown here is taken from Aetna
records and is based upon information furnished by you.
This Certificate is a summary of the Group Annuity Contract provisions. It
replaces any and all prior certificates, riders, or amendments issued to you
under the stated Contract and Certificate numbers. This Certificate is for
information only and is not a part of the Contract.
THE VARIABLE FEATURES OF THE GROUP CONTRACT ARE DESCRIBED IN PART III AND V.
Right to Cancel
- --------------------------------------------------------------------------------
You may cancel this Certificate within 10 days of receiving it by returning this
Certificate along with a written notice to Aetna at the above address or to the
agent from whom it was purchased. Within 7 days after it receives the notice of
cancellation and this Certificate at its Home Office, Aetna will return the
entire consideration paid plus any increase or minus any decrease in the current
value of any funds allocated to the Separate Account.
President Secretary
- --------------------------------------------------------------------------------
Contract Holder Group Annuity Contract No.
SPECIMEN SPECIMEN
- --------------------------------------------------------------------------------
Your Name Certificate No.
SPECIMEN SPECIMEN
- --------------------------------------------------------------------------------
Type of Plan
SPECIMEN
- --------------------------------------------------------------------------------
The underlying group combination annuity contract is delivered in FLORIDA and is
subject to the laws of that jurisdiction.
ALL PAYMENTS AND VALUES PROVIDED BY THE GROUP CONTRACT, WHEN BASED ON INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
FIXED DOLLAR AMOUNT.
GTCC2-99(TORP)FL
<PAGE>
Specifications
- --------------------------------------------------------------------------------
Guaranteed There is a guaranteed interest rate for
Interest Rate Contribution(s) held in the Fixed Plus Account
- --------------------------------------------------------------------------------
Deductions from There will be deductions for mortality and
the Separate expense risks. There also may be deductions for
Account administrative charges and asset based sales
charges. (See 3.06 and 5.06.)
- --------------------------------------------------------------------------------
Deductions from Contribution(s) are subject to a deduction for
Contribution(s) premium taxes, if any. (See 3.02.)
GTCC2-99(TORP)FL
<PAGE>
Contract Schedule I
Accumulation Period
Separate Account
- --------------------------------------------------------------------------------
Separate Account:
Variable Annuity Account I
Charges to Separate Account:
A daily charge is deducted from any portion of the Current Value
allocated to the Separate Account. The daily charge is at an
annual effective rate that will not exceed 1.00% for Annuity
mortality and expense risks, 0.00% for asset based sales charge
and a daily administrative charge which will not exceed 0.25% on
an annual basis.
Fixed Plus Account Is Available
- --------------------------------------------------------------------------------
Minimum Guaranteed Interest Rate:
3% (effective annual rate of return).
Partial Withdrawal:
The 20% limit applicable to partial withdrawal from the Fixed Plus
Account will be waived when the withdrawal is:
(a) due to the Participant's death, (and made within six (6)
months of the Participant's date of death), before Annuity
payments begin. This partial withdrawal may only be
exercised once; or
(b) used to purchase Annuity benefits.
GTCC2-99(TORP)FL i
<PAGE>
Contract Schedule I
Accumulation Period (Cont'd)
Separate Account and Fixed Plus Account
- --------------------------------------------------------------------------------
Systematic Withdrawal Option (SWO):
Is Available
The Specified Payment may not be greater than 20% of the
Individual Account's Current Value at the time of election.
The Specified Period may not be less than five years.
The Specified Percentage may not be greater than 20%.
Estate Conservation Option (ECO):
Is Available
Life Expectancy Option (LEO):
Is Available
See Section 1. - DEFINITIONS for explanations.
GTCC2-99(TORP)FL ii
<PAGE>
Contract Schedule II
Annuity Period
Separate Account
- --------------------------------------------------------------------------------
Fund Transfers:
Maximum number of allowable transfers in the Annuity Period is 4.
Charges to Separate Account:
A daily charge at an annual effective rate that will not exceed
1.25% for Annuity mortality and expense risks. The administrative
charge is established upon election of an Annuity option. This
charge will not exceed 0.25%.
Variable Annuity Assumed Annual Net Return Rate:
If a Variable Annuity is chosen, an assumed annual net return rate
of 5.0% may be elected. If 5.0% is not elected, Aetna will use an
assumed annual net return rate of 3.5%.
The assumed annual net return rate factor for 3.5% per year is
0.9999058.
The assumed annual net return rate factor for 5.0% per year is
0.9998663.
If the portion of a Variable Annuity payment for any Fund is not
to decrease, the Annuity return factor under the Separate Account
for that Fund must be:
(a) 4.75% on an annual basis plus an annual return of up to
0.25% to offset the administrative charge set at the time
Annuity payments commence if an assumed annual net return
rate of 3.5% is chosen; or
(b) 6.25% on an annual basis plus an annual return of up to
0.25% to offset the administrative charge set at the time
Annuity payments commence, if an assumed annual net return
rate of 5% is chosen.
Annuity Option:
Under the option "Payments for a Stated Period of Time":
For amounts invested in one or more of the Fund(s), the number of
years must be at least five (5) and not more than thirty (30) and
the Annuity may be a Fixed or Variable Annuity.
For amounts invested in the Fixed Plus Account, the number of
years must be at least five (5) and not more than thirty (30) and
the Annuity must be a Fixed Annuity.
Fixed Annuity
- --------------------------------------------------------------------------------
Minimum Guaranteed Interest Rate:
3% (effective annual rate of return).
See Section 1. - DEFINITIONS for explanations.
GTCC2-99(TORP)FL iii
<PAGE>
TABLE OF GUARANTEED VALUES -
FIXED PLUS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
End of Minimum Contract Withdrawal
Years Value Value
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
1 1,219.41 1,219.41
2 2,475.41 2,475.41
3 3,769.08 3,769.08
4 5,101.56 5,101.56
5 6,474.02 6,474.02
6 7,887.66 7,887.66
7 9,343.70 9,343.70
8 10,843.42 10,843.42
9 12,388.14 12,388.14
10 13,979.19 13,979.19
11 15,617.98 15,617.98
12 17,305.93 17,305.93
13 19,044.52 19,044.52
14 20,835.27 20,835.27
15 22,679.74 22,679.74
16 24,579.54 24,579.54
17 26,536.34 26,536.34
18 28,551.84 28,551.84
19 30,627.81 30,627.81
20 32,766.06 32,766.06
21 34,968.45 34,968.45
22 37,236.91 37,236.91
23 39,573.43 39,573.43
24 41,980.05 41,980.05
25 44,458.86 44,458.86
30 58,014.03 58,014.03
35 73,728.18 73,728.18
40 91,945.20 91,945.20
45 113,063.71 113,063.71
50 137,545.85 137,545.85
- -----------------------------------------------------------------------------------------------------------
</TABLE>
Values illustrated are based on monthly purchase payments of $100 and a minimum
interest rate of 3%.
Full withdrawal is available in certain limited situations as described in the
contract. Otherwise, no full withdrawal is available under this option.
The payout schedule is as follows:
1/5 of contract value at the time requested;
1/4 of remaining current value 12 months later;
1/3 of remaining current value 12 months later;
1/2 of remaining current value 12 months later;
and the balance of current value 12 months later.
GTCC2-99(TORP)FL iv
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Aetna Insurance Company of America
Home Office 5100 West Lemon Street, Suite 213
Tampa, Florida 33609
(800) 525-4225
Certificate of Group Annuity Coverage
- --------------------------------------------------------------------------------
ALL PAYMENTS AND VALUES PROVIDED BY THE GROUP CONTRACT, WHEN BASED ON INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
FIXED DOLLAR AMOUNT.
GTCC2-99(TORP)FL
FUND PARTICIPATION AGREEMENT
Among
JANUS ASPEN SERIES
and
AETNA INSURANCE COMPANY OF AMERICA
and
JANUS CAPITAL CORPORATION
Aetna Insurance Company of America (the "Company") Janus Aspen Series
(the "Fund") and Janus Capital Corporation (the "Adviser") hereby agree to an
arrangement whereby the Fund shall be made available to serve as underlying
investment media for Variable Annuity or Variable Life Contracts ("Contracts")
to be issued by the Company.
1. Establishment of Accounts; Availability of Fund.
(a) The Company represents that it has established Variable Annuity
Accounts I and II may establish such other accounts as may be set
forth in Schedule A attached hereto and as may be amended from
time to time with the mutual consent of the parties hereto (the
"Accounts"), each of which is a separate account under Connecticut
Insurance law, and has registered or will register each of the
Accounts (except for such Accounts for which no such registration
is required) as a unit investment trust under the Investment
Company Act of 1940 (the "1940 Act"), to serve as an investment
vehicle for the Contracts. Each Contract provides for the
allocation of net amounts received by the Company to an Account
for investment in the shares of one of more specified open-end
management investment companies available through that Account as
underlying investment media. Selection of a particular investment
management company and changes therein from time to time are made
by the participant or Contract owner (hereinafter "Participant" or
"Contract Owner"), as applicable under a particular Contract.
The Company represents and warrants that it is an insurance
company duly organized and in good standing under the laws of the
State of Connecticut and that it has legally and validly
established each Account as a segregated asset account under such
law.
The Company represents and warrants that the Contracts or
interests in the Accounts (1) are or, prior to issuance, will be
registered as securities under the
<PAGE>
1933 Act or, alternatively (2) are not registered because they
are properly exempt from registration under the 1933 Act or will
be offered exclusively in transactions that are properly exempt
from registration under the 1933 Act. The Company further
represents and warrants that the Contracts will be issued in
compliance in all material respects with all applicable federal
and state laws;
(b) The Fund and the Adviser represent and warrant that the
investments of the series of the Fund (each designated a
"Portfolio") specified in Schedule B attached hereto (as may be
amended from time to time with the mutual consent of the parties
hereto) will at all times be adequately diversified within the
meaning of Section 817(h) of the Internal Revenue Service Code of
1986, as amended (the "Code"), and the Regulations thereunder, and
that at all times while this agreement is in effect, all
beneficial interests will be owned by one or more insurance
companies, qualified plans, or by any other party permitted under
Section 1.817-5(f)(3) of the Regulations promulgated under the
Code or by the successor thereto, or by any other party permitted
under a Revenue Ruling or private letter ruling granted by the
Internal Revenue Service.
2. Pricing Information; Orders; Settlement.
(a) The Fund will make Fund shares available to be purchased by the
Company, and will accept redemption orders from the Company, on
behalf of each Account at the net asset value applicable to each
order on those days on which the New York Stock Exchange (the
"Exchange") is open and the Fund is obligated to calculate its net
asset value (a "Business Day"). Fund shares shall be purchased and
redeemed in such quantity and at such time determined by the
Company to be necessary to meet the requirements of those
Contracts for which the Fund serve as underlying investment media,
provided, however, that the Board of Trustees of the Fund
(hereinafter the "Trustees") may upon reasonable notice to the
Company, refuse to sell shares of any Portfolio to any person, or
suspend or terminate the offering of shares of any Portfolio if
such action is required by law or by regulatory authorities having
jurisdiction or is, in the sole discretion of the Trustees, acting
in good faith and in the best interests of the shareholders of any
Portfolio and in compliance with their fiduciary obligations under
federal and/or any applicable state laws, necessary in the best
interests of the shareholders of any Portfolio.
(b) The Fund will provide to the Company closing net asset value,
dividend and capital gain information as soon as reasonably
practical after the close of trading each Business Day but in no
event later than 7:00 p.m. Eastern Standard Time on such Business
Day. The Fund shall be liable to the Company for systems and out
of pocket costs (as well as the cost to make the Accounts whole)
incurred by the Company in making a Contract Owner's or
Participant's Account whole if such costs or expenses are a result
of the
2
<PAGE>
Fund's failure to provide timely or correct (as determined by the
Fund) net asset values, dividend and capital gains information or
if the Fund changes such information after the Company receives
it. The Company will send via facsimile or electronic transmission
to the Fund or its specified agent orders to purchase and/or
redeem Fund shares by 10:00 a.m. Eastern Standard Time the
following Business Day. Payment for net purchases will be wired by
the Company to an account designated by the Fund to coincide with
the order for shares of the Fund. The Company hereby elects to
receive all such income dividends and capital gain distributions
as are payable on a Portfolio's shares in additional shares of
that Portfolio.
(c) The Fund hereby appoints the Company as its agent for the limited
purpose of accepting purchase and redemption orders for Fund
shares relating to the Contracts from Contract Owners or
Participants. Orders from Contract Owners or Participants received
from any distributor of the Contracts (including affiliates of the
Company) by the Company, acting as agent for the Fund, prior to
the close of the Exchange on any given Business Day will be
executed by the Fund at the net asset value determined as of the
close of the Exchange on such Business Day, provided that the Fund
receives written (or facsimile) notice of such order by 10 a.m.
Eastern Standard Time on the next following Business Day. Any
orders received by the Company acting as agent on such day but
after the close of the Exchange will be executed by the Fund at
the net asset value determined as of the close of the Exchange on
the next Business Day following the day of receipt of such order,
provided that the Fund receives written (or facsimile) notice of
such order by 10 a.m. Eastern Standard Time within two Business
Days following the day of receipt of such order.
(d) Payments for net redemption's of shares of the Fund will be wired
by the Fund to an account designated by the Company. Payments for
net purchases of the Fund will be wired by the Company to an
account designated by the Fund on the same Business Day the
Company places an order to purchase Fund shares. Payments shall be
in federal funds transmitted by wire.
(e) Each party has the right to rely on information or confirmations
provided by the other party (or by any affiliate of the other
party), and shall not be liable in the event that an error is a
result of any misinformation supplied by the other party.
(f) The Company agrees to purchase and redeem the shares of the
Portfolios named in Schedule B offered by the then current
prospectus and statement of additional information of the Fund in
accordance with the provisions of such prospectus and statement of
additional information. The Company shall not permit any person
other than a Contract owner or Participant to give instructions to
the Company which would require the Company to redeem or
3
<PAGE>
exchange shares of the Fund. This provision shall not be construed
to prohibit the Company from substituting shares of another fund,
as permitted by law.
(g) Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to the Company or the
Accounts. Shares ordered from the Fund will be recorded in the
appropriate tittle for each Account or the appropriate subaccount
of each Account.
3. Expenses.
(a) Except as otherwise provided in this Agreement, all expenses
incident to the performance by the Fund under this Agreement shall
be paid by the Fund, including the cost of registration of Fund
shares with the Securities and Exchange Commission (the "SEC") and
in states where required. The Fund and Adviser shall pay no fee or
other compensation to the Company under this Agreement, and the
Company shall pay no fee or other compensation to the Fund or
Adviser, except as provided herein and in Schedule C attached
hereto and made a part of this Agreement as may be amended from
time to time with the mutual consent of the parties hereto. All
expenses incident to performance by each party of its respective
duties under this Agreement shall be paid by that party, unless
otherwise specified in this Agreement.
(b) The Fund or the Adviser shall provide to the Company Post Script
files of periodic fund reports to shareholders and other materials
that are required by law to be sent to Contract Owners. In
addition, the Fund or the Adviser shall provide the Company with a
sufficient quantity of its prospectuses, statements of additional
information and any supplements to any of these materials, to be
used in connection with the offerings and transactions
contemplated by this Agreement. In addition, the Fund shall
provide the Company with a sufficient quantity of its proxy
material that is required to be sent to Contract Owners. The
Company shall be responsible for delivering such materials to
Contract Owners in accordance with federal and state law, provided
the Fund or Adviser provides such materials to the Company on a
timely basis. The Adviser shall be permitted to review and approve
the typeset form of such material prior to such printing provided
such material has been provided by the Adviser to the Company
within a reasonable period of time prior to typesetting and
further provided that the Company's procedures provide for a
reasonable amount of time for the Adviser to provide such
materials. The Company shall be responsible for conforming
information in the typeset form to the information provided in the
post script files.
(c) In lieu of the Fund's or Adviser's providing printed copies of
prospectuses, statements of additional information and any
supplements to any of these materials, and periodic fund reports
to shareholders, the Company shall have the right to request that
the Fund transmit a copy of such materials in an
4
<PAGE>
electronic format (Post Script files), which the Company may use
to have such materials printed together with similar materials of
other Account funding media that the Company or any distributor
will distribute to existing or prospective Contract Owners or
Participants subject to the conditions set forth in (b) above.
4. Representations.
The Company agrees that it and its agents shall not, without the written
consent of the Fund or the Adviser, make representations concerning the Fund, or
its shares except those contained in the then current prospectuses and in
current printed sales literature approved by (or deemed approved by failure to
request changes within the expected time frame or because a form of such
materials has been approved or deemed approved) the Fund or the Adviser.
5. Termination.
This agreement shall terminate as to the sale and issuance of new
Contracts:
(a) at the option of either the Company, the Adviser or the Fund, upon
sixty days advance written notice to the other parties;
(b) at the option of the Company, upon one week advance written notice
to the Adviser and the Fund, if Fund shares are not available for
any reason to meet the requirement of Contracts as determined by
the Company. Reasonable advance notice of election to terminate
shall be furnished by Company;
(c) at the option of either the Company, the Adviser or the Fund,
immediately upon institution of formal proceedings against the
broker-dealer or broker-dealers marketing the Contracts, the
Account, the Company, the Fund or the Adviser by the National
Association of Securities Dealers, Inc. (the "NASD"), the SEC or
any other regulatory body;
(d) upon the determination of the Accounts to substitute for the
Fund's shares the shares of another investment company in
accordance with the terms of the applicable Contracts. The Company
will give 60 days written notice to the Fund and the Adviser of
any decision to replace the Fund's' shares;
(e) upon "assignment" of this Agreement as that term is defined in the
1940 Act, unless made with the written consent of all other
parties hereto;
(f) if Fund shares are not registered, issued or sold in conformance
with Federal law or such law precludes the use of Fund shares as
an underlying investment medium for Contracts issued or to be
issued by the Company. Prompt notice shall be given by the
appropriate party should such situation occur.
5
<PAGE>
6. Continuation of Agreement.
Termination as the result of any cause listed in Section 5 shall not
affect the Fund's obligation to furnish its shares to Contracts then in force
for which its shares serve or may serve as the underlying medium unless such
further sale of Fund shares is prohibited by law or the SEC or other regulatory
body, or is determined by the Fund's Board to be necessary in the best interests
of the shareholders of any Portfolio.
7. Advertising Materials; Filed Documents.
(a) Advertising and sales literature with respect to the Fund prepared
by the Company or its agents for use in marketing its Contracts
will be submitted to the Fund or its designee for review before
such material is submitted to any regulatory body for review. No
such material shall be used if the Fund or its designee reasonably
object to such use in writing, transmitted by facsimile within
three Business Days after receipt of such material.
(b) The Fund will provide additional copies of its financials as soon
as available to the Company and at least one complete copy of all
registration statements, prospectuses, statements of additional
information, annual and semi-annual reports, proxy statements and
all amendments or supplements to any of the above that relate to
the Fund promptly after the filing of such document with the SEC
or other regulatory authorities. At the Adviser's request, the
Company will provide to the Adviser at least one complete copy of
all registration statements, prospectuses, statements of
additional information, annual and semi-annual reports, proxy
statements, and all amendments or supplements to any of the above
that relate to the Account promptly after the filing of such
document with the SEC or other regulatory authority. The Fund and
Adviser will not be responsible for any information contained in
such materials that they have been given an opportunity to review
before filing.
(c) The Fund or the Adviser will provide via Excel spreadsheet
diskette format or in electronic transmission or other mutually
agreeable format to the Company at least quarterly, portfolio
information necessary to update Fund profiles within ten Business
Days following the end of each quarter.
(d) The Fund will reimburse the Company for any incorrect information
provided to the Company under this Section as provided for in
Schedule C.
8. Proxy Voting.
(a) The Company shall provide pass-through voting privileges on Fund
shares held by registered separate accounts to all Contract
Owner's and Participant's to the extent the SEC continues to
interpret the 1940 Act as requiring such
6
<PAGE>
privileges. The Company shall provide pass-through voting
privileges on Fund shares held by unregistered separate accounts
to all Contract Owner's.
(b) The Company will distribute to Contract Owner's and Participant's,
as appropriate, all proxy material furnished by the Fund and will
vote Fund shares in accordance with instructions received from
such Contract Owner's and Participant's. If and to the extent
required by law, the Company, with respect to each group Contract
and in each Account, shall vote Fund shares for which no
instructions have been received in the same proportion as shares
for which such instructions have been received. The Company and
its agents shall not oppose or interfere with the solicitation of
proxies for Fund shares held for such Contract Owner's and
Participant's.
9. Indemnification.
(a) The Company agrees to indemnify and hold harmless the Fund and the
Adviser, and their trustees, directors, officers, employees,
agents and each person, if any, who controls the Fund or its
Adviser within the meaning of the Securities Act of 1933 (the
"1933 Act") against any losses, claims, damages or liabilities to
which the Fund or Adviser or any such trustee, director, officer,
employee, agent, or controlling person may become subject, under
the 1933 Act or otherwise, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) (i) arise
out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration
Statement, prospectus or sales literature of the Company or arise
out of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii)
arise out of or as a result of conduct, statements or
representations (other than statements or representations
contained in the prospectuses or sales literature of the Fund) of
the Company or its agents, with respect to the sale and
distribution of Contracts for which Fund shares are the underlying
investment (iii) arise out of or result from any failure by the
Company to provide the services or furnish the materials required
under the terms of this Agreement; or (iv) arise out of or result
from any material breach of any representation and/or warranty
made by the Company in the Agreement or arise out of or result
from any other material breach of this Agreement by the Company.
The Company will reimburse any legal or other expenses reasonably
incurred by the Fund or Adviser or any such trustee, director,
officer, employee, agent, investment adviser, or controlling
person in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that
the Company will not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or omission or alleged omission
made in such Registration Statement or prospectus in conformity
with written materials furnished to the Company by the Fund
specifically for use therein.
7
<PAGE>
(b) The Fund and the Adviser agree to indemnify and hold harmless the
Company and its directors, officers, employees, agents and each
person, if any, who controls the Company within the meaning of the
1933 Act against any losses, claims, damages or liabilities to
which the Company or any such director, officer, employee, agent
or controlling person may become subject, under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) (i) arise out of or are based upon
any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, prospectuses or
sales literature of the Fund or Adviser or arise out of or are
based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or material fact
required to be stated therein or necessary to make the statements
therein not misleading, (ii) arise out of or result from any
failure by the Fund and/or Adviser to provide the services or
furnish the materials required under the terms of this Agreement;
or (iii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund and/or Adviser in
the Agreement or arise out of or result from any other material
breach of this Agreement by the Fund and/or Adviser. The Fund will
reimburse any legal or other expenses reasonably incurred by the
Company or any such director, officer, employee, agent, or
controlling person in connection with investigating or defending
any such loss, claim, damage, liability or action; provided,
however, that the Fund will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or omission or alleged
omission made in such Registration Statement or prospectuses which
are in conformity with written materials furnished to the Fund by
the Company specifically for use therein.
(c) Promptly after receipt by an indemnified party hereunder of notice
of the commencement of action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying
party hereunder, notify the indemnifying party of the commencement
thereof; but the omission to so notify the indemnifying party will
not relieve it from any liability which it may have to any
indemnified party otherwise than under this Section 10. In case
any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to
the extent that it may wish to, assume the defense thereof, with
counsel satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of its
election to assume the defense thereof, the indemnifying party
will not be liable to such indemnified party under this Section 9
for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other
than reasonable costs of investigation.
10. Potential Conflicts.
8
<PAGE>
(a) The Company has received a copy of an application for exemptive
relief, as amended, filed by the Fund 5/21/93 on and on 12/9/93
with the SEC and the order issued by the SEC dated 3/2/94 (File
No. 812-8408) in response thereto (the "Shared Funding Exemptive
Order"). The Company has reviewed the conditions to the requested
relief set forth in such application for exemptive relief. As set
forth in such application, the Board of Trustees of Fund (the
"Board") will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the Contract
Owners of all separate accounts ("Participating Companies")
investing in the Fund. An irreconcilable material conflict may
arise for a variety of reasons, including: (i) an action by any
state insurance regulatory authority; (ii) a change in applicable
federal or state insurance, tax, or securities laws or
regulations, or a public ruling, private letter ruling, no-action
or interpretative letter, or any similar actions by insurance, tax
or securities regulatory authorities; (iii) an administrative or
judicial decision in any relevant proceeding; (iv) the manner in
which the investments of any portfolio are being managed; (v) a
difference in voting instructions given by variable annuity
Contract Owners and variable life insurance Contract Owners; or
(vi) a decision by an insurer to disregard the voting instructions
of Contract Owners. The Board shall promptly inform the Company if
it determines that an irreconcilable material conflict exists and
the implications thereof.
(b) The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board
in carrying out its responsibilities under the Shared Funding
Exemptive Order by providing the Board with all information
reasonably necessary for the Board to consider any issues raised.
This includes, but is not limited to, an obligation by the Company
to inform the Board whenever Contract Owner voting instructions
are disregarded.
(c) If a majority of the Board, or a majority of its disinterested
Board members, determines that a material irreconcilable conflict
exists with regard to Contract Owner investments in a Fund, the
Board shall give prompt notice to all Participating Companies and
the Company shall, in cooperation with other Participating
Companies whose Contract Owners are affected, and to the extent
reasonably practicable (as determined by a majority of the
disinterested Board members), take such action as is necessary to
remedy or eliminate the irreconcilable material conflict. Such
necessary action may include but shall not be limited to:
(i) withdrawing the assets allocable to the Account from the Fund
and reinvesting such assets in a different investment medium
or submitting the question of whether such segregation should
be implemented to a vote of all affected Contract Owners and
as appropriate, segregating the assets of
9
<PAGE>
any appropriate group (i.e., annuity Contract Owners, life
insurance Contract Owners, or variable Contract Owners of
one or more Participating Companies) that votes in favor of
such segregation, or offering to the affected Contract
Owners the option of making such a change; and/or
(ii) establishing a new registered management investment company
or managed separate account.
(d) If a material irreconcilable conflict arises as a result of a
decision by the Company to disregard its Contract Owner voting
instructions and said decision represents a minority position or
would preclude a majority vote by all of its Contract Owners
having an interest in the Fund, the Company at its sole cost, may
be required, at the Board's election, to withdraw an Account's
investment in the Fund and terminate this Agreement; provided,
however, that such withdrawal and termination shall be limited to
the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members
of the Board.
(e) For the purpose of this Section 10, a majority of the
disinterested Board members shall determine whether or not any
proposed action adequately remedies any irreconcilable material
conflict, but in no event will the Fund be required to establish a
new funding medium for any Contract. The Company shall not be
required by this Section 11 to establish a new funding medium for
any Contract if an offer to do so has been declined by vote of a
majority of the Contract Owners or Participants materially
adversely affected by the irreconcilable material conflict.
(f) If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any
provision of the 1940 Act or the rules promulgated thereunder with
respect to mixed or shared funding (as defined in the Exemptive
Order, then the Fund and/or the Participating Insurance Companies,
as appropriate, shall take such steps as may be necessary to
comply with Rules 6e-2 and 63-3(T), as amended, and Rule 6e-3, as
adopted, to the extent such rules are applicable.
11. Miscellaneous.
(a) Amendment and Waiver. Neither this Agreement, nor any provision
hereof, may be amended, waived, discharged or terminated orally,
but only by an instrument in writing signed by all parties hereto.
10
<PAGE>
(b) Notices. All notices and other communications hereunder shall be
given or made in writing and shall be delivered personally, or
sent by telex, telecopier or registered or certified mail, postage
prepaid, return receipt requested, to the party or parties to whom
they are directed at the following addresses, or at such other
addresses as may be designated by notice from such party to all
other parties.
To the Company:
Aetna Insurance Company of America
151 Farmington Avenue
Hartford, Connecticut 06156
Attention: Julie E. Rockmore, Counsel
To the Fund:
Janus Aspen Series
100 Fillmore Street
Denver, Colorado 80203
Attention: General Counsel
To the Advisor:
Janus Capital Corporation
100 Fillmore Street
Denver, Colorado 80203
Attention: General Counsel
Any notice, demand or other communication given in a manner prescribed in
this subsection (b) shall be deemed to have been delivered on receipt.
(c) Successors and Assigns. This agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
permitted successors and assigns.
(d) Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one
agreement, and any party hereto may execute this Agreement by
signing any such counterpart.
(e) Severability. In case any one or more of the provisions contained
in this Agreement should be invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be
affected or impaired thereby.
11
<PAGE>
(f) Entire Agreement. This Agreement constitutes the entire agreement
and understanding between the parties hereto and supersedes all
prior agreement and understandings relating to the subject matter
hereof.
(g) Governing Law. This Agreement shall be governed and interpreted in
accordance with the laws of the State of Connecticut.
(h) It is understood by the parties that this Agreement is not an
exclusive arrangement in any respect.
(i) The terms of this Agreement and the Schedules thereto will be held
confidential by each party except to the extent that either party
or its counsel may deem it necessary to disclose such terms.
(j) Each party shall cooperate with each other party and all
appropriate governmental authorities (including without limitation
the Securities and Exchange Commission, the National Association
of Securities Dealers, Inc., and state insurance regulators) and
shall permit such authorities reasonable access to its books and
records in connection with any investigation or inquiry relating
to this Agreement or the transactions contemplated hereby.
(k) The Company agrees and acknowledges that the Adviser is the sole
owner of the name and mark "Janus" and that all use of any
designation comprised in whole or part of Janus (a "Janus Mark")
under this Agreement shall inure to the benefit of Janus Capital.
. Any use of a Janus Mark by the Company must be in a form
approved by the Adviser. Upon termination of this Agreement for
any reason, the Company shall cease all use of any Janus Mark(s)
as soon as reasonably practicable.
12. Limitation on Liability of Trustees, etc.
This agreement has been executed on behalf of the Fund by the undersigned
officer of the Fund in his or her capacity as an officer of the Fund. The
obligations of this agreement shall be binding upon the assets and property of
the Fund only and shall not be binding on any Trustee, officer or shareholder of
the Fund individually.
12
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement by their
duly authorized officers effective as of the 8th day of December, 1997.
AETNA INSURANCE COMPANY OF AMERICA
By: /s/ Shaun P. Mathews
-----------------------------------------
Name: Shaun P. Mathews
-----------------------------------------
Title: Vice President
-----------------------------------------
Date: 12/8/97
-----------------------------------------
JANUS ASPEN SERIES
By: /s/ Bonnie Howe
-----------------------------------------
Name: Bonnie M. Howe
-----------------------------------------
Title: Assistant Vice President
-----------------------------------------
Date: 12/2/97
-----------------------------------------
JANUS CAPITAL CORPORATION
By: /s/ Stephen L. Stieneker
-----------------------------------------
Name: Stephen L. Stieneker
-----------------------------------------
Title: Vice President
-----------------------------------------
Date: 12/2/97
-----------------------------------------
13
<PAGE>
Schedule A
14
<PAGE>
Schedule B
Janus Aspen Aggressive Growth
Janus Aspen Growth
Janus Aspen Worldwide Growth
Jaspen Aspen Balanced
Janus Aspen Flexible Income
Janus Aspen Short-Term Bond
15
<PAGE>
Schedule C
The following costs, expenses and reimbursements will be paid by the party
indicated:
1. For purposes of Sections 2 and 7, the Fund or the Adviser shall be liable
to the Company for systems and out of pocket costs incurred by the Company
in making a Contract owner's or a participant's account whole, if such
costs or expenses are a result of the Fund's failure to provide timely or
correct (as determined by the Fund) net asset values, dividend and capital
gains or financial information and if such information is not corrected by
4pm EST of the next business day after releasing such incorrect information
provided the incorrect NAV as well as the correct NAV for each day that the
error occurred is provided. If a mistake is caused in supplying such
information or confirmations, which results in a reconciliation with
incorrect information, the amount required to make a Contract Owner's or a
Participant's account whole shall be borne by the party providing the
incorrect information, regardless of when the error is corrected.
2. For purposes of Section 3, the Fund or the Adviser shall pay for the cost
of typesetting, printing and distributing periodic fund reports to
shareholders, prospectuses, prospectus supplements, statements of
additional information, proxy materials and other materials that are
required by law to be sent to existing Contract Owners or Participants and
the Company shall pay for the cost of printing such materials for
prospective Contract Owners or Participants and the cost of distributing
such materials. Each party shall be provided with such supporting data as
may reasonably be requested for determining expenses under this Section.
3. The Fund shall pay all expenses in connection with the provision to the
Company of a sufficient quantity of Fund initiated proxy material under
Section 2. The cost associated with proxy preparation, group authorization
letters, programming for tabulation and necessary materials (including
postage) will be paid by the Fund.
Dated this 8th day of December, 1997.
AETNA INSURANCE COMPANY OF AMERICA
By: /s/ Shaun P. Mathews
-----------------------------------------
Name: Shaun P. Mathews
-----------------------------------------
Title: Vice President
-----------------------------------------
JANUS ASPEN SERIES
By: /s/ Bonnie Howe
-----------------------------------------
Name: Bonnie M. Howe
-----------------------------------------
Title: Assistant Vice President
-----------------------------------------
16
<PAGE>
JANUS CAPITAL CORPORATION
By: /s/ Stephen L. Stieneker
-----------------------------------------
Name: Stephen L. Stieneker
-----------------------------------------
Title: Vice President
-----------------------------------------
17
AMENDMENT TO FUND PARTICIPATION AGREEMENT
This Amendment is made as of October 12, 1998, by and among JANUS ASPEN
SERIES (the "Fund"), AETNA INSURANCE COMPANY OF AMERICA (the "Company") and
JANUS CAPITAL CORPORATION (the "Adviser").
BACKGROUND
A. The Fund, the Company and the Adviser are parties to a Fund
Participation Agreement dated December 8, 1997 (the "Agreement").
B. The parties wish to amend the Agreement as follows:
AMENDMENT
For good and valuable consideration, the receipt of which is
acknowledged, the parties agree:
1. That the first paragraph of 1. (a) Establishment of Accounts;
Availability of Fund. shall be deleted in its entirety and replaced with the
following:
The Company represents that it has established Variable
Annuity Accounts I and II and may establish such other accounts as
may be set forth in Schedule A attached hereto and as may be
amended from time to time with the mutual consent of the parties
hereto (the "Accounts"), each of which is a separate account under
Connecticut Insurance law, and (1) has been registered or, will be
registered as a unit investment trust in accordance with the
provisions of the Investment Company Act of 1940 (the "1940 Act")
or, alternatively (2) has not been registered in proper reliance
upon the exclusion from registration under Section 3(c)(11) of the
1940 Act, to serve as an investment vehicle for the Contracts.
Each Contract provides for the allocation of net amounts received
by the Company to an Account for investment in the shares of one
or more specified open-end management investment companies
available through that Account as underlying investment media.
Selection of a particular investment management company and
changes therein from time to time are made by the participant or
Contract owner (hereinafter "Participant" or "Contract Owner"), as
available under a particular Contract.
<PAGE>
2. The Agreement, as modified by this Amendment, is ratified and
confirmed.
AETNA INSURANCE COMPANY JANUS ASPEN SERIES
OF AMERICA
By: /s/ Laurie M. LeBlanc By: /s/ Bonnie Howe
--------------------------------- ----------------------------
Name: Laurie M. LeBlanc Bonnie M. Howe
Title: For Shaun Mathews, Senior Assistant Vice President
Vice President pursuant to
delegation of authority
JANUS CAPITAL CORPORATION
By: /s/ Bonnie Howe
-------------------------
Bonnie M. Howe
Assistant Vice President
2
SERVICE AGREEMENT
WITH
INVESTMENT ADVISER
AGREEMENT, effective as of December 8, 1997, between Janus Capital
Corporation (the "Adviser"), a Colorado corporation, and Aetna Insurance Company
of America (the "Company"), a Connecticut corporation, for the provision of
described administrative services by the Company in connection with the sale of
shares of Janus Aspen Series (the "Fund") as described in the Fund Participation
Agreement dated December 8, 1997 between the Company, the Fund and the Adviser
(the "Fund Participation Agreement").
In consideration of their mutual promises, the Adviser and the Company agree as
follows:
1. The Company agrees to provide the following services to the Adviser and
the Fund:
a. responding to inquiries from owners of or Participants in the
Company variable annuity contracts and variable life insurance
policies using the Funds as an investment vehicle ("Contract
Owners") regarding the services performed by the Company that
relate to the Funds;
b. providing information to Adviser and Contract Owners with respect
to Fund shares attributable to Contract Owner accounts;
c. communicating directly with Contract Owners concerning the Funds'
operations;
d. providing such other similar services as Adviser may reasonably
request pursuant to Adviser's agreement with the Funds to the
extent permitted under applicable federal and state requirements.
2. (a) Administrative services to Contract Owners and Participants shall
be the responsibility of the Company and shall not be the
responsibility of the Fund or the Adviser. The Adviser recognizes
the Company as the sole shareholder of Fund shares issued under
the Fund Participation Agreement, and that substantial savings
will be derived in administrative expenses, such as significant
reductions in postage expense and shareholder communications, by
virtue of having a sole shareholder for each of the Accounts
rather than multiple shareholders. In consideration of the savings
resulting from such arrangement, and to compensate the Company for
its costs, the Adviser agrees to pay to the Company and the
Company agrees to accept as full compensation for all services
rendered hereunder an amount described in Schedule A attached
hereto and made a part of this Agreement as may be amended from
time to time with the mutual consent of the parties hereto.
<PAGE>
(b) The Company represents and warrants that the Adviser's payments to
the Company are for administrative services only and do not
constitute payment in any manner for investment advisory services
or for costs of distribution.
(c) For the purposes of computing the administrative fee reimbursement
contemplated by this Section 2, the average aggregate amount
invested by the Company over a one month period shall be computed
by totaling the Company's aggregate investment (share net asset
value multiplied by total number of shares held by the Company) on
each business day during the month and dividing by the total
number of business days during each month.
(d) The Adviser will calculate the reimbursement of administrative
expenses at the end of each month and will make such reimbursement
to the Company within 30 days thereafter. The reimbursement
payment will be accompanied by a statement showing the calculation
of the monthly amounts payable by the Adviser and such other
supporting data as may be reasonably requested by the Company.
Payment will be wired by the Adviser to an account designated by
the Company.
3. (a) The Company represents and warrants that: (1) it and its employees
meet and it will use its best efforts to assure that its agents
meet the requirements of applicable law, including but not limited
to federal and state securities law and state insurance law, for
the performance of services contemplated herein; (2) the fee
provided herein does not include any payment to the Company that
is prohibited under the Employee Retirement Income Securities Act
of 1974 ("ERISA") with respect to any assets of a Contract Owner
invested in a Contract using the Funds as investment vehicles; and
(3) the Company is (i) registered as a broker-dealer (ii) has
entered into arrangements with an affiliate to act as its
broker-dealer, or (iii) is not required to be registered as a
broker-dealer pursuant to the Securities Exchange Act of 1934 (the
"Exchange Act") or any applicable state securities laws in order
to enter into and perform the services set forth in this
Agreement.
(b) The Company represents, warrants and agrees that, if required by
applicable law, as determined solely in discretion of the Company,
the Company will disclose to each Contract Owner the existence of
the fee received by the Company pursuant to this Agreement in a
form consistent with the requirements of applicable law.
4. The Company agrees to indemnify and hold harmless the Adviser and its
directors, officers, and employees from any and all loss, liability and
expense resulting from any gross negligence or willful wrongful act of
the Company or its employees or agents under this Agreement or a breach
of a material provision of this Agreement,
2
<PAGE>
except to the extent such loss, liability or expense is the result of
the Adviser's misfeasance, bad faith or gross negligence in the
performance of its duties.
5. The Adviser agrees to indemnify and hold harmless the Company and its
directors, officers, and employees from any and all loss, liability and
expense resulting from any gross negligence or willful wrongful act of
the Adviser or its employees or agents under this Agreement or a breach
of a material provision under this Agreement, except to the extent such
loss, liability or expense is the result of the Company's own
misfeasance, bad faith or gross negligence in the performance of its
duties.
6. Either party may terminate this Agreement, without penalty, (i) on sixty
(60) days written notice to the other party, for any cause or without
cause, or (ii) on reasonable notice to the other party, if it is not
permissible to continue the arrangement described herein under laws,
rules or regulations applicable to either party or the Fund, or if the
Participation Agreement is terminated.
This Agreement may not be assigned (as that term is defined in the 1940
Act) by either party without the prior written approval of the other
party, which approval will not be unreasonably withheld, except that the
Adviser may assign its obligations under this Agreement, including the
payment of all or any portion of the fee, to the Fund upon one hundred
and twenty (120) days' written notice to the Company if legally
permissible to do so and provided Fund and/or Adviser agree to pay for
any costs or expenses incurred with such charge (e.g. prospectuses, etc.)
unless such change is able to be made in the ordinary course of updating
the prospectus for its annual update.)
7. The terms of this arrangement will be held confidential by each party
except to the extent that either party or its counsel may deem it
necessary under applicable law to disclose this arrangement.
8. This Agreement together with the Fund Participation Agreement represents
the entire Agreement of the parties on the subject matter hereof and it
cannot be amended or modified except in writing, signed by the parties.
This Agreement may be executed in one or more separate counterparts, all
of which, when taken together, shall constitute one and the same
Agreement.
9. All notices and other communications hereunder shall be given or made in
writing and shall be delivered personally, or sent by telex, telecopier
or registered or certified mail, postage prepaid, return receipt
requested, to the party to whom they are directed at the following
addresses, or at such other addresses as may be designated by notice from
such party to the other party.
3
<PAGE>
To Aetna:
Aetna Insurance Company of America
151 Farmington Avenue
Hartford, Connecticut 06156
Attention: Julie E. Rockmore, Counsel
To Adviser:
Janus Capital Corporation
100 Fillmore Street
Denver, Colorado 80206
Attention: General Counsel
Any notice, demand or other communication given in a manner prescribed in this
Section 9 shall be deemed to have been delivered on receipt.
IN WITNESS WHEREOF, the parties to this Agreement have caused this Agreement to
be executed by their authorized officers as of the day and year first above
written.
JANUS CAPITAL CORPORATION
By: /s/ Stephen L. Stieneker
-----------------------------
Date: 12/2/97
-----------------------------
AETNA INSURANCE COMPANY OF AMERICA
By: /s/ Shaun P. Mathews
-----------------------------
Date: 12/8/97
-----------------------------
4
<PAGE>
Schedule A
In consideration of the services provided by the Company, the Adviser agrees to
pay the Company an amount equal to 20 basis points (0.20%) per annum on the
first $500 million of the average aggregate amount invested by the Company in
the Fund under the Fund Participation Agreement, and 25 basis points (0.25%) per
annum on the total average aggregate amount invested by the Company in the Fund
under the Fund Participation Agreement, in excess of $500 million after the
total aggregate assets invested by the Company in the Fund exceeds $1.25
billion.
Dated this 8th day of December, 1997.
JANUS CAPITAL CORPORATION
By: /s/ Stephen L. Stieneker
-----------------------------
Date: 12/2/97
-----------------------------
AETNA INSURANCE COMPANY OF AMERICA
By: /s/ Shaun P. Mathews
-----------------------------
Date: 12/8/97
-----------------------------
5
Consent of Independent Auditors
The Board of Directors of Aetna Insurance Company of America
and Contractholders of Aetna Variable Annuity Account I:
We consent to the use in this prospectus constituting part of this Registration
Statement on Form N-4 (File No. 811-8582) of our report dated February 26, 1999,
relating to the financial statements of the Aetna Variable Annuity Account I and
our report dated March 24, 1999 relating to the consolidated financial
statements of Aetna Insurance Company of America, which are included in such
Registration Statement.
We consent to the references to our firm under the heading "Independent
Auditors" in the statement of additional information.
/s/ KPMG LLP
Hartford, Connecticut
September 15, 1999
