<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 1
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 1
THE TRAVELERS FUND VA FOR VARIABLE ANNUITIES
(Exact name of Registrant)
THE TRAVELERS LIFE AND ANNUITY COMPANY
(Name of Depositor)
ONE TOWER SQUARE, HARTFORD, CONNECTICUT 06183
(Address of Depositor's Principal Executive Offices)
Insurance Company's Telephone Number,
including area code: (203) 277-0111
ERNEST J. WRIGHT
Assistant Secretary
The Travelers Life and Annuity Company
One Tower Square
Hartford, Connecticut 06183
(Name and address of Agent for Service)
Approximate Date of Proposed Public Offering: ___________________
It is proposed that this filing will become effective (check
appropriate box):
_____ immediately upon filing pursuant to paragraph (b) of Rule 485
__X__ on May 1, 1995 pursuant to paragraph (b) of Rule 485
_____ 60 days after filing pursuant to paragraph (a)(i) of Rule 485
_____ on May 1, 1995 pursuant to paragraph (a)(i) of Rule 485
_____ 75 days after filing pursuant to paragraph (a)(ii)
_____ on May 1, 1995 pursuant to paragraph (a)(ii) of Rule 485
If appropriate, check the following box:
<PAGE>
_____ This Post-Effective Amendment designates a new effective date
for a previously filed Post-Effective Amendment.
Pursuant to Rule 24f-2 of the Investment Company Act of 1940, the
Registrant hereby declares that an indefinite amount of Variable
Annuity Contracts was registered under the Securities Act of 1933.
However, pursuant to paragraph 24f-2(b)(2), a Rule 24f-2 Notice
need not have been filed for the fiscal year ended December 31,
1994 because the Registrant did not sell any Variable Annuity
Contracts pursuant to its 24f-2 Declaration during the fiscal year.
THE TRAVELERS FUND VA FOR VARIABLE ANNUITIES
Cross-Reference Sheet
Form N-4
ITEM
NO. CAPTION IN PROSPECTUS
1. Cover Page Cover Page
2. Definitions Glossary of Special Terms
3. Synopsis Prospectus Summary
4. Condensed Financial Information Not Available
5. General Description of Registrant, The Insurance Company;
Depositor and Portfolio Companies The Separate Account
and the Underlying Funds
6. Deductions Charges and Deductions;
Distribution of
Variable Annuity
Contracts
7. General Description of Variable The Contract
Annuity Contracts
8. Annuity Period The Annuity Period
9. Death Benefit Death Benefit
10. Purchases and Contract Value The Contract
11. Redemptions Surrenders and Redemptions
12. Taxes Federal Tax Considerations
13. Legal Proceedings Legal Proceedings and Opinions
14. Table of Contents of Statement Appendix A
of Additional Information
CAPTION IN STATEMENT OF
ADDITIONAL INFORMATION
15. Cover Page Cover Page
16. Table of Contents Table of Contents
17. General Information and History The Insurance Company;
The Separate Account
and the Underlying
Funds
<PAGE>
18. Services Distribution and Management
Services
19. Purchase of Securities Being Offered Not Applicable
20. Underwriters Principal Underwriter
21. Calculation of Performance Data Performance
Information
22. Annuity Payments Not Applicable
23. Financial Statements Financial Statements
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
<PAGE>
UNIVERSAL ANNUITY
INDIVIDUAL VARIABLE ANNUITY
CONTRACT PROSPECTUS
THE TRAVELERS LIFE AND ANNUITY COMPANY
ONE TOWER SQUARE, HARTFORD, CONNECTICUT 06183
This Prospectus describes an individual flexible premium variable
annuity contract (the "Contract") offered by The Travelers Life and
Annuity Company (the "Company"). The Contract is currently available for use
in connection with (1) Individual Retirement Annuities (IRAs) pursuant to
Section 408 of the Internal Revenue Code of 1986, as amended (the "Code"),
(2) qualified retirement plans pursuant to Sections 403(b), 401(a) and 401(k)
of the Code, (3) deferred compensation programs pursuant to Section 457 of
the Code, and (4) individual nonqualified purchases.
Purchase Payments made under the Contract will accumulate
on a fixed and/or a variable basis, as selected by the Owner. If on a
variable basis, the value of the Contract prior to the Maturity Date, as
stated on the application, will vary continuously to reflect the investment
experience of The Travelers Fund VA for Variable Annuities ("Fund VA").
Purchase Payments may be allocated to any one or more of the sub-accounts
(the "Sub-Accounts") currently available under Fund VA. The assets in each
Sub-Account are invested in shares of the following mutual funds
(collectively, the "Underlying Funds"): Capital Appreciation Fund; High Yield
Bond Trust; Managed Assets Trust; Cash Income Trust; the U.S. Government
Securities Portfolio, Social Awareness Stock Portfolio and Utilities
Portfolio of The Travelers Series Trust; the Templeton Bond Fund, Templeton
Stock Fund and Templeton Asset Allocation Fund of the Templeton Variable
Products Series Fund; the High Income Portfolio, Equity-Income Portfolio and
Growth Portfolio of Fidelity's Variable Insurance Products Fund; the Asset
Manager Portfolio of Fidelity's Variable Insurance Products Fund II; Dreyfus
Stock Index Fund; and American Odyssey Core Equity Fund, American Odyssey
Emerging Opportunities Fund, American Odyssey International Equity Fund,
American Odyssey Long-Term Bond Fund, American Odyssey Intermediate-Term Bond
Fund, and American Odyssey Short-Term Bond Fund of the American Odyssey
Funds, Inc.; Smith Barney Income and Growth Portfolio, Alliance Growth
Portfolio, Smith Barney International Equity Portfolio, Putnam Diversified
Income Portfolio, G.T. Global Strategic Income Portfolio, Smith Barney High
Income Portfolio and MFS Total Return Portfolio.
Travelers Equities Sales, Inc. is the principal underwriter
for the Contracts. The Company may add or substitute investment alternatives,
as described in this Prospectus. The value of the Contract before annuity
benefits become payable will vary continuously to reflect the investment
performance of the Sub-Account(s) selected by the Owner. The Owner bears the
investment risk.
This Prospectus sets forth concisely the information about
Fund VA that you should know before investing. Please read it and retain it
for future reference. Additional information about Fund VA is contained in a
Statement of Additional Information dated May 1, 1995 which has been filed
with the Securities and Exchange Commission and is incorporated by reference
into this Prospectus. A copy may be obtained, without charge, by writing to
The Travelers Life and Annuity Company, Annuity Services 5 SHS, One Tower
Square, Hartford, Connecticut 06183-5030, or by calling 1-800-842-0125. The
Table of Contents of the Statement of Additional Information appears in
Appendix A of this Prospectus.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUSES
OF THE UNDERLYING FUNDS. BOTH THIS PROSPECTUS AND EACH OF THE UNDERLYING
FUND PROSPECTUSES SHOULD BE READ AND RETAINED FOR FUTURE
REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS MAY 1, 1995
<PAGE>
TABLE OF CONTENTS
GLOSSARY OF SPECIAL TERMS iv
PROSPECTUS SUMMARY 1
FEE TABLE 3
THE INSURANCE COMPANY 5
THE SEPARATE ACCOUNT AND THE UNDERLYING FUNDS 5
THE TRAVELERS FUND VA FOR VARIABLE ANNUITIES ("Fund VA") 5
THE UNDERLYING FUNDS 5
Underlying Fund Investment Advisers 7
Asset Allocation Advice 8
Substitution 8
General 9
PERFORMANCE INFORMATION 9
THE CONTRACT 10
Purchase Payments 10
Application of Purchase Payments 10
Right to Return 10
Accumulation Units 11
Net Investment Factor 11
Federal and State Income Tax Withholding 11
CHARGES AND DEDUCTIONS 11
Contingent Deferred Sales Charge 11
Insurance Charge 12
Administrative Charge 12
Reduction or Elimination of Contingent Deferred Sales Charge
and Administrative Charge 13
Underlying Fund Charges 13
Premium Tax 13
Changes in Taxes Based Upon Premium or Value 13
TRANSFERS 13
Dollar-Cost Averaging (Automated Transfers) 13
SURRENDERS AND REDEMPTIONS 14
Systematic Withdrawals 14
DEATH BENEFIT 14
THE ANNUITY PERIOD 15
Maturity Date 15
Allocation of Annuity Payments 15
Variable Annuity 15
Fixed Annuity 16
PAYMENT OPTIONS 16
Election of Options 16
Annuity Options 16
Income Options 17
MISCELLANEOUS CONTRACT PROVISIONS 17
Termination 17
Required Reports 17
Suspension of Payments 18
<PAGE>
FEDERAL TAX CONSIDERATIONS 18
General 18
Tax Law Diversification Requirements for Variable Annuities 18
Ownership of the Investments 18
Section 403(b) Plans and Arrangements 19
Qualified Pension and Profit-Sharing Plans 19
Individual Retirement Annuities 19
Section 457 Plans 20
Nonqualified Annuities 20
Federal Income Tax Withholding 21
Tax Advice 21
VOTING RIGHTS 22
DISTRIBUTION OF VARIABLE ANNUITY CONTRACTS 22
STATE REGULATION 22
LEGAL PROCEEDINGS AND OPINIONS 23
THE FIXED ACCOUNT 23
APPENDIX A 24
<PAGE>
GLOSSARY OF SPECIAL TERMS
As used in this Prospectus, the following terms have the indicated meanings:
ACCUMULATION UNIT: an accounting unit of measure used to calculate the value
of a contract before Annuity Payments begin.
ANNUITANT: the person on whose life the Variable Annuity contract is issued.
ANNUITY PAYMENTS: a series of periodic payments for life; for life with
either a minimum number of payments or a determinable sum assured;
or for the joint lifetime of the Annuitant and another person and
thereafter during the lifetime of the survivor.
ANNUITY UNIT: an accounting unit of measure used to calculate the dollar
amount of Annuity Payments.
CASH SURRENDER VALUE: the amount payable to the Owner or other payee upon
termination of the contract during the lifetime of the Annuitant.
COMPANY: The Travelers Life and Annuity Company.
COMPANY'S HOME OFFICE: the principal executive offices of The Travelers
Life and Annuity Company, located at One Tower Square, Hartford,
Connecticut.
CONTRACT DATE: the date on which the contract, benefits and the provisions of
the Contract become effective.
CONTRACT VALUE: the current value of Accumulation Units credited to the
contract less any administrative charges.
CONTRACT YEARS: annual periods computed from the Contract Date.
FIXED ACCOUNT: an additional account into which Purchase Payments may be
allocated and which is included in the Contract Value. Purchase
Payments allocated to the Fixed Account will earn interest at a
rate guaranteed by the Company; this rate will change from time to time.
INCOME PAYMENTS: optional forms of periodic payments made by the Company
which are not based on the life of the Annuitant.
MATURITY DATE: the date on which the first Annuity Payment is to begin.
NET PURCHASE PAYMENT: that part of the Purchase Payment applied to the
Contract Value, and is equal to the Purchase Payment less any
applicable premium tax charge.
OWNER: the person or entity to whom the Contract is issued.
PURCHASE PAYMENT: a gross amount paid to the Company under a Contract during
the accumulation period.
SEPARATE ACCOUNT: assets set aside by the Company, the investment experience
of which is kept separate from that of other assets of the Company;
for example, The Travelers Fund VA for Variable Annuities.
SUB-ACCOUNT: the portion of the assets of the Separate Account allocated to a
particular Underlying Fund.
UNDERLYING FUND: an open-end management investment company which serves as an
investment option under the Separate Account.
VALUATION DATE: generally, a day on which the Sub-Account is valued. A
valuation date is any day on which the New York Stock Exchange is open
for trading and the Company is open for business. The value of
Accumulation Units and Annuity Units will be determined as of the close
of trading on the New York Stock Exchange, or as of the normal close
of trading if the Exchange is not open.
VALUATION PERIOD: the period between the close of business on successive
Valuation Dates.
VARIABLE ANNUITY: an annuity contract which provides for accumulation and for
Annuity Payments which vary in amount in accordance with the
investment experience of the designated Sub-Account(s).
WRITTEN REQUEST: written information, including requests for contract
changes, sent to the Company at its Home Office in a form and content
satisfactory to the Company.
<PAGE>
PROSPECTUS SUMMARY
INTRODUCTION
The Contract described in this Prospectus is issued by The Travelers Life and
Annuity Company (the "Company"), an indirect wholly owned subsidiary of
Travelers Group Inc. The Company has established The Travelers Fund VA for
Variable Annuities ("Fund VA"), a registered unit investment trust, for the
purpose of investing exclusively in shares of the Underlying Funds described
herein.
THE CONTRACT
The purpose of the Contract is to provide for an individual flexible premium
variable annuity which allows a purchaser to accumulate funds until retirement.
The Contract allows you to invest in any or all of the Sub-Accounts currently
available under Fund VA, as well as in the Fixed Account.
RIGHT TO RETURN
A Contract may be returned for a full refund of the Contract Value (including
charges) within ten days after the Contract is delivered to the applicant,
unless state law requires a longer period. The Contract Value returned may
be greater or less than the original Purchase Payment. However, if applicable
state law so requires, the Purchase Payment will be refunded in full for some
or all of the free-look period, and if the Contract is purchased as an
Individual Retirement Annuity (IRA), the Purchase Payment will be refunded
in full for the first seven days of the free-look period. (See "Right to
Return," page 10.)
THE SEPARATE ACCOUNT AND THE UNDERLYING FUNDS
Fund VA is registered with the Securities and Exchange Commission as a unit
investment trust under the Investment Company Act of 1940. Net Purchase
Payments designated to be allocated to Fund VA will be invested at net asset
value in shares of the following Underlying Funds in accordance with the
selection made by the Owner:
Capital Appreciation Fund Dreyfus Stock Index Fund
Managed Assets Trust American Odyssey Core Equity Fund
High Yield Bond Trust American Odyssey Emerging Opportunities
Fund
Cash Income Trust American Odyssey International Equity
Fund
U.S. Government Securities Portfolio American Odyssey Long-Term Bond Fund
Social Awareness Stock Portfolio American Odyssey Intermediate-Term
Bond Fund
Utilities Portfolio American Odyssey Short-Term Bond Fund
Templeton Bond Fund Smith Barney Income and Growth
Portfolio
Templeton Stock Fund Alliance Growth Portfolio
Templeton Asset Allocation Fund Smith Barney International Equity
Portfolio
Fidelity's High Income Portfolio Putnam Diversified Income Portfolio
Fidelity's Equity-Income Portfolio G.T. Global Strategic Income
Fidelity's Growth Portfolio Smith Barney High Income Portfolio
Fidelity's Asset Manager Portfolio MFS Total Return Portfolio
For information regarding the investment objectives for each of the
Underlying Funds listed above, as well as for the investment advisers which
provide investment management and advisory services for the funds, please
refer to "The Underlying Funds" on page 5. For complete descriptions of
investment objectives, restrictions, and other material information regarding
the Underlying Funds, please refer to the prospectuses for each of the
Underlying Funds.
PURCHASE PAYMENTS
The minimum Purchase Payment under tax-benefited contracts is $20, except
in the case of IRAs where the initial minimum Purchase Payment is $1,000.
For non tax-benefited contracts, the minimum Purchase Payment is
$1,000 initially, and $100 thereafter. All Net Purchase Payments will be
allocated to the Sub-Account(s) or the Fixed Account, as chosen by the
Contract Owner. (See "Purchase Payments," page 10.)
<PAGE>
ASSET ALLOCATION
Some Owners have elected to enter into an investment advisory agreement
with Copeland Financial Services, Inc. ("Copeland"). Copeland provides
asset allocation advice under its CHART(R) Program, which is fully
described in a separate Disclosure Statement. Under the CHART
Program, purchase payments and Contract Values are allocated among
the six American Odyssey Funds. The service may not be available in all
marketing programs through which the Contract is sold. See "Asset
Allocation Advice," page 8.)
CHARGES AND EXPENSES
No sales charge is deducted from Purchase Payments when they are received.
However, a Contingent Deferred Sales Charge of 5% will be deducted if
a Purchase Payment is fully or partially surrendered within five
years of the date it was received. Under certain circumstances, the
Contingent Deferred Sales Charge may be waived. (See "Contingent Deferred
Sales Charge," page 11.)
The Company will deduct $15 semiannually from the Contract to cover
administrative expenses associated with the Contract. (See "Administrative
Charge," page 12.)
The Company deducts an insurance charge from each Sub-Account to
compensate for mortality and expense risks assumed by the Company.
The insurance charge is equivalent on an annual basis to 1.25% of
the daily net assets of the Account. (See "Insurance Charge," page 12.)
Premium taxes may apply to annuities in a few states. These taxes currently
range from 0.5% to 5.0%, depending upon the jurisdiction. The Company will
deduct any applicable premium tax from the Contract Value, upon death,
surrender, or annuitization, or from Purchase Payments at the time
they are made to the Contract, but no earlier than when the Company has a tax
liability under state law. (See "Premium Tax," page 13.)
TRANSFERS AND WITHDRAWALS
Prior to the Maturity Date, your investments may be reallocated among the
Fixed Account and any of the Sub-Accounts available under Fund VA.
Transfers between the Fixed Account and any of the variable Sub-Accounts
may be subject to certain restrictions. (See "Transfers," page
13 and "The Fixed Account," page 23.)
SURRENDERS
Prior to Maturity Date, all or part of the contract value may be surrendered,
subject to certain charges and limitations. (See "Surrenders and
Redemptions," page 14, and "Section 403(b) Plans and Arrangements," page 19.)
THE ANNUITY PERIOD
On the Maturity Date, or other agreed upon payment date, the Company will
provide Annuity or Income Payments to the Contract Owner or his or her
designee in accordance with the payment option selected by the Contract
Owner. If a payment option has not been selected at or prior to the
Maturity Date, the Company will pay to the Contract Owner the first of a
series of monthly payments based on the life of the Annuitant, in accordance
with Annuity Option 2 (Life Annuity with 120 Monthly Payments Assured), or
for certain qualified contracts, in accordance with Annuity Option 4 (Joint
and Last Survivor Life Annuity-Annuity Reduced on Death of Primary Payee)
(the "Automatic Option"). If a variable payout is selected, the payments will
continue to vary with the investment performance of the selected Underlying
Fund. If monthly Annuity Payments are less than $20, the Company reserves the
right to reduce the frequency of payments or to pay the Contract Value in one
lump-sum payment. (See "Annuity Period," page 15.)
DEATH BENEFIT
A death benefit is payable to the Beneficiary of the Contract if the
Annuitant dies before Annuity or Income Payments begin. (See "Death Benefit,"
page 14.)
<PAGE>
FEE TABLE
THE TRAVELERS FUND VA FOR VARIABLE ANNUITIES AND ITS UNDERLYING FUNDS
The purpose of this Fee Table is to assist Contract Owners
in understanding the various costs and expenses that will be
borne, directly or indirectly, under the Contract. The
information listed reflects expenses of the Separate Account
as well as of the Underlying Funds. For additional
information regarding the charges and deductions assessed
under the Contract, including possible waivers or reductions
of these expenses, see "Charges and Deductions," page 11.
Expenses shown do not include premium taxes, which may be
applicable.
CONTRACT CHARGES AND EXPENSES
Contingent Deferred Sales Charge (as a percentage of
purchase payments): 5.00%
Semiannual Contract Administrative Charge $15
ANNUAL EXPENSES
Mortality and Expense Risk Fees (as a percentage of average
net assets of Fund VA) 1.25%
UNDERLYING FUND EXPENSES
(as a percentage of average net assets of the Underlying
Fund)
<TABLE>
Other Total
Management Expenses Underlying
Fee (After Reimbursement) Fund Expenses
<S> <C> <C> <C>
Capital Appreciation Fund 0.75% 0.14%(1) 0.89%
High Yield Bond Trust 0.50% 0.75%(1) 1.25%
Managed Assets Trust 0.50% 0.11%(1) 0.61%
U.S. Government Securities Portfolio 0.32% 0.39%(1) 0.71%
Social Awareness Stock Portfolio 0.65% 0.60%(1) 1.25%
Utilities Portfolio* 0.65% 0.60%(1) 1.25%
Templeton Bond Fund 0.50% 0.40%(2) 0.90%
Templeton Stock Fund 0.48% 0.25%(2) 0.73%
Templeton Asset Allocation Fund 0.49% 0.26%(2) 0.75%
Fidelity's High Income Portfolio 0.61% 0.10%(3) 0.71%
Fidelity's Equity-Income Portfolio 0.52% 0.06%(3) 0.58%
Fidelity's Growth Portfolio 0.62% 0.07%(3) 0.69%
Fidelity's Asset Manager Portfolio 0.72% 0.08%(3) 0.80%
Dreyfus Stock Index Fund 0.07% 0.33%(4) 0.40%
American Odyssey International Equity Fund 0.70% 0.55%(5) 1.25%
American Odyssey Emerging Opportunities Fund 0.65% 0.18%(5) 0.83%
American Odyssey Core Equity Fund 0.60% 0.18%(5) 0.78%
American Odyssey Long-Term Bond Fund 0.50% 0.25%(5) 0.75%
American Odyssey Intermediate-Term Bond Fund 0.50% 0.25%(5) 0.75%
American Odyssey Short-Term Bond Fund 0.50% 0.25%(5) 0.75%
Smith Barney Income and Growth Portfolio 0.65% 0.10%(5) 0.75%
Alliance Growth Portfolio 0.80% 0.10%(5) 0.90%
Smith Barney International Equity Portfolio 0.90% 0.35%(5) 1.25%
Putnam Diversified Income Portfolio 0.75% 0.20%(5) 0.95%
G.T. Global Strategic Income Portfolio 0.80% 0.30%(5) 1.10%
Smith Barney High Income Portfolio 0.60% 0.10%(5) 0.70%
MFS Total Return Portfolio 0.80% 0.15%(5) 0.95%
</TABLE>
<FN1>
1 Other Expenses are as of the fiscal year ended December 31,
1994, taking into account the current expense reimbursement
arrangement with the Company. The Company has agreed to
reimburse each Fund for the amount by which its aggregate
expenses (including the management fee, but excluding
brokerage commissions, interest charges and taxes) exceeds
1.25%. Without such arrangement, Other Expenses would have
been 0.83%, 2.69% and 2.84% for High Yield Bond Trust,
Social Awareness Stock Portfolio and Utilities Portfolio
respectively.
<FN2>
2 Other Expenses are based on the actual operating expenses
incurred by the Fund during the year ended December 31,
1994.
<FN3>
3 Management Fees and Other Expenses are as of the fiscal year
ended December 31, 1994. No reimbursement arrangement
affected the High Income Portfolio. A portion of the
brokerage commissions the Fund paid was used to reduce its
expenses. Without this reduction, total Other Expenses would
have been: Equity-Income Portfolio, 0.60%; Growth Portfolio,
0.70%; and Asset Manager Portfolio, 0.81%.
<FN4>
4 The administrator and investment adviser have agreed to
reimburse the Fund for expenses in excess of 0.40%. For the
fiscal year ended December 31, 1994, the Management Fee and
Other Expenses before reimbursement were 0.15% and 0.42%,
respectively.
<FN5>
5 Other Expenses are as of the fiscal year ended December 31,
1994 taking into account the current expense limitations
agreed to by the Manager. The Manager has agreed to
continue, at least until May 1, 1996, to waive fees or
reimburse expenses to the extent a Fund's total expense ratio
exceeds the following expense limitation: International
Equity Fund, 1.25%; Emerging Opportunities Fund and Core
Equity Fund, 1.00%; and Long-Term Bond Fund, Intermediate-
Term Bond Fund, Short-Term Bond Fund, 0.75%. Thereafter,
each fund is required to reimburse the Manager for any fees
waived or expenses it reimbursed provided that this
reimbursement by the Fund does not cause the total expense
ratio to exceed the expense limitations above. The Long-Term
Bond Fund and the Intermediate-Bond Fund are currently
reimbursing the Manager while the Short-Term Bond Fund and
the Intermediate Equity Fund are still receiving
reimbursements from the Manager. Without these expense
limitations and/or Manager reimbursements, Other Expenses of
the Funds would have been as follows: International Equity
Fund, 0.66%; Emerging Opportunities Fund, 0.27%; Core Equity
Fund, 0.25%, Long-Term Bond Fund, 0.23%; Intermediate-Bond
Fund, 0.25%; and Short-Term Bond, 0.52%.
[FN]
* Annualized (Fund commenced operations February 4, 1994).
<PAGE>
EXAMPLE *
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE SHOWN.
<TABLE>
<CAPTION>
A $1,000 investment would If the Contract is NOT
be subject to the following surrendered at the end of the
expenses, assuming a 5% annual period shown, a $1,000 investment
return on assets, if the would be subject to the following
Contract is surrendered at the expenses, assuming a 5% annual
end of the period shown **: return:
One Three Five Ten One Three Five Ten
Year Years Years Years Year Years Years Years
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Capital Appreciation Fund $74 $122 $174 $265 $24 $72 $124 $265
High Yield Bond Trust 77 133 192 301 27 83 142 301
Managed Assets Trust 71 114 160 237 21 64 110 237
U.S. Government Securities Portfolio 72 117 165 247 22 67 115 247
Social Awareness Stock Portfolio 77 133 192 301 27 83 142 301
Utilities Portfolio 77 133 -- -- 27 83 -- --
Templeton Bond Fund 74 123 174 267 24 73 124 267
Templeton Stock Fund 72 118 166 249 22 68 116 249
Templeton Asset Allocation Fund 72 118 167 251 22 68 117 251
Fidelity's High Income Portfolio 72 117 165 247 22 67 115 247
Fidelity's Equity-Income Portfolio 70 113 158 234 20 63 108 234
Fidelity's Growth Portfolio 72 116 164 245 22 66 114 245
Fidelity's Asset Manager Portfolio 73 120 169 256 23 70 119 256
Dreyfus Stock Index Fund 69 108 149 215 19 58 99 215
American Odyssey Funds(1):
International Equity Fund 77 133 192 301 27 83 142 301
Emerging Opportunities Fund 73 121 171 259 23 71 121 259
Core Equity Fund 72 119 168 254 22 69 117 254
Long-Term Bond Fund 72 118 167 251 22 68 117 251
Intermediate-Term Bond Fund 72 118 167 251 22 68 117 251
Short-Term Bond Fund 72 118 167 251 22 68 117 251
American Odyssey Funds(2):
International Equity Fund 90 170 252 415 40 120 202 415
Emerging Opportunities Fund 85 158 232 378 35 108 182 378
Core Equity Fund 85 156 230 374 35 106 180 374
Long-Term Bond Fund 85 155 228 371 35 105 178 371
Intermediate-Term Bond Fund 85 155 228 371 35 105 178 371
Short-Term Bond Fund 85 155 228 371 35 105 178 371
Smith Barney Income and Growth Portfolio 72 118 -- -- 22 68 -- --
Alliance Growth Portfolio 74 123 -- -- 24 73 -- --
Smith Barney International Equity Portfolio 77 133 -- -- 27 83 -- --
Putnam Diversified Income Portfolio 74 124 -- -- 24 74 -- --
G.T. Global Strategic Income Portfolio 76 129 -- -- 26 79 -- --
Smith Barney High Income Portfolio 72 117 -- -- 22 67 -- --
MFS Total Return Portfolio 74 124 -- -- 24 74 -- --
<FN>
* The Example reflects the $15 "Semiannual" Contract Fee as an
annual charge of 0.179% of assets.
<FN>
** The Contingent Deferred Sales Charge may be waived upon
annuitization (see "Charges and Deductions - Contingent
Deferred Sales Charge," page 11.)
<FN1>
(1) Reflects expenses that would be incurred for those Contract
Owners who DO NOT participate in the CHART Asset Allocation
program.
<FN2>
(2) Reflects expenses that would be incurred for those Contract
Owners who DO participate in the CHART Asset Allocation
program.
<PAGE>
THE INSURANCE COMPANY
The Travelers Life and Annuity Company (the "Company") is a stock insurance
company chartered in 1973 in the State of Connecticut. The Company is
licensed to conduct life insurance business in a majority of the states of
the United States, and intends to seek licensure in the remaining states,
except New York. The Company is an indirect wholly owned subsidiary of
Travelers Group Inc. The Company's principal executive offices are located
at One Tower Square, Hartford, Connecticut 06183, telephone number (203)
277-0111.
THE SEPARATE ACCOUNT AND THE UNDERLYING FUNDS
THE TRAVELERS FUND VA FOR VARIABLE ANNUITIES ("FUND VA")
Fund VA was established on August 19, 1994 and is registered with the
Securities and Exchange Commission (the "SEC") as a unit investment trust
under the Investment Company Act of 1940, as amended (the "1940 Act").
The assets of Fund VA will be invested exclusively in shares of the
Underlying Funds. Fund VA meets the definition of a separate account
under the federal securities laws, and will comply with the provisions of the
1940 Act. Additionally, the operations of Fund VA are subject to the
provisions of Section 38a-433 of the Connecticut General Statutes which
authorizes the Connecticut Insurance Commissioner to adopt regulations under
it. The Section contains no restrictions on the investments of the Fund, and
the Commissioner has adopted no regulations under the Section that affect
the Fund.
Under Connecticut law, the assets of Fund VA will be held for the exclusive
benefit of the owners of, and the persons entitled to payment under, the
Contract offered by this Prospectus and under all other contracts which
provide for accumulated values or dollar amount payments to reflect
investment results of the Fund. The assets held in Fund VA are not
chargeable with liabilities arising out of any other business which the
Company may conduct. The obligations arising under the Contract are
obligations of the Company.
THE UNDERLYING FUNDS
Net Purchase Payments applied to Fund VA will be invested in one or more
of the available Underlying Funds at net asset value in accordance with
the selection made by the Owner. Owners may change their selection without
fee, penalty or charge. The Underlying Funds currently available under the
Contract may be added or withdrawn as permitted by applicable law. Please
read carefully the complete risk disclosure in the prospectuses before
investing.
Fund VA currently invests in the following Underlying Funds:
CAPITAL APPRECIATION FUND. The objective of the Capital
Appreciation Fund is growth of capital through the use of common stocks.
Income is not an objective. The Fund invests principally in common stocks
of small to large companies that may experience wide fluctuations in
price in both rising and declining markets.
HIGH YIELD BOND TRUST. The objective of the High Yield Bond
Trust is generous income. The assets of the High Yield Bond Trust will be
invested in bonds which, as a class, sell at discounts from par value and
are typically high risk securities.
MANAGED ASSETS TRUST. The objective of the Managed Assets Trust is high
total investment return through a fully managed investment policy.
Assets of the Managed Assets Trust will be invested in a portfolio of
equity, debt and convertible securities.
CASH INCOME TRUST. Cash Income Trust seeks to provide high current
income while emphasizing preservation of capital and maintaining a
high degree of liquidity by investing in short-term money market securities
deemed to present minimal credit risks.
U.S. GOVERNMENT SECURITIES PORTFOLIO. The objective of the U.S. Government
Securities Portfolio is the selection of investments from the point of view
of an investor concerned primarily with highest credit quality, current
income and total return. The assets of the U.S. Government Securities
Portfolio will be invested in direct obligations of the United States, its
agencies and instrumentalities.
SOCIAL AWARENESS STOCK PORTFOLIO. The investment objective of the Social
Awareness Stock Portfolio is long-term capital appreciation and retention
of net investment income. The Portfolio seeks to fulfill this
<PAGE>
objective by selecting investments, primarily common stocks, which meet
the social criteria established for the Portfolio. Social criteria
currently excludes companies that derive a significant portion of their
revenues from the production of tobacco, tobacco products, alcohol, or
military defense systems, or in the provision of military defense related
services or gambling services.
UTILITIES PORTFOLIO. The objective of the Utilities Portfolio is to provide
current income by investing in equity and debt securities of companies in
the utility industries.
TEMPLETON BOND FUND. The objective of the Templeton Bond Fund is high
current income through a flexible policy of investing primarily
in debt securities of companies, governments and government agencies of
various nations throughout the world.
TEMPLETON STOCK FUND. The objective of the Templeton Stock Fund is capital
growth through a policy of investing primarily in common stocks issued by
companies, large and small, in various nations throughout the world.
TEMPLETON ASSET ALLOCATION FUND. The objective of the Templeton
Asset Allocation Fund is a high level of total return with
reduced risk over the long term through a flexible policy of
investing in stocks of companies in any nation and debt
obligations of companies and governments of any nation. Changes
in the asset mix will be adjusted in an attempt to capitalize
on total return potential produced by changing economic
conditions throughout the world.
FIDELITY'S HIGH INCOME PORTFOLIO. The objective of the High
Income Portfolio is to seek to obtain a high level of current
income by investing primarily in high yielding, lower-rated,
fixed-income securities, while also considering growth of
capital.
FIDELITY'S EQUITY-INCOME PORTFOLIO. The objective of
Equity-Income Portfolio is to seek reasonable income by
investing primarily in income-producing equity securities; in
choosing these securities, the portfolio manager will also
consider the potential for capital appreciation.
FIDELITY'S GROWTH PORTFOLIO. The objective of the Growth
Portfolio is to seek capital appreciation. The Portfolio
normally purchases common stocks of well-known, established
companies, and small emerging growth companies, although its
investments are not restricted to any one type of security.
Capital appreciation may also be found in other types of
securities, including bonds and preferred stocks.
FIDELITY'S ASSET MANAGER PORTFOLIO. The objective of the Asset
Manager Portfolio is to seek high total return with reduced
risk over the long-term by allocating its assets among stocks,
bonds and short-term fixed-income instruments.
DREYFUS STOCK INDEX FUND. The objective of the Dreyfus Stock
Index Fund is to provide investment results that correspond to
the price and yield performance of publicly traded common
stocks in the aggregate, as represented by the Standard &
Poor's 500 Composite Stock Price Index.
AMERICAN ODYSSEY INTERNATIONAL EQUITY FUND.* The objective of
the International Equity Fund is to seek maximum long-term
total return by investing primarily in common stocks of
established non-U.S. companies.
AMERICAN ODYSSEY EMERGING OPPORTUNITIES FUND.* The objective of
the Emerging Opportunities Fund is to seek maximum long-term
total return by investing primarily in common stocks of small,
rapidly growing companies.
AMERICAN ODYSSEY CORE EQUITY FUND.* The objective of the Core
Equity Fund is to seek maximum long-term total return by
investing primarily in common stocks of well-established
companies.
AMERICAN ODYSSEY LONG-TERM BOND FUND.* The objective of the
Long-Term Bond Fund is to seek maximum long-term total return
by investing primarily in long-term corporate debt securities,
U.S. government securities, mortgage-related securities, and
asset-backed securities, as well as money market instruments.
AMERICAN ODYSSEY INTERMEDIATE-TERM BOND FUND.* The objective
of the Intermediate-Term Bond Fund is to seek maximum long-term
total return by investing primarily in intermediate-term
corporate debt securities, U.S. government securities,
mortgage-related securities and asset-backed securities, as
well as money market instruments.
AMERICAN ODYSSEY SHORT-TERM BOND FUND.* The objective of the
Short-Term Bond Fund is to seek maximum long-term total return
by investing primarily in investment-grade, short-term debt
securities.
<PAGE>
SMITH BARNEY INCOME AND GROWTH PORTFOLIO. The objective of the
Income and Growth Portfolio is current income and long-term
growth of income and capital by investing primarily, but not
exclusively, in common stocks.
ALLIANCE GROWTH PORTFOLIO. The objective of the Growth
Portfolio is long-term growth of capital by investing
predominantly in equity securities of companies with a
favorable outlook for earnings and whose rate of growth is
expected to exceed that of the U.S. economy over time. Current
income is only an incidental consideration.
SMITH BARNEY INTERNATIONAL EQUITY PORTFOLIO. The objective of
the International Equity Portfolio is total return on assets
from growth of capital and income by investing at least 65% of
its assets in a diversified portfolio of equity securities of
established non-U.S. issuers.
PUTNAM DIVERSIFIED INCOME PORTFOLIO. The objective of the
Diversified Income Portfolio is to seek high current income
consistent with preservation of capital. The Portfolio will
allocate its investments among the U.S. Government Sector, the
High Yield Sector, and the International Sector of the fixed
income securities markets.
G.T. GLOBAL STRATEGIC INCOME PORTFOLIO. The Strategic Income
Portfolio's investment objective is primarily to seek high
current income and secondarily to seek capital appreciation.
The Portfolio allocates its assets among debt securities of
issuers in the United States, developed foreign countries, and
emerging markets.
SMITH BARNEY HIGH INCOME PORTFOLIO. The investment objective of
the High Income Portfolio is high current income. Capital
appreciation is a secondary objective. The Portfolio will
invest at least 65% of its assets in high-yielding corporate
debt obligations and preferred stock.
MFS TOTAL RETURN PORTFOLIO. The Total Return Portfolio's
objective is to obtain above-average income (compared to a
portfolio entirely invested in equity securities) consistent
with the prudent employment of capital. Generally, at least
40% of the Portfolio's assets will be invested in equity
securities.
* Funds available for use with an asset allocation program, as
described below.
UNDERLYING FUND INVESTMENT ADVISERS
The Underlying Funds receive investment management and advisory
services from the following investment professionals:
</TABLE>
<TABLE>
<S> <C>
FUND INVESTMENT ADVISER SUB-ADVISER
Capital Appreciation Fund The Traveler Investment Management Janus Capital Corporation
Company (TIMCO)
High Yield Bond Trust Travelers Asset Management
International Corporation (TAMIC)
Managed Assets Trust TAMIC TIMCO
Cash Income Trust TAMIC
U.S. Government Securities TAMIC
Portfolio
Social Awareness Stock Portfolio Smith Barney Mutual Funds Management Inc.
Utilities Portfolio Smith Barney Mutual Funds
Management Inc.
Templeton Stock Fund Templeton Investment Counsel, Inc.
Templeton Asset Allocation Fund Templeton Investment Counsel. Inc.
Templeton Bond Fund Templeton Global Bond Managers
Fidelity's High Income Portfolio Fidelity Management & Research Company
Fidelity's Equity-Income Portfolio Fidelity Management & Research Company
Fidelity's Growth Portfolio Fidelity Management & Research Company
<PAGE>
FUND INVESTMENT ADVISER SUB-ADVISER
Fidelity's Asset Manager Portfolio Fidelity Management & Research Company
Dreyfus Stock Index Fund Wells Fargo Nikko Investment Advisors
American Odyssey International American Odyssey Funds Management, Inc Bank of Ireland Asset
Equity Fund Management Limited
American Odyssey Emerging American Odyssey Funds Management, Inc. Wilke/Thompson Capital
Opportunities Fund Management, Inc.
American Odyssey Core Equity American Odyssey Funds Management, Inc. Equinox Capital Management, Inc.
Fund
American Odyssey Long-Term American Odyssey Funds Management, Inc. Western Asset Management
Company Bond Fund and WLO Global Management
American Odyssey Intermediate- American Odyssey Funds Management, Inc. TAMIC
Term Bond Fund
American Odyssey Short-Term American Odyssey Funds Management, Inc. Smith Graham & Co. Asset
Bond Fund Managers, L.P.
Smith Barney Income and Growth Smith Barney Mutual Funds Management Inc.
Portfolio
Alliance Growth Portfolio Smith Barney Mutual Funds Management Inc. Alliance Capital Management L.P.
Smith Barney International Smith Barney Mutual Funds Management Inc.
Equity Portfolio
Putnam Diversified Income Smith Barney Mutual Funds Management Inc. Putnam Investment.
Portfolio Management, Inc
G.T. Global Strategic Income Smith Barney Mutual Funds Management Inc. G.T. Capital Management, Inc.
Portfolio
Smith Barney High Income Smith Barney Mutual Funds Management Inc.
Portfolio
MFS Total Return Portfolio Smith Barney Mutual Funds Management Inc. Massachusetts Financial Services
Company
</TABLE>
ASSET ALLOCATION ADVICE
Some Owners have elected to enter into a separate advisory
agreement with Copeland Financial Services, Inc. ("Copeland"), an
affiliate of the Company. Copeland provides asset allocation
advice under its CHART Program, which is fully described in
a separate Disclosure Statement. Under the CHART(R) Program,
purchase payments and Contract Values are allocated among the six
American Odyssey Funds. Copeland's charge for this advisory service
is equal to a maximum of 1.50% of the assets subject to the CHART
Program. This fee is currently reduced by 0.25%, the amount of the
fee paid to the investment manager of American Odyssey Funds, and
it is further reduced for assets over $25,000. Another reduction is
made for participants in plans subject to the Employee Retirement
Income Security Act of 1974 ("ERISA") with respect to amounts
allocated to the American Odyssey Intermediate-Term Bond Fund
because that Fund has as its sub-adviser an affiliate of Copeland.
A $30 initial fee is also charged. The CHART Program fee will be
paid by quarterly withdrawals from the Contract Values allocated to
the American Odyssey Funds. The Company will not treat these
withdrawals as taxable distributions. The CHART Program may not be
available in all marketing programs through which the Contract is
sold.
SUBSTITUTION
If shares of any of the Underlying Funds should not be
available for purchase by the appropriate Sub-Account, or if in the
judgment of the Company further investment in such shares becomes
inappropriate for the purposes of the Contract, shares of another
registered, open-end management investment company may be
substituted for shares of the Underlying Funds held in the
Sub-Accounts. Substitution may be made with respect to both
existing investments and the investment of any future Purchase
Payments. However, no such substitution will be made without
notice to Owners and without prior approval of the Securities and
Exchange Commission, to the extent required by the 1940 Act, or
other applicable law. The Company may also add other available
Underlying Funds under the Contract as it deems appropriate.
GENERAL
All investment income and other distributions of Fund VA are
reinvested in shares of the Underlying Funds at net asset value.
The Underlying Funds are required to redeem fund shares at net
asset value and to make payment within seven days. Shares of the
Underlying Funds listed above are currently sold only to life
insurance company separate accounts to fund benefits under variable
annuity and variable life insurance contracts issued by insurance
companies. Underlying Fund shares are not sold to the general
public.
More detailed information may be found in the current
prospectuses for the Underlying Funds; these prospectuses are
included with and must accompany this Prospectus. Please read them
carefully before investing.
PERFORMANCE INFORMATION
From time to time, the Company may advertise several types of
historical performance for Sub-Accounts of Fund VA. The Company may
advertise the standardized "average annual total returns" of the
Sub-Accounts, calculated in a manner prescribed by the Securities
and Exchange Commission, as well as "non-standardized total
return," as described below.
"Average annual total return" will show the percentage rate of
return of a hypothetical initial investment of $1,000 for the most
recent one-, five- and ten-year periods, or for a period covering
the time during which the Underlying Fund held in the Sub-Account
has been in existence if the Underlying Funds has not been in
existence for one of the prescribed periods. This standardized
calculation reflects the deduction of all applicable charges made
to the Contract, except for premium taxes which may be imposed by
certain states. Nonstandardized "total return" will be calculated
in a similar manner based on the performance of the Sub-Account
over a period of time, usually for the calendar year-to-date, and
for the past one-, three-, five- and seven-year periods.
Non-standardized total return will not reflect the deduction of any
applicable Contingent Deferred Sales Charge or the $15 semiannual
contract administrative charge, which, if reflected, would decrease
the level of performance shown. The Contingent Deferred Sales
Charge is not reflected because the Contract is designed for
long-term investment.
For Sub-Accounts that invest in Underlying Funds that were in
existence prior to the date the Underlying Funds became available
under Fund VA, the standardized average annual total return and
non-standardized total return quotations will show the investment
performance that such Underlying Funds would have achieved (reduced
by the applicable charges) had they been held as Sub-Accounts under
the Contract for the period quoted.
Within the guidelines prescribed by the SEC and the National
Association of Securities Dealers, Inc. ("NASD"), performance
information may be quoted numerically or may be presented in a
table, graph or other illustration. Advertisements may include data
comparing performance to well-known indices of market performance
(including, but not limited to, the Dow Jones Industrial Average,
the Standard & Poor's (S&P) 500 Index and the S&P 400 Index, the
Lehman Brothers Long T-Bond Index, the Russell 1000, 2000 and 3000
Indices, the Value Line Index, and the Morgan Stanley Capital
International's EAFE Index). Advertisements may also include
published editorial comments and performance rankings compiled by
independent organizations (including, but not limited to, Lipper
Analytical Services, Inc. and Morningstar, Inc.) and publications
that monitor the performance of Fund VA and the Underlying Funds.
The total return quotations are based upon historical earnings
and are not necessarily representative of future performance. The
Contract Value at redemption may be more or less than original
cost. The Statement of Additional Information contains more
detailed information about these performance calculations,
including actual examples of each type of performance advertised.
<PAGE>
THE CONTRACT
The individual variable annuity contract described in this
Prospectus is both an insurance product and a security. As an
insurance product, the Contract is subject to the insurance laws
and regulations of each state in which it is available for
distribution. The underlying product is an annuity where premiums
are paid to the Company and credited to the Contract to accumulate
until the Maturity Date. A variable annuity differs from a fixed
annuity in that during the accumulation period, the Contract Value
may vary from day to day. The Contract Owner assumes the risk of
gain or loss according to the performance of the selected
sub-account(s). There is generally no guarantee that the Contract
Value at the Maturity Date will equal or exceed the total Purchase
Payments made under the Contract, except as specified or elected
under the Death Benefit provisions described on
page 14.
PURCHASE PAYMENTS
Purchase Payments are the payments made under the Contract. An
initial lump sum Purchase Payment must be made to the Contract and
is due and payable before the Contract becomes effective. Net
Purchase Payments are that part of the Purchase Payment applied to
the Contract Value, and are equal to the Purchase Payment less any
applicable premium tax charge. Each Purchase Payment should be
remitted to and is payable at the Company's Home Office. No
Purchase Payments after the first are required to continue the
Contract, except as provided under "Termination" on page 17.
Purchase Payments under tax-benefited retirement plans (403(b),
corporate pension and profit-sharing, governmental and deferred
compensation plans for governmental and tax-exempt organization
employees) may be made under the Contract in amounts of $20 or
more, subject to the terms of the plan. The initial minimum
Purchase Payment for IRAs is $1,000; for non tax-benefited
Contracts, the initial minimum Purchase Payment is $1,000 and $100
thereafter.
APPLICATION OF PURCHASE PAYMENTS
Each Net Purchase Payment will be applied by the Company to
provide Accumulation Units of the selected Sub-Account(s) or the
Fixed Account to the credit of the Contract. If the Contract
application is in good order, the Company will apply the initial
Purchase Payment within two business days of receipt of the
Purchase Payment in the mail at the Company's Home Office. If the
application is not in good order, the Company will attempt to get
it in good order within five business days. If the application is
not complete at the end of this period, the Company will inform the
applicant of the reason for the delay and that the Purchase Payment
will be returned immediately unless the applicant specifically
consents to the Company keeping the Purchase Payment until the
application is complete. Once it is complete, the Purchase Payment
will be applied within two business days.
Any subsequent Purchase Payments will be applied as of the next
valuation following receipt at the Company's Home Office. All Net
Purchase Payments will be allocated to the Accounts in the
proportion specified by the Contract Owner. You may change your
choice of Accounts or allocation percentages at any time through
Written Request submitted to the Company's Home Office. (See
"Transfers," page 13.)
RIGHT TO RETURN
The Contract may be returned for a full refund of the Contract
Value (including charges) within ten days after delivery of the
Contract to the Owner (the "free-look period"), unless state law
requires a longer period. The Owner bears the investment risk
during the free-look period; therefore, the Contract Value returned
may be greater or less than the Purchase Payment made under the
Contract. However, if the Contract was purchased as an Individual
Retirement Annuity, (1) the Purchase Payment will be returned in
full if the Contract is returned within the first seven days after
delivery, and (2) the Contract Value (including charges) will be
refunded if the Contract is returned during the remainder of the
free-look period. In addition, certain states require that Purchase
Payments be refunded in full for all Contracts or for Contracts
issued in replacement situations, during the entire free-look
period or for some portion of it. All Contract Values will be
determined as of the Valuation Date next following the Company's
receipt of the Owner's written request for refund.
The right to return is not available to participants of the
Texas Optional Retirement Program.
<PAGE>
ACCUMULATION UNITS
The number of Accumulation Units to be credited to the Contract
once a Purchase Payment has been received by the Company will be
determined by dividing the Net Purchase Payment applied to the
designated Sub-Account by the current Accumulation Unit Value of
the Sub-Account.
The Accumulation Unit Value for each Sub-Account was established
at $1 at inception. The value of an Accumulation Unit on any Valuation
Date is determined by multiplying the value on the immediately
preceding Valuation Date by the net investment factor for the
Valuation Period just ended. The value of an Accumulation Unit
on any date other than a Valuation Date will be equal to its value
as of the next succeeding Valuation Date. The value of an
Accumulation Unit may increase or decrease.
NET INVESTMENT FACTOR
The net investment factor is used to measure the investment
performance of a Sub-Account from one Valuation Period to the next.
The net investment factor for a Sub-Account for any Valuation
Period period is equal to the sum of 1.000000 plus the net
investment rate (the gross investment rate less any applicable
Sub-Account deductions during the Valuation Period relating to the
Insurance Charge). The gross investment rate of a Sub-Account is
equal to (a) minus (b) divided by (c) where:
(a) investment income plus capital gains and losses (whether
realized or unrealized);
(b) any deduction for applicable taxes (presently zero); and
(c) the value of the net assets of the Sub-Account at the
beginning of the Valuation Period.
The gross investment rate may be either positive or negative.
The value of the Sub-Account's assets are based on the net asset
value of the Underlying Fund, and investment income includes any
distribution whose ex-dividend date occurs during the Valuation
Period.
FEDERAL AND STATE INCOME TAX WITHHOLDING
The federal tax law requires income tax withholding on
distributions from pension plans and annuity contracts. The Owner,
participant or beneficiary generally has a right to elect not to
have withholding apply. Some states also require withholding from
pension and annuity payments unless the Owner, participant or
beneficiary elects not to have withholding apply. (For further
information on federal withholding, see "Federal Income Tax
Withholding," page 21.)
CHARGES AND DEDUCTIONS
CONTINGENT DEFERRED SALES CHARGE
There are no sales charges deducted from Purchase Payments when
they are received and applied under the Contract. However, a
Contingent Deferred Sales Charge of 5% will be assessed if an
amount is surrendered (withdrawn) within five years of the payment
date. (For this calculation, the five years will be measured from
the first day of the calendar month of the payment date.)
In the case of a partial surrender, payments made first will be
considered to be surrendered first ("first in, first out"). In no
event may the Contingent Deferred Sales Charge exceed 5% of
premiums paid in the five years immediately preceding the surrender
date, nor may the charge exceed 5% of the amount withdrawn. Unless
the Company receives instructions to the contrary, the Contingent
Deferred Sales Charge will be deducted from the amount requested.
In the Contingent Deferred Sales Charge will be waived if:
-- an annuity payout is begun;
-- an income option of at least three years' duration
(without right of withdrawal) is begun after the first
Contract Year;
-- the Annuitant dies;
-- the Annuitant becomes disabled (as defined by the
Internal Revenue Service) subsequent to purchase of the
Contract;
<PAGE>
-- the Annuitant under a tax-deferred annuity plan
(403(b) plan) retires after age 55, provided the
Contract has been in effect five years or more and
provided the payment is made to the Owner;
-- the Annuitant under an IRA plan reaches age 70 1/2,
provided the Contract has been in effect five years or
more;
-- the Annuitant under a qualified pension or
profit-sharing plan, including a 401(k) plan, retires
at or after age 59 1/2, provided the Contract has been
in effect five years or more; or if refunds are made to
satisfy the anti-discrimination test; or
-- the Annuitant under a Section 457 deferred
compensation plan retires and the Contract has been in
effect five years or more, or if a financial hardship
or disability withdrawal has been allowed by the plan
administrator under applicable IRS rules;
There is a 10% free withdrawal allowance available for partial
withdrawals taken during any Contract Year after the first. Such
withdrawals will be free of charge until the free withdrawal amount
is exceeded. Free withdrawals from IRA plans are only available
after the participant has attained age 59 1/2. The free withdrawal
amount that is available will be calculated as of the first
Contract Anniversary Date immediately preceding the surrender date.
The free withdrawal allowance does not apply to full surrenders.
For 403(b) plan participants, partial and full withdrawals
(surrenders) may be subject to restrictions. (See "Section 403(b)
Plans and Arrangements," page 19.)
The Company expects that the Contingent Deferred Sales Charge
assessed under the Contracts will be insufficient to cover
distribution expenses. The difference will be covered by the
general assets of the Company which are attributable, in part, to
mortality and expense risk charges under the Contract described
below.
INSURANCE CHARGE
An insurance charge is deducted daily from the Sub-Accounts of
Fund VA. This charge is intended to cover the mortality and expense
risks associated with guarantees which the Company provides under
the Contract. As discussed below, a portion of the insurance charge
is for the assumption of mortality risk, while the remainder is for
the assumption of expense risk. The mortality risk portion of the
insurance charge compensates the Company for guaranteeing to
provide Annuity Payments to an Annuitant according to the terms of
the Contract regardless of how long the Annuitant lives and no
matter what the actual mortality experience of the other Annuitants
under the Contract might be, and for guaranteeing to provide a
death benefit under the Contract if the Annuitant dies prior to the
Maturity Date. The expense risk charge compensates the Company for
the risk that the charges under the Contract, which cannot be
increased during the duration of the Contract, will be insufficient
to cover actual costs.
The insurance charge is equivalent, on an annual basis, to
1.25% of the daily net asset value of the Sub-Accounts. This charge
is deducted on each Valuation Date at the rate of 0.003425% for
each day in the Valuation Period. The Company estimates that
approximately 50% of the insurance charge will be for the
assumption of mortality risk, while the remainder is for the
assumption of expense risk.
If the amount deducted for these mortality and expense risks is
not sufficient to cover the mortality costs and expense shortfalls,
the loss will be borne by the Company. If the deduction is more
than sufficient, the excess will be a profit to the Company. The
Company expects to make a profit from the insurance charge.
ADMINISTRATIVE CHARGE
A semiannual administrative charge of $15 will be deducted from
all Contracts to cover administrative expenses. The administrative
charge will be deducted from the Contract Value on the second to
last Friday of June and December of each year, and will be prorated
from the date of purchase to the next date of assessment of charge.
The administrative charge will also be deducted on a pro rata basis
upon full or partial surrender or termination of the Contract, upon
the death of the Annuitant, and at the time Annuity or Income
Payments begin. The administrative charge will not be assessed
during payout, after payments under an Annuity or Income Option
have begun.
The administrative charge will be deducted from the Contract
Value by canceling Accumulation Units in each Sub-Account on a pro
rata basis. This charge cannot be increased. The administrative
charge will offset the actual expenses of the Company in
administering the Contract. The charge is set at a level which does
not exceed the average expected cost of the administrative services
to be provided while the Contract is in force.
<PAGE>
REDUCTION OR ELIMINATION OF CONTINGENT DEFERRED SALES CHARGE AND
ADMINISTRATIVE CHARGE
The amount of the Contingent Deferred Sales Charge and the
administrative charge assessed under the Contract may be reduced or
eliminated when sales of the Contract are made to individuals or a
group of individuals in such a manner that results in savings or
reduction of sales expenses. The entitlement to such a reduction in
the Contingent Deferred Sales Charges or the administrative charge
will be based on the following: (1) the size and type of group to
which sales are to be made; (2) the total amount of Purchase
Payments to be received; and (3) any prior or existing relationship
with the Company.
There may be other circumstances, of which the Company is not
presently aware, which could result in fewer sales expenses. In no
event will reduction or elimination of the Contingent Deferred
Sales Charge or the administrative charge be permitted where such
reduction or elimination will be unfairly discriminatory to any
person.
UNDERLYING FUND CHARGES
Fund VA purchases shares of the Underlying Funds at net asset
value. The net asset value of each Underlying Fund reflects
investment management fees and other expenses already deducted from
the assets of the Underlying Funds. For a complete description of
these investment advisory fees and other expenses, refer to the
prospectuses for the Underlying Funds.
PREMIUM TAX
Certain states and local governments impose premium taxes.
These taxes currently range from 0.5% to 5.0%, depending upon
jurisdiction. The Company, in its sole discretion and in compliance
with any applicable state law, will determine the method used to
recover premium tax expenses incurred. The Company will deduct any
applicable premium taxes from the Contract Value upon death,
surrender, annuitization, or from Purchase Payments at the time
they are made to the Contract, but no earlier than when the Company
has a tax liability under state law.
CHANGES IN TAXES BASED UPON PREMIUM OR VALUE
If there is any change in a law assessing taxes against the
Company based upon the premiums of the contract, gains in the
contract or value of the contract, the Company reserves the right
to charge you proportionately for that tax. This would include a
tax based upon our realized net capital gains in the Sub-Accounts,
on which we are not currently taxed.
TRANSFERS
Before Annuity or Income Payments begin, the Owner may transfer
all or part of the Contract Value from one available Sub-Account to
another without fee, penalty or charge. There are currently no
restrictions on frequency of transfers, but the Company reserves
the right to limit transfers to no more than one in any six-month
period.
Some of the Underlying Funds available under the Contract have
higher investment advisory fees than others; therefore, a transfer
from one Sub-Account to another could result in a Owner's
investment becoming subject to higher or lower investment advisory
fees. A transfer between Sub-Accounts has no other effect on the
amount or timing of any other chargers under the Contract. For
purposes of computing the applicability of the Contingent Deferred
Sales Charge, the date on which the Purchase Payments were made
pursuant to the Contract will not be affected by transfers among
Sub-Accounts. A transfer between Sub-Accounts has no other effect
on the amount or timing of any other charges under the Contract.
DOLLAR-COST AVERAGING (AUTOMATED TRANSFERS)
Dollar-cost averaging permits the Contract Owner to transfer
the same dollar amount to other Sub-Accounts on a regular basis so
that more Accumulation Units are purchased in a Sub-Account if the
value per unit is low and less Accumulation Units are puchased if
the value per unit is high. Therefore, a lower-than-average per
unit may be achieved over the long run.
<PAGE>
By written request, you may elect automated transfers of Contract
Values on a monthly or quarterly basis from specific Sub-Accounts
to other Sub-Accounts. You may stop or change your participation in
the Dollar-Cost Averaging program at any time, provided the Company
receives at least 30 days' written notice.
Automated transfers are subject to all Contract provisions,
including those relating to the transfer of money between
Sub-Accounts. Certain minimums apply to amounts transferred and/or
to enroll in the program.
Dollar-cost averaging requires regular investment regardless of
fluctuating prices and does not guarantee profits nor prevent
losses in a declining market. Before electing this option, you
should consider you financial ability to continue purchases through
periods of low price levels.
SURRENDERS AND REDEMPTIONS
An Owner may redeem all or any portion of the Cash Surrender
Value of the Contract at any time prior to the Maturity Date. The
Owner must submit a written request (in the proper form) specifying
the Sub-Account(s) from which the surrender is to be made. The Cash
Surrender Value will be determined as of the Valuation Date next
following receipt of the Owner's surrender request at the Company's
Home Office.
The Company may defer payment of any Cash Surrender Value for
a period of not more than seven days after the request is received
in the mail, but it is its intent to pay as soon as possible.
Requests for surrender that are not in good order will not be
processed until the deficiencies are corrected. The Company will
contact the Owner to advise of the reason for the delay and what is
needed to act on the surrender request.
The Cash Surrender Value on any date will be equal to the
Contract Value less any applicable Contingent Deferred Sales
Charge, outstanding cash loans, and any premium tax not previously
deducted. The Cash Surrender Value may be more or less than the
amount of Purchase Payments applied under the Contract depending on
the value of the Contract at the time of surrender.
For participants in the Texas Optional Retirement Program,
surrenders are available only upon termination of employment,
retirement or death as provided in the Texas Optional Retirement
Program.
For participants in Section 403(b) tax-deferred annuity plans,
a withdrawal may not be made from certain salary reduction amounts
prior to age 59 1/2, separation from service, death, disability or
hardship. (See "Section 403(b) Plans and Arrangements," page 19.)
SYSTEMATIC WITHDRAWALS
You may elect to take monthly, quarterly, semi-annual or annual
systematic withdrawals of a specified dollar amount during the
prior twelve months. Any applicable premium taxes will be deducted.
To elect this option, you must complete an election form provided
by the Company. You may stop the systematic withdrawals at any
time, provided the Company receives at least 30 days' written
notice.
DEATH BENEFIT
A death benefit is payable to the beneficiary of the Contract
upon the death of the Annuitant prior to the Maturity Date. If the
Annuitant dies on or after age 75 and before Annuity or Income
Payments begin, the Company will pay to the beneficiary the
Contract Value as of the date it receives proof of death at its
Home Office, less any applicable premium tax or outstanding cash
loans. If the Annuitant dies before age 75 and before Annuity or
Income Payments begin, after receipt of due proof of the
Annuitant's death, the Company will pay to the beneficiary the
greatest of (1), (2) or (3) below, less any applicable premium tax,
outstanding cash loans or prior surrenders not previously deducted:
1. the Contract Value;
2. the total Purchase Payments made under the Contract; or
3. the Contract Value on the quinquennial Contract Date
Anniversary on or immediately preceding the date of receipt of
due proof of death by the Company.
<PAGE>
THE ANNUITY PERIOD
MATURITY DATE
Annuity Payments will ordinarily begin on the Maturity Date
slated in the Contract. If no Maturity Date is elected, the
Maturity Date will be the date on which the Annuitant attains age
70 1/2 or required beginning date, if later, and the Annuitant's
75th birthday, or ten years after the Contract Date, if later, for
non-tax qualified contracts. The Maturity Date is the date on which
the Company will begin paying the first of a series of Annuity or
Income Payments in accordance with the Settlement Option selected
by the Contract Owner. Annuity or Income Payments will begin on the
Maturity Date unless the Contract has been fully surrendered or the
proceeds have been paid to the Beneficiary prior to that date. The
Company may require proof that the Annuitant is alive before
Annuity Payments are made.
At least 30 days before the original Maturity Date, and to the
extent permitted by tax law, a Contract Owner may elect to extend
the Maturity Date to a later date by Written Request and with the
Company's consent. Certain annuity options taken at the Maturity
Date may be used to meet the minimum required distribution
requirements of federal tax law, or a program of partial surrenders
may be used instead. These mandatory distribution requirements take
effect generally upon the death of the Contract Owner, or with
tax-qualified contracts, upon either the Contract Owner's
attainment of age 70 1/2 or the death of the Contract Owner.
Independent tax advice should be sought regarding the election of
minimum required distributions.
ALLOCATION OF ANNUITY PAYMENTS
At the time election of one of the Annuity Options is made, the
person electing the Option may further elect to have the Contract
Value applied to provide a Variable Annuity, a Fixed Annuity, or a
combination of both. If at the time when Annuity Payments begin no
election has been made to the contrary, the value of a Sub-Account
or the Fixed Account shall be applied to provide an annuity funded
by that same Sub-Account or Fixed Account. A Contract Owner may
elect to transfer Contract Values from one accou nt to another
prior to the date Annuity Payments commence in order to reallocate
the basis on which Annuity Payments will be determined. (See
"Transfers," page 13.)
VARIABLE ANNUITY
ANNUITY UNIT VALUE. The initial value of an Annuity Unit for
each Sub-Account was set at $1.00. The Annuity Unit Value for each
Sub-Account as of any Valuation Date is equal to (a) the value of
the Annuity Unit on the immediately preceding Valuation Date,
multiplied by (b) the net investment factor for that Sub-Account
for the Valuation Period just ended, divided by (c) the assumed net
investment factor for the Valuation Period. (For example, the
assumed net investment factor based on an annual assumed net
investment rate of 3.5% for a Valuation Period of one day is
1.0000942 and, for a period of two days, is 1.0000942 x 1.0000942.)
The value of an Annuity Unit as of any date other than a Valuation
Date is equal to its value on the next succeeding Valuation Date.
The number of Annuity Units credited to the Contract is
determined by dividing the first monthly Annuity Payment
attributable to each Sub-Account's Annuity Unit Value as of 14 days
prior to the Maturity Date. The number of Annuity Units remains
fixed during the annuity period.
DETERMINATION OF FIRST ANNUITY PAYMENT. The Contract contains
tables used to determine the first monthly Annuity Payment. The
amount applied to effect an Annuity will be the Contract Value as
of 14 days before the Maturity Date less any applicable premium
taxes not previously deducted.
The amount of the first monthly payment depends on the Annuity
Option elected. A formula for determining the adjusted age is
contained in the Contract. The total first monthly Annuity Payment
is determined by multiplying the benefit per $ 1,000 of value shown
in the tables of the Contract by the number of thousands of dollars
of value of the Contract applied to that Annuity Option. The
Company reserves the right to require satisfactory proof of age of
any person on whose life Annuity Payments are based before making
the first payment under any of the Settlement Options.
DETERMINATION OF SECOND AND SUBSEQUENT ANNUITY PAYMENTS. The
dollar amount of the second and subsequent Annuity Payments is not
predetermined and may change from month to month based on the
investment experience of the applicable Sub-Account. The actual
amounts of these payments are determined by mul-
<PAGE>
tiplying the number of Annuity Units credited to each Sub-Account
by the corresponding Annuity Unit Value as of the date 14 days
prior to the date before payment is due.
FIXED ANNUITY
A Fixed Annuity is an annuity with payments which remain
fixed as to dollar amount throughout the payment period. The dollar
amount of the first Fixed Annuity Payment will be calculated as
described under "Variable Annuity" above. All subsequent payments
will be made in the same amount, and that amount will be assured
throughout the payment period. If it would produce a larger
payment, the Company agrees that the first Fixed Annuity Payment
will be determined using the Life Annuity Tables in effect on the
Maturity Date.
PAYMENT OPTIONS
ELECTION OF OPTIONS
On the Maturity Date, or other agreed upon date, the Company
will pay an amount payable under the Contract in one lump sum, or
in accordance with the payment option selected by the Owner.
Election of an option must be made in writing in a form
satisfactory to the Company. Any election made during the lifetime
of the Annuitant must be made by the Owner. While the Annuitant is
alive, the Contract Owner may change a Settlement Option election
by Written Request at any time prior to the Maturity Date. Once
Annuity or Income Payments have begun, no further election changes
are allowed. During the Annuitant's lifetime, if no election has
been made prior to the Maturity Date, the Company will pay to the
Contract Owner the first of a series of monthly Annuity Payments
based on the life of the Annuitant, in accordance with Annuity
Option 2 (Life Annuity with 120 Monthly Payments Assured). For
certain tax-qualified contracts, Annuity Option 4 (Joint and Last
Survivor Life Annuity - Annuity Reduced on Death of Primary Payee)
will be the automatic option, as described in the Contract.
The minimum amount that can be placed under an Annuity or
Income Option will be $2,000 unless the Company consents to a
lesser amount. If any monthly periodic payment due any payee is
less than $20, the Company reserves the right to reduce the
frequency of payments or to pay the Cash Value in one lump-sum
payment.
ANNUITY OPTIONS
Subject to the conditions described in "Election of Options"
above, all or any part of the Cash Surrender Value of the Contract
may be paid under one or more of the following Annuity Options.
OPTION 1--LIFE ANNUITY--NO REFUND: The Company will make
monthly Annuity Payments during the lifetime of the person on whose
life the payments are based, terminating with the last monthly
payment preceding death. This option offers the maximum monthly
payment, since there is no assurance of a minimum number of
payments or provision for a death benefit for beneficiaries. (It
would be possible under this option to receive only one Annuity
Payment if the Annuitant died before the due date of the second
Annuity Payment, only two if the Annuitant died before the third
Annuity Payment, etc.)
OPTION 2--LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS
ASSURED: The Company will make monthly Annuity Payments during the
lifetime of the person on whose life payments are based, with the
agreement that if, at the death of that person, payments have been
made for less than 120, 180 or 240 months, as elected, payments
will be continued during the remainder of the period to the
beneficiary designated. The beneficiary may instead receive a
single sum settlement equal to the discounted value of the future
payments with the interest rate equivalent to the assumption
originally used when the Annuity began.
OPTION 3--JOINT AND LAST SURVIVOR LIFE ANNUITY--NO REFUND: The
Company will make monthly Annuity Payments during the joint
lifetime of the two persons on whose lives payments are based, and
during the lifetime of the survivor. No further payments will be
made following the death of the survivor. (It would be possible
under this option to receive only one Annuity Payment if both
Annuitants died before the due date of the second Annuity Payment,
only two if they died before the third Annuity Payment, etc.)
OPTION 4--JOINT AND LAST SURVIVOR LIFE ANNUITY--ANNUITY REDUCED
ON DEATH OF PRIMARY PAYEE: The Company will make monthly Annuity
Payments during the lifetime of the two persons on whose lives
payments are based. One of the two persons will be designated as
the primary payee. The other will be designated
<PAGE>
as the secondary payee. On the death of the secondary payee, if
survived by the primary payee, the Company will continue to make
monthly Annuity Payments to the primary payee in the same amount
that would have been payable during the joint lifetime of the two
persons. On the death of the primary payee, if survived by the
secondary payee, the Company will continue to make Annuity Payments
to the secondary payee in an amount equal to 50% of the payments
which would have been made during the lifetime of the primary
payee. No further payments will be made following the death of the
survivor.
OPTION 5--OTHER ANNUITY OPTIONS: The Company will make any
other arrangements for Annuity Payments as may be mutually agreed
upon.
INCOME OPTIONS
Instead of one of the Annuity Options described above, and
subject to the conditions described under "Election of Options,"
one of the following Income Options may be elected to the extent
they are consistent with federal tax law qualification
requirements.
OPTION 1--PAYMENTS OF A FIXED AMOUNT: The Company will make
equal monthly payments of the amount elected until the Contract
Value applied under this option has been exhausted. The first
monthly payment and all later payments will be paid from each
Sub-Account or the Fixed Account in proportion to the Cash
Surrender Value attributable to that Account. The final payment
will include any amount insufficient to make another full payment.
OPTION 2--PAYMENTS FOR A FIXED PERIOD: The Company will make
monthly payments for the number of years selected. The amount of
each payment will be equal to the remaining Contract Value applied
under this option divided by the number of remaining payments.
OPTION 3--OTHER INCOME OPTIONS: The Company will make any other
arrangements for Income Payments as may be mutually agreed upon.
The amount applied to effect an Income Option will be the
Contract Value as of 14 days before the date Income Payments
commence, less any applicable premium taxes not previously deducted
and any applicable contingent deferred sales charge. The Contract
Value used to determine the amount of any Income Payment will be
determined on the same basis as the Contract Value during the
Accumulation Period, including the deduction for mortality and
expense risks and the Sub-Account Administrative Charge. Income
Options differ from Annuity Options in that the amount of the
payments made under Income Options are unrelated to the length of
life of any person. Although the Company continues to deduct the
charge for mortality and expense risks, it assumes no mortality
risks for amounts applied under any Income Option. Moreover,
payments are unrelated to the actual life span of any person. Thus,
the Annuitant may outlive the payment period.
While Income Options do not directly involve mortality risks
for the Company, an Owner may elect to apply the remaining Contract
Value to provide an Annuity at the guaranteed rates even though
Income Payments have been received under an Income Option. Before
an Owner makes any Income Option election, he or she should consult
a tax adviser as to any adverse tax consequences the election might
have.
MISCELLANEOUS CONTRACT PROVISIONS
TERMINATION
No Purchase Payments after the first are required to keep the
Contract in effect. However, the Company reserves the right to
terminate the Contract on any Valuation Date if the Contract Value
as of that date is less than $500 and no Purchase Payments have
been made for at least three years, unless otherwise specified by
state law. Termination will not occur until 31 days after the
Company has mailed notice of termination to the Owner at his last
known address and to any assignee of record. If the Contract is
terminated, the Company will pay to the Owner the Contract Value,
if any (without deduction of any Contingent Deferred Sales Charges,
but after deduction of any applicable administrative charge or
premium tax).
REQUIRED REPORTS
As often as required by law, but at least once in each Contract
Year before the due date of the first Annuity Payment, the Company
will furnish a report which will show the number of Accumulation
Units cred-
<PAGE>
ited to the Contract in each Sub-Account and the corresponding
Accumulation Unit Value as of the date of the report. The Company
will keep all records required under federal or state laws.
SUSPENSION OF PAYMENTS
If a national stock exchange is closed (except for holidays or
weekends), or trading is restricted due to an existing emergency as
defined by the Securities and Exchange Commission so that disposal
of the Sub-Account's investments or determination of its net asset
value is not reasonably practicable, or the Commission has ordered
that the right of redemption (surrender) be suspended for the
protection of Owners, the Company may postpone all procedures
(including making Annuity Payments) which require valuation of
Sub-Accounts until the stock exchange is reopened and trading is no
longer restricted.
FEDERAL TAX CONSIDERATIONS
GENERAL
The Company is taxed as a life insurance company under
Subchapter L of the Code. The Sub-Accounts described herein are
treated as part of the total operations of the Company and are not
taxed separately. Investment income and gains of a fund that are
credited to a variable annuity contract incur no current federal
income tax. Generally, amounts credited to a contract are not
taxable until received by The Owner, participant or beneficiary,
either in the form of Annuity Payments or other distributions. Tax
consequences and limits are described further below for each
annuity program.
TAX LAW DIVERSIFICATION REQUIREMENTS FOR VARIABLE ANNUITIES
The Code requires that any nonqualified variable annuity
contracts based on a segregated asset account shall not be treated
as an annuity for any period if investments made in the account are
not adequately diversified. Final tax regulations define how
segregated assets accounts must be diversified. The Company
monitors the diversification of investments constantly and believes
that its accounts are adequately diversified. The consequences of
any failure is essentially the loss to the contract owner of
tax-deferred treatment. The Company intends to administer all
contracts subject to this provision of law in a manner that will
maintain adequate diversification.
OWNERSHIP OF THE INVESTMENTS
Assets in the segregated asset accounts must be owned by the
Company and not by the contract owner for federal income tax
purposes. Otherwise, the deferral of taxes is lost and income and
gains from the accounts would be includible annually in the
contract owner's gross income.
The Internal Revenue Service has stated in published rulings
that a variable contract owner will be considered the owner of the
assets of a segregated asset account if the owner possesses an
incident of ownership in those assets, such as the ability to
exercise investment control over the assets. The Treasury
Department announced, in connection with the issuance of temporary
regulations concerning investment diversification, that those
regulations "do not provide guidance concerning the circumstances
in which investor control of the investments of a segregated asset
account may cause the investor, rather than the insurance company,
to be treated as the owner of the assets of the account." This
announcement, dated September 15, 1986, also stated that the
guidance would be issued by way of regulations or rulings on the
"extent to which policyholders may direct their investments to
particular sub-accounts [of a segregated asset account] without
being treated as owners of the underlying assets." As of the date
of this prospectus, no such guidance has been issued.
The Company does not know if such guidance will be issued, or
if it is, what standards it may set. Furthermore, the Company does
not know if such guidance may be issued with retroactive effect.
New regulations are generally issued with a prospective-only effect
as to future sales or as to future voluntary transactions in
existing contracts. The Company therefore reserves the right ot
modify the contract as necessary to attempt to prevent contract
owners from being considered the owner of the assets of the
accounts.
The remaining tax discussion assumes that the Contract
qualifies as a life insurance contract for federal income tax
purposes.
<PAGE>
SECTION 403(B) PLANS AND ARRANGEMENTS
Purchase Payments for tax deferred annuity contracts may be
made by an employer for employees under annuity plans adopted by
public educational organizations and certain organizations which
are tax exempt under Section 501(c)(3) of the Code. Within
statutory limits, these payments are not currently includable in
the gross income of the participants. Increases in the value of the
Contract attributable to these Purchase Payments are similarly not
subject to current taxation. The income in the Contract is taxable
as ordinary income whenever distributed.
An additional tax of 10% will apply to any taxable distribution
received by the participant before the age of 59 1/2, except when
due to death, disability, or as part of a series of payments for
life or life expectancy, or made after the age of 55 with
separation from service. There are other statutory exceptions.
Amounts attributable to salary reductions and income thereon
may not be withdrawn prior to attaining the age of 59 1/2,
separation from service, death, total and permanent disability, or
in the case of hardship as defined by federal tax law and
regulations. Hardship withdrawals are available only to the extent
of the salary reduction contributions and not from the income
attributable to such contributions. These restrictions do not apply
to assets held generally as of December 31, 1988.
Distributions must begin by April 1st of the calendar year
following the calendar year in which the participant attains the
age of 70 1/2. Certain other mandatory distribution rules apply at
the death of the participant. Certain rollover distributions,
including most partial or full redemptions or "term-for-years"
distributions of less than 10 years, are eligible for direct
rollover to another 403(b) contract or to an Individual Retirement
Arrangement (IRA) without federal income tax withholding.
QUALIFIED PENSION AND PROFIT-SHARING PLANS
Under a qualified pension or profit-sharing trust described in
Section 401(a) of the Code and exempt from tax under Section 501(a)
of the Code, Purchase Payments made by an employer are not
currently taxable to the participant and increases in the value of
a contract are not subject to taxation until received by a
participant or beneficiary.
Distributions in the form of Annuity or Income Payments are
taxable to the participant or beneficiary as ordinary income in the
year of receipt. Any distribution that is considered the
participant's "investment in the contract" is treated as a return
of capital and is not taxable. Payments under Income Option 3 are
taxable in full. Certain lump sum distributions described in
Section 402 of the Code may be eligible for special ten-year
forward averaging treatment for individuals born before January 1,
1936. All individuals may be eligible for favorable five-year
forward averaging of lump sum distributions after age 59 1/2.
Certain eligible rollover distributions including most partial and
full surrenders or term-for-years distributions of less than 10
years are eligible for direct rollover to an eligible retirement
plan or to an IRA without federal income tax withholding.
An additional tax of 10% will apply to any taxable distribution
received by the participant before the age of 59 1/2, except by
reason of death, disability or as part of a series of payments for
life or life expectancy, or at early retirement at or after the age
of 55. There are other statutory exceptions.
INDIVIDUAL RETIREMENT ANNUITIES
To the extent of earned income for the year and not exceeding
$2,000 per individual, an individual may make deductible
contributions to an individual retirement annuity (IRA). There are
certain limits on the deductible amount based on the adjusted gross
income of the individual and spouse and based on their
participation in a retirement plan. If an individual is married and
the spouse is not employed, the individual may establish IRAs for
the individual and spouse. Purchase Payments may then be made
annually into IRAs for both spouses in the maximum amount of 100%
of earned income up to a combined limit of $2,250.
Partial or full distributions made prior to the age of 59 1/2,
except in the case of death, disability or distribution for life or
life expectancy, will incur a penalty tax of 10% plus ordinary
income tax treatment of the taxable amount received. Distributions
after the age of 59 1/2 are treated as ordinary income. Amounts
contributed after 1986 on a non-deductible basis are not includable
in income when distributed. Distributions must commence by April
1st of the calendar year after the close of the calendar year in
which the individual attains the age of 70 1/2. The individual
must maintain personal and tax return records of any nondeductible
contributions and distributions.
<PAGE>
Section 408(k) of the Code provides for the purchase of a
Simplified Employee Pension (SEP) plan. A SEP is funded through an
IRA with an annual employer contribution limit of 15% of
compensation up to $30,000 for each Participant.
SECTION 457 PLANS
Section 457 of the Code allows employees and independent
contractors of state and local governments and tax-exempt
organizations to defer a portion of their salaries or compensation
to retirement years without paying current income tax on either the
deferrals or the earnings on the deferrals.
The Owner of contracts issued under Section 457 plans is the
employer or a contractor of the participant and amounts may not be
made available to participants (or beneficiaries) until separation
from service, retirement or death or an unforeseeable emergency as
determined by Treasury Regulations. The proceeds of annuity
contracts purchased by Section 457 plans are subject to the claims
of general creditors of the employer or contractor.
Distributions must begin generally by April 1st of the calendar
year following the calendar year in which the participant attains
the age of 70 1/2. Certain other mandatory distribution rules apply
upon the death of the participant.
All distributions from plans that meet the requirements of
Section 457 of the Code are taxable as ordinary income in the year
paid or made available to the participant or beneficiary.
NONQUALIFIED ANNUITIES
Individuals may purchase tax-deferred annuities without tax law
funding limits. The Purchase Payments receive no tax benefit,
deduction or deferral, but increases in the value of the Contract
are generally deferred from tax until distribution. If a
nonqualified annuity is owned by other than an individual, however,
(e.g., by a corporation), the increases in value attributable to
Purchase Payments made after February 28, 1986 are includable in
income annually. Furthermore, for Contracts issued after April 22,
1987, all deferred increases in value will be includable in the
income of an Owner when the Owner transfers the Contract without
adequate consideration.
The federal tax law requires nonqualified annuity contracts
issued on or after January 19, 1985 to meet minimum mandatory
distribution requirements upon the death of the Owner. Failure to
meet these requirements will cause the succeeding Owner or
beneficiary to lose the tax benefits associated with annuity
contracts, i.e., primarily the tax deferral prior to distribution.
The distribution required depends upon whether an Annuity Option is
elected or whether the succeeding Owner is the surviving spouse.
Contracts will be administered by The Company in accordance with
these rules.
If two or more nonqualified annuity contracts are purchased
from the same insurer within the same calendar year, distributions
from any of them will be taxed based upon the amount of income in
all of the same calendar year series of annuities. This will
generally have the effect of causing taxes to be paid sooner on the
deferred gain in the contracts.
Those receiving partial distributions made before the Maturity
Date will generally be taxed on an income-first basis to the extent
of income in the contract. If you are exchanging another annuity
contract for this annuity, certain pre-August 14, 1982 deposits
into a nonqualified annuity contract that have been placed in the
contract by means of a tax-deferred exchange under Section 1035 of
the Code may be withdrawn first without income tax liability. This
information on deposits must be provided to the Company by the
other insurance company at the time of the exchange. There is
income in the contract generally to the extent the Contract Value
exceeds the investment in the contract. This investment in the
contract is equal to the amount of premiums paid less any amount
received previously which was excludable from gross income. Any
direct or indirect borrowing against the value of the contract or
pledging of the contract as security for a loan will be treated as
a cash withdrawal under the tax law.
With certain exceptions, the law will impose an additional tax
if a Owner makes a withdrawal of any amount under the contract
which is allocable to an investment made after August 13, 1982. The
amount of the additional tax will be 10% of the amount includable
in income by the Owner because of the withdrawal. The additional
tax will not be imposed if the amount is received on or after the
Owner reaches the age of 59 1/2, or if the amount is one of a
series of substantially equal periodic payments made for life or
life expectancy of the tax-
<PAGE>
payer. The additional tax will not be imposed if the withdrawal or
partial surrender follows the death or disability of the Owner.
FEDERAL INCOME TAX WITHHOLDING
The portion of a distribution which is taxable income to the
recipient will be subject to federal income tax withholding,
generally pursuant to Section 3405 of the Code. The application of
this provision is summarized below.
1. ELIGIBLE ROLLOVER DISTRIBUTION FROM SECTION 403(B) PLANS OR
ARRANGEMENTS OR FROM QUALIFIED PENSION AND PROFIT-SHARING PLANS
There is an unwaivable 20% tax withholding for plan
distributions that are eligible for rollover to an lRA or to
another retirement plan but that are not directly rolled over. A
distribution made directly to a participant or beneficiary may
avoid this result if:
(a) a periodic settlement distribution is elected based upon a
life or life expectancy calculation, or
(b) a complete term-for-years settlement distribution is
elected for a period of ten years or more, payable at least
annually, or
(c) a minimum required distribution as defined under the tax
law is taken after the attainment of the age of 70 1/2 or as
otherwise required by law.
A distribution including a rollover that is not a direct
rollover will require the 20% withholding, and a 10% additional tax
penalty may apply to any amount not added back in the rollover. The
20% withholding may be recovered when the participant or
beneficiary files a personal income tax return for the year if a
rollover was completed within 60 days of receipt of the funds,
except to the extent that the participant or spousal beneficiary is
otherwise underwithheld or short on estimated taxes for that year.
2. OTHER NON-PERIODIC DISTRIBUTIONS (FULL OR PARTIAL REDEMPTIONS)
To the extent not described as requiring 20% withholding in 1
above, the portion of a non-periodic distribution which constitutes
taxable income will be subject to federal income tax withholding,
to the extent such aggregate distributions exceed $200 for the
year, unless the recipient elects not to have taxes withheld. If an
election out is not provided, 10% of the taxable distribution will
be withheld as federal income tax. Election forms will be provided
at the time distributions are requested. This form of withholding
applies to all annuity programs.
3. PERIODIC DISTRIBUTIONS (DISTRIBUTIONS PAYABLE OVER A PERIOD
GREATER THAN ONE YEAR)
The portion of a periodic distribution which constitutes
taxable income will be subject to federal income tax withholding
under the wage withholding tables as if the recipient were married
claiming three exemptions. A recipient may elect not to have income
taxes withheld or have income taxes withheld at a different rate by
providing a completed election form. Election forms will be
provided at the time distributions are requested. This form of
withholding applies to all annuity programs. As of January 1, 1994,
a recipient receiving periodic payments (e.g., monthly or annual
payments under an Annuity Option) which total $13,700 or less per
year, will generally be exempt from the withholding requirements.
Recipients who elect not to have withholding made are liable
for payment of federal income tax on the taxable portion of the
distribution. All recipients may also be subject to penalties under
the estimated tax payment rules if withholding and estimated tax
payments are not sufficient.
Recipients who do not provide a social security number or other
taxpayer identification number will not be permitted to elect out
of withholding. Additionally, United States citizens residing
outside of the country, or U.S. legal residents temporarily
residing outside the country, are not permitted to elect out of
withholding.
TAX ADVICE
Because of the complexity of the law and the fact that the tax
results will vary according to the factual status of the individual
involved, tax advice may be needed by a person contemplating
purchase of an annuity contract and by an Owner, participant or
beneficiary who may make elections under a contract. It should be
understood that the foregoing description of the federal income tax
consequences under these contracts is not exhaustive and that
special rules are provided with respect to situations not discussed
here. It should be understood that if a tax-benefited plan loses
its exempt status, employees could lose some of the tax benefits
described. For further information, a qualified tax adviser should
be consulted.
<PAGE>
VOTING RIGHTS
The Owner has certain voting rights in Fund VA and the
Underlying Funds. A participant covered by a Contract issued in
connection with a Section 403(b) or a Section 408 plan is the
Owner. The number of votes which a Owner may cast in the
accumulation period is equal to the number of Accumulation Units
credited to the account under the Contract. During the annuity
period, the Owner may cast the number of votes equal to (i) the
reserve related to the Contract divided by (ii) the value of an
Accumulation Unit. During the annuity period, an Owner's voting
rights will decline as the reserve for the Contract declines.
Upon the death of the Owner, all voting rights will vest in the
beneficiary of the Contract, except in the case of non
tax-benefited annuity contracts where the surviving spouse may
succeed to the ownership.
In accordance with its view of present applicable law, the
Company will vote shares of Underlying Funds held by Fund VA at
regular and special meetings of the Underlying Fund shareholders in
accordance with instructions received from persons having a voting
interest in Fund VA. The Company will vote shares for which it has
not received instructions in the same proportion as it votes shares
for which it has received instructions. However, if the 1940 Act or
any regulation thereunder should be amended, or if the present
interpretation thereof should change, and as a result the Company
determines that it is permitted to vote shares of the Underlying
Funds in its own right, it may elect to do so.
The number of shares which a person has a right to vote will be
determined as of the date concurrent with the date established by
the respective Underlying Fund for determining shareholders
eligible to vote at the meeting of the fund, and voting
instructions will be solicited by written communication before the
meeting in accordance with the procedures established by the
Underlying Fund.
Each person having a voting interest in Fund VA will receive
periodic reports relating to the Underlying Fund(s) in which he or
she has an interest, as well as any proxy materials, including a
form on which to give voting instructions with respect to the
proportion of the Underlying Fund shares held by Fund VA which
correspond to his or her interest in the Sub-Account.
DISTRIBUTION OF VARIABLE ANNUITY CONTRACTS
The Company intends to sell the Contracts in all jurisdictions
where it is licensed to do business. The Company does not intend to
conduct business in the state of New York. The Contracts will be
sold by life insurance sales representatives of the Company who are
licensed with broker-dealers registered with the SEC under the
Securities Exchange Act of 1934 and the NASD. Any sales
representative or employee will also have been qualified to sell
Variable Annuities under applicable federal and state laws. The
compensation paid to broker-dealers will not exceed 5.5% of the
payments made under the Contracts.
Travelers Equities Sales, Inc. is the principal underwriter for
the variable annuity contract described in this Prospectus.
STATE REGULATION
The Company is subject to the laws of the state of Connecticut
governing insurance companies and to regulation by the Insurance
Commissioner of the state of Connecticut. An annual statement in a
prescribed form must be filed with that Commissioner on or before
March l in each year covering the operations of the Company for the
preceding year and its financial condition on December 31 of such
year. Its books and assets are subject to review or examination by
the Commissioner or his agents at all times, and a full examination
of its operations is conducted at least once in every four years.
In addition, the Company is subject to the insurance laws and
regulations of the other states in which it is licensed to operate.
Generally, the insurance departments of the states apply the laws
of the jurisdiction of domicile in determining the field of
permissible investments.
<PAGE>
LEGAL PROCEEDINGS AND OPINIONS
There are no pending material legal proceedings affecting Funds
VA.
Legal matters in connection with federal laws and regulations
affecting the issue and sale of the Variable Annuity contracts
described in this Prospectus and the organization of the Company,
its authority to issue Variable Annuity contracts under Connecticut
law and the validity of the forms of the Variable Annuity contracts
under Connecticut law have been reviewed by the General Counsel of
the Life and Annuities division of the Company.
THE FIXED ACCOUNT
Purchase Payments allocated to the Fixed Account portion of the
Contract and any transfer made to the Fixed Account become part of
the general account of the Company which supports insurance and
annuity obligations. Because of exemptive and exclusionary
provisions, interests in the general account have not been
registered under the Securities Act of 1933 (the "1933 Act"), nor
is the general account registered as an investment company under
the 1940 Act. Accordingly, neither the general account or any
interest therein is generally subject to the provisions of the 1933
or 1940 Acts, and the staff of the Securities and Exchange
Commission does not generally review the disclosure in the
prospectus relating to the Fixed Account. Disclosure regarding the
Fixed Account and the general account may, however, be subject to
certain generally applicable provisions of the federal securities
laws relating to the accuracy and completeness of statements made
in the prospectus.
Under the Fixed Account, the Company assumes the risk of
investment gain or loss, guarantees a specified interest rate, and
guarantees a specified monthly annuity payment. The investment gain
or loss of Fund VA or any of the Sub-Accounts does not affect the
fixed account portion of the Contract Value, or the dollar amount
of fixed annuity payments made under any payout option.
The Fixed Account is secured by part of the general assets of
the Company. The general assets of the Company include all assets
of the Company other than those held in Fund VA or any other
separate account sponsored by the Company or its affiliates.
Purchase Payments will be allocated to the Fixed Account at the
direction of the Contract Owner at the time of purchase or at a
later date.
The Company will invest the assets of the Fixed Account in
those assets chosen by the Company and allowed by applicable law.
Investment income from such Fixed Account assets will be allocated
by the Company between itself and the Contracts participating in
the Fixed Account.
Investment income from the Fixed Account allocated to the
Company includes compensation for mortality and expense risks borne
by the Company in connection with Fixed Account Contracts. The
amount of such investment income allocated to the Contracts will
vary from year to year in the sole discretion of the Company at
such rate or rates as the Company prospectively declares from time
to time. The interest rate credited to the Fixed Account will be
guaranteed for at least three months. The Company also guarantees
that for the life of the Contract it will credit interest at not
less than 3.5% per year. ANY INTEREST CREDITED TO AMOUNTS ALLOCATED
TO THE FIXED ACCOUNT IN EXCESS OF 3.5% PER YEAR WILL BE DETERMINED
IN THE SOLE DISCRETION OF THE COMPANY. THE CONTRACT OWNER ASSUMES
THE RISK THAT INTEREST CREDITED TO THE FIXED ACCOUNT MAY NOT EXCEED
THE MINIMUM GUARANTEE OF 3.5% FOR ANY GIVEN YEAR.
The Company guarantees that, at any time, the Fixed Account
Contract Value will not be less than the amount of the purchase
payments allocated to the Fixed Account, plus interest credited as
described above, less any applicable premium taxes or prior
surrenders. If the Contract Owner effects a surrender, the amount
available from the Fixed Account will be reduced by any applicable
Contingent Deferred Sales Charge.
TRANSFERS
For non-tax benefited contracts, transfers from the Fixed
Account to any of the Sub-Accounts will only be permitted twice a
year during the 30 days following the semiannual Contract Date
anniversary in an amount of up to 10% of the Fixed Account Value on
the semiannual Contract Date anniversary. The Company reserves the
right to waive this restriction in its discretion.
<PAGE>
APPENDIX A
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
The Statement of Additional Information contains more specific
information and financial statements of The Travelers Life and
Annuity Company. A list of the contents of the Statement of
Additional Information is set forth below:
The Insurance Company
The Separate Account and the Underlying Funds
The Travelers Fund VA for Variable Annuities
The Underlying Funds
Principal Underwriter
Distribution and Management Services
Securities Custodian
Independent Accountants
Financial Statements
- -------------------------------------------------------------------
A COPY OF THE STATEMENT OF ADDITIONAL INFORMATION DATED MAY 1,
1995 (FORM NO. L12428S) IS AVAILABLE WITHOUT CHARGE. TO REQUEST A
COPY, PLEASE CLIP THIS COUPON ON THE DOTTED LINE ABOVE, ENTER YOUR
NAME AND ADDRESS IN THE SPACES PROVIDED BELOW, AND MAIL TO: THE
TRAVELERS LIFE AND ANNUITY COMPANY, ANNUITY SERVICES - SHS, ONE
TOWER SQUARE, HARTFORD, CONNECTICUT 06183-5030.
NAME: -------------------------------------------------------------
- -------------------------------------------------------------------
ADDRESS:
- -------------------------------------------------------------------
- -------------------------------------------------------------------
- -------------------------------------------------------------------
<PAGE>
UNIVERSAL ANNUITY
INDIVIDUAL VARIABLE ANNUITY CONTRACTS
ISSUED BY
THE TRAVELERS LIFE AND ANNUITY COMPANY
ONE TOWER SQUARE
HARTFORD, CONNECTICUT 06183
L12428 TIC ED. 5/95
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
DATED
MAY 1, 1995
FOR
THE TRAVELERS FUND VA FOR VARIABLE ANNUITIES
Individual Variable Annuity Contracts
issued by
The Travelers Life and Annuity Company
One Tower Square
Hartford, Connecticut 06183
Telephone (203) 277-0111
This Statement of Additional Information is not a prospectus but
relates to, and should be read in conjunction with, the Prospectus dated May
1, 1995. A copy of the Prospectus may be obtained by writing to The Travelers
Life and Annuity Company, Annuity Services - 5 SHS, One Tower Square,
Hartford, Connecticut 06183-5030, or by calling 1-800-842-0125.
TABLE OF CONTENTS
THE INSURANCE COMPANY 1
THE SEPARATE ACCOUNT AND THE UNDERLYING FUNDS 1
The Travelers Fund VA for Variable Annuities (Fund VA) 1
The Underlying Funds 1
PERFORMANCE INFORMATION 4
PRINCIPAL UNDERWRITER 6
DISTRIBUTION AND MANAGEMENT SERVICES 6
INDEPENDENT ACCOUNTANTS 6
FINANCIAL STATEMENTS 6
<PAGE>
THE INSURANCE COMPANY
The Travelers Life and Annuity Company (the "Company") is a stock
insurance company chartered in 1973 in the State of Connecticut, and has been
continuously engaged in the insurance business since that time. The Company
is licensed to conduct a life insurance business in a majority of the states
of the United States, and intends to seek licensure in the remaining states,
except New York. The Company's Home Office is located at One Tower Square,
Hartford, Connecticut 06183, and its telephone number is (203) 277-0111.
The Company is an indirect wholly owned subsidiary of The Travelers
Insurance Company, which is indirectly owned by Travelers Group Inc., a
financial services holding company engaged, through its subsidiaries,
principally in four business segments: (i) Investment Services; (ii) Consumer
Finance Services; (iii) Life Insurance Services; and (iv) Property and
Casualty Insurance Services.
THE SEPARATE ACCOUNT AND THE UNDERLYING FUNDS
THE TRAVELERS FUND VA FOR VARIABLE ANNUITIES (FUND VA)
Fund VA was established on August 19, 1994 pursuant to the
insurance laws of the State of Connecticut, and is registered with the
Securities and Exchange Commission ("SEC") as a unit investment trust under
the Investment Company Act of 1940, as amended (the "1940 Act"). The assets
of Fund VA will be invested exclusively in shares of the Underlying Funds.
Fund VA meets the definition of a separate account under federal securities
laws, and will comply with the provisions of the 1940 Act. Registration of
Fund VA with the SEC does not involve supervision by the SEC of the management
or investment policies of Fund VA. Additionally, the operations of Fund VA
are subject to the provisions of Section 38a-433 of the Connecticut General
Statutes which authorizes the Connecticut Insurance Commissioner to adopt
regulations under it. The Section contains no restrictions on investments of
Fund VA, and the Commissioner has adopted no regulations under the Section
that affect Fund VA.
Under Connecticut law, the assets of Fund VA will be held for the
exclusive benefit of Contract Owners and the persons entitled to payment
under the Contract offered by the Prospectus. The assets held in Fund VA are
not chargeable with liabilities arising out of any other business which the
Company may conduct. Any obligations arising under the Contract are general
obligations of the Company.
THE UNDERLYING FUNDS
Purchase Payments applied to Fund VA will be invested in one or
more of the available Underlying Funds at net asset value in accordance with
the selection made by the Contract Owner. Contract Owners may change their
selection without fee, penalty or charge. All investment income and other
distributions of Fund VA are reinvested in fund shares at net asset value.
The funds are required to redeem fund shares at net asset value and to make
payment within seven days. Shares of the Underlying Funds described below are
currently sold to separate accounts of the Company in connection with its
variable annuity products; additionally, some of the Underlying Fund shares
may also be sold to other separate accounts of the Company or its affiliates,
or to other insurance companies in connection with such companies' variable
annuity and variable life insurance products. Fund shares are not sold to the
general public. Available mutual funds may be added or withdrawn as permitted
by applicable law.
Fund VA currently invests in the following Underlying Funds:
MANAGED ASSETS TRUST: The objective of the Managed Assets Trust
is high total investment return through a fully managed investment
policy. Assets of the Managed Assets Trust will be invested in a
portfolio of U.S. stocks, bonds and money market securities.
<PAGE>
CAPITAL APPRECIATION FUND: The objective of the Capital
Appreciation Fund is growth of capital through the use of common
stocks. Income is not an objective. The Fund invests principally in
common stocks of small to large companies that characteristically
move faster than the market during major price movements.
HIGH YIELD BOND TRUST: The objective of the High Yield Bond Trust
is generous income. The assets of the HighYield Bond Trust will be
invested in bonds which, as a class, sell at discounts from par
value and are typically high risk securities. Contract Owners are
advised to read carefully the complete risk disclosure contained in
the Trust's prospectus before investing.
CASH INCOME TRUST: Cash Income Trust seeks to provide high
current income while emphasizing preservation of capital and
maintaining a high degree of liquidity by investing in short-term
money market securities deemed to present minimal credit risks.
U.S. GOVERNMENT SECURITIES PORTFOLIO: The objective of the U.S.
Government Securities Portfolio is the selection of investments
from the point of view of an investor concerned primarily with
highest credit quality, current income and total return. The assets
of the U.S. Government Securities Portfolio will be invested in
direct obligations of the United States, its instrumentalities and
agencies.
SOCIAL AWARENESS STOCK PORTFOLIO: The objective of the Social
Awareness Stock Portfolio is long-term capital appreciation and
retention of net investment income through the selection of
investments, primarily common stocks, which meet the social
criteria established for the Portfolio. Social criteria currently
excludes companies that derive a significant portion of their
revenues from the production of tobacco, tobacco products, alcohol
or military defense systems, or the provision of military defense
or gambling services.
UTILITIES PORTFOLIO: The objective of the Utilities Portfolio is
to provide current income. Long-term capital appreciation is a
secondary objective. The Portfolio seeks to achieve its objective
by investing in equity and debt securities of companies in the
utility industries.
TEMPLETON BOND FUND: The objective of the Templeton Bond Fund is
high current income through a flexible policy of investing
primarily in debt securities of companies, governments and
government agencies of various nations throughout the world.
TEMPLETON STOCK FUND: The objective of the Templeton Stock Fund
is capital growth through a policy of investing primarily in common
stocks issued by companies, large and small, in various nations
throughout the world.
TEMPLETON ASSET ALLOCATION FUND: The objective of the Templeton
Asset Allocation Fund is a high level of total return with reduced
risk over the long term through a flexible policy of investing in
stocks of companies in any nation, debt obligations of companies
and governments of any nation. Changes in the asset mix will be
adjusted in an attempt to capitalize on total return potential
produced by changing economic conditions throughout the world.
FIDELITY'S HIGH INCOME PORTFOLIO: The objective of the High
Income Portfolio is to seek to obtain a high level of current
income by investing primarily in high yielding, lower-rated,
fixed-income securities, while also considering growth of capital.
Contract Owners are advised to read the complete risk disclosure
contained in the Portfolio's prospectus before investing.
FIDELITY'S EQUITY INCOME PORTFOLIO: The objective of the
Equity-Income Portfolio is to seek reasonable income by investing
primarily in income-producing equity securities.
FIDELITY'S GROWTH PORTFOLIO: The objective of the Growth
Portfolio is to seek capital appreciation. The Portfolio normally
purchases common stocks of well-known, established companies and
smaller, emerging growth companies, although its investments are
not restricted to any one type of security. Capital appreciation
may also be found in other types of securities, including bonds and
preferred stocks.
FIDELITY'S ASSET MANAGER PORTFOLIO: The objective of the Asset
Manager Portfolio is to seek high total return with reduced risk
over the long-term by allocating its assets among stocks, bonds,
and short-term fixed-income instruments.
DREYFUS STOCK INDEX FUND: The objective of the Dreyfus Stock
Index Fund is to provide investment results that correspond to the
price and yield performance of publicly traded common stocks in the
aggregate, as represented by the Standard & Poor's 500 Composite
Stock Price Index.
<PAGE>
AMERICAN ODYSSEY INTERNATIONAL EQUITY FUND: The objective of the
American Odyssey International Equity Fund is to seek maximum
long-term total return by investing primarily in common stocks of
established non-U.S. companies.
AMERICAN ODYSSEY EMERGING OPPORTUNITIES FUND: The objective of
the American Odyssey Emerging Opportunities Fund is to seek maximum
long-term total return by investing primarily in common stocks of
small, rapidly growing companies.
AMERICAN ODYSSEY CORE EQUITY FUND: The objective of the American
Odyssey Core Equity Fund is to seek maximum long-term total return
by investing primarily in common stocks of well-established
companies.
AMERICAN ODYSSEY LONG-TERM BOND FUND: The objective of the
American Odyssey Long-Term Bond Fund is to seek maximum long-term
total return by investing primarily in long-term corporate debt
securities, U.S. government securities, mortgage-related
securities, and asset-backed securities, as well as money market
instruments.
AMERICAN ODYSSEY INTERMEDIATE-TERM BOND FUND: The objective of
the American Odyssey Intermediate-Term Bond Fund is to seek maximum
long-term total return by investing primarily in intermediate-term
corporate debt securities, U.S. government securities,
mortgage-related securities and asset-backed securities, as well as
money market instruments.
AMERICAN ODYSSEY SHORT-TERM BOND FUND: The objective of the
American Odyssey Short-Term Bond Fund is to seek maximum long-term
total return by investing primarily in investment-grade, short-term
debt securities.
SMITH BARNEY INCOME AND GROWTH PORTFOLIO. The objective of the
Income and Growth Portfolio is current income and long-term growth
of income and capital by investing primarily, but not exclusively,
in common stocks.
ALLIANCE GROWTH PORTFOLIO. The objective of the Growth Portfolio
is long-term growth of capital by investing predominantly in equity
securities of companies with a favorable outlook for earnings and
whose rate of growth is expected to exceed that of the U.S. economy
over time. Current income is only an incidental consideration.
SMITH BARNEY INTERNATIONAL EQUITY PORTFOLIO. The objective of
the International Equity Portfolio is total return on assets from
growth of capital and income by investing at least 65% of its
assets in a diversified portfolio of equity securities of
established non-U.S. issuers.
PUTNAM DIVERSIFIED INCOME PORTFOLIO. The objective of the
Diversified Income Portfolio is to seek high current income
consistent with preservation of capital. The Portfolio will
allocate its investments among the U.S. Government Sector, the High
Yield Sector, and the International Sector of the fixed income
securities markets. (Please read carefully the complete risk
disclosure in the Portfolio's prospectus before investing.)
G.T. GLOBAL STRATEGIC INCOME PORTFOLIO. The Strategic Income
Portfolio's investment objective is primarily to seek high current
income and secondarily to seek capital appreciation. The Portfolio
allocates its assets among debt securities of issuers in the United
States, developed foreign countries, and emerging markets. (Please
read carefully the complete risk disclosure in the Portfolio's
prospectus before investing.)
SMITH BARNEY HIGH INCOME PORTFOLIO. The investment objective of
the High Income Portfolio is high current income. Capital
appreciation is a secondary objective. The Portfolio will invest at
least 65% of its assets in high-yielding corporate debt obligations
and preferred stock. (Please read carefully the complete risk
disclosure in the Portfolio's prospectus before investing.)
MFS TOTAL RETURN PORTFOLIO. The Total Return Portfolio's
objective is to obtain above-average income (compared to a
portfolio entirely invested in equity securities) consistent with
the prudent employment of capital. Generally, at least 40% of the
Portfolio's assets will be invested in equity securities. (Please
read carefully the complete risk disclosure in the Portfolio's
prospectus before investing.)
Each Underlying Fund is subject to certain investment restrictions
which may not be changed without the approval of a "majority vote of the
outstanding voting securities" of that Portfolio (as defined in the 1940
Act). There is no assurance that the Underlying Funds will achieve their
stated objectives.
More detailed information regarding the Underlying Funds may be
found in the current Prospectuses and Statements of Additional Information
for the Underlying Funds.
<PAGE>
PERFORMANCE INFORMATION
From time to time, the Company may advertise several types of
historical performance for Sub-Accounts of Fund VA. The Company may advertise
the standardized "average annual total returns" of the Sub-Accounts,
calculated in a manner prescribed by the Securities and Exchange Commission,
as well as "non-standardized total return," as described below.
STANDARDIZED METHOD. Quotations of average annual total return are
computed according to a formula in which a hypothetical initial investment of
$1,000 is applied to the Sub-Account, and then related to ending redeemable
values over one, five and ten year periods, or for a period covering the time
during which the Underlying Fund held in the Sub-Account has been in
existence if the Underlying Fund has not been in existence for one of the
prescribed periods. The quotations reflect the deduction of all recurring
charges during each period (on a pro rata basis in the case of fractional
periods). The deduction for the semi-annual administrative charge ($15.00) is
converted to a percentage of assets based on the actual fee collected,
divided by the average net assets per contract sold under the Prospectus to
which this Statement of Additional Information relates. Each quotation
assumes a total redemption at the end of each period with the assessment of
any applicable surrender charge at that time.
NON-STANDARDIZED METHOD. Non-standardized "total return" will be
calculated in a similar manner based on the performance of the Sub-Account
over a period of time, usually for the calendar year-to-date, and for the
past one-, three-, five- and seven-year periods. Non-standardized total
return will not reflect the deduction of any applicable surrender charge or
the $15 semi-annual contract administrative charge, which, if reflected,
would decrease the level of performance shown. The surrender charge is not
reflected because the Contract is designed for long-term investment.
GENERAL. Within the guidelines prescribed by the SEC and the
National Association of Securities Dealers, Inc. ("NASD"), performance
information may be quoted numerically or may be presented in a table, graph
or other illustration. Advertisements may include data comparing performance
to well-known indices of market performance (including, but not limited to,
the Dow Jones Industrial Average, the Standard & Poor's (S&P) 500 Index and
the S&P 400 Index, the Lehman Brothers Long T-Bond Index, the Russell 1000,
2000 and 3000 Indices, the Value Line Index, and the Morgan Stanley Capital
International's EAFE Index). Advertisements may also include published
editorial comments and performance rankings compiled by independent
organizations (including, but not limited to, Lipper Analytical Services,
Inc. and Morningstar, Inc.) and publications that monitor the performance of
Fund VA and the Underlying Funds.
For Sub-Accounts that invest in Underlying Funds that were in
existence prior to the date the Underlying Funds became available under Fund
VA, the standardized average annual total return and non-standardized total
return quotations will show the investment performance that such Underlying
Funds would have achieved (reduced by the applicable charges) had they been
held as Sub-Accounts under the Contract for the period quoted. The total
return quotations are based upon historical earnings and are not necessarily
representative of future performance. A Owner's Contract Value at redemption
may be more or less than original cost.
Average annual total returns for each of the Sub-Accounts computed
according to the standardized and non-standardized methods for the periods
ended December 31, 1994 are set forth in the following table.
<PAGE>
TOTAL RETURN CALCULATIONS
SUB-ACCOUNTS OF FUND VA
(NOT YET AVAILABLE)
<TABLE>
<CAPTION
STANDARDIZED NON-STANDARDIZED
<S> <C> <C> <C> <C> <C> <C> <C>
INCEPTION
1 YEAR 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS DATE
Managed Assets Trust
High Yield Bond Trust
Capital Appreciation Fund
U.S. Government Securities Portfolio
Social Awareness Stock Portfolio
Templeton Bond Fund
Templeton Stock Fund
Templeton Asset Allocation Fund
Fidelity's High Income Portfolio
Fidelity's Equity-Income Portfolio
Fidelity's Growth Portfolio
Fidelity's Asset Manager Portfolio
Dreyfus Stock Index Fund
American Odyssey Funds:
Core Equity Fund
Emerging Opportunities Fund
International Equity Fund
Long-Term Bond Fund
Intermediate-Term Bond Fund
Short-Term Bond Fund
Smith Barney Income and Growth Portfolio
Alliance Growth Portfolio
Smith Barney International Equity Portfolio
Putnam Diversified Income Portfolio
G.T. Global Strategic Income Portfolio
Smith Barney High Income Portfolio
MFS Total Return Portfolio
* Since inception date
</TABLE>
<PAGE>
PRINCIPAL UNDERWRITER
Travelers Equities Sales, Inc. ("TESI"), an affiliate of the
Company, serves as the principal underwriter for Fund VA and the Contracts.
The offering is continuous. TESI is an indirect wholly owned subsidiary of
Travelers Group Inc. and its principal executive offices are located at One
Tower Square, Hartford, Connecticut.
DISTRIBUTION AND MANAGEMENT SERVICES
Under the terms of the Distribution and Management Agreement
between Fund VA, the Company and TESI, the Company provides all
administrative services and mortality and expense risk guarantees related to
variable annuity contracts sold by the Company in connection with Fund VA.
TESI performs the sales functions related to the Contracts. The Company
reimburses TESI for commissions paid, other sales expenses and certain
overhead expenses connected with such sales functions. The Company also pays
all costs of qualifying Fund VA and the variable annuity contract with
regulatory authorities; the costs of proxy solicitation; and all custodian,
accountants' and legal fees; and provides without cost to Fund VA all
necessary office space, facilities, and personnel to manage its affairs.
There were no fees paid either to the Company or to TESI under the
Distribution and Management Agreement during the year ended December 31, 1994
since Fund VA had not yet commenced operations.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., Independent Accountants, 100 Pearl
Street, Hartford, Connecticut, are the independent auditors for Fund VA. The
services to be provided to Fund VA include primarily the examination of the
Fund's financial statements.
FINANCIAL STATEMENTS
The financial statements of the Company as contained herein should
be considered only as bearing upon the Company's ability to meet its
obligations under the Policy, and they should not be considered as bearing on
the investment performance of The Travelers Fund VA for Variable Annuities.
Financial statements for The Travelers Fund VA for Variable Annuities are not
available since the Fund had no assets as of the effective date of this
Statement of Additional Information.
<PAGE>
FUND VA FOR VARIABLE ANNUITIES
STATEMENT OF ADDITIONAL INFORMATION
THE TRAVELERS LIFE AND ANNUITY COMPANY
ONE TOWER SQUARE
HARTFORD, CONNECTICUT 06183
MAY 1995
L-12428S PRINTED IN THE U.S.A.
<PAGE> 1
THE TRAVELERS LIFE AND ANNUITY COMPANY
Financial Statements
for the years ended December 31, 1994, 1993 and 1992
<PAGE> 2
THE TRAVELERS LIFE AND ANNUITY COMPANY
FINANCIAL STATEMENTS
INDEX
Page
Independent Auditors' Reports 1-3
Financial Statements:
Statement of Operations and Retained Earnings
for the years ended December 31, 1994, 1993 and 1992 4
Balance Sheet - December 31, 1994 and 1993 5
Statement of Cash Flows
for the years ended December 31, 1994, 1993 and 1992 6
Notes to Financial Statements 7-26
Glossary of Insurance Terms 27-28
<PAGE> 3
Independent Auditors' Report
The Board of Directors and Shareholder of
The Travelers Life and Annuity Company:
We have audited the accompanying balance sheets of The Travelers Life and
Annuity Company as of December 31, 1994 and 1993, and the related statements of
operations and retained earnings and cash flows for the year ended December 31,
1994. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Travelers Life and Annuity
Company as of December 31, 1994 and 1993, and the results of its operations and
its cash flows for the year ended December 31, 1994 in conformity with
generally accepted accounting principles.
As discussed in Note 2 to the financial statements, the Company adopted the
provisions of Statement of Financial Accounting Standards No. 115, "Accounting
for Certain Investments in Debt and Equity Securities," in 1994.
/s/KPMG Peat Marwick LLP
Hartford, Connecticut
January 17, 1995
1
<PAGE> 4
Report of Independent Accountants
To the Board of Directors and Shareholder of
The Travelers Life and Annuity Company:
We have audited the statements of operations and retained earnings and cash
flows of The Travelers Life and Annuity Company for the year ended December 31,
1993. These financial statements are the responsibility of Company
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of The
Travelers Life and Annuity Company for the year ended December 31, 1993 in
conformity with generally accepted accounting principles.
/s/COOPERS & LYBRAND
Hartford, Connecticut
September 16, 1994
2
<PAGE> 5
Report of Independent Accountants
To the Board of Directors and Shareholder of
The Travelers Life and Annuity Company:
We have audited the statements of operations and retained earnings and cash
flows of The Travelers Life and Annuity Company for the year ended December 31,
1992. These financial statements are the responsibility of Company management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of The
Travelers Life and Annuity Company for the year ended December 31, 1992 in
conformity with generally accepted accounting principles.
As discussed in Notes 2, 7 and 9 to the financial statements, the Company
changed its method of accounting for postretirement benefits other than
pensions, accounting for income taxes and accounting for foreclosed assets in
1992.
/s/COOPERS & LYBRAND
Hartford, Connecticut
September 16, 1994
3
<PAGE> 6
THE TRAVELERS LIFE AND ANNUITY COMPANY
STATEMENT OF OPERATIONS AND RETAINED EARNINGS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
(for the year ended December 31, in thousands) 1994 | 1993 1992
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES |
Premiums $ 3,498 | $ 4,524 $ 4,781
Net investment income 66,093 | 58,044 63,912
Realized investment gains (losses) (2,074) | 11,955 21,403
Other 18,702 | 9,102 7,542
- --------------------------------------------------------------------------------------------------------
86,219 | 83,625 97,638
- --------------------------------------------------------------------------------------------------------
BENEFITS AND EXPENSES |
Current and future insurance benefits 55,596 | 67,489 68,253
General and administrative expenses 2,758 | 3,075 8,045
- --------------------------------------------------------------------------------------------------------
58,354 | 70,564 76,298
- --------------------------------------------------------------------------------------------------------
|
Income before federal income taxes and |
cumulative effects of changes in |
accounting principles 27,865 | 13,061 21,340
- --------------------------------------------------------------------------------------------------------
Federal income taxes: |
Current 4,742 | 22,124 37,198
Deferred 4,798 | (22,672) (21,704)
- --------------------------------------------------------------------------------------------------------
9,540 | (548) 15,494
- --------------------------------------------------------------------------------------------------------
|
Income before cumulative effects of changes |
in accounting principles 18,325 | 13,609 5,846
Cumulative effect of change in accounting |
for postretirement benefits other than |
pensions, net of tax - | - (1,148)
Cumulative effect of change in accounting |
for income taxes - | - 4,171
- --------------------------------------------------------------------------------------------------------
|
Net income 18,325 | 13,609 8,869
Retained earnings beginning of year 110,665 | 97,034 88,119
Preference stock tax benefit allocated by parent - | 22 46
- --------------------------------------------------------------------------------------------------------
Retained earnings end of year $128,990 | $110,665 $97,034
- --------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
4
<PAGE> 7
THE TRAVELERS LIFE AND ANNUITY COMPANY
BALANCE SHEET
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
(at December 31, in thousands) 1994 1993
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Fixed maturities, available for sale at market in 1994
(cost, $624,347); at lower of aggregate cost or market
in 1993 (market, $487,010) $ 559,142 $ 486,195
Equity securities, at market (cost, $14,252; $22,827) 16,064 24,666
Mortgage loans 152,359 246,965
Real estate held for sale, net of accumulated depreciation of $337; $0 6,810 30,983
Short-term securities 44,472 43,326
Other investments 72,190 75,708
- ---------------------------------------------------------------------------------------------------
Total investments 851,037 907,843
- ---------------------------------------------------------------------------------------------------
Cash 296 -
Investment income accrued 10,211 11,296
Reinsurance recoverable 573 523
Deferred federal income taxes 94,315 78,007
Separate accounts 820,384 949,772
Value of insurance in force 21,014 -
Other assets 3,539 15,703
- ---------------------------------------------------------------------------------------------------
Total assets $1,801,369 $1,963,144
- ---------------------------------------------------------------------------------------------------
LIABILITIES
Future policy benefits $ 691,108 $707,916
Current federal income taxes 26,071 20,305
Separate accounts 808,181 942,633
Other liabilities 17,889 11,383
- ---------------------------------------------------------------------------------------------------
Total liabilities 1,543,249 1,682,237
- ---------------------------------------------------------------------------------------------------
SHAREHOLDER'S EQUITY
Common stock, par value $100; 100,000
shares authorized, 30,000 issued and outstanding 3,000 3,000
Additional paid-in capital 167,354 166,047
Unrealized investment gains (losses), net of taxes (41,224) 1,195
Retained earnings 128,990 110,665
- ---------------------------------------------------------------------------------------------------
Total shareholder's equity 258,120 280,907
- ---------------------------------------------------------------------------------------------------
Total liabilities and shareholder's equity $1,801,369 $1,963,144
- ---------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
5
<PAGE> 8
THE TRAVELERS LIFE AND ANNUITY COMPANY
STATEMENT OF CASH FLOWS
Increase (Decrease) in Cash
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
(for the year ended December 31, in thousands) 1994 | 1993 1992
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES |
Premiums collected $ 3,498 | $ 4,524 $10,034
Net investment income received 57,240 | 53,944 64,304
Benefits and claims paid (72,298) | (74,660) (76,873)
Operating expenses paid (4,400) | (3,249) (6,562)
Income taxes refunded (paid) 1,030 | (10,661) (25,537)
Trading account investments (purchases) sales, net - | 35,093 (18,341)
Other 22,507 | (683) (19,101)
- -----------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities 7,577 | 4,308 (72,076)
- -----------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES |
Investment repayments |
Fixed maturities 29,043 | 29,479 28,409
Mortgage loans 60,260 | 53,835 80,904
Proceeds from investments sold |
Fixed maturities 41,671 | 46,001 4,527
Equity securities 9,373 | 7,676 34,058
Mortgage loans 23,327 | 11,835 26,120
Real estate 34,181 | 26,014 20,025
Investments in |
Fixed maturities (204,412) | (206,682) (75,479)
Equity securities (375) | (5,280) (15,577)
Mortgage loans (5,607) | - (599)
Short-term securities, (purchases) sales, net (1,146) | (16,430) (26,310)
Other investments, (purchases) sales, net 682 | 46,595 (11,437)
Securities transactions in course of settlement 5,722 | 1,133 7,095
- -----------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities (7,281) | (5,824) 71,736
- -----------------------------------------------------------------------------------------------------
Net increase (decrease) in cash $ 296 | $ (1,516) $ (340)
- -----------------------------------------------------------------------------------------------------
Cash at December 31 $ 296 $ - $ 1,516
- -----------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
6
<PAGE> 9
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Travelers Life and Annuity Company (the Company) is a wholly owned
subsidiary of The Travelers Insurance Company (TIC). TIC is a wholly
owned subsidiary of The Travelers Insurance Group Inc. (TIG). TIG is an
indirect wholly owned subsidiary of The Travelers Inc. Significant
accounting policies used in the preparation of the accompanying financial
statements follow.
Basis of presentation
In December 1992, Primerica Corporation (Primerica) acquired
approximately 27% of The Travelers Corporation's common stock (the
Acquisition). The Acquisition was accounted for as a purchase.
Effective December 31, 1993, Primerica acquired the approximately 73% of
The Travelers Corporation common stock which it did not already own, and
The Travelers Corporation was merged into Primerica, which was renamed
The Travelers Inc. This was effected through the exchange of .80423
shares of The Travelers Inc. common stock for each share of The Travelers
Corporation common stock (the Merger). All subsidiaries of The Travelers
Corporation were contributed to TIG.
The Acquisition and the Merger are being accounted for as a "step
acquisition." The step acquisition method of purchase accounting
requires that the assets and liabilities of the Company be recorded at
the fair values determined at each acquisition date (i.e., 27% of values
at December 31, 1992 as carried forward and 73% of the values at
December 31, 1993). These assets and liabilities are reflected in the
balance sheet at December 31, 1993 based upon management's then best
estimate of their fair values. Evaluation and appraisal of assets and
liabilities, including investments, the value of insurance in force,
reinsurance recoverable, other insurance assets and liabilities and
related deferred income taxes were completed during 1994. The excess of
the 27% share of assigned value of identifiable net assets over cost at
December 31, 1992, which was allocated to the Company through the
"pushdown" basis of accounting, was approximately $1.3 million and is
being amortized over ten years on a straight-line basis.
The statement of operations and retained earnings, the statement of cash
flows and the related accompanying notes for the year ended December 31,
1994, which are presented on a purchase accounting basis, are separated
from the corresponding 1993 and 1992 information, which is presented on a
historical accounting basis, to indicate the difference in valuation
bases.
Certain prior year amounts have been reclassified to conform with the
1994 presentation.
7
<PAGE> 10
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
Investments
Fixed maturities include bonds, notes and redeemable preferred stocks.
Fixed maturities are valued based upon quoted market prices, or if
quoted market prices are not available, discounted expected cash flows
using market rates commensurate with the credit quality and maturity of
the investment. Securities are classified as "available for sale" and
are reported at fair value, with unrealized gains and losses, net of
income taxes, charged or credited directly to shareholder's equity at
December 31, 1994. As of December 31, 1993, in conjunction with the
Merger, all fixed maturities were classified as "available for sale" and
recorded at the lower of aggregate cost or market value.
Equity securities, which include common and nonredeemable preferred
stocks, are carried at market values that are based primarily on quoted
market prices. Changes in market values of equity securities are charged
or credited directly to shareholder's equity, net of applicable income
taxes.
Mortgage loans are carried at amortized cost. Real estate held for sale
is carried at the lower of cost or fair value less estimated costs to
sell. Fair value was established at time of foreclosure by appraisers,
both internal and external, using discounted cash flow analyses and
other acceptable techniques.
Accrual of income is suspended on fixed maturities or mortgage loans
that are in default, or on which it is likely that future interest
payments will not be made as scheduled. Interest income on investments
in default is recognized only as payment is received.
Forward commitments are not recorded in the balance sheet until the
commitments are fulfilled.
Investment Gains and Losses
Realized investment gains and losses are included as a component of
pretax revenues based upon specific identification of the investments
sold on the trade date and, prior to the Merger, included adjustments to
the valuation reserves. These adjustments reflected changes considered
to be other than temporary in the net realizable value of investments.
Also included are gains and losses arising from the translation of the
local currency value of foreign investments to U.S. dollars, the
functional currency of the Company.
Separate Accounts
Separate accounts primarily represent funds for which the assets of each
account are legally segregated and are not subject to claims that arise
out of any other business of the Company. Each account has specific
investment objectives. The liabilities associated with these separate
account products provide for guarantees of mortality, morbidity,
principal or interest and the related assets of these accounts are
carried at amortized cost except at December 31, 1993, when the assets
and liabilities of these accounts were recorded at the value assigned at
the acquisition dates. Amounts assessed to the contractholders for
management services are included in other revenues. Deposits and net
investment income for these accounts are excluded from revenues, and
related liability increases are excluded from benefits and expenses.
8
<PAGE> 11
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
Value of Insurance In Force
The value of insurance in force represents the actuarially determined
present value of anticipated profits to be realized from annuities
contracts at the date of the Merger using the same assumptions that were
used for computing related liabilities where appropriate. The value of
insurance in force was the actuarially determined present value of the
projected future profits discounted at an interest rate of 16% for the
business acquired. The value of the business in force is amortized over
the contract period using current interest crediting rates to accrete
interest and using an amortization method based on a level yield method.
The value of insurance in force is reviewed periodically for
recoverability to determine if any adjustment is required.
Benefit Reserves
Benefit reserves represent liabilities for future insurance policy
benefits. Benefit reserves for traditional life insurance and annuity
policies have been computed based upon mortality, morbidity, persistency
and interest assumptions applicable to these coverages, which range from
5.5% to 7.3%, including a provision for adverse deviation. These
assumptions consider Company experience and industry standards and may
be revised if it is determined that the future experience will differ
substantially from that previously assumed. The assumptions vary by
plan, age at issue, year of issue and duration.
At December 31, 1994, the Company has $691.1 million of life and annuity
deposit funds and reserves, none of which are subject to discretionary
withdrawal based on contract terms and related market conditions.
Permitted Statutory Accounting Practices
The Company, domiciled in the State of Connecticut, prepares statutory
financial statements in accordance with the accounting practices
prescribed or permitted by the State of Connecticut Insurance
Department. Prescribed statutory accounting practices include a variety
of publications of the National Association of Insurance Commissioners
as well as state laws, regulations, and general administrative rules.
Permitted statutory accounting practices encompass all accounting
practices not so prescribed. The impact of any permitted accounting
practices on the statutory surplus of the Company is not material.
Premiums
Premiums are recognized as revenues when due. Reserves are established
for the portion of premiums that will be earned in future periods.
Other Revenues
Other revenues include surrender, mortality and administrative charges
and fees as earned on investment and other insurance contracts.
9
<PAGE> 12
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
Federal Income Taxes
The provision for federal income taxes is comprised of two components,
current income taxes and deferred income taxes. Deferred federal income
taxes arise from changes in the Company's deferred federal income tax
asset during the year. The deferred federal income tax asset is
recognized to the extent that future realization of the tax benefit is
more likely than not, with a valuation allowance for the portion that is
not likely to be recognized.
Accounting Standards not yet Adopted
Statement of Financial Accounting Standards No. 118, "Accounting by
Creditors for Impairment of a Loan - Income Recognition and Disclosures"
(FAS 118), and Statement of Financial Accounting Standards No. 114,
"Accounting by Creditors for Impairment of a Loan" (FAS 114), describe
how impaired loans should be measured when determining the amount of a
loan loss accrual. These statements also amend existing guidance on the
measurement of restructured loans in a troubled debt restructuring
involving a modification of terms. The adoption of these statements,
effective January 1, 1995, will not have a material effect on results of
operations or financial position.
2. CHANGES IN ACCOUNTING PRINCIPLES
Accounting for Certain Debt and Equity Securities
Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt
and Equity Securities" (FAS 115), which addresses accounting and
reporting for investments in equity securities that have a readily
determinable fair value and for all debt securities. Investment
securities have been classified as "available for sale" and are reported
at fair value, with unrealized gains and losses, net of income taxes,
charged or credited directly to shareholder's equity. Previously,
securities classified as available for sale were carried at the lower of
aggregate cost or market value. Initial adoption of this standard
resulted in an increase of approximately $530 thousand (net of taxes) to
net unrealized gains in shareholder's equity. See note 11 for additional
disclosures.
Accounting and Reporting for Reinsurance Contracts
In the first quarter of 1993, the Company implemented Statement of
Financial Accounting Standards No. 113, "Accounting and Reporting for
Reinsurance of Short-Duration and Long-Duration Contracts" (FAS 113). FAS
113 requires the reporting of reinsurance receivables and prepaid
reinsurance premiums as assets and precludes the immediate recognition of
gains for all reinsurance contracts unless the liability to the
policyholder has been extinguished. Implementation of FAS 113 did not
have an impact on the Company's earnings, however, assets and liabilities
increased by like amounts. See note 3 for additional reinsurance
disclosures.
10
<PAGE> 13
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
2. CHANGES IN ACCOUNTING PRINCIPLES, Continued
Postretirement Benefits other than Pensions
In 1992, the Company adopted Statement of Financial Accounitng Standards
No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions" (FAS 106). As required, the Company changed its method of
accounting for retiree benefit plans effective January 1, 1992, to accrue
for the Company's share of the costs of postretirement benefits over the
service period rendered by employees. Previously these benefits were
charged to expense when paid. The Company elected to recognize
immediately the liability for postretirement benefits as the cumulative
effect of a change in accounting principle. This resulted in a noncash
after-tax charge to net income of $1.1 million. See Note 7 for
additional information relating to FAS 106.
Accounting for Income Taxes
In the third quarter of 1992, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (FAS 109)
with retroactive application to January 1, 1992. FAS 109 establishes new
principles for calculating and reporting the effects of federal income
taxes in financial statements. FAS 109 replaces the income statement
orientation inherent in the prior income tax accounting standard with a
balance sheet approach. Under the new approach, deferred tax assets and
liabilities are generally determined based on the difference between the
financial statement and tax bases of assets and liabilities using enacted
tax rates in effect for the year in which the differences are expected to
reverse. FAS 109 allows recognition of deferred tax assets if future
realization of the tax benefit is more likely than not, with a valuation
allowance for the portion that is not likely to be recognized.
The implementation of FAS 109 resulted in a one time increase to earnings
of $4.2 million in the first quarter of 1992. This increase in earnings
was principally due to tax rate differences and the recognition of a
portion of previously unrecognized deferred tax assets. See note 9 for
further discussion of FAS 109.
Accounting for Foreclosed Assets
In February 1993, The Travelers Corporation announced its intent to
accelerate the sale of foreclosed real estate and, effective December 31,
1992, changed its method of accounting for foreclosed assets in
compliance with the American Institute of Certified Public Accountants'
Statement of Position 92-3, "Accounting for Foreclosed Assets" (SOP
92-3). This guidance requires that in-substance foreclosures and
foreclosed assets held for sale be carried at the lower of cost or fair
value less estimated costs to sell. Previously, all foreclosed assets
were carried at cost less accumulated depreciation. This accounting
change resulted in a $12.5 million pre-tax charge to realized investment
losses in 1992.
3. REINSURANCE
The Company participates in reinsurance to reduce overall risks,
including exposure to large losses and catastrophic events. The Company
remains primarily liable as the direct insurer on all risks reinsured.
11
<PAGE> 14
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
3. REINSURANCE, Continued
Life insurance in force ceded to affiliates at December 31, 1994 and 1993
was $106.0 million and $111.7 million, respectively.
4. SHAREHOLDER'S EQUITY
Unrealized Investment Gains (Losses)
An analysis of the change in unrealized gains and losses on investments
is shown in note 11.
Additional Paid-in Capital
As a result of the finalization of the evaluations and appraisals used
to assign fair values to assets and liabilities under purchase
accounting, additional paid-in capital was increased by $1.3 million in
1994. It was decreased by $70.4 million in 1993 based upon the initial
evaluations and appraisals.
Shareholder's Equity and Dividend Availability
The statutory net income was $5.7 million for the year ended December 31,
1994. The statutory net loss was $23.0 million and $35.3 million for the
years ended December 31, 1993 and 1992, respectively.
Statutory capital and surplus was $233.0 million and $220.1 million at
December 31, 1994 and 1993, respectively.
The Company is currently subject to various regulatory restrictions that
limit the maximum amount of dividends available to TIC without prior
approval of insurance regulatory authorities. Under statutory
accounting practices, there is no statutory surplus available in 1995
for dividends to TIC without prior approval.
5. DISCLOSURE ABOUT DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE OF
FINANCIAL INSTRUMENTS
The Company has, in the normal course of business, provided fixed rate
loan commitments and commitments to partnerships. Also, the Company
uses forward contracts as a means of prudently hedging exposure to
foreign currency rate risk on existing assets. The Company does not
hold or issue derivative instruments for trading purposes.
These derivative financial instruments have off-balance-sheet risk.
Financial instruments with off-balance-sheet risk involve, to varying
degrees, elements of credit and market risk in excess of the amount
recognized in the balance sheet. The contract or notional amounts of
these instruments reflect the extent of involvement the Company has in a
particular class of financial instrument. However, the maximum credit
loss or cash flow associated with these instruments can be less than
these amounts. For unfunded commitments, credit exposure is the
contractual amount of the unfunded commitments.
12
<PAGE> 15
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
5. DISCLOSURE ABOUT DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE OF
FINANCIAL INSTRUMENTS, Continued
The Company monitors creditworthiness of counterparties to these
financial instruments by using criteria of acceptable risk that are
consistent with on-balance-sheet financial instruments. The controls
include credit approvals, limits and other monitoring procedures. Many
transactions include the use of collateral to minimize credit risk and
lower the effective cost to the borrower.
A summary of contract or notional amounts is presented below:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Contract or
notional amount
(in thousands) 1994 1993
--------------------------------------------------------------------------------
<S> <C> <C>
Financial instruments whose contract
amount represents credit exposure:
Unfunded commitments to partnerships $9,606 $9,328
Fixed rate loan commitments 378 6,631
--------------------------------------------------------------------------------
</TABLE>
The Company has outstanding at any given time commitments to fund
partnerships. Generally these are simple forward commitments for
investment purposes. At December 31, 1994 and 1993, the terms of
unfunded commitments to partnerships approximate market value. Fixed
rate loan commitments are obligations to make investments at fixed rates.
At December 31, 1994 and 1993, the terms of fixed rate loan commitments
approximate market value.
The off-balance-sheet risks of forward contracts were not considered
significant at December 31, 1994 and 1993.
Fair Value of Certain Financial Instruments
The Company uses various financial instruments in the normal course of
its business. Fair values of financial instruments which are considered
insurance contracts are not required to be disclosed and are not
included in the amounts discussed.
At December 31, 1994 and 1993, investments in fixed maturities have a
fair value of $559.1 million and $487.0 million, respectively. See note
11.
At December 31, 1994, mortgage loans have a carrying value of $152.4
million, which approximates fair value, compared with a carrying value
and fair value of $247.0 million at December 31, 1993. In estimating
fair value, the Company used interest rates reflecting the higher
returns required in the current real estate financing market.
The carrying value of $2.4 million and $2.0 million of financial
instruments classified as other assets approximates their fair values at
December 31, 1994 and 1993, respectively. The carrying value of $14.2
million and $7.6 million of financial instruments classified as other
liabilities also approximates their fair values at December 31, 1994 and
1993, respectively. Fair value is determined using various methods
including discounted cash flows and carrying value, as appropriate for
the various financial instruments.
13
<PAGE> 16
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
5. DISCLOSURE ABOUT DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE OF
FINANCIAL INSTRUMENTS, Continued
The assets of separate accounts providing a guaranteed return have a
carrying value and a fair value of $820.4 million and $757.2 million,
respectively, at December 31, 1994, compared to a carrying value of
$949.7 million which approximates fair value at December 31, 1993. The
liabilities of separate accounts providing a guaranteed return have a
carrying value and a fair value of $808.2 million and $681.4 million,
respectively, at December 31, 1994, compared to a carrying value of
$942.7 million which approximates fair value at December 31, 1993.
The carrying values of cash, short-term securities, and investment
income accrued approximate their fair values.
6. COMMITMENTS AND CONTINGENCIES
Financial Instruments with Off-Balance-Sheet Risk
See Note 5 for a discussion of financial instruments with
off-balance-sheet risk.
Litigation
The Company is a defendant in various litigation matters. Although there
can be no assurances, as of December 31, 1994, the Company believes,
based on information currently available, that the ultimate resolution of
these legal proceedings would not be likely to have a material adverse
effect on its results of operations, financial condition or liquidity.
7. BENEFIT PLANS
Pension Plans
The Company participates in qualified and nonqualified, noncontributory
defined benefit pension plans covering the majority of the Company's U.S.
employees. Benefits for the qualified plan are based on an account
balance formula. Under this formula, each employee's accrued benefit can
be expressed as an account that is credited with amounts based upon the
employee's pay, length of service and a specified interest rate, all
subject to a minimum benefit level. This plan is funded in accordance
with the Employee Retirement Income Security Act of 1974 and the Internal
Revenue Code. For the nonqualified plan, contributions are based on
benefits paid. The Company's share of net pension expense was not
significant for 1994, 1993 or 1992.
14
<PAGE> 17
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
7. BENEFIT PLANS, Continued
Other Benefit Plans
In addition to pension benefits, the Company provides certain health care
and life insurance benefits for retired employees through a plan
sponsored by TIG. Covered employees may become eligible for these
benefits if they reach retirement age while working for the Company.
These retirees may elect certain prepaid health care benefit plans. Life
insurance benefits generally are set at a fixed amount. The cost
recognized by the Company for these benefits represents its allocated
share of the total costs of the plan, net of employee contributions.
In the third quarter of 1992, TIG adopted FAS 106 and elected to
recognize the accumulated postretirement benefit obligation (i.e., the
transition obligation) as a change in accounting principle retroactive to
January 1, 1992. The Company's pretax share of the total cost of the
plan for 1994, 1993 and 1992 was $140 thousand, $155 thousand and $1.9
million, respectively.
The Merger resulted in a change in control of The Travelers Corporation
as defined in the applicable plans, and provisions of some employee
benefit plans secured existing compensation and benefit entitlements
earned prior to the change in control, and provided a salary and benefit
continuation floor for employees whose employment was affected. The
costs related to these changes have been assumed by TIG.
Savings, Investment and Stock Ownership Plan
Under the savings, investment and stock ownership plan available to
substantially all employees of TIG, the Company matches a portion of
employee contributions. Effective April 1, 1993, the match decreased
from 100% to 50% of an employee's first 5% contribution and a variable
match based on TIG's profitability was added. The Company's matching
obligation was $48 thousand, $94 thousand and $245 thousand in 1994, 1993
and 1992, respectively.
8. RELATED PARTY TRANSACTIONS
The principal banking functions for certain subsidiaries and affiliates
of TIG, and salaries and expenses for TIG and its insurance subsidiaries,
are handled by TIC. Settlements for these functions between TIC and its
affiliates are made regularly. TIC provides various insurance coverages,
principally life and health, to certain subsidiaries of TIG. The
premiums for these coverages were charged in accordance with normal cost
allocation procedures. In addition, investment advisory and management
services, data processing services and claims processing services are
provided by affiliated companies.
TIG and its subsidiaries maintain short-term investment pools in which
the Company participates. The positions of each company participating in
the pools are calculated and adjusted daily. At December 31, 1994 and
1993, the pools totaled approximately $1.5 billion and $1.3 billion,
respectively. The Company's share of the pools amounted to $44.5 million
and $43.2 million at December 31, 1994 and 1993, respectively, and is
included in short-term securities in the balance sheet.
15
<PAGE> 18
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
8. RELATED PARTY TRANSACTIONS, Continued
Amounts due to parent and affiliates included in other liabilities at
December 31, 1994 were $3.8 million. Amounts due from parent and
affiliates included in other assets at December 31, 1993 were $13.5
million.
Most leasing functions for TIG and its subsidiaries are handled by TIC.
Leasing expenses are shared by the companies on a cost allocation method
based generally on estimated usage by department.
9. FEDERAL INCOME TAXES
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
(in thousands) 1994 | 1993 1992
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Effective tax rate |
|
Income before federal |
income taxes $ 27,865 | $ 13,061 $ 21,340
---------------------------------------------------------------------------------------
Statutory tax rate 35% | 35% 34%
---------------------------------------------------------------------------------------
|
Expected federal income taxes $ 9,753 | $ 4,571 $ 7,256
Tax effect of: |
Nontaxable investment income (90) | (85) (83)
Adjustments to benefit and other reserves (117) | (4,705) 7,217
Adjustment to deferred tax asset for |
enacted change in tax rates from |
34% to 35% - | (255) -
Other (6) | (74) 1,104
---------------------------------------------------------------------------------------
Federal income taxes $ 9,540 | $ (548) $ 15,494
---------------------------------------------------------------------------------------
|
Effective tax rate 34% | (4)% 73%
---------------------------------------------------------------------------------------
|
Composition of federal income taxes |
Current: |
United States $ 4,742 | $ 22,124 $ 37,198
---------------------------------------------------------------------------------------
|
Deferred: |
United States 4,798 | (22,672) (21,704)
---------------------------------------------------------------------------------------
Federal income taxes $ 9,540 | $ (548) $ 15,494
---------------------------------------------------------------------------------------
</TABLE>
16
<PAGE> 19
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
9. FEDERAL INCOME TAXES, Continued
The net deferred tax assets at December 31, 1994 and 1993 were comprised
of the tax effects of the temporary differences related to the following
assets and liabilities:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
(in thousands) 1994 1993
------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Benefit, reinsurance and other reserves $ 70,729 $ 71,623
Investments 30,908 3,521
Investment income valuation reserve - 3,317
Other 2,766 1,616
------------------------------------------------------------------------------
Total 104,403 80,077
------------------------------------------------------------------------------
Deferred tax liabilities:
Value of insurance in force 7,355 -
Other 663 -
------------------------------------------------------------------------------
Total 8,018 -
------------------------------------------------------------------------------
Net deferred tax asset before valuation allowance 96,385 80,077
Valuation allowance for deferred tax assets (2,070) (2,070)
------------------------------------------------------------------------------
Net deferred tax asset after valuation allowance $ 94,315 $ 78,007
------------------------------------------------------------------------------
</TABLE>
Starting in 1994 and continuing for at least five years, TIC and its life
insurance subsidiaries will file a consolidated federal income tax
return. Federal income taxes are allocated to each member on a separate
return basis adjusted for credits and other amounts required by the
consolidation process. Any resulting liability will be paid currently to
TIC. Any credits for losses will be paid by TIC to the extent that such
credits are for tax benefits that have been utilized in the consolidated
federal income tax return. The Company has no receivable for
unreimbursed credits from its previous allocation agreement with the
Travelers Corporation.
A net deferred tax asset valuation allowance of $2.1 million has been
established to reduce the net deferred tax asset on investment losses to
the amount that, based upon available evidence, is more likely than not
to be realized. Reversal of the valuation allowance is contingent upon
the recognition of future capital gains in the Company's consolidated
life insurance company federal income tax return through 1998, and the
consolidated federal income tax return of The Travelers Inc. commencing
in 1999 or a change in circumstances which causes the recognition of the
benefits to become more likely than not. There was no net change in the
valuation allowance during 1994. The initial recognition of any benefit
provided produced by the reversal of the valuation allowance will be
recognized by reducing goodwill.
17
<PAGE> 20
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
9. FEDERAL INCOME TAXES, Continued
In management's judgment, the $94.3 million "net deferred tax asset after
valuation allowance" as of December 31, 1994, is fully recoverable
against expected future years' taxable ordinary income and capital gains.
At December 31, 1994, the Company has no ordinary or capital loss
carryforwards.
The "policyholders surplus account", which arose under prior tax law, is
generally that portion of the gain from operations that has not been
subjected to tax, plus certain deductions. The balance of this account,
which, under provisions of the Tax Reform Act of 1984, will not increase
after 1983, is estimated to be $2.0 million. This amount has not been
subjected to current income taxes but, under certain conditions that
management considers to be remote, may become subject to income taxes in
future years. At current rates, the maximum amount of such tax (for
which no provision has been made in the financial statements) is
approximately $700 thousand.
See note 2 for a discussion of the implementation of new principles for
accounting for income taxes.
10. NET INVESTMENT INCOME
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
(For the year ended December 31, in thousands) 1994 | 1993 1992
-----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Gross investment income |
----------------------- |
Fixed maturities $ 44,569 | $ 39,400 $ 34,429
Equity securities 827 | 930 1,221
Mortgage loans 17,178 | 25,258 37,846
Real estate 6,299 | 19,028 20,640
Other 4,265 | (4,273) (1,371)
-----------------------------------------------------------------------------------------
73,138 | 80,343 92,765
-----------------------------------------------------------------------------------------
|
Investment expenses 7,045 | 22,299 28,853
-----------------------------------------------------------------------------------------
Net investment income $ 66,093 | $ 58,044 $ 63,912
-----------------------------------------------------------------------------------------
</TABLE>
18
<PAGE> 21
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
11. INVESTMENTS AND INVESTMENT GAINS (LOSSES)
Realized investment gains (losses) for the periods were as follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
(For the year ended December 31, in thousands) 1994 | 1993 1992
-----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Realized |
|
Fixed maturities $ (908) | $ 8,659 $ (1,621)
Equity securities 1,675 | 1,580 4,065
Mortgage loans 36 | (1,564) 823
Real estate - | (8,310) (6,713)
Other (2,877) | 11,590 24,849
-----------------------------------------------------------------------------------------
Realized investment gains (losses) $ (2,074) | $ 11,955 $ 21,403
-----------------------------------------------------------------------------------------
</TABLE>
Changes in net unrealized investment gains (losses) that are included as a
separate component of shareholder's equity were as follow:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
(For the year ended December 31, in thousands) 1994 | 1993 1992
-------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Unrealized |
|
Fixed maturities $ (65,205) | $ (20,059) $ 20,730
Equity securities (27) | (1,389) 3,916
Other (28) | 8,524 (5,318)
-------------------------------------------------------------------------------------------
(65,260) | (12,924) 19,328
Related taxes (22,841) | (3,445) 6,571
-------------------------------------------------------------------------------------------
|
Net unrealized investment gains (losses) (42,419) | (9,479) 12,757
Balance beginning of year 1,195 10,674 | (2,083)
-------------------------------------------------------------------------------------------
Balance end of year $ (41,224) $ 1,195 | $ 10,674
-------------------------------------------------------------------------------------------
</TABLE>
The initial adoption of FAS 115 resulted in an increase of approximately
$530 thousand (net of taxes) to net unrealized investment gains in 1994.
Fixed Maturities
Proceeds from sales of fixed maturities classified as available for sale
were $41.7 million in 1994, resulting in gross realized gains of $869
thousand and gross realized losses of $1.9 million. There were no sales
of fixed maturities classified as available for sale in 1993 or 1992 as,
in conjunction with the Merger, all fixed maturities were first
classified as "available for sale" effective December 31, 1993.
19
<PAGE> 22
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
11. INVESTMENTS AND INVESTMENT GAINS (LOSSES), Continued
Prior to December 31, 1993, fixed maturities that were intended to be
held to maturity were recorded at amortized cost and classified as held
for investment. Proceeds from sales of such securities were $16.4
million and $5.1 million in 1993 and 1992, respectively. Gross gains of
$617 thousand in 1993 and gross losses of $2.2 million in 1992 were
realized on those sales.
Prior to December 31, 1993, the carrying values of the trading portfolio
fixed maturities were adjusted to market value as it was likely they
would be sold prior to maturity. Sales of trading portfolio fixed
maturities were $96.6 million and $39.0 million in 1993 and 1992,
respectively. Gross gains of $12.4 million and $1.2 million in 1993 and
1992, respectively, were realized on those sales.
The amortized cost and market values of investments in fixed maturities
were as follows:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
December 31, 1994
----------------------------------------------------------------------------------------
Gross Gross
Amortized unrealized unrealized Market
(in thousands) cost gains losses value
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Available for sale:
Mortgage-backed securities -
CMOs and pass through
securities $ 60,102 $ 14 $ 4,624 $ 55,493
U.S. Treasury securities
and obligations of U.S.
Government and
government agencies
and authorities 188,043 25 24,301 163,767
Obligations of states and
political subdivisions 3,000 - 184 2,816
Debt securities issued by
foreign governments 20,076 - 2,157 17,919
All other corporate bonds 352,197 1,140 35,055 318,280
Redeemable preferred stock 929 13 76 867
------------------------------------------------------------------------------------------
Total $ 624,347 $ 1,192 $ 66,397 $ 559,142
------------------------------------------------------------------------------------------
</TABLE>
20
<PAGE> 23
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
11. INVESTMENTS AND INVESTMENT GAINS (LOSSES), Continued
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
December 31, 1993
--------------------------------------------------------------------------------------------
Gross Gross
Carrying unrealized unrealized Market
(in thousands) value gains losses value
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Available for sale:
Mortgage-backed securities -
CMOs and pass through
securities $ 63,241 $ 462 $ 709 $ 62,994
U.S. Treasury securities
and obligations of U.S.
Government and
government agencies
and authorities 91,777 660 280 92,157
Debt securities issued by
foreign governments 9,211 179 - 9,390
All other corporate bonds 320,748 3,485 3,004 321,229
Redeemable preferred stock 1,218 24 2 1,240
--------------------------------------------------------------------------------------------
Total $ 486,195 $ 4,810 $ 3,995 $ 487,010
--------------------------------------------------------------------------------------------
</TABLE>
The amortized cost and market value of fixed maturities available for
sale at December 31, 1994, by contractual maturity, are shown below.
Actual maturities will differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or
without call or prepayment penalties.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------
Maturity Amortized Market
(in thousands) Cost value
-----------------------------------------------------------------------
<S> <C> <C>
Due in one year or less $ 4,105 $ 3,912
Due after 1 year through 5 years 35,433 32,495
Due after 5 years through 10 years 110,446 102,555
Due after 10 years 414,261 364,687
-----------------------------------------------------------------------
564,245 503,649
Mortgage-backed securities 60,102 55,493
-----------------------------------------------------------------------
Total $ 624,347 $ 559,142
-----------------------------------------------------------------------
</TABLE>
The Company makes significant investments in collateralized mortgage
obligations (CMOs). CMOs typically have high credit quality, offer good
liquidity, and provide a significant advantage in yield and total return
compared to U.S. Treasury securities. The Company's investment strategy
is to purchase CMO tranches which are protected against prepayment risk,
primarily planned amortization class (PAC) tranches. Prepayment
protected tranches are preferred because they provide stable cash flows
in a variety of scenarios. The Company does invest in other types of CMO
tranches if a careful assessment indicates a favorable risk/return
tradeoff. The Company does not purchase residual interests in CMOs.
21
<PAGE> 24
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
11. INVESTMENTS AND INVESTMENT GAINS (LOSSES), Continued
At December 31, 1994 and 1993, the Company held CMOs with a market value
of $55.5 million and $63.0 million, respectively. Approximately 96% and
100% of the Company's CMO holdings are fully collateralized by GNMA, FNMA
or FHLMC securities at December 31, 1994 and 1993, respectively. The
majority of these are GNMA-backed securities. Virtually all of these
securities are rated AAA.
Equity Securities
The cost and market values of investments in equity securities were as
follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
December 31, 1994
------------------------------------------------------------------------------------------
Gross Gross
unrealized unrealized Market
(in thousands) Cost gains losses value
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stocks $ 6,141 $ 3,177 $ 654 $ 8,664
Nonredeemable preferred stocks 8,111 7 718 7,400
------------------------------------------------------------------------------------------
Total $ 14,252 $ 3,184 $ 1,372 $ 16,064
------------------------------------------------------------------------------------------
December 31, 1993
------------------------------------------------------------------------------------------
Common stocks $ 11,061 $ 1,779 $ 199 $ 12,641
Nonredeemable preferred stocks 11,766 260 1 12,025
------------------------------------------------------------------------------------------
Total $ 22,827 $ 2,039 $ 200 $ 24,666
------------------------------------------------------------------------------------------
</TABLE>
Proceeds from sales of equity securities were $9.4 million in 1994,
resulting in gross realized gains of $2.8 million and gross realized
losses of $369 thousand.
Mortgage loans and real estate held for sale
Underperforming assets include delinquent mortgage loans, loans in the
process of foreclosure, foreclosed loans and loans modified at interest
rates below market. The Company continues its strategy, adopted in
conjunction with the Merger, to dispose of these real estate assets and
some of the mortgage loans and to reinvest the proceeds to obtain current
market yields.
22
<PAGE> 25
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
11. INVESTMENTS AND INVESTMENT GAINS (LOSSES), Continued
At December 31, 1994 and 1993, the Company's mortgage loan and real
estate portfolios consisted of the following:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
(in thousands) 1994 1993
---------------------------------------------------------------------------
<S> <C> <C>
Current mortgage loans $ 134,868 $ 213,110
Underperforming mortgage loans 17,491 33,855
---------------------------------------------------------------------------
Total mortgage loans 152,359 246,965
---------------------------------------------------------------------------
Real estate held for sale 6,810 30,983
---------------------------------------------------------------------------
Total mortgage loans and real estate $ 159,169 $ 277,948
---------------------------------------------------------------------------
</TABLE>
Aggregate annual maturities on mortgage loans at December 31, 1994 are as
follows:
<TABLE>
<CAPTION>
----------------------------------------------------
(in thousands)
----------------------------------------------------
<S> <C>
Past maturity $ 4,567
1995 13,278
1996 26,317
1997 9,473
1998 24,000
1999 7,759
Thereafter 66,965
----------------------------------------------------
Total $ 152,359
----------------------------------------------------
</TABLE>
Concentrations
At December 31, 1994 and 1993, the Company had no concentration of credit
risk in a single investee exceeding 10% of shareholder's equity.
The Company participates in a short-term investment pool maintained by
TIG and its subsidiaries. This pool is discussed in note 8.
Included in fixed maturities are below investment grade assets totaling
$51.1 million and $78.0 million at December 31, 1994 and 1993,
respectively. The Company defines its below investment grade assets as
those securities rated "Ba1" or below by external rating agencies, or the
equivalent by internal analysts when a public rating does not exist.
Such assets include publicly traded below investment grade bonds, highly
leveraged transactions and certain other privately issued bonds that are
classified as below investment grade loans.
23
<PAGE> 26
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
11. INVESTMENTS AND INVESTMENT GAINS (LOSSES), Continued
The Company also has significant concentrations of investments in the
following industries:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
(in thousands) 1994 1993
--------------------------------------------------------------------------
<S> <C> <C>
Banking $ 42,191 $43,856
Oil and gas 39,749 39,348
Transportation 38,523 23,577
Chemical manufacturing 27,326 27,155
--------------------------------------------------------------------------
</TABLE>
Below investment grade assets included in the totals of the previous
table are as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
(in thousands) 1994 1993
--------------------------------------------------------------------------
<S> <C> <C>
Banking $ 5,124 $ 5,104
Oil and gas 4,002 2,822
Transportation 2,678 6,488
--------------------------------------------------------------------------
</TABLE>
At December 31, 1994 and 1993, significant concentrations of mortgage
loans were for properties located in highly populated areas in the states
listed below:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
(in thousands) 1994 1993
--------------------------------------------------------------------------
<S> <C> <C>
New York $ 23,710 $ 22,904
Arizona 21,074 36,708
Florida 19,638 23,073
California 18,636 53,373
West Virginia 15,106 15,924
Texas 12,077 21,119
--------------------------------------------------------------------------
</TABLE>
Other mortgage loan investments are fairly evenly dispersed throughout
the United States, with no holdings in any state exceeding $9.3 million
and $8.8 million at December 31, 1994 and 1993, respectively.
Concentrations of mortgage loans by property type at December 31, 1994
and 1993 are shown below:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
(in thousands) 1994 1993
--------------------------------------------------------------------------
<S> <C> <C>
Office $ 40,559 $ 47,456
Agricultural 32,890 49,851
Retail 31,712 48,125
Apartment 16,108 67,882
--------------------------------------------------------------------------
</TABLE>
The Company monitors creditworthiness of counterparties to all financial
instruments by using controls that include credit approvals, limits and
other monitoring procedures. Collateral for fixed maturities often
includes pledges of assets, including stock and other assets, guarantees
and letters of credit. The Company's underwriting standards with respect
to new mortgage loans generally require loan to value ratios of 75% or
less at the time of mortgage origination.
24
<PAGE> 27
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
11. INVESTMENTS AND INVESTMENT GAINS (LOSSES), Continued
Investment Valuation Reserves
At December 31, 1993 and 1992, total investment valuation reserves, which
are deducted from the applicable investment carrying values in the
balance sheet, were as follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
(in thousands) 1994 | 1993 1992
-------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Beginning of year $ - | $ 41,443 $ 28,535
Increase - | 8,355 12,548
Impairments, net of gains/recoveries - | (6,887) 360
Purchase accounting adjustment - | (42,911) -
-------------------------------------------------------------------------------------------
End of year $ - $ - | $ 41,443
-------------------------------------------------------------------------------------------
</TABLE>
At December 31, 1992, investment valuation reserves were comprised of
$28.9 million for mortgage loans and $12.5 million for real estate.
Increases in the investment valuation reserves were reflected as realized
investment losses.
Nonincome Producing
Investments included in the balance sheets that were nonincome producing
for the preceding 12 months were as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
(in thousands) 1994 1993
--------------------------------------------------------------------------
<S> <C> <C>
Mortgage loans $ 444 $ 1,408
Fixed maturities 90 1,537
Real estate - 4,925
--------------------------------------------------------------------------
Total $ 534 $ 7,870
--------------------------------------------------------------------------
</TABLE>
Restructured
The Company has mortgage loan and debt securities which were restructured
at below market terms totaling approximately $17.4 million and $30.7
million at December 31, 1994 and 1993, respectively. At December 31,
1993, the Company's restructured assets were recorded at purchase
accounting value. The new terms typically defer a portion of contract
interest payments to varying future periods. The accrual of interest is
suspended on all restructured assets, and interest income is reported
only as payment is received. Gross interest income on restructured
assets that would have been recorded in accordance with the original
terms of such assets amounted to $5.2 million in 1994 and $3.1 million in
1993. Interest on these assets, included in net investment income,
aggregated $1.4 million in 1994 and $471 thousand in 1993.
25
<PAGE> 28
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
12. RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
The following table reconciles net income to net cash provided by
operating activities:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
(For the year ended December 31, in thousands) 1994 | 1993 1992
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income $ 18,325 | $ 13,609 $ 8,869
Reconciling adjustments |
Trading account investments, |
(purchases) sales, net - | 35,093 (18,341)
Realized gains (losses) 2,074 | (11,955) (21,403)
Investment income accrued 1,085 | (9,607) 708
Deferred federal income taxes 4,798 | (22,672) (21,704)
Cumulative effects of changes in |
accounting principles - | - (3,023)
Insurance reserves and accrued expenses (16,062) | 80,238 3,512
Other, including investment valuation reserves (2,643) | (80,398) (20,694)
------------------------------------------------------------------------------------------------
|
Net cash provided by (used in) |
operating activities $ 7,577 | $ 4,308 $ (72,076)
------------------------------------------------------------------------------------------------
</TABLE>
13. NONCASH INVESTING AND FINANCING ACTIVITIES
Significant noncash investing and financing activities include: a) the
1994 transfer of $5.6 million of mortgage loans from one of the Company's
separate accounts to the general account; b) changes in investment
valuation reserves in 1993 and 1992 for mortgage loans and/or investment
real estate (see note 11); c) acquisition of real estate through
foreclosures of mortgage loans amounting to $10.3 million, $7.7 million
and $8.1 million in 1994, 1993 and 1992, respectively.
26
<PAGE> 29
THE TRAVELERS LIFE AND ANNUITY COMPANY
GLOSSARY OF INSURANCE TERMS
ANNUITY - A contract that pays a periodic income benefit for the life of
a person (the annuitant), the lives of two or more persons or for a specified
period of time.
ASSUMED REINSURANCE - Business received as reinsurance from another
company. See "Reinsurance".
ASSUMPTION REINSURANCE - A transaction whereby the ceding company
transfers its entire obligation under the policy to the reinsurer, who becomes
directly liable to the policyholder in all respects, including collecting
premiums and paying benefits. See "Reinsurance."
CEDED REINSURANCE - Risks transferred to another company as reinsurance.
See "Reinsurance".
CLAIM - Request by an insured for indemnification by an insurance company
for loss incurred from an insured peril.
CONTRACTHOLDER FUNDS - Receipts from the issuance of universal life,
pension investment and certain individual annuity contracts. Such receipts are
considered deposits on investment contracts that do not have substantial
mortality or morbidity risks.
DEFERRED ACQUISITION COSTS - Commissions and other selling expenses which
vary with and are directly related to the production of business. These
acquisition costs are deferred and amortized to achieve a matching of revenues
and expenses when reported in financial statements prepared in conformity with
GAAP.
DEFINED BENEFIT PLANS - Type of pension plan under which benefits are
fixed in advance by formula, and contributions vary.
DEPOSITS AND OTHER CONSIDERATIONS - Consist of cash value deposits and
charges for mortality risk and expenses associated with universal life
insurance, annuities and group pensions.
FIDUCIARY ACCOUNTS - Accounts held on behalf of others.
GENERAL ACCOUNT - All of an insurer's assets other than those allocated
to separate accounts.
GUARANTEED INVESTMENT CONTRACTS (GICs) - Group contracts sold to pension
plans, profit sharing plans and funding agreements that guarantee a stated
interest rate for a specified period of time.
INDEMNITY REINSURANCE - A transaction whereby the reinsurer agrees to
indemnify the ceding company against all or part of the loss that the latter
may sustain under the policies it issued that are being reinsured. The ceding
company remains primarily liable as the direct insurer on all risks ceded. See
"Reinsurance."
INSURANCE - Mechanism for contractually shifting burdens of a number of
risks by pooling them.
27
<PAGE> 30
THE TRAVELERS LIFE AND ANNUITY COMPANY
LIFE CONTINGENCIES - Contingencies affecting the duration of life of an
individual or a group of individuals.
LONG-TERM CARE - Coverage for extended stays in a nursing home or home
health services.
MORBIDITY - The rate at which people become diseased, mentally or
physically, or physically impaired.
MORTALITY - The rate at which people die.
POLICY LOAN - A loan made by an insurance company to a policyholder on
the security of the cash value of the policy. Policy loans offset benefits
payable to policyholders.
REINSURANCE - The acceptance by one or more insurers, called reinsurers,
of all or a portion of the risk underwritten by another insurer who has
directly written the coverage. However, the legal rights of the insured
generally are not affected by the reinsurance transaction and the insurance
enterprise issuing the insurance contract remains liable to the insured for
payment of policy benefits.
RETENTION - The amount of exposure an insurance company retains on any
one risk or group of risks.
SEPARATE ACCOUNTS - Funds for which investment income and investment
gains and losses accrue directly to, and investment risk is borne by, the
contractholders. The assets of these separate accounts are legally segregated
and not subject to claims that arise out of any other business of the insurance
company.
STATUTORY ACCOUNTING PRACTICES - Those accounting practices prescribed or
permitted by the National Association of Insurance Commissioners or an
insurer's domicilary state insurance regulator for purposes of financial
reporting to regulators.
STATUTORY CAPITAL AND SURPLUS - The excess of statutory admitted assets
over statutory liabilities as shown on an insurer's statutory financial
statements.
STRUCTURED SETTLEMENTS - Periodic payments to an injured person or
survivor for a determined number of years or for life, typically in settlement
of a claim under a liability policy.
SURRENDER VALUE - The amount of money, usually the legal reserve under
the policy, less sometimes a surrender charge, which an insurance company will
pay to a policyholder who cancels a policy. This value may be used as
collateral for a loan.
UNDERWRITING - The assumption of risk for designated loss or damage in
consideration of receiving a premium. Also includes the process of examining,
accepting or rejecting insurance risks, and determining the proper premium.
28
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) The audited financial statements of The Travelers Life and
Annuity Company and the Reports of Independent Accountants are
contained in the Statement of Additional Information. The
financial statements of The Travelers Life and Annuity Company
include:
Statement of Operations and Retained Earnings for the
years ended December 31, 1994, 1993 and 1992
Balance Sheet as of December 31, 1994 and 1993
Statement of Cash Flows for the years ended December 31,
1994, 1993 and 1992
Notes to Financial Statements
(b) Exhibits
*1. Resolution of The Travelers Life and Annuity Company
Board of Directors authorizing the establishment of the
Registrant. (Incorporated herein by reference to the
Registration Statement on Form N-4, File No. 33-83446,
filed on August 29, 1994.)
2. Not Applicable.
3(a). Distribution and Management Agreement among the
Registrant, The Travelers Life and Annuity Company and
Travelers Equities Sales, Inc.
*3(b). Specimen copies of Dealer Agreements between principal
underwriter and dealer. (Incorporated herein by
reference to Pre-Effective Amendment No. 1 to the
Registration Statement on Form N-4, File No. 33-83446,
filed on December 6, 1994.)
*4. Form of Variable Annuity Contract. (Incorporated herein
by reference to the Registration Statement on Form N-4,
File No. No. 33-83446, filed on August 29, 1994.)
*5. Form of Application. (Incorporated herein by reference
to the Registration Statement on Form N-4, File No. 33-
83446, filed on August 29, 1994.)
<PAGE>
*6(a). Charter of The Travelers Life and Annuity Company, as
amended on April 10, 1990. (Incorporated herein by
reference to Exhibit 6(a) to the Registration Statement
on Form N-4, File No. 33-58131, filed via Edgar on March
17, 1995.)
*6(b). By-Laws of The Travelers Life and Annuity Company, as
amended on October 20, 1994. (Incorporated herein by
reference to Exhibit 6(b) to the Registration Statement
on Form N-4, File No. 33-58131, filed via EDGAR on March
17, 1995.)
9. Opinion of Counsel as to the legality of securities being
registered.
10(a). Consent of Coopers & Lybrand L.L.P., Independent
Accountants, to the inclusion in this Form N-4 of their
report on the financial statements of The Travelers Life
and Annuity Company contained in Part B of this
Registration Statement.
10(b). Consent of KPMG Peat Marwick LLP, Independent Auditors,
to the inclusion in this Form N-4 of their report on the
financial statements of The Travelers Life and Annuity
Company contained in Part B of this Registration
Statement.
13. None
14. Representation concerning reliance upon No-Action Letter
IP-6-88.
15(a) Power of Attorney authorizing Ernest J. Wright as
signatory for Jay S. Fishman.
15(b). Powers of Attorney authorizing Jay S. Fishman or Ernest
J. Wright as signatory for Robert I. Lipp, Charles O.
Prince, III, Marc P. Weill, Irwin R. Ettinger, Michael A.
Carpenter and Donald T. DeCarlo.
27. Financial Data Schedule.
* Previously filed and incorporated herein by reference.
<PAGE>
Item 25. Directors and Officers of the Depositor
Name and Principal Positions and Offices
Business Address with Depositor
- ---------------- ----------------
Michael A. Carpenter* Director and Chairman of
the Board
Robert I. Lipp* Director
Jay S. Fishman* Director and Chief Financial
Officer
Charles O. Prince, III** Director
Marc P. Weill** Director and Senior Vice
President - Investments
Irwin R. Ettinger** Director
Donald T. DeCarlo* Director, General Counsel
and Secretary
Robert E. Evans* President
Jay S. Benet* Senior Vice President
James L. Morgan* Senior Vice President and Chief
Accounting Officer
William H. White* Vice President and Treasurer
Ian R. Stuart* Vice President and Financial
Officer
Kathleen M. D'Auria* Vice President
George C. Kokulis* Vice President
Gene S. Lunman* Vice President and Actuary
Kathleen A. Preston* Vice President
Charles N. Vest* Vice President and Actuary
Robert C. Hamilton* Second Vice President
Kyle Rotherie* Second Vice President
Elizabeth Charron* Second Vice President
Ernest J. Wright* Assistant Secretary
Principal Business Address:
* The Travelers Life and **Travelers Group Inc.
Annuity Company 388 Greenwich Street
One Tower Square New York, N.Y. 10013
Hartford, CT 06183
<PAGE>
Item 26. Persons Controlled by or Under Common Control with the
Depositor or Registrant
<PAGE>
OWNERSHIP OF THE TRAVELERS LIFE AND ANNUITY COMPANY
<TABLE>
<CAPTION>
Company State of Organization Ownership Principal Business
- ------- --------------------- --------- ------------------
<S> <C> <C> <C>
The Travelers Group Inc. Delaware Publicly Held --------------
Associated Madison Companies Inc. Delaware 100.00 --------------
The Travelers Insurance Group, Inc. Connecticut 100.00 --------------
The Travelers Insurance Company Connecticut 100.00 Insurance
The Travelers Life and Annuity Company Connecticut 100.00 Insurance
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
THE TRAVELERS LIFE AND ANNUITY COMPANY
<TABLE>
<CAPTION>
% of Voting
Securities
Owned
Directly
or
Indirectly
by
Travelers
State of Group
Organization Inc. Principal Business
------------ --------- -------------------
<S> <C> <C> <C>
AC Health Ventures, Inc. Delaware 100.00 Inactive
AMCO Biotech, Inc. Delaware 100.00 Inactive
Associated Madison Companies, Inc. Delaware 100.00 Holding company.
American National Life Insurance Turks and Caicos 100.00 Insurance
(T & C), Ltd. Islands
ERISA Corporation New York 100.00 Inactive
Mid-America Insurance Services, Inc. Georgia 100.00 Third party administrator
National Marketing Corporation Pennsylvania 100.00 Inactive
PFS Custodial Services, Inc. Georgia 100.00 General partner
PFS Distributors, Inc. Georgia 100.00 General partner
PFS Investments Inc. Georgia 100.00 Broker dealer
PFS Services, Inc. Georgia 100.00 General partner
Primerica Finance Corporation Delaware 100.00 Holding company
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
% of Voting
Securities
Owned
Directly
or
Indirectly
by
Travelers
State of Group
Organization Inc. Principal Business
------------ --------- -------------------
<S> <C> <C> <C>
American Capital Custodial Delaware 100.00 Limited partner
Services, Inc.
American Capital T.A., Inc. Delaware 100.00 Joint venture partner
Primerica Financial Services Home Georgia 100.00 Mortgage loan broker
Mortgages, Inc.
Primerica Financial Services, Inc. Nevada 100.00 General agency
Primerica Financial Services New York 100.00 General agency licensing
Agency of New York, Inc.
Primerica Financial Services Connecticut 100.00 General agency licensing
Insurance Marketing of
Connecticut, Inc.
Primerica Financial Services Idaho 100.00 General agency licensing
Insurance Marketing of
Idaho, Inc.
Primerica Financial Services Nevada 100.00 General agency licensing
Insurance Marketing of
Nevada, Inc.
Primerica Financial Services Pennsylvania 100.00 General agency licensing
Insurance Marketing of
Pennsylvania, Inc.
Primerica Financial Services United States 100.00 General agency licensing
Insurance Marketing of Virgin Islands
the Virgin Islands, Inc.
Primerica Financial Services Wyoming 100.00 General agency licensing
Insurance Marketing of
Wyoming, Inc.
Primerica Financial Services Delaware 100.00 General agency licensing
Insurance Marketing, Inc.
Primerica Financial Services of Alabama 100.00 General agency licensing
Alabama, Inc.
Primerica Financial Services of New Mexico 100.00 General agency licensing
New Mexico, Inc.
Primerica Insurance Agency of Massachusetts 100.00 General agency licensing
Massachusetts, Inc.
Primerica Insurance Marketing Puerto Rico 100.00 Insurance agency
Services of Puerto Rico, Inc.
Primerica Insurance Services of Louisiana 100.00 General agency licensing
Louisiana, Inc.
Primerica Insurance Services of Maryland 100.00 General agency licensing
Maryland, Inc.
Primerica Services, Inc. Georgia 100.00 Inactive
RCM Acquisition Inc. Delaware 100.00 Investments
SCN Acquisitions Company Delaware 100.00 Investments
SL&H Reinsurance, Ltd. Turks and Caicos 100.00 Reinsurance
Islands
Southwest Service Agreements, North Carolina 100.00 Warranty/service agreements
Inc.
Southwest Warranty Corporation Florida 100.00 Extended automobile warranty
The Travelers Insurance Group Inc. Connecticut 100.00 Holding company
Harbour Associates I, Inc. Delaware 100.00 Real estate holding
Deer Run II, Inc. Delaware 100.00 Real estate holding
Net & Twine II Corporation Delaware 100.00 Real estate holding
KP Properties Corporation Massachusetts 100.00 Real estate
KPI 85, Inc. Massachusetts 100.00 Real estate
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
% of Voting
Securities
Owned
Directly
or
Indirectly
by
Travelers
State of Group
Organization Inc. Principal Business
------------ --------- -------------------
<S> <C> <C> <C>
KRA Advisers Corporation Massachusetts 100.00 Real estate
KRP Corporation Massachusetts 100.00 Real estate
La Metropole S.A. Belgium 98.83 P-C insurance/reinsurance
The Plaza Corporation Connecticut 100.00 Holding company
Joseph A. Wynne Agency California 100.00 Inactive
The Copeland Companies New Jersey 100.00 Holding company
American Odyssey Funds New Jersey 100.00 Investment advisor
Management, Inc.
American Odyssey Maryland 100.00 Investment management
Funds, Inc.
Copeland Administrative New Jersey 100.00 Administrative services
Services, Inc.
Copeland Associates, Delaware 100.00 Fixed/variable annuities
Inc.
Copeland Ohio 99.00 Fixed/variable annuities
Associates
Agency of
Ohio, Inc.
Copeland Alabama 100.00 Fixed/variable annuities
Associates of
Alabama, Inc.
Copeland Montana 100.00 Fixed/variable annuities
Associates of
Montana, Inc.
Copeland Benefits New Jersey 51.00 Investment marketing
Management
Company
Copeland Equities, New Jersey 100.00 Fixed/variable annuities
Inc.
H.C. Copeland Massachusetts 100.00 Fixed annuities
Associates,
Inc. of
Massachusetts
Copeland Financial New Jersey 100.00 Investment advisory services.
Services, Inc.
Copeland Healthcare New Jersey 100.00 Life insurance marketing
Services, Inc.
H.C. Copeland and Texas 100.00 Fixed/variable annuities
Associates, Inc.
of Texas
The Parker Realty and Vermont 57.98 Real estate
Insurance Agency, Inc.
Travelers General Agency of Hawaii 100.00 Insurance agency
Hawaii, Inc.
The Prospect Company Delaware 100.00 Investments
89th & York Avenue New York 100.00 Real estate
Corporation
979 Third Avenue Corporation Delaware 100.00 Real estate
Meadow Lane, Inc. Georgia 100.00 Real estate development
Panther Valley, Inc. New Jersey 100.00 Real estate management
Prospect Management Services Delaware 100.00 Real estate management
Company
The Travelers Asset Funding Connecticut 100.00 Investment adviser
Corporation
Travelers Capital Connecticut 100.00 Furniture/equipment
Funding Corporation
The Travelers Corporation of Bermuda 99.99 Pensions
Bermuda Limited
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
% of Voting
Securities
Owned
Directly
or
Indirectly
by
Travelers
State of Group
Organization Inc. Principal Business
------------ --------- -------------------
<S> <C> <C> <C>
The Travelers Indemnity Company Connecticut 100.00 P-C insurance
Commercial Insurance Delaware 100.00 Holding company
Resources, Inc.
Gulf Insurance Company Missouri 100.00 P-C insurance
Atlantic Insurance Texas 100.00 P-C insurance
Company
Gulf Risk Delaware 100.00 Claims/risk management
Services, Inc.
Gulf Underwriters North Carolina 100.00 P-C ins/surplus lines
Insurance
Company
Penn Casualty Missouri 100.00 P-C insurance
Insurance
Company
Select Insurance Texas 100.00 P-C insurance
Company
Countersignature Agency, Florida 100.00 Countersign ins policies
Inc.
First Trenton Indemnity New Jersey 100.00 P-C insurance
Company
Laramia Insurance Agency, North Carolina 100.00 Flood insurance
Inc.
Lynch, Ryan & Associates, Massachusetts 100.00 Cost containment
Inc.
The Charter Oak Fire Connecticut 100.00 P-C insurance
Insurance Company
The Exchange Agency, Inc. Delaware 100.00 Insurance agency
The Phoenix Insurance Connecticut 100.00 P-C insurance
Company
Constitution State Montana 100.00 Service company
Service Company
The Travelers Indemnity Georgia 100.00 P-C insurance
Company of America
The Travelers Indemnity Connecticut 100.00 Insurance
Company of Connecticut
The Travelers Indemnity Illinois 100.00 P-C insurance
Company of Illinois
The Premier Insurance Massachusetts 100.00 Insurance
Company of Massachusetts
The Travelers Home and Indiana 100.00 P-C insurance
Marine Insurance Company
The Travelers Lloyds Texas 100.00 Non-life insurance
Insurance Company
TI Home Mortgage Brokerage, Delaware 100.00 Mortgage brokerage services
Inc.
TravCo Insurance Company Indiana 100.00 P-C insurance
Travelers Medical Management Delaware 100.00 Managed care
Services Inc.
The Travelers Insurance Company Connecticut 100.00 Insurance
Applied Expert Systems Inc. Massachusetts 23.40 EDP Software
Delaware Windtree Realty Delaware 100.00 Real estate holdings
Corporation
Market Funding Corporation I Delaware 100.00 Real estate management
Market Funding CorporationII Delaware 100.00 Real estate management
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
% of Voting
Securities
Owned
Directly
or
Indirectly
by
Travelers
State of Group
Organization Inc. Principal Business
------------ --------- -------------------
<S> <C> <C> <C>
Red Oak Plaza Holding Delaware 100.00 Inactive
Company, Inc.
The Travelers Life and Connecticut 100.00 Life insurance
Annuity Company
Three Parkway Inc. - I Pennsylvania 100.00 Investment real estate
Three Parkway Inc. - II Pennsylvania 100.00 Investment real estate
Three Parkway Inc. - III Pennsylvania 100.00 Investment real estate
Travelers Insurance Georgia 100.00 Holding company
Holdings Inc.
AC RE, Ltd. Bermuda 100.00 Reinsurance
American Financial Texas 100.00 Insurance
Life Insurance
Company
Transport Life Texas 100.00 Insurance
Insurance
Company
Continental Texas 100.00 Insurance
Life
Insurance
Company
Primerica Life Massachusetts 100.00 Life insurance
Insurance Company
National Benefit New York 100.00 Insurance
Life Insurance
Company
Primerica Canada 100.00 Holding company
Financial
Services
(Canada) Ltd.
PFSL Canada 100.00 Mutual fund dealer
Investments
Canada Ltd.
Primerica Canada 82.82 General agent
Financial
Services
Ltd.
Primerica Canada 100.00 Life insurance
Life
Insurance
Company of
Canada
The Travelers Insurance Australia 100.00 Inactive
Corporation Proprietary
Limited
The Travelers Marine Corporation California 100.00 General insurance brokerage
The Travelers Realty Investment Connecticut 100.00 Real estate investment advisor
Company
AdVision, Inc. Connecticut 100.00 Advertising agency
Constitution Plaza, Inc. Connecticut 100.00 Real estate brokerage
Travelers Asset Management New York 100.00 Investment adviser
International Corporation
Travelers Canada Corporation Canada 100.00 Inactive
Travelers Equities Sales, Inc. Connecticut 100.00 Broker dealer
Travelers Mortgage Securities Delaware 100.00 Collateralized obligations
Corporation
Travelers of Ireland Limited Ireland 99.90 Data processing
Travelers Specialty Property Connecticut 100.00 Insurance management
Casualty Company, Inc.
CCC Holdings, Inc. Delaware 100.00 Holding company
Commercial Credit Company Delaware 100.00 Holding company.
American Health and Life Maryland 100.00 LH&A Insurance
Insurance Company
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
% of Voting
Securities
Owned
Directly
or
Indirectly
by
Travelers
State of Group
Organization Inc. Principal Business
------------ --------- -------------------
<S> <C> <C> <C>
Brookstone Insurance Company Vermont 100.00 Insurance managers
CC Finance Company, Inc. New York 100.00 Consumer lending
CC Financial Services, Inc. Hawaii 100.00 Financial services
CCC Fairways, Inc. Delaware 100.00 Investment company
City Loan Financial Services, Ohio 100.00 Consumer finance
Inc.
Commercial Credit Banking Oregon 100.00 Consumer finance
Corporation
Commercial Credit Consumer Minnesota 100.00 Consumer finance
Services, Inc.
Commercial Credit Corporation Alabama 100.00 Consumer finance
(AL)
Commercial Credit Corporation California 100.00 Consumer finance
(CA)
Commercial Credit Corporation Iowa 100.00 Consumer finance
(IA)
Commercial Credit Corporation Kentucky 100.00 Consumer finance
(KY)
Certified Insurance Agency, Kentucky 100.00 Insurance agency
Inc.
Commercial Credit Kentucky 100.00 Investment company
Investment, Inc.
National Life Insurance Kentucky 100.00 Insurance agency
Agency of Kentucky, Inc.
Union Casualty Insurance Kentucky 100.00 Insurance agency
Agency, Inc.
Commercial Credit Corporation Maryland 100.00 Consumer finance
(MD)
Action Data Services, Inc. Missouri 100.00 Data processing
Commercial Credit Plan, Oklahoma 100.00 Consumer finance
Incorporated (OK)
Commercial Credit Corporation New Jersey 100.00 Consumer finance
(NJ)
Commercial Credit Corporation New York 100.00 Consumer finance
(NY)
Commercial Credit Corporation South Carolina 100.00 Consumer finance
(SC)
Commercial Credit Corporation West Virginia 100.00 Consumer finance
(WV)
Commercial Credit Corporation NC North Carolina 100.00 Consumer finance
Commercial Credit Europe, Inc. Delaware 100.00 Inactive
Commercial Credit Far East Inc. Delaware 100.00 Inactive
Commercial Credit Insurance Maryland 100.00 Insurance broker
Services, Inc.
Commercial Credit Insurance Mississippi 100.00 Insurance agency
Agency (P&C) of
Mississippi, Inc.
Commercial Credit Insurance Alabama 100.00 Insurance agency
Agency of Alabama, Inc.
Commercial Credit Insurance Kentucky 100.00 Insurance agency
Agency of Kentucky, Inc.
Commercial Credit Insurance Massachusetts 100.00 Insurance agency
Agency of Massachusetts,
Inc.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
% of Voting
Securities
Owned
Directly
or
Indirectly
by
Travelers
State of Group
Organization Inc. Principal Business
------------ --------- -------------------
<S> <C> <C> <C>
Commercial Credit Insurance Nevada 100.00 Credit LH&A, P-C insurance
Agency of Nevada, Inc.
Commercial Credit Insurance Ohio 100.00 Insurance agency/broker
Agency of Ohio, Inc.
Commercial Credit Insurance New Mexico 100.00 Insurance agency/broker
Agency of New Mexico,
Inc.
Commercial Credit International, Delaware 100.00 Holding company
Inc.
Commercial Credit Oregon 100.00 International lending
International Banking
Corporation
Commercial Credit Canada 100.00 Second mortgage loans
Corporation CCC
Limited
Commercial Credit Brazil 99.00 Inactive
Services do Brazil
Ltda.
Commercial Credit Services Belgium 100.00 Inactive
Belgium S.A.
Commercial Credit Services Israel 100.00 Equipment leasing
Israel Limited
Industrial Leasing Israel 99.71 Equipment leasing
Services Limited
Comlease Ltd. Israel 99.99 Equipment leasing
Commercial Credit Limited Delaware 100.00 Inactive
Commercial Credit Loan, Inc. (NY) New York 100.00 Consumer finance
Commercial Credit Loans, Inc. Delaware 100.00 Consumer finance
(DE)
Commercial Credit Loans, Inc. Ohio 100.00 Consumer finance
(OH)
Commercial Credit Loans, Inc. Virginia 100.00 Consumer finance
(VA)
Commercial Credit Management Maryland 100.00 Intercompany services
Corporation
Commercial Credit Plan Tennessee 100.00 Consumer finance
Incorporated (TN)
Commercial Credit Plan Utah 100.00 Consumer finance
Incorporated (UT)
Commercial Credit Plan Delaware 100.00 Consumer finance
Incorporated of Georgetown
Commercial Credit Plan Industrial Virginia 100.00 Consumer finance
Loan Company
Commercial Credit Plan, Colorado 100.00 Consumer finance
Incorporated (CO)
Commercial Credit Plan, Delaware 100.00 Consumer finance
Incorporated (DE)
Commercial Credit Plan, Georgia 100.00 Consumer finance
Incorporated (GA)
Commercial Credit Plan, Missouri 100.00 Consumer finance
Incorporated (MO)
Commercial Credit Securities, Delaware 100.00 Broker dealer
Inc.
DeAlessandro & Associates, Inc. Delaware 100.00 Insurance consulting
Park Tower Holdings, Inc. Delaware 100.00 Holding company
CC Retail Services, Inc. Delaware 100.00 Leasing, financing
Troy Textiles, Inc. Delaware 100.00 Factoring. Company is inactive.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
% of Voting
Securities
Owned
Directly
or
Indirectly
by
Travelers
State of Group
Organization Inc. Principal Business
------------ --------- -------------------
<S> <C> <C> <C>
COMCRES, Inc. Delaware 100.00 Inactive
Commercial Credit Delaware 100.00 Direct loan
Development Corporation
Myers Park Properties, Delaware 100.00 Inactive
Inc.
Penn Re, Inc. North Carolina 100.00 Management company
Plympton Concrete Products, Inc. Delaware 100.00 Inactive
Resource Deployment, Inc. Texas 100.00 Management company
The Travelers Bank Delaware 100.00 Banking services
The Travelers Bank USA Delaware 100.00 Credit card bank
Travelers Home Equity, Inc. 100.00 Financial services
CC Consumer Services of Alabama 100.00 Financial services
Alabama, Inc.
CC Home Lenders Financial, Georgia 100.00 Financial services
Inc.
CC Home Lenders, Inc. Ohio 100.00 Financial services
Commercial Credit Texas 100.00 Consumer finance
Corporation (TX)
Commercial Credit Financial Kentucky 100.00 Consumer finance
of Kentucky, Inc.
Commercial Credit Financial West Virginia 100.00 Consumer finance
of West Virginia, Inc.
Commercial Credit Plan Pennsylvania 100.00 Financial services
Consumer Discount Company
Commercial Credit Services Kentucky 100.00 Financial services.
of Kentucky, Inc.
Travelers Home Equity North Carolina 100.00 Financial services
Services, Inc.
Verochris Corporation Delaware 100.00 Joint venture company
AMC Aircraft Corp. Delaware 100.00 Aviation
Voyager Guaranty Insurance Missouri 100.00 P-C insurance
Company
World Service Life Insurance Colorado 100.00 Life insurance
Company
D.I.R.E.C.T. Resources, Inc. Delaware 100.00 Fraud/subrogation recovery
Greenwich Street Capital Partners, Inc. Delaware 100.00 Investments
Greenwich Street Investments, Inc. Delaware 100.00 Investments
Greenwich Street Capital Partners Delaware 100.00 Investments
Offshore Holdings, Inc.
Margco Holdings, Inc. Delaware 100.00 Holding company
Berg Associates New Jersey 100.00 Inactive
Berg Enterprises Realty, Inc. (NY) New York 100.00 Inactive
Dublin Escrow, Inc. California 100.00 Inactive
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
% of Voting
Securities
Owned
Directly
or
Indirectly
by
Travelers
State of Group
Organization Inc. Principal Business
------------ --------- -------------------
<S> <C> <C> <C>
M.K.L. Realty Corporation New Jersey 66.67 Holding company
MFC Holdings, Inc. Delaware 100.00 Inactive
MRC Holdings, Inc. Delaware 100.00 Real estate
The Berg Agency, Inc. (NJ) 100.00 Inactive
Mirasure Insurance Company, Ltd. Bermuda 100.00 Inactive
PA/RCM Corporation Delaware 100.00 Inactive
Pacific Basin Investments Ltd. Delaware 100.00 Inactive
Primerica Corporation (WY) Wyoming 100.00 Inactive
Primerica, Inc. Delaware 100.00 Name saver
RCM Capital Trust Company California 100.00 Trust company
Smith Barney Corporate Trust Company 100.00 Trust company
Smith Barney Holdings Inc. Delaware 100.00 Holding company
Mutual Management Corp. New York 100.00 Investment adviser
Smith Barney Asset Management Japan 100.00 Investment manager
Co., Ltd.
R-H Sports Enterprises Inc Georgia 100.00 Investment banking
SB Cayman Holdings I Inc. Delaware 100.00 Holding company
SB Cayman Holdings II Inc. Delaware 100.00 Holding company
SBS Software Inc. Delaware 100.00 Financial software
Smith Barney (Delaware) Inc. Delaware 100.00 Investment banking
1345 Media Corp. Delaware 100.00 Holding company
Americas Avenue Corporation Delaware 100.00 Holding company
Corporate Realty Advisors, Inc. Delaware 100.00 Investment adviser
CRA Acquisition Corp. Delaware 100.00 Real estate
IPO Holdings Inc. Delaware 100.00 Holding company
Institutional Property Delaware 100.00 Sale leaseback transactions
Owners, Inc. IV
Institutional Property Delaware 100.00 Sale leaseback transactions
Owners, Inc. V
Institutional Property Delaware 100.00 Sale leaseback transactions
Owners, Inc. VI
Institutional Property Delaware 100.00 Sale leaseback transactions
Owners, Inc. VII
MLA 50 Corporation Delaware 100.00 Real estate
MLA GP Corporation Delaware 100.00 Real estate
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
% of Voting
Securities
Owned
Directly
or
Indirectly
by
Travelers
State of Group
Organization Inc. Principal Business
------------ --------- -------------------
<S> <C> <C> <C>
Municipal Markets Advisors Delaware 100.00 Real estate
Incorporated
SBF Corp. Delaware 100.00 General partner
Smith Barney Acquisition Delaware 100.00 Investment advisor
Corporation
Smith Barney Commercial Corp. Delaware 100.00 Consumer credit
Smith Barney Funding Holding Delaware 100.00 Broker dealer
Corp.
Smith Barney Global Capital Delaware 100.00 Investment advisor
Management, Inc.
Smith Barney Investment, Inc. Delaware 100.00 Investment advisor
Smith Barney Offshore, Inc. Delaware 100.00 Investment advisor
Decathlon Offshore Limited Cayman Islands 100.00 Commodity fund
Smith Barney Pension Advisors Delaware 100.00 Investment advisor
Corp.
Smith Barney Realty Advisors, Delaware 100.00 Inactive
Inc.
Smith Barney Realty, Inc. Delaware 100.00 Real estate broker
Smith Barney Risk Investors, Inc. Delaware 100.00 General partner
Smith Barney Venture Corp. Delaware 100.00 Venture capital
First Century Company Delaware 100.00 Holding company
First Century Management Delaware 100.00 Investment adviser
Company
Smith Barney Asia Inc. Delaware 100.00 Corporate finance
Smith Barney Asset Management Group Singapore 100.00 Asset management
(Asia) Pte. Ltd.
Smith Barney Canada Inc. Canada 100.00 Investment advisor
Smith Barney Capital Services Inc. Delaware 100.00 Derivative product transactions
Smith Barney Cayman Islands, Ltd. Cayman Islands 100.00 Market debt securities
Smith Barney Commercial Corporation Hong Kong 99.00 Investment adviser
Asia Limited
Smith Barney Europe Holdings, Ltd. United Kingdom 100.00 Holding company
Smith Barney Europe, Ltd. United Kingdom 100.00 Broker dealer
Smith Barney Shearson Futures, United Kingdom 100.00 Broker dealer
Ltd.
Smith Barney Futures Management Inc. Delaware 100.00 Investment banking
Harbourer Fund, Ltd. Bahama Islands 100.00 Investment fund
Smith Barney Offshore Fund Ltd. 100.00 Investment fund
Smith Barney Shearson Overview Dublin 100.00 Investment company
Fund PLC
Smith Barney Inc. Delaware 100.00 Broker dealer
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
% of Voting
Securities
Owned
Directly
or
Indirectly
by
Travelers
State of Group
Organization Inc. Principal Business
------------ --------- -------------------
<S> <C> <C> <C>
SBHU Life Agency, Inc. Delaware 100.00 Insurance broker
Robinson-Humphrey Insurance Georgia 100.00 Insurance
Services Inc.
Robinson-Humphrey Alabama 100.00 Insurance
Insurance Services
of Alabama, Inc.
SBHU Life & Health Agency, Delaware 100.00 Insurance broker
Inc.
SBHU Life Agency of Arizona, Arizona 100.00 Insurance broker
Inc.
SBHU Life Agency of Indiana, Indiana 100.00 Insurance broker
Inc.
SBHU Life Agency of Utah, Utah 100.00 Insurance broker
Inc.
SBHU Life Insurance Agency Massachusetts 100.00 Insurance broker
of Massachusetts, Inc.
SBS Insurance Agency of Hawaii 100.00 Insurance broker
Hawaii, Inc.
SBS Insurance Agency of Idaho 100.00 Insurance broker
Idaho, Inc.
SBS Insurance Agency of Maine 100.00 Insurance broker
Maine, Inc.
SBS Insurance Agency of Montana 100.00 Insurance broker
Montana, Inc.
SBS Insurance Agency of Nevada 100.00 Insurance broker
Nevada, Inc.
SBS Insurance Agency of North Carolina 100.00 Insurance broker
North Carolina, Inc.
SBS Insurance Agency of Ohio 100.00 Insurance broker
Ohio, Inc.
SBS Insurance Agency of South Dakota 100.00 Insurance broker
South Dakota, Inc.
SBS Insurance Agency of Wyoming 100.00 Insurance broker
Wyoming, Inc.
SBS Insurance Brokerage Arkansas 100.00 Insurance broker
Agency of Arkansas, Inc.
SBS Insurance Brokers of Arizona 100.00 Insurance broker
Arizona, Inc.
SBS Insurance Brokers of Kentucky 100.00 Insurance broker
Kentucky, Inc.
SBS Insurance Brokers of Louisiana 100.00 Insurance broker
Louisiana, Inc.
SBS Insurance Brokers of New New Hampshire 100.00 Insurance broker
Hampshire, Inc.
SBS Insurance Brokers of North Dakota 100.00 Insurance broker
North Dakota, Inc.
SBS Life Insurance Agency of Puerto Rico 100.00 Insurance broker
Puerto Rico, Inc.
SLB Insurance Agency of Maryland 100.00 Insurance broker
Maryland, Inc.
Smith Barney Life Agency Louisiana 100.00 Insurance broker
Inc.
Smith Barney (France) S.A. France 100.00 Commodities trading
Smith Barney (Hong Kong) Limited Hong Kong 100.00 Commodities trading
Smith Barney (Netherlands) Inc. Delaware 100.00 Commodities trading
Smith Barney International Oregon 100.00 Commodities trading
Incorporated
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
% of Voting
Securities
Owned
Directly
or
Indirectly
by
Travelers
State of Group
Organization Inc. Principal Business
------------ --------- -------------------
<S> <C> <C> <C>
Smith Barney Pacific British Virgin 100.00 Holding company
Holdings, Inc. Islands
Smith Barney Shearson Hong Kong 100.00 Commodities trading
(Asia) Limited
Smith Barney Shearson Singapore 100.00 Futures broker
(Singapore) Pte Ltd
Smith Barney Shearson, HG Singapore 100.00 Securities broker
Asia (Singapore) Pte Ltd
HG Asia (Singapore) Singapore 100.00 Securities broker
Pte. Ltd.
The Robinson-Humphrey Company, Delaware 100.00 Broker dealer
Inc.
Smith Barney Mortgage Brokers Inc. Delaware 100.00 Home equity loans
Smith Barney Mortgage Capital Corp. Delaware 100.00 Sponsor CMOs
Smith Barney Mortgage Capital Group, Delaware 100.00 Trade whole loans
Inc.
Smith Barney Mutual Funds Management Delaware 100.00 Investment adviser
Inc.
Smith Barney Strategy Advisers Delaware 100.00 Investment advisor
Inc.
E.C. Tactical Management Luxembourg 100.00 Investment advisor
S.A.
Smith Barney Private Trust Company Cayman Islands 100.00 Trust company
(Cayman) Limited
Greenwich (Cayman) Services I Cayman Islands 100.00 Investment advisor
Limited
Greenwich (Cayman) Services II Cayman Islands 100.00 Investment advisor
Limited
Greenwich (Cayman) Services III Cayman Islands 100.00 Investment advisor
Limited
Smith Barney S.A. France 99.00 Commodities trading
Smith Barney Shearson (Chile) Chile 100.00 Commodities trading
Corredora de Seguro Limitada
Smith Barney Shearson (Ireland) Ireland 100.00 Commodities trading
Limited
Structured Mortgage Securities Delaware 100.00 Issue CMOs
Corporation
The Travelers Investment Management Connecticut 100.00 Investment advisor
Company
Smith Barney Private Trust Company New York 100.00 Trust company.
Smith Barney Private Trust Company of Florida 100.00 Trust company
Florida
Tinmet Corporation Delaware 100.00 Inactive
Travelers Services Inc. Delaware 100.00 Holding company
TRV Employees Investments, Inc. Delaware 100.00 Investments
</TABLE>
<PAGE>
Item 27. Number of Contract Owners
As of March 31, 1995, there were no contract owners of
variable annuity contracts funded through the Registrant.
Item 28. Indemnification
Section 33-320a of the Connecticut General Statutes ("C.G.S.")
regarding indemnification of directors and officers of
Connecticut corporations provides in general that Connecticut
corporations shall indemnify their officers, directors and
certain other defined individuals against judgments, fines,
penalties, amounts paid in settlement and reasonable expenses
actually incurred in connection with proceedings against the
corporation. The corporation's obligation to provide such
indemnification generally does not apply unless (1) the
individual is successful on the merits in the defense of any
such proceeding; or (2) a determination is made (by persons
specified in the statute) that the individual acted in good
faith and in the best interests of the corporation; or (3) the
court, upon application by the individual, determines in view
of all of the circumstances that such person is fairly and
reasonably entitled to be indemnified, and then for such
amount as the court shall determine. With respect to
proceedings brought by or in the right of the corporation, the
statute provides that the corporation shall indemnify its
officers, directors and certain other defined individuals,
against reasonable expenses actually incurred by them in
connection with such proceedings, subject to certain
limitations.
C.G.S. Section 33-320a provides an exclusive remedy; a
Connecticut corporation cannot indemnify a director or officer
to an extent either greater or less than that authorized by
the statute, e.g., pursuant to its certificate of
incorporation, by-laws, or any separate contractual
arrangement. However, the statute does specifically authorize
a corporation to procure indemnification insurance to provide
greater indemnification rights. The premiums for such
insurance may be shared with the insured individuals on an
agreed basis.
Travelers Group Inc. also provides liability insurance for its
directors and officers and the directors and officers of its
subsidiaries, including the Depositor. This insurance
provides for coverage against loss from claims made against
directors and officers in their capacity as such, including,
subject to certain exceptions, liabilities under the Federal
securities laws.
Rule 484 Undertaking
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liability
(other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the
registrant in
<PAGE>
the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
<PAGE>
Item 29. Principal Underwriter
(a) Travelers Equities Sales, Inc.
One Tower Square
Hartford, CT 06183
<TABLE>
<C> <S> <C> <C>
(b) Name and Principal Positions and Offices Positions and Offices
Business Address * With Underwriter With Registrant
------------------ ----------------
George C. Kokulis Chairman of the Board -----
and President
Robert E. Evans Director -----
Gregory C. MacDonald Director -----
Kathleen A. Preston Director and Executive -----
Vice President
Robert C. Hamilton Director and Senior -----
Vice President
Donald R. Munson, Jr. Director and Vice President, -----
Annuity Marketing
Thomas P. Tooley Vice President, Life Marketing -----
George A. Ryan Vice President -----
Jeffrey A. Barker Regional Vice President -----
Walter Melnik, Jr. Regional Vice President -----
Raymond W. Sheridan Regional Vice President -----
William F. Scully, III Treasurer -----
William H. White Assistant Treasurer -----
Charles B. Chamberlain Assistant Treasurer -----
George M. Quaggin Assistant Treasurer -----
Kathleen A. McGah General Counsel and Secretary Assistant Secretary
Alison K. George Director of Compliance -----
and Assistant Corporate Secretary
</TABLE>
* Principal business address: One Tower Square, Hartford,
Connecticut 06183
(c) Not Applicable.
Item 30. Location of Accounts and Records
The Travelers Life and Annuity Company
One Tower Square
Hartford, Connecticut 06183
<PAGE>
Item 31. Management Services
Not Applicable.
<PAGE>
Item 32. Undertakings
The undersigned Registrant hereby undertakes:
(a) To file a post-effective amendment to this registration
statement as frequently as is necessary to ensure that the
audited financial statements in the registration statement are
never more than sixteen months old for so long as payments
under the variable annuity contracts may be accepted;
(b) To include either (1) as part of any application to purchase
a contract offered by the prospectus, a space that an
applicant can check to request a Statement of Additional
Information, or (2) a post card or similar written
communication affixed to or included in the prospectus that
the applicant can remove to send for a Statement of Additional
Information;
(c) To deliver any Statement of Additional Information and any
financial statements required to be made available under this
Form N-4 promptly upon written or oral request; and
(d) To include in any registration statement filed in connection
with a contract used as a funding vehicle for retirement plans
meeting the requirements of Section 403(b) of the Internal
Revenue Code, a representation that the Registrant is relying
upon No-Action Letter IP-6-88 issued to the American Council
of Life Insurance. (See Exhibit 14.)
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets the
requirements of Securities Act Rule 485(b) for effectiveness of
this post-effective amendment to this Registration Statement and
has caused this amendment to this Registration Statement to be
signed on its behalf in the City of Hartford, State of Connecticut,
on April 27, 1995.
THE TRAVELERS FUND VA FOR VARIABLE ANNUITIES
(Registrant)
and
THE TRAVELERS LIFE AND ANNUITY COMPANY
(Depositor)
By: *JAY S. FISHMAN
Jay S. Fishman
Chief Financial
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following
persons in the capacities indicated on April 27, 1995.
*MICHAEL A. CARPENTER Director and Chairman of
(Michael A. Carpenter) the Board
(principal executive officer)
*ROBERT I. LIPP Director
(Robert I. Lipp)
*JAY S. FISHMAN Director and Chief Financial
(Jay S. Fishman) Officer
*CHARLES O. PRINCE, III Director
(Charles O. Prince, III)
*MARC P. WEILL Director
(Marc P. Weill)
*IRWIN R. ETTINGER Director
(Irwin R. Ettinger)
*DONALD T. DeCARLO Director
(Donald T. DeCarlo)
<PAGE>
/s/James L. Morgan
_________________________ Senior Vice
(James L. Morgan) President and
Chief Accounting Officer
* By: /s/Ernest J. Wright
___________________________________
Ernest J. Wright, Attorney-in-Fact
<PAGE>
<TABLE>
EXHIBIT INDEX
<CAPTION>
Exhibit
No. Description Method of Filing
<S> <C> <C>
1. Resolution of The Travelers Life and Annuity Company
Board of Directors authorizing the establishment of the
Registrant. (Incorporated herein by reference to the
Registration Statement on Form N-4, File No. 33-83446,
filed on August 29, 1994.)
3(a). Form of Distribution and Management Agreement among Electronically
the Registrant, The Travelers Life and Annuity Company
and Travelers Equities Sales, Inc.
3(b). Specimen copies of Dealer Agreements between principal
underwriter and dealer. (Incorporated herein by reference
to Pre-Effective Amendment No. 1 to the Registration
Statement on Form N-4, File No. 33-83446, filed on
December 6, 1994.)
4. Form of Variable Annuity Contract. (Incorporated herein
by reference to the Registration Statement on Form N-4,
File No. No. 33-83446, filed on August 29, 1994.)
5. Form of Application. (Incorporated herein by reference to
the Registration Statement on Form N-4, File No. 33-83446,
filed on August 29, 1994.)
6(a). By-Laws of The Travelers Life and Annuity Company, as
amended on October 20, 1994. (Incorporated herein by
reference to Exhibit 6(a) to the Registration Statement
on Form N-4, File No. 33-58131, filed via Edgar on
March 17, 1995.)
6(b). Charter of The Travelers Life and Annuity Company, as
amended on April 10, 1990. (Incorporated herein by
reference to Exhibit 6(b) to the Registration Statement
on Form N-4, File No. 33-58131, filed via Edgar on
March 17, 1995.)
9. Opinion of Counsel as to the legality of securities being Electronically
registered.
10(a). Consent of Coopers & Lybrand L.L.P., Independent Electronically
Accountants, to the inclusion in this Form N-4 of their
report on the financial statements of The Travelers Life
<PAGE>
and Annuity Company contained in Part B of this
Registration Statement.
10(b). Consent of KPMG Peat Marwick LLP, Independent Electronically
Auditors, to the inclusion in this Form N-4 of their report
on the financial statements of The Travelers Life and
Annuity Company contained in Part B of this Registration
Statement.
<PAGE> EXHIBIT INDEX (cont'd)
Exhibit
No. Description Method of Filing
14. Representation concerning reliance upon No-Action Electronically
Letter IP-6-88.
15(a) Power of Attorney authorizing Ernest J. Wright as Electronically
signatory for Jay S. Fishman.
15(b). Powers of Attorney authorizing Jay S. Fishman or Electronically
Ernest J. Wright as signatory for Michael A.
Carpenter, Robert I. Lipp, Charles O.
Prince, III, Irwin R. Ettinger and Donald T. DeCarlo.
27. Financial Data Schedule Filed as Module
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
This schedule contains summary financial information extracted from the
Travelers Life and Annuity Company's financial statements for the year ended
December 31, 1994 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<DEBT-HELD-FOR-SALE> 0
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 16,064
<MORTGAGE> 152,359
<REAL-ESTATE> 6,810
<TOTAL-INVEST> 851,037
<CASH> 296
<RECOVER-REINSURE> 573
<DEFERRED-ACQUISITION> 0
<TOTAL-ASSETS> 1,801,369
<POLICY-LOSSES> 691,108
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 808,181
<NOTES-PAYABLE> 0
<COMMON> 3,000
0
0
<OTHER-SE> 255,120
<TOTAL-LIABILITY-AND-EQUITY> 1,801,369
3,498
<INVESTMENT-INCOME> 66,093
<INVESTMENT-GAINS> (2,074)
<OTHER-INCOME> 18,702
<BENEFITS> 55,596
<UNDERWRITING-AMORTIZATION> 0
<UNDERWRITING-OTHER> 2,758
<INCOME-PRETAX> 27,865
<INCOME-TAX> 9,540
<INCOME-CONTINUING> 18,325
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,325
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
<PAGE>
EXHIBIT 3
FORM OF
DISTRIBUTION AND MANAGEMENT AGREEMENT
DISTRIBUTION AND MANAGEMENT AGREEMENT made this 1st day of
February, 1995, by and among The Travelers Life and Annuity Company,
a Connecticut stock insurance company (hereinafter the "Company"),
Travelers Equities Sales, Inc., a Connecticut general business
corporation (hereinafter "TESI"), and The Travelers Fund VA for
Variable Annuities (hereinafter "Fund VA"), a separate account of
the Company established on August 19, 1994 by its Chief Investment
Officer in accordance with a resolution adopted by the Company's
Board of Directors and pursuant to Section 38a-433 of the
Connecticut General Statutes.
1. The Company hereby agrees to provide all administrative
services relative to variable annuity contracts and revisions
thereof (hereinafter "Contracts") sold by the Company, the net
proceeds of which or reserves for which are maintained in Fund VA.
2. TESI hereby agrees to perform all sales functions relative
to the Contracts. The Company agrees to reimburse TESI for
commissions paid, other sales expenses and properly allocable
overhead expenses incurred in performance thereof.
3. For providing the administrative services referred to in
paragraph 1 above and for reimbursing TESI for the sales functions
referred to in paragraph 2 above, the Company will receive the
deductions for sales and administrative expenses which are stated in
the Contracts.
4. The Company will furnish at its own expense and without cost
to Fund VA the administrative expenses of Fund VA, including but not
limited to:
(a) office space in the offices of the Company or in such other
place as may be agreed upon from time to time, and all
necessary office facilities and equipment;
(b) necessary personnel for managing the affairs of Fund VA,
including clerical, bookkeeping, accounting and other
office personnel;
(c) all information and services, including legal services,
required in connection with registering and qualifying Fund
VA or the Contracts with federal and state
<PAGE>
regulatory authorities, preparation of registration
statements and prospectuses, including amendments and revi-
sions thereto, and annual, semi-annual and periodic
reports, notices and proxy solicitation materials furnished
to variable annuity Contract Owners or regulatory
authorities, including the costs of printing and mailing
such items;
(d) the costs of preparing, printing, and mailing all sales
literature;
(e) all registration, filing and other fees in connection with
compliance requirements of federal and state regulatory
authorities;
(f) the charges and expenses of any custodian or depository
appointed by Fund VA for the safekeeping of its cash,
securities and other property ; and
(g) the charges and expenses of independent accountants
retained by Fund VA.
5. The services of the Company and TESI to Fund VA hereunder
are not to be deemed exclusive and the Company or TESI shall be free
to render similar services to others so long as its services
hereunder are not impaired or interfered with thereby.
6. The Company agrees to guarantee that the annuity payments
will not be affected by mortality experience (under Contracts the
reserves for which are invested in Fund VA) and as such assumes the
risks (a) that the actuarial estimate of mortality rates among
annuitants may prove erroneous and that reserves set up on the basis
of such estimates will not be sufficient to meet the Company's
variable annuity payment obligations, and (b) that the charges for
services and expenses of the Company set forth in the Contracts may
not prove sufficient to cover its actual expenses. For providing
these mortality and expense risk guarantees, the Company will
receive from Fund VA an amount per valuation period of Fund VA, as
provided from time to time.
7. This Agreement will be effective on the date executed, and
will remain effective until terminated by any party upon sixty (60)
days notice; provided, however, that this Agreement will terminate
automatically in the event of its assignment by any of the parties
hereto.
8. Notwithstanding termination of this Agreement, the Company
shall continue to provide administrative services and mortality and
expense risk guarantees provided for herein with respect to Con-
tracts in effect on the date of termination, and
<PAGE>
the Company shall continue to receive the compensation
provided under this Agreement.
9. This Agreement is subject to the provisions of the
Investment Company Act of 1940, as amended, and the rules of the
Securities and Exchange Commission.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective officials thereunto duly
authorized and, in the case of the Company and TESI, seals to be
affixed as of the day and year first above written.
THE TRAVELERS LIFE AND ANNUITY COMPANY
(Seal)
By:___________________________________
Title:________________________________
ATTEST:
___________________
Assistant Secretary
THE TRAVELERS FUND VA FOR VARIABLE
ANNUITIES
By:__________________________________
Title:_______________________________
WITNESS:
____________________
TRAVELERS EQUITIES SALES, INC.
By: __________________________________
Title: _______________________________
ATTEST: (SEAL)
___________________
Corporate Secretary
<PAGE>
EXHIBIT 9
April 25, 1995
The Travelers Life and Annuity Company
The Travelers Fund VA for Variable Annuities
One Tower Square
Hartford, Connecticut 06183
Gentlemen:
With reference to the Post-Effective Amendment No. 1 to the
Registration Statement on Form N-4 filed by The Travelers Insurance
Company with the Securities and Exchange Commission covering Flexible
Premium Variable Annuity Contracts, I have examined such documents
and such law as I have considered necessary and appropriate, and on
the basis of such examination, it is my opinion that:
1. The Travelers Life and Annuity Company is duly organized and
existing under the laws of the State of Connecticut and has
been duly authorized to do business and to issue variable
annuity contracts by the Insurance Commissioner of the State
of Connecticut.
2. The Travelers Fund VA for Variable Annuities is a duly
authorized and validly existing separate account established
pursuant to Section 38a-433 of the Connecticut General
Statutes.
3. The variable annuity contracts covered by the above
Registration Statement, and all Post-Effective Amendments
related thereto, have been approved and authorized by the
Insurance Commissioner of the State of Connecticut and when
issued will be valid, legal and binding obligations of The
Travelers Life and Annuity Company and of The Travelers Fund
VA for Variable Annuities.
4. Assets of The Travelers Fund VA for Variable Annuities are
not chargeable with liabilities arising out of any other
business The Travelers Life and Annuity Company may conduct.
I hereby consent to the filing of this opinion as an exhibit to
the above-referenced Post-Effective Amendment and to the reference to
this opinion under the caption "Legal Proceedings and Opinion" in the
Prospectus constituting a part of such Post-Effective Amendment.
Very truly yours,
/s/Ernest J. Wright
Ernest J. Wright
General Counsel
Life and Annuities Division
The Travelers Life and Annuity
Company
<PAGE>
COOPERS Coopers & Lybrand L.L.P.
&LYBRAND a professional services firm
EXHIBIT 10(A)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Post-Effective Amendment No. 1 of this
Registration Statement on Form N-4 of The Travelers Fund VA for Variable
Annuities of our reports on the December 31, 1993 and 1992 financial
statements of The Travelers Life and Annuity Company (the "Company") both
dated September 16, 1994, which include an explanatory paragraph regarding the
change in the methods of accounting for post-retirement benefits other than
pensions, income taxes, and foreclosed assets in 1992, on our audits of the
financial statements of the Company.
/s/COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
April 24, 1995
<PAGE>
EXHIBIT 10(B)
The Board of Directors
The Travelers Life and Annuity Company:
We consent to the inclusion in this Post-Effective Amendment No. 1 to
the registration statement (No. 33-83446) on Form N-4, filed for The Travelers
Fund VA for Variable Annuities, of our report, dated January 17, 1995. Our
report refers to a change in accounting for investments in accordance with the
provisions of Statement of Financial Accounting Standards No. 115, "Accounting
for Certain Investments in Debt and Equity Securities."
/s/KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP
Hartford, Connecticut
April 18, 1995
<PAGE>
EXHIBIT 14
In connection with the solicitation and sale of variable
annuity contracts to participants of plans qualified under Section
403(b) of the Internal Revenue Code, the Registrant hereby
represents, in reliance upon No-Action Letter IP-6-88, that it has:
(1) included appropriate disclosure regarding the redemption
restrictions imposed by Section 403(b)(11) in each
registration statement, including the prospectus, used in
connection with the offer of the contract;
(2) included appropriate disclosure regarding the redemption
restrictions imposed by Section 403(b)(11) in any sales
literature used in connection with the offer of the
contract;
(3) instructed sales representatives who solicit participants
to purchase the contract specifically to bring the
redemption restrictions imposed by Section 403(b)(11) to
the attention of the potential participants; and
(4) obtained from each plan participant who purchases a
Section 403(b) annuity contact, prior to or at the time of
such purchase, a signed statement acknowledging the
participant's understanding of (i) the restrictions on
redemption imposed by Section 403(b)(11), and (ii) the
investment alternatives available under the employer's
Section 403(b) arrangement, to which the participant may
elect to transfer his or her contract value.
By: /s/Robert C. Hamilton
Name: Robert C. Hamilton
Title: Second Vice President
Date: April 25, 1995
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, JAY S. FISHMAN of Haworth, New Jersey, director
and Chief Financial Officer of The Travelers Life and
Annuity Company (hereafter the "Company"), do hereby
make, constitute and appoint ERNEST J. WRIGHT, Assistant Secretary
of said Company, and KATHLEEN A. McGAH, Assistant Secretary of said
Company, or either one of them acting alone, my true and lawful
attorney-in-fact, for me, and in my name, place and stead to sign
registration statements on behalf of said Company on Form N-3, Form
N-4, S-2 and Form S-6 or other appropriate Form under the Securi-
ties Act of 1933 which registrants are dedicated specifically to
the funding of variable annuity contracts, modified guaranteed
annuity contracts and variable life insurance contracts to be
offered by said Company, and further, to sign any and all
amendments thereto, including post-effective amendments, that may
be filed by the Company on behalf of said registrant.
IN WITNESS WHEREOF I have hereunto set my hand this 24th day of
April, 1995.
/s/Jay S. Fishman
Jay S. Fishman
Director and Chief Financial Officer
TLAC
<PAGE>
EXHIBIT 15
THE TRAVELERS FUND VA FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, MICHAEL A. CARPENTER of Greenwich, Connecticut,
Chairman of The Travelers Life and Annuity Company (hereafter the
"Company"), do hereby make, constitute and appoint JAY S. FISHMAN,
Director and Chief Financial Officer of said Company, and ERNEST J.
WRIGHT, Assistant Secretary of said Company, or either one of them
acting alone, my true and lawful attorney-in-fact, for me, and in
my name, place and stead to sign registration statements on behalf
of said Company on Form N-4 or other appropriate Form under the
Securities Act of 1933 for The Travelers Fund VA for Variable
Annuities, a separate account of the Company dedicated specifically
to the funding of variable annuity contracts to be offered by said
Company, and further, to sign any and all amendments thereto,
including post-effective amendments, that may be filed by the
Company on behalf of said registrant.
IN WITNESS WHEREOF I have hereunto set my hand this 3rd day of
February, 1995.
/s/Michael A. Carpenter
Chairman
The Travelers Life and Annuity Company
<PAGE>
THE TRAVELERS FUND VA FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, ROBERT I. LIPP of Scarsdale, New York, director of The
Travelers Life and Annuity Company (hereafter the "Company"), do
hereby make, constitute and appoint JAY S. FISHMAN, Director and
Chief Financial Officer of said Company, and ERNEST J. WRIGHT,
Assistant Secretary of said Company, or either one of them acting
alone, my true and lawful attorney-in-fact, for me, and in my name,
place and stead to sign registration statements on behalf of said
Company on Form N-4 or other appropriate Form under the Securities
Act of 1933 for The Travelers Fund VA for Variable Annuities, a
separate account of the Company dedicated specifically to the
funding of variable annuity contracts to be offered by said
Company, and further, to sign any and all amendments thereto,
including post-effective amendments, that may be filed by the
Company on behalf of said registrant.
IN WITNESS WHEREOF I have hereunto set my hand this 26th
day of April, 1995.
s/Robert I. Lipp
Director
The Travelers Life and Annuity Company
<PAGE>
THE TRAVELERS FUND VA FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, CHARLES O. PRINCE, III of Weston, Connecticut,
director of The Travelers Life and Annuity Company (hereafter the
"Company"), do hereby make, constitute and appoint JAY S. FISHMAN,
Director and Chief Financial Officer of said Company, and ERNEST J.
WRIGHT, Assistant Secretary of said Company, or either one of them
acting alone, my true and lawful attorney-infact, for me, and in my
name, place and stead to sign registration statements on behalf of
said Company on Form N-4 or other appropriate form under the
Securities Act of 1933 for The Travelers Fund VA for Variable
Annuities, a separate account of the Company dedicated specifically
to the funding of variable annuity contracts to be offered by said
Company, and further, to sign any and all amendments thereto,
including post-effective amendments, that may be filed by the
Company on behalf of said registrant.
IN WITNESS WHEREOF I have hereunto set my hand this 26th day of
April, 1995.
/s/Charles O. Prince, III
Director
The Travelers Life and Annuity Company
<PAGE>
THE TRAVELERS FUND VA FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, MARC P. WEILL of New York, New York, director of The
Travelers Life and Annuity Company (hereafter the "Company"), do
hereby make, constitute and appoint JAY S. FISHMAN, Director and
Chief Financial Officer of said Company, and ERNEST J. WRIGHT,
Assistant Secretary of said Company, or either one of them acting
alone, my true and lawful attorney-in-fact, for me, and in my name,
place and stead to sign registration statements on behalf of said
Company on Form N-4 or other appropriate Form under the Securities
Act of 1933 for The Travelers Fund VA for Variable Annuities, a
separate account of the Company dedicated specifically to the
funding of variable annuity contracts to be offered by said
Company, and further, to sign any and all amendments thereto,
including post-effective amendments, that may be filed by the
Company on behalf of said registrant.
IN WITNESS WHEREOF I have hereunto set my hand this 26th day of
April, 1995.
/s/Marc P. Weill
Director
The Travelers Life and Annuity Company
<PAGE>
THE TRAVELERS FUND VA FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, IRWIN R. ETTINGER of Stamford, Connecticut, director
of The Travelers Life and Annuity Company (hereafter the
"Company"), do hereby make, constitute and appoint JAY S. FISHMAN,
Director and Chief Financial Officer of said Company, and ERNEST J.
WRIGHT, Assistant Secretary of said Company, or either one of them
acting alone, my true and lawful attorney-in-fact, for me, and in
my name, place and stead to sign registration statements on behalf
of said Company on Form N-4 or other appropriate Form under the
Securities Act of 1933 for The Travelers Fund VA for Variable
Annuities, a separate account of the Company dedicated specifically
to the funding of variable annuity contracts to be offered by said
Company, and further, to sign any and all amendments thereto,
including post-effective amendments, that may be filed by the
Company on behalf of said registrant.
IN WITNESS WHEREOF I have hereunto set my hand this 26th day of
April, 1995.
/s/Irwin R. Ettinger
Director
The Travelers Life and Annuity Company
<PAGE>
EXHIBIT 15
THE TRAVELERS FUND VA FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, DONALD T. DeCARLO of Douglaston, New York, director of
The Travelers Life and Annuity Company (hereafter the "Company"),
do hereby make, constitute and appoint JAY S. FISHMAN, Director and
Chief Financial Officer of said Company, and ERNEST J. WRIGHT,
Assistant Secretary of said Company, or either one of them acting
alone, my true and lawful attorney-in-fact, for me, and in my name,
place and stead to sign registration statements on behalf of said
Company on Form N-4 or other appropriate Form under the Securities
Act of 1933 for The Travelers Fund VA for Variable Annuities, a
separate account of the Company dedicated specifically to the
funding of variable annuity contracts to be offered by said
Company, and further, to sign any and all amendments thereto,
including post-effective amendments, that may be filed by the
Company on behalf of said registrant.
IN WITNESS WHEREOF I have hereunto set my hand this 10th day of
April, 1995.
/s/Donald T. DeCarlo
Director
The Travelers Life and Annuity Company
