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File No. 33-83240
File No. 811-8726
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [_]
Pre-Effective Amendment No. [_]
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Post-Effective Amendment No. 7 [X]
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [_]
Amendment No. 10 [X]
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(Check appropriate box or boxes)
T. ROWE PRICE VARIABLE ANNUITY ACCOUNT OF FIRST SECURITY BENEFIT
LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
(Exact Name of Registrant)
First Security Benefit Life Insurance and Annuity Company of New York
(Name of Depositor)
70 West Red Oak Lane, 4th Floor, White Plains, New York 10604
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number, Including Area Code:
(914) 697-4748
Roger K. Viola, Secretary and Vice President
First Security Benefit Life Insurance and Annuity
Company of New York
700 SW Harrison Street, Topeka, KS 66636-0001
(Name and address of Agent for Service)
It is proposed that this filing will become effective:
[_] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on May 1, 2000, pursuant to paragraph (b) of Rule 485
[_] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[_] on May 1, 2000, pursuant to paragraph (a)(1) of Rule 485
[_] 75 days after filing pursuant to paragraph (a)(2) of Rule 485
[_] on May 1, 2000, 1999, pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
[_] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of securities being registered: Interests in a separate account under
individual flexible premium deferred variable annuity contracts (the
"Contract").
<PAGE>
VARIABLE ANNUITY PROSPECTUS
T. ROWE PRICE NO-LOAD VARIABLE ANNUITY
An Individual Flexible Premium
Deferred Variable Annuity Contract
May 1, 2000
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ISSUED BY:
First Security Benefit Life Insurance and Annuity
Company of New York
70 West Red Oak Lane, 4th Floor
White Plains, New York 10604
1-914-697-4748
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INTRODUCTION
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* THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR DETERMINED IF THE PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
* THIS PROSPECTUS IS ACCOMPANIED BY A CURRENT PROSPECTUS FOR THE T. ROWE
PRICE EQUITY SERIES, INC., THE T. ROWE PRICE FIXED INCOME SERIES, INC.
AND THE T. ROWE PRICE INTERNATIONAL SERIES, INC. YOU SHOULD READ THE
PROSPECTUSES CAREFULLY AND RETAIN THEM FOR FUTURE REFERENCE.
This Prospectus describes the T. Rowe Price No-Load Variable Annuity--a
flexible premium deferred variable annuity contract (the "Contract") issued
by First Security Benefit Life Insurance and Annuity Company of New York
(the "Company"). The Contract is available for individuals as a non-tax
qualified retirement plan. The Contract is also available as an individual
retirement annuity ("IRA") qualified under Section 408 or a Roth IRA
qualified under Section 408A, of the Internal Revenue Code. The Contract is
designed to give you flexibility in planning for retirement and other
financial goals.
You may allocate your purchase payments to one or more of the Subaccounts
that comprise a separate account of the Company called the T. Rowe Price
Variable Annuity Account of First Security Benefit Life Insurance and
Annuity Company of New York, or to the Fixed Interest Account of the
Company. Each Subaccount invests in a corresponding Portfolio of the T. Rowe
Price Equity Series, Inc., the T. Rowe Price Fixed Income Series, Inc., or
the T. Rowe Price International Series, Inc. (the "Funds"). Each Portfolio
is listed under its respective Fund below.
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price New America Growth Portfolio
T. Rowe Price Mid-Cap Growth Portfolio
T. Rowe Price Equity Income Portfolio
T. Rowe Price Personal Strategy Balanced Portfolio
T. ROWE PRICE FIXED INCOME SERIES, INC.
T. Rowe Price Limited-Term Bond Portfolio
T. Rowe Price Prime Reserve Portfolio
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
The investments made by the Funds at any given time are not expected to be
the same as the investments made by other mutual funds sponsored by T. Rowe
Price Associates, Inc., including other mutual funds with investment
objectives and policies similar to those of the Portfolios. Different
performance will result due to differences in cash flows into and out of the
Portfolios, different fees and expenses and differences in portfolio size
and positions.
Amounts that you allocate to the Subaccounts will vary based on investment
performance of the Subaccounts. The Company does not guarantee any minimum
amount of Account Value in the Subaccounts.
Amounts that you allocate to the Fixed Interest Account will accrue interest
at rates that are paid by the Company as described in "The Fixed Interest
Account," page 27. The Company guarantees Account Value in the Fixed
Interest Account.
When you are ready to begin receiving Annuity Payments, the Contract
provides several options for Annuity Payments (see "Annuity Options," page
24.)
You may return a Contract according to the terms of its Free-Look Right (see
"Free-Look Right," page 20). This Prospectus concisely sets forth
information about the Contract and the T. Rowe Price Variable Annuity
Account that you should know before purchasing the Contract. The "Statement
of Additional Information," dated May 1, 2000, which has been filed with the
Securities and Exchange Commission (the "SEC") contains certain additional
information. The Statement of Additional Information, as it may be
supplemented from time to time, is incorporated by reference into this
Prospectus and is available at no charge, by writing the Company at 70 West
Red Oak Lane, 4th Floor, White Plains, New York 10604. The table of contents
of the Statement of Additional Information is set forth on page 41 of this
Prospectus.
Date: May 1, 2000
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CONTENTS
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* THE CONTRACT IS AVAILABLE ONLY IN NEW YORK. YOU SHOULD NOT CONSIDER THIS
PROSPECTUS TO BE AN OFFERING IF THE CONTRACT MAY NOT BE LAWFULLY OFFERED
IN YOUR STATE. YOU SHOULD ONLY RELY UPON INFORMATION CONTAINED IN THIS
PROSPECTUS OR THAT WE HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED
ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT.
Definitions 5
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Summary 7
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Expense Table 9
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Condensed Financial Information 11
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Information About the Company, the Separate Account, and the Funds 12
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The Contract 14
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Charges and Deductions 22
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Annuity Payments 23
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The Fixed Interest Account 27
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More About the Contract 30
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Federal Tax Matters 31
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Other Information 37
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Performance Information 40
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Additional Information 41
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DEFINITIONS
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* VARIOUS TERMS COMMONLY USED IN THIS PROSPECTUS ARE DEFINED AS FOLLOWS:
ACCOUNT VALUE The total value of a Contract, which includes amounts
allocated to the Subaccounts and the Fixed Interest Account. The Company
determines Account Value as of each Valuation Date prior to the Annuity
Payout Date and on and after the Annuity Payout Date under Annuity Options 5
through 7.
ACCUMULATION PERIOD The period commencing on the Contract Date and ending on
the Annuity Payout Date or, if earlier, when the Contract is terminated
through a full withdrawal, payment of charges, or payment of the death
benefit proceeds.
ACCUMULATION UNIT A unit of measure used to calculate Account Value.
ANNUITANT The person or persons on whose life Annuity Payments depend under
Annuity Options 1 through 4. If Joint Annuitants are named in the Contract,
"Annuitant" means both Annuitants unless otherwise stated. The Annuitant
receives Annuity Payments during the Annuity Period.
ANNUITY A series of periodic income payments made by the Company to an
Annuitant, Joint Annuitant, or Beneficiary during the period specified in
the Annuity Option.
ANNUITY OPTIONS or OPTIONS Options under the Contract that prescribe the
provisions under which a series of Annuity Payments are made.
ANNUITY PAYMENTS Payments made beginning on the Annuity Payout Date
according to the provisions of the Annuity Option selected. Annuity Payments
are made on the same day of each month, on a monthly, quarterly, semiannual
or annual basis depending upon the Annuity Option selected.
ANNUITY PERIOD The period beginning on the Annuity Payout Date during which
Annuity Payments are made.
ANNUITY PAYOUT DATE The date when Annuity Payments are scheduled to begin.
AUTOMATIC INVESTMENT PROGRAM A program pursuant to which purchase payments
are automatically paid from your checking account on a specified day of the
month, on a monthly, quarterly, semiannual or annual basis, or a salary
reduction arrangement.
CONTRACT DATE The date shown as the Contract Date in a Contract. Annual
Contract anniversaries are measured from the Contract Date. It is usually
the date that the initial purchase payment is credited to the Contract.
CONTRACTOWNER or OWNER The person entitled to the ownership rights under the
Contract and in whose name the Contract is issued.
CONTRACT YEAR Each 12-month period measured from the Contract Date.
DESIGNATED BENEFICIARY The person having the right to the death benefit, if
any, payable upon the death of the Owner or the Joint Owner during the
Accumulation Period or the death of the Annuitant during the Annuity Period.
The Designated Beneficiary is the first person on the following list who is
alive on the date of death of the Owner or the Joint Owner: the Owner; the
Joint Owner; the Primary Beneficiary; the Secondary Beneficiary; the
Annuitant; or if none of the above is alive, the Owner's Estate.
FIXED INTEREST ACCOUNT An account that is part of the Company's General
Account in which all or a portion of the Account Value may be held for
accumulation at fixed rates of interest (which may not be less than 3%)
declared by the Company periodically at its discretion.
FUNDS T. Rowe Price Equity Series, Inc., T. Rowe Price Fixed Income Series,
Inc., and T. Rowe Price International Series, Inc. The Funds are
diversified, open-end management investment companies commonly referred to
as mutual funds.
GENERAL ACCOUNT All assets of the Company other than those allocated to
the Separate Account or to any other separate account of the Company.
PAYMENT UNIT A unit of measure used to calculate Annuity Payments under
Options 1 through 4.
PURCHASE PAYMENT The amounts paid to the Company as consideration for the
Contract.
SEPARATE ACCOUNT The T. Rowe Price Variable Annuity Account of First
Security Benefit Life Insurance and Annuity Company of New York, a separate
account of the Company. Account Value may be allocated to Subaccounts of the
Separate Account for variable accumulation.
SUBACCOUNT A division of the Separate Account of the Company which invests
in a separate Portfolio of one of the Funds. Currently, seven Subaccounts
are available under the Contract.
VALUATION DATE Each date on which the Separate Account is valued, which
currently includes each day that the Company and the New York Stock Exchange
are open for trading. The Company and the New York Stock Exchange are closed
on weekends and on the following holidays: New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day, and Christmas Day.
VALUATION PERIOD A period used in measuring the investment experience of
each Subaccount. The Valuation Period begins at the close of one Valuation
Date and ends at the close of the next succeeding Valuation Date.
WITHDRAWAL VALUE The amount a Contractowner receives upon full withdrawal of
the Contract, which is equal to Account Value less any premium taxes due and
paid by the Company.
<PAGE>
SUMMARY
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This summary provides a brief overview of the more significant aspects of
the Contract. Further detail is provided in this Prospectus, the Statement
of Additional Information, and the Contract. Unless the context indicates
otherwise, the discussion in this summary and the remainder of the
Prospectus relate to the portion of the Contract involving the Separate
Account. The Fixed Interest Account is briefly described under "The Fixed
Interest Account," page 27 and in the Contract.
PURPOSE OF THE CONTRACT
The flexible premium deferred variable annuity contract ("Contract")
described in this Prospectus is designed to give you flexibility in planning
for retirement and other financial goals.
You may purchase the Contract as a non-tax qualified retirement plan for an
individual ("Non-Qualified Plan"). If you are eligible, you may also
purchase the Contract as an individual retirement annuity ("IRA") qualified
under Section 408 or a Roth IRA qualified under Section 408A, of the
Internal Revenue Code of 1986, as amended ("Qualified Plan"). See the
discussion of IRAs under "Section 408 and Section 408A," page 35.
THE SEPARATE ACCOUNT AND THE FUNDS
You may allocate your purchase payments to the T. Rowe Price Variable
Annuity Account of First Security Benefit Life Insurance and Annuity Company
of New York (the "Separate Account"). See "Separate Account," page 12. The
Separate Account is currently divided into seven divisions referred to as
Subaccounts. Each Subaccount invests exclusively in shares of a specific
Portfolio of one of the Funds. Each of the Funds' Portfolios has a different
investment objective or objectives. Each Portfolio is listed under its
respective Fund below.
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price New America Growth Portfolio
T. Rowe Price Mid-Cap Growth Portfolio
T. Rowe Price Equity Income Portfolio
T. Rowe Price Personal Strategy Balanced Portfolio
T. ROWE PRICE FIXED INCOME SERIES, INC.
T. Rowe Price Limited-Term Bond Portfolio
T. Rowe Price Prime Reserve Portfolio
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
Amounts that you allocate to the Subaccounts will increase or decrease in
dollar value depending on the investment performance of the corresponding
Portfolio in which such Subaccount invests. The Contractowner bears the
investment risk for amounts allocated to a Subaccount.
FIXED INTEREST ACCOUNT
You may allocate all or part of your purchase payments to the Fixed Interest
Account, which is part of the Company's General Account. Amounts that you
allocate to the Fixed Interest Account earn interest at rates determined at
the discretion of the Company and that are guaranteed to be at least an
effective annual rate of 3%. See "The Fixed Interest Account," page 27.
PURCHASE PAYMENTS
If you are purchasing a Contract as a Non-Qualified Plan, the minimum
initial purchase payment is $10,000 ($5,000 if made pursuant to an Automatic
Investment Program). If you are purchasing a Contract as a Qualified Plan,
the minimum initial purchase payment is $2,000 ($25 if made pursuant to an
Automatic Investment Program). Thereafter, you may choose the amount and
frequency of purchase payments, except that the minimum subsequent purchase
payment is $1,000 ($200 if made pursuant to an Automatic Investment Program)
for a Non-Qualified Plan or $500 ($25 if made pursuant to an Automatic
Investment Program) for a Qualified Plan. See "Purchase Payments," page 15.
CONTRACT BENEFITS
You may exchange Account Value among the Subaccounts and to and from the
Fixed Interest Account, subject to certain restrictions as described in "The
Contract," page 14, "Annuity Payments," page 23 and "The Fixed Interest
Account," page 27.
At any time before the Annuity Payout Date, you may surrender your Contract
for its Withdrawal Value and may make partial withdrawals, including
systematic withdrawals, from Account Value. On or after the Annuity Payout
Date, you may withdraw your Account Value under Annuity Options 5 through 7.
Withdrawals of Account Value allocated to the Fixed Interest Account are
subject to certain restrictions described in "The Fixed Interest Account,"
page 27. See "Full and Partial Withdrawals," page 19, "Annuity Payments,"
page 23 and "Federal Tax Matters," page 31 for more information about
withdrawals, including the 10% penalty tax that may be imposed upon full and
partial withdrawals (including systematic withdrawals) made prior to the
Owner attaining age 59 1/2.
The Contract provides for a death benefit upon the death of the Owner prior
to the Annuity Start Date. See "Death Benefit," page 21 for more
information. The Contract provides for several Annuity Options on either a
variable basis, a fixed basis, or both. The Company guarantees Annuity
Payments under the fixed Annuity Options. See "Annuity Payments," page 23.
FREE-LOOK RIGHT
You may return the Contract within the Free-Look Period, which is generally
a 30-day period beginning when you receive the Contract. In this event, the
Company will refund to you the amount of purchase payments allocated to the
Fixed Interest Account plus the Account Value in the Subaccounts. The
Company will refund purchase payments allocated to the Subaccounts rather
than the Account Value in those circumstances in which it is required to do
so. See "Free-Look Right," on page 20.
CHARGES AND DEDUCTIONS
The Company does not deduct a sales load from purchase payments. The Company
will deduct certain charges in connection with the Contract as described
below.
* MORTALITY AND EXPENSE RISK CHARGE The Company deducts a daily charge
from the assets of each Subaccount for mortality and expense risks equal
to an annual rate of 0.55% of each Subaccount's average daily net
assets. See "Mortality and Expense Risk Charge," page 22.
* PREMIUM TAX CHARGE The Company assesses a premium tax charge to
reimburse itself for any premium taxes that it incurs with respect to
this Contract. This charge will usually be deducted when Annuity
Payments begin or upon full withdrawal if the Company incurs a premium
tax. Partial withdrawals, including systematic withdrawals, may be
subject to a premium tax charge if a premium tax is incurred on the
withdrawal by the Company and is not refundable. No premium tax is
currently imposed in the State of New York. The Company reserves the
right to deduct such taxes, if imposed, when due or anytime thereafter.
See "Premium Tax Charge," page 22.
* OTHER EXPENSES The Company pays the operating expenses of the Separate
Account. Investment management fees and operating expenses of the Funds
are paid by the Funds and are reflected in the net asset value of Fund
shares. For a description of these charges and expenses, see the
prospectus for the Funds.
CONTACTING THE COMPANY
You should direct all written requests, notices, and forms required by the
Contract, and any questions or inquiries to First Security Benefit Life
Insurance and Annuity Company of New York, 70 West Red Oak Lane, 4th Floor,
White Plains, New York 10604.
EXPENSE TABLE
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The purpose of this table is to assist you in understanding the various
costs and expenses that you will bear directly and indirectly if you
allocate Account Value to the Subaccounts. The table reflects any
contractual charges, expenses of the Separate Account, and charges and
expenses of the Portfolios. The table does not reflect premium taxes that
may be imposed by various jurisdictions. See "Premium Tax Charge," page 22.
The information contained in the table is not applicable to amounts
allocated to the Fixed Interest Account.
For a complete description of a Contract's costs and expenses, see "Charges
and Deductions," page 22. For a more complete description of each
Portfolio's costs and expenses, see the Portfolio's prospectus, which
accompanies this Prospectus.
TABLE 1
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CONTRACTOWNER TRANSACTION EXPENSES
Sales Load on Purchase Payments None
Annual Maintenance Fee None
ANNUAL SEPARATE ACCOUNT EXPENSES
Annual Mortality and Expense Risk Charge
(as a percentage of each Subaccount's average
daily net assets) 0.55%
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Total Annual Separate Account Expenses 0.55%
ANNUAL PORTFOLIO EXPENSES (AS A PERCENTAGE OF EACH PORTFOLIO'S AVERAGE
DAILY NET ASSETS)
<TABLE>
<CAPTION>
TOTAL
MANAGEMENT* OTHER PORTFOLIO
FEE EXPENSES EXPENSES
<S> <C> <C> <C>
T. Rowe Price New America Growth Portfolio .85% 0% .85%
T. Rowe Price International Stock Portfolio 1.05% 0% 1.05%
T. Rowe Price Mid-Cap Growth Portfolio .85% 0% .85%
T. Rowe Price Equity Income Portfolio .85% 0% .85%
T. Rowe Price Personal Strategy Balanced Portfolio .90% 0% .90%
T. Rowe Price Limited-Term Bond Portfolio .70% 0% .70%
T. Rowe Price Prime Reserve Portfolio .55% 0% .55%
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</TABLE>
* The management fee includes the ordinary expenses of operating the Funds.
EXAMPLES
The example presented below shows expenses that you would pay at the end of
one, three, five, or ten years. The example shows expenses based upon an
allocation of $1,000 to each of the Subaccounts and a hypothetical annual
return of 5%. The information presented applies if, at the end of those time
periods, the Contract is (1) surrendered, (2) annuitized, or (3) not
surrendered or annuitized.
You should not consider the example below a representation of past or future
expenses. Actual expenses may be greater or lesser than those shown. The 5%
return assumed in the example is hypothetical and should not be considered a
representation of past or future actual returns, which may be greater or
lesser than the assumed amount.
EXAMPLE - You would pay the expenses shown below during the Accumulation
Period and during the Annuity Period:
<TABLE>
<CAPTION>
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1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
New America Growth Subaccount $14 $44 $77 $168
International Stock Subaccount $16 $50 $87 $190
Mid-Cap Growth Subaccount $14 $44 $77 $168
Equity Income Subaccount $14 $44 $77 $168
Personal Strategy Balanced Subaccount $15 $46 $79 $174
Limited-Term Bond Subaccount $13 $40 $69 $151
Prime Reserve Subaccount $11 $35 $61 $134
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</TABLE>
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CONDENSED FINANCIAL INFORMATION
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The following condensed financial information presents accumulation unit
values for the years ended December 31, 1999, 1998, 1997 and 1996, as well
as ending accumulation units outstanding under each Subaccount.
<TABLE>
<CAPTION>
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1999 1998 1997 1996
<S> <C> <C> <C> <C>
NEW AMERICA GROWTH SUBACCOUNT
Accumulation unit value:
Beginning of period $22.72 $19.27 $16.00 $10.00
End of period $25.47 $22.72 $19.27 $16.00
Accumulation units:
Outstanding at the end of period 172,664 188,096 170,990 143,768
INTERNATIONAL STOCK SUBACCOUNT
Accumulation unit value:
Beginning of period $15.08 $13.09 $12.77 $10.00
End of period $19.99 $15.08 $13.09 $12.77
Accumulation units:
Outstanding at the end of period 126,636 126,224 123,502 86,235
EQUITY INCOME SUBACCOUNT
Accumulation unit value:
Beginning of period $20.42 $18.84 $14.70 $10.00
End of period $21.07 $20.42 $18.84 $14.70
Accumulation units:
Outstanding at the end of period 307,417 341,036 320,917 181,250
PERSONAL STRATEGY BALANCED SUBACCOUNT
Accumulation unit value:
Beginning of period $18.04 $15.86 $13.51 $10.00
End of period $19.44 $18.04 $15.86 $13.51
Accumulation units:
Outstanding at the end of period 89,204 94,177 76,311 39,697
LIMITED TERM-BOND SUBACCOUNT
Accumulation unit value:
Beginning of period $12.37 $11.60 $10.92 $10.00
End of period $12.39 $12.37 $11.60 $10.92
Accumulation units:
Outstanding at the end of period 35,572 40,576 41,943 33,375
MID-CAP GROWTH SUBACCOUNT*
Accumulation unit value:
Beginning of period $14.34 $11.82 $10.00
End of period $17.65 $14.34 $11.82
Accumulation units:
Outstanding at the end of period 187,779 155,295 91,142
PRIME RESERVE SUBACCOUNT*
Accumulation unit value:
Beginning of period $10.97 $10.47 $10.00
End of period $11.44 $10.97 $10.47
Accumulation units:
Outstanding at the end of period 99,390 99,654 75,383
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</TABLE>
*The Mid-Cap Growth and Prime Reserve Subaccounts commenced operations on
January 2, 1997.
<PAGE>
INFORMATION ABOUT THE COMPANY, THE SEPARATE ACCOUNT, AND THE FUNDS
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FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
The Company is a stock life insurance company organized under the laws of
the State of New York on November 8, 1994. The Company offers variable
annuity contracts in New York and is admitted to do business in that state.
On September 8, 1995, the Company merged with and is the successor
corporation of Pioneer National Life Insurance Company, a stock life
insurance company organized under the laws of the State of Kansas. The
Company is a wholly-owned subsidiary of Security Benefit Group, Inc., a
financial services holding company which is wholly-owned by Security Benefit
Life Insurance Company, a stock life insurance company, organized under the
laws of the State of Kansas. On July 31, 1998, Security Benefit Life
Insurance Company converted from a mutual life insurance company to a stock
life insurance company ultimately controlled by Security Benefit Mutual
Holding Company, a Kansas mutual holding company. Membership interests of
persons who owned Security Benefit Life policies as of July 31, 1998 became
membership interests in Security Benefit Mutual Holding Company as of that
date, and persons who acquire policies from Security Benefit Life after that
date automatically become members in the mutual holding company.
PUBLISHED RATINGS
The Company may from time to time publish in advertisements, sales
literature, and reports to Owners, the ratings and other information
assigned to it by one or more independent rating organizations such as A.M.
Best Company and Standard & Poor's. The purpose of the ratings is to reflect
the financial strength and/or claims-paying ability of the Company and
should not be considered as bearing on the investment performance of assets
held in the Separate Account. Each year the A.M. Best Company reviews the
financial status of thousands of insurers, culminating in the assignment of
Best's Ratings. These ratings reflect their current opinion of the relative
financial strength and operating performance of an insurance company in
comparison to the norms of the life/health insurance industry. In addition,
the claims-paying ability of the Company as measured by Standard & Poor's
Insurance Ratings Services may be referred to in advertisements or sales
literature or in reports to Owners. These ratings are opinions of an
operating insurance company's financial capacity to meet the obligations of
its insurance and annuity policies in accordance with their terms. Such
ratings do not reflect the investment performance of the Separate Account or
the degree of risk associated with an investment in the Separate Account.
SEPARATE ACCOUNT
T. ROWE PRICE VARIABLE ANNUITY ACCOUNT OF FIRST SECURITY BENEFIT LIFE
INSURANCE AND ANNUITY COMPANY OF NEW YORK
The Company established the T. Rowe Price Variable Annuity Account as a
separate account under New York law on November 1, 1994. The Contract
provides that the income, gains, or losses of the Separate Account, whether
or not realized, are credited to or charged against the assets of the
Separate Account without regard to other income, gains, or losses of the
Company. The Company owns the assets in the Separate Account and is required
to maintain sufficient assets in the Separate Account to meet all Separate
Account obligations under the Contract. Such Separate Account assets are not
subject to claims of the Company's creditors. The Company may transfer to
its General Account assets that exceed anticipated obligations of the
Separate Account. All obligations arising under the Contracts are general
corporate obligations of the Company. The Company may invest its own assets
in the Separate Account for other purposes, but not to support contracts
other than variable annuity contracts, and may accumulate in the Separate
Account proceeds from Contract charges and investment results applicable to
those assets.
The Separate Account is currently divided into seven Subaccounts. The
Contract provides that income, gains and losses, whether or not realized,
are credited to, or charged against, the assets of each Subaccount without
regard to the income, gains, or losses in the other Subaccounts. Each
Subaccount invests exclusively in shares of a specific Portfolio of one of
the Funds. The Company may in the future establish additional Subaccounts of
the Separate Account, which may invest in other Portfolios of the Funds or
in other securities, mutual funds, or investment vehicles. Under its
contract with the distributor, T. Rowe Price Investment Services, Inc.
("Investment Services"), the Company cannot add new Subaccounts, or
substitute shares of another portfolio, without the consent of Investment
Services, unless (1) such change is necessary to comply with applicable
laws, (2) shares of any or all of the Portfolios should no longer be
available for investment, or (3) the Company receives an opinion from
counsel acceptable to Investment Services that substitution is in the best
interest of Contractowners and that further investment in shares of the
Portfolio(s) would cause undue risk to the Company. For more information
about the distributor, see "Distribution of the Contract," page 39.
The Separate Account is registered with the SEC as a unit investment trust
under the Investment Company Act of 1940 (the "1940 Act"). Registration with
the SEC does not involve supervision by the SEC of the administration or
investment practices of the Separate Account or of the Company.
THE FUNDS
The T. Rowe Price Equity Series, Inc., the T. Rowe Price Fixed Income
Series, Inc., and the T. Rowe Price International Series, Inc. are
diversified, open-end management investment companies of the series type.
The Funds are registered with the SEC under the 1940 Act. Such registration
does not involve supervision by the SEC of the investments or investment
policy of the Funds. Together, the Funds currently have seven separate
Portfolios, each of which pursues different investment objectives and
policies.
In addition to the Separate Account, shares of the Funds are being sold to
variable life insurance and variable annuity separate accounts of other
insurance companies, including insurance companies affiliated with the
Company. In the future, it may be disadvantageous for variable annuity
separate accounts of other life insurance companies, or for both variable
life insurance separate accounts and variable annuity separate accounts, to
invest simultaneously in the Funds. Currently neither the Company nor the
Funds foresee any such disadvantages to either variable annuity owners or
variable life insurance owners. The management of the Funds intends to
monitor events in order to identify any material conflicts between or among
variable annuity owners and variable life insurance owners and to determine
what action, if any, should be taken in response. In addition, if the
Company believes that any Fund's response to any of those events or
conflicts insufficiently protects Owners, it will take appropriate action on
its own. For more information see the Funds' prospectus.
A summary of the investment objective of each Portfolio of the Funds is set
forth below. There can be no assurance that any Portfolio will achieve its
objective. More detailed information is contained in the accompanying
prospectus of the Funds, including information on the risks associated with
the investments and investment techniques of each Portfolio.
THE FUNDS' PROSPECTUS ACCOMPANIES THIS PROSPECTUS AND SHOULD BE READ
CAREFULLY BEFORE INVESTING.
T. ROWE PRICE NEW AMERICA GROWTH PORTFOLIO
The investment objective of the New America Growth Portfolio is long-term
growth of capital through investments primarily in the common stocks of
companies operating in sectors T. Rowe Price believes will be the fastest
growing in the United States.
T. ROWE PRICE INTERNATIONAL STOCK PORTFOLIO
The investment objective of the International Stock Portfolio is to seek
long-term growth of capital through investments primarily in common stocks
of established, non-U.S. companies.
T. ROWE PRICE MID-CAP GROWTH PORTFOLIO
The investment objective of the Mid-Cap Growth Portfolio is to provide
long-term capital appreciation by investing primarily in common stocks of
medium-sized growth companies.
T. ROWE PRICE EQUITY INCOME PORTFOLIO
The investment objective of the Equity Income Portfolio is to provide
substantial dividend income and also capital appreciation by investing
primarily in dividend-paying common stocks of established companies.
T. ROWE PRICE PERSONAL STRATEGY BALANCED PORTFOLIO
The investment objective of the Personal Strategy Balanced Portfolio is to
seek the highest total return over time consistent with an emphasis on both
capital appreciation and income.
T. ROWE PRICE LIMITED-TERM BOND PORTFOLIO
The investment objective of the Limited-Term Bond Portfolio is to seek a
high level of income consistent with moderate price fluctuation by investing
primarily in short- and intermediate-term investment grade debt securities.
T. ROWE PRICE PRIME RESERVE PORTFOLIO
The investment objectives of the Prime Reserve Portfolio are preservation of
capital, liquidity, and, consistent with these, the highest possible current
income, by investing primarily in high-quality money market securities.
THE INVESTMENT ADVISERS
T. Rowe Price Associates, Inc. ("T. Rowe Price"), located at 100 East Pratt
Street, Baltimore, Maryland 21202, serves as Investment Adviser to each
Portfolio, except the T. Rowe Price International Stock Portfolio. Rowe
Price-Fleming International, Inc. ("Price-Fleming"), an affiliate of T. Rowe
Price, serves as Investment Adviser to the T. Rowe Price International Stock
Portfolio. Price-Fleming's U.S. office is located at 100 East Pratt Street,
Baltimore, Maryland 21202. As Investment Adviser to the Portfolios, T. Rowe
Price and Price-Fleming are responsible for selection and management of
portfolio investments. T. Rowe Price and Price-Fleming are registered with
the SEC as investment advisers.
T. Rowe Price and Price-Fleming are not affiliated with the Company, and the
Company has no responsibility for the management or operations of the
Portfolios.
THE CONTRACT
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GENERAL
The Company issues the Contract offered by this Prospectus. It is a flexible
premium deferred variable annuity. To the extent that you allocate all or a
portion of your purchase payments to the Subaccounts, the Contract is
significantly different from a fixed annuity contract in that it is the
Owner who assumes the risk of investment gain or loss rather than the
Company. When you are ready to begin receiving Annuity Payments, the
Contract provides several Annuity Options under which the Company will pay
periodic Annuity Payments on a variable basis, a fixed basis, or both,
beginning on the Annuity Payout Date. The amount that will be available for
Annuity Payments will depend on the investment performance of the
Subaccounts to which you have allocated Account Value and the amount of
interest credited on Account Value that you have allocated to the Fixed
Interest Account.
The Contract is available for purchase by an individual as a non-tax
qualified retirement plan ("Non-Qualified Plan"). The Contract is also
eligible for purchase as an individual retirement annuity ("IRA") qualified
under Section 408 or a Roth IRA under Section 408A, of the Internal Revenue
Code ("Qualified Plan"). You may name Joint Owners only on a Contract issued
pursuant to a Non-Qualified Plan.
APPLICATION FOR A CONTRACT
If you wish to purchase a Contract, you may submit an application and an
initial purchase payment to the Company, as well as any other form or
information that the Company may require. The initial purchase payment may
be made by check or, if you own shares of one or more mutual funds
distributed by Investment Services ("T. Rowe Price Funds"), you may elect on
the application to redeem shares of that fund(s) and forward the redemption
proceeds to the Company. Any such transaction shall be effected by
Investment Services, the distributor of the T. Rowe Price Funds and the
Contract. If you redeem fund shares, it is a sale of shares for tax
purposes, which may result in a taxable gain or loss. You may obtain an
application by contacting the Company. The Company reserves the right to
reject an application or purchase payment for any reason, subject to the
Company's underwriting standards and guidelines and any applicable state or
federal law relating to nondiscrimination.
The maximum age of an Owner or Annuitant for which a Contract will be issued
is 85. If there are Joint Owners or Annuitants, the maximum issue age will
be determined by reference to the older Owner or Annuitant.
PURCHASE PAYMENTS
If you are purchasing a Contract as a Non-Qualified Plan, the minimum
initial purchase payment is $10,000 ($5,000 if made pursuant to an Automatic
Investment Program). If you are purchasing a Contract as a Qualified Plan,
the minimum initial purchase payment is $2,000 ($25 if made pursuant to an
Automatic Investment Program). Thereafter, you may choose the amount and
frequency of purchase payments, except that the minimum subsequent purchase
payment is $1,000 ($200 if made pursuant to an Automatic Investment Program)
for Non-Qualified Plans and $500 ($25 if made pursuant to an Automatic
Investment Program) for Qualified Plans. The Company may reduce the minimum
purchase payment requirements under certain circumstances, such as for group
or sponsored arrangements. Cumulative purchase payments exceeding $1 million
will not be accepted under a Contract without prior approval of the Company.
The Company will apply the initial purchase payment not later than the end
of the second Valuation Date after the Valuation Date it is received by the
Company at P.O. Box 2788, Topeka, Kansas 66601-9804; provided that the
purchase payment is preceded or accompanied by an application that contains
sufficient information to establish an account and properly credit such
purchase payment. If the Company does not receive a complete application,
the Company will notify you that it does not have the necessary information
to issue a Contract. If you do not provide the necessary information within
five Valuation Dates after the Valuation Date on which the Company first
receives the initial purchase payment or if the Company determines it cannot
otherwise issue the Contract, the Company will return the initial purchase
payment to you unless you consent to the Company retaining the purchase
payment until the application is made complete.
The Company will credit subsequent purchase payments as of the end of the
Valuation Period during which they are received. You may make purchase
payments after the initial purchase payment at any time prior to the Annuity
Payout Date, so long as the Owner is living. Subsequent purchase payments
under a Qualified Plan may be limited by the terms of the plan and
provisions of the Internal Revenue Code. Subsequent purchase payments may be
paid under an Automatic Investment Program or, if you own shares of one or
more T. Rowe Price Funds, you may direct Investment Services to redeem
shares of that fund(s) and forward the redemption proceeds to the Company as
a subsequent purchase payment. The minimum initial purchase payment must be
paid before the Company will accept an Automatic Investment Program. If you
redeem fund shares, it is a sale of shares for tax purposes, which may
result in a taxable gain or loss.
ALLOCATION OF PURCHASE PAYMENTS
In an application for a Contract, you select the Subaccounts or the Fixed
Interest Account to which purchase payments will be allocated. The
allocation must be a whole percentage. Purchase payments will be allocated
according to your instructions contained in the application or more recent
instructions received, if any, except that no purchase payment allocation is
permitted that would result in less than 5% of any payment being allocated
to any one Subaccount or the Fixed Interest Account. Available allocation
alternatives include the seven Subaccounts and the Fixed Interest Account.
You may change the purchase payment allocation instructions by submitting a
proper written request to the Company. A proper change in allocation
instructions will be effective upon receipt by the Company and will continue
in effect until subsequently changed. You may change your purchase payment
allocation instructions by telephone or by sending a request in writing to
the Company. Changes in the allocation of future purchase payments have no
effect on existing Account Value. You may, however, exchange Account Value
among the Subaccounts and the Fixed Interest Account as described in
"Exchanges of Account Value," page 18.
DOLLAR COST AVERAGING OPTION
Prior to the Annuity Payout Date, you may dollar cost average your Account
Value by authorizing the Company to make periodic exchanges of Account Value
from any one Subaccount to one or more of the other Subaccounts. Dollar cost
averaging is a systematic method of investing in which securities are
purchased at regular intervals in fixed dollar amounts so that the cost of
the securities gets averaged over time and possibly over various market
cycles. The option will result in the exchange of Account Value from one
Subaccount to one or more of the other Subaccounts. Amounts exchanged under
this option will be credited at the Subaccount's price as of the end of the
Valuation Dates on which the exchanges are effected. Since the price of a
Subaccount's Accumulation Units will vary, the amounts allocated to a
Subaccount will result in the crediting of a greater number of units when
the price is low and a lesser number of units when the price is high.
Similarly, the amounts exchanged from a Subaccount will result in a debiting
of a greater number of units when the Subaccount's price is low and a lesser
number of units when the price is high. Dollar cost averaging does not
guarantee profits, nor does it assure that you will not have losses.
You may request a Dollar Cost Averaging Request form from the Company. On
the form, you must designate whether Account Value is to be exchanged on the
basis of a specific dollar amount, a fixed period or earnings only, the
Subaccount or Subaccounts to and from which the exchanges will be made, the
desired frequency of the exchanges, which may be on a monthly, quarterly,
semiannual, or annual basis, and the length of time during which the
exchanges shall continue or the total amount to be exchanged over time.
To elect the Dollar Cost Averaging Option, your Account Value must be at
least $5,000, ($2,000 for a Contract funding a Qualified Plan), and a Dollar
Cost Averaging Request in proper form must be received by the Company. The
Company will not consider the Dollar Cost Averaging Request form to be
complete until your Account Value is at least the required amount. You may
not have in effect at the same time Dollar Cost Averaging and Asset
Rebalancing Options.
After the Company has received a Dollar Cost Averaging Request in proper
form, the Company will exchange Account Value in the amounts you designate
from the Subaccount from which exchanges are to be made to the Subaccount or
Subaccounts you have chosen. The minimum amount that may be exchanged is
$200 and the minimum amount that may be allocated to any one Subaccount is
$25. The Company will effect each exchange on the date you specify or if no
date is specified, on the monthly, quarterly, semiannual, or annual
anniversary, whichever corresponds to the period selected, of the date of
receipt at the Company of a Dollar Cost Averaging Request in proper form.
Exchanges will be made until the total amount elected has been exchanged, or
until the Account Value in the Subaccount from which exchanges are made has
been depleted. Amounts periodically exchanged under this option are not
included in the six exchanges per Contract Year that are allowed as
discussed in "Exchanges of Account Value," page 18.
You may instruct the Company at any time to terminate the option by written
request to the Company. In that event, the Account Value in the Subaccount
from which exchanges were being made that has not been exchanged will remain
in that Subaccount unless you instruct us otherwise. If you wish to continue
exchanging on a dollar cost averaging basis after the expiration of the
applicable period, the total amount elected has been exchanged, or the
Subaccount has been depleted, or after the Dollar Cost Averaging Option has
been canceled, you must complete a new Dollar Cost Averaging Request and
send it to the Company. The Contract must meet the $5,000 ($2,000 for a
Contract funding a Qualified Plan) minimum required amount of Account Value
at that time. The Company may discontinue, modify, or suspend the Dollar
Cost Averaging Option at any time provided that, as required by its contract
with Investment Services, the Company first obtains the consent of
Investment Services.
Account Value also may be dollar cost averaged to or from the Fixed Interest
Account, subject to certain restrictions described under "The Fixed Interest
Account," page 27.
ASSET REBALANCING OPTION
Prior to the Annuity Payout Date, you may authorize the Company to
automatically exchange Account Value each quarter to maintain a particular
percentage allocation among the Subaccounts. The Account Value allocated to
each Subaccount will grow or decline in value at different rates during the
quarter, and Asset Rebalancing automatically reallocates the Account Value
in the Subaccounts each quarter to the allocation you select. Asset
Rebalancing is intended to exchange Account Value from those Subaccounts
that have increased in value to those Subaccounts that have declined in
value. Over time, this method of investing may help you to buy low and sell
high, although there can be no assurance of this. This investment method
does not guarantee profits, nor does it assure that you will not have
losses.
To elect the Asset Rebalancing Option, the Account Value must be at least
$10,000 ($2,000 for a Contract funding a Qualified Plan) and an Asset
Rebalancing Request in proper form must be received by the Company. You may
not have in effect at the same time Dollar Cost Averaging and Asset
Rebalancing Options. An Asset Rebalancing Request form is available upon
request. On the form, you must indicate the applicable Subaccounts and the
percentage of Account Value which should be allocated to each of the
applicable Subaccounts each quarter under the Asset Rebalancing Option. If
the Asset Rebalancing Option is elected, all Account Value allocated to the
Subaccounts must be included in the Asset Rebalancing Option.
This option will result in the exchange of Account Value to one or more of
the Subaccounts on the date you specify or, if no date is specified, on the
date of the Company's receipt of the Asset Rebalancing Request in proper
form and on each quarterly anniversary of the applicable date thereafter.
The amounts exchanged will be credited at the price of the Subaccount as of
the end of the Valuation Dates on which the exchanges are effected. Amounts
periodically exchanged under this option are not included in the six
exchanges per Contract Year that are allowed as discussed below.
You may instruct us to terminate this option at any time by written request
to the Company. This option will terminate automatically in the event that
you exchange Account Value (outside the Asset Rebalancing option) by written
request or telephone instructions. In either event, the Account Value in the
Subaccounts that has not been exchanged will remain in those Subaccounts
regardless of the percentage allocation unless you instruct us otherwise. If
you wish to resume Asset Rebalancing after it has been canceled, you must
complete a new Asset Rebalancing Request form and send it to the Company.
The Account Value at the time the request is made must be at least $10,000
($2,000 for a Contract funding a Qualified Plan). The Company may
discontinue, modify, or suspend the Asset Rebalancing Option at any time
provided that, as required by its contract with Investment Services, the
Company first obtains the consent of Investment Services.
Account Value allocated to the Fixed Interest Account may be included in
Asset Rebalancing, subject to certain restrictions described under "The
Fixed Interest Account," page 27.
EXCHANGES OF ACCOUNT VALUE
Prior to the Annuity Payout Date, you may exchange Account Value among the
Subaccounts upon proper written request to the Company. You may exchange
Account Value (other than exchanges in connection with the Dollar Cost
Averaging or Asset Rebalancing Options) by telephone if an Authorization for
Telephone Requests form has been properly completed, signed, and filed at
the Company. Up to six exchanges are allowed in any Contract Year. The
minimum exchange amount is $500 ($200 under the Dollar Cost Averaging
Option), or the amount remaining in a given Subaccount.
You may also exchange Account Value between the Subaccounts and the Fixed
Interest Account; however, exchanges from the Fixed Interest Account to the
Subaccounts are restricted as described in "The Fixed Interest Account,"
page 27. For a discussion of exchanges after the Annuity Payout Date, see
"Annuity Payments," page 23.
ACCOUNT VALUE
The Account Value is the sum of the amounts under the Contract held in each
Subaccount and the Fixed Interest Account. Account Value is determined as of
any Valuation Date during the Accumulation Period and during the Annuity
Period under Annuity Options 5 through 7.
On each Valuation Date, the portion of the Account Value allocated to any
particular Subaccount will be adjusted to reflect the investment experience
of that Subaccount for that date. See "Determination of Account Value,"
below. No minimum amount of Account Value is guaranteed. You bear the entire
investment risk relating to the investment performance of Account Value
allocated to the Subaccounts.
DETERMINATION OF ACCOUNT VALUE
Account Value will vary to a degree that depends upon several factors,
including investment performance of the Subaccounts to which you have
allocated Account Value, payment of subsequent purchase payments, partial
withdrawals, Annuity Payments under Options 5 through 7 , and the charges
assessed in connection with the Contract. The amounts allocated to the
Subaccounts will be invested in shares of the corresponding Portfolios of
the Funds. The investment performance of the Subaccounts will reflect
increases or decreases in the net asset value per share of the corresponding
Portfolios and any dividends or distributions declared by the corresponding
Portfolios. Any dividends or distributions from any Portfolio will be
automatically reinvested in shares of the same Portfolio, unless the
Company, on behalf of the Separate Account, elects otherwise.
Assets in the Subaccounts are divided into Accumulation Units, which are
accounting units of measure used to calculate the value of a Contractowner's
interest in a Subaccount. When you allocate purchase payments to a
Subaccount, your Contract is credited with Accumulation Units. The number of
Accumulation Units to be credited is determined by dividing the dollar
amount allocated to the particular Subaccount by the price for the
particular Subaccount as of the end of the Valuation Period in which the
purchase payment is credited. In addition, other transactions including full
or partial withdrawals, exchanges, Annuity Payments under Options 5 through
7, and assessment of premium taxes against the Contract, all affect the
number of Accumulation Units credited to a Contract. The number of units
credited or debited in connection with any such transaction is determined by
dividing the dollar amount of such transaction by the price of the affected
Subaccount. The price of each Subaccount is determined as of each Valuation
Date. The number of Accumulation Units credited to a Contract will not be
changed by any subsequent change in the value of an Accumulation Unit, but
the price of an Accumulation Unit may vary from Valuation Date to Valuation
Date depending upon the investment experience of the Subaccount and charges
against the Subaccount.
The price of each Subaccount's units initially was $10. Determination of the
price of a Subaccount takes into account the following: (1) the investment
performance of the Subaccount, which is based upon the investment
performance of the corresponding Portfolio of the Funds, (2) any dividends
or distributions paid by the corresponding Portfolio, (3) the charges, if
any, that may be assessed by the Company for taxes attributable to the
operation of the Subaccount, and (4) the mortality and expense risk charge
under the Contract.
FULL AND PARTIAL WITHDRAWALS
Prior to the Annuity Payout Date, you may surrender the Contract for its
Withdrawal Value or make a partial withdrawal of Account Value. A full or
partial withdrawal, including a systematic withdrawal, may be taken from the
Account Value at any time while the Owner is living, subject to restrictions
on partial withdrawals of Account Value from the Fixed Interest Account and
limitations under applicable law. Withdrawals after the Annuity Payout Date
are permitted only under Annuity Options 5 through 7. See "Annuity
Payments," page 23. A full or partial withdrawal request will be effective
as of the end of the Valuation Period that a proper written request is
received by the Company. A proper written request must include the written
consent of any effective assignee or irrevocable Beneficiary, if applicable.
You may direct Investment Services to apply the proceeds of a full or
partial withdrawal to the purchase of shares of one or more of the T. Rowe
Price Funds by so indicating in your written withdrawal request.
The proceeds received upon a full withdrawal will be the Contract's
Withdrawal Value. The Withdrawal Value is equal to the Account Value as of
the end of the Valuation Period during which a proper withdrawal request is
received by the Company, less any premium taxes due and paid by the Company.
You may request a partial withdrawal as a specified percentage or dollar
amount of Account Value. Each partial withdrawal must be for at least $500
except systematic withdrawals discussed below. A request for a partial
withdrawal will result in a payment by the Company in accordance with the
amount specified in the partial withdrawal request. Upon payment, the
Account Value will be reduced by an amount equal to the payment and any
applicable premium tax. If a partial withdrawal is requested that would
leave the Withdrawal Value in the Contract less than $2,000, the Company
reserves the right to treat the partial withdrawal as a request for a full
withdrawal.
The amount of a partial withdrawal will be deducted from the Account Value
in the Subaccounts and the Fixed Interest Account, according to your
instructions to the Company, subject to the restrictions on partial
withdrawals from the Fixed Interest Account. See "The Fixed Interest
Account," page 27. If you do not specify the allocation, the Company will
contact you for instructions, and the withdrawal will be effected as of the
end of the Valuation Period in which such instructions are obtained. A full
or partial withdrawal, including a systematic withdrawal, may be subject to
a premium tax charge to reimburse the Company for any tax on premiums on a
Contract that may be imposed by various states and municipalities. See
"Premium Tax Charge," page 22.
A full or partial withdrawal, including a systematic withdrawal, may result
in receipt of taxable income to the Owner and, if made prior to the Owner's
attaining age 59 1/2, may be subject to a 10% penalty tax. You should
carefully consider the tax consequences of a withdrawal under the Contract.
See "Federal Tax Matters," page 31.
SYSTEMATIC WITHDRAWALS
The Company currently offers a feature under which you may elect to receive
systematic withdrawals of Account Value by sending a properly completed
Systematic Withdrawal Request form to the Company. Systematic withdrawals
are available only prior to the Annuity Payout Date. You may direct
Investment Services to apply the proceeds of a systematic withdrawal to the
purchase of shares of one or more of the T. Rowe Price Funds by so
indicating on the Systematic Withdrawal Request form. A proper request must
include the written consent of any effective assignee or irrevocable
Beneficiary, if applicable. You may designate the systematic withdrawal
amount as a percentage of Account Value allocated to the Subaccounts and/or
Fixed Interest Account, as a specified dollar amount, as all earnings in the
Contract, or as based upon the life expectancy of the Owner or the Owner and
a beneficiary, and the desired frequency of the systematic withdrawals,
which may be monthly, quarterly, semiannually, or annually. You may stop or
modify systematic withdrawals upon proper written request to the Company at
least 30 days in advance of the requested date of termination or
modification.
Each systematic withdrawal must be at least $100. Upon payment, your Account
Value will be reduced by an amount equal to the payment proceeds plus any
applicable premium taxes. Any systematic withdrawal that equals or exceeds
the Withdrawal Value will be treated as a full withdrawal. In no event will
payment of a systematic withdrawal exceed the Withdrawal Value. The Contract
will automatically terminate if a systematic withdrawal causes the
Contract's Withdrawal Value to equal zero.
The Company will effect each systematic withdrawal as of the end of the
Valuation Period during which the withdrawal is scheduled. The deduction
caused by the systematic withdrawal will be allocated to your Account Value
in the Subaccounts and the Fixed Interest Account based on your
instructions.
The Company may, at any time, discontinue, modify, or suspend systematic
withdrawals provided that, as required by its contract with Investment
Services, the Company first obtains the consent of Investment Services.
Systematic withdrawals from Account Value allocated to the Fixed Interest
Account must provide for payments over a period of not less than 36 months
as described under "The Fixed Interest Account," page 27. You should
consider carefully the tax consequences of a systematic withdrawal,
including the 10% penalty tax imposed on withdrawals made prior to the
Owner's attaining age 59 1/2. See "Federal Tax Matters," page 31.
FREE-LOOK RIGHT
You may return a Contract within the Free-Look Period, which is a 30-day
period beginning when you receive the Contract. The returned Contract will
then be deemed void and the Company will refund any purchase payments
allocated to the Fixed Interest Account plus the Account Value in the
Subaccounts as of the end of the Valuation Period during which the returned
Contract is received by the Company. The Company will return purchase
payments allocated to the Subaccounts rather than Account Value in those
circumstances in which it is required to do so.
DEATH BENEFIT
If the Owner dies during the Accumulation Period, the Company will pay the
death benefit proceeds to the Designated Beneficiary upon receipt of due
proof of death and instructions regarding payment to the Designated
Beneficiary. If there are Joint Owners, the death benefit proceeds will be
payable upon receipt of due proof of death of either Owner during the
Accumulation Period and instructions regarding payment. If the surviving
spouse of the deceased Owner is the sole Designated Beneficiary, such spouse
may elect to continue the Contract in force, subject to certain limitations.
See "Distribution Requirements" below. If the Owner is not a natural person,
the death benefit proceeds will be payable upon receipt of due proof of
death of the Annuitant during the Accumulation Period and instructions
regarding payment, and the amount of the death benefit is based on the age
of the oldest Annuitant on the date the Contract was issued. If the death of
an Owner occurs on or after the Annuity Payout Date, no death benefit
proceeds will be payable under the Contract, except that any guaranteed
Annuity Payments remaining unpaid will continue to be paid to the Annuitant
pursuant to the Annuity Option in force at the date of death. See "Annuity
Options," page 24.
The death benefit proceeds will be the death benefit reduced by any premium
taxes due or paid by the Company. If an Owner dies during the Accumulation
Period and the age of each Owner was 75 or younger on the date the Contract
was issued, the amount of the death benefit will be the greatest of (1) the
Account Value as of the end of the Valuation Period in which due proof of
death and instructions regarding payment are received by the Company, (2)
the total purchase payments received less any reductions caused by previous
withdrawals, or (3) the stepped-up death benefit. The stepped-up death
benefit is: (a) the highest death benefit on any annual Contract anniversary
that is both an exact multiple of five and occurs prior to the oldest Owner
attaining age 76, plus (b) any purchase payments made since the applicable
fifth annual Contract anniversary, less (c) any withdrawals since the
applicable anniversary.
If an Owner dies during the Accumulation Period and the Contract was issued
to the Owner after age 75, the amount of the death benefit will be the
Account Value as of the end of the Valuation Period in which due proof of
death and instructions regarding payment are received by the Company.
The Company will pay the death benefit proceeds to the Designated
Beneficiary in a single sum or under one of the Annuity Options, as elected
by the Designated Beneficiary. If the Designated Beneficiary is to receive
Annuity Payments under an Annuity Option, there may be limits under
applicable law on the amount and duration of payments that the Beneficiary
may receive, and requirements respecting timing of payments. A tax adviser
should be consulted in considering Annuity Options. See "Federal Tax
Matters," page 31 for a discussion of the tax consequences in the event of
death.
DISTRIBUTION REQUIREMENTS
For Contracts issued in connection with Non-Qualified Plans, if the
surviving spouse of the deceased Owner is the sole Designated Beneficiary,
such spouse may elect to continue the Contract in force until the earlier of
the surviving spouse's death or the Annuity Payout Date or to receive the
death benefit proceeds. For any Designated Beneficiary other than a
surviving spouse, only those options may be chosen that provide for complete
distribution of the Owner's interest in the Contract within five years of
the death of the Owner. If the Designated Beneficiary is a natural person,
that person alternatively can elect to begin receiving Annuity Payments
within one year of the Owner's death over a period not extending beyond his
or her life or life expectancy. If the Owner of the Contract is not a
natural person, these distribution rules are applicable upon the death of or
a change in the primary Annuitant.
For Contracts issued in connection with Qualified Plans, the terms of any
Qualified Plan and the Internal Revenue Code should be reviewed with respect
to limitations or restrictions on distributions following the death of the
Owner or Annuitant. Because the rules applicable to Qualified Plans are
extremely complex, a competent tax adviser should be consulted.
DEATH OF THE ANNUITANT
If the Annuitant dies prior to the Annuity Payout Date, and the Owner is a
natural person and is not the Annuitant, no death benefit proceeds will be
payable under the Contract. The Owner may name a new Annuitant within 30
days of the Annuitant's death. If a new Annuitant is not named, the Company
will designate the Owner as Annuitant. On the death of the Annuitant on or
after the Annuity Payout Date, any guaranteed Annuity Payments remaining
unpaid will continue to be paid to the Designated Beneficiary pursuant to
the Annuity Option in force at the date of death. See "Annuity Options,"
page 24.
CHARGES AND DEDUCTIONS
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MORTALITY AND EXPENSE RISK CHARGE
The Company deducts a daily charge from the assets of each Subaccount for
mortality and expense risks assumed by the Company under the Contracts. The
charge is equal to an annual rate of 0.55% of each Subaccount's average
daily net assets. This amount is intended to compensate the Company for
certain mortality and expense risks the Company assumes in offering and
administering the Contracts and in operating the Subaccounts.
The expense risk borne by the Company is the risk that the Company's actual
expenses in issuing and administering the Contracts and operating the
Subaccounts will be more than the profit realized from the mortality and
expense risk charge. The mortality risk borne by the Company is the risk
that Annuitants, as a group, will live longer than the Company's actuarial
tables predict. In this event, the Company guarantees that Annuity Payments
will not be affected by a change in mortality experience that results in the
payment of greater annuity income than assumed under the Annuity Options in
the Contract. The Company assumes a mortality risk in connection with the
death benefit under the Contract.
The Company may ultimately realize a profit from the mortality and expense
risk charge to the extent it is not needed to cover mortality and
administrative expenses, but the Company may realize a loss to the extent
the charge is not sufficient. The Company may use any profit derived from
this charge for any lawful purpose, including any promotional and
administrative expenses.
PREMIUM TAX CHARGE
Various states and municipalities impose a tax on premiums on annuity
contracts received by insurance companies. Whether or not a premium tax is
imposed will depend upon, among other things, the Owner's state of
residence, the Annuitant's state of residence, and the insurance tax laws
and the Company's status in a particular state. The Company assesses a
premium tax charge to reimburse itself for premium taxes that it incurs in
connection with a Contract. This charge will be deducted upon the Annuity
Payout Date, upon full or partial withdrawal, or upon payment of the death
benefit, if premium taxes are incurred at that time and are not refundable.
No premium tax is currently imposed in the State of New York. The Company
reserves the right to deduct premium taxes, if imposed, when due or any time
thereafter.
OTHER CHARGES
The Company may charge the Separate Account or the Subaccounts for the
federal, state, or local taxes incurred by the Company that are attributable
to the Separate Account or the Subaccounts, or to the operations of the
Company with respect to the Contract, or that are attributable to payment of
premiums or acquisition costs under the Contract. No such charge is
currently assessed. See "Tax Status of the Company and the Separate Account"
and "Charge for the Company's Taxes," page 31.
GUARANTEE OF CERTAIN CHARGES
The Company guarantees that the charge for mortality and expense risks will
not exceed an annual rate of 0.55% of each Subaccount's average daily net
assets.
FUND EXPENSES
Each Subaccount purchases shares at the net asset value of the corresponding
Portfolio of the Funds. Each Portfolio's net asset value reflects the
investment management fee and any other expenses that are deducted from the
assets of the Fund. These fees and expenses are not deducted from the
Subaccount, but are paid from the assets of the corresponding Portfolio. As
a result, you indirectly bear a pro rata portion of such fees and expenses.
The management fees and other expenses, if any, which are more fully
described in the Funds' prospectus, are not specified or fixed under the
terms of the Contract, and the Company bears no responsibility for such fees
and expenses.
ANNUITY PAYMENTS
- --------------------------------------------------------------------------------
GENERAL
You may select the Annuity Payout Date at the time of application. You may
not defer the Annuity Payout Date beyond the Annuitant's 90th birthday,
although the terms of a Qualified Plan and the laws of certain states may
require you to begin receiving Annuity Payments at an earlier age. If you do
not select an Annuity Payout Date, the Annuity Payout Date will be the later
of the Annuitant's 70th birthday or the fifth annual Contract Anniversary.
See "Selection of an Option," page 25. If there are Joint Annuitants, the
birth date of the older Annuitant will be used to determine the latest
Annuity Payout Date. A letter will be sent to the Owner on the proposed
Annuity Payout Date requesting that the Owner confirm this date or to select
a new date.
On the Annuity Payout Date, the Account Value as of that date, less any
premium taxes, will be applied to provide an annuity under one of the
Options described below. Each Option is available either as a variable
annuity supported by the Subaccounts or as a fixed annuity supported by the
Fixed Interest Account. A combination variable and fixed annuity is also
available under Options 5 through 7. Your payment choices for each Annuity
Option are set forth in the table below.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
COMBINATION VARIABLE
ANNUITY OPTION VARIABLE ANNUITY FIXED ANNUITY AND FIXED ANNUITY
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Option 1 - Life Income X X
- -------------------------------------------------------------------------------------------------------
Option 2 - Life Income with Period Certain X X
- -------------------------------------------------------------------------------------------------------
Option 3 - Life Income with Installment X X
Refund
- -------------------------------------------------------------------------------------------------------
Option 4 - Joint and Last Survivor X X
- -------------------------------------------------------------------------------------------------------
Option 5 - Payments for a Specified Period X X X
- -------------------------------------------------------------------------------------------------------
Option 6 - Payments of a Specified Amount X X X
- -------------------------------------------------------------------------------------------------------
Option 7 - Age Recalculation X X X
- -------------------------------------------------------------------------------------------------------
</TABLE>
Variable Annuity Payments will fluctuate with the investment performance of
the applicable Subaccounts while fixed Annuity Payments will not. Unless you
direct otherwise, Account Value allocated to the Subaccounts will be applied
to purchase a variable annuity and Account Value allocated to the Fixed
Interest Account will be applied to purchase a fixed annuity. The Company
will make Annuity Payments on a monthly, quarterly, semiannual, or annual
basis. No Annuity Payments will be made for less than $20. You may direct
Investment Services to apply the proceeds of an Annuity Payment to shares of
one or more of the T. Rowe Price Funds by submitting a written request to
the Company. If the frequency of payments selected would result in payments
of less than $20, the Company reserves the right to change the frequency.
You may designate or change an Annuity Payout Date, Annuity Option and
Annuitant, provided proper written notice is received at the Company at
least 30 days prior to the Annuity Payout Date. The date selected as the new
Annuity Payout Date must be at least 30 days after the date written notice
requesting a change of Annuity Payout Date is received by the Company.
EXCHANGES AND WITHDRAWALS
During the Annuity Period, you may exchange Account Value or Payment Units
among the Subaccounts upon proper written request to the Company. Up to six
exchanges are allowed in any Contract Year. Exchanges are not allowed within
30 days of the Annuity Payout Date. Exchanges of Account Value or Payment
Units during the Annuity Period will result in future Annuity Payments based
upon the performance of the Subaccounts to which the exchange is made.
You may exchange Payment Units under Options 1 through 4 and may exchange
Account Value among the Subaccounts and the Fixed Interest Account under
Options 5 through 7, subject to the restrictions on exchanges from the Fixed
Interest Account described under the "Fixed Interest Account," page 27. The
minimum amount of Account Value that may be exchanged is $500 or, if less,
the amount remaining in the Fixed Interest Account or Subaccount.
Once Annuity Payments have commenced, an Annuitant or Owner cannot change
the Annuity Option and generally cannot surrender his or her annuity for the
Withdrawal Value. Full and partial withdrawals of Account Value are
available, however, during the Annuity Period under Options 5 through 7,
subject to the restrictions on withdrawals from the Fixed Interest Account.
Partial withdrawals during the Annuity Period will reduce the amount of
future Annuity Payments.
ANNUITY OPTIONS
The Contract provides for seven Annuity Options. Other Annuity Options may
be available upon request at the discretion of the Company. If no Annuity
Option has been selected, Annuity Payments will be made to the Annuitant
under Option 2 which shall be an annuity payable monthly during the lifetime
of the Annuitant with payments guaranteed to be made for 10 years. A letter
will be sent to the Owner on the Annuity Payout Date to notify the Owner
that Option 2 will be selected and to give the Owner the opportunity to
confirm this Annuity Option or to select a different Annuity Option. The
Annuity Options are set forth below.
OPTION 1 - LIFE INCOME Periodic Annuity Payments will be made during the
lifetime of the Annuitant. It is possible under this Option for an Annuitant
to receive only one Annuity Payment if the Annuitant's death occurred prior
to the due date of the second Annuity Payment, two if death occurred prior
to the due date of the third Annuity Payment, etc. THERE IS NO MINIMUM
NUMBER OF PAYMENTS GUARANTEED UNDER THIS OPTION. PAYMENTS CEASE UPON THE
DEATH OF THE ANNUITANT, REGARDLESS OF THE NUMBER OF PAYMENTS RECEIVED.
OPTION 2 - LIFE INCOME WITH PERIOD CERTAIN OF 5, 10, 15, OR 20 YEARS
Periodic Annuity Payments will be made during the lifetime of the Annuitant
with the promise that if, at the death of the Annuitant, payments have been
made for less than a stated period, which may be 5, 10, 15, or 20 years, as
elected, Annuity Payments will be continued during the remainder of such
period to the Designated Beneficiary. UPON THE ANNUITANT'S DEATH AFTER THE
PERIOD CERTAIN, NO FURTHER ANNUITY PAYMENTS WILL BE MADE.
OPTION 3 - LIFE INCOME WITH INSTALLMENT OR UNIT REFUND OPTION Periodic
Annuity Payments will be made during the lifetime of the Annuitant with the
promise that, if at the death of the Annuitant, the number of payments that
has been made is less than the number determined by dividing the amount
applied under this Option by the amount of the first payment, Annuity
Payments will be continued to the Designated Beneficiary until that number
of Annuity Payments has been made.
OPTION 4 - JOINT AND LAST SURVIVOR Periodic Annuity Payments will be made
during the lifetime of the Annuitants. Annuity Payments will be made as long
as either Annuitant is living. Upon the death of one Annuitant, Annuity
Payments continue to the surviving annuitant at the same or a reduced level
of 75%, 66 2/3% or 50% of Annuity Payments as elected by the Owner at the
time the Annuity Option is selected. With respect to fixed Annuity Payments,
the amount of the Annuity Payment and, with respect to variable Annuity
Payments, the number of Payment Units used to determine the Annuity Payment
is reduced as of the first Annuity Payment following the Annuitant's death.
It is possible under this Option for only one Annuity Payment to be made if
both Annuitants died prior to the second Annuity Payment due date, two if
both died prior to the third Annuity Payment due date, etc. AS IN THE CASE
OF OPTION 1, THERE IS NO MINIMUM NUMBER OF PAYMENTS GUARANTEED UNDER THIS
OPTION. PAYMENTS CEASE UPON THE DEATH OF THE LAST SURVIVING ANNUITANT,
REGARDLESS OF THE NUMBER OF PAYMENTS RECEIVED.
OPTION 5 - PAYMENTS FOR SPECIFIED PERIOD Periodic Annuity Payments will be
made for a fixed period, which may be from 5 to 20 years, as elected by the
Owner. The amount of each annuity payment is determined by dividing Account
Value by the number of Annuity Payments remaining in the period. If, at the
death of the Annuitant, payments have been made for less than the selected
fixed period, the remaining unpaid payments will be paid to the Designated
Beneficiary.
OPTION 6 - PAYMENTS OF A SPECIFIED AMOUNT Periodic Annuity Payments of the
amount elected by the Owner will be made until Account Value is exhausted,
with the guarantee that, if, at the death of the Annuitant, all guaranteed
payments have not yet been made, the remaining unpaid payments will be paid
to the Designated Beneficiary. This Option is available only for Contracts
issued in connection with Non-Qualified Plans.
OPTION 7 - AGE RECALCULATION Periodic Annuity Payments will be made based
upon the Annuitant's life expectancy, or the joint life expectancy of the
Annuitant and a beneficiary, at the Annuitant's attained age (and the
beneficiary's attained or adjusted age, if applicable) each year. The
payments are computed by reference to government actuarial tables and are
made until Account Value is exhausted. Upon the Annuitant's death, any
Account Value will be paid to the Designated Beneficiary.
SELECTION OF AN OPTION
You should carefully review the Annuity Options with your financial or tax
adviser. For Contracts used in connection with a Qualified Plan, reference
should be made to the terms of the particular plan and the requirements of
the Internal Revenue Code for pertinent limitations respecting Annuity
Payments and other matters. For instance, Qualified Plans generally require
that Annuity Payments begin no later than April 1 of the calendar year
following the year in which the Annuitant reaches age 70 1/2. In addition,
under Qualified Plans, the period elected for receipt of Annuity Payments
under Annuity Options (other than life income) generally may be no longer
than the joint life expectancy of the Annuitant and beneficiary in the year
that the Annuitant reaches age 70 1/2, and must be shorter than such joint
life expectancy if the beneficiary is not the Annuitant's spouse and is more
than 10 years younger than the Annuitant. For Non-Qualified Plans, the
Company does not allow Annuity Payments to be deferred beyond the
Annuitant's 90th birthday.
ANNUITY PAYMENTS
Annuity Payments under Options 1 through 4 are based upon annuity rates that
vary with the Annuity Option selected. The annuity rates will vary based
upon the age and sex of the Annuitant, except that unisex rates are used
where required by law. The annuity rates reflect your life expectancy based
upon your age as of the Annuity Payout Date and gender, unless unisex rates
apply. The annuity rates are based upon the 1983(a) mortality table adjusted
to reflect an assumed interest rate of 3.5% or 5%, compounded annually, as
selected by the Owner. In the case of Options 5, 6 and 7, Annuity Payments
are based upon Account Value without regard to annuity rates. The Company
calculates variable Annuity Payments under Options 1 through 4 using Payment
Units. The value of a Payment Unit for each Subaccount is determined as of
each Valuation Date and was initially $1.00. The Payment Unit value of a
Subaccount as of any subsequent Valuation Date is determined by adjusting
the Payment Unit value on the previous Valuation Date for (1) the interim
performance of the corresponding Portfolio of the Funds; (2) any dividends
or distributions paid by the corresponding Portfolio; (3) the mortality and
expense risk charge; (4) the charges, if any, that may be assessed by the
Company for taxes attributable to the operation of the Subaccount; and (5)
the assumed interest rate.
The Company determines the number of Payment Units used to calculate each
variable annuity payment as of the Annuity Payout Date. As discussed above,
the Contract specifies annuity rates for Options 1 through 4, which are the
guaranteed minimum dollar amount of monthly annuity payment for each $1,000
of Account Value, less any applicable premium taxes, applied to an Annuity
Option. The Account Value as of the Annuity Payout Date, less any applicable
premium taxes, is divided by $1,000 and the result is multiplied by the rate
per $1,000 specified in the annuity tables to determine the initial Annuity
Payment for a variable annuity and the guaranteed monthly Annuity Payment
for a fixed annuity.
On the Annuity Payout Date, the Company divides the initial variable Annuity
Payment by the value as of that date of the Payment Unit for the applicable
Subaccount to determine the number of Payment Units to be used in
calculating subsequent Annuity Payments. If variable Annuity Payments are
allocated to more than one Subaccount, the number of Payment Units will be
determined by dividing the portion of the initial variable Annuity Payment
allocated to a Subaccount by the value of that Subaccount's Payment Unit as
of the Annuity Payout Date. The initial variable Annuity Payment is
allocated to the Subaccounts in the same proportion as the Account Value is
allocated as of the Annuity Payout Date. The number of Payment Units will
remain constant for subsequent Annuity Payments, unless the Owner exchanges
Payment Units among Subaccounts.
Subsequent variable Annuity Payments are calculated by multiplying the
number of Payment Units allocated to a Subaccount by the value of the
Payment Unit as of the date of the Annuity Payment. If the Annuity Payment
is allocated to more than one Subaccount, the Annuity Payment is equal to
the sum of the payment amount determined for each Subaccount. An example is
set forth below of an Annuity Payment calculation under Option 2, assuming
purchase of a Contract by a 60-year-old male with Account Value of $100,000.
- --------------------------------------------------------------------------------
Account Value $100,000 $100,000
Premium Tax - 0 -------- = 100
------- $ 1,000
Proceeds Under the Contract $100,000
Amount determined by reference to annuity table for a male,
age 60 under Option 2................................................... $4.78
First Variable Annuity Payment (100 x $4.78)............................ $478
<TABLE>
<CAPTION>
ALLOCATION OF FIRST VARIABLE PAYMENT UNIT NUMBER OF PAYMENT
ACCOUNT VALUE ANNUITY PAYMENT VALUE ON ANNUITY UNITS USED TO DETERMINE
SUBACCOUNT UNDER THE CONTRACT ALLOCATION PAYOUT DATE SUBSEQUENT PAYMENTS
<S> <C> <C> <C> <C> <C> <C>
Equity Income 50% $239.00 / $1.51 = 158.2781
International Stock 50% 239.00 / 1.02 = 234.3137
-------
$478.00
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF PAYMENT UNITS USED TO PAYMENT UNIT VALUE ON AMOUNT OF SUBSEQUENT
SUBACCOUNT DETERMINE SUBSEQUENT PAYMENTS SUBSEQUENT PAYMENT DATE ANNUITY PAYMENT
<S> <C> <C> <C> <C> <C>
Equity Income 158.2781 x $1.60 = $253.24
International Stock 234.3137 x 1.10 = 257.74
-------
Subsequent Variable Annuity Payment....................................................... $510.98
- ------------------------------------------------------------------------------------------------------------
</TABLE>
ASSUMED INTEREST RATE
As discussed above, the annuity rates for Options 1 through 4 are based upon
an assumed interest rate of 3.5% or 5%, compounded annually, as you elect at
the time the Annuity Option is selected. Variable Annuity Payments generally
increase or decrease from one Annuity Payment date to the next based upon
the performance of the applicable Subaccounts during the interim period
adjusted for the assumed interest rate. If the performance of the
Subaccounts is equal to the assumed interest rate, Annuity Payments will
remain constant. If the performance of the Subaccounts is greater than the
assumed interest rate, the amount of the Annuity Payments will increase and
if it is less than the assumed interest rate, the amount of the Annuity
Payments will decline. A higher assumed interest rate, for example 5%, would
mean a higher initial variable Annuity Payment, but the amount of the
Annuity Payments would increase more slowly in a rising market (or the
amount of the Annuity Payments would decline more rapidly in a falling
market). Conversely, a lower assumed interest rate, for example 3.5%, would
mean a lower initial variable Annuity Payment and more rapidly rising
Annuity Payment amounts in a rising market and more slowly declining Annuity
Payment amounts in a falling market.
THE FIXED INTEREST ACCOUNT
- --------------------------------------------------------------------------------
You may allocate all or a portion of your purchase payments and exchange
Account Value to the Fixed Interest Account. Amounts allocated to the Fixed
Interest Account become part of the Company's General Account, which
supports the Company's insurance and annuity obligations. The Company's
General Account is subject to regulation and supervision by the New York
Department of Insurance. In reliance on certain exemptive and exclusionary
provisions, interests in the Fixed Interest Account have not been registered
as securities under the Securities Act of 1933 (the "1933 Act") and the
Fixed Interest Account has not been registered as an investment company
under the Investment Company Act of 1940 (the "1940 Act"). Accordingly,
neither the Fixed Interest Account nor any interests therein are generally
subject to the provisions of the 1933 Act or the 1940 Act. The disclosure in
this Prospectus relating to the Fixed Interest Account, however, may be
subject to certain generally applicable provisions of the federal securities
laws relating to the accuracy and completeness of statements made in the
Prospectus. This Prospectus is generally intended to serve as a disclosure
document only for aspects of a Contract involving the Separate Account and
contains only selected information regarding the Fixed Interest Account. For
more information regarding the Fixed Interest Account, see "The Contract,"
page 14.
Amounts allocated to the Fixed Interest Account become part of the General
Account of the Company, which consists of all assets owned by the Company
other than those in the Separate Account and other separate accounts of the
Company. Subject to applicable law, the Company has sole discretion over the
investment of the assets of its General Account.
INTEREST
Account Value allocated to the Fixed Interest Account earns interest at a
fixed rate or rates that are paid by the Company. The Account Value in the
Fixed Interest Account earns interest at an interest rate that is guaranteed
to be at least an annual effective rate of 3% which will accrue daily
("Guaranteed Rate"). Such interest will be paid regardless of the actual
investment experience of the Company's General Account. In addition, the
Company may in its discretion pay interest at a rate ("Current Rate") that
exceeds the Guaranteed Rate. The Company will determine the Current Rate, if
any, from time to time.
Account Value allocated or exchanged to the Fixed Interest Account will earn
interest at the Current Rate, if any, in effect on the date such portion of
Account Value is allocated or exchanged to the Fixed Interest Account. The
Current Rate paid on any such portion of Account Value allocated or
exchanged to the Fixed Interest Account will be guaranteed for rolling
one-year periods (each a "Guarantee Period"). Upon expiration of any
Guarantee Period, a new Guarantee Period begins with respect to that portion
of Account Value, which will earn interest at the Current Rate, if any,
declared by the Company as of the first day of the new Guarantee Period.
Account Value allocated or exchanged to the Fixed Interest Account at one
point in time may be credited with a different Current Rate than amounts
allocated or exchanged to the Fixed Interest Account at another point in
time. For example, amounts allocated to the Fixed Interest Account in June
may be credited with a different Current Rate than amounts allocated to the
Fixed Interest Account in July. Therefore, at any time, various portions of
a Contractowner's Account Value in the Fixed Interest Account may be earning
interest at different Current Rates depending upon the point in time such
portions were allocated or exchanged to the Fixed Interest Account. The
Company bears the investment risk for the Account Value allocated to the
Fixed Interest Account and for paying interest at the Guaranteed Rate on
amounts allocated to the Fixed Interest Account.
For purposes of determining the interest rates to be credited on Account
Value in the Fixed Interest Account, withdrawals or exchanges from the Fixed
Interest Account will be deemed to be taken first from any portion of
Account Value allocated to the Fixed Interest Account for which the
Guarantee Period expires during the calendar month in which the withdrawal
or exchange is effected, then in the order beginning with that portion of
such Account Value which has the longest amount of time remaining before the
end of its Guarantee Period and ending with that portion which has the least
amount of time remaining before the end of its Guarantee Period. For more
information about exchanges and withdrawals from the Fixed Interest Account,
see "Exchanges and Withdrawals" below.
DEATH BENEFIT
The death benefit under the Contract will be determined in the same fashion
for a Contract that has Account Value in the Fixed Interest Account as for a
Contract that has Account Value allocated to the Subaccounts. See "Death
Benefit," page 21.
CONTRACT CHARGES
Premium taxes will be the same for Contractowners who allocate purchase
payments or exchange Account Value to the Fixed Interest Account as for
those who allocate purchase payments to the Subaccounts. The charge for
mortality and expense risks will not be assessed against the Fixed Interest
Account, and any amounts that the Company pays for income taxes allocable to
the Subaccounts will not be charged against the Fixed Interest Account. In
addition, the investment management fees and any other expenses paid by the
Funds will not be paid directly or indirectly by Contractowners to the
extent the Account Value is allocated to the Fixed Interest Account;
however, such Contractowners will not participate in the investment
experience of the Subaccounts.
EXCHANGES AND WITHDRAWALS
Amounts may be exchanged from the Subaccounts to the Fixed Interest Account
and from the Fixed Interest Account to the Subaccounts, subject to the
following limitations. Exchanges from the Fixed Interest Account are allowed
only (1) from Account Value, the Guarantee Period of which expires during
the calendar month in which the exchange is effected, (2) pursuant to the
Dollar Cost Averaging Option provided that such exchanges are scheduled to
be made over a period of not less than one year, and (3) pursuant to the
Asset Rebalancing Option, provided that upon receipt of the Asset
Rebalancing Request, Account Value is allocated among the Fixed Interest
Account and the Subaccounts in the percentages selected by the Contractowner
without violating the restrictions on exchanges from the Fixed Interest
Account set forth in (1) above. Accordingly, a Contractowner who desires to
implement the Asset Rebalancing Option should do so at a time when Account
Value may be exchanged from the Fixed Interest Account to the Subaccounts in
the percentages selected by the Contractowner without violating the
restrictions on exchanges from the Fixed Interest Account. Once an Asset
Rebalancing Option is implemented, the restrictions on exchanges will not
apply to exchanges made pursuant to the Option. Up to six exchanges are
allowed in any Contract Year and exchanges pursuant to the Dollar Cost
Averaging and Asset Rebalancing Options are not included in the six
exchanges allowed per Contract Year. The minimum exchange amount is $500
($200 under the Dollar Cost Averaging Option) or the amount remaining in the
Fixed Interest Account.
If Account Value is being exchanged from the Fixed Interest Account pursuant
to the Dollar Cost Averaging or Asset Rebalancing Option or withdrawn from
the Fixed Interest Account pursuant to systematic withdrawals, any purchase
payment allocated to, or Account Value exchanged to or from, the Fixed
Interest Account will automatically terminate such Dollar Cost Averaging or
Asset Rebalancing Option or systematic withdrawals, and any withdrawal from
the Fixed Interest Account or the Subaccounts will automatically terminate
the Asset Rebalancing Option. In the event of automatic termination of any
of the foregoing options, the Company shall so notify the Contractowner, and
the Contractowner may reestablish Dollar Cost Averaging, Asset Rebalancing,
or systematic withdrawals by sending a written request to the Company,
provided that the Owner's Account Value at that time meets any minimum
amount required for the Dollar Cost Averaging or Asset Rebalancing Option.
The Contractowner may also make full withdrawals to the same extent as a
Contractowner who has allocated Account Value to the Subaccounts. A
Contractowner may make a partial withdrawal from the Fixed Interest Account
only (1) from Account Value, the Guarantee Period of which expires during
the calendar month in which the partial withdrawal is effected, (2) pursuant
to systematic withdrawals, and (3) once per Contract Year in an amount up to
the greater of $5,000 or 10% of Account Value allocated to the Fixed
Interest Account at the time of the partial withdrawal. Systematic
withdrawals from Account Value allocated to the Fixed Interest Account must
provide for payments over a period of not less than 36 months. See "Full and
Partial Withdrawals," page 19 and "Systematic Withdrawals," page 20.
PAYMENTS FROM THE FIXED INTEREST ACCOUNT
The Company reserves the right to delay any full and partial withdrawals and
exchanges from the Fixed Interest Account for up to six months after a
written request in proper form is received by the Company. During the period
of deferral, interest at the applicable interest rate or rates will continue
to be credited to the amounts allocated to the Fixed Interest Account. The
Company does not expect to delay payments from the Fixed Interest Account
and will notify you if there will be a delay.
MORE ABOUT THE CONTRACT
- --------------------------------------------------------------------------------
OWNERSHIP
The Contractowner is the person named as such in the application or in any
later change shown in the Company's records. While living, the Contractowner
alone has the right to receive all benefits and exercise all rights that the
Contract grants or the Company allows. The Owner may be an entity that is
not a living person, such as a trust or corporation, referred to herein as
"Non-Natural Persons." See "Federal Tax Matters," below.
JOINT OWNERS. The Joint Owners will be joint tenants with rights of
survivorship and upon the death of an Owner, the surviving Owner shall be
the sole Owner. Any Contract transaction requires the signature of all
persons named jointly. Joint Owners are permitted only on a Contract issued
pursuant to a Non-Qualified Plan.
DESIGNATION AND CHANGE OF BENEFICIARY
The Beneficiary is the individual named as such in the application or any
later change shown in the Company's records. The Contractowner may change
the Beneficiary at any time while the Contract is in force by written
request on a form provided and received by the Company. The change will not
be binding on the Company until it is received and recorded by the Company.
The change will be effective as of the date this form is signed subject to
any payments made or other actions taken by the Company before the change is
received and recorded. A Secondary Beneficiary may be designated. The Owner
may designate a permanent Beneficiary whose rights under the Contract cannot
be changed without the Beneficiary's consent.
NON-PARTICIPATING
The Company is a stock life insurance company and, accordingly, no dividends
are paid by the Company on the Contract.
PAYMENTS FROM THE SEPARATE ACCOUNT
The Company will pay any full or partial withdrawal benefit or death benefit
proceeds from Account Value allocated to the Subaccounts, and will effect an
exchange between Subaccounts or from a Subaccount to the Fixed Interest
Account within seven days from the Valuation Date a proper request is
received by the Company. However, the Company can postpone the calculation
or payment of such a payment or exchange of amounts from the Subaccounts to
the extent permitted under applicable law, for any period during which: (a)
the New York Stock Exchange is closed other than customary weekend and
holiday closings, (b) trading on the New York Stock Exchange is restricted
as determined by the SEC, or (c) an emergency, as determined by the SEC,
exists as a result of which (i) disposal of securities held by the Separate
Account is not reasonably practicable, or (ii) it is not reasonably
practicable to determine the value of the assets of the Separate Account.
PROOF OF AGE AND SURVIVAL
The Company may require proof of age or survival of any person on whose life
Annuity Payments depend.
MISSTATEMENTS
If the age or sex of an Annuitant or age of an Owner has been misstated, the
correct amount paid or payable by the Company under the Contract shall be
such as the Account Value would have provided for the correct age or sex
(unless unisex rates apply).
FEDERAL TAX MATTERS
- --------------------------------------------------------------------------------
INTRODUCTION
The Contract described in this Prospectus is designed for use by individuals
in retirement plans which may or may not be Qualified Plans under the
provisions of the Internal Revenue Code ("Code").
The ultimate effect of federal income taxes on the amounts held under a
Contract, on Annuity Payments, and on the economic benefits to the Owner,
the Annuitant, and the Beneficiary or other payee will depend upon the type
of retirement plan for which the Contract is purchased, the tax and
employment status of the individuals involved, and a number of other
factors. The discussion of the federal income tax considerations relating to
a contract contained herein and in the Statement of Additional Information
is general in nature and is not intended to be an exhaustive discussion of
all questions that might arise in connection with a Contract. It is based
upon the Company's understanding of the present federal income tax laws as
currently interpreted by the Internal Revenue Service ("IRS"), and is not
intended as tax advice. No representation is made regarding the likelihood
of continuation of the present federal income tax laws or of the current
interpretations by the IRS or the courts. Future legislation may affect
annuity contracts adversely. Moreover, no attempt has been made to consider
any applicable state or other laws. Because of the inherent complexity of
the tax laws and the fact that tax results will vary according to the
particular circumstances of the individual involved and, if applicable, the
Qualified Plan, a person should consult a qualified tax adviser regarding
the purchase of a Contract, the selection of an Annuity Option under a
Contract, the receipt of Annuity Payments under a Contract, or any other
transaction involving a Contract (including an exchange). THE COMPANY DOES
NOT MAKE ANY GUARANTEE REGARDING THE TAX STATUS OF, OR TAX CONSEQUENCES
ARISING FROM, ANY CONTRACT OR ANY TRANSACTION INVOLVING THE CONTRACT.
TAX STATUS OF THE COMPANY AND THE SEPARATE ACCOUNT
GENERAL
The Company intends to be taxed as a life insurance company under Part I,
Subchapter L of the Code. Because the operations of the Separate Account
form a part of the Company, the Company will be responsible for any federal
income taxes that become payable with respect to the income of the Separate
Account and its Subaccounts.
CHARGE FOR THE COMPANY'S TAXES
A charge may be made against the Separate Account for any federal taxes
incurred by the Company that are attributable to the Separate Account, the
Subaccounts, or to the operations of the Company with respect to the
Contract or attributable to payments, premiums, or acquisition costs under
the Contract. The Company will review the question of a charge to the
Separate Account, the Subaccounts, or the Contracts for the Company's
federal taxes periodically. Charges may become necessary if, among other
reasons, the tax treatment of the Company or of income and expenses under
the Contracts is ultimately determined to be other than what the Company
currently believes it to be, if there are changes made in the federal income
tax treatment of variable annuities at the insurance company level, or if
there is a change in the Company's tax status.
Under current laws, the Company may incur state and local taxes (in addition
to premium taxes) in several states. At present, these taxes are not
significant. If there is a material change in applicable state or local tax
laws, the Company reserves the right to charge the Separate Account or the
Subaccounts for such taxes, if any, attributable to the Separate Account or
Subaccounts.
DIVERSIFICATION STANDARDS
Each of the Portfolios will be required to adhere to regulations issued by
the Treasury Department pursuant to Section 817(h) of the Code prescribing
asset diversification requirements for investment companies whose shares are
sold to insurance company separate accounts funding variable contracts.
Pursuant to these regulations, on the last day of each calendar quarter (or
on any day within 30 days thereafter), no more than 55% of the total assets
of a Portfolio may be represented by any one investment, no more than 70%
may be represented by any two investments, no more than 80% may be
represented by any three investments, and no more than 90% may be
represented by any four investments. For purposes of Section 817(h),
securities of a single issuer generally are treated as one investment, but
obligations of the U.S. Treasury and each U.S. Governmental agency or
instrumentality generally are treated as securities of separate issuers. The
Separate Account, through the Portfolios, intends to comply with the
diversification requirements of Section 817(h).
In certain circumstances, owners of variable annuity contracts may be
considered the owners, for federal income tax purposes, of the assets of the
separate account used to support their contracts. In those circumstances,
income and gains from the separate account assets would be includible in the
variable contractowner's gross income. The IRS has stated in published
rulings that a variable contractowner will be considered the owner of
separate account assets if the contractowner possesses incidents of
ownership in those assets, such as the ability to exercise investment
control over the assets. The Treasury Department also announced, in
connection with the issuance of regulations concerning diversification, that
those regulations "do not provide guidance concerning the circumstances in
which investor control of the investments of a segregated asset account may
cause the investor (i.e., the policyowner), rather than the insurance
company, to be treated as the owner of the assets in the account." This
announcement also stated that guidance would be issued by way of regulations
or rulings on the "extent to which policyholders may direct their
investments to particular subaccounts without being treated as owners of the
underlying assets." As of the date of this Prospectus, no guidance
applicable to the Contract has been issued.
The ownership rights under the Contract are similar to, but different in
certain respects from, those described by the IRS in rulings in which it was
determined that policyowners were not owners of separate account assets. For
example, in the present case the Contractowner has additional flexibility in
allocating purchase payments and Contract Values than in the cases described
in the rulings. These differences could result in a Contractowner being
treated as the owner of a pro rata portion of the assets of the Separate
Account. In addition, the Company does not know what standards will be set
forth, if any, in the regulations or rulings which the Treasury Department
has stated it expects to issue. The Company therefore reserves the right to
modify the Contract, as deemed appropriate by the Company, to attempt to
prevent a Contractowner from being considered the owner of a pro rata share
of the assets of the Separate Account. Moreover, in the event that
regulations or rulings are promulgated, there can be no assurance that the
Portfolios will be able to operate as currently described in the Prospectus,
or that the Funds will not have to change any Portfolio's investment
objective or investment policies.
INCOME TAXATION OF ANNUITIES IN GENERAL-NON-QUALIFIED PLANS
Section 72 of the Code governs the taxation of annuities. In general, a
Contractowner is not taxed on increases in value under an annuity contract
until some form of distribution is made under the contract. However, the
increase in value may be subject to tax currently under certain
circumstances. See "Contracts Owned by Non-Natural Persons" on page 34 and
"Diversification Standards" on page 32. Withholding of federal income taxes
on all distributions may be required unless a recipient who is eligible
elects not to have any amounts withheld and properly notifies the Company of
that election.
* SURRENDERS OR WITHDRAWALS PRIOR TO THE ANNUITY PAYOUT DATE Code Section
72 provides that amounts received upon a total or partial withdrawal
(including systematic withdrawals) from a Contract prior to the Annuity
Payout Date generally will be treated as gross income to the extent that
the cash value of the Contract (determined without regard to any
surrender charge in the case of a partial withdrawal) exceeds the
"investment in the contract." The "investment in the contract" is that
portion, if any, of purchase payments paid under a Contract less any
distributions received previously under the Contract that are excluded
from the recipient's gross income. The taxable portion is taxed at
ordinary income tax rates. For purposes of this rule, a pledge or
assignment of a Contract is treated as a payment received on account of
a partial withdrawal of a Contract. Similarly, loans under a Contract
are generally treated as distributions under the Contract.
* SURRENDERS OR WITHDRAWALS ON OR AFTER THE ANNUITY PAYOUT DATE Upon a
complete surrender, the amount received is taxable to the extent that
the cash value of the Contract exceeds the investment in the Contract.
The taxable portion of such payments will be taxed at ordinary income
tax rates. For fixed Annuity Payments, the taxable portion of each
payment generally is determined by using a formula known as the
"exclusion ratio," which establishes the ratio that the investment in
the Contract bears to the total expected amount of Annuity Payments for
the term of the Contract. That ratio is then applied to each payment to
determine the non-taxable portion of the payment. The remaining portion
of each payment is taxed at ordinary income rates. For variable Annuity
Payments, the taxable portion of each payment is determined by using a
formula known as the "excludable amount," which establishes the
non-taxable portion of each payment. The non-taxable portion is a fixed
dollar amount for each payment, determined by dividing the investment in
the Contract by the number of payments to be made. The remainder of each
variable annuity payment is taxable. Once the excludable portion of
Annuity Payments to date equals the investment in the Contract, the
balance of the Annuity Payments will be fully taxable.
* PENALTY TAX ON CERTAIN SURRENDERS AND WITHDRAWALS With respect to
amounts withdrawn or distributed before the taxpayer reaches age 59 1/2,
a penalty tax is generally imposed equal to 10% of the portion of such
amount which is includible in gross income. However, the penalty tax is
not applicable to withdrawals: (i) made on or after the death of the
owner (or where the owner is not an individual, the death of the
"primary annuitant," who is defined as the individual the events in
whose life are of primary importance in affecting the timing and amount
of the payout under the Contract); (ii) attributable to the taxpayer's
becoming totally disabled within the meaning of Code Section 72(m)(7);
(iii) which are part of a series of substantially equal periodic
payments (not less frequently than annually) made for the life (or life
expectancy) of the taxpayer, or the joint lives (or joint life
expectancies) of the taxpayer and his or her beneficiary; (iv) from
certain qualified plans; (v) under a so-called qualified funding asset
(as defined in Code Section 130(d)); (vi) under an immediate annuity
contract; or (vii) which are purchased by an employer on termination of
certain types of qualified plans and which are held by the employer
until the employee separates from service.
If the penalty tax does not apply to a surrender or withdrawal as a
result of the application of item (iii) above, and the series of
payments are subsequently modified (other than by reason of death or
disability), the tax for the first year in which the modification occurs
will be increased by an amount (determined by the regulations) equal to
the tax that would have been imposed but for item (iii) above, plus
interest for the deferral period, if the modification takes place (a)
before the close of the period which is five years from the date of the
first payment and after the taxpayer attains age 59 1/2, or (b) before
the taxpayer reaches age 59 1/2.
ADDITIONAL CONSIDERATIONS
* DISTRIBUTION-AT-DEATH RULES In order to be treated as an annuity
contract, a Contract must provide the following two distribution rules:
(a) if any owner dies on or after the Annuity Payout Date, and before
the entire interest in the Contract has been distributed, the remainder
of the owner's interest will be distributed at least as quickly as the
distribution method in effect on the owner's death; and (b) if any owner
dies before the Annuity Payout Date, the entire interest in the Contract
must generally be distributed within five years after the date of death,
or, if payable to a designated beneficiary, must be annuitized over the
life of that designated beneficiary or over a period not extending
beyond the life expectancy of that beneficiary, commencing within one
year after the date of death of the owner. If the sole designated
beneficiary is the spouse of the deceased owner, the Contract (together
with the deferral of tax on the accrued and future income thereunder)
may be continued in the name of the spouse as owner.
Generally, for purposes of determining when distributions must begin
under the foregoing rules, where an owner is not an individual, the
primary annuitant is considered the owner. In that case, a change in the
primary annuitant will be treated as the death of the owner. Finally, in
the case of joint owners, the distribution-at-death rules will be
applied by treating the death of the first owner as the one to be taken
into account in determining generally when distributions must commence,
unless the sole Beneficiary is the deceased owner's spouse.
* GIFT OF ANNUITY CONTRACTS Generally, gifts of Non-Qualified Plan
Contracts prior to the Annuity Payout Date will trigger tax on the gain
on the Contract, with the donee getting a stepped-up basis for the
amount included in the donor's income. The 10% penalty tax and gift tax
also may be applicable. This provision does not apply to transfers
between spouses or incident to a divorce.
* CONTRACTS OWNED BY NON-NATURAL PERSONS If the Contract is held by a
non-natural person (for example, a corporation), the income on that
Contract (generally the increase in net surrender value less the
purchase payments) is includible in taxable income each year. The rule
does not apply where the Contract is acquired by the estate of a
decedent, where the Contract is held by certain types of retirement
plans, where the Contract is a qualified funding asset for structured
settlements, where the Contract is purchased on behalf of an employee
upon termination of a qualified plan, and in the case of a so-called
immediate annuity. An annuity contract held by a trust or other entity
as agent for a natural person is considered held by a natural person.
* MULTIPLE CONTRACT RULE For purposes of determining the amount of any
distribution under Code Section 72(e) (amounts not received as
annuities) that is includible in gross income, all Non-Qualified annuity
contracts issued by the same insurer to the same Contractowner during
any calendar year are to be aggregated and treated as one contract.
Thus, any amount received under any such contract prior to the
contract's Annuity Payout Date, such as a partial withdrawal, dividend,
or loan, will be taxable (and possibly subject to the 10% penalty tax)
to the extent of the combined income in all such contracts.
In addition, the Treasury Department has broad regulatory authority in
applying this provision to prevent avoidance of the purposes of this
rule. It is possible that, under this authority, the Treasury Department
may apply this rule to amounts that are paid as annuities (on and after
the Annuity Payout Date) under annuity contracts issued by the same
company to the same owner during any calendar year. In this case,
Annuity Payments could be fully taxable (and possibly subject to the 10%
penalty tax) to the extent of the combined income in all such contracts
and regardless of whether any amount would otherwise have been excluded
from income because of the "exclusion ratio" under the contract.
* POSSIBLE TAX CHANGES In recent years, legislation has been proposed that
would have adversely modified the federal taxation of certain annuities.
There is always the possibility that the tax treatment of annuities
could change by legislation or other means (such as IRS regulations,
revenue rulings, and judicial decisions). Moreover, although unlikely,
it is also possible that any legislative change could be retroactive
(that is, effective prior to the date of such change).
* TRANSFERS, ASSIGNMENTS, OR EXCHANGES OF A CONTRACT A transfer of
ownership of a Contract, the designation of an Annuitant, Payee, or
other Beneficiary who is not also the Owner, the selection of certain
Annuity Payout Dates or the exchange of a Contract may result in certain
tax consequences to the Owner that are not discussed herein. An Owner
contemplating any such transfer, assignment, selection, or exchange
should contact a qualified tax adviser with respect to the potential
effects of such a transaction.
QUALIFIED PLANS
The Contract may be used as a Qualified Plan that meets the requirements of
an individual retirement annuity ("IRA") under Section 408 or a Roth IRA
under Section 408A, of the Code. No attempt is made herein to provide more
than general information about the use of the Contract as a Qualified Plan.
Contractowners, Annuitants, and Beneficiaries are cautioned that the rights
of any person to any benefits under such Qualified Plans may be limited by
applicable law, regardless of the terms and conditions of the Contract
issued in connection therewith.
The amount that may be contributed to a Qualified Plan is subject to
limitations under the Code. In addition, early distributions from Qualified
Plans may be subject to penalty taxes. Furthermore, most Qualified Plans are
subject to certain minimum distribution rules. Failure to comply with these
rules could result in disqualification of the Plan or subject the Owner or
Annuitant to penalty taxes. As a result, the minimum distribution rules may
limit the availability of certain Annuity Options to certain Annuitants and
their beneficiaries. These rules and requirements may not be incorporated
into our Contract administration procedures. Therefore, Contractowners,
Annuitants, and Beneficiaries are responsible for determining that
contributions, distributions, and other transactions with respect to the
Contracts comply with applicable law.
THE FOLLOWING IS A BRIEF DESCRIPTION OF QUALIFIED PLANS AND THE USE OF THE
CONTRACT THEREWITH:
* SECTION 408 AND SECTION 408A
INDIVIDUAL RETIREMENT ANNUITIES. Section 408 of the Code permits eligible
individuals to establish individual retirement programs through the purchase
of Individual Retirement Annuities ("traditional IRAs"). The Contract may be
purchased as an IRA. The IRAs described in this paragraph are called
"traditional IRAs" to distinguish them from "Roth IRAs" which are described
below.
IRAs are subject to limitations on the amount that may be contributed, the
persons who may be eligible, and on the time when distributions must
commence. Depending upon the circumstances of the individual, contributions
to a traditional IRA may be made on a deductible or nondeductible basis.
IRAs may not be transferred, sold, assigned, discounted, or pledged as
collateral for a loan or other obligation. The annual premium for an IRA may
not be fixed and may not exceed $2,000. Any refund of premium must be
applied to the payment of future premiums or the purchase of additional
benefits.
Sale of the Contract for use with IRAs may be subject to special
requirements imposed by the Internal Revenue Service. Purchasers of the
Contract for such purposes will be provided with such supplementary
information as may be required by the Internal Revenue Service and will have
the right to revoke the Contract under certain circumstances. See the IRA
Disclosure Statement which accompanies this Prospectus.
An individual's interest in a traditional IRA must generally be distributed
or begin to be distributed not later than April 1 of the calendar year
following the calendar year in which the individual reaches age 70 1/2
("required beginning date"). The Contractowner's retirement date, if any,
will not affect his or her required beginning date. Periodic distributions
must not extend beyond the life of the individual or the lives of the
individual and a designated beneficiary (or over a period extending beyond
the life expectancy of the individual or the joint life expectancy of the
individual and a designated beneficiary).
If an individual dies before reaching his or her required beginning date,
the individual's entire interest must generally be distributed within five
years of the individual's death. However, the five-year rule will be deemed
satisfied if distributions begin before the close of the calendar year
following the year of the individual's death to a designated beneficiary and
are made over the life of the beneficiary (or over a period not extending
beyond the life expectancy of the beneficiary). If the designated
beneficiary is the individual's surviving spouse, distributions may be
delayed until the individual would have reached age 70 1/2.
If an individual dies after reaching his or her required beginning date, the
individual's interest must generally be distributed at least as rapidly as
under the method of distribution in effect at the time of the individual's
death.
Distributions from IRAs are generally taxed under Code Section 72. Under
these rules, a portion of each distribution may be excludable from income.
The amount excludable from the individual's income is the amount of the
distribution which bears the same ratio as the individual's nondeductible
contributions to all IRAs bear to the expected return under the IRAs.
The Internal Revenue Service has not reviewed the Contract for qualification
as an IRA, and has not addressed in a ruling of general applicability
whether a death benefit provision such as the provision in the Contract
comports with IRA qualification requirements.
ROTH IRAS. Section 408A of the Code permits eligible individuals to
establish a Roth IRA, a type of IRA which became available in 1998. The
Contract may be purchased as a Roth IRA. Contributions to a Roth IRA are not
deductible, but withdrawals that meet certain requirements are not subject
to federal income tax. Sale of the Contract for use with Roth IRAs may be
subject to special requirements imposed by the Internal Revenue Service.
Purchasers of the Contract for such purposes will be provided with such
supplementary information as may be required by the Internal Revenue Service
or other appropriate agency, and will have the right to revoke the Contract
under certain requirements. Unlike a traditional IRA, Roth IRAs are not
subject to minimum required distribution rules during the Contractowner's
life time. Generally, however, upon the death of the Contractowner, the
amount in a remaining Roth IRA must be distributed in the same manner as a
traditional IRA as described above.
The Internal Revenue Service has not reviewed the Contract for
qualifications as a Roth IRA and has not addressed in a ruling of general
applicability whether a death benefit provision such as the provision in the
Contract comports with Roth IRA qualification.
* TAX PENALTIES
PREMATURE DISTRIBUTION TAX. Distributions from a Qualified Plan before the
owner reaches age 59 1/2 are generally subject to an additional tax equal to
10% of the taxable portion of the distribution. The 10% penalty tax does not
apply to distributions: (i) made on or after the death of the Owner; (ii)
attributable to the Owner's disability; (iii) which are part of a series of
substantially equal periodic payments made (at least annually) for the life
(or life expectancy) of the Owner or the joint lives (or joint life
expectancies) of the Owner and a designated beneficiary; (iv) made to pay
for certain medical expenses; (v) that are exempt withdrawals of an excess
contribution; (vi) that are rolled over or transferred in accordance with
Code requirements; (vii) which, subject to certain restrictions, do not
exceed the health insurance premiums paid by unemployed individuals in
certain cases; (viii) made to pay "qualified higher education expenses"; or
(ix) for certain "qualified first-time homebuyer distributions."
MINIMUM DISTRIBUTION TAX. If the amount distributed from all of your IRAs is
less than the minimum required distribution for the year, the Owner is
subject to a 50% tax on the amount that was not properly distributed from
all of your IRAs.
WITHHOLDING
Periodic distributions (e.g., annuities and installment payments) from a
Qualified Plan that will last for a period of 10 or more years are generally
subject to voluntary income tax withholding. The amount withheld on such
periodic distributions is determined at the rate applicable to wages. The
recipient of a periodic distribution may generally elect not to have
withholding apply.
Nonperiodic distributions (e.g., lump sums and annuities or installment
payments of less than 10 years) from an IRA are subject to income tax
withholding at a flat 10% rate. The recipient of such a distribution may
elect not to have withholding apply.
The above description of the federal income tax consequences applicable to
Qualified Plans which may be funded by the Contract offered by this
Prospectus is only a brief summary and is not intended as tax advice. The
rules governing the provisions of Qualified Plans are extremely complex and
often difficult to comprehend. Anything less than full compliance with the
applicable rules, all of which are subject to change, may have adverse tax
consequences. A prospective Contractowner considering adoption of a
Qualified Plan and purchase of a Contract in connection therewith should
first consult a qualified and competent tax adviser, with regard to the
suitability of the Contract as an investment vehicle for the Qualified Plan.
OTHER INFORMATION
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VOTING OF FUND SHARES
You indirectly (through the Separate Account) purchase shares of the
Portfolios when you allocate purchase payments to the Subaccounts. The
Company owns shares of the Portfolios in the Separate Account for your
benefit. Under current law, the Company will vote shares of the Portfolios
held in the Subaccounts in accordance with voting instructions received from
Owners having the right to give such instructions. You will have the right
to give voting instructions to the extent that you have Account Value
allocated to the particular Subaccount. The Company will vote all shares it
owns through the Subaccount in the same proportion as the shares for which
it receives voting instructions from Owners. The Company votes shares in
accordance with its current understanding of the federal securities laws. If
the Company later determines that it may vote shares of the Funds in its own
right, it may elect to do so.
Unless otherwise required by applicable law, the number of shares of a
particular Portfolio as to which you may give voting instructions to the
Company is determined by dividing your Account Value in a Subaccount on a
particular date by the net asset value per share of that Portfolio as of the
same date. Fractional votes will be counted. The number of votes as to which
voting instructions may be given will be determined as of the date
established by the Fund for determining shareholders eligible to vote at the
meeting of the Fund. If required by the SEC, the Company reserves the right
to determine in a different fashion the voting rights attributable to the
shares of the Funds. Voting instructions may be cast in person or by proxy.
Voting rights attributable to your Account Value in a Subaccount for which
you do not submit timely voting instructions will be voted by the Company in
the same proportion as the voting instructions that are received in a timely
manner for Contracts participating in that Subaccount.
SUBSTITUTION OF INVESTMENTS
The Company reserves the right, subject to compliance with the law as then
in effect, to make additions to, deletions from, substitutions for, or
combinations of the securities that are held by the Separate Account or any
Subaccount or that the Separate Account or any Subaccount may purchase. If
shares of any or all of the Portfolios of the Funds should no longer be
available for investment, or if the Company receives an opinion from counsel
acceptable to Investment Services that substitution is in the best interest
of Contractowners and that further investment in shares of the Portfolio(s)
would cause undue risk to the Company, the Company may substitute shares of
another Portfolio of the Funds or of a different fund for shares already
purchased, or to be purchased in the future under the Contract. The Company
may also purchase, through the Subaccount, other securities for other
classes of contracts, or permit a conversion between classes of contracts on
the basis of requests made by Owners.
In connection with a substitution of any shares attributable to an Owner's
interest in a Subaccount or the Separate Account, the Company will, to the
extent required under applicable law, provide notice, seek Owner approval,
seek prior approval of the SEC, and comply with the filing or other
procedures established by applicable state insurance regulators.
The Company also reserves the right to establish additional Subaccounts of
the Separate Account that would invest in a new Portfolio of one of the
Funds or in shares of another investment company, a series thereof, or other
suitable investment vehicle. New Subaccounts may be established by the
Company with the consent of Investment Services, and any new Subaccount will
be made available to existing Owners on a basis to be determined by the
Company and Investment Services. The Company may also eliminate or combine
one or more Subaccounts if marketing, tax, or investment conditions so
warrant.
Subject to compliance with applicable law, the Company may transfer assets
to the General Account with the consent of Investment Services. The Company
also reserves the right, subject to any required regulatory approvals, to
transfer assets of any Subaccount of the Separate Account to another
separate account or Subaccount with the consent of Investment Services.
In the event of any such substitution or change, the Company may, by
appropriate endorsement, make such changes in these and other contracts as
may be necessary or appropriate to reflect such substitution or change. If
deemed by the Company to be in the best interests of persons having voting
rights under the Contracts, the Separate Account may be operated as a
management investment company under the 1940 Act or any other form permitted
by law; it may be deregistered under that Act in the event such registration
is no longer required; or it may be combined with other separate accounts of
the Company or an affiliate thereof. Subject to compliance with applicable
law, the Company also may combine one or more Subaccounts and may establish
a committee, board, or other group to manage one or more aspects of the
operation of the Separate Account.
CHANGES TO COMPLY WITH LAW AND AMENDMENTS
The Company reserves the right, without the consent of Owners, to suspend
sales of the Contract as presently offered and to make any change to the
provisions of the Contracts to comply with, or give Owners the benefit of,
any federal or state statute, rule, or regulation, including but not limited
to requirements for annuity contracts and retirement plans under the
Internal Revenue Code and regulations thereunder or any state statute or
regulation. The Company also reserves the right to limit the amount and
frequency of subsequent purchase payments.
REPORTS TO OWNERS
A statement will be sent annually to each Contractowner setting forth a
summary of the transactions that occurred during the year, and indicating
the Account Value as of the end of each year. In addition, the statement
will indicate the allocation of Account Value among the Fixed Interest
Account and the Subaccounts and any other information required by law.
Confirmations will also be sent upon purchase payments, exchanges, and full
and partial withdrawals. Certain transactions will be confirmed quarterly.
These transactions include exchanges under the Dollar Cost Averaging and
Asset Rebalancing Options, purchase payments made under an Automatic
Investment Program, systematic withdrawals, and Annuity Payments.
Each Contractowner will also receive an annual and semiannual report
containing financial statements for the Portfolios, which will include a
list of the portfolio securities of the Portfolios, as required by the 1940
Act, and/or such other reports as may be required by federal securities
laws.
TELEPHONE EXCHANGE PRIVILEGES
You may request an exchange of Account Value by telephone if an
Authorization for Telephone Requests form ("Telephone Authorization") has
been completed, signed, and filed with the Company. The Company has
established procedures to confirm that instructions communicated by
telephone are genuine and will not be liable for any losses due to
fraudulent or unauthorized instructions, provided that it complies with its
procedures. The Company's procedures require that any person requesting an
exchange by telephone provide the account number and the Owner's tax
identification number and such instructions must be received on a recorded
line. The Company reserves the right to deny any telephone exchange request.
If all telephone lines are busy (which might occur, for example, during
periods of substantial market fluctuations), Contractowners might not be
able to request exchanges by telephone and would have to submit written
requests.
By authorizing telephone exchanges, you authorize the Company to accept and
act upon telephonic instructions for exchanges involving your Contract, and
agree that neither the Company, nor any of its affiliates, nor the Funds,
nor any of their directors, trustees, officers, employees, or agents, will
be liable for any loss, damages, cost, or expense (including attorney's
fees) arising out of any requests effected in accordance with the Telephone
Authorization and believed by the Company to be genuine, provided that the
Company has complied with its procedures. As a result of this policy on
telephone requests, the Contractowner will bear the risk of loss arising
from the telephone exchange privileges. The Company may discontinue, modify,
or suspend telephone exchange privileges at any time.
DISTRIBUTION OF THE CONTRACT
T. Rowe Price Investment Services, Inc. ("Investment Services"), is the
distributor of the Contracts. Investment Services also acts as the
distributor of certain mutual funds advised by T. Rowe Price and
Price-Fleming. Investment Services is registered with the SEC as a
broker-dealer under the Securities Exchange Act of 1934, and in all 50
states, the District of Columbia, and Puerto Rico. Investment Services is a
member of the National Association of Securities Dealers, Inc. Investment
Services is a wholly owned subsidiary of T. Rowe Price and is an affiliate
of the Funds.
LEGAL PROCEEDINGS
There are no legal proceedings pending to which the Separate Account is a
party, or which would materially affect the Separate Account.
LEGAL MATTERS
Legal matters relating to New York law have been passed upon by LeBoeuf,
Lamb, Greene & MacRae, New York, New York.
Legal matters relating to the federal securities and federal income tax laws
have been passed upon by Dechert Price & Rhoads, Washington, D.C.
PERFORMANCE INFORMATION
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Performance information for the Subaccounts of the Separate Account,
including the yield and total return of all Subaccounts may appear in
advertisements, reports, and promotional literature to current or
prospective Owners.
Current yield for the Prime Reserve Subaccount will be based on investment
income received by a hypothetical investment over a given seven-day period
(less expenses accrued during the period), and then "annualized" (i.e.,
assuming that the seven-day yield would be received for 52 weeks, stated in
terms of an annual percentage return on the investment). "Effective yield"
for the Prime Reserve Subaccount is calculated in a manner similar to that
used to calculate yield but reflects the compounding effect of earnings.
For the other Subaccounts, quotations of yield will be based on all
investment income per Accumulation Unit earned during a given 30-day period,
less expenses accrued during the period ("net investment income"), and will
be computed by dividing net investment income by the value of an
Accumulation Unit on the last day of the period. Quotations of average
annual total return for any Subaccount will be expressed in terms of the
average annual compounded rate of return on a hypothetical investment in a
Contract over a period of 1, 5, and 10 years (or, if less, up to the life of
the Subaccount), and will reflect the deduction of the mortality and expense
risk charge and may simultaneously be shown for other periods. Where the
Portfolio in which a Subaccount invests was established prior to inception
of the Subaccount, quotations of total return may include quotations for
periods beginning prior to the Subaccount's date of inception. Such
quotations of total return are based upon the performance of the
Subaccount's corresponding Portfolio adjusted to reflect deduction of the
mortality and expense risk charge.
Performance information for any Subaccount reflects only the performance of
a hypothetical Contract under which Account Value is allocated to a
Subaccount during a particular time period on which the calculations are
based. Performance information should be considered in light of the
investment objectives and policies, characteristics, and quality of the
Portfolio in which the Subaccount invests, and the market conditions during
the given time period, and should not be considered as a representation of
what may be achieved in the future. For a description of the methods used to
determine yield and total return for the Subaccounts and the usage of other
performance related information, see the Statement of Additional
Information.
ADDITIONAL INFORMATION
- -------------------------------------------------------------------------------
REGISTRATION STATEMENT
A Registration Statement under the 1933 Act has been filed with the SEC
relating to the offering described in this Prospectus. This Prospectus has
been filed as a part of the Registration Statement and does not contain all
of the information set forth in the Registration Statement and exhibits
thereto, and reference is made to such Registration Statement and exhibits
for further information relating to the Company and the Contract. Statements
contained in this Prospectus, as to the content of the Contract and other
legal instruments, are summaries. For a complete statement of the terms
thereof, reference is made to the instruments filed as exhibits to the
Registration Statement. The Registration Statement and the exhibits thereto
may be inspected and copied at the SEC's office, located at 450 Fifth
Street, N.W., Washington, D.C.
FINANCIAL STATEMENTS
The financial statements of the Company at December 31, 1999 and 1998, and
for each of the three years in the period ended December 31, 1999, and the
financial statements of the Separate Account at December 31, 1999, and for
the years ended December 31, 1999 and 1998, are included in the Statement of
Additional Information.
STATEMENT OF ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
The Statement of Additional Information contains more specific information
and financial statements relating to the Company and the Separate Account.
The Table of Contents of the Statement of Additional Information is set
forth below.
TABLE OF CONTENTS
General Information and History 1
------------------------------------------------------------------------
Distribution of the Contract 1
------------------------------------------------------------------------
Limits on Premiums Paid Under Tax-Qualified Retirement Plans 1
------------------------------------------------------------------------
Experts 2
------------------------------------------------------------------------
Performance Information 2
------------------------------------------------------------------------
Financial Statements 4
------------------------------------------------------------------------
ILLUSTRATIONS
The following tables illustrate how the Account Values and Withdrawal Values
of a hypothetical Contract and systematic withdrawals and Annuity Payments
from a hypothetical Contract may vary over an extended period of time
assuming hypothetical rates of return equivalent to constant gross annual
rates of return of 0%, 6%, and 12%. The values illustrated would be
different from those shown if the gross annual investment rates of return
averaged 0%, 6%, or 12% over a period of years, but also fluctuated above or
below those averages for individual Contract Years.
The hypothetical illustrations assume purchase of a Contract with an initial
investment of $20,000 by a New York resident, age 50, whose income tax rate
is 31% federal and 7.59% state and whose capital gains tax rate is 20%
federal and 7.59% state. The illustrations further assume an Accumulation
Period of 15 years and distributions beginning upon the Owner's attaining
age 65 and continuing until age 90. Two methods of distribution are
illustrated: (1) systematic withdrawals in equal amounts over a 25-year
distribution period (assuming the Owner stops withdrawals after 25 years to
begin Annuity Payments or to take a lump-sum withdrawal), and (2) life
income with guaranteed payments of 10 years.
The amounts shown for Account Value, Withdrawal Value, systematic
withdrawals, and life income with 10 years certain Annuity Payments reflect
the fact that the net investment return on the Subaccounts is lower than the
gross investment return as a result of the mortality and expense risk charge
levied against the Subaccounts and the daily investment management fee
deducted from the Portfolios of the Funds. The management fee is assumed to
be equal to 0.85% which is representative of the average investment
management fee applicable to the seven Portfolios of the Funds. The
management fee includes the ordinary expenses of operating the Funds. For
the year ended December 31, 1999, the total expenses of each Portfolio of
the Funds were the following percentages of the average daily net assets of
the Portfolios: .85% for New America Growth Portfolio; 1.05% for
International Stock Portfolio; .85% for Mid-Cap Growth Portfolio; .85% for
Equity Income Portfolio; .90% for Personal Strategy Balanced Portfolio; .70%
for Limited-Term Bond Portfolio; and .55% for Prime Reserve Portfolio.
After deduction of the mortality and expense risk charge and Portfolio
expenses described above, the illustrated gross annual investment rates of
return of 0%, 6%, and 12% correspond to approximate net annual rates of
-1.4%, 4.6%, and 10.6%. The hypothetical values shown in the tables do not
reflect any charges against the Subaccounts for income taxes that may be
attributable to the Subaccounts in the future since the Company is not
currently making these charges. Similarly, the hypothetical values do not
reflect deduction of a premium tax charge, as no premium tax is currently
imposed in the State of New York. In the event that these charges were to be
made, the gross annual investment rate would have to exceed 0%, 6%, or 12%
by an amount sufficient to cover the charges in order to produce the values
illustrated.
The Withdrawal Values, systematic withdrawals, and life income with 10 years
certain Annuity Payments shown are net of the assumed tax rates set forth
above. All federal tax calculations assume that state taxes are allowed as a
deduction on the federal tax return. The illustrations further assume that
any investment losses may be applied in full against other ordinary income
or capital gains as applicable.
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
ACCUMULATION (12.00% HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN)
END OF WITHDRAWAL VALUE ACCOUNT VALUE
CONTRACT YEAR AGE ANNUAL INVESTMENT (AFTER TAX) (BEFORE TAX)
<S> <C> <C> <C> <C>
1 50 $20,000.00 $21,122 $22,087
2 51 0 22,362 24,393
3 52 0 23,730 26,939
4 53 0 25,242 29,750
5 54 0 26,911 32,855
6 55 0 28,755 36,285
7 56 0 30,791 40,072
8 57 0 33,040 44,254
9 58 0 35,523 48,873
10 59 0 38,265 53,974
11 60 0 45,255 59,607
12 61 0 49,222 65,829
13 62 0 53,603 72,700
14 63 0 58,441 80,287
15 64 0 63,784 88,667
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
DISTRIBUTION (ANNUAL AFTER-TAX PAYMENTS)
BEGINNING OF SYSTEMATIC WITHDRAWALS LIFE WITH 10
CONTRACT YEAR AGE ANNUAL INVESTMENT (AFTER TAX) (AFTER TAX)
<S> <C> <C> <C> <C>
16 65 0 $5,781 $ 3,907
17 66 0 5,781 4,145
18 67 0 5,781 4,399
19 68 0 5,781 4,670
20 69 0 5,781 4,959
21 70 0 5,781 5,268
22 71 0 5,781 5,597
23 72 0 5,781 5,949
24 73 0 5,781 6,324
25 74 0 5,781 6,724
26 75 0 5,781 7,151
27 76 0 5,781 7,607
28 77 0 5,781 8,093
29 78 0 5,781 8,612
30 79 0 5,781 9,165
31 80 0 5,781 9,756
32 81 0 5,781 10,386
33 82 0 5,781 11,058
34 83 0 5,781 11,776
35 84 0 5,781 12,541
36 85 0 5,781 13,181
37 86 0 5,781 13,876
38 87 0 5,781 14,806
39 88 0 7,360 15,799
40 89 0 8,474 16,858
41 90 0 8,755* 17,988**
- --------------------------------------------------------------------------------------------------------------
</TABLE>
*Systematic withdrawals must stop at age 90 at which time the Owner must begin
Annuity Payments or take a lump sum withdrawal.
**Life income Annuity Payments will continue for the life of the Annuitant or 10
years, whichever is longer. Accordingly, Annuitants cannot predict the period
of time such payments will be made as they will be made over the
Annuitant's lifetime (or a minimum period of 10 years).
Accumulated investment losses are assumed to be applied in full against ordinary
income or capital gains as applicable.
The hypothetical investment results above are illustrative only and should not
be deemed a representation of past or future investment results. Actual
investment results may be more or less than those shown.
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
ACCUMULATION (6.00% HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN)
END OF WITHDRAWAL VALUE ACCOUNT VALUE
CONTRACT YEAR AGE ANNUAL INVESTMENT (AFTER TAX) (BEFORE TAX)
<S> <C> <C> <C> <C>
1 50 $20,000.00 $20,486 $20,904
2 51 0 20,994 21,849
3 52 0 21,525 22,837
4 53 0 22,080 23,870
5 54 0 22,661 24,949
6 55 0 23,267 26,077
7 56 0 23,901 27,255
8 57 0 24,563 28,488
9 58 0 25,256 29,776
10 59 0 25,979 31,122
11 60 0 27,989 32,529
12 61 0 28,926 33,999
13 62 0 29,906 35,536
14 63 0 30,931 37,143
15 64 0 32,002 38,822
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
DISTRIBUTION (ANNUAL AFTER-TAX PAYMENTS)
BEGINNING OF SYSTEMATIC WITHDRAWALS LIFE WITH 10
CONTRACT YEAR AGE ANNUAL INVESTMENT (AFTER TAX) (AFTER TAX)
<S> <C> <C> <C> <C>
16 65 0 $1,567 $1,909
17 66 0 1,567 1,925
18 67 0 1,567 1,940
19 68 0 1,567 1,956
20 69 0 1,567 1,971
21 70 0 1,567 1,987
22 71 0 1,567 2,004
23 72 0 1,567 2,020
24 73 0 1,567 2,036
25 74 0 1,567 2,053
26 75 0 1,567 2,070
27 76 0 1,567 2,087
28 77 0 1,567 2,104
29 78 0 1,567 2,121
30 79 0 1,567 2,138
31 80 0 1,775 2,156
32 81 0 2,139 2,174
33 82 0 2,165 2,192
34 83 0 2,192 2,210
35 84 0 2,221 2,228
36 85 0 2,250 2,070
37 86 0 2,281 1,912
38 87 0 2,313 1,931
39 88 0 2,347 1,950
40 89 0 2,382 1,969
41 90 0 2,419* 1,988**
- --------------------------------------------------------------------------------------------------------------
</TABLE>
*Systematic withdrawals must stop at age 90 at which time the Owner must
begin Annuity Payments or take a lump sum withdrawal.
**Life income Annuity Payments will continue for the life of the Annuitant or
10 years, whichever is longer. Accordingly, Annuitants cannot predict the
period of time such payments will be made as they will be made over the
Annuitant's lifetime (or a minimum period of 10 years).
Accumulated investment losses are assumed to be applied in full against ordinary
income or capital gains as applicable.
The hypothetical investment results above are illustrative only and should not
be deemed a representation of past or future investment results. Actual
investment results may be more or less than those shown.
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
ACCUMULATION (0.00% HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN)
END OF WITHDRAWAL VALUE ACCOUNT VALUE
CONTRACT YEAR AGE ANNUAL INVESTMENT (AFTER TAX) (BEFORE TAX)
<S> <C> <C> <C> <C>
1 50 $20,000.00 $19,822 $19,721
2 51 0 19,647 19,446
3 52 0 19,474 19,174
4 53 0 19,303 18,907
5 54 0 19,135 18,643
6 55 0 18,969 18,383
7 56 0 18,805 18,126
8 57 0 18,644 17,874
9 58 0 18,485 17,624
10 59 0 18,328 17,378
11 60 0 18,174 17,136
12 61 0 18,021 16,897
13 62 0 17,871 16,661
14 63 0 17,723 16,428
15 64 0 17,576 16,199
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
DISTRIBUTION (ANNUAL AFTER-TAX PAYMENTS)
BEGINNING OF SYSTEMATIC WITHDRAWALS LIFE WITH 10
CONTRACT YEAR AGE ANNUAL INVESTMENT (AFTER TAX) (AFTER TAX)
<S> <C> <C> <C> <C>
16 65 0 $ 520 $1,003
17 66 0 520 970
18 67 0 520 924
19 68 0 520 880
20 69 0 520 839
21 70 0 520 799
22 71 0 520 761
23 72 0 520 725
24 73 0 520 691
25 74 0 520 658
26 75 0 520 627
27 76 0 520 597
28 77 0 520 569
29 78 0 520 542
30 79 0 520 517
31 80 0 520 492
32 81 0 520 469
33 82 0 520 447
34 83 0 520 426
35 84 0 520 405
36 85 0 520 386
37 86 0 520 368
38 87 0 520 351
39 88 0 520 334
40 89 0 520 318
41 90 0 2,870* 1,979**
- --------------------------------------------------------------------------------------------------------------
</TABLE>
*Systematic withdrawals must stop at age 90 at which time the Owner must
begin Annuity Payments or take a lump sum withdrawal.
**Life income Annuity Payments will continue for the life of the Annuitant or 10
years, whichever is longer. Accordingly, Annuitants cannot predict the period
of time such payments will be made as they will be made over the
Annuitant's lifetime (or a minimum period of 10 years).
Accumulated investment losses are assumed to be applied in full against ordinary
income or capital gains as applicable.
The hypothetical investment results above are illustrative only and should not
be deemed a representation of past or future investment results. Actual
investment results may be more or less than those shown.
<PAGE>
IRA DISCLOSURE STATEMENT
- --------------------------------------------------------------------------------
This Disclosure Statement describes the statutory and regulatory provisions
applicable to the operation of Individual Retirement Annuities. Internal
Revenue Service regulations require that this be given to each person
desiring to establish an Individual Retirement Annuity. Further information
can be obtained from any district office of the Internal Revenue Service.
RIGHT TO REVOKE
You may revoke your Individual Retirement Annuity within seven days of the
date your first purchase payment is received by First Security Benefit Life
Insurance and Annuity Company of New York. To revoke your Individual
Retirement Annuity and receive a refund of the entire amount you paid, you
must mail or deliver a written notice of revocation, signed exactly as your
signature appears on your variable annuity application to: First Security
Benefit Life, c/o T. Rowe Price Variable Annuity Service Center, P.O. Box
2788, Topeka, KS 66601-9804, 1-800-888-2461, ext. 5101.
If you send your revocation notice by First Class Mail, we will consider
that you have notified us as of the date of the postmark on the envelope. If
you send it by Certified or Registered Mail, you will have notified us as of
the certification or registration date on the label. In either case, the
revocation notice must be properly addressed and mailed, with postage
prepaid. Upon receipt of a timely revocation notice, the entire amount of
your contribution will be returned to you without adjustment for sales
commissions, administrative fees, or market value fluctuation.
WHAT ARE THE STATUTORY REQUIREMENTS?
An Individual Retirement Annuity contract must meet the following
requirements:
1. The amount in your Individual Retirement Annuity must be fully vested at
all times.
2. The contract must provide that you cannot transfer it to someone else.
3. The contract must have flexible premiums.
4. You must start receiving distributions by April 1 of the year following
the year in which you reach age 70 1/2 (see "Required Minimum
Distributions").
5. The contract must provide that you cannot contribute more than $2,000
for any year. (This requirement does not apply to rollovers. See
"Rollovers and Direct Transfers.")
6. The contract must provide that any refund of premium will be applied
before the close of the calendar year following the year of refund
toward the payment of future premiums or the purchase of additional
benefits.
The Individual Retirement Annuity contract contains the provisions described
above. The contract has not, however, been approved as to form by the
Internal Revenue Service.
ROLLOVERS AND DIRECT TRANSFERS
1. A rollover is a tax-free transfer of cash or other assets from one
retirement program to another. There are two kinds of rollover payments.
In one, you transfer amounts from one Individual Retirement Annuity or
Individual Retirement Account (collectively referred to herein as an
"IRA") to another. With the other, you transfer amounts from a qualified
employee benefit plan or tax-sheltered annuity to an IRA. While you may
make rollover contributions to the Individual Retirement Annuity, you
cannot deduct them on your tax return.
2. You must complete a tax-free rollover by the 60th day after the date you
receive the distribution from your IRA or other qualified employee
benefit plan.
3. A rollover distribution from an IRA may be made to you only once a year.
The one-year period begins on the date you receive the IRA distribution,
not on the date you roll it over (reinvest it) into another IRA.
4. A direct transfer of funds in an IRA from one trustee or insurance
company to another is not a rollover. It is a transfer that is not
affected by the one-year waiting period.
5. All or part of the premium for the contract may be paid from an IRA
rollover, qualified pension or profit-sharing plan or tax-sheltered
annuity rollover, or from a direct transfer from another IRA. The
proceeds from this contract may be used as a rollover contribution to
another IRA.
ALLOWANCE OF DEDUCTION
1. In general, the amount you can contribute each year to the Annuity
contract is the lesser of $2,000 or your taxable compensation for the
year. If you have more than one IRA, the limit applies to the total
contributions made to your IRAs for the year. Wages, salaries, tips,
professional fees, bonuses, and other amounts you receive for providing
personal services are compensation. If you own and operate your own
business as a sole proprietor, your net earnings reduced by your
deductible contributions on your behalf to self-employed retirement
plans is compensation. If you are an active partner in a partnership and
provide services to the partnership, your share of partnership income
reduced by deductible contributions made on your behalf to qualified
retirement plans is compensation. All taxable alimony and separate
maintenance payments received under a decree of divorce or separate
maintenance are compensation.
2. Generally, if you are not covered by a qualified retirement plan, the
amount you can deduct in a year for contributions to your IRA is the
lesser of $2,000 or your taxable compensation for the year. However, if
you are not covered by a qualified retirement plan, but your spouse is,
the amount you may deduct for IRA contributions will be phased out if
your joint adjusted gross income ("AGI") is between $150,000 and
$160,000.
3. If you are covered by a qualified retirement plan, the amount of IRA
contributions you may deduct in a year may be reduced or eliminated
based on your AGI for the year. The AGI level at which a single
taxpayer's deduction for 1999 is affected, $31,000, will increase
annually to $50,000 in 2005. The AGI level at which a married taxpayer's
deduction for 1999 is affected, $51,000, will increase annually to
$80,000 in 2007.
4. Contributions to your IRA can be made at any time. If you make a
contribution between January 1 and April 15, however, you may elect to
treat the contribution as made either in that year or in the preceding
year. You may file a tax return claiming a deduction for your IRA
contribution before the contribution is actually made. You must,
however, make the contribution by the due date of your return not
including extensions.
5. You cannot make a contribution other than a rollover contribution to
your IRA for the year in which you reach age 70 1/2 or thereafter.
6. If both you and your spouse have compensation, you can each set up your
own IRA. The contribution for each of you is figured separately and
depends on how much each earns. Both of you cannot participate in the
same IRA account or contract.
7. If you and your spouse file a joint federal income tax return, each of
you may contribute up to $2,000 to your own IRA annually if your joint
income is $4,000 or more. The maximum amount the higher compensated
spouse may contribute for the year is the lesser of $2,000 or 100% of
that spouse's compensation. The maximum the lower-compensated spouse may
contribute is the lesser of (i) $2,000 or (ii) 100% of that spouse's
compensation plus the amount by which the higher compensated spouse's
compensation exceeds the amount the higher compensated spouse
contributes to his or her IRA.
SEP-IRAS
If you are participating in a Simplified Employee Pension Plan (SEP), the
contributions made by your employer into your IRA after 1986 are excluded
from your income. If the SEP contains a salary reduction arrangement, you
may elect to reduce your salary by up to the lesser of 15% of compensation
or $9,500 (indexed annually) and have that amount contributed to your
SEP-IRA. The maximum SEP contributions, including salary reduction amounts
and employer contributions to your account in any year is generally limited
to the lesser of $30,000 (indexed) or 15% of your total compensation from
such employer for that year. Employers that have established salary
reduction SEPs before 1997 may continue to maintain and contribute to them.
However, no new salary reduction SEPs may be established after 1996.
Instead, eligible employers may establish SIMPLE IRA programs for years
after 1996, which permit salary reduction contributions. This IRA may not be
used in connection with a SIMPLE plan.
If an IRA is being used in connection with a SEP, contributions must bear a
uniform relationship to the total compensation (not in excess of the first
$160,000 indexed) of each employee participating under the SEP. If you are a
participant in a SEP, you will be considered to be an active participant in
an employee pension plan for purposes of your deductible contribution limits
for your IRA (see "Allowance of Deduction" section). For further information
concerning participation and contributions, please refer to IRS Form
5305-SEP (which must be completed and executed by your employer in order to
establish a SEP).
TAX STATUS OF THE CONTRACT AND DISTRIBUTIONS
1. Earnings of your Individual Retirement Annuity contract are not taxed
until they are distributed to you.
2. In general, taxable distributions are included in your gross income in
the year you receive them.
3. Distributions are non-taxable to the extent they represent a return of
non-deductible contributions. The non-taxable percentage of a
distribution is determined by dividing your total undistributed,
non-deductible IRA contributions by the value of all your IRAs
(including SEPs and rollovers).
4. You cannot choose the special five-year or ten-year averaging that may
apply to lump sum distributions from qualified employer plans.
Amounts held in IRAs are generally subject to the imposition of federal
estate taxes. In addition, if you elect to have all or any part of your
account payable to a beneficiary (or beneficiaries) upon your death, the
election generally will not subject you to any gift tax liability.
REQUIRED MINIMUM DISTRIBUTIONS
You must start receiving minimum distributions from your Individual
Retirement Annuity starting with the year you reach age 70 1/2 . Ordinarily,
the required minimum distribution for a particular year must be received by
December 31 of that year. However, you may delay the required minimum
distribution for the year you reach age 70 1/2 until April 1 of the
following year (your "required beginning date").
Figure your required minimum distribution for each year by dividing the
value of your Individual Retirement Annuity on December 31 of the preceding
year by the applicable life expectancy. The applicable life expectancy is
your remaining life expectancy or the remaining joint life and last survivor
expectancy of you and your designated beneficiary. If a designated
beneficiary is more than 10 years younger than you, that beneficiary is
assumed to be exactly 10 years younger. Life expectancies are determined
using the expected return multiple tables shown in IRS Publication 590
"Individual Retirement Arrangements." To obtain a free copy of IRS
Publication 590 and other IRA forms, write the IRS Forms Distribution Center
for your area as shown in your income tax return instructions.
Annuity Payments which begin by April 1 of the year following the year you
reach age 70 1/2 satisfy the minimum distribution requirement if they
provide for non-increasing payments over your life or the lives of you and
your spouse, provided that, if installments are guaranteed, the maximum
guaranty period may be less than the applicable life expectancy.
If you have more than one IRA, you must determine the required minimum
distribution separately for each IRA; however, you can take the actual
distribution of these amounts from any one or more of your IRAs.
If the actual distribution from your IRA is less than the minimum amount
that should be distributed in accordance with the rules set forth above, the
difference is an excess accumulation. There is a 50% excise tax on any
excess accumulations.
If you die after your required beginning date, your entire remaining account
balance must be distributed to your designated beneficiary at least as
rapidly as under the method of distribution in effect on your date of death.
If you die before your required beginning date, the general rule is that
your entire balance must be distributed within five (5) years of your death.
However, if the balance of your IRA account is payable to your designated
beneficiary, your designated beneficiary may elect that the amount be paid
in substantially equal installments over a fixed period not exceeding the
designated beneficiary's life expectancy, beginning no later than December
31 of the year following the year in which you died. If your spouse is your
designated beneficiary, such distribution need not commence until December
31 of the year during which you would have attained 70 1/2 had you survived.
Alternatively, if your designated beneficiary is your spouse, he or she may
elect to treat your IRA as his or her own IRA.
WHAT HAPPENS IF EXCESS CONTRIBUTIONS ARE MADE TO MY INDIVIDUAL RETIREMENT
ANNUITY?
1. You must pay a 6% excise tax each year on excess contributions that
remain in your Individual Retirement Annuity. Generally, an excess
contribution is the amount contributed to your Individual Retirement
Annuity that is above the maximum amount you can contribute for the
year. The excess is taxed in the year contributed and each year after
that until you correct it.
2. You will not have to pay the 6% excise tax if you withdraw the excess
amount by the date your tax return is due, including extensions, for the
year of the contribution. You do not have to include in your gross
income an excess contribution that you withdraw from your Individual
Retirement Annuity before your tax return is due if the income earned on
the excess was also withdrawn and no deduction was allowed for the
excess contribution.
ARE THERE ANY PENALTIES FOR PREMATURE DISTRIBUTIONS?
There is an additional tax on premature distributions equal to 10% of the
amount of the premature distribution that you must include in your gross
income. Premature distributions are generally amounts you withdraw from your
IRA before you are age 59 1/2. However, the tax on premature distributions
does not apply:
1. To distributions that are rolled over tax free to another IRA, a
qualified employee benefit plan, or a tax-sheltered annuity.
2. To a series of substantially equal periodic payments made over your life
or life expectancy, or the joint life or life expectancy of you and your
beneficiary.
3. To amounts distributed to a beneficiary, or the individual's estate, on
or after the death of the individual.
4. If you are permanently disabled. You are considered disabled if you
cannot do any substantial gainful activity because of your physical or
mental condition. A physician must determine that the condition has
lasted or can be expected to last continuously for 12 months or more or
that the condition can be expected to lead to death.
5. To a distribution which does not exceed the amount of your medical
expenses that could be deducted for the year (generally speaking,
medical expenses paid during a year are deductible to the extent they
exceed 7 1/2% of your adjusted gross income for the year).
6. To a distribution (subject to certain restrictions) that does not exceed
the premiums you paid for health insurance coverage for yourself, your
spouse, and dependents if you have been unemployed and received
unemployment compensation for at least 12 weeks.
7. To a "qualified first-time homebuyer distribution," within the meaning
of Code 72(t)(8), up to a $10,000 lifetime limit.
8. To a distribution for post-secondary education costs for you, your
spouse, or any child or grandchild of you or your spouse (i.e.,
"qualified higher education expenses").
IRA EXCISE TAX REPORTING
Use Form 5329, Return for Individual Retirement Arrangement Taxes, to report
the excise taxes on excess contributions, premature distributions, and
excess accumulations. If you do not owe any IRA excise taxes, you do not
need Form 5329. Further information can be obtained from any district office
of the Internal Revenue Service.
BORROWING
If you borrow money under your Individual Retirement Annuity contract or use
it as security for a loan, you must include in gross income the fair market
value of the Individual Retirement Annuity contract as of the first day of
your tax year, and the penalty tax on premature distributions may apply.
(Note: This contract does not allow borrowings under it, nor may it be
assigned or pledged as collateral for a loan.)
FINANCIAL INFORMATION
Contributions to your Individual Retirement Annuity contract are not subject
to sales charges. A mortality and expense risk charge of 0.55% on an annual
basis is deducted as described in the attached variable annuity prospectus.
(This charge is not deducted with respect to contract value allocated to the
fixed interest account option.) See the accompanying prospectus for the
underlying mutual funds for information about the charges associated with
the funds. Contractowners who allocate contract value to the Subaccounts
bear a pro rata share of the fees and expenses of the underlying funds. The
growth in value of the Individual Retirement Annuity contract is neither
guaranteed, nor projected, but is based upon the investment experience of
the underlying mutual fund portfolios that correspond to the Subaccounts to
which you have allocated contract value.
<PAGE>
ROTH IRA DISCLOSURE STATEMENT
ROTH INDIVIDUAL RETIREMENT ANNUITY DISCLOSURE STATEMENT
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This Disclosure Statement describes the statutory and regulatory provisions
applicable to the operation of Roth IRAs. Internal Revenue Service
regulations require that this be given to each person desiring to establish
a Roth IRA. Further information can be obtained from any district office of
the Internal Revenue Service.
YOUR RIGHT TO REVOKE
You may revoke your Roth IRA within seven days of the date your first
purchase payment is received by First Security Benefit Life Insurance and
Annuity Company of New York. To revoke your Roth IRA and receive a refund of
the entire amount you paid, you must mail or deliver a written notice of
revocation, signed exactly as your signature appears on your variable
annuity application, to: First Security Benefit, c/o T. Rowe Price Variable
Annuity Service Center, P.O. Box 2788, Topeka, KS 66601-9804,
1-800-888-2461, ext. 5101.
If you send your revocation notice by First Class Mail, we will consider
that you have notified us as of the date of the postmark on the envelope. If
you send it by Certified or Registered Mail, you will have notified us as of
the certification or registration date on the label. In either case, the
revocation notice must be properly addressed and mailed, with postage
prepaid. Upon receipt of a timely revocation notice, the entire amount of
your contribution will be returned to you without adjustment for sales
commissions, administrative fees or market value fluctuation.
WHAT ARE THE REQUIREMENTS?
A Roth IRA contract must meet the following requirements:
1. The amount in your Roth IRA must be fully vested at all times.
2. The contract must provide that you cannot transfer it to someone else.
3. The contract must have flexible premiums.
4. If you die before your entire interest in the contract has been
distributed, your beneficiary may need to receive distributions within a
specified time frame (see "Required Minimum Distributions" below).
5. The contract must provide that you cannot contribute more than $2,000
for any year. This requirement does not apply to qualified rollover
contributions. (See "Rollovers and Direct Transfers" below).
6. The contract must provide that any refund of premium will be applied
before the close of the calendar year following the year of refund
toward the payment of future premiums or the purchase of additional
benefits.
The Roth IRA contract contains the provisions described above. The contract
has not, however, been approved as to form by the Internal Revenue Service.
ROLLOVERS AND DIRECT TRANSFERS
1. You may make a qualified rollover contribution to this contract from
another Roth IRA or from a traditional IRA, and such a contribution will
not count toward the annual limit on contributions to the contract. You
may make a qualified rollover contribution from a traditional IRA only
if your modified adjusted gross income for the year in which the
rollover will occur is $100,000 or less, = and if you are married, you
and your spouse have joint income of $100,000 or less and you file a
joint income tax return for the year in which the rollover occurs. You
and your spouse will not be subject to the requirements for married
individuals if you have lived apart for the entire year of contribution.
2. The amount distributed from your traditional IRA and rolled over will be
subject to federal income taxes, except to the extent such amounts
relate to nondeductible contributions. However, if the distribution was
made before 1999, the amount to be included in your taxable income would
be evenly divided over a four-year period. If you die before the end of
the four-year period, the amount that was not included at the time of
your death in your income because you elected to divide your income over
a four-year period must be included in your final return, unless your
spouse is the sole beneficiary of all your Roth IRAs. If your spouse is
the sole beneficiary of all your Roth IRAs, he or she will continue to
include the amounts converted from your traditional IRA over the
four-year period. If you become divorced during the four-year period, or
you are married and file a separate income tax return during the
four-year period, you must continue to recognize income over the
four-year period.
3. You must complete a qualified rollover contribution by the 60th day
after the date you receive the distribution from your IRA.
4. A direct transfer of funds in a Roth IRA or a traditional IRA from one
trustee or insurance company to this Roth IRA does not constitute a
rollover.
5. You may make a direct transfer of funds in a traditional IRA to this
Roth IRA.
6. You may not make a rollover contribution from a qualified pension or
profit-sharing plan or tax-sheltered annuity to this Roth IRA. A
distribution from this Roth IRA may be used as a rollover contribution
to another Roth IRA. You may not transfer a Roth IRA to a traditional
IRA.
7. You may not rollover minimum required distributions from your
traditional IRA into this Roth IRA.
8. A rollover contribution from one IRA to another IRA, other than a
qualified rollover contribution from a traditional IRA to a Roth IRA,
may be made only once a year. The one-year period begins on the date you
receive the distribution from the first IRA, not on the date you roll it
over (reinvest it) into another IRA. A conversion from a traditional IRA
to a Roth IRA is not treated as a rollover for purposes of the one-year
rule.
AMOUNT OF ANNUAL CONTRIBUTION
1. In general, the amount you can contribute each year to the contract is
the lesser of $2,000 or your taxable compensation for the year. If you
have more than one IRA (either a Roth IRA or a traditional IRA), the
limit applies to the total contributions made to your IRAs for the year.
Wages, salaries, tips, professional fees, bonuses and other amounts you
receive for providing personal services are compensation. If you own and
operate your own business as a sole proprietor, your net earnings
reduced by your deductible contributions on your behalf to self-employed
retirement plans is compensation. If you are an active partner in a
partnership and provide services to the partnership, your share of
partnership income reduced by deductible contributions made on your
behalf to qualified retirement plans is compensation. All taxable
alimony and separate maintenance payments received under a decree of
divorce or separate maintenance are compensation.
2. No amount you contribute to the contract will be deductible for federal
income tax purposes.
3. Contributions to your Roth IRA can be made at any time. If you make a
contribution between January 1 and April 15, however, you may elect to
treat the contribution as made either in that year or in the preceding
year.
4. If both you and your spouse have compensation you can each set up your
own Roth IRA. The contribution for each of you is figured separately and
depends on how much each earns. Both of you cannot participate in the
same Roth IRA or contract.
5. If you and your spouse file a joint federal income tax return, each of
you may contribute up to $2,000 to your own Roth IRA annually if your
joint income is $4,000 or more. The maximum amount the higher
compensated spouse may contribute for the year is the lesser of $2,000
or 100% of that spouse's compensation. The maximum the lower compensated
spouse may contribute is the lesser of (i) $2,000 or (ii) 100% of that
spouse's compensation plus the amount by which the higher compensated
spouse's compensation exceeds the amount the higher compensated spouse
contributes to his or her Roth IRA.
6. Your maximum annual contribution amount shall be phased-out if you are
single and have an adjusted gross income between $95,000 and $110,000,
or if you are married and you and your spouse have a combined adjusted
gross income between $150,000 and $160,000 in accordance with Section
408A(c)(3) of the Internal Revenue Code (the "Code").
TAX STATUS OF DISTRIBUTIONS
1. Since your contributions to the contract will be made with after-tax
dollars, when your contributions are distributed to you they will not be
subject to federal income tax. Distributions from the contract will be
considered as coming first from your contributions and then from the
earnings on your contributions. You will owe no federal income tax when
earnings on your contributions are distributed to you, provided they are
distributed in a "qualified distribution."
2. "Qualified distributions" from the contract will not be subject to
federal income tax or the additional 10% early withdrawal tax. To be
qualified, a distribution must:
(a) occur after the five-year period beginning on the first day of the
year you made your initial contribution to the contract, and
(b) must be:
(1) made on or after the date on which you attain age 59 1/2;
(2) made to a beneficiary (or your estate) on or after your death;
(3) attributable to your being disabled; or
(4) a distribution to pay for "qualified first-time homebuyer
expenses" under Code Section 72(t)(8) up to $10,000.
3. You will owe federal income tax, and perhaps an additional 10% early
withdrawal tax, as a result of obtaining a "nonqualified distribution."
A nonqualified distribution is subject to federal income tax and the
early withdrawal tax to the extent that the sum of the distribution PLUS
all other distributions from the Roth IRA (whether qualified or
nonqualified) MINUS the amount of your previous distributions that were
taxable EXCEEDS your contribution to all of your Roth IRAs.
4. Your surviving spouse will be treated as the owner of your Roth IRA for
purposes of determining whether a distribution is a "nonqualified
distribution." This means that a distribution to your surviving spouse
from your Roth IRA will be satisfied only if the above requirements are
satisfied with respect to your surviving spouse. However, the period
during which you held the Roth IRA prior to your death will be taken
into account for purposes of determining whether your spouse has
satisfied the five-year requirement in 2(a) above.
5. Amounts held in Roth IRAs are generally subject to the imposition of
federal estate taxes. If you elect to have all or any part of your
account payable to a beneficiary (or beneficiaries) upon your death, the
election generally will not subject you to any gift tax liability.
6. Taxable distributions from a Roth IRA are not eligible for special
five-year or ten-year averaging that may apply to lump sum distributions
from qualified employer retirement plans.
7. Distributions that are rolled over as a qualified rollover contribution
to another Roth IRA will be treated as a "qualified distribution."
8. Substantially equal periodic payments from a Roth IRA that was formerly
a traditional IRA from which you were receiving substantially equal
periodic payments will be treated as nonqualified distributions.
However, such distributions will not be subject to the 10% penalty on
premature distributions (see below).
REQUIRED MINIMUM DISTRIBUTIONS
1. You are not required to receive required minimum distributions from your
Roth IRA during your lifetime.
2. If you die before the entire balance in your Roth IRA has been
distributed, the general rule is that the entire balance must be
distributed within five (5) years of your death. However, if the balance
in your Roth IRA account is payable to your designated beneficiary, you
may elect or your designated beneficiary may elect that the amount be
paid in substantially equal installments over a fixed period not
exceeding the designated beneficiary's life expectancy, beginning no
later than December 31 of the year following the year in which you died.
If your spouse is the sole designated beneficiary of your Roth IRA on
your date of death, these rules do not apply and the Roth IRA will be
treated as your spouse's IRA, and no distributions from the Roth IRA to
your spouse will be required during your spouse's lifetime.
3. Life expectancies are determined using the expected return multiple
tables shown in IRS Publication 590 "Individual Retirement
Arrangements." To obtain a free copy of IRS Publication 590, write the
IRS Forms Distribution Center for your area as shown in your income tax
return instructions.
4. If the actual distribution from your Roth IRA is less than the minimum
amount that should be distributed in accordance with the rules set forth
above, the difference is subject to a 50% excise tax.
WHAT HAPPENS IF EXCESS CONTRIBUTIONS ARE MADE TO MY ROTH IRA?
1. You must pay a 6% excise tax if you make excess contributions to your
Roth IRA. Generally, an excess contribution is the amount contributed to
your Roth IRA that is above the maximum amount you can contribute for
the year.
2. You will not have to pay the 6% excise tax if you withdraw the excess
amount, plus the net income on those excess contributions, by the date
your tax return is due, including extensions, for the year of the
contribution. The net earnings on these excess contributions will be
included in your income for the year in which the contributions were
made.
3. If your excess contributions, plus the net income on those
contributions, are distributed AFTER the due date of your tax return for
the year of contribution, the earnings on those contributions may be
subject to federal income tax and the 10% tax on premature
distributions. However, if you choose to leave the excess contributions
in your Roth IRA after the due date of your income tax return for the
year of contribution, the excess contributions will be treated as deemed
Roth IRA contributions for subsequent years, to the extent you
contribute less than $2,000 for those subsequent years.
ARE THERE ANY PENALTIES FOR PREMATURE DISTRIBUTIONS?
There is an additional tax on premature distributions which are part of a
nonqualified distribution equal to 10% of the amount of the premature
distribution that you must include in your gross income. (See the discussion
above on the "Tax Status of Distributions.") Premature distributions are
generally amounts you withdraw from your Roth IRA before you are age 59 1/2.
Distributions to your surviving spouse will be treated as premature
distributions if your surviving spouse withdraws amounts from your Roth IRA
before he or she is 59 1/2. However, the tax on premature distributions does
not apply:
1. To distributions that constitute qualified rollover contributions to
another Roth IRA.
2. To a series of substantially equal periodic payments made over your life
or life expectancy, or the joint life expectancy of you and your
beneficiary.
3. To amounts distributed to a beneficiary, or your estate, on or after
your death.
4. If you are permanently disabled. You are considered disabled if you
cannot do any substantial gainful activity because of your physical or
mental condition. A physician must determine that the condition has
lasted or can be expected to last continuously for 12 months or more or
the condition can be expected to lead to death.
5. To a distribution which does not exceed the amount of your medical
expenses that could be deducted for the year (generally speaking,
medical expenses paid during a year are deductible to the extent they
exceed 7 1/2% of your adjusted gross income for the year).
6. To a distribution (subject to certain restrictions) that does not exceed
the premiums you paid for health insurance coverage for yourself, your
spouse and dependents if you have been unemployed and received
unemployment compensation for at least 12 weeks.
7. To a "qualified first-time homebuyer distribution," within the meaning
of Code Section 72(t)(8), up to $10,000.
8. To a distribution for post-secondary education costs for you, your
spouse or any child or grandchild of you or your spouse.
IRA EXCISE TAX REPORTING
Use Form 5329, Return for Individual Retirement Arrangement Taxes, to report
the excise taxes on excess contributions and premature distributions. If you
do not owe any excise taxes, you do not need Form 5329. Further information
can be obtained from any district office of the Internal Revenue Service.
TRANSACTIONS WITH YOUR ROTH IRA
If you engage in a so-called prohibited transaction with respect to your
Roth IRA, the IRA will lose its exemption from tax. In this event, you will
be taxed on the fair market value of the contract even if you do not
actually receive a distribution. In addition, if you are less than 59 1/2,
your taxes may be further increased by a penalty tax in an amount equal to
10% of the fair market value of the contract. These prohibited transactions
include borrowing money from your Roth IRA, using your Roth IRA account as
security for a loan or a number of other financial transactions with your
Roth IRA. If you pledge your Roth IRA as security for a loan, then the
amount or portion pledged is considered to be distributed to you and also
must be included in your gross income. (Note: This contract does not allow
borrowings under it, nor may it be assigned or pledged as collateral for a
loan.)
FINANCIAL INFORMATION
Contributions to your Roth IRA contract are not subject to sales charges. A
mortality and expense risk charge of 0.55% on an annual basis is deducted as
described in the attached variable annuity prospectus. (This charge is not
deducted with respect to contract value allocated to the fixed interest
account option.) See the accompanying prospectus for the underlying mutual
funds for information about the charges associated with the funds.
Contractowners who allocate contract value to the Subaccounts bear a pro
rata share of the fees and expenses of the underlying funds. The growth in
value of the Roth IRA contract is neither guaranteed, nor projected, but is
based upon the investment experience of the underlying mutual fund
portfolios that correspond to the Subaccounts to which you have allocated
contract value.
IMPORTANT: The discussion of the tax rules for Roth IRAs in this Disclosure
Statement is based upon the best available information. However, the rules
that apply to Roth IRAs, including those applicable to the conversion and
reconversion of IRAs, are complex and may have consequences that are
specific to your personal tax or financial situation. Therefore, you should
consult your tax advisor for the latest developments and for advice about
how maintaining a Roth IRA will affect your personal tax or financial
situation.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
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T. ROWE PRICE VARIABLE ANNUITY
STATEMENT OF ADDITIONAL INFORMATION
DATE: MAY 1, 2000
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT
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ISSUED BY: MAILING ADDRESS:
First Security Benefit Life Insurance First Security Benefit Life Insurance
and Annuity Company of New York and Annuity Company of New York
70 West Red Oak Lane, 4th Floor c/o T. Rowe Price Variable Annuity
White Plains, New York 10604 Service Center
1-800-355-4570 P.O. Box 750106
Topeka, Kansas 66675-0106
1-800-469-6587
This Statement of Additional Information is not a prospectus and should be
read in conjunction with the current Prospectus for the T. Rowe Price
Variable Annuity dated May 1, 2000. A copy of the Prospectus may be obtained
from the T. Rowe Price Variable Annuity Service Center by calling
1-800-469-6587 or by writing P.O. Box 750106, Topeka, Kansas 66675-0106.
<PAGE>
CONTENTS
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General Information and History 1
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Distribution of the Contract 1
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Limits on Premiums Paid Under Tax-Qualified Retirement Plans 1
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Experts 2
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Performance Information 2
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Financial Statements 4
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<PAGE>
GENERAL INFORMATION AND HISTORY
- --------------------------------------------------------------------------------
For a description of the Individual Flexible Premium Deferred Variable
Annuity Contract (the "Contract"), First Security Benefit Life Insurance and
Annuity Company of New York (the "Company"), and the T. Rowe Price Variable
Annuity Account of First Security Benefit Life Insurance and Annuity Company
of New York (the "Separate Account"), see the Prospectus. This Statement of
Additional Information contains information that supplements the information
in the Prospectus. Defined terms used in this Statement of Additional
Information have the same meaning as terms defined in the section entitled
"Definitions" in the Prospectus.
SAFEKEEPING OF ASSETS
The Company is responsible for the safekeeping of the assets of the
Subaccounts. These assets, which consist of shares of the Portfolios of the
Funds in non-certificated form, are held separate and apart from the assets
of the Company's General Account and its other separate accounts.
DISTRIBUTION OF THE CONTRACT
- --------------------------------------------------------------------------------
T. Rowe Price Investment Services, Inc. ("Investment Services"), a Maryland
corporation formed in 1980 as a wholly-owned subsidiary of T. Rowe Price
Associates, Inc., is Principal Underwriter of the Contract. Investment
Services is registered as a broker/dealer with the Securities and Exchange
Commission ("SEC") under the Securities Exchange Act of 1934 and is a member
of the National Association of Securities Dealers, Inc. ("NASD"). The
offering of the Contract is continuous.
Investment Services serves as Principal Underwriter under a Distribution
Agreement with the Company. Investment Services' registered representatives
are required to be authorized under applicable state regulations to make the
Contract available to its customers. Investment Services is not compensated
under its Distribution Agreement with the Company.
LIMITS ON PREMIUMS PAID UNDER TAX-QUALIFIED RETIREMENT PLANS
- --------------------------------------------------------------------------------
SECTION 408
Premiums (other than rollover contributions) paid under a Contract used in
connection with an individual retirement annuity (IRA) that is described in
Section 408 of the Internal Revenue Code are subject to the limits on
contributions to IRA's under Section 219(b) of the Internal Revenue Code.
Under Section 219(b) of the Code, contributions (other than rollover
contributions) to an IRA are limited to the lesser of $2,000 per year or the
Owner's annual earned income. An additional $2,000 may be contributed if the
Owner has a spouse with little or no earned income for the year, provided
distinct accounts are maintained for the Owner and his or her spouse, and no
more than $2,000 is contributed to either account in any one year. The extent
to which an Owner may deduct contributions to an IRA depends on the type of
IRA (Traditional or Roth) and the modified adjusted gross income of the Owner
and his or her spouse for the year and whether either participates in another
employer-sponsored retirement plan.
Premiums under a Contract used in connection with a simplified employee
pension plan described in Section 408 of the Internal Revenue Code are
subject to limits under Section 402(h) of the Internal Revenue Code. Section
402(h) currently limits employer contributions and salary reduction
contributions (if permitted) under a simplified employee pension plan to the
lesser of (a) 15% of the compensation of the participant in the Plan, or (b)
$30,000. Salary reduction contributions, if any, are subject to additional
annual limits. Salary reduction simplified employee pensions ("SARSEPs") have
been repealed; however, SARSEPs established prior to January 1, 1997 may
continue to receive contributions.
EXPERTS
- --------------------------------------------------------------------------------
Ernst & Young LLP, independent auditors, perform certain auditing services
for the Company and the Separate Account. The financial statements of the
Company at December 31, 1999 and 1998 and for each of the three years in the
period ended December 31, 1999, are contained in this Statement of Additional
Information. The financial statements of the Separate Account as of December
31, 1999, and for the years ended December 31, 1999 and 1998, are also
included in this Statement of Additional Information. The financial
statements have been audited by Ernst & Young LLP, as set forth in their
reports thereon appearing herein and are included in reliance upon such
reports given upon the authority of such firm as experts in accounting and
auditing.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
Performance information for the Subaccounts of the Separate Account,
including the yield and total return of all Subaccounts, may appear in
advertisements, reports, and promotional literature provided to current or
prospective Owners.
Quotations of yield for the Prime Reserve Subaccount will be based on the
change in the value, exclusive of capital changes, of a hypothetical
investment in a Contract over a particular seven day period, less a
hypothetical charge reflecting deductions from the Contract during the period
(the "base period") and stated as a percentage of the investment at the start
of the base period (the "base period return"). The base period return is then
annualized by multiplying by 365/7, with the resulting yield figure carried
to at least the nearest one hundredth of one percent. Any quotations of
effective yield for the Prime Reserve subaccount assume that all dividends
received during an annual period have been reinvested. Calculation of
"effective yield" begins with the same "base period return" used in the yield
calculation, which is then annualized to reflect weekly compounding pursuant
to the following formula:
Effective Yield = [(Base Period Return + 1)^365/7] - 1
For the seven-day period ended December 31, 1999, the yield of the Prime
Reserve Subaccount was 5.03% and the effective yield of the Subaccount was
5.16%.
Quotations of yield for the Subaccounts, other than the Prime Reserve
Subaccount, will be based on all investment income per Accumulation Unit
earned during a particular 30-day period, less expenses accrued during the
period ("net investment income"), and will be computed by dividing net
investment income by the value of the Accumulation Unit on the last day of
the period, according to the following formula:
YIELD = 2[(a - b + 1)^6 - 1]
-----
cd
where a = net investment income earned during the period by the Portfolio
attributable to shares owned by the Subaccount,
b = expenses accrued for the period (net of any reimbursements),
c = the average daily number of Accumulation Units outstanding
during the period that were entitled to receive dividends, and
d = the maximum offering price per Accumulation Unit on the last
day of the period.
For the 30-day period ended December 31, 1999, the yield of the Limited-Term
Bond Subaccount was 5.85%.
Quotations of average annual total return for any Subaccount will be
expressed in terms of the average annual compounded rate of return of a
hypothetical investment in a Contract over a period of one, five and ten
years (or, if less, up to the life of the Subaccount), calculated pursuant to
the following formula: P(1 + T)^n = ERV (where P = a hypothetical initial
payment of $1,000, T = the average annual total return, n = the number of
years, and ERV = the ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the period). All total return figures reflect the
deduction of the mortality and expense risk charge. Quotations of total
return may simultaneously be shown for other periods.
Where the Portfolio in which a Subaccount invests was established prior to
inception of the Subaccount, quotations of total return may include
quotations for periods beginning prior to the Subaccount's date of inception.
Such quotations of total return are based upon the performance of the
Subaccount's corresponding Portfolio adjusted to reflect deduction of the
mortality and expense risk charge.
---------------------------------- -----------------------------------------
AVERAGE ANNUAL TOTAL RETURN AS OF
DECEMBER 31, 1999
-----------------------------------------
FROM DATE OF INCEPTION
SUBACCOUNT ONE-YEAR (APRIL 3, 1995)
---------------------------------- --------------- ------------------------
International 32.56% 15.72%
New America Growth 12.10 21.78
Mid-Cap Growth 23.08 20.85*
Equity Income 3.23 17.02
Personal Strategy Balanced 7.76 15.04
Limited-Term Bond 0.32 4.62
---------------------------------- --------------- ------------------------
*Average annual total return from Mid-Cap Growth Subaccount's date of
inception, December 31, 1996.
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Performance information for a Subaccount may be compared, in reports and
promotional literature, to: (i) the Standard & Poor's 500 Stock Index ("S&P
500"), Dow Jones Industrial Average ("DJIA"), Donoghue Money Market
Institutional Averages, the Lehman Brothers Government Corporate Index, the
Morgan Stanley Capital International's EAFE Index, or other indices that
measure performance of a pertinent group of securities so that investors may
compare a Subaccount's results with those of a group of securities widely
regarded by investors as representative of the securities markets in general
or representative of a particular type of security; (ii) other variable
annuity separate accounts, insurance product funds, or other investment
products tracked by Lipper Analytical Services, a widely used independent
research firm which ranks mutual funds and other investment companies by
overall performance, investment objectives, and assets, or tracked by The
Variable Annuity Research and Data Service ("VARDS"), an independent service
which monitors and ranks the performance of variable annuity issues by
investment objectives on an industry-wide basis or tracked by other services,
companies, publications, or persons who rank such investment companies on
overall performance or other criteria; and (iii) the Consumer Price Index
(measure for inflation) to assess the real rate of return from an investment
in the Contract. Unmanaged indices may assume the reinvestment of dividends
but generally do not reflect deductions for administrative and management
costs and expenses.
Performance information for any Subaccount reflects only the performance of a
hypothetical Contract under which an Owner's Account Value is allocated to a
Subaccount during a particular time period on which the calculations are
based. Performance information should be considered in light of the
investment objectives and policies, characteristics, and quality of the
Portfolio of the Funds in which the Subaccount invests, and the market
conditions during the given time period, and should not be considered as a
representation of what may be achieved in the future.
Reports and promotional literature may also contain other information
including (i) the ranking of any Subaccount derived from rankings of variable
annuity separate accounts, insurance product funds, or other investment
products tracked by Lipper Analytical Services, Inc., Morningstar, Inc. or by
other rating services, companies, publications, or other persons who rank
separate accounts or other investment products on overall performance or
other criteria, (ii) the effect of a tax-deferred compounding on a
Subaccount's investment returns, or returns in general, which may be
illustrated by graphs, charts, or otherwise, and which may include a
comparison, at various points in time, of the return from an investment in a
Contract (or returns in general) on a tax-deferred basis (assuming one or
more tax rates) with the return on a taxable basis, and (iii) personal or
general hypothetical illustrations of accumulation and payout period Account
Values and annuity payments. From time to time information may be provided in
advertising, sales literature and other written material regarding the
appropriateness of the various annuity options as well as their advantages
and disadvantages to contractholders and prospective investors.
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The financial statements of the Company at December 31, 1999 and 1998, and
for each of the three years in the period ended December 31, 1999 and the
financial statements of the Separate Account at December 31, 1999, and for
the years ended December 31, 1999 and 1998, are set forth herein, starting on
page 5.
The financial statements of the Company, which are included in this Statement
of Additional Information, should be considered only as bearing on the
ability of the Company to meet its obligations under the Contracts. They
should not be considered as bearing on the investment performance of the
assets held in the Separate Account.
CONTENTS
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Report of Independent Auditors 5
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Audited Financial Statements
Balance Sheet 6
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Statements of Operations and Changes in Net Assets 7
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Notes to Financial Statements 9
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<PAGE>
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
The Contract Owners of T. Rowe Price Variable Annuity
Account of First Security Benefit Life Insurance and
Annuity Company of New York and The Board of
Directors of First Security Benefit Life Insurance and
Annuity Company of New York
We have audited the accompanying individual and combined balance sheets of T.
Rowe Price Variable Annuity Account of First Security Benefit Life Insurance
and Annuity Company of New York (comprised of the individual series as
indicated therein) as of December 31, 1999, and the related statements of
operations and changes in net assets for each of the two years in the period
then ended. These financial statements are the responsibility of First
Security Benefit Life Insurance and Annuity Company of New York's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of investments
owned as of December 31, 1999, by correspondence with the transfer agent. 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 individual and combined financial position of the
individual series of T. Rowe Price Variable Annuity Account of First Security
Benefit Life Insurance and Annuity Company of New York at December 31, 1999,
and the individual and combined results of their operations and changes in
their net assets for each of the two years in the period then ended in
conformity with accounting principles generally accepted in the United
States.
Ernst & Young LLP
Kansas City, Missouri
February 4, 2000
<PAGE>
T. ROWE PRICE VARIABLE ANNUITY ACCOUNT OF
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
<TABLE>
<CAPTION>
BALANCE SHEET DECEMBER 31, 1999
(DOLLARS IN THOUSANDS -
EXCEPT PER SHARE AND UNIT VALUES)
<S> <C> <C>
ASSETS
Investments:
T. Rowe Price Portfolios:
New America Growth Portfolio - 167,990 shares at net asset value of $26.18 per share (cost, $3,597) $ 4,398
International Stock Portfolio - 133,205 shares at net asset value of $19.04 per share (cost, $1,840) 2,536
Equity Income Portfolio - 346,304 shares at net asset value of $18.73 per share (cost, $6,318)..... 6,486
Personal Strategy Balanced Portfolio - 108,900 shares at net asset value of $16.00 per share
(cost, $1,668)..................................................................................... 1,742
Limited-Term Bond Portfolio - 94,651 shares at net asset value of $4.79 per share (cost, $470)..... 453
Mid-Cap Growth Portfolio - 189,832 shares at net asset value of $17.46 per share (cost, $2,546).... 3,314
Prime Reserve Portfolio - 1,137,023 shares at net asset value of $1.00 per share (cost, $1,137).... 1,137
----------
Combined assets......................................................................................... $20,066
==========
</TABLE>
<TABLE>
<CAPTION>
NET ASSETS NUMBER OF UNITS UNIT VALUE AMOUNT
-----------------------------------------
<S> <C> <C> <C> <C>
Net assets are represented by (NOTE 3):
New America Growth Subaccount:
Accumulation units....................................... 172,664 $25.47 $ 4,398
International Stock Subaccount:
Accumulation units....................................... 126,636 19.99 $2,532
Annuity reserves......................................... 212 19.99 4 2,536
--------
Equity Income Subaccount:
Accumulation units....................................... 307,417 21.07 6,478
Annuity reserves......................................... 376 21.07 8 6,486
--------
Personal Strategy Balanced Subaccount:
Accumulation units....................................... 89,204 19.44 1,734
Annuity reserves......................................... 404 19.44 8 1,742
--------
Limited-Term Bond Subaccount:
Accumulation units....................................... 35,572 12.39 441
Annuity reserves......................................... 959 12.39 12 453
--------
Mid-Cap Growth Subaccount:
Accumulation units....................................... 187,779 17.65 3,314
Prime Reserve Subaccount:
Accumulation units....................................... 99,390 11.44 1,137
----------
Combined net assets........................................... $20,066
==========
</TABLE>
See accompanying notes.
<PAGE>
T. ROWE PRICE VARIABLE ANNUITY ACCOUNT OF
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999
(IN THOUSANDS)
NEW AMERICA INTERNATIONAL EQUITY INCOME PERSONAL STRATEGY
GROWTH SUBACCOUNT STOCK SUBACCOUNT SUBACCOUNT BALANCED SUBACCOUNT
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dividend distributions.................. $ --- $ 9 $ 127 $ 52
Expenses (NOTE 2):
Mortality and expense risk fee....... (23) (11) (38) (10)
--------------------------------------------------------------------------
Net investment income (loss)............ (23) (2) 89 42
Capital gain distributions.............. 252 29 287 102
Realized gain (loss) on investments..... 346 80 349 50
Unrealized appreciation
(depreciation) on investments........ (101) 514 (526) (64)
--------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments........... 497 623 110 88
--------------------------------------------------------------------------
Net increase in net assets
resulting from operations............ 474 621 199 130
Net assets at beginning of year......... 4,273 1,907 6,972 1,707
Variable annuity deposits 625 340 700 178
(NOTES 2 AND 3)
Terminations and withdrawals
(NOTES 2 AND 3)...................... (974) (332) (1,385) (273)
Annuity payments (NOTES 2 AND 3)........ --- --- --- ---
--------------------------------------------------------------------------
Net assets at end of year............... $4,398 $2,536 $6,486 $1,742
==========================================================================
</TABLE>
<TABLE>
<CAPTION>
LIMITED-TERM MID-CAP GROWTH PRIME RESERVE
BOND SUBACCOUNT SUBACCOUNT SUBACCOUNT COMBINED
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dividend distributions.................. $ 27 $ --- $ 53 $ 268
Expenses (NOTE 2):
Mortality and expense risk fee....... (3) (14) (6) (105)
--------------------------------------------------------------------------
Net investment income (loss)............ 24 (14) 47 163
Capital gain distributions.............. --- 33 --- 703
Realized gain (loss) on investments..... (3) 165 --- 987
Unrealized appreciation
(depreciation) on investments........ (21) 410 --- 212
--------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments........... (24) 608 --- 1,902
--------------------------------------------------------------------------
Net increase in net assets
resulting from operations............ --- 594 47 2,065
Net assets at beginning of year......... 515 2,228 1,093 18,695
Variable annuity deposits 167 926 490 3,426
(NOTES 2 AND 3)
Terminations and withdrawals
(NOTES 2 AND 3)...................... (229) (434) (493) (4,120)
Annuity payments (NOTES 2 AND 3)........ --- --- --- ---
--------------------------------------------------------------------------
Net assets at end of year............... $ 453 $3,314 $1,137 $20,066
==========================================================================
</TABLE>
See accompanying notes.
<PAGE>
T. ROWE PRICE VARIABLE ANNUITY ACCOUNT OF
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS)
NEW AMERICA INTERNATIONAL EQUITY INCOME PERSONAL STRATEGY
GROWTH SUBACCOUNT STOCK SUBACCOUNT SUBACCOUNT BALANCED SUBACCOUNT
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dividend distributions.................... $ --- $ 22 $ 134 $ 48
Expenses (NOTE 2):
Mortality and expense risk fee......... (21) (10) (36) (9)
--------------------------------------------------------------------------
Net investment income (loss).............. (21) 12 98 39
Capital gain distributions................ 85 7 213 61
Realized gain on investments.............. 200 63 379 68
Unrealized appreciation
(depreciation) on investments.......... 347 167 (167) 24
--------------------------------------------------------------------------
Net realized and unrealized
gain on investments.................... 632 237 425 153
--------------------------------------------------------------------------
Net increase in net assets
resulting from operations.............. 611 249 523 192
Net assets at beginning of year........... 3,296 1,620 6,053 1,218
Variable annuity deposits (NOTES 2 AND 3). 1,057 471 1,652 581
Terminations and withdrawals (NOTES 2
AND 3)................................. (691) (432) (1,255) (284)
Annuity payments (NOTES 2 AND 3).......... --- (1) (1) ---
--------------------------------------------------------------------------
Net assets at end of year................. $4,273 $1,907 $6,972 $1,707
==========================================================================
</TABLE>
<TABLE>
<CAPTION>
LIMITED-TERM MID-CAP GROWTH PRIME RESERVE
BOND SUBACCOUNT SUBACCOUNT SUBACCOUNT COMBINED
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dividend distributions.................... $ 27 $ --- $ 52 $ 283
Expenses (NOTE 2):
Mortality and expense risk fee......... (3) (9) (6) (94)
--------------------------------------------------------------------------
Net investment income (loss).............. 24 (9) 46 189
Capital gain distributions................ 2 32 --- 400
Realized gain on investments.............. 3 65 --- 778
Unrealized appreciation
(depreciation) on investments.......... 2 238 --- 611
--------------------------------------------------------------------------
Net realized and unrealized
gain on investments.................... 7 335 --- 1,789
--------------------------------------------------------------------------
Net increase in net assets
resulting from operations.............. 31 326 46 1,978
Net assets at beginning of year........... 500 1,077 790 14,554
Variable annuity deposits (NOTES 2 AND 3). 206 1,058 2,018 7,043
Terminations and withdrawals (NOTES 2
AND 3)................................. (220) (233) (1,761) (4,876)
Annuity payments (NOTES 2 AND 3).......... (2) --- --- (4)
--------------------------------------------------------------------------
Net assets at end of year................. $515 $2,228 $1,093 18,695
==========================================================================
</TABLE>
See accompanying notes.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
DECEMBER 31, 1999 AND 1998
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
T. Rowe Price Variable Annuity Account (the Account) is a separate account
of First Security Benefit Life Insurance and Annuity Company of New York
(FSBL). The Account is registered as a unit investment trust under the
Investment Company Act of 1940, as amended. The Account currently is divided
into seven subaccounts. Each subaccount invests exclusively in shares of a
single corresponding mutual fund or series thereof. Purchase payments
received by the Account are invested in one of the portfolios of either T.
Rowe Price Equity Series, Inc., T. Rowe Price Fixed Income Series, Inc., or
T. Rowe Price International Series, Inc., mutual funds not otherwise
available to the public. As directed by the owners, purchase payments are
invested in shares of New America Growth Portfolio - emphasis on long-term
capital growth through investments primarily in common stocks of domestic
companies, International Stock Portfolio - emphasis on long-term capital
growth through investments primarily in common stocks of established foreign
companies, Equity Income Portfolio - emphasis on substantial dividend income
and capital appreciation by investing primarily in dividend-paying common
stocks, Personal Strategy Balanced Portfolio - emphasis on both capital
appreciation and income, Limited-Term Bond Portfolio - emphasis on income
with moderate price fluctuation by investing primarily in short-and
intermediate-term investment-grade debt securities, Mid-Cap Growth Portfolio
- emphasis on long-term capital appreciation through investments primarily
in common stocks of medium-sized growth companies and Prime Reserve
Portfolio - emphasis on preservation of capital and liquidity while
generating current income by investing primarily in high-quality money
market securities.
T. Rowe Price Associates, Inc. (T. Rowe Price) serves as the investment
advisor to each portfolio except the International Stock Portfolio, which is
managed by Rowe Price-Fleming International, Inc., an affiliate of T. Rowe
Price. The investment advisors are responsible for managing the portfolios'
assets in accordance with the terms of the investment advisory contracts.
INVESTMENT VALUATION
Investments in mutual fund shares are carried in the balance sheet at market
value (net asset value of the underlying mutual fund). The first-in,
first-out cost method is used to determine gains and losses. Security
transactions are accounted for on the trade date.
The cost of investments purchased and proceeds from investments sold during
the years ended December 31 were as follows:
<TABLE>
<CAPTION>
1999 1998
------------------------------------------------------------
COST OF PROCEEDS FROM COST OF PROCEEDS FROM
PURCHASES SALES PURCHASES SALES
------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
New America Growth Portfolio................ $ 945 $1,065 $1,184 $ 754
International Stock Portfolio............... 380 345 540 483
Equity Income Portfolio..................... 1,202 1,511 2,107 1,400
Personal Strategy Balanced Portfolio........ 346 297 738 341
Limited-Term Bond Portfolio................. 196 234 279 269
Mid-Cap Growth Portfolio.................... 1,005 494 1,112 264
Prime Reserve Portfolio..................... 543 499 2,072 1,769
</TABLE>
ANNUITY RESERVES
Annuity reserves relate to contracts that have matured and are in the payout
stage. Such reserves are computed on the basis of published mortality tables
using assumed interest rates that will provide reserves as prescribed by
law. In cases where the payout option selected is life contingent, FSBL
periodically recalculates the required annuity reserves, and any resulting
adjustment is either charged or credited to FSBL and not to the Account.
REINVESTMENT OF DIVIDENDS
Dividend and capital gains distributions paid by the mutual fund to the
Account are reinvested in additional shares of each respective portfolio.
Dividend income and capital gains distributions are recorded as income on
the ex-dividend date.
FEDERAL INCOME TAXES
The operations of the Account are a part of the operations of FSBL. Under
current law, no federal income taxes are allocated by FSBL to the operations
of the Account.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to
make estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could differ
from those estimates.
2. VARIABLE ANNUITY CONTRACT CHARGES
Mortality and expense risks assumed by FSBL are compensated for by a fee
equivalent to an annual rate of 0.55% of the average daily net assets of
each account.
When applicable, an amount for state premium taxes is deducted as provided
by pertinent state law either from the purchase payments or from the amount
applied to effect an annuity at the time annuity payments commence.
3. SUMMARY OF UNIT TRANSACTIONS
<TABLE>
<CAPTION>
UNITS
---------------------------------
---------------------------------
YEAR ENDED DECEMBER 31
1999 1998
---------------------------------
(IN THOUSANDS)
<S> <C> <C>
New America Growth Subaccount:
Variable annuity deposits................................................. 26 51
Terminations, withdrawals and annuity payments............................ 42 34
International Stock Subaccount:
Variable annuity deposits................................................. 21 33
Terminations, withdrawals and annuity payments............................ 20 31
Equity Income Subaccount:
Variable annuity deposits................................................. 32 86
Terminations, withdrawals and annuity payments............................ 66 66
Personal Strategy Balanced Subaccount:
Variable annuity deposits................................................. 10 36
Terminations, withdrawals and annuity payments............................ 15 19
Limited-Term Bond Subaccount:
Variable annuity deposits................................................. 13 17
Terminations, withdrawals and annuity payments............................ 18 19
Mid-Cap Growth Subaccount:
Variable annuity deposits................................................. 61 82
Terminations, withdrawals and annuity payments............................ 29 18
Prime Reserve Subaccount:
Variable annuity deposits................................................. 44 188
Terminations, withdrawals and annuity payments............................ 44 164
</TABLE>
<PAGE>
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
CONTENTS
- --------------------------------------------------------------------------------
Report of Independent Auditors 13
----------------------------------------------------------------------------
Audited Financial Statements
Balance Sheets 14
----------------------------------------------------------------------------
Statements of Income 15
----------------------------------------------------------------------------
Statements of Changes in Stockholder's Equity 16
----------------------------------------------------------------------------
Statements of Cash Flows 17
----------------------------------------------------------------------------
Notes to Financial Statements 18
----------------------------------------------------------------------------
<PAGE>
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
The Board of Directors
First Security Benefit Life Insurance and Annuity Company of New York
We have audited the accompanying balance sheets of First Security Benefit
Life Insurance and Annuity Company of New York (the Company), an indirect
wholly-owned subsidiary of Security Benefit Mutual Holding Company, as of
December 31, 1999 and 1998, and the related statements of income, changes in
stockholder's equity and cash flows for each of the three years in the period
ended December 31, 1999. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. 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 First Security Benefit Life
Insurance and Annuity Company of New York at December 31, 1999 and 1998, and
the results of its operations and its cash flows for each of the three years
in the period ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States.
Ernst & Young LLP
Kansas City, Missouri
February 4, 2000
<PAGE>
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31
1999 1998
----------------------------------
ASSETS (IN THOUSANDS)
<S> <C> <C>
Fixed maturities available-for-sale........................................ $ 6,655 $ 6,729
Cash ...................................................................... 260 495
Accrued investment income.................................................. 96 108
Reinsurance recoverable.................................................... 182 209
Deferred policy acquisition costs.......................................... 58 62
Deferred income tax asset.................................................. 52 ---
Other assets............................................................... 108 150
Separate account assets.................................................... 20,066 18,695
==================================
$27,477 $26,448
==================================
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Policy reserves and annuity account values.............................. $ 524 $ 555
Deferred income tax liability........................................... --- 86
Other liabilities....................................................... --- 74
Separate account liabilities............................................ 20,066 18,695
----------------------------------
Total liabilities.......................................................... 20,590 19,410
Stockholder's equity:
Common capital stock, par value $10 per share;
200,000 shares authorized, issued and outstanding..................... 2,000 2,000
Additional paid-in capital.............................................. 4,600 4,600
Accumulated other comprehensive income (loss), net...................... (57) 119
Retained earnings....................................................... 344 319
----------------------------------
Total stockholder's equity................................................. 6,887 7,038
==================================
$27,477 $26,448
==================================
</TABLE>
See accompanying notes.
<PAGE>
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1999 1998 1997
--------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues:
Net investment income........................................... $407 $441 $478
Asset based fees................................................ 104 92 60
--------------------------------------------
Total revenues..................................................... 511 533 538
Benefits and expenses:
Interest credited to annuity account balances................... 15 16 20
Operating expenses.............................................. 464 418 336
Amortization of deferred policy acquisition costs............... 7 9 7
--------------------------------------------
Total benefits and expenses........................................ 486 443 363
--------------------------------------------
Income before income taxes......................................... 25 90 175
Income taxes....................................................... --- 28 63
============================================
Net income......................................................... $ 25 $ 62 $112
============================================
</TABLE>
See accompanying notes.
<PAGE>
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
ADDITIONAL ACCUMULATED OTHER
PAID-IN COMPREHENSIVE RETAINED
COMMON STOCK CAPITAL INCOME (LOSS) EARNINGS TOTAL
----------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996............. $2,000 $4,600 $116 $145 $6,861
Comprehensive income:
Net income.......................... --- --- --- 112 112
Other comprehensive income, net..... --- --- 2 --- 2
--------------
Comprehensive income.................. 114
----------------------------------------------------------------------
Balance at December 31, 1997............. 2,000 4,600 118 257 6,975
Comprehensive income:
Net income.......................... --- --- --- 62 62
Other comprehensive income, net..... --- --- 1 --- 1
--------------
Comprehensive income.................. 63
----------------------------------------------------------------------
Balance at December 31, 1998............. 2,000 4,600 119 319 7,038
Comprehensive income:
Net income.......................... --- --- --- 25 25
Other comprehensive loss, net....... --- --- (176) --- (176)
--------------
Comprehensive loss.................... (151)
----------------------------------------------------------------------
Balance at December 31, 1999............. $2,000 $4,600 $ (57) $344 $6,887
======================================================================
</TABLE>
See accompanying notes.
<PAGE>
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1999 1998 1997
-------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES (IN THOUSANDS)
Net income............................................................ $ 25 $ 62 $112
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Decrease in reinsurance recoverable................................ 27 10 21
Policy acquisition costs deferred.................................. (3) (13) (30)
Policy acquisition costs amortized................................. 7 9 7
Provision for deferred income taxes................................ (16) (19) 9
Decrease in policy reserves........................................ (27) (11) (20)
Interest credited to annuity account balances...................... 15 16 20
Increase (decrease) in other liabilities........................... (74) (27) 75
Other.............................................................. 71 (30) 17
-------------------------------------------
Net cash provided by (used in) operating activities................... 25 (3) 211
INVESTING ACTIVITIES
Sale, maturity or repayment of fixed maturities available-for-sale. 2,187 1,521 558
Acquisition of fixed maturities available-for-sale.................... (2,428) (1,495) (323)
-------------------------------------------
Net cash provided by (used in) investing activities................... (241) 26 235
FINANCING ACTIVITIES
Deposits credited to annuity account balances......................... 79 113 227
Withdrawals from annuity account balances............................. (98) (149) (240)
-------------------------------------------
Net cash used in financing activities................................. (19) (36) (13)
-------------------------------------------
Net increase (decrease) in cash....................................... (235) (13) 433
Cash at beginning of year............................................. 495 508 75
===========================================
Cash at end of year................................................... $ 260 $ 495 $508
===========================================
</TABLE>
See accompanying notes.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
DECEMBER 31, 1999
1. SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
First Security Benefit Life Insurance and Annuity Company of New York (the
Company) is licensed to transact life insurance business in New York and
Kansas and was organized to offer insurance products in New York. The
Company's business activities are concentrated in a variable annuity product
with separate account assets managed by a single investment advisor. The
Company is a wholly-owned subsidiary of Security Benefit Group, Inc., which
is an indirect wholly-owned subsidiary of Security Benefit Mutual Holding
Company (SBMHC). SBMHC was formed July 31, 1998 in conjunction with the
conversion of Security Benefit Life Insurance Company (SBL) (the Company's
previous ultimate parent) from a mutual life insurance company to a stock
life insurance company under a mutual holding company structure.
USE OF ESTIMATES
The preparation of financial statements requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
INVESTMENTS
Fixed maturities are classified as available-for-sale and are stated at fair
value with the unrealized gain or loss, net of deferred income taxes,
reported as a separate component of accumulated other comprehensive income
(loss). Premiums and discounts are recognized over the estimated lives of
the assets adjusted for prepayment activity.
DEFERRED POLICY ACQUISITION COSTS
To the extent recoverable from future policy revenues and gross profits,
commissions and other policy-issue, underwriting and marketing costs that
are primarily related to the acquisition or renewal of deferred annuity
business have been deferred.
For deferred annuity business, deferred policy acquisition costs are
amortized in proportion to the present value (discounted at the crediting
rate) of expected gross profits from investment, mortality and expense
margins. That amortization is adjusted retrospectively when estimates of
current or future gross profits to be realized from a group of products are
revised.
SEPARATE ACCOUNT
The separate account assets and liabilities reported in the accompanying
balance sheets represent funds that are separately administered for the
benefit of contractholders who bear the investment risk. The separate
account is established in conformity with New York insurance laws and is not
chargeable with liabilities that arise from any other business of the
Company. Assets held in the separate account are carried at quoted market
values or, where quoted market values are not available, at fair market
value as determined by the investment manager. The separate account assets
recorded by the Company are invested in subaccounts which are managed by T.
Rowe Price Associates, Inc. (or an affiliated company). Revenues and
expenses related to the separate account assets and liabilities, to the
extent of benefits paid or provided to the separate account contractholders,
are excluded from the amounts reported in the accompanying statements of
income. Investment income and gains or losses arising from the separate
account accrue directly to the contractholders and are, therefore, not
included in investment earnings in the accompanying statements of income.
Revenues to the Company from the separate account consist principally of
mortality and expense risk charges.
POLICY RESERVES AND ANNUITY ACCOUNT VALUES
Liabilities for future policy benefits for deferred annuity products
represent accumulated contract values, without reduction for potential
surrender charges that are amortized over the life of the policy. Interest
on accumulated contract values is credited to contracts as earned. Crediting
rates ranged from 3.75% to 5.05% during 1999, from 3.40% to 4.75% during
1998 and from 4.85% to 5.70% during 1997.
INCOME TAXES
Deferred tax assets and liabilities are determined based on differences
between the financial reporting and income tax bases of assets and
liabilities and are measured using the enacted tax rates and laws. Deferred
income tax expenses or benefits reflected in the Company's statements of
income are based on changes in deferred tax assets or liabilities from
period to period (excluding unrealized gains or losses on available-for-sale
securities).
RECOGNITION OF REVENUES
Revenues from investment-type contracts (deferred annuities) consist of
mortality and expense risk charges assessed against contractholder account
balances during the period.
FAIR VALUES OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in estimating
its fair value disclosures for financial instruments:
Cash: The carrying amounts reported in the balance sheets approximate their
fair values.
Investment securities: Fair values for fixed maturities are based on quoted
market prices, if available. For fixed maturities not actively traded, fair
values are estimated using values obtained from independent pricing services
or estimated by discounting expected future cash flows using a current
market rate applicable to the yield, credit quality and maturity of the
investments.
Investment-type contracts: Fair values for the Company's liabilities under
investment-type insurance contracts are estimated using the assumption
reinsurance method, whereby the amount of statutory profit the assuming
company would realize from the business is calculated. Those amounts are
then discounted at a rate of return commensurate with the rate presently
offered by the Company on similar contracts. The carrying amounts reported
in the balance sheets approximate their fair values.
STATUTORY FINANCIAL INFORMATION
The Company prepares statutory-basis financial statements in accordance with
accounting practices prescribed or permitted by the New York insurance
regulatory authorities. Accounting practices used to prepare statutory-basis
financial statements for regulatory filings of stock life insurance
companies differ in certain instances from generally accepted accounting
principles (GAAP). Prescribed statutory accounting practices include a
variety of publications of the National Association of Insurance
Commissioners (NAIC), as well as state laws, regulations and general
administrative rules. Permitted statutory accounting practices encompass all
accounting practices not so prescribed; such practices may differ from state
to state, may differ from company to company within a state and may change
in the future. In addition, effective January 1, 2001, the NAIC has adopted
the codification of Statutory Accounting Principles (the Codification). Once
implemented, the definitions of what comprises prescribed versus permitted
statutory accounting practices may result in changes to accounting policies
that insurance enterprises use to prepare their statutory financial
statements. The implementation date is ultimately dependent on an insurer's
state of domicile. The Company does not expect a material impact on its
statutory financial statements resulting from the implementation of
Codification. The New York Insurance Department recognizes only statutory
accounting practices for determining and reporting the financial condition
and results of operations of an insurance company and for determining its
solvency under the New York insurance laws. The following reconciles the
Company's net income and statutory surplus determined in accordance with
accounting practices prescribed or permitted by the New York Insurance
Department with net income and stockholder's equity on a GAAP basis.
<TABLE>
<CAPTION>
NET INCOME STOCKHOLDER'S EQUITY
---------------------------------------------------------
YEAR ENDED DECEMBER 31 DECEMBER 31
1999 1998 1997 1999 1998
---------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Based on statutory accounting practices..... $22 $27 $ 97 $6,827 $6,758
Investment carrying amounts................. --- --- --- (97) 201
Deferred policy acquisition costs........... (4) 4 23 58 62
Income taxes................................ 2 23 (24) 52 (86)
Investment reserve.......................... --- --- --- 6 6
Nonadmitted assets.......................... --- --- --- 41 82
Other....................................... 5 8 16 --- 15
---------------------------------------------------------
Based on GAAP............................... $25 $62 $112 $6,887 $7,038
=========================================================
</TABLE>
Under the laws of the state of New York, the Company is required to maintain
minimum capital and surplus of $6,000,000.
2. INVESTMENTS
Information as to the amortized cost, gross unrealized gains and losses, and
fair values of the Company's portfolio of fixed maturities
available-for-sale at December 31, 1999 and 1998 is as follows:
<TABLE>
<CAPTION>
1999
------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
U.S. Treasury securities......................... $3,546 $35 $ 36 $3,545
Obligations of states and political subdivisions. 412 --- 21 391
Corporate securities............................. 1,259 1 36 1,224
Mortgage-backed securities....................... 1,535 --- 40 1,495
------------------------------------------------------
Total fixed maturities........................... $6,752 $36 $133 $6,655
======================================================
</TABLE>
<TABLE>
<CAPTION>
1998
------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
U.S. Treasury securities......................... $4,442 $161 $--- $4,603
Corporate securities............................. 1,121 18 --- 1,139
Asset-backed securities.......................... 153 3 --- 156
Mortgage-backed securities....................... 812 19 --- 831
------------------------------------------------------
Total fixed maturities........................... $6,528 $201 $--- $6,729
======================================================
</TABLE>
The amortized cost and fair value of fixed maturities available-for-sale at
December 31, 1999, by contractual maturity, are shown below. Expected
maturities may differ from contractual maturities because borrowers may have
the right to call or prepay obligations with or without call or prepayment
penalties.
<TABLE>
<CAPTION>
AMORTIZED COST FAIR VALUE
-----------------------------------
(IN THOUSANDS)
<S> <C> <C>
Due in one year or less..................... $ 952 $ 949
Due after one year through five years....... 4,107 4,061
Due after five years through 10 years....... 158 150
Mortgage-backed securities.................. 1,535 1,495
===================================
$6,752 $6,655
===================================
</TABLE>
The composition of the Company's portfolio of fixed maturities by quality
rating at December 31, 1999 is as follows:
QUALITY RATING CARRYING AMOUNT %
- --------------------------------------------------------------------------------
(IN THOUSANDS)
AAA......................................... $5,808 87%
AA.......................................... 477 7%
A........................................... 370 6%
===================================
$6,655 100%
===================================
At December 31, 1999, fixed maturities available-for-sale with a carrying
amount of $525,000 were held in joint custody with the New York Insurance
Department to comply with statutory regulations.
Major categories of net investment income for the years ended December 31,
1999, 1998 and 1997 are summarized as follows:
<TABLE>
<CAPTION>
1999 1998 1997
-------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C>
Interest on fixed maturities................ $428 $452 $500
Other....................................... 20 17 7
-------------------------------------------------
Total investment income..................... 448 469 507
Less investment expenses.................... 41 28 29
-------------------------------------------------
Net investment income....................... $407 $441 $478
=================================================
</TABLE>
There were no sales of fixed maturities available-for-sale for the years
ended December 31, 1999, 1998 and 1997.
3. INCOME TAXES
The Company files a life/nonlife consolidated federal income tax return with
SBMHC. Income taxes are allocated to the Company on the basis of its filing
a separate return. The provision for income taxes includes current federal
income tax expense or benefit and deferred income tax expense or benefit due
to temporary differences between the financial reporting and income tax
bases of assets and liabilities. Such differences relate principally to
deferred policy acquisition costs.
Income tax expense (benefit) consists of the following for the years ended
December 31, 1999, 1998 and 1997:
<TABLE>
<CAPTION>
1999 1998 1997
-----------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C>
Current..................................... $ 16 $ 47 $54
Deferred.................................... (16) (19) 9
===============================================
Income tax expense.......................... $--- $ 28 $63
===============================================
</TABLE>
The provision for income taxes differs from the amount computed at the
statutory federal income tax rate due primarily to dividends-received
deduction. Income taxes paid by the Company were $34,000, $51,000 and
$89,000 during 1999, 1998 and 1997, respectively.
Net deferred income tax assets or liabilities primarily consist of the
unrealized appreciation on fixed maturities available-for-sale and deferred
policy acquisition costs.
4. RELATED-PARTY TRANSACTIONS
The Company paid $163,000 in 1999, $152,000 in 1998 and $144,000 in 1997 to
affiliates for providing management, investment and administrative services.
5. REINSURANCE
Principal reinsurance transactions for the years ended December 31, 1999,
1998 and 1997 are summarized as follows:
<TABLE>
<CAPTION>
1999 1998 1997
-----------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C>
Reinsurance ceded:
Premiums paid............................ $ 3 $3 $ 2
===============================================
Claim recoveries......................... $13 $8 $13
===============================================
</TABLE>
In the accompanying financial statements, premiums and benefits are reported
net of reinsurance ceded; policy liabilities and accruals are reported gross
of reinsurance ceded. The Company remains liable to policyholders if the
reinsurer is unable to meet its contractual obligations under the applicable
reinsurance agreement. At December 31, 1999 and 1998, the Company had
established a receivable totaling $182,000 and $209,000, respectively, for
reinsurance claims and other receivables from its reinsurer.
6. IMPACT OF YEAR 2000 (UNAUDITED)
Over the past several years, SBL has been assessing the potential impact of
the year 2000 on its systems, procedures, customers and business processes.
This assessment provided information on system components that needed to be
replaced or modified. All identified modifications to the Company's
operating systems were completed during 1998 and 1999. Subsequent to
December 31, 1999, the Company has experienced no significant impact on its
business operations resulting from the year 2000. SBL continues to assess
and test its systems to ensure continued compliance and expects no
significant future impact.
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
All required financial statements are included in Part B of this
Registration Statement.
(b) Exhibits
(1) Certified Resolution of the Board of Directors of First
Security Benefit Life Insurance and Annuity Company of New
York authorizing establishment of the Separate Account(b)
(2) Not Applicable
(3) Distribution Agreement (Amended and Restated)(b)
(4) (a) Individual Contract (Form FSB201 R11-96)(a)
(b) Unisex Individual Contract (Form FSB201U R11-96)(a)
(c) TSA Endorsement (Form FSB202 R2-97)(a)
(d) IRA Endorsement (Form FSB203 R2-97)(a)
(e) Dollar Cost Averaging Endorsement (Form FSB211 4-94)(a)
(f) Asset Rebalancing Endorsement (Form FSB212 4-94)(a)
(g) Roth IRA Endorsement (Form FSB206 11-97)
(5) Form of Application(a)
(6) (a) Declaration and Certificate of Incorporation of First
Security Benefit Life Insurance and Annuity Company of
New York(a)
(b) Bylaws of First Security Benefit Life Insurance and
Annuity Company of New York(a)
(7) Not Applicable
(8) (a) Participation Agreement(b)
(b) Master Agreement (Amended and Restated)(b)
(9) Opinion of Counsel
(10) Consent of Independent Auditors
(11) Not Applicable
(12) Not Applicable
(13) Schedule of Computation of Performance
(14) Not Applicable
(15) Powers of Attorney of Howard R. Fricke, Donald J. Schepker,
James R. Schmank, Roger K. Viola, John E. Hayes, Jr., Kris A.
Robbins, Katherine White, Stephen R. Herbert and Stephen A.
Crane
(a) Incorporated herein by reference to the Exhibits filed with the Registrant's
Post-Effective Amendment No. 5 under the Securities Act of 1933 and
Amendment No. 8 under the Investment Company Act of 1940, File No. 33-83240
(filed April 30, 1998).
(b) Incorporated herein by reference to the Exhibits filed with the Registrant's
Post-Effective Amendment No. 6 under the Securities Act of 1933 and
Amendment No. 9 under the Investment Company Act of 1940, File No. 33-83240
(filed April 30, 1999).
<PAGE>
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
NAME AND PRINCIPAL
BUSINESS ADDRESS POSITIONS AND OFFICES WITH DEPOSITOR
Howard R. Fricke* CEO and Chairman of the Board
Peggy S. Avey Assistant Secretary and Chief
70 West Red Oak Lane-4th Floor Administrative Officer
White Plains, New York 10604
Donald J. Schepker* Vice President and Director
James R. Schmank* Director, Vice President and
Treasurer
Roger K. Viola* Secretary, Vice President, General
Counsel and Director
Kris A. Robbins* President and Director
Stephen A. Crane Director
480 Park Avenue
New York, NY 10022
John E. Hayes, Jr. Director
200 Gulf Blvd.
Belleair Shore, FL 33786
Stephen R. Herbert Director
1100 Summer Street
Stamford, CT 06905
Katherine White Director
32 Avenue of the Americas
125 W. 55th Street
New York, NY 10019-5389
Leland Kling* Assistant Vice President
J. Timothy Gaule* Valuation Actuary
Ken Abitz* Internal Auditor
Brandt Brock* Product Development Actuary
*Located at 700 SW Harrison Street, Topeka, Kansas 66636.
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
The Depositor, First Security Benefit Life Insurance and Annuity
Company of New York, is wholly owned by Security Benefit Group, Inc.,
which is wholly owned by Security Benefit Life Insurance Company
(SBL). SBL is wholly owned by Security Benefit Corp. Security Benefit
Corp. is wholly owned by Security Benefit Mutual Holding Company
(SBMHC). As of December 31, 1999, no one person holds more than
approximately 0.0004% of the voting power of SBMHC. The Registrant is
a segregated asset account of First Security Benefit Life Insurance
and Annuity Company of New York.
The following chart indicates the persons controlled by or under
common control with T. Rowe Price Variable Annuity Account of First
Security Benefit Life Insurance and Annuity Company of New York or
First Security Benefit Life Insurance and Annuity Company of New York:
PERCENT OF
JURISDICTION OF VOTING SECURITIES
NAME INCORPORATION OWNED BY SBMHC
---- ------------- --------------
(DIRECTLY OR
INDIRECTLY)
Security Benefit Mutual Holding Kansas ---
Company (Holding Company)
Security Benefit Corp. Kansas 100%
(Holding Company)
Security Benefit Life Insurance Kansas 100%
Company (Stock Life Insurance Company)
Security Benefit Group, Inc. Kansas 100%
(Holding Company)
Security Management Company, LLC Kansas 100%
(Investment Adviser)
Security Distributors, Inc. Kansas 100%
(Broker/Dealer, Principal
Underwriter of Mutual Funds)
Security Benefit Academy, Inc. Kansas 100%
(Daycare Company)
Security Financial Resources, Inc. Kansas 100%
(Financial Services Company)
First Advantage Insurance Agency, Inc. Kansas 100%
(Insurance Agency)
First Security Benefit Life Insurance and Annuity Company of New York
is also the depositor of the following separate accounts: None
ITEM 27. NUMBER OF CONTRACT OWNERS
As of April 1, 2000, there were 407 owners of the Contract.
ITEM 28. INDEMNIFICATION
Article IX, Section 1(c) of the By-laws of First Security Benefit Life
Insurance and Annuity Company of New York includes the following
provision:
The Corporation may indemnify any person made, or threatened to be
made, a party to an action by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact that he or she,
his or her testator or intestate, is or was a director or officer of
the Corporation, or is or was serving at the request of the
Corporation as a director or officer of any other corporation of any
type or kind, domestic or foreign, of any partnership, joint venture,
trust, employee benefit plan or any other enterprise, against amounts
paid in settlement and reasonable expenses, including attorneys' fees,
actually and necessarily incurred by him or her in connection with the
defense or settlement of such action, or in connection with an appeal
therein, if such director or officer acted, in good faith, for a
purpose which he or she reasonably believed to be in or in the case of
service for other corporation or any partnership, joint venture,
trust, employee benefit plan or other enterprise, not opposed to the
best interests of the corporation, except that no indemnification
under this paragraph shall be made in respect of (1) a threatened
action, or a pending action which is settled or otherwise disposed of,
or (2) any claim, issue or matter as to which such person shall have
been adjudged to be liable to the Corporation, unless and only to the
extent that the court in which the action was brought, or, if no
action was brought, any court of competent jurisdiction, determines
upon application that, in view of all the circumstances of the case,
the person is fairly and reasonably entitled to indemnity for such
portion of the settlement and expenses as the court deems proper.
Insofar as indemnification for a 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 Depositor 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 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 Depositor will, unless in the opinion
of its counsel the matter has been settled by a controlling precedent,
submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such issue.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) The principal underwriter for the Registrant is T. Rowe Price
Investment Services, Inc. ("Investment Services). Investment
Services acts as the principal underwriter for eighty-eight mutual
funds, including the following investment companies: T. Rowe Price
Growth Stock Fund, Inc., T. Rowe Price New Horizons Fund, Inc., T.
Rowe Price New Era Fund, Inc., T. Rowe Price New Income Fund,
Inc., T. Rowe Price Prime Reserve Fund, Inc., T. Rowe Price
Tax-Free Income Fund, Inc., T. Rowe Price Tax-Exempt Money Fund,
Inc., T. Rowe Price International Funds, Inc., T. Rowe Price
Growth & Income Fund, Inc., T. Rowe Price Tax-Free
Short-Intermediate Fund, Inc., T. Rowe Price Short-Term Bond Fund,
Inc., T. Rowe Price High Yield Fund, Inc., T. Rowe Price Tax- Free
High Yield Fund, Inc., T. Rowe Price New America Growth Fund, T.
Rowe Price Equity Income Fund, T. Rowe Price GNMA Fund, T. Rowe
Price Capital Appreciation Fund, T. Rowe Price California Tax-Free
Income Trust, T. Rowe Price State Tax-Free Income Trust, T. Rowe
Price Science & Technology Fund, Inc., T. Rowe Price Small-Cap
Value Fund, Inc., Institutional International Funds, Inc., T. Rowe
Price U.S. Treasury Funds, Inc., T. Rowe Price Index Trust, Inc.,
T. Rowe Price Spectrum Fund, Inc., T. Rowe Price Balanced Fund,
Inc., T. Rowe Price Short-Term U.S. Government Fund, Inc., T. Rowe
Price Mid-Cap Growth Fund, Inc., T. Rowe Price Small-Cap Stock
Fund, Inc., T. Rowe Price Tax-Free Intermediate Bond Fund, Inc.,
T. Rowe Price Dividend Growth Fund, Inc., T. Rowe Price Blue Chip
Growth Fund, Inc., T. Rowe Price Summit Funds, Inc., T. Rowe Price
Summit Municipal Funds, Inc., T. Rowe Price Equity Series, Inc.,
T. Rowe Price International Series, Inc., T. Rowe Price Fixed
Income Series, Inc., T. Rowe Price Personal Strategy Funds, Inc.,
T. Rowe Price Value Fund, Inc., T. Rowe Price Capital Opportunity
Fund, Inc., T. Rowe Price Corporate Income Fund, Inc., T. Rowe
Price Health Sciences Fund, Inc., T. Rowe Price Mid-Cap Value
Fund, Inc., Institutional Equity Funds, Inc., T. Rowe Price
Financial Services Fund, Inc., T. Rowe Price Diversified Small-Cap
Growth Fund, Inc., T. Rowe Price Tax-Efficient Funds, Inc.,
Reserve Investment Funds, Inc., T. Rowe Price Media &
Telecommunications Fund, Inc., and T. Rowe Price Real Estate Fund,
Inc. Investment Services is a wholly owned subsidiary of T. Rowe
Price Associates, Inc., is registered as a broker- dealer under
the Securities Exchange Act of 1934 and is a member of the
National Association of Securities Dealers, Inc. Investment
Services does not engage in a general securities business. Since
the Contract is sold on a no-load basis, Investment Services will
not receive any commissions or other compensation for acting as
principal underwriter.
(b) The address of each of the directors and officers of Investment
Services listed below is 100 East Pratt Street, Baltimore,
Maryland 21202.
POSITIONS AND POSITIONS AND
OFFICES WITH OFFICES WITH
NAME UNDERWRITER REGISTRANT
---- ------------- ------------
James S. Riepe Chairman of the Board
and Director
Edward C. Bernard President and Director None
Henry H. Hopkins Vice President Vice
and Director President
Charles E. Vieth Vice President None
and Director
Patricia M. Archer Vice President None
Steven J. Banks Vice President None
John T. Bielski Vice President None
Darrell N. Braman Vice President None
Ronae M. Brock Vice President None
Meredith C. Callanan Vice President None
John H. Cammack Vice President None
Ann R. Campbell Vice President None
Christine M. Carolan Vice President None
Joseph A. Carrier Vice President None
Laura H. Chasney Vice President None
Renee M. Christoff Vice President None
Christopher W. Dyer Vice President None
Christine S. Fahlund Vice President None
Forrest R. Foss Vice President None
Thomas A. Gannon Vice President None
Andrea G. Griffin Vice President None
Douglas E. Harrison Vice President None
David J. Healy Vice President None
Joanne M. Healey Vice President None
Joseph P. Healy Vice President None
Walter J. Helmlinger Vice President None
Valerie King-Calloway Vice President None
Eric G. Knauss Vice President None
Sharon R. Krieger Vice President None
Steven A. Larson Vice President None
Jeanette M. LeBlanc Vice President None
Keith W. Lewis Vice President None
Gayle A. Lomax Vice President None
Sarah McCafferty Vice President None
Maurice A. Minerbi Vice President None
Mark J. Mitchell Vice President None
Nancy M. Morris Vice President None
George A. Murnaghan Vice President None
Steven E. Norwitz Vice President None
Kathleen M. O'Brien Vice President None
Barbara A. O'Connor Vice President None
Wayne D. O'Melia Vice President None
David Oestreicher Vice President None
Robert Petrow Vice President None
Pamela D. Preston Vice President None
George D. Riedel Vice President None
Lucy B. Robins Vice President None
John R. Rockwell Vice President None
Kenneth J. Rutherford Vice President None
Alexander Savich Vice President None
Kristin E. Seeberger Vice President None
Donna B. Singer Vice President None
Bruce D. Stewart Vice President None
William W. Strickland, Jr Vice President None
Jerome Tuccille Vice President None
Walter Wdowiak Vice President None
William F. Wendler II Vice President None
Jane F. White Vice President None
Thomas R. Woolley Vice President None
Barbara A. O'Connor Controller None
Theodore J. Zamerski III Assistant Vice President None
and Assistant
Controller
Matthew B. Alsted Assistant Vice President None
Kimberly B. Andersen Assistant Vice President None
Richard J. Barna Assistant Vice President None
Catherine L. Berkenkemper Assistant Vice President None
Edwin J. Brooks III Assistant Vice President None
Carl A. Cox Assistant Vice President None
Charles R. Dicken Assistant Vice President None
Cheryl L. Emory Assistant Vice President None
John A. Galateria Assistant Vice President None
Edward F. Giltenan Assistant Vice President None
Jason L. Gounaris Assistant Vice President None
Janelyn A. Healey Assistant Vice President None
Sandra J. Kiefler Assistant Vice President None
Suzanne M. Knoll Assistant Vice President None
Patricia B. Lippert Assistant Vice President Secretary
Teresa M. Loeffert Assistant Vice President None
C. Lillian Matthews Assistant Vice President None
Janice D. McCrory Assistant Vice President None
Danielle N. Nicholson Assistant Vice President None
JeanneMarie B. Patella Assistant Vice President None
Kylelane Purcell Assistant Vice President None
David A. Roscum Assistant Vice President None
Matthew A. Scher Assistant Vice President None
Carole H. Smith Assistant Vice President None
John A. Stranovsky Assistant Vice President None
Nolan L. North Assistant Treasurer None
Barbara A. Van Horn Assistant Secretary None
(c) Not applicable. Investment Services will not receive any
compensation with respect to its activities as underwriter for the
Contract since the Contract is sold on a no-load basis.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All accounts and records required to be maintained by Section 31(a) of
the 1940 Act and the rules under it are maintained by First Security
Benefit Life Insurance and Annuity Company of New York at its
administrative offices--70 West Red Oak Lane, 4th Floor, White Plains,
New York 10604.
ITEM 31. MANAGEMENT SERVICES
All management contracts are discussed in Part A or Part B.
ITEM 32. UNDERTAKINGS
(a) Registrant undertakes that it will file a post-effective amendment
to this Registration Statement as frequently as necessary to
ensure that the audited financial statements in the Registration
Statement are never more than sixteen (16) months old for so long
as payments under the Contract may be accepted.
(b) Registrant undertakes that it will provide, as part of the
Application Kit, a box for the applicant to check if he or she
wishes to receive a copy of the Statement of Additional
Information.
(c) Registrant undertakes to deliver any Statement of Additional
Information and any financial statements required to be made
available under this Form promptly upon written or oral request to
First Security Benefit Life Insurance and Annuity Company of New
York at the address or phone number listed in the prospectus.
(d) Subject to the terms and conditions of Section 15(d) of the
Securities Exchange Act of 1934, the Registrant hereby undertakes
to file with the Securities and Exchange Commission such
supplementary and periodic information, documents, and reports as
may be prescribed by any rule or regulation of the Commission
heretofore or hereafter duly adopted pursuant to authority
conferred in that Section.
(e) Registrant represents that the fees and charges deducted under the
Contract, in the aggregate, are reasonable in relation to the
services rendered, the expenses expected to be incurred, and the
risks assumed by the Registrant.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, the Registrant has caused this
Registration Statement to be signed on its behalf, in the City of Topeka, and
State of Kansas, on this 24th day of April, 2000.
SIGNATURES AND TITLES
Howard R. Fricke SECURITY BENEFIT LIFE INSURANCE
Chairman of the Board, AND ANNUITY COPMPANY OF NEW YORK
Chief Executive Officer (The Depositor)
and Director
By: ROGER K. VIOLA
Donald J. Schepker -------------------------------------------
Vice President and Director Roger K. Viola, Senior Vice President,
and Director as Attorney In-Fact for the
Officers and Directors Whose Names Appear
James R. Schmank Opposite
Vice President, Director
and Treasurer
T. ROWE PRICE VARIABLE ANNUITY ACCOUNT OF
FIRST SECURITY BENEFIT LIFE INSURANCE
Roger K. Viola ANNUITY COMPANY OF NEW YORK
Secretary, Vice President, (The Registrant)
General Counsel and Director
By: SECURITY BENEFIT LIFE INSURANCE COMPANY
John E. Hayes, Jr. (The Depositor)
Director
By: HOWARD R. FRICKE
Kris A. Robbins -------------------------------------------
President and Director Howard R. Fricke, Chairman of the Board and
Chief Executive Officer
Stephen R. Herbert
Director By: JAMES R. SCHMANK
-------------------------------------------
James R. Schmank, Vice President and
Katherine White Treasurer
Director (Principal Financial Officer)
Stephen A. Crane (ATTEST): ROGER K. VIOLA
Director --------------------------------------
Roger K. Viola, Secretary, Vice
President and Director
Date: April 24, 2000
<PAGE>
EXHIBIT INDEX
(1) None
(2) None
(3) None
(4) (g) Roth IRA Endorsement (Form FSB 206 11-97)
(5) None
(6) None
(7) None
(8) (a) None
(b) None
(9) Opinion of Counsel
(10) Consent of Independent Auditors
(11) None
(12) None
(13) Schedule of Computation of Performance
(14) None
(15) Powers of Attorney of Howard R. Fricke, Donald J. Schepker, James R.
Schmank, Roger K. Viola, John E. Hayes, Jr., Kris A. Robbins, Katherine
White, Stephen R. Herbert, and Stephen A. Crane.
<PAGE>
ENDORSEMENT
- --------------------------------------------------------------------------------
ROTH IRA PROVISIONS
- --------------------------------------------------------------------------------
ROTH IRA ENDORSEMENT
This Contract is established as a Roth IRA as defined in Section 408A of the
Internal Revenue Code of 1986, as amended (the "Code") or any successor
provision, pursuant to the Owner's request in the Application. Accordingly, this
endorsement is attached to and made part of the Contract as of its Issue Date
or, if later, the date shown below. Notwithstanding any other provisions of the
Contract to the contrary, the following provisions shall apply.
RESTRICTIONS ON ROTH IRA
To ensure treatment as a Roth IRA, this Contract will be subject to the
requirements of Code Section 408A, which are briefly summarized below:
1. The Contract is established for the exclusive benefit of the Owner or his
or her beneficiaries. The Owner shall be the Annuitant.
2. The Contract shall be nontransferable and the entire interest of the
Owner in the Contract is nonforfeitable.
3. Notwithstanding any provision of the Contract to the contrary, on the
death of the Owner the distribution of the Owner's interest in the
Contract shall be made in accordance with the distribution requirements
of Section 401(a)(9)(B) of the Code and the regulations thereunder, all
of which are herein incorporated by reference, as follows:
a. If the Owner dies on or after distributions have begun to the Owner,
the entire remaining interest must be distributed at least as rapidly
as under the method of payment in effect at the Owner's death.
b. If the Owner dies before distributions have begun to the Owner, the
entire remaining interest must be distributed as elected by the Owner
or, if the Owner has not so elected, as elected by the Designated
Beneficiary or Beneficiaries as follows:
1) by December 31 of the year containing the fifth anniversary of the
Owner's death, or
2) in equal or substantially equal payments over the life or life
expectancy of the Designated Beneficiary or Beneficiaries starting
by December 31 of the year following the year of the Owner's
death. If, however, the Designated Beneficiary is the Owner's
surviving spouse, then this Distribution is not required to begin
until December 31 of the later of: (1) the calendar year
immediately following the calendar year in which the Owner died;
or (2) the calendar year in which the Owner would have attained
age 70 1/2.
4. Any refund of premiums (other than those attributable to excess
contributions) will be applied before the close of the calendar year
following the year of the refund toward the payment of future premiums or
the purchase of additional benefits.
5. The annual premium shall not exceed the lesser of $2,000 or 100 percent
of compensation ($4,000 or 100 percent of compensation for two Roth IRAs
owned by a married couple, however, no more than $2,000 can be
contributed to either spouse's Roth IRA). The maximum annual premium
shall be phased-out for single Owners with adjusted gross income between
$95,000 and $110,000, and for married Owners with adjusted gross income
between $150,000 and $160,000 in accordance with Section 408A(c)(3).
6. Other than qualified rollover contributions, as defined in Section
408A(e) of the Code, no rollover contributions may be made to the
Contract. Qualified rollover contributions are excluded from the annual
premium limit set forth in Section 5.
7. Notwithstanding any Contract provision to the contrary, no amount may be
borrowed under the Contract and no portion may be used as security for a
loan.
8. The portion of any Annuity Payments made from the Contract representing
earnings will be subject to a 10% penalty tax under Section 72(t) of the
Code if such amounts are paid before the Annuitant attains the age of
59-1/2, unless the payments meet one of the exceptions to the penalty tax
for distributions from individual retirement plans under Section 72(t) of
the Code.
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
ROGER K. VIOLA HOWARD R. FRICKE
Secretary President
_____________________________
Endorsement Effective Date
(If Other Than Issue Date)
FSB206 (11-97) SP020611
<PAGE>
[LOGO]
FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK
- --------------------------------------------------------------------------------
70 WEST RED OAK LANE, FOURTH FLOOR
WHITE PLAINS, NEW YORK 10604
April 28, 2000
First Security Benefit Life Insurance
and Annuity Company of New York
70 West Red Oak Lane, 4th Floor
White Plains, NY 10604
Dear Sir/Madam:
This letter is with reference to the Registration Statement of the T. Rowe Price
Variable Annuity Account of which First Security Benefit Life Insurance and
Annuity Company of New York (hereinafter "FSBL") is the Depositor. Said
Registration Statement is being filed with the Securities and Exchange
Commission for the purpose of registering the variable annuity contracts issued
by FSBL and the interests of T. Rowe Price Variable Annuity Account of First
Security Benefit Life Insurance and Annuity Company of New York under such
variable annuity contracts which will be sold pursuant to an indefinite
registration.
I have examined the Declaration and Certificate of Incorporation and bylaws of
FSBL, minutes of the meetings of its Board of Directors and other records, and
pertinent provisions of the New York insurance laws, together with applicable
certificates of public officials and other documents which I have deemed
relevant. Based on the foregoing, it is my opinion that:
1. FSBL is duly organized and validly existing as a stock life insurance
company under the laws of New York.
2. T. Rowe Price Variable Annuity Account of FSBL has been validly created as a
Separate Account in accordance with the pertinent provisions of the
insurance laws of New York.
3. FSBL has the power, and has validly and legally exercised it, to create and
issue the variable annuity contracts which are administered within and by
means of T. Rowe Price Variable Annuity Account of FSBL.
4. The amount of variable annuity contracts to be sold pursuant to the
indefinite registration, when issued, will represent binding obligations of
FSBL in accordance with their terms providing said contracts were issued for
the considerations set forth therein and evidenced by appropriate policies
and certificates.
I hereby consent to the inclusion in the Registration Statement of my foregoing
opinion.
Respectfully submitted,
ROGER K. VIOLA
Roger K. Viola, Esq.
Vice President
First Security Benefit Life Insurance and
Annuity Company of New York
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Experts" and to the
use of our reports dated February 4, 2000, with respect to the financial
statements of First Security Benefit Life Insurance and Annuity Company of New
York and the financial statements of T. Rowe Price Variable Annuity Account of
First Security Benefit Life Insurance and Annuity Company of New York included
in Post-Effective Amendment No. 7 to the Registration Statement under the
Securities Act of 1933 (Registration No. 33-83240) and Post-Effective Amendment
No. 10 to the Registration Statement under the Investment Company Act of 1940
(Registration No. 811-8726) on Form N-4 and the related Statement of Additional
Information accompanying the Prospectus of The T. Rowe Price No-Load Variable
Annuity.
Ernst & Young LLP
Kansas City, Missouri
April 26, 2000
<PAGE>
Item 24.b Exhibit (13)
EQUITY INCOME
AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1999
1 Year
1000 (1+T)^1 = 1,032.30
((1+T)^1)^1 = (1.0323)^1
1+T = 1.0323
T = .0323
4.75 Years (From Date of Inception 4/3/95)
1000 (1+T)^4.75 = 2,109.77
((1+T)^4.75)^4.75 = (2.10977)^4.75
1+T = 1.1702
T = .1702
INTERNATIONAL STOCK
AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1999
1 Year
1000 (1+T)^1 = 1,325.60
((1+T)^1)^1 = (1.3256)^1
1+T = 1.3256
T = .3256
4.75 Years (From Date of Inception 4/3/95)
1000 (1+T)^4.75 = 2,000.74
((1+T)^4.75)^4.75 = (2.00074)^4.75
1+T = 1.1572
T = .1572
<PAGE>
LIMITED-TERM BOND
AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1999
1 Year
1000 (1+T)^1 = 1,003.20
((1+T)^1)^1 = (1.0032)^1
1+T = 1.0032
T = .0032
4.75 Years (From Date of Inception 4/3/95)
1000 (1+T)^4.75 = 1,239.28
((1+T)^4.75)^4.75 = (1.23928)^4.75
1+T = 1.0462
T = .0462
NEW AMERICA GROWTH
AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1999
1 Year
1000 (1+T)^1 = 1,121
((1+T)^1)^1 = (1.121)^1
1+T = 1.121
T = .121
4.75 Years (From Date of Inception 4/3/95)
1000 (1+T)^4.75 = 2,549.68
((1+T)^4.75)^4.75 = (2.54968)^4.75
1+T = 1.21780
T = .2178
<PAGE>
PERSONAL STRATEGY BALANCED
AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1999
1 Year
1000 (1+T)^1 = 1,077.6
((1+T)^1)^1 = (1.0776)^1
1+T = 1.0776
T = .0776
4.75 Years (From Date of Inception 4/3/95)
1000 (1+T)^4.75 = 1,945.50
((1+T)^4.75)^4.75 = (1.9455)^4.75
1+T = 1.15040
T = .1504
MID-CAP GROWTH
AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1999
1 Year
1000 (1+T)^1 = 1,230.80
((1+T)^1)^1 = (1.2308)^1
1+T = 1.2308
T = .2308
3 Years (From Date of Inception 12/31/96)
1000 (1+T)^3 = 1,764.98
((1+T)^3)^3 = (1.76498)^3
1+T = 1.2085
T = .2085
<PAGE>
PRIME RESERVE
AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1999
1 Year
1000 (1+T)^1 = 1,042.80
((1+T)^1)^1 = (1.0428)^1
1+T = 1.0428
T = .0428
3 Years (From Date of Inception 12/31/96)
1000 (1+T)^3 = 1,144.12
((1+T)^3)^3 = (1.14412)^3
1+T = 1.0459
T = .0459
PRIME RESERVE
Money Market Yield as of December 31, 1999
CALCULATION OF CHANGE IN UNIT VALUE:
- -----------------------------------
( Unrounded Unrounded )
( Price Price )
( 12-31-99 - 12-23-99 ) = 11.441355930923 - 11.430330195142 = .00096460344
------------------------- ---------------------------------
( Unrounded Price ) 11.430330195142
( 12-23-99 )
ANNUALIZED YIELD:
- ----------------
365/7(.00096460344) = 5.03%
EFFECTIVE YIELD:
- ---------------
(1 + .00096460344)^365/7 - 1 = 5.16%
<PAGE>
LIMITED - TERM BOND
30 DAY YIELD CALCULATION AS OF DECEMBER 31, 1999
[[ (2,083.35) ]6]
2[[ ------------------------- + 1] ] - 1
[[ (34,913.0385 x 12.39) ] ]
[( (2,083.35) )6]
2[(-------------------------- + 1) ] - 1
[( (432,572.55) ) ]
2 [((.00481619 + 1)^6) - 1]
2 [((1.00481619)^6) - 1]
2 [(1.0292473) - 1]
2 (.0292)
= .0585 or 5.85% December 31, 1999
<PAGE>
POWER OF ATTORNEY
STATE OF KANSAS )
) ss.
COUNTY OF SHAWNEE )
KNOW ALL MEN BY THESE PRESENTS:
THAT I, Howard R. Fricke, being a Director of FIRST SECURITY BENEFIT LIFE
INSURANCE AND ANNUITY COMPANY OF NEW YORK, by these presents do make, constitute
and appoint, James R. Schmank and Roger K. Viola, and each of them, my true and
lawful attorneys, each with full power and authority for me and in my name and
behalf to sign, as my agent, any Registration Statement applicable to separate
accounts of the Company, as well as any pre-effective amendment, post-effective
amendment and any application for exemptive relief (including amendments to such
applications) for such separate accounts (now or hereafter established by the
Company) and filed pursuant to the Investment Company Act of 1940 or the
Securities Act of 1933, each as amended, any instrument or document filed as
part thereof, or in connection therewith or in any way related thereto, with
like effect as though said Registration Statement or other document had been
signed and filed personally by me in the capacity aforesaid.
IN WITNESS WHEREOF, I have hereunto set my hand this 3rd day of April, 2000.
HOWARD R. FRICKE
------------------------
Howard R. Fricke
SUBSCRIBED AND SWORN to before me this 3rd day of April, 2000.
ANNETTE E. CRIPPS
------------------------
Notary Public
My Commission Expires:
7/8/2001
- ---------------------
<PAGE>
POWER OF ATTORNEY
STATE OF KANSAS )
) ss.
COUNTY OF SHAWNEE )
KNOW ALL MEN BY THESE PRESENTS:
THAT I, Kris A. Robbins, being a Director of FIRST SECURITY BENEFIT LIFE
INSURANCE AND ANNUITY COMPANY OF NEW YORK, by these presents do make, constitute
and appoint, Howard R. Fricke, James R. Schmank and Roger K. Viola, and each of
them, my true and lawful attorneys, each with full power and authority for me
and in my name and behalf to sign, as my agent, any Registration Statement
applicable to separate accounts of the Company, as well as any pre-effective
amendment, post-effective amendment and any application for exemptive relief
(including amendments to such applications) for such separate accounts (now or
hereafter established by the Company) and filed pursuant to the Investment
Company Act of 1940 or the Securities Act of 1933, each as amended, any
instrument or document filed as part thereof, or in connection therewith or in
any way related thereto, with like effect as though said Registration Statement
or other document had been signed and filed personally by me in the capacity
aforesaid.
IN WITNESS WHEREOF, I have hereunto set my hand this 3rd day of April, 2000.
KRIS A. ROBBINS
----------------------
Kris A. Robbins
SUBSCRIBED AND SWORN to before me this 3rd day of April, 2000.
ANNETTE E. CRIPPS
---------------------
Notary Public
My Commission Expires:
July 8, 2001
- ----------------------
<PAGE>
POWER OF ATTORNEY
STATE OF KANSAS )
) ss.
COUNTY OF SHAWNEE )
KNOW ALL MEN BY THESE PRESENTS:
THAT I, Roger K. Viola, being a Director of FIRST SECURITY BENEFIT LIFE
INSURANCE AND ANNUITY COMPANY OF NEW YORK, by these presents do make, constitute
and appoint, Howard R. Fricke and James R. Schmank, and each of them, my true
and lawful attorneys, each with full power and authority for me and in my name
and behalf to sign, as my agent, any Registration Statement applicable to
separate accounts of the Company, as well as any pre-effective amendment,
post-effective amendment and any application for exemptive relief (including
amendments to such applications) for such separate accounts (now or hereafter
established by the Company) and filed pursuant to the Investment Company Act of
1940 or the Securities Act of 1933, each as amended, any instrument or document
filed as part thereof, or in connection therewith or in any way related thereto,
with like effect as though said Registration Statement or other document had
been signed and filed personally by me in the capacity aforesaid.
IN WITNESS WHEREOF, I have hereunto set my hand this 3rd day of April, 2000.
ROGER K. VIOLA
----------------------
Roger K. Viola
SUBSCRIBED AND SWORN to before me this 3rd day of April, 2000.
ANNETTE E. CRIPPS
----------------------
Notary Public
My Commission Expires:
7/8/2001
- ---------------------
<PAGE>
POWER OF ATTORNEY
STATE OF KANSAS )
) ss.
COUNTY OF SHAWNEE )
KNOW ALL MEN BY THESE PRESENTS:
THAT I, James R. Schmank, being a Director of FIRST SECURITY BENEFIT LIFE
INSURANCE AND ANNUITY COMPANY OF NEW YORK, by these presents do make, constitute
and appoint, Howard R. Fricke, James R. Schmank and Roger K. Viola, and each of
them, my true and lawful attorneys, each with full power and authority for me
and in my name and behalf to sign, as my agent, any Registration Statement
applicable to separate accounts of the Company, as well as any pre-effective
amendment, post-effective amendment and any application for exemptive relief
(including amendments to such applications) for such separate accounts (now or
hereafter established by the Company) and filed pursuant to the Investment
Company Act of 1940 or the Securities Act of 1933, each as amended, any
instrument or document filed as part thereof, or in connection therewith or in
any way related thereto, with like effect as though said Registration Statement
or other document had been signed and filed personally by me in the capacity
aforesaid.
IN WITNESS WHEREOF, I have hereunto set my hand this 3rd day of April, 2000.
JAMES R. SCHMANK
----------------------
James R. Schmank
SUBSCRIBED AND SWORN to before me this 3rd day of April, 2000.
ANNETTE E. CRIPPS
----------------------
Notary Public
My Commission Expires:
7/8/2001
- ---------------------
<PAGE>
POWER OF ATTORNEY
STATE OF KANSAS )
) ss.
COUNTY OF SHAWNEE )
KNOW ALL MEN BY THESE PRESENTS:
THAT I, Donald J. Schepker, being a Director of FIRST SECURITY BENEFIT LIFE
INSURANCE AND ANNUITY COMPANY OF NEW YORK, by these presents do make, constitute
and appoint, Howard R. Fricke, James R. Schmank and Roger K. Viola, and each of
them, my true and lawful attorneys, each with full power and authority for me
and in my name and behalf to sign, as my agent, any Registration Statement
applicable to separate accounts of the Company, as well as any pre-effective
amendment, post-effective amendment and any application for exemptive relief
(including amendments to such applications) for such separate accounts (now or
hereafter established by the Company) and filed pursuant to the Investment
Company Act of 1940 or the Securities Act of 1933, each as amended, any
instrument or document filed as part thereof, or in connection therewith or in
any way related thereto, with like effect as though said Registration Statement
or other document had been signed and filed personally by me in the capacity
aforesaid.
IN WITNESS WHEREOF, I have hereunto set my hand this 3rd day of April, 2000.
DONALD J. SCHEPKER
-----------------------
Donald J. Schepker
SUBSCRIBED AND SWORN to before me this 3rd day of April, 2000.
ANNETTE E. CRIPPS
-----------------------
Notary Public
My Commission Expires:
7/8/2001
- ---------------------
<PAGE>
POWER OF ATTORNEY
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
KNOW ALL MEN BY THESE PRESENTS:
THAT I, Stephen A. Crane, being a Director of FIRST SECURITY BENEFIT LIFE
INSURANCE AND ANNUITY COMPANY OF NEW YORK, by these presents do make, constitute
and appoint, Howard R. Fricke, James R. Schmank and Roger K. Viola, and each of
them, my true and lawful attorneys, each with full power and authority for me
and in my name and behalf to sign, as my agent, any Registration Statement
applicable to separate accounts of the Company, as well as any pre-effective
amendment, post-effective amendment and any application for exemptive relief
(including amendments to such applications) for such separate accounts (now or
hereafter established by the Company) and filed pursuant to the Investment
Company Act of 1940 or the Securities Act of 1933, each as amended, any
instrument or document filed as part thereof, or in connection therewith or in
any way related thereto, with like effect as though said Registration Statement
or other document had been signed and filed personally by me in the capacity
aforesaid.
IN WITNESS WHEREOF, I have hereunto set my hand this 20th day of April, 2000.
STEPHEN A. CRANE
-----------------------
Stephen A. Crane
SUBSCRIBED AND SWORN to before me this 20th day of April, 2000.
MINERVA GORDIAN
-----------------------
Notary Public
My Commission Expires:
May 31, 2000
- ---------------------
<PAGE>
POWER OF ATTORNEY
STATE OF CONNETICUT )
) ss.
COUNTY OF FAIRFIELD )
KNOW ALL MEN BY THESE PRESENTS:
THAT I, Stephen R. Herbert, being a Director of FIRST SECURITY BENEFIT LIFE
INSURANCE AND ANNUITY COMPANY OF NEW YORK, by these presents do make, constitute
and appoint, Howard R. Fricke, James R. Schmank and Roger K. Viola, and each of
them, my true and lawful attorneys, each with full power and authority for me
and in my name and behalf to sign, as my agent, any Registration Statement
applicable to separate accounts of the Company, as well as any pre-effective
amendment, post-effective amendment and any application for exemptive relief
(including amendments to such applications) for such separate accounts (now or
hereafter established by the Company) and filed pursuant to the Investment
Company Act of 1940 or the Securities Act of 1933, each as amended, any
instrument or document filed as part thereof, or in connection therewith or in
any way related thereto, with like effect as though said Registration Statement
or other document had been signed and filed personally by me in the capacity
aforesaid.
IN WITNESS WHEREOF, I have hereunto set my hand this 2nd day of April, 2000.
STEPHEN R. HERBERT
----------------------
Stephen R. Herbert
SUBSCRIBED AND SWORN to before me this 2nd day of April, 2000.
ELISA SCARAZZINI
----------------------
Notary Public
My Commission Expires:
5/31/02
- ---------------------
<PAGE>
POWER OF ATTORNEY
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
KNOW ALL MEN BY THESE PRESENTS:
THAT I, Katherine White, being a Director of FIRST SECURITY BENEFIT LIFE
INSURANCE AND ANNUITY COMPANY OF NEW YORK, by these presents do make, constitute
and appoint, Howard R. Fricke, James R. Schmank and Roger K. Viola, and each of
them, my true and lawful attorneys, each with full power and authority for me
and in my name and behalf to sign, as my agent, any Registration Statement
applicable to separate accounts of the Company, as well as any pre-effective
amendment, post-effective amendment and any application for exemptive relief
(including amendments to such applications) for such separate accounts (now or
hereafter established by the Company) and filed pursuant to the Investment
Company Act of 1940 or the Securities Act of 1933, each as amended, any
instrument or document filed as part thereof, or in connection therewith or in
any way related thereto, with like effect as though said Registration Statement
or other document had been signed and filed personally by me in the capacity
aforesaid.
IN WITNESS WHEREOF, I have hereunto set my hand this 4th day of April, 2000.
KATHERINE WHITE
----------------------
Katherine White
SUBSCRIBED AND SWORN to before me this 4th day of April, 2000.
PATRICIA DAWSON
----------------------
Notary Public
My Commission Expires:
June 30, 2000
- ---------------------
<PAGE>
POWER OF ATTORNEY
STATE OF FLORIDA )
) ss.
COUNTY OF PINELLAS )
KNOW ALL MEN BY THESE PRESENTS:
THAT I, John E. Hayes, Jr., being a Director of FIRST SECURITY BENEFIT LIFE
INSURANCE AND ANNUITY COMPANY OF NEW YORK, by these presents do make, constitute
and appoint, Howard R. Fricke, James R. Schmank and Roger K. Viola, and each of
them, my true and lawful attorneys, each with full power and authority for me
and in my name and behalf to sign, as my agent, any Registration Statement
applicable to separate accounts of the Company, as well as any pre-effective
amendment, post-effective amendment and any application for exemptive relief
(including amendments to such applications) for such separate accounts (now or
hereafter established by the Company) and filed pursuant to the Investment
Company Act of 1940 or the Securities Act of 1933, each as amended, any
instrument or document filed as part thereof, or in connection therewith or in
any way related thereto, with like effect as though said Registration Statement
or other document had been signed and filed personally by me in the capacity
aforesaid.
IN WITNESS WHEREOF, I have hereunto set my hand this 4th day of April, 2000.
JOHN E. HAYES, JR.
--------------------------
John E. Hayes, Jr.
SUBSCRIBED AND SWORN to before me this 4th day of April, 2000.
DEBORAH K. WEST
--------------------------
Notary Public
My Commission Expires:
July 6, 2002
- ---------------------
