SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ( X )
PRE-EFFECTIVE AMENDMENT NO. _____ ( )
POST-EFFECTIVE AMENDMENT NO. _____ ( )
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 ( X )
Amendment No. _____ ( )
(Check appropriate box or boxes)
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ANNUITY INVESTORS(SERVICEMARK) VARIABLE ACCOUNT A
(Exact Name of Registrant)
ANNUITY INVESTORS(SERVICEMARK) LIFE INSURANCE COMPANY
(Name of Depositor)
P.O. Box 5423
Cincinnati, Ohio 45201-5423
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code:
(800) 789-6771
----------------------------------------------------------------------
Mark F. Muething, Esq.
Senior Vice President, Secretary and General Counsel
Annuity Investors Life Insurance Company
P.O. Box 5423
Cincinnati, Ohio 45201-5423
(Name and Address of Agent for Service)
Copy to:
Catherine S. Bardsley, Esq.
Kirkpatrick & Lockhart LLP
1800 M Street, N.W.
South Lobby - Suite 900
Washington, D.C. 20036
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Approximate Date of Proposed Public Offering: As soon as practicable
after the effective date of the Registration Statement
DECLARATION REQUIRED BY RULE 24f-2 (a) (1)
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the
Registrant declares that an indefinite number of its securities is being
registered under the Securities Act of 1933. Fee $500.00
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, action
pursuant to said Section 8(a), may determine.
<PAGE>
TABLE OF CONTENTS
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Page
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DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 3
HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . 6
The Contract and Certificates . . . . . . . . . . . 6
The Separate Account . . . . . . . . . . . . . . . . 6
The Fixed Account . . . . . . . . . . . . . . . . . 7
Transfers Before the Annuity Commencement Date . . . 7
Surrenders . . . . . . . . . . . . . . . . . . . . . 7
Contingent Deferred Sales Charge ("CDSC") . . . . . 8
Other Charges and Deductions . . . . . . . . . . . . 8
Annuity Benefits . . . . . . . . . . . . . . . . . . 8
Death Benefit . . . . . . . . . . . . . . . . . . . 8
Federal Income Tax Consequences . . . . . . . . . . 9
Contacting the Company . . . . . . . . . . . . . . . 9
SUMMARY OF EXPENSES . . . . . . . . . . . . . . . . . . . . 10
Examples . . . . . . . . . . . . . . . . . . . . . . 13
FINANCIAL STATEMENTS FOR THE COMPANY . . . . . . . . . . . . 14
THE FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . 15
Janus Aspen Series . . . . . . . . . . . . . . . . . 15
Aggressive Growth Portfolio . . . . . . . . 15
Worldwide Growth Portfolio . . . . . . . . 15
Balanced Portfolio . . . . . . . . . . . . 15
Short-Term Bond Portfolio . . . . . . . . . 15
Dreyfus Funds . . . . . . . . . . . . . . . . . . . 15
Capital Appreciation Portfolio (Dreyfus
Variable Investment Fund) . . . . . . . . . 15
Socially Responsible Growth Fund . . . . . 16
Stock Index Fund . . . . . . . . . . . . . 16
Merrill Lynch Variable Series Funds, Inc. . . . . . 16
Basic Value Focus Fund . . . . . . . . . . 16
Global Strategy Focus Fund . . . . . . . . 16
High Current Income Fund . . . . . . . . . 17
Domestic Money Market Fund . . . . . . . . 17
Additions, Deletions, or Substitutions . . . . . . . 17
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . 18
Yield Data . . . . . . . . . . . . . . . . . . . . . 19
Total Return Data . . . . . . . . . . . . . . . . . 19
ANNUITY INVESTORS(SERVICEMARK) LIFE INSURANCE COMPANY AND
THE SEPARATE ACCOUNT . . . . . . . . . . . . . . . . . . . . 20
Annuity Investors Life Insurance Company . . . . . . 20
Published Ratings . . . . . . . . . . . . . . . . . 20
The Separate Account . . . . . . . . . . . . . . . . 21
i
<PAGE>
THE FIXED ACCOUNT . . . . . . . . . . . . . . . . . . . . . 21
Fixed Account Options . . . . . . . . . . . . . . . 22
Renewal of Fixed Account Options . . . . . . . . . . 22
THE CONTRACT . . . . . . . . . . . . . . . . . . . . . . . . 23
ENROLLMENT AND PURCHASE PAYMENTS . . . . . . . . . . . . . . 23
Purchase Payments . . . . . . . . . . . . . . . . . 23
Allocation of Purchase Payments . . . . . . . . . . 24
ACCOUNT VALUE . . . . . . . . . . . . . . . . . . . . . . . 24
Fixed Account Value . . . . . . . . . . . . . . . . 24
Variable Account Value . . . . . . . . . . . . . . . 24
Accumulation Unit Value . . . . . . . . . . . . . . 25
Net Investment Factor . . . . . . . . . . . . . . . 25
TRANSFERS . . . . . . . . . . . . . . . . . . . . . . . . . 26
Telephone Transfers . . . . . . . . . . . . . . . . 27
Dollar Cost Averaging . . . . . . . . . . . . . . . 27
Portfolio Rebalancing . . . . . . . . . . . . . . . 28
SURRENDERS . . . . . . . . . . . . . . . . . . . . . . . . . 29
Surrender Value . . . . . . . . . . . . . . . . . . 29
Suspension or Delay in Payment of Surrender Value . 30
Systematic Withdrawal Option . . . . . . . . . . . . 31
CONTRACT LOANS . . . . . . . . . . . . . . . . . . . . . . . 31
DEATH BENEFIT . . . . . . . . . . . . . . . . . . . . . . . 32
Death of Participant . . . . . . . . . . . . . . . . 32
Death Benefit . . . . . . . . . . . . . . . . . . . 32
Beneficiary . . . . . . . . . . . . . . . . . . . . 33
CHARGES AND DEDUCTIONS . . . . . . . . . . . . . . . . . . . 33
Contingent Deferred Sales Charge . . . . . . . . . . 33
Maintenance and Administrative Charges . . . . . . . 35
Mortality and Expense Risk Charge . . . . . . . . . 36
Premium Taxes . . . . . . . . . . . . . . . . . . . 38
Transfer Fee . . . . . . . . . . . . . . . . . . . . 38
Fund Expenses . . . . . . . . . . . . . . . . . . . 38
Reduction or Elimination of Contract and
Certificate Charges . . . . . . . . . . . . . . . . 38
SETTLEMENT OPTIONS . . . . . . . . . . . . . . . . . . . . . 38
Annuity Commencement Date . . . . . . . . . . . . . 38
Election of Settlement Option . . . . . . . . . . . 39
Annuity Benefit . . . . . . . . . . . . . . . . . . 39
Fixed Dollar Annuity Benefit . . . . . . . . . . . . 40
Variable Dollar Annuity Benefit . . . . . . . . . . 40
Transfers After the Annuity Commencement Date . . . 41
Annuity Transfer Formula . . . . . . . . . . . . . . 41
Settlement Options . . . . . . . . . . . . . . . . . 42
ii
<PAGE>
Minimum Amounts . . . . . . . . . . . . . . . . . . 43
Settlement Option Tables . . . . . . . . . . . . . . 43
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . 43
Non-participating . . . . . . . . . . . . . . . . . 43
Misstatement of Age . . . . . . . . . . . . . . . . 44
Proof of Existence and Age . . . . . . . . . . . . . 44
Facility of Payment . . . . . . . . . . . . . . . . 44
Transfer and Assignment . . . . . . . . . . . . . . 44
Annuity Data . . . . . . . . . . . . . . . . . . . . 44
Annual Report . . . . . . . . . . . . . . . . . . . 45
Incontestability . . . . . . . . . . . . . . . . . . 45
Entire Contract . . . . . . . . . . . . . . . . . . 45
Changes in the Contract . . . . . . . . . . . . . . 45
Waiver of the Certificate Maintenance Fee . . . . . 45
Notices and Directions . . . . . . . . . . . . . . . 46
FEDERAL TAX MATTERS . . . . . . . . . . . . . . . . . . . . 46
Introduction . . . . . . . . . . . . . . . . . . . . 46
Taxation of Annuities In General . . . . . . . . . . 47
Surrenders . . . . . . . . . . . . . . . . . . . . . 47
Annuity Payments . . . . . . . . . . . . . . . . . . 48
Penalty Tax . . . . . . . . . . . . . . . . . . . . 48
Taxation of Death Benefit Proceeds . . . . . . . . . 48
Transfers, Assignments, or Exchanges of the
Contract . . . . . . . . . . . . . . . . . . . . . . 49
Texas Optional Retirement Program . . . . . . . . . 49
Qualified Pension and Profit Sharing Plans and
H.R. 10 Plans . . . . . . . . . . . . . . . . . . . 49
Withholding . . . . . . . . . . . . . . . . . . . . 49
Possible Changes in Taxation . . . . . . . . . . . . 49
Other Tax Consequences . . . . . . . . . . . . . . . 50
General . . . . . . . . . . . . . . . . . . . . . . 50
DISTRIBUTION OF THE CONTRACT . . . . . . . . . . . . . . . . 50
LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . 51
VOTING RIGHTS . . . . . . . . . . . . . . . . . . . . . . . 51
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . 52
STATEMENT OF ADDITIONAL INFORMATION . . . . . . . . . . . . 53
APPENDIX A . . . . . . . . . . . . . . . . . . . . . . . . . 55
iii
<PAGE>
CROSS REFERENCE SHEET
Pursuant to Rule 495
Showing Location in Part A (Prospectus), Part B (Statement of
Additional Information) and Part C of Registration Statement Information
Required by Form N-4
<TABLE>
<CAPTION>
PART A
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<S> <C> <C>
Item of Form N-4 Prospectus Caption
---------------- ------------------
1. Cover Page . . . . . . . . . . . . . . Cover Page
2. Definitions . . . . . . . . . . . . . . Definitions
3. Synopsis . . . . . . . . . . . . . . . Highlights
4. Condensed Financial Information
(a) Accumulation Unit Values . . . Not Applicable
(b) Performance Data . . . . . . . Not Applicable
(c) Financial Statements . . . . . Financial Statements for
the Company
5. General Description of Registrant,
Depositor and Portfolio Companies
(a) Depositor . . . . . . . . . . Annuity Investors Life
Insurance Company
(b) Registrant . . . . . . . . . . The Separate Account
(c) Portfolio Company . . . . . . The Funds
(d) Fund Prospectus . . . . . . . The Funds
(e) Voting Rights . . . . . . . . Voting Rights
iv
<PAGE>
6. Deductions and Expenses
(a) General . . . . . . . . . . . Charges and Deductions
(b) Sales Load % . . . . . . . . . Contingent Deferred Sales
Charge
(c) Special Purchase Plan . . . . Contingent Deferred Sales
Charge; Reduction or
Elimination of Contract
and Certificate Charges
(d) Commissions . . . . . . . . . Distribution of the
Contract
(e) Fund Expenses . . . . . . . . The Funds
(f) Operating Expenses . . . . . . Summary of Expenses
7. Contracts
(a) Persons with Rights . . . . . The Contract; Surrenders;
Contract Loans; Death
Benefit; Voting Rights
(b) (i) Allocation of Premium Payments Enrollment and Purchase
Payments
(ii) Transfers . . . . . . . . . . Transfers
(iii) Exchanges . . . . . . . . . . Additions, Deletions or
Substitutions
(c) Changes . . . . . . . . . . . Not Applicable
(d) Inquiries . . . . . . Contacting the Company
8. Annuity Period . . . . . . . . . . . . Settlement Options
9. Death Benefit . . . . . . . . . . . . . Death Benefit
10. Purchases and Contract Values
(a) Purchases . . . . . . . . . . Enrollment and Purchase
Payments
(b) Valuation . . . . . . . . . . Fixed Account Value;
Variable Account Value
(c) Daily Calculation . . . . . . Accumulation Unit Value;
Net Investment Factor
v
<PAGE>
(d) Underwriter . . . . . . . . . Distribution of the
Contract
11. Redemptions
(a) By Contract Owners . . . . . . Surrender Value;
Systematic Withdrawal
Option
By Annuitant . . . . . . . . . Not Applicable
(b) Texas ORP . . . . . . . . . . Texas Optional Retirement
Program
(c) Check Delay . . . . . . . . . Suspension or Delay in
Payment of Surrender Value
(d) Free Look . . . . . . . . . . Not Applicable
12. Taxes . . . . . . . . . . . . . . . . . Federal Tax Matters
13. Legal Proceedings . . . . . . . . . . . Legal Proceedings
14. Table of Contents for the Statement of Statement of Additional
Additional Information . . . . . . . . Information
PART B
------
Statement of Additional
Item of Form N-4 Information Caption
---------------- -----------------------
15. Cover Page . . . . . . . . . . . . . . Cover Page
16. Table of Contents . . . . . . . . . . . Table of Contents
17. General Information and General Information and
History . . . . . . . . . . . . . . . . History
18. Services
(a) Fees and Expenses of Registrant (Prospectus) Summary of
Expenses
(b) Management Contracts . . . . . Not Applicable
(c) Custodian . . . . . . . . . . Not Applicable
Independent Auditors . . . . . Independent Accountants
vi
<PAGE>
(d) Assets of Registrant . . . . . Not Applicable
(e) Affiliated Person . . . . . . Not Applicable
(f) Principal Underwriter . . . . Not Applicable
19. Purchase of Securities Being Offered . (Prospectus) Distribution
of the Contract
Offering Sales Load . . . . . . . . . . (Prospectus) Contingent
Deferred Sales Charge
20. Underwriters . . . . . . . . . . . . . Distribution of the
Contract
21. Calculation of Performance Data
(a) Money Market Funded Sub Money Market Sub-Account
Accounts . . . . . . . . . . . Yield Calculation
(b) Other Sub-Accounts . . . . . . Other Sub-Account Yield
Calculation
22. Annuity Payments . . . . . . . . . . . (Prospectus) Fixed Dollar
Annuity Benefit; Variable
Dollar Annuity Benefit
23. Financial Statements . . . . . . . . . Financial Statements
PART C - Other Information
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Item of Form N-4 Part C Caption
---------------- --------------
24. Financial Statements and Exhibits . . . Financial Statements and
Exhibits
(a) Financial Statements . . . . . Financial Statements
(b) Exhibits . . . . . . . . . . . Exhibits
25. Directors and Officers of the Depositor Directors and Officers of
Annuity Investors Life
Insurance Company
vii
<PAGE>
26. Persons Controlled By or Under Common Persons Controlled By Or
Control With the Depositor or Under Common Control With
Registrant . . . . . . . . . . . . . . the Depositor or
Registrant
27. Number of Contract Owners . . . . . . . Number of Certificate
Owners
28. Indemnification . . . . . . . . . . . . Indemnification
29. Principal Underwriters . . . . . . . . Principal Underwriter
30. Location of Accounts and Location of Accounts and
Records . . . . . . . . . . . . . . . . Records
31. Management Services . . . . . . . . . . Management Services
32. Undertakings . . . . . . . . . . . . . Undertakings
Signature Page . . . . . . . . . . . . Signature Page
</TABLE>
1
<PAGE>
ANNUITY INVESTORS VARIABLE ACCOUNT A
of
ANNUITY INVESTORS LIFE INSURANCE COMPANY
PROSPECTUS
for the
Group Flexible Premium Deferred Annuity
Issued by
ANNUITY INVESTORS LIFE INSURANCE COMPANY
P.O. Box 5423, Cincinnati, Ohio 45201-5423, (800) 789-6771
This Prospectus describes the Group Flexible Premium Deferred
Annuity Contract (the "Contract") issued by Annuity Investors Life
Insurance Company (the "Company") and the Certificates of Participation
under the Contract ("Certificates").
A Certificate provides for the accumulation of an Account Value
on a fixed or variable basis, or a combination of both. The Certificate
also provides for the payment of periodic annuity payments on a fixed or
variable basis, or a combination of both. If the variable basis is
chosen, Certificate values will be held in Annuity Investors Variable
Account A (the "Separate Account") and will vary according to the
investment performance of the mutual funds in which the Sub-Accounts of
the Separate Account invest. If the fixed basis is chosen, periodic
annuity payments are fixed and will not vary.
The Separate Account is divided into Sub-Accounts. Each Sub-
Account uses its assets to purchase, at their net asset value, shares of a
designated registered investment company or portfolio thereof (each, a
"Fund"). The Funds available for investment in the Separate Account under
the Contract are as follows: from Janus Aspen Series Funds, (1) the
Aggressive Growth Portfolio, (2) the Worldwide Growth Portfolio, (3) the
Balanced Portfolio, and (4) the Short-Term Bond Portfolio; (5) Dreyfus
Variable Investment Fund's Capital Appreciation Portfolio; (6) Dreyfus
Socially Responsible Growth Fund; (7) Dreyfus Stock Index Fund; and from
Merrill Lynch Variable Series Funds, Inc., (8) the Basic Value Focus Fund,
(9) the Global Strategy Focus Fund, (10) the High Current Income Fund and
(11) the Domestic Money Market Fund.
This Prospectus sets forth the basic information that a
prospective investor should know before investing. A "Statement of
Additional Information" containing more detailed information about the
Contract is available free of charge by writing to the Company's
Administrative Office at P.O. Box 5423, Cincinnati, Ohio 45201-5423. The
Statement of Additional Information, which has the same date as this
Prospectus, as it may be supplemented from time to time, has been filed
with the Securities and Exchange Commission and is incorporated herein by
reference. The table of contents of the Statement of Additional
Information is included at the end of this Prospectus.
* * *
2
<PAGE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES REGULATORY AUTHORITIES
NOR HAS THE COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Please Read this Prospectus Carefully and
Retain It for Future Reference.
The Date of this Prospectus is _______, 1995.
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THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN
WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO DEALER, SALESMAN, OR
OTHER PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH OTHER
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON.
------------------------------------------------------------------
VARIABLE ANNUITY CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED
OR GUARANTEED BY, ANY FINANCIAL INSTITUTION, NOR ARE THEY FEDERALLY
INSURED OR OTHERWISE PROTECTED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY; THEY ARE
SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL
INVESTMENT.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUS
FOR EACH UNDERLYING FUND. BOTH THIS PROSPECTUS AND THE UNDERLYING FUND
PROSPECTUSES SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
3
<PAGE>
DEFINITIONS
Account(s): The Sub-Account(s) and/or the Fixed Account options.
Account Value: The aggregate value of the Participant's interest in the
Sub-Account(s) and the Fixed Account options as of the end of any
Valuation Period.
Accumulation Period: The period prior to the Annuity Commencement Date
during which the Participant is eligible for benefits under the Contract.
Accumulation Unit: The unit of measurement used to calculate the value of
the Sub-Account(s) prior to the Annuity Commencement Date.
Administrative Office: The home office of the Company or any other office
the Company may designate for administration.
Age: Age as of most recent birthday.
Annuitant: The Annuitant is the Participant and is the person on whose
life Annuity Benefit payments are based.
Annuity Benefit: Periodic payments made by the Company under a Settlement
Option, which payments commence after the Annuity Commencement Date and
continue during the Annuity Payment Period, for the life of a person or
for a specific period. A Variable Dollar Annuity Benefit will provide
payments that vary in amount. Fixed Dollar Annuity Benefit payments
remain constant.
Annuity Commencement Date: The date on which Annuity Benefits are to
begin.
Annuity Payment Period: The period commencing with the Annuity
Commencement Date, during which Annuity Benefits are payable under the
Contract.
Annuity Unit: The unit of measurement used to determine the value of any
Variable Dollar Annuity Benefit payments after the first Annuity Benefit
payment is made by the Company.
Beneficiary: The person or persons entitled to receive the Death Benefit
if the Participant dies prior to the Annuity Commencement Date.
Certificate Anniversary: An annual anniversary of the Certificate
Effective Date.
Certificate Effective Date: The date shown on the Certificate
Specifications page.
Certificate Year: Any period of twelve months commencing on the
Certificate Effective Date and on each Certificate Anniversary thereafter.
4
<PAGE>
Code: The Internal Revenue Code of 1986, as amended, and the rules and
regulations issued thereunder.
Contract Owner: The person or company identified as such in the
application for the Contract or other such form as may be designated by
the Company.
Due Proof of Death: Any of (1) a certified copy of a death certificate;
(2) a certified copy of a decree of a court of competent jurisdiction as
to the finding of death; (3) a written statement by a medical doctor who
attended the deceased; or (4) any other proof satisfactory to the Company.
Fixed Account: An account which is part of the Company's general account,
the values of which are not dependent upon the investment performance of
the Sub-Accounts.
Fixed Account Value: The value of a Participant's interest in all Fixed
Account options.
Fund: A management investment company or a portfolio thereof, registered
under the Investment Company Act of 1940, in which a Sub-Account of the
Separate Account invests.
Net Asset Value: The amount computed by an investment company, no less
frequently than each Valuation Period, as the price at which its shares or
units, as the case may be, are redeemed in accordance with the rules of
the Securities and Exchange Commission.
Participant: The person identified on the Certificate Specifications
page, who participates in the benefits of the Contract.
Purchase Payment: A contribution after the deduction of premium tax, if
any, made to the Company in consideration for the Participant's
participation under the Contract.
Separate Account: Annuity Investors(SERVICEMARK) Variable Account A (also
referred to as the "Variable Account") which has been established by the
Company pursuant to the laws of the State of Ohio.
Settlement Option: The option elected by the Participant for the payment
of Annuity Benefits.
Sub-Account: The Separate Account is divided into Sub-Accounts, each of
which invests in the shares of a designated Fund.
Surrender Value: The amount payable under a Certificate if the
Certificate is surrendered.
Valuation Period: The period commencing at the close of regular trading
on the New York Stock Exchange on any Valuation Date and ending at the
close of trading on the next succeeding Valuation Date. "Valuation Date"
means each day on which the New York Stock Exchange is open for business.
5
<PAGE>
Variable Account Value: The value of a Participant's interest in all Sub-
Accounts.
Written Request: Information provided, or a request made, that is in
writing, that is sent to the Company on the Company's form or in a form
satisfactory to the Company, and that is received by the Company at the
Administrative Office. A Written Request is subject to any payment made
or any action the Company takes before the Written Request is acknowledged
by the Company. A Participant may be required to return his or her
Certificate to the Company in connection with a Written Request.
6
<PAGE>
HIGHLIGHTS
The Contract and Certificates
The Group Flexible Premium Deferred Annuity Contract described in
this Prospectus is designed for use in connection with certain retirement
arrangements that qualify for favorable tax treatment under Sections 401,
403, or 457 of the Code.
The Contract Owner is the employer or the trustee for the
employer's retirement plan, as shown on the Application for the Contract,
the Participant Enrollment Form and Certificate Specifications page. The
Contract is held by the Contract Owner for the benefit of Participants and
Beneficiaries. Each participant for whom Purchase Payment(s) are made
will participate in the Contract as a Participant. A Participant account
will be established for each Participant. Subject to the terms of a
Certificate, the Account Value, after certain adjustments, will be applied
to the payment of an Annuity Benefit under the Settlement Option elected
by the Participant.
The Account Value will depend on the investment experience of the
amounts allocated to each Sub-Account of the Separate Account elected by
the Participant and/or interest credited on amounts allocated to the Fixed
Account option(s) elected. All Annuity Benefits and other values provided
under the Certificate when based on the investment experience of the
Separate Account are variable and are not guaranteed as to dollar amount.
Therefore, prior to the Annuity Commencement Date the Participant bears
the entire investment risk with respect to amounts allocated to the
Separate Account under the Certificate.
There is no guaranteed or minimum Surrender Value with respect to
amounts allocated to the Separate Account, so the proceeds of a surrender
could be less than the total Purchase Payments.
The Separate Account
Annuity Investors(SERVICEMARK) Variable Account A is a separate
account of the Company that is divided into Sub-Accounts (See "The
Separate Account," page ___.) Each Sub-Account uses its assets to
purchase, at their Net Asset Value, shares of a Fund. The Funds available
for investment in the Separate Account under the Contract are as follows:
from Janus Aspen Series Funds, (1) the Aggressive Growth Portfolio, (2)
the Worldwide Growth Portfolio, (3) the Balanced Portfolio, and (4) the
Short-Term Bond Portfolio; (5) Dreyfus Variable Investment Fund's Capital
Appreciation Portfolio; (6) Dreyfus Socially Responsible Growth Fund; (7)
Dreyfus Stock Index Fund; and from Merrill Lynch Variable Series Funds
Inc., (8) the Basic Value Focus Fund, (9) the Global Strategy Focus Fund,
(10) the High Current Income Fund and (11) the Domestic Money Market Fund.
Each Fund has distinct investment objectives and policies which are
described in the accompanying prospectus for the Fund.
7
<PAGE>
Each Fund pays its investment adviser and other service providers
certain fees charged against the assets of the Fund. The Account Value of
a Certificate and the amount of any Annuity Benefits will vary to reflect
the investment performance of all the Sub-Accounts elected by the
Participant and the deduction of the charges described under "Charges and
Deductions," page ___. For more information about the Funds, see "The
Funds," page __, and the accompanying Funds' prospectuses.
The Fixed Account
The Fixed Account is an account within the Company's general
account. There are currently four Fixed Account options available under
the Fixed Account: a Fixed Accumulation Account option and three fixed-
term options. Purchase Payments allocated or amounts transferred to the
Fixed Account options are credited with interest at a rate declared by the
Company's Board of Directors, but in any event at a minimum guaranteed
annual rate of 3.0% corresponding to a daily rate of 0.0081%. (See "The
Fixed Account," page ___.)
Transfers Before the Annuity Commencement Date
Prior to the Annuity Commencement Date, the Participant may
transfer values between the Separate Account and the Fixed Account, within
the Fixed Account and between the Sub-Accounts, by Written Request to the
Company or by telephone in accordance with the Company's telephone
transfer rules. (See "Transfers," page___.)
The Company currently charges a fee of $25 for each transfer
("Transfer Fee") in excess of twelve made during the same Certificate
Year. (See "Transfers," page __.)
For transfers after the Annuity Commencement Date, see "After the
Annuity Commencement Date," page __.
Surrenders
All or part of the Surrender Value of a Certificate may be
surrendered by the Participant on or before the Annuity Commencement Date
by Written Request to the Company. Amounts surrendered may be subject to
a Contingent Deferred Sales Charge ("CDSC") depending upon how long the
Purchase Payments to be withdrawn have been held under the Certificate.
Amounts withdrawn also may be subject to a premium tax or similar tax,
depending upon the jurisdiction in which the Participant lives.
Surrenders may further be subject to federal, state or local income tax,
and subject to a penalty tax. (See "Federal Tax Matters," page ___.)
Contingent Deferred Sales Charge ("CDSC")
A CDSC may be imposed on surrenders. The maximum CDSC is 7% of
Purchase Payments withdrawn during the first year after that Purchase
Payment is received, decreasing by 1% annually to 0% after year seven.
8
<PAGE>
The CDSC may be waived under certain circumstances. (See "Charges and
Deductions," page ___.)
Other Charges and Deductions
The Company deducts a daily charge ("Mortality and Expense Risk
Charge") at an effective annual rate of 1.25% of the daily Net Asset Value
of each Sub-Account.
The Company deducts a Certificate maintenance charge each year
("Certificate Maintenance Fee"). This Fee is currently $25 and is
deducted from a Participant's Variable Account Value at the end of the
Certificate Year. The Certificate Maintenance Fee may be waived under
certain circumstances, at the Company's discretion.
The Company does not currently intend to deduct a charge to help
cover the costs of administering the Contract, the Certificates and the
Separate Account ("Administration Charge"); however, the Company reserves
the right to impose an Administration Charge at a future date. Any such
Administration Charge is guaranteed not to exceed a maximum effective
annual rate of .20% of the daily Net Asset Value of each Sub-Account.
Charges for premium taxes may be imposed in some jurisdictions.
Depending on the applicability of such taxes, the charges may be deducted
from Purchase Payments, from surrenders, and from other payments made
under the Certificate. (See "Charges and Deductions," page ___.)
Annuity Benefits
Annuity Benefits are paid on a fixed or variable basis, or a
combination of both. (See "Annuity Benefits," page __.)
Death Benefit
The Certificate provides for the payment of a death benefit if
the Participant dies prior to the Annuity Commencement Date. The death
benefit may be paid as either a lump sum or pursuant to one of the
Settlement Options offered under the Certificate. (See "Death Benefit,"
page ___.)
Federal Income Tax Consequences
A Participant generally should not be taxed on increases in the
Account Value until a distribution under the Certificate occurs (e.g., a
surrender or Annuity Benefit) or is deemed to occur (e.g., a pledge, loan,
or assignment of a Certificate). Generally, a portion (up to 100%) of any
distribution or deemed distribution is taxable as ordinary income. The
taxable portion of distributions is generally subject to income tax
withholding unless the recipient elects otherwise. In addition, a federal
penalty tax may apply to certain distributions. (See "Federal Tax
Matters," page __.)
9
<PAGE>
Contacting the Company
All Written Requests and any questions or inquiries should be
directed to the Company's Administrative Office, P.O. Box 5423,
Cincinnati, Ohio 45201-5423, (800) 789-6771. All inquiries should
include the Certificate Number and the Participant's name.
NOTE: THE FOREGOING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE DETAILED
INFORMATION IN THE REMAINDER OF THIS PROSPECTUS AND IN THE ACCOMPANYING
PROSPECTUSES FOR THE FUNDS WHICH SHOULD BE REFERRED TO FOR MORE DETAILED
INFORMATION. THE REQUIREMENTS OF A PARTICULAR RETIREMENT PLAN, AN
ENDORSEMENT TO THE CONTRACT OR CERTIFICATE, OR LIMITATIONS OR PENALTIES
IMPOSED BY THE CODE OR THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED, MAY IMPOSE ADDITIONAL LIMITS OR RESTRICTIONS ON PURCHASE
PAYMENTS, SURRENDERS, DISTRIBUTIONS, OR BENEFITS, OR ON OTHER PROVISIONS
OF THE CONTRACT OR THE CERTIFICATES THEREUNDER. THIS PROSPECTUS DOES NOT
DESCRIBE SUCH LIMITATIONS OR RESTRICTIONS. (SEE "FEDERAL TAX MATTERS,"
PAGE ____.)
10
<PAGE>
SUMMARY OF EXPENSES
Participant Transaction Expenses
Sales Load Imposed on Purchase
Payments None
Contingent Deferred Sales Charge
(as a percentage of Purchase
Payments withdrawn)
Certificate Years since
Purchase Payment Receipt
less than 1 year 7%
1 year but less
than 2 years 6%
2 years but less
than 3 years 5%
3 years but less
than 4 years 4%
4 years but less
than 5 years 3%
5 years but less
than 6 years 2%
6 years but less
than 7 years 1%
7 years or more 0%
Surrender Fees None
Transfer Fee 1/ $25
Annual Certificate Maintenance Fee $25
1/ The first twelve transfers in a Certificate
Year are free. Thereafter, a $25 fee will be
charged on each subsequent transfer.
11
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Janus Janus Dreyfus
Separate Account A.S. A.S. V.I.F.
Annual Expenses2/ Janus A.S. World- Janus Short- Capital
(as a percentage of Aggressive wide A.S. Term Appre-
average Separate Growth Growth Balanced Bond ciation
Account assets) ---------- ------ -------- ------ -------
Mortality and 1.25% 1.25% 1.25% 1.25% 1.25%
Expense Risk
Charge
Administration 0.00% 0.00% 0.00% 0.00% 0.00%
Charge
Other Fees and 0.00% 0.00% 0.00% 0.00% 0.00%
Expenses of the
Separate Account
Total Separate 1.25% 1.25% 1.25% 1.25% 1.25%
Account Annual
Expenses
Fund Annual
Expenses3/
(as a percentage of
Fund average net
assets after fee
waiver and/or
expense reimburse-
ment)
Management Fees 0.77% 0.69% 0.83% 0.00% 0.00%
Other Expenses 0.28% 0.49% 0.74% 0.65% 0.25%
Total Fund Annual 1.05% 1.18% 1.57% 0.65% 0.25%
Expenses
</TABLE>
----------------
2/ Annual expenses are anticipated to be the same for each Sub-Account.
These expenses are based on estimated amounts for the current fiscal year.
3/ Information regarding each Fund has been provided by the Fund. While
the Company has no reason to doubt the accuracy of these figures, the
12
<PAGE>
Company does not guarantee their accuracy, does not represent they are
true and complete, and disclaims all responsibility for these figures.
Data for each Fund is for its fiscal year ended December 31, 1994. Actual
expenses in future years may be higher or lower.
Fund expenses are net of management fees waived. For the fiscal year
ended December 31, 1994: Merrill Lynch Asset Management, L.P. waived
management fees and reimbursed expenses totaling 0.07% for the Domestic
Money Market Fund; Janus Capital Corporation waived fees totaling 0.17%
for the Balanced Fund, 0.23% for the Aggressive Growth Fund, 0.31% for the
Worldwide Growth Fund and 0.75% for the Short-Term Fund; The Dreyfus
Corporation waived fees totaling 0.86% for the Capital Appreciation Fund
and 2.60% for the Socially Responsible Fund; and Wells Fargo Niko
Investment Advisors waived fees totalling 0.16% for the Stock Index Fund.
Absent such management fee waivers and/or expense reimbursements, the
total expenses of the Funds would be higher.
13
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Separate
Account
Annual
Expenses Merrill Merrill Merrill Merrill
(as a Dreyfus Lynch Lynch Lynch Lynch
percentage Socially V.S.F. V.S.F. V.S.F. V.S.F.
of average Respon- Dreyfus Basic Global High Domestic
Separate sible Stock Value Strategy Current Money
Account Growth Index Focus Focus Income Market
assets) ------- ------- ------- -------- ------- --------
Mortality 1.25% 1.25% 1.25% 1.25% 1.25% 1.25%
and
Expense
Risk
Charge
Admini- 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
stration
Charge
Other 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Fees and
Expenses
of the
Separate
Account
Total 1.25% 1.25% 1.25% 1.25% 1.25% 1.25%
Separate
Account
Annual
Expenses
14
<PAGE>
<S> <C> <C> <C> <C> <C> <C>
Fund Annual
Expenses (as
a percentage
of Fund
average net Merrill Merrill Merrill Merrill
assets after Dreyfus Lynch Lynch Lynch Lynch
fee waiver Socially V.S.F. V.S.F. V.S.F. V.S.F.
and/or Respon- Dreyfus Basic Global High Domestic
expense sible Stock Value Strategy Current Money
reimburse- Growth Index Focus Focus Income Market
ment) ------- ------- ------- -------- ------- --------
Manage- 0.00% 0.14% 0.60% 0.65% 0.52% 0.50%
ment Fees
Other 0.25% 0.26% 0.12% 0.12% 0.09% 0.00%
Expenses
Total 0.25% 0.40% 0.72% 0.77% 0.61% 0.50%
Fund
Annual
Expenses
</TABLE>
The purpose of this table is to assist a Participant in understanding the
various costs and expenses that the Participant will bear directly and
indirectly with respect to investment in the Separate Account. The table
reflects expenses of each Sub-Account as well as of the Fund in which the
Sub-Account invests. See "Charges and Deductions" on page _____ of this
Prospectus and the accompanying prospectus for the applicable Fund for a
more complete description of the various costs and expenses. In addition
to the expenses listed above, premium taxes may be applicable.
Sub-Account 1 Year 3 Years
----------- ----- -------
Janus A.S. Aggressive Growth $95 $128
Janus A.S. Worldwide Growth 96 132
Janus A.S. Balanced 100 144
Janus A.S. Short-Term Bond 91 115
Dreyfus V.I.F. Capital Appreciation 87 102
Dreyfus Socially Responsible Growth 87 102
15
<PAGE>
Sub-Account 1 Year 3 Years
----------- ----- -------
Dreyfus Stock Index 88 107
Merrill Lynch V.S.F. Basic Value 91 117
Focus
Merrill Lynch V.S.F. Global 92 119
Strategy Focus
Merrill Lynch V.S.F. High Current 90 114
Income
Merrill Lynch V.S.F. Money Market 89 110
Examples2/
If you surrender your Certificate at the end of the applicable time
period, you would pay the following expenses on a $1,000 investment,
assuming a 5% annual return on assets:
If you do not surrender your Certificate, or if you annuitize it, you
would pay the following expenses on a $1,000 investment at the end of the
applicable time period, assuming a 5% annual return on assets:
Sub-Account 1 Year 3 Years
----------- ------ -------
Janus A.S. Aggressive Growth $25 $78
Janus A.S. Worldwide Growth 26 82
Janus A.S. Balanced 30 94
Janus A.S. Short-Term Bond 21 65
Dreyfus V.I.F. Capital 17 52
Appreciation
2/ The examples assume the reinvestment of all dividends and
distributions, no transfers among Sub-Accounts or between Accounts, and a
5% annual rate of return as mandated by Securities and Exchange Commission
regulations. Annual Certificate Maintenance Fees are based on an
estimated amount for the Separate Account's current fiscal year.
16
<PAGE>
Sub-Account 1 Year 3 Years
----------- ------ -------
Dreyfus Socially Responsible 17 52
Growth
Dreyfus Stock Index 18 57
Merrill Lynch V.S.F. Basic Value 21 67
Focus
Merrill Lynch V.S.F. Global 22 69
Strategy Focus
Merrill Lynch V.S.F. High 20 64
Current Income Focus
Merrill Lynch V.S.F. Money 19 60
Market
The examples should not be considered a representation of past or future
expenses or annual rates of return of any Fund. Actual expenses and
annual rates of return may be more or less than those assumed for the
purpose of the examples.
The fee table and examples do not include charges to Participants
for premium taxes.
FINANCIAL STATEMENTS FOR THE COMPANY
The financial statements and report of independent public
accountants for the Company are contained in the Statement of Additional
Information. Because the Contracts and Certificates registered by this
Prospectus have not yet been issued, no financial information for the
Separate Account is provided.
THE FUNDS
The Separate Account currently has eleven Funds that are available
for investment under a Certificate. Each Fund has separate investment
objectives and policies. As a result, each Fund operates as a separate
investment portfolio and the investment performance of one Fund has no
effect on the investment performance of any other Fund. There is no
assurance that any of these Funds will achieve their stated objectives.
The Securities and Exchange Commission does not supervise the management
or the investment practices and/or policies of any of the Funds.
The Separate Account invests exclusively in shares of the
following Funds:
Janus Aspen Series:
17
<PAGE>
Aggressive Growth Portfolio. A nondiversified portfolio that
seeks long-term growth of capital by investing primarily in common
stocks. The common stocks held by this Fund will normally have an
average market capitalization between $1 billion and $5 billion.
Worldwide Growth Portfolio. A diversified portfolio that seeks
long-term growth of capital by investing primarily in common
stocks of foreign and domestic companies.
Balanced Portfolio. A diversified portfolio that seeks long-term
growth of capital balanced by current income. The Fund normally
invests 40-60% of its assets in equity securities selected for
their growth potential and 40-60% in fixed-income securities.
Short-Term Bond Portfolio. A diversified portfolio that seeks a
high level of current income while minimizing interest rate risk
by investing in shorter term fixed-income securities. Its
average-weighted maturity is normally less than three years.
Janus Capital Corporation serves as the investment adviser to each of
these Funds.
Dreyfus Funds:
Capital Appreciation Portfolio (Dreyfus Variable Investment Fund).
The Capital Appreciation Portfolio's primary investment objective
is to provide long-term capital growth consistent with the
preservation of capital, current income is a secondary goal. It
seeks to achieve its goals by investing in common stocks of
domestic and foreign issuers.
The Dreyfus Corporation serves as the investment adviser and Fayez
Sarofim & Company serves as the investment sub-adviser to this
Fund.
Socially Responsible Growth Fund. The Socially Responsible Fund's
primary goal is to provide capital growth. It seeks to achieve
this goal by investing principally in common stocks, or securities
convertible into common stock, of companies which, in the opinion
of the Fund's management, not only meet traditional investments
standards, but also show evidence that they conduct their business
in a manner that contributes to the enhancement of the quality of
life in America. Current income is a secondary goal.
The Dreyfus Corporation serves as the investment adviser and NCM
Capital Management Group, Inc. serves as the investment sub-
adviser to this Fund.
Stock Index Fund. The Stock Index Fund's investment objective 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
18
<PAGE>
Stock Price Index. The Stock Index Fund is neither sponsored by
nor affiliated with Standard & Poor's Corporation.
Wells Fargo Niko Investment Advisors serves as this Fund's
investment adviser.
Merrill Lynch Variable Series Funds, Inc.:
Basic Value Focus Fund. The investment objective of the Fund is
to seek capital appreciation and, secondarily, income by investing
in securities, primarily equities, that management of the Fund
believes are undervalued. The Fund seeks special opportunities in
securities that are selling at a discount, either from book value
or historical price-earnings ratios, or seem capable of recovering
from temporarily out-of-favor considerations. Particular emphasis
is placed on securities that provide an above-average dividend
return and sell at a below-average price-earnings ratio.
Global Strategy Focus Fund. The investment objective of the Fund
is to seek high total investment return by investing primarily in
a portfolio of equity and fixed income securities, including
convertible securities, of U.S. and foreign issuers. The Fund
seeks to achieve its objective by investing primarily in
securities of issuers located in the U.S., Canada, Western Europe
and the Far East. The Fund may allocate investments without
prescribed limits among capital markets and types and maturities
of securities on the basis of various considerations which may
affect total anticipated return from investments.
High Current Income Fund. The investment objective of the Fund is
to obtain as high a level of current income as is consistent with
prudent investment management, and capital appreciation to the
extent consistent with the foregoing objective, by investing
principally in fixed-income securities that are rated in the lower
rating categories of the established rating services or in unrated
securities of comparable quality.
Domestic Money Market Fund. The investment objectives of the Fund
are to seek preservation of capital, maintain liquidity and
achieve the highest possible current income consistent with the
foregoing objectives by investing in short-term money market
securities.
Merrill Lynch Asset Management, L.P. serves as the investment adviser to
these Funds.
INVESTMENTS IN THESE FUNDS ARE NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT OR ANY OTHER ENTITY OR PERSON.
Since each of the Funds is available to registered separate
accounts offering variable annuity and variable life products of other
insurance companies, there is a possibility that a material conflict may
19
<PAGE>
arise between the interests of the Separate Account and one or more other
separate accounts investing in the Fund. In the event of a material
conflict, the affected insurance companies will take any necessary steps
to resolve the matter, including stopping their separate accounts from
investing in the particular Fund. See the Funds' prospectuses for greater
detail.
Additional information concerning the investment objectives and
policies of each Fund, the investment advisory services and administrative
services and charges can be found in the current prospectus for the Fund
which accompanies this Prospectus. THE APPROPRIATE FUNDS' PROSPECTUSES
SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE CONCERNING THE
ALLOCATION OF PURCHASE PAYMENTS TO, OR TRANSFERS AMONG, THE SUB-ACCOUNTS.
Additions, Deletions, or Substitutions
The Company does not control the Funds and cannot guarantee that
any of the Sub-Accounts or any of the Funds will always be available for
allocation of Purchase Payments or transfers. The Company retains the
right to make changes in the Separate Account and its investments.
The Company reserves the right to eliminate the shares of any Fund
held by a Sub-Account and to substitute shares of another investment
company for the shares of any Fund, if the shares of that Fund are no
longer available for investment or if, in the Company's judgment,
investment in any Fund would be inappropriate in view of the purposes of
the Separate Account. To the extent required by the Investment Company
Act of 1940, as amended ("1940 Act"), or other applicable law, a
substitution of shares attributable to the Participant's interest in a
Sub-Account will not be made without prior notice to the Participant and
the prior approval of the Securities and Exchange Commission. Nothing
contained herein shall prevent the Separate Account from purchasing other
securities for other series or classes of variable annuity policies, or
from effecting an exchange between series or classes of variable policies
on the basis of requests made by Participants.
New Sub-Accounts may be established when, in the sole discretion
of the Company, marketing, tax, investment or other conditions so warrant.
Any new Sub-Accounts will be made available to existing Participants on a
basis to be determined by the Company. Each additional Sub-Account will
purchase shares in a Fund or in another mutual fund or investment vehicle.
The Company may also eliminate one or more Sub-Accounts, if in its sole
discretion, marketing, tax, investment or other conditions so warrant. In
the event any Sub-Account is eliminated, the Company will notify
Participants and request a re-allocation of the amounts invested in the
eliminated Sub-Account.
In the event of any substitution or change, the Company may make
such changes in the Contract and Certificate as may be necessary or
appropriate to reflect such substitution or change. Furthermore, if
deemed to be in the best interests of persons having voting rights under
the Certificates, the Separate Account may be operated as a management
20
<PAGE>
company under the 1940 Act or any other form permitted by law, may be de-
registered under such Act in the event such registration is no longer
required, or may be combined with one or more separate accounts.
PERFORMANCE INFORMATION
From time to time, the Company may advertise yields and/or total
returns for the Sub-Accounts. THESE FIGURES ARE BASED ON HISTORICAL
INFORMATION AND ARE NOT INTENDED TO INDICATE FUTURE PERFORMANCE. For a
description of the methods used to determine yield and total return, see
the Statement of Additional Information.
Yield Data
The yield of the Money Market Sub-Account refers to the annualized
income generated by an investment in that Sub-Account over a specified
seven-day period. The Company may also advertise the effective yield of
the Money Market Sub-Account which is calculated similarly but, when
annualized, the income earned by an investment in that Sub-Account is
assumed to be reinvested. The effective yield will be slightly higher
than the yield because of the compounding effect of this assumed
reinvestment.
The yield of a Sub-Account other than the Money Market Sub-Account
refers to the annualized income generated by an investment in the Sub-
Account over a specified 30-day period.
The yield calculations do not reflect the effect of any CDSC or
premium taxes that may be applicable to a particular Certificate which
would reduce the yield of that Certificate.
Total Return Data
The average annual total return of a Sub-Account refers to return
quotations assuming an investment has been held in the Sub-Account for
various periods of time including, but not limited to, a period measured
from the date the Sub-Account commenced operations. When a Sub-Account
has been in operation for one, five and ten years, respectively, the
average annual total return presented will be presented for these periods,
although other periods may also be provided. The average annual total
return quotations reflect the deduction of all applicable charges except
for premium taxes. In addition to average annual total return for a Sub-
Account, the Company may provide cumulative total return and/or other non-
standardized total return for the Sub-Account.
Reports and promotional literature may contain the ranking of any
Sub-Account derived from rankings of variable annuity separate accounts or
their investment products tracked by Lipper Analytical Services, Inc.,
VARDS, IBC/Donoghue's Money Fund Report, Financial Planning Magazine,
Money Magazine, Bank Rate Monitor, Standard & Poor's Indices, Dow Jones
Industrial Average, and other rating services, companies, publications, or
other persons who rank separate accounts or other investment products on
21
<PAGE>
overall performance or other criteria. The Company may compare the
performance of a Sub-Account with applicable indices and/or industry
averages. Performance information may present the effects of tax-deferred
compounding on Sub-Account investment returns, or returns in general,
which may be illustrated by graphs, charts, or otherwise, and which may
include comparisons of investment return on a tax-deferred basis with
currently taxable investment return.
The Company may also advertise performance figures for the Sub-
Accounts based on the performance of a Fund prior to the time the Separate
Account commenced operations.
ANNUITY INVESTORS(SERVICEMARK) LIFE INSURANCE COMPANY AND THE
SEPARATE ACCOUNT
Annuity Investors(SERVICEMARK) Life Insurance Company
Annuity Investors(SERVICEMARK) Life Insurance Company (the
"Company"), formerly known as Carillon Life Insurance Company, is a stock
life insurance company incorporated under the laws of the State of Ohio in
1981. The Company is principally engaged in the sale of fixed and
variable annuity policies.
The Company is a wholly-owned subsidiary of American Annuity
Group, Inc., a publicly traded insurance holding company, which in turn is
indirectly controlled by American Premier Group, Inc., a publicly traded
holding company.
The home office of the Company is located at 250 East Fifth
Street, Cincinnati, Ohio 45202.
Published Ratings
The Company may from time to time publish in advertisements, sales
literature and reports to Contract Owners and Participants, the ratings
and other information assigned to it by one or more independent rating
organizations such as A.M. Best Company, Standard & Poor's, and Duff &
Phelps. The purpose of the ratings is to reflect the financial strength
and/or claims-paying ability of the Company and should not be considered
as reflecting on the investment performance of assets held in the Separate
Account. Each year the A.M. Best Company reviews the financial status of
thousands of insurers, culminating in the assignment of Best's Ratings.
These ratings reflect their current opinion of the relative financial
strength and operating performance of an insurance company in comparison
to the norms of the life/health insurance industry. In addition, the
claims-paying ability of the Company as measured by Standard & Poor's or
Duff & Phelps may be referred to in advertisements or sales literature or
in reports to Contract Owners and Participants. These ratings are
opinions of those agencies as to an operating insurance company's
financial capacity to meet the obligations of its insurance and annuity
policies in accordance with their terms. Such ratings do not reflect the
22
<PAGE>
investment performance of the Separate Account or the degree of risk
associated with an investment in the Separate Account.
The Separate Account
Annuity Investors(SERVICEMARK) Variable Account A was established
by the Company as an insurance company separate account under the laws of
the State of Ohio on May 26, 1995, pursuant to resolutions of the
Company's Board of Directors. The Separate Account is registered with the
Securities and Exchange Commission under the 1940 Act as a unit investment
trust. However, the Securities and Exchange Commission does not supervise
the management or the investment practices or policies of the Separate
Account.
The assets of the Separate Account are owned by the Company but
they are held separately from the other assets of the Company. The Ohio
Revised Code provides that the assets of a separate account are not
chargeable with liabilities incurred in any other business operation of
the Company. Income, gains and losses incurred on the assets in the
Separate Account, whether or not realized, are credited to or charged
against the Separate Account, without regard to other income, gains or
losses of the Company. Therefore, the investment performance of the
Separate Account is entirely independent of the investment performance of
the Company's general account assets or any other separate account
maintained by the Company.
Under Ohio law, the assets of the Separate Account will be held
for the exclusive benefit of Contract Owners and Participants under the
Contracts offered by this Prospectus and under all other contracts which
provide for accumulated values or dollar amount payments to reflect
investment results of the Separate Account. The obligations arising under
the Contract and Certificates are obligations of the Company.
The Separate Account has eleven Sub-Accounts, each of which
invests solely in a specific corresponding Fund. (See "The Funds,"
below.) Changes to the Sub-Accounts may be made at the discretion of the
Company. (See "Addition, Deletion, or Substitution," page ____.)
THE FIXED ACCOUNT
The Fixed Account is a part of the Company's general account.
Because of exemptive and exclusionary provisions, interests in the general
account have not been registered under the Securities Act of 1933, nor is
the general account registered as an investment company under the 1940
Act. Accordingly, neither the general account nor any interest therein is
generally subject to the provisions of these Acts, and the staff of the
Securities and Exchange Commission does not generally review the
disclosures in the prospectus relating to the Fixed Account. Disclosures
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.
23
<PAGE>
The Company has sole discretion to invest the assets of the Fixed
Account, subject to applicable law. Allocation of any amounts to the
Fixed Account does not entitle Participants to share directly in the
investment experience of these assets. The Company assumes the risk of
investment gain or loss on the portion of the Account Value allocated to
the Fixed Account. All assets held in the general account are subject to
the Company's general liabilities from business operations.
Fixed Account Options
There are currently four options under the Fixed Account: the
Fixed Accumulation Account option; and the guarantee period options
referred to in the Certificate as the Fixed Account options One-Year,
Three-Year and Five-Year Fixed, respectively. Additional Fixed Account
options may be offered by the Company at any time. Purchase Payments
allocated and amounts transferred to the Fixed Account options accumulate
interest at the applicable current interest rate declared by the Company's
Board of Directors, and if applicable, for the duration of the guarantee
period selected.
The Company guarantees a minimum rate of interest for the Fixed
Account options. The guaranteed rate is 3% per year. For any Fixed
Account option, the Company's Board of Directors may declare and pay
current interest higher than the guaranteed rate at any time. Once
declared, such rate will be paid until changed by the Company for new
allocations to that Fixed Account option, but such change will not be
applicable with respect to amounts previously allocated to such Fixed
Account option.
Renewal of Fixed Account Options
At the end of a guarantee period, and for the thirty days
immediately preceding the end of such guarantee period, the Participant
may elect a new option to replace the Fixed Account option that is then
expiring. The entire amount maturing may be reallocated to any of the
then current options under the Certificate (including the various Sub-
Accounts within the Separate Account), except that a Fixed Account option
with a guarantee period that would extend past the Annuity Commencement
Date may not be selected. In particular, in the case of renewals
occurring within one year of the Annuity Commencement Date, the only Fixed
Account option available is the Fixed Accumulation Account.
If the Participant does not specify a new option in accordance
with the preceding paragraph, the Participant will be deemed to have
elected the same Fixed Account option, so long as the guarantee period of
such option does not extend beyond the Annuity Commencement Date. In the
event that such a period would extend beyond the Annuity Commencement
Date, the Participant will be deemed to have selected the Fixed Account
option with the longest available guarantee period that expires prior to
the Annuity Commencement Date.
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THE CONTRACT
The Contract is a group flexible premium deferred annuity. The
rights and benefits are described below and in the Certificate and the
Contract. The Company reserves the right to make any modification to
conform the Contract and Certificates thereunder to, or give the
Participant the benefit of, any applicable law. The obligations under the
Contract and Certificates are obligations of the Company.
For each Certificate, a different Account will be established and
Fixed Account Values, Variable Account Values, and benefits and charges
will be calculated separately. The various administrative rules described
below will apply separately to each Certificate, unless otherwise noted.
The Company reserves the right to terminate any Certificate for which the
Account Value is less than $500 and no Purchase Payment has been received
for at least two years.
ENROLLMENT AND PURCHASE PAYMENTS
Purchase Payments
All Purchase Payments must be received at the Administrative
Office.
Each Purchase Payment will be applied by the Company to the credit
of a Participant's Account. If the Participant Enrollment Form is in good
order, the Company will apply the initial Purchase Payment to an account
for the Participant within two business days of receipt of the Purchase
Payment at the Administrative Office. If the Enrollment Form is not in
good order, the Company will attempt to get the Enrollment Form in good
order within five business days. If the Enrollment Form is not in good
order at the end of this period, the Company will inform the Contract
Owner of the reason for the delay and that the Purchase Payment will be
returned immediately unless he or she specifically consents to the Company
keeping the Purchase Payment until the Enrollment Form is in good order.
Once the Enrollment Form is in good order, the Purchase Payment will be
applied to the Participant's Account within two business days.
Additional Purchase Payments may be made at any time prior to the
Annuity Commencement Date, as long as the Participant is living. Each
additional Purchase Payment is credited to a Certificate as of the next
valuation following the receipt of such additional Purchase Payment.
No Purchase Payment for any Certificate may exceed $500,000
without prior approval of the Company.
Allocation of Purchase Payments
Purchase Payments will be allocated to the Fixed Account and/or to
the Sub-Accounts according to the instructions in the Participant
Enrollment Form or subsequent Written Request. Allocations are made in
percentages, and whole percentages must be used.
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ACCOUNT VALUE
Before the Annuity Commencement Date, the Account Value is equal
to the Fixed Account Value plus the Variable Account Value.
Fixed Account Value
The Fixed Account Value at any time is equal to (a) the Purchase
Payment(s) allocated to the Fixed Account; plus (b) amounts transferred to
the Fixed Account; plus (c) interest credited to the Fixed Account; less
(d) any charges, surrenders, deductions, amounts transferred from the
Fixed Account or other adjustments made in accordance with the provisions
of the Contract.
Variable Account Value
The Variable Account Value for the Certificate at any time is the
sum of the value of each Sub-Account ("Sub-Account Value") selected by the
Participant for the Certificate on the Valuation Date most recently
completed.
Purchase Payments may be allocated among, and Account Values may
be transferred to, the various Sub-Accounts within the Separate Account,
subject to the provisions of the Contract governing transfers. For each
Sub-Account, the Purchase Payment(s) or amounts transferred are converted
into Accumulation Units. The number of Accumulation Units credited is
determined by dividing the dollar amount directed to each Sub-Account by
the Accumulation Unit Value for that Sub-Account at the end of the
Valuation Period on which the Purchase Payment(s) or transferred amount is
received.
Partial surrenders or transfers from a Sub-Account will result in
the cancellation of the appropriate number of Accumulation Units of a Sub-
Account. The following events will also result in the cancellation of an
appropriate number of Accumulation Units of a Sub-Account:
(1) receipt of a Written Request for surrender;
(2) payment of a Death Benefit;
(3) application of the Account Value to a Settlement Option;
or
(4) deduction of the Certificate Maintenance Fee.
Accumulation Units will be canceled as of the end of the Valuation
Period during which the Company received a Written Request regarding the
event giving rise to such cancellation, or Due Proof of Death and
instructions regarding payment of the Death Benefit, or the Valuation
Period on which the Certificate Maintenance Fee is due, as the case may
be.
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The Variable Account Value for a Certificate at any time is equal
to the sum of the number of Accumulation Units attributable to that
Certificate for each Sub-Account multiplied by the Accumulation Unit value
("Accumulation Unit Value") for each Sub-Account at the end of the
Valuation Period.
Accumulation Unit Value
The initial Accumulation Unit Value for each Sub-Account, with the
exception of the Money Market Sub-Account, was set at $10 when the Sub-
Account was created. The initial Accumulation Unit Value for the Money
Market Sub-Account was set at $1.00. Thereafter, the Accumulation Unit
Value at the end of each Valuation Period is the Accumulation Unit Value
at the end of the previous Valuation Period multiplied by the Net
Investment Factor, as described below.
Net Investment Factor
The Accumulation Unit Value for each Sub-Account for any Valuation
Period is determined by the 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. Each Sub-Account has a Net
Investment Factor for each Valuation Period which may be greater or less
than one. Therefore, the value of an Accumulation Unit may increase or
decrease. The Net Investment Factor for any Sub-Account for any Valuation
Period is determined by dividing (1) by (2) and subtracting (3) from the
result, where:
(1) is equal to:
a. the Net Asset Value per share of the
Fund held in the Sub-Account, determined at the
end of the current Valuation Period; plus
b. the per share amount of any dividend or
net capital gain distributions made by the Fund
held in the Sub-Account, if the "ex-dividend"
date occurs during the current Valuation Period;
plus or minus
c. a per share charge or credit for any
taxes reserved for, which is determined by the
Company to have resulted from the investment
operations of the Sub-Account;
(2) is the Net Asset Value per share of the Fund held in the
Sub-Account, determined at the end of the most recent
Valuation Period; and
(3) is the factor representing the Mortality and Expense Risk
Charge and the Administration Charge deducted from the
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Sub-Account for the number of days in the Valuation
Period.
TRANSFERS
By Written Request prior to the Annuity Commencement Date, the
Participant may transfer amounts in a Sub-Account to a different Sub-
Account and/or one or more of the Fixed Account options. The minimum
transfer amount is $500. If the Sub-Account balance is less than $500 at
the time of the transfer, the entire amount of the Sub-Account balance
must be transferred. The Participant may also transfer amounts from any
Fixed Account options to any different Fixed Account option and/or one or
more of the Sub-Accounts. If a transfer is being made from a Fixed
Account option pursuant to the "Renewal" provision of the "FIXED ACCOUNT"
section of this Prospectus, then the entire amount of that Fixed Account
option may be transferred to any one or more of the Sub-Accounts. In any
other case, transfers from any Fixed Account options are subject to a
cumulative limit during each Certificate Year of 20% of the most recent
Certificate Year-end values of that Fixed Account option, and are not
permitted during the first Certificate Year. However, if the Account
Value of the Fixed Account option being transferred is less than $500 at
the time of the transfer, then the entire balance will be transferred.
The Company may from time to time change the amount available for transfer
from the Fixed Accumulation Account. Amounts previously transferred from
Fixed Account options to the Sub-Accounts may not be transferred back to
the Fixed Account options for a period of at least six months from the
date of transfer.
The Company charges a Transfer Fee of $25 for each transfer in
excess of twelve during the same Certificate Year.
The Company reserves the right, in the Company's sole discretion
and at any time without prior notice, to terminate, suspend or modify the
transfer privileges described above.
See "Transfers After the Annuity Commencement Date," page_____.
Telephone Transfers
A Participant also may place a request for all or part of the
Account Value to be transferred by telephone. All transfers must be in
accordance with the terms of the Certificate. Transfer instructions are
currently accepted on each Valuation Date during regular business hours at
(800) 789-6771. Once instructions have been accepted, they may not be
rescinded; however, new telephone instructions may be given the following
day.
The Company will not be liable for complying with telephone
instructions the Company reasonably believes to be genuine or for any
loss, damage, cost or expense in acting on such telephone instructions.
The Participant will bear the risk of such loss. The Company will employ
reasonable procedures to determine that telephone instructions are
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genuine. If the Company does not employ such procedures, the Company may
be liable for losses due to unauthorized or fraudulent instructions.
These procedures may include, among others, tape recording telephone
instructions.
Dollar Cost Averaging
Prior to the Annuity Commencement Date, the Participant may
establish automatic transfers from the Money Market Sub-Account to any of
the other Sub-Accounts, on a monthly or quarterly basis, by submitting to
the Administrative Office a Dollar Cost Averaging Enrollment Form. No
Dollar Cost Averaging transfers may be made to any of the Fixed Account
options. The transfers will begin within 30 days of the receipt of such
Enrollment Form.
In order to be eligible for Dollar Cost Averaging the value of the
Money Market Sub-Account must be at least $10,000 and the minimum amount
that can be transferred is $500 per month.
The Company reserves the right to terminate Dollar Cost Averaging
if the balance of the Money Market Sub-Account falls below $500. In this
event, the Company will allocate the balance of the Money Market Sub-
Account to the other Sub-Accounts in the same percentage distribution as
directed in the Dollar Cost Averaging Enrollment Form.
Dollar Cost Averaging transfers will not count toward the twelve
transfers permitted under the Certificate without charge.
Before electing Dollar Cost Averaging, a Participant should
consider the risks involved in switching between investments available
under the Certificate. Dollar Cost Averaging requires regular investments
regardless of fluctuating price levels and does not guarantee profits or
prevent losses in a declining market. A Participant should consider his
or her financial ability to continue Dollar Cost Averaging transfers
through periods of changing price levels.
The Participant may terminate Dollar Cost Averaging services, at
any time, by Written Request to the Company. In addition, the Company
reserves the right to terminate, modify or suspend the Dollar Cost
Averaging option at any time. Currently, the Company does not charge a
fee for Dollar Cost Averaging services. However, the Company reserves the
right to impose an annual fee not to exceed $25 for each Dollar Cost
Averaging service performed by the Company.
Portfolio Rebalancing
In connection with the allocation of Purchase Payments to the Sub-
Accounts and/or the Fixed Accumulation Account, the Participant may elect
to have the Company perform Portfolio Rebalancing services. The election
of Portfolio Rebalancing instructs the Company to automatically transfer
amounts between the Sub-Accounts and the Fixed Accumulation Account to
maintain the percentage allocations selected by the Participant.
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<PAGE>
The Participant may elect Portfolio Rebalancing in the Participant
Enrollment Form or by subsequent Written Request. In order to elect
Portfolio Rebalancing after the Certificate has been issued, the
Participant must submit a Written Request for Portfolio Rebalancing to the
Company and the Participant must have a minimum Account Value of $10,000.
Portfolio Rebalancing will be performed on a quarterly basis.
The Participant may terminate Portfolio Rebalancing services, at
any time, by Written Request to the Company. In addition, the Company
reserves the right to terminate, modify or suspend the Portfolio
Rebalancing option at any time. Currently, the Company does not charge a
fee for Portfolio Rebalancing services. However, the Company reserves the
right to impose an annual fee not to exceed $25 for each Portfolio
Rebalancing service performed by the Company.
The Company reserves the right, at any time, to terminate, suspend
or modify the transfer privileges described above without prior notice to
Participants, as permitted by applicable law.
SURRENDERS
Surrender Value
The Participant may surrender all or part of the Surrender Value
of a Certificate. Full or partial surrenders of the Surrender Value may
be made by Written Request at any time prior to the Annuity Commencement
Date; the Surrender Value will be the Surrender Value at the end of the
Valuation Period in which the Written Request is received. The Surrender
Value at any time is equal to the Account Value as of that Valuation
Period less any applicable Contingent Deferred Sales Charge ("CDSC"), less
any outstanding loans and less any applicable premium tax not previously
deducted. On full surrender, an annual Certificate Maintenance Fee also
will be deducted as part of the calculation of the Surrender Value. A
full or partial surrender prior to the Annuity Commencement Date may be
subject to a CDSC as set forth in this prospectus, except that such charge
will not apply to: (1) any portion of the Account Value in excess of total
Purchase Payments; (2) any portion of the Account Value attributable to
Purchase Payment(s) that are no longer subject to the charge; or (3)
payment of the Death Benefit.
The CDSC is calculated separately for each Purchase Payment.
Surrenders will be deemed to be withdrawn first from the portion of the
Account Value in excess of total Purchase Payments and then from Purchase
Payments. For this purpose, Purchase Payment(s) are deemed to be
withdrawn on a "first-in, first-out" (FIFO) basis. Surrenders will result
in the cancellation of Accumulation Units from each applicable Sub-
Account(s) and/or a reduction of the Participant's Fixed Account Value.
In the case of a full surrender, the Participant's participation interest
under the Contract and the Certificate will be canceled. The CDSC may be
waived in whole or in part under certain circumstances.
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The Company reserves the right to terminate a Certificate if a
partial surrender would reduce a Participant's Account Value to less than
the $500 minimum balance and no Purchase Payments have been received by
the Company for at least two years.
The Certificate Maintenance Fee, unless waived, will be deducted
from a full surrender before the application of any CDSC. (See "Charges
and Deductions," page __.)
Surrenders may have tax consequences. (See "Federal Tax Matters,"
page___.)
Suspension or Delay in Payment of Surrender Value
The Company may suspend or delay the date of payment of a partial
or full surrender of the Variable Account Value for any period if:
(1) the New York Stock Exchange ("NYSE") is closed or trading
on the NYSE is restricted;
(2) an emergency exists (as determined by the Securities and
Exchange Commission) as a result of which (a) the
disposal of securities in the Separate Account is not
reasonably practicable; or (b) it is not reasonably
practicable to determine fairly the value of the net
assets in the Separate Account; or
(3) the Securities and Exchange Commission so permits for the
protection of security holders.
The Company further reserves the right to delay payment of any
partial or full surrender of the Fixed Account Value for up to six months.
A surrender request will be effective when all appropriate
surrender request forms are received. Payments of any amounts derived
from a Purchase Payment paid by check may be delayed until the check has
cleared.
SINCE THE PARTICIPANT ASSUMES THE INVESTMENT RISK AND BECAUSE
CERTAIN SURRENDERS ARE SUBJECT TO A CDSC, THE TOTAL AMOUNT PAID UPON
SURRENDER OF THE CERTIFICATE (TAKING INTO ACCOUNT ANY PRIOR SURRENDERS)
MAY BE MORE OR LESS THAN THE TOTAL PURCHASE PAYMENTS.
Since the qualified contracts offered by this Prospectus will be
issued in connection with retirement plans which meet the requirements of
Sections 401, 403 or 457 of the Code, as applicable, reference should be
made to the terms of the particular plans for any additional limitations
or restrictions on surrenders.
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Systematic Withdrawal Option
Prior to the Annuity Commencement Date, the Participant, by
Written Request to the Administrative Office, may elect to automatically
withdraw money from the Fixed Account and/or the Sub-Accounts. To be
eligible for the Systematic Withdrawal Option, the Account Value must be
at least $10,000 at the time of election. The minimum monthly amount that
can be withdrawn is $100. Systematic withdrawals will be subject to the
CDSC to the extent the amount withdrawn exceeds the Free Withdrawal
Allowance (See "Charges and Deductions," page __.) The Company reserves
the right to discontinue offering systematic withdrawals or to assess a
processing fee for this service upon 30 days' written notice to Contract
Owners and Participants. The Participant may begin or discontinue
systematic withdrawals at any time by Written Request to the Company, but
at least 30 days' notice must be given to change any systematic withdrawal
instructions that are currently in place.
Systematic withdrawals may have tax consequences. (See "Federal
Tax Matters," page ___.)
CONTRACT LOANS
Certain Contracts may contain a loan provision issued in
connection with certain qualified plans. Participants under such
Contracts may obtain loans using their interest under such Contract as the
only security for the loan. Loans are subject to provisions of the Code
and to applicable retirement program rules. Tax advisers and retirement
plan fiduciaries should be consulted prior to exercising loan privileges.
Loan provisions are described in the loan endorsement.
The amount of any loan will be deducted from the minimum death
benefit. In addition, a loan, whether or not repaid, will have a
permanent effect on the Account Value because the investment results of
the investment options will only apply to the unborrowed portion of the
Account Value. The longer the loan is outstanding, the greater the effect
is likely to be. The effect could be favorable or unfavorable. If the
investment results are greater than the rate being credited on amounts
held in the loan account while the loan is outstanding, the Account Value
will not increase as rapidly as it would if no loan were outstanding. If
investment results are below that rate, the Account Value will be higher
than it would have been if no loan had been outstanding.
DEATH BENEFIT
Death of Participant
If a Participant dies before the Annuity Commencement Date, a
death benefit will be paid to the primary Beneficiary(ies) then living at
the time of the Participant's death. If no primary Beneficiary is living
at the time of the Participant's death or if the primary Beneficiary dies
within 30 days after the Participant's death and no death benefit has been
paid, the death benefit will be paid to the person(s) named as contingent
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Beneficiary(ies). If no primary or contingent Beneficiary is living at
the time of the Participant's death, the death benefit will be paid to the
Participant's estate. No death benefit is payable on or after the Annuity
Commencement Date. Only one death benefit is payable.
Death Benefit
The death benefit will be determined as of the end of the
Valuation Period in which Due Proof of Death is received by the Company.
If a Participant dies before attaining Age 75 and before the Annuity
Commencement Date, the death benefit is an amount equal to the greatest
of:
(1) the Account Value on the date Due Proof of Death is
received by the Company, less any applicable premium tax
not previously deducted, and less any outstanding loans;
(2) the total Purchase Payments, less any applicable premium
tax not previously deducted, less any partial surrenders,
and less any outstanding loans; or
(3) the largest death benefit amount on any Certificate
Anniversary that is an exact multiple of five and occurs
prior to the date on which the Company receives Due Proof
of Death, less any applicable premium tax not previously
deducted, less any partial surrenders after such death
benefit was determined and less any outstanding loans.
If the Participant dies after attaining Age 75 and before the
Annuity Commencement Date, the death benefit is an amount equal to the
greatest of:
(1) the Account Value on the date Due proof of Death is
received by the Company, less any applicable premium tax
not previously deducted, and less any outstanding loans;
(2) the total Purchase Payments, less any applicable premium
tax not previously deducted, less any partial surrenders,
and less any outstanding loans; or
(3) the largest death benefit amount on any Certificate
Anniversary that is both an exact multiple of five and
occurs prior to the date on which the Participant
attained age 75, less any applicable premium tax not
previously deducted, less any partial surrenders after
such death benefit was determined and less any
outstanding loans.
Payment of the death benefit is not subject to a CDSC.
Beneficiary
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The primary Beneficiary(ies) and contingent Beneficiary(ies) are
named on the Participant Enrollment Form. The Beneficiaries may be
changed at any time prior to the Participant's death. The Company must
receive a Written Request to change a Beneficiary. Any such change will
relate back to and take effect on the date the Written Request was signed.
The Company will not be liable for any payment it makes before such
Written Request has been received and acknowledged at the Administrative
Office.
In determining the identity or non-existence of any Beneficiary
not identified by name, the Company may rely on an affidavit by any person
whom the Company reasonably believes to be a reliable source for that
information.
CHARGES AND DEDUCTIONS
There are two types of charges and deductions. First, there are
charges assessed under the Certificate. These charges include the CDSC,
the Administration Charge, the Mortality and Expense Risk Charge, Premium
Taxes and Transfer Fees. All of these charges are described below and
some may not be applicable to every Certificate. Second, there are Fund
expenses for fund management fees and administration expenses. These fees
are described in the prospectus and statement of additional information
for each Fund.
Contingent Deferred Sales Charge ("CDSC")
No deduction for sales charges is made from Purchase Payments.
However, the Company may deduct a CDSC of up to 7% of Purchase Payments on
certain surrenders to partially cover certain expenses incurred by the
Company relating to the sale of the Contract, including commissions paid,
the costs of preparation of sales literature and other promotional costs
and acquisition expenses.
The CDSC percentage varies according to the number of Certificate
Years between the Certificate Year in which a Purchase Payment was
credited to the Certificate and the Certificate Year in which the
surrender is made. The amount of the CDSC is determined by multiplying
the amount withdrawn subject to the CDSC by the CDSC percentage in
accordance with the following table. Surrenders will be applied first to
accumulated earnings (which may be surrendered without charge) and then to
Purchase Payments on a first-in, first-out basis; surrenders will be made
from the oldest Purchase Payment first.
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Contingent Deferred
Number of Years Sales Charge as a
Elapsed Since Receipt percentage of Purchase
of Purchase Payment Payment
--------------------- ----------------------
0 7%
1 6%
2 5%
3 4%
4 3%
5 2%
6 1%
7 0%
In no event shall the CDSC assessed against the Certificate exceed
7% of the aggregate Purchase Payment(s).
Any Purchase Payments that have been held by the Company for at
least seven Certificate Years may be surrendered free of any CDSC. In
addition, during any Certificate Year after the first Certificate Year or
for Certificates qualified under Section 403(b) of the Code, the CDSC will
not be imposed on the surrender of up to 10% of the Account Value as of
the last day of the previous Certificate Year ("Free Withdrawal
Allowance"). If the Free Withdrawal Allowance is not withdrawn during a
Certificate Year, it does not carry over to the next Certificate Year.
No CDSC is assessed upon payment of the death benefit. Any
applicable CDSC will be deducted from the amount requested for partial and
full surrenders.
The CDSC arising from a surrender of the Certificate will be
waived in all cases if: (i) all or part of the Account Value is applied to
the purchase of an annuity from the Company for life or for a non-
commutable period of five years or more; or (ii) the Participant is
"disabled" as that term is defined in the Social Security Act of 1935, as
amended.
The CDSC arising from a surrender of the Certificate will be
waived for Certificates held by Participants in plans qualified under
Section 403(b) of the Code that are subject to the Employee Retirement
Income Security Act of 1974, as amended, and regulations thereunder
("ERISA"), or qualified under Section 401 of the Code, if the Participant
incurs a separation from service.
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The CDSC arising from a surrender of the Certificate will be
waived for Certificates held by Participants in plans qualified under
Section 403(b) of the Code that are not subject to ERISA if: (i) the
Participant incurs a separation from service, has attained age 55 and has
held the Certificate for at least seven years, provided the Account Value
is not transferred on a tax-free basis to another insurance carrier; or
(ii) the Participant has held the Certificate for fifteen years or more.
The CDSC also will be waived in all cases if the Participant is
confined in a licensed Hospital or Long-Term Care Facility, as those terms
are defined in the Long Term-Care Waiver Rider, for at least 90 days
beginning on or after the first Certificate Anniversary. This Rider may
not be available in all jurisdictions.
The Company reserves the right to terminate, suspend or modify
waivers of the CDSC, without prior notice to Participants, as permitted by
applicable law.
Maintenance and Administrative Charges
At the end of each Certificate Year, the Company deducts an annual
Certificate Maintenance Fee as partial compensation for expenses relating
to the issue and maintenance of the Certificate, and the Separate Account.
The annual Certificate Maintenance Fee is $25. The Company reserves the
right to increase the Certificate Maintenance Fee and guarantees that the
Certificate Maintenance Fee will not exceed $40. Any increase in the
Certificate Maintenance Fee will apply only to deductions after the
effective date of the change. If the Certificate is surrendered on any
day other than on the Certificate Anniversary, the Certificate Maintenance
Fee will be deducted in full at the time of such surrender. Before the
Annuity Commencement Date and after the Annuity Commencement Date, if a
Variable Annuity Benefit is elected, the Certificate Maintenance Fee will
be deducted on a pro rata basis from each Sub-Account in which the
Participant's Account is invested.
The Certificate Maintenance Fee may be waived for sales of
Contracts to a trustee, employer or similar entity representing a group
where the Company determines that such sales result in savings of sales
and/or administrative expenses.
Currently, the Company imposes no Administration Charge to
reimburse the Company for those administrative expenses attributable to
the Certificate and the Separate Account which exceed the revenues
received from the Certificate Maintenance Fee and any Transfer Fee.
However, the Company reserves the right to impose an Administration Charge
to be deducted at the end of each Valuation Period (both before and after
the Annuity Commencement Date) from the Net Asset Value of each Sub-
Account of the Separate Account at an effective annual rate guaranteed not
to exceed 0.20%
The Company will provide 30 days written notice in advance of any
change in fees. The Company has not imposed an Administration Charge and
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has set the Certificate Maintenance Fee at a level such that the Company
will recover no more than the anticipated and estimated costs associated
with administering the Certificate and Separate Account. The Company does
not expect to make a profit from the actual administrative costs of a
particular Certificate. The Company does not expect to make a profit from
the Certificate Maintenance Fee.
Mortality and Expense Risk Charge
The Company imposes a Mortality and Expense Risk Charge as
compensation for bearing certain mortality and expense risks under the
Certificate. For assuming these risks, the Company makes a daily charge
equal to .003403% corresponding to an effective annual rate of 1.25% of
the daily Net Asset Value of each Sub-Account in the Separate Account.
The approximate portion of this charge estimated to be attributable to
mortality risks is 0.75%; the approximate portion of this charge
attributable to expense risks is 0.50%. In connection with certain
Contracts that allow the Company to reduce administrative expenses, the
Company will issue an Enhanced Contract with a Mortality and Expense Risk
Charge equal to an effective annual rate of 0.95%. This is equal to a
daily charge of 0.002590%. The Company estimates that 0.20% is for
administrative expenses and 0.75% is for mortality and expense risks.
This charge is imposed before the Annuity Commencement Date and after the
Annuity Commencement Date if a Variable Annuity Benefit is selected. The
Company guarantees that the applicable charge will never increase for a
Contract. The Mortality and Expense Risk Charge is reflected in the
Accumulation Unit values for each Sub-Account.
The mortality risks assumed by the Company arise from its
contractual obligations to make annuity payments (determined in accordance
with the annuity tables and other provisions contained in the Certificate)
and to pay death benefits prior to the Annuity Commencement Date.
The Company also bears substantial risk in connection with the
Death Benefit before the Annuity Commencement Date, since in connection
with the death of a Participant who dies prior to attaining Age 75, the
Company will pay a Death Benefit at least equal to the greater of: (i)
the Account Value on the date Due Proof of Death is received by the
Company, less any applicable premium tax not previously deducted, and less
any outstanding loans; (ii) the total Purchase Payments, less any
applicable premium tax not previously deducted, less any partial
surrenders, and less any outstanding loans; or (iii) the largest Death
Benefit on any Certificate Anniversary that is an exact multiple of five
and occurs prior to the date on which the Company receives Due Proof of
Death, less any applicable premium tax not previously deducted, less any
partial surrenders after the Death Benefit was determined, and less any
outstanding loans. In connection with the death of Participant who dies
after attaining Age 75, the Company will pay a Death Benefit at least
equal to the greater of: (i) the Account Value on the date of Due Proof of
Death is received by the Company, less any applicable premium tax not
previously deducted, and less any outstanding loans; (ii) the total
Purchase Payments, less any applicable premium tax not previously
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deducted, less any partial surrenders, and less any outstanding loans; or
(iii) the largest Death Benefit on any Certificate Anniversary that is
both an exact multiple of five and occurs prior to the date on which the
Participant attained Age 75, less any applicable premium tax not
previously deducted, less any partial surrenders after the Death Benefit
was determined, and less any outstanding loans.
The expense risk assumed by the Company is the risk that the
Company's actual expenses in administering the Certificates and the
Separate Account will exceed the amount recovered through the Certificate
Maintenance Fees and Transfer Fees.
If the Mortality and Expense Risk Charge is insufficient to cover
actual costs and risks assumed, the loss will fall on the Company.
Conversely, if this charge is more than sufficient, any excess will be
profit to the Company. Currently, the Company expects a profit from this
charge.
The Company recognizes that the CDSC may not generate sufficient
funds to pay the cost of distributing the Contracts and Certificates
thereunder. To the extent that the CDSC is insufficient to cover the
actual cost of Contract and Certificate distribution, the deficiency will
be met from the Company's general corporate assets which may include
amounts, if any, derived from the Mortality and Expense Risk Charge.
Premium Taxes
Certain state and local governments impose premium taxes. These
taxes currently range up to 5.0% depending upon the 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
Account Value either upon death, surrender, annuitization, or at the time
Purchase Payments are made to the Certificate, but no earlier than when
the Company has a tax liability under state law.
Transfer Fee
The Company currently imposes a $25 fee for each transfer in
excess of twelve in a single Certificate Year. The Company will deduct
the charge from the amount transferred.
Fund Expenses
The value of the assets in the Separate Account reflects the value
of Fund shares and therefore the fees and expenses paid by each Fund. A
complete description of the fees, expenses, and deductions from the Funds
are found in the respective prospectuses for the Funds. (See "The Funds"
page __.)
Reduction or Elimination of Contract and Certificate Charges
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The CDSC and the administrative charges under the Contract and
Certificates may be reduced or eliminated when certain sales of the
Contract and Certificates result in savings or reduction of sales
expenses. The entitlement to such a reduction in the CDSC or the
administrative charges will be based on the following: (1) the size and
type of the group to which sales are to be made; (2) the total amount of
Purchase Payments to be received; and (3) any prior or existing
relationship with the Company. There may be other circumstances, of which
the Company is not presently aware, which could result in fewer sales
expenses. In no event will reduction or elimination of the CDSC or the
administrative charge be permitted where such reduction or elimination
will be unfairly discriminatory to any person.
SETTLEMENT OPTIONS
Annuity Commencement Date
Unless otherwise specified, the Annuity Commencement Date will be
the Participant's 70th birthday. The Annuity Commencement Date may be
changed by the Participant or by the Contract Owner by Written Request at
least 30 days prior to the then-current Annuity Commencement Date. The
Annuity Commencement Date may be changed to any date not later than such
date as may be required or permitted by law or by any applicable
retirement plan.
Election of Settlement Option
If the Participant is alive on the Annuity Commencement Date and
unless otherwise directed, the Company will apply the Account Value, less
premium taxes, if any, according to the Settlement Option elected.
If no election has been made on the Annuity Commencement Date and
if the Participant is living and has a spouse, the Company will begin
payments based on the life of the Participant as primary payee and the
spouse as secondary payee, in accordance with Settlement Option 3 (Joint
and One Half Survivor Annuity) described below. If no election has been
made on the Annuity Commencement Date and if the Participant is living and
does not have a spouse, the Company will begin payments based on the life
of the Participant in accordance with Settlement Option 1 (Life Annuity
with Payments for at Least a Fixed Period), described below, with a fixed
period of 120 monthly payments assured.
Annuity Benefit
The Annuity Benefit may be calculated and paid: (1) as a Fixed
Dollar Annuity Benefit; (2) as a Variable Dollar Annuity Benefit; or (3)
as a combination of both.
If a Fixed Dollar Annuity Benefit only is elected, the Company
will transfer all of the Separate Account Value to the Fixed Account prior
to the Annuity Commencement Date. Similarly, if a Variable Dollar Annuity
Benefit only is elected, the Company will transfer all of the Fixed
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Account Value to the Sub-Accounts prior to the Annuity Commencement Date.
The Company will allocate the amount transferred among the Sub-Accounts in
accordance with a Written Request. If a combination of both is elected,
no transfers between the Fixed Dollar Annuity Benefit and the Variable
Dollar Annuity Benefit will be allowed after the Annuity Commencement
Date. However, after the Variable Dollar Annuity Benefit has been paid
for at least twelve months, the Participant may, no more than once each
twelve months, transfer all or part of the Annuity Units upon which the
Variable Dollar Annuity Benefit is based from the Sub-Account(s) held to
Annuity Units in different Sub-Accounts.
If a Variable Dollar Annuity Benefit is elected, the amount
applied under that benefit is the Variable Account Value as of the end of
the Valuation Period immediately preceding the Annuity Commencement Date.
If a Fixed Dollar Annuity Benefit is elected, the amount applied under
that benefit is the Fixed Account Value as of the Annuity Commencement
Date.
Fixed Dollar Annuity Benefit
Fixed Dollar Annuity Benefits are determined by multiplying the
Fixed Account Value (expressed in thousands of dollars and after deduction
of any premium taxes not previously deducted) by the amount of the monthly
payment per $1,000 of value obtained from the Settlement Option Table for
the Annuity Benefit elected. The Fixed Dollar Annuity Benefit will remain
level for the duration of the Annuity.
Variable Dollar Annuity Benefit
The first monthly Variable Dollar Annuity Benefit payment is equal
to the Variable Account Value as of the end of the Valuation Period
immediately preceding the Annuity Commencement Date (expressed in
thousands of dollars and after deduction of any premium taxes not
previously deducted) multiplied by the amount of the monthly payment per
$1,000 of value obtained from the Settlement Option Table for the Annuity
Benefit elected less the pro rata portion of the Certificate Maintenance
Fee. The dollar amount of the first monthly Variable Dollar Annuity
Benefit from each Sub-Account is determined in the same manner.
The dollar amount of the second and subsequent monthly Variable
Dollar Annuity Benefit payments is equal to the sum of the number of
Annuity Units for each Sub-Account in which amounts are held by the
Participant, multiplied by the value of an Annuity Unit ("Annuity Unit
Value") for that Sub-Account as of the fifth Valuation Date preceding the
due date of the payment. A pro rata portion of the Certificate
Maintenance Fee is deducted from the total to arrive at the actual
payment.
The number of Annuity Units in each Sub-Account held by a
Participant is determined by dividing the dollar amount of the first
monthly Variable Dollar Annuity Benefit from each Sub-Account by the
Annuity Unit Value for that Sub-Account as of the Participant's Annuity
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Commencement Date. The number of Annuity Units remains fixed during the
Annuity Payment Period, except as a result of any transfers among Sub-
Accounts after the Annuity Commencement Date.
The Annuity Unit Value for each Sub-Account was originally
established in the same manner as Accumulation Unit values. Thereafter,
the Annuity Unit Value for a Sub-Account is determined by multiplying the
Annuity Unit Value as of the end of the preceding Valuation Period by the
Net Investment Factor, determined as set forth above under "Accumulation
Unit Value," for the Valuation Period just ended, and multiplying the
product by the assumed daily investment factor (0.99991781), which
represents the assumed net investment rate of three percent (3%) that is
reflected in the Settlement Option Tables.
The Annuitant receives an amount equal to the value of a fixed
number of Annuity Units each month. Such value will reflect the
investment performance of the Sub-Accounts selected and the amount of each
annuity payment will vary accordingly.
Transfers After the Annuity Commencement Date
After the Annuity Commencement Date, no transfers between the
Fixed Account and the Separate Account are permitted. However, after a
Variable Dollar Annuity Benefit has been paid for at least twelve months,
the Participant may, by Written Request to the Administrative Office,
transfer Annuity Units between Sub-Accounts no more than once during a
twelve month period.
Annuity Transfer Formula
Transfers after the Annuity Commencement Date are implemented
according to the following formulas:
(1) Determine the number of units to be transferred from the
Sub-Account as follows:
= AT/AUV1
(2) Determine the number of Variable Annuity Units remaining
in such Sub-Account (after the transfer):
= UNIT1 - AT/AUV1
(3) Determine the number of Variable Annuity Units in the
transferee Sub-Account (after the transfer):
= UNIT2 + AT/AUV2
(4) Subsequent Variable Dollar Annuity Benefit payments will
reflect the changes in Variable Annuity Units in each
Sub-Account as of the next Variable Dollar Annuity
Benefit payment's due date.
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Where:
(AUV1) is the value of a Variable Annuity Unit ("Variable Annuity
Unit Value") of the Sub-Account that the transfer is being made
from as of the end of the Valuation Period in which the transfer
request was received.
(AUV2) is the Variable Annuity Unit Value of the Sub-Account that
the transfer is being made to as of the end of the Valuation
Period in which the transfer request was received.
(UNIT1) is the number of Variable Annuity Units in the Sub-Account
that the transfer is being made from, before the transfer.
(UNIT2) is the number of Variable Annuity Units in the Sub-Account
that the transfer is being made to, before the transfer.
(AT) is the dollar amount being transferred from the Sub-Account.
Settlement Options
Option 1: Life Annuity with Payments for at Least a Fixed
Period. The Company will make a monthly payment
for at least a fixed period. If the Annuitant
lives longer than the fixed period, then the
Company will make payments until the Annuitant's
death. The fixed periods available are reflected
in Annuity Table 1.
If, at the death of the Annuitant, payments have
been made for less than the fixed period elected,
the Company will continue to make payments:
(i) to the contingent payee designated on the
Settlement Option election form; and (ii) during
the remainder of the fixed period.
Option 2: Life Annuity. The Company will make annuity
payments until the Annuitant's death. Annuity
Table 2 applies to this Option.
Option 3: Joint and One-Half Survivor Annuity. The Company
will provide a monthly payment to an Annuitant
during his/her lifetime; thereafter, upon the
death of the Annuitant and receipt by the Company
of Due Proof of Death, one-half of the monthly
payments will continue to a designated survivor,
if living, and until his/her death. Annuity
Table 3 applies to this Option.
Option 4: Income for a Fixed Period. The Company will make
payments for a fixed period. Payment intervals
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and amounts are shown in Annuity Table 4 and are
based on a 3% guaranteed interest rate.
If, at the death of the Annuitant, payments have
been made for less than the fixed period elected,
the Company will continue to make payments:
(i) to the contingent payee designated on the
Settlement Option election form; and (ii) during
the remainder of the fixed period.
Option 5: Any Other Form. The Company will make payments
in the form of any other annuity which is
acceptable to the Company.
Minimum Amounts
If the Participant's Account Value is less than $5,000 on the
Annuity Commencement Date, the Company reserves the right to pay that
amount in one lump sum. If monthly payments under a Settlement Option
would be less than $100, the Company may make payments quarterly, semi-
annually or annually at its discretion.
All elected Settlement Options must comply with current applicable
laws, regulations and rulings issued by any governmental agency. If at
the time a Fixed Dollar Annuity Benefit is elected, the Company has
available options or rates on a more favorable basis than those
guaranteed, the higher benefits shall be applied and guaranteed for as
long as that election remains in force.
To the extent applicable, all factors, values, benefits and
reserves will not be less than those required by the law of the state in
which the Contract is delivered.
Settlement Option Tables
The Settlement Option Tables in Appendix A reflect the dollar
amount of the monthly payments for each $1,000 applied.
Rates for monthly payments for ages or fixed periods not shown in
the Settlement Option Tables will be calculated on the same basis as those
shown and may be obtained from the Company. Fixed periods shorter than
five years are not available.
GENERAL PROVISIONS
Non-participating
The Contract and the Certificates thereunder are non-
participating. Neither the Contract nor the Certificates thereunder are
eligible to share in the profits or surplus earnings of the Company's
general account and will not receive dividends from the general account.
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Misstatement of Age
If the age of the Participant has been misstated in the
Certificate Application, Annuity Benefit payments under the Certificate
will be whatever the Account Value on the Annuity Commencement Date would
purchase on the basis of the correct age of the Participant. If the
Company has made underpayments based on any misstatement, the Company
shall promptly pay the amount of any underpayment, with interest, in one
lump sum. Any overpayments made shall be charged, with interest, against
the next Annuity Benefit payment or succeeding Annuity Benefit payments
due under the Certificate. The interest rate used will not be less than
3% per year.
Proof of Existence and Age
The Company may require proof of age of the Annuitant and, if
applicable, any joint payee, before any Annuity Benefit involving lifetime
payments will be made.
Facility of Payment
If any person receiving payments under a Certificate is incapable
of giving valid receipt of payment, the Company may make such payment to
the person who has legally assumed responsibility for his or her care and
principal support. Any such payment shall fully discharge the Company to
the extent of that payment.
Transfer and Assignment
Neither any one Participant nor the Contract Owner may transfer,
sell, assign, pledge, charge, encumber or in any way alienate his or her
interest under a Certificate or the Contract, respectively. To the extent
permitted by law, no benefits payable under the Contract or a Certificate
will be subject to the claims of creditors.
Annuity Data
The Company will not be liable for obligations which depend on the
Company receiving information from a Participant until such information is
received by the Company in a satisfactory form.
Annual Report
At least once each Certificate Year prior to the Annuity
Commencement Date, the Participant will be given a report of the current
Account Value allocated to each Sub-Account, and each Fixed Account
option. This report will also include any other information required by
law or regulation, including all transactions which have occurred during
the accounting period shown in the report.
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Incontestability
Each Certificate shall not be contestable by the Company.
Entire Contract
The Company issues the Certificate in consideration and acceptance
of the payment of the initial Purchase Payment and, where state law
requires, the Participant Enrollment Form. In those states that require a
written application, a copy of the Enrollment Form will be attached to and
become part of the Certificate and along with the Certificate constitutes
the entire Certificate. All statements made by the Participant will be
considered representations and not warranties. The Company will not use
any statement in defense of a claim unless it is made in the Participant
Enrollment Form (or other application form) and a copy of the Participant
Enrollment Form (or other application form) is attached to the Certificate
when issued.
Changes in the Contract
Only the Company's President, Vice President and Secretary have
the authority to bind the Company or to make any change in the Contract or
the Certificates thereunder and then only in writing. The Company will
not be bound by any promise or representation made by any other persons.
The Company may not change or amend the Contract or Certificates
thereunder, except as expressly provided therein, without the
Participant's consent. However, the Company may change or amend the
Contract or Certificates thereunder if such change or amendment is
necessary for the Contract or Certificates thereunder to comply with any
state or federal law, rule or regulation.
Waiver of the Certificate Maintenance Fee
The Company may waive the Certificate Maintenance Fee in certain
situations where the Company expects to realize significant economies of
scale with respect to sales of Contracts and Certificates. This is
possible because sales costs do not increase in proportion to the Purchase
Payments under the Contracts and Certificates sold; for example, the per
dollar transaction cost for a sale of a Contract and Certificates with
$500,000 of Purchase Payments is generally much higher than the per dollar
cost for a sale of a Contract and Certificates with $1,000,000 of Purchase
Payments. Thus, the applicable sales costs decline as a percentage of the
Purchase Payments as the amount of Purchase Payments increases.
Notices and Directions
The Company will not be bound by any authorization, election or
notice which is not in writing and received at the Company's
Administrative Office.
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Any written notice requirement by the Company to the Participant
will be satisfied by the mailing of any such required written notice, by
first-class mail, to the Participant's last known address as shown on the
Company's records.
FEDERAL TAX MATTERS
Introduction
The following discussion is a general description of federal tax
considerations relating to the Contract and is not intended as tax advice.
This discussion is not intended to address the tax consequences resulting
from all of the situations in which a person may be entitled to or may
receive a distribution under the Contract. Any person concerned about tax
implications should consult a competent tax adviser before initiating any
transaction. This discussion is based upon the Company's understanding of
the present federal income tax laws as they are currently interpreted by
the Internal Revenue Service. No representation is made as to the
likelihood of the continuation of the present federal income tax laws or
of the current interpretation by the Internal Revenue Service. Moreover,
no attempt has been made to consider any applicable state or other tax
laws.
The ultimate effect of federal income taxes on the amounts held
under a Contract, on Annuity Payments, and on the economic benefit to the
Participant or the Beneficiary may depend on the type of retirement plan,
and on the tax status of the individual concerned. Certain requirements
must be satisfied in purchasing a Contract for a qualified plan and
receiving distributions from such a Contract in order to continue to
receive favorable tax treatment. The Company makes no attempt to provide
more than general information about use of the Contracts with the various
types of retirement plans. Participants under retirement plans and
Beneficiaries are cautioned that the rights of any person to any benefits
may be subject to the terms and conditions of the plans themselves,
regardless of the terms and conditions of the Contract issued in
connection with such a plan. Some retirement plans are subject to
distribution and other requirements that are not incorporated in the
administration of the Contracts. Participants are responsible for
determining that contributions, distributions and other transactions with
respect to the Contracts satisfy applicable law. Therefore, purchasers of
Contracts should seek competent legal and tax advice regarding the
suitability of the Contract for their situation, the applicable
requirements, and the tax treatment of the rights and benefits of the
Contract. The following discussion assumes that a Contract is purchased
with proceeds from and/or contributions under retirement plans that
qualify for the intended special federal income tax treatment ("Qualified
Contracts").
The following discussion also is based on the assumption that the
Contract qualifies as an annuity contract for federal income tax purposes.
The Statement of Additional Information discusses the requirements for
qualifying as an annuity.
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Taxation of Annuities In General
Section 72 of the Code governs taxation of annuities in general.
The Company believes that the Participant who is a natural person
generally is not taxed on increases in the value of an Account until
distribution occurs by withdrawing all or part of the Account Value (e.g.,
surrenders or annuity payments under the Settlement Option elected). For
this purpose, the assignment, pledge, or agreement to assign or pledge any
portion of the Account Value or any portion of an interest in the
qualified plan generally will be treated as a distribution. The taxable
portion of a distribution (in the form of a single sum payment or an
annuity) is generally taxable as ordinary income.
The following discussion generally applies to a Certificate owned
by a natural person under a group Contract.
Surrenders
In the case of a surrender under a Qualified Contract, including
withdrawals under the Systematic Withdrawal Option, a ratable portion of
the amount received is taxable, generally based on the ratio of the
"investment in the contract" to the individual's total accrued benefit
under the retirement plan. The "investment in the contract" generally
equals the amount of any non-deductible Purchase Payments paid by or on
behalf of any individual. For a Contract issued in connection with
qualified plans, the "investment in the contract" is often zero. Special
tax rules may be available for certain distributions from a Qualified
Contract.
Annuity Payments
Although the tax consequences may vary depending on the Annuity
Payment and Settlement Option elected under the Contract, in general, only
the portion of the Annuity Payment that represents the amount by which the
Account Value exceeds the "investment in the contract" will be taxed;
after the "investment in the contract" is recovered, the full amount of
any additional Annuity Payments is taxable. For Variable Dollar Annuity
Payments, the taxable portion is generally determined by an equation that
establishes a specific dollar amount of each payment that is not taxed.
The dollar amount is determined by dividing the "investment in the
contract" by the total number of expected periodic payments. However, the
entire distribution will be taxable once the recipient has recovered the
dollar amount of his or her "investment in the contract." For Fixed
Dollar Annuity Payments, in general there is no tax on the portion of each
payment which represents the same ratio that the "investment in the
contract" bears to the total expected value of the Annuity Payments for
the term of the payments; however, the remainder of each Annuity Payment
is taxable. Once the "investment in the contract" has been fully
recovered, the full amount of any additional Annuity Payments is taxable.
If Annuity Payments cease as a result of a Participant's death before full
recovery of the "investment in the contract," consult a competent tax
adviser regarding deductibility of the unrecovered amount.
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Penalty Tax
In general, a 10% premature distribution penalty tax applies to
distributions unless: (1) made on or after the date on which the
Participant attains age 59 1/2; (2) made as a result of death or
disability of the Participant; (3) received in substantially equal
periodic payments as a life annuity or a joint and one-half survivor
annuity for the lives or life expectancies of the Participant and a
"designated beneficiary;" (4) made to the Participant after separation
from service and attainment of age 55; (5) made under a qualified domestic
relations order; or (6) to the extent they do not exceed the Participant's
allowable deduction for medical care for that year. Other tax penalties
may apply to certain distributions under a qualified plan.
Taxation of Death Benefit Proceeds
Amounts may be distributed from the Account because of the death
of a Participant. Generally such amounts are includible in the income of
the recipient as follows: (1) if distributed in a lump sum, they are
taxed in the same manner as a full surrender as described above, or (2) if
distributed under a Settlement Option, they are taxed in the same manner
as Annuity Payments, as described above.
Transfers, Assignments, or Exchanges of the Contract
A transfer of ownership of a Contract, the designation of a
Beneficiary who is not also the Participant, or the exchange of a Contract
may result in certain tax consequences to the Participant that are not
discussed herein.
Texas Optional Retirement Program
Section 36.105 of the Texas Educational Code permits participants
in the Texas Optional Retirement Program ("ORP") to withdraw their
interests in a variable annuity policy issued under the ORP only upon: (1)
termination of employment in the Texas public institutions of higher
education; (2) retirement; or (3) death. Accordingly, a participant in
the ORP (or the participant's estate if the participant has died) will be
required to obtain a certificate of termination from the employer or a
certificate of death before all or part of the Account Value can be
withdrawn.
Qualified Pension and Profit Sharing Plans and H.R. 10 Plans
Code section 401(a) permits employers to establish various types
of retirement plans for employees, and permit self-employed individuals to
establish retirement plans for themselves and their employees. These
retirement plans may permit the purchase of the Contracts to accumulate
retirement savings under the plans.
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Purchasers of a Contract for use with such plans should seek
competent advice regarding the suitability of the proposed plan documents
and the Contract to their specific needs.
Withholding
Pension and annuity distributions generally are subject to
withholding for the recipient's federal income tax liability at rates that
vary according to the type of distribution and the recipient's tax status.
Federal withholding at a flat 20% of the taxable part of the distribution
is required if the distribution is eligible for rollover and the
distribution is not paid as a direct rollover. In other cases, recipients
generally are provided the opportunity to elect not to have tax withheld
from distributions.
Possible Changes in Taxation
Although as of the date of this prospectus, Congress is not
actively considering any legislation regarding the taxation of annuities
issued in connection with a qualified plan, there is always the
possibility that the tax treatment of such annuities could change by
legislation or other means (such as IRS regulations, revenue rulings,
judicial decisions, etc.). Moreover, it is also possible that any change
could be retroactive (that is, effective prior to the date of the change).
Other Tax Consequences
As noted above, the foregoing discussion of the federal income tax
consequences is not exhaustive and special rules are provided with respect
to other tax situations not discussed in this Prospectus. Further, the
federal income tax consequences discussed herein reflect the Company's
understanding of current law and the law may change. Federal estate tax
consequences and state and local estate, inheritance, and other tax
consequences of ownership or receipt of distributions under the Contract
depend on the individual circumstances of each Participant or recipient of
the distribution. A competent tax adviser should be consulted for further
information.
General
At the time the initial Purchase Payment is paid, a prospective
purchaser must specify whether the purchase is a Qualified Contract. If
the initial purchase payment is derived from an exchange or surrender of
another annuity contract, the Company may require that the prospective
purchaser provide information with regard to the federal income tax status
of the previous annuity contract. The Company will require that persons
purchase separate Contracts if they desire to invest monies qualifying for
different annuity tax treatment under the Code. Each such separate
Contract would require the minimum initial Purchase Payment stated above.
Additional Purchase Payments under a Contract must qualify for the same
federal income tax treatment as the Initial Purchase Payment under the
Contract; the Company will not accept an additional Purchase Payment under
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a Contract if the federal income tax treatment of such Purchase Payment
would be different from that of the Initial Purchase Payment.
DISTRIBUTION OF THE CONTRACT
AAG Securities, Inc. ("AAG Securities") is the principal
underwriter and distributor of the Contracts. AAG Securities may also
serve as an underwriter and distributor of other contracts issued through
the Separate Account and certain other Separate Accounts of the Company
and any affiliates of the Company. AAG Securities is a wholly-owned
subsidiary of American Annuity Group, Inc., a publicly-traded company
which is an indirect subsidiary of American Premier Group, Inc. AAG
Securities is registered with the Securities and Exchange Commission as a
broker-dealer and is a member of the National Association of Securities
Dealers, Inc. ("NASD"). Its principal offices are located at 250 East
Fifth Street, Cincinnati, Ohio 45202. The Company pays AAG Securities
for acting as underwriter under a distribution agreement.
AAG Securities has entered into sales agreements with other
broker-dealers to solicit applications for the Contracts through
registered representatives who are licensed to sell securities and
variable insurance products. These agreements provide that applications
for the Contracts may be solicited by registered representatives of the
broker-dealers appointed by the Company to sell its variable life
insurance and variable annuities. These broker-dealers are registered
with the Securities and Exchange Commission and are members of the NASD.
The registered representatives are authorized under applicable state
regulations to sell variable annuities.
Under the agreements, Contracts will be sold by registered
representatives which will receive commissions from AAG Securities of up
to 8% of any Purchase Payments. From time to time the Company may pay or
permit other promotional incentives, in cash or credit or other
compensation.
LEGAL PROCEEDINGS
There are no pending legal proceedings affecting the Separate
Account or AAG Securities. The Company is involved in various kinds of
routine litigation which, in management's judgment, are not of material
importance to the Company's assets or the Separate Account.
VOTING RIGHTS
To the extent required by applicable law, all Fund shares held in
the Separate Account will be voted by the Company at regular and special
shareholder meetings of the respective Funds in accordance with
instructions received from persons having voting interests in the
corresponding Sub-Account. If, however, the 1940 Act or any regulation
thereunder should be amended, or if the present interpretation thereof
should change, or if the Company determines that it is allowed to vote all
shares in its own right, the Company may elect to do so.
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The person with the voting interest is the Participant. The
number of votes which are available to a Participant will be calculated
separately for each Sub-Account. Before the Annuity Commencement Date,
that number will be determined by applying his or her percentage interest,
if any, in a particular Sub-Account to the total number of votes
attributable to that Sub-Account. The Participant holds a voting interest
in each Sub-Account to which the Account Value is allocated. After the
Annuity Commencement Date, the number of votes decreases as Annuity
Payments are made and as the number of Accumulation Units for a
Certificate decreases.
The number of votes of a Fund will be determined as of the date
coincident with the date established by that Fund for shareholders
eligible to vote at the meeting of the Fund. Voting instructions will be
solicited by written communication prior to such meeting in accordance
with procedures established by the respective Funds.
Shares as to which no timely instructions are received and shares
held by the Company as to which Participants have no beneficial interest
will be voted in proportion to the voting instructions which are received
with respect to all Certificates participating in the Sub-Account. Voting
instructions to abstain on any item will be applied on a pro rata basis to
reduce the votes eligible to be cast.
Each person or entity having a voting interest in a Sub-Account
will receive proxy material, reports and other material relating to the
appropriate Fund.
It should be noted that the Funds are not required to hold annual
or other regular meetings of shareholders.
AVAILABLE INFORMATION
The Company has filed a registration statement (the Registration
Statement) with the Securities and Exchange Commission under the
Securities Act of 1933 relating to the Contract and Certificates
thereunder offered by this Prospectus. This Prospectus has been filed as
a part of the Registration Statement and does not contain all of the
information set forth in the Registration Statement and exhibits thereto,
and reference is hereby made to such Registration Statement and exhibits
for further information relating to the Company, the Contract and the
Certificates. Statements contained in this Prospectus, as to the content
of the Contract, the Certificates and other legal instruments, are
summaries. For a complete statement of the terms thereof, reference is
made to the instruments filed as exhibits to the Registration Statement.
The Registration Statement and the exhibits thereto may be inspected and
copied at the office of the Commission, located at 450 Fifth Street, N.W.,
Washington, D.C.
51
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
A Statement of Additional Information is available which contains
more details concerning the subjects discussed in this Prospectus. The
following is the Table of Contents for that Statement:
Page
----
ANNUITY INVESTORS(SERVICEMARK) LIFE INSURANCE COMPANY . . . 1
General Information and History . . . . . . . . . . 1
State Regulation . . . . . . . . . . . . . . . . . . 1
SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Safekeeping of Separate Account Assets . . . . . . . 1
Records and Reports . . . . . . . . . . . . . . . . 2
Independent Accountants . . . . . . . . . . . . . . 2
DISTRIBUTION OF THE CONTRACTS . . . . . . . . . . . . . . . 2
CALCULATION OF PERFORMANCE INFORMATION . . . . . . . . . . . 2
Money Market Sub-Account Yield Calculation . . . . . 2
Other Sub-Account Yield Calculation . . . . . . . . 3
Standardized Total Return Calculation . . . . . . . 4
Hypothetical Performance Data . . . . . . . . . . . 5
Other Performance Data . . . . . . . . . . . . . . . 5
FEDERAL TAX MATTERS . . . . . . . . . . . . . . . . . . . . 6
Taxation of the Company . . . . . . . . . . . . . . 6
Tax Status of the Contract . . . . . . . . . . . . . 7
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . 8
52
<PAGE>
----------------------------------------------------------------
Copies of the Statement of Additional Information dated
__________________, 1995 are available without charge. To request a copy,
please clip this coupon on the dotted line above, enter your name and
address in the spaces provided below, and mail to: Annuity
Investors(SERVICEMARK) Life Insurance Company, P.O. Box 5423, Cincinnati,
Ohio 45201-5423.
Name:
Address:
53
<PAGE>
APPENDIX A
54
<PAGE>
ANNUITY INVESTORS(SERVICEMARK) VARIABLE ACCOUNT A
of
ANNUITY INVESTORS(SERVICEMARK) LIFE INSURANCE COMPANY
STATEMENT OF ADDITIONAL INFORMATION
for the
Group Flexible Premium Deferred Annuity
Issued by
ANNUITY INVESTORS(SERVICEMARK) LIFE INSURANCE COMPANY
P.O. Box 5423, Cincinnati, Ohio 45201-5423, (800) 789-6771
The Statement of Additional Information expands upon subjects
discussed in the current Prospectus for the Group Flexible Premium
Deferred Annuity Contract ("Contract") offered by Annuity
Investors(SERVICEMARK) Life Insurance Company and the Certificates of
Participation under the Contract ("Certificates"). A copy of the
Prospectus dated _________________, 1995, as supplemented from time to
time, may be obtained free of charge by writing to Annuity
Investors(SERVICEMARK) Life Insurance Company, Administrative Office,
P.O. Box 5423, Cincinnati, Ohio 45201-5423. Terms used in the current
Prospectus for the Contract are incorporated in this Statement of
Additional Information.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD BE
READ ONLY IN CONJUNCTION WITH THE PROSPECTUS FOR THE CONTRACT.
______________, 1995
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ANNUITY INVESTORS(SERVICEMARK) LIFE INSURANCE COMPANY . . . 1
General Information and History . . . . . . . . . . 1
State Regulation . . . . . . . . . . . . . . . . . . 1
SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Safekeeping of Separate Account Assets . . . . . . . 1
Records and Reports . . . . . . . . . . . . . . . . 2
Independent Accountants . . . . . . . . . . . . . . 2
DISTRIBUTION OF THE CONTRACTS . . . . . . . . . . . . . . . 2
CALCULATION OF PERFORMANCE INFORMATION . . . . . . . . . . . 2
Money Market Sub-Account Yield Calculation . . . . . 2
Other Sub-Account Yield Calculation . . . . . . . . 3
Standardized Total Return Calculation . . . . . . . 4
Hypothetical Performance Data . . . . . . . . . . . 5
Other Performance Data . . . . . . . . . . . . . . . 5
FEDERAL TAX MATTERS . . . . . . . . . . . . . . . . . . . . 6
Taxation of the Company . . . . . . . . . . . . . . 6
Tax Status of the Contract . . . . . . . . . . . . . 7
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . 8
<PAGE>
The following information supplements the information in the
Prospectus about the Contract and Certificates. Terms used in this
Statement of Additional Information have the same meaning as in the
Prospectus.
ANNUITY INVESTORS(SERVICEMARK) LIFE INSURANCE COMPANY
General Information and History
Annuity Investors(SERVICEMARK) Life Insurance Company (the
"Company"), formerly known as Carillon Life Insurance Company, is a stock
life insurance company incorporated under the laws of the State of Ohio in
1981. The name change occurred in the state of domicile on April 12,
1995. The Company is principally engaged in the sale of fixed and
variable annuity policies.
The Company was acquired in November, 1994, by American Annuity
Group, Inc. ("AAG") a Delaware corporation that is a publicly traded
insurance holding company. Great American Insurance Company ("GAIC"), an
Ohio corporation, owns 80% of the common stock of AAG. GAIC is a multi-
line insurance carrier and a wholly-owned subsidiary of Great American
Holding Company ("GAHC"), an Ohio corporation. GAHC is a wholly-owned
subsidiary of American Financial Corporation ("AFC"), an Ohio corporation.
AFC is a wholly-owned subsidiary of American Premier Group, Inc. ("APG"),
an Ohio corporation. APG is a publicly traded holding company which is
engaged, through its subsidiaries, in financial businesses that include
annuities, insurance and portfolio investing, and non-financial businesses
that include food products and television and radio operations.
State Regulation
The Company is subject to the insurance laws and regulations of
all the jurisdictions where it is licensed to operate. The availability
of certain Contract rights and provisions depends on state approval and/or
filing and review processes in each such jurisdiction. Where required by
law or regulation, the Contract will be modified accordingly.
SERVICES
Safekeeping of Separate Account Assets
Title to assets of the Separate Account is held by the Company.
The Separate Account assets are kept separate and apart from the Company's
general account assets. Records are maintained of all purchases and
redemptions of Fund shares held by each of the Sub-Accounts.
Title to assets of the Fixed Account is held by the Company
together with the Company's general account assets.
Records and Reports
All records and accounts relating to the Fixed Account and the
Separate Account will be maintained by the Company. As presently required
by the provisions of the Investment Company Act of 1940, as amended ("1940
<PAGE>
Act"), and rules and regulations promulgated thereunder which pertain to
the Separate Account, reports containing such information as may be
required under the 1940 Act or by other applicable law or regulation will
be sent to each Participant semi-annually at the Participant's last known
address of record.
Independent Accountants
The financial statements of the Company included in this
Statement of Additional Information have been examined by Ernst & Young
LLP, Cincinnati, Ohio, independent accountants, for the periods indicated
in their reports as stated in their opinion and have been so included in
reliance upon such opinion given upon the authority of that firm as
experts in accounting and auditing.
DISTRIBUTION OF THE CONTRACTS
The offering of the Contracts is expected to be continuous, and
the Company does not anticipate discontinuing the offering of the
Contracts. However, the Company reserves the right to discontinue the
offering of the Contracts.
CALCULATION OF PERFORMANCE INFORMATION
Money Market Sub-Account Yield Calculation
In accordance with rules and regulations adopted by the
Securities and Exchange Commission, the Company computes the Money Market
Sub-Account's current annualized yield for a seven-day period in a manner
which does not take into consideration any realized or unrealized gains or
losses on shares of the Money Market Fund or on its portfolio securities.
This current annualized yield is computed by determining the net change
(exclusive of realized gains and losses on the sale of securities and
unrealized appreciation and depreciation) in the value of a hypothetical
account having a balance of one unit of the Money Market Sub-Account at
the beginning of such seven-day period, dividing such net change in the
value of the hypothetical account by the value of the hypothetical account
at the beginning of the period to determine the base period return and
annualizing this quotient on a 365-day basis. The net change in the value
of the hypothetical account reflects the deductions for the Mortality and
Expense Risk and Administration Charges and income and expenses accrued
during the period. Because of these deductions, the yield for the Money
Market Sub-Account of the Separate Account will be lower than the yield
for the Money Market Fund or any comparable substitute funding vehicle.
The Securities and Exchange Commission also permits the Company
to disclose the effective yield of the Money Market Sub-Account for the
same seven-day period, determined on a compounded basis. The effective
yield is calculated according to the following formula:
375/7
EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1) ] - 1
2
<PAGE>
The yield on amounts held in the Money Market Sub-Account
normally will fluctuate on a daily basis. Therefore, the disclosed yield
for any given past period is not an indication or representation of future
yields. The Money Market Sub-Account's actual yield is affected by
changes in interest rates on money market securities, average portfolio
maturity of the Money Market Fund or substitute funding vehicle, the types
and quality of portfolio securities held by the Money Market Fund or
substitute funding vehicle, and operating expenses. IN ADDITION, THE
YIELD FIGURES DO NOT REFLECT THE EFFECT OF ANY CONTINGENT DEFERRED SALES
CHARGE ("CDSC") (OF UP TO 7% OF PURCHASE PAYMENTS) THAT MAY BE APPLICABLE
ON SURRENDER.
Other Sub-Account Yield Calculation
The Company may from time to time disclose the current annualized
yield of one or more of the Sub-Accounts (other than the Money Market Sub-
Account) for 30-day periods. The annualized yield of a Sub-Account refers
to the income generated by the Sub-Account over a specified 30-day period.
Because this yield is annualized, the yield generated by a Sub-Account
during the 30-day period is assumed to be generated each 30-day period.
The yield is computed by dividing the net investment income per
Accumulation Unit earned during the period by the price per unit on the
last day of the period, according to the following formula:
6
YIELD = 2[(a-b + 1) - 1]
---
cd
Where:
a = net investment income earned during the period by the
Portfolio attributable to the shares owned by the Sub-
Account.
b = expenses for the Sub-Account accrued for the period (net
of reimbursements).
c = the average daily number of Accumulation Units
outstanding during the period.
d = the maximum offering price per Accumulation Unit on the
last day of the period.
Net investment income will be determined in accordance with rules
and regulations established by the Securities and Exchange Commission.
Accrued expenses will include all recurring fees that are charged to all
Contracts. The yield calculations do not reflect the effect of any CDSC
that may be applicable to a particular Contract. CDSCs range from 7% to
0% of the Purchase Payments withdrawn depending on the elapsed time since
the receipt of such Purchase Payments.
3
<PAGE>
Because of the charges and deductions imposed by the Separate
Account, the yield for a Sub-Account will be lower than the yield for the
corresponding Fund. The yield on amounts held in a Sub-Account normally
will fluctuate over time. Therefore, the disclosed yield for any given
period is not an indication or representation of future yields or rates of
return. The Sub-Account's actual yield will be affected by the types and
quality of portfolio securities held by the Fund and its operating
expenses.
Standardized Total Return Calculation
The Company may from time to time also disclose average annual
total returns for one or more of the Sub-Accounts for various periods of
time. Average annual total return quotations are computed by finding the
average annual compounded rates of return over one, five and ten year
periods that would equal the initial amount invested to the ending
redeemable value, according to the following formula:
n
P(1 + T) = ERV
Where:
P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
ERV = "ending redeemable value" of a hypothetical $1,000
payment made at the beginning of the one, five or ten-
year period at the end of the one, five, or ten-year
period (or fractional portion thereof).
All recurring fees that are charged to all Contracts are
recognized in the ending redeemable value. The average annual total
return calculations will reflect the effect of any CDSCs that may be
applicable to a particular period.
Hypothetical Performance Data
The Company may also disclose "hypothetical" performance data for
a Sub-Account, for periods BEFORE the Sub-Account commenced operations.
Such performance information for the Sub-Account will be calculated based
on the performance of the corresponding Fund and the assumption that the
Sub-Account was in existence for the same periods as those indicated for
the Fund, with a level of Contract charges currently in effect. The Fund
used for these calculations will be the actual Fund in which the Sub-
Account invests.
This type of hypothetical performance data may be disclosed on
both an average annual total return and a cumulative total return basis.
Moreover, it may be disclosed assuming that the Contract is not
4
<PAGE>
surrendered (i.e., with no deduction for a CDSC) or assuming that the
Contract is surrendered at the end of the applicable period (i.e.,
reflecting a deduction for any applicable CDSC).
Other Performance Data
The Company may from time to time disclose non-standardized total
return in conjunction with the standardized performance data described
above. Non-standardized data may reflect no CDSC or present performance
data for a period other than that required by the standardized format.
The Company may from time to time also disclose cumulative total
return calculated using the following formula assuming that the CDSC
percentage is 0%.
CTR = (ERV/P) - 1
Where:
CTR = the cumulative total return net of Sub-Account recurring
charges for the period.
ERV = ending redeemable value of a hypothetical $1,000 payment
at the beginning of the one, five or ten-year period at
the end of the one, five or ten-year period (or
fractional portion thereof).
P = a hypothetical initial payment of $1,000.
All non-standardized performance data will be advertised only if
the requisite standardized performance data is also disclosed.
FEDERAL TAX MATTERS
The Contract and Certificates thereunder are designed for use by
individuals in retirement plans which qualify for special tax treatment
under Sections 401, 403, or 457 of the Internal Revenue Code of 1986, as
amended (the "Code"). The ultimate effect of federal taxes on the Account
Value, on Annuity Benefits, and on the economic benefit to the Participant
or the Beneficiary may depend on the type of retirement plan for which the
Contract is purchased, on the tax and employment status of the individual
concerned and on the Company's tax status. THE FOLLOWING DISCUSSION IS
GENERAL AND IS NOT INTENDED AS TAX ADVICE. Any person concerned about tax
implications should consult a competent tax adviser. This discussion is
based upon the Company's understanding of the present federal income tax
laws as they are currently interpreted by the Internal Revenue Service.
No representation is made as to the likelihood of continuation of present
federal income tax laws or of the current interpretations by the Internal
Revenue Service. Moreover, no attempt has been made to consider any
applicable state or other tax laws.
5
<PAGE>
Taxation of the Company
The Company is taxed as a life insurance company under Part I of
Subchapter L of the Code. Since the Separate Account is not an entity
separate from the Company, and its operations form a part of the Company,
it will not be taxed separately as a "regulated investment company" under
Subchapter M of the Code. Investment income and realized capital gains
are automatically applied to increase reserves under the Contracts. Under
existing federal income tax law, the Company believes that the Separate
Account investment income and realized net capital gains will not be taxed
to the extent that such income and gains are applied to increase the
reserves under the Contracts.
Accordingly, the Company does not anticipate that it will incur
any federal income tax liability attributable to the Separate Account and,
therefore, the Company does not intend to make provisions for any such
taxes. However, if changes in the federal tax laws or interpretations
thereof result in the Company being taxed on income or gains attributable
to the Separate Account, then the Company may impose a charge against the
Separate Account (with respect to some or all Contracts) in order to set
aside provisions to pay such taxes.
Tax Status of the Contract
In certain circumstances, participants under group variable
annuity contracts may be considered the owners, for federal income tax
purposes, of the assets of the separate accounts used to support their
contracts. In those circumstances, income and gains from the separate
account assets would be includible in the variable contract owner's gross
income. The Internal Revenue Service has stated in published rulings that
a variable contract owner will be considered the owner of separate account
assets if the contract owner possesses incidents of ownership in those
assets, such as the ability to exercise investment control over the
assets. The Treasury Department has also announced, in connection with
the issuance of regulations concerning diversification, that those
regulations "do not provide guidance concerning the circumstances in which
investor control of the investments of a segregated asset account may
cause the investor (i.e., the participant), rather than the insurance
company, to be treated as the owner of the assets in the account." This
announcement also stated that guidance would be issued by way of
regulations or rulings on the "extent to which policyholders may direct
their investments to particular subaccounts without being treated as
owners of the underlying assets." As of the date of this Statement of
Additional Information, no guidance has been issued.
The ownership rights under the Contract are similar to, but
different in certain respects from, those described by the Internal
Revenue Service in rulings in which it was determined that contract owners
were not owners of separate account assets. For example, the Participant
has additional flexibility in allocating Purchase Payments and Account
Value. These differences could result in a Participant's being treated as
the owner of a pro rata portion(s) of the assets of the Separate Account
6
<PAGE>
and/or Fixed Account. In addition, the Company does not know what
standards will be set forth, if any, in the regulations or rulings which
the Treasury Department has stated it expects to issue. The Company
therefore reserves the right to modify the Contract as necessary to
attempt to prevent a Participant from being considered the owner of a pro
rata share of the assets of the Separate Account.
FINANCIAL STATEMENTS
Audited financial statements of Annuity Investors(SERVICEMARK)
Life Insurance Company as of December 31, 1993 and December 31, 1994 are
included herein.
The financial statements of the Company included in this
Statement of Additional Information should be considered only as bearing
on the ability of the Company to meet its obligations under the Contract.
They should not be considered as bearing on the investment performance of
the assets held in the Separate Account.
7
<PAGE>
Statutory Financial Statements
ANNUITY INVESTORS LIFE INSURANCE COMPANY
(formerly Carillon Life Insurance Company)
Years ended December 31, 1994 and 1993
8
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Annuity Investors Life Insurance Company
We have audited the accompanying statutory-basis balance sheets of Annuity
Investors Life Insurance Company (formerly Carillon Life Insurance
Company) as of December 31, 1994 and 1993, and the related statutory-basis
statements of operations, changes in capital and surplus, and cash flows
for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
The Company presents its financial statements in conformity with the
accounting practices prescribed or permitted by the Insurance Department
of the State of Ohio. The variances between such practices and generally
accepted accounting principles and the effects on the accompanying
financial statements are described in Notes A and I.
In our opinion, because of the materiality of the effects of the variances
between generally accepted accounting principles and the accounting
practices referred to in the preceding paragraph, the financial statements
referred to above are not intended to and do not present fairly, in
conformity with generally accepted accounting principles, the financial
position of Annuity Investors Life Insurance Company at December 31, 1994
and 1993, or the results of its operations or its cash flows for the years
then ended. However, in our opinion, the supplementary information
included in Note I presents fairly, in all material respects, capital and
surplus at December 31, 1994 and 1993 and net income for the years then
ended in conformity with generally accepted accounting principles.
Also, in our opinion, the statutory-basis financial statements referred to
above present fairly, in all material respects, the financial position of
Annuity Investors Life Insurance Company at December 31, 1994 and 1993,
and the results of its operations and its cash flows for the years then
ended, in conformity with accounting practices prescribed or permitted by
the Insurance Department of the State of Ohio.
Ernst & Young LLP
March 13, 1995
9
<PAGE>
ANNUITY INVESTORS LIFE INSURANCE COMPANY
BALANCE SHEETS
STATUTORY BASIS
December 31,
---------
1994 1993
---- ----
ASSETS
Cash and investments:
Bonds - principally at amortized cost
(market value: $7,545,390 and
$5,702,563) $8,291,079 $5,679,807
Certificate of deposit due 4/4/95 25,000 25,000
Dreyfus cash management fund 400,660 2,987,908
Cash 79,862 10,909
------ ---------
Total cash and investments 8,796,601 8,703,624
Investment income due and accrued 150,193 88,464
Federal income tax recoverable 23,181
------- 15,698
Total assets $8,969,975 $8,807,786
========== ==========
LIABILITIES, CAPITAL AND SURPLUS
Annuity reserves $2,684,376 $2,622,749
Payable to affiliate 11,264 41,101
General expenses due and accrued 3,445 2,538
---------- ---------
Total liabilities 2,699,085 2,666,388
Common stock, $100 par value:
- 25,000 shares authorized
- 20,000 shares issued and outstanding 2,000,000 2,000,000
Gross paid in and contributed surplus 3,350,000 3,350,000
Unassigned surplus 920,890 791,398
--------- ---------
Total capital and surplus 6,270,890 6,141,398
--------- ---------
Total liabilities, capital and
surplus $8,969,975 $8,807,786
========= =========
See notes to statutory financial statements.
10
<PAGE>
ANNUITY INVESTORS LIFE INSURANCE COMPANY
SUMMARY OF OPERATIONS
STATUTORY BASIS
Year ended December 31,
-----------------------
1994 1993
----- ----
Revenues:
Premiums and annuity
considerations $ 219,308 $ 111,136
Net investment income 432,932 264,694
---------- ----------
652,240 375,830
Benefits and expenses:
Increase in aggregate reserves 61,627 1,658,903
Policyholders' benefits 280,517 689,472
Operating expenses and
commissions 72,653 68,518
Taxes, licenses and fees 38,951 31,447
Reserve adjustments on
reinsurance assumed - (2,281,572)
------ -----------
453,748 166,768
------- -----------
Income from operations before
federal income taxes 198,492 209,062
Provision for federal income taxes 69,000 16,781
------- -----------
Net income after federal income
taxes before net realized
capital gains 129,492 192,281
Net realized capital gains:
Pretax - 112,990
Capital gains tax - (40,000)
Interest maintenance reserve
transfer (net of tax) - 46,737
-------- ---------
- 119,727
-------- ---------
Net income $ 129,492 $ 312,008
========== ===========
See notes to statutory financial statements.
11
<PAGE>
ANNUITY INVESTORS LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS
STATUTORY BASIS
Year ended December 31,
---------------------------
1994 1993
---- ----
Common stock:
Balance at beginning and end of period $2,000,000 $2,000,000
========== ==========
Gross paid-in and contributed surplus:
Balance at beginning of year $3,350,000 $3,350,000
========== ==========
Unassigned funds:
Balance at beginning of year $ 791,398 $ 376,418
Net income 129,492 312,008
Change in asset valuation reserve - 102,972
--------- --------
Balance at end of year $ 920,890 $ 791,398
========== ==========
Total capital and surplus $6,270,890 $6,141,398
========== ==========
See notes to statutory financial statements.
12
<PAGE>
ANNUITY INVESTORS LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
STATUTORY BASIS
Year ended December 31,
-----------------------
1994 1993
---- ----
Operating activities:
Premiums and annuity considerations $ 219,308 $ 111,136
Funds received for assumption of
reserves - 2,663,850
Net investment income 398,729 274,075
Life claims paid - (25,000)
Surrender benefits paid (280,517) (711,857)
Other benefits to policyholders paid - (6,615)
Commissions, expenses and premium and
other taxes paid (111,604) (100,385)
Federal income tax paid (76,483) (32,706)
Payments to affiliate (29,837) -
Other expenses paid - (294,169)
---------- ----------
119,596 1,878,329
Investing activities:
Sale, maturity or repayment of bonds - 5,380,219
Sale of stocks - 492,100
Purchase of bonds (2,637,891) (4,866,659)
Purchase of stocks - (439)
---------- -----------
(2,637,891) 1,005,221
---------- -----------
Net increase (decrease) in cash and
short-term investments (2,518,295) 2,883,550
Cash and short-term investments at
beginning of year 3,023,817 140,267
--------- -------
Cash and short-term investments at end
of year $ 505,522 $3,023,817
========== ==========
See notes to statutory financial statements.
13
<PAGE>
ANNUITY INVESTORS LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS
A. ACCOUNTING POLICIES
-------------------
BASIS OF PRESENTATION Annuity Investors Life Insurance Company ("Annuity
Investors"), formerly Carillon Life Insurance Company, a life insurance
company domiciled in the State of Ohio, is a wholly owned subsidiary of
American Annuity Group, Inc., a publicly traded financial services holding
company of which American Financial Corporation ("AFC") owns 80%. On
November 29, 1994, Annuity Investors was purchased from Great American
Insurance Company, a wholly-owned subsidiary of AFC.
The accompanying financial statements have been prepared in conformity
with accounting practices prescribed or permitted by the National
Association of Insurance Commissioners ("NAIC") and the Insurance
Department of the State of Ohio, which vary in some respects from
generally accepted accounting principles ("GAAP"). The more significant
of these differences are as follows: (a) annuity receipts are accounted
for as revenues versus liabilities; (b) an Interest Maintenance Reserve
("IMR") is provided whereby interest related realized gains and losses are
deferred and amortized into investment income over the life of the
security sold; (c) Asset Valuation Reserves are provided which reclassify
a portion of surplus to liabilities; and (d) investments in bonds
considered "available for sale" (as defined under GAAP) are generally
recorded at amortized cost versus market.
Certain reclassifications have been made to the prior year to conform to
the current year's presentation.
INVESTMENTS Asset values are generally stated as follows: bonds not
backed by loans, at amortized cost using the interest method; short-term
investments are carried at cost which approximates market.
As prescribed by the NAIC, the market value for investments in bonds is
determined by the values included in the Valuations of Securities manual
published by the NAIC's Security Valuation Office. Those values generally
represent quoted market value prices for securities traded in the public
marketplace or analytically determined values of the Securities Valuation
Office.
ANNUITY RESERVES Annuity reserves are developed by actuarial methods and
are determined based on published tables using statutorily specified
interest rates and valuation methods that will provide, in the aggregate,
reserves that are greater than or equal to the minimum amounts required by
law.
REINSURANCE Reinsurance premiums, benefits and expenses are accounted for
on a basis consistent with those used in accounting for the original
policies issued and the terms of the reinsurance contracts.
14
<PAGE>
ANNUITY INVESTORS LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS - CONTINUED
B. INVESTMENTS
-----------
Bonds at December 31, 1994 and 1993, consisted entirely of publicly traded
U.S. Treasury bonds.
Gross unrealized gains and gross unrealized (losses) on bonds were
approximately $1,000 and ($746,000) in 1994 and $86,000 and ($63,000) in
1993.
There were no realized gains or losses in 1994. Gross realized gains and
gross realized (losses) on bonds were $272,700 and ($177,200) for 1993.
Securities (primarily U.S. Treasury Notes) with a carrying value of $2.1
million at December 31, 1994, were on deposit as required by the insurance
departments of various states.
C. FEDERAL INCOME TAXES
--------------------
Annuity Investors' 1994 federal income tax expense was equal to the
enacted tax rate. In 1993, Annuity Investors' effective tax rate was
different from the enacted rate due principally to the exclusion of tax
exempt interest on federal income tax refunds received and interest
maintenance reserve adjustment.
Annuity Investors' amount of federal income taxes incurred for recoupment
in the event of future losses are approximately $69,000 in 1994, $57,000
in 1993 and $233,000 in 1992.
D. RELATED PARTY TRANSACTIONS
--------------------------
Certain investment, administrative, management, accounting and data
processing services are provided to Annuity Investors through the use of
shared facilities and personnel or under agreements between Annuity
Investors and affiliates.
On December 30, 1993, Annuity Investors entered into a reinsurance
agreement with Great American Life Insurance Company ("GALIC"), an
affiliated Ohio domiciled life and accident and health insurance company.
As a result of the transaction, Annuity Investors assumed $2.6 million in
deferred annuity reserves and received an equivalent amount of assets.
All premium income received in 1994 was assumed reinsurance from GALIC in
accordance with the agreement.
15
<PAGE>
ANNUITY INVESTORS LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS - CONTINUED
E. DIVIDEND RESTRICTIONS
---------------------
The amount of dividends which can be paid by Annuity Investors without
prior approval of regulatory authorities is subject to restrictions
relating to capital and surplus and net income. Annuity Investors may pay
approximately $627,000 in dividends in 1995, based on capital and surplus,
without prior approval.
F. ANNUITY RESERVES
----------------
At December 31, 1994, all of Annuity Investors' annuity reserves were
subject to discretionary withdrawal without adjustment.
G. CONTINGENT LIABILITIES
----------------------
The increase in the number of insurance companies that are under
regulatory supervision has resulted, and is expected to continue to
result, in increased assessments by state guaranty funds to cover losses
to policyholders of insolvent or rehabilitated insurance companies. Those
mandatory assessments may be partially recovered through a reduction in
future premium taxes in certain states. GALIC is responsible for payment
of all assessments relating to premiums earned in accordance with the
reinsurance agreement discussed in Note D.
16
<PAGE>
H. SELECTED FINANCIAL DATA
-----------------------
The following tables present selected statutory-basis financial data as of
December 31, 1994 and 1993 and for the years then ended for purposes of
complying with paragraph 9 of the Annual Audited Financial Reports in the
General section of the National Association of Insurance Commissioners'
Annual Statement Instructions and agrees to or is included in the amounts
reported in Annuity Investors' 1994 and 1993 Statutory Annual Statements
as filed with the insurance department of the State of Ohio:
ANNUITY INVESTORS LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS - CONTINUED
1993 1994
---- ----
Gross investment income earned:
Bonds $ 431,170 $ 244,280
Stocks - 8,165
Short-term investments 18,168 21,998
Aggregate write-ins for investment
income 106 27,019
-------- ---------
$ 449,444 $ 301,462
========== ==========
Bonds by class--statement value (A) $8,291,079 $5,679,807
========== ==========
Total bonds publicly traded $8,291,079 $5,679,807
========== ==========
Short-term investments (book value) $ 425,660 $3,012,908
========== ==========
Cash on deposit $ 79,862 $ 10,909
========== ==========
Group annuities not fully paid--account
balance $2,684,376 $2,622,749
========== ==========
(A) All bonds were rated NAIC "1" at December 31, 1994 and 1993.
17
<PAGE>
December 31, 1994
-----------------
Carrying Market
Value Value
Bonds by maturity: -------- -------
Due within 1 year or less $1,159,723 $ 1,157,100
Over 1 year through 5 years 2,229,938 2,071,249
Over 5 years through 10 years 4,901,418 4,317,041
---------- ----------
$8,291,079 $7,545,390
========== ==========
I. VARIANCES FROM GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
-------------------------------------------------------
These financial statements have been presented in conformity with the
accounting practices prescribed or permitted by the insurance department
of the State of Ohio. The following table summarizes the principal
differences between net income and surplus as determined in accordance
with statutory accounting practices and GAAP for the years ended December
31, 1994 and 1993:
ANNUITY INVESTORS LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS - CONTINUED
Net Income Capital and Surplus
---------- ------------------
1994 1993 1994 1993
---- ---- ---- ----
As reported on a
statutory basis $129,492 $312,008 $6,270,890 $6,141,398
IMR adjustment - (46,737) - -
Unrealized gain
(loss) adjustment - - (485,000) 15,000
------ ------- -------- ---------
GAAP basis $129,492 $ 265,271 $5,785,890 $6,156,398
======== ========== ========= ==========
J. SUBSEQUENT EVENT (UNAUDITED)
----------------------------
On April 3, 1995, American Premier Group, Inc. ("New American Premier")
acquired 100% of the common stock (79% of the voting stock) of American
Financial Corporation ("AFC"). In the transaction, shareholders of AFC
common stock received approximately 55% of New American Premier voting
common stock.
18
<PAGE>
PART C
Other Information
Item 24. Financial Statements and Exhibits
(a) Financial Statements
All required financial statements are included in
Parts A or B of this Registration Statement.
(b) Exhibits
(1) Resolution of the Board of Directors of Annuity
Investors(SERVICEMARK) Life Insurance Company
authorizing establishment of Annuity
Investors(SERVICEMARK) Variable Account A. [To Be
Supplied.]
(2) Not Applicable.
(3) (a) Master Agreement among Annuity Investors Life
Insurance Company, AAG Securities, Inc. and
_____. [To Be Supplied.]
(b) Principal Agency Agreement between Annuity
Investors Life Insurance Company and
___________. [To Be Supplied.]
(c) Distribution Agreement between Annuity
Investors Life Insurance Company and AAG
Securities, Inc. [To Be Supplied.]
(d) Form of Sales Agreement between AAG
Securities, Inc. and another Broker-Dealer.
[To Be Supplied.]
(4) Group Contract Form, Certificate Form, and
Endorsements. [To Be Supplied.]
(a) Group Contract Forms and Endorsements. [To
Be Supplied.]
(i) Form of Group Flexible Premium
Deferred Annuity Contract. [To Be
Supplied.]
(ii) Form of Dollar Cost Averaging Option
Endorsement to Group Contract. [To
Be Supplied.]
19
<PAGE>
(iii) Form of Guaranteed Minimum Death
Benefit Endorsement to Group
Contract. [To Be Supplied.]
(iv) Form of Systematic Withdrawal Option
Endorsement to Group Contract. [To
Be Supplied.]
(b) Certificate of Participation Form and
Endorsements. [To Be Supplied.]
(i) Form of Certificate of Participation.
[To Be Supplied.]
(ii) Form of Dollar Cost Averaging Option
Endorsement to Certificate. [To Be
Supplied.]
(iii) Form of Benefit Distribution
Endorsement to Certificate. [To Be
Supplied.]
(iv) Form of Systematic Withdrawal Option
Endorsement to Certificate. [To Be
Supplied.]
(5) (a) Form of Application for and Acceptance of
Group Annuity Contract. [To Be Supplied.]
(b) Form of Application for Enrollment under
Group Annuity Contract. [To Be Supplied.]
(6) (a) Articles of Incorporation of Annuity
Investors(SERVICEMARK) Life Insurance
Company.
(b) Code of Regulations of Annuity
Investors(SERVICEMARK) Life Insurance
Company.
(7) Not Applicable.
(8) (a) Participation Agreement between Annuity
Investors Life Insurance Company and Dreyfus
Variable Investment Fund. [To Be Supplied.]
(b) Participation Agreement between Annuity
Investors Life Insurance Company and Dreyfus
Stock Index Fund. [To Be Supplied.]
20
<PAGE>
(c) Participation Agreement between Annuity
Investors Life Insurance Company and Dreyfus
Socially Responsible Fund. [To Be Supplied.]
(d) Participation Agreement between Annuity
Investors Life Insurance Company and Janus
Aspen Series. [To Be Supplied.]
(e) Participation Agreement between Annuity
Investors Life Insurance Company and Merrill
Lynch Variable Series Funds, Inc. [To Be
Supplied.]
(f) Administrative Services Agreement between
Annuity Investors Life Insurance Company and
Great American Life Insurance Company. [To
Be Supplied.]
(9) Opinion and Consent of Counsel. [To Be Supplied.]
(10) (a) Report of Independent Accountants. [To Be
Supplied.]
(b) Consent of Independent Accountants. [To Be
Supplied.]
(11) No financial statements are omitted from item 23.
(12) Not Applicable.
(13) Not Applicable.
(14) Not Applicable.
21
<PAGE>
Item 25. Directors and Officers of Annuity Investors(SERVICEMARK) Life
Insurance Company
Principal
Business Positions and Offices
Name Address With the Company
---- ------- ---------------------
Robert Allen Adams (1) President, Director
Stephen Craig Lindner (1) Director
William Jack Maney, II (1) Assistant Treasurer and
Director
James Michael Mortensen (1) Executive Vice President,
Assistant Secretary and
Director
Mark Francis Muething (1) Senior Vice President,
Secretary, General Counsel and
Director
Jeffrey Scott Tate (1) Director
Thomas Kevin Liguzinski (1) Senior Vice President
Charles Kent McManus (1) Senior Vice President
Robert Eugene Allen (1) Vice President and Treasurer
Arthur Ronald Greene, III (1) Vice President
Betty Marie Kasprowicz (1) Vice President and Assistant
Secretary
Michael Joseph O'Connor (1) Vice President and Chief
Actuary
Lynn Edward Laswell (1) Assistant Vice President and
Assistant Treasurer
-------------------------
(1) P.O. Box 5423, Cincinnati, Ohio 45201-5423.
Item 26. Persons Controlled by or Under Common Control With the
Depositor or Registrant.
22
<PAGE>
The Depositor, Annuity Investors(SERVICEMARK) Life Insurance Company,
is wholly owned by American Annuity Group, Inc. The Registrant, Annuity
Investors Separate Account A, is a segregated asset account of Annuity
Investors Life Insurance Company.
The following chart indicates the persons controlled by or under
common control with the Company.
[To Be Supplied]
Item 27. Number of Certificate Owners
Not Applicable.
Item 28. Indemnification
(a) The Code of Regulations of Annuity Investors Life Insurance
Company provide in Article V follows:
The Corporations shall, to the full extent permitted by the
General Corporation Law of Ohio, indemnify any person who is
or was a director or officer of the Corporation and whom it
may indemnify pursuant thereto. The Corporation may, within
the sole discretion of the Board of Directors, indemnify in
whole or in part any other persons whom it may indemnify
pursuant thereto.
Insofar as indemnification for liability arising under the Securities
Act of 1933 ("1933 Act") may be permitted to directors, officers and
controlling person of the Depositor pursuant to the foregoing provisions,
or otherwise, the Depositor has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the 1933 Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other
than the payment by the Depositor of expenses incurred or paid by the
director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Depositor will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it
is against public policy as expressed in the 1933 Act and will be governed
by the final adjudication of such issue.
(b) The directors and officers of Annuity Investors(SERVICEMARK) Life
Insurance Company are covered under a Directors and Officers Reimbursement
Policy. Under the Reimbursement Policy, directors and officers are
indemnified for loss arising from any covered claim by reason of any
Wrongful Act in their capacities as directors or officers, except to the
extent the Company has indemnified them. In general, the term "loss"
means any amount which the directors or officers are legally obligated to
pay for a claim for Wrongful Acts. In general, the term "Wrongful Acts"
23
<PAGE>
means any breach of duty, neglect, error, misstatement, misleading
statement, omission or act by a director or officer while acting
individually or collectively in their capacity as such claimed against
them solely by reason of their being directors and officers. The limit of
liability under the program is $20,000,000 for the policy year ending
September 1, 1995. The primary policy under the program is with National
Union Fire Insurance Company of Pittsburgh, PA. in the name of American
Premier Underwriters, Inc.
Item 29. Principal Underwriter
AAG Securities, Inc. is the underwriter and distributor of the
Contracts as defined in the Investment Company Act of 1940 ("1940 Act").
(a) AAG Securities, Inc. does not act as a principal underwriter,
depositor, sponsor or investment adviser for any investment company other
than Annuity Investors Variable Account A.
(b) Directors and Officers of AAG Securities, Inc.
Name and Principal Position with
Business Address AAG Securities, Inc.
------------------ --------------------
Thomas Kevin Liguzinski (1) Chief Executive Officer and
Director
Mark Francis Muething (1) Vice President, Secretary and
Director
William Jack Maney, II (1) Director
Jeffrey Scott Tate (1) Director
James Medford Tarkington (1) President
Andrew Conrad Bambeck, III (1) Vice President
William Claire Bair, Jr. (1) Treasurer
____________________________
(1) 250 East Fifth Street, Cincinnati, Ohio 45202
(c) Not applicable.
Item 30. Location of Accounts and Records
All accounts and records required to be maintained by Section 31(a) of
the 1940 Act and the rules under it are maintained by Lynn E. Laswell,
Assistant Vice President, of the Company at the Administrative Office.
24
<PAGE>
Item 31. Management Services
Not applicable.
Items 32. Undertakings
(a) Registrant undertakes that it will file a post-effective
amendment to this registration statement as frequently as
necessary to ensure that the audited financial statements in
the registration statement are never more than 16 months old
for so long as payments under the variable annuity contracts
may be accepted.
(b) Registrant undertakes that it will include either (1) as part
of any application to purchase a Certificate offered by the
Prospectus, a space that an applicant can check to request a
Statement of Additional Information, or (2) a post card or
similar written communication affixed to or included in the
Prospectus that the applicant can remove to send for a
Statement of Additional Information.
(c) Registrant undertakes to deliver any Prospectus and Statement
of Additional Information and any financial statements
required to be made available under this Form promptly upon
written or oral request to the Company at the address or phone
number listed in the Prospectus.
25
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company
Act of 1940, the Registrant certifies that it meets the requirements of
Securities Act Rule 485(b) for effectiveness of this Registration
Statement and has caused this Registration Statement to be signed on its
behalf by the undersigned in the City of Cincinnati, State of Ohio on the
__th day of May, 1995.
ANNUITY INVESTORS(SERVICEMARK) VARIABLE ACCOUNT A
(REGISTRANT)
By:_______________________________________
Robert Allen Adams
Chairman of the Board, President
and Director, Annuity Investors
Life Insurance Company
ANNUITY INVESTORS(SERVICEMARK) LIFE INSURANCE COMPANY
(DEPOSITOR)
By:________________________________
Robert Allen Adams
Chairman of the Board, President
and Director
As required by the Securities Act of 1933, this Registration Statement
has been signed by the following persons in the capacities and on the
dates indicated.
__________________ ___________________ ______________
Robert Allen Adams Principal Executive [Date]
Officer, Director
___________________ ___________________ ______________
Robert Eugene Allen Principal Financial [Date]
Officer
___________________ ____________________ ______________
Lynn Edward Laswell Principal Accounting [Date]
Officer
_____________________ ___________________ ______________
Stephen Craig Lindner Director [Date]
26
<PAGE>
______________________ ___________________ ______________
William Jack Maney, II Director [Date]
_______________________ ___________________ ______________
James Michael Mortenson Director [Date]
_____________________ ___________________ ______________
Mark Francis Muething Director [Date]
__________________ ___________________ ______________
Jeffrey Scott Tate Director [Date]
27
<PAGE>
EXHIBIT INDEX
-------------
Exhibit
No. Description of Exhibit Page No.
------- ---------------------- --------
(6) (a) Articles of Incorporation of Annuity
Investors(SERVICEMARK) Life Insurance
Company.
(6) (b) Code of Regulations of Annuity
Investors(SERVICEMARK) Life Insurance
Company.
28
<PAGE>
CERTIFICATION
******
As DIRECTOR OF INSURANCE OF THE STATE OF OHIO, I do hereby certify that
that I have the annexed copy of the:
Articles of Incorporation and all amendments of the ANNUITY
INVESTORS LIFE INSURANCE COMPANY, Cincinnati, Ohio.
with the original on file in this Department.
May 8, 1995
IN WITNESS WHERE OF, I have hereunto
subscribed my name and caused my seal to
be affixed at Columbus, Ohio, this day
and date
Director of Insurance of Ohio
<PAGE>
APPROVED
BY ----------------------
DATE 11/13/81
--------------------
AMOUNT $650.00
------------------
ARTICLES OF INCORPORATION
OF
UCL LIFE ASSURANCE CORPORATION
The undersigned, desiring to form a stock life insurance
corporation under the laws of the State of Ohio, do hereby certify:
FIRST: The name of the corporation shall be UCL LIFE ASSURANCE
CORPORATION.
SECOND: The place of business and the location of the principal
office of the Corporation shall be Hamilton County, Ohio, but it may
establish other offices or places of business in the State of Ohio and
elsewhere.
THIRD: The business to be undertaken by and the objects and
purposes of the Corporation shall be to insure the lives of persons in and
out of the State of Ohio under policies and contracts providing for fixed
or variable benefits or both; to insure against accidents to persons,
sickness, or temporary or permanent physical disability; to take all risks
in connection with or pertaining to such insurances; to grant, purchase
and dispose of annuities providing for fixed or variable benefits or both;
to set up and operate separate accounts; to carry on all of said business
under either the participating or non-participating plan or both; to
accept reinsurance; and to do any and all other acts either permitted or
not prohibited under the laws of the State of Ohio for a stock life
insurance corporation.
FOURTH: The number of shares which the Corporation is authorized
to have outstanding is Fifteen Thousand (15,000), all of which shall be
Common Shares, par value One Hundred Dollars ($100).
FIFTH: The corporate powers of the Corporation shall be
exercised by and its business and affairs shall be under the control of a
Board of Directors, a majority of whom shall be citizens of the State of
Ohio and all of whom shall be shareholders of the Corporation. The Board
of Directors shall be composed of seven (7) Directors unless and until
such number is changed by the affirmative vote of the holders of a
majority of the shares which are represented at the meeting of the
shareholders called for the purpose of electing directors at which a
quorum is present and which are entitled to vote on such proposal. In no
event, however, shall the number of directors be less than five (5) nor
more than twenty-one (21). The directors shall be elected by the written
ballot of a majority of shareholders entitled to vote thereon at an annual
meeting of shareholders to be held at the principal office of the
Corporation on the third Friday in February at such hour as the Board of
<PAGE>
Directors may fix (provided, however, that in the event such day is a
legal holiday, the annual meeting shall be held the next February at such
hour as the Board of Directors may fix (provided, however, that in the
event such day is a legal holiday, the annual meeting shall be held the
next succeeding day not a Saturday, Sunday or legal holiday), or at a
special meeting of shareholders called for the purpose of electing
directors. Vacancies in the Board of Directors shall be filled for the
unexpired term by the vote of a majority of the remaining directors.
SIXTH: The officers of the Corporation shall be a President, one
or more Vice Presidents, a Secretary, a Treasurer and such other officers
and assistant officers as the Board of Directors may from time to time
deem necessary. Such officers shall be elected by the Board of Directors
at its first meeting held each year following the annual meeting of
shareholders, and shall hold their respective offices for one year and
until their successors are duly elected and qualified. Any officer may be
removed or suspended at any time with or without cause by the Board of
Directors. Any two offices except the offices of President and Vice
President may be held by the same person. Vacancies among the officers
may be filled for the unexpired term by the Board of Directors.
SEVENTH: The amount of capital to be employed in the business of
the Corporation will be paid-in-capital of not less than One Million Five
Hundred Thousand Dollars ($1,500,000). In addition to such paid-in-
capital, there shall be initial contributed surplus of not less than One
Million Five Hundred Thousand Dollars ($1,500,000). Additional
contributions to surplus may be made at any time and from time to time.
EIGHTH: The Corporation, by action of the Board and without
action by the shareholders, may purchase its shares of any class, whether
such shares or such class be now or hereafter authorized, for the purposes
and to the extent permitted by law.
NINTH: No holder of shares of the Corporation shall have any
preemptive right to subscribe for or to purchase any shares of the
Corporation of any class, whether such shares or such class be now or
hereafter authorized.
TENTH: Notwithstanding any provision of the General Corporation
Law or the Insurance Laws of Ohio now or hereafter in force, requiring for
any purpose the vote or consent of the holders of shares entitling them to
exercise two-thirds of the voting power of the Corporation or of any class
or classes of shares thereof, such action, unless otherwise expressly
required by statute, may be taken by the vote or consent of the holders of
shares entitling them to exercise a majority of the voting power of the
corporation or of such class or classes of shares thereof.
<PAGE>
IN WITNESS WHEREOF the undersigned have hereunto set their hands
this /s/ 2nd day of /s/ October , 1981.
----- ---------
/s/ Harry Rossi /s/ Kenneth J. Longerman
----------------------------- ------------------------------
Harry Rossi Kenneth J. Longerman
/s/ Charles C. Hinckley /s/ John C. Powers
----------------------------- ------------------------------
Charles C. Hinckley John C. Powers
/s/ Daniel J. Fischer /s/ Charles R. Scheper
----------------------------- ------------------------------
Daniel J. Fischer Charles R. Scheper
/s/ James P. Shanahan /s/ David F. Westerbeck
----------------------------- ------------------------------
James P. Shanahan David F. Westerbeck
/s/ Judith A. Kleemann /s/ Dennis L. Trammell
----------------------------- ------------------------------
Judith A. Kleemann Dennis L. Trammell
/s/ Charles W. McMahon /s/ Stephen R. Hatcher
----------------------------- ------------------------------
Charles W. McMahon Stephen R. Hatcher
/s/ Thomas J. Hummel
-----------------------------
Thomas J. Hummel
<PAGE>
ORIGINAL APPOINTMENT OF AGENT
------------------------------
The Undersigned, being at least a majority of the incor-
porators of UCL Life Assurance Corporation hereby appoint David F.
Westerbeck, a natural person resident in the county in which the
corporation has its principal office upon whom any process, notice or
demand required or permitted by statute to be served upon the corporation
may be served. His complete address is Post Office Box 179, Cincinnati,
Hamilton County, Ohio, 45201.
/s/ Daniel J. Fischer
_______________________________
Daniel J. Fischer
/s/ Dennis L. Trammell
_______________________________
Dennis L. Trammell
/s/ Charles W. McMahon
_______________________________
Charles W. McMahon
/s/ Thomas J. Hummel
_______________________________
Thomas J. Hummel
/s/ Kenneth J. Longerm
_______________________________
Kenneth J. Longerman
/s/ James P. Shanahan
_______________________________
James P. Shanahan
<PAGE>
/s/ Judith A. Kleeman
_______________________________
Judith A. Kleemann
Cincinnati, Ohio, October 2, 1981.
UCL LIFE ASSURANCE CORPORATION
Gentlemen: I hereby accept appointment as agent for your
corporation upon whom process, tax notices or demands may be served.
/s/ David F. Westerbeck
-------------------------------
David F. Westerbeck
<PAGE>
November 13, 1981
Honorable Anthony J. Celebrezze, Jr.
Secretary of State
14th Floor
30 East Broad Street
Columbus, Ohio 43215
Attention: Corporation Division
Re: UCL Life Assurance Corporation
Dear Sirs:
The Ohio Department of Insurance has reviewed the attached
Articles of Incorporation of UCL Life Assurance Corporation. Our Legal
and Examination divisions have reviewed these Articles and find them
acceptable.
Very truly yours,
/s/ Robert H. Katz
ROBERT H. KATZ
Deputy Director
RHK:eag
cc: Steven L. Petty
Assistant Attorney General
<PAGE>
November 13, 1981
Honorable Anthony J. Celebrezze, Jr.
Secretary of State
14th Floor
30 East Broad Street
Columbus, Ohio 43215
Attention: Corporation Division
Re: UCL Life Assurance Corporation
Dear Sirs:
Enclosed please find the original Articles of Incorporation of
UCL Life Assurance Corporation.
Based upon the language of the Articles, the approval of the Ohio
Department of Insurance, and my review of the relevant statutes I find
these Articles to be in accordance with those sections of law and not
inconsistent with the Constitution and laws of the United States and this
State.
Very truly yours,
WILLIAM J. BROWN
Attorney General
/s/ Steven L. Petty
STEVEN L. PETTY
Assistant Attorney
General
SLP:mfg
cc: Robert H. Katz
Deputy Director
Charles Hertlein
Dinsmore, Shohl, Coates & Deupree
<PAGE>
DATE: October 20, 1981
TO : Office of Secretary of State
30 East Broad Street, 14th Floor
Attn: Corporations Department
FROM: Robert H. Katz
Deputy Director
SUBJ: UCL Life Assurance Corporation
Enclosed are the original Articles of Incorporation, Code of Regulations,
and Emergency Bylaws of UCL Life Assurance Corporation. Also please find
a check for $650.00
Please hold these for filing until you receive approval letters, as
necessary, from either this office or the Office of the Attorney General.
Please call me if you have any questions.
RHK:bjl
xc :Steve Petty
Attorney General's Office
<PAGE>
APPROVED
BY ----------------------
DATE 10/18/83
---------------------
AMOUNT $235.00
------------------
CERTIFICATE
We, the undersigned, Charles C. Hinckley and David F. Westerbeck,
respectively the President and Secretary of UCL Life Assurance
Corporation, a stock life insurance company, do hereby certify that at a
special meeting of the stockholders of said Corporaration duly called and
held in the City of Cincinnati, on the 25th day of July, 1983, at which
meeting 14,997 out of a total 15,000 shares of the capital stock of said
Corporation issued and outstanding, were represented in person,
resolutions as hereinafter set forth were adopted by a unanimous vote of
said issued and outstanding stock represented;
RESOLVED, that the fourth article of the Articles of
Incorporation of UCL Life Assurance Corporation is hereby amended to read
as follows:
"Fourth: The number of shares which the
Corporation is authorized to have
outstanding is Twenty-Five Thousand
(25,000), all of which shall be Common
Shares, par value One Hundred Dollars
($100).
RESOLVED, FURTHER, that the President and Secretary of this
Corporation be and they are authorized and directed to make, execute, and
acknowledge a certificate, under the corporate seal of this company,
embracing the foregoing resolutions, and cause such certificate to be
filed, recorded or published as may be required by law.
IN WITNESS WHEREOF, we have set our hands on this 25th day of
July, 1983.
/s/ Charles C. Hinkley
-----------------------------------------
President
Attest /s/ David F. Westerbeck
---------------------------------------
Secretary
<PAGE>
September 15, 1983
Secretary of State's Office
State Office Tower
30 East Broad Street, 14th Floor
Columbus, Ohio 43215
Attn: Corporations Division, W. Curtis Stitt
Re: UCL Life Assurance Corporation
Dear Sir:
Please find enclosed the copy of the certificate of amendment to the
articles of UCL Life Assurance Company which you recently forwarded to
this office. Pending further approval from the Attorney General's Office,
the Department approves the amendment in the articles.
If you have any questions regarding this matter, please contact me.
Very truly yours,
/s/ Andromeda Monroe
ANDROMEDA MONROE
Deputy Director
AM/KW/slp
Enclosure
cc: Pat Devine, Esq. (Attorney General's Office)
<PAGE>
October 18, 1983
Honorable Sherrod Brown
Secretary of State
State Office Tower
14th Floor
Columbus, Ohio 43215
ATTN: W. Curtis Stitt
Assistant Corporate Counsel
Re: UCL Life Assurance Corporation
Charter No. 584965
Dear Sir:
I have reviewed the certificate of amendment to the articles of
incorporation of UCL Life Assurance Corporation. I have also discussed
the same with the Ohio Department of Insurance which has approved the
amendment in question.
Based upon my examination of the certificate of amendment and my
review of the relevant statutes, I find the certificate of amendment to be
in accordance with the constitution and laws of the State of Ohio and of
the United States.
Very truly yours,
ANTHONY J. CELEBREZZE, JR.
Attorney General
/s/ Patrick A. Devine
PATRICK A. DEVINE
Assistant Attorney General
1680 State Office Tower
30 East Broad Street
Columbus, Ohio, 43215
(614) 466-8614
PAD:mfm
cc: Kurt Weiland
<PAGE>
INTER-OFFICE COMMUNICATION
To: W. Curtis Stitt, Secretary of State Date: October 11, 1983
----------------------------------- -----------------
From: Kurt Weiland, Attorney, Department of Insurance
-------------------------------------------------------------
Subject: UCL Life Amendment
-----------------------------------------------------------
-----------------------------------------------------------------------
I spoke with David Westerbrook (513-595-2325) regarding the UCL Life
Amendment to articles. Enclosed is a copy of the Department's approval
letter regarding that amendment. I've spoken to Assistant Attorney
General Devine, who has indicated that he thinks he can complete this
review by Monday, October 17.
Westerbrook also indicated that he has requested twenty-five (25)
certified copies of the approved articles from your office and was curious
whether there would be any delay in receiving them.
KW/slp
cc: - Pat Devine
David Westerbrook
<PAGE>
Charter # 584965
--------------------
Approved By: D. Burns
----------------
Date: 10-17-85
-----------------------
Fee: $35.00
-----------------------
CERTIFICATE OF AMENDMENT
By Shareholders
to the Articles of Incorporation of
UCL LIFE ASSURANCE CORPORATION
--------------------------------------------------------------------------
(Name of Corporation)
Charles C. Hinckley , who is / / Chairman of the Board /x/ President
---------------------- --- ---
/ / Vice President (Check One)
---
and David F. Westerbeck , who is /xx/ Secretary
---------------------------------- ----
/ / Assistant Secretary (Check One)
---
of the above named Ohio corporation for profit with its principal location
at Mill and Waycross Roads, Cincinnati, Ohio do hereby certify that (check
-----------------------------------
the appropriate box and complete the appropriate statements)
/x/ a meeting of the shareholders was duly called for the purpose of
---
adopting this amendment and held on September 23, 1985, at which
-------------------
meeting a quorum of the shareholders was present in person or by
proxy, and by the affirmative vote of the holders of shares
entitling them to exercise 99 % of the voting power of the
---------
corporation.
/ / in a writing signed by all of the shareholders who would be
---
entitled to notice of a meeting held for that purpose,
the following resolution to amend the articles was adopted:
<PAGE>
RESOLVED, by the Shareholders of UCL Life Assurance Corporation
that the first article of the Articles of Incorporation of UCL Life
Assurance Corporation is hereby amended to read as follows:
"FIRST: The name of the Corporation shall be Carillon Life
Insurance Company"
RESOLVED FURTHER, that the President and Secretary of this
Corporation be and they are authorized and directed to make, execute and
acknowledge all documents on behalf of the Corporation necessary to
effectuate the foregoing resolution as may be required by law.
IN WITNESS WHEREOF, the above named officers, acting for and on
the behalf of the corporation, have hereto subscribed their names this
_______ day of October, 1985.
BY /s/ Charles C. Hinckley
----------------------------------------
(Chairman, President or Vice President)
BY /s/ David F. Westerbeck
-----------------------------------------
(Secretary or Assistant Secretary)
NOTE: Ohio law does not permit one officer to sign in two capacities.
Two separate signatures required, even if this necessitates the election
of a second officer before the filing can be made.
<PAGE>
October 8, 1985
Honorable Sherrod Brown
Secretary of State
State Office Tower
14th Floor
Columbus, Ohio 43215
Attn: Bradley Hoffman
Assistant Corporate Counsel
Re: UCL Life Assurance Corporation
Dear Sir:
I have reviewed the amendment to the articles of incorporation of
the UCL Life Assurance Corporation adopted September 23, 1985. I have
also discussed the same with the Ohio Department of Insurance which has
expressed its approval of the amendments in question.
Based upon my examination of the amendments of the articles of
incorporation and my review of the relevant statutes, I find the amendment
to be in accordance with the constitution and laws of the State of Ohio
and of the United States.
Very truly yours,
/s/ Kenneth L. McLaughlin
Kenneth L. McLaughlin
Assistant Attorney General
State Departments
16th Floor
Columbus, Ohio 43215
(614) 466-8614
KLM:jdc
Enclosures
cc: Kurt Weiland
David F. Westerbeck
<PAGE>
Charter No. 584965
--------------
Approved: RB
----------------
Date: 4/12/95
-------------------
Fee: $35.00
---------------------
95041233101
CERTIFICATE OF AMENDMENT
BY SHAREHOLDERS TO THE ARTICLES OF INCORPORATION OF
Carillon Life Insurance Company
--------------------------------------------------------------------------
(Name of Corporation)
Betty M. Kasprowicz , who is:
-------------------------------------------------------
/ / Chairman of the Board / / President
--- ---
/xx/ Vice President (Please check one.)
----
and James M. Mortensen , who is:
-------------------------------------------------
/ / Secretary /xx/ Assistant Secretary (Please check one.)
--- ----
of the above named Ohio corporation organized for profit does hereby
certify that: (Please check the appropriate box and complete the
appropriate statements.)
/ / a meeting of the shareholders was duly called for the purpose of
---
adopting this amendment and held on --------------------------,
19--- at which meeting a quorum of the shareholders was present
in person or by proxy, and by the affirmative vote of the holders
of shares entitling them to exercise -----------------% of the
voting power of the corporation.
/xx/ in a writing signed by all of the shareholders who would be
----
entitled to notice of a meeting held for that purpose, the
following resolution to amend the articles was adopted:
<PAGE>
RESOLVED, by the Sole Shareholder of Carillon Life
Insurance Company that the first article of the Articles of
Incorporation of Carillon Life Insurance Company is hereby
amended to read as follows:
"FIRST: The name of the Corporation shall be Annuity
Investors Life Insurance Company."
RESOLVED FURTHER, that the Vice President and Assistant
Secretary of this Corporation be and they are authorized and
directed to make, execute and acknowledge all documents on behalf
of the Corporation necessary to effectuate the foregoing
resolution as may be required by law.
IN WITNESS WHEREOF, the above named officers, acting for and on the behalf
of the corporation, have hereto subscribed their names this 30th day
---------
of March , 1995 .
------------- --
By /s/ Betty Kasprowicz By /s/ James M. Mortense
-------------------------- -----------------------------
Betty Kasprowicz James M. Mortensen
(Chairman, President, Vice President) (Secretary, Assistant Secretary)
NOTE: OHIO LAW DOES NOT PERMIT ONE OFFICER TO SIGN IN TWO CAPACITIES.
TWO SEPARATE SIGNATURES ARE REQUIRED, EVEN IF THIS NECESSITATES THE
ELECTION OF A SECOND OFFICER BEFORE THE FILING CAN BE MADE.
- 2 -
<PAGE>
April 6, 1995
Julia M. Graver
Office of The Attorney General
Health & Human Services Section
30 E Broad St 26th Fl
Columbus OH 43215
Dear Ms. Graver:
Enclosed please find an originally executed Certificate of Amendment by
the Shareholders to the Articles of Incorporation of Carillon Life
Insurance Company.
Based upon my review, the Department extends its preclearance to the
amended Articles which amend Article First changing the name of the
corporation from Carillon Life Insurance Company to Annuity Investors Life
Insurance Company.
Please call should you have any questions.
Sincerely,
/s/ Stephen J. Vamos
Stephen J. Vamos
Staff Counsel
Office of Legal Services
SJV/baw
Enclosure
<PAGE>
April 7, 1995
Honorable Robert Taft
Secretary of State
30 East Broad Street
14th Floor
Columbus, Ohio 43215
ATTN: KATHIE MCCLURG
OFFICE MANAGER
Re: Carillon Life Insurance Company
Dear Sir:
I have reviewed the Certificate of Amendment to the Articles of
Incorporation for the Carillon Life Insurance Company which was adopted on
March 30, 1995. I have also discussed the same with the Ohio Department
of Insurance which has expressed its approval of the articles in question.
Based upon my examination of these articles and my review of the
relevant statutes, I find the articles to be in accordance with the
constitution and laws of the State of Ohio and of the United States.
Very truly yours,
ATTORNEY GENERAL
BETTY D. MONTGOMERY
/s/ Julia M Graver
JULIA M. GRAVER
Assistant Attorney General
Health and Human Services Section
30 East Broad Street, 26th Floor
Columbus, Ohio 43215-3428
(614) 466-8600
JMG/mdg
Enclosures
cc: Stephen J. Vamos
<PAGE>
CODE OF REGULATIONS
OF
ANNUITY INVESTORS LIFE INSURANCE COMPANY
ARTICLE I
SHAREHOLDERS
1. The annual meeting of the shareholders shall be held at the
time provided in the corporation's Articles of Incorporation.
2. All meetings of shareholders shall be held at the principal
office of the corporation, or (except in the case of the annual meeting
which shall be held at the place fixed in the corporation's Articles of
Incorporation) at such other place within or without the State of Ohio as
may be designated in the notice of such meeting.
3. A meeting of the shareholders which is called by shareholders
may be called only by persons who hold at least twenty-five percent of all
shares issued and outstanding and entitled to vote at such meeting.
4. A majority of the shares issued and outstanding and entitled
to vote, represented by the holders of record thereof, in person or by
proxy shall constitute a quorum at all meetings of shareholders.
ARTICLE II
BOARD OF DIRECTORS
1. The Board of Directors shall hold regular meetings on the
third Friday of each February, May, August, and November, and such other
regular meetings as it shall determine from time to time. The President
may convene special meetings of the Board at any time and shall be
required so to do at the request of the Executive Committee or of any four
members of the Board. An organizational meeting of the Board of Directors
may be held without notice immediately after each annual meeting of share-
holders for the purpose of electing officers and attending to such other
business as may properly come before the meeting.
2. The Board of Directors shall adopt such plans of insurance
and annuities, rates of premiums, and regulations on the subject of
insurance and annuities as it may deem proper.
3. The Board of Directors from the funds of the Corporation
shall:
FIRST -
Pay the necessary expenses of conducting the business of the
Corporation, and all approved policy claims. The compensation of
each officer shall be fixed by the Board. The compensation of
each non-officer employee shall be fixed by the President
<PAGE>
SECOND -
Establish and maintain the reserve funds required by law.
THIRD -
Establish and maintain surplus funds in such amounts as, in the
judgment of the Board, may be necessary for the security of the
Corporation.
FOURTH -
Declare annually a dividend to participating policyholders, if
any, according to the kind and class of each policy, that shall
be applied according to the terms and conditions of each policy.
4. After provision has been made in accordance with Section 4 of
this Article for expenses, policy claims, reserve funds, surplus funds and
dividends to participating policyholders, if any, the Board may from time
to time declare and cause to be paid dividends to shareholders according
to the terms of each class of shares then outstanding and as provided by
law.
5. The Board of Directors may create an Executive Committee or
any other committee of the directors, each such committee to consist of
not less than three directors, and may delegate to any such committee any
of the authority of the directors, however conferred, other than that of
filling vacancies among the directors or in any committee of the
directors. Any director may, however, be designated by the Chief
Executive Officer or by the members present at any meeting of a committee
to serve on the committee at that meeting in place of an absent committee
member.
ARTICLE III
DUTIES OF THE OFFICERS
1. PRESIDENT: The Board of Directors shall elect a President
who shall be the chief executive officer of the Corporation. The
President shall have general supervision and control of the business of
the Corporation, shall preside at meetings of the Board of Directors and
of the shareholders, and shall perform such other duties as may be
assigned to him by the Board of Directors. All other officers and
employees shall act under the direction of the President and shall perform
such duties as he may assign to them.
2. VICE PRESIDENTS: The Vice Presidents, under the direction of
the President, shall assist in the management of the Corporation and shall
perform such other duties as may be assigned to them. The President shall
designate a Vice President to act for him in his absence; otherwise, the
Vice Presidents in the order in which they were listed for election at the
- 2 -
<PAGE>
most recent election of officers of the Corporation shall act in his place
and perform the duties of his office.
3. SECRETARY: The Secretary shall keep the minutes of meetings
of shareholders, of the Board of Directors and of committees of the Board
of Directors and shall record them in books kept for that purpose, shall
keep all corporate records and archives and shall perform such other
duties as may be assigned to him. In addition, in the absence of the
President and all Vice Presidents, the Secretary shall act in the place of
the President and shall perform all the duties of his office.
ARTICLE IV
EXECUTION OF INSTRUMENTS
The President, a Vice President, the Secretary, an Assistant
Secretary, the Treasurer or an Assistant Treasurer, and each of them,
shall have authority to execute in the name of and on behalf of the
Corporation all deeds, mortgages, powers of attorney, waivers of service,
leases, contract, bonds, full or partial assignments and releases of
mortgages, deeds of trust, vendors' liens, judgments, tax certificates,
certificates of purchase or other securities, and any and all other
instruments that are necessary or proper to be executed in the transaction
of the Corporation's business, and to affix the corporate seal thereto
when necessary. The Board of Directors may from time to time authorize
other officers and non-officer employees to execute instruments and to
affix the corporate seal thereto.
ARTICLE V
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Corporation shall, to the full extent permitted by the
General Corporation Law of Ohio, indemnify any person who is or was a
director or officer of the Corporation and whom it may indemnify pursuant
thereto. The Corporation may, within the sole discretion of the Board of
Directors, indemnify in whole or in part any other persons whom it may
indemnify pursuant thereto.
ARTICLE VI
CERTIFICATES FOR SHARES
If any certificate for shares is lost, stolen or destroyed, a new
certificate may be issued upon such terms or under such rules as the Board
of Directors may from time to time determine.
- 3 -
<PAGE>
ARTICLE VII
SEAL
The seal of the Corporation shall be in such form as the Board of
Directors may from time to time determine.
ARTICLE VIII
FISCAL YEAR
The fiscal year of the Corporation shall end on December 31 of
each year, or on such date as the Board of Directors may from time to time
determine.
- 4 -
<PAGE>
