<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. 3
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 3
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
Secretary
The Travelers Life and Annuity Company
One Tower Square
Hartford, Connecticut 06183
----------------------------
(Name and address of Agent for Service)
Approximate Date of Proposed Public Offering: ___________________
It is proposed that this filing will become effective (check appropriate box):
______ immediately upon filing pursuant to paragraph (b) of Rule 485.
X on May 1, 1997 pursuant to paragraph (b) of Rule 485.
- ------
______ 60 days after filing pursuant to paragraph (a)(1) of Rule 485.
______ on __________ pursuant to paragraph (a)(1) of Rule 485.
If appropriate, check the following box:
______ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Pursuant to Rule 24f-2 of the Investment Company Act of 1940, the Registrant
hereby declares that an indefinite amount of Variable Annuity Contract units
was registered under the Securities Act of 1933. A Rule 24f-2 Notice for the
fiscal year ended December 31, 1996 was filed on February 28, 1997.
<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
CAPTION IN STATEMENT OF ADDITIONAL
INFORMATION
---------------------------------------------------
15. Cover Page Cover Page
16. Table of Contents Table of Contents
17. General Information and History The Insurance Company; The Separate
Account and the Underlying Funds
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, 1997.
<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
Fixed annuity........................................................................ 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................................................................. 22
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
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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
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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 8.
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 25.)
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
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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% 0.08% 0.83%
High Yield Bond Trust................................ 0.50% 0.47% 0.97%
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% 0.30% 0.62%
Social Awareness Stock Portfolio..................... 0.65% 0.60%(1) 1.25%
Utilities Portfolio.................................. 0.65% 0.42% 1.07%
Templeton Bond Fund.................................. 0.50% 0.18% 0.68%
Templeton Stock Fund................................. 0.70% 0.18%(2) 0.88%
Templeton Asset Allocation Fund...................... 0.61% 0.17%(2) 0.78%
Fidelity's High Income Portfolio..................... 0.59% 0.12%(3) 0.71%
Fidelity's Equity-Income Portfolio................... 0.51% 0.05%(3) 0.56%
Fidelity's Growth Portfolio.......................... 0.61% 0.06%(3) 0.67%
Fidelity's Asset Manager Portfolio................... 0.64% 0.09%(3) 0.73%
Dreyfus Stock Index Fund............................. 0.25% 0.05% 0.30%
American Odyssey International Equity Fund........... 0.65% 0.21% 0.86%
American Odyssey Emerging Opportunities Fund......... 0.60% 0.12% 0.72%
American Odyssey Core Equity Fund.................... 0.57% 0.11% 0.68%
American Odyssey Long-Term Bond Fund................. 0.50% 0.13% 0.63%
American Odyssey Intermediate-Term Bond Fund......... 0.50% 0.16% 0.66%
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% 0.07%(5) 0.87%
Smith Barney International Equity Portfolio.......... 0.75% 0.21%(5) 0.96%
Putnam Diversified Income Portfolio.................. 0.60% 0.24%(5) 0.84%
Smith Barney High Income Portfolio................... 0.80% 0.11%(5) 0.91%
MFS Total Return Portfolio........................... 0.90% 0.20%(6) 1.10%
</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
1.69% for the Social Awareness Stock Portfolio.
(2) Management Fees and Total Underlying Fund Expenses have been restated to
reflect the management fee schedule which was approved by shareholders and
which takes effect on May 1, 1997. Actual Management Fees and Total
Underlying Fund Expenses before May 1, 1997 were lower.
(3) A portion of the brokerage commissions that certain funds pay was used to
reduce the fund's expensed. In addition, certain funds have entered into
arrangements with their custodian and transfer agent whereby interest
earned on uninvested cash balances was used to reduce custodian and transfer
agent expenses. Without these reductions, the Total Underlying Fund Expenses
presented in this table would have been 0.58% for Equity -Income Portfolio,
0.69% for Growth Portfolio, and 0.74% for Asset Management Portfolio.
(4) The Short-Term Bond Fund is required to repay the Manager for any fees the
Manager previously waived or expenses the Manager previously reimbursed,
provided that this repayment by the Fund does not cause the total expense
ratio to exceed 0.75%. Without these repayments, Total Fund Expenses for the
Short-Term Bond Fund for 1996 would have been 0.68%.
(5) Other expenses are as of October 31, 1996 (the Fund's fiscal year end).
There were no fees waived or expenses reimbursed for these funds in 1996.
(6) During the fiscal year ended October 31, 1996, the Smith Barney
International Equity Portfolio and G.T. Global Strategic Income 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 Portfolios are 1.05% and 1.11% respectively. In addition,
the Manager waived all or part of its fees for this period for the G.T.
Global Strategic Income Portfolio. Actual Total Underlying Expenses for the
Portfolio would have been 1.38% without this reimbursement.
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>
- ----------------------------------------------------------------------------------------------------------
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Underlying Funding Options:
Capital Appreciation Fund...................................... $73(a) $120(a) $170(a) $258 a)
23(b) 70(b) 120(b) 258 b)
High Yield Bond Trust.......................................... 74(a) 124(a) 177(a) 272 a)
24(b) 74(b) 127(b) 272 b)
Managed Assets Trust........................................... 70(a) 113(a) 158(a) 232 a)
20(b) 63(b) 108(b) 232 b)
Cash Income Trust..............................................
U.S. Government Securities Portfolio........................... 71(a) 114(a) 160(a) 237 a)
21(b) 64(b) 110(b) 237 b)
Social Awareness Stock Portfolio............................... 77(a) 133(a) 191(a) 300 a)
27(b) 83(b) 141(b) 300 b)
Utilities Portfolio............................................ 75(a) 127(a) 182(a) 282 a)
25(b) 77(b) 132(b) 282 b)
Templeton Bond Fund (Class 1).................................. 71(a) 116(a) 163(a) 243 a)
21(b) 66(b) 113(b) 243 b)
Templeton Stock Fund (Class 1)................................. 73(a) 122(a) 173(a) 263 a)
23(b) 72(b) 123(b) 263 b)
Templeton Asset Allocation Fund (Class 1)...................... 72(a) 119(a) 168(a) 253 a)
22(b) 69(b) 118(b) 253 b)
Fidelity VIP High Income Portfolio............................. 72(a) 117(a) 164(a) 246 a)
22(b) 67(b) 114(b) 246 b)
Fidelity VIP Equity-Income Portfolio........................... 70(a) 112(a) 157(a) 230 a)
20(b) 62(b) 107(b) 230 b)
Fidelity VIP Growth Portfolio.................................. 71(a) 115(a) 162(a) 242 a)
21(b) 65(b) 112(b) 242 b)
Fidelity VIP II Asset Manager Portfolio........................ 72(a) 117(a) 165(a) 248 a)
22(b) 67(b) 115(b) 248 b)
Dreyfus Stock Index Fund....................................... 67(a) 104(a) 143(a) 203 a)
17(b) 54(b) 93(b) 203 b)
American Odyssey Funds(1):
International Equity Fund.................................... 73(a) 121(a) 172(a) 261 a)
23(b) 71(b) 122(b) 261 b)
Emerging Opportunities Fund.................................. 72(a) 117(a) 165(a) 247 a)
22(b) 67(b) 115(b) 247 b)
Core Equity Fund............................................. 71(a) 116(a) 163(a) 243 a)
21(b) 66(b) 113(b) 243 b)
Long-Term Bond Fund.......................................... 71(a) 114(a) 160(a) 238 a)
21(b) 64(b) 110(b) 238 b)
Intermediate-Term Bond Fund.................................. 71(a) 115(a) 162(a) 241 a)
21(b) 65(b) 112(b) 241 b)
Short-Term Bond Fund......................................... 72(a) 118(a) 166(a) 250 a)
22(b) 68(b) 116(b) 250 b)
American Odyssey Funds(2):
International Equity Fund.................................... 86(a) 158(a) 233(a) 380 a)
36(b) 108(b) 183(b) 380 b)
Emerging Opportunities Fund.................................. 84(a) 154(a) 226(a) 367 a)
34(b) 104(b) 176(b) 367 b)
Core Equity Fund............................................. 84(a) 153(a) 224(a) 364 a)
34(b) 103(b) 174(b) 364 b)
Long-Term Bond Fund.......................................... 83(a) 151(a) 222(a) 359 a)
33(b) 101(b) 172(b) 359 b)
Intermediate-Term Bond Fund.................................. 84(a) 152(a) 223(a) 362 a)
34(b) 102(b) 173(b) 362 b)
Short-Term Bond Fund......................................... 84(a) 155(a) 228(a) 370 a)
34(b) 105(b) 178(b) 370 b)
Smith Barney Income and Growth Portfolio....................... 72(a) 117(a) 165(a) 248 a)
22(b) 67(b) 115(b) 248 b)
Alliance Growth Portfolio...................................... 73(a) 121(a) 172(a) 262 a)
23(b) 71(b) 122(b) 262 b)
Smith Barney International Equity Portfolio.................... 75(a) 128(a) 184(a) 285 a)
25(b) 78(b) 134(b) 285 b)
Putnam Diversified Income Portfolio............................ 74(a) 124(a) 177(a) 271 a)
24(b) 74(b) 127(b) 271 b)
Smith Barney High Income Portfolio............................. 73(a) 121(a) 171(a) 259 a)
23(b) 71(b) 121(b) 259 b)
MFS Total Return Portfolio..................................... 74(a) 123(a) 174(a) 266 a)
24(b) 73(b) 124(b) 266 b)
</TABLE>
* The Example reflects the $15 Semiannual Contract Fee as an annual charge of
0.167% 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.
[/R]
8
<PAGE> 12
<PAGE> 13
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.
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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.
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 12 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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<PAGE> 23
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> 24
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> 25
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 1997. 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 Insurance Company, and serves as principal underwriter pursuant to a
Distribution and Management Agreement to which the Separate Accounts, the
Company and Tower Square are parties.
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> 26
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> 27
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 Travelers Asset Management Janus Capital Corporation
International Corporation (TAMIC)
- -------------------------------------------------------------------------------------------------------
High Yield Bond Trust (TAMIC)
- -------------------------------------------------------------------------------------------------------
Cash Income Trust TAMIC
- -------------------------------------------------------------------------------------------------------
Managed Assets Trust TAMIC The Travelers Investment
Management Company (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 Investment Counsel, Inc.
- -------------------------------------------------------------------------------------------------------
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; Cowen Asset
Management
- -------------------------------------------------------------------------------------------------------
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> 28
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
UNDERLYING FUND INVESTMENT ADVISER SUBADVISER
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Alliance Growth Portfolio Travelers Investment Alliance Capital Management L.P.
Advisors Inc. ("TIA")
- -------------------------------------------------------------------------------------------------------
Smith Barney International Smith Barney Mutual Funds
Equity Portfolio Management Inc.
- -------------------------------------------------------------------------------------------------------
Putnam Diversified Income Travelers Investment Putnam Investment Management,
Portfolio Advisors Inc. ("TIA") Inc.
- -------------------------------------------------------------------------------------------------------
Smith Barney High Income Smith Barney Mutual Funds
Portfolio Management Inc.
- -------------------------------------------------------------------------------------------------------
MFS Total Return Portfolio Travelers Investment Massachusetts Financial Services
Advisors Inc. ("TIA") 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> 29
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> 30
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> 31
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> 32
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> 33
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> 34
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, 1997 (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> 35
THE TRAVELERS UNIVERSAL ANNUITY
VARIABLE ANNUITY CONTRACTS
ISSUED BY
THE TRAVELERS LIFE AND ANNUITY COMPANY
L-12428 TLAC Ed. 5-97
Printed in U.S.A.
<PAGE> 36
PART B
Information Required in a Statement of Additional Information
-------------------------------------------------------------
<PAGE> 37
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, 1997
This Statement of Additional Information is not a prospectus but
relates to, and should be read in conjunction with, the Prospectus dated May 1,
1997. 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> 38
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> 39
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> 40
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, 1996 are set forth in the following table.
4
<PAGE> 41
<TABLE>
<CAPTION>
STANDARDIZED NON-STANDARDIZED INCEPTION
1 YEAR 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS DATE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FUND U **--
Managed Assets Trust 7.17% 7.81% 9.45% 12.36% 10.36% 8.83% 9.76% 6/83
High Yield Bond Trust 9.42% 8.92% 6.90% 14.60% 8.43% 9.91% 7.21% 5/83
Capital Appreciation Fund(1) 21.40% 15.32% 11.13% 26.60% 17.04% 16.18% 11.44% 5/83
U.S. Government Securities -4.99% 4.73%* -- 0.18% 4.70% 5.83% -- 1/92
Portfolio
Social Awareness Stock 13.28% 11.46%* -- 18.47% 14.50% 12.46%* -- 5/92
Portfolio
Utilities Portfolio 0.95% 9.57%* -- 6.12% 11.23%* -- -- 2/94
Templeton Bond Fund 2.90% 4.63% 6.38%* 8.08% 4.84% 5.73% 6.66%* 8/88
Templeton Stock Fund 15.70% 14.23% 11.78%* 20.89% 13.04% 15.11% 12.08%* 8/88
Templeton Asset Allocation Fund 12.19% 11.66% 10.62%* 17.38% 10.83% 12.59% 10.92%* 8/88
Fidelity VIP High Income Portfolio 7.43% 12.63% 9.43% 12.61% 9.26% 13.53% 9.74% 9/85
Fidelity VIP Equity-Income Portfolio 7.67% 15.65% 12.01% 12.85% 16.76% 16.51% 12.32% 10/86
Fidelity VIP Growth Portfolio 8.08% 12.84% 13.41% 13.27% 14.35% 13.74% 13.73% 10/86
Fidelity VIP II Asset Manager Portfolio 7.99% 8.88% 10.01%* 13.17% 6.63% 9.87% 10.30%* 9/89
Dreyfus Stock Index Fund 15.81% 12.29% 11.96%* 21.00% 17.65% 13.21% 12.26%* 9/89
American Odyssey Core Equity Fund 16.42% 13.33%* -- 21.61% 17.61% 14.56%* -- 5/93
American Odyssey Emerging -9.29% 9.54%* -- -4.36% 10.60% 10.85%* -- 5/93
Opportunities Fund
American Odyssey International Equity 15.16% 11.08%* -- 20.36% 9.12% 12.36%* -- 5/93
Fund
American Odyssey Long-Term Bond -5.12% 4.15%* -- 0.04% 4.04% 5.60%* -- 5/93
Fund
American Odyssey Intermediate-Bond -2.54% 2.57%* -- 2.63% 3.81% 4.06%* -- 5/93
Fund
American Odyssey Short-Term Bond -2.68% 1.84%* -- 2.49% 3.44% 3.36%* -- 5/93
Fund
American Odyssey Core Equity 14.91% 11.94%* -- 20.10% 16.15% 13.20%* -- 5/93
Fund***
American Odyssey Emerging -10.42% 8.19%* -- -5.55% 9.23% 9.54%* -- 5/93
Opportunities Fund***
American Odyssey 13.67% 9.72%* -- 18.86% 7.77% 11.02* -- 5/93
International Equity Fund***
American Odyssey Long-Term Bond -6.30% 2.86%* -- -1.21% 2.74% 4.35%* -- 5/93
Fund***
American Odyssey Intermediate-Bond -3.81% 1.29%* -- 1.36% 2.52% 2.83%* -- 5/93
Fund***
American Odyssey Short-Term Bond -3.95% 0.58% -- 1.22% 2.15% 2.13%* -- 5/93
Fund***
Smith Barney Income and Growth 13.12% 16.35%* -- 18.31% 18.13%* -- -- 6/94
Portfolio
Alliance Growth Portfolio 22.57% 23.92%* -- 27.77% 25.57%* -- -- 6/94
Smith Barney International Equity 11.00% 6.12%* -- 16.18% 8.11%* -- -- 6/94
Portfolio
Putnam Diversified Income Portfolio 1.71% 7.21%* -- 6.89% 9.17%* -- -- 6/94
Smith Barney High Income Portfolio 6.57% 8.48%* -- 11.75% 10.42%* -- -- 6/94
MFS Total Return Portfolio 7.84% 11.45%* -- 13.02% 13.32%* -- -- 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.
***The CHART Fees are reflected in these performance figures.
(1) Formerly Aggressive Stock Trust.
5
<PAGE> 42
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 financial statements of the Travelers Life and Annuity Company as of
December 31, 1996 and 1995 and for each of the years in the three-year period
ended December 31, 1996 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.
6
<PAGE> 43
Independent Auditors' Report
The Board of Directors and Shareholder
The Travelers Life and Annuity Company:
We have audited the accompanying balance sheets of The Travelers Life and
Annuity Company as of December 31, 1996 and 1995, and the related statements of
income and retained earnings and cash flows for each of the years in the
three-year period ended December 31, 1996. 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, 1996 and 1995, and the results of its operations and
its cash flows for each of the years in the three-year period ended December 31,
1996, in conformity with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
Hartford, Connecticut
January 17, 1997
8
<PAGE> 44
THE TRAVELERS LIFE AND ANNUITY COMPANY
STATEMENTS OF INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
(for the year ended December 31, in thousands) 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Premiums $ 9,357 $ 2,652 $ 3,498
Net investment income 89,040 63,209 66,093
Realized investment gains (losses) (9,613) 18,713 (2,074)
Other 16,223 17,466 18,702
- ----------------------------------------------------------------------------------------------------------
Total revenues 105,007 102,040 86,219
- ----------------------------------------------------------------------------------------------------------
BENEFITS AND EXPENSES
Current and future insurance benefits 56,448 52,390 55,596
Amortization of deferred acquisition costs
and value of insurance in force 3,286 1,563 -
Other operating expenses 5,691 4,651 2,758
- ----------------------------------------------------------------------------------------------------------
Total benefits and expenses 65,425 58,604 58,354
- ----------------------------------------------------------------------------------------------------------
Income before federal income taxes 39,582 43,436 27,865
- ----------------------------------------------------------------------------------------------------------
Federal income taxes:
Current 29,456 2,555 4,742
Deferred expense (benefit) (15,665) 11,964 4,798
- ----------------------------------------------------------------------------------------------------------
Total federal income taxes 13,791 14,519 9,540
- ----------------------------------------------------------------------------------------------------------
Net income 25,791 28,917 18,325
Retained earnings beginning of year 157,907 128,990 110,665
Dividends to parent 16,000 - -
- ----------------------------------------------------------------------------------------------------------
Retained earnings end of year $167,698 $157,907 $128,990
- ----------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
9
<PAGE> 45
THE TRAVELERS LIFE AND ANNUITY COMPANY
BALANCE SHEETS
<TABLE>
<CAPTION>
(at December 31, in thousands) 1996 1995
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Fixed maturities, available for sale at fair value
(cost, $672,173; $678,293) $ 694,535 $ 724,639
Equity securities, at fair value (cost, $6,654; $9,453) 9,554 13,099
Mortgage loans 90,542 125,813
Real estate held for sale, net of accumulated depreciation of $0; $524 10,111 8,995
Policy loans 1,750 -
Short-term securities 70,755 51,381
Other investments 69,754 65,805
- -----------------------------------------------------------------------------------------------------------------
Total investments 947,001 989,732
- -----------------------------------------------------------------------------------------------------------------
Separate accounts 1,187,812 886,688
Deferred acquisition costs and value of insurance in force 40,027 22,560
Deferred federal income taxes 57,616 41,158
Other assets 21,827 24,501
- -----------------------------------------------------------------------------------------------------------------
Total assets $2,254,283 $1,964,639
- -----------------------------------------------------------------------------------------------------------------
LIABILITIES
Future policy benefits $ 654,534 $ 671,027
Contractholder funds 86,097 11,947
Separate accounts 1,124,605 856,867
Other liabilities 17,179 61,247
- -----------------------------------------------------------------------------------------------------------------
Total liabilities 1,882,415 1,601,088
- -----------------------------------------------------------------------------------------------------------------
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 167,314 167,314
Retained earnings 167,698 157,907
Unrealized investment gains, net of taxes 33,856 35,330
- -----------------------------------------------------------------------------------------------------------------
Total shareholder's equity 371,868 363,551
- -----------------------------------------------------------------------------------------------------------------
Total liabilities and shareholder's equity $2,254,283 $1,964,639
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
10
<PAGE> 46
THE TRAVELERS LIFE AND ANNUITY COMPANY
STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash
<TABLE>
<CAPTION>
(for the year ended December 31, in thousands) 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Premiums collected $ 6,472 $ 1,950 $ 3,498
Net investment income received 71,083 66,219 57,240
Benefits and claims paid (70,331) (71,710) (72,298)
Interest credited to contractholders (813) - -
Operating expenses paid (5,482) (3,013) (4,400)
Income taxes refunded (paid) (23,931) (35,305) 1,030
Other (6,857) (6,772) 22,507
- -------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities (29,859) (48,631) 7,577
- -------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities of investments
Fixed maturities 20,301 11,752 29,043
Mortgage loans 37,789 24,137 60,260
Proceeds from sales of investments
Fixed maturities 978,970 459,971 41,671
Equity securities 12,818 11,823 9,373
Mortgage loans 22,437 7,013 23,327
Real estate held for sale - - 34,181
Purchases of investments
Fixed maturities (994,443) (515,098) (204,412)
Equity securities (5,412) (156) (375)
Mortgage loans (21,450) (4,890) (5,607)
Policy loans (1,750) - -
Short-term securities, (purchases) sales, net (19,688) (5,051) (1,146)
Other investments, (purchases) sales, net (6,160) 9,274 682
Securities transactions in course of settlement (51,703) 45,727 5,722
- -------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities (28,291) 44,502 (7,281)
- -------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Contractholder fund deposits 96,490 5,707 -
Contractholder fund withdrawals (22,340) (1,874) -
Dividends to parent company (16,000) - -
- -------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 58,150 3,833 -
- -------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash $ - $ (296) $ 296
- -------------------------------------------------------------------------------------------------------------
Cash at December 31 $ - $ - $ 296
- -------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
11
<PAGE> 47
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 a wholly
owned subsidiary of The Travelers Insurance Group Inc. (TIGI), which is
an indirect wholly owned subsidiary of Travelers Group Inc. (Travelers
Group), a financial services holding company engaged, through its
subsidiaries, principally in four business segments: (i) Investment
Services; (ii) Consumer Finance Services; (iii) Property & Casualty
Insurance Services; and (iv) Life Insurance Services (through TIC and its
subsidiaries). The periodic reports of Travelers Group provide additional
business and financial information concerning that company and its
consolidated subsidiaries.
The Company offers fixed and variable deferred annuities and individual
life insurance to individuals and small businesses. It also provides
single premium group annuity close-out contracts and individual
structured settlement annuities.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Significant accounting policies used in the preparation of the
accompanying financial statements follow.
Basis of presentation
The financial statements and accompanying footnotes of the Company are
prepared in conformity with generally accepted accounting principles. 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
1996 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 investment 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 classified as "available for sale" and are carried at fair
value based primarily on quoted market prices. Changes in fair values of
equity securities are charged or credited directly to shareholder's
equity, net of income taxes.
12
<PAGE> 48
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
Mortgage loans are carried at amortized cost. A mortgage loan is
considered impaired when it is probable that the Company will be unable
to collect principal and interest amounts due. 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. In estimating fair value, the Company uses
interest rates reflecting the higher returns required in the current real
estate financing market. Impaired loans were insignificant at December
31, 1996 and 1995.
Real estate held for sale is carried at the lower of cost or fair value
less estimated costs to sell. Fair value of foreclosed properties is
established at the time of foreclosure by internal analysis or external
appraisers, 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, 1996 and 1995.
Short-term securities, consisting primarily of money market instruments
and other debt issues purchased with a maturity of less than one year,
are carried at amortized cost which approximates market.
Accrual of income, included in other assets, 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
pre-tax revenues based upon specific identification of the investments
sold on the trade date. 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.
Policy Loans
Policy loans are carried at the amount of the unpaid balances that are
not in excess of the net cash surrender values of the related insurance
policies. The carrying value of policy loans, which have no defined
maturities, is considered to be fair value.
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 primarily
carried at fair value. Earnings on structured settlement contracts,
generally net investment income less policyholder benefits and operating
expenses, are included in other revenues.
13
<PAGE> 49
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
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 fair 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 in relation
to 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 20-year period is employed for annuities. Deferred acquisition costs
are reviewed periodically for recoverability to determine if any
adjustment is required. Adjustments, if any are charged to income.
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 acquisition 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 using
current interest crediting rates to accrete interest and amortized
employing a level yield method. The value of insurance in force is
reviewed periodically for recoverability to determine if any adjustment
is required. Adjustments, if any are charged to income.
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. The assumptions vary by plan,
age at issue, year of issue and duration.
14
<PAGE> 50
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. Contractholder Fund
balances are increased by such receipts and credited interest and reduced
by withdrawals, mortality charges and administrative expenses charged to
the contractholders. Interest rates credited to contractholder funds
range from 3.9% to 7.0%.
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 certain 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> 51
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
Future Application of Accounting Standards
In June 1996, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 125 (FAS 125),
"Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities." FAS 125 provides accounting and
reporting standards for transfers and servicing of financial assets and
extinguishments of liabilities. These standards are based on consistent
application of a financial-components approach that focuses on control.
Under that approach, after a transfer of financial assets, an entity
recognizes the financial and servicing assets it controls and the
liabilities it has incurred, derecognizes financial assets when control
has been surrendered and derecognizes liabilities when extinguished. FAS
125 provides consistent standards for distinguishing transfers of
financial assets that are sales from transfers that are secured
borrowings. The requirements of FAS No. 125 are effective for transfers
and servicing of financial assets and extinguishments of liabilities
occurring after December 31, 1996, and are to be applied prospectively.
However, in December 1996 the FASB issued FAS No. 127, "Deferral of the
Effective Date of Certain Provisions of FASB Statement No. 125," which
delays until January 1, 1998 the effective date for certain provisions.
The adoption of the provisions of this statement effective January 1,
1997 will not have a material impact on results of operations, financial
condition or liquidity and the Company is currently evaluating the impact
of the provisions whose effective date has been delayed until January 1,
1998.
3. CHANGES IN ACCOUNTING PRINCIPLES
Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of
Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." This
statement establishes accounting standards for the impairment of
long-lived assets and certain identifiable intangibles to be disposed.
This statement requires a write down to fair value when long-lived assets
to be held and used are impaired. The statement also requires long-lived
assets to be disposed (e.g., real estate held for sale) 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 standard did not have a
material impact on the Company's financial condition, results of
operations or liquidity.
Accounting for Stock-Based Compensation
The Company participates in a stock option plan sponsored by Travelers
Group that provides for the granting of stock options in Travelers Group
common stock to officers and key employees. The Company applies
Accounting Principles Board Opinion No. 25 (APB 25) and related
interpretations in accounting for stock options. Since stock options are
issued at fair market value on the date of award, no compensation cost
has been recognized for these awards. 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 provides an alternative to APB 25 whereby fair values may
be ascribed to options using a valuation model and amortized to
compensation cost over the vesting period of the options. Had the Company
applied FAS 123 in accounting for stock options, net income would have
been reduced by an insignificant amount in 1996 and 1995.
16
<PAGE> 52
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
3. CHANGES IN ACCOUNTING PRINCIPLES, Continued
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.
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 TIC at December 31, 1996 and 1995 was
$90.7 million and $97.7 million, respectively. At December 31, 1996 and
1995, $2.2 billion and $601.2 million, 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.
Shareholder's Equity and Dividend Availability
The Company's statutory net income was $17.9 million, $23.0 million and
$5.7 million for the years ended December 31, 1996, 1995 and 1994,
respectively.
Statutory capital and surplus was $254.1 million and $257.8 million at
December 31, 1996 and 1995, 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 $14.8 million is available in 1997 for dividend payments by
the Company without prior approval of the Connecticut Insurance
Department.
17
<PAGE> 53
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
6. DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company does not hold or issue derivative instruments for trading
purposes. The carrying value of derivative instruments was not
significant at December 31, 1996 and 1995.
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, 1996, investments in fixed maturities had a carrying
value and a fair value of $694.5 million, compared with a carrying value
and a fair value of $724.6 million at December 31, 1995. See Note 12.
At December 31, 1996 and 1995, mortgage loans had a carrying value of
$90.5 million and $125.8 million, respectively, which approximates fair
value. In estimating fair value, the Company used interest rates
reflecting the higher returns required in the current real estate
financing market.
The carrying values of $2.1 million and $1.9 million of financial
instruments classified as other assets approximated their fair values at
December 31, 1996 and 1995, respectively. The carrying values of $13.3
million and $55.3 million of financial instruments classified as other
liabilities also approximated their fair values at December 31, 1996 and
1995, 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 $896.9 million and $901.0 million,
respectively, at December 31, 1996, compared to a carrying value and a
fair value of $869.1 million and $923.0 million, respectively, at
December 31, 1995. The liabilities of separate accounts providing a
guaranteed return had a carrying value and a fair value of $808.7 million
and $695.3 million, respectively, at December 31, 1996, compared to a
carrying value and a fair value of $839.1 million and $766.3 million,
respectively, at December 31, 1995.
The carrying values of short-term securities and policy loans
approximated their fair values.
18
<PAGE> 54
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
7. COMMITMENTS AND CONTINGENCIES
Financial Instruments with Off-Balance Sheet Risk
The Company has, in the normal course of business, provided fixed rate
loan commitments and commitments to partnerships.
The off-balance sheet risks of fixed rate loan commitments, commitments
to partnerships and forward contracts were not significant at December
31, 1996 and 1995.
Litigation
The Company is a defendant in various litigation matters in the normal
course of business. Although there can be no assurances, as of December
31, 1996, 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 a qualified, noncontributory defined benefit
pension plan sponsored by Travelers Group covering the majority of
Travelers Group's U.S. employees. Benefits for the qualified plan are
based on an account balance formula. Under this formula, each employee's
accrued benefit can be expressed as an account that is credited with
amounts based upon the employee's pay, length of service and a specified
interest rate, all subject to a minimum benefit level. This plan is
funded in accordance with the Employee Retirement Income Security Act of
1974 and the Internal Revenue Code.
The Company also participates in a nonqualified, noncontributory defined
benefit pension plan sponsored by an affiliate covering the majority of
the Company's U.S. employees. Contributions are based on benefits paid.
The Company's share of net pension expense was not significant for 1996,
1995 or 1994.
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. Retirees may elect certain prepaid health care benefit
plans. Life insurance benefits are generally set at a fixed amount.
Beginning January 1, 1996, these plans were amended to restrict benefit
eligibility to retirees and certain retiree-eligible employees. The cost
recognized by the Company for these benefits represents its allocated
share of the total costs of the plan, net of retiree contributions. The
Company's share of the total cost of the plan for 1996, 1995 and 1994 was
not significant.
19
<PAGE> 55
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
8. BENEFIT PLANS, Continued
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 through
December 31, 1995. Effective January 1, 1996, the match remained at 50%
of an employee's first 5% contribution with a maximum of $1,000.
Effective January 1, 1997, employee contributions will be matched with
Travelers Group stock options. The Company's expense was not significant
for 1996, 1995 or 1994.
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, 1996 and 1995,
the pool totaled approximately $2.9 billion and $2.2 billion,
respectively. The Company's share of the pool amounted to $68.2 million
and $49.5 million at December 31, 1996 and 1995, 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 $250
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 an affiliate,
Travelers Property Casualty Corp., (TAP), formerly Travelers/Aetna
Property Casualty Corp. Such deposits were $36.9 million, $36.6 million
and $37.6 million for 1996, 1995 and 1994, respectively.
The Company began marketing variable annuity products through its
affiliate, Smith Barney, Inc., in 1995. Deposits related to these
products were $300.0 million and $20.5 million in 1996 and 1995,
respectively.
Most leasing functions for TIGI and its subsidiaries are handled by TAP.
Rent expense related to these leases are shared by the companies on a
cost allocation method based generally on estimated usage by department.
The company's rent expense was insignificant in 1996, 1995 and 1994.
20
<PAGE> 56
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
10. FEDERAL INCOME TAXES
<TABLE>
<CAPTION>
(in thousands) 1996 1995 1994
--------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Effective tax rate
Income before federal income taxes $ 39,582 $43,436 $27,865
Statutory tax rate 35% 35% 35%
-------------------------------------------------------------------------------------------
Expected federal income taxes $ 13,854 $15,203 $ 9,753
Tax effect of:
Nontaxable investment income (15) (13) (90)
Adjustments to benefit and other reserves - - (117)
Other, net (48) (671) (6)
--------------------------------------------------------------------------------------------
Federal income taxes $ 13,791 $14,519 $ 9,540
--------------------------------------------------------------------------------------------
Effective tax rate 35% 33% 34%
-------------------------------------------------------------------------------------------
Composition of federal income taxes
Current:
United States $ 29,435 $ 2,555 $ 4,742
Foreign 21 - -
--------------------------------------------------------------------------------------------
Total 29,456 2,555 4,742
--------------------------------------------------------------------------------------------
Deferred:
United States (15,665) 11,964 4,798
--------------------------------------------------------------------------------------------
Federal income taxes $ 13,791 $14,519 $ 9,540
--------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE> 57
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
10. FEDERAL INCOME TAXES, Continued
The net deferred tax assets at December 31, 1996 and 1995 were comprised
of the tax effects of temporary differences related to the following
assets and liabilities:
<TABLE>
<CAPTION>
(in thousands) 1996 1995
------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Benefit, reinsurance and other reserves $79,484 $ 67,104
Other 3,043 2,570
------------------------------------------------------------------------------------------
Total 82,527 69,674
------------------------------------------------------------------------------------------
Deferred tax liabilities:
Investments, Net 12,113 19,625
Deferred acquisition costs and
value of insurance in force 10,066 6,285
Other 662 536
------------------------------------------------------------------------------------------
Total 22,841 26,446
------------------------------------------------------------------------------------------
Net deferred tax asset before valuation allowance 59,686 43,228
Valuation allowance for deferred tax assets (2,070) (2,070)
------------------------------------------------------------------------------------------
Net deferred tax asset after valuation allowance $57,616 $41,158
------------------------------------------------------------------------------------------
</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 Group 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 1996. The initial recognition of any benefit
provided by the reversal of the valuation allowance will be recognized by
reducing goodwill.
22
<PAGE> 58
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
10. FEDERAL INCOME TAXES, Continued
In management's judgment, the $57.6 million "net deferred tax asset after
valuation allowance" as of December 31, 1996, is fully recoverable
against expected future years' taxable ordinary income and capital gains.
At December 31, 1996, 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) 1996 1995 1994
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Gross investment income
Fixed maturities $54,029 $49,486 $44,354
Equity securities 411 497 827
Mortgage loans 15,491 11,644 17,178
Real estate held for sale 3,480 2,476 6,299
Other 19,770 2,552 4,480
---------------------------------------------------------------------------------------
93,181 66,655 73,138
---------------------------------------------------------------------------------------
Investment expenses 4,141 3,446 7,045
---------------------------------------------------------------------------------------
Net investment income $89,040 $63,209 $66,093
---------------------------------------------------------------------------------------
</TABLE>
23
<PAGE> 59
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) 1996 1995 1994
-----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Realized
Fixed maturities $(11,491) $(4,240) $ (908)
Equity securities 4,613 6,138 1,675
Mortgage loans 1,979 725 36
Real estate held for sale (73) (35) -
Other (4,641) 16,125 (2,877)
-----------------------------------------------------------------------------------------
Realized investment gains (losses) $ (9,613) $18,713 $(2,074)
-----------------------------------------------------------------------------------------
</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) 1996 1995 1994
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Unrealized
Fixed maturities $(23,953) $111,551 $(65,205)
Equity securities (746) 1,834 (27)
Other 22,431 4,390 (28)
------------------------------------------------------------------------------------------
(2,268) 117,775 (65,260)
Related taxes (794) 41,221 (22,841)
------------------------------------------------------------------------------------------
Change in unrealized investment gains (losses) (1,474) 76,554 (42,419)
Balance beginning of year 35,330 (41,224) 1,195
------------------------------------------------------------------------------------------
Balance end of year $ 33,856 $ 35,330 $(41,224)
------------------------------------------------------------------------------------------
</TABLE>
Fixed Maturities
Proceeds from sales of fixed maturities classified as available for sale
were $979.0 million and $460.0 million in 1996 and 1995, respectively.
Gross gains of $8.4 million and $7.9 million and gross losses of $19.9
million and $10.3 million in 1996 and 1995, respectively, were realized
on those sales.
24
<PAGE> 60
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
12. INVESTMENTS AND INVESTMENT GAINS (LOSSES), Continued
The amortized cost and fair values of investments in fixed maturities
were as follows:
<TABLE>
<CAPTION>
December 31, 1996
----------------------------------------------------------------------------------------------------
Gross Gross
Amortized unrealized unrealized Fair
(in thousands) cost gains losses value
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Available for sale:
Mortgage-backed securities -
CMOs and pass through
securities $ 88,138 $ 1,637 $ 629 $ 89,146
U.S. Treasury securities
and obligations of U.S.
Government and
government agencies
and authorities 115,059 10,371 61 125,369
Obligations of states and
political subdivisions 3,500 255 -- 3,755
Debt securities issued
by foreign governments 56,097 1,473 1,269 56,301
All other corporate bonds 409,294 13,862 3,277 419,879
Redeemable preferred stock 85 -- -- 85
----------------------------------------------------------------------------------------------------
Total $672,173 $27,598 $5,236 $694,535
----------------------------------------------------------------------------------------------------
</TABLE>
25
<PAGE> 61
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
12. INVESTMENTS AND INVESTMENT GAINS (LOSSES), Continued
<TABLE>
<CAPTION>
December 31, 1995
------------------------------------------------------------------------------------------
Gross Gross
Amortized unrealized unrealized Fair
(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>
The amortized cost and fair value of fixed maturities available for sale
at December 31, 1996, 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 Fair
(in thousands) cost value
-------------------------------------------------------------------------
<S> <C> <C>
Due in one year or less $ 11,184 $ 11,204
Due after 1 year through 5 years 50,397 50,366
Due after 5 years through 10 years 169,634 173,049
Due after 10 years 352,820 370,770
-------------------------------------------------------------------------
584,035 605,389
Mortgage-backed securities 88,138 89,146
-------------------------------------------------------------------------
Total $672,173 $694,535
-------------------------------------------------------------------------
</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,
including planned amortization class (PAC) tranches. Prepayment protected
tranches are preferred because they provide stable cash flows in a
variety of interest rate 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> 62
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
12. INVESTMENTS AND INVESTMENT GAINS (LOSSES), Continued
At December 31, 1996 and 1995, the Company held CMOs with a market value
of $67.7 million and $68.6 million, respectively. The Company's CMO
holdings are 100% and approximately 94% collateralized by GNMA, FNMA or
FHLMC securities at December 31, 1996 and 1995, respectively.
Equity Securities
The cost and market values of investments in equity securities were as
follows:
<TABLE>
<CAPTION>
December 31, 1996
----------------------------------------------------------------------------------------------------
Gross Gross
unrealized unrealized Fair
(in thousands) Cost gains losses value
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stocks $1,630 $2,845 $83 $4,392
Nonredeemable preferred stocks 5,024 138 - 5,162
----------------------------------------------------------------------------------------------------
Total $6,654 $2,983 $83 $9,554
----------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
December 31, 1995
----------------------------------------------------------------------------------------------------
Gross Gross
unrealized unrealized Fair
(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>
Proceeds from sales of equity securities were $12.8 million and $11.8
million in 1996 and 1995, respectively. Gross gains of $4.7 million and
$4.9 million and gross losses of $155 thousand and $474 thousand in 1996
and 1995, respectively, were realized on those sales.
Real estate held for sale and mortgage loans
Underperforming assets include delinquent mortgage loans, loans in the
process of foreclosure, foreclosed loans and loans modified at interest
rates below market.
27
<PAGE> 63
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
12. INVESTMENTS AND INVESTMENT GAINS (LOSSES), Continued
At December 31, 1996 and 1995, the Company's real estate held for sale
and mortgage loan portfolios consisted of the following:
<TABLE>
<CAPTION>
(in thousands) 1996 1995
---------------------------------------------------------------------------
<S> <C> <C>
Current mortgage loans $ 90,394 $108,142
Underperforming mortgage loans 148 17,671
---------------------------------------------------------------------------
Total 90,542 125,813
---------------------------------------------------------------------------
Real estate held for sale 10,111 8,995
---------------------------------------------------------------------------
Total $100,653 $134,808
---------------------------------------------------------------------------
</TABLE>
Aggregate annual maturities on mortgage loans at December 31, 1996 are as
follows:
<TABLE>
<CAPTION>
(in thousands)
---------------------------------------------------
<S> <C>
Past maturity $ 1,677
1997 5,662
1998 316
1999 5,088
2000 5,734
2001 5,678
Thereafter 66,387
---------------------------------------------------
Total $90,542
---------------------------------------------------
</TABLE>
Concentrations
At December 31, 1996 the Company had investments of $75.1 million in the
State of Israel and $40.6 million in Merrill Lynch Trust Series 45. In
1995, 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 an
affiliate. See Note 9.
Included in fixed maturities are below investment grade assets totaling
$40.7 million and $59.0 million at December 31, 1996 and 1995,
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> 64
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
12. INVESTMENTS AND INVESTMENT GAINS (LOSSES), Continued
The Company also had concentrations of investments, primarily fixed
maturities, in the following industries:
<TABLE>
<CAPTION>
(in thousands) 1996 1995
------------------------------------------------------------------------------------------
<S> <C> <C>
Foreign governments $108,850 $ -
Finance 90,222 25,853
Transportation 86,819 44,118
------------------------------------------------------------------------------------------
</TABLE>
Below investment grade assets included in the totals of the previous
table were as follows:
<TABLE>
<CAPTION>
(in thousands) 1996 1995
----------------------------------------------------------------------------------------
<S> <C> <C>
Foreign governments $6,567 $ -
Finance 2,386 451
Transportation 776 18,648
----------------------------------------------------------------------------------------
</TABLE>
Concentrations of mortgage loans by property type at December 31, 1996
and 1995 were as follows:
<TABLE>
<CAPTION>
(in thousands) 1996 1995
-----------------------------------------------------------------------------------------
<S> <C> <C>
Agricultural $33,501 $29,820
Office 22,533 32,024
Retail 20,024 27,870
-----------------------------------------------------------------------------------------
</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.
Non-Income Producing Investments
Investments included in the balance sheets that were non-income 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 $1.0 million and $17.7
million at December 31, 1996 and 1995, respectively. 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 was insignificant in
1996 and amounted to $4.9 million in 1995. Interest on these assets,
included in net investment income, was insignificant in 1996 and amounted
to $2.0 million in 1995.
29
<PAGE> 65
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
13. LIFE AND ANNUITY DEPOSIT FUNDS AND RESERVES
At December 31, 1996, the Company had $740.6 million of life and annuity
deposit funds and reserves. Of that total, $659.0 million were not
subject to discretionary withdrawal based on contract terms. The
remaining $81.6 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 $50.4 million of
liabilities that are surrenderable with market value adjustments. An
additional $31.2 million of the life insurance and individual annuity
liabilities are subject to discretionary withdrawals with an average
surrender charge of 6.7%. 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) 1996 1995 1994
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income from continuing operations $ 25,791 $ 28,917 $ 18,325
Adjustments to reconcile net income to
cash provided by operating activities
Realized (gains) losses 9,613 (18,713) 2,074
Deferred federal income taxes (15,665) 11,964 4,798
Amortization of deferred policy acquisition
costs and value of insurance in force 3,286 1,563 -
Additions to deferred policy acquisition costs (20,753) (3,109) (21,014)
Investment income accrued 1,308 (819) 1,085
Premium balances receivable (3,561) (2,277) -
Insurance reserves and accrued expenses (16,459) (20,081) (16,062)
Other (13,419) (46,076) 18,371
------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities $(29,859) $(48,631) $ 7,577
------------------------------------------------------------------------------------------------------------
</TABLE>
15. NONCASH INVESTING AND FINANCING ACTIVITIES
Significant noncash investing and financing activities include: a) the
transfer of $2.6 million of real estate held for sale and mortgage loans
from one of the Company's separate accounts to the general account in
1995, b) acquisition of real estate through foreclosures of mortgage
loans amounting to $1.1 million, $0 and $10.3 million in 1996, 1995 and
1994, respectively.
30
<PAGE> 66
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) The financial statements of the Registrant are not provided since the
Registrant had no assets as of the effective date of this amendment to this
Registration Statement.
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:
Statements of Income and Retained Earnings for the years
ended December 31, 1996, 1995 and 1994
Balance Sheets as of December 31, 1996 and 1995
Statements of Cash Flows for the years ended December 31, 1996,
1995 and 1994
Notes to Financial Statements
(b) Exhibits
1. Resolution of The Travelers Life and Annuity Company Board of
Directors authorizing the establishment of the Registrant.
(Incorporated herein by reference to Exhibit 1 to
Post-Effective Amendment No. 2 to the Registration Statement
on Form N-4 filed April 30, 1996.)
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. (Incorporated herein by reference to
Exhibit 3(b) to Post-Effective Amendment No. 2 to the
Registration Statement on Form N-4 filed April 30, 1996.)
4. Form of Variable Annuity Contract.
5. Form of Application.
6(a). Charter of The Travelers Life and Annuity Company, as amended
on April 10, 1990. (Incorporated herein by reference to
Exhibit 6(a) to the Registration Statement on Form N-4, File
No. 33-58131, filed via Edgar on March 17, 1995.)
6(b). By-Laws of The Travelers Life and Annuity Company, as amended
on October 20, 1994. (Incorporated herein by reference to
Exhibit 6(b) to the Registration Statement on Form N-4, File
No. 33-58131, filed via EDGAR on March 17, 1995.)
9. Opinion of Counsel as to the legality of securities being
registered.
10(a). Consent of KPMG Peat Marwick LLP, Independent Certified Public
Accountants.
13. Schedule for computation for each performance quotation -
Standardized and Non-Standardized.
<PAGE> 67
15(a) Powers of Attorney authorizing Ernest J. Wright or Kathleen A.
McGah as signatory for Michael A. Carpenter, Jay S. Benet,
George C. Kokulis, Ian R. Stuart and Katherine M. Sullivan.
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.)
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* Director, Chairman of the Board,
President and Chief Executive Officer
Jay S. Benet* Director and Senior Vice President
George C. Kokulis* Director and Senior Vice President
Robert I. Lipp* Director
Ian R. Stuart* Director, Senior Vice President,
Chief Financial Officer, Chief
Accounting Officer and Controller
Katherine M. Sullivan* Director and Senior Vice President
and General Counsel
Marc P. Weill** Director and Senior Vice President
Stuart Baritz** Senior Vice President
Elizabeth C. Georgakopoulos* Senior Vice President
Barry Jacobson* Senior Vice President
Russell H. Johnson* Senior Vice President
Warren H. May* Senior Vice President
Christine M. Modie* Senior Vice President
David A. Tyson* Senior Vice President
F. Denney Voss* Senior Vice President
Paula Burton* Vice President
Charles N. Vest* Vice President and Actuary
Donald R. Munson, Jr.* Second Vice President
Ernest J. Wright* Vice President and Secretary
Kathleen A. McGah* Assistant Secretary and Counsel
</TABLE>
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
<PAGE> 68
Item 26. Persons Controlled by or Under Common Control with the Depositor
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 ----------------
PFS Services Inc. Georgia 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
Organization The Travelers Inc. Principal Business
------------ ----------------- ------------------
<S> <C> <C> <C>
AC Health Ventures, Inc. Delaware 100.00 Inactive
AMCO Biotech, Inc. Delaware 100.00 Inactive
Associated Madison Companies, Inc. Delaware 100.00 Holding company.
American National Life Insurance (T & C), Ltd. Turks and
Caicos Islands 100.00 Insurance
ERISA Corporation New York 100.00 Inactive
Mid-America Insurance Services, Inc. Georgia 100.00 Third party
administrator
National Marketing Corporation Pennsylvania 100.00 Inactive
PFS Services, Inc. Georgia 100.00 General partner and
holding company
The Travelers Insurance Group Inc. Connecticut 100.00 Holding company
</TABLE>
3/18/97
<PAGE> 69
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by
Organization The Travelers Inc. Principal Business
------------ ----------------- ------------------
<S> <C> <C> <C>
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
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
Travelers Capital Funding Corporation Connecticut 100.00 Furniture/equipment
The Travelers Insurance Company Connecticut 100.00 Insurance
The Plaza Corporation Connecticut 100.00 Holding company
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 Massachusetts 100.00 Fixed annuities
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>
2
<PAGE> 70
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by
Organization The Travelers Inc. Principal Business
------------ ----------------- ------------------
<S> <C> <C> <C>
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
Tower Square Securities, Inc. Connecticut 100.00 Broker dealer
Travelers Asset Management International
Corporation New York 100.00 Investment adviser
Travelers Distribution Company Delaware 100.00
Travelers Investment Adviser, Inc. Delaware 100.00 Investment Advisor
Travelers/Net Plus Agency of Ohio, Inc. Ohio 100.00 Insurance agency
Travelers/Net Plus Insurance Agency, Inc. Massachusetts 100.00 Insurance agency
Travelers/Net Plus, Inc. Connecticut 100.00
The Travelers Life and Annuity Company Connecticut 100.00 Life insurance
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
The Travelers Insurance Corporation Proprietary
Limited Australia 100.00 Inactive
Travelers Canada Corporation Canada 100.00 Inactive
Travelers Mortgage Securities Corporation Delaware 100.00 Collateralized
obligations
Travelers of Ireland Limited Ireland 99.90 Data processing
Travelers Property Casualty Corp. Delaware 82.00 Holding company
The Aetna Casualty and Surety Company Connecticut 100.00 Insurance company
AE Development Group, Inc. Connecticut 100.00
Aetna Casualty & Surety Company of Canada Canada 100.00
Aetna Casualty and Surety Company of
America Connecticut 100.00 Insurance company
Aetna Casualty and Surety Company of
Illinois Illinois 100.00 Insurance company
</TABLE>
3
<PAGE> 71
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by
Organization The Travelers Inc. Principal Business
------------ ----------------- ------------------
<S> <C> <C> <C>
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 Lloyds of Texas Insurance Company Texas 100.00 Insurance company
Aetna National Accounts U.K. Limited United Kingdom 100.00 Insurance company
Axia Services, Inc. New York 100.00
Farmington Casualty Company Connecticut 100.00 Insurance company
Farmington Management, Inc. Connecticut 100.00
Urban Diversified Properties, Inc. Connecticut 100.00
The Standard Fire Insurance Company Connecticut 100.00
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 Connecticut 100.00 Insurance company
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 Missouri 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 Floridian Auto and Home Insurance
Company Florida 100.00 Insurance company
First Trenton Indemnity Company New Jersey 100.00 P-C insurance
Laramia Insurance Agency, Inc. North Carolina 100.00 Flood insurance
Secure Affinity Agency, Inc. Delaware 100.00 P-C insurance agency
The Charter Oak Fire Insurance Company Connecticut 100.00 P-C insurance
The Parker Realty and Insurance
Agency, Inc. Vermont 58.00 Real estate
</TABLE>
4
<PAGE> 72
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by
Organization The Travelers Inc. Principal Business
------------ ----------------- ------------------
<S> <C> <C>
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
The Travelers Marine Corporation California 100.00 General insurance
brokerage
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
Primerica Convention Services, Inc. Georgia 100.00
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, Inc. New York 100.00 General agency
licensing
Primerica Financial Services Insurance Marketing of
Connecticut, Inc. Connecticut 100.00 General agency
licensing
Primerica Financial Services Insurance Marketing of
Idaho, Inc. Idaho 100.00 General agency
licensing
Primerica Financial Services Insurance Marketing of
Nevada, Inc. Nevada 100.00 General agency
licensing
Primerica Financial Services Insurance Marketing of
Pennsylvania, Inc. Pennsylvania 100.00 General agency
licensing
Primerica Financial Services Insurance Marketing of
the Virgin Islands, Inc. United States
Virgin Islands 100.00 General agency
licensing
Primerica Financial Services Insurance Marketing of
Wyoming, Inc. Wyoming 100.00 General agency
licensing
</TABLE>
5
<PAGE> 73
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by
Organization The Travelers Inc. Principal Business
------------ ----------------- ------------------
<S> <C> <C> <C>
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 Arizona, Inc. Arizona 100.00 General agency
licensing
Primerica Financial Services of Kentucky Inc. Kentucky 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, Inc. Puerto Rico 100.00 Insurance agency
Primerica Insurance Services of Louisiana, Inc. Louisiana 100.00 General agency
licensing
Primerica Insurance Services of Maryland, Inc. Maryland 100.00 General agency
licensing
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
Berg Associates New Jersey 100.00 Inactive
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 Consumer lending
CCC Fairways, Inc. Delaware 100.00 Investment company
Chesapeake Appraisal and Settlement Services Inc. Maryland 100.00 Appraisal/title
Chesapeake Appraisal and Settlement Services
Agency of Ohio Inc. Ohio 100.00 Appraisal/Title
City Loan Financial Services, Inc. Ohio 100.00 Direct loan
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
Commercial Credit Corporation [CA] California 100.00 Consumer finance
</TABLE>
6
<PAGE> 74
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by
Organization The Travelers Inc. Principal Business
------------ ----------------- ------------------
<S> <C> <C> <C>
Commercial Credit Corporation [HI] Hawaii 100.00 Financial services
Commercial Credit Corporation [IA] Iowa 100.00 Consumer finance
Commercial Credit of Alabama, Inc. Delaware 100.00 Consumer lending
Commercial Credit of Mississippi, Inc. Delaware 100.00 Consumer finance
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, Inc. Mississippi 100.00 Insurance agency
Commercial Credit Insurance Agency of Alabama, Inc. Alabama 100.00 Insurance agency
Commercial Credit Insurance Agency of Hawaii, Inc. Hawaii 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
</TABLE>
7
<PAGE> 75
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by
Organization The Travelers Inc. Principal Business
------------ ----------------- ------------------
<S> <C> <C> <C>
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
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 Inactive
Park Tower Holdings, Inc. Delaware 100.00 Holding company
CC Retail Services, Inc. Delaware 100.00 Leasing, financing
Troy Textiles, Inc. Delaware 100.00 Inactive
Commercial Credit Development Corporation Delaware 100.00 Direct loan
Myers Park Properties, Inc. Delaware 100.00 Inactive
Travelers Home Mortgage Services of Alabama, 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
Travelers Home Equity, Inc. North Carolina 100.00 Financial services
</TABLE>
8
<PAGE> 76
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by
Organization The Travelers Inc. Principal Business
------------ ----------------- ------------------
<S> <C> <C> <C>
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, Inc. West Virginia 100.00 Consumer finance
Commercial Credit Plan Consumer Discount Company Pennsylvania 100.00 Financial services
Commercial Credit Services of Kentucky, Inc. Kentucky 100.00 Financial services.
Travelers Home Mortgage 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
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
Smith Barney Corporate Trust Company Delaware 100.00 Trust company
Smith Barney Holdings Inc. Delaware 100.00 Holding company
Nextco Inc. Delaware 100.00 Purchasing
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
SB Cayman Holdings II Inc. Delaware 100.00 Holding company
</TABLE>
9
<PAGE> 77
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by
Organization The Travelers Inc. Principal Business
------------ ----------------- ------------------
<S> <C> <C> <C>
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
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
Smith Barney Acquisition Corporation Delaware 100.00 Offshore fund adviser
Smith Barney Global Capital Management, Inc. Delaware 100.00 Investment management
Smith Barney Realty, Inc. Delaware 100.00 Investments
Smith Barney Risk Investors, Inc. Delaware 100.00 Investments
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 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
SBHU Life Agency, Inc. Delaware 100.00 Insurance brokerage
</TABLE>
10
<PAGE> 78
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by
Organization The Travelers Inc. Principal Business
------------ ----------------- ------------------
<S> <C> <C> <C>
Robinson-Humphrey Insurance Services Inc. Georgia 100.00 Insurance brokerage
Robinson-Humphrey Insurance Services of
Alabama, Inc. Alabama 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 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 New Hampshire, Inc. New Hampshire 100.00 Insurance brokerage
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 (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 Islands 100.00 Holding company
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 Puerto Rico Inc. Puerto Rico 100.00 Broker dealer
</TABLE>
11
<PAGE> 79
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by
Organization The Travelers Inc. Principal Business
------------ ----------------- ------------------
<S> <C> <C> <C>
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
Smith Barney Asset Management Co., Ltd. Japan 100.00 Investment advisor
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 S.A. France 100.00 Com. based asset
management
Smith Barney Securities Investment Consulting Co. Ltd. Taiwan 99.00 Investrment analysis
Smith Barney Shearson (Chile) Corredora de Seguro Limitada Chile 100.00 Insurance brokerage
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 Group Diversified Distribution Services, Inc. Delaware 100.00 Alternative marketing
Travelers Group Exchange, Inc. Delaware 100.00 Insurance agency
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>
12
<PAGE> 80
Item 27. Number of Contract Owners
As of March 1, 1997, 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> 81
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
The Travelers Variable Life Insurance Separate Account Two
The Travelers Variable Life Insurance Separate Account Four
<TABLE>
<CAPTION>
(b) Name and Principal Positions and Offices
Business Address * With Underwriter
------------------ ---------------------
<S> <C>
Russell H. Johnson Chairman of the Board, Chief Executive Officer,
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
and Assistant Secretary
Joanne K. Russo Member, Board of Directors
Senior Vice President
Kathleen A. McGah General Counsel and Secretary
Jay S. Benet Member, Board of Directors
George C. Kokulis Member, Board of Directors
Warren H. May Member, Board of Directors
Donald R. Munson, Jr. Senior Vice President
Stuart L. Baritz Vice President
Michael P. Kiley 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
</TABLE>
<PAGE> 82
<TABLE>
<CAPTION>
(b) Name and Principal Positions and Offices
Business Address * With Underwriter
------------------ ---------------------
<S> <C>
Susan M. Cursio Director and Operations Manager
Dennis D. D'Angelo Director
Thomas P. Tooley Director
Nancy S. Waldrop Assistant Treasurer
</TABLE>
* Principal business address: One Tower Square, Hartford,
Connecticut 06183
(c) Not applicable.
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.
The coimpany hereby represents:
(a) That the aggregate charges under the Contract of the Registrant
described herein are reasonable in relation to the services rendered, the
expenses expected to be incurred, and the risks assumed by the Company.
<PAGE> 83
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, 1997.
THE TRAVELERS FUND VA FOR VARIABLE ANNUITIES
(Registrant)
and
THE TRAVELERS LIFE AND ANNUITY COMPANY
(Depositor)
By: *IAN R. STUART
------------------------------------------------
Ian R. Stuart
Senior Vice President, Chief Financial Officer,
Chief Accounting Officer and Controller
As required by the Securities Act of 1933, this post-effective amendment to
this registration statement has been signed by the following persons in the
capacities indicated on April 30, 1997.
<TABLE>
<S> <C>>
*MICHAEL A. CARPENTER Director, Chairman of the Board, President
- ------------------------------------------- and Chief Executive Officer
(Michael A. Carpenter)
*JAY S. BENET Director
- -------------------------------------------
(Jay S. Benet)
*GEORGE C. KOKULIS Director
- -------------------------------------------
(George C. Kokulis
*ROBERT I. LIPP Director
- -------------------------------------------
(Robert I. Lipp)
*IAN R. STUART Director, Senior Vice President, Chief
- ------------------------------------------- Financial Officer, Chief Accounting Officer
(Ian R. Stuart) and Controller
*KATHERINE M. SULLIVAN Director, Senior Vice President and
- -------------------------------------------
(Katherine M. Sullivan) General Counsel
*MARC P. WEILL Director
- -------------------------------------------
(Marc P. Weill)
*By: Ernest J. Wright, Attorney-in-Fact
</TABLE>
<PAGE> 84
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description Method of Filing
- ------- ----------- ----------------
<S> <C> <C>
1. Resolution of The Travelers Life and Annuity Company
Board of Directors authorizing the establishment of the
Registrant. Incorporated herein by reference to
Exhibit 1 to Post-Effective Amendment No. 2 to the
Registration Statement on Form N-4 filed April 30, 1996.)
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
underwriter and dealer. (Incorporated herein by reference
to Exhibit 3(b) to Post-Effective Amendment No. 2 to the
Registration Statement on Form N-4 filed April 30, 1996.)
4. Form of Variable Annuity Contract. Electronically
5. Form of Application. Electronically
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. Consent of KPMG Peat Marwick LLP, Independent Electronically
Certified Public Accountants.
13. Schedule for computation of each performance quotation - Electronically
Standardized and Non-Standardized.
15(a). Powers of Attorney authorizing Ernest J. Wright or Electronically
Kathleen A. McGah as signatory for Michael A. Carpenter,
Jay S. Benet, George C. Kokulis, Ian R. Stuart and
Katherine M. Sullivan.
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 4
The TRAVELERS
THE TRAVELERS LIFE AND ANNUITY COMPANY ONE TOWER SQUARE HARTFORD CT 06183
A STOCK COMPANY
We are pleased to provide you with the benefits of this Annuity
Contract. Please read your contract and all attached forms carefully.
RIGHT TO EXAMINE THIS CONTRACT
If this contract is returned to us at Our Office or to our
Agent to be cancelled within 10 days after its delivery to
you, we will pay you the Contract Value determined as of the
next valuation after we receive the Written Request at Our
Office, plus any premium tax charges and contract charges
paid. After the contract is returned, it will be considered as
never in effect.
If this contract is issued as an Individual Retirement Annuity
(IRA) and is returned to us at Our Office or to our Agent to
be cancelled within 7 days after its delivery to you, we will
pay you the greater of (1) the Contract Value plus any premium
tax charges and contract charges paid; or (2) purchase
payments made.
This contract is issued in consideration of the purchase payment. It is
subject to the terms and conditions stated on the attached pages, all
of which are a part of it.
Executed at Hartford, Connecticut
President
This is a legal contract between you and us. READ YOUR CONTRACT CAREFULLY
Individual Variable Annuity Contract
Life Annuity Commencing at Maturity Date
Elective Options Non-Participating
ANNUITY PAYMENTS AND OTHER VALUES PROVIDED BY THIS CONTRACT, WHEN BASED
ON THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT, ARE VARIABLE AND
MAY INCREASE OR DECREASE AND ARE NOT GUARANTEED AS TO FIXED DOLLAR
AMOUNT.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Right to Examine this Contract Cover Page
<S> <C>
Contract Specifications Page 3
Definitions Page 4
Owner, Beneficiary and Annuitant Provisions Pages 5
Purchase Payment and Valuation Provisions Pages 6 - 8
Death Benefit Provisions Page 9
Settlement Provisions Pages 10 - 12
General Provisions Pages 13 & 14
Table of Values Page 15
Life Annuity Tables Pages 16 & 17
</TABLE>
Any Riders or Endorsements follow the Life Annuity Tables.
<PAGE> 3
CONTRACT SPECIFICATIONS
OWNER JOHN DOE JOHN DOE ANNUITANT
CONTRACT NUMBER SPECIMEN 06/01/94 CONTRACT DATE
MONTHLY LIFE ANNUITY 06/01/24 MATURITY DATE
PURCHASE PAYMENTS:
Minimum Initial Purchase Payment: $1,000
Minimum Subsequent Purchase Payment: $100
Maximum Purchase Payment: $1,000,000 unless we consent to a larger amount
<TABLE>
<CAPTION>
SUBACCOUNT
SEPARATE ACCOUNT: THE TRAVELERS FUND VA DEDUCTION PER DAY
- --------------------------------------- -----------------
<S> <C>
Underlying Funds -
Capital Appreciation Fund .00003425
High Yield Bond Trust .00003425
Managed Assets Trust .00003425
Cash Income Trust .00003425
The Travelers Series Trust
U.S. Government Securities Portfolio .00003425
Social Awareness Stock Portfolio .00003425
Utilities Portfolio .00003425
Templeton Variable Products Series Fund
Templeton Bond Fund .00003425
Templeton Stock Fund .00003425
Templeton Asset Allocation Fund .00003425
Fidelity's Variable Insurance Products Fund
High Income Portfolio .00003425
Equity-Income Portfolio .00003425
Growth Portfolio .00003425
Fidelity's Variable Insurance Products Fund II
Asset Manager Portfolio .00003425
American Odyssey Funds, Inc.
American Odyssey Core Equity Fund .00003425
American Odyssey Emerging Opportunities Fund .00003425
American Odyssey International Equity Fund .00003425
American Odyssey Long-Term Bond Fund .00003425
American Odyssey Intermediate-Term Bond Fund .00003425
American Odyssey Short-Term Bond Fund .00003425
</TABLE>
Information about the Separate Account is provided in the prospectus for Fund
VA.
FIXED ACCOUNT GUARANTEED INTEREST PERIODS: Credited rates will be guaranteed for
at least three months.
TRANSFER CHARGE: $0.00
TRANSFER RESTRICTIONS: You may transfer up to 10% of the Fixed Account value to
any of the Sub-Accounts twice a year during the 30 days following the
semi-annual Contract Date anniversary.
<PAGE> 4
AMOUNTS DEDUCTED ON SURRENDER (FIRST IN, FIRST OUT BASIS):
<TABLE>
<CAPTION>
YEARS SINCE PURCHASE PERCENT OF PURCHASE
PAYMENT WAS PAID PAYMENTS (NOT PREVIOUSLY SURRENDERED)
- ---------------- -------------------------------------
<S> <C>
1 - 5 5 %
6 AND THEREAFTER 0 %
</TABLE>
After the first Contract Year, you may take partial surrenders annually of up to
10% of your Contract Value as of the first Valuation Date of any given Contract
Year without imposition of amounts deducted on surrender.
ADMINISTRATIVE CHARGE
$15.00, Semi-Annually. This charge will be waived if payment of an Annuity or
Income Option has begun. No Administrative Charge will be deducted from the
Fixed Account.
ASSUMED DAILY NET INVESTMENT FACTOR is 1.0000942 for all Sub-Accounts.
TERMINATION
We reserve the right to terminate this contract when the Contract Value is less
than the Termination Amount of $500 and no purchase payments have been made for
at least three years.
<PAGE> 5
CONTRACT SPECIFICATIONS
OWNER JOHN DOE JOHN DOE ANNUITANT
CONTRACT NUMBER SPECIMEN 06/01/94 CONTRACT DATE
MONTHLY LIFE ANNUITY 06/01/24 MATURITY DATE
PURCHASE PAYMENTS:
Minimum Initial Purchase Payment: $1,000
Minimum Subsequent Purchase Payment: $20
<TABLE>
<CAPTION>
SUBACCOUNT
SEPARATE ACCOUNT: THE TRAVELERS FUND VA DEDUCTION PER DAY
- --------------------------------------- -----------------
<S> <C>
Underlying Funds -
Capital Appreciation Fund .00003425
High Yield Bond Trust .00003425
Managed Assets Trust .00003425
Cash Income Trust .00003425
The Travelers Series Trust
U.S. Government Securities Portfolio .00003425
Social Awareness Stock Portfolio .00003425
Utilities Portfolio .00003425
Templeton Variable Products Series Fund
Templeton Bond Fund .00003425
Templeton Stock Fund .00003425
Templeton Asset Allocation Fund .00003425
Fidelity's Variable Insurance Products Fund
High Income Portfolio .00003425
Equity-Income Portfolio .00003425
Growth Portfolio .00003425
Fidelity's Variable Insurance Products Fund II
Asset Manager Portfolio .00003425
American Odyssey Funds, Inc.
American Odyssey Core Equity Fund .00003425
American Odyssey Emerging Opportunities Fund .00003425
American Odyssey International Equity Fund .00003425
American Odyssey Long-Term Bond Fund .00003425
American Odyssey Intermediate-Term Bond Fund .00003425
American Odyssey Short-Term Bond Fund .00003425
</TABLE>
Information about the Separate Account is provided in the prospectus for Fund
VA.
FIXED ACCOUNT GUARANTEED INTEREST PERIODS: Credited rates will be guaranteed for
at least three months.
TRANSFER CHARGE: $0.00
TRANSFER RESTRICTIONS: NONE
<PAGE> 6
AMOUNTS DEDUCTED ON SURRENDER (FIRST IN, FIRST OUT BASIS):
<TABLE>
<CAPTION>
YEARS SINCE PURCHASE PERCENT OF PURCHASE
PAYMENT WAS PAID PAYMENTS (NOT PREVIOUSLY SURRENDERED)
- ---------------- -------------------------------------
<S> <C>
1 - 5 5 %
6 AND THEREAFTER 0 %
</TABLE>
After the first Contract Year for those age 59-1/2 or older, you may take
partial surrenders annually of up to 10% of your Contract Value as of the first
Valuation Date of any given Contract Year without imposition of amounts deducted
on surrender.
ADMINISTRATIVE CHARGE
$15.00, Semi-Annually. This charge will be waived if payment of an Annuity or
Income Option has begun. No Administrative Charge will be deducted from the
Fixed Account.
ASSUMED DAILY NET INVESTMENT FACTOR is 1.0000942 for all Sub-Accounts.
TERMINATION
We reserve the right to terminate this contract when the Contract Value is less
than the Termination Amount of $500 and no purchase payments have been made for
at least three years.
<PAGE> 7
CONTRACT SPECIFICATIONS
OWNER JOHN DOE JOHN DOE ANNUITANT
CONTRACT NUMBER SPECIMEN 06/01/94 CONTRACT DATE
MONTHLY LIFE ANNUITY 06/01/24 MATURITY DATE
PURCHASE PAYMENTS:
Minimum Initial Purchase Payment: $20
Minimum Subsequent Purchase Payment: $200
<TABLE>
<CAPTION>
SUBACCOUNT
SEPARATE ACCOUNT: THE TRAVELERS FUND VA DEDUCTION PER DAY
- --------------------------------------- -----------------
<S> <C>
Underlying Funds -
Capital Appreciation Fund .00003425
High Yield Bond Trust .00003425
Managed Assets Trust .00003425
Cash Income Trust .00003425
The Travelers Series Trust
U.S. Government Securities Portfolio .00003425
Social Awareness Stock Portfolio .00003425
Utilities Portfolio .00003425
Templeton Variable Products Series Fund
Templeton Bond Fund .00003425
Templeton Stock Fund .00003425
Templeton Asset Allocation Fund .00003425
Fidelity's Variable Insurance Products Fund
High Income Portfolio .00003425
Equity-Income Portfolio .00003425
Growth Portfolio .00003425
Fidelity's Variable Insurance Products Fund II
Asset Manager Portfolio .00003425
American Odyssey Funds, Inc.
American Odyssey Core Equity Fund .00003425
American Odyssey Emerging Opportunities Fund .00003425
American Odyssey International Equity Fund .00003425
American Odyssey Long-Term Bond Fund .00003425
American Odyssey Intermediate-Term Bond Fund .00003425
American Odyssey Short-Term Bond Fund .00003425
</TABLE>
Information about the Separate Account is provided in the prospectus for Fund
VA.
FIXED ACCOUNT GUARANTEED INTEREST PERIODS: Credited rates will be guaranteed for
at least three months.
TRANSFER CHARGE: $0.00
TRANSFER RESTRICTIONS:. NONE
<PAGE> 8
AMOUNTS DEDUCTED ON SURRENDER (FIRST IN, FIRST OUT BASIS):
<TABLE>
<CAPTION>
YEARS SINCE PURCHASE PERCENT OF PURCHASE
PAYMENT WAS PAID PAYMENTS (NOT PREVIOUSLY SURRENDERED)
- ---------------- -------------------------------------
<S> <C>
1 - 5 5 %
6 AND THEREAFTER 0 %
</TABLE>
After the first Contract Year, you may take partial surrenders annually of up to
10% of your Contract Value as of the first Valuation Date of any given Contract
Year without imposition of amounts deducted on surrender.
ADMINISTRATIVE CHARGE
$15.00, Semi-Annually. This charge will be waived if payment of an Annuity or
Income Option has begun. No Administrative Charge will be deducted from the
Fixed Account.
ASSUMED DAILY NET INVESTMENT FACTOR is 1.0000942 for all Sub-Accounts.
TERMINATION
We reserve the right to terminate this contract when the Contract Value is less
than the Termination Amount of $500 and no purchase payments have been made for
at least three years.
MAXIMUM LOAN INTEREST RATE: 7.00% per annum in advance.
MINIMUM LOAN VALUE: $1000
MAXIMUM LOAN VALUE: 80% of the Contract Value for Accounts with balances up to
$12,500 or -1/2 of the Contract Value of $12,500 up to a maximum of $50,000. The
loan amount shall be reduced by the highest outstanding loan balance during the
last 12 months.
<PAGE> 9
CONTRACT SPECIFICATIONS
OWNER JOHN DOE JOHN DOE ANNUITANT
CONTRACT NUMBER SPECIMEN 06/01/94 CONTRACT DATE
MONTHLY LIFE ANNUITY 06/01/24 MATURITY DATE
PURCHASE PAYMENTS:
Minimum Initial Purchase Payment: $20
Minimum Subsequent Purchase Payment: $20
<TABLE>
<CAPTION>
SUBACCOUNT
SEPARATE ACCOUNT: THE TRAVELERS FUND VA DEDUCTION PER DAY
- --------------------------------------- -----------------
<S> <C>
Underlying Funds -
Capital Appreciation Fund .00003425
High Yield Bond Trust .00003425
Managed Assets Trust .00003425
Cash Income Trust .00003425
The Travelers Series Trust
U.S. Government Securities Portfolio .00003425
Social Awareness Stock Portfolio .00003425
Utilities Portfolio .00003425
Templeton Variable Products Series Fund
Templeton Bond Fund .00003425
Templeton Stock Fund .00003425
Templeton Asset Allocation Fund .00003425
Fidelity's Variable Insurance Products Fund
High Income Portfolio .00003425
Equity-Income Portfolio .00003425
Growth Portfolio .00003425
Fidelity's Variable Insurance Products Fund II
Asset Manager Portfolio .00003425
American Odyssey Funds, Inc.
American Odyssey Core Equity Fund .00003425
American Odyssey Emerging Opportunities Fund .00003425
American Odyssey International Equity Fund .00003425
American Odyssey Long-Term Bond Fund .00003425
American Odyssey Intermediate-Term Bond Fund .00003425
American Odyssey Short-Term Bond Fund .00003425
</TABLE>
Information about the Separate Account is provided in the prospectus for Fund
VA.
FIXED ACCOUNT GUARANTEED INTEREST PERIODS: Credited rates will be guaranteed for
at least three months.
TRANSFER CHARGE: $0.00
TRANSFER RESTRICTIONS: NONE
<PAGE> 10
AMOUNTS DEDUCTED ON SURRENDER (FIRST IN, FIRST OUT BASIS):
<TABLE>
<CAPTION>
YEARS SINCE PURCHASE PERCENT OF PURCHASE
PAYMENT WAS PAID PAYMENTS (NOT PREVIOUSLY SURRENDERED)
- ---------------- -------------------------------------
<S> <C>
1 - 5 5 %
6 AND THEREAFTER 0 %
</TABLE>
After the first Contract Year, you may take partial surrenders annually of up to
10% of your Contract Value as of the first Valuation Date of any given Contract
Year without imposition of amounts deducted on surrender.
ADMINISTRATIVE CHARGE
$15.00, Semi-Annually. This charge will be waived if payment of an Annuity or
Income Option has begun. No Administrative Charge will be deducted from the
Fixed Account.
ASSUMED DAILY NET INVESTMENT FACTOR is 1.0000942 for all Sub-Accounts.
TERMINATION
We reserve the right to terminate this contract when the Contract Value is less
than the Termination Amount of $500 and no purchase payments have been made for
at least three years.
<PAGE> 11
DEFINITIONS
(a) ACCOUNT(S) -- the Sub-Accounts and/or the Fixed Account under this
contract.
(b) ACCUMULATION UNIT -- an accounting unit of measure used to calculate
the value of this contract before Annuity payments begin.
(c) AGE -- age last birthday.
(d) ANNUITANT -- the person on whose life the Maturity Date and Annuity
payments depend.
(e) ANNUITY UNIT -- an accounting unit of measure used to calculate the
amount of Annuity payments.
(f) CODE -- the Internal Revenue Code of 1986 or any subsequent version
thereof, as amended, and all related laws and regulations which are in
effect during the term of this contract.
(g) CONTRACT DATE -- the date on which the contract is issued.
(h) CONTRACT VALUE -- on any date equals the sum of the accumulated values
in the Accounts.
(i) CONTRACT YEARS -- twelve month periods beginning with the Contract
Date.
(j) DEATH REPORT DATE -- the Valuation Date coincident with or next
following the day on which we have received 1) Due Proof of Death and
2) Written Request for an election of a single sum payment or an
alternate Settlement Option as described in the contract.
(k) DUE PROOF OF DEATH -- (i) a copy of a certified death certificate; (ii)
a copy of a certified decree of a court of competent jurisdiction as to
the finding of death; (iii) a written statement by a medical doctor who
attended the deceased; or (iv) any other proof satisfactory to us.
(l) FIXED ACCOUNT -- an account that consists of all the assets under this
contract other than those in the Separate Account.
(m) MATURITY DATE -- the date on which the Annuity or Income payments are
to begin.
(n) OUR OFFICE -- the Home Office of The Travelers Life and Annuity Company
or any other office which we may designate for the purpose of
administering this contract.
(o) PURCHASE PAYMENT -- the payments you make for this contract and the
benefits it provides. Net purchase payments are that part of your
purchase payments applied to the Contract Value. A net purchase payment
is equal to the purchase payment less any applicable premium tax
charge.
(p) RECORDED -- a Written Request is recorded when the information is noted
in our file for this contract.
(q) SEPARATE ACCOUNTS -- those Separate Accounts indicated in the CONTRACT
SPECIFICATIONS which we established for this class of contracts and
certain other contracts.
(r) SETTLEMENT OPTION -- an Annuity or Income option elected under this
contract.
(s) SUB-ACCOUNT -- that portion of the assets of a Separate Account which
is allocated to a particular Underlying Fund.
(t) UNDERLYING FUND -- an open-end investment management company indicated
in the CONTRACT SPECIFICATIONS which serves as an investment option
under the Separate Account.
(u) VALUATION DATE -- A date on WHICH A SUB-ACCOUNT IS valued.
(v) VALUATION PERIOD -- the period between successive valuations.
(w) WE, US, OUR -- THE Travelers Life and Annuity Company.
(x) WRITTEN REQUEST -- written information including requests for contract
changes sent to us in a form and content satisfactory to us and
received at Our Office.
(y) YOU, YOUR -- the owner.
<PAGE> 12
OWNER, BENEFICIARY AND ANNUITANT PROVISIONS
OWNER
This contract belongs to the owner shown on the CONTRACT SPECIFICATIONS or to
any person subsequently named in a Written Request of transfer of owner as
provided below unless restricted by an attached endorsement or rider. As owner,
you have sole power during the Annuitant's lifetime to exercise any rights and
to receive all benefits given in this contract provided you have not named an
irrevocable Beneficiary and provided the contract is not assigned.
You will be the recipient of all payments while the Annuitant is alive unless
you direct them to an alternate recipient under a Recorded payment direction. An
alternate recipient under a payment direction does not become the owner. A
payment direction is revocable by you at any time by Written Request giving 30
days advance notice.
SUCCEEDING OWNER
If this contract is issued with the Tax Law Qualification Rider, you may name a
succeeding owner by Written Request prior to the Contract Date. The succeeding
owner becomes the owner if living when you die. The succeeding owner has no
interest in this contract before then. You may change or delete a succeeding
owner by Written Request.
TRANSFER OF OWNERSHIP
You may transfer ownership by Written Request. You may not revoke any transfer
after the effective date. Once the transfer of owner is Recorded by us, it will
take effect as of the date of your Request, subject to any payments made or
other actions taken by us before the recording.
Unless provided otherwise, a transfer does not affect the interest of any
Beneficiary designated prior to the effective date of the transfer.
We are not responsible for advising you or the proposed new owner about the
income tax consequences of a transfer of owner.
ASSIGNMENT
You may collaterally assign ownership of all or a portion of this contract by
Written Request without the approval of any Beneficiary unless irrevocably
named. You may not exercise any rights of ownership while the assignment remains
in effect without the approval of the collateral assignee. We are not
responsible for the validity of any assignment. Once the collateral assignment
is Recorded by us, it will take effect as of the date of your Written Request,
subject to any payments made or other actions taken by us before the Request is
received.
If a claim is made based on an assignment, we may require proof of interest of
the claimant. A Recorded assignment takes precedence over any rights of a
Beneficiary. Any amounts due under a Recorded assignment will be paid in a
single sum.
We are not responsible for advising you about the income tax consequences of an
assignment.
CREDITOR CLAIMS
To the extent permitted by law, no right or benefit of the owner, Annuitant or
Beneficiary under this contract shall be subject to the claims of creditors or
any legal process except as may be provided by an assignment.
BENEFICIARY
The Beneficiary is the party named in a Written Request. The Beneficiary has the
right to receive any remaining contractual benefits upon the death of the
Annuitant. If there is more than one Beneficiary surviving the Annuitant, the
Beneficiaries will share equally in benefits unless different shares are
Recorded with us by Written Request prior to the death of the Annuitant.
If this contract is issued with the Tax Law Qualification Rider and you are the
owner but not the Annuitant and you die with a succeeding owner surviving, the
succeeding owner is entitled to the remaining Contract Value, not the
Beneficiary.
Unless an irrevocable Beneficiary has been named, you have the right to change
any Beneficiary by Written Request during the lifetime of the Annuitant and
while the contract continues.
Once a change in Beneficiary is Recorded by us, it will take effect as of the
date of the Written Request, subject to any payments made or other actions taken
by us before the recording.
<PAGE> 13
If no Beneficiary has been named by you, or if no Beneficiary is living when the
Annuitant dies, the interest of any Beneficiary will pass to you if you are
living or to your estate if you have died.
If this contract is issued with the Tax Law Qualification Rider and no
Beneficiary has been named by you, or if no Beneficiary
is living when the Annuitant dies, the interest of any Beneficiary will pass to
you if you are living, to a surviving succeeding owner, or if there is no
succeeding owner, to your estate if you have died.
ANNUITANT
The Annuitant is the individual shown on the CONTRACT SPECIFICATIONS on whose
life the first Annuity payment is made. The Annuitant may not be changed after
the Contract Date.
<PAGE> 14
PURCHASE PAYMENT AND VALUATION PROVISIONS
PURCHASE PAYMENTS
PURCHASE PAYMENT
Purchase payments are the payments you make for this contract and the benefits
it provides. An initial lump sum purchase payment must be made to the contract
and is due and payable before the contract becomes effective. Each purchase
payment is payable as shown on the CONTRACT SPECIFICATIONS to us at Our Office
or to one of our authorized representatives. No purchase payments after the
initial purchase payment are required to continue this contract in force, except
as provided in the "Termination" provision.
ALLOCATION OF PURCHASE PAYMENTS
We will apply any net purchase payments to provide Accumulation Units of
selected Sub-Accounts and/or the Fixed Account of this contract. The initial
payment will be applied within two business days following its receipt at Our
Office. Any subsequent purchase payments will be applied as of the next
valuation following receipt of those payments at Our Office. The net purchase
payment will be allocated to the Accounts in the proportion specified by you for
this contract. By Written Request, you may change your choice of Accounts or
allocation percentages. The available Underlying Funds to which Sub-Account
assets are allocated are shown on the CONTRACT SPECIFICATIONS; funds may be
subsequently added or may be deleted.
SUB-ACCOUNT VALUATION
NUMBER OF ACCUMULATION UNITS
The number of Accumulation Units to be credited to each Sub-Account once a
purchase payment has been received by us will be determined by dividing the net
purchase payment applied to that Sub-Account by the then Accumulation Unit Value
of that Sub-Account.
ACCUMULATION UNIT VALUE
The initial value of an Accumulation Unit for each Sub-Account was set at $1.00.
We determine the value of an Accumulation Unit in each Sub-Account on each
Valuation Date by multiplying the value on the immediately preceding Valuation
Date by the net investment factor for that Sub-Account for the Valuation Period
just ended.
The value of an Accumulation Unit on any date other than a Valuation Date will
be equal to its value as of the next Valuation Date.
NET INVESTMENT FACTOR
The net investment factor is a factor applied to measure the investment
performance of a Sub-Account from one Valuation Period to the next. The net
investment factor for a Sub-Account for any Valuation Period is equal to the sum
of 1.0000 plus the net investment rate.
Each Sub-Account's net investment rate for a Valuation Period is equal to the
gross investment rate for that Sub-Account, less the applicable Sub-Account
deduction for the Valuation Period.
All Sub-Account deductions are shown on the CONTRACT SPECIFICATIONS.
The gross investment rate of a Sub-Account for a Valuation Period is equal to
(1) divided by (2) where (1) is:
a. investment income, plus
b. capital gains and losses, whether realized or unrealized; less
c. a deduction for any tax levied against the Separate Account and its
Underlying Funds; and
(2) is the amount of the assets at the beginning of the Valuation Period.
<PAGE> 15
The gross investment rate for a Sub-Account may be either positive or negative.
If a Sub-Account is invested in shares of an Underlying Fund, assets are based
on the net asset value of the Underlying Fund. Investment income includes any
distribution whose ex-dividend date occurs during the Valuation Period.
FIXED ACCOUNT VALUATION
NUMBER OF ACCUMULATION UNITS--We will determine the number of Accumulation Units
to be credited to the Fixed Account on receipt of a purchase payment by dividing
the net purchase payment applied to the Fixed Account by the then dollar value
of one Accumulation Unit Value of the Fixed Account.
ACCUMULATION UNIT VALUE--We determine the value of an Accumulation Unit in the
Fixed Account on any day by multiplying the value on the immediately preceding
day by the net interest factor for the day on which the value is being
determined.
NET INTEREST FACTOR--The net interest factor for any day is the guaranteed net
interest rate which is equivalent to an effective annual interest rate of 3.50%
plus any additional net interest we choose to credit at our discretion, plus
1.0000.
Interest is declared in advance. Before Annuity or Income payments begin, we may
credit the Fixed Account with annual interest rates higher than the minimum
guaranteed interest rate of 3.50%. However, we will not credit less than the
minimum guaranteed interest rate of 3.50%. Additional amounts may be credited by
us at our discretion for the guaranteed interest periods shown on the CONTRACT
SPECIFICATIONS.
TRANSFER BETWEEN ACCOUNTS
You may generally transfer all or any part of the Contract Value from one
Sub-Account or the Fixed Account to any other Sub-Account or the Fixed Account
at any time up to 30 days before the due date of the first Annuity or Income
payment. However, transfer restrictions may apply as shown on the CONTRACT
SPECIFICATIONS. We will not limit these transfers to less than one in any six
month period.
Transfers between Accounts will result in the addition or deletion of
Accumulation Units having a total value equal to the dollar amount being
transferred to or from a particular Account. The number of Accumulation Units
will be determined by using the Accumulation Unit Value of the Accounts involved
as of the next valuation after we receive notification of request for transfer.
Transfers will be subject to any applicable Transfer charge stated on the
CONTRACT SPECIFICATIONS.
CONTRACT VALUES
CONTRACT VALUE
The Contract Value of this contract on any date equals the sum of the
accumulated values in the Accounts. The accumulated value in an Account equals
the number of outstanding Accumulation Units credited to that Account,
multiplied by the then Accumulation Unit Value for that Account
The Guaranteed Value of the Fixed Account equals the accumulated value of the
Fixed Account calculated by using the guaranteed net interest factor of 1.0000
plus 3.50%. The Guaranteed Values of the Fixed Account are shown in the Table of
Values.
ADMINISTRATIVE CHARGE
An Administrative Charge in the amount and for the period shown on the CONTRACT
SPECIFICATIONS will be deducted from the Contract Value to reimburse us for
administrative expenses relating to the contract. The Administrative Charge will
be deducted by surrendering on a pro rata basis Accumulation Units from all
Sub-Accounts in which you have an interest, which yields the number of
outstanding Accumulation Units.
We will deduct the charge on a pro rata basis if the contract has been in effect
for less than a full period on the date an Administrative Charge is deducted.
The Administrative Charge will also be deducted on a pro rata basis upon full
surrender or termination of the contract or if the Annuitant dies or Annuity or
Income payments begin.
CASH SURRENDER
You may elect by Written Request to receive the Cash Surrender Value of this
contract before the due date of the first Annuity or Income payment and without
the consent of any Beneficiary unless irrevocably named. You may elect either a
full or
<PAGE> 16
partial surrender of the Cash Surrender Value. In the case of a full surrender,
this contract will be cancelled. A partial surrender will result in a reduction
in your Contract Value. If you have a balance in more than one Account, your
Contract Value will be reduced from all your Accounts on a pro rata basis,
unless you request otherwise.
The Cash Surrender Value will be determined as of the next valuation following
receipt of your Written Request. We may delay payment of the Cash Surrender
Value of the Sub-Accounts for a period of not more than seven days after we
receive your Written Request. We may delay payment of the Cash Surrender Value
of the Fixed Account for a period of not more than six months after receive your
Written Request.
CASH SURRENDER VALUE
The Cash Surrender Value is equal to the Contract Value less any amounts
deducted on surrender which are shown on the CONTRACT SPECIFICATIONS, any
applicable premium tax not previously deducted and any outstanding loan balance.
The Guaranteed Cash Surrender Value of the Fixed Account equals the Guaranteed
Value of the Fixed Account less any amounts deducted on surrender which are
shown on the CONTRACT SPECIFICATIONS, less any applicable premium tax, not
previously deducted and any outstanding loan balance. For Guaranteed Cash
Surrender Values of the Fixed Account, see the Table of Values.
CONTRACT CONTINUATION
Except as provided in the "Termination" provision, this contract does not
require continuing purchase payments and will automatically continue as a
paid-up contract during the lifetime of the Annuitant until the Maturity Date or
until it is surrendered.
<PAGE> 17
DEATH BENEFIT PROVISIONS
DEATH OF ANNUITANT
A death benefit is payable to the Beneficiary upon the death of the Annuitant
before the Maturity Date. A death benefit is also payable under those Settlement
Options which provide for death benefits. We will pay the Beneficiary the death
benefit in a single sum as described below upon receiving Due Proof of Death. A
Beneficiary may request that a death benefit payable under this contract be
applied to a Settlement Option subject to the provisions of this contract.
DEATH PROCEEDS PRIOR TO THE MATURITY DATE
If the Annuitant dies before age 75 and before the Maturity Date, we will pay
the Beneficiary the greatest of a), b), or c) below, less any applicable premium
tax or prior surrenders not previously deducted or any outstanding loan balance
as of the Death Report Date:
a. the Contract Value of the contract;
b. the total purchase payments under the contract; or
c. the Contract Value of the Contract on the most recent quinquennial
Contract Date anniversary on or immediately preceding the Death
Report Date.
If the Annuitant dies on or after age 75 and before the Maturity Date, we will
pay the Beneficiary the Contact Value of the contract less any applicable
premium tax or any outstanding loan balance as of the Death Report Date.
The Contract Value will be determined as of the next valuation following receipt
of the Due Proof of Death by us at Our Office.
DEATH PROCEEDS AFTER THE MATURITY DATE
If the Annuitant dies on or after the Maturity Date, we will pay the Beneficiary
a death benefit consisting of any benefit remaining under the Annuity or Income
option then in effect.
<PAGE> 18
SETTLEMENT PROVISIONS
MATURITY DATE
The Maturity Date is shown on the CONTRACT SPECIFICATIONS. This is the date on
which we will begin paying to you the first of a series of Annuity or Income
payments in accordance with the Settlement Option elected by you. Annuity or
Income payments will begin under this contract on the Maturity Date unless the
contract has been fully surrendered or the proceeds have been paid to the
Beneficiary prior to that date. We may require proof that the Annuitant is alive
before Annuity payments are made.
Additionally, to the extent permitted by tax law, at least 30 days before the
original Maturity Date, you may change the Maturity Date by Written Request with
our consent.
ELECTION OF SETTLEMENT OPTIONS
On the Maturity Date, or other agreed upon date, we will pay any amount payable
under this contract to you in one lump sum or in accordance with the option
elected by you. While the Annuitant is alive, you may change your Settlement
Option election by Written Request, but only before the Maturity Date. Once
Annuity or Income payments have commenced, no further election changes are
allowed.
During the Annuitant's lifetime, if no election has been made on the Maturity
Date, we will pay to you the first of a series of monthly Annuity payments based
on the life of the Annuitant, in accordance with Annuity Option 2, with 120
monthly payments assured.
MINIMUM AMOUNTS
The minimum amount that can be placed under a Settlement Option is $2,000 unless
we consent to a lesser amount. If any periodic payments due are less than
$20.00, we reserve the right to make payments at less frequent intervals.
ALLOCATION OF ANNUITY
At the time election of one of the Annuity Options is made, the person electing
the option may further elect to have the Contract Value applied to provide a
Variable Annuity, a Fixed Annuity or a combination of both.
If no election is made to the contrary, the value of a Sub-Account will be
applied when Annuity payments start to provide an Annuity which varies with the
investment experience of that same Sub-Account and the value of the Fixed
Account will be applied to provide a Fixed Annuity.
You may elect to transfer Contract Value from one Account to another, as
described in the provision "Transfer Between Accounts," in order to reallocate
the basis on which Annuity payments will be determined. Once Annuity payments
have begun, no further transfers are allowed.
VARIABLE ANNUITY
AMOUNT OF BASIC FIRST PAYMENT
The LIFE ANNUITY TABLES are used to determine the basic first monthly Annuity
payment. They show the dollar amount of the basic first monthly Annuity payment
which can be purchased with each $1,000 applied. The amount applied to an
Annuity will be the Cash Surrender Value as of 14 days before the date Annuity
payments start. We reserve the right to require satisfactory proof of the age of
any person on whose life Annuity payments are based before making the first
payment under any of these options.
ANNUITY UNIT VALUE
The initial value of an Annuity Unit for each Sub-Account was set at $1.00. On
any Valuation Date, the Annuity Unit Value for a Sub-Account equals the
Sub-Account Annuity Unit Value on the immediately preceding Valuation Date,
multiplied by the net investment factor for that Sub-Account for the Valuation
Period just ended, divided by the Assumed Daily Net Investment Factor. The
Assumed Daily Net Investment Factor is shown on the CONTRACT SPECIFICATIONS.
<PAGE> 19
The value of an Annuity Unit as of any date other than a Valuation Date will be
equal to its value as of the next succeeding Valuation Date.
NUMBER OF ANNUITY UNITS
We determine the number of Annuity Units credited to this contract in each
Sub-Account by dividing the basic first monthly Annuity payment attributable to
that Sub-Account by the Sub-Account's Annuity Unit Value as of 14 days before
the due date of the first Annuity payment.
AMOUNT OF SECOND AND SUBSEQUENT BASIC PAYMENTS
The dollar amount of the second and subsequent payments may change from month to
month. The total amount of each Annuity payment will be equal to the sum of the
basic payments in each Sub-Account.
The actual amount of the basic payments in each Sub-Account is found by
multiplying the number of Annuity Units credited to the contract in that
Sub-Account by the Annuity Unit Value of the Sub-Account as of the date 14 days
prior to the date on which the payment is due.
FIXED ANNUITY
A Fixed Annuity is an Annuity with payments which remain fixed as to dollar
amount throughout the payment period. The dollar amount of the first Fixed
Annuity payment will be calculated as described above in the "Amount of Basic
First Payment" provision. All subsequent payments will be in the same amount and
that amount will be assured throughout the payment period. If it would produce a
larger payment, we agree that the first Fixed Annuity payment will be determined
using the Life Annuity Tables in effect on the Maturity Date.
ANNUITY OPTIONS
Subject to conditions stated in ELECTIONS OF SETTLEMENT OPTIONS and MINIMUM
AMOUNTS, all or any part of the Cash Surrender Value of this contract may be
paid under one or more of the Annuity Options below.
OPTION 1. LIFE ANNUITY--NO REFUND
We will make monthly Annuity payments during the lifetime of the person on whose
life the payments are based, ending with the last monthly payment preceding
death.
OPTION 2. LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS ASSURED
We will make monthly Annuity payments during the lifetime of the person on whose
life the payments are based and under the conditions stated below.
If at the death of that person, payments have been made for less than 120, 180
or 240 months, as elected, we will continue to make payments to the designated
Beneficiary during the remainder of the period.
OPTION 3. JOINT AND LAST SURVIVOR LIFE ANNUITY
We will make monthly Annuity payments during the joint lifetime of two persons
on whose lives payments are based and during the lifetime of the survivor
No more payments will be made after the death of the survivor.
OPTION 4. JOINT AND LAST SURVIVOR LIFE ANNUITY--ANNUITY REDUCED ON DEATH OF
PRIMARY PAYEE
We will make monthly Annuity payments during the joint lifetime of 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 the secondary payee. On the
death of the secondary payee, if survived by the primary payee, we 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, we will
continue to make monthly 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.
<PAGE> 20
No further payments will be made following the death of the survivor.
OPTION 5. OTHER ANNUITY OPTIONS
We will make any other arrangements for Annuity payments as may be mutually
agreed.
INCOME OPTIONS
We will pay all or any part of the Cash Surrender Value to you under one or more
of the Income Options below subject to the conditions stated in ELECTION OF
SETTLEMENT OPTIONS and MINIMUM AMOUNTS.
The Cash Surrender Value used to determine the amount of any Income payment will
be based on the Accumulation Unit Value as of 14 days before the date an Income
payment is due and will be determined the same way as in the Accumulation
period.
OPTION 1. PAYMENTS OF A FIXED AMOUNT
We will make equal payments each month in the amount elected until the Cash
Surrender Value applied under this option is gone.
The first monthly payment will be paid from each Sub-Account in proportion to
its Cash Surrender Values applied.
The second payment and all later payments from each Sub-Account will be the same
as the first payment under this option. The final payment will include any
amount that is not enough to make another full payment.
OPTION 2. PAYMENTS FOR A FIXED PERIOD
We will make monthly payments for the period selected. The amount of each
payment will be equal to the then remaining Cash Surrender Value applied under
this option divided by the number of remaining payments.
OPTION 3. OTHER INCOME OPTIONS
We will make any other arrangements for Income payments as may be mutually
agreed.
<PAGE> 21
GENERAL PROVISIONS
THE CONTRACT
The entire contract between you and us consists of the contract and all attached
pages.
CONTRACT CHANGES
The only way this contract may be changed is by a written endorsement signed by
one of our officers.
SUBSTITUTION OF SEPARATE ACCOUNT OR UNDERLYING FUNDS
If it is not possible to continue to offer a Separate Account or Underlying
Fund, or in our judgment becomes inappropriate for the purposes of this
contract, we may substitute another Separate Account or Underlying Fund without
your consent. Substitution may be made with respect to both existing investments
and investment of future premium payments. However, no such substitution will be
made without notice to you and without prior approval of the Securities and
Exchange Commission, to the extent required by law.
MISSTATEMENT
If the Annuitant's or owner's sex or date of birth was misstated, all benefits
of this contract are what the purchase payment paid would have purchased at the
correct sex and age. Proof of the Annuitant's and owner's ages may be filed at
any time at Our Office.
INCONTESTABILITY
We will not contest this contract from its Contract Date.
TERMINATION
We reserve the right to terminate this contract on any Valuation Date if the
Contract Value as of the date is less than the Termination Amount shown on the
CONTRACT SPECIFICATIONS, and purchase payments have not been made to this
contract for at least three years. Termination will not occur until 31 days
after we have mailed notice of termination to you at your last known address and
to any assignee of record. If this contract is terminated, we will pay you the
Cash Surrender Value, if any.
REQUIRED REPORTS
We will furnish a report to the owner as often as required by law, but at least
once in each Contract Year before the due date of the first Annuity or Income
payment. The report will show the number of Accumulation Units credited to the
contract in each Account and the corresponding Accumulation Unit Value as of the
date of the report.
VOTING RIGHTS
So long as federal law requires, you may have the right to vote at the meetings
of the shareholders of the Underlying Funds. If you have voting rights, we will
send a notice to you telling you the time and place of a meeting. The notice
will also explain matters to be voted upon and how many votes you get.
MORTALITY AND EXPENSES
Our actual mortality and expense experience will not affect the amount of any
Annuity or Income payments or any other values under this contract.
NON-PARTICIPATING
This contract does not share in our surplus earnings, so you will receive no
dividends under it.
CONFORMITY WITH STATE AND FEDERAL LAWS
This contract is governed by the law of the state in which it is delivered. Any
paid-up Annuity, Cash Surrender or death benefits that are available under this
contract are not less than the minimum benefits required by the statutes of the
state in which this contract is delivered.
Upon receiving appropriate state approval, we may at any time make any changes,
including retroactive changes, in this contract to the extent that the change is
required to meet the requirements of any law or regulation issued by any
governmental agency to which we or you are subject.
<PAGE> 22
EMERGENCY PROCEDURE
We reserve the right to suspend or postpone the date of any payment of any
benefit or values for any Valuation Period (1) when the New York Stock Exchange
is closed; (2) when trading on the Exchange is restricted; (3) when an emergency
exists as determined by the Securities and Exchange Commission so that disposal
of the securities held in the Sub-Accounts is not reasonably practicable or it
is not reasonably practicable to determine the value of the Sub-Account's net
assets, or (4) during any other period when the Securities and Exchange
Commission, by order, so permits for the protection of security holders. Any
provision of this contract which specifies a Valuation Date will be superseded
by this Emergency Procedure.
RELATION OF THIS CONTRACT TO THE SEPARATE ACCOUNTS AND SUB-ACCOUNTS
We will have exclusive and absolute ownership and control of the assets of our
Separate Account and the Sub-Accounts. That portion of the assets of a Separate
Account or Sub-Account equal to the reserves and other contract liabilities with
respect to such Separate Account or Sub-Account shall not be chargeable with
liabilities arising out of any other business we conduct. Our determination of
the value of an Accumulation Unit and an Annuity Unit by the method described in
this contract will be conclusive.
<PAGE> 23
TABLE OF VALUES
GUARANTEED VALUES OF THE FIXED ACCOUNT PER $1,000
OF NET PURCHASE PAYMENT APPLIED
<TABLE>
<CAPTION>
NO. OF FULL GUARANTEED NO. OF FULL GUARANTEED
YEARS FROM CASH YEARS FROM CASH
DATE PAYMT. GUARANTEED SURRENDER DATE PAYMT. GUARANTEED SURRENDER
IS APPLIED VALUE VALUE IS APPLIED VALUE VALUE
- ---------- ----- ----- ---------- ----- -----
<S> <C> <C> <C> <C> <C>
1 1035 985 36 3450 3450
2 1071 1021 37 3571 3571
3 1108 1058 38 3696 3696
4 1147 1097 39 3825 3825
5 1187 1137 40 3959 3959
6 1229 1229 41 4097 4097
7 1272 1272 42 4241 4241
8 1316 1316 43 4389 4389
9 1362 1362 44 4543 4543
10 1410 1410 45 4702 4702
11 1459 1459 46 4866 4866
12 1511 1511 47 5037 5037
13 1563 1563 48 5213 5213
14 1618 1618 49 5396 5395
15 1675 1675 50 5584 5584
16 1733 1733 51 5780 5780
17 1794 1794 52 5982 5982
18 1857 1857 53 6192 6192
19 1922 1922 54 6408 6408
20 1989 1989 55 6633 6633
21 2059 2059 56 6865 6865
22 2131 2131 57 7105 7105
23 2206 2206 58 7354 7354
24 2283 2283 59 7611 7611
25 2363 2363 60 7878 7878
26 2445 2445 61 8153 8153
27 2531 2531 62 8439 8439
28 2620 2620 63 8734 8734
29 2711 2711 64 9040 9040
30 2806 2806 65 9356 9356
31 2905 2905 66 9684 9684
32 3006 3006 67 10023 10023
33 3111 3111 68 10373 10373
34 3220 3220 69 10737 10737
35 3333 3333 70 11112 11112
</TABLE>
<PAGE> 24
LIFE ANNUITY TABLES
DOLLAR AMOUNT OF THE FIRST MONTHLY ANNUITY PAYMENT WHICH IS PURCHASED
WITH EACH $1,000 APPLIED
OPTIONS 1 AND 2 - SINGLE LIFE ANNUITIES
<TABLE>
<CAPTION>
120 180 240
ADJUSTED NO MONTHLY MONTHLY MONTHLY
AGE REFUND PAYMENTS PAYMENTS PAYMENTS
ASSURED ASSURED ASSURED
<S> <C> <C> <C> <C>
50 $4.74 $4.69 $4.62 $4.52
51 4.84 4.78 4.70 4.58
52 4.94 4.87 4.78 4.65
53 5.04 4.97 4.87 4.71
54 5.16 5.07 4.95 4.78
55 5.28 5.18 5.04 4.85
56 5.40 5.29 5.13 4.91
57 5.54 5.41 5.23 4.98
58 5.69 5.53 5.33 5.05
59 5.84 5.66 5.43 5.11
60 6.01 5.79 5.53 5.18
61 6.18 5.94 5.63 5.24
62 6.37 6.08 5.74 5.30
63 6.57 6.24 5.84 5.36
64 6.79 6.40 5.95 5.41
65 7.02 6.57 6.05 5.46
66 7.27 6.74 6.15 5.51
67 7.54 6.91 6.26 5.55
68 7.83 7.10 6.35 5.59
69 8.14 7.28 6.45 5.62
70 8.48 7.47 6.54 5.65
71 8.84 7.66 6.62 5.68
72 9.23 7.85 6.70 5.70
73 9.65 8.04 6.77 5.71
74 10.11 8.23 6.83 5.72
75 10.61 8.41 6.88 5.73
</TABLE>
OPTION 3 - JOINT AND LAST SURVIVOR LIFE; ANNUITY
<TABLE>
<CAPTION>
ADJUSTED AGE OF ADJUSTED AGE OF SECOND LIFE
FIRST LIFE 51 56 58 61 63 66 71
<S> <C> <C> <C> <C> <C> <C> <C>
50 $4.21 $4.35 $4.40 $4.47 $4.51 $4.57 $4.64
55 4.37 4.58 4.66 4.78 4.85 4.94 5.07
57 4.43 4.67 4.77 4.90 4.99 5.10 5.26
60 4.51 4.80 4.92 5.09 5.20 5.36 5.59
62 4.55 4.88 5.01 5.22 5.35 5.54 5.82
65 4.62 4.99 5.15 5.39 5.56 5.81 6.19
70 4.70 5.14 5.34 5.65 5.88 6.23 6.83
</TABLE>
Dollar amounts of the first monthly payments for ages not shown in these Tables
will be calculated on the same basis as those shown and may be obtained from us.
Amounts shown in these Tables are based on the Progressive Annuity Table, with a
two year set-back (assuming births in the year 1900) with interest at the rate
of 3-1/2% per annum. The adjusted age of the person on
<PAGE> 25
whose life the Annuity is based is determined from the actual age last birthday
on the due date of the first Annuity payment in the following manner.
Calendar Year in which
First Payment is Due . . 1991-2000 2001-2010 2011 & later
Adjusted Age is Actual Age minus 2 minus 3 minus 4
OPTION 4-JOINT AND LAST SURVIVOR LIFE ANNUITY
ANNUITY REDUCES ON DEATH OF PRIMARY PAYEE
<TABLE>
<CAPTION>
Adjusted Age of
Primary Payee Adjusted Age of Second Payee
Male 50 55 60 65
<S> <C> <C> <C> <C>
50 $4.37 $4.46 $4.54 $4.61
55 4.65 4.78 4.91 5.02
60 4.97 5.15 5.34 5.51
65 5.34 5.57 5.83 6.10
70 5.75 6.05 6.40 6.78
</TABLE>
<TABLE>
<CAPTION>
Adjusted Age of
Primary Payee Adjusted Age of Second Payee
Female 50 55 60 65
<S> <C> <C> <C> <C>
50 $4.23 $4.29 $4.33 $4.36
55 4.50 4.59 4.67 4.73
60 4.82 4.96 5.08 5.19
65 5.19 5.39 5.58 5.76
70 5.61 5.88 6.17 6.46
</TABLE>
Dollar amounts of the first monthly payments for ages not shown in these Tables
will be calculated on the same basis as those shown and may be obtained from us.
Amounts shown in these Tables are based on the Progressive Annuity Table, with a
two year set-back, (assuming births in the year 1900) with interest at the rate
of 3-1/2% per annum. The adjusted age of the person on whose life the .annuity
is based is determined from the actual age last birthday on the due date of the
first Annuity payment in the following manner.
Calendar Year in which
First Payment is Due 1991-2000 2001-2010 2011 & later
Adjusted Age is Actual Age minus 2 minus 3 minus 4
<PAGE> 26
LIFE ANNUITY TABLES
DOLLAR AMOUNT OF THE FIRST MONTHLY ANNUITY PAYMENT WHICH IS PURCHASED
WITH EACH $1,000 APPLIED
OPTIONS 1 AND 2 - SINGLE LIFE ANNUITIES
<TABLE>
<CAPTION>
120 180 240
ADJUSTED NO MONTHLY MONTHLY MONTHLY
AGE REFUND PAYMENTS PAYMENTS PAYMENTS
ASSURED ASSURED ASSURED
<S> <C> <C> <C> <C>
50 $4.74 $4.69 $4.62 $4.52
51 4.84 4.78 4.70 4.58
52 4.94 4.87 4.78 4.65
53 5.04 4.97 4.87 4.71
54 5.16 5.07 4.95 4.78
55 5.28 5.18 5.04 4.85
56 5.40 5.29 5.13 4.91
57 5.54 5.41 5.23 4.98
58 5.69 5.53 5.33 5.05
59 5.84 5.66 5.43 5.11
60 6.01 5.79 5.53 5.18
61 6.18 5.94 5.63 5.24
62 6.37 6.08 5.74 5.30
63 6.57 6.24 5.84 5.36
64 6.79 6.40 5.95 5.41
65 7.02 6.57 6.05 5.46
66 7.27 6.74 6.15 5.51
67 7.54 6.91 6.26 5.55
68 7.83 7.10 6.35 5.59
69 8.14 7.28 6.45 5.62
70 8.48 7.47 6.54 5.65
71 8.84 7.66 6.62 5.68
72 9.23 7.85 6.70 5.70
73 9.65 8.04 6.77 5.71
74 10.11 8.23 6.83 5.72
75 10.61 8.41 6.88 5.73
</TABLE>
OPTION 3 - JOINT AND LAST SURVIVOR LIFE; ANNUITY
<TABLE>
<CAPTION>
ADJUSTED AGE OF ADJUSTED AGE OF SECOND LIFE
FIRST LIFE 51 56 58 61 63 66 71
<S> <C> <C> <C> <C> <C> <C> <C>
50 $4.21 $4.35 $4.40 $4.47 $4.51 $4.57 $4.64
55 4.37 4.58 4.66 4.78 4.85 4.94 5.07
57 4.43 4.67 4.77 4.90 4.99 5.10 5.26
60 4.51 4.80 4.92 5.09 5.20 5.36 5.59
62 4.55 4.88 5.01 5.22 5.35 5.54 5.82
65 4.62 4.99 5.15 5.39 5.56 5.81 6.19
70 4.70 5.14 5.34 5.65 5.88 6.23 6.83
</TABLE>
Dollar amounts of the first monthly payments for ages not shown in these Tables
will be calculated on the same basis as those shown and may be obtained from us.
Amounts shown in these Tables are based on the Progressive Annuity Table, with a
two year set-back (assuming births in the year 1900) with interest at the rate
of 3-1/2% per annum. The adjusted age of the person on
<PAGE> 27
whose life the Annuity is based is determined from the actual age last birthday
on the due date of the first Annuity payment in the following manner.
<TABLE>
<S> <C> <C> <C>
Calendar Year in which
First Payment is Due . . 1991-2000 2001-2010 2011 & later
Adjusted Age is Actual Age minus 4 minus 5 minus 6
</TABLE>
OPTION 4-JOINT AND LAST SURVIVOR LIFE ANNUITY
ANNUITY REDUCES ON DEATH OF PRIMARY PAYEE
<TABLE>
<CAPTION>
Adjusted Age of
Primary Payee Adjusted Age of Second Payee
46 51 56 61
<S> <C> <C> <C> <C>
50 $4.37 $4.46 $4.54 $4.61
55 4.65 4.78 4.91 5.02
60 4.97 5.15 5.34 5.51
65 5.34 5.57 5.83 6.10
70 5.75 6.05 6.40 6.78
</TABLE>
Dollar amounts of the first monthly payments for ages not shown in these Tables
will be calculated on the same basis as those shown and may be obtained from us.
Amounts shown in these Tables are based on the Progressive Annuity Table, with a
two year set-back, (assuming births in the year 1900) with interest at the rate
of 3-1/2% per annum. The adjusted age of the person on whose life the .annuity
is based is determined from the actual age last birthday on the due date of the
first Annuity payment in the following manner.
<TABLE>
<S> <C> <C> <C>
Calendar Year in which
First Payment is Due 1991-2000 2001-2010 2011 & later
Adjusted Age is Actual Age minus 4 minus 5 minus 6
</TABLE>
<PAGE> 28
Individual Variable Annuity Contract
Non-Participating
ENDORSEMENTS
<PAGE> 29
TAX LAW QUALIFICATION RIDER
This rider is made a part of this contract at its Contract Date in order to
comply with the tax rules under Section 72(s) of the Code for required
distributions upon the death of the contract owner. The following conditions,
restrictions and limitations must apply.
REQUIRED DISTRIBUTIONS WHERE OWNER AND ANNUITANT DIE SIMULTANEOUSLY
If you are the owner and the Annuitant or you are the owner and you die
simultaneously with the Annuitant before payment of an Annuity or Income option
begins, an amount equal to the Death Benefit will be distributed within five
years of your death to the contract Beneficiary unless:
a.the Beneficiary elects by Written Request to have the proceeds
distributed over the Beneficiary's life or over a period not extending
beyond life expectancy, and the payments begin within one year of your
death; or
b.the sole Beneficiary is your spouse who elects by Written Request to
continue the contract as the owner and Annuitant.
If you are the owner and the Annuitant or you are the owner and you die
simultaneously with the Annuitant before an Annuity or Income option begins but
before your entire interest has been distributed, the remaining proceeds of the
contract will be distributed to the contract Beneficiary at least as rapidly as
they were being distributed under the method of payment in effect at the time of
your death.
NON-NATURAL OWNER HOLDING FOR NATURAL PERSONS
The above rules also apply if you are not an individual and the Annuitant dies
before payment of an Annuity or Income option begins. Payments will be made to
the Beneficiary.
If you are not an individual and the Annuitant dies after payment of an Annuity
or Income option begins, the remaining proceeds of the contract will be
distributed to the contract Beneficiary at least as rapidly as they were being
distributed under the method of payment in effect at the time of the Annuitant's
death.
REQUIRED DISTRIBUTIONS WHERE OWNER AND ANNUITANT DO NOT DIE SIMULTANEOUSLY
If you are the owner but not the Annuitant, and you die before the Annuitant and
before payment of an Annuity or Income option begins, an amount equal to the
Death Benefit will be distributed within five years of your death to the
succeeding owner surviving you (for this circumstance, the succeeding owner is
the "designated beneficiary" of Section 72(s) of the Code), unless:
a.the succeeding owner elects by Written Request to have the proceeds
distributed over his or her life or over a period not extending beyond
life expectancy, and the payments begin within one year of your death;
or
b.the succeeding owner is your spouse, who elects by Written Request to
continue the contract as owner.
The succeeding owner is the owner who succeeds to your interest by contract
designation, by Recorded administrative change, or if no contract designation or
subsequent change was made, the succeeding owner in this circumstance is the
Beneficiary. If there is no succeeding owner or Beneficiary surviving you,
ownership of this contract passes to your estate. The individual taking the
contract benefits through your estate must take complete distribution within
five years of your death.
If you are the owner but not the Annuitant, and you die before the Annuitant but
after payment of an Annuity or Income option begins, the remaining proceeds of
the contract will be distributed to the succeeding owner at least as rapidly as
they were being distributed under the method of payment in effect at the time of
your death. If there is no succeeding owner surviving you, ownership passes to
the contract Beneficiary. If there is no contract Beneficiary, ownership passes
to your estate. The individual that thus succeeds is the "designated
beneficiary" under Section 72(s) of the Code.
<PAGE> 30
ADMINISTRATIVE COMPLIANCE
If the Code and related law, regulations and rulings require a distribution
other than described above in order to keep this Annuity contract qualified
under the Code, we will administer the contract in accordance with these laws,
regulations and rulings. We will provide you with a revised rider describing any
necessary changes, following all regulatory approvals.
THE TRAVELERS LIFE, AND ANNUITY COMPANY
President
<PAGE> 31
TAX-SHELTERED ANNUITY QUALIFICATION RIDER
This endorsement is made a part of this contract in order to comply with Section
403(b) of the Code. The following conditions, restrictions and limitations
apply.
OWNERSHIP - NON-TRANSFERABLE
You may not sell, assign, or discount this contract or pledge this contract as
collateral for a loan or as security for the performance of an obligation or for
any other purpose, to any person or organization other than to us. his provision
supersedes any provisions of the contract which may be inconsistent with it.
ELECTIVE DEFERRAL CONTRIBUTION LIMITS
In order to meet the qualification requirements of Code Section 403(b), elective
deferral contributions may not exceed the limitations in effect under Code
Section 402(g)).
This rule applies to all elective deferral plans, contracts or arrangements.
WITHDRAWAL RESTRICTIONS
To qualify as a contract which can defer compensation under a Code Section
403(b) plan or arrangement, the withdrawal restrictions under Code Section
403(b)(11) must be met.
Withdrawals attributable to contributions made pursuant to a salary reduction
agreement may be paid only upon or after attainment of age 59-1/2, separation
from service, death, total or permanent disability (as defined in Code Section
72(m)(7)) or in the case of hardship (as defined in the Treasury Regulations).
The hardship exception applies only to the salary reduction contribution and not
to any income attributable to such contribution.
These withdrawal restrictions apply to years beginning after December 31, 1988
but only with respect to assets other than those assets held as of the close of
the last year beginning before January 1, 1989.
If contributions attributable to a custodial account described in Section
403(b)(7) of the Code are transferred to this contract, the following
conditions, restrictions and limitations apply.
Withdrawals attributable to these transferred contributions may be paid only
upon or after attainment of age 59-1/2, separation from service, death, or total
and permanent disability (as defined in Code Section 72(m)(7)).
Withdrawals on account of hardship may be made only with respect to assets
attributable to a custodial account as of the close of the last year beginning
before January 1, 1989 and amounts contributed thereafter under a salary
reduction agreement but not to any income attributable to such contributions.
MANDATORY DISTRIBUTION RESTRICTIONS
In order to meet the qualification requirements of Code Section 403(b), all
plans must meet the required mandatory distribution rules in Code Section
401(a)(9).
Code Section 401(a)(9) states that a plan will not be qualified unless the
entire interest of each employee is distributed to such employee not later than
the "required beginning date" or over the life or life expectancy of such
employee or over the lives or joint life expectancy of such employee and a
designated Beneficiary. Generally, the "required beginning date" means April l
of the calendar year following the calendar year in which the employee attains
age 70-1/2.
If the employee dies before his/her entire interest has been distributed, the
remaining interest must be paid out at least as rapidly as it was being paid out
under the method of payment in effect at the time of death. If the employee dies
before the distribution of his/her entire interest has begun, the entire
interest must be distributed within five years after the employee's death or an
Annuity payable over no longer than life or life expectancy must be distributed
to an electing designated Beneficiary starting within one year of the employee's
death. A spousal designated Beneficiary may elect to defer distributions until
the employee would have attained the age of 70-1/2 .
<PAGE> 32
ADMINISTRATIVE COMPLIANCE
If the Code and related law, regulations and rulings require 8 distribution
other than described above in order to keep this Annuity qualified under the
Code, we will administer the contract in accordance with these laws, regulations
and rulings. We will provide you with a revised rider describing any necessary
changes, following all regulatory approvals.
THE TRAVELERS LIFE AND ANNUITY COMPANY
President
<PAGE> 33
DISTRIBUTION FROM A PENSION/PROFIT SHARING PLAN QUALIFICATION RIDER
The following conditions, restrictions and limitations apply to this contract if
it has been issued as an annuity contract as described in Section 401(g) of the
Internal Revenue Code.
OWNERSHIP - NON-TRANSFERABLE
You may not sell, assign, or discount this contract or pledge this contract as
collateral for a loan or as security for the performance of an obligation or for
any other purpose, to any person or organization other than The Travelers Life
and Annuity Company; provided, however, the restrictions of this provisions will
not apply to the Trustee of any Trust described in Section 401(a) or the
Administrator of any Annuity Plan described in Section 403(a) of the Code. This
provision supersedes any provisions of the contract which may be inconsistent
with it.
MANDATORY DISTRIBUTION RESTRICTIONS
In order to meet the qualification requirements of Code Section 401(a), all
plans must meet the required mandatory distribution rules in Code Section
401(a)(9).
Code Section 401(a)(9) states that a plan will not be qualified unless the
entire interest of each employee is distributed to such
employee not later than the "required beginning date" or over no longer than the
life or life expectancy of such employee or the lives or joint life expectancy
of such employee and a designated Beneficiary. Generally, the "required
beginning date" means April I of the calendar year following the calendar year
in which the employee attains age 70-1/2.
If the employee dies before his/her entire interest has been distributed, the
remaining interest must be paid out at least as rapidly as it was being paid out
under the method of payment in effect at the time of death. If the employee dies
before the distribution of his/her entire interest has begun, the entire
interest must be distributed within five years after the employee's death or an
Annuity payable over no longer than life or life expectancy must be distributed
to an electing designated Beneficiary starting within one year of the employee's
death. A spousal designated Beneficiary may elect to defer distributions until
the employee would have attained the age of 70-1/2.
ANNUITIES DISTRIBUTED UNDER QUALIFIED PLANS
If the applicant for this contract requested that it be issued to comply with
Section 401(a) of the Code, and this contract has subsequently been transferred
to the Annuitant, the following conditions, restrictions and limitations apply
to this contract in addition to the above.
Spousal Consent
Death Benefit - If the Annuitant dies while the contract continues and the
Annuitant has a spouse at the time of the Annuitant's death, we will pay the
death benefit to a person other than the current spouse of the Annuitant only if
proof of spousal consent, which meets the requirements of Section 417 of the
Code, is furnished to us.
If the Beneficiary is not the current spouse and such spousal consent is not
furnished, we will pay 50% of the death benefit to the current spouse. We will
pay the balance of the death benefit to the Beneficiary.
Cash Surrender - Before the due date of the first Annuity Payment, 1) if you do
not have a spouse and without the consent of any Beneficiary unless irrevocably
named; or, 2) if you do have a current spouse then only with the written consent
of your spouse, as required by Section 417 of the Code; we will pay to you all
or any portion of the Cash Surrender Value of the contract upon receipt of your
Written Request for it.
Settlement Option - If the Annuitant is living on the Maturity Date, payment
must be made in accordance with Option 5 under ANNUITY OPTIONS unless you elect
another form of Annuity or Income Option and furnish us a qualified election
which meets the requirements of Section 417 of the Code.
THE TRAVELERS LIFE AND ANNUITY COMPANY
President
<PAGE> 34
INDIVIDUAL RETIREMENT ANNUITY QUALIFICATION RIDER)ER
As requested by the owner, this Contract is amended as follows to qualify as an
Individual Retirement Annuity (IRA) under Section 408(b) of the Code of 1986, as
amended.
I. EXCLUSIVE BENEFIT
This Contract is established for the exclusive benefit of you or your
Beneficiaries.
II. PROHIBITION OF ASSIGNMENT OR LOAN
This Contract shall not be pledged or otherwise encumbered and it shall
not be sold, assigned or otherwise transferred to any person or entity
other than us. No loans shall be made under this Contract.
III. LIMITATION ON PREMIUMS
Notwithstanding the provisions of the Contract and except in the case of
a rollover contribution (as permitted by Section 402(c), 403(a)(4),
403(b)(8), or 408(d)(3) of the Code) or a contribution made in accordance
with the terms of a Simplified Employee Pension (SEP) program as
described in Section 408(k) of the Code, the total contributions shall
not exceed the lesser of $2,000 or 100% of compensation for any taxable
year. In the case of a spousal IRA, the maximum contribution shall not
exceed the lesser of $2,250 or 100% of compensation, but no more than
$2,000 can be contributed to either spouse's IRA. In the case of a
Simplified Employee Pension Plan qualifying under Section 408(k), the
annual contribution under the Contract may not exceed the lesser of
$30,000 or 15% of compensation. No contributions will be accepted unless
they are in cash.
The purchase payments under this Contract are not fixed. Any refund of
purchase payments (other than those attributable to excess contributions)
will be applied, before the close of the calendar year following the year
of the refund, toward the payment of future purchase payments or the
purchase of additional benefits.
Purchase payments after the first will not be required to continue this
Contract in force. We reserve the right, however, to terminate this
Contract when no purchase payments have been made for at least two
consecutive years and the Contract Value of the Contract is less than the
termination amount of $1000 or the paid up Annuity benefit at maturity
would be less than $20 per month. If this Contract is terminated, we will
pay you the Contract Value of the Contract, if any, less applicable
premium tax not previously deducted.
IV. COMPENSATION
Compensation means wages, salaries, professional fees, or other amounts
derived from or received from personal service actually rendered
(including, but not limited to, commissions) and includes earned income
as defined in Code Section 401(c)(2). Compensation does not include
amounts received as earnings or profits from property or amounts not
includible in gross income. Compensation also does not include any amount
received as a pension or Annuity or as deferred compensation. The term
"compensation" shall include any amount includible in the individual's
gross income under Code Section 71 with respect to a divorce or
separation instrument.
V. DISTRIBUTION OF BENEFITS
Notwithstanding any provision of this contract to the contrary, the
distribution of an individual's interest shall be made in accordance with
the minimum distribution requirements of Section 408(a)(6) or Section
408(b)(3) of the Code and the regulations thereunder, including the
incidental death benefit provisions of Section 1.401(a)(9)-2 of the
proposed regulations, all of which are herein incorporated by reference.
Your entire interest in the account must be distributed, or begin to be
distributed, by your required beginning date, which is the April 1
following the calendar year in which you reach age 70 1/2. For each
succeeding year, a distribution must be made on or before December 31. By
the required beginning date you may elect to have the balance in the
account distributed in one of the following forms:
<PAGE> 35
1. a single sum payment;
2. equal or substantially equal payments over your life;
3. equal or substantially equal payments over the lives of you and
your designated Beneficiary;
4. equal or substantially equal payments over a specified period that
may not be longer than your life expectancy;
5. equal or substantially equal payments over a specified period that
may not be longer than the joint life and last survivor expectancy
of you and your designated Beneficiary.
Minimum Amounts to be Distributed.
If your interest is to be distributed in other than a lump sum or
substantially equal amounts as discussed above, then the amount to be
distributed each year, commencing at your required beginning date, must
be at least an amount equal to the quotient obtained by dividing your
entire interest by your life expectancy or the joint and last survivor
expectancy of you and your designated Beneficiary.
Life expectancy and joint and last survivor expectancy are computed by
use of the return multiples contained in section 1.72-9 of the Income Tax
Regulations. For purposes of this computation, the owner's life
expectancy may be recalculated no more frequently than annually; however,
the life expectancy of a nonspouse Beneficiary may not be recalculated.
If your designated Beneficiary is not your spouse, then the minimum
amount required to be distributed shall be the greater of the amount
determined above, or the amount determined under the incidental benefit
rules set forth in Treasury Regulation Section 1.401(a)(9)-2.
VI. DEATH
If you die before your entire interest is distributed, the entire
remaining interest will be distributed as follows:
1. If you die on or after distributions have begun under the
DISTRIBUTION OF BENEFITS section, the entire remaining interest
must be distributed at least as rapidly as provided under the
DISTRIBUTION OF BENEFITS section.
2. If you die before distributions have begun under the
DISTRIBUTION OF BENEFITS section, the entire remaining interest
must be distributed as elected by you, or, if you have not so
elected, as elected by the Beneficiary or Beneficiaries, as
follows:
a. by December 31st of the year containing the fifth
anniversary of your death; or
b. in equal or substantially equal payments over the
life or life expectancy of the designated Beneficiary
or Beneficiaries starting by December 31st of the
year following the year of your death. If, however,
the Beneficiary is your surviving spouse, then this
distribution is not required to begin before December
31st of the year in which you would have turned
70 1/2.
If your surviving spouse dies before distributions begin, he or she shall
be treated as the IRA contract owner and the restrictions in the
preceding paragraph shall apply.
Unless otherwise elected by you prior to the commencement of
distributions under the DISTRIBUTION OF BENEFITS section or, if
applicable, by the surviving spouse where you die before distributions
have commenced, life expectancies of you or your spousal Beneficiary
shall be recalculated annually for purposes of distributions under the
DISTRIBUTION OF BENEFITS section and the DEATH section. An election not
to recalculate shall be irrevocable and shall apply to all subsequent
years. The life expectancy of a non-spouse Beneficiary shall not be
recalculated.
<PAGE> 36
VII. ALTERNATIVE CALCULATION METHOD
An individual may satisfy the minimum distribution requirements under
section 408(a)(6) and 408(b)(3) of the Code by receiving a distribution
for one IRA that is equal to the amount required to satisfy the minimum
distribution requirements for two or more IRAs. For this purpose, the
owner of two or more IRAs may use the "alternative method" described in
Notice 88-38, 1988-1 C.B. 524, to satisfy the minimum distribution
requirements described above.
VIII. NONFORFEITABILITY
Your entire interest in this Contract is nonforfeitable.
IX. NONTRANSFERABLE
This Contract is not transferable.
X. ROLLOVERS
A. Subject to subparagraphs (B) and (C) hereof, and the limitations
stated in the Contract, you may transfer to this Contract your
interest in any of the following:
1. the entire amount, or any portion thereof, under any other
individual retirement account or individual retirement Annuity
qualified under Section 408 of the Code;
2. the entire amount, or any portion thereof, excluding
nondeductible employee voluntary contributions, under a trust
described in Section 401(a) of the Code which is exempt from tax
under Section 501(a) of the Code or under a qualified annuity
plan described in Section 403(a) of the Code.
3. the entire amount or any portion thereof to which you are
entitled under a tax sheltered annuity described in Section
403(b) of the Code.
4. distributions you roll over from retirement plans or
arrangements described in A.2. and A.3. above to this contract
must be completed by means of a direct transfer or rollover in
accordance with Code Section 401(a)(31) in order to avoid
mandatory 20% income tax withholding from the distribution and a
possible 10% additional tax penalty under Code Section 72(t).
You may replace amounts withheld from other sources to complete
the full rollover, but the 10% penalty may continue to be due,
if you do not specify that the transfer of the distribution be
conducted by direct transfer or rollover.
B. You shall not make a rollover under subparagraph (A)(1) hereof during
the 12 month period commencing on the date you last made a rollover
contribution of the type described in subparagraph (A)(1).
C. We must receive any amount which qualifies for a rollover within 60
days after you receive the distribution.
XI. DISTRIBUTIONS PRIOR TO AGE 59-1/2
Except in the event of your death, disability or attainment of age
59-1/2, we shall receive from you a declaration of your intention as to
the disposition of the amounts distributed before making any distribution
from this Contract.
XII. REPORTS
As the issuer of this Contract, we will furnish reports concerning the
status of the Annuity at least annually.
XIII. DISABILITY PAYMENTS
If the Contract contains a Rider for waiver of premium and disability
payments benefits, any disability payments provided for in the CONTRACT
SPECIFICATIONS will be applied as purchase payments under the contract.
<PAGE> 37
XIV. AMENDMENT
This Contract may be amended by us at any time to maintain its qualified
status under Section 408(b) of the Code, following all regulatory
approvals. Any such amendment may be made retroactively effective if
necessary or appropriate to conform to the requirements of the Code (or
any State law granting IRA tax benefits.)
THE TRAVELERS LIFE AND ANNUITY COMPANY
President
<PAGE> 1
EXHIBIT 5
The Travelers Life and Annuity Company
One Tower Square, Annuity Services
Hartford, CT 06183-5030
- --------------------------------------------------------------------------------
APPLICATION FOR INDIVIDUAL DEFERRED ANNUITY
- --------------------------------------------------------------------------------
A Name of Annuitant (Please Print)
Sex Date of Birth (mm/dd/yy) U.S. Citizen
[ ] Yes [ ] No
Address of Annuitant Social Security Maturity Date (mm/dd/yy)
Name of Owner (Non-Qualified Only)
Sex Date of Birth(mm/dd/yy) U.S. Citizen
[ ] Yes [ ] No
Address of Owner (Non-Qualified only) Social Security Succeeding Owner (If
Owner & Annuitant are
different)
- --------------------------------------------------------------------------------
B. BENEFICIARY (Name, Relationship)
<TABLE>
<CAPTION>
ALLOCATION SCHEDULE
Investment Individual Rollover
Selection Contribution Contribution Other
- ------------------------------------------------------------
<S> <C> <C> <C>
% % %
- ------------------------------------------------------------
% % %
- ------------------------------------------------------------
% % %
- ------------------------------------------------------------
% % %
- ------------------------------------------------------------
% % %
- ------------------------------------------------------------
% % %
- ------------------------------------------------------------
TOTAL 100% 100% 100%
- ------------------------------------------------------------
Money Type $ $ $
Sub-Amount
============================================================
Initial Premium Amount $
--------------
Rollover Premium Amount $
--------------
TOTAL AMOUNT $
--------------
</TABLE>
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------
Periodic Contribution
[ ] Annual [ ] Quarterly [ ] Monthly
[ ] Semi-annual [ ] Semi-monthly [ ] Bi-weekly
- --------------------------------------------------------------------
Marketing Program
[ ] IRA [ ] IRA/SEP [ ] TSA [ ] Non-Qualified
- --------------------------------------------------------------------
</TABLE>
REPLACEMENT INFORMATION Will the contract(s) applied for replace any existing
annuity contract or life insurance policy on the Annuitant's life?
[ ] Yes [ ] No
If YES, give name of company and contract number
- ----------------------------------------------------
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
C ACKNOWLEDGMENT I understand that the contract will take effect when the first
premium payment is received, and the application is approved in the Home Office
of The Travelers Life and Annuity Company. All payments and values provided by
the contract applied for, when based on investment experience of a separate
account, are variable and are not guaranteed as to a fixed dollar. No agent is
authorized to make changes to the contract or application. I understand that The
Travelers Life and Annuity Company may amend this contract to comply with
changes in the Internal Revenue Code and related regulations.
[ ] I acknowledge receipt of a current prospectus(es). (For variable annuities
only.)
- --------------------------------------------------------------------------------
Signature of Owner Home Telephone # Work Telephone #
( ) ( )
- --------------------------------------------------------------------------------
Signature of Applicant (If other than Owner, Non-Qualified only)
- --------------------------------------------------------------------------------
Application Signed at (City and State) Date
- --------------------------------------------------------------------------------
Witnessed by (Licensed Representative)
- --------------------------------------------------------------------------------
<PAGE> 2
D. TELEPHONE TRANSFER AUTHORIZATION
I, the undersigned Contract Owner of the variable annuity contract issued in
response to the application contained on the reverse hereof, authorize The
Travelers Life and Annuity Company, to accept and act upon telephone
instructions from me, my spouse (if indicated below) or any person purporting to
be me or my spouse and who provides the identifying contract information.
I the undersigned Contract Owner, for myself and all persons claiming through me
or under any variable annuity I own, understand, promise and warrant that The
Travelers Life and Annuity Company and all persons acting on its behalf shall be
indemnified, defended and held harmless by me against all claim loss, liability,
or demand of whatsoever nature to which said insurance company its said
employees, subcontracts or owners (collectively its "agents") may be subject or
put by reason of real or claimed damage or injury arising or resulting in whole
or in part from negligence, wrongful act or wrongful omission of said Travelers
Life and Annuity Company, or any of its "agents" so long as it or they shall
have acted in good faith in attempting to perform according to terms of this
Telephone Transfer Authorization.
[ ] I authorize telephone transfer capabilities for my spouse.
Name of spouse: ________________________________________________
[ ] I acknowledge receipt and agree to the terms of the Telephone Transfer
Rules and Regulations listed on the Customer Information Sheet
Signature of Contract Owner: Date
________________________________________________ _________________
- --------------------------------------------------------------------------------
E. REMITTANCE INFORMATION
Name of Employer _________________________________ Case #________________
Address __________________________________________
__________________________________________
- --------------------------------------------------------------------------------
F. REPRESENTATIVE'S REPORT I acknowledge that all data representations and
signatures recorded in Parts A-G were recorded by me or in my presence in
response to my inquiry and request and all such representations and
signatures are accurate and value to the best of my knowledge and belief.
Signed Print Name Here Date
_______________________ ___________________ ___________________
(to be signed personally by the representative(s) by whom the application was
solicited)
Will the contract(s) applied for replace any existing annuity contract or life
insurance policy on the Annuitant's life? [ ] Yes [ ] No
- --------------------------------------------------------------------------------
G. OWNER INFORMATION
Occupation ____________________________________________________
Annual Income_____________________________ Net Worth __________
Applicable Tax Bracket ________________________________________
Investment Objective __________________________________________
Registered Representative
Signature __________________________________________
If your customer is affiliated with or working for a member of a stock exchange
or the NASD they are required to disclose this information. Please note the
broker/dealer name below: _____________________________________________________
If the customer refuses to provide any of the above information, please have
him/her sign below. ___________________________________________________________
H. (use space below for plate or Producer's name, contract and code.)
<PAGE> 1
EXHIBIT 9
April 30, 1997
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. 3 to the Registration
Statement on Form N-4 filed by The Travelers Insurance Company with the
Securities and Exchange Commission covering Flexible Premium Variable Annuity
Contracts, I have examined such documents and such law as I have considered
necessary and appropriate, and on the basis of such examination, it is my
opinion that:
1. The Travelers Life and Annuity Company is duly organized and existing
under the laws of the State of Connecticut and has been duly
authorized to do business and to issue variable annuity contracts by
the Insurance Commissioner of the State of Connecticut.
2. The Travelers Fund VA for Variable Annuities is a duly authorized and
validly existing separate account established pursuant to Section
38a-433 of the Connecticut General Statutes.
3. The variable annuity contracts covered by the above Registration
Statement, and all Post-Effective Amendments related thereto, have
been approved and authorized by the Insurance Commissioner of the
State of Connecticut and when issued will be valid, legal and binding
obligations of The Travelers Life and Annuity Company and of The
Travelers Fund VA for Variable Annuities.
4. Assets of The Travelers Fund VA for Variable Annuities are not
chargeable with liabilities arising out of any other business The
Travelers Life and Annuity Company may conduct.
I hereby consent to the filing of this opinion as an exhibit to the
above-referenced Post-Effective Amendment and to the reference to this opinion
under the caption "Legal Proceedings and Opinion" in the Prospectus constituting
a part of such Post-Effective Amendment.
Very truly yours,
Katherine M. Sullivan
General Counsel
The Travelers Life and Annuity Company
<PAGE> 1
Exhibit 13(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".
KPMG Peat Marwick LLP
Hartford, Connecticut
April 30, 1997
<PAGE> 1
Exhibit 13
THE TRAVELERS FUND VA FOR VARIABLE ANNUITIES
SCHEDULE FOR COMPUTATION OF TOTAL RETURN CALCULATIONS
The standardized and nonstandardized average annual total returns are computed
according to the formula described below. A hypothetical initial investment of
$1,000 is applied to the fund, and then related to ending redeemable values as
of the most recent fiscal year end for the calendar year-to-date
(nonstandardized only), and over a 1-year, 3-year (nonstandardized only),
5-year, and 10-year period, or since inception if a fund has not been in
existence for one of the prescribed periods.
T = (ERV/P)(1/n) - 1 where:
T = average annual total return
P = a hypothetical initial payment of $1,000
n = the applicable year (1, 3, 5, 10) or portion thereof
ERV = ending redeemable value of a hypothetical $1,000 payment made
at the beginning of each of the periods
Both the standardized and nonstandardized performance returns reflect the
deduction for the management fees and other expenses for a fund, and the
mortality and expense risk charge.
For Underlying Funds that were in existence prior to the date they became
available under Fund VA, the standardized average total return and
nonstandardized total return quotations will show the investment performance
that such funds would have achieved (reduced by the applicable fees/charges)
had they been held under the Contract for the period quoted. The total return
quotations are based upon historical earnings and are not necessarily
representative of future performance. An Owner's Contract Value at redemption
may be more or less than original cost.
Standardized Method
The standardized returns take into consideration all fees and/or charges
applicable to the fund or contract.
Under the standardized method, the $15 semiannual contract administrative
charge is reflected in the calculation and is assumed to be deducted at the end
of June and December of each year. It is expressed as a percentage of assets
based on the actual fees collected divided by the average net assets for
contracts sold under the prospectus for each year for which performance is
shown.
Since the 5% contingent deferred sales charge applies only for 5 years, the
ending redeemable value for the 10-year period does not reflect this charge.
Nonstandardized Method
Nonstandardized returns do not reflect the deduction of any applicable
contingent deferred sales charge or the $15 semiannual contract administrative
charge, which, if reflected, would decrease the level of performance shown.
The contingent deferred sales charge is not reflected because the contract is
designed for long-term investment.
For a Schedule of the Computation of the Total Return Quotations, both
Standardized and Nonstandardized, see attached.
<PAGE> 2
FUND VA - UNIVERSAL ANNUITY 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 -1.42 -1.811 .002830
03/31/91 .894569 .002970
06/30/91 .888822 -1.53 -1.724 .002970
09/30/91 .931911 .002970
12/31/91 1.005682 1,000.00 994.350 -1.73 -1.723 .002970
03/31/92 .976358 .003500
06/30/92 .990287 -1.74 -1.754 -2.15 -2.169 .003500
09/30/92 1.017069 .003500
12/31/92 1.063662 -1.78 -1.677 -2.21 -2.074 .003500
03/31/93 1.103994 .003410
06/30/93 1.104058 -1.83 -1.659 -2.26 -2.051 .003410
09/30/93 1.127227 .003410
12/31/93 1.148463 -1.90 -1.654 -2.35 -2.046 .003410
03/31/94 1.100683 .002910
06/30/94 1.100821 -1.62 -1.468 -2.00 -1.816 .002910
09/30/94 1.148798 .002910
12/30/94 1.144205 -1.61 -1.408 -1.99 -1.741 .002910
03/31/95 1.250834 .001850
06/30/95 1.362735 -1.14 -.838 -1.41 -1.036 .001850
09/29/95 1.465091 .001850
12/29/95 1.545680 1,000.00 646.964 -1.32 -.856 -1.64 -1.059 .001850
03/29/96 1.623245 .001670
06/28/96 1.689128 -.87 -.517 -1.33 -.786 -1.64 -.972 .001670
09/30/96 1.733543 .001670
12/31/96 1.870303 -.96 -.514 -1.46 -.780 -1.81 -.965 .001670
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR FIVE YEAR TEN YEAR
<S> <C> <C> <C>
ENDING UNITS 645.934 981.470 1,213.921
ACCOUNT VALUE 1,208.09 1,835.65 2,270.40
SURRENDER VALUE 1,158.09 1,785.65
TOTAL RETURN 15.81 % 78.56 % 127.04 %
ANNUALIZED RETURN 12.29 % 11.96 %
</TABLE>
<PAGE> 3
FUND VA - UNIVERSAL ANNUITY 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 -1.48 -1.819 .002830
03/31/91 .897954 .002970
06/30/91 .912510 -1.66 -1.820 .002970
09/30/91 .956830 .002970
12/31/91 .985224 1,000.00 1,014.998 -1.82 -1.850 .002970
03/31/92 1.011568 .003500
06/30/92 1.032958 -1.79 -1.735 -2.28 -2.208 .003500
09/30/92 1.050109 .003500
12/31/92 1.088353 -1.88 -1.728 -2.39 -2.199 .003500
03/31/93 1.144645 .003410
06/30/93 1.176733 -1.95 -1.660 -2.49 -2.112 .003410
09/30/93 1.222979 .003410
12/31/93 1.300962 -2.13 -1.640 -2.71 -2.087 .003410
03/31/94 1.234767 .002910
06/30/94 1.218600 -1.85 -1.517 -2.35 -1.930 .002910
09/30/94 1.249846 .002910
12/30/94 1.206570 -1.78 -1.472 -2.26 -1.873 .002910
03/31/95 1.230368 .001850
06/30/95 1.272729 -1.15 -.906 -1.47 -1.153 .001850
09/29/95 1.346710 .001850
12/29/95 1.393727 1,000.00 717.501 -1.24 -.889 -1.58 -1.131 .001850
03/29/96 1.430551 .001670
06/28/96 1.465480 -.86 -.584 -1.20 -.817 -1.52 -1.040 .001670
09/30/96 1.491607 .001670
12/31/96 1.577312 -.91 -.577 -1.27 -.808 -1.62 -1.028 .001670
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR FIVE YEAR TEN YEAR
<S> <C> <C> <C>
ENDING UNITS 716.339 1,001.827 1,274.952
ACCOUNT VALUE 1,129.89 1,580.19 2,011.00
SURRENDER VALUE 1,079.89 1,530.19
TOTAL RETURN 7.99 % 53.02 % 101.10 %
ANNUALIZED RETURN 8.88 % 10.01 %
</TABLE>
<PAGE> 4
FUND VA - UNIVERSAL ANNUITY 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>
12/31/86 .696774 1,000.00 1,435.186 .002800
03/31/87 .739084 .003960
06/30/87 .722394 -2.02 -2.791 .003960
09/30/87 .701551 .003960
12/31/87 .696485 -2.01 -2.889 .003960
03/31/88 .733310 .003150
06/30/88 .751050 -1.63 -2.170 .003150
09/30/88 .758903 .003150
12/31/88 .767911 -1.71 -2.223 .003150
03/31/89 .777650 .002680
06/30/89 .803175 -1.50 -1.868 .002680
09/30/89 .763119 .002680
12/31/89 .726744 -1.46 -2.007 .002680
03/31/90 .690197 .002830
06/30/90 .715361 -1.45 -2.027 .002830
09/30/90 .695152 .002830
12/31/90 .701638 -1.42 -2.028 .002830
03/31/91 .780691 .002970
06/30/91 .835447 -1.62 -1.936 .002970
09/30/91 .895690 .002970
12/31/91 .935999 1,000.00 1,068.377 -1.86 -1.989 .002970
03/31/92 1.051533 .003500
06/30/92 1.080335 -1.88 -1.745 -2.49 -2.308 .003500
09/30/92 1.132682 .003500
12/31/92 1.137517 -2.07 -1.820 -2.74 -2.407 .003500
03/31/93 1.212775 .003410
06/30/93 1.266920 -2.18 -1.723 -2.89 -2.279 .003410
09/30/93 1.293522 .003410
12/31/93 1.353807 -2.38 -1.754 -3.14 -2.321 .003410
03/31/94 1.346061 .002910
06/30/94 1.325859 -2.07 -1.561 -2.74 -2.064 .002910
09/30/94 1.336418 .002910
12/30/94 1.316357 -2.04 -1.548 -2.69 -2.047 .002910
03/31/95 1.388275 .001850
06/30/95 1.465121 -1.36 -.929 -1.80 -1.229 .001850
09/29/95 1.532383 .001850
12/29/95 1.567961 1,000.00 637.771 -1.48 -.946 -1.96 -1.251 .001850
03/29/96 1.621580 .001670
06/28/96 1.671895 -.86 -.516 -1.43 -.855 -1.89 -1.131 .001670
09/30/96 1.734434 .001670
12/31/96 1.765656 -.91 -.518 -1.51 -.858 -2.00 -1.135 .001670
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR FIVE YEAR TEN YEAR
<S> <C> <C> <C>
ENDING UNITS 636.737 1,054.640 1,395.086
ACCOUNT VALUE 1,124.26 1,862.13 2,463.24
SURRENDER VALUE 1,074.26 1,812.13
TOTAL RETURN 7.43 % 81.21 % 146.32 %
ANNUALIZED RETURN 12.63 % 9.43 %
</TABLE>
<PAGE> 5
FUND VA - UNIVERSAL ANNUITY 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>
12/31/86 .523774 1,000.00 1,909.220 .002800
03/31/87 .610766 .003960
06/30/87 .609820 -2.14 -3.514 .003960
09/30/87 .634819 .003960
12/31/87 .511397 -2.12 -4.136 .003960
03/31/88 .563154 .003150
06/30/88 .611254 -1.68 -2.750 .003150
09/30/88 .615505 .003150
12/31/88 .619753 -1.84 -2.970 .003150
03/31/89 .666753 .002680
06/30/89 .711341 -1.69 -2.377 .002680
09/30/89 .753957 .002680
12/31/89 .718237 -1.81 -2.525 .002680
03/31/90 .672708 .002830
06/30/90 .683324 -1.88 -2.744 .002830
09/30/90 .564035 .002830
12/31/90 .600841 -1.72 -2.855 .002830
03/31/91 .688643 .002970
06/30/91 .697811 -1.82 -2.605 .002970
09/30/91 .745366 .002970
12/31/91 .779960 1,000.00 1,282.117 -2.07 -2.649 .002970
03/31/92 .803652 .003500
06/30/92 .825563 -1.80 -2.182 -2.64 -3.199 .003500
09/30/92 .838214 .003500
12/31/92 .900353 -1.93 -2.147 -2.83 -3.148 .003500
03/31/93 .973310 .003410
06/30/93 .995302 -2.06 -2.075 -3.03 -3.042 .003410
09/30/93 1.040209 .003410
12/31/93 1.051644 -2.23 -2.117 -3.26 -3.104 .003410
03/31/94 1.021781 .002910
06/30/94 1.057170 -1.95 -1.848 -2.87 -2.710 .002910
09/30/94 1.126333 .002910
12/30/94 1.112000 -2.01 -1.805 -2.94 -2.647 .002910
03/31/95 1.209130 .001850
06/30/95 1.294552 -1.41 -1.092 -2.07 -1.601 .001850
09/29/95 1.402090 .001850
12/29/95 1.483574 1,000.00 674.048 -1.63 -1.099 -2.39 -1.611 .001850
03/29/96 1.543062 .001670
06/28/96 1.560705 -.86 -.549 -1.61 -1.032 -2.36 -1.514 .001670
09/30/96 1.574850 .001670
12/31/96 1.674194 -.91 -.543 -1.71 -1.022 -2.51 -1.498 .001670
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR FIVE YEAR TEN YEAR
<S> <C> <C> <C>
ENDING UNITS 672.956 1,265.699 1,856.019
ACCOUNT VALUE 1,126.66 2,119.03 3,107.34
SURRENDER VALUE 1,076.66 2,069.03
TOTAL RETURN 7.67 % 106.90 % 210.73 %
ANNUALIZED RETURN 15.65 % 12.01 %
</TABLE>
<PAGE> 6
FUND VA - UNIVERSAL ANNUITY 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>
12/31/86 .498701 1,000.00 2,005.210 .002800
03/31/87 .586887 .003960
06/30/87 .606346 -2.19 -3.618 .003960
09/30/87 .639965 .003960
12/31/87 .510542 -2.21 -4.335 .003960
03/31/88 .557143 .003150
06/30/88 .585433 -1.72 -2.944 .003150
09/30/88 .582594 .003150
12/31/88 .582770 -1.83 -3.148 .003150
03/31/89 .628140 .002680
06/30/89 .673853 -1.68 -2.488 .002680
09/30/89 .750815 .002680
12/31/89 .756981 -1.91 -2.519 .002680
03/31/90 .726438 .002830
06/30/90 .781271 -2.16 -2.767 .002830
09/30/90 .616809 .002830
12/31/90 .659807 -2.02 -3.065 .002830
03/31/91 .776772 .002970
06/30/91 .752157 -2.08 -2.760 .002970
09/30/91 .864335 .002970
12/31/91 .948195 1,000.00 1,054.635 -2.50 -2.633 .002970
03/31/92 .960645 .003500
06/30/92 .877747 -1.68 -1.920 -3.16 -3.595 .003500
09/30/92 .899612 .003500
12/31/92 1.024228 -1.75 -1.711 -3.28 -3.203 .003500
03/31/93 1.060381 .003410
06/30/93 1.135505 -1.94 -1.704 -3.62 -3.191 .003410
09/30/93 1.207495 .003410
12/31/93 1.207307 -2.10 -1.736 -3.92 -3.251 .003410
03/31/94 1.165626 .002910
06/30/94 1.083999 -1.75 -1.611 -3.27 -3.017 .002910
09/30/94 1.167146 .002910
12/30/94 1.192078 -1.73 -1.453 -3.24 -2.721 .002910
03/31/95 1.258248 .001850
06/30/95 1.466358 -1.28 -.876 -2.40 -1.640 .001850
09/29/95 1.668285 .001850
12/29/95 1.593743 1,000.00 627.454 -1.48 -.927 -2.77 -1.735 .001850
03/29/96 1.674303 .001670
06/28/96 1.753707 -.88 -.500 -1.46 -.831 -2.73 -1.556 .001670
09/30/96 1.774251 .001670
12/31/96 1.805177 -.93 -.516 -1.55 -.858 -2.90 -1.606 .001670
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR FIVE YEAR TEN YEAR
<S> <C> <C> <C>
ENDING UNITS 626.438 1,041.010 1,949.418
ACCOUNT VALUE 1,130.83 1,879.21 3,519.04
SURRENDER VALUE 1,080.83 1,829.21
TOTAL RETURN 8.08 % 82.92 % 251.90 %
ANNUALIZED RETURN 12.84 % 13.41 %
</TABLE>
<PAGE> 7
FUND VA - UNIVERSAL ANNUITY 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> <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 -1.55 -1.445 .002910
03/31/95 1.131555 .001850
06/30/95 1.230754 -1.06 -.858 .001850
09/29/95 1.242915 .001850
12/29/95 1.320899 1,000.00 757.060 -1.17 -.884 .001850
03/29/96 1.254845 .001670
06/28/96 1.253193 -.81 -.649 -1.06 -.848 .001670
09/30/96 1.273336 .001670
12/31/96 1.323272 -.81 -.615 -1.06 -.803 .001670
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR FIVE YEAR TEN YEAR
<S> <C> <C> <C>
ENDING UNITS 755.796 987.123
ACCOUNT VALUE 1,000.12 1,306.23
SURRENDER VALUE 950.12 1,256.23
TOTAL RETURN -4.99 % 25.62 % %
ANNUALIZED RETURN 4.73 % %
</TABLE>
<PAGE> 8
FUND VA - UNIVERSAL ANNUITY 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 -1.57 -1.755 .002830
03/31/91 .914025 .002970
06/30/91 .918887 -1.70 -1.845 .002970
09/30/91 .972519 .002970
12/31/91 1.022356 1,000.00 978.133 -1.81 -1.774 .002970
03/31/92 .987423 .003500
06/30/92 1.034866 -1.76 -1.701 -2.26 -2.185 .003500
09/30/92 1.067424 .003500
12/31/92 1.064775 -1.79 -1.685 -2.30 -2.164 .003500
03/31/93 1.112129 .003410
06/30/93 1.131937 -1.83 -1.613 -2.34 -2.071 .003410
09/30/93 1.159356 .003410
12/31/93 1.172093 -1.91 -1.631 -2.45 -2.094 .003410
03/31/94 1.119632 .002910
06/30/94 1.094718 -1.60 -1.463 -2.06 -1.880 .002910
09/30/94 1.099411 .002910
12/30/94 1.101064 -1.55 -1.407 -1.99 -1.807 .002910
03/31/95 1.143544 .001850
06/30/95 1.196103 -1.03 -.860 -1.32 -1.105 .001850
09/29/95 1.207163 .001850
12/29/95 1.249706 1,000.00 800.188 -1.09 -.876 -1.41 -1.125 .001850
03/29/96 1.235711 .001670
06/28/96 1.259920 -.84 -.665 -1.01 -.804 -1.30 -1.033 .001670
09/30/96 1.293156 .001670
12/31/96 1.350649 -.87 -.645 -1.05 -.780 -1.35 -1.001 .001670
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR FIVE YEAR TEN YEAR
<S> <C> <C> <C>
ENDING UNITS 798.878 965.312 1,239.723
ACCOUNT VALUE 1,079.00 1,303.80 1,674.43
SURRENDER VALUE 1,029.00 1,253.80
TOTAL RETURN 2.90 % 25.38 % 67.44 %
ANNUALIZED RETURN 4.63 % 6.38 %
</TABLE>
<PAGE> 9
FUND VA - UNIVERSAL ANNUITY 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 -1.55 -1.951 .002830
03/31/91 .873771 .002970
06/30/91 .867105 -1.60 -1.850 .002970
09/30/91 .943179 .002970
12/31/91 1.003260 1,000.00 996.751 -1.80 -1.796 .002970
03/31/92 1.006362 .003500
06/30/92 1.068318 -1.81 -1.691 -2.35 -2.198 .003500
09/30/92 1.060888 .003500
12/31/92 1.070227 -1.86 -1.740 -2.42 -2.262 .003500
03/31/93 1.129396 .003410
06/30/93 1.176935 -1.90 -1.617 -2.47 -2.102 .003410
09/30/93 1.249192 .003410
12/31/93 1.333027 -2.12 -1.592 -2.76 -2.069 .003410
03/31/94 1.286213 .002910
06/30/94 1.263356 -1.87 -1.480 -2.43 -1.924 .002910
09/30/94 1.319009 .002910
12/30/94 1.277445 -1.83 -1.431 -2.38 -1.860 .002910
03/31/95 1.308087 .001850
06/30/95 1.421156 -1.23 -.867 -1.60 -1.127 .001850
09/29/95 1.505370 .001850
12/29/95 1.546087 1,000.00 646.794 -1.35 -.875 -1.76 -1.138 .001850
03/29/96 1.608706 .001670
06/28/96 1.662636 -.87 -.521 -1.32 -.794 -1.72 -1.032 .001670
09/30/96 1.686653 .001670
12/31/96 1.814823 -.94 -.517 -1.43 -.788 -1.86 -1.024 .001670
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR FIVE YEAR TEN YEAR
<S> <C> <C> <C>
ENDING UNITS 645.756 983.876 1,278.940
ACCOUNT VALUE 1,171.93 1,785.56 2,321.05
SURRENDER VALUE 1,121.93 1,735.56
TOTAL RETURN 12.19 % 73.56 % 132.10 %
ANNUALIZED RETURN 11.66 % 10.62 %
</TABLE>
<PAGE> 10
FUND VA - UNIVERSAL ANNUITY 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 -1.54 -1.963 .002830
03/31/91 .877701 .002970
06/30/91 .857706 -1.57 -1.829 .002970
09/30/91 .927562 .002970
12/31/91 .990028 1,000.00 1,010.072 -1.76 -1.779 .002970
03/31/92 1.000848 .003500
06/30/92 1.042397 -1.80 -1.723 -2.28 -2.187 .003500
09/30/92 1.020298 .003500
12/31/92 1.046888 -1.84 -1.761 -2.34 -2.234 .003500
03/31/93 1.116933 .003410
06/30/93 1.173076 -1.90 -1.624 -2.42 -2.061 .003410
09/30/93 1.274035 .003410
12/31/93 1.385364 -2.19 -1.582 -2.78 -2.008 .003410
03/31/94 1.340311 .002910
06/30/94 1.335335 -1.99 -1.487 -2.52 -1.887 .002910
09/30/94 1.404836 .002910
12/30/94 1.338030 -1.95 -1.456 -2.47 -1.848 .002910
03/31/95 1.381158 .001850
06/30/95 1.517535 -1.32 -.871 -1.68 -1.105 .001850
09/29/95 1.615610 .001850
12/29/95 1.655043 1,000.00 604.214 -1.47 -.886 -1.86 -1.125 .001850
03/29/96 1.746198 .001670
06/28/96 1.818243 -.88 -.482 -1.45 -.796 -1.84 -1.011 .001670
09/30/96 1.838704 .001670
12/31/96 2.000862 -.96 -.481 -1.59 -.795 -2.02 -1.009 .001670
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR FIVE YEAR TEN YEAR
<S> <C> <C> <C>
ENDING UNITS 603.251 997.090 1,265.222
ACCOUNT VALUE 1,207.02 1,995.04 2,531.54
SURRENDER VALUE 1,157.02 1,945.04
TOTAL RETURN 15.70 % 94.50 % 153.15 %
ANNUALIZED RETURN 14.23 % 11.78 %
</TABLE>
<PAGE> 11
FUND VA - UNIVERSAL ANNUITY 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> <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 -1.46 -1.449 .002910
03/31/95 1.066677 .001850
06/30/95 1.141545 -.99 -.867 .001850
09/29/95 1.162560 .001850
12/29/95 1.220991 1,000.00 819.007 -1.09 -.890 .001850
03/29/96 1.160620 .001670
06/28/96 1.159280 -.81 -.702 -.99 -.851 .001670
09/30/96 1.177378 .001670
12/31/96 1.221464 -.81 -.666 -.99 -.807 .001670
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR FIVE YEAR TEN YEAR
<S> <C> <C> <C>
ENDING UNITS 817.639 991.420
ACCOUNT VALUE 998.72 1,210.98
SURRENDER VALUE 948.78 1,160.98
TOTAL RETURN -5.12 % 16.10 % %
ANNUALIZED RETURN 4.15 % %
</TABLE>
<PAGE> 12
FUND VA - UNIVERSAL ANNUITY 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> <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 -1.43 -1.447 .002910
03/31/95 1.070957 .001850
06/30/95 1.176170 -1.00 -.847 .001850
09/29/95 1.277819 .001850
12/29/95 1.354370 1,000.00 738.351 -1.16 -.859 .001850
03/29/96 1.432730 .001670
06/28/96 1.461625 -.87 -.594 -1.17 -.799 .001670
09/30/96 1.498212 .001670
12/31/96 1.647046 -.96 -.581 -1.29 -.782 .001670
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR FIVE YEAR TEN YEAR
<S> <C> <C> <C>
ENDING UNITS 737.175 991.544
ACCOUNT VALUE 1,214.16 1,633.12
SURRENDER VALUE 1,164.16 1,583.12
TOTAL RETURN 16.42 % 58.31 % %
ANNUALIZED RETURN 13.33 % %
</TABLE>
<PAGE> 13
FUND VA - UNIVERSAL ANNUITY 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> <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 -1.58 -1.353 .002910
03/31/95 1.214213 .001850
06/30/95 1.411561 -1.19 -.841 .001850
09/29/95 1.569549 .001850
12/29/95 1.526112 1,000.00 655.260 -1.35 -.885 .001850
03/29/96 1.568060 .001670
06/28/96 1.614670 -.86 -.532 -1.30 -.807 .001670
09/30/96 1.656788 .001670
12/31/96 1.459622 -.84 -.576 -1.27 -.873 .001670
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR FIVE YEAR TEN YEAR
<S> <C> <C> <C>
ENDING UNITS 654.152 991.555
ACCOUNT VALUE 954.81 1,447.30
SURRENDER VALUE 907.07 1,397.30
TOTAL RETURN -9.29 % 39.73 % %
ANNUALIZED RETURN 9.54 % %
</TABLE>
<PAGE> 14
FUND VA - UNIVERSAL ANNUITY 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> <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 -1.57 -1.452 .002910
03/31/95 1.093010 .001850
06/30/95 1.175760 -1.04 -.885 .001850
09/29/95 1.262995 .001850
12/29/95 1.274376 1,000.00 784.698 -1.13 -.884 .001850
03/29/96 1.342434 .001670
06/28/96 1.370217 -.87 -.632 -1.10 -.800 .001670
09/30/96 1.400646 .001670
12/31/96 1.533787 -.95 -.620 -1.20 -.784 .001670
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR FIVE YEAR TEN YEAR
<S> <C> <C> <C>
ENDING UNITS 783.446 991.558
ACCOUNT VALUE 1,201.64 1,520.84
SURRENDER VALUE 1,151.64 1,470.84
TOTAL RETURN 15.16 % 47.08 % %
ANNUALIZED RETURN 11.08 % %
</TABLE>
<PAGE> 15
FUND VA - UNIVERSAL ANNUITY 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> <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 -1.44 -1.451 .002910
03/31/95 1.028928 .001850
06/30/95 1.078101 -.95 -.884 .001850
09/29/95 1.090109 .001850
12/29/95 1.127795 1,000.00 886.686 -1.01 -.899 .001850
03/29/96 1.116694 .001670
06/28/96 1.117527 -.83 -.744 -.93 -.833 .001670
09/30/96 1.132233 .001670
12/31/96 1.157496 -.84 -.727 -.94 -.814 .001670
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR FIVE YEAR TEN YEAR
<S> <C> <C> <C>
ENDING UNITS 885.215 991.395
ACCOUNT VALUE 1,024.63 1,147.54
SURRENDER VALUE 974.63 1,097.54
TOTAL RETURN -2.54 % 9.75 % %
ANNUALIZED RETURN 2.57 % %
</TABLE>
<PAGE> 16
FUND VA - UNIVERSAL ANNUITY 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> <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 -1.46 -1.449 .002910
03/31/95 1.036122 .001850
06/30/95 1.070093 -.96 -.893 .001850
09/29/95 1.078089 .001850
12/29/95 1.101532 1,000.00 907.827 -1.00 -.906 .001850
03/29/96 1.095950 .001670
06/28/96 1.101107 -.83 -.758 -.91 -.829 .001670
09/30/96 1.113586 .001670
12/31/96 1.128984 -.84 -.748 -.92 -.818 .001670
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR FIVE YEAR TEN YEAR
<S> <C> <C> <C>
ENDING UNITS 906.320 991.391
ACCOUNT VALUE 1,023.22 1,119.26
SURRENDER VALUE 973.22 1,069.26
TOTAL RETURN -2.68 % 6.93 % %
ANNUALIZED RETURN 1.84 % %
</TABLE>
<PAGE> 17
FUND VA - UNIVERSAL ANNUITY STANDARDIZED PERFORMANCE
SOCIAL AWARENESS STOCK PORTFOLIO
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR1 UNIT1 DOLLAR5 UNIT5 DOLLAR10 UNIT10 SEMFEE
---- ----- ------- ----- ------- ----- -------- ------ ------
<S> <C> <C> <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 -1.59 -1.431 .002910
03/31/95 1.209024 .001850
06/30/95 1.320270 -1.11 -.844 .001850
09/29/95 1.393969 .001850
12/29/95 1.460895 1,000.00 684.512 -1.27 -.872 .001850
03/29/96 1.542615 .001670
06/28/96 1.582354 -.87 -.550 -1.26 -.795 .001670
09/30/96 1.653874 .001670
12/31/96 1.730753 -.95 -.547 -1.37 -.790 .001670
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR FIVE YEAR TEN YEAR
<S> <C> <C> <C>
ENDING UNITS 683.416 988.178
ACCOUNT VALUE 1,182.82 1,710.29
SURRENDER VALUE 1,132.82 1,660.29
TOTAL RETURN 13.28 % 66.03 % %
ANNUALIZED RETURN 11.46 % %
</TABLE>
<PAGE> 18
FUND VA - UNIVERSAL ANNUITY 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>
12/31/86 1.223010 1,000.00 817.655 .002800
03/31/87 1.445994 .003960
06/30/87 1.481165 -2.19 -1.478 .003960
09/30/87 1.546842 .003960
12/31/87 1.233686 -2.19 -1.778 .003960
03/31/88 1.273436 .003150
06/30/88 1.317886 -1.64 -1.242 .003150
09/30/88 1.296419 .003150
12/30/88 1.330834 -1.70 -1.274 .003150
03/31/89 1.397951 .002680
06/30/89 1.511052 -1.55 -1.023 .002680
09/29/89 1.631150 .002680
12/29/89 1.670980 -1.73 -1.035 .002680
03/30/90 1.632375 .002830
06/29/90 1.716575 -1.94 -1.131 .002830
09/28/90 1.591752 .002830
12/31/90 1.683418 -1.95 -1.156 .002830
03/28/91 1.808914 .002970
06/28/91 1.805897 -2.09 -1.159 .002970
09/30/91 1.909094 .002970
12/31/91 2.033846 1,000.00 491.679 -2.30 -1.130 .002970
03/31/92 1.968786 .003500
06/30/92 2.009641 -1.74 -.866 -2.85 -1.418 .003500
09/30/92 2.057708 .003500
12/31/92 2.111478 -1.77 -.838 -2.90 -1.373 .003500
03/31/93 2.195169 .003410
06/30/93 2.214177 -1.81 -.816 -2.96 -1.336 .003410
09/30/93 2.268465 .003410
12/31/93 2.280590 -1.87 -.822 -3.07 -1.346 .003410
03/31/94 2.185810 .002910
06/30/94 2.168655 -1.58 -.729 -2.59 -1.194 .002910
09/30/94 2.221974 .002910
12/30/94 2.201344 -1.55 -.704 -2.54 -1.153 .002910
03/31/95 2.343044 .001850
06/30/95 2.525949 -1.06 -.421 -1.74 -.690 .001850
09/29/95 2.654052 .001850
12/29/95 2.763480 1,000.00 361.863 -1.19 -.431 -1.95 -.705 .001850
03/29/96 2.805166 .001670
06/28/96 2.877167 -.85 -.296 -1.14 -.398 -1.87 -.652 .001670
09/30/96 2.934235 .001670
12/31/96 3.104925 -.90 -.291 -1.21 -.391 -1.99 -.640 .001670
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR FIVE YEAR TEN YEAR
<S> <C> <C> <C>
ENDING UNITS 361.276 485.264 794.743
ACCOUNT VALUE 1,121.73 1,506.71 2,467.62
SURRENDER VALUE 1,071.73 1,456.71
TOTAL RETURN 7.17 % 45.67 % 146.76 %
ANNUALIZED RETURN 7.81 % 9.45 %
</TABLE>
<PAGE> 19
FUND VA - UNIVERSAL ANNUITY 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>
12/31/86 1.412432 1,000.00 707.999 .002800
03/31/87 1.478947 .003960
06/30/87 1.459673 -2.01 -1.379 .003960
09/30/87 1.429921 .003960
12/31/87 1.388266 -1.99 -1.435 .003960
03/31/88 1.474435 .003150
06/30/88 1.498753 -1.60 -1.070 .003150
09/30/88 1.534578 .003150
12/30/88 1.571309 -1.70 -1.083 .003150
03/31/89 1.605096 .002680
06/30/89 1.679425 -1.53 -.912 .002680
09/29/89 1.648107 .002680
12/29/89 1.573397 -1.53 -.973 .002680
03/30/90 1.493038 .002830
06/29/90 1.524863 -1.54 -1.008 .002830
09/28/90 1.420906 .002830
12/31/90 1.402285 -1.45 -1.034 .002830
03/28/91 1.526564 .002970
06/28/91 1.593250 -1.55 -.976 .002970
09/30/91 1.677140 .002970
12/31/91 1.766769 1,000.00 566.005 -1.74 -.986 .002970
03/31/92 1.853915 .003500
06/30/92 1.886057 -1.81 -.959 -2.23 -1.181 .003500
09/30/92 1.940150 .003500
12/31/92 1.973957 -1.91 -.967 -2.35 -1.191 .003500
03/31/93 2.073533 .003410
06/30/93 2.142071 -1.98 -.924 -2.44 -1.138 .003410
09/30/93 2.183544 .003410
12/31/93 2.222328 -2.10 -.943 -2.58 -1.161 .003410
03/31/94 2.164136 .002910
06/30/94 2.144559 -1.79 -.833 -2.20 -1.026 .002910
09/30/94 2.181349 .002910
12/30/94 2.166884 -1.76 -.813 -2.17 -1.001 .002910
03/31/95 2.276282 .001850
06/30/95 2.390870 -1.18 -.494 -1.46 -.609 .001850
09/29/95 2.421989 .001850
12/29/95 2.472157 1,000.00 404.505 -1.26 -.510 -1.55 -.628 .001850
03/29/96 2.620603 .001670
06/28/96 2.651980 -.87 -.326 -1.20 -.451 -1.47 -.556 .001670
09/30/96 2.740482 .001670
12/31/96 2.833134 -.93 -.327 -1.28 -.452 -1.58 -.557 .001670
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR FIVE YEAR TEN YEAR
<S> <C> <C> <C>
ENDING UNITS 403.852 558.660 688.096
ACCOUNT VALUE 1,144.17 1,582.76 1,949.47
SURRENDER VALUE 1,094.17 1,532.76
TOTAL RETURN 9.42 % 53.28 % 94.95 %
ANNUALIZED RETURN 8.92 % 6.90 %
</TABLE>
<PAGE> 20
FUND VA - UNIVERSAL ANNUITY STANDARDIZED PERFORMANCE
UTILITIES PORTFOLIO
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR1 UNIT1 DOLLAR5 UNIT5 DOLLAR10 UNIT10 SEMFEE
---- ----- ------- ----- ------- ----- -------- ------ ------
<S> <C> <C> <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 -1.45 -1.438 .002910
03/31/95 1.052948 .001850
06/30/95 1.116051 -.98 -.877 .001850
09/29/95 1.188817 .001850
12/29/95 1.283982 1,000.00 778.827 -1.11 -.861 .001850
03/29/96 1.280231 .001670
06/28/96 1.334978 -.85 -.638 -1.09 -.815 .001670
09/30/96 1.294729 .001670
12/31/96 1.362572 -.88 -.643 -1.12 -.822 .001670
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR FIVE YEAR TEN YEAR
<S> <C> <C> <C>
ENDING UNITS 777.546 994.013
ACCOUNT VALUE 1,059.46 1,354.41
SURRENDER VALUE 1,009.46 1,304.41
TOTAL RETURN .95 % 30.44 % %
ANNUALIZED RETURN 9.57 % %
</TABLE>
<PAGE> 21
FUND VA - UNIVERSAL ANNUITY 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>
12/31/86 1.026600 1,000.00 974.089 .002800
03/31/87 1.337873 .003960
06/30/87 1.315794 -2.26 -1.717 .003960
09/30/87 1.359885 .003960
12/31/87 .933666 -2.17 -2.319 .003960
03/31/88 1.009223 .003150
06/30/88 1.086541 -1.54 -1.420 .003150
09/30/88 1.018419 .003150
12/30/88 1.014693 -1.60 -1.580 .003150
03/31/89 1.074554 .002680
06/30/89 1.114221 -1.38 -1.238 .002680
09/29/89 1.236725 .002680
12/29/89 1.157147 -1.47 -1.270 .002680
03/30/90 1.144672 .002830
06/29/90 1.235622 -1.63 -1.321 .002830
09/28/90 .981598 .002830
12/31/90 1.083795 -1.58 -1.458 .002830
03/28/91 1.298703 .002970
06/28/91 1.282081 -1.69 -1.318 .002970
09/30/91 1.340840 .002970
12/31/91 1.433412 1,000.00 697.636 -1.94 -1.351 .002970
03/31/92 1.477458 .003500
06/30/92 1.410818 -1.74 -1.231 -2.39 -1.692 .003500
09/30/92 1.480864 .003500
12/31/92 1.665086 -1.87 -1.126 -2.58 -1.548 .003500
03/31/93 1.762397 .003410
06/30/93 1.822381 -2.07 -1.134 -2.84 -1.559 .003410
09/30/93 1.925978 .003410
12/31/93 1.892135 -2.20 -1.162 -3.02 -1.597 .003410
03/31/94 1.813722 .002910
06/30/94 1.702090 -1.81 -1.065 -2.49 -1.464 .002910
09/30/94 1.780524 .002910
12/30/94 1.779321 -1.75 -.985 -2.41 -1.354 .002910
03/31/95 1.865442 .001850
06/30/95 2.122753 -1.25 -.587 -1.71 -.808 .001850
09/29/95 2.380648 .001850
12/29/95 2.396267 1,000.00 417.316 -1.44 -.602 -1.98 -.828 .001850
03/29/96 2.630144 .001670
06/28/96 2.782490 -.90 -.324 -1.49 -.536 -2.05 -.737 .001670
09/30/96 2.914696 .001670
12/31/96 3.033745 -1.01 -.334 -1.67 -.552 -2.30 -.758 .001670
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR FIVE YEAR TEN YEAR
<S> <C> <C> <C>
ENDING UNITS 416.658 688.657 946.752
ACCOUNT VALUE 1,264.03 2,089.21 2,872.21
SURRENDER VALUE 1,214.03 2,039.21
TOTAL RETURN 21.40 % 103.92 % 187.22 %
ANNUALIZED RETURN 15.32 % 11.13 %
</TABLE>
<PAGE> 1
EXHIBIT 15
THE TRAVELERS FUND VA FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, MICHAEL A. CARPENTER of Greenwich, Connecticut, Chairman of the
Board, President and Chief Executive Officer of The Travelers Life and Annuity
Company (hereafter the "Company"), do hereby make, constitute and appoint ERNEST
J. WRIGHT, 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 10th day of June,
1996.
Michael A. Carpenter
Chairman of the Board, President and
Chief Executive Officer
The Travelers Life and Annuity Company
<PAGE> 2
THE TRAVELERS FUND VA FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, JAY S. BENET of West Hartford, Connecticut, a director of
The Travelers Life and Annuity Company (hereinafter the "Company"), do hereby
make, constitute and appoint ERNEST J. WRIGHT, 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
July, 1996.
Jay S. Benet
Director
The Travelers Life and Annuity Company
<PAGE> 3
THE TRAVELERS FUND VA FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, GEORGE C. KOKULIS of Simsbury, Connecticut, a director of
The Travelers Life and Annuity Company (hereinafter the "Company"), do hereby
make, constitute and appoint ERNEST J. WRIGHT, 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
July, 1996.
George C. Kokulis
Director
The Travelers Life and Annuity Company
<PAGE> 4
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, Director, Senior
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, 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 10th day of
February, 1997.
Ian R. Stuart
Director, Senior Vice President,
Chief Financial Officer,
Chief Accounting Officer and Controller
The Travelers Life and Annuity Company
<PAGE> 5
THE TRAVELERS FUND VA FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, KATHERINE M. SULLIVAN of Longmeadow, Massachusetts,
Director, Senior Vice President and General Counsel of The Travelers Life and
Annuity Company (hereinafter the "Company"), do hereby make, constitute and
appoint ERNEST J. WRIGHT, 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 10th day of
June, 1996.
Katherine M. Sullivan
Director, Senior Vice President
and General Counsel
The Travelers Life and Annuity Company
