As filed with the Securities and Exchange Commission on April 23,1999
File No. 33-81626
File No. 811-8628
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
---
Post-Effective Amendment No. 10 [X]
----
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 13
----
CITICORP LIFE VARIABLE ANNUITY SEPARATE ACCOUNT
(Exact Name of Registrant)
CITICORP LIFE INSURANCE COMPANY
(Name of Depositor)
800 Silver Lake Boulevard
Dover, DE 19904
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number: (302) 672-5000
Catherine S. Mulholland, Esq.
General Counsel
Citicorp Life Insurance Company
800 Silver Lake Boulevard
Dover, Delaware 19904
(Name and Address of Agent for Service of Process)
Copy to:
Stephen E. Roth, Esquire
Sutherland Asbill & Brennan LLP
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2415
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of the registration statement.
<PAGE>
It is proposed that this filling will become effective:
[ ] immediately upon filing pursuant to paragraph (b)
[X] on MAY 1, 1999 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i) [ ]
on ________________ pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on ________________ pursuant to paragraph (a)(ii) of Rule 485
If appropriate, check the following box:
[X] this Post-Effective Amendment designates a new effective date for a
previously filed Post-Effective Amendment.
Title of Securities Being Registered: Flexible Premium Deferred Variable
Annuity Contracts
<PAGE>
PART A
PROSPECTUS
<PAGE>
SUPPLEMENT DATED MAY 1, 1999 TO
PROSPECTUS DATED MAY 1, 1999
Citicorp Life Variable Annuity Separate Account
Citicorp Life Insurance Company
Flexible Premium Deferred Variable Annuity Contract
Your flexible premium deferred variable annuity contract (the "Contract") has
been issued with a Guaranteed Minimum Income Benefit option (the "rider"). This
rider guarantees that a minimum amount will be paid to you if you elect a lump
sum distribution or a fixed annuity income option on the ANNUITY INCOME DATE, so
long as you meet certain conditions. If you elect a fixed annuity income option
with a life annuity feature, we guarantee you will receive minimum annuity
income payments with an effective annual interest rate of at least 4.25%
credited daily. This rate is greater than the 3.0% guaranteed annual interest
rate shown in the Contract. In addition, each PURCHASE PAYMENT may be as little
as $150 ($100 for QUALIFIED CONTRACTS).
We offer only certain SUBACCOUNTS for investment under this rider, and we charge
an additional annual charge of 0.50% of the average daily net assets against the
amount invested in those SUBACCOUNTS. As a result, the total expenses paid will
be higher, and the investment performance of SUBACCOUNTS under the rider will be
lower than if you did not own the rider.
The tables below supplement the prospectus dated May 1, 1999 for Contracts with
the Guaranteed Minimum Income Benefit option and should be read together with
the prospectus. For more information about the Guaranteed Minimum Income Benefit
option, Please see your rider.
The following table of "Separate Account Annual Expenses" applies to purchase
payments applied under the Guaranteed Minimum Income Benefit option only.
- ------------------------------------------------------------------------------
Separate Account Annual Expenses (as a percentage of average net assets)
Mortality and Expense Risk Charge 0.84%
Administration Charge 0.15%
Guaranteed Minimum Income Benefit Charge 0.50%
-----
Total Separate Account Expenses 1.49%
- ------------------------------------------------------------------------------
The following table of "Examples" applies to purchase payments applied under the
Guaranteed Minimum Income Benefit option only.
EXAMPLES: If you elect the Guaranteed Minimum Income Benefit option, you will
pay the following expenses on a $1,000 investment. We assume a 5% annual return
on assets.
If, at the end of the applicable time period, you surrender the Contract or
annuitize it under an ANNUITY INCOME OPTION that does not provide a life annuity
or a life annuity with a period certain of at least five years.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CitiSelect VIP Folio 400 Growth $90 $129 $170 $302
(formerly CitiSelect VIP Folio 400)
CitiSelect VIP Folio 500 Growth Plus $90 $129 $170 $302
(formerly CitiSelect VIP Folio 500)
CitiFunds Small Cap Growth VIP Portfolio $87 $119 $153 $268
Fidelity VIP Growth Portfolio $85 $112 $141 $244
Fidelity VIP Equity-Income Portfolio $84 $109 $136 $235
Fidelity VIP Overseas Portfolio $87 $118 $152 $267
Fidelity VIP II Contrafund Portfolio $85 $112 $141 $244
Fidelity VIP II Index 500 Portfolio $81 $100 $122 $206
AIM V.I. Capital Appreciation Fund $85 $112 $141 $245
AIM V.I. Growth Fund $85 $113 $144 $250
AIM V.I. Growth and Income Fund $84 $111 $140 $243
AIM V.I. International Equity Fund $87 $119 $153 $269
AIM V.I. Value Fund $85 $112 $141 $244
MFS Research Series $87 $117 $151 $264
MFS Emerging Growth Series $86 $117 $150 $263
</TABLE>
1
<PAGE>
If you don't surrender the Contract or you annuitize it under an ANNUITY
INCOME OPTION providing either a life annuity or a life annuity with a period
certain of at least five years at the end of the applicable time period.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CitiSelect VIP Folio 400 Growth $27 $84 $143 $302
(formerly CitiSelect(R) VIP Folio 400)
CitiSelect VIP Folio 500 Growth Plus $27 $84 $143 $302
(formerly CitiSelect(R) VIP Folio 500)
CitiFunds Small Cap Growth VIP Portfolio $24 $74 $126 $268
Fidelity VIP Growth Portfolio $22 $67 $114 $244
Fidelity VIP Equity-Income Portfolio $21 $64 $109 $235
Fidelity VIP Overseas Portfolio $24 $73 $125 $267
Fidelity VIP II Contrafund Portfolio $22 $67 $114 $244
Fidelity VIP II Index 500 Portfolio $18 $55 $ 95 $206
AIM V.I. Capital Appreciation Fund $22 $67 $114 $245
AIM V.I. Growth Fund $21 $68 $117 $250
AIM V.I. Growth and Income Fund $24 $66 $113 $243
AIM V.I. International Equity Fund $25 $74 $126 $269
AIM V.I. Value Fund $24 $67 $114 $244
MFS Research Series $24 $72 $124 $264
MFS Emerging Growth Series $23 $72 $123 $263
</TABLE>
Expenses deducted at both the Contract and Portfolio level, including the daily
charge equal to 0.50% per annum of the average daily net assets held under the
Guaranteed Minimum Income Benefit option, are reflected in the Examples. Premium
taxes are not. We may apply premium taxes ranging up to 3.5%, depending on the
laws of various jurisdictions. In addition, the Examples do not reflect any
transfer charges. The $30 Annual Contract Fee is reflected in the Examples by
dividing the total Annual Contract Fees collected during fiscal year 1998 by the
total of all Contract assets under management as of the end of fiscal year 1997.
This converts the Annual Contract Fee to a factor of $0.17 for purposes of the
examples based on a $1,000 investment.
THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. THE 5% ANNUAL RATE OF RETURN IS HYPOTHETICAL AND DOES NOT REPRESENT
PAST OR FUTURE ANNUAL RETURNS. ACTUAL RETURNS MAY BE GREATER OR LESS THAN THE 5%
ASSUMED RATE.
The following "Condensed Financial Information" applies to purchase payments
applied under the Guaranteed Minimum Income Benefit option only.
CONDENSED FINANCIAL INFORMATION
The following shows accumulation unit values and number of accumulation units
for subaccounts under the Guaranteed Minimum Income Benefit option for the
period from the date this option was first offered (December 10, 1997) through
December 31, 1998. This condensed financial information is derived from the
financial statements of the Separate Account and should be read in conjunction
with the financial statements, related notes and other financial information
contained in the Statement of Additional Information.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Subaccount Year Ending Period 12/10/97 to
12/31/98 12/10/97*
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CitiSelect VIP Folio 400 Growth
(formerly CitiSelect VIP Folio 400)
Unit Value Beginning of Period $1.08 $1.08
Unit Value End of Period $1.10 $1.08
Number of Accumulation Units Outstanding 370,583 281,111
- ---------------------------------------------------------------------------------------------------------------------------
CitiSelect VIP Folio 500 Growth Plus
(formerly CitiSelect VIP Folio 500)
Unit Value Beginning of Period $1.09 $1.10
Unit Value End of Period $1.09 $1.09
Number of Accumulation Units Outstanding 36,504 0
- ---------------------------------------------------------------------------------------------------------------------------
CitiFunds Small Cap Growth VIP Portfolio
Unit Value Beginning of Period $1.11 $1.10
Unit Value End of Period $1.05 $1.11
Number of Accumulation Units Outstanding 0 0
- ---------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio
Unit Value Beginning of Period $1.80 $1.18
Unit Value End of Period $2.47 $1.80
Number of Accumulation Units Outstanding 65,677 0
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Subaccount Year Ending Period 12/10/97 to
12/31/98 12/10/97*
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Fidelity Equity-Income Portfolio
Unit Value Beginning of Period $1.21 $1.21
Unit Value End of Period $1.33 $1.21
Number of Accumulation Units Outstanding 97,857 0
- ---------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Overseas Portfolio
Unit Value Beginning of Period $1.09 $1.09
Unit Value End of Period $1.20 $1.09
Number of Accumulation Units Outstanding 13,941 0
- ---------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Contrafund Portfolio
Unit Value Beginning of Period $1.21 $1.21
Unit Value End of Period $1.55 $1.21
Number of Accumulation Units Outstanding 149,140 0
- ---------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Index 500 Portfolio
Unit Value Beginning of Period $1.23 $1.23
Unit Value End of Period $1.56 $1.23
Number of Accumulation Units Outstanding 220,247 0
- ---------------------------------------------------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund
Unit Value Beginning of Period $1.67 $1.69
Unit Value End of Period $1.96 $1.67
Number of Accumulation Units Outstanding 52,223 0
- ---------------------------------------------------------------------------------------------------------------------------
AIM V.I. Growth Fund
Unit Value Beginning of Period $1.21 $1.22
Unit Value End of Period $1.56 $1.21
Number of Accumulation Units Outstanding 61,373 0
- ---------------------------------------------------------------------------------------------------------------------------
AIM V.I. Growth and Income Fund
Unit Value Beginning of Period $1.18 $1.19
Unit Value End of Period $1.49 $1.18
Number of Accumulation Units Outstanding 68,966 0
- ---------------------------------------------------------------------------------------------------------------------------
AIM V.I. International Equity Fund
Unit Value Beginning of Period $1.05 $1.06
Unit Value End of Period $1.19 $1.05
Number of Accumulation Units Outstanding 27,560 0
- ---------------------------------------------------------------------------------------------------------------------------
AIM V.I. Value Fund
Unit Value Beginning of Period $1.19 $1.20
Unit Value End of Period $1.55 $1.19
Number of Accumulation Units Outstanding 301,230 0
- ---------------------------------------------------------------------------------------------------------------------------
MFS Research Series
Unit Value Beginning of Period $1.15 $1.16
Unit Value End of Period $1.40 $1.15
Number of Accumulation Units Outstanding 18,119 0
- ---------------------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Series
Unit Value Beginning of Period $1.16 $1.18
Unit Value End of Period $1.54 $1.16
Number of Accumulation Units Outstanding 129,185 0
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
*As of 12/31/97, no purchase payments had been allocated to the subaccounts
investing in the CitiSelect VIP Folio 500 Growth Plus, CitiFunds Small Cap
Growth VIP Portfolio, Fidelity VIP Growth Portfolio, Fidelity VIP
Equity-Income Portfolio, Fidelity VIP Overseas Portfolio, Fidelity VIP II
Contrafund Portfolio, Fidelity VIP II Index 500 Portfolio, AIM V.I. Capital
Appreciation Fund, AIM V.I. Growth Fund, AIM V.I. International Equity Fund,
AIM V.I. Value Fund, AIM V.I. Growth and Income Fund, MFS Research Series or
MFS Emerging Growth Series under the Guaranteed Minimum Income Benefit option.
3
<PAGE>
SUPPLEMENT DATED MAY 1, 1999 TO
PROSPECTUS DATED MAY 1, 1999
Citicorp Life Variable Annuity Separate Account
Citicorp Life Insurance Company
Flexible Premium Deferred Variable Annuity Contract
For all Contracts applied for prior to February 1, 1999, the prospectus dated
May 1, 1999 is amended to reflect mortality and expense risk charges equal, on
an annual basis, to 0.84% of the average daily net assets of the Contract
invested in the INVESTMENT PORTFOLIOS. We may change this charge in the future
but it will never be greater than 1.25%.
* * * * *
The first paragraph in the section captioned "5. Charges and Deductions" (page
4) is revised as follows:
The Contract has insurance features and investment features and there are
costs related to each. Each year, we deduct a $30 contract fee from your
Contract. This charge is waived if the value of your Contract is at least
$25,000 or if you have added at least $2,500 ($2,000 for QUALIFIED
CONTRACTS) in additional PURCHASE PAYMENTS to your Contract during the last
12 months. We also deduct for insurance charges a total of 0.99% of the
average daily value of your contract allocated to the SUBACCOUNTS. We may
change this charge in the future but it will never be greater than 1.40%.
The Table of "Separate Account Annual Expenses" in the section captioned
"FEE TABLES" (page 5) is revised as follows:
- ----------------------------------------------------------------
SEPARATE ACCOUNT ANNUAL EXPENSES (as a percentage
of average net assets)
Mortality and Expense Risk Charge 0.84%
Administration Charge 0.15%
-----
Total Separate Account Expenses 0.99%
- ----------------------------------------------------------------
The paragraph titled "MORTALITY AND EXPENSE RISK CHARGE" in the section
captioned "SECTION 5. CHARGES AND DEDUCTIONS" (page 12) is replaced with the
following:
This charge is for all of the insurance benefits included under the
Contract such as the guaranteed minimum interest rate used to calculate
Fixed Annuity Income Payments, the guarantee that ANNUITY INCOME PAYMENTS
will continue for the life of the ANNUITANT, the guaranteed death benefits
and for the risk that the current charges will be insufficient to cover the
cost of administering the Contract in the future. If the charges under the
Contract are not sufficient, then we will bear the loss. Currently, the
Mortality and Expense Risk Charge is equal, on an annual basis, to 0.84% of
the average daily net assets of the Contract invested in the INVESTMENT
PORTFOLIOS. We may change this charge in the future but it will never be
greater than 1.25%.
The section captioned "Examples" (page 6) is replaced with the following:
EXAMPLES: You will pay the following expenses on a $1,000 investment, assuming a
5% annual return on assets:1
If you surrender or annuitize the Contract under an annuity income option
not providing a life annuity or a life annuity with a period certain of at least
five years at the end of the applicable time period.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CitiSelect VIP Folio 200 Conservative $82 $105 $130 $223
(formerly CitiSelect VIP Folio 200)
CitiSelect VIP Folio 300 Balanced $82 $105 $130 $223
(formerly CitiSelect VIP Folio 300)
CitiSelect VIP Folio 400 Growth $85 $114 $145 $253
(formerly CitiSelect VIP Folio 400)
CitiSelect VIP Folio 500 Growth Plus $85 $114 $145 $253
(formerly CitiSelect VIP Folio 500)
CitiFunds Small Cap Growth VIP Portfolio $82 $104 $128 $218
Fidelity VIP Growth Portfolio $80 $ 96 $116 $193
Fidelity VIP High Income Portfolio $80 $ 98 $118 $197
Fidelity VIP Equity-Income Portfolio $79 $ 94 $111 $183
Fidelity VIP Overseas Portfolio $82 $103 $127 $217
Fidelity VIP II Contrafund Portfolio $80 $ 96 $116 $193
Fidelity VIP II Index 500 Portfolio $76 $ 85 $ 96 $152
AIM V.I. Capital Appreciation Fund $80 $ 97 $116 $194
AIM V.I. Government Securities Fund $81 $ 99 $121 $203
AIM V.I. Growth Fund $80 $ 98 $119 $199
AIM V.I. Growth and Income Fund $80 $ 96 $115 $192
AIM V.I. International Equity Fund $82 $104 $128 $219
AIM V.I. Value Fund $80 $ 96 $116 $193
MFS Global Governments Series $83 $107 $133 $229
(formerly MFS World Governments Series)
MFS Money Market Series $79 $ 95 $114 $188
MFS Bond Series $83 $107 $134 $230
MFS Total Return Series $82 $104 $128 $219
MFS Research Series $82 $102 $126 $214
MFS Emerging Growth Series $81 $102 $125 $213
</TABLE>
1
<PAGE>
If you don't surrender the Contract or you annuitize it under an annuity
income option providing either a life annuity or a life annuity with a
period certain of at least five years at the end of the applicable time
period.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CitiSelect VIP Folio 200 Conservative $19 $60 $103 $223
(formerly CitiSelect VIP Folio 200)
CitiSelect VIP Folio 300 Balanced $19 $60 $103 $223
(formerly CitiSelect VIP Folio 300)
CitiSelect VIP Folio 400 Growth $22 $69 $118 $253
(formerly CitiSelect VIP Folio 400)
CitiSelect VIP Folio 500 Growth Plus $22 $69 $118 $253
(formerly CitiSelect VIP Folio 500)
Citifunds Small Cap Growth Vip Portfolio $19 $59 $101 $218
Fidelity VIP Growth Portfolio $17 $51 $ 89 $193
Fidelity VIP High Income Portfolio $17 $53 $ 91 $197
Fidelity VIP Equity-Income Portfolio $16 $49 $ 84 $183
Fidelity VIP Overseas Portfolio $19 $58 $100 $217
Fidelity VIP II Contrafund Portfolio $17 $51 $ 89 $193
Fidelity VIP II Index 500 Portfolio $13 $40 $ 69 $152
AIM V.I. Capital Appreciation Fund $17 $52 $ 89 $194
AIM V.I. Government Securities Fund $20 $54 $ 94 $203
AIM V.I. Growth Fund $16 $53 $ 92 $199
AIM V.I. Growth and Income Fund $19 $51 $ 88 $192
AIM V.I. International Equity Fund $20 $59 $101 $219
AIM V.I. Value Fund $19 $51 $ 89 $193
MFS Global Governments Series $20 $62 $106 $229
(formerly MFS World Governments Series)
MFS Money Market Series $16 $50 $ 87 $188
MFS Bond Series $20 $62 $107 $230
MFS Total Return Series $19 $59 $101 $219
MFS Research Series $19 $57 $ 99 $214
MFS Emerging Growth Series $18 $57 $ 98 $213
</TABLE>
FOOTNOTES TO EXAMPLES
The foregoing tables are intended to assist you in understanding the costs and
expenses that you will bear directly or indirectly. The tables reflect fiscal
year 1998 expenses for the SEPARATE ACCOUNT and fiscal year 1998 expenses for
the INVESTMENT PORTFOLIOS.
1. Premium taxes are not reflected in the Examples. We may apply premium taxes
ranging up to 3.5%, depending on the laws of various jurisdictions. In addition,
the Examples do not reflect any transfer charges. The $30 Annual Contract Fee is
reflected in the Examples by dividing the total Annual Contract Fees collected
during fiscal year 1998 by the total of all Contract assets under management as
of the end of fiscal year 1997. This converts the Annual Contract Fee to a
factor of $0.17 for purposes of the examples based on a $1,000 investment.
THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. THE 5% ANNUAL RATE OF RETURN IS HYPOTHETICAL AND DOES NOT REPRESENT
PAST OR FUTURE ANNUAL RETURNS. ACTUAL RETURNS MAY BE GREATER OR LESS THAN 5%
ASSUMED RATE.
2
<PAGE>
FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT
ISSUED BY
CITICORP LIFE INSURANCE COMPANY
PROSPECTUS
This Prospectus describes the flexible premium deferred variable annuity
contract (the "Contract") offered by Citicorp Life Insurance Company ("We,"
"us," "our" or "CLIC").
The Contract has 24 investment choices: a FIXED ACCOUNT and 23 SUBACCOUNTS,
which are divisions of the Citicorp Life Variable Annuity Separate Account. You
can put your money into the FIXED ACCOUNT and/or any of these SUBACCOUNTS. Money
directed to the FIXED ACCOUNT earns a declared interest rate which is guaranteed
by us. Money directed to any SUBACCOUNT is invested exclusively in a single
INVESTMENT PORTFOLIO. These 23 INVESTMENT PORTFOLIOS are professionally managed
and provide a broad range of investment strategies (growth and income,
aggressive growth, income, etc.), styles (growth, value, etc.) and asset classes
(stocks, bonds, international, etc.) and are listed below. Investments in the
INVESTMENT PORTFOLIOS are not guaranteed. You could lose money.
Please read this prospectus carefully and keep it for future reference. It
contains important information about the Citicorp Life Flexible Premium Variable
Annuity Contract that you ought to know before investing.
To learn more about the Contract, you can obtain a copy of the Statement of
Additional Information (SAI) dated the same date as this prospectus. The SAI has
been filed with the Securities and Exchange Commission (SEC) and is legally a
part of this prospectus. The SEC maintains a Web site (http://www.sec.gov) that
contains the SAI, material incorporated by reference and other information
regarding registrants that file electronically with the SEC. The SAI's table of
contents is on the last page of this prospectus. For a free copy of the SAI,
call us at (800) 497-4857 or write us at 800 Silver Lake Blvd., P.O. Box 7031,
Dover, DE 19903.
VARIABLE ANNUITY CONTRACTS ARE SUBJECT TO MARKET FLUCTUATION, REINVESTMENT RISK
AND POSSIBLE LOSS OF PRINCIPAL INVESTED. THE CONTRACTS ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION AND ARE
NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY.
MANAGED BY CITIBANK, N.A.
CitiSelect(R) VIP Folio 200 Conservative
(formerly CitiSelect(R) VIP Folio 200)
CitiSelect(R) VIP Folio 300 Balanced
(formerly CitiSelect(R) VIP Folio 300)
CitiSelect(R) VIP Folio 400 Growth
(formerly CitiSelect(R) VIP Folio 400)
CitiSelect(R) VIP Folio 500 Growth Plus
(formerly CitiSelect(R) VIP Folio 500)
CitiFundsSM Small Cap Growth VIP Portfolio
MANAGED BY FIDELITY MANAGEMENT & RESEARCH COMPANY
Fidelity VIP1 Growth Portfolio
Fidelity VIP1 High Income Portfolio
Fidelity VIP1 Equity-Income Portfolio
Fidelity VIP1 Overseas Portfolio
Fidelity VIP II2 Contrafund Portfolio
Fidelity VIP II2 Index 500 Portfolio
1 Variable Insurance Products Fund
2 Variable Insurance Products Fund II
MANAGED BY A I M ADVISORS, INC.
AIM V.I. Capital Appreciation Fund
AIM V.I. Government Securities Fund
AIM V.I. Growth Fund
AIM V.I. Growth and Income Fund
AIM V.I. International Equity Fund
AIM V.I. Value Fund
MANAGED BY MFS INVESTMENT MANAGEMENT(R)
MFS Global Governments Series
(formerly MFS World Governments Series)
MFS Money Market Series
MFS Bond Series
MFS Total Return Series
MFS Research Series
MFS Emerging Growth Series
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE
May 1, 1999
1
<PAGE>
TABLE OF CONTENTS
INDEX OF SPECIAL TERMS 2
SUMMARY 3
FEE TABLES 5
EXAMPLES 6
SECTION 1: THE ANNUITY CONTRACT 8
SECTION 2: ANNUITY PAYMENTS (THE INCOME PHASE) 8
Variable Annuity Income Payments 8
Fixed Annuity Income Payments 9
Annuity Income Options 9
SECTION 3: PURCHASE 9
Purchase Payments 9
Allocation of Purchase Payments 9
Free Look Period 9
Accumulation Units 10
SECTION 4: INVESTMENT OPTIONS 10
Transfers During the Accumulation Phase 11
Transfers During the Income Phase 11
Transfer Requests 11
Dollar-Cost Averaging Program 11
Voting Rights 11
Substitution 12
SECTION 5: CHARGES AND DEDUCTIONS 12
Insurance Charges 12
Annual Contract Fee 12
Surrender Charges 12
Surrender Processing Fee 13
Premium Taxes 13
Transfer Processing Fee 13
Investment Portfolio Expenses 13
SECTION 6: TAXES 13
Annuity Contracts in General 13
Qualified and Non-Qualified Contracts 13
Withdrawals-- Non-Qualified Contracts 13
Withdrawals-- Qualified Contracts 14
Diversification Requirements 14
Owner Control 14
Taxation of Death Benefit Proceeds 14
Transfers, Assignments or Exchanges of
a Contract 14
Withholding 14
Multiple Contracts 14
SECTION 7: ACCESS TO YOUR MONEY 14
Systematic Withdrawal Program 15
SECTION 8: PERFORMANCE 15
SECTION 9: DEATH BENEFITS 15
Upon Your Death 15
Death of the Annuitant 16
SECTION 10: OTHER INFORMATION 16
Citicorp Life Insurance Company 16
The Separate Account 16
Distribution 16
Ownership 16
Beneficiary 16
Suspension of Payment or Transfers 17
Modifications 17
Legal Proceedings 17
Financial Statements 17
Inquiries 17
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS 17
APPENDIX: Condensed Financial Information 19
INDEX OF SPECIAL TERMS
We have tried to make this prospectus as easy as possible for you to read and
understand. However, the nature of variable annuities requires us to use certain
technical words or terms. We have identified some of these, which are italicized
when they are used in the text. The page shown below is where we believe you
will find the best explanation for the word or term.
Accumulation Phase 8
Accumulation Unit 10
Annuitant 8
Annuity Income Date 8
Annuity Income Options 8
Annuity Income Payments 8
Annuity Unit 10
Beneficiary 16
Business Day 9
Contract Value 8
Contract Year 11
Fixed Account 8
Income Phase 8
Investment Portfolios 10
Joint Owner 8
Non-Qualified Contract 13
Notice To Us 11
Owner 16
Purchase Payment 9
Qualified Contract 13
Separate Account 16
Subaccount 8
Tax Deferral 13
2
<PAGE>
SUMMARY
THE SECTIONS IN THIS SUMMARY CORRESPOND TO SECTIONS IN THIS PROSPECTUS WHICH
DISCUSS THE TOPICS IN GREATER DETAIL.
1. THE ANNUITY CONTRACT: The variable annuity offered by Citicorp Life Insurance
Company ("We," "Our" and "Us") is a contract between you, the Owner, and us, an
insurance company. The Contract enables you to invest on a tax-deferred basis in
a FIXED ACCOUNT and 23 different SUBACCOUNTS. The Contract is intended for use
in making long term financial plans, including saving for retirement and estate
planning, and provides for a death benefit and guaranteed income options.
The FIXED ACCOUNT earns interest annually at a fixed rate that is guaranteed by
us never to be less than 3.0% and may be more. This rate is established
separately for each new PURCHASE PAYMENT or transfer you pay into the FIXED
ACCOUNT. Once established, a rate is guaranteed for 12 months. While money is in
the FIXED ACCOUNT, the interest earned as well as your principal is guaranteed
by us. Money directed to any of the 23 SUBACCOUNTS is, in turn invested
exclusively in a single INVESTMENT PORTFOLIO. The INVESTMENT PORTFOLIOS thus
available under the Contract are listed in Section 4. These portfolios are
designed and professionally managed and allow for a broad range of investment
strategies (growth and income, aggressive growth, income, etc.) styles, (growth,
value, etc.,) and asset classes (stocks, bonds, international, etc.). Amounts
invested in these portfolios will fluctuate daily based on the portfolio's
investment performance. Investments in these portfolios are NOT guaranteed and
may increase or decrease. You can also lose money.
You can put money into the FIXED ACCOUNT and any or all of the INVESTMENT
PORTFOLIOS by investing in the corresponding SUBACCOUNT. You can transfer your
money between the FIXED ACCOUNT and/or the SUBACCOUNTS, subject to certain
limitations which are explained elsewhere in this prospectus.
The Contract, like all deferred annuity contracts, has two phases: the
ACCUMULATION PHASE and the INCOME PHASE. During the ACCUMULATION PHASE, earnings
accumulate on a tax-deferred basis and are taxed as income only if you make a
withdrawal. The INCOME PHASE occurs when we begin making regular payments from
the Contract to you or some other person you name (the "ANNUITANT"). The amount
of money you are able to accumulate under the Contract during the ACCUMULATION
PHASE, as well as the manner in which payments are made, will determine the
amount of the payments made during the INCOME PHASE.
2. Annuity Payments (The INCOME PHASE): If you want regular income from your
annuity, paid either to you or some other person(s), you may choose one of
several ANNUITY INCOME OPTIONS. You may also elect to receive all of your
CONTRACT VALUE in one lump sum or paid under any other plan to which we agree.
Once regular income payments begin, you cannot change the payment plan.
During the INCOME PHASE, you have the same investment choices you had during the
ACCUMULATION PHASE. You can choose to have payments come from the FIXED ACCOUNT,
one or more of the SUBACCOUNTS or both. If you choose to have any part of the
payments come from the SUBACCOUNTS, the dollar amount of the income payments may
go up or down, depending on the investment performance of the corresponding
INVESTMENT PORTFOLIOS.
3. PURCHASE: You may purchase a Contract with $5,000 or more. For tax QUALIFIED
CONTRACTS (such as IRA's and Roth IRA's), we require only $2,000. You can add
$500 or more to your Contract at any time during the ACCUMULATION PHASE ($100 or
more to tax QUALIFIED CONTRACTS).
4. INVESTMENT OPTIONS: You may put your money in any or all of the following
INVESTMENT PORTFOLIOS by directing it into the corresponding SUBACCOUNT. The
portfolios are described in their own prospectuses. You can make or lose money
in any of these portfolios, depending on market conditions.
MANAGED BY CITIBANK, NA
CitiSelect VIP Folio 200 Conservative
(formerly CitiSelect VIP Folio 200)
CitiSelect VIP Folio 300 Balanced
(formerly CitiSelect VIP Folio 300)
CitiSelect VIP Folio 400 Growth
(formerly CitiSelect VIP Folio 400)
CitiSelect VIP Folio 500 Growth Plus
(formerly CitiSelect VIP Folio 500)
CitiFundsSM Small Cap Growth VIP Portfolio
MANAGED BY FIDELITY MANAGEMENT &
RESEARCH COMPANY Fidelity VIP Growth Portfolio
Fidelity VIP High Income Portfolio
Fidelity VIP Equity-Income Portfolio
Fidelity VIP Overseas Portfolio
Fidelity VIP II Contrafund Portfolio Fidelity
VIP II Index 500 Portfolio
MANAGED BY A I M ADVISORS, INC.
AIM V.I. Capital Appreciation Fund
AIM V.I. Government Securities Fund
AIM V.I. Growth Fund
AIM V.I. Growth and Income Fund
AIM V.I. International Equity Fund
AIM V.I. Value Fund
MANAGED BY MFS INVESTMENT MANAGEMENT(R)
MFS Global Governments Series
(formerly MFS World Governments Series)
MFS Money Market Series
MFS Bond Series
MFS Total Return Series
MFS Research Series
MFS Emerging Growth Series
3
<PAGE>
5. CHARGES AND DEDUCTIONS: The Contract has insurance features and investment
features and there are costs related to each. Each year, we deduct a $30
contract fee from your Contract. This charge is waived if the value of your
Contract is at least $25,000 or if you have added at least $2,500 ($2,000 for
QUALIFIED CONTRACTS) in additional PURCHASE PAYMENTS to your Contract during the
last 12 months. We also deduct for insurance charges a total of 1.40% of the
average daily value of your contract allocated to the SUBACCOUNTS. We may change
this charge in the future but it will never be greater than 1.40%. If you take
any money out of the Contract, we may assess a Surrender Charge on any PURCHASE
PAYMENT you withdraw. The amount of the Surrender Charge is dependent on the
number of years since the PURCHASE PAYMENT was added to the Contract. This
Surrender Charge ranges from a maximum of 7% in the first year after payment,
declining 1% each year until the sixth year, when it becomes 0%. If you
surrender the Contract by taking out its entire value, or when you begin
receiving regular income payments under it, we may assess a state premium tax
ranging from 0-3.5%, depending upon the state in which you live.
There are also investment charges which range from 0.28% to 1.25% of the average
daily value of the INVESTMENT PORTFOLIO, depending on the portfolios in which
your Contract is invested.
6. TAXES: Earnings under the Contract are not taxed until you take them out (if
you are a natural person). If you take money out, earnings come out first and
are taxed as income. If you are younger than 59 1/2 when you take money out, you
may also be charged a 10% federal tax penalty on the withdrawn earnings.
Payments during the INCOME PHASE may be considered partly to be a return of your
original investment. That part of each payment is not taxable as income. Special
tax rules apply if your annuity has been issued as a QUALIFIED CONTRACT under
the Internal Revenue Code.
7. ACCESS TO YOUR MONEY: You can take some or all of the money out of your
Contract at any time during the ACCUMULATION PHASE. You can take all of your
earnings and up to 10% of your total PURCHASE PAYMENTS each year without any
Surrender Charge. Withdrawals in excess of this amount will be charged the
applicable Surrender Charge. After we have held the PURCHASE PAYMENT for 5
years, there is no charge for withdrawing it. Of course, you may have to pay
income tax and a tax penalty on any earnings you take out. Each PURCHASE PAYMENT
you add to your Contract has its own 5-year Surrender Charge period.
8. PERFORMANCE: The value of the Contract will increase or decrease depending
upon the investment performance of the INVESTMENT PORTFOLIO(S) in which the
subaccounts you chose are invested. Performance information for each of the
INVESTMENT PORTFOLIOS is provided elsewhere in this prospectus and in the SAI.
Past performance is not a guarantee of future results.
9. Death Benefits: If you die before the INCOME PHASE begins, the person you
have chosen as your BENEFICIARY will receive a death benefit. This death benefit
will be the greater of: (1) the value of your Contract on the date we receive
proof of your death; (2) the money you've put into the Contract less any
PURCHASE PAYMENTS withdrawn; or (3) the value of your Contract on the most
recent 5-year anniversary after the date of issue plus any money you've added
minus any money withdrawn since that anniversary. If you die on or after age 75,
slightly different rules apply.
10. OTHER INFORMATION:
FREE LOOK: If you cancel the Contract within 10 days after receiving it (or
longer period if required in your state), we will refund the value of your
Contract on the day we receive your request without assessing a Surrender
Charge. This may be more or less than your original payment. If we're
required by law to return your original payment, we will refund that amount
(less any amounts you have previously taken).
NO PROBATE: In most cases, any death benefit paid to your BENEFICIARY will
not have to pass through probate.
DOLLAR-COST AVERAGING PROGRAM: An optional Dollar-Cost Averaging program is
available that permits you to transfer a set dollar amount systematically
from the SUBACCOUNT investing in the Money Market Portfolio or the FIXED
ACCOUNT to any other SUBACCOUNT, subject to certain restrictions. This
reduces the risk of investing in a portfolio only when the price is high.
Dollar-Cost Averaging does not guarantee a profit and it doesn't protect
against a loss if market prices decline.
SYSTEMATIC WITHDRAWALS: You may arrange to have money automatically sent to
you each month while your Contract is still in the ACCUMULATION PHASE. Of
course, you may have to pay taxes on the money you receive.
WAIVER OF SURRENDER CHARGES: We automatically include in your Contract at
no additional cost, an endorsement which permits you to withdraw money from
your Contract without a Surrender Charge if you need it while you are
confined in a nursing home or other long term care facility or have a
terminal illness. Certain restrictions apply and current laws require
slight variations in some states.
4
<PAGE>
FEE TABLES
- -----------------------------------------------------------------
OWNER TRANSACTION EXPENSES
Sales Charge Imposed on PURCHASE PAYMENTS None
Maximum Surrender Charge (contingent
deferred sales charge) as a percentage of
the PURCHASE PAYMENT withdrawn 7%1
Surrender Processing Fee None2
Transfer Fee (imposed after the 18th transfer
in any Contract Year) $253
- -----------------------------------------------------------------
- -----------------------------------------------------------------
ANNUAL CONTRACT FEE $304
- -----------------------------------------------------------------
- -----------------------------------------------------------------
Separate Account Annual Expenses (as a percentage of
average net assets)
Mortality and Expense Risk Charge 1.25%
Administration Charge 0.15%
-----
Total Separate Account Expenses 1.40%
- ------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANNUAL PORTFOLIO EXPENSES (as percentage of average daily net assets)
<TABLE>
<CAPTION>
Total Annual
Other Expenses Portfolio Expenses
after after
Portfolio Management fees reimbursement reimbursement
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CitiSelect VIP Folio 200 Conservative 0.75% 0.20% 0.95%
(formerly CitiSelect VIP Folio 200)
CitiSelect VIP Folio 300 Balanced 0.75% 0.20% 0.95%
(formerly CitiSelect VIP Folio 300)
CitiSelect VIP Folio 400 Growth 0.75% 0.50% 1.25%
(formerly CitiSelect VIP Folio 400
CitiSelect VIP Folio 500 Growth Plus 0.75% 0.50% 1.25%
(formerly CitiSelect VIP Folio 500)
CitiFunds Small Cap Growth VIP Portfolio 0.75% 0.15% 0.90%
Fidelity VIP Growth Portfolio 0.59% 0.07% 0.66%
Fidelity VIP High Income Portfolio 0.58% 0.12% 0.70%
Fidelity VIP Equity-Income Portfolio 0.49% 0.08% 0.57%
Fidelity VIP Overseas Portfolio 0.74% 0.15% 0.89%
Fidelity VIP II Contrafund Portfolio 0.59% 0.07% 0.66%
Fidelity VIP II Index 500 Portfolio 0.24% 0.04% 0.28%
AIM V.I. Capital Appreciation Fund 0.62% 0.05% 0.67%
AIM V.I. Government Securities Fund 0.50% 0.26% 0.76%
AIM V.I. Growth Fund 0.64% 0.08% 0.72%
AIM V.I. Growth and Income Fund 0.61% 0.04% 0.65%
AIM V.I. International Equity Fund 0.75% 0.16% 0.91%
AIM V.I. Value Fund 0.61% 0.05% 0.66%
MFS Global Governments Series 0.75% 0.26% 1.01%
(formerly MFS World Governments Series)
MFS Money Market Series 0.50% 0.12% 0.62%
MFS Bond Series 0.60% 0.42% 1.02%
MFS Total Return Series 0.75% 0.16% 0.91%
MFS Research Series 0.75% 0.11% 0.86%
MFS Emerging Growth Series 0.75% 0.10% 0.85%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The investment advisers to certain investment portfolios and/or the fund
managers voluntarily agreed to reimburse or waiver certain fees and expenses
during fiscal year 1998. Absent such fee waivers and reimbursements, "Other
Expenses" and "Total Annual Fund Expenses" for the following portfolios were:
CitiSelect VIP Folio 200 Conservative -- 3.55% and 4.30%; CitiSelect VIP Folio
300 Balanced -- 2.48% and 3.23%; CitiSelect VIP Folio 400 Growth -- 3.41% and
4.16%; CitiSelect VIP Folio 500 Growth Plus -- 4.78% and 5.53%; CitiFunds Small
Cap Growth VIP Portfolio -- 4.99% and 5.74%; Fidelity VIP Growth Portfolio --
0.09% and 0.68%; Fidelity VIP Equity Income Portfolio -- 0.09% and 0.58%;
Fidelity VIP Overseas Portfolio -- 0.17% and 0.91%; Fidelity VIP II Contrafund
Portfolio -- 0.11% and 0.70%; Fidelity VIP II Index 500 Portfolio -- 0.11% and
0.35%; MFS Global Governments Series -- 0.36% and 1.11%; MFS Money Market Series
- -- 0.46% and 0.96%; and the MFS Bond Series -- 0.63% and 1.23%, respectively.
There is no assurance that the fee waivers or reimbursements will continue at
current levels. For a more complete description of the various costs and
expenses see "Charges and Deductions" and the prospectus for the investment
portfolios.
5
<PAGE>
EXAMPLES: You will pay the following expenses on a $1,000 investment. We assume
a 5% annual return on assets:5
If, at the end of the applicable time period, you surrender or annuitize the
Contract under an ANNUITY INCOME OPTION that does not provide a life annuity
or a life annuity with a period certain of at least five years.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CitiSelect VIP Folio 200 Conservative $87 $117 $151 $264
(formerly CitiSelect VIP Folio 200)
CitiSelect VIP Folio 300 Balanced $87 $117 $151 $264
(formerly CitiSelect VIP Folio 300)
CitiSelect VIP Folio 400 Growth $89 $126 $166 $293
(formerly CitiSelect VIP Folio 400)
CitiSelect VIP Folio 500 Growth Plus $89 $126 $166 $293
(formerly CitiSelect VIP Folio 500)
CitiFunds Small Cap Growth VIP Portfolio $86 $116 $148 $259
Fidelity VIP Growth Portfolio $84 $109 $136 $235
Fidelity VIP High Income Portfolio $84 $110 $138 $239
Fidelity VIP Equity-Income Portfolio $83 $106 $132 $226
Fidelity VIP Overseas Portfolio $86 $116 $148 $258
Fidelity VIP II Contrafund Portfolio $84 $109 $136 $235
Fidelity VIP II Index 500 Portfolio $80 $ 97 $117 $196
AIM V.I. Capital Appreciation Fund $84 $109 $137 $236
AIM V.I. Government Securities Fund $85 $112 $141 $245
AIM V.I. Growth Fund $84 $111 $139 $241
AIM V.I. Growth and Income Fund $84 $109 $136 $234
AIM V.I. International Equity Fund $86 $116 $149 $260
AIM V.I. Value Fund $84 $109 $136 $235
MFS Global Governments Series $87 $119 $154 $270
(formerly MFS World Governments Series)
MFS Money Market Series $83 $108 $134 $231
MFS Bond Series $87 $119 $154 $271
MFS Total Return Series $86 $116 $149 $260
MFS Research Series $86 $115 $146 $255
MFS Emerging Growth Series $86 $114 $146 $254
</TABLE>
If you don't surrender the Contract or you annuitize it under an ANNUITY
INCOME OPTION providing either a life annuity or a life annuity with a period
certain of at least five years at the end of the applicable time period.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CitiSelect VIP Folio 200 Conservative $24 $72 $124 $264
(formerly CitiSelect VIP Folio 200)
CitiSelect VIP Folio 300 Balanced $24 $72 $124 $264
(formerly CitiSelect VIP Folio 300)
CitiSelect VIP Folio 400 Growth $26 $81 $139 $293
(formerly CitiSelect VIP Folio 400)
CitiSelect VIP Folio 500 Growth Plus $26 $81 $139 $293
(formerly CitiSelect VIP Folio 500)
CitiFunds Small Cap Growth VIP Portfolio $23 $71 $121 $259
Fidelity VIP Growth Portfolio $21 $64 $109 $235
Fidelity VIP High Income Portfolio $21 $65 $111 $239
Fidelity VIP Equity-Income Portfolio $20 $61 $105 $226
Fidelity VIP Overseas Portfolio $23 $71 $121 $258
Fidelity VIP II Contrafund Portfolio $21 $64 $109 $235
Fidelity VIP II Index 500 Portfolio $17 $52 $ 90 $196
AIM V.I. Capital Appreciation Fund $21 $64 $110 $236
AIM V.I. Government Securities Fund $24 $67 $114 $245
AIM V.I. Growth Fund $20 $66 $112 $241
AIM V.I. Growth and Income Fund $23 $64 $109 $234
AIM V.I. International Equity Fund $24 $71 $122 $260
AIM V.I. Value Fund $23 $64 $109 $235
MFS Global Governments Series $24 $74 $127 $270
(formerly MFS World Governments Series)
MFS Money Market Series $20 $63 $107 $231
MFS Bond Series $24 $74 $127 $271
MFS Total Return Series $23 $71 $122 $260
MFS Research Series $23 $70 $119 $255
MFS Emerging Growth Series $23 $69 $119 $254
</TABLE>
6
<PAGE>
FOOTNOTES TO FEE TABLE AND EXAMPLES
The foregoing tables are intended to assist you in understanding the costs and
expenses that you will bear directly or indirectly. The tables reflect fiscal
year 1998 expenses for the SEPARATE ACCOUNT and fiscal year 1998 expenses for
the INVESTMENT PORTFOLIOS
1. Surrender Charges apply separately to each PURCHASE PAYMENT withdrawn
and are dependent on the number of years since the PURCHASE PAYMENT
was added to the Contract. Surrender Charges range from a maximum of
7% in the first year after payment, declining 1% each year until the
sixth year, when it becomes 0%.
2. We reserve the right to assess a processing fee equal to the lesser of
$25 or 2% of the amount withdrawn for each withdrawal (including the
final surrender) after the first 12 withdrawals in any CONTRACT YEAR.
See "Section 5: Charges and Deductions."
3. We reserve the right to charge a $25 transfer fee on each transfer
after the first 12 transfers in any CONTRACT YEAR. See "Section 5:
Charges and Deductions."
4. We will waive the Annual Contract Fee in its entirety if, at the time
this fee would be deducted, the CONTRACT VALUE is at least $25,000.
The Annual Contract Fee will also be waived in its entirety for any
CONTRACT YEAR during which PURCHASE PAYMENTS of at least $2,500
($2,000 for QUALIFIED CONTRACTS), excluding the initial PURCHASE
PAYMENT, are paid.
5. Premium taxes are not reflected in the Examples. We may apply premium
taxes ranging up to 3.5%, depending on the laws of various
jurisdictions. In addition, the Examples do not reflect any transfer
charges. The $30 Annual Contract Fee is reflected in the Examples by
dividing the total Annual Contract Fees collected during fiscal year
1998 by the total of all Contract assets under management as of the
end of fiscal year 1997. This converts the Annual Contract Fee to a
factor of $0.17 for purposes of the examples based on a $1,000
investment.
THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. THE 5% ANNUAL RATE OF RETURN IS HYPOTHETICAL AND DOES NOT
REPRESENT PAST OR FUTURE ANNUAL RETURNS. ACTUAL RETURNS MAY BE GREATER OR
LESS THAN THE 5% ASSUMED RATE.
THERE IS AN ACCUMULATION UNIT VALUE HISTORY FOR EACH SUBACCOUNT IN THE APPENDIX
- -- CONDENSED FINANCIAL INFORMATION.
7
<PAGE>
SECTION 1: THE ANNUITY CONTRACT
An annuity is a contract between the owner ("you"), and an insurance company (in
this case, Citicorp Life Insurance Company), where the insurance company
promises to pay an income to you, or some other person you name (the
"ANNUITANT"), in the form of ANNUITY INCOME PAYMENTS, beginning on a date that's
at least 30 days in the future. Until the date ANNUITY INCOME PAYMENTS begin,
the contract is in the ACCUMULATION PHASE. Once ANNUITY INCOME PAYMENTS begin,
the contract is in the INCOME PHASE. Your earnings under the contract are TAX
DEFERRED.
TAX DEFERRED means that earnings or appreciation of the assets in your contract
aren't taxed until money is taken out.
This Contract is a variable annuity. It enables you to put money into a number
of different SUBACCOUNTS, each of which invests exclusively in a single
INVESTMENT PORTFOLIO. Depending on market conditions, any of these portfolios
can make or lose money. The amount of money you are able to accumulate under the
Contract during the ACCUMULATION PHASE depends on the investment performance of
the INVESTMENT PORTFOLIO(S) in which your money is invested. Each SUBACCOUNT is
a division of the Citicorp Life Variable Annuity Separate Account. The SEPARATE
ACCOUNT is an investment account we establish to receive and invest purchase
payments under the Contract that is insulated from any profit or loss arising
from any other business we conduct.
The Contract also contains a FIXED ACCOUNT. The FIXED ACCOUNT is part of our
General Account that supports our insurance and annuity obligations. All assets
in the FIXED ACCOUNT are subject to the general liabilities of our business
operations. The FIXED ACCOUNT earns interest annually at a rate guaranteed by us
never to be less than 3.0% and may be more. This rate is established by us, at
our sole discretion, for each purchase payment or transfer into the FIXED
ACCOUNT. Once established, a rate is guaranteed for 12 months. We have no
specific formula for determining FIXED ACCOUNT interest rates. If you select the
FIXED ACCOUNT, the amount of money you are able to accumulate during the
ACCUMULATION PHASE depends on the total interest credited to the FIXED ACCOUNT.
Your total CONTRACT VALUE is equal to the dollar amount you have in the FIXED
ACCOUNT plus the dollar value of any amounts you have which are invested in the
different INVESTMENT PORTFOLIOS.
As OWNER of the Contract, you exercise all rights under it before the ANNUITY
INCOME DATE. You can name a new OWNER by notifying us. You may co-own the
Contract with someone else ("JOINT OWNER"). You may name or change the person
who will receive the ANNUITY INCOME PAYMENTS. Your rights under the Contract end
when ANNUITY INCOME PAYMENTS begin, unless you are also the person receiving
these payments (the "ANNUITANT"). More information about your rights under the
Contract is included in "Section 10 -- Other Information."
SECTION 2: ANNUITY PAYMENTS (THE INCOME PHASE)
Under the Contract, you can choose the month and year in which ANNUITY INCOME
PAYMENTS begin. That date is called the ANNUITY INCOME DATE. You can also choose
the frequency of ANNUITY INCOME PAYMENTS and the plan on which those payments
are based. We call these ANNUITY INCOME OPTIONS.
You may choose your ANNUITY INCOME DATE and ANNUITY INCOME OPTION when you
purchase the Contract. However, you may defer these decisions until a later date
if you wish, or once chosen, you can change them at any time before the ANNUITY
INCOME DATE if you give us at least 30 days notice. The ANNUITY INCOME DATE
cannot be any earlier than one month after you buy the Contract. If you don't
choose an ANNUITY INCOME DATE, ANNUITY INCOME PAYMENTS will begin on the
ANNUITANT'S 65th birthday or 10 years after the date the Contract was issued,
whichever is later. However, annuity income payments must begin by the first day
of the month following the Annuitant's 85th birthday or 10 years from the date
the Contract was issued, whichever is later. Certain plans which qualify for
special tax considerations may require an earlier ANNUITY INCOME DATE. (See
"Section 6: Taxes")
If you don't choose an ANNUITY INCOME OPTION by the time ANNUITY INCOME PAYMENTS
begin, we will make the payments under Option 3 (see below) as a Life Annuity
with 10 years of payments guaranteed. If you do not identify another ANNUITANT,
we will consider you to be the ANNUITANT.
During the INCOME PHASE, you have the same investment choices you had during the
ACCUMULATION PHASE. At the ANNUITY INCOME DATE, you can select whether payments
will come from the FIXED ACCOUNT, one or more of the SUBACCOUNTS, or a
combination of both. If you don't tell us otherwise, ANNUITY INCOME PAYMENTS
will be based on the value of your investments under the Contract, and their
allocations among the FIXED ACCOUNT and the SUBACCOUNTS on the ANNUITY INCOME
DATE.
VARIABLE ANNUITY INCOME PAYMENTS: If you choose to have any portion of your
ANNUITY INCOME PAYMENTS come from the SUBACCOUNTS, the payment amount will
depend on four things: (1) the portion of the CONTRACT VALUE you keep in the
SUBACCOUNTS on and after the ANNUITY INCOME DATE; (2) the 3% assumed investment
rate used in the Contract's annuity tables; (3) the performance of the
INVESTMENT PORTFOLIOS in which the SUBACCOUNTS are invested; and (4) the ANNUITY
INCOME OPTION you choose. If, after all charges and deductions, the combined
total return of the SUBACCOUNTS you have chosen exceeds the 3% annual assumed
rate, your ANNUITY INCOME PAYMENTS will increase. Similarly, if the combined
total return of the SUBACCOUNTS chosen is less than the 3% annual assumed rate,
your ANNUITY INCOME PAYMENTS will decrease. For detailed information on how
variable ANNUITY INCOME PAYMENTS are determined, see the SAI.
8
<PAGE>
FIXED ANNUITY INCOME PAYMENTS: If you choose to have any portion of your ANNUITY
INCOME PAYMENTS come from the FIXED ACCOUNT, the payment amount will be fixed
and guaranteed by us. The payment amount will depend on three things: (1) the
portion of the CONTRACT VALUE you keep in the FIXED ACCOUNT on and after the
ANNUITY INCOME DATE; (2) the interest rate we credit on those amounts (we
guarantee a minimum annual interest rate of 3.0%); and (3) the ANNUITY INCOME
OPTION you choose.
ANNUITY INCOME OPTIONS: You may select one of the following standard ANNUITY
INCOME OPTIONS. In addition, you may elect any other method of payment that is
mutually agreeable to you and us. After ANNUITY INCOME PAYMENTS begin, you
cannot change the ANNUITY INCOME OPTION.
OPTION 1: INCOME FOR A FIXED PERIOD. Under this option, we will make
ANNUITY INCOME PAYMENTS each month for a fixed number of years. The number
of years must be at least 5 and not more than 30. If the ANNUITANT dies and
we have made ANNUITY INCOME payments for less than the selected period, we
will continue to make ANNUITY INCOME PAYMENTS for the rest of the
guaranteed period to any person named by the ANNUITANT. This option is
available only for ANNUITY INCOME PAYMENTS from the FIXED ACCOUNT and only
if the ANNUITY INCOME DATE is at least 5 years from the date the Contract
was issued.
OPTION 2: LIFE ANNUITY. Under this option, we will make an ANNUITY INCOME
PAYMENT each month as long as the ANNUITANT is alive. After the ANNUITANT
dies, we stop making ANNUITY INCOME PAYMENTS.
OPTION 3: LIFE ANNUITY WITH PERIOD CERTAIN. Under this option, we will make
an ANNUITY INCOME PAYMENT each month as long as the ANNUITANT is alive. If
the ANNUITANT dies and we have made ANNUITY INCOME PAYMENTS for less than
the selected guaranteed period, we will continue to make ANNUITY INCOME
PAYMENTS for the rest of the guaranteed period to any person named by the
ANNUITANT.
OPTION 4: JOINT AND SURVIVOR ANNUITY. Under this option, we will make
ANNUITY INCOME PAYMENTS each month as long as the ANNUITANT and a second
person are both alive. When either of these persons die, we will continue
to make ANNUITY INCOME PAYMENTS to the survivor. When the survivor dies, we
stop making ANNUITY INCOME PAYMENTS.
NOTE CAREFULLY: Under options 2 and 4 it would be possible for only one annuity
payment to be made if the ANNUITANT(S) were to die before the second annuity
payment was due; and only two payments if the ANNUITANT(S) were to die before
the third annuity payment was due; etc.
ANNUITY INCOME PAYMENTS are made monthly unless we agree to some other payment
schedule. If you have less than $2,000 under the Contract to apply toward
payments, we may pay your ANNUITY INCOME PAYMENT in a single lump sum. If your
ANNUITY INCOME PAYMENTS would be less than $50 a month, we have the right to
change the frequency of payments so that your ANNUITY INCOME PAYMENTS are at
least $50. (In TX, we have the right to pay the annuity benefit in one lump sum
only if the initial annuity payment under the option elected is less than $20.)
SECTION 3: PURCHASE
The Contract may be purchased by anyone age 90 or younger.
PURCHASE PAYMENTS: A PURCHASE PAYMENT is the money you give us to buy the
Contract. The minimum we will accept when the Contract is bought is $5,000
($2,000 if the Contract qualifies for special tax treatment under the IRS Code).
You can make additional PURCHASE PAYMENTS at any time, and you may arrange for
PURCHASE PAYMENTS to be made automatically from your bank account or other
source each month. We have the right to require each additional payment to be at
least $500 ($100 for QUALIFIED CONTRACTS). Our approval is required if total
PURCHASE PAYMENTS in any CONTRACT YEAR exceed $1,000,000.
ALLOCATION OF PURCHASE PAYMENTS: When you purchase a Contract, we will allocate
your PURCHASE PAYMENT to the FIXED ACCOUNT and/or one or more of the SUBACCOUNTS
as you have directed us, for investment in the corresponding INVESTMENT
PORTFOLIOS. If you make additional PURCHASE PAYMENTS, we will allocate them the
same way as your first PURCHASE PAYMENT unless you tell us otherwise. You may
direct individual PURCHASE PAYMENTS to one or more SUBACCOUNTS and/or to the
FIXED ACCOUNT without changing your current allocation schedule. Your allocation
directions must be in whole percent and each PURCHASE PAYMENT must result in a
minimum allocation of $100 to each selected INVESTMENT PORTFOLIO and/or the
FIXED ACCOUNT.
You should periodically review your PURCHASE PAYMENT allocation schedule in
light of market conditions and your overall financial objectives.
Once we receive your initial PURCHASE PAYMENT, and all necessary information, we
will allocate your PURCHASE PAYMENT and issue your Contract within 2 business
days. If you do not give us all of the information we need, we will contact you
to get it. If for some reason we are unable to complete this process within 5
business days, we will either send the money back to you or get your permission
to keep it until we get all of the necessary information. If you add more money
to your contract by making additional PURCHASE PAYMENTS, we will credit those
amounts to your contract within one BUSINESS DAY after receipt at the price next
determined after we receive the payment. A BUSINESS DAY is any day when both we
and the New York Stock Exchange are open for business. Our BUSINESS DAY closes
when the New York Stock Exchange closes, usually 4:00 p.m., Eastern time. We are
open for business on all days that the New York Stock Exchange is open for
business.
FREE LOOK PERIOD: If you change your mind about owning this Contract, you may
cancel it within 10 days after receiving it (or other period as may be required
in your state). When you cancel the Contract within this time period, we will
not assess a
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Surrender Charge. You will receive the value of your Contract on the day we
receive your request. In some jurisdictions, we may be required to return the
CONTRACT VALUE plus any fees and charges deducted. These amounts may be more or
less than the aggregate amount of PURCHASE PAYMENTS made up to that time. In
other states or if you have purchased your Contract as an IRA, we may be
required to give you back your full PURCHASE PAYMENT if you decide to cancel it
within this period. If that is the case, we have the right to put any portion of
your initial PURCHASE PAYMENT allocated to a SUBACCOUNT into the Money Market
SUBACCOUNT until the end of the cancellation period described above. At the end
of that period, we will reallocate your initial PURCHASE PAYMENT according to
your allocation directions. Currently, however, all PURCHASE PAYMENTS are
allocated directly to the SUBACCOUNTS as you direct. We will consider the
Contract received five days after it is mailed to your last known address.
ACCUMULATION UNITS: In order to keep track of the value of your Contract during
the ACCUMULATION PHASE, we use a unit of measure we call an ACCUMULATION UNIT.
During the Contract's INCOME PHASE, we call the unit an ANNUITY UNIT. These
units represent your ownership interest in a SUBACCOUNT. When you make a
PURCHASE PAYMENT, or transfer money, into a SUBACCOUNT, we credit that
SUBACCOUNT with ACCUMULATION UNITS. The number of ACCUMULATION UNITS credited to
your Contract is determined by dividing the amount of the PURCHASE PAYMENT or
transfer allocated to the SUBACCOUNT by the value of an ACCUMULATION UNIT for
that SUBACCOUNT next determined as of the end of that BUSINESS DAY. If you make
a withdrawal or transfer out of a SUBACCOUNT or if we assess transfer or
Surrender Charges or an Annual Contract Fee, we subtract ACCUMULATION UNITS from
the SUBACCOUNT in a similar manner.
At the close of each BUSINESS DAY, we determine the value of an ACCUMULATION
UNIT for each subaccount. We do this by:
1. determining the total value of the SUBACCOUNT'S investment in the
corresponding INVESTMENT PORTFOLIO, using the portfolio's net asset
value calculated at the end of that day;
2. subtracting from that amount any insurance charges (see "Section 5:
Charges and Deductions;" and
3. dividing this amount by the number of outstanding ACCUMULATION UNITS
in that SUBACCOUNT.
Example: On Monday we receive an additional PURCHASE PAYMENT of $5,000 from
you. You have told us you want the entire amount to be allocated to
SUBACCOUNT "x" (any SUBACCOUNT currently available). When the New York
Stock Exchange closes that day, we determine that the value of one
ACCUMULATION UNIT for that SUBACCOUNT is $10.00. We then divide $5,000 by
$10.00 and credit your Contract that night with 500 additional ACCUMULATION
UNITS in SUBACCOUNT x.
The value of an ACCUMULATION UNIT may go up or down from day to day depending on
the investment performance of the INVESTMENT PORTFOLIO invested in by that
SUBACCOUNT and the deduction of certain fees and expenses. For a detailed
discussion of how we determine Accumulation Unit Value, see the SAI.
SECTION 4: INVESTMENT OPTIONS
In addition to the FIXED ACCOUNT, 23 SUBACCOUNTS, each investing exclusively in
a single INVESTMENT PORTFOLIO, are available under the Contract. Additional
SUBACCOUNTS, each investing exclusively in an additional INVESTMENT PORTFOLIO
may be made available in the future. Each INVESTMENT PORTFOLIO is available
under a fund which is registered with the SEC as an open end, management
investment company of the series type, having one or more INVESTMENT PORTFOLIOS.
Shares of the INVESTMENT PORTFOLIOS are sold only to insurance company separate
accounts and qualified plans. Each INVESTMENT PORTFOLIO has a specific
investment objective which may be similar to the investment objective and policy
of other portfolios managed by the same or other investment advisers. No
representation is made that the investment results of any portfolio will be
comparable to the results of any other portfolio, even if the same investment
adviser or manager is used or if the names and investment objectives are
similar.
THERE IS NO ASSURANCE THAT AN INVESTMENT PORTFOLIO WILL ACHIEVE ITS STATED
OBJECTIVE. The 23 INVESTMENT PORTFOLIOS available under the contract are listed
below.
YOU SHOULD READ THE PROSPECTUSES FOR THESE INVESTMENT PORTFOLIOS CAREFULLY
BEFORE INVESTING. COPIES OF THESE PROSPECTUSES ARE PROVIDED WITH THIS
PROSPECTUS.
CITIBANK N.A. SERVES AS THE INVESTMENT MANAGER FOR THE FOLLOWING INVESTMENT
PORTFOLIOS:
CitiSelect VIP Folio 200 Conservative (Asset Allocation)
(formerly CitiSelect VIP Folio 200)
CitiSelect VIP Folio 300 Balanced (Asset Allocation)
(formerly CitiSelect VIP Folio 300)
CitiSelect VIP Folio 400 Growth (Asset Allocation)
(formerly CitiSelect VIP Folio 400)
CitiSelect VIP Folio 500 Growth Plus (Asset Allocation)
(formerly CitiSelect VIP Folio 500)
CitiFunds Small Cap Growth VIP Portfolio
(Aggressive Growth)
FIDELITY MANAGEMENT & RESEARCH COMPANY SERVES AS THE INVESTMENT ADVISER
FOR THE FOLLOWING INVESTMENT PORTFOLIOS:
Fidelity VIP Growth Portfolio (Growth)
Fidelity VIP High Income Portfolio (High Yield Bond)
Fidelity VIP Equity-Income Portfolio (Growth & Income)
Fidelity VIP Overseas Portfolio (International Stock)
Fidelity VIP II Contrafund Portfolio (Growth)
Fidelity VIP II Index 500 Portfolio (Growth & Income)
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A I M ADVISORS, INC. SERVES AS THE INVESTMENT ADVISER FOR THE FOLLOWING
INVESTMENT PORTFOLIOS:
AIM V.I. Capital Appreciation Fund (Aggressive Growth)
AIM V.I. Government Securities Fund (Govt Bond)
AIM V.I. Growth Fund (Growth)
AIM V.I. Growth and Income Fund (Growth & Income)
AIM V.I. International Equity Fund (International Stock)
AIM V.I. Value Fund (Growth)
MFS INVESTMENT MANAGEMENT(R) SERVES AS THE INVESTMENT ADVISER FOR THE FOLLOWING
INVESTMENT PORTFOLIOS:
MFS Global Governments Series (Income & Capital
Appreciation)
(formerly MFS World Governments Series)
MFS Money Market Series (Money Market)
MFS Bond Series (Corp Bond)
MFS Total Return Series (Balanced)
MFS Research Series (Growth)
MFS Emerging Growth Series (Aggressive Growth)
Certain unaffiliated investment advisers reimburse us for administrative costs
we incur in connection with administering the INVESTMENT PORTFOLIOS as
investment options under the Contract. These reimbursements are paid to us out
of the advisers' investment advisory fees as a percentage of assets under
management.
TRANSFERS DURING THE ACCUMULATION PHASE: During the ACCUMULATION PHASE, you may
transfer money to or from the FIXED ACCOUNT and to or from any SUBACCOUNT. We
have the right to charge a $25 fee for each transfer you make in excess of 12 in
any Contract Year. Currently, transfer fees are charged only if you make more
than 18 transfers in a CONTRACT YEAR. A CONTRACT YEAR is each consecutive
12-month period measured from the day we issued your Contract.
The following apply to any transfer during the ACCUMULATION PHASE:
1. If the value remaining in the FIXED ACCOUNT or a SUBACCOUNT after a
transfer is less than $100, we may transfer the entire amount instead
of the requested amount. Unless you give us other directions, such
transfer will be allocated in the same proportion as the transfer
request resulting in this action.
2. We have the right to defer transfers from the FIXED ACCOUNT for up to
6 months following the date of the request.
TRANSFERS DURING THE INCOME PHASE: During the INCOME PHASE, the ANNUITANT may
transfer values among SUBACCOUNTS once every three months. Transfers from the
FIXED ACCOUNT to a SUBACCOUNT or from any SUBACCOUNT to the FIXED ACCOUNT are
not allowed during the INCOME PHASE.
TRANSFER REQUESTS: Transfer requests, like all other elections, requests and
NOTICES TO US, must be in writing in a form acceptable to us unless you have
provided us with valid authorization to accept such requests or notices by
telephone. Any telephone authorization is valid until it is rescinded or
modified in writing by you. We employ reasonable procedures to confirm that
instructions given us by telephone are genuine. We may be liable for losses due
to unauthorized or fraudulent instructions only if we fail to follow those
reasonable procedures. The procedures we follow for telephone transfers include
confirming the correct name, contract number and your social security number. We
may modify or eliminate the transfer privileges at any time, for any class of
Contracts, for any reason. In particular, we reserve the right to not honor
transfers requested by a third party holding a power of attorney from an OWNER
where that third party requests simultaneous transfers on behalf of the OWNERS
of two or more Contracts.
DOLLAR-COST AVERAGING PROGRAM: Dollar-Cost Averaging allows you to
systematically transfer a specific amount each month from either the FIXED
ACCOUNT or the Money Market SUBACCOUNT to any other SUBACCOUNT(S). By
transferring a set amount on a regular schedule instead of transferring the
total amount at one particular time, you may reduce the risk of investing in the
corresponding INVESTMENT PORTFOLIO only when the price is high. Dollar-Cost
Averaging does not guarantee a profit and it doesn't protect against a loss if
market prices decline. Dollar-Cost Averaging is available only during the
ACCUMULATION PHASE.
The minimum amount which can be transferred each month under Dollar-Cost
Averaging is $100. The maximum transfer amount can be no more than 1/6 of the
total value in the FIXED ACCOUNT or Money Market SUBACCOUNT at the time the
transfers begin. Once you elect Dollar-Cost Averaging, it remains in effect
until the value in the FIXED ACCOUNT or Money Market SUBACCOUNT is inadequate to
execute the requested transfers or until you cancel it by notifying us. You may
cancel this option at any time.
There is no charge or fee for using Dollar-Cost Averaging. However, transfers
made under the Dollar-Cost Averaging program will be counted in determining the
total number of transfers in any year. We reserve the right to discontinue
offering the Dollar-Cost Averaging program at any time.
VOTING RIGHTS: We are the legal owner of all INVESTMENT PORTFOLIO shares
purchased under this Contract and held in the SUBACCOUNTS. However, when an
INVESTMENT PORTFOLIO solicits proxies in conjunction with a vote of
shareholders, we are required to obtain from you and other Contract OWNERS (or
ANNUITANTS, if the Contract is in the INCOME PHASE) instructions as to how to
vote those shares. When we receive those instructions, we will vote all of the
shares we own in the affected portfolio, including any we own in our own behalf,
in the same proportion as those instructions. If, however, we determine that we
are no longer required to obtain voting instructions from the Contract
OWNERS/ANNUITANTS, we will vote the shares as we alone may decide. A more
detailed discussion of voting rights is found in the SAI.
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SUBSTITUTION: From time to time, we may substitute one or more of the INVESTMENT
PORTFOLIOS available for investment by the SUBACCOUNTS you have selected with
another portfolio. We may also add or delete one or more SUBACCOUNTS or
INVESTMENT PORTFOLIOS. We will not do this without the prior approval of the
Securities and Exchange Commission and we will notify you of our intent, if we
decide to take such action. For a more complete discussion of our right to add,
delete or substitute investments under the Contract, see the SAI.
SECTION 5: CHARGES AND DEDUCTIONS
There are several charges and other expenses associated with the Contract that
will reduce the return on your investment in the Contract. These charges and
expenses are:
INSURANCE CHARGES: Each BUSINESS DAY, we make a deduction from the assets in the
SUBACCOUNTS for certain risks and costs we incur for providing the Contract. We
do this as part of the calculation of the value of ACCUMULATION UNITS and
ANNUITY UNITS. The insurance charge has two parts: (1) the mortality and expense
risk charge; and (2) the administration charge.
MORTALITY AND EXPENSE RISK CHARGE: This charge is for all of the insurance
benefits included under the Contract such as the guaranteed minimum
interest rate used to calculate Fixed Annuity Income Payments, the
guarantee that ANNUITY INCOME PAYMENTS will continue for the life of the
ANNUITANT, the guaranteed death benefits and for the risk that the current
charges will be insufficient to cover the cost of administering the
Contract in the future. If the charges under the Contract are not
sufficient, then we will bear the loss. Currently, the Mortality and
Expense Risk Charge is equal, on an annual basis, to 1.25% of the average
daily net assets of the Contract invested in the INVESTMENT PORTFOLIOS. We
may change this charge in the future but it will never be greater than
1.25%.
ADMINISTRATION CHARGE: This charge, together with the Annual Contract Fee
(see below) is intended to cover all the expenses associated with
administering the Contract. These costs include printing the Contract,
preparing and distributing confirmation statements and annual reports to
Contract OWNERS, maintaining Contract records, personnel costs, legal and
accounting fees, filing fees, computer and systems costs and general
overhead. Currently, the Administration Charge is equal, on an annual
basis, to 0.15% of the average daily net assets of the Contract invested in
the INVESTMENT PORTFOLIOS. We may change this charge in the future but it
will never be greater than 0.15%. If this charge and the Annual Contract
Fee are not enough to cover the costs of administering the Contracts in the
future, we will bear the loss.
ANNUAL CONTRACT FEE: On the last BUSINESS DAY of each CONTRACT YEAR during the
ACCUMULATION PHASE, we deduct $30 from your Contract as an Annual Contract Fee
to reimburse us for administering the Contract. The fee will be charged by
reducing the value in each SUBACCOUNT and/or the FIXED ACCOUNT on a pro-rata
basis. This charge cannot be increased.
We do not deduct this fee if, when the deduction is to be made, the value of
your Contract is $25,000 or more. In addition, we do not deduct this fee if you
have paid $2,500 in additional PURCHASE PAYMENTS ($2,000 for QUALIFIED
CONTRACTS), exclusive of the initial PURCHASE PAYMENT, during the CONTRACT YEAR.
If you surrender your Contract, the Annual Contract Fee for that CONTRACT YEAR
will be deducted from the amount you receive, unless it is waived, as noted
above.
SURRENDER CHARGES: Each CONTRACT YEAR during the ACCUMULATION PHASE, you may
withdraw all of your earnings and up to 10% of your total PURCHASE PAYMENTS
remaining under the Contract without paying any Surrender Charge. Otherwise, the
charge is a percentage of the PURCHASE PAYMENT(S) withdrawn, based on the number
of years since the date the PURCHASE PAYMENT(S) was paid. This right of "free
withdrawal" does not accumulate from year to year. In other words, any portion
of the 10% not taken in one CONTRACT YEAR is not added to the 10% that can be
taken during the next CONTRACT YEAR.
Surrender Charges range from a maximum of 7%, declining 1% each year since the
PURCHASE PAYMENT was added to the Contract until the sixth year, when it becomes
0%. A table of Surrender Charges is shown below.
Number of Years Since Charge as a Percentage
Date of Purchase Payment of Purchase Payment Withdrawn
_____________________ __________________________
0-1 7%
1-2 6%
2-3 5%
3-4 4%
4-5 3%
5+ 0%
We do not assess Surrender Charges on earnings withdrawn, death benefit payments
or ANNUITY INCOME PAYMENTS paid as a life annuity or a life annuity with a
period certain of at least five years. For purposes of determining the Surrender
Charge, we treat withdrawals as coming first from earnings and then from the
oldest PURCHASE PAYMENT, then the next oldest and so forth. When a withdrawal is
made, you will receive the amount withdrawn less any Surrender Charge.
We will not impose any Surrender Charge if, prior to your 80th birthday, you
surrender, or make a withdrawal from, your Contract after you are confined to a
hospital, nursing home or other long term care facility on the recommendation of
a physician or are diagnosed with a terminal illness (terminal condition in PA).
In order to qualify for the waiver if confined, your withdrawal or surrender
request must be received by us no later than 91 days after the last day of your
confinement.
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SURRENDER PROCESSING FEE: In addition to the Surrender Charge, we reserve the
right to assess a processing charge equal to the lesser of $25 or 2% of the
amount withdrawn for each withdrawal in excess of 12 in any CONTRACT YEAR (not
in CT). This fee is deducted pro rata from the FIXED ACCOUNT and each subaccount
from which a withdrawal is made. We are not currently imposing this fee.
PREMIUM TAXES: Some states and other governmental entities (i.e. cities and
municipalities) charge premium or other taxes ranging up to 3.5%, on contracts
issued by insurance companies. We are responsible for paying these taxes and
will make a deduction from the CONTRACT VALUE for them. Some of these taxes are
due when the Contract is issued and others are due when ANNUITY INCOME PAYMENTS
begin. Unless we are required to pay taxes at some other time, it is our
practice to deduct for these taxes at the time ANNUITY INCOME PAYMENTS begin or
when the Contract is surrendered.
TRANSFER PROCESSING FEE: We reserve the right to charge $25 for each transfer in
excess of 12 in any CONTRACT YEAR. Currently, we are not charging this fee until
the 19th transfer in a CONTRACT YEAR. For the purposes of determining the
number, each transfer from the FIXED ACCOUNT and/or any SUBACCOUNT in a CONTRACT
YEAR is considered to be one transfer, regardless of how allocated. Although a
transfer processing fee is not charged for Dollar-Cost Averaging, Dollar-Cost
Averaging transactions are counted in determining the number of transfers made
during a CONTRACT YEAR. If a transfer is made from the FIXED ACCOUNT and/or one
or more SUBACCOUNTS at the same time, each losing SUBACCOUNT and the FIXED
ACCOUNT would be charged a separate transfer processing fee.
INVESTMENT PORTFOLIO EXPENSES: Each INVESTMENT PORTFOLIO incurs certain
expenses, including investment advisory fees, which are paid out of its assets
and are described in its prospectus.
SECTION 6: TAXES
NOTE: The following is provided as general information. It is based on our
understanding of current federal income tax laws and no representation is made
as to the likelihood of the continuation of such laws or their interpretation by
the Internal Revenue Service ("IRS"). It is not intended as tax advice to any
individual. You should consult your own tax adviser with any questions regarding
your own situation.
ANNUITY CONTRACTS IN GENERAL: Annuity contracts are a means of setting aside
money for future needs, such as retirement. Congress recognized how important
long-term saving was and provided special rules in the Internal Revenue Code
(the "Code") for annuities.
Simply stated, these rules provide that generally you will not be taxed on the
earnings on money held in your annuity contract until you take the money out.
This is referred to as tax deferral. There are different rules as to how you
will be taxed depending on how you take the money out and the type of contract
- -- qualified or non-qualified. (See the following sections.)
You, as the OWNER, will generally not be taxed on increases in the value of your
Contract unless a distribution occurs prior to the ANNUITY INCOME DATE -- either
as a withdrawal or at surrender. The ANNUITANt (including you, if you are also
the ANNUITANt), will be taxed at the time ANNUITY INCOME PAYMENTS are paid. When
you make a withdrawal, you are taxed on the amount of the withdrawal that comes
from earnings. For ANNUITY INCOME PAYMENTS different rules apply. A portion of
each ANNUITY INCOME PAYMENT is treated as a return of PURCHASE PAYMENTS and that
portion will not be taxed. The remaining portion of the ANNUITY INCOME PAYMENT
will be treated as ordinary income. How the ANNUITY INCOME PAYMENT is divided
between taxable and non-taxable portions depends on the period over which the
ANNUITY INCOME PAYMENTS are expected to be made. ANNUITY INCOME PAYMENTS
received after you have received all of your PURCHASE PAYMENTS are fully
includible in income.
When a NON-QUALIFIED CONTRACT is owned by a non-natural person (i.e. a
corporation or certain other entities other than tax-qualified trusts), the
Contract will generally not be treated as an annuity for tax purposes, although
there are certain exceptions to this rule. Non-natural persons considering the
purchase of a NON-QUALIFIED CONTRACT should consult a tax adviser.
QUALIFIED AND NON-QUALIFIED CONTRACTS: If you purchase the Contract on an
individual basis and not under any pension plan or as an individual retirement
annuity, your Contract is referred to as a NON-QUALIFIED CONTRACT.
If you purchase the Contract as an individual retirement annuity (IRA) or as a
Roth IRA, your Contract is referred to as a QUALIFIED CONTRACT. Under a
traditional IRA, contributions to the Contract may be deductible. Contributions
made under a Roth IRA are not deductible but distributions may be tax-free if
you meet certain rules. You should consult your legal adviser or tax counsel if
you are considering buying the contract for use with any retirement plan.
WITHDRAWALS -- NON-QUALIFIED CONTRACTS: If you make a withdrawal from your
Contract, the Code treats such a withdrawal as first coming from earnings and
then from your PURCHASE PAYMENTS. Such withdrawn earnings are includible as
income.
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The Code also provides that under certain conditions, any amount received under
an annuity contract which is included in income may be subject to a penalty. The
amount of the penalty is equal to 10% of the amount that is includible in
income. There is no penalty on any amounts: (1) paid to you on or after you
reach age 59 1/2; (2) paid after you die; (3) paid if you become totally
disabled (as that term is defined in the Code); (4) paid in a series of
substantially equal payments made at least annually under a lifetime annuity;
(5) paid under an immediate annuity; or (6) which came from PURCHASE PAYMENTS
made prior to August 14, 1982.
WITHDRAWALS -- QUALIFIED CONTRACTS: The above information describing the
taxation of NON-QUALIFIED CONTRACTs does not apply to QUALIFIED CONTRACTS. There
are special rules which govern QUALIFIED CONTRACTS. Generally, these rules
restrict both: (1) the amount that you are allowed to contribute to the Contract
during any year; and (2) the time when you can take withdrawals or surrenders,
and receive payments under the Contract. In addition, the 10% penalty tax may be
assessed on withdrawals you take prior to the date you reach age 59 1/2. You may
also be required to begin receiving minimum amounts from your Contract by a
certain date. The terms of the plan may limit your rights under the Contract. We
have provided a more complete discussion in the SAI.
DIVERSIFICATION REQUIREMENTS: The Code provides that the underlying investments
for a non-qualified variable annuity must satisfy certain diversification
requirements in order for it to be treated as an annuity contract. We believe
that the INVESTMENT PORTFOLIOS are being managed so as to comply with the
requirements.
OWNER CONTROL: Neither the Code nor the Treasury Regulations issued to date
provide guidance as to the circumstances under which you, because of the degree
of control you exercise over the underlying investments, and not us, would be
considered the owner of the shares of the INVESTMENT PORTFOLIOS. If this occurs,
it would result in the loss of the favorable tax treatment for the Contract. It
is unknown to what extent OWNERS are permitted to select INVESTMENT PORTFOLIOS,
to make transfers among investment portfolios or the number and type of
INVESTMENT PORTFOLIOS OWNERS may select from.
If additional guidance is issued in this area, it is possible that you, as the
OWNER of the Contract, could be treated as the owner of the INVESTMENT
PORTFOLIOS, which could significantly change your tax obligations.
Due to the uncertainty in this area, we reserve the right to modify the Contract
as necessary to attempt to maintain favorable tax treatment.
TAXATION OF DEATH BENEFIT PROCEEDS: The death benefit is taxable as the income
of the recipient as follows: (i) if distributed in a lump sum, the death benefit
is taxed in the same way as a surrender of the Contract; or (ii) if distributed
under an annuity income payment option, it is taxed in the same way as annuity
income payments.
TRANSFERS, ASSIGNMENTS OR EXCHANGES OF A CONTRACT: If you transfer or assign
your ownership of the Contract, change the ANNUITANT, select certain ANNUITY
INCOME DATES, or exchange the Contract, it may result in certain tax
consequences to you that are not discussed in this prospectus. You should
consult a tax adviser if you wish to transfer, assign or exchange the Contract.
WITHHOLDING: Unless directed otherwise, we are required to withhold an amount
for federal income tax from any money we distribute from the Contract.
Recipients can generally elect, however, not to have tax withheld from
distributions. Certain amounts we pay out from some QUALIFIED CONTRACTS are
subject to mandatory tax withholding.
MULTIPLE CONTRACTS: All annuity contracts that are issued by us (or our
affiliates) to the same Owner during any calendar year are treated as one
annuity contract for purposes of determining the amount includible in that
Owner's income when a taxable distribution occurs.
SECTION 7: ACCESS TO YOUR MONEY
You can obtain the money you have in your Contract: (1) by withdrawing a portion
of it or surrendering your Contract in full prior to the ANNUITY INCOME DATE; or
(2) by electing to start receiving ANNUITY INCOME PAYMENTS. In addition, your
Beneficiary can receive the money in your Contract as a death benefit if you die
prior to the ANNUITY INCOME DATE. If you surrender your Contract before the
ANNUITY INCOME DATE, you will receive the CONTRACT VALUE on the day the
surrender is completed, less any applicable Surrender Charges, premium taxes and
the Annual Contract Fee (See "Section 5: Charges and Deductions").
If you withdraw only some of the money in your Contract, you must tell us if
money is to be taken from the FIXED ACCOUNT and/or one or more SUBACCOUNTS.
Under most circumstances, the amount of any withdrawal must be at least $500.
You will receive the amount you requested, less any applicable Surrender
Charges, taxes and fees. We will withdraw the amount requested at the end of the
BUSINESS day on which we receive your request. After a withdrawal, if your total
CONTRACT VALUE is less than $2,000, we may pay the remaining value to you and
terminate the Contract. (Only if no PURCHASE PAYMENTS have been paid during the
prior two years and total PURCHASE PAYMENTS minus withdrawals equal less than
$2,000 in TX.)
INCOME TAXES, TAX PENALTIES AND CERTAIN RESTRICTIONS MAY APPLY TO ANY SURRENDER
OR WITHDRAWAL. WE HAVE THE RIGHT TO DEFER PAYMENTS FROM THE FIXED ACCOUNT FOR UP
TO SIX MONTHS.
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SYSTEMATIC WITHDRAWAL PROGRAM: You may elect to receive periodic withdrawals of
a specified dollar amount or a specified whole percent of the CONTACT'S VALUE
under our systematic withdrawal plan. Withdrawals may be made on a monthly,
quarterly, semi-annual or annual basis. Each withdrawal from the FIXED ACCOUNT
and/or any SUBACCOUNT under the systematic withdrawal program must be at least
$50. If you don't elect this option when you first apply for the Contract,
payments under the systematic withdrawal program will not begin until on or
after the first contract anniversary. Withdrawals under the systematic
withdrawal plan may be subject to a Surrender Charge. (See "Surrender Charges").
Participation in the systematic withdrawal plan will automatically end if the
value in the FIXED ACCOUNT or the SUBACCOUNT(S) from which withdrawals are being
made becomes zero. You may stop systematic withdrawals at any time. We reserve
the right to discontinue offering the systematic withdrawal plan at any time.
SYSTEMATIC WITHDRAWALS MAY HAVE ADVERSE FEDERAL INCOME TAX CONSEQUENCES AND YOU
SHOULD, THEREFORE, CONSULT WITH YOUR TAX ADVISER BEFORE ELECTING THIS OPTION.
SECTION 8: PERFORMANCE
>From time to time, we may advertise yields, effective yields and total returns
of the various INVESTMENT PORTFOLIOS and/or SUBACCOUNTS. Standard Total Return
figures for the SUBACCOUNTS will reflect the deduction of all charges under the
Contract, including the insurance charges, the Annual Contract Fee and Surrender
Charges. THESE FIGURES ARE BASED ON HISTORICAL RETURNS OF THE SUBACCOUNTS SINCE
THEIR INCEPTION AND DO NOT INDICATE OR PROJECT FUTURE PERFORMANCE.
Advertisements may also include yields, effective yields and total returns that
do not reflect the deduction of the Annual Contract Fees and Surrender Charges.
The deduction of Annual Contract Fees and Surrender Charges would reduce the
performance results.
In addition, we may present historic performance data for the INVESTMENT
PORTFOLIOS since their inception reduced by portfolio expenses and some or all
of the fees and charges under the Contract. Such adjusted historic performance
includes data that precedes the date the portfolio(s) were first available under
the Contract but is designed to show the performance that would have resulted if
the INVESTMENT PORTFOLIOS and/or the Contract had been available during that
time.
We may also advertise INVESTMENT PORTFOLIO and/or SUBACCOUNT performance
relative to certain performance rankings and indices compiled by independent
organizations and/or report other information including the effect of
tax-deferred compounding on a SUBACCOUNT'S investment returns, or returns in
general, which may be illustrated by tables, graphs, or charts. All income and
capital gains derived from underlying INVESTMENT PORTFOLIOS are reinvested and
can lead to substantial long-term accumulation of assets, provided that the
portfolio's investment experience is positive. More detailed information as to
the calculation of performance appears in the SAI.
For more information on the performance of INVESTMENT PORTFOLIOS under the
Contract, see their prospectuses.
SECTION 9: DEATH BENEFITS
UPON YOUR DEATH: If you die before ANNUITY INCOME PAYMENTS begin, we will pay a
death benefit to your BENEFICIARY (see below). If there is a JOINT OWNER, the
death benefit will be paid when the first owner dies and the surviving JOINT
OWNER will be treated as the BENEFICIARY. The amount of the death benefit
depends on how old you (or the JOINT OWNER) are on the date of death.
If you (or the JOINT OWNER) die prior to age 75, the death benefit will be the
greater of:
1. the value of your Contract on the date we receive adequate proof of
death;
2. the value of the Contract on the most recent 5th Contract anniversary
immediately preceding the date of death, plus any subsequent purchase
payments less any withdrawals since that anniversary date; or
3. the total of all PURCHASE PAYMENTS received less any PURCHASE PAYMENT
withdrawals since the date the Contract was issued.
If you (or your JOINT OWNER) die on or after the date you (or the JOINT OWNER)
reach age 75, the death benefit will be the greater of:
1. the value of your Contract on the date we receive adequate proof of
death;
2. the death benefit as of your (or the JOINT OWNER'S) 75th birthday,
less the dollar amount of any subsequent withdrawals; or
3. the total of all PURCHASE PAYMENTS received less any purchase payment
withdrawals since the date this Contract was issued.
You may specify the manner in which the death benefit is to be paid. If you do
not, the BENEFICIARY has this right. In either case, the entire death benefit
must be paid within 5 years after the date of death, unless: (1) it is paid over
the BENEFICIARY'S lifetime or a period not extending beyond the BENEFICIARY'S
life expectancy; and (2) payments begin within one year of the date of death.
However, if the BENEFICIARY is your spouse, he/she may continue the Contract as
the OWNER.
If the death benefit is paid immediately in one lump sum, the Contract will end
on the date of payment. If not, the death benefit will become the new CONTRACT
VALUE and will be allocated to the various SUBACCOUNTS and the FIXED ACCOUNT in
the same proportion as existed on the date we receive adequate proof of death.
15
<PAGE>
DEATH OF THE ANNUITANT: If the ANNUITANT dies before ANNUITY INCOME PAYMENTS
start, you can name a new ANNUITANT. If no new ANNUITANT is named within 30
days, you will become the ANNUITANT. If you are the ANNUITANT, we will pay the
BENEFICIARY the death benefit as described above. However, if the OWNER (you) is
a non-natural person, then the death of, or change in, the ANNUITANT will be
treated as the death of the OWNER and the "Upon Your Death" provisions stated
above will apply.
If the ANNUITANT dies after ANNUITY INCOME PAYMENTS start, payments will be made
as described in "Section 2: Annuity Payments (The Income Phase)."
SECTION 10: OTHER INFORMATION
CITICORP LIFE INSURANCE COMPANY: Citicorp Life Insurance Company (formerly
Family Guardian Life Insurance Company) is a stock life insurance company
organized under Arizona laws in 1971. We are a wholly owned subsidiary of
Citibank Delaware which is a wholly owned subsidiary of Citicorp Holdings Inc.,
which in turn, is a wholly owned subsidiary of Citigroup, one of the world's
largest bank holding companies.
We, and our former parent corporation, Citicorp Mortgage, Inc., a Delaware
holding company, were both acquired by Citicorp in 1973. During 1990, the
ownership of Citicorp Life was transferred to Citibank Delaware.
Like all financial services providers, we utilize computer systems that may be
affected by Year 2000 transition issues, and rely on service providers,
including the INVESTMENT PORTFOLIOS, whose systems also may be affected. We have
developed, and are in the process of implementing, a Year 2000 transition plan.
In addition, we are in the process of confirming that the INVESTMENT PORTFOLIOS
and other service providers are also engaged in similar transition plans. The
resources that are being devoted to this effort are substantial. It is difficult
to predict with precision whether the amount of resources ultimately devoted, or
the outcome of these efforts, will have any negative impact on our operations.
However, as of the date of this Prospectus, it is not anticipated that you will
experience negative effects on your investment, or on the services we provide,
as a result of Year 2000 transition implementation. As of January 1, 1999, our
systems are Year 2000 compliant, but there can be no assurance that the
interaction with other service providers will not impair services at that time.
THE SEPARATE ACCOUNT: On July 6, 1994 we established a SEPARATE ACCOUNT under
Arizona law, the Citicorp Life Variable Annuity Separate Account, to receive,
hold and invest PURCHASE PAYMENTS made under these, and similar contracts. It
has been registered with the SEC as a unit investment trust under the Investment
Company Act of 1940 (the "1940 Act"). The SEPARATE ACCOUNT is divided into a
number of SUBACCOUNTS, each of which invests exclusively in the shares of a
corresponding INVESTMENT PORTFOLIO. Although the assets in the SEPARATE ACCOUNT
are our property, the SEPARATE ACCOUNT is not chargeable with liabilities
arising out of any other business that we may conduct. The assets of the
SEPARATE ACCOUNT are available to cover our general liabilities only to the
extent that those assets exceed the liabilities arising under the Contracts and
any other contracts supported by the SEPARATE ACCOUNT. The income, gains and
losses, realized and unrealized, from the assets allocated to each SUBACCOUNT
are credited to and charged against that SUBACCOUNT without regard to income,
gains and losses from any other of our accounts or SUBACCOUNTS. We have the
right to transfer to the General Account any assets of the SEPARATE ACCOUNT
which are in excess of reserves and other contract liabilities. All obligations
arising under the Contracts are our general corporate obligations.
DISTRIBUTION: Applications for Contracts are solicited by agents who are
licensed by applicable state insurance authorities to sell our variable annuity
contracts and who are also registered representatives of broker-dealers
registered with the SEC under the Securities Exchange Act of 1934 and having
written sales agreements with the principal underwriter to sell the Contract.
CFBDS, Inc. acts as the principal underwriter, as defined in the 1940 Act, of
the Contracts for the SEPARATE ACCOUNT pursuant to an Underwriting Agreement
with us. CFBDS is not obligated to sell any specific number of Contracts. CFBDS,
Inc.'s principal business address is 21 Milk St., Boston, Massachusetts.
We may pay sales commissions to broker-dealers up to an amount equal to 7.00% of
the PURCHASE PAYMENTS. These broker-dealers are expected to compensate sales
representatives in varying amounts from these commissions. We also may pay other
distribution expenses such as production incentive bonuses, agent's insurance
and pension benefits, and agency expense allowances. These distribution expenses
do not result in any additional charges under the Contracts that are not
described under "Charges and Deductions."
OWNERSHIP: You are the OWNER of the Contract. You are also the ANNUITANT unless
a different ANNUITANT is named. Any JOINT OWNER must be your spouse unless state
law requires us to permit other JOINT OWNERS or we otherwise agree. Before the
ANNUITY INCOME DATE you have all the rights under the Contract, subject to the
rights of any irrevocable beneficiary or assignee of record. If JOINT OWNERS are
named, both must consent to any change.
BENEFICIARY: The BENEFICIARY is the person(s) or entity you name to receive any
death benefit. The BENEFICIARY is named by you and can be changed at any time
prior to the ANNUITY INCOME DATE. If you have named an irrevocable beneficiary,
their approval must be obtained before you change BENEFICIARIES. If you name two
or more BENEFICIARIES, each BENEFICIARY will receive an equal share of any Death
Benefit unless you specify otherwise in writing. If a named BENEFICIARY dies
before you, the interest of that BENEFICIARY will end on his or her death. If no
BENEFICIARY is named or no BENEFICIARY survives you, any Death Benefit will be
paid to your estate.
16
<PAGE>
SUSPENSION OF PAYMENTS OR TRANSFERS: We may be required to suspend or postpone
surrender or withdrawal payments and transfers if:
1. the New York Stock Exchange is closed, other than customary weekend
and holiday closings, or trading on the exchange is restricted as
determined by the SEC; or
2. the SEC permits by an order such postponement for the protection of
Contract Owners; or
3. the SEC determines that an emergency exists that would make the
disposal of securities held in a SUBACCOUNT or the determination of
the value of the SUBACCOUNT'S net assets not reasonably practicable.
If a recent check or draft has been submitted, we have the right to delay
payment until we have assured ourselves that the check or draft has been
honored.
Any surrender, withdrawal or death benefit will usually be paid within 7 days
after we receive proper notice. We have the right to defer payment of any
surrender, withdrawal or transfer from the FIXED ACCOUNT for up to six months
from the date of receipt of written notice for such a surrender, withdrawal or
transfer. If payment is not made within 10 days after receipt of all necessary
documentation from you, any amount paid will include interest at the minimum
rate required by law or the current FIXED ACCOUNT interest rate, if greater.
MODIFICATIONS: We may modify the Contract if necessary:
1. for the Contract or the SEPARATE ACCOUNT to comply with the laws or
regulations of a governmental agency; or
2. to reflect a change in the operation of the SEPARATE ACCOUNT or a
SUBACCOUNT; or
3. to add, delete or modify an account, a SUBACCOUNT or an INVESTMENT
PORTFOLIO.
If such modifications are made, we will notify you, or the ANNUITANT, and
endorse the Contract if appropriate.
LEGAL PROCEEDINGS: There are no material legal proceedings to which the SEPARATE
ACCOUNT, or CFBDS, Inc. as principal underwriter, is a party or the assets of
the SEPARATE ACCOUNT are subject. We are not involved in any litigation that is
of material importance in relation to the total assets of, or that relates to,
the SEPARATE ACCOUNT.
FINANCIAL STATEMENTS: Our audited Statutory Financial Statements as of December
31, 1998 and 1997 and for the years ended December 31, 1998, 1997 and 1996 as
well as the Independent Auditors' Report appear in the Statement of Additional
Information bearing the same date as this Prospectus. Our Financial Statements
should only be considered when evaluating our ability to meet our obligations
under the Contract. The SAI also contains financial statements for the SEPARATE
ACCOUNT as of December 31, 1998.
INQUIRES: If you need more information, please contact us at: Citicorp Life
Insurance Company, 800 Silver Lake Boulevard, P.O. Box 7031, Dover, DE 19903.
You may call us toll free at 800-497-4857
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
ADDITIONAL CONTRACT PROVISIONS 4
The Contract 4
Incontestability 4
Misstatement of Age or Sex 4
Participation 4
Assignment 4
DISTRIBUTION OF THE CONTRACTS 4
DETERMINING ACCUMULATION UNIT VALUES 4
ADDING, DELETING OR SUBSTITUTING
INVESTMENT PORTFOLIOS 5
VOTING RIGHTS 5
CALCULATION OF YIELDS AND TOTAL RETURNS 6
Money Market Subaccount Yields 6
Other Subaccount Yields 8
Average Annual Total Returns 9
Subaccount Performance Data 11
Adjusted Historic Portfolio Performance Data 16
Effect of the Annual Contract Fee on
Performance Data 21
VARIABLE ANNUITY PAYMENTS 21
Assumed Investment Rate 21
Amount of Variable Annuity Payments 21
Annuity Unit Value 22
TAX STATUS 23
Introduction 23
Taxation of the Company 23
Tax Status of the Contract 23
Taxation of Annuities 25
Qualified Contracts 26
Withholding 27
Possible Changes in Taxation 28
Other Tax Consequences 28
LEGAL MATTERS 28
EXPERTS 28
OTHER INFORMATION 28
FINANCIAL STATEMENTS 29
If you would like a free copy of the Statement of Additional Information for
this prospectus, please complete the following and mail it to Citicorp Life
Insurance Company, 800 Silver Lake Boulevard, P.O. Box 7031, Dover, Delaware
19903.
Please send a copy of the Statement of Additional Information pertaining to the
Citicorp Life Insurance Company Variable Annuity and the Citicorp Life Variable
Annuity Separate Account to: (Please Print or Type)
Name:__________________________________________________________
Mailing Address: ______________________________________________
______________________________________________
17
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK.
<PAGE>
APPENDIX: CONDENSED FINANCIAL INFORMATION
The following shows Accumulation Unit Values and number of ACCUMULATION UNITS
for the period from the commencement of business (2/21/95) through December 31,
1998 for each of the SUBACCOUNTS. This condensed financial information is
derived from the financial statements of the SEPARATE ACCOUNT and should be read
in conjunction with the financial statements, related notes and other financial
information contained in the SAI.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
From
Commencement
Year Ending Year Ending Year Ending of Operations to
Subaccount 12/31/98 12/31/97 12/31/96 12/31/95*
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CitiSelect VIP Folio 200 Conservative
(formerly CitiSelect VIP Folio 200)
Unit Value Beginning of Period $1.06 $1.00 -- --
Unit Value End of Period $1.13 $1.06 -- --
Number of Accumulation Units Outstanding 3,875,575 2,283,189
- ----------------------------------------------------------------------------------------------------------------------------------
CitiSelect VIP Folio 300 Balanced
(formerly CitiSelect VIP Folio 300)
Unit Value Beginning of Period$1.07 $1.00 -- --
Unit Value End of Period $1.14 $1.07 -- --
Number of Accumulation Units Outstanding 6,153,461 3,338,546
- ----------------------------------------------------------------------------------------------------------------------------------
CitiSelect VIP Folio 400 Growth
(formerly CitiSelect VIP Folio 400)
Unit Value Beginning of Period $1.08 $1.00 -- --
Unit Value End of Period $1.10 $1.08 -- --
Number of Accumulation Units Outstanding 2,901,723 2,863,311
- ----------------------------------------------------------------------------------------------------------------------------------
CitiSelect VIP Folio 500 Growth Plus
(formerly CitiSelect VIP Folio 500)
Unit Value Beginning of Period $1.09 $1.00 -- --
Unit Value End of Period $1.10 $1.09 -- --
Number of Accumulation Units Outstanding 1,566,185 1,046,036
- ----------------------------------------------------------------------------------------------------------------------------------
CitiFunds Small Cap Growth VIP Portfolio
Unit Value Beginning of Period $1.11 $1.00 -- --
Unit Value End of Period $1.05 $1.11 -- --
Number of Accumulation Units Outstanding 473,301 150,143 -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio
Unit Value Beginning of Period $1.80 $1.48 $1.31 $1.00
Unit Value End of Period $2.49 $1.80 $1.48 $1.31
Number of Accumulation Units Outstanding 1,821,492 725,424 98,550 4,656
- ----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP High Income Portfolio
Unit Value Beginning of Period $1.14 $1.00 -- --
Unit Value End of Period $1.08 $1.14 -- --
Number of Accumulation Units Outstanding 2,915,521 819,371 -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Fidelity Equity-Income Portfolio
Unit Value Beginning of Period $1.22 $1.00 -- --
Unit Value End of Period $1.34 $1.22 -- --
Number of Accumulation Units Outstanding 5,786,776 2,265,460 -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Overseas Portfolio
Unit Value Beginning of Period $1.09 $1.00 -- --
Unit Value End of Period $1.21 $1.09 -- --
Number of Accumulation Units Outstanding 1,400,537 1,070,184 -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Contrafund Portfolio
Unit Value Beginning of Period $1.21 $1.00 -- --
Unit Value End of Period $1.55 $1.21 -- --
Number of Accumulation Units Outstanding 4,179,308 1,585,128 -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Index 500 Portfolio
Unit Value Beginning of Period $1.24 $1.00 -- --
Unit Value End of Period $1.57 $1.24 -- --
Number of Accumulation Units Outstanding 7,620,186 2,215,225 -- --
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
From
Commencement
Year Ending Year Ending Year Ending of Operations to
Subaccount 12/31/98 12/31/97 12/31/96 12/31/95*
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM V.I. Capital Appreciation Fund
Unit Value Beginning of Period $1.67 $1.49 $1.00 $1.00
Unit Value End of Period $1.97 $1.67 $1.49 $1.00
Number of Accumulation Units Outstanding 2,195,417 1,293,126 77,611 0
- -------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Government Securities Fund
Unit Value Beginning of Period $1.06 $1.00 -- --
Unit Value End of Period $1.13 $1.06 -- --
Number of Accumulation Units Outstanding 1,596,060 573,525 -- --
- -------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Growth Fund
Unit Value Beginning of Period $1.21 $1.00 -- --
Unit Value End of Period $1.61 $1.21 -- --
Number of Accumulation Units Outstanding 784,811 315,240 -- --
- -------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Growth and Income Fund
Unit Value Beginning of Period $1.18 $1.00 -- --
Unit Value End of Period $1.49 $1.18 -- --
Number of Accumulation Units Outstanding 2,586,911 827,506 -- --
- -------------------------------------------------------------------------------------------------------------------------------
AIM V.I. International Equity Fund
Unit Value Beginning of Period $1.05 $1.00 -- --
Unit Value End of Period $1.20 $1.05 -- --
Number of Accumulation Units Outstanding 3,742,016 2,357,251 -- --
- -------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Value Fund
Unit Value Beginning of Period $1.19 $1.00 -- --
Unit Value End of Period $1.56 $1.19 -- --
Number of Accumulation Units Outstanding 5,351,283 2,102,285 -- --
- -------------------------------------------------------------------------------------------------------------------------------
MFS Global Governments Series
(formerly MFS World Governments Series)
Unit Value Beginning of Period $1.10 $1.12 $1.00 $1.00
Unit Value End of Period $1.17 $1.10 $1.12 $1.00
Number of Accumulation Units Outstanding 382,462 303,642 65,848 0
- -------------------------------------------------------------------------------------------------------------------------------
MFS Money Market Series
Unit Value Beginning of Period $1.09 $1.06 $1.00 $1.00
Unit Value End of Period $1.14 $1.09 $1.06 $1.00
Number of Accumulation Units Outstanding 2,781,034 3,362,150 47,376 0
- -------------------------------------------------------------------------------------------------------------------------------
MFS Bond Series
Unit Value Beginning of Period $1.08 $1.00 -- --
Unit Value End of Period $1.14 $1.08 -- --
Number of Accumulation Units Outstanding 2,234,730 861,145 -- --
- -------------------------------------------------------------------------------------------------------------------------------
MFS Total Return Series
Unit Value Beginning of Period $1.16 $1.00 -- --
Unit Value End of Period $1.29 $1.16 -- --
Number of Accumulation Units Outstanding 3,960,924 1,592,342 -- --
- -------------------------------------------------------------------------------------------------------------------------------
MFS Research Series
Unit Value Beginning of Period $1.15 $1.00 -- --
Unit Value End of Period $1.41 $1.15 -- --
Number of Accumulation Units Outstanding 4,246,685 2,569,829 -- --
- -------------------------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Series
Unit Value Beginning of Period $1.17 $1.00 -- --
Unit Value End of Period $1.55 $1.17 -- --
Number of Accumulation Units Outstanding 4,576,450 2,322,481 -- --
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*The Fidelity VIP Growth Portfolio, AIM V.I. Capital Appreciation Fund, MFS
Global Governments Series and MFS Money Market Series SUBACCOUNTS commenced
operations on February 21, 1995. All other SUBACCOUNTS commenced operations on
February 3, 1997.
20
<PAGE>
PART B
STATEMENT OF ADDITIONAL INFORMATION
1
<PAGE>
SUPPLEMENT DATED MAY 1, 1999 TO
STATEMENT OF ADDITIONAL INFORMATION DATED MAY 1, 1999
Citicorp Life Variable Annuity Separate Account ("Separate Account")
Citicorp Life Insurance Company
Individual Flexible Premium Deferred Variable Annuity Contracts
Effective May 1, 1999, the section of the Statement of Additional Information
captioned AVERAGE ANNUAL TOTAL RETURNS is amended to include the following:
SUBACCOUNT PERFORMANCE DATA
From time to time we may quote average annual total returns and
cumulative total returns for subaccounts from their inception that reflect the
election of the Guaranteed Minimum Income Benefit option. Such performance
information will be calculated in exactly the same way as the average annual
total returns and cumulative total returns described in the accompanying
statement of additional information but will deduct the Guaranteed Minimum
Income Benefit Charge of 0.50% on an annual basis as if the charge had been in
effect since the subaccounts' inception. For purposes of calculating both
average annual total returns and cumulative total returns, we deduct a mortality
and expense risk charge equal to 0.84% of Separate Account assets on an annual
basis. Such charge represents the mortality and expense risk charge assessed
under the Contract, effective March 2, 1998. Prior to that date, this charge was
1.25% of Separate Account assets on an annual basis. We may change this charge
in the future but it will never be greater than 1.25%. Data is not an indication
of future performance of the subaccounts.
Based on the method of calculation described in the accompanying
statement of additional information and the election of the Guaranteed Minimum
Income Benefit option, the Standardized Average Annual Total Returns for the
subaccounts available under the option for the period ending December 31, 1998
were:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Guaranteed Minimum Income Benefit Option
Subaccount
Standardized Average Annual Total Return Table
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Guaranteed Minimum Income Benefit Option For the For the
Subaccount one-year period
(date of inception of subaccount) period from
ending inception to
12/31/98 12/31/98
- ------------------------------------------------------------------------------------------------------
VARIABLE ANNUITY PORTFOLIOS
CitiSelect VIP Folio 400 Growth (2/03/97) -4.44% 1.64%
(formerly CitiSelect VIP Folio 400)
CitiSelect VIP Folio 500 Growth Plus (2/03/97) -6.24% 1.42%
(formerly CitiSelect VIP Folio 500)
CitiFundsSM Small Cap Growth VIP Portfolio (2/03/97) -11.55% -0.93%
- ------------------------------------------------------------------------------------------------------
A I M VARIABLE INSURANCE FUNDS, INC.
Capital Appreciation Fund (2/21/95) 11.21% 18.12%
Growth Fund (2/03/97) 25.81% 24.77%
Growth and Income Fund (2/03/97) 19.47% 20.03%
International Equity Fund (2/03/97) 7.45% 6.26%
Value Fund (2/03/97) 24.12% 22.70%
- ------------------------------------------------------------------------------------------------------
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
Growth Portfolio (2/21/95) 31.10% 25.58%
Equity-Income Portfolio (2/03/97) 3.65% 13.21%
Overseas Portfolio (2/03/97) 4.76% 7.00%
- ------------------------------------------------------------------------------------------------------
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
Contrafund Portfolio (2/03/97) 21.73% 22.61%
Index 500 Portfolio (2/03/97) 20.10% 23.21%
- ------------------------------------------------------------------------------------------------------
MFS VARIABLE INSURANCE TRUST
Research Series (2/03/97) 15.24% 16.08%
Emerging Growth Series (2/03/97) 25.85% 22.32%
- ------------------------------------------------------------------------------------------------------
</TABLE>
1
<PAGE>
Based on the method of calculation described in the accompanying
statement of additional information and the election of the Guaranteed Minimum
Income Benefit option, the Standardized Cumulative Total Returns for the
subaccounts available under the option for the period ending December 31, 1998
were:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Guaranteed Minimum Income Benefit Option
Subaccount
Standardized Cumulative Total Return Table
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Guaranteed Minimum Income Benefit Option For the For the
Subaccount one-year period
(date of inception of subaccount) period from
ending inception to
12/31/98 12/31/98
- ----------------------------------------------------------------------------------------------------
VARIABLE ANNUITY PORTFOLIOS
CitiSelect VIP Folio 400 Growth (2/03/97) -4.44% 3.15%
(formerly CitiSelect VIP Folio 400)
CitiSelect VIP Folio 500 Growth Plus (2/03/97) -6.24% 2.73%
(formerly CitiSelect VIP Folio 500)
CitiFunds Small Cap Growth VIP Portfolio (2/03/97) -11.55% -1.77%
- ----------------------------------------------------------------------------------------------------
A I M VARIABLE INSURANCE FUNDS, INC.
Capital Appreciation Fund (2/21/95) 11.21% 90.09%
Growth Fund (2/03/97) 25.81% 52.50%
Growth and Income Fund (2/03/97) 19.47% 41.64%
International Equity Fund (2/03/97) 7.45% 12.28%
Value Fund (2/03/97) 24.12% 47.70%
- ----------------------------------------------------------------------------------------------------
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
Growth Portfolio (2/21/95) 31.10% 140.75%
Equity-Income Portfolio (2/03/97) 3.65% 26.69%
Overseas Portfolio (2/03/97) 4.76% 13.76%
- ----------------------------------------------------------------------------------------------------
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
Contrafund Portfolio (2/03/97) 21.73% 47.51%
Index 500 Portfolio (2/03/97) 20.10% 48.89%
- ----------------------------------------------------------------------------------------------------
MFS VARIABLE INSURANCE TRUST
Research Series (2/03/97) 15.24% 32.89%
Emerging Growth Series (2/03/97) 25.85% 46.84%
- ----------------------------------------------------------------------------------------------------
</TABLE>
From time to time we may also quote average annual total returns and
cumulative total returns for subaccounts that reflect the election of the
Guaranteed Minimum Income Benefit option and do not reflect the surrender charge
or the Annual Contract Fee. Such performance information will be calculated in
exactly the same way as the subaccounts' Non-Standardized Average Annual Total
Returns and Non-Standardized Cumulative Total Returns described in the
accompanying statement of additional information except that the Guaranteed
Minimum Income Benefit Charge will also be deducted as if the charge had been in
effect since the subaccounts' inception.
2
<PAGE>
Based on the method of calculation described in the accompanying
statement of additional information and the election of the Guaranteed Minimum
Income Benefit option, the Non-Standardized Average Annual Total Returns for the
subaccounts under the option for the period ending December 31, 1998 were:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Guaranteed Minimum Income Benefit Option
Subaccount Non-Standardized
Average Annual Total Return Table
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Guaranteed Minimum Income Benefit Option For the For the
Subaccount one-year period
(date of inception of subaccount) period from
ending inception to
12/31/98 12/31/98
- -----------------------------------------------------------------------------------------------------
VARIABLE ANNUITY PORTFOLIOS
CitiSelect VIP Folio 400 Growth (2/03/97) 1.88% 4.41%
(formerly CitiSelect VIP Folio 400)
CitiSelect VIP Folio 500 Growth Plus (2/03/97) 0.08% 4.20%
(formerly CitiSelect VIP Folio 500)
CitiFunds Small Cap Growth VIP Portfolio (2/03/97) -5.23% 1.91%
- -----------------------------------------------------------------------------------------------------
A I M VARIABLE INSURANCE FUNDS, INC.
Capital Appreciation Fund (2/21/95) 17.53% 18.71%
Growth Fund (2/03/97) 32.13% 27.08%
Growth and Income Fund (2/03/97) 25.79% 22.42%
International Equity Fund (2/03/97) 13.77% 8.93%
Value Fund (2/03/97) 30.44% 25.05%
- -----------------------------------------------------------------------------------------------------
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
Growth Portfolio (2/21/95) 37.42% 26.08%
Equity-Income Portfolio (2/03/97) 9.97% 15.73%
Overseas Portfolio (2/03/97) 11.07% 9.65%
- -----------------------------------------------------------------------------------------------------
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
Contrafund Portfolio (2/03/97) 28.05% 24.96%
Index 500 Portfolio (2/03/97) 26.42% 25.55%
- -----------------------------------------------------------------------------------------------------
MFS VARIABLE INSURANCE TRUST
Research Series (2/03/97) 21.55% 18.55%
Emerging Growth Series (2/03/97) 32.17% 24.67%
- ---------------------------------------------------------------------- ------------- ----------------
</TABLE>
3
<PAGE>
Based on the method of calculation described in the accompanying
statement of additional information and the election of the Guaranteed Minimum
Income Benefit option, the Non-Standardized Cumulative Total Returns for the
subaccounts under the option for the period ending December 31, 1998 were:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Guaranteed Minimum Income Benefit Option
Subaccount Non-Standardized
Cumulative Total Return Table
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Guaranteed Minimum Income Benefit Option For the For the
Subaccount one-year period
(date of inception of subaccount) period from
ending inception to
12/31/98 12/31/98
- ----------------------------------------------------------------------------------------------------
VARIABLE ANNUITY PORTFOLIOS
CitiSelect VIP Folio 400 Growth (2/03/97) 1.88% 8.58%
(formerly CitiSelect VIP Folio 400)
CitiSelect VIP Folio 500 Growth Plus (2/03/97) 0.08% 8.17%
(formerly CitiSelect VIP Folio 500)
CitiFunds Small Cap Growth VIP Portfolio (2/03/97) -5.23% 3.67%
- ----------------------------------------------------------------------------------------------------
A I M VARIABLE INSURANCE FUNDS, INC.
Capital Appreciation Fund (2/21/95) 17.53% 93.79%
Growth Fund (2/03/97) 32.13% 57.94%
Growth and Income Fund (2/03/97) 25.79% 47.08%
International Equity Fund (2/03/97) 13.77% 17.71%
Value Fund (2/03/97) 30.44% 53.14%
- ----------------------------------------------------------------------------------------------------
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
Growth Portfolio (2/21/95) 37.42% 144.48%
Equity-Income Portfolio (2/03/97) 9.97% 32.12%
Overseas Portfolio (2/03/97) 11.07% 19.20%
- ----------------------------------------------------------------------------------------------------
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
Contrafund Portfolio (2/03/97) 28.05% 52.95%
Index 500 Portfolio (2/03/97) 26.42% 54.33%
- ----------------------------------------------------------------------------------------------------
MFS VARIABLE INSURANCE TRUST
Research Series (2/03/97) 21.55% 38.32%
Emerging Growth Series (2/03/97) 32.17% 52.28%
- ----------------------------------------------------------------------------------------------------
</TABLE>
ADJUSTED HISTORIC PORTFOLIO PERFORMANCE DATA
The charts below show adjusted historic performance data for the
portfolios, including for periods prior to the inception of the subaccounts,
reduced by some or all of the fees and charges under the Contract. Such
performance information will be calculated in exactly the same way as the
average annual total returns and cumulative total returns described in the
accompanying statement of additional information, except that the Guaranteed
Minimum Income Benefit Charge will also be deducted. Non-standard performance
data will be disclosed only if standard performance data for the required
periods is also disclosed.
For purposes of calculating the average annual total returns and
cumulative total returns of the portfolios, we have deducted a daily mortality
and expense risk charge equal to 0.84% of annual assets (except that prior to
March 2, 1998, we deduct a daily mortality and expense risk charge of 1.25% of
annual assets), a daily administration fee of 0.15% of annual assets, the $30
annual contract fee, the applicable surrender charge, and the Guaranteed Minimum
Income Benefit Charge of 0.50% on an annual basis.
4
<PAGE>
Based on the method of calculation described in the accompanying
statement of additional information and the election of the Guaranteed Minimum
Income Benefit option, the Adjusted Historic Average Annual Total Returns for
the portfolios available under the option for the period ending December 31,
1998 were:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Guaranteed Minimum Income Benefit Option
Adjusted Portfolio
Average Annual Total Return Table Deducting All Fees and Charges
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Guaranteed Minimum Income Benefit Option For the For the For the For the
Portfolio one-year 5-year 10-year period period
(date of inception of portfolio) period period ending from
ending ending 12/31/98 inception to
12/31/98 12/31/98 12/31/98
- ---------------------------------------------------------------------------------------------------------------------
VARIABLE ANNUITY PORTFOLIOS
CitiSelect VIP Folio 400 Growth (11/25/96) -4.44% N/A N/A 1.64%
(formerly CitiSelect VIP Folio 400)
CitiSelect VIP Folio 500 Growth Plus (11/25/96) -6.24% N/A N/A 1.42%
(formerly CitiSelect VIP Folio 500)
CitiFunds Small Cap Growth VIP Portfolio -11.55% N/A N/A -0.93%
(11/25/96)
- ---------------------------------------------------------------------------------------------------------------------
A I M VARIABLE INSURANCE FUNDS, INC.
Capital Appreciation Fund (5/05/93) 11.20% 15.16% N/A 17.22%
Growth Fund (5/05/93) 25.80% 19.35% N/A 19.15%
Growth and Income Fund (5/02/94) 19.46% N/A N/A 20.66%
International Equity Fund (5/05/93) 7.45% 9.28% N/A 12.25%
Value Fund (5/05/93) 24.11% 19.60% N/A 20.10%
- ---------------------------------------------------------------------------------------------------------------------
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
Growth Portfolio (10/9/86) 31.09% 19.64% 17.61% 14.42%
Equity-Income Portfolio (10/9/86) 3.65% 16.69% 13.88% 11.97%
Overseas Portfolio (1/28/87) 4.75% 7.65% 8.42% 7.16%
- ---------------------------------------------------------------------------------------------------------------------
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
Contrafund Portfolio (1/03/95) 21.72% N/A N/A 26.49%
Index 500 Portfolio (8/27/92) 20.08% 21.61% N/A 19.22%
- ---------------------------------------------------------------------------------------------------------------------
MFS VARIABLE INSURANCE TRUST
Research Series (7/26/95) 15.23% N/A N/A 20.71%
Emerging Growth Series (7/24/95) 25.84% N/A N/A 24.58%
- ------------------------------------------------------ -------------- -------------- --------------- ----------------
</TABLE>
5
<PAGE>
Based on the method of calculation described in the accompanying
statement of additional information and the election of the Guaranteed Minimum
Income Benefit option, the Adjusted Historic Cumulative Total Returns for the
portfolios available under the option for the period ending December 31, 1998
were:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Guaranteed Minimum Income Benefit Option
Adjusted Portfolio
Cumulative Total Return Table Deducting All Fees and Charges
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Guaranteed Minimum Income Benefit Option For the For the For the For the
Portfolio one-year 5-year 10-year period period
(date of inception of portfolio) period period ending from
ending ending 12/31/98 inception to
12/31/98 12/31/98 12/31/98
- ---------------------------------------------------------------------------------------------------------------------
VARIABLE ANNUITY PORTFOLIOS
CitiSelect VIP Folio 400 Growth (11/25/96) -4.44% N/A N/A 3.15%
(formerly CitiSelect VIP Folio 400)
CitiSelect VIP Folio 500 Growth Plus (11/25/96) -6.24% N/A N/A 2.73%
(formerly CitiSelect VIP Folio 500)
CitiFunds Small Cap Growth VIP Portfolio -11.55% N/A N/A -1.77%
(11/25/96)
- ---------------------------------------------------------------------------------------------------------------------
A I M VARIABLE INSURANCE FUNDS, INC.
Capital Appreciation Fund (5/05/93) 11.20% 102.52% N/A 145.71%
Growth Fund (5/05/93) 25.80% 142.12% N/A 169.47%
Growth and Income Fund (5/02/94) 19.46% N/A N/A 140.18%
International Equity Fund (5/05/93) 7.45% 55.82% N/A 92.31%
Value Fund (5/05/93) 24.11% 144.75% N/A 181.80%
- ---------------------------------------------------------------------------------------------------------------------
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
Growth Portfolio (10/9/86) 31.09% 145.16% 406.37% 419.25%
Equity-Income Portfolio (10/9/86) 3.65% 116.36% 266.77% 298.65%
Overseas Portfolio (1/28/87) 4.75% 44.55% 124.47% 128.18%
- ---------------------------------------------------------------------------------------------------------------------
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
Contrafund Portfolio (1/03/95) 21.72% N/A N/A 155.49%
Index 500 Portfolio (8/27/92) 20.08% 165.98% N/A 205.06%
- ---------------------------------------------------------------------------------------------------------------------
MFS VARIABLE INSURANCE TRUST
Research Series (7/26/95) 15.23% N/A N/A 90.81%
Emerging Growth Series (7/24/95) 25.84% N/A N/A 112.93%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
From time to time we may also quote adjusted historic average annual
total returns and cumulative total returns for the portfolios that reflect the
election of the Guaranteed Minimum Income Benefit option and do not deduct the
surrender charge or the Annual Contract Fee. Such performance information will
be calculated in exactly the same way as described in the accompanying statement
of additional information, except that the Guaranteed Minimum Income Benefit
Charge will also be deducted.
6
<PAGE>
Based on the method of calculation described in the accompanying
statement of additional information and the election of the Guaranteed Minimum
Income Benefit option, the adjusted Average Annual Total Returns for the
portfolios without deduction of Surrender Charges and Annual Contract Fees under
the option for the period ending December 31, 1998 were:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Guaranteed Minimum Income Benefit Option
Adjusted Portfolio
Average Annual Total Return Table Without Deduction of Surrender Charges and Annual Contract Fee
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Guaranteed Minimum Income Benefit Option For the For the For the For the
Portfolio one-year 5-year 10-year period period
(date of inception of portfolio) period period ending from
ending ending 12/31/98 inception to
12/31/98 12/31/98 12/31/98
- ---------------------------------------------------------------------------------------------------------------------
VARIABLE ANNUITY PORTFOLIOS
CitiSelect VIP Folio 400 Growth (11/25/96) 1.88% N/A N/A 4.41%
(formerly CitiSelect VIP Folio 400)
CitiSelect VIP Folio 500 Growth Plus (11/25/96) 0.08% N/A N/A 4.20%
(formerly CitiSelect VIP Folio 500)
CitiFunds Small Cap Growth VIP Portfolio -5.23% N/A N/A 1.91%
(11/25/96)
- ---------------------------------------------------------------------------------------------------------------------
A I M VARIABLE INSURANCE FUNDS, INC.
Capital Appreciation Fund (5/05/93) 17.52% 15.48% N/A 17.24%
Growth Fund (5/05/93) 32.12% 19.63% N/A 19.17%
Growth and Income Fund (5/02/94) 25.78% N/A N/A 20.97%
International Equity Fund (5/05/93) 13.77% 9.67% N/A 12.27%
Value Fund (5/05/93) 30.44% 19.89% N/A 20.12%
- ---------------------------------------------------------------------------------------------------------------------
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
Growth Portfolio (10/9/86) 37.41% 19.93% 17.63% 14.44%
Equity-Income Portfolio (10/9/86) 9.97% 17.00% 13.90% 11.99%
Overseas Portfolio (1/28/87) 11.07% 8.07% 8.44% 7.18%
- ---------------------------------------------------------------------------------------------------------------------
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
Contrafund Portfolio (1/03/95) 28.04% N/A N/A 26.96%
Index 500 Portfolio (8/27/92) 26.40% 21.88% N/A 19.24%
- ---------------------------------------------------------------------------------------------------------------------
MFS VARIABLE INSURANCE TRUST
Research Series (7/26/95) 21.55% N/A N/A 21.39%
Emerging Growth Series (7/24/95) 32.16% N/A N/A 25.21%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
Based on the method of calculation described in the accompanying
statement of additional information and the election of the Guaranteed Minimum
Income Benefit option, the adjusted Cumulative Total Returns for the portfolios
without deduction of Surrender Charges and Annual Contract Fees under the option
for the period ending December 31, 1998 were:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Guaranteed Minimum Income Benefit Option
Adjusted Portfolio
Cumulative Total Return Table Without Deduction of Surrender Charges and Annual Contract Fee
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Guaranteed Minimum Income Benefit Option For the For the For the For the
Portfolio one-year 5-year 10-year period period
(date of inception of portfolio) period period ending from
ending ending 12/31/98 inception to
12/31/98 12/31/98 12/31/98
- ---------------------------------------------------------------------------------------------------------------------
VARIABLE ANNUITY PORTFOLIOS
CitiSelect VIP Folio 400 Growth (11/25/96) 1.88% N/A N/A 10.37%
(formerly CitiSelect VIP Folio 400)
CitiSelect VIP Folio 500 Growth Plus (11/25/96) 0.08% N/A N/A 9.95%
(formerly CitiSelect VIP Folio 500)
CitiFunds Small Cap Growth VIP Portfolio -5.23% N/A N/A 5.37%
(11/25/96)
- ---------------------------------------------------------------------------------------------------------------------
A I M VARIABLE INSURANCE FUNDS, INC.
Capital Appreciation Fund (5/05/93) 17.52% 105.40% N/A 145.94%
Growth Fund (5/05/93) 32.12% 145.02% N/A 169.73%
Growth and Income Fund (5/02/94) 25.78% N/A N/A 143.07%
International Equity Fund (5/05/93) 13.77% 58.66% N/A 92.49%
Value Fund (5/05/93) 30.44% 147.66% N/A 182.07%
- ---------------------------------------------------------------------------------------------------------------------
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
Growth Portfolio (10/9/86) 37.41% 148.07% 407.24% 420.33%
Equity-Income Portfolio (10/9/86) 9.97% 119.25% 267.39% 299.48%
Overseas Portfolio (1/28/87) 11.07% 47.38% 124.85% 128.64%
- ---------------------------------------------------------------------------------------------------------------------
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
Contrafund Portfolio (1/03/95) 28.04% N/A N/A 159.27%
Index 500 Portfolio (8/27/92) 26.40% 168.91% N/A 205.39%
- ---------------------------------------------------------------------------------------------------------------------
MFS VARIABLE INSURANCE TRUST
Research Series (7/26/95) 21.55% N/A N/A 94.52%
Emerging Growth Series (7/24/95) 32.16% N/A N/A 116.66%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
-----------------------------------
STATEMENT OF
ADDITIONAL INFORMATION
CITICORP LIFE INSURANCE COMPANY
800 Silver Lake Boulevard
P.O. Box 7031
Dover, DE 19903
(800) 497-4857
CITICORP LIFE VARIABLE
ANNUITY SEPARATE ACCOUNT
INDIVIDUAL FLEXIBLE PREMIUM
DEFERRED VARIABLE ANNUITY CONTRACT
MAY 1, 1999
-----------------------------------
1
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
CITICORP LIFE INSURANCE COMPANY
800 Silver Lake Boulevard
P.O. Box 7031
Dover, DE 19903
(800) 497-4857
CITICORP LIFE VARIABLE ANNUITY SEPARATE ACCOUNT
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT
This Statement of Additional Information contains information in
addition to the information described in the Prospectus for the flexible premium
deferred variable annuity contract (the "Contract") offered by Citicorp Life
Insurance Company ("we", "our" and "us"). This Statement of Additional
Information is not a prospectus, and it should be read only in conjunction with
the prospectuses for the Contract and the investment portfolios. The Prospectus
for the Contract is dated the same as this Statement of Additional Information.
You may obtain a copy of the prospectuses by writing or calling us at our
address or phone number shown above.
MAY 1, 1999
2
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
PAGE
----
ADDITIONAL CONTRACT PROVISIONS.......................................4
The Contract................................................4
Incontestability............................................4
Misstatement of Age or Sex..................................4
Participation...............................................4
Assignment..................................................4
DISTRIBUTION OF THE CONTRACTS........................................4
DETERMINING ACCUMULATION UNIT VALUES.................................4
ADDING, DELETING OR SUBSTITUTING INVESTMENT PORTFOLIOS..............5
VOTING RIGHTS........................................................5
CALCULATION OF YIELDS AND TOTAL RETURNS..............................6
Money Market Subaccount Yields..............................6
Other Subaccount Yields.....................................8
Average Annual Total Returns................................9
Subaccount Performance Data................................11
Adjusted Historic Portfolio Performance Data...............16
Effect of the Annual Contract Fee on Performance Data......21
VARIABLE ANNUITY PAYMENTS...........................................21
Assumed Investment Rate....................................21
Amount of Variable Annuity Payments........................21
Annuity Unit Value.........................................22
TAX STATUS..........................................................23
Introduction...............................................23
Taxation of the Company....................................23
Tax Status of the Contract.................................23
Taxation of Annuities......................................25
Qualified Contracts........................................26
Withholding................................................27
Possible Changes in Taxation...............................28
Other Tax Consequences.....................................28
LEGAL MATTERS.......................................................28
EXPERTS ............................................................28
OTHER INFORMATION...................................................28
FINANCIAL STATEMENTS................................................29
3
<PAGE>
ADDITIONAL CONTRACT PROVISIONS
THE CONTRACT
The application, endorsements and all other attached papers are part of
the Contract. The statements made in the application are deemed representations
and not warranties. We will not use any statement in defense of a claim or to
void the Contract unless it is contained in the application.
INCONTESTABILITY
We will not contest the Contract.
MISSTATEMENT OF AGE OR SEX
If the age or sex (if applicable) of the payee has been misstated, the
amount which will be paid is that which the proceeds would have purchased at the
correct age and sex (if applicable).
PARTICIPATION
The Contract does not participate in our divisible surplus.
ASSIGNMENT
Upon written notice to us, you may assign your rights under this
Contract. We assume no responsibility for the validity of any such assignment.
Assignments will not apply to any payments or actions taken prior to the time it
is recorded by us. Certain Qualified Contracts may not be assigned.
DISTRIBUTION OF THE CONTRACTS
CFBDS, Inc. acts as the principal underwriter and distributor of the
Contract, pursuant to an Underwriting Agreement with us. Applications for the
Contracts are solicited by agents who are licensed by applicable state insurance
authorities to sell our variable annuity contracts and who are also licensed
representatives of broker-dealers registered with the SEC under the Securities
Exchange Act of 1934 and having written sales agreements with the principal
underwriter to sell the Contract.
CFBDS, Inc. is not affiliated with Citicorp Life Insurance Company or
the Separate Account. For fiscal years 1998, 1997 and 1996, no underwriting
commissions were paid to, or retained by, CFBDS, Inc.
DETERMINING ACCUMULATION UNIT VALUES
The accumulation unit value for each subaccount on its first Valuation
Period was set at $1.00. A Valuation Period is the period that starts at the
close of regular trading on the New York Stock Exchange on any business day and
ends at the close of regular trading on the next business day. We calculate the
accumulation unit value for each subaccount at the end of each Valuation Period.
We do this by multiplying the subaccount's accumulation unit value on the
preceding business day by the net investment factor for the subaccount's
Valuation Period just ended.
The net investment factor for each subaccount for each Valuation Period
is calculated by dividing (1) by (2) and subtracting (3) from the result, where:
4
<PAGE>
(1) Is the net asset value per share of the corresponding portfolio
at the end of the Valuation Period, plus the per share amount of
any declared and unpaid dividends or capital gains accruing to
that portfolio plus (or minus) a per share credit (or charge)
for any taxes resulting form the investment operations of the
subaccount;
(2) Is the portfolio's net asset value per share at the beginning of
the Valuation Period; and
(3) Is a factor representing the daily mortality and expense risk
charge and the administration charge deducted from the
subaccount.
ADDING, DELETING OR SUBSTITUTING INVESTMENT PORTFOLIOS
We reserve the right, subject to applicable law, to make additions to,
deletions from, or substitutions for the shares of a portfolio that are held in
or purchased by the Separate Account. If the shares of a portfolio are no longer
available for investment, or if, in our judgment, further investments in any
portfolio becomes inappropriate, we may redeem the shares of that portfolio and
substitute shares of another portfolio. We will not substitute any shares
attributable to a Contract's interest in a subaccount without notice and prior
approval of the SEC and state insurance authorities, to the extent required by
the 1940 Act and other applicable law.
We also reserve the right to establish additional subaccounts of the
Separate Account, each of which would invest in shares of a new corresponding
portfolio having a specified investment objective. We may, in our sole
discretion, establish new subaccounts or eliminate or combine one or more
subaccounts if marketing needs, tax considerations or investment or other
conditions warrant. Any new subaccounts may be made available to existing
Contract Owners on a basis to be determined by us. Subject to obtaining any
approvals or consents required by applicable law, the assets of one or more
subaccounts may be transferred to any other subaccount if, in our sole
discretion, marketing, tax, investment or other conditions warrant.
In the event of any such substitution or change, we may (by appropriate
endorsements, if necessary) change the Contract to reflect the substitution or
change. If we consider it to be in the best interest of Owners or annuitants,
and subject to any approvals that may be required under applicable law, the
Separate Account may be operated as a management investment company under the
1940 Act; it may be deregistered under that Act if registration is no longer
required; it may be combined with other separate accounts, or its assets may be
transferred to another separate account. In addition, we may, when permitted by
law, restrict or eliminate any voting privileges of Owners or other persons who
have such privileges under the Contracts.
VOTING RIGHTS
In accordance with our view of current applicable law, we will vote
portfolio shares held in the Separate Account at regular and special shareholder
meetings of the portfolios in accordance with instructions received from persons
having voting interests in the corresponding subaccounts. If, however, the 1940
Act or any regulation thereunder should be amended, or if the present
interpretation of the Act should change, or we otherwise determine that we are
allowed to vote the shares in our own right, we may elect to do so.
5
<PAGE>
The number of votes that an Owner or Annuitant has the right to
instruct us will be calculated separately for each subaccount of the Separate
Account, and may include fractional votes. Prior to the Annuity Income Date, an
Owner holds a voting interest in each subaccount to which Contract Value is
allocated. After the Annuity Income Date, the Annuitant has a voting interest in
each subaccount from which variable annuity payments are made.
For each Owner, the number of votes attributable to a subaccount will
be determined by dividing the Contract Value attributable to that Owner's
Contract in that subaccount by the net asset value per share of the portfolio in
which that subaccount invests. For each Annuitant, the number of votes
attributable to a subaccount will be determined by dividing the liability for
future variable annuity payments to be paid from the subaccount by the net asset
value per share of the portfolio in which that subaccount invests. This
liability for future payments is calculated on the basis of the mortality
assumptions, the 3.0% assumed investment rate used in determining the number of
annuity units of that subaccount credited to the Annuitant's Contract and
annuity unit value of that subaccount on the date that the number of votes is
determined. As variable annuity payments are made to the Annuitant, the
liability for future payments decreases as does the number of votes.
The number of votes available to an Owner or Annuitant will be
determined as of the same or coincident date established by the portfolio for
determining shareholders eligible to vote at the shareholders' meeting. Voting
instructions will be solicited by written communication prior to such meeting in
accordance with procedures established for the portfolio. Each Owner or
Annuitant having a voting interest in a subaccount will receive proxy materials
and reports relating to any meeting of shareholders of the portfolio in which
that subaccount invests.
Portfolio shares as to which no timely instructions are received and
shares held by us in a subaccount as to which no Owner or Annuitant has a
beneficial interest will be voted in proportion to the voting instructions which
are received with respect to all Contracts participating in that subaccount.
Voting instructions to abstain on any item to be voted upon will be applied to
reduce the total number of votes eligible to be cast on a matter.
CALCULATION OF YIELDS AND TOTAL RETURNS
From time to time, we may disclose yields, total returns, and other
performance data pertaining to the Contracts for a subaccount. Such performance
data will be computed, or accompanied by performance data computed, in
accordance with the standards defined by the SEC. Because of the fees and
charges assessed under the Contract, the yield for each subaccount will be lower
than the yield for the investment portfolio supporting that subaccount. The
calculation of yields, total returns and other performance data do not reflect
the effect of any premium tax that may be applicable. Most states and political
subdivisions do not assess premium taxes; however, where state premium taxes are
assessed, we will deduct the amount of the tax due from each payment at rates
ranging from a minimum of 0.5% to a maximum of 3.5% of such payment at the time
annuity payments begin. Premium taxes levied by political subdivisions,
generally at rates of less than 1.00%, will be deducted in the same manner.
MONEY MARKET SUBACCOUNT YIELDS
From time to time, advertisements and sales literature may quote the
current annualized yield of the Money Market Subaccount for a seven-day period
in a manner which does not take into consideration
6
<PAGE>
any realized or unrealized gains or losses on shares of the MFS Money Market
Series or on that portfolio's securities.
This current annualized yield is computed by determining the net change
(exclusive of realized gains and losses on the sale of securities and unrealized
appreciation and depreciation, as well as income other than investment income)
at the end of the seven-day period in the value of a hypothetical account under
a Contract having a balance of 1 unit of the Money Market Subaccount at the
beginning of the period, dividing such net change in subaccount value by the
value of the hypothetical account at the beginning of the period to determine
the base period return, and annualizing this quotient on a 365-day basis. The
net change in subaccount value reflects: 1) net income from the portfolio
attributable to the hypothetical account; and 2) charges and deductions imposed
under the Contract which are attributable to the hypothetical account. The
charges and deductions include the per unit charges for the hypothetical account
for: 1) the annual contract fee; 2) the mortality and expense risk charge; and
(3) the asset-based administration charge. For purposes of calculating current
yields for a Contract, an average per unit contract fee is used based on the $30
annual contract fee deducted at the end of each Contract Year. Current Yield is
calculated according to the following formula:
CURRENT YIELD = ((NCS - ES)/UV) X (365/7)
WHERE:
NCS = the net change in the value of the MFS Money Market Series
(exclusive of realized gains or losses on the sale of
securities and unrealized appreciation and depreciation,
as well as income other than investment income) for the
seven-day period attributable to a hypothetical account
having a balance of 1 subaccount unit.
ES = per unit expenses attributable to the hypothetical account
for the seven-day period.
UV = the unit value for the first day of the seven-day period.
7
<PAGE>
The seven-day Effective Yield is calculated by compounding the
unannualized base period return according to the following formula:
EFFECTIVE YIELD = (1 + ((NCS-ES)/UV)) 365/7 - 1
WHERE:
NCS = the net change in the value of the MFS Money Market Series
(exclusive of realized gains or losses on the sale of
securities and unrealized appreciation and depreciation,
as well as income other than investment income) for the
seven-day period attributable to a hypothetical account
having a balance of 1 subaccount unit.
ES = per unit expenses attributable to the hypothetical account
for the seven-day period.
UV = the unit value for the first day of the seven-day period.
Based on the method of calculation described above, the Current Yield
and Effective Yield on amounts held in the MFS Money Market Subaccount for the
seven-day period ending December 31, 1998 were:
Current Yield - 3.49%
Effective Yield - 3.55%
The current and effective yields on amounts held in this subaccount
normally fluctuate on a daily basis. THEREFORE, THE DISCLOSED YIELD FOR ANY
GIVEN PAST PERIOD IS NOT AN INDICATION OR REPRESENTATION OF FUTURE YIELDS OR
RATES OF RETURN. The Money Market Subaccount's actual yield is affected by
changes in interest rates on money market securities, average portfolio maturity
of the MFS Money Market Series, the types and quality of portfolio securities
held by the MFS Money Market Series and the MFS Money Market Series' operating
expenses. Yields on amounts held in the Money Market Subaccount may also be
presented for periods other than a seven-day period.
Yield calculations do not take into account the surrender charge under
the Contract equal to a maximum of 7% of the amount of purchase payments
withdrawn for certain withdrawals. During each Contract Year, up to 10% of all
purchase payments, less any prior withdrawal of purchase payments, may be
withdrawn without the imposition of a surrender charge.
OTHER SUBACCOUNT YIELDS
From time to time, sales literature or advertisements may quote the
current annualized yield of the Bond Subaccount for a Contract for 30-day or
one-month periods. The annualized yield generated by the Bond Subaccount refers
to income generated by the subaccount during a 30-day or one-month period and is
assumed to be generated each 30-day or one month period over a 12-month period.
The yield is computed by: 1) dividing the net investment income of the
portfolio attributable to the subaccount units less subaccount expenses for the
period; by 2) the maximum offering price per unit on the last day of the period
times the daily average number of units outstanding for the period; by 3)
8
<PAGE>
compounding that yield for a six-month period; and by 4) multiplying that result
by 2. Expenses attributable to the subaccount include the annual contract fee,
the asset-based administration charge and the mortality and expense risk charge.
The yield calculation assumes a contract fee of $30 per year per Contract
deducted at the end of each Contract Year for Contracts with less than $25,000
of Contract Value. For purposes of calculating the 30-day or one-month yield, an
average contract fee based on the average Contract Value in the Separate Account
is used to determine the amount of the charge attributable to the subaccount for
the 30-day or one-month period. The 30-day or one-month yield is calculated
according to the following formula:
YIELD = 2 X (((NI - ES)/(U X UV)) + 1)6 - 1)
WHERE:
NI = net income of the portfolio for the 30-day or
one-month period attributable to the subaccount's
units.
ES = expenses of the subaccount for the 30-day or
one-month period.
U = the average number of units outstanding.
UV = the unit value at the close (highest) of the last
day in the 30-day or one-month period.
Based on the method of calculation described above, for the thirty-day
period ending December 31, 1998, the yield for the Bond Subaccount was:
Yield = -0.98%
The yield on the amounts held in the Bond Subaccount normally
fluctuates over time. THEREFORE, THE DISCLOSED YIELD FOR ANY GIVEN PAST PERIOD
IS NOT AN INDICATION OR REPRESENTATION OF FUTURE YIELDS OR RATES OF RETURN. The
Bond Subaccount's actual yield is affected by the types and quality of
securities held by the MFS Bond Series and that portfolio's operating expenses.
Yield calculations do not take into account the surrender charge under
the Contract equal to a maximum of 7% of the amount of purchase payments
withdrawn for certain withdrawals. During each Contract Year, up to 10% of all
purchase payments, less any prior withdrawal of purchase payments, may be
withdrawn without the imposition of a surrender charge.
AVERAGE ANNUAL TOTAL RETURNS
From time to time, sales literature or advertisements may also quote
average annual total returns for one or more of the subaccounts for various
periods of time.
When a subaccount has been in operation for 1, 5, and 10 years,
respectively, the average annual total return for these periods will be
provided. Average annual total returns for other periods of time may, from time
to time, also be disclosed.
Average annual total returns represent the average annual compounded
rates of return that would equate an initial investment of $1,000 under a
Contract to the redemption value of that investment as of
9
<PAGE>
the last day of each of the periods. The ending date for each period for which
total return quotations are provided will be for the most recent calendar
quarter-end practicable, considering the type of the communication and the media
through which it is communicated.
Average annual total returns are calculated using subaccount unit
values which we calculate on each Valuation Day based on the performance of the
subaccount's underlying portfolio, the deductions for the mortality and expense
risk charge, the deductions for the asset-based administration charge and the
Annual Contract Fee. The calculation assumes that the contract fee is $30 per
year per Contract deducted at the end of each Contract Year for Contracts with
less than $25,000 of Contract Value. For purposes of calculating average annual
total return, an average per-dollar per-day contract fee attributable to the
hypothetical account for the period is used. The calculation also assumes
surrender of the Contract at the end of the period for the return quotation.
Total returns will therefore reflect a deduction of the surrender charge for any
period less than five years since the date of the purchase payment being
withdrawn. The total return is calculated according to the following formula:
TR = ((ERV/P)1/N) - 1
WHERE:
TR = the average annual total return net of subaccount
recurring charges.
ERV = the ending redeemable value (net of any
applicable surrender charge) of the hypothetical
account at the end of the period.
P = a hypothetical initial payment of $1,000.
N = the number of years in the period.
10
<PAGE>
SUBACCOUNT PERFORMANCE DATA
Based on the method of calculation described above, the Standardized
Average Annual Total Returns for the Subaccounts for the periods ending December
31, 1998 were:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Subaccount Standardized Average Annual Total Return Table
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
For the For the period
one-year period from inception
Subaccount (date of inception of subaccount) ending to
12/31/98 12/31/98
- ----------------------------------------------------------------------------------------------------------------------
VARIABLE ANNUITY PORTFOLIOS
CitiSelect(R)VIP Folio 200 Conservative (2/03/97) -0.12% 3.92%
(formerly CitiSelect VIP Folio 200)
CitiSelect(R)VIP Folio 300 Balanced (2/03/97) -0.34% 4.26%
(formerly CitiSelect VIP Folio 300)
CitiSelect(R)VIP Folio 400 Growth (2/03/97) -3.99% 2.56%
(formerly CitiSelect VIP Folio 400)
CitiSelect(R)VIP Folio 500 Growth Plus (2/03/97) -5.80% 2.34%
(formerly CitiSelect VIP Folio 500)
CitiFundsSM Small Cap Growth VIP -11.13% -0.03%
Portfolio (2/03/97)
A I M VARIABLE INSURANCE FUNDS, INC.
Capital Appreciation Fund (2/21/95) 11.73% 18.63%
Government Securities Fund (2/03/97) 0.30% 3.87%
Growth Fund (2/03/97) 26.39% 25.88%
Growth and Income Fund (2/03/97) 20.02% 21.10%
International Equity Fund (2/03/97) 7.95% 7.22%
Value Fund (2/03/97) 24.69% 23.79%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
Growth Portfolio (2/21/95) 31.70% 26.12%
High Income Portfolio (2/03/97) -11.66% 1.17%
Equity-Income Portfolio (2/03/97) 4.13% 14.22%
Overseas Portfolio (2/03/97) 5.24% 7.96%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
Contrafund Portfolio (2/03/97) 22.29% 23.71%
Index 500 Portfolio (2/03/97) 20.66% 24.31%
MFS VARIABLE INSURANCE TRUST
Global Governments Series (2/21/95) 0.44% 3.29%
(formerly World Governments Series)
Money Market Series (2/21/95)* -2.51% 2.48%
Bond Series (2/03/97) -0.65% 4.36%
Total Return Series (2/03/97) 4.83% 11.91%
Research Series (2/03/97) 15.77% 17.12%
Emerging Growth Series (2/03/97) 26.43% 23.41%
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
*The yield quotations for the MFS Money Market Series quoted above more closely
reflect the current earnings of this subaccount than the total return quotation.
11
<PAGE>
We may disclose cumulative total returns in conjunction with the
standard formats described above. The cumulative total returns will be
calculated using the following formula:
CTR = (ERV/P) - 1
WHERE:
CTR = The cumulative total return net of subaccount recurring charges
for the period.
ERV = The ending redeemable value of the hypothetical
investment at the end of the period.
P = A hypothetical single payment of $1,000.
12
<PAGE>
Based on the method of calculation described above, the Standardized
Cumulative Total Returns for the Subaccounts for the periods ending December 31,
1998 were:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Subaccount Standardized Cumulative Total Return Table
- ----------------------------------------------------------------------------------------------------------------------
For the For the period
one-year period from inception
Subaccount (date of inception of subaccount) ending to
12/31/98 12/31/98
- ----------------------------------------------------------------------------------- ----------------- ----------------
<S> <C> <C>
VARIABLE ANNUITY PORTFOLIOS
CitiSelect VIP Folio 200 Conservative (2/03/97) -0.12% 7.61%
(formerly CitiSelect VIP Folio 200)
CitiSelect VIP Folio 300 Balanced (2/03/97) -0.34% 8.27%
(formerly CitiSelect VIP Folio 300)
CitiSelect VIP Folio 400 Growth (2/03/97) -3.99% 4.94%
(formerly CitiSelect VIP Folio 400)
CitiSelect VIP Folio 500 Growth Plus (2/03/97) -5.80% 4.51%
(formerly CitiSelect VIP Folio 500)
CitiFunds Small Cap Growth VIP -11.13% -0.06%
Portfolio (2/03/97)
A I M VARIABLE INSURANCE FUNDS, INC.
Capital Appreciation Fund (2/21/95) 11.73% 93.28%
Government Securities Fund (2/03/97) 0.30% 7.51%
Growth Fund (2/03/97) 26.39% 55.10%
Growth and Income Fund (2/03/97) 20.02% 44.06%
International Equity Fund (2/03/97) 7.95% 14.22%
Value Fund (2/03/97) 24.69% 50.23%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
Growth Portfolio (2/21/95) 31.70% 144.78%
High Income Portfolio (2/03/97) -11.66% 2.24%
Equity-Income Portfolio (2/03/97) 4.13% 28.86%
Overseas Portfolio (2/03/97) 5.24% 15.73%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
Contrafund Portfolio (2/03/97) 22.29% 50.03%
Index 500 Portfolio (2/03/97) 20.66% 51.43%
MFS VARIABLE INSURANCE TRUST
Global Governments Series (2/21/95) 0.44% 13.31%
(formerly World Governments Series)
Money Market Series (2/21/95)* -2.51% 9.93%
Bond Series (2/03/97) -0.65% 8.48%
Total Return Series (2/03/97) 4.83% 23.94%
Research Series (2/03/97) 15.77% 35.16%
Emerging Growth Series (2/03/97) 26.43% 49.34%
- ----------------------------------------------------------------------------------- ----------------- ----------------
</TABLE>
*The yield quotations for the MFS Money Market Series quoted above more closely
reflect the current earnings of this subaccount than the total return quotation.
From time to time, sales literature or advertisements may also quote
average annual total returns and cumulative total returns that do not reflect
the surrender charge or the Annual Contract Fee. These are calculated in exactly
the same way as the average annual total returns and cumulative total returns
described above, except that the ending redeemable value of the hypothetical
account for the period is replaced with an ending value for the period that does
not take into account any charges on amounts surrendered or withdrawn or the
payment of the annual contract fee.
13
<PAGE>
Based on this non-standardized method of calculation, the
Non-Standardized Average Total Returns and Non-Standardized Cumulative Total
Returns for the Subaccounts for the periods ending December 31, 1998 were:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Subaccount Non-Standardized Average Annual Total Return Table
- ----------------------------------------------------------------------------------------------------------------------
For the For the period
one-year period from inception
Subaccount (date of inception of subaccount) ending to
12/31/98 12/31/98
- ----------------------------------------------------------------------------------- ----------------- ----------------
<S> <C> <C>
VARIABLE ANNUITY PORTFOLIOS
CitiSelect VIP Folio 200 Conservative (2/03/97) 6.20% 6.64%
(formerly CitiSelect VIP Folio 200)
CitiSelect VIP Folio 300 Balanced (2/03/97) 5.97% 6.97%
(formerly CitiSelect VIP Folio 300)
CitiSelect VIP Folio 400 Growth (2/03/97) 2.33% 5.31%
(formerly CitiSelect VIP Folio 400)
CitiSelect VIP Folio 500 Growth Plus (2/03/97) 0.52% 5.10%
(formerly CitiSelect VIP Folio 500)
CitiSelect VIP Folio 200 (2/03/97) 6.20% 6.64%
CitiSelect VIP Folio 300 (2/03/97) 5.97% 6.97%
CitiSelect VIP Folio 400 (2/03/97) 2.33% 5.31%
CitiSelect VIP Folio 500 (2/03/97) 0.52% 5.10%
CitiFunds Small Cap Growth VIP -4.82% 2.78%
Portfolio (2/03/97)
A I M VARIABLE INSURANCE FUNDS, INC.
Capital Appreciation Fund (2/21/95) 18.04% 19.21%
Government Securities Fund (2/03/97) 6.62% 6.59%
Growth Fund (2/03/97) 32.71% 28.18%
Growth and Income Fund (2/03/97) 26.34% 23.48%
International Equity Fund (2/03/97) 14.27% 9.87%
Value Fund (2/03/97) 31.01% 26.12%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
Growth Portfolio (2/21/95) 38.02% 26.61%
High Income Portfolio (2/03/97) -5.34% 3.96%
Equity-Income Portfolio (2/03/97) 10.45% 16.73%
Overseas Portfolio (2/03/97) 11.56% 10.59%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
Contrafund Portfolio (2/03/97) 28.61% 26.04%
Index 500 Portfolio (2/03/97) 26.97% 26.63%
MFS VARIABLE INSURANCE TRUST
Global Governments Series (2/21/95) 6.76% 4.15%
(formerly World Governments Series)
Money Market Series (2/21/95)* 3.81% 3.36%
Bond Series (2/03/97) 5.66% 7.07%
Total Return Series (2/03/97) 11.15% 14.46%
Research Series (2/03/97) 22.08% 19.57%
Emerging Growth Series (2/03/97) 32.75% 25.75%
- ----------------------------------------------------------------------------------- ----------------- ----------------
</TABLE>
*The yield quotations for the MFS Money Market Series quoted above more closely
reflect the current earnings of this subaccount than the total return quotation.
14
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Subaccount Non-Standardized Cumulative Total Return Table
- ----------------------------------------------------------------------------------------------------------------------
For the For the period
one-year period from inception
Subaccount (date of inception of subaccount) ending to
12/31/98 12/31/98
- ----------------------------------------------------------------------------------- ----------------- ----------------
<S> <C> <C>
VARIABLE ANNUITY PORTFOLIOS
CitiSelect VIP Folio 200 Conservative (2/03/97) 6.20% 13.05%
(formerly CitiSelect VIP Folio 200)
CitiSelect VIP Folio 300 Balanced (2/03/97) 5.97% 13.71%
(formerly CitiSelect VIP Folio 300)
CitiSelect VIP Folio 400 Growth (2/03/97) 2.33% 10.37%
(formerly CitiSelect VIP Folio 400)
CitiSelect VIP Folio 500 Growth Plus (2/03/97) 0.52% 9.95%
(formerly CitiSelect VIP Folio 500)
CitiFunds Small Cap Growth VIP -4.82% 5.37%
Portfolio (2/03/97)
A I M VARIABLE INSURANCE FUNDS, INC.
Capital Appreciation Fund (2/21/95) 18.04% 96.99%
Government Securities Fund (2/03/97) 6.62% 12.94%
Growth Fund (2/03/97) 32.71% 60.54%
Growth and Income Fund (2/03/97) 26.34% 49.50%
International Equity Fund (2/03/97) 14.27% 19.65%
Value Fund (2/03/97) 31.01% 55.67%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
Growth Portfolio (2/21/95) 38.02% 148.51%
High Income Portfolio (2/03/97) -5.34% 7.68%
Equity-Income Portfolio (2/03/97) 10.45% 34.30%
Overseas Portfolio (2/03/97) 11.56% 21.16%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
Contrafund Portfolio (2/03/97) 28.61% 55.47%
Index 500 Portfolio (2/03/97) 26.97% 56.87%
MFS VARIABLE INSURANCE TRUST
Global Governments Series (2/21/95) 6.76% 16.98%
(formerly World Governments Series)
Money Market Series (2/21/95)* 3.81% 13.60%
Bond Series (2/03/97) 5.66% 13.91%
Total Return Series (2/03/97) 11.15% 29.37%
Research Series (2/03/97) 22.08% 40.60%
Emerging Growth Series (2/03/97) 32.75% 54.78%
- ----------------------------------------------------------------------------------- ----------------- ----------------
</TABLE>
*The yield quotations for the MFS Money Market Series quoted above more closely
reflect the current earnings of this subaccount than the total return quotation.
Non-standard performance data will only be disclosed if the standard
performance data for the required periods is also disclosed.
In advertising and sales literature, the performance of each subaccount
may be compared to the performance of other variable annuity issuers in general
or to the performance of particular types of variable annuities investing in
mutual funds, or mutual fund portfolios with investment objectives similar to
each of the subaccounts. Lipper Analytical Services, Inc. ("Lipper") and the
Variable Annuity Research Data Services ("VARDS") are independent services which
monitor and rank the performance of variable annuity issuers in each of the
major categories of investment objectives on an industry-wide basis.
15
<PAGE>
Lipper's rankings include variable life issuers as well as variable
annuity issuers. VARDS rankings compare only variable annuity issuers. The
performance analyses prepared by Lipper and VARDS each rank such issuers on the
basis of total return, assuming reinvestment of distributions, but do not take
sales charges, redemption fees, or certain expense deductions at the separate
account level into consideration. In addition, VARDS prepares risk adjusted
rankings, which consider the effects of market risk on total return performance.
This type of ranking provides data as to which funds provide the highest total
return within various categories of funds defined by the degree of risk inherent
in their investment objectives.
Advertising and sales literature may also compare the performance of
each subaccount to the Standard & Poor's Index of 500 Common Stocks, a widely
used measure of stock performance. This unmanaged index assumes the reinvestment
of dividends but does not reflect any "deductions" for the expenses of operating
or managing an investment portfolio. Other independent ranking services and
indices may also be used as a source of performance comparison.
Comparison may also report other information including the effect of
tax-deferred compounding on a subaccount's investment returns, or returns in
general, which may be illustrated by tables, graphs, or charts. All income and
capital gains derived from subaccount investments are reinvested and can lead to
substantial long-term accumulation of assets, provided that the underlying
portfolio's investment experience is positive.
ADJUSTED HISTORIC PORTFOLIO PERFORMANCE DATA
The charts below show historic performance data for the portfolios,
including for periods prior to the inception of the subaccounts, reduced by some
or all of the fees and charges under the Contract. Non-standard performance data
will only be disclosed if standard performance data for the required periods is
also disclosed.
For the purposes of calculating the average annual total returns and
cumulative total returns of the portfolios, we have deducted a daily mortality
and expense risk charge equal to 1.25% of annual assets (except that for the
period March 2, 1998 through December 31, 1998, we deducted the mortality and
expense risk charge of 0.84% of annual assets), a daily administrative fee equal
to 0.15% of annual net assets, the $30 annual contract fee and the applicable
surrender charge.
16
<PAGE>
Based on the method of calculation described above, the Adjusted
Historic Average Annual Total Returns for the portfolios for the periods ending
December 31, 1998 were:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Adjusted Portfolio Average Annual Total Return Table Deducting All Fees and Charges
- -------------------------------------------------------------------------------------------------------------------------
For the For the For the For the period
Portfolio (date of inception of portfolio) one-year 5-year period 10-year from inception
period ending period to
ending 12/31/98 ending 12/31/98
12/31/98 12/31/98
- ------------------------------------------------------- --------------- --------------- -------------- ------------------
<S> <C> <C> <C> <C>
VARIABLE ANNUITY PORTFOLIOS
CitiSelect VIP Folio 200 Conservative (2/03/97) -0.12% N/A N/A 3.92%
(formerly CitiSelect VIP Folio 200)
CitiSelect VIP Folio 300 Balanced (2/03/97) -0.34% N/A N/A 4.26%
(formerly CitiSelect VIP Folio 300)
CitiSelect VIP Folio 400 Growth (2/03/97) -3.99% N/A N/A 2.56%
(formerly CitiSelect VIP Folio 400)
CitiSelect VIP Folio 500 Growth Plus (2/03/97) -5.80% N/A N/A 2.34%
(formerly CitiSelect VIP Folio 500)
CitiFunds Small Cap Growth VIP Portfolio -11.13% N/A N/A -0.03%
(11/25/96)
A I M VARIABLE INSURANCE FUNDS, INC.
Capital Appreciation Fund (5/05/93) 11.80% 15.75% N/A 17.57%
Government Securities Fund (5/05/93) 0.35% 4.28% N/A 4.70%
Growth Fund (5/05/93) 26.47% 19.96% N/A 19.65%
Growth and Income Fund (5/02/94) 20.09% N/A N/A 20.97%
International Equity Fund (5/05/93) 8.03% 9.84% N/A 12.22%
Value Fund (5/05/93) 24.78% 20.22% N/A 20.67%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
Growth Portfolio (10/9/86) 31.79% 20.26% 18.21% 16.17%
High Income Portfolio (9/19/85) -11.59% 7.30% 9.96% 9.97%
Equity-Income Portfolio (10/9/86) 4.21% 17.29% 14.46% 13.26%
Overseas Portfolio (1/28/87) 5.31% 8.20% 8.97% 7.50%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
Contrafund Portfolio (1/03/95) 22.37% N/A N/A 26.88%
Index 500 Portfolio (8/27/92) 20.72% 22.23% N/A 19.94%
MFS VARIABLE INSURANCE TRUST
Global Governments Series (6/14/94) 0.51% N/A N/A 3.99%
(formerly World Governments Series)
Money Market Series (1/03/95)* -2.45% N/A N/A 2.82%
Bond Series (10/24/95) -0.59% N/A N/A 4.81%
Total Return Series (1/03/95) 4.90% N/A N/A 16.97%
Research Series (7/26/95) 15.85% N/A N/A 20.63%
Emerging Growth Series (7/24/95) 26.51% N/A N/A 24.67%
- ------------------------------------------------------- --------------- --------------- -------------- ------------------
</TABLE>
*The yield quotations for the MFS Money Market Series quoted above more closely
reflect the current earnings of this portfolio than the total return quotation.
17
<PAGE>
The Adjusted Historic Cumulative Total Returns for the portfolios for
the periods ending December 31, 1998 were:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Adjusted Portfolio Cumulative Total Return Table Deducting All Fees and Charges
- -------------------------------------------------------------------------------------------------------------------------
For the For the For the For the period
Portfolio (date of inception of portfolio) one-year 5-year period 10-year from inception
period ending period ending to
ending 12/31/98 12/31/98 12/31/98
12/31/98
- ------------------------------------------------------- --------------- --------------- --------------- -----------------
<S> <C> <C> <C> <C>
VARIABLE ANNUITY PORTFOLIOS
CitiSelect VIP Folio 200 Conservative (2/03/97) -0.12% N/A N/A 7.61%
(formerly CitiSelect VIP Folio 200)
CitiSelect VIP Folio 300 Balanced (2/03/97) -0.34% N/A N/A 8.27%
(formerly CitiSelect VIP Folio 300)
CitiSelect VIP Folio 400 Growth (2/03/97) -3.99% N/A N/A 4.94%
(formerly CitiSelect VIP Folio 400)
CitiSelect VIP Folio 500 Growth Plus (2/03/97) -5.80% N/A N/A 4.51%
(formerly CitiSelect VIP Folio 500)
CitiFunds Small Cap Growth VIP Portfolio -11.13% N/A N/A -0.06%
(11/25/96)
A I M VARIABLE INSURANCE FUNDS, INC.
Capital Appreciation Fund (5/05/93) 11.80% 107.78% N/A 149.92%
Government Securities Fund (5/05/93) 0.35% 23.32% N/A 29.64%
Growth Fund (5/05/93) 26.47% 148.39% N/A 175.97%
Growth and Income Fund (5/02/94) 20.09% N/A N/A 143.08%
International Equity Fund (5/05/93) 8.03% 59.89% N/A 91.98%
Value Fund (5/05/93) 24.78% 151.09% N/A 189.54%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
Growth Portfolio (10/9/86) 31.79% 151.51% 432.67% 524.97%
High Income Portfolio (9/19/85) -11.59% 42.23% 158.47% 253.51%
Equity-Income Portfolio (10/9/86) 4.21% 121.98% 285.82% 358.27%
Overseas Portfolio (1/28/87) 5.31% 48.33% 136.12% 136.77%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
Contrafund Portfolio (1/03/95) 22.37% N/A N/A 158.70%
Index 500 Portfolio (8/27/92) 20.72% 172.87% N/A 216.99%
MFS VARIABLE INSURANCE TRUST
Global Governments Series (6/14/94) 0.51% N/A N/A 19.50%
(formerly World Governments Series)
Money Market Series (1/03/95)* -2.45% N/A N/A 11.72%
Bond Series (10/24/95) -0.59% N/A N/A 16.16%
Total Return Series (1/03/95) 4.90% N/A N/A 86.98%
Research Series (7/26/95) 15.85% N/A N/A 90.36%
Emerging Growth Series (7/24/95) 26.51% N/A N/A 113.42%
- ------------------------------------------------------- --------------- --------------- --------------- -----------------
</TABLE>
*The yield quotations for the MFS Money Market Series quoted above more closely
reflect the current earnings of this portfolio than the total return quotation.
From time to time, sales literature or advertisements may also quote
adjusted average annual total returns and cumulative total returns for the
portfolios that do not reflect the surrender charge or the Annual Contract Fee.
These are calculated in exactly the same way as the adjusted portfolio average
annual total returns and cumulative total returns described above, except that
ending value for the period does not take into account any charges on amounts
surrendered or withdrawn or the payment of the annual contract fee.
18
<PAGE>
Based on this method of calculation, the Adjusted Portfolio Average
Total Returns and Cumulative Total Returns without the deduction of surrender
charges and the Annual Contract Fee for the portfolios for the periods ending
December 31, 1998 were:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Adjusted Portfolio Average Annual Total Return Table Without Deduction of Surrender Charges and Annual Contract Fee
- -------------------------------------------------------------------------------------------------------------------------
For the For the For the For the period
Portfolio (date of inception of portfolio) one-year 5-year period 10-year from inception
period ending period ending to
ending 12/31/98 12/31/98 12/31/98
12/31/98
- ------------------------------------------------------- --------------- --------------- -------------- ------------------
<S> <C> <C> <C> <C>
VARIABLE ANNUITY PORTFOLIOS
CitiSelect VIP Folio 200 Conservative (2/03/97) 6.20% N/A N/A 6.64%
(formerly CitiSelect VIP Folio 200)
CitiSelect VIP Folio 300 Balanced (2/03/97) 5.97% N/A N/A 6.97%
(formerly CitiSelect VIP Folio 300)
CitiSelect VIP Folio 400 Growth (2/03/97) 2.33% N/A N/A 5.31%
(formerly CitiSelect VIP Folio 400)
CitiSelect VIP Folio 500 Growth Plus (2/03/97) 0.52% N/A N/A 5.10%
(formerly CitiSelect VIP Folio 500)
CitiFunds Small Cap Growth VIP Portfolio -4.82% N/A N/A 2.78%
(11/25/96)
A I M VARIABLE INSURANCE FUNDS, INC.
Capital Appreciation Fund (5/05/93) 18.12% 16.07% N/A 17.59%
Government Securities Fund (5/05/93) 6.66% 4.75% N/A 4.71%
Growth Fund (5/05/93) 32.79% 20.24% N/A 19.67%
Growth and Income Fund (5/02/94) 26.42% N/A N/A 21.28%
International Equity Fund (5/05/93) 14.35% 10.23% N/A 12.24%
Value Fund (5/05/93) 31.10% 20.50% N/A 20.69%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
Growth Portfolio (10/9/86) 38.11% 20.53% 18.23% 16.19%
High Income Portfolio (9/19/85) -5.28% 7.72% 9.98% 9.99%
Equity-Income Portfolio (10/9/86) 10.52% 17.59% 14.48% 13.28%
Overseas Portfolio (1/28/87) 11.63% 8.61% 8.99% 7.51%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
Contrafund Portfolio (1/03/95) 28.69% N/A N/A 27.35%
Index 500 Portfolio (8/27/92) 27.04% 22.50% N/A 19.96%
MFS VARIABLE INSURANCE TRUST
Global Governments Series (6/14/94) 6.83% N/A N/A 4.52%
(formerly World Governments Series)
Money Market Series (1/03/95)* 3.87% N/A N/A 3.65%
Bond Series (10/24/95) 5.73% N/A N/A 5.84%
Total Return Series (1/03/95) 11.22% N/A N/A 17.55%
Research Series (7/26/95) 22.17% N/A N/A 21.31%
Emerging Growth Series (7/24/95) 32.83% N/A N/A 25.30%
- ------------------------------------------------------- --------------- --------------- -------------- ------------------
</TABLE>
*The yield quotations for the MFS Money Market Series quoted above more closely
reflect the current earnings of this portfolio than the total return quotation.
19
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Adjusted Portfolio Cumulative Total Return Table Without Deduction of Surrender Charges and Annual Contract Fee
- -------------------------------------------------------------------------------------------------------------------------
For the For the For the For the period
Portfolio (date of inception of portfolio) one-year 5-year period 10-year from inception
period ending period ending to
ending 12/31/98 12/31/98 12/31/98
12/31/98
- ------------------------------------------------------- --------------- --------------- --------------- -----------------
<S> <C> <C> <C> <C>
VARIABLE ANNUITY PORTFOLIOS
CitiSelect VIP Folio 200 Conservative (2/03/97) 6.20% N/A N/A 13.05%
(formerly CitiSelect VIP Folio 200)
CitiSelect VIP Folio 300 Balanced (2/03/97) 5.97% N/A N/A 13.71%
(formerly CitiSelect VIP Folio 300)
CitiSelect VIP Folio 400 Growth (2/03/97) 2.33% N/A N/A 10.37%
(formerly CitiSelect VIP Folio 400)
CitiSelect VIP Folio 500 Growth Plus (2/03/97) 0.52% N/A N/A 9.95%
(formerly CitiSelect VIP Folio 500)
CitiFunds Small Cap Growth VIP Portfolio -4.82% N/A N/A 5.37%
(11/25/96)
A I M VARIABLE INSURANCE FUNDS, INC.
Capital Appreciation Fund (5/05/93) 18.12% 110.66% N/A 150.16%
Government Securities Fund (5/05/93) 6.66% 26.13% N/A 29.76%
Growth Fund (5/05/93) 32.79% 151.31% N/A 176.23%
Growth and Income Fund (5/02/94) 26.42% N/A N/A 145.98%
International Equity Fund (5/05/93) 14.35% 62.73% N/A 92.16%
Value Fund (5/05/93) 31.10% 154.01% N/A 189.82%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
Growth Portfolio (10/9/86) 38.11% 154.43% 433.58% 526.27%
High Income Portfolio (9/19/85) -5.28% 45.06% 158.91% 254.31%
Equity-Income Portfolio (10/9/86) 10.52% 124.87% 286.47% 359.23%
Overseas Portfolio (1/28/87) 11.63% 51.16% 136.52% 137.25%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
Contrafund Portfolio (1/03/95) 28.69% N/A N/A 162.47%
Index 500 Portfolio (8/27/92) 27.04% 175.80% N/A 217.33%
MFS VARIABLE INSURANCE TRUST
Global Governments Series (6/14/94) 6.83% N/A N/A 22.30%
(formerly World Governments Series)
Money Market Series (1/03/95)* 3.87% N/A N/A 15.40%
Bond Series (10/24/95) 5.73% N/A N/A 19.83%
Total Return Series (1/03/95) 11.22% N/A N/A 90.71%
Research Series (7/26/95) 22.17% N/A N/A 94.08%
Emerging Growth Series (7/24/95) 32.83% N/A N/A 117.15%
- ------------------------------------------------------- --------------- --------------- --------------- -----------------
</TABLE>
*The yield quotations for the MFS Money Market Series quoted above more closely
reflect the current earnings of this portfolio than the total return quotation.
20
<PAGE>
EFFECT OF THE ANNUAL CONTRACT FEE ON PERFORMANCE DATA
The Contract provides for a $30 Annual Contract Fee to be deducted
annually at the end of each Contract Year from the Accounts based on the
proportion of the Contract Value invested in each such Account. This fee is
waived for Contracts having a Contract Value of at least $25,000 or if, during
the Contract Year, purchase payments of at least $2,500 ($2,000 for Qualified
Contracts), exclusive of the initial purchase payment, are paid. For purposes of
reflecting the contract fee in yield and total return quotations, the annual
charge is converted into a per-dollar per-day charge based on the average
Contract Value of all Contracts on the last day of the period for which
quotations are provided. This converts the Annual Contract Fee to a factor of
$0.017.
VARIABLE ANNUITY PAYMENTS
ASSUMED INVESTMENT RATE
The discussion concerning the amount of variable annuity payments which
follows is based on an assumed investment rate of 3.0% per year. The assumed net
investment rate is used merely in order to determine the first monthly payment
per thousand dollars of applied value. THIS RATE DOES NOT BEAR ANY RELATIONSHIP
TO THE ACTUAL NET INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT OR OF ANY
SUBACCOUNT.
AMOUNT OF VARIABLE ANNUITY PAYMENTS
The amount of the first variable annuity payment is determined by
dividing the Contract Value on the Annuity Income Date by 1,000 and multiplying
the result by the appropriate factor in the annuity tables provided in the
Contract. These tables are based upon the 1983 IAM Tables (promulgated by the
Society of Actuaries). The appropriate factor is based on the annual net
investment return of 3.0%. The amount of each payment will depend on the age of
the Annuitant(s) at the time the first payment is due, and the sex of the
Annuitant(s), unless otherwise required by law.
The dollar amount of the second and subsequent variable annuity
payments will vary and is determined by multiplying the number of subaccount
annuity units by the subaccount annuity unit value as of a date no earlier than
the fifth Valuation Day preceding the date the payment is due. The number of
such units will remain fixed during the annuity period, assuming you or the
Annuitant, if you are deceased, make no exchanges of annuity units for annuity
units of another subaccount or to provide a fixed annuity payment. Once every 3
months after annuity payments have commenced, the Annuitant may elect in
writing, to transfer among any subaccounts. After the Annuity Income Date, no
transfers may be made between the subaccounts and the Fixed Account.
The annuity unit value will increase or decrease from one payment to
the next in proportion to the net investment return of the subaccount or
subaccounts supporting the variable annuity payments, less an adjustment to
neutralize the 3.0% assumed net investment rate referred to above. Therefore,
the dollar amount of annuity payments after the first will vary with the amount
by which the net investment return of the appropriate subaccounts is greater or
less than 3.0% per year. For example, for a Contract using only one subaccount
to generate variable annuity payments, if that subaccount has a cumulative net
investment return of 5% over a one year period, the first annuity payment in the
next year will be approximately 2% greater than the payment on the same date in
the preceding year. If such net investment return is 1% over a one year period,
the first annuity payment in the next year will be approximately 2 percentage
points less than the payment on the same date in the preceding year. (See also
"Variable Annuity Payments" in the Prospectus.)
21
<PAGE>
Fixed annuity payments are determined at annuitization by multiplying
the values allocated to the Fixed Account by a rate to be determined by Citicorp
Life which is no less than the rate specified in the annuity tables in the
Contract. The annuity payment will remain level for the duration of the annuity.
The annuity payments will be made on the fifteenth day of each month.
The annuity unit value used in calculating the amount of the variable annuity
payments will be based on an annuity unit value determined as of the close of
business on a day no earlier than the fifth Valuation Day preceding the date of
the annuity payment.
ANNUITY UNIT VALUE
The annuity unit value is calculated at the same time that the value of
an accumulation unit is calculated and is based on the same values for portfolio
shares and other assets and liabilities. (See "Variable Contract Value" in the
Prospectus.) The annuity unit value for each subaccount's first valuation period
was set at $1.00. The annuity unit value for a subaccount is calculated for each
subsequent Valuation Period by multiplying the subaccount annuity unit value on
the preceding day by the product of 1 times 2 where:
(1) is the subaccount's net investment factor on the Valuation Day
the Annuity Unit Value is being calculated; and
(2) is 0.999919 (which is the daily factor that will produce the
3.0% annual investment rate assumed in the annuity tables),
adjusted by the number of days since the previous Valuation
Day.
The following illustration shows, by use of hypothetical example, the
method of determining the annuity unit value.
ILLUSTRATION OF CALCULATION OF ANNUITY UNIT VALUE
1. Net Investment Factor for period................... 1.003662336
2. Adjustment for 3% Assumed Investment Rate......... 0.999919016
3. 2x1............................................... 1.003581055
4. annuity unit value, beginning of valuation period.....10.743769
5. annuity unit value, end of valuation period (3x4)... 10.782243
22
<PAGE>
TAX STATUS
INTRODUCTION
The following discussion is a general discussion of federal income tax
considerations relating to the Contract and is not intended as tax advice. This
discussion is not intended to address the tax consequences resulting from all of
the situations in which a person may be entitled to or may receive a
distribution under the Contract. Any person concerned about these tax
implications should consult a competent tax adviser before initiating any
transaction. This discussion is based upon the Company's understanding of the
present federal income tax laws as they are currently interpreted by the
Internal Revenue Service ("IRS"). No representation is made as to the likelihood
of the continuation of the present federal income tax laws or of the current
interpretation by the IRS. Moreover, no attempt has been made to consider any
applicable state or other tax laws.
The Contract may be purchased on a non-tax qualified basis
("Non-Qualified Contract") or purchased and used as an Individual Retirement
Annuity or Roth IRA entitled to special income tax treatment under section
408(b) or 408A of the Code ("Qualified Contracts"). The ultimate effect of
federal income taxes on the amounts held under a Contract, on Annuity Income
Payments, and on the economic benefit to the Contract Owner, the Annuitant or
the Beneficiary may depend on the tax status of the individual concerned.
TAXATION OF THE COMPANY
The Company is taxed as a life insurance company under Part I of
Subchapter L of the Code. Since the Separate Account is not an entity separate
from the Company, and its operation forms a part of the Company, it will not be
taxed separately as a "regulated investment company" under Subchapter M of the
Code. Investment income and realized capital gains are automatically applied to
increase reserves under the Contracts. Under existing federal income tax law,
the Company believes that the Separate Account investment income and realized
net capital gains will not be taxed to the extent that such income and gains are
applied to increase the reserves under the Contracts.
Accordingly, the Company does not anticipate that it will incur any
federal income tax liability attributable to the Separate Account and,
therefore, the Company does not intend to make provisions for any such taxes.
However, if changes in the federal tax laws or interpretations thereof result in
the Company being taxed on income or gains attributable to the Separate Account,
then the Company may impose a charge against the Separate Account (with respect
to some or all Contracts) in order to set aside provisions to pay such taxes.
TAX STATUS OF THE CONTRACT
The Company believes that the Contract will be subject to tax as an
annuity contract under the Code, which generally means that any increase in a
Contract's Contract Value will not be taxable until amounts are received from
the Contract, either in the form of Annuity Income Payments or in some other
form. In order to be subject to annuity contract treatment for tax purposes, the
Contract must meet the following Code requirements:
DIVERSIFICATION. Section 817(h) of the Code requires that with respect
to Non-Qualified Contracts, the investments of the Investment Portfolios be
"adequately diversified" in accordance with Treasury Regulations in order for
the Contracts to qualify as annuity contracts under federal tax law. The
Separate
23
<PAGE>
Account, through the Investment Portfolios, intends to comply with the
diversification requirements prescribed by the Treasury in Reg. Sec. 1.817-5,
which affect how the Investment Portfolios' assets may be invested.
OWNER CONTROL. In certain circumstances, owners of variable annuity
contracts may be considered the owners, for federal income tax purposes, of the
assets of the separate accounts used to support their contracts. In those
circumstances, income and gains from the separate account assets would be
includible in the variable contract owner's gross income. The IRS has stated in
published rulings that a variable contract owner will be considered the owner of
separate account assets if the contract owner possesses incidents of ownership
in those assets, such as the ability to exercise investment control over the
assets. The Treasury Department has also announced, in connection with the
issuance of regulations concerning diversification, that those regulations "do
not provide guidance concerning the circumstances in which investor control for
the investments of a segregated asset account may cause the investor (i.e., the
Owner), rather than the insurance company, to be treated as the owner of the
assets in the account." This announcement also stated that guidance would be
issued by way of regulations or rulings on the "extent to which policyholders
may direct their investments to particular Sub-Accounts without being treated as
owners of the underlying assets." As of the date of this prospectus, no guidance
has been issued.
The ownership rights under the Contract are similar to, but different
in certain respects from those described by the IRS in rulings in which it was
determined that contract owners were not owners of separate account assets. For
example, an Owner has additional flexibility in allocating premium payments and
Contract Values. These differences could result in an Owner being treated as the
owner of a pro rata portion of the assets of the Separate Account. In addition,
the Company does not know what standards will be set forth, if any, in the
regulations or rulings which the Treasury Department has stated it expects to
issue. The Company therefore reserves the right to modify the Contract as
necessary to attempt to prevent an Owner from being considered the owner of a
pro rata share of the assets of the Separate Account.
REQUIRED DISTRIBUTIONS. In order to be treated as an annuity contract
for federal income tax purposes, section 72(s) of the Code requires
Non-Qualified Contracts to provide that (a) if any Owner dies on or after the
Annuity Income Date but prior to the time the entire interest in the Contract
has been distributed, the remaining portion of such interest will be distributed
at least as rapidly as under the method of distribution being used as of the
date of such owner's death; and (b) if any Owner dies prior to the Annuity
Income Date, the entire interest in the Contract will be distributed within five
years after the date of such holder's death. These requirements will be
considered satisfied as to any portion of a holder's interest which is payable
to or for the benefit of a "designated beneficiary" and which is distributed
over the life of such "designated beneficiary" or over a period not extending
beyond the life expectancy of that beneficiary, provided that such distributions
begin within one year of the Owner's death. The `designated beneficiary" refers
to a natural person designated by the owner as a Beneficiary and to whom
ownership of the contract passes by reason of death. However, if the "designated
beneficiary" is the surviving spouse of the deceased Owner, the contract may be
continued with the surviving spouse as the new Owner.
The Non-Qualified Contracts contain provisions which are intended to
comply with the requirements of section 72(s) of the Code, although no
regulations interpreting these requirements have yet been issued. The Company
intends to review such provisions and modify them if necessary to assure that
they comply with the requirements of Code section 72(s) when clarified by
regulation or otherwise. Other rules may apply to Qualified Contracts.
NON-NATURAL OWNER. The owner of any Contract who is not a natural
person generally must include in income any increase in the excess of the
Contract Value over the "investment in the contract"
24
<PAGE>
(discussed below) during the taxable year. There are several exceptions to this
general rule for non-natural owners. Certain Contracts will generally be treated
as held by a natural person if (a) the nominal owner is a trust or other entity
which holds the contract as an agent for a natural person (but not in the case
of certain non-qualified deferred compensation arrangements); (b) the contract
is acquired by an estate of a decedent by reason of the death of the decedent;
(c) the contract is issued in connection with certain Qualified Plans; (d) the
contract is purchased by an employer upon the termination of certain Qualified
Plans; (e) the contract is used in connection with a structured settlement
agreement; and (f) the contract is purchased with a single purchase payment when
the annuity starting date (as defined in the tax law) is no later than a year
from the purchase of the contract and substantially equal periodic payments are
made, not less frequently than annually, during the annuity period. Prospective
Owners that are not natural persons may wish to discuss these with a competent
tax adviser.
The following discussion is based on the assumption that the Contract
qualifies as an annuity contract for federal income tax purposes.
TAXATION OF ANNUITIES
IN GENERAL. Section 72 of the Code governs taxation of annuities in
general. The Company believes that an Owner who is a natural person generally is
not taxed on increases in the Owner's Contract Value until distribution occurs
by withdrawing all or part of such Contract Value (e.g., withdrawals or Annuity
Income Payments under the Annuity Income Option elected). For this purpose, the
assignment, pledge, or agreement to assign or pledge any portion of the Contract
Value (and in the case of a Qualified Contract, any portion of an interest in
the qualified plan) generally will be treated as a distribution. The taxable
portion of a distribution (in the form of a single sum payment or an annuity) is
taxable as ordinary income.
The following discussion generally applies to a Contract owned by a
natural person.
WITHDRAWALS. In the case of a withdrawal under a Qualified Contract,
including withdrawals under the systematic withdrawal program, a ratable portion
of the amount received is taxable, generally based on the ratio of the
"investment in the contract" to the individual's total accrued benefit under the
retirement plan. The "investment in the contract" generally equals the amount of
any non-deductible Purchase Payments paid by or on behalf of any individual. For
a Contract issued in connection with qualified plans, the "investment in the
contract" can be zero. Special tax rules may be available for certain
distributions from a Qualified Contract.
With respect to Non-Qualified Contracts, partial withdrawals, including
withdrawals under the systematic withdrawal program, are generally treated as
taxable income to the extent that the Contract Value immediately before the
withdrawal exceeds the "investment in the contract" at that time.
Full surrenders of a Non-Qualified Contract are treated as taxable
income to the extent that the amount received exceeds the "investment in the
contract".
ANNUITY INCOME PAYMENTS . Although the tax consequences may vary
depending on the Annuity Income Payment elected under the Contract, in general,
only the portion of the Annuity Income Payment that represents the amount by
which the Contract Value exceeds the "investment in the contract" will be taxed;
after the "investment in the contract" is recovered, the full amount of any
additional Annuity Income Payments is taxable. For Variable Annuity Income
Payments, the taxable portion is generally determined by an equation that
establishes a specific dollar amount of each payment that is not taxed. The
dollar
25
<PAGE>
amount is determined by dividing the investment in the contract" by the total
number of expected periodic payments. However, the entire distribution will be
taxable once the recipient has recovered the dollar amount of his or her
"investment in the contract". For Fixed Annuity Income Payments, in general
there is no tax on the portion of each payment which represents the same ratio
that the "investment in the contract" bears to the total expected value of the
Annuity Income Payments for the term of the payments; however, the remainder of
each Annuity Income Payment is taxable. Once the "investment in the contract"
has been fully recovered, the full amount of any additional Annuity Income
Payments is taxable. If Annuity Income Payments cease as a result of an
Annuitant's death before full recovery of the "investment in the contract,"
consult a competent tax adviser regarding deductibility of the unrecovered
amount.
PENALTY TAX. In the case of a distribution pursuant to a Non-Qualified
Contract, there may be imposed a federal income tax penalty equal to 10% of the
amount treated as taxable income. In general, however, there is no penalty tax
on distributions: (1) made on or after the date on which the taxpayer attains
age 59 1/2; (2) made as a result of death or disability of an Owner; (3)
received in substantially equal periodic payments as a life annuity or a joint
and survivor annuity for the lives or life expectancies of the Owner and a
"designated beneficiary". Other tax penalties may apply to certain distributions
pursuant to a Qualified Contract.
TAXATION OF DEATH BENEFIT PROCEEDS. Amounts may be distributed from the
Contract because of the death of an Owner or the Annuitant. Generally, such
amounts are includible in the income of the recipient as follows: (1) if
distributed in a lump sum, they are taxed in the same manner as a full surrender
as described above, or (2) if distributed under an Annuity Income Option, they
are taxed in the same manner as Annuity Income Payments, as described above.
TRANSFERS, ASSIGNMENTS, OR EXCHANGES OF THE CONTRACT. A transfer of
ownership of a Contract, the designation of an Annuitant, Payee or other
Beneficiary who is not also an Owner, the selection of certain Annuity Income
Dates, or the exchange of a Contract may result in certain tax consequences that
are not discussed herein. Anyone contemplating any such designation, transfer,
assignment, selection, or exchange should contact a competent tax adviser with
respect to the potential tax effects of such a transaction.
MULTIPLE CONTRACTS. All deferred non-qualified annuity contracts that
are issued by the Company (or its affiliates) to the same owner during any
calendar year are treated as one annuity contract for purposes of determining
the amount includible in gross income under section 72(e) of the Code. In
addition, the Treasury Department has specific authority to issue regulations
that prevent the avoidance of section 72(e) through the serial purchase of
annuity contracts or otherwise. Congress has also indicated that the Treasury
Department may have authority to treat the combination purchase of an immediate
annuity contract and separate deferred annuity contracts as a single annuity
contract under its general authority to prescribe rules as may be necessary to
enforce the income tax laws.
QUALIFIED CONTRACTS
IN GENERAL. The Qualified Contract is designed for use as an Individual
Retirement Annuity ("IRA") or Roth IRA. Special favorable tax treatment may be
available for certain types of contributions and distributions. Adverse tax
consequences may result from contributions in excess of specified limits;
distributions prior to age 59 1/2 (subject to certain exceptions); distributions
that do not conform to specified commencement and minimum distribution rules;
and in other specified circumstances.
The Company makes no attempt to provide more than general information
about use of the Contract as an IRA or Roth IRA. Owners and participants under
IRA's and Roth IRA's, as well as
26
<PAGE>
annuitants and beneficiaries, are cautioned that the rights of any person to any
benefits under Qualified Contracts may be subject to the terms and conditions of
the IRA or Roth IRA Endorsement, regardless of the terms and conditions of the
Contract issued in connection with such a plan. IRA's and Roth IRA's are subject
to distribution and other requirements that are not incorporated in the
administration of the Contracts. Owners are responsible for determining that
contributions, distributions and other transactions with respect to the
Contracts satisfy applicable law. Purchasers of Contracts for use with any IRA
or Roth IRA should consult their legal counsel and tax adviser regarding the
suitability of the Contract.
For IRAs described in Section 408, distributions generally must
commence no later than April 1 of the calendar year following the calendar year
in which the Owner (or plan participant) reaches age 70 1/2. Roth IRAs under
Section 408A do not require distributions at any time prior to the Owner's
death.
INDIVIDUAL RETIREMENT ANNUITIES. Section 408 of the Code permits
eligible individuals to contribute to an Individual Retirement Annuity ("IRA").
Also, distributions from certain other types of qualified plans may be "rolled
over" on a tax-deferred basis into an IRA. The sale of a Contract for use with
an IRA may be subject to special disclosure requirements of the Internal Revenue
Service. Purchasers of a Contract for use with IRAs will be provided with
supplemental information required by the Internal Revenue Service or other
appropriate agency. Such purchasers will have the right to revoke their purchase
within 7 days of the earlier of the establishment of the IRA or their purchase.
A Qualified Contract issued in connection with an IRA will be amended as
necessary to conform to the requirements of the Code. Purchasers should seek
competent advice as to the suitability of the Contract for use with IRAs.
EARNINGS IN AN IRA ARE NOT TAXED UNTIL DISTRIBUTION. IRA contributions
are limited each year to the lesser of $2,000 or 100% of the Owner's adjusted
gross income and may be deductible in whole or in part depending on the
individual's income and whether the individual is a participant in a qualified
plan. The limit on the amount contributed to an IRA does not apply to
distributions from certain other types of qualified plans that are "rolled over"
on a tax-deferred basis into an IRA. Amounts in the IRA (other than
nondeductible contributions) are taxed when distributed from the IRA.
Distributions prior to age 59 1/2 (unless certain exceptions apply) are subject
to a 10% penalty tax.
ROTH IRAS. Section 408A of the Code permits certain eligible
individuals to contribute to a Roth IRA. Contributions to a Roth IRA, which are
subject to certain limitations, are not deductible and must be made in cash or
as a rollover or transfer from another Roth IRA or other IRA. A rollover from or
conversion of an IRA to a Roth IRA is generally subject to tax and other special
rules apply. You may wish to consult a tax adviser before combining any
converted amounts with any other Roth IRA contributions, including any other
conversion amounts from other tax years. Distributions from a Roth IRA generally
are not taxed, except that, once aggregate distributions exceed contributions to
the Roth IRA, income tax and a 10% penalty tax may apply to distributions made
(1) before age 59 1/2 (subject to certain exceptions) or (2) during the five
taxable years starting with the year in which the first contribution is made to
any Roth IRA. A 10% penalty tax may apply to amounts attributable to a
conversion from an IRA if they are distributed during the five taxable years
beginning with the year in which the conversion was made.
WITHHOLDING
Distributions from Contracts generally are subject to withholding for
the Owner's federal income tax liability. The withholding rate varies according
to the type of distribution and the Owner's tax status. The Owner will be
provided the opportunity to elect not have tax withheld from distributions.
27
<PAGE>
POSSIBLE CHANGES IN TAXATION
Although the likelihood of legislative change is uncertain, there is
always the possibility that the tax treatment of the Contracts could change by
legislation or other means. It is also possible that any change could be
retroactive (that is, effective prior to the date of the change). A tax adviser
should be consulted with respect to legislative developments and their effect on
the Contract.
OTHER TAX CONSEQUENCES
As noted above, the foregoing discussion of the federal income tax
consequences is not exhaustive and special rules are provided with respect to
other tax situations not discussed in this Prospectus. Further, the federal
income tax consequences discussed herein reflect the Company's understanding of
the current law and the law may change. Federal estate and gift tax consequences
of ownership or receipt of distributions under the Contract depend on the
individual circumstances of each Owner or recipient of a distribution. A
competent tax adviser should be consulted for further information.
LEGAL MATTERS
All matters relating to Arizona law pertaining to the Contracts,
including the validity of the Contracts and our authority to issue the
Contracts, have been passed upon by Catherine S. Mulholland, General Counsel of
the Company. Sutherland Asbill & Brennan LLP of Washington, D.C. has provided
advice on certain matters relating to the federal securities laws.
EXPERTS
The statutory financial statements of Citicorp Life Insurance Company
as of December 31, 1998 and 1997, and for each of the years in the three-year
period ended December 31, 1998 and the financial statements for the Separate
Account as of December 31, 1998 have been included herein and in the
registration statement in reliance upon the report of KPMG LLP, independent
certified public accountants, and upon the authority of said firm as experts in
accounting and auditing.
The report of KPMG LLP covering the financial statements of Citicorp
Life Insurance Company contains an explanatory paragraph which states that the
financial statements are presented in conformity with accounting practices
prescribed or permitted by the Department of Insurance of the State of Arizona.
These practices differ in some respects from generally accepted accounting
principles. The financial statements do not include any adjustments that might
result from the differences.
OTHER INFORMATION
A registration statement has been filed with the SEC under the
Securities Act of 1933, as amended, with respect to the Contracts discussed in
this Statement of Additional Information. Not all the information set forth in
the registration statement, amendments and exhibits thereto has been included in
this Statement of Additional Information. Statements contained in this Statement
of Additional Information concerning the content of the Contracts and other
legal instruments are intended to be summaries. For a complete statement of the
terms of these documents, reference should be made to the instruments filed with
the SEC.
28
<PAGE>
FINANCIAL STATEMENTS
The audited Statutory Financial Statements of the Company as of
December 31, 1998 and 1997 and for the years ended December 31, 1998, 1997 and
1996, as well as the Independent Auditor's Report which appear in this Statement
of Additional Information should be considered only as bearing on our ability to
meet our obligations under the contracts. They should not be considered as
bearing on the investment performance of the assets held in the Separate
Account. This Statement of Additional Information also contains audited
financial statements for the Separate Account as of December 31, 1998.
29
<PAGE>
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Financial Statements and Schedule
December 31, 1998
(With Independent Auditors' Report Thereon)
<PAGE>
[GRAPHIC LOGO OMITTED]
KPMG
10 South Broadway
Suite 900
St. Louis, MO 63102-1761
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Citicorp Life Insurance Company and Policyholders
of Citicorp Life Insurance Company
Variable Annuity Separate Account:
We have audited the accompanying statement of net assets of the AIM V.I.
Capital Appreciation Fund, AIM V.I. Government Series Fund, AIM V.I. Growth
Fund, AIM V.I. Growth and Income Fund, AIM V.I. International Equity Fund,
AIM V.I. Value Fund, CitiSelect VIP Folio 200, CitiSelect VIP Folio 300,
CitiSelect VIP Folio 400, CitiSelect VIP Folio 500, Fidelity VIP Equity
Income Portfolio, Fidelity VIP Growth Portfolio, Fidelity VIP High Income
Portfolio, Fidelity VIP Overseas Portfolio, Fidelity VIP II Contrafund
Portfolio, Fidelity VIP II Index 500 Portfolio, CitiFunds Small Cap Growth
V.I.P. Portfolio, MFS Bond Series, MFS Emerging Growth Series, MFS Money
Market Series, MFS Research Series, MFS Total Return Series, and MFS World
Government Series divisions of Citicorp Life Insurance Company Variable
Annuity Separate Account as of December 31, 1998, and the related statement
of operations for the year then ended and related statements of changes in
net assets for each of the years in the two-year period ended December 31,
1998. These financial statements are the responsibility of Citicorp Life
Insurance Company Variable Annuity Separate Account'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. Our procedures included confirmation of investments owned at
December 31, 1998, by correspondence with the A.I.M. Variable Insurance
Funds, Inc., CitiSelect Variable Insurance Products Funds, Fidelity
Variable Insurance Products Funds, and MFS Variable Insurance Trust. 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 the AIM V.I. Capital
Appreciation Fund, AIM V.I. Government Series Fund, AIM V.I. Growth Fund,
AIM V.I. Growth and Income Fund, AIM V.I. International Equity Fund, AIM
V.I. Value Fund, CitiSelect VIP Folio 200, CitiSelect VIP Folio 300,
CitiSelect VIP Folio 400, CitiSelect VIP Folio 500, Fidelity VIP Equity
Income Portfolio, Fidelity VIP Growth Portfolio, Fidelity VIP High Income
Portfolio, Fidelity VIP Overseas Portfolio, Fidelity VIP II Contrafund
Portfolio, Fidelity VIP II Index 500 Portfolio, CitiFunds Small Cap Growth
V.I.P. Portfolio, MFS Bond Series, MFS Emerging Growth Series, MFS Money
Market Series, MFS
<PAGE>
Research Series, MFS Total Return Series, and MFS World Government Series
divisions of Citicorp Life Insurance Company Variable Annuity Separate
Account as of December 31, 1998, and the results of their operations for
the year then ended and changes in their net assets for each of the years
in the two-year period ended December 31, 1998, in conformity with
generally accepted accounting principles.
/s/ KPMG LLP
April 9, 1999
2
<PAGE>
FINANCIAL STATEMENTS
AND SCHEDULE
<PAGE>
<TABLE>
<CAPTION>
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Net Assets
December 31, 1998
=====================================================================================================
AIM V.I. AIM V.I. AIM AIM V.I. AIM V.I.
Capital Government V.I. Growth and International
Appreciation Series Growth Income Equity
Fund Fund Fund Fund Fund
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net assets:
Investments at market value $4,430,926 1,804,208 1,359,102 3,973,470 4,514,281
Payable to Citicorp Life
Insurance Company 3,827 1,607 1,182 3,485 4,041
- -----------------------------------------------------------------------------------------------------
Total net assets $4,427,099 1,802,601 1,357,920 3,969,985 4,510,240
=====================================================================================================
Total net assets represented by:
Variable annuity cash value
invested in separate account
by contractholders - Base 4,324,841 1,802,601 1,259,980 3,867,498 4,477,462
Variable annuity cash value
invested in separate account
by contractholders -
Guaranteed Minimum
Income Benefit (GMIB) 102,258 0 97,940 102,487 32,778
- -----------------------------------------------------------------------------------------------------
Total net assets represented $4,427,099 1,802,601 1,357,920 3,969,985 4,510,240
=====================================================================================================
Total units held by contract-
holders - Base 2,195,417 1,596,060 784,810 2,586,910 3,742,014
Total units held by contract-
holders - GMIB 52,223 0 61,373 68,966 27,560
Accumulated unit value - Base $ 1.97 1.13 1.61 1.50 1.20
Accumulated unit value - GMIB $ 1.96 N/A 1.60 1.49 1.19
Cost of investments $3,905,309 1,764,741 1,174,401 3,380,936 4,269,525
=====================================================================================================
Number of shares $ 175,830 161,378 54,802 167,303 230,085
=====================================================================================================
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
========================================================================================================================
AIM CitiSelect CitiSelect CitiSelect CitiSelect Fidelity Fidelity Fidelity
V.I. VIP VIP VIP VIP VIP Equity VIP VIP High
Value Folio Folio Folio Folio Income Growth Income
Fund 200 300 400 500 Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
8,804,301 4,385,348 7,003,262 3,612,696 1,763,531 7,909,413 4,692,953 3,142,262
7,781 4,026 6,333 3,439 1,609 7,033 4,143 2,862
- ------------------------------------------------------------------------------------------------------------------------
8,796,520 4,381,322 6,996,929 3,609,257 1,761,922 7,902,380 4,688,810 3,139,400
========================================================================================================================
8,330,406 4,381,322 6,996,929 3,202,697 1,722,027 7,771,746 4,526,578 3,139,400
466,114 0 0 406,560 39,895 130,634 162,232 0
- ------------------------------------------------------------------------------------------------------------------------
8,796,520 4,381,322 6,996,929 3,609,257 1,761,922 7,902,380 4,688,810 3,139,400
========================================================================================================================
5,351,283 3,875,575 6,153,461 2,901,724 1,566,185 5,786,776 1,821,491 2,915,521
301,230 0 0 370,583 36,504 97,858 65,677 0
1.56 1.13 1.14 1.10 1.10 1.34 2.49 1.08
1.55 N/A N/A 1.10 1.09 1.33 2.47 N/A
7,541,512 4,493,925 7,025,666 3,733,005 2,102,184 7,469,581 3,862,785 3,369,020
========================================================================================================================
335,401 421,668 656,350 353,147 204,586 311,149 104,589 272,529
========================================================================================================================
</TABLE>
(Continued)
4
<PAGE>
<TABLE>
<CAPTION>
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Net Assets
======================================================================================================================
Fidelity Fidelity Fidelity CitiFunds
VIP VIP II VIP II Small Cap MFS
Overseas Contrafund Index 500 Growth V.I.P. Bond
Portfolio Portfolio Portfolio Portfolio Series
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net assets:
Investments at market value $1,715,280 6,734,043 12,308,263 499,212 2,547,940
Payable to Citicorp Life
Insurance Company 1,550 5,816 11,042 457 2,299
- ----------------------------------------------------------------------------------------------------------------------
Total net assets $1,713,730 6,728,227 12,297,221 498,755 2,545,641
======================================================================================================================
Total net assets represented by:
Variable annuity cash value
invested in separate account
by contractholders 1,696,940 6,497,745 11,953,798 498,755 2,545,641
Variable annuity cash value
invested in separate account
by contractholders -
Guaranteed Minimum
Income Benefit (GMIB) 16,790 230,482 343,423 0 0
- ----------------------------------------------------------------------------------------------------------------------
Total net assets represented $1,713,730 6,728,227 12,297,221 498,755 2,545,641
======================================================================================================================
Total units held by contract-
holders - Base 1,400,538 4,179,307 7,620,186 473,301 2,234,729
Total units held by contract-
holders - GMIB 13,941 149,140 220,247 0 0
Accumulated unit value - Base $ 1.21 1.55 1.57 1.05
Accumulated unit value - GMIB $ 1.20 1.55 1.56 N/A N/A
Cost of investments $1,688,261 5,534,851 10,637,909 593,876 2,459,443
======================================================================================================================
Number of shares 85,550 275,533 87,138 52,001 223,896
======================================================================================================================
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
================================================================================
MFS MFS MFS MFS
Emerging Money MFS Total World
Growth Market Research Return Government
Series Series Series Series Series
- --------------------------------------------------------------------------------
7,289,009 3,162,129 6,001,622 5,128,988 447,835
6,416 2,949 5,236 4,613 417
- --------------------------------------------------------------------------------
7,282,593 3,159,180 5,996,386 5,124,375 447,418
================================================================================
7,083,830 3,159,180 5,971,063 5,124,375 447,418
198,763 0 25,323 0 0
- --------------------------------------------------------------------------------
7,282,593 3,159,180 5,996,386 5,124,375 447,418
================================================================================
4,576,451 2,781,036 4,246,685 3,960,924 382,462
129,185 0 18,119 0 0
1.54 N/A 1.40 N/A N/A
5,818,699 3,162,129 5,117,979 4,712,427 424,835
================================================================================
339,497 3,162,128 315,045 283,056 41,161
================================================================================
6
<PAGE>
<TABLE>
<CAPTION>
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Operations
For the year ended December 31, 1998
==========================================================================================================================
AIM V.I. AIM V.I. AIM AIM V.I. AIM V.I.
Capital Government V.I. Growth and International
Appreciation Series Growth Income Equity
Fund Fund Fund Fund Fund
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment income - dividends $ 6,277 49,105 4,302 15,366 35,899
- --------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk fees 30,741 9,596 7,308 21,797 33,052
Daily administrative charges 5,365 1,636 1,392 3,893 5,644
- --------------------------------------------------------------------------------------------------------------------------
Total expenses 36,106 11,232 8,700 25,690 38,696
- --------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (29,829) 37,873 (4,398) (10,324) (2,797)
- --------------------------------------------------------------------------------------------------------------------------
Realized and unrealized gain (loss)
on investments:
Realized gain distributions 111,200 0 80,655 37,925 0
Realized gain (loss) on sale of
investments 16,814 15,927 27,313 47,829 33,457
Change in unrealized gain
(loss) on investments 453,648 13,731 158,081 541,047 305,855
- --------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments 581,662 29,658 266,049 626,801 339,312
- --------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
resulting from operations $ 551,833 67,531 261,651 616,477 336,515
==========================================================================================================================
</TABLE>
See accompanying notes to financial statements.
7
<PAGE>
<TABLE>
<CAPTION>
=============================================================================================================================
AIM CitiSelect CitiSelect CitiSelect CitiSelect Fidelity Fidelity Fidelity
V.I. VIP VIP VIP VIP VIP Equity VIP VIP High
Value Folio Folio Folio Folio Income Growth Income
Fund 200 300 400 500 Portfolio Portfolio Portfolio
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
40,598 185,878 204,683 65,874 261,373 42,400 7,025 80,793
- -----------------------------------------------------------------------------------------------------------------------------
51,503 33,470 49,172 34,285 13,565 50,356 23,490 19,273
9,882 5,661 8,310 7,597 2,389 8,949 4,365 3,327
- -----------------------------------------------------------------------------------------------------------------------------
61,385 39,131 57,482 41,882 15,954 59,305 27,855 22,600
- -----------------------------------------------------------------------------------------------------------------------------
(20,787) 146,747 147,201 23,992 245,419 (16,905) (20,830) 58,193
- -----------------------------------------------------------------------------------------------------------------------------
359,068 51,304 71,922 67,228 76,388 150,892 183,762 51,337
62,263 195,689 60,234 45,165 862,110 62,518 21,558 (96)
1,170,050 (100,351) (27,072) (150,217) (645,554) 160,174 747,119 (301,743)
- -----------------------------------------------------------------------------------------------------------------------------
1,591,381 146,642 105,084 (37,824) 292,944 373,584 952,439 (250,502)
- -----------------------------------------------------------------------------------------------------------------------------
1,570,594 293,389 252,285 (13,832) 538,363 356,679 931,609 (192,309)
=============================================================================================================================
</TABLE>
(Continued)
8
<PAGE>
<TABLE>
<CAPTION>
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Operations
=========================================================================================================================
Fidelity Fidelity Fidelity CitiFunds
VIP VIP II VIP II Small Cap MFS
Overseas Contrafund Index 500 Growth V.I.P. Bond
Portfolio Portfolio Portfolio Portfolio Series
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment income - dividends $ 23,272 14,581 37,236 0 52,187
- -------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk fees 13,980 36,018 59,538 3,090 14,677
Daily administrative charges 2,386 6,653 10,849 530 2,506
- -------------------------------------------------------------------------------------------------------------------------
Total expenses 16,366 42,671 70,387 3,620 17,183
- -------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) 6,906 (28,090) (33,151) (3,620) 35,004
- -------------------------------------------------------------------------------------------------------------------------
Realized and unrealized gain (loss)
on investments:
Realized gain distributions 68,590 107,270 86,245 55,493 545
Realized gain (loss) on sale of
investments (9,947) 40,614 93,692 422,034 21,416
Change in unrealized gain
(loss) on investments 14,618 992,268 1,417,958 (324,158) 39,177
- -------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments 73,261 1,140,152 1,597,895 153,369 61,138
- -------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
resulting from operations $ 80,167 1,112,062 1,564,744 149,749 96,142
=========================================================================================================================
</TABLE>
See accompanying notes to financial statements.
9
<PAGE>
<TABLE>
<CAPTION>
=========================================================================================
MFS MFS MFS MFS
Emerging Money MFS Total World
Growth Market Research Return Government
Series Series Series Series Series
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
25,026 205,644 78,258 63,663 3,338
- -----------------------------------------------------------------------------------------
42,318 39,070 39,751 29,367 3,367
7,476 6,514 6,661 4,982 561
- -----------------------------------------------------------------------------------------
49,794 45,584 46,412 34,349 3,928
- -----------------------------------------------------------------------------------------
(24,768) 160,060 31,846 29,314 (590)
- -----------------------------------------------------------------------------------------
8,937 0 7,851 19,885 0
117,283 0 63,673 53,013 4,219
1,202,739 0 693,248 243,579 21,572
- -----------------------------------------------------------------------------------------
1,328,959 0 764,772 316,477 25,791
- -----------------------------------------------------------------------------------------
1,304,191 160,060 796,618 345,791 25,201
=========================================================================================
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Changes in Net Assets
For the year ended December 31, 1998
==============================================================================================================================
AIM V.I. AIM V.I. AIM AIM V.I. AIM V.I.
Capital Government V.I. Growth and International
Appreciation Series Growth Income Equity
Fund Fund Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
resulting from operations:
Net investment income (loss) $ (29,829) 37,873 (4,398) (10,324) (2,797)
Realized gain distributions 111,200 0 80,655 37,925 0
Realized gain (loss) on sale of
investments 16,814 15,927 27,313 47,829 33,457
Change in unrealized gain
(loss) on investments 453,648 13,731 158,081 541,047 305,855
- ------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets resulting
from operations 551,833 67,531 261,651 616,477 336,515
- ------------------------------------------------------------------------------------------------------------------------------
Capital transactions:
Contract deposits 1,640,323 1,005,051 610,673 2,330,427 1,648,046
Transfers between funds 25,766 170,026 107,960 30,714 (3,088)
Transfers to (from) Citicorp Life
Insurance Company 82,085 35,440 10,022 71,782 149,400
Annual administrative charges (441) (21) (125) (139) (427)
Death benefits 0 0 0 0 0
Contract withdrawals (30,462) (83,100) (13,633) (58,503) (88,542)
- ------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets resulting
from capital transactions 1,717,271 1,127,396 714,897 2,374,281 1,705,389
- ------------------------------------------------------------------------------------------------------------------------------
Total increase in net assets 2,269,104 1,194,927 976,548 2,990,758 2,041,904
Net assets at beginning of period 2,157,995 607,674 381,372 979,227 2,468,336
- ------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $4,427,099 1,802,601 1,357,920 3,969,985 4,510,240
==============================================================================================================================
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
<TABLE>
<CAPTION>
==================================================================================================================================
AIM CitiSelect CitiSelect CitiSelect CitiSelect Fidelity Fidelity Fidelity
V.I. VIP VIP VIP VIP VIP Equity VIP VIP High
Value Folio Folio Folio Folio Income Growth Income
Fund 200 300 400 500 Portfolio Portfolio Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(20,787) 146,747 147,201 23,992 245,419 (16,905) (20,830) 58,193
359,068 51,304 71,922 67,228 76,388 150,892 183,762 51,337
62,263 195,689 60,234 45,165 862,110 62,518 21,558 (96)
1,170,050 (100,351) (27,072) (150,217) (645,554) 160,174 747,119 (301,743)
- ----------------------------------------------------------------------------------------------------------------------------------
1,570,594 293,389 252,285 (13,832) 538,363 356,679 931,609 (192,309)
- ----------------------------------------------------------------------------------------------------------------------------------
4,712,758 2,044,233 3,762,009 1,694,019 902,179 4,558,466 2,042,497 2,384,000
11,270 (30,312) (543,422) (722,147) (135,047) 264,257 468,172 45,331
199,728 (2,470,893) 29,854 (289,936) (7,425,682) 77,503 40,231 38,102
(464) (483) (766) (757) (545) (352) (231) (60)
0 0 0 0 0 (20,513) 0 0
(195,371) (248,254) (85,219) (146,266) (135,916) (88,397) (99,647) (67,715)
- ----------------------------------------------------------------------------------------------------------------------------------
4,727,921 (705,709) 3,162,456 534,913 (6,795,011) 4,790,964 2,451,022 2,399,658
- ----------------------------------------------------------------------------------------------------------------------------------
6,298,515 (412,320) 3,414,741 521,081 (6,256,648) 5,147,643 3,382,631 2,207,349
2,498,005 4,793,642 3,582,188 3,088,176 8,018,570 2,754,737 1,306,179 932,051
- ----------------------------------------------------------------------------------------------------------------------------------
8,796,520 4,381,322 6,996,929 3,609,257 1,761,922 7,902,380 4,688,810 3,139,400
==================================================================================================================================
</TABLE>
(Continued)
12
<PAGE>
<TABLE>
<CAPTION>
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Changes in Net Assets
==============================================================================================================================
Fidelity Fidelity Fidelity CitiFunds
VIP VIP II VIP II Small Cap MFS
Overseas Contrafund Index 500 Growth V.I.P. Bond
Portfolio Portfolio Portfolio Portfolio Series
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
resulting from operations:
Net investment income (loss) $ 6,906 (28,090) (33,151) (3,620) 35,004
Realized gain distributions 68,590 107,270 86,245 55,493 545
Realized gain (loss) on sale of
investments (9,947) 40,614 93,692 422,034 21,416
Change in unrealized gain
(loss) on investments 14,618 992,268 1,417,958 (324,158) 39,177
- ------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets resulting
from operations 80,167 1,112,062 1,564,744 149,749 96,142
- ------------------------------------------------------------------------------------------------------------------------------
Capital transactions:
Contract deposits 581,922 2,994,798 6,081,289 428,801 1,408,925
Transfers between funds (166,413) 526,163 1,848,471 (27,452) 195,281
Transfers to (from) Citicorp Life
Insurance Company 62,498 242,619 183,533 (2,240,493) 42,067
Annual administrative charges (87) (450) (499) (64) (53)
Death benefits 0 0 0 0 (19,528)
Contract withdrawals (6,684) (63,218) (117,192) (2,722) (105,567)
- ------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets resulting
from capital transactions 471,236 3,699,912 7,995,602 (1,841,930) 1,521,125
- ------------------------------------------------------------------------------------------------------------------------------
Total increase in net assets 551,403 4,811,974 9,560,346 (1,692,181) 1,617,267
Net assets at beginning of period 1,162,327 1,916,253 2,736,875 2,190,936 928,374
- ------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $1,713,730 6,728,227 12,297,221 498,755 2,545,641
==============================================================================================================================
</TABLE>
See accompanying notes to financial statements.
13
<PAGE>
<TABLE>
<CAPTION>
=================================================================================
MFS MFS MFS MFS
Emerging Money MFS Total World
Growth Market Research Return Government
Series Series Series Series Series
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
(24,768) 160,060 31,846 29,314 (590)
8,937 0 7,851 19,885 0
117,283 0 63,673 53,013 4,219
1,202,739 0 693,248 243,579 21,572
- ---------------------------------------------------------------------------------
1,304,191 160,060 796,618 345,791 25,201
- ---------------------------------------------------------------------------------
2,543,515 2,344,165 2,046,454 2,185,703 148,502
707,074 (3,148,486) (105,836) 533,134 (51,420)
85,740 173,352 392,120 270,312 15,416
(424) (230) (325) (257) (24)
(13,419) 0 (24,708) 0 0
(52,248) (49,529) (67,671) (63,758) (22,973)
- ---------------------------------------------------------------------------------
3,270,238 (680,728) 2,240,034 2,925,134 89,501
- ---------------------------------------------------------------------------------
4,574,429 (520,668) 3,036,652 3,270,925 114,702
2,708,164 3,679,848 2,959,734 1,853,450 332,716
- ---------------------------------------------------------------------------------
7,282,593 3,159,180 5,996,386 5,124,375 447,418
=================================================================================
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Changes in Net Assets
For the year ended December 31, 1997
===================================================================================================================================
AIM V.I. AIM V.I. AIM AIM V.I. AIM V.I.
Capital Government V.I. Growth and International
Appreciation Series Growth Income Equity
Fund Fund Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
resulting from operations:
Net investment income (loss) $ (14,024) (3,507) (1,320) (5,294) (5,851)
Realized gain distributions 25,326 0 11,577 736 38,581
Realized gain (loss) on sale of
investments 13,462 528 3,283 915 1,552
Change in unrealized gain
(loss) on investments 67,869 25,735 26,620 51,487 (61,099)
- -----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets resulting
from operations 92,633 22,756 40,160 47,844 (26,817)
- -----------------------------------------------------------------------------------------------------------------------------------
Capital transactions:
Contract deposits 1,861,129 427,259 322,951 925,509 2,116,404
Transfers between funds 133,734 168,348 40,708 8,561 373,137
Transfers to (from) Citicorp Life
Insurance Company (21,269) (10,689) (22,447) 3,261 17,147
Annual administrative charges (19) 0 0 0 0
Death benefits 0 0 0 0 (481)
Contract withdrawals (23,936) 0 0 (5,948) (11,054)
- -----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets resulting
from capital transactions 1,949,639 584,918 341,212 931,383 2,495,153
- -----------------------------------------------------------------------------------------------------------------------------------
Total increase in net assets 2,042,272 607,674 381,372 979,227 2,468,336
Net assets at beginning of period 115,723 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $2,157,995 607,674 381,372 979,227 2,468,336
===================================================================================================================================
</TABLE>
See accompanying notes to financial statements.
15
<PAGE>
<TABLE>
<CAPTION>
=================================================================================================================================
AIM CitiSelect CitiSelect CitiSelect CitiSelect Fidelity Fidelity Fidelity
V.I. VIP VIP VIP VIP VIP Equity VIP VIP High
Value Folio Folio Folio Folio Income Growth Income
Fund 200 300 400 500 Portfolio Portfolio Portfolio
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
5,945 239,783 128,579 135,584 408,695 (17,814) (7,701) (6,698)
66,177 0 0 0 0 0 4,494 0
1,188 406,331 416,225 591,490 289,938 11,275 27,616 10,454
92,739 (8,226) 4,667 29,907 306,902 279,658 77,797 74,985
- ---------------------------------------------------------------------------------------------------------------------------------
166,049 637,888 549,471 756,981 1,005,535 273,119 102,206 78,741
- ---------------------------------------------------------------------------------------------------------------------------------
2,148,867 2,401,340 3,312,960 2,954,710 1,086,664 2,116,829 1,085,062 820,108
164,471 23,801 128,048 16,016 11,810 235,669 43,852 40,099
21,363 1,768,348 (382,008) (598,743) 5,923,423 144,921 (55,737) 24,227
0 0 0 0 0 (14) (35) 0
0 0 (496) 0 0 (517) 0 0
(2,745) (37,735) (25,787) (40,788) (8,862) (15,270) (14,907) (31,124)
- ---------------------------------------------------------------------------------------------------------------------------------
2,331,956 4,155,754 3,032,717 2,331,195 7,013,035 2,481,618 1,058,235 853,310
- ---------------------------------------------------------------------------------------------------------------------------------
2,498,005 4,793,642 3,582,188 3,088,176 8,018,570 2,754,737 1,160,441 932,051
0 0 0 0 0 0 145,738 0
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2,498,005 4,793,642 3,582,188 3,088,176 8,018,570 2,754,737 1,306,179 932,051
=================================================================================================================================
</TABLE>
(Continued)
16
<PAGE>
<TABLE>
<CAPTION>
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Changes in Net Assets
- ------------------------------------------------------------------------------------------------------------------------------
Fidelity Fidelity Fidelity Landmark Landmark
VIP VIP II VIP II Small Cap VIP
Overseas Contrafund Index 500 Equity VIP Balanced
Portfolio Portfolio Portfolio Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
resulting from operations:
Net investment income (loss) $ (9,004) (12,939) (16,637) (1,219) 32,508
Realized gain distributions 0 0 0 0 216,898
Realized gain (loss) on sale of
investments 903 4,118 2,533 70,406 (95,900)
Change in unrealized gain
(loss) on investments 12,401 206,924 252,397 229,494 (126,072)
- ------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets resulting
from operations 4,300 198,103 238,293 298,681 27,434
- ------------------------------------------------------------------------------------------------------------------------------
Capital transactions:
Contract deposits 1,062,266 1,641,264 2,391,045 154,300 11,588
Transfers between funds 95,513 107,565 126,147 1,999 (67,856)
Transfers to (from) Citicorp Life
Insurance Company 1,903 (1,638) (7,068) 1,735,956 (1,233,209)
Annual administrative charges 0 0 0 0 0
Death benefits 0 0 (518) 0 0
Contract withdrawals (1,655) (29,041) (11,024) 0 0
- ------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets resulting
from capital transactions 1,158,027 1,718,150 2,498,582 1,892,255 (1,289,477)
- ------------------------------------------------------------------------------------------------------------------------------
Total increase in net assets 1,162,327 1,916,253 2,736,875 2,190,936 (1,262,043)
Net assets at beginning of period 0 0 0 0 1,262,043
- ------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $1,162,327 1,916,253 2,736,875 2,190,936 0
==============================================================================================================================
</TABLE>
See accompanying notes to financial statements.
17
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
Landmark Landmark Landmark MFS MFS MFS MFS
VIP VIP VIP U.S. MFS Emerging Money MFS Total World
Equity International Government Bond Growth Market Research Return Government
Fund Equity Fund Fund Series Series Series Series Series Series
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16,683 31,704 33,371 (5,993) (18,868) 42,873 (19,480) (12,893) (398)
497,237 34,624 0 0 0 8,975 0 0 0
(206,783) 11,138 (53,223) 4,085 3,481 0 1,784 4,051 449
(252,777) (194,481) 16,093 49,320 267,571 0 190,395 172,982 (1,796)
- -----------------------------------------------------------------------------------------------------------------------------------
54,360 (117,015) (3,759) 47,412 252,184 51,848 172,699 164,140 (1,745)
- -----------------------------------------------------------------------------------------------------------------------------------
11,588 100 0 736,413 2,261,039 6,327,835 2,403,116 1,636,629 278,054
(13,028) (107,251) (69,541) 173,284 184,924 (2,264,257) 398,099 67,561 (21,407)
(1,364,903) (4,259,003) (1,081,533) (22,790) 17,964 5,563 15,817 13,308 3,801
0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 (515) 0
0 0 0 (5,945) (7,947) (491,241) (29,997) (27,673) 0
- -----------------------------------------------------------------------------------------------------------------------------------
(1,366,343) (4,366,154) (1,151,074) 880,962 2,455,980 3,577,900 2,787,035 1,689,310 260,448
- -----------------------------------------------------------------------------------------------------------------------------------
(1,311,983) (4,483,169) (1,154,833) 928,374 2,708,164 3,629,748 2,959,734 1,853,450 258,703
1,311,983 4,483,169 1,154,833 0 0 50,100 0 0 74,013
- -----------------------------------------------------------------------------------------------------------------------------------
0 0 0 928,374 2,708,164 3,679,848 2,959,734 1,853,450 332,716
===================================================================================================================================
</TABLE>
18
<PAGE>
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Notes to Financial Statements
December 31, 1998
(1) HISTORY
Citicorp Life Insurance Company Variable Annuity Separate Account (the
Account) is a separate investment account maintained under the
provisions of Arizona Insurance Law by Citicorp Life Insurance Company
(the Company). The Account operates as a unit investment trust
registered under the Investment Company Act of 1940, as amended, and
supports the operations of the Company's individual flexible premium
deferred variable annuity contracts (the contracts). The Account invests
in portfolios of the following funds:
o Variable Annuity Portfolios:
o CitiSelect VIP Folio 200*,
o CitiSelect VIP Folio 300*,
o CitiSelect VIP Folio 400*,
o CitiSelect VIP Folio 500, and
o CitiFunds Small Cap Growth V.I.P. Portfolio.**
o AIM Variable Insurance Funds, Inc.:
o AIM V.I. Capital Appreciation Fund,
o AIM V.I. Government Series Fund*,
o AIM V.I. Growth Fund*,
o AIM V.I. Growth and Income Fund*,
o AIM V.I. International Equity Fund*, and
o AIM V.I. Value Fund*.
o Fidelity Variable Insurance Products Funds:
o Fidelity VIP Equity Income Portfolio*,
o Fidelity VIP Growth Portfolio,
o Fidelity VIP High Income Portfolio*,
o Fidelity VIP Overseas Portfolio*,
o Fidelity VIP II Contrafund Portfolio*, and
o Fidelity VIP II Index 500 Portfolio*.
o MFS Variable Insurance Trust:
o MFS Bond Series*,
o MFS Emerging Growth Series*,
o MFS Money Market Series,
o MFS Research Series*,
o MFS Total Return Series*, and
o MFS World Government Series.
* Available to the Account beginning February 3, 1997.
** Formerly known as Landmark Small Cap Equity VIP Fund through
February 28, 1998
The CitiSelect Variable Insurance Products Funds had no assets or
operations until February 10, 1997, when the Company transferred
$40,000,000 from its general fund to provide initial capital. Also at
this time, the Company transferred $3,000,000 from its general fund to
the Landmark Small Cap Equity VIP Fund for the same purpose. All initial
capital was repaid as of June 16, 1998.
19
<PAGE>
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Notes to Financial Statements
December 31, 1998
As of April 30, 1997, several funds were no longer available to the
Account, including Landmark VIP Balanced Fund, Landmark VIP Equity Fund,
Landmark VIP International Equity Fund, and Landmark VIP U.S. Government
Fund. In conjunction with the removal of these Landmark Variable
Insurance Products Funds from the Account, the Company transferred
$7,000,000 in initial capital back to its general fund.
The assets of the Account are the property of the Company. The portion
of the Account's assets applicable to the contracts is not chargeable
with liabilities arising out of any other business conducted by the
Company.
In addition to the Account, a contract owner may also allocate funds to
the General Account, which is part of the Company's general account.
Amounts allocated to the General Account are credited with a guaranteed
rate of interest for one year. Because of exemptive and exclusionary
provisions, interests in the General Account have not been registered
under the Securities Act of 1933, and the General Account has not been
registered as an investment company under the Investment Company Act of
1940.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed
by the Account in preparation of the financial statements in conformity
with generally accepted accounting principles.
(A) INVESTMENT VALUATION
The investment in the Fund is stated at market value, which is the
net asset value of each of the respective series as determined by
the Fund at the close of business on the last working day of the
period.
(B) ACCOUNTING FOR INVESTMENTS
Investment transactions are accounted for on the trade date.
Dividend income is recorded on the ex-dividend date. The cost of
investments sold is generally determined on the specific
identification method.
(C) FEDERAL INCOME TAXES
The Company is taxed under federal law as a life insurance
company. The Account is part of the Company's total operations,
and is not taxed separately. Under existing law, no taxes are
payable on investment income and realized capital gains of the
Account.
(D) 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 reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of increase and decrease in net assets from
operations during the period. Actual results could differ from
those estimates.
20
<PAGE>
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Notes to Financial Statements
December 31, 1998
(3) CONTRACT CHARGES
Daily charges for mortality and expense risks assumed by the Company are
assessed through the daily unit value calculation, and are equivalent on
an annual basis to 1.25% and 0.84% of the net assets of the contracts
for the initial annuity investment period of January 1, 1998 through
February 28, 1998 and March 1, 1998 through December 31, 1998,
respectively.
An annual contract fee of $30 is assessed against each contract on its
anniversary date by surrendering units. Daily charges for administrative
expenses are assessed through the daily unit value calculation, and are
equivalent on an annual basis to 0.15% of the net assets of the
contracts.
The contracts provide that in the event that a contract owner withdraws
all or a portion of the contract value within five contract years, a
deferred sales charge will be assessed. The deferred sales charge is
based on a table of charges, of which the maximum charge is currently 7%
of the purchase payments withdrawn. During each contract year, up to 10%
of purchase payments less any prior withdrawal of purchase payments may
be withdrawn without a deferred sales charge.
Premium taxes may be applicable, depending on the laws of various
jurisdictions. Various states and other governmental entities levy a
premium tax on annuity contracts issued by insurance companies.
21
<PAGE>
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Notes to Financial Statements
December 31, 1998
(4) PURCHASES OF INVESTMENTS
For the year ended December 31, 1998, investment activity in each of the
respective funds was as follows:
<TABLE>
<CAPTION>
==========================================================================================================================
Cost of Proceeds
Shares of purchases from sales
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Variable Annuity Portfolios:
CitiSelect VIP Folio 200 $ 2,560,820 3,065,925
CitiSelect VIP Folio 300 4,349,751 963,997
CitiSelect VIP Folio 400 1,846,330 1,218,483
CitiSelect VIP Folio 500 1,235,843 7,708,091
CitiFunds Small Cap Growth V.I.P. Portfolio 515,346 2,305,044
AIM Variable Insurance Funds, Inc.:
AIM V.I. Capital Appreciation Fund 1,997,132 195,924
AIM V.I. Government Series Fund 1,310,703 144,198
AIM V.I. Growth Fund 908,485 116,375
AIM V.I. Growth and Income Fund 2,585,874 181,087
AIM V.I. International Equity Fund 2,143,923 438,783
AIM V.I. Value Fund 5,683,822 611,335
Fidelity Variable Insurance Products Funds:
Fidelity VIP Equity Income Portfolio 5,709,407 779,041
Fidelity VIP Growth Portfolio 2,781,769 164,417
Fidelity VIP High Income Portfolio 2,706,725 195,247
Fidelity VIP Overseas Portfolio 791,623 244,045
Fidelity VIP II Contrafund Portfolio 3,992,504 208,711
Fidelity VIP II Index 500 Portfolio 8,436,140 378,004
MFS Variable Insurance Trust:
MFS Bond Series 1,753,088 194,671
MFS Emerging Growth Series 3,918,792 659,564
MFS Money Market Series 5,086,360 5,605,431
MFS Research Series 2,733,594 450,394
MFS Total Return Series 3,289,230 311,408
MFS World Government Series 292,312 203,190
==========================================================================================================================
22 (Continued)
</TABLE>
<PAGE>
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Notes to Financial Statements
December 31, 1998
<TABLE>
<CAPTION>
=======================================================================================================================
(5) NET INCREASE IN ACCUMULATION UNITS
For the years ended December 31, 1998 and 1997, transactions in
accumulation units of contractholders of the Account were as follows:
=======================================================================================================================
1998
- -----------------------------------------------------------------------------------------------------------------------
AIM V.I. AIM V.I. AIM AIM V.I. AIM V.I.
Capital Government V.I. Growth and International
Appreciation Series Growth Income Equity
Fund Fund Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BASE
Units purchased 887,152 915,206 393,252 1,724,132 1,377,527
Units withdrawn and
contract charges (17,233) (74,845) (9,680) (45,710) (77,004)
Units transferred
between funds 32,372 182,174 85,998 80,982 84,240
- -----------------------------------------------------------------------------------------------------------------------
Net increase 902,291 1,022,535 469,570 1,759,404 1,384,763
Units at beginning
of period 1,293,126 573,525 315,240 827,506 2,357,251
- -----------------------------------------------------------------------------------------------------------------------
Units at end of period 2,195,417 1,596,060 784,810 2,586,910 3,742,014
=======================================================================================================================
GMIB
Units purchased 28,511 0 61,373 68,966 18,737
Units withdrawn and
contract charges 0 0 0 0 0
Units transferred
between funds 23,712 0 0 0 8,823
- -----------------------------------------------------------------------------------------------------------------------
Net increase 52,223 0 61,373 68,966 27,560
Units at beginning
of period 0 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------
Units at end of period 52,223 0 61,373 68,966 27,560
=======================================================================================================================
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
==========================================================================================================================
==========================================================================================================================
1998
- --------------------------------------------------------------------------------------------------------------------------
AIM CitiSelect CitiSelect CitiSelect CitiSelect Fidelity Fidelity Fidelity
V.I. VIP VIP VIP VIP VIP Equity VIP VIP High
Value Folio Folio Folio Folio Income Growth Income
Fund 200 300 400 500 Portfolio Portfolio Portfolio
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
3,243,206 1,850,889 3,367,640 1,412,573 765,778 3,429,266 920,758 2,088,173
(66,048) (226,842) (77,942) (132,003) (113,966) (85,413) (48,141) (60,139)
71,840 (31,661) (474,783) (961,046) (131,663) 177,463 223,450 68,116
- --------------------------------------------------------------------------------------------------------------------------
3,248,998 1,592,386 2,814,915 319,524 520,149 3,521,316 1,096,067 2,096,150
2,102,285 2,283,189 3,338,546 2,582,200 1,046,036 2,265,460 725,424 819,371
- --------------------------------------------------------------------------------------------------------------------------
5,351,283 3,875,575 6,153,461 2,901,724 1,566,185 5,786,776 1,821,491 2,915,521
==========================================================================================================================
342,555 0 0 89,472 36,504 97,858 65,677 0
(76,241) 0 0 0 0 0 0 0
34,916 0 0 0 0 0 0 0
- --------------------------------------------------------------------------------------------------------------------------
301,230 0 0 89,472 36,504 97,858 65,677 0
0 0 0 281,111 0 0 0 0
- --------------------------------------------------------------------------------------------------------------------------
301,230 0 0 370,583 36,504 97,858 65,677 0
==========================================================================================================================
(Continued)
</TABLE>
24
<PAGE>
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Notes to Financial Statements
December 31, 1998
<TABLE>
<CAPTION>
==========================================================================================================================
(5) NET INCREASE IN ACCUMULATION UNITS, CONTINUED
For the years ended December 31, 1998 and 1997, transactions in
accumulation units of contractholders of the Account were as follows:
==========================================================================================================================
1998
- --------------------------------------------------------------------------------------------------------------------------
Fidelity Fidelity Fidelity CitiFunds
VIP VIP II VIP II Small Cap MFS
Overseas Contrafund Index 500 Growth V.I.P. Bond
Portfolio Portfolio Portfolio Portfolio Series
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BASE
Units purchased 454,202 2,095,468 4,109,662 364,048 1,276,823
Units withdrawn and
contract charges (5,780) (46,542) (82,319) (3,084) (113,702)
Units transferred
between funds (118,068) 545,253 1,377,618 (37,806) 210,463
- --------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) 330,354 2,594,179 5,404,961 323,158 1,373,584
Units at beginning
of period 1,070,184 1,585,128 2,215,225 150,143 861,145
- --------------------------------------------------------------------------------------------------------------------------
Units at end of period 1,400,538 4,179,307 7,620,186 473,301 2,234,729
==========================================================================================================================
GMIB
Units purchased 13,941 134,042 188,208 0 0
Units withdrawn and
contract charges 0 0 0 0 0
Units transferred
between funds 0 15,098 32,039 0 0
- --------------------------------------------------------------------------------------------------------------------------
Net increase 13,941 149,140 220,247 0 0
Units at beginning
of period 0 0 0 0 0
- --------------------------------------------------------------------------------------------------------------------------
Units at end of period 13,941 149,140 220,247 0 0
==========================================================================================================================
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
============================================================================================
============================================================================================
1998
- --------------------------------------------------------------------------------------------
MFS MFS MFS MFS
Emerging Money MFS Total World
Growth Market Research Return Government
Series Series Series Series Series
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1,802,586 2,117,554 1,562,199 1,775,407 133,458
(47,912) (44,557) (72,671) (51,540) (20,399)
499,296 (2,654,111) 187,328 644,715 (34,239)
- --------------------------------------------------------------------------------------------
2,253,970 (581,114) 1,676,856 2,368,582 78,820
2,322,481 3,362,150 2,569,829 1,592,342 303,642
- --------------------------------------------------------------------------------------------
4,576,451 2,781,036 4,246,685 3,960,924 382,462
============================================================================================
98,182 0 18,119 0 0
0 0 0 0 0
31,003 0 0 0 0
- --------------------------------------------------------------------------------------------
129,185 0 18,119 0 0
0 0 0 0 0
- --------------------------------------------------------------------------------------------
129,185 0 18,119 0 0
============================================================================================
(Continued)
</TABLE>
26
<PAGE>
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Notes to Financial Statements
December 31, 1998
<TABLE>
<CAPTION>
==========================================================================================================================
(5) NET INCREASE IN ACCUMULATION UNITS, CONTINUED
For the years ended December 31, 1998 and 1997, transactions in
accumulation units of contractholders of the Account were as follows:
==========================================================================================================================
1997
- --------------------------------------------------------------------------------------------------------------------------
AIM V.I. AIM V.I. AIM AIM V.I. AIM V.I.
Capital Government V.I. Growth and International
Appreciation Series Growth Income Equity
Fund Fund Fund Fund Fund
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BASE
Units purchased 1,162,380 419,758 302,312 822,814 1,995,901
Units withdrawn and
contract charges (14,524) 0 0 (5,199) (11,071)
Units transferred
between funds 67,659 153,767 12,928 9,891 372,421
- --------------------------------------------------------------------------------------------------------------------------
Net increase 1,215,515 573,525 315,240 827,506 2,357,251
Units at beginning
of period 77,611 0 0 0 0
- --------------------------------------------------------------------------------------------------------------------------
Units at end of period 1,293,126 573,525 315,240 827,506 2,357,251
==========================================================================================================================
GMIB
Units purchased 0 0 0 0 0
Units withdrawn and
contract charges 0 0 0 0 0
Units transferred
between funds 0 0 0 0 0
- --------------------------------------------------------------------------------------------------------------------------
Net increase 0 0 0 0 0
Units at beginning
of period 0 0 0 0 0
- --------------------------------------------------------------------------------------------------------------------------
Units at end of period 0 0 0 0 0
==========================================================================================================================
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
========================================================================================================================
========================================================================================================================
1997
- ------------------------------------------------------------------------------------------------------------------------
AIM CitiSelect CitiSelect CitiSelect CitiSelect Fidelity Fidelity Fidelity
V.I. VIP VIP VIP VIP VIP Equity VIP VIP High
Value Folio Folio Folio Folio Income Growth Income
Fund 200 300 400 500 Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1,946,925 2,296,533 3,216,778 2,625,064 1,039,064 1,925,885 644,857 789,414
(2,388) (35,890) (24,862) (37,494) (8,003) (13,505) (8,500) (29,938)
157,748 22,546 146,630 (5,370) 14,975 353,080 (9,483) 59,895
- ------------------------------------------------------------------------------------------------------------------------
2,102,285 2,283,189 3,338,546 2,582,200 1,046,036 2,265,460 626,874 819,371
0 0 0 0 0 0 98,550 0
- ------------------------------------------------------------------------------------------------------------------------
2,102,285 2,283,189 3,338,546 2,582,200 1,046,036 2,265,460 725,424 819,371
========================================================================================================================
0 0 0 281,111 0 0 0 0
0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------
0 0 0 281,111 0 0 0 0
0 0 0 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------
0 0 0 281,111 0 0 0 0
========================================================================================================================
(Continued)
</TABLE>
28
<PAGE>
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Notes to Financial Statements
December 31, 1998
<TABLE>
<CAPTION>
===========================================================================================================================
(5) NET INCREASE IN ACCUMULATION UNITS, CONTINUED
For the years ended December 31, 1998 and 1997, transactions in
accumulation units of contractholders of the Account were as follows:
===========================================================================================================================
1997
- ---------------------------------------------------------------------------------------------------------------------------
Fidelity Fidelity Fidelity Landmark Landmark
VIP VIP II VIP II Small Cap VIP
Overseas Contrafund Index 500 Equity VIP Balanced
Portfolio Portfolio Portfolio Portfolio Fund
- ---------------------------------------------------------------------------------------------------------------------------
BASE
<S> <C> <C> <C> <C> <C>
Units purchased 984,950 1,515,643 2,127,252 148,286 9,479
Units withdrawn and
contract charges (1,495) (24,919) (9,879) 0 0
Units transferred
between funds 86,729 94,404 97,852 1,857 (55,954)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) 1,070,184 1,585,128 2,215,225 150,143 (46,475)
Units at beginning
of period 0 0 0 0 46,475
- ----------------------------------------------------------------------------------------------------------------------------
Units at end of period 1,070,184 1,585,128 2,215,225 150,143 0
===========================================================================================================================
GMIB
Units purchased 0 0 0 0 0
Units withdrawn and
contract charges 0 0 0 0 0
Units transferred
between funds 0 0 0 0
- ----------------------------------------------------------------------------------------------------------------------------
Net increase 0 0 0 0 0
Units at beginning
of period 0 0 0 0 0
- ----------------------------------------------------------------------------------------------------------------------------
Units at end of period 0 0 0 0 0
===========================================================================================================================
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
==================================================================================================================================
==================================================================================================================================
1997
- ----------------------------------------------------------------------------------------------------------------------------------
Landmark Landmark Landmark MFS MFS MFS MFS
VIP VIP VIP U.S. MFS Emerging Money MFS Total World
Equity International Government Bond Growth Market Research Return Government
Fund Equity Fund Fund Series Series Series Series Series Series
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
8,546 94 0 724,554 2,147,071 5,856,833 2,226,580 1,541,024 253,499
0 0 0 (5,747) (7,257) (453,780) (25,571) (24,995) 0
(9,711) (101,857) (65,380) 142,338 182,667 (2,088,279) 368,820 76,313 (15,705)
- ----------------------------------------------------------------------------------------------------------------------------------
(1,165) (101,763) (65,380) 861,145 2,322,481 3,314,774 2,569,829 1,592,342 237,794
1,165 101,763 65,380 0 0 47,376 0 0 65,848
- ----------------------------------------------------------------------------------------------------------------------------------
0 0 0 861,145 2,322,481 3,362,150 2,569,829 1,592,342 303,642
==================================================================================================================================
0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
0 0 0 0 0 0 0 0 0
==================================================================================================================================
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Schedule of Investments
December 31, 1998
===============================================================================================================================
Number Market
of shares value Cost
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Variable Annuity Portfolios:
CitiSelect VIP Folio 200 421,668 $ 4,385,348 4,493,925
CitiSelect VIP Folio 300 656,350 7,003,262 7,025,666
CitiSelect VIP Folio 400 353,147 3,612,696 3,733,005
CitiSelect VIP Folio 500 204,586 1,763,531 2,102,184
CitiFunds Small Cap Growth V.I.P. Portfolio 52,001 499,212 593,876
AIM Variable Insurance Funds, Inc.:
AIM V.I. Capital Appreciation Fund 175,830 4,430,926 3,905,309
AIM V.I. Government Series Fund 161,378 1,804,208 1,764,741
AIM V.I. Growth Fund 54,802 1,359,102 1,174,401
AIM V.I. Growth and Income Fund 167,303 3,973,470 3,380,936
AIM V.I. International Equity Fund 230,085 4,514,281 4,269,525
AIM V.I. Value Fund 335,401 8,804,301 7,541,512
Fidelity Variable Insurance Products Funds:
Fidelity VIP Equity Income Portfolio 311,149 7,909,413 7,469,581
Fidelity VIP Growth Portfolio 104,589 4,692,953 3,862,785
Fidelity VIP High Income Portfolio 272,529 3,142,262 3,369,020
Fidelity VIP Overseas Portfolio 85,550 1,715,280 1,688,261
Fidelity VIP II Contrafund Portfolio 275,533 6,734,043 5,534,851
Fidelity VIP II Index 500 Portfolio 87,138 12,308,263 10,637,909
MFS Variable Insurance Trust:
MFS Bond Series 223,896 2,547,940 2,459,443
MFS Emerging Growth Series 339,497 7,289,009 5,818,699
MFS Money Market Series 3,162,128 3,162,129 3,162,129
MFS Research Series 315,045 6,001,622 5,117,979
MFS Total Return Series 283,056 5,128,988 4,712,427
MFS World Government Series 41,161 447,835 424,835
===============================================================================================================================
</TABLE>
31
<PAGE>
CITICORP LIFE INSURANCE COMPANY
Statutory Financial Statements
December 31, 1998, 1997, and 1996
(With Independent Auditors' Report Thereon)
<PAGE>
[GRAPHIC LOGO OMITTED]
10 South Broadway
Suite 900
St. Louis, MO 63102
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Citicorp Life Insurance Company:
We have audited the accompanying statutory statements of admitted assets,
liabilities, and capital and surplus of Citicorp Life Insurance Company as
of December 31, 1998 and 1997, and the related statutory statements of
operations, capital and surplus, and cash flow 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.
As described more fully in note 1 to the financial statements, the Company
prepared these financial statements using accounting practices prescribed
or permitted by the Insurance Department of the State of Arizona, which
practices differ from generally accepted accounting principles. The effect
on the financial statements of the variances between the statutory basis of
accounting and generally accepted accounting principles, although not
reasonably determinable, are presumed to be material.
In our opinion, because of the effects of the matter discussed in the
preceding paragraph, the financial statements referred to above do not
present fairly, in conformity with generally accepted accounting
principles, the financial position of Citicorp Life Insurance Company as of
December 31, 1998 and 1997, or the results of its operations or its cash
flows for the years then ended.
Also, in our opinion, the financial statements referred to above present
fairly, in all material respects, the admitted assets, liabilities, and
capital and surplus of Citicorp Life Insurance Company as of 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, on the
basis of accounting as described in note 1.
<PAGE>
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information
included in the accompanying schedule is presented for purposes of
additional analysis, and is not a required part of the basic financial
statements. Such information has been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
April 9, 1999
2
<PAGE>
CITICORP LIFE INSURANCE COMPANY
Statutory Statements of Admitted Assets,
Liabilities, and Capital and Surplus
December 31, 1998 and 1997
<TABLE>
<CAPTION>
ASSETS 1998 1997
------------ -----------
<S> <C> <C>
Cash and investments - other than investments in insurance affiliates:
Bonds $488,989,160 353,130,836
Mortgage loans 1,091,992 1,311,377
Cash on hand and on deposit 1,264,635 6,929,415
Short-term investments 29,626,553 58,912,105
Real estate 25,552,002 26,054,375
Options 3,167,879 1,346,215
Investments in insurance affiliates 88,677,743 63,998,710
------------ -----------
Total cash and investments 638,369,964 511,683,033
Net deferred and uncollected premiums -- 1,399,627
Due from reinsurers 17,041,986 17,121,282
Accrued investment income 5,767,513 5,412,349
Transfers from separate accounts due 3,138,495 1,753,408
Other assets 49,471 772,162
------------ -----------
Total admitted assets excluding separate account assets 664,367,429 538,141,861
Separate account assets 103,230,073 54,061,319
------------ -----------
Total admitted assets $767,597,502 592,203,180
============ ===========
LIABILITIES AND CAPITAL AND SURPLUS
Liabilities:
Future policy benefit reserves:
Life insurance $ 1,939,733 6,023,072
Accident and health insurance 249,093 1,064,091
Policyholder account balances - annuities 124,370,787 102,080,678
Policy and contract claim reserves:
Life insurance 3,901,334 4,785,221
Accident and health insurance 11,365,298 19,461,833
General expenses due or accrued 185,000 67,291
Federal income taxes due to parent 34,843,281 35,413,211
Asset valuation reserve 13,858,001 14,630,806
Interest maintenance reserve 8,486,675 8,552,176
Other liabilities 549,059 3,234,301
------------ -----------
Total liabilities excluding separate account liabilities 199,748,261 195,312,680
Separate account liabilities 103,230,073 42,799,108
------------ -----------
Total liabilities 302,978,334 238,111,788
------------ -----------
Commitments and contingencies
Capital and surplus:
Preferred stock - $1 par value per share; 5,000,000 shares
authorized and -0- shares issued and outstanding -- --
Common stock - $1 par value per share; 5,000,000 shares
authorized, 2,500,000 shares issued and outstanding at
December 31, 1998 and 1997, respectively 2,500,000 2,500,000
Nonvoting common stock - $1 par value per share; 5,000,000 shares
authorized; 705,000 shares issued and outstanding at December 31, 1998 705,000 --
Surplus:
Paid-in 142,694,878 3,399,878
Assigned - separate account -- 11,262,211
Unassigned 318,719,290 336,929,303
------------ -----------
Total capital and surplus 464,619,168 354,091,392
------------ -----------
Total liabilities and capital and surplus $767,597,502 592,203,180
============ ===========
See accompanying notes to statutory financial statements.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
CITICORP LIFE INSURANCE COMPANY
Statutory Statements of Operations
Years ended December 31, 1998, 1997, and 1996
1998 1997 1996
------------ ----------- -----------
<S> <C> <C> <C>
Revenues:
Premiums and annuity considerations:
Annuities $ 83,868,640 72,200,297 21,559,834
Life insurance 22,694,941 26,439,369 28,870,474
Accident and health insurance 39,655,690 47,455,840 48,512,593
------------ ----------- -----------
Total premiums and annuity considerations 146,219,271 146,095,506 98,942,901
Net investment income (including dividends from
subsidiaries of $20.0, $20.0, and $74.3 million in
1998, 1997, and 1996, respectively) 48,290,028 47,212,270 102,762,955
Amortization of interest maintenance reserve 824,528 964,031 1,300,049
Commissions and expense allowances on
reinsurance ceded 8,114,355 194,346 256,312
Net gain from operations in separate accounts 844,211 2,775,548 547,873
Other 4,283,635 301,918 (12,409)
------------ ----------- -----------
Total revenues 208,576,028 197,543,619 203,797,681
------------ ----------- -----------
Benefits and expenses:
Death and other policy benefits:
Annuities 4,917,117 2,111,772 1,527,015
Life insurance 12,522,537 13,039,222 15,268,489
Accident and health insurance 10,181,535 19,889,996 22,187,628
Surrenders 13,960,077 8,395,452 5,219,710
Change in future policy benefits:
Annuities 22,290,109 26,197,332 17,492,764
Life insurance (4,083,339) (481,132) (446,083)
Accident and health insurance (814,998) (203,816) (20,674)
Other operating costs and expenses:
Commissions 14,949,143 13,994,793 8,829,493
General insurance expenses 11,101,350 13,341,637 15,992,174
Net transfers to separate accounts 48,691,310 38,066,102 589,552
Other (181,582) (66,555) 324,674
------------ ----------- -----------
Total benefits and expenses 133,533,259 134,284,803 86,964,742
------------ ----------- -----------
Income from operations before federal
income tax expense and net realized
capital gains 75,042,769 63,258,816 116,832,939
Federal income tax expense 13,007,956 20,097,427 14,240,457
------------ ----------- -----------
Income from operations before net realized
capital gains 62,034,813 43,161,389 102,592,482
Net realized capital gains, net of IMR transfer -- -- 101,296
------------ ----------- -----------
Net income $ 62,034,813 43,161,389 102,693,778
============ =========== ===========
See accompanying notes to statutory financial statements.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
CITICORP LIFE INSURANCE COMPANY
Statutory Statements of Capital and Surplus
Years ended December 31, 1998, 1997, and 1996
1998 1997 1996
------------- ----------- -----------
<S> <C> <C> <C>
Capital and surplus at beginning of year $ 354,091,392 410,579,431 349,380,157
Net income 62,034,813 43,161,389 102,693,778
Net unrealized gain (loss) from revaluation of investments 7,218,120 1,337,886 (45,000,202)
Change in asset valuation reserve 772,805 (492,559) 9,386,758
Dividends on common stock (100,000,000) (100,000,000) --
Change in nonadmitted assets 3,370 3,914 67,901
Capital paid in 705,000 -- --
Surplus paid in 139,295,000 -- 1,500,000
Change in unassigned surplus - separate account (12,106,423) 489,829 (7,448,961)
Surplus contributed to separate accounts 12,605,091 (988,498) --
------------- ----------- -----------
Capital and surplus at end of year $ 464,619,168 354,091,392 410,579,431
============= =========== ===========
See accompanying notes to statutory financial statements.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
CITICORP LIFE INSURANCE COMPANY
Statutory Statements of Cash Flow
Years ended December 31, 1998, 1997, and 1996
1998 1997 1996
------------ ----------- -----------
<S> <C> <C> <C>
Cash from operating activities:
Premiums and annuity considerations $147,618,901 146,348,499 99,269,724
Net investment income received 49,278,743 48,922,731 104,780,308
Other income received 4,215,965 277,427 (12,409)
Allowances and reserve adjustments received
on reinsurance ceded 8,114,355 194,346 256,312
Life and accident and health claims, and other
benefits paid (50,564,359) (44,739,184) (41,824,703)
Commissions, other expenses, and taxes paid (25,932,785) (27,449,387) (25,359,582)
Federal income taxes paid (13,986,593) (20,561,930) (11,210,540)
Net transfer to separate accounts (50,008,727) (39,795,018) (589,552)
Net surplus contribution (to) from separate account 12,605,091 (988,498) --
------------ ----------- -----------
Net cash provided by operating activities 81,340,591 62,208,986 125,309,558
------------ ----------- -----------
Cash from investing activities:
Proceeds from investments sold, matured, or repaid:
Bonds 127,402,212 84,612,461 74,104,424
Stocks -- -- 1,755,839
Mortgage loans 219,385 187,734 535,983
Other 728 (120) 772
Cost of investments acquired (long-term only):
Cost of bonds acquired (262,935,036) (141,341,381) (94,496,685)
Cost of stocks acquired - affiliates (19,000,000) (9,000,000) (6,500,000)
Tax on capital gains (losses) -- -- (626,923)
Other (282,577) (1,349,980) --
------------ ----------- -----------
Net cash used in investing activities (154,595,288) (66,891,286) (25,226,590)
------------ ----------- -----------
Cash from financing activities:
Capital and surplus paid in 140,000,000 -- 1,500,000
Other cash provided 874,504 8,392,371 30,952,803
Dividends paid to stockholder (100,000,000) (100,000,000) (16,000,000)
Change in due from reinsurers 79,296 2,667,259 5,001,222
Other cash used (2,649,435) (4,177,162) (28,458,313)
------------ ----------- -----------
Net cash provided by (used in)
financing activities 38,304,365 (93,117,532) (7,004,288)
------------ ----------- -----------
Net change in cash on hand and on deposit
and short-term investments (34,950,332) (97,799,832) 93,078,680
Cash on hand and on deposit and short-term
investments, beginning of year 65,841,520 163,641,352 70,562,672
------------ ----------- -----------
Cash on hand and on deposit and short-term
investments, end of year $ 30,891,188 65,841,520 163,641,352
============ =========== ===========
See accompanying notes to statutory financial statements.
</TABLE>
6
<PAGE>
CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
December 31, 1998, 1997, and 1996
(1) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Citicorp Life Insurance Company (the Company) is a 78%-owned subsidiary
of Citibank Delaware (the Parent), which is a third-tier wholly owned
subsidiary of Citigroup. The remaining 22% ownership of the Company is
by Citicorp Holdings Netherlands, B.V. The Company issues and assumes
term life insurance, credit life, credit accident and health, credit
involuntary unemployment, single and flexible premium deferred annuity
policies, and variable deferred annuity policies. The Company also
writes and assumes mortgage disability policies. The Company is licensed
to issue insurance in 48 states and the District of Columbia. The
majority of the Company's business is generated through customers of
Citigroup and its subsidiaries. At December 31, 1998, the Company has
two wholly owned insurance company subsidiaries, First Citicorp Life
Insurance Company and Citicorp Assurance Co. (CAC), both of which are
accounted for on the statutory equity method.
On January 1, 1996, the credit involuntary unemployment business which
had been assumed by FG Casualty Company, a wholly owned subsidiary of
the Company and FG Insurance Corporation, an affiliate of the Company,
prior to 1996 was transferred to CAC. CAC was dividended to the Company
and became a wholly owned subsidiary during 1996. During the first
quarter of 1996, FG Casualty Company and FG Insurance Corporation were
sold to an unrelated third party.
The accompanying statutory financial statements have been prepared in
accordance with insurance accounting practices prescribed or permitted
by the Department of Insurance of the State of Arizona, which vary in
some respects from generally accepted accounting principles (GAAP), as
discussed more fully in note 12. The preparation of statutory financial
statements requires management to make estimates and assumptions which
affect the reported amounts of assets and liabilities as of the date of
the financial statements. Actual results could differ from these
estimates.
The significant statutory accounting policies are as follows:
REVENUE AND EXPENSES
Life premiums are reflected as earned on the policy anniversary
date. Annuity considerations are reported as income when received.
Accident and health premiums are reported as revenue when due and
earned on a pro rata basis over the period covered by the policy.
Deferred life premiums represent modal premiums (other than
annual) to be billed in the year subsequent to the commencement of
the policy year. Uncollected premiums represent premiums due less
accident and health premiums over 90 days past due. Expenses,
including acquisition costs related to acquiring new business and
interest credited to policyholder account balances, are charged to
operations as incurred. Investment income is recognized as earned.
(Continued)
7
<PAGE>
CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
December 31, 1998, 1997, and 1996
POLICY RESERVES
The liability for future life policy benefits is based on
statutory mortality and interest requirements without
consideration of withdrawals. The mortality table and interest
assumptions currently being used on the majority of new ordinary
and group life policies are the 1980 Commissioners Standard
Ordinary (CSO) table, with 5.5% interest on a Commissioners
Reserve Valuation Method (CRVM) basis. With respect to in-force
ordinary life and group policies, the mortality table and interest
assumptions are from the 1980 CSO table with 5.5% interest. The
Company utilizes the 1980 CSO table with 5.5% to 6% interest for
most credit life policies. Life reserves are generally calculated
on either a net level or CRVM reserve basis.
For deferred annuities, reserves are computed on the Commissioners
Annuity Reserve Valuation Method (CARVM) using appropriate
issue-year interest rates ranging from 5.0% to 6.5%.
Future policy benefits on accident and health insurance are based
on unearned premiums computed on a pro rata basis. The Company
provides a liability for accident and health claims which
represents an estimate of the ultimate cost of unpaid claims
incurred through December 31 of each year. Management believes
this liability will be adequate to cover such costs; however, the
ultimate liability may be more or less than the estimated
liability.
INVESTMENTS
Bonds and stocks are valued as prescribed by the National
Association of Insurance Commissioners (NAIC). Bonds and
short-term investments, which consist primarily of U.S. Treasury,
corporate, and mortgage-backed securities, are generally carried
at amortized cost, preferred stocks are generally carried at cost,
and common stocks of unaffiliated companies are generally carried
at fair value. Investments in common stock of insurance affiliates
are recorded at their underlying statutory book value with changes
in book value reflected in surplus. Mortgage loans are stated at
the unpaid principal balance and represent first liens on
residential properties located in the United States. Real estate
is carried at cost less accumulated depreciation of $6,206,717,
$5,704,344, and $5,201,971 in 1998, 1997, and 1996, respectively,
which is calculated on a straight-line basis over the estimated
life of the property (50 years).
Life insurance companies are required to establish an Asset
Valuation Reserve (AVR) and an Interest Maintenance Reserve (IMR).
The AVR provides for a standardized statutory investment valuation
reserve for bonds, preferred stocks, short-term investments,
mortgage loans, common stocks, real estate, and other invested
assets for the purpose of stabilizing surplus against the effect
of fluctuations in the value of investments and is recorded as a
direct charge to surplus in accordance with statutory accounting
practices. The IMR is designed to defer net realized capital gains
and losses resulting from changes in the level of interest rates
in the market and to amortize them into income over the remaining
life of the bond or mortgage loan sold. The IMR represents the
unamortized portion of such net unrealized capital gains and
losses not yet taken into income.
(Continued)
8
<PAGE>
CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
December 31, 1998, 1997, and 1996
CAPITAL GAINS AND LOSSES
The cost of investments sold is generally determined on the
first-in, first-out method and includes the effects of any related
amortization of premium or accretion of discount. Realized
investment gains and losses are reported net of income taxes of
$408,707, $263,167, and $52,836 in 1998, 1997, and 1996,
respectively, and are included in the determination of net income.
Realized investment gains and losses exclude $759,027, $488,739,
and $(3,171), which were transferred to the IMR in 1998, 1997, and
1996, respectively, net of federal income taxes.
SEPARATE ACCOUNT ASSETS AND LIABILITIES
The assets and liabilities of the separate account represent
segregated funds administered and invested by the Company for
purposes of funding variable annuity contracts for the exclusive
benefit of variable annuity contractholders. The Company receives
administrative fees from the separate account and retains varying
amounts of withdrawal charges to cover expenses in the event of
early withdrawals by contractholders. The assets and liabilities
of the separate account are carried at fair value. The Company
withdraws its initial capital as deposits increase from
contractholders. At December 31, 1998 and 1997, $-0- and
$11,262,211, respectively, represented the Company's funds on
deposit in the separate account and are reflected as assigned
surplus. The Company reflects the net gain from operations of the
separate account, which consists of annuity considerations and
investment income less contractholder reserves and expenses, in
the statement of operations.
NONADMITTED ASSETS
Assets included in the statutory statements of admitted assets,
liabilities, and capital and surplus are at "admitted asset
values." Nonadmitted assets, principally capitalized expenditures
for furniture and equipment, are excluded from the accompanying
statutory financial statements through a charge against unassigned
surplus.
FEDERAL INCOME TAXES
Federal income taxes are charged to operations based on income
that is currently taxable. No charge to operations is made or
liability established for the tax effects of temporary differences
between the financial reporting and tax basis of assets and
liabilities.
(Continued)
9
<PAGE>
CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
December 31, 1998, 1997, and 1996
FAIR VALUE DISCLOSURES
Fair value estimates are made at a specific point in time, based
on relevant market information and information about the financial
instrument. These 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. Although
fair value estimates are calculated using assumptions that
management believes are appropriate, changes in assumptions could
significantly affect the estimates and such estimates should be
used with care. The following methods and assumptions were used to
estimate the fair market value of each class of financial
instrument for which it was practicable to estimate fair value:
INVESTMENT SECURITIES - Fixed maturities are based on market
prices obtained from a pricing service which approximates fair
value.
MORTGAGE LOANS - First mortgages on real estate are carried at
the unpaid principal balance. As discussed in note 3, the
Company bears no credit risk as all mortgage loans were
purchased, with recourse, from an affiliate. The carrying value
of mortgage loans approximates fair value.
POLICYHOLDER ACCOUNT BALANCES - The liability for policyholder
account balances is related to investment-type annuity
contracts for which crediting rates are subject to adjustment
annually, based on interest rates currently being offered for
similar contracts with maturities consistent with those
remaining for the contracts being valued. The carrying value
approximates fair value at December 31, 1998 and 1997.
CASH AND SHORT-TERM INVESTMENTS - The carrying amount is a
reasonable estimate of fair value.
CASH AND CASH EQUIVALENTS
For purposes of reporting cash flows, cash and cash equivalents
represent demand deposits and highly liquid short-term
investments, which include U.S. Treasury bills, commercial paper,
and repurchase agreements with original or remaining maturities of
90 days or less when purchased.
RECLASSIFICATIONS
Certain reclassifications have been made to the 1997 and 1996
information to conform with the 1998 presentation.
(2) REINSURANCE
Insurance is assumed from other companies in areas where the Company had
or has limited authority to write business. Normally, a commission based
on net written premiums is charged by the ceding company under the terms
of the agreement.
Effective August 1, 1998, the Company entered into assumption
reinsurance agreements to cede its obligation for certain term life and
accident and health policies to unaffiliated third parties. The Company
recorded a pre-tax gain of $2,994,649 on the transaction and included
this amount in other income in the annual statement filed with
regulators.
(Continued)
10
<PAGE>
CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
December 31, 1998, 1997, and 1996
Effective January 1, 1998, the Company entered into assumption
reinsurance agreements to cede its obligation for certain accident and
health policies to unaffiliated third parties. The Company recorded a
pre-tax gain of $247,336 on the transaction and included this amount in
other income in the annual statement filed with regulators.
Effective January 1, 1998, the Company entered into reinsurance
agreements to cede its obligation for certain term life and accident and
health policies to an unaffiliated third party. The Company recorded
$7,700,000 in ceding fees included in commissions and expense allowances
on reinsurance ceded on the statements of operations and transferred
$4,316,071 in policy liabilities to the reinsurer related to this
transaction.
The effect of reinsurance on premiums for the years ended December 31,
1998, 1997, and 1996 is as follows:
<TABLE>
<CAPTION>
1998 1997 1996
------------- ----------- ----------
<S> <C> <C> <C>
Direct premiums:
Annuities $ 83,868,640 72,200,297 21,559,834
Life 2,185,410 7,122,026 7,908,778
Accident and health 2,285,042 3,507,386 5,266,759
Premiums assumed - life 19,459,815 20,068,879 24,051,178
Premiums assumed - accident and health 43,902,300 44,020,047 43,414,326
Premiums ceded - life 1,049,717 (751,536) (3,089,484)
Premiums ceded - accident and health (6,531,653) (71,593) (168,490)
------------- ----------- ----------
Net premiums earned $ 146,219,271 146,095,506 98,942,901
============= =========== ==========
</TABLE>
Reserve credits taken with respect to risks ceded to other companies
amounted to $3,674,647, $1,148,262, and $1,252,712 at December 31, 1998,
1997, and 1996, respectively. The Company remains contingently liable
with respect to any reinsurance ceded and would become actually liable
if the assuming company was unable to meet its obligations under the
reinsurance treaty.
The Company received approximately 99%, 97%, and 96% of its assumed
premiums from three unrelated insurance companies in 1998, 1997, and
1996, respectively.
(Continued)
11
<PAGE>
CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
December 31, 1998, 1997, and 1996
(3) INVESTMENTS
Major categories of net investment income for the years ended December
31, 1998, 1997, and 1996 consist of the following:
<TABLE>
<CAPTION>
1998 1997 1996
----------- ---------- -----------
<S> <C> <C> <C>
Bonds 22,965,720 20,831,460 19,749,865
Stocks (subsidiaries) 20,000,000 20,000,000 74,289,520
Mortgage loans 110,082 117,275 125,648
Real estate 3,126,593 3,126,593 2,866,044
Short-term investments 3,261,501 4,507,298 6,856,874
Other (97,288) (80,240) 114,269
----------- ---------- -----------
Total investment revenue 49,366,608 48,502,386 104,002,220
Investment expense 1,076,580 1,290,116 1,239,265
----------- ---------- -----------
Net investment income $48,290,028 47,212,270 102,762,955
=========== ========== ===========
</TABLE>
Investment expense includes $502,373 in depreciation on investments in
real estate for 1998, 1997, and 1996.
Investments in bonds at December 31, 1998 and 1997 are summarized below.
<TABLE>
<CAPTION>
1998
---------------------------------------------------------------
GROSS GROSS ESTIMATED
CARRYING UNREALIZED UNREALIZED FAIR
VALUE GAINS LOSSES VALUE
------------ --------- --------- -----------
<S> <C> <C> <C> <C>
Bonds:
U.S. Treasury securities $ 11,365,375 827,150 (15,108) 12,177,417
U.S Government agency 152,115,379 1,714,226 (58,326) 153,771,279
Industrial and miscellaneous
bonds 325,508,406 4,870,212 (1,841,991) 328,536,627
------------ --------- --------- -----------
Total bonds $488,989,160 7,411,588 (1,915,425) 494,485,323
============ ========= ========= ===========
1997
--------------------------------------------------------------
GROSS GROSS ESTIMATED
CARRYING UNREALIZED UNREALIZED FAIR
VALUE GAINS LOSSES VALUE
------------ --------- --------- -----------
Bonds:
U.S. Treasury securities $ 17,300,834 65,459 (12,151) 17,354,142
U.S Government agency 97,820,711 413,983 (420,059) 97,814,635
Industrial and miscellaneous
bonds 238,009,291 2,356,466 (1,599,464) 238,766,293
Total bonds $353,130,836 2,835,908 (2,031,674) 353,935,070
============ ========= ========= ===========
</TABLE>
12 (Continued)
<PAGE>
CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
December 31, 1998, 1997, and 1996
The carrying and estimated fair values of bonds at December 31, 1998, by
contractual maturity, are shown below. Actual maturities may differ from
contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
ESTIMATED
CARRYING FAIR
VALUE VALUE
------------ -----------
<S> <C> <C>
Within 1 year $ 1,924,108 1,923,304
After 1 year through 5 years 107,476,204 108,240,437
After 5 years through 10 years 67,815,057 68,406,446
After 10 years through 20 years 18,516,721 18,437,031
After 20 years 22,859,973 23,376,150
Mortgage-backed and asset-backed securities 270,397,097 274,101,955
$488,989,160 494,485,323
============ ===========
</TABLE>
Proceeds from sale of bonds during 1998, 1997, and 1996 were
$36,582,568, $64,431,719, and $61,066,581, respectively. Gross gains of
$1,238,304, $938,918, and $1,075,411, and gross losses of $71,300,
$251,667, and $1,081,062 were realized on those sales in 1998, 1997, and
1996, respectively.
Investments in mortgage loans were purchased from Citicorp Mortgage,
Inc. (CMI), an affiliate, pursuant to a Mortgage Loan Purchase and Sale
Agreement. In the event of default by the borrower, CMI has agreed to
take back the related loans at current book value.
(4) INVESTMENTS ON DEPOSIT
At December 31, 1998, 1997, and 1996, investments with a carrying value
of $2,907,504, $2,808,189, and $2,701,958, respectively, were on deposit
with various state insurance departments as required by law and
$3,719,000, $3,728,341, and $4,819,650, respectively, were on deposit in
escrow accounts under the terms of certain of the Company's reinsurance
agreements.
13 (Continued)
<PAGE>
CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
December 31, 1998, 1997, and 1996
(5) INVESTMENTS IN AFFILIATES
Investments in affiliates is comprised of the following:
Condensed financial information for First Citicorp Life Insurance
Company, on a statutory basis, is as follows:
<TABLE>
<CAPTION>
1998 1997 1996
------------- ------------- -------------
<S> <C> <C> <C>
Balance sheet at December 31:
Admitted assets $ 820,257,370 515,678,672 291,720,101
Liabilities 779,562,812 490,466,856 272,567,912
------------- ------------- -------------
Capital and surplus 40,694,558 25,211,816 19,152,189
============= ============= =============
Results of operations:
Premiums earned 293,310,347 250,565,989 112,681,329
Benefits and expenses 328,652,625 273,184,335 126,674,439
Investment income, including realized gains 24,939,020 20,772,942 16,263,882
Other income 6,687,844 943,024 502,543
------------- ------------- -------------
Income (loss) before federal income taxes (3,715,414) (902,380) 2,773,315
Federal income tax expense (463,095) 1,848,635 1,178,369
Net income (loss) $ (3,252,319) (2,751,015) 1,594,946
============= ============= =============
Condensed financial information for CAC, on a statutory basis, is as follows:
1998 1997 1996
------------- ------------- -------------
Balance sheet at December 31:
Admitted assets $ 85,467,834 73,854,894 56,301,892
Liabilities 37,484,649 35,068,000 21,797,022
------------- ------------- -------------
Capital and surplus $ 47,983,185 38,786,894 34,504,870
============= ============= =============
Results of operations:
Net premiums earned 81,025,106 68,420,444 66,903,396
Losses and underwriting expenses 38,453,807 33,154,319 25,003,148
------------- ------------- -------------
Underwriting gain 42,571,299 35,266,125 41,900,248
Investment income 2,425,994 2,316,371 825,948
Other income -- -- --
------------- ------------- -------------
Income before federal income taxes 44,997,293 37,582,496 42,726,196
Federal income tax expense 15,801,001 13,300,474 14,957,396
------------- ------------- -------------
Net income $ 29,196,292 24,282,022 27,768,800
============= ============= =============
</TABLE>
14 (Continued)
<PAGE>
CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
December 31, 1998, 1997, and 1996
(6) ACCIDENT AND HEALTH INSURANCE POLICY AND CONTRACT CLAIMS
Activity in the liability for accident and health insurance policy and
contract claims is summarized as follows:
1998 1997 1996
------------ ------------ ------------
Balance at January 1 $ 20,026,861 20,237,540 17,094,210
------------ ------------ ------------
Incurred related to:
Current year 16,920,083 21,833,053 25,334,054
Prior years (7,256,936) (2,038,251) (3,071,930)
------------ ------------ ------------
Total incurred 9,663,147 19,794,802 22,262,124
Paid related to:
Current year 7,392,135 8,113,616 10,574,937
Prior years 10,885,935 11,891,865 8,543,857
Total paid 18,278,070 20,005,481 19,118,794
------------ ------------ ------------
Balance at December 31 $ 11,411,938 20,026,861 20,237,540
============ ============ =============
The schedule above reflects the due and unpaid, in the course of
settlement, and incurred but not reported components of the unpaid
claims reserves for the Company's health and disability coverages. The
schedule also includes unpaid claims reserves recorded in future policy
benefits which represent the present value of amounts not yet due on
claims.
(7) FEDERAL INCOME TAXES
The Company will file a consolidated federal income tax return with its
ultimate parent, Citicorp, and its other subsidiaries prior to
Citicorp's merger with Travelers Group. The Company participates in a
tax-sharing agreement with the Parent whereby it is liable for federal
income taxes on a stand-alone basis. Subsequent to the merger with
Travelers Group, the Company's federal income tax return will be
consolidated with its subsidiary FCLIC.
Under the Life Insurance Company Income Tax Act of 1959, a portion of
income prior to 1984 is not subject to federal income taxes, within
certain limits, until it is distributed to stockholders, at which time
the distribution is taxed at ordinary corporate rates. The untaxed
income is accumulated in a memorandum tax account designated as
"Policyholders' Surplus Account." The accumulated "Policyholders'
Surplus Account," as reported in the federal income tax returns at
December 31, 1998, 1997, and 1996, was approximately $10,532,900. Based
on the current tax rate, if such accumulated amounts were distributed to
stockholders, the income tax would be approximately $3,686,500. Since
the Company does not intend to make any significant taxable
distributions in the foreseeable future, no provision for such taxes has
been made in the accompanying statutory financial statements.
15 (Continued)
<PAGE>
CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
December 31, 1998, 1997, and 1996
At December 31, 1998, the Company had a stockholder's surplus account
balance of approximately $263,929,000 from which it could pay dividends
to the stockholder without incurring additional federal income tax
liability.
Federal income tax expense on income from operations varies from amounts
computed by applying the current federal corporate income tax rate to
income from operations before federal income tax expense and net
realized capital gains. The reasons for these differences, and the tax
effects thereof, are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
------------------------- ---------------------------- ----------------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
------------ ----------- -------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Computed "expected" tax
at U.S. corporate
tax rate $ 26,264,969 35.00% $ 22,140,586 35.00% $ 40,891,529 35.00%
Difference between .
changes in statutory
reserves as compared
to tax reserves
122,243 .16 164,199 .26 (100,513) (.10)
Policy acquisition
expenses
capitalized, net of
amortization 158,254 .21 248,167 .39 (48,558) (.05)
Dividend exclusion (7,000,000) (9.32) (7,000,000) (11.07) (26,001,332) (22.26)
Amortization of IMR (288,585) (.38) (337,411) (.53) (455,017) (.39)
Prior year taxes (6,770,708) (9.02) (758,857) (1.20) -- --
Other, net 521,783 .69 5,640,743 8.92 (45,652) (.01)
------------ ----- ------------ ----- ------------ -----
$ 13,007,956 17.34% $ 20,097,427 31.77% $ 14,240,457 12.19%
============ ===== ============ ===== ============ =====
</TABLE>
(8) RELATED-PARTY TRANSACTIONS
The Company leases two buildings to an affiliate and rental income
received from this affiliate of $3,127,000, $3,127,000, $2,866,000 in
1998, 1997, and 1996, respectively, is included in net investment
income. These leases expire at various dates and contain options for
renewal. The future minimum rental income for the year ending December
31, 1999 is $3,127,000 under the terms of the leases.
The Company has entered into various service contracts with affiliates
of the Company which cover management, investment, and information
processing services. Expenses incurred under such agreements were
$2,111,447, $2,377,645, and $2,766,904 in 1998, 1997, and 1996,
respectively.
16 (Continued)
<PAGE>
CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
December 31, 1998, 1997, and 1996
The Company utilizes the services of Citicorp Insurance Services, Inc.
and CMI. Employees of these companies are eligible to participate in
defined benefit plans provided by Citicorp. Charges for these services
are based on the actual salary and benefit costs of employees providing
service to the Company. Included in these charges are costs associated
with Citicorp's benefit plans.
(9) DIVIDEND RESTRICTIONS
The maximum amount of dividends which can be paid by Arizona insurance
companies without the prior approval of the Arizona Director of
Insurance is not to exceed the lesser of 10% of policyholder surplus as
of December 31 of the preceding year or net gain from operations. The
Company requires prior approval from the Arizona Department of Insurance
prior to declaring any dividends in 1999. Dividends of $100 million were
paid in 1998 and 1997.
(10) RISK-BASED CAPITAL
The insurance departments of various states, including the Company's
domiciliary state of Arizona, impose risk-based capital (RBC)
requirements on insurance enterprises. The RBC calculation serves as a
benchmark for the regulation of life insurance companies by state
insurance regulators. The requirements apply various weighted factors to
financial balances or activity levels based on their perceived degree of
risk.
The RBC guidelines define specific capital levels where action by the
Company or regulatory intervention is required based on the ratio of a
Company's actual total adjusted capital (sum of capital and surplus and
asset valuation reserve) to control levels determined by the RBC
formula. At December 31, 1998, the Company's actual total adjusted
capital exceeded all regulatory requirements; thus, no action by the
Company or its regulators is required.
(11) COMMITMENTS AND CONTINGENCIES
The Company is involved in various litigation arising in the ordinary
course of operations. Management is of the opinion, after reviewing
these matters with legal counsel, that the ultimate liability, if any,
resulting from any or all of the above matters would not have a material
adverse effect on the Company's financial position.
(12) DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND
STATUTORY ACCOUNTING PRACTICES
Statutory accounting practices differ in some respects from generally
accepted accounting principles. Under GAAP, the following applies:
(a) The liability for future policy benefits is computed using the
rule-of-78s and pro rata methods.
(b) Life premiums are reflected as earned when due. Annuity
considerations and other fund deposits are reflected as deposits
rather than revenue.
17 (Continued)
<PAGE>
CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
December 31, 1998, 1997, and 1996
(c) Acquisition costs are capitalized and amortized generally over the
premium paying period for individual life contracts and in
relation to the estimated present value of gross profits of the
underlying business for interest-sensitive life and investment
contracts.
(d) Deferred income taxes are provided for the tax effects of
temporary differences between the financial reporting and tax
basis of assets and liabilities.
(e) Nonadmitted assets, less applicable allowance accounts, are
restored to the balance sheet.
(f) Asset valuation and interest maintenance reserves are not
provided.
(g) Realized investment gains (losses) resulting from changes in
interest rates are recognized when the related security is sold.
(h) Majority-owned subsidiaries are consolidated and the Company's
investment in subsidiaries is eliminated in consolidation.
(i) Debt securities are classified into one of three categories:
held-to-maturity, trading, or available-for-sale. Held-to-maturity
securities are carried at amortized cost. Trading securities are
reported at fair value with unrealized gains and losses included
in earnings. Available-for-sale securities are reported at fair
value with unrealized gains and losses excluded from earnings and
reported as a separate component of equity, net of tax.
(j) Reinsurance premiums, commissions, expense reimbursements, and
reserves would be presented on a gross basis consistent with terms
of the reinsurance contracts.
The statutory financial statements do not include any adjustments
that might result from differences between statutory accounting
practices and GAAP.
18
<PAGE>
SCHEDULE 1
CITICORP LIFE INSURANCE COMPANY
Schedule of Selected Financial Data From Annual Statement
Year ended December 31, 1998
Investment income earned:
Government bonds $ 3,672,423
Other bonds (unaffiliated) 19,293,297
Bonds of affiliates --
Preferred stocks (unaffiliated) --
Preferred stocks of affiliates --
Common stocks (unaffiliated) --
Common stocks of affiliates 20,000,000
Mortgages loans 110,082
Real estate 3,126,593
Premium notes, policy loans and liens --
Cash on hand and on deposit --
Short-term investments 3,261,501
Other invested assets --
Derivative instruments (103,552)
Aggregate write-in for investment income 6,264
------------
Gross investment income $ 49,366,608
============
Real estate owned - book value less encumbrances $ 25,552,002
============
Mortgage loans - book value:
Farm mortgages $ --
Residential mortgages 1,091,992
Commercial mortgages --
------------
Total mortgage loans $ 1,091,992
============
Mortgage loans by standing - book value:
Good standing $ 1,091,992
Good standing with restructured terms --
Interest overdue more than three months, not in
foreclosure --
Foreclosure in process --
Other long-term assets - statement value --
Bonds and stocks of parents, subsidiaries, and affiliates -
book value:
Bonds --
Preferred stocks --
Common stocks 40,500,000
(Continued)
19
<PAGE>
SCHEDULE 1
CITICORP LIFE INSURANCE COMPANY
Schedule of Selected Financial Data From Annual Statement
Year ended December 31, 1998
Bonds and short-term investments by class and maturity: Bonds by maturity -
statement value:
Due within one year or less $ 84,314,874
Over 1 year through 5 years 159,218,674
Over 5 years through 10 years 89,738,114
Over 10 years through 20 years 44,412,964
Over 20 years 140,931,087
------------
Total by maturity $518,615,713
============
Bonds by class - statement value
Class 1 $455,379,356
Class 2 61,288,485
Class 3 1,947,872
Class 4 --
Class 5 --
Class 6 --
------------
Total by class 518,615,713
Total bonds publicly traded 506,718,962
------------
Total bonds privately placed $ 11,896,751
============
Preferred stocks - statement value $ --
Common stocks - market value 88,677,743
Short-term investments - book value 29,626,553
Financial options owned - statement value 3,167,879
Financial options written and in force - statement value --
Financial futures contracts open - current price --
Cash on deposit 1,264,635
Life insurance in force (in thousands):
Industrial --
Ordinary 44,502
Credit life 2,470,918
Group life 275,625
Amount of accidental death insurance in force under
ordinary policies --
Life insurance policies with disability provisions in force:
Industrial --
Ordinary --
Credit Life --
Group Life --
(Continued)
20
<PAGE>
SCHEDULE 1
CITICORP LIFE INSURANCE COMPANY
Schedule of Selected Financial Data From Annual Statement
Year ended December 31, 1998
<TABLE>
<CAPTION>
Supplementary contracts in force: Ordinary - not involving life contingencies:
<S> <C>
Amount on deposit $ 119,518
Income payable 15,511
Ordinary - involving life contingencies -
income payable --
Group - not involving life contingencies:
Amount of deposit --
Income payable --
Group - involving life contingencies -
income payable --
Annuities:
Ordinary:
Immediate - amount of income payable 25,220 Deferred - fully paid account
balance 230,779,642 Deferred - not fully paid account balance --Immediate
- amount of income payable --Fully paid account balance --Not fully paid
account balance --
Accident and health insurance - premium in force:
Ordinary --
Group --
Credit 40,242,637
Deposits funds and dividend accumulations:
Deposit funds account balance --
Dividend accumulations account balance --
Claim payments 1998:
Group accident and health year ended
December 31:
1998 2,021,969
1997 1,199,325
1996 122,544
1995 79,096
Other accident and health:
1998 --
1997 --
1996 --
1995 --
Other coverages that use developmental methods to calculate claims reserves:
1998 5,370,166
1997 7,439,203
1996 1,079,048
1995 395,639
See accompanying independent auditors' report.
</TABLE>
21
<PAGE>
PART C
OTHER INFORMATION
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
All required financial statements are included in Part B.
(b) Exhibits
(1) Certified resolution of the board of directors of Citicorp
Life Insurance Company (the "Company") establishing Citicorp
Life Variable Annuity Separate Account (the "Separate
Account").*
(2) Not Applicable.
(3) Form of underwriting agreement among the Company, the Separate
Account and CFBDS, Inc.*
(4) (a) Contract Form.*
(b) Individual Retirement Annuity Endorsement.*
(c) 403(b) Tax Sheltered Annuity Endorsement.*
(d) Annuity Contract Endorsement: Waiver of Surrender
Charges.*
(e) Variable Annuity Endorsement: Amendment of
Contract Provisions.****
(f) Roth Individual Retirement Annuity
Endorsement.****
(5) Contract Application.**
(6) (a) Certificate of Incorporation of the Company.*
(b) By-Laws of the Company.*
(7) None.
(8) (a) Participation Agreement Among Variable Insurance
Products Fund, Fidelity Distributors
Corporation and Citicorp Life Insurance Company*
(b) Participation Agreement Among Variable Insurance
Products Fund II, Fidelity Distributors Corporation
and Citicorp Life Insurance Company.**
<PAGE>
(c) Participation Agreement Between MFS Variable
Insurance Trust, Citicorp Life Insurance Company
and Massachusetts Financial Services Company.**
(d) Participation Agreement By and Among AIM Variable
Insurance Funds, Inc. and Citicorp Life Insurance
Company, on Behalf of Itself and Citicorp Life
Variable Annuity Separate Account.**
(e) Participation Agreement Among CitiFunds and Citicorp
Life Insurance Company.**
(f) Participation Agreement Between Variable Annuity
Portfolios and Citicorp Life Insurance Company.**
(g) Administrative Services Agreement between Citicorp
Insurance Services, Inc. and Citicorp Life Insurance
Company with Addendums.*
(9) Opinion and Consent of Catherine S. Mulholland, Esq.
(10) (a) Consent of Sutherland Asbill & Brennan LLP.
(b) Consent of KPMG LLP.
(11) Not Applicable.
(12) None.
(13) Schedule for Computation of Each Performance Calculation.***
(14) Not Applicable.
*Incorporated herein by reference to the registrant's Post-Effective Amendment
No. 2 to the Registration Statement filed with the Securities and Exchange
Commission via EDGARLINK on April 29, 1996(File 33-81626).
**Incorporated herein by reference to the registrant's Post-Effective Amendment
No. 3 to the Registration Statement filed with the Securities and Exchange
Commission via EDGARLINK on November 8, 1996 (File 33-81626).
***Incorporated herein by reference to the registrant's Post-Effective Amendment
No. 5 to the Registration Statement filed with the Securities and Exchange
Commission via EDGARLINK on April 28, 1997 (File 33-81626).
****Incorporated herein by reference to the registrant's Post-Effective
Amendment No. 8 to the Registration Statement filed with the Securities and
Exchange Commission via EDGARLINK on April 27, 1998 (File 33-81626).
<PAGE>
Item 25. DIRECTORS AND OFFICERS OF THE COMPANY.
Alan F. Liebowitz Director*
Daniel F. Forcade Director/President and Chief
Operating Officer*
Marc J. Fink Director/Senior Vice President*
Charles H. Masland, IV Director/Senior Vice President*
Larry D. Williams Director/Senior Vice President*
Catherine S. Mulholland Senior Vice President and
General Counsel*
Benjamin G. Spurgeon Senior Vice President and Chief
Actuary/Valuation Actuary *
Mark C. Lovejoy Vice President and Chief
Underwriter*
Eric S. Miller Vice President*
Kenneth E. Nelson Vice President*
Walter C. Smith, Jr. Vice President/Treasurer*
Richard M. Zuckerman Vice President/Associate General
Counsel and Secretary*
- ------------
* 800 Silver Lake Boulevard, Dover, DE 19904
<PAGE>
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE
DEPOSITOR OR REGISTRANT
ORGANIZATION CHART
--------------------------
CITIGROUP
(Delaware Corporation)
--------------------------
|
| 100%
|
--------------------------
CITICORP HOLDINGS, INC.
(Delaware Corporation
|
| 100%
|
--------------------------
CITIBANK DELAWARE
(Delaware Corporation)
--------------------------
|
--------------------------
| 100%
---------------------------
CITICORP LIFE
INSURANCE COMPANY
(Arizona Corporation)
---------------------------
--------------------------------------
| 100% | 100%
- ---------------------------------- ----------------------------------------
FIRST CITICORP LIFE CITICORP ASSURANCE
INSURANCE CO
COMPANY (Delaware Corporation)
(New York Corporation) ---------------------------------------
- ----------------------------------
<PAGE>
ITEM 27. NUMBER OF CONTRACT OWNERS
As of December 31, 1998 there were 1,931 ontract owners.
ITEM 28. INDEMNIFICATION
The Articles of Incorporation of Citicorp Life Insurance Company
provide in Article IX as follows:
(1) The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than
an action by or in the right of the Corporation) by reason of
the fact he is or was a director or officer of the
Corporation, against expenses (including attorney's fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action,
suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of NOLO CONTENDERE or its
equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe
that his conduct was unlawful.
(2) The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of
the fact that he is or was a director or officer of the
Corporation, against expenses (including attorney's fees)
actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Corporation and
except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been
adjudged to be liable for negligence or misconduct in the
performance of his duty to the Corporation unless and only to
the extent that the court having jurisdiction in cases
<PAGE>
of equity of the State of Arizona or the court in which such
action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the
court having jurisdiction in cases of equity of the State of
Arizona or such other court shall deem proper.
(3) The Corporation may indemnify any person who is or was an
employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise to the extent and under the
circumstances provided by paragraphs 1 and 2 of this Article
IX with respect to a person who is or was a director or
officer of the Corporation.
(4) Any indemnification under paragraphs 1, 2 and 3 of this
Article IX (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a
determination that indemnification of the director or officer
is proper in the circumstances because he has met the
applicable standard of conduct set forth therein. Such
determination shall be made (a) by the Board of Directors by a
majority vote of a quorum (as defined in the by-laws of the
Corporation) consisting of directors who were not parties to
such action, suit or proceeding, or (b) if such quorum is not
obtainable, or, even if obtainable a quorum of disinterested
directors so direct, by independent legal counsel in a written
opinion, or (c) by the stockholders.
(5) Expenses incurred in defending a civil or criminal action,
suit or proceeding may be paid by the Corporation in advance
of the final disposition of such action, suit or proceeding as
authorized by the Board of Directors of the Corporation in the
manner provided in the next preceding paragraph upon receipt
of an undertaking by or on behalf of the director, officer,
employee or agent to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified
by the Corporation as authorized in this Article IX.
(6) The indemnification provided by this Article IX shall not be
deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any statute, by-law,
agreement, vote of stockholders
<PAGE>
or disinterested directors or otherwise, both as to action in
his official capacity and as to action in another capacity
while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent
and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(7) By action of its Board of Directors, notwithstanding any
interest of the directors in the action, the Corporation may
cause to be purchased and maintained insurance, in such
amounts as the Board of Directors deems appropriate, on behalf
of any person who is or was a director, officer, employee or
agent of the Corporation, or of any corporation a majority of
the voting stock of which is owned by the Corporation, or is
or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against
any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether
or not the Corporation would have the power or would be
required to indemnify him against such liability under the
provisions of this Article IX or of the General Corporation
Law of the State of Arizona.
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 Regis-trant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of
such issue.
ITEM 29. PRINCIPAL UNDERWRITER
(a) CFBDS, Inc., the Registrant's Distributor, is also the
distributor for CitiFunds Cash Reserves, CitiFunds Premium
Liquid Reserves, CitiFunds Tax Free Reserves,
<PAGE>
CitiFunds New York Tax Free Reserves, CitiFunds California Tax
Free Reserves, CitiFunds Connecticut Tax Free Reserves,
CitiFunds New York Tax Free Income Fund, CitiFunds Balanced
Fund, CitiFunds Equity Fund, CitiFunds Short Term U.S.
Government Income Fund, CitiFunds Intermediate Income Fund,
CitiFunds U.S. Treasury Reserves, CitiFunds Premium U.S.
Treasury Reserves, CitiFunds Institutional Liquid Reserves,
CitiFunds Institutional U.S. Treasury Reserves and CitiFunds
Institutional Tax Free Reserves. CFBDS, Inc. is also the
placement agent for International Portfolio, Large Cap Value
Portfolio, Intermediate Income Portfolio, Foreign Bond
Portfolio, Short Term Portfolio, Small Cap Value Portfolio,
Balanced Portfolio, Cash Reserves Portfolio, Emerging Asian
Markets Equity Portfolio, U.S. Treasury Reserves Portfolio,
Small Cap Growth Portfolio, Tax Free Reserves Portfolio,
International Equity Portfolio, Large Cap Growth Portfolio,
Growth and Income Portfolio and Government Income Portfolio.
(b) The information required by this item 29 with respect to each
director and officer of CFBDS, Inc. is incorporated by
reference to Schedule A or Form BD filed by CFBDS, Inc.
pursuant to the Securities and Exchange Act of 1934 (File No.
8-32417).
(c) Not applicable.
ITEM 30. LOCATION BOOKS AND RECORDS
All of the accounts, books, records or other documents required to be
kept by Section 31(a) of the Investment Company Act of 1940 and rules
thereunder, are maintained by the Company at 800 Silver Lake Boulevard,
Dover, Delaware 19904.
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS AND REPRESENTATIONS
(a) The registrant undertakes that it will file a post- effective
amendment to this registration statement as frequently as is
necessary to ensure that the audited financial statements in
the registration statement are never more than 16 months old
for as long as purchase payments under the contracts offered
herein are being accepted.
(b) The registrant undertakes that it will include either (1) as
part of any application to purchase a contract
<PAGE>
offered by the prospectus, a space that an applicant can check
to request a statement of additional information, or (2) a
post card or similar written communication affixed to or
included in the prospectus that the applicant can remove and
send to the Company for a statement of additional information.
(c) The registrant undertakes 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 to the Company at the address or phone number
listed in the prospectus.
(d) The Company represents that in connection with its offering of
the contracts as funding vehicles for retirement plans meeting
the requirements of Section 403(b) of the Internal Revenue
Code of 1986, it is relying on a no-action letter dated
November 28, 1988, to the American Council of Life Insurance
(Ref. No. IP-6-88) regarding Sections 22(e), 27(c)(1), and
27(d) of the Investment Company Act of 1940, and that
paragraphs numbered (1) through (4) of that letter will be
complied with.
(e) Citicorp Life Insurance Company hereby represents that the
fees and charges deducted under the Contract, in the
aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks
assumed by Citicorp Life Insurance Company.
<PAGE>
As required by the Securities Act of 1933 and the Investment Company
Act of 1940, the registrant certifies that this Amendment to the Registration
Statement meets the requirements for effectiveness pursuant to paragraph (b) of
Rule 485 and has caused this Amendment to the Registration Statement to be
signed on its behalf, in the City of Dover, and the State of Delaware, on this
19TH day of APRIL, 1999.
CITICORP LIFE VARIABLE ANNUITY
SEPARATE ACCOUNT
(Registrant)
Attest:/s/ CATHERINE S. MULHOLLAND By:/s/LARRY D. WILLIAMS
--------------------------- --------------------------------
Senior Vice President of
Citicorp Life Insurance
Company
BY: CITICORP LIFE INSURANCE COMPANY
(Depositor)
Attest:/s/CATHERINE S. MULHOLLAND By:/s/LARRY D. WILLIAMS
--------------------------- --------------------------------
Senior Vice 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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/DANIEL F. FORCADE DIRECTOR, PRESIDENT April 19, 1999
- ---------------------------- -----------------------
(COO)
/s/LARRY D. WILLIAMS DIRECTOR, SVP April 19, 1999
- ---------------------------- -----------------------
/s/CHARLES H. MASLAND, IV DIRECTOR, SVP April 19, 1999
- ---------------------------- -----------------------
/s/MARC J. FINK DIRECTOR, SVP April 19, 1999
- ---------------------------- -----------------------
/s/WALTER C. SMITH, JR. TREASURER, VP April 19, 1999
- ---------------------------- -----------------------
<PAGE>
As required by the Securities Act of 1933 and the Investment Company
Act of 1940, the registrant certifies that this Amendment to the Registration
Statement meets the requirements for effectiveness pursuant to paragraph (b) of
Rule 485 and has caused this Amendment to the Registration Statement to be
signed on its behalf, in the City of Dover, and the State of Delaware, on this
19TH day of APRIL, 1999.
CITICORP LIFE VARIABLE ANNUITY
SEPARATE ACCOUNT
(Registrant)
Attest:/s/CATHERINE S. MULHOLLAND By:/s/LARRY D. WILLIAMS
--------------------------- --------------------------------
Senior Vice President of
Citicorp Life Insurance
Company
BY: CITICORP LIFE INSURANCE COMPANY
(Depositor)
Attest:/s/CATHERINE S. MULHOLLAND By:/s/LARRY D. WILLIAMS
Senior Vice 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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ALAN F. LIEBOWITZ DIRECTOR April 19, 1999
<PAGE>
EXHIBIT INDEX
9. Opinion and Consent of Catherine S. Mulholland.
10(a). Consent of Sutherland, Asbill & Brennan LLP.
10(b). Consent of KPMG LLP.
<PAGE>
EXHIBIT 9
<PAGE>
CITICORP LIFE INSURANCE COMPANY LETTERHEAD
With reference to Form N-4 Registration Statement filed on behalf of Citicorp
Life Insurance Company and the Citicorp Life Variable Annuity Separate Account
with the Securities and Exchange Commission covering flexible premium variable
deferred annuity policies, I have examined such documents and such law and have
made due inquiries as I considered necessary and appropriate, and on the basis
of such examination and inquiries, it is my opinion that:
1. The Citicorp Life Insurance Company is duly organized and validly
existing under the laws of the State of Arizona and has been duly
authorized to issue flexible premium variable deferred annuity
policies by the Department of Insurance of the State of Arizona.
2. The Citicorp Life Variable Annuity Separate Account is a duly
authorized and existing separate account established pursuant to
the provisions of the Revised Statutes of the state of Arizona;
3. The flexible premium variable deferred annuity policies, when
issued as contemplated by said Form N-4 Registration Statement,
will constitute legal, validly issued and binding obligations of
Citicorp Life Insurance Company.
I hereby consent to the filing of this opinion as an exhibit to Post-Effective
Amendment No. 10 to the Form N-4 Registration Statement.
Citicorp Life Insurance Company
/s/ CATHERINE S. MULHOLLAND
----------------------------------
Catherine S. Mulholland
Sr. Vice President, General Counsel
April 22, 1999
--------------
(Date)
<PAGE>
CITICORP LIFE INSURANCE COMPANY LETTERHEAD
I hereby consent to the use of my name under the caption "Legal Matters" in the
Statement of Additional Information contained in this Post-Effective Amendment
to the Form N-4 Registration Statement, filed on behalf of Citicorp Life
Insurance Company and the Citicorp Life Variable Annuity Separate Account with
the Securities and Exchange Commission.
Citicorp Life Insurance Company
/s/ CATHERINE S. MULHOLLAND
----------------------------------
Catherine S. Mulholland
Sr. Vice President, General Counsel
April 22, 1999
--------------
(Date)
EXHIBIT 10(a)
SUTHERLAND, ASBILL & BRENNAN LLP LETTERHEAD
STEPHEN E. ROTH
DIRECT LINE: (202) 383-0158
Internet: [email protected]
April 23, 1999
VIA EDGARLINK
Board of Directors
Citicorp Life Insurance Company
800 Silver Lake Boulevard
Dover, DE 19904
Ladies and Gentlemen:
We hereby consent to the reference to our name under the caption "Legal
Matters" in the Statement of Additional Information filed as part of
Post-Effective Amendment No. 10 to the registration statement on Form N-4 for
Citicorp Life Variable Annuity Separate Account (File No. 33-81626). In giving
this consent, we do not admit that we are in the category of persons whose
consent is required under Section 7 of the Securities Act of 1933.
Very truly yours,
SUTHERLAND, ASBILL & BRENNAN LLP
By:/s/ STEPHEN E. ROTH
------------------------
Stephen E. Roth
EXHIBIT 10(b)
INDEPENDENT AUDITORS' CONSENT
-----------------------------
The Board of Directors
Citicorp Life Insurance Company:
We consent to the use of our reports included herein and to the reference of our
firm under the headings "Experts" and "Financial Statements" in the Statement of
Additional Information filed as part of Post Effective Amendment No. 10 to the
registration statement on Form N-4 for Citicorp Life Variable Annuity Separate
Account (File No. 33-81626).
Our report dated April 9, 1999, covering the financial statements of Citicorp
Life Insurance Company, contains an explanatory paragraph which states that the
financial statements are presented in conformity with accounting practices
prescribed or permitted by the State of Arizona Department of Insurance. These
practices differ in some respects from generally accepted accounting principles.
The financial statements do not include any adjustments that might result from
the differences.
/s/KPMG LLP
Chicago, Illinois
April 16, 1999
