<PAGE> 1
Registration Nos: 333-71379
811-8628
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 2
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 16
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: (212) 830-4901
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)
Approximate Date of Proposed Public Offering:
It is proposed that this filling will become effective:
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on May 1, 2000 pursuant to paragraph (b) of Rule 485
--------------
[ ] 60 days after filing pursuant to paragraph (a) of Rule 485
[ ] on pursuant to paragraph (a)(i) of Rule 485
---------------------------
If appropriate, check the following box:
[ ] this Post-Effective Amendment designates a new effective date
for a previously filed Post-Effective Amendment.
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PART A
Information Required in a Prospectus
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CITIELITE ANNUITY PROSPECTUS
CITICORP LIFE VARIABLE ANNUITY
SEPARATE ACCOUNT
This prospectus describes CITIELITE ANNUITY, a flexible premium variable annuity
contract (the "Contract") issued by Citicorp Life Insurance Company (the
"Company," "we" or "our"). The Contract is available in connection with certain
retirement plans that qualify for special federal income tax treatment
("qualified Contracts") as well as those that do not qualify for such treatment
("nonqualified Contracts"). We may issue it as an individual Contract or as a
group Contract. In states where only group Contracts are available, you will be
issued a certificate summarizing the provisions of the group Contract. For
convenience, we refer to Contracts and certificates as "Contracts."
You can choose to have your premium ("purchase payments") accumulate on a fixed
basis and/or a variable basis. Your contract value will vary daily to reflect
the investment experience of the subaccounts ("funding options") you select and
any interest credited to the Fixed Account. The variable funding options are:
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
Technology Portfolio -- Class B
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Value Fund
CONCERT INVESTMENT SERIES
Select Small Cap Portfolio(1)
Select Growth Portfolio
Select Growth and Income Portfolio
Select Government Portfolio
Select Mid Cap Portfolio
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
Franklin Small Cap Fund -- Class 2(2)
Templeton International Securities Fund -- Class 2(3)
GREENWICH STREET SERIES FUND
Equity Index Portfolio Class II
SALOMON BROTHERS VARIABLE SERIES FUND INC.
Capital Fund
High Yield Bond Fund
Investors Fund
Total Return Fund
THE TRAVELERS SERIES TRUST
Equity Income Portfolio
Large Cap Portfolio
MFS Emerging Growth Portfolio
MFS Mid Cap Growth Portfolio
MFS Research Portfolio
Travelers Quality Bond Portfolio
TRAVELERS HIGH YIELD BOND TRUST
TRAVELERS MONEY MARKET PORTFOLIO
TRAVELERS SERIES FUND INC.
AIM Capital Appreciation Portfolio
MFS Total Return Portfolio
Putnam Diversified Income Portfolio
VARIABLE ANNUITY PORTFOLIOS
CitiSelect(R) VIP Folio 200 Conservative
CitiSelect VIP Folio 300 Balanced
CitiSelect VIP Folio 400 Growth
CitiSelect VIP Folio 500 Growth Plus
CitiFunds Small Cap Growth VIP Portfolio
VARIABLE INSURANCE PRODUCTS FUND II (FIDELITY)
Contrafund(R) Portfolio -- Service Class 2
(1) previously offered as Select Emerging Growth Portfolio
(2) previously offered as Franklin Small Cap Investments Fund
(3) previously offered as Templeton Fund
The Fixed Account is described in Appendix B. Unless specified otherwise, this
prospectus refers to the variable funding options. The contracts and/or some of
the funding options may not be available in all states. THIS PROSPECTUS IS VALID
ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUSES FOR THE VARIABLE FUNDING
OPTIONS. READ AND RETAIN THEM FOR FUTURE REFERENCE.
This prospectus provides the information that you should know before investing
in the Contract. You can receive additional information about Citicorp Life
Variable Annuity Separate Account ("Separate Account") by requesting a copy of
the Statement of Additional Information ("SAI") dated May 1, 2000. The SAI has
been filed with the Securities and Exchange Commission ("SEC") and is
incorporated by reference into this prospectus. To request a copy, write to our
Customer Service Office at One Tower Square, Hartford, Connecticut 06183-4065 or
call (800) 497-4857 or access the SEC's website (http://www.sec.gov). See
Appendix C for the SAI's table of contents.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
VARIABLE ANNUITY CONTRACTS ARE NOT DEPOSITS OF ANY BANK, AND ARE NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY.
PROSPECTUS DATED MAY 1, 2000
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<S> <C>
Index of Special Terms................ 2
Summary............................... 3
Fee Table............................. 6
Condensed Financial Information....... 9
The Annuity Contract.................. 10
Contract Owner Inquiries............ 10
Purchase Payments................... 10
Accumulation Units.................. 10
The Funding Options................. 10
Charges and Deductions................ 13
General............................. 13
Withdrawal Charge................... 14
Free Withdrawal Allowance........... 14
Administrative Charges.............. 15
Mortality and Expense Risk Charge... 15
Funding Option Expenses............. 15
Premium Tax......................... 15
Changes in Taxes Based Upon Premium
or Value......................... 15
Transfers............................. 15
Dollar Cost Averaging............... 16
Access to Your Money.................. 17
Systematic Withdrawals.............. 17
Loans............................... 17
Ownership Provisions.................. 17
Types of Ownership.................. 17
Beneficiary......................... 18
Annuitant........................... 18
Death Benefit......................... 18
Death Proceeds Before the Maturity
Date............................. 18
Payment of Proceeds................. 20
Death Proceeds After the Maturity
Date............................. 21
The Annuity Period.................... 22
Maturity Date....................... 22
Allocation of Annuity............... 22
Variable Annuity.................... 22
Fixed Annuity....................... 23
Payment Options....................... 23
Election of Options................. 23
Annuity Options..................... 23
Income Options...................... 24
Miscellaneous Contract Provisions..... 24
Right to Return..................... 24
Termination......................... 25
Required Reports.................... 25
Suspension of Payments.............. 25
Transfers of Contract Values to
Other Annuities.................. 25
The Separate Account.................. 25
Performance Information............. 26
Federal Tax Considerations............ 27
General Taxation of Annuities....... 27
Types of Contracts: Qualified or
Nonqualified..................... 27
Nonqualified Annuity Contracts...... 27
Qualified Annuity Contracts......... 28
Penalty Tax for Premature
Distributions.................... 28
Diversification Requirements for
Variable Annuities............... 28
Ownership of the Investments........ 28
Mandatory Distributions for
Qualified Plans.................. 29
Other Information..................... 29
The Insurance Company............... 29
Financial Statements................ 29
Distribution of Variable Annuity
Contracts........................ 29
Conformity with State and Federal
Laws............................. 30
Voting Rights....................... 30
Legal Proceedings and Opinions...... 30
Appendix A: Condensed Financial
Information......................... A-1
Appendix B: The Fixed Account......... B-1
Appendix C: Contents of the Statement
of Additional Information........... C-1
</TABLE>
INDEX OF SPECIAL TERMS
The following terms are italicized throughout the prospectus. Refer to the page
listed for an explanation of each term.
<TABLE>
<S> <C>
Accumulation Unit..................... 10
Accumulation Period................... 10
Annuitant............................. 18
Annuity Payments...................... 22
Annuity Unit.......................... 10
Cash Surrender Value.................. 18
Contingent Annuitant.................. 18
Contract Date......................... 10
Contract Owner (You, Your)............ 18
Contract Value........................ 10
Contract Year......................... 10
Death Report Date..................... 18
Fixed Account......................... B-1
Funding Option(s)..................... 10
Maturity Date......................... 22
Purchase Payment...................... 10
Underlying Fund....................... 10
Written Request....................... 10
</TABLE>
2
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SUMMARY:
CITIELITE VARIABLE ANNUITY
THIS SUMMARY DETAILS SOME OF THE MORE IMPORTANT POINTS THAT YOU SHOULD KNOW AND
CONSIDER BEFORE PURCHASING THE CONTRACT. PLEASE READ THE ENTIRE PROSPECTUS
CAREFULLY.
CAN YOU GIVE ME A GENERAL DESCRIPTION OF THE VARIABLE ANNUITY CONTRACT? The
Contract offered by Citicorp Life is intended for retirement savings or other
long-term investment purposes. The Contract provides a death benefit as well as
guaranteed payout options. You direct your payment(s) to one or more of the
variable funding options and/or to the Fixed Account. We guarantee money
directed to the Fixed Account as to principal and interest. The variable funding
options are designed to produce a higher rate of return than the Fixed Account;
however, this is not guaranteed. You can also lose money in the variable funding
options.
The Contract, like all deferred variable annuity contracts, has two phases: the
accumulation phase and the payout phase. During the accumulation phase
generally, under a qualified contract, your pre-tax contribution accumulates on
a tax-deferred basis and is taxed as income when you make a withdrawal,
presumably when you are in a lower tax bracket. During the accumulation phase,
under a nonqualified contract, earnings on your after-tax contribution
accumulates on a tax-deferred basis and is taxed as income when you make a
withdrawal. The payout phase occurs when you begin receiving payments from your
Contract. The amount of money you accumulate in your Contract determines the
amount of income (annuity payments) you receive during the payout phase.
During the payout phase, you may choose to receive annuity payments from the
Fixed Account or the variable funding options. If you want to receive payments
from your annuity, you can choose one of a number of annuity options or income
options.
Once you choose one of the annuity options or income options and begin to
receive payments, it cannot be changed. During the payout phase, you have the
same investment choices you had during the accumulation phase. If amounts are
directed to the variable funding options, the dollar amount of your payments may
increase or decrease.
WHO MAY PURCHASE THIS CONTRACT? The Contract is currently available for use in
connection with (1) individual nonqualified purchases; (2) rollovers from
Individual Retirement Annuities (IRAs); and (3) rollovers from other qualified
retirement plans. Qualified contracts include contracts qualifying under Section
401(a), 403(b), or 408(b) of the Internal Revenue Code of 1986, as amended.
Purchase of this Contract through a tax qualified retirement plan ("Plan") does
not provide any additional tax deferral benefits beyond those provided by the
Plan. Accordingly, if you are purchasing this Contract through a Plan, you
should consider purchasing this Contract for its Death Benefit, Annuity Option
Benefits, and other non-tax-related benefits.
You may purchase the Contract with an initial payment of at least $5,000, which
amount may be paid in one or more installments of at least $100 within the first
12 months after the contract date. You may make additional payments of at least
$100 at any time during the accumulation phase.
IS THERE A RIGHT TO RETURN PERIOD? If you cancel the Contract within twenty
days after you receive it, you will receive a full refund of the contract value
(including charges). Where state law requires a longer right to return period,
or the return of purchase payments, the Company will comply. You bear the
investment risk on the purchase payment during the right to return period;
therefore, the Contract value returned may be greater or less than your purchase
payment.
If the Contract is purchased as an Individual Retirement Annuity, and is
returned within the first seven days after delivery, your full purchase payment
will be refunded. During the remainder of the right to return period, the
Contract value (including charges) will be refunded. The Contract value will be
determined at the close of business on the day we receive a written request for
a refund.
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WHAT TYPES OF INVESTMENT OPTIONS ARE AVAILABLE? You can direct your money into
the Fixed Account or any or all of the funding options shown on the cover page.
The funding options are described in the prospectuses for the funds. Depending
on market conditions, you may make or lose money in any of these options.
The value of the Contract will vary depending upon the investment performance of
the funding options you choose. Past performance is not a guarantee of future
results. Standard and Nonstandard performance is shown in the Statement of
Additional Information that you may request free of charge.
You can transfer between the funding options as frequently as you wish without
any current tax implications. Currently there is no charge for transfers, nor a
limit to the number of transfers allowed. We may, in the future, charge a fee
for any transfer request, or limit the number of transfers allowed. At a
minimum, we would always allow one transfer every six months. We reserve the
right to restrict transfers that we determine will disadvantage other contract
owners. You may transfer between the Fixed Account and the funding options twice
a year (during the 30 days after the six-month contract date anniversary),
provided the amount is not greater than 15% of the Fixed Account Value on that
date.
WHAT EXPENSES WILL BE ASSESSED UNDER THE CONTRACT? The Contract has insurance
features and investment features, and there are costs related to each. The
Company deducts an annual administrative charge of $30. The annual insurance
charge is 1.25% of the amounts you direct to the funding options, and the
sub-account administrative charge is 0.15% annually. Each funding option also
charges for management and other expenses. Please refer to the Fee Table for
more information about the charges.
A withdrawal charge will apply to withdrawals from the Contract, and is
calculated as a percentage of the purchase payments. The maximum percentage is
7%, decreasing to 0% in years seven and later.
HOW WILL MY CONTRIBUTIONS AND WITHDRAWALS BE TAXED? Generally, the payments you
make to a qualified Contract during the accumulation phase are made with
before-tax dollars. You will be taxed on your purchase payments and on any
earnings when you make a withdrawal or begin receiving annuity or income
payments. Under a nonqualified Contract, payments to the contract are made with
after-tax dollars, and earnings will accumulate tax-deferred. You will be taxed
on these earnings when they are withdrawn from the Contract.
For owners of qualified Contracts, if you reach a certain age, you may be
required by federal tax laws to begin receiving payments from your annuity or
risk paying a penalty tax. In those cases, we can calculate and pay you the
minimum required distribution amounts. If you are younger than 59 1/2 when you
take money out, you may be charged a 10% federal penalty tax on the amount
withdrawn.
HOW MAY I ACCESS MY MONEY? You can take withdrawals any time during the
accumulation phase. Withdrawal charges, income taxes, and/or a penalty tax may
apply to taxable amounts withdrawn.
WHAT IS THE DEATH BENEFIT UNDER THE CONTRACT? The death benefit applies upon
the first death of the owner, joint owner, or annuitant. Assuming you are the
Annuitant, the death benefit is as follows: If you die before the Contract is in
the payout phase, the person you have chosen as your beneficiary will receive a
death benefit. The death benefit value is calculated at the close of the
business day on which the Company's Home Office receives due proof of death and
written payment instructions. Certain states may have varying age requirements.
Please refer to the Death Benefit section in the prospectus for more details.
ARE THERE ANY ADDITIONAL FEATURES? This Contract has other features you may be
interested in. These include:
DOLLAR COST AVERAGING. This is a program that allows you to invest a fixed
amount of money in funding options each month, theoretically giving you a
lower average cost per unit over
4
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time than a single one-time purchase. Dollar Cost Averaging requires
regular investments regardless of fluctuating price levels, and does not
guarantee profits or prevent losses in a declining market. Potential
investors should consider their financial ability to continue purchases
through periods of low price levels.
SYSTEMATIC WITHDRAWAL OPTION. Before the maturity date, you can arrange to
have money sent to you at set intervals throughout the year. Of course, any
applicable income and penalty taxes will apply on amounts withdrawn.
AUTOMATIC REBALANCING. You may elect to have the Company periodically
reallocate the values in your Contract to match your original (or your
latest) funding option allocation request.
5
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FEE TABLE
- --------------------------------------------------------------------------------
CONTRACT OWNER TRANSACTION EXPENSES
<TABLE>
<S> <C>
WITHDRAWAL CHARGE (as a percentage of the purchase
payments withdrawn)
</TABLE>
<TABLE>
<CAPTION>
YEARS SINCE PURCHASE
PAYMENT MADE WITHDRAWAL CHARGE
<S> <C>
less than1 7%
1 7%
2 7%
3 6%
4 5%
5 4%
6 3%
7 and over 0%
</TABLE>
<TABLE>
<S> <C>
ANNUAL CONTRACT ADMINISTRATIVE CHARGE $30
</TABLE>
<TABLE>
<S> <C>
ANNUAL SEPARATE ACCOUNT CHARGES
(as a percentage of the average daily net assets of the
Separate Account)
Mortality & Expense Risk Charge....................... 1.25%
Administrative Expense Charge......................... 0.15%
-----
Total Separate Account Charges.................... 1.40%
</TABLE>
FUNDING OPTION EXPENSES:
(as a percentage of average daily net assets of the Funding Option as of
December 31, 1999, unless otherwise noted)
<TABLE>
<CAPTION>
TOTAL ANNUAL
OPERATING
MANAGEMENT FEE OTHER EXPENSES EXPENSES
(AFTER EXPENSE (AFTER EXPENSE (AFTER EXPENSE
FUNDING OPTIONS: REIMBURSEMENT) 12B-1 FEE REIMBURSEMENT) REIMBURSEMENT)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
High Yield Bond Trust................................... 0.50% 0.31% 0.81%
Money Market Portfolio.................................. 0.32% 0.08% 0.40%(1)
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Value Fund..................................... 0.61% 0.15% 0.76%
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
Technology Portfolio -- Class B......................... 0.71% 0.25% 0.24% 1.20%(2)
CONCERT INVESTMENT SERIES
Select Small Cap Portfolios............................. 0.75% 0.25% 1.00%(3)
Select Government Portfolio............................. 0.60% 0.20% 0.80%(3)
Select Growth Portfolio................................. 0.75% 0.20% 0.95%(3)
Select Growth and Income Portfolio...................... 0.75% 0.20% 0.95%(3)
Select Mid Cap Portfolio................................ 0.75% 0.20% 0.95%(3)
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
Franklin Small Cap Fund -- Class 2 (previously offered
as Franklin Small Cap Investments Fund)............... 0.55% 0.25% 0.27% 1.07%(4)
Templeton International Securities Fund (Formerly
Templeton Fund) -- Class 2............................ 0.69% 0.25% 0.19% 1.13%(5)
SALOMON BROTHERS VARIABLE SERIES FUND INC.
Capital Fund............................................ 0.00% 1.00% 1.00%(6)
High Yield Bond Fund.................................... 0.00% 1.00% 1.00%(6)
Investors Fund.......................................... 0.53% 0.45% 0.98%(6)
Total Return Fund....................................... 0.15% 0.85% 1.00%(6)
THE TRAVELERS SERIES TRUST
Equity Income Portfolio................................. 0.75% 0.13% 0.88%
Large Cap Portfolio..................................... 0.75% 0.12% 0.87%
MFS Emerging Growth Portfolio........................... 0.75% 0.12% 0.87%
MFS Mid Cap Growth Portfolio............................ 0.80% 0.20% 1.00%(7)
MFS Research Portfolio.................................. 0.80% 0.19% 0.99%
Travelers Quality Bond Portfolio........................ 0.32% 0.22% 0.54%
</TABLE>
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<TABLE>
<CAPTION>
TOTAL ANNUAL
OPERATING
MANAGEMENT FEE OTHER EXPENSES EXPENSES
(AFTER EXPENSE (AFTER EXPENSE (AFTER EXPENSE
FUNDING OPTIONS: REIMBURSEMENT) 12B-1 FEE REIMBURSEMENT) REIMBURSEMENT)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TRAVELERS SERIES FUND INC.
AIM Capital Appreciation Portfolio...................... 0.80% 0.04% 0.84%(8)
MFS Total Return Portfolio.............................. 0.80% 0.04% 0.84%(8)
Putnam Diversified Income Portfolio..................... 0.75% 0.08% 0.83%(8)
VARIABLE ANNUITY PORTFOLIOS
CitiSelect(R) VIP Folio 200 Conservative................ 0.75% 0.20% 0.95%(9)
CitiSelect(R) VIP Folio 300 Balanced.................... 0.75% 0.20% 0.95%(9)
CitiSelect(R) VIP Folio 400 Growth...................... 0.75% 0.50% 1.25%(9)
CitiSelect(R) VIP Folio 500 Growth Plus................. 0.75% 0.50% 1.25%(9)
CitiFunds Small Cap Growth VIP Portfolio................ 0.75% 0.15% 0.90%(9)
VARIABLE INSURANCE PRODUCTS FUND II
Contrafund(R) Portfolio -- Service Class 2.............. 0.58% 0.25% 0.07% 0.90%(10)
</TABLE>
NOTES:
The purpose of this Fee Table is to assist Contract Owners in understanding the
various costs and expenses that a Contract Owner will bear, directly or
indirectly. See "Charges and Deductions" in this prospectus for additional
information. Expenses shown do not include premium taxes, which may be
applicable. "Other Expenses" include operating costs of the fund. These expenses
are reflected in each funding option's net asset value and are not deducted from
the account value under the Contract.
(1) Other Expenses have been restated to reflect the current expense
reimbursement arrangement with Travelers Insurance Company. Travelers has
agreed to reimburse the Portfolio for the amount by which its aggregate
expenses (including the management fee, but excluding brokerage
commissions, interest charges and taxes) exceeds 0.40%. Without such
arrangement, Total Expenses would have been 0.50% for the MONEY MARKET
PORTFOLIO.
(2) Fees are stated net of waivers and/or reimbursements. Absent waivers
and/or reimbursements, the Management Fees, "12b-1 Fees", Other Expenses
and Total Annual Operating Expenses would have been 1.00%, 0.25%, 0.27%,
and 1.52% respectively for the TECHNOLOGY PORTFOLIO -- CLASS B. Effective
May 1, 2000, there is no cap on the expenses for this fund.
(3) The Adviser has agreed to waive all of its fees for the period ending
October 31, 1999 (the Fund's fiscal year end). If such fees were not
waived and expenses not reimbursed, total Annual Operating Expenses for
the SELECT SMALL CAP PORTFOLIO, the SELECT MID CAP PORTFOLIO, the SELECT
GROWTH PORTFOLIO, the SELECT GROWTH AND INCOME PORTFOLIO, and the SELECT
GOVERNMENT PORTFOLIO would have been 4.38%, 5.35%, 5.00%, 5.22% and 3.73%
respectively. As a result of a voluntary expense limitation, the expense
ratios of these funds will not exceed 1.00%, 0.95%, 0.95%, 0.95%, and
0.80% respectively.
(4) On 2/8/00, a merger and reorganization was approved to merge the assets of
Franklin Small Cap Investments Fund into Franklin Small Cap Fund,
effective 5/1/00. The above table shows restated total expenses based upon
the new fees and assets of Franklin Small Cap Fund as of 12/31/99, and not
the assets of the combined fund on 5/1/00. However if the table reflected
both the new fees and the combined assets, the fund's expenses after
5/1/00 would be estimated as: Management Fees 0.55%, Distribution and
Service Fee 0.25%, Other expenses 0.27% and Total Fund Operating Expenses
1.07%. The Fund's Class 2 distribution plan or "Rule 12b-1 Plan" is
described in the Fund's prospectus.
(5) On 2/8/00, fund shareholders approved a merger and reorganization to merge
the assets of Templeton International Equity Fund into Templeton
International Fund (which then changed its name to Templeton International
Securities Fund), effective 5/1/00. The table shows restated total
expenses based upon the new fees and assets of Templeton International
Fund as of 12/31/99, and not the assets of the combined fund on 5/1/00.
However if the table reflected both the new fees and the combined assets,
the fund's expenses after 5/1/00 would be estimated as: Management Fees
0.65%, Distribution and Service Fee 0.25%, Other expenses 0.20% and Total
Fund Operating Expenses 1.10%. The Fund's Class 2 distribution plan or
"Rule 12b-1 Plan" is described in the Fund's prospectus.
(6) The Adviser has waived all or a portion of its Management Fees for the
year ended December 31, 1999. If such fees were not waived or expenses
reimbursed, the Management Fee, Other Expenses, and Total Annual Operating
Expenses would have been as follows: 0.70%, 0.45% and 1.15% respectively
for the INVESTORS FUND; 0.75%, 1.05%, and 1.80% respectively for the HIGH
YIELD BOND FUND; 0.85%, 1.14%, and 1.99% respectively for the CAPITAL
FUND; and 0.80%, 0.85%, and 1.65% respectively for the TOTAL RETURN FUND.
(7) Travelers Insurance Company has agreed to reimburse the MFS MID CAP GROWTH
PORTFOLIO for expenses for the year ended December 31, 1999 which exceeded
0.80%, 0.90%, 1.00% and 1.00% respectively. Without such voluntary
arrangements, the actual annualized Total Annual Operating Expenses would
have been 1.07%.
7
<PAGE> 10
(8) Expenses are as of October 31, 1999 (the Fund's fiscal year end). There
were no fees waived or expenses reimbursed for these funds in 1999.
(9) Fee waivers and expense reimbursements reduced expenses for CITISELECT(R)
VIP 200 CONSERVATIVE, CITISELECT(R) VIP 300 BALANCED, CITISELECT(R) VIP
400 GROWTH, CITISELECT(R) VIP 500 GROWTH PLUS, and the CITIFUNDS SMALL CAP
GROWTH VIP PORTFOLIO for the period ended December 31, 1999. If such
expenses were not voluntarily reimbursed, the actual annualized Total
Annual Operating Expenses would have been 4.82%, 3.66%, 5.44%, 10.38%, and
9.40% respectively.
(10) A portion of the brokerage commissions that certain funds pay was used to
reduce fund expenses. In addition, through arrangements with certain funds
custodian, credits realized as a result of uninvested cash balances were
used to reduce a portion of each applicable fund's expenses. Without these
reductions, the Total Annual Operating Expenses presented in the table
would have been 0.95% for CONTRAFUND PORTFOLIO -- SERVICE CLASS 2. Service
Class 2 expenses are based on estimated expenses for the first year.
EXAMPLE*:
Assuming a 5% annual return on assets, a $1,000 investment would be subject to
the following expenses:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
IF CONTRACT IS SURRENDERED AT THE IF CONTRACT IS NOT SURRENDERED OR
END OF PERIOD SHOWN: ANNUITIZED AT END OF PERIOD SHOWN:
------------------------------------- -------------------------------------
FUNDING OPTION 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
High Yield Bond Trust............................ 93 141 171 260 23 71 121 260
Money Market Portfolio........................... 89 128 150 218 19 58 100 218
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Value Fund.............................. 92 139 169 255 22 69 119 255
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
Technology Portfolio -- Class B.................. 97 152 191 299 27 82 141 299
CONCERT INVESTMENT SERIES
Select Small Cap Portfolio....................... 95 146 181 279 25 76 131 279
Select Government Portfolio...................... 93 140 171 259 23 70 121 259
Select Growth Portfolio.......................... 94 145 178 274 24 75 128 274
Select Growth and Income Portfolio............... 94 145 178 274 24 75 128 274
Select Mid Cap Portfolio......................... 94 145 178 274 24 75 128 274
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS
TRUST
Franklin Small Cap Fund -- Class 2............... 96 149 184 286 26 79 134 286
Templeton International Securities Fund -- Class
2.............................................. 96 150 187 292 26 80 137 292
SALOMON BROTHERS VARIABLE SERIES FUND INC.
Capital Fund..................................... 95 146 181 279 25 76 131 279
High Yield Bond Fund............................. 95 146 181 279 25 76 131 279
Investors Fund................................... 95 146 180 277 25 76 130 277
Total Return Fund................................ 95 146 181 279 25 76 131 279
GREENWICH STREET SERIES FUND
Equity Index Portfolio -- Class II............... 90 132 156 229 20 62 106 229
THE TRAVELERS SERIES TRUST
Equity Income Portfolio.......................... 94 143 175 267 24 73 125 267
Large Cap Portfolio.............................. 94 143 174 266 24 73 124 266
MFS Emerging Growth Portfolio.................... 94 143 174 266 24 73 124 266
MFS Mid Cap Growth Portfolio..................... 95 146 181 279 25 76 131 279
MFS Research Portfolio........................... 95 146 180 278 25 76 130 278
Travelers Quality Bond Portfolio................. 90 133 157 232 20 63 107 232
TRAVELERS SERIES FUND INC.
AIM Capital Appreciation Portfolio............... 93 142 173 263 23 72 123 263
MFS Total Return Portfolio....................... 93 142 173 263 23 72 123 263
Putnam Diversified Income Portfolio.............. 93 141 172 262 23 71 122 262
VARIABLE ANNUITY PORTFOLIOS
CitiSelect(R) VIP Folio 200 Conservative......... 94 145 178 274 24 75 128 274
CitiSelect(R) VIP Folio 300 Balanced............. 94 145 178 274 24 75 128 274
CitiSelect(R) VIP Folio 400 Growth............... 97 154 193 304 27 84 143 304
CitiSelect(R) VIP Folio 500 Growth Plus.......... 97 154 193 304 27 84 143 304
CitiFunds Small Cap Growth VIP Portfolio......... 94 143 176 269 24 73 126 269
VARIABLE INSURANCE PRODUCTS FUND II
Contrafund(R) Portfolio -- Service Class 2....... 94 143 176 269 24 73 126 269
</TABLE>
* THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. THE EXAMPLE
REFLECTS THE $30 ANNUAL CONTRACT ADMINISTRATIVE CHARGE AS AN ANNUAL CHARGE OF
0.054% OF ASSETS.
8
<PAGE> 11
CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
See Appendix A.
9
<PAGE> 12
THE ANNUITY CONTRACT
- --------------------------------------------------------------------------------
CitiElite Annuity is a contract between the contract owner ("you"), and the
Company. You make purchase payments to us and we credit them to your Contract.
The Company promises to pay you an income, in the form of annuity or income
payments, beginning on a future date that you choose, the maturity date. The
purchase payments accumulate tax deferred in the funding options of your choice.
We offer multiple variable funding options, and one fixed account option. The
contract owner assumes the risk of gain or loss according to the performance of
the variable funding options. The contract value is the amount of purchase
payments, plus or minus any investment experience or interest. The contract
value also reflects all surrenders made and charges deducted. There is generally
no guarantee that at the maturity date the contract value will equal or exceed
the total purchase payments made under the Contract. The date the contract and
its benefits become effective is referred to as the contract date. Each 12-month
period following the contract date is called a contract year.
Certain changes and elections must be made in writing to the Company. Where the
term "written request" is used, it means that written information must be sent
to the Company's Customer Service Office at One Tower Square, Hartford,
Connecticut 06183-4065 in a form and content satisfactory to us.
CONTRACT OWNER INQUIRIES
Any questions you have about your Contract should be directed to the Company's
Customer Service Office at (800) 497-4857.
PURCHASE PAYMENTS
The initial purchase payment must be at least $5,000, which amount may be paid
in one or more installments of at least $100 within the first twelve months
after the contract date. You may make additional payments of at least $100 at
any time. Under certain circumstances, we may waive the minimum purchase payment
requirement. Purchase payments over $1,000,000 may be made with our prior
consent.
We will apply the initial purchase payment within two business days after we
receive it in good order at our Customer Service Office. Subsequent purchase
payments will be credited to a Contract on the same business day, if received in
good order by our Customer Service Office by 4:00 p.m. Eastern time. A business
day is any day that the New York Stock Exchange is open. Our business day ends
at 4:00 p.m. Eastern time unless we need to close earlier due to an emergency.
ACCUMULATION UNITS
The period between the contract effective date and the maturity date is the
accumulation period. During the accumulation period, an accumulation unit is
used to calculate the value of a Contract. An accumulation unit works like a
share of a mutual fund. Each funding option has a corresponding accumulation
unit value. The accumulation units are valued each business day and their values
may increase or decrease from day to day. The number of accumulation units we
will credit to your Contract once we receive a purchase payment is determined by
dividing the amount directed to each funding option by the value of its
accumulation unit. We calculate the value of an accumulation unit for each
funding option each day the New York Stock Exchange is open. The values are
calculated as of 4:00 p.m. Eastern time. After the value is calculated, we
credit your Contract. During the annuity period (i.e., after the maturity date),
you are credited with annuity units.
THE FUNDING OPTIONS
You choose which of the following variable funding options to have your purchase
payments allocated to. These funding options are subsections of the Separate
Account, which invest in the underlying mutual funds ("underlying funds"). You
will find detailed information about the options and their inherent risks in the
current prospectuses for the funding options which must accompany this
prospectus. You are not investing directly in the underlying fund. Since each
option has varying degrees of risk, please read the prospectuses carefully
before investing.
10
<PAGE> 13
Contact your registered representative or call (800) 497-4857 to request
additional copies of the prospectuses.
If any of the funding options become unavailable for allocating purchase
payments, or if we believe that further investment in a funding option is
inappropriate for the purposes of the Contract, we may substitute another
funding option. However, we will not make any substitutions without notifying
you and obtaining any state and SEC approval, if necessary. From time to time we
may make new funding options available.
The current variable funding options are listed below, along with their
investment advisers and any subadviser:
<TABLE>
<CAPTION>
FUNDING OPTION INVESTMENT OBJECTIVE INVESTMENT ADVISER/SUBADVISER
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ALLIANCE VARIABLE PRODUCTS
SERIES FUND, INC.
Technology Portfolio Class Seeks to achieve growth of capital by investing Alliance Capital Management
B primarily in securities of companies that use L.P.
technology extensively in the development of new
or improved products or processes. Current income
is incidental to the Portfolio's objective.
AIM VARIABLE INSURANCE FUNDS,
INC.
AIM V.I. Value Fund Seeks to achieve long-term growth of capital by AIM Advisers, Inc.
investing primarily in equity securities of
undervalued companies. Income is a secondary
objective.
CONCERT INVESTMENT SERIES
Select Small Cap Portfolio Seeks capital appreciation by investing primarily SSB Citi Fund Management LLC
in the common stocks of small cap companies having ("SSB Citi")
market capitalization in the lowest 20% of all
publicly traded U.S. companies.
Select Growth Portfolio Seeks capital appreciation by investing primarily SSB Citi
in U.S. common stocks and other equity securities,
typically of established companies with large
market capitalization.
Select Growth and Income Seeks both growth and income by investing princi- SSB Citi
Portfolio pally in equity securities which provide dividend
and interest income but may invest in non-income
producing investments for potential appreciation
in value.
Select Government Portfolio Seeks high current return consistent with the SSB Citi
preservation of capital by investing primarily in
debt instruments issued or guaranteed by the U.S.
government, its agencies or instrumentalities.
Select Mid Cap Portfolio Seeks long-term growth of capital by investing at SSB Citi
least 65% of its assets in the equity securities
of companies having a market capitalization within
the range of the companies included in the
Standard and Poor's MidCap 400 Index at the time
of investment.
FRANKLIN TEMPLETON INSURANCE
PRODUCTS TRUST
Franklin Small Cap Fund Seeks long-term capital growth. The Fund seeks to Franklin Advisers, Inc.
(Class 2) accomplish its objective by investing primarily
(normally at least 65% of its assets) in equity
securities of smaller capitalization growth
companies.
Templeton International Seeks long-term capital growth through a flexible Templeton Investment Counsel,
Securities Fund (Class 2) policy of investing in stocks and debt obligations Inc.
of companies and governments outside the United
States. Any income realized will be incidental.
GREENWICH STREET SERIES FUND
Equity Index Portfolio Seeks to replicate, before deduction of expenses, Travelers Investment Management
Class II the total return performance of the S&P 500 index. Co.
SALOMON BROTHERS VARIABLE
SERIES FUND, INC.
Capital Fund Seeks capital appreciation, primarily through Salomon Brothers Asset
investments in common stocks which are believed to Management ("SBAM")
have above-average price appreciation potential
and which may involve above average risk.
</TABLE>
11
<PAGE> 14
<TABLE>
<CAPTION>
FUNDING OPTION INVESTMENT OBJECTIVE INVESTMENT ADVISER/SUBADVISER
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
High Yield Bond Fund Seeks to maximize current income, and secondarily, SBAM
to seek capital appreciation through investments
in medium or lower rating categories.
Investors Fund Seeks long-term growth of capital, and, SBAM
secondarily, current income, through investments
in common stocks of well-known companies.
Total Return Fund Seeks above-average income (compared to a portfo- SBAM
lio invested entirely in equity securities).
Secondarily, seeks opportunities for growth of
capital and income.
THE TRAVELERS SERIES TRUST
Equity Income Portfolio Seeks reasonable income by investing at least 65% Travelers Asset Management
in income-producing equity securities. The balance International Company ("TAMIC")
may be invested in all types of domestic and Subadviser: Fidelity Management
foreign securities, including bonds. The Portfolio & Research Co. ("FMR")
seeks to achieve a yield that exceeds that of the
securities comprising the S&P 500. The Subadviser
also considers the potential for capital
appreciation.
Large Cap Portfolio Seeks long-term growth of capital by investing TAMIC
primarily in equity securities of companies with Subadviser: FMR
large market capitalizations.
MFS Emerging Growth Seeks to provide long-term growth of capital. TAMIC
Portfolio Dividend and interest income from portfolio Subadviser: Massachusetts
securities, if any, is incidental to the MFS Financial Services ("MFS")
Portfolio's investment objective.
MFS Mid Cap Growth Seeks to obtain long-term growth of capital by TAMIC
Portfolio investing, under normal market conditions, at Subadviser: MFS
least 65% of its total assets in equity securities
of companies with medium market capitalization
which the investment adviser believes have
above-average growth potential.
MFS Research Portfolio Seeks to provide long-term growth of capital and TAMIC
future income. Subadviser: MFS
Travelers Quality Bond Seeks current income, moderate capital volatility TAMIC
Portfolio and total return.
TRAVELERS HIGH YIELD BOND TRUST Generous income. The assets of the High Yield Bond TAMIC
Trust will be invested in bonds, which, as a
class, sell at discounts from par value and are
typically high risk securities.
TRAVELERS MONEY MARKET Seeks high current income from short-term money TAMIC
PORTFOLIO market instruments while preserving capital and
maintaining a high degree of liquidity.
TRAVELERS SERIES FUND INC.
AIM Capital Appreciation Seeks capital appreciation by investing Travelers Investment Advisers
Portfolio principally in common stock, with emphasis on ("TIA")
medium-sized and smaller emerging growth Subadviser: AIM Capital
companies. Management, Inc.
MFS Total Return Portfolio Seeks to obtain above-average income (compared to TIA
a portfolio entirely invested in equity Subadviser: MFS
securities) consistent with the prudent employment
of capital. Generally, at least 40% of the
Portfolio's assets will be invested in equity
securities.
Putnam Diversified Income Seeks high current income consistent with TIA
Portfolio preservation of capital. The Portfolio will Subadviser: Putnam Investment
allocate its investments among the U.S. Government Management, Inc.
Sector, the High Yield Sector, and the
International Sector of the fixed income
securities markets.
VARIABLE ANNUITY PORTFOLIOS
CitiSelect VIP Folio 200 This portfolio seeks as high a total return over Citibank, N.A.
Conservative time as is consistent with primary emphasis on
fixed income securities and a secondary emphasis
on equity securities. Under normal circumstances,
20%-40% of the portfolio's assets will be invested
in equity securities and 60%-80% of the
portfolio's assets will be invested in fixed
income securities.
CitiSelect VIP Folio 300 This portfolio seeks as high a total return over Citibank, N.A.
Balanced time as is consistent with a balanced emphasis on
equity and fixed-income securities. Under normal
circumstances, 40%-60% of the portfolio's assets
will be invested in equity securities and 40%-60%
of the portfolio's assets will be invested in
fixed income securities.
</TABLE>
12
<PAGE> 15
<TABLE>
<CAPTION>
FUNDING OPTION INVESTMENT OBJECTIVE INVESTMENT ADVISER/SUBADVISER
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CitiSelect VIP Folio 400 This portfolio seeks as high a total return over Citibank, N.A.
Growth time as is consistent with a primary emphasis on
equity securities and a secondary emphasis on
fixed income securities. Under normal
circumstances, 60%-80% of the portfolio's assets
will be invested in equity securities and 20%-40%
of the portfolio's assets will be invested in
fixed income securities.
CitiSelect VIP Folio 500 This portfolio seeks as high a total return over Citibank, N.A.
Growth Plus time as is consistent with a dominant emphasis on
equity securities and a small allocation to fixed
income. Under normal circumstances, 75%-100% of
the portfolio's assets will be invested in equity
securities and 0%-25% of the portfolio's assets
will be invested in fixed income securities.
CitiFunds Small Cap Growth The fund seeks long-term capital growth by Citibank, N.A.
VIP Portfolio investing in equity securities of U.S. companies
with market capitalizations below the top 1,000
stocks of the equity market. Under normal
circumstances, at least 65% of the fund's total
assets will be invested in such companies.
Dividend income, if any, is incidental to this
investment objective.
VARIABLE INSURANCE PRODUCTS
FUND II
Contrafund Portfolio: Seeks long term appreciation of capital by SSB Citi
Service Class 2 investing primarily in equity securities.
</TABLE>
CHARGES AND DEDUCTIONS
- --------------------------------------------------------------------------------
GENERAL
We deduct the charges described below. The charges are for the service and
benefits we provide, costs and expenses we incur, and risks we assume under the
Contracts. Services and benefits we provide include:
- the ability for you to make withdrawals and surrenders under the
Contracts;
- the death benefit paid on the death of the contract owner, annuitant, or
first of the joint contract owners,
- the available funding options and related programs (including dollar-cost
averaging, portfolio rebalancing, and systematic withdrawal programs);
- administration of the annuity options available under the Contracts; and
- the distribution of various reports to contract owners.
Costs and expenses we incur include:
- losses associated with various overhead and other expenses associated
with providing the services and benefits provided by the Contracts,
- sales and marketing expenses including commission payments to your sales
agent, and
- other costs of doing business.
Risks we assume include:
- that annuitants may live longer than estimated when the annuity factors
under the Contracts were established;
- that the amount of the death benefit will be greater than the contract
value, and
- that the costs of providing the services and benefits under the Contracts
will exceed the charges deducted.
We may also deduct a charge for taxes.
13
<PAGE> 16
Unless otherwise specified, charges are deducted proportionately from all
funding options in which you are invested.
We may reduce or eliminate the withdrawal charge, the administrative charges
and/or the mortality and expense risk charge under the Contract when certain
sales or administration of the Contract result in savings or reduced expenses
and/or risks. For certain trusts, we may change the order in which purchase
payments and earnings are withdrawn in order to determine the withdrawal charge.
We will not reduce or eliminate the withdrawal charge or the administrative
charge where such reduction or elimination would be unfairly discriminatory to
any person.
WITHDRAWAL CHARGE
We do not deduct a sales charge from purchase payments when they are made to the
Contract. However, a withdrawal charge will apply if purchase payments are
withdrawn before they have been in the Contract for seven years. We will assess
the charge as a percentage of the purchase payment withdrawn as follows:
<TABLE>
<CAPTION>
YEARS SINCE PURCHASE
PAYMENT MADE WITHDRAWAL CHARGE
<S> <C>
<1 7 %
1 7 %
2 7 %
3 6 %
4 5 %
5 4 %
6 3 %
7 and over 0 %
</TABLE>
For purposes of the withdrawal charge calculation, withdrawals are deemed to be
taken first from:
(a) any purchase payment to which no withdrawal charge applies, and then
(b) any remaining free withdrawal allowance (as described below) (after
being reduced by (a)), then
(c) from any purchase payment to which a withdrawal charge applies (on a
first-in, first-out basis), then
(d) from any Contract earnings.
Unless you instruct us otherwise, we will deduct the withdrawal charge from the
amount requested.
We will not deduct a withdrawal charge:
- from payments we make due to the distribution of death proceeds;
- upon election of a lifetime annuity payout taken after the first Contract
year or,
- due to a minimum distribution under our minimum distribution rules then
in effect.
Note: Any free withdrawals taken will not reduce purchase payments still subject
to a withdrawal charge.
FREE WITHDRAWAL ALLOWANCE
You may withdraw up to 15% of the contract value annually, without a withdrawal
charge. (If you have purchase payments no longer subject to a withdrawal charge,
the maximum you may withdraw without a withdrawal charge is the greater of (a)
the free withdrawal allowance, or (b) the total amount of purchase payments no
longer subject to a withdrawal charge. Note: Any free withdrawal taken will
reduce purchase payments no longer subject to a withdrawal charge.) For the
first contract year, the available amount is 15% of the initial purchase
payment. Beginning in the second contract year, the available free withdrawal
amount is 15% of the contract value at the end of the previous contract year.
The free withdrawal allowance applies to any partial withdrawals and to full
withdrawals, except those transferred directly to annuity contracts issued by
14
<PAGE> 17
other financial institutions. In Washington State, the free withdrawal provision
applies to all withdrawals.
ADMINISTRATIVE CHARGES
We deduct a contract administrative charge of $30 annually on each anniversary
of the contract date. This charge compensates us for expenses incurred in
establishing and maintaining the Contract. The $30 charge is deducted from the
contract value by canceling accumulation units applicable to each variable
funding option on a pro rata basis. For the first Contract year this charge will
be prorated (i.e. calculated) from the date of purchase. A prorated charge will
also be made if the Contract is completely withdrawn or terminated. We will not
deduct a contract administrative charge:
(1) from the distribution of death proceeds; or
(2) after an annuity payout has begun.
An administrative expense charge (sometimes called "sub-account administrative
charge") is deducted on each business day from amounts allocated to the variable
funding options in order to compensate the Company for certain related
administrative and operating expenses. The charge equals, on an annual basis,
0.15% of the daily net asset value allocated to each of the variable funding
options.
MORTALITY AND EXPENSE RISK CHARGE
Each business day, the Company deducts a mortality and expense risk ("M&E")
charge from amounts held in the variable funding options. The deduction is
reflected in our calculation of accumulation and annuity unit values. The
charges stated are the maximum for this product. We reserve the right to lower
this charge at any time. This charge equals, on an annual basis, 1.25% of the
amounts held in each variable funding option. This charge compensates the
Company for risks assumed, benefits provided and expenses incurred, including
the payment of commissions to your sales agent.
FUNDING OPTION EXPENSES
The charges and expenses of the funding options are summarized in the fee table
and are described in the accompanying prospectuses.
PREMIUM TAX
Certain state and local governments charge premium taxes ranging from 0% to 5%,
depending upon jurisdiction. The Company is responsible for paying these taxes
and will determine the method used to recover premium tax expenses incurred. We
will deduct any applicable premium taxes from the contract value either upon
death, surrender, annuitization, or at the time purchase payments are made to
the Contract, but no earlier than when we have a tax liability under state law.
CHANGES IN TAXES BASED UPON PREMIUM OR VALUE
If there is any change in a law assessing taxes against the Company based upon
premiums, contract gains or value of the contract, we reserve the right to
charge you proportionately for this tax.
TRANSFERS
- --------------------------------------------------------------------------------
Up to 30 days before the maturity date, you may transfer all or part of the
contract value between funding options. Transfers are made at the value(s) next
determined after we receive your request at the Home Office. There are no
charges or restrictions on the amount or frequency of transfers currently;
however, we reserve the right to charge a fee for any transfer request, and to
limit the number of transfers to one in any six-month period. We also reserve
the right to restrict transfers by any market timing firm or any other third
party authorized to initiate transfers on behalf of
15
<PAGE> 18
multiple contract owners. We may, among other things, not accept: 1) the
transfer instructions of any agent acting under a power of attorney on behalf of
more than one owner, or 2) the transfer or exchange instructions of individual
owners who have executed pre-authorized transfer forms which are submitted by
market timing firms or other third parties on behalf of more than one owner. We
further reserve the right to limit transfers that we determine will disadvantage
other contract owners.
Since different funding options have different expenses, a transfer of contract
values from one funding option to another could result in your investment
becoming subject to higher or lower expenses. After the maturity date, you may
make transfers between funding options only with our consent. Please refer to
Appendix B for information about transfers between the Fixed Account and the
funding options.
DOLLAR COST AVERAGING
Dollar cost averaging or the pre-authorized transfer program (the "DCA Program")
allows you to transfer a set dollar amount to other funding options on a monthly
or quarterly basis during the accumulation phase of the Contract. Using this
method, more accumulation units are purchased in a funding option if the value
per unit is low and fewer accumulation units are purchased if the value per unit
is high. Therefore, a lower-than-average cost per unit may be achieved over the
long run.
You may elect the DCA Program through written request or other method acceptable
to the Company. You must have a minimum total contract value of $5,000 to enroll
in the DCA Program. The minimum amount that may be transferred through this
program is $100.
You may establish pre-authorized transfers of contract values from the Fixed
Account, subject to certain restrictions. Under the DCA Program, automated
transfers from the Fixed Account may not deplete your Fixed Account Value in
less than twelve months from your enrollment in the DCA Program.
In addition to the DCA Program, the Company may credit increased interest rates
to contract owners under an administrative Special DCA Program established at
the discretion of the Company, depending on availability and state law. Under
this program, the contract owner may pre-authorize level transfers to any of the
funding options under either a 6 Month Program or 12 Month Program. The 6 Month
Program and the 12 Month Program will generally have different credited interest
rates. Under the 6 Month Program, the interest rate can accrue up to 6 months on
funds in the Special DCA Program and all purchase payments and accrued interest
must be transferred on a level basis to the selected funding option in 6 months.
Under the 12 Month Program, the interest rate can accrue up to 12 months on
funds in the Special DCA Program and all purchase payments and accrued interest
in this Program must be transferred on a level basis to the selected funding
options in 12 months.
The pre-authorized transfers will begin after the initial Program purchase
payment and complete enrollment instructions are received by the Company. If
complete Program enrollment instructions are not received by the Company within
15 days of receipt of the initial Program purchase payment, the entire balance
in the Program will be credited with the non-Program interest rate then in
effect for the Fixed Account.
You may start or stop participation in the DCA Program at any time, but you must
give the Company at least 30 days' notice to change any automated transfer
instructions that are currently in place. If you stop the Special DCA Program
and elect to remain in the Fixed Account, your contract value will be credited
for the remainder of 6 or 12 months with the interest rate for non-Program
funds.
A contract owner may only have one DCA Program or Special DCA Program in place
at one time. Any subsequent purchase payments received by the Company within the
Program period selected
16
<PAGE> 19
will be allocated to the current funding options over the remainder of that
Program transfer period, unless otherwise directed by the contract owner.
All provisions and terms of the Contract apply to the DCA and Special DCA
Programs, including provisions relating to the transfer of money between
investment options. We reserve the right to suspend or modify transfer
privileges at any time and to assess a processing fee for this service.
ACCESS TO YOUR MONEY
- --------------------------------------------------------------------------------
Any time before the maturity date, you may redeem all or any portion of the cash
surrender value, that is, the contract value less any withdrawal charge and any
premium tax not previously deducted. Unless you submit a written request
specifying the fixed or variable funding option(s) from which amounts are to be
withdrawn, the withdrawal will be made on a pro rata basis. The cash surrender
value will be determined as of the close of business after we receive your
surrender request at the Customer Service Office. The cash surrender value may
be more or less than the purchase payments made. Withdrawals during the annuity
period are not allowed.
We may defer payment of any cash surrender value for a period of up to seven
days after the written request is received, but it is our intent to pay as soon
as possible. We cannot process requests for withdrawals that are not in good
order. We will contact you if there is a deficiency causing a delay and will
advise what is needed to act upon the withdrawal request.
SYSTEMATIC WITHDRAWALS
Beginning in the first contract year and before the maturity date, you may
choose to withdraw a specified dollar amount (at least $100) on a monthly,
quarterly, semiannual or annual basis. Any applicable premium taxes and
withdrawal charge will be deducted. To elect systematic withdrawals, you must
have a contract value of at least $15,000 and you must make the election on the
form provided by the Company. We will surrender accumulation units pro rata from
all investment options in which you have an interest, unless you instruct us
otherwise. You may begin or discontinue systematic withdrawals at any time by
notifying us in writing, but at least 30 days' notice must be given to change
any systematic withdrawal instructions that are currently in place.
We reserve the right to discontinue offering systematic withdrawals or to assess
a processing fee for this service upon 30 days' written notice to contract
owners (where allowed by state law).
Each systematic withdrawal is subject to federal income taxes on the taxable
portion. In addition, a 10% federal penalty tax may be assessed on systematic
withdrawals if the contract owner is under age 59 1/2. You should consult with
your tax adviser regarding the tax consequences of systematic withdrawals.
LOANS
Loans may be available under your Contract. If available, all loan provisions
are described in your Contract or loan agreement.
OWNERSHIP PROVISIONS
- --------------------------------------------------------------------------------
TYPES OF OWNERSHIP
CONTRACT OWNER (you). The Contract belongs to the contract owner named in the
Contract (on the Specifications page), or to any other person to whom the
contract is subsequently assigned. An assignment of ownership or a collateral
assignment may be made only for nonqualified contracts. You have sole power
during the annuitant's lifetime to exercise any rights and to receive
17
<PAGE> 20
all benefits given in the contract provided you have not named an irrevocable
beneficiary and provided the Contract is not assigned.
You receive all payments while the annuitant is alive unless you direct them to
an alternate recipient. An alternate recipient does not become the contract
owner.
Joint Owner. For nonqualified contracts only, joint owners (e.g. spouses) may
be named in a written request before the contract is in effect. Joint owners may
independently exercise transfers allowed under the Contract. All other rights of
ownership must be exercised by both owners. Joint owners own equal shares of any
benefits accruing or payments made to them.
BENEFICIARY
You name the beneficiary in a written request. The beneficiary has the right to
receive any death proceeds under the contract upon the death of the annuitant or
a contract owner. If more than one beneficiary survives the annuitant or
contract owner, they will share equally in benefits unless different shares are
recorded with the Company by written request before the death of the annuitant
or contract owner. In the case of a non-spousal beneficiary or a spousal
beneficiary who has not chosen to assume the contract, the death benefit
proceeds will be held in a fixed account until the beneficiary elects a
Settlement Option or takes a distribution.
Unless an irrevocable beneficiary has been named, you have the right to change
any beneficiary by written request during the lifetime of the annuitant and
while the Contract continues.
ANNUITANT
The annuitant is designated in the Contract (on the Specifications page), and is
the individual on whose life the maturity date and the amount of the monthly
annuity payments depend. The annuitant may not be changed after the contract is
in effect.
A contingent annuitant may not be changed, deleted or added after the Contract
becomes effective.
DEATH BENEFIT
- --------------------------------------------------------------------------------
Before the maturity date, when there is no contingent annuitant, a death benefit
is payable when either the annuitant or a contract owner dies. The death benefit
is calculated at the close of the business day on which the Company's Customer
Service Office receives due proof of death and written payment instructions
("death report date").
18
<PAGE> 21
DEATH PROCEEDS BEFORE THE MATURITY DATE
WHERE THE ANNUITANT WAS YOUNGER THAN AGE 68 ON THE CONTRACT DATE:
The death benefit payable will be the greatest of (1), (2) or (3) below, each
reduced by any applicable premium tax and outstanding loans:
(1) the contract value;
(2) the total purchase payments made under the Contract less all partial
surrenders; or
(3) the Step-Up value (if any, as described below).
We must be notified no later than six months from the date of death in order for
Us to make payment of proceeds as described above. If we receive the
notification more than six months after the date of death, the Death Benefit
payable will be the Contract Value on the Death Report Date less any applicable
premium tax and outstanding loans.
WHERE THE ANNUITANT WAS BETWEEN THE AGES OF 68 THROUGH 75 ON THE CONTRACT DATE:
The death benefit payable will be the greatest of (1), (2) or (3) below, each
reduced by any applicable premium tax and outstanding loans:
(1) the contract value;
(2) the total purchase payments made under the Contract less all partial
surrender; or
(3) the Step-Up value (as described below) associated with the seventh
Contract Date Anniversary.
We must be notified no later than six months from the date of death in order for
Us to make payment of proceeds as described above. When permitted by state law,
if we receive the notification more than six months after the date of death, the
Death Benefit payable will be the Contract Value on the Death Report Date less
any applicable premium tax and outstanding loans.
WHERE ANNUITANT WAS AGE 76 OR OLDER ON THE CONTRACT DATE:
The death benefit payable will be the Contract Value on the Death Report Date,
less any applicable premium tax and any outstanding loans.
STEP-UP VALUE:
The Step-Up Value will be established on the seventh Contract Date anniversary.
The Step-Up Value will equal the Contract Value on that anniversary. For
Contracts where the Annuitant was younger than 68 on the Contract Date, the
Step-Up Value will be recalculated on each anniversary until the Annuitant's
76th birthday. If the Contract Value on the anniversary is greater than the
Step-Up Value, the Step-Up Value will be reset to equal the Contract Value on
that date. If the Step-Up Value is greater than the Contract Value, the Step-Up
Value remains unchanged. For all contracts, each time a Purchase Payment is made
we will increase the Step-Up Value by the amount of the payment and, when a
partial surrender is taken, we will reduce the Step-Up Value by a Partial
Surrender reduction (as described below).
The Partial Surrender Reduction equals:
(1) the Step-Up Value immediately before the reduction for the partial
surrender, multiplied by
(2) the amount of the partial surrender divided by
(3) the Contract Value immediately before the partial surrender.
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<PAGE> 22
For example, assume your current contract value is $55,000. If your original
step-up value is $50,000, and you decide to make a partial withdrawal of
$10,000, the step-up value would be reduced as follows:
50,000 x (10,000/55,000) = 9,090
Your new step-up value would be 50,000 - 9,090, or $40,910.
The following example shows what would happen in a declining market. Assume your
current contract value is $30,000. If your original step-up value is $50,000,
and you decide to make a partial withdrawal of $10,000, the step-up value would
be reduced as follows:
50,000 x (10,000/30,000) = 16,666
Your new step-up value would be 50,000 - 16,666, or $33,334.
PAYMENT OF PROCEEDS
The process of paying death benefit proceeds before the maturity date under
various situations for nonqualified contracts and qualified contracts is
summarized in the charts below. The charts do not encompass every situation and
are merely intended as a general guide. More detailed information is provided in
your Contract. Generally, the person(s) receiving the benefit may request that
the proceeds be paid in a lump sum, or be applied to one of the settlement
options available under the Contract.
NONQUALIFIED CONTRACTS
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
BEFORE THE MATURITY DATE, UPON THE COMPANY WILL PAY THE UNLESS... MANDATORY PAYOUT
THE DEATH OF THE PROCEEDS TO: RULES APPLY*
- --------------------------------------------------------------------------------------------------------------
Owner (who is not the The beneficiary (ies), Unless, the beneficiary is Yes
annuitant) (with no joint or if none, to the the contract owner's spouse
owner) contract owner's estate. and the spouse elects to
continue the contract as the
new owner rather than receive
the distribution.
- --------------------------------------------------------------------------------------------------------------
Owner (who is the annuitant) The beneficiary (ies), Unless, the beneficiary is Yes
(with no joint owner) or if none, to the the contract owner's spouse
contract owner's estate. and the spouse elects to
continue the contract as the
new owner rather than receive
the distribution.
- --------------------------------------------------------------------------------------------------------------
Joint Owner (who is not the The surviving joint Unless the surviving joint Yes
annuitant) owner. owner is the spouse and
elects to assume and continue
the contract.
- --------------------------------------------------------------------------------------------------------------
Joint Owner (who is the The beneficiary (ies), Unless the beneficiary is the Yes
annuitant) or if none, to the contract owner's spouse and
contract owner's estate. the spouse elects to assume
and continue the contract.
Or, unless there is a
contingent annuitant the
contingent annuitant becomes
the annuitant and the
proceeds will be paid to the
surviving joint owner. If the
surviving joint owner is the
spouse, the spouse may elect
to assume and continue the
contract.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
20
<PAGE> 23
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
BEFORE THE MATURITY DATE, UPON THE COMPANY WILL PAY THE UNLESS... MANDATORY PAYOUT
THE DEATH OF THE PROCEEDS TO: RULES APPLY*
- --------------------------------------------------------------------------------------------------------------
Annuitant (who is not the The beneficiary (ies). Unless, there is a contingent No
contract owner) annuitant. Then, the
contingent annuitant becomes
the annuitant and the
Contract continues in effect
(generally using the original
maturity date). The proceeds
will then be paid upon the
death of the contingent
annuitant or owner.
- --------------------------------------------------------------------------------------------------------------
Annuitant (who is the contract See death of "owner who N/A
owner) is the annuitant" above.
- --------------------------------------------------------------------------------------------------------------
Annuitant (where owner is a The beneficiary (ies) Yes (Death of
nonnatural person/trust) (e.g. the trust). annuitant is
treated as death
of the owner in
these
circumstances.)
- --------------------------------------------------------------------------------------------------------------
Contingent Annuitant (assuming No death proceeds are N/A
annuitant is still alive) payable; contract
continues.
- --------------------------------------------------------------------------------------------------------------
Beneficiary No death proceeds are N/A
payable; contract
continues.
- --------------------------------------------------------------------------------------------------------------
Contingent Beneficiary No death proceeds are N/A
payable; contract
continues.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
* Certain payout rules of the Internal Revenue Code (IRC) are triggered upon the
death of any Owner. Non-spousal Beneficiaries (as well as spousal
beneficiaries who choose not to assume the contract) must begin taking
distributions based on the Beneficiary's life expectancy within one year of
death or take a complete distribution of contract proceeds within 5 years of
death.
QUALIFIED CONTRACTS
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
BEFORE THE MATURITY DATE, UPON THE COMPANY WILL PAY THE UNLESS... MANDATORY PAYOUT
THE DEATH OF THE PROCEEDS TO: RULES APPLY (SEE *
ABOVE)
- --------------------------------------------------------------------------------------------------------------
Owner/Annuitant The beneficiary (ies), Yes
or if none, >to the
contract owner's estate.
- --------------------------------------------------------------------------------------------------------------
Beneficiary No death proceeds are N/A
payable; contract
continues.
- --------------------------------------------------------------------------------------------------------------
Contingent Beneficiary No death proceeds are N/A
payable; contract
continues.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
DEATH PROCEEDS AFTER THE MATURITY DATE
If any owner or the annuitant dies on or after the maturity date, the Company
will pay the beneficiary a death benefit consisting of any benefit remaining
under the annuity or income option then in effect.
21
<PAGE> 24
THE ANNUITY PERIOD
- --------------------------------------------------------------------------------
MATURITY DATE
Under the Contract, you can receive regular income payments (annuity payments).
You can choose the month and the year in which those payments begin (maturity
date). You can also choose among income plans (annuity or income options) or
elect a lump sum distribution. While the annuitant is alive, you can change your
selection any time up to the maturity date. Annuity or income payments will
begin on the maturity date stated in the Contract unless the Contract has been
fully surrendered or the proceeds have been paid to the beneficiary before that
date, or unless you elect another date. Annuity payments are a series of
periodic payments (a) for life; (b) for life with either a minimum number of
payments or a specific amount assured; or (c) for the joint lifetime of the
annuitant and another person, and thereafter during the lifetime of the
survivor. We may require proof that the annuitant is alive before annuity
payments are made. Not all options may be available in all states.
Unless you elect otherwise, the maturity date will be the annuitant's 90th
birthday or ten years after the effective date of the contract, if later. (For
Contracts issued in certain states, the maturity date elected may not be later
than the annuitant's 90th birthday.) Certain annuity options taken at the
maturity date may be used to meet the minimum required distribution requirements
of federal tax law or a program of partial surrenders may be used instead. These
mandatory distribution requirements take effect generally upon the death of the
contract owner, or with qualified contracts upon either the later of the
contract owner's attainment of age 70 1/2 or year of retirement; or the death of
the contract owner. Independent tax advice should be sought regarding the
election of minimum required distributions.
ALLOCATION OF ANNUITY
When an annuity option is elected, it may be elected as a variable annuity, a
fixed annuity, or a combination of both. If, at the time annuity payments begin,
no election has been made to the contrary, the cash surrender value will be
applied to provide an annuity funded by the same investment options as you have
selected during the accumulation period (contract value, in Oregon). At least 30
days before the maturity date, you may transfer the contract value among the
funding options in order to change the basis on which annuity payments will be
determined. (See "Transfers.")
VARIABLE ANNUITY
You may choose an annuity payout that fluctuates depending on the investment
experience of the variable funding options. The number of annuity units credited
to the Contract is determined by dividing the first monthly annuity payment
attributable to each funding option by the corresponding accumulation unit value
as of 14 days before the date annuity payments begin. An annuity unit is used to
measure the dollar value of an annuity payment. The number of annuity units (but
not their value) remains fixed during the annuity period.
DETERMINATION OF FIRST ANNUITY PAYMENT. The Contract contains tables used to
determine the first monthly annuity payment. If a variable annuity is elected,
the amount applied to it will be the value of the funding options as of 14 days
before the date annuity payments begin less any applicable premium taxes not
previously deducted.
The amount of the first monthly payment depends on the annuity option elected
and the annuitant's adjusted age. A formula for determining the adjusted age is
contained in the Contract. The total first monthly annuity payment is determined
by multiplying the benefit per $1,000 of value shown in the Contract tables by
the number of thousands of dollars of contract value applied to that annuity
option and factors in an assumed daily net investment factor. The Assumed Daily
22
<PAGE> 25
Net Investment factor corresponds to an annual interest rate of 3%, used to
determine the guaranteed payout rates shown. If investment rates are higher at
the time annuitization is selected, payout rates will be higher than those
shown. The Company reserves the right to require satisfactory proof of age of
any person on whose life annuity payments are based before making the first
payment under any of the payment options.
DETERMINATION OF SECOND AND SUBSEQUENT ANNUITY PAYMENTS. The dollar amount of
all subsequent annuity payments changes from month to month based on the
investment experience of the applicable funding options. The total amount of
each annuity payment will be equal to the sum of the basic payments in each
funding option. The actual amounts of these payments are determined by
multiplying the number of annuity units credited to each funding option by the
corresponding annuity unit value as of the date 14 days before the date the
payment is due.
FIXED ANNUITY
You may choose a fixed annuity that provides payments which do not vary during
the annuity period. We will calculate the dollar amount of the first fixed
annuity payment as described under "Variable Annuity," except that the amount
applied to begin the annuity will be the cash surrender value, determined as of
the date annuity payments begin. Payout rates will not be lower than those shown
in the Contract. If it would produce a larger payment, the first fixed annuity
payment will be determined using the Life Annuity Tables in effect on the
maturity date.
PAYMENT OPTIONS
- --------------------------------------------------------------------------------
ELECTION OF OPTIONS
While the annuitant is alive, you can change your annuity or income option
selection any time up to the maturity date. Once annuity or income payments have
begun, no further elections are allowed.
During the annuitant's lifetime, if you do not elect otherwise before the
maturity date, we will pay you (or another designated payee) the first of a
series of monthly annuity or income payments based on the life of the annuitant,
in accordance with Annuity Option 2 (Life Annuity with 120 monthly payments
assured). For certain qualified contracts, Annuity Option 4 (Joint and Last
Survivor Joint Life Annuity -- Annuity Reduced on Death of Primary Payee) will
be the automatic option as described in the Contract.
The minimum amount that can be placed under an annuity or income option will be
$1,000 unless we agree to a lesser amount. If any monthly periodic payment due
is less than $100, the Company reserves the right to make payments at less
frequent intervals, or to pay the contract value in a lump-sum.
On the maturity date, we will pay the amount due under the Contract in
accordance with the payment option that you select. You may choose to receive a
single lump-sum payment. You must elect an option in writing, in a form
satisfactory to the Company. Any election made during the lifetime of the
annuitant must be made by the contract owner.
ANNUITY OPTIONS
Subject to the conditions described in "Election of Options" above, all or any
part of the cash surrender value (less any applicable premium taxes) may be paid
under one or more of the following annuity options. Payments under the annuity
options may be elected on a monthly, quarterly, semiannual or annual basis. We
may offer additional options.
23
<PAGE> 26
Option 1 -- Life Annuity -- No Refund. The Company will make annuity payments
during the lifetime of the annuitant ending with the last payment before death.
This option offers the maximum periodic payment, since there is no assurance of
a minimum number of payments or provision for a death benefit for beneficiaries.
Option 2 -- Life Annuity with 120, 180 or 240 Monthly Payments Assured. The
Company will make monthly annuity payments during the lifetime of the annuitant,
with the agreement that if, at the death of that person, payments have been made
for less than 120, 180 or 240 months as elected, we will continue making
payments to the beneficiary during the remainder of the period.
Option 3 -- Joint and Last Survivor Life Annuity -- No Refund. The Company will
make regular annuity payments during the lifetime of the annuitant and a second
person. When either person dies, we will continue making payments to the
survivor. No further payments will be made following the death of the survivor.
Option 4 -- Joint and Last Survivor Life Annuity -- Annuity Reduced on Death of
Primary Payee. The Company will make annuity payments during the lifetimes of
the annuitant and a second person. One will be designated the primary payee, the
other will be designated the secondary payee. On the death of the secondary
payee, the Company will continue to make monthly annuity payments to the primary
payee in the same amount that would have been payable during the joint lifetime
of the two persons. On the death of the primary payee, the Company will continue
to make annuity payments to the secondary payee in an amount equal to 50% of the
payments which would have been made during the lifetime of the primary payee. No
further payments will be made once both payees have died.
Option 5 -- Other Annuity Options. The Company will make any other arrangements
for annuity payments as may be mutually agreed upon.
INCOME OPTIONS
Instead of one of the annuity options described above, and subject to the
conditions described under "Election of Options," all or part of the Contract's
cash surrender value (or, if required by state law, contract value) may be paid
under one or more of the following income options, provided that they are
consistent with federal tax law qualification requirements. Payments under the
income options may be elected on a monthly, quarterly, semiannual or annual
basis:
Option 1 -- Payments of a Fixed Amount. The Company will make equal payments of
the amount elected until the cash surrender value applied under this option has
been exhausted. The first payment and all later payments will be paid from each
funding option or the Fixed Account in proportion to the cash surrender value
attributable to each funding option and/or Fixed Account. The final payment will
include any amount insufficient to make another full payment.
Option 2 -- Payments for a Fixed Period. The Company will make payments for the
period selected. The amount of each payment will be equal to the remaining cash
surrender value applied under this option divided by the number of remaining
payments. If, at the death of the annuitant, the total number of fixed payments
has not been made, the payments will be made to the beneficiary.
Option 3 -- Other Income Options. The Company will make any other arrangements
for Income Options as may be mutually agreed upon.
MISCELLANEOUS CONTRACT PROVISIONS
- --------------------------------------------------------------------------------
RIGHT TO RETURN
You may return the Contract for a full refund of the contract value (including
charges) within twenty days after you receive it (the "right to return period").
You bear the investment risk on the
24
<PAGE> 27
purchase payment during the right to return period; therefore, the contract
value returned may be greater or less than your purchase payment.
If the Contract is purchased as an Individual Retirement Annuity, and is
returned within the first seven days after delivery, your purchase payment will
be refunded in full; during the remainder of the right to return period, the
contract value (including charges) will be refunded.
The contract value will be determined following the close of the business day on
which we receive the Contract and a written request for a refund. Where state
law requires a longer period, or the return of purchase payments or other
variations of this provision, the Company will comply. Refer to your Contract
for any state-specific information.
TERMINATION
You do not need to make any purchase payments after the first to keep the
Contract in effect. However, we reserve the right to terminate the Contract on
any business day if the contract value as of that date is less than $1,000 and
no purchase payments have been made for at least two years, unless otherwise
specified by state law. Termination will not occur until 31 days after the
Company has mailed notice of termination to the contract owner's last known
address and to any assignee of record. If the Contract is terminated, we will
pay you the cash surrender value less any applicable premium tax, and any
applicable administrative charge.
REQUIRED REPORTS
As often as required by law, but at least once in each contract year before the
due date of the first annuity payment, we will furnish a report showing the
number of accumulation units credited to the Contract and the corresponding
accumulation unit value(s) as of the report date for each funding option to
which the contract owner has allocated amounts during the applicable period. The
Company will keep all records required under federal and state laws.
SUSPENSION OF PAYMENTS
The Company reserves the right to suspend or postpone the date of any payment or
determination of values on any business day (1) when the New York Stock Exchange
("the Exchange") is closed; (2) when trading on the Exchange is restricted; (3)
when an emergency exists as determined by the SEC so that the sale of securities
held in the Separate Account may not reasonably occur or so that the Company may
not reasonably determine the value the Separate Account's net assets; or (4)
during any other period when the SEC, by order, so permits for the protection of
security holders.
TRANSFERS OF CONTRACT VALUES TO OTHER ANNUITIES
Where state law permits, we may allow contract owners to transfer their contract
values into other annuities offered by us or our affiliated insurance companies
under rules then in effect.
THE SEPARATE ACCOUNT
- --------------------------------------------------------------------------------
Citicorp Life Variable Annuity ("Separate Account") was established on July 6,
1994 and is registered with the SEC as a unit investment trust (separate
account) under the Investment Company Act of 1940, as amended (the "1940 Act").
The Separate Account assets attributable to the Contracts will be invested
exclusively in the shares of the variable funding options.
The Separate Account assets are held for the exclusive benefit of the owners of
this separate account, according to the laws of Arizona. Income, gains and
losses, whether or not realized, from assets allocated to the Separate Account
are, in accordance with the Contracts, credited to or
25
<PAGE> 28
charged against the Separate Account without regard to other income, gains and
losses of the Company. The assets held by the Separate Account are not
chargeable with liabilities arising out of any other business which the Company
may conduct. Obligations under the Contract are obligations of the Company.
All investment income and other distributions of the funding options are payable
to the Separate Account. All such income and/or distributions are reinvested in
shares of the respective funding option at net asset value. Shares of the
funding options are currently sold only to life insurance company separate
accounts to fund variable annuity and variable life insurance contracts.
PERFORMANCE INFORMATION
From time to time, we may advertise several types of historical performance for
the Contract's funding options. We may advertise the "standardized average
annual total returns" of the funding option, calculated in a manner prescribed
by the SEC, and the "nonstandardized total return," as described below. Specific
examples of the performance information appear in the SAI.
STANDARDIZED METHOD. Quotations of average annual total returns are computed
according to a formula in which a hypothetical initial investment of $1,000 is
applied to the funding option, and then related to ending redeemable values over
one-, five-, and ten-year periods, or for a period covering the time during
which the funding option has been in existence, if less. These quotations
reflect the deduction of all recurring charges during each period (on a pro rata
basis in the case of fractional periods). The deduction for the annual
administrative charge is converted to a percentage of assets based on the actual
fee collected, divided by the average net assets for Contracts sold. Each
quotation assumes a total redemption at the end of each period with the
applicable withdrawal charge deducted at that time.
NONSTANDARDIZED METHOD. Nonstandardized "total returns" will be calculated in a
similar manner based on the performance of the funding options over a period of
time, usually for the calendar year-to-date, and for the past one-, three-,
five- and ten-year periods. Nonstandardized total returns will not reflect the
deduction of the annual contract administrative charge, which, if reflected,
would decrease the level of performance shown. The withdrawal charge is not
reflected because the Contract is designed for long-term investment.
For funding options that were in existence before they became available under
the Separate Account, the nonstandardized average annual total return quotations
will reflect the investment performance that such funding options would have
achieved (reduced by the applicable charges) had they been held under the
Contract for the period quoted. The total return quotations are based upon
historical earnings and are not necessarily representative of future
performance.
GENERAL. Within the guidelines prescribed by the SEC and the National
Association of Securities Dealers, Inc. ("NASD"), performance information may be
quoted numerically or may be presented in a table, graph or other illustration.
Advertisements may include data comparing performance to well-known indices of
market performance (including, but not limited to, the Dow Jones Industrial
Average, the Standard & Poor's (S&P) 500 Index, the S&P 400 Index, the Lehman
Brothers Long T-Bond Index, the Russell 1000, 2000 and 3000 Indices, the Value
Line Index, and the Morgan Stanley Capital International's EAFE Index).
Advertisements may also include published editorial comments and performance
rankings compiled by independent organizations (including, but not limited to,
Lipper Analytical Services, Inc. and Morningstar, Inc.) and publications that
monitor the performance of the Separate Account and the variable funding
options.
26
<PAGE> 29
FEDERAL TAX CONSIDERATIONS
- --------------------------------------------------------------------------------
The following general discussion of the federal income tax consequences under
this Contract is not intended to cover all situations, and is not meant to
provide tax advice. Because of the complexity of the law and the fact that the
tax results will vary depending on many factors, you should consult your tax
adviser regarding your personal situation. For your information, a more detailed
tax discussion is contained in the SAI.
GENERAL TAXATION OF ANNUITIES
Congress has recognized the value of saving for retirement by providing certain
tax benefits, in the form of tax deferral, for money put into an annuity. The
Internal Revenue Code (Code) governs how this money is ultimately taxed,
depending upon the type of contract, qualified or non-qualified, and the manner
in which the money is distributed, as briefly described below.
TAX-FREE EXCHANGES: The Internal Revenue Codes provides that, generally, no gain
or loss is recognized when an annuity contract is received in exchange for a
life, endownment, or annuity contract. Since different annuity contracts have
different expenses, fees and benefits, a tax-free exchange could result in your
investment becoming subject to higher or lower fees and/or expenses.
TYPES OF CONTRACTS: QUALIFIED OR NONQUALIFIED
If you purchase an annuity contract with proceeds of an eligible rollover
distribution from any pension plan, specially sponsored program, or individual
retirement annuity (IRA) with pre-tax dollars, your contract is referred to as a
qualified contract. Some examples of qualified contracts are: IRAs, 403(b)
annuities, pension and profit-sharing plans (including 401(k) plans), Keogh
Plans, and certain other qualified deferred compensation plans. An exception to
this is a qualified plan called a Roth IRA. Under Roth IRA, after tax
contributions accumulate until Maturity, when amounts (including earnings) may
be withdrawn tax-free. If you purchase the contract on an individual basis with
after-tax dollars and not under one of the programs described above, your
contract is referred to as nonqualified.
NONQUALIFIED ANNUITY CONTRACTS
As the owner of a nonqualified annuity, you do not receive any tax benefit
(deduction or deferral of income) on purchase payments, but you will not be
taxed on increases in the value of your contract until a distribution occurs --
either as a withdrawal (distribution made prior to the maturity date), or as
annuity payments. When a withdrawal is made, you are taxed on the amount of the
withdrawal that is considered earnings. Similarly, when you receive an annuity
payment, part of each payment is considered a return of your purchase payments
and will not be taxed. The remaining portion of the annuity payment (i.e., any
earnings) will be considered ordinary income for tax purposes.
If a nonqualified annuity is owned by other than an individual, however, (e.g.,
by a corporation), increases in the value of the contract attributable to
purchase payments made after February 28, 1986 are includible in income
annually. Furthermore, for contracts issued after April 22, 1987, if you
transfer the contract without adequate consideration all deferred increases in
value will be includible in your income at the time of the transfer.
If you make a partial withdrawal, this money will generally be taxed as first
coming from earnings, (income in the contract), and then from your purchase
payments. These withdrawn earnings are includible in your income. (See "Penalty
Tax for Premature Distributions" below.) There is income in the contract to the
extent the contract value exceeds your investment in the contract. The
investment in the contract equals the total purchase payments you paid less any
amount received previously which was excludible from gross income. Any direct or
indirect borrowing
27
<PAGE> 30
against the value of the contract or pledging of the contract as security for a
loan will be treated as a cash distribution under the tax law.
Federal tax law requires that nonqualified annuity contracts meet minimum
mandatory distribution requirements upon the death of the contract owner,
including the first of joint owners. If these requirements are not met, the
surviving joint owner, or the beneficiary, will have to pay taxes prior to
distribution. The distribution required depends, among other things, upon
whether an annuity option is elected or whether the new contract owner is the
surviving spouse. We will administer Contracts in accordance with these rules
and we will notify you when you should begin receiving payments.
QUALIFIED ANNUITY CONTRACTS
Under a qualified annuity, since amounts paid into the contract have not yet
been taxed, the full amount of all distributions, including lump-sum withdrawals
and annuity payments, are taxed at the ordinary income tax rate unless the
distribution is transferred to an eligible rollover account or contract. The
Contract is available as a vehicle for IRA rollovers and for other qualified
contracts. There are special rules which govern the taxation of qualified
contracts, including withdrawal restrictions, requirements for mandatory
distributions, and contribution limits. We have provided a more complete
discussion in the SAI.
PENALTY TAX FOR PREMATURE DISTRIBUTIONS
Taxable distributions taken before the contract owner has reached the age of
59 1/2 will be subject to a 10% additional tax penalty unless the distribution
is taken in a series of periodic distributions, for life or life expectancy, or
unless the distribution follows the death or disability of the contract owner.
Other exceptions may be available in certain qualified plans.
DIVERSIFICATION REQUIREMENTS FOR VARIABLE ANNUITIES
The Code requires that any nonqualified variable annuity contracts based on a
separate account shall not be treated as an annuity for any period if
investments made in the account are not adequately diversified. Final tax
regulations define how separate accounts must be diversified. The Company
monitors the diversification of investments constantly and believes that its
accounts are adequately diversified. The consequence of any failure to diversify
is essentially the loss to the Contract Owner of tax deferred treatment. The
Company intends to administer all contracts subject to this provision of law in
a manner that will maintain adequate diversification.
OWNERSHIP OF THE INVESTMENTS
Assets in the separate accounts, also referred to as segregated asset accounts,
must be owned by the Company and not by the Contract Owner for federal income
tax purposes. Otherwise, the deferral of taxes is lost and income and gains from
the accounts would be includable annually in the Contract Owner's gross income.
The Internal Revenue Service has stated in published rulings that a variable
contract owner will be considered the owner of the assets of a segregated asset
account if the owner possesses an incident of ownership in those assets, such as
the ability to exercise investment control over the assets. The Treasury
Department announced, in connection with the issuance of temporary regulations
concerning investment diversification, that those regulations "do not provide
guidance concerning the circumstances in which investor control of the
investments of a segregated asset account may cause the investor, rather than
the insurance company, to be treated as the owner of the assets of the account."
This announcement, dated September 15, 1986, also stated that the guidance would
be issued by way of regulations or rulings on the "extent to which policyholders
may direct their investments to particular subaccounts [of a segregated asset
account] without being treated as owners of the underlying assets." As of the
date of this prospectus, no such guidance has been issued.
28
<PAGE> 31
The Company does not know if such guidance will be issued, or if it is, what
standards it may set. Furthermore, the Company does not know if such guidance
may be issued with retroactive effect. New regulations are generally issued with
a prospective-only effect as to future sales or as to future voluntary
transactions in existing contracts. The Company therefore reserves the right to
modify the contract as necessary to attempt to prevent Contract Owners from
being considered the owner of the assets of the separate account.
MANDATORY DISTRIBUTIONS FOR QUALIFIED PLANS
Federal tax law requires that minimum annual distributions begin by April 1st of
the calendar year following the calendar year in which an IRA owner attains age
70 1/2. Participants in qualified plans and 403(b) annuities may defer minimum
distributions until the later of April 1st of the calendar year following the
calendar year in which they attain age 70 1/2 or the year of retirement.
Distributions must begin or be continued according to required patterns
following the death of the contract owner or annuitant of both qualified and
nonqualified annuities.
OTHER INFORMATION
- --------------------------------------------------------------------------------
THE INSURANCE COMPANY
Citicorp Life Insurance Company (formerly Family Guardian Life Insurance
Company) is a stock life insurance company organized under the laws of Arizona
in 1971. Citicorp Life is wholly owned by Citibank Delaware. Citibank Delaware
is a wholly owned subsidiary of Citicorp Holdings Inc., which in turn, is a
wholly owned subsidiary of Citigroup Inc. one of the world's largest bank
holding companies.
Citicorp Life engages in the reinsurance of credit life insurance issued by
other insurance companies. First Citicorp Life also issues term life insurance
and fixed and variable annuities on a direct basis. The Company's Home Office is
located at 800 Silver Lake Blvd. Dover, Delaware 19904.
FINANCIAL STATEMENTS
The financial statements for the insurance company and the separate account are
located in the Statement of Additional Information. These reports are accessible
through the SEC's website that appears on page 1 of the prospectus.
DISTRIBUTION OF VARIABLE ANNUITY CONTRACTS
The Company intends to sell the Contracts in all jurisdictions where it is
licensed to do business and where the Contract is approved. Any sales
representative or employee who sells the Contracts will be qualified to sell
variable annuities under applicable federal and state laws. Each broker-dealer
is registered with the SEC under the Securities Exchange Act of 1934, and all
are members of the NASD. The principal underwriter of the Contracts is CFBDS,
Inc., 21 Milk St., Boston, MA. CFBDS, Inc. is not affiliated with the Company or
the Separate Account. However, it is currently anticipated that Travelers
Distribution LLC, an affiliated broker-dealer, may become the principal
underwriter for the Contracts during the year 2000.
Up-front compensation paid to sales representatives will not exceed 7% of the
purchase payments made under the Contracts. If asset based compensation is paid,
it will not exceed 2% of the average account value annually. From time to time,
the Company may pay or permit other promotional incentives, in cash, credit or
other compensation.
29
<PAGE> 32
CONFORMITY WITH STATE AND FEDERAL LAWS
The Contract is governed by the laws of the state in which it is delivered.
Where a state has not approved a contract feature or funding option, it will not
be available in that state. Any paid-up annuity, cash surrender value or death
benefits that are available under the Contract are not less than the minimum
benefits required by the statutes of the state in which the Contract is
delivered. We reserve the right to make any changes, including retroactive
changes, in the Contract to the extent that the change is required to meet the
requirements of any law or regulation issued by any governmental agency to which
the Company, the Contract or the contract owner is subject.
VOTING RIGHTS
The Company is the legal owner of the shares of the funding options. However, we
believe that when a funding option solicits proxies in conjunction with a vote
of shareholders we are required to obtain from you and from other owners
instructions on how to vote those shares. When we receive those instructions, we
will vote all of the shares we own in proportion to those instructions. This
will also include any shares we own on our own behalf. Should we determine that
we are no longer required to comply with the above, we will vote on the shares
in our own right.
LEGAL PROCEEDINGS AND OPINIONS
There are no pending material legal proceedings affecting the Separate Account
or the Company. Legal matters in connection with the federal laws and
regulations affecting the issue and sale of the contract described in this
prospectus, as well as the organization of the Company, its authority to issue
variable annuity contracts under Arizona law and the validity of the forms of
the variable annuity contracts under Arizona law, have been passed on by the
General Counsel of the Company.
30
<PAGE> 33
APPENDIX A: CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
CITICORP LIFE VARIABLE ANNUITY
ACCUMULATION UNIT VALUES
<TABLE>
<CAPTION>
PORTFOLIO NAME
--------------
<S> <C>
TRAVELERS HIGH YIELD BOND TRUST
Unit Value at beginning of year........................ 1
Unit Value at end of year.............................. 0.989639
Number of units outstanding at end of year............. 387,819.5853
TRAVELERS MONEY MARKET PORTFOLIO
Unit Value at beginning of year........................ 1
Unit Value at end of year.............................. 1.020466
Number of units outstanding at end of year............. 103,493.8349
TRAVELERS QUALITY BOND PORTFOLIO
Unit Value at beginning of year........................ 1
Unit Value at end of year.............................. 1.006447
Number of units outstanding at end of year............. 323,931.2300
VARIABLE ANNUITY PORTFOLIOS
CITISELECT VIP FOLIO 200 CONSERVATIVE
Unit Value at beginning of year Unit Value at end of
year.................................................. 1.019241
Number of units outstanding at end of year............. --
CITISELECT VIP FOLIO 300 BALANCED
Unit Value at beginning of year........................ 1
Unit Value at end of year.............................. 1.046945
Number of units outstanding at end of year............. 65,497.860600
CITISELECT VIP FOLIO 400 GROWTH
Unit Value at beginning of year........................ 1
Unit Value at end of year.............................. 1.072726
Number of units outstanding at end of year............. 10,560.1602
CITISELECT VIP FOLIO 500 GROWTH PLUS
Unit Value at beginning of year........................ 1
Unit Value at end of year.............................. 1.092684
Number of units outstanding at end of year............. 0
CITISELECT SMALL CAP GROWTH VIP
Unit Value at beginning of year........................ 1
Unit Value at end of year.............................. 1.447874
Number of units outstanding at end of year............. 52,739.9767
CONCERT INVESTMENT SERIES
SELECT GOVERNMENT PORTFOLIO
Unit Value at beginning of year........................ 1
Unit Value at end of year.............................. 0.987866
Number of units outstanding at end of year............. 22,639.7634
SELECT GROWTH & INCOME PORTFOLIO
Unit Value at beginning of year........................ 1
Unit Value at end of year.............................. 1.081850
Number of units outstanding at end of year............. 136,744.5490
SELECT GROWTH PORTFOLIO
Unit Value at beginning of year........................ 1
Unit Value at end of year.............................. 1.182107
Number of units outstanding at end of year............. 186,983.2806
</TABLE>
A-1
<PAGE> 34
APPENDIX A: CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
CITICORP LIFE VARIABLE ANNUITY
ACCUMULATION UNIT VALUES (CONTINUED)
<TABLE>
<CAPTION>
PORTFOLIO NAME
--------------
<S> <C>
SELECT MID CAP PORTFOLIO
Unit Value at beginning of year........................ 1
Unit Value at end of year.............................. 1.189776
Number of units outstanding at end of year............. 61,531.3879
SELECT SMALL CAP PORTFOLIO
Unit Value at beginning of year........................ 1
Unit Value at end of year.............................. 1.238916
Number of units outstanding at end of year............. 5,594.9655
GREENWICH STREET FUND
EQUITY INDEX PORTFOLIO
CLASS II
Unit Value at beginning of year........................ 1
Unit Value at end of year.............................. 3.566304
Number of units outstanding at end of year............. 91,907.4349
THE TRAVELERS SERIES TRUST
MFS MID CAP GROWTH PORTFOLIO
Unit Value at beginning of year........................ 1
Unit Value at end of year.............................. 1.570453
Number of units outstanding at end of year............. 726,744.6062
LARGE CAP PORTFOLIO (FIDELITY)
Unit Value at beginning of year........................ 1
Unit Value at end of year.............................. 1.225365
Number of units outstanding at end of year............. 2,109,249.3817
MFS RESEARCH PORTFOLIO
Unit Value at beginning of year........................ 1
Unit Value at end of year.............................. 1.206176
Number of units outstanding at end of year............. 805,920.9160
TRAVELERS SERIES FUND INC.
MFS TOTAL RETURN PORTFOLIO
Unit Value at beginning of year........................ 1
Unit Value at end of year.............................. 0.986723
Number of units outstanding at end of year............. 880,103.4882
AIM CAPITAL APPRECIATION PORTFOLIO
Unit Value at beginning of year........................ 1
Unit Value at end of year.............................. 1.393933
Number of units outstanding at end of year............. 954,494.9171
PUTNAM DIVERSIFIED INCOME PORTFOLIO
Unit Value at beginning of year........................ 1.0000
Unit Value at end of year.............................. 1.007736
Number of units outstanding at end of year............. 319,190.5637
FRANKLIN VARIABLE INSURANCE PRODUCTS TRUST
FRANKLIN SMALL CAP FUND
Unit Value at beginning of year........................ 1
Unit Value at end of year.............................. 1.606265
Number of units outstanding at end of year............. 353,953.2130
</TABLE>
A-2
<PAGE> 35
APPENDIX A: CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
CITICORP LIFE VARIABLE ANNUITY
ACCUMULATION UNIT VALUES (CONTINUED)
<TABLE>
<CAPTION>
PORTFOLIO NAME
--------------
<S> <C>
TEMPLETON INTERNATIONAL SECURITIES FUND
CLASS II
Unit Value at beginning of year........................ 1
Unit Value at end of year.............................. 1.154708
Number of units outstanding at end of year............. 523,110.3501
SALOMON BROTHERS VARIABLE SERIES FUND, INC.
CAPITAL FUND
Unit Value at beginning of year........................ 1
Unit Value at end of year.............................. 1.110208
Number of units outstanding at end of year............. 487,553.2413
HIGH YIELD FUND
Unit Value at beginning of year........................ 1
Unit Value at end of year.............................. 1.026291
Number of units outstanding at end of year............. 243,341.0712
TOTAL RETURN FUND
Unit Value at beginning of year........................ 1
Unit Value at end of year.............................. 0.976196
Number of units outstanding at end of year............. 680,015.6472
INVESTORS FUND
Unit Value at beginning of year........................ 1
Unit Value at end of year.............................. 1.013551
Number of units outstanding at end of year............. 880,931.5203
</TABLE>
A-3
<PAGE> 36
APPENDIX B
- --------------------------------------------------------------------------------
THE FIXED ACCOUNT
The Fixed Account is secured by part of the general assets of the Company. The
general assets of the Company include all assets of the Company other than those
held in the separate accounts sponsored by the Company or its affiliates.
The staff of the SEC does not generally review the disclosure in the prospectus
relating to the Fixed Account. Disclosure regarding the Fixed Account and the
general account may, however, be subject to certain provisions of the federal
securities laws relating to the accuracy and completeness of statements made in
the prospectus.
Under the Fixed Account, the Company assumes the risk of investment gain or
loss, guarantees a specified interest rate, and guarantees a specified periodic
annuity payment. The investment gain or loss of the Separate Account or any of
the funding options does not affect the Fixed Account portion of the contract
owner's contract value, or the dollar amount of fixed annuity payments made
under any payout option.
We guarantee that, at any time, the Fixed Account contract value will not be
less than the amount of the purchase payments allocated to the Fixed Account,
plus interest credited as described below, less any applicable premium taxes or
prior surrenders.
Purchase payments allocated to the Fixed Account and any transfers made to the
Fixed Account become part of the Company's general account which supports
insurance and annuity obligations. Neither the general account nor any interest
therein is registered under, nor subject to the provisions of, the Securities
Act of 1933 or Investment Company Act of 1940. We will invest the assets of the
Fixed Account at our discretion. Investment income from such Fixed Account
assets will be allocated to us and to the Contracts participating in the Fixed
Account.
Investment income from the Fixed Account allocated to us includes compensation
for mortality and expense risks borne by us in connection with Fixed Account
Contracts. The amount of such investment income allocated to the Contracts will
vary from year to year in our sole discretion at such rate or rates as we
prospectively declare from time to time.
The initial rate for any allocations into the Fixed Account is guaranteed for
one year from the date of such allocation. Subsequent renewal rates will be
guaranteed for the calendar quarter. We also guarantee that for the life of the
Contract we will credit interest at not less than 3% per year. Any interest
credited to amounts allocated to the Fixed Account in excess of 3% per year will
be determined in our sole discretion. You assume the risk that interest credited
to the Fixed Account may not exceed the minimum guarantee of 3% for any given
year.
TRANSFERS
You may make transfers from the Fixed Account to any other available funding
option(s) twice a year during the 30 days following the semiannual anniversary
of the contract effective date. The transfers are limited to an amount of up to
15% of the Fixed Account Value on the semiannual contract effective date
anniversary. (This restriction does not apply to transfers under the Dollar Cost
Averaging Program.) Amounts previously transferred from the Fixed Account to
other funding options may not be transferred back to the Fixed Account for a
period of at least six months from the date of transfer. We reserve the right to
waive either of these restrictions.
Automated transfers from the Fixed Account to any of the funding options may
begin at any time. Automated transfers from the Fixed Account may not deplete
your Fixed Account value in a period of less than twelve months from your
enrollment in the Dollar Cost Averaging Program.
B-1
<PAGE> 37
APPENDIX C
- --------------------------------------------------------------------------------
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
The Statement of Additional Information contains more specific information and
financial statements relating to the insurance company. A list of the contents
of the Statement of Additional Information is set forth below:
The Insurance Company
Principal Underwriter
Distribution and Principal Underwriting Agreement
Valuation of Assets
Performance Information
Federal Tax Considerations
Independent Accountants
Financial Statements
- --------------------------------------------------------------------------------
Copies of the Statement of Additional Information dated May 1, 2000 (Form No.
L-20676S) are available without charge. To request a copy, please clip this
coupon on the dotted line above, enter your name and address in the spaces
provided below, and mail to: The Company's Customer Service Office.
Name:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
C-1
<PAGE> 38
THIS PAGE INTENTIONALLY LEFT BLANK.
<PAGE> 39
L-20676 May 1, 2000
<PAGE> 40
PART B
Information Required in a Statement of Additional Information
<PAGE> 41
CitiElite
STATEMENT OF ADDITIONAL INFORMATION
dated
May 1, 2000
for
CITICORP LIFE VARIABLE ANNUITY SEPARATE ACCOUNT
ISSUED BY
CITICORP LIFE INSURANCE COMPANY
This Statement of Additional Information ("SAI") is not a prospectus but relates
to, and should be read in conjunction with, the Contract Prospectus dated May 1,
2000. A copy of the Prospectus may be obtained by writing to Citicorp Life
Insurance Company, Customer Service, One Tower Square, Hartford, CT 06183 or by
calling (800) 497-4857.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
THE INSURANCE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PRINCIPAL UNDERWRITER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
DISTRIBUTION AND PRINCIPAL UNDERWRITING AGREEMENT . . . . . . . . . . ......... 1
VALUATION OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
PERFORMANCE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
FEDERAL TAX CONSIDERATIONS . . . . . . . . . . . .. . . . . . . . . . . . . . . 7
INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
</TABLE>
<PAGE> 42
THE INSURANCE COMPANY
Citicorp Life Insurance Company is a stock insurance company
organized under the laws of the State of Arizona in 1971. Citicorp Life
Insurance Company is wholly owned by Citibank Delaware. Citibank Delaware, which
in turn, is a wholly owned subsidiary of Citigroup, one of the world's largest
bank holding companies.
STATE REGULATION. The Company is subject to the laws of the state of
Connecticut governing insurance companies and to regulation by the Insurance
Commissioner of Arizona.
The Company is also subject to the insurance laws and regulations of
all other states in which it is licensed to operate. However, the insurance
departments of each of these states generally apply the laws of the home state
(jurisdiction of domicile) in determining the field of permissible investments.
THE SEPARATE ACCOUNT. The Separate Account meets the definition of a separate
account under the federal securities laws, and will comply with the provisions
of the 1940 Act. Additionally, the operations of the Separate Account are
subject to the provisions of Arizona laws.
It is conceivable that in the future it may be disadvantageous for both variable
annuity and variable life insurance separate accounts, or for variable separate
accounts of different insurance companies, to invest simultaneously in the same
portfolios (called "mixed" and "shared" funding). Currently neither the
insurance companies nor the portfolios foresee any such disadvantages to the
companies or to variable contract owners. Each portfolio's board of trustees,
directors or managers intends to monitor events in order to identify any
material conflicts between such policy owners and to determine what action, if
any, should be taken in response thereto.
PRINCIPAL UNDERWRITER
CFBDS, Inc. serves as principal underwriter for the Separate Account
and the Contracts. The offering is continuous. CFBDS, Inc. is not affiliated
with the Company or the Separate Account. Its principal executive offices are
located at 21 Milk Street, Boston, MA. However, it is currently anticipated that
Travelers Distribution LLC, an affiliated broker dealer, may become the
principal underwriter for the Contracts during the year 2000.
DISTRIBUTION AND PRINCIPAL UNDERWRITING AGREEMENT
Under the terms of the Distribution and Principal Underwriting
Agreement among Fund ABD, CFBDS and the Company, CFBDS acts as agent for the
distribution of the Contracts and as principal underwriter for the Contracts.
The Company reimburses CFBDS for certain sales and overhead expenses connected
with sales functions.
1
<PAGE> 43
VALUATION OF ASSETS
FUNDING OPTIONS: The value of the assets of each funding option is determined at
4:00 p.m. Eastern time on each business day, unless we need to close earlier due
to an emergency. A business day is any day the New York Stock Exchange. Each
security traded on a national securities exchange is valued at the last reported
sale price on the business day. If there has been no sale on that day, then the
value of the security is taken to be the mean between the reported bid and asked
prices on the business day or on the basis of quotations received from a
reputable broker or any other recognized source.
Any security not traded on a securities exchange but traded in the
over-the-counter-market and for which market quotations are readily available is
valued at the mean between the quoted bid and asked prices on the business day
or on the basis of quotations received from a reputable broker or any other
recognized source.
Securities traded on the over-the-counter-market and listed
securities with no reported sales are valued at the mean between the last
reported bid and asked prices or on the basis of quotations received from a
reputable broker or other recognized source.
Short-term investments for which a quoted market price is available
are valued at market. Short-term investments maturing in more than sixty days
for which there is no reliable quoted market price are valued by "marking to
market" (computing a market value based upon quotations from dealers or issuers
for securities of a similar type, quality and maturity.) "Marking to market"
takes into account unrealized appreciation or depreciation due to changes in
interest rates or other factors which would influence the current fair values of
such securities. Short-term investments maturing in sixty days or less for which
there is no reliable quoted market price are valued at amortized cost which
approximates market.
THE CONTRACT VALUE: The value of an accumulation unit on any business day is
determined by multiplying the value on the preceding business day by the net
investment factor for the valuation period just ended. The net investment factor
is used to measure the investment performance of a funding option from one
valuation period to the next. The net investment factor for a funding option for
any valuation period is equal to the sum of 1.000000 plus the net investment
rate (the gross investment rate less any applicable funding option deductions
during the valuation period relating to the mortality and expense risk charge
and the administrative expense charge). The gross investment rate of a funding
option is equal to (a) minus (b), divided by (c) where:
(a) = investment income plus capital gains and losses (whether realized or
unrealized);
(b) = any deduction for applicable taxes (presently zero);
and
(c) = the value of the assets of the funding option at the beginning
of the valuation period.
The gross investment rate may be either positive or negative. A
funding option's investment income includes any distribution whose ex-dividend
date occurs during the valuation period.
ACCUMULATION UNIT VALUE. The value of the accumulation unit for each funding
option was initially established at $1.00. The value of an accumulation unit on
any business day is determined by
2
<PAGE> 44
multiplying the value on the preceding business day by the net investment factor
for the valuation period just ended. The net investment factor is calculated for
each funding option and takes into account the investment performance, expenses
and the deduction of certain expenses.
ANNUITY UNIT VALUE. The initial Annuity Unit Value applicable to each funding
option was established at $1.00. An annuity unit value as of any business day is
equal to (a) the value of the annuity unit on the immediately preceding business
day, multiplied by (b) the corresponding net investment factor for the valuation
period just ended, divided by (c) the assumed net investment factor for the
valuation period. (For example, the assumed net investment factor based on an
annual assumed net investment rate of 3.0% for a Valuation Period of one day is
1.000081 and, for a period of two days, is 1.000081 x 1.000081.)
PERFORMANCE INFORMATION
From time to time, the Company may advertise several types of
historical performance for the Funding Options of the Separate Account. The
Company may advertise the "standardized average annual total returns" of the
Funding Option, calculated in a manner prescribed by the Securities and Exchange
Commission, as well as the "nonstandardized total return," as described below:
STANDARDIZED METHOD. Quotations of average annual total returns are
computed according to a formula in which a hypothetical initial investment of
$1,000 is applied to the Funding Option, and then related to ending redeemable
values over one-, five-, and ten-year periods, or for a period covering the time
during which the Funding Option has been in existence, if less. If a Funding
Option has been in existence for less than one year, the "since inception" total
return performance quotations are year-to-date and are not average annual total
returns. These quotations reflect the deduction of all recurring charges during
each period (on a pro rata basis in the case of fractional periods). The
deduction for the annual administrative charge is converted to a percentage of
assets based on the actual fee collected (or anticipated to be collected, if a
new product), divided by the average net assets for contracts sold (or
anticipated to be sold) under the Prospectus to which this Statement of
Additional Information relates. Each quotation assumes a total redemption at the
end of each period with the assessment of any applicable withdrawal charge at
that time.
NONSTANDARDIZED METHOD. Nonstandardized "total returns" will be
calculated in a similar manner based on the performance of the Funding Options
over a period of time, usually for the calendar year-to-date, and for the past
one-, three-, five- and ten-year periods. Nonstandardized total returns will not
reflect the deduction of any applicable withdrawal charge or the annual contract
administrative charge, which, if reflected, would decrease the level of
performance shown. The withdrawal charge is not reflected because the Contract
is designed for long-term investment.
For Funding Options that were in existence before they became
available under the Separate Account, the nonstandardized average annual total
return quotations may be accompanied by returns showing the investment
performance that such Funding Options would have achieved (reduced by the
applicable charges) had they been held under the Contract for the period quoted.
The total return quotations are based upon historical earnings and are not
necessarily representative of future performance. An Owner's Contract Value at
redemption may be more or less than original cost.
3
<PAGE> 45
GENERAL. Within the guidelines prescribed by the SEC and the
National Association of Securities Dealers, Inc. ("NASD"), performance
information may be quoted numerically or may be presented in a table, graph or
other illustration. Advertisements may include data comparing performance to
well-known indices of market performance (including, but not limited to, the Dow
Jones Industrial Average, the Standard & Poor's (S&P) 500 Index and the S&P 400
Index, the Lehman Brothers Long T-Bond Index, the Russell 1000, 2000 and 3000
Indices, the Value Line Index, and the Morgan Stanley Capital International's
EAFE Index). Advertisements may also include published editorial comments and
performance rankings compiled by independent organizations (including, but not
limited to, Lipper Analytical Services, Inc. and Morningstar, Inc.) and
publications that monitor the performance of the Separate Account and the
Funding Options.
Average annual total returns for each of the Funding Options
computed according to the standardized and nonstandardized methods for the
period ending December 31, 1999 are set forth in the following tables.
4
<PAGE> 46
CITIELITE VARIABLE ANNUITY
SEC STANDARDIZED PERFORMANCE AS OF 12/31/99
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Inception Date 1 Year 5 Years 10 years or
- ------------------------------------------------------------------------------------------------------------------------------------
Since Inception
- ------------------------------------------------------------------------------------------------------------------------------------
STOCK ACCOUNTS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CitiSelect VIP Folio 200 Conservative 06/99 --- --- -6.86%
- -----------------------------------------------------------------------------------------------------------------------------------
CitiSelect VIP Folio 300 Balanced 06/99 --- --- -3.94%
- -----------------------------------------------------------------------------------------------------------------------------------
CitiSelect VIP Folio 400 Growth 06/99 --- --- -0.54%
- -----------------------------------------------------------------------------------------------------------------------------------
CitiSelect VIP Folio 500 Growth Plus 06/99 --- --- 2.54%
- -----------------------------------------------------------------------------------------------------------------------------------
Citifunds Small Cap Growth VIP Portfolio 06/99 --- --- 26.18%
- -----------------------------------------------------------------------------------------------------------------------------------
Concert Emerging Growth Portfolio --- --- --- ---
- -----------------------------------------------------------------------------------------------------------------------------------
Concert Mid Cap Portfolio --- --- --- ---
- -----------------------------------------------------------------------------------------------------------------------------------
Concert Growth Portfolio --- --- --- ---
- -----------------------------------------------------------------------------------------------------------------------------------
Concert Growth and Income Portfolio --- --- --- ---
- -----------------------------------------------------------------------------------------------------------------------------------
Concert Government Portfolio --- --- --- ---
- -----------------------------------------------------------------------------------------------------------------------------------
Large Cap Portfolio (Fidelity) 06/99 --- --- 18.61%
- -----------------------------------------------------------------------------------------------------------------------------------
AIM Capital Appreciation Portfolio 06/99 --- --- 31.12%
- -----------------------------------------------------------------------------------------------------------------------------------
MFS Mid Cap Growth Portfolio 06/99 --- --- 50.56%
- -----------------------------------------------------------------------------------------------------------------------------------
MFS Research Portfolio 06/99 --- --- 13.43%
- -----------------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Investors Fund 06/99 --- --- 2.40%
- -----------------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Capital Fund 06/99 --- --- 11.98%
- -----------------------------------------------------------------------------------------------------------------------------------
Franklin/Templeton Small Cap Investments Fund 06/99 --- --- 59.91%
- -----------------------------------------------------------------------------------------------------------------------------------
Templeton International Fund II 06/99 --- --- 13.03%
- -----------------------------------------------------------------------------------------------------------------------------------
BOND ACCOUNTS:
- -----------------------------------------------------------------------------------------------------------------------------------
Putnam Diversified Income Portfolio 06/99 --- --- -7.28%
- -----------------------------------------------------------------------------------------------------------------------------------
Travelers High Yield Bond Trust 06/99 --- --- -4.22%
- -----------------------------------------------------------------------------------------------------------------------------------
Salomon Brothers High Yield Fund 06/99 --- --- -3.22%
- -----------------------------------------------------------------------------------------------------------------------------------
Travelers Quality Bond Portfolio 06/99 --- --- -7.28%
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCED ACCOUNTS:
- -----------------------------------------------------------------------------------------------------------------------------------
MFS Total Return Portfolio 06/99 --- --- -5.88%
- -----------------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Total Return Fund 06/99 --- --- -7.56%
- -----------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET ACCOUNTS:
- -----------------------------------------------------------------------------------------------------------------------------------
Travelers Money Market Portfolio 06/99 --- --- -3.73%
- -----------------------------------------------------------------------------------------------------------------------------------
INDEX ACCOUNTS:
- ------------------------------------------------------------------------------------------------------------------------------------
Greenwich Street Series Equity Index Portfolio Class II 11/99 11.24%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The inception date used to calculate standardized performance is based on the
date that the investment option commenced operations.
5
<PAGE> 47
CITIELITE VARIABLE ANNUITY
NONSTANDARDIZED PERFORMANCE AS OF 12/31/99
<TABLE>
<CAPTION>
Cumulative Returns
----------------------------------------------------------------------------------------------------------------------------
YTD 1 YR 3 YR 5 YR 10 YR
----------------------------------------------------------------------------------------------------------------------------
STOCK ACCOUNTS
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CitiSelect VIP Folio 200 Conservative 0.15% 0.15% --- --- ---
---------------------------------------------------------------------------------------------------------------------------
CitiSelect VIP Folio 300 Balanced 3.29% 3.29% --- --- ---
---------------------------------------------------------------------------------------------------------------------------
CitiSelect VIP Folio 400 Growth 6.95% 6.95% --- --- ---
---------------------------------------------------------------------------------------------------------------------------
CitiSelect VIP Folio 500 Growth Plus 10.25% 10.25% --- --- ---
---------------------------------------------------------------------------------------------------------------------------
Citifunds Small Cap Growth VIP Portfolio 35.67% 35.67% --- --- ---
---------------------------------------------------------------------------------------------------------------------------
Concert Emerging Growth Portfolio --- --- --- --- ---
---------------------------------------------------------------------------------------------------------------------------
Concert Mid Cap Portfolio --- --- --- --- ---
---------------------------------------------------------------------------------------------------------------------------
Concert Growth Portfolio --- --- --- --- ---
---------------------------------------------------------------------------------------------------------------------------
Concert Growth and Income Portfolio --- --- --- --- ---
---------------------------------------------------------------------------------------------------------------------------
Concert Government Portfolio --- --- --- --- ---
---------------------------------------------------------------------------------------------------------------------------
Large Cap Portfolio (Fidelity) 27.53% 27.53% --- --- ---
---------------------------------------------------------------------------------------------------------------------------
AIM Capital Appreciation Portfolio 40.99% 40.99% 80.23% --- ---
---------------------------------------------------------------------------------------------------------------------------
MFS Mid Cap Growth Portfolio 61.90% 61.90% --- --- ---
---------------------------------------------------------------------------------------------------------------------------
MFS Research Portfolio 21.97% 21.97% --- --- ---
---------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Investors Fund 10.11% 10.11% --- --- ---
---------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Capital Fund 20.40% 20.40% --- --- ---
---------------------------------------------------------------------------------------------------------------------------
Franklin/Templeton Small Cap Investments Fund 71.94% 71.94% --- --- ---
---------------------------------------------------------------------------------------------------------------------------
Templeton International Fund II 21.53% 21.53% 46.51% 104.72% ---
---------------------------------------------------------------------------------------------------------------------------
BOND ACCOUNTS:
---------------------------------------------------------------------------------------------------------------------------
Putnam Diversified Income Portfolio -0.31% -0.31% 5.10% --- ---
----------------------------------------------------------------------------------------------------------------------------
Travelers High Yield Bond Trust 2.99% 2.99% 24.40% 62.16% 117.79%
----------------------------------------------------------------------------------------------------------------------------
Salomon Brothers High Yield Fund 4.06% 4.06% --- --- ---
----------------------------------------------------------------------------------------------------------------------------
Travelers Quality Bond Portfolio -0.30% -0.30% --- --- ---
----------------------------------------------------------------------------------------------------------------------------
BALANCED ACCOUNTS:
----------------------------------------------------------------------------------------------------------------------------
MFS Total Return Portfolio 1.21% 1.21% 33.22% --- ---
----------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Total Return Fund -0.61% -0.61% --- --- ---
----------------------------------------------------------------------------------------------------------------------------
MONEY MARKET ACCOUNTS:
----------------------------------------------------------------------------------------------------------------------------
Travelers Money Market Portfolio 3.52% 3.52% 11.10% 17.30% 36.70%
----------------------------------------------------------------------------------------------------------------------------
INDEX ACCOUNTS:
----------------------------------------------------------------------------------------------------------------------------
Greenwich Street Series Equity Index Portfolio Class II 18.91% 18.91% 98.43% 228.46% ---
----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Average Annual Returns
--------------------------------------------------------------------------------------------------------------------------
3 YR 5 YR 10 YR Inception
--------------------------------------------------------------------------------------------------------------------------
STOCK ACCOUNTS
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CitiSelect VIP Folio 200 Conservative --- --- --- 4.27% (2/97)
--------------------------------------------------------------------------------------------------------------------------
CitiSelect VIP Folio 300 Balanced --- --- --- 5.60% (2/97)
--------------------------------------------------------------------------------------------------------------------------
CitiSelect VIP Folio 400 Growth --- --- --- 5.79% (2/97)
--------------------------------------------------------------------------------------------------------------------------
CitiSelect VIP Folio 500 Growth Plus --- --- --- 6.76% (2/97)
--------------------------------------------------------------------------------------------------------------------------
Citifunds Small Cap Growth VIP Portfolio --- --- --- 13.04% (2/97)
--------------------------------------------------------------------------------------------------------------------------
Concert Emerging Growth Portfolio --- --- --- 23.90% (9/99)
--------------------------------------------------------------------------------------------------------------------------
Concert Mid Cap Portfolio --- --- --- 18.98% (9/99)
--------------------------------------------------------------------------------------------------------------------------
Concert Growth Portfolio --- --- --- 18.22% (9/99)
--------------------------------------------------------------------------------------------------------------------------
Concert Growth and Income Portfolio --- --- --- 8.19% (9/99)
--------------------------------------------------------------------------------------------------------------------------
Concert Government Portfolio --- --- --- -1.21% (9/99)
--------------------------------------------------------------------------------------------------------------------------
Large Cap Portfolio (Fidelity) --- --- --- 29.02% (8/96)
--------------------------------------------------------------------------------------------------------------------------
AIM Capital Appreciation Portfolio 21.70% --- --- 17.19% (10/95)
--------------------------------------------------------------------------------------------------------------------------
MFS Mid Cap Growth Portfolio --- --- --- 30.79% (3/98)
--------------------------------------------------------------------------------------------------------------------------
MFS Research Portfolio --- --- --- 15.13% (3/98)
--------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Investors Fund --- --- --- 10.39% (2/98)
--------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Capital Fund --- --- --- 19.88% (2/98)
--------------------------------------------------------------------------------------------------------------------------
Franklin/Templeton Small Cap Investments Fund --- --- 31.14% (5/98)
--------------------------------------------------------------------------------------------------------------------------
Templeton International Fund II 13.58% 15.41% 13.65% (5/92)
--------------------------------------------------------------------------------------------------------------------------
BOND ACCOUNTS:
--------------------------------------------------------------------------------------------------------------------------
Putnam Diversified Income Portfolio 1.67% 4.97% (6/94)
--------------------------------------------------------------------------------------------------------------------------
Travelers High Yield Bond Trust 7.55% 10.15% 8.09% 7.62% (5/83)
--------------------------------------------------------------------------------------------------------------------------
Salomon Brothers High Yield Fund 1.91% (5/98)
--------------------------------------------------------------------------------------------------------------------------
Travelers Quality Bond Portfolio 4.58% (8/96)
--------------------------------------------------------------------------------------------------------------------------
BALANCED ACCOUNTS:
--------------------------------------------------------------------------------------------------------------------------
MFS Total Return Portfolio 10.03% 11.46% (6/94)
--------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Total Return Fund 1.98% (2/98)
--------------------------------------------------------------------------------------------------------------------------
MONEY MARKET ACCOUNTS:
--------------------------------------------------------------------------------------------------------------------------
Travelers Money Market Portfolio 3.57% 3.24% 3.18% 3.62% (12/87)
--------------------------------------------------------------------------------------------------------------------------
INDEX ACCOUNTS:
--------------------------------------------------------------------------------------------------------------------------
Greenwich Street Series Equity Index Portfolio Class II 25.66% 26.85% --- 19.54% (11/91)
--------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Calendar Year Returns
-----------------------------------------------------------------------------------------------
1998 1997 1996
------------------------------------------------------------------------------------------------
STOCK ACCOUNTS
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CitiSelect VIP Folio 200 Conservative 5.83% --- ---
------------------------------------------------------------------------------------------------
CitiSelect VIP Folio 300 Balanced 5.60% --- ---
------------------------------------------------------------------------------------------------
CitiSelect VIP Folio 400 Growth 1.97% --- ---
------------------------------------------------------------------------------------------------
CitiSelect VIP Folio 500 Growth Plus 0.17% --- ---
------------------------------------------------------------------------------------------------
Citifunds Small Cap Growth VIP Portfolio -5.15% --- ---
------------------------------------------------------------------------------------------------
Concert Emerging Growth Portfolio --- --- ---
------------------------------------------------------------------------------------------------
Concert Mid Cap Portfolio --- --- ---
------------------------------------------------------------------------------------------------
Concert Growth Portfolio --- --- ---
------------------------------------------------------------------------------------------------
Concert Growth and Income Portfolio --- --- ---
------------------------------------------------------------------------------------------------
Concert Government Portfolio --- --- ---
------------------------------------------------------------------------------------------------
Large Cap Portfolio (Fidelity) 33.69% 21.74% ---
------------------------------------------------------------------------------------------------
AIM Capital Appreciation Portfolio 15.59% 10.60% 13.31%
------------------------------------------------------------------------------------------------
MFS Mid Cap Growth Portfolio --- --- ---
------------------------------------------------------------------------------------------------
MFS Research Portfolio --- --- ---
------------------------------------------------------------------------------------------------
Salomon Brothers Investors Fund --- --- ---
------------------------------------------------------------------------------------------------
Salomon Brothers Capital Fund --- --- ---
------------------------------------------------------------------------------------------------
Franklin/Templeton Small Cap Investments Fund --- --- ---
------------------------------------------------------------------------------------------------
Templeton International Fund II 7.48% 12.16% 22.37%
------------------------------------------------------------------------------------------------
BOND ACCOUNTS:
------------------------------------------------------------------------------------------------
Putnam Diversified Income Portfolio -0.73% 6.20% 6.72%
------------------------------------------------------------------------------------------------
Travelers High Yield Bond Trust 5.08% 14.95% 14.43%
------------------------------------------------------------------------------------------------
Salomon Brothers High Yield Fund --- --- ---
------------------------------------------------------------------------------------------------
Travelers Quality Bond Portfolio 6.98% 5.65% ---
------------------------------------------------------------------------------------------------
BALANCED ACCOUNTS:
------------------------------------------------------------------------------------------------
MFS Total Return Portfolio 10.11% 19.50% 12.90%
------------------------------------------------------------------------------------------------
Salomon Brothers Total Return Fund --- --- ---
------------------------------------------------------------------------------------------------
MONEY MARKET ACCOUNTS:
------------------------------------------------------------------------------------------------
Travelers Money Market Portfolio 3.59% 3.60% 2.72%
------------------------------------------------------------------------------------------------
INDEX ACCOUNTS:
------------------------------------------------------------------------------------------------
Greenwich Street Series Equity Index Portfolio Class II 26.81% 31.59% 21.78%
------------------------------------------------------------------------------------------------
</TABLE>
The inception date is the date that the underlying fund commenced operations.
6
<PAGE> 48
FEDERAL TAX CONSIDERATIONS
The following description of the federal income tax consequences
under this Contract is not exhaustive and is not intended to cover all
situations. Because of the complexity of the law and the fact that the tax
results will vary according to the factual status of the individual involved,
tax advice may be needed by a person contemplating purchase of an annuity
contract and by a contract owner or beneficiary who may make elections under a
contract. For further information, please consult a qualified tax adviser.
MANDATORY DISTRIBUTIONS FOR QUALIFIED PLANS
Federal tax law requires that minimum annual distributions begin by
April 1st of the calendar year following the calendar year in which a
participant under a qualified plan, a Section 403(b) annuity, or an IRA attains
age 70 1/2. Distributions must also begin or be continued according to required
patterns following the death of the contract owner or the annuitant.
NONQUALIFIED ANNUITY CONTRACTS
Individuals may purchase tax-deferred annuities without tax law
funding limits. The purchase payments receive no tax benefit, deduction or
deferral, but increases in the value of the contract are generally deferred from
tax until distribution. If a nonqualified annuity is owned by other than an
individual, however, (e.g., by a corporation), the increases in value
attributable to purchase payments made after February 28, 1986 are includable in
income annually. Furthermore, for contracts issued after April 22, 1987, all
deferred increases in value will be includable in the income of a contract owner
when the contract owner transfers the contract without adequate consideration.
If two or more annuity contracts are purchased from the same insurer
within the same calendar year, distributions from any of them will be taxed
based upon the amount of income in all of the same calendar year series of
annuities. This will generally have the effect of causing taxes to be paid
sooner on the deferred gain in the contracts.
Those receiving partial distributions made before the maturity date
will generally be taxed on an income-first basis to the extent of income in the
contract. If you are exchanging another annuity contract for this annuity,
certain pre-August 14, 1982 deposits into an annuity contract that have been
placed in the contract by means of a tax-deferred exchange under Section 1035 of
the Code may be withdrawn first without income tax liability. This information
on deposits must be provided to the Company by the other insurance company at
the time of the exchange. There is income in the contract generally to the
extent the cash value exceeds the investment in the contract. The investment in
the contract is equal to the amount of premiums paid less any amount received
previously which was excludable from gross income. Any direct or indirect
borrowing against the value of the contract or pledging of the contract as
security for a loan will be treated as a cash distribution under the tax law.
The federal tax law requires that nonqualified annuity contracts
meet minimum mandatory distribution requirements upon the death of the contract
owner, including the first of joint owners. Failure to meet these requirements
will cause the surviving joint owner, or the beneficiary, to lose the tax
benefits associated with annuity contracts, i.e., primarily the tax deferral
prior to distribution. The distribution required depends, among other things,
upon whether an annuity option is elected or whether the new contract owner is
the surviving spouse. Contracts will be administered by the
7
<PAGE> 49
Company in accordance with these rules and the Company will make a notification
when payments should be commenced.
INDIVIDUAL RETIREMENT ANNUITIES
To the extent of earned income for the year and not exceeding $2,000
per individual, an individual may make deductible contributions to an individual
retirement annuity (IRA). There are certain limits on the deductible amount
based on the adjusted gross income of the individual and spouse and based on
their participation in a retirement plan. If an individual is married and the
spouse does not have earned income, the individual may establish IRAs for the
individual and spouse. Purchase payments may then be made annually into IRAs for
both spouses in the maximum amount of 100% of earned income up to a combined
limit of $4,000.
The Code provides for the purchase of a Simplified Employee Pension
(SEP) plan. A SEP is funded through an IRA with an annual employer contribution
limit of 15% of compensation up to $30,000 for each participant.
SIMPLE PLAN IRA FORM
Effective January 1, 1997, employers may establish a savings
incentive match plan for employees ("SIMPLE plan") under which employees can
make elective salary reduction contributions to an IRA based on a percentage of
compensation of up to $6,000. (Alternatively, the employer can establish a
SIMPLE cash or deferred arrangement under IRS Section 401(k)). Under a SIMPLE
plan IRA, the employer must either make a matching contribution of 100% on the
first 3% or 7% contribution for all eligible employees. Early withdrawals are
subject to the 10% early withdrawal penalty generally applicable to IRAs, except
that an early withdrawal by an employee under a SIMPLE plan IRA, within the
first two years of participation, shall be subject to a 25% early withdrawal
tax.
ROTH IRAS
Effective January 1, 1998, Section 408A of the Code permits certain
individuals to contribute to a Roth IRA. Eligibility to make contributions is
based upon income, and the applicable limits vary based on marital status and/or
whether the contribution is a rollover contribution from another IRA or an
annual contribution. Contributions to a Roth IRA, which are subject to certain
limitations ($2,000 per year for annual contributions), are not deductible and
must be made in cash or as a rollover or transfer from another Roth IRA or other
IRA. A conversion of a "traditional" IRA to a Roth IRA may be subject to tax and
other special rules apply. You should consult a tax adviser before combining any
converted amounts with other Roth IRA contributions, including any other
conversion amounts from other tax years.
Qualified distributions from a Roth IRA are tax-free. A qualified
distribution requires that the Roth IRA has been held for at least 5 years, and
the distribution is made after age 59 1/2, on death or disability of the owner,
or for a limited amount ($10,000) for a qualified first time home purchase for
the owner or certain relatives. 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 five taxable years starting with the year in which the first contribution
is made to the Roth IRA.
8
<PAGE> 50
QUALIFIED PENSION AND PROFIT-SHARING PLANS
Under a qualified pension or profit-sharing plan, purchase payments
made by an employer are not currently taxable to the participant and increases
in the value of a contract are not subject to taxation until received by a
participant or beneficiary.
Distributions are taxable to the participant or beneficiary as
ordinary income in the year of receipt. Any distribution that is considered the
participant's "investment in the contract" is treated as a return of capital and
is not taxable. Certain lump-sum distributions may be eligible for special
forward averaging tax treatment for certain classes of individuals.
FEDERAL INCOME TAX WITHHOLDING
The portion of a distribution which is taxable income to the
recipient will be subject to federal income tax withholding as follows:
1. ELIGIBLE ROLLOVER DISTRIBUTION FROM SECTION 403(b) PLANS OR ARRANGEMENTS
OR FROM QUALIFIED PENSION AND PROFIT-SHARING PLANS
There is a mandatory 20% tax withholding for plan distributions that
are eligible for rollover to an IRA or to another retirement plan but that are
not directly rolled over. A distribution made directly to a participant or
beneficiary may avoid this result if:
(a) a periodic settlement distribution is elected based upon a life
or life expectancy calculation, or
(b) a term-for-years settlement distribution is elected for a period
of ten years or more, payable at least annually, or
(c) a minimum required distribution as defined under the tax law is
taken after the attainment of the age of 70 1/2 or as otherwise
required by law.
A distribution including a rollover that is not a direct rollover
will be subject to the 20% withholding, and a 10% additional tax penalty may
apply to any amount not added back in the rollover. The 20% withholding may be
recovered when the participant or beneficiary files a personal income tax return
for the year if a rollover was completed within 60 days of receipt of the funds,
except to the extent that the participant or spousal beneficiary is otherwise
underwithheld or short on estimated taxes for that year.
2. OTHER NON-PERIODIC DISTRIBUTIONS (FULL OR PARTIAL REDEMPTIONS)
To the extent not described as requiring 20% withholding in 1 above,
the portion of a non-periodic distribution which constitutes taxable income will
be subject to federal income tax withholding, if the aggregate distributions
exceed $200 for the year, unless the recipient elects not to have taxes
withheld. If no such election is made, 10% of the taxable distribution will be
withheld as federal income tax. Election forms will be provided at the time
distributions are requested. This form of withholding applies to all annuity
programs.
9
<PAGE> 51
3. PERIODIC DISTRIBUTIONS (DISTRIBUTIONS PAYABLE OVER A PERIOD GREATER
THAN ONE YEAR)
The portion of a periodic distribution which constitutes taxable
income will be subject to federal income tax withholding under the wage
withholding tables as if the recipient were married claiming three exemptions. A
recipient may elect not to have income taxes withheld or have income taxes
withheld at a different rate by providing a completed election form. Election
forms will be provided at the time distributions are requested. This form of
withholding applies to all annuity programs. As of January 1, 2000, a recipient
receiving periodic payments (e.g., monthly or annual payments under an annuity
option) which total $14,850 or less per year, will generally be exempt from
periodic withholding.
Recipients who elect not to have withholding made are liable for
payment of federal income tax on the taxable portion of the distribution. All
recipients may also be subject to penalties under the estimated tax payment
rules if withholding and estimated tax payments are not sufficient to cover tax
liabilities.
Recipients who do not provide a social security number or other
taxpayer identification number will not be permitted to elect out of
withholding. Additionally, U.S citizens residing outside of the country, or U.S.
legal residents temporarily residing outside the country, are not permitted to
elect out of withholding.
INDEPENDENT ACCOUNTANTS
The statutory financial statements of Citicorp Life Insurance Company as
of December 31, 1999 and 1998, and for each of the years in the three-year
period ended December 31, 1999, included herein, and the financial statements
of Citicorp Life Variable Annuity Separate Account as of and for the year ended
December 31, 1999, also included herein, have been included in reliance upon
the reports of KPMG LLP, independent certified public accountants, appearing
elsewhere herein, and upon the authority of said firm as experts in accounting
and auditing.
10
<PAGE> 52
CitiElite
STATEMENT OF ADDITIONAL INFORMATION
Individual Variable Annuity Contract
issued by
Citicorp Life Insurance Company
800 Silver Lake Blvd.
Dover, Delaware
L-20676S May 2000
11
<PAGE> 53
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Financial Statements and Schedule
December 31, 1999 and 1998
(With Independent Auditors' Report Thereon)
<PAGE> 54
[KPMG LOGO]
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Citicorp Life Insurance Company and Contractholders
of Citicorp Life Insurance Company
Variable Annuity Separate Account:
We have audited the accompanying statement of net assets, including the schedule
of investments, 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 VIP Portfolio, MFS Bond Series, MFS Emerging Growth Series, MFS Money
Market Series, MFS Research Series, MFS Total Return Series, MFS World
Government Series, Travelers High Yield Bond Trust Fund, Travelers Money Market
Portfolio, Salomon Brothers Variable Capital Fund, Salomon Brothers Variable
High Yield Bond Fund, Salomon Brothers Variable Investors Fund, Salomon Brothers
Variable Total Return Fund, Smith Barney AIM Capital Appreciation Fund, Smith
Barney MFS Total Return Portfolio, Smith Barney Putnam Diversified Income
Portfolio, Franklin Small Cap Investment Portfolio, Templeton International Fund
Class II, Smith Barney Large Cap Portfolio, Smith Barney MFS Research Portfolio,
Smith Barney MFS Mid Cap Growth Portfolio, Travelers Quality Bond Portfolio, CIS
Emerging Growth Portfolio, CIS Mid Cap Growth Portfolio, CIS Growth Portfolio,
CIS Growth & Income Portfolio, CIS Government Portfolio, and Equity Index
Portfolio Class II divisions of Citicorp Life Insurance Company Variable Annuity
Separate Account as of December 31, 1999, 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, 1999.
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, 1999, by correspondence with
the transfer agents of the underlying funds. 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 VIP Portfolio, MFS Bond Series, MFS
Emerging Growth Series, MFS Money Market Series, MFS
[KPMG LOGO]
<PAGE> 55
Research Series, MFS Total Return Series, MFS World Government Series, Travelers
High Yield Bond Trust Fund, Travelers Money Market Portfolio, Salomon Brothers
Variable Capital Fund, Salomon Brothers Variable High Yield Bond Fund, Salomon
Brothers Variable Investors Fund, Salomon Brothers Variable Total Return Fund,
Smith Barney AIM Capital Appreciation Fund, Smith Barney MFS Total Return
Portfolio, Smith Barney Putnam Diversified Income Portfolio, Franklin Small Cap
Investment Portfolio, Templeton International Fund Class II, Smith Barney Large
Cap Portfolio, Smith Barney MFS Research Portfolio, Smith Barney MFS Mid Cap
Growth Portfolio, Travelers Quality Bond Portfolio, CIS Emerging Growth
Portfolio, CIS Mid Cap Growth Portfolio, CIS Growth Portfolio, CIS Growth &
Income Portfolio, CIS Government Portfolio, and Equity Index Portfolio Class II
divisions of Citicorp Life Insurance Company Variable Annuity Separate Account
as of December 31, 1999, 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, 1999, in conformity with generally accepted accounting
principles.
/s/ KPMG LLP
March 31, 2000
2
<PAGE> 56
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Net Assets
December 31, 1999
<TABLE>
<CAPTION>
===============================================================================================================================
AIM V.I. AIM V.I. AIM AIM V.I.
Capital Government V.I. Growth and
Appreciation Series Growth Income
Fund Fund Fund Fund
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net assets:
Investments at market value $ 7,117,453 2,415,610 3,068,310 8,079,078
Payable to Citicorp Life Insurance Company 197 74 88 230
- -------------------------------------------------------------------------------------------------------------------------------
Total net assets $ 7,117,256 2,415,536 3,068,222 8,078,848
===============================================================================================================================
Total net assets represented by:
Variable annuity cash value invested in
separate account by contractholders-
Base 99 Basis Points 6,606,169 1,685,562 2,625,360 7,028,455
Variable annuity cash value invested in
separate account by contractholders-
Base 140 Basis Points 464,130 729,974 386,825 969,525
Variable annuity cash value invested in
separate account by contractholders-
Guaranteed Minimum Income Benefit
(GMIB) 46,957 - 56,037 80,868
Variable annuity cash value invested in
separate account by contractholders-
Citi-Elite - - - -
- -------------------------------------------------------------------------------------------------------------------------------
Total net assets represented $ 7,117,256 2,415,536 3,068,222 8,078,848
===============================================================================================================================
Total units held by contractholders -
Base-99 Basis Points 2,342,148 1,527,473 1,221,307 3,536,972
Total units held by contractholders -
Base-140 Basis Points 166,252 663,825 181,807 492,938
Total units held by contractholders - GMIB 16,835 - 26,360 41,149
Total units held by contractholders - Citi-Elite - - - -
Accumulated unit value - Base - 99 Basis Points 2.82 1.10 2.15 1.99
Accumulated unit value - Base - 140 Basis Points 2.79 1.10 2.13 1.97
Accumulated unit value - GMIB 2.79 - 2.13 1.97
Accumulated unit value - Citi-Elite - - - -
Cost of investments $ 4,857,267 2,528,108 2,380,575 5,884,097
===============================================================================================================================
Number of shares 200,041 227,245 95,141 255,748
===============================================================================================================================
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 57
<TABLE>
<CAPTION>
=============================================================================================================
AIM V.I. AIM CitiSelect CitiSelect CitiSelect CitiSelect Fidelity
International V.I. VIP VIP VIP VIP VIP Equity
Equity Value Folio Folio Folio Folio Income
Fund Fund 200 300 400 500 Portfolio
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
8,142,881 16,520,302 3,263,818 4,106,392 2,140,054 1,167,005 10,199,785
230 479 90 112 62 32 291
- -------------------------------------------------------------------------------------------------------------
8,142,651 16,519,823 3,263,728 4,106,280 2,139,992 1,166,973 10,199,494
=============================================================================================================
7,376,599 13,756,775 3,209,088 4,005,462 1,780,887 1,123,027 8,903,254
736,980 2,414,845 54,640 32,244 - - 1,223,857
29,072 348,203 - - 347,776 43,946 72,383
- - - 68,574 11,329 - -
- -------------------------------------------------------------------------------------------------------------
8,142,651 16,519,823 3,263,728 4,106,280 2,139,992 1,166,973 10,199,494
=============================================================================================================
4,015,919 6,871,254 2,822,733 3,396,277 1,502,485 922,549 6,296,999
405,344 1,218,630 48,240 27,441 - - 874,546
16,003 175,860 - - 296,684 36,504 51,766
- - - 65,498 10,560 - -
1.84 2.00 1.14 1.18 1.19 1.22 1.41
1.82 1.98 1.13 1.18 - - 1.40
1.82 1.98 - - 1.17 1.20 1.40
- - - 1.05 1.07 - -
5,399,802 12,709,085 3,289,674 3,987,610 2,060,944 1,206,555 9,753,153
=============================================================================================================
278,009 493,143 310,840 368,617 193,495 121,310 396,724
=============================================================================================================
</TABLE>
(Continued)
4
<PAGE> 58
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Net Assets
<TABLE>
<CAPTION>
=====================================================================================================================
Fidelity Fidelity Fidelity Fidelity
VIP VIP High VIP VIP II
Growth Income Overseas Contrafund
Portfolio Portfolio Portfolio Portfolio
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net assets:
Investments at market value $12,182,361 4,540,933 2,939,300 12,239,321
Payable to Citicorp Life Insurance Company 368 131 84 359
=====================================================================================================================
Total net assets $12,181,993 4,540,802 2,939,216 12,238,962
- --------------------------------------------------------------------------------------------------------------------
Total net assets represented by:
Variable annuity cash value invested in
separate account by contractholders -
Base 99 Basis Points 8,967,777 3,860,862 2,597,498 9,841,049
Variable annuity cash value invested in
separate account by contractholders -
Base 140 Basis Points 3,095,657 679,940 315,330 2,282,724
Variable annuity cash value invested in
separate account by contractholders -
Guaranteed Minimum Income Benefit
(GMIB) 118,559 - 26,388 115,189
Variable annuity cash value invested in
separate account by contractholders -
Citi-Elite - - - -
- --------------------------------------------------------------------------------------------------------------------
Total net assets represented $12,181,993 4,540,802 2,939,216 12,238,962
=====================================================================================================================
Total units held by contractholders -
Base - 99 Basis Points 2,651,923 3,348,327 1,518,098 5,145,207
Total units held by contractholders -
Base - 140 Basis Points 924,895 591,858 186,197 1,205,814
Total units held by contractholders - GMIB 35,451 - 15,594 60,896
Total units held by contractholders - Citi-Elite - - - -
Accumulated unit value - Base - 99 Basis Points $ 3.38 1.15 1.71 1.91
Accumulated unit value - Base - 140 Basis Points 3.35 1.15 1.69 1.89
Accumulated unit value - GMIB $ 3.34 - 1.69 1.89
Accumulated unit value - Citi-Elite - - - -
Cost of investments $ 9,304,444 4,646,887 2,200,300 9,565,199
=====================================================================================================================
Number of shares 221,780 401,497 107,117 419,874
=====================================================================================================================
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 59
<TABLE>
<CAPTION>
==========================================================================================================
Fidelity Citifunds MFS MFS MFS
VIP II Small Cap MFS Emerging Money MFS Total
Index 500 Growth VIP Bond Growth Market Research Return
Portfolio Portfolio Series Series Series Series Series
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
18,943,929 727,419 3,121,462 14,975,224 2,128,522 7,890,107 6,224,876
545 20 92 421 61 223 178
- ---------------------------------------------------------------------------------------------------------
18,943,384 727,399 3,121,370 14,974,803 2,128,461 7,889,884 6,224,698
==========================================================================================================
16,334,341 638,915 2,568,536 13,332,626 1,883,109 7,078,913 5,422,244
2,479,351 12,122 552,834 1,525,386 245,352 784,310 802,454
129,692 - - 116,791 - 26,661 -
- 76,362 - - - - -
- ---------------------------------------------------------------------------------------------------------
18,943,384 727,399 3,121,370 14,974,803 2,128,461 7,889,884 6,224,698
==========================================================================================================
8,726,888 445,031 2,313,508 4,922,989 1,600,253 4,117,175 4,106,432
1,338,324 8,530 499,789 569,055 209,272 458,863 609,971
70,063 - - 43,605 - 15,611 -
- 52,740 - - - - -
1.87 1.44 1.11 2.71 1.18 1.72 1.32
1.85 1.42 1.11 2.68 1.17 1.71 1.32
1.85 - - 2.68 - 1.71 -
- 1.45 - - - - -
15,057,599 608,861 3,196,332 7,742,432 2,128,522 5,972,792 6,117,723
==========================================================================================================
113,159 55,066 285,587 394,708 2,128,522 338,051 350,697
==========================================================================================================
</TABLE>
(Continued)
6
<PAGE> 60
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Net Assets
<TABLE>
<CAPTION>
==================================================================================================================
MFS Travelers Travelers Salomon Brothers
World High Yield Money Variable
Government Bond Trust Market Capital
Series Fund Portfolio Fund
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net assets:
Investments at market value $412,373 383,816 105,374 541,416
Payable to Citicorp Life Insurance Company 12 10 3 15
- ------------------------------------------------------------------------------------------------------------------
Total net assets $412,361 383,806 105,371 541,401
==================================================================================================================
Total net assets represented by:
Variable annuity cash value invested in
separate account by contractholders -
Base 99 Basis Points 363,010 - - -
Variable annuity cash value invested in
separate account by contractholders -
Base 140 Basis Points 49,351 - - -
Variable annuity cash value invested in
separate account by contractholders -
Guaranteed Minimum Income Benefit
(GMIB) - - - -
Variable annuity cash value invested in
separate account by contractholders -
Citi-Elite - 383,806 105,371 541,401
- ------------------------------------------------------------------------------------------------------------------
Total net assets represented $412,361 383,806 105,371 541,401
==================================================================================================================
Total units held by contractholders -
Base - 99 Basis Points 321,808 - - -
Total units held by contractholders -
Base - 140 Basis Points 43,862 - - -
Total units held by contractholders - GMIB - - - -
Total units held by contractholders - Citi-Elite - 387,819 103,494 487,552
Accumulated unit value - Base - 99 Basis Points $ 1.13 - - -
Accumulated unit value - Base - 140 Basis Points 1.13 - - -
Accumulated unit value - GMIB $ - - - -
Accumulated unit value - Citi-Elite - 0.99 1.02 1.11
Cost of investments $428,226 380,887 105,374 527,636
==================================================================================================================
Number of shares 41,114 40,530 105,374 39,606
==================================================================================================================
</TABLE>
See accompanying notes to financial statements.
7
<PAGE> 61
<TABLE>
<CAPTION>
=============================================================================================================================
Salomon Brothers Salomon Brothers Salomon Brothers Smith Barney Smith Barney Smith Barney Franklin
Variable High Variable Variable AIM Capital MFS Total Putnam Diversified Small Cap
Yield Bond Investors Total Return Appreciation Return Income Investment
Fund Fund Fund Portfolio Portfolio Portfolio Portfolio
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
249,645 893,081 663,943 1,330,570 868,454 321,673 568,570
7 24 18 36 24 9 15
- -----------------------------------------------------------------------------------------------------------------------------
249,638 893,057 663,925 1,330,534 868,430 321,664 568,555
=============================================================================================================================
- - - - - - -
- - - - - - -
- - - - - - -
249,638 893,057 663,925 1,330,534 868,430 321,664 568,555
- -----------------------------------------------------------------------------------------------------------------------------
249,638 893,057 663,925 1,330,534 868,430 321,664 568,555
=============================================================================================================================
- - - - - - -
- - - - - - -
- - - - - - -
243,342 880,931 680,016 954,495 880,104 319,191 353,953
- - - - - - -
- - - - - - -
- - - - - - -
1.03 1.01 0.98 1.39 0.99 1.01 1.61
264,612 878,778 688,489 1,077,069 879,486 316,598 443,434
=============================================================================================================================
27,076 73,024 64,902 64,279 53,509 28,094 36,123
=============================================================================================================================
</TABLE>
(Continued)
8
<PAGE> 62
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Net Assets
<TABLE>
<CAPTION>
===================================================================================================================
Templeton Smith Barney
International Smith Barney Smith Barney MFS Mid Cap
Fund Large Cap MFS Research Growth
Class II Portfolio Portfolio Portfolio
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net assets:
Investments at market value $ 604,065 2,584,710 972,126 1,141,384
Payable to Citicorp Life Insurance Company 16 71 26 30
- ------------------------------------------------------------------------------------------------------------------
Total net assets $ 604,049 2,584,639 972,100 1,141,354
===================================================================================================================
Total net assets represented by:
Variable annuity cash value invested in
separate account by contractholders -
Base 99 Basis Points - - - -
Variable annuity cash value invested in
separate account by contractholders -
Base 140 Basis Points - - - -
Variable annuity cash value invested in
separate account by contractholders -
Guaranteed Minimum Income Benefit
(GMIB) - - - -
Variable annuity cash value invested in
separate account by contractholders -
Citi-Elite 604,049 2,584,639 972,100 1,141,354
- ------------------------------------------------------------------------------------------------------------------
604,049 2,584,639 972,100 1,141,354
===================================================================================================================
Total units held by contractholders -
Base - 99 Basis Points - - - -
Total units held by contractholders -
Base - 140 Basis Points - - - -
Total units held by contractholders - GMIB - - - -
Total units held by contractholders - Citi-Elite 523,110 2,109,249 805,920 726,744
Accumulated unit value - Base - 99 Basis Points $ - - - -
Accumulated unit value - Base - 140 Basis Points - - - -
Accumulated unit value - GMIB $ - - - -
Accumulated unit value - Citi-Elite 1.15 1.23 1.21 1.57
Cost of investments $ 553,653 2,395,119 847,503 860,894
===================================================================================================================
Number of shares 27,296 122,440 74,435 69,470
===================================================================================================================
</TABLE>
See accompanying notes to financial statements.
9
<PAGE> 63
<TABLE>
<CAPTION>
=========================================================================================
Travelers CIS CIS CIS Equity
Quality Emerging Mid Cap CIS Growth & CIS Index
Bond Growth Growth Growth Income Government Portfolio
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Class II
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
326,031 6,954 73,193 221,789 148,534 22,366 327,783
9 - 2 6 4 1 9
- -----------------------------------------------------------------------------------------
326,022 6,954 73,191 221,783 148,530 22,365 327,774
=========================================================================================
- - - - - - -
- - - - - - -
- - - - - - -
326,022 6,954 73,191 221,783 148,530 22,365 327,774
- -----------------------------------------------------------------------------------------
326,022 6,954 73,191 221,783 148,530 22,365 327,774
=========================================================================================
- - - - - - -
- - - - - - -
- - - - - - -
323,930 5,595 61,532 186,983 136,745 22,640 91,908
- - - - - - -
- - - - - - -
- - - - - - -
1.01 1.24 1.19 1.19 1.09 0.99 3.57
324,718 5,774 64,975 197,997 136,845 23,126 313,514
=========================================================================================
30,132 561 6,135 18,701 13,702 2,292 9,153
=========================================================================================
</TABLE>
10
<PAGE> 64
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Operations
For the year ended December 31, 1999
<TABLE>
<CAPTION>
============================================================================================================================
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 $ 4,646 87,714 5,452 39,603 51,226
- ----------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk fees 46,317 23,864 18,428 53,444 48,408
Daily administrative charges 8,326 3,277 3,324 8,992 8,106
- ----------------------------------------------------------------------------------------------------------------------------
Total expenses 54,643 27,141 21,752 62,436 56,514
- ----------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (49,997) 60,573 (16,300) (22,833) (5,288)
- ----------------------------------------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investments:
Realized gain distributions 144,940 - 95,567 27,345 214,970
Realized gain (loss) on sale of
investments 355,939 36,947 90,815 254,595 96,603
Change in unrealized gain
(loss) on investments 1,734,569 (151,964) 503,034 1,602,447 2,498,323
- ----------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments 2,235,448 (115,017) 689,416 1,884,387 2,809,896
- ----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
resulting from operations $ 2,185,451 (54,444) 673,116 1,861,554 2,804,608
============================================================================================================================
</TABLE>
See accompanying notes to financial statements.
11
<PAGE> 65
<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>
43,691 6,764 18,969 8,455 2,505 122,134 9,038 293,499
- -------------------------------------------------------------------------------------------------------------------------
115,922 31,525 47,581 22,390 11,476 85,270 81,828 37,474
20,481 5,453 8,468 5,647 2,253 14,410 12,164 5,742
- -------------------------------------------------------------------------------------------------------------------------
136,403 36,978 56,049 28,037 13,729 99,680 93,992 43,216
- -------------------------------------------------------------------------------------------------------------------------
(92,712) (30,214) (37,080) (19,582) (11,224) 22,454 (84,954) 250,283
- -------------------------------------------------------------------------------------------------------------------------
228,475 14,874 - - - 269,982 568,244 10,972
674,091 (56,711) 45,844 (45,514) (155,117) 146,047 272,465 (134,118)
2,548,428 82,721 141,186 199,419 299,103 6,800 2,047,749 120,804
- -------------------------------------------------------------------------------------------------------------------------
3,450,994 40,884 187,030 153,905 143,986 422,829 2,888,458 (2,342)
- -------------------------------------------------------------------------------------------------------------------------
3,358,282 10,670 149,950 134,323 132,762 445,283 2,803,504 247,941
=========================================================================================================================
</TABLE>
(Continued)
12
<PAGE> 66
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Operations
<TABLE>
<CAPTION>
==================================================================================================================================
Fidelity Fidelity Fidelity Citifunds
VIP VIP II VIP II Small Cap MFS
Overseas Contrafund Index 500 Growth VIP Bond
Portfolio Portfolio Portfolio Portfolio Series
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment income - dividends $ 26,946 34,371 132,517 - 75,182
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk fees 18,494 89,439 143,995 4,469 28,590
Daily administrative charges 3,048 14,472 24,692 774 4,466
- ----------------------------------------------------------------------------------------------------------------------------------
Total expenses 21,542 103,911 168,687 5,243 33,056
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) 5,404 (69,540) (36,170) (5,243) 42,126
- ----------------------------------------------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investments:
Realized gain distributions 43,461 252,058 89,922 - 5,656
Realized gain (loss) on sale of
investments 49,655 440,774 644,495 (18,891) 25,327
Change in unrealized gain
(loss) on investments 711,981 1,474,930 2,215,976 213,222 (163,366)
- ----------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments 805,097 2,167,762 2,950,393 194,331 (132,383)
- ----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
resulting from operations $ 810,501 2,098,222 2,914,223 189,088 (90,257)
==================================================================================================================================
</TABLE>
See accompanying notes to financial statements.
13
<PAGE> 67
<TABLE>
<CAPTION>
=========================================================================================================
MFS MFS MFS MFS Travelers Travelers
Emerging Money MFS Total World High Yield Money
Growth Market Research Return Government Bond Trust Market
Series Series Series Series Series Fund Portfolio
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- 125,568 13,278 107,717 24,995 - 1,336
- ---------------------------------------------------------------------------------------------------------
84,623 27,604 60,373 50,364 3,913 1,591 675
14,596 5,322 9,961 8,010 582 111 44
- ---------------------------------------------------------------------------------------------------------
99,219 32,926 70,334 58,374 4,495 1,702 719
- ---------------------------------------------------------------------------------------------------------
(99,219) 92,642 (57,056) 49,343 20,500 (1,702) 617
- ---------------------------------------------------------------------------------------------------------
- - 70,171 199,752 - - -
764,677 6 473,775 185,268 3,067 (120) -
5,762,482 1 1,033,672 (309,408) (38,853) 2,929 -
- ---------------------------------------------------------------------------------------------------------
6,527,159 7 1,577,618 75,612 (35,786) 2,809 -
- ---------------------------------------------------------------------------------------------------------
6,427,940 92,649 1,520,562 124,955 (15,286) 1,107 617
=========================================================================================================
</TABLE>
(Continued)
14
<PAGE> 68
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Operations
<TABLE>
<CAPTION>
===============================================================================================================================
Salomon Brothers Salomon Brothers Salomon Brothers Salomon Brothers
Variable Variable High Variable Variable
Capital Yield Bond Investors Total Return
Fund Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment income - dividends $ 2,555 21,909 4,538 15,941
- ------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk fees 2,428 1,567 5,400 3,198
Daily administrative charges 158 104 391 347
- ------------------------------------------------------------------------------------------------------------------------------
Total expenses 2,586 1,671 5,791 3,545
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (31) 20,238 (1,253) 12,396
- ------------------------------------------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investments:
Realized gain distributions 14,813 - - -
Realized gain (loss) on sale of
investments 2,037 76 (646) (1,583)
Change in unrealized gain
(loss) on investments 13,780 (14,967) 14,303 (24,546)
- ------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments 30,630 (14,891) 13,657 (26,129)
- ------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
resulting from operations $ 30,599 5,347 12,404 (13,733)
===============================================================================================================================
</TABLE>
See accompanying notes to financial statements.
15
<PAGE> 69
<TABLE>
<CAPTION>
===================================================================================================================
Smith Barney Smith Barney Smith Barney Franklin Templeton
AIM Capital MFS Total Putnam Diversi- Small Cap International Smith Barney Smith Barney
Appreciation Return fied Income Investment Fund Large Cap MFS Research
Portfolio Portfolio Portfolio Portfolio Class II Portfolio Portfolio
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- 2,554 1,899 - - 113,483 -
- -------------------------------------------------------------------------------------------------------------------
4,716 6,580 1,949 921 2,788 10,584 4,991
408 446 135 164 184 831 345
- -------------------------------------------------------------------------------------------------------------------
5,124 7,026 2,084 1,085 2,972 11,415 5,336
- -------------------------------------------------------------------------------------------------------------------
(5,124) (4,472) (185) (1,085) (2,972) 102,068 (5,336)
- -------------------------------------------------------------------------------------------------------------------
- 4,409 - - - - -
1,094 (1,900) (1,885) 447 159 4,181 (99)
253,501 (11,032) 5,075 125,136 50,412 189,591 124,623
- -------------------------------------------------------------------------------------------------------------------
254,595 (8,523) 3,190 125,583 50,571 193,772 124,524
- -------------------------------------------------------------------------------------------------------------------
249,471 (12,995) 3,005 124,498 47,599 295,840 119,188
===================================================================================================================
</TABLE>
(Continued)
16
<PAGE> 70
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Operations
<TABLE>
<CAPTION>
==========================================================================================================================
Smith Barney Travelers CIS CIS
MFS Mid Cap Quality Emerging Mid Cap
Growth Bond Growth Growth
Portfolio Portfolio Portfolio Portfolio
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment income - dividends $ 158 - 28 103
- --------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk fees 7,440 1,816 41 793
Daily administrative charges 334 125 1 10
- --------------------------------------------------------------------------------------------------------------------------
Total expenses 7,774 1,941 42 803
- --------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (7,616) (1,941) (14) (700)
- --------------------------------------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investments:
Realized gain distributions - - - -
Realized gain (loss) on sale of
investments 856 116 - 17
Change in unrealized gain
(loss) on investments 280,490 1,313 1,180 8,218
- --------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments 281,346 1,429 1,180 8,235
- --------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
resulting from operations $ 273,730 (512) 1,166 7,535
==========================================================================================================================
</TABLE>
See accompanying notes to financial statements.
17
<PAGE> 71
<TABLE>
<CAPTION>
========================================================
CIS Equity
CIS Growth & CIS Index
Growth Income Government Portfolio
Portfolio Portfolio Portfolio Class II
- --------------------------------------------------------
<S> <C> <C> <C>
186 318 361 -
- --------------------------------------------------------
1,086 540 43 622
45 37 2 35
- --------------------------------------------------------
1,131 577 45 657
- --------------------------------------------------------
(945) (259) 316 (657)
- --------------------------------------------------------
- - - -
366 240 (1) 630
23,792 11,689 (760) 14,269
- --------------------------------------------------------
24,158 11,929 (761) 14,899
- --------------------------------------------------------
23,213 11,670 (445) 14,242
========================================================
</TABLE>
18
<PAGE> 72
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Changes in Net Assets
For the year ended December 31, 1999
<TABLE>
<CAPTION>
================================================================================================================================
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) $ (49,997) 60,573 (16,300) (22,833) (5,288)
Realized gain distributions 144,940 - 95,567 27,345 214,970
Realized gain (loss) on sale of
investments 355,939 36,947 90,815 254,595 96,603
Change in unrealized gain
(loss) on investments 1,734,569 (151,964) 503,034 1,602,447 2,498,323
- --------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets resulting
from operations 2,185,451 (54,444) 673,116 1,861,554 2,804,608
- --------------------------------------------------------------------------------------------------------------------------------
Capital transactions:
Contract deposits 666,110 863,085 413,427 837,789 598,893
Transfers between funds (19,503) (214,920) 488,403 1,449,465 73,206
Transfers to (from) Citicorp Life
Insurance Company 438,408 217,873 225,143 185,648 331,745
Annual administrative charges (653) (271) (335) (535) (603)
Death benefits - - - - -
Contract withdrawals (579,656) (198,388) (89,453) (225,058) (175,438)
- --------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets resulting
from capital transactions 504,706 667,379 1,037,186 2,247,309 827,803
- --------------------------------------------------------------------------------------------------------------------------------
Total increase in net assets 2,690,157 612,935 1,710,302 4,108,863 3,632,411
Net assets at beginning of period 4,427,099 1,802,601 1,357,920 3,969,985 4,510,240
- --------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 7,117,256 2,415,536 3,068,222 8,078,848 8,142,651
================================================================================================================================
</TABLE>
See accompanying notes to financial statements.
19
<PAGE> 73
<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>
(92,712) (30,214) (37,080) (19,582) (11,224) 22,454 (84,954) 250,283
228,475 14,874 - - - 269,982 568,244 10,972
674,091 (56,711) 45,844 (45,514) (155,117) 146,047 272,465 (134,118)
2,548,428 82,721 141,186 199,419 299,103 6,800 2,047,749 120,804
- -----------------------------------------------------------------------------------------------------------------------------------
3,358,282 10,670 149,950 134,323 132,762 445,283 2,803,504 247,941
- -----------------------------------------------------------------------------------------------------------------------------------
2,901,682 194,547 164,102 43,087 38,008 1,923,559 2,989,027 1,190,148
1,526,332 (994,216) (2,404,941) (1,244,725) (313,915) (81,884) 1,865,377 (54,439)
844,471 (19,248) (522,347) (128,395) (203,737) 517,765 658,286 249,002
(1,401) (645) (840) (771) (645) (1,058) (725) (290)
- - - - - - - -
(906,063) (308,702) (276,572) (272,784) (247,422) (506,552) (822,286) (230,960)
- -----------------------------------------------------------------------------------------------------------------------------------
4,365,021 (1,128,264) (3,040,599) (1,603,588) (727,711) 1,851,831 4,689,679 1,153,461
- -----------------------------------------------------------------------------------------------------------------------------------
7,723,303 (1,117,594) (2,890,649) (1,469,265) (594,949) 2,297,114 7,493,183 1,401,402
8,796,520 4,381,322 6,996,929 3,609,257 1,761,922 7,902,380 4,688,810 3,139,400
- -----------------------------------------------------------------------------------------------------------------------------------
16,519,823 3,263,728 4,106,280 2,139,992 1,166,973 10,199,494 12,181,993 4,540,802
===================================================================================================================================
</TABLE>
(Continued)
20
<PAGE> 74
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
================================================================================================================================
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) $ 5,404 (69,540) (36,170) (5,243) 42,126
Realized gain distributions 43,461 252,058 89,922 - 5,656
Realized gain (loss) on sale of
investments 49,655 440,774 644,495 (18,891) 25,327
Change in unrealized gain
(loss) on investments 711,981 1,474,930 2,215,976 213,222 (163,366)
- --------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets resulting
from operations 810,501 2,098,222 2,914,223 189,088 (90,257)
- --------------------------------------------------------------------------------------------------------------------------------
Capital transactions:
Contract deposits 316,397 2,491,363 2,801,609 19,463 844,014
Transfers between funds 98,387 809,928 (126,805) (42,539) (76,353)
Transfers to (from) Citicorp Life
Insurance Company 93,592 566,242 1,697,036 92,868 95,739
Annual administrative charges (150) (853) (1,956) (45) (265)
Death benefits - - - - -
Contract withdrawals (93,241) (454,168) (637,944) (30,382) (197,150)
- --------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets resulting
from capital transactions 414,985 3,412,513 3,731,940 39,556 665,986
- --------------------------------------------------------------------------------------------------------------------------------
Total increase in net assets 1,225,486 5,510,735 6,646,163 228,644 575,729
Net assets at beginning of period 1,713,730 6,728,227 12,297,221 498,755 2,545,641
- --------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 2,939,216 12,238,962 18,943,384 727,399 3,121,370
================================================================================================================================
</TABLE>
See accompanying notes to financial statements.
21
<PAGE> 75
<TABLE>
<CAPTION>
==================================================================================================================
MFS MFS MFS MFS Travelers Travelers
Emerging Money MFS Total World High Yield Money
Growth Market Research Return Government Bond Trust Market
Series Series Series Series Series Fund Portfolio
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(99,219) 92,642 (57,056) 49,343 20,500 (1,702) 617
- - 70,171 199,752 - - -
764,677 6 473,775 185,268 3,067 (120) -
5,762,482 1 1,033,672 (309,408) (38,853) 2,929 -
- ------------------------------------------------------------------------------------------------------------------
6,427,940 92,649 1,520,562 124,955 (15,286) 1,107 617
- ------------------------------------------------------------------------------------------------------------------
1,370,714 515,355 945,664 890,355 45,100 106,359 33,337
416,060 (1,236,952) (76,561) 241,760 (81,165) - -
235,864 29,774 120,149 304,039 54,789 279,186 73,903
(885) (334) (628) (569) (52) - -
- - - - - - -
(757,483) (431,212) (615,688) (460,216) (38,441) (2,846) (2,486)
- ------------------------------------------------------------------------------------------------------------------
1,264,270 (1,123,368) 372,936 975,368 (19,771) 382,699 104,754
- ------------------------------------------------------------------------------------------------------------------
7,692,210 (1,030,719) 1,893,498 1,100,323 (35,057) 383,806 105,371
7,282,593 3,159,180 5,996,386 5,124,375 447,418 - -
- ------------------------------------------------------------------------------------------------------------------
14,974,803 2,128,461 7,889,884 6,224,698 412,361 383,806 105,371
==================================================================================================================
</TABLE>
(Continued)
22
<PAGE> 76
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
===========================================================================================================================
Salomon Brothers Salomon Brothers Salomon Brothers Salomon Brothers
Variable Variable High Variable Variable
Capital Yield Bond Investors Total Return
Fund Fund Fund Fund
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
resulting from operations:
Net investment income (loss) $ (31) 20,238 (1,253) 12,396
Realized gain distributions 14,813 - - -
Realized gain (loss) on sale of
investments 2,037 76 (646) (1,583)
Change in unrealized gain
(loss) on investments 13,780 (14,967) 14,303 (24,546)
- ---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets resulting
from operations 30,599 5,347 12,404 (13,733)
- ---------------------------------------------------------------------------------------------------------------------------
Capital transactions:
Contract deposits 384,037 128,320 651,096 559,982
Transfers between funds (1) (1) 30,189 (40,131)
Transfers to (from) Citicorp Life
Insurance Company 127,797 121,070 200,022 160,012
Annual administrative charges
Death benefits
Contract withdrawals (1,031) (5,098) (654) (2,205)
- ---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets resulting
from capital transactions 510,802 244,291 880,653 677,658
- ---------------------------------------------------------------------------------------------------------------------------
Total increase in net assets 541,401 249,638 893,057 663,925
Net assets at beginning of period - - - -
- ---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 541,401 249,638 893,057 663,925
===========================================================================================================================
</TABLE>
See accompanying notes to financial statements.
23
<PAGE> 77
<TABLE>
<CAPTION>
==================================================================================================================================
Smith Barney Smith Barney Smith Barney Franklin Templeton
AIM Capital MFS Total Putnam Diversi- Small Cap International Smith Barney Smith Barney
Appreciation Return fied Income Investment Fund Large Cap MFS Research
Portfolio Portfolio Portfolio Portfolio Class II Portfolio Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(5,124) (4,472) (185) (1,085) (2,972) 102,068 (5,336)
- 4,409 - - - - -
1,094 (1,900) (1,885) 447 159 4,181 (99)
253,501 (11,032) 5,075 125,136 50,412 189,591 124,623
- ----------------------------------------------------------------------------------------------------------------------------------
249,471 (12,995) 3,005 124,498 47,599 295,840 119,188
- ----------------------------------------------------------------------------------------------------------------------------------
578,365 677,166 167,967 183,848 327,208 1,577,607 649,142
(1,475) 2 - 1,284 5,393 (448) 1
506,674 216,215 151,508 258,925 224,953 721,800 206,280
(2,501) (11,958) (816) - (1,104) (10,160) (2,511)
- ----------------------------------------------------------------------------------------------------------------------------------
1,081,063 881,425 318,659 444,057 556,450 2,288,799 852,912
- ----------------------------------------------------------------------------------------------------------------------------------
1,330,534 868,430 321,664 568,555 604,049 2,584,639 972,100
- - - - - - -
- ----------------------------------------------------------------------------------------------------------------------------------
1,330,534 868,430 321,664 568,555 604,049 2,584,639 972,100
==================================================================================================================================
</TABLE>
(Continued)
24
<PAGE> 78
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
===============================================================================================================================
Smith Barney Travelers CIS CIS
MFS Mid Cap Quality Emerging Mid Cap
Growth Bond Growth Growth
Portfolio Portfolio Portfolio Portfolio
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
resulting from operations:
Net investment income (loss) $ (7,616) (1,941) (14) (700)
Realized gain distributions - - - -
Realized gain (loss) on sale of
investments 856 116 - 17
Change in unrealized gain
(loss) on investments 280,490 1,313 1,180 8,218
- -------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets resulting
from operations 273,730 (512) 1,166 7,535
- -------------------------------------------------------------------------------------------------------------------------------
Capital transactions:
Contract deposits 572,539 151,857 4,955 40,770
Transfers between funds 5,184 3 -
Transfers to (from) Citicorp Life
Insurance Company 292,183 174,865 833 24,886
Annual administrative charges
Death benefits
Contract withdrawals (2,282) (191)
- -------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets resulting
from capital transactions 867,624 326,534 5,788 65,656
- -------------------------------------------------------------------------------------------------------------------------------
Total increase in net assets 1,141,354 326,022 6,954 73,191
Net assets at beginning of period - - -
- -------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 1,141,354 326,022 6,954 73,191
===============================================================================================================================
</TABLE>
See accompanying notes to financial statements.
25
<PAGE> 79
<TABLE>
<CAPTION>
===============================================================
CIS Equity
CIS Growth & CIS Index
Growth Income Government Portfolio
Portfolio Portfolio Portfolio Class II
- ---------------------------------------------------------------
<S> <C> <C> <C>
(945) (259) 316 (657)
- - - -
366 240 (1) 630
23,792 11,689 (760) 14,269
- ---------------------------------------------------------------
23,213 11,670 (445) 14,242
- ---------------------------------------------------------------
162,443 111,087 22,298 279,142
1 - (1)
36,829 26,282 512 34,640
(703) (509) - (249)
- ---------------------------------------------------------------
198,570 136,860 22,810 313,532
- ---------------------------------------------------------------
221,783 148,530 22,365 327,774
- - - -
- ---------------------------------------------------------------
221,783 148,530 22,365 327,774
===============================================================
</TABLE>
26
<PAGE> 80
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Changes in Net Assets
For the year ended December 31, 1998
<TABLE>
<CAPTION>
==================================================================================================================================
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 - 80,655 37,925 -
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 - - - - -
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.
27
<PAGE> 81
<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>
(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)
- - - - - (20,513) - -
(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)
28
<PAGE> 82
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
=================================================================================================================================
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 - - - - (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.
29
<PAGE> 83
<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>
(24,768) 160,060 31,846 29,314 (590)
8,937 - 7,851 19,885 -
117,283 - 63,673 53,013 4,219
1,202,739 - 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) - (24,708) - -
(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>
30
<PAGE> 84
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Notes to Financial Statements
December 31, 1999 and 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),
an indirect subsidiary of Citigroup. 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:
- Variable Annuity Portfolios:
- CitiSelect VIP Folio 200,
- CitiSelect VIP Folio 300,
- CitiSelect VIP Folio 400,
- CitiSelect VIP Folio 500, and
- CitiFunds Small Cap Growth V.I.P. Portfolio.*
- AIM Variable Insurance Funds, Inc.:
- 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, and
- AIM V.I. Value Fund.
- Fidelity Variable Insurance Products Funds:
- Fidelity VIP Equity Income Portfolio,
- Fidelity VIP Growth Portfolio,
- Fidelity VIP High Income Portfolio,
- Fidelity VIP Overseas Portfolio,
- Fidelity VIP II Contrafund Portfolio, and
- Fidelity VIP II Index 500 Portfolio.
- MFS Variable Insurance Trust:
- MFS Bond Series,
- MFS Emerging Growth Series,
- MFS Money Market Series,
- MFS Research Series,
- MFS Total Return Series, and
- MFS World Government Series.
- The Travelers Series Trust
- Large Cap Portfolio,
- MFS Mid Cap Stock Portfolio,
- MFS Research Portfolio, and
- Travelers Quality Bond Portfolio.
- The Travelers Money Market Portfolio.
- The Travelers High Yield Bond Trust.
- The Travelers Series Funds
- AIM Capital Appreciation Portfolio,
- MFS Total Return Portfolio, and
- Putnam Diversified Income Portfolio.
- Salomon Brothers Variable Series Funds, Inc.
- Capital Fund,
31
<PAGE> 85
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Notes to Financial Statements
December 31, 1999 and 1998
- Investors Fund,
- Total Return Fund, and
- High Yield Bond Fund.
- Templeton Variable Products Series Fund
- Franklin Small Cap Investments Fund, and
- Templeton International Fund.
- Concert Investments Series
- Select Emerging Growth Portfolio,
- Select Mid Cap Portfolio,
- Select Growth Portfolio,
- Select Growth and Income Portfolio, and
- Select Government Portfolio.
- Greenwich Street Series Fund
- Equity Index Portfolio Class II.
* Formerly known as Landmark Small Cap Equity VIP Fund through
February 28, 1998
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.
32
<PAGE> 86
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Notes to Financial Statements
December 31, 1999 and 1998
(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.
(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% ("Base - 140 Basis Points" and "Citi-Elite")
and 0.84% ("Base - 99 Basis Points" and "GMIB") of the net assets of the
contracts.
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.
33
<PAGE> 87
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Notes to Financial Statements
December 31, 1999 and 1998
(4) PURCHASES OF INVESTMENTS
For the year ended December 31, 1999, 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 $ 238,568 1,386,109
CitiSelect VIP Folio 300 249,986 3,333,886
CitiSelect VIP Folio 400 209,765 1,836,311
CitiSelect VIP Folio 500 42,782 783,295
CitiFunds Small Cap Growth V.I.P. Portfolio 129,248 95,372
AIM Variable Insurance Funds, Inc.:
AIM V.I. Capital Appreciation Fund 1,687,865 1,091,846
AIM V.I. Government Series Fund 1,370,425 644,005
AIM V.I. Growth Fund 1,457,026 341,667
AIM V.I. Growth and Income Fund 3,073,784 825,217
AIM V.I. International Equity Fund 1,463,936 430,262
AIM V.I. Value Fund 6,575,243 2,081,760
Fidelity Variable Insurance Products Funds:
Fidelity VIP Equity Income Portfolio 3,167,284 1,029,759
Fidelity VIP Growth Portfolio 6,233,581 1,064,387
Fidelity VIP High Income Portfolio 2,291,726 879,741
Fidelity VIP Overseas Portfolio 810,201 347,817
Fidelity VIP II Contrafund Portfolio 4,895,766 1,306,192
Fidelity VIP II Index 500 Portfolio 5,771,742 1,996,546
MFS Variable Insurance Trust:
MFS Bond Series 1,549,633 838,070
MFS Emerging Growth Series 2,834,621 1,675,565
MFS Money Market Series 4,726,399 5,760,012
MFS Research Series 1,952,202 1,571,164
MFS Total Return Series 2,245,575 1,025,547
MFS World Government Series 151,439 151,115
The Traveler Series Trust:
Large Cap Portfolio 2,466,538 75,600
MFS Mid Cap Stock Portfolio 915,513 55,474
MFS Research Portfolio 874,590 26,987
Travelers Quality Bond Portfolio 330,506 5,904
</TABLE>
34
<PAGE> 88
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Notes to Financial Statements
December 31, 1999 and 1998
<TABLE>
<CAPTION>
========================================================================================================================
Cost of Proceeds
Shares of purchases from sales
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
The Travelers Money Market Portfolio $ 108,379 3,006
The Travelers High Yield Bond Trust 395,751 14,745
The Travelers Series Fund:
AIM Capital Appreciation Portfolio 1,130,364 54,389
MFS Total Return Portfolio 903,538 22,151
Putnam Diversified Income Portfolio 351,686 33,204
Salomon Brothers Variable Series Funds, Inc.:
Capital Fund 601,666 76,067
Investors Fund 922,434 43,010
Total Return Fund 732,788 42,716
High Yield Bond Fund 284,282 19,746
Templeton Variable Products Series Fund:
Franklin Small Cap Investments Fund 444,710 1,722
Templeton International Fund 562,193 8,699
Concert Investment Series:
Select Emerging Growth Portfolio 5,775 1
Select Mid Cap Portfolio 65,045 88
Select Growth Portfolio 202,466 4,834
Select Growth and Income Portfolio 141,338 4,734
Select Government Portfolio 23,144 17
Greenwich Street Series Fund -
Equity Index Portfolio Class II 319,313 6,429
========================================================================================================================
</TABLE>
35
<PAGE> 89
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Notes to Financial Statements
December 31, 1999 and 1998
================================================================================
(5) NET INCREASE IN ACCUMULATION UNITS
For the years ended December 31, 1999 and 1998, transactions in
accumulation units of contractholders of the Account were as follows:
<TABLE>
<CAPTION>
===================================================================================================================================
1999
- -----------------------------------------------------------------------------------------------------------------------------------
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 - 99 BASIS POINTS
Units purchased 195,512 109,299 129,470 100,047 128,892
Units withdrawn and contract charges (243,450) (160,501) (52,207) (123,654) (123,997)
Units transferred between funds 194,669 (17,385) 359,234 973,669 269,010
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase 146,731 (68,587) 436,497 950,062 273,905
Units at beginning of period 2,195,417 1,596,060 784,810 2,586,910 3,742,014
- -----------------------------------------------------------------------------------------------------------------------------------
Units at end of period 2,342,148 1,527,473 1,221,307 3,536,972 4,015,919
===================================================================================================================================
BASE - 140 BASIS POINTS
Units purchased 147,504 662,872 146,112 446,776 357,849
Units withdrawn and contract charges (3,890) (19,158) (134) (9,219) (13,142)
Units transferred between funds 22,638 20,111 35,829 55,381 60,637
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase 166,252 663,825 181,807 492,938 405,344
Units at beginning of period - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Units at end of period 166,252 663,825 181,807 492,938 405,344
===================================================================================================================================
GMIB
Units purchased (10,799) - (35,013) (27,817) -
Units withdrawn and contract charges - - - - (2,734)
Units transferred between funds (24,589) - - - (8,823)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (35,388) - (35,013) (27,817) (11,557)
Units at beginning of period 52,223 - 61,373 68,966 27,560
- -----------------------------------------------------------------------------------------------------------------------------------
Units at end of period 16,835 - 26,360 41,149 16,003
===================================================================================================================================
CITI-ELITE
Units purchased - - - - -
Units withdrawn and contract charges - - - - -
Units transferred between funds - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase - - - - -
Units at beginning of period - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Units at end of period - - - - -
===================================================================================================================================
</TABLE>
36
<PAGE> 90
<TABLE>
<CAPTION>
===================================================================================================================================
===================================================================================================================================
1999
- -----------------------------------------------------------------------------------------------------------------------------------
AIM CitiSelect CitiSelect CitiSelect CitiSelect Fidelity Fidelity Fidelity Fidelity
V.I. VIP VIP VIP VIP VIP Equity VIP VIP High VIP
Value Folio Folio Folio Folio Income Growth Income Overseas
Fund 200 300 400 500 Portfolio Portfolio Portfolio Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <S> <S> <S> <S> <C> <C> <C> <C>
764,108 59,142 59,481 34,126 33,643 606,163 253,139 374,191 62,644
(449,656) (276,662) (243,923) (224,942) (213,946) (310,124) (259,184) (176,337) (63,232)
1,205,519 (835,322) (2,572,742) (1,208,423) (463,333) 214,184 836,477 234,952 118,148
- -----------------------------------------------------------------------------------------------------------------------------------
1,519,971 (1,052,842) (2,757,184) (1,399,239) (643,636) 510,223 830,432 432,806 117,560
5,351,283 3,875,575 6,153,461 2,901,724 1,566,185 5,786,776 1,821,491 2,915,521 1,400,538
- -----------------------------------------------------------------------------------------------------------------------------------
6,871,254 2,822,733 3,396,277 1,502,485 922,549 6,296,999 2,651,923 3,348,327 1,518,098
===================================================================================================================================
1,072,125 115,383 26,527 - - 821,596 889,575 683,537 186,384
(52,650) - (849) - - (45,310) (19,888) (26,957) (6,214)
199,155 (67,143) 1,763 - - 98,260 55,208 (64,722) 6,027
- -----------------------------------------------------------------------------------------------------------------------------------
1,218,630 48,240 27,441 - - 874,546 924,895 591,858 186,197
- - - - - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
1,218,630 48,240 27,441 - - 874,546 924,895 591,858 186,197
===================================================================================================================================
(90,202) - - - - (45,824) (30,063) - 1,653
(252) - - (24,111) - (268) (163) - -
(34,916) - - (49,788) - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
(125,370) - - (73,899) - (46,092) (30,226) - 1,653
301,230 - - 370,583 36,504 97,858 65,677 - 13,941
- -----------------------------------------------------------------------------------------------------------------------------------
175,860 - - 296,684 36,504 51,766 35,451 - 15,594
===================================================================================================================================
- - 65,596 5,166 - - - - -
- - (98) - - - - - -
- - - 5,394 - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
- - 65,498 10,560 - - - - -
- - - - - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
- - 65,498 10,560 - - - - -
===================================================================================================================================
</TABLE>
(Continued)
37
<PAGE> 91
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Notes to Financial Statements
December 31, 1999 and 1998
================================================================================
(5) NET INCREASE IN ACCUMULATION UNITS, CONTINUED
For the years ended December 31, 1999 and 1998, transactions in
accumulation units of contractholders of the Account were as follows:
<TABLE>
<CAPTION>
====================================================================================================================
1999
- --------------------------------------------------------------------------------------------------------------------
Fidelity Fidelity CitiFunds MFS
VIP II VIP II Small Cap MFS Emerging
Contrafund Index 500 Growth V.I.P. Bond Growth
Portfolio Portfolio Portfolio Series Series
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BASE - 99 BASIS POINTS
Units purchased 502,819 752,344 10,567 321,001 354,067
Units withdrawn and contract charges (234,979) (357,826) (28,539) (174,444) (381,679)
Units transferred between funds 698,060 712,184 (10,298) (67,778) 374,150
- --------------------------------------------------------------------------------------------------------------------
Net increase 965,900 1,106,702 (28,270) 78,779 346,538
Units at beginning of period 4,179,307 7,620,186 473,301 2,234,729 4,576,451
- --------------------------------------------------------------------------------------------------------------------
Units at end of period 5,145,207 8,726,888 445,031 2,313,508 4,922,989
====================================================================================================================
BASE - 140 BASIS POINTS
Units purchased 1,096,826 1,072,132 8,530 420,972 539,919
Units withdrawn and contract charges (38,117) (17,993) - (653) (10,540)
Units transferred between funds 147,105 284,185 - 79,470 39,676
- --------------------------------------------------------------------------------------------------------------------
Net increase 1,205,814 1,338,324 8,530 499,789 569,055
Units at beginning of period - - - - -
- --------------------------------------------------------------------------------------------------------------------
Units at end of period 1,205,814 1,338,324 8,530 499,789 569,055
====================================================================================================================
GMIB
Units purchased (72,896) (117,900) - - (54,577)
Units withdrawn and contract charges (250) (245) - - -
Units transferred between funds (15,098) (32,039) - - (31,003)
- --------------------------------------------------------------------------------------------------------------------
Net increase (88,244) (150,184) - - (85,580)
Units at beginning of period 149,140 220,247 - - 129,185
- --------------------------------------------------------------------------------------------------------------------
Units at end of period 60,896 70,063 - - 43,605
====================================================================================================================
CITI-ELITE
Units purchased - - 52,740 - -
Units withdrawn and contract charges - - - - -
Units transferred between funds - - - - -
- --------------------------------------------------------------------------------------------------------------------
Net increase - - 52,740 - -
Units at beginning of period - - - - -
- --------------------------------------------------------------------------------------------------------------------
Units at end of period - - 52,740 - -
====================================================================================================================
</TABLE>
38
<PAGE> 92
<TABLE>
<CAPTION>
=============================================================================================================
=============================================================================================================
1999
- -------------------------------------------------------------------------------------------------------------
MFS MFS MFS Travelers Travelers Salomon Brothers
Money MFS Total World High Yield Money Variable
Market Research Return Government Bond Trust Market Capital
Series Series Series Series Fund Portfolio Fund
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
50,271 204,817 225,351 2,247 - - -
(372,061) (383,487) (333,769) (33,923) - - -
(858,993) 31,160 253,926 (29,338) - - -
- -------------------------------------------------------------------------------------------------------------
(1,180,783) (147,510) 145,508 (61,014) - - -
2,781,036 4,264,685 3,960,924 382,822 - - -
- -------------------------------------------------------------------------------------------------------------
1,600,253 4,117,175 4,106,432 321,808 - - -
=============================================================================================================
399,235 459,030 455,848 36,697 - - -
(14,135) (11,290) - - - -
(189,963) 13,968 165,413 7,165 - - -
- -------------------------------------------------------------------------------------------------------------
209,272 458,863 609,971 43,862 - - -
- - - - - - -
- -------------------------------------------------------------------------------------------------------------
209,272 458,863 609,971 43,862 - - -
=============================================================================================================
- - - - - - -
- (2,508) - - - - -
- - - - - - -
- -------------------------------------------------------------------------------------------------------------
- (2,508) - - - - -
- 18,119 - - - - -
- -------------------------------------------------------------------------------------------------------------
- 15,611 - - - - -
=============================================================================================================
- - - - 110,629 33,266 364,485
- - - - (2,890) (2,462) (988)
- - - - 280,080 72,690 124,055
- -------------------------------------------------------------------------------------------------------------
- - - - 387,819 103,494 487,552
- - - - - - -
- -------------------------------------------------------------------------------------------------------------
- - - - 387,819 103,494 487,552
=============================================================================================================
</TABLE>
(Continued)
39
<PAGE> 93
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Notes to Financial Statements
December 31, 1999 and 1998
================================================================================
(5) NET INCREASE IN ACCUMULATION UNITS, CONTINUED
For the years ended December 31, 1999 and 1998, transactions in
accumulation units of contractholders of the Account were as follows:
<TABLE>
<CAPTION>
===================================================================================================================
1999
- -------------------------------------------------------------------------------------------------------------------
Salomon Brothers Salomon Brothers Salomon Brothers Smith Barney
Variable High Variable Variable AIM Capital
Yield Bond Investors Total Return Appreciation
Fund Fund Fund Portfolio
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BASE - 99 BASIS POINTS
Units purchased - - - -
Units withdrawn and contract charges - - - -
Units transferred between funds - - - -
- -------------------------------------------------------------------------------------------------------------------
Net increase - - - -
Units at beginning of period - - - -
- -------------------------------------------------------------------------------------------------------------------
Units at end of period - - - -
===================================================================================================================
BASE - 140 BASIS POINTS
Units purchased - - - -
Units withdrawn and contract charges - - - -
Units transferred between funds - - - -
- -------------------------------------------------------------------------------------------------------------------
Net increase - - - -
Units at beginning of period - - - -
- -------------------------------------------------------------------------------------------------------------------
Units at end of period - - - -
===================================================================================================================
GMIB
Units purchased - - - -
Units withdrawn and contract charges - - - -
Units transferred between funds - - - -
- -------------------------------------------------------------------------------------------------------------------
Net increase - - - -
Units at beginning of period - - - -
- -------------------------------------------------------------------------------------------------------------------
Units at end of period - - - -
===================================================================================================================
CITI-ELITE
Units purchased 128,192 649,723 561,624 508,104
Units withdrawn and contract charges (5,049) (634) (2,268) (2,119)
Units transferred between funds 120,199 231,842 120,660 448,510
- -------------------------------------------------------------------------------------------------------------------
Net increase 243,342 880,931 680,016 954,495
Units at beginning of period
- -------------------------------------------------------------------------------------------------------------------
Units at end of period 243,342 880,931 680,016 954,495
===================================================================================================================
</TABLE>
40
<PAGE> 94
<TABLE>
<CAPTION>
==================================================================================================================================
==================================================================================================================================
1999
- ----------------------------------------------------------------------------------------------------------------------------------
Smith Barney Smith Barney Franklin Templeton Smith Barney
MFS Total Putnam Diversi- Small Cap International Smith Barney Smith Barney MFS Mid Cap
Return fied Income Investment Fund Large Cap MFS Research Growth
Portfolio Portfolio Portfolio Class II Portfolio Portfolio Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- - - - - - -
- - - - - - -
- - - - - - -
- ----------------------------------------------------------------------------------------------------------------------------------
- - - - - - -
- - - - - - -
- ----------------------------------------------------------------------------------------------------------------------------------
- - - - - - -
==================================================================================================================================
- - - - - - -
- - - - - - -
- - - - - - -
- ----------------------------------------------------------------------------------------------------------------------------------
- - - - - - -
- - - - - - -
- ----------------------------------------------------------------------------------------------------------------------------------
- - - - - - -
==================================================================================================================================
- - - - - - -
- - - - - - -
- - - - - - -
- ----------------------------------------------------------------------------------------------------------------------------------
- - - - - - -
- - - - - - -
- ----------------------------------------------------------------------------------------------------------------------------------
- - - - - - -
==================================================================================================================================
679,233 168,585 141,659 307,398 1,471,270 616,943 482,936
(12,115) (811) (1,053) (9,162) (2,364) (1,980)
212,986 151,417 212,294 216,765 647,141 191,341 245,788
- ----------------------------------------------------------------------------------------------------------------------------------
880,104 319,191 353,953 523,110 2,109,249 805,920 726,744
- ----------------------------------------------------------------------------------------------------------------------------------
880,104 319,191 353,953 523,110 2,109,249 805,920 726,744
==================================================================================================================================
</TABLE>
(Continued)
41
<PAGE> 95
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Notes to Financial Statements
December 31, 1999 and 1998
================================================================================
(5) NET INCREASE IN ACCUMULATION UNITS, CONTINUED
For the years ended December 31, 1999 and 1998, transactions in
accumulation units of contractholders of the Account were as follows:
<TABLE>
<CAPTION>
===================================================================================================================================
1999
- -----------------------------------------------------------------------------------------------------------------------------------
Travelers CIS CIS CIS
Quality Emerging Mid Cap CIS Growth &
Bond Growth Growth Growth Income
Portfolio Portfolio Portfolio Portfolio Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BASE - 99 BASIS POINTS
Units purchased - - - - -
Units withdrawn and contract charges - - - - -
Units transferred between funds - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase - - - - -
Units at beginning of period - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Units at end of period - - - - -
===================================================================================================================================
BASE - 140 BASIS POINTS
Units purchased - - - - -
Units withdrawn and contract charges - - - - -
Units transferred between funds - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase - - - - -
Units at beginning of period - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Units at end of period - - - - -
===================================================================================================================================
GMIB
Units purchased - - - - -
Units withdrawn and contract charges - - - - -
Units transferred between funds - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase - - - - -
Units at beginning of period - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Units at end of period - - - - -
===================================================================================================================================
CITI-ELITE
Units purchased 151,072 4,868 38,350 155,207 112,433
Units withdrawn and contract charges (189) (646) (493)
Units transferred between funds 173,047 727 23,182 32,422 24,805
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase 323,930 5,595 61,532 186,983 136,745
Units at beginning of period
- -----------------------------------------------------------------------------------------------------------------------------------
Units at end of period 323,930 5,595 61,532 186,983 136,745
===================================================================================================================================
</TABLE>
42
<PAGE> 96
<TABLE>
<CAPTION>
=====================================
=====================================
1999
- -------------------------------------
Equity
CIS Index
Government Portfolio
Portfolio Class II
- -------------------------------------
<S> <C>
- -
- -
- -
- -------------------------------------
- -
- -
- -------------------------------------
- -
=====================================
- -
- -
- -
- -------------------------------------
- -
- -
- -------------------------------------
- -
=====================================
- -
- -
- -
- -------------------------------------
- -
- -
- -------------------------------------
- -
=====================================
22,105 81,983
- (73)
535 9,998
- -------------------------------------
22,640 91,908
- -------------------------------------
22,640 91,908
=====================================
</TABLE>
43
<PAGE> 97
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Notes to Financial Statements
December 31, 1999 and 1998
================================================================================
(5) NET INCREASE IN ACCUMULATION UNITS
For the years ended December 31, 1999 and 1998, transactions in
accumulation units of contractholders of the Account were as follows:
<TABLE>
<CAPTION>
==============================================================================================================================
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 - 61,373 68,966 18,737
Units withdrawn and
contract charges - - - - -
Units transferred
between funds 23,712 - - - 8,823
- ------------------------------------------------------------------------------------------------------------------------------
Net increase 52,223 - 61,373 68,966 27,560
Units at beginning
of period - - - - -
- ------------------------------------------------------------------------------------------------------------------------------
Units at end of period 52,223 - 61,373 68,966 27,560
==============================================================================================================================
</TABLE>
44
<PAGE> 98
<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>
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 - - 89,472 36,504 97,858 65,677 -
(76,241) - - - - - - -
34,916 - - - - - - -
- ----------------------------------------------------------------------------------------------------------------------------------
301,230 - - 89,472 36,504 97,858 65,677 -
- - - 281,111 - - - -
- ----------------------------------------------------------------------------------------------------------------------------------
301,230 - - 370,583 36,504 97,858 65,677 -
==================================================================================================================================
</TABLE>
(Continued)
45
<PAGE> 99
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Notes to Financial Statements
December 31, 1999 and 1998
================================================================================
(5) NET INCREASE IN ACCUMULATION UNITS, CONTINUED
For the years ended December 31, 1999 and 1998, transactions in
accumulation units of contractholders of the Account were as follows:
<TABLE>
<CAPTION>
==============================================================================================================================
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 - -
Units withdrawn and
contract charges - - - - -
Units transferred
between funds - 15,098 32,039 - -
- ------------------------------------------------------------------------------------------------------------------------------
Net increase 13,941 149,140 220,247 - -
Units at beginning
of period - - - - -
- ------------------------------------------------------------------------------------------------------------------------------
Units at end of period 13,941 149,140 220,247 - -
==============================================================================================================================
</TABLE>
46
<PAGE> 100
<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>
1,802,586 2,117,554 1,562,199 1,775,407 133,458
(47,912) (44,557) (72,671) (51,540) (20,339)
499,296 (2,654,111) 187,328 644,715 (34,239)
- -------------------------------------------------------------------------------------------
2,253,970 (581,114) 1,676,856 2,368,582 78,880
2,322,481 3,362,150 2,569,829 1,592,342 303,642
- -------------------------------------------------------------------------------------------
4,576,451 2,781,036 4,246,685 3,960,924 382,522
===========================================================================================
98,182 - 18,119 - -
- - - - -
31,003 - - - -
- -------------------------------------------------------------------------------------------
129,185 - 18,119 - -
- - - - -
- -------------------------------------------------------------------------------------------
129,185 - 18,119 - -
===========================================================================================
</TABLE>
47
<PAGE> 101
Schedule
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Schedule of Investments
December 31, 1999
<TABLE>
<CAPTION>
===============================================================================================================
Number Market
of shares value Cost
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Variable Annuity Portfolios:
CitiSelect VIP Folio 200 310,840 $ 3,263,818 3,289,674
CitiSelect VIP Folio 300 368,617 4,106,391 3,987,610
CitiSelect VIP Folio 400 193,495 2,140,054 2,060,944
CitiSelect VIP Folio 500 121,310 1,167,005 1,206,555
CitiFunds Small Cap Growth V.I.P. Portfolio 55,066 727,420 608,861
AIM Variable Insurance Funds, Inc.:
AIM V.I. Capital Appreciation Fund 200,041 7,117,453 4,857,267
AIM V.I. Government Series Fund 227,245 2,415,610 2,528,108
AIM V.I. Growth Fund 95,141 3,068,310 2,380,575
AIM V.I. Growth and Income Fund 255,748 8,079,078 5,884,097
AIM V.I. International Equity Fund 278,009 8,142,881 5,399,802
AIM V.I. Value Fund 493,143 16,520,302 12,709,085
Fidelity Variable Insurance Products Funds:
Fidelity VIP Equity Income Portfolio 396,724 10,199,785 9,753,153
Fidelity VIP Growth Portfolio 221,780 12,182,361 9,304,444
Fidelity VIP High Income Portfolio 401,497 4,540,933 4,646,887
Fidelity VIP Overseas Portfolio 107,117 2,939,300 2,200,300
Fidelity VIP II Contrafund Portfolio 419,874 12,239,321 9,565,199
Fidelity VIP II Index 500 Portfolio 113,159 18,943,929 15,057,599
MFS Variable Insurance Trust:
MFS Bond Series 285,587 3,121,462 3,196,332
MFS Emerging Growth Series 394,708 14,975,224 7,742,432
MFS Money Market Series 2,128,522 2,128,522 2,128,522
MFS Research Series 338,051 7,890,107 5,972,792
MFS Total Return Series 350,697 6,224,876 6,117,723
MFS World Government Series 41,114 412,373 428,226
</TABLE>
48
<PAGE> 102
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Schedule of Investments
December 31, 1999
<TABLE>
<CAPTION>
====================================================================================================
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The Traveler Series Trust:
Large Cap Portfolio 122,440 2,584,710 2,395,119
MFS Mid Cap Stock Portfolio 69,470 1,141,384 860,894
MFS Research Portfolio 74,435 972,126 847,503
Travelers Quality Bond Portfolio 30,132 326,031 324,718
The Travelers Money Market Portfolio 105,374 105,374 105,374
The Travelers High Yield Bond Trust 40,530 383,816 380,887
The Travelers Series Fund:
AIM Capital Appreciation Portfolio 64,279 1,330,570 1,077,069
MFS Total Return Portfolio 53,509 868,454 879,486
Putnam Diversified Income Portfolio 28,094 321,673 316,598
Salomon Brothers Variable Series Funds, Inc.:
Capital Fund 39,606 541,416 527,636
Investors Fund 73,024 893,081 878,778
Total Return Fund 64,902 663,943 688,489
High Yield Bond Fund 27,076 249,645 264,612
Templeton Variable Products Series Fund:
Franklin Small Cap Investments Fund 36,123 568,570 443,434
Templeton International Fund 27,296 604,065 553,653
Concert Investment Series:
Select Emerging Growth Portfolio 561 6,954 5,774
Select Mid Cap Portfolio 6,135 73,193 64,975
Select Growth Portfolio 18,701 221,789 197,997
Select Growth and Income Portfolio 13,702 148,534 136,845
Select Government Portfolio 2,292 22,366 23,126
Greenwich Street Series Fund -
Equity Index Portfolio Class II 9,153 327,783 313,514
====================================================================================================
</TABLE>
49
<PAGE> 103
CITICORP LIFE INSURANCE COMPANY
Statutory Financial Statements and Schedule
December 31, 1999, 1998, and 1997
(With Independent Auditors' Report Thereon)
<PAGE> 104
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, 1999 and 1998, 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, 1999. 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, 1999 and 1998, or the
results of its operations or its cash flows for each of the years in the
three-year period ended December 31, 1999.
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, 1999 and 1998, and
the results of its operations and its cash flows for each of the years in the
three-year period ended December 31, 1999, on the basis of accounting as
described in note 1.
<PAGE> 105
Our audit was 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 of Selected Financial Data From Annual Statement 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.
/s/ KPMG LLP
March 30, 2000
2
<PAGE> 106
CITICORP LIFE INSURANCE COMPANY
Statutory Statements of Admitted Assets,
Liabilities, and Capital and Surplus
December 31, 1999 and 1998
<TABLE>
<CAPTION>
ASSETS 1999 1998
---------------- ----------------
<S> <C> <C>
Cash and investments - other than investments in insurance affiliates:
Bonds $ 516,705,036 488,989,160
Mortgage loans 674,530 1,091,992
Cash on hand and on deposit 2,527,511 1,264,635
Short-term investments 31,458,338 29,626,553
Real estate 25,049,630 25,552,002
Options 4,813,249 3,167,879
Investments in insurance affiliates 126,253,647 88,677,743
---------------- ----------------
Total cash and investments 707,481,941 638,369,964
Due from reinsurers 17,055,186 17,041,986
Accrued investment income 6,108,687 5,767,513
Transfers from separate accounts due 4,474,573 3,138,495
Other assets 120,000 49,471
---------------- ----------------
Total admitted assets excluding separate account assets 735,240,387 664,367,429
Separate account assets 164,901,993 103,230,073
---------------- ----------------
Total admitted assets $ 900,142,380 767,597,502
================ ================
LIABILITIES AND CAPITAL AND SURPLUS
Liabilities:
Future policy benefit reserves:
Life insurance $ 1,869,722 1,939,733
Accident and health insurance 189,696 249,093
Policyholder account balances - annuities 132,314,117 124,370,787
Policy and contract claim reserves:
Life insurance 3,938,973 3,901,334
Accident and health insurance 11,424,666 11,365,298
General expenses due or accrued 257,748 185,000
Federal income taxes due to parent 15,781,632 34,843,281
Asset valuation reserve 22,320,483 13,858,001
Interest maintenance reserve 5,471,716 8,486,675
Payable for securities 15,354,586 --
Other liabilities 700,807 549,059
---------------- ----------------
Total liabilities excluding separate account liabilities 209,624,146 199,748,261
Separate account liabilities 164,901,993 103,230,073
---------------- ----------------
Total liabilities 374,526,139 302,978,334
---------------- ----------------
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, 1999 and 1998, 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, 1999 and 1998 705,000 705,000
Surplus:
Paid-in 142,694,878 142,694,878
Unassigned 379,716,363 318,719,290
---------------- ----------------
Total capital and surplus 525,616,241 464,619,168
---------------- ----------------
Total liabilities and capital and surplus $ 900,142,380 767,597,502
================ ================
</TABLE>
See accompanying notes to statutory financial statements.
3
<PAGE> 107
CITICORP LIFE INSURANCE COMPANY
Statutory Statements of Operations
Years ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
1999 1998 1997
--------------- --------------- ----------------
<S> <C> <C> <C>
Revenues:
Premiums and annuity considerations:
Annuities $ 54,065,168 83,868,640 72,200,297
Life insurance 19,023,778 22,694,941 26,439,369
Accident and health insurance 34,717,062 39,655,690 47,455,840
--------------- --------------- ----------------
Total premiums and annuity considerations 107,806,008 146,219,271 146,095,506
Net investment income (including dividends from
subsidiaries of $0.0, $20.0, and $20.0 million in
1999, 1998, and 1997, respectively) 35,788,210 48,290,028 47,212,270
Amortization of interest maintenance reserve 640,027 824,528 964,031
Commissions and expense allowances on
reinsurance ceded 211,704 8,114,355 194,346
Net gain from operations in separate accounts -- 844,211 2,775,548
Other 3,559,763 4,283,635 301,918
--------------- --------------- ----------------
Total revenues 148,005,712 208,576,028 197,543,619
--------------- --------------- ----------------
Benefits and expenses:
Death and other policy benefits:
Annuities 4,372,429 4,917,117 2,111,772
Life insurance 10,686,012 12,522,537 13,039,222
Accident and health insurance 12,527,746 10,181,535 19,889,996
Surrenders 17,918,739 13,960,077 8,395,452
Change in future policy benefits:
Annuities 7,943,330 22,290,109 26,197,332
Life insurance (70,011) (4,083,339) (481,132)
Accident and health insurance (59,397) (814,998) (203,816)
Other operating costs and expenses:
Commissions 12,771,706 14,949,143 13,994,793
General insurance expenses 3,775,406 11,101,350 13,341,637
Net transfers to separate accounts 30,269,853 48,691,310 38,066,102
Other 168,161 (181,582) (66,555)
--------------- --------------- ----------------
Total benefits and expenses 100,303,974 133,533,259 134,284,803
--------------- --------------- ----------------
Income from operations before Federal income tax
expense and net realized capital gains 47,701,738 75,042,769 63,258,816
Federal income tax expense 16,656,549 13,007,956 20,097,427
--------------- --------------- ----------------
Income from operations before net realized
capital gains 31,045,189 62,034,813 43,161,389
Net realized capital losses net of IMR transfer (812,000) -- --
--------------- --------------- ----------------
Net income $ 30,233,189 62,034,813 43,161,389
=============== =============== ================
</TABLE>
See accompanying notes to statutory financial statements.
4
<PAGE> 108
CITICORP LIFE INSURANCE COMPANY
Statutory Statements of Capital and Surplus
Years ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
1999 1998 1997
--------------- --------------- ----------------
<S> <C> <C> <C>
Capital and surplus at beginning of year $ 464,619,168 354,091,392 410,579,431
Net income 30,233,189 62,034,813 43,161,389
Net unrealized gain from revaluation of investments 39,221,274 7,218,120 1,337,886
Change in asset valuation reserve (8,462,482) 772,805 (492,559)
Dividends on common stock -- (100,000,000) (100,000,000)
Change in nonadmitted assets 5,092 3,370 3,914
Capital paid in -- 705,000 --
Surplus paid in -- 139,295,000 --
Change in unassigned surplus - separate account -- (12,106,423) 489,829
Surplus contributed to separate accounts -- 12,605,091 (988,498)
--------------- --------------- ----------------
Capital and surplus at end of year $ 525,616,241 464,619,168 354,091,392
=============== =============== ================
</TABLE>
See accompanying notes to statutory financial statements.
5
<PAGE> 109
CITICORP LIFE INSURANCE COMPANY
Statutory Statements of Cash Flow
Years ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
1999 1998 1997
--------------- --------------- ----------------
<S> <C> <C> <C>
Cash from operating activities:
Premiums and annuity considerations $ 107,806,008 147,618,901 146,348,499
Net investment income received 36,338,069 49,278,743 48,922,731
Other income received 3,647,210 4,215,965 277,427
Allowances and reserve adjustments received
on reinsurance ceded 211,704 8,114,355 194,346
Life and accident and health claims, and other
benefits paid (45,439,843) (50,564,359) (44,739,184)
Commissions, other expenses, and taxes paid (16,479,827) (25,932,785) (27,449,387)
Federal income taxes paid (34,439,389) (13,986,593) (20,561,930)
Net transfer to separate accounts (31,693,379) (50,008,727) (39,795,018)
Net surplus contribution (to) from separate account -- 12,605,091 (988,498)
--------------- --------------- ----------------
Net cash provided by operating activities 19,950,553 81,340,591 62,208,986
--------------- --------------- ----------------
Cash from investing activities:
Proceeds from investments sold, matured, or repaid:
Bonds 446,078,084 127,402,212 84,612,461
Mortgage loans 417,462 219,385 187,734
Other 553 728 (120)
Cost of investments acquired (long-term only):
Cost of bonds acquired (478,643,454) (262,935,036) (141,341,381)
Cost of stocks acquired - affiliates -- (19,000,000) (9,000,000)
Other -- (282,577) (1,349,980)
--------------- --------------- ----------------
Net cash used in investing activities (32,147,355) (154,595,288) (66,891,286)
--------------- --------------- ----------------
Cash from financing activities:
Capital and surplus paid in -- 140,000,000 --
Other cash provided 15,898,858 874,504 8,392,371
Dividends paid to stockholder -- (100,000,000) (100,000,000)
Change in due from reinsurers (13,200) 79,296 2,667,259
Other cash used (594,195) (2,649,435) (4,177,162)
--------------- --------------- ----------------
Net cash provided by (used in)
financing activities 15,291,463 38,304,365 (93,117,532)
--------------- --------------- ----------------
Net change in cash on hand and on deposit
and short-term investments 3,094,661 (34,950,332) (97,799,832)
Cash on hand and on deposit and short-term
investments, beginning of year 30,891,188 65,841,520 163,641,352
--------------- --------------- ----------------
Cash on hand and on deposit and short-term
investments, end of year $ 33,985,849 30,891,188 65,841,520
=============== =============== =================
</TABLE>
See accompanying notes to statutory financial statements.
6
<PAGE> 110
CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
December 31, 1999, 1998, and 1997
(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 49 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, 1999, 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.
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. Permitted statutory accounting practices
encompass all accounting practices that are not prescribed; such
practices differ from state to state, may differ from company to company
within a state, and may change in the future. In March 1998, the National
Association of Insurance Commissioners (NAIC) adopted the Codification of
Statutory Accounting Principles (Codification). The Codification, if
adopted by an insurer's state of domicile, will constitute the only
source of "prescribed" statutory accounting practices. Accordingly, once
implemented, the definition of what comprises prescribed versus permitted
statutory accounting practices may result in changes to the accounting
policies that insurance enterprises use to prepare their statutory
financial statements. The implementation date is ultimately dependent on
an insurer's state of domicile. The Company is currently evaluating the
impact of the Codification on its statutory financial statements. All
material transactions recorded by the Company are in conformity with
current prescribed practices. 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.
7 (Continued)
<PAGE> 111
CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
December 31, 1999, 1998, and 1997
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 $6,709,090,
$6,206,717, and $5,704,344 in 1999, 1998, and 1997, 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.
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 tax expense
(benefit) of ($1,278,809), $408,707, and
8 (Continued)
<PAGE> 112
CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
December 31, 1999, 1998, and 1997
$263,167 in 1999, 1998, and 1997, respectively, and are included
in the determination of net income. Realized investment gains and
losses exclude ($2,374,931), $759,027, and 488,739, which were
transferred to the IMR in 1999, 1998, and 1997, 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
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.
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.
9 (Continued)
<PAGE> 113
CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
December 31, 1999, 1998, and 1997
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, 1999 and 1998.
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 1998 and 1997
information to conform with the 1999 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.
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.
10 (Continued)
<PAGE> 114
CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
December 31, 1999, 1998, and 1997
The effect of reinsurance on premiums for the years ended December 31,
1999, 1998, and 1997 is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------------ ------------------- --------------------
<S> <C> <C> <C>
Direct premiums:
Annuities $ 54,071,277 83,868,640 72,200,297
Life 1,011,324 2,185,410 7,122,026
Accident and health 1,581,071 2,285,042 3,507,386
Premiums assumed - life 19,368,807 19,459,815 20,068,879
Premiums assumed - accident and health 37,237,011 43,902,300 44,020,047
Premiums ceded - annuities (6,109) -- --
Premiums ceded - life (1,356,353) 1,049,717 (751,536)
Premiums ceded - accident and health (4,101,020) (6,531,653) (71,593)
------------------ ------------------- --------------------
Net premiums earned $ 107,806,008 146,219,271 146,095,506
================== =================== ====================
</TABLE>
Reserve credits taken with respect to risks ceded to other companies
amounted to $2,800,540, $3,674,647, and $1,148,262 at December 31, 1999,
1998, and 1997, 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 100%, 99%, and 97% of its assumed
premiums from five unrelated insurance companies in 1999, 1998, and 1997,
respectively.
(3) INVESTMENTS
Major categories of net investment income for the years ended December
31, 1999, 1998, and 1997 consist of the following:
<TABLE>
<CAPTION>
1999 1998 1997
------------------ ------------------- --------------------
<S> <C> <C> <C>
Bonds $ 31,663,088 22,965,720 20,831,460
Stocks (subsidiaries) -- 20,000,000 20,000,000
Mortgage loans 70,630 110,082 117,275
Real estate 3,126,593 3,126,593 3,126,593
Short-term investments 1,566,289 3,261,501 4,507,298
Other 486,697 (97,288) (80,240)
------------------ ------------------- --------------------
Total investment revenue 36,913,297 49,366,608 48,502,386
Investment expense 1,125,087 1,076,580 1,290,116
------------------ ------------------- --------------------
Net investment income $ 35,788,210 48,290,028 47,212,270
================== =================== ====================
</TABLE>
Investment expense includes $502,373 in depreciation on investments in
real estate for 1999, 1998, and 1997.
11 (Continued)
<PAGE> 115
CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
December 31, 1999, 1998, and 1997
Investments in bonds at December 31, 1999 and 1998 are summarized below.
<TABLE>
<CAPTION>
1999
---------------------------------------------------------------------
GROSS GROSS ESTIMATED
CARRYING UNREALIZED UNREALIZED FAIR
VALUE GAINS LOSSES VALUE
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Bonds:
U.S. Treasury securities $ 45,370,740 225 (2,383,775) 42,987,190
U.S Government agency 192,172,735 83,528 (8,397,288) 183,858,975
Industrial and miscellaneous
bonds 279,161,561 873,420 (10,919,937) 269,115,044
--------------- --------------- --------------- ---------------
Total bonds $ 516,705,036 957,173 (21,701,000) 495,961,209
=============== =============== =============== ===============
</TABLE>
<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
=============== =============== =============== ===============
</TABLE>
The carrying and estimated fair values of bonds at December 31, 1999, 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 $ 14,562,152 14,445,525
After 1 year through 5 years 137,219,871 132,825,423
After 5 years through 10 years 44,395,280 42,446,295
After 10 years through 20 years 3,089,255 2,911,350
After 20 years 28,440,466 25,274,499
Mortgage-backed and asset-backed securities 288,998,012 278,058,117
--------------- ---------------
$ 516,705,036 495,961,209
=============== ===============
</TABLE>
Proceeds from sale of bonds during 1999, 1998, and 1997 were
$376,112,679, $36,582,568, and $64,431,719, respectively. Gross gains of
$750,249, $1,239,426, and $1,003,740, and gross losses of $5,215,989,
$71,692, and $251,834 were realized on those sales in 1999, 1998, and
1997, respectively.
12 (Continued)
<PAGE> 116
CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
December 31, 1999, 1998, and 1997
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, 1999, 1998, and 1997, investments with a carrying value
of $2,881,520, $2,907,504, and $2,808,189, respectively, were on deposit
with various state insurance departments as required by law and
$3,708,906, $3,719,000, and $3,728,341, respectively, were on deposit in
escrow accounts under the terms of certain of the Company's reinsurance
agreements.
(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>
1999 1998 1997
----------------- ---------------- ----------------
<S> <C> <C> <C>
Balance sheet at December 31:
Admitted assets $ 1,224,601,174 832,541,014 522,744,871
Liabilities 1,191,305,669 791,846,456 497,533,055
----------------- ---------------- ----------------
Capital and surplus $ 33,295,505 40,694,558 25,211,816
================= ================ ================
Results of operations:
Premiums earned $ 331,489,668 293,310,347 250,565,989
Benefits and expenses 378,310,407 328,652,625 273,184,335
Investment income, including realized losses 28,517,412 24,939,020 20,772,942
Other income 7,048,104 6,687,844 943,024
----------------- ---------------- ----------------
Loss before Federal income taxes (11,255,223) (3,715,414) (902,380)
Federal income tax expense (benefit) (5,317,493) (463,095) 1,848,635
Net realized capital losses less
transferred to IMR (2,088,000) -- --
----------------- ---------------- ----------------
Net loss $ (8,025,730) (3,252,319) (2,751,015)
================= ================ ================
</TABLE>
13 (Continued)
<PAGE> 117
CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
December 31, 1999, 1998, and 1997
Condensed financial information for CAC, on a statutory basis, is as
follows:
<TABLE>
<CAPTION>
1999 1998 1997
--------------- --------------- ---------------
<S> <C> <C> <C>
Balance sheet at December 31:
Admitted assets $ 123,810,546 85,467,834 73,854,894
Liabilities 30,852,406 37,484,649 35,068,000
--------------- --------------- ---------------
Capital and surplus $ 92,958,140 47,983,185 38,786,894
=============== =============== ===============
Results of operations:
Net premiums earned $ 107,859,715 81,025,106 68,420,444
Losses and underwriting expenses 41,575,405 38,453,807 33,154,319
--------------- --------------- ---------------
Underwriting gain 66,284,310 42,571,299 35,266,125
Investment income, including realized losses 3,079,208 2,425,994 2,316,371
--------------- --------------- ---------------
Income before Federal income taxes 69,363,518 44,997,293 37,582,496
Federal income tax expense 24,388,562 15,801,001 13,300,474
--------------- --------------- ---------------
Net income $ 44,974,956 29,196,292 24,282,022
=============== =============== ===============
</TABLE>
(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:
<TABLE>
<CAPTION>
1999 1998 1997
--------------- --------------- ---------------
<S> <C> <C> <C>
Balance at January 1 $ 11,411,938 20,026,861 20,237,540
--------------- --------------- ---------------
Incurred related to:
Current year 13,775,860 16,920,083 21,833,053
Prior years (1,294,754) (7,256,936) (2,038,251)
--------------- --------------- ---------------
Total incurred 12,481,106 9,663,147 19,794,802
--------------- --------------- ---------------
Paid related to:
Current year 3,970,847 7,392,135 8,113,616
Prior years 8,497,531 10,885,935 11,891,865
--------------- --------------- ---------------
Total paid 12,468,378 18,278,070 20,005,481
--------------- --------------- ---------------
Balance at December 31 $ 11,424,666 11,411,938 20,026,861
=============== =============== ===============
</TABLE>
14 (Continued)
<PAGE> 118
CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
December 31, 1999, 1998, and 1997
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. As a
result of changes in estimates of insured events in prior years, the
provision for claims and claims adjustment expenses decreased by
$1,294,754, $7,256,936, and $2,038,251 for the years ended 1999, 1998,
and 1997, respectively.
(7) FEDERAL INCOME TAXES
The Company's Federal income tax return is 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, 1999, 1998,
and 1997, 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.
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>
1999 1998 1997
----------------------- ----------------------- ------------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
---------- ----------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Computed "expected" tax at
U.S. corporate tax rate $ 16,695,608 35.00% $ 26,264,969 35.00% $ 22,140,586 35.00%
Difference between changes in
statutory reserves as
compared to tax reserves 28,025 .06 122,243 .16 164,199 .26
Policy acquisition expenses
capitalized, net of
amortization 25,276 .05 158,254 .21 248,167 .39
Dividend exclusion -- (7,000,000) (9.32) (7,000,000) (11.07)
Amortization of IMR 224,009 .47 (288,585) (.38) (337,411) (.53)
Provision to return (245,539) (.51) (6,770,708) (9.02) (758,857) (1.20)
Other, net (70,830) (.15) 521,783 .69 5,640,743 8.92
---------- ----------- ---------- ----------- ---------- -----------
$ 16,656,549 34.92% $ 13,007,956 17.34% $ 20,097,427 31.77%
========== =========== ========== =========== ========== ===========
</TABLE>
15 (Continued)
<PAGE> 119
CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
December 31, 1999, 1998, and 1997
(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, $3,127,000 in
1999, 1998, and 1997, 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, 2000 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
$1,671,925, $2,111,447, and $2,377,645 in 1999, 1998, and 1997,
respectively.
The Company utilizes the services of Citicorp Insurance Services, Inc.
Employees of this company 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 maximum
dividend the Company could pay without the approval of the Arizona
Director of Insurance is $31,000,000 during 2000. Dividends of $0, $100
million, and $100 million were paid in 1999, 1998, and 1997,
respectively.
(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, 1999, 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.
16 (Continued)
<PAGE> 120
CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
December 31, 1999, 1998, and 1997
(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.
(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.
(k) Comprehensive income disclosures are included.
(l) Costs of providing postretirement benefits other than pensions are
calculated without regard to active non-vested employees.
The statutory financial statements do not include any adjustments that
might result from differences between statutory accounting practices and
GAAP.
17
<PAGE> 121
SCHEDULE 1
CITICORP LIFE INSURANCE COMPANY
Schedule of Selected Financial Data From Annual Statement
Year ended December 31, 1999
<TABLE>
<S> <C>
Investment income earned:
Government bonds $ 5,073,188
Other bonds (unaffiliated) 26,589,900
Bonds of affiliates --
Preferred stocks (unaffiliated) --
Preferred stocks of affiliates --
Common stocks (unaffiliated) --
Common stocks of affiliates --
Mortgages loans 70,630
Real estate 3,126,593
Premium notes, policy loans and liens --
Cash on hand and on deposit --
Short-term investments 1,566,289
Other invested assets --
Derivative instruments (4,919)
Aggregate write-in for investment income 491,616
---------------------
Gross investment income $ 36,913,297
=====================
Real estate owned - book value less encumbrances $ 25,049,630
=====================
Mortgage loans - book value:
Farm mortgages $ --
Residential mortgages 674,530
Commercial mortgages --
---------------------
Total mortgage loans $ 674,530
=====================
Mortgage loans by standing - book value:
Good standing $ 674,530
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
=====================
</TABLE>
18
<PAGE> 122
SCHEDULE 1, CONT.
CITICORP LIFE INSURANCE COMPANY
Schedule of Selected Financial Data From Annual Statement
Year ended December 31, 1999
<TABLE>
<S> <C>
Bonds and short-term investments by class and maturity:
Bonds by maturity - statement value:
Due within one year or less $ 60,116,925
Over 1 year through 5 years 150,349,749
Over 5 years through 10 years 101,337,769
Over 10 years through 20 years 40,218,130
Over 20 years 196,140,801
---------------------
Total by maturity $ 548,163,374
=====================
Bonds by class - statement value
Class 1 $ 496,504,383
Class 2 46,885,672
Class 3 3,568,532
Class 4 1,204,787
Class 5 --
Class 6 --
---------------------
Total by class 548,163,374
Total bonds publicly traded 529,972,849
---------------------
Total bonds privately placed $ 18,190,525
=====================
Preferred stocks - statement value $ --
Common stocks - market value 126,253,647
Short-term investments - book value 31,458,338
Financial options owned - statement value 4,813,249
Financial options written and in force - statement value --
Financial futures contracts open - current price --
Cash on deposit 2,527,511
Life insurance in force (in thousands):
Industrial --
Ordinary 30,574
Credit life 2,342,427
Group life 124,077
Amount of accidental death insurance in force under
ordinary policies --
Life insurance policies with disability provisions in force:
Industrial --
Ordinary --
Credit Life --
Group Life --
</TABLE>
19
<PAGE> 123
SCHEDULE 1, CONT.
CITICORP LIFE INSURANCE COMPANY
Schedule of Selected Financial Data From Annual Statement
Year ended December 31, 1999
<TABLE>
<S> <C>
Supplementary contracts in force:
Ordinary - not involving life contingencies:
Amount on deposit $ 255,755
Income payable 37,830
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 33,551
Deferred - fully paid account balance 300,136,029
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 39,128,632
Deposits funds and dividend accumulations:
Deposit funds account balance --
Dividend accumulations account balance --
Claim payments 1999:
Group accident and health year ended
December 31:
1999 --
1998 (1,207,384)
1997 --
1996 --
Other accident and health:
1999 --
1998 --
1997 --
1996 --
Other coverages that use developmental methods
to calculate claims reserves:
1999 3,970,837
1998 7,801,717
1997 1,313,595
1996 231,811
</TABLE>
See accompanying independent auditors' report.
20
<PAGE> 124
CitiElite
STATEMENT OF ADDITIONAL INFORMATION
Individual Variable Annuity Contract
issued by
Citicorp Life Insurance Company
800 Silver Lake Blvd.
Dover, Delaware
L-20676S May 2000
11
<PAGE> 125
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
The financial statements of the Registrant and the Report of
Independent Auditors thereto are contained in the Registrant's Annual
Report and are included in the Statement of Additional Information.
The financial statements of the Registrant include:
Statement of Net Assets as of December 31, 1999
Statement of Operations for the year ended December 31, 1999
Statement of Changes in Net Assets for the year ended December
31, 1999
Notes to Financial Statements
Schedule of Investments as of December 31, 1999
The statutory financial statements of Citicorp Life Insurance Company
and the report of Independent Auditors, are contained in the
Statement of Additional Information. The statutory financial
statements of Citicorp Life Insurance Company include:
Statutory Statements of Admitted Assets, Liabilities, and
Capital and Surplus as of December 31, 1999 and 1998
Statutory Statements of Operations for the years ended
December 31, 1999, 1998 and 1997
Statutory Statements of Capital and Surplus for the years
ended December 31, 1999, 1998 and 1997
Statutory Statements of Cash Flows for the years ended
December 31, 1999, 1998 and 1997
Notes to Statutory Financial Statements
Schedule of Selected Financial Data From Annual Statement
for the year ended December 31, 1999
(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. (formerly The Landmark Funds Broker-Dealer
Services, Inc.)*
(4) (a) Contract Form.**
(5) Contract Application.**
(6) (a) Certificate of Incorporation of the Company.*
(b) By-Laws of the Company.*
<PAGE> 126
(7) None.
(8) (a) Participation Agreement Among MFS Variable Insurance
Trust, Citicorp Life Insurance Company and Massachusetts
Financial Services Company.***
(b) Participation Agreement By and Among AIM Variable
Insurance Funds, Inc. and Citicorp Life Insurance
Company, on Behalf of Itself and First Citicorp Life
Variable Annuity Separate Account.***
(c) Participation Agreement Among CitiFunds and Citicorp
Life Insurance Company.***
(d) Participation Agreement Between Variable Annuity
Portfolios and Citicorp Life Insurance Company.***
(e) 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) 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 Pre-Effective Amendment
No. 1 to the Registration Statement filed with the Securities and Exchange
Commission via Edgarlink on April 6, 1999 (File 333-71379).
***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 29, 1997 (File 33-81626).
<PAGE> 127
*****Incorporated herein by reference to the registrant's Post-Effective
Amendment No. 10 to the Registration Statement filed with the Securities and
Exchange Commission via Edgarlink on January 29, 1999 (File 333-71379).
<TABLE>
<CAPTION>
Item 25. DIRECTORS AND OFFICERS OF THE COMPANY.
<S> <C>
Marc J. Fink 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 *
Barbara S. Drake Vice President*
Walter C. Smith, Jr. Vice President/Treasurer*
</TABLE>
- ---------------------
* 800 Silver Lake Boulevard, Dover, DE 19904
<PAGE> 128
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 CO
INSURANCE COMPANY (Delaware Corporation)
(New York Corporation)
<PAGE> 129
ITEM 27. NUMBER OF CONTRACT OWNERS
As of December 31, 1999, there were 240 contract 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 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
<PAGE> 130
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 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.
<PAGE> 131
ITEM 29. PRINCIPAL UNDERWRITER
(a) CFBDS, the Registrant's Distributor, is also the distributor for
CitiFunds(SM) International Growth & Income Portfolio, CitiFunds(SM)
International Growth Portfolio, CitiFunds(SM) U.S. Treasury Reserves,
CitiFunds(SM) Cash Reserves, CitiFunds(SM) Premium U.S. Treasury Reserves,
CitiFunds(SM) Premium Liquid Reserves, CitiFunds(SM) Institutional U.S. Treasury
Reserves, CitiFunds(SM) Institutional Liquid Reserves, CitiFunds(SM)
Institutional Cash Reserves, CitiFunds(SM) Tax Free Reserves, CitiFunds(SM)
Institutional Tax Free Reserves, CitiFunds(SM) California Tax Free Reserves,
CitiFunds(SM) Connecticut Tax Free Reserves, CitiFunds(SM) New York Tax Free
Reserves, CitiFunds(SM) New York Tax Free Income Portfolio, CitiFunds(SM)
National Tax Free Income Portfolio, CitiFunds(SM) California Tax Free Income
Portfolio, CitiFunds(SM) Intermediate Income Portfolio, CitiFunds(SM) Balanced
Portfolio, CitiFunds(SM) Small Cap Value Portfolio, CitiFunds(SM) Growth &
Income Portfolio, CitiFunds(SM) Large Cap Growth Portfolio, CitiFunds(SM) Small
Cap Growth Portfolio, CitiFunds(SM) Short-Term U.S. Government Income Portfolio,
CitiFunds(SM) Emerging Asian Markets Equity Portfolio CitiSelect(R) VIP Folio
200, CitiSelect(R) VIP Folio 300, CitiSelect(R) VIP Folio 400, CitiSelect(R) VIP
Folio 500, CitiFunds(SM) Small Cap Growth VIP Portfolio, CitiSelect(R) Folio
100, CitiSelect(R) Folio 200, CitiSelect(R) Folio 300, CitiSelect(R) Folio 400,
and CitiSelect(R) Folio 500.
CFBDS is also the placement agent for Large Cap Value Portfolio, Small Cap Value
Portfolio, International Portfolio, Foreign Bond Portfolio, Intermediate Income
Portfolio, Short-Term Portfolio, Growth & Income Portfolio, U.S. Fixed Income
Portfolio, High Yield Portfolio, Large Cap Growth Portfolio, Small Cap Growth
Portfolio, International Equity Portfolio, Balanced Portfolio, Government Income
Portfolio, Tax Free Reserves Portfolio, Cash Reserves Portfolio and U.S.
Treasury Reserves Portfolio, Emerging Asian Markets Equity 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 Blvd, Dover,
Delaware.
ITEM 31. MANAGEMENT SERVICES
Not applicable.
<PAGE> 132
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 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> 133
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it meets the requirements of Securities Act
Rule 485(b) for effectiveness of this amendment to this Registration Statement
and has caused this post-effective amendment to the Registration Statement to be
signed on its behalf, in the City of Dover, and the State of Delaware, on this
28th day of April, 2000.
CITICORP LIFE VARIABLE ANNUITY SEPARATE ACCOUNT
(Registrant)
<TABLE>
<S> <C>
Attest:/s/Catherine S. Mulholland By:/s /Larry D. Williams
-------------------------- ---------------------
General Counsel and Senior Vice President of
Senior Vice President Citicorp Life Insurance Company
</TABLE>
BY: CITICORP LIFE INSURANCE COMPANY
(Depositor)
<TABLE>
<S> <C>
Attest:/s/Catherine S. Mulholland By:/s /Larry D. Williams
-------------------------- ---------------------
General Counsel and Senior Vice President of
Senior Vice President Citicorp Life Insurance Company
</TABLE>
As required by the Securities Act of 1933, this post-effective amendment to the
Registration Statement has been signed by the following persons in the
capacities indicated on the 28th day of April, 2000.
<TABLE>
<CAPTION>
Signature Title
- --------- -----
<S> <C>
/s/Larry D. Williams Director, SVP
- ---------------------------
Larry D. Williams
/s/Marc J. Fink Director, SVP
- ---------------------------
Marc J. Fink
/s/Walter C. Smith, Jr. Treasurer, VP
- ---------------------------
Walter C. Smith, Jr.
</TABLE>
<PAGE> 134
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description Method of Filing
- ------- ----------- ----------------
<S> <C> <C>
10. Consent of KPMG LLP, Independent Certified Electronically
Public Accountants.
</TABLE>
<PAGE> 1
EXHIBIT 10
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Citicorp Life Insurance Company
We consent to the use of our reports included herein and to the reference to our
firm as experts under the heading "Independent Accountants."
/s/KPMG LLP
Hartford, Connecticut
April 28, 2000
