<PAGE>
Registration No. 33-61643
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 2 [ X ]
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
Amendment No. 8 [ X ]
(Check appropriate box or boxes.)
C.M. MULTI-ACCOUNT A
--------------------
(Exact Name of Registrant)
---------------------------
C.M. LIFE INSURANCE COMPANY
(Name of Depositor)
140 Garden Street, Hartford, Connecticut 06154
----------------------------------------------
(Address of Depositor's Principal Executive Office (Zip Code)
(203) 987-6500
--------------
(Depositor's Telephone Number, including Area Code)
Ann F. Lomeli, Secretary
C.M. Life Insurance Company
140 Garden Street
Hartford, Connecticut 06154
---------------------------
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: Continuous
It is proposed that this filing will become effective
/ / immediately upon filing pursuant to paragraph (b) of Rule 485
/X/ on May 1, 1997 pursuant to paragraph (b) of Rule 485
/ / 60 days after filing pursuant to paragraph (a) of Rule 485
/ / on (date) pursuant to paragraph (a) of the Rule 485
An indefinite amount of securities has been registered under the Securities Act
of 1933 pursuant to Rule 24f-2 under the Investment Company Act of 1940. The
Rule 24f-2 Notice for Registrants fiscal year ended December 31, 1996 and was
filed on or about February 28, 1997.
I
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CROSS REFERENCE TO ITEMS
REQUIRED BY FORM N-4
<TABLE>
<CAPTION>
N-4 ITEM Caption in Prospectus
- -------- ---------------------
<S> <C>
1.......................................................................................Cover Page
2.......................................................................................Definitions
3.......................................................................................Table of Fees and Expenses
4.......................................................................................Condensed Financial Information;
Performance Measures
5.......................................................................................C.M. Life and the Separate Account
6.......................................................................................Contract Charges; Distribution
7.......................................................................................Miscellaneous Provisions; An
Explanation of the Contracts;
Reservation of Rights; Contract
Owner's Voting Rights
8.......................................................................................The Annuity (Pay-Out) Period
9.......................................................................................The Death Benefit
10......................................................................................The Accumulation (Pay-In) Period;
Distribution
11......................................................................................Right to Return Contract;
Redemption Privilege
12......................................................................................Federal Tax Status
13......................................................................................None
14......................................................................................Additional Information
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Caption in Statement of
Additional Information
----------------------
<S> <C>
15......................................................................................Cover Page
16......................................................................................Table of Contents
17......................................................................................General Information
18......................................................................................Service Arrangements and
Distribution
19......................................................................................Performance Measures
20......................................................................................Contract Value Calculations
21......................................................................................Reports of Independent Accountants
and Financial Statements
</TABLE>
3
<PAGE>
INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACTS
WITH FLEXIBLE PURCHASE PAYMENTS
issued by
C.M. Multi-Account A and C.M. Life Insurance Company
140 Garden Street, Hartford, Connecticut 06154, (203) 987-6500
Annuity Service Center
P.O. Box 419162, Kansas City, MO 64141, (800) 334-8117
or
301 West 11th Street, Fourth Floor, Kansas City, MO 64105
THE INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACTS WITH FLEXIBLE
PURCHASE PAYMENTS (the "Contracts") described in this Prospectus provide for
accumulation of Contract Values on a variable basis and payment of annuity
payments on a fixed and variable basis. The Contracts are designed for use by
individuals on a Qualified or Non-Qualified basis. The minimum initial Purchase
Payment without prior approval is $100,000.
Purchase Payments for the Contracts will be allocated to a segregated
investment account of C.M. Life Insurance Company (the "Company") which account
has been designated C.M. Multi-Account A (the "Separate Account"). The Company
may allocate initial Purchase Payments to the Money Market Sub-Account of the
Separate Account during the Right to Examine Contract Period. The Separate
Account invests in shares of the Oppenheimer Money Fund of the Oppenheimer
Variable Account Funds ("Oppenheimer Funds") and The OFFITBANK Variable
Insurance Fund, Inc. ("OFFITBANK VIF") with its three Funds: OFFITBANK VIF -High
Yield Fund, OFFITBANK VIF - Investment Grade Global Debt Fund and OFFITBANK
VIF - Emerging Markets Fund.
This Prospectus concisely sets forth the information a prospective
investor should know before investing. Additional information about the
Contracts is contained in the Statement of Additional Information which is
available at no charge. The Statement of Additional Information has been filed
with the Securities and Exchange Commission and is incorporated herein by
reference. For the Statement of Additional Information, call (800) 334-8117 or
write to Stephen Wells, OFFITBANK, 520 Madison Avenue, New York, New York 10022.
ANY INQUIRIES CAN BE MADE BY TELEPHONE OR IN WRITING TO C.M. LIFE
INSURANCE COMPANY AT ITS ANNUITY SERVICE CENTER.
This Prospectus and the Statement of Additional Information are dated
May 1, 1997.
The Contracts are not deposits or obligations of, or guaranteed or
endorsed by, any financial institution and are not federally insured by the
Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other
agency. Investment in the Contracts is subject to risk that may cause the value
of the Contract Owner's investment to fluctuate, and when the contracts are
surrendered, the value may be higher or lower than the purchase payment.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This Prospectus should be kept for future reference.
1
<PAGE>
Table of Contents
<TABLE>
Page
<S> <C> <C>
Definitions...................................................................................................... 4
Highlights....................................................................................................... 6
Table of Fees & Expenses......................................................................................... 8
The Company...................................................................................................... 10
The Separate Account............................................................................................. 10
Eligible Investments............................................................................................. 11
The OFFITBANK Variable Insurance Fund, Inc..................................................... 11
Oppenheimer Variable Account Funds - Money Fund................................................ 11
Voting Rights.................................................................................. 12
Substitution of Securities..................................................................... 12
Charges and Deductions........................................................................................... 12
Deduction for Mortality and Expense Risk Charge................................................ 12
Deduction for Administrative Charge............................................................ 13
Deduction for Annual Contract Maintenance Charge............................................... 13
Deduction for Premium and Other Taxes.......................................................... 13
Deduction for Eligible Investments Expenses.................................................... 13
Deduction for Transfer Fee..................................................................... 14
The Contracts.................................................................................................... 14
Contract Owner................................................................................. 14
Joint Contract Owners.......................................................................... 14
Annuitant...................................................................................... 14
Assignment..................................................................................... 14
Purchase Payments and Contract Value............................................................................. 15
Purchase Payments.............................................................................. 15
Allocation of Purchase Payments................................................................ 15
Contract Value................................................................................. 15
Accumulation Units............................................................................. 15
Accumulation Unit Value........................................................................ 15
Transfers........................................................................................................ 16
Transfers During the Accumulation Period....................................................... 16
Transfers During the Annuity Period............................................................ 16
Withdrawals...................................................................................................... 17
Systematic Withdrawals......................................................................... 18
Suspension or Deferral of Payments............................................................. 18
Proceeds Payable on Death........................................................................................ 19
Death of Contract Owner During the Accumulation Period......................................... 19
Death Benefit Amount During the Accumulation Period............................................ 19
Death Benefit Options During the Accumulation Period........................................... 19
Death of Contract Owner During the Annuity Period.............................................. 20
Death of Annuitant............................................................................. 20
Payment of Death Benefit....................................................................... 20
Beneficiary.................................................................................... 20
Change of Beneficiary.......................................................................... 20
Annuity Provisions............................................................................................... 21
Annuity Guidelines............................................................................. 21
Annuity Payments............................................................................... 21
Fixed Annuity.................................................................................. 21
Variable Annuity............................................................................... 22
</TABLE>
2
<PAGE>
<TABLE>
<S> <C> <C>
Annuity Units and Payments..................................................................... 22
Annuity Unit Value............................................................................. 22
Annuity Options................................................................................ 22
Annuity Option A - Life Income................................................................. 22
Annuity Option B - Life Income with Period Certain............................................. 23
Annuity Option C - Joint and Last Survivor Payments............................................ 23
Annuity Option D - Joint and 2/3rds Survivor Annuity........................................... 23
Annuity Option E - Period Certain.............................................................. 23
Annuity Option F - Special Income Settlement Agreement......................................... 23
Distribution..................................................................................................... 23
Performance Information.......................................................................................... 24
Money Market Sub-Account....................................................................... 24
Other Sub-Accounts............................................................................. 24
Tax Status....................................................................................................... 25
General........................................................................................ 25
Diversification................................................................................ 25
Multiple Contracts............................................................................. 26
Tax Treatment of Assignments................................................................... 27
Income Tax Withholding......................................................................... 27
Tax Treatment of Withdrawals - Non-Qualified Contracts......................................... 27
Penalty Tax.................................................................................... 27
Qualified Plans................................................................................ 27
H.R. 10 Plans.................................................................................. 28
Individual Retirement Annuities................................................................ 28
Corporate Pension and Profit-Sharing Plans..................................................... 28
Tax Treatment of Withdrawals - Qualified Contracts............................................. 29
Contracts Owned by Other Than Natural Persons.................................................. 29
Financial Statements............................................................................................. 29
Legal Proceedings................................................................................................ 30
Table of Contents of the Statement of Additional Information..................................................... 30
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
Definitions
Accumulation Period: The period prior to the commencement of Annuity Payments during which Purchase Payments may be
made.
Accumulation Unit: A unit of measure used to determine the value of the Contract Owner's interest in a Sub-Account
of the Separate Account during the Accumulation Period.
Annuitant: The primary person upon whose life Annuity Payments are to be made. For purposes of applicable
Contract provisions, on or after the Annuity Date, reference to the Annuitant also includes any
joint Annuitant.
Annuity Date: The date on which Annuity Payments begin.
Annuity Payments: The series of payments that will begin on the Annuity Date.
Annuity Options: Options available for Annuity Payments.
Annuity Period: The period which begins on the Annuity Date and ends with the last Annuity Payment.
Annuity Reserve: The assets which support a variable Annuity Option during the Annuity Period.
Annuity Service Center: The office indicated on the Cover Page of this Prospectus to which notices, requests and Purchase
Payments must be sent. All sums payable by the Company under a Contract are payable only at the
Annuity Service Center.
Annuity Unit: A unit of measure used to determine the amount of each Variable Annuity Payment after the Annuity
Date.
Beneficiary: The person(s) or entity(ies) designated to receive the death benefit provided by the Contract.
Contract Anniversary: An anniversary of the Issue Date of the Contract.
Contract Owner: The person(s) or entity(ies) entitled to the ownership rights stated in the Contract.
Contract Value: The sum of the Contract Owner's interest the Sub- Accounts of the Separate Account during the
Accumulation Period.
Contract Year: The first Contract Year is the annual period which begins on the Issue Date. Subsequent Contract
Years begin on each anniversary of the Issue Date.
Eligible Investment: An investment entity into which assets of the Separate Account will be invested.
Fixed Annuity: A series of payments made during the Annuity Period which are guaranteed as to dollar amount by
the Company.
General Account: The Company's general investment account which contains all the assets of the Company with the
exception of the Separate Account and other segregated asset accounts.
Issue Date: The date on which the Contract became effective.
Non-Qualified Contracts: Contracts other than Qualified Contracts which do not receive favorable tax treatment
under Sections 401 or 408 of the Internal Revenue Code of 1986, as amended (the "Code").
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
Premium Tax: A tax imposed by certain states and other jurisdictions when a Purchase Payment is made, when
Annuity Payments begin, or when a Contract is surrendered.
Purchase Payment: During the Accumulation Period, a payment made by or on behalf of a Contract Owner with respect
to the Contract.
Qualified Contracts: Contracts issued under Qualified Plans.
Qualified Plans: Plans which receive favorable tax treatment under Sections 401 or 408 of the Code.
Separate Account: The Company's Separate Account designated as C.M. Multi-Account A.
Sub-Account: Separate Account assets are divided into Sub-Accounts. Assets of each Sub-Account will be
invested in shares of an available Eligible Investment or a portfolio or fund of an Eligible
Investment. Currently, the Eligible Investments available for the Contracts offered hereby are
the Funds of the OFFITBANK Variable Insurance Fund, Inc. and the Oppenheimer Money Fund of the
Oppenheimer Funds.
Valuation Date: Each day on which the Company, the New York Stock Exchange ("NYSE") and the Eligible Investments
are open for business. See the Prospectuses for the Eligible Investments.
Valuation Period: The period of time beginning at the close of business of the NYSE on each Valuation Date and
ending at the close of business for the next succeeding Valuation Date.
Variable Annuity: An annuity with payments which vary as to dollar amount in relation to the investment performance
of specified Sub- Accounts of the Separate Account.
Written Request: A request or notice in writing, in a form satisfactory to the Company, which is received by the
Annuity Service Center.
</TABLE>
5
<PAGE>
Highlights
General
Purchase Payments for the Contracts will be allocated to a segregated
investment account of C.M. Life Insurance Company (the "Company") which account
has been designated C.M. Multi-Account A (the "Separate Account"). As described
in Right to Examine Contract below, Purchase Payments may initially be allocated
to the Money Market Sub-Account of the Separate Account. The Separate Account
invests in shares of the Oppenheimer Money Fund of the Oppenheimer Funds, and
the OFFITBANK Variable Insurance Fund, Inc. ("OFFITBANK VIF") with its three
Funds: OFFITBANK VIF - High Yield Fund, OFFITBANK VIF - Investment Grade Global
Debt Fund and OFFITBANK VIF - Emerging Markets Fund.(See Eligible Investments).
Contract Owner(s) bear the investment risk for all amounts allocated to the
Separate Account. The Contracts may not be available in all states.
Right to Examine Contract
The Contract may be returned to the Company for any reason within ten
(10) calendar days (or twenty (20) calendar days of the date of receipt with
respect to the circumstances described in (c) below) after its receipt by the
Contract Owner ("Right to Examine Contract"). It may be returned to the Company
at its Annuity Service Center. When the Contract is received at the Annuity
Service Center, it will be voided as if it had never been in force. Upon its
return, the Company will refund the Contract Value next computed after receipt
of the Contract by the Company at its Annuity Service Center except in the
following circumstances: (a) where the Contract is purchased pursuant to an
Individual Retirement Annuity; (b) in those states which require the Company to
refund Purchase Payments, less withdrawals; or (c) in the case of Contracts
(including Contracts purchased pursuant to an Individual Retirement Annuity)
which are deemed by certain states to be replacing an existing annuity or
insurance contract and which require the Company to refund Purchase Payments,
less withdrawals. With respect to the circumstances described in (a), (b) and
(c) above, the Company will refund the greater of Purchase Payments, less any
withdrawals, or the Contract Value, and will allocate initial Purchase Payments
to the Money Market Sub-Account until the expiration of fifteen (15) days from
the Issue Date (or twenty-five (25) days in the case of Contracts described
under (c) above). Upon the expiration of the fifteen days (15) day period (or
twenty-five (25) day period with respect to Contracts described under (c)), the
Sub-Account value of the Money Market Sub-Account will be allocated to the
Separate Account in accordance with the election made by the Contract Owner in
the Application.
Charges and Deductions
Mortality and Expense Risk Charge. Each Valuation Period, the Company
deducts a Mortality and Expense Risk Charge which is currently equal, on an
annual basis, to 0.38% of the average daily net asset value of the Separate
Account. The Company may increase this charge to an amount not to exceed 1.25%
of the average daily net asset value of the Separate Account. This charge
compensates the Company for assuming the mortality and expense risks under the
Contracts. (See Charges and Deductions - Deduction for Mortality and Expense
Risk Charge).
Administrative Charge. Each Valuation Period, the Company deducts an
Administrative Charge which is currently equal, on an annual basis, to .01% of
the average daily net asset value of the Separate Account. The Company may
increase this charge to an amount not to exceed .25% of the average daily net
asset value of the Separate Account. This charge compensates the Company for
costs associated with the administration of the Contracts and the Separate
Account. (See Charges and Deductions - Deduction for Administrative Charge).
Annual Contract Maintenance Charge. Currently, there is an Annual
Contract Maintenance Charge of $35 deducted on the last day of the Contract
Year. The Company may increase this charge to an amount not to exceed $60 per
Contract Year. The Annual Contract Maintenance Charge will be deducted from the
Sub-Accounts in the same proportion that the amount of the Contract Value in
each Sub-Account bears to the total Contract Value. If the Annuity Date is not
the last day of the Contract Year, then a pro-rata portion of the Annual
Contract Maintenance Charge will be deducted on the Annuity Date. During the
Annuity Period, unless otherwise elected the Annual Contract Maintenance Charge
will be deducted pro-rata from Annuity Payments and will result in a reduction
of each Annuity Payment.
6
<PAGE>
Premium Taxes. Premium Taxes are charged against Premium Payments or
Contract Values. (See Charges and Deductions - Deduction for Premium and Other
Taxes). The Company currently intends to charge for any Premium Taxes when
due.
Transfer Fee. Under certain circumstances, a Transfer Fee may be assessed
during the Accumulation Period when a Contract Owner makes a transfer from one
Sub-Account to another Sub-Account or during the Annuity Period when a Contract
Owner makes a transfer from one Sub- Account to another Sub-Account or from a
Sub-Account to the General Account. (See Charges and Deductions Deduction for
Transfer Fee).
Federal Income Tax Penalty
There is a ten percent (10%) federal income tax penalty applied to the
income portion of any distribution from Non-Qualified Contracts. However, the
penalty is not imposed on amounts received: (a) after the taxpayer reaches age
59 1/2; (b) after the death of the Contract Owner; (c) if the taxpayer is
totally disabled (for this purpose disability is as defined in Section 72(m)(7)
of the Code); (d) in a series of substantially equal periodic payments made not
less frequently than annually for the life (or life expectancy) of the taxpayer
and his or her Beneficiary; (e) under an immediate annuity; or (f) which are
allocable to purchase payments made prior to August 14, 1982. For federal income
tax purposes, withdrawals are deemed to be on a last-in, first-out basis.
Separate tax withdrawal penalties and restrictions apply to Qualified Contracts.
(See Tax Status - Tax Treatment of Withdrawals - Qualified Contracts). For a
further discussion of the taxation of the Contracts, see Tax Status.
See Tax Status - Diversification for a discussion of owner control of the
underlying investments in a variable annuity contract.
The Contract
Transfers. Subject to the conditions imposed on such transfers by the
Company, Contract Owners may make unlimited transfers between Sub- Accounts
during the Accumulation Period and six (6) transfers per calendar year during
the Annuity Period. The Company reserves the right to further limit the number
of transfers in the future. The Contract provides for twelve (12) free transfers
per calendar year during the Accumulation Period and six (6) free transfers per
calendar year during the Annuity Period. Transfers made in excess of the number
of free transfers will result in the imposition of the transfer fee. During the
Annuity Period, the Contract Owner may, once each Contract Year, make a transfer
from one or more Sub-Accounts to the General Account. However, transfers cannot
be made from the General Account to the Separate Account. The Transfer Fee is
the lesser of $20 or 2% of the amount transferred. (See Transfers).
Withdrawals. Subject to certain minimums imposed on such withdrawals by the
Company, the Contract Owner may, during the Accumulation Period, upon Written
Request, make a total or partial withdrawal of the Contract Withdrawal Value.
(See Withdrawals). Tax penalties may apply. (See Tax Status).
Death Benefit. The death benefit during the Accumulation Period will be the
Contract Value. (See Proceeds Payable on Death for an additional discussion.)
Annuity Options. There are six (6) Annuity Options available for the
Contract Owner to choose from. The Contract Owner may elect to have the Contract
Value applied to provide a Variable Annuity, a Fixed Annuity, or a combination
Fixed and Variable Annuity. (See Annuity Provisions for a further discussion.)
Maximum Issue Ages. The maximum issue age is 85. This restriction applies
at the time of Contract issue and upon any change in Contract Owner or Annuitant
during the Accumulation Period and applies to both the Contract Owner and the
Annuitant. For Joint Contract Owners all provisions which are based upon age,
including the maximum issue age, are based on the age of the older of the Joint
Contract Owners.
7
<PAGE>
Table of Fees & Expenses
(See Note 1 Below.)
<TABLE>
<CAPTION>
Contract Owner Transaction Expenses
<S> <C>
There are no sales loads assessed against Purchase Payments or amounts withdrawn. (See
Note 2 below.)
Transfer Fee (See Note 3 below.) No charge is imposed for the first 12 transfers in a calendar year during the
Accumulation Period. Only 6 transfers in a calendar year during the Annuity Period
are permitted (6 transfers are free). The Fee is the lesser of $20 or 2% of the
amount transferred.
Annual Contract Maintenance Charge $35 per Contract per Contract Year.
(See Note 4 below.)
</TABLE>
<TABLE>
<CAPTION>
Separate Account Annual Expenses
(as a percentage of average account value)
<S> <C>
Mortality and Expense Risk Charge (See Note 5 below)..................................................................... 0.38%
Administrative Charge (See Note 6 below)................................................................................. 0.01%
Total Separate Account Annual Expenses................................................................................... 0.39%
</TABLE>
ELIGIBLE INVESTMENT'S ESTIMATED ANNUAL EXPENSES FOR 1996
(as a percentage of the average net assets of a Fund or Portfolio)
<TABLE>
<CAPTION>
Advisory Other Fund
Fees Expenses Operating
Expenses
<S> <C> <C> <C>
OFFITBANK VIF - Investment Grade Global Debt Fund....................................... 0.80% 0.25% 1.05%
OFFITBANK VIF - Emerging Markets Fund................................................... 0.90% 0.30% 1.20%
OFFITBANK VIF - High Yield Fund......................................................... 0.85% 0.06% 0.91%
Oppenheimer Money Fund.................................................................. 0.45% 0.04% 0.49%
</TABLE>
(See the Prospectuses for the Eligible Investments for more information.)
Examples
A Contract Owner would pay the following expenses on a $1,000
investment, assuming a 5% annual return on assets and assuming that the same
Fund or Portfolio expenses as shown above for the periods shown in the examples,
regardless of whether the Contract is fully surrendered at the end of each time
period, or if the Contract is not surrendered, or if the Contract is annuitized.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
OFFITBANK VIF - Investment Grade Global Debt Fund.................................. $15 $46 $80 $174
OFFITBANK VIF - Emerging Markets Fund.............................................. $16 $51 $88 $191
OFFITBANK VIF - High Yield Fund.................................................... $13 $42 $72 $158
Oppenheimer Money Fund............................................................. $ 9 $28 $49 $110
</TABLE>
8
<PAGE>
Notes to Table of Fees and Expenses
1. The purpose of the Fee Table is to assist Contract Owners in understanding
the various costs and expenses that a Contract Owner will incur directly or
indirectly. The Examples assume an average Contract Value of $100,000. The
Fee Table reflects expenses of the Separate Account as well as the Eligible
Investments. For additional information, see "Charges and Deductions" in
this Prospectus and the Prospectuses for the Eligible Investments.
2. The Contracts are offered without the imposition of a front-end sales load
or a back-end sales load (often referred to as a contingent deferred sales
load).
3. Transfers made by the Company at the end of the Right to Examine Contract
period will not be counted in determining the application of the Transfer
Fee. The Transfer Fee is the lesser of $20 or 2% of the amount transferred.
All transfers made during a Valuation Period are deemed to be one transfer.
4. Currently, the Annual Contract Maintenance Charge is $35 each Contract Year
and is deducted on the last day of the Contract Year. The Company may
increase this charge to an amount not to exceed $60 per Contract Year. If a
total withdrawal is made on other than the last day of the Contract Year,
the full Annual Contract Maintenance Charge will be deducted at the time of
the total withdrawal. The Annual Contract Maintenance Charge will be
deducted from Sub-Accounts in the same proportion that the amount of the
Contract Value in each Sub-Account bears to the total Contract Value. If
the Annuity Date is not the last day of the Contract Year, then a pro-rata
portion of the Annual Contract Maintenance Charge will be deducted on the
Annuity Date. During the Annuity Period, unless the Annual Contract
Maintenance Charge will be deducted pro-rata from Annuity Payments
regardless of Contract size and will result in a reduction of each Annuity
Payment. (See Charges and Deductions - Deduction for Annual Contract
Maintenance Charge). The examples reflect the $35 Annual Contract
Maintenance Charge as an annual charge of 0.007% of assets, based on an
anticipated average Contract Value of $500,000.
5. The current Mortality and Expense Risk Charge is equal on an annual basis
to 0.38% of the average daily net asset value of the Separate Account. The
Company may increase this charge to an amount not to exceed 1.25% of the
average daily net asset value of the Separate Account.
6. The current Administrative Charge is equal on an annual basis to .01% of
the average daily net asset value of the Separate Account. The Company may
increase this charge to an amount not to exceed .25% of the average daily
net asset value of the Separate Account.
7. Premium Taxes are not reflected. Premium taxes may apply. (See Charges and
Deductions - Deduction for Premium and Other Taxes).
8. THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
9
<PAGE>
Condensed Financial Information(a)
ACCUMULATION UNIT VALUES
<TABLE>
<CAPTION>
Sub-Account 1996 December 31, 1996
---- -----------------
<S> <C> <C>
OFFITBANK VIF - Investment Grade Global Debt Fund............................................... 10.00 --
OFFITBANK VIF - Emerging Markets Fund........................................................... 10.00 10.582968
OFFITBANK VIF - High Yield Fund................................................................. 10.00 10.604901
Oppenheimer Money Fund.......................................................................... 10.00 --
</TABLE>
ACCUMULATION UNITS OUTSTANDING
<TABLE>
<CAPTION>
December 31, 1996
-----------------
<S> <C>
OFFITBANK VIF - Investment Grade Global Debt Fund........................................................... 0
OFFITBANK VIF - Emerging Markets Fund....................................................................... 296,409
OFFITBANK VIF - High Yield Fund............................................................................. 695,534
Oppenheimer Money Fund...................................................................................... 0
</TABLE>
(a)Commencement of the public offering was January 4, 1996. As there were no
assets in the Global Debt Fund or the Money Fund, these funds had no unit values
or accumulation units outstanding as of December 31, 1996.
The Company
C.M. Life Insurance Company (the "Company"), 140 Garden Street,
Hartford, Connecticut 06154, is a stock life insurance company. It was chartered
by a special Act of the Connecticut General Assembly on April 25, 1980. It is
principally engaged in the sale of life insurance and annuities, and is licensed
in all states except New York. The Company is a wholly-owned subsidiary of
Massachusetts Mutual Life Insurance Company ("MassMutual"). MassMutual is a
mutual life insurance company specially chartered by the Commonwealth of
Massachusetts on May 14, 1851. It is currently licensed to transact life
(including variable life), accident, and health insurance business in all
states, the District of Columbia, Puerto Rico and certain provinces of Canada.
MassMutual has estimated statutory assets in excess of $55 billion, and
estimated total assets under management in excess of $130 billion.
Prior to February 29, 1996, C.M. Life was a wholly-owned subsidiary of
Connecticut Mutual Life Insurance Company ("CML"). On February 29, 1996, CML
merged with and into MassMutual. CML was a mutual life insurance company
originally chartered by a special act of the Connecticut General Assembly in
1846. Prior to the merger, CML was the nation's sixth oldest life insurance
company. Upon the merger, CML's existence ceased and MassMutual became the
surviving company under the name Massachusetts Mutual Life Insurance Company.
The Separate Account
The Board of Directors of the Company adopted a resolution to establish
a segregated asset account pursuant to Connecticut insurance law on August 3,
1994. This segregated asset account has been designated C.M. Multi-Account A
(the "Separate Account"). The Company has caused the Separate Account to be
registered with the Securities and Exchange Commission as a unit investment
trust pursuant to the provisions of the Investment Company Act of 1940, as
amended (the "1940 Act").
The assets of the Separate Account are the property of the Company.
However, the assets of the Separate Account, equal to the reserves and other
contract liabilities with respect to the Separate Account, are not chargeable
with liabilities arising out of any other business the Company may conduct.
Income, gains and losses, whether or not realized, are, in accordance with the
Contracts, credited to or charged against the Separate Account without regard to
other
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income, gains or losses of the Company. The Company's obligations arising under
the Contracts are general obligations. The Separate Account meets the definition
of a "separate account" under federal securities laws.
The Separate Account currently is divided into three segments, one of
which relates to the Contract. This segment is divided into Sub-Accounts, with
the assets of each Sub-Account invested in one Fund of The OFFITBANK Variable
Insurance Fund, Inc. (OFFITBANK VIF - High Yield Fund, OFFITBANK VIF -Investment
Grade Global Debt Fund and OFFITBANK VIF - Emerging Markets Fund) or the
Oppenheimer Money Fund of the Oppenheimer Variable Account Funds. There is no
assurance that the investment objectives of any of the Eligible Investments will
be met. Contract Owners bear the complete investment risk for Purchase Payments
allocated to a Sub-Account. Contract Values will fluctuate in accordance with
the investment performance of the Sub-Accounts to which Purchase Payments are
allocated, and in accordance with the imposition of the fees and charges
assessed under the Contracts.
Eligible Investments
The following are the current Eligible Investments and individual Funds
or Portfolios of the Eligible Investments that can be selected as the underlying
investments of the Contract. Some Funds or Portfolios may not be available to
Contract Owners residing in certain states. While a brief summary of the various
investment objectives is set forth below, more comprehensive information,
including a discussion of potential risks, is found in the current Prospectus
for each of the Eligible Investments which are included with this Prospectus.
The OFFITBANK Variable Insurance Fund, Inc.
The OFFITBANK Variable Insurance Fund, Inc. ("OFFITBANK Fund") is a
newly organized open-end, management investment company consisting of three
separate investment portfolios (the "Funds"). OFFITBANK, a trust company
specializing in global fixed income management, serves as the Funds' investment
adviser. OFFITBANK's address is 237 Park Avenue, Suite 910, New York, New York
10017. The Funds and their investment objectives and policies are as follows:
OFFITBANK VIF - High Yield Fund. This Fund seeks high current income
with capital appreciation as a secondary objective. The Fund invests, under
normal circumstances, at least 65% of its total assets in U.S. corporate fixed
income securities rated below investment grade offering potential returns that
are sufficiently high to justify the greater investment risks.
OFFITBANK VIF - Investment Grade Global Debt Fund. This Fund seeks a
competitive fixed-income total investment return by investing, under normal
circumstances, at least 75% of its total assets in a wide range of investment
grade debt securities issued anywhere in the world, including the United States,
and denominated in any currency, including U.S. dollars. Up to 25% of the Fund's
total assets may be invested in below investment grade debt securities.
OFFITBANK VIF - Emerging Markets Fund. This Fund seeks to provide
investors with a competitive total investment return by focusing on current
yield and opportunities for capital appreciation primarily by investing in
corporate and sovereign debt securities of emerging market countries. Under
normal circumstances, the Fund will invest at least 80% of its total assets in
debt instruments, but may invest up to 20% of its total assets in equity
securities.
The OFFITBANK VIF - High Yield, Emerging Markets Fund, and Investment
Grade Global Debt Funds may invest up to 25% of their total assets, in high
yield, high risk corporate debt securities and sovereign debt obligations which
are considered speculative and subject to certain risks.
Oppenheimer Variable Account Funds
Oppenheimer Funds is an open-end management investment company. The
Funds' investment adviser is OppenheimerFunds, Inc. ("OppenheimerFunds")
formerly named Oppenheimer Management Corporation, which (including a
subsidiary) advises investment company portfolios having over $62 billion in
assets and 3 million shareholder accounts. OppenheimerFunds has operated as an
investment adviser since 1959. Oppenheimer Acquisition
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Corp., a holding company that is owned in part by senior officers of
OppenheimerFunds and controlled by MassMutual. OppenheimerFunds' address is Two
World Trade Center, New York, New York 10048.
Oppenheimer Money Fund
The Money Fund seeks the maximum current income from investments in
"money market" securities consistent with low capital risk and the maintenance
of liquidity. Its shares are neither insured nor guaranteed by the U.S.
government, and there is no assurance that this Fund will be able to maintain a
stable net asset value of $1.00 per share.
Voting Rights
In accordance with its view of present applicable law, the Company will
vote the shares of the Eligible Investments held in the Separate Account at
meetings of the shareholders in accordance with instructions received from
persons having the voting interest in the Separate Account. The Company will
vote shares for which it has not received instructions, as well as shares
attributable to it, in the same proportion as it votes shares for which it has
received instructions. The Eligible Investments do not hold regular meetings of
shareholders.
The number of shares which a person has a right to vote will be
determined as of a date to be chosen by the Company not more than sixty (60)
days prior to a shareholder meeting of any of the Eligible Investments. Voting
instructions will be solicited by written communication at least ten (10) days
prior to the meeting.
Substitution of Securities
If the shares of any Eligible Investment are no longer available for
investment by the Separate Account or, if in the judgment of the Company's Board
of Directors, further investment in the shares should become inappropriate in
view of the purpose of the Contracts, the Company may limit further purchase of
such shares or may substitute shares of another Eligible Investment for shares
already purchased under the Contracts. No substitution of securities may take
place without prior approval of the Securities and Exchange Commission and under
the requirements it may impose.
Charges and Deductions
Various charges and deductions are made from the Contract Value and the Separate
Account. These charges and deductions are described below:
Deduction for Mortality and
Expense Risk Charge
Each Valuation Period, the Company deducts a Mortality and Expense Risk
Charge which is equal, on an annual basis, to 0.38% of the average daily net
asset value of the Separate Account. The Company may increase this charge;
however, the maximum Mortality and Expense Risk Charge will not exceed 1.25% of
the average daily net asset value of the Separate Account. In the event of an
increase, the Company will give Contract Owners 90 days prior notice of the
increase. The mortality risks assumed by the Company arise from its contractual
obligation to make Annuity Payments after the Annuity Date (determined in
accordance with the Annuity Option chosen by the Contract Owner) regardless of
how long all Annuitants live. This assures that neither an Annuitant's own
longevity, nor an improvement in life expectancy greater than expected, will
have any adverse effect on the Annuity Payments the Annuitant will receive under
the Contract. Further, the Company bears a mortality risk in that it guarantees
the annuity purchase rates for the Annuity Options under the Contract whether
for a Fixed Annuity or a Variable Annuity. Also, there is a mortality risk borne
by the Company with respect to the death benefit. The expense risk assumed by
the Company is that all actual expenses involved in administering the Contracts,
including Contract maintenance costs, administrative costs, mailing costs, data
processing costs, legal fees, accounting fees, filing fees and the costs of
other services may exceed the amount recovered from the Annual Contract
Maintenance Charge and the Administrative Charge.
If the Mortality and Expense Risk Charge is insufficient to cover the
actual costs, the loss will be borne by the Company. Conversely, if the amount
deducted proves more than sufficient, the excess will be a profit to the
Company. The Company expects a profit from this charge.
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Deduction for Administrative Charge
Each Valuation Period, the Company deducts an Administrative Charge
which is equal, on an annual basis, to 0.01% of the average daily net asset
value of the Separate Account. The Company may increase this charge; however,
the maximum Administrative Charge will not exceed 0.25% of the average daily net
asset value of the Separate Account. In the event of an increase, the Company
will give Contract Owners 90 days prior notice of the increase. This charge,
together with the Annual Contract Maintenance Charge (see below), is to
reimburse the Company for the expenses it incurs in the establishment and
maintenance of the Contracts and the Separate Account. These expenses include
but are not limited to: preparation of the Contracts, confirmation statements,
annual and periodic reports, maintenance of Contract Owner records, maintenance
of Separate Account records, administrative personnel costs, mailing costs, data
processing costs, legal fees, accounting fees, filing fees, the costs of other
services necessary for Contract Owner servicing and all accounting, valuation,
regulatory and reporting requirements. Since this charge is an asset-based
charge, the amount of the charge attributable to a particular Contract may have
no relationship to the administrative costs actually incurred by that Contract.
The Company does not intend to profit from this charge. This charge will be
reduced to the extent that the amount of this charge is in excess of that
necessary to reimburse the Company for its administrative expenses.
Deduction for Annual Contract
Maintenance Charge
Currently, the Annual Contract Maintenance Charge is $35 each Contract
Year and is deducted on the last day of the Contract Year. This charge may be
increased but it will not exceed $60 per Contract Year. In the event of an
increase, the Company will give Contract Owners 90 days prior notice of the
increase. If a total withdrawal is made on other than the last day of the
Contract Year, the full Annual Contract Maintenance Charge will be deducted at
the time of the total withdrawal. The Annual Contract Maintenance Charge will be
deducted from the Sub- Accounts in the same proportion that the amount of the
Contract Value in each Sub-Account bears to the total Contract Value. If the
Annuity Date is not the last day of the Contract Year, then a pro-rata portion
of the Annual Contract Maintenance Charge will be deducted on the Annuity Date.
During the Annuity Period, unless otherwise elected the Annual Contract
Maintenance Charge will be deducted pro-rata from Annuity Payments and will
result in a reduction of each Annuity Payment. The Company has set this charge
at a level so that, when considered in conjunction with the Administrative
Charge (see above), it will not make a profit from the charges assessed for
administration.
Deduction for Premium and Other Taxes
Currently, any Premium Taxes relating to the Contracts will be deducted
from the Purchase Payments or from Contract Value when incurred. The Company
will, in its sole discretion, determine when Premium Taxes have resulted from:
the investment experience of the Separate Account; receipt by the Company of the
Purchase Payments; or commencement of Annuity Payments. Premium Taxes generally
range from 0% to 3.5%. The Company will deduct any withholding taxes required by
applicable law.
The Company reserves the right to establish a provision for federal
income taxes if it determines, in its sole discretion, that it will incur a tax
as a result of the operation of the Separate Account. The Company will deduct
for any income taxes incurred by it as a result of the operation of the Separate
Account whether or not there was a provision for taxes and whether or not it was
sufficient. The Company is not currently making any provision for federal income
taxes.
Deduction for Eligible Investment Expenses
There are other deductions from and expenses paid out of the assets of
the Eligible Investments, including amounts paid for advisory and operating
fees, which are described in the accompanying Prospectuses for the Eligible
Investments.
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Deduction for Transfer Fee
Subject to certain minimums and to any limitations imposed by the
Company on the number of transfers (currently, unlimited during the Accumulation
Period and six (6) during the Annuity Period) Contract Owners may transfer all
or part of the Contract Owner's interest in a Sub-Account to another Sub-Account
or during the Annuity Period from a Sub-Account to the General Account without
the imposition of any fee or charge if there have been no more than the number
of free transfers permitted. If more than the number of free transfers
(currently, 12 during the Accumulation Period, and 6 during the Annuity Period)
have been made, the Company will deduct a Transfer Fee for each subsequent
transfer permitted. The Transfer Fee is the lesser of $20 or 2% of the amount
transferred. Transfers made by the Company at the end of the Right to Examine
Contract period will not be counted in determining the application of the
Transfer Fee. All transfers made during a Valuation Period are deemed to be one
transfer.
The Contracts
Contract Owner
The Contract Owner is the person(s) or entity(ies) entitled to
ownership rights stated in the Contract. The Contract Owner is the person
designated as such on the Issue Date, unless changed.
The Contract Owner may change owners at any time prior to the Annuity
Date by Written Request. A change of Contract Owner will automatically revoke
any prior designation of Contract Owner. The change will become effective as of
the date the Written Request is received. A new designation of Contract Owner
will not apply to any payment made or action taken by the Company prior to the
time it was received. Any change of Contract Owner is subject to the Company's
underwriting rules then in effect. (See, "Tax Status - General," Page 27.)
Joint Contract Owners
The Contract can be owned by Joint Contract Owners. If Joint Contract
Owners are named, any Joint Contract Owner must be the spouse of the other
Contract Owner. Upon the death of either Contract Owner, the surviving spouse
will be the Primary Beneficiary. Any other Beneficiary designation on record at
the time of death will be treated as a Contingent Beneficiary unless otherwise
indicated in a Written Request. Unless otherwise specified in the application
for the Contract, if there are Joint Contract Owners both signatures will be
required for all Contract Owner transactions except telephone transfers. If the
telephone transfer option is elected and there are Joint Contract Owners, either
Joint Contract Owner can give telephone instructions.
Annuitant
The Annuitant is the person on whose life Annuity Payments are based.
The Annuitant is the person designated by the Contract Owner at the Issue Date,
unless changed prior to the Annuity Date. The Annuitant may not be changed in a
Contract which is owned by a non-natural person. Any change of Annuitant is
subject to the Company's underwriting rules then in effect. In the case of
certain Qualified Contracts the Contract Owner must be the Annuitant.
Assignment
A Written Request specifying the terms of an assignment of the Contract
must be provided to the Annuity Service Center. Until the Written Request is
received, the Company will not be required to take notice of or be responsible
for any transfer of interest in the Contract by assignment, agreement, or
otherwise. The Company will not be responsible for the validity or tax
consequences of any assignment. Any assignment made after the death benefit has
become payable will be valid only with the Company's consent. If the Contract is
assigned, the Contract Owner's rights may only be exercised with the consent of
the assignee of record. The consent of any Irrevocable Beneficiaries is required
before assignment of proceeds can happen.
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Purchase Payments and
Contract Value
Purchase Payments
The initial Purchase Payment is due on the Issue Date. The minimum
initial Purchase Payment the Company will accept without prior approval is
$100,000. The minimum subsequent Purchase Payment the Company will accept is
$10,000, unless the Contract Owner has elected the automatic investment option
in which case the Company will accept a minimum of $5,000. The maximum total
Purchase Payment is $5 million. Purchase Payments above these amounts must be
preapproved by the Company. The Company reserves the right to reject any
Application or Purchase Payment.
Allocation of Purchase Payments
The allocation of the initial Purchase Payment is made in accordance
with the selection made by the Contract Owner at the time the Contract is
issued, except in the circumstances described under Right to Examine Contract.
In those circumstances, the Company will allocate initial Purchase Payments to
the Money Market Sub-Account until the expiration of the Right to Examine
Contract period. Upon expiration, the Contract Value will be reallocated in
accordance with the Contract Owner's selection. Unless otherwise changed by
Written Request by the Contract Owner, subsequent Purchase Payments are
allocated in accordance with the same selection as the initial Purchase Payment.
There are currently no limitations on the number of Sub-Accounts that
can be selected by a Contract Owner. If allocations are made in percentages,
whole numbers must be used.
If the Purchase Payments and forms required to issue a Contract are in
good order, the initial Purchase Payment will be credited to the Contract within
(2) business days after receipt at the Annuity Service Center. Additional
Purchase Payments will be credited to the Contract as of the Valuation Period
when they are received. If the forms required to issue a Contract are not in
good order the Company will attempt to get them in good order or the Company
will return the forms and the Purchase Payment within five (5) business days,
unless it has been authorized otherwise by the purchaser.
Contract Value
The Contract Value is the sum of the Contract Owner's interest in the
Sub-Accounts of the Separate Account for any Valuation Date during the
Accumulation Period. It will fluctuate from one Valuation Period to the next,
and may be more or less than Purchase Payments made. The Contract Owner's
interest in a Sub-Account is determined by multiplying the number of
Accumulation Units credited to the Contract by the Accumulation Unit Value for
that Sub-Account.
Accumulation Units
During the Accumulation Period, Accumulation Units shall be used to
account for all amounts allocated to or withdrawn from the Sub-Accounts of the
Separate Account as a result of Purchase Payments, withdrawals, transfers, or
fees and charges. The Company will determine the number of Accumulation Units of
a Sub-Account purchased or canceled. This will be done by dividing the amount
allocated to (or the amount withdrawn from) the Sub-Account by the dollar value
of one Accumulation Unit of the Sub-Account as of the end of the Valuation
Period during which the request for the transaction is received at the Annuity
Service Center.
Accumulation Unit Value
The Accumulation Unit Value for each Sub-Account was arbitrarily set
initially at $10. Subsequent Accumulation Unit Values for each Sub-Account are
determined for each Valuation Period by multiplying the Accumulation Unit Value
for the immediately preceding Valuation Period by the Net Investment Factor for
the Sub-Account for the current Valuation Period.
The Net Investment Factor for each Sub-Account is determined by
dividing A by B and subtracting C where:
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A is (i) the net asset value per share of the fund or portfolio of an
Eligible Investment held by the Sub-Account for the current Valuation Period;
plus (ii) any dividend per share declared on behalf of such fund or portfolio of
an Eligible Investment that has an ex-dividend date within the current Valuation
Period; less (iii) the cumulative charge or credit for taxes reserved which is
determined by the Company to have resulted from the operation or maintenance of
the Sub-Account.
B is the net asset value per share of the fund or portfolio held by the
Sub-Account for the immediately preceding Valuation Period.
C is the cumulative charge for the Mortality and Expense Risk Charge
and for the Administrative Charge.
The Accumulation Unit Value may increase or decrease from Valuation
Period to Valuation Period.
Transfers
Transfers During the Accumulation Period
Subject to certain limitations imposed by the Company on the number of
transfers (currently, unlimited) that can be made during the Accumulation
Period, the Contract Owner may transfer all or part of the Contract Owner's
interest in a Sub-Account by Written Request. No fee will be imposed if there
have been no more than the number of free transfers allowed (currently, twelve
(12) per calendar year). All transfers are subject to the following:
1. If more than the number of free transfers have been made, the Company
will deduct a Transfer Fee, (see Charges and Deductions - Deduction for
Transfer Fee) for each subsequent transfer permitted. The Transfer Fee
will be deducted from the Contract Owner's interest in the Sub-Account
from which the transfer is made. However, if the Contract Owner's
entire interest in a Sub-Account is being transferred, the Transfer Fee
will be deducted from the amount which is transferred. If Contract
Values are being transferred from more than one Sub-Account, any
Transfer Fee will be allocated to those Sub-Accounts on a pro-rata
basis in proportion to the amount transferred from each Sub-Account.
2. The minimum amount which can be transferred is $10,000 (from one or
multiple Sub-Accounts) or the Contract Owner's entire interest in the
Sub-Account, or the minimum amount permitted by applicable state law,
if less. The minimum amount which must remain in a Sub-Account after a
transfer is $10,000 or $0 if the entire amount in the Sub-Account is
transferred.
3. The Contract provides that the Company reserves the right, at any time
and without prior notice to any party, to terminate, suspend or modify
the transfer privilege described above. However, the Company has agreed
to give prior notice to OFFITBANK of any proposed termination,
suspension or modification of the transfer privilege.
Contract Owners can elect to make transfers by telephone. To do so,
Contract Owners must submit a completed Written Request electing the telephone
transfer privilege. The Company will use reasonable procedures to confirm that
instructions communicated by telephone are genuine. If it does not, the Company
may be liable for any losses due to unauthorized or fraudulent instructions. The
Company may tape record all telephone instructions. The Company will not be
liable for any loss, liability, cost or expense incurred by the Contract Owner
for acting in accordance with such telephone instructions believed to be
genuine. The telephone transfer privilege may be discontinued at any time by the
Company.
If there are Joint Contract Owners, unless the Company is informed to
the contrary, telephone instructions will be accepted from either of the Joint
Contract Owners.
Transfers During the Annuity Period
During the Annuity Period, the Contract Owner may make transfers
(currently, six (6) per calendar year), by Written Request, as follows:
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1. The Contract Owner may make transfers of Annuity Reserves between Sub-
Accounts, subject to any limitations imposed by the Company on the
number of transfers (currently, six (6) transfers per calendar year)
that can be made during the Annuity Period. Currently, six (6)
transfers permitted per calendar year during the Annuity Period are
free (no Transfer Fee will be imposed).
2. The Contract Owner may, once each Contract Year, make a transfer of
Annuity Reserves from one or more Sub-Accounts to the General Account.
The Contract Owner may not make a transfer from the General Account to
one or more Sub-Accounts of the Separate Account.
3. Transfers of Annuity Reserves between Sub-Accounts will be made by
converting the number of Annuity Units attributable to the Annuity
Reserves being transferred to the number of Annuity Units of the Sub-
Account to which the transfer is made, so that the next Annuity Payment
if it were made at that time would be the same amount that it would
have been without the transfer. Thereafter, Annuity Payments will
reflect changes in the value of the new Annuity Units.
The amount transferred to the General Account from a Sub-Account will
be based on the Annuity Reserves for the Contract Owner in that Sub-
Account. Transfers to the General Account will be made by converting
the Annuity Units being transferred to purchase fixed Annuity Payments
under the Annuity Option in effect and based on the Age of the
Annuitant at the time of the transfer.
4. The minimum amount which can be transferred is $10,000 or the Contract
Owner's entire interest in the Sub-Account, or the minimum amount
permitted by applicable state law, if less. The minimum amount which
must remain in a Sub-Account after a transfer is $10,000 or $0 if the
entire amount in the Sub-Account is transferred.
5. The Contract provides that the Company reserves the right, at any time
and without prior notice to any party, to terminate, suspend or modify
the transfer privilege described above. However, the Company has agreed
to give prior notice to OFFITBANK of any proposed termination,
suspension or modification of the transfer privilege.
Contract Owners can elect to make transfers by telephone. To do so,
Contract Owners must complete a prior Written Request electing the telephone
transfer privilege. The Company will use reasonable procedures to confirm that
instructions communicated by telephone are genuine. If it does not, the Company
may be liable for any losses due to unauthorized or fraudulent instructions. The
Company may tape record all telephone instructions. The Company will not be
liable for any loss, liability, cost or expense incurred by the Contract Owner
for acting in accordance with such telephone instructions believed to be
genuine. The telephone transfer privilege may be discontinued at any time by the
Company.
If there are Joint Contract Owners, unless the Company is informed to
the contrary, telephone instructions will be accepted from either of the Joint
Contract Owners.
Withdrawals
During the Accumulation Period, the Contract Owner may, upon a Written
Request, make a total or partial withdrawal of the Contract Withdrawal Value.
The Contract Withdrawal Value is:
1. The Contract Value as of the end of the Valuation Period during which a
Written Request for a withdrawal is received; less
2. Any applicable Premium Taxes not previously deducted; less
3. The Annual Contract Maintenance Charge, if any; less
4. Any Purchase Payments credited to the Contract when based upon checks
that have not cleared the drawer bank.
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A withdrawal will result in the cancellation of Accumulation Units from
each applicable Sub-Account in the ratio that the Contract Owner's interest in
the Sub-Account bears to the total Contract Value. The Contract Owner must
specify by Written Request in advance which Sub- Account Units are to be
canceled if other than the above method is desired. If the Contract Owner makes
a total withdrawal, all of the Contract Owner's rights and interests in the
Contract will terminate.
The Company will pay the amount of any withdrawal within seven (7) days
of receipt of a request in good order unless the Suspension or Deferral of
Payments provision is in effect (or unless a shorter period is required under
applicable law or regulation). Each partial withdrawal must be for at least
$10,000 or the Contract Owner's entire interest in the Sub-Account, if less. The
minimum Contract Value which must remain in the Contract after a partial
withdrawal is $50,000. The Company reserves the right to limit the number of
partial withdrawals that can be made from a Contract. Currently, there are no
limitations on the number of partial withdrawals. Certain tax withdrawal
penalties and restrictions may apply to withdrawals from Contracts. (See Tax
Status).
No withdrawals are permitted during the Annuity Period.
Systematic Withdrawals
The Company permits a Systematic Withdrawal Plan which enables a
Contract Owner to pre-authorize (by providing the Company with a Written
Request) a periodic exercise of the contractual withdrawal rights. Systematic
withdrawals are made on any monthly date specified by the Contract Owner (or the
next following Valuation Date if the monthly date is not a Valuation Date). If
no start date is selected, the Company will automatically begin systematic
withdrawals within five (5) business days after the Written Request is received.
Contract Owners must be 59 1/2 or older to participate in the program. A minimum
Contract Value of $100,000 at the time the Systematic Withdrawal Plan is elected
is required. Certain tax penalties may apply to withdrawals from the Contracts
(see Tax Status - Tax Treatment of Withdrawals - Qualified Contracts). Contract
Owners can choose the frequency at which withdrawals will be made, i.e.,
monthly, quarterly, semi-annually or annually. The amount will be withdrawn
proportionately from each Sub-Account held under the Contract unless otherwise
directed by the Contract Owner.
Changes to selections made by the Contract Owner may be made by Written
Request. The Systematic Withdrawal Option will terminate if: (i) the total
Contract Value is withdrawn; (ii) the last withdrawal as selected by the
Contract Owner has been made; (iii) there is insufficient Contract Value in the
Sub-Account to complete the withdrawal; (iv) Annuity Payments have commenced; or
(v) a Written Request from the Contract Owner to terminate the option has been
received at the Annuity Service Center at least (5) business days prior to the
next withdrawal request. Contract Owners who elect to terminate the Systematic
Withdrawal Plan may re-institute the Plan by Written Request.
Contract Owners currently participating in the automatic premium system
may not simultaneously participate in the Systematic Withdrawal Plan. All the
provisions relating to withdrawals contained in the Contract are applicable to
the Systematic Withdrawal Plan.
Suspension or Deferral of Payments
The Company reserves the right to suspend or postpone payments for a
withdrawal or transfer for any period when:
1. The New York Stock Exchange is closed (other than customary weekend and
holiday closings);
2. Trading on the New York Stock Exchange is restricted;
3. An emergency exists as a result of which disposal of securities held in
the Separate Account is not reasonably practicable or it is not
reasonably practicable to determine the value of the Separate Account's
net assets; or
4. During any other period when the Securities and Exchange Commission, by
order, so permits for the protection of Contract Owners;
provided that applicable rules and regulations of the Securities and Exchange
Commission will govern as to whether the conditions described in (2) and (3)
exist.
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Proceeds Payable on Death
Death of Contract Owner During
the Accumulation Period
Upon the death of the Contract Owner or a Joint Contract Owner during
the Accumulation Period, the death benefit will be paid to the Primary
Beneficiary designated by the Contract Owner. Upon the death of a Joint Contract
Owner, the surviving Joint Contract Owner, if any, will be treated as the
Primary Beneficiary. Any other Beneficiary designation on record at the time of
death will be treated as a Contingent Beneficiary, unless previously changed by
Written Request.
A Beneficiary may request that the death benefit be paid under one of
the Death Benefit Options below. If the Beneficiary is the spouse of the
Contract Owner he or she may elect to continue the Contract at the then current
Contract Value (which may be less than the Death Benefit) in his or her own name
and exercise all the Contract Owner's rights under the Contract. In the event of
the simultaneous death of Joint Contract Owners, death benefits will be
determined in accordance with state law.
Death Benefit Amount During
the Accumulation Period
The death benefit during the Accumulation Period will be the Contract
Value determined and paid as of the end of the Valuation Period during which the
Company receives both due proof of death and an election of the payment method.
Death Benefit Options During
the Accumulation Period
A non-spousal Beneficiary must elect the death benefit to be paid under one of
the following options in the event of the death of the Contract Owner during the
Accumulation Period:
Option 1 - lump sum payment of the death benefit; or
Option 2 - the payment of the entire death benefit within five (5)
years of the date of the death of the Contract Owner; or
Option 3 - payment of the death benefit under an Annuity Option over
the lifetime of the Beneficiary or over a period not extending beyond the life
expectancy of the Beneficiary with distribution beginning within one (1) year of
the date of death of the Contract Owner or any Joint Contract Owner.
Any portion of the death benefit not applied under Option 3 within one
(1) year of the date of the Contract Owner's death, must be distributed within
five (5) years of the date of death.
A spousal Beneficiary may elect to continue the Contract in his or her
own name, elect a lump sum payment of the death benefit or apply the death
benefit to an Annuity Option.
If a lump sum payment is requested, the amount will be paid within
seven (7) days of receipt of proof of death and the election, unless the
Suspension or Deferral of Payments Provision is in effect.
Payment to the Beneficiary, other than in a lump sum, may only be
elected during the sixty-day period beginning with the date of receipt by the
Company of proof of death.
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Death of Contract Owner During
the Annuity Period
If the Contract Owner or a Joint Contract Owner, who is not the
Annuitant, dies during the Annuity Period, any remaining payments under the
Annuity Option elected will continue to be made at least as rapidly as under the
method of distribution in effect at such Contract Owner's death. Upon the death
of a Contract Owner during the Annuity Period, the Beneficiary becomes the
Contract Owner.
Death of Annuitant
Upon the death of the Annuitant, who is not a Contract Owner, during
the Accumulation Period, the Contract Owner may designate a new Annuitant,
subject to the Company's underwriting rules then in effect. If no designation is
made within 30 days of the death of the Annuitant, the Contract Owner will
become the Annuitant. If the Contract Owner is a non-natural person, the death
of the Annuitant will be treated as the death of the Contract Owner and a new
Annuitant may not be designated. (See Death of Contract Owner During
Accumulation Period).
Upon the death of the Annuitant on or after the Annuity Date, the death
benefit, if any, will be as specified in the Annuity Option elected. Death
benefits will be paid at least as rapidly as under the method of distribution in
effect at the Annuitant's death.
Payment of Death Benefit
The Company will require due proof of death before any death benefit is
paid. Due proof of death will be:
1. a certified death certificate;
2. a certified decree of a court of competent jurisdiction as to the
finding of death; or
3. any other proof satisfactory to the Company.
All death benefits will be paid in accordance with applicable law or
regulations governing death benefit payments.
Beneficiary
The Beneficiary designation in effect on the Issue Date will remain in
effect until changed. Unless the Contract Owner provides otherwise, the death
benefit will be paid in equal shares to the Beneficiary(ies) as follows:
1. to the Primary Beneficiary(ies) who survive the Contract Owner's and/or
the Annuitant's death, as applicable; or if there are none
2. to the Contingent Beneficiary(ies) who survive the Contract Owner's
and/or the Annuitant's death, as applicable; or if there are none
3. to the estate of the Contract Owner.
Beneficiaries may be named irrevocably. In that case a change of
Beneficiary requires the consent of any irrevocable Beneficiary. If an
irrevocable Beneficiary is named, the Contract Owner retains all other
contractual rights.
Change of Beneficiary
Subject to the rights of any irrevocable Beneficiary(ies), the Contract
Owner may change the Primary Beneficiary(ies) or Contingent Beneficiary(ies). A
change may be made by Written Request. The change will take effect
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as of the date the notice is signed. The Company will not be liable for any
payment made or action taken before it records the change.
Annuity Provisions
Annuity Guidelines
Once the Contract reaches the Annuity Date, the following guidelines
apply:
1. The Contract Owner may elect to have the Contract Value applied to
provide a Variable Annuity, a Fixed Annuity, or a combination Fixed and
Variable Annuity. If a combination is elected, the Contract Owner must
specify what part of the Contract Value is to be applied to the Fixed
and Variable options.
2. The amount applied to an Annuity Option on the Annuity Date, excluding
any death benefit proceeds applied to an Annuity Option, is equal to
the Contract Value minus any applicable Premium Tax and Annual Contract
Maintenance Charge.
3. If the amount to be applied under an Annuity Option is less than
$2,000, the Company reserves the right to pay the amount in a lump sum.
If any Annuity Payment is less than $100, the Company reserves the
right to change the payment basis to equivalent quarterly, semi-annual
or annual payments.
4. Contract Owners select an Annuity Date at the Issue Date. Contract
Owners may change the Annuity Date at any time prior to the Annuity
Date by Written Request 30 days prior to the new Annuity Date. The
Annuity Date must be the first day of a calendar month. The Annuity
Date cannot be earlier than five years after the Issue Date. The latest
permitted Annuity Date is the earlier of: (i) the 90th birthday of the
Annuitant or the oldest Joint Annuitant; or (ii) the latest date
permitted under state law.
5. If no Annuity Option has been chosen at least thirty (30) calendar days
before the Annuity Date, the Company will make payments to the
Annuitant under Option B, with 10 years of payments guaranteed. Unless
specified otherwise, the then Contract Value shall be used to provide a
Variable Annuity.
Annuity Payments
The Company will make Annuity Payments beginning on the Annuity Date,
provided no death benefit has become payable and the Contract Owner has by
Written Request selected an available Annuity Option and payment schedule.
Except as otherwise agreed to by the Contract Owner and the Company, Annuity
Payments will be payable monthly unless another Annuity Payment frequency is
selected by the Contract Owner. The Annuity Option and frequency of Annuity
Payments may not be changed by the Contract Owner after Annuity Payments begin.
Unless the Contract Owner specifies otherwise, the payee of the Annuity Payments
shall be the Annuitant.
If the amount of the Annuity Payment will depend on the Age or sex of
the Annuitant, the Company reserves the right to ask for satisfactory proof of
the Annuitant's (or Joint Annuitant's, if any) Age and sex. The Company reserves
the right to delay Annuity Payments until acceptable proof is received.
The Mortality and Expense Risk Charge is assessed during both the
Accumulation Period and Annuity Period. The Company will continue to assess the
Mortality and Expense Risk Charge during payment of an Annuity Option that does
not involve life contingency even though the Company no longer bears any
mortality risk on such payment obligation.
Fixed Annuity
A Fixed Annuity provides for payments which do not fluctuate based on
investment performance.
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Fixed Annuity payments shall be determined by applying the Annuity
Purchase Rates set forth in the Fixed Annuity Rate Tables contained in the
Contract to the portion of the Contract Value allocated to the Fixed Annuity
Option selected by the Contract Owner.
Variable Annuity
A Variable Annuity provides for payments which may fluctuate based on
the investment performance of the Sub-Accounts of the Separate Account. Variable
Annuity Payments will be based on the Sub-Accounts' Annuity Units credited to
the Variable Annuity Option.
Annuity Units and Payments
The dollar amount of each Variable Annuity payment depends on the
number of Annuity Units credited to that Annuity Option, and the value of those
Units. The number of Annuity Units is determined as follows:
1. The number of Annuity Units credited in each Sub-Account will be
determined by dividing the product of the portion of the Contract Value
to be applied to the Sub-Account and the Annuity Purchase Rate by the
value of one Annuity Unit in that Sub-Account on the Annuity Date. The
purchase rates are set forth in the Variable Annuity Rate Tables in the
Contract.
2. For each Sub-Account, the amount of each Annuity Payment equals the
product of the Annuitant's number of Annuity Units and the Annuity Unit
Value on the payment date. The amount of each payment may vary.
Annuity Unit Value
The value of any Annuity Unit for each Sub-Account of the Separate
Account was arbitrarily set initially at $10.
The Sub-Account Annuity Unit Value at the end of any subsequent
Valuation Period is determined as follows:
1. The Net Investment Factor (see page 16 for a description) for the
current Valuation Period is multiplied by the value of the Annuity Unit
for the Sub-Account for the immediately preceding Valuation Period.
2. The result in (1) is then divided by an assumed investment rate factor.
The assumed investment rate factor equals 1.00 plus the assumed
investment rate for the number of days since the preceding Valuation
Date. The assumed investment rate is based on an effective annual rate
of 4%.
The value of an Annuity Unit may increase or decrease from Valuation
Period to Valuation Period.
Annuity Options
The Contract Owner may choose periodic Fixed and/or Variable Annuity
Payments under any one of the Annuity Options described below. The Company may
consent to other plans of payment before the Annuity Date.
The following Annuity Options are available:
Annuity Option A - Life Income.
Periodic payments will be made as long as the Annuitant lives. Under
this option it would be possible for only one (1) Annuity Payment to be made if
the Annuitant were to die before the due date of the second Annuity Payment;
only two (2) Annuity Payments if the Annuitant were to die before the due date
of the third Annuity Payment; and so forth.
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Annuity Option B - Life Income with Period Certain
Periodic payments will be made for a guaranteed period, or as long as
the Annuitant lives, whichever is longer. The guaranteed period may be five (5),
ten (10) or twenty (20) years. If the Beneficiary does not desire payments to
continue for the remainder of the guaranteed period, he/she may elect to have
the present value of the guaranteed Annuity Payments remaining commuted and paid
in a lump sum.
Annuity Option C - Joint and Last Survivor Payments
Periodic payments will be made during the joint lifetime of two
Annuitants continuing in the same amount during the lifetime of the surviving
Annuitant. Under this option it would be possible for only one (1) Annuity
Payment to be made if both Annuitants were to die before the due date of the
second Annuity Payment; only two (2) Annuity Payments if both Annuitants were to
die before the due date of the third Annuity Payment; and so forth.
Annuity Option D - Joint and 2/3 Survivor Annuity
Periodic payments will be made during the joint lifetime of two
Annuitants. Payments will continue during the lifetime of the surviving
Annuitant and will be computed on the basis of two-thirds of the Annuity Payment
(or Units) in effect during the joint lifetime. Under this option it would be
possible for only one (1) Annuity Payment to be made if both Annuitants were to
die before the due date of the second Annuity Payment; only two (2) Annuity
Payments if both Annuitants were to die before the due date of the third Annuity
Payment; and so forth.
Annuity Option E - Period Certain
Periodic payments will be made for a specified period. The specified
period must be at least five (5) years and cannot be more than thirty (30)
years. If the Contract Owner does not desire payments to continue for the
remainder of the guaranteed period, he/she may elect to have the present value
of the remaining payments commuted and paid in a lump sum or as an Annuity
Option purchased at the date of such election.
Annuity Option F - Special Income Settlement Agreement
The Company will pay the proceeds in accordance with terms agreed upon
in writing by the Contract Owner and the Company.
Distribution
MML Distributors, LLC ("MML Distributors"), formerly known as
Connecticut Mutual Financial Services, LLC, is the distributor of the Contracts.
MML Distributors is a limited liability corporation. MML Distributors is a
broker-dealer registered with the Securities and Exchange Commission and a
member of the National Association of Securities Dealers, Inc. MML Distributors
is an indirect wholly owned subsidiary of Massachusetts Mutual Life Insurance
Company and an affiliate of C.M. Life Insurance Company.
MML Distributors may enter into selling agreements with other broker-
dealers which are registered with the Securities and Exchange Commission and are
members of the National Association of Securities Dealers, Inc. ("selling
brokers"). Contracts are sold through agents who are licensed by state insurance
officials to sell the Contracts. These agents are also registered
representatives of selling brokers.
MML Distributors does business under different variations of its name;
including the name MML Distributors, L.L.C. in the states of Illinois, Michigan,
Oklahoma, South Dakota, and Washington, and the name MML Distributors, Limited
Liability Company in the states of Maine, Ohio, and West Virginia.
It is anticipated that the offering of the Contracts will be
continuous.
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Performance Information
Money Market Sub-Account
From time to time, the Company may advertise its "yield" and "effective
yield" of the Money Market Sub-Account. Both yield figures are based on
historical earnings and are not intended to indicate future performance. The
"yield" of the Money Market Sub-Account refers to the income generated by
Contract Values in the Money Market Sub-Account over a seven-day period (which
period will be stated in the advertisement). This income is "annualized." That
is, the amount of income generated by the investment during that week is assumed
to be generated each week over a 52-week period and is shown as a percentage of
the Contract Values in the Money Market Sub-Account. The "effective yield" is
calculated similarly. However, when annualized, the income earned by Contract
Values is assumed to be reinvested. This results in the "effective yield" being
slightly higher than the "yield" because of the compounding effect of the
assumed reinvestment. The yield figure will reflect the deduction of any asset-
based charges and any applicable Annual Contract Maintenance Charge, but not
Premium Taxes.
Other Sub-Accounts
From time to time, the Company may advertise performance data for the
various other Sub-Accounts under the Contract. Such data will show the
percentage change in the value of a Sub-Account's Accumulation Unit based on the
performance of the underlying investment vehicle over a period of time, usually
a calendar year, determined by dividing the increase (decrease) in value for
that Unit by the Accumulation Unit value at the beginning of the period. This
percentage figure will reflect the deduction of any asset-based charges and any
applicable Annual Contract Maintenance Charges under the Contract, but not
Premium Taxes. Any advertisement will include total return figures calculated as
described in the Statement of Additional Information. The total return figures
reflect the deduction of any applicable Annual Contract Maintenance Charge, as
well as any asset-based charges, but not Premium Taxes.
The Company may also show historical Accumulation Unit values in
certain advertisements containing illustrations. These illustrations will be
based on actual Accumulation Unit values or values since inception of the Fund.
In addition, the Company may distribute sales literature which compares
the percentage change in Accumulation Unit values for any of the Sub- Accounts
against established market indices such as the Standard & Poor's 500 Composite
Stock Price Index, the Dow Jones Industrial Average or other management
investment companies which have investment objectives similar to the underlying
Portfolio being compared. The Standard & Poor's 500 Composite Stock Price Index
is an unmanaged, unweighted average of 500 stocks, the majority of which are
listed on the New York Stock Exchange. The Dow Jones Industrial Average is an
unmanaged, weighted average of thirty blue chip industrial corporations listed
on the New York Stock Exchange. Both the Standard & Poor's 500 Composite Stock
Price Index and the Dow Jones Industrial Average assume quarterly reinvestment
of dividends. In addition, the Company may, as appropriate, compare each Sub-
Account's performance to that of other types of investments such as certificates
of deposit, savings accounts and U.S. Treasuries, or to certain interest rate
and inflation indices, such as the Consumer Price Index, which is published by
the U.S. Department of Labor and measures the average change in prices over time
of a fixed "market basket" of certain specified goods and services. Similar
comparisons of Sub-Account performance may also be made with appropriate indices
measuring the performance of a defined group of securities widely recognized by
investors as representing a particular segment of the securities markets. For
example, Sub-Account performance may be compared with Donoghue Money Market
Institutional Averages (money market rates), Lehman Brothers Corporate Bond
Index (corporate bond interest rates) or Lehman Brothers Government Bond Index
(long-term U.S. Government obligation interest rates).
The Company may also distribute sales literature which compares the
performance of the Contracts and Insurance Investment Products Trust with the
contracts issued through the separate accounts of other insurance companies and
their underlying funds. Such information will be derived from the Lipper
Variable Insurance Products Performance Analysis Service, the VARDS Report or
from Morningstar.
The Lipper Variable Insurance Products Performance Analysis Service is
published by Lipper Analytical Services, Inc., a publisher of statistical data
which currently tracks the performance of almost 4,000 investment companies. The
rankings compiled by Lipper may or may not reflect the deduction of asset-based
insurance charges.
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The Company's sales literature utilizing these rankings will indicate whether or
not such charges have been deducted. Where the charges have not been deducted,
the sales literature will indicate that if the charges had been deducted, the
ranking might have been lower.
The VARDS Report is a monthly variable annuity industry analysis
compiled by Variable Annuity Research & Data Service of Atlanta and published by
Financial Planning Resources, Inc. The VARDS rankings may or may not reflect the
deduction of asset-based insurance charges. The Company's sales literature
utilizing these rankings will indicate which charges had been deducted. Where
the charges have not been deducted, the sales literature will indicate that if
the charges had been deducted, the ranking might have been lower.
Morningstar rates mutual funds used with variable contracts against its
peers with similar investment objectives. Morningstar does not rate any mutual
fund that has less than three years of performance data. The Company's sales
literature utilizing these rankings will indicate whether they reflect the
deduction of asset-based insurance charges. Where the charges have not been
deducted, the sales literature will indicate that if the charges had been
deducted, the ranking might have been lower.
Tax Status
General
Note: the following description is based upon the Company's understanding of
current federal income tax law applicable to annuities in general. The Company
cannot predict the probability that any changes in such laws will be made.
Purchasers are cautioned to seek competent tax advice regarding the possibility
of such changes. This discussion is based upon C.M. Life's understanding of the
present Federal income tax laws as they are currently interpreted by the
Internal Revenue Service. No representation is made as to the likelihood of the
continuation of the present Federal income tax laws, or of the current
interpretation by the Internal Revenue Service. It should be further understood
that the following discussion is not exhaustive and that special rules not
described in this prospectus may be applicable in certain situations. Moreover,
no attempt has been made to consider any applicable state or other tax laws.
Section 72 of the Code governs taxation of annuities in general. A Contract
Owner is generally not taxed on increases in the value of a Contract until
distribution occurs, either in the form of a lump sum payment or other non-
periodic distribution or as Annuity Payments under the Annuity Option selected.
For a lump sum payment received as a total withdrawal (total surrender), the
recipient is taxed on the portion of the payment that exceeds the cost basis of
the Contract. For Non-Qualified Contracts, this cost basis is generally the
Purchase Payments, while for Qualified Contracts there may be no cost basis. The
taxable portion of the lump sum payment is taxed at ordinary income tax rates.
For Annuity Payments, a portion of each payment in excess of an exclusion amount
is includable in taxable income. The exclusion amount for payments based on a
fixed Annuity Option is determined by multiplying the payment by the ratio that
the cost basis of the Contract (adjusted for any period certain or refund
feature) bears to the expected return under the Contract. The exclusion amount
for payments based on a variable Annuity Option is determined by dividing the
cost basis of the Contract (adjusted for any period certain or refund guarantee)
by the number of years over which the annuity is expected to be paid. Payments
received after the investment in the Contract has been recovered (i.e., when the
total of the excludable amounts received equal the investment in the Contract)
are fully taxable. The taxable portion is taxed at ordinary income tax rates.
For certain types of Qualified Plans there may be no cost basis in the Contract
within the meaning of Section 72 of the Code. Contract Owners, Annuitants, and
Beneficiaries under the Contracts should seek competent financial advice about
the tax consequences of any distributions.
The Company is taxed as a life insurance company under the Code. For federal
income tax purposes, the Separate Account is not a separate entity from the
Company and its operations form a part of the Company.
Diversification
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not, in
accordance with regulations prescribed by the United
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States Treasury Department ("Treasury Department"), adequately diversified.
Disqualification of the Contract as an annuity contract would result in the
imposition of federal income tax to the Contract Owner with respect to earnings
allocable to the Contract prior to the receipt of payments under the Contract.
The Code contains a safe harbor provision which provides that annuity contracts
such as the Contract meet the diversification requirements if, as of the end of
each quarter, the underlying assets meet the diversification standards for a
regulated investment company and no more than 55% of the total assets consist of
cash, cash items, U.S. Government securities and securities of other regulated
investment companies.
On March 2, 1989, the Treasury Department issued Regulations (Treas. Reg. 1.817-
5), which established diversification requirements for the investment portfolios
underlying variable contracts such as the Contract. The Regulations amplify the
diversification requirements for variable contracts set forth in the Code and
provide an alternative to the safe harbor provision described above. Under the
Regulations, an investment portfolio will be deemed adequately diversified if:
(1) no more than 55% of the value of the total assets of the portfolio is
represented by any one investment; (2) no more than 70% of the value of the
total assets of the portfolio is represented by any two investments; (3) no more
than 80% of the value of the total assets of the portfolio is represented by any
three investments; and (4) no more than 90% of the value of the total assets of
the portfolio is represented by any four investments.
The Code provides that, for purposes of determining whether or not the
diversification standards imposed on the underlying assets of variable contracts
by Section 817(h) of the Code have been met, "each United States Government
agency or instrumentality shall be treated as a separate issuer."
The Company intends that all Portfolios of the Trust underlying the Contracts
will be managed by the Investment Adviser for the Trust in such a manner as to
comply with these diversification requirements.
The Treasury Department has indicated that the diversification Regulations do
not provide guidance regarding the circumstances in which Contract Owner control
of the investments of the Separate Account will cause the Contract Owner to be
treated as the owner of the assets of the Separate Account, thereby resulting in
the loss of favorable tax treatment for the Contract. At this time it cannot be
determined whether additional guidance will be provided and what standards may
be contained in such guidance.
The amount of Contract Owner control which may be exercised under the Contract
is different in some respects from the situations addressed in published rulings
issued by the Internal Revenue Service in which it was held that the policy
owner was not the owner of the assets of the separate account. It is unknown
whether these differences, such as the Contract Owner's ability to transfer
among investment choices or the number and type of investment choices available,
would cause the Contract Owner to be considered as the owner of the assets of
the Separate Account resulting in the imposition of federal income tax to the
Contract Owner with respect to earnings allocable to the Contract prior to
receipt of payments under the Contract.
In the event any forthcoming guidance or ruling is considered to set forth a new
position, such guidance or ruling would generally be applied only prospectively.
However, if such ruling or guidance was not considered to set forth a new
position, it may be applied retroactively resulting in the Contract Owner being
retroactively determined to be the owner of the assets of the Separate Account.
Due to the uncertainty in this area, the Company reserves the right to modify
the Contract in an attempt to maintain favorable tax treatment.
Multiple Contracts
The Code provides that multiple Non-Qualified annuity contracts which are issued
within a calendar year to the same contract owner by one company or its
affiliates are treated as one annuity contract for purposes of determining the
tax consequences of any distribution. Such treatment may result in adverse tax
consequences including more rapid taxation of the distributed amounts from such
combination of contracts. Contract Owners should consult a tax adviser prior to
purchasing more than one Non-Qualified annuity Contract in any calendar year.
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Tax Treatment of Assignments
A transfer of ownership, assignment or pledge of a Contract may be a taxable
event. Contract Owners should therefore consult competent tax advisers should
they wish to transfer, assign or pledge their Contracts.
Income Tax Withholding
All distributions or the portion thereof which is includable in the gross income
of a payee are subject to federal income tax withholding. Generally, amounts are
withheld from periodic payments at the same rate as wages and at the rate of 10%
from non-periodic payments. However, the payee, in most cases, may elect not to
have taxes withheld or to have withholding done at a different rate. Special
rules limit the ability of a payee to elect no withholding where the payee fails
to provide a U.S. residence address or federal taxpayer identification number.
Effective January 1, 1993, certain distributions from Qualified Plans under
Section 401, which are not directly rolled over to another eligible retirement
plan or individual retirement account or individual retirement annuity, are
subject to a mandatory 20% withholding for federal income tax. The 20%
withholding requirement does not apply to: a) distributions for the life or life
expectancy of the participant or joint lives or joint life expectancies of the
participant and a designated beneficiary; or b) distributions for a specified
period of ten (10) years or more; or c) distributions which are required minimum
distributions. Payments that are not eligible for rollover remain subject to the
withholding rules described in the preceding paragraph.
Tax Treatment of Withdrawals -
Non-Qualified Contracts
Section 72 of the Code governs treatment of distributions from annuity
contracts. It provides that if the Contract Value exceeds the aggregate purchase
payments made, any amount withdrawn will be treated as coming first from the
earnings and then, only after the income portion is exhausted, as coming from
the principal. Withdrawn earnings are includable in gross income.
Penalty Tax
A 10% penalty will apply to the income portion of any distribution. However, the
penalty is not imposed on amounts received: (a) after the taxpayer reaches age
59 1/2; (b) after the death of the Contract Owner; (c) if the taxpayer has
become totally disabled (for this purpose disability is as defined in Section
72(m)(7) of the Code); (d) in a series of substantially equal periodic payments
made not less frequently than annually for the life (or life expectancy) of the
taxpayer or for the joint lives (or joint life expectancies) of the taxpayer and
his or her Beneficiary; (e) under an immediate annuity; or (f) which are
allocable to purchase payments made prior to August 14, 1982.
The above information does not apply to Qualified Contracts. However, separate
tax withdrawal penalties and restrictions may apply to such Qualified Contracts.
(See Tax Treatment of Withdrawals - Qualified Contracts.)
Qualified Plans
The Contracts offered by this Prospectus are designed to be suitable
for use under various types of Qualified Plans. Taxation of participants in each
Qualified Plan varies with the type of plan and terms and conditions of each
specific plan. Contract Owners, Annuitants and Beneficiaries are cautioned that
benefits under a Qualified Plan may be subject to the terms and conditions of
the plan regardless of the terms and conditions of the Contracts issued pursuant
to the plan. Some retirement plans are subject to distribution and other
requirements that are not incorporated into the Contract's administrative
procedures. Owners, participants and Beneficiaries are responsible for
determining that contributions, distributions and other transactions with
respect to the Contracts comply with applicable law. Following are general
descriptions of the types of Qualified Plans with which the Contracts may be
used. Such descriptions are not exhaustive and are for general informational
purposes only. The tax rules regarding Qualified Plans are very complex and will
have differing applications depending on individual facts and circumstances.
Each purchaser should obtain competent tax advice prior to purchasing a Contract
issued under a Qualified Plan.
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Contracts issued pursuant to Qualified Plans include special provisions
restricting Contract rights that may otherwise be available as described in this
Prospectus. Generally, Contracts issued pursuant to Qualified Plans are not
transferable except upon surrender or annuitization. Various penalty and excise
taxes may apply to contributions or distributions made in violation of
applicable limitations. Furthermore, certain withdrawal penalties and
restrictions may apply to surrenders from Qualified Contracts. (See Tax
Treatment of Withdrawals - Qualified Contracts).
On July 6, 1983, the Supreme Court decided in Arizona Governing
Committee v. Norris that optional annuity benefits provided under an employer's
deferred compensation plan could not, under Title VII of the Civil Rights Act of
1964, vary between men and women. The Contracts sold by the Company in
connection with certain Qualified Plans will utilize annuity tables which do not
differentiate on the basis of sex. Such annuity tables will also be available
for use in connection with certain non-qualified deferred compensation plans.
H.R. 10 Plans
Section 401 of the Code permits self-employed individuals to establish
Qualified Plans for themselves and their employees, commonly referred to as
"H.R. 10" or "Keogh" plans. Contributions made to the Plan for the benefit of
the employees will not be included in the gross income of the employees until
distributed from the Plan. The tax consequences to participants may vary
depending upon the particular plan design. However, the Code places limitations
and restrictions on all Plans including on such items as: amount of allowable
contributions; form, manner and timing of distributions; transferability of
benefits; vesting and nonforfeitability of interests; nondiscrimination in
eligibility and participation; and the tax treatment of distributions,
withdrawals and surrenders. (See Tax Treatment of Withdrawals - Qualified
Contracts). These retirement plans may permit the purchase of the Contracts to
accumulate retirement savings under the plans. Adverse tax or other legal
consequences to the Plan, to the participant or to both may result if the
Contract is assigned or transferred to any individual as a means to provide
benefit payments, unless the Plan complies with all legal requirements
applicable to such benefits prior to the transfer of the Contract. Purchasers of
Contracts for use with an H.R. 10 Plan should obtain competent tax advice as to
the tax treatment and suitability of such an investment.
Individual Retirement Annuities
Section 408(b) of the Code permits eligible individuals to contribute
to an individual retirement program known as an "Individual Retirement Annuity"
("IRA"). Under applicable limitations, certain amounts may be contributed to an
IRA which will be deductible from the individual's gross income. These IRAs are
subject to limitations on eligibility, contributions, transferability and
distributions. (See Tax Treatment of Withdrawals - Qualified Contracts). Under
certain conditions, distributions from other IRAs and other Qualified Plans may
be rolled over or transferred on a tax-deferred basis into an IRA. Sales of
Contracts for use with IRAs are subject to special requirements imposed by the
Code, including the requirement that certain informational disclosure be given
to persons desiring to establish an IRA. Purchasers of Contracts to be qualified
as Individual Retirement Annuities should obtain competent tax advice as to the
tax treatment and suitability of such an investment.
Corporate Pension and
Profit-Sharing Plans
Sections 401(a) and 401(k) of the Code permit corporate employers to
establish various types of retirement plans for employees. These retirement
plans may permit the purchase of the Contracts to provide benefits under the
Plan. Contributions to the Plan for the benefit of employees will not be
includable in the gross income of the employees until distributed from the Plan.
The tax consequences to participants may vary depending upon the particular plan
design. However, the Code places limitations and restrictions on all plans
including on such items as: amount of allowable contributions; form, manner and
timing of distributions; transferability of benefits; vesting and
nonforfeitability of interests; nondiscrimination in eligibility and
participation; and the tax treatment of distributions, withdrawals and
surrenders. (See Tax Treatment of Withdrawals - Qualified Contracts). These
retirement plans may permit the purchaser of the Contracts to accumulate
retirement savings under the plans. Adverse tax or other legal consequences to
the plan, to the participant, or to both may result if the Contract is assigned
or transferred to any individual as a means to provide benefit payments, unless
the plan complies with all legal requirements applicable to such benefits prior
to
28
<PAGE>
transfer of the Contract. Purchasers of Contracts for use with Corporate Pension
or Profit-Sharing Plans should obtain competent tax advice as to the tax
treatment and suitability of such an investment.
Tax Treatment of Withdrawals -
Qualified Contracts
In the case of a withdrawal under a Qualified Contract, a ratable
portion of the amount received is taxable, generally based on the ratio of the
individual's cost basis to the individual's total accrued benefit under the
retirement plan. Special tax rules may be available for certain distributions
from a Qualified Contract. Section 72(t) of the Code imposes a 10% penalty tax
on the taxable portion of any distribution from qualified retirement plans,
including Contracts issued and qualified under Code Sections 401 (H.R. 10 and
Corporate Pension and Profit-Sharing Plans) and 408(b) (Individual Retirement
Annuities). To the extent amounts are not includable in gross income because
they have been rolled over to an IRA or to another eligible Qualified Plan, no
tax penalty will be imposed. The tax penalty will not apply to the following
distributions: (a) if distribution is made on or after the date on which the
Contract Owner or Annuitant (as applicable) reaches age 59 1/2 (b) distributions
following the death or disability of the Contract Owner or Annuitant (as
applicable) (for this purpose disability is as defined in Section 72(m)(7) of
the Code); (c) after separation from service, distributions that are part of
substantially equal periodic payments made not less frequently than annually for
the life (or life expectancy) of the Contract Owner or Annuitant (as applicable)
or the joint lives (or joint life expectancies) of such Contract Owner or
Annuitant (as applicable) and his or her designated Beneficiary; (d)
distributions to a Contract Owner or Annuitant (as applicable) who has separated
from service after he/she has attained age 55; (e) distributions made to the
Contract Owner or Annuitant (as applicable) to the extent such distributions do
not exceed the amount allowable as a deduction under Code Section 213 to the
Contract Owner or Annuitant (as applicable) for amounts paid during the taxable
year for medical care; and (f) distributions made to an alternate payee pursuant
to a qualified domestic relations order. The exceptions stated in (d) and (f)
above do not apply in the case of an Individual Retirement Annuity. The
exception stated in (c) above applies to an Individual Retirement Annuity
without the requirement that there be a separation from service. In addition,
for calendar years beginning January 1, 1997, withdrawals from IRAs by certain
unemployed persons for payment of health insurance premiums are not subject to
the tax penalty.
Generally, distributions from a Qualified Plan by a 5% owner or from an
IRA must commence no later than April 1 of the calendar year, following the year
in which the employee attains age 70 1/2 and from all others in Qualified Plans
at the later of age 70 1/2 or when the employee retires. Required distributions
must be over a period not exceeding the life expectancy of the individual or the
joint lives or life expectancies of the individual and his or her designated
beneficiary. If the required minimum distributions are not made, a 50% penalty
tax is imposed as to the amount not distributed. In addition, distributions in
excess of $160,000 per year may be subject to an additional 15% excise tax
unless an exemption applies. For calendar years 1997, 1998 and 1999 the 15%
excise tax on excess distributions has been suspended and will be reinstated for
calendar years beginning January 1, 2000.
Contracts Owned by Other Than
Natural Persons
Generally, investment earnings on Purchase Payments for Contracts will
be taxed currently to the Contract Owner if the Owner is a non-natural person,
e.g., a corporation, or certain other entities other than tax- qualified trusts.
Such Contracts generally will not be treated as annuities for federal income tax
purposes.
Financial Statements
Financial statements of the Company have been included in the Statement of
Additional Information. No financial statements for the Separate Account have
been included herein because, as of the date of this Prospectus the Sub-Accounts
available under the Contracts offered hereunder had no assets.
29
<PAGE>
Legal Proceedings
There are no material pending legal proceedings to which the Separate Account,
the Distributor or the Company is a party which would have a negative impact on
any party's ability to meet its obligations under the Contracts.
Table of Contents of the
Statement of Additional Information
Item
1. Company
2. Experts
3. Distribution
4. Yield Calculation for Money Market Sub-Account
5. Performance Information
6. Annuity Provisions
7. Financial Statements
30
<PAGE>
- -----------
- -----------
- -----------
FRONT
OFFITBANK
Attention: Stephen Wells
520 Madison Avenue
New York, NY 10022-4213
31
<PAGE>
PLEASE SEND ME, AT NO CHARGE THE STATEMENT OF ADDITIONAL INFORMATION DATED
MAY 1, 1997 FOR THE INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACTS ISSUED BY
C.M. MULTI-ACCOUNT A--OFFITBANK
BACK
(Please print or type and fill in all information.)
Name __________________________________________________________________________
Address _______________________________________________________________________
City ________________________________ State ____________ ZIP Code _____________
32
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
INDIVIDUAL VARIABLE DEFERRED ANNUITY CONTRACTS WITH
FLEXIBLE PURCHASE PAYMENTS
ISSUED BY
C.M. MULTI-ACCOUNT A
AND
C.M. LIFE INSURANCE COMPANY
THIS IS NOT A PROSPECTUS. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE
READ IN CONJUNCTION WITH THE PROSPECTUS DATED MAY 1, 1997 FOR THE INDIVIDUAL
VARIABLE DEFERRED ANNUITY CONTRACTS WITH FLEXIBLE PURCHASE PAYMENTS WHICH ARE
REFERRED TO HEREIN.
THE PROSPECTUS CONCISELY SETS FORTH INFORMATION THAT A PROSPECTIVE INVESTOR
OUGHT TO KNOW BEFORE INVESTING. FOR A COPY OF THE PROSPECTUS CALL (800) 334-8117
OR WRITE, to Stephen Wells, OFFITBANK, 520 Madison Avenue, New York, New York
10022.
MAY 1, 1997.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Company.....................................................................2
Experts.....................................................................2
Distribution................................................................2
Yield Calculation For Money Market Sub-Account..............................2
Performance Information.....................................................3
Annuity Provisions..........................................................5
Financial Statements..............................................final pages
</TABLE>
7
<PAGE>
COMPANY
Information regarding the Company and its ownership is contained in the
Prospectus.
EXPERTS
The audited financial statements of the OFFITBANK segment of C.M. Multi-Account
A as of December 31, 1996 and for the period August 13, 1996 (date of
commencement of operations) to December 31, 1996 included in this Statement of
Additional Information have been so included in reliance on the report of
Coopers & Lybrand L.L.P., independent accountants, given on the authority of
that firm as experts in accounting and auditing.
The audited statement of statutory financial position of C.M. Life Insurance
Company as of December 31, 1996 and the related statutory statements of income,
changes in shareholder's equity and cash flows for the year ended December 31,
1996 included in this Statement of Additional Information have been so included
in reliance on the report, which includes explanatory paragraphs relating to the
use of statutory accounting practices rather than generally accepted accounting
principles, of Coopers & Lybrand L.L.P., independent accountants, given on the
authority of that firm as experts in accounting and auditing.
The audited statement of statutory financial position of C.M. Life Insurance
Company as of December 31, 1995 and the related statutory statements of income,
changes in shareholder's equity and cash flows for each of the years in the two
year period ended December 31, 1995 included in this Statements of Additional
Information have been so included in reliance on the reports of Arthur Andersen
LLP, C.M. Life's former independent accountants, given on the authority of that
firm as experts in accounting and auditing.
DISTRIBUTION
See the prospectus for information regarding distribution of the Contracts.
No compensation was paid to MML Distributors or MMLISI in 1996.
YIELD CALCULATION FOR MONEY MARKET SUB-ACCOUNT
The Money Market Sub-Account of the Separate Account will calculate its current
yield based upon the seven days ended on the date of calculation.
The current yield of the Money Market Sub-Account is computed by determining the
net change (exclusive of capital changes) in the value of a hypothetical pre-
existing Contract Owner account having a balance of one Accumulation Unit of the
Sub-Account at the beginning of the period, subtracting the Mortality and
Expense Risk Charge, the Administrative Charge and the Annual Contract
Maintenance Charge, dividing the difference by the value of the account at the
beginning of the same period to obtain the base period return and multiplying
the result by (365/7).
The Money Market Sub-Account computes its effective compound yield according to
the method prescribed by the Securities and Exchange Commission. The effective
yield reflects the reinvestment of net income earned daily on Money Market Sub-
Account assets.
Net investment income for yield quotation purposes will not include either
realized capital gains and losses or unrealized appreciation and depreciation,
whether reinvested or not.
The yields quoted should not be considered a representation of the yield of the
Money Market Sub-Account in the future since the yield is not fixed. Actual
yields will depend not only on the type, quality and maturities of the
8
<PAGE>
investments held by the Money Market Sub-Account and changes in the interest
rates on such investments, but also on changes in the Money Market Sub-Account's
expenses during the period.
Yield information may be useful in reviewing the performance of the Money Market
Sub-Account and for providing a basis for comparison with other investment
alternatives. However, the Money Market Sub-Account's yield fluctuates, unlike
bank deposits or other investments which typically pay a fixed yield for a
stated period of time.
PERFORMANCE INFORMATION
From time to time, the Company may advertise performance data as described in
the Prospectus. Any such advertisement will include total return figures for the
time periods indicated in the advertisement. Such total return figures will
reflect the deduction of a 0.38% Mortality and Expense Risk Charge, a 0.01%
Administrative Charge, the investment advisory fee for the underlying Portfolio
being advertised and any applicable Annual Contract Maintenance Charge.
The hypothetical value of a Contract purchased for the time periods described in
the advertisement will be determined by using the actual Accumulation Unit
Values for an initial $1,000 purchase payment, and deducting any applicable
Annual Contract Maintenance Charge to arrive at the ending hypothetical value.
The Annual Contract Maintenance Charge for purposes of computing this
hypothetical value will be prorated among the Sub-Accounts of the Separate
Account based upon the percentage of in-force Contracts investing in each of the
Sub-Accounts. The percentages used are those determined as of the most recent
calendar year. For the first year of the Separate Account's operation, the
percentages used will be evenly allocated among the Sub-Accounts. In general,
the percentages are used in all instances where a Contract Maintenance Charge is
deducted in the calculation.
The average annual total return is then determined by computing the fixed
interest rate that a $1,000 purchase payment would have to earn annually,
compounded annually, to grow to the hypothetical value at the end of the time
periods described. The formula used in these calculations is:
n
P (1+T) = ERV
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the time periods
used (or fractional portion thereof) of a hypothetical
$1,000 payment made at the beginning of the time periods
used.
In addition to total return data, the Company may include yield information in
its advertisements. For each Sub-Account (other than the Money Market
Sub-Account) for which the Company will advertise yield, it will show a yield
quotation based on a 30 day (or one month) period ended on the date of the most
recent balance sheet of the Separate Account included in the registration
statement, computed by dividing the net investment income per Accumulation Unit
earned during the period by the maximum offering price per Unit on the last day
of the period, according to the following formula:
Yield = 2 [((a-b)/(cd) + 1)6 - 1]
Where:
a = Net investment income earned during the period by the Trust
attributable to shares owned by the Sub-Account.
9
<PAGE>
b = Expenses accrued for the period (net of reimbursements).
c = The average daily number of Accumulation Units outstanding
during the period.
d = The maximum offering price per Accumulation Unit on the last
day of the period.
Contract Owners should note that the investment results of each Sub-Account will
fluctuate over time, and any presentation of the Sub-Account's total return or
yield for any period should not be considered as a representation of what an
investment may earn or what a Contract Owner's total return or yield may be in
any future period.
The Policies were first offered to the public in 1996. However, total return
data may be advertised based on the period of time the Portfolios of the Funds
have been in existence. The results for any period prior to the Contracts being
offered will be calculated as if the Contracts had been offered during that
period of time, with all charges assumed to be those applicable to the
Contracts.
The Separate Account may from time to time also disclose average annual total
returns in non-standard formats in conjunction with the standard format
described above. The non-standard format calculation will be identical to the
standard format except it will NOT take any sales or surrender charges into
account.
Historical non-standard performance data are contained in the tables appearing
below.
The Fund may from time to time also discuss cumulative total returns in
conjunction with the standard format described above. The cumulative returns
will be calculated using the following formula, assuming no sales charge.
CTR = (ERV/P) - 1
Where: CTR = the cumulative total return net of a Sub-
Account recurring charges for the period
ERV = ending redeemable value of a
hypothetical $1,000 payment made at
the beginning of the one, five, or
ten-year (or other) period, at the
end of the one, five, or ten-year
(or other) period (or fractional
portion thereof)
P = a hypothetical initial payment of $1,000.
All non-standard performance data will only be advertised if the standard total
return performance data is also included in the advertisement.
Performance information for the Separate Account may be: (a) compared to other
variable annuity separate accounts or other investment products surveyed by
Lipper Analytical Services, a nationally recognized independent reporting
service or similar services that rank mutual funds and other investment
companies by overall performance, investment objectives and assets; (b) tracked
by other ratings services, companies, publications or persons who rank separate
accounts or other investment products on overall performance or other criteria;
and (c) included in data bases that can be used to produce reports and
illustrations by organizations such as CDA Wiesenberger. Performance figures
will be calculated in accordance with standardized methods established by each
reporting service.
10
<PAGE>
ANNUITY PROVISIONS
A Variable Annuity is an annuity with payments which; (1) are not predetermined
as to dollar amount; and (2) will vary in amount with the net investment results
of the applicable Sub-Accounts of the Separate Account. Annuity Payments also
depend upon the Age of the Annuitant and any Joint Annuitant and the assumed
interest factor utilized. The Annuity Table used will depend upon the Annuity
Option chosen. The dollar amount of annuity payments after the first is
determined as follows;
1. The dollar amount of the first Annuity Payment is divided by the
value of a Date. This establishes the number of Annuity Units for
each Annuity Payment. The number of Annuity Units remains fixed
during the Annuity Period.
2. For each Sub-Account, the fixed number of Annuity Units is
multiplied by the Annuity Unit value on each subsequent Annuity
Payment Date.
3. The total dollar amount of each Variable Annuity Payment is the
sum of all Sub-Account Variable Annuity Payments.
See "Annuity Provisions" in the Prospectus for further information about the
Annuity Period and Annuity Options.
11
<PAGE>
Report Of Independent Accountants
To the Contract Owners of the OFFITBANK segment of C.M. Multi-Account A and the
Board of Directors of C.M. Life Insurance Company
We have audited the statement of assets and liabilities of the OFFITBANK segment
of C.M. Multi-Account A as of December 31, 1996, and the related statements of
operations and changes in net assets for the period August 13, 1996 (date of
commencement of operations) to December 31, 1996. These financial statements are
the responsibility of the Account's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit 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 securities owned as of December 31, 1996, by correspondence with
the underlying investment fund. 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
audit provides 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 OFFITBANK segment of C.M.
Multi-Account A as of December 31, 1996, and the results of its operations and
changes in its net assets for the period August 13, 1996 (date of commencement
of operations) to December 31, 1996, in conformity with generally accepted
accounting principles.
Coopers & Lybrand L.L.P.
Springfield, Massachusetts
March 14, 1997
1
<PAGE>
C.M. Multi-Account A - OFFITBANK
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1996
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments, at market (Notes 3A and 3B):
OFFITBANK Variable Insurance Fund, Inc.
High Yield
703,009 shares (Cost $7,198,250)........................................................................ $ 7,381,590
Emerging Markets
303,773 shares ($3,044,606)............................................................................. 3,125,827
------------
10,507,417
------------
Due from C.M. Life Insurance Company......................................................................... 5,539
------------
NET ASSETS................................................................................................... $ 10,512,956
============
<CAPTION>
Net assets consisted of: Units Unit value Net assets
----- ---------- ----------
<S> <C> <C> <C>
High Yield.................................................................... 695,534 10.604901 $ 7,376,069
Emerging Markets.............................................................. 296,409 10.582968 3,136,887
------------
$ 10,512,956
============
</TABLE>
See Notes to Financial Statements.
2
<PAGE>
C.M. Multi-Account A - OFFITBANK
STATEMENT OF OPERATIONS
For the Period August 13, 1996 (Date of Commencement of Operations)
through December 31, 1996
<TABLE>
<CAPTION>
Sub-Accounts
--------------------------------------------
OFFITBANK
-------------------
Emerging Oppenheimer
High Yield Markets Money
---------- -------- -----------
<S> <C> <C> <C>
Investment income
Dividends (Note 3B)............................................................ $ 171,157 $ 61,969 $ 9,914
Expenses
Mortality and expense risk fees (Note 4)....................................... 8,687 2,597 791
------------ ------------ ------------
Net investment income (Note 3C)................................................ 162,470 59,372 9,123
------------ ------------ ------------
Net realized and unrealized gain (loss) on investments
Net realized gain on investments (Notes 3B, 3C and 5).......................... 8,838 151 --
Change in net unrealized appreciation of investments........................... 183,340 81,221 --
------------ ------------ ------------
Net gain on investments........................................................ 192,178 81,372 --
------------ ------------ ------------
Net increase in net assets resulting from operations........................... $ 354,648 $ 140,744 $ 9,123
============ ============ ============
</TABLE>
See Notes to Financial Statements.
3
<PAGE>
C.M. Multi-Account A - OFFITBANK
STATEMENT OF CHANGES IN NET ASSETS
For the Period August 13, 1996 (Date of Commencement of Operations)
through December 31, 1996
<TABLE>
<CAPTION>
Sub-Accounts
--------------------------------------------
OFFITBANK
-------------------
Emerging Oppenheimer
High Yield Markets Money
---------- -------- -----------
<S> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income......................................................... $ 162,470 $ 59,372 $ 9,123
Net realized gain on investments.............................................. 8,838 151 --
Change in net unrealized appreciation/depreciation of investments............. 183,340 81,221 --
------------ ------------ ------------
Net increase (decrease) in net assets resulting from operations............... 354,648 140,744 9,123
------------ ------------ ------------
Capital transactions:
Net contract payments......................................................... 4,000,000 1,000,000 5,000,000
Divisional transfers.......................................................... 3,007,627 2,001,907 (5,009,534)
Transfer due to reimbursement (payment) of accumulation unit value fluctuation 13,794 (5,764) 411
------------ ------------ ------------
Net increase (decrease) in net assets resulting from capital transactions..... 7,021,421 2,996,143 (9,123)
------------ ------------ ------------
Total increase.................................................................. 7,376,069 3,136,887 --
NET ASSETS, at beginning of the period.......................................... -- -- --
NET ASSETS, at end of the year.................................................. $ 7,376,069 $ 3,136,887 $ --
============ ============ ============
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
C.M. Multi-Account A - OFFITBANK
Notes To Financial Statements
1. HISTORY
C.M. Multi-Account A (the "Separate Account") was established as a separate
investment account of C.M. Life Insurance Company ("C.M. Life"). C.M. Life
was formerly a wholly-owned stock life insurance subsidiary of Connecticut
Mutual Life Insurance Company (CML). On February 29, 1996, CML merged with
and into Massachusetts Mutual Life Insurance Company ("MassMutual"). Upon
the merger, CML's existence ceased and MassMutual became the surviving
company under the name Massachusetts Mutual Life Insurance Company. C.M.
Life became a wholly-owned subsidiary of MassMutual. The Separate Account
operates as a registered unit investment trust pursuant to the Investment
Company Act of 1940 ("the 1940 Act") and the rules promulgated thereunder.
C.M. Life maintains two segments within the Separate Account. The segments
are Panorama Premier and OFFITBANK. These notes and the financial
statements presented herein describe and consist only of the OFFITBANK
segment (the "Segment").
2. INVESTMENT OF THE SEGMENT'S ASSETS
The Segment maintains four Sub-Accounts. Each Sub-Account invests in shares
of certain investment portfolios of two investment companies: OFFITBANK
Variable Insurance Fund, Inc. ("OFFITBANK VIF") and the Oppenheimer
Variable Account Funds. OFFITBANK VIF High Yield Sub-Account invests in
shares of the OFFITBANK VIF High Yield portfolio. OFFITBANK VIF Investment
Grade Global Debt Sub-Account invests in shares of the OFFITBANK VIF
Investment Grade Global Debt portfolio. OFFITBANK VIF Emerging Markets Sub-
Account invest in shares of the OFFITBANK VIF Emerging Markets portfolio.
Oppenheimer Variable Account Funds is a series-type mutual fund with one of
its portfolios currently available to OFFITBANK contract owners:
Oppenheimer Money. OppenheimerFunds, Inc., a controlled subsidiary of
MassMutual, serves as investment adviser to the Oppenheimer Variable
Account Funds. OFFITBANK VIF and the Oppenheimer Variable Account Funds are
registered, open-end, diversified management investment companies
registered under the 1940 Act.
3. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed
consistently by the Segment in preparation of the financial statements in
conformity with generally accepted accounting principles.
A. Investment Valuation
The investments in OFFITBANK VIF and Oppenheimer Variable Account Funds are
each stated at market value which is the net asset value per share of each
of the respective underlying portfolios.
B. Accounting for Investments
Investment transactions are accounted for on the trade date and identified
cost is the basis followed in determining the cost of investments sold for
financial statement purposes. Dividend income is recorded on the ex-
dividend date.
C. Federal Income Taxes
Operations of the Segment form a part of the total operations of C.M. Life,
and the Segment is not taxed separately. C.M. Life is taxed as a life
insurance company under the provisions of the 1986 Internal Revenue Code,
as amended. The Segment will not be taxed as a "regulated investment
company" under Subchapter M of the Internal Revenue Code. Under existing
federal law, no taxes are payable on investment income and realized capital
gains attributable to contracts which depend on the Segment's investment
performance (the "Contracts"). Accordingly, no provision for federal income
tax has been made. C.M. Life may, however, make such a charge in the future
if an unanticipated change of current law results in a company tax
liability attributable to the Segment.
5
<PAGE>
Notes To Financial Statements (Continued)
D. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires that management 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 revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
4. CHARGES
There are no deductions for sales charges made from purchase payments.
Currently, any premium taxes relating to the Contracts will be deducted
from the purchase payments or contract value when annuity payments or
withdrawals are made. Premium taxes generally range from 0% to 3.5%.
There is also an annual contract maintenance charge (currently $35 per
Contract), imposed each year for Contract maintenance and related
administrative expenses.
For assuming mortality and expense risks, C.M. Life deducts a charge equal,
on an annual basis, to 0.38% of the average daily net asset value of the
Separate Account's assets. C.M. Life also deducts an administrative charge
equal, on an annual basis, to 0.01% of the average daily net asset value of
the Separate Account. These charges cover expenses in connection with the
administration of the Separate Account and the contract.
5. PURCHASES AND SALES OF INVESTMENTS
<TABLE>
<CAPTION>
Cost of Proceeds
For the Year Ended December 31, 1996 Purchases from Sales
--------- ----------
<S> <C> <C>
High Yield .................................. $ 8,194,496 $ 1,005,084
Emerging Markets ............................ 3,055,064 10,609
Money ....................................... 6,011,062 6,011,062
</TABLE>
6. DISTRIBUTION AGREEMENTS
MML Distributors, LLC ("MML Distributors"), a wholly-owned subsidiary of
MassMutual, serves as principal underwriter of the contracts pursuant to an
underwriting and servicing agreement among MML Distributors, C.M. Life and
C.M. Multi-Account A. MML Distributors is registered with the Securities
and Exchange Commission (the "SEC") as a broker-dealer under the Securities
Exchange Act of 1934 and is a member of the National Association of
Securities Dealers, Inc. (the "NASD"). MML Distributors may enter into
selling agreements with other broker-dealers who are registered with the
SEC and are members of the NASD in order to sell the contracts.
MML Investors Services, Inc. ("MMLISI") serves as co-underwriter of the
contracts pursuant to underwriting and servicing agreements among MMLISI,
C.M. Life and C.M. Multi-Account A. MMLISI is registered with the SEC as a
broker-dealer under the Securities Exchange Act of 1934 and is a member of
the NASD. Registered representatives of MMLISI sell the contracts as
authorized variable life insurance agents under applicable state insurance
laws.
Pursuant to underwriting and servicing agreements, commissions or other
fees due to registered representatives for selling and servicing the
contracts are paid by C.M. Life through MML Distributors or MMLISI. MML
Distributors and MMLISI also receive compensation for their actions as
underwriters of the contracts.
6
<PAGE>
C.M. LIFE INSURANCE COMPANY
STATUTORY FINANCIAL STATEMENTS
as of December 31, 1996 and 1995
and for the years ended December 31, 1996, 1995 and 1994
1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Policyholders of
C.M. Life Insurance Company
We have audited the accompanying statutory statement of financial position of
C.M. Life Insurance Company as of December 31, 1996, and the related statutory
statements of income, changes in shareholder's equity, and cash flows for the
year then ended. 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 audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
As described in Note 1 to the financial statements, the Company prepared these
financial statements using statutory accounting practices of the National
Association of Insurance Commissioners and the accounting practices prescribed
or permitted by the Department of Insurance of the State of Connecticut, which
practices differ from generally accepted accounting principles. The effects on
the financial statements of the variances between the statutory basis of
accounting and generally accepted accounting principles, although not
determinable at this time, are presumed to be material.
In our opinion, because of the effects of the matter discussed in the third
paragraph, the financial statements referred to above do not present fairly, in
conformity with generally accepted accounting principles, the financial position
of C.M. Life Insurance Company at December 31, 1996, and the results of its
operations and its cash flows for the year then ended.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of C.M. Life Insurance Company at
December 31, 1996, and the results of its operations and its cash flows for the
year then ended, on the statutory basis of accounting described in Note 1.
COOPERS & LYBRAND, L.L.P.
Springfield, Massachusetts
February 7, 1997
2
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To C.M. Life Insurance Company:
We have audited the accompanying statutory statement of financial position of
C.M. Life Insurance Company (a Connecticut corporation and a wholly-owned
subsidiary of Connecticut Mutual Life Insurance Company) as of December 31,
1995, and the related statutory statements of income, changes in shareholder's
equity and cash flows for each of the two years in the period ended December 31,
1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe our audits provide a reasonable basis for our opinion.
In our originally issued report dated February 15, 1996, we expressed an opinion
that the 1995 financial statements, prepared using accounting practices
prescribed or permitted by the Insurance Department of the State of Connecticut,
present fairly, in all material respects, the financial position of C.M. Life
Insurance Company as of December 31, 1995, and the results of its operations,
and its cash flows for each of the two years in the period ended December 31,
1995 in conformity with generally accepted accounting principles. As described
in Note 1 to the financial statements, pursuant to the provisions of Statement
of Financial Accounting Standards No. 120 (SFAS No. 120), Accounting and
Reporting by Mutual Life Insurance Enterprises and by Insurance Enterprises for
Certain Long-Duration Participating Contracts, financial statements of mutual
life insurance enterprises for periods ending on or before December 31, 1996,
prepared using accounting practices prescribed or permitted by insurance
regulators (statutory financial statements) are no longer considered
presentations in conformity with generally accepted accounting principles when
presented for comparative purposes with the enterprise's financial statements
for periods subsequent to the effective date of SFAS No. 120. Accordingly, our
present opinion on the presentation of the 1995 financial statements in
accordance with generally accepted accounting principles, as presented herein,
is different from that expressed in our previous report.
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 C.M. Life Insurance Company as of December 31, 1995, or the results of its
operations and it cash flows for each of the two years in the period ended
December 31, 1995.
In our opinion, the financial statements referred to above do present fairly, in
all material respects, the financial position of C.M. Life Insurance Company as
of December 31, 1995 and the results of its operations and its cash flows for
each of the two years in the period ended December 31, 1995 in conformity with
accounting practices prescribed or permitted by the Insurance Department of the
State of Connecticut.
ARTHUR ANDERSEN, LLP
Hartford, Connecticut
February 15, 1996
(Except with respect to the matter discussed in Note 1,
as to which the date is March 4, 1996)
3
<PAGE>
C.M. LIFE INSURANCE COMPANY
STATUTORY STATEMENT OF FINANCIAL POSITION
<TABLE>
<CAPTION>
December 31,
1996 1995
------ ------
(In Thousands Except for
Share Information)
<S> <C> <C>
Assets:
Bonds $ 736,524 $736,099
Preferred stocks - 211
Common stocks 55,642 72,361
Mortgage loans 33,791 30,716
Policy loans 132,942 126,014
Cash and short-term instruments 63,688 15,069
Investment and insurance amounts receivable 32,783 23,765
Transfer due from separate account 24,278 22,300
Federal income tax receivable 7,094 -
Other assets 87 1,819
Separate account assets 779,742 531,432
---------- ----------
$1,866,571 $1,559,786
========== ==========
Liabilities:
Policyholders' reserves and funds $ 907,492 $867,672
Policy claims and other benefits 3,843 2,086
Payable to parent and affiliates 9,654 10,823
Federal income taxes - 2,820
Asset valuation reserve 18,475 15,868
Investment reserves 3,329 4,011
Other liabilities 34,292 11,875
Separate account reserves and liabilities 779,742 531,432
---------- ----------
1,756,827 1,446,587
---------- ----------
Shareholder's equity:
Common stock, $200 par value
50,000 shares authorized
12,500 shares issued and outstanding 2,500 2,500
Paid-in capital and contributed surplus 43,759 43,759
Shareholder's equity 63,485 66,940
---------- ----------
109,744 113,199
---------- ----------
$1,866,571 $1,559,786
========== ==========
</TABLE>
See notes to statutory financial statements.
4
<PAGE>
C.M. LIFE INSURANCE COMPANY
STATUTORY STATEMENT OF INCOME
<TABLE>
<CAPTION>
Years Ended December 31,
1996 1995 1994
------ ------ ------
(In Thousands)
<S> <C> <C> <C>
Income:
Premium income $314,372 $260,847 $251,176
Net investment and other income 76,456 84,390 83,354
-------- -------- --------
390,828 345,237 334,530
-------- -------- --------
Benefits and expenses:
Policy benefits and payments 98,966 58,913 44,033
Addition to policyholders' reserves, funds
and separate accounts 210,324 211,403 230,338
Operating expenses 45,448 32,146 14,786
Commissions 24,987 14,092 7,365
State taxes, licenses and fees 3,247 5,017 4,199
-------- -------- --------
382,972 321,571 300,721
Net gain from operations before federal
income taxes 7,856 23,666 33,809
Federal income taxes 6,286 9,376 14,249
-------- -------- --------
Net gain from operations 1,570 14,290 19,560
Net realized capital gain (loss) 635 (540) (1,772)
-------- -------- --------
Net income $ 2,205 $ 13,750 $ 17,788
======== ======== ========
</TABLE>
See notes to statutory financial statements.
5
<PAGE>
C.M. LIFE INSURANCE COMPANY
STATUTORY STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
Years Ended December 31,
1996 1995 1994
------ ------ ------
(In Thousands)
<S> <C> <C> <C>
Shareholder's equity, beginning of year $113,199 $103,837 $ 87,898
Increases (decreases) due to:
Net income 2,205 13,750 17,788
Change in asset valuation and investment
reserves (1,923) (9,228) (106)
Change in non-admitted assets (2,765) (1,157) (1,761)
Net unrealized capital gain (loss) (972) 5,997 18
-------- -------- --------
(3,455) 9,362 15,939
-------- -------- --------
Shareholder's equity, end of year $109,744 $113,199 $103,837
======== ======== ========
</TABLE>
See notes to statutory financial statements.
6
<PAGE>
C.M. LIFE INSURANCE COMPANY
STATUTORY STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended December 31,
1996 1995 1994
------ ------ ------
(In Thousands)
<S> <C> <C> <C>
Operating activities:
Net income (loss) $ 2,205 $ 13,750 $ 17,788
Additions to policyholders'
reserves, funds, and net of transfers
to separate accounts 41,578 84,218 68,764
Net realized capital gain (loss) (635) 540 1,772
Change in receivable (payable)
from parent (1,169) 5,711 (3,870)
Other changes 409 (6,303) (3,306)
--------- --------- ---------
Net cash provided by operating
activities 42,388 97,916 81,148
Investing activities:
Loans and purchases of investments (184,900) (491,893) (332,750)
Sales or maturities of investments
and receipts from repayment of loans 191,131 406,021 249,038
--------- --------- ---------
Net cash provided by (used in)
investing activities 6,231 (85,872) (83,712)
Financing activities:
Net cash provided by financing
activities - - -
Increase (decrease) in short-term
investments 48,619 12,044 (2,564)
Cash and short-term investments,
beginning of year 15,069 3,025 5,589
--------- --------- ---------
Cash and short-term investments,
end of year $ 63,688 $ 15,069 $ 3,025
========= ========= =========
</TABLE>
See notes to statutory financial statements.
7
<PAGE>
NOTES TO STATUTORY FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
C.M. Life Insurance Company (the Company) is a wholly owned stock life
insurance subsidiary of Massachusetts Mutual Life Insurance Company
("MassMutual"). On March 1, 1996, the operations of the Company's former
parent, Connecticut Mutual Life Insurance Company, were merged into
MassMutual. The Company is primarily engaged in the sale of flexible premium
universal life insurance and variable annuity products. The Company is
licensed to transact business in all states except New York.
The accompanying statutory financial statements, except as to form, have been
prepared in conformity with the practices of the National Association of
Insurance Commissioners and the accounting practices prescribed or permitted
by the Insurance Department of the State of Connecticut ("statutory
accounting practices"), which prior to 1996 were considered to be in
conformity with generally accepted accounting principles ("GAAP"). In 1993,
the Financial Accounting Standards Board ("FASB") issued interpretation No.
40 ("Fin. 40"), "Applicability of Generally Accepted Accounting Principles to
Mutual Life Insurance and Other Enterprises", which clarified that wholly
owned stock life insurance subsidiaries of mutual life insurance companies
issuing financial statements described as prepared in conformity with GAAP
after 1995 are required to apply all applicable GAAP pronouncements in
preparing those financial statements. In January 1995, the FASB issued
Statement No. 120 ("SFAS 120"), Accounting and Reporting by Mutual Life
Insurance Enterprises and by Insurance Enterprises for Certain Long-Duration
Participating Contracts," which among other things, extended the
applicability of certain FASB statements to mutual life insurance companies
and deferred the effective date of Fin. 40 to financial statements issued or
reissued after 1996. As required by generally accepted auditing standards,
the opinion expressed by our former independent accountants on the 1995 and
1994 financial statements is different from that expressed in their previous
report.
The accompanying statutory financial statements are different in some
respects from GAAP financial statements. The more significant differences are
as follows: (a) acquisition costs, such as commissions and other costs in
connection with acquiring new business, are charged to current operations as
incurred, whereas GAAP would require these expenses to be capitalized and
recognized over the life of the policies; (b) policy reserves are based upon
statutory mortality and interest requirements without consideration of
withdrawals, whereas GAAP reserves would be based upon reasonably
conservative estimates of mortality, morbidity, interest and withdrawals; (c)
bonds are generally carried at amortized cost whereas GAAP would value bonds
at fair value and (d) deferred income taxes are not provided for book-tax
timing differences whereas GAAP would record deferred income taxes.
Management has not yet completed GAAP financial statements, but believes that
shareholders' equity based upon GAAP will be higher than shareholder's equity
based upon statutory accounting practices.
The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities,
as well as disclosures of contingent assets and liabilities, at the date of
the financial statements. Management must also make estimates and assumptions
that affect the amounts of revenues and expenses during the reporting period.
Future events, including changes in the levels of mortality, morbidity,
interest rates and asset valuations, could cause actual results to differ
from the estimates used in the financial statements.
8
<PAGE>
NOTES TO STATUTORY FINANCIAL STATEMENTS, Continued
The following is a description of the Company's current principal accounting
policies and practices.
a. Investments
Bonds and stocks are valued in accordance with rules established by the
National Association of Insurance Commissioners. Generally, bonds are
valued at amortized cost, preferred stocks in good standing at cost, and
common stocks at fair value.
Mortgage loans are valued at principal less unamortized discount.
Policy loans are carried at the outstanding loan balance less amounts
unsecured by the cash surrender value of the policy.
Short-term investments are stated at amortized cost, which approximates
fair value.
In compliance with regulatory requirements, the Company maintains an Asset
Valuation Reserve and an Interest Maintenance Reserve. The Asset Valuation
Reserve and other investment reserves, as prescribed and permitted by the
Connecticut Insurance Department, stabilize the policyholders' contingency
reserves against fluctuations in the value of stocks, as well as declines
in the value of bonds and mortgage loans.
The Interest Maintenance Reserve captures after-tax realized capital gains
and losses which result from changes in the overall level of interest rates
for all types of fixed income investments. This reserve is amortized into
income using the grouped method over the remaining life of the investment
sold or over the remaining life of the underlying asset. Net realized
after tax capital gains of $425 thousand in 1996 and net realized after tax
capital losses of $867 thousand in 1995 and $3,391 thousand in 1994 were
transferred to the Interest Maintenance Reserve. Amortization of the
Interest Maintenance Reserve into net investment income amounted to $37
thousand in 1996, $61 thousand in 1995, and $309 thousand in 1994. In
1996, 1995 and 1994, the Interest Maintenance Reserve resulted in net loss
deferral. In accordance with the practices of the National Association of
Insurance Commissioners, the balance was recorded as a reduction of
shareholder's equity.
Realized capital gains and losses, less taxes, not includable in the
Interest Maintenance Reserve, are recognized in net income. Realized
capital gains and losses are determined using the specific identification
method. Unrealized capital gains and losses are included in shareholder's
equity.
b. Separate Accounts
Separate account assets and liabilities represent segregated funds
administered and invested by the Company for the benefit of variable
annuity and variable life insurance contract holders. The assets consist
principally of marketable securities reported at fair value. Transfers due
from separate account represents the separate account assets in excess of
statutory benefit reserves. Premiums, benefits and expenses of the
separate accounts are reported in the statutory statement of income.
Reserves for these life and annuity contracts have been established using
assumed interest rates and valuation methods that will provide reserves at
least as great as those required by law and contract provisions. The
Company receives administrative and investment advisory fees from these
accounts.
c. Non-admitted Assets
Assets designated as "non-admitted" (principally prepaid agent commissions,
other prepaid expenses and Interest Maintenance Reserve, when in a net loss
deferral position) are excluded from the statutory statement of financial
position. These amounted to $6,604 thousand and $3,839 thousand as of
December 31, 1996 and 1995, respectively and changes therein are charged
directly to shareholder's equity.
9
<PAGE>
NOTES TO STATUTORY FINANCIAL STATEMENTS, Continued
d. Policyholders' Reserves and Funds
Policyholders' reserves for life contracts are developed using accepted
actuarial methods computed principally on the net level premium and the
Commissioners' Reserve Valuation Method bases using the American Experience
and 1980 Commissioners' Standard Ordinary mortality tables with assumed
interest rates ranging from 4.0 to 4.5 percent.
Reserves for single premium deferred annuities are calculated based on the
Commissioners' Annuity Reserve Valuation Method utilizing the change in
fund method and assuming interest on changes in funds of 7.0%, 8.0% and
7.0% in 1996, 1995 and 1994, respectively. Additional reserves are
maintained for contracts where the cash surrender value exceeds the
actuarially determined reserve.
Reserves for policies and contracts considered investment contracts have a
carrying value and fair value of $113,670 thousand (fair value is
determined by discounted cash flow projections).
e. Premium and Related Expense Recognition
Life insurance premium income is recognized annually on the anniversary
date of the policy. Annuity premium is recognized when received.
Commissions and other costs related to the issuance of new policies,
maintenance and settlement costs are charged to current operations.
f. Cash and Short-term Investments
For purposes of the statutory Statement of Cash Flows, the Company
considers all highly liquid short-term investments with a maturity of
twelve months or less from the date of purchase to be cash and short-term
investments.
2. Federal Income Taxes
Provision for federal income taxes is based upon the Company's best estimate
of its tax liability. No deferred tax effect is recognized for temporary
differences that may exist between financial reporting and taxable income.
Accordingly, the reporting of miscellaneous temporary differences, such as
reserves and acquisition costs, resulted in an effective tax rate which is
other than the statutory tax rate.
3. Stockholder's Equity
The Board of Directors of MassMutual has authorized the contribution of funds
to the Company sufficient to meet the capital requirements of all states in
which the Company is licensed to do business. Substantially all of the
statutory stockholder's equity is subject to dividend restrictions relating
to various state regulations which limit the payment of dividends without
prior approval. Under these regulations, $11,320 thousand of stockholder's
equity is available for distribution to shareholders in 1997 without prior
regulatory approval.
4. Related Party Transactions
Investment and administrative services are provided to the Company pursuant
to a management services agreement with MassMutual. Fees incurred under the
terms of the agreement were $45,914 thousand, $34,008 thousand and $16,412
thousand in 1996, 1995 and 1994, respectively.
Effective March, 1996, the Company modified its underwriting agreement with
its affiliates, GR Phelps and MassMutual Distributors, whereby the Company
will pay all future commissions relating to variable annuity business in
exchange for the rights to retain all future policy administration fees and
charges.
10
<PAGE>
NOTES TO STATUTORY FINANCIAL STATEMENTS, Continued
The Company cedes a portion of its life insurance business to MassMutual and
other insurers in the normal course of business. The Company's retention
limit per individual insured is $4 million; the portion of the risk exceeding
the retention limit is reinsured with other insurers. The Company is
contingently liable with respect to ceded reinsurance in the event any
reinsurer is unable to fulfill its contractual obligations.
The Company has a modified coinsurance quota-share reinsurance agreement with
MassMutual whereby the Company cedes 50% of the premiums on certain
universal life policies issued in 1985 and 75% of the premiums with issue
dates on or after January 1, 1986. In return Mass Mutual pays the Company a
stipulated expense allowance, death and surrender benefits, and a modified
coinsurance adjustment. Reserves for payment of future benefits for the ceded
policies are retained by the Company.
The Company also has a stop-loss agreement with MassMutual, with maximum
coverage at $25,000 thousand, under which the Company cedes claims which, in
aggregate, exceed $28,080 thousand in 1996, $24,245 thousand in 1995, and
$18,348 thousand in 1994. For each of the years, the limit was not exceeded.
The Company paid approximately $400 thousand, $602 thousand, and $435
thousand in premiums under the agreement in 1996, 1995 and 1994,
respectively.
5. Investments
The Company maintains a diversified investment portfolio. Investment policies
limit concentration in any asset class, geographic region, industry group,
economic characteristic, investment quality or individual investment.
a. Bonds
The carrying value and estimated fair value of investments in bonds as of
December 31, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
December 31, 1996
-----------------
Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
-------- ---------- ---------- ---------
(In Thousands)
<S> <C> <C> <C> <C>
U. S. Treasury Securities $138,751 $ 2,175 $ 964 $139,962
and Obligations of U.S.
Government Corporations
and Agencies
Debt Securities issued by 3,953 53 22 3,984
Foreign Governments
Mortgage-backed securities 37,395 745 725 37,415
State and local governments 10,263 244 101 10,406
Industrial securities 509,227 11,643 3,700 517,170
Utilities 36,935 1,168 159 37,944
-------- ------- ------ --------
Total $736,524 $ 16,028 $5,671 $ 746,881
======== ========= ====== =========
</TABLE>
11
<PAGE>
NOTES TO STATUTORY FINANCIAL STATEMENTS, Continued
<TABLE>
<CAPTION>
December 31, 1995
-----------------
Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
-------- ---------- ---------- --------
(In Thousands)
<S> <C> <C> <C> <C>
U. S. Treasury Securities $ 27,817 $ 1,764 $ 8 $ 29,573
and Obligations of U.S.
Government Corporations
and Agencies
Debt Securities issued by 11,186 483 295 11,374
Foreign Governments
Mortgage-backed securities 150,694 7,144 347 157,491
Industrial securities 501,252 21,472 711 522,013
Utilities 45,150 2,303 16 47,437
-------- ------- ---- --------
Total $736,099 $33,166 $1,377 $767,888
======== ======= ====== ========
</TABLE>
The carrying value and estimated fair value of bonds at December 31, 1996, by
contractual maturity, are shown below. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without prepayment penalties.
<TABLE>
<CAPTION>
Estimated
Carrying Fair
Value Value
--------- ---------
(In Thousands)
<S> <C> <C>
Due in one year or less $ 76,698 $ 77,009
Due after one year through five years 284,200 287,363
Due after five years through ten years 202,722 206,317
Due after ten years 84,515 86,874
-------- --------
subtotal 648,135 657,563
-------- --------
Mortgage-backed securities, including
securities guaranteed by the U.S. Government 88,389 89,318
-------- --------
Total $736,524 $746,881
======== ========
</TABLE>
Proceeds from sales of investments in bonds were $162,934 thousand during 1996,
$380,567 thousand during 1995 and $224,884 thousand during 1994. Gross capital
gains of $1,608 thousand in 1996, $3,598 thousand in 1995 and $1,358 thousand in
1994 and gross capital losses of $876 thousand in 1996, $4,658 thousand, in 1995
and $4,439 thousand in 1994 were realized on those sales, a portion of which
were included in the Interest Maintenance Reserve. Estimated fair value of
non-publicly traded bonds is determined by the Company using a pricing matrix.
12
<PAGE>
NOTES TO STATUTORY FINANCIAL STATEMENTS, Continued
b. Stocks
Common stocks had a cost of $47,195 thousand in 1996 and $64,225 thousand in
1995.
c. Mortgages
The fair value of mortgage loans, as determined from a pricing matrix for
performing loans and the estimated underlying real estate value for non-
performing loans, approximated carrying value less valuation reserves held.
d. Other
The carrying value of investments which were non-income producing for the
preceding twelve months was $2,774 thousand at December 31, 1996. The
Company had restructured loans with book values of $21,867 thousand and
$17,128 thousand at December 31, 1996 and 1995, respectively. The loans
typically have been modified to defer a portion of the contracted interest
payments to future periods. Interest deferred to future periods totaled $178
thousand in 1996, $171 thousand in 1995 and $183 thousand in 1994.
It is not practicable to determine the fair value of policy loans as they do
not have a stated maturity.
6. Portfolio Risk Management
The Company manages its investment risks to reduce interest rate and duration
imbalances determined in asset/liability analyses. The fair values of these
instruments, which are not recorded in the financial statements, are based
upon market prices or prices obtained from brokers. The Company does not
hold or issue financial instruments for trading purposes.
The Company utilizes interest rate swap agreements and options to reduce
interest rate exposures arising from mismatches between assets and
liabilities and to modify portfolio profiles to manage other risks
identified. Under interest rate swaps, the Company agrees to exchange, at
specified intervals, the difference between fixed and floating interest rates
calculated by reference to an agreed-upon notional principal amount. Net
amounts receivable and payable are accrued as adjustments to interest income
and included in investment and insurance amounts receivable on the Statutory
Statement of Financial Position. Gains and losses realized on the
termination of contracts are amortized through the Interest Maintenance
Reserve over the remaining life of the associated contract. At December 31,
1996 and 1995, the Company had swaps with notional amounts of $13,000
thousand. The fair value of these instruments was $103 thousand at December
31, 1996 and $491 thousand at December 31, 1995. During 1996 options
(protective puts) were utilized to hedge equity exposures. The net 1996
realized losses from this activity were $837 thousand. The notional amount of
options totaled $34,700 thousand as of December 31, 1996.
During 1994 interest rate futures were acquired to hedge the reinvestment of
anticipated proceeds from a bulk mortgage sale. The actual gain of $95
thousand was amortized over the expected term of the assets acquired with the
mortgage sale proceeds. No interest rate futures were held as of December 31,
1996 and 1995.
13
<PAGE>
NOTES TO STATUTORY FINANCIAL STATEMENTS, Continued
7. Liquidity
The withdrawal characteristics of the policyholder's reserves and funds,
including separate accounts, and the invested assets which support them at
December 31, 1996 are illustrated below:
<TABLE>
<CAPTION>
(In thousands)
<S> <C>
Total policyholders' reserves and funds and
separate account liabilities $1,687,234
Not subject to discretionary withdrawal (1,446)
Policy loans (132,941)
----------
Subject to discretionary withdrawal $1,552,847
==========
Total invested assets, including separate
investment accounts $1,802,416
Policy loans and other invested assets (216,721)
----------
Readily available marketable instruments $1,585,695
===========
</TABLE>
8. Business Risks and Contingencies
The Company is subject to insurance guaranty fund laws in the states in
which it does business. These laws assess insurance companies amounts to be
used to pay benefits to policyholders and claimants of insolvent insurance
companies. Many states allow these assessments to be credited against future
premium taxes. The Company believes such assessments in excess of amounts
accrued will not materially affect its financial position, results of
operations or liquidity. In 1996, the Company elected not to admit $1,621
thousand of guaranty fund premium tax offset receivable relating to prior
assessments.
The Company is involved in regulatory proceedings and various litigation in
the ordinary course of business. In the opinion of management, the ultimate
resolution of such proceedings and litigation will not result in fines or
judgments which, in the aggregate, would materially affect the Company's
financial position.
9. Reclassifications
Certain 1995 and 1994 amounts have been reclassified to conform with the
current year presentation.
10. Affiliated Companies
The relationship of the Company, its parent and affiliated companies as of
December 31, 1996 is illustrated below. Subsidiaries are wholly-owned by the
parent, except as noted.
Parent
------
Massachusetts Mutual Life Insurance Company
Subsidiaries of Massachusetts Mutual Life Insurance Company
-----------------------------------------------------------
C.M. Assurance Company
C.M. Benefit Insurance Company
C.M. Life Insurance Company
MassMutual Holding Company
MassMutual Holding Company Two, Inc. (Sold in March 1996)
MassMutual of Ireland, Limited
MML Bay State Life Insurance Company
MML Distributors, LLC
14
<PAGE>
NOTES TO STATUTORY FINANCIAL STATEMENTS, Continued
Subsidiaries of MassMutual Holding Company
------------------------------------------
GR Phelps, Inc.
MassMutual Holding Trust I
MassMutual Holding Trust II
MassMutual Holding MSC, Inc.
MassMutual International, Inc.
MassMutual Reinsurance Bermuda (Sold in December 1996)
MML Investor Services, Inc.
State House One (Liquidated in December 1996)
Subsidiaries of MassMutual Holding Trust I
------------------------------------------
Antares Leveraged Capital Corporation
Charter Oak Capital Management, Inc.
Cornerstone Real Estate Advisors, Inc.
DLB Acquisition Corporation
Oppenheimer Acquisition Corporation - 86.15%
Subsidiaries of MassMutual Holding Trust II
-------------------------------------------
CM Advantage, Inc.
CM International, Inc.
CM Property Management, Inc.
High Yield Management, Inc.
MMHC Investments, Inc.
MML Realty Management
Urban Properties, Inc.
Westheimer 335 Suites, Inc.
Subsidiaries of MassMutual International
----------------------------------------
MassLife Seguros de Vida (Argentina) S. A.
MassMutual International (Bermuda) Ltd.
Mass Seguros de Vida (Chile) S. A.
MassMutual International (Luxemburg) S. A.
MassMutual Holding MSC, Incorporated
------------------------------------
MassMutual/Carlson CBO N. V. - 50%
MassMutual Corporate Value Limited - 46%
Affiliates of Massachusetts Mutual Life Insurance Company
---------------------------------------------------------
MML Series Investment Fund
MassMutual Institutional Funds
Oppenheimer Value Stock Fund
15
<PAGE>
PART C
ITEM 24. Financial Statements and Exhibits
---------------------------------
(a.) Financial Statements
Financial Statements Included in Part A
---------------------------------------
Condensed Financial Information
Financial Statements Included in Part B
---------------------------------------
The Registrant
--------------
Report of Independent Accountants
Statement of Assets and Liabilities as of December 31, 1996
Statement of Operations for the period August 13, 1996 (date
of commencement of operations) to December 31, 1996
Statement of Changes in Net Assets for the period August 13,
1996 (date of commencement of operations) to December 31, 1996
Notes to Financial Statements
The Depositor
-------------
Reports of Independent Accountants
Statutory Statement of Financial Position as of December 31, 1996
and 1995
Statutory Statement of Income for the years ended December 31,
1996, 1995 and 1994
Statutory Statement of Changes in Shareholder's Equity for the
years ended December 31, 1996, 1995 and 1994
Statutory Statement of Cash Flows for the years ended December 31,
1996, 1995 and 1994
Notes To Statutory Financial Statements
(b.) Exhibits
Exhibit 1 Resolution of Board of Directors of the Company
authorizing the establishment of the Separate Account.*
Exhibit 2 Not Applicable.
Exhibit 3 (i) Copy of Distribution Agreement between the
Registrant and MML Distributors, LLC, incorporated by
reference to Exhibit 3 (i) to Registrant's Post
Effective Amendment No. 1 to Registration Statement
under the Securities Act of 1933, File No. 33-61643.
(ii) Copy of Co-Underwriting Agreement between the
Registrant and MML Investors Services, Inc.,
incorporated by reference to Exhibit 3 (ii) to the
Registrant's Post Effective Amendment No. 1 to
Registration Statement under the Securities act of
1933, File No. 33-61643.
Exhibit 4 Individual Variable Deferred Annuity Contract.**
Exhibit 5 Application Form.**
Exhibit 6 (i) Copy of Articles of Incorporation of the
Company.**
(ii) Copy of the Bylaws of the Company.**
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Exhibit 7 Not Applicable.
Exhibit 9 Opinion and Consent of Counsel.**
Exhibit 10 (i) Consent of Coopers & Lybrand, L.L.P.,
Independent Accountants.
(ii) Consent of Arthur Andersen, LLP,
Independent Accountants
(iii) Powers of Attorney
Exhibit 11 Not Applicable.
Exhibit 12 Not Applicable.
Exhibit 13 Not Applicable
Exhibit 14 Financial Data Schedule.
* Incorporated by reference to Registrant's Form N-4 filed
on August 11, 1994.
** Incorporated by reference to Registrant's Form N-4 filed
on August 8, 1995.
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
C.M. LIFE INSURANCE COMPANY
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
NAME AND POSITION PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
- ----------------------------------------------------------------------------------------------------------------------------------
Lawrence V. Burkett, Jr., Director, President Director, President and Chief Executive Officer, C.M. Life, since 1996; Executive
and Chief Executive Officer Vice President and General Counsel, MassMutual, since 1993; Senior Vice President
and Deputy General Counsel, 1992-1993.
- ----------------------------------------------------------------------------------------------------------------------------------
John B. Davies, Director Director, C.M. Life, since 1996; Executive Vice President, MassMutual, since 1994;
Associate Executive Vice President, 1994-1994; General Agent, 1982-1993.
- ----------------------------------------------------------------------------------------------------------------------------------
Daniel J. Fitzgerald, Director Director, C.M. Life, since 1996; Executive Vice President, Corporate Financial
Operations, MassMutual, since 1994; Senior Vice President, 1991-1994.
- ----------------------------------------------------------------------------------------------------------------------------------
Stuart H. Reese, Director and Senior Vice Director and Senior Vice President-Investments, C.M. Life, since 1996; Senior Vice
President-Investments President, MassMutual, since 1993; Investment Manager, Aetna Life and Casualty and
Affiliates, 1979-1993.
- ----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OFFICERS (other than those who are also Directors):
- ----------------------------------------------------------------------------------------------------------------------------------
Paul D. Adornato Senior Vice President-Operations, C.M. Life, since 1996; Senior Vice President,
MassMutual, since 1986.
- ----------------------------------------------------------------------------------------------------------------------------------
Anne Melissa Dowling Senior Vice President-Large Corporate Marketing, C.M. Life, since 1996; Senior Vice
President, MassMutual, since 1996; Chief Investment Officer, Connecticut Mutual
Life Insurance Company, 1994-1996; Senior Vice President-International, Travelers
Insurance Co., 1987-1993.
- ----------------------------------------------------------------------------------------------------------------------------------
Maureen R. Ford Senior Vice President-Annuity Marketing, C.M. Life, since 1996; Senior Vice
President, MassMutual, since 1996; Marketing Officer, Connecticut Mutual Life
Insurance Company, 1989-1996.
- ----------------------------------------------------------------------------------------------------------------------------------
Isadore Jermyn Senior Vice President and Actuary, C.M. Life, since 1996; Senior Vice
President and Actuary, MassMutual, since 1995; Vice President and Actuary,
1980-1995.
- ----------------------------------------------------------------------------------------------------------------------------------
Ann Iseley Treasurer, C.M. Life, since 1996; Vice President and Treasurer, MassMutual,
since 1996; Chief Financial and Operations Officer, Connecticut Mutual Financial
Services, 1994-1996; Controller, The Mack Company, 1993-1994; Vice
President-Finance, Mutual of New York, 1988-1993.
- ----------------------------------------------------------------------------------------------------------------------------------
Ann F. Lomeli Secretary, C.M. Life, since 1988; Vice President, Associate Secretary and Associate
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
15
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<TABLE>
<S> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
General Counsel, MassMutual, since 1996; Corporate Secretary and Counsel,
Connecticut Mutual Life Insurance Company, 1988-1996.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE
DEPOSITOR OR REGISTRANT
The assets of the Registrant, under state law, are assets of
C.M. Life.
The Registrant may also be deemed to be under common control
with other separate accounts established by MassMutual and its
life insurance subsidiaries C.M. Life Insurance Company and
MML Bay State Life Insurance Company, which are registered as
unit investment trusts under The Investment Company Act of
1940.
LIST OF SUBSIDIARIES AND AFFILIATES
1. MassMutual Holding Company, a Delaware corporation, all the stock of which
is owned by MassMutual.
2. MML Series Investment Fund, a registered open-end investment company
organized as a Massachusetts business trust, all of the shares of which are
owned by separate accounts of MassMutual and companies controlled by
MassMutual.
3. MassMutual Institutional Funds, a registered open-end investment company
organized as a Massachusetts business trust, all of the shares are owned by
MassMutual.
4. MML Bay State Life Insurance Company, a Missouri corporation, all the stock
of which is owned by MassMutual.
5. MassMutual of Ireland, Ltd., incorporated in the Republic of Ireland, to
operate a group life and health claim office for MassMutual, all of the
stock of which is owned by MassMutual.
6. C.M. Assurance Company, a Connecticut life, accident, disability and health
insurer, all the stock of which is owned by MassMutual.
7. C.M. Benefit Insurance Company, a Connecticut life, accident, disability
and health insurer, all the stock of which is owned by MassMutual.
8. C.M. Life Insurance Company, a Connecticut life, accident, disability and
health insurer, all the stock of which is owned by MassMutual.
9. MML Distributors, LLC, formerly known as Connecticut Mutual Financial
Services, LLC, a registered broker-dealer incorporated as a limited
liability company in Connecticut. MassMutual has a 99% ownership interest
and G.R. Phelps & Co. has a 1% ownership interest.
10. Panorama Series Fund, Inc., a registered open-end investment company
organized as a Maryland corporation. Shares of the fund are sold only to
MassMutual and its affiliates.
11. MassMutual Holding Trust I, a Massachusetts business trust, which acts as a
holding company for certain MassMutual subsidiaries and affiliates, all of
the stock of which is owned by MassMutual Holding Company.
12. MassMutual Holding Trust II, a Massachusetts business trust, which acts as
a holding company for certain MassMutual subsidiaries and affiliates, all
of the stock of which is owned by MassMutual Holding Company.
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13. MassMutual Holding MSC, Inc., a Massachusetts corporation, which acts as a
holding company for certain MassMutual subsidiaries and affiliates, all of
the stock of which is owned by MassMutual Holding Company.
14. MML Investors Services, Inc., registered broker-dealer incorporated in
Massachusetts, all the stock of which is owned by MassMutual Holding
Company.
15. G.R. Phelps & Company, Inc., Connecticut corporation which formerly
operated as a securities broker-dealer, all the stock of which is owned by
MassMutual Holding Company.
16. MassMutual International, Inc., a Delaware corporation that acts as a
holding company of and provides services to international insurance
companies, all of the stock of which is owned by MassMutual Holding
Company.
17. MassLife Seguros de Vida S.A. (Argentina), a life insurance company
incorporated in Argentina. MassMutual International Inc. owns 99.99% of the
outstanding capital stock of MassLife Seguros de Vida S.A.
18. Cornerstone Real Estate Advisers, Inc., a Massachusetts equity real estate
advisory corporation, all the stock of which is owned by MassMutual Holding
Trust I.
19. DLB Acquisition Corporation ("DLB") is a Delaware corporation, which serves
as a holding company for certain investment advisory subsidiaries of
MassMutual. MassMutual Holding Trust I owns 83.7% of the outstanding
capital stock of DLB.
20. Oppenheimer Acquisition Corporation ("OAC") is a Delaware corporation,
which serves as a holding company for OppenheimerFunds, Inc. MassMutual
Holding Trust I owns 86% of the capital stock of OAC.
21. Antares Leveraged Capital Corp., a Delaware corporation that operates as a
finance company, all of the stock of which is owned by MassMutual Holding
Trust I.
22. Charter Oak Capital Management, Inc., a Delaware corporation that operates
as an investment manager. MassMutual Holding Trust I owns 80% of the
capital stock of Charter Oak.
23. MML Realty Management Corporation, a property manager incorporated in
Massachusetts, all the stock of which is owned by MassMutual Holding Trust
II.
24. Westheimer 335 Suites, Inc., was incorporated in Delaware to serve as a
general partner of the Westheimer 335 Suites Limited Partnership.
MassMutual Holding Trust II owns all the stock of Westheimer 335 Suites,
Inc.
25. C.M. Advantage, Inc., a Connecticut corporation that acts as a general
partner in real estate limited partnerships. MassMutual Holding Trust II
owns all of the outstanding stock.
26. C.M. International, Inc., a Delaware corporation that holds a mortgage pool
and issues collateralized bond obligations. MassMutual Holding Trust II
owns all the outstanding stock of CM International, Inc.
27. C.M. Property Management, Inc., a Connecticut real estate holding company,
all the stock of which is owned by MassMutual Holding Trust II.
17
<PAGE>
28. Urban Properties, Inc., a Delaware real estate holding and development
company, all the stock of which is owned by MassMutual Holding Trust II.
29. MMHC Investment, Inc., a Delaware corporation which is a passive investor
in MassMutual High Yield Partners LLC. MassMutual Holding Trust II owns all
the outstanding stock of MMHC Investment, Inc.
30. HYP Management, Inc., a Delaware corporation which is the LLC Manager for
MassMutual High Yield Partners LLC and owns 1.28% of the LLC units of such
entity. MassMutual Holding Trust II owns all the outstanding stock of HYP
Management, Inc.
31. MassMutual Corporate Value Limited, a Cayman Islands corporation that owns
approximately 90% of MassMutual Corporate Value Partners Limited.
MassMutual Holding MSC, Inc. owns 46.19% of the outstanding capital stock
of MassMutual Corporate Value Limited.
32. MassMutual International (Bermuda) Ltd., a Bermuda life insurance company,
all of the stock of which is owned by MassMutual International Inc.
33. MassMutual Internacional (Chile) S.A. a Chilean corporation, which operates
as a holding company. MassMutual International Inc. owns 99% of the
outstanding shares and MassMutual Holding Company owns the remaining 1% of
the shares.
34. MassMutual International (Luxembourg) S.A. a Luxembourg corporation, which
operates as an insurance company. MassMutual International Inc. owns 99% of
the outstanding shares and MassMutual Holding Company owns the remaining 1%
of the shares.
35. Mass Seguros de Vida S.A., a life insurance company incorporated in Chile.
MassMutual Holding Company owns 33.5% of the outstanding capital stock of
Mass Seguros de Vida S.A.
36. MML Insurance Agency, Inc., a licensed insurance broker incorporated in
Massachusetts, all of the stock of which is owned by MML Investors
Services, Inc.
37. MML Securities Corporation, a Massachusetts securities corporation, all of
the stock of which is owned by MML Investors Services, Inc.
38. OppenheimerFunds, Inc., a registered investment adviser incorporated in
Colorado, all of the stock of which is owned by Oppenheimer Acquisition
Corporation
39. David L. Babson and Company, Incorporated, a registered investment adviser
incorporated in Massachusetts, all of the stock of which is owned by DLB
Acquisition Corporation.
40 Cornerstone Office Management, LLC, a Delaware limited liability company
that is 50% owned by Cornerstone Real Estate Advisers, Inc. and 50% owned
by MML Realty Management Corporation.
41. Westheimer 335 Suites Limited Partnership, a Texas limited partnership of
which Westheimer 335 Suites, Inc. is the general partner.
42. MassMutual High Yield Partners LLC, a Delaware limited liability company,
that operates as a high yield bond fund. MassMutual holds 5.28%, MMHC
Investment Inc. holds 35.99%, and HYP Management, Inc. holds 1.28% for a
total of 42.55% of the ownership interest in this company.
43 MassMutual Corporate Value Partners Limited, a Cayman Islands corporation
that operates as a high yield bond fund. MassMutual Corporate Value Limited
holds an approximately 90% ownership interest in this company.
18
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44. First Israel Mezzanine Investors, Ltd., an Israeli corporation which
operates as managing general partner of First Israel Mezzanine Investors
Fund, LP. MassMutual holds a 33% ownership interest in First Israel
Mezzanine Investors, Ltd.
45. First Israel Mezzanine Investors Fund, LP, a Delaware limited partnership,
of which MassMutual holds a 37.5% ownership interest.
46. MBD Mezzanine Investments, LLC, a Delaware limited liability company, which
operates as the participating general partner of First Israel Mezzanine
Investors Fund, LP. MassMutual holds a 33% ownership interest in MBD
Mezzanine Investments, LLC.
47. Diversified Insurance Services Agency of America, Inc. (Alabama), a
licensed insurance broker incorporated in Alabama. MML Insurance Agency,
Inc. owns all the shares of outstanding stock.
48. Diversified Insurance Services Agency of America, Inc. (Hawaii), a licensed
insurance broker incorporated in Hawaii. MML Insurance Agency, Inc. owns
all the shares of outstanding stock.
49. MML Insurance Agency of Nevada, Inc., a Nevada corporation that operates as
an insurance broker, all of the stock of which is owned by MML Insurance
Agency, Inc.
50. MML Insurance Agency of Ohio, Inc., a subsidiary of MML Insurance Agency,
Inc., is incorporated in the state of Ohio that operates as an insurance
broker. The outstanding capital stock is controlled by MML Insurance
Agency, Inc. by means of a voting trust.
51. MML Insurance Agency of Texas, Inc., a subsidiary of MML Insurance Agency,
Inc., is incorporated in the state of Texas that operates as an insurance
broker. The outstanding capital stock is controlled by MML Insurance
Agency, Inc. by means of a voting trust.
52. MML Insurance Agency of Mississippi, P.C., a Mississippi professional
corporation that operates as an insurance broker, all of the stock of which
is owned by MML Insurance Agency, Inc.
53. Origen Inversiones S.A., a Chilean corporation which operates as a holding
company. MassMutual Internacional (Chile) S.A. holds a 33.5% ownership
interest in this corporation.
54. Babson Securities Corporation, a registered broker-dealer incorporated in
Massachusetts, all of the stock of which is owned by David L. Babson and
Company, Incorporated.
55. Potomac Babson Incorporated, a Massachusetts corporation, is a registered
investment adviser. David L. Babson and Company Incorporated owns 60% of
the outstanding shares of Potomac Babson Incorporated.
56. Babson-Stewart-Ivory International, a Massachusetts general partnership,
which operates as a registered investment adviser. David L. Babson and
Company Incorporated holds a 50% ownership interest in the partnership.
57. Oppenheimer Value Stock Fund ("OVSF") is a series of Oppenheimer Integrity
Funds, a Massachusetts business trust. OVSF is a registered open-end
investment company of which MassMutual owns 40% of the outstanding shares
of beneficial interest.
58. Oppenheimer Series Fund I Inc., a Maryland corporation and a registered
open-end investment company of which MassMutual and its affiliates own
approximately 27% of the outstanding shares of beneficial interest.
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59. Centennial Asset Management Corporation, a Delaware corporation that serves
as the investment adviser and general distributor of the Centennial Funds.
OppenheimerFunds, Inc. owns all the stock of Centennial Asset Management
Corporation.
60. HarbourView Asset Management Corporation, a registered investment adviser
incorporated in New York, all the stock of which is owned by
OppenheimerFunds, Inc.
61. Main Street Advisers, Inc., a Delaware corporation, all the stock of which
is owned by OppenheimerFunds, Inc.
62. OppenheimerFunds Distributor, Inc., a registered broker-dealer incorporated
in New York, all the stock of which is owned by OppenheimerFunds, Inc.
63. Oppenheimer Partnership Holdings, Inc., a Delaware holding company, all the
stock of which is owned by OppenheimerFunds, Inc.
64. Shareholder Financial Services, Inc., a transfer agent incorporated in
Colorado, all the stock of which is owned by OppenheimerFunds, Inc.
65. Shareholder Services, Inc., a transfer agent incorporated in Colorado, all
the stock of which is owned by OppenheimerFunds, Inc.
66. MultiSource Service, Inc., a Colorado corporation that operates as a
clearing broker, all of the stock of which is owned by OppenheimerFunds,
Inc.
67. Centennial Capital Corporation, a former sponsor of unit investment trust
incorporated in Delaware, all the stock of which is owned by Centennial
Asset Management Corporation.
68. Compensa Compania Seguros De Vida, a Chilean insurance company. Origen
Inversiones S.A. owns 99% of the outstanding shares of this company
69. Cornerstone Suburban Office Investors, LP, a Delaware limited partnership,
which operates as a real estate operating company. Cornerstone Office
Management, LLC holds a 1% general partnership interest in this fund and
MassMutual holds a 99% limited partnership interest.
70. 505 Waterford Park Limited Partnership, a Delaware limited partnership,
which holds title to an office building in Minneapolis, Minnesota. MML
Realty Management Corporation holds a 1% general partnership interest in
this partnership and MassMutual holds a 99% limited partnership interest.
71. The DLB Fund Group, an open-end management investment company, of which
MassMutual owns at least 25% of each series.
MassMutual is the investment adviser the following investment companies, and as
such may be deemed to control them.
1. MassMutual Corporate Investors, a registered closed-end Massachusetts
business trust.
2. MassMutual Participation Investors, a registered closed-end Massachusetts
business trust.
3. MML Series Investment Fund, a registered open-end Massachusetts business
trust, all of the shares are owned by separate accounts of MassMutual and
companies controlled by MassMutual.
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4. MassMutual Institutional Funds, a registered open-end Massachusetts
business trust, all of the shares are owned by MassMutual.
5. MassMutual/Carlson CBO N.V., a Netherlands Antilles corporation that issued
Collateralized Bond Obligations on or about May 1, 1991, which is owned
equally by MassMutual interests (MassMutual and MassMutual Holding MSC,
Inc.) and Carlson Investment Management Co.
6. MassMutual Corporate Value Partners, Limited, an off-shore unregistered
investment company.
7. MassMutual High Yield Partners LLC, a high yield bond fund organized as
Delaware limited liability company.
ITEM 27. NUMBER OF CONTRACT OWNERS
As of March 20, 1997, there were 9 Contract Owners.
ITEM 28. INDEMNIFICATION
The Bylaws of the Company provide that:
The following provisions regarding the Indemnification of Directors and
Officers of the Registrant are applicable: CONNECTICUT LAW. Except where an
applicable insurance policy is procured, Connecticut General Statutes ("C.G.S.")
Section 33-320a is the sole source of indemnification rights for directors and
officers of Connecticut corporations and for persons who may be deemed to be
controlling persons by reason of their status as a shareholder, director,
officer, employee or agent of a Connecticut corporation. Under C.G.S. Section
33-320a, a corporation shall indemnify any director or officer who was or is a
party, or was threatened to be made a party, to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter referred to as "proceeding") by virtue of the fact
that he or the person whose legal representative he is: (i) is or was a director
or officer of the corporation; (ii) while a director or an officer of the
corporation, is or was serving at the request of the corporation as a director,
officer, partner, trustee, employee or agent of another foreign or domestic
corporation, partnership, joint venture, trust or other enterprise (hereinafter
referred to as "enterprise"), other than an employee benefit plan or trust; or
(iii) while a director or an officer of the corporation, is or was a director or
officer serving at the request of the corporation as a fiduciary or an employee
benefit plan or trust maintained for the benefit of employees of the corporation
or any other enterprise, against "covered expenditures" if (and only if) his
conduct met the applicable statutory eligibility standard. The types of
expenditures which are covered and the statutory eligibility standard vary
according to the type of proceeding to which the director or officer is or was a
party or was threatened to be made a party.
According to C.G.S. Section 33-320a, in non-derivative proceedings
other than ones brought in connection with an alleged claim based upon the
purchase or sale by a director or officer of securities of the corporation or of
another enterprise, which the director or officer serves or served at the
request of the corporation, the corporation shall indemnify a director or
officer against judgments, fines, penalties, amounts paid in settlement and
reasonable expenses, including attorneys' fees, actually incurred by him in
connection with the proceeding, or any appeal therein, IF AND ONLY IF he acted
(i) in good faith and (ii) in a manner he reasonably believed to be in the best
interests of the corporation or, in the case of a person serving as a fiduciary
of any employee benefit plan or trust, in a manner he reasonably believed to be
in the best interests of the corporation or in the best interest of the
participants and beneficiaries of such employee benefit plan or trust and
consistent with the provisions of such employee benefit plan or trust. However,
where the proceeding brought is criminal in nature, C.G.S. Section 33-320a
requires that the director or officer must satisfy the additional condition that
he had no reasonable cause to believe that his conduct was unlawful in order to
be indemnified. A director or officer also will be entitled to indemnification
as described above if (i) he is successful on the merits in the defense of any
non-derivative proceeding brought against him or (ii) a court shall have
determined that in view of all the circumstances he is fairly and reasonably
entitled to be indemnified. The decision about whether the director or
21
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officer qualifies for indemnification under C.G.S. Section 33-320a may be made
(i) in writing by a majority of those members of the board of directors who were
not parties to the proceeding in question, (ii) in writing by independent legal
counsel selected by a consent in writing signed by a majority of those directors
who were not parties to the proceeding, or (iii) by the shareholders of the
corporation at a special or annual meeting by an affirmative vote of at least a
majority of the voting power of shares not owned by parties to the proceeding. A
director or officer also may apply to a court of competent jurisdiction for
indemnification even though he previously applied to the board, independent
legal counsel or the shareholders and his application for indemnification was
rejected.
For purposes of C.G.S. Section 33-320a, the termination of any
proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent shall not create, of itself, a presumption that the
director or officer did not act in good faith or in a manner which that director
or officer did not believe reasonably to be in the best interests of the
corporation or of the participants and beneficiaries of an employee benefit plan
or trust and consistent with the provisions of such plan or trust. Likewise, the
termination of a criminal act or proceeding shall not create, of itself, a
presumption that the director or officer had reasonable cause to believe that
his conduct was unlawful.
In non-derivative proceedings based on the purchase or sale of
securities of the corporation or of another enterprise, which the director or
officer serves or served at the request of the corporation, C.G.S. Section
33-320a provides that the corporation shall indemnify the director or officer
only after a court shall have determined upon application that, in view of all
the circumstances, the director or officer is fairly and reasonably entitled to
be indemnified. Furthermore, the expenditures for which the director or officer
shall be indemnified shall be only such amount as the court determines to
appropriate.
Pursuant to C.G.S. Section 33-320a, where a director or officer was or
is a party or was threatened to be made a party to a derivative proceeding, the
corporation shall indemnify him against expenses, including attorneys' fees,
actually and reasonably incurred by him in connection with the proceeding or any
appeal therein, in relation to matters as to which he is finally adjudged not to
have breached his duty to the corporation. The corporation also shall indemnify
a director or officer where the court determines that, in view of all the
circumstances, such person is fairly and reasonably entitled to be indemnified;
however, in such a situation, the individual shall be indemnified only for such
amount as the court determines to be appropriate. Furthermore, the statute
provides that the corporation shall not indemnify a director or officer for
amounts paid to the corporation, to a plaintiff or to counsel for a plaintiff in
settling or otherwise disposing of a threatened or pending action, with or
without court approval, or for expenses incurred in defending a threatened
action or a pending action which is settled or otherwise disposed of without
court approval.
C.G.S. Section 33-320a also provides that expenses incurred in
defending a proceeding may be paid by the corporation in advance of the final
disposition of such proceeding upon authorization of the board of directors,
provided said expenses are indemnifiable under the statute and the director or
officer agrees to repay such amount if he is later found not entitled to
indemnification by the corporation.
Lastly, C.G.S. Section 33-320a is intended to be an exclusive statute.
A corporation established under Connecticut statute cannot indemnify a director
or officer (other than a director or officer who is or was serving at the
request of the corporation as a director, officer, partner, trustee, employee or
agent of another enterprise), to an extent either greater or less than that
authorized by the statute, and any provision in the certificate of
incorporation, the bylaws, a shareholder or director resolution, or agreement or
otherwise that is inconsistent with the statute is invalid. C.M. Life Insurance
Company was not established under Connecticut statute but was instead created by
special act of the Connecticut General Assembly. Currently, its charter does not
have provisions dealing with indemnification of its directors or officers,
therefore the provisions of C.G.S. Section 33-320a currently apply to such
indemnification. However, in the event C.M. Life Insurance Company's charter is
amended by the Connecticut General Assembly in such a manner which is
inconsistent with the statute, the charter would take precedence over C.G.S.
Section 33-320a. Notwithstanding the above, C.G.S. Section 33-320a specifically
authorizes a corporation to procure insurance providing greater indemnification
rights than those set
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out in the statute the premium cost of which may be shared with the director or
officer on such basis as may be agreed upon. The directors and officers may be
covered by an errors and omissions insurance policy or other insurance policy.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) MML Distributors, LLC, a wholly owned subsidiary of MassMutual acts as
principal underwriter for registered separate accounts of MassMutual, C.M. Life
and MML Bay State.
(b)(1) MML Distributors, LLC is the principal underwriter of the Contracts. The
following people are officers and directors of the principal underwriter.
OFFICERS AND MEMBER REPRESENTATIVES
MML DISTRIBUTORS, LLC
Name and Position
with Principal Underwriter Principal Business Address
- -------------------------- --------------------------
Kenneth M. Rickson One Monarch Place
Member Representative 1414 Main Street
G.R. Phelps & Co., Inc. Springfield, MA 01144-1013
Margaret Sperry 1295 State Street
Member Representative Springfield, MA 01111-0001
Massachusetts Mutual
Life Insurance Co.
Kenneth M. Rickson One Monarch Place
President 1414 Main Street
Springfield, MA 01144-1013
Ronald E. Thomson One Monarch Place
Vice President 1414 Main Street
Springfield, MA 01144-1013
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Michael L. Kerley One Monarch Place
Vice President 1414 Main Street
Chief Legal Officer Springfield, MA 01144-1013
Assistant Secretary
John O'Connor One Monarch Place
Vice President 1414 Main Street
Springfield, MA 01144-1013
Robert S. Rosenthal One Monarch Place
Compliance Officer 1414 Main Street
Springfield, MA 01144-1013
James T. Birchall One Monarch Place
Treasurer 1414 Main Street
Springfield, MA 01144-1013
Bruce C. Frisbie 1295 State Street
Assistant Treasurer Springfield, MA 01111-0001
Raymond W. Anderson 140 Garden Street
Assistant Treasurer Hartford, CT 01654
Ann F. Lomeli 1295 State Street
Secretary Springfield, MA 01111-0001
(b)(2) MML Investors Services, Inc. is the co-underwriter of the Contracts. The
following people are the officers and directors of the co-underwriter.
MML INVESTORS SERVICES, INC.
OFFICERS AND DIRECTORS
Name and Position
with Co-Underwriter Principal Business Address
- ------------------- --------------------------
Kenneth M. Rickson One Monarch Place
President and Chief 1414 Main Street
Operating Officer Springfield, MA 01144-1013
Michael L. Kerley One Monarch Place
Second Vice President 1414 Main Street
Chief Legal Officer Springfield, MA 01144-1013
Assistant Secretary
Ronald E. Thomson One Monarch Place
Treasurer and Second 1414 Main Street
Vice President Springfield, MA 01144-1013
Thomas J. Finnegan, Jr. 1295 State Street
Secretary/Clerk Springfield, MA 01111
Marilyn A. Sponzo One Monarch Place
Assistant Secretary 1414 Main Street
Springfield, MA 01144-1013
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John E. Forrest One Monarch Place
Second Vice President 1414 Main Street
National Sales Director Springfield, MA 01144-1013
Eileen D. Leo One Monarch Place
Assistant Treasurer 1414 Main Street
Springfield, MA 01103-1013
William Bartol One Monarch Place
Compliance Officer 1414 Main Street
Springfield, MA 01144-1013
Robert S. Rosenthal One Monarch Place
Compliance Officer 1414 Main Street
Springfield, MA 01144-1013
Trudy A. Fearon One Monarch Place
Sr. Registered Options Principal 1414 Main Street
Springfield, MA 01144-1013
Dennis L. Reyhons 1295 State Street
Regional Supervisor/South Springfield, MA 01111
Nicholas J. Orphan 245 Peach Tree Center Ave.
Regional Supervisor/South Suite 2330
Atlanta, GA 30303
25
<PAGE>
Page 2
MML INVESTORS SERVICES, INC.
OFFICERS AND DIRECTORS
Name and Position
with Co-Underwriter Principal Business Address
- ------------------- ---------------------------
William L. Tindall 1295 State Street
Chief Pension Management Springfield, MA 01111
Field Force Supervisor
Robert W. Kumming 1295 State Street
Regional Pension Management Springfield, MA 01111
Supervisor (East/Central)
Peter J. Zummo 1295 State Street
Regional Pension Management Springfield, MA 01111
Supervisor (South/West)
Bruce Lukowiak 6263 North Scottsdale Rd.
Regional Supervisor/West Suite 222
Scottsdale, AZ 85250
Robert Burke One Lincoln Centre
Regional Supervisor/Central Suite 1490
Oak Brook Terrace, IL
60181-4271
Lawrence V. Burkett 1295 State Street
Chairman of the Board Springfield, MA 01111
of Directors
Peter Cuozzo, CLU, ChFC 1295 State Street
Director Springfield, MA 01111
John B. Davies 1295 State Street
Director Springfield, MA 01111
Daniel J. Fitzgerald 1295 State Street
Director Springfield, MA 01111
Maureen R. Ford 140 Garden Street
Director Hartford, CT 01654
Gary T. Huffman 1295 State Street
Director Springfield, MA 01111
Isadore Jermyn, FIA, ASA 1295 State Street
Director Springfield, MA 01111
Susan Alfano 1295 State Street
Director Springfield, MA 01111
Anne Melissa Dowling 140 Garden Street
Director Hartford, CT 01654
26
<PAGE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
C.M. Life Insurance Company at 140 Garden Street, Hartford, Connecticut
06154 has possession of the accounts, books or documents of the Separate Account
required to be maintained by Section 31(a) of the Investment Company Act of 1940
and the rules promulgated thereunder.
ITEM 31. MANAGEMENT SERVICES
Not Applicable.
ITEM 32. UNDERTAKINGS
a. Registrant hereby undertakes to 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 sixteen (16) months old for so long as payment
under the variable annuity contracts may be accepted.
b. Registrant hereby undertakes to 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 postcard or similar written communication
affixed to or included in the Prospectus that the applicant can remove
to send for a Statement of Additional Information.
c. Registrant hereby undertakes to deliver any Statement of Additional
Information and any financial statement required to be made available
under this Form promptly upon written or oral request.
d. C.M. Life Insurance company hereby represents that the fees and
charges deducted under the individual deferred variable annuity
contracts with flexible purchase payments described in this
Registration Statement in the aggregate, are reasonable in relation to
the services rendered, the expenses expected to be incurred, and the
risks assumed by C.M. Life Insurance Company.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has
caused this Post-Effective Amendment No. 2 to Registration Statement No.
33-61643 to be signed on its behalf by the undersigned thereunto duly
authorized, all in the city of Springfield and the Commonwealth of
Massachusetts, on the 21st day of April, 1997.
C.M. MULTI-ACCOUNT A
C.M. LIFE INSURANCE COMPANY
(Depositor)
By: /s/ Lawrence V. Burkett, Jr.*
-----------------------------------------------
Lawrence V. Burkett, Jr., President and Chief Executive Officer
C.M. Life Insurance Company
/s/ Richard M. Howe On April 21, 1997, as Attorney-in-Fact pursuant to
- ------------------- powers of attorney filed herewith.
*Richard M. Howe
As required by the Securities Act of 1933, this Post-Effective Amendment No. 2
to Registration Statement No. 33-61643 has been signed by the following persons
in the capacities and on the duties indicated.
27
<PAGE>
PAGE>
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Lawrence V. Burkett, Jr.* President, Chief Executive April 21, 1997
- ----------------------------- and Director
Lawrence V. Burkett, Jr.
/s/ Ann Iseley* Treasurer (Principal Financial April 21, 1997
- --------------- Officer)
Ann Iseley
/s/ John Miller, Jr.* Second Vice President and Comptroller April 21, 1997
- --------------------- (Principal Accounting Officer)
John Miller, Jr.
/s/ John B. Davies* Director April 21, 1997
- -------------------
John B. Davies
/s/ Daniel F. Fitzgerald* Director April 21, 1997
- -------------------------
Daniel F. Fitzgerald
/s/ Stuart H. Reese* Director April 21, 1997
- --------------------
Stuart H. Reese
/s/ Richard M. Howe On April 21, 1997, as Attorney-in-Fact pursuant to
- ------------------- powers of attorney filed herewith.
*Richard M. Howe
</TABLE>
28
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
10. (i) Consent of Coopers & Lybrand, L.L.P., Independent Accountants
(ii) Consent of Arthur Andersen, LLP, Independent Accountants
(iii) Powers of Attorney
14. Financial Data Schedule
29
<PAGE>
EXHIBIT 10.I
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
To the Board of Directors of
C.M. Life Insurance Company
We consent to the inclusion in Post-Effective Amendment No. 2 to the
Registration Statement of C.M. Multi-Account A OFFITBANK segment on form N-4
(Registration No. 33-61643), of our report, which includes explanatory
paragraphs relating to the use of statutory accounting practices, which
practices are not considered to be in accordance with generally accepted
accounting principles, dated February 7, 1997 on our audit of the financial
statements of C.M. Life Insurance Company, and our report dated March 14, 1997
on our audit of the OFFITBANK segment of C.M. Multi-Account A. We also consent
to the reference to our firm under the caption "Experts."
Coopers & Lybrand L.L.P.
April 25, 1997
30
<PAGE>
EXHIBIT 10.II
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
(and to all references to our Firm) included in or made a part of this
Registration Statement for C.M. Life Insurance Company.
Hartford, Connecticut
April 25, 1997 Arthur Andersen LLP
31
<PAGE>
EXHIBIT 10.III
POWER OF ATTORNEY
C.M. LIFE SEPARATE INVESTMENT ACCOUNTS
--------------------------------------
The Undersigned, Lawrence V. Burkett, Jr., President, Chief Executive Officer
and member of the Board of Directors of C.M. Life Insurance Company ("CM Life"),
does hereby constitute and appoint Thomas F. English, Richard M. Howe, and
Michael Berenson, and each of them individually, as his true and lawful
attorneys and agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as President, Chief Executive Officer and member of the Board of Directors of CM
Life that said attorneys and agents may deem necessary or advisable to enable CM
Life to comply with the Securities Act of 1933, as amended (the "1933 Act"), the
Investment Company Act of 1940, as amended (the "1940 Act"), and any rules,
regulations, orders or other requirements of the Securities and Exchange
Commission (the "Commission") thereunder. This power of attorney applies to the
registration, under the 1933 Act and the 1940 Act, of shares of beneficial
interest of CM Life separate investment accounts (the "CM Life Separate
Accounts"). This power of attorney authorizes such attorneys and agents to sign
the Undersigned's name on his behalf as President, Chief Executive Officer and
member of Board of Directors of CM Life to the Registration Statements and to
any instruments or documents filed or to be filed with the Commission under the
1933 Act and the 1940 Act in connection with such Registration Statements,
including any and all amendments to such statements, documents or instruments of
any CM Life Separate Account, including but not limited to those listed below.
Panorama Plus Separate Account
C.M. Multi-Account A
C.M. Life Variable Life Separate Account I
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this 26th day of February,
1997.
/s/ Lawrence V. Burkett, Jr.
- ----------------------------------------------------------------
Lawrence V. Burkett, Jr. Witness
President, Chief Executive Officer
and Member, Board of Directors
32
<PAGE>
POWER OF ATTORNEY
C.M. LIFE SEPARATE INVESTMENT ACCOUNTS
--------------------------------------
The Undersigned, John B. Davies, member of the Board of Directors of C.M. Life
Insurance Company ("CM Life"), does hereby constitute and appoint Lawrence V.
Burkett, Jr., Thomas F. English, Richard M. Howe, and Michael Berenson, and each
of them individually, as his true and lawful attorneys and agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as member of the Board of Directors of CM Life that said attorneys and agents
may deem necessary or advisable to enable CM Life to comply with the Securities
Act of 1933, as amended (the "1933 Act"), the Investment Company Act of 1940, as
amended (the "1940 Act"), and any rules, regulations, orders or other
requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of CM Life separate
investment accounts (the "CM Life Separate Accounts"). This power of attorney
authorizes such attorneys and agents to sign the Undersigned's name on his
behalf as member of Board of Directors of CM Life to the Registration Statements
and to any instruments or documents filed or to be filed with the Commission
under the 1933 Act and the 1940 Act in connection with such Registration
Statements, including any and all amendments to such statements, documents or
instruments of any CM Life Separate Account, including but not limited to those
listed below.
Panorama Plus Separate Account
C.M. Multi-Account A
C.M. Life Variable Life Separate Account I
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this 25th day of February,
1997.
/s/ John B. Davies
- -------------------------------------------------
John B. Davies Witness
Member, Board of Directors
33
<PAGE>
POWER OF ATTORNEY
C.M. LIFE SEPARATE INVESTMENT ACCOUNTS
--------------------------------------
The Undersigned, Daniel J. Fitzgerald, member of the Board of Directors of C.M.
Life Insurance Company ("CM Life"), does hereby constitute and appoint Lawrence
V. Burkett, Jr., Thomas F. English, Richard M. Howe, and Michael Berenson, and
each of them individually, as his true and lawful attorneys and agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as member of the Board of Directors of CM Life that said attorneys and agents
may deem necessary or advisable to enable CM Life to comply with the Securities
Act of 1933, as amended (the "1933 Act"), the Investment Company Act of 1940, as
amended (the "1940 Act"), and any rules, regulations, orders or other
requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of CM Life separate
investment accounts (the "CM Life Separate Accounts"). This power of attorney
authorizes such attorneys and agents to sign the Undersigned's name on his
behalf as member of Board of Directors of CM Life to the Registration Statements
and to any instruments or documents filed or to be filed with the Commission
under the 1933 Act and the 1940 Act in connection with such Registration
Statements, including any and all amendments to such statements, documents or
instruments of any CM Life Separate Account, including but not limited to those
listed below.
Panorama Plus Separate Account
C.M. Multi-Account A
C.M. Life Variable Life Separate Account I
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this 25th day of February,
1997.
/s/ Daniel J. Fitzgerald
- ----------------------------------------------------------
Daniel J. Fitzgerald Witness
Member, Board of Directors
34
<PAGE>
POWER OF ATTORNEY
C.M. LIFE SEPARATE INVESTMENT ACCOUNTS
--------------------------------------
The Undersigned, Stuart H. Reese, member of the Board of Directors of C.M. Life
Insurance Company ("CM Life"), does hereby constitute and appoint Lawrence V.
Burkett, Jr., Thomas F. English, Richard M. Howe, and Michael Berenson, and each
of them individually, as his true and lawful attorneys and agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as member of the Board of Directors of CM Life that said attorneys and agents
may deem necessary or advisable to enable CM Life to comply with the Securities
Act of 1933, as amended (the "1933 Act"), the Investment Company Act of 1940, as
amended (the "1940 Act"), and any rules, regulations, orders or other
requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of CM Life separate
investment accounts (the "CM Life Separate Accounts"). This power of attorney
authorizes such attorneys and agents to sign the Undersigned's name on his
behalf as member of Board of Directors of CM Life to the Registration Statements
and to any instruments or documents filed or to be filed with the Commission
under the 1933 Act and the 1940 Act in connection with such Registration
Statements, including any and all amendments to such statements, documents or
instruments of any CM Life Separate Account, including but not limited to those
listed below.
Panorama Plus Separate Account
C.M. Multi-Account A
C.M. Life Variable Life Separate Account I
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this 25th day of February,
1997.
/s/ Stuart H. Reese
- -----------------------------------------------------
Stuart H. Reese Witness
Member, Board of Directors
35
<PAGE>
POWER OF ATTORNEY
C.M. LIFE SEPARATE INVESTMENT ACCOUNTS
--------------------------------------
The Undersigned, Ann Iseley, Treasurer of C.M. Life Insurance Company ("CM
Life"), does hereby constitute and appoint Lawrence V. Burkett, Jr., Thomas F.
English, Richard M. Howe, and Michael Berenson, and each of them individually,
as her true and lawful attorneys and agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as Treasurer of CM Life that said attorneys and agents may deem necessary or
advisable to enable CM Life to comply with the Securities Act of 1933, as
amended (the "1933 Act"), the Investment Company Act of 1940, as amended (the
"1940 Act"), and any rules, regulations, orders or other requirements of the
Securities and Exchange Commission (the "Commission") thereunder. This power of
attorney applies to the registration, under the 1933 Act and the 1940 Act, of
shares of beneficial interest of CM Life separate investment accounts (the "CM
Life Separate Accounts"). This power of attorney authorizes such attorneys and
agents to sign the Undersigned's name on her behalf as Treasurer of CM Life to
the Registration Statements and to any instruments or documents filed or to be
filed with the Commission under the 1933 Act and the 1940 Act in connection with
such Registration Statements, including any and all amendments to such
statements, documents or instruments of any CM Life Separate Account, including
but not limited to those listed below.
Panorama Plus Separate Account
C.M. Multi-Account A
C.M. Life Variable Life Separate Account I
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set her hand this 25th day of February,
1997.
/s/ Ann Iseley
- -------------------------------------------------------
Ann Iseley Witness
Treasurer
36
<PAGE>
POWER OF ATTORNEY
C.M. LIFE SEPARATE INVESTMENT ACCOUNTS
--------------------------------------
The Undersigned, John Miller, Jr., Second Vice President and Comptroller of C.M.
Life Insurance Company ("CM Life"), does hereby constitute and appoint Lawrence
V. Burkett, Jr., Thomas F. English, Richard M. Howe, and Michael Berenson, and
each of them individually, as his true and lawful attorneys and agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as Second Vice President and Comptroller of CM Life that said attorneys and
agents may deem necessary or advisable to enable CM Life to comply with the
Securities Act of 1933, as amended (the "1933 Act"), the Investment Company Act
of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of CM Life separate
investment accounts (the "CM Life Separate Accounts"). This power of attorney
authorizes such attorneys and agents to sign the Undersigned's name on his
behalf as Second Vice President and Comptroller of CM Life to the Registration
Statements and to any instruments or documents filed or to be filed with the
Commission under the 1933 Act and the 1940 Act in connection with such
Registration Statements, including any and all amendments to such statements,
documents or instruments of any CM Life Separate Account, including but not
limited to those listed below.
Panorama Plus Separate Account
C.M. Multi-Account A
C.M. Life Variable Life Separate Account I
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this 26th day of February,
1997.
/s/ John Miller, Jr.
- -------------------------------------------------------
John Miller, Jr. Witness
Second Vice President
and Comptroller
37
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 10,242,856
<INVESTMENTS-AT-VALUE> 10,507,417
<RECEIVABLES> 5,539
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 10,512,956
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 10,512,956
<DIVIDEND-INCOME> 243,040
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 12,075
<NET-INVESTMENT-INCOME> 230,965
<REALIZED-GAINS-CURRENT> 8,989
<APPREC-INCREASE-CURRENT> 264,561
<NET-CHANGE-FROM-OPS> 504,515
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 10,512,956
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 8,805,373
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
