<PAGE> 1
Registration Nos: 33-83354
811-8732
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 9
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 12
FIRST CITICORP LIFE VARIABLE ANNUITY SEPARATE ACCOUNT
(Exact Name of Registrant)
FIRST CITICORP LIFE INSURANCE COMPANY
(Name of Depositor)
333 West 34th Street, 10th Floor, New York, New York 10001
----------------------------------------------------------
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number: (212) 830-4901
Catherine S. Mulholland, Esq.
General Counsel
First Citicorp Life Insurance Company
800 Silver Lake Boulevard
Dover, Delaware 19904
(Name and Address of Agent for Service of Process)
Copy to:
Stephen E. Roth, Esquire
Sutherland Asbill & Brennan LLP
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2415
Approximate Date of Proposed Public Offering:
It is proposed that this filling will become effective:
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on May 1, 2000 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a) of Rule 485
[ ] on pursuant to paragraph (a)(i) pf Rule 485
---------------------------
If appropriate, check the following box:
[ ] this Post-Effective Amendment designates a new effective date for a
previously filed Post-Effective Amendment.
<PAGE> 2
PART A
Information Required in a Prospectus
<PAGE> 3
PART A
PROSPECTUS
- 1 -
<PAGE> 4
SUPPLEMENT DATED MAY 1, 2000 TO PROSPECTUS DATED MAY 1, 2000
First Citicorp Life Variable Annuity Separate Account
First Citicorp Life Insurance Company
Flexible Premium Deferred Variable Annuity Contract
For all Contracts applied for prior to February 1, 1999, the prospectus dated
May 1, 2000 is amended to reflect mortality and expense risk charges equal, on
an annual basis, to 0.84% of the average daily net assets of the Contract
invested in the investment portfolios. We may change this charge in the future
but it will never be greater than 1.25%.
* * * * *
The first paragraph in the section captioned "5. Charges and Deductions" (page
4) is revised as follows:
The Contract has insurance features and investment features and there are costs
related to each. Each year, we deduct a $30 contract fee from your Contract.
This charge is waived if the value of your Contract is at least $25,000 or if
you have added at least $2,500 ($2,000 for Qualified Contracts) in additional
purchase payments to your Contract during the last 12 months. We also deduct for
insurance charges a total of 0.99% of the average daily value of your contract
allocated to the subaccounts. We may change this charge in the future but it
will never be greater than 1.40%.
The Table of "Separate Account Annual Expenses" in the section captioned "FEE
TABLES" (page 5) is revised as follows:
<TABLE>
<S> <C>
SEPARATE ACCOUNT ANNUAL EXPENSES (as a percentage
of average net assets)
Mortality and Expense Risk Charge 0.84%
Administration Charge 0.15%
----
Total Separate Account Expenses 0.99%
</TABLE>
The paragraph titled "Mortality and Expense Risk Charge" in the section
captioned "SECTION 5. CHARGES AND DEDUCTIONS" (page 12) is replaced with the
following:
This charge is for all of the insurance benefits included under the
Contract such as the guaranteed minimum interest rate used to calculate
Fixed Annuity Income Payments, the guarantee that annuity income payments
will continue for the life of the Annuitant, the guaranteed death benefits
and for the risk that the current charges will be insufficient to cover the
cost of administering the Contract in the future. If the charges under the
Contract are not sufficient, then we will bear the loss. Currently, the
Mortality and Expense Risk Charge is equal, on an annual basis, to 0.84% of
the average daily net assets of the Contract invested in the investment
portfolios. We may change this charge in the future but it will never be
greater than 1.25%.
The section captioned "Examples" (page 6) is replaced with the following:
- 1 -
<PAGE> 5
EXAMPLES: You will pay the following expenses on a $1,000 investment, assuming a
5% annual return on assets:1 If you surrender or annuitize the Contract
under an annuity income option not providing a life annuity or a life
annuity with a period certain of at least five years at the end of the
applicable time period.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
---------------------------------------------------------
<S> <C> <C> <C> <C>
CitiSelect VIP Folio 200 Conservative $ 82 $ 105 $ 130 $ 223
CitiSelect VIP Folio 300 Balanced $ 82 $ 105 $ 130 $ 223
CitiSelect VIP Folio 400 Growth $ 85 $ 114 $ 145 $ 253
CitiSelect VIP Folio 500 Growth Plus $ 85 $ 114 $ 145 $ 253
CitiFunds Small Cap Growth VIP Portfolio $ 82 $ 104 $ 128 $ 218
Fidelity VIP Growth Portfolio $ 80 $ 96 $ 115 $ 192
Fidelity VIP High Income Portfolio $ 80 $ 97 $ 117 $ 196
Fidelity VIP Equity-Income Portfolio $ 79 $ 93 $ 111 $ 182
Fidelity VIP Overseas Portfolio $ 82 $ 103 $ 126 $ 215
Fidelity VIP II Contrafund Portfolio $ 80 $ 96 $ 115 $ 192
Fidelity VIP II Index 500 Portfolio $ 76 $ 85 $ 96 $ 152
AIM V.I. Capital Appreciation Fund $ 80 $ 99 $ 119 $ 200
AIM V.I. Government Securities Fund $ 82 $ 104 $ 128 $ 218
AIM V.I. Growth Fund $ 80 $ 99 $ 119 $ 200
AIM V.I. Growth and Income Fund $ 81 $ 100 $ 121 $ 204
AIM V.I. International Equity Fund $ 83 $ 106 $ 131 $ 225
AIM V.I. Value Fund $ 81 $ 99 $ 121 $ 203
MFS Global Governments Series $ 82 $ 104 $ 128 $ 219
MFS Money Market Series $ 79 $ 95 $ 113 $ 187
MFS Bond Series $ 81 $ 99 $ 121 $ 203
MFS Total Return Series $ 82 $ 104 $ 128 $ 218
MFS Research Series $ 82 $ 102 $ 126 $ 214
MFS Emerging Growth Series $ 81 $ 102 $ 125 $ 212
</TABLE>
If you don't surrender the Contract or you annuitize it under an
annuity income option providing either a life annuity or a life
annuity with a period certain of at least five years at the end of
the applicable time period.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------------------------------------------------------
<S> <C> <C> <C> <C>
CitiSelect VIP Folio 200 Conservative $ 19 $ 60 $ 103 $ 223
CitiSelect VIP Folio 300 Balanced $ 19 $ 60 $ 103 $ 223
CitiSelect VIP Folio 400 Growth $ 22 $ 69 $ 118 $ 253
CitiSelect VIP Folio 500 Growth Plus $ 22 $ 69 $ 118 $ 253
CitiFunds Small Cap Growth VIP Portfolio $ 19 $ 59 $ 101 $ 218
Fidelity VIP Growth Portfolio $ 17 $ 51 $ 88 $ 192
Fidelity VIP High Income Portfolio $ 17 $ 52 $ 90 $ 196
Fidelity VIP Equity-Income Portfolio $ 16 $ 48 $ 84 $ 182
Fidelity VIP Overseas Portfolio $ 19 $ 58 $ 99 $ 215
Fidelity VIP II Contrafund Portfolio $ 17 $ 51 $ 88 $ 192
Fidelity VIP II Index 500 Portfolio $ 13 $ 40 $ 69 $ 152
AIM V.I. Capital Appreciation Fund $ 17 $ 54 $ 92 $ 200
AIM V.I. Government Securities Fund $ 19 $ 59 $ 101 $ 218
AIM V.I. Growth Fund $ 16 $ 54 $ 92 $ 200
AIM V.I. Growth and Income Fund $ 19 $ 55 $ 94 $ 204
AIM V.I. International Equity Fund $ 18 $ 61 $ 104 $ 225
AIM V.I. Value Fund $ 19 $ 54 $ 94 $ 203
MFS Global Governments Series $ 19 $ 59 $ 101 $ 219
MFS Money Market Series $ 16 $ 50 $ 86 $ 187
MFS Bond Series $ 18 $ 54 $ 94 $ 203
MFS Total Return Series $ 19 $ 59 $ 101 $ 218
MFS Research Series $ 19 $ 57 $ 99 $ 214
MFS Emerging Growth Series $ 18 $ 57 $ 98 $ 212
</TABLE>
- 2 -
<PAGE> 6
FOOTNOTES TO EXAMPLES
The foregoing tables are intended to assist you in understanding the costs and
expenses that you will bear directly or indirectly. The tables reflect fiscal
year 1999 expenses for the Separate Account and fiscal year 1999 expenses for
the investment portfolios.
1. Premium taxes are not reflected in the Examples. We may apply premium taxes
ranging up to 3.5%, depending on the laws of various jurisdictions. In addition,
the Examples do not reflect any transfer charges. The $30 Annual Contract Fee is
reflected in the Examples by dividing the total Annual Contract Fees collected
during fiscal year 1999 by the total of all Contract assets under management as
of the end of fiscal year 1998. This converts the Annual Contract Fee to a
factor of $0.17 for purposes of the examples based on a $1,000 investment.
THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. THE 5% ANNUAL RATE OF RETURN IS HYPOTHETICAL AND DOES NOT REPRESENT
PAST OR FUTURE ANNUAL RETURNS. ACTUAL RETURNS MAY BE GREATER OR LESS THAN THE 5%
ASSUMED RATE.
- 3 -
<PAGE> 7
CONDENSED FINANCIAL INFORMATION
The following shows Accumulation Unit Values and number of Accumulation Units
for the period from the commencement of business(2/21/95) through December
31, 1999 for each of the subaccounts. This condensed financial information is
derived from the financial statements of the Separate Accounts and should be
read in conjunction with the financial statements, related notes and other
financial information contained in the SAI.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
From Commencement of
Year Ending Year Ending Year Ending Year Ending Operations to
Subaccount 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95*
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CitiSelect VIP Folio 200 Conservative
Unit Value Beginning of Period $1.13 $1.06 $1.00 -- --
Unit Value End of Period $1.14 $1.13 $1.06 -- --
Number of Accumulation Units Outstanding 6,697,215 8,486,948 5,186,850 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
CitiSelect VIP Folio 300 Balanced
Unit Value Beginning of Period $1.14 $1.07 $1.00 -- --
Unit Value End of Period $1.18 $1.14 $1.07 -- --
Number of Accumulation Units Outstanding 10,546,542 13,807,523 9,994,557 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
CitiSelect VIP Folio 400 Growth
Unit Value Beginning of Period $1.10 $1.08 $1.00 -- --
Unit Value End of Period $1.19 $1.10 $1.08 -- --
Number of Accumulation Units Outstanding 6,033,212 9,177,901 7,624,470 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
CitiSelect VIP Folio 500 Growth Plus
Unit Value Beginning of Period $1.10 $1.09 $1.00 -- --
Unit Value End of Period $1.22 $1.10 $1.09 -- --
Number of Accumulation Units Outstanding 2,351,967 3,582,943 2,332,285 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
CitiFunds Small Cap Growth VIP Portfolio
Unit Value Beginning of Period $1.05 $1.11 $1.00 -- --
Unit Value End of Period $1.44 $1.05 $1.11 -- --
Number of Accumulation Units Outstanding 1,834,607 1,427,896 811,490 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio
Unit Value Beginning of Period $2.49 $1.80 $1.48 $1.31 $1.00
Unit Value End of Period $3.38 $2.49 $1.80 $1.48 $1.31
Number of Accumulation Units Outstanding 12,745,698 9,921,446 6,485,960 2,902,936 1,237,930
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP High Income Portfolio
Unit Value Beginning of Period $1.08 $1.14 $1.00 -- --
Unit Value End of Period $1.15 $1.08 $1.14 -- --
Number of Accumulation Units Outstanding 12,487,774 12,550,649 4,679,724 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Equity-Income Portfolio
Unit Value Beginning of Period $1.34 $1.22 $1.00 -- --
Unit Value End of Period $1.41 $1.34 $1.22 -- --
Number of Accumulation Units Outstanding 29,019,678 28,422,802 11,769,502 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Overseas Portfolio
Unit Value Beginning of Period $1.21 $1.09 $1.00 -- --
Unit Value End of Period $1.71 $1.21 $1.09 -- --
Number of Accumulation Units Outstanding 8,189,584 7,440,541 4,444,906 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Contrafund Portfolio
Unit Value Beginning of Period $1.55 $1.21 $1.00 -- --
Unit Value End of Period $1.91 $1.55 $1.21 -- --
Number of Accumulation Units Outstanding 19,684,080 16,365,923 7,182,541 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Index 500 Portfolio
Unit Value Beginning of Period $1.57 $1.24 $1.00 -- --
Unit Value End of Period $1.87 $1.57 $1.24 -- --
Number of Accumulation Units Outstanding 43,186,834 37,349,984 17,510,630 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund
Unit Value Beginning of Period $1.97 $1.67 $1.49 $1.29 $1.00
Unit Value End of Period $2.82 $1.97 $1.67 $1.49 $1.29
Number of Accumulation Units Outstanding 11,899,636 12,795,979 9,405,192 3,464,766 1,345,513
- -----------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Government Securities Fund
Unit Value Beginning of Period $1.13 $1.06 $1.00 -- --
Unit Value End of Period $1.10 $1.13 $1.06 -- --
Number of Accumulation Units Outstanding 7,835,868 8,085.335 2,587,138 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Growth Fund
Unit Value Beginning of Period $1.61 $1.21 $1.00 -- --
Unit Value End of Period $2.15 $1.61 $1.21 -- --
Number of Accumulation Units Outstanding 5,608,680 4,344,807 1,609,176 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- 4 -
<PAGE> 8
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
From Commencement of
Year Ending Year Ending Year Ending Year Ending Operations to
Subaccount 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95*
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AIM V.I. Growth and Income Fund
Unit Value Beginning of Period $1.49 $1.18 $1.00 -- --
Unit Value End of Period $1.99 $1.49 $1.18 -- --
Number of Accumulation Units Outstanding 14,517,357 12,751,057 5,216,176 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
AIM V.I. International Equity Fund
Unit Value Beginning of Period $1.20 $1.05 $1.00 -- --
Unit Value End of Period $1.84 $1.20 $1.05 -- --
Number of Accumulation Units Outstanding 12,561,784 11,552,635 8,040,029 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Value Fund
Unit Value Beginning of Period $1.56 $1.19 $1.00 -- --
Unit Value End of Period $2.00 $1.56 $1.19 -- --
Number of Accumulation Units Outstanding 22,849,391 17,350,727 6,012,919 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
MFS Global Governments Series
Unit Value Beginning of Period $1.17 $1.10 $1.12 $1.10 $1.00
Unit Value End of Period $1.13 $1.17 $1.10 $1.12 $1.10
Number of Accumulation Units Outstanding 1,740,631 1,906,433 1,814,432 467,158 241,914
- -----------------------------------------------------------------------------------------------------------------------------------
MFS Money Market Series
Unit Value Beginning of Period $1.14 $1.09 $1.06 $1.03 $1.00
Unit Value End of Period $1.18 $1.14 $1.09 $1.06 $1.03
Number of Accumulation Units Outstanding 6,895,732 7,130,698 4,552,838 491,668 115,908
- -----------------------------------------------------------------------------------------------------------------------------------
MFS Bond Series
Unit Value Beginning of Period $1.14 $1.08 $1.00 -- --
Unit Value End of Period $1.11 $1.14 $1.08 -- --
Number of Accumulation Units Outstanding 4,981,425 4,592,230 1,523,046 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
MFS Total Return Series
Unit Value Beginning of Period $1.29 $1.16 $1.00 -- --
Unit Value End of Period $1.32 $1.29 $1.16 -- --
Number of Accumulation Units Outstanding 18,218,624 16,554,134 6,044,594 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
MFS Research Series
Unit Value Beginning of Period $1.41 $1.15 $1.00 -- --
Unit Value End of Period $1.73 $1.41 $1.15 -- --
Number of Accumulation Units Outstanding 19,122,690 18,835,706 11,348,445 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Series
Unit Value Beginning of Period $1.55 $1.17 $1.00 -- --
Unit Value End of Period $2.71 $1.55 $1.17 -- --
Number of Accumulation Units Outstanding 20,174,491 18,253,621 7,769,779 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*The Fidelity VIP Growth Portfolio, AIM V.I. Capital Appreciation Fund, MFS
Global Governments Series and MFS Money Market Series subaccounts commenced
operations on February 21, 1995. All other subaccounts commenced operations on
February 3, 1997.
- 5 -
<PAGE> 9
FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT
issued by
FIRST CITICORP LIFE INSURANCE COMPANY
PROSPECTUS
This Prospectus describes the flexible premium deferred variable annuity
contract (the "Contract") offered by First Citicorp Life Insurance Company
("We," "us," "our" or "FCLIC").
The Contract has 24 investment choices: a Fixed Account and 23 subaccounts,
which are divisions of the First Citicorp Life Variable Annuity Separate
Account. You can put your money into the Fixed Account and/or any of these
subaccounts. Money directed to the Fixed Account earns a declared interest rate
which is guaranteed by us. Money directed to any subaccount is invested
exclusively in a single investment portfolio. These 23 investment portfolios are
professionally managed and provide a broad range of investment strategies
(growth and income, aggressive growth, income, etc.), styles (growth, value,
etc.) and asset classes (stocks, bonds, international, etc.) and are listed
below. Investments in the investment portfolios are not guaranteed. You could
lose money.
Please read this prospectus carefully and keep it for future reference. It
contains important information about the First Citicorp Life Flexible Premium
Variable Annuity Contract that you ought to know before investing.
To learn more about the Contract, you can obtain a copy of the Statement of
Additional Information (SAI) dated the same date as this prospectus. The SAI has
been filed with the Securities and Exchange Commission (SEC) and is legally a
part of this prospectus. The SEC maintains a Web site (http://www.sec.gov) that
contains the SAI, material incorporated by reference and other information
regarding registrants that file electronically with the SEC. The SAI's table of
contents is on the last page of this prospectus. For a free copy of the SAI,
call us at (800) 497-4857 or write us at our Customer Service Office at 800
Silver Lake Blvd., P.O. Box 7031, Dover, DE 19903.
VARIABLE ANNUITY CONTRACTS ARE SUBJECT TO MARKET FLUCTUATION, REINVESTMENT RISK
AND POSSIBLE LOSS OF PRINCIPAL INVESTED. THE CONTRACTS ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION AND ARE
NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY.
Managed by CitiBank, N.A.
- -------------------------
CitiSelect(R) VIP Folio 200 Conservative
CitiSelect(R) VIP Folio 300 Balanced
CitiSelect(R) VIP Folio 400 Growth
CitiSelect(R) VIP Folio 500 Growth Plus
CitiFunds(SM) Small Cap Growth VIP Portfolio
Managed by Fidelity Management & Research Company
- -------------------------------------------------
Fidelity VIP(1) Growth Portfolio
Fidelity VIP(1) High Income Portfolio
Fidelity VIP(1) Equity-Income Portfolio
Fidelity VIP(1) Overseas Portfolio
Fidelity VIP II(2) Contrafund Portfolio
Fidelity VIP II(2) Index 500 Portfolio
(1) Variable Insurance Products Fund
(2) Variable Insurance Products Fund II
Managed by A I M Advisors, Inc.
- -------------------------------
AIM V.I. Capital Appreciation Fund
AIM V.I. Government Securities Fund
AIM V.I. Growth Fund
AIM V.I. Growth and Income Fund
AIM V.I. International Equity Fund
AIM V.I. Value Fund
Managed by MFS Investment Management(R)
- ---------------------------------------
MFS Global Governments Series
MFS Money Market Series
MFS Bond Series
MFS Total Return Series
MFS Research Series
MFS Emerging Growth Series
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE
May 1, 2000
<PAGE> 10
TABLE OF CONTENTS
<TABLE>
<S> <C>
INDEX OF SPECIAL TERMS 2
SUMMARY 3
FEE TABLES 5
EXAMPLES 6
SECTION 1: THE ANNUITY CONTRACT 8
SECTION 2: ANNUITY PAYMENTS (THE INCOME
PHASE) 8
Variable Annuity Income Payments 8
Fixed Annuity Income Payments 9
Annuity Income Options 9
SECTION 3: PURCHASE 9
Purchase Payments 9
Allocation of Purchase Payments 9
Free Look Period 10
Accumulation Units 10
SECTION 4: INVESTMENT OPTIONS 10
Transfers During the Accumulation Phase 11
Transfers During the Income Phase 11
Transfer Requests 11
Dollar Cost Averaging Program 11
Voting Rights 12
Substitution 12
SECTION 5: CHARGES AND DEDUCTIONS 12
Insurance Charges 12
Annual Contract Fee 12
Surrender Charges 12
Surrender Processing Fee 13
Premium Taxes 13
Transfer Processing Fee 13
Investment Portfolio Expenses 13
SECTION 6: TAXES 13
Annuity Contracts in General 13
Qualified and Non-Qualified Contracts 14
Withdrawals - Non-Qualified Contracts 14
Withdrawals - Qualified Contracts 14
Diversification Requirements 14
Owner Control 14
Taxation of Death Benefit Proceeds 14
Transfers, Assignments or Exchanges of a
Contract 14
Withholding 14
Multiple Contracts 15
SECTION 7: ACCESS TO YOUR MONEY 15
Systematic Withdrawal Program 15
SECTION 8: PERFORMANCE 15
SECTION 9: DEATH BENEFITS 15
Upon Your Death 15
Death of the Annuitant 16
SECTION 10: OTHER INFORMATION 16
First Citicorp Life Insurance Company 16
The Separate Account 16
Distribution 16
Ownership 17
Beneficiary 17
Suspension of Payment or Transfers 17
Modifications 17
Legal Proceedings 17
Financial Statements 17
Inquiries 17
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS 18
APPENDIX: Condensed Financial Information 19
</TABLE>
INDEX OF SPECIAL TERMS
We have tried to make this prospectus as easy as possible for you to read and
understand. However, the nature of variable annuities requires us to use certain
technical words or terms. We have identified some of these, which are italicized
when they are used in the text. The page shown below is where we believe you
will find the best explanation for the word or term.
<TABLE>
<S> <C>
Accumulation Phase 8
Accumulation Unit 10
Annuitant 8
Annuity Income Date 8
Annuity Income Options 8
Annuity Income Payments 8
Annuity Unit 10
Beneficiary 17
Business Day 10
Contract Value 8
Contract Year 11
Fixed Account 8
Income Phase 8
Investment Portfolios 10
Joint Owner 8
Non-Qualified Contract 14
Notice To Us 11
Owner 17
Purchase Payment 9
Qualified Contract 14
Separate Account 17
Subaccount 8
Tax Deferral 14
</TABLE>
- 2 -
<PAGE> 11
SUMMARY
THE SECTIONS IN THIS SUMMARY CORRESPOND TO SECTIONS IN THIS PROSPECTUS WHICH
DISCUSS THE TOPICS IN GREATER DETAIL.
1. THE ANNUITY CONTRACT: The variable annuity offered by First Citicorp Life
Insurance Company ("We," "Our" and "Us") is a contract between you, the Owner,
and us, an insurance company. The Contract enables you to invest on a
tax-deferred basis in a Fixed Account and 23 different subaccounts. The Contract
is intended for use in making long term financial plans, including saving for
retirement and estate planning, and provides for a death benefit and guaranteed
income options.
The Fixed Account earns interest annually at a fixed rate that is guaranteed by
us never to be less than 3.0% and may be more. This rate is established
separately for each new purchase payment or transfer you pay into the Fixed
Account. Once established, a rate is guaranteed for 12 months. While money is in
the Fixed Account, the interest earned as well as your principal is guaranteed
by us. Money directed to any of the 23 subaccounts is, in turn invested
exclusively in a single investment portfolio. The investment portfolios thus
available under the Contract are listed in Section 4. These portfolios are
designed and professionally managed and allow for a broad range of investment
strategies (growth and income, aggressive growth, income, etc.) styles, (growth,
value, etc.,) and asset classes (stocks, bonds, international, etc.). Amounts
invested in these portfolios will fluctuate daily based on the portfolio's
investment performance. Investments in these portfolios are NOT guaranteed and
may increase or decrease. You can also lose money.
You can put money into the Fixed Account and any or all of the investment
portfolios by investing in the corresponding subaccount. You can transfer your
money between the Fixed Account and/or the subaccounts, subject to certain
limitations which are explained elsewhere in this prospectus.
The Contract, like all deferred annuity contracts, has two phases: the
Accumulation Phase and the Income Phase. During the Accumulation Phase, earnings
accumulate on a tax-deferred basis and are taxed as income only if you make a
withdrawal. The Income Phase occurs when we begin making regular payments from
the Contract to you or some other person you name (the "Annuitant"). The amount
of money you are able to accumulate under the Contract during the Accumulation
Phase, as well as the manner in which payments are made, will determine the
amount of the payments made during the Income Phase.
2. ANNUITY PAYMENTS (THE INCOME PHASE): If you want regular income from your
annuity, paid either to you or some other person(s), you may choose one of
several annuity income options. You may also elect to receive all of your
Contract Value in one lump sum or paid under any other plan to which we agree.
Once regular income payments begin, you cannot change the payment plan.
During the Income Phase, you have the same investment choices you had during the
Accumulation Phase. You can choose to have payments come from the Fixed Account,
one or more of the subaccounts or both. If you choose to have any part of the
payments come from the subaccounts, the dollar amount of the income payments may
go up or down, depending on the investment performance of the corresponding
investment portfolios.
3. PURCHASE: You may purchase a Contract with $5,000 or more. For tax qualified
contracts (such as IRA's and Roth IRA's), we require only $2,000. You can add
$500 or more to your Contract at any time during the Accumulation Phase ($100 or
more to tax qualified contracts).
4. INVESTMENT OPTIONS: You may put your money in any or all of the following
investment portfolios by directing it into the corresponding subaccount. The
portfolios are described in their own prospectuses. You can make or lose money
in any of these portfolios, depending on market conditions.
MANAGED BY CITIBANK, NA
CitiSelect VIP Folio 200 Conservative
CitiSelect VIP Folio 300 Balanced
CitiSelect VIP Folio 400 Growth
CitiSelect VIP Folio 500 Growth Plus
CitiFunds Small Cap Growth VIP Portfolio
MANAGED BY FIDELITY MANAGEMENT &
RESEARCH COMPANY
Fidelity VIP Growth Portfolio
Fidelity VIP High Income Portfolio
Fidelity VIP Equity-Income Portfolio
Fidelity VIP Overseas Portfolio
Fidelity VIP II Contrafund Portfolio
Fidelity VIP II Index 500 Portfolio
MANAGED BY A I M ADVISORS, INC.
AIM V.I. Capital Appreciation Fund
AIM V.I. Government Securities Fund
AIM V.I. Growth Fund
AIM V.I. Growth and Income Fund
AIM V.I. International Equity Fund
AIM V.I. Value Fund
- 3 -
<PAGE> 12
MANAGED BY MFS INVESTMENT MANAGEMENT(R)
MFS Global Governments Series
MFS Money Market Series
MFS Bond Series
MFS Total Return Series
MFS Research Series
MFS Emerging Growth Series
5. CHARGES AND DEDUCTIONS: The Contract has insurance features and investment
features and there are costs related to each. Each year, we deduct a $30
contract fee from your Contract. This charge is waived if the value of your
Contract is at least $25,000 or if you have added at least $2,500 ($2,000 for
Qualified Contracts) in additional purchase payments to your Contract during the
last 12 months. We also deduct for insurance charges a total of 1.40% of the
average daily value of your contract allocated to the subaccounts. We may change
this charge in the future but it will never be greater than 1.40%.
If you take any money out of the Contract, we may assess a Surrender Charge on
any purchase payment you withdraw. The amount of the Surrender Charge is
dependent on the number of years since the purchase payment was added to the
Contract. This Surrender Charge ranges from a maximum of 7% in the first year
after payment, declining 1% each year until the sixth year, when it becomes 0%.
If you surrender the Contract by taking out its entire value, or when you begin
receiving regular income payments under it, we may assess a state premium tax
ranging from 0-3.5%, depending upon the state in which you live.
There are also investment charges which range from 0.28% to 1.25% of the average
daily value of the investment portfolio, depending on the portfolios in which
your Contract is invested.
6. TAXES: Earnings under the Contract are not taxed until you take them out (if
you are a natural person). If you take money out, earnings come out first and
are taxed as income. If you are younger than 59 1/2 when you take money out, you
may also be charged a 10% federal tax penalty on the withdrawn earnings.
Payments during the Income Phase may be considered partly to be a return of your
original investment. That part of each payment is not taxable as income. Special
tax rules apply if your annuity has been issued as a Qualified Contract under
the Internal Revenue Code.
7. ACCESS TO YOUR MONEY: You can take some or all of the money out of your
Contract at any time during the Accumulation Phase. You can take all of your
earnings and up to 10% of your total purchase payments each year without any
Surrender Charge. Withdrawals in excess of this amount will be charged the
applicable Surrender Charge. After we have held the purchase payment for 5
years, there is no charge for withdrawing it. Of course, you may have to pay
income tax and a tax penalty on any earnings you take out. Each purchase payment
you add to your Contract has its own 5-year Surrender Charge period.
8. PERFORMANCE: The value of the Contract will increase or decrease depending
upon the investment performance of the investment portfolio(s) in which the
subaccounts you chose are invested. Performance information for each of the
investment portfolios is provided elsewhere in this prospectus and in the SAI.
Past performance is not a guarantee of future results.
9. DEATH BENEFITS: If you die before the Income Phase begins, the person you
have chosen as your Beneficiary will receive a death benefit. This death benefit
will be the greater of: (1) the value of your Contract on the date we receive
proof of your death; (2) the money you've put into the Contract less any
purchase payments withdrawn; or (3) the value of your Contract on the most
recent 5-year anniversary after the date of issue plus any money you've added
minus any money withdrawn since that anniversary. If you die on or after age 75,
slightly different rules apply.
10. OTHER INFORMATION:
FREE LOOK: If you cancel the Contract within 10 days after receiving it, we
will refund: (1) the value of your Contract invested in the subaccounts on
the day we receive your request and any insurance charges assessed, plus (2)
any purchase payments invested in the Fixed Account not previously
withdrawn. No Surrender Charge will be assessed. This may be more or less
than your original payment.
NO PROBATE: In most cases, any death benefit paid to your Beneficiary will
not have to pass through probate.
DOLLAR COST AVERAGING PROGRAM: An optional Dollar-Cost Averaging program is
available that permits you to transfer a set dollar amount systematically
from the subaccount investing in the Money Market Portfolio or the Fixed
Account to any other subaccount, subject to certain restrictions. This
reduces the risk of investing in a portfolio only when the price is high.
DOllar-cost Averaging does not guarantee a profit and it doesn't protect
against a loss if market prices decline.
SYSTEMATIC WITHDRAWALS: You may arrange to have money automatically sent to
you each month while your Contract is still in the Accumulation Phase. Of
course, you may have to pay taxes on the money you receive.
- 4 -
<PAGE> 13
FEE TABLES
<TABLE>
<CAPTION>
OWNER TRANSACTION EXPENSES ANNUAL CONTRACT FEE $30(4)
-----------------------------------------------------------
-----------------------------------------------------------
<S> <C> <C> <C> <C>
Sales Charge Imposed on Purchase Payments None SEPARATE ACCOUNT ANNUAL EXPENSES (as a percentage
of average net assets)
Maximum Surrender Charge (contingent deferred
sales charge) as a percentage of the purchase
payment withdrawn 7%(1) Mortality and Expense Risk Charge 1.25%
Surrender Processing Fee None(2) Administration Charge 0.15%
-----
Transfer Fee (imposed after the 18th transfer Total Separate Account Expenses 1.40%
in any Contract Year) $25 (3) -----------------------------------------------------------
</TABLE>
Annual Portfolio Expenses (as percentage of average daily net assets)
<TABLE>
<CAPTION>
Total Annual
Other Expenses Portfolio Expenses
after after
Portfolio Management fees reimbursement reimbursement
------------ --------------- --------------- -------------------
<S> <C> <C> <C>
CitiSelect VIP Folio 200 Conservative 0.74% 0.21% 0.95%
CitiSelect VIP Folio 300 Balanced 0.68% 0.27% 0.95%
CitiSelect VIP Folio 400 Growth 0.91% 0.34% 1.25%
CitiSelect VIP Folio 500 Growth Plus 0.87% 0.38% 1.25%
CitiFunds Small Cap Growth VIP Portfolio 0.90% 0.00% 0.90%
Fidelity VIP Growth Portfolio 0.58% 0.07% 0.65%
Fidelity VIP High Income Portfolio 0.58% 0.11% 0.69%
Fidelity VIP Equity-Income Portfolio 0.48% 0.08% 0.56%
Fidelity VIP Overseas Portfolio 0.73% 0.14% 0.87%
Fidelity VIP II Contrafund Portfolio 0.58% 0.07% 0.65%
Fidelity VIP II Index 500 Portfolio 0.24% 0.04% 0.28%
AIM V.I. Capital Appreciation Fund 0.62% 0.11% 0.73%
AIM V.I. Government Securities Fund 0.50% 0.40% 0.90%
AIM V.I. Growth Fund 0.63% 0.10% 0.73%
AIM V.I. Growth and Income Fund 0.61% 0.16% 0.77%
AIM V.I. International Equity Fund 0.75% 0.22% 0.97%
AIM V.I. Value Fund 0.61% 0.15% 0.76%
MFS Global Governments Series 0.75% 0.16% 0.91%
MFS Money Market Series 0.50% 0.11% 0.61%
MFS Bond Series 0.60% 0.16% 0.76%
MFS Total Return Series 0.75% 0.15% 0.90%
MFS Research Series 0.75% 0.11% 0.86%
MFS Emerging Growth Series 0.75% 0.09% 0.84%
</TABLE>
The investment advisers to certain investment portfolios and/or the fund
managers voluntarily agreed to reimburse or waiver certain fees and expenses
during fiscal year 1999. Absent such fee waivers and reimbursements, "Other
Expenses" and "Total Annual Fund Expenses" for the following portfolios were:
CitiSelect VIP Folio 200 Conservative - 4.07% and 4.82%; CitiSelect VIP Folio
300 Balanced - 2.91% and 3.66%; CitiSelect VIP Folio 400 Growth - 4.69% and
5.44%; CitiSelect VIP Folio 500 Growth Plus--9.63% and 10.38%; CitiFunds Small
Cap Growth VIP Portfolio - 8.65% and 9.40%; Fidelity VIP Growth Portfolio -
0.08% and 0.66%; Fidelity VIP Equity Income Portfolio - 0.09% and 0.57%;
Fidelity VIP Overseas Portfolio - 0.18% and 0.91%; Fidelity VIP II Contrafund
Portfolio - 0.09% and 0.65%; Fidelity VIP II Index 500 Portfolio - 0.10% and
0.34%; MFS Global Governments Series - 0.30% and 1.05%; MFS Money Market Series
- - 0.38% and 0.88%; and the MFS Bond Series - 0.46% and 1.06%, respectively.
There is no assurance that the fee waivers or reimbursements will continue at
current levels. For a more complete description of the various costs and
expenses see "Charges and Deductions" and the prospectus for the investment
portfolios.
- 5 -
<PAGE> 14
EXAMPLES: You will pay the following expenses on a $1,000 investment. We assume
a 5% annual return on assets:(5)
If, at the end of the applicable time period, you surrender or annuitize the
Contract under an annuity income option that does not provide a life annuity
or a life annuity with a period certain of at least five years.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
-----------------------------------------
<S> <C> <C> <C> <C>
CitiSelect VIP Folio 200 Conservative $ 87 $117 $151 $264
CitiSelect VIP Folio 300 Balanced $ 87 $117 $151 $264
CitiSelect VIP Folio 400 Growth $ 89 $126 $166 $293
CitiSelect VIP Folio 500 Growth Plus $ 89 $126 $166 $293
CitiFunds Small Cap Growth VIP Portfolio $ 86 $116 $148 $259
Fidelity VIP Growth Portfolio $ 84 $109 $136 $234
Fidelity VIP High Income Portfolio $ 84 $110 $138 $238
Fidelity VIP Equity-Income Portfolio $ 83 $106 $131 $225
Fidelity VIP Overseas Portfolio $ 86 $115 $147 $256
Fidelity VIP II Contrafund Portfolio $ 84 $109 $136 $234
Fidelity VIP II Index 500 Portfolio $ 80 $ 97 $117 $196
AIM V.I. Capital Appreciation Fund $ 84 $111 $140 $242
AIM V.I. Government Securities Fund $ 86 $116 $148 $259
AIM V.I. Growth Fund $ 84 $111 $140 $242
AIM V.I. Growth and Income Fund $ 85 $112 $142 $246
AIM V.I. International Equity Fund $ 87 $118 $152 $266
AIM V.I. Value Fund $ 85 $112 $141 $245
MFS Global Governments Series $ 86 $116 $149 $260
MFS Money Market Series $ 83 $107 $134 $230
MFS Bond Series $ 85 $112 $141 $245
MFS Total Return Series $ 86 $116 $148 $259
MFS Research Series $ 86 $115 $146 $255
MFS Emerging Growth Series $ 86 $114 $145 $253
</TABLE>
If you don't surrender the Contract or you annuitize it under an
annuity income option providing either a life annuity or a life
annuity with a period certain of at least five years at the end of
the applicable time period.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
-----------------------------------------
<S> <C> <C> <C> <C>
CitiSelect VIP Folio 200 Conservative $ 24 $ 72 $124 $264
CitiSelect VIP Folio 300 Balanced $ 24 $ 72 $124 $264
CitiSelect VIP Folio 400 Growth $ 26 $ 81 $139 $293
CitiSelect VIP Folio 500 Growth Plus $ 26 $ 81 $139 $293
CitiFunds Small Cap Growth VIP Portfolio $ 23 $ 71 $121 $259
Fidelity VIP Growth Portfolio $ 21 $ 64 $109 $234
Fidelity VIP High Income Portfolio $ 21 $ 65 $111 $238
Fidelity VIP Equity-Income Portfolio $ 20 $ 61 $104 $225
Fidelity VIP Overseas Portfolio $ 23 $ 70 $120 $256
Fidelity VIP II Contrafund Portfolio $ 21 $ 64 $109 $234
Fidelity VIP II Index 500 Portfolio $ 17 $ 52 $ 90 $196
AIM V.I. Capital Appreciation Fund $ 21 $ 66 $113 $242
AIM V.I. Government Securities Fund $ 23 $ 71 $121 $259
AIM V.I. Growth Fund $ 20 $ 66 $113 $242
AIM V.I. Growth and Income Fund $ 23 $ 67 $115 $246
AIM V.I. International Equity Fund $ 22 $ 73 $125 $266
AIM V.I. Value Fund $ 23 $ 67 $114 $245
MFS Global Governments Series $ 23 $ 71 $122 $260
MFS Money Market Series $ 20 $ 62 $107 $230
MFS Bond Series $ 22 $ 67 $114 $245
MFS Total Return Series $ 23 $ 71 $121 $259
MFS Research Series $ 23 $ 70 $119 $255
MFS Emerging Growth Series $ 22 $ 69 $118 $253
</TABLE>
- 6 -
<PAGE> 15
FOOTNOTES TO FEE TABLE AND EXAMPLES
The foregoing tables are intended to assist you in understanding the costs and
expenses that you will bear directly or indirectly. The tables reflect fiscal
year 1998 expenses for the Separate Account and fiscal year 1998 expenses for
the investment portfolios
1. Surrender Charges apply separately to each purchase payment withdrawn and
are dependent on the number of years since the purchase payment was added to
the Contract. Surrender Charges range from a maximum of 7% in the first year
after payment, declining 1% each year until the sixth year, when it becomes
0%.
2. We reserve the right to assess a processing fee equal to the lesser of $25
or 2% of the amount withdrawn for each withdrawal (including the final
surrender) after the first 12 withdrawals in any Contract Year. See "Section
5: Charges and Deductions."
3. We reserve the right to charge a $25 transfer fee on each transfer after the
first 12 transfers in any Contract Year. See "Section 5: Charges and
Deductions."
4. We will waive the Annual Contract Fee in its entirety if, at the time this
fee would be deducted, the Contract Value is at least $25,000. The Annual
Contract Fee will also be waived in its entirety for any Contract Year
during which purchase payments of at least $2,500 ($2,000 for Qualified
Contracts), excluding the initial purchase payment, are paid.
5. Premium taxes are not reflected in the Examples. We may apply premium taxes
ranging up to 3.5%, depending on the laws of various jurisdictions. In
addition, the Examples do not reflect any transfer charges. The $30 Annual
Contract Fee is reflected in the Examples by dividing the total Annual
Contract Fees collected during fiscal year 1999 by the total of all Contract
assets under management as of the end of fiscal year 1998. This converts the
Annual Contract Fee to a factor of $0.17 for purposes of the examples based
on a $1,000 investment.
THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. THE 5% ANNUAL RATE OF RETURN IS HYPOTHETICAL AND DOES NOT REPRESENT
PAST OR FUTURE ANNUAL RETURNS. ACTUAL RETURNS MAY BE GREATER OR LESS THAN THE 5%
ASSUMED RATE.
THERE IS AN ACCUMULATION UNIT VALUE HISTORY FOR EACH SUBACCOUNT IN THE APPENDIX
- - CONDENSED FINANCIAL INFORMATION.
- 7 -
<PAGE> 16
SECTION 1: THE ANNUITY CONTRACT
An annuity is a contract between the owner ("you"), and an insurance company (in
this case, First Citicorp Life Insurance Company), where the insurance company
promises to pay an income to you, or some other person you name (the
"Annuitant"), in the form of annuity income payments, beginning on a date that's
at least 30 days in the future. Until the date annuity income payments begin,
the contract is in the Accumulation Phase. Once annuity income payments begin,
the contract is in the Income Phase. Your earnings under the contract are tax
deferred.
Tax deferred means that earnings or appreciation of the assets in your contract
aren't taxed until money is taken out.
This Contract is a variable annuity. It enables you to put money into a number
of different subaccounts, each of which invests exclusively in a single
investment portfolio. Depending on market conditions, any of these portfolios
can make or lose money. The amount of money you are able to accumulate under the
Contract during the Accumulation Phase depends on the investment performance of
the investment portfolio(s) in which your money is invested. Each subaccount is
a division of the First Citicorp Life Variable Annuity Separate Account. The
Separate Account is an investment account we establish to receive and invest
purchase payments under the Contract that is insulated from any profit or loss
arising from any other business we conduct.
The Contract also contains a Fixed Account. The Fixed Account is part of our
General Account that supports our insurance and annuity obligations. All assets
in the Fixed Account are subject to the general liabilities of our business
operations. The Fixed Account earns interest annually at a rate guaranteed by us
never to be less than 3.0% and may be more. This rate is established by us, at
our sole discretion, for each purchase payment or transfer into the Fixed
Account. Once established, a rate is guaranteed for 12 months. We have no
specific formula for determining Fixed Account interest rates. If you select the
Fixed Account, the amount of money you are able to accumulate during the
Accumulation Phase depends on the total interest credited to the Fixed Account.
Your total Contract Value is equal to the dollar amount you have in the Fixed
Account plus the dollar value of any amounts you have which are invested in the
different investment portfolios.
As Owner of the Contract, you exercise all rights under it before the Annuity
Income Date. You can name a new Owner by notifying us. You may co-own the
Contract with someone else ("Joint Owner"). You may name or change the person
who will receive the annuity income payments. Your rights under the Contract end
when annuity income payments begin, unless you are also the person receiving
these payments (the "Annuitant"). More information about your rights under the
Contract is included in "Section 10 - Other Information."
SECTION 2: ANNUITY PAYMENTS (THE INCOME PHASE)
Under the Contract, you can choose the month and year in which annuity income
payments begin. That date is called the Annuity Income Date. You can also choose
the frequency of annuity income payments and the plan on which those payments
are based. We call these annuity income options.
You may choose your Annuity Income Date and annuity income option when you
purchase the Contract. However, you may defer these decisions until a later date
if you wish, or once chosen, you can change them at any time before the Annuity
Income Date if you give us at least 30 days notice. The Annuity Income Date
cannot be any earlier than one month after you buy the Contract. If you don't
choose an Annuity Income Date, annuity income payments will begin on the
Annuitant's 65th birthday or 10 years after the date the Contract was issued,
whichever is later. However, annuity income payments must begin by the first day
of the month following the Annuitant's 85th birthday. Certain plans which
qualify for special tax considerations may require an earlier Annuity Income
Date. (See "Section 6: Taxes")
If you don't choose an annuity income option by the time annuity income payments
begin, we will make the payments under Option 3 (see below) as a Life Annuity
with 10 years of payments guaranteed. If you do not identify another Annuitant,
we will consider you to be the Annuitant.
During the Income Phase, you have the same investment choices you had during the
Accumulation Phase. At the Annuity Income Date, you can select whether payments
will come from the Fixed Account, one or more of the subaccounts, or a
combination of both. If you don't tell us otherwise, annuity income payments
will be based on the value of your investments under the Contract, and their
allocations among the Fixed Account and the subaccounts on the Annuity Income
Date.
VARIABLE ANNUITY INCOME PAYMENTS: If you choose to have any portion of your
annuity income payments come from the subaccounts, the payment amount will
depend on four things: (1) the portion of the Contract Value you keep in the
subaccounts on and after the Annuity Income Date; (2) the 3% assumed investment
rate used in the Contract's annuity tables; (3) the performance of the
investment portfolios in which the subaccounts are invested; and (4) the annuity
income option you choose. If, after all charges and
- 8 -
<PAGE> 17
deductions, the combined total return of the subaccounts you have chosen exceeds
the 3% annual assumed rate, your annuity income payments will increase.
Similarly, if the combined total return of the subaccounts chosen is less than
the 3% annual assumed rate, your annuity income payments will decrease. For
detailed information on how variable annuity income payments are determined, see
the SAI.
FIXED ANNUITY INCOME PAYMENTS: If you choose to have any portion of your annuity
income payments come from the Fixed Account, the payment amount will be fixed
and guaranteed by us. The payment amount will depend on three things: (1) the
portion of the Contract Value you keep in the Fixed Account on and after the
Annuity Income Date; (2) the interest rate we credit on those amounts (we
guarantee a minimum annual interest rate of 3.0%); and (3) the annuity income
option you choose.
ANNUITY INCOME OPTIONS: You may select one of the following standard annuity
income options. In addition, you may elect any other method of payment that is
mutually agreeable to you and us. After annuity income payments begin, you
cannot change the annuity income option.
OPTION 1: INCOME FOR A FIXED PERIOD. Under this option, we will make annuity
income payments each month for a fixed number of years. The number of years
must be at least 5 and not more than 30. If the Annuitant dies and we have
made annuity income payments for less than the selected period, we will
continue to make annuity income payments for the rest of the guaranteed
period to any person named by the Annuitant. This option is available only
for annuity income payments from the Fixed Account and only if the Annuity
Income Date is at least 5 years from the date the Contract was issued.
OPTION 2: LIFE ANNUITY. Under this option, we will make an annuity income
payment each month as long as the Annuitant is alive. After the Annuitant
dies, we stop making annuity income payments.
OPTION 3: LIFE ANNUITY WITH PERIOD CERTAIN. Under this option, we will make
an annuity income payment each month as long as the Annuitant is alive. If
the Annuitant dies and we have made annuity income payments for less than
the selected guaranteed period, we will continue to make annuity income
payments for the rest of the guaranteed period to any person named by the
Annuitant.
OPTION 4: JOINT AND SURVIVOR ANNUITY. Under this option, we will make annuity
income payments each month as long as the Annuitant and a second person are
both alive. When either of these persons die, we will continue to make
annuity income payments to the survivor. When the survivor dies, we stop
making annuity income payments.
Note Carefully: Under options 2 and 4 it would be possible for only one annuity
payment to be made if the Annuitant(s) were to die before the second annuity
payment was due; and only two payments if the Annuitant(s) were to die before
the third annuity payment was due; etc.
Annuity income payments are made monthly unless we agree to some other payment
schedule. If you have less than $2,000 under the Contract to apply toward
payments, we may pay your annuity income payment in a single lump sum. If your
annuity income payments would be less than $50 a month, we have the right to
change the frequency of payments so that your annuity income payments are at
least $50.
SECTION 3: PURCHASE
The Contract may be purchased by anyone age 90 or younger.
PURCHASE PAYMENTS: A purchase payment is the money you give us to buy the
Contract. The minimum we will accept when the Contract is bought is $5,000
($2,000 if the Contract qualifies for special tax treatment under the IRS Code).
You can make additional purchase payments at any time, and you may arrange for
purchase payments to be made automatically from your bank account or other
source each month. We have the right to require each additional payment to be at
least $500 ($100 for Qualified Contracts). Our approval is required if total
purchase payments in any Contract Year exceed $1,000,000.
ALLOCATION OF PURCHASE PAYMENTS: When you purchase a Contract, we will allocate
your purchase payment to the Fixed Account and/or one or more of the subaccounts
as you have directed us, for investment in the corresponding investment
portfolios. If you make additional purchase payments, we will allocate them the
same way as your first purchase payment unless you tell us otherwise. You may
direct individual purchase payments to one or more subaccounts and/or to the
Fixed Account without changing your current allocation schedule. Your allocation
directions must be in whole percent and each purchase payment must result in a
minimum allocation of $100 to each selected investment portfolio and/or the
Fixed Account.
You should periodically review your purchase payment allocation schedule in
light of market conditions and your overall financial objectives.
Once we receive your initial purchase payment, and all necessary information, we
will allocate your purchase payment and issue your Contract within 2 business
days. If you do not give us all of the information we need, we will contact you
to get it. If for some reason we are unable to
- 9 -
<PAGE> 18
complete this process within 5 business days, we will either send the money back
to you or get your permission to keep it until we get all of the necessary
information. If you add more money to your contract by making additional
purchase payments, we will credit those amounts to your contract within one
business day after receipt at the price next determined after we receive the
payment. A business day is any day when both we and the New York Stock Exchange
are open for business. Our business day closes when the New York Stock Exchange
closes, usually 4:00 p.m., Eastern time. We are open for business on all days
that the New York Stock Exchange is open for business.
FREE LOOK PERIOD: If you change your mind about owning this Contract, you may
cancel it within 10 days after receiving it (or other period as may be required
in your state). When you cancel the Contract within this time period, we will
not assess a Surrender Charge. You will receive the value of your Contract
invested in the subaccounts on the day we receive your request and any insurance
charges assessed plus any purchase payments invested in the Fixed Account not
previously withdrawn. This amount may be more or less than the aggregate amount
of purchase payments made up to that time. If you have purchased your Contract
as an IRA, we may be required to give you back your full purchase payment if you
decide to cancel it within this period. If that is the case, we have the right
to put any portion of your initial purchase payment allocated to a subaccount
into the Money Market subaccount until the end of the cancellation period
described above. At the end of that period, we will reallocate your initial
purchase payment according to your allocation directions. Currently, however,
all purchase payments are allocated directly to the subaccounts as you direct.
We will consider the Contract received five days after it is mailed to your last
known address.
ACCUMULATION UNITS: In order to keep track of the value of your Contract during
the Accumulation Phase, we use a unit of measure we call an Accumulation Unit.
During the Contract's Income Phase, we call the unit an Annuity Unit. These
units represent your ownership interest in a subaccount. When you make a
purchase payment, or transfer money, into a subaccount, we credit that
subaccount with Accumulation Units. The number of Accumulation Units credited to
your Contract is determined by dividing the amount of the purchase payment or
transfer allocated to the subaccount by the value of an Accumulation Unit for
that subaccount next determined as of the end of that business day. If you make
a withdrawal or transfer out of a subaccount or if we assess transfer or
Surrender Charges or an Annual Contract Fee, we subtract Accumulation Units from
the subaccount in a similar manner.
At the close of each business day, we determine the value of an Accumulation
Unit for each subaccount. We do this by:
1. determining the total value of the subaccount's investment in the
corresponding investment portfolio, using the portfolio's net asset
value calculated at the end of that day;
2. subtracting from that amount any insurance charges (see "Section 5:
Charges and Deductions;" and
3. dividing this amount by the number of outstanding Accumulation Units in
that subaccount.
Example: On Monday we receive an additional purchase payment of $5,000 from
you. You have told us you want the entire amount to be allocated to
subaccount "x" (any subaccount currently available). When the New York Stock
Exchange closes that day, we determine that the value of one Accumulation
Unit for that subaccount is $10.00. We then divide $5,000 by $10.00 and
credit your Contract that night with 500 additional Accumulation Units in
subaccount x.
The value of an Accumulation Unit may go up or down from day to day depending on
the investment performance of the investment portfolio invested in by that
subaccount and the deduction of certain fees and expenses. For a detailed
discussion of how we determine Accumulation Unit Value, see the SAI.
SECTION 4: INVESTMENT OPTIONS
In addition to the Fixed Account, 23 subaccounts, each investing exclusively in
a single investment portfolio, are available under the Contract. Additional
subaccounts, each investing exclusively in an additional investment portfolio
may be made available in the future. Each investment portfolio is available
under a fund which is registered with the SEC as an open end, management
investment company of the series type, having one or more investment portfolios.
Shares of the investment portfolios are sold only to insurance company separate
accounts and qualified plans. Each investment portfolio has a specific
investment objective which may be similar to the investment objective and policy
of other portfolios managed by the same or other investment advisers. No
representation is made that the investment results of any portfolio will be
comparable to the results of any other portfolio, even if the same investment
adviser or manager is used or if the names and investment objectives are
similar.
THERE IS NO ASSURANCE THAT AN INVESTMENT PORTFOLIO WILL ACHIEVE ITS STATED
OBJECTIVE. The 23 investment portfolios available under the contract are listed
below.
- 10 -
<PAGE> 19
YOU SHOULD READ THE PROSPECTUSES FOR THESE INVESTMENT PORTFOLIOS CAREFULLY
BEFORE INVESTING. COPIES OF THESE PROSPECTUSES ARE PROVIDED WITH THIS
PROSPECTUS.
CITIBANK N.A. SERVES AS THE INVESTMENT MANAGER FOR THE
FOLLOWING INVESTMENT PORTFOLIOS:
CitiSelect VIP Folio 200 Conservative (Asset Allocation)
CitiSelect VIP Folio 300 Balanced (Asset Allocation)
CitiSelect VIP Folio 400 Growth (Asset Allocation)
CitiSelect VIP Folio 500 Growth Plus (Asset Allocation)
CitiFunds Small Cap Growth VIP Portfolio (Aggressive Growth)
FIDELITY MANAGEMENT & RESEARCH COMPANY SERVES AS THE
INVESTMENT ADVISER FOR THE FOLLOWING INVESTMENT
PORTFOLIOS:
Fidelity VIP Growth Portfolio (Growth)
Fidelity VIP High Income Portfolio (High Yield Bond)
Fidelity VIP Equity-Income Portfolio (Growth & Income)
Fidelity VIP Overseas Portfolio (International Stock)
Fidelity VIP II Contrafund Portfolio (Growth)
Fidelity VIP II Index 500 Portfolio (Growth & Income)
A I M ADVISORS, INC. SERVES AS THE INVESTMENT ADVISER FOR
THE FOLLOWING INVESTMENT PORTFOLIOS:
AIM V.I. Capital Appreciation Fund (Aggressive Growth)
AIM V.I. Government Securities Fund (Govt Bond)
AIM V.I. Growth Fund (Growth)
AIM V.I. Growth and Income Fund (Growth & Income)
AIM V.I. International Equity Fund (International Stock)
AIM V.I. Value Fund (Growth)
MFS INVESTMENT MANAGEMENT(R) SERVES AS THE INVESTMENT
ADVISER FOR THE FOLLOWING INVESTMENT PORTFOLIOS:
MFS Global Governments Series (Income & Capital
Appreciation)
MFS Money Market Series (Money Market)
MFS Bond Series (Corp Bond)
MFS Total Return Series (Balanced)
MFS Research Series (Growth)
MFS Emerging Growth Series (Aggressive Growth)
The Company has entered into agreements with either the investment adviser or
distributor of certain of the underlying funds in which the adviser or
distributor pays us a fee for providing administrative services, which fee may
vary. The fee is ordinarily based upon an annual percentage of the average
aggregate net amount invested in the underlying funds on behalf of the Separate
Account.
TRANSFERS DURING THE ACCUMULATION PHASE: During the Accumulation Phase, you may
transfer money to or from the Fixed Account and to or from any subaccount. We
have the right to charge a $25 fee for each transfer you make in excess of 12 in
any Contract Year. Currently, transfer fees are charged only if you make more
than 18 transfers in a Contract Year. A Contract Year is each consecutive
12-month period measured from the day we issued your Contract.
The following apply to any transfer during the Accumulation Phase:
1. If the value remaining in the Fixed Account or a subaccount after a
transfer is less than $100, we may transfer the entire amount instead of
the requested amount. Unless you give us other directions, such transfer
will be allocated in the same proportion as the transfer request
resulting in this action.
2. We have the right to defer transfers from the Fixed Account for up to 6
months following the date of the request.
TRANSFERS DURING THE INCOME PHASE: During the Income Phase, the Annuitant may
transfer values among subaccounts once every three months. Transfers from the
Fixed Account to a subaccount or from any subaccount to the Fixed Account are
not allowed during the Income Phase.
TRANSFER REQUESTS: Transfer requests, like all other elections, requests and
notices to us, must be in writing in a form acceptable to us unless you have
provided us with valid authorization to accept such requests or notices by
telephone. Any telephone authorization is valid until it is rescinded or
modified in writing by you. We employ reasonable procedures to confirm that
instructions given us by telephone are genuine. We may be liable for losses due
to unauthorized or fraudulent instructions only if we fail to follow those
reasonable procedures. The procedures we follow for telephone transfers include
confirming the correct name, contract number and your social security number. We
may modify or eliminate the transfer privileges at any time, for any class of
Contracts, for any reason. In particular, we reserve the right to not honor
transfers requested by a third party holding a power of attorney from an Owner
where that third party requests simultaneous transfers on behalf of the Owners
of two or more Contracts.
DOLLAR COST AVERAGING PROGRAM: Dollar Cost Averaging allows you to
systematically transfer a specific amount each month from either the Fixed
Account or the Money Market subaccount to any other subaccount(s). By
transferring a set amount on a regular schedule instead of transferring the
total amount at one particular time, you may reduce the risk of investing in the
corresponding investment portfolio only when the price is high. Dollar Cost
Averaging does not guarantee a profit and it doesn't protect against a loss if
market prices decline. Dollar Cost Averaging is available only during the
Accumulation Phase.
The minimum amount which can be transferred each month under Dollar Cost
Averaging is $100. The maximum
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transfer amount can be no more than 1/6 of the total value in the Fixed Account
or Money Market subaccount at the time the transfers begin. Once you elect
Dollar Cost Averaging, it remains in effect until the value in the Fixed Account
or Money Market subaccount is inadequate to execute the requested transfers or
until you cancel it by notifying us. You may cancel this option at any time.
There is no charge or fee for using Dollar Cost Averaging. However, transfers
made under the Dollar Cost Averaging program will be counted in determining the
total number of transfers in any year. We reserve the right to discontinue
offering Dollar Cost Averaging at any time. Such action by us will not end any
Dollar Cost Averaging in effect at the time we terminate the program.
VOTING RIGHTS: We are the legal owner of all investment portfolio shares
purchased under this Contract and held in the subaccounts. However, when an
investment portfolio solicits proxies in conjunction with a vote of
shareholders, we are required to obtain from you and other Contract Owners (or
Annuitants, if the Contract is in the Income Phase) instructions as to how to
vote those shares. When we receive those instructions, we will vote all of the
shares we own in the affected portfolio, including any we own in our own behalf,
in the same proportion as those instructions. If, however, we determine that we
are no longer required to obtain voting instructions from the Contract
Owners/Annuitants, we will vote the shares as we alone may decide. A more
detailed discussion of voting rights is found in the SAI. These new investment
portfolios may have higher fees and charges than the ones they replaced.
SUBSTITUTION: From time to time, we may substitute one or more of the investment
portfolios available for investment by the subaccounts you have selected with
another portfolio. We may also add or delete one or more subaccounts or
investment portfolios. We will not do this without the prior approval of the
Securities and Exchange Commission and we will notify you of our intent, if we
decide to take such action. For a more complete discussion of our right to add,
delete or substitute investments under the Contract, see the SAI.
SECTION 5: CHARGES AND DEDUCTIONS
There are several charges and other expenses associated with the Contract that
will reduce the return on your investment in the Contract. We may realize a
profit or loss on one or more of these charges. We may use any such profits for
any corporate purpose, including, among other things, the payment of sales
expenses. These charges and expenses are:
INSURANCE CHARGES: Each business day, we make a deduction from the assets in the
subaccounts for certain risks and costs we incur for providing the Contract. We
do this as part of the calculation of the value of Accumulation Units and
Annuity Units. The insurance charge has two parts: (1) the mortality and expense
risk charge; and (2) the administration charge.
Mortality and Expense Risk Charge: This charge is for all of the insurance
benefits included under the Contract such as the guaranteed minimum interest
rate used to calculate Fixed Annuity Income Payments, the guarantee that
annuity income payments will continue for the life of the Annuitant, the
guaranteed death benefits and for the risk that the current charges will be
insufficient to cover the cost of administering the Contract in the future.
Currently, the Mortality and Expense Risk Charge is equal, on an annual
basis, to 1.25% of the average daily net assets of the Contract invested in
the investment portfolios. We may change this charge in the future but it
will never be greater than 1.25%.
Administration Charge: This charge, together with the Annual Contract Fee
(see below) is intended to cover all the expenses associated with
administering the Contract. These costs include printing the Contract,
preparing and distributing confirmation statements and annual reports to
Contract Owners, maintaining Contract records, personnel costs, legal and
accounting fees, filing fees, computer and systems costs and general
overhead. Currently, the Administration Charge is equal, on an annual basis,
to 0.15% of the average daily net assets of the Contract invested in the
investment portfolios. We may change this charge in the future but it will
never be greater than 0.15%.
ANNUAL CONTRACT FEE: On the last business day of each Contract Year during the
Accumulation Phase, we deduct $30 from your Contract as an Annual Contract Fee
to reimburse us for administering the Contract. The fee will be charged by
reducing the value in each subaccount and/or the Fixed Account on a pro-rata
basis. This charge cannot be increased.
We do not deduct this fee if, when the deduction is to be made, the value of
your Contract is $25,000 or more. In addition, we do not deduct this fee if you
have paid $2,500 in additional purchase payments ($2,000 for Qualified
Contracts), exclusive of the initial purchase payment, during the Contract Year.
If you surrender your Contract, the Annual Contract Fee for that Contract Year
will be deducted from the amount you receive, unless it is waived, as noted
above.
SURRENDER CHARGES: Each Contract Year during the Accumulation Phase, you may
withdraw all of your earnings and up to 10% of your total purchase payments
remaining under the Contract without paying any Surrender Charge.
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Otherwise, the charge is a percentage of the purchase payment(s) withdrawn,
based on the number of years since the date the purchase payment(s) was paid.
This right of "free withdrawal" does not accumulate from year to year. In other
words, any portion of the 10% not taken in one Contract Year is not added to the
10% that can be taken during the next Contract Year.
Surrender Charges range from a maximum of 7%, declining 1% each year since the
purchase payment was added to the Contract until the sixth year, when it becomes
0%. A table of Surrender Charges is shown below.
<TABLE>
<CAPTION>
Number of Years Since Charge as a Percentage
Date of Purchase Payment of Purchase Payment Withdrawn
- ------------------------ -----------------------------
<S> <C>
0-1 7%
1-2 6%
2-3 5%
3-4 4%
4-5 3%
5+ 0%
</TABLE>
We do not assess Surrender Charges on earnings withdrawn, death benefit payments
or Annuity Income Payments paid as a life annuity or a life annuity with a
period certain of at least five years. For purposes of determining the Surrender
Charge, we treat withdrawals as coming first from earnings and then from the
oldest purchase payment, then the next oldest and so forth. When a withdrawal is
made, you will receive the amount withdrawn less any Surrender Charge.
SURRENDER PROCESSING FEE: In addition to the Surrender Charge, we reserve the
right to assess a processing charge equal to the lesser of $25 or 2% of the
amount withdrawn for each withdrawal in excess of 12 in any Contract Year. This
fee is deducted pro rata from the Fixed Account and each subaccount from which a
withdrawal is made. We are not currently imposing this fee.
PREMIUM TAXES: Some states and other governmental entities (i.e. cities and
municipalities) charge premium or other taxes ranging up to 3.5%, on contracts
issued by insurance companies. We are responsible for paying these taxes and
will make a deduction from the Contract Value for them. Some of these taxes are
due when the Contract is issued and others are due when annuity income payments
begin. Unless we are required to pay taxes at some other time, it is our
practice to deduct for these taxes at the time annuity income payments begin or
when the Contract is surrendered.
TRANSFER PROCESSING FEE: We reserve the right to charge $25 for each transfer in
excess of 12 in any Contract Year. This charge is at cost with no profit to us.
Currently, we are not charging this fee until the 19th transfer in a Contract
Year. For the purposes of determining the number, each transfer from the Fixed
Account and/or any subaccount in a Contract Year is considered to be one
transfer, regardless of how allocated. Although a transfer processing fee is not
charged for Dollar Cost Averaging, Dollar Cost Averaging transactions are
counted in determining the number of transfers made during a Contract Year. If a
transfer is made from the Fixed Account and/or one or more subaccounts at the
same time, each losing subaccount and the Fixed Account would be charged a
separate transfer processing fee.
INVESTMENT PORTFOLIO EXPENSES: Each investment portfolio incurs certain
expenses, including investment advisory fees, which are paid out of its assets
and are described in its prospectus.
SECTION 6: TAXES
NOTE: The following is provided as general information. It is based on our
understanding of current federal income tax laws and no representation is made
as to the likelihood of the continuation of such laws or their interpretation by
the Internal Revenue Service ("IRS"). It is not intended as tax advice to any
individual. You should consult your own tax adviser with any questions regarding
your own situation.
ANNUITY CONTRACTS IN GENERAL: Annuity contracts are a means of setting aside
money for future needs, such as retirement. Congress recognized how important
long-term saving was and provided special rules in the Internal Revenue Code
(the "Code") for annuities.
Simply stated, these rules provide that generally you will not be taxed on the
earnings on money held in your annuity contract
until you take the money out. This is referred to as tax deferral. There are
different rules as to how you will be taxed depending on how you take the money
out and the type of contract - qualified or non-qualified. (See the following
sections.)
You, as the Owner, will generally not be taxed on increases in the value of your
Contract unless a distribution occurs prior to the Annuity Income Date - either
as a withdrawal or at surrender. The Annuitant (including you, if you are also
the Annuitant), will be taxed at the time annuity income payments are paid. When
you make a withdrawal, you are taxed on the amount of the withdrawal that comes
from earnings. For annuity income payments different rules apply. A portion of
each annuity income payment is treated as a return of purchase payments and that
portion will not be taxed. The remaining portion of the annuity income payment
will be treated as ordinary income. How the annuity income payment is divided
between taxable and non-taxable portions depends on the period over which the
annuity income
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payments are expected to be made. Annuity income payments received after you
have received all of your purchase payments are fully includible in income.
When a Non-Qualified Contract is owned by a non-natural person (i.e. a
corporation or certain other entities other than tax-qualified trusts), the
Contract will generally not be treated as an annuity for tax purposes, although
there are certain exceptions to this rule. Non-natural persons considering the
purchase of a Non-Qualified Contract should consult a tax adviser.
QUALIFIED AND NON-QUALIFIED CONTRACTS: If you purchase the Contract on an
individual basis and not under any pension plan or as an individual retirement
annuity, your Contract is referred to as a Non-Qualified Contract.
If you purchase the Contract as an individual retirement annuity (IRA) or as a
Roth IRA, your Contract is referred to as a Qualified Contract. Under a
traditional IRA, contributions to the Contract may be deductible. Contributions
made under a Roth IRA are not deductible but distributions may be tax free if
you meet certain rules. You should consult your legal adviser or tax counsel if
you are considering buying the contract for use with any retirement plan.
WITHDRAWALS - NON-QUALIFIED CONTRACTS: If you make a withdrawal from your
Contract, the Code treats such a withdrawal as first coming from earnings and
then from your purchase payments. Such withdrawn earnings are includible as
income.
The Code also provides that under certain conditions, any amount received under
an annuity contract which is included in income may be subject to a penalty. The
amount of the penalty is equal to 10% of the amount that is includible in
income. There is no penalty on any amounts: (1) paid to you on or after you
reach age 59 1/2; (2) paid after you die; (3) paid if you become totally
disabled (as that term is defined in the Code); (4) paid in a series of
substantially equal payments made at least annually under a lifetime annuity;
(5) paid under an immediate annuity; or (6) which came from purchase payments
made prior to August 14, 1982.
WITHDRAWALS - QUALIFIED CONTRACTS: The above information describing the taxation
of Non-Qualified Contracts does not apply to Qualified Contracts. There are
special rules which govern Qualified Contracts. Generally, these rules restrict
both: (1) the amount that you are allowed to contribute to the Contract during
any year; and (2) the time when you can take withdrawals or surrenders, and
receive payments under the Contract. In addition, the 10% penalty tax may be
assessed on withdrawals you take prior to the date you reach age 59 1/2. You may
also be required to begin receiving minimum amounts from your Contract by a
certain date. The terms of the plan may limit your rights under the Contract. We
have provided a more complete discussion in the SAI.
DIVERSIFICATION REQUIREMENTS: The Code provides that the underlying investments
for a non-qualified variable annuity must satisfy certain diversification
requirements in order for it to be treated as an annuity contract. We believe
that the investment portfolios are being managed so as to comply with the
requirements.
OWNER CONTROL: Neither the Code nor the Treasury Regulations issued to date
provide guidance as to the circumstances under which you, because of the degree
of control you exercise over the underlying investments, and not us, would be
considered the owner of the shares of the investment portfolios. If this occurs,
it would result in the loss of the favorable tax treatment for the Contract. It
is unknown to what extent Owners are permitted to select investment portfolios,
to make transfers among investment portfolios or the number and type of
investment portfolios Owners may select from.
If additional guidance is issued in this area, it is possible that you, as the
Owner of the Contract, could be treated as the owner of the investment
portfolios, which could significantly change your tax obligations.
Due to the uncertainty in this area, we reserve the right to modify the Contract
as necessary to attempt to maintain favorable tax treatment.
TAXATION OF DEATH BENEFIT PROCEEDS: The death benefit is taxable as the income
of the recipient as follows: (i) if distributed in a lump sum, the death benefit
is taxed in the same way as a surrender of the Contract; or (ii) if distributed
under an annuity income payment option, it is taxed in the same way as annuity
income payments.
TRANSFERS, ASSIGNMENTS OR EXCHANGES OF A CONTRACT: If you transfer or assign
your ownership of the Contract, change the Annuitant, select certain Annuity
Income Dates, or exchange the Contract, it may result in certain tax
consequences to you that are not discussed in this prospectus. You should
consult a tax adviser if you wish to transfer, assign or exchange the Contract.
WITHHOLDING: Unless directed otherwise, we are required to withhold an amount
for federal income tax from any money we distribute from the Contract.
Recipients can generally elect, however, not to have tax withheld from
distributions. Certain amounts we pay out from some Qualified Contracts are
subject to mandatory tax withholding.
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<PAGE> 23
MULTIPLE CONTRACTS: All annuity contracts that are issued by us (or our
affiliates) to the same Owner during any calendar year are treated as one
annuity contract for purposes of determining the amount includible in that
Owner's income when a taxable distribution occurs.
SECTION 7: ACCESS TO YOUR MONEY
You can obtain the money you have in your Contract: (1) by withdrawing a portion
of it or surrendering your Contract in full prior to the Annuity Income Date; or
(2) by electing to start receiving annuity income payments. In addition, your
Beneficiary can receive the money in your Contract as a death benefit if you die
prior to the Annuity Income Date. If you surrender your Contract before the
Annuity Income Date, you will receive the Contract Value on the day the
surrender is completed, less any applicable Surrender Charges, premium taxes and
the Annual Contract Fee (See "Section 5: Charges and Deductions").
If you withdraw only some of the money in your Contract, you must tell us if
money is to be taken from the Fixed Account and/or one or more subaccounts.
Under most circumstances, the amount of any withdrawal must be at least $500.
You will receive the amount you requested, less any applicable Surrender
Charges, taxes and fees. We will withdraw the amount requested at the end of the
business day on which we receive your request. After a withdrawal, if your total
Contract Value is less than $2,000, we may pay the remaining value to you and
terminate the Contract.
Income taxes, tax penalties and certain restrictions may apply to any surrender
or withdrawal. We have the right to defer payments from the Fixed Account for up
to six months.
SYSTEMATIC WITHDRAWAL PROGRAM: You may elect to receive periodic withdrawals of
a specified dollar amount or a specified whole percent of the Contact's Value
under our systematic withdrawal plan. Withdrawals may be made on a monthly,
quarterly, semi-annual or annual basis. Each withdrawal from the Fixed Account
and/or any subaccount under the systematic withdrawal program must be at least
$50. If you don't elect this option when you first apply for the Contract,
payments under the systematic withdrawal program will not begin until on or
after the first contract anniversary. Withdrawals under the systematic
withdrawal plan may be subject to a Surrender Charge. (See "Surrender Charges").
Participation in the systematic withdrawal plan will automatically end if the
value in the Fixed Account or the subaccount(s) from which withdrawals are being
made becomes zero. You may stop systematic withdrawals at any time. We reserve
the right to discontinue offering the systematic withdrawal plan at any time.
However, termination of the program by us will not end any systematic withdrawal
plan in effect at the time we terminate the program. Systematic withdrawals may
have adverse federal income tax consequences and you should, therefore, consult
with your tax adviser before electing this option.
SECTION 8: PERFORMANCE
From time to time, we may advertise yields, effective yields and total returns
of the various investment portfolios and/or subaccounts. Standard Total Return
figures for the subaccounts will reflect the deduction of all charges under the
Contract, including the insurance charges, the Annual Contract Fee and Surrender
Charges. These figures are based on historical returns of the subaccounts since
their inception and do not indicate or project future performance.
Advertisements may also include yields, effective yields and total returns that
do not reflect the deduction of the Annual Contract Fees and Surrender Charges.
The deduction of Annual Contract Fees and Surrender Charges would reduce the
performance results.
In addition, we may present historic performance data for the investment
portfolios since their inception reduced by portfolio expenses and some or all
of the fees and charges under the Contract. Such adjusted historic performance
includes data that precedes the date the portfolio(s) were first available under
the Contract but is designed to show the performance that would have resulted if
the investment portfolios and/or the Contract had been available during that
time.
We may also advertise investment portfolio and/or subaccount performance
relative to certain performance rankings and indices compiled by independent
organizations and/or report other information including the effect of
tax-deferred compounding on a subaccount's investment returns, or returns in
general, which may be illustrated by tables, graphs, or charts. All income and
capital gains derived from underlying investment portfolios are reinvested and
can lead to substantial long-term accumulation of assets, provided that the
portfolio's investment experience is positive. More detailed information as to
the calculation of performance appears in the SAI.
For more information on the performance of investment portfolios under the
Contract, see their prospectuses.
SECTION 9: DEATH BENEFITS
UPON YOUR DEATH: If you die before annuity income payments begin, we will pay a
death benefit to your Beneficiary (see below). If there is a Joint Owner, the
death benefit will be paid when the first owner dies and the surviving Joint
Owner will be treated as the Beneficiary. The
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<PAGE> 24
amount of the death benefit depends on how old you (or the Joint Owner) are on
the date of death.
If you (or the Joint Owner) die prior to age 75, the death benefit will be the
greater of:
1. the value of your Contract on the date we receive adequate proof of
death;
2. the value of the Contract on the most recent 5th Contract anniversary
immediately preceding the date of death, plus any subsequent purchase
payments less any withdrawals since that anniversary date; or
3. the total of all purchase payments received less any purchase payment
withdrawals since the date the Contract was issued.
If you (or your Joint Owner) die on or after the date you (or the Joint Owner)
reach age 75, the death benefit will be the greater of:
1. the value of your Contract on the date we receive adequate proof of
death;
2. the death benefit as of your (or the Joint Owner's) 75th birthday, less
the dollar amount of any subsequent withdrawals; or
3. the total of all purchase payments received less any purchase payment
withdrawals since the date this Contract was issued.
You may specify the manner in which the death benefit is to be paid. If you do
not, the Beneficiary has this right. In either case, the entire death benefit
must be paid within 5 years after the date of death, unless: (1) it is paid over
the Beneficiary's lifetime or a period not extending beyond the Beneficiary's
life expectancy; and (2) payments begin within one year of the date of death.
However, if the Beneficiary is your spouse, he/she may continue the Contract as
the Owner.
If the death benefit is paid immediately in one lump sum, the Contract will end
on the date of payment. If not, the death benefit will become the new Contract
Value and will be allocated to the various subaccounts and the Fixed Account in
the same proportion as existed on the date we receive adequate proof of death.
DEATH OF THE ANNUITANT: If the Annuitant dies before annuity income payments
start, you can name a new Annuitant. If no new Annuitant is named within 30
days, you will become the Annuitant. If you are the Annuitant, we will pay the
Beneficiary the death benefit as described above. However, if the Owner (you) is
a non-natural person, then the death of, or change in, the Annuitant will be
treated as the death of the Owner and the "Upon Your Death" provisions stated
above will apply.
If the Annuitant dies after annuity income payments start, payments will be made
as described in "Section 2: Annuity Payments (The Income Phase)."
SECTION 10: OTHER INFORMATION
FIRST CITICORP LIFE INSURANCE COMPANY: First Citicorp Life Insurance Company is
a stock life insurance company organized under New York laws in 1978. We are a
wholly owned subsidiary of Citicorp Life Insurance Company, an Arizona company,
which in turn is wholly owned by Citibank Delaware. Citibank Delaware is a
wholly owned subsidiary of Citicorp Holdings Inc., which in turn, is a wholly
owned subsidiary of Citigroup, one of the world's largest bank holding
companies.
THE SEPARATE ACCOUNT: On July 6, 1994 we established a Separate Account under
New York law, the First Citicorp Life Variable Annuity Separate Account, to
receive, hold and invest purchase payments made under these, and similar
contracts. It has been registered with the SEC as a unit investment trust under
the Investment Company Act of 1940 (the "1940 Act"). The Separate Account is
divided into a number of subaccounts, each of which invests exclusively in the
shares of a corresponding investment portfolio. Although the assets in the
Separate Account are our property, the Separate Account is not chargeable with
liabilities arising out of any other business that we may conduct. The assets of
the Separate Account are available to cover our general liabilities only to the
extent that those assets exceed the liabilities arising under the Contracts and
any other contracts supported by the Separate Account. The income, gains and
losses, realized and unrealized, from the assets allocated to each subaccount
are credited to and charged against that subaccount without regard to income,
gains and losses from any other of our accounts or subaccounts. We have the
right to transfer to the General Account any assets of the Separate Account
which are in excess of reserves and other contract liabilities. All obligations
arising under the Contracts are our general corporate obligations.
DISTRIBUTION: Applications for Contracts are solicited by agents who are
licensed by applicable state insurance authorities to sell our variable annuity
contracts and who are also registered representatives of broker-dealers
registered with the SEC under the Securities Exchange Act of 1934 and having
written sales agreements with the principal underwriter to sell the Contract.
CFBDS, Inc. acts as the principal underwriter, as defined in the 1940 Act, of
the Contracts for the Separate Account pursuant to an Underwriting Agreement
with us. CFBDS is not obligated to sell any specific number of Contracts. CFBDS,
Inc.'s principal business address is 21 Milk St., Boston, Massachusetts.
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We may pay sales commissions to broker-dealers up to an amount equal to 7.00% of
the purchase payments. These broker-dealers are expected to compensate sales
representatives in varying amounts from these commissions. We also may pay other
distribution expenses such as production incentive bonuses, agent's insurance
and pension benefits, and agency expense allowances. These distribution expenses
do not result in any additional charges under the Contracts that are not
described under "Charges and Deductions."
OWNERSHIP: You are the Owner of the Contract. You are also the Annuitant unless
a different Annuitant is named. Any Joint Owner must be your spouse unless state
law requires us to permit other Joint Owners or we otherwise agree. Before the
Annuity Income Date you have all the rights under the Contract, subject to the
rights of any irrevocable beneficiary or assignee of record. If Joint Owners are
named, both must consent to any change.
BENEFICIARY: The Beneficiary is the person(s) or entity you name to receive any
death benefit. The Beneficiary is named by you and can be changed at any time
prior to the Annuity Income Date. If you have named an irrevocable beneficiary,
their approval must be obtained before you change Beneficiaries. If you name two
or more Beneficiaries, each Beneficiary will receive an equal share of any Death
Benefit unless you specify otherwise in writing. If a named Beneficiary dies
before you, the interest of that Beneficiary will end on his or her death. If no
Beneficiary is named or no Beneficiary survives you, any Death Benefit will be
paid to your estate.
SUSPENSION OF PAYMENTS OR TRANSFERS: We may be required to suspend or postpone
surrender or withdrawal payments and transfers if:
1. the New York Stock Exchange is closed, other than customary weekend and
holiday closings, or trading on the exchange is restricted as determined
by the SEC; or
2. the SEC permits by an order such postponement for the protection of
Contract Owners; or
3. the SEC determines that an emergency exists that would make the disposal
of securities held in a subaccount or the determination of the value of
the subaccount's net assets not reasonably practicable.
If a recent check or draft has been submitted, we have the right to delay
payment until we have assured ourselves that the check or draft has been
honored.
Any surrender, withdrawal or death benefit will usually be paid within 7 days
after we receive proper notice. We have the right to defer payment of any
surrender, withdrawal or transfer from the Fixed Account for up to six months
from the date of receipt of written notice for such a surrender, withdrawal or
transfer. If payment is not made within 10 days after receipt of all necessary
documentation from you, any amount paid will include interest at the minimum
rate required by law or the current Fixed Account interest rate, if greater.
MODIFICATIONS: We may modify the Contract if necessary:
1. for the Contract or the Separate Account to comply with the laws or
regulations of a governmental agency; or
2. to reflect a change in the operation of the Separate Account or a
subaccount; or
3. to add, delete or modify an account, a subaccount or an investment
portfolio.
If such modifications are made, we will notify you, or the Annuitant, and
endorse the Contract if appropriate.
LEGAL PROCEEDINGS: There are no material legal proceedings to which the Separate
Account, or CFBDS, Inc. as principal underwriter, is a party or the assets of
the Separate Account are subject. We are not involved in any litigation that is
of material importance in relation to the total assets of, or that relates to,
the Separate Account.
FINANCIAL STATEMENTS: Our audited Statutory Financial Statements as of December
31, 1999 and 1998 and for the years ended December 31, 1999, 1998 and 1997 as
well as the Independent Auditors' Report appear in the Statement of Additional
Information bearing the same date as this Prospectus. Our Financial Statements
should only be considered when evaluating our ability to meet our obligations
under the Contract. The SAI also contains financial statements for the Separate
Account as of December 31, 1999.
If you would like a free copy of the Statement of Additional Information for
this prospectus, please complete the following and mail it to First Citicorp
Life Insurance Company, 800 Silver Lake Boulevard, P.O. Box 7031, Dover,
Delaware 19903.
INQUIRES: If you need more information, please contact us at our Customer
Service Office at: First Citicorp Life Insurance Company, 800 Silver Lake
Boulevard, P.O. Box 7031, Dover, DE 19903. You may call us toll free at
800-497-4857.
- 17 -
<PAGE> 26
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
<TABLE>
<S> <C>
ADDITIONAL CONTRACT PROVISIONS 4
The Contract 4
Incontestability 4
Misstatement of Age or Sex 4
Participation 4
Assignment 4
DISTRIBUTION OF THE CONTRACTS 4
DETERMINING ACCUMULATION UNIT VALUES 4
ADDING, DELETING OR SUBSTITUTING
INVESTMENT PORTFOLIOS 5
VOTING RIGHTS 5
CALCULATION OF YIELDS AND TOTAL
RETURNS 6
Money Market Subaccount Yields 6
Other Subaccount Yields 8
Average Annual Total Returns 9
Subaccount Performance Data 11
Adjusted Historic Portfolio Performance Data 16
Effect of the Annual Contract Fee on Performance Data 21
VARIABLE ANNUITY PAYMENTS 21
Assumed Investment Rate 21
Amount of Variable Annuity Payments 21
Annuity Unit Value 22
TAX STATUS 23
Introduction 23
Taxation of the Company 23
Tax Status of the Contract 23
Taxation of Annuities 25
Qualified Contracts 26
Withholding 27
Possible Changes in Taxation 28
Other Tax Consequences 28
LEGAL MATTERS 28
EXPERTS 28
OTHER INFORMATION 28
FINANCIAL STATEMENTS 29
Please send a copy of the Statement of Additional Information pertaining to the
First Citicorp Life Insurance Company Variable Annuity and the First Citicorp
Life Variable Annuity Separate Account to: (Please Print or Type)
Name:
---------------------------------------
Mailing Address:
----------------------------
----------------------------
</TABLE>
- 18 -
<PAGE> 27
APPENDIX: CONDENSED FINANCIAL INFORMATION
The following shows Accumulation Unit Values and number of Accumulation Units
for the period from the commencement of each subaccount (2/99) through December
31, 1999. This condensed financial information is derived from the financial
statements of the Separate Account and should be read in conjunction with the
financial statements, related notes and other financial information contained in
the SAI.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------- -------------------------------------
From Commencement
of Subaccount
Subaccount through 12/31/99
- -------------------------------------------------------------------------- -------------------------------------
<S> <C>
CitiSelect VIP Folio 200 Conservative
Unit Value Beginning of Period
Unit Value End of Period $1.13
Number of Accumulation Units Outstanding 418,239
- -------------------------------------------------------------------------- -------------------------------------
CitiSelect VIP Folio 300 Balanced
Unit Value Beginning of Period
Unit Value End of Period $1.17
Number of Accumulation Units Outstanding 248,559
- -------------------------------------------------------------------------- -------------------------------------
CitiSelect VIP Folio 400 Growth
Unit Value Beginning of Period
Unit Value End of Period $1.17
Number of Accumulation Units Outstanding 349,928
- -------------------------------------------------------------------------- -------------------------------------
CitiSelect VIP Folio 500 Growth Plus
Unit Value Beginning of Period
Unit Value End of Period $1.20
Number of Accumulation Units Outstanding 9,906
- -------------------------------------------------------------------------- -------------------------------------
CitiFunds Small Cap Growth VIP Portfolio
Unit Value Beginning of Period
Unit Value End of Period $1.42
Number of Accumulation Units Outstanding 197,794
- -------------------------------------------------------------------------- -------------------------------------
Fidelity VIP Growth Portfolio
Unit Value Beginning of Period
Unit Value End of Period $3.35
Number of Accumulation Units Outstanding 6,054
- -------------------------------------------------------------------------- -------------------------------------
Fidelity VIP High Income Portfolio
Unit Value Beginning of Period
Unit Value End of Period $1.49
Number of Accumulation Units Outstanding 2,922,891
- -------------------------------------------------------------------------- -------------------------------------
Fidelity Equity-Income Portfolio
Unit Value Beginning of Period
Unit Value End of Period $1.40
Number of Accumulation Units Outstanding 5,183,695
- -------------------------------------------------------------------------- -------------------------------------
Fidelity VIP Overseas Portfolio
Unit Value Beginning of Period
Unit Value End of Period $1.69
Number of Accumulation Units Outstanding 696,431
- -------------------------------------------------------------------------- -------------------------------------
Fidelity VIP II Contrafund Portfolio
Unit Value Beginning of Period
Unit Value End of Period $1.89
Number of Accumulation Units Outstanding 6,894,075
- -------------------------------------------------------------------------- -------------------------------------
Fidelity VIP II Index 500 Portfolio
Unit Value Beginning of Period
Unit Value End of Period $1.85
Number of Accumulation Units Outstanding 13,803,244
- -------------------------------------------------------------------------- -------------------------------------
AIM V.I. Capital Appreciation Fund
Unit Value Beginning of Period
Unit Value End of Period $2.79
Number of Accumulation Units Outstanding 1,211,084
- -------------------------------------------------------------------------- -------------------------------------
AIM V.I. Government Securities Fund
Unit Value Beginning of Period
Unit Value End of Period $1.10
Number of Accumulation Units Outstanding 4,697,586
- -------------------------------------------------------------------------- -------------------------------------
</TABLE>
- 19 -
<PAGE> 28
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------- -------------------------------------
From Commencement
of Subaccount
Subaccount through 12/31/99
- -------------------------------------------------------------------------- -------------------------------------
<S> <C>
AIM V.I. Growth Fund
Unit Value Beginning of Period
Unit Value End of Period $2.13
Number of Accumulation Units Outstanding 2,865,017
- -------------------------------------------------------------------------- -------------------------------------
AIM V.I. Growth and Income Fund
Unit Value Beginning of Period
Unit Value End of Period $1.97
Number of Accumulation Units Outstanding 5,084,678
- -------------------------------------------------------------------------- -------------------------------------
AIM V.I. International Equity Fund
Unit Value Beginning of Period
Unit Value End of Period $1,82
Number of Accumulation Units Outstanding 2,271,267
- -------------------------------------------------------------------------- -------------------------------------
AIM V.I. Value Fund
Unit Value Beginning of Period
Unit Value End of Period $1.98
Number of Accumulation Units Outstanding 9,936,964
- -------------------------------------------------------------------------- -------------------------------------
MFS Global Governments Series
Unit Value Beginning of Period
Unit Value End of Period $1.13
Number of Accumulation Units Outstanding 181,566
- -------------------------------------------------------------------------- -------------------------------------
MFS Money Market Series
Unit Value Beginning of Period
Unit Value End of Period $1.17
Number of Accumulation Units Outstanding 689,526
- -------------------------------------------------------------------------- -------------------------------------
MFS Bond Series
Unit Value Beginning of Period
Unit Value End of Period $1.11
Number of Accumulation Units Outstanding 2,384,560
- -------------------------------------------------------------------------- -------------------------------------
MFS Total Return Series
Unit Value Beginning of Period
Unit Value End of Period $1.32
Number of Accumulation Units Outstanding 5,952,784
- -------------------------------------------------------------------------- -------------------------------------
MFS Research Series
Unit Value Beginning of Period
Unit Value End of Period $1.71
Number of Accumulation Units Outstanding 2,373,664
- -------------------------------------------------------------------------- -------------------------------------
MFS Emerging Growth Series
Unit Value Beginning of Period
Unit Value End of Period $2.68
Number of Accumulation Units Outstanding 3,879,175
- -------------------------------------------------------------------------- -------------------------------------
</TABLE>
*The Fidelity VIP Growth Portfolio, AIM V.I. Capital Appreciation Fund, MFS
Global Governments Series and MFS Money Market Series subaccounts commenced
operations on February 21, 1995. All other subaccounts commenced operations on
February 3, 1997.
- 20 -
<PAGE> 29
PART B
Information Required in a Statement of Additional Information
<PAGE> 30
STATEMENT OF ADDITIONAL INFORMATION
FIRST CITICORP LIFE INSURANCE COMPANY
Customer Service Office
800 Silver Lake Boulevard
P.O. Box 7031
Dover, DE 19904
(800) 497-4857
FIRST CITICORP LIFE VARIABLE ANNUITY SEPARATE ACCOUNT
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT
This Statement of Additional Information contains information in
addition to the information described in the Prospectus for the flexible premium
deferred variable annuity contract (the "Contract") offered by First Citicorp
Life Insurance Company ("we", "our" and "us"). This Statement of Additional
Information is not a prospectus, and it should be read only in conjunction with
the prospectuses for the Contract and the investment portfolios. The Prospectus
for the Contract is dated the same as this Statement of Additional Information.
You may obtain a copy of the prospectuses by writing or calling us at our
address or phone number shown above.
MAY 1, 2000
<PAGE> 31
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ADDITIONAL CONTRACT PROVISIONS..........................................................................................3
The Contract................................................................................................3
Incontestability............................................................................................3
Misstatement of Age or Sex..................................................................................3
Participation...............................................................................................3
Assignment..................................................................................................3
DISTRIBUTION OF THE CONTRACTS...........................................................................................3
DETERMINING ACCUMULATION UNIT VALUES....................................................................................3
ADDING, DELETING OR SUBSTITUTING INVESTMENT PORTFOLIOS.................................................................4
VOTING RIGHTS...........................................................................................................4
CALCULATION OF YIELDS AND TOTAL RETURNS.................................................................................5
Money Market Subaccount Yields..............................................................................6
Other Subaccount Yields.....................................................................................7
Average Annual Total Returns................................................................................8
Subaccount Performance Data................................................................................10
Adjusted Historic Portfolio Performance Data...............................................................15
Effect of the Annual Contract Fee on Performance Data......................................................20
VARIABLE ANNUITY PAYMENTS..............................................................................................20
Assumed Investment Rate....................................................................................20
Amount of Variable Annuity Payments........................................................................20
Annuity Unit Value.........................................................................................21
TAX STATUS.............................................................................................................22
Introduction...............................................................................................22
Taxation of the Company....................................................................................22
Tax Status of the Contract.................................................................................22
Taxation of Annuities......................................................................................24
Qualified Contracts........................................................................................25
Withholding................................................................................................27
Possible Changes in Taxation...............................................................................27
Other Tax Consequences.....................................................................................27
LEGAL MATTERS..........................................................................................................27
EXPERTS................................................................................................................27
OTHER INFORMATION......................................................................................................28
FINANCIAL STATEMENTS...................................................................................................28
</TABLE>
-2-
<PAGE> 32
ADDITIONAL CONTRACT PROVISIONS
THE CONTRACT
The application, endorsements and all other attached papers are part of
the Contract. The statements made in the application are deemed representations
and not warranties. We will not use any statement in defense of a claim or to
void the Contract unless it is contained in the application.
INCONTESTABILITY
We will not contest the Contract.
MISSTATEMENT OF AGE OR SEX
If the age or sex (if applicable) of the payee has been misstated, the
amount which will be paid is that which the proceeds would have purchased at the
correct age and sex (if applicable).
PARTICIPATION
The Contract does not participate in our divisible surplus.
ASSIGNMENT
Upon written notice to us, you may assign your rights under this
Contract. We assume no responsibility for the validity of any such assignment.
Assignments will not apply to any payments or actions taken prior to the time it
is recorded by us. Certain Qualified Contracts may not be assigned.
DISTRIBUTION OF THE CONTRACTS
CFBDS, Inc. acts as the principal underwriter and distributor of the
Contract, pursuant to an Underwriting Agreement with us. Applications for the
Contracts are solicited by agents who are licensed by applicable state insurance
authorities to sell our variable annuity contracts and who are also licensed
representatives of broker-dealers registered with the SEC under the Securities
Exchange Act of 1934 and having written sales agreements with the principal
underwriter to sell the Contract.
CFBDS, Inc. is not affiliated with First Citicorp Life Insurance Company
or the Separate Account. For fiscal years 1999, 1998 and 1997, no underwriting
commissions were paid to, or retained by, CFBDS, Inc.
DETERMINING ACCUMULATION UNIT VALUES
The accumulation unit value for each subaccount on its first Valuation
Period was set at $1.00. A Valuation Period is the period that starts at the
close of regular trading on the New York Stock Exchange on any business day and
ends at the close of regular trading on the next business day. We calculate the
accumulation unit value for each subaccount at the end of each Valuation Period.
We do this by multiplying the subaccount's accumulation unit value on the
preceding business day by the net investment factor for the subaccount's
Valuation Period just ended.
-3-
<PAGE> 33
The net investment factor for each subaccount for each Valuation Period
is calculated by dividing (1) by (2) and subtracting (3) from the result, where:
(1) Is the net asset value per share of the corresponding portfolio
at the end of the Valuation Period, plus the per share amount of
any declared and unpaid dividends or capital gains accruing to
that portfolio plus (or minus) a per share credit (or charge) for
any taxes resulting form the investment operations of the
subaccount;
(2) Is the portfolio's net asset value per share at the beginning of
the Valuation Period; and
(3) Is a factor representing the daily mortality and expense risk
charge and the administration charge deducted from the
subaccount.
ADDING, DELETING OR SUBSTITUTING INVESTMENT PORTFOLIOS
We reserve the right, subject to applicable law, to make additions to,
deletions from, or substitutions for the shares of a portfolio that are held in
or purchased by the Separate Account. If the shares of a portfolio are no longer
available for investment, or if, in our judgment, further investments in any
portfolio becomes inappropriate, we may redeem the shares of that portfolio and
substitute shares of another portfolio. We will not substitute any shares
attributable to a Contract's interest in a subaccount without notice and prior
approval of the SEC and state insurance authorities, to the extent required by
the 1940 Act and other applicable law.
We also reserve the right to establish additional subaccounts of the
Separate Account, each of which would invest in shares of a new corresponding
portfolio having a specified investment objective. We may, in our sole
discretion, establish new subaccounts or eliminate or combine one or more
subaccounts if marketing needs, tax considerations or investment or other
conditions warrant. Any new subaccounts may be made available to existing
Contract Owners on a basis to be determined by us. Subject to obtaining any
approvals or consents required by applicable law, the assets of one or more
subaccounts may be transferred to any other subaccount if, in our sole
discretion, marketing, tax, investment or other conditions warrant.
In the event of any such substitution or change, we may (by appropriate
endorsements, if necessary) change the Contract to reflect the substitution or
change. If we consider it to be in the best interest of Owners or annuitants,
and subject to any approvals that may be required under applicable law, the
Separate Account may be operated as a management investment company under the
1940 Act; it may be deregistered under that Act if registration is no longer
required; it may be combined with other separate accounts, or its assets may be
transferred to another separate account. In addition, we may, when permitted by
law, restrict or eliminate any voting privileges of Owners or other persons who
have such privileges under the Contracts.
VOTING RIGHTS
In accordance with our view of current applicable law, we will vote
portfolio shares held in the Separate Account at regular and special shareholder
meetings of the portfolios in accordance with instructions received from persons
having voting interests in the corresponding subaccounts. If, however, the 1940
Act or any regulation thereunder should be amended, or if the present
interpretation of
-4-
<PAGE> 34
the Act should change, or we otherwise determine that we are allowed to vote
the shares in our own right, we may elect to do so.
The number of votes that an Owner or Annuitant has the right to instruct
us will be calculated separately for each subaccount of the Separate Account,
and may include fractional votes. Prior to the Annuity Income Date, an Owner
holds a voting interest in each subaccount to which Contract Value is allocated.
After the Annuity Income Date, the Annuitant has a voting interest in each
subaccount from which variable annuity payments are made.
For each Owner, the number of votes attributable to a subaccount will be
determined by dividing the Contract Value attributable to that Owner's Contract
in that subaccount by the net asset value per share of the portfolio in which
that subaccount invests. For each Annuitant, the number of votes attributable to
a subaccount will be determined by dividing the liability for future variable
annuity payments to be paid from the subaccount by the net asset value per share
of the portfolio in which that subaccount invests. This liability for future
payments is calculated on the basis of the mortality assumptions, the 3.0%
assumed investment rate used in determining the number of annuity units of that
subaccount credited to the Annuitant's Contract and annuity unit value of that
subaccount on the date that the number of votes is determined. As variable
annuity payments are made to the Annuitant, the liability for future payments
decreases as does the number of votes.
The number of votes available to an Owner or Annuitant will be determined
as of the same or coincident date established by the portfolio for determining
shareholders eligible to vote at the shareholders' meeting. Voting instructions
will be solicited by written communication prior to such meeting in accordance
with procedures established for the portfolio. Each Owner or Annuitant having a
voting interest in a subaccount will receive proxy materials and reports
relating to any meeting of shareholders of the portfolio in which that
subaccount invests.
Portfolio shares as to which no timely instructions are received and
shares held by us in a subaccount as to which no Owner or Annuitant has a
beneficial interest will be voted in proportion to the voting instructions which
are received with respect to all Contracts participating in that subaccount.
Voting instructions to abstain on any item to be voted upon will be applied to
reduce the total number of votes eligible to be cast on a matter.
CALCULATION OF YIELDS AND TOTAL RETURNS
From time to time, we may disclose yields, total returns, and other
performance data pertaining to the Contracts for a subaccount. Such performance
data will be computed, or accompanied by performance data computed, in
accordance with the standards defined by the SEC. Because of the fees and
charges assessed under the Contract, the yield for each subaccount will be lower
than the yield for the investment portfolio supporting that subaccount. The
calculation of yields, total returns and other performance data do not reflect
the effect of any premium tax that may be applicable. Most states and political
subdivisions do not assess premium taxes; however, where state premium taxes are
assessed, we will deduct the amount of the tax due from each payment at rates
ranging from a minimum of 0.5% to a maximum of 3.5% of such payment at the time
annuity payments begin. Premium taxes levied by political subdivisions,
generally at rates of less than 1.00%, will be deducted in the same manner.
MONEY MARKET SUBACCOUNT YIELDS
-5-
<PAGE> 35
From time to time, advertisements and sales literature may quote the
current annualized yield of the Money Market Subaccount for a seven-day period
in a manner which does not take into consideration any realized or unrealized
gains or losses on shares of the MFS Money Market Series or on that portfolio's
securities.
This current annualized yield is computed by determining the net change
(exclusive of realized gains and losses on the sale of securities and unrealized
appreciation and depreciation, as well as income other than investment income)
at the end of the seven-day period in the value of a hypothetical account under
a Contract having a balance of 1 unit of the Money Market Subaccount at the
beginning of the period, dividing such net change in subaccount value by the
value of the hypothetical account at the beginning of the period to determine
the base period return, and annualizing this quotient on a 365-day basis. The
net change in subaccount value reflects: 1) net income from the portfolio
attributable to the hypothetical account; and 2) charges and deductions imposed
under the Contract which are attributable to the hypothetical account. The
charges and deductions include the per unit charges for the hypothetical account
for: 1) the annual contract fee; 2) the mortality and expense risk charge; and
(3) the asset-based administration charge. For purposes of calculating current
yields for a Contract, an average per unit contract fee is used based on the $30
annual contract fee deducted at the end of each Contract Year. Current Yield is
calculated according to the following formula:
CURRENT YIELD = ((NCS - ES)/UV) X (365/7)
Where:
NCS = the net change in the value of the MFS Money
Market Series (exclusive of realized gains or
losses on the sale of securities and unrealized
appreciation and depreciation, as well as
income other than investment income) for the
seven-day period attributable to a hypothetical
account having a balance of 1 subaccount unit.
ES = per unit expenses attributable to the
hypothetical account for the seven-day period.
UV = the unit value for the first day of the
seven-day period.
The seven-day Effective Yield is calculated by compounding the
unannualized base period return according to the following formula:
EFFECTIVE YIELD = (1 + ((NCS-ES)/UV)) 365/7 - 1
Where:
NCS = the net change in the value of the MFS Money
Market Series (exclusive of realized gains or
losses on the sale of securities and unrealized
appreciation and depreciation, as well as income
other than investment income) for the seven-day
period attributable to a hypothetical account
having a balance of 1 subaccount unit.
ES = per unit expenses attributable to the
hypothetical account for the seven-day period.
-6-
<PAGE> 36
UV = the unit value for the first day of the seven-day
period.
Based on the method of calculation described above, the Current Yield and
Effective Yield on amounts held in the MFS Money Market Subaccount for the
seven-day period ending December 31, 1999 were:
Current Yield = 4.46%
Effective Yield = 4.55%
The current and effective yields on amounts held in this subaccount
normally fluctuate on a daily basis. THEREFORE, THE DISCLOSED YIELD FOR ANY
GIVEN PAST PERIOD IS NOT AN INDICATION OR REPRESENTATION OF FUTURE YIELDS OR
RATES OF RETURN. The Money Market Subaccount's actual yield is affected by
changes in interest rates on money market securities, average portfolio maturity
of the MFS Money Market Series, the types and quality of portfolio securities
held by the MFS Money Market Series and the MFS Money Market Series' operating
expenses. Yields on amounts held in the Money Market Subaccount may also be
presented for periods other than a seven-day period.
Yield calculations do not take into account the surrender charge under
the Contract equal to a maximum of 7% of the amount of purchase payments
withdrawn for certain withdrawals. During each Contract Year, up to 10% of all
purchase payments, less any prior withdrawal of purchase payments, may be
withdrawn without the imposition of a surrender charge.
OTHER SUBACCOUNT YIELDS
From time to time, sales literature or advertisements may quote the
current annualized yield of the Bond Subaccount for a Contract for 30-day or
one-month periods. The annualized yield generated by the Bond Subaccount refers
to income generated by the subaccount during a 30-day or one-month period and is
assumed to be generated each 30-day or one month period over a 12-month period.
The yield is computed by: 1) dividing the net investment income of the
portfolio attributable to the subaccount units less subaccount expenses for the
period; by 2) the maximum offering price per unit on the last day of the period
times the daily average number of units outstanding for the period; by 3)
compounding that yield for a six-month period; and by 4) multiplying that result
by 2. Expenses attributable to the subaccount include the annual contract fee,
the asset-based administration charge and the mortality and expense risk charge.
The yield calculation assumes a contract fee of $30 per year per Contract
deducted at the end of each Contract Year for Contracts with less than $25,000
of Contract Value. For purposes of calculating the 30-day or one-month yield, an
average contract fee based on the average Contract Value in the Separate Account
is used to determine the amount of the charge attributable to the subaccount for
the 30-day or one-month period. The 30-day or one-month yield is calculated
according to the following formula:
YIELD = 2 X (((NI - ES)/(U X UV)) + 1)(6) - 1)
-7-
<PAGE> 37
Where:
NI = net income of the portfolio for the 30-day
or one-month period attributable to the
subaccount's units.
ES = expenses of the subaccount for the 30-day or
one-month period.
U = the average number of units outstanding.
UV = the unit value at the close (highest) of the
last day in the 30-day or one-month period.
Based on the method of calculation described above, for the thirty-day
period ending December 31, 1999, the yield for the Bond Subaccount was:
Yield = -6.80%
The yield on the amounts held in the Bond Subaccount normally fluctuates
over time. THEREFORE, THE DISCLOSED YIELD FOR ANY GIVEN PAST PERIOD IS NOT AN
INDICATION OR REPRESENTATION OF FUTURE YIELDS OR RATES OF RETURN. The Bond
Subaccount's actual yield is affected by the types and quality of securities
held by the MFS Bond Series and that portfolio's operating expenses.
Yield calculations do not take into account the surrender charge under
the Contract equal to a maximum of 7% of the amount of purchase payments
withdrawn for certain withdrawals. During each Contract Year, up to 10% of all
purchase payments, less any prior withdrawal of purchase payments, may be
withdrawn without the imposition of a surrender charge.
AVERAGE ANNUAL TOTAL RETURNS
From time to time, sales literature or advertisements may also quote
average annual total returns for one or more of the subaccounts for various
periods of time.
When a subaccount has been in operation for 1, 5, and 10 years,
respectively, the average annual total return for these periods will be
provided. Average annual total returns for other periods of time may, from time
to time, also be disclosed.
Average annual total returns represent the average annual compounded
rates of return that would equate an initial investment of $1,000 under a
Contract to the redemption value of that investment as of the last day of each
of the periods. The ending date for each period for which total return
quotations are provided will be for the most recent calendar quarter-end
practicable, considering the type of the communication and the media through
which it is communicated.
Average annual total returns are calculated using subaccount unit values
which we calculate on each Valuation Day based on the performance of the
subaccount's underlying portfolio, the deductions for the mortality and expense
risk charge, the deductions for the asset-based administration charge and the
Annual Contract Fee. The calculation assumes that the contract fee is $30 per
year per Contract deducted at the end of each Contract Year for Contracts with
less than $25,000 of Contract Value. For purposes of calculating average annual
total return, an average per-dollar per-day contract fee attributable to the
hypothetical account for the period is used. The calculation also assumes
surrender of the Contract
-8-
<PAGE> 38
at the end of the period for the return quotation. Total returns will therefore
reflect a deduction of the surrender charge for any period less than five years
since the date of the purchase payment being withdrawn. The total return is
calculated according to the following formula:
TR = ((ERV/P)(1/N)) - 1
Where:
TR = the average annual total return net of
subaccount recurring charges.
ERV = the ending redeemable value (net of any
applicable surrender charge) of the
hypothetical account at the end of the
period.
P = a hypothetical initial payment of $1,000.
N = the number of years in the period.
-9-
<PAGE> 39
SUBACCOUNT PERFORMANCE DATA
Based on the method of calculation described above, the Standardized
Average Annual Total Returns for the Subaccounts for the periods ending December
31, 1999 were:
**
Based on the method of calculation described above, we show the
Standardized Average Annual Total Returns for the Subaccounts for the periods
ending December 31, 1999 below. Although the current subaccount charge structure
did not exist during the periods shown, we have adjusted the returns of the
Subaccounts shown below to reflect the current Subaccount charges imposed under
the Contract.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Subaccount Standardized Average Annual Total Return Table
- ----------------------------------------------------------------------------------------------------------------------------------
For the one- For the period
year period from inception
Subaccount (date of inception of subaccount) ending to
12/31/99 12/31/99
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
VARIABLE ANNUITY PORTFOLIOS
CitiSelect(R)VIP Folio 200 Conservative (2/03/97) -6.17% -0.24%
CitiSelect(R)VIP Folio 300 Balanced (2/03/97) -3.03% 0.01%
CitiSelect(R)VIP Folio 400 Growth (2/03/97) 0.63% 1.27%
CitiSelect(R)VIP Folio 500 Growth Plus (2/03/97) 3.94% 2.25%
CitiFunds(SM) Small Cap Growth VIP Portfolio (2/03/97) 29.36% 8.54%
A I M VARIABLE INSURANCE FUNDS, INC.
Capital Appreciation Fund (2/21/95) 36.27% 20.87%
Government Securities Fund (2/03/97) -9.02% -1.32%
Growth Fund (2/03/97) 27.03% 25.52%
Growth and Income Fund (2/03/97) 26.05% 22.02%
International Equity Fund (2/03/97) 46.56% 18.62%
Value Fund (2/03/97) 21.76% 22.35%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
Growth Portfolio (2/21/95) 29.20% 25.57%
High Income Portfolio (2/03/97) 0.32% 0.27%
Equity-Income Portfolio (2/03/97) -1.48% 7.94%
Overseas Portfolio (2/03/97) 34.31% 15.63%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
Contrafund Portfolio (2/03/97) 16.20% 20.36%
Index 500 Portfolio (2/03/97) 12.51% 19.43%
MFS VARIABLE INSURANCE TRUST
Global Governments Series (2/21/95) -10.18% -0.34%
Money Market Series (2/21/95)* -3.16% 0.53%
Bond Series (2/03/97) -9.26% -1.10%
Total Return Series (2/03/97) -4.68% 5.31%
Research Series (2/03/97) 16.00% 16.01%
Emerging Growth Series (2/03/97) 67.92% 36.36%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*The yield quotations for the MFS Money Market Series quoted above more closely
reflect the current earnings of this subaccount than the total return quotation.
-10-
<PAGE> 40
We may disclose cumulative total returns in conjunction with the standard
formats described above. The cumulative total returns will be calculated using
the following formula:
CTR = (ERV/P) - 1
Where:
CTR = The cumulative total return net of
subaccount recurring charges for the
period.
ERV = The ending redeemable value of the
hypothetical investment at the end of the
period.
P = A hypothetical single payment of $1,000.
-11-
<PAGE> 41
Based on the method of calculation described above, we show the
Standardized Cumulative Total Returns for the Subaccounts for the periods ending
December 31, 1999 below. Although the current subaccount charge structure did
not exist during the periods shown, we have adjusted the returns of the
Subaccounts shown below to reflect the current Subaccount charges imposed under
the Contract.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Subaccount Standardized Cumulative Total Return Table
- ------------------------------------------------------------------------------------------------------------------------
For the For the
one-year period from
Subaccount (date of inception of subaccount) period ending inception to
12/31/99 12/31/99
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
VARIABLE ANNUITY PORTFOLIOS
CitiSelect VIP Folio 200 Conservative (2/03/97) -6.17% -0.70%
CitiSelect VIP Folio 300 Balanced (2/03/97) -3.03% 3.18%
CitiSelect VIP Folio 400 Growth (2/03/97) 0.63% 3.72%
CitiSelect VIP Folio 500 Growth Plus (2/03/97) 3.94% 6.64%
CitiFunds Small Cap Growth VIP Portfolio (2/03/97) 29.36% 26.66%
A I M VARIABLE INSURANCE FUNDS, INC.
Capital Appreciation Fund (2/21/95) 36.27% 151.25%
Government Securities Fund (2/03/97) -9.02% -3.75%
Growth Fund (2/03/97) 27.03% 92.65%
Growth and Income Fund (2/03/97) 26.05% 77.57%
International Equity Fund (2/03/97) 46.56% 63.66%
Value Fund (2/03/97) 21.76% 78.96%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
Growth Portfolio (2/21/95) 29.20% 202.44%
High Income Portfolio (2/03/97) 0.32% 0.78%
Equity-Income Portfolio (2/03/97) -1.48% 24.67%
Overseas Portfolio (2/03/97) 34.31% 52.03%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
Contrafund Portfolio (2/03/97) 16.20% 70.68%
Index 500 Portfolio (2/03/97) 12.51% 66.89%
MFS VARIABLE INSURANCE TRUST
Global Governments Series (2/21/95) -10.18% -1.66%
Money Market Series (2/21/95)* -3.16% 2.58%
Bond Series (2/03/97) -9.26% -3.14%
Total Return Series (2/03/97) -4.68% 16.09%
Research Series (2/03/97) 16.00% 53.50%
Emerging Growth Series (2/03/97) 67.92% 144.65%
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
*The yield quotations for the MFS Money Market Series quoted above more closely
reflect the current earnings of this subaccount than the total return quotation.
From time to time, sales literature or advertisements may also quote
average annual total returns and cumulative total returns that do not reflect
the surrender charge or the Annual Contract Fee. These are calculated in exactly
the same way as the average annual total returns and cumulative total returns
described above, except that the ending redeemable value of the hypothetical
account for the period is replaced with an ending value for the period that does
not take into account any charges on amounts surrendered or withdrawn or the
payment of the Annual Contract Fee.
-12-
<PAGE> 42
Based on this non-standardized method of calculation, the
Non-Standardized Average Annual Total Returns and the Non-Standardized
Cumulative Total Returns for the Subaccounts for the period ending December 31,
1999 were:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Subaccount Non-Standardized Average Annual Total Return Table
- ------------------------------------------------------------------------------------------------------------------------------------
For the one- For the period
year period from inception
ending to
Subaccount (date of inception of subaccount) 12/31/99 12/31/99
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
VARIABLE ANNUITY PORTFOLIOS
CitiSelect VIP Folio 200 Conservative (2/03/97) 0.15% 4.27%
CitiSelect VIP Folio 300 Balanced (2/03/97) 3.29% 5.61%
CitiSelect VIP Folio 400 Growth (2/03/97) 6.95% 5.79%
CitiSelect VIP Folio 500 Growth Plus (2/03/97) 10.26% 6.77%
CitiFunds Small Cap Growth VIP Portfolio (2/03/97) 35.68% 13.05%
A I M VARIABLE INSURANCE FUNDS, INC.
Capital Appreciation Fund (2/21/95) 42.59% 23.59%
Government Securities Fund (2/03/97) -2.70% 3.20%
Growth Fund (2/03/97) 33.34% 30.03%
Growth and Income Fund (2/03/97) 32.37% 26.54%
International Equity Fund (2/03/97) 52.88% 23.14%
Value Fund (2/03/97) 28.08% 26.87%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
Growth Portfolio (2/21/95) 35.51% 28.29%
High Income Portfolio (2/03/97) 6.64% 4.79%
Equity-Income Portfolio (2/03/97) 4.84% 12.46%
Overseas Portfolio (2/03/97) 40.63% 20.15%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
Contrafund Portfolio (2/03/97) 22.52% 24.88%
Index 500 Portfolio (2/03/97) 18.82% 23.94%
MFS VARIABLE INSURANCE TRUST
Global Governments Series (2/21/95) -3.86% 2.37%
Money Market Series (2/21/95)* 3.16% 3.24%
Bond Series (2/03/97) -2.94% 3.42%
Total Return Series (2/03/97) 1.64% 9.82%
Research Series (2/03/97) 22.31% 20.53%
Emerging Growth Series (2/03/97) 74.24% 40.88%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*The yield quotations for the MFS Money Market Series quoted above more closely
reflect the current earnings of this subaccount than the total return quotation.
-13-
<PAGE> 43
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Subaccount Non-Standardized Cumulative Total Return Table
- ----------------------------------------------------------------------------------------------------------------------------
For the For the period
one-year from inception
Subaccount (date of inception of subaccount) period ending to
12/31/99 12/31/99
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
VARIABLE ANNUITY PORTFOLIOS
CitiSelect VIP Folio 200 Conservative (2/03/97) 0.15% 12.83%
CitiSelect VIP Folio 300 Balanced (2/03/97) 3.29% 17.05%
CitiSelect VIP Folio 400 Growth (2/03/97) 6.95% 17.63%
CitiSelect VIP Folio 500 Growth Plus (2/03/97) 10.26% 20.81%
CitiFunds Small Cap Growth VIP Portfolio (2/03/97) 35.68% 42.47%
A I M VARIABLE INSURANCE FUNDS, INC.
Capital Appreciation Fund (2/21/95) 42.59% 179.91%
Government Securities Fund (2/03/97) -2.70% 9.51%
Growth Fund (2/03/97) 33.34% 113.33%
Growth and Income Fund (2/03/97) 52.88% 82.29%
International Equity Fund (2/03/97) 28.08% 98.69%
Value Fund (2/03/97)
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
Growth Portfolio (2/21/95) 35.51% 235.60%
High Income Portfolio (2/03/97) 6.64% 14.44%
Equity-Income Portfolio (2/03/97) 4.84% 40.32%
Overseas Portfolio (2/03/97) 40.63% 69.80%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
Contrafund Portfolio (2/03/97) 22.52% 89.82%
Index 500 Portfolio (2/03/97) 18.82% 85.75%
MFS VARIABLE INSURANCE TRUST
Global Governments Series (2/21/95) -3.86% 12.07%
Money Market Series (2/21/95)* 3.16% 16.78%
Bond Series (2/03/97) -2.94% 10.18%
Total Return Series (2/03/97) 1.64% 31.04%
Research Series (2/03/97) 22.31% 71.38%
Emerging Growth Series (2/03/97) 74.24% 168.77%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*The yield quotations for the MFS Money Market Series quoted above more closely
reflect the current earnings of this subaccount than the total return quotation.
Non-standard performance data will only be disclosed if the standard
performance data for the required periods is also disclosed.
In advertising and sales literature, the performance of each subaccount
may be compared to the performance of other variable annuity issuers in general
or to the performance of particular types of variable annuities investing in
mutual funds, or mutual fund portfolios with investment objectives similar to
each of the subaccounts. Lipper Analytical Services, Inc. ("Lipper") and the
Variable Annuity Research Data Services ("VARDS") are independent services which
monitor and rank the performance of variable annuity issuers in each of the
major categories of investment objectives on an industry-wide basis.
Lipper's rankings include variable life issuers as well as variable
annuity issuers. VARDS rankings compare only variable annuity issuers. The
performance analyses prepared by Lipper and VARDS each rank such issuers on the
basis of total return, assuming reinvestment of distributions, but do not take
sales charges, redemption fees, or certain expense deductions at the separate
account level
-14-
<PAGE> 44
into consideration. In addition, VARDS prepares risk adjusted rankings, which
consider the effects of market risk on total return performance. This type of
ranking provides data as to which funds provide the highest total return within
various categories of funds defined by the degree of risk inherent in their
investment objectives.
Advertising and sales literature may also compare the performance of each
subaccount to the Standard & Poor's Index of 500 Common Stocks, a widely used
measure of stock performance. This unmanaged index assumes the reinvestment of
dividends but does not reflect any "deductions" for the expenses of operating or
managing an investment portfolio. Other independent ranking services and indices
may also be used as a source of performance comparison.
Comparison may also report other information including the effect of
tax-deferred compounding on a subaccount's investment returns, or returns in
general, which may be illustrated by tables, graphs, or charts. All income and
capital gains derived from subaccount investments are reinvested and can lead to
substantial long-term accumulation of assets, provided that the underlying
portfolio's investment experience is positive.
ADJUSTED HISTORIC PORTFOLIO PERFORMANCE DATA
The charts below show historic performance data for the portfolios,
including for periods prior to the inception of the subaccounts, reduced by some
or all of the fees and charges under the Contract. Non-standard performance data
will only be disclosed if standard performance data for the required periods is
also disclosed.
For the purposes of calculating the average annual total returns and
cumulative total returns of the portfolios, we have deducted a daily mortality
and expense risk charge equal to 1.25% of annual assets (except that for the
period March 2, 1998 through December 31, 1999, we deducted the mortality and
expense risk charge of 0.84% of annual assets), a daily administrative fee equal
to 0.15% of annual net assets, the $30 annual contract fee and the applicable
surrender charge.
-15-
<PAGE> 45
Based on the method of calculation described above, the Adjusted Historic
Average Annual Total Returns for the portfolios for the periods ending December
31, 1999 were:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Adjusted Portfolio Average Annual Total Return Table Deducting All Fees and Charges
- -----------------------------------------------------------------------------------------------------------------------------------
For the one- For the 5- For the 10-
Portfolio (date of inception of portfolio) year period year period year period
ending ending ending
12/31/99 12/31/99 12/31/99
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
VARIABLE ANNUITY PORTFOLIOS
CitiSelect VIP Folio 200 Conservative (11/25/96) -6.17% N/A N/A
CitiSelect VIP Folio 300 Balanced (11/25/96) -3.02% N/A N/A
CitiSelect VIP Folio 400 Growth (11/25/96) 0.63% N/A N/A
CitiSelect VIP Folio 500 Growth Plus (11/25/96) 3.94% N/A N/A
CitiFunds Small Cap Growth VIP Portfolio (11/25/96) 29.36% N/A N/A
A I M VARIABLE INSURANCE FUNDS, INC.
Capital Appreciation Fund (5/05/93) 36.27% 23.81% N/A
Government Securities Fund (5/05/93) -9.02% 4.82% N/A
Growth Fund (5/05/93) 27.03% 27.81% N/A
Growth and Income Fund (5/02/94) 26.05% 26.37% N/A
International Equity Fund (5/05/93) 46.55% 20.21% N/A
Value Fund (5/05/93) 21.76% 25.43% N/A
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
Growth Portfolio (10/9/86) 29.20% 27.91% 18.24%
High Income Portfolio (9/19/85) 0.32% 9.31% 10.84%
Equity-Income Portfolio (10/9/86) -1.48% 16.93% 12.87%
Overseas Portfolio (1/28/87) 34.24% 15.71% 9.85%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
Contrafund Portfolio (1/03/95) 16.19% N/A N/A
Index 500 Portfolio (8/27/92) 12.52% 26.35% N/A
MFS VARIABLE INSURANCE TRUST
Global Governments Series (6/14/94) -10.18% N/A N/A
Money Market Series (1/03/95)* -3.19% N/A N/A
Bond Series (10/24/95) -9.25% N/A N/A
Total Return Series (1/03/95) -4.68% N/A N/A
Research Series (7/26/95) 16.00% N/A N/A
Emerging Growth Series (7/24/95) 67.92% N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
Adjusted Portfolio Average Annual Tota
- -----------------------------------------------------------------------------------------------------------
For the period
Portfolio (date of inception of portfolio) from inception
to
12/31/99
- -----------------------------------------------------------------------------------------------------------
<S> <C>
VARIABLE ANNUITY PORTFOLIOS
CitiSelect VIP Folio 200 Conservative (11/25/96) 2.79%
CitiSelect VIP Folio 300 Balanced (11/25/96) 4.16%
CitiSelect VIP Folio 400 Growth (11/25/96) 4.35%
CitiSelect VIP Folio 500 Growth Plus (11/25/96) 5.35%
CitiFunds Small Cap Growth VIP Portfolio (11/25/96) 11.78%
A I M VARIABLE INSURANCE FUNDS, INC.
Capital Appreciation Fund (5/05/93) 20.60%
Government Securities Fund (5/05/93) 3.19%
Growth Fund (5/05/93) 21.19%
Growth and Income Fund (5/02/94) 22.73%
International Equity Fund (5/05/93) 17.14%
Value Fund (5/05/93) 21.33%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
Growth Portfolio (10/9/86) 17.08%
High Income Portfolio (9/19/85) 9.31%
Equity-Income Portfolio (10/9/86) 12.17%
Overseas Portfolio (1/28/87) 9.33%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
Contrafund Portfolio (1/03/95) 25.71%
Index 500 Portfolio (8/27/92) 19.09%
MFS VARIABLE INSURANCE TRUST
Global Governments Series (6/14/94) 2.60%
Money Market Series (1/03/95)* 2.71%
Bond Series (10/24/95) 2.55%
Total Return Series (1/03/95) 13.46%
Research Series (7/26/95) 20.70%
Emerging Growth Series (7/24/95) 34.22%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
*The yield quotations for the MFS Money Market Series quoted above more closely
reflect the current earnings of this portfolio than the total return quotation.
-16-
<PAGE> 46
The Adjusted Historic Cumulative Total Returns for the portfolios for the
periods ending December 31, 1999 were:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Adjusted Portfolio Cumulative Total Return Table Deducting All Fees and Charges
- -----------------------------------------------------------------------------------------------------------------------
For the one- For the 5-
year period year period
ending ending
Portfolio (date of inception of portfolio) 12/31/99 12/31/99
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
VARIABLE ANNUITY PORTFOLIOS
CitiSelect VIP Folio 200 Conservative (11/25/96) -6.17% N/A
CitiSelect VIP Folio 300 Balanced (11/25/96) -3.02% N/A
CitiSelect VIP Folio 400 Growth (11/25/96) 0.63% N/A
CitiSelect VIP Folio 500 Growth Plus (11/25/96) 3.94% N/A
CitiFunds Small Cap Growth VIP Portfolio (11/25/96) 29.36% N/A
A I M VARIABLE INSURANCE FUNDS, INC.
Capital Appreciation Fund (5/05/93) 36.27% 190.98%
Government Securities Fund (5/05/93) -9.02% 26.57%
Growth Fund (5/05/93) 27.03% 241.03%
Growth and Income Fund (5/02/94) 26.05% 222.27%
International Equity Fund (5/05/93) 46.55% 150.98%
Value Fund (5/05/93) 21.76% 210.49%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
Growth Portfolio (10/9/86) 29.20% 242.35%
High Income Portfolio (9/19/85) 0.32% 56.07%
Equity-Income Portfolio (10/9/86) -1.48% 118.61%
Overseas Portfolio (1/28/87) 34.24% 107.42%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
Contrafund Portfolio (1/03/95) 16.19% N/A
Index 500 Portfolio (8/27/92) 12.52% 222.00%
MFS VARIABLE INSURANCE TRUST
Global Governments Series (6/14/94) -10.18% N/A
Money Market Series (1/03/95)* -3.19% N/A
Bond Series (10/24/95) -9.25% N/A
Total Return Series (1/03/95) -4.68% N/A
Research Series (7/26/95) 16.00% N/A
Emerging Growth Series (7/24/95) 67.92% N/A
- -----------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Adjusted Portfolio Cumulative Total Return Table Deducting All Fees and Charges
- ---------------------------------------------------------------------------------------------------------------------------
For the 10- For the period
year period from inception
ending to
Portfolio (date of inception of portfolio) 12/31/99 12/31/99
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
VARIABLE ANNUITY PORTFOLIOS
CitiSelect VIP Folio 200 Conservative (11/25/96) N/A 8.27%
CitiSelect VIP Folio 300 Balanced (11/25/96) N/A 12.47%
CitiSelect VIP Folio 400 Growth (11/25/96) N/A 13.07%
CitiSelect VIP Folio 500 Growth Plus (11/25/96) N/A 16.23%
CitiFunds Small Cap Growth VIP Portfolio (11/25/96) N/A 37.88%
A I M VARIABLE INSURANCE FUNDS, INC.
Capital Appreciation Fund (5/05/93) N/A 248.19%
Government Securities Fund (5/05/93) N/A 23.25%
Growth Fund (5/05/93) N/A 259.72%
Growth and Income Fund (5/02/94) N/A 291.24%
International Equity Fund (5/05/93) N/A 186.81%
Value Fund (5/05/93) N/A 262.46%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
Growth Portfolio (10/9/86) 434.31% 706.20%
High Income Portfolio (9/19/85) 179.86% 257.22%
Equity-Income Portfolio (10/9/86) 235.58% 357.26%
Overseas Portfolio (1/28/87) 155.93% 216.95%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
Contrafund Portfolio (1/03/95) N/A 213.54%
Index 500 Portfolio (8/27/92) N/A 139.31%
MFS VARIABLE INSURANCE TRUST
Global Governments Series (6/14/94) N/A 15.29%
Money Market Series (1/03/95)* N/A 14.27%
Bond Series (10/24/95) N/A 11.14%
Total Return Series (1/03/95) N/A 87.92%
Research Series (7/26/95) N/A 130.37%
Emerging Growth Series (7/24/95) N/A 269.53%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
*The yield quotations for the MFS Money Market Series quoted above more closely
reflect the current earnings of this portfolio than the total return quotation.
From time to time, sales literature or advertisements may also quote
adjusted average annual total returns and cumulative total returns for the
portfolios that do not reflect the surrender charge or the Annual Contract Fee.
These are calculated in exactly the same way as the adjusted portfolio average
annual total returns and cumulative total returns described above, except that
ending value for the period does not take into account any charges on amounts
surrendered or withdrawn or the payment of the annual contract fee.
-17-
<PAGE> 47
Based on this method of calculation, the Adjusted Portfolio Average Total
Returns and Cumulative Total Returns without the deduction of surrender charges
and the Annual Contract Fee for the portfolios for the periods ending December
31, 1999 were:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Adjusted Portfolio Average Annual Total Return Table Without Deduction of Surrender Charges and Annual Contract Fee
- ------------------------------------------------------------------------------------------------------------------------------------
For the one- For the 5- For the 10-
year period period ending year period
ending year ending
Portfolio (date of inception of portfolio) 12/31/99 12/31/99 12/31/99
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
VARIABLE ANNUITY PORTFOLIOS
CitiSelect VIP Folio 200 Conservative (11/25/96) 0.15% N/A N/A
CitiSelect VIP Folio 300 Balanced (11/25/96) 3.29% N/A N/A
CitiSelect VIP Folio 400 Growth (11/25/96) 6.95% N/A N/A
CitiSelect VIP Folio 500 Growth Plus (11/25/96) 10.25% N/A N/A
CitiFunds Small Cap Growth VIP Portfolio (11/25/96) 35.67% N/A N/A
A I M VARIABLE INSURANCE FUNDS, INC.
Capital Appreciation Fund (5/05/93) 42.59% 23.83% N/A
Government Securities Fund (5/05/93) -2.70% 4.84% N/A
Growth Fund (5/05/93) 33.35% 27.83% N/A
Growth and Income Fund (5/02/94) 32.37% 26.39% N/A
International Equity Fund (5/05/93) 52.87% 20.22% N/A
Value Fund (5/05/93) 28.08% 25.45% N/A
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
Growth Portfolio (10/9/86) 35.52% 27.92% 18.26%
High Income Portfolio (9/19/85) 6.64% 9.33% 10.86%
Equity-Income Portfolio (10/9/86) 4.84% 16.95% 12.89%
Overseas Portfolio (1/28/87) 40.55% 15.73% 9.87%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
Contrafund Portfolio (1/03/95) 22.51% N/A N/A
Index 500 Portfolio (8/27/92) 18.83% 26.37% N/A
MFS VARIABLE INSURANCE TRUST
Global Governments Series (6/14/94) -3.86% N/A N/A
Money Market Series (1/03/95)* 3.13% N/A N/A
Bond Series (10/24/95) -2.94% N/A N/A
Total Return Series (1/03/95) 1.64% N/A N/A
Research Series (7/26/95) 22.31% N/A N/A
Emerging Growth Series (7/24/95) 74.24% N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Adjusted Portfolio Average Annual Total Return Table Without Deduction of Surrender Charges and Annual Contract Fee
- -----------------------------------------------------------------------------------------------------------------------------------
For the period
from inception
to
Portfolio (date of inception of portfolio) 12/31/99
- -----------------------------------------------------------------------------------------------------------
<S> <C>
VARIABLE ANNUITY PORTFOLIOS
CitiSelect VIP Folio 200 Conservative (11/25/96) 4.27%
CitiSelect VIP Folio 300 Balanced (11/25/96) 5.60%
CitiSelect VIP Folio 400 Growth (11/25/96) 5.79%
CitiSelect VIP Folio 500 Growth Plus (11/25/96) 6.76%
CitiFunds Small Cap Growth VIP Portfolio (11/25/96) 13.05%
A I M VARIABLE INSURANCE FUNDS, INC.
Capital Appreciation Fund (5/05/93) 20.62%
Government Securities Fund (5/05/93) 3.20%
Growth Fund (5/05/93) 21.21%
Growth and Income Fund (5/02/94) 22.75%
International Equity Fund (5/05/93) 17.16%
Value Fund (5/05/93) 21.35%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
Growth Portfolio (10/9/86) 17.10%
High Income Portfolio (9/19/85) 9.33%
Equity-Income Portfolio (10/9/86) 12.19%
Overseas Portfolio (1/28/87) 9.35%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
Contrafund Portfolio (1/03/95) 25.94%
Index 500 Portfolio (8/27/92) 19.38%
MFS VARIABLE INSURANCE TRUST
Global Governments Series (6/14/94) 2.61%
Money Market Series (1/03/95)* 3.20%
Bond Series (10/24/95) 3.35%
Total Return Series (1/03/95) 13.80%
Research Series (7/26/95) 21.14%
Emerging Growth Series (7/24/95) 34.53%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*The yield quotations for the MFS Money Market Series quoted above more closely
reflect the current earnings of this portfolio than the total return quotation.
-18-
<PAGE> 48
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Adjusted Portfolio Cumulative Total Return Table Without Deduction of Surrender Charges and Annual Contract Fee
- -----------------------------------------------------------------------------------------------------------------------------------
For the one- For the 5- For the 10-
year period year period year period
ending ending ending
Portfolio (date of inception of portfolio) 12/31/99 12/31/99 12/31/99
- --------------------------------------------------------------------------------------- -------------------- ---------------------
<S> <C> <C> <C>
VARIABLE ANNUITY PORTFOLIOS
CitiSelect VIP Folio 200 Conservative (11/25/96) 0.13% N/A N/A
CitiSelect VIP Folio 300 Balanced (11/25/96) 3.28% N/A N/A
CitiSelect VIP Folio 400 Growth (11/25/96) 6.93% N/A N/A
CitiSelect VIP Folio 500 Growth Plus (11/25/96) 10.24% N/A N/A
CitiFunds Small Cap Growth VIP Portfolio (11/25/96) 35.66% N/A N/A
A I M VARIABLE INSURANCE FUNDS, INC.
Capital Appreciation Fund (5/05/93) 42.57% 191.18% N/A
Government Securities Fund (5/05/93) -2.72% 26.67% N/A
Growth Fund (5/05/93) 33.33% 241.26% N/A
Growth and Income Fund (5/02/94) 32.35% 222.49% N/A
International Equity Fund (5/05/93) 52.85% 151.15% N/A
Value Fund (5/05/93) 28.06% 210.70% N/A
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
Growth Portfolio (10/9/86) 35.50% 242.58% 435.08%
High Income Portfolio (9/19/85) 6.62% 56.19% 180.29%
Equity-Income Portfolio (10/9/86) 4.82% 118.77% 236.09%
Overseas Portfolio (1/28/87) 40.54% 107.57% 156.33%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
Contrafund Portfolio (1/03/95) 22.49% N/A N/A
Index 500 Portfolio (8/27/92) 18.82% 222.22% N/A
MFS VARIABLE INSURANCE TRUST
Global Governments Series (6/14/94) -3.88% N/A
Money Market Series (1/03/95)* 3.11% N/A N/A
Bond Series (10/24/95) -2.95% N/A N/A
Total Return Series (1/03/95) 1.62% N/A N/A
Research Series (7/26/95) 22.30% N/A N/A
Emerging Growth Series (7/24/95) 74.22% N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Adjusted Portfolio Cumulative Total Return Table Without Deduction of Surrender
Charges and Annual Contract Fee
- --------------------------------------------------------------------------------------------------------
For the period
from inception
to
Portfolio (date of inception of portfolio) 12/31/99
- --------------------------------------------------------------------------------------------------------
<S> <C>
VARIABLE ANNUITY PORTFOLIOS
CitiSelect VIP Folio 200 Conservative (11/25/96) 12.82%
CitiSelect VIP Folio 300 Balanced (11/25/96) 17.03%
CitiSelect VIP Folio 400 Growth (11/25/96) 17.62%
CitiSelect VIP Folio 500 Growth Plus (11/25/96) 20.78%
CitiFunds Small Cap Growth VIP Portfolio (11/25/96) 42.44%
A I M VARIABLE INSURANCE FUNDS, INC.
Capital Appreciation Fund (5/05/93) 248.51%
Government Securities Fund (5/05/93) 23.38%
Growth Fund (5/05/93) 260.06%
Growth and Income Fund (5/02/94) 291.60%
International Equity Fund (5/05/93) 187.08%
Value Fund (5/05/93) N/A
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
Growth Portfolio (10/9/86) 707.75%
High Income Portfolio (9/19/85) 258.02%
Equity-Income Portfolio (10/9/86) 358.18%
Overseas Portfolio (1/28/87) 217.59%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
Contrafund Portfolio (1/03/95) 216.45%
Index 500 Portfolio (8/27/92) 142.19%
MFS VARIABLE INSURANCE TRUST
Global Governments Series (6/14/94) 15.39%
Money Market Series (1/03/95)* 17.06%
Bond Series (10/24/95) 14.81%
Total Return Series (1/03/95) 90.76%
Research Series (7/26/95) 134.12%
Emerging Growth Series (7/24/95) 273.34%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
*The yield quotations for the MFS Money Market Series quoted above more closely
reflect the current earnings of this portfolio than the total return quotation.
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<PAGE> 49
EFFECT OF THE ANNUAL CONTRACT FEE ON PERFORMANCE DATA
The Contract provides for a $30 Annual Contract Fee to be deducted
annually at the end of each Contract Year from the Accounts based on the
proportion of the Contract Value invested in each such Account. This fee is
waived for Contracts having a Contract Value of at least $25,000 or if, during
the Contract Year, purchase payments of at least $2,500 ($2,000 for Qualified
Contracts), exclusive of the initial purchase payment, are paid. For purposes of
reflecting the contract fee in yield and total return quotations, the annual
charge is converted into a per-dollar per-day charge based on the average
Contract Value of all Contracts on the last day of the period for which
quotations are provided. This converts the Annual Contract Fee to a factor of
0.017%.
VARIABLE ANNUITY PAYMENTS
ASSUMED INVESTMENT RATE
The discussion concerning the amount of variable annuity payments which
follows is based on an assumed investment rate of 3.0% per year. The assumed net
investment rate is used merely in order to determine the first monthly payment
per thousand dollars of applied value. THIS RATE DOES NOT BEAR ANY RELATIONSHIP
TO THE ACTUAL NET INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT OR OF ANY
SUBACCOUNT.
AMOUNT OF VARIABLE ANNUITY PAYMENTS
The amount of the first variable annuity payment is determined by
dividing the Contract Value on the Annuity Income Date by 1,000 and multiplying
the result by the appropriate factor in the annuity tables provided in the
Contract. These tables are based upon the 1983 IAM Tables (promulgated by the
Society of Actuaries). The appropriate factor is based on the annual net
investment return of 3.0%. The amount of each payment will depend on the age of
the Annuitant(s) at the time the first payment is due, and the sex of the
Annuitant(s), unless otherwise required by law.
The dollar amount of the second and subsequent variable annuity payments
will vary and is determined by multiplying the number of subaccount annuity
units by the subaccount annuity unit value as of a date no earlier than the
fifth Valuation Day preceding the date the payment is due. The number of such
units will remain fixed during the annuity period, assuming you or the
Annuitant, if you are deceased, make no exchanges of annuity units for annuity
units of another subaccount or to provide a fixed annuity payment. Once every 3
months after annuity payments have commenced, the Annuitant may elect in
writing, to transfer among any subaccounts. After the Annuity Income Date, no
transfers may be made between the subaccounts and the Fixed Account.
The annuity unit value will increase or decrease from one payment to the
next in proportion to the net investment return of the subaccount or subaccounts
supporting the variable annuity payments, less an adjustment to neutralize the
3.0% assumed net investment rate referred to above. Therefore, the dollar amount
of annuity payments after the first will vary with the amount by which the net
investment return of the appropriate subaccounts is greater or less than 3.0%
per year. For example, for a Contract using only one subaccount to generate
variable annuity payments, if that subaccount has a cumulative net investment
return of 5% over a one year period, the first annuity payment in the next year
will be approximately 2% greater than the payment on the same date in the
preceding year. If such net investment return is 1% over a one year period, the
first annuity payment in the next year will be
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<PAGE> 50
approximately 2 percentage points less than the payment on the same date in the
preceding year. (See also "Variable Annuity Payments" in the Prospectus.)
Fixed annuity payments are determined at annuitization by multiplying the
values allocated to the Fixed Account by a rate to be determined by First
Citicorp Life which is no less than the rate specified in the annuity tables in
the Contract. The annuity payment will remain level for the duration of the
annuity.
The annuity payments will be made on the fifteenth day of each month. The
annuity unit value used in calculating the amount of the variable annuity
payments will be based on an annuity unit value determined as of the close of
business on a day no earlier than the fifth Valuation Day preceding the date of
the annuity payment.
ANNUITY UNIT VALUE
The annuity unit value is calculated at the same time that the value of
an accumulation unit is calculated and is based on the same values for portfolio
shares and other assets and liabilities. (See "Variable Contract Value" in the
Prospectus.) The annuity unit value for each subaccount's first valuation period
was set at $1.00. The annuity unit value for a subaccount is calculated for each
subsequent Valuation Period by multiplying the subaccount annuity unit value on
the preceding day by the product of 1 times 2 where:
(1) is the subaccount's net investment factor on the Valuation
Day the Annuity Unit Value is being calculated; and
(2) is 0.999919 (which is the daily factor that will produce the
3.0% annual investment rate assumed in the annuity tables),
adjusted by the number of days since the previous Valuation
Day.
The following illustration shows, by use of hypothetical example, the
method of determining the annuity unit value.
<TABLE>
<CAPTION>
ILLUSTRATION OF CALCULATION OF ANNUITY UNIT VALUE
- --------------------------------------------------
<S> <C> <C>
1. Net Investment Factor for period....................................................................... 1.003662336
2. Adjustment for 3% Assumed Investment
Rate................................................................................................... 0.999919016
3. 2x1.................................................................................................... 1.003581055
4. annuity unit value, beginning of
valuation period....................................................................................... 10.743769
5. annuity unit value, end of valuation
period (3x4)........................................................................................... 10.782243
</TABLE>
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<PAGE> 51
TAX STATUS
INTRODUCTION
The following discussion is a general discussion of federal income tax
considerations relating to the Contract and is not intended as tax advice. This
discussion is not intended to address the tax consequences resulting from all of
the situations in which a person may be entitled to or may receive a
distribution under the Contract. Any person concerned about these tax
implications should consult a competent tax adviser before initiating any
transaction. This discussion is based upon the Company's understanding of the
present federal income tax laws as they are currently interpreted by the
Internal Revenue Service ("IRS"). No representation is made as to the likelihood
of the continuation of the present federal income tax laws or of the current
interpretation by the IRS. Moreover, no attempt has been made to consider any
applicable state or other tax laws.
The Contract may be purchased on a non-tax qualified basis
("Non-Qualified Contract") or purchased and used as an Individual Retirement
Annuity or Roth IRA entitled to special income tax treatment under section
408(b) or 408A of the Code ("Qualified Contracts"). The ultimate effect of
federal income taxes on the amounts held under a Contract, on Annuity Income
Payments , and on the economic benefit to the Contract Owner, the Annuitant or
the Beneficiary may depend on the tax status of the individual concerned.
TAXATION OF THE COMPANY
The Company is taxed as a life insurance company under Part I of
Subchapter L of the Code. Since the Separate Account is not an entity separate
from the Company, and its operation forms a part of the Company, it will not be
taxed separately as a "regulated investment company" under Subchapter M of the
Code. Investment income and realized capital gains are automatically applied to
increase reserves under the Contracts. Under existing federal income tax law,
the Company believes that the Separate Account investment income and realized
net capital gains will not be taxed to the extent that such income and gains are
applied to increase the reserves under the Contracts.
Accordingly, the Company does not anticipate that it will incur any
federal income tax liability attributable to the Separate Account and,
therefore, the Company does not intend to make provisions for any such taxes.
However, if changes in the federal tax laws or interpretations thereof result in
the Company being taxed on income or gains attributable to the Separate Account,
then the Company may impose a charge against the Separate Account (with respect
to some or all Contracts) in order to set aside provisions to pay such taxes.
TAX STATUS OF THE CONTRACT
The Company believes that the Contract will be subject to tax as an
annuity contract under the Code, which generally means that any increase in a
Contract's Contract Value will not be taxable until amounts are received from
the Contract, either in the form of Annuity Income Payments or in some other
form. In order to be subject to annuity contract treatment for tax purposes, the
Contract must meet the following Code requirements:
Diversification. Section 817(h) of the Code requires that with respect to
Non-Qualified Contracts, the investments of the Investment Portfolios be
"adequately diversified" in accordance with Treasury Regulations in order for
the Contracts to qualify as annuity contracts under federal tax law. The
Separate Account, through the Investment Portfolios, intends to comply with the
diversification
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<PAGE> 52
requirements prescribed by the Treasury in Reg. Sec. 1.817-5, which affect how
the Investment Portfolios' assets may be invested.
Owner Control. In certain circumstances, owners of variable annuity
contracts may be considered the owners, for federal income tax purposes, of the
assets of the separate accounts used to support their contracts. In those
circumstances, income and gains from the separate account assets would be
includible in the variable contract owner's gross income. The IRS has stated in
published rulings that a variable contract owner will be considered the owner of
separate account assets if the contract owner possesses incidents of ownership
in those assets, such as the ability to exercise investment control over the
assets. The Treasury Department has also announced, in connection with the
issuance of regulations concerning diversification, that those regulations "do
not provide guidance concerning the circumstances in which investor control for
the investments of a segregated asset account may cause the investor (i.e., the
Owner), rather than the insurance company, to be treated as the owner of the
assets in the account." This announcement also stated that guidance would be
issued by way of regulations or rulings on the "extent to which policyholders
may direct their investments to particular Sub-Accounts without being treated as
owners of the underlying assets." As of the date of this prospectus, no guidance
has been issued.
The ownership rights under the Contract are similar to, but different in
certain respects from those described by the IRS in rulings in which it was
determined that contract owners were not owners of separate account assets. For
example, an Owner has additional flexibility in allocating premium payments and
Contract Values. These differences could result in an Owner being treated as the
owner of a pro rata portion of the assets of the Separate Account. In addition,
the Company does not know what standards will be set forth, if any, in the
regulations or rulings which the Treasury Department has stated it expects to
issue. The Company therefore reserves the right to modify the Contract as
necessary to attempt to prevent an Owner from being considered the owner of a
pro rata share of the assets of the Separate Account.
Required Distributions. In order to be treated as an annuity contract for
federal income tax purposes, section 72(s) of the Code requires Non-Qualified
Contracts to provide that (a) if any Owner dies on or after the Annuity Income
Date but prior to the time the entire interest in the Contract has been
distributed, the remaining portion of such interest will be distributed at least
as rapidly as under the method of distribution being used as of the date of such
owner's death; and (b) if any Owner dies prior to the Annuity Income Date, the
entire interest in the Contract will be distributed within five years after the
date of such holder's death. These requirements will be considered satisfied as
to any portion of a holder's interest which is payable to or for the benefit of
a "designated beneficiary" and which is distributed over the life of such
"designated beneficiary" or over a period not extending beyond the life
expectancy of that beneficiary, provided that such distributions begin within
one year of the Owner's death. The 'designated beneficiary" refers to a natural
person designated by the owner as a Beneficiary and to whom ownership of the
contract passes by reason of death. However, if the "designated beneficiary" is
the surviving spouse of the deceased Owner, the contract may be continued with
the surviving spouse as the new Owner.
The Non-Qualified Contracts contain provisions which are intended to
comply with the requirements of section 72(s) of the Code, although no
regulations interpreting these requirements have yet been issued. The Company
intends to review such provisions and modify them if necessary to assure that
they comply with the requirements of Code section 72(s) when clarified by
regulation or otherwise. Other rules may apply to Qualified Contracts.
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<PAGE> 53
Non-Natural Owner. The owner of any Contract who is not a natural person
generally must include in income any increase in the excess of the Contract
Value over the "investment in the contract" (discussed below) during the taxable
year. There are several exceptions to this general rule for non-natural owners.
Certain Contracts will generally be treated as held by a natural person if (a)
the nominal owner is a trust or other entity which holds the contract as an
agent for a natural person (but not in the case of certain non-qualified
deferred compensation arrangements); (b) the contract is acquired by an estate
of a decedent by reason of the death of the decedent; (c) the contract is issued
in connection with certain Qualified Plans; (d) the contract is purchased by an
employer upon the termination of certain Qualified Plans; (e) the contract is
used in connection with a structured settlement agreement; and (f) the contract
is purchased with a single purchase payment when the annuity starting date (as
defined in the tax law) is no later than a year from the purchase of the
contract and substantially equal periodic payments are made, not less frequently
than annually, during the annuity period. Prospective Owners that are not
natural persons may wish to discuss these with a competent tax adviser.
The following discussion is based on the assumption that the Contract
qualifies as an annuity contract for federal income tax purposes.
TAXATION OF ANNUITIES
In General. Section 72 of the Code governs taxation of annuities in
general. The Company believes that an Owner who is a natural person generally is
not taxed on increases in the Owner's Contract Value until distribution occurs
by withdrawing all or part of such Contract Value (e.g., withdrawals or Annuity
Income Payments under the Annuity Income Option elected). For this purpose, the
assignment, pledge, or agreement to assign or pledge any portion of the Contract
Value (and in the case of a Qualified Contract, any portion of an interest in
the qualified plan) generally will be treated as a distribution. The taxable
portion of a distribution (in the form of a single sum payment or an annuity) is
taxable as ordinary income.
The following discussion generally applies to a Contract owned by a
natural person.
Withdrawals. In the case of a withdrawal under a Qualified Contract,
including withdrawals under the systematic withdrawal program, a ratable portion
of the amount received is taxable, generally based on the ratio of the
"investment in the contract" to the individual's total accrued benefit under the
retirement plan. The "investment in the contract" generally equals the amount of
any non-deductible Purchase Payments paid by or on behalf of any individual. For
a Contract issued in connection with qualified plans, the "investment in the
contract" can be zero. Special tax rules may be available for certain
distributions from a Qualified Contract.
With respect to Non-Qualified Contracts, partial withdrawals, including
withdrawals under the systematic withdrawal program, are generally treated as
taxable income to the extent that the Contract Value immediately before the
withdrawal exceeds the "investment in the contract" at that time.
Full surrenders of a Non-Qualified Contract are treated as taxable income
to the extent that the amount received exceeds the "investment in the contract".
Annuity Income Payments . Although the tax consequences may vary
depending on the Annuity Income Payment elected under the Contract, in general,
only the portion of the Annuity Income Payment that represents the amount by
which the Contract Value exceeds the "investment in the contract" will be taxed;
after the "investment in the contract" is recovered, the full amount of any
additional Annuity Income Payments is taxable. For Variable Annuity Income
Payments, the taxable portion is generally
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<PAGE> 54
determined by an equation that establishes a specific dollar amount of each
payment that is not taxed. The dollar amount is determined by dividing the
investment in the contract" by the total number of expected periodic payments.
However, the entire distribution will be taxable once the recipient has
recovered the dollar amount of his or her "investment in the contract". For
Fixed Annuity Income Payments, in general there is no tax on the portion of each
payment which represents the same ratio that the "investment in the contract"
bears to the total expected value of the Annuity Income Payments for the term of
the payments; however, the remainder of each Annuity Income Payment is taxable.
Once the "investment in the contract" has been fully recovered, the full amount
of any additional Annuity Income Payments is taxable. If Annuity Income Payments
cease as a result of an Annuitant's death before full recovery of the
"investment in the contract," consult a competent tax adviser regarding
deductibility of the unrecovered amount.
Penalty Tax. In the case of a distribution pursuant to a Non-Qualified
Contract, there may be imposed a federal income tax penalty equal to 10% of the
amount treated as taxable income. In general, however, there is no penalty tax
on distributions: (1) made on or after the date on which the taxpayer attains
age 59 1/2; (2) made as a result of death or disability of an Owner; (3)
received in substantially equal periodic payments as a life annuity or a joint
and survivor annuity for the lives or life expectancies of the Owner and a
"designated beneficiary". Other tax penalties may apply to certain distributions
pursuant to a Qualified Contract.
Taxation of Death Benefit Proceeds. Amounts may be distributed from the
Contract because of the death of an Owner or the Annuitant. Generally, such
amounts are includible in the income of the recipient as follows: (1) if
distributed in a lump sum, they are taxed in the same manner as a full surrender
as described above, or (2) if distributed under an Annuity Income Option, they
are taxed in the same manner as Annuity Income Payments, as described above.
Transfers, Assignments, or Exchanges of the Contract. A transfer of
ownership of a Contract, the designation of an Annuitant, Payee or other
Beneficiary who is not also an Owner, the selection of certain Annuity Income
Dates, or the exchange of a Contract may result in certain tax consequences that
are not discussed herein. Anyone contemplating any such designation, transfer,
assignment, selection, or exchange should contact a competent tax adviser with
respect to the potential tax effects of such a transaction.
Multiple Contracts. All deferred non-qualified annuity contracts that are
issued by the Company (or its affiliates) to the same owner during any calendar
year are treated as one annuity contract for purposes of determining the amount
includible in gross income under section 72(e) of the Code. In addition, the
Treasury Department has specific authority to issue regulations that prevent the
avoidance of section 72(e) through the serial purchase of annuity contracts or
otherwise. Congress has also indicated that the Treasury Department may have
authority to treat the combination purchase of an immediate annuity contract and
separate deferred annuity contracts as a single annuity contract under its
general authority to prescribe rules as may be necessary to enforce the income
tax laws.
QUALIFIED CONTRACTS
In General. The Qualified Contract is designed for use as an Individual
Retirement Annuity ("IRA") or Roth IRA. Special favorable tax treatment may be
available for certain types of contributions and distributions. Adverse tax
consequences may result from contributions in excess of specified limits;
distributions prior to age 59 1/2 (subject to certain exceptions); distributions
that do not conform to specified commencement and minimum distribution rules;
and in other specified circumstances.
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<PAGE> 55
The Company makes no attempt to provide more than general information
about use of the Contract as an IRA or Roth IRA. Owners and participants under
IRA's and Roth IRA's, as well as annuitants and beneficiaries, are cautioned
that the rights of any person to any benefits under Qualified Contracts may be
subject to the terms and conditions of the IRA or Roth IRA Endorsement,
regardless of the terms and conditions of the Contract issued in connection with
such a plan. IRA's and Roth IRA's are subject to distribution and other
requirements that are not incorporated in the administration of the Contracts.
Owners are responsible for determining that contributions, distributions and
other transactions with respect to the Contracts satisfy applicable law.
Purchasers of Contracts for use with any IRA or Roth IRA should consult their
legal counsel and tax adviser regarding the suitability of the Contract.
For IRAs described in Section 408, distributions generally must commence
no later than April 1 of the calendar year following the calendar year in which
the Owner (or plan participant) reaches age 70 1/2. Roth IRAs under Section 408A
do not require distributions at any time prior to the Owner's death.
Individual Retirement Annuities. Section 408 of the Code permits eligible
individuals to contribute to an Individual Retirement Annuity ("IRA"). Also,
distributions from certain other types of qualified plans may be "rolled over"
on a tax-deferred basis into an IRA. The sale of a Contract for use with an IRA
may be subject to special disclosure requirements of the Internal Revenue
Service. Purchasers of a Contract for use with IRAs will be provided with
supplemental information required by the Internal Revenue Service or other
appropriate agency. Such purchasers will have the right to revoke their purchase
within 7 days of the earlier of the establishment of the IRA or their purchase.
A Qualified Contract issued in connection with an IRA will be amended as
necessary to conform to the requirements of the Code. Purchasers should seek
competent advice as to the suitability of the Contract for use with IRAs.
Earnings in an IRA are not taxed until distribution. IRA contributions
are limited each year to the lesser of $2,000 or 100% of the Owner's adjusted
gross income and may be deductible in whole or in part depending on the
individual's income and whether the individual is a participant in a qualified
plan. The limit on the amount contributed to an IRA does not apply to
distributions from certain other types of qualified plans that are "rolled over"
on a tax-deferred basis into an IRA. Amounts in the IRA (other than
nondeductible contributions) are taxed when distributed from the IRA.
Distributions prior to age 59 1/2 (unless certain exceptions apply) are subject
to a 10% penalty tax.
Roth IRAs. Section 408A of the Code permits certain eligible individuals
to contribute to a Roth IRA. Contributions to a Roth IRA, which are subject to
certain limitations, are not deductible and must be made in cash or as a
rollover or transfer from another Roth IRA or other IRA. A rollover from or
conversion of an IRA to a Roth IRA is generally subject to tax and other special
rules apply. You may wish to consult a tax adviser before combining any
converted amounts with any other Roth IRA contributions, including any other
conversion amounts from other tax years. Distributions from a Roth IRA generally
are not taxed, except that, once aggregate distributions exceed contributions to
the Roth IRA, income tax and a 10% penalty tax may apply to distributions made
(1) before age 59 1/2 (subject to certain exceptions) or (2) during the five
taxable years starting with the year in which the first contribution is made to
any Roth IRA. A 10% penalty tax may apply to amounts attributable to a
conversion from an IRA if they are distributed during the five taxable years
beginning with the year in which the conversion was made.
WITHHOLDING
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<PAGE> 56
Distributions from Contracts generally are subject to withholding for the
Owner's federal income tax liability. The withholding rate varies according to
the type of distribution and the Owner's tax status. The Owner will be provided
the opportunity to elect not have tax withheld from distributions.
POSSIBLE CHANGES IN TAXATION
Although the likelihood of legislative change is uncertain, there is
always the possibility that the tax treatment of the Contracts could change by
legislation or other means. It is also possible that any change could be
retroactive (that is, effective prior to the date of the change). A tax adviser
should be consulted with respect to legislative developments and their effect on
the Contract.
OTHER TAX CONSEQUENCES
As noted above, the foregoing discussion of the federal income tax
consequences is not exhaustive and special rules are provided with respect to
other tax situations not discussed in this Prospectus. Further, the federal
income tax consequences discussed herein reflect the Company's understanding of
the current law and the law may change. Federal estate and gift tax consequences
of ownership or receipt of distributions under the Contract depend on the
individual circumstances of each Owner or recipient of a distribution. A
competent tax adviser should be consulted for further information.
LEGAL MATTERS
All matters relating to New York law pertaining to the Contracts,
including the validity of the Contracts and our authority to issue the
Contracts, have been passed upon by Catherine S. Mulholland, General Counsel of
the Company. Sutherland Asbill & Brennan LLP of Washington, D.C. has provided
advice on certain matters relating to the federal securities laws.
EXPERTS
The statutory financial statements of First Citicorp Life Insurance
Company as of December 31, 1999 and 1998, and for each of the years in the
three-year period ended December 31, 1999 and the financial statements for the
Separate Account as of December 31, 1999 have been included herein and in the
registration statement in reliance upon the report of KPMG LLP, independent
certified public accountants, and upon the authority of said firm as experts in
accounting and auditing.
The report of KPMG LLP covering the financial statements of First
Citicorp Life Insurance Company contains an explanatory paragraph which states
that the financial statements are presented in conformity with accounting
practices prescribed or permitted by the Department of Insurance of the State of
New York. These practices differ in some respects from generally accepted
accounting principles. The financial statements do not include any adjustments
that might result from the differences.
OTHER INFORMATION
A registration statement has been filed with the SEC under the
Securities Act of 1933, as amended, with respect to the Contracts discussed in
this Statement of Additional Information. Not all the information set forth in
the registration statement, amendments and exhibits thereto has been included in
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<PAGE> 57
this Statement of Additional Information. Statements contained in this Statement
of Additional Information concerning the content of the Contracts and other
legal instruments are intended to be summaries. For a complete statement of the
terms of these documents, reference should be made to the instruments filed with
the SEC.
FINANCIAL STATEMENTS
The audited Statutory Financial Statements of the Company as of December
31, 1999 and 1998 and for the years ended December 31, 1999, 1998 and 1997, as
well as the Independent Auditor's Report which appear in this Statement of
Additional Information should be considered only as bearing on our ability to
meet our obligations under the contracts. They should not be considered as
bearing on the investment performance of the assets held in the Separate
Account. This Statement of Additional Information also contains audited
financial statements for the Separate Account as of December 31, 1999.
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<PAGE> 58
[KPMG LOGO]
FIRST CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Financial Statements and Schedule
December 31, 1999 and 1998
(With Independent Auditors' Report Thereon)
<PAGE> 59
[KPMG LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
The Board of Directors
First Citicorp Life Insurance Company and
Contractholders of First Citicorp Life Insurance Company
Variable Annuity Separate Account:
We have audited the accompanying statement of net assets, including the schedule
of investments, of the AIM V.I. Capital Appreciation Fund, AIM V.I. Government
Series Fund, AIM V.I. Growth Fund, AIM V.I. Growth and Income Fund, AIM V.I.
International Equity Fund, AIM V.I. Value Fund, CitiSelect VIP Folio 200,
CitiSelect VIP Folio 300, CitiSelect VIP Folio 400, CitiSelect VIP Folio 500,
Fidelity VIP Equity Income Portfolio, Fidelity VIP Growth Portfolio, Fidelity
VIP High Income Portfolio, Fidelity VIP Overseas Portfolio, Fidelity VIP II
Contrafund Portfolio, Fidelity VIP II Index 500 Portfolio, CitiFunds Small Cap
Growth V.I.P. Portfolio, MFS Bond Series, MFS Emerging Growth Series, MFS Money
Market Series, MFS Research Series, MFS Total Return Series, MFS World
Government Series, Travelers High Yield Bond Trust Fund, Travelers Money Market
Portfolio, Salomon Brothers Variable Capital Fund, Salomon Brothers Variable
High Yield Bond Fund, Salomon Brothers Variable Investors Fund, Salomon Brothers
Variable Total Return Fund, Smith Barney AIM Capital Appreciation Fund, Smith
Barney MFS Total Return Portfolio, Smith Barney Putnam Diversified Income
Portfolio, Franklin Small Cap Investment Portfolio, Templeton International Fund
Class II, Smith Barney Large Cap Portfolio, Smith Barney MFS Research Portfolio,
Smith Barney MFS Mid Cap Growth Portfolio, Travelers Quality Bond Portfolio, CIS
Emerging Growth Portfolio, CIS Mid Cap Growth Portfolio, CIS Growth Portfolio,
CIS Growth & Income Portfolio, CIS Government Portfolio, and Equity Index
Portfolio Class II divisions of First Citicorp Life Insurance Company Variable
Annuity Separate Account as of December 31, 1999, and the related statement of
operations for the year then ended and the related statements of changes in net
assets for each of the years in the two-year period ended December 31, 1999.
These financial statements are the responsibility of First Citicorp Life
Insurance Company Variable Annuity Separate Account's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of investments owned at December 31, 1999, by correspondence with
the transfer agents of the underlying funds. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the AIM V.I. Capital
Appreciation Fund, AIM V.I. Government Series Fund, AIM V.I. Growth Fund, AIM
V.I. Growth and Income Fund, AIM V.I. International Equity Fund, AIM V.I. Value
Fund, CitiSelect VIP Folio 200, CitiSelect VIP Folio 300, CitiSelect VIP Folio
400, CitiSelect VIP Folio 500, Fidelity VIP Equity Income Portfolio, Fidelity
VIP Growth Portfolio, Fidelity VIP High Income Portfolio, Fidelity VIP Overseas
Portfolio, Fidelity VIP II Contrafund Portfolio, Fidelity VIP II Index 500
Portfolio, CitiFunds Small Cap Growth V.I.P. Portfolio, MFS Bond Series, MFS
Emerging Growth Series, MFS Money Market Series, MFS
<PAGE> 60
Research Series, MFS Total Return Series, MFS World Government Series, Travelers
High Yield Bond Trust Fund, Travelers Money Market Portfolio, Salomon Brothers
Variable Capital Fund, Salomon Brothers Variable High Yield Bond Fund, Salomon
Brothers Variable Investors Fund, Salomon Brothers Variable Total Return Fund,
Smith Barney AIM Capital Appreciation Fund, Smith Barney MFS Total Return
Portfolio, Smith Barney Putnam Diversified Income Portfolio, Franklin Small Cap
Investment Portfolio, Templeton International Fund Class II, Smith Barney Large
Cap Portfolio, Smith Barney MFS Research Portfolio, Smith Barney MFS Mid Cap
Growth Portfolio, Travelers Quality Bond Portfolio, CIS Emerging Growth
Portfolio, CIS Mid Cap Growth Portfolio, CIS Growth Portfolio, CIS Growth &
Income Portfolio, CIS Government Portfolio, and Equity Index Portfolio Class II
divisions of First Citicorp Life Insurance Company Variable Annuity Separate
Account as of December 31, 1999, and the results of their operations for the
year then ended and changes in their net assets for each of the years in the
two-year period ended December 31, 1999, in conformity with generally accepted
accounting principles.
/s/ KPMG LLP
March 31, 2000
2
<PAGE> 61
FIRST CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Net Assets
December 31, 1999
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
AIM V.I. AIM V.I. AIM AIM V.I. AIM V.I.
Capital Government V.I. Growth and International
Appreciation Series Growth Income Equity
Fund Fund Fund Fund Fund
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net assets:
Investments at market value $ 36,945,644 13,811,710 18,143,205 38,820,692 27,203,320
Payable to First Citicorp Life
Insurance Company 1,031 436 559 1,161 785
- -------------------------------------------------------------------------------------------------------------------
Total net assets $ 36,944,613 13,811,274 18,142,646 38,819,531 27,202,535
- -------------------------------------------------------------------------------------------------------------------
Total net assets represented by:
Variable annuity cash value invested in
separate account by contractholders -
Base 99 Basis Points 33,563,619 8,646,888 12,056,398 28,847,965 23,073,941
Variable annuity cash value invested in
separate account by contractholders -
Base 140 Basis Points 3,380,994 5,164,386 6,086,248 9,971,566 4,128,594
Variable annuity cash value invested in
separate account by contractholders -
CitiEite - - - - -
- -------------------------------------------------------------------------------------------------------------------
Total net assets represented $ 36,944,613 13,811,274 18,142,646 38,819,531 27,202,535
- -------------------------------------------------------------------------------------------------------------------
Total units held by contractholders -
Base - 99 Basis Points 11,899,636 7,835,868 5,608,680 14,517,356 12,561,783
Total units held by contractholders -
Base - 140 Basis Points 1,211,084 4,697,585 2,865,017 5,084,679 2,271,268
Total units held by contractholders - Citi-Elite - - - - -
Accumulated unit value - Base - 99 Basis Points $ 2.82 1.10 2.15 1.99 1.84
Accumulated unit value - Base - 140 Basis Points 2.79 1.10 2.12 1.96 1.82
Accumulated unit value - Citi-Elite - - - - -
Cost of investments $ 23,555,521 14,410,358 14,213,633 27,344,121 17,868,426
- -------------------------------------------------------------------------------------------------------------------
Number of shares 1,038,382 1,299,314 562,580 1,228,892 928,758
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 62
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
AIM CitiSelect CitiSelect CitiSelect CitiSelect Fidelity Fidelity Fidelity
V.I. VIP VIP VIP VIP VIP Equity VIP VIP High
Value Folio Folio Folio Folio Income Growth Income
Fund 200 300 400 500 Portfolio Portfolio Portfolio
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
65,393,490 8,309,180 12,921,257 7,649,933 2,903,893 48,288,014 63,340,230 17,757,703
1,989 232 354 211 79 1,390 1,947 522
- -----------------------------------------------------------------------------------------------
65,391,501 8,308,948 12,920,903 7,649,722 2,903,814 48,286,624 63,338,283 17,757,181
- -----------------------------------------------------------------------------------------------
45,746,269 7,613,881 12,438,255 7,151,130 2,863,066 41,030,584 43,101,019 14,399,303
19,645,232 473,731 292,062 410,523 11,935 7,256,040 20,237,264 3,357,878
- 221,336 190,586 88,069 28,813 - - -
- -----------------------------------------------------------------------------------------------
65,391,501 8,308,948 12,920,903 7,649,722 2,903,814 48,286,624 63,338,283 17,757,181
- -----------------------------------------------------------------------------------------------
22,849,391 6,697,215 10,546,543 6,033,213 2,351,968 29,019,677 12,745,698 12,487,773
9,936,964 418,239 248,559 349,928 9,906 5,183,696 6,054,067 2,922,891
- 217,156 182,037 82,097 26,368 - - -
2.00 1.14 1.18 1.19 1.22 1.41 3.38 1.15
1.98 1.13 1.18 1.17 1.20 1.40 3.34 1.15
- 1.02 1.05 1.07 1.09 - - -
50,803,195 8,321,059 12,488,193 7,424,227 3,047,937 45,642,865 46,636,424 18,706,409
- -----------------------------------------------------------------------------------------------
1,952,044 791,351 1,159,897 691,676 301,860 1,878,180 1,153,108 1,570,089
- -----------------------------------------------------------------------------------------------
</TABLE>
(Continued)
4
<PAGE> 63
FIRST CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Net Assets
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Fidelity Fidelity Fidelity CitiFunds
VIP VIP II VIP II Small Cap MFS
Overseas Contrafund Index 500 Growth V.I.P. Bond
Portfolio Portfolio Portfolio Portfolio Series
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net assets:
Investments at market value $ 15,192,411 50,666,361 106,304,073 3,080,585 8,168,448
Payable to First Citicorp Life
Insurance Company 426 1,520 3,176 85 253
- --------------------------------------------------------------------------------------------------------------------
Total net assets $ 15,191,985 50,664,841 106,300,897 3,080,500 8,168,195
- --------------------------------------------------------------------------------------------------------------------
Total net assets represented by:
Variable annuity cash value invested in
separate account by contractholders -
Base 99 Basis Points 14,012,561 37,649,008 80,833,910 2,633,867 5,527,445
Variable annuity cash value invested in
separate account by contractholders -
Base 140 Basis Points 1,179,424 13,015,833 25,466,987 281,060 2,640,750
Variable annuity cash value invested in
separate account by contractholders -
CitiEite - - - 165,573 -
- --------------------------------------------------------------------------------------------------------------------
Total net assets represented $ 15,191,985 50,664,841 106,300,897 3,080,500 8,168,195
- --------------------------------------------------------------------------------------------------------------------
Total units held by contractholders -
Base - 99 Basis Points 8,189,584 19,684,081 43,186,834 1,834,606 4,981,425
Total units held by contractholders -
Base - 140 Basis Points 696,431 6,894,076 13,803,243 197,794 2,384,560
Total units held by contractholders - Citi-Elite - - - 114,352 -
Accumulated unit value - Base - 99 Basis Points $ 1.71 1.91 1.87 1.44 1.11
Accumulated unit value - Base - 140 Basis Points 1.69 1.89 1.85 1.42 1.11
Accumulated unit value - Citi-Elite - - - 1.45 -
Cost of investments $ 11,219,484 39,320,611 81,937,269 2,574,002 8,357,636
- --------------------------------------------------------------------------------------------------------------------
Number of shares 553,659 1,738,126 634,992 233,201 747,342
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 64
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
MFS MFS MFS MFS Travelers Travelers Salomon Brothers
Emerging Money MFS Total World High Yield Money Variable
Growth Market Research Return Government Bond Trust Market Capital
Series Series Series Series Series Fund Portfolio Fund
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
65,041,771 8,923,044 37,085,472 31,856,282 2,170,037 227,340 331,410 5,964,786
1,862 252 1,050 955 62 7 9 161
- ---------------------------------------------------------------------------------------------------
65,039,909 8,922,792 37,084,422 31,855,327 2,169,975 227,333 331,401 5,964,625
- ---------------------------------------------------------------------------------------------------
54,633,943 8,112,474 33,020,495 24,052,544 1,965,574 - - -
10,405,966 810,318 4,063,927 7,802,783 204,401 - - -
- - - - - 227,333 331,401 5,964,625
- ---------------------------------------------------------------------------------------------------
65,039,909 8,922,792 37,084,422 31,855,327 2,169,975 227,333 331,401 5,964,625
- ---------------------------------------------------------------------------------------------------
20,174,491 6,895,732 19,122,690 18,218,623 1,740,631 - - -
3,879,175 689,526 2,373,664 5,952,785 181,566 - - -
- - - - - 229,710 325,542 5,371,395
2.71 1.18 1.73 1.32 1.13 - - -
2.68 1.18 1.71 1.31 1.13 - - -
- - - - - 0.99 1.02 1.11
32,483,597 8,923,045 26,479,099 31,104,827 2,213,850 225,706 331,410 5,705,003
- ---------------------------------------------------------------------------------------------------
1,714,332 8,923,045 1,588,923 1,794,720 216,355 24,006 331,410 436,341
- ---------------------------------------------------------------------------------------------------
</TABLE>
(Continued)
6
<PAGE> 65
FIRST CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Net Assets
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Salomon Brothers Salomon Brothers Smith Barney
Variable High Variable Variable AIM Capital
Yield Bond Investors Total Return Appreciation
Fund Fund Fund Portfolio
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net assets:
Investments at market value $ 738,670 5,903,165 2,257,541 4,800,342
Payable to First Citicorp Life
Insurance Company 20 160 62 129
- ------------------------------------------------------------------------------------------------------------------------------
Total net assets $ 738,650 5,903,005 2,257,479 4,800,213
- ------------------------------------------------------------------------------------------------------------------------------
Total net assets represented by:
Variable annuity cash value invested in
separate account by contractholders -
Base 99 Basis Points - - - -
Variable annuity cash value invested in
separate account by contractholders -
Base 140 Basis Points - - - -
Variable annuity cash value invested in
separate account by contractholders -
CitiEite 738,650 5,903,005 2,257,479 4,800,213
- ------------------------------------------------------------------------------------------------------------------------------
Total net assets represented $ 738,650 5,903,005 2,257,479 4,800,213
- ------------------------------------------------------------------------------------------------------------------------------
Total units held by contractholders -
Base - 99 Basis Points - - - -
Total units held by contractholders -
Base - 140 Basis Points - - - -
Total units held by contractholders - Citi-Elite 720,019 5,822,883 2,312,186 3,443,558
Accumulated unit value - Base - 99 Basis Points - - - -
Accumulated unit value - Base - 140 Basis Points - - - -
Accumulated unit value - Citi-Elite 1.03 1.01 0.98 1.39
Cost of investments $ 780,236 5,810,925 2,328,687 3,819,542
- ------------------------------------------------------------------------------------------------------------------------------
Number of shares 80,116 482,679 220,678 231,901
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
7
<PAGE> 66
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Smith Barney Smith Barney Franklin Templeton Smith Barney
MFS Total Putnam Diversified Small Cap International Smith Barney Smith Barney MFS Mid Cap
Return Income Investment Fund Large Cap MFS Research Growth
Portfolio Portfolio Portfolio Class II Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
4,099,056 984,054 980,399 1,957,367 10,014,562 3,794,262 2,422,124
112 27 26 53 273 103 65
- ------------------------------------------------------------------------------------------------------------
4,098,944 984,027 980,373 1,957,314 10,014,289 3,794,159 2,422,059
- ------------------------------------------------------------------------------------------------------------
- - - - - - -
- - - - - - -
4,098,944 984,027 980,373 1,957,314 10,014,289 3,794,159 2,422,059
- ------------------------------------------------------------------------------------------------------------
4,098,944 984,027 980,373 1,957,314 10,014,289 3,794,159 2,422,059
- ------------------------------------------------------------------------------------------------------------
- - - - - - -
- - - - - - -
4,154,044 976,461 610,331 1,695,046 8,172,389 3,145,553 1,542,218
- - - - - - -
- - - - - - -
0.99 1.01 1.61 1.15 1.23 1.21 1.57
4,089,486 969,589 780,718 1,787,308 9,281,316 3,339,758 1,828,349
- ------------------------------------------------------------------------------------------------------------
252,560 85,944 62,287 88,449 474,399 290,525 147,421
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(Continued)
8
<PAGE> 67
FIRST CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Net Assets
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Travelers CIS CIS
Quality Emerging Mid Cap CIS
Bond Growth Growth Growth
Portfolio Portfolio Portfolio Portfolio
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net assets:
Investments at market value $ 1,891,337 664,623 470,962 1,287,862
Payable to First Citicorp Life
Insurance Company 52 18 13 35
- -----------------------------------------------------------------------------------------------------------------------
Total net assets $ 1,891,285 664,605 470,949 1,287,827
- -----------------------------------------------------------------------------------------------------------------------
Total net assets represented by:
Variable annuity cash value invested in
separate account by contractholders -
Base 99 Basis Points - - - -
Variable annuity cash value invested in
separate account by contractholders -
Base 140 Basis Points - - - -
Variable annuity cash value invested in
separate account by contractholders -
CitiEite 1,891,285 664,605 470,949 1,287,827
- -----------------------------------------------------------------------------------------------------------------------
Total net assets represented $ 1,891,285 664,605 470,949 1,287,827
- -----------------------------------------------------------------------------------------------------------------------
Total units held by contractholders -
Base - 99 Basis Points - - - -
Total units held by contractholders -
Base - 140 Basis Points - - - -
Total units held by contractholders - Citi-Elite 1,879,153 535,119 395,924 1,085,790
Accumulated unit value - Base - 99 Basis Points - - - -
Accumulated unit value - Base - 140 Basis Points - - - -
Accumulated unit value - Citi-Elite 1.01 1.24 1.19 1.19
Cost of investments $ 1,882,204 585,966 410,213 1,173,372
- -----------------------------------------------------------------------------------------------------------------------
Number of shares 174,800 53,642 39,477 108,589
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
9
<PAGE> 68
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
CIS
Growth & CIS Equity Index
Income Government Portfolio
Portfolio Portfolio Class II
- --------------------------------------------------------------------
<S> <C> <C> <C>
523,220 117,144 2,330,077
14 3 62
- --------------------------------------------------------------------
523,206 117,141 2,330,015
- --------------------------------------------------------------------
- - -
- - -
523,206 117,141 2,330,015
- --------------------------------------------------------------------
523,206 117,141 2,330,015
- --------------------------------------------------------------------
- - -
- - -
481,693 118,578 653,333
- - -
- - -
1.09 0.99 3.57
493,177 120,643 2,199,384
- --------------------------------------------------------------------
48,268 12,002 65,068
- --------------------------------------------------------------------
</TABLE>
10
<PAGE> 69
FIRST CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Operations
For the year ended December 31, 1999
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
AIM V.I. AIM V.I. AIM AIM V.I.
Capital Government V.I. Growth and
Appreciation Series Growth Income
Fund Fund Fund Fund
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment income - dividends $ 24,342 516,671 34,961 192,716
Expenses:
Mortality and expense risk fees 236,244 127,174 122,043 263,572
Daily administrative charges 39,284 17,198 16,762 38,538
- --------------------------------------------------------------------------------------------------------------------
Total expenses 275,528 144,372 138,805 302,110
- --------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (251,186) 372,299 (103,844) (109,394)
- --------------------------------------------------------------------------------------------------------------------
Realized and unrealized gain (loss)
on investments:
Realized gain distribution 759,482 - 612,847 133,063
Realized gain (loss) on sale of
investments 1,089,338 190,945 566,349 634,287
Change in unrealized gain
(loss) on investments 9,472,133 (846,154) 3,012,193 8,070,307
- --------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments 11,320,953 (655,209) 4,191,389 8,837,657
- --------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
resulting from operations $ 11,069,767 (282,910) 4,087,545 8,728,263
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
11
<PAGE> 70
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
AIM V.I. AIM CitiSelect CitiSelect CitiSelect CitiSelect Fidelity
International V.I. VIP VIP VIP VIP VIP Equity
Equity Value Folio Folio Folio Folio Income
Fund Fund 200 300 400 500 Portfolio
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
166,457 172,581 17,131 45,225 26,825 6,491 585,347
157,684 440,479 77,083 115,710 72,073 27,510 409,202
24,583 61,751 13,204 20,311 12,481 4,891 65,771
- ---------------------------------------------------------------------------------------------------------------------------
182,267 502,230 90,287 136,021 84,554 32,401 474,973
- ---------------------------------------------------------------------------------------------------------------------------
(15,810) (329,649) (73,156) (90,796) (57,729) (25,910) 110,374
- ---------------------------------------------------------------------------------------------------------------------------
698,533 902,484 37,671 - - - 1,293,924
205,690 1,161,963 (106,669) 208,273 15,534 (335,561) 576,823
8,242,982 10,641,792 170,998 324,917 537,826 652,225 87,043
- ---------------------------------------------------------------------------------------------------------------------------
9,147,205 12,706,239 102,000 533,190 553,360 316,664 1,957,790
- ---------------------------------------------------------------------------------------------------------------------------
9,131,395 12,376,590 28,844 442,394 495,631 290,754 2,068,164
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(Continued)
12
<PAGE> 71
FIRST CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Operations
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Fidelity Fidelity Fidelity Fidelity
VIP VIP High VIP VIP II
Growth Income Overseas Contrafund
Portfolio Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment income - dividends $ 47,164 1,281,555 144,060 131,143
Expenses:
Mortality and expense risk fees 418,089 153,033 98,733 353,880
Daily administrative charges 57,547 24,128 16,543 51,745
- ------------------------------------------------------------------------------------------------------------------------
Total expenses 475,636 177,161 115,276 405,625
- ------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (428,472) 1,104,394 28,784 (274,482)
- ------------------------------------------------------------------------------------------------------------------------
Realized and unrealized gain (loss)
on investments:
Realized gain distribution 2,965,433 47,908 232,356 961,718
Realized gain (loss) on sale of
investments 1,033,467 (391,788) 215,031 764,241
Change in unrealized gain
(loss) on investments 11,028,307 232,494 3,786,188 6,939,240
- ------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments 15,027,207 (111,386) 4,233,575 8,665,199
- ------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
resulting from operations $ 14,598,735 993,008 4,262,359 8,390,717
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements
13
<PAGE> 72
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity CitiFunds MFS MFS MFS MFS
VIP II Small Cap MFS Emerging Money MFS Total World
Index 500 Growth V.I.P. Bond Growth Market Research Return Government
Portfolio Portfolio Series Series Series Series Series Series
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
611,241 - 188,437 - 365,196 58,009 659,947 125,616
788,058 14,963 76,179 355,884 78,520 268,340 260,594 19,460
117,287 2,409 10,945 55,094 12,924 44,123 38,955 3,262
- -----------------------------------------------------------------------------------------------------------------------------------
905,345 17,372 87,124 410,978 91,444 312,463 299,549 22,722
- -----------------------------------------------------------------------------------------------------------------------------------
(294,104) (17,372) 101,313 (410,978) 273,752 (254,454) 360,398 102,894
- -----------------------------------------------------------------------------------------------------------------------------------
414,771 - 4,125 - 38,659 306,553 718,110 -
1,386,756 (28,756) 53,268 726,956 - 505,041 375,311 (3,251)
13,759,990 696,373 (387,195) 26,770,394 (1) 6,253,060 (979,034) (179,471)
- -----------------------------------------------------------------------------------------------------------------------------------
15,561,517 667,617 (329,802) 27,497,350 38,658 7,064,654 114,387 (182,722)
- -----------------------------------------------------------------------------------------------------------------------------------
15,267,413 650,245 (228,489) 27,086,372 312,410 6,810,200 474,785 (79,828)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(Continued)
14
<PAGE> 73
FIRST CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Operations
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Travelers Travelers Salomon Brothers Salomon Brothers
High Yield Money Variable Variable High
Bond Trust Market Capital Yield Bond
Fund Portfolio Fund Fund
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment income - dividends $ - 5,161 27,611 64,982
Expenses:
Mortality and expense risk fees 732 1,391 18,367 2,452
Daily administrative charges 86 161 2,116 290
- ----------------------------------------------------------------------------------------------------------------------------------
Total expenses 818 1,552 20,483 2,742
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (818) 3,609 7,128 62,240
- ----------------------------------------------------------------------------------------------------------------------------------
Realized and unrealized gain (loss)
on investments:
Realized gain distribution - - 160,109 -
Realized gain (loss) on sale of
investments (136) - 4,348 508
Change in unrealized gain
(loss) on investments 1,634 - 259,783 (41,566)
- ----------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments 1,498 - 424,240 (41,058)
- ----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
resulting from operations $ 680 3,609 431,368 21,182
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements
15
<PAGE> 74
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Salomon Brothers Smith Barney Smith Barney Smith Barney Franklin Templeton
Variable Variable AIM Capital MFS Total Putnam Diversi- Small Cap International
Investors Total Return Appreciation Return fied Income Investment Fund
Fund Fund Portfolio Portfolio Portfolio Portfolio Class II
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
29,355 54,853 - 7,537 1,315 - -
18,864 7,475 13,555 13,677 3,279 1,370 5,443
2,168 869 1,569 1,611 379 245 604
- -----------------------------------------------------------------------------------------------------------------------------------
21,032 8,344 15,124 15,288 3,658 1,615 6,047
- -----------------------------------------------------------------------------------------------------------------------------------
8,323 46,509 (15,124) (7,751) (2,343) (1,615) (6,047)
- -----------------------------------------------------------------------------------------------------------------------------------
- - - 13,016 - - -
(4,694) 3,075 26,840 (18,454) (785) 1,389 1,677
92,240 (71,146) 980,800 9,570 14,465 199,681 170,059
- -----------------------------------------------------------------------------------------------------------------------------------
87,546 (68,071) 1,007,640 4,132 13,680 201,070 171,736
- -----------------------------------------------------------------------------------------------------------------------------------
95,869 (21,562) 992,516 (3,619) 11,337 199,455 165,689
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(Continued)
16
<PAGE> 75
FIRST CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Operations
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Smith Barney Travelers
Smith Barney Smith Barney MFS Mid Cap Quality
Large Cap MFS Research Growth Bond
Portfolio Portfolio Portfolio Portfolio
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment income - dividends $ 12,601 - 77 110
Expenses:
Mortality and expense risk fees 29,804 11,709 6,171 6,149
Daily administrative charges 3,443 1,359 687 710
- ----------------------------------------------------------------------------------------------------------------------------
Total expenses 33,247 13,068 6,858 6,859
- ----------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (20,646) (13,068) (6,781) (6,749)
- ----------------------------------------------------------------------------------------------------------------------------
Realized and unrealized gain (loss)
on investments:
Realized gain distribution 432,614 - - 2
Realized gain (loss) on sale of
investments 8,521 6,908 4,927 494
Change in unrealized gain
(loss) on investments 733,246 454,504 593,775 9,133
- ----------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments 1,174,381 461,412 598,702 9,629
- ----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
resulting from operations $ 1,153,735 448,344 591,921 2,880
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements
17
<PAGE> 76
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
CIS CIS CIS
Emerging Mid Cap CIS Growth & CIS Equity Index
Growth Growth Growth Income Government Portfolio
Portfolio Portfolio Portfolio Portfolio Portfolio Class II
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
2,040 650 1,072 1,119 1,891 -
1,096 947 1,971 859 153 3,207
105 97 213 91 17 372
- --------------------------------------------------------------------------------------------------------------------------
1,201 1,044 2,184 950 170 3,579
- --------------------------------------------------------------------------------------------------------------------------
839 (394) (1,112) 169 1,721 (3,579)
- --------------------------------------------------------------------------------------------------------------------------
- - - - - -
4,187 3,961 197 88 (1) 2,118
78,657 60,749 114,490 30,043 (3,499) 130,693
- --------------------------------------------------------------------------------------------------------------------------
82,844 64,710 114,687 30,131 (3,500) 132,811
- --------------------------------------------------------------------------------------------------------------------------
83,683 64,316 113,575 30,300 (1,779) 129,232
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE> 77
FIRST CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Changes in Net Assets
For the year ended December 31, 1999
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
AIM V.I. AIM V.I. AIM AIM V.I. AIM V.I.
Capital Government V.I. Growth and International
Appreciation Series Growth Income Equity
Fund Fund Fund Fund Fund
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
resulting from operations:
Net investment income (loss) $ (251,186) 372,299 (103,844) (109,394) (15,810)
Realized gain distributions 759,482 - 612,847 133,063 698,533
Realized gain (loss) on sale of
investments 1,089,338 190,945 566,349 634,287 205,690
Change in unrealized gain (loss)
on investments 9,472,133 (846,154) 3,012,193 8,070,307 8,242,982
- ----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets resulting
from operations 11,069,767 (282,910) 4,087,545 8,728,263 9,131,395
- ----------------------------------------------------------------------------------------------------------------------------------
Capital transactions:
Contract deposits 3,409,350 6,352,027 5,822,215 9,616,499 3,366,232
Transfers between funds (1,974,776) (1,276,459) 1,048,057 548,080 982,092
Transfers to (from) First Citicorp Life
Insurance Company 783,525 661,544 766,342 1,946,432 658,817
Annual administrative charges (1,747) (174) (453) (1,230) (475)
Death benefits (10,430) - - (20,943) (10,070)
Contract withdrawals (1,538,385) (773,443) (556,457) (1,060,718) (748,611)
- ----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets resulting
from capital transactions 667,537 4,963,495 7,079,704 11,028,120 4,247,985
- ----------------------------------------------------------------------------------------------------------------------------------
Total increase in net assets 11,737,304 4,680,585 11,167,249 19,756,383 13,379,380
Net assets at beginning of period 25,207,309 9,130,689 6,975,397 19,063,148 13,823,155
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 36,944,613 13,811,274 18,142,646 38,819,531 27,202,535
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
19
<PAGE> 78
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
AIM CitiSelect CitiSelect CitiSelect CitiSelect Fidelity Fidelity Fidelity
V.I. VIP VIP VIP VIP VIP Equity VIP VIP High
Value Folio Folio Folio Folio Income Growth Income
Fund 200 300 400 500 Portfolio Portfolio Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
(329,649) (73,156) (90,796) (57,729) (25,910) 110,374 (428,472) 1,104,394
902,484 37,671 - - - 1,293,924 2,965,433 47,908
1,161,963 (106,669) 208,273 15,534 (335,561) 576,823 1,033,467 (391,788)
10,641,792 170,998 324,917 537,826 652,225 87,043 11,028,307 232,494
- -----------------------------------------------------------------------------------------------------------------------------------
12,376,590 28,844 442,394 495,631 290,754 2,068,164 14,598,735 993,008
- -----------------------------------------------------------------------------------------------------------------------------------
19,710,606 690,934 699,678 600,761 128,059 10,160,017 18,260,421 4,702,923
3,068,672 (1,271,996) (3,253,972) (2,815,181) (1,179,288) (1,932,115) 4,913,300 (1,581,274)
4,932,805 (346,375) 73,054 (22,376) (107,743) 1,769,249 3,105,686 879,547
(1,601) (552) (904) (1,004) (347) (2,340) (1,506) (541)
(12,059) - - - - (6,782) (8,823) -
(1,693,589) (386,367) (739,387) (737,961) (167,087) (1,939,821) (2,185,220) (750,880)
- -----------------------------------------------------------------------------------------------------------------------------------
26,004,833 (1,314,356) (3,221,533) (2,975,762) (1,326,405) 8,048,207 24,083,858 3,249,775
- -----------------------------------------------------------------------------------------------------------------------------------
38,381,423 (1,285,512) (2,779,139) (2,480,131) (1,035,651) 10,116,371 38,682,593 4,242,783
27,010,078 9,594,460 15,700,042 10,129,853 3,939,465 38,170,253 24,655,690 13,514,398
- -----------------------------------------------------------------------------------------------------------------------------------
65,391,501 8,308,948 12,920,903 7,649,722 2,903,814 48,286,624 63,338,283 17,757,181
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(Continued)
20
<PAGE> 79
FIRST CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Fidelity Fidelity Fidelity CitiFunds
VIP VIP II VIP II Small Cap MFS
Overseas Contrafund Index 500 Growth V.I.P. Bond
Portfolio Portfolio Portfolio Portfolio Series
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
resulting from operations:
Net investment income (loss) $ 28,784 (274,482) (294,104) (17,372) 101,313
Realized gain distributions 232,356 961,718 414,771 - 4,125
Realized gain (loss) on sale of
investments 215,031 764,241 1,386,756 (28,756) 53,268
Change in unrealized gain (loss)
on investments 3,786,188 6,939,240 13,759,990 696,373 (387,195)
- ----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets resulting
from operations 4,262,359 8,390,717 15,267,413 650,245 (228,489)
- ----------------------------------------------------------------------------------------------------------------------------------
Capital transactions:
Contract deposits 1,609,386 13,334,863 27,190,674 321,034 4,123,210
Transfers between funds 90,598 1,651,961 2,480,942 622,123 (792,643)
Transfers to (from) First Citicorp Life
Insurance Company 650,421 3,298,589 6,362,710 77,438 317,108
Annual administrative charges (412) (1,769) (3,109) (85) (305)
Death benefits - - (41,646) - (27,119)
Contract withdrawals (435,588) (1,453,166) (3,546,913) (94,948) (454,701)
- ----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets resulting
from capital transactions 1,914,406 16,830,477 32,442,659 925,562 3,165,550
- ----------------------------------------------------------------------------------------------------------------------------------
Total increase in net assets 6,176,765 25,221,194 47,710,072 1,575,807 2,937,061
Net assets at beginning of period 9,015,220 25,443,647 58,590,825 1,504,693 5,231,134
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 15,191,985 50,664,841 106,300,897 3,080,500 8,168,195
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements
21
<PAGE> 80
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
MFS MFS MFS MFS Travelers Travelers Salomon Brothers
Emerging Money MFS Total World High Yield Money Variable
Growth Market Research Return Government Bond Trust Market Capital
Series Series Series Series Series Fund Portfolio Fund
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
(410,978) 273,752 (254,454) 360,398 102,894 (818) 3,609 7,128
- 38,659 306,553 718,110 - - - 160,109
726,956 - 505,041 375,311 (3,251) (136) - 4,348
26,770,394 (1) 6,253,060 (979,034) (179,471) 1,634 - 259,783
- ----------------------------------------------------------------------------------------------------------------------------------
27,086,372 312,410 6,810,200 474,785 (79,828) 680 3,609 431,368
- ----------------------------------------------------------------------------------------------------------------------------------
7,822,447 1,503,085 4,290,033 8,729,999 285,777 115,202 450,365 3,879,427
1,581,124 (303,860) (97,782) (291,124) (216,481) (26,493) (203,190) 23,760
1,640,043 (157,950) 1,076,734 2,764,053 96,682 141,197 80,617 1,893,582
(1,606) (176) (1,410) (1,178) (68) - - -
(12,578) - - (28,792) (5,989) - - -
(1,329,202) (531,065) (1,477,326) (1,209,022) (140,334) (3,253) - (263,512)
- ----------------------------------------------------------------------------------------------------------------------------------
9,700,227 510,034 3,790,249 9,963,934 19,588 226,653 327,792 5,533,257
- ----------------------------------------------------------------------------------------------------------------------------------
36,786,599 822,444 10,600,449 10,438,719 (60,240) 227,333 331,401 5,964,625
28,253,310 8,100,348 26,483,973 21,416,608 2,230,215 - - -
- ----------------------------------------------------------------------------------------------------------------------------------
65,039,909 8,922,792 37,084,422 31,855,327 2,169,975 227,333 331,401 5,964,625
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(Continued)
22
<PAGE> 81
FIRST CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Salomon Brothers Salomon Brothers Smith Barney
Variable High Variable Variable AIM Capital
Yield Bond Investors Total Return Appreciation
Fund Fund Fund Portfolio
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
resulting from operations:
Net investment income (loss) $ 62,240 8,323 46,509 (15,124)
Realized gain distributions - - - -
Realized gain (loss) on sale of
investments 508 (4,694) 3,075 26,840
Change in unrealized gain (loss)
on investments (41,566) 92,240 (71,146) 980,800
- ------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets resulting
from operations 21,182 95,869 (21,562) 992,516
- ------------------------------------------------------------------------------------------------------------------------------
Capital transactions:
Contract deposits 437,372 4,109,653 1,446,978 2,853,899
Transfers between funds 578 (53,147) (17,068) 118,853
Transfers to (from) First Citicorp Life
Insurance Company 365,309 1,822,838 879,344 1,070,189
Annual administrative charges - - - -
Death benefits - - - -
Contract withdrawals (85,791) (72,208) (30,213) (235,244)
- ------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets resulting
from capital transactions 717,468 5,807,136 2,279,041 3,807,697
- ------------------------------------------------------------------------------------------------------------------------------
Total increase in net assets 738,650 5,903,005 2,257,479 4,800,213
Net assets at beginning of period - - - -
- ------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 738,650 5,903,005 2,257,479 4,800,213
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements
23
<PAGE> 82
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Smith Barney Smith Barney Franklin Templeton Smith Barney
MFS Total Putnam Diversified Small Cap International Smith Barney Smith Barney MFS Mid Cap
Return Income Investment Fund Large Cap MFS Research Growth
Portfolio Portfolio Portfolio Class II Portfolio Portfolio Portfolio
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(7,751) (2,343) (1,615) (6,047) (20,646) (13,068) (6,781)
13,016 - - - 432,614 - -
(18,454) (785) 1,389 1,677 8,521 6,908 4,927
9,570 14,465 199,681 170,059 733,246 454,504 593,775
- --------------------------------------------------------------------------------------------------------------------------------
(3,619) 11,337 199,455 165,689 1,153,735 448,344 591,921
- --------------------------------------------------------------------------------------------------------------------------------
2,822,334 337,370 507,533 1,150,001 6,111,584 2,015,558 1,104,231
(50,145) (19,751) 22,886 22,574 117,030 16,668 61,689
1,507,812 666,276 251,868 738,267 2,891,180 1,355,043 696,427
- - - - - - -
- - - - - - -
(177,438) (11,205) (1,369) (119,217) (259,240) (41,454) (32,209)
- --------------------------------------------------------------------------------------------------------------------------------
4,102,563 972,690 780,918 1,791,625 8,860,554 3,345,815 1,830,138
- --------------------------------------------------------------------------------------------------------------------------------
4,098,944 984,027 980,373 1,957,314 10,014,289 3,794,159 2,422,059
- - - - - - -
- --------------------------------------------------------------------------------------------------------------------------------
4,098,944 984,027 980,373 1,957,314 10,014,289 3,794,159 2,422,059
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(Continued)
24
<PAGE> 83
FIRST CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Travelers CIS CIS
Quality Emerging Mid Cap CIS
Bond Growth Growth Growth
Portfolio Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
resulting from operations:
Net investment income (loss) $ (6,749) 839 (394) (1,112)
Realized gain distributions 2 - - -
Realized gain (loss) on sale of
investments 494 4,187 3,961 197
Change in unrealized gain (loss)
on investments 9,133 78,657 60,749 114,490
- ------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets resulting
from operations 2,880 83,683 64,316 113,575
- ------------------------------------------------------------------------------------------------------------------------
Capital transactions:
Contract deposits 938,174 553,982 349,607 992,329
Transfers between funds (5,903) 10,143
Transfers to (from) First Citicorp Life
Insurance Company 979,519 28,948 58,630 181,733
Annual administrative charges - - - -
Death benefits - - - -
Contract withdrawals (23,385) (2,008) (1,604) (9,953)
- ------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets resulting
from capital transactions 1,888,405 580,922 406,633 1,174,252
- ------------------------------------------------------------------------------------------------------------------------
Total increase in net assets 1,891,285 664,605 470,949 1,287,827
Net assets at beginning of period - - - -
- ------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 1,891,285 664,605 470,949 1,287,827
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements
25
<PAGE> 84
<TABLE>
<CAPTION>
- ---------------------------------------------------
CIS
Growth & CIS Equity Index
Income Government Portfolio
Portfolio Portfolio Class II
- ---------------------------------------------------
<S> <C> <C> <C>
169 1,721 (3,579)
- - -
88 (1) 2,118
30,043 (3,499) 130,693
- ---------------------------------------------------
30,300 (1,779) 129,232
- ---------------------------------------------------
404,475 89,002 1,901,410
(18,492)
93,019 30,081 336,991
- - -
- - -
(4,588) (163) (19,126)
- ---------------------------------------------------
492,906 118,920 2,200,783
- ---------------------------------------------------
523,206 117,141 2,330,015
- - -
- ---------------------------------------------------
523,206 117,141 2,330,015
- ---------------------------------------------------
</TABLE>
26
<PAGE> 85
FIRST CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Changes in Net Assets
For the year ended December 31, 1998
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
AIM V.I. AIM V.I. AIM AIM V.I. AIM V.I.
Capital Government V.I. Growth and International
Appreciation Series Growth Income Equity
Fund Fund Fund Fund Fund
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
resulting from operations:
Net investment income (loss) $ (181,730) 188,855 (22,114) (57,624) (11,954)
Realized gain distributions 635,653 - 407,901 182,511 -
Realized gain (loss) on sale of
investments 264,574 28,266 43,418 77,011 58,512
Change in unrealized gain (loss)
on investments 2,612,146 129,785 851,618 2,984,696 1,194,349
- ----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets resulting
from operations 3,330,643 346,906 1,280,823 3,186,594 1,240,907
- ----------------------------------------------------------------------------------------------------------------------------------
Capital transactions:
Contract deposits 7,740,252 4,965,328 3,401,874 9,762,303 4,853,547
Transfers between funds (1,033,718) 919,280 198,698 264,997 (255,178)
Transfers to (from) First Citicorp Life
Insurance Company 270,751 431,053 263,980 92,109 (6,048)
Annual administrative charges (4,691) (389) (700) (1,280) (1,786)
Death benefits (56,638) - (11,663) (109,134) (9,517)
Contract withdrawals (734,675) (272,638) (104,341) (304,900) (417,582)
- ----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets resulting
from capital transactions 6,181,281 6,042,634 3,747,848 9,704,095 4,163,436
- ----------------------------------------------------------------------------------------------------------------------------------
Total increase in net assets 9,511,924 6,389,540 5,028,671 12,890,689 5,404,343
Net assets at beginning of period 15,695,385 2,741,149 1,946,726 6,172,459 8,418,812
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 25,207,309 9,130,689 6,975,397 19,063,148 13,823,155
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
27
<PAGE> 86
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
AIM CitiSelect CitiSelect CitiSelect CitiSelect Fidelity Fidelity Fidelity
V.I. VIP VIP VIP VIP VIP Equity VIP VIP High
Value Folio Folio Folio Folio Income Growth Income
Fund 200 300 400 500 Portfolio Portfolio Portfolio
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
(48,167) 320,691 310,044 80,831 134,452 (68,917) (127,597) 324,178
1,096,684 111,989 161,191 188,899 561,131 787,658 1,638,156 274,204
22,455 86,486 107,903 27,088 19,525 155,321 202,217 (27,400)
3,770,427 (116,105) 143,788 (203,940) (777,018) 1,162,382 4,026,684 (1,545,816)
- ---------------------------------------------------------------------------------------------------------------------------------
4,841,399 403,061 722,926 92,878 (61,910) 2,036,444 5,739,460 (974,834)
- ---------------------------------------------------------------------------------------------------------------------------------
14,481,943 4,850,064 6,248,896 3,153,769 1,858,410 22,291,643 8,889,225 9,224,401
675,855 (235,424) (952,262) (709,625) (221,168) (269,855) (828,373) 252,852
391,394 (642,730) (464,608) (140,345) (64,895) 803,351 206,844 41,693
(2,019) (767) (1,708) (1,750) (689) (3,330) (3,469) (947)
(88,072) (20,424) (18,520) (9,742) (1,188) (34,826) (83,994) (30,842)
(435,073) (280,800) (558,495) (479,377) (120,203) (964,393) (942,639) (321,143)
- ---------------------------------------------------------------------------------------------------------------------------------
15,024,028 3,669,919 4,253,303 1,812,930 1,450,267 21,822,590 7,237,594 9,166,014
- ---------------------------------------------------------------------------------------------------------------------------------
19,865,427 4,072,980 4,976,229 1,905,808 1,388,357 23,859,034 12,977,054 8,191,180
7,144,651 5,521,480 10,723,813 8,224,045 2,551,108 14,311,219 11,678,636 5,323,218
- ---------------------------------------------------------------------------------------------------------------------------------
27,010,078 9,594,460 15,700,042 10,129,853 3,939,465 38,170,253 24,655,690 13,514,398
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(Continued)
28
<PAGE> 87
FIRST CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Changes in Net Assets
For the year ended December 31, 1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Fidelity Fidelity CitiFunds
VIP VIP II VIP II Small Cap MFS
Overseas Contrafund Index 500 Growth V.I.P. Bond
Portfolio Portfolio Portfolio Portfolio Series
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
resulting from operations:
Net investment income (loss) 22,766 (112,633) (148,676) (13,252) 54,126
Realized gain distributions 294,636 494,360 646,740 155,804 916
Realized gain (loss) on sale of
investments 9,475 175,168 329,545 1,380 20,559
Change in unrealized gain (loss)
on investments 203,596 3,646,901 8,381,550 (262,235) 105,644
- -----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets resulting
from operations 530,473 4,203,796 9,209,159 (118,303) 181,245
- -----------------------------------------------------------------------------------------------------------------------------------
Capital transactions:
Contract deposits 3,848,922 13,182,572 28,649,048 954,889 3,294,019
Transfers between funds (59,100) (452,920) (142,535) (115,922) 333,904
Transfers to (from) First Citicorp Life
Insurance Company 28,197 214,639 398,799 (16,235) (48,863)
Annual administrative charges (1,004) (2,916) (5,039) (142) (213)
Death benefits (664) (20,189) (25,038) - (35,396)
Contract withdrawals (159,156) (364,169) (1,127,428) (97,993) (135,490)
- -----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets resulting
from capital transactions 3,657,195 12,557,017 27,747,807 724,597 3,407,961
- -----------------------------------------------------------------------------------------------------------------------------------
Total increase in net assets 4,187,668 16,760,813 36,956,966 606,294 3,589,206
Net assets at beginning of period 4,827,552 8,682,834 21,633,859 898,399 1,641,928
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period 9,015,220 25,443,647 58,590,825 1,504,693 5,231,134
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements
29
<PAGE> 88
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
MFS MFS MFS MFS
Emerging Money MFS Total World
Growth Market Research Return Government
Series Series Series Series Series
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
(95,703) 171,629 165,149 120,634 2,661
35,238 - 37,864 84,940 -
85,201 - 54,095 38,497 1,528
5,111,014 (1) 3,412,274 1,199,825 133,770
- ------------------------------------------------------------------------------------------------------
5,135,750 171,628 3,669,382 1,443,896 137,959
- ------------------------------------------------------------------------------------------------------
14,047,640 2,569,452 9,825,945 12,539,757 251,986
205,628 1,681,111 434,889 346,836 (37,973)
171,768 (1,030,178) 87,611 527,252 (12,596)
(2,212) (664) (2,933) (1,747) (276)
(1,300) (66,618) (31,803) (5,772) (8,592)
(363,902) (206,625) (569,232) (469,295) (88,439)
- ------------------------------------------------------------------------------------------------------
14,057,622 2,946,478 9,744,477 12,937,031 104,110
- ------------------------------------------------------------------------------------------------------
19,193,372 3,118,106 13,413,859 14,380,927 242,069
9,059,938 4,982,242 13,070,114 7,035,681 1,988,146
- ------------------------------------------------------------------------------------------------------
28,253,310 8,100,348 26,483,973 21,416,608 2,230,215
- ------------------------------------------------------------------------------------------------------
</TABLE>
30
<PAGE> 89
FIRST CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Notes to Financial Statements
December 31, 1999 and 1998
(1) HISTORY
First Citicorp Life Insurance Company Variable Annuity Separate Account
(the Account) is a separate investment account maintained under the
provisions of New York Insurance Law by First Citicorp Life Insurance
Company (the Company), a subsidiary of Citicorp Life Insurance Company
and an indirect subsidiary of Citigroup. The Account operates as a unit
investment trust registered under the Investment Company Act of 1940, as
amended, and supports the operations of the Company's individual
flexible premium deferred variable annuity contracts (the contracts).
The Account invests in portfolios of the following funds:
- Variable Annuity Portfolios:
- CitiSelect VIP Folio 200,
- CitiSelect VIP Folio 300,
- CitiSelect VIP Folio 400,
- CitiSelect VIP Folio 500, and
- CitiFunds Small Cap Growth V.I.P. Portfolio.*
- AIM Variable Insurance Funds, Inc.:
- AIM V.I. Capital Appreciation Fund,
- AIM V.I. Government Series Fund,
- AIM V.I. Growth Fund,
- AIM V.I. Growth and Income Fund,
- AIM V.I. International Equity Fund, and
- AIM V.I. Value Fund.
- Fidelity Variable Insurance Products Funds:
- Fidelity VIP Equity Income Portfolio,
- Fidelity VIP Growth Portfolio,
- Fidelity VIP High Income Portfolio,
- Fidelity VIP Overseas Portfolio,
- Fidelity VIP II Contrafund Portfolio, and
- Fidelity VIP II Index 500 Portfolio.
- MFS Variable Insurance Trust:
- MFS Bond Series,
- MFS Emerging Growth Series,
- MFS Money Market Series,
- MFS Research Series,
- MFS Total Return Series, and
- MFS World Government Series.
- The Travelers Series Trust
- Large Cap Portfolio,
- MFS Mid Cap Stock Portfolio
- MFS Research Portfolio, and
- Travelers Quality Bond Portfolio.
- The Travelers Money Market Portfolio.
- The Travelers High Yield Bond Trust.
- The Travelers Series Funds
- AIM Capital Appreciation Portfolio,
- MFS Total Return Portfolio, and
- Putnam Diversified Income Portfolio.
- Salomon Brothers Variable Series Funds, Inc.
31 (Continued)
<PAGE> 90
FIRST CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Notes to Financial Statements
December 31, 1999 and 1998
- Capital Fund,
- Investors Fund,
- Total Return Fund, and
- High Yield Bond Fund.
- Templeton Variable Products Series Fund
- Franklin Small Cap Investments Fund, and
- Templeton International Fund.
- Concert Investments Series
- Select Emerging Growth Portfolio,
- Select Mid Cap Portfolio,
- Select Growth Portfolio,
- Select Growth and Income Portfolio, and
- Select Government Portfolio.
- Greenwich Street Series Fund
- Equity Index Portfolio Class II.
* Formerly known as Landmark Small Cap Equity VIP Fund
through February 28, 1998.
The assets of the Account are the property of the Company. The portion
of the Account's assets applicable to the contracts are not chargeable
with liabilities arising out of any other business conducted by the
Company.
In addition to the Account, a contract owner may also allocate funds to
the General Account, which is part of the Company's general account.
Amounts allocated to the General Account are credited with a guaranteed
rate of interest for one year. Because of exemptive and exclusionary
provisions, interests in the General Account have not been registered
under the Securities Act of 1933, and the General Account has not been
registered as an investment company under the Investment Company Act of
1940.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed
by the Account in preparation of the financial statements in conformity
with generally accepted accounting principles.
(a) INVESTMENT VALUATION
The investment in the fund is stated at market value, which is the net
asset value of each of the respective series as determined by the Fund
at the close of business on the last working day of the period.
(b) ACCOUNTING FOR INVESTMENTS
Investment transactions are accounted for on the trade date. Dividend
income is recorded on the ex-dividend date. The cost of investments sold
is generally determined on the specific identification method.
32 (Continued)
<PAGE> 91
FIRST CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Notes to Financial Statements
December 31, 1999 and 1998
(c) FEDERAL INCOME TAXES
The Company is taxed under federal law as a life insurance company. The
Account is part of the Company's total operations and is not taxed
separately. Under existing law, no taxes are payable on investment
income and realized capital gains of the Account.
(d) USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of increase and decrease
in net assets from operations during the period. Actual results could
differ from those estimates.
(3) CONTRACT CHARGES
Daily charges for mortality and expense risks assumed by the Company for
are assessed through the daily unit value calculation, and are
equivalent on an annual basis to 1.25% ("Base - 140 Basis Points" and
"Citi-Elite") and 0.84% ("Base - 99 Basis Points") of the net assets of
the contracts.
An annual contract fee of $30 is assessed against each contract on its
anniversary date by surrendering units. Daily charges for administrative
expenses are assessed through the daily unit value calculation, and are
equivalent on an annual basis to 0.15% of the net assets of the
contracts.
The contracts provide that in the event a contract owner withdraws all
or a portion of the contract value within five contract years, a
deferred sales charge will be assessed. The deferred sales charge is
based on a table of charges of which the maximum charge is currently 7%
of the purchase payments withdrawn. During each contract year, up to 10%
of purchase payments less any prior withdrawal of purchase payments may
be withdrawn without a deferred sales charge.
Premium taxes may be applicable, depending on the laws of various
jurisdictions. Various states and other governmental entities levy a
premium tax on annuity contracts issued by insurance companies.
33 (Continued)
<PAGE> 92
FIRST CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Notes to Financial Statements
December 31, 1999 and 1998
(4) PURCHASE OF INVESTMENTS
For the twelve months ended December 31, 1999, investment activity in
each of the respective funds is as follows:
<TABLE>
<CAPTION>
1999
---------------------------------
COST OF PROCEEDS
SHARES OF PURCHASES FROM SALES
----------------- --------------
<S> <C> <C>
Variable Annuity Portfolios: $
CitiSelect VIP Folio 200 Conservative 1,483,935 2,842,286
CitiSelect VIP Folio 300 Balanced 664,260 3,990,507
CitiSelect VIP Folio 400 Growth 567,766 3,610,183
CitiSelect VIP Folio 500 Growth Plus 115,525 1,471,306
CitiFunds Small Cap Growth V.I.P. Portfolio 1,364,205 457,249
AIM Variable Insurance Funds, Inc:
AIM V.I. Capital Appreciation Fund 4,376,473 3,221,181
AIM V.I. Government Securities Fund 8,458,143 3,130,219
AIM V.I. Growth Fund 9,576,204 1,992,816
AIM V.I. Growth and Income Fund 12,561,019 1,524,668
AIM V.I. International Equity Fund 5,737,478 818,277
AIM V.I. Value Fund 29,185,889 2,629,478
Fidelity Variable Insurance Products Funds:
Fidelity VIP Equity Income Portfolio 12,023,360 2,603,672
Fidelity VIP Growth Portfolio 29,360,226 2,759,082
Fidelity VIP High Income Portfolio 7,633,100 3,242,955
Fidelity VIP Overseas Portfolio 3,147,037 979,215
Fidelity VIP II Contrafund Portfolio 19,561,627 2,064,223
Fidelity VIP II Index 500 Portfolio 35,809,295 3,294,607
MFS Variable Insurance Trust:
MFS Bond Series 5,580,405 2,313,920
MFS Emerging Growth Series 10,712,075 1,445,388
MFS Money Market Series 7,257,024 6,441,738
MFS Research Series 5,380,276 1,560,166
MFS Total Return Series 12,875,092 1,851,045
MFS Global Government Series 519,453 398,966
</TABLE>
34 (Continued)
<PAGE> 93
FIRST CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Notes to Financial Statements
December 31, 1999 and 1998
<TABLE>
<S> <C> <C>
The Travelers High Yield Bond Trust 258,352 32,508
Travelers Money Market Portfolio 721,793 390,384
The Traveler Series Trust:
Large Cap Portfolio 9,387,354 114,558
MFS Mid Cap Stock Portfolio 1,840,366 16,944
MFS Research Portfolio 3,406,297 73,449
Travelers Quality Bond Portfolio 1,925,322 43,614
The Travelers Series Fund:
AIM Capital Appreciation Fund 4,045,604 252,901
MFS Total Return Portfolio 4,489,241 381,300
Putnam Diversified Income Portfolio 1,031,064 60,691
Salomon Brothers Variable Series Funds, Inc.:
Capital Fund 5,866,058 165,402
Investors Fund 5,937,445 121,824
Total Return Fund 2,631,266 305,654
High Yield Bond Fund 833,753 54,023
Templeton Variable Products Series Fund:
Franklin Small Cap Investment Fund 784,220 4,891
Templeton International Fund 1,860,198 74,566
Concert Investment Series:
Select Emerging Growth Portfolio 609,421 27,642
Select Mid Cap Portfolio 437,048 30,797
Select Growth Portfolio 1,175,058 1,883
Select Growth and Income Portfolio 495,210 2,121
Select Government Portfolio 120,959 316
Greenwich Street Series Fund -
Equity Index Portfolio Class II 2,300,244 102,979
================= ==============
</TABLE>
35 (Continued)
<PAGE> 94
FIRST CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Notes to Financial Statements
December 31, 1999 and 1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
(5) NET INCREASE IN ACCUMULATION UNITS
For the years ended December 31, 1999 and 1998, transactions in accumulation units of contractholders
of the account were as follows:
- -----------------------------------------------------------------------------------------------------------------------------------
1999
- -----------------------------------------------------------------------------------------------------------------------------------
AIM V.I. AIM V.I. AIM AIM V.I. AIM V.I. AIM
Capital Government V.I. Growth and International V.I.
Appreciation Series Growth Income Equity Value
Fund Fund Fund Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------------------------------
BASE - 99 BASIS POINTS
<S> <C> <C> <C> <C> <C> <C>
Units purchased 620,939 1,306,700 798,304 1,401,793 730,716 3,052,961
Units withdrawn and contract charges (706,797) (597,739) (268,593) (593,218) (542,834) (841,139)
Units transferred between funds (810,485) (958,427) 734,162 957,724 821,265 3,286,842
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (896,343) (249,466) 1,263,873 1,766,299 1,009,147 5,498,664
Units at beginning of period 12,795,979 8,085,334 4,344,807 12,751,057 11,552,636 17,350,727
- -----------------------------------------------------------------------------------------------------------------------------------
Units at end of period 11,899,636 7,835,868 5,608,680 14,517,356 12,561,783 22,849,391
- -----------------------------------------------------------------------------------------------------------------------------------
BASE - 140 BASIS POINTS
Units purchased 1,041,815 4,386,693 2,597,501 4,575,319 2,029,591 8,596,583
Units withdrawn and contract charges (14,526) (99,720) (44,880) (59,019) (25,681) (134,344)
Units transferred between funds 183,795 410,612 312,396 568,379 267,358 1,474,725
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase 1,211,084 4,697,585 2,865,017 5,084,679 2,271,268 9,936,964
Units at beginning of period - - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Units at end of period 1,211,084 4,697,585 2,865,017 5,084,679 2,271,268 9,936,964
- -----------------------------------------------------------------------------------------------------------------------------------
CITI-ELITE
Units purchased - - - - - -
Units withdrawn and contract charges - - - - - -
Units transferred between funds - - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase - - - - - -
Units at beginning of period - - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Units at end of period - - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
36
<PAGE> 95
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
1999
- -------------------------------------------------------------------------------------------------------------------------
CitiSelect CitiSelect CitiSelect CitiSelect Fidelity Fidelity Fidelity
VIP VIP VIP VIP VIP Equity VIP VIP High
Folio Folio Folio Folio Income Growth Income
200 300 400 500 Portfolio Portfolio Portfolio
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
138,413 258,024 147,634 84,342 2,642,331 1,328,570 1,782,114
(300,186) (615,201) (663,361) (150,517) (1,285,625) (664,103) (620,615)
(1,627,960) (2,903,803) (2,628,961) (1,164,800) (759,832) 2,159,784 (1,224,376)
- -------------------------------------------------------------------------------------------------------------------------
(1,789,733) (3,260,980) (3,144,688) (1,230,975) 596,874 2,824,251 (62,877)
8,486,948 13,807,523 9,177,901 3,582,943 28,422,803 9,921,447 12,550,650
- -------------------------------------------------------------------------------------------------------------------------
6,697,215 10,546,543 6,033,213 2,351,968 29,019,677 12,745,698 12,487,773
- -------------------------------------------------------------------------------------------------------------------------
436,465 242,643 340,546 9,906 4,680,355 5,422,609 2,354,671
(43,645) (35,942) - - (96,594) (107,423) (41,892)
25,419 41,858 9,382 - 599,935 738,881 610,112
- -------------------------------------------------------------------------------------------------------------------------
418,239 248,559 349,928 9,906 5,183,696 6,054,067 2,922,891
- - - - - - -
- -------------------------------------------------------------------------------------------------------------------------
418,239 248,559 349,928 9,906 5,183,696 6,054,067 2,922,891
- -------------------------------------------------------------------------------------------------------------------------
47,472 136,031 61,213 23,136 - - -
(3,052) (4,391) (311) (127) - - -
172,736 50,397 21,195 3,359 - - -
- -------------------------------------------------------------------------------------------------------------------------
217,156 182,037 82,097 26,368 - - -
- - - - - - -
- -------------------------------------------------------------------------------------------------------------------------
217,156 182,037 82,097 26,368 - - -
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
37
<PAGE> 96
FIRST CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Notes to Financial Statements
December 31, 1999 and 1998
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
(5) NET INCREASE IN ACCUMULATION UNITS
For the years ended December 31, 1999 and 1998, transactions in accumulation units of contractholders
of the account were as follows:
- ----------------------------------------------------------------------------------------------------------------------------------
1999
- ----------------------------------------------------------------------------------------------------------------------------------
Fidelity Fidelity Fidelity CitiFunds MFS
VIP VIP II VIP II Small Cap MFS Emerging
Overseas Contrafund Index 500 Growth V.I.P. Bond Growth
Portfolio Portfolio Portfolio Portfolio Series Series
- ----------------------------------------------------------------------------------------------------------------------------------
BASE - 99 BASIS POINTS
<S> <C> <C> <C> <C> <C> <C>
Units purchased 701,538 2,241,960 4,172,373 109,826 1,475,604 1,271,597
Units withdrawn and contract charges (318,114) (782,958) (1,899,386) (85,647) (331,666) (718,252)
Units transferred between funds 365,619 1,859,156 3,563,863 382,531 (754,743) 1,367,525
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase 749,043 3,318,158 5,836,850 406,710 389,195 1,920,870
Units at beginning of period 7,440,541 16,365,923 37,349,984 1,427,896 4,592,230 18,253,621
- ----------------------------------------------------------------------------------------------------------------------------------
Units at end of period 8,189,584 19,684,081 43,186,834 1,834,606 4,981,425 20,174,491
- ----------------------------------------------------------------------------------------------------------------------------------
BASE - 140 BASIS POINTS
Units purchased 559,320 5,837,330 12,219,141 112,086 2,161,551 3,446,003
Units withdrawn and contract charges (2,458) (82,292) (209,235) (2,789) (97,024) (31,525)
Units transferred between funds 139,569 1,139,038 1,793,337 88,497 320,033 464,697
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase 696,431 6,894,076 13,803,243 197,794 2,384,560 3,879,175
Units at beginning of period - - - - - -
- ----------------------------------------------------------------------------------------------------------------------------------
Units at end of period 696,431 6,894,076 13,803,243 197,794 2,384,560 3,879,175
- ----------------------------------------------------------------------------------------------------------------------------------
CITI-ELITE
Units purchased - - - 87,741 - -
Units withdrawn and contract charges - - - - - -
Units transferred between funds - - - 26,611 - -
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase - - - 114,352 - -
Units at beginning of period
- ----------------------------------------------------------------------------------------------------------------------------------
Units at end of period - - - 114,352 - -
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
38
<PAGE> 97
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
1999
- --------------------------------------------------------------------------------------------------------------------------
MFS MFS MFS Travelers Travelers Salomon Brothers
Money MFS Total World High Yield Money Variable
Market Research Return Government Bond Trust Market Capital
Series Series Series Series Fund Portfolio Fund
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
498,796 927,613 1,558,892 118,109 - - -
(383,312) (935,643) (895,497) (92,489) - - -
(350,451) 295,014 1,001,095 (191,422) - - -
- --------------------------------------------------------------------------------------------------------------------------
(234,967) 286,984 1,664,490 (165,802) - - -
7,130,699 18,835,706 16,554,133 1,906,433 - - -
- --------------------------------------------------------------------------------------------------------------------------
6,895,732 19,122,690 18,218,623 1,740,631 - - -
- --------------------------------------------------------------------------------------------------------------------------
811,223 2,061,755 5,095,403 128,820 - - -
(73,239) (57,727) (46,178) (35,159) - - -
(48,458) 369,636 903,560 87,905 - - -
- --------------------------------------------------------------------------------------------------------------------------
689,526 2,373,664 5,952,785 181,566 - - -
- - - - - - -
- --------------------------------------------------------------------------------------------------------------------------
689,526 2,373,664 5,952,785 181,566 - - -
- --------------------------------------------------------------------------------------------------------------------------
- - - - 116,393 445,226 3,775,204
- - - - (3,326) - (244,986)
- - - - 116,643 (119,684) 1,841,177
- --------------------------------------------------------------------------------------------------------------------------
- - - - 229,710 325,542 5,371,395
- --------------------------------------------------------------------------------------------------------------------------
- - - - 229,710 325,542 5,371,395
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
39
<PAGE> 98
FIRST CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Notes to Financial Statements
December 31, 1999 and 1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
(5) NET INCREASE IN ACCUMULATION UNITS
For the years ended December 31, 1999 and 1998, transactions in accumulation units of contractholders
of the account were as follows:
- -----------------------------------------------------------------------------------------------------------------------------------
1999
- -----------------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Salomon Brothers Salomon Brothers Smith Barney Smith Barney
Variable High Variable Variable AIM Capital MFS Total
Yield Bond Investors Total Return Appreciation Return
Fund Fund Fund Portfolio Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
BASE - 99 BASIS POINTS
<S> <C> <C> <C> <C> <C>
Units purchased - - - - -
Units withdrawn and contract charges - - - - -
Units transferred between funds - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase - - - - -
Units at beginning of period - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Units at end of period - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
BASE - 140 BASIS POINTS
Units purchased - - - - -
Units withdrawn and contract charges - - - - -
Units transferred between funds - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase - - - - -
Units at beginning of period - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Units at end of period - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
CITI-ELITE
Units purchased 439,099 4,105,969 1,459,581 2,598,540 2,841,345
Units withdrawn and contract charges (84,196) (73,484) (30,713) (179,976) (181,819)
Units transferred between funds 365,116 1,790,398 883,318 1,024,994 1,494,518
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase 720,019 5,822,883 2,312,186 3,443,558 4,154,044
Units at beginning of period
- -----------------------------------------------------------------------------------------------------------------------------------
Units at end of period 720,019 5,822,883 2,312,186 3,443,558 4,154,044
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
40
<PAGE> 99
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
1999
- -----------------------------------------------------------------------------------------------------------------------------
Smith Barney Franklin Templeton Smith Barney Travelers
Putnam Diversified Small Cap International Smith Barney Smith Barney MFS Mid Cap Quality
Income Investment Fund Large Cap MFS Research Growth Bond
Portfolio Portfolio Class II Portfolio Portfolio Portfolio Portfolio
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- - - - - - -
- - - - - - -
- - - - - - -
- -----------------------------------------------------------------------------------------------------------------------------
- - - - - - -
- - - - - - -
- -----------------------------------------------------------------------------------------------------------------------------
- - - - - - -
- -----------------------------------------------------------------------------------------------------------------------------
- - - - - - -
- - - - - - -
- - - - - - -
- -----------------------------------------------------------------------------------------------------------------------------
- - - - - - -
- - - - - - -
- -----------------------------------------------------------------------------------------------------------------------------
- - - - - - -
- -----------------------------------------------------------------------------------------------------------------------------
338,650 403,930 1,087,852 5,677,911 1,902,466 955,368 934,781
(11,171) (975) (106,410) (222,171) (38,158) (21,787) (23,230)
648,982 207,376 713,604 2,716,649 1,281,245 608,637 967,602
- -----------------------------------------------------------------------------------------------------------------------------
976,461 610,331 1,695,046 8,172,389 3,145,553 1,542,218 1,879,153
- -----------------------------------------------------------------------------------------------------------------------------
976,461 610,331 1,695,046 8,172,389 3,145,553 1,542,218 1,879,153
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
41
<PAGE> 100
FIRST CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Notes to Financial Statements
December 31, 1999 and 1998
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
(5) NET INCREASE IN ACCUMULATION UNITS
For the years ended December 31, 1999 and 1998, transactions in accumulation units of contractholders
of the account were as follows:
- ----------------------------------------------------------------------------------------------------------------------
1999
- ----------------------------------------------------------------------------------------------------------------------
CIS CIS CIS
Emerging Mid Cap CIS Growth & CIS Equity Index
Growth Growth Growth Income Government Portfolio
Portfolio Portfolio Portfolio Portfolio Portfolio Class II
- ----------------------------------------------------------------------------------------------------------------------
BASE - 99 BASIS POINTS
<S> <C> <C> <C> <C> <C> <C>
Units purchased - - - - - -
Units withdrawn and contract charges - - - - - -
Units transferred between funds - - - - - -
- ----------------------------------------------------------------------------------------------------------------------
Net increase - - - - - -
Units at beginning of period - - - - - -
- ----------------------------------------------------------------------------------------------------------------------
Units at end of period - - - - - -
- ----------------------------------------------------------------------------------------------------------------------
BASE - 140 BASIS POINTS
Units purchased - - - - - -
Units withdrawn and contract charges - - - - - -
Units transferred between funds - - - - - -
- ----------------------------------------------------------------------------------------------------------------------
Net increase - - - - - -
Units at beginning of period - - - - - -
- ----------------------------------------------------------------------------------------------------------------------
Units at end of period - - - - - -
- ----------------------------------------------------------------------------------------------------------------------
CITI-ELITE
Units purchased 512,140 342,039 927,240 398,807 88,732 565,645
Units withdrawn and contract charges (1,795) (1,471) (8,776) (4,506) (161) (5,847)
Units transferred between funds 24,774 55,356 167,326 87,392 30,007 93,535
- ----------------------------------------------------------------------------------------------------------------------
Net increase 535,119 395,924 1,085,790 481,693 118,578 653,333
Units at beginning of period
- ----------------------------------------------------------------------------------------------------------------------
Units at end of period 535,119 395,924 1,085,790 481,693 118,578 653,333
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
42
<PAGE> 101
FIRST CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Notes to Financial Statements
December 31, 1999 and 1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
(5) NET INCREASE IN ACCUMULATION UNITS
For the years ended December 31, 1999 and 1998, transactions in accumulation units of contractholders
of the account were as follows:
- -----------------------------------------------------------------------------------------------------------------------------------
1998
- -----------------------------------------------------------------------------------------------------------------------------------
AIM V.I. AIM V.I. AIM AIM V.I. AIM V.I.
Capital Government V.I. Growth and International
Appreciation Series Growth Income Equity
Fund Fund Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Units purchased 4,328,493 4,533,419 2,503,555 7,586,850 4,121,465
Units withdrawn and contract charges (449,457) (247,482) (86,347) (319,221) (370,575)
Units transferred between funds (488,249) 1,212,259 318,423 267,252 (238,283)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase 3,390,787 5,498,196 2,735,631 7,534,881 3,512,607
Units at beginning of period 9,405,192 2,587,138 1,609,176 5,216,176 8,040,029
- -----------------------------------------------------------------------------------------------------------------------------------
Units at end of period 12,795,979 8,085,334 4,344,807 12,751,057 11,552,636
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
43
<PAGE> 102
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
1998
- -----------------------------------------------------------------------------------------------------------------------------------
AIM CitiSelect CitiSelect CitiSelect CitiSelect Fidelity Fidelity Fidelity
V.I. VIP VIP VIP VIP VIP Equity VIP VIP High
Value Folio Folio Folio Folio Income Growth Income
Fund 200 300 400 500 Portfolio Portfolio Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10,962,298 4,416,440 5,635,753 2,800,165 1,631,801 17,156,046 4,339,777 7,961,371
(394,104) (276,154) (523,847) (454,752) (107,671) (783,330) (499,768) (313,149)
769,614 (840,188) (1,298,940) (791,982) (273,472) 280,585 (404,522) 222,704
- -----------------------------------------------------------------------------------------------------------------------------------
11,337,808 3,300,098 3,812,966 1,553,431 1,250,658 16,653,301 3,435,487 7,870,926
6,012,919 5,186,850 9,994,557 7,624,470 2,332,285 11,769,502 6,485,960 4,679,724
- -----------------------------------------------------------------------------------------------------------------------------------
17,350,727 8,486,948 13,807,523 9,177,901 3,582,943 28,422,803 9,921,447 12,550,650
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(Continued)
44
<PAGE> 103
FIRST CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Notes to Financial Statements
December 31, 1999 and 1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
(5) NET INCREASE IN ACCUMULATION UNITS, CONTINUED
For the years ended December 31, 1999 and 1998, transactions in accumulation units of contractholders
of the account were as follows:
- -----------------------------------------------------------------------------------------------------------------------------------
1998
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Fidelity Fidelity CitiFunds
VIP VIP II VIP II Small Cap MFS
Overseas Contrafund Index 500 Growth V.I.P. Bond
Portfolio Portfolio Portfolio Portfolio Series
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Units purchased 3,181,038 9,830,482 20,660,162 846,161 2,971,843
Units withdrawn and contract charges (138,029) (288,454) (840,681) (86,932) (154,573)
Units transferred between funds (47,374) (358,646) 19,873 (142,823) 251,914
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase 2,995,635 9,183,382 19,839,354 616,406 3,069,184
Units at beginning of period 4,444,906 7,182,541 17,510,630 811,490 1,523,046
- -----------------------------------------------------------------------------------------------------------------------------------
Units at end of period 7,440,541 16,365,923 37,349,984 1,427,896 4,592,230
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
45
<PAGE> 104
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
1998
- ----------------------------------------------------------------------------------------------------
MFS MFS MFS MFS
Emerging Money MFS Total World
Growth Market Research Return Government
Series Series Series Series Series
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
10,548,138 2,309,841 7,598,069 10,190,977 226,274
(282,619) (246,613) (474,173) (385,015) (87,465)
218,323 514,633 363,365 703,577 (46,808)
- ----------------------------------------------------------------------------------------------------
10,483,842 2,577,861 7,487,261 10,509,539 92,001
7,769,779 4,552,838 11,348,445 6,044,594 1,814,432
- ----------------------------------------------------------------------------------------------------
18,253,621 7,130,699 18,835,706 16,554,133 1,906,433
- ----------------------------------------------------------------------------------------------------
</TABLE>
46
<PAGE> 105
FIRST CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Schedule of Investments
December 31, 1999
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Number Market
of shares value Cost
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Variable Annuity Portfolios:
CitiSelect VIP Folio 200 791,351 $ 8,309,181 8,321,059
CitiSelect VIP Folio 300 1,159,897 12,921,257 12,488,193
CitiSelect VIP Folio 400 691,676 7,649,933 7,424,227
CitiSelect VIP Folio 500 301,860 2,903,893 3,047,937
CitiFunds Small Cap Growth V.I.P. Portfolio 233,201 3,080,586 2,574,002
AIM Variable Insurance Funds, Inc.:
AIM V.I. Capital Appreciation Fund 1,038,382 36,945,644 23,555,521
AIM V.I. Government Series Fund 1,299,314 13,811,710 14,410,358
AIM V.I. Growth Fund 562,580 18,143,205 14,213,633
AIM V.I. Growth and Income Fund 1,228,892 38,820,692 27,344,121
AIM V.I. International Equity Fund 928,758 27,203,320 17,868,426
AIM V.I. Value Fund 1,952,044 65,393,490 50,803,195
Fidelity Variable Insurance Products Funds:
Fidelity VIP Equity Income Portfolio 1,878,180 48,288,014 45,642,865
Fidelity VIP Growth Portfolio 1,153,108 63,340,230 46,636,424
Fidelity VIP High Income Portfolio 1,570,089 17,757,703 18,706,409
Fidelity VIP Overseas Portfolio 553,659 15,192,411 11,219,484
Fidelity VIP II Contrafund Portfolio 1,738,126 50,666,361 39,320,611
Fidelity VIP II Index 500 Portfolio 634,992 106,304,073 81,937,269
MFS Variable Insurance Trust:
MFS Bond Series 747,342 8,168,448 8,357,636
MFS Emerging Growth Series 1,714,332 65,041,771 32,483,597
MFS Money Market Series 8,923,044 8,923,044 8,923,045
MFS Research Series 1,588,923 37,085,472 26,479,099
MFS Total Return Series 1,794,720 31,856,282 31,104,827
MFS World Government Series 216,355 2,170,037 2,213,850
The Travelers High Yield Bond Trust 24,006 227,340 225,706
The Travelers Money Market Portfolio 331,410 331,410 331,410
</TABLE>
47
<PAGE> 106
Schedule, Cont.
FIRST CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Schedule of Investments
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Market
value Cost
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The Traveler Series Trust:
Large Cap Portfolio 474,399 $ 10,014,562 9,281,316
MFS Mid Cap Stock Portfolio 147,421 2,422,124 1,828,349
MFS Research Portfolio 290,525 3,794,262 3,339,758
Travelers Quality Bond Portfolio 174,800 1,891,337 1,882,204
The Travelers Series Fund:
AIM Capital Appreciation Portfolio 231,901 4,800,342 3,819,542
MFS Total Return Portfolio 252,560 4,099,056 4,089,486
Putnam Diversified Income Portfolio 85,944 984,054 969,589
Salomon Brothers Variable Series Funds, Inc.:
Capital Fund 436,341 5,964,786 5,705,003
Investors Fund 482,679 5,903,165 5,810,925
Total Return Fund 220,678 2,257,541 2,328,687
High Yield Fund 80,116 738,670 780,236
Templeton Variable Products Series Fund:
Franklin Small Cap Investments Fund 62,287 980,399 780,718
Templeton International Fund 88,449 1,957,367 1,787,308
Concert Investment Series:
Select Emerging Growth Portfolio 53,642 664,623 585,966
Select Mid Cap Portfolio 39,477 470,962 410,213
Select Growth Portfolio 108,589 1,287,862 1,173,372
Select Growth and Income Portfolio 48,268 523,220 493,177
Select Government Portfolio 12,002 117,144 120,643
Greenwich Street Series Fund -
Equity Index Portfolio Class II 65,068 2,330,077 2,199,384
- -----------------------------------------------------------------------------------------
</TABLE>
(Continued)
48
<PAGE> 107
[KPMG LOGO]
First Citicorp Life Insurance Company
Audited Financial Report 220
FIRST CITICORP LIFE INSURANCE COMPANY
(a wholly owned subsidiary of
Citicorp Life Insurance Company)
Statutory Financial Statements and Schedule
December 31, 1999, 1998, and 1997
(With Independent Auditors' Report Thereon)
------------------------
<PAGE> 108
[KPMG LOGO]
CityPlace II
Hartford, CT 06103-4103
INDEPENDENT AUDITORS' REPORT
The Board of Directors
First Citicorp Life Insurance Company:
We have audited the accompanying statutory statements of admitted assets,
liabilities, and capital and surplus of First Citicorp Life Insurance
Company (a wholly owned subsidiary of Citicorp Life Insurance Company) as
of December 31, 1999 and 1998, and the related statutory statements of
operations, capital and surplus, and cash flows for each of the years in
the three-year period ended December 31, 1999. These financial statements
are the responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
As described more fully in note 1 to the financial statements, the Company
prepared these financial statements using accounting practices prescribed
or permitted by the Insurance Department of the State of New York, which
practices differ from generally accepted accounting principles. The effect
on the financial statements of the variances between the statutory basis of
accounting and generally accepted accounting principles, although not
reasonably determinable, is presumed to be material.
In our opinion, because of the effects of the matter discussed in the
preceding paragraph, the financial statements referred to above do not
present fairly, in conformity with generally accepted accounting
principles, the financial position of First Citicorp Life Insurance Company
as of December 31, 1999 and 1998, or the results of its operations or its
cash flows for each of the years in the three-year period then ended.
Also, in our opinion, the financial statements referred to above present
fairly, in all material respects, the admitted assets, liabilities, and
capital and surplus of First Citicorp Life Insurance Company as of December
31, 1999 and 1998, and the results of its operations and its cash flows for
each of the years in the three-year period ended December 31, 1999 on the
basis of accounting as described in note 1.
[KPMG LOGO]
<PAGE> 109
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information
included in the accompanying Schedule of Selected Financial Data From
Annual Statement is presented for purposes of additional analysis and is
not a required part of the basic financial statements. Such information has
been subjected to the auditing procedures applied in the audits of the
basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
KPMG LLP
March 30, 2000
2
<PAGE> 110
FIRST CITICORP LIFE INSURANCE COMPANY
Statutory Statements of Admitted Assets,
Liabilities, and Capital and Surplus
December 31, 1999 and 1998
<TABLE>
<CAPTION>
ADMITTED ASSETS 1999 1998
------------------ ----------------
<S> <C> <C>
Cash and investments:
Bonds $ 431,253,168 379,632,866
Mortgage loans 431,707 604,606
Cash on hand and on deposit 6,235,409 1,714,654
Short-term investments 24,455,521 29,615,624
------------------ ----------------
Total cash and investments 462,375,805 411,567,750
Due from reinsurers 83,875 134,467
Accrued investment income 5,411,563 5,004,937
Transfers from separate accounts due 14,992,874 12,283,644
Other assets -- 10,036
------------------ ----------------
Total admitted assets excluding separate account assets 482,864,117 429,000,834
Separate account assets 741,737,057 403,540,180
------------------ ----------------
Total admitted assets $ 1,224,601,174 832,541,014
================== ================
LIABILITIES AND CAPITAL AND SURPLUS
Liabilities:
Future policy benefit reserves:
Life insurance $ 4,656,177 2,895,220
Accident and health insurance 41,292 26,564
Policyholder account balances - annuities 436,889,353 374,232,095
Supplementary contracts without life contingencies 808,444 730,645
Policy and contract claim reserves:
Life insurance 1,105,917 1,285,652
Accident and health insurance 12,071 65,753
Federal income taxes due to (from) parent (1,709,671) 1,986,101
Asset valuation reserve 791,701 1,418,378
Interest maintenance reserve 647,829 3,326,975
Other liabilities 6,325,499 2,338,893
------------------ ----------------
Total liabilities excluding separate account liabilities 449,568,612 388,306,276
Separate account liabilities 741,737,057 403,540,180
------------------ ----------------
Total liabilities 1,191,305,669 791,846,456
------------------ ----------------
Commitments and contingencies
Capital and surplus:
Capital stock - $5 par value per share; 400,000 shares
authorized, issued, and outstanding 2,000,000 2,000,000
Surplus:
Paid-in 32,000,000 32,000,000
Unassigned (704,495) 6,694,558
------------------ ----------------
Total capital and surplus 33,295,505 40,694,558
------------------ ----------------
Total liabilities and capital and surplus $ 1,224,601,174 832,541,014
================== ================
</TABLE>
See accompanying notes to statutory financial statements.
3
<PAGE> 111
FIRST CITICORP LIFE INSURANCE COMPANY
Statutory Statements of Operations
Years ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
1999 1998 1997
---------------- ---------------- ----------------
<S> <C> <C> <C>
Revenues:
Premiums and annuity considerations:
Life insurance $ 2,522,901 2,265,209 4,403,236
Annuities 328,785,289 290,839,483 242,832,491
Accident and health insurance 96,153 112,524 3,270,262
Supplementary contracts without life
contingencies 85,325 93,131 60,000
---------------- ---------------- ----------------
Total premiums and annuity considerations 331,489,668 293,310,347 250,565,989
Net investment income 28,517,412 24,939,020 20,772,942
Amortization of interest maintenance
reserve 353,714 433,566 220,878
Net loss from operations in separate account -- -- (472,560)
Other 6,694,390 6,254,278 1,194,706
---------------- ---------------- ----------------
Total revenues 367,055,184 324,937,211 272,281,955
---------------- ---------------- ----------------
Benefits and expenses:
Death and other policy benefits:
Life insurance 2,187,622 1,954,962 3,091,336
Accident and health insurance (33,037) 292,994 999,422
Annuities 7,306,095 6,459,356 5,891,652
Surrenders 69,781,364 50,627,956 36,676,368
Payments on supplementary contracts 393,885 100,823 87,389
Change in future policy benefits:
Annuities 62,657,258 66,100,047 65,117,211
Life insurance 1,760,957 170,455 621,754
Accident and health insurance 14,728 (181,176) (47,248)
Change in reserves for supplementary
contracts 77,799 27,587 18,555
Other operating costs and expenses:
Commissions 21,068,211 17,413,060 14,200,628
General insurance expenses and
taxes, licenses, and fees 8,521,885 8,515,881 5,260,127
Net transfer to separate accounts 204,573,640 177,175,741 141,267,186
Other -- (5,061) (45)
---------------- ---------------- ----------------
Total benefits and expenses 378,310,407 328,652,625 273,184,335
---------------- ---------------- ----------------
Loss from operations before federal income
tax expense and net realized capital gains (11,255,223) (3,715,414) (902,380)
Federal income tax expense (benefit) (5,317,493) (463,095) 1,848,635
---------------- ---------------- ----------------
Loss from operations before net
realized capital gains (5,937,730) (3,252,319) (2,751,015)
Net realized capital losses, net of IMR transfers (2,088,000) -- --
---------------- ---------------- ----------------
Net loss $ (8,025,730) (3,252,319) (2,751,015)
================ ================ ================
</TABLE>
See accompanying notes to statutory financial statements.
4
<PAGE> 112
FIRST CITICORP LIFE INSURANCE COMPANY
Statutory Statements of Capital and Surplus
Years ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
1999 1998 1997
--------------- --------------- ----------------
<S> <C> <C> <C>
Capital and surplus at beginning of year $ 40,694,558 25,211,816 19,152,189
Net loss (8,025,730) (3,252,319) (2,751,015)
Change in nonadmitted assets -- -- 197
Change in asset valuation reserve 626,677 (264,939) (189,555)
Surplus paid in -- 19,000,000 9,000,000
--------------- --------------- ----------------
Capital and surplus at end of year $ 33,295,505 40,694,558 25,211,816
=============== =============== ================
</TABLE>
See accompanying notes to statutory financial statements.
5
<PAGE> 113
FIRST CITICORP LIFE INSURANCE COMPANY
Statutory Statements of Cash Flows
Years ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
1999 1998 1997
----------------- ----------------- -----------------
<S> <C> <C> <C>
Cash from operating activities:
Premiums and annuity considerations $ 331,404,343 293,849,091 250,512,274
Net investment income received 27,844,154 23,585,121 20,506,033
Other income received 6,778,284 4,094,765 1,091,035
Life and accident and health claims
and other benefits paid (79,869,347) (60,209,869) (47,362,201)
Commissions, other expenses, and taxes paid (28,405,407) (25,407,949) (19,410,754)
Federal income taxes 2,873,876 (1,425,291) (1,703,703)
Other 180,960 2,252,644 61,099
Net transfers to separate accounts (207,462,398) (182,139,489) (148,230,813)
----------------- ----------------- -----------------
Net cash provided by operating activities 53,344,465 54,599,023 55,462,970
----------------- ----------------- -----------------
Cash from investing activities:
Proceeds from investments sold, matured,
or repaid:
Bonds 296,291,961 116,339,838 183,393,541
Mortgage loans 172,899 715,670 97,294
Other (502) (415) (73)
Cost of investments acquired:
Cost of bonds acquired (353,085,717) (176,363,599) (238,051,758)
Other invested assets, net -- 135,192 (135,192)
----------------- ----------------- -----------------
Total cash used in investing activities (56,621,359) (59,173,314) (54,696,188)
----------------- ----------------- -----------------
Cash from financing activities:
Surplus paid in -- 19,000,000 9,000,000
Other cash provided 3,529,533 547,296 3,565,220
Other cash applied (891,987) (564,970) (4,379,471)
----------------- ----------------- -----------------
Total cash provided by financing activities 2,637,546 18,982,326 8,185,749
----------------- ----------------- -----------------
Net change in cash on hand and on deposit
and short-term investments (639,348) 14,408,035 8,952,531
Cash on hand and on deposit and short-term
investments, beginning of year 31,330,278 16,922,243 7,969,712
----------------- ----------------- -----------------
Cash on hand and on deposit and short-term
investments, end of year $ 30,690,930 31,330,278 16,922,243
================= ================= =================
</TABLE>
See accompanying notes to statutory financial statements.
6
<PAGE> 114
FIRST CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
December 31, 1999, 1998, and 1997
(1) BASIS OF PRESENTATION AND SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
First Citicorp Life Insurance Company (the Company) is a wholly owned
subsidiary of Citicorp Life Insurance Company (the Parent), which is a
third-tier, 78%-owned subsidiary of Citigroup. The Company issues term
life insurance, single and flexible premium deferred annuity policies,
variable deferred annuity policies, and accident and health policies.
The majority of the Company's business is generated through customers of
Citigroup and its subsidiaries. The Company also assumes credit life
insurance policies. The Company is licensed to issue insurance in the
State of New York.
The accompanying statutory financial statements have been prepared in
accordance with insurance accounting practices prescribed or permitted
by the Department of Insurance of the State of New York, which vary in
some respects from generally accepted accounting principles (GAAP) as
discussed more fully in note 10. Permitted statutory accounting
practices encompass all accounting practices that are not prescribed;
such practices differ from state to state, may differ from company to
company within a state, and may change in the future. In March 1998, the
National Association of Insurance Commissioners (NAIC) adopted the
Codification of Statutory Accounting Principles (Codification). The
Codification, if adopted by an insurer's state of domicile, will
constitute the only source of "prescribed" statutory accounting
practices. Accordingly, once implemented, the definition of what
comprises prescribed versus permitted statutory accounting practices may
result in changes to the accounting policies that insurance enterprises
use to prepare their statutory financial statements. The implementation
date is ultimately dependent on an insurer's state of domicile. The
Company is currently evaluating the impact of the Codification on its
statutory financial statements. All material transactions recorded by
the Company are in conformity with current prescribed practices. The
preparation of statutory financial statements requires management to
make estimates and assumptions which affect the reported amounts of
assets and liabilities as of the date of the financial statements.
Actual results could differ from these estimates.
The significant statutory accounting policies are as follows:
REVENUES AND EXPENSES
Life premiums are reflected as earned on the policy anniversary
date. Annuity considerations are reported as income when received.
Accident and health premiums are reported as revenue when due and
earned on a pro rata basis over the period covered by the policy.
Deferred life premiums represent modal premiums (other than
annual) to be billed in the year subsequent to the commencement of
the policy year. Uncollected premiums represent premiums due less
accident and health premiums over 90 days past due. Expenses,
including acquisition costs related to acquiring new business and
interest credited to policyholder account balances, are charged to
operations as incurred. Investment income is recognized as earned.
POLICY RESERVES
The liability for future life policy benefits is based on
statutory mortality and interest requirements without
consideration of withdrawals. The mortality table, and interest
assumptions, currently utilized is the 1980 Commissioners Standard
Ordinary (CSO) table, with interest rates ranging from 4.5% to 6%
for ordinary business, and from 5.5% to 6% for credit business.
For new business, the interest assumptions are 5.5% for credit
business, and from 4.5%
7 (Continued)
<PAGE> 115
FIRST CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
December 31, 1999, 1998, and 1997
to 5.25% for ordinary business. Life reserves are generally
calculated on either the net level or Commissioners Reserve
Valuation Method (CRVM) basis.
For deferred annuities, reserves are computed on the Commissioners
Annuity Reserve Valuation Method (CARVM) using appropriate
issue-year interest rates ranging from 5.0% to 6.5%.
The Company provides a liability for accident and health policies
which represents an estimate of the ultimate costs of unpaid
claims incurred through December 31 of each year. Management
believes this liability will be adequate to cover such costs;
however, the ultimate liability may be more or less than the
estimated liability.
INVESTMENTS
Bonds and short-term investments, which consist primarily of U.S.
Treasury, corporate, and mortgage-backed securities, are valued as
prescribed by the National Association of Insurance Commissioners
(NAIC) and are generally carried at amortized cost. Mortgage loans
are stated at the unpaid principal balance and represent first
liens on residential properties located in the United States.
Life insurance companies are required to establish an Asset
Valuation Reserve (AVR) and an Interest Maintenance Reserve (IMR).
The AVR provides for a standardized statutory investment valuation
reserve for bonds, preferred stocks, short-term investments,
mortgage loans, common stocks, real estate, and other invested
assets and is recorded as a direct charge to surplus in accordance
with statutory accounting principles. The IMR is designed to defer
net realized capital gains and losses resulting from changes in
the level of interest rates in the market and to amortize them
into income over the remaining life of the bond or mortgage loan
sold. The IMR represents the unamortized portion not yet taken
into income.
CAPITAL GAINS AND LOSSES
The cost of investments sold is generally determined on the
first-in, first-out method and includes the effects of any related
amortization of premium or accretion of discount. Realized
investment gains and losses are reported net of income tax expense
(benefit) of ($1,252,155), $454,191, and $805,989 for the years
ended December 31, 1999, 1998, and 1997, respectively, and are
included in the determination of net income. Realized investment
gains (losses) in 1999, 1998, and 1997 of ($2,325,432), $843,497,
and $1,496,838, respectively, were excluded from net income by a
transfer to the IMR, net of Federal income taxes.
SEPARATE ACCOUNT ASSETS AND LIABILITIES
The assets and liabilities of the separate account represent
segregated funds administered and invested by the Company for
purposes of funding variable annuity contracts for the exclusive
benefit of variable annuity contractholders. The Company receives
administrative fees from the separate accounts and retains varying
amounts of withdrawal charges to cover expenses in the event of
early withdrawals by contractholders. The amount of the asset
balance in excess of liabilities included within surplus
represents policy surrender charges which are permitted to be
recorded to surplus under statutory accounting practices. The
assets and liabilities of the separate accounts are carried at
fair value.
8 (Continued)
<PAGE> 116
FIRST CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
December 31, 1999, 1998, and 1997
NONADMITTED ASSETS
Assets included in the statutory statements of admitted assets,
liabilities, and capital and surplus are at "admitted asset
values." Nonadmitted assets, principally capitalized expenditures
for furniture and equipment, are excluded from the accompanying
statutory financial statements through a charge against unassigned
surplus.
FEDERAL INCOME TAXES
Federal income taxes are charged to operations based on income
that is currently taxable. No charge to operations is made or
liability established for the tax effects of temporary differences
between the financial reporting and tax basis of assets and
liabilities.
FAIR MARKET DISCLOSURES
Fair value estimates are made at a specific point in time, based
on relevant market information and information about the financial
instrument. These estimates do not reflect any premium or discount
that could result from offering for sale at one time the Company's
entire holdings of a particular financial instrument. Although
fair value estimates are calculated using assumptions that
management believes are appropriate, changes in assumptions could
significantly affect the estimates and such estimates should be
used with care. The following methods and assumptions were used to
estimate the fair market value of each class of financial
instrument for which it was practicable to estimate fair value:
INVESTMENT SECURITIES
Fixed maturities are based on market prices obtained from a
pricing service which approximates fair value.
MORTGAGE LOANS
First mortgages on real estate are carried at the unpaid
principal balance. As discussed in note 3, the Company bears
no credit risk as all mortgage loans were purchased, with
recourse, from an affiliate. The carrying value of mortgage
loans approximates fair value.
POLICYHOLDER ACCOUNT BALANCES
The liability for policyholder account balances is related
to investment-type annuity contracts for which crediting
rates are subject to adjustment annually, based on interest
rates currently being offered for similar contracts with
maturities consistent with those remaining for the contracts
being valued. The carrying value approximates fair value at
December 31, 1999 and 1998.
CASH AND SHORT-TERM INVESTMENTS
The carrying amount is a reasonable estimate of fair value.
9 (Continued)
<PAGE> 117
FIRST CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
December 31, 1999, 1998, and 1997
CASH AND CASH EQUIVALENTS
For purposes of reporting cash flows, cash and cash equivalents
represent demand deposits and highly liquid short-term
investments, which include discount notes, commercial paper, and
repurchase agreements with original or remaining maturities of 90
days or less when purchased.
RECLASSIFICATIONS
Certain reclassifications have been made to the 1998 and 1997
information to conform with the 1999 presentation.
(2) REINSURANCE
Insurance is assumed from other companies in areas where the Company had
or has limited authority to write business. Normally, a commission based
on net written premiums is charged by the ceding company under the terms
of the agreement.
Effective August 1, 1998, the Company entered into an assumption
reinsurance agreement to cede its obligation for certain term life and
accident and health policies to unaffiliated third parties. The Company
recorded a pre-tax gain of $775,806 on the transaction and included this
amount in other income in the annual statement filed with regulators.
Effective January 1, 1998, the Company entered into an assumption
reinsurance agreement to cede its obligation for certain accident and
health policies to unaffiliated third parties. The Company recorded a
pre-tax gain of $56,547 on the transaction and included this amount in
other income in the annual statement filed with regulators.
Effective January 1, 1998, the Company entered into reinsurance
agreements to cede its obligation for certain term life and accident and
health policies to an unaffiliated third party. The Company recorded
$2,100,000 in ceding fees included in commissions and expense allowances
on reinsurance ceded on the statements of operations and transferred
$885,657 in policy liabilities to the reinsurer related to this
transaction.
10 (Continued)
<PAGE> 118
FIRST CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
December 31, 1999, 1998, and 1997
The effect of reinsurance on premiums for the years ended December 31,
1999, 1998, and 1997 is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---------------- ----------------- -----------------
<S> <C> <C> <C>
Direct premiums and annuity considerations:
Annuities $ 328,797,393 290,839,483 242,832,491
Life 4,200,901 3,552,617 4,568,893
Accident and health 1,298,976 1,537,721 2,337,584
Premiums assumed - life 265,539 252,752 274,757
Premiums assumed - accident and health 509,696 728,139 932,678
Premiums ceded - annuities (12,105) -- --
Premiums ceded - life (1,943,539) (1,540,160) (440,414)
Premiums ceded - accident and health (1,712,518) (2,153,336) --
---------------- ----------------- -----------------
Net premiums earned $ 331,404,343 293,217,216 250,505,989
================ ================= =================
</TABLE>
Reserve credits taken with respect to risks ceded to other companies
amounted to $2,417,114, $2,480,850, and $58,769 at December 31, 1999,
1998, and 1997, respectively. The Company remains contingently liable
with respect to any reinsurance ceded and would become actually liable
if the assuming company was unable to meet its obligations under the
reinsurance treaty.
(3) INVESTMENTS
Major categories of net investment income for the years ended December
31, 1999, 1998, and 1997 consist of the following:
<TABLE>
<CAPTION>
1999 1998 1997
---------------- ---------------- ----------------
<S> <C> <C> <C>
Bonds $ 27,363,542 23,872,163 20,469,123
Mortgage loans 39,781 91,059 116,139
Short-term investments 1,860,381 1,371,008 861,812
Other 3,038 20,774 63,433
---------------- ---------------- ----------------
Total investment revenue 29,266,742 25,355,004 21,510,507
Investment expense 749,330 415,984 737,565
---------------- ---------------- ----------------
Net investment income $ 28,517,412 24,939,020 20,772,942
================ ================ ================
</TABLE>
11 (Continued)
<PAGE> 119
FIRST CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
December 31, 1999, 1998, and 1997
Investments in bonds at December 31, 1999 and 1998 are summarized below.
<TABLE>
<CAPTION>
1999
-----------------------------------------------------------------------
GROSS GROSS
CARRYING UNREALIZED UNREALIZED ESTIMATED
VALUE GAINS LOSSES FAIR VALUE
----------------- ---------------- --------------- -----------------
<S> <C> <C> <C> <C>
Bonds:
U.S. Treasury securities $ 32,881,604 -- (597,046) 32,284,558
U.S. government agencies 133,572,963 78,620 (4,494,756) 129,156,827
Industrial and miscellaneous 264,798,601 2,090,137 (12,810,755) 254,077,983
----------------- ---------------- --------------- -----------------
Total bonds $ 431,253,168 2,168,757 (17,902,557) 415,519,368
================= ================ =============== =================
1998
-----------------------------------------------------------------------
GROSS GROSS
CARRYING UNREALIZED UNREALIZED ESTIMATED
VALUE GAINS LOSSES FAIR VALUE
----------------- ---------------- --------------- -----------------
Bonds:
U.S. Treasury securities $ 1,317,973 41,973 -- 1,359,946
U.S. government agencies 123,016,337 2,090,419 (28,909) 125,077,847
Industrial and miscellaneous 255,298,556 6,476,935 (2,841,473) 258,934,018
----------------- ---------------- --------------- -----------------
Total bonds $ 379,632,866 8,609,327 (2,870,382) 385,371,811
================= ================ =============== =================
</TABLE>
The carrying and estimated fair values of bonds 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>
CARRYING ESTIMATED
VALUE FAIR VALUE
----------------- -----------------
<S> <C> <C>
Within 1 year $ 7,349,430 7,110,260
After 1 year through 5 years 109,060,471 106,375,398
After 5 years through 10 years 93,860,289 90,767,007
After 10 years through 20 years 7,767,766 7,240,950
After 20 years 24,515,594 21,184,340
Mortgage-backed and asset-backed securities 188,699,618 182,841,413
----------------- -----------------
$ 431,253,168 415,519,368
================= =================
</TABLE>
Proceeds from sale of bonds during 1999, 1998, and 1997 were
$262,197,676, $80,744,910, and $154,306,338, respectively. Gross gains
of $578,587, $1,363,299, and $2,720,547, and gross losses of
$6,244,174, $65,611, and $417,720 were realized on those sales in 1999,
1998, and 1997, respectively.
12 (Continued)
<PAGE> 120
FIRST CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
December 31, 1999, 1998, and 1997
Investments in mortgage loans were purchased from Citicorp Mortgage,
Inc. (CMI), an affiliate of the Company, pursuant to a Mortgage Loan
Purchase and Sale Agreement. In the event of default by the borrower,
CMI has agreed to take back the related loans at current book value.
(4) INVESTMENTS ON DEPOSIT
At December 31, 1999 and 1998, investments with a carrying value of
$573,067 and $574,609, respectively, were on deposit with the Department
of Insurance of the State of New York, as required by law, and $76,654
and $500,429, respectively, were on deposit in escrow accounts under the
terms of certain of the Company's reinsurance agreements.
(5) FEDERAL INCOME TAXES
The Company's Federal income tax return is consolidated with its Parent.
The method of allocation is subject to written agreement with the
allocation based upon taxable income calculations. Intercompany tax
balances payable are settled annually.
Federal income tax expense on income from operations varies from amounts
computed by applying the current federal corporate income tax rate to
income (loss) from operations before Federal income tax expense and net
realized capital gains. The reasons for these differences, and the tax
effects thereof, are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------------------- -------------------------- ------------------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
<S> <C> <C> <C> <C> <C> <C>
Computed "expected" tax
at U.S. corporate
tax rate $ (3,939,328) 35.00% $ (1,300,395) 35.00% $ (315,833) 35.00%
Difference between
changes in
statutory reserves
as compared to tax
reserves 81,663 (.73) 120,767 (3.25) 133,000 (14.74)
Policy acquisition
expenses capitalized,
net of amortization 877,194 (7.79) 1,103,469 (29.70) 995,623 (110.33)
Provision to return and
other, net (2,337,022) 20.76 (386,936) 10.42 1,035,845 (114.79)
--------------- --------------------------- ------------ -------------- -------------
$ (5,317,493) 47.24% $ (463,095) 12.47% $ 1,848,635 (204.86)%
=============== ========= ================ ========= ================ =============
</TABLE>
13 (Continued)
<PAGE> 121
FIRST CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
December 31, 1999, 1998, and 1997
(6) RELATED-PARTY TRANSACTIONS
The Company has entered into various service agreements with the Parent
and other affiliates which cover management, investment, and information
processing services. Expenses incurred under such agreements were
$5,080,680, $5,432,438, and $3,462,644 in 1999, 1998, and 1997,
respectively.
The Company occupies certain facilities which are leased by an
affiliate. The Company is allocated a portion of the lease expense by
the affiliate. Allocated rent expense totaled $50,491, $341,222, and
$260,401 in 1999, 1998, and 1997, respectively.
The Company utilizes the services of Citicorp Insurance Services, Inc.
Employees of this company are eligible to participate in defined benefit
plans provided by Citicorp. Charges for these services are based on the
actual salary and benefit costs of employees providing service to the
Company. Included in these charges are costs associated with Citicorp's
benefit plans.
(7) DIVIDEND RESTRICTIONS
A New York domestic life insurance company shall not distribute a
dividend to its stockholders unless a notice of its intention and the
amount thereof has been filed with the Superintendent of Insurance not
less than 30 days in advance of such declaration. Such dividends may not
exceed the lessor of 10% of surplus as of December 31 of the preceding
year or 100% of net investment income, subject to certain adjustments,
of the preceding year. The Company did not pay a dividend in 1999, 1998,
or 1997.
(8) RISK-BASED CAPITAL
The insurance departments of various states, including the Company's
domiciliary state of New York, impose risk-based capital (RBC)
requirements on insurance enterprises. The RBC calculation serves as a
benchmark for the regulation of life insurance companies by state
insurance regulators. The requirements apply various weighted factors to
financial balances or activity levels based on their perceived degree of
risk.
The RBC guidelines define specific capital levels where action by the
Company or regulatory intervention is required based on the ratio of a
Company's actual total adjusted capital (sum of capital and surplus and
asset valuation reserve) to control levels determined by the RBC
formula. At December 31, 1999, the Company's total adjusted capital
exceeded all regulatory requirements, thus no action by the Company or
its regulators is required.
(9) CONTINGENCIES
The Company is involved in various litigation arising in the ordinary
course of operations. Management is of the opinion, after reviewing
these matters with legal counsel, that the ultimate liability, if any,
resulting from any or all of the above matters would not have a material
adverse effect on the Company's financial position.
14 (Continued)
<PAGE> 122
FIRST CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
December 31, 1999, 1998, and 1997
(10) DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES AND STATUTORY ACCOUNTING PRACTICES
Statutory accounting practices differ in some respects from generally
accepted accounting principles. Under generally accepted accounting
principles (GAAP), the following applies:
(a) The liability for future policy benefits is computed using the
rule-of-78s and pro rata methods.
(b) Life premiums are reflected as earned when due. Annuity
considerations and other fund deposits are reflected as deposits
rather than revenue.
(c) Acquisition costs are capitalized and amortized generally over the
premium paying period for individual life contracts in relation to
the estimated present value of gross profits of the underlying
business for interest-sensitive life and investment contracts.
(d) Deferred income taxes are provided for the tax effects of
temporary differences between the financial reporting and tax
bases of assets and liabilities.
(e) Nonadmitted assets, less applicable allowance accounts, are
restored to the financial statements.
(f) Asset valuation and interest maintenance reserves are not
provided.
(g) Realized investment gains (losses) resulting from changes in
interest rates are recognized when the related security is sold.
(h) Debt securities are classified into one of three categories: held
to maturity, trading, or available for sale. Held-to-maturity
securities are carried at amortized cost. Trading securities are
reported at fair value with unrealized gains and losses included
in earnings. Available-for-sale securities are reported at fair
value with unrealized gains and losses excluded from earnings and
reported as a separate component of stockholders' equity, net of
tax.
(i) Reinsurance premiums, commissions, expense reimbursements, and
reserves would be presented on a gross basis consistent with terms
of the reinsurance contracts.
(j) Comprehensive income disclosures are included.
(k) Costs of providing postretirement benefits other than pensions are
calculated without regard to active non-vested employees.
The statutory financial statements do not include any adjustments
that might result from differences between statutory accounting
practices and GAAP.
15
<PAGE> 123
SCHEDULE
FIRST CITICORP LIFE INSURANCE COMPANY
Schedule of Selected Financial Data from Annual Statement
Year ended December 31, 1999
<TABLE>
<S> <C>
Investment income earned:
Government bonds $ 3,083,269
Other bonds (unaffiliated) 24,280,273
Bonds of affiliates
Preferred stocks (unaffiliated) --
Preferred stocks of affiliates --
Common stocks (unaffiliated) --
Common stocks of affiliates --
Mortgage loans 39,781
Real estate --
Premium notes, policy loans, and liens --
Collateral loans --
Cash on hand and on deposit --
Short-term investments 1,860,381
Other invested assets --
Derivative instruments (2,175)
Aggregate write-in for investment income 5,213
----------------------
Gross investment income $ 29,266,742
======================
Real estate owned - book value less encumbrances $ --
======================
Mortgage loans - book value:
Farm mortgages $ --
Residential mortgages 431,707
Commercial mortgages --
----------------------
Total mortgage loans $ 431,707
======================
Mortgage loans by standing - book value:
Good standing $ 431,707
Good standing with restructured terms --
Interest overdue more than three months,
not in foreclosure --
Foreclosure in process --
Other long-term assets - statement value --
Collateral loans --
Bonds and stocks of parents, subsidiaries, and affiliates - book value:
Bonds --
Preferred stocks --
Common stocks --
======================
</TABLE>
16
<PAGE> 124
SCHEDULE, CONT.
FIRST CITICORP LIFE INSURANCE COMPANY
Schedule of Selected Financial Data from Annual Statement, Continued
Year ended December 31, 1999
<TABLE>
<S> <C>
Bonds and short-term investments by class and maturity:
Bonds by maturity - statement value:
Due within one year or less $ 61,765,458
Over 1 year through 5 years 168,083,226
Over 5 years through 10 years 117,921,929
Over 10 years through 20 years 41,358,096
Over 20 years 66,579,980
----------------------
Total by maturity $ 455,708,689
======================
Bonds by class - statement value:
Class 1 $ 368,893,356
Class 2 76,939,793
Class 3 5,224,016
Class 4 2,816,661
Class 5 1,834,863
Class 6 --
----------------------
Total by class 455,708,689
Total bonds publicly traded 407,589,776
----------------------
Total bonds privately placed $ 48,118,913
======================
Preferred stocks - statement value $ --
Common stocks - market value --
Short-term investments - book value 24,455,521
Financial options owned - statement value --
Financial options written and in force - statement value --
Financial futures contracts open - current price --
Cash on deposit 6,235,409
Life insurance in force (in thousands):
Industrial --
Ordinary 185,602
Credit life 220,191
Group life 55,149
Amount of accidental death insurance in force under
ordinary policies --
Life insurance policies with disability provisions in force:
Industrial --
Ordinary --
Credit Life --
Group Life --
======================
</TABLE>
17
<PAGE> 125
SCHEDULE, CONT.
FIRST CITICORP LIFE INSURANCE COMPANY
Schedule of Selected Financial Data from Annual Statement, Continued
Year ended December 31, 1999
<TABLE>
<S> <C>
Supplementary contracts in force:
Ordinary - not involving life contingencies: Amount on deposit $ 808,444
Income payable 105,113
Ordinary - involving life contingencies - income
payable --
Group - not involving life contingencies:
Amount of deposit --
Income payable --
Group - involving life contingencies - income payable -- Annuities:
Ordinary:
Immediate - amount of income payable 80,422
Deferred - fully paid account balance 1,188,986,254
Deferred - not fully paid account balance --
Group:
Immediate - amount of income payable --
Fully paid account balance --
Not fully paid account balance --
Accident and health insurance - premium in force:
Ordinary --
Group --
Credit 114,170
Deposit funds and dividend accumulations:
Deposit funds account balance --
Dividend accumulations account balance --
Claim payments 1999:
Group accident and health year ended
December 31:
1999 --
1998 --
1997 --
1996 --
Other accident and health:
1999 --
1998 --
1997 --
1996 --
Other coverages that use developmental methods to calculate claims reserves:
1999 4,496
1998 12,840
1997 3,309
1996 --
======================
</TABLE>
See accompanying independent auditors' report.
18
<PAGE> 126
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
The financial statements of the Registrant and the Report of Independent
Auditors thereto are contained in the Registrant's Annual Report and are
included in the Statement of Additional Information. The financial
statements of the Registrant include:
Statement of Net Assets as of December 31, 1999
Statement of Operations for the year ended December 31, 1999
Statement of Changes in Net Assets for the year ended December 31,
1999
Notes to Financial Statements
Schedule of Investments as of December 31, 1999
The statutory financial statements of First Citicorp Life Insurance
Company and the report of Independent Auditors, are contained in the
Statement of Additional Information. The statutory financial statements
of First Citicorp Life Insurance Company include:
Statutory Statements of Admitted Assets, Liabilities, and
Capital and Surplus as of December 31, 1999 and 1998
Statutory Statements of Operations for the years ended
December 31, 1999, 1998 and 1997 Statutory Statements of
Capital and Surplus for the years ended December 31, 1999,
1998 and 1997
Statutory Statements of Cash Flow for the years
ended December 31, 1999, 1998 and 1997
Notes to Statutory Financial Statements Schedule of Selected
Financial Data from Annual Statement for the year ended
December 31, 1999
(b) Exhibits
(1) Certified resolution of the board of directors of First Citicorp Life
Insurance Company (the "Company") establishing First Citicorp Life
Variable Annuity Separate Account (the "Separate Account").*
(2) Not Applicable.
(3) Form of underwriting agreement among the Company, the Separate Account
and CFBDS, Inc.(formerly The Landmark Funds Broker-Dealer Services,
Inc.)*
(4) (a) Contract Form.*
(b) Individual Retirement Annuity Endorsement.*
(c) 403(b) Tax Sheltered Annuity Endorsement.*
(d) Annuity Contract Endorsement: Amendment of Annuity Income Option
Tables.*
(e) Variable Annuity Endorsement: Amendment of Contract
Provisions.****
(f) Roth Individual Retirement Annuity Endorsement.****
(5) Contract Application.**
<PAGE> 127
(6) (a) Certificate of Incorporation of the Company.*
(b) By-Laws of the Company.*
(7) None.
(8) (a) Participation Agreement Among Variable Insurance Products Fund,
Fidelity Distributors Corporation and First Citicorp Life
Insurance Company*
(b) Participation Agreement Among Variable Insurance Products Fund II,
Fidelity Distributors Corporation and First Citicorp Life
Insurance Company.**
(c) Participation Agreement Among MFS Variable Insurance Trust, First
Citicorp Life Insurance Company and Massachusetts Financial
Services Company.**
(d) Participation Agreement By and Among AIM Variable Insurance Funds,
Inc. and First Citicorp Life Insurance Company, on Behalf of
Itself and First Citicorp Life Variable Annuity Separate
Account.**
(e) Participation Agreement Among CitiFunds and First Citicorp Life
Insurance Company.**
(f) Participation Agreement Between Variable Annuity Portfolios and
First Citicorp Life Insurance Company.**
(g) Administrative Services Agreement between Citicorp Insurance
Services, Inc. and First Citicorp Life Insurance Company with
Addendums.*
(9) Opinion and Consent of Catherine S. Mulholland, Esq.
(10) (a) Consent of Sutherland, Asbill & Brennan LLP.
(b) Consent of KPMG LLP.
(11) Not Applicable.
(12) None.
(13) Schedule for Computation of Each Performance Calculation.***
(14) Not Applicable
* Incorporated herein by reference to the registrant's Post-Effective
Amendment No. 2 to the Registration Statement filed with the Securities and
Exchange Commission via EDGARLINK on April 29, 1996(File 33-83354)
<PAGE> 128
** Incorporated herein by reference to the registrant's Post-Effective
Amendment No. 3 to the Registration Statement filed with the Securities and
Exchange Commission via EDGARLINK on November 8, 1996 (File 33-83354).
*** Incorporated herein by reference to the registrant's Post-Effective
Amendment No. 5 to the Registration Statement filed with the Securities and
Exchange Commission via EDGARLINK on April 29, 1997 (File 33-83354).
**** Incorporated herein by reference to the registrant's Post-Effective
Amendment No. 7 to the Registration Statement filed with the Securities and
Exchange Commission via EDGARLINK on April 27, 1998 (File 33-83354).
Item 25. DIRECTORS AND OFFICERS OF THE COMPANY.
DIRECTORS**
Jack S. Berger
Frederick W. Bradley, Jr.*
Elizabeth C. Craig
Carl W. Desch*
Alice B. Leopold
Frederic W. Thomas, Jr.*
John M. Walbridge*
Larry D. Williams
* Outside Director
OFFICERS**
Catherine S. Mulholland Senior Vice President and General Counsel
Benjamin G. Spurgeon Senior Vice President and
Chief Actuary/Valuation Actuary
Larry D. Williams Senior Vice President
Barbara S. Drake Vice President
Walter C. Smith Vice President and Treasurer
Susan Houser Assistant Vice President and Claims Managers
Bruce Rechsteiner Assistant Vice President
*333 West 34th Street, 10th Floor, New York, New York 10001
<PAGE> 129
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
ORGANIZATION CHART
CITIGROUP
(Delaware Corporation)
--------------------------------------
100%
---------------------------------------
CITICORP HOLDINGS, INC.
(Delaware Corporation)
---------------------------------------
100%
------------------------------------------
CITIBANK DELAWARE
(Delaware Corporation)
-------------------------------------------
100%
- --------------------------------------
CITICORP LIFE
INSURANCE COMPANY
(Arizona Corporation)
- --------------------------------------
100% 100%
- -------------------------------------- ------------------------
FIRST CITICORP LIFE CITICORP ASSURANCE CO
INSURANCE COMPANY (Delaware Corporation)
(New York Corporation)
<PAGE> 130
ITEM 27. NUMBER OF CONTRACT OWNERS
As of December 31, 1999, there were 11,770 contract owners.
ITEM 28. INDEMNIFICATION
The Bylaws of First Citicorp Life Insurance Company provide in Article
VIII as follows:
(a) The Corporation shall indemnify any person made a party to an
action or proceeding by or in the right of the Corporation to procure a judgment
in its favor, by reason of the fact that he, his testator or intestate, is or
was a director or officer or employee of the Corporation against the reasonable
expenses, including attorneys' fees, actually and necessarily incurred by him in
connection with the defense of such action or proceeding, or in connection with
an appeal therein, except in relation to matters as to which such person is
adjudged to have breached his duty to the Corporation; and
(b) The Corporation shall indemnify any person made, or threatened to
be made a party to an action or proceeding other than one by or in the right of
the Corporation to procure a judgement in its favor, whether civil or criminal,
including an action by or in the right of any other corporation of any type or
kind domestic or foreign, which any director or officer or employee of the
Corporation served in any capacity at the request of the Corporation, by reason
of the fact that he, his testator or intestate, was a director or officer or
employee of the Corporation, or served such other corporation in any capacity,
against judgments, fines, amounts paid in settlement and reasonable expenses,
including attorneys' fees, actually and necessarily incurred as a result of such
action or proceeding, or any appeal therein, if such person acted in good faith,
for a purpose which he reasonably believed to be in the best interests of the
Corporation and, in criminal actions, or proceedings, in addition, had no
reasonable cause to believe that his conduct was unlawful.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, offi-cers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforce-able. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemni-fication by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
ITEM 29. PRINCIPAL UNDERWRITER
(a) CFBDS, the Registrant's Distributor, is also the distributor for
CitiFunds(SM) International Growth & Income Portfolio, CitiFunds(SM)
International Growth Portfolio, CitiFunds(SM) U.S. Treasury Reserves,
CitiFunds(SM) Cash Reserves, CitiFunds(SM) Premium U.S. Treasury Reserves,
<PAGE> 131
CitiFunds(SM) Premium Liquid Reserves, CitiFunds(SM) Institutional U.S. Treasury
Reserves, CitiFunds(SM) Institutional Liquid Reserves, CitiFunds(SM)
Institutional Cash Reserves, CitiFunds(SM) Tax Free Reserves, CitiFunds(SM)
Institutional Tax Free Reserves, CitiFunds(SM) California Tax Free Reserves,
CitiFunds(SM) Connecticut Tax Free Reserves, CitiFunds(SM) New York Tax Free
Reserves, CitiFunds(SM) New York Tax Free Income Portfolio, CitiFunds(SM)
National Tax Free Income Portfolio, CitiFunds(SM) California Tax Free Income
Portfolio, CitiFunds(SM) Intermediate Income Portfolio, CitiFunds(SM) Balanced
Portfolio, CitiFunds(SM) Small Cap Value Portfolio, CitiFunds(SM) Growth &
Income Portfolio, CitiFunds(SM) Large Cap Growth Portfolio, CitiFunds(SM) Small
Cap Growth Portfolio, CitiFunds(SM) Short-Term U.S. Government Income Portfolio,
CitiFunds(SM) Emerging Asian Markets Equity Portfolio CitiSelect(R) VIP Folio
200, CitiSelect(R) VIP Folio 300, CitiSelect(R) VIP Folio 400, CitiSelect(R) VIP
Folio 500, CitiFunds(SM) Small Cap Growth VIP Portfolio, CitiSelect(R) Folio
100, CitiSelect(R) Folio 200, CitiSelect(R) Folio 300, CitiSelect(R) Folio 400,
and CitiSelect(R) Folio 500.
CFBDS is also the placement agent for Large Cap Value Portfolio, Small Cap Value
Portfolio, International Portfolio, Foreign Bond Portfolio, Intermediate Income
Portfolio, Short-Term Portfolio, Growth & Income Portfolio, U.S. Fixed Income
Portfolio, High Yield Portfolio, Large Cap Growth Portfolio, Small Cap Growth
Portfolio, International Equity Portfolio, Balanced Portfolio, Government Income
Portfolio, Tax Free Reserves Portfolio, Cash Reserves Portfolio and U.S.
Treasury Reserves Portfolio, Emerging Asian Markets Equity Portfolio.
(b) The information required by this item 29 with respect to each director
and officer of CFBDS, Inc. is incorporated by reference to Schedule A or Form BD
filed by CFBDS, Inc pursuant to the Securities and Exchange Act of 1934 (File
No. 8-32417).
(c) Not applicable.
ITEM 30. LOCATION BOOKS AND RECORDS
All of the accounts, books, records or other documents required to be
kept by Section 31(a) of the Investment Company Act of 1940 and rules
thereunder, are maintained by the Company at 333 West 34th Street York, New
York.
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS AND REPRESENTATIONS
(a) The registrant undertakes that it will file a post-effective
amendment to this registration statement as frequently as is necessary to ensure
that the audited financial statements in the registration statement are never
more than 16 months old for as long as purchase payments under the contracts
offered herein are being accepted.
(b) The registrant undertakes that it will include either (1) as part
of any application to purchase a contract offered by the prospectus, a space
that an applicant can check to request a statement of additional information, or
(2) a post card or similar written communication affixed to or included in
<PAGE> 132
the prospectus that the applicant can remove and send to the Company for a
statement of additional information.
(c) The registrant undertakes to deliver any statement of additional
information and any financial statements required to be made available under
this Form N-4 promptly upon written or oral request to the Company at the
address or phone number listed in the prospectus.
(d) The Company represents that in connection with its offering of the
contracts as funding vehicles for retirement plans meeting the requirements of
Section 403(b) of the Internal Revenue Code of 1986, it is relying on a
no-action letter dated November 28, 1988, to the American Council of Life
Insurance (Ref. No. IP-6-88) regarding Sections 22(e), 27(c)(1), and 27(d) of
the Investment Company Act of 1940, and that paragraphs numbered (1) through (4)
of that letter will be complied with.
(e) First Citicorp Life Insurance Company hereby represents that the
fees and charges deducted under the Contract, in the aggregate, are reasonable
in relation to the services rendered, the expenses expected to be incurred, and
the risks assumed by First Citicorp Life Insurance Company.
<PAGE> 133
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it meets the requirements of Securities Act
Rule 485(b) for effectiveness of this amendment to this Registration Statement
and has caused this post-effective amendment to the Registration Statement to be
signed on its behalf, in the City of Dover, and the State of Delaware, on this
28th day of April, 2000.
FIRST CITICORP LIFE VARIABLE ANNUITY SEPARATE ACCOUNT
(Registrant)
Attest:/s/Catherine S. Mulholland By:/s/Larry D. Williams
- --------------------------------- -------------------------------------------
Senior Vice President and Senior Vice President
General Counsel First Citicorp Life Insurance Company
BY: FIRST CITICORP LIFE INSURANCE COMPANY
(Depositor)
Attest:/s/Catherine S. Mulholland By:/s/Larry D. Williams
- --------------------------------- -------------------------------------------
Senior Vice President and Senior Vice President
General Counsel First Citicorp Life Insurance Company
As required by the Securities Act of 1933, this post-effective amendment to the
Registration Statement has been signed by the following persons in the
capacities indicated on the 28th day of April, 2000.
Signature Title
- --------- -----
/s/Jack S. Berger Director
- -------------------------
Jack S. Berger
/s/Frederic W. Bradley Director
- -------------------------
Frederic W. Bradley
/s/Elizabeth C. Craig Director
- -------------------------
Elizabeth C. Craig
/s/Carl W. Desch Director
- -------------------------
Carl W. Desch
<PAGE> 134
SIGNATURES (Cont'd)
/s/Alice B. Leopold Director
- -------------------------
Alice B. Leopold
/s/Frederic W. Thomas Director
- -------------------------
Frederic W. Thomas
/s/Larry D. Williams Director, Senior Vice President
- -------------------------
Larry D. Williams
/s/Walter C. Smith, Jr. Treasurer, Vice President
- -------------------------
Walter C. Smith, Jr.
<PAGE> 135
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description Method of Filing
- ------- -------------- ----------------
<S> <C> <C>
9. Opinion and Consent of Catherine S. Mulholland Electronically
10(a). Consent of Sutherland Asbill & Brennan Electronically
10(b). Consent of KPMG LLP. Electronically
</TABLE>
<PAGE> 1
EXHIBIT 9
FIRST CITICORP LIFE INSURANCE COMPANY LETTERHEAD
First Citicorp Life Variable Annuity Separate Account
334 West 34th Street
New York, NY 10001
April 28, 2000
With reference to Form N-4 Registration Statement filed on behalf of First
Citicorp Life Insurance Company and the First Citicorp Life Variable Annuity
Separate Account with the Securities and Exchange Commission covering flexible
premium variable deferred annuity policies, I have examined such documents and
such law and have made due inquiries as I considered necessary and appropriate,
and on the basis of such examination and inquiries, it is my opinion that:
1. The First Citicorp Life Insurance Company is duly organized and validly
existing under the laws of the State of New York and has been duly authorized to
issue flexible premium variable deferred annuity policies by the Department of
Insurance of the State of New York.
2. The First Citicorp Life Variable Annuity Separate Account is a duly
authorized and existing separate account established pursuant to the provisions
of the Revised Statutes of the state of New York;
3. The flexible premium variable deferred annuity policies, when issued as
contemplated by said Form N-4 Registration Statement, will constitute legal,
validly issued and binding obligations of First Citicorp Life Insurance Company.
I hereby consent to the filing of this opinion as an exhibit to Post-Effective
Amendment No. 9 to the Form N-4 Registration Statement.
First Citicorp Life Insurance Company
/s/Catherine S. Mulholland
---------------------------------------
Catherine S. Mulholland
Senior Vice President, General Counsel
<PAGE> 2
FIRST CITICORP LIFE INSURANCE COMPANY LETTERHEAD
April 28, 2000
I hereby consent to the use of my name under the caption "Legal Matters" in the
Statement of Additional Information contained in this Post-Effective Amendment
to the Form N-4 Registration Statement, filed on behalf of First Citicorp Life
Insurance Company and the First Citicorp Life Variable Annuity Separate Account
with the Securities and Exchange Commission.
First Citicorp Life Insurance Company
/s/Catherine S. Mulholland
---------------------------------------
Catherine S. Mulholland
Senior Vice President, General Counsel
<PAGE> 1
EXHIBIT 10(a)
(SUTHERLAND, ASBILL & BRENNAN LLP LETTERHEAD)
STEPHEN E. ROTH
DIRECT LINE: (202) 383-0158
Internet: [email protected]
April 28, 2000
VIA EDGARLINK
Board of Directors
First Citicorp Life Insurance Company
666 Fifth Avenue, 3rd Floor
New York, NY 10103
Ladies and Gentlemen:
We hereby consent to the reference to our name under the caption "Legal Matters"
in the Statement of Additional Information filed as part of Post-Effective
Amendment No. 9 to the registration statement on Form N-4 for First Citicorp
Life Variable Annuity Separate Account (File No. 33-83354). In giving this
consent, we do not admit that we are in the category of persons whose consent is
required under Section 7 of the Securities Act of 1933.
Very truly yours,
SUTHERLAND, ASBILL & BRENNAN LLP
By: /s/ Stephen E. Roth
-----------------------
Stephen E. Roth
<PAGE> 1
EXHIBIT 10(b)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
First Citicorp Life Insurance Company
We consent to the use of our reports included herein and to the reference to our
firm as experts under the heading "Independent Accountants."
/s/KPMG LLP
Hartford, Connecticut
April 28, 2000
