<PAGE>
As filed with the Securities and Exchange Commission on April 29, 1996
- ----------------------------------------------------------------------
Registration No. 33-83120
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM N-4
REGISTRATION STATEMENT UNDER SECURITIES ACT OF 1933 / /
--
Pre-Effective Amendment No. / /
--
Post-Effective Amendment No. 1 / /
--
REGISTRATION STATEMENT UNDER THE INVESTMENT / /
COMPANY ACT OF 1940
Amendment No. 2 /X/
--
---------------------------
PIA VARIABLE ANNUITY ACCOUNT I
(Exact Name of Registrant)
--------------------------
THE PENN INSURANCE AND ANNUITY COMPANY
(Name of Depositor)
--------------------------
600 Dresher Road
Horsham, Pennsylvania 19044
(Address of Principal Executive Offices of Depositor)
Depositor's Telephone Number: (215) 956-9177
--------------------------
L. Stockton Illoway
Vice President
The Penn Insurance and Annuity Company
600 Dresher Road
Horsham, Pennsylvania 19044
(Name and Address of Agent for Service)
Copy to:
Richard W. Grant
C. Ronald Rubley
Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, PA 19103-6993
It is proposed that this filing will become effective (check appropriate
box)
___ immediately upon filing pursuant to paragraph (b) of Rule
485
x on April 30, 1996 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 Rule 485
The registrant has registered an indefinite amount of securities pursuant
to Rule 24f-2 under the Investment Company Act of 1940, as amended. The Rule
24f-2 Notice for the fiscal year ending December 31, 1995 was filed on February
29, 1996.
<PAGE>
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Location in Statement
of Additional
Form N-4 Item Number Location in Prospectus Information
- -------------------- ---------------------- ---------------------
<S> <C> <C>
Item 1. Cover Page Cover Page N/A
Item 2. Definitions Special Terms N/A
Item 3. Synopsis or Highlights Cover Page; Expenses N/A
Item 4. Condensed Financial Performance Information N/A
Information
Item 5. General Description of The Penn Insurance and Annuity N/A
Registrant, Depositor Company; The Separate Account
and Portfolio Companies
Item 6. Deductions and Expenses The Contract - Charges N/A
Item 7. General Description of The Contract N/A
Variable Annuity Contracts
Item 8. Annuity Period The Contract - Annuity Payments N/A
Item 9. Death Benefit The Contract - Death Benefit N/A
Item 10. Purchases and Contract The Contract - Purchases; N/A
Value The Contract - Accumulations
Units
Item 11. Redemptions The Contract - Withdrawals N/A
Item 12. Taxes Federal Income Tax N/A
Considerations
Item 13. Legal Proceedings N/A N/A
Item 14. Table of Contents of Statement of Additional N/A
Statement of Additional Information Contents
Information
Item 15. Cover Page N/A Cover Page
Item 16. Table of Contents N/A Cover Page
Item 17. General Information and N/A N/A
History
Item 18. Services N/A Administrative and
Recordkeeping
Services; Custodian;
Auditors
Item 19. Purchase of Securities The Contract - Purchases; Distribution of
Being Offered The Contract - Transfers; Contracts
The Contract - Charges
Item 20. Underwriters N/A Distribution of
Contracts
Item 21. Calculation of Performance N/A Performance Data
Data
Item 22. Annuity Payments N/A Variable Annuity
Payments
Item 23. Financial Statements N/A Financial Statements
</TABLE>
<PAGE>
PROSPECTUS -- MAY 1, 1996
INDIVIDUAL VARIABLE AND FIXED ANNUITY CONTRACT -- FLEXIBLE PURCHASE PAYMENTS
- --------------------------------------------------------------------------------
PIA VARIABLE ANNUITY ACCOUNT I
THE PENN INSURANCE AND ANNUITY COMPANY [LOGO OF PENNANT APPEARS HERE]
INDEPENDENCE SQUARE . PHILADELPHIA, PENNSYLVANIA 19172 . TELEPHONE (215) 956-
9177
- --------------------------------------------------------------------------------
This prospectus describes a combination variable and fixed annuity contract
offered by The Penn Insurance and Annuity Company (the "Company"). Through PIA
Variable Annuity Account I (the "Separate Account"), you may allocate amounts
invested under the Contract among one or more of the following funds:
<TABLE>
<CAPTION>
FUNDS MANAGERS
- --------------------------------------------------------------------------------
PENN SERIES FUNDS, INC.
<S> <C>
Growth Equity Fund Independence Capital Management, Inc.
(a subsidiary of The Penn Mutual Life Insurance Company)
Flexibly Managed Fund T. Rowe Price Associates, Inc.
Value Equity Fund OpCap Advisors (a subsidiary of Oppenheimer Capital)
Small Capitalization OpCap Advisors
Fund
International Equity Vontobel USA, Inc. (a subsidiary of Vontobel Holding
Fund Ltd.)
Quality Bond Fund Independence Capital Management, Inc.
High Yield Bond Fund T. Rowe Price Associates, Inc.
Money Market Fund Independence Capital Management, Inc.
- --------------------------------------------------------------------------------
TCI PORTFOLIOS, INC.
TCI Growth Portfolio Investors Research Corporation (a Twentieth Century
company)
- --------------------------------------------------------------------------------
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST
Balanced Portfolio Neuberger & Berman Management Incorporated
Limited Maturity Bond Neuberger & Berman Management Incorporated
Portfolio
- --------------------------------------------------------------------------------
FIDELITY INVESTMENTS' VARIABLE INSURANCE PRODUCT FUND
Equity-Income Fidelity Management and Research Company
Portfolio
Growth Portfolio Fidelity Management and Research Company
- --------------------------------------------------------------------------------
FIDELITY INVESTMENTS' VARIABLE INSURANCE PRODUCTS FUND II
Asset Manager Fidelity Management and Research Company
Portfolio
- --------------------------------------------------------------------------------
</TABLE>
In addition, you may also invest in fixed interest options in the Fixed
Account. The fixed interest options are funded through and are backed by the
Company's general account.
For many persons, a combination variable and fixed annuity contract may be
an attractive long-term investment vehicle. Its benefits include the manner in
which earnings on accumulated funds are taxed, the availability of multiple
investment options, and the provision of annuity and death benefit guarantees.
The Contract is not intended as a short-term investment vehicle. Early
withdrawals of purchase payments from the Contract may be subject to a
contingent deferred sales charge of up to 6%, and withdrawals by an owner
before age 59 1/2 may be subject to a 10% additional income tax.
For contracts sold in some states, not all Funds or fixed interest options
are available. Also, in some states, the number of years during which purchase
payments may be made to the Company is limited.
A Contract may be returned within ten days of receipt for a full refund of
the Contract Value (or purchase payments, if required under applicable law).
Longer free look periods apply in some states.
This prospectus sets forth concisely the information a prospective investor
should know before investing. It should be retained for future reference.
A statement of additional information dated the same as this prospectus has
been filed with the Securities and Exchange Commission and is incorporated
herein by reference. It is available, at no charge by writing The Penn
Insurance and Annuity Company, Customer Service Group, Independence Square,
Philadelphia, PA 19172. Or, you can call (215) 956-9177. The table of contents
of the statement of additional information is at the end of this prospectus.
THIS PROSPECTUS MUST BE ACCOMPANIED OR PRECEDED BY A CURRENT PROSPECTUS FOR
EACH APPLICABLE FUND.
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.
<PAGE>
- --------------------------------------------------------------------------------
PROSPECTUS CONTENTS
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
SPECIAL TERMS.............................................................. 3
- --------------------------------------------------------------------------------
EXPENSES................................................................... 4
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EXAMPLES OF FEES AND EXPENSES.............................................. 5
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THE PENN INSURANCE AND ANNUITY COMPANY..................................... 6
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THE SEPARATE ACCOUNT....................................................... 7
Penn Series Funds, Inc. ................................................. 7
TCI Portfolios, Inc. .................................................... 8
Neuberger & Berman Advisers Management Trust............................. 8
Fidelity Investments' Variable Insurance Products Fund................... 8
Fidelity Investments' Variable Insurance Products Fund II................ 8
Voting Rights............................................................ 8
- --------------------------------------------------------------------------------
THE CONTRACT............................................................... 9
Purchases................................................................ 9
Accumulation Units....................................................... 9
Annuity Payments......................................................... 10
Death Benefit............................................................ 10
Transfers................................................................ 11
Dollar Cost Averaging................................................... 11
Automatic Rebalancing................................................... 11
Withdrawals.............................................................. 11
Systematic Withdrawals.................................................. 11
403(b) Withdrawals...................................................... 12
Deferment of Payments and Transfers...................................... 12
Charges.................................................................. 12
Administration Charges.................................................. 12
Mortality and Expense Risk Charge....................................... 12
Contingent Deferred Sales Charge........................................ 12
Free Withdrawals........................................................ 13
Premium Taxes........................................................... 13
Performance Information.................................................. 13
- --------------------------------------------------------------------------------
THE FIXED INTEREST OPTIONS................................................. 14
General Information...................................................... 14
Loans Under Section 403(b) Contracts..................................... 14
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FEDERAL INCOME TAX CONSIDERATIONS.......................................... 15
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STATEMENT OF ADDITIONAL INFORMATION CONTENTS............................... 17
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</TABLE>
2
<PAGE>
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SPECIAL TERMS
As used in this prospectus, the following terms have the indicated meanings:
ACCUMULATION UNIT: A unit of measure used to compute the Variable Account
Value under the Contract prior to the Annuity Date.
ANNUITANT: The person during whose life annuity payments are made.
ANNUITY DATE: The date on which annuity payments start.
ANNUITY UNIT: A unit of measure used to calculate the amount of each
variable annuity payment.
BENEFICIARY: The person(s) named by the Contract Owner to receive the death
benefit payable upon the death of the Contract Owner or Annuitant.
CONTRACT: The combination variable and fixed annuity Contract described in
this prospectus.
CONTRACT OWNER: The person specified in the Contract as the Contract Owner.
CONTRACT VALUE: The sum of the Variable Account Value and the Fixed Account
Value.
FIXED ACCOUNT VALUE: The value of amounts held under the Contract in all
fixed interest options.
SEPARATE ACCOUNT: PIA Variable Annuity Account I, a separate account of The
Penn Insurance and Annuity Company that is registered as a unit investment
trust under the Investment Company Act of 1940.
VARIABLE ACCOUNT VALUE: The value of amounts held under the Contract in all
subaccounts of the Separate Account.
VALUATION PERIOD: The period from one valuation of Separate Account assets
to the next. Valuation is performed on each day the New York Stock Exchange
is open for trading.
WE: A reference to "we" or "us" denotes The Penn Insurance and Annuity
Company.
YOU: A reference to "you" denotes the Contract Owner or prospective Contract
Owner.
3
<PAGE>
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EXPENSES
- -------------------------------------------------------------------------------
CONTRACT OWNER TRANSACTION EXPENSES
Sales Load Imposed on Purchase Payments................................... None
<TABLE>
<S> <C>
Maximum Contingent Deferred Sales Charge..... 6% of purchase payments withdrawn*
</TABLE>
Exchange Fee.............................................................. None
<TABLE>
<S> <C>
MAXIMUM ANNUAL CONTRACT ADMINISTRATION CHARGE............................... $30
</TABLE>
SEPARATE ACCOUNT ANNUAL EXPENSES (AS A PERCENTAGE OF VARIABLE ACCOUNT VALUE)
<TABLE>
<S> <C>
Mortality and Expense Risk Charge......................................... 1.25%
Contract Administration Charge............................................ 0.15%
-----
Total Separate Account Annual Expenses.................................... 1.40%
</TABLE>
- -----------------------
* See Charges in this prospectus for information on the decline in the per-
centage charge over time and free withdrawals.
- -------------------------------------------------------------------------------
PENN SERIES FUNDS, INC.**
UNDERLYING FUND ANNUAL EXPENSES (AS A % OF PORTFOLIO AVG. NET ASSETS)
<TABLE>
<CAPTION>
ADMINISTRATIVE
MANAGEMENT AND CORPORATE TOTAL
FEES (AFTER SERVICES FEES ACCOUNTING OTHER FUND
WAIVER) (AFTER WAIVER) FEES EXPENSES EXPENSES
----------- -------------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
Growth Equity........... 0.45% 0.15% 0.08% 0.09% 0.77%
Value Equity............ 0.50% 0.15% 0.07% 0.08% 0.80%
Int'l Equity............ 0.75% 0.15% 0.09% 0.24% 1.23%
Flexibly Managed........ 0.50% 0.15% 0.06% 0.08% 0.79%
Small Capitalization.... 0.50% 0.15% 0.04% 0.31% 1.00%
Quality Bond............ 0.40% 0.15% 0.08% 0.10% 0.73%
High Yield Bond......... 0.50% 0.15% 0.08% 0.14% 0.87%
Money Market............ 0.35% 0.15% 0.08% 0.11% 0.69%
</TABLE>
- -----------------------
** The expenses presented are for the last fiscal year, except accounting fees
have been restated to reflect current fees based on a revised accounting
fee agreement. In the absence of voluntary fee waivers by the investment
adviser, the total expenses of the Growth Equity and Quality Bond Funds
would have been 0.82% and 0.78% respectively. In the absence of expense
waivers and voluntary fee waivers by the investment adviser, the total ex-
penses of the Money Market Fund would have been 0.74%. In the absence of
voluntary fee waivers by the investment adviser and administrator of the
Fund, the total expenses of the Small Capitalization Fund would have been
1.29% annualized for the period from March 1, 1995 to December 31, 1995.
- -------------------------------------------------------------------------------
TCI PORTFOLIOS, INC.
UNDERLYING FUND ANNUAL EXPENSES (AS A % OF PORTFOLIO AVG. NET ASSETS)
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL FUND
FEES 12B-1 FEES EXPENSES EXPENSES
---------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Growth................................ 1.00% None None 1.00%
</TABLE>
- -------------------------------------------------------------------------------
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST***
UNDERLYING FUND ANNUAL EXPENSES (AS A % OF PORTFOLIO AVG. NET ASSETS)
<TABLE>
<CAPTION>
MANAGEMENT,
ADVISORY AND
ADMINISTRATION OTHER TOTAL FUND
FEES EXPENSES EXPENSES
-------------- -------- ----------
<S> <C> <C> <C>
Limited Maturity Bond........................ 0.65% 0.10% 0.75%
Balanced..................................... 0.85% 0.19% 1.04%
</TABLE>
- -----------------------
*** Neuberger & Berman Advisers Management Trust (the "Trust") is divided into
portfolios ("Portfolios"), each of which invests all of its net investable
assets in a corresponding series ("Series") of Advisers Managers Trust.
Expenses in the table reflect expenses of the Portfolios and include each
Portfolio's pro rata portion of the operating expenses of each Portfolio's
corresponding Series. The Portfolios pay Neuberger & Berman Management
Inc. ("NBMI") an administration fee based on the Portfolio's net asset
value. Each Portfolio's corresponding Series pays NBMI a management fee
based on the Series' average daily net assets. Accordingly, this table
combines management fees at the Series level and administration fees at
the Portfolio's level in a unified fee rate. Total Annual Expenses for
each portfolio have been restated based upon current administration fees
for the Portfolio and management fees for its corresponding Series. See
"Expenses" in the Trust's Prospectus.
4
<PAGE>
- --------------------------------------------------------------------------------
FIDELITY INVESTMENTS' VARIABLE INSURANCE PRODUCTS FUND
UNDERLYING FUND ANNUAL EXPENSES (AS A % OF PORTFOLIO AVG. NET ASSETS)
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL FUND
FEES EXPENSES EXPENSES
---------- -------- ----------
<S> <C> <C> <C>
Equity-Income.................................... 0.51% 0.10% 0.61%
Growth........................................... 0.61% 0.09% 0.70%
</TABLE>
- --------------------------------------------------------------------------------
FIDELITY INVESTMENTS' VARIABLE INSURANCE PRODUCTS FUND II++
UNDERLYING FUND ANNUAL EXPENSES (AS A % OF PORTFOLIO AVG. NET ASSETS)
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL FUND
FEE EXPENSES EXPENSES
---------- -------- ----------
<S> <C> <C> <C>
Asset Manager.................................... 0.71% 0.08% 0.79%
</TABLE>
- -------
++ The expenses presented are for the last fiscal year. A portion of the
brokerage commissions the fund paid was used to reduce its expenses. Without
this reduction, total expenses would have been 0.81% for the Asset Manager
Portfolio.
- --------------------------------------------------------------------------------
The purpose of the foregoing table is to assist you in understanding the
various costs and expenses that you will bear directly and indirectly. The
table shows Contract expenses and underlying fund expenses. See the
prospectuses of Penn Series Funds, Inc., TCI Portfolios, Inc., Neuberger &
Berman Advisers Management Trust, Fidelity Investments' Variable Insurance
Products Fund and Fidelity Investments' Variable Insurance Products Fund II for
additional information on fund expenses.
Premium taxes may be applicable, but are not reflected in the tables above
or the examples below. See Charges in this prospectus.
- --------------------------------------------------------------------------------
EXAMPLES OF FEES AND EXPENSES
The following examples illustrate the cumulative dollar amount of all the
above expenses that would be incurred on each $1,000 invested.
If you make a single purchase payment and surrender your Contract at the end
of the applicable period, you would pay the following expenses on each $1,000
invested, assuming a 5% annual return on assets.
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ----- ----- -----
<S> <C> <C> <C> <C>
Penn Series Money Market Fund............................ $74 $104 $135 $249
Penn Series Quality Bond Fund............................ $75 $106 $137 $253
Penn Series High Yield Bond Fund......................... $76 $110 $144 $267
Penn Series Growth Equity Fund........................... $75 $107 $139 $256
Penn Series Value Equity Fund............................ $75 $108 $141 $260
Penn Series Flexibly Managed Fund........................ $76 $107 $140 $259
Penn Series International Equity Fund.................... $79 $120 $162 $303
Penn Series Small Capitalization Fund.................... $77 $113 $150 $280
TCI Growth Portfolio..................................... $77 $113 $150 $280
Neuberger & Berman Limited Maturity Bond Portfolio....... $75 $106 $138 $255
Neuberger & Berman Balanced Portfolio.................... $78 $115 $152 $284
Fidelity's Equity-Income Portfolio....................... $74 $102 $131 $240
Fidelity's Growth Portfolio.............................. $74 $105 $136 $250
Fidelity's Asset Manager Portfolio....................... $75 $107 $140 $259
</TABLE>
5
<PAGE>
If you make a single purchase payment and either you do not surrender your
Contract or you annuitize your Contract at the end of the applicable period,*
you would pay the following expenses on each $1,000 invested, assuming a 5%
annual return on assets:
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ----- ----- -----
<S> <C> <C> <C> <C>
Penn Series Money Market Fund............................ $22 $67 $116 $249
Penn Series Quality Bond Fund............................ $22 $69 $118 $253
Penn Series High Yield Bond Fund......................... $24 $73 $125 $267
Penn Series Growth Equity Fund........................... $23 $70 $119 $256
Penn Series Value Equity Fund............................ $23 $71 $121 $260
Penn Series Flexibly Managed Fund........................ $23 $70 $121 $259
Penn Series International Equity Fund.................... $27 $84 $143 $303
Penn Series Small Capitalization Fund.................... $25 $77 $131 $280
TCI Growth Portfolio..................................... $25 $77 $131 $280
Neuberger & Berman Limited Maturity Bond Portfolio....... $22 $69 $119 $255
Neuberger & Berman Balanced Portfolio.................... $25 $78 $133 $284
Fidelity's Equity Income Portfolio....................... $21 $65 $111 $240
Fidelity's Growth Portfolio.............................. $22 $68 $116 $250
Fidelity's Asset Manager Portfolio....................... $23 $70 $121 $259
</TABLE>
- -----------------------
* You may not annuitize your Contract until after the second Contract anniver-
sary.
The examples are based upon fund data for the fiscal year ended December 31,
1995.
THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES UNDER YOUR CONTRACT; ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN
THOSE SHOWN.
- --------------------------------------------------------------------------------
THE PENN INSURANCE AND ANNUITY COMPANY
The Penn Insurance and Annuity Company (the "Company") is a Delaware stock life
insurance company. The Company is a wholly-owned subsidiary of The Penn Mutual
Life Insurance Company ("Penn Mutual"), a Pennsylvania mutual life insurance
company that has been in the life insurance business since 1847. The Company is
licensed to sell insurance and annuities in 47 states and the District of
Columbia. The Company's financial statements appear in the statement of
additional information.
6
<PAGE>
- --------------------------------------------------------------------------------
THE SEPARATE ACCOUNT
PIA Variable Annuity Account I was established as a separate account of the
Company on July 13, 1994. The Separate Account is registered with the
Securities and Exchange Commission as a unit investment trust under the
Investment Company Act of 1940.
The Separate Account is divided into subaccounts for investment in shares of
different mutual funds. Income, gains and losses, realized or unrealized, of a
subaccount are credited to or charged against the subaccount without regard to
any other income, gains or losses of the Company. Assets equal to the reserves
and other contract liabilities with respect to each subaccount are not
chargeable with liabilities arising out of any other business of the Company.
The Company is obligated to pay all benefits and make all payments provided
under the Contracts.
Amounts allocated or transferred to the Separate Account under the Contracts
are invested, at the direction of the Contract Owner, in one or more funds of
Penn Series Funds, Inc., TCI Portfolios, Inc., Neuberger & Berman Advisers
Management Trust, Fidelity Investments' Variable Insurance Products Fund, and
Fidelity Investments' Variable Insurance Products Fund II.
The mutual funds have shareholders other than the Separate Account. Shares
of Penn Series Funds, Inc. are also sold to Penn Mutual and other separate
accounts of Penn Mutual that fund benefits under variable annuity and variable
life insurance contracts. Shares of TCI Portfolios, Inc., Neuberger & Berman
Advisers Management Trust, Fidelity Investments' Variable Insurance Products
Fund and Fidelity Investments' Variable Insurance Products Fund II are sold to
variable annuity and variable life separate accounts of Penn Mutual, such
accounts of other insurance companies and, in the case of Neuberger & Berman
Advisers Management Trust, directly to qualified pension and retirement plans.
Each mutual fund will monitor events to identify any material conflicts that
might arise between the Separate Account and its other shareholders. See the
accompanying prospectuses of the funds for information on their monitoring for
conflicts.
- --------------------------------------------------------------------------------
PENN SERIES FUNDS, INC.:
GROWTH EQUITY FUND - seeks long term growth of capital and increase of
future income by investing primarily in common stocks of well established
growth companies;
VALUE EQUITY FUND - seeks to maximize total return (capital appreciation and
income) primarily by investing in equity securities of companies believed to be
undervalued considering such factors as assets, earnings, growth potential and
cash flows;
SMALL CAPITALIZATION FUND - seeks capital appreciation through investment in
a diversified portfolio which under normal conditions will have at least 65% of
its assets invested in equity securities of companies with market
capitalization under $1 billion;
FLEXIBLY MANAGED FUND - seeks to maximize total return (capital appreciation
and income) by investing in common stocks, other equity securities, corporate
debt securities, and/or short term reserves, in proportions considered
appropriate in light of the availability of attractively valued individual
securities and current and expected economic and market conditions;
INTERNATIONAL EQUITY FUND - seeks to maximize capital appreciation by
investing in a carefully selected diversified portfolio consisting primarily of
equity securities. The investments will consist principally of equity
securities of European and Pacific Basin countries;
QUALITY BOND FUND - seeks the highest income over the long term consistent
with the preservation of principal through investment primarily in marketable
investment grade debt securities;
HIGH YIELD BOND FUND - seeks high current income by investing primarily in a
diversified portfolio of long term high-yield/high-risk fixed income securities
in the medium to lower quality ranges; capital appreciation is a secondary
objective; such securities, which are commonly referred to as "junk" bonds,
generally involve greater risks of loss of income and principal than higher
rated securities (see accompanying Penn Series prospectuses);
MONEY MARKET FUND - seeks to preserve capital, maintain liquidity and
achieve the highest possible level of current income consistent therewith, by
investing in high quality money market instruments; an investment in the Fund
is neither insured nor guaranteed by the U.S. Government and there can be no
assurance that the fund will be able to maintain a stable net asset value of
$1.00 per share.
Independence Capital Management, Inc., Horsham, Pennsylvania is investment
adviser to the Growth Equity, Quality Bond and Money Market Funds. OpCap
Advisors, New York, New York, is investment adviser to the Value Equity and
Small Capitalization Funds. T. Rowe Price Associates, Baltimore, Maryland, is
investment adviser to the Flexibly Managed and High Yield Bond Funds. Vontobel
USA, Inc., New York, New York, is investment adviser to the International
Equity Fund.
7
<PAGE>
- --------------------------------------------------------------------------------
TCI PORTFOLIOS, INC.:
TCI GROWTH PORTFOLIO - seeks capital growth by investing primarily in common
stocks believed to have better-than-average prospects for appreciation.
Investors Research Corporation, Kansas City, Missouri, is investment adviser
to the TCI Growth Portfolio.
- --------------------------------------------------------------------------------
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST:
LIMITED MATURITY BOND PORTFOLIO - seeks highest current income consistent
with low risk to principal and liquidity, primarily by investing in a
diversified portfolio of limited maturity debt securities. A secondary
objective is capital appreciation.
BALANCED PORTFOLIO - seeks long-term capital growth and reasonable current
income without undue risk to principal through investment of a portion of its
assets in common stock and a portion in debt securities.
Neuberger & Berman Management Incorporated, New York, New York, is
investment adviser to the Limited Maturity Bond Portfolio and the Balanced
Portfolio.
- --------------------------------------------------------------------------------
FIDELITY INVESTMENTS' VARIABLE INSURANCE PRODUCTS FUND:
EQUITY-INCOME PORTFOLIO - seeks reasonable income by investing primarily in
income-producing equity securities. In choosing these securities, the fund will
also consider the potential for capital appreciation. The fund's goal is to
achieve a yield which exceeds the composite yield on the securities comprising
the Standard & Poor's 500 Composite Stock Price Index.
GROWTH PORTFOLIO - seeks to achieve capital appreciation. The fund normally
purchases common stocks, although its investments are not restricted to any one
type of security. Capital appreciation may also be found in other types of
securities, including bonds and preferred stocks.
Fidelity Management & Research Company, Boston, Massachusetts, is investment
adviser to the Equity-Income Portfolio and the Growth Portfolio.
- --------------------------------------------------------------------------------
FIDELITY INVESTMENTS' VARIABLE INSURANCE PRODUCTS FUND II:
ASSET MANAGER PORTFOLIO - seeks high total return with reduced risk over the
long-term by allocating its assets among domestic and foreign stocks, bonds and
short-term fixed income investments.
Fidelity Management & Research Company, Boston, Massachusetts, is investment
adviser to the Asset Manager Portfolio.
- --------------------------------------------------------------------------------
FOR MORE INFORMATION ON THE MUTUAL FUNDS IN WHICH THE SUBACCOUNTS INVEST, SEE
THE PROSPECTUSES FOR PENN SERIES FUNDS, INC., TCI PORTFOLIOS, INC., NEUBERGER &
BERMAN ADVISERS MANAGEMENT TRUST, FIDELITY INVESTMENTS' VARIABLE INSURANCE
PRODUCTS FUND AND FIDELITY INVESTMENTS' VARIABLE INSURANCE PRODUCTS FUND II.
YOU SHOULD READ THE PROSPECTUSES FOR THE FUNDS IN WHICH YOU ARE INTERESTED
BEFORE INVESTING.
- --------------------------------------------------------------------------------
VOTING RIGHTS
Under the Investment Company Act of 1940 as currently interpreted, Contract
Owners have the right to instruct the Company as to the voting of the shares of
the mutual funds held in the subaccounts of the Separate Account pursuant to
the Contracts. The number of shares of a fund for which voting instructions may
be given prior to the Contract Annuity Date is determined by dividing the
Contract Owner's interest in the applicable subaccount of the Separate Account
by the net asset value per share of the fund. The number of shares of a fund
for which voting instructions may be given after the Contract Annuity Date is
determined by dividing the reserve allocated to the applicable subaccount by
the net asset value per share of the fund. Should the applicable law, or
interpretations thereof, change so as to permit us to vote shares of the mutual
funds in our own right, we may elect to do so. Further, we reserve the right to
modify the manner in which we calculate the weight to be given to pass-through
voting instructions where such a change is necessary to comply with federal law
or interpretations thereof.
8
<PAGE>
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THE CONTRACT
The Contract described in this prospectus is a combination variable and fixed
annuity contract. The Contract provides for investment, through subaccounts of
the Separate Account, in one or more of the available funds of Penn Series
Funds, Inc., TCI Portfolios, Inc., Neuberger & Berman Advisers Management
Trust, Fidelity Investments' Variable Insurance Products Fund and Fidelity
Investments' Variable Insurance Products Fund II. It also provides for
investment in one or more fixed interest accounts. The fixed interest accounts
are guaranteed and funded by the Company through its general account. See THE
FIXED INTEREST OPTIONS in this prospectus.
As the Contract Owner, you determine, within Contract limits (1) the amount
and frequency of the purchase payments to be made to the Company, (2) the
investment options to which the purchase payments are to be allocated, (3)
transfers among investment options, (4) the form of annuity to be paid after
the accumulation period and the person to whom it is to be paid, (5) the
beneficiary to whom death benefits are to be paid, and (6) the amount and
frequency of withdrawals from the Contract Value. Currently, for Contracts sold
in Oregon, purchase payments may be made only during the first three contract
years.
During the variable annuity payout period, you (or the beneficiary in the
event of your death or the Annuitant's death) may transfer Annuity Unit values
among subaccounts of the Separate Account.
Upon the earlier of the death of the Contract Owner (other than a trustee)
or Annuitant prior to the Annuity Date, the beneficiary may elect to receive a
death benefit in a lump sum or in the form of an annuity. A spousal beneficiary
may elect to become the Owner of the Contract.
The Contract may be amended at any time to conform to applicable laws or
governmental regulations. If, in our judgment, investment in any of the mutual
funds becomes inappropriate to the purposes of the Contract, we may, with
approval of the Securities and Exchange Commission and the governing state
insurance department, substitute another fund for existing and future
investments.
Contract Owner inquiries may be made by writing The Penn Insurance and
Annuity Company, Customer Service Group, Independence Square, Philadelphia, PA
19172. Or, you can call (215) 956-9177.
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PURCHASES
To purchase a Contract, your completed application, together with a check
for the first purchase payment, should be forwarded to our administrative
office. Normally, a completed application form received at our administrative
office will be accepted within two business days. If an incomplete application
is not completed and acted upon within five business days, the purchase payment
will be returned to you unless you request that we retain it while you complete
the application. All subsequent purchase payments are sent directly to our
administrative office.
The minimum initial purchase payment is $5,000 for all non-qualified
contracts and $2,000 for individual retirement annuities under Section 408 of
the Internal Revenue Code and for tax deferred annuities under Section 403(b)
of the Code. For all Contracts, the minimum subsequent purchase payment that
will be accepted is $250. We may, in our discretion, reduce the minimum
requirements for initial and subsequent purchase payments. We will accept total
purchase payments under your Contract of up to $1 million. Total purchase
payments in excess of $1 million require our prior approval.
Purchase payments allocated to the Separate Account are credited in the form
of Accumulation Units of the subaccount selected. The number of Accumulation
Units credited is determined by dividing the purchase payment allocated to the
Separate Account by the value of the Accumulation Unit at the end of the
valuation period in which the purchase payment is received at our
administrative office or, in a case of the first purchase payment, is accepted
by us.
The principal underwriter of the Contract (under federal securities laws) is
Hornor, Townsend & Kent, Inc., 600 Dresher Road, Horsham, PA 19044, a wholly-
owned subsidiary of Penn Mutual.
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ACCUMULATION UNITS
For each subaccount of the Separate Account the value of an Accumulation
Unit will be $10 when the subaccount commences operation. The value of an
Accumulation Unit may increase or decrease from one valuation period to the
next.
The value of an Accumulation Unit for a valuation period is determined by
multiplying the value of an Accumulation Unit for the prior valuation period by
the net investment factor for the subaccount for the current valuation period.
The net investment factor is a measure of (1) investment performance of
mutual fund shares held in the subaccount, (2) any taxes on income or gains
from investments held in the subaccount and (3) the mortality and expense risk
charge at an annual rate
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of 1.25% and contract administration charge at an annual rate of 0.15% assessed
against the subaccount. Under current law, no taxes are levied against income
or gain from investments held in a subaccount.
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ANNUITY PAYMENTS
You may choose one of the following forms of annuity: (1) an annuity for a
specified number of years, (2) a life annuity, (3) a life annuity with payments
guaranteed for 10 or 20 years, (4) a joint and survivor life annuity or (5)
such other form of annuity as we may agree upon. You may select any one of
these forms of annuity as a variable annuity (except for a specified number of
years), a fixed annuity, or a combination of both.
The level of the variable annuity payments is determined by various factors,
including the amount accumulated and applied under the Contract to the variable
annuity, the form of annuity chosen, the expected duration of the annuity
period, the performance of the applicable investment options, and the annuity
purchase rates and charges specified in the Contract.
The variable annuity purchase rates assume an annual net investment return
of 3%. If the annual net investment return during the annuity payout period is
greater than 3%, the level of the annuity payment increases. If the annual net
investment return is less than 3%, the level of the annuity payments decreases.
The level of fixed annuity payments under a Contract is determined by
various factors, including the amount accumulated and applied under the
Contract to the fixed annuity, the form of annuity chosen, the expected
duration of the annuity period, and current annuity purchase rates for single
premium nonparticipating fixed annuity contracts issued by the Company.
Unless you specify otherwise, you or such other person you designate will
receive a life annuity with payments guaranteed for 10 years, except for tax
deferred annuities under Section 403(b) of the Code and pension or profit
sharing plans under Section 401 of the Code. Annuitants under those Contracts
will receive a joint and survivor annuity. Unless you specify otherwise, the
annuity will be split between fixed and variable in the same proportions as the
Contract Value on the Annuity Date.
Unless you specify otherwise, the Annuity Date will be the later of (1) the
first day of the next month after the Annuitant's 85th birthday or (2) 10 years
after the contract date, unless state law requires an earlier Annuity Date. The
Annuity Date under the Contract may not be earlier than the second contract
anniversary and must be on the first day of a month.
You may change the Annuity Date or annuity option by giving written notice
at our administrative office at least 30 days prior to the current Annuity
Date. If the Contract Value of a Contract is less than $5,000, we may elect to
pay such amount in a lump sum in place of an annuity. Annuity payments are
generally monthly, starting with the Annuity Date, but may also be made
quarterly, semiannually or annually at your request. However, if any payment
would be less than $50, we may change the frequency of annuity payments so that
payments are at least $50 each.
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DEATH BENEFIT
If the Contract Owner or the Annuitant dies prior to the Annuity Date, we
will pay the beneficiary the greater of (1) the Contract Value for the
valuation period in which proof of death and any other required information
needed to make payment is received at our administrative office; or (2) the sum
of the Fixed Account Value on the date the above information is received at our
administrative office and the net purchase payments and transfers allocated to
the Separate Account (i.e., all purchase payments and transfers to the Separate
Account minus all prior withdrawals and transfers made from the Separate
Account). The death benefit generally will be paid within 7 days after the
Company has sufficient information to make the payment. For a discussion of the
tax treatment of a death benefit, see FEDERAL INCOME TAX CONSIDERATIONS in this
prospectus.
If the Contract Owner dies before the age of 80 and if permitted by state
law, an enhanced death benefit will be paid to the beneficiary, if it is
greater than the Contract Value as of the receipt of proof of death and the
necessary information to make a death benefit payment. The enhanced death
benefit is the sum of: (1) the Fixed Account Value, and (2) the net purchase
payments allocated to the Separate Account (as defined in the previous
paragraph) plus interest accumulated at an annual interest rate of 5% through
the Contract Owner's attained age 69, and interest accumulated at an annual
interest rate of 3% for years subsequent to attained age 70.
If the beneficiary is the Contract Owner's surviving spouse, the surviving
spouse has the right to become the Contract Owner rather than receive the death
benefit.
Within one year of the date of death, the beneficiary may elect to receive
the death benefit in single sum or in the form of an annuity. If payment is to
be received in a single sum, it must be paid within five years of the date of
death (until paid out, the death benefit will be allocated to subaccounts of
the Separate Account and/or fixed interest options as directed by the
beneficiary). If an annuity is selected, payments must commence within one year
of the date of death and must be made over
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the beneficiary's life or over a period not longer than the beneficiary's life
expectancy. If an election is not made within one year of the date of death,
the death benefit will be paid to the beneficiary in a single sum.
You may designate a beneficiary in your application. You may change the
beneficiary at any time before your death or the death of the Annuitant,
whichever occurs first.
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TRANSFERS
Prior to the Annuity Date, you may transfer amounts from one subaccount of
the Separate Account to another subaccount of the Separate Account. Within
certain additional limitations stated in the Contract, you may also transfer
amounts from the subaccounts of the Separate Account to a fixed interest option
of the Fixed Account prior to the Annuity Date. Transfers may be made from the
Fixed Account to the Variable Account or to another fixed interest option
within the Fixed Account only at the completion of the interest period or
within the 25 days thereafter.
After the Annuity Date and during an annuity payout period, you may transfer
amounts (upon which the annuity payments are based) from one subaccount of the
Separate Account to another. Upon your death or the death of the Annuitant, a
beneficiary who is receiving annuity payments may transfer amounts among the
subaccounts of the Separate Account.
The minimum amount that may be transferred is $250 or, if less, the amount
held in the subaccount or fixed interest option. In the case of partial
transfers, the amount remaining in the subaccount or fixed interest option must
be at least $250.
A written request for transfer (or, if authorized in writing, a telephone
request for transfer) must be received at our administrative office and all
other administrative requirements for transfer must be met to make the
transfer. The Separate Account and the Company will not be liable for following
transfer instructions communicated by telephone that we reasonably believe to
be genuine. We require certain personal identifying information to process a
telephone transfer.
DOLLAR COST AVERAGING: If you have a Contract Value of at least $10,000, you
may elect to have flat dollar amounts ($100 minimum) transferred monthly or
quarterly from one source account to other accounts ($50 minimum per account).
These transfers may be made only from one of the following accounts: Money
Market Subaccount, Limited Maturity Bond Subaccount, Quality Bond Subaccount,
or One Year Fixed Interest Option. The dollar cost averaging term may run from
12 to 60 months, or until you give notice of a change in allocation or
cancellation of the feature.
AUTOMATIC REBALANCING: You may elect to have your investments in subaccounts
of the Separate Account automatically rebalanced. We will transfer funds under
your Contract on a quarterly (calendar) basis among the subaccounts to maintain
a specified percentage allocation among your selected variable investment
options. Dollar cost averaging and automatic rebalancing may not be in effect
at the same time.
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WITHDRAWALS
Prior to the Annuity Date and prior to the earlier of the death of the
Contract Owner and Annuitant, you may withdraw all or part of your Contract
Value. Withdrawals will be based on values at the end of the valuation period
in which a proper written request for withdrawal (and the Contract, in case of
a full withdrawal) is received at our administrative office. Payment will
normally be made within seven days of receipt of the written request and the
Contract, if required. A withdrawal may result in certain tax consequences,
including an additional 10% tax under certain circumstances. For a discussion
of the tax treatment of withdrawals, see FEDERAL INCOME TAX CONSIDERATIONS in
this prospectus.
The minimum withdrawal is $500 or, at the time of the first withdrawal in
each Contract Year, 15% of total purchase payments if less. A partial
withdrawal may be made from a subaccount of the Separate Account only if the
amount remaining in the subaccount is at least $250. If you request a partial
withdrawal without specifying allocation of the withdrawal among investment
options, it will be taken pro rata from the variable subaccounts; if the
partial withdrawal exhausts your Variable Account Value, then any remaining
withdrawal will be taken from the fixed interest options beginning with the One
Year Fixed Interest Option and continuing with the other fixed interest options
in order of ascending duration.
SYSTEMATIC WITHDRAWALS: You may make a request for a systematic withdrawal
if there is no previous withdrawal in the current contract year. The maximum
value of a systematic withdrawal request is 15% of total purchase payments at
the time of the request. A level systematic withdrawal will begin one modal
period after the date of receipt of the request. The systematic withdrawals may
be made on a monthly, quarterly, semiannual or annual basis. The minimum
Contract Value that is eligible for a systematic withdrawal is $25,000, and the
minimum amount of each withdrawal payment is $50. Payments can be made of
either a fixed dollar amount or of a fixed percentage of purchase payments. The
latter option provides a convenient way to take advantage of the ability to
withdraw a limited percentage of purchase payments without incurring a
contingent deferred sales charge. See FREE WITHDRAWALS below. For a discussion
of the tax treatment of withdrawals, see FEDERAL INCOME TAX CONSIDERATIONS in
this prospectus.
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403(B) WITHDRAWALS: With respect to Contracts qualifying under Section
403(b) of the Internal Revenue Code, there are certain restrictions on
withdrawals. Withdrawals may be made only if the Contract Owner is over the age
of 59 1/2, leaves the employment of the employer, dies, or becomes disabled as
defined in the Code. Withdrawals (other than withdrawals attributable to income
earned on purchase payments) may also be possible in the case of hardship as
defined in the Code. The restrictions do not apply to transfers among
subaccounts and may also not apply to transfers to other investments qualifying
under Section 403(b). For a discussion of the tax treatment of withdrawals
under Section 403(b) Contracts, see FEDERAL INCOME TAX CONSIDERATIONS in this
prospectus.
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DEFERMENT OF PAYMENTS AND TRANSFERS
We reserve the right to defer a withdrawal, a transfer of values or annuity
payments funded by the Separate Account if (a) the New York Stock Exchange is
closed (other than customary weekend and holiday closings); (b) trading on the
Exchange is restricted; (c) an emergency exists such that it is not reasonably
practical to dispose of securities held in the Separate Account or to determine
the value of its assets; or (d) the Securities and Exchange Commission by order
so permits for the protection of investors. Conditions described in (b) and (c)
will be decided by, or in accordance with rules of, the Commission.
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CHARGES
ADMINISTRATION CHARGES: Charges are assessed to reimburse us for the
expenses we incur in administering the Contract and the Separate Account.
First, on each Contract Anniversary prior to the Annuity Date (and any other
date the Variable Account Value is reduced to zero through withdrawal or
transfer), we deduct from the Variable Account Value a contract administration
charge of $30 or, if less, 2% of the Variable Account Value. We will not,
however, deduct this charge if the Variable Account Value is greater than
$50,000. The charge is made by canceling Accumulation Units credited to the
Contract, with the charge allocated pro rata among the subaccounts comprising
the Variable Account Value. Second, we deduct from the Separate Account a daily
administration charge equal to an effective annual rate of 0.15% of the daily
net asset value of the Separate Account. These administration charges are
guaranteed not to increase and are intended to cover our average anticipated
administration expenses over the periods the Contracts are in force.
MORTALITY AND EXPENSE RISK CHARGE: We deduct a daily mortality and expense
risk charge equal to an effective annual rate of 1.25% of the daily net asset
value of the Separate Account. This charge is to compensate us for the
mortality-related guarantees we make under the Contract (e.g., the death
benefit and the guarantee that the annuity factors will never be decreased even
if mortality experience is substantially different than originally assumed),
and for the risk that our administration charges will be insufficient to cover
administration expenses over the life of the Contracts. The mortality and
expense risk charge is assessed during both the accumulation and variable
annuity pay-out phases of the Contract.
CONTINGENT DEFERRED SALES CHARGE: A contingent deferred sales charge may be
deducted in the event of full or partial withdrawal from the Contract Value
prior to the Annuity Date. This charge is made to cover sales expenses that we
have incurred. Sales expenses which are not covered by the deferred sales
charge are paid from the surplus of the Company, which may include proceeds
from the mortality and expense risk charge.
A contingent deferred sales charge, if applicable, will be imposed only on a
withdrawal of a purchase payment in cases where the purchase payment was made
within seven years of the date of the withdrawal. The following table shows the
schedule of the contingent deferred sales charge that will be applied to
withdrawal of a purchase payment, after allowing for the free withdrawals which
are described in the next subsection. Purchase payments will be treated as
withdrawn on a first-in, first-out basis.
<TABLE>
<CAPTION>
NUMBER OF FULL CONTRACT
YEARS SINCE PURCHASE PAYMENT APPLICABLE CHARGE
--------------------------------------------------------
<S> <C>
0 6%
--------------------------------------------------------
1 6%
--------------------------------------------------------
2 5%
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3 4%
--------------------------------------------------------
4 3%
--------------------------------------------------------
5 2%
--------------------------------------------------------
6 1%
--------------------------------------------------------
7+ 0%
--------------------------------------------------------
</TABLE>
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The contingent deferred sales charge may be reduced on Contracts sold to a
trustee, employer or similar party pursuant to a retirement plan or to a group
of individuals, if such sales are expected to involve reduced sales expenses.
The amount of reduction will depend upon such factors as the size of the group,
any prior or existing relationship with the purchaser or group, the total
amount of purchase payments and other relevant factors that might tend to
reduce expenses incurred in connection with such sales. The reduction will not
be unfairly discriminatory to any Contract Owner.
FREE WITHDRAWALS:
Seven-Year-Old Purchase Payments. You may withdraw any purchase payment which
---------------------------------
was made more than 7 years before the withdrawal without incurring a contingent
deferred sales charge.
15% Withdrawals. On the last day of the first contract year and once each
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contract year thereafter, you may withdraw, without incurring a contingent
deferred sales charge, 15% of total purchase payments. You may take the 15% free
withdrawal on a single sum basis or systematically, but not both. The 15% free
withdrawal amount will be applied to purchase payments on a first-in, first-out
basis. With respect to any withdrawal in excess of the 15% free withdrawal in a
contract year, the contingent deferred sales charge schedule set forth above
will apply to the remainder of the purchase payments so withdrawn on a first-in,
first-out basis. This 15% free withdrawal applies only to the first withdrawal
request made in a contract year (after the first contract year) and the amount
is not cumulative from year to year.
Medically Related Withdrawal. Subject to applicable state law, after the
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first contract year and before the Annuity Date, you may withdraw, without
incurring a contingent deferred sales charge, up to the lesser of $500,000 or
your Contract Value if certain medically related contingencies occur. This free
withdrawal is available if you are (1) first confined in a nursing home or
hospital while this Contract is in force and remain confined for at least 90
days in a row or (2) first diagnosed as having a fatal illness (an illness
expected to result in death within 2 years for 80% of diagnosed cases) while
this Contract is in force. The precise terms and conditions of this benefit are
set forth in the Contract. It is not available if your age at issue is greater
than 75. The medically related contingencies that must be met for free
withdrawal vary in some states.
Disability Related Withdrawal. You may withdraw, without incurring a
------------------------------
contingent deferred sales charge, part or all of your Contract Value if you
(you or the Annuitant for qualified Contracts) become totally disabled as
defined in the Contract.
Other Withdrawals. There is no contingent deferred sales charge imposed upon
------------------
minimum distributions under qualified contracts which are required by the
Internal Revenue Code.
PREMIUM TAXES:
Some states and municipalities impose premium taxes on purchase payments
received by insurance companies. Generally, any premium taxes payable will be
deducted upon annuitization, although we reserve the right to deduct such taxes
when due in jurisdictions that impose such taxes on purchase payments.
Currently, state premium taxes on purchase payments range from 0% to 3 1/2%.
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PERFORMANCE INFORMATION
The Company may advertise total return performance and annual changes in
accumulation unit values. We may also provide information on "yields" and
"effective yields" on investments in the Money Market Fund subaccount.
Information on total return performance will include average annual rates of
total return for one, five and ten year periods, or lesser periods depending on
how long the underlying fund portfolio has been in existence. Such figures are
based on the hypothetical assumption that the Separate Account invested in the
underlying portfolios from the date those portfolios were first available to
other insurance company separate accounts. Average annual total return figures
will show the average annual rates of increase or decrease in investments in
the subaccounts, assuming a hypothetical $1,000 investment at the beginning of
the period, withdrawal of the investment at the end of the period, and the
deduction of all applicable fund and Contract charges. We may also show average
annual rates of total return, assuming other amounts invested at the beginning
of the period and no withdrawal at the end of the period. Average annual total
return figures which assume no withdrawals at the end of the period will
reflect all recurring charges, but will not reflect the contingent deferred
sales charge (if applicable, the contingent deferred sales charge would reduce
the amount that may be withdrawn under the Contracts).
The "yield" on an investment in the Money Market Fund subaccount refers to
the income generated by the investment over a 7-day period. This income is then
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 investment. The "effective yield" is calculated
similarly, but, when annualized, the income earned by an investment in the
subaccount is assumed to be reinvested. The effective yield will be slightly
higher than the yield because of the compounding effect of this assumed
reinvestment.
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THE FIXED INTEREST OPTIONS
BECAUSE OF EXEMPTIVE AND EXCLUSIONARY PROVISIONS, INTERESTS IN THE COMPANY'S
GENERAL ACCOUNT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND
THE GENERAL ACCOUNT HAS NOT BEEN REGISTERED AS AN INVESTMENT COMPANY UNDER THE
INVESTMENT COMPANY ACT OF 1940. THE GENERAL ACCOUNT AND ANY INTERESTS HELD IN
THE GENERAL ACCOUNT ARE THEREFORE NOT SUBJECT TO THE PROVISIONS OF THESE ACTS.
HENCE THIS PROSPECTUS GENERALLY DISCUSSES ONLY THE VARIABLE PORTION OF THE
CONTRACT. THE COMPANY HAS BEEN ADVISED THAT THE STAFF OF THE SECURITIES AND
EXCHANGE COMMISSION HAS NOT REVIEWED THE DISCLOSURE IN THIS PROSPECTUS RELATING
TO THE FIXED ACCOUNT. DISCLOSURE REGARDING THE FIXED ACCOUNT, HOWEVER, MAY BE
SUBJECT TO GENERALLY APPLICABLE PROVISIONS OF THE FEDERAL SECURITIES LAWS
RELATING TO THE ACCURACY AND COMPLETENESS OF STATEMENTS MADE IN THIS
PROSPECTUS.
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GENERAL INFORMATION
You may allocate or transfer all or part of the amount credited to your
Contract to one or more of the following fixed interest options in the Fixed
Account: (1) the One Year Fixed Interest Option; (2) the Three Year Fixed
Interest Option; (3) the Five Year Fixed Interest Option; and (4) the Seven
Year Fixed Interest Option. We periodically declare an effective annual
interest rate applicable to allocations to the various fixed interest options.
For each amount allocated to the One Year Fixed Interest Option, the Three Year
Fixed Interest Option, the Five Year Fixed Interest Option or the Seven Year
Fixed Interest Option, we credit interest at an effective annual interest rate
declared by us in the month in which the allocation is made. The declared rate
of interest will apply through the end of the 12-month, 36-month, 60-month or
84-month period, as applicable, which begins on the first day of the calendar
month in which the allocation is made. We guarantee an effective annual rate of
interest on allocations to all fixed interest options of not less than 3%. In
addition, we guarantee that the rate credited in the One Year Fixed Interest
Option will at least equal the increase in the cost of living as calculated by
the Company; the Company uses for this purpose a six-month average of the
relative change by month in the Consumer Price Index published by the Bureau of
Labor Statistics.
You may transfer amounts in the Fixed Account to subaccounts of the Separate
Account or to another fixed interest option within the Fixed Account, subject
to the conditions and limitations in the fixed account provisions of your
Contract. A premature withdrawal charge in an amount specified in the Contract
will be deducted from the interest earned on any amount that is withdrawn from
the Three Year Fixed Interest Option, the Five Year Fixed Interest Option or
the Seven Year Fixed Interest Option prior to the expiration of the period for
which the interest rate is guaranteed. Amounts not withdrawn or reallocated
within 25 days after the end of an interest period are rolled over and treated
as a new allocation to the same fixed interest option. The premature withdrawal
charge is not applicable to amounts withdrawn to effect an annuity or to meet
the minimum distribution requirement under the tax laws. Nor will the premature
withdrawal charge be applied to amounts withdrawn due to the death, total
disability, or defined medical confinement or terminal illness of the owner or
annuitant, as specified in the Contract. In no event will the premature
withdrawal charge be greater than the total amount of interest credited to the
applicable fixed interest option. In accordance with state law, we may defer a
withdrawal or transfer from the Fixed Account for up to six months if we
reasonably determine that investment conditions are such that an orderly sale
of assets in the Company's general account is not feasible.
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LOANS UNDER SECTION 403(B) CONTRACTS
Subject to compliance with applicable state law, Contract Owners qualifying
under Section 403(b) of the Code may be able to borrow against a portion of the
amount credited under their Contract, provided the loan privilege has been
approved in the applicable state. The loan will be made from the general
account of the Company. Because this prospectus generally is limited to
describing the variable portion of the Contract, you should review the Contract
loan endorsement or consult your Company representative for a complete
description of the terms of the loan privilege, including minimum and maximum
loan amounts, repayment terms, and restrictions on prepayments. The following
paragraphs describe how exercise of the loan privilege may relate to the
Variable Account Value.
First, at the time a Contract loan is made and in accordance with your
direction, an amount equal to the initial loan amount will be transferred from
the Contract's investment options to an account in the Company's general
account called the "Restricted Account." Amounts transferred from investment
options to the Restricted Account will not participate in the investment
experience of those investment options. Amounts transferred to the Restricted
Account will generally earn interest at a rate 2 1/2 percentage points less
than the rate of interest charged on the loan.
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<PAGE>
Second, on your Contract Anniversary, the accrued interest in the Restricted
Account will be transferred to your investment options in accordance with your
current payment allocation instructions.
Third, loan repayments, which are due quarterly, will result in the transfer
of an amount equal to the principal portion of the repayment from the
Restricted Account to the Money Market subaccount. You may then transfer
amounts from the Money Market subaccount to the other investment options
offered under the Contract.
Fourth, if a payment or the entire loan is in default as defined in the
Contract, the Company will report the amount of the default to the Internal
Revenue Service as a taxable distribution and, if you are then under age 59
1/2, as a premature distribution. Subject to restrictions in Section 403(b) of
the Code, the amount of any missed payment, plus interest, or the entire loan
balance, plus interest, if the entire loan is in default, plus any applicable
contingent deferred sales charge, will be withdrawn by us from your investment
options in accordance with your direction in the Loan Request and Agreement. We
will use the net proceeds from the withdrawal to repay the loan. If a
withdrawal is restricted under the Code, the outstanding loan balance will
continue to accrue interest and the amount due will be withdrawn when a
withdrawal becomes permissible. Thus, when an event takes place which makes
withdrawal from the Contract permissible under the Code, such as attainment of
age 59 1/2, disability, or death, we will check the Contract to determine if
there is an outstanding loan balance for which one or more payments have been
missed. If so, we will withdraw from your investment options, in accordance
with your direction in the Loan Request and Agreement, funds necessary to pay
the overdue amount, plus any applicable contingent deferred sales charge. While
a loan balance is outstanding, any withdrawal or death benefit proceeds must
first be used to pay the loan.
Loans are subject to the terms of your Contract, your Section 403(b) plan
and the Code, and, in the case of plans subject to the Employee Retirement
Income Security Act of 1974, the ERISA regulations on plan loans, all of which
may impose restrictions. The Company reserves the right to suspend, modify or
terminate the availability of loans. Where there is a plan fiduciary, it is the
responsibility of the fiduciary to ensure that any Contract loans comply with
plan qualification requirements, including ERISA.
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FEDERAL INCOME TAX CONSIDERATIONS
The following brief discussion of federal income tax considerations is based on
the law in effect on the date of this prospectus, which may be changed by
legislative, judicial or administration action. The summary is general in
nature and does not consider any applicable state or local tax laws. For
further information, you should consult qualified tax counsel.
Under current law, no federal income taxes are imposed on increases in the
value of a Contract until distribution occurs, either in the form of a
withdrawal or death benefit or as annuity payment under an annuity option.
For a withdrawal or death benefit, the taxable portion is generally the
amount in excess of the cost basis of the Contract. Amounts withdrawn by the
Contract owner or received as a death benefit by the designated beneficiary are
treated first as taxable income to the extent of the excess of the Contract
Value over the purchase payments made under the Contract. Such taxable portion
is taxed at ordinary income tax rates. Designation of a beneficiary who is
either 37 1/2 years younger than the Contract Owner or a grandchild of the
Contract Owner may have Generation Skipping Transfer Tax consequences under
Section 2601 of the Internal Revenue Code.
For annuity payments, the taxable portion is generally determined by a
formula that establishes the ratio of the cost basis of the Contract (as
adjusted for any refund feature) to the expected return under the Contract. The
taxable portion, which is the amount of the annuity payment in excess of the
cost basis, is taxed at ordinary income tax rates.
An additional income tax of 10% may be imposed on the taxable portion of an
early withdrawal or distribution unless one of several exceptions apply. There
will be no additional income tax on early withdrawals which are part of a
series of substantially equal periodic payments (not less frequently than
annually) made for life (or life expectancy) of the taxpayer or the joint lives
(or joint life expectancies) of the taxpayer and a beneficiary, or on
withdrawals made on or after age 59 1/2. There also will be no additional tax
on distributions made after death or on withdrawals attributable to disability.
Further, there will be no additional tax on distributions within certain other
exceptions to the general rule.
The transfer of a Contract for less than adequate consideration may result
in the transferor incurring tax. The taxable portion would be the Contract
Value at the time of transfer over the investment in the Contract at such time.
This rule does not apply to transfers between spouses or to transfers incident
to a divorce.
Subject to certain exceptions, a Contract must be held by or on behalf of a
natural person in order to be treated as an annuity contract under federal
income tax law and to be accorded the tax treatment described in the preceding
paragraphs. If a contract is not treated as an annuity contract for federal
income tax purposes, the income on the Contract is treated as ordinary income
received or accrued by the Contract Owner during the taxable year.
15
<PAGE>
Section 817(h) of the Code provides that the investments of a separate
account underlying a variable annuity contract which is not purchased under a
qualified retirement plan (or the investments of a mutual fund, the shares of
which are owned by the variable annuity separate account) must be "adequately
diversified" in order for the Contract to be treated as an annuity contract for
tax purposes. The Treasury Department has issued regulations prescribing such
diversification requirements. The Separate Account, through each of the
available funds of the Penn Series Funds, Inc., TCI Portfolios, Inc., Neuberger
& Berman Advisers Management Trust, Variable Insurance Products Fund, and
Variable Insurance Products Fund II intends to comply with those requirements.
The requirements are briefly discussed in the accompanying prospectuses for the
underlying funds.
The Treasury Department has indicated that in regulations or revenue rulings
under Section 817(d) (relating to the definition of a variable contract), it
will provide guidance on the extent to which contract owners may direct their
investments to particular subaccounts without being treated as owners of the
underlying shares. It is possible that when such regulations or rulings are
issued, the Contracts may need to be modified to comply with them.
The Contracts may be used in connection with retirement plans that qualify
for special tax treatment under the Code. The plans include individual
retirement annuities qualified under Section 408(b) of the Code (referred to as
IRAs), tax deferred annuities qualified under Section 403(b) of the Code,
pension or profit sharing plans for self-employed individuals qualified under
Section 401 of the Code (referred to as H.R. 10 or Keogh plans) and corporate
pension or profit sharing plans qualified under Section 401 of the Code, or
annuity plans qualified under Section 403(a) of the Code. Special provisions
are required in some Contracts for qualification under the Code.
For some types of qualified retirement plans, there may be no cost basis in
the Contract. In this case, the total payments received may be taxable. Before
purchasing a contract under a qualified retirement plan, the tax law provisions
applicable to the particular plan should be considered.
Generally, under a nonqualified annuity or individual retirement annuity
qualified under Section 408(b), unless the Contract Owner elects to the
contrary, any amounts that are received under the Contract that the Company
believes are includable in gross income for tax purposes will be subject to
withholding to meet federal income tax obligations. The same treatment will
apply to distributions from a qualified plan or Section 403(b) annuity that are
payable as an annuity for the life or life expectancy of one or more
individuals, or for a period of at least 10 years, or are required minimum
distributions. Other distributions from a qualified plan or a Section 403(b)
annuity are subject to mandatory withholding, unless an election is made to
receive the distribution as a direct rollover to another eligible retirement
plan.
16
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION CONTENTS
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
VARIABLE ANNUITY PAYMENTS................................................... B-2
First Variable Annuity Payments........................................... B-2
Subsequent Variable Annuity Payments...................................... B-2
Annuity Units............................................................. B-2
Value of Annuity Units.................................................... B-2
Net Investment Factor..................................................... B-2
Assumed Interest Rate..................................................... B-3
Valuation Period.......................................................... B-3
- --------------------------------------------------------------------------------
PERFORMANCE DATA............................................................ B-3
Average Annual Total Return............................................... B-3
Annual Changes in Accumulation Unit Values................................ B-5
Yields (Money Market Fund)................................................ B-6
- --------------------------------------------------------------------------------
ADMINISTRATION AND RECORDKEEPING SERVICES................................... B-6
- --------------------------------------------------------------------------------
DISTRIBUTION OF CONTRACTS AND CERTIFICATES.................................. B-6
- --------------------------------------------------------------------------------
CUSTODIAN................................................................... B-6
- --------------------------------------------------------------------------------
INDEPENDENT ACCOUNTANTS..................................................... B-6
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS........................................................ B-6
- --------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
- ----------------------------------------------------
THIS PAGE LEFT INTENTIONALLY BLANK
18
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION -- MAY 1, 1996
- --------------------------------------------------------------------------------
PIA VARIABLE ANNUITY ACCOUNT I [LOGO OF PENNANT APPEARS HERE]
THE PENN INSURANCE AND ANNUITY COMPANY
INDEPENDENCE SQUARE . PHILADELPHIA, PENNSYLVANIA 19172 . TELEPHONE (215) 956-
9177
- --------------------------------------------------------------------------------
This statement of additional information is not a prospectus. It should be read
in conjunction with the current prospectus for PIA Variable Annuity Account I,
dated May 1, 1996. To obtain a prospectus you may write to The Penn Insurance
and Annuity Company, Customer Service Group, Independence Square, Philadelphia,
PA 19172. Or you may call (215) 956-9177. Terms used in this statement of
additional information have the same meaning as the prospectus.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
VARIABLE ANNUITY PAYMENTS................................................... B-2
First Variable Annuity Payments........................................... B-2
Subsequent Variable Annuity Payments...................................... B-2
Annuity Units............................................................. B-2
Value of Annuity Units.................................................... B-2
Net Investment Factor..................................................... B-2
Assumed Interest Rate..................................................... B-3
Valuation Period.......................................................... B-3
- --------------------------------------------------------------------------------
PERFORMANCE DATA............................................................ B-3
Average Annual Total Return............................................... B-3
Annual Changes in Accumulation Unit Values................................ B-5
Yields (Money Market Fund)................................................ B-6
- --------------------------------------------------------------------------------
ADMINISTRATION AND RECORDKEEPING SERVICES................................... B-6
- --------------------------------------------------------------------------------
DISTRIBUTION OF CONTRACTS................................................... B-6
- --------------------------------------------------------------------------------
CUSTODIAN................................................................... B-6
- --------------------------------------------------------------------------------
INDEPENDENT ACCOUNTANTS..................................................... B-6
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS........................................................ B-6
- --------------------------------------------------------------------------------
</TABLE>
B-1
<PAGE>
- --------------------------------------------------------------------------------
VARIABLE ANNUITY PAYMENTS
- --------------------------------------------------------------------------------
FIRST VARIABLE ANNUITY PAYMENT
When a variable annuity is effected, we will first deduct applicable premium
taxes, if any, from the Contract Value. The dollar amount of the first monthly
annuity payment will be determined by applying the net Contract Value to the
annuity table set forth in the contract for the annuity option chosen. The
annuity tables show the amount of the first monthly income payment under each
annuity option for each $1,000 of value applied, based on the Annuitant's age
at the Annuity Date. The annuity tables are based on the 1983 Individual
Annuity Mortality Tables with interest at 3%.
- --------------------------------------------------------------------------------
SUBSEQUENT VARIABLE ANNUITY PAYMENTS
The dollar amount of subsequent variable annuity payments will vary in
accordance with the investment experience of the subaccount(s) of the Separate
Account applicable to the annuity. Each subsequent variable annuity payment
will equal the number of annuity units credited, multiplied by the value of the
annuity unit for the valuation period. The Company guarantees that the amount
of each subsequent annuity payment will not be affected by variations in
expense or mortality experience.
- --------------------------------------------------------------------------------
ANNUITY UNITS
For each subaccount selected, the number of annuity units is the amount of
the first annuity payment allocated to the subaccount divided by the value of
an annuity unit for the subaccount on the Annuity Date. The number of your
annuity units will not change as a result of investment experience.
- --------------------------------------------------------------------------------
VALUE OF ANNUITY UNITS
The value of an annuity unit for each subaccount was arbitrarily set at $10
when the subaccount was established. The value may increase or decrease from
one valuation period to the next. For a valuation period, the value of an
annuity unit for a subaccount is the value of an annuity unit for the
subaccount for the last prior valuation period multiplied by the net investment
factor for the subaccount for the valuation period. The result is then
multiplied by a factor to neutralize an assumed interest rate of 3% built into
the annuity tables.
- --------------------------------------------------------------------------------
NET INVESTMENT FACTOR
For any subaccount the net investment factor for a valuation period is
determined by dividing (a) by (b) and subtracting (c):
WHERE (a) IS:
The net asset value per share of the mutual fund held in the subaccount, as
of the end of the valuation period
plus
----
The per share amount of any dividend or capital gain distributions by the
mutual fund if the "ex-dividend" date occurs in the valuation period
plus or minus
-------------
A per share charge or credit, as we may determine as of the end of the val-
uation period, for provision for taxes (if applicable).
WHERE (b) IS:
The net asset value per share of the mutual fund held in the subaccount as
of the end of the last prior valuation period
plus or minus
-------------
The per share charge or credit for provision for taxes as of the end of the
last prior valuation period (if applicable).
WHERE (c) IS:
The sum of the mortality and expense risk charge and the daily administra-
tion charge. On an annual basis, the sum of such charges equals 1.40% of
the daily net asset value of the subaccount.
B-2
<PAGE>
- --------------------------------------------------------------------------------
ASSUMED INTEREST RATE
A 3% assumed annual interest rate is included in the annuity tables in the
contracts. A higher assumption would mean a higher first annuity payment but
more slowly rising or more rapidly falling subsequent payments. A lower
assumption would have the opposite effect. If the actual net investment rate is
3% on an annual basis, annuity payments will be level.
- --------------------------------------------------------------------------------
VALUATION PERIOD
Valuation period is the period from one valuation of underlying fund assets
to the next. Valuation is performed each day the New York Stock Exchange is
open for trading.
- --------------------------------------------------------------------------------
PERFORMANCE DATA
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
Although the Separate Account was not available until the effective date of
this registration statement, the returns calculated below reflect a
hypothetical return as if the Separate Account had invested in the underlying
funds for the indicated periods.
- --------------------------------------------------------------------------------
TABLE 1
Table 1 shows the average annual rates of total return on hypothetical
investments of $1,000, through the Separate Account, in funds of Penn Series
Funds, Inc., TCI Portfolios, Inc., Neuberger and Berman Advisers Management
Trust, Variable Insurance Products Fund and Variable Insurance Products Fund II
for the periods ended December 31, 1995 and assume withdrawal of the
investments at the end of the period.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
----------------------------------------------
FIVE TEN FROM
ONE YEAR YEARS YEARS INCEPTION
INCEPTION ENDED ENDED ENDED THROUGH
FUND (MANAGER) DATE* 12/31/95 12/31/95 12/31/95 12/31/95
- -------------- --------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Growth Equity (a)............... 06/01/83 18.29% 11.28% 9.90% 9.63%
(Independence Capital)
Value Equity (a)................ 03/17/87 28.32% 15.02% N/A 10.37%
(OpCap)
Flexibly Managed (a)............ 07/31/84 13.83% 12.00% 12.86% 13.12%
(T. Rowe Price)
Quality Bond (a)................ 03/17/87 12.33% 7.40% N/A 6.99%
(Independence Capital)
High Yield Bond (a)............. 08/06/84 8.85% 13.37% 7.59% 8.54%
(T. Rowe Price)
International Equity (a)........ 11/01/92 6.32% N/A N/A 10.72%
(Vontobel)
Small-Cap Fund.................. 03/01/95 N/A N/A N/A 5.62%
(OpCap)
Growth Portfolio (b)............ 11/20/87 22.37% 12.66% N/A 11.07%
(Investors Research -- Twenti-
eth Century)
Balanced Portfolio (c).......... 02/28/89 15.68% 9.00% N/A 8.76%
(Neuberger & Berman)
Limited Maturity Bond Portfolio 09/10/84 3.76% 4.80% 6.07% 7.11%
(c)............................
(Neuberger & Berman)
Equity-Income Portfolio (d)..... 10/09/86 25.24% 18.79% N/A 11.38%
(Fidelity Investments)
Growth Portfolio (d)............ 10/09/86 26.24% 18.37% N/A 12.91%
(Fidelity Investments)
Asset Manager Portfolio (e)..... 09/06/89 9.34% 10.72% N/A 9.31%
(Fidelity Investments)
</TABLE>
- -----------------------
*Represents the date the underlying fund was established.
(a)Penn Series Funds, Inc.
(b)TCI Portfolios, Inc.
(c)Neuberger and Berman Advisers Management Trust
(d)Variable Insurance Products Fund
(e)Variable Insurance Products Fund II
B-3
<PAGE>
The average annual rates of total return shown in Table 1 are computed by
finding the average annual compounded rates of return over the periods shown
that would equate the initial amount invested to the withdrawal value, in
accordance with the following formula: P(1 + T)n = ERV. In the formula, P is a
hypothetical investment payment of $1,000; T is the average annual total
return; n is the number of years; and ERV is the withdrawal value at the end of
the periods shown. The $30 annual contract administration charge is reflected
assuming an anticipated average Contract Value and assuming that the Contract
Value is allocated equally across all available subaccounts by an average
contract owner.
- --------------------------------------------------------------------------------
TABLE 2
Table 2 below shows the average annual rates of return on hypothetical
initial investments of $1,000, through the Separate Account, in funds of the
Penn Series Funds, Inc., TCI Portfolios, Inc., Neuberger and Berman Advisers
Management Trust, Variable Insurance Products Fund and Variable Insurance
Products Fund II for the periods ended December 31, 1995 and assumes the
investments are not withdrawn at the end of the period.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
----------------------------------------------
FIVE TEN FROM
ONE YEAR YEARS YEARS INCEPTION
INCEPTION ENDED ENDED ENDED THROUGH
FUND (MANAGER) DATE* 12/31/95 12/31/95 12/31/95 12/31/95
- -------------- --------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Growth Equity (a)............... 06/01/83 24.65% 11.66% 9.90% 9.63%
(Independence Capital)
Value Equity (a)................ 03/17/87 35.23% 15.41% N/A 10.37%
(OpCap)
Flexibly Managed (a)............ 07/31/84 19.98% 12.38% 12.86% 13.12%
(T. Rowe Price)
Quality Bond (a)................ 03/17/87 18.38% 7.77% N/A 6.99%
(Independence Capital)
High Yield Bond (a)............. 08/06/84 14.71% 13.76% 7.59% 8.54%
(T. Rowe Price)
International Equity (a)........ 11/01/92 12.05% N/A N/A 11.94%
(Vontobel)
Small-Cap Fund.................. 03/01/95 N/A N/A N/A 11.31%
(OpCap)
Growth Portfolio (b)............ 11/20/87 28.95% 13.05% N/A 11.07%
(Investors Research -- Twenti-
eth Century)
Balanced Portfolio (c).......... 02/28/89 21.91% 9.37% N/A 9.04%
(Neuberger & Berman)
Limited Maturity Bond Portfolio 09/10/84 9.34% 5.16% 6.07% 7.11%
(c)............................
(Neuberger & Berman)
Equity-Income Portfolio (d)..... 10/09/86 31.99% 19.20% N/A 11.38%
(Fidelity Investments)
Growth Portfolio (d)............ 10/09/86 33.05% 18.78% N/A 12.91%
(Fidelity Investments)
Asset Manager Portfolio (e)..... 09/06/89 15.23% 11.10% N/A 9.60%
(Fidelity Investments)
</TABLE>
- -----------------------
*Represents the date the underlying fund was established.
(a)Penn Series Funds, Inc.
(b)TCI Portfolios, Inc.
(c)Neuberger and Berman Advisers Management Trust
(d)Variable Insurance Products Fund
(e)Variable Insurance Products Fund II
B-4
<PAGE>
- --------------------------------------------------------------------------------
TABLE 3
Table 3 below shows the average annual rates of return on hypothetical
initial investments of $10,000, through the Separate Account, in funds of the
Penn Series Funds, Inc., TCI Portfolios, Inc., Neuberger and Berman Advisers
Management Trust, Variable Insurance Products Fund, and Variable Insurance
Products Fund II for the periods ended December 31, 1995 and assumes the
investments are not withdrawn at the end of the period.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
----------------------------------------------
FIVE TEN FROM
ONE YEAR YEARS YEARS INCEPTION
INCEPTION ENDED ENDED ENDED THROUGH
FUND (MANAGER) DATE* 12/31/95 12/31/95 12/31/95 12/31/95
- -------------- --------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Growth Equity (a)............... 06/01/83 24.70% 11.69% 9.93% 9.65%
(Independence Capital)
Value Equity (a)................ 03/17/87 35.54% 15.65% N/A 10.60%
(OpCap)
Flexibly Managed (a)............ 07/31/84 20.53% 12.82% 13.19% 13.42%
(T. Rowe Price)
Quality Bond (a)................ 03/17/87 18.47% 7.85% N/A 7.07%
(Independence Capital)
High Yield Bond (a)............. 08/06/84 14.79% 13.82% 7.66% 8.60%
(T. Rowe Price)
International Equity (a)........ 11/01/92 12.21% N/A N/A 12.11%
(Vontobel)
Small-Cap Fund.................. 03/01/95 N/A N/A N/A 11.44%
(OpCap)
Growth Portfolio (b)............ 11/20/87 29.12% 13.18% N/A 11.20%
(Investors Research -- Twenti-
eth Century)
Balanced Portfolio (c).......... 02/28/89 22.03% 9.48% N/A 9.14%
(Neuberger & Berman)
Limited Maturity Bond Portfolio 09/10/84 9.39% 5.21% 6.11% 7.15%
(c)............................
(Neuberger & Berman)
Equity-Income Portfolio (d)..... 10/09/86 32.34% 19.45% N/A 11.65%
(Fidelity Investments)
Growth Portfolio (d)............ 10/09/86 33.45% 19.06% N/A 13.20%
(Fidelity Investments)
Asset Manager Portfolio (e)..... 09/06/89 15.33% 11.18% N/A 9.69%
(Fidelity Investments)
</TABLE>
- -----------------------
*Represents the date the underlying fund was established.
(a)Penn Series Funds, Inc.
(b)TCI Portfolios, Inc.
(c)Neuberger and Berman Advisers Management Trust
(d)Variable Insurance Products Fund
(e)Variable Insurance Products Fund II
The average annual rates of total return shown in Tables 2 and 3 are computed
by finding the average annual compounded rates of return over the periods shown
that would equate the initial amount invested to the Contract Value at the end
of the periods shown, in accordance with the following formula: P(1 + T)n = FV.
In the formula, P is a hypothetical investment of $1,000 in Table 2 and $10,000
in Table 3; T is the average annual total return; n is the number of years; and
FV is the Contract Value at the end of the periods shown. The $30 annual
contract administrative charge is reflected assuming an anticipated average
Contract Value and assuming that the average Contract Value is allocated
equally across all available subaccounts by an average contract owner. The
average annual rates of total returns reflect all recurring charges, but do not
reflect the contingent deferred sales charge ranging from 6% to 1% which, if
applicable, would reduce the amount that may be withdrawn under the Contract.
- --------------------------------------------------------------------------------
ANNUAL CHANGES IN ACCUMULATION UNIT VALUES
We may also show in advertisements or sales literature the changes in the
value of Accumulation Units from inception of the Separate Account.
B-5
<PAGE>
- --------------------------------------------------------------------------------
YIELDS (MONEY MARKET FUND)
From time to time, advertisements and sales literature may quote the current
or effective yield of the Money Market subaccount.
The "yield" and "effective yield" of the Money Market Fund subaccount for the
seven days ended December 31, 1995 were 3.36% and 3.41%, respectively.
The yield is computed by determining the net change, exclusive of capital
changes, in the value of a hypothetical preexisting account having a balance of
one accumulation unit of the subaccount at the beginning of the period,
subtracting a hypothetical charge reflecting deductions from contract owner
accounts, and dividing the difference by the value of the account at the
beginning of the base period to obtain the base period return, and then
multiplying the base period return by (365/7) with the resulting figure carried
to at least the nearest hundredth of 1%. The hypothetical charge reflects
deductions from contract owners' accounts in proportion to the length of the
base period. The $30 annual contract administrative charge is reflected
assuming an anticipated average Contract Value and assuming that the average
Contract Value is allocated equally across all available subaccounts by an
average contract owner.
The effective yield is obtained by taking the base period return as computed
above, and then compounding the base period return by adding 1, raising the sum
to a power equal to 365 divided by 7, and subtracting 1 from the result,
according to the following formula: Effective Yield = [(base period return +
1)/365//7/] -1.
The yields do not reflect the contingent deferred sales charge ranging from
6% to 1%. The deferred sales charge may or may not be applicable to a
withdrawal from a Contract, depending on when the withdrawal is made.
THE YIELDS ON AMOUNTS HELD IN THE MONEY MARKET SUBACCOUNT NORMALLY WILL
FLUCTUATE ON A DAILY BASIS. THEREFORE, THE STATED YIELDS FOR ANY GIVEN PERIOD
ARE NOT AN INDICATION OR REPRESENTATION OF FUTURE YIELDS.
---------------------------------
THE PERFORMANCE INFORMATION SET FORTH ABOVE IS FOR PAST PERFORMANCE OF THE
FUNDS, ASSUMING THE SEPARATE ACCOUNT HAD INVESTED IN THE FUNDS FROM THEIR
INCEPTION, AND IS NOT AN INDICATION OR REPRESENTATION OF FUTURE PERFORMANCE.
- --------------------------------------------------------------------------------
ADMINISTRATIVE AND RECORDKEEPING SERVICES
The Company performs all data processing, recordkeeping and other related
services with respect to the Contracts and the Separate Accounts.
- --------------------------------------------------------------------------------
DISTRIBUTION OF CONTRACTS
Hornor, Townsend & Kent, Inc., a wholly owned subsidiary of Penn Mutual,
serves as principal underwriter of the Contracts. The address of Hornor,
Townsend & Kent, Inc. is 600 Dresher Road, Horsham, PA 19044. For 1995, the
Company paid Hornor, Townsend & Kent, Inc. underwriting commissions of $25,447.
The Contracts will be distributed by Hornor, Townsend & Kent, Inc. through
broker-dealers. Total commissions on purchase payments made under the Contract
will not exceed 6 1/2% and trailer commissions based on a percentage of
Contract Value may be paid. The offering of the Contracts is continuous, and
the Company does not anticipate discontinuing the offering of the Contract,
although we reserve the right to do so.
- --------------------------------------------------------------------------------
CUSTODIAN
The Company is custodian of the assets held in the Separate Account.
- --------------------------------------------------------------------------------
INDEPENDENT ACCOUNTANTS
The statements of assets and liabilities of the PIA Variable Annuity Account
I--Pennant as of December 31, 1995, and the related statements of operations
and of changes in net assets for the period from March 1, 1995 (commencement of
operations) to December 31, 1995 and the statements of financial condition of
The Penn Insurance and Annuity Company as of December 31, 1995 and 1994, and
the related statements of operations and surplus and cash flows for each of the
three years in the period ended December 31, 1995 included in this statement of
additional information have been audited by Coopers & Lybrand L.L.P.,
independent accountants. The reports and the financial statements have been
included upon the authority of said firm as experts in accounting and auditing.
- --------------------------------------------------------------------------------
LEGAL MATTERS
Morgan, Lewis & Bockius LLP of Philadelphia, Pennsylvania, has provided
advice on certain matters relating to the federal securities laws and the
offering of the Contracts.
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
The financial statements of the Separate Account and PIA are set forth on the
following pages. The financial statements of PIA should be distinguished from
the financial statements of the Separate Account and should be considered only
as bearing upon the PIA's ability to meet its obligations under the contracts.
B-6
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE PENN INSURANCE AND ANNUITY COMPANY AND CONTRACT OWNERS OF PIA VARIABLE
ANNUITY ACCOUNT I - PENNANT:
We have audited the accompanying statements of assets and liabilities of the
PIA Variable Annuity Account I - Pennant ("Pennant") [comprising, respectively,
the Money Market Fund, Quality Bond Fund, High Yield Bond Fund, Growth Equity
Fund, Value Equity Fund, Flexibly Managed Fund, Small Capitalization Fund,
International Equity Fund, Limited Maturity Bond Portfolio, Balanced Portfolio,
TCI Growth Portfolio, Equity-Income Portfolio, Growth Portfolio, and Asset
Manager Portfolio] as of December 31, 1995, and the related statements of
operations and of changes in net assets for the period from March 1,
1995(commencement of operations) to December 31, 1995. These financial
statements are the responsibility of the management of Pennant. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of December 31, 1995 by
correspondence with the transfer agents. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of PIA Variable Annuity Account I
- - Pennant as of December 31, 1995, the results of its operations and changes in
net assets for the period from March 1, 1995 (commencement of operations) to
December 31, 1995 in conformity with generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
April 4, 1996
B-7
<PAGE>
- --------------------------------------------------------------------------------
PIA VARIABLE ANNUITY ACCOUNT I - PENNANT
STATEMENT OF ASSETS AND LIABILITIES - DECEMBER 31, 1995
<TABLE>
<CAPTION>
MONEY MARKET QUALITY BOND HIGH YIELD GROWTH EQUITY
TOTAL FUND+ FUND+ BOND FUND+ FUND+
----------- ------------ ------------ ---------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT IN COMMON
STOCK:
Number of shares....... 1,982,595 70,359 74,414 8,179
Identified cost........ $22,726,107 $1,982,595 $729,123 $666,141 $180,298
ASSETS AND LIABILITIES:
Investments at value... $22,812,231 $1,982,595 $720,473 $628,052 $163,587
Dividends receivable... 6,995 6,995 0 0 0
Due to the Penn Insur-
ance and Annuity Com-
pany.................. (69,430) (65,413) (140) (125) (29)
----------- ---------- -------- -------- --------
NET ASSETS.............. $22,749,796 $1,924,177 $720,333 $627,927 $163,558
=========== ========== ======== ======== ========
Variable annuity
accumulation units..... 186,641 64,152 57,255 13,923
Accumulation unit
values................. $ 10.31 11.23 10.97 11.75
- ----------------------------------------------------------------------------------------
PIA VARIABLE ANNUITY ACCOUNT I - PENNANT
STATEMENT OF OPERATIONS - FOR THE PERIOD OF MARCH 1, 1995 (COMMENCEMENT OF
OPERATIONS)
TO DECEMBER 31, 1995
<CAPTION>
MONEY MARKET QUALITY BOND HIGH YIELD GROWTH EQUITY
TOTAL FUND+ FUND+ BOND FUND+ FUND+
----------- ------------ ------------ ---------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 396,492 $ 27,132 $ 39,914 $ 56,027 $ 614
EXPENSE:
Mortality and expense
risk charges.......... 84,945 7,254 2,944 2,229 414
----------- ---------- -------- -------- --------
Net investment income
(loss)................ 311,547 19,878 36,970 53,798 200
----------- ---------- -------- -------- --------
REALIZED AND UNREALIZED
GAINS (LOSSES) ON
INVESTMENTS:
Realized gains (losses)
from redemption of
fund shares........... 1,544 0 251 100 318
Capital gains distribu-
tions................. 380,817 0 0 0 20,233
----------- ---------- -------- -------- --------
Net realized gains
(losses).............. 382,361 0 251 100 20,551
Net change in
unrealized apprecia-
tion /depreciation of
investments........... 86,124 0 (8,650) (38,089) (16,711)
----------- ---------- -------- -------- --------
Net realized and
unrealized gains
(losses) on invest-
ments................. 468,485 0 (8,399) (37,989) 3,840
----------- ---------- -------- -------- --------
NET INCREASE IN NET
ASSETS RESULTING FROM
OPERATIONS............ $ 780,032 $ 19,878 $ 28,571 $ 15,809 $ 4,040
=========== ========== ======== ======== ========
</TABLE>
- -----------------------
+ Investment in Penn Series Funds, Inc.
++ Investment in Neuberger & Berman Advisers Management Trust.
+++ Investment in TCI Portfolios, Inc.
++++ Investment in Fidelity Investments' Variable Insurance Products Funds I
and II.
The accompanying notes are an integral part of these financial statements.
B-8
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FLEXIBLY SMALL LIMITED
VALUE EQUITY MANAGED CAPITALIZATION INTERNATIONAL BALANCED MATURITY
FUND+ FUND+ FUND+ FUND+ PORTFOLIO++ PORTFOLIO++
- ------------ ---------- -------------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
137,996 396,110 56,339 44,831 46,323 37,431
$2,255,042 $7,073,989 $617,467 $619,281 $799,902 $538,668
$2,246,579 $6,892,315 $617,476 $648,710 $811,586 $550,604
0 0 0 0 0 0
(430) (1,307) (118) (127) (152) (106)
---------- ---------- -------- -------- -------- --------
$2,246,149 $6,891,008 $617,358 $648,583 $811,434 $550,498
========== ========== ======== ======== ======== ========
177,701 591,562 55,394 54,604 69,633 51,495
$ 12.64 $ 11.65 $ 11.14 $ 11.88 $ 11.65 $ 10.69
- ------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
FLEXIBLY SMALL LIMITED
VALUE EQUITY MANAGED CAPITALIZATION INTERNATIONAL BALANCED MATURITY
FUND+ FUND+ FUND+ FUND+ PORTFOLIO++ PORTFOLIO++
- ------------ -------- -------------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
$ 31,432 $198,186 $ 4,668 $14,489 $ 0 $ 0
8,709 24,527 2,209 2,984 3,044 1,802
-------- -------- ------- ------- ------ -------
22,723 173,659 2,459 11,505 (3,044) (1,802)
-------- -------- ------- ------- ------ -------
148 99 11 21 120 146
114,184 234,129 12,271 0 0 0
-------- -------- ------- ------- ------ -------
114,332 234,228 12,282 21 120 146
(8,464) (181,674) 9 29,429 11,684 11,936
-------- -------- ------- ------- ------ -------
105,868 52,554 12,291 29,450 11,804 12,082
-------- -------- ------- ------- ------ -------
$128,591 $226,213 $14,750 $40,955 $8,760 $10,280
======== ======== ======= ======= ====== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
B-9
<PAGE>
- --------------------------------------------------------------------------------
PIA VARIABLE ANNUITY ACCOUNT I - PENNANT
STATEMENT OF ASSETS AND LIABILITIES - DECEMBER 31, 1995 (CONT'D.)
<TABLE>
<CAPTION>
TCI
GROWTH EQUITY INCOME GROWTH ASSET MANAGER
PORTFOLIO+++ PORTFOLIO++++ PORTFOLIO++++ PORTFOLIO++++
------------ ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT IN COMMON STOCK:
Number of shares......... 76,400 161,475 100,220 37,417
Identified cost.......... $903,225 $2,912,252 $2,894,248 $553,876
ASSETS AND LIABILITIES:
Investments at value..... $921,388 $3,111,628 $2,926,420 $590,818
Dividends receivable..... 0 0 0 0
Due to the Penn Insurance
and Annuity Company .... (247) (616) (511) (109)
-------- ---------- ---------- --------
NET ASSETS................. $921,141 $3,111,012 $2,925,909 $590,709
======== ========== ========== ========
Variable annuity
accumulation units........ 71,869 246,915 223,746 51,476
Accumulation unit values... $ 12.82 $ 12.60 $ 13.08 $ 11.48
- -----------------------------------------------------------------------------------
PIA VARIABLE ANNUITY ACCOUNT I - PENNANT
STATEMENT OF OPERATIONS - FOR THE PERIOD OF MARCH 1, 1995 (COMMENCEMENT
OF OPERATIONS)
TO DECEMBER 31, 1995 (CONT'D.)
<CAPTION>
TCI
GROWTH EQUITY INCOME GROWTH ASSET MANAGER
PORTFOLIO+++ PORTFOLIO++++ PORTFOLIO++++ PORTFOLIO++++
------------ ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends................ $ 0 $ 24,030 $ 0 $ 0
EXPENSE:
Mortality and expense
risk charges............ 3,426 11,663 10,704 3,036
-------- ---------- ---------- --------
Net investment income
(loss).................. (3,426) 12,367 (10,704) (3,036)
-------- ---------- ---------- --------
REALIZED AND UNREALIZED
GAINS (LOSSES) ON INVEST-
MENTS:
Realized gains (losses)
from redemption of fund
shares.................. (78) 191 111 106
Capital gains
distributions........... 0 0 0 0
-------- ---------- ---------- --------
Net realized gains
(losses)................ (78) 191 111 106
Net change in unrealized
appreciation/depreciation
of investments.......... 18,162 199,378 32,172 36,942
-------- ---------- ---------- --------
Net realized and
unrealized gains
(losses) on investments. 18,084 199,569 32,283 37,048
-------- ---------- ---------- --------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS. $ 14,658 $ 211,936 $ 21,579 $ 34,012
======== ========== ========== ========
</TABLE>
- -----------------------
+ Investment in Penn Series Funds, Inc.
++ Investment in Neuberger & Berman Advisers Management Trust.
+++ Investment in TCI Portfolios, Inc.
++++ Investment in Fidelity Investments' Variable Insurance Products Funds I
and II.
The accompanying notes are an integral part of these financial statements.
B-10
<PAGE>
- --------------------------------------------------------------------------------
PIA VARIABLE ANNUITY ACCOUNT I - PENNANT
STATEMENT OF CHANGES IN NET ASSETS - FOR THE PERIOD OF MARCH 1, 1995
(COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1995
<TABLE>
<CAPTION>
MONEY MARKET QUALITY BOND HIGH YIELD
TOTAL FUND+ FUND+ BOND FUND+
------------- ------------ ------------ --------------
INCREASE IN NET ASSETS 1995 1995 1995 1995
RESULTING FROM: ------------- ------------ ------------ --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss).................. $ 311,547 $ 19,878 $ 36,970 $ 53,798
Net realized gain (loss)
from investment
transactions............ 382,361 0 251 100
Net change in unrealized
appreciation/depreciation
of investments.......... 86,124 0 (8,650) (38,089)
----------- ---------- ---------- --------
Net increase in net assets
resulting from
operations............... 780,032 19,878 28,571 15,809
----------- ---------- ---------- --------
VARIABLE ANNUITY
ACTIVITIES:
Purchase payments under
variable annuity
contracts............... 21,438,030 2,982,737 756,991 589,034
Net transfers............ 562,648 (1,078,058) (65,223) 25,706
Contract administration
charges................. (425) (30) (6) 0
Annuity benefits......... (30,489) (350) 0 (2,622)
----------- ---------- ---------- --------
Net increase in net assets
derived from annuity
activities............... 21,969,764 1,904,299 691,762 612,118
----------- ---------- ---------- --------
Total increase in net
assets................... 22,749,796 1,924,177 720,333 627,927
NET ASSETS:
Beginning of period...... 0 0 0 0
----------- ---------- ---------- --------
END OF PERIOD............ $22,749,796 $1,924,177 $ 720,333 $627,927
=========== ========== ========== ========
<CAPTION>
FLEXIBLY SMALL
GROWTH EQUITY VALUE EQUITY MANAGED CAPITALIZATION
FUND+ FUND+ FUND+ FUND+
------------- ------------ ------------ --------------
INCREASE IN NET ASSETS 1995 1995 1995 1995
RESULTING FROM: ------------- ------------ ------------ --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss).................. $ 200 $ 22,723 $ 173,659 $ 2,459
Net realized gain (loss)
from investment
transactions............ 20,551 114,332 234,228 12,282
Net change in unrealized
appreciation/depreciation
of investments.......... (16,711) (8,464) (181,674) 9
----------- ---------- ---------- --------
Net increase in net assets
resulting from
operations............... 4,040 128,591 226,213 14,750
----------- ---------- ---------- --------
VARIABLE ANNUITY
ACTIVITIES:
Purchase payments under
variable annuity
contracts............... 145,157 1,864,128 6,004,397 520,095
Net transfers............ 14,361 254,805 671,116 84,113
Contract administration
charges................. 0 (45) (134) (3)
Annuity benefits......... 0 (1,330) (10,584) (1,597)
----------- ---------- ---------- --------
Net increase in net assets
derived from annuity
activities............... 159,518 2,117,558 6,664,795 602,608
----------- ---------- ---------- --------
Total increase in net
assets................... 163,558 2,246,149 6,891,008 617,358
NET ASSETS:
Beginning of period...... 0 0 0 0
----------- ---------- ---------- --------
END OF PERIOD............ $ 163,558 $2,246,149 $6,891,008 $617,358
=========== ========== ========== ========
</TABLE>
- -----------------------
+ Investment in Penn Series Funds, Inc.
++ Investment in Neuberger & Berman Advisers Management Trust.
+++ Investment in TCI Portfolios, Inc.
++++ Investment in Fidelity Investments' Variable Insurance Products Funds I
and II.
The accompanying notes are an integral part of these financial statements.
B-11
<PAGE>
- --------------------------------------------------------------------------------
PIA VARIABLE ANNUITY ACCOUNT I - PENNANT
STATEMENT OF CHANGES IN NET ASSETS - FOR THE PERIOD OF MARCH 1, 1995
(COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1995 (CONT'D.)
<TABLE>
<CAPTION>
TCI
INTERNATIONAL BALANCED LIMITED MATURITY GROWTH
EQUITY FUND+ PORTFOLIO++ BOND PORTFOLIO++ PORTFOLIO+++
------------- ------------- ---------------- ------------
INCREASE IN NET ASSETS 1995 1995 1995 1995
RESULTING FROM: ------------- ------------- ---------------- ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss).................. $ 11,505 $ (3,044) $ (1,802) $ (3,426)
Net realized gain (loss)
from investment
transactions............ 21 120 146 (78)
Net change in unrealized
appreciation/depreciation
of investments.......... 29,429 11,684 11,936 18,162
---------- ---------- -------- --------
Net increase in net assets
resulting from
operations............... 40,955 8,760 10,280 14,658
---------- ---------- -------- --------
VARIABLE ANNUITY
ACTIVITIES:
Purchase payments under
variable annuity
contracts............... 562,944 744,910 584,013 851,970
Net transfers............ 48,183 59,538 (43,455) 57,677
Contract administration
charges................. (3) 0 0 (45)
Annuity benefits......... (3,496) (1,774) (340) (3,119)
---------- ---------- -------- --------
Net increase in net assets
derived from annuity
activities............... 607,628 802,674 540,218 906,483
---------- ---------- -------- --------
Total increase in net
assets................... 648,583 811,434 550,498 921,141
NET ASSETS:
Beginning of period...... 0 0 0 0
---------- ---------- -------- --------
END OF PERIOD............ $ 648,583 $ 811,434 $550,498 $921,141
========== ========== ======== ========
<CAPTION>
EQUITY INCOME GROWTH ASSET MANAGER
PORTFOLIO++++ PORTFOLIO++++ PORTFOLIO++++
------------- ------------- ----------------
INCREASE IN NET ASSETS 1995 1995 1995
RESULTING FROM: ------------- ------------- ----------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income
(loss).................. $ 12,367 $ (10,704) $ (3,036)
Net realized gain (loss)
from investment
transactions............ 191 111 106
Net change in unrealized
appreciation/depreciation
of investments.......... 199,378 32,172 36,942
---------- ---------- --------
Net increase in net assets
resulting from
operations............... 211,936 21,579 34,012
---------- ---------- --------
VARIABLE ANNUITY
ACTIVITIES:
Purchase payments under
variable annuity
contracts............... 2,621,032 2,667,181 543,441
Net transfers............ 279,515 240,417 13,953
Contract administration
charges................. (44) (70) (45)
Annuity benefits......... (1,427) (3,198) (652)
---------- ---------- --------
Net increase in net assets
derived from annuity
activities............... 2,899,076 2,904,330 556,697
---------- ---------- --------
Total increase in net
assets................... 3,111,012 2,925,909 590,709
NET ASSETS:
Beginning of period...... 0 0 0
---------- ---------- --------
END OF PERIOD............ $3,111,012 $2,925,909 $590,709
========== ========== ========
</TABLE>
- -----------------------
+ Investment in Penn Series Funds, Inc.
++ Investment in Neuberger & Berman Advisers Management Trust.
+++ Investment in TCI Portfolios, Inc.
++++ Investment in Fidelity Investments' Variable Insurance Products Funds I
and II.
The accompanying notes are an integral part of these financial statements.
B-12
<PAGE>
- ----------------------------------------------------
THIS PAGE LEFT INTENTIONALLY BLANK
B-13
<PAGE>
- --------------------------------------------------------------------------------
PIA VARIABLE ANNUITY ACCOUNT I - PENNANT
NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 1995
- --------------------------------------------------------------------------------
NOTE 1.
The significant accounting policies of Penn Insurance and Annuity Variable
Annuity Account I (Account I) are as follows:
GENERAL - Account I was established by The Penn Insurance and Annuity
Company (PIA) under the provisions of the Delaware Insurance Law. PIA has
structured Account I as a unit investment trust registered under the
Investment Company Act of 1940. Account I offers units to variable annuity
contractholders to provide for the accumulation of value and for the
payment of annuities. The preparation of the accompanying financial
statements require management to make estimates and assumptions that affect
the report values of assets and liabilities as of December 31, 1995 and the
reported amounts from operations and contract transactions during 1995.
Actual results could differ from those estimates.
INVESTMENTS - Assets of Account I are invested in shares of Penn Series
Funds, Inc. (Penn Series): Money Market, Quality Bond, High Yield Bond,
Growth Equity, Value Equity, Flexibly Managed, International Equity and
Small Capitalization Funds; Neuberger and
- --------------------------------------------------------------------------------
NOTE 2.
For the period March 1, 1995 (commencement of operations) to December 31,
1995 share transactions of Account I were as follows:
<TABLE>
<CAPTION>
MONEY QUALITY HIGH YIELD
MARKET FUND+ BOND FUND+ BOND FUND+
------------- ----------- ----------------
1995 1995 1995
------------- ----------- ----------------
<S> <C> <C> <C>
Shares purchased................... 2,926,149 71,618 71,558
Shares received from reinvestment
of:
Net investment income............ 20,254 3,898 6,638
Capital gains distributions...... 0 0 0
---------- -------- --------
Total shares acquired.............. 2,946,403 75,516 78,196
Shares redeemed.................... (963,808) (5,157) (3,782)
---------- -------- --------
Net increase in shares owned....... 1,982,595 70,359 74,414
Shares owned beginning of period... 0 0 0
---------- -------- --------
Shares owned end of period......... 1,982,595 70,359 74,414
========== ======== ========
Cost of shares acquired............ $2,946,403 $782,534 $699,733
Proceeds from shares redeemed...... $ 963,808 $ 53,662 $ 33,692
<CAPTION>
INTERNATIONAL BALANCED LIMITED MATURITY
EQUITY FUND+ PORTFOLIO++ BOND PORTFOLIO++
------------- ----------- ----------------
1995 1995 1995
------------- ----------- ----------------
<S> <C> <C> <C>
Shares purchased................... 44,056 47,329 39,251
Shares received from reinvestment
of:
Net investment income............ 1,001 0 0
Capital gains distributions...... 0 0 0
---------- -------- --------
Total shares acquired.............. 45,057 47,329 39,251
Shares redeemed.................... (226) (1,006) (1,820)
---------- -------- --------
Net increase in shares owned....... 44,831 46,323 37,431
Shares owned beginning of period... 0 0 0
---------- -------- --------
Shares owned end of period......... 44,831 46,323 37,431
========== ======== ========
Cost of shares acquired............ $ 622,422 $817,479 $564,630
Proceeds from shares redeemed...... $ 3,162 $ 17,697 $ 26,108
</TABLE>
The cost of shares redeemed is determined on a last-in, first-out basis.
- -----------------------
+ Investment in Penn Series Funds, Inc.
++ Investment in Neuberger & Berman Advisers Management Trust.
+++ Investment in TCI Portfolios, Inc.
++++ Investment in Fidelity Investments' Variable Insurance Products Funds I
and II.
- --------------------------------------------------------------------------------
NOTE 3.
Operations are charged for mortality and expense risks assumed by PIA and
for administering the separate account at an annual rate of 1.25% and 0.15%
respectively, of the average account value of Account I.
B-14
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTE 1., CONT'D.
Berman Advisers Management Trust (AMT): Limited Maturity Bond and Balanced
Portfolios; TCI Portfolios, Inc. (TCI): TCI Growth Portfolio, and Fidelity
Investments' Variable Insurance Product (Fidelity): Equity-Income, Growth,
and Asset Manager Portfolios. Penn Series, AMT, TCI, and Fidelity are open-
end diversified investment companies. The shares are carried at market
value as determined by the underlying net asset value of the respective
funds. Dividend income is recorded on the ex-dividend date. Investment
transactions are accounted for on a trade date basis.
FEDERAL INCOME TAXES - PIA is taxed under federal law as a life insurance
company. The Account is part of PIA's total operations and is not taxed
separately. Under existing federal law, no taxes are payable on investment
income and realized gains of the Account.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALL
GROWTH VALUE FLEXIBLY CAPITALIZATION
EQUITY FUND+ EQUITY FUND+ MANAGED FUND+ FUND+
- ------------ ------------- ------------- --------------
1995 1995 1995 1995
- ------------ ------------- ------------- --------------
<S> <C> <C> <C>
10,560 131,244 373,372 55,344
31 1,931 11,390 426
1,012 7,014 13,456 1,120
-------- ---------- ---------- --------
11,603 140,189 398,218 56,890
(3,424) (2,193) (2,108) (551)
-------- ---------- ---------- --------
8,179 137,996 396,110 56,339
0 0 0 0
-------- ---------- ---------- --------
8,179 137,996 396,110 56,339
======== ========== ========== ========
$252,011 $2,290,813 $7,109,671 $623,629
$ 72,031 $ 35,919 $ 35,781 $ 6,173
<CAPTION>
TCI
GROWTH EQUITY INCOME GROWTH ASSET MANAGER
PORTFOLIO+++ PORTFOLIO++++ PORTFOLIO++++ PORTFOLIO++++
- ------------ ------------- ------------- --------------
1995 1995 1995 1995
- ------------ ------------- ------------- --------------
<S> <C> <C> <C>
76,984 162,829 101,293 42,510
0 1,291 0 0
0 0 0 0
-------- ---------- ---------- --------
76,984 164,120 101,293 42,510
(584) (2,645) (1,073) (5,093)
-------- ---------- ---------- --------
76,400 161,475 100,220 37,417
0 0 0 0
-------- ---------- ---------- --------
76,400 161,475 100,220 37,417
======== ========== ========== ========
$910,433 $2,958,084 $2,925,304 $627,916
$ 7,130 $ 46,023 $ 31,167 $ 74,146
</TABLE>
- --------------------------------------------------------------------------------
NOTE 3., CONT'D.
As reimbursement for expenses incurred in administering the contract, PIA
receives $30 per year from each annuity contract prior to the contract's
date of maturity. The $30 charge is waived on certain contracts.
If a policy is surrendered within the first 7 years, a contingent deferred
sales charge will be assessed. This charge will be deducted before any
surrender proceeds are paid. See original contract documents for specific
charges assessed.
B-15
<PAGE>
- ----------------------------------------------------
THIS PAGE LEFT INTENTIONALLY BLANK
B-16
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
THE BOARD OF DIRECTORS
THE PENN INSURANCE AND ANNUITY COMPANY
WILMINGTON, DELAWARE
We have audited the accompanying statements of financial condition of The Penn
Insurance and Annuity Company (a wholly-owned subsidiary of The Penn Mutual
Life Insurance Company) as of December 31, 1995 and 1994 and the related
statements of operations, changes in stockholder's equity and cash flows for
each of the three 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 that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Penn Insurance and Annuity
Company as of December 31, 1995 and 1994, and the results of its operations and
cash flows for each of the three years in the period ended December 31, 1995,
in conformity with the accounting principles prescribed or permitted by the
Insurance Department of the State of Delaware, which are considered generally
accepted accounting principles for wholly-owned stock life insurance
subsidiaries of mutual life insurance companies.
As discussed in Note 2 to the financial statements during 1995, the Company
changed its accounting method for certain components of the federal income tax
expense.
/s/ Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
January 26, 1996
B-17
<PAGE>
- --------------------------------------------------------------------------------
THE PENN INSURANCE AND ANNUITY COMPANY
STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
DECEMBER 31, 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
(in thousands of dollars)
ASSETS
Bonds...................................................... $413,987 $385,002
Stocks.....................................................
Preferred................................................. 3,577 3,963
Common--affiliated........................................ 1,940 1,868
--unaffiliated......................................... -- 6,932
Mortgage loans............................................. 90,395 85,323
Real estate................................................ 5,087 4,388
Policy loans............................................... 234,442 200,099
Cash and short-term investments............................ 22,722 2,158
-------- --------
Total Cash and Invested Assets............................ 772,150 689,733
Investment income due and accrued.......................... 14,257 16,580
Other assets............................................... 10,016 8,615
Separate account assets.................................... 28,216 --
-------- --------
TOTAL ASSETS.............................................. $824,639 $714,928
======== ========
LIABILITIES
Reserves and funds for payment of future life and annuity
benefits.................................................. $708,720 $642,635
Policy claims in process................................... 3,623 3,213
Interest maintenance reserve............................... 1,744 364
Asset valuation reserve.................................... 5,436 6,203
Other liabilities.......................................... 11,299 5,990
Separate account liabilities............................... 28,216 --
-------- --------
TOTAL LIABILITIES......................................... 759,038 658,405
-------- --------
STOCKHOLDER'S EQUITY
Common stock, $2 par value; 1,000 shares authorized, issued
and outstanding........................................... 2,000 2,000
Capital contributed in excess of par value................. 103,369 103,369
Accumulated deficit........................................ (39,768) (48,846)
-------- --------
TOTAL STOCKHOLDER'S EQUITY................................ 65,601 56,523
-------- --------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY............... $824,639 $714,928
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
B-18
<PAGE>
- --------------------------------------------------------------------------------
THE PENN INSURANCE AND ANNUITY COMPANY
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31, 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
(in thousands of dollars)
INCOME
Premium and annuity considerations..................... $ 78,904 $35,916 $38,705
Net investment income.................................. 58,898 50,515 53,583
Other income........................................... 39,940 2,461 2,528
-------- ------- -------
TOTAL INCOME.......................................... 172,742 88,892 94,816
-------- ------- -------
BENEFITS AND EXPENSES
Benefits paid to policyholders and beneficiaries....... 48,029 44,456 50,898
Increase in reserves and funds for the payment of fu-
ture life and annuity benefits........................ 66,086 18,728 15,762
Commissions............................................ 5,398 5,008 5,491
Operating expenses..................................... 6,330 5,718 5,321
Net transfers to separate accounts..................... 27,388 -- --
-------- ------- -------
TOTAL BENEFITS AND EXPENSES........................... 153,231 73,910 77,472
-------- ------- -------
INCOME FROM OPERATIONS BEFORE FEDERAL INCOME TAXES.... 19,511 14,982 17,344
Federal income tax expense............................. 7,644 4,292 5,242
-------- ------- -------
INCOME FROM OPERATIONS................................ 11,867 10,690 12,102
Net realized capital losses, net of taxes.............. 1,591 4,646 5,423
-------- ------- -------
NET INCOME............................................ $ 10,276 $ 6,044 $ 6,679
======== ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
B-19
<PAGE>
- --------------------------------------------------------------------------------
THE PENN INSURANCE AND ANNUITY COMPANY
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31, 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
(in thousands of dollars)
COMMON STOCK
Beginning of year................................ $ 2,000 $ 2,000 $ 2,000
-------- -------- --------
END OF YEAR...................................... 2,000 2,000 2,000
-------- -------- --------
CAPITAL CONTRIBUTED IN EXCESS OF PAR VALUE
Beginning of year................................ 103,369 103,369 105,369
Return of capital................................ -- -- (2,000)
-------- -------- --------
END OF YEAR...................................... 103,369 103,369 103,369
-------- -------- --------
ACCUMULATED DEFICIT
Beginning of year................................ (48,846) (59,087) (70,775)
Net income....................................... 10,276 6,044 6,679
Change in non-admitted assets.................... (71) 117 (129)
Change in asset valuation reserve................ 767 2,505 2,230
Change in net unrealized capital gains and loss-
es.............................................. 123 774 2,690
Change in accounting method...................... (2,017) -- --
Other............................................ -- 801 218
-------- -------- --------
END OF YEAR...................................... (39,768) (48,846) (59,087)
-------- -------- --------
TOTAL STOCKHOLDER'S EQUITY....................... $ 65,601 $ 56,523 $ 46,282
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
B-20
<PAGE>
- --------------------------------------------------------------------------------
THE PENN INSURANCE AND ANNUITY COMPANY
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31, 1995 1994 1993
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
(in thousands of dollars)
CASH PROVIDED
Net cash from operations:
Premium and annuity considerations................ $ 78,404 $ 35,640 $ 37,135
Net investment income............................. 60,655 51,409 53,521
Other income...................................... 37,000 3,414 2,533
-------- -------- --------
176,059 90,463 93,189
Benefits to policyholders......................... 48,225 42,330 52,808
Commissions....................................... 5,312 4,915 5,287
Operating expenses and taxes...................... 13,488 11,222 15,167
Transfers to separate accounts.................... 27,388 -- --
Net increase in policy loans...................... 33,911 10,391 14,634
-------- -------- --------
NET CASH FROM OPERATIONS.......................... 47,735 21,605 5,293
-------- -------- --------
Investments sold, matured or repaid:
Bonds............................................. 73,341 76,309 158,962
Stocks............................................ 7,270 27,169 180,691
Mortgage loans.................................... 11,317 11,866 5,557
Real estate....................................... 753 1,538 --
-------- -------- --------
Total investments sold, matured or repaid........ 92,681 116,882 345,210
Taxes on realized investment gains................. (373) 89 (1,084)
Other cash provided................................ 674 28 --
-------- -------- --------
TOTAL CASH PROVIDED............................... 140,717 138,604 349,419
-------- -------- --------
CASH APPLIED
Cost of investments acquired:
Bonds............................................. 99,407 115,155 154,522
Stocks............................................ 1 25,005 177,951
Mortgage loans.................................... 20,459 2,554 13,068
Real estate....................................... -- -- 146
-------- -------- --------
Total cost of investments acquired............... 119,867 142,714 345,687
Other cash applied................................. 286 61 2,325
-------- -------- --------
TOTAL CASH APPLIED................................ 120,153 142,775 348,012
-------- -------- --------
Net change in cash and short-term investments...... 20,564 (4,171) 1,407
CASH AND SHORT-TERM INVESTMENTS:
Beginning of year................................. 2,158 6,329 4,922
-------- -------- --------
END OF YEAR....................................... $ 22,722 $ 2,158 $ 6,329
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
B-21
<PAGE>
- --------------------------------------------------------------------------------
THE PENN INSURANCE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
NATURE OF OPERATIONS
The Penn Insurance and Annuity Company (the "Company"), is a wholly owned
subsidiary of The Penn Mutual Life Insurance Company ("Penn Mutual"). The
Company currently concentrates primarily in the sale of individual annuity
products, both fixed and variable. The Company sells its products through Penn
Mutual's distribution systems, which consist of a network of career agents,
independent agents and independent marketing organizations. Additionally, it
has a significant amount of universal life insurance business in force,
although the Company no longer sells these products. The Company is licensed to
do business in forty-seven states and the District of Columbia.
BASIS OF PRESENTATION
The financial statements of the Company have been prepared in conformity with
accounting principles prescribed or permitted by the Insurance Department of
the State of Delaware, which are considered generally accepted accounting
principles for mutual life insurance companies and their wholly-owned life
insurance subsidiaries. Prescribed statutory accounting principles include
state laws, regulations, and general administrative rules, as well as a variety
of publications of the National Association of Insurance Commissioners (NAIC).
Permitted statutory accounting principles encompass all accounting practices
that are not prescribed. In accordance with Delaware Insurance Laws and
Regulations, the Company's subsidiary is not consolidated for statutory filing
purposes. The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the 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.
In April 1993, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation No. 40, "Applicability of Generally Accepted Accounting
Principles to Mutual Life Insurance and Other Enterprises" (Interpretation No.
40), which was amended by Statement of Financial Accounting Standards (SFAS)
No. 120, "Accounting and Reporting by Mutual Life Insurance Enterprises for
Certain Long-Duration Participating Contracts". SFAS No. 120 deferred the
effective data of Interpretation No. 40 to fiscal years beginning after
December 15, 1995. Under Interpretation No. 40, the financial statements of
mutual life insurance companies and their wholly-owned life insurance
subsidiaries which are prepared on the basis of statutory accounting principles
can no longer be described as prepared in conformity with generally accepted
accounting principles (GAAP). After 1995, the Company will continue to issue
financial statements prepared in accordance with statutory accounting
principles for regulatory purposes.
When the Company prepares financial statements in accordance with
Interpretation No. 40, the accounting treatment for certain items, such as
policy reserves, new business acquisition costs, asset valuation reserves and
income taxes will be different than for financial statements issued in
conformity with statutory accounting principles. In addition, the Company
believes stockholder's equity presented in accordance with Interpretation No.
40 will be greater than stockholder's equity presented in accordance with
statutory accounting principles.
VALUATION OF INVESTMENTS
Bonds and stocks are carried in the accompanying statements of financial
condition at values prescribed by the NAIC. In general, bonds are stated at
amortized cost, preferred stocks at cost and common stocks at market value. The
Company's wholly-owned subsidiary, Penn Assurance and Reinsurance Co., Ltd.
(PAR), is carried on the equity basis. Changes in PAR's equity are charged or
credited directly to stockholder's equity. Real estate is carried at cost less
encumbrances and accumulated depreciation. Real estate acquired through
foreclosure is recorded at the lower of cost or market value at the time of
foreclosure. Real estate is depreciated using the straight-line method.
Mortgage loans are carried at the unpaid principal amount, less any unamortized
discount. Policy loans are carried at the unpaid principal balance less amounts
unsecured by cash surrender values. Cash and short-term investments include
cash on deposit and securities purchased with a maturity date of less than one
year. Short-term investments are valued at cost, which approximates market.
Certain assets which are considered to be non-admitted for statutory purposes
have been excluded from the Statements of Financial Condition by a direct
charge to stockholder's equity.
Financial instruments utilized to hedge the Company's assets are recorded using
a valuation method consistent with the valuation method of the assets hedged.
Gains and losses on financial futures contracts used as hedges against interest
rate fluctuations are deferred and recognized in the Statements of Operations
over the remaining life of the hedged securities.
B-22
<PAGE>
- --------------------------------------------------------------------------------
THE PENN INSURANCE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(IN THOUSANDS OF DOLLARS)
Changes in the market value of financial futures contracts used as hedges
against market fluctuations of equity securities are reported as unrealized
gains or losses. They are recognized as realized gains or losses when the
hedged securities are sold.
Statutory accounting principles require insurance companies to hold an Asset
Valuation Reserve (AVR) and an Interest Maintenance Reserve (IMR). The purpose
of the AVR is to maintain consistent and prescribed valuation reserves for
invested assets. Changes in the AVR are recorded directly to stockholder's
equity. The purpose of the IMR is to defer recognition of realized gains and
losses which result from interest rate movements and to amortize these gains
and losses into income over the original expected life of the investment sold.
Amortization of gains and losses included in the IMR are reflected as a
component of net investment income.
Realized gains and losses are determined on the specific identification method
and are presented in the Statements of Operations net of taxes and excluding
net gains and losses transferred to the IMR. Unrealized gains and losses are
accounted for as direct increases or decreases in stockholder's equity.
RESERVES AND FUNDS FOR THE PAYMENT OF FUTURE LIFE AND ANNUITY BENEFITS
Reserves and funds for the payment of future life and annuity benefits are
developed using actuarial methods based on statutory mortality and interest
requirements. Reserves for life insurance are computed principally on a
modified preliminary term method using the 1958 and 1980 Commissioners'
Standard Ordinary Mortality Tables and assumed interest rates ranging from 4%
to 6%. Reserves for annuity contracts were based principally on the 1949, 1971
and 1983 Individual Annuity Mortality Tables and assumed interest rates ranging
from 5.65% to 11.25%. Policy claims in process include provisions for payments
to be made on reported claims and claims incurred but not reported. Any
adjustments that are made to the reserve balances are reflected in the
Statements of Operations in the year in which such adjustments are made. All
policies are non-participating.
REVENUE AND RELATED EXPENSE RECOGNITION
Premiums are recognized as income over the premium payment period of the
related policies. Annuity considerations are recognized as income as they are
received. Premium and annuity considerations are recorded net of reinsurance
premiums. Benefits are reported net of the amounts received from reinsurers.
Commissions and other expenses related to the acquisition of new policies are
charged to operations as incurred.
FEDERAL INCOME TAXES
The Company files a consolidated federal income tax return with its parent,
Penn Mutual. The federal income tax provision or benefit is recorded to the
extent the Company's results increase or decrease the consolidated tax
liability of Penn Mutual. The resulting tax liability or receivable is paid to
or received from Penn Mutual. The provision for federal income taxes is
computed in accordance with the section of the Internal Revenue Code applicable
to life insurance companies and is based on income which is currently taxable.
In accordance with statutory accounting practices, no deferred taxes are
provided for temporary differences between pre-tax accounting income and
taxable income.
SEPARATE ACCOUNTS
Separate Account assets and liabilities represent segregated funds administered
and invested by the Company primarily for the benefit of variable annuity and
pension contractholders. The value of the assets in the Separate Accounts
reflects the actual investment performance of the respective accounts and is
not guaranteed by the Company. The carrying value for Separate Account assets
and liabilities approximates the estimated fair value of the underlying assets.
NOTE 2 - ACCOUNTING CHANGE:
The Company's parent, Penn Mutual, is required by the Internal Revenue Code
(IRC) to include the Differential Earnings Amount (DEA) in each year's taxable
income. This amount, which is allocated to the Company by Penn Mutual, is
computed by multiplying the Company's average taxable equity base by a rate
that represents the difference between stock and mutual companies' earnings
rates. Under the IRC, the enacted DEA rate for the current year is an Internal
Revenue Service (IRS) estimate and is recomputed in the following year to
reflect the actual industry results.
Prior to 1995, the Company recorded its portion of the federal income tax
expense for the DEA based on the enacted IRS rates for the current year along
with any adjustment to the DEA related to the recomputation of the prior year's
estimate. The portion of the Company's federal income tax expense associated
with the DEA was recorded directly to surplus.
B-23
<PAGE>
- --------------------------------------------------------------------------------
THE PENN INSURANCE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(IN THOUSANDS OF DOLLARS)
In 1995, the Company changed its method of accounting for the DEA to record the
tax based on management's best estimate of the final DEA rates. The impact of
this accounting change resulted in a $2,017 direct charge to surplus in 1995.
In addition, in 1995 the Company began recording the portion of its federal
income tax expense associated with the DEA in the Statement of Operations.
NOTE 3 - INVESTMENTS:
DEBT SECURITIES
The following summarizes the statement value and estimated fair value of the
Company's investment in debt securities as of December 31, 1995 and 1994.
<TABLE>
<CAPTION>
DECEMBER 31, 1995
-----------------------------------------
GROSS GROSS ESTIMATED
STATEMENT UNREALIZED UNREALIZED FAIR
VALUE GAINS LOSSES VALUE
--------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
United States Government............. $ 3,376 $ 173 $ -- $ 3,549
Other governmental units............. 4,718 544 -- 5,262
Public utility....................... 26,355 844 3 27,196
Industrial and other................. 301,111 12,354 231 313,234
Mortgage and other asset-backed secu-
rities.............................. 78,427 1,148 1,186 78,389
-------- ------- ------- --------
TOTAL............................... $413,987 $15,063 $ 1,420 $427,630
======== ======= ======= ========
<CAPTION>
DECEMBER 31, 1994
-----------------------------------------
GROSS GROSS ESTIMATED
STATEMENT UNREALIZED UNREALIZED FAIR
VALUE GAINS LOSSES VALUE
--------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
United States Government............. $ 3,036 $ -- $ 66 $ 2,970
Public utility....................... 20,181 13 1,334 18,860
Industrial and other................. 286,912 1,931 14,017 274,826
Mortgage and other asset-backed secu-
rities.............................. 74,873 304 3,863 71,314
-------- ------- ------- --------
TOTAL............................... $385,002 $ 2,248 $19,280 $367,970
======== ======= ======= ========
</TABLE>
The following summarizes the statement value and estimated fair value of the
Company's investment in debt securities as of December 31, 1995, by contractual
maturity.
<TABLE>
<CAPTION>
STATEMENT ESTIMATED
VALUE FAIR VALUE
--------- ----------
<S> <C> <C>
Maturity:
Within one year........................................... $ 15,026 $ 15,255
After one year through five years......................... 232,976 240,296
After five years through ten years........................ 77,154 82,005
After ten years........................................... 10,404 11,685
Mortgage and other asset-backed securities................ 78,427 78,389
-------- --------
TOTAL.................................................... $413,987 $427,630
======== ========
</TABLE>
Expected maturities may differ from contractual maturities because certain
borrowers have the right to call or prepay obligations with or without call or
prepayment penalties.
During 1995, 1994 and 1993, proceeds from dispositions of investments in debt
securities amounted to $73,341, $76,309 and $158,962, respectively. The gross
gains realized on those dispositions were $2,307, $205 and $797 and gross
losses realized on those dispositions were $133, $799 and $3,226 during 1995,
1994 and 1993, respectively. Net realized gains, net of taxes, transferred to
the IMR for 1995 were $1,413. Net realized losses, net of taxes, transferred to
the IMR for 1994 and 1993 were $70 and $661, respectively. Amortization of the
IMR included in net investment income amounted to $33 in 1995.
B-24
<PAGE>
- --------------------------------------------------------------------------------
THE PENN INSURANCE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(IN THOUSANDS OF DOLLARS)
Amortization of the IMR deducted from net investment income amounted to $36 in
1994. Amortization of the IMR included in net investment income amounted to
$124 in 1993.
The Company's investment portfolio of debt securities is comprised
predominantly of investment grade securities. As of December 31, 1995 and 1994,
debt securities totaling $10,081 and $21,120, respectively, were classified by
the NAIC as less than investment grade. The Company held no debt securities
which were non-income producing for the preceding twelve months as of December
31, 1995 and 1994.
MORTGAGE LOANS
The following summarizes the statement value of mortgage loans by property type
and geographic concentration as of December 31, 1995 and 1994.
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
PROPERTY TYPE
Retail.......................................................... $28,391 $34,240
Office buildings................................................ 20,586 20,785
Dwellings....................................................... 22,110 14,784
Other........................................................... 19,308 15,514
------- -------
TOTAL.......................................................... $90,395 $85,323
======= =======
GEOGRAPHIC CONCENTRATION
Northeast....................................................... $17,068 $21,056
West............................................................ 28,534 28,332
Midwest......................................................... 33,680 27,715
South........................................................... 11,113 8,220
------- -------
TOTAL.......................................................... $90,395 $85,323
======= =======
</TABLE>
The Company originates commercial mortgage loans through a network of
commercial mortgage bankers throughout the country. All mortgage loans are
collateralized by the underlying real estate, and insurance is required on all
properties up to their replacement values. The maximum and minimum lending rate
for mortgage loans originated during 1995 was 9.50% and 7.90%, respectively.
For loans originated during 1995, the maximum percentage of any one loan to the
value of the collateral at the time of the loan, exclusive of insured,
guaranteed and purchase money mortgages, was 75%. The Company controls credit
risk through credit approvals, limits and monitoring procedures. The Company's
investments did not include any mortgage loans delinquent over 90 days as of
December 31, 1995. The Company's investments included $2,169 of mortgage loans
delinquent over 90 days as of December 31, 1994 which were the only non-income
producing mortgage loans preceding twelve months. As of December 31, 1995 and
1994, there were no restructured mortgage loans in the mortgage loan portfolio.
Restructured mortgage loans include commercial loans for which the basic terms,
such as interest rate, amortization, maturity date, or collateral have been
changed as a result of actual or anticipated delinquency. Restructures do not
include mortgages refinanced prior to or upon maturity at or above current
market terms.
REAL ESTATE
The Company's investments include $5,087 and $4,388 of foreclosed real estate
as of December 31, 1995 and 1994, respectively.
NOTE 4 - RESERVES AND FUNDS FOR THE PAYMENT OF FUTURE LIFE AND ANNUITY
BENEFITS:
The following summarizes the withdrawal characteristics of the Company's
reserves and deposit funds as of December 31, 1995.
<TABLE>
<CAPTION>
STATEMENT
VALUE
---------
<S> <C>
Total policyholders' reserves and funds, including separate account
liabilities......................................................... $736,936
Amounts not subject to discretionary withdrawal...................... (29,000)
--------
AMOUNTS SUBJECT TO DISCRETIONARY WITHDRAWAL......................... $707,936
========
</TABLE>
B-25
<PAGE>
- --------------------------------------------------------------------------------
THE PENN INSURANCE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(IN THOUSANDS OF DOLLARS)
Of the total reserves and deposit funds which are subject to discretionary
withdrawal, $375,358, which is net of applicable policy loans, may be withdrawn
without the policyholder incurring surrender charges or market value
adjustments to the funds.
NOTE 5 - FAIR VALUE OF FINANCIAL INSTRUMENTS:
The following table summarizes the Company's investment in financial
instruments as of December 31, 1995 and 1994.
<TABLE>
<CAPTION>
1995 1994
-------------------- --------------------
STATEMENT ESTIMATED STATEMENT ESTIMATED
VALUE FAIR VALUE VALUE FAIR VALUE
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
FINANCIAL ASSETS:
Debt securities
Bonds................................ $413,987 $427,630 $385,002 $367,970
Equity securities
Common stock--unaffiliated........... -- -- 6,932 6,932
Non-redeemable preferred stocks...... 3,577 3,973 3,963 3,833
Mortgage loans
Commercial........................... 90,234 90,529 85,157 82,846
Residential.......................... 161 163 166 165
Separate account assets............... 28,216 28,216 -- --
FINANCIAL LIABILITIES:
Investment-type contracts
Individual annuities................. 21,777 22,767 -- --
Separate account liabilities.......... 28,216 28,216 -- --
</TABLE>
The estimated fair values for the Company's investments in debt and equity
securities are based on quoted market prices, where available. In situations
where market prices are not readily available, primarily private placements,
fair values are estimated using a formula pricing method based on fair values
of securities with similar characteristics. The fair value of currently
performing mortgage loans is estimated by discounting the cash flows associated
with the investment, using an interest rate currently offered for similar loans
to borrowers with similar credit ratings. Loans with similar credit quality,
characteristics and time to maturity are aggregated for purposes of estimating
fair value. Assumptions regarding credit risk, cash flows and discount rates
are determined using the available market and borrower-specific information.
The estimated fair value for non-performing loans is based on the estimated
fair value of the underlying real estate, which is based on recent appraisals
or other estimation techniques. The statement values of policy loans and cash
and short-term investments approximate their fair values. The resulting
estimated fair values may not be indicative of the value negotiated in an
actual sale.
The Company is exposed to interest rate risk on its interest sensitive
products. The Company's investment strategy is designed to minimize interest
risk by managing the durations and anticipated cash flows of the Company's
assets and liabilities.
The fair value of the Company's liabilities for individual annuities is
estimated by discounting the cash flows associated with the contracts, using an
interest rate currently offered for similar contracts with maturities similar
to those remaining for the contracts being valued.
Currently, disclosure of estimated fair values is not required for all the
Company's assets and liabilities. Therefore, presentation of the estimated fair
value of a significant portion of assets without a corresponding valuation of
liabilities associated with insurance contracts can be misinterpreted. The
continuing management of the relationship between the maturities of the
Company's investments and the amounts due under insurance contracts reduces the
Company's exposure to changing interest rates.
NOTE 6 - FEDERAL INCOME TAXES:
The provision for federal income taxes differs from the normal relationship of
federal income tax to pre-tax income principally due to the mutual company DEA,
treatment of policy acquisition costs and differences in policy reserve
valuation methods.
B-26
<PAGE>
- --------------------------------------------------------------------------------
THE PENN INSURANCE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(IN THOUSANDS OF DOLLARS)
NOTE 7 - REINSURANCE:
The Company has assumed and ceded reinsurance on certain life and annuity
contracts under various agreements. The Company remains primarily liable as the
direct insurer on all risks reinsured, and performs due diligence to ensure
that amounts due from reinsurers are collectable. The table below includes the
reinsurance amounts recorded in the accompanying financial statements, which
are presented net of reinsurance activity.
<TABLE>
<CAPTION>
ASSUMED CEDED TO
GROSS FROM OTHER OTHER NET
AMOUNT COMPANIES COMPANIES AMOUNT
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
DECEMBER 31, 1995:
Life Insurance in-force............ $3,427,165 $3,226,701 $3,638,470 $3,015,396
Premium and annuity considerations. 81,965 19,826 22,887 78,904
Reserves and funds for the payment
of future life and annuity bene-
fits.............................. 466,707 244,689 2,676 708,720
DECEMBER 31, 1994:
Life Insurance in-force............ $3,595,862 $3,397,409 $3,826,542 $3,166,729
Premium and annuity considerations. 57,429 19,625 41,138 35,916
Reserves and funds for the payment
of future life and annuity bene-
fits.............................. 432,086 244,197 33,648 642,635
</TABLE>
The Company assumes and cedes certain risks under reinsurance agreements with
Penn Mutual. Net life insurance in-force assumed from Penn Mutual totaled
$342,694 and $368,473 as of December 31, 1995 and 1994, respectively. The
Company maintained reserves related to these policies of $242,691 and $226,751,
as of December 31, 1995 and 1994, respectively. Net premium and annuity
considerations ceded in 1995 in connection with these agreements were $8,799.
Net premium and annuity considerations ceded in 1994 in connection with these
agreements were $10,069. Net premium and annuity considerations ceded in 1993
were $5,288. For 1993, the Company had gross premiums of $55,244, assumed
premiums of $21,143 and ceded premiums of $37,682.
The Company's intercompany yearly renewable term (YRT) reinsurance treaty with
Penn Mutual, which covers certain universal life insurance products, was
modified in 1995 to provide an experience refund to be paid to the Company by
Penn Mutual in the amount of 75% of any reinsurance gain that is generated on
the products covered by the reinsurance agreement. As a result of the change to
this reinsurance treaty, $2,257 was received by the Company from Penn Mutual as
an experience rating refund in 1995.
During 1995, the Company recaptured its single premium immediate annuity
business which it had previously ceded entirely to Penn Mutual. The transaction
resulted in the transfer of approximately $31,000 of invested assets and
policyholder liabilities from Penn Mutual to the Company.
NOTE 8 - RELATED PARTIES:
Penn Mutual has undertaken to provide sufficient financial support so that the
Company will have adequate capital and surplus as required by applicable laws
to meet its obligations to its policyholders under the terms of the Company's
policies and contracts.
Under the terms of an expense allocation agreement, the Company reimbursed Penn
Mutual for services and facilities provided on behalf of the Company, including
direct and allocated expenses. For 1995, 1994 and 1993, the total expenses
incurred under this agreement were $6,738, $5,391 and $5,169, respectively.
State insurance laws limit the amount of dividends that the Company may pay to
Penn Mutual.
NOTE 9 - COMMITMENTS:
The Company, in the ordinary course of business, extends commitments relating
to its investment activities. As of December 31, 1995, the Company had
outstanding commitments totaling $5,000 relating to these investment
activities. The fair value of these commitments approximates the face amount.
B-27
<PAGE>
PART C
------
Other Information
-----------------
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements included in Part B:
Financial Statements of Penn Variable Annuity Account I:
-------------------------------------------------------
Report of Independent Accountants
Statement of Assets and Liabilities - December 31, 1995
Statement of Operations - For the year ended
December 31, 1995
Statements of Changes in Net Assets - For the years ended
December 31, 1995
Notes to Financial Statements
Financial Statements of The Penn Insurance and Annuity Company:
Report of Independent Accountants
Statements of Financial Condition at December 31, 1995 and 1994
Statements of Operations for the years ended December 31, 1995,
1994 and 1993
Statements of Changes in Stockholders' Equity for the years ended
December 31, 1995, 1994 and 1993
Statements of Cash Flows for the years ended December 31, 1995,
1994 and 1993
Notes to Financial Statements
<TABLE>
<CAPTION>
(b) Exhibits
<S> <C>
1. Resolution of Board of Directors of The Penn
Insurance and Annuity Company authorizing the
establishment of the Registrant./(a)/
2. Not applicable.
3. (a) Sales Support Agreement between The Penn Insurance
and Annuity Company and Hornor, Townsend & Kent,
Inc./(b)/
(b) Agent's Agreement between the Company , Hornor,
Townsend & Kent, Inc. and Agent, relating to
brokerdealer supervision./(b)/
</TABLE>
C-1
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
(c) Distribution Agreement between The Penn Insurance and
Annuity Company and Hornor, Townsend & Kent, Inc./(b)/
4. Individual Variable and Fixed Annuity Contract./(b)/
5. Application for Individual Variable and Fixed Annuity
Contract./(b)/
6. (a) Charter of The Penn Insurance and Annuity
Company./(a)/
(b) By-laws of The Penn Insurance and Annuity Company./(a)/
7. None.
8. (a) Fund Participation Agreement among The Penn
Insurance and Annuity Company, TCI Portfolios, Inc. and
Investors Research Corporation./(b)/
(b)(1) Sales Agreement between The Penn Insurance and
Annuity Company and Neuberger & Berman Advisers
Management Trust. Filed herewith.
(b)(2) Assignment and Modification Agreement between
Neuberger & Berman Management Trust, Neuberger &
Berman Advisers Management Trust and The Penn
Insurance and Annuity Company. Filed herewith.
(c) Participation Agreement between The Penn Insurance and
Annuity Company and Variable Insurance Products
Fund./(b)/
(d) Participation Agreement between The Penn Insurance and
Annuity Company and Variable Insurance Products Fund
II./(b)/
(e) Sales Agreement between Penn Series Funds, Inc. and The
Penn Insurance and Annuity Company./(b)/
9. Opinion of C. Ronald Rubley, Esq., Associate General
Counsel to The Penn Mutual Life Insurance
</TABLE>
C-2
<PAGE>
Company (parent of the Company), as to the legality of
the Contracts./(b)/
10. (a) Consent of Coopers & Lybrand, LLP. Filed herewith.
(b) Consent of Morgan, Lewis & Bockius LLP. Filed
herewith.
11. None.
12. None.
13. Schedule for Computation of Performance Quotations.
Filed herewith.
14. Powers of Attorney of Directors, except Rudolph C.
Sandee./(a)/
Power of Attorney of Rudolph C. Sander filed herewith.
_____________________
/(a)/ Filed as exhibit and incorporated herein by reference to Exhibit 1 to this
Registration Statement filed on August 22, 1994.
/(b)/ Filed as exhibit and incorporated herein by reference to Pre-Effective
Amendment No. 1 to this Registration Statement filed on February 28, 1995.
Item 25. Directors and Officers of the Depositor
---------------------------------------
The following table sets forth all of the directors and officers of the
- -----------------------------------------------------------------------
Depositor.
- ----------
<TABLE>
<CAPTION>
DIRECTORS
- ---------
<S> <C>
Robert E. Chappell Joseph J. Horvath
Nancy S. Brodie L. Stockton Illoway
Richard J. Liburdi Ernest K. Noll
Rudoph C. Sander Catherine B. Strauss
</TABLE>
C-3
<PAGE>
John E. Tait
<TABLE>
<CAPTION>
<S> <C>
OFFICERS
- --------
Robert E. Chappell L. Stockton Illoway
President and Chairman of the Board Vice President
Richard J. Liburdi Nancy S. Brodie
Vice President Chief Financial Officer
Richard F. Plush James A. Clary
Vice President Vice President
George J. Limbach Robert P. Davis
Vice President Vice President and Valuation Actuary
Patrick J. Fillette George F. Koch
Vice President Secretary
Franklin L. Best, Jr. Steven M. Herzberg
Asst. Secretary and Counsel Treasurer
Carol A. Kligerman James D. Benson
Asst. Treasurer Controller
Alicia Bolton Peter R. Schaefer
Assistant Controller Actuary
Thomas F. Gumina Joseph D. Burns
Medical Director Claims Officer
Michael S. Baron Christopher C. Rasmussen
Investment Officer Investment Officer
Barbara J. Henderson Ronald M. Pappas
Investment Officer Investment Officer
Keith D. Russell Peter M. Sherman
Investment Officer Investment Officer
Julia F. Terranova
Tax Officer
</TABLE>
C-4
<PAGE>
The business address of the directors and officers, except Messrs. Noll and
Sander, is Independence Square, Philadelphia, PA 19172. The address of Mr. Noll
is 421 Keats Road, Huntingdon Valley, PA 19006. The business address of Mr.
Sander is Janney Montgaman Scott Inc., 1801 Market Street, Philadelphia, PA.
Item 26. Persons Controlled By or Under Common Control with the Depositor or
-------------------------------------------------------------------
Registrant
----------
The Penn Insurance and Annuity Company is a wholly owned subsidiary of
The Penn Mutual Life Insurance Company ("Penn Mutual").
The Penn Insurance and Annuity Company is the record and beneficial
owner of 100% of the outstanding common stock of Penn Assurance and
Reinsurance Company, Ltd., a Bermuda corporation.
Penn Mutual is the owner of 100% of the outstanding common stock of
Penn Series Funds, Inc. (registered investment company), a Maryland
corporation. For further information on the ownership of the
outstanding common stock of Penn Series, see "General Information" in
the Prospectus and "Ownership of Shares" in the Statement of
Additional Information, both of which are included in Post-Effective
Amendment No. 43 to the Form N-lA Registration Statement of Penn
Series filed in April 1994, incorporated herein by reference.
Penn Mutual is the record and beneficial owner of all of the
outstanding common stock of Independence Capital Management, Inc., a
Pennsylvania corporation and registered investment adviser.
Penn Mutual is the record and beneficial owner of all of the
outstanding common stock of Penn Janney Fund, Inc. Penn Janney Fund,
Inc. is a Pennsylvania corporation and invests in new businesses.
Penn Mutual is the record and beneficial owner of 100% of the
outstanding common stock of Independence Square Properties, Inc., a
holding corporation incorporated in Delaware.
Independence Square Properties, Inc. is the record and beneficial
owner of 100% of the outstanding common stock of the following
corporations: Penn Glenside Corp., Penn Latham Corp., Penn Loop South,
Inc., Penn Mifflin Corp., Penn Oxford Corp., Penn Wayne Corp., St.
James Realty Corp., Investors' Mortgage Corp., and Christie Street
Properties, Inc. The subsidiary corporations are Pennsylvania
corporations and are (or were) engaged in the real estate investment,
mortgage or investment business.
C-5
<PAGE>
Independence Square Properties, Inc. also is the record and beneficial
owner of 100% of the outstanding common stock of the following
corporations: Hornor, Townsend and Kent, Inc. (registered broker-
dealer and investment adviser), a Pennsylvania corporation; Indepro
Corp. (real estate limited partnerships), a Delaware corporation; Penn
Tallahassee Corp. and Penn Apalachee, Inc. (real estate investment),
both Florida corporations.
Independence Square Properties, Inc. also is the record and beneficial
owner of 100% of the outstanding common stock of Janney Montgomery
Scott Inc. (registered broker-dealer and investment adviser), a
Delaware corporation.
Indepro Corp. is the record and beneficial owner of 100% of the
following corporations: Indepro Property Fund I Corp.; Indepro
Property Fund II Corp.; Commons I Corp.; and West Hazleton Inc. The
corporations are Delaware corporations and are (or were) engaged in
investment in real estate and/or in selling real estate limited
partnership interests to investors.
Janney Montgomery Scott Inc. is the record and beneficial owner of
100% of the outstanding common stock of the following corporations:
Addison Capital Management, Inc. (investment adviser), a Pennsylvania
corporation; JMS Resources, Inc. (oil and gas development), a
Pennsylvania corporation; and JMS Investor Services, Inc. (insurance
sales), a Delaware corporation.
Item 27. Number of Contract Owners
-------------------------
As of March 31, 1996, there were:
455 owners of qualified individual variable annuity contracts
407 owners of nonqualified individual variable annuity contracts
Item 28. Indemnification
---------------
Article 4.1 of the By-laws of The Penn Insurance and Annuity Company
provides as follows: "The Company shall indemnify any person who was
or is a party or threatened to be made a party to any threatened,
pending or completed action, suit or proceeding either civil,
criminal, administrative or investigative by reason of the fact that
he is or was a Director, Officer or employee of the Company or is or
was serving at the request of the Company as a director, officer or
employee of another enterprise against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such
C-6
<PAGE>
action, suit or proceeding to the extent that such person is not
otherwise indemnified and the power to do so has been or may be
granted by statute. For this purpose the Board of Directors may, and
on request of any such person shall be required to, determine in each
case whether or not the applicable standards in any such statute have
been met, or such determination shall be made by independent legal
counsel, if the Board so directs or if the Board is not empowered by
statute to make such determination." Article 4.2 further provides that
the foregoing indemnification provision is not exclusive, and
Article 4.3 authorizes the Board to purchase at the Company's expense
insurance and to give other indemnification to the extent permitted by
law.
Selling Agreements entered into by The Penn Insurance and Annuity
Company ("PIA") and its affiliate, Hornor, Townsend & Kent, Inc.
("HTK") with securities brokers and insurance agents generally provide
for indemnification of PIA and HTK and their directors and officers in
the event of liability resulting from unauthorized acts of the brokers
and insurance agents.
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
----------------------
Hornor, Townsend and Kent, Inc. serves as principal underwriters of
the securities of the Securities Registrant.
Hornor, Townsend and Kent, Inc. serves as principal underwriter for
Addison Capital Shares, Inc., a registered investment company, and for
variable annuity and variable life insurance contracts issued by Penn
C-7
<PAGE>
Mutual and funded through Variable Annuity Account III and Variable
Life Account I.
Hornor, Townsend and Kent, Inc. - Directors and Officers
--------------------------------------------------------
John J. Gray, Director and Chairman of the Board
Harold E. Maude, Director
Joseph J. Horvath, Director
John E. Tait, Director
Norman T. Wilde, Jr., Director
Ronald C. Zimmerman, President and Chief Executive Officer
Michael Sweeney, Director of Compliance
C. Ray Smith, Executive Vice President, Sales
George F. Koch, Assistant Secretary
Henry Buck, Assistant Vice President and Assistant Treasurer
Barbara S. Wood, Senior Vice President, Finance and Treasurer
Bruce Ohrenich, Vice President, Sales
The principal business address of Messrs. Horvath, Maude, Tait, Koch
and Ohrenich is The Penn Mutual Life Insurance Company, Independence
Square, Philadelphia, Pennsylvania.
The principal business address of Messrs. Zimmerman, Smith, Sweeney,
Buck and Ms. Wood is Hornor, Townsend & Kent, Inc., 600 Dresher Road,
Horsham, Pennsylvania.
The principal business address of Messrs. Gray and Wilde is Janney,
Montgomery, Scott Inc., 1801 Market Street, Philadelphia,
Pennsylvania.
Commissions and Other Compensation Received By Each Principal
--------------------------------------------------------------
Underwriter During Last Fiscal Year
-----------------------------------
<TABLE>
<CAPTION>
Net Underwriting Compensation
Name of Principal Discounts and on Broker Other
Underwriter Commissions Redemption Commissions Commissions
- ----------------- ---------------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
Hornor, Townsend $25,447 $0 $0 $0
and Kent, Inc.
</TABLE>
Item 30. Location of Accounts and Records
--------------------------------
The name and address of the person who maintains physical possession
of each account, book or other documents required by Section 31(a) of
the Investment Company Act of 1940 is as follows:
C-8
<PAGE>
The Penn Insurance and Annuity Company
600 Dresher Road
Horsham, Pennsylvania 19044
Item 31. Management Services
-------------------
See "Administrative and Recordkeeping Services" in Part B of this
Registration Statement.
Item 32. Undertakings
------------
The Penn Insurance and Annuity Company hereby undertakes:
--------------------------------------------------------
(a) 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 16 months old for so long as payments under the variable
annuity contracts may be accepted;
(b) to include either (1) as part of any application to purchase a
contract or account offered by the prospectus, a space that an
applicant can check to request a statement of additional
information, or (2) a post card or similar written communication
affixed to or included in the prospectus that the applicant can
remove to send for a statement of additional information;
(c) to deliver any statement of additional information and any
financial statements required to be made available under Form N-4
promptly upon written or oral request.
Restrictions on withdrawals under Section 403(b) contracts are imposed in
reliance upon, and in compliance with, a no-action letter issued by the Chief of
the Office of Insurance Products and Legal Compliance of the Securities and
Exchange Commission to the American Council of Life Insurance on November 28,
1988.
C-9
<PAGE>
SIGNATURES
----------
As required by the Securities Act of 1933 and the Investment Company
Act of 1940, the Registrant certifies that it meets the requirements of
Securities Act Rule 485(b) for effectiveness of this Post-Effective Amendment
No. 1 of this Registration Statement and has caused this Post-Effective
Amendment No. 1 to be signed on its behalf, in the Township of Horsham and
Commonwealth of Pennsylvania on this 22nd day of April, 1996.
PIA VARIABLE ANNUITY ACCOUNT I
(Registrant)
By:/s/ Robert E. Chappell
----------------------
Robert E. Chappell
Chairman of the Board,
and President
As required by the Securities Act of 1933, this Registration Statement has been
signed by the following persons, in the capacities indicated, on the 22nd day of
April, 1996.
/s/ Robert E. Chappell
- -------------------------- Chairman of the Board and President
Robert E. Chappell (Principal Executive Officer)
/s/ Nancy S. Brodie
- -------------------------- Chief Financial Officer and Director
Nancy S. Brodie (Principal Financial Officer)
/s/ James D. Benson
- -------------------------- Controller
James D. Benson (Principal Accounting Officer)
*Joseph J. Horvath, Director
*L. Stockton Illoway, Director
*Richard J. Liburdi, Director
*Ernest K. Noll, Director
*Rudolph C. Sander, Director
*Catherine B. Strauss, Director
*John E. Tait, Director
*By: /s/ Robert E. Chappell
-----------------------
Robert E. Chappell
attorney-in-fact
C-10
<PAGE>
EXHIBIT INDEX
-------------
EX-99.B 8(b)(1) Sales Agreement between The Penn Insurance and Annuity
Company and Neuberger & Berman Advisers Management Trust
EX-99.B 8(b)(2)Assignment and Modification Agreement between
Neuberger & Berman Management Trust, Neuberger & Berman Advisers
Management Trust and The Penn Insurance and Annuity Company
EX-99.B 10(a) Consent of Coopers & Lybrand, Independent Certified
Public Accountants
EX-99.B 10(b) Consent of Morgan, Lewis & Bockius LLP
EX-99.B 13 Schedule for Computation of Performance Quotations
EX-99.B 14 Power of Attorney of Rudolph C. Sander
C-11
<PAGE>
Exhibit 8(b)(1)
Sales Agreement between The Penn Insurance and Annuity Company
and Neuberger & Berman Advisors Management Trust
SALES AGREEMENT
THIS AGREEMENT effective as of March 10, 1995, is made by and between
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST ("TRUST"), a Massachusetts business
trust, and THE PENN INSURANCE AND ANNUITY COMPANY ("LIFE COMPANY"), a life
insurance company organized under the laws of the State of Delaware.
WHEREAS, TRUST is registered with the Securities and Exchange Commission
(the "SEC") under the Investment Company Act of 1940 ("'40 Act") as an open-end
diversified management investment company; and
WHEREAS, TRUST is organized as a series fund with a number of Portfolios,
two of which, namely the Limited Maturity Bond Portfolio and Balanced Portfolio
(a "Portfolio," collectively, the "Portfolios") are to be made available under
this Agreement; and
WHEREAS, TRUST was organized to act as a funding vehicle for certain
variable contracts offered by life insurance companies through separate accounts
of such life insurance companies; and
WHEREAS, LIFE COMPANY has established or will establish one or more
separate accounts (the "Separate Accounts") to offer variable contracts
participating in such Separate Accounts (the "Contracts") and is desirous of
having TRUST as an underlying funding vehicle for the Contracts.
NOW, THEREFORE, it is hereby agreed by and between TRUST and LIFE COMPANY
as follows:
1. TRUST represents and warrants that TRUST shares sold pursuant to this
Agreement shall be registered under the Securities Act of 1933 (the "1933 Act")
and duly authorized for issuance, and shall be issued, in compliance in all
material respects with applicable law, and that TRUST is and shall remain
registered under the '40 Act for so long as required thereunder. TRUST further
represents and warrants that TRUST currently qualifies and will make every
effort to continue to qualify as a Regulated Investment Company under Subchapter
M of the Internal Revenue Code of 1986, as amended (the "Code"), and to maintain
such qualification (under Subchapter M or any successor or similar provision),
and that TRUST will notify LIFE COMPANY immediately upon having a reasonable
basis for believing that it has ceased to so qualify or that it might not so
qualify in the future. TRUST further represents and warrants that TRUST will
comply with Section 817(h) of the Code, and all regulations issued thereunder,
and that TRUST will notify LIFE COMPANY immediately upon having a reasonable
basis for believing that TRUST has ceased to so qualify or that TRUST might not
so qualify in the future.
<PAGE>
2. LIFE COMPANY has established or will establish one or more Separate
Accounts and will do so in such a manner as to enable it to offer each Portfolio
of TRUST as a funding vehicle for the Contracts.
3. TRUST will make available to the Separate Accounts shares of the
Portfolios for investment under the Contracts. TRUST will make the shares
available to the Separate Accounts at net asset value next computed after
receipt of each order by TRUST in accordance with Section 4 of this Agreement.
Each Portfolio issues a separate class of shares which will have its own net
asset value.
TRUST will credit LIFE COMPANY with the appropriate number of shares
in each Portfolio. Such shares shall share pro rata in the investment
performance of such Portfolio and shall be subject to the same valuation
procedures and the same periodic charges as are other shares of such
Portfolio.
Orders shall be placed for such shares with TRUST's custodian pursuant
to procedures which are then in effect and which may be modified from time to
time.
4. (a) TRUST agrees to sell to LIFE COMPANY those shares of the
selected Portfolios of TRUST which LIFE COMPANY orders, executing
such orders on a daily basis at the net asset value next computed
after receipt by TRUST or its designee of the order for the
shares of TRUST. For purposes of this Section 4(a)m LIFE COMPANY
shall be the designee of TRUST for receipt of such orders from
LIFE COMPANY and receipt by such designee shall constitute
receipt by TRUST; provided that TRUST receives notice of such
order by 9:30 a.m. New York time on the next following Business
Day. However this deadline shall be extended if Trust fails to
make such net asset value per share available by 6:15 p.m.
Eastern Time as set forth in Section 4(c). Any such extension
shall be in direct proportion to the additional time required by
Trust to make its daily net asset value per share available.
"Business Day" shall mean any day on which the New York Stock
Exchange is open for trading and on which TRUST calculates its
net asset value pursuant to the rules of the Securities and
Exchange Commission.
(b) TRUST agrees to redeem for cash, on LIFE COMPANY's request, any
full or fractional shares of TRUST held by LIFE COMPANY,
executing such requests on a daily basis at the net asset value
next computed after receipt by TRUST or its designee of the
request for redemption. For purposes of this Section 4(b), LIFE
COMPANY shall be the designee of TRUST for receipt of requests
for redemption from LIFE COMPANY and receipt by such designee
shall constitute receipt by TRUST; provided that TRUST receives
notice of such request for
2
<PAGE>
redemption by 9:30 a.m. New York time on the next following
Business Day. However this deadline shall be extended if TRUST
fails to make such net asset value per share available by 6:15
p.m., Eastern Time as set forth in Section 4(c). Any such
extension shall be in direct proportion to the additional time
required by TRUST to make its daily net asset value per share
available.
(c) TRUST shall make the net asset value per share for the selected
Portfolio(s) available to LIFE COMPANY on a daily basis as soon
as reasonably practical after the net asset value per share is
calculated but shall use its best efforts to make such net asset
value available by 6:15 p.m. New York time.
5. Payment for net redemptions of TRUST shares will be wired by TRUST
from the TRUST custodial account to an account designated by LIFE COMPANY in
writing pursuant to Section 15 of this Agreement, the same business day LIFE
COMPANY transmits the redemption order to TRUST.
6. LIFE COMPANY shall not be responsible for expense incurred under this
Agreement by TRUST or TRUST's investment adviser, including the cost of
registration of TRUST's shares with the SEC and in states where required.
7. TRUST will provide LIFE COMPANY with a camera ready copy of the
current TRUST prospectus and any supplements thereto for printing by LIFE
COMPANY. TRUST will provide LIFE COMPANY a copy of the current TRUST statement
of additional information and any supplements thereto, suitable for duplication.
TRUST will provide LIFE COMPANY copies of its proxy material suitable for
printing. TRUST will provide LIFE COMPANY with annual and semi-annual reports
and any supplements thereto, in camera ready form.
8. Any materials utilized by LIFE COMPANY which describe TRUST, its
shares, or the TRUST's investment adviser shall be submitted to TRUST and
TRUST's distributor for approval prior to use, not less than five business days
before such approval is needed by LIFE COMPANY. Advertising and literature, if
and to the extent that it describes LIFE COMPANY, the Separate Accounts or the
Contracts, prepared by TRUST's distributor for use in marketing TRUST or the
Portfolios will be submitted to LIFE COMPANY for approval before use, not less
than five (5) business days before such approval is needed by TRUST's
distributor.
9. TRUST will provide LIFE COMPANY with at least one complete copy of all
registration statements, prospectuses, statements of additional information,
annual and semi-annual reports, proxy statements, no-action letters, exemptive
applications and all amendments or supplements to any of the above that relate
to the Portfolios promptly after the filing of each such document with the SEC
or other regulatory authority. LIFE
3
<PAGE>
COMPANY will provide TRUST with at least one complete copy of all registration
statements, prospectuses, statements of additional information, annual and semi-
annual reports, proxy statements, no-actions letters, exemptive applications and
all amendments or supplements to any of the above that relate to a Separate
Account promptly after the filing of each such document with the SEC or other
regulatory authority.
10. LIFE COMPANY and its agents will not make any written representations
concerning the TRUST or TRUST shares except those contained in the then current
prospectus and statement of additional information of the TRUST and in current
printed sales literature of the TRUST.
11. LIFE COMPANY agrees to inform the Board of Trustees of TRUST of the
existence of or any potential for any material irreconcilable conflict of
interest between the interests of the Contract owners of the Separate Accounts
and/or any other separate account of any other insurance company investing in
the Trust.
A material irreconcilable conflict may arise for a variety of reasons,
including:
(a) an action by any state insurance regulatory authority;
(b) a change in applicable federal or state insurance, tax, or
securities laws or regulations, or a public ruling, private
letter ruling, or any similar action by insurance, tax or
securities regulatory authorities;
(c) an administrative or judicial decision in any relevant
proceeding;
(d) the manner in which the investments of any Portfolio are being
managed;
(e) a difference in voting instructions given by variable annuity
contract owners and variable life insurance contract owners or by
contract owners of different life insurance companies utilizing
TRUST; or
(f) a decision by LIFE COMPANY to disregard the voting instructions
of contract owners.
LIFE COMPANY will be responsible for assisting the Board of Trustees
of TRUST in carrying out its responsibilities by providing the Board with all
information reasonably necessary for the Board to consider any issue raised
including information as to a decision by LIFE COMPANY to disregard voting
instructions of contract owners.
It is agreed that if it is determined by a majority of the members of
the Board of Trustees of TRUST or a majority of its disinterested Trustees that
a material irreconcilable conflict exists affecting LIFE COMPANY, LIFE COMPANY
shall, at its own
4
<PAGE>
expense, take whatever steps are necessary to remedy or eliminate the
irreconcilable material conflict, which steps may include, but are not limited
to,
(a) withdrawing the assets allocable to some or all of the Separate
Accounts from TRUST or any Portfolio and reinvesting such assets
in a different investment medium, including another Portfolio of
the TRUST or submitting the question of whether such segregation
should be implemented to a vote of all affected contract owners
and, as appropriate, segregating the assets of any particular
(group annuity contract owners, life insurance contract owners or
qualified contract owners) that votes n favor of such
segregation, or offering to the affected contract owners the
option of making such a change;
(b) establishing a new registered management investment company or
managed separate account.
If a material irreconcilable conflict arises because of LIFE COMPANY's
decision to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the LIFE
COMPANY may be required, at TRUST's election, to withdraw a Separate Account's
investment in TRUST. No charge or penalty will be imposed against a Separate
Account or LIFE COMPANY as a result of such a withdrawal. LIFE COMPANY agrees
that any remedial action taken by it in resolving any material conflicts of
interest will be carried out with a view only to the interests of contract
owners.
For purposes hereof, a majority of the disinterested members of the
Board of Trustees of TRUST shall determine whether or not any proposed action
adequately remedies any material irreconcilable conflict. In no event will
TRUST be required to establish a new funding medium for any variable contracts.
LIFE COMPANY shall not be required by the terms hereof to establish a new
funding medium for any Contracts if an offer to do so has been declined by vote
of a majority of affected Contract owners.
TRUST will undertake to promptly make known to LIFE COMPANY the Board
of Trustees' determination of the existence of a material irreconcilable
conflict and its implications.
12. LIFE COMPANY shall provide pass-through voting privileges to all
Contract owners so long as the SEC continues to interpret the '40 Act to require
such pass-through voting privileges for variable contract owners, provided,
however, that LIFE COMPANY may disregard voting instructions of Contract owners
to the extent and in the circumstances permitted by Rule 6e-3(T) under the '40
Act or as the SEC may otherwise permit. LIFE COMPANY shall be responsible for
assuring that each of its Separate Accounts calculates voting privileges in a
manner consistent with other life companies utilizing TRUST. It's a condition
of this Agreement that LIFE COMPANY will vote shares, for which it has not
5
<PAGE>
received voting instructions as well as shares attributable to it, in the same
proportion as it votes shares for which it has received instructions. TRUST
hereby confirms that the manner in which LIFE COMPANY currently calculates
voting privileges is consistent with the manner in which other life companies
utilizing TRUST so calculate voting privileges. TRUST will notify LIFE COMPANY
if TRUST becomes aware that another life company utilizing TRUST has changed the
manner in which it so calculates voting privileges.
13. This Agreement shall terminate as to the sale and issuance of new
Contracts:
(a) at the option of either LIFE COMPANY or TRUST upon six months'
advance written notice to the other; provided, however, that LIFE
COMPANY may terminate this Agreement upon 30 days prior written
notice to TRUST as to the sale and issuance of new Contracts if
LIFE COMPANY reasonably determines in good faith that it is no
longer in the interests of Contract owners or consistent with the
purposes of the Contracts to continue to offer the Portfolios as
investment options;
(b) at the option of LIFE COMPANY if TRUST shares are not available
for any reason to meet the requirements of the Contracts as
determined by LIFE COMPANY, provided that reasonable advance
notice of election to terminate shall be furnished by LIFE
COMPANY;
(c) at the option of either LIFE COMPANY or TRUST, upon institution
of formal proceedings against the broker-dealer or broker-dealers
marketing the Contracts, the Separate Accounts, LIFE COMPANY, or
TRUST by the National Association of Securities Dealers, Inc.
("NASD"), the SEC or any other regulatory body;
(d) upon termination of the Investment Advisory Agreement between
TRUST and Neuberger & Berman Management Incorporated, notice of
the occurrence of which shall be promptly furnished to LIFE
COMPANY, provided, however, that this subsection (d) shall not be
-------- -------
deemed to apply if contemporaneously with such termination a new
contract of substantially similar terms is entered into between
TRUST and Neuberger & Berman Management Incorporated;
(e) upon the requisite vote of Contract owners having an interest in
TRUST to substitute for TRUST's shares the shares of another
investment company in accordance with the terms of Contracts for
which TRUST's shares had been selected to serve as the underlying
investment medium; provided; however, that LIFE COMPANY shall
-------- -------
give 60 days' written notice to TRUST of any proposed vote to
replace TRUST shares.
6
<PAGE>
(f) upon assignment of this Agreement unless made with the written
consent of all other parties hereto;
(g) if TRUST's shares are not registered, issued or sold in
conformance with Federal law or such law precludes the use the
TRUST shares as the underlying investment medium of Contracts
issued or to be issued by LIFE COMPANY, provided that prompt
notice shall be given by either party should such situation
occur; or
(h) at the option of LIFE COMPANY if TRUST ceased to qualify as a
Regulated Investment Company under Subchapter M of the Code, or
under any successor or similar provision, or fails to meet the
diversification requirements specified in Section 817(h) of the
code and any regulations thereunder, or if LIFE COMPANY
reasonably believes that TRUST may cease or fail to so
qualify.
Termination as the result of any cause listed in this Section shall
not affect TRUST's obligation to furnish its shares to Contracts then in force
for which its shares serve or may serve as the underlying medium unless such
further sale of TRUST shares is proscribed by law or the SEC or other regulatory
body.
14. This Agreement shall be subject to the provisions of the '40 Act and
the rules and regulations thereunder, including any exemptive relief therefrom
and the orders of the SEC setting forth such relief.
15. All notices and other communications hereunder shall be given or made
in writing and shall be delivered personally, or sent by telex, telecopier or
registered certified mail, postage prepaid, return receipt requested, to the
party or parties to whom they are directed at the following addresses, or at
such other addresses as may be designated by notice from such party to all other
parties.
To LIFE COMPANY:
The Penn Insurance and Annuity Company
Independence Square
Philadelphia, PA 19172
Attention: L. Stockton Illoway, Vice President
To TRUST:
Neuberger & Berman Advisers Management Trust
605 Third Avenue, Second Floor
New York, NY 10158-0006
Attention: Stanley Egener, Chairman,
7
<PAGE>
Trustee and Principal Executive Officer
Any notice, demand or other communication given in a manner prescribed in this
Section shall be deemed to have been delivered on receipt.
16. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective permitted successors and assigns.
17. This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one agreement, and any party hereto may
execute this Agreement by signing any such counterpart.
18. In case any one or more of the provisions contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
19. This Agreement constitutes the entire agreement and understanding
between the parties hereto and supersedes all prior agreements and
understandings relating to the subject matter hereof.
20. It is understood by the parties that this Agreement is not to be
deemed an exclusive arrangement.
21. This Agreement is made by TRUST pursuant to authority granted by the
Trustees, and the obligations created hereby are not binding on any of the
Trustees or shareholders of TRUST individually, but bind only the property of
TRUST.
Executed this 2nd day of May, 1995.
NEUBERGER & BERMAN ADVISERS
MANAGEMENT ADVISERS
ATTEST: By:
------------------------------- -----------------------------------
Stanley Egener, Chairman
THE PENN INSURANCE and ANNUITY
COMPANY
ATTEST: By:
------------------------------- -----------------------------------
L. Stockton Illoway, Vice President
8
<PAGE>
Exhibit 8(b)(2)
Assignment and Modification Agreement between
Neuberger & Berman Management Trust, Neuberger & Berman Advisers Management
Trust and The Penn Insurance and Annuity Company
ASSIGNMENT AND MODIFICATION AGREEMENT
This Agreement is made by and between Neuberger & Berman Advisers
Management Trust ("Trust"), a Massachusetts business trust, Neuberger & Berman
Management Incorporated ("N&B Management"), a New York corporation, Neuberger &
Berman Advisers Management Trust ("Successor Trust"), a Delaware business trust,
Advisers Managers Trust ("Managers Trust") and The Penn Insurance and Annuity
Company ("Life Company"), a life insurance company organized under the laws of
the State of Connecticut.
WHEREAS, the Life Company has previously entered into a Sales Agreement
dated March 10, 1995 (the "Sales Agreement") with the Trust regarding the
purchase of shares of the Trust by Life Company; and
WHEREAS, as part of the reorganization into a "master-feeder" fund
structure (the "Reorganization"), the Trust will be converted into the Successor
Trust, a Delaware business trust; and
WHEREAS, as part of the Reorganization, each Portfolio of the Trust will
transfer all of its assets to the corresponding Portfolio of the Successor Trust
("Successor Portfolio") and each Successor Portfolio will invest all of its net
investable assets in a corresponding series of Managers Trust; and
WHEREAS, as part of the Reorganization, an Order under Section 6(c) of the
Investment Company Act of 1940 ("40 Act") is expected to be issued by the
Securities and Exchange Commission ("SEC") granting exemptions from Sections
9(a), 13(a), 15(a) and 15(b) of the '40 Act and Rules 6e-2(b)(1 5) and 6e-
3(T)(b)(1 5) thereunder; and
WHEREAS, the Order is expected to require that certain conditions (the
"Conditions") as set forth in the Notice (Investment Company Act Release No.
21003 (April 12, 1995)) be made a part of the Sales Agreement; and
WHEREAS, the parties hereto desire to assign the Sales Agreement from the
Trust to the Successor Trust, to modify the Sales Agreement to include the
Conditions and Indemnification and to rename the Sales Agreement; and
WHEREAS N&B Management and Managers Trust will become parties to the
Sales Agreement as modified hereby, due to and for purposes of their obligations
under the Conditions and N&B Management's obligations under the Indemnification
provision.
NOW THEREFORE, in consideration of their mutual promises, Trust, N&B
Management, Successor Trust, Managers Trust and Life Company agree as follows:
1. The Sales Agreement is hereby assigned by the Trust to the Successor
Trust.
<PAGE>
2. Pursuant to such assignment, the Successor Trust hereby accepts all
rights and benefits of the Trust under the Sales Agreement and agrees to perform
all duties and obligations of the Trust under the Sales Agreement. Upon the
effectiveness of this Assignment and Modification Agreement, the Trust will be
released from all obligations and duties under the Sales Agreement.
3. The Sales Agreement is hereby modified to include the Conditions as
follows:
Sections 11 and 12 of the Sales Agreement are replaced by the following:
11. a) The Board of Trustees of each of the Successor Trust and Managers
Trust (the "Boards") will monitor the Successor Trust and Managers Trust,
respectively, (collectively the "Funds") for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
insurance company separate accounts investing in the Funds. A material
irreconcilable conflict may arise for a variety of reasons, including; (a)
state insurance regulatory authority action; (b) a change in applicable
federal or state insurance, tax, or securities laws or regulations, or a
public ruling, private letter ruling, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of the Funds are being managed; (e) a difference in voting
instructions given by variable annuity and variable life insurance contract
owners or by contract owners of different participating insurance
companies; or (f) a decision by a participating insurance company to
disregard voting instructions of contract owners,
b) Life Company will report any potential or existing conflicts to the
Boards. Participants will be responsible for assisting the appropriate
Board in carrying out its responsibilities under the Conditions set forth
in the notice issued by the SEC for the Funds on April 12, 1995 (the
"Notice") by providing the Board with all information reasonably necessary
for it to consider any issues raised. This responsibility includes, but is
not limited to, an obligation by each Life Company to inform the Board
whenever variable contract owner voting instructions are disregarded by
Life Company. These responsibilities will be carried out with a view only
to the interests of the contract owners.
c) If a majority of the Board of a Fund or a majority of its
disinterested trustees or directors, determines that a material
irreconcilable conflict exists, affecting the Life Company, Life Company at
its expense and to the extent reasonably practicable (as determined by a
majority of disinterested trustees or directors), will take any steps
necessary to remedy or eliminate the irreconcilable material conflict,
including: (a) withdrawing
2
<PAGE>
the assets allocable to some or all of the separate accounts from the Funds
or any series thereof and reinvesting those assets in a different
investment medium, which may include another series of the Successor Trust
or Managers Trust, or another investment company or submitting the question
as to whether such segregation should be implemented to a vote of all
affected variable contract owners and, as appropriate, segregating the
assets of any appropriate group (i.e., variable annuity or variable life
contract owners of one or more Participants) that votes in favor of such
segregation, or offering to the affected variable contract owners the
option of making such a change; and (b) establishing a new registered
management investment company or managed separate account. If a material
irreconcilable conflict arises because of Life Company's decision to
disregard contract owner voting instructions, and that decision represents
a minority position or would preclude a majority vote, Life Company may be
required, at the election of the relevant Fund, to withdraw its separate
account's investment in such Fund, and no charge or penalty will be imposed
as a result of such withdrawal. The responsibility to take such remedial
action shall be carried out with a view only to the interests of the
contract owners.
For the purposes of Condition (c), a majority of the disinterested members
of the applicable Board shall determine whether or not any proposed action
adequately remedies any irreconcilable material conflict, but in no event will
the relevant Fund or N&B Management (or any other investment adviser of the
Funds) be required to establish a new funding medium for any variable contract.
Further, Life Company shall not be required by this condition (c) to establish a
new funding medium for any variable contract if any offer to do so has been
declined by a vote of a majority of contract owners materially affected by the
irreconcilable material conflict.
d) Any Board's determination of the existence of an irreconcilable
material conflict and its implications shall be made known promptly and in
writing to all Participants.
12. a) Life Company will provide pass-through voting privileges to all
contract owners so long as the SEC continues to interpret the '40 Act as
requiring pass-through voting privileges for variable contract owners.
This condition will apply to UIT-separate accounts investing in the
Successor Trust and to managed separate accounts investing in Managers
Trust to the extent a vote is required with respect to matters relating to
Managers Trust. Accordingly, Life Company, where applicable, will vote
shares of a Fund held in its separate accounts in a manner consistent with
voting instructions timely received from its variable contract owners.
Life Company will be responsible for assuring that each of its separate
accounts that participates in the Funds calculates voting privileges in a
manner consistent with other Participants as defined in the Conditions set
forth in the Notice. Each
3
<PAGE>
Participant will vote shares for which it has not received timely voting
instructions, as well as shares it owns, in the same proportion as its
votes those shares for which it has received voting instructions. Funds
hereby confirm that the manner in which Life Company currently calculates
voting privileges is consistent with the manner in which other Participants
so calculate voting privileges. Funds will notify Life Company if Funds
become aware that another Participant has changed the manner in which it so
calculates voting privileges.
If and to the extent Rule 6e-2 and Rule 6e-3(T) are amended, or Rule 6e-3
is adopted, to provide exemptive relief from any provision of the '40 Act or the
rules thereunder with respect to mixed and shared funding on terms and
conditions materially different from any exemptions granted in the Order, then
the Successor Trust, Managers Trust and/or the Participants, as appropriate,
shall take such steps as may be necessary to comply with Rule 6e-2 and Rule 6e-
3(T), as amended, and Rule 6e-3, as adopted, to the extent such Rules are
applicable.
c) No less than annually, the Participants shall submit to the Boards
such reports, materials or data as such Boards may reasonably request so
that the Boards may fully carry out the obligations imposed upon them by
these Conditions. Such reports, materials, and data shall be submitted
more frequently if deemed appropriate by the applicable Boards.
4. The Sales Agreement is hereby modified to include Indemnification as
follows:
22. (a) Except as limited by and in accordance with the provisions of
Sections 22 (b) and 22 (c) hereof, N&B MANAGEMENT agrees to indemnify and
hold harmless LIFE COMPANY and each of its directors and officers and each
person, if any, who controls LIFE COMPANY within the meaning of Section 15
of the '33 Act (collectively, the "Indemnified Parties") against any and
all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of N&B MANAGEMENT, which consent shall
not be unreasonably withheld) or litigation expenses (including attorneys
fees, legal and other expenses) to which the Indemnified Parties may become
subject under any statute, or regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereon or settlements are related to the sale or
acquisition of, or investment in, TRUST's shares or the variable contracts
or the exercise of any ownership rights with respect to such shares or
contracts, and arise as a result of a failure by Trust to comply with the
diversification requirements of Section 817(h) of the Code.
(b) N&B MANAGEMENT shall not be liable under this indemnification
provision with respect to any losses, claims, damages,
4
<PAGE>
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad
faith, or gross negligence in the performance of such Indemnified Party's
duties or by reason of such Indemnified Party's reckless disregard of
obligations and duties under this Agreement or to LIFE COMPANY.
(c) N&B MANAGEMENT shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified party
unless such Indemnified Party shall have notified N&B MANAGEMENT in writing
within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon
such Indemnified Party (or after such Indemnified Party shall have received
notice of such service on any designated agent), but failure to notify N&B
MANAGEMENT of any such claim shall not relieve N&B MANAGEMENT from any
liability which it may have to the Indemnified Party against whom such
action is brought otherwise than on account of this indemnification
provision. In case any such action is brought against the Indemnified
Parties, N&B MANAGEMENT shall be entitled to participate at its own expense
in the defense thereof. N&B MANAGEMENT also shall be entitled to assume
the defense thereof, with counsel satisfactory to the party named in the
action. After notice from N&B MANAGEMENT to such party of N&B MANAGEMENT's
election to assume the defense thereof, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it, and N&B
MANAGEMENT will not be liable to such party under this Agreement for any
legal or other expenses subsequently incurred by such party independently
in connection with the defense thereof other than reasonable costs of
investigation.
5. The Sales Agreement shall be renamed Fund Participation Agreement.
6. This Assignment and Modification Agreement shall be effective on May
1, 1995, the closing date of the conversion. In the event of a conflict between
the terms of this Assignment and Modification Agreement and the terms of the
Sales Agreement, the terms of this Assignment and Modification Agreement shall
control.
7. All other terms and conditions of the Sales Agreement remain in full
force and effect.
Executed this ____ day of __________ 1995.
Neuberger & Berman Advisers
Management Trust
(a Massachusetts business trust)
5
<PAGE>
Attest:__________________ By:______________________________
Stanley Egener, Chairman
Neuberger & Berman Advisers
Management Trust
(a Delaware business trust)
Attest:_________________ By:_____________________________
Stanley Egener, Chairman
Advisers Managers Trust
Attest:_________________ By:_____________________________
Neuberger & Berman Management
Incorporated
Attest:_________________ By:_____________________________
The Penn Insurance and Annuity Company
Attest:_________________ By:___________________________________
6
<PAGE>
Exhibit 10(a)
Consent of Coopers & Lybrand, Independent Certified Public Accountants
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the following with respect to Post-Effective Amendment No.
1 and Amendment No. 2 to the Registration Statement on Form N-4 (File No. 33-
83120), filed on behalf of The Penn Insurance and Annuity Company and PIA
Variable Annuity Account I under the Securities Act of 1933 and the Investment
Company Act of 1940:
1. The inclusion in the Statement of Additional Information of our report
dated January 26, 1996 on our audits of the financial statements of The
Penn Insurance and Annuity Company as of December 31, 1995 and 1994 and for
the three years in the period ended December 31, 1995.
2. The inclusion in the Statement of Additional Information of our report
dated April 4, 1996 on our audit of the financial statements of PIA
Variable Annuity Account I as of December 31, 1995 and for the period from
March 1, 1995 (commencement of operations) to December 31, 1995.
3. The reference to our firm under the heading of "Experts" in the
Registration Statement.
/s/ Coopers & Lybrand, L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
April 25, 1996
<PAGE>
Exhibit 10(b)
Consent of Morgan, Lewis & Bockius LLP
April 25, 1996
Board of Trustees
The Penn Mutual Life Insurance Company
Independence Square
Philadelphia, PA 19172
Re: PIA Variable Annuity Account I
SEC Registration No. 33-83120
------------------------------
Gentlemen:
We hereby consent to the reference to our name under the caption "Legal
Matters" in the Prospectus filed as part of the Post-Effective Amendment No. 1.
In giving this consent, we do not admit that we are in the category of persons
whose consent is required under Section 7 of the Securities Act of 1933.
Very truly yours,
/s/ Morgan, Lewis & Bockius, LLP
MORGAN, LEWIS & BOCKIUS LLP
<PAGE>
Exhibit 13
PIA VARIABLE ANNUITY ACCOUNT I
- ------------------------------
TABLE 1: AVERAGE ANNUAL TOTAL RETURN
WITH DEDUCTION OF DEFERRED SALES LOAD (SINGLE PURCHASE PAYMENT)
FOR THE 12 MONTHS ENDED: 12/31/95
AMOUNT INVESTED: $1,000.00
<TABLE>
<CAPTION>
Prorated Total Total
Unit Number Portion of $30.00 Number Unit Total Return
Values of Units Contract Fee and of Units Values Value for
12/31/94 at $1000 Deferred Sales Load End of Period 12/31/95 12/31/95 1 Year
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
QUALITY BOND FUND 9.477839 105.509283 5.473587 100.035696 11.229457 $1,123.35 12.33%
HIGH YIELD BOND 9.553762 104.670809 5.428473 99.242336 10.968126 $1,088.50 8.85%
VALUE EQUITY FUND 9.323905 107.251200 5.742733 101.508467 12.641006 $1,283.17 28.32%
FLEXIBLY MANAGED FUND 9.660523 103.514064 5.803693 97.710371 11.649728 $1,138.30 13.83%
GROWTH EQUITY 9.420707 106.149146 5.454465 100.694681 11.747874 $1,182.95 18.29%
INTERNATIONAL EQUITY 10.584417 94.478515 4.972461 89.506054 11.878760 $1,063.22 6.32%
TCI GROWTH 9.926047 100.745040 5.281545 95.463495 12.818022 $1,223.65 22.37%
N&B BALANCED 9.548559 104.727844 5.463826 99.264018 11.653880 $1,156.81 15.68%
N&B LMTD MAT BOND 9.772495 102.328013 5.277655 97.050358 10.691231 $1,037.59 3.76%
SMALL-CAP FUND 0.000000 #DIV/0! #DIV/0! #DIV/0! 11.145667 #DIV/0! #DIV/0!
FID EQUITY INC 9.518617 105.057279 5.668226 99.389052 12.600495 $1,252.35 25.24%
FID GROWTH 9.796554 102.076710 5.549239 96.527470 13.077900 $1,262.38 26.24%
FID ASSET MANAGER 9.949957 100.502947 5.224986 95.277961 11.476196 $1,093.43 9.34%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
PIA VARIABLE ANNUITY ACCOUNT I
- ------------------------------
TABLE 1A & 1B: AVERAGE ANNUAL TOTAL RETURN
WITH DEDUCTION OF DEFERRED SALES LOAD
FOR THE THREE YEARS ENDED: 12/31/95
AMOUNT INVESTED: $1,000.00
<TABLE>
<CAPTION>
Prorated
Portion of $ 30.00 Units Owned Ending Total Return Average
Growth Equity Contract Fee and End Of Redeemable End Of Annual
Date Fund Deferred Sales Load Period Value Period Total Return
------------ ------------- ------------------- ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/92 $9.378029 106.632215 $1,000.00
12/31/93 $10.397651 0.046164 106.586050 $1,108.24
12/31/94 $9.420707 0.050952 106.535099 $1,003.64
12/31/95 $11.747874 3.663052 102.872047 $1,208.53 20.85% 6.52%
<CAPTION>
Prorated
Portion of $ 30.00 Units Owned Ending Total Return Average
Flexibly Contract Fee and End Of Redeemable End Of Annual
Date Managed Deferred Sales Load Period Value Period Total Return
------------ ------------- ------------------- ------------ ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
12/31/92 $8.238463 121.381865 $1,000.00
12/31/93 $9.407267 0.649498 120.732367 $1,135.76
12/31/94 $9.660523 0.632471 120.099896 $1,160.23
12/31/95 $11.649728 4.607872 115.492024 $1,345.45 34.55% 10.40%
<CAPTION>
Prorated
Portion of $ 30.00 Units Owned Ending Total Return Average
High Yield Contract Fee and End Of Redeemable End Of Annual
Date Bond Deferred Sales Load Period Value Period Total Return
------------ ------------- ------------------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/92 $8.851986 112.968999 $1,000.00
12/31/93 $10.454800 0.094693 112.874306 $1,180.08
12/31/94 $9.553762 0.103624 112.770682 $1,077.38
12/31/95 $10.968126 3.924465 108.846217 $1,193.84 19.38% 6.08%
<CAPTION>
Prorated
Portion of $ 30.00 Units Owned Ending Total Return Average
Quality Contract Fee and End Of Redeemable End Of Annual
Date Bond Deferred Sales Load Period Value Period Total Return
------------ ------------- ------------------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/92 $9.216454 108.501599 $1,000.00
12/31/93 $10.148405 0.102479 108.399120 $1,100.08
12/31/94 $9.477839 0.109730 108.289391 $1,026.35
12/31/95 $11.229457 3.77445 104.514938 $1,173.65 17.37% 5.48%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Prorated
Portion of $ 30.00 Units Owned Ending Total Return Average
Value Contract Fee and End Of Redeemable End Of Annual
Date Equity Deferred Sales Load Period Value Period Total Return
- ---------- -------------- ------------------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/92 $8.699744 114.945911 $1,000.00
12/31/93 $9.186022 0.375571 114.570340 $1,052.45
12/31/94 $9.323905 0.370017 114.200324 $1,064.79
12/31/95 $12.641006 4.155732 110.044591 $1,391.07 39.11% 11.63%
<CAPTION>
Prorated
Portion of $ 30.00 Units Owned Ending Total Return Average
International Contract Fee and End Of Redeemable End Of Annual
Date Equity Deferred Sales Load Period Value Period Total Return
- ---------- -------------- ------------------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/92 $8.411030 118.891503 $1,000.00
12/31/93 $11.456448 0.159735 118.731768 $1,360.24
12/31/94 $10.584417 0.172896 118.558872 $1,254.88
12/31/95 $11.878760 4.185058 114.373814 $1,358.62 35.86% 10.76%
<CAPTION>
Prorated
Portion of $ 30.00 Units Owned Ending Total Return Average
TCI Contract Fee and End Of Redeemable End Of Annual
Date Growth Deferred Sales Load Period Value Period Total Return
- ---------- -------------- ------------------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/92 $9.386697 106.533747 $1,000.00
12/31/93 $10.185124 0.180656 106.353091 $1,083.22
12/31/94 $9.926047 0.185371 106.167720 $1,053.83
12/31/95 $12.818022 3.753250 102.414470 $1,312.75 31.28% 9.49%
<CAPTION>
Prorated
Portion of $ 30.00 Units Owned Ending Total Return Average
N&B Contract Fee and End Of Redeemable End Of Annual
Date Balanced Deferred Sales Load Period Value Period Total Return
- ---------- -------------- ------------------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/92 $9.544854 104.768496 $1,000.00
12/31/93 $9.981206 0.143269 104.625227 $1,044.29
12/31/94 $9.548559 0.149761 104.475466 $997.59
12/31/95 $11.653880 3.674872 100.800594 $1,174.72 17.47% 5.51%
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
12/31/92 $9.439952 105.932742 $1,000.00
12/31/93 $9.925608 0.063472 105.869270 $1,050.82
12/31/94 $9.772495 0.064467 105.804803 $1,033.98
12/31/95 $10.691231 3.656290 102.148513 $1,092.09 9.21% 2.98%
<CAPTION>
Prorated
Portion of $ 30.00 Units Owned Ending Total Return Average
Contract Fee and End Of Redeemable End Of Annual
Date SMALL-CAP Deferred Sales Load Period Value Period Total Return
- -------- ----------- ------------------- ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/92 $0.000000 #DIV/0! #DIV/0!
12/31/93 $0.000000 #DIV/0! #DIV/0! #DIV/0!
12/31/94 $0.000000 #DIV/0! #DIV/0! #DIV/0!
12/31/95 $11.145667 #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
<CAPTION>
Prorated
Portion of $ 30.00 Units Owned Ending Total Return Average
FIDELITY Contract Fee and End Of Redeemable End Of Annual
Date EQUITY INC Deferred Sales Load Period Value Period Total Return
- -------- ----------- ------------------- ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/92 $7.728908 129.384384 $1,000.00
12/31/93 $9.015770 0.433685 128.950699 $1,162.59
12/31/94 $9.518617 0.410774 128.539925 $1,223.52
12/31/95 $12.600495 4.680663 123.859263 $1,560.69 56.07% 15.99%
<CAPTION>
Prorated
Portion of $ 30.00 Units Owned Ending Total Return Average
FIDELITY Contract Fee and End Of Redeemable End Of Annual
Date GROWTH Deferred Sales Load Period Value Period Total Return
- -------- ----------- ------------------- ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/92 $8.441505 118.462288 $1,000.00
12/31/93 $9.936599 0.451865 118.010424 $1,172.62
12/31/94 $9.796554 0.458324 117.552099 $1,151.61
12/31/95 $13.077900 4.340099 113.212000 $1,480.58 48.06% 13.98%
<CAPTION>
Prorated
Portion of $ 30.00 Units Owned Ending Total Return Average
FIDELITY Contract Fee and End Of Redeemable End Of Annual
Date ASSET MGR Deferred Sales Load Period Value Period Total Return
- -------- ----------- ------------------- ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/92 $8.987776 111.262230 $1,000.00
12/31/93 $10.744669 0.106099 111.156131 $1,194.34
12/31/94 $9.949957 0.114573 111.041557 $1,104.86
12/31/95 $11.476196 3.874749 107.166808 $1,229.87 22.99% 7.14%
</TABLE>
<PAGE>
PIA VARIABLE ANNUITY ACCOUNT I
- ------------------------------
TABLE 1A & 1B: AVERAGE ANNUAL TOTAL RETURN
WITH DEDUCTION OF DEFERRED SALES LOAD
FOR THE FIVE YEARS ENDED: 12/31/90
AMOUNT INVESTED: $1,000.00
<TABLE>
<CAPTION>
Prorated
Portion of $ 30.00 Units Owned Ending Total Return Average
Growth Equity Contract Fee and End Of Redeemable End Of Annual
Date Fund Deferred Sales Load Period Value Period Total Return
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 $6.755130 148.035641 $1,000.00
12/31/91 $8.975410 0.053479 147.982162 $1,328.20
12/31/92 $9.378029 0.051183 147.930978 $1,387.30
12/31/93 $10.397651 0.046164 147.884814 $1,537.65
12/31/94 $9.420707 0.050952 147.833862 $1,392.70
12/31/95 $11.747874 2.554034 145.279828 $1,706.73 70.67% 11.28%
<CAPTION>
Prorated
Portion of $ 30.00 Units Owned Ending Total Return Average
Flexibly Contract Fee and End Of Redeemable End Of Annual
Date Managed Deferred Sales Load Period Value Period Total Return
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 $6.357921 157.284119 $1,000.00
12/31/91 $7.625445 0.801265 156.482854 $1,193.25
12/31/92 $8.238463 0.741643 155.741211 $1,283.07
12/31/93 $9.407267 0.649498 155.091713 $1,458.99
12/31/94 $9.660523 0.632471 154.459242 $1,492.16
12/31/95 $11.649728 3.150283 151.308959 $1,762.71 76.27% 12.00%
<CAPTION>
Prorated
Portion of $ 30.00 Units Owned Ending Total Return Average
High Yield Contract Fee and End Of Redeemable End Of Annual
Date Bond Deferred Sales Load Period Value Period Total Return
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 $5.737681 174.286441 $1,000.00
12/31/91 $7.752279 0.127704 174.158736 $1,350.13
12/31/92 $8.851986 0.111839 174.046897 $1,540.66
12/31/93 $10.454800 0.094693 173.952204 $1,818.64
12/31/94 $9.553762 0.103624 173.848580 $1,660.91
12/31/95 $10.968126 3.045687 170.802892 $1,873.39 87.34% 13.37%
</TABLE>
<PAGE>
<TABLE>
Prorated
Portion of $ 30.00 Units Owned Ending Total Return Average
Quality Contract Fee and End Of Redeemable End Of Annual
Date Bond Deferred Sales Load Period Value Period Total Return
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 $7.692775 129.992103 $1,000.00
12/31/91 $8.770907 0.118574 129.873529 $1,139.11
12/31/92 $9.216454 0.112842 129.760687 $1,195.93
12/31/93 $10.148405 0.102479 129.658208 $1,315.82
12/31/94 $9.477839 0.109730 129.548479 $1,227.84
12/31/95 $11.229457 2.294938 127.253541 $1,428.99 42.90% 7.40%
<CAPTION>
Prorated
Portion of $ 30.00 Units Owned Ending Total Return Average
Value Contract Fee and End Of Redeemable End Of Annual
Date Equity Deferred Sales Load Period Value Period Total Return
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 $6.100284 163.926794 $1,000.00
12/31/91 $7.680989 0.449161 163.477633 $1,255.67
12/31/92 $8.699744 0.396563 163.081070 $1,418.76
12/31/93 $9.186022 0.375571 162.705499 $1,494.62
12/31/94 $9.323905 0.370017 162.335483 $1,513.60
12/31/95 $12.641006 3.032625 159.302858 $2,013.75 101.37% 15.02%
<CAPTION>
Prorated
Portion of $ 30.00 Units Owned Ending Total Return Average
International Contract Fee and End Of Redeemable End Of Annual
Date Equity Deferred Sales Load Period Value Period Total Return
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 $0.000000 #DIV/0! #DIV/0!
12/31/91 $0.000000 #DIV/0! #DIV/0! #DIV/0!
12/31/92 $8.411030 0.217571 #DIV/0! #DIV/0!
12/31/93 $11.456448 0.159735 #DIV/0! #DIV/0!
12/31/94 $10.584417 0.172896 #DIV/0! #DIV/0!
12/31/95 $11.878760 #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
<CAPTION>
Prorated
Portion of $ 30.00 Units Owned Ending Total Return Average
TCI Contract Fee and End Of Redeemable End Of Annual
Date Growth Deferred Sales Load Period Value Period Total Return
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 $6.896673 144.997450 $1,000.00
12/31/91 $9.648771 0.190698 144.806752 $1,397.21
12/31/92 $9.386697 0.196022 144.610730 $1,357.42
12/31/93 $10.185124 0.180656 144.430075 $1,471.04
12/31/94 $9.926047 0.185371 144.244704 $1,431.78
12/31/95 $12.818022 2.595708 141.648996 $1,815.66 81.57% 12.66%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
N&B Contract Fee and End Of Redeemable End Of Annual
Date Balanced Deferred Sales Load Period Value Period Total Return
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 $7.405018 135.043561 $1,000.00
12/31/91 $8.958110 0.159632 134.883929 $1,208.31
12/31/92 $9.544854 0.149819 134.734110 $1,286.02
12/31/93 $9.981206 0.143269 134.590841 $1,343.38
12/31/94 $9.548559 0.149761 134.441080 $1,283.72
12/31/95 $11.653880 2.408204 132.032876 $1,538.70 53.87% 9.00%
</TABLE>
<TABLE>
<CAPTION>
Prorated
Portion of $ 30.00 Units Owned Ending Total Return Average
N&B Contract Fee and End Of Redeemable End Of Annual
Date LTD MAT Deferred Sales Load Period Value Period Total Return
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 $8.290079 120.626112 $1,000.00
12/31/91 $9.102169 0.069214 120.556898 $1,097.33
12/31/92 $9.439952 0.066738 120.490160 $1,137.42
12/31/93 $9.925608 0.063472 120.426688 $1,195.31
12/31/94 $9.772495 0.064467 120.362222 $1,176.24
12/31/95 $10.691231 2.105085 118.257137 $1,264.31 26.43% 4.80%
</TABLE>
<TABLE>
<CAPTION>
Prorated
Portion of $ 30.00 Units Owned Ending Total Return Average
Contract Fee and End Of Redeemable End Of Annual
Date SMALL-CAP Deferred Sales Load Period Value Period Total Return
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 $0.000000 #DIV/0! #DIV/0!
12/31/91 $0.000000 #DIV/0! #DIV/0! #DIV/0!
12/31/92 $0.000000 #DIV/0! #DIV/0! #DIV/0!
12/31/93 $0.000000 #DIV/0! #DIV/0! #DIV/0!
12/31/94 $0.000000 #DIV/0! #DIV/0! #DIV/0!
12/31/95 $11.145667 #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
</TABLE>
<TABLE>
<CAPTION>
Prorated
Portion of $ 30.00 Units Owned Ending Total Return Average
FIDELITY Contract Fee and End Of Redeemable End Of Annual
Date EQUITY INC Deferred Sales Load Period Value Period Total Return
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 $5.173663 193.286652 $1,000.00
12/31/91 $6.705724 0.583084 192.703568 $1,292.22
12/31/92 $7.728908 0.505893 192.197675 $1,485.48
12/31/93 $9.015770 0.433685 191.763991 $1,728.90
12/31/94 $9.518617 0.410774 191.353217 $1,821.42
12/31/95 $12.600495 3.563310 187.789907 $2,366.25 136.62% 18.79%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Prorated
Portion of $ 30.00 Units Owned Ending Total Return Average
FIDELITY Contract Fee and End Of Redeemable End Of Annual
Date GROWTH Deferred Sales Load Period Value Period Total Return
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 $5.457380 183.238111 $1,000.00
12/31/91 $7.830958 0.573365 182.664745 $1,430.44
12/31/92 $8.441505 0.531896 182.132850 $1,537.48
12/31/93 $9.936599 0.451865 181.680985 $1,805.29
12/31/94 $9.796554 0.458324 181.222660 $1,775.36
12/31/95 $13.077900 3.424113 177.798548 $2,325.23 132.52% 18.37%
<CAPTION>
Prorated
Portion of $ 30.00 Units Owned Ending Total Return Average
FIDELITY Contract Fee and End Of Redeemable End Of Annual
Date ASSET MGR Deferred Sales Load Period Value Period Total Return
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 $6.751165 148.122583 $1,000.00
12/31/91 $8.159166 0.139720 147.982863 $1,207.42
12/31/92 $8.987776 0.126839 147.856024 $1,328.90
12/31/93 $10.744669 0.106099 147.749925 $1,587.52
12/31/94 $9.949957 0.114573 147.635352 $1,468.97
12/31/95 $11.476196 2.609137 145.026215 $1,664.35 66.43% 10.72%
</TABLE>
<PAGE>
PIA VARIABLE ANNUITY ACCOUNT I
- ------------------------------
TABLE 1A & 1B: AVERAGE ANNUAL TOTAL RETURN
WITH DEDUCTION OF DEFERRED SALES LOAD
FOR THE TEN YEARS ENDED 12/31/85
AMOUNT INVESTED: $1,000.00
<TABLE>
<CAPTION>
Prorated Prorated
Portion of $30.00 Units Owned Ending Total Return Average
Growth Equity Contract Fee and End Of Redeemable End Of Annual
Date Fund Deferred Sales Load Period Value Period Total Return
--------- ------------- -------------------- ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $4.555522 219.513812 $1,000.00
12/31/86 $5.158375 0.093053 219.420759 $1,131.85 13.19%
12/31/87 $5.355589 0.089626 219.331133 $1,174.65 17.46%
12/31/88 $5.950681 0.080663 219.250470 $1,304.69 30.47%
12/31/89 $7.708737 0.062267 219.188203 $1,689.66 68.97%
12/31/90 $6.755130 0.071057 219.117146 $1,480.16 48.02%
12/31/91 $8.975410 0.053479 219.063667 $1,966.19 96.62%
12/31/92 $9.378029 0.051183 219.012483 $2,053.91 105.39%
12/31/93 $10.397651 0.046164 218.966319 $2,276.74 127.67%
12/31/94 $9.420707 0.050952 218.915368 $2,062.34 106.23%
12/31/95 $11.747874 0.040858 218.874509 $2,571.31 157.13% 9.90%
<CAPTION>
Prorated
Flexibly Portion of $30.00 Units Owned Ending Total Return Average
Managed Contract Fee and End Of Redeemable End Of Annual
Date Fund Deferred Sales Load Period Value Period Total Return
--------- ------------- -------------------- ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $3.363245 297.331892 $1,000.00
12/31/86 $3.804915 1.605818 295.726075 $1,125.21 #DIV/0!
12/31/87 $4.637999 1.317378 294.408696 $1,365.47 36.55%
12/31/88 $5.439985 1.123165 293.285531 $1,595.47 59.55%
12/31/89 $6.500886 0.939872 292.345659 $1,900.51 90.05%
12/31/90 $6.357921 0.961006 291.384653 $1,852.60 85.26%
12/31/91 $7.625445 0.801265 290.583389 $2,215.83 121.58%
12/31/92 $8.238463 0.741643 289.841745 $2,387.85 138.79%
12/31/93 $9.407267 0.649498 289.192248 $2,720.51 172.05%
12/31/94 $9.660523 0.632471 288.559777 $2,787.64 178.76%
12/31/95 $11.649728 0.524476 288.035301 $3,355.53 235.55% 12.86%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Prorated
Portion of $30.00 Units Owned Ending Total Return Average
High Yield Contract Fee and End Of Redeemable End Of Annual
Date Bond Fund Deferred Sales Load Period Value Period Total Return
- ---------- ------------ ------------------- ------------- ----------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $5.236704 190.959810 $1,000.00
12/31/86 $5.739456 0.172490 190.787320 $1,095.02 9.50%
12/31/87 $5.618674 0.176198 190.611121 $1,070.98 7.10%
12/31/88 $6.525979 0.151701 190.459420 $1,242.93 24.29%
12/31/89 $6.396748 0.154766 190.304654 $1,217.33 21.73%
12/31/90 $5.737681 0.172544 190.132110 $1,090.92 9.09%
12/31/91 $7.752279 0.127704 190.004406 $1,472.97 47.30%
12/31/92 $8.851986 0.111839 189.892567 $1,680.93 68.09%
12/31/93 $10.454800 0.094693 189.797873 $1,984.30 98.43%
12/31/94 $9.553762 0.103624 189.694249 $1,812.29 81.23%
12/31/95 $10.968126 0.090262 189.603988 $2,079.60 107.96% 7.59%
</TABLE>
<TABLE>
<CAPTION>
Prorated
Portion of $30.00 Units Owned Ending Total Return Average
Quality Bond Contract Fee and End Of Redeemable End Of Annual
Date Bond Fund Deferred Sales Load Period Value Period Total Return
- ---------- ------------- ------------------- ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $0.000000 #DIV/0! #DIV/0!
12/31/86 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/87 $6.121631 0.169889 #DIV/0! #DIV/0! #DIV/0!
12/31/88 $6.490498 0.160234 #DIV/0! #DIV/0! #DIV/0!
12/31/89 $7.226374 0.143917 #DIV/0! #DIV/0! #DIV/0!
12/31/90 $7.692775 0.135192 #DIV/0! #DIV/0! #DIV/0!
12/31/91 $8.770907 0.118574 #DIV/0! #DIV/0! #DIV/0!
12/31/92 $9.216454 0.112842 #DIV/0! #DIV/0! #DIV/0!
12/31/93 $10.148405 0.102479 #DIV/0! #DIV/0! #DIV/0!
12/31/94 $9.477839 0.109730 #DIV/0! #DIV/0! #DIV/0!
12/31/95 $11.229457 0.092614 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
</TABLE>
<TABLE>
<CAPTION>
Prorated
Portion of $30.00 Units Owned Ending Total Return Average
Value Equity Contract Fee and End Of Redeemable End Of Annual
Date Bond Fund Deferred Sales Load Period Value Period Total Return
- ---------- ------------ ------------------- ------------ ------------ ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $0.000000 #DIV/0! #DIV/0!
12/31/86 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/87 $4.724564 0.730226 #DIV/0! #DIV/0! #DIV/0!
12/31/88 $6.039898 0.571202 #DIV/0! #DIV/0! #DIV/0!
12/31/89 $6.728437 0.512749 #DIV/0! #DIV/0! #DIV/0!
12/31/90 $6.100284 0.565547 #DIV/0! #DIV/0! #DIV/0!
12/31/91 $7.680989 0.449161 #DIV/0! #DIV/0! #DIV/0!
12/31/92 $8.699744 0.396563 #DIV/0! #DIV/0! #DIV/0!
12/31/93 $9.186022 0.375571 #DIV/0! #DIV/0! #DIV/0!
12/31/94 $9.323905 0.370017 #DIV/0! #DIV/0! #DIV/0!
12/31/95 $12.641006 0.272921 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Prorated
Portion of $30.00 Units Owned Ending Total Return Average
International Contract Fee and End Of Redeemable End Of Annual
Date Equity Deferred Sales Load Period Value Period Total Return
- --------- ------------- ------------------- ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $0.000000 #DIV/0! #DIV/0!
12/31/86 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/87 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/88 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/89 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/90 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/91 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/92 $8.411030 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/93 $11.456448 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/94 $10.584417 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/95 $11.878760 #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
<CAPTION>
Prorated
Portion of $30.00 Units Owned Ending Total Return Average
TCI Contract Fee and End Of Redeemable End Of Annual
Date Growth Deferred Sales Load Period Value Period Total Return
- --------- ------------- ------------------- ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $0.000000 #DIV/0! #DIV/0!
12/31/86 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/87 $5.790207 0.317778 #DIV/0! #DIV/0! #DIV/0!
12/31/88 $5.577805 0.329879 #DIV/0! #DIV/0! #DIV/0!
12/31/89 $7.084750 0.259713 #DIV/0! #DIV/0! #DIV/0!
12/31/90 $6.896673 0.266795 #DIV/0! #DIV/0! #DIV/0!
12/31/91 $9.648771 0.190698 #DIV/0! #DIV/0! #DIV/0!
12/31/92 $9.386697 0.196022 #DIV/0! #DIV/0! #DIV/0!
12/31/93 $10.185124 0.180656 #DIV/0! #DIV/0! #DIV/0!
12/31/94 $9.926047 0.185371 #DIV/0! #DIV/0! #DIV/0!
12/31/95 $12.818022 #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
<CAPTION>
Prorated
Portion of $30.00 Units Owned Ending Total Return Average
N&B Contract Fee and End Of Redeemable End Of Annual
Date Balanced Deferred Sales Load Period Value Period Total Return
- --------- ------------- ------------------- ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $0.000000 #DIV/0! #DIV/0!
12/31/86 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/87 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/88 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/89 $7.365810 0.194140 #DIV/0! #DIV/0! #DIV/0!
12/31/90 $7.405018 0.193112 #DIV/0! #DIV/0! #DIV/0!
12/31/91 $8.958110 0.159632 #DIV/0! #DIV/0! #DIV/0!
12/31/92 $9.544854 0.149819 #DIV/0! #DIV/0! #DIV/0!
12/31/93 $9.981206 0.143269 #DIV/0! #DIV/0! #DIV/0!
12/31/94 $9.548559 0.149761 #DIV/0! #DIV/0! #DIV/0!
12/31/95 $11.653880 #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Prorated
Portion of $30.00 Units Owned Ending Total Return Average
N&B Contract Fee and End Of Redeemable End Of Annual
Date Lmtd Mat Bond Deferred Sales Load Period Value Period Total Return
- ----------- ------------- -------------------- ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $5.903314 169.396376 $1,000.00
12/31/86 $6.626619 0.095071 169.301305 $1,121.90 12.19%
12/31/87 $6.723442 0.093702 169.207603 $1,137.66 13.77%
12/31/88 $7.104860 0.088672 169.118932 $1,201.57 20.16%
12/31/89 $7.760881 0.081176 169.037755 $1,311.88 31.19%
12/31/90 $8.290079 0.075994 168.961761 $1,400.71 40.07%
12/31/91 $9.102169 0.069214 168.892546 $1,537.29 53.73%
12/31/92 $9.439952 0.066738 168.825809 $1,593.71 59.37%
12/31/93 $9.925608 0.063472 168.762337 $1,675.07 67.51%
12/31/94 $9.772495 0.064467 168.697870 $1,648.60 64.86%
12/31/95 $10.691231 0.058927 168.638943 $1,802.96 80.30% 6.07%
<CAPTION>
Prorated
Portion of $30.00 Units Owned Ending Total Return Average
Contract Fee and End Of Redeemable End Of Annual
Date Small - Cap Deferred Sales Load Period Value Period Total Return
- ----------- ------------- -------------------- ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $0.000000 #DIV/0! #DIV/0!
12/31/86 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/87 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/88 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/89 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/90 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/91 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/92 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/93 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/94 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/95 $11.145667 #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
<CAPTION>
Prorated
Portion of $30.00 Units Owned Ending Total Return Average
FIDELITY Contract Fee and End Of Redeemable End Of Annual
Date Equity Inc Deferred Sales Load Period Value Period Total Return
- ----------- ------------- -------------------- ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $0.000000 #DIV/0! #DIV/0!
12/31/86 $4.537328 0.861741 #DIV/0! #DIV/0! #DIV/0!
12/31/87 $4.423567 0.883902 #DIV/0! #DIV/0! #DIV/0!
12/31/88 $5.352534 0.730495 #DIV/0! #DIV/0! #DIV/0!
12/31/89 $6.193601 0.631297 #DIV/0! #DIV/0! #DIV/0!
12/31/90 $5.173663 0.755751 #DIV/0! #DIV/0! #DIV/0!
12/31/91 $6.705724 0.583084 #DIV/0! #DIV/0! #DIV/0!
12/31/92 $7.728908 0.505893 #DIV/0! #DIV/0! #DIV/0!
12/31/93 $9.015770 0.433685 #DIV/0! #DIV/0! #DIV/0!
12/31/94 $9.518617 0.410774 #DIV/0! #DIV/0! #DIV/0!
12/31/95 $12.600495 #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Prorated
Portion of $30.00 Units Owned Ending Total Return Average
FIDELITY Contract Fee and End Of Redeemable End Of Annual
Date Growth Deferred Sales Load Period Value Period Total Return
- ----------- --------- --------------------- ----------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $0.000000 #DIV/0! #DIV/0!
12/31/86 $4.149882 1.081958 #DIV/0! #DIV/0! #DIV/0!
12/31/87 $4.242140 1.058428 #DIV/0! #DIV/0! #DIV/0!
12/31/88 $4.834827 0.928679 #DIV/0! #DIV/0! #DIV/0!
12/31/89 $6.270101 0.716097 #DIV/0! #DIV/0! #DIV/0!
12/31/90 $5.457380 0.822739 #DIV/0! #DIV/0! #DIV/0!
12/31/91 $7.830958 0.573365 #DIV/0! #DIV/0! #DIV/0!
12/31/92 $8.441505 0.531896 #DIV/0! #DIV/0! #DIV/0!
12/31/93 $9.936599 0.451865 #DIV/0! #DIV/0! #DIV/0!
12/31/94 $9.796554 0.458324 #DIV/0! #DIV/0! #DIV/0!
12/31/95 $13.077900 #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
<CAPTION>
Prorated
Portion of $30.00 Units Owned Ending Total Return Average
FIDELITY Contract Fee and End Of Redeemable End Of Annual
Date Asset Mgr Deferred Sales Load Period Value Period Total Return
- ----------- --------- --------------------- ----------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $0.000000 #DIV/0! #DIV/0!
12/31/86 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/87 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/88 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/89 $6.415215 0.177703 #DIV/0! #DIV/0! #DIV/0!
12/31/90 $6.751165 0.168860 #DIV/0! #DIV/0! #DIV/0!
12/31/91 $8.159166 0.139720 #DIV/0! #DIV/0! #DIV/0!
12/31/92 $8.987776 0.126839 #DIV/0! #DIV/0! #DIV/0!
12/31/93 $10.744669 0.106099 #DIV/0! #DIV/0! #DIV/0!
12/31/94 $9.949957 0.114573 #DIV/0! #DIV/0! #DIV/0!
12/31/95 $11.476196 #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
</TABLE>
<PAGE>
PIA VARIABLE ANNUITY ACCOUNT I
- ------------------------------
TABLE 1A & 1B: AVERAGE ANNUAL TOTAL RETURN
WITH DEDUCTION OF DEFERRED SALES LOAD
SINCE INCEPTION TO: 12/31/95
AMOUNT INVESTED: $1,000.00
<TABLE>
<CAPTION>
Prorated
Portion of $ 30.00 Units Owned Ending Total Return Average
Growth Equity Contract Fee and End Of Redeemable End Of Annual
Date Fund Deferred Sales Load Period Value Period Total Return
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
06/01/83 $3.679564 271.771329 $1,000.00
06/01/84 $3.378781 0.142063 271.629266 $917.78 -8.22%
06/01/85 $4.140589 0.115926 271.513341 $1,124.23 12.42%
06/01/86 $5.326260 0.090120 271.423221 $1,445.67 44.57%
06/01/87 $6.031310 0.079585 271.343637 $1,636.56 63.66%
06/01/88 $5.802547 0.082722 271.260914 $1,574.00 57.40%
06/01/89 $6.988377 0.068685 271.192229 $1,895.19 89.52%
06/01/90 $7.936197 0.060482 271.131746 $2,151.75 115.18%
06/01/91 $8.112479 0.059168 271.072578 $2,199.07 119.91%
06/01/92 $8.769114 0.054738 271.017841 $2,376.59 137.66%
06/01/93 $9.586086 0.050073 270.967768 $2,597.52 159.75%
06/01/94 $9.444207 0.050825 270.916943 $2,558.60 155.86%
06/01/95 $10.236038 0.046893 270.870050 $2,772.64 177.26%
12/31/95 $11.747874 0.040858 270.829192 $3,181.67 218.17% 9.63% 0.00%
<CAPTION>
Prorated
Portion of $ 30.00 Units Owned Ending Total Return Average
Flexibly Contract Fee and End Of Redeemable End Of Annual
Date Managed Deferred Sales Load Period Value Period Total Return
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
07/31/84 $2.755418 362.921343 $1,000.00
07/31/85 $3.152745 1.937994 360.983349 $1,138.09 13.81%
07/31/86 $3.821619 1.598799 359.384550 $1,373.43 37.34%
07/31/87 $4.756778 1.284483 358.100067 $1,703.40 70.34%
07/31/88 $5.214443 1.171745 356.928322 $1,861.18 86.12%
07/31/89 $6.479420 0.942986 355.985336 $2,306.58 130.66%
07/31/90 $6.554032 0.932251 355.053085 $2,327.03 132.70%
07/31/91 $7.383192 0.827555 354.225530 $2,615.32 161.53%
07/31/92 $8.064706 0.757622 353.467908 $2,850.61 185.06%
07/31/93 $8.811342 0.693424 352.774484 $3,108.42 210.84%
07/31/94 $9.461836 0.645752 352.128731 $3,331.78 233.18%
07/31/95 $11.071102 0.551887 351.576844 $3,892.34 289.23%
12/31/95 $11.649728 0.524476 351.052368 $4,089.66 308.97% 13.12% 0.00%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Prorated
Portion of $ 30.00 Units Owned Ending Total Return Average
High Yield Contract Fee and End Of Redeemable End Of Annual
Date Bond Deferred Sales Load Period Value Period Total Return
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
08/06/84 $4.274745 233.932082 $1,000.00
08/06/85 $4.949967 0.200001 233.732081 $1,156.97 15.70%
08/06/86 $5.513970 0.179544 233.552537 $1,287.80 28.78%
08/06/87 $5.818893 0.170135 233.382402 $1,358.03 35.80%
08/06/88 $6.267419 0.157960 233.224442 $1,461.72 46.17%
08/06/89 $6.884597 0.143799 233.080643 $1,604.67 60.47%
08/06/90 $6.549305 0.151161 232.929482 $1,525.53 52.55%
08/06/91 $7.201615 0.137469 232.792012 $1,676.48 67.65%
08/06/92 $8.565493 0.115580 232.676432 $1,992.99 99.30%
08/06/93 $9.917575 0.099823 232.576610 $2,306.60 130.66%
08/06/94 $9.944338 0.099554 232.477056 $2,311.83 131.18%
08/06/95 $10.548141 0.093855 232.383200 $2,451.21 145.12%
12/31/95 $10.968126 0.090262 232.292939 $2,547.82 154.78% 8.54% 0.00%
Prorated
Portion of $ 30.00 Units Owned Ending Total Return Average
Quality Contract Fee and End Of Redeemable End Of Annual
Date Bond Deferred Sales Load Period Value Period Total Return
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
03/17/87 $6.153024 162.521713 $1,000.00
03/17/88 $6.336540 0.164127 162.357585 $1,028.79 2.88%
03/17/89 $6.478625 0.160528 162.197058 $1,050.81 5.08%
03/17/90 $7.130900 0.145844 162.051213 $1,155.57 15.56%
03/17/91 $7.812288 0.133124 161.918090 $1,264.95 26.50%
03/17/92 $8.512054 0.122180 161.795910 $1,377.22 37.72%
03/17/93 $9.638590 0.107900 161.688011 $1,558.44 55.84%
03/17/94 $9.880534 0.105257 161.582753 $1,596.52 59.65%
03/17/95 $10.046136 0.103522 161.479231 $1,622.24 62.22%
12/31/95 $11.229457 0.092614 161.386617 $1,812.28 81.23% 6.99% 0.00%
<CAPTION>
Prorated
Portion of $ 30.00 Units Owned Ending Total Return Average
Value Contract Fee and End Of Redeemable End Of Annual
Date Equity Deferred Sales Load Period Value Period Total Return
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
03/17/87 $5.197559 192.398008 $1,000.00
03/17/88 $5.435785 0.634683 191.763325 $1,042.38 4.24%
03/17/89 $6.322311 0.545687 191.217639 $1,208.94 20.89%
03/17/90 $6.612748 0.521720 190.695919 $1,261.02 26.10%
03/17/91 $6.968546 0.495082 190.200838 $1,325.42 32.54%
03/17/92 $8.044809 0.428848 189.771990 $1,526.68 52.67%
03/17/93 $8.767314 0.393507 189.378483 $1,660.34 66.03%
03/17/94 $9.332653 0.369670 189.008813 $1,763.95 76.40%
03/17/95 $10.147961 0.339970 188.668843 $1,914.60 91.46%
12/31/95 $12.641006 0.272921 188.395922 $2,381.51 138.15% 10.37% 0.00%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Prorated
Portion of $ 30.00 Units Owned Ending Total Return Average
International Contract Fee and End Of Redeemable End Of Annual
Date Equity Deferred Sales Load Period Value Period Total Return
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
11/01/92 $8.268342 120.943231 $1,000.00
11/01/93 $10.753055 0.170184 120.773047 $1,298.68
11/01/94 $11.363818 0.161037 120.612010 $1,370.61
11/01/95 $11.249363 0.162676 120.449334 $1,354.98
12/31/95 $11.878760 4.254865 116.194469 $1,380.25 38.02% 10.72% 4.00%
<CAPTION>
Prorated
Portion of $ 30.00 Units Owned Ending Total Return Average
TCI Contract Fee and End Of Redeemable End Of Annual
Date Growth Deferred Sales Load Period Value Period Total Return
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
11/20/87 $5.409667 184.854262 $1,000.00
11/20/88 $5.329299 0.345261 184.509001 $983.30 -1.67%
11/20/89 $7.050619 0.260970 184.248031 $1,299.06 29.91%
11/20/90 $6.369260 0.288888 183.959143 $1,171.68 17.17%
11/20/91 $8.534217 0.215603 183.743540 $1,568.11 56.81%
11/20/92 $9.166839 0.200723 183.542817 $1,682.51 68.25%
11/20/93 $9.960345 0.184733 183.358084 $1,826.31 82.63%
11/20/94 $9.995646 0.184080 183.174004 $1,830.94 83.09%
11/20/95 $12.613669 0.145873 183.028131 $2,308.66 130.87%
12/31/95 $12.818022 0.143548 182.884583 $2,344.22 134.42% 11.07% 0.00%
<CAPTION>
Prorated
Portion of $ 30.00 Units Owned Ending Total Return Average
N&B Contract Fee and End Of Redeemable End Of Annual
Date Balanced Deferred Sales Load Period Value Period Total Return
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
02/28/89 $6.402692 156.184305 $1,000.00
02/28/90 $7.127999 0.200617 155.983688 $1,111.85 11.19%
02/28/91 $7.988449 0.179008 155.804679 $1,244.64 24.46%
02/28/92 $9.152294 0.156245 155.648434 $1,424.54 42.45%
02/28/93 $9.392281 0.152253 155.496182 $1,460.46 46.05%
02/28/94 $10.094085 0.141667 155.354514 $1,568.16 56.82%
02/28/95 $9.973464 0.143380 155.211134 $1,547.99 54.80%
02/28/96 $11.945190 0.119713 155.091420 $1,852.60 85.26%
12/31/95 $11.653880 2.761295 152.449839 $1,776.63 77.66% 8.76% 2.00%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Prorated
Portion of $ 30.00 Units Owned Ending Total Return Average
N&B Contract Fee and End Of Redeemable End Of Annual
Date LTD MAT Deferred Sales Load Period Value Period Total Return
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
09/10/84 $4.892696 204.386293 $1,000.00
09/10/85 $5.670945 0.111093 204.275201 $1,158.43 15.84%
09/10/86 $6.518318 0.096651 204.178550 $1,330.90 33.09%
09/10/87 $6.721697 0.093726 204.084824 $1,371.80 37.18%
09/10/88 $7.042462 0.089457 203.995366 $1,436.63 43.66%
09/10/89 $7.569360 0.083230 203.912136 $1,543.48 54.35%
09/10/90 $8.050673 0.078254 203.833882 $1,641.00 64.10%
09/10/91 $8.707241 0.072354 203.761528 $1,774.20 77.42%
09/10/92 $9.480589 0.066452 203.695077 $1,931.15 93.11%
09/10/93 $9.954736 0.063286 203.631790 $2,027.10 102.71%
09/10/94 $9.807571 0.064236 203.567554 $1,996.50 99.65%
09/10/95 $10.401477 0.060568 203.506986 $2,116.77 111.68%
12/31/95 $10.691231 0.058927 203.448059 $2,175.11 117.51% 7.11% 0.00%
<CAPTION>
Prorated
Portion of $ 30.00 Units Owned Ending Total Return Average
Contract Fee and End Of Redeemable End Of Annual
Date SMALL-CAP Deferred Sales Load Period Value Period Total Return
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
03/01/95 $10.000000 100.000000 $1,000.00
12/31/95 $11.145667 5.235479 94.764521 $1,056.21 5.62% 6.76% 6.00%
<CAPTION>
Prorated
Portion of $ 30.00 Units Owned Ending Total Return Average
FIDELITY Contract Fee and End Of Redeemable End Of Annual
Date EQUITY INC Deferred Sales Load Period Value Period Total Return
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10/09/86 $4.542707 220.133062 $1,000.00
10/09/87 $5.371647 0.727896 219.405166 $1,178.57 17.86%
10/09/88 $5.393455 0.724953 218.680213 $1,179.44 17.94%
10/09/89 $6.592083 0.593136 218.087077 $1,437.65 43.76%
10/09/90 $4.840596 0.807752 217.279325 $1,051.76 5.18%
10/09/91 $6.256874 0.624913 216.654413 $1,355.58 35.56%
10/09/92 $7.000715 0.558514 216.095898 $1,512.83 51.28%
10/09/93 $8.979943 0.435415 215.660484 $1,936.62 93.66%
10/09/94 $9.524197 0.410533 215.249950 $2,050.08 105.01%
10/09/95 $11.784016 0.331805 214.918145 $2,532.60 153.26%
12/31/95 $12.600495 0.310305 214.607840 $2,704.17 170.42% 11.38% 0.00%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Prorated
Portion of $ 30.00 Units Owned Ending Total Return Average
FIDELITY Contract Fee and End Of Redeemable End Of Annual
Date GROWTH Deferred Sales Load Period Value Period Total Return
- --------- ----------- ------------------- ---------- ----------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
10/09/86 $4.150654 240.925888 $1,000.00
10/09/87 $5.223288 0.859612 240.066276 $1,253.94 25.39%
10/09/88 $4.908182 0.914799 239.151477 $1,173.80 17.38%
10/09/89 $6.447561 0.696387 238.455090 $1,537.45 53.75%
10/09/90 $5.071896 0.885271 237.569819 $1,204.93 20.49%
10/09/91 $6.909447 0.649835 236.919984 $1,636.99 63.70%
10/09/92 $7.281259 0.616652 236.303333 $1,720.59 72.06%
10/09/93 $9.912135 0.452980 235.850353 $2,337.78 133.78%
10/09/94 $9.388262 0.478257 235.372096 $2,209.73 120.97%
10/09/95 $12.759168 0.351904 235.020192 $2,998.66 199.87%
12/31/95 $13.077900 0.343327 234.676865 $3,069.08 206.91% 12.91% 0.00%
<CAPTION>
Prorated
Portion of $ 30.00 Units Owned Ending Total Return Average
FIDELITY Contract Fee and End Of Redeemable End Of Annual
Date ASSET MGR Deferred Sales Load Period Value Period Total Return
- --------- ----------- ------------------- ---------- ----------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
9/06/89 $6.392017 156.445141 $1,000.00
9/06/90 $6.379732 0.178691 156.266450 $996.94 -0.31%
9/06/91 $7.862493 0.144992 156.121458 $1,227.50 22.75%
9/06/92 $8.695734 0.131099 155.990359 $1,356.45 35.65%
9/06/93 $10.064653 0.113268 155.877091 $1,568.85 56.88%
9/06/94 $10.400201 0.109613 155.767478 $1,620.01 62.00%
9/06/95 $11.066582 0.103013 155.664465 $1,722.67 72.27%
12/31/95 $11.476196 2.745632 152.918833 $1,754.93 75.49% 9.31% 2.00%
</TABLE>
<PAGE>
PIA VARIABLE ANNUITY ACCOUNT I
- ------------------------------
TABLE 2: AVERAGE ANNUAL TOTAL RETURN
NO WITHDRAWAL
FOR THE 12 MONTHS ENDED: 12/31/95
AMOUNT INVESTED: $1,000.00
<TABLE>
<CAPTION>
Total Total
Unit Number Prorated Number Unit Total Return
Values of Units Portion of $30.00 of Units Values Value for
12/31/94 at $1000 Contract Fee End of Period 12/31/95 12/31/95 1 Year
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
QUALITY BOND FUND 9.477839 105.509283 0.092614 105.416670 11.229457 $1,183.77 18.38%
HIGH YIELD BOND 9.553762 104.670809 0.090262 104.580548 10.968126 $1,147.05 14.71%
VALUE EQUITY FUND 9.323905 107.251200 0.272921 106.978279 12.641006 $1,352.31 35.23%
FLEXIBLY MANAGED FUND 9.660523 103.514064 0.524476 102.989589 11.649728 $1,199.80 19.98%
GROWTH EQUITY 9.420707 106.149146 0.040858 106.108287 11.747874 $1,246.55 24.65%
INTERNATIONAL EQUITY 10.584417 94.478515 0.154056 94.324458 11.878760 $1,120.46 12.05%
TCI GROWTH 9.926047 100.745040 0.143548 100.601492 12.818022 $1,289.51 28.95%
N&B BALANCED 9.548559 104.727844 0.122706 104.605138 11.653880 $1,219.06 21.91%
N&B LMTD MAT BOND 9.772495 102.328013 0.058927 102.269087 10.691231 $1,093.38 9.34%
SMALL-CAP FUND 0.000000 #DIV/0! 0.135479 #DIV/0! 11.145667 #DIV/0! #DIV/0!
FID EQUITY INC 9.518617 105.057279 0.310305 104.746974 12.600495 $1,319.86 31.99%
FID GROWTH 9.796554 102.076710 0.343327 101.733383 13.077900 $1,330.46 33.05%
FID ASSET MANAGER 9.949957 100.502947 0.099336 100.403611 11.476196 $1,152.25 15.23%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
PIA VARIABLE ANNUITY ACCOUNT I
- ------------------------------
TABLE 2: AVERAGE ANNUAL TOTAL RETURN
NO WITHDRAWAL
FOR THE THREE YEARS ENDED: 12/31/95
AMOUNT INVESTED: $1,000.00
<TABLE>
<CAPTION>
Prorated Units Owned Ending Total Return Average
Growth Equity Portion of $ 30.00 End Of Redeemable End Of Annual
Date Fund Contract Fee Period Value Period Total Return
- ---------- ------------- ------------------- ------------ ---------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
12/31/92 $9.378029 106.632215 $1,000.00
12/31/93 $10.397651 0.046164 106.586050 $1,108.24
12/31/94 $9.420707 0.050952 106.535099 $1,003.64
12/31/95 $11.747874 0.040858 106.494240 $1,251.08 25.11% 7.75%
<CAPTION>
Prorated Units Owned Ending Total Return Average
Flexibly Portion of $ 30.00 End Of Redeemable End Of Annual
Date Managed Contract Fee Period Value Period Total Return
- ---------- ------------- ------------------- ------------ ---------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
12/31/92 $8.238463 121.381865 $1,000.00
12/31/93 $9.407267 0.649498 120.732367 $1,135.76
12/31/94 $9.660523 0.632471 120.099896 $1,160.23
12/31/95 $11.649728 0.524476 119.575420 $1,393.02 39.30% 11.68%
<CAPTION>
Prorated Units Owned Ending Total Return Average
High Yield Portion of $ 30.00 End Of Redeemable End Of Annual
Date Bond Contract Fee Period Value Period Total Return
- ---------- ------------- ------------------- ------------ ---------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
12/31/92 $8.851986 112.968999 $1,000.00
12/31/93 $10.454800 0.094693 112.874306 $1,180.08
12/31/94 $9.553762 0.103624 112.770682 $1,077.38
12/31/95 $10.968126 0.090262 112.680420 $1,235.89 23.59% 7.31%
<CAPTION>
Prorated Units Owned Ending Total Return Average
Quality Portion of $ 30.00 End Of Redeemable End Of Annual
Date Bond Contract Fee Period Value Period Total Return
- ---------- ------------- ------------------- ------------ ---------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
12/31/92 $9.216454 108.501599 $1,000.00
12/31/93 $10.148405 0.102479 108.399120 $1,100.08
12/31/94 $9.477839 0.109730 108.289391 $1,026.35
12/31/95 $11.229457 0.092614 108.196777 $1,214.99 21.50% 6.71%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Prorated Units Owned Ending Total Return Average
Value Portion of $ 30.00 End Of Redeemable End Of Annual
Date Equity Contract Fee Period Value Period Total Return
- --------- ----------- ------------------- ------------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/92 $8.699744 114.945911 $1,000.00
12/31/93 $9.186022 0.375571 114.570340 $1,052.45
12/31/94 $9.323905 0.370017 114.200324 $1,064.79
12/31/95 $12.641006 0.272921 113.927402 $1,440.16 44.02% 12.93%
<CAPTION>
Prorated Units Owned Ending Total Return Average
International Portion of $ 30.00 End Of Redeemable End Of Annual
Date Equity Contract Fee Period Value Period Total Return
- --------- -------------- ------------------- ------------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/92 $8.411030 118.891503 $1,000.00
12/31/93 $11.456448 0.159735 118.731768 $1,360.24
12/31/94 $10.584417 0.172896 118.558872 $1,254.88
12/31/95 $11.878760 0.154056 118.404816 $1,406.50 40.65% 12.04%
<CAPTION>
Prorated Units Owned Ending Total Return Average
TCI Portion of $ 30.00 End Of Redeemable End Of Annual
Date Growth Contract Fee Period Value Period Total Return
- --------- ----------- ------------------- ------------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/92 $9.386697 106.533747 $1,000.00
12/31/93 $10.185124 0.180656 106.353091 $1,083.22
12/31/94 $9.926047 0.185371 106.167720 $1,053.83
12/31/95 $12.818022 0.143548 106.024172 $1,359.02 35.90% 10.77%
<CAPTION>
Prorated Units Owned Ending Total Return Average
N&B Portion of $ 30.00 End Of Redeemable End Of Annual
Date Balanced Contract Fee Period Value Period Total Return
- --------- ----------- ------------------- ------------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/92 $9.544854 104.768496 $1,000.00
12/31/93 $9.981206 0.143269 104.625227 $1,044.29
12/31/94 $9.548559 0.149761 104.475466 $997.59
12/31/95 $11.653880 0.122706 104.352760 $1,216.11 21.61% 6.74%
<CAPTION>
Prorated Units Owned Ending Total Return Average
N&B Portion of $ 30.00 End Of Redeemable End Of Annual
Date LTD MAT Contract Fee Period Value Period Total Return
- --------- ----------- ------------------- ------------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/92 $9.439952 105.932742 $1,000.00
12/31/93 $9.925608 0.063472 105.869270 $1,050.82
12/31/94 $9.772495 0.064467 105.804803 $1,033.98
12/31/95 $10.691231 0.058927 105.745876 $1,130.55 13.06% 4.17%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Prorated Units Owned Ending Total Return Average
Portion of $ 30.00 End Of Redeemable End Of Annual
Date SMALL-CAP Contract Fee Period Value Period Total Return
---------- ------------ -------------------- ------------- ------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
12/31/92 $0.000000 #DIV/01 #DIV/01
12/31/93 $0.000000 #DIV/01 #DIV/01 #DIV/01
12/31/94 $0.000000 #DIV/01 #DIV/01 #DIV/01
12/31/95 $11.145667 0.135479 #DIV/01 #DIV/01 #DIV/01 #DIV/01
<CAPTION>
Prorated Units Owned Ending Total Return Average
FIDELITY Portion of $ 30.00 End Of Redeemable End Of Annual
Date EQUITY INC Contract Fee Period Value Period Total Return
---------- ------------ -------------------- ------------- ------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
12/31/92 $7.728908 129.384384 $1,000.00
12/31/93 $9.015770 0.433685 128.950699 $1,162.59
12/31/94 $9.518617 0.410774 128.539925 $1,223.52
12/31/95 $12.600495 0.310305 128.229620 $1,615.76 61.58% 17.34%
<CAPTION>
Prorated Units Owned Ending Total Return Average
FIDELITY Portion of $ 30.00 End Of Redeemable End Of Annual
Date GROWTH Contract Fee Period Value Period Total Return
---------- ------------ -------------------- ------------- ------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
12/31/92 $8.441505 118.462288 $1,000.00
12/31/93 $9.936599 0.451865 118.010424 $1,172.62
12/31/94 $9.796554 0.458324 117.552099 $1,151.61
12/31/95 $13.077900 0.343327 117.208772 $1,532.84 53.28% 15.30%
<CAPTION>
Prorated Units Owned Ending Total Return Average
FIDELITY Portion of $ 30.00 End Of Redeemable End Of Annual
Date ASSET MGR Contract Fee Period Value Period Total Return
---------- ------------ -------------------- ------------- ------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
12/31/92 $8.987776 111.262230 $1,000.00
12/31/93 $10.744669 0.106099 111.156131 $1,194.34
12/31/94 $9.949957 0.114573 111.041557 $1,104.86
12/31/95 $11.476196 0.099336 110.942221 $1,273.19 27.32% 8.38%
</TABLE>
<PAGE>
PIA VARIABLE ANNUITY ACCOUNT I
- ------------------------------
TABLE 2: AVERAGE ANNUAL TOTAL RETURN
NO WITHDRAWAL
FOR THE FIVE YEARS ENDED: 12/31/95
AMOUNT INVESTED: $1,000.00
<TABLE>
<CAPTION>
Prorated Units Owned Ending Total Return Average
Growth Equity Portion of $ 30.00 End Of Redeemable End Of Annual
Date Fund Contract Fee Period Value Period Total Return
- -------- ------------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 $6.755130 148.035641 $1,000.00
12/31/91 $8.975410 0.053479 147.982162 $1,328.20
12/31/92 $9.378029 0.051183 147.930978 $1,387.30
12/31/93 $10.397651 0.046164 147.884814 $1,537.65
12/31/94 $9.420707 0.050952 147.833862 $1,392.70
12/31/95 $11.747874 0.040858 147.793004 $1,736.25 73.63% 11.66%
<CAPTION>
Prorated Units Owned Ending Total Return Average
Flexibly Portion of $ 30.00 End Of Redeemable End Of Annual
Date Managed Contract Fee Period Value Period Total Return
- -------- ------------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 $6.357921 157.284119 $1,000.00
12/31/91 $7.625445 0.801265 156.482854 $1,193.25
12/31/92 $8.238463 0.741643 155.741211 $1,283.07
12/31/93 $9.407267 0.649498 155.091713 $1,458.99
12/31/94 $9.660523 0.632471 154.459242 $1,492.16
12/31/95 $11.649728 0.524476 153.934766 $1,793.30 79.33% 12.38%
<CAPTION>
Prorated Units Owned Ending Total Return Average
High Yield Portion of $ 30.00 End Of Redeemable End Of Annual
Date Bond Contract Fee Period Value Period Total Return
- -------- ------------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 $5.737681 174.286441 $1,000.00
12/31/91 $7.752279 0.127704 174.158736 $1,350.13
12/31/92 $8.851986 0.111839 174.046897 $1,540.66
12/31/93 $10.454800 0.094693 173.952204 $1,818.64
12/31/94 $9.553762 0.103624 173.848580 $1,660.91
12/31/95 $10.968126 0.090262 173.758318 $1,905.80 90.58% 13.76%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Prorated Units Owned Ending Total Return Average
Quality Portion of $ 30.00 End Of Redeemable End Of Annual
Date Bond Contract Fee Period Value Period Total Return
- ---------- ------------ -------------------- -------------- ------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 $7.692775 129.992103 $1,000.00
12/31/91 $8.770907 0.118574 129.873529 $1,139.11
12/31/92 $9.216454 0.112842 129.760687 $1,195.93
12/31/93 $10.148405 0.102479 129.658208 $1,315.82
12/31/94 $9.477839 0.109730 129.548479 $1,227.84
12/31/95 $11.229457 0.092614 129.455865 $1,453.72 45.37% 7.77%
<CAPTION>
Prorated Units Owned Ending Total Return Average
Value Portion of $ 30.00 End Of Redeemable End Of Annual
Date Equity Contract Fee Period Value Period Total Return
- ---------- ------------ -------------------- -------------- ------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 $6.100284 163.926794 $1,000.00
12/31/91 $7.680989 0.449161 163.477633 $1,255.67
12/31/92 $8.699744 0.396563 163.081070 $1,418.76
12/31/93 $9.186022 0.375571 162.705499 $1,494.62
12/31/94 $9.323905 0.370017 162.335483 $1,513.60
12/31/95 $12.641006 0.272921 162.062561 $2,048.63 104.86% 15.41%
<CAPTION>
Prorated Units Owned Ending Total Return Average
International Portion of $ 30.00 End Of Redeemable End Of Annual
Date Equity Contract Fee Period Value Period Total Return
- ---------- ------------- -------------------- -------------- ------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 $0.000000 #DIV/0! #DIV/0!
12/31/91 $0.000000 #DIV/0! #DIV/0! #DIV/0!
12/31/92 $8.411030 0.217571 #DIV/0! #DIV/0!
12/31/93 $11.456448 0.159735 #DIV/0! #DIV/0!
12/31/94 $10.584417 0.172896 #DIV/0! #DIV/0!
12/31/95 $11.878760 0.154056 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
<CAPTION>
Prorated Units Owned Ending Total Return Average
TCI Portion of $ 30.00 End Of Redeemable End Of Annual
Date Growth Contract Fee Period Value Period Total Return
- ---------- ------------- -------------------- -------------- ------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 $6.896673 144.997450 $1,000.00
12/31/91 $9.648771 0.190698 144.806752 $1,397.21
12/31/92 $9.386697 0.196022 144.610730 $1,357.42
12/31/93 $10.185124 0.180656 144.430075 $1,471.04
12/31/94 $9.926047 0.185371 144.244704 $1,431.78
12/31/95 $12.818022 0.143548 144.101156 $1,847.09 84.71% 13.05%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Prorated Units Owned Ending Total Return Average
N&B Portion of $ 30.00 End Of Redeemable End Of Annual
Date Balanced Contract Fee Period Value Period Total Return
- --------- ----------- --------------------- ------------ ---------- --------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 $7.405018 135.043561 $1,000.00
12/31/91 $8.958110 0.159632 134.883929 $1,208.31
12/31/92 $9.544854 0.149819 134.734110 $1,286.02
12/31/93 $9.981206 0.143269 134.590841 $1,343.38
12/31/94 $9.548559 0.149761 134.441080 $1,283.72
12/31/95 $11.653880 0.122706 134.318374 $1,565.33 56.53% 9.37%
<CAPTION>
Prorated Units Owned Ending Total Return Average
N&B Portion of $ 30.00 End Of Redeemable End Of Annual
Date LTD MAT Contract Fee Period Value Period Total Return
- --------- ----------- --------------------- ------------ ---------- --------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 $8.290079 120.626112 $1,000.00
12/31/91 $9.102169 0.069214 120.556898 $1,097.33
12/31/92 $9.439952 0.066738 120.490160 $1,137.42
12/31/93 $9.925608 0.063472 120.426688 $1,195.31
12/31/94 $9.772495 0.064467 120.362222 $1,176.24
12/31/95 $10.691231 0.058927 120.303295 $1,286.19 28.62% 5.16%
<CAPTION>
Prorated Units Owned Ending Total Return Average
Portion of $ 30.00 End Of Redeemable End Of Annual
Date SMALL-CAP Contract Fee Period Value Period Total Return
- --------- ----------- --------------------- ------------ ----------- --------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 $0.000000 #DIV/0! #DIV/0!
12/31/91 $0.000000 #DIV/0! #DIV/0! #DIV/0!
12/31/92 $0.000000 #DIV/0! #DIV/0! #DIV/0!
12/31/93 $0.000000 #DIV/0! #DIV/0! #DIV/0!
12/31/94 $0.000000 #DIV/0! #DIV/0! #DIV/0!
12/31/95 $11.145667 0.135479 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
<CAPTION>
Prorated Units Owned Ending Total Return Average
FIDELITY Portion of $ 30.00 End Of Redeemable End Of Annual
Date EQUITY INC Contract Fee Period Value Period Total Return
- --------- ----------- --------------------- ------------ ---------- --------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 $5.173663 193.286652 $1,000.00
12/31/91 $6.705724 0.583084 192.703568 $1,292.22
12/31/92 $7.728908 0.505893 192.197675 $1,485.48
12/31/93 $9.015770 0.433685 191.763991 $1,728.90
12/31/94 $9.518617 0.410774 191.353217 $1,821.42
12/31/95 $12.600495 0.310305 191.042911 $2,407.24 140.72% 19.20%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Prorated Units Owned Ending Total Return Average
FIDELITY Portion of $ 30.00 End Of Redeemable End Of Annual
Date GROWTH Contract Fee Period Value Period Total Return
- ---------- ------------ -------------------- ------------- ------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 $5.457380 183.238111 $1,000.00
12/31/91 $7.830958 0.573365 182.664745 $1,430.44
12/31/92 $8.441505 0.531896 182.132850 $1,537.48
12/31/93 $9.936599 0.451865 181.680985 $1,805.29
12/31/94 $9.796554 0.458324 181.222660 $1,775.36
12/31/95 $13.077900 0.343327 180.879333 $2,365.52 136.55% 18.78%
<CAPTION>
Prorated Units Owned Ending Total Return Average
FIDELITY Portion of $ 30.00 End Of Redeemable End Of Annual
Date ASSET MGR Contract Fee Period Value Period Total Return
- ---------- ------------ -------------------- ------------- ------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 $6.751165 148.122583 $1,000.00
12/31/91 $8.159166 0.139720 147.982863 $1,207.42
12/31/92 $8.987776 0.126839 147.856024 $1,328.90
12/31/93 $10.744669 0.106099 147.749925 $1,587.52
12/31/94 $9.949957 0.114573 147.635352 $1,468.97
12/31/95 $11.476196 0.099336 147.536016 $1,693.15 69.32% 11.10%
</TABLE>
<PAGE>
PIA VARIABLE ANNUITY ACCOUNT I
- ------------------------------
TABLE 2: AVERAGE ANNUAL TOTAL RETURN
NO WITHDRAWAL
FOR THE TEN YEARS ENDED 12/31/95
AMOUNT INVESTED: $1,000.00
<TABLE>
<CAPTION>
Prorated Units Owned Ending Total Return Average
Growth Equity Portion of $ 30.00 End Of Redeemable End Of Annual
Date Fund Contract Fee Period Value Period Total Return
- -------- ------------- ------------------ ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $4.555522 219.513812 $1,000.00
12/31/86 $5.158375 0.093053 219.420759 $1,131.85 13.19%
12/31/87 $5.355589 0.089626 219.331133 $1,174.65 17.46%
12/31/88 $5.950681 0.080663 219.250470 $1,304.69 30.47%
12/31/89 $7.708737 0.062267 219.188203 $1,689.66 68.97%
12/31/90 $6.755130 0.071057 219.117146 $1,480.16 48.02%
12/31/91 $8.975410 0.053479 219.063667 $1,966.19 96.62%
12/31/92 $9.378029 0.051183 219.012483 $2,053.91 105.39%
12/31/93 $10.397651 0.046164 218.966319 $2,276.74 127.67%
12/31/94 $9.420707 0.050952 218.915368 $2,062.34 106.23%
12/31/95 $11.747874 0.040858 218.874509 $2,571.31 157.13% 9.90%
<CAPTION>
Flexibly Prorated Units Owned Ending Total Return Average
Managed Portion of $ 30.00 End Of Redeemable End Of Annual
Date Fund Contract Fee Period Value Period Total Return
- -------- ------------- ------------------ ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $3.363245 297.331892 $1,000.00
12/31/86 $3.804915 1.605818 295.726075 $1,125.21 #DIV/0!
12/31/87 $4.637999 1.317378 294.408696 $1,365.47 36.55%
12/31/88 $5.439985 1.123165 293.285531 $1,595.47 59.55%
12/31/89 $6.500886 0.939872 292.345659 $1,900.51 90.05%
12/31/90 $6.357921 0.961006 291.384653 $1,852.60 85.26%
12/31/91 $7.625445 0.801265 290.583389 $2,215.83 121.58%
12/31/92 $8.238463 0.741643 289.841745 $2,387.85 138.79%
12/31/93 $9.407267 0.649498 289.192248 $2,720.51 172.05%
12/31/94 $9.660523 0.632471 288.559777 $2,787.64 178.76%
12/31/95 $11.649728 0.524476 288.035301 $3,355.53 235.55% 12.86%
<CAPTION>
Prorated Units Owned Ending Total Return Average
High Yield Portion of $ 30.00 End Of Redeemable End Of Annual
Date Bond Fund Contract Fee Period Value Period Total Return
- -------- ------------- ------------------ ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $5.236704 190.959810 $1,000.00
12/31/86 $5.739456 0.172490 190.787320 $1,095.02 9.50%
12/31/87 $5.618674 0.176198 190.611121 $1,070.98 7.10%
12/31/88 $6.525979 0.151701 190.459420 $1,242.93 24.29%
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
12/31/89 $6.396748 0.154766 190.304654 $1,217.33 21.73%
12/31/90 $5.737681 0.172544 190.132110 $1,090.92 9.09%
12/31/91 $7.752279 0.127704 190.004406 $1,472.97 47.30%
12/31/92 $8.851986 0.111839 189.892567 $1,680.93 68.09%
12/31/93 $10.454800 0.094693 189.797873 $1,984.30 98.43%
12/31/94 $9.553762 0.103624 189.694249 $1,812.29 81.23%
12/31/95 $10.968126 0.090262 189.603988 $2,079.60 107.96% 7.59%
<CAPTION>
Prorated Units Owned Ending Total Return Average
Quality Bond Portion of $ 30.00 End Of Redeemable End Of Annual
Date Fund Contract Fee Period Value Period Total Return
- ---------- -------------- -------------------- ------------- ------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $0.000000 #DIV/0! #DIV/0!
12/31/86 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/87 $6.121631 0.169889 #DIV/0! #DIV/0! #DIV/0!
12/31/88 $6.490498 0.160234 #DIV/0! #DIV/0! #DIV/0!
12/31/89 $7.226374 0.143917 #DIV/0! #DIV/0! #DIV/0!
12/31/90 $7.692775 0.135192 #DIV/0! #DIV/0! #DIV/0!
12/31/91 $8.770907 0.118574 #DIV/0! #DIV/0! #DIV/0!
12/31/92 $9.216454 0.112842 #DIV/0! #DIV/0! #DIV/0!
12/31/93 $10.148405 0.102479 #DIV/0! #DIV/0! #DIV/0!
12/31/94 $9.477839 0.109730 #DIV/0! #DIV/0! #DIV/0!
12/31/95 $11.229457 0.092614 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
<CAPTION>
Prorated Units Owned Ending Total Return Average
Value Equity Portion of $ 30.00 End Of Redeemable End Of Annual
Date Fund Contract Fee Period Value Period Total Return
- ---------- -------------- -------------------- ------------- ------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $0.000000 #DIV/0! #DIV/0!
12/31/86 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/87 $4.724564 0.730226 #DIV/0! #DIV/0! #DIV/0!
12/31/88 $6.039898 0.571202 #DIV/0! #DIV/0! #DIV/0!
12/31/89 $6.728437 0.512749 #DIV/0! #DIV/0! #DIV/0!
12/31/90 $6.100284 0.565547 #DIV/0! #DIV/0! #DIV/0!
12/31/91 $7.680989 0.449161 #DIV/0! #DIV/0! #DIV/0!
12/31/92 $8.699744 0.396563 #DIV/0! #DIV/0! #DIV/0!
12/31/93 $9.186022 0.375571 #DIV/0! #DIV/0! #DIV/0!
12/31/94 $9.323905 0.370017 #DIV/0! #DIV/0! #DIV/0!
12/31/95 $12.641006 0.272921 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Prorated Units Owned Ending Total Return Average
International Portion of $ 30.00 End Of Redeemable End Of Annual
Date Equity Contract Fee Period Value Period Total Return
-------- ------------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $0.000000 #DIV/0! #DIV/0!
12/31/86 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/87 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/88 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/89 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/90 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/91 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/92 $8.411030 0.217571 #DIV/0! #DIV/0! #DIV/0!
12/31/93 $11.456448 0.159735 #DIV/0! #DIV/0! #DIV/0!
12/31/94 $10.584417 0.172896 #DIV/0! #DIV/0! #DIV/0!
12/31/95 $11.878760 0.154056 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
<CAPTION>
Prorated Units Owned Ending Total Return Average
TCI Portion of $ 30.00 End Of Redeemable End Of Annual
Date Growth Contract Fee Period Value Period Total Return
-------- ------------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $0.000000 #DIV/0! #DIV/0!
12/31/86 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/87 $5.790207 0.317778 #DIV/0! #DIV/0! #DIV/0!
12/31/88 $5.577805 0.329879 #DIV/0! #DIV/0! #DIV/0!
12/31/89 $7.084750 0.259713 #DIV/0! #DIV/0! #DIV/0!
12/31/90 $6.896673 0.266795 #DIV/0! #DIV/0! #DIV/0!
12/31/91 $9.648771 0.190698 #DIV/0! #DIV/0! #DIV/0!
12/31/92 $9.386697 0.196022 #DIV/0! #DIV/0! #DIV/0!
12/31/93 $10.185124 0.180656 #DIV/0! #DIV/0! #DIV/0!
12/31/94 $9.926047 0.185371 #DIV/0! #DIV/0! #DIV/0!
12/31/95 $12.818022 0.143548 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
<CAPTION>
Prorated Units Owned Ending Total Return Average
N&B Portion of $ 30.00 End Of Redeemable End Of Annual
Date Balanced Contract Fee Period Value Period Total Return
-------- ------------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $0.000000 #DIV/0! #DIV/0!
12/31/86 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/87 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/88 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/89 $7.365810 0.194140 #DIV/0! #DIV/0! #DIV/0!
12/31/90 $7.405018 0.193112 #DIV/0! #DIV/0! #DIV/0!
12/31/91 $8.958110 0.159632 #DIV/0! #DIV/0! #DIV/0!
12/31/92 $9.544854 0.149819 #DIV/0! #DIV/0! #DIV/0!
12/31/93 $9.981206 0.143269 #DIV/0! #DIV/0! #DIV/0!
12/31/94 $9.548559 0.149761 #DIV/0! #DIV/0! #DIV/0!
12/31/95 $11.653880 0.122706 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Prorated Units Owned Ending Total Return Average
N&B Portion of $ 30.00 End Of Redeemable End Of Annual
Date Lmtd Mat Bond Contract Fee Period Value Period Total Return
-------- ------------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $5.903314 169.396376 $1,000.00
12/31/86 $6.626619 0.095071 169.301305 $1,121.90 12.19%
12/31/87 $6.723442 0.093702 169.207603 $1,137.66 13.77%
12/31/88 $7.104860 0.088672 169.118932 $1,201.57 20.16%
12/31/89 $7.760881 0.081176 169.037755 $1,311.88 31.19%
12/31/90 $8.290079 0.075994 168.961761 $1,400.71 40.07%
12/31/91 $9.102169 0.069214 168.892546 $1,537.29 53.73%
12/31/92 $9.439952 0.066738 168.825809 $1,593.71 59.37%
12/31/93 $9.925608 0.063472 168.762337 $1,675.07 67.51%
12/31/94 $9.772495 0.064467 168.697870 $1,648.60 64.86%
12/31/95 $10.691231 0.058927 168.638943 $1,802.96 80.30% 6.07%
<CAPTION>
Prorated Units Owned Ending Total Return Average
Portion of $ 30.00 End Of Redeemable End Of Annual
Date Small-Cap Contract Fee Period Value Period Total Return
-------- ------------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $0.000000 #DIV/0! #DIV/0!
12/31/86 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/87 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/88 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/89 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/90 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/91 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/92 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/93 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/94 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/95 $11.145667 0.135479 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
<CAPTION>
Prorated Units Owned Ending Total Return Average
FIDELITY Portion of $ 30.00 End Of Redeemable End Of Annual
Date Equity Inc Contract Fee Period Value Period Total Return
-------- ------------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $0.000000 #DIV/0! #DIV/0!
12/31/86 $4.537328 0.861741 #DIV/0! #DIV/0! #DIV/0!
12/31/87 $4.423567 0.883902 #DIV/0! #DIV/0! #DIV/0!
12/31/88 $5.352534 0.730495 #DIV/0! #DIV/0! #DIV/0!
12/31/89 $6.193601 0.631297 #DIV/0! #DIV/0! #DIV/0!
12/31/90 $5.173663 0.755751 #DIV/0! #DIV/0! #DIV/0!
12/31/91 $6.705724 0.583084 #DIV/0! #DIV/0! #DIV/0!
12/31/92 $7.728908 0.505893 #DIV/0! #DIV/0! #DIV/0!
12/31/93 $9.015770 0.433685 #DIV/0! #DIV/0! #DIV/0!
12/31/94 $9.518617 0.410774 #DIV/0! #DIV/0! #DIV/0!
12/31/95 $12.600495 0.310305 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Prorated Units Owned Ending Total Return Average
FIDELITY Portion of $ 30.00 End Of Redeemable End Of Annual
Date Growth Contract Fee Period Value Period Total Return
- ---------- ------------ -------------------- ------------- ------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $0.000000 #DIV/0! #DIV/0!
12/31/86 $4.149882 1.081958 #DIV/0! #DIV/0! #DIV/0!
12/31/87 $4.242140 1.058428 #DIV/0! #DIV/0! #DIV/0!
12/31/88 $4.834827 0.928679 #DIV/0! #DIV/0! #DIV/0!
12/31/89 $6.270101 0.716097 #DIV/0! #DIV/0! #DIV/0!
12/31/90 $5.457380 0.822739 #DIV/0! #DIV/0! #DIV/0!
12/31/91 $7.830958 0.573365 #DIV/0! #DIV/0! #DIV/0!
12/31/92 $8.441505 0.531896 #DIV/0! #DIV/0! #DIV/0!
12/31/93 $9.936599 0.451865 #DIV/0! #DIV/0! #DIV/0!
12/31/94 $9.796554 0.458324 #DIV/0! #DIV/0! #DIV/0!
12/31/95 $13.077900 0.343327 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
<CAPTION>
Prorated Units Owned Ending Total Return Average
FIDELITY Portion of $ 30.00 End Of Redeemable End Of Annual
Date Asset Mgr Contract Fee Period Value Period Total Return
- ---------- ------------ -------------------- ------------- ------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $0.000000 #DIV/0! #DIV/0!
12/31/86 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/87 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/88 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/89 $6.415215 0.177703 #DIV/0! #DIV/0! #DIV/0!
12/31/90 $6.751165 0.168860 #DIV/0! #DIV/0! #DIV/0!
12/31/91 $8.159166 0.139720 #DIV/0! #DIV/0! #DIV/0!
12/31/92 $8.987776 0.126839 #DIV/0! #DIV/0! #DIV/0!
12/31/93 $10.744669 0.106099 #DIV/0! #DIV/0! #DIV/0!
12/31/94 $9.949957 0.114573 #DIV/0! #DIV/0! #DIV/0!
12/31/95 $11.476196 0.099336 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
</TABLE>
<PAGE>
PIA VARIABLE ANNUITY ACCOUNT I
- ------------------------------
TABLE 2: AVERAGE ANNUAL TOTAL RETURN
NO WITHDRAWAL
SINCE INCEPTION TO: 12/31/95
AMOUNT INVESTED: $1,000.00
<TABLE>
<CAPTION>
Prorated Units Owned Ending Total Return Average
Growth Equity Portion of $ 30.00 End Of Redeemable End Of Annual
Date Fund Contract Fee Period Value Period Total Return
-------- ------------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
06/01/83 $3.679564 271.771329 $1,000.00
06/01/84 $3.378781 0.142063 271.629266 $917.78 -8.22%
06/01/85 $4.140589 0.115926 271.513341 $1,124.23 12.42%
06/01/86 $5.326260 0.090120 271.423221 $1,445.67 44.57%
06/01/87 $6.031310 0.079585 271.343637 $1,636.56 63.66%
06/01/88 $5.802547 0.082722 271.260914 $1,574.00 57.40%
06/01/89 $6.988377 0.068685 271.192229 $1,895.19 89.52%
06/01/90 $7.936197 0.060482 271.131746 $2,151.75 115.18%
06/01/91 $8.112479 0.059168 271.072578 $2,199.07 119.91%
06/01/92 $8.769114 0.054738 271.017841 $2,376.59 137.66%
06/01/93 $9.586086 0.050073 270.967768 $2,597.52 159.75%
06/01/94 $9.444207 0.050825 270.916943 $2,558.60 155.86%
06/01/95 $10.236038 0.046893 270.870050 $2,772.64 177.26%
12/31/95 $11.747874 0.040858 270.829192 $3,181.67 218.17% 9.63%
<CAPTION>
Flexibly Prorated Units Owned Ending Total Return Average
Managed Portion of $ 30.00 End Of Redeemable End Of Annual
Date Fund Contract Fee Period Value Period Total Return
-------- ------------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
07/31/84 $2.755418 362.921343 $1,000.00
07/31/85 $3.152745 1.937994 360.983349 $1,138.09 13.81%
07/31/86 $3.821619 1.598799 359.384550 $1,373.43 37.34%
07/31/87 $4.756778 1.284483 358.100067 $1,703.40 70.34%
07/31/88 $5.214443 1.171745 356.928322 $1,861.18 86.12%
07/31/89 $6.479420 0.942986 355.985336 $2,306.58 130.66%
07/31/90 $6.554032 0.932251 355.053085 $2,327.03 132.70%
07/31/91 $7.383192 0.827555 354.225530 $2,615.32 161.53%
07/31/92 $8.064706 0.757622 353.467908 $2,850.61 185.06%
07/31/93 $8.811342 0.693424 352.774484 $3,108.42 210.84%
07/31/94 $9.461836 0.645752 352.128731 $3,331.78 233.18%
07/31/95 $11.071102 0.551887 351.576844 $3,892.34 289.23%
12/31/95 $11.649728 0.524476 351.052368 $4,089.66 308.97% 13.12%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Prorated Units Owned Ending Total Return Average
High Yield Portion of $ 30.00 End Of Redeemable End Of Annual
Date Bond Fund Contract Fee Period Value Period Total Return
---- ---------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
08/06/84 $4.274745 233.932082 $1,000.00
08/06/85 $4.949967 0.200001 233.732081 $1,156.97 15.70%
08/06/86 $5.513970 0.179544 233.552537 $1,287.80 28.78%
08/06/87 $5.818893 0.170135 233.382402 $1,358.03 35.80%
08/06/88 $6.267419 0.157960 233.224442 $1,461.72 46.17%
08/06/89 $6.884597 0.143799 233.080643 $1,604.67 60.47%
08/06/90 $6.549305 0.151161 232.929482 $1,525.53 52.55%
08/06/91 $7.201615 0.137469 232.792012 $1,676.48 67.65%
08/06/92 $8.565493 0.115580 232.676432 $1,992.99 99.30%
08/06/93 $9.917575 0.099823 232.576610 $2,306.60 130.66%
08/06/94 $9.944338 0.099554 232.477056 $2,311.83 131.18%
08/06/95 $10.548141 0.093855 232.383200 $2,451.21 145.12%
12/31/95 $10.968126 0.090262 232.292939 $2,547.82 154.78% 8.54%
<CAPTION>
Prorated Units Owned Ending Total Return Average
Quality Bond Portion of $ 30.00 End Of Redeemable End Of Annual
Date Fund Contract Fee Period Value Period Total Return
---- ----------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
03/17/87 $6.153024 162.521713 $1,000.00
03/17/88 $6.336540 0.164127 162.357585 $1,028.79 2.88%
03/17/89 $6.478625 0.160528 162.197058 $1,050.81 5.08%
03/17/90 $7.130900 0.145844 162.051213 $1,155.57 15.56%
03/17/91 $7.812288 0.133124 161.918090 $1,264.95 26.50%
03/17/92 $8.512054 0.122180 161.795910 $1,377.22 37.72%
03/17/93 $9.638590 0.107900 161.688011 $1,558.44 55.84%
03/17/94 $9.880534 0.105257 161.582753 $1,596.52 59.65%
03/17/95 $10.046136 0.103522 161.479231 $1,622.24 62.22%
12/31/95 $11.229457 0.092614 161.386617 $1,812.28 81.23% 6.99%
<CAPTION>
Prorated Units Owned Ending Total Return Average
Value Equity Portion of $ 30.00 End Of Redeemable End Of Annual
Date Fund Contract Fee Period Value Period Total Return
---- ----------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
03/17/87 $5.197559 192.398008 $1,000.00
03/17/88 $5.435785 0.634683 191.763325 $1,042.38 4.24%
03/17/89 $6.322311 0.545687 191.217639 $1,208.94 20.89%
03/17/90 $6.612748 0.521720 190.695919 $1,261.02 26.10%
03/17/91 $6.968546 0.495082 190.200838 $1,325.42 32.54%
03/17/92 $8.044809 0.428848 189.771990 $1,526.68 52.67%
03/17/93 $8.767314 0.393507 189.378483 $1,660.34 66.03%
03/17/94 $9.332653 0.369670 189.008813 $1,763.95 76.40%
03/17/95 $10.147961 0.339970 188.668843 $1,914.60 91.46%
12/31/95 $12.641006 0.272921 188.395922 $2,381.51 138.15% 10.37%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Prorated Units Owned Ending Total Return Average
International Portion of $ 30.00 End Of Redeemable End Of Annual
Date Equity Contract Fee Period Value Period Total Return
-------- ------------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
11/01/92 $8.268342 120.943231 $1,000.00
11/01/93 $10.753055 0.170184 120.773047 $1,298.68
11/01/94 $11.363818 0.161037 120.612010 $1,370.61
11/01/95 $11.249363 0.162676 120.449334 $1,354.98
12/31/95 $11.878760 0.154056 120.295277 $1,428.96 42.90% 11.94%
<CAPTION>
Prorated Units Owned Ending Total Return Average
TCI Portion of $ 30.00 End Of Redeemable End Of Annual
Date Growth Contract Fee Period Value Period Total Return
-------- ------------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
11/20/87 $5.409687 184.854262 $1,000.00
11/20/88 $5.329299 0.345261 184.509001 $983.30 -1.67%
11/20/89 $7.050619 0.260970 184.248031 $1,299.06 29.91%
11/20/90 $6.369260 0.288888 183.959143 $1,171.68 17.17%
11/20/91 $8.534217 0.215603 183.743540 $1,568.11 56.81%
11/20/92 $9.166839 0.200723 183.542817 $1,682.51 68.25%
11/20/93 $9.960345 0.184733 183.358084 $1,826.31 82.63%
11/20/94 $9.995646 0.184080 183.174004 $1,830.94 83.09%
11/20/95 $12.613669 0.145873 183.028131 $2,308.66 130.87%
12/31/95 $12.818022 0.143548 182.884583 $2,344.22 134.42% 11.07%
<CAPTION>
Prorated Units Owned Ending Total Return Average
N&B Portion of $ 30.00 End Of Redeemable End Of Annual
Date Balanced Contract Fee Period Value Period Total Return
-------- ------------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
02/28/89 $6.402692 156.184305 $1,000.00
02/28/90 $7.127999 0.200617 155.983688 $1,111.85 11.19%
02/28/91 $7.988449 0.179008 155.804679 $1,244.64 24.46%
02/28/92 $9.152294 0.156245 155.648434 $1,424.54 42.45%
02/28/93 $9.392281 0.152253 155.496182 $1,460.46 46.05%
02/28/94 $10.094085 0.141667 155.354514 $1,568.16 56.82%
02/28/95 $9.973464 0.143380 155.211134 $1,547.99 54.80%
02/28/96 $11.945190 0.119713 155.091420 $1,852.60 85.26%
12/31/95 $11.653880 0.122706 155.088428 $1,807.38 80.74% 9.04%
<CAPTION>
Prorated Units Owned Ending Total Return Average
N&B Portion of $ 30.00 End Of Redeemable End Of Annual
Date Lmtd Mat Bond Contract Fee Period Value Period Total Return
-------- ------------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
09/10/84 $4.892696 204.386293 $1,000.00
09/10/85 $5.670945 0.111093 204.275201 $1,158.43 15.84%
09/10/86 $6.518318 0.096651 204.178550 $1,330.90 33.09%
09/10/87 $6.721697 0.093726 204.084824 $1,371.80 37.18%
09/10/88 $7.042462 0.089457 203.995366 $1,436.63 43.66%
09/10/89 $7.569360 0.083230 203.912136 $1,543.48 54.35%
09/10/90 $8.050673 0.078254 203.833882 $1,641.00 64.10%
09/10/91 $8.707241 0.072354 203.761528 $1,774.20 77.42%
09/10/92 $9.480589 0.066452 203.695077 $1,931.15 93.11%
09/10/93 $9.954736 0.063286 203.631790 $2,027.10 102.71%
09/10/94 $9.807571 0.064236 203.567554 $1,996.50 99.65%
09/10/95 $10.401477 0.060568 203.506986 $2,116.77 111.68%
12/31/95 $10.691231 0.058927 203.448059 $2,175.11 117.51% 7.11%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Prorated Units Owned Ending Total Return Average
Portion of $ 30.00 End Of Redeemable End Of Annual
Date Small - Cap Contract Fee Period Value Period Total Return
- -------- ------------- -------------------- -------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
03/01/95 $10.000000 100.000000 $1,000.00
12/31/95 $11.145667 0.135479 99.864521 $1,113.06 11.31% 13.68%
<CAPTION>
Prorated Units Owned Ending Total Return Average
FIDELITY Portion of $ 30.00 End Of Redeemable End Of Annual
Date Equity Income Contract Fee Period Value Period Total Return
- -------- ------------- -------------------- -------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
10/09/86 $4.542707 220.133062 $1,000.00
10/09/87 $5.371647 0.727896 219.405166 $1,178.57 17.86%
10/09/88 $5.393455 0.724953 218.680213 $1,179.44 17.94%
10/09/89 $6.592083 0.593136 218.087077 $1,437.65 43.76%
10/09/90 $4.840596 0.807752 217.279325 $1,051.76 5.18%
10/09/91 $6.256874 0.624913 216.654413 $1,355.58 35.56%
10/09/92 $7.000715 0.558514 216.095898 $1,512.83 51.28%
10/09/93 $8.979943 0.435415 215.660484 $1,936.62 93.66%
10/09/94 $9.524197 0.410533 215.249950 $2,050.08 105.01%
10/09/95 $11.784016 0.331805 214.918145 $2,532.60 153.26%
12/31/95 $12.600495 0.310305 214.607840 $2,704.17 170.42% 11.38%
<CAPTION>
Prorated Units Owned Ending Total Return Average
FIDELITY Portion of $ 30.00 End Of Redeemable End Of Annual
Date Growth Contract Fee Period Value Period Total Return
- -------- ------------- -------------------- -------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
10/09/86 $4.150654 240.925888 $1,000.00
10/09/87 $5.223288 0.859612 240.066276 $1,253.94 25.39%
10/09/88 $4.908182 0.914799 239.151477 $1,173.80 17.38%
10/09/89 $6.447561 0.696387 238.455090 $1,537.45 53.75%
10/09/90 $5.071896 0.885271 237.569819 $1,204.93 20.49%
10/09/91 $6.909447 0.649835 236.919984 $1,636.99 63.70%
10/09/92 $7.281259 0.616652 236.303333 $1,720.59 72.06%
10/09/93 $9.912135 0.452980 235.850353 $2,337.78 133.78%
10/09/94 $9.388262 0.478257 235.372096 $2,209.73 120.97%
10/09/95 $12.759168 0.351904 235.020192 $2,998.66 199.87%
12/31/95 $13.077900 0.343327 234.676865 $3,069.08 206.91% 12.91%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Prorated Units Owned Ending Total Return Average
FIDELITY Portion of $30.00 End Of Redeemable End Of Annual
Date Asset Mgr Contract Fee Period Value Period Total Return
- ---------- ------------ ----------------- ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
09/06/89 $6.392017 156.445141 $1,000.00
09/06/90 $6.379732 0.178691 156.266450 $996.94 -0.31%
09/06/91 $7.862493 0.144992 156.121458 $1,227.50 22.75%
09/06/92 $8.695734 0.131099 155.990359 $1,356.45 35.65%
09/06/93 $10.064653 0.113268 155.877091 $1,568.85 56.88%
09/06/94 $10.400201 0.109613 155.767478 $1,620.01 62.00%
09/06/95 $11.066582 0.103013 155.664465 $1,722.67 72.27%
12/31/95 $11.476196 0.099336 155.565129 $1,785.30 78.53% 9.60%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
PIA VARIABLE ANNUITY ACCOUNT I
- ------------------------------
TABLE 3: AVERAGE ANNUAL TOTAL RETURN
NO WITHDRAWAL
FOR THE 12 MONTHS ENDED: 12/31/95
AMOUNT INVESTED: $10,000.00
<TABLE>
<CAPTION>
Total Total
Unit Number Prorated Number Unit Total Return
Values of Units Portion of $30.00 of Units Values Value for
12/31/94 at $1000 Contract Fee End of Period 12/31/95 12/31/95 1 Year
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
QUALITY BOND FUND 9.477839 1,055.092833 0.092614 1,055.000219 11.229457 $11,847.08 18.47%
HIGH YIELD BOND 9.553762 1,046.708093 0.090262 1,046.617831 10.968126 $11,479.44 14.79%
VALUE EQUITY FUND 9.323905 1,072.512000 0.272921 1,072.239079 12.641006 $13,554.18 35.54%
FLEXIBLY MANAGED FUND 9.660523 1,035.140644 0.524476 1,034.616168 11.649728 $12,053.00 20.53%
GROWTH EQUITY 9.420707 1,061.491457 0.040858 1,061.450599 11.747874 $12,469.79 24.70%
INTERNATIONAL EQUITY 10.584417 944.785150 0.154056 944.631093 11.878760 $11,221.05 12.21%
TCI GROWTH 9.926047 1,007.450398 0.143548 1,007.306850 12.818022 $12,911.68 29.12%
N&B BALANCED 9.548559 1,047.278443 0.122706 1,047.155737 11.653880 $12,203.43 22.03%
N&B LMTD MAT BOND 9.772495 1,023.280135 0.058927 1,023.221208 10.691231 $10,939.49 9.39%
SMALL-CAP FUND 0.000000 #DIV/0I 0.135479 #DIV/0I 11.145667 #DIV/0I #DIV/0I
FID EQUITY INC 9.518617 1,050.572788 0.310305 1,050.262483 12.600495 $13,233.83 32.34%
FID GROWTH 9.796554 1,020.767098 0.343327 1,020.423771 13.077900 $13,345.00 33.45%
FID ASSET MANAGER 9.949957 1,005.029469 0.099336 1,004.930133 11.476196 $11,532.78 15.33%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
PIA VARIABLE ANNUITY ACCOUNT I
- ------------------------------
TABLE 3: AVERAGE ANNUAL TOTAL RETURN
NO WITHDRAWAL
FOR THE THREE YEARS ENDED: 12/31/95
AMOUNT INVESTED: $10,000.00
<TABLE>
<CAPTION>
Prorated Units Owned Ending Total Return Average
Growth Equity Portion of $ 30.00 End Of Redeemable End Of Annual
Date Fund Contract Fee Period Value Period Total Return
- ---------- --------------- ------------------- ------------- ------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
12/31/92 $9.378029 1066.322145 $10,000.00
12/31/93 $10.397651 0.046164 1066.275981 $11,086.77
12/31/94 $9.420707 0.050952 1066.225029 $10,044.59
12/31/95 $11.747874 0.040858 1066.184171 $12,525.40 25.25% 7.79%
<CAPTION>
Prorated Units Owned Ending Total Return Average
Flexibly Portion of $ 30.00 End Of Redeemable End Of Annual
Date Managed Contract Fee Period Value Period Total Return
- ---------- --------------- ------------------- ------------- ------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
12/31/92 $8.238463 1213.818646 $10,000.00
12/31/93 $9.407267 0.649498 1213.169148 $11,412.61
12/31/94 $9.660523 0.632471 1212.536677 $11,713.74
12/31/95 $11.649728 0.524476 1212.012201 $14,119.61 41.20% 12.19%
<CAPTION>
Prorated Units Owned Ending Total Return Average
High Yield Portion of $ 30.00 End Of Redeemable End Of Annual
Date Bond Contract Fee Period Value Period Total Return
- ---------- --------------- ------------------- ------------- ------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
12/31/92 $8.851986 1129.689993 $10,000.00
12/31/93 $10.454800 0.094693 1129.595299 $11,809.69
12/31/94 $9.553762 0.103624 1129.491675 $10,790.89
12/31/95 $10.968126 0.090262 1129.401414 $12,387.42 23.87% 7.40%
<CAPTION>
Prorated Units Owned Ending Total Return Average
Quality Portion of $ 30.00 End Of Redeemable End Of Annual
Date Bond Contract Fee Period Value Period Total Return
- ---------- --------------- ------------------- ------------- ------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
12/31/92 $9.216454 1085.015994 $10,000.00
12/31/93 $10.148405 0.102479 1084.913515 $11,010.14
12/31/94 $9.477839 0.109730 1084.803785 $10,281.60
12/31/95 $11.229457 0.092614 1084.711172 $12,180.72 21.81% 6.80%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Prorated Units Owned Ending Total Return Average
Value Portion of $ 30.00 End Of Redeemable End Of Annual
Date Equity Contract Fee Period Value Period Total Return
---- ------ ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/92 $8.699744 1149.459111 $10,000.00
12/31/93 $9.186022 0.375571 1149.083540 $10,555.51
12/31/94 $9.323902 0.370017 1148.713523 $10,710.50
12/31/95 $12.641006 0.272921 1148.440602 $14,517.44 45.17% 13.23%
<CAPTION>
Prorated Units Owned Ending Total Return Average
International Portion of $ 30.00 End Of Redeemable End Of Annual
Date Equity Contract Fee Period Value Period Total Return
---- ------------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/92 $8.411030 1188.915032 $10,000.00
12/31/93 $11.456448 0.159735 1188.755296 $13,618.91
12/31/94 $10.584417 0.172896 1188.582401 $12,580.45
12/31/95 $11.878760 0.154056 1188.428344 $14,117.06 41.17% 12.18%
<CAPTION>
Prorated Units Owned Ending Total Return Average
TCI Portion of $ 30.00 End Of Redeemable End Of Annual
Date Growth Contract Fee Period Value Period Total Return
---- ------ ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/92 $9.386697 1065.337466 $10,000.00
12/31/93 $10.185124 0.180656 1065.156811 $10,848.75
12/31/94 $9.926047 0.185371 1064.971440 $10,570.96
12/31/95 $12.818022 0.143548 1064.827892 $13,648.99 36.49% 10.93%
<CAPTION>
Prorated Units Owned Ending Total Return Average
N&B Portion of $ 30.00 End Of Redeemable End Of Annual
Date Balanced Contract Fee Period Value Period Total Return
---- -------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/92 $9.544854 1047.684962 $10,000.00
12/31/93 $9.981206 0.143269 1047.541693 $10,455.73
12/31/94 $9.548559 0.149761 1047.391932 $10,001.08
12/31/95 $11.653880 0.122706 1047.269226 $12,204.75 22.05% 6.87%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Prorated Units Owned Ending Total Return Average
N&B Portion of $ 30.00 End Of Redeemable End Of Annual
Date LTD MAT Contract Fee Period Value Period Total Return
---- ------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/92 $9.439952 1059.327420 $10,000.00
12/31/93 $9.925608 0.063472 1059.263948 $10,513.84
12/31/94 $9.772495 0.064467 1059.199481 $10,351.02
12/31/95 $10.691231 0.058927 1059.140555 $11,323.52 13.24% 4.23%
<CAPTION>
Prorated Units Owned Ending Total Return Average
Portion of $ 30.00 End Of Redeemable End Of Annual
Date SMALL-CAP Contract Fee Period Value Period Total Return
---- --------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/92 $0.0000000 -- #DIV/0!
12/31/93 $0.0000000 #DIV/0! #DIV/0! #DIV/0!
12/31/94 $0.0000000 #DIV/0! #DIV/0! #DIV/0!
12/31/95 $11.145667 0.135479 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
<CAPTION>
Prorated Units Owned Ending Total Return Average
FIDELITY Portion of $ 30.00 End Of Redeemable End Of Annual
Date EQUITY INC Contract Fee Period Value Period Total Return
---- ---------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/92 $7.728908 1293.843839 $10,000.00
12/31/93 $9.015770 0.433685 1293.410155 $11,661.09
12/31/94 $9.518617 0.410774 1292.999381 $12,307.57
12/31/95 $12.600495 0.310305 1292.689075 $16,288.52 62.89% 17.66%
<CAPTION>
Prorated Units Owned Ending Total Return Average
FIDELITY Portion of $ 30.00 End Of Redeemable End Of Annual
Date GROWTH Contract Fee Period Value Period Total Return
---- --------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/92 $8.441505 1184.622884 $10,000.00
12/31/93 $9.936599 0.451865 1184.171019 $11,766.63
12/31/94 $9.796554 0.458324 1183.712695 $11,596.31
12/31/95 $13.077900 0.343327 1183.369368 $15,475.99 54.76% 15.67%
<CAPTION>
Prorated Units Owned Ending Total Return Average
FIDELITY Portion of $ 30.00 End Of Redeemable End Of Annual
Date ASSET MGR Contract Fee Period Value Period Total Return
---- --------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/92 $8.987776 1112.622299 $10,000.00
12/31/93 $10.744669 0.106099 1112.516200 $11,953.62
12/31/94 $9.949957 0.114573 1112.401627 $11,068.35
12/31/95 $11.476196 0.099336 1112.302291 $12,765.00 27.65% 8.48%
</TABLE>
<PAGE>
PIA VARIABLE ANNUITY ACCOUNT I
- ------------------------------
TABLE 3: AVERAGE ANNUAL TOTAL RETURN
NO WITHDRAWAL
FOR THE FIVE YEARS ENDED: 12/31/95
AMOUNT INVESTED: $10,000.00
<TABLE>
<CAPTION>
Prorated Units Owned Ending Total Return Average
Growth Equity Portion of $ 30.00 End Of Redeemable End Of Annual
Date Fund Contract Fee Period Value Period Total Return
---- ------------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 $6.755130 1,480.356411 $10,000.00
12/31/91 $8.975410 0.053479 1,480.302931 $13,286.33
12/31/92 $9.378029 0.051183 1,480.251748 $13,881.84
12/31/93 $10.397651 0.046164 1,480.205583 $15,390.66
12/31/94 $9.420707 0.050952 1,480.154632 $13,944.10
12/31/95 $11.747874 0.040858 1,480.113773 $17,388.19 73.88% 11.69%
<CAPTION>
Prorated Units Owned Ending Total Return Average
Flexibly Portion of $ 30.00 End Of Redeemable End Of Annual
Date Managed Contract Fee Period Value Period Total Return
---- ------------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 $6.357921 1,572.841185 $10,000.00
12/31/91 $7.625445 0.801265 1,572.039920 $11,987.50
12/31/92 $8.238463 0.741643 1,571.298277 $12,945.08
12/31/93 $9.407267 0.649498 1,570.648779 $14,775.51
12/31/94 $9.660523 0.632471 1,570.016308 $15,167.18
12/31/95 $11.649728 0.524476 1,569.491833 $18,284.15 82.84% 12.82%
<CAPTION>
Prorated Units Owned Ending Total Return Average
High Yield Portion of $ 30.00 End Of Redeemable End Of Annual
Date Bond Contract Fee Period Value Period Total Return
---- ------------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 $5.737681 1,742.864408 $10,000.00
12/31/91 $7.752279 0.127704 1,742.736704 $13,510.18
12/31/92 $8.851986 0.111839 1,742.624864 $15,425.69
12/31/93 $10.454800 0.094693 1,742.530171 $18,217.80
12/31/94 $9.553762 0.103624 1,742.426547 $16,646.73
12/31/95 $10.968126 0.090262 1,742.336285 $19,110.16 91.10% 13.82%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Prorated Units Owned Ending Total Return Average
Quality Portion of $ 30.00 End Of Redeemable End Of Annual
Date Bond Contract Fee Period Value Period Total Return
- -------- ------------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 $7.692775 1,299.921030 $10,000.00
12/31/91 $8.770907 0.118574 1,299.802456 $11,400.45
12/31/92 $9.216454 0.112842 1,299.689614 $11,978.53
12/31/93 $10.148405 0.102479 1,299.587135 $13,188.74
12/31/94 $9.477839 0.109730 1,299.477405 $12,316.24
12/31/95 $11.229457 0.092614 1,299.384792 $14,591.39 45.91% 7.85%
<CAPTION>
Prorated Units Owned Ending Total Return Average
Value Portion of $ 30.00 End Of Redeemable End Of Annual
Date Equity Contract Fee Period Value Period Total Return
- -------- ------------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 $6.100284 1,639.267942 $10,000.00
12/31/91 $7.680989 0.449161 1,638.818781 $12,587.75
12/31/92 $8.699744 0.396563 1,638.422218 $14,253.85
12/31/93 $9.186022 0.375571 1,638.046647 $15,047.13
12/31/94 $9.323905 0.370017 1,637.676631 $15,269.54
12/31/95 $12.641006 0.272921 1,637.403709 $20,698.43 106.98% 15.65%
<CAPTION>
Prorated Units Owned Ending Total Return Average
International Portion of $ 30.00 End Of Redeemable End Of Annual
Date Equity Contract Fee Period Value Period Total Return
- -------- ------------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 $0.000000 #DIV/0! #DIV/0!
12/31/91 $0.000000 #DIV/0! #DIV/0! #DIV/0!
12/31/92 $8.411030 0.217571 #DIV/0! #DIV/0!
12/31/93 $11.456448 0.159735 #DIV/0! #DIV/0!
12/31/94 $10.584417 0.172896 #DIV/0! #DIV/0!
12/31/95 $11.878760 0.154056 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
<CAPTION>
Prorated Units Owned Ending Total Return Average
TCI Portion of $ 30.00 End Of Redeemable End Of Annual
Date Growth Contract Fee Period Value Period Total Return
- -------- ------------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 $6.896673 1,449.974502 $10,000.00
12/31/91 $9.648771 0.190698 1,449.783804 $13,988.63
12/31/92 $9.386697 0.196022 1,449.587782 $13,606.84
12/31/93 $10.185124 0.180656 1,449.407127 $14,762.39
12/31/94 $9.926047 0.185371 1,449.221756 $14,385.04
12/31/95 $12.818022 0.143548 1,449.078208 $18,574.32 85.74% 13.18%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Prorated Units Owned Ending Total Return Average
N&B Portion of $ 30.00 End Of Redeemable End Of Annual
Date Balanced Contract Fee Period Value Period Total Return
---------- ----------- -------------------- ------------ ------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 $7.405018 1350.435610 $10,000.00
12/31/91 $8.958110 0.159632 1350.275978 $12,095.92
12/31/92 $9.544854 0.149819 1350.126159 $12,886.76
12/31/93 $9.981206 0.143269 1349.982890 $13,474.46
12/31/94 $9.548559 0.149761 1349.833129 $12,888.96
12/31/95 $11.653880 0.122706 1349.710423 $15,729.36 57.29% 9.48%
</TABLE>
<TABLE>
<CAPTION>
Prorated Units Owned Ending Total Return Average
N&B Portion of $ 30.00 End Of Redeemable End Of Annual
Date LTD MAT Contract Fee Period Value Period Total Return
---------- ----------- -------------------- ------------ ------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 $8.290079 1206.261122 $10,000.00
12/31/91 $9.102169 0.069214 1206.191908 $10,978.96
12/31/92 $9.439952 0.066738 1206.125171 $11,385.76
12/31/93 $9.925608 0.063472 1206.061698 $11,970.90
12/31/94 $9.772495 0.064467 1205.997232 $11,785.60
12/31/95 $10.691231 0.058927 1205.938305 $12,892.96 28.93% 5.21%
</TABLE>
<TABLE>
<CAPTION>
Prorated Units Owned Ending Total Return Average
Portion of $ 30.00 End Of Redeemable End Of Annual
Date SMALL-CAP Contract Fee Period Value Period Total Return
---------- ----------- -------------------- ------------ ------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 $0.000000 #DIV/0! #DIV/0!
12/31/91 $0.000000 #DIV/0! #DIV/0! #DIV/0!
12/31/92 $0.000000 #DIV/0! #DIV/0! #DIV/0!
12/31/93 $0.000000 #DIV/0! #DIV/0! #DIV/0!
12/31/94 $0.000000 #DIV/0! #DIV/0! #DIV/0!
12/31/95 $11.145667 0.135479 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
</TABLE>
<TABLE>
<CAPTION>
Prorated Units Owned Ending Total Return Average
FIDELITY Portion of $ 30.00 End Of Redeemable End Of Annual
Date EQUITY INC. Contract Fee Period Value Period Total Return
---------- ----------- -------------------- ------------ ------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 $5.173663 1932.866520 $10,000.00
12/31/91 $6.705724 0.583084 1932.283436 $12,957.36
12/31/92 $7.728908 0.505893 1931.777543 $14,930.53
12/31/93 $9.015770 0.433685 1931.343859 $17,412.55
12/31/94 $9.518617 0.410774 1930.933085 $18,379.81
12/31/95 $12.600495 0.310305 1930.622780 $24,326.80 143.27% 19.45%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Prorated Units Owned Ending Total Return Average
FIDELITY Portion of $ 30.00 End Of Redeemable End Of Annual
Date GROWTH Contract Fee Period Value Period Total Return
-------- -------- ------------------ ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 $5.457380 1,832.381106 $10,000.00
12/31/91 $7.830958 0.573365 1,831.807741 $14,344.81
12/31/92 $8.441505 0.531896 1,831.275845 $15,458.72
12/31/93 $9.936599 0.451865 1,830.823980 $18,192.16
12/31/94 $9.796554 0.458324 1,830.365656 $17,931.28
12/31/95 $13.077900 0.343327 1,830.022328 $23,932.85 139.33% 19.06%
<CAPTION>
Prorated Units Owned Ending Total Return Average
FIDELITY Portion of $ 30.00 End Of Redeemable End Of Annual
Date ASSET MGR Contract Fee Period Value Period Total Return
-------- --------- ------------------ ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 $6.751165 1,481.225833 $10,000.00
12/31/91 $8.159166 0.139720 1,481.086113 $12,084.43
12/31/92 $8.987776 0.126839 1,480.959274 $13,310.53
12/31/93 $10.744669 0.106099 1,480.853175 $15,911.28
12/31/94 $9.949957 0.114573 1,480.738601 $14,733.29
12/31/95 $11.476196 0.099336 1,480.639265 $16,992.11 69.92% 11.18%
</TABLE>
<PAGE>
PIA VARIABLE ANNUITY ACCOUNT I
- ------------------------------
TABLE 3: AVERAGE ANNUAL TOTAL RETURN
NO WITHDRAWAL
FOR THE TEN YEARS ENDED 12/31/95
AMOUNT INVESTED: $10,000.00
<TABLE>
<CAPTION>
Prorated Units Owned Ending Total Return Average
Growth Equity Portion of $ 30.00 End Of Redeemable End Of Annual
Date Fund Contract Fee Period Value Period Total Return
---- ------------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $4.555522 2,195.138120 $10,000.00
12/31/86 $5.158375 0.093053 2,195.045068 $11,322.87 13.23%
12/31/87 $5.355589 0.089626 2,194.955442 $11,755.28 17.55%
12/31/88 $5.950681 0.080663 2,194.874779 $13,061.00 30.61%
12/31/89 $7.708737 0.062267 2,194.812512 $16,919.23 69.19%
12/31/90 $6.755130 0.071057 2,194.741455 $14,825.76 48.26%
12/31/91 $8.975410 0.053479 2,194.687975 $19,698.22 96.98%
12/31/92 $9.378029 0.051183 2,194.636792 $20,581.37 105.81%
12/31/93 $10.397651 0.046164 2,194.590627 $22,818.59 128.19%
12/31/94 $9.420707 0.050952 2,194.539676 $20,674.12 106.74%
12/31/95 $11.747874 0.040858 2,194.498817 $25,780.70 157.81% 9.93%
<CAPTION>
Prorated Units Owned Ending Total Return Average
Growth Equity Portion of $ 30.00 End Of Redeemable End Of Annual
Date Fund Contract Fee Period Value Period Total Return
---- ------------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $3.363245 2,973.318923 $10,000.00
12/31/86 $3.804915 1.605818 2,971.713105 $11,307.12 #DIV/0!
12/31/87 $4.637999 1.317378 2,970.395726 $13,776.69 37.77%
12/31/88 $5.439985 1.123165 2,969.272562 $16,152.80 61.53%
12/31/89 $6.500886 0.939872 2,968.332690 $19,296.79 92.97%
12/31/90 $6.357921 0.961006 2,967.371684 $18,866.31 88.66%
12/31/91 $7.625445 0.801265 2,966.570419 $22,621.42 126.21%
12/31/92 $8.238463 0.741643 2,965.828776 $24,433.87 144.34%
12/31/93 $9.407267 0.649498 2,965.179278 $27,894.23 178.94%
12/31/94 $9.660523 0.632471 2,964.546807 $28,639.07 186.39%
12/31/95 $11.649728 0.524476 2,964.022331 $34,530.05 245.30% 13.19%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Prorated Units Owned Ending Total Return Average
High Yield Portion of $ 30.00 End Of Redeemable End Of Annual
Date Bond Fund Contract Fee Period Value Period Total Return
---- ---------- ------------------- ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $5.236704 1,909.598098 $10,000.00
12/31/86 $5.739456 0.172490 1,909.425608 $10,959.06 9.59%
12/31/87 $5.618674 0.176198 1,909.249410 $10,727.45 7.27%
12/31/88 $6.525979 0.151701 1,909.097709 $12,458.73 24.59%
12/31/89 $6.396748 0.154766 1,908.942942 $12,211.03 22.11%
12/31/90 $5.737681 0.172544 1,908.770399 $10,951.92 9.52%
12/31/91 $7.752279 0.127704 1,908.642694 $14,796.33 47.96%
12/31/92 $8.851986 0.111839 1,908.530855 $16,894.29 68.94%
12/31/93 $10.454800 0.094693 1,908.436162 $19,952.32 99.52%
12/31/94 $9.553762 0.103624 1,908.332538 $18,231.75 82.32%
12/31/95 $10.968126 0.090262 1,908.242276 $20,929.84 109.30% 7.66%
<CAPTION>
Prorated Units Owned Ending Total Return Average
Quality Bond Portion of $ 30.00 End Of Redeemable End Of Annual
Date Fund Contract Fee Period Value Period Total Return
---- ------------ ------------------- ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $0.000000 #DIV/0! #DIV/0!
12/31/86 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/87 $6.121631 0.169889 #DIV/0! #DIV/0! #DIV/0!
12/31/88 $6.490498 0.160234 #DIV/0! #DIV/0! #DIV/0!
12/31/89 $7.226374 0.143917 #DIV/0! #DIV/0! #DIV/0!
12/31/90 $7.692775 0.135192 #DIV/0! #DIV/0! #DIV/0!
12/31/91 $8.770907 0.118574 #DIV/0! #DIV/0! #DIV/0!
12/31/92 $9.216454 0.112842 #DIV/0! #DIV/0! #DIV/0!
12/31/93 $10.148405 0.102479 #DIV/0! #DIV/0! #DIV/0!
12/31/94 $9.477839 0.109730 #DIV/0! #DIV/0! #DIV/0!
12/31/95 $11.229457 0.092614 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
<CAPTION>
Prorated Units Owned Ending Total Return Average
Value Equity Portion of $ 30.00 End Of Redeemable End Of Annual
Date Fund Contract Fee Period Value Period Total Return
---- ------------ ------------------- ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $0.000000 #DIV/0! #DIV/0!
12/31/86 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/87 $4.724564 0.730226 #DIV/0! #DIV/0! #DIV/0!
12/31/88 $6.039898 0.571202 #DIV/0! #DIV/0! #DIV/0!
12/31/89 $6.728437 0.512749 #DIV/0! #DIV/0! #DIV/0!
12/31/90 $6.100284 0.565547 #DIV/0! #DIV/0! #DIV/0!
12/31/91 $7.680989 0.449161 #DIV/0! #DIV/0! #DIV/0!
12/31/92 $8.699744 0.396563 #DIV/0! #DIV/0! #DIV/0!
12/31/93 $9.186022 0.375571 #DIV/0! #DIV/0! #DIV/0!
12/31/94 $9.323905 0.370017 #DIV/0! #DIV/0! #DIV/0!
12/31/95 $12.641006 0.272921 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Prorated Units Owned Ending Total Return Average
International Portion of $ 30.00 End Of Redeemable End Of Annual
Date Equity Contract Fee Period Value Period Total Return
---- ------------- ------------------ ----------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $0.000000 #DIV/0! #DIV/0!
12/31/86 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/87 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/88 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/89 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/90 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/91 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/92 $8.411030 0.217571 #DIV/0! #DIV/0! #DIV/0!
12/31/93 $11.456448 0.159735 #DIV/0! #DIV/0! #DIV/0!
12/31/94 $10.584417 0.172896 #DIV/0! #DIV/0! #DIV/0!
12/31/95 $11.878760 0.154056 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
<CAPTION>
Prorated Units Owned Ending Total Return Average
TCI Portion of $ 30.00 End Of Redeemable End Of Annual
Date Growth Contract Fee Period Value Period Total Return
---- ------------- ------------------ ----------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $0.000000 #DIV/0! #DIV/0!
12/31/86 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/87 $5.790207 0.317778 #DIV/0! #DIV/0! #DIV/0!
12/31/88 $5.577805 0.329879 #DIV/0! #DIV/0! #DIV/0!
12/31/89 $7.084750 0.259713 #DIV/0! #DIV/0! #DIV/0!
12/31/90 $6.896673 0.266795 #DIV/0! #DIV/0! #DIV/0!
12/31/91 $9.648771 0.190698 #DIV/0! #DIV/0! #DIV/0!
12/31/92 $9.386697 0.196022 #DIV/0! #DIV/0! #DIV/0!
12/31/93 $10.185124 0.180656 #DIV/0! #DIV/0! #DIV/0!
12/31/94 $9.926047 0.185371 #DIV/0! #DIV/0! #DIV/0!
12/31/95 $12.818022 0.143548 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
<CAPTION>
Prorated Units Owned Ending Total Return Average
N&B Portion of $ 30.00 End Of Redeemable End Of Annual
Date Balanced Contract Fee Period Value Period Total Return
---- ------------- ------------------ ----------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $0.000000 #DIV/0! #DIV/0!
12/31/86 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/87 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/88 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/89 $7.365810 0.194140 #DIV/0! #DIV/0! #DIV/0!
12/31/90 $7.405018 0.193112 #DIV/0! #DIV/0! #DIV/0!
12/31/91 $8.958110 0.159632 #DIV/0! #DIV/0! #DIV/0!
12/31/92 $9.544854 0.149819 #DIV/0! #DIV/0! #DIV/0!
12/31/93 $9.981206 0.143269 #DIV/0! #DIV/0! #DIV/0!
12/31/94 $9.548559 0.149761 #DIV/0! #DIV/0! #DIV/0!
12/31/95 $11.653880 0.122706 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Prorated Units Owned Ending Total Return Average
N&B Portion of $ 30.00 End Of Redeemable End Of Annual
Date Lmtd Mat Bond Contract Fee Period Value Period Total Return
---- ------------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $5.903314 1,693.963763 $10,000.00
12/31/86 $6.626619 0.095071 1,693.868692 $11,224.62 12.25%
12/31/87 $6.723442 0.093702 1,693.774990 $11,388.00 13.88%
12/31/88 $7.104860 0.088672 1,693.686319 $12,033.40 20.33%
12/31/89 $7.760881 0.081176 1,693.605142 $13,143.87 31.44%
12/31/90 $8.290079 0.075994 1,693.529148 $14,039.49 40.39%
12/31/91 $9.102169 0.069214 1,693.459934 $15,414.16 54.14%
12/31/92 $9.439952 0.066738 1,693.393196 $15,985.55 59.86%
12/31/93 $9.925608 0.063472 1,693.329724 $16,807.33 68.07%
12/31/94 $9.772495 0.064467 1,693.265257 $16,547.43 65.47%
12/31/95 $10.691231 0.058927 1,693.206330 $18,102.46 81.02% 6.11%
<CAPTION>
Prorated Units Owned Ending Total Return Average
Portion of $ 30.00 End Of Redeemable End Of Annual
Date Small-Cap Contract Fee Period Value Period Total Return
---- ------------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $0.000000 #DIV/0! #DIV/0!
12/31/86 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/87 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/88 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/89 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/90 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/91 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/92 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/93 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/94 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/95 $11.145667 0.135479 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Prorated Units Owned Ending Total Return Average
FIDELITY Portion of $ 30.00 End Of Redeemable End Of Annual
Date Equity Inc Contract Fee Period Value Period Total Return
-------- ------------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $0.000000 #DIV/0! #DIV/0!
12/31/86 $4.537328 0.861741 #DIV/0! #DIV/0! #DIV/0!
12/31/87 $4.423567 0.883902 #DIV/0! #DIV/0! #DIV/0!
12/31/88 $5.352534 0.730495 #DIV/0! #DIV/0! #DIV/0!
12/31/89 $6.193601 0.631297 #DIV/0! #DIV/0! #DIV/0!
12/31/90 $5.173663 0.755751 #DIV/0! #DIV/0! #DIV/0!
12/31/91 $6.705724 0.583084 #DIV/0! #DIV/0! #DIV/0!
12/31/92 $7.728908 0.505893 #DIV/0! #DIV/0! #DIV/0!
12/31/93 $9.015770 0.433685 #DIV/0! #DIV/0! #DIV/0!
12/31/94 $9.518617 0.410774 #DIV/0! #DIV/0! #DIV/0!
12/31/95 $12.600495 0.310305 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
<CAPTION>
Prorated Units Owned Ending Total Return Average
FIDELITY Portion of $ 30.00 End Of Redeemable End Of Annual
Date Growth Contract Fee Period Value Period Total Return
-------- ------------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $0.000000 #DIV/0! #DIV/0!
12/31/86 $4.149882 1.081958 #DIV/0! #DIV/0! #DIV/0!
12/31/87 $4.242140 1.058428 #DIV/0! #DIV/0! #DIV/0!
12/31/88 $4.834827 0.928679 #DIV/0! #DIV/0! #DIV/0!
12/31/89 $6.270101 0.716097 #DIV/0! #DIV/0! #DIV/0!
12/31/90 $5.457380 0.822739 #DIV/0! #DIV/0! #DIV/0!
12/31/91 $7.830958 0.573365 #DIV/0! #DIV/0! #DIV/0!
12/31/92 $8.441505 0.531896 #DIV/0! #DIV/0! #DIV/0!
12/31/93 $9.936599 0.451865 #DIV/0! #DIV/0! #DIV/0!
12/31/94 $9.796554 0.458324 #DIV/0! #DIV/0! #DIV/0!
12/31/95 $13.077900 0.343327 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
<CAPTION>
Prorated Units Owned Ending Total Return Average
FIDELITY Portion of $ 30.00 End Of Redeemable End Of Annual
Date Asset Mgr Contract Fee Period Value Period Total Return
-------- ------------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $0.000000 #DIV/0! #DIV/0!
12/31/86 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/87 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/88 $0.000000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
12/31/89 $6.415215 0.177703 #DIV/0! #DIV/0! #DIV/0!
12/31/90 $6.751165 0.168860 #DIV/0! #DIV/0! #DIV/0!
12/31/91 $8.159166 0.139720 #DIV/0! #DIV/0! #DIV/0!
12/31/92 $8.987776 0.126839 #DIV/0! #DIV/0! #DIV/0!
12/31/93 $10.744669 0.106099 #DIV/0! #DIV/0! #DIV/0!
12/31/94 $9.949957 0.114573 #DIV/0! #DIV/0! #DIV/0!
12/31/95 $11.476196 0.099336 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
</TABLE>
<PAGE>
PIA VARIABLE ANNUITY ACCOUNT I
TABLE 3: AVERAGE ANNUAL TOTAL RETURN
NO WITHDRAWAL
SINCE INCEPTION TO: 12/31/95
AMOUNT INVESTED: $10,000.00
<TABLE>
<CAPTION>
Prorated Units Owned Ending Total Return Average
Growth Equity Portion of $ 30.00 End Of Redeemable End Of Annual
Date Fund Contract Fee Period Value Period Total Return
- ---------- ------------- ----------------- ---------------- ---------------- ----------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
06/01/83 $3.679564 2,717.713294 $10,000.00
06/01/84 $3.378781 0.142063 2,717.571231 $9,182.08 -8.18%
06/01/85 $4.140589 0.115926 2,717.455306 $11,251.87 12.52%
06/01/86 $5.326260 0.090120 2,717.365186 $14,473.39 44.73%
06/01/87 $6.031310 0.079585 2,717.285601 $16,388.79 63.89%
06/01/88 $5.802547 0.082722 2,717.202879 $15,766.70 57.67%
06/01/89 $6.988377 0.068685 2,717.134194 $18,988.36 89.88%
06/01/90 $7.936197 0.060482 2,717.073711 $21,563.23 115.63%
06/01/91 $8.112479 0.059168 2,717.014543 $22,041.72 120.42%
06/01/92 $8.769114 0.054738 2,716.959806 $23,825.33 138.25%
06/01/93 $9.586086 0.050073 2,716.909733 $26,044.53 160.45%
06/01/94 $9.444207 0.050825 2,716.858908 $25,658.58 156.59%
06/01/95 $10.236038 0.046893 2,716.812015 $27,809.39 178.09%
12/31/95 $11.747874 0.040858 2,716.771157 $31,916.29 219.16% 9.65%
</TABLE>
<TABLE>
<CAPTION>
Flexibly Prorated Units Owned Ending Total Return Average
Managed Portion of $ 30.00 End Of Redeemable End Of Annual
Date Fund Contract Fee Period Value Period Total Return
- ---------- ------------- ----------------- ---------------- ---------------- ----------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
7/31/84 $2.755418 3,629.213426 $10,000.00
7/31/85 $3.152745 1.937994 3,627.275432 $11,435.87 14.36%
7/31/86 $3.821619 1.598799 3,625.676634 $13,855.95 38.56%
7/31/87 $4.756778 1.284483 3,624.392151 $17,240.43 72.40%
7/31/88 $5.214443 1.171745 3,623.220405 $18,893.08 88.93%
7/31/89 $6.479420 0.942986 3,622.277419 $23,470.26 134.70%
7/31/90 $6.554032 0.932251 3,621.345169 $23,734.41 137.34%
7/31/91 $7.383192 0.827555 3,620.517614 $26,730.98 167.31%
7/31/92 $8.064706 0.757622 3,619.759991 $29,192.30 191.92%
7/31/93 $8.811342 0.693424 3,619.066567 $31,888.83 218.89%
7/31/94 $9.461836 0.645752 3,618.420815 $34,236.90 242.37%
7/31/95 $11.071102 0.551887 3,617.868928 $40,053.80 300.54%
12/31/95 $11.649728 0.524476 3,617.344452 $42,141.08 321.41% 13.42%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Prorated Units Owned Ending Total Return Average
High Yield Portion of $ 30.00 End Of Redeemable End Of Annual
Date Bond Fund Contract Fee Period Value Period Total Return
-------- ---------- ------------------ ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
08/06/84 $4.274745 2339.320825 $10,000.00
08/06/85 $4.949967 0.200001 2339.120824 $11,578.57 15.79%
08/06/86 $5.513970 0.179544 2338.941280 $12,896.85 28.97%
08/06/87 $5.818893 0.170135 2338.771144 $13,609.06 36.09%
08/06/88 $6.267419 0.157960 2338.613184 $14,657.07 46.57%
08/06/89 $6.884597 0.143799 2338.469385 $16,099.42 60.99%
08/06/90 $6.549305 0.151161 2338.318224 $15,314.36 53.14%
08/06/91 $7.201615 0.137469 2338.180755 $16,838.68 68.39%
08/06/92 $8.565493 0.115580 2338.065175 $20,026.68 100.27%
08/06/93 $9.917575 0.099823 2337.965352 $23,186.95 131.87%
08/06/94 $9.944338 0.099554 2337.865798 $23,248.53 132.49%
08/06/95 $10.548141 0.093855 2337.771943 $24,659.15 146.59%
12/31/95 $10.968126 0.090262 2337.681681 $25,639.99 156.40% 8.60%
<CAPTION>
Prorated Units Owned Ending Total Return Average
Quality Bond Portion of $ 30.00 End Of Redeemable End Of Annual
Date Fund Contract Fee Period Value Period Total Return
------- ------------ ------------------ ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
03/17/87 $6.153024 1625.217129 $10,000.00
03/17/88 $6.336540 0.164127 1625.053002 $10,297.21 2.97%
03/17/89 $6.478625 0.160528 1624.892474 $10,527.07 5.27%
03/17/90 $7.130900 0.145844 1624.746630 $11,585.91 15.86%
03/17/91 $7.812288 0.133124 1624.613506 $12,691.95 26.92%
03/17/92 $8.512054 0.122180 1624.491326 $13,827.76 38.28%
03/17/93 $9.638590 0.107900 1624.383427 $15,656.77 56.57%
03/17/94 $9.880534 0.105257 1624.278169 $16,048.74 60.49%
03/17/95 $10.046136 0.103522 1624.174647 $16,316.68 63.17%
12/31/95 $11.229457 0.092614 1624.082033 $18,237.56 82.38% 7.07%
<CAPTION>
Prorated Units Owned Ending Total Return Average
Value Equity Portion of $ 30.00 End Of Redeemable End Of Annual
Date Fund Contract Fee Period Value Period Total Return
------- ------------ ------------------ ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
03/17/87 $5.197559 1923.980084 $10,000.00
03/17/88 $5.435785 0.634683 1923.345401 $10,454.89 4.55%
03/17/89 $6.322311 0.545687 1922.799714 $12,156.54 21.57%
03/17/90 $6.612748 0.521720 1922.277995 $12,711.54 27.12%
03/17/91 $6.968546 0.495082 1921.782913 $13,392.03 33.92%
03/17/92 $8.044809 0.428848 1921.354065 $15,456.93 54.57%
03/17/93 $8.767314 0.393507 1920.960558 $16,841.66 68.42%
03/17/94 $9.332653 0.369670 1920.590888 $17,924.21 79.24%
03/17/95 $10.147961 0.339970 1920.250918 $19,486.63 94.87%
12/31/95 $12.641006 0.272921 1919.977997 $24,270.45 142.70% 10.60%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Prorated Units Owned Ending Total Return Average
International Portion of $ 30.00 End Of Redeemable End Of Annual
Date Equity Contract Fee Period Value Period Total Return
---- ------------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
11/01/92 $8.268342 1209.432314 $10,000.00
11/01/93 $10.753055 0.170184 1209.262130 $13,003.26
11/01/94 $11.363818 0.161037 1209,101093 $13,740.00
11/01/95 $11.249363 0.162676 1208.938417 $13,599.79
12/31/95 $11.878760 0.154056 1208.784360 $14,358.86 43.59% 12.11%
<CAPTION>
Prorated Units Owned Ending Total Return Average
TCI Portion of $ 30.00 End Of Redeemable End Of Annual
Date Growth Contract Fee Period Value Period Total Return
---- ------------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
11/20/87 $5.409667 1848.542618 $10,000.00
11/20/88 $5.329299 0.345261 1848.197357 $9,849.60 -1.50%
11/20/89 $7.050619 0.260970 1847.936387 $13,029.10 30.29%
11/20/90 $6.369260 0.288888 1847.647500 $11,768.15 17.68%
11/20/91 $8.534217 0.215603 1847.431897 $15,766.38 57.66%
11/20/92 $9.166839 0.200723 1847.231173 $16,933.27 69.33%
11/20/93 $9.960345 0.184733 1847.046441 $18.397.22 83.97%
11/20/94 $9.995646 0.184080 1846.862361 $18.460.58 84.61%
11/20/95 $12.613669 0.145873 1846.716487 $23,293.87 132.94%
12/31/95 $12.818022 0.143548 1846.572939 $23,669.41 136.69% 11.20%
<CAPTION>
Prorated Units Owned Ending Total Return Average
N&B Portion of $ 30.00 End Of Redeemable End Of Annual
Date Balanced Contract Fee Period Value Period Total Return
---- ------------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
02/28/89 $6.402692 1561.843050 $10,000.00
02/28/90 $7.127999 0.200617 1561.642432 $11,131,39 11.31%
02/28/91 $7.988449 0.179008 1561.463424 $12,473.67 24.74%
03/28/92 $9.152294 0.156245 1561.307179 $14,289.54 42.90%
02/28/93 $9.392281 0.152253 1561.154926 $14.662.81 46.63%
02/28/94 $10.094085 0.141667 1561.013259 $15,757.00 57.57%
02/28/95 $9.973464 0.143380 1560.869879 $15,567.28 55.67%
02/28/96 $11.945190 0.119713 1560.750165 $18.643.46 86.43%
12/31/95 $11.653880 0.122706 1560.747173 $18,188.76 81.89% 9.14%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Prorated Units Owned Ending Total Return Average
N&B Portion of $ 30.00 End Of Redeemable End Of Annual
Date Lmtd Mat Bond Contract Fee Period Value Period Total Return
- --------- ---------------- ------------------ -------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
9/10/84 $4.892696 2,043.862934 $10,000.00
9/10/85 $5.670945 0.111093 2,043.751841 $11,590.00 15.90%
9/10/86 $6.518318 0.096651 2,043.655190 $13,321.19 33.21%
9/10/87 $6.721697 0.093726 2,043.561464 $13,736.20 37.36%
9/10/88 $7.042462 0.089457 2,043.472007 $14,391.07 43.91%
9/10/89 $7.569360 0.083230 2,043.388776 $15,467.15 54.67%
9/10/90 $8.050673 0.078254 2,043.310522 $16,450.02 64.50%
9/10/91 $8.707241 0.072354 2,043.238168 $17,790.97 77.91%
9/10/92 $9.480589 0.066452 2,043.171717 $19,370.47 93.70%
9/10/93 $9.954736 0.063286 2,043.108430 $20,338.61 103.39%
9/10/94 $9.807571 0.064236 2,043.044194 $20,037.30 100.37%
9/10/95 $10.401477 0.060568 2,042.983626 $21,250.05 112.50%
12/31/95 $10.691231 0.058927 2,042.924699 $21,841.38 118.41% 7.15%
<CAPTION>
Prorated Units Owned Ending Total Return Average
Portion of $ 30.00 End Of Redeemable End Of Annual
Date Small - Cap Contract Fee Period Value Period Total Return
- ---------- ---------------- ------------------ ---------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
03/1/95 $10.000000 1,000.000000 $10,000.00
12/31/95 $11.145667 0.135479 999.864521 $11,144.16 11.44% 13.84%
<CAPTION>
Prorated Units Owned Ending Total Return Average
FIDELITY Portion of $ 30.00 End Of Redeemable End Of Annual
Date Equity Income Contract Fee Period Value Period Total Return
- ---------- -------------- ------------------ ------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
10/09/86 $4.542707 2,201.330616 $10,000.00
10/09/87 $5.371647 0.727896 2,200.602720 $11,820.86 18.21%
10/09/88 $5.393455 0.724953 2,199.877768 $11,864.94 18.65%
10/09/89 $6.592083 0.593136 2,199.284632 $14,497.87 44.98%
10/09/90 $4.840596 0.807752 2,198.476880 $10,641.94 6.42%
10/09/91 $6.256874 0.624913 2,197.851967 $13,751.68 37.52%
10/09/92 $7.000715 0.558514 2,197.293453 $15,382.63 53.83%
10/09/93 $8.979943 0.435415 2,196.858038 $19,727.66 97.28%
10/09/94 $9.524197 0.410533 2,196.447505 $20,919.40 109.19%
10/09/95 $11.784016 0.331805 2,196.115700 $25,879.06 158.79%
12/31/95 $12.600495 0.310305 2,195.805394 $27,668.23 176.68% 11.65%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Prorated Units Owned Ending Total Return Average
FIDELITY Portion of $ 30.00 End Of Redeemable End Of Annual
Date Growth Contract Fee Period Value Period Total Return
-------- ------------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
10/09/86 $4.150654 2409.258878 $10,000.00
10/09/87 $5.223288 0.859612 2408.399266 $12,579.76 25.80%
10/09/88 $4.908182 0.914799 2407.484467 $11,816.37 18.16%
10/09/89 $6.447561 0.696387 2406.788080 $15,517.91 55.18%
10/09/90 $5.071896 0.885271 2405.902810 $12,202.49 22.02%
10/09/91 $6.909447 0.649835 2405.252975 $16,618.97 66.19%
10/09/92 $7.281259 0.616652 2404.636323 $17,508.78 75.09%
10/09/93 $9.912135 0.452980 2404.183343 $23,830.59 138.31%
10/09/94 $9.388262 0.478257 2403.705086 $22,566.61 125.67%
10/09/95 $12.759168 0.351904 2403.353182 $30,664.79 206.65%
12/31/95 $13.077900 0.343327 2403.009855 $31,426.32 214.26% 13.20%
<CAPTION>
Prorated Units Owned Ending Total Return Average
FIDELITY Portion of $ 30.00 End Of Redeemable End Of Annual
Date Asset Mgr Contract Fee Period Value Period Total Return
-------- ------------- ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
09/06/89 $6.392017 1564.451409 $10,000.00
09/06/90 $6.379732 0.178691 1564.272718 $9,979.64 -0.20%
09/06/91 $7.862493 0.144992 1564.127726 $12,297.94 22.98%
09/06/92 $8.695734 0.131099 1563.996627 $13,600.10 36.00%
09/06/93 $10.064653 0.113268 1563.883359 $15,739.94 57.40%
09/06/94 $10.400201 0.109613 1563.773746 $16,263.56 62.64%
09/06/95 $11.066582 0.103013 1563.670733 $17,304.49 73.04%
12/31/95 $11.476196 0.099336 1563.571397 $17,943.85 79.44% 9.69%
</TABLE>
<PAGE>
Exhibit 14
THE PENN INSURANCE AND ANNUITY COMPANY
Power of Attorney for Signing
Variable Annuity SEC Registration Statements
I, Rudolph C. Sander, as a director of The Penn Insurance and Annuity
Company, a Delaware corporation, do hereby appoint Robert E. Chappell, Joseph J.
Horvath and L. Stockton Illoway and each of them severally, as my true and
lawful attorneys or attorney to execute in my name, place and stead, in my
capacity as a director of said corporation, a registration statement or
registration statements under the Securities Act of 1933, in connection with
variable annuity contracts offered, issued or sold by The Penn Insurance and
Annuity Company or any separate account created by said corporation, and any and
all amendments to said registration statement or registration statements and all
instruments necessary or incidental in connection therewith, and to file the
same with the Securities and Exchange Commission; and do hereby provide that
each of said attorneys shall have power to act hereunder with or without the
other said attorneys, and shall have full power of substitution and
resubstitution and that each of said attorneys shall have full power and
authority to do and perform in my name and on my behalf in any and all
capacities every act whatsoever required to be done in the premises, as fully
and to all intents and purposes as I might or could do in person, hereby
ratifying and approving the acts of said attorneys and each of them.
/s/ Rudolph C. Sander
Date: 4/15/96
-------------- ---------------------------
Rudolph C. Sander
