<PAGE> 1
Registration Statement No.33-83446
811-8740
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 2
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 2
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
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(Address of Depositor's Principal Executive Offices)
Insurance Company's Telephone Number, including area code: (860) 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.
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X on May 1, 1996 pursuant to paragraph (b) of Rule 485.
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60 days after filing pursuant to paragraph (a)(1) of Rule 485.
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on __________ pursuant to paragraph (a)(1) of Rule 485.
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If appropriate, check the following box:
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, 1995 because the Registrant did not sell any Variable
Annuity Contracts pursuant to its 24f-2 Declaration during the fiscal year.
<PAGE> 2
THE TRAVELERS FUND VA FOR VARIABLE ANNUITIES
Cross-Reference Sheet
Form N-4
<TABLE>
<CAPTION>
ITEM
NO. CAPTION IN PROSPECTUS
- --- ---------------------
<S> <C> <C>
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; The Separate
Depositor and Portfolio Companies 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
</TABLE>
<TABLE>
<CAPTION>
CAPTION IN STATEMENT OF ADDITIONAL
INFORMATION
---------------------------------------------------
<S> <C> <C>
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
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
</TABLE>
<PAGE> 3
PART A
INFORMATION REQUIRED IN A PROSPECTUS
<PAGE> 4
UNIVERSAL ANNUITY
PROSPECTUS
This prospectus describes the Individual Variable Annuity Contracts (the
"Contracts") to which Purchase Payments may be made as either a single payment
or on a flexible basis. The Contracts are issued by The Travelers Life and
Annuity Company. Purchase Payments may be allocated to one or more of the
following Underlying Funds of The Travelers Fund VA for Variable Annuities (Fund
VA):
<TABLE>
<S> <C>
Capital Appreciation Fund Dreyfus Stock Index Fund
High Yield Bond Trust American Odyssey International Equity Fund
Managed Assets Trust American Odyssey Emerging Opportunities Fund
U.S. Government Securities
Portfolio American Odyssey Core Equity Fund
Social Awareness Stock Portfolio American Odyssey Long-Term Bond Fund
Utilities Portfolio American Odyssey Intermediate-Term Bond Fund
Templeton Bond Fund American Odyssey Short-Term Bond Fund
Templeton Stock Fund Smith Barney Income and Growth Portfolio
Templeton Asset Allocation Fund Alliance Growth Portfolio
Fidelity's High Income Portfolio Smith Barney International Equity Portfolio
Fidelity's Equity-Income Portfolio Putnam Diversified Income Portfolio
Fidelity's Growth Portfolio Smith Barney High Income Portfolio
Fidelity's Asset Manager Portfolio MFS Total Return Portfolio
Cash Income Trust
</TABLE>
This prospectus sets forth the information that you should know before
investing. Please read it and retain it for future reference. Additional
information is contained in a Statement of Additional Information ("SAI") dated
May 1, 1996, which has been filed with the Securities and Exchange Commission
("SEC") 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, One Tower Square, Hartford, Connecticut 06183-5030, or by
calling 860-422-3985. The Table of Contents of the SAI appears in Appendix A of
this prospectus.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUSES OF
FUND VA'S 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.
VARIABLE ANNUITY CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR
GUARANTEED BY ANY BANK, NOR ARE THEY FEDERALLY INSURED OR OTHERWISE PROTECTED BY
THE FDIC, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY; THEY ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL INVESTMENT.
THE DATE OF THIS PROSPECTUS IS MAY 1, 1996.
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<S> <C>
GLOSSARY OF SPECIAL TERMS.............................................................. 4
PROSPECTUS SUMMARY..................................................................... 5
FEE TABLE.............................................................................. 6
THE VARIABLE ANNUITY CONTRACT.......................................................... 9
PURCHASE PAYMENTS.................................................................... 9
Application of Purchase Payments.................................................. 9
Number of Accumulation Units...................................................... 9
Fund VA: Underlying Funds......................................................... 9
TRANSFERS.............................................................................. 12
Dollar-Cost Averaging (Automated Transfers).......................................... 12
Asset Allocation Advice.............................................................. 12
Telephone Transfers.................................................................. 13
SURRENDERS AND REDEMPTIONS............................................................. 13
Systematic Withdrawals............................................................... 13
DEATH BENEFIT.......................................................................... 13
CHARGES AND DEDUCTIONS................................................................. 14
Contingent Deferred Sales Charge..................................................... 14
Premium Tax.......................................................................... 15
Administrative Charge................................................................ 15
Mortality and Expense Risk Charge.................................................... 15
Reduction or Elimination of Contract Charges......................................... 15
Investment Advisory Fees............................................................. 16
THE ANNUITY PERIOD..................................................................... 16
Maturity Date........................................................................ 16
Allocation of Annuity Payments....................................................... 16
Annuity Unit Value................................................................... 16
Determination of First Annuity Payment............................................... 17
Determination of Second and Subsequent Annuity Payments.............................. 17
PAYOUT OPTIONS......................................................................... 17
Election of Options.................................................................. 17
Annuity Options...................................................................... 18
Income Options....................................................................... 19
MISCELLANEOUS.......................................................................... 19
Termination.......................................................................... 19
Required Reports..................................................................... 19
Right to Return...................................................................... 20
Suspension of Payments............................................................... 20
Voting Rights........................................................................ 20
Distribution of Variable Annuity Contracts........................................... 21
State Regulation..................................................................... 21
Legal Proceedings and Opinions....................................................... 21
</TABLE>
2
<PAGE> 6
<TABLE>
<S> <C>
THE INSURANCE COMPANY AND SEPARATE ACCOUNT............................................. 21
THE INSURANCE COMPANY................................................................ 21
THE SEPARATE ACCOUNT................................................................. 21
Substitution of Investments....................................................... 22
Investment Advisers............................................................... 23
Performance Information........................................................... 24
FEDERAL TAX CONSIDERATIONS............................................................. 24
General.............................................................................. 24
Investor Control..................................................................... 25
Section 403(b) Plans and Arrangements................................................ 25
Qualified Pension and Profit-Sharing Plans........................................... 26
Individual Retirement Annuities...................................................... 26
Section 457 Plans.................................................................... 26
The Employee Retirement Income Security Act of 1974.................................. 27
Federal Income Tax Withholding....................................................... 27
Tax Advice........................................................................... 28
The Fixed Account.................................................................... 29
APPENDIX A............................................................................. 30
</TABLE>
3
<PAGE> 7
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 COMMENCEMENT DATE: the date on which Annuity Payments are to begin
under the terms of the Contract and/or the Plan. Also referred to as "Maturity
Date".
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.
CASH VALUE: the current value of Accumulation Units credited to the contract
less any administrative charges.
COMPANY: The Travelers Life and Annuity Company.
COMPANY'S HOME OFFICE: the principal executive offices of the Company, located
at One Tower Square, Hartford, Connecticut, 06183.
CONTRACT: the Variable Annuity contract described in this prospectus.
CONTRACT DATE: the date on which the Contract and its benefits and provisions
become effective.
CONTRACT YEARS: annual periods computed from the Contract Date.
CONTRACT OWNER (OWNER): the person to whom the Contract is issued.
CONTRACT OWNER'S ACCOUNT (OWNER'S ACCOUNT): the record of Accumulation Units
credited to the Contract Owner.
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.
PURCHASE PAYMENT: a gross amount paid to the Company under the Contract during
the accumulation period.
SEPARATE ACCOUNT: The Travelers Fund VA for Variable Annuities, which contains
assets set aside by the Company, the investment experience of which is kept
separate from that of other assets of the Company.
UNDERLYING FUND(S): the investment option(s) available under The Travelers Fund
VA for Variable Annuities to which payments under the Contract may be allocated.
(The portion of the Contract or Account allocated to the Underlying Fund is
referred to in the Contract as "Sub-Accounts.")
VALUATION DATE: generally, a day on which an account is valued. A valuation
date is any day on which the New York Stock Exchange is open for trading. The
value of Accumulation Units and Annuity Units will be determined as of the close
of trading on the New York Stock Exchange.
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 a Separate Account.
4
<PAGE> 8
PROSPECTUS SUMMARY
- --------------------------------------------------------------------------------
INTRODUCTION
The Contract described in this prospectus is both an insurance product and a
security. As an insurance product, it is subject to the insurance laws and
regulations of each state in which it is available for distribution. As a
security it is subject to federal securities laws. The Contract is a variable
annuity designed to help Contract Owners accumulate money for retirement. It
allows Purchase Payments to be allocated to any or all of the Underlying Funds.
The Contracts described in this prospectus are issued by The Travelers Life and
Annuity Company (the "Company" or "The Travelers"). The minimum Purchase Payment
under tax-qualified contracts is $20, except in the case of individual
retirement annuities ("IRAs") where the initial minimum Purchase Payment is
$1,000. For nonqualified contracts, the minimum Purchase Payment is $1,000
initially, and $100 thereafter. (See "The Variable Annuity Contract -- Purchase
Payments," page 9.) Purchase Payments are allocated to the Underlying Funds of
Fund VA in accordance with the selection made by the Contract Owner. A
description of the investment objectives for each begins on page 9.
For Individual Contracts there is a Right to Return. (See
"Miscellaneous -- Right to Return," page 19.)
TRANSFERS AND SURRENDERS
Transfers may be made among available Underlying Funds without fee, penalty or
charge at any time before Annuity or Income Payments begin. (See "Transfers,"
page 12.)
Prior to the Maturity Date, all or part of the Contract value may be
surrendered, subject to certain charges and limitations. Income taxes will be
payable on the taxable portion of the amount surrendered, and a penalty tax may
be incurred if you are under age 59 1/2. (See "Surrenders and Redemptions," page
13, and "Federal Tax Considerations -- Section 403(b) Plans and Arrangements,"
page 24.)
ASSET ALLOCATION
Some Contract Owners may elect to enter into an asset allocation investment
advisory agreement which is fully described in a separate Disclosure Statement.
(See "The Travelers Fund VA for Variable Annuities -- Asset Allocation Advice,"
page 12.)
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 surrendered within five years of the date it was received. Under
certain circumstances, the Contingent Deferred Sales Charge may be waived. (See
"Charges and Deductions -- Contingent Deferred Sales Charge," page 14.)
Premium taxes may apply to annuities in a few states. The applicable amount will
be deducted in compliance with each state's laws. (See "Charges and
Deductions -- Premium Tax," page 15.)
The Company will deduct $15 semiannually from the Contract to cover
administrative expenses associated with the Contract. (See "Charges and
Deductions -- Administrative Charge," page 15.)
The Company deducts an insurance charge from the Separate Account to compensate
for mortality and expense risks assumed by the Company. The charge is equivalent
on an annual basis to 1.25% of the daily net assets of the Separate Account.
(See "Charges and Deductions -- Mortality and Expense Risk Charge," page 15.)
5
<PAGE> 9
For investment options under Fund VA, the investment management and advisory
services fee is deducted from the assets of the underlying funds. (See the
prospectuses for the Underlying Funds for a description of their respective
investment management and advisory fees.)
ANNUITY PAYMENTS
At the Maturity Date, the Contract provides lifetime Annuity Payments, as well
as other types of payout plans. (See "Payout Options," page 17.) If a variable
payout is selected, the payments will continue to vary with the investment
performance of the selected Underlying Funds. Variable payout is not available
for Contracts issued in New Jersey and Florida.
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 13.)
FEE TABLE
- --------------------------------------------------------------------------------
FUND VA AND ITS UNDERLYING FUNDS
The purpose of this Fee Table is to help individuals understand the various
costs and expenses that a Contract Owner may bear, directly or indirectly, under
the Contract. The information, except as noted, reflects expenses of Fund VA and
its Underlying Funds for the fiscal year ending December 31, 1995. For
additional information, including possible waivers or reductions of these
expenses, see "Charges and Deductions," page 14. Expenses shown do not include
premium taxes, which may be applicable.
CONTRACT CHARGES AND EXPENSES
<TABLE>
<S> <C>
CONTINGENT DEFERRED SALES CHARGE (as a percentage of purchase payments)........ 5.00%
SEMIANNUAL CONTRACT ADMINISTRATIVE CHARGE...................................... $15
ANNUAL SEPARATE ACCOUNT EXPENSES
MORTALITY AND EXPENSE RISK CHARGE (as a percentage of average net assets of
Fund VA)..................................................................... 1.25%
UNDERLYING FUND EXPENSES:
(as a percentage of average net assets of amounts allocated to the Underlying Fund)
</TABLE>
6
<PAGE> 10
<TABLE>
<CAPTION>
OTHER TOTAL
EXPENSES UNDERLYING
MANAGEMENT (AFTER FUND
UNDERLYING FUNDS FEE REIMBURSEMENT) EXPENSES
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital Appreciation Fund............................ 0.75% 0.10% 0.85%
High Yield Bond Trust................................ 0.50% 0.75%(1) 1.25%
Managed Assets Trust................................. 0.50% 0.08% 0.58%
Cash Income Trust.................................... 0.32% 0.93% 1.25%
U.S. Government Securities Portfolio................. 0.32% 0.24% 0.56%
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% 0.28% 0.78%
Templeton Stock Fund................................. 0.47% 0.19% 0.66%
Templeton Asset Allocation Fund...................... 0.48% 0.18% 0.66%
Fidelity's High Income Portfolio..................... 0.60% 0.11%(2) 0.71%
Fidelity's Equity-Income Portfolio................... 0.51% 0.10%(2) 0.61%
Fidelity's Growth Portfolio.......................... 0.61% 0.09%(2) 0.70%
Fidelity's Asset Manager Portfolio................... 0.71% 0.08%(2) 0.79%
Dreyfus Stock Index Fund............................. 0.25% 0.14%(3) 0.39%
American Odyssey International Equity Fund........... 0.68% 0.30%(4) 0.98%
American Odyssey Emerging Opportunities Fund......... 0.63% 0.14%(4) 0.77%
American Odyssey Core Equity Fund.................... 0.59% 0.11%(4) 0.70%
American Odyssey Long-Term Bond Fund................. 0.50% 0.16%(4) 0.66%
American Odyssey Intermediate-Term Bond Fund......... 0.50% 0.18%(4) 0.68%
American Odyssey Short-Term Bond Fund................ 0.50% 0.25%(4) 0.75%
Smith Barney Income and Growth Portfolio............. 0.65% 0.08%(5) 0.73%
Alliance Growth Portfolio............................ 0.80% 0.10%(5) 0.90%
Smith Barney International Equity Portfolio.......... 0.90% 0.54%(6) 1.44%
Putnam Diversified Income Portfolio.................. 0.75% 0.22%(5) 0.97%
Smith Barney High Income Portfolio................... 0.60% 0.10%(5) 0.70%
MFS Total Return Portfolio........................... 0.80% 0.15%(5) 0.95%
</TABLE>
(1) Other Expenses take 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
0.78%, 1.10% 0.62% and 7.37% for High Yield Bond Trust, Social Awareness
Stock Portfolio, Utilities Portfolio and Cash Income Trust, respectively.
(2) No reimbursement arrangement affected the Equity-Income Portfolio and the
Growth Portfolio. A portion of the brokerage commissions the Fund paid was
used to reduce its expenses. Without this reduction, Total Underlying Fund
Expenses would have been: High Income Portfolio, 0.71% (there were brokerage
commissions paid, but it did not affect the ratio) and Asset Manager
Portfolio, 0.81%.
(3) The administrator and investment adviser have agreed to reimburse the Fund
for expenses in excess of 0.40%. The Management Fee and Other Expenses
before reimbursement were 0.17% and 0.25%, respectively. The Management Fee
prior to November 13, 1995 was 0.15% and the administration fee was 0.15%.
On that date, a new Management Agreement became effective with a Management
Fee of 0.245% and no administration fee.
(4) Other Expenses do not take into account the expense limitations agreed to by
the Manager. The Manager anticipates that as of May 1996, it will no longer
waive the fees or reimburse the expenses for the International Equity Fund,
the Emerging Opportunities Fund, the Core Equity Fund, the Long-Term Bond
Fund, and the Intermediate-Term Bond Fund. Total Underlying Fund Expenses,
which reflect the repayment to the Manager of prior fees waived and expenses
reimbursed, were 1.08%, 0.77%, 0.70%, 0.70%, and 0.75% respectively
The Manager has agreed to continue, at least until May 1, 1997, to waive
fees or reimburse expenses to the extent the Short-Term Bond Fund's total
expense ratio exceeds 0.75%. Thereafter, the 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. Without these expense limitations and/or
Manager reimbursements, Other Expenses of the Short-Term Bond Fund would
have been 0.26%.
(5) Other expenses are as of October 31, 1995, (the Fund's fiscal year end)
taking into account the current expense limitations agreed to by the
Manager. The Manager waived all of its fees for the period and reimbursed
the Portfolios for their expenses. If such fees were not waived and expenses
were not reimbursed, Total Underlying Fund Expenses would have been as
follows: Smith Barney Income and Growth, 0.94%; Alliance Growth Portfolio,
0.97%; Putnam Diversified Income Portfolio, 1.31%; Smith Barney High Income
Portfolio, 1.07%; and MFS Total Return Portfolio, 1.06%.
(6) During the fiscal year ended October 31, 1995, the Smith Barney
International Equity Portfolio earned credits from the Custodian which
reduced the service fees incurred. When these credits are taken into
consideration, Total Underlying Fund Expenses for these Portfolio is 1.21%.
7
<PAGE> 11
EXAMPLE*
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
Assuming a 5% annual return on assets, a $1,000 investment would be subject to
the following expenses:
<TABLE>
<CAPTION>
If the Contract is NOT
If the Contract is surrendered surrendered at the end of the
period shown or if it is
at the end of the period shown: annuitized:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
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>
UNDERLYING FUNDS:
Capital Appreciation Fund $73 $ 121 $ 172 $ 262 $23 $ 71 $ 122 $ 262
High Yield Bond Trust 77 133 192 302 27 83 142 302
Managed Assets Trust 70 113 159 234 20 63 109 234
Cash Income Trust
U.S. Government Securities Portfolio 70 113 158 233 20 63 108 233
Social Awareness Stock Portfolio 77 133 192 302 27 83 142 302
Utilities Portfolio 77 133 192 302 27 83 142 302
Templeton Bond Fund 72 119 169 255 22 69 119 255
Templeton Stock Fund 71 116 163 243 21 66 113 243
Templeton Asset Allocation Fund 71 116 163 243 21 66 113 243
Fidelity's High Income Portfolio 72 117 165 248 22 67 115 248
Fidelity's Equity-Income Portfolio 71 114 160 237 21 64 110 237
Fidelity's Growth Portfolio 72 117 165 247 22 67 115 247
Fidelity's Asset Manager Portfolio 73 120 169 256 23 70 119 256
Dreyfus Stock Index Fund 69 107 149 214 19 57 99 214
American Odyssey Funds(1):
International Equity Fund 73 122 173 264 23 72 123 264
Emerging Opportunities Fund 72 118 166 250 22 68 116 250
Core Equity Fund 72 117 165 247 22 67 115 247
Long-Term Bond Fund 71 115 161 239 21 65 111 239
Intermediate-Term Bond Fund 71 115 162 241 21 65 112 241
Short-Term Bond Fund 72 118 167 252 22 68 117 252
American Odyssey Funds(2):
International Equity Fund 86 159 234 382 36 109 184 382
Emerging Opportunities Fund 84 155 228 370 34 105 178 370
Core Equity Fund 84 154 226 367 34 104 176 367
Long-Term Bond Fund 83 152 223 361 33 102 173 361
Intermediate-Term Bond Fund 84 152 223 362 34 102 173 362
Short-Term Bond Fund 85 155 229 372 35 105 179 372
Smith Barney Income and Growth Portfolio 72 118 166 250 22 68 116 250
Alliance Growth Portfolio 74 123 175 267 24 73 125 267
Smith Barney International Equity Portfolio 79 139 202 320 29 89 152 320
Putnam Diversified Income Portfolio 74 125 178 274 24 75 128 274
Smith Barney High Income Portfolio 72 117 165 247 22 67 115 247
MFS Total Return Portfolio 74 124 177 272 24 74 127 272
</TABLE>
* The Example reflects the $15 Semiannual Contract Fee as an annual charge of
0.185% of assets.
(1) Reflects expenses that would be incurred for those Contract Owners who DO
NOT participate in the CHART Asset Allocation program.
(2) Reflects expenses that would be incurred for those Contract Owners who DO
participate in the CHART Asset Allocation program.
8
<PAGE> 12
THE VARIABLE ANNUITY CONTRACT
- --------------------------------------------------------------------------------
The Contract is a variable annuity designed to help Contract Owners accumulate
money for retirement. The following brief description of the key features of the
Contract is subject to the specific terms of the Contract itself. Reference
should also be made to the Glossary of Special Terms.
PURCHASE PAYMENTS
Purchase Payments under tax-qualified retirement plans (except IRAs), that is,
tax-sheltered annuities (i.e., 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
per Participant, subject to the terms of the Plan. The initial minimum Purchase
Payment for IRAs is $1,000; for nonqualified Contracts, the initial minimum
Purchase Payment is $1,000 and $100 thereafter. The initial Purchase Payment is
due and payable before the Contract becomes effective.
Purchase Payments accumulate under the Contract until the Annuity Commencement
Date. The Company will automatically begin paying Annuity Payments to the Owner
on the Annuity Commencement Date, if the Owner is then living. (See "Annuity
Option -- Automatic Option," page 18.) The Owner may choose instead a number of
alternative arrangements for benefit payments. If the Owner dies before a payout
begins, the amount due will be paid to the beneficiary.
APPLICATION OF PURCHASE PAYMENTS
Each Purchase Payment will be applied to the Contract to provide Accumulation
Units of the Underlying Funds, as selected by the Contract Owner. Such
Accumulation Units will be credited to an Owner's Account. 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 at the
Company's Home Office. If the application is not in good order, the Company will
attempt to secure the missing information 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. 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.
NUMBER OF ACCUMULATION UNITS
The number of Accumulation Units to be credited will be determined by dividing
the Purchase Payment applied to the designated Underlying Fund by the current
Accumulation Unit Value of that Underlying Fund.
The Accumulation Unit Value for each Underlying Fund was established at $1.00 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 net investment factor
is described in the SAI. 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.
FUND VA
Fund VA currently invests in the following Underlying Funds. Each Underlying
Fund has risks associated with it. Please read the accompanying prospectus for
each carefully. Underlying Funds may be added or withdrawn as permitted by
applicable law. Additionally, some of the Underlying Funds may not be available
in every state due to various insurance regulations.
9
<PAGE> 13
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 which
are expected to experience wide fluctuations in price in both rising and
declining markets.
CASH INCOME TRUST. The objective of the Cash Income Trust is to seek high
current income from short-term money market instruments while preserving capital
and maintaining a high degree of liquidity.
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.
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.
THE TRAVELERS SERIES TRUST PORTFOLIOS
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 objective of the Social Awareness Stock
Portfolio is long-term capital appreciation and retention of net investment
income. The Portfolio seeks to fulfill this 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 VARIABLE PRODUCTS SERIES
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.
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FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND
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 the 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 VARIABLE INSURANCE PRODUCTS FUND II
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.
AMERICAN ODYSSEY FUNDS, INC.
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.
SMITH BARNEY/TRAVELERS SERIES FUND, INC.
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
- ---------------
* Funds available for use with an asset allocation program, for which there is
a fee. See "Asset Allocation Advice" on page 14 for more information.
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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.
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.
TRANSFERS
Before Annuity or Income Payments begin, the Owner may transfer all or part of
the Contract Value among available Underlying Funds without fee, penalty or
charge. There are currently no restrictions on frequency of transfers, but the
Company reserves the right to limit transfers to one in any six-month period.
Since the available Underlying Funds have different investment advisory fees, a
transfer from one Underlying Fund to another could result in higher or lower
investment advisory fees. (See "Investment Advisory Fees," page 16.)
DOLLAR COST AVERAGING (AUTOMATED TRANSFERS)
By written request, the Owner may elect automated transfers of Contract Values
on a monthly or quarterly basis from specific Underlying Funds to other
Underlying Funds. Certain minimums may apply to enroll in the program. He or she
may stop or change 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 Underlying Funds. Certain minimums may
apply to amounts transferred.
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, individuals should consider their financial ability
to continue purchases through periods of low price levels.
ASSET ALLOCATION ADVICE
Some Contract Owners may elect 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 CHARTSM Program, which is
fully described in a separate Disclosure Statement. Under the CHART Program,
Purchase Payments and Cash 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 ERISA with respect to
amounts allocated to the American Odyssey Intermediate-Term Bond Fund because
that Fund has as its subadviser an affiliate of Copeland. A $30 initial fee is
also charged. The CHART Program fee will be paid by quarterly withdrawals from
the Cash Values allocated to the American Odyssey Funds. The Company will not
treat these withdrawals as taxable
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distributions. The CHART Program may not be available in all marketing programs
through which the Universal Annuity Contract is sold.
TELEPHONE TRANSFERS
A Contract Owner may place a transfer request via telephone. The telephone
transfer privilege is available automatically; no special election is necessary
for a Contract Owner to have this privilege. All transfers must be in accordance
with the terms of the Contract. Transfer instructions are currently accepted on
each Valuation Date between 9:00 a.m. and 4:00 p.m., Eastern time, at
1-800-842-8573. Once instructions have been accepted, they may not be rescinded;
however, new telephone instructions may be given the following day. If the
transfer instructions are not in good order, the Company will not execute the
transfer and will promptly notify the caller.
The Company will make a reasonable effort to record each telephone transfer
conversation, but in the event that no recording is effective or available, the
Contract Owner will remain liable for each telephone transfer effected.
Additionally, the Company is not liable for acting upon instructions believed to
be genuine and in accordance with the procedures described above. As a result of
this policy, the Contract Owner may bear the risk of loss in the event that the
Company follows instructions that prove to be fraudulent.
SURRENDERS AND REDEMPTIONS
The Contract Owner may redeem all or any portion of the Cash Surrender Value at
any time prior to the Annuity Commencement Date. The Owner or Participant must
submit a written surrender request. Surrenders will be made pro rata from all
the investment options unless he or she specifies the Underlying Fund(s) from
which 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 good order. The Cash
Surrender Value of an Owner's Account on any date will be equal to the Cash
Value of the applicable Contract or Account 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
Purchase Payments made depending on the value of the Contract or Account at the
time of surrender.
For those participating in the Texas Optional Retirement Program, a withdrawal
is available only upon termination of employment, retirement or death as
provided in the Texas Optional Retirement Program.
SYSTEMATIC WITHDRAWALS
Each Contract Year, Contract Owners may elect to take monthly, quarterly,
semiannual or annual systematic withdrawals of a specified dollar amount. Any
applicable premium taxes will be deducted. To elect this option, an election
form provided by the Company must be completed. Systematic withdrawals may be
stopped at any time, provided the Company receives at least 30 days' written
notice.
DEATH BENEFIT
If the Annuitant dies on or after age 75 and before Annuity or Income Payments
begin, the Company will pay to the beneficiary the Cash Value, as of the date it
receives at its Home Office proof of death, less any premium tax incurred. If
the Annuitant dies before age 75 and before Annuity or Income Payments begin,
after receipt of due proof of death, the Company will pay the greatest of (1),
(2) or (3) below:
1. the Cash Value, less any premium tax incurred or outstanding cash loans;
2. the total Purchase Payments allocated for that Contract Owner, less any
prior surrenders or cash loans; or
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3. the Cash Value, on the fifth Contract Year immediately preceding the
date of receipt of due proof of death by the Company, less any
applicable premium tax, outstanding cash loans or surrenders made since
such fifth year anniversary.
In some jurisdictions, until state approval is received, the applicable age at
which the death benefit formula will reduce will be age 65 rather than age 75.
CHARGES AND DEDUCTIONS
CONTINGENT DEFERRED SALES CHARGE
No sales charges are deducted at the time a Purchase Payment is applied under
the Contract. A Contingent Deferred Sales Charge of 5% will be assessed if an
amount is surrendered (withdrawn) within five years of its 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.
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 under an Individual Contract dies;
-- the Annuitant under an Individual Contract becomes disabled (as defined
by the Internal Revenue Service) subsequent to purchase of the
Contract;
-- the Annuitant under an Individual Contract, 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 Contract 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 an Individual Contract, 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.
(For those under Contract issued before May 1, 1992, the Contingent
Deferred Sales Charge will also be waived if the Annuitant retires at
normal retirement age (as defined by the Plan), provided the Contract,
as applicable has been in effect one year or more);
-- 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 Internal Revenue Service ("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. Participants under IRA
plans with Contracts issued prior to May 1, 1994, are entitled to a 20% free
withdrawal allowance after the first Contract Year. 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 Contract
Anniversary Date immediately preceding the surrender date. The free withdrawal
allowance does not apply to full surrenders. For 403(b) plan
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Participants, partial and full withdrawals (surrenders) may be subject to
restrictions. (See "Section 403(b) Plans and Arrangements," page 25.)
The Company expects the Contingent Deferred Sales Charge 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
the mortality and expense risk charges assessed under the Contract.
PREMIUM TAX
Certain state 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 either upon death,
surrender, annuitization, or at the time Purchase Payments are made to the
Contract, but no earlier than when the Company has a tax liability under state
law.
ADMINISTRATIVE CHARGE
On all Contracts there will be a semiannual administrative charge of $15. The
administrative charge will be deducted from the account in June and December of
each year. This charge will be prorated from the date of purchase to the next
date of assessment of charge. A prorated charge will also be assessed upon
voluntary or involuntary surrender of the Contract. This charge will not be
assessed after an annuity payout has begun. The administrative charge will be
deducted from the Contract Value by canceling Accumulation Units in each
Underlying Fund on a pro rata basis. 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.
MORTALITY AND EXPENSE RISK CHARGE
There is an insurance charge against the assets of the Separate Account to cover
the mortality and expense risks associated with guarantees which the Company
provides under these Variable Annuity Contracts. This charge, on an annual
basis, is 1.25% of the Separate Account value and 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 charge is for the assumption
of mortality risk, while the remainder is for the assumption of expense risk.
The mortality risk charge compensates the Company for guaranteeing to provide
Annuity Payments according to the terms of the Contract regardless of how long
the Annuitant lives and for the guaranteeing to provide the death benefit 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.
If the amount deducted for these mortality and expense risks is not sufficient
to cover the mortality costs and expense shortfalls, the loss is 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.
REDUCTION OR ELIMINATION OF CONTRACT CHARGES
The amount of the Contingent Deferred Sales Charge, mortality and expense risk
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, mortality and expense risk charge or the administrative charge will be
based on the following: (1) the size and type of group to which sales are to be
made (the sales expenses for a larger group are generally less than for a
smaller group because of the ability to implement large numbers of contracts
with fewer sales contacts); (2) the total amount of Purchase Payments to be
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received (per Contract sales expenses are likely to be less on larger Purchase
Payments than on smaller ones); and (3) any prior or existing relationship with
the Company (per contract sales expenses are likely to be less when there is a
prior or existing relationship because of the likelihood of implementing the
Contract with fewer sales contacts).
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, mortality and expense risk
charge or the administrative charge be permitted where such reduction or
elimination will be unfairly discriminatory to any person.
INVESTMENT ADVISORY FEES
For information on the Investment Advisory Fees of Fund VA's underlying funds
refer to the Fee Table and to the prospectuses for those funds.
THE ANNUITY PERIOD
MATURITY DATE
Annuity Payments will ordinarily begin on the date stated in the Contract.
However, a later Annuity Commencement Date may be elected. The Annuity
Commencement Date must be before the individual's 70th birthday, unless the
Company consents to a later date. Federal income tax law requires that certain
minimum distribution payments be taken from pension, profit-sharing, Section
403(b), Section 457 and IRA plans after the individual reaches the age of
70 1/2. A number of payout options are available (see "Payout Options," page
17). No Contingent Deferred Sales Charge will be assessed if an Annuity Option
is elected, or an Income Option of at least three years' duration (without right
of withdrawal) is elected after the first Contract Year. Federal income tax law
also requires that certain minimum distribution payments be taken upon the death
of the Contract Owner of a nonqualified annuity contract and upon the death of
the Annuitant of a pension, profit-sharing, Section 403(b), Section 457, or IRA
plan.
ALLOCATION OF ANNUITY PAYMENTS
When Annuity Payments begin, the accumulated value in each Underlying Fund will
be applied to provide an Annuity with the amount of Annuity Payments varying
with the investment experience of that same Underlying Fund. If the Owner wishes
to have Annuity Payments which vary with the investment experience of a
different Underlying Fund, transfers among accounts must be made at least 30
days before the date Annuity Payments begin. If the Owner wishes to have a fixed
dollar annuity whose payments do not vary, the Company will exchange that
Contract for a different contract or provide such other settlement agreements as
are appropriate to effect the payment of such an Annuity.
Variable payout is not available for Contracts issued in the states of New
Jersey and Florida. Once Annuity Payments begin, these Contract Owners will
automatically receive a fixed dollar annuity whose payments do not vary with the
investment experience of an Underlying Fund.
ANNUITY UNIT VALUE
The dollar value of an Annuity Unit for each Underlying Fund was established at
$1.00 at inception. The value of an Annuity Unit as of any Valuation Date is
determined 14 days in advance in order to allow adequate time for the required
calculations and the mailing of annuity checks in advance of their due dates.
(If the date 14 days in advance is not a Valuation Date, the calculation is made
on the next following Valuation Date, which would generally be 13 or 12 days in
advance.)
Specifically, the Annuity Unit Value for an Underlying Fund as of a 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 the Valuation
Period ending on or next following 14 days prior to the current Valuation Date,
divided by (c) the assumed net investment factor for the Valuation
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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 Underlying Fund by the
Underlying Fund's Annuity Unit Value as of the due date of the first Annuity
Payment. 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 Cash Value of the
Contract as of 14 days before the date Annuity Payments commence less any
applicable premium taxes not previously deducted.
The amount of the first monthly payment depends on the Annuity Option elected
(see "Automatic Option," page 18) and the adjusted age of the Participant. A
formula for determining the adjusted age is contained in the Contract. The
tables are determined from the Progressive Annuity Table assuming births in the
year 1900 and an assumed annual net investment rate of 3.5%. 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 proof of age before Annuity Payments begin.
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 Underlying Funds. The actual amounts of these
payments are determined by multiplying the number of Annuity Units credited to
the Contract in each Underlying Fund by the corresponding Annuity Unit Value as
of the date on which payment is due. The interest rate assumed in the annuity
tables would produce a level Annuity Unit Value and, therefore, level Annuity
Payments if the net investment rate remained constant at the assumed rate. In
fact, payments will vary up or down as the net investment rate varies up or down
from the assumed rate, and there can be no assurance that a net investment rate
will be as high as the assumed rate.
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.
PAYOUT OPTIONS
ELECTION OF OPTIONS
On the Annuity Commencement 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 Contract Owner. Election of an Annuity Option
or an Income Option must be made in writing in a form satisfactory to the
Company. Any election made during the lifetime of the Annuitant under an
Individual Contract, must be made by the Contract Owner. The terms of options
elected may be restricted to meet the contract qualification requirements of
Section 401(a)(9) of the Internal Revenue Code. If, at the death of an Annuitant
under an
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Individual Contract, there is no election in effect for that Annuitant, the
beneficiary may elect an Annuity Option or Income Option in lieu of the Death
Benefit. The minimum amount that can be placed under an Annuity Option or Income
Option, as described below, is $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 make payments at less frequent intervals. Annuity
Options and Income Options may be elected on a monthly, quarterly, semiannual or
annual basis.
ANNUITY OPTIONS
AUTOMATIC OPTION -- Unless the Company is directed otherwise by the Owner, if he
or she is living and has a spouse and no election has been made, the Company
will, on his or her Annuity Commencement Date, pay to the Annuitant the first of
a series of Annuity Payments based on the life of the Annuitant as the primary
payee and the Annuitant's spouse in accordance with Option 5 below.
If the Annuitant is living and no election has been made and the Annuitant has
no spouse, the Company will, on the Annuity Commencement Date, pay to the
Annuitant the first of a series of Annuity Payments based on the life of the
Annuitant, in accordance with Option 2 with 120 monthly payments assured.
OPTION 1 -- LIFE ANNUITY -- NO REFUND: The Company will make Annuity Payments
during the lifetime of the person on whose life the payments are based,
terminating with the last payment preceding death. While this option offers the
maximum periodic payment, there is no assurance of a minimum number of payments,
nor is there a provision for a death benefit for beneficiaries.
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 -- UNIT REFUND LIFE ANNUITY: The Company will make Annuity Payments
during the lifetime of the person on whose life payments are based, terminating
with the last payment due before the death of that person, provided that, at
death, the beneficiary will receive in one sum the current dollar value of the
number of Annuity Units equal to (a) minus (b) (if that difference is positive)
where: (a) is the total amount applied under the option divided by the Annuity
Unit Value on the due date of the first Annuity Payment, and (b) is the product
of the number of the Annuity Units represented by each payment and the number of
payments made.
OPTION 4 -- JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: The Company will
make 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. There is no assurance
of a minimum number of payments, nor is there a provision for a death benefit
upon the survivor's death.
OPTION 5 -- JOINT AND LAST SURVIVOR LIFE ANNUITY -- ANNUITY REDUCES ON DEATH OF
PRIMARY PAYEE: The Company will make 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 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.
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OPTION 6 -- OTHER ANNUITY OPTIONS: The Company will make any other arrangements
for Annuity Payments as may be mutually agreed upon.
INCOME OPTIONS
OPTION 1 -- PAYMENTS OF A FIXED AMOUNT: The Company will make equal payments of
the amount elected until the Cash Value applied under this option has been
exhausted. The final payment will include any amount insufficient to make
another full payment.
OPTION 2 -- PAYMENTS FOR A FIXED PERIOD: The Company will make payments for the
number of years selected. The amount of each payment will be equal to the
remaining Cash Value applied under this option divided by the number of
remaining payments.
OPTION 3 -- INVESTMENT INCOME: The Company will make payments for the period
agreed on. The amount payable will be equal to the excess, if any, of the Cash
Value under this option over the amount applied under this option. No payment
will be made if the Cash Value is less than the amount applied, and it is
possible that no payments would be made for a period of time. Payments under
this option are not considered to be Annuity Payments and are taxable in full as
ordinary income. (See "Federal Tax Considerations," page 24.) This option will
generally be inappropriate under federal tax law for periods that exceed the
Participant's attainment of age 70 1/2.
The Cash Value used to determine the amount of any Income Payment will be
calculated as of 14 days before the date an Income Payment is due and will be
determined on the same basis as the Cash Value of the Contract, including the
deduction for mortality and expense risks.
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, except with respect to lifetime payments of investment income
under Income Option 3, payments are unrelated to the actual life span of any
person. Thus, the Participant may outlive the payment period.
While Income Options do not directly involve mortality risks for the Company, an
individual may elect to apply the remaining Cash 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
- --------------------------------------------------------------------------------
TERMINATION
We reserve the right to terminate this Contract on any Valuation Date if:
1. the Cash Value, if any, is less than $500, and;
2. premium has not been paid for at least three years.
If this Contract is terminated, the Cash Value of the Owner's Account, if any,
less any applicable premium tax not previously deducted will be paid to you.
Termination will not occur until 31 days after the Company has mailed notice of
termination to the Group Contract Owner or the Participant, as provided in the
Plan, at the last known address; and to any assignee of record.
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
19
<PAGE> 23
Accumulation Units credited to the Contract in each Underlying Fund 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.
RIGHT TO RETURN
The Contract may be returned for a full refund of the Contract's Cash Value
(including charges) within ten days after the delivery of the Contract to the
Contract Owner, unless state law requires a longer period. The Contract Owner
bears the investment risk during the free-look period; therefore, the Cash Value
returned may be greater or less than the Purchase Payment made under the
Contract. However, if applicable state law so requires, or if the Contract was
purchased in an Individual Retirement Annuity, the Purchase Payment will be
returned in full. All Cash Values will be determined as of the Valuation Date
next following the Company's receipt of the Contract Owner's written request for
refund.
The right to return is not available to participants of the Texas Optional
Retirement Program.
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 SEC so that
disposal of the Separate 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 Contract
Owners, the Company may postpone all procedures (including making Annuity
Payments) which require valuation of Separate Accounts until the stock exchange
is reopened and trading is no longer restricted.
VOTING RIGHTS
The Contract Owner has certain voting rights in the Underlying Funds. The number
of votes which an 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 Contract 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, the voting rights of an Annuitant, will decline
as the reserve for the Contract declines.
Upon the death of the person authorized to vote under the Contract, all voting
rights will vest in the beneficiary of the Contract, except in the case of
nonqualified Individual 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 the Underlying Funds at regular and special meetings of the
shareholders of the funds 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 mutual 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 mutual 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 mutual fund.
Each person having a voting interest in Fund VA will receive periodic reports
relating to the fund(s) in which he or she has an interest, proxy material and a
form with which to give such instructions with respect to the proportion of the
fund shares held in Fund VA corresponding to his or her interest in Fund VA.
20
<PAGE> 24
DISTRIBUTION OF VARIABLE ANNUITY CONTRACTS
The Company intends to sell the Contract in all jurisdictions where the Company
is licensed to do business. The Contract may be purchased from agents who are
licensed by state insurance authorities to sell variable annuity contracts
issued by the Company, and who are also registered representatives of
broker-dealers which have Selling Agreements with Tower Square Securities, Inc.
("Tower Square"). Tower Square, whose principal business address is One Tower
Square, Hartford, Connecticut, serves as the principal underwriter for the
variable annuity contracts described herein. It is anticipated, however, that an
affiliated broker-dealer may become the principal underwriter for the Contracts
during 1996. The offering is continuous. Tower Square is a registered
broker-dealer with the SEC under the Securities Exchange Act of 1934 and is a
member of the National Association of Securities Dealers, Inc. ("NASD"). Tower
Square is an affiliate of the Company and an indirect wholly owned subsidiary of
Travelers Group Inc., and serves as principal underwriter pursuant to a
Distribution and Management Agreement to which the Separate Accounts, the
Company and Tower Square are parties. No amounts have been or will be retained
by Tower Square for acting as principal underwriter for the Contracts.
Agents will be compensated for sales of the Contracts on a commission and
service fee basis. The compensation paid to sales agents will not exceed 7.0% of
the payments made under the Contract. In addition, certain production,
persistency and managerial bonuses may be paid.
From time to time the Company may pay or permit other promotional incentives, in
cash, credit or other compensation.
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 1 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 by the National Association of Insurance Commissioners
("NAIC") 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.
LEGAL PROCEEDINGS AND OPINIONS
There are no pending material legal proceedings affecting the Separate Accounts.
Legal matters in connection with federal laws and regulations affecting the
issue and sale of the variable annuity Contract 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 passed on by the General
Counsel of the Life and Annuities Division of the Company.
THE INSURANCE COMPANY AND SEPARATE ACCOUNT
- --------------------------------------------------------------------------------
THE INSURANCE COMPANY
The Travelers Life and Annuity Company (the "Company"), an indirect wholly owned
subsidiary of Travelers Group Inc., is a stock insurance company chartered in
1973 in Connecticut and 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
21
<PAGE> 25
become licensed in the remaining states, except New York. The Company's Home
Office is located at One Tower Square, Hartford, Connecticut 06183.
THE SEPARATE ACCOUNT
Fund VA is a unit investment trust registered with the SEC under the 1940 Act,
which means that Fund VA's assets are invested exclusively in the shares of the
Underlying Funds.
Under Connecticut law, the assets of Fund VA will be held for the exclusive
benefit of its owners. Income, gains and losses, whether or not realized, for
assets allocated to Fund VA, are in accordance with the applicable annuity
contracts, credited to or charged against the Separate Account without regard to
other income, gains or losses of the Company. The assets in the Separate Account
are not chargeable with liabilities arising out of any other business which the
Company may conduct. The obligations arising under the Variable Annuity
contracts are obligations of the Company.
SUBSTITUTION OF INVESTMENTS
If any of the Underlying Funds become unavailable, or in the judgment of the
Company become inappropriate for the purposes of the Contract, the Company may
substitute another Underlying Fund without consent of Contract Owners.
Substitution may be made with respect to both existing investments and the
investment of future Purchase Payments. However, no such substitution will be
made without notice to Contract Owners and without prior approval of the SEC, to
the extent required by the 1940 Act, or other applicable law.
22
<PAGE> 26
INVESTMENT ADVISERS
The Underlying Funds receive investment management and advisory services from
the following investment professionals:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
UNDERLYING FUND INVESTMENT ADVISER SUBADVISER
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Capital Appreciation Fund The Travelers Investment Janus Capital Corporation
Management Company (TIMCO)
- -------------------------------------------------------------------------------------------------------
High Yield Bond Trust Travelers Asset Management
International Corporation (TAMIC)
- -------------------------------------------------------------------------------------------------------
Cash Income Trust TAMIC
- -------------------------------------------------------------------------------------------------------
Managed Assets Trust TAMIC TIMCO
- -------------------------------------------------------------------------------------------------------
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 Fidelity Management & Research
Portfolio Company
- -------------------------------------------------------------------------------------------------------
Fidelity's Growth Portfolio Fidelity Management & Research
Company
- -------------------------------------------------------------------------------------------------------
Fidelity's Asset Manager Fidelity Management & Research
Portfolio Company
- -------------------------------------------------------------------------------------------------------
Dreyfus Stock Index Fund Mellon Equity Associates
- -------------------------------------------------------------------------------------------------------
American Odyssey International American Odyssey Funds Bank of Ireland Asset Management
Equity Fund Management, Inc. (U.S.) Limited
- -------------------------------------------------------------------------------------------------------
American Odyssey Emerging American Odyssey Funds Wilke/Thompson Capital
Opportunities Fund Management, Inc. Management, Inc
- -------------------------------------------------------------------------------------------------------
American Odyssey Core Equity American Odyssey Funds Equinox Capital Management, Inc.
Fund Management, Inc.
- -------------------------------------------------------------------------------------------------------
American Odyssey Long-Term American Odyssey Western Asset Management
Bond Fund Funds Management, Inc. Company and WLO Global
Management
- -------------------------------------------------------------------------------------------------------
American Odyssey Intermediate- American Odyssey Funds TAMIC
Term Bond Fund Management, Inc
- -------------------------------------------------------------------------------------------------------
American Odyssey Short-Term Bond American Odyssey Funds Smith Graham & Co. Asset
Fund Management, Inc. Managers, L.P.
- -------------------------------------------------------------------------------------------------------
Smith Barney Income and Growth Smith Barney Mutual Funds
Portfolio Management Inc.
- -------------------------------------------------------------------------------------------------------
</TABLE>
23
<PAGE> 27
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
UNDERLYING FUND INVESTMENT ADVISER SUBADVISER
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Alliance Growth Portfolio Smith Barney Mutual Funds Alliance Capital Management L.P.
Management Inc.
- -------------------------------------------------------------------------------------------------------
Smith Barney International Smith Barney Mutual Funds
Equity Portfolio Management Inc.
- -------------------------------------------------------------------------------------------------------
Putnam Diversified Income Smith Barney Mutual Funds Putnam Investment Management,
Portfolio Management Inc. Inc.
- -------------------------------------------------------------------------------------------------------
Smith Barney High Income Smith Barney Mutual Funds
Portfolio Management Inc.
- -------------------------------------------------------------------------------------------------------
MFS Total Return Portfolio Smith Barney Mutual Funds Massachusetts Financial Services
Management Inc. Company
- -------------------------------------------------------------------------------------------------------
</TABLE>
PERFORMANCE INFORMATION
From time to time, the Company may advertise several types of historical
performance for the Underlying Funds of Fund VA. The Company may also advertise
the standardized average annual total returns of the Underlying Fund, calculated
in a manner prescribed by the SEC, as well as the nonstandardized total return,
as described below. Standardized 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 since an Underlying Fund's
inception date. 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. The nonstandardized total returns differ from the
standardized average annual total returns, in that they do not reflect the
deduction of any applicable Contingent Deferred Sales Charge or the $15
semiannual contract administrative charge, which would decrease the level of
performance shown.
For Underlying Funds that were in existence prior to the date they became
available under the Contract, the standardized average annual total return and
nonstandardized total return quotations will show the investment performance
that such Underlying Funds would have achieved (reduced by the applicable
charges) had they been available under the Contract for the period quoted.
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 as discussed in the
Statement of Additional Information. 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 separate
accounts and mutual 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.
FEDERAL TAX CONSIDERATIONS
- --------------------------------------------------------------------------------
GENERAL
The Company is taxed as a life insurance company under Subchapter L of the
Internal Revenue Code (the "Code"). Investment income and gains of a Separate
Account 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 Contract 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.
24
<PAGE> 28
INVESTOR CONTROL
In certain circumstances, owners of variable annuity contracts may be considered
the owners, for federal income tax purposes, of the assets of the separate
accounts used to support their contract. In those circumstances, income and
gains from the separate account assets would be includable in the variable
contract owner's gross income.
The IRS has stated in published rulings that a variable contract owner will be
considered the owner of separate account assets if the contract owner possesses
incidents of ownership in those assets, such as the ability to exercise
investment control over the assets. The U.S. Treasury Department has also
announced, in connection with the issuance of regulations concerning
diversification, that those regulations "do not provide guidance concerning the
circumstances in which investor control of the investments of a segregated asset
account may cause the investor (i.e., the Contract Owner), rather than the
insurance company, to be treated as the owner of the assets in the account."
This announcement also stated that guidance would be issued by way of
regulations or rulings on the "extent to which policyholders may direct their
investments to particular Sub-Accounts without being treated as owners of the
underlying assets." As of the date of this prospectus, no such guidance has been
issued.
The ownership rights under the Contract are similar to, but different in certain
respects from, those described by the IRS in rulings in which it determined that
the owners were not owners of separate account assets. For example, a Contract
Owner or Participant of this Contract has additional flexibility in allocating
payments and cash values. These differences could result in the Contract Owner
being treated as the owner of the assets of Fund VA. In addition, the Company
does not know what standard will be set forth in the regulations or rulings
which the Treasury is expected to issue, nor does the Company know if such
guidance will be issued. The Company therefore reserves the right to modify the
Contract as necessary to attempt to prevent the Contract Owner from being
considered the owner of a pro rata share of the assets of Fund VA.
The remaining tax discussion assumes that the Contract qualifies as an annuity
contract for federal income tax purposes.
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.
Distribution 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.
25
<PAGE> 29
Eligible 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.
Distribution 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.
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.
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 begin by April 1st of
the calendar year following 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 non-deductible contributions and distributions.
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 taxexempt 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.
26
<PAGE> 30
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.
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974
Under the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended,
certain special provisions may apply to certain tax-qualified Contracts if the
Owner requests that the Contract be issued to conform to ERISA or if the Company
has notice that the Contract was issued pursuant to a plan that is subject to
ERISA.
ERISA requires that certain Annuity Options, withdrawals or other payments and
any application for a loan secured by the Contract may not be made until the
Participant has filed a Qualified Election with the Plan administrator. Under
certain Plans, ERISA also requires that a designation of a beneficiary other
than the Participant's spouse be invalid unless the Participant has filed a
Qualified Election.
A Qualified Election must include either the written consent of the
Participant's spouse, notarized or witnessed by an authorized Plan
representative, or the Participant's certification that there is no spouse or
that the spouse cannot be located.
The Company intends to administer all contracts to which ERISA applies in a
manner consistent with the direction of the Plan administrator regarding the
provisions of the Plan, in accordance with applicable law. Because these
requirements differ according to the Plan, a person contemplating the purchase
of an annuity contract should consider the provisions of the Plan.
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 a mandatory 20% tax withholding for plan distributions that are
eligible for rollover to an IRA 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
27
<PAGE> 31
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, 1996, a recipient receiving periodic payments (e.g.,
monthly or annual payments under an Annuity Option) which total $14,350 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-qualified plan loses its exempt status, employees could lose some
of the tax benefits described. For further information regarding federal income
taxes and any applicable state income taxes, a qualified tax adviser should be
consulted.
28
<PAGE> 32
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 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.
29
<PAGE> 33
APPENDIX A
CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
The Statement of Additional Information contains more specific information and
financial statements relating to the Separate Accounts and The Travelers Life
and Annuity Company. A list of the contents of the Statement of Additional
Information is set forth below:
Description of The Travelers Life and Annuity Company and The Separate
Accounts
The Insurance Company
The Separate Account
Valuation of Separate Account Assets
Net Investment Factor
Performance Data
Average Annual Total Return Quotations of Fund VA
Distribution and Management Services
Independent Accountants
Financial Statements
COPIES OF THE STATEMENT OF ADDITIONAL INFORMATION DATED MAY 1, 1996 (FORM NO.
L-12428S) ARE AVAILABLE WITHOUT CHARGE. TO REQUEST A COPY, PLEASE CLIP THIS
COUPON ON THE DOTTED LINE, ENTER YOUR NAME AND ADDRESS IN THE SPACES PROVIDED
BELOW, AND MAIL TO: THE TRAVELERS LIFE AND ANNUITY COMPANY, ANNUITY SERVICES,
ONE TOWER SQUARE, HARTFORD, CONNECTICUT 06183-5030.
Name:
Address:
----------------------------------------------------------------------
30
<PAGE> 34
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
<PAGE> 35
UNIVERSAL ANNUITY
STATEMENT OF ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
THE TRAVELERS FUND VA FOR VARIABLE ANNUITIES
- --------------------------------------------------------------------------------
VARIABLE ANNUITY CONTRACTS
ISSUED BY
THE TRAVELERS LIFE AND ANNUITY COMPANY
MAY 1, 1996
This Statement of Additional Information is not a prospectus but
relates to, and should be read in conjunction with, the Prospectus dated May 1,
1996. A copy of the Prospectus may be obtained by writing to The Travelers
Life and Annuity Company (the "Company"), Annuity Services, One Tower Square,
Hartford, Connecticut 06183-5030, or by calling 860-422-3985.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
DESCRIPTION OF THE TRAVELERS LIFE AND ANNUITY COMPANY AND THE SEPARATE ACCOUNT. . . . . . . . . . 2
The Insurance Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
The Separate Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
VALUATION OF SEPARATE ACCOUNT ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
NET INVESTMENT FACTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
PERFORMANCE DATA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Average Annual Total Return Quotations of Fund VA . . . . . . . . . . . . . . . . . . . . . . . 4
DISTRIBUTION AND MANAGEMENT SERVICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
</TABLE>
1
<PAGE> 36
DESCRIPTION OF THE TRAVELERS LIFE AND ANNUITY COMPANY
AND THE SEPARATE ACCOUNTS
THE INSURANCE COMPANY
The Travelers Life and Annuity Company (the "Company"), an indirect
wholly owned subsidiary of Travelers Group Inc., is a stock insurance company
chartered in 1973 in Connecticut and 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 (860) 277-0111.
The Company is a wholly owned subsidiary of The Travelers Insurance
Company, which is indirectly owned, through a wholly owned subsidiary, 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
Fund VA meets the definition of a separate account under federal
securities laws, and will comply with the provisions of the Investment Company
Act of 1940, as amended (the "1940 Act"). Additionally, the operations of
the Separate Account is subject to the provisions of Section 38a-433 of the
Connecticut General Statutes which authorize the Connecticut Insurance
Commissioner to adopt regulations under it. The Section contains no
restrictions on investments of the Separate Account, and the Commissioner has
adopted no regulations under the Section that affect the Separate Account.
VALUATION OF SEPARATE ACCOUNT ASSETS
The value of the assets of each Separate Account is determined on each
Valuation Date as of the close of the New York Stock Exchange. If the New York
Stock Exchange is not open for trading on any such day, then such computation
shall be made as of the normal close of the New York Stock Exchange. Each
security traded on a national securities exchange is valued at the last
reported sale price on the Valuation Date. If there has been no sale on that
day, then the value of the security is taken to be the mean between the
reported bid and asked prices on the Valuation Date or on the basis of
quotations received from a reputable broker or any other recognized source.
Any security not traded on a securities exchange but traded in the
over-the-counter market and for which market quotations are readily available
is valued at the mean between the quoted bid and asked prices on the Valuation
Date or on the basis of quotations received from a reputable broker or any
other recognized source.
Securities traded on the over-the-counter market and listed securities
with no reported sales are valued at the mean between the last reported bid and
asked prices or on the basis of quotations received from a reputable broker or
other recognized source.
Short-term investments for which a quoted market price is available
are valued at market. Short-term investments maturing in more than sixty days
for which there is no reliable quoted market price are valued by "marking to
market" (computing a market value based upon quotations from dealers or issuers
for securities of a similar type, quality and maturity). "Marking to market"
takes into account unrealized appreciation or depreciation due to changes in
interest rates or other factors which would influence the current fair values
of such securities. Short-term investments maturing in sixty days or less for
which there is no reliable quoted market price are valued at amortized cost
which approximates market.
2
<PAGE> 37
NET INVESTMENT FACTOR
The net investment factor is used to measure the investment
performance of an investment alternative from one Valuation Period to the next.
The net investment factor is determined by dividing (a) by (b) and adding (c)
to the result where:
(a) is the net result of the Valuation Period's investment income
(including, in the case of assets invested in an underlying mutual
fund, distributions whose ex-dividend date occurs during the
Valuation Period), PLUS capital gains and losses (whether realized
or unrealized), LESS any deduction for applicable taxes (presently
zero);
(b) is the value of the assets at the beginning of the Valuation
Period (or, in the case of assets invested in an underlying mutual
fund, value is based on the net asset value of the mutual fund);
(c) is the net result of 1.000, LESS the Valuation Period deduction
for the insurance charge, LESS the applicable deduction for the
investment advisory fee, and in the case of Accounts TGIS, TSB,
TAS and TB, LESS the applicable deduction for market timing fees
(the deduction for the investment advisory fee is not applicable
in the case of assets invested in an Underlying Fund, since the
fee is reflected in the net asset value of the fund).
The net investment factor may be more or less than one.
PERFORMANCE DATA
3
<PAGE> 38
AVERAGE ANNUAL TOTAL RETURN QUOTATIONS OF FUND VA
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 an Investment Alternative, and then related to ending
redeemable values over one-, five- and ten-year periods (or fractional portions
thereof). 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 semiannual administrative charge ($15) 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. For Underlying Funds that were in existence prior to the date
they became available under Fund VA, average annual total return calculations
may include periods prior to their availability under Fund VA. Such returns
will be calculated by adjusting the actual returns of the underlying funds to
reflect the charges that would have been assessed under Fund VA had the
underlying fund been available under Fund VA during that period.
NONSTANDARDIZED METHOD. Fund VA may also show the percentage change in
the value of an Accumulation Unit based on performance over a period of time,
usually for the calendar year-to-date, and for the past one- , three- , five-
and seven-year periods, determined by dividing the increase (decrease) in value
for that unit by the Accumulation Unit Value at the beginning of the period.
This percentage figure will reflect the deduction of any asset based charges
under the contracts, but will not reflect the deduction of the semiannual
administrative charge or surrender charge. The deduction of the semi-annual
administrative charge or surrender charge would reduce any percentage increase
or make greater any percentage decrease. For Underlying Funds that were in
existence prior to the date they became available under Fund VA, the percentage
change in the value of an accumulation unit based on the performance of Fund VA
over a period of time may include periods prior to their availability under
Fund VA. Such returns will be calculated by adjusting the actual returns of
the underlying funds to reflect the charges that would have been assessed under
Fund VA had the underlying fund been available under Fund VA during that
period.
GENERAL. 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
separate accounts and mutual funds.
Average annual total returns of each Separate Account computed
according to the standardized and non-standardized methods for the periods
ended December 31, 1995 are set forth in the following table.
4
<PAGE> 39
<TABLE>
<CAPTION>
STANDARDIZED NON-STANDARDIZED
INCEPTION DATE
1 Year 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fund VA **--
Managed Assets Trust 20.32% 9.42% 9.94% 25.54% 9.38% 10.42% 10.26%
High Yield Bond Trust 8.88% 11.05% 6.12% 14.09% 7.79% 12.01% 6.44% 5/83
Capital Appreciation Fund(1) 29.44% 16.33% 9.42% 34.67% 12.90% 17.20% 9.74% 5/83
Cash Income Trust N/A N/A N/A N/A N/A N/A N/A N/A
U.S. Government Securities Portfolio 17.72% 5.97%* -- 22.94% 7.40%* -- -- 1/92
Social Awareness Stock Portfolio 26.52% 9.53% -- 31.75% 1.039%* -- -- 5/92
Utilities Portfolio 22.47% 11.44%* -- 27.69% 14.07%* -- -- 2/94
Templeton Bond Fund 8.30% 5.85% 6.18%* 13.50% 5.48% 6.94% 6.48%* 8/88
Templeton Stock Fund 18.48% 15.16% 10.63%* 23.69% 16.49% 16.05% 10.94%* 8/88
Templeton Asset Allocation Fund 15.82% 13.29% 9.77%* 21.03% 13.05% 14.21% 10.08%* 8/88
Fidelity's High Income Portfolio 13.90% 16.64% 9.79%* 19.11% 11.29% 17.50% 10.11%* 9/85
Fidelity's Equity-Income Portfolio 28.18% 18.99% 11.60%* 33.41% 18.11% 19.81% 11.93%* 10/86
Fidelity's Growth Portfolio 28.46% 18.46% 13.09%* 33.69% 15.88% 19.29% 13.42%* 10/86
Fidelity's Asset Manager Portfolio 0.31% 10.38% 9.56%* 15.51% 8.59% 11.36% 9.87%* 9/89
Dreyfus Stock Index Fund 29.86% 13.62% 10.62%* 35.09% 13.27% 14.53% 10.94%* 9/89
American Odyssey Core Equity Fund 31.61% 10.20% -- 36.85% 12.06%* -- -- 5/93
American Odyssey
Emerging Opportunities Fund 25.38% 15.44%* -- 30.61% 17.20%* -- -- 5/93
American Odyssey
International Equity Fund 12.32% 7.61%* -- 17.53% 9.53%* -- -- 5/93
American Odyssey
Long-Term Bond Fund 15.72% 5.82%* -- 20.94% 7.79%* -- -- 5/93
American Odyssey
Intermediate-Term Bond Fund 8.39% 2.57%* -- 13.59% 4.62%* -- -- 5/93
American Odyssey
Short-Term Bond Fund 4.29% 1.63%* -- 9.49% 3.70%* -- -- 5/93
Smith Barney Income
and Growth Portfolio 26.18% 14.84%* -- 31.41% 28.92%* -- -- 6/94
Alliance Growth Portfolio 27.92% 21.10%* -- 33.15% 39.37%* -- -- 6/94
Smith Barney
International Equity Portfolio 4.66% (0.32)%* -- 9.86% 4.87%* -- -- 6/94
Putnam Diversified
Income Portfolio 10.72% 7.38%* -- 15.93% 16.83%* -- -- 6/94
Smith Barney
High Income Portfolio 11.27% 6.22%* -- 16.48% 14.99%* -- -- 6/94
MFS Total Return
Portfolio 18.93% 10.25%* -- 24.15% 21.46%* -- -- 6/94
</TABLE>
* Since inception date.
** For those Fund VA sub-accounts that invest in underlying funds that were in
existence prior to the date on which the underlying fund became available under
the Contract, performance figures represent actual returns of the underlying
funds, adjusted to reflect the charges that would have been assessed had those
underlying funds been offered under Fund VA during the entire period shown.
(1) Formerly Aggressive Stock Trust.
5
<PAGE> 40
DISTRIBUTION AND MANAGEMENT SERVICES
Under the terms of a Distribution and Management Agreement between the
Separate Account, the Company and Tower Square Securities, Inc., the Company
provides all sales and administrative services and mortality and expense risk
guarantees related to variable annuity contracts issued by the Company in
connection with the Separate Account and assumes the risk of minimum death
benefits, as applicable. The Company also pays all sales costs (including
costs associated with the preparation of sales literature); all costs of
qualifying the Separate Account and the variable annuity contracts with
regulatory authorities; the costs of proxy solicitation; all custodian,
accountants' and legal fees. The Company also provides without cost to the
Separate Accounts all necessary office space, facilities, and personnel to
manage its affairs.
INDEPENDENT ACCOUNTANTS
The balance sheet of The Travelers Life and Annuity Company
(the"Company") as of December 31, 1995 and 1994 and the statements of
operations and retained earnings and cash flows for the years then ended, have
been included herein in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, and upon the authority of said firm
as experts in accounting and auditing. The report of KPMG Peat Marwick LLP
covering the December 31, 1995 and 1994 financial statements of the Company
refers to a change in the accounting for investments in accordance with
provisions of Statement of Financial Accounting Standards No. 115, "Accounting
for Certain Investments in Debt and Equity Securitites," in 1994.
The statements of operations and retained earnings and cash flows of
the Company for the year ended December 31, 1993, have been included herein in
reliance upon the report dated September 16, 1994 of Coopers & Lybrand L.L.P.,
certified public accountants, and upon the authority of said firm as experts in
accounting and auditing.
6
<PAGE> 41
Independent Auditors' Report
The Board of Directors and Shareholder of
The Travelers Life and Annuity Company:
We have audited the accompanying balance sheet of The Travelers Life and
Annuity Company as of December 31, 1995 and 1994, and the related statements of
operations and retained earnings and cash flows for the years then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our 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, 1995 and 1994, and the results of its operations and
its cash flows for the years then ended, in conformity with generally accepted
accounting principles.
As discussed in note 3 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 16, 1996
7
<PAGE> 42
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 L.L.P.
Hartford, Connecticut
September 16, 1994
8
<PAGE> 43
THE TRAVELERS LIFE AND ANNUITY COMPANY
STATEMENT OF OPERATIONS AND RETAINED EARNINGS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
(for the year ended December 31, in thousands) 1995 1994 | 1993
- --------------------------------------------------------------------------------------------|-----------
<S> <C> <C> | <C>
REVENUES |
Premiums $ 2,652 $ 3,498 | $ 4,524
Net investment income 63,209 66,093 | 58,044
Realized investment gains (losses) 18,713 (2,074) | 11,955
Other 17,466 18,702 | 9,102
- --------------------------------------------------------------------------------------------|-----------
102,040 86,219 | 83,625
- --------------------------------------------------------------------------------------------|-----------
|
BENEFITS AND EXPENSES |
Current and future insurance benefits 52,390 55,596 | 67,489
Amortization of deferred acquisition costs |
and value of insurance in force 1,563 - | -
Other operating expenses 4,651 2,758 | 3,075
- --------------------------------------------------------------------------------------------|-----------
58,604 58,354 | 70,564
- --------------------------------------------------------------------------------------------|-----------
|
Income before federal income taxes 43,436 27,865 | 13,061
- --------------------------------------------------------------------------------------------|-----------
|
Federal income taxes: |
Current 2,555 4,742 | 22,124
Deferred 11,964 4,798 | (22,672)
- --------------------------------------------------------------------------------------------|-----------
14,519 9,540 | (548)
- --------------------------------------------------------------------------------------------|-----------
Net income 28,917 18,325 | 13,609
Retained earnings beginning of year 128,990 110,665 | 97,034
Preference stock tax benefit allocated by parent - - | 22
- --------------------------------------------------------------------------------------------|-----------
Retained earnings end of year $ 157,907 $ 128,990 | $ 110,665
- --------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
9
<PAGE> 44
THE TRAVELERS LIFE AND ANNUITY COMPANY
BALANCE SHEET
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
(at December 31, in thousands) 1995 1994
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Fixed maturities, available for sale at market
(cost, $678,293; $624,347) $ 724,639 $ 559,142
Equity securities, at market (cost, $9,453; $14,252) 13,099 16,064
Mortgage loans 125,813 152,359
Real estate held for sale, net of accumulated depreciation of $524; $337 8,995 6,810
Short-term securities 51,381 44,472
Other investments 65,805 72,190
- ---------------------------------------------------------------------------------------------------------------
Total investments 989,732 851,037
- ---------------------------------------------------------------------------------------------------------------
Cash - 296
Investment income accrued 11,030 10,211
Premium balances receivable 2,277 -
Reinsurance recoverables 718 573
Deferred acquisition costs and value of insurance in force 22,560 21,014
Deferred federal income taxes 41,158 94,315
Separate accounts 886,688 820,384
Current federal income taxes 6,691 -
Other assets 3,785 3,539
- ---------------------------------------------------------------------------------------------------------------
Total assets $ 1,964,639 $ 1,801,369
- ---------------------------------------------------------------------------------------------------------------
LIABILITIES
Future policy benefits $ 671,027 $ 691,108
Contractholder funds 11,947 -
Current federal income taxes - 26,071
Separate accounts 856,867 808,181
Other liabilities 61,247 17,889
- ---------------------------------------------------------------------------------------------------------------
Total liabilities 1,601,088 1,543,249
- ---------------------------------------------------------------------------------------------------------------
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 167,314 167,354
Retained earnings 157,907 128,990
Unrealized investment gains (losses), net of taxes 35,330 (41,224)
- ---------------------------------------------------------------------------------------------------------------
Total shareholder's equity 363,551 258,120
- ---------------------------------------------------------------------------------------------------------------
Total liabilities and shareholder's equity $ 1,964,639 $ 1,801,369
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
10
<PAGE> 45
THE TRAVELERS LIFE AND ANNUITY COMPANY
STATEMENT OF CASH FLOWS
Increase (Decrease) in Cash
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
(for the year ended December 31, in thousands) 1995 1994 | 1993
- ------------------------------------------------------------------------------------------|-------------
<S> <C> <C> | <C>
CASH FLOWS FROM OPERATING ACTIVITIES |
Premiums collected $ 1,950 $ 3,498 | $ 4,524
Net investment income received 66,219 57,240 | 53,944
Benefits and claims paid (71,710) (72,298) | (74,660)
Operating expenses paid (3,013) (4,400) | (3,249)
Income taxes refunded (paid) (35,305) 1,030 | (10,661)
Trading account investments, (purchases) sales, net - - | 35,093
Other (6,772) 22,507 | (683)
- ------------------------------------------------------------------------------------------|-------------
Net cash provided by (used in) operating activities (48,631) 7,577 | 4,308
- ------------------------------------------------------------------------------------------|-------------
CASH FLOWS FROM INVESTING ACTIVITIES |
Investment repayments |
Fixed maturities 11,752 29,043 | 29,479
Mortgage loans 24,137 60,260 | 53,835
Proceeds from investments sold, including real estate |
held for sale |
Fixed maturities 459,971 41,671 | 46,001
Equity securities 11,823 9,373 | 7,676
Mortgage loans 7,013 23,327 | 11,835
Real estate held for sale - 34,181 | 26,014
Investments in |
Fixed maturities (515,098) (204,412) | (206,682)
Equity securities (156) (375) | (5,280)
Mortgage loans (4,890) (5,607) | -
Short-term securities, (purchases) sales, net (5,051) (1,146) | (16,430)
Other investments, (purchases) sales, net 9,274 682 | 46,595
Securities transactions in course of settlement 45,727 5,722 | 1,133
- ------------------------------------------------------------------------------------------|-------------
Net cash provided by (used in) investing activities 44,502 (7,281) | (5,824)
- ------------------------------------------------------------------------------------------|-------------
CASH FLOWS FROM FINANCING ACTIVITIES |
Contractholder fund deposits 5,707 - | -
Contractholder fund withdrawals (1,874) - | -
- ------------------------------------------------------------------------------------------|-------------
Net cash provided by financing activities 3,833 - | -
- ------------------------------------------------------------------------------------------|-------------
Net increase (decrease) in cash $ (296) $ 296 | $ (1,516)
- --------------------------------------------------------------------------------------------------------
Cash at December 31 $ - $ 296 $ -
- --------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
11
<PAGE> 46
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS
The Travelers Life and Annuity Company (the Company) is a wholly owned
subsidiary of The Travelers Insurance Company (TIC), which is an
indirect, wholly owned subsidiary of Travelers Group Inc. (Travelers).
The Company primarily writes single premium group annuity close-out
contracts and individual structured settlement annuities. The single
premium group annuity contracts are typically purchased by
employer-sponsored pension plans upon termination of the plan, asset
reversion or other significant plan changes. The individual structured
settlement contracts are purchased by affiliates, The Travelers
Indemnity Company and its subsidiaries, in connection with the
settlement of certain of its policyholder obligations. In 1995, the
Company also commenced writing individual life and deferred annuity
business.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 27%
Acquisition). The 27% 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
Travelers Group Inc. This was effected through the exchange of .80423
shares of Travelers common stock for each share of The Travelers
Corporation common stock (the Merger). All subsidiaries of The
Travelers Corporation were contributed to The Travelers Insurance Group
Inc. (TIGI).
The 27% Acquisition and the Merger were accounted for as a "step
acquisition", and the purchase accounting adjustments were "pushed down"
as of December 31, 1993 to the subsidiaries of TIGI, including the
Company, and reflect adjustments of assets and liabilities of the
Company to their 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 were
recorded at December 31, 1993 based upon management's then best estimate
of their fair values at the respective dates. Evaluation and appraisal
of assets and liabilities, including investments, the value of insurance
in force, other insurance assets and liabilities and related deferred
federal income taxes was 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 "pushdown"
accounting, was approximately $1.3 million and is being amortized over
ten years on a straight-line basis.
The statements of operations and retained earnings and of cash flows and
the related accompanying notes for the years ended December 31, 1995 and
1994, which are presented on a purchase accounting basis, are separated
from the corresponding 1993 information, which is presented on a
historical accounting basis, to indicate the difference in valuation
bases.
12
<PAGE> 47
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and benefits
and expenses during the reporting period. Actual results could differ
from those estimates.
Certain prior year amounts have been reclassified to conform with the
1995 presentation.
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. Fixed maturities 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.
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. For mortgage loans that
are determined to be impaired, a reserve is established for the
difference between the amortized cost and fair market value of the
underlying collateral. Impaired loans were insignificant at December
31, 1995.
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, either internal or external, using discounted
cash flow analyses and other acceptable techniques. Thereafter, an
allowance for losses on real estate held for sale is established if the
carrying value of the property exceeds its current fair value less
estimated costs to sell. There was no such allowance at December 31,
1995.
Accrual of income is suspended on fixed maturities or mortgage loans
that are in default, or on which it is likely that future payments will
not be made as scheduled. Interest income on investments in default is
recognized only as payment is received.
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
investment 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
remeasurement of the local currency value of foreign investments to U.S.
dollars, the functional currency of the Company.
13
<PAGE> 48
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
Separate Accounts
Separate account liabilities primarily represent structured settlement
annuity obligations, which provide guaranteed levels of return or
benefits to contractholders. The separate account assets supporting
these obligations, which are legally segregated and are not subject to
claims that arise out of any other business of the Company, are carried
at amortized cost. Earnings on structured settlement contracts,
generally net investment income less policyholder benefits and operating
expenses, are included in other revenues.
In addition, the Company has other separate accounts, representing funds
for which investment income and investment gains and losses accrue
directly to, and investment risk is borne by, the contractholders. Each
of these accounts have specific investment objectives. The assets and
liabilities of these accounts are carried at market value, and amounts
assessed to the contractholders for management services are included in
revenues. Deposits, net investment income and realized investment gains
and losses for these accounts are excluded from revenues, and related
liability increases are excluded from benefits and expenses.
Deferred Acquisition Costs and Value of Insurance In Force
Costs of acquiring individual life insurance and annuity business,
principally commissions and certain expenses related to policy issuance,
underwriting and marketing, all of which vary with and are primarily
related to the production of new business, are deferred. Acquisition
costs relating to traditional life insurance are amortized over the
period of anticipated premiums; universal life in relation to estimated
gross profits; and annuity contracts employing a level yield method. A
10- to 25-year amortization period is used for life insurance, and a 10-
to 15-year period is employed for annuities. Deferred acquisition costs
are reviewed periodically for recoverability to determine if any
adjustment is required.
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.
Future Policy Benefits
Benefit reserves represent liabilities for future insurance policy
benefits. Benefit reserves for life insurance and annuity policies have
been computed based upon mortality, morbidity, persistency and interest
assumptions applicable to these coverages, which range from 4.5% to
7.5%, 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.
14
<PAGE> 49
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
Contractholder Funds
Contractholder funds represent receipts from the issuance of universal
life and certain individual annuity contracts. Such receipts are
considered deposits on investment contracts that do not have substantial
mortality or morbidity risk. Account balances are also increased by
interest credited and reduced by withdrawals, mortality charges and
administrative expenses charged to the contractholders. Calculations of
contractholder account balances reflect lapse, withdrawal and interest
rate assumptions based on contract provisions, the Company's experience
and industry standards. Interest rates credited to contractholder funds
range from 4.2% to 6.5%.
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. Other
revenues also include structured settlement policyholder revenues, which
relate to contracts issued through a separate account of the Company,
net of the related policyholder benefits and expenses.
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 during the year in cumulative temporary
differences between the tax basis and book basis of assets and
liabilities. 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.
15
<PAGE> 50
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
Accounting Standards not yet Adopted
Statement of Financial Accounting Standards No. 121, "Accounting for
Long-Lived Assets and for Long-Lived Assets to be Disposed Of"
establishes accounting standards for the impairment of long-lived
assets, certain identifiable intangibles, and goodwill related to those
assets to be held and used and for long-lived assets and certain
identifiable intangibles to be disposed of. This statement requires the
write down to fair value when long-lived assets to be held and used are
impaired. It also requires long-lived assets to be disposed of (e.g.,
real estate held for sale) to be carried at the lower of cost or fair
value less cost to sell and does not allow such assets to be
depreciated. The adoption of this statement, effective January 1, 1996,
did not have a material effect on results of operations, financial
condition or liquidity.
In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" (FAS 123). This statement addresses
alternative accounting treatments for stock-based compensation, such as
stock options and restricted stock. FAS 123 permits either expensing
the value of stock-based compensation over the period earned or
disclosing in the financial statement footnotes the pro forma impact to
net income as if the value of stock-based compensation awards had been
expensed. The value of awards would be measured at the grant date based
upon estimated fair value, using option pricing models. The
requirements of this statement will be effective for 1996 financial
statements, although earlier adoption is permissible if an entity elects
to expense the cost of stock-based compensation. The Company, along
with affiliated companies, participates in stock option and incentive
plans sponsored by Travelers. The Company is currently evaluating the
disclosure requirements and expense recognition alternatives addressed
by this statement.
3. CHANGES IN ACCOUNTING PRINCIPLES
Accounting by Creditors for Impairment of a Loan
Effective January 1, 1995, the Company adopted Statement of Financial
Accounting Standards No. 114, "Accounting by Creditors for Impairment of
a Loan," and Statement of Financial Accounting Standards No. 118,
"Accounting by Creditors for Impairment of a Loan - Income Recognition
and Disclosures," which describe how impaired loans should be measured
when determining the amount of a loan loss accrual. These statements
amended existing guidance on the measurement of restructured loans in a
troubled debt restructuring involving a modification of terms. Their
adoption did not have a material impact on the Company's financial
condition, results of operations or liquidity.
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 12 for
additional disclosures.
16
<PAGE> 51
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
4. REINSURANCE
The Company participates in reinsurance in order to limit losses,
minimize exposure to large risks, provide capacity for future growth and
to effect business-sharing arrangements. The Company remains primarily
liable as the direct insurer on all risks reinsured.
Life insurance in force ceded to affiliates at December 31, 1995 and
1994 was $97.7 million and $106.0 million, respectively. At December
31, 1995 and 1994, $601.2 million and $0, respectively, was ceded to
non-affiliates.
5. SHAREHOLDER'S EQUITY
Unrealized Investment Gains (Losses)
An analysis of the change in unrealized gains and losses on investments
is shown in note 12.
Additional Paid-in Capital
As a result of the finalization of the evaluations and appraisals used
to assign fair value 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
Statutory net income was $23.0 million and $5.7 million for the years
ended December 31, 1995 and 1994, respectively. Statutory net loss was
$23.0 million for the year ended December 31, 1993.
Statutory capital and surplus was $257.8 million and $233.0 million at
December 31, 1995 and 1994, respectively.
The Company is currently subject to various regulatory restrictions that
limit the maximum amount of dividends available to be paid to its parent
without prior approval of insurance regulatory authorities. Statutory
surplus of $16.4 million is available in 1996 for dividend payments by
the Company without prior approval of the Connecticut Insurance
Department.
17
<PAGE> 52
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
6. 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. The Company does not
hold or issue derivative instruments for trading purposes.
The off-balance-sheet risks of fixed rate loan commitments, commitments
to partnerships and forward contracts were not significant at December
31, 1995 and 1994.
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, 1995, investments in fixed maturities had a carrying
value and a fair value of $724.6 million, compared with a carrying value
and a fair value of $559.1 million at December 31, 1994. See note 12.
At December 31, 1995 and 1994, mortgage loans had a carrying value of
$125.8 million and $152.4 million, respectively, which approximates fair
value. In estimating fair value, the Company used interest rates
reflecting the higher returns required in the real estate financing
market.
The carrying values of $1.9 million and $2.4 million of financial
instruments classified as other assets approximated their fair values at
December 31, 1995 and 1994, respectively. The carrying values of $55.3
million and $14.2 million of financial instruments classified as other
liabilities also approximated their fair values at December 31, 1995 and
1994, respectively. Fair value is determined using various methods
including discounted cash flows, as appropriate for the various
financial instruments.
The assets of separate accounts providing a guaranteed return had a
carrying value and a fair value of $869.1 million and $923.0 million,
respectively, at December 31, 1995, compared to a carrying value and a
fair value of $820.4 million and $757.2 million, respectively, at
December 31, 1994. The liabilities of separate accounts providing a
guaranteed return had a carrying value and a fair value of $839.1
million and $766.3 million, respectively, at December 31, 1995, compared
to a carrying value and a fair value of $808.2 million and $681.4
million, respectively, at December 31, 1994.
The carrying values of short-term securities and investment income
accrued approximated their fair values.
18
<PAGE> 53
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
7. COMMITMENTS AND CONTINGENCIES
Financial Instruments with Off-Balance-Sheet Risk
See note 6 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, 1995, 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.
8. BENEFIT PLANS
Pension Plans
The Company participates in qualified and nonqualified, noncontributory
defined benefit pension plans sponsored by an affiliate. 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 1995,
1994 or 1993.
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 TIGI. 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.
The Company's share of the total cost of the plan for 1995, 1994 and
1993 was not significant.
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. These
merger-related costs were assumed by TIGI.
19
<PAGE> 54
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
8. BENEFIT PLANS
Savings, Investment and Stock Ownership Plan
Under the savings, investment and stock ownership plan available to
substantially all employees of TIGI, 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 the profitability of TIGI and its subsidiaries was added.
The Company's matching obligation was not significant for 1995, 1994 or
1993.
9. RELATED PARTY TRANSACTIONS
The principal banking functions, including payment of salaries and
expenses, for certain subsidiaries and affiliates of TIGI, including the
Company, are handled by TIC. Settlements for these functions between
TIC and its affiliates are made regularly. TIC provides various
employee benefit coverages to certain subsidiaries of TIGI. The
premiums for these coverages were charged in accordance with cost
allocation procedures based upon salaries or census. In addition,
investment advisory and management services, data processing services
and claims processing services are provided by affiliated companies.
Charges for these services are shared by the companies on cost
allocation methods based generally on estimated usage by department.
TIGI and its subsidiaries maintain a short-term investment pool in which
the Company participates. The position of each company participating in
the pool is calculated and adjusted daily. At December 31, 1995 and
1994, the pool totaled approximately $2.2 billion and $1.5 billion,
respectively. The Company's share of the pool amounted to $49.5 million
and $44.5 million at December 31, 1995 and 1994, respectively, and is
included in short-term securities in the balance sheet.
The Company's TTM Modified Guaranteed Annuity Contracts are subject to a
limited guarantee agreement by TIC in a principal amount of up to $100
million. TIC's obligation is to pay in full to any owner or beneficiary
of the TTM Modified Guaranteed Annuity Contracts principal and interest
as and when due under the annuity contract to the extent that the
Company fails to make such payment. In addition, TIC guarantees that
the Company will maintain a minimum statutory capital and surplus level.
The Company sells structured settlement annuities to its affiliates, The
Travelers Indemnity Company and its subsidiaries. Such deposits were
$36.6 million, $37.6 million and $48.4 million for 1995, 1994 and 1993,
respectively.
The Company began marketing variable annuity products through its
affiliate, Smith Barney, Inc., in 1995. Deposits related to these
products were $20.5 million in 1995.
Most leasing functions for TIGI 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.
20
<PAGE> 55
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
10. FEDERAL INCOME TAXES
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
(in thousands) 1995 1994 | 1993
----------------------------------------------------------------------------|-------------
<S> <C> <C> | <C>
Effective tax rate |
------------------ |
|
Income before federal income taxes $ 43,436 $ 27,865 | $ 13,061
Statutory tax rate 35% 35% | 35%
----------------------------------------------------------------------------|-------------
|
Expected federal income taxes $ 15,203 $ 9,753 | $ 4,571
Tax effect of: |
Nontaxable investment income (13) (90) | (85)
Adjustments to benefit and other reserves - (117) | (4,705)
Adjustment to deferred tax asset for |
enacted change in tax rates from |
34% to 35% - - | (255)
Other, net (671) (6) | (74)
----------------------------------------------------------------------------|-------------
Federal income taxes $ 14,519 $ 9,540 | $ (548)
----------------------------------------------------------------------------|-------------
|
Effective tax rate 33% 34% | (4)%
----------------------------------------------------------------------------|-------------
|
Composition of federal income taxes |
----------------------------------- |
Current: |
United States $ 2,555 $ 4,742 | $ 22,124
----------------------------------------------------------------------------|-------------
|
Deferred: |
United States 11,964 4,798 | (22,672)
----------------------------------------------------------------------------|-------------
Federal income taxes $ 14,519 $ 9,540 | $ (548)
------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE> 56
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
10. FEDERAL INCOME TAXES, Continued
The net deferred tax assets at December 31, 1995 and 1994 were comprised
of the tax effects of temporary differences related to the following
assets and liabilities:
<TABLE>
<CAPTION>
(in thousands) 1995 1994
-----------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Benefit, reinsurance and other reserves $ 67,104 $ 70,729
Investments - 30,908
Other 2,570 2,766
-----------------------------------------------------------------------------------------------
Total 69,674 104,403
-----------------------------------------------------------------------------------------------
Deferred tax liabilities:
Investments 19,625 -
Deferred acquisition costs and
value of insurance in force 6,285 7,355
Other 536 663
-----------------------------------------------------------------------------------------------
Total 26,446 8,018
-----------------------------------------------------------------------------------------------
Net deferred tax asset before valuation allowance 43,228 96,385
Valuation allowance for deferred tax assets (2,070) (2,070)
-----------------------------------------------------------------------------------------------
Net deferred tax asset after valuation allowance $ 41,158 $ 94,315
-----------------------------------------------------------------------------------------------
</TABLE>
Starting in 1994 and continuing for at least five years, TIC and its
life insurance subsidiaries, including the Company, 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.
A net deferred tax asset valuation allowance of $2.1 million has been
established to reduce the 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 Travelers commencing in 1999,
or a change in circumstances which causes the recognition of the
benefits to become more likely than not. There was no change in the
valuation allowance during 1995. The initial recognition of any benefit
provided by the reversal of the valuation allowance will be recognized
by reducing goodwill.
22
<PAGE> 57
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
10. FEDERAL INCOME TAXES, Continued
In management's judgment, the $41.2 million "net deferred tax asset after
valuation allowance" as of December 31, 1995, is fully recoverable
against expected future years' taxable ordinary income and capital gains.
At December 31, 1995, 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) would be
approximately $700 thousand.
11. NET INVESTMENT INCOME
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
(For the year ended December 31, in thousands) 1995 1994 | 1993
---------------------------------------------------------------------------------|--------------
<S> <C> <C> | <C>
Gross investment income |
----------------------- |
Fixed maturities $ 49,486 $ 44,354 | $ 39,189
Equity securities 497 827 | 930
Mortgage loans 11,644 17,178 | 25,258
Real estate held for sale 2,476 6,299 | 19,028
Other 2,552 4,480 | (4,062)
---------------------------------------------------------------------------------|--------------
66,655 73,138 | 80,343
---------------------------------------------------------------------------------|--------------
|
Investment expenses 3,446 7,045 | 22,299
---------------------------------------------------------------------------------|--------------
Net investment income $ 63,209 $ 66,093 | $ 58,044
------------------------------------------------------------------------------------------------
</TABLE>
23
<PAGE> 58
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
12. 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) 1995 1994 | 1993
----------------------------------------------------------------------------------|-------------
<S> <C> <C> | <C>
Realized |
-------- |
|
Fixed maturities $ (4,240) $ (908) | $ 8,659
Equity securities 6,138 1,675 | 1,580
Mortgage loans 725 36 | (1,564)
Real estate held for sale (35) - | (8,310)
Other 16,125 (2,877) | 11,590
----------------------------------------------------------------------------------|-------------
Realized investment gains (losses) $ 18,713 $ (2,074) | $ 11,955
------------------------------------------------------------------------------------------------
</TABLE>
Changes in net unrealized investment gains (losses) that are included
as a separate component of shareholder's equity were as follows:
<TABLE>
<CAPTION>
(For the year ended December 31, in thousands) 1995 1994 1993
------------------------------------------------------------------------------------------------
<S> <C> <C> | <C>
Unrealized |
---------- |
|
Fixed maturities $ 111,551 $ (65,205) | $ (20,059)
Equity securities 1,834 (27) | (1,389)
Other 4,390 (28) | 8,524
----------------------------------------------------------------------------------|-------------
117,775 (65,260) | (12,924)
Related taxes 41,221 (22,841) | (3,445)
----------------------------------------------------------------------------------|-------------
Change in unrealized investment gains (losses) 76,554 (42,419) | (9,479)
Balance beginning of year (41,224) 1,195 | 10,674
------------------------------------------------------------------------------------------------
Balance end of year $ 35,330 $ (41,224) $ 1,195
------------------------------------------------------------------------------------------------
</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 $460.0 million and $41.7 million in 1995 and 1994, respectively.
Gross gains of $7.9 million and $869 thousand and gross losses of $10.3
million and $1.9 million in 1995 and 1994, respectively, were realized
on those sales.
24
<PAGE> 59
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
12. 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 in 1993, resulting in gross realized gains of $617 thousand.
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 in 1993, resulting in gross realized gains
of $12.4 million.
The amortized cost and market values of investments in fixed maturities
were as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
December 31, 1995
------------------------------------------------------------------------------------------------
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 $ 89,044 $ 2,545 $ 378 $ 91,211
U.S. Treasury securities
and obligations of U.S.
Government and
government agencies
and authorities 160,988 24,267 1 185,254
Obligations of states and
political subdivisions 3,500 499 - 3,999
All other corporate bonds 424,676 21,576 2,162 444,090
Redeemable preferred stock 85 - - 85
------------------------------------------------------------------------------------------------
Total $ 678,293 $ 48,887 $ 2,541 $ 724,639
------------------------------------------------------------------------------------------------
</TABLE>
25
<PAGE> 60
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
12. INVESTMENTS AND INVESTMENT GAINS (LOSSES), Continued
<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 $ 55,492
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 35,055 318,282
Redeemable preferred stock 929 13 76 866
------------------------------------------------------------------------------------------------
Total $ 624,347 $ 1,192 $ 66,397 $ 559,142
------------------------------------------------------------------------------------------------
</TABLE>
The amortized cost and market value of fixed maturities available for
sale at December 31, 1995, 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 $ 7,858 $ 8,245
Due after 1 year through 5 years 28,392 29,022
Due after 5 years through 10 years 172,831 178,526
Due after 10 years 380,168 417,635
------------------------------------------------------------------------------------------------
589,249 633,428
Mortgage-backed securities 89,044 91,211
------------------------------------------------------------------------------------------------
Total $ 678,293 $ 724,639
------------------------------------------------------------------------------------------------
</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.
26
<PAGE> 61
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
12. INVESTMENTS AND INVESTMENT GAINS (LOSSES), Continued
At December 31, 1995 and 1994, the Company held CMOs with a market value
of $68.6 million and $55.5 million, respectively. Approximately 94% and
96% of the Company's CMO holdings are fully collateralized by
GNMA, FNMA or FHLMC securities at December 31, 1995 and 1994,
respectively. 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, 1995
------------------------------------------------------------------------------------------------
Gross Gross
unrealized unrealized Market
(in thousands) Cost gains losses value
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stocks $ 3,310 $ 3,374 $ 68 $ 6,616
Nonredeemable preferred stocks 6,143 340 - 6,483
------------------------------------------------------------------------------------------------
Total $ 9,453 $ 3,714 $ 68 $ 13,099
------------------------------------------------------------------------------------------------
</TABLE>
<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
------------------------------------------------------------------------------------------------
</TABLE>
Proceeds from sales of equity securities were $11.8 million and $9.4
million in 1995 and 1994, respectively. Gross gains of $4.9 million and
$2.8 million and gross losses of $474 thousand and $369 thousand in
1995 and 1994, respectively, were realized on those sales.
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.
27
<PAGE> 62
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
12. INVESTMENTS AND INVESTMENT GAINS (LOSSES), Continued
At December 31, 1995 and 1994, the Company's mortgage loan and real
estate held for sale portfolios consisted of the following:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
(in thousands) 1995 1994
------------------------------------------------------------------------------
<S> <C> <C>
Current mortgage loans $ 108,142 $ 134,868
Underperforming mortgage loans 17,671 17,491
------------------------------------------------------------------------------
Total 125,813 152,359
------------------------------------------------------------------------------
Real estate held for sale 8,995 6,810
------------------------------------------------------------------------------
Total $ 134,808 $ 159,169
------------------------------------------------------------------------------
</TABLE>
Aggregate annual maturities on mortgage loans at December 31, 1995 are
as follows:
<TABLE>
<CAPTION>
(in thousands)
-----------------------------------------------------
<S> <C>
Past maturity $ 3,437
1996 21,927
1997 5,966
1998 21,237
1999 9,700
2000 6,016
Thereafter 57,530
-----------------------------------------------------
Total $ 125,813
-----------------------------------------------------
</TABLE>
Concentrations
At December 31, 1995 and 1994, 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
TIGI and its subsidiaries. See note 9.
Included in fixed maturities are below investment grade assets totaling
$59.0 million and $51.1 million at December 31, 1995 and 1994,
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 and
certain other privately issued bonds that are classified as below
investment grade loans.
28
<PAGE> 63
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
12. INVESTMENTS AND INVESTMENT GAINS (LOSSES), Continued
The Company also had significant concentrations of investments,
primarily fixed maturities, in the following industries:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
(in thousands) 1995 1994
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Oil and gas $ 63,835 $ 39,749
Transportation 44,119 38,523
Banking 33,168 42,191
Chemical manufacturing 16,032 27,326
--------------------------------------------------------------------------------------------------
</TABLE>
Below investment grade assets included in the totals of the previous
table were as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
(in thousands) 1995 1994
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Oil and gas $ 3,469 $ 4,002
Transportation 18,648 2,678
Banking 632 5,124
--------------------------------------------------------------------------------------------------
</TABLE>
Concentrations of mortgage loans by property type at December 31, 1995
and 1994 were as follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
(in thousands) 1995 1994
-------------------------------------------------------------------------------------------------
<S> <C> <C>
Office $ 32,024 $ 40,559
Agricultural 29,820 32,890
Retail 27,870 31,712
-------------------------------------------------------------------------------------------------
</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.
29
<PAGE> 64
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
12. INVESTMENTS AND INVESTMENT GAINS (LOSSES), Continued
Investment Valuation Reserves
There were no investment valuation reserves at December 31, 1995, 1994
and 1993. Investment valuation reserve activity during 1993 was as
follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
(in thousands) 1993
------------------------------------------------------------------------------------------------
<S> <C>
Beginning of year $ 41,443
Increase 8,355
Impairments, net of gains/recoveries (6,887)
Purchase accounting adjustment (42,911)
------------------------------------------------------------------------------------------------
End of year $ -
------------------------------------------------------------------------------------------------
</TABLE>
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 insignificant.
Restructured Investments
The Company had mortgage loan and debt securities which were restructured
at below market terms totaling approximately $17.7 million and $17.4
million at December 31, 1995 and 1994, 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 $4.9 million in 1995 and $5.2 million in
1994. Interest on these assets, included in net investment income,
aggregated $2.0 million in 1995 and $1.4 million in 1994.
30
<PAGE> 65
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
13. LIFE AND ANNUITY DEPOSIT FUNDS AND RESERVES
At December 31, 1995, the Company had $683.0 million of life and annuity
deposit funds and reserves. Of that total, $671.2 million were not
subject to discretionary withdrawal based on contract terms. The
remaining $11.8 million were life and annuity products that were subject
to discretionary withdrawal by the contractholders. Included in the
amount that is subject to discretionary withdrawal were $8.2 million of
liabilities that are surrenderable with market value adjustments. An
additional $3.6 million of the life insurance and individual annuity
liabilities are subject to discretionary withdrawals with an average
surrender charge of 6.6%. The life insurance risks would have to be
underwritten again if transferred to another carrier, which is considered
a significant deterrent for long-term policyholders. Insurance
liabilities that are surrendered or withdrawn from the Company are
reduced by outstanding policy loans and related accrued interest prior to
payout.
14. RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES
The following table reconciles net income to net cash provided by (used
in) operating activities:
<TABLE>
<CAPTION>
(For the year ended December 31, in thousands) 1995 1994 1993
-------------------------------------------------------------------------------------------------------
<S> <C> <C> | <C>
Net income $ 28,917 $ 18,325 | $ 13,609
Reconciling adjustments |
Realized (gains) losses (18,713) 2,074 | (11,955)
Deferred federal income taxes 11,964 4,798 | (22,672)
Amortization of deferred policy acquisition costs and |
value of insurance in force 1,563 - | -
Deferred policy acquisition costs (3,109) (21,014) | -
Investment income accrued (819) 1,085 | (9,607)
Insurance reserves (20,081) (16,062) | 80,238
Trading account investments, (purchases) sales, net - - | 35,093
Other (48,353) 18,371 | (80,398)
-----------------------------------------------------------------------------------------|-------------
|
Net cash provided by (used in) operating activities $ (48,631) $ 7,577 | $ 4,308
-------------------------------------------------------------------------------------------------------
</TABLE>
15. NONCASH INVESTING AND FINANCING ACTIVITIES
Significant noncash investing and financing activities include: a) the
transfer of $2.6 million and $5.6 million of mortgage loans and real
estate held for sale from one of the Company's separate accounts to the
general account in 1995 and 1994, respectively; b) acquisition of real
estate through foreclosures of mortgage loans amounting to $10.3 million
and $7.7 million in 1994 and 1993, respectively; and c) increases in
investment valuation reserves in 1993 for mortgage loans and real estate
held for sale (see note 12).
31
<PAGE> 66
TheTRAVELERS (logo umbrella)
THE TRAVELERS
VARIABLE ANNUITIES
INDIVIDUAL AND GROUP VARIABLE ANNUITY CONTRACTS
Issued By
THE TRAVELERS LIFE AND ANNUITY COMPANY
PENSION AND PROFIT-SHARING,
SECTION 403(b) AND SECTION 408, AND
DEFERRED COMPENSATION PROGRAMS
L-12428S TIC Ed. 5-96
Printed in U.S.A.
<PAGE> 67
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 Auditors 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, 1995, 1994 and 1993
Balance Sheet as of December 31, 1995 and 1994
Statement of Cash Flows for the years ended December 31, 1995,
1994 and 1993
Notes to Financial Statements
(b) Exhibits
1. Resolution of The Travelers Life and Annuity Company Board of
Directors authorizing the establishment of the Registrant
2. Not Applicable.
3(a). Distribution and Management Agreement among the Registrant,
The Travelers Life and Annuity Company and Travelers Equities
Sales, Inc. (Incorporated herein by reference to Exhibit 3(a)
to Post-Effective Amendment No. 1 to the Registration
Statement on Form N-4, filed April 27, 1995.)
3(b). Specimen copies of Dealer Agreements between principal
underwriter and dealer.
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). 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.)
<PAGE> 68
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
audited financial statements of The Travelers Life and Annuity
Company contained in Part B of this Registration Statement,
and to the reference to such firm as "Experts" in accounting
and auditing.
10(b). Consent of KPMG Peat Marwick LLP, Independent Certified Public
Accountants.
13. Schedule for Computation of Total Return Calculations -
Standardized and Non-Standardized.
15(a) Powers of Attorney authorizing Ernest J. Wright or Kathleen A.
McGah as signatory for Jay S. Fishman and Ian R. Stuart.
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. (Incorporated herein by reference to
Exhibit 15(b) to Post-Effective Amendment No. 1 to the
Registration Statement on Form N-4, filed April 27, 1995.)
<PAGE> 69
Item 25. Directors and Officers of the Depositor
<TABLE>
<CAPTION>
Name and Principal Positions and Offices
Business Address with Depositor
- ---------------- ---------------------------
<S> <C>
Michael A. Carpenter* Chairman, President and Chief Executive Officer
Robert I. Lipp* Director
Jay S. Fishman* Director
Charles O. Prince, III** Director
Marc P. Weill** Director and Senior Vice President
Irwin R. Ettinger** Director
Donald T. DeCarlo* Director, General Counsel and Secretary
Stuart Baritz** Senior Vice President
Jay S. Benet* Senior Vice President
George C. Kokulis* Senior Vice President
Warren H. May* Senior Vice President
Kathleen M. D'Auria* Vice President
Elizabeth Charron* Vice President
Robert Hamilton* Vice President
Ian R. Stuart* Vice President, Chief Financial Officer,
Chief Accounting Officer and Controller
Charles N. Vest* Vice President and Actuary
William H. White* Vice President and Treasurer
Bethann C. Maas* Second Vice President
Ernest J. Wright* Assistant Secretary
Kathleen A. McGah* Assistant Secretary
Principal Business Address:
* The Travelers Life and Annuity Company ** Travelers Group Inc.
One Tower Square 388 Greenwich Street
Hartford, Connecticut 06183 New York, New York 10013
</TABLE>
<PAGE> 70
Item 26. Persons Controlled by or under Common Control with The Travelers(R)
Life and Annuity Company or Registrant
OWNERSHIP OF THE TRAVELERS LIFE AND ANNUITY COMPANY
<TABLE>
<CAPTION>
Company State of Organization Ownership Principal Business
- ------- ---------------------- --------- -------------------
<S> <C> <C> <C>
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
State of or Indirectly by Principal
Company Organization The Travelers Inc. 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 (T & C), Ltd. Turks and Caicos Islands 100.00 Insurance
ERISA Corporation New York 100.00 Inactive
</TABLE>
1
<PAGE> 71
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by Principal
Company Organization The Travelers Inc. Business
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mid-America Insurance Services, Inc. Georgia 100.00 Third party administrator
National Marketing Corporation Pennsylvania 100.00 Inactive
PFS Services, Inc. Georgia 100.00 General partner
The Travelers Insurance Group Inc. Connecticut 100.00 Holding company
Constitution Plaza, Inc. Connecticut 100.00 Real estate brokerage
KP Properties Corporation Massachusetts 100.00 Real estate
KPI 85, Inc. Massachusetts 100.00 Real estate
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
Principal Financial Associates, Inc. Delaware 100.00 Inactive
Winthrop Financial Group, Inc. Delaware 100.00 Leasing company.
The Prospect Company Delaware 100.00 Investments
89th & York Avenue Corporation New York 100.00 Real estate
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 Company Delaware 100.00 Real estate management
The Travelers Asset Funding Corporation Connecticut 100.00 Investment adviser
</TABLE>
2
<PAGE> 72
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by Principal
Company Organization The Travelers Inc. Business
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Travelers Capital Funding Corporation Connecticut 100.00 Furniture/equipment
The Travelers Corporation of Bermuda Limited Bermuda 99.99 Pensions
The Travelers Insurance Company Connecticut 100.00 Insurance
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 Management, Inc. New Jersey 100.00 Investment advisor
American Odyssey Funds, Inc. Maryland 100.00 Investment management
Copeland Administrative Services, Inc. New Jersey 100.00 Administrative services
Copeland Associates, Inc. Delaware 100.00 Fixed/variable annuities
Copeland Associates Agency of Ohio, Inc. Ohio 99.00 Fixed/variable annuities
Copeland Associates of Alabama, Inc. Alabama 100.00 Fixed/variable annuities
Copeland Associates of Montana, Inc. Montana 100.00 Fixed/variable annuities
Copeland Benefits Management Company New Jersey 51.00 Investment marketing
Copeland Equities, Inc. New Jersey 100.00 Fixed/variable annuities
H.C. Copeland Associates, Inc. of Massachusetts 100.00 Fixed annuities
Massachusetts
Copeland Financial Services, Inc. New Jersey 100.00 Investment advisory services.
Copeland Healthcare Services, Inc. New Jersey 100.00 Life insurance marketing
H.C. Copeland and Associates, Inc. of Texas Texas 100.00 Fixed/variable annuities
</TABLE>
3
<PAGE> 73
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by Principal
Company Organization The Travelers Inc. Business
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Tower Square Securities, Inc. Connecticut 100.00 Broker dealer
The Travelers Life and Annuity Company Connecticut 100.00 Life insurance
The Travelers Marine Corporation California 100.00 General insurance brokerage
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 Holdings Inc. Georgia 100.00 Holding company
AC RE, Ltd. Bermuda 100.00 Reinsurance
American Financial Life Insurance Company Texas 100.00 Insurance
Primerica Life Insurance Company Massachusetts 100.00 Life insurance
National Benefit Life Insurance Company New York 100.00 Insurance
Primerica Financial Services (Canada) Ltd. Canada 100.00 Holding company
PFSL Investments Canada Ltd. Canada 100.00 Mutual fund dealer
Primerica Financial Services Ltd. Canada 82.82 General agent
Primerica Life Insurance Company of Canada Canada 100.00 Life insurance
Travelers/Net Plus, Inc. Connecticut 100.00
The Travelers Insurance Corporation Proprietary Limited Australia 100.00 Inactive
Travelers Asset Management International Corporation New York 100.00 Investment adviser
Travelers Canada Corporation Canada 100.00 Inactive
</TABLE>
4
<PAGE> 74
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by Principal
Company Organization The Travelers Inc. Business
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Travelers Mortgage Securities Corporation Delaware 100.00 Collateralized obligations
Travelers of Ireland Limited Ireland 99.90 Data processing
Travelers/Aetna Property Casualty Corp. Delaware 100.00 Holding company
The Aetna Casualty and Surety Company Connecticut 100.00 Insurance company
ABP Community Urban Redevelopment Corporation Connecticut 100.00
AE Development Group, Inc. Connecticut 100.00
Aetna Casualty & Surety Company of America Connecticut 100.00 Insurance company
Aetna Casualty & Surety Company of Canada Canada 100.00
Aetna Casualty & Surety Company of Illinois Illinois 100.00 Insurance company
Aetna Casualty Company of Connecticut Connecticut 100.00 Insurance company
Aetna Commercial Insurance Company Connecticut 100.00 Insurance company
Aetna Excess and Surplus Lines Company Connecticut 100.00 Insurance company
Aetna Financial Futures, Inc. Connecticut 100.00
Aetna Lloyds of Texas Insurance Company Texas 100.00 Insurance company
Aetna National Accounts U.K. Limited United Kingdom 100.00 Insurance company
Aetna Opportunity Corporation Connecticut 100.00
Aetna Property Services, Inc. Delaware 100.00
AFF, Inc. Connecticut 100.00
Axia Services, Inc. New York 100.00
</TABLE>
5
<PAGE> 75
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by Principal
Company Organization The Travelers Inc. Business
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Farmington Management, Inc. Connecticut 100.00
The Farmington Casualty Company Connecticut 100.00 Insurance company
Urban Diversified Properties, Inc. Connecticut 100.00
The Standard Fire Insurance Company Connecticut 100.00 Insurance company
AE Properties, Inc. California 100.00
Aetna Insurance Company Connecticut 100.00 Insurance company
Aetna Insurance Company of Illinois Illinois 100.00 Insurance company
Aetna Personal Security Insurance Company Connecticut 100.00 Insurance company
Community Rehabilitation Investment Corporation Connecticut 100.00
The Automobile Insurance Company of Hartford, Connecticut 100.00 Insurance company
Connecticut
The Travelers Indemnity Company Connecticut 100.00 P-C insurance
Commercial Insurance Resources, Inc. Delaware 100.00 Holding company
Gulf Insurance Company Missouri 100.00 P-C insurance
Atlantic Insurance Company Texas 100.00 P-C insurance
Gulf Risk Services, Inc. Delaware 100.00 Claims/risk management
Gulf Underwriters Insurance Company North Carolina 100.00 P-C ins/surplus lines
Select Insurance Company Texas 100.00 P-C insurance
Countersignature Agency, Inc. Florida 100.00 Countersign ins policies
First Trenton Indemnity Company New Jersey 100.00 P-C insurance
</TABLE>
6
<PAGE> 76
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by Principal
Company Organization The Travelers Inc. Business
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Laramia Insurance Agency, Inc. North Carolina 100.00 Flood insurance
Lynch, Ryan & Associates, Inc. Massachusetts 100.00 Cost containment
The Charter Oak Fire Insurance Company Connecticut 100.00 P-C insurance
The Parker Realty and Insurance Agency, Inc. Vermont 58.00 Real estate
The Phoenix Insurance Company Connecticut 100.00 P-C insurance
Constitution State Service Company Montana 100.00 Service company
The Travelers Indemnity Company of America Georgia 100.00 P-C insurance
The Travelers Indemnity Company of Connecticut Connecticut 100.00 Insurance
The Travelers Indemnity Company of Illinois Illinois 100.00 P-C insurance
The Premier Insurance Company of Massachusetts Massachusetts 100.00 Insurance
The Travelers Home and Marine Insurance Company Indiana 100.00 P-C insurance
The Travelers Indemnity Company of Missouri Missouri 100.00 P-C insurance
The Travelers Lloyds Insurance Company Texas 100.00 Non-life insurance
TI Home Mortgage Brokerage, Inc. Delaware 100.00 Mortgage brokerage services
TravCo Insurance Company Indiana 100.00 P-C insurance
Travelers Bond Investments, Inc. Connecticut 100.00 Bond investments
Travelers General Agency of Hawaii, Inc. Hawaii 100.00 Insurance agency
Travelers Medical Management Services Inc. Delaware 100.00 Managed care
Travelers Specialty Property Casualty Company, Inc. Connecticut 100.00 Insurance management
</TABLE>
7
<PAGE> 77
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by Principal
Company Organization The Travelers Inc. Business
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
VIPortfolio Agency, Inc. Delaware 100.00 Insurance agency
Primerica Finance Corporation Delaware 100.00 Holding company
PFS Distributors, Inc. Georgia 100.00 General partner
PFS Investments Inc. Georgia 100.00 Broker dealer
PFS T.A., Inc. Delaware 100.00 Joint venture partner
Primerica Financial Services Home Mortgages, Inc. Georgia 100.00 Mortgage loan broker
Primerica Financial Services, Inc. Nevada 100.00 General agency
Primerica Financial Services Agency of New York 100.00 General agency licensing
New York, Inc.
Primerica Financial Services Insurance Marketing of Connecticut 100.00 General agency licensing
Connecticut, Inc.
Primerica Financial Services Insurance Marketing of Idaho 100.00 General agency licensing
Idaho, Inc.
Primerica Financial Services Insurance Marketing of Nevada 100.00 General agency licensing
Nevada, Inc.
Primerica Financial Services Insurance Marketing of Pennsylvania 100.00 General agency licensing
Pennsylvania, Inc.
Primerica Financial Services Insurance Marketing of the United States 100.00 General agency licensing
Virgin Islands, Inc. Virgin Islands
Primerica Financial Services Insurance Marketing of Wyoming 100.00 General agency licensing
Wyoming, Inc.
Primerica Financial Services Insurance Marketing, Inc. Delaware 100.00 General agency licensing
Primerica Financial Services of Alabama, Inc. Alabama 100.00 General agency licensing
Primerica Financial Services of New Mexico, Inc. New Mexico 100.00 General agency licensing
Primerica Insurance Agency of Massachusetts, Inc. Massachusetts 100.00 General agency licensing
Primerica Insurance Marketing Services of Puerto Rico 100.00 Insurance agency
Puerto Rico, Inc.
8
</TABLE>
<PAGE> 78
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by Principal
Company Organization The Travelers Inc. Business
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
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 Print operations
RCM Acquisition Inc. Delaware 100.00 Investments
SCN Acquisitions Company Delaware 100.00 Investments
SL&H Reinsurance, Ltd. Nevis 100.00 Reinsurance
Southwest Service Agreements, Inc. North Carolina 100.00 Warranty/service agreements
Southwest Warranty Corporation Florida 100.00 Extended automobile warranty
CCC Holdings, Inc. Delaware 100.00 Holding company
Commercial Credit Company Delaware 100.00 Holding company.
American Health and Life Insurance Company Maryland 100.00 LH&A Insurance
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, Inc. Ohio 100.00 Consumer finance
Commercial Credit Banking Corporation Oregon 100.00 Consumer finance
Commercial Credit Consumer Services, Inc. Minnesota 100.00 Consumer finance
Commercial Credit Corporation (AL) Alabama 100.00 Consumer finance
</TABLE>
9
<PAGE> 79
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by Principal
Company Organization The Travelers Inc. Business
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Commercial Credit Corporation (CA) California 100.00 Consumer finance
Commercial Credit Corporation (IA) Iowa 100.00 Consumer finance
Commercial Credit of Alabama, Inc. Delaware 100.00 Consumer lending
Commercial Credit Corporation (KY) Kentucky 100.00 Consumer finance
Certified Insurance Agency, Inc. Kentucky 100.00 Insurance agency
Commercial Credit Investment, Inc. Kentucky 100.00 Investment company
National Life Insurance Agency of Kentucky, Inc. Kentucky 100.00 Insurance agency
Union Casualty Insurance Agency, Inc. Kentucky 100.00 Insurance agency
Commercial Credit Corporation (MD) Maryland 100.00 Consumer finance
Action Data Services, Inc. Missouri 100.00 Data processing
Commercial Credit Plan, Incorporated (OK) Oklahoma 100.00 Consumer finance
Commercial Credit Corporation (NY) New York 100.00 Consumer finance
Commercial Credit Corporation (SC) South Carolina 100.00 Consumer finance
Commercial Credit Corporation (WV) West Virginia 100.00 Consumer finance
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 Services, Inc. Maryland 100.00 Insurance broker
Commercial Credit Insurance Agency (P&C) of Mississippi 100.00 Insurance agency
Mississippi, Inc.
</TABLE>
10
<PAGE> 80
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by Principal
Company Organization The Travelers Inc. Business
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Commercial Credit Insurance Agency of Alabama, Inc. Alabama 100.00 Insurance agency
Commercial Credit Insurance Agency of Kentucky, Inc. Kentucky 100.00 Insurance agency
Commercial Credit Insurance Agency of Massachusetts, Inc. Massachusetts 100.00 Insurance agency
Commercial Credit Insurance Agency of Nevada, Inc. Nevada 100.00 Credit LH&A, P-C insurance
Commercial Credit Insurance Agency of New Mexico, Inc. New Mexico 100.00 Insurance agency/Broker
Commercial Credit Insurance Agency of Ohio, Inc. Ohio 100.00 Insurance agency/broker
Commercial Credit International, Inc. Delaware 100.00 Holding company
Commercial Credit International Banking Corporation Oregon 100.00 International lending
Commercial Credit Corporation CCC Limited Canada 100.00 Second mortgage loans
Commercial Credit Services do Brazil Ltda. Brazil 99.00 Inactive
Commercial Credit Services Belgium S.A. Belgium 100.00 Inactive
Commercial Credit Limited Delaware 100.00 Inactive
Commercial Credit Loan, Inc. (NY) New York 100.00 Consumer finance
Commercial Credit Loans, Inc. (DE) Delaware 100.00 Consumer finance
Commercial Credit Loans, Inc. (OH) Ohio 100.00 Consumer finance
Commercial Credit Loans, Inc. (VA) Virginia 100.00 Consumer finance
Commercial Credit Management Corporation Maryland 100.00 Intercompany services
Commercial Credit Plan Incorporated (TN) Tennessee 100.00 Consumer finance
Commercial Credit Plan Incorporated (UT) Utah 100.00 Consumer finance
</TABLE>
11
<PAGE> 81
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by Principal
Company Organization The Travelers Inc. Business
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Commercial Credit Plan Incorporated of Georgetown Delaware 100.00 Consumer finance
Commercial Credit Plan Industrial Loan Company Virginia 100.00 Consumer finance
Commercial Credit Plan, Incorporated (CO) Colorado 100.00 Consumer finance
Commercial Credit Plan, Incorporated (DE) Delaware 100.00 Consumer finance
Commercial Credit Plan, Incorporated (GA) Georgia 100.00 Consumer finance
Commercial Credit Plan, Incorporated (MO) Missouri 100.00 Consumer finance
Commercial Credit Securities, Inc. Delaware 100.00 Broker dealer
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.
COMCRES, Inc. Delaware 100.00 Inactive
Commercial Credit Development Corporation Delaware 100.00 Direct loan
Myers Park Properties, Inc. Delaware 100.00 Inactive
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
</TABLE>
12
<PAGE> 82
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by Principal
Company Organization The Travelers Inc. Business
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Travelers Home Equity, Inc. North Carolina 100.00 Financial services
CC Consumer Services of Alabama, Inc. Alabama 100.00 Financial services
CC Home Lenders Financial, Inc. Georgia 100.00 Financial services
CC Home Lenders, Inc. Ohio 100.00 Financial services
Commercial Credit Corporation (TX) Texas 100.00 Consumer finance
Commercial Credit Financial of Kentucky, Inc. Kentucky 100.00 Consumer finance
Commercial Credit Financial of West Virginia 100.00 Consumer finance
West Virginia, Inc.
Commercial Credit Plan Consumer Discount Company Pennsylvania 100.00 Financial services
Commercial Credit Services of Kentucky, Inc. Kentucky 100.00 Financial services.
Travelers Home Equity Services, Inc. North Carolina 100.00 Financial services
Triton Insurance Company Missouri 100.00 P-C insurance
Verochris Corporation Delaware 100.00 Joint venture company
AMC Aircraft Corp. Delaware 100.00 Aviation
World Service Life Insurance Company Colorado 100.00 Life insurance
Greenwich Street Capital Partners, Inc. Delaware 100.00 Investments
Greenwich Street Investments, Inc. Delaware 100.00 Investments
Greenwich Street Capital Partners Offshore Holdings, Inc. Delaware 100.00 Investments
Margco Holdings, Inc. Delaware 100.00 Holding company
Berg Associates New Jersey 100.00 Inactive
</TABLE>
13
<PAGE> 83
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by Principal
Company Organization The Travelers Inc. Business
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Berg Enterprises Realty, Inc. (NY) New York 100.00 Inactive
Dublin Escrow, Inc. California 100.00 Inactive
M.K.L. Realty Corporation New Jersey 66.67 Holding company
MRC Holdings, Inc. Delaware 100.00 Real estate
The Berg Agency, Inc. (NJ) New Jersey 100.00 Inactive
Mirasure Insurance Company, Ltd. Bermuda 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 Delaware 100.00 Trust company
Smith Barney Holdings Inc. Delaware 100.00 Holding company
Mutual Management Corp. New York 100.00 Inactive
R-H Capital, Inc. Delaware 100.00 Investments
R-H Sports Enterprises Inc Georgia 100.00 Sports representation
SB Cayman Holdings I Inc. Delaware 100.00 Holding company
Greenwich (Cayman) I Limited Cayman Islands 100.00 Corporate services
Greenwich (Cayman) II Limited Cayman Islands 100.00 Corporate services
Greenwich (Cayman) III Limited Cayman Islands 100.00 Corporate services
</TABLE>
14
<PAGE> 84
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by Principal
Company Organization The Travelers Inc. Business
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SB Cayman Holdings II Inc. Delaware 100.00 Holding company
SB Cayman Holdings III Inc. Delaware 100.00 Holding company
SB Cayman Holdings IV Inc. Delaware 100.00 Holding company
Smith Barney (Delaware) Inc. Delaware 100.00 Holding company
1345 Media Corp. Delaware 100.00 Holding company
Americas Avenue Corporation Delaware 100.00 Inactive
Corporate Realty Advisors, Inc. Delaware 100.00 Realty trust adviser
IPO Holdings Inc. Delaware 100.00 Holding company
Institutional Property Owners, Inc. V Delaware 100.00 Investments
Institutional Property Owners, Inc. VI Delaware 100.00 General partner
MLA 50 Corporation Delaware 100.00 Limited partner
MLA GP Corporation Delaware 100.00 General partner
Municipal Markets Advisors Incorporated Delaware 100.00 Public finance
SBF Corp. Delaware 100.00 Merchant banking investments
Smith Barney Acquisition Corporation Delaware 100.00 Offshore fund adviser
Smith Barney Global Capital Management, Inc. Delaware 100.00 Investment management
Smith Barney Investment, Inc. Delaware 100.00 Inactive
Smith Barney Realty, Inc. Delaware 100.00 Investments
Smith Barney Risk Investors, Inc. Delaware 100.00 Investments
</TABLE>
15
<PAGE> 85
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by Principal
Company Organization The Travelers Inc. Business
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Smith Barney Venture Corp. Delaware 100.00 Investments
Smith Barney (Ireland) Limited Ireland 100.00 Fund management
Smith Barney Asia Inc. Delaware 100.00 Investment banking
Smith Barney Asset Management Group (Asia) Pte. Ltd. Singapore 100.00 Asset management
Smith Barney Canada Inc. Canada 100.00 Investment dealer
Smith Barney Capital Services Inc. Delaware 100.00 Derivative product transactions
Smith Barney Cayman Islands, Ltd. Cayman Islands 100.00 Securities trading
Smith Barney Commercial Corp. Delaware 100.00 Commercial credit
Smith Barney Commercial Corporation Asia Limited Hong Kong 99.00 Commodities trading
Smith Barney Europe Holdings, Ltd. United Kingdom 100.00 Holding corp.
Smith Barney Europe, Ltd. United Kingdom 100.00 Securities brokerage
Smith Barney Shearson Futures, Ltd. United Kingdom 100.00 Inactive
Smith Barney Futures Management Inc. Delaware 100.00 Commodities pool operator
Smith Barney Offshore Fund Ltd. Delaware 100.00 Commodity pool
Smith Barney Overview Fund PLC Dublin 100.00 Commodity fund
Smith Barney Inc. Delaware 100.00 Broker dealer
Institutional Property Owners, Inc. VII Delaware 100.00 Never activated
SBHU Life Agency, Inc. Delaware 100.00 Insurance brokerage
Robinson-Humphrey Insurance Services Inc. Georgia 100.00 Insurance brokerage
</TABLE>
16
<PAGE> 86
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by Principal
Company Organization The Travelers Inc. Business
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Robinson-Humphrey Insurance Services of Alabama, Inc. Alabama 100.00 Insurance brokerage
SBHU Life & Health Agency, Inc. Delaware 100.00 Insurance brokerage
SBHU Life Agency of Arizona, Inc. Arizona 100.00 Insurance brokerage
SBHU Life Agency of Indiana, Inc. Indiana 100.00 Insurance brokerage
SBHU Life Agency of Utah, Inc. Utah 100.00 Insurance brokerage
SBHU Life Insurance Agency of Massachusetts, Inc. Massachusetts 100.00 Insurance brokerage
SBS Insurance Agency of Hawaii, Inc. Hawaii 100.00 Insurance brokerage
SBS Insurance Agency of Idaho, Inc. Idaho 100.00 Insurance brokerage
SBS Insurance Agency of Maine, Inc. Maine 100.00 Insurance brokerage
SBS Insurance Agency of Montana, Inc. Montana 100.00 Insurance brokerage
SBS Insurance Agency of Nevada, Inc. Nevada 100.00 Insurance brokerage
SBS Insurance Agency of North Carolina, Inc. North Carolina 100.00 Insurance brokerage
SBS Insurance Agency of Ohio, Inc. Ohio 100.00 Insurance brokerage
SBS Insurance Agency of South Dakota, Inc. South Dakota 100.00 Insurance brokerage
SBS Insurance Agency of Wyoming, Inc. Wyoming 100.00 Insurance brokerage
SBS Insurance Brokerage Agency of Arkansas, Inc. Arkansas 100.00 Insurance brokerage
SBS Insurance Brokers of Kentucky, Inc. Kentucky 100.00 Insurance brokerage
SBS Insurance Brokers of Louisiana, Inc. Louisiana 100.00 Insurance brokerage
SBS Insurance Brokers of New Hampshire, Inc. New Hampshire 100.00 Insurance brokerage
</TABLE>
17
<PAGE> 87
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by Principal
Company Organization The Travelers Inc. Business
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SBS Insurance Brokers of North Dakota, Inc. North Dakota 100.00 Insurance brokerage
SBS Life Insurance Agency of Puerto Rico, Inc. Puerto Rico 100.00 Insurance brokerage
SLB Insurance Agency of Maryland, Inc. Maryland 100.00 Insurance brokerage
Smith Barney Life Agency Inc. Louisiana 100.00 Insurance brokerage
Smith Barney (France) S.A. France 100.00 Commodities trading
Smith Barney (Hong Kong) Limited Hong Kong 100.00 Broker dealer
Smith Barney (Netherlands) Inc. Delaware 100.00 Broker dealer
Smith Barney International Incorporated Oregon 100.00 Broker dealer
Smith Barney (Singapore) Pte Ltd Singapore 100.00 Commodities
Smith Barney Pacific Holdings, Inc. British Virgin 100.00 Holding company
Islands
Smith Barney (Asia) Limited Hong Kong 100.00 Broker dealer
Smith Barney (Pacific) Limited Hong Kong 100.00 Commodities dealer
Smith Barney Securities Pte Ltd Singapore 100.00 Securities brokerage
Smith Barney Research Pte. Ltd. Singapore 100.00 Inactive
The Robinson-Humphrey Company, Inc. Delaware 100.00 Broker dealer
Smith Barney Mortgage Brokers Inc. Delaware 100.00 Mortgage brokerage
Smith Barney Mortgage Capital Corp. Delaware 100.00 Mortgage-backed securities
Smith Barney Mortgage Capital Group, Inc. Delaware 100.00 Mortgage trading
Smith Barney Mutual Funds Management Inc. Delaware 100.00 Investment management
</TABLE>
18
<PAGE> 88
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by Principal
Company Organization The Travelers Inc. Business
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Smith Barney Strategy Advisers Inc. Delaware 100.00 Investment management
E.C. Tactical Management S.A. Luxembourg 100.00 Investment management
Smith Barney Offshore, Inc. Delaware 100.00 Decathlon Fund advisor
Decathlon Offshore Limited Cayman Islands 100.00 Commodity fund
Smith Barney S.A. France 100.00 Commodities trading
Smith Barney Asset Management France SA France 100.00 Com. based asset management
Smith Barney Shearson (Chile) Corredora de Chile 100.00 Insurance brokerage
Seguro Limitada
Structured Mortgage Securities Corporation Delaware 100.00 Mortgage-backed securities
The Travelers Investment Management Company Connecticut 100.00 Investment advisor
Smith Barney Private Trust Company New York 100.00 Trust company.
Smith Barney Private Trust Company of Florida Florida 100.00 Trust company
Tinmet Corporation Delaware 100.00 Inactive
Travelers Services Inc. Delaware 100.00 Holding company
Tribeca Management Inc. Delaware 100.00
TRV Employees Investments, Inc. Delaware 100.00 Investments
TRV/RCM Corp. Delaware 100.00 Inactive
TRV/RCM LP Corp. Delaware 100.00 Inactive
</TABLE>
19
<PAGE> 89
Item 27. Number of Contract Owners
As of March 31, 1996, 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 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> 90
Item 29. Principal Underwriter
(a) Tower Square Securities, Inc.
One Tower Square
Hartford, Connecticut 06183
Tower Square Securities, Inc. also serves as principal underwriter for the
following :
The Travelers Growth and Income Stock Account for Variable Annuities
The Travelers Quality Bond Account for Variable Annuities
The Travelers Money Market Account for Variable Annuities
The Travelers Timed Growth and Income Stock Account for Variable
Annuities
The Travelers Timed Short-Term Bond Account for Variable Annuities
The Travelers Timed Aggressive Stock Account for Variable Annuities
The Travelers Timed Bond Account for Variable Annuities
The Travelers Fund U for Variable Annuities
The Travelers Fund BD for Variable Annuities
The Travelers Fund BD II for Variable Annuities
The Travelers Fund ABD for Variable Annuities
The Travelers Fund ABD II for Variable Annuities
The Travelers Separate Account QP for Variable Annuities
The Travelers Separate Account QP II for Variable Annuities
The Travelers Fund UL for Variable Life Insurance
The Travelers Fund UL II for Variable Life Insurance
The Travelers Variable Life Insurance Separate Account One
The Travelers Variable Life Insurance Separate Account Three
<TABLE>
<CAPTION>
(b) Name and Principal Positions and Offices Positions and Offices
Business Address * With Underwriter With Registrant
------------------ ---------------- -----------------
<S> <C> <C>
Russell H. Johnson Chairman and Chief Executive -----
Officer
Donald R. Munson, Jr. Director, President and Chief -----
Operating Officer
William F. Scully, III Member, Board of Directors, -----
Senior Vice President, Treasurer
and Chief Financial Officer
Cynthia P. Macdonald Vice President, Chief Compliance -----
Officer, Assistant Secretary
Jay S. Benet Member, Board of Directors -----
George C. Kokulis Member, Board of Directors -----
Warren H. May Member, Board of Directors -----
Kathleen A. McGah General Counsel and Secretary Assistant Secretary
Robert C. Hamilton Vice President -----
Tracey Kiff-Judson Second Vice President -----
Robin A. Jones Second Vice President -----
Whitney F. Burr Second Vice President -----
Marlene M. Ibsen Second Vice President -----
John J. Williams, Jr. Director and Assistant Compliance -----
Officer
Susan M. Curcio Director and Operations Manager -----
</TABLE>
<PAGE> 91
(cont'd)
<TABLE>
<S> <C> <C> <C>
(b) Name and Principal Positions and Offices Positions and Offices
Business Address * With Underwriter With Registrant
------------------ ---------------- -----------------
Gregory C. Macdonald Director -----
Thomas P. Tooley Director -----
Nancy S. Waldrop Assistant Treasurer -----
</TABLE>
* Principal business address: One Tower Square, Hartford,
Connecticut 06183
(c) Tower Square Securities, Inc. serves as the principal underwriter.
The compensation listed below is for the year ending December 31, 1995.
<TABLE>
<CAPTION>
Name of Net Underwriting Compensation on
Principal Discounts and Redemption or Brokerage Other
Underwriter Commissions Annuitization Commissions Compensation*
- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Tower Square $ 0 $ 0 $ 0 $ 0
Securities, Inc.
</TABLE>
Item 30. Location of Accounts and Records
(1) The Travelers Life and Annuity Company
One Tower Square
Hartford, Connecticut 06183
Item 31. Management Services
Not applicable.
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; and
(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.
<PAGE> 92
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 30, 1996.
THE TRAVELERS FUND VA FOR VARIABLE ANNUITIES
(Registrant)
and
THE TRAVELERS LIFE AND ANNUITY COMPANY
(Depositor)
By: *IAN R. STUART
------------------------------------------
Ian R. Stuart
Vice President and Chief Financial Officer
Chief Accounting Officer and Controller
Pursuant to the requirements of the Securities Act of 1933, this post-effective
amendment to this Registration Statement has been signed below by the following
persons in the capacities indicated on April 30, 1996.
<TABLE>
<S> <C>
*MICHAEL A. CARPENTER Chairman of the Board, President and
- ------------------------------------------- and Chief Executive Officer
(Michael A. Carpenter)
*ROBERT I. LIPP Director
- -------------------------------------------
(Robert I. Lipp)
*JAY S. FISHMAN Director
- -------------------------------------------
(Jay S. Fishman)
*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)
*IAN R. STUART Vice President, Chief Financial Officer
- ------------------------------------------- Chief Accounting Officer and Controller
(Ian R. Stuart)
*By: /s/ERNEST J. WRIGHT
-----------------------------------
Ernest J. Wright, Attorney-in-Fact
</TABLE>
<PAGE> 93
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description Method of Filing
- ------- ----------- ----------------
<S> <C> <C>
1. Resolution of The Travelers Life and Annuity Company Electronically
Board of Directors authorizing the establishment of the
Registrant.
3(a). Form of Distribution and Management Agreement among
the Registrant, The Travelers Life and Annuity Company
and Travelers Equities Sales, Inc. (Incorporated herein by
reference to Exhibit 3(a) to Post-Effective Amendment to
the Registration Statement on Form N-4, filed on
April 27, 1995.)
3(b). Specimen copies of Dealer Agreements between principal Electronically
underwriter and dealer.
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 audited financial statements of The
Travelers Life and Annuity Company contained in
Part B of this Registration Statement, and to the reference
to such firm as "Experts" in accounting and auditing.
</TABLE>
<PAGE> 94
EXHIBIT INDEX (cont'd)
<TABLE>
<CAPTION>
Exhibit
No. Description Method of Filing
- ------- ----------- ----------------
<S> <C> <C>
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 and to the reference to such firm as "experts"
under the heading "Independent Accountants."
13. Schedule for Computation of Total Return Electronically
Calculations - Standardized and Non-Standardized.
15(a). Powers of Attorney authorizing Ernest J. Wright or Electronically
Kathleen A. McGah as signatory for Jay S. Fishman and
Ian R. Stuart.
15(b). Powers of Attorney authorizing Jay S. Fishman or
Ernest J. Wright as signatory for Michael A.
Carpenter, Robert I. Lipp, Charles O. Prince, III,
Irwin R. Ettinger and Donald T. DeCarlo.
(Incorporated herein by reference to Exhibit 15(b) to
Post-Effective Amendment No. 1 to the Registration
Statement on Form N-4, filed on April 27, 1995.)
</TABLE>
<PAGE> 1
EXHIBIT 1
CERTIFICATE
I, KATHLEEN A. McGAH, Assistant Secretary of THE TRAVELERS LIFE AND
ANNUITY COMPANY, DO HEREBY CERTIFY that at a meeting of the Board of Directors
of The Travelers Life and Annuity Company held on the 9th day of July, 1993, at
which a quorum was present and voting, the following resolutions were adopted:
VOTED: That pursuant to authority granted by Section 38a-433 of the
Connecticut General Statutes, the proper officers of the Company are
authorized to establish a separate account or accounts to invest in
shares of investment companies pursuant to plans and contracts
issued and sold by the Company in connection therewith.
VOTED: That the proper officers of the Company are authorized to take such
action as may be necessary to register the separate account or
accounts as a unit investment trust investment company under the
Investment Company Act of 1940; to file any necessary or appropriate
exemptive requests, and any amendments thereto, for such separate
account or accounts under the Investment Company Act of 1940; to
file a registration statement, and any amendments, exhibits and
other documents thereto, in order to register plans and contracts of
the Company and interests in such separate account or accounts in
connection therewith under the Securities Act of 1933; and to take
any and all action as may in their judgment be necessary or
appropriate in connection therewith.
I FURTHER CERTIFY that by unanimous consent action of the Board of
Directors of The Travelers Life and Annuity Company effective the 21st day of
September, 1994, the following resolution was adopted:
VOTED: That each officer and director who may be required, on their own
behalf and in the name and on behalf of the Company, to execute one
or more registration statements, and any amendments thereto, under
the Securities Act of 1933 and the Investment Company Act of 1940
relating to the separate account or accounts to be established to
invest in shares of investment companies is authorized to execute a
power of attorney appointing representatives to act as their
attorney and agent to execute said registration statement, and any
amendments thereto, in their name, place and stead; and that the
Secretary, or any Assistant Secretary designated by the Secretary,
is designated and appointed the agent for service of process of the
Company under the Securities Act of 1933 and the Investment Company
Act of 1940 in connection with such registration statement, and any
amendments thereto, with all the powers incident to such
appointment.
AND I DO FURTHER CERTIFY that the foregoing actions of the said
Board of Directors is still in full force and effect.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of THE
TRAVELERS LIFE AND ANNUITY COMPANY at Hartford, Connecticut, this 24th day of
April, 1996.
/s/Kathleen A. McGah
Kathleen A. McGah
Assistant Secretary
<PAGE> 1
EXHIBIT 3(b)
SELLING AGREEMENT
FOR VARIABLE CONTRACTS
THIS AGREEMENT, effective ____________________, is made by TOWER SQUARE
SECURITIES, INC., (hereafter referred to as Tower Square) as the Distributor,
and __________________________________________
__________________________________________________, (hereafter referred to as
Broker/Dealer).
Tower Square and the Broker/Dealer enter into this agreement for the purpose of
authorizing the Broker/Dealer, through its licensed individual agents as
described in paragraph 3, to solicit applications for such variable life
insurance, variable annuity and modified guaranteed annuity contracts (the
"Contract(s)") as may be issued by The Travelers Insurance Company, the
Travelers Life and Annuity Company and any affiliated companies (hereafter
referred to as the Insurance Companies), and identified by policy form in the
Compensation Schedules relating to this agreement as such schedules may be
amended from time to time. The parties represent and agree as follows:
1. The Insurance Companies are engaged in the issuance of the
Contracts in accordance with federal securities laws and the
applicable insurance laws of those states in which the
Contracts have been qualified for sale. The Contracts may be
considered securities under the Securities Act of 1933;
therefore, distribution of the Contracts is made through Tower
Square as a registered Broker/Dealer under the Securities
Exchange Act of 1934 and as a member of the National
Association of Securities Dealers, Inc. ("NASD"). The terms
of the offering of the Contracts are more particularly
described in the Prospectus(es) for the Contracts.
2. The Broker/Dealer certifies that it is a registered
Broker/Dealer under the Securities Exchange Act of 1934 and a
member of the NASD. The Broker/Dealer agrees to abide by all
rules and regulations of the NASD and to comply with all
applicable state and federal laws and the rules and
regulations of the authorized regulatory agencies affecting
the sale of the Contracts.
3. The Broker/Dealer will select persons whom it will employ and
supervise and who will be trained and qualified to solicit
applications for the Contracts in conformance with applicable
state and federal laws and regulations. Persons so trained
and qualified will be registered representatives of the
Broker/Dealer in accordance with the rules of the NASD and
they will be properly licensed in accordance with the state
insurance laws of those jurisdictions in which the Contracts
may lawfully be distributed and in which they solicit
applications for such Contracts. The Insurance Companies
shall have ultimate authority to determine whether they shall
appoint or terminate a particular registered representative as
an agent of the Insurance Companies with the various state
insurance departments.
4. The Broker/Dealer will review all contract proposals and
applications for suitability and for completeness and
correctness as to form. The Broker/Dealer will promptly, but
in no case later than the end of the next business day
following receipt by the Broker/Dealer, forward to the
applicable Insurance Company, at addresses provided, all
applications found suitable and in good form, together with
any payments received with such applications without deduction
or reduction. The Broker/Dealer will immediately return to
the applicant all applications together with any payments
received therewith deemed by the Broker/Dealer to be
unsuitable or not complete and correct as to form. The
Insurance Companies reserve the right to reject any Contract
application and return any payment made in connection with an
application which is rejected. Contracts issued on
applications accepted by the Insurance Companies will be
forwarded to the Broker/Dealer or at the direction of the
Broker/Dealer to the registered representative for delivery to
the Contract Owner. The Broker/Dealer shall obtain and retain
a receipt for each Contract which the Broker/Dealer delivers.
<PAGE> 2
2
5. The Broker/Dealer will perform the selling functions required
by this Agreement only in accordance with the terms and
conditions of the then current prospectus(es) applicable to
the Contract and will make no representations not included in
the prospectus or in any authorized supplemental material. No
sales solicitation, including the delivery of supplemental
sales literature or other such materials, shall occur, be
delivered to, or used with a prospective purchaser unless
accompanied or preceded by appropriate and then-current
prospectus(es). Any material prepared or used by the
Broker/Dealer or its registered representative, which
describes in whole or in part or refers by name or form to any
of the Insurance Companies' Contracts or underlying funds or
uses the name of the Insurance Companies, Tower Square, or The
Travelers Group, Inc., or the logos or service marks of any of
them, or the name, logos or service marks of any "Affiliated
Company" of any of them, as that term is defined in Section
2(a)(2) of the Investment Company Act of 1940, must be
approved by Tower Square in writing prior to any such use.
6. Compensation payable to the Broker/Dealer on sales of the
Contracts solicited by the Broker/Dealer will be paid to the
Broker/Dealer, or as necessary to meet any and all legal
requirements, to a licensed insurance affiliate, in accordance
with the Compensation Schedule(s) relating to this agreement
as they may be amended from time to time and are in effect at
the time the Contract payments are received by the applicable
Insurance Company (in the case of annuities) or at the time
the applications are received (in the case of life insurance).
In the event compensation is paid to the licensed insurance
agency affiliate as described in the preceding sentence, such
payment will be reflected in the Broker/Dealer's "Focus"
reports, and in its fee assessment reports filed with the
NASD. The Insurance Companies and Tower Square reserve the
privilege of revising the Compensation Schedules at any time.
7. If the Insurance Companies return all or a portion of a
premium paid with respect to a Contract, Broker/Dealer shall
be obligated to refund to Tower Square applicable commissions
on the amount of such premium only where:
(a) the Contract solicited is returned not taken under
the policy "free look" provisions;
(b) premiums are refunded due to overpayments, errors in
billing or in the timing of automatic premium
collection deductions, or errors resulting in policy
reissue;
(c) the check delivered in payment of any contract
premium does not clear and the premium collection
deductions, or errors resulting in policy reissue;
(d) the Contract is terminated or there is a refund of
premium and an act, error or omission of the
Broker/Dealer or its registered representative
materially contributed to the termination of the
Contract or the need to return premium;
(e) the application is rejected by the Insurance Company;
(f) the Insurance Company is directed by a judicial or
regulatory authority to return premium without
assessment of a surrender charge;
(g) the applicant's initial premium on a 1035 exchange is
returned because the expected rollover amount from
another Contract is not transferred due to the
exchange not meeting the legal requirements to
qualify for a tax-free exchange;
(h) the Insurance Company returns unearned premium on a
life insurance contract as required by the provisions
of the contract;
<PAGE> 3
3
(i) the Insurance Company determines that it has a legal
liability to return premiums on a life insurance
contract within the first year after the Contract is
issued; or
(j) the Insurance Company and Broker/Dealer mutually
agree to return all or a portion of a premium paid
with respect to a Contract.
8. If any Contract is repurchased at any time or if within
forty-five (45) days after confirmation by the Insurance
Companies of any premium payments credited to a Contract, that
Contract is tendered for full or partial surrender, or the
life at risk thereunder dies, then, at the option of the
Insurance Companies or Tower Square no commission will be
payable with respect to said premium payments and any
commission previously paid for said premium payments must be
refunded to the applicable Insurance Company or Tower Square
as directed by Tower Square. Tower Square agrees to notify
the Broker/Dealer within ten (10) business days after the
request for repurchase or redemption, or notification or death
of the life at risk is received by the applicable Insurance
Company.
9. This Agreement may not be assigned except by mutual consent
and will continue, subject to the termination by any party on
written notice to the other party, except that in the event
the Broker/Dealer ceases to be a registered Broker/Dealer or a
member of the NASD, this Agreement will immediately terminate.
Tower Square reserves the right to designate, at its sole
discretion, an alternative Principal Underwriter for the
distribution of the Contracts covered by this Agreement. The
designation will constitute substitution of parties to this
Agreement with assumption of the rights and obligations
created by this Agreement as applicable.
10. Failure of any party to terminate this Agreement for any of
the causes set forth in this agreement will not constitute a
waiver of the right to terminate this Agreement at a later
time for any of these causes.
11. For the purpose of compliance with any applicable federal or
state securities laws or regulations promulgated under them,
the Broker/Dealer acknowledges and agrees that in performing
the Broker/Dealer services covered by this Agreement, it is
acting in the capacity of an independent broker and dealer as
defined by the By-Laws of the NASD and not as an agent or
employee of either Tower Square or any registered investment
company.
The Broker/Dealer represents and warrants that it is
authorized and licensed as an agent under applicable state
insurance laws to solicit, negotiate and effect the contracts
of insurance contemplated hereunder. In the event the
Broker/Dealer is not licensed as such, an insurance agency
affiliated with the Broker/Dealer shall be licensed as an
agent under applicable state insurance laws to solicit,
negotiate and effect the contracts of insurance contemplated
hereunder.
For the purpose of compliance with any applicable state
insurance laws or regulations promulgated under them, the
Broker/Dealer acknowledges and agrees that solely in
performing the insurance-selling functions reflected by this
agreement, it or its registered representative is acting as
the agent of the Insurance Companies, and in that capacity is
authorized only to solicit applications from the public for
the Contracts. Such Contracts will not become effective until
such applications are accepted after underwriting review by
the Insurance Companies at their Home Office.
In furtherance of its responsibilities as a Broker/Dealer, the
Broker/Dealer acknowledges that it is responsible for
compliance on any business it produces concerning the
Contracts. No Broker/Dealer will be entitled to compensation
with respect to any application for or payment credited to,
any Contract(s) that is rejected by the Insurance Companies in
the event the Insurance Companies or Tower Square determine
the solicitation or obtaining of purchasers,
<PAGE> 4
4
applications or payments by the Broker/Dealer or any of its
Associated persons was done in violation of the securities or
insurance laws of the United States or any state or other
jurisdiction.
No party to this Agreement will be liable for any obligation,
act or omission of the other. Each party to this Agreement
will hold harmless and indemnify the (1) Registered Investment
Companies which are used to fund the Contracts, (2) Insurance
Companies, (3) Tower Square, and (4) the Broker/Dealer, as
appropriate, for any loss or expense suffered as a result of
the violation or noncompliance by that party or the Associated
persons of that party of any applicable law or regulation or
any provision of the Agreement; provided, however, that no
party or any of its employees or agents will be liable to the
other party for any direct, special or consequential damages
arising out of or in connection with the performance of any
services pursuant to the Agreement.
12. All notices to the Insurance Companies or Tower Square
relating to this Agreement should be sent to the attention of
The Travelers Insurance Companies, FS Law Department, One
Tower Square, Hartford, CT 06183. All notices to the
Broker/Dealer will be duly given if mailed or faxed to the
address shown below.
13. The terms "Associated Person", "member" and "rules of the
Corporation" as used herein shall be defined consistently with
the definition of similar terms as contained in Article I of
the NASD By-Laws. This Agreement will be construed in
accordance with the laws of the State of Connecticut.
In reliance on the representations set forth and in consideration of the
undertakings described herein, the parties represented below do hereby contract
and agree.
<TABLE>
<CAPTION>
TOWER SQUARE SECURITIES, INC. The Broker/Dealer
<S> <C>
By:
------------------------------ ----------------------------------
Title:
------------------------------ ----------------------------------
Street Address
Date:
------------------------------ ----------------------------------
By:
----------------------------------
Title:
----------------------------------
Taxpayer I.D.:
----------------------------------
Date:
----------------------------------
Fax:
----------------------------------
</TABLE>
<PAGE> 1
EXHIBIT 9
April 23, 1996
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. 2 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 Com-missioner
of the State of Connecticut and when issued will be valid, legal
and bindng 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> 1
EXHIBIT 10(A)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion on this Post-Effective Amendment No. 2 of the
Registration Statement on Form N-4 of The Travelers Fund VA for Variable
Annuities of our report dated September 16, 1994, relating to our audit of the
statements of operations and retained earnings and cash flows of The Travelers
Life and Annuity Company for the year ended December 31, 1993. We also consent
to the reference in our Firm as experts in accounting and auditing under the
caption "Independent Accountants" in the Statement of Additional Information.
COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
April 24, 1996
<PAGE> 1
Exhibit 10(b)
Consent of Independent Certified Public Accountants
The Board of Directors
The Travelers Life and Annuity Company
We consent to the use of our report included herein and to the reference to our
Firm as experts under the heading "Independent Accountants" in the Prospectus.
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," in 1994.
/s/ KPMG Peat Marwick
April 18, 1996
<PAGE> 1
EXHIBIT 13
THE TRAVELERS FUND VA FOR VARIABLE ANNUITIES
SCHEDULE FOR COMPUTATION OF TOTAL RETURN CALCULATIONS
Total Return Calculation (Standardized)
The "1-year rate" represents fund performance for the most recent fiscal year.
The "since rate" represents fund performance for the most recent fiscal year.
1/n
T = (ERV/P) where:
T = average annual total return
P = a hypothetical initial payment of $1,000
n = the applicable year (1, 5, 10) or portion thereof
ERV = ending redeemable value of a hypothetical $1,000 payment made
at the beginning of each of the periods
For calculating the redeemable value, the $15 semiannual administrative charge
was expressed as a percentage of assets based on the actual fee collected
divided by the average net assets per contracts sold under that prospectus for
each year for which performance was shown, and was assumed to be deducted on
June 30 and December 31 of each year.
The unit values used in the calculation reflect the deduction for the
investment advisory fees for the fund and the mortality and expense risk
charge. Since the applicable 5% contingent deferred sales charge applies for
five years, the ERV for the end of the 10-year period does not reflect this
charge.
Total Return Calculation (Non-Standardized)
The non-standardized rate represents fund performance for the calendar year-to
date, and for the most recent applicable 1-year, 3-year, 5-year and 10-year
periods ending with the most recent fiscal year end.
The non-standardized total returns reflect a percentage change in the value of
an Accumulation Unit based on the performance of an account over periods of the
applicable period, determined by dividing the increase (decrease) in value for
that unit by the Accumulation Unit Value at the beginning of the period. This
percentage figure reflects the deduction of asset based charges, but does not
reflect the deduction of semiannual administrative charges or contingent
deferred sales charges. The deduction of the semiannual administrative charge
or the contingent deferred sales charge would reduce any percentage increase or
make greater any percentage decrease.
For a Schedule of the Computation of the Total Return Quotations, both
Standardized and Non-Standardized, see attached.
<PAGE> 2
TLAC
UA STANDARDIZED PERFORMANCE
DREYFUS STOCK INDEX FUND
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR1 UNIT1 DOLLAR5 UNIT5 DOLLAR10 UNIT10 SEMFEE
- ---- ----- ------- ----- ------- ----- -------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
09/30/89 .807971 1,000.00 1,237.668 .002680
12/31/89 .822856 -.68 -.828 .002680
03/31/90 .795004 .002830
06/30/90 .840749 -1.46 -1.732 .002830
09/30/90 .723607 .002830
12/31/90 .784249 1,000.00 1,275.105 -1.42 -1.811 .002830
03/31/91 .894569 .002970
06/30/91 .888822 -1.58 -1.782 -1.53 -1.724 .002970
09/30/91 .931911 .002970
12/31/91 1.005682 -1.79 -1.781 -1.73 -1.723 .002970
03/31/92 .976358 .003500
06/30/92 .990287 -2.22 -2.242 -2.15 -2.169 .003500
09/30/92 1.017069 .003500
12/31/92 1.063662 -2.28 -2.145 -2.21 -2.074 .003500
03/31/93 1.103994 .003410
06/30/93 1.104058 -2.34 -2.121 -2.26 -2.051 .003410
09/30/93 1.127227 .003410
12/31/93 1.148463 -2.43 -2.115 -2.35 -2.046 .003410
03/31/94 1.100683 .002910
06/30/94 1.100821 -2.07 -1.877 -2.00 -1.816 .002910
09/30/94 1.148798 .002910
12/30/94 1.144205 1,000.00 873.969 -2.06 -1.800 -1.99 -1.741 .002910
03/31/95 1.250834 .001850
06/30/95 1.362735 -1.01 -.744 -1.46 -1.071 -1.41 -1.036 .001850
09/29/95 1.465091 .001850
12/29/95 1.545680 -1.17 -.760 -1.69 -1.095 -1.64 -1.059 .001850
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR FIVE YEAR SINCE INCEPTION
<S> <C> <C> <C>
ENDING UNITS 872.466 1,257.075 1,215.859
ACCOUNT VALUE 1,348.55 1,943.04 1,879.33
SURRENDER VALUE 1,298.55 1,893.04
TOTAL RETURN 29.86 % 89.30 % 87.93 %
ANNUALIZED RETURN 13.62 % 10.62 %
</TABLE>
<PAGE> 3
UA STANDARDIZED PERFORMANCE
FIDELITY ASSET MANAGER PORTFOLIO
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR1 UNIT1 DOLLAR5 UNIT5 DOLLAR10 UNIT10 SEMFEE
- ---- ----- ------- ----- ------- ----- -------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
09/06/89 .769163 1,000.00 1,300.115 .002680
09/30/89 .767789 .002680
12/31/89 .772372 -.85 -1.105 .002680
03/31/90 .766878 .002830
06/30/90 .799139 -1.44 -1.807 .002830
09/30/90 .752903 .002830
12/31/90 .813985 1,000.00 1,228.524 -1.48 -1.819 .002830
03/31/91 .897954 .002970
06/30/91 .912510 -1.57 -1.726 -1.66 -1.820 .002970
09/30/91 .956830 .002970
12/31/91 .985224 -1.73 -1.755 -1.82 -1.850 .002970
03/31/92 1.011568 .003500
06/30/92 1.032958 -2.16 -2.094 -2.28 -2.208 .003500
09/30/92 1.050109 .003500
12/31/92 1.088353 -2.27 -2.086 -2.39 -2.199 .003500
03/31/93 1.144645 .003410
06/30/93 1.176733 -2.36 -2.003 -2.49 -2.112 .003410
09/30/93 1.222979 .003410
12/31/93 1.300962 -2.57 -1.979 -2.71 -2.087 .003410
03/31/94 1.234767 .002910
06/30/94 1.218600 -2.23 -1.830 -2.35 -1.930 .002910
09/30/94 1.249846 .002910
12/30/94 1.206570 1,000.00 828.796 -2.14 -1.777 -2.26 -1.873 .002910
03/31/95 1.230368 .001850
06/30/95 1.272729 -.95 -.747 -1.39 -1.093 -1.47 -1.153 .001850
09/29/95 1.346710 .001850
12/29/95 1.393727 -1.02 -.733 -1.49 -1.073 -1.58 -1.131 .001850
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR FIVE YEAR SINCE INCEPTION
<S> <C> <C> <C>
ENDING UNITS 827.316 1,211.108 1,277.020
ACCOUNT VALUE 1,153.05 1,687.95 1,779.82
SURRENDER VALUE 1,103.05 1,637.95
TOTAL RETURN 10.31 % 63.80 % 77.98 %
ANNUALIZED RETURN 10.38 % 9.56 %
</TABLE>
<PAGE> 4
UA STANDARDIZED PERFORMANCE
FIDELITY HIGH INCOME PORTFOLIO
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR1 UNIT1 DOLLAR5 UNIT5 DOLLAR10 UNIT10 SEMFEE
- ---- ----- ------- ----- ------- ----- -------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/85 .598305 1,000.00 1,671.388 .003520
03/31/86 .639679 .002800
06/30/86 .666687 -1.48 -2.220 .002800
09/30/86 .670893 .002800
12/31/86 .695343 -1.59 -2.289 .002800
03/31/87 .737566 .003960
06/30/87 .720910 -2.34 -3.242 .003960
09/30/87 .700111 .003960
12/31/87 .695054 -2.33 -3.355 .003960
03/31/88 .731804 .003150
06/30/88 .749507 -1.89 -2.520 .003150
09/30/88 .757344 .003150
12/31/88 .766334 -1.98 -2.582 .003150
03/31/89 .776053 .002680
06/30/89 .801525 -1.74 -2.169 .002680
09/30/89 .761552 .002680
12/31/89 .725251 -1.69 -2.332 .002680
03/31/90 .688779 .002830
06/30/90 .713891 -1.68 -2.354 .002830
09/30/90 .693724 .002830
12/31/90 .700220 1,000.00 1,428.123 -1.65 -2.355 .002830
03/31/91 .779113 .002970
06/30/91 .833787 -1.63 -1.951 -1.87 -2.248 .002970
09/30/91 .893910 .002970
12/31/91 .934139 -1.87 -2.004 -2.16 -2.310 .002970
03/31/92 1.051533 .003500
06/30/92 1.080335 -2.51 -2.324 -2.89 -2.678 .003500
09/30/92 1.132682 .003500
12/31/92 1.137517 -2.76 -2.426 -3.18 -2.796 .003500
03/31/93 1.212775 .003410
06/30/93 1.266920 -2.91 -2.297 -3.35 -2.647 .003410
09/30/93 1.293522 .003410
12/31/93 1.353807 -3.17 -2.339 -3.65 -2.695 .003410
03/31/94 1.346061 .002910
06/30/94 1.325859 -2.76 -2.080 -3.18 -2.398 .002910
09/30/94 1.336418 .002910
12/30/94 1.316357 1,000.00 759.672 -2.72 -2.063 -3.13 -2.378 .002910
03/31/95 1.388275 .001850
06/30/95 1.465121 -.98 -.667 -1.81 -1.239 -2.09 -1.428 .001850
09/29/95 1.532383 .001850
12/29/95 1.567961 -1.06 -.679 -1.98 -1.261 -2.28 -1.453 .001850
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR FIVE YEAR SINCE INCEPTION
<S> <C> <C> <C>
ENDING UNITS 758.326 1,408.140 1,622.940
ACCOUNT VALUE 1,189.03 2,207.91 2,544.71
SURRENDER VALUE 1,139.03 2,157.91
TOTAL RETURN 13.90 % 115.79 % 154.47 %
ANNUALIZED RETURN 16.64 % 9.79 %
</TABLE>
<PAGE> 5
UA STANDARDIZED PERFORMANCE
FIDELITY EQUITY-INCOME PORTFOLIO
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR1 UNIT1 DOLLAR5 UNIT5 DOLLAR10 UNIT10 SEMFEE
- ---- ----- ------- ----- ------- ----- -------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10/09/86 .524217 1,000.00 1,907.607 .002800
12/31/86 .523774 -.64 -1.215 .002800
03/31/87 .610766 .003960
06/30/87 .609820 -2.14 -3.508 .003960
09/30/87 .634819 .003960
12/31/87 .511397 -2.11 -4.130 .003960
03/31/88 .563154 .003150
06/30/88 .611254 -1.68 -2.746 .003150
09/30/88 .615505 .003150
12/31/88 .619753 -1.84 -2.966 .003150
03/31/89 .666753 .002680
06/30/89 .711341 -1.69 -2.373 .002680
09/30/89 .753957 .002680
12/31/89 .718237 -1.81 -2.521 .002680
03/31/90 .672708 .002830
06/30/90 .683324 -1.87 -2.740 .002830
09/30/90 .564035 .002830
12/31/90 .600841 1,000.00 1,664.334 -1.71 -2.851 .002830
03/31/91 .688643 .002970
06/30/91 .697811 -1.60 -2.300 -1.82 -2.601 .002970
09/30/91 .745366 .002970
12/31/91 .779960 -1.82 -2.338 -2.06 -2.645 .002970
03/31/92 .803652 .003500
06/30/92 .825563 -2.33 -2.824 -2.64 -3.195 .003500
09/30/92 .838214 .003500
12/31/92 .900353 -2.50 -2.779 -2.83 -3.143 .003500
03/31/93 .973310 .003410
06/30/93 .995302 -2.67 -2.686 -3.02 -3.038 .003410
09/30/93 1.040209 .003410
12/31/93 1.051644 -2.88 -2.740 -3.26 -3.100 .003410
03/31/94 1.021781 .002910
06/30/94 1.057170 -2.53 -2.393 -2.86 -2.706 .002910
09/30/94 1.126333 .002910
12/30/94 1.112000 1,000.00 899.281 -2.60 -2.336 -2.94 -2.643 .002910
03/31/95 1.209130 .001850
06/30/95 1.294552 -1.00 -.773 -1.83 -1.413 -2.07 -1.599 .001850
09/29/95 1.402090 .001850
12/29/95 1.483574 -1.15 -.778 -2.11 -1.423 -2.39 -1.609 .001850
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR FIVE YEAR SINCE INCEPTION
<S> <C> <C> <C>
ENDING UNITS 897.729 1,641.102 1,856.277
ACCOUNT VALUE 1,331.85 2,434.70 2,753.92
SURRENDER VALUE 1,281.85 2,384.70
TOTAL RETURN 28.18 % 138.47 % 175.39 %
ANNUALIZED RETURN 18.99 % 11.60 %
</TABLE>
<PAGE> 6
UA STANDARDIZED PERFORMANCE
FIDELITY GROWTH PORTFOLIO
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR1 UNIT1 DOLLAR5 UNIT5 DOLLAR10 UNIT10 SEMFEE
- ---- ----- ------- ----- ------- ----- -------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10/09/86 .498625 1,000.00 2,005.515 .002800
12/31/86 .498701 -.64 -1.277 .002800
03/31/87 .586887 .003960
06/30/87 .606346 -2.19 -3.616 .003960
09/30/87 .639965 .003960
12/31/87 .510542 -2.21 -4.333 .003960
03/31/88 .557143 .003150
06/30/88 .585433 -1.72 -2.943 .003150
09/30/88 .582594 .003150
12/31/88 .582770 -1.83 -3.147 .003150
03/31/89 .628140 .002680
06/30/89 .673853 -1.68 -2.487 .002680
09/30/89 .750815 .002680
12/31/89 .756981 -1.91 -2.517 .002680
03/31/90 .726438 .002830
06/30/90 .781271 -2.16 -2.765 .002830
09/30/90 .616809 .002830
12/31/90 .659807 1,000.00 1,515.595 -2.02 -3.063 .002830
03/31/91 .776772 .002970
06/30/91 .752157 -1.59 -2.112 -2.08 -2.759 .002970
09/30/91 .864335 .002970
12/31/91 .948195 -1.91 -2.015 -2.50 -2.632 .002970
03/31/92 .960645 .003500
06/30/92 .877747 -2.41 -2.751 -3.15 -3.593 .003500
09/30/92 .899612 .003500
12/31/92 1.024228 -2.51 -2.451 -3.28 -3.202 .003500
03/31/93 1.060381 .003410
06/30/93 1.135505 -2.77 -2.442 -3.62 -3.190 .003410
09/30/93 1.207495 .003410
12/31/93 1.207307 -3.00 -2.488 -3.92 -3.249 .003410
03/31/94 1.165626 .002910
06/30/94 1.083999 -2.50 -2.309 -3.27 -3.015 .002910
09/30/94 1.167146 .002910
12/30/94 1.192078 1,000.00 838.871 -2.48 -2.082 -3.24 -2.719 .002910
03/31/95 1.258248 .001850
06/30/95 1.466358 -1.03 -.703 -1.84 -1.255 -2.40 -1.639 .001850
09/29/95 1.668285 .001850
12/29/95 1.593743 -1.19 -.744 -2.12 -1.328 -2.76 -1.735 .001850
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR FIVE YEAR SINCE INCEPTION
<S> <C> <C> <C>
ENDING UNITS 837.424 1,494.360 1,951.634
ACCOUNT VALUE 1,334.64 2,381.63 3,110.40
SURRENDER VALUE 1,284.64 2,331.63
TOTAL RETURN 28.46 % 133.16 % 211.04 %
ANNUALIZED RETURN 18.46 % 13.09 %
</TABLE>
<PAGE> 7
UA STANDARDIZED PERFORMANCE
U.S. GOVERNMENT SECURITIES PORTFOLIO
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR1 UNIT1 DOLLAR5 UNIT5 DOLLAR10 UNIT10 SEMFEE
- ---- ----- ------- ----- ------- ----- -------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
01/24/92 1.000000 1,000.00 1,000.000 .003500
03/31/92 1.004840 .003500
06/30/92 1.028527 -1.54 -1.494 .003500
09/30/92 1.064789 .003500
12/31/92 1.066269 -1.83 -1.716 .003500
03/31/93 1.113928 .003410
06/30/93 1.137403 -1.87 -1.646 .003410
09/30/93 1.168646 .003410
12/31/93 1.153070 -1.94 -1.685 .003410
03/31/94 1.095843 .002910
06/30/94 1.077102 -1.61 -1.496 .002910
09/30/94 1.062501 .002910
12/30/94 1.074430 1,000.00 930.726 -1.55 -1.445 .002910
03/31/95 1.131555 .001850
06/30/95 1.230754 -.99 -.806 -1.06 -.858 .001850
09/29/95 1.242915 .001850
12/29/95 1.320899 -1.10 -.831 -1.17 -.884 .001850
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION
<S> <C> <C>
ENDING UNITS 929.089 988.774
ACCOUNT VALUE 1,227.23 1,306.07
SURRENDER VALUE 1,177.23 1,256.07
TOTAL RETURN 17.72 % 25.61 %
ANNUALIZED RETURN 5.97 %
</TABLE>
<PAGE> 8
UA STANDARDIZED PERFORMANCE
TEMPLETON BOND FUND
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR1 UNIT1 DOLLAR5 UNIT5 DOLLAR10 UNIT10 SEMFEE
- ---- ----- ------- ----- ------- ----- -------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
08/31/88 .788642 1,000.00 1,268.002 .003150
09/30/88 .792559 .003150
12/31/88 .800303 -1.06 -1.325 .003150
03/31/89 .811695 .002680
06/30/89 .824316 -1.38 -1.673 .002680
09/30/89 .835262 .002680
12/31/89 .850853 -1.42 -1.669 .002680
03/31/90 .842456 .002830
06/30/90 .863644 -1.53 -1.774 .002830
09/30/90 .865048 .002830
12/31/90 .893435 1,000.00 1,119.276 -1.57 -1.755 .002830
03/31/91 .914025 .002970
06/30/91 .918887 -1.51 -1.639 -1.70 -1.845 .002970
09/30/91 .972519 .002970
12/31/91 1.022356 -1.61 -1.576 -1.81 -1.774 .002970
03/31/92 .987423 .003500
06/30/92 1.034866 -2.01 -1.941 -2.26 -2.185 .003500
09/30/92 1.067424 .003500
12/31/92 1.064775 -2.05 -1.922 -2.30 -2.164 .003500
03/31/93 1.112129 .003410
06/30/93 1.131937 -2.08 -1.840 -2.34 -2.071 .003410
09/30/93 1.159356 .003410
12/31/93 1.172093 -2.18 -1.861 -2.45 -2.094 .003410
03/31/94 1.119632 .002910
06/30/94 1.094718 -1.83 -1.670 -2.06 -1.880 .002910
09/30/94 1.099411 .002910
12/30/94 1.101064 1,000.00 908.212 -1.77 -1.606 -1.99 -1.807 .002910
03/31/95 1.143544 .001850
06/30/95 1.196103 -.96 -.807 -1.17 -.982 -1.32 -1.105 .001850
09/29/95 1.207163 .001850
12/29/95 1.249706 -1.03 -.821 -1.25 -1.000 -1.41 -1.125 .001850
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR FIVE YEAR SINCE INCEPTION
<S> <C> <C> <C>
ENDING UNITS 906.584 1,103.240 1,241.757
ACCOUNT VALUE 1,132.96 1,378.73 1,551.83
SURRENDER VALUE 1,082.96 1,328.73
TOTAL RETURN 8.30 % 32.87 % 55.18 %
ANNUALIZED RETURN 5.85 % 6.18 %
</TABLE>
<PAGE> 9
UA STANDARDIZED PERFORMANCE
TEMPLETON ASSET ALLOCATION FUND
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR1 UNIT1 DOLLAR5 UNIT5 DOLLAR10 UNIT10 SEMFEE
- ---- ----- ------- ----- ------- ----- -------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
08/31/88 .764604 1,000.00 1,307.867 .003150
09/30/88 .769166 .003150
12/31/88 .782762 -1.07 -1.361 .003150
03/31/89 .800836 .002680
06/30/89 .811232 -1.40 -1.720 .002680
09/30/89 .856326 .002680
12/31/89 .875511 -1.47 -1.684 .002680
03/31/90 .864730 .002830
06/30/90 .890442 -1.63 -1.828 .002830
09/30/90 .767523 .002830
12/31/90 .795571 1,000.00 1,256.959 -1.55 -1.951 .002830
03/31/91 .873771 .002970
06/30/91 .867105 -1.55 -1.790 -1.60 -1.850 .002970
09/30/91 .943179 .002970
12/31/91 1.003260 -1.74 -1.737 -1.80 -1.796 .002970
03/31/92 1.006362 .003500
06/30/92 1.068318 -2.27 -2.127 -2.35 -2.198 .003500
09/30/92 1.060888 .003500
12/31/92 1.070227 -2.34 -2.188 -2.42 -2.262 .003500
03/31/93 1.129396 .003410
06/30/93 1.176935 -2.39 -2.033 -2.47 -2.102 .003410
09/30/93 1.249192 .003410
12/31/93 1.333027 -2.67 -2.002 -2.76 -2.069 .003410
03/31/94 1.286213 .002910
06/30/94 1.263356 -2.35 -1.862 -2.43 -1.924 .002910
09/30/94 1.319009 .002910
12/30/94 1.277445 1,000.00 782.813 -2.30 -1.799 -2.38 -1.860 .002910
03/31/95 1.308087 .001850
06/30/95 1.421156 -.98 -.687 -1.55 -1.090 -1.60 -1.127 .001850
09/29/95 1.505370 .001850
12/29/95 1.546087 -1.07 -.694 -1.70 -1.101 -1.76 -1.138 .001850
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR FIVE YEAR SINCE INCEPTION
<S> <C> <C> <C>
ENDING UNITS 781.431 1,239.231 1,280.996
ACCOUNT VALUE 1,208.16 1,915.96 1,980.53
SURRENDER VALUE 1,158.16 1,865.96
TOTAL RETURN 15.82 % 86.60 % 98.05 %
ANNUALIZED RETURN 13.29 % 9.77 %
</TABLE>
<PAGE> 10
UA STANDARDIZED PERFORMANCE
TEMPLETON STOCK FUND
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR1 UNIT1 DOLLAR5 UNIT5 DOLLAR10 UNIT10 SEMFEE
- ---- ----- ------- ----- ------- ----- -------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
08/31/88 .772928 1,000.00 1,293.782 .003150
09/30/88 .776767 .003150
12/31/88 .790514 -1.06 -1.347 .003150
03/31/89 .825684 .002680
06/30/89 .826945 -1.40 -1.694 .002680
09/30/89 .898485 .002680
12/31/89 .894924 -1.49 -1.664 .002680
03/31/90 .880159 .002830
06/30/90 .909033 -1.65 -1.810 .002830
09/30/90 .764002 .002830
12/31/90 .786446 1,000.00 1,271.543 -1.54 -1.963 .002830
03/31/91 .877701 .002970
06/30/91 .857706 -1.55 -1.810 -1.57 -1.829 .002970
09/30/91 .927562 .002970
12/31/91 .990028 -1.74 -1.760 -1.76 -1.779 .002970
03/31/92 1.000848 .003500
06/30/92 1.042397 -2.25 -2.163 -2.28 -2.187 .003500
09/30/92 1.020298 .003500
12/31/92 1.046888 -2.31 -2.210 -2.34 -2.234 .003500
03/31/93 1.116933 .003410
06/30/93 1.173076 -2.39 -2.039 -2.42 -2.061 .003410
09/30/93 1.274035 .003410
12/31/93 1.385364 -2.75 -1.986 -2.78 -2.008 .003410
03/31/94 1.340311 .002910
06/30/94 1.335335 -2.49 -1.867 -2.52 -1.887 .002910
09/30/94 1.404836 .002910
12/30/94 1.338030 1,000.00 747.367 -2.45 -1.828 -2.47 -1.848 .002910
03/31/95 1.381158 .001850
06/30/95 1.517535 -.99 -.650 -1.66 -1.093 -1.68 -1.105 .001850
09/29/95 1.615610 .001850
12/29/95 1.655043 -1.10 -.662 -1.84 -1.112 -1.86 -1.125 .001850
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR FIVE YEAR SINCE INCEPTION
<S> <C> <C> <C>
ENDING UNITS 746.055 1,253.675 1,267.242
ACCOUNT VALUE 1,234.75 2,074.89 2,097.34
SURRENDER VALUE 1,184.75 2,024.89
TOTAL RETURN 18.48 % 102.49 % 109.73 %
ANNUALIZED RETURN 15.16 % 10.63 %
</TABLE>
<PAGE> 11
UA STANDARDIZED PERFORMANCE
AMERICAN ODYSSEY LONG TERM BOND FUND
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR1 UNIT1 DOLLAR5 UNIT5 DOLLAR10 UNIT10 SEMFEE
- ---- ----- ------- ----- ------- ----- -------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
05/01/93 1.000000 1,000.00 1,000.000 .003410
06/30/93 1.022681 -.57 -.554 .003410
09/30/93 1.077476 .003410
12/31/93 1.084753 -1.80 -1.655 .003410
03/31/94 1.040919 .002910
06/30/94 1.009481 -1.52 -1.506 .002910
09/30/94 1.007277 .002910
12/30/94 1.009615 1,000.00 990.477 -1.46 -1.449 .002910
03/31/95 1.066677 .001850
06/30/95 1.141545 -.99 -.863 -.99 -.867 .001850
09/29/95 1.162560 .001850
12/29/95 1.220991 -1.08 -.886 -1.09 -.890 .001850
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION
<S> <C> <C>
ENDING UNITS 988.728 993.078
ACCOUNT VALUE 1,207.23 1,212.54
SURRENDER VALUE 1,157.23 1,162.54
TOTAL RETURN 15.72 % 16.25 %
ANNUALIZED RETURN 5.82 %
</TABLE>
<PAGE> 12
UA STANDARDIZED PERFORMANCE
AMERICAN ODYSSEY CORE EQUITY FUND
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR1 UNIT1 DOLLAR5 UNIT5 DOLLAR10 UNIT10 SEMFEE
- ---- ----- ------- ----- ------- ----- -------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
05/01/93 1.000000 1,000.00 1,000.000 .003410
06/30/93 .994108 -.56 -.562 .003410
09/30/93 1.014439 .003410
12/31/93 1.012373 -1.71 -1.689 .003410
03/31/94 .985818 .002910
06/30/94 .985673 -1.45 -1.471 .002910
09/30/94 1.013639 .002910
12/30/94 .989690 1,000.00 1,010.417 -1.43 -1.447 .002910
03/31/95 1.070957 .001850
06/30/95 1.176170 -1.01 -.861 -1.00 -.847 .001850
09/29/95 1.277819 .001850
12/29/95 1.354370 -1.18 -.872 -1.16 -.859 .001850
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION
<S> <C> <C>
ENDING UNITS 1,008.684 993.125
ACCOUNT VALUE 1,366.13 1,345.06
SURRENDER VALUE 1,316.13 1,295.06
TOTAL RETURN 31.61 % 29.51 %
ANNUALIZED RETURN 10.20 %
</TABLE>
<PAGE> 13
UA STANDARDIZED PERFORMANCE
AMERICAN ODYSSEY EMERGING OPPTS FUND
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR1 UNIT1 DOLLAR5 UNIT5 DOLLAR10 UNIT10 SEMFEE
- ---- ----- ------- ----- ------- ----- -------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
05/01/93 1.000000 1,000.00 1,000.000 .003410
06/30/93 .969499 -.55 -.569 .003410
09/30/93 1.008005 .003410
12/31/93 1.078790 -1.75 -1.618 .003410
03/31/94 1.080366 .002910
06/30/94 1.013294 -1.52 -1.499 .002910
09/30/94 1.128325 .002910
12/30/94 1.168475 1,000.00 855.816 -1.58 -1.353 .002910
03/31/95 1.214213 .001850
06/30/95 1.411561 -1.02 -.723 -1.19 -.841 .001850
09/29/95 1.569549 .001850
12/29/95 1.526112 -1.16 -.761 -1.35 -.885 .001850
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION
<S> <C> <C>
ENDING UNITS 854.332 993.235
ACCOUNT VALUE 1,303.81 1,515.79
SURRENDER VALUE 1,253.81 1,465.79
TOTAL RETURN 25.38 % 46.58 %
ANNUALIZED RETURN 15.44 %
</TABLE>
<PAGE> 14
UA STANDARDIZED PERFORMANCE
AMERICAN ODYSSEY INTNL EQUITY FUND
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR1 UNIT1 DOLLAR5 UNIT5 DOLLAR10 UNIT10 SEMFEE
- ---- ----- ------- ----- ------- ----- -------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
05/01/93 1.000000 1,000.00 1,000.000 .003410
06/30/93 .973707 -.55 -.568 .003410
09/30/93 1.009188 .003410
12/31/93 1.180346 -1.84 -1.555 .003410
03/31/94 1.102016 .002910
06/30/94 1.087810 -1.65 -1.514 .002910
09/30/94 1.131246 .002910
12/30/94 1.084329 1,000.00 922.229 -1.57 -1.452 .002910
03/31/95 1.093010 .001850
06/30/95 1.175760 -.96 -.820 -1.04 -.885 .001850
09/29/95 1.262995 .001850
12/29/95 1.274376 -1.04 -.819 -1.13 -.884 .001850
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION
<S> <C> <C>
ENDING UNITS 920.590 993.143
ACCOUNT VALUE 1,173.18 1,265.64
SURRENDER VALUE 1,123.18 1,215.64
TOTAL RETURN 12.32 % 21.56 %
ANNUALIZED RETURN 7.61 %
</TABLE>
<PAGE> 15
UA STANDARDIZED PERFORMANCE
AMERICAN ODYSSEY INTMEDTE TERM BOND FUND
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR1 UNIT1 DOLLAR5 UNIT5 DOLLAR10 UNIT10 SEMFEE
- ---- ----- ------- ----- ------- ----- -------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
05/01/93 1.000000 1,000.00 1,000.000 .003410
06/30/93 1.012954 -.56 -.557 .003410
09/30/93 1.036579 .003410
12/31/93 1.034768 -1.74 -1.686 .003410
03/31/94 1.009556 .002910
06/30/94 .995410 -1.47 -1.480 .002910
09/30/94 .997262 .002910
12/30/94 .992838 1,000.00 1,007.214 -1.44 -1.451 .002910
03/31/95 1.028928 .001850
06/30/95 1.078101 -.96 -.895 -.95 -.884 .001850
09/29/95 1.090109 .001850
12/29/95 1.127795 -1.03 -.910 -1.01 -.899 .001850
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION
<S> <C> <C>
ENDING UNITS 1,005.408 993.042
ACCOUNT VALUE 1,133.89 1,119.95
SURRENDER VALUE 1,083.89 1,069.95
TOTAL RETURN 8.39 % 6.99 %
ANNUALIZED RETURN 2.57 %
</TABLE>
<PAGE> 16
UA STANDARDIZED PERFORMANCE
AMERICAN ODYSSEY SHORT TERM BOND FUND
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR1 UNIT1 DOLLAR5 UNIT5 DOLLAR10 UNIT10 SEMFEE
- ---- ----- ------- ----- ------- ----- -------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
05/01/93 1.000000 1,000.00 1,000.000 .003410
06/30/93 1.006005 -.56 -.559 .003410
09/30/93 1.015785 .003410
12/31/93 1.020116 -1.73 -1.692 .003410
03/31/94 1.011941 .002910
06/30/94 1.005771 -1.47 -1.462 .002910
09/30/94 1.009626 .002910
12/30/94 1.006059 1,000.00 993.977 -1.46 -1.449 .002910
03/31/95 1.036122 .001850
06/30/95 1.070093 -.95 -.892 -.96 -.893 .001850
09/29/95 1.078089 .001850
12/29/95 1.101532 -1.00 -.905 -1.00 -.906 .001850
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION
<S> <C> <C>
ENDING UNITS 992.180 993.038
ACCOUNT VALUE 1,092.92 1,093.86
SURRENDER VALUE 1,042.92 1,043.86
TOTAL RETURN 4.29 % 4.39 %
ANNUALIZED RETURN 1.63 %
</TABLE>
<PAGE> 17
UA STANDARDIZED PERFORMANCE
SOCIAL AWARENESS STOCK PORTFOLIO
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR1 UNIT1 DOLLAR5 UNIT5 DOLLAR10 UNIT10 SEMFEE
- ---- ----- ------- ----- ------- ----- -------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
05/01/92 1.000000 1,000.00 1,000.000 .003500
06/30/92 .989966 -.57 -.578 .003500
09/30/92 1.007741 .003500
12/31/92 1.085896 -1.82 -1.672 .003500
03/31/93 1.131872 .003410
06/30/93 1.123379 -1.88 -1.673 .003410
09/30/93 1.163586 .003410
12/31/93 1.152985 -1.93 -1.677 .003410
03/31/94 1.099062 .002910
06/30/94 1.087557 -1.62 -1.490 .002910
09/30/94 1.134471 .002910
12/30/94 1.108859 1,000.00 901.828 -1.59 -1.431 .002910
03/31/95 1.209024 .001850
06/30/95 1.320270 -1.01 -.767 -1.11 -.844 .001850
09/29/95 1.393969 .001850
12/29/95 1.460895 -1.16 -.793 -1.27 -.872 .001850
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION
<S> <C> <C>
ENDING UNITS 900.267 989.764
ACCOUNT VALUE 1,315.20 1,445.94
SURRENDER VALUE 1,265.20 1,395.94
TOTAL RETURN 26.52 % 39.59 %
ANNUALIZED RETURN 9.53 %
</TABLE>
<PAGE> 18
UA STANDARDIZED PERFORMANCE
MANAGED ASSETS TRUST
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR1 UNIT1 DOLLAR5 UNIT5 DOLLAR10 UNIT10 SEMFEE
- ---- ----- ------- ----- ------- ----- -------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/85 1.040246 1,000.00 961.311 .003520
03/31/86 1.193011 .002800
06/30/86 1.257659 -1.55 -1.230 .002800
09/30/86 1.174191 .002800
12/31/86 1.223010 -1.67 -1.363 .002800
03/31/87 1.445994 .003960
06/30/87 1.481165 -2.57 -1.733 .003960
09/30/87 1.546842 .003960
12/31/87 1.233686 -2.57 -2.085 .003960
03/31/88 1.273436 .003150
06/30/88 1.317886 -1.92 -1.456 .003150
09/30/88 1.296419 .003150
12/30/88 1.330834 -1.99 -1.494 .003150
03/31/89 1.397951 .002680
06/30/89 1.511052 -1.81 -1.200 .002680
09/29/89 1.631150 .002680
12/29/89 1.670980 -2.03 -1.213 .002680
03/30/90 1.632375 .002830
06/29/90 1.716575 -2.28 -1.326 .002830
09/28/90 1.591752 .002830
12/31/90 1.683418 1,000.00 594.030 -2.28 -1.355 .002830
03/28/91 1.808914 .002970
06/28/91 1.805897 -1.54 -.852 -2.45 -1.358 .002970
09/30/91 1.909094 .002970
12/31/91 2.033846 -1.69 -.832 -2.70 -1.325 .002970
03/31/92 1.968786 .003500
06/30/92 2.009641 -2.10 -1.043 -3.34 -1.662 .003500
09/30/92 2.057708 .003500
12/31/92 2.111478 -2.13 -1.010 -3.40 -1.610 .003500
03/31/93 2.195169 .003410
06/30/93 2.214177 -2.18 -.983 -3.47 -1.567 .003410
09/30/93 2.268465 .003410
12/31/93 2.280590 -2.26 -.990 -3.60 -1.578 .003410
03/31/94 2.185810 .002910
06/30/94 2.168655 -1.90 -.878 -3.04 -1.400 .002910
09/30/94 2.221974 .002910
12/30/94 2.201344 1,000.00 454.268 -1.87 -.848 -2.98 -1.352 .002910
03/31/95 2.343044 .001850
06/30/95 2.525949 -.99 -.393 -1.28 -.508 -2.04 -.809 .001850
09/29/95 2.654052 .001850
12/29/95 2.763480 -1.11 -.402 -1.43 -.519 -2.29 -.827 .001850
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR FIVE YEAR TEN YEAR
<S> <C> <C> <C>
ENDING UNITS 453.473 585.567 933.368
ACCOUNT VALUE 1,253.16 1,618.20 2,579.34
SURRENDER VALUE 1,203.16 1,568.20
TOTAL RETURN 20.32 % 56.82 % 157.93 %
ANNUALIZED RETURN 9.42 % 9.94 %
</TABLE>
<PAGE> 19
UA STANDARDIZED PERFORMANCE
HIGH YIELD BOND TRUST
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR1 UNIT1 DOLLAR5 UNIT5 DOLLAR10 UNIT10 SEMFEE
- ---- ----- ------- ----- ------- ----- -------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/85 1.324407 1,000.00 755.055 .003520
03/31/86 1.400043 .002800
06/30/86 1.418786 -1.45 -1.022 .002800
09/30/86 1.386517 .002800
12/31/86 1.412432 -1.49 -1.058 .002800
03/31/87 1.478947 .003960
06/30/87 1.459673 -2.14 -1.467 .003960
09/30/87 1.429921 .003960
12/31/87 1.388266 -2.12 -1.526 .003960
03/31/88 1.474435 .003150
06/30/88 1.498753 -1.71 -1.138 .003150
09/30/88 1.534578 .003150
12/30/88 1.571309 -1.81 -1.152 .003150
03/31/89 1.605096 .002680
06/30/89 1.679425 -1.63 -.970 .002680
09/29/89 1.648107 .002680
12/29/89 1.573397 -1.63 -1.034 .002680
03/30/90 1.493038 .002830
06/29/90 1.524863 -1.63 -1.072 .002830
09/28/90 1.420906 .002830
12/31/90 1.402285 1,000.00 713.122 -1.54 -1.100 .002830
03/28/91 1.526564 .002970
06/28/91 1.593250 -1.59 -.996 -1.65 -1.038 .002970
09/30/91 1.677140 .002970
12/31/91 1.766769 -1.78 -1.006 -1.85 -1.048 .002970
03/31/92 1.853915 .003500
06/30/92 1.886057 -2.27 -1.205 -2.37 -1.256 .003500
09/30/92 1.940150 .003500
12/31/92 1.973957 -2.40 -1.215 -2.50 -1.266 .003500
03/31/93 2.073533 .003410
06/30/93 2.142071 -2.49 -1.161 -2.59 -1.210 .003410
09/30/93 2.183544 .003410
12/31/93 2.222328 -2.63 -1.185 -2.74 -1.235 .003410
03/31/94 2.164136 .002910
06/30/94 2.144559 -2.24 -1.046 -2.34 -1.091 .002910
09/30/94 2.181349 .002910
12/30/94 2.166884 1,000.00 461.492 -2.21 -1.021 -2.31 -1.064 .002910
03/31/95 2.276282 .001850
06/30/95 2.390870 -.97 -.407 -1.48 -.621 -1.55 -.647 .001850
09/29/95 2.421989 .001850
12/29/95 2.472157 -1.04 -.419 -1.58 -.640 -1.65 -.667 .001850
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR FIVE YEAR TEN YEAR
<S> <C> <C> <C>
ENDING UNITS 460.666 703.027 732.991
ACCOUNT VALUE 1,138.84 1,737.99 1,812.07
SURRENDER VALUE 1,088.84 1,687.99
TOTAL RETURN 8.88 % 68.80 % 81.21 %
ANNUALIZED RETURN 11.05 % 6.12 %
</TABLE>
<PAGE> 20
UA STANDARDIZED PERFORMANCE
UTILITIES PORTFOLIO
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR1 UNIT1 DOLLAR5 UNIT5 DOLLAR10 UNIT10 SEMFEE
- ---- ----- ------- ----- ------- ----- -------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
02/04/94 1.000000 1,000.00 1,000.000 .002910
03/31/94 .998125 .002910
06/30/94 .984067 -1.15 -1.173 .002910
09/30/94 .998823 .002910
12/30/94 1.005532 1,000.00 994.498 -1.45 -1.438 .002910
03/31/95 1.052948 .001850
06/30/95 1.116051 -.98 -.874 -.98 -.877 .001850
09/29/95 1.188817 .001850
12/29/95 1.283982 -1.10 -.859 -1.11 -.861 .001850
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION
<S> <C> <C>
ENDING UNITS 992.765 995.650
ACCOUNT VALUE 1,274.69 1,278.40
SURRENDER VALUE 1,224.69 1,228.40
TOTAL RETURN 22.47 % 22.84 %
ANNUALIZED RETURN 11.44 %
</TABLE>
<PAGE> 21
UA STANDARDIZED PERFORMANCE
CAPITAL APPRECIATION FUND
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR1 UNIT1 DOLLAR5 UNIT5 DOLLAR10 UNIT10 SEMFEE
- ---- ----- ------- ----- ------- ----- -------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/85 .945573 1,000.00 1,057.560 .003520
03/31/86 1.100847 .002800
06/30/86 1.181165 -1.57 -1.333 .002800
09/30/86 .976295 .002800
12/31/86 1.026600 -1.63 -1.590 .002800
03/31/87 1.337873 .003960
06/30/87 1.315794 -2.45 -1.859 .003960
09/30/87 1.359885 .003960
12/31/87 .933666 -2.34 -2.511 .003960
03/31/88 1.009223 .003150
06/30/88 1.086541 -1.67 -1.538 .003150
09/30/88 1.018419 .003150
12/30/88 1.014693 -1.74 -1.710 .003150
03/31/89 1.074554 .002680
06/30/89 1.114221 -1.49 -1.340 .002680
09/29/89 1.236725 .002680
12/29/89 1.157147 -1.59 -1.375 .002680
03/30/90 1.144672 .002830
06/29/90 1.235622 -1.77 -1.431 .002830
09/28/90 .981598 .002830
12/31/90 1.083795 1,000.00 922.684 -1.71 -1.579 .002830
03/28/91 1.298703 .002970
06/28/91 1.282081 -1.62 -1.264 -1.83 -1.427 .002970
09/30/91 1.340840 .002970
12/31/91 1.433412 -1.86 -1.296 -2.10 -1.463 .002970
03/31/92 1.477458 .003500
06/30/92 1.410818 -2.29 -1.623 -2.58 -1.832 .003500
09/30/92 1.480864 .003500
12/31/92 1.665086 -2.47 -1.485 -2.79 -1.675 .003500
03/31/93 1.762397 .003410
06/30/93 1.822381 -2.73 -1.496 -3.08 -1.688 .003410
09/30/93 1.925978 .003410
12/31/93 1.892135 -2.90 -1.532 -3.27 -1.729 .003410
03/31/94 1.813722 .002910
06/30/94 1.702090 -2.39 -1.404 -2.70 -1.585 .002910
09/30/94 1.780524 .002910
12/30/94 1.779321 1,000.00 562.012 -2.31 -1.299 -2.61 -1.466 .002910
03/31/95 1.865442 .001850
06/30/95 2.122753 -1.01 -.478 -1.64 -.775 -1.86 -.874 .001850
09/29/95 2.380648 .001850
12/29/95 2.396267 -1.17 -.490 -1.90 -.794 -2.15 -.896 .001850
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR FIVE YEAR TEN YEAR
<S> <C> <C> <C>
ENDING UNITS 561.045 909.715 1,026.658
ACCOUNT VALUE 1,344.41 2,179.92 2,460.15
SURRENDER VALUE 1,294.41 2,129.92
TOTAL RETURN 29.44 % 112.99 % 146.01 %
ANNUALIZED RETURN 16.33 % 9.42 %
</TABLE>
<PAGE> 1
EXHIBIT 15(a)
THE TRAVELERS FUND VA FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, JAY S. FISHMAN of Haworth, New Jersey, Director of The
Travelers Life and Annuity Company (hereinafter 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-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 the 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 1st day
of April, 1996.
/s/Jay S. Fishman
Director
The Travelers Life and Annuity Company
<PAGE> 2
EXHIBIT 15(a)
THE TRAVELERS FUND VA FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, IAN R. STUART of East Hampton, Connecticut, Vice
President, Chief Financial Officer, Chief Accounting Officer and Controller of
The Travelers Life and Annuity Company (hereinafter 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-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 the 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 1st day
of April, 1996.
/s/Ian R. Stuart
Vice President, Chief Financial Officer,
Chief Accounting Officer and Controller
The Travelers Life and Annuity Company
